A bull in a bear's outfit?

It was exactly 29 months ago tomorrow that the MSE Index closed lower than last Friday's 4,502.946. On November 28, 2005, the index had closed at 4,495.222. At that point in 2005, the index had already gained a healthy 47% in 11 months.

Investors who were still bullish bought from sellers who happily cashed in their chips. Four months later the same buyers were celebrating an identical 47% tax free capital gain as the index peaked at an all-time high on March 28, 2006, of 6,641.873.

It may be just sheer coincidence, but since studies of market cycles prove that, eventually, markets first climb back to previous peaks to then substantially exceed them, the market needs a 47% increase (that number again!) from last Friday's level to climb back to the peak of the previous cycle.

Will it do it in four months? I don't have a crystal ball but that does not look likely.

On the other hand, even assuming it takes a full four years - which seems unrealistically very long - isn't that a return of nearly 12% per annum?

Stock market investment is not about tomorrow, next week, next month or next Christmas. It may be worth remembering that the current bear market is 25 months old tomorrow. The last major bear market lasted 33 months - but, from its ashes rose the 41-month bull market to March 2006. So do we have a bull in bear's clothing?

What about last week on the exchange? It was a very balanced one: four equities ended the week in positive territory, four ended in the negative, four did not trade, and five were unchanged. However, with three of the four negatives being large cap Bank of Valletta plc (BOV), HSBC Bank Malta plc (HSB) and GO plc (GO), the MSE index was again dragged to another 2008 low of 4,502.946 on Friday.

Even though at last Friday's close Global Capital plc (GCL) is still 38% below its 2008 high of €5.15 on January 22, it was the undisputed best performer last week when its share price gained a healthy respite with a 13.4% gain. Maltapost plc's (MTP) gained second place with a balanced 2% gain, while Malta International Airport plc's (MIA) 0.9% and Fimbank plc's (FIM) 0.6% advances, though barely audible, were effectively new 2008 highs. Equity turnover by value came in at the third lowest for the year at €846,923. A gargantuan 75% of this was executed in the banking sector.

BOV was moderately positive in the early part of the week, stable on Monday at €5.25 and rising to €5.29 by the close, retaining this level on Tuesday. It moved stubbornly into reverse gear from Wednesday, hitting consecutive new 2008 lows for the rest of the week. On Wednesday, it fell to €5.249, stumbling to €5.20 on Thursday on brisk volume of just under 31,500 shares. On Friday, it continued to sag as 37,488 shares traded closing at €5.19, 1.1% down on the week. BoV registered the highest turnover by value at €429,180 as 82,402 shares changed hands. At the end of the week, total bids for 600 shares were at €5.17, whereas offers of 1,953 shares started at €5.19. BoV announced last Tuesday that the board is scheduled to meet on Tuesday to consider and approve the interim financial statements for six months ended March 31, 2008, and the declaration of an interim dividend.

HSB started out unchanged at €4.30 but slid down the chute, closing the day at a new 2008 low of €4.193. Its rebound to €4.26 on Tuesday was short-lived as HSB slipped back to the €4.20 region for the rest of the week. Friday saw it hit an intra-day low of €4.19 but it closed at €4.20 - down a despondent 2.3% on the week. Turnover for the five days totalled 45,977 shares for a value of €194,104. At the end of trading, the best bid was for 750 shares at €4.18, while the best offer for 2,593 shares stood at €4.20.

GO, after hitting a closing high of €3.014 on Monday, closed at €3 where it had stayed as flat as a pancake throughout the week, for a 0.5% drop on the week. Turnover totalled 14,310 shares for a value of just under €42,929. At the end of trading, best bids totalled 1,000 shares at €2.971, with a supply of 1,450 shares at €3.

Go announced on Friday that further to the announcement issued on April 15, the board of Forthnet will, at the extraordinary general meeting on May 14, propose to increase Forthnet's share capital - through the payment in cash and with pre-emptive and oversubscription rights - with the aim of raising €300 million. These funds will be used mainly to finance part of the consideration for the acquisition of the entire share capital of two Dutch companies - NetMed NV and Intervision (Services) BV. The purchase of all the shares in these companies will be made through a wholly-owned subsidiary of Forthnet, which is in the process of being established in Greece.

MIA took off on Monday, opening 2c higher at €3.37 and closing at €3.378. It was stable on Wednesday, but dipped 7c8 to €3.30 during Thursday's handful of trades which totaled 700 shares. It more than made up this loss, climbing to a new 2008 high of €3.38 on Friday, to end the week 0.9% ahead. Total weekly volume was low at 7,600 shares for a value of €25,623. At the end of trading, best bids totalled 1,000 shares at €3.32, with a supply of 9,000 shares at €3.40.

IHI traded in the latter part of the week starting on Wednesday, stable at €1.06. It only gained €0.005 on Thursday, but was back at €1.06 on Friday to end the week unchanged. Volume was mute with just 11,650 shares traded on the three days.

FIM started the week a fraction lower at $1.90 but advanced to $1.915 on Tuesday, closing Friday at a new 2008 high of $1.92. Turnover however was fairly soft with the week's total coming up to 19,200 shares for a value of €23,140.

GCL shares gained 13.4% this week, opening at €2.95 on Monday, progressing to a €2.996 close on turnover of 3,420 shares. It advanced further on Tuesday, rising from a €3 open to a €3.176 close when 13,240 shares changed hands. It not trade for the rest of the week.

Again, a number of equities only traded on one day.

A single deal for 20,000 shares was struck in 6PM plc on Monday at the previous close of 78p. On the same day the company announced that it has been awarded a large contract for the continued provision of IM (information management) skills to a major UK client. The contract is for 15 months and is in excess of £1 million.

Crimsonwing plc only traded on Wednesday in one deal for 8,097 shares stable at €0.565.

Lombard Bank plc (LOM) only dealt on Thursday with 118 shares traded at the unchanged price of €13.00. LOM announced on Friday that all ordinary resolutions were approved by the AGM on Thursday.

Two extraordinary resolutions were approved to increase the nominal value of each share to €1, by transferring €3,603,849 from retained earnings to called up share capital account; and the four for one share split effective May 3, 2008, with the appropriate deletions and substitutions to the text of Clause 5 of the company's memorandum of association.

Middlesea Insurance plc (MSI) also only dealt on Thursday, sinking to yet another 2008 low of €3.40 on a turnover of 1,809 shares to end the week 2.9% lower. Late on Friday afternoon, MSI announced a pre-tax profit of €9.3 million (Lm4 million) in 2007, a 9.4% increase on 2006. The board is recommending the payment of a final dividend of €0.1281 (Lm0.055) per share, 22% higher than the 2006 distribution. The board is also proposing an increase in the authorised and paid-up value of each share in issue from €0.582343 (the euro equivalent of the current value of Lm0.25) to €0.60. This increase would be funded through the capitalisation of distributable reserves amounting to €441,425.

Grand Harbour Marina plc held on to its €2.25 tag on Monday and Tuesday, the only two days it was active with 13,900 shares swapped for a value of €31,260.

MTP gained 1.5c to €0.75 on a 5,000-share deal on Monday. It was stable at this price in the week's second and last deal for 2,199 shares on Thursday, ending the week 2% higher.

On Monday, Datatrak plc announced that the board is scheduled to meet on Wednesday to consider and approve the annual financial statements for the year ended December 31, 2007 and the declaration or otherwise of a dividend.

In the Government Bond market, turnover by value reached €1.4 million with 20 deals struck in eight stocks. In the corporate bond market, there were 18 deals for a total turnover value of €319,496. Turnover value in the Treasury Bill market totalled €704,845.

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.