Hope is not a good strategy

In the 16 years since trading started on the Malta Stock Exchange (MSE), 16 equities have been listed on the MSE Official List. This averages one equity per year. That does not include Datatrak plc's (DTK) listing on the Alternative Companies List - but let's not go there! In fairness, a third of these listings - five of them - came on board in the last two years, i.e. in the current chairman's incumbency. Listed corporate bonds number twice the number of equities.

Even with these figures, the value of turnover volumes simply does not make it a viable proposition for the 12 stockbroking firms listed on the MSE's website. Half of these are founder members. Of the other six member firms, when the two major banks got their stockbrokers' licence in 2001, it was tantamount to the overnight creation of 100 island-wide outlets able to generate new MSE business.

So how does one explain the persistent niggardly turnover figures, especially in the light of the number of shareholders (say 55,000) in listed companies' annual reports? A proposed and long-discussed public seminar by the College of Stockbrokers, late last year, never saw the light of day for reasons best known to those who poured cold water over the initiative.

Within the industry the lackadaisical attitude inclines towards hoping for better times. Hope is not a strategy.

So the MSE's winter of discontent has well and truly extended beyond spring, as index heavyweights Bank of Valletta plc (BOV), HSBC Bank Malta plc (HSB) and GO plc (GO) again slumped to 2008 lows of €4.95, €3.94 and €2.90 respectively. More tellingly, the big banks are a staggering 47% and 43% off their March 2006 peaks. Isn't it ironic that when these banks traded at PEs in the high 20s, weekly turnover regularly topped several hundreds of thousands of liri (possibly millions of euros), while today's more attractive PEs barely attract a couple of hundred thousand euros? For the record, the two banks accounted for 75% of the week's equity turnover by value, which at €506,304 was the third lowest for 2008. As expected, the MSE index fell to yet another low of 4,358.269, down 2.13% for the week.

BOV got off to a fairly stable start, generally at the €5.05 level on Monday and Tuesday. It then sagged to €5 on Wednesday under the pressure of various sales orders, recovering to €5.05 in the final few deals. It was back at €5 on Thursday, shedding a further 5c to a year's low of €4.95 on a ludicrously low 38-share deal. The bulk of Friday's deals were also affected at this price for BoV to end lower for the sixth consecutive week. BoV which closed Friday 2% down, was the most active equity, accounting for 45% of the week's equity turnover by value with 45,686 shares changing hands for a value of €228,686. At the end of the session, best bids totalled 400 shares at €4.94 with offers for 617 shares at €4.98.

On Wednesday, BoV announced John Cassar White's retirement with effect from last Tuesday, and Mario Mallia's appointment in his stead. On the same day, Michael Borg Costanzi, Elvia George, Kenneth Farrugia and Peter Perotti were appointed chief officers.

In a similar vein to BoV, price movements in HSB between Monday and Wednesday were contained between €4.15 and €4.10. However, with scarce demand, sellers started to dump shares at the only support level available, with HSB first slumping to €4, then sliding further to €3.95 on Thursday. It shed another cent on Friday to close the week 4.6% lower. A total of 37,833 shares changed hands for a value of €151,564. By Friday's close, there was outstanding demand for 500 shares at €3.93 with offers for 2,700 shares starting at €3.94.

GO lost a cent to €2.94 on a single 1,250 share deal on Monday and continued lower, wilting like a flower to yet a new low of €2.90 on Tuesday. It maintained this price up to Thursday, the last day it traded, closing the week 1.7% down. At the end of the session, best bids totalled 330 shares at €2.795; offers for 1,925 shares started at €2.90.

Go announced on Friday that Forthnet's EGM approved an increase in the issued share capital up to €137,556,721.74 with pre-emption rights in favour of the shareholders as at the last business day prior to the ex-rights date, which will be determined by the board.

Malta International Airport plc saw a very erratic trading pattern on Wednesday, the only day it was active. It opened 10c lower at €3.25, fell to the bottom of the day's allowable trade range of €3.115, but recovered to €3.35 in the final deal to close unchanged. The day's - and week's - turnover amounted to just 3,800 shares for a value of €12,099. At the end of Friday's session, the best bid was for 1,500 shares at €3.10 while the best offer for 5,500 shares was at €3.349.

International Hotel Investments plc (IHI) was stable at €1.07 on Tuesday and Wednesday, rising to €1.085 on Thursday. It did not trade again, to close 1.4% up. This makes IHI the solitary positive performer for the week.

On Tuesday, IHI issued an interim directors' statement, confirming that the development agreement on the Metropole Hotel and 10 Whitehall Place in London, was signed by IHI, LFICO and Nakheel with The Crown Estate (UK) on April 15. The statement covered developments in the first quarter related to the company's properties in Lisbon, St Petersburg, Tripoli and Prague. Revenues in the same period at €24.72 million for the six properties, compared to €10.99 million on four properties in quarter one 2007. Gross operating profit more than quintupled to €7.28 million from €1.29 million in 2007.

David John Nicholson and Andrew John Watson were appointed non-executive directors of IHI effective last Thursday, the day of IHI's eighth AGM, at which all resolutions on the agenda were approved.

Fimbank plc (FIM) held on the $1.88 mark throughout the week, to close unchanged. Turnover was weak with just 8,300 shares changing hands.

An interim directors' statement last Tuesday, confirmed that the continued expansion of major developing countries, high commodity and energy prices as well as shipping rates at record levels continue to provide good profit opportunities for FIM. It further confirmed a profit of $36.5 million for FIM or $29.3 million for the group, from the sale of its 38.5% holding in Global Trade Finance Limited (GTF), to the State Bank of India Lombard Bank plc advanced slightly to €3.249 on Monday, but retreated on the other days it traded. It only lost 0.4% on Tuesday but stumbled to a new 2008 low of €3.127 on Friday to end 3.5% down.

Grand Harbour Marina plc (GHM) slumped to €2.05 on Monday, when its trade range was removed, on one deal for 9,134 shares. Tuesday's only other deal for 866 shares was effected at this price as GHM earned the week's worst performing spot, a heavy 10.9% down.

MaltaPost plc was stable at €0.80c on Tuesday, but sagged 6.3% to €0.75 on Wednesday. It did not trade again. The week's turnover totalled just 10,322 shares for a value of €7804.

Simonds Farsons Cisk plc (SFC), Global Capital plc (GCL) and Crimsonwing plc (CW) only traded on one day in very thin trade. The former was stable at €2.73 on a mere 100 share deal. GCL on the other hand dived 5.5% to €3on a 400-share trade on Tuesday as the trade range was removed on this equity, while CW lost 2% falling to €0.54 on turnover of 8,812 shares.

DTK issued a preliminary profit and loss statement on Wednesday and co-opted Joseph Roland Scerri as a non-executive director.

In the Government Bond market, turnover by value reached €12 million with 22 deals struck in 12 stocks. In the corporate bond market, there were 22 deals for a total turnover value of €145,845. Turnover value in the Treasury Bill market totalled €4.99 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.