HSBC's 15.7% gain hikes index 7%

Why is it that people queued for hours to buy, at massive discounts, the same goods that they could have bought before Christmas, in the post-Christmas sale? Answer: The rational desire to strike a really good bargain.

Contrarily, when stock market prices get slashed, irrationally, not only do people not buy, but the herd instinct takes over; they panic and sell out.

This week, the 'sale' mentality crossed over to the Malta Stock Exchange, when investors must have been suddenly struck by the unadvertised, near 40% discount to its all-time high last April, at which HSBC Bank Malta plc (HSB) was trading at last week's close.

This caused a blast of invigorating, fresh mountain air to breeze through the exchange, acting like a chair lift for the big banks. HSB undid in one brief week the loss it suffered over a tortuous four and a half months, thereby spearheading the very welcome 7% gain as the MSE Index basked in the new year sun.

After months of gloom and falling prices, HSB performed an F1 speed U-turn and completed five consecutive positive sessions (Friday, January 5 to last Thursday) - crossing the winning line after having clocked a massive 15.7% gain on last Friday week's close.

Michael Schumacher would have been proud. Monday saw HSB zoom ahead from a Lm1.859 open to a session high of Lm1.97, falling back a cent to Lm1.96 for a 5.9% increase on the day.

Tuesday saw a repeat performance, as HSB first advanced to Lm2.05 and then on to the top of the allowable trade range of Lm2.072. It momentarily faltered to Lm2.051 but was back at Lm2.07, for another 5.6% increase on the day.

Wednesday saw a more contained increase of 1.4% to Lm2.10. It was again speeding round the track on Thursday, ahead from a Lm2.12 open to a Lm2.19 close.

At the opening of Friday's session HSB peaked at an intra-day high of Lm2.20, a level last seen on August 31, 2006. However, as expected, profit-taking set in as supply came on tap, pulling HSB in for a pit stop equal to a 2.3% drop for the day, down to a Lm2.14 close for the week.

As is nearly customary, the week's volume in HSB - 206,446 shares for a turnover of Lm425,814 - accounted for the lion's share (56%) of equity turnover by value of Lm759,621.

At the end of trading, the best bid was for 1,000 shares at Lm2.13 and the best offers for 851 shares stood at Lm2.14.

Following a presentation to stockbrokers on Monday, HSB in a company announcement on Wednesday stated that it had published the prospectus of a new 10-year bond. This bond issue is for Lm20 million or €46.6 million, at 4.6% in either currency, at par.

The over-allotment option will not exceed, in aggregate, Lm5 million or €11.7 million in value in any one or a combination of the bonds.

Application has been made to the listing authority for the admission of the bonds to listing, and to the MSE for the bonds to be listed on its Official List and traded on the exchange.

Bank of Valletta plc (BOV), not to be outdone, closed the week 2.8% up on a turnover of 55,146 shares for a market value of just under Lm200,000. It got off to a flat start on Monday, trading unchanged at Lm3.60 throughout.

Tuesday's session consisted of only two deals for a total of 1,085 shares, which nonetheless saw the price gain a cent. The share price continued to pick up speed on Wednesday, rising cent by cent from Lm3.61 to Lm3.64 before advancing 3c to Lm3.67 in the final deal.

The feel-good factor extended to Thursday where BOV climbed a further 2c5 to Lm3.695, and continued into Friday as it traded and closed at Lm3.70. At the end of trading best bids totalled 4,069 shares at Lm3.67, and supply of 396 shares started at Lm3.70

The wind of change seemed to have bypassed Maltacom plc (MLC). It did not trade on Monday and only saw a mere 500 shares change hands on Tuesday at Lm1.45.

Wednesday was a good session as MLC advanced to a high of Lm1.49, closing 5 mils short at Lm1.485. The gains came undone on Thursday as the final deal was struck at Lm1.451, with Friday's two trades effected at Lm1.455, closing the week practically unchanged.

The week's trading consisted of 10,552 shares for a value of Lm15,478. At the end of the session, the best bid was for 108 shares at Lm1.471 and the best offer for 1,500 shares at Lm1.48.

Malta International Airport plc (MIA) freshened up further, ending the week up 1.45% to close at Lm1.40. It started at Lm1.375, closing Monday's session at Lm1.39.

On Tuesday, it advanced to Lm1.40, the price of the October 2005 sale of government's second tranche of shares to the public. The equity had last traded at this level on September 26, 2006.

MIA was stable at this price on Wednesday and only traded again on Friday, starting at Lm1.40, slipping to Lm1.38 to recover to Lm1.40 in the last trade.

Total turnover for the week was a healthy 44,807 shares for a market value of Lm62,487. At the end of the session, best bids were for 4,829 shares at Lm1.38, and offers totalled a substantial 20,750 shares at Lm1.40.

Lombard Bank plc (LOM) started the week where it had left off, trading on Monday at Lm5.25. It advanced to Lm5.30 on Wednesday, picked up another 5c to Lm5.35 on Thursday and a further 5c on Friday to close the week at Lm5.40, for a 2.9% rise on the week.

FIMBank plc (FIM) only traded once on Thursday when 3,000 shares changed hands. The price was static at $1.73. On Tuesday FIM announced that Kuwaiti Interests for Financial Investments, KSCC, one of its qualifying shareholders, has changed its name to Massaleh Investments K.S.C.C.

International Hotels Investments plc was only active on Monday, stable at €1 and on Friday when 10,000 shares traded at €1.02, pushing the price up 2.5%.

GlobalCapital plc's first trade for 2007 was struck on Tuesday at Lm2.17, 3c below the 2006 closing price. Wednesday's first trade saw the price slump to Lm2.10, but then recovered to a Lm2.199 close, to end the week practically unchanged.

Simonds Farsons Cisk plc only traded on Tuesday, unchanged at 80c. There were no shows from Middlesea Insurance plc, Medserv plc and Datatrak plc.

The Government bond market was significantly busier this week with 84 deals for a turnover by value of Lm1,194,532. In the corporate bond market turnover by value reached Lm149,383 spread over 29 deals.

Financial Planning Services Limited is licensed by the MFSA to provide investment services, including stockbroking (IS/3608). The company is involved in acting as sponsoring stockbroker and corporate stockbroker. The directors or related parties, including the company, and their clients, are likely to have an interest in securities mentioned.

Report by Financial Planning Services Ltd., tel: 2134-4244, fax 2134-1202, e-mail matthew@bonellofinancial.com, elaine@bonellofinancial.com