Financial news

Corporate news in two banking equities sparked fresh buying activity during yesterday's trading session at the Malta Stock Exchange which helped the Index gain 0.34 per cent to close at 4,835 points.

Lombard Bank was the day's top gainer as well as the most liquid and actively traded equity. In fact a grand total of 9,150 shares, carrying a market consideration of Lm45,750, were swapped during the session across 15 transactions. As a result the equity jumped 25c or 5.3 per cent to close at the Lm5.00 mark.

Investors flocked to the equity after yesterday's announcement that Marfin Popular Bank plc of Cyprus has agreed to acquire from BSI SA, Lugano as well as from other foreign shareholders a stake of circa 43 per cent in Lombard Bank Malta plc. This transaction is still subject to regulatory approval. The Nicosia-based Marfin said that it would pay €48.3 million for the stake, representing a price of around Lm5.58 per share. FIMBank climbed 2 per cent to $1.99, its highest level since June 2006, as the market reacted to Monday's announcement that the bank was seeking to raise $25 million through a rights issue to registered shareholders as at October 26, who can subscribe for ordinary shares at $1.10 on the basis of five new shares for every 19 shares held.

Both HSBC Bank Malta and Bank of Valletta gained in sympathy with the two other smaller financial institutions, with the former climbing 1c to Lm1.90 and the latter gaining 1c5 to close the day at Lm3.59,5.

Strong buying activity in Simonds Farsons Cisk saw 15,800 shares being cleared off the offer side at Lm1.10, its highest level since June 2005, thereby leaving the next visible level of supply at Lm1.20.

On the contrary a single sale for merely 196 shares in Middlesea Insurance brought further misery to investors, as the trade was executed at Lm1.59, its lowest level since February 2005.

Elsewhere in the market, low volume deals in Maltacom and International Hotel Investments saw their prices terminate the session at Lm1.38,4 and €1.039 respectively.

Eurozone economic review weekly round-up

A number of European Central Bank (ECB) policymakers have mirrored Mr Trichet's comments after the last ECB meeting, that financial market turbulence has failed so far to dent the eurozone economy and that inflationary pressures are on the rise.

Knock-on effects from the sub-prime crunch in the United States and less favourable trends in asset prices in the United Kingdom add up to less support for euro-area exports, even though growth in Asia and emerging Europe still seem positive. The change in environment because of the credit shock will bode negatively for an increasingly credit-dependent economy like the eurozone and more signs of weaker activity may be looming over the horizon. On the inflation front, food prices are likely to continue to exert further pressures on input prices for both producers and consumers. In fact, the European Community's survey in the food sector has increased strongly over the past three months and currently stands significantly above its long-term average in all countries.

A number of economists expect inflation in the eurozone to stay above 2.0 per cent for the remainder of the year, and look for it to pick up further in the last quarter for this year. On the other hand, a strong euro currency may somewhat tamper upside risks to inflation. Mr Trichet himself continued to warn of upside risks to inflation from money supply growth and expects inflation to stay above the two per cent target well into 2008.

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.