Financial news

Selling activity continued unabated during yesterday's trading session at the Malta Stock Exchange with investors dumping shares of the two largest capitalised companies. As a result the MSE Index lost a further 1.3 per cent to close at 3,860 points, bringing the decline since the beginning of the year to 22 per cent.

HSBC Bank Malta was the day's top loser, declining by a further 2.8 per cent as 6,080 shares carrying a market consideration of just €18,932 were exchanged across four transactions. The equity settled at €3.11, its lowest level since August 2005. The equity has dropped sharply since the publication of its interim results towards the end of July.

Bank of Valletta dropped to its lowest level since March 2005 with the equity continuing to suffer from contagion trading in its larger competitor. The day's activity consisted in just 4,406 shares carrying a consideration of €19,449 which chopped off €10.5 million worth of market capitalisation, as the equity terminated the day 7c9 or 1.8 per cent lower at €4.40. Bank of Valletta's historic gross dividend yield now stands at nine per cent, and just €261,064 separates the company from being overtaken as the second largest equity on the exchange by International Hotel Investments.

Elsewhere among the financial services sector, FIMBank traded steady at $1.885 as 2,778 shares were swapped across two transactions.

Plaza Centres attracted the highest turnover of shares with a grand total of 24,800 shares being swapped across three transactions. All deals were executed at the €1.70 level.

Malta International Airport suffered a bruising as 4,300 shares were sold down to €3.04. This represents a 8c or 2.6 per cent discount to its previous closing price.

Weekly eurozone economic review

Last week's economic data within the eurozone continued to signal a darkening outlook in the months ahead. The Harmonized Index of Consumer Prices (HICP) reached 4.1 per cent in July, a new cyclical high, as food and energy prices continue to escalate. The outcome was in line with consensus expectations. Producer Price Inflation (PPI) also rose during the month of June. Record high inflation rates coincided with record lows in consumer confidence. In Germany, the region's largest economy, consumer confidence stood at a five-year low. However, French consumers seem to be the most pessimistic as their confidence level stands at the lowest since 1987.

European business was equally downbeat as the European's commission economic sentiment index recorded its biggest fall since the September 11 terrorist attacks. Besides, the real economy data shows that activity is slowing. European retail sales fell for a second month in July as higher inflation is eroding consumer confidence and spending. Across the European regions, Germany seems to be joining the other large European countries on their way down as June retail sales fell by nearly four per cent year on year. The unemployment rate in Germany fell at a slower pace in July as companies in Europe's largest economy are becoming reluctant to hire people as the outlook darkens.

In conclusion, The International Monetary Fund revised its forecast for eurozone growth, expecting it to fall significantly this year, but should avoid a recession. More positively, it also expects inflation to fall appreciably from its record highs.

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.