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local
news
Further falls expected on Malta Stock
Exchange
The general feeling among a number of local financial analysts is
that Maltese investors should be warned to expect further sharp
falls in the stock market, after what was witnessed at the year's
inception.
Since the beginning of the year, the Maltese stock market share
index, a figure used to gauge the overall performance of the market,
has plummeted by some 15 per cent from 3,375 to 2895.577 in just
two and a half months.
A comparison with the UK's FTSE 100 index shows a not unsubstantial
drop of six per cent. Unfortunately, small investors have been the
ones to suffer most.
The falls have worried many people but investors have been cautious
and, with little on no analysis, on the performance of listed companies,
many of the smaller investors feel left out and confused.
The main concern that is not being voiced is the future of the American
economy, which still bears and will continue to influence the workings
of other markets. While there is a certain degree of doubt as to
how much an effect the US economy has on the local economy, it is
undeniable that the US economy directly affects that of Europe,
while that of Europe, in turn, directly affects the profitability
of companies listed on the Malta Stock Exchange.
It is expected that in the next 18 months will see slowdown in the
American economy and this will continue to influence and affect
the European markets.
Such slow downs scenarios, traditionally, beckon investors to buy
more shares while they lie at low prices, or sell them in a state
of panic. Many, meanwhile, read the market as being corrective.
These three evaluations have, perhaps, also contributed to uncertainty
in the market.
However, the underlying message is that there is no one out there
to advise the investor on what to do. Indeed some stockbrokers consider
analysis as amounting to little more than interference. Though there
is a fine line between financial analysts and fund managers in Malta.
Although the two indicators for a bright economical future are low
inflation and low unemployment – two factors that Malta currently
benefits from - the markets remain intrinsically linked to the global
changes around us.
Last January, the Malta Stock Exchange had suffered what could only
be described as a crash, albeit a minor one. As a result, the Exchange's
most watched equities – Maltacom, Bank of Valletta, HSBC and
Middle Sea Insurance – all hit their yearly lows.
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