So sang Freddy Mercury almost 40 years ago. And if they could, that’s what markets would sing now. Most major indices have ebulliently been smashing through record territory at incredible speeds with the Dow Jones in the US the veritable trail blazer.

In a remarkable run up to this Index surpassing the 21,000 level last Wednesday, the Dow closed at 12 consecutive highs in the past fortnight. The import of this statistic carries even more weight as this event has happened only another two times in its 120-year history. It did not make it to a 13th consecutive high, but after pausing for breath on Tuesday it resumed a panther’s pace on Wednesday, zooming through the 21,000 level for the first time ever.

In a remarkable run up to this Index surpassing the 21,000 level last Wednesday, the Dow closed at 12 consecutive highs in the past fortnight. The import of this statistic carries even more weight as this event has happened only another two times in its 120-year history. It did not make it to a 13th consecutive high, but after pausing for breath on Tuesday it resumed a panther’s pace on Wednesday, zooming through the 21,000 level for the first time ever.

All the more noteworthy is the fact that it has taken a mere 24 trading days to breach a new 1000 mark, equalling a record set in 1999 for the shortest period for a 1000 point milestone.

When asked about what is causing such elation in the markets, US Federal Reserve Chair Janet Yellen, certainly didn’t say anything we didn’t know: “I think market participants likely are anticipating shifts in fiscal policy that will stimulate growth and perhaps raise earnings”

Despite these factors being the cornerstone of the great Trump rally, any details on the President’s plans to stimulate the economy and cut taxes were missing from his first speech to Congress last Wednesday. Nonetheless, market commentators agreed that it sounded “more orderly and methodical” than any of his previous speeches.

Nonetheless apart from the Trump fixation, a series of better than expected European and US manufacturing surveys lent more credibility to the global rally in equities. Global economic data is beating economists’ forecasts by the most since 2010 according to Citigroup.

In the UK , the two main equity indices, the FTSE 100 and the FTSE 250 both hit record highs on Wednesday afternoon with the FTSE 100 hitting a series of record highs during its record breaking 14 day run.

Which of course, begs the question – how long can this last?

From a technical point of view, the rally has gone beyond fundamentals with valuations at extremely high levels by historical standards. If the market looked expensive a month ago, it is all the more so now. Judged by price to revenue multiples the US stock market has never been more expensive; judged by multiples of cyclical earnings, it has only been more expensive before the crashes of 1929 and 2000.

It was not surprising to read that in a note to clients this week Bank of America Merill Llynch wrote that there is a greater chance “we are entering the typical later stages of a bull market”.

Yet on the other hand, legendary investor Warren Buffett isn’t worried. Earlier this week he told CNBC that the market is “not in bubble territory or anything of the sort”. He went as far as saying that stocks are “actually on the cheap side” when compared with extremely low interest rates.

But of course, those of us without rose coloured glasses are also aware that the story on tax cuts and less regulation in the US may be severely oversimplified and it may take longer than planned to get these proposals through Congress. In addition, the situation in Europe is still totally unclear as France goes to the polls in less than two months. Marine Le Pen could end up being the EU version of Trump, pushing for “Frexit” from the EU, while Britain is still to start its own negotiations on Brexit.

The urge to take your money and run is of course very high. But as the FT’s John Authers wrote this this week, timing the market is always a huge challenge, because “it is just too easy to miss out on recoveries once out and also to miss the market’s propensity to grow even more irrational.….

But the reality is that long term returns of the stock market are concentrated in a few days. Javier Estrada of the IESE Business School showed that over a period of 40 years, missing only the best 10 days would have cost investors about half their capital gains, while avoiding the 10 worst days would have led to 2 ½ times the capital gains.”
It sure makes you think.
To close off where we started with Queen’s songs in mind, playing the market can make you sing “I’m going slightly mad” but John Authers’s words can hopefully avoid us singing “Another one bites the dust”

Local Market: Positive vibe continues on the MSE

The MSE index mirrored its counterparts and extended its positive run as the index closed higher for the fourth consecutive week up 0.33% at 4763.682. Equity turnover came in just over €100,000 lower than the previous week at €1,587,692 spread across 17 securities, with eight gaining ground, five closing lower and four unchanged.
This week’s podium is a little unusual with two of the least trading securities occupying first and third place.

This week’s top performer was Santumas Shareholdings plc which catapulted 13.79% to €1.65. It had only traded once in January and another twice prior to this week. It came to life from Monday, trading every day except yesterday for a turnover of 18,220 shares with a market value of €28,541.

Malta Properties Company plc came in second with a gain of 5.58%. It dipped on Monday falling to a low of €0.517 but picked up gradually jumping to €0.549 today. Turnover totalled 53,700 shares amounting to just under €28,000.

Alternative Companies List Loqus Holdings plc traded for the second and third time this year, up €0.005 or 3.03% to €0.17, to make it to third best performer.
Turnover was all of 4,100 shares for a value of €697.

Once again the banking sector accounted for the lion’s share of the turnover with trading in Bank of Valletta plc (BOV), HSBC Bank Malta plc (HSB), Lombard Bank Malta plc (LOM) and FimBank plc (FIM) representing 51% of all trade.
HSB climbed 1.95% to a multi year high of €2.09 on very strong turnover of 233,308 shares for a value of just under €482,000. Shareholders on the books up to Friday 10th will be eligible to receive the €0.027 to be approved at the AGM to be held on 13 April.
LOM advanced 1.7% to €2.39 on 9,480 shares while BOV gained 0.91% to close at €2.21 with 122,586 shares changing hands for a value of €269,283. FIM closed unchanged at US$0.90 on turnover of 41,000 shares.

The loser’s side was led by Malita Investments plc, down 4.94% touching a low of €0.77. Turnover amounted to 30,800 shares for a value of €24,723. On Wednesday the Company released their financial statements for the year ended 31 December 2016 which showed a sharp drop in pre- tax profits from €16.8 million to €8.3million. The main reason for this is that the Company benefitted from a far lower change in fair value of investment property from the previous year (€11.6 million) compared to this year’s €3 million. Malita is proposing a gross dividend of €0.0228 per share to shareholders on the register by 24 March, subject to approval at the AGM to be held on 27 April.

International Hotels Investments plc lost 3.08% down to €0.63. Turnover was a fairly muted 18,515 shares for a value of €11,704.

Medserv plc lost 1.99% to €1.625 on strong turnover of 192,948 shares for a value of €312,572. In a Company Announcement released on Monday, Medserv confirmed that its Middle East subsidiary METS has been awarded a new long term contract with the Sumitomo Corporation Turbular Supply Oman, for the supply chain management of Oil Country Tubular Goods to Petroleum Development Oman, a joint venture between the Government of Oman and Shell. This is the largest ever contract won by the Medserv group and is for an initial period of five years with a five year extension option.

Trading in Corporate Bonds totalled €1.67 million spread over 156 deals. The 4.25% GAP Group Secured 2023 bond was the most active with 34 trades for a value of €435,000 closing at €101.5.

In Government Bonds, turnover soared to €18.6 million – more than three times the value of the previous week. The 2.3% MGS 2029 was the most active accounting for nearly 36% of this total, closing 0.9% higher at €107.97.

The latest crop of MGSes – 1.4% MGS 2023, 1.5% MGS 2027 and 2.2% MGS 2035 – were listed last week. They were largely inactive this week, with just the 2.2% MGS 2035 trading over 11 deals for a turnover value of €244,468 in trade range of €102.76 – €101.54.