UBS-a-daisy!

A Reuters report about UBS last Thursday evening revealed new risky debt exposure, totalling US$26.6 billion, by the Swiss banking giant. This is in addition to the US$18.1 billion of write-downs in the second half of last year. On Friday afternoon, UBS shares had fallen from a 52-week high of CHF80.45 to an intra-day low of CHF35.00 - a spine-chilling 56%.

Last Friday, the MSE Index - of which HSBC Bank Malta plc (HSB) and Bank of Valletta plc (BOV) make up the largest weighting by far - closed at its lowest level since December 15, 2005, at 4,713.265. This is a drop of 3% on the week and 4.5% in the one-and-a-half months for the year to date. This decline's major contributor, undoubtedly, is BOV which this week alone collapsed a vertiginous 9.6%. BOV's closing price on the January 14 and 15 peaked at €6.84, and it has since fallen inexorably on almost every single trading day.

The one major item of relevant, official, information in the public domain is BOV's interim directors' statement, covering the near four-month period starting October 1, 2007, issued on January 25 - on which date, BOV closed at €6.55. Besides the closing line stating that "profits for the first half of the current financial year will be below that achieved during the first six months of financial year 2007", could the market be reading too much into "international credit market conditions remained extremely volatile, and this has led to further markdowns in the group's investment portfolio"? In fairness, this was counterbalanced with "which, nevertheless, remains of very high quality".

The fact remains that investors may be getting nervous and becoming more aware that neither BOV nor HSB - whose results for the full year 2007 will be published tomorrow - operate in a vacuum. But then, let's realise that we are not a Switzerland in the Mediterranean.

With the MSE index at a 2007/8 low and BOV close to 10% lower, a ray of sunshine is more than sorely needed. Although, technically, four equities ended in positive territory, that included a negligible 0.3% gain on Malta International Airport plc (MIA) and a 0.7% increase on GO plc (GO). The week's best performer was low-cap Plaza Centres plc (PZC), up 4.1% on 1,640 shares followed by mid-cap, Middlesea Insurance plc (MSI), up 1.1%. However, the week's worst losses came where it mattered most - from the three largest cap stocks - HSB, BOV and International Hotel Investments plc (IHI), which respectively lost 1.6%, 9.6% and 2.9%.

BOV had a torrid week as the price continued to slide unremittingly. Each day saw BOV stumble to lower closes on relatively strong volumes. The only day it managed to end over the €6 mark was on Monday, although this was still 1.6% down. Tuesday's close was the only one that came near to this level at €5.998. It ended Wednesday at €5.85 and Thursday at €5.80, rounding off the week at a new 2007/8 low of €5.65 - this after flirting with the €5.50 level in earlier trading. BOV closed Friday a steep 9.6% down, by far the week's worst performer. Turnover for the five days totalled 100,350 shares for a value of just over €588,000 representing 46.5% of the total equity turnover by value. At the end of the week, total bids for 600 shares were at €5.601, whereas offers of 1,568 shares started at €5.65.

HSB was cautiously optimistic at the start of the week, advancing 0.4% by Monday's close to €4.745 and rising to €4.75 by Tuesday. It maintained this level up to Thursday but saw all the week's advances come undone on Friday to then slip into negative territory. Selling pressure first pulled HSB down from €4.748 to €4.70 and continued lower to close at €4.65, 1.6% down on the week. The bank's results for the year ended December 31, 2007 will be released tomorrow. Turnover for the week totalled 56,053 shares for a value of €265,509. At the end of trading, bids for 5,000 shares were at €4.50, while the best offer for 4,335 shares stood at €4.68.

Trading in Go was fairly uneventful, stable at €3.03 for most of the week, rising 2c to €3.05 on Friday's last two deals to end the week 0.7% ahead. Trading for the week amounted to 22,451 shares for a market value of €68,152. At the end of trading, best bids totalled 22,660 shares at €3 with a supply of 15,000 shares at €3.06. On Thursday, Go announced that the relevant authorities in Greece approved the concentration occurring as a result of the acquisition by Forengo Ltd of 21% of Hellenic Co for Telecommunications and Telematic Applications S.A. Go's board is to meet on February 27 to consider and approve the audited financial statements for the financial year ended December 31, 2007, and to consider the declaration of a final dividend to be recommended to the annual general meeting.

MIA traded unchanged at €3.17 for 20 of the 21 deals executed throughout the week, rising 1c to €3.18 in Friday's final deal for 798 shares, to close a marginal 0.3% ahead. A total of 31,250 shares changed hands for a value of €99,070. At the end of Friday's session, best bids were for 1,615 shares at €3.151 while offers for 4,202 shares started at €3.18. The MIA board is to meet on March 6 to consider the approval of the financial statements for the financial year ended December 31, 2007, and to consider the payment of a dividend.

IHI was steady at €1.05 in the early part of the week, but dropped 3c to €1.02 on Thursday, also trading at this level on Friday to end the week 2.9% down.

Fimbank plc was only active on Tuesday and Wednesday. Shares changed hands at $2, 1% lower than the previous week. Lombard Bank plc too only traded on these two days, steady at €13 on a turnover of 3,703 shares.

Maltapost plc traded around the 66c mark for the whole week, hitting an intra-day high of 66c8 on Monday and a low of 66c on Tuesday. It closed Friday unchanged on the week at 66c5. Turnover was still strong, with 141,843 shares swapped for a value of €93,991.

MSI only traded on Thursday, gaining 4c, or 1.1% to €3.70. This, however, was on a meagre turnover of 298 shares for a value of €1,105.

PZC and Crimsonwing plc (CW) only traded on Monday. PZC made up some lost ground advancing 4.1% to €1.60 on 1,640 shares, while CW lost a negligible 0.5% on 2,000 shares at 59c7.

In the Government Bond market, turnover by value reached €2.5 million with 38 deals struck in 13 stocks. In the corporate bond market, there were 46 deals for a total turnover value of €755,804. Turnover value in the Treasury Bill market totalled €774,093.

This report was provided by J.G.P. Bonello, managing director of Financial Planning Services Ltd, of Marina Court, G. Cali Street, Ta' Xbiex, which 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. E-mail: info@bonellofinancial.com or 2134 4243.