MSE share index down 17% this year

By David Lindsay

With just six days of trading left on this year’s Malta Stock Exchange trading calendar, including today, the overall performance of equities listed on the MSE has become evident.

And the figures show further declines for the Exchange as a whole and also for most equities that, together, form Malta’s capital market.

The MSE’s share index had fallen by 17.21 per cent this year up to yesterday’s close. The index, which provides a representation of the values of securities listed on the MSE, had stood at 2,207.445 at the year’s inception and yesterday stood 379.98 points lower at 1,827.46.

However, the decline was less pronounced than last year’s, which accounted for an approximate 33 per cent decline in the Exchange’s index. Since the close of 2000, the MSE’s index has dropped by no less than 44.46 per cent.

But while the group of equities has, by and large, persisted in its decline this year, a closer look at some exmples provide further insight.

In the most basic of terms, that of sheer percentage, Global Financial Services Group shares have had the longest fall, shedding close to half their value by plummeting 49.63 per cent.

Globe was followed closely by Maltacom, which had dropped by 37.11 per cent over the year up to yesterday. In a similar vein, Simonds Farsons Cisk, Bank of Valletta and International Hotel Investments depreciated respectively by 18.55, 15.49 and 12.28 per cent.

Meanwhile, those equities registering gains over this year’s trading were few and with little positive headway being made. In fact, only Plaza Centres – at 1.49 per cent – and Lombard Bank – with 1.28 per cent – have climbed so far this year. Suncrest shares, however, have remained stable in their price of Lm0.60 due to minimal trading of just 2,200 shares over the whole year.

However, only First International Bank and Suncrest shares are currently standing at their yearly lows. Both equities have been meagrely traded this year.

The largest differential between yearly high and lows was evident in Bank of Valletta shares, with a difference of 99c7 between being registered between its high this year of Lm3.367 and its low of Lm2.37. Bank of Valletta shares today stand at Lm2.70. HSBC also had a relatively high margin of 79c, Lombard with 70c, Middlesea Insurance with 66c and Maltacom with 64c.

However, what’s in store for next year is difficult to gauge with most financial advisors holding their cards close to the chests.

Maltacom certainly holds the potential of seeing additional growth come the liberalisation of telecommunications next year. This is of course the provided that the soon-to-be-former monopoly plays its cards right and is not ousted from its role of prominence in the sector and that it would instead expand in line with the new legislation.

Bank of Valletta also appears to have interesting prospects, with its strategical drive toward regional internationalisation, which is seeing the bank tap further into the potentially lucrative Mediterranean region. While much more is expected along these lines from the bank over the coming year, the present year has seen it set up regional offices in Italy, Tunisia and Libya.

International Hotel Investments also looks set for appreciations next year, due to its strategy of investing in hotels in economies where long-term growth in real estate values and tourism are expected to run at higher averages. While IHI just recently opened a groundbreaking property in Budapest, next year will also see the Corinthia subsidiary open a first class property in St Petersburg and another in Tripoli.

However, the key to next year’s share performance always lies in how the investor reacts to the year’s developments. But judging from this strange breed’s behaviour this year, it is not always the hard facts that lead to an upwardly mobile share price, but, sadly, more often than not investor behaviour is closer pegged to mob politics and panic knee-jerk reactions.