Issue link: https://maltatoday.uberflip.com/i/1330252
NEWS 9 maltatoday | SUNDAY • 17 JANUARY 2021 PAUL COCKS THE advent of online invest- ment platforms and apps may have provided much-needed new investment opportunities for Maltese investors, although stockbreaks are urging caution. Investment advisor Michael Grech has warned that many people have lost sizeable sav- ings after playing the market on widely advertised mobile phone apps to invest their money themselves, bypassing financial advice. "The advent of online invest- ment platforms, becoming much easier to access, is clear- ly creating a shift in investment patterns, but nothing beats the direct one to one contact be- tween the investor and his ad- visor," Grech said. "Such plat- forms, especially if they offer a leverage opportunity, can be quite dangerous for investors and it is not the first time that we have seen investors turn in- to gamblers and get burnt out quite easily using these plat- forms." Online investment platforms and apps gained a lot of trac- tion in 2020 as people avoid- ed face-to-face contact in the COVID-19 pandemic, shunning meetings with their stockbro- kers or financial advisors. Grech said the appetite for investment had been tempered by limited local investment op- portunities in 2020, with the propensity for saving growing due to job uncertainty. "Most Maltese investors prefer in- come generating instruments like government stocks, such as the 62+ issues, local corporate bonds and local and interna- tional bond funds," he said. With the pandemic certain investors took action to dis-in- vest themselves from sectors they perceived could be severely hit by the pandemic. A case in point were Malta International Airport shares, which suffered heavy losses in 2020 but have since recovered much of the said losses. But many investors com- plained of a weak local offering on the Malta Stock Exchange, leaving them no option but to invest abroad or in bonds. "It is true that on the MSE there is a substantial amount of holdings in hotels and real estate, and such a concentration might not be too healthy because if there is a correction in a sector, it would probably hit all the issu- ers in that sector," Grech said. "Brokers and investment ad- visory firms will always warn clients of the risks associated with having too much money in one particular investment, but the truth is that there is too much money chasing few in- vestment opportunities. Most bond issues are normally over- subscribed within a few hours of opening." Joseph Portelli, chairman of the Malta Stock Exchange, however says the MSE has a good balance of equities, cor- porate bonds and government securities where the public can invest. "For a small exchange, we have a very sophisticated capital market. Over the last five years we've introduced RE- ITs, affordable SME financing options, and we will soon be introducing green bonds. We also list bonds and equities of companies representing a myri- ad of industries including tech- nology, gaming, telecommu- nications, leisure, banking and insurance, real estate, trans- portation, oil and gas, amongst others." Portelli confirmed that the economic uncertainty brought about by COVID-19 had creat- ed an environment where rais- ing capital was more challeng- ing. Trading volumes last year plummeted by as much as a third when compared to 2019, while the Exchange managed to increase its operating income by controlling expenses. Grech says investors looking for income will continue to in- vest in bond issues as long as they see some kind of guarantee or security and that they are be- ing fairly compensated for the risk being taken. As to the months ahead, Portelli and Grech agree that 2021 should be challenging – but interesting. "On one side we have a huge amount of com- pliance pressure coming from the regulators on matters like Moneyval, the Greco report and the Venice Commission," Grech said. "Having Malta grey- or black-listed would have a devas- tating effect on the gaming and financial services industries." He said that other external factors – such as Brexit, a new US president, and China emerg- ing as the world's biggest econo- my by 2028 – might exert more pressure on Malta's economy. "I am confident that Malta as a country will be able to start to make a turnaround in the sec- ond half of this year with bet- ter prospects for all sectors," he said. Portelli, too, was upbeat. "We are optimistic 2021 will be a re- cord year for the exchange con- sidering there is a significant pipeline of new issues which we are anticipating. "Although online trading has become very popular, receiving quality be- spoke, financial advice from the stock brokerage community is invaluable and is a service which will be demanded by the invest- ing public for decades to come." Going it alone on investment apps is risky money CONTACT Adriana Farrugia or Erika Arrigo on 21382741 for sponsorship opportunities