Financial news

During yesterday's session at the Malta Stock Exchange activity consisted of 46 deals, spread over eight equities. The MSE Index closed practically flat at 4,229 points. The declines registered in four of the eight equities which traded were balanced off by gains registered in Lombard Bank and Go.

In fact, Lombard Bank was the day's star performer with the equity trading four per cent higher than its previous level. Activity started early in the session at €3 and continued trading at this price, only to increase by 12c in the last 10 minutes of trading, thereby closing at €3.12 with a total turnover of 1,750 shares.

All transactions in Go were executed in rapid succession towards the end of trading, seeing the price trade between the intraday low of €2.75 right up to the session's closing price of €2.799. This represents a 0.14 per cent gain achieved on a turnover of 14,399 shares exchanged over nine trades. Crimsonwing's turnover was made up of 24,727 shares which were exchanged across two deals at €0.53, representing a decline of 1c or 1.85 per cent from its previous closing.

Trading activity in International Hotel Investments lowered the price by a mere 0c7 or 0.65 per cent to close at €1.078. Turnover here consisted of 2,362 shares and was spread over two deals.

FIMBank was the day's most liquid equity with a grand total of 34,930 shares changing hands across two transactions. The equity was active for a short while during mid-session, trading lower by 1c to close at $1.88.

Bank of Valletta traded up to an intraday high of €4.855 only to lose this gain and close lower by the smallest of margins at €4.85 on a total volume of 5,146 shares which changed hands over eight transactions.

Interest in HSBC Bank Malta and Malta International Airport to the tune of 20,400 and 8,400 shares respectively failed to change the respective closing prices.

Weekly eurozone economic review

The apparent resilience of economic growth as suggested by recent indicators, particularly the Gross Domestic Product (GDP) for the first quarter and the May IFO report, combined with surging oil prices, is probing questions regarding the likely rate movement during the next European Central Bank Committee meeting.

Italian GDP figures surprised on the upside, coming at 0.4 per cent quarter on quarter though far way below the eurozone average. This followed a contraction of similar size in the previous quarter. Stagnation is likely to become again the norm in this country despite the promises of tax cuts made by the newly elected Prime Minister Berlusconi and the apparent positive effect that they have had on consumer confidence.

Elsewhere residential investment contracted by 1.1 per cent quarter on quarter, representing the second consecutive quarterly decline. The broad construction sector is decelerating though not contracting yet, protected by the significant volume of public works budgeted for in 2008.

Employment is undoubtedly a key factor in the slowdown. The release of employment data from the national accounts noted a marked deterioration in the construction sector. The extent of the retrenchment is significant, with the number of employed people contracting by 0.5 per cent quarter on quarter, mostly driven by construction, energy and agriculture. Meanwhile in the private service sector, including financial services and real estate, employment stagnated.

This data is consistent with an economy expanding below potential growth and heading towards a negative output gap.

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.