I cannot but agree with Edward Rizzo’s excellent analysis of the reasons for the lack of appetite for equities listed on the Borża ta’ Malta (Very weak activity on the Borża – February 22).

As explained by him, the reasons for this are more than one. However, primary among these is the lack of information made available to shareholders by some of the local issuers of shares to the public. Rizzo has been a long-standing advocate for companies to keep shareholders periodically abreast of developments, especially when these are most likely to affect the company’s fortunes.

I highlight three cases where a company’s shares showed very wide price movements in the last year or so, and I consider that insufficient or timely information on important developments was not given to shareholders.

IHI took a long time to come out with the fact that the much-heralded potential investment by the Qatari Investment Fund announced in April 2022 (as a result of which the share price jumped from 60 euro cents to 80.5 cents in one day (+34%). It was only over time, after the share price fell back gradually to around 50 cents, that the company felt the need to inform shareholders that the Qatari investment had fallen off the radar. The current price is even lower at 46.2 cents (-42.6% from its peak).

RS2 shareholders were better informed of possible dark clouds ahead but, even then, communications were not good enough

In the case of RS2, shareholders were better informed of possible dark clouds ahead but, even then, communications were not good enough as, only after the share price had fallen by -23.1% at the end of 2022 (a few days earlier even by -38.6%), was an interim directors’ statement issued on January 20, 2023. Further information on the challenging environment being faced by the company was given at their AGM last May by which time the price of both the ordinary and preference shares had fallen further. In the case of the former, this fell rather quickly from €1.35 last June to around €1 (-26%), the current price being €1.17. The price of the preference shares fell less sharply from €1.50 in November 2023 to €1.29 (-7.3%). Further information has not been given as yet on the “ongoing discussions on potential sizeable projects” reported by the company last June.

BMIT, a GO subsidiary, is another case. The shares were issued at a price of 49 cents in November 2028 and quickly rose above that level, maintaining an average price above the issue price until mid-2022. In commenting a year ago on the 2022 results, the CEO remarked that 2023 would be a year of transformation as the company was then in the process of expanding from an infrastructure solutions provider to a full-suite technology adviser and adviser.

Subsequently, at an extraordinary general meeting last September, shareholders voted in favour of a resolution to acquire from its parent certain assets (passive tower rights) which they would maintain and lease back to the parent on advantageous terms for a 30-year period. So far, this had not had a positive impact on the share price which has fallen from around 41 cents to 38 cents at present (-7.3%), but still well below the original issue price. Admittedly, in this case the company has always paid a good dividend.

However, shareholders would welcome an update, particularly regarding the sustainability of future dividend payments. This especially since GO, as majority shareholder, undertook to take up additional shares in any share issue offered by BMIT in the coming years up to €15 million.

Over the years I have built up a portfolio of local bonds and equities to augment my pension income, but I have to admit that − for the reasons mentioned by Rizzo − my appetite for local equities has waned. I end by quoting Rizzo “a shake-up is needed on various fronts to bring the Maltese capital market out of its dire situation”.

Note - Current prices quoted are as at February 23.