9 - 15 May, 2001

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Equitisation, the missing link

The first few months of 2001 have been rather depressed for the Malta Stock Exchange.
The world is experiencing the first sustained bear market in a decade and Malta is no exception to this.
There have been sharp falls in equity prices all over the world. It would be worth pointing out that in 1982 the Dow Jones Industrial average stood at 875, the Nasdaq stock market stood at 196. Eighteen years later, they stood at 11,497 and 4,069 respectively.
The Maltese stock market has followed the European markets which in turn has followed the US market. The high performance came about because of the technology boom such as telecoms, and this bubble was largely responsible for the rise in the markets.
In most countries, markets have replaced the banking sector and their traditional function has diminished, Malta still has a long way to go before this becomes a reality.
Yet, local banks have taken it upon themselves to dominate the financial markets.
This is not the case in Malta, where investors have felt the pinch and feel cheated by false information by a number of stockbrokers.
The loss suffered due to the drop in Maltacom shares is a case in point.
This has been an unfortunate happening for the MSE, because what is needed now is more equity supply, especially in the face of planned privatisation.
This must be debated in the scenario of 30 bourses in Europe. Can the Maltese Stock Exchange flourish against such stiff competition?
Some years back, stock exchanges talked of forming joint ventures, but nothing happened here. In the end it will be the investors who will determine the future of the MSE. Recent fiscal measures taken by the Maltese finance ministry should work to favour this.
Maltese companies must brave this new world. Many are still run like family fiefdoms who are simply not willing to venture into this new era. The ones that do are usually hard on cash.
Equitisation is the buzz word for capitalism and the new economy but it has to be steered down the right course.
Stockbrokers must take it upon themselves to be more ‘honest’ to their clients and to advise clients of the short term and long terms contrasts of equitisation.
Coupled with this one needs to instil in investors an understanding of the value of different shares.

A Pontiff is always welcome

The visit of the frail Pope John Paul II is of course an unforgettable event for a country that is more Catholic than the Pope himself.
The reverence shown by the people of Malta to the Pontiff places Malta as one of the bastions of Roman Catholicism in the world.
Our Island status has allowed Roman Catholicism to flourish and retain a semi-medieval status, more so with its objection to certain social reforms.
The beatification of three saints has significant meaning to the Church. But it does nothing to change the crisis facing the faith and society in Malta.
As the ailing Pope follows in the footsteps of Paul, it would be useful to look to the future of the Maltese Church in this multi-faceted and changing world.

 



The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt