Last week’s article was my 300th contribution to the Times of Malta Business, and this milestone made me reflect on the initial objectives of my contributions and whether my goals have been met.
It was May 2007 when my first article was published. When looking back at the first contributions of 2007, I feel my articles have evolved throughout the years, giving more in-depth analysis to the reader. The objective of my press interventions was to fill a void in financial journalism to ensure that investors are in a position to follow local and occasionally international financial market developments by gaining access to weekly articles on various topics and specific company developments.
Unfortunately, few people may have had access or time to search for the regular company announcements issued by the locally-listed companies beforehand, and the aim was to present such information in a manner which would be easily understood and accessible by retail investors.
My initial objective was therefore mainly aimed at improving investor education, and although feedback is received on a regular basis from a number of investors showing the steady readership over the years, I still feel that despite writing over 450,000 words during the past six years, a lot still needs to be achieved in this respect.
When one meets investors during the Annual General Meetings of some of the companies it is very evident that knowledge on some basic principles on the mechanics of the stock market is still lacking.
It is also worth recalling that initially companies were very sceptical about divulging information. At times, some companies were reluctant to accept to meet up on a one-to-one basis to provide clarification on announcements of a financial or strategic nature which would then be used in my contribution to explain such matters to the market at large.
However, it is reassuring that the mentality of a large number of the companies listed on the Malta Stock Exchange has changed significantly over the past six years. Many companies are now not only eager to provide me with inform-ation for publication but they are also taking the initiative of issuing regular and more detailed announcements and news releases. This confirms that many companies have understood the importance of timely communication with the market, something which I mentioned countless times in many of my articles over the past six years.
Regular dissemination of information is important to create liquidity in a company’s securities through higher trading activity. In fact, an increase in trading activity was registered in a number of shares listed on the Malta Stock Exchange in recent months, confirming that investor relations is an important aspect of a company once it obtains a listing on a publicly-traded exchange.
This is something that needs to be taken into consideration once a company decides to go public. Moreover, it is also not a coincid-ence that the more regular and detailed company announcements also led to a higher degree of responsiveness in share prices to company developments.
Some recent examples are worth mentioning, such as the significant volatility and subsequent recovery in the share price of GO plc in the past year as well as the sizeable upturn in the share prices of three IT companies accompanied by a surge in activity as the market responded to the new international contracts awarded and the improved financial performances.
It is also not a coincidence that the more regular and detailed company announcements also led to a higher degree of responsiveness in share prices to company developments
On the other hand, it is disappointing that some companies still do not feel the need to organise regular meetings with the financial community and provide more meaningful information to shareholders and the market at large on financial and strategic developments. This will inevitably lead to less focus by retail and institutional investors on such companies, and as such a less liquid market for its shares, which is ultimately not in the interests of the company itself and its shareholders.
My articles over the past six years mainly provided readers with updates on individual companies as well as new bond and equity offerings. Moreover, reviews of local and international market developments were also published to help investors understand the changes taking place in order to assist them in the positioning of their investment port-folios. Various contributions also focused on some basic investment concepts and important financial metrics for individual investors to more easily understand specific investment instruments.
It is my intention to keep focusing on some of these important fundamental principles, although it may seem somewhat repetitive for the more seasoned and know-ledgeable investors.
Other articles dealt with the local financial services sector in general, including specific views aimed at government and regulat-ory authorities in order to assist the further development of this important sector. In fact, specific reference was made in the past to the need to reconsider the Listing Policies that had come into force in August 2010 which stalled the new issuance bond market. These have since been amended and there are early indications that companies have come to terms with the changes as a number of bond issues are expected to hit the market during the final quarter of the year. Irrespective of this, the Stock Exchange must look into various initiatives to attract more companies to consider a listing, thereby deepening the market for the benefit of all concerned.
My ultimate objective is to continue to improve the level of education among the investment community. Although one must admit that it is quite a challenge to come out with a different topic each week, I am determined to continue such a task on a regular basis, hoping that the financial market will continue to develop with more companies using the market for equity and bond listings to provide the investing public with much-sought-after local investment options.
Meanwhile, directors and top management of those companies already among the listed entities should do their utmost to provide timely and detailed information to the market and make every effort to organise regular meetings in order to assist analysts and financial journalists to perform their duties in the best way possible.
Rizzo, Farrugia & Co. (Stockbrokers) Ltd (RFC) is a member of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the issuer/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC nor any of its directors or employees accept any liability for any loss or damage arising from the use of all or any part thereof, and no representation or warranty is provided in respect of the reliability of the information contained in this report.
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Edward Rizzo is a director at Rizzo, Farrugia & Co. (Stockbrokers) Ltd.