Financial news

During the mid-week session at the Malta Stock Exchange investors sold the two largest capitalised companies, thereby forcing the Index to close lower by 0.04 per cent at 4,165 points. Trading was relatively quite with just 14 transactions summing up the day's activity in the equity market. HSBC Bank Malta dropped 2c or 0.5 per cent as a chunk of 11,000 shares was exchanged in a single transaction at the €3.81 level. The company is due to report its interim results and a declaration of a dividend following this Friday's board meeting.

Bank of Valletta shed 0c8 or 0.2 per cent to terminate the session at €4.652. The day's activity consisted in 15,300 shares which were exchanged across three transactions.

Elsewhere, FIMBank consolidated at the $1.87 level as two investors swapped 25,000 shares between them.

International Hotel Investments, the third largest local company by market capitalisation, was the day's only positive mover gaining 1c or 0.9 per cent to €1.06 as 5,000 shares were cleared off the ask side across two transactions.

Go was the day's most liquid and actively traded equity with a grand total of 28,190 shares, carrying a market consideration of €70,475 being swapped across seven transactions. All transactions were struck at the €2.50 level.

In the fixed interest sector of the market, activity was spread across four corporate bonds and seven government stocks. The 6.45 per cent MGS 2014 suffered the biggest decline in monetary terms shedding 141 ticks to close at €105.54, while the 4.80 per cent MGS 2016 was the most active, attracting a turnover of 462,500 nominal which corrected the price lower by 47c to trade at 96.31 per cent.

Both corporate bonds of Bank of Valletta were active during Wednesday's session with the 6.15 per cent issue closing slightly weaker at €100.49 while the dollar denominated 8.00 per cent issue maintained its previous $107.17 level as 42,000 nominal changed hands.

Weekly UK economic review

Central bankers around the globe continued to find themselves between a rock (slower growth) and a hard place (higher inflation) last week. After the Consumer Price Inflation (CPI) jumped to 3.8 per cent in June, another record high up from 3.3 per cent in May, policymakers are bracing themselves to fight against the worst British bout of inflation in more than a decade while trying to keep the economy clear of a recession.

During an interview, Chancellor of the Exchequer which is equivalent to our Finance Minister, Alistair Darling emphasised that taxpayers cannot be asked to pay more while the economic downturn is proving to be deeper than previously thought. The economic slowdown is also exhausting tax receipts which lead to a widening in the UK budget deficit to £9.2 billion in June, more than economists expected.

Meanwhile, UK mortgage approvals slumped by 23 per cent in June after the housing market worsened and deterred potential buyers. This led UK house prices lower in July from a year earlier as the squeeze on lending pushed up the number of unsold properties to a record. On the month, prices declined 1.8 per cent, the biggest drop since December.

In conclusion, UK unemployment jumped the most in June since the aftermath of the last recession in 1992 as the economic slowdown is also forcing house builders and banks to cut jobs and stop hiring. Claims for jobless benefits climbed for a fifth month, increasing 15,500 from May. This is clear evidence that the labour market is also softening in the UK.

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.