1907-2007: Time and timing

One hundred years ago - a full 22 years before the infamous October 1929 crash - stock markets all around the world collapsed during 1907. In America, it was called the rich man's panic, set off by the closure of the Knickerbocker Trust Company. London and New York share prices nose-dived, with the 11-year-old Dow Jones crashing from 96.37 in January to a low of 53 on November 15, and closing the year at 58.75.

In Japan, the great bull market of 1906 became the great bear market of 1907 - one of the most dramatic declines in the history of Japanese stock markets. The latter was comparable to the collapse of (i) the St Petersburg Stock Exchange in 1917, caused by the birth of Soviet Communism (which died - unmourned, unloved and unsung - at the age of 72 on November 9, 1989, in Berlin), and (ii) of the Shanghai stock market in 1949 (compliments of Red China's Mao Tse Tung's Communist takeover). In the 12 days from the Japanese market's peak on January 19, 1907, to the end of that month, the market shed one-third of its value. By the end of 1907, the selling bloodbath had reduced the market value by a catastrophic 88%.

That same year, in America, a 22-year-old semi-professional baseball player named Charles Merrill bumped into a soda-fountain equipment salesman named Edmund Lynch. It was not until 1915 that they set up a brokerage firm that they proudly called Merrill Lynch & Co, today the world's largest stockbroking firm. Why did they wait eight years? Was it by accident or very neat design? Had Merrill and Lynch uncovered something about timing 92 years ago?

We wonder because, although the Dow Jones climbed back - very briefly - to the 100 level at the end of 1909, it remained beneath that level until 1914. That year saw the start of World War I. It was the only time in history that the Stock Exchange Board of Governors decided, on July 31, to close the exchange. Trading only reopened on December 15. And in 1915, the first year of operations for Merrill Lynch & Co, the Dow, which has bottomed just above the 50 level the previous year, closed marginally below the magical 100 level again. Perfect timing. That was 100 years ago.

And that is what the local market's level today will be seen as, in, say, 12 to 18 months' time. If you are dropping off a relative at the airport, observe the beehive of activity that it is - especially since the introduction of low-cost airlines. How many overseas listed telecom companies are sitting on a cash mountain, which would enable them to execute a massive share buyback? Which overseas listed bank pays a dividend as attractive as Malta's number one by market capitalisation?

It is true that we saw another soft week, with equity volumes dwindling to Lm234,651 - the third lowest for 2007. Positive vibrations were hard to come by with the only ray of sunshine coming, for the second week running, from newcomer 6PM and Simonds Farsons Cisk plc (SFC), up 1.4% and 0.9% respectively. One could argue that the negatives were scarce too; Middlesea Insurance plc (MSI) was the hardest hit, down 3% to a 2007 low of Lm1.60 while Bank of Valletta plc (BOV), and Maltacom plc (MLC) ended an insubstantial 0.6% and 0.1% lower. But the true gauge of the mood on the market is the fact that 10 of the 15 listed equities were totally static (seven closed flat while three did not trade), portraying the status quo that has been plaguing the market. As expected, the MSE index hardly moved, down 0.21% to 4,828.514.

BOV started off minimally down at Lm3.595 and continued lower, stopping at Lm3.58. It recovered a cent, but was back at Lm3.58 for Monday's final deal. It was up to Lm3.595 on Tuesday, closing at Lm3.599. It did not trade on Wednesday but was back on the ticker at Lm3.599 on Thursday. The last day of the week saw BOV open at this price but slide down to Lm3.58 for the last 70-share trade to end the week 0.6% lower. Total volume for the week amounted to 18,143 shares for a value of Lm65,210. At the end of trading, best bids totalled 9,105 shares at Lm3.58, with a supply of 400 shares at Lm3.598.

HSBC Bank Malta plc (HSB) was stable at Lm1.90, slipping to Lm1.895 for the concluding deal in thin trade on turnover of just 4,225 shares. It was back at Lm1.90 for Tuesday's four trades and a further four trades on Wednesday. Thursday saw minuscule change, with dealings at Lm1.909 and Lm1.91. On Friday, 7,145 shares changed hands, all at Lm1.90. Incredibly, this was HSB's busiest day which explains the low turnover for the week for the MSE's largest capitalisation stock: 18,555 shares for a value of Lm35,279. At the end of trading, the best bid was for 2,800 shares at Lm1.896, while the best offer for 2,755 shares stood at Lm1.90.

MLC was low on the popularity stakes, only trading on Wednesday and Thursday. The first trade was struck at the unchanged price of Lm1.389, closing barely lower at Lm1.387 on thin turnover of just 1398 shares. Thursday's two deals were effected at the same price, ending the week a negligible 0.1% lower. Turnover for the two days totalled an abysmal 3,398 shares for a value of Lm4,712. At the end of Friday's session, the best bid was for 300 shares at Lm1.37 and the best offer was for 2,290 shares at Lm1.386.

Fimbank plc (FIM) was the week's most actively traded equity with a robust 166,794 shares traded for a value of Lm99,304. This, despite the disastrous dollar, still made up 42% of the week's total equity turnover. FIM started out the week on slow note, with just 6,915 shares changing hands flat at $1.95. A very large number of shares - 135,339 - were traded at this price on Tuesday as were the balance of shares on Wednesday and Friday.

SFC maintained its Lm1.07 price, trading at this level from Monday to Wednesday. On Thursday it pushed ahead to Lm1.08 on comparatively strong turnover of 10,000 shares, maintaining this price on Friday to end the week 0.9% ahead.

6PM traded on Tuesday and Wednesday unchanged at 70p; Friday saw it advance a penny to 71c, to rise 6% on its IPO price - less than a month ago. Volume, however, was very low as only 2,740 shares traded.

MSI had another dismal week: it started out late in the week when on Wednesday 1,000 shares traded at the previous week's closing price of Lm1.65 on 1,000 shares. Friday, however, saw this equity crash to a new 2007 low of Lm1.60 on one deal for 3,100 shares. The 5c drop translated into a 3% drop, making MSI the week's worst performer.

A number of equities only dealt on one day; these are listed in date order.

Malta International Airport plc's turnover was restricted to a single, pitifull deal for 500 shares on Monday at the unchanged price of Lm1.35. At the end of Friday's session, best bids were for 5,447 shares at Lm1.35 while offers for 1,000 shares started at Lm1.398.

Lombard Bank plc only traded on Tuesday, unchanged at Lm4.75 with 811 shares changing hands.

Medserv plc also made its appearance on the same day with 2,000 shares traded, stable at Lm1.60.

International Hotel Investments plc however topped the charts for the lowest volume for the week with a puny 200 shares traded on Wednesday, flat at €1.05.

Thursday was the only day Plaza Centres plc traded with just one deal for 600 shares at 74c.

On Tuesday Datatrak plc (DTK) announced that Anthony Demajo had acquired 1,000,750 shares from Dr Pascal Demajo and 225,000 shares from Demco Ltd. Following this acquisition, the holding of Anthony Demajo is equivalent to 8.47%. DTK did not trade on the regular market.

In the Government Bond market, turnover by value reached Lm937,240 with 56 deals struck in 20 stocks. In the corporate bond market there were 26 deals for a total turnover value of Lm88,374. Turnover value in the Treasury Bill market totalled Lm1.5 million.

Financial Planning Services Limited is licensed 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.