Depressed equity market holds investment opportunities

Malta’s equity market has not been spared the agony suffered by many of the world’s markets following 11 September 2001. But regardless of whether the sharp drop in equity prices registered between then and now has been spurred on by the events that saw many of the world’s economies repositioning themselves, on an albeit loose footing, the fact remains that equity prices listed on the Malta Stock Exchange have fallen substantially close to 13 months later.

Over the time frame, the Malta Stock Exchange’s index has plunged 23.5 per cent from 11 September 2001’s market index of 2,366.84 to yesterday’s 1,808.556.

While many stakeholders have watched their investments sink further into the doldrums, dramatically in some cases, prospective investors appear reluctant to join the market.

However, the point is that a particularly low market holds the potential of making for the best investment opportunities. If some of Malta’s equities were to recover the position they held on 11 September 2001, the timely investor could be looking at very respectable profit margins.

Globe Financial Management shares, for example, have seen the largest fall over the past 13 months, percentage-wise, dropping by just over 50 per cent in value. Meanwhile, the company’s frequent media releases on the benefits expected to be accrued from its merger with the operations of British American Insurance seem to have, so far, fallen on deaf ears.

Middlesea Insurance has fallen by just over 30 per cent, or 99c, Bank of Valletta shares have dropped by 28.5 per cent, HSBC shares are down 22.6 per cent, Simonds Farsons Cisk shares have depreciated by 27.7 per cent, Maltacom by 27.2 per cent and Lombard Bank by 14.9 per cent.

More stable - perhaps surprisingly given its close ties to the heavily affected global tourism

industry - is International Hotel Investments, which have only dropped by 11.6 per cent despite the turmoil of the industry it operates in.

Even more stable was Plaza Centres, which actually appreciated by 4.3 per cent, and First International Merchant Bank, which has climbed over the time frame by 1.2 per cent.