Financial News

Local equities closed the first trading session of the new month on a positive footing, thanks to gains in GlobalCapital and heavyweight Bank of Valletta, while longer dated yields declined as sovereign bond prices increased.

Investors deemed that Bank of Valletta's, drop on Friday was the necessary capitulation needed for sellers to exit the equity and clear the overhang of shares which has kept a cap on the price for the past few weeks. The day's activity wasn't all that great simply because of a sudden and acute lack of supply.

This forced the hand of investors who wanted to purchase shares during the session, initially increasing their bids to the Lm3.60 level before helping the equity gain almost 7c or 1.9 per cent to close at Lm3.62.

GlobalCapital was the day's best performer in percentage terms; gaining 2.3 per cent to Lm2.20c, as well as the day's most actively traded equity; with 33,185 shares changing hands across eight transactions. The equity has raced ahead over the past two weeks, gaining a grand total of 40c or 22.2 percentage points on renewed interest in Group with a diversified interest in the financial sector.

Elsewhere in the market, HSBC Bank Malta remained stuck to the Lm1.90 level as buyers and sellers deemed this price to correctly reflect the company's current valuation. The day's activity consisted of 24,340 shares which were struck across 20 transactions.

Simonds Farsons Cisk dropped a penny to close at 98c as supply outweighed demand on 4,100 shares which were traded across five transactions.

The MSE Index closed 0.5 per cent higher at 4,834 points.

Europe retreats amid oil and security concerns

European equity markets moved lower by mid-morning yesterday, weighed down by high oil prices, volatility in bond markets and security concerns following attempted terrorist attacks in the UK over the weekend.

Continued weakness in the real estate sector dragged the FTSE lower yesterday. While yields on property have fallen over the last five years amid often frenzied bidding for assets, a steep rise in borrowing costs since last summer has prompted fears that yields are poised to rise - meaning downward valuations on buildings. Holiday companies fell following the terrorist attack at Glasgow airport on Saturday.

US equity in the financial sector extended its loss for the month to 4.3 per cent. Concerns over the sector's exposure to sub-prime mortgage troubles and a potential credit crunch sparked renewed selling. The S&P 500 index fell 0.2 per cent to close at 1,53.35.

The Japanese stock market reacted little to a solid but unexciting Tankan survey of business confidence from the Bank of Japan, leaving the day dominated by corporate news. The market as a whole was nearly flat. The Nikkei 225 ended the day almost unchanged at 18,146.30.

The financial news was compiled by Valletta Fund Management (Tel. 8007 2344) and Bank of Valletta plc (Tel. 2131 2020). BOV and VFM are licensed by the MFSA to conduct investment services business.