Trading on the Malta Stock Exchange ended the shortened year-end week with a modest gain and a new high for 2009. The last trading day of the year occurred last Wednesday with the index reaching its highest level of 3460.553, and 0.49% higher than the previous week.
Although this week consisted once again of three trading days, volume was unusually on the high side and mostly concentrated in the three equities, Bank of Valletta, HSBC Bank Malta, and Middlesea Insurance plc. A total of nearly 259,000 shares were dealt across 160 deals last week.
The performance on the local exchange in 2009 has therefore ended on a positive note with an improvement of 7.87 per cent from the closing level of 3,208.215 recorded at the end of December 2008. Several issues arise upon interpreting the performance of the local market.
It would make most sense to view the market movements on a longer term rather than solely within the parameters of the past 12 months mainly due to the sharp market disruption or shock occurring within the past two years.
Seen in that context, the local market is still very heavily below the peak reached back in January 2008 when the index was at 5,053.13. The local index did indeed sustain the steep downward trend started in January 2008 to reach a low of 2,636.39 this year towards mid-April. The whole downward move meant a depreciation of the index by circa 48%.
Subsequent months, however, saw the index recover albeit in a haphazard manner to reach last Wednesday's level of 3460.553, or a jump upwards of 31%. Nevertheless, the index is still well below the peak by a significant 32%.
On comparison with major indices of developed countries, the Malta Stock Exchange index has underperformed significantly this year.
This underperformance has resulted from several factors; the main reasons being the sharp decline in a good number of low capitalised companies share prices and also a significant event affecting a single company listed on the exchange. Given that the local exchange is not as broad and deep as that of most countries, the impact felt on this single company was large enough to depress the local index overall.
Also worth mentioning is the great divide between winners and losers on the exchange given the huge difference between the best performer and the largest decliner.
Low trading volumes in some of the smaller capitalised companies meant that pricing of these companies (which were most hardly hit) are still in a catch-up mode.
The best performing equity for the year has been Bank of Valletta plc with a rise of 33.83% over the past 12 months. Little change occurred last week yet volume traded in this stock was high.
This stock moved very similarly to international banking equities which saw their shares continue in their decline till March only to recover steadily as confidence re-emerged in the following months. In fact, the equity traded at a low of €2.001 and a high of €3.95 although closing the year at €3.87.
On a very similar note HSBC Bank Malta plc recorded a hefty rise of nearly 20% this year with its share price moving very much in tandem with the above equity and the general financial equities abroad. This equity fell slightly during last week after having traded at a low of €2.43 and a high of €3.27 in 2009 but closing last Wednesday at €3.23.
Once again both these equities have still a long way to recover from their 2008 peaks yet their performance this year was nevertheless very encouraging.
Following a hefty loss in the share price of Go plc over the past two years, the upward move this year amounted to 19.86%. Most of these gains were achieved in the last quarter of the year.
Medserv plc shares soared significantly since the end of September, improving by 6.33% year to date. Volume traded in this equity, however, was often very light as only 192,000 shares changing hands in 2009.
Simonds Farsons Cisk was another equity with a positive performance last year with its share price edging nearly 4.4% higher. Island Hotels Group plc equities saw their debut in the later period of the year and hence free ride on the optimism in the general trading. This equity has improved by 1% despite a fall of 0.98% last week.
A further positive gain in last week's trading meant that yearly losses for Lombard Bank plc were simply limited to 0.33% or just €0.01 on 2008. The share price improved constantly in the past few months of last year. Over a two-year period, however, the share price of this financial company has seen limited losses and has therefore outperformed the major two local banks notwithstanding the meagre performance of the past 12 months.
Middlesea Insurance plc saw a further climb last week backed with large volumes. The share price rose by slightly more than 11% in the week ending December 24 and a further rise of 1.77% last week is an encouraging sign to shareholders.
Nevertheless, this company has seen an erasure of nearly 70% of its share value over the past year influencing the overall index very negatively.
Last Wednesday, the company announced that its executive chairman Mario Grech would not be renewing his contract, which terminated last Thursday. Investors are now awaiting any further changes to the board of directors following the increased shareholding of Bank of Valletta plc and Mapfre Internacional SA after Middlesea's saga at their Italian subsidiary.
A total of 53,390 shares traded in Fimbank plc last week led the share price of this equity to increase by just under one per cent. The total loss for the year reached 25.47% despite the equity being the most traded equity of the year with over 3.7 million shares changing hands. On the other hand, Maltapost fell by 2.78% on 12,000 shares last week thus losing 14% in 2009.
Another equity which traded last week was International Hotel Investments plc with turnover reaching 26,750 shares traded across five transactions, at the unchanged price of €0.80. This equity lost just over 10 per cent in 2009.
Global Capital plc ended the year on a positive note as a mere 370 shares traded last Monday resulting in a rise of 5.47% in the share price, thus closing the year at €1.35, and a third positive consecutive week. Notwithstanding this recovery in recent weeks the share price of Global Capital fell by 32% in 2009.
Another gainer last week was Malta International Airport which traded 11 times with turnover reaching 8,185 shares.
The equity's share price gained 2.13% and closed the year at €2.40. Notwithstanding this positive week MIA ended the year at a loss of 4%, having traded at a low of €2 and a high of €2.50 in 2009.
RS2 Software plc traded only once last week with turnover at 1,900 shares. The share price closed unchanged at €0.557as the equity experienced a bad year as it fell by 30% and was one of the worst performers in 2009.
Total trade in the local equity market amounted to 6,800 deals at a value of just under €25 million, while Corporate Bonds traded amounted to just under €34 million and government bonds traded amounted to €237million. Treasury Bills traded registered a total value traded of €235million. In total, including put-through transactions, a total of €553 million was transacted, on the Malta Stock Exchange in 2009.
I wish you all a prosperous and profitable New Year.
This article, which was compiled by Jesmond Mizzi, managing director of Jesmond Mizzi Financial Services Limited (JMFS), does not intend to give investment advice and the contents therein should not be construed as such. JMFS is licensed to conduct investment services by the MFSA. The directors or related parties, including the company, and their clients are likely to have an interest in securities mentioned in this article. For further information contact JMFS at 67/3 South Street, Valletta, call 2122 4410 or e-mail jmizzi@jmfs.net.