Eye-opener for small investors

Martin Webster's 'Underpromise, overdeliver?' (The Sunday Times, March 30) must surely rank as one of the most important eye-opening articles for small individual Maltese investors written in the past few years.

It makes the simple but factual point that no fewer than six Maltese companies (a big enough number when one considers how small is the equities part of the Malta Stock Exchange), who sought, via Initial Public Offerings (IPOs), small investors' hard-earned savings to be invested in them, have ended up producing actual results (big losses) which are way out from those heralded in the glossy prospectuses and full-page newspaper adverts published to attract the investments.

The list which Mr Webster presents shows total actual losses registered ranging from 5.5 per cent to a massive 231 per cent in variance from the originally projected profits. Surely this situation calls for some serious self-checking by whoever is responsible for vetting the projections being submitted for vetting prior to allowing IPO documents to be foisted on our far-from-sophisticated would-be Maltese investors.

Perhaps Mr Webster didn't go far enough in his analysis of the factual characteristics of the investor-investment seeker relationship as it exists and operates in Malta. With a financial services sector that has (inevitably, it seems) assumed a 'sell, sell, sell' aura in practically everything it seems to be doing all the time, the capitalist class is clearly trying to use the imbalance between the 'knows' and the 'don't knows' purely to the advantage of 'the project' or 'the company' and not towards objectivity. And this quite apart from seeking any high moral ground.

If many Maltese now start realising to what extent they have been hoodwinked by several Maltese companies coming to the market, presenting unrealistic future profits streams, and then only to flounder to the extent shown in Mr Webster's figures, then I would expect, as he rightly suggests, a flight to quality to be pushed even by our financial intermediary services providers.

In euroland there are so many good, currency problem-free, blue chip, good dividend-paying companies and investments (bonds, equities, funds) available. The sooner the marriage between the local capitalist class and local financial intermediaries is dissolved, the better for all concerned.