Donald Trump, now the White House incumbent for exactly a week, was quick with the above commemorative tweet as the Dow Jones surpassed the psychologically important barrier of 20,000 last Wednesday.

dow20kSince Trump’s election, the Dow Jones has surged 1,700 points or 9% slicing through landmark thousand mark levels in record time. The previous time it breached a 1,000 point mark was on 23 December 2014 when the index closed above 18,000 for the first time ever. Yet after surpassing the 19,000 mark on 22 November 2016 it only took two short months to breach the 20,000 level.

Without a shadow of doubt, Trump’s policies of expected infrastructure spending, lower taxes and less regulation have been superlatively well received by the public leading to near euphoria.

All main indices in the US are at record highs, including the Dow Jones transportation index. This index tracks 20 US railways, airlines and freight companies and is seen as a good barometer of the overall economy ( if you have nothing to ship or send, you have nothing to sell). It has catapulted an impressive 13.5% since Trump’s election last November.

The twin peaks of new closing highs for both the Dow Jones Industrials and the Dow Jones Transportations signals rising investor confidence in both the economy and corporate America.

It also shows that Trump has inherited a solid economy from his predecessor. The US has added jobs for a record 75 consecutive quarters and the unemployment rate is at a near 10 year low.

But despite the statistics you can’t help that giddy feeling that things have gone up too far. Trump’s egging on the stock market “ We just hit a record, and a number that’s never been hit before…. Now we have to go up, up, up. We don’t want it to stay there.” doesn’t really help to alleviate the queasiness either. More so, when just a few short months ago in September, Trump said that the market is “in a big fat ugly bubble”

A JP Morgan analyst speaks for many when he said this week “ Markets seem to be pricing in the positives, and not worrying too much about the negatives”. In a more ominous vein, chief investment strategist Michael Hartnett at Bank of America Merrill Lynch believes we should enjoy the positive vibes while we can as they think the “market hubris is in its last 100 days”.

Comparing the current mood on markets to the mythological figure of Icarus , Hartnett stated “ We believe positioning, profits and policy are consistent with one last melt up in risky assets” While higher targets are attainable, Merrill Lynch feel they are not sustainable and that things will start to unravel “some time in the summer”. The Summer Sun and Icarus hardly conjure comforting thoughts.

mse27jan

Local Market: MSE Index at near nine year high

The MSE enjoyed its busiest week this year as turnover topped the €2 million mark, improving by nearly 30% from the previous week. The MSE index, buoyed by the performance of two of the larger cap stocks, HSBC Bank Malta plc (HSB) and International Hotel Investments plc (IHI), rose to a near nine year high of 4720.618. A total of sixteen equities were active with positives and non- movers tied at six a piece while four closed in negative territory.

trading27jan

Despite the strong turnover, the top two performers were amongst the least active:

The top performing security, Santumas Shareholdings plc surged 11.11% to an all time high of €1.40 on a single 5,000 share-deal for a value of €7,000. Similarly, Plaza Centres plc jumped by 8.49% to an all- time high of €1.15 on one trade for 2,300 shares for a value of €2,645.
Third placed IHI, more than held its own in the performance table, up by 6.45% to a three month high of €0.66. Here turnover was more respectable with just over 100,000 shares changing hands for a value of €65,250.

While the banking sector did not feature in the top or bottom performance, it contributed substantially to global turnover, accounting for 41.5% of the week’s €2 million plus turnover. HSBC Bank Malta plc advanced 2.51% to a near three year high of €2.00 on turnover of nearly 200,000 shares for a value of €397,473. Bank of Valletta plc closed the week unchanged at €2.17 with 206,665 shares traded for a value of just under €451,000.

In a Company Announcement released on Wednesday, Simonds Farsons Cisk announced the Board of the Planning Authority approved a permit of rehabilitation of the Farsons Old Brewhouse in Mriehel. The project covers the restoration and conversion of approximately 7,000 square metres of industrial space and will include a Visitor Centre Experience with supporting food and other retail outlets. The project is expected to commence in mid- 2017 and is expected to be completed within two years with an investment of around €10 million.
On the market, SFC advanced a minimal 0.07% to regain its €7.30 all time high on turnover of 13,036 shares for a value of €95,122.

On the losers’ side Malta Properties Co plc was the undisputed leader, down a hefty 10.02% to a four month low of €0.53. Turnover was robust with 182,155 shares dealt for a turnover of just under €100,000.
Malta International Airport plc fell a comparatively minimal 0.73% to €4.07 as 53,000 shares were swapped for a value of €215,132. MIDI plc gave up 0.3% to €0.329. Here activity was fairly brisk as 123,263 shares were swapped for a value of €40,700.

Trading in the Corporate Bond market totalled in excess of €2.5 million spread across 211 deals. The highest turnover took place in the 5% Hal Mann Vella Group Secured 2024 which closed at €1.05 and accounted for 14.5% of the total followed by the 4.25% Gap Group Secured bond 2023 which closed at €101.5, representing 11% of the total.

In Government Bonds, just under €11.9 million worth of bonds was traded. All MGS prices retreated especially in the latter part of the week following an ECB board member’s comments about the possibility of an increase in inflation in the Euro area. Friday saw the last two MGS issues, namely the 2.4% MGS 2041 and the 2.1% MGS 2039 close at €100.2 and €97.5 respectively.