The only way is up

Can you recall your frame of mind at this precise point in time last Sunday? Whatever it was, it was certainly not caused by Malta's stock market performance in election years. Although the first trading session on the stock exchange was held on January 8, 1992, by the time of that year's February election, only Malta Government Bonds were being traded on our then nascent exchange.

The MSE index was established with a base of 1,000 as at the end of 1995. On a year-end to year-end basis, election years have always proved positive for markets, with the Labour Party's 1996 victory showing a marginal gain of 0.44%, while the two Nationalist Party victories in 1998 and 2003 show respective overall gains for the year of 15.28% and 13.62%.

Interestingly when performance is analysed further and broken down into percentage change from the previous year-end to election eve, and percentage change from election eve to the end of the election year, it transpires that, in 1996 - when trading only took place once a week - the index had gained 3.04% up to the election eve on October 23. Post-election, however, the index had fallen by 2.52% in the two months to the end of 1996.

In 1998, by the September 5 election - when we had switched to daily trading - the Index had gained 3.18%, but then gained a further 11.73% - more than three-and-a-half times as much - in the less than four months to the year end.

In the three-and-a-half months to the April 12, 2003 election, the index was down by 0.59%, but then increased 14.29% by the end of 2003.

Conclusion? On Malta's post-election market, a Labour victory has proved negative, while a Nationalist victory has provided double digit gains. The situation in this election year is that, up to election eve, the index was down by 5.42%. Should history repeat itself, it would seem that for the local market, the only way is up.

This week the MSE Index closed at 4,659.116 - 0.24% down on the week. Turnover by value was the best for year so far at €7 million. On the positive side, Fimbank plc (FIM) registered the best bonus-share-adjusted gain - 6.22%. Following far behind, Simonds Farsons Cisk plc (SFC) and Crimsonwing plc (CW) shared the silver, both gaining 2.04%. Go plc (GO) and 6PM plc (6PM) were the week's casualties suffering 4.46% (after going ex-div) and 3.98% drops.

Bank of Valletta plc (BOV) started the week on a positive note as it climbed four euro cents between Monday and Tuesday, closing at €5.83. It did not trade on Wednesday, and traded lower at €5.80 on Thursday, with the final deal for 225 shares completed at €5.804. It collapsed to a €5.74 close on Friday, erasing all the week's gains. Total turnover amounted to 57,988 shares, for a market value of €337,326, with the price closing 0.17% down. At the end of the week, total bids for 241 shares were at €5.74, whereas offers of 3,014 shares started at €5.799.

HSBC Bank Malta plc (HSB) traded on Monday and Tuesday in a range of €4.40 to €4.42, closing at €4.418. A single 300-share deal on Wednesday, six minutes from the close of trading, took the price down to €4.38. Thursday was much more positive as HSB advanced to a €4.418 close. On Friday it closed at €4.39 - a minimal drop of 0.25% on the week. By HSB standards turnover was a very low 24,820 shares for a value of €109,285. At the end of trading, bids for 400 shares were at €4.391, while the best offer for 4,800 shares stood at €4.40.

GO continued up to €3.145 on Monday, and slid a negligible €0.001 on Tuesday. The price crumbled on Wednesday, opening 11c6 lower as the price went ex-dividend at €3.028. It then closed minimally up at €3.03 on a total turnover of just 554 shares. Go headed further south on Thursday and Friday closing at €3 - 4.46% down for the week. Turnover for the week totalled 41,304 shares for a value of €129,063. At the end of trading, best bids totalled 3,000 shares at €3.001 with a supply of 3,350 shares at €3.03.

International Hotel Investments plc lost 1.5 euro cents on Wednesday closing at €1.02, but recovered the loss on Thursday closing at €1.039, with 17,000 shares changing hands during the week with the price up 0.39%.

Malta International Airport plc started on Monday on €3.29 and closed at a fresh 2007/2008 high of €3.33. It retained this price on Wednesday and shed 0.005 on Friday to close the week at €3.325 - 1.06% up. At the end of Friday's session, best bids were for 1,000 shares at €3.152 while offers for 2,000 shares started at €3.325.

FIM was very active on Monday, the last day investors could have bought shares and still be entitled to both the scrip dividend of US cents 3.80232493, and the one-for-five bonus share issue. The price climbed to US$2.09 - a new 2007/08 high. On Friday, 7,958 shares were traded and the price dropping to a US$1.742 close. On a bonus share adjusted basis, FIM ended the week 6.22% ahead on the previous Friday's close, thus topping the week's star performer list.

Lombard Bank plc (LOM) traded every day at €13 from Monday till Thursday, except for three small deals struck at €12.999, €12.99 and €12.97 on Wednesday - the busiest session, in which 453,850 shares changed hands. On the back of the results for the year ended December 31, 2007, issued on Thursday afternoon, LOM gained 1.54% on Friday, as the price advanced to €13.20 with 1,880 shares traded. Total turnover for the week was 462,260 shares for a value of €6 million - a full 85.6% of the week's total turnover.

The results showed a record pre-tax profit of €10.64 million (Lm4.57 million) for the year - an 18.1% increase over the same period in 2006. Shareholders' funds increased by 14.8% based on an after-tax profit of €7.07 million (Lm3.03 million). Earnings per share increased by 19.66% from €0.687 (Lm0.295) to €0.822 (Lm0.353). Net interest income increased by 26.7%, driven by growth of 23.9% in credit activity as well as continued effective treasury management. Net fees and commission income advanced by 5.3%. Administrative expenses were slightly higher at €6.73 million (Lm2.89 million), including the relative share of expenses of MaltaPost plc.

For the year ending December 31, 2007: the bank's cost-to-income ratio was 36.8% (2006:35.1%); customer deposits decreased slightly by €2.47 million (Lm1.06 million) to €418.2 million (Lm179.5 million); loans and advances to customers increased by 23.9% to €260.28 million (Lm111.74 million); total assets increased by €25 million (Lm10.75 million) to €504.46 (Lm216.57 million). The board is recommending a final gross dividend of €0.40 (Lm0.1717) per share, to shareholders who are on the bank's register by Thursday, i.e. investors who will have purchased shares by last Friday. This dividend represents an increase of 37% over last year's. Shareholders can opt to receive their dividend in cash or by the issue of new shares, at the attribution price of €12.60.

Finally, by way of Special Business, the board will be proposing to the general meeting the approval of the increase of the nominal value of each share to €1, by the transfer of €3,603,849 from retained earnings to the called up share capital account and, with effect from May 2, the deletion and substitution of the text of the current Clause 5 of the memorandum of association.

MaltaPost plc (MTP)'s single deal on Monday was struck at 70 cents. Activity was brisker on Wednesday as 40,571 shares changed hands with the price progressing slightly to 70.3 cents. It continued up on Thursday, albeit on much lower turnover, to close the session at 71c. Friday saw 32,030 shares traded at 71c1 - a new all-time high. MTP advanced 1.6% this week.

Grand Harbour Marina plc (GHM)'s 28,346 shares traded were struck at €1.73 on Monday and Wednesday. GHM announced on Monday that following the March 3 announcement, the board meeting, which had to be held the previous Friday, to consider the approval of the financial statements for the year ended December 31, 2007, and the recommendation or otherwise of a dividend, was adjourned to a date yet to be specified.

CW traded on Monday and Friday at 55c - up 2.04% - with a total weekly turnover reaching 38,145 shares.

6PM plc only traded on Tuesday in a very tight range between £0.695 and £0.70, closing at the latter price - 3.98% down.

SFC, Plaza Centres plc (PZC) and Datatrak plc (DTK) only traded on Friday: SFC gained 5 euro cents (2.04%) closing at €2.50 on a 2,000-share deal; PZC was up a negligible €0.001 to €1.70 with 10,230 shares changing hands; while DTK closed unchanged at 30c5 with 2,694 shares traded. PZC announced on Monday that the board is scheduled to meet on March 28 to consider: the approval of the financial statements for the year ended December 31, 2007; and the recommendation to the shareholders for the payment of a dividend. The extraordinary general meeting will be held on April 4, for shareholders on the register as at close of business last Wednesday.

In the Government Bond market, turnover by value reached €9.6 million with 31 deals struck in 15 stocks. In the corporate bond market, there were 24 deals for a total turnover value of €108,763. Turnover value in the Treasury Bill market totalled €2.8 million.

This report was provided by J.G.P. Bonello, managing director of Financial Planning Services Limited, 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