Financial news

Local equities seemed heading for an unchanged close during the mid-week session of the week, however the final trade of the day brought a slim decline to Maltacom's share price which subsequently dragged the MSE Index lower by a single point to close at the 4,837 mark.

The day's activity in Maltacom consisted of merely 1,389 shares which were swapped across five transactions. The price shed 0c2 towards the end of the session forcing the equity to close at the Lm1.38c7 level and leaving a further 3,552 shares outstanding at this price against supply of just 130 shares best bid at Lm1.36.

Elsewhere in the equity market low volume trades were executed in six other companies with both buyers and sellers agreeing that Tuesday's closing levels offered the right valuation. However, the major interest of the day remained in the fixed interest sector of the market, where investors traded holdings ahead of the upcoming government bond issues. In fact, the day's activity was spread across four corporate bonds and eight government stocks.

The euro denominated seven per cent Gap Developments 2011/13 registered the biggest drop in price as 2,500 nominal were sold at the €97 level. Elsewhere, the 6.70 per cent AX Investments 2014/16 gained 100 ticks on a single purchase of 2,000 nominal which was executed at Lm102. Among government stocks, short and medium dated stocks decreased in price whilst longer dated securities gained. Both retail and institution investors were active in the market as investors positioned their holdings to obtain the best possible yields. The 6.35 per cent MGS 2013, 5.90 per cent MGS 2015 and the 6.65 per cent MGS 2016 all shed 20 ticks to close the day at Lm107.48, Lm106.59 and Lm111.97 respectively.

UK interest rates at six-year high

The Bank of England (BOE) Monetary Policy Committee's (MPC) meeting took centre stage during the past week, as it held its monthly meeting yesterday. The Bank of England decided to leave its benchmark interest rate unchanged at 5.75 per cent, this being the highest level for the past six years. The MPC's decision matched the forecast of most of the market's participants who had anticipated that the BOE will delay any decisions to its next meeting in November. Policy makers took this decision after evaluating the effect of higher credit costs on the UK economy, especially in the light of the recent run on mortgage lender Northern Rock, which was bailed out by the Bank of England last month.

Also of concern was the issue of statistics for the month of September showing that UK house prices, which had surged 18 percent in the past two years, fell for the first time in nine months. Another important highlight was the issue of the pre-budget report and the fact that UK's Prime Minister Gordon Brown, announced that he has abandoned plans for an early election this year, ending speculation that Brown will face an election almost three years before the official termination of his term.

This pre-budget report may not have been a pre-election report but it was still a baptism of fire for the new Chancellor of the Exchequer (Finance Minister), Alistair Darling, who is faced with a very challenging economic backdrop.

This article was compiled by Bank of Valletta plc, which is licensed to conduct investment services business by the MFSA. Bonds and shares may be purchased and sold from any BOV branch. Further details may be obtained by contacting us on tel.: 21312020 or email: customercare@bov.com.

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.