Financial news

Selling activity in the two larger capitalised companies of the Malta Stock Exchange brought a 0.9 per cent decline to the Index which drifted even lower, to close the day at 3,942 points, its lowest level since September 2004.

Selling activity in HSBC Bank Malta continued unabated during yesterday's trading session as investors continued to react to last Friday's interim results which saw the bank report a 21 per cent drop in pre-tax profits which also led to a decline in its interim dividend for the first time since the take-over of Mid-Med Bank plc back in 1999.

The equity fell by a further 8c6 to close at €3.289, its lowest equivalent level since September 2005. During the past three sessions alone, in excess of €149 million worth of market capitalisation has been lost with the equity trading almost 30 per cent lower than the beginning of the year. HSBC shares are still trading with the attached rights to receive a net dividend of 7c7 per share.

Bank of Valletta shares continued to decline in sympathy with HSBC Bank Malta. The day's trades consisted of 6,910 shares which were exchanged across 11 transactions for a total market consideration of €30,741. The equity fell to a multi-year low of €4.35 before renewed buying activity helped the equity recoup intraday losses to trade back at €4.50. However, the final trade of the day was struck at the €4.47 which meant that the equity closed at a 3c or 0.7 per cent discount to its previous closing price.

Go consolidated at the €2.50 level as a mere 1,220 shares were swapped across three transactions.

Crimsonwing failed to trade on the day following the issue of their full year results, which saw the group record a pre tax profit of €909,324 following two successful acquisitions and integrations undertaken during the past financial year. Top line growth increased by 35 per cent to €9.6 million and the board of directors declared a net interim dividend of 1c per share.

Weekly UK economic review

The challenging times being faced by the United Kingdom were clearly reflected in the last Monetary Policy Committee (MPC) minutes, where votes for a rate cut, a hike and no change were revealed. The MPC acknowledged that economic growth was likely to be weaker and inflation higher going forward. The MPC stated that "any change in rates would be better communicated alongside the Bank's August inflation report".

Meanwhile, the first estimate of Gross Domestic Product (GDP) for the second quarter expanded at a meager 0.2 per cent quarter on quarter, which brings annual growth at 1.6 per cent down from a previous 2.3 per cent. The decline in construction is now impacting total economic growth. The service sector had a better quarter, but the annual pace of growth continued to slow, hardly surprising given the ongoing difficulties in financial and housing market. The question is whether trade, services and consumers can keep the UK from contracting in the third quarter.

After registering the largest monthly rise in May, retail sales posted its worst monthly fall in June. Mortgage approvals also broke a new record low as the British Bankers Association reported that mortgage approvals fell to 21,000 lower than the 28,000 registered last month.

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.