Will Obama be the next FDR?

There is no gainsaying the feeble turnover on the Malta Stock Exchange is undoubtedly being caused by the fear that has gripped international markets. These are now looking beyond the still-to-be-resolved credit crunch into the confirmed start of a worldwide economic recession.

In the same way as British Prime Minister Gordon Brown will be judged by history as having saved the UK from economic implosion (fingers tightly crossed), what the world needs now is the voting into office, next Tuesday week, of a US President with the convincing charisma and political nous of Franklin Delano Roosevelt (FDR).

In his inaugural address on March 4, 1933, when the US banking system had collapsed, and the Great Depression was at its nadir, Roosevelt, admitting that "only a foolish optimist can deny the dark realities of the moment", made his galvanising statement: "the only thing we have to fear is fear itself".

In fairness, between his victory at the polls in November 1932 and his inauguration, he had four months to prepare his takeover from President Herbert Hoover, who presided over the disaster of the 1929 stock market crash. Since then, Congress changed the inauguration date to January 20.

Barack Obama's current, and apparently insurmountable, lead in the opinion polls, virtually guarantees the entrance of the first black man into the White House, on January 20, 2009. Obama does not have Roosevelt's presidential lineage, which is traceable to his uncle Theodore's presidency between 1901 and 1909. But will Obama's undoubted oratorical skills be matched by an ability to demonstrate the considerable powers of leadership needed in the current crisis?

Would a president Obama exhume and re-pristinise the Glass Steagall Act passed on June 16, 1933 - ironically removed from the statute book, late in 1999, by his fellow Democrat Bill Clinton?

Meanwhile, on the Malta Stock Exchange, apathy reigns supreme in the equity market. The worst weekly equity turnover volume this year (€294,210) was for the one-day trading week, starting and ending on January 4.

So this week's €296,500 - although technically ranking as the second lowest - effectively takes the wooden spoon since the volume was spread over a five-day week.

Understandably, with such poor turnover figures, it comes as no surprise that equities did not trade; only 50% of the 18 listed equities saw some activity with Bank of Valletta plc (BoV) and HSBC Bank Malta plc (HSB) accounting for 74% of the week's total.

The previous week's gains were more than undone as BoV tumbled a bitter 8.1% to a 2008 and multi-year low of €3.40, GO plc (GO) reversed 4.8% to €2, while HSB erased the previous week's gain of 3.45% to a near identical loss of 3.3%.

With all index heavyweights down, the MSE index sank to a 2008 and 39-month low of 3,409.554. There were no gainers this week. The closest to some form of good news was Fimbank plc (FIM) and Maltapost plc (MTP) which held their prices to end the week unchanged, at $1.60 and €0.818 respectively.

BoV gave up 10c to €3.60 on Monday. The negative start set the tone for the rest of the week, which saw this equity give up another 5c on Wednesday. After a stable session on Thursday, BoV went into free fall on Friday. Bouts of selling saw the price go into a tailspin from a €3.54 open to a €3.40 close, in the busiest day which saw half the week's turnover. For the week, BoV was down a staggering 8.1% on a total turnover of 31,874 shares for a market value of €112,742. At the end of trading, the best bid was for 1,000 shares at €3.37, with supply of 3,120 shares at €3.50. On Thursday, the company announced that the board will meet next Friday to consider and approve the group's and bank's audited financial statements for the year ended September 30, and to consider the declaration of a final dividend.

HSB started out steady at €3, but lost ground on Tuesday as it fell back, almost deal by deal, to close at €2.90. It ping-ponged between €2.95 and €2.90 for the rest of the week, and closing Friday at this latter price - 3.3% lower.

In all, 36,033 shares changed hands for a value of €105,985.

At the close of trading, bids for 6,400 shares were at €2.85 while supply of 4,742 shares started at €2.90.

Turnover in International Hotel Investments plc was very feeble; the week's turnover consisted of just three deals for a mere 3,000 shares with a market value of just €2,916. The final deal was effected at €0.968 - 1.2% down on the week. At the end of Friday's session, the best bid was for 1,050 shares at €0.955 with supply of 8,000 shares at €0.968.

GO held on to its €2.10 price tag on Monday, trading minimally lower on Tuesday on just 800 shares. It continued consistently lower for the rest of the week, closing Friday at €2, down by 4.8%, on a total turnover of just under 21,000 shares for a value of €42,701.

At the end of trading, bids for 1,000 shares started at €1.98 while supply of 625 shares was available at €2.

FIM was one of the few equities to end the week stable. It did not move from its $1.60 price and the week's meagre turnover of three deals was for 5,070 shares worth €6,151.

Lombard Bank plc too was steady, down just 0.03% at €2.948 in the week's single deal for 359 shares, effected on Tuesday.

RS2 Software plc was only active on Thursday and Friday. It first gave up 2.3c to €0.78 in two deals for 7,500 shares, then lost another cent in Friday's 5,000 share deal to close the week 4.1% down.

Apart from being a 2008 low, this €0.77 cents close is 3 cents below its June IPO price.

MTP's only traded on Monday at the unchanged price of €0.818 on turnover of 5,500 shares, while Grand Harbour Marina plc's single deal for 5,000 shares was effected on Thursday - 2.2% lower at €2.15.

On Monday, Medserv plc announced the appointment of Carmel (Karl) Bartolo as financial controller, with effect from last Monday.

On Thursday, Simonds Farsons Cisk plc announced that Antoinette Caruana was appointed as group human resources manager (designate) with effect from February 2, 2009. There was no activity in either of these two equities.

The €50 million issue of the 5.1% Malta Government Stock 2014 (iii) Fungibility issue and the 5% Malta Government Stock 2021 Fungibility issue, closed last Wednesday.

In the Government Bond market, turnover by value amounted to €3.4 million with 40 deals struck in 18 stocks. In the corporate bond market, there were 73 deals for a total turnover value of €1.07 million. Turnover value in the Treasury Bill market totalled €2.5 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.