Financial news

The mid-week session at the Malta Stock Exchange was characterised by soft selling activity which saw the Index close lower for its third consecutive session to touch a new multi-year low of 4,487 points.

The day's focus was around Bank of Valletta that reported its interim results after Tuesday's closing bell. Despite "disappointing" results, which saw the bank record a net profit before taxation of €25 million for the six months which ended on March 31, the directors proposed a gross interim dividend of €0.135 which is effectively 3.3 per cent higher than last year.

The day's activity was surprisingly muted with merely 2,271 shares being exchanged across five transactions. Nevertheless this activity was mainly driven by sellers who brought the price down to €5.179, which represents a 1c1 or a 0.2 per cent discount to its previous closing level.

A single trade in Lombard Bank Malta saw two investors swap a mere 120 shares at the €13.00 level, shaving off Tuesday's gains completely. Elsewhere, all 3,318 shares of HSBC Bank Malta, exchanged across five transactions, were dealt at the €4.19 level.

Malta International Airport commenced trading without the attached rights to receive a net final dividend of 5c8 and the market took note of this, correcting immediately by dropping 5c or 1.5 per cent to terminate the day at €3.33. At the end of the session 810 shares were best bid at €3.30 against supply of 8,766 shares offered at €3.35.

Single sell orders in Crimsonwing and Plaza Centres brought slim losses to their equity prices which closed at €0.551 and €1.72 respectively, while trades executed in Go, Simonds Farsons Cisk and International Hotel Investments did not alter their previous corresponding closing prices of €2.95, €2.60 and €1.06.

Weekly eurozone economic review

This week was marked by conflicting comments from Bank of England (BOE) governor Mervyn King and fellow policy maker David Blanchflower. In a testimony to the Treasury Committee, Mr King did nothing to change the current market views that interest rates will continue to fall at a fairly gradual pace.

Meanwhile, data from the housing market extended its predicament as mortgage approvals for new house purchases, from 72,000 to 64,000 in March, taking figures within a whisker of the low reached in the early 1990s. Last week's Special Liquidity Scheme should aid in stopping things from getting worse. Mr King also highlighted during this testimony that the aim of the scheme is to restore confidence in the banking system rather than to regenerate the housing market. Among other things the governor of the BOE reiterated his view that a slowdown in consumer spending and rebalancing of the economy is necessary.

On another opposing front, Monetary Policy Committee member David Blanchflower, urged fellow members to bring interest rates down as the British economy is facing a real risk of recession and house prices could crash by more than 30 per cent, unless the BOE takes an "aggressive" action. Mr Blanchflower told his audience in Edinburgh that "developments in the UK are starting to look eerily similar to those in the United States six months ago".

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.