Financial news

Activity in Bank of Valletta shares flared during the opening session of the new week at the Malta Stock Exchange, however weakness in the largest company by market capitalisation weighed on the Index which closed 0.2 per cent in negative territory at 4,818 points.

Investors purchased shares of Bank of Valletta ahead of the company's full year results which are due to be reported after the close of business of October 26. The equity feebly gained 1c in the early stages of trading but gave it back later as more shares were supplied to the market. The day's activity resulted in a grand total of 21,646 shares which were swapped across 25 trades for a total market consideration of Lm77,545. The equity closed unchanged at Lm3.58 leaving demand for a further 386 shares at this level against supply of 5,000 shares best offered at Lm3.59,5.

HSBC Bank Malta declined under sustained selling pressure which saw the price drop by 1c or 0.5 per cent as 11,430 shares were transacted across 10 deals. The equity closed the day at the Lm1.89 level.

Elsewhere in the market, a single transaction for a mere 100 shares in Maltacom was executed at the Lm1.38,4 level, which represents a 0c3 discount to its previous traded price. This week, Maltacom shareholders are called for an Extraordinary General Meeting to vote on a resolution to change the name of the company to Go and modify a clause relating to the election of the worker director.

The main news of the day was announced by FIMBank, which failed to trade during the session. The trade finance specialist announced a rights issue to shareholders to raise $25 million by subscribing for additional ordinary shares on the ratio of five new shares for every 19 existing shares at an offer price of $1.10 per share. This rights issue stands at a 43.6 per cent discount to its current level of $1.95. Following the announcement, offers in the market were immediately marked higher.

US economic review - weekly round up

In the US data continues to show modest growth outside the depressed housing sector. September payrolls, an indicator of employment, increased by a healthy 110,000, while retail sales for the same month, issued last week were solid. Meanwhile, from the Federal Open Market Committee (FOMC) minutes last week it emerged that the Federal Reserve believes that the economy grew at a "moderate rate" in the third quarter. An elevation in the downside risk has also led the Fed to reduce their growth forecast for the rest of the year and for 2008.

It is important to note that data lags the state of the economy by some months. Subsequently, the effect of rate cuts will take several months to leave a mark on the economy. As such contrasting reports will remain the order of the day as the consequences of a weak housing market continue to emerge in data.

It follows that the outlook for the next FOMC committee meeting, to be held on October 31 is skewed towards a "hold" of interest rates as markets reduced the probability of a recession. The expectations of a rate cut, priced by futures markets, has gone down significantly over the past weeks. Still the Fed will be expected to cut further down the line particularly if weaker data emerges.

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.