10 JULY 2002
Christopher Jenkins, Director with Rothschild and advisor for Valletta Fund Management, yesterday spoke at a seminar on the current global market and its effect on Maltas capital market organised by Valletta Fund Management.
Mr Jenkins said he expects global profit growth to start again in the second half of this year and that Maltas privatisation drive is expected to transform the country into a services centre for the Mediterranean region.
Giving a global overview of the markets, Mr Jenkins explained how 11 September had coincided with the beginning of a recovery in economies world-wide and that this resulted in a loss of confidence that affected the market to no small extent.
But on a lighter note, he said that profit growth should start again in the second half of this year, explaining that profits typically recover three quarters after the economic trough of recession. However, Mr Jenkins predicts that the US might not be the leader in the next economic cycle and that it is already lagging behind in certain areas.
Citing the sharpest gain in productivity in twenty years, Mr Jenkins said that the recoveries of both the US and Europe were underway.
Turning to Malta in a global context, Mr Jenkins explained that the increase in foreign investment and the involvement of foreign companies in the Maltese economy mean that Malta is vulnerable to changes in global demand. Mr Jenkins was adamant that competition would increase following the liberalisation of the Maltese economy and the internationalisation process. According to the Central Bank, competitiveness is the biggest challenge facing the Maltese economy, he said.
Mr Jenkins also made reference to the fact that that there was a synchronised world-wide recovery taking place for the first time in two decades. He said that the Maltese economy was becoming increasingly characterised by large employers who relied on global demand for their products. As such, 2001 saw a slowdown in activity as a result of deteriorating external conditions.
Referring to the governments privatisation drive, Mr Jenkins expressed his belief that the development would see the transformation of Malta into a services and financial centre for the Mediterranean region. Citing examples of possible roles within this hubbing context, he referred to Maltapost as a possible hub for postal services, the expansion of the BoV network the Lufthansa-Air Malta maintenance joint venture.
Mr Jenkins added that Maltese equities are attractively valued but that confidence was the most important factor and local sentiment should start to improve. He said that Maltese economy was undergoing structural changes with a view to joining the EU, which posed challenges for the macroeconomic process and had implications for both private and public sectors.
Mr Jenkins is a director and senior global equity portfolio manager responsible for the asset allocation and implementation of investment policies on the major international client portfolios at Rothschild.