Financial news

With the exception of Medserv which rose to yet another all time high, local equities declined across the board during yesterday's trading session at the Malta Stock Exchange dragging the Index lower by 0.22 per cent to the 4,878 mark.

Medserv was the star performer of the market rallying by a further 4c5 or 2.6 per cent as an acute lack of supply continued to force the hand of investors who upped their bids to the Lm1.78 level, where 3,700 shares changed hands across a single deal. At the end of the session demand stood for 5,600 shares at the Lm1.75 level against supply of 1,000 shares best offered at Lm1.83.

The banking sector suffered under low volume selling activity. Lombard Bank Malta was the day's top loser, with the equity shedding 15 or 2.86 per cent of its value as 500 shares were swapped between two investors at the Lm5.10 level.

Bank of Valletta was the day's most liquid and actively traded equity with 4,265 shares changing hands across 11 transactions. The equity traded within a tight trade range below Monday's closing level, and closed the session at the Lm3.58 level, which represents a 1c discount.

Trading activity in HSBC Bank Malta was uncharacteristically low with barely 2,200 shares changing hands across four transactions. The equity terminated the day at the Lm1.97 level, just 0c5 or 0.25 per cent lower than its previous close.

A single purchase for 1,000 shares in Malta International Airport was executed against supply offered at the Lm1.39,9, while 1,600 shares of Plaza Centres were sold towards the end of the session across two trades, dropping the price by 1c or 1.35 per cent to 73c.

Eurozone economic review weekly round-up

The eurozone economy performed well in the third quarter. According to the flash estimate released by Eurostat, real Gross Domestic Product (GDP) grew by 0.7 per cent in the third quarter, which was above market consensus and over twice the pace of growth in the second quarter.

Looking ahead most economists are not expecting this pace of growth to be repeated in the fourth quarter or in the immediate future. Some of the growth in the third quarter may be interpreted as a technical rebound from a weak second quarter. The upheaval in the credit markets kicked off in the middle of the third quarter, so the true impact on the real economy would only be expected to register from the final quarter of this year.

The timeliest indicators, like the business sentiment surveys, show a loss of momentum into the final quarter. The German ZEW survey fell to a 14-year-low, highlighting the pessimistic scenario currently looming over the financial markets.

Tighter financial conditions, weaker global growth and a stronger euro should reduce growth momentum in the euro area. The current outlook suggests the European Central Bank may choose to keep rates on hold at four per cent for the remainder of this year with increased likelihood of rate cuts in 2008.

This article has been prepared by Bank of Valletta p.l.c. (the Bank), which is licensed to conduct investment services business by the MFSA, for your general information only. This information is not a solicitation or offer by the Bank to acquire or sell securities. Nor does it constitute any form of advice by the Bank. Appropriate advice should be obtained before making any such decision. Past performance is not necessarily a guide to future performance and the value of your investments may fall or rise.