Financial news

A buyers strike lead the MSE Index to lose 1.9 per cent during yesterday's trading session, and close below the 4,000 point mark for the first time since the September 2004.

HSBC Bank Malta was the main culprit for the decline with investors still exiting the equity following its "disappointing" interim results. The day's activity consisted of 9,200 shares which were exchanged across 19 transactions, forcing the price lower by 16c7 or 4.7 per cent. The session's turnover amounted to just over €31,000 which brought about a €48.7 million decline in the bank's market capitalisation.

Bank of Valletta followed on its main competitor's footsteps as it dropped towards the end of the session as two investors sold an aggregate of 13,379 shares in rapid succession, squeezing the price down by 9c9 or 2.2 per cent to its previous support level of €4.50.

A single transaction in FIMBank, the international trade finance specialist domiciled in Malta, saw two investors swap 1,215 shares at $1.875 which represents a 0.3 per cent discount to its previous closing price.

Plaza Centres traded lower by 3c or 1.7 per cent as two investors swapped 1,000 shares at the €1.70 level.

Elsewhere International Hotel Investments attracted 7,846 shares which were sold across three transactions clearing all demand down to the €1.06 level. At the end of the session, a further 1,154 shares remained outstanding on the offer side at this price, against demand for 2,330 shares best bid at €1.04. Go was the only equity to trade and retain its previous closing level, as 2,000 shares were struck across two deals at the €2.50 level.

Crimsonwing failed to trade on the day the company reported its full-year results which showed a 35 per cent increase in revenues to €9.5 million, while pre-tax profits declined by 23 per cent to €909,324 due to an adverse impact caused by weakness in the sterling.

Weekly eurozone economic review

The eurozone survey indicators have been losing momentum lately but the falls reported during the past week still came as a shock. The data flow kicked off with the national business surveys, reporting larger than expected declines. These figures are pointing towards a recessionary growth outlook.

This was also confirmed in the eurozone Purchasing Manager Index (PMI), a leading indicator of economic activity, which fell another 1.5 points in July to 47.8. This is the second consecutive month below 50 (the level which separates expansion from contraction) and the lowest since November 2001. This indicator implies a growth pace of contraction in private sector activity. Germany remains the strongest of the big four, but with its PMI falling to a near three-year low, it too is beginning to show signs of weakening. In fact, new orders fell to the lowest levels in five years. The French PMI remain consistent with slow growth but Italy and Spain are facing an outright contraction in their economies.

The confidence surveys added further despair to a gloomy outlook, as both the German consumer confidence and the French business confidence fell in July as soaring energy prices sapped purchasing power.

In conclusion, the risk of another rate hike is appearing less likely as market expectations for growth are adjusting downwards and inflation forecasts have started to fall due to a notable fall in oil prices.

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.