Rainbows, redundancies and reversals

So the week kicked off last Monday with a 71-year old making it to Prime Minister - for a third time - in Italy. The headline I liked best was 'Dopo l'arcobaleno, la tempesta' - the storm after the rainbow. Its genius lies in the reversal of the natural sequence of the rainbow following the storm. Yet it correctly described the effect of the election result on the far left grouping La Sinistra Arcobaleno, formed by Italy's caviar and cashmere Communist parties and the Greens. The storm that followed the rainbow? Not a single parliamentary seat for them. Italy's Mibtel Index reacted colourfully with a 2% gain for the week.

It was also the week that saw the price of oil peak above the $115 level. However a spokesman for Deutsche Bank, quoted in this week's Economist, states that the oil price still has to rise by $35 to reach an inflation-adjusted all-time high.

On world markets, Citigroup, the largest US Bank, announced a further 9,000 job cuts following the 4,200 fired last January, while JP Morgan are forecasting that job losses could reach 40,000 in the City of London within the next 12 months.

This is not a case of schadenfreude but certainly makes much less gruesome the MSE Index's 1.85% drop this week, and near 8% decline for the year to date.

We had three new highs and three new lows for 2008 on the equity market this week. The new highs were International Hotels Investments plc (IHI) at €1.10, Simonds Farsons Cisk plc (SFC) at €2.60 and 6PM plc (6PM) at 78p - the week's top performer. However with index heavyweights Bank of Valletta plc (BoV) and HSBC Bank Malta plc (HSB) at new 2008 lows of €5.25 and €4.30 respectively, it is no wonder that the MSE index closed at a fresh 2008 low of 4,545.811 on Friday - 1% lower than the previous 2008 low of 4,587.41 on February 19. GlobalCapital plc (GCL) was the third new low for 2008 at €2.73, but recovered to €2.80 by the end of the week. The mood was generally despondent with losers outpacing gainers 2 to 1, while equity volume didn't even make it to the €1 million mark.

BoV started the week stable at €5.45, but a wave of sale orders sent it tumbling to an already tested low of €5.35 on Tuesday. The selling pressure continued, dragging it to a new 2008 low of €5.25 on Wednesday. It staged a feeble recovery on Thursday but was back at €5.25 by Friday's close, ending the week 3.7% lower. BoV's turnover by value was the week's highest with 67,240 shares traded for a value of €356,910 - 37% of the week's total equity turnover. At the end of trading, total bids for 100 shares were at €5.23, whereas offers of 5,000 shares started at €5.28.

HSB opened the week flat ending the day €0.025 lower at €4.39. The price drifted around this level in very thin trade till Thursday, when it slipped to €4.35. In apparent sympathy with BoV, it lost another 5c on Friday to end the week 2.6% down. Total turnover amounted to 27,047 shares for a value of €117,673. At the end of Friday's session, bids for 390 shares were at €4.30, while the best offer for 50 shares started at €4.38.

There was a feeble reaction to comments made during GO plc's (GO) AGM held on April 11. Sonny Portelli said that Go would reap rich benefits from its possible collaboration with Smart City. The company is also looking to expand "organically" through its purchase of 21% into Greek telecoms company Forthnet SA, a fixed line and broadband operator. Mr Portelli also referred to the laying of a new undersea cable, the work on which should be finalised by summer, to the benefit of clients with a high broadband demand.

Turnover was sparse with just 7,890 shares for a value of €23,756 changing hands for the whole week. The price was generally stable, closing down an inconspicuous 0.03% lower at €3.014. At the end of Friday's session, best bids totalled 800 shares at €3 with a supply of 1,390 shares at €3.014.

On Tuesday, Go announced that Forthnet, whose share capital is 21% owned by Forgendo (a company owned by Go and Emirates International Telecommunications (Malta) Ltd), entered into a share purchase agreement to purchase the entire issued share capital of Net Med NV and Intervision (Services) BV, both companies incorporated in the Netherlands. Forthnet is proposing to raise capital inter alia by way of a rights issue to its existing shareholders.

Go, with Forgendo and EITML, has agreed to support this commitment to take up in full Forgendo's entitlement to the rights issue and to, contemporaneously with the exercise of such entitlement, exercise the oversubscription right in respect of all the shares remaining unsubscribed. Go and EITML will each make available to Forgendo the necessary funds to take up the rights issue and oversubscription right, provided that Go is only liable to a maximum of €100 million.

Malta International Airport plc saw a miniscule deal for 75 shares at €3.33 on Tuesday but advanced to €3.35 on Wednesday's more substantial trade of 19,825 shares. It did not trade again, ending the week 0.6% higher. The turnover for the two days resulted in value of €66,419. At the end of Friday's session, the best bid for 1,340 shares stood at €3.35, while offers for 600 shares started at €3.37.

IHI saw a bevy of deals early on Monday as the price advanced to €1.10 to then close at €1.099. It was stable on Tuesday but slipped to €1.05 on one deal on Wednesday, rising to €1.06 on Thursday, the last day it traded. It ended the week 1% cheaper on a total turnover of 87,464 shares for a value of €95,526.

6PM got off to a good start on the back of its promising results released late the previous Friday. The results covering the five-month period ending December 31, 2007, show that the group registered a pre-tax profit of £275,881, representing a return of 15% of the shareholders' funds. Profits attributable to shareholders were £314,265 and earnings per share £0.068. The gross profit amounted to £1,023,459 - 35% of total revenues. Net operating costs amounted to £711,191, which mainly represent employee costs of £455,543. The board declared a net interim dividend of £0.013 per share, which will be paid to all shareholders on the company's share register at close of trading on Friday, i.e. investors who have acquired shares by Tuesday.

6PM opened Monday 2p ahead at 75p closing the day at 77p. It traded steadily at this level for the rest of the week advancing to an all-time high of 78p on Friday - the busiest day during which 47,700 shares were swapped. 6PM was the top performer ending the week with a 6.8% gain. The week's turnover was a healthy 88,804 shares for a value of €85,491.

Five equities only traded on one day. Middlesea Insurance plc (MSI) and Plaza Centres plc (PZC) both only traded on Tuesday. The former traded €0.014 lower at €3.50 on a 100-share deal, while PZC advanced 1.5% to €1.725 on 2,900 shares. Fimbank plc (FIM) only traded on Wednesday, practically unchanged at $1.909 on turnover of 24,000. On Monday, FIM announced that all the ordinary and extraordinary resolutions were approved by the AGM held on April 10. Grand Harbour Marina plc was flat with just 655 shares swapped at €2.25. Crimsonwing plc was the last of the one-day trades, with a single deal for 5,000 shares on Thursday at €0.565, 1% up.

Lombard Bank plc (LOM) was steady at €13 with all the week's 14 deals for 11,288 shares executed at this price. SFC traded practically unchanged at €2.562 on Monday, rising to a new 2008 high of €2.60 on Wednesday. It maintained this price, for a 1.6% increase on the week. On Thursday, SFC announced that the board is scheduled to meet on May 2 to consider and approve the financial results for the year ended January 31, 2008, and to consider the declaration of a final dividend.

GCL continued its slide, down 7% to the bottom of Monday's allowable range of €2.73. However, it recovered to €2.80 by Friday to end the week 4.4% lower. On Friday the company announced that it has agreed terms for the acquisition of 85.5% of the issued share capital of Medifin Holding Ltd which holds 99.9% of the issued share capital of Mediterranean Bank plc. The latter is licensed by the Malta Financial Services Authority to carry on the business of banking and to provide investment services. The agreed terms are subject to confirmation following due diligence and further to all necessary regulatory approvals.

Maltapost plc started out on Tuesday 2.5c lower at €0.76 but advanced to €0.79 in the final deal. However it only traded again on Thursday and Friday, first shedding 2c and then losing another 3.5c to end the week a discouraging 6.4% down at €0.735. Total turnover amounted to 25,106 shares for a value of €19,029.

In the Government Bond market, turnover by value reached €10.5 million with 72 deals struck in 17 stocks. In the corporate bond market, there were 34 deals for a total turnover value of €205,189. Turnover value in the Treasury Bill market totalled €64,907.

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.