Financial news

Selling activity continued unabated during yestreday'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 two,778 shares were swapped across 2 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 UK economic review

The UK housing market has yet to find a bottom, according to Nationwide. House prices fell by 1.7 per cent month on month in July. That means that the average UK home is worth £17,000 or nine per cent less than the peak reached last October. This hit to net wealth from falling house prices, combined with the squeeze from rising living costs is putting further pressure on households. This coincided with an all-time low in consumer confidence for the month of July.

The manufacturing sector is another ailing sector which is currently contracting at the fastest rate in almost a decade. The manufacturing purchasing managers' index (PMI) recorded its fifth consecutive month below 50 (the level that separates expansion from contraction). The outlook of growth for the remainder of the year is not very encouraging either, as new orders dipped to their lowest level for a decade. To make matters worse for the Bank of England, inflation pressures continued to mount, with both input and output prices reaching new series highs. This is not an encouraging mix for the Monetary Policy Committee which meets today. Meanwhile, UK services from banks to airlines contracted in July and factory production unexpectedly dropped for a fourth month in June. The Chancellor of the Exchequer Alistair Darling said today that Britain faces a "tough time" as the credit squeeze and rising oil prices choke economic growth.

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.