Bear bludgeons €2bn off banks' market cap

This bear market, the second major one in the Malta Stock Exchange's history, makes Al Qaeda look like kindergarden as far as its potential for destruction on a large scale.

Market capitalisation has been massacred by the 58% drop in the share price of HSBC Bank Malta plc (HSB) since its all-time high, translating into €1.2 billion being wiped off its market cap - from €2.03 billion to €846.34 million.

Bank of Valletta plc's (BOV) figures are equally spine-chilling. The 56% decline in its share price from its all-time high has savaged €718 million from the market cap of Malta's second largest bank - from €1.29 billion to €573.3 million. On Thursday, BOV even lost second place in market cap rankings to International Hotel Investments plc (IHI), whose market cap at €586.4 million, now exceeds BOV's by €13 million.

Even if IHI's number two ranking has been achieved by default, it is still a monumental achievement for Alfred Pisani. This Maltese entrepreneur's vision, drive, ambition and dedication to excellence, has seen a small family company develop, merge and grow into a multinational in the hotel, tourism and property development industries. IHI's achievement was the only silver lining on one of the dark clouds in the overcast skies which hung heavily over the MSE last week.

The MSE Index this week had another 4.3% lopped off, which, added to last week's 5.4%, totals a cumulative 9.4% collapse in the past two weeks alone. The loss for the year to date stands at 24%. The index heavyweights, HSB and BOV, slid further down the slipway sinking to fresh multi-year lows amid very poor volumes.

HSB again suffered a very bad drubbing. It started the week on a fairly contained note, down 5c to €3.20 as it went ex-div. But this was barely a taste of what lay in store for the rest of the week as it dived headlong for the next four sessions: down 2.8% to €3.11 on Tuesday, 1.9% to €3.05 on Wednesday, 3.3% to €2.95 on Thursday, and 1.7% to €2.90 on Friday. For the second week on the trot, HSB again suffered a double digit loss, down a walloping 10.8%. The closing price of €2.90 is the lowest since 28th June 2005, wiping out three years' gains.

Turnover for the week, however, was not particularly busy with just under 51,000 shares changing hands for a value of €152,891. At the end of trading, best bids for 1,542 shares started at €2.90 while supply of 3,618 shares was available at €3.15.

BOV also suffered a bruising fall, in possible sympathy with HSB. It opened on Monday only marginally lower, closing down a few cents at €4.479. On Tuesday, however it tripped 1.8% down to €4.40, and continued to lower down to €4.399 on Wednesday, and €4.30 on Thursday. It clung to this price on Friday to end the week 4.4% lower. In all, 30,598 shares traded for a value of €133,073. At close of trading demand for 1,000 shares was at €4.25 with the best offer of 6,865 shares at €4.299.

GO plc (GO) only traded on Monday and Friday, maintaining near status quo around the €2.50 mark. However, during Friday's session, it hit an intra-day high of €2.60 only to fall back to €2.50 as support fizzled out, closing the week at this level - down 1c. Turnover for the two days totalled just 10,700 shares for a value of €27,325. At the end of Friday's session, the price was supported by a bid for 3,880 shares at €2.50, with supply of 10,260 shares at €2.60.

Go announced on Monday that the board is scheduled to meet on August 28 to discuss the half-yearly financial statements for the period January 1 to June 30, 2008.

IHI put in a token appearance on Friday when just 478 shares changed hands in a single deal at the unchanged price of €1.06.

Trading in Malta International Airport plc (MIA) was also poor with the week's only three deals for 4,300 shares effected on Tuesday. As tourist arrival figures showed healthy upward levels, MIA's share price ignored the positive news and moved in the opposite direction, falling 2.6% to a new 2008 low of €3.04.

Fimbank plc was static at $1.885 on Tuesday and Thursday, the only two days it was active with a turnover of 64,628 shares for a value of €78,675.

A number of small cap stocks were stable: Plaza Centres plc traded unchanged at €1.70 on Tuesday with 24,800 shares changing hands. Crimsonwing plc was static at €0.53 for all the week's seven deals with a turnover of 71,500 shares. Maltapost plc too was steady at €0.75 for the week's turnover of 6,241 shares.

Datatrak plc traded on Friday after a three-month absence, closing down 0.3% to €0.29 with 13,424 shares swapped for a value of just over €4,000.

RS2 Software plc announced on Wednesday that the board is scheduled to meet next Tuesday to consider and approve the half-yearly financial report for the period ended June 30.

Medserv plc announced on Thursday that the board is scheduled to meet on August 25 to consider and approve the half-yearly financial report for the period ended June 30.

Middlesea Insurance plc (MSI) did not trade this week. On Friday, it issued its interim results for the six months ended June 30, 2008. For the first time in its 27-year history, MSI has registered a loss in a reporting period. From pre-tax profits of €4.5 million in the first six months of last year, MSI registered a pre-tax loss of €2.1 million - a 146.7% drop. Earnings per share dropped from a positive 10c8 to a negative 6c2.

This happened notwithstanding an increase of 5.8% in turnover, 23.3% in gross premiums written, and 4.3% in total assets. On the other hand, return from investments, which include the unrealised capital movements for the period under review, reduced sharply from an income of €2.98 million in 2007 to a loss of €3.01 million in 2008. Gross Technical Reserves, as at June 30, increased by 7.7% over December 31, 2007 reserves of €174 million, to €187.3 million.

MSI reported that the sharp downturn in the financial markets had a strong and direct impact on the group's performance. The fair value losses on the investment portfolio for the first six-month period of 2008 amounted to €5.9 million, as compared to a marginal gain of €0.16 million recorded in the previous year.

The board, as it did last year, is not proposing the payment of an interim dividend for the half-year.

In the Government Bond market, turnover by value amounted to €4.03 million with 43 deals struck in 13 stocks. In the corporate bond market, there were 44 deals for a total turnover value of €384,030. Turnover value in the Treasury Bill market totalled €1.84 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.