The darkest hour is just before dawn

At last Friday's closing prices - both fresh lows for this year - the two largest capitalisation stocks on the Malta Stock Exchange, Bank of Valletta plc (BOV) and HSBC Bank Malta plc (HSB), yield 8.08% and 7.95% respectively. HSB's yield would exceed 10% if their special interim dividend were included. This yield is twice what each bank pays on a one-year fixed deposit.

Add to this the fact that both banks are over 45% below their all-time high. It's true that in the last bear market, BOV had bottomed at 60% below its previous all-time high, and HSB at 55% below. So those inclined towards bottom fishing can bide their time - in the full knowledge that they will miss the rebound when it happens. Shrewder investors will recall that the darkest hour is just before dawn. How much darker will it get before sunrise?

BOV found a tenuous floor at €4.95, from its Monday open to its first deal on Thursday, after which it promptly dropped 5c under a steady stream of small sale orders, drifting lower to close the day at €4.89. Friday brought no respite as it declined further, to end the week at €4.851 - 2% down on the week. Total turnover amounted to just 22,282 shares, for a market value of €109,618. At the end of the week, total bids for 2,500 shares were at €4.851, whereas offers of 2,204 shares started at €4.95.

HSB was equally brake-free, slipping further to €3.89 on Monday and €3.88 from Tuesday till Thursday morning, when the price again gave way, sliding to €3.84. The tune was not altered on Friday as HSB lost 4c to close the week at yet another new 2008 low of €3.80 - 3.5% down on the week. Turnover for the five days totalled 44,807 shares for a value of €173,242. At the end of trading, bids for 2,000 shares were at €3.751, while the best offer for 6,280 shares stood at €3.80.

HSB issued an interim directors' report in the late afternoon of the previous Friday, reporting satisfactory progress for the year to May 16. It referred to a general slowdown in business activity due to the currency transition to the euro and the general election. Profits before tax were lower than for the same period last year. Interest income was below expectations because of tighter margins and heightened competition, while non-interest income was also lower, primarily due to significantly reduced foreign exchange dealing income as a result of the euro adoption.

GO plc (GO) traded a fraction lower at €2.899 in a single trade for 420 shares on Monday. It was only active again on Thursday, down to €2.884 on 6,700 shares, falling again on Friday to end the week at €2.80 - 3.45% lower. Turnover for the week totalled a poor 9,360 shares for a value of €26,812. At the end of trading, best bids totalled 330 shares at €2.80 with a supply of 1,500 shares at €2.889.

Malta International Airport plc (MIA) got clobbered! It fell 7.1% to €3.111 when 13,700 shares changed hands in three deals on Friday. It ended with best bids, for 10,000 shares, at €3.11 and offers for 1,000 shares starting at €3.34. For the yield-conscious, MIA returns 5.75% gross at this price.

On Monday, MIA issued an interim directors' statement for the year to May 12. The financial position has remained sound and the performance has been in line with projected results. The traffic for the first four months of the financial year increased at a higher rate than anticipated and the prospects for the rest of the year look good.

Fimbank plc (FIM) was steady at $1.88 for the whole week with only minute variations on Thursday when the price hit an intra-day high of $1.89. However it was back at $1.88 on Friday - by far the busiest day - when turnover topped 110,000 shares. FIM was the most heavily traded equity for the week with volume of 175,984 shares accounting for just under a third of the week's equity turnover by value.

International Hotel Investments plc only traded on Wednesday, the day before the bonus shares were admitted to trading. Wednesday's deals were effected at €1.09 and €1.085 for IHI to end the week unchanged.

Lombard Bank plc (LOM) crashed to a new 2008 low of €3 on a 200-share deal on Thursday. Friday's deals were effected at the same price for LOM to end the week nursing a 4.1% loss.

On Friday, LOM issued an interim directors' statement covering the first quarter of 2008. The period was influenced by the general election and the euro transition. Results were satisfactory across traditional income streams and performance for the period in line with expectations.

Turnover in Middlesea Insurance plc (MSI) was limited to just 444 shares on Tuesday as the price advanced 2c, or 0.6%, to €3.43.

Grand Harbour Marina plc (GHM) too was only active on Tuesday with one deal effected at €2, while the second and final one was struck at €2.05 for GHM to close unchanged. On Thursday, GHM issued an interim directors' report stating that during the first quarter the sale of a 30-metre super yacht berth was concluded, resulting in a better performance than during the first quarter last year.

GlobalCapital plc (GCL) lost 5c or 1.7% to €2.95 on Wednesday's single deal for 401 shares. It issued an interim directors' statement on Monday covering this year till May 12, and referred to the terms agreed 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 persisting disruption in global financial markets continued to adversely affect GCL's portfolio of financial investments, resulting in a decrease in the operating performance of the company's main divisions, when compared to the same period in 2007.

Simonds Farsons Cisk plc (SFC) enjoyed an enthusiastic start to the week with 12,445 shares changing hands, 1 cent up at €2.71. It maintained this price for the rest of the week to end 0.4% ahead. On Monday, SFC announced that the AGM will be held on June 26.

Crimsonwing plc was stable at €0.54, with the week's turnover of 29,846 shares for a value of €16,114 effected at this price.

Maltapost plc (MTP) was stable at €0.75 between Tuesday and Thursday, advancing one cent on Friday to end the week up 1.3%. Total turnover amounted to 24,996 shares for a value of €18,767.

On Thursday, MTP issued interim financial statements for the six-month period ended March 31. MTP registered a pre-tax profit of €2.6 million, an increase of 157% on the same period last year, with earnings per share increasing by 160%. Turnover increased by 13.4% to €10.96 million. Apart from an overall increase in business, performance was enhanced by increased volumes during the general election, and philatelic/numismatic issues commemorating the introduction of the euro. In the postal services industry, the first half of the financial year is characterised by higher activity and volumes than the second half.

On Monday 6PM plc announced that the board expects results for the first half of the current financial year to be below those during the last period. While 6pm is too small to be affected significantly by changes brought about by the worldwide commercial climate, the board has decided to change its business focus to take advantage of emerging opportunities.

On Monday Datatrak plc issued the interim directors' statement stating that the restructuring approved by the EGM has formally come into effect, enabling the group to proceed with its international growth plans. Group revenue for 2008 was estimated to be slightly above €4 million. The board stated that overall, the operational performance in the first four months of 2008 is in line with forecasts.

In the Government Bond market, turnover by value reached €2.05 million with 29 deals struck in 15 stocks. In the corporate bond market, there were 23 deals for a total turnover value of €196,050. Turnover value in the Treasury Bill market totalled €3.96 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.