Evaluating the past returns of investments listed on the Malta Stock Exchange

Abstract

This dissertation sets out to identify the returns achieved by Maltese listed equities since their listing on the Malta Stock Exchange. These will be then compared to the returns achieved by investing in Maltese government bonds and treasury bills in order to be able to determine the best investment within the Maltese islands. In addition, this dissertation will compare these returns to the returns achieved in several countries across the world. From the methodological point of view, this dissertation uses a quantitative approach. The analysis is based on computing the holding period returns achieved by investing in a particular equity on its listing date and holding it till the end of 2014. These returns are then adjusted to reflect an annualised figure in order to compare between the various equities listed on the Malta Stock Exchange and to the Maltese government bonds and treasury bills. The findings will first outline the top 3 performing companies listed being; RS2 Software plc, Malta International Airport plc and Maltapost plc having an annualised holding period return of 26.42%, 24.95% and 17.55% respectively. On average, companies with a constant dividend policy and high dividend payments performed better than those companies with low and infrequent dividend payments. Out of the Maltese instruments analysed, on average, equities, government bonds and treasury bills gave an annualised real rate of return of 6.05%, 2.41% and 0.66% respectively which is considered to be comparable to the returns achieved in the major foreign stock markets.