Financial news

Yesterday's trading session at the Malta Stock Exchange marked the tenth negative close for the Index in the past 11 sessions. Soft trading activity was struck across eight different equities with declines in a single share forcing the negative close.

In fact, GlobalCapital was the day's only decliner as two investors swapped a mere 401 shares at the €2.95 level, which represents a 5c or 1.7 per cent discount to its previous closing level.

In the recently issued Interim Statement, the company's directors commented that disruption in the global financial markets continue to have an adverse effect on the group's portfolio of financial investments, however the agency and brokerage segments are trading above last year's levels. Furthermore, the due diligence process for the acquisition of an indirect stake in Mediterranean Bank plc is currently underway.

A paltry 575 shares were exchanged in HSBC Bank Malta, the largest listed company on the exchange. These shares were struck across six transactions at the €3.88 level. The day's activity in Bank of Valletta consisted of 2,520 shares which were all exchanged at the €4.95 level, while 20,000 shares in FIMBank were swapped across 4 trades without altering its previous closing price of $1.88.

International Hotels Investments tentatively moved higher during the session, touching an intra-day high of €1.09, however the equity failed to maintain the gains until the end of the session and closed unchanged at €1.085.

Elsewhere, trades struck in Simonds Farsons Cisk, Maltapost and Crimsonwing did not alter their previous closing prices of €2.71, €0.75 and €0.54 respectively. Otherwise, Middlesea Insurance failed to trade as the equity turned ex-dividend, while Maltapost will be reporting their interim results for the period ending March 2008 today.

Weekly UK economic review

This week's data has been significantly worse than expected with the Bank of England picturing a dismal image of weakening growth and sharply raising inflationary pressures.

The Inflation Report showed CPI inflation rising to 3.7 per cent later this year, while growth easing to just one per cent at the start of the next year. In a nutshell, the upshot is simply that growth is weakening at a time of accelerating inflation.

Mervyn King's opening remarks at this week's Inflation Report press conference were particularly revealing about the strategy the Monetary Policy Committee (MPC) intends to pursue in the coming months "to try to bring CPI inflation back to target within this period (over the next 12 months) would result in an undesirable degree of volatility in output, so the MPC is aiming to bring inflation back to target over a somewhat longer horizon..."

Meanwhile, the labour market report exposed a further increase in claimant count unemployment for the third consecutive month. Despite the surge in the unemployment rate, the rate of growth edged down. The report revealed also that the average earnings growth picked up.

Elsewhere, producers input costs rose at their fastest annual pace since 1980, with output prices rising by some 1.4 per cent during April. Even core producer output prices rose sharply by 1.1 per cent month on month.

Furthermore, the monthly trade figures published this week reported a surge in import prices resulting from rising commodity prices combined with a fall in the currency's trade weighted index.

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.