SPEECH BY THE MINISTER OF FINANCE, THE HON JOHN DALLI AT THE CORINTHIA PALACE BUSINESS TIMES SEMINAR "A CULTURAL VOID: MEDIA ANALYSIS OF THE STOCK EXCHANGE" ATTARD. FRIDAY, 23 MARCH 2001

Ladies and Gentlemen,

Information – timely, relevant and objective information is the key element to good decisions in any sphere. In the financial investment sector, it is also the main element.

Intuition may play a part in investment decision. But intuition is not based on revelation. Intuition is the capability of the correct interpretation of various elements of information, of the way they will interact together, and of the sound judgement of what the result of this interaction will be.

The investor on the stock market needs information. The right type of information. Information that is not only correct and objective but which is disseminated in a way that ensures that all players can have access to it at the same time.

For information to be correct and objective it must be researched. Sources can forward or sometimes provide unsolicited information that is often slanted towards the creation of a particular perception. The irresponsible information provider would swallow the information, and make it his own, publish it to start the spin and quote anonymous sources to give credibility to the spin.

The responsible information provider on the other hand, would connect the source and the information, question the motivation, dig into the substance of what he is being fed, filter the various information elements and ensures that he has collaboration or an independent opinion on the facts.

In the bigger more mature markets, one finds financial analysts. An army of independent observers, sometimes experts in specific areas of operation, who make it their business to get at the information, pass it through their intuitive filter and make it available to the public at large. These are in no way soothsayers, gazing in crystal balls and reacting to vibrations. They are rather inquisitors who probe into all angles and facts of an issue leafing off a layer at a time to reveal the state of affairs.

In Malta, we do not have the luxury of these independent inquisitors and their role is assumed by stockbrokers. This is a very imperfect arrangement as whichever way one looks at it, stockbrokers do have a vested interest in particular issues, especially IPO's which they would be fronting, as well as in keeping the stock market moving in a certain way that would guarantee their revenue. I am in no way passing judgement on any particular event. I am putting my finger on the fact that there is a void in the analysis of the local financial market.

Journalists and contributors to financial papers are also a possible contributor to a proper information flow to the public. I will pass judgement on this too. I do not see any disinterested in-depth analysis in our papers and I must say that some material that is published make me shudder.

I was tempted to expand on this by a case study of some reportage carried yesterday in our pink newspaper. It would have given us an opportunity to discuss such subjects as gullibility, superficiality, rubber-stamping of camouflaged sources, wrong factual content and vested interests.

However I choose to pass on this.

Even the media must avert the appearance of conflict of interest or misuse of the power. Put another way, it is an essential prerequisite for success in the news and information business that readers and listeners believe that the media, in our case the financial media and their analysts are telling the truth. If the truth is not being told then the Stock Exchange cannot prosper. It will suffer, for example, if investors cannot assume that:

Facts are accurate and fairly presented;

Analyses represent best judgements rather than particular preferences, or those of other sources, advertisers or information providers;

Opinions represent only independent editorial philosophies and that there are no hidden agendas in any of the journalistic undertakings.

A business, financial and economics writer and market analyst should therefore:

Recognise the trust, confidence and responsibility placed in him or her by the publication's readers and does nothing to abuse this obligation.

Avoid any practice, which might compromise or appear to compromise his or her objectivity or fairness. He or she should not let any personal investments or anything that directly effects him, influence what he or she writes.

Not take advantage in his or her personal investing of any inside information and be sure any relevant information he or she may have is widely disseminated before he buys or sells.

Make every effort to insure the confidentiality of information held for publication to keep such information from finding its way to those who might use it for gain before it becomes available to the public.

Therefore in order o encourage the observance of these minimum standards information providers should establish policies and guidelines to protect the integrity of business news coverage.

Everybody professes business integrity. But the impact of the work of the media particularly the financial media on the work of others, and on the lives and fortunes of ordinary people, places special responsibilities upon this particular sector of journalism.

This means acceptance of individual responsibility for following all ethical business practices, as well as the responsibility to stress proper ethical behaviour among colleagues and subordinates. Moreover, it must be made clear to each of us that reporting and analysis integrity is necessary because of its impact on business decisions. Business integrity requires that we make all of our decisions, and approach all questions, objectively and realistically, and in the long-term best interests of all investors.

My friends there is still a large cultural void in the flow of information on which investment decisions can be based. We have a long way ahead. I am pleased to note the initiative being taken by the Malta Stock Exchange to start an education process to develop human resources in this field. This is a first step. I hope that these are followed by a consistent string of initiatives.