From their March 17 lows, the world's major markets have come back strongly, led by Hong Kong's Hang Seng Index (+19%) and Japan's Nikkei (+16%). The UK's FTSE 100 is up by 14%, while on continental Europe, the German Dax is ahead by 13% and France's Cac 40 stands 11.5% higher. That shows how profitably markets can turn around in a couple of months.
While in the US the Dow Jones closed at a 2008 high of 13,058.20 on May 2, it is still the 'worst' performer of the seven major indices, 'only' 10% ahead from its March 10 low this year. On the other hand, the tech-laden Nasdaq performed much better, registering a 13% gain from its low of 2,169.34 hit on the same day - exactly two months ago yesterday.
Contrarily, on the local market, the MSE Index fell for the fourth consecutive week to a yet another 2008 low. At the risk of readers thinking we are just cutting and pasting the previous three weeks' reports, Bank of Valletta plc (BOV) and HSBC Bank Malta plc (HSB) have again hit new 2008 lows, which explains the Index's sagging to 4,456.884 on Friday. While equity turnover tripled from the previous holiday-shortened week to €867,300, it is still a lethargic shadow of what a thriving market should produce and light years away from the all-time record weekly turnover of Lm7.97 million (€18.56 million) for the week starting February 20, 2006.
This week saw four equities end in the black, led by MaltaPost plc's (MTP) 6.7% jump, followed by Simonds Farsons Cisk plc's (SFC) 5% gain. Malta International Airport plc (MIA) and International Hotel Investments plc's (IHI) returns were a more modest, 1.5% and 0.9% respectively. On the other hand, seven stocks closed in negative territory, headed by Datatrak plc's (DTK) 4.6% drop. BOV was next in line with a 2.7% loss, while Fimbank plc (FIM) ranked third in the laggard's list, down 1.6%.
BoV started the week a cent ahead at €5.20. It spent Monday and Tuesday in a narrow range of €5.185 and €5.209 ending Tuesday, the last day it traded cum div, at this level. On Wednesday, BoV fell by the exact amount of gross dividend being paid out, i.e., 13c5, with all the day's 3,592 shares executed at €5.074.
However, it continued lower, ending Friday at a new 2008 low of €5.05 - 2.7% down on the week. BoV accounted for 26% of the week's equity turnover by value with 43,535 shares changing hands for a value of €224,346. At the end of the session, best bids totalled 124 shares at €5.05 with offers for 7398 shares at €5.07.
HSB dropped 2c to €4.17 at Monday's open but recouped the loss by the close. It was relatively stable around the €4.18 mark till Wednesday but lost ground over Thursday and Friday, ending the week at a new 2008 - and 30-month low of €4.13. HSB lost 1.4% on the week. Trading in this equity amounted to a total of 39,940 shares, worth €166,515.
By Friday's close, there was outstanding demand for 4,993 shares at €4 with offers for 200 shares starting at €4.149.
HSB announced on Thursday that with effect from last Wednesday, Alan Richards was appointed executive director following the resignation, effective last Monday, of Shaun Wallis. Mr Wallis will be taking up an appointment with HSBC in Brazil.
GO plc (GO) only traded on Friday when 3,600 shares changed hands as the price fell 1.5% to a previously tested low of €2.95. At the end of the session, best bids totalled 3,500 shares at €2.915 with offers for 990 shares at €2.95.
In an interim directors' statement issued after the close of trading on Friday, Go announced that results for the quarter ended March 31, 2008, are in line with its expectations and at levels similar to those registered for the same period in 2007.
The group increased its overall client base by 1.2% due to continued growth in the broadband, television and mobile sectors. Consequently, the group maintained its turnover levels despite a decline in traditional fixed-line voice services.
During the first quarter, the group embarked on a programme to streamline its activities. Simultaneously, Go's further controls of its operating costs has seen profitability maintained at the 2007 levels.
The statement confirmed Go's continued investment in network upgrading and the commencement of the process leading to the eventual deployment of a second international submarine link from Malta to Sicily, and onto the Pan-European network operated by Interoute.
Earlier this year, the group announced its acquisition of 50% of the share capital of Forgendo Limited, which has subsequently acquired a shareholding of approximately 21% in Forthnet SA, a Greek telecommunications operator providing broadband and fixed voice services. The latter, in turn, purchased the entire share capital in NetMed NV and Intervision (Services) BV.
Notwithstanding these investments Go's balance sheet remains strong, and is driven by continued healthy cash generation from operations. Further investments in Forgendo Limited are expected to be financed through bank borrowings which will leverage the group within acceptable levels.
MIA was static at €3.30 on Monday, advancing 5c on good buying interest of 17,256 shares on Tuesday. It maintained this price till Friday, to close the week 1.5% ahead. The week's volume totalled 22,800 shares which changed hands for a value of €75,920.
At the end of the session, best bids were for 1,500 shares at €3.098 with offers for 6,506 shares at €3.35.
IHI was steady at €1.06 on Tuesday, rising to €1.07 on Friday, the only other day it was active. Volume for the week totalled 29,750 shares.
FIM skimmed the $1.90 level between Monday and Thursday, but traded lower at $1.895, closing at $1.88 on Friday. Volume was thin with turnover for the five days totalling 19,642 shares.
Lombard Bank plc traded post the four-for-one share split on Monday, maintaining the same equivalent price at €3.25. It slipped a fraction to €3.249 from Tuesday to Thursday, closing the week 0.3% lower at €3.24 - a new 2008 low.
Middlesea Insurance plc shed 2c to €3.41 maintaining this price on Monday and Tuesday, the only days this equity registered trade. Turnover for the two days was poor at 1,180 shares.
SFC made good progress on the back of the excellent results released the previous Friday. It opened the week 5c ahead and closed at €2.70, gaining another 3c to a 2008 high of €2.73 on Tuesday, the last day it traded, up 5% on the week.
MTP gained 3.5 cents to €0.785 in a single deal for 20,000 shares on Tuesday. It accelerated to 80c on Wednesday with 28,755 shares changing hands. It maintained this price till the end of the week, to end as the best performer, ahead by 6.7%.
Plaza Centres plc (PZC) was stable at €1.72 in heavy trade with 118,049 shares changing hands on Tuesday for a value of €203,044. As a result, PZC registered the second highest turnover by value for the week, an unusual event for one of the lower capitalisation stocks.
DTK shed 4.6% to €0.291 on a 3,000-share deal on Monday - the only day it traded.
This 4.6% drop earned DTK the week's worst performer title - which it can add to that of the all-time worst performance of any listed company on the MSE (albeit the Alternative Companies List's only listed equity). DTK was launched at €2.329 (Lm1) on November 27, 2000, and has therefore had 87.5% wiped off its IPO price.
In the Government Bond market, turnover by value reached €1.8 million with 50 deals struck in 14 stocks. In the corporate bond market, there were 43 deals for a total turnover value of €303,587. Turnover value in the Treasury Bill market totalled €1.02 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.