Financial news
Banks drag index lower
Local equities joined their international counterparts as markets worldwide declined under sustained selling activity. However, while foreign shares declined on worries related to the fall-out in the US subprime lending market, the MSE Index's drop can be linked to the continuation of the bear market which has plagued prices for the past 16 months.
HSBC Bank Malta was the day's most liquid and actively traded equity with a grand total of 39,021 shares, carrying a market consideration of Lm77,594, shares being exchanged across 23 transactions. The equity closed the day lower by 0c5 at Lm1.98,9.
For the second day running, Lombard Bank topped the worst performer's board as investors hold that the company may have overpaid for its recent acquisition of a 25 per cent stake in Maltapost plc. Although the bank plans to expand its market presence through Maltapost's various outlets, the price paid for the tranche of shares represents a significantly high price to earnings ratio on a historical basis.
The day's activity in Lombard Bank consisted in 750 shares which were sold across two transactions squeezing the price lower by 29c or 5.8 per cent to Lm4.65. Ironically, the drop wipes off in excess of Lm2.5 million worth of market capitalisation in contrast to the total acquisition cost of slightly more than Lm1.2 million.
Bank of Valletta too succumbed under renewed selling pressure, shedding 3c or 0.8 per cent to finish the session at Lm3.57, on a total turnover of 3,620 shares which were swapped across seven deals.
Elsewhere in the market, GlobalCapital and International Hotel Investments traded on low volumes without affecting their previous closing prices of Lm1.90 and €1.05 respectively.
The MSE Index closed 0.46 per cent lower at 4,899 points.
Retreat across the board result of new credit fears
Yesterday, European markets fell sharply, surrendering all of Tuesday's gains, as investors were unsettled by a late sell-off on Wall Street prompted by renewed concerns about turmoil in credit markets. The FTSE Eurofirst 300 dropped 2.3 per cent, surrendering all of Tuesday's rise which had been its best one-day gain since last July. In Germany, the Xetra Dax fell 2.1 per cent, and in Paris, the French CAC 40 index lost 2.9 per cent.
In London the FTSE fell sharply after returning fears about the US subprime crisis caused heavy overnight losses in the US. Tuesday's 2.5 per cent FTSE rally was wiped out as Wall Street reversed early gains to end the day 1.1 per cent lower. The FTSE 100 fell 2.4 per cent, while the mid-cap FTSE 250 slumped 2.3 per cent.
Asia's stock markets fell more than four per cent and the yen hit a three-month high, as investors scrambled away from risky trades on worries about a worsening credit crunch. Japan's Nikkei dropped 2.2 per cent to its lowest close since mid-March.
US stock-index futures dropped after Bear Stearns Cos. blocked investors from withdrawing money from a third fund as losses in the credit market expand.
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.