Lots of sour, then some sweet

Seven may be a lucky number for some. However, the seventh month of the year was definitely not so for the Exchange. The Malta Stock Exchange (MSE) Index slumped 7.2% for the worst July on record - more than twice as much the 3.34% drop in July 2001.

It tumbled below the 4,000 level for the first time in 34 months, touching a low of 3,933.865 on Friday - a level last seen on September 29, 2005.

This could well have been the week which saw the start of the last leg of the bear market which began 28 months ago.

For the week, the Index dropped by 5.4%, but the peak to trough 28-month bear market collapse now stands at 41%. The last bear market stretched a full 33 months and saw the index shedding 56.5%.

The very large bulk of this week's drop is attributable to the mauling suffered by indexheavyweight HSBC Bank Malta plc (HSB) following the half-yearly results published the previous Friday, and a reference by CEO Alan Richards to a review of HSB's dividend policy.

HSB plunged a jaw-dropping 14.5% on the week as its interim results, digested over last week end, resulted in severe heartburn leading investors to dump shares often at the bottom of the trade range.

Given HSB's May 16 Interim Report, forecasting lower profits, was the panic justified?

The largest market capitalisation stock had a torrid week, with its market cap falling below the €1 billion mark. On Monday it was practically in free fall, as trading opened 10c lower at €3.70, then tumbled to within a whisker of the bottom of the allowable trade range at €3.55 - all this within 23 seconds of the open.

The only other deal on Monday was effected at the bottom of the range at €3.542. Tuesday saw another onslaught with a flurry of deals all executed at €3.375 - again the bottom of the trade range.

The price continued to sag on Wednesday, albeit not in 7% tranches, down to €3.289.

Thursday brought a fleeting respite as HSB picked up to €3.34 only to crash another 9c on Friday, the last day it was trading cum dividend (of a net €0.77).

In total 87,327 shares changed hands for a turnover by value at €294,840, which accounted for just over half the total equity turnover by value on the MSE. At the end of trading, a bid for 1,000 shares was at €3.22 with offers of 1,584 shares at €3.25.

Bank of Valletta plc (BOV) had a lame start to the week, down €0.021c to €4.599. On Tuesday, a selling spree, seconds from the closing bell, dragged BOV still lower to €4.50 while Wednesday's undecided session saw this equity hit a new 2008 low of €4.47.

The last deal of the week was Thursday's single deal for 2,000 shares at €4.50 for BOV to end the week 2.6% down. Turnover for the week totalled 27,224 shares for a value of €122,573. At the end of Friday's session, bids for 600 shares started at €4.40 while supply of 162 shares was at €4.499.

A sweet at the end of a very sour week was BOV's interim directors' report highlighting "a marked improvement in profitability during the third quarter, when compared (on a pro-rata basis) with the results for the six months through to March 31, 2008."

Considering the 56% drop for that particular half-year, it should not take too much to improve on. But then again, BOV is today aware that its choice of terminology is thoroughly vetted, and no irrational exuberance will be forgiven if figures do not live up to forecasts.

GO plc was generally stable, giving up a cent to €2.50 on Monday which was recovered on Thursday, the last day it dealt. A total of 15,520 shares changed hands for a value of €38,866. At the end of Friday's session, a bid for 580 shares was present at €2.51 while supply of 3,900 shares was available at €2.52.

International Hotel Investments plc traded unchanged at €1.06 throughout the week on a total turnover of 22,671 shares for a value of €24,036. Fimbank plc too barely moved, adding a slim 0.5% as it traded in a very tight range of $1.875 to $1.885, closing at this latter price with a total of 56,821 shares changing hands for a value of €68,325.

There was one deal for 1,000 shares in Plaza Centres plc on Tuesday. This was effected at €1.70 - 1.7% lower. Crimsonwing plc traded on Thursday, stable at 53c in a single deal for 10,000 shares. Its financial statements for the year ended March 31, 2008, published on Tuesday, showed a 35% jump in revenue growth of €9,552,567 over the previous year.

The sterling's slide impacted negatively on the value of revenue - a 14% decrease.

Pre-tax profits at €909,324 were 17% lower, also due to sterling's decline. Direct costs increased by 54% as a result of the increased sales of product licences and associated consultancy support from vendors.

Earnings per share fell by 20% from €0.056 to €0.045. A net interim dividend of €0.01 per share will be paid to shareholders on the register on August 8, i.e. those who would have purchased shares by next Tuesday.

Middlesea Insurance plc traded twice on Thursday when 405 shares were traded, closing at the unchanged price of €3.34.

On Friday, three deals for 1,000 shares in Global Capital plc pushed the price 2.2% lower to €2.444, a new 2008 low. Grand Harbour Marina plc advanced a minimal 0.2% to €2.30 on a single trade for 10,000 shares, while Maltapost plc gave up 2c to €0.75 on three trades totalling 4,000 shares.

MTP issued an interim directors' statement announcing that during the first quarter (April to June 2008) of the second half of the financial year it achieved its performance objectives and there is no reason to believe that the objectives set for the financial year ending September 2008 will not be met.

Lombard Bank plc, Simonds Farsons Cisk plc, Malta International Airport plc, Medserv plc, 6PM plc, RS2 Software plc and Datatrak plc did not trade this week.

Close-ended investment scheme Santumas Shareholdings plc announced on Monday that the net asset value per share is €4.352, as compared to the June 30, 2008, Net Asset Value of €2.549 - a 70.7% increase in four weeks.

In the Government Bond market, turnover by value amounted to €6.1 million with 45 deals struck in 16 stocks. In the corporate bond market, there were 29 deals for a total turnover value of €327,540.

Turnover value in the Treasury Bill market totalled €2.9 million. Subscriptions for the issue of €100 million in the 5.1% MGS 2014 (iii) Fungibility Issue (at €99.45) and 5% MGS 2021 Fungibility Issue (at €97.20) open tomorrow and close on Wednesday, or earlier at the discretion of the Accountant General.

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.