The greatest pleasure to be derived from making money is giving it away, especially to one's grandchildren. Children are often ungrateful, but grandchildren have yet to learn how to be so.
In Italy, the most popular financial gift to the minors of one's family are shares of Generali, the insurance company, Europe's third largest - and which is obviously undervalued.
In Malta, Middlesea Insurance (MSI) has all the credentials to occupy an analogous position, but unfortunately this is not the case. Its share price has been displaying a disturbing losing streak for some time, for no good economic reason. A poor investment portfolio performance is not a good economic reason. It is something which can easily be corrected with hard-working money trading on a 24-hour basis.
Recent slight gains certainly do not make up for the MSI's massive losses of the past months. Our stock exchange does not reflect financial conditions in the real world economy. This is booming, as shown by Nokia, which advanced from a company making boots to one winning 38 per cent of the world's mobile telephony market.
Globalisation has brought about previously unheard-of prosperity. World tourism is definitely booming. In Valletta, we can see the billionaire cruise liner trade sparking off special-interest tourism. The contrast with the protectionist Thirties could not be greater. The subprime lending scandals are only seriously affecting British and American banks.
Have politicians ever encouraged bankers to recklessly use depositors' money to win friends and influence people? It is subprime lending when a bank lends money to those who cannot repay it, making use of faulted regulations imposed by the political class at some long-forgotten Basel meeting. It will be a long time before people forget the present subprime scandal, and start to give bank shares as a Christmas present.
If the majority of bank shares are currently taking a battering, what other shares, besides mining shares, can we give as Christmas gifts, with confidence? When one looks at the Malta stock exchange one can hardly pick out a better company than MSI, which has a greater promise of stability and integrity.
It is a pity that MSI shareholder meetings are distinguished by an apathetic audience more attracted by the 'entertainment' of the occasion, than by an urge to study the accounting ratios with a view to influencing company management.
This is in great contrast to what happens in Europe. In the case of Generali, the activist hedge fund Algebris, has targeted its redoubtable chairman Antoine Bernheim. He is a banker with an illustrious Lazard track record. The strongest objection of Algebris against Generali is that the Milan merchant bank Mediobanca has too much influence on it and says it is dragging down its share price.
Are Maltese shareholders in our otherwise splendid MSI happy with the company's power structure? Are they even prepared to think about it?
The power structure of HSBC is being questioned by the hedge fund of Eric Knight, whose strategy objections seem to have been anticipated by this great bank. There is also the fact that despite its nasty US mortgage mess, it has been rather well-served by the recent severe market turmoil. The experience of its banking peers has been much more damaging. The Financial Times put it on record on February 25 that: "It has outperformed the banking sector both in Europe and globally by nearly five per cent since the start of August".
Giving shares to your loved ones as Christmas presents not only has monetary significance, but also an educational one. One can only become a money man by handling money, by enjoying its rewards, and also excluding the hardship involved in its creation.
Mr Azzopardi Vella has advised S&P and has been the promoter of the Malta Development Fund. He is economic adviser to DBR Investments Ltd. E-mail: johnazzopardivella@hotmail.com.