Basil Fawlty's forecast (!)

A brief look at what happened in election years in the mother of all markets - the United States - in the last six elections, shows that in 1984 Ronald Reagan's victory year saw the Dow drop 3.7%.

In the three consecutive elections between 1988 and 1996, the Dow gained irrespective of the political stripe of the winner. The 1998 Republican Bush Snr's victory saw the Dow gain 11.9%, while Democrat Bill Clinton's victories in 1992 and 1996 registered gains of 4.2% and 26% respectively. George W's election victories saw the Dow drop 6.2% in 2000, whereas in 2004 it registered a gain of 3.2%.

So US election years do not provide investors with a pattern to punt on. But in the case of the Maltese stock market, good old Basil Fawlty would say that it is "bleeding obvious" that the only way that the Maltese stock market can go next year is... up!

Why? Well, the Malta Stock Exchange index has only been around for the last three election years. In 1996 it ended with a marginal gain of 0.6%, closing at 1,005.94. 1998 saw the best election year index performance to date with a jump of 18.2%, which took the index to 1,276.94. The last election was held in 2003, and by the end of it the MSE index had closed at 2,125.76 - a healthy 13.6% gain. Fawlty Towers logic says "Buy now, benefit later".

On the basis of equity markets' come-back-and-go-beyond theory, with the index closing last Friday at 4,880.56, there is a 26.5% gain to be made when the index attains just the "comeback" part of the theory at the 6,641.87 level, reached on 28th March 2006 .

Trading on the exchange shuffled along in a hushed week. Large cap stocks were lacklustre at best. The minnows had a field day, as some of the small caps like Plaza Centre plc (PZC) and Simonds Farsons Cisk plc (SFC) were almost oblivious to the stagnation that permeates the market. The former gained 4.2% to a near three-and-a-half-year high of 74c, while the latter breezed ahead to a new 2007 high of Lm1.05.

San Tumas Shareholdings plc (STUM) - the only closed-ended investment scheme listed on the MSE - was however the week's best performer, up a tub-banging 8.6%, although volume was just 550 shares.

On the negative side, Lombard Bank Malta plc (LOM) slumped 3.5%, while Datatrak plc (DTK), the only equity listed on the Alternative Companies List, was an unmitigated wash-out, careening a dizzying 22.3% (possibly the worst weekly result in MSE history) to an all-time low of 17c1. The poor souls who bought at the initial public offering price of Lm1 are... let's not go there!

Bank of Valletta plc (BOV) started the week on a quiet note, minimally lower at Lm3.621 and closing the day at Lm3.622. It dawdled around Lm3.60 and Lm3.621 on Tuesday, closing at Lm3.62. A positive start saw BOV up to Lm3.63 within ten minutes of the open on Wednesday. However, selling pressure pulled the price back to Lm3.60 during the week's busiest session. Thursday's token presence yielded just one small deal for 280 shares at Lm3.59, while Friday was again a one-session deal on a turnover of 1,384 shares at Lm3.595, one per cent lower on the week.

Nonetheless, BOV still accounted for the largest share of equity trading, with 33,543 shares changing hands for a value of Lm121,054 - 32.4% of the week's total. At the end of the week, total bids for 2,920 shares were at Lm3.59, whereas offers of 14,884 shares started at Lm3.60.

HSBC Bank Malta plc (HSB) was just a few mils off its previous close at Monday's Lm1.922 open. There were only a handful of deals, closing at Lm1.925. It opened at this level on Tuesday, falling back to Lm1.91 by the end of the day. It gained a cent to Lm1.92 on Wednesday but was back at Lm1.905 by the end of Thursday. It hovered around this level during Friday's indifferent session to close the day at Lm1.901, 1.45% down on the week. Total turnover totalled 30,298 shares for a value of Lm58,088. At the end of trading, bids for 5,907 shares were at Lm1.901, while the best offer for 446 shares stood at Lm1.91.

Maltacom plc (MLC) only had a two-day trading week, rising 2c to Lm1.42 on Tuesday, only to erase the gain on Wednesday, and end the week unchanged on a total turnover of 12,400 shares. At the end of trading, best bids totalled 2,893 shares at Lm1.39 with a supply of 3459 shares at Lm1.40.

International Hotels Investments plc (IHI) got off to an active start when 50,527 shares changed hands on Monday. Trade was carried out in narrow range of €1.098 and €1.10, closing at the latter. Tuesday and Wednesday saw IHI level at €1.10. Friday's turnover was carried out just a shade lower, to end the week at €1.097, just 0.2% down on the week. In total, 142,827 shares changed hands for a value of Lm67,350, the second highest volume of the week.

Malta International Airport plc (MIA) picked up where it left off, trading unchanged at Lm1.40 on Monday. Two deals totalling 2,771 shares dragged the price down 5c to Lm1.35 on Tuesday, with another 1,000 shares changing hands at the same price on Wednesday. However, demand came back on stream by the end of the week for MIA to bounce back to Lm1.40, to close the week unchanged.

The week's turnover for 23,491 shares gave a market value of Lm32,698. At the end of the session, best bids were for 1,300 shares at Lm1.34 while offers for 2,400 shares started at Lm1.41.

Fimbank plc only traded on Friday with 38,398 shares changing hands at the unchanged price of $1.94.

LOM traded after a five-week absence, shedding 17c5 to fall to Lm4.80 on a 100-share deal; another 616 shares traded at the same level on Wednesday closing the day a mil down, ending the week a rather heavy 3.5% in the "red box" (LOM's subsidiary in the Maltapost acquisition).

SFC climbed to yet another 2007 and multi-year high of Lm1.05 on relatively strong turnover of 11,432 shares on Wednesday. It only traded again on Thursday on much slimmer volume, to close the week 2% up. SFC now stands 15c - or 14.3% - below its all-time high of Lm1.20, struck on January 31, 2000.

PZC was bustling with activity as 30,000 shares changed hands, shooting up 3c to a three-year five-month high of 74c on Tuesday. A further 1,600 shares were exchanged at this level on Thursday for PZC to end the week 4.2% up.

Medserv plc only traded on Friday in a single deal for 3,850 shares at the unchanged price of Lm1.60.

DTK had a dismal week: the 7% trade range had been temporarily removed on this equity, allowing deals to be struck at any price; shares were dumped at the only bid price on the board - 17c1, to send the price careening an incredible 22.3%. It is not exactly encouraging - to put it mildly - to see that there are no outstanding bids on the board.

In the Government bond market, turnover by value reached Lm815,690 with 37 deals struck in 13 stocks. In the Corporate bond market there were 30 deals for a total turnover value of Lm98,131. Turnover value in the Treasury bill market totalled Lm2.96 million.

Financial Planning Services Limited is licenced by the MFSA to provide investment services, including stockbroking (IS/3608). The company is involved in acting as sponsoring stockbroker and corporate stockbroker. The directors or related parties, including the company, and their clients, are likely to have an interest in securities mentioned.