Financial news

The MSE Index built on its earlier gains, with a positive increase of 0.86 per cent during yesterday's session at the Malta Stock Exchange, closing off at 3,826 points. The day's activity consisted of 31 equity deals carrying 45,958 shares with a total traded value of €129,768.

HSBC Bank Malta continued to enjoy some mild buying interest as the equity opened the session 5c higher at €3.05. Subsequent trading saw the largest equity component on the Index gain a further 10c to close the session at €3.15 over a turnover of 8,612 shares exchanged over 11 transactions.

FIMBank ended the day higher by the slightest of margins, closing at $1.886 with 4,937 shares being swapped across two trades.

Trading activity in Bank of Valletta consisted of 11 trades for 9,544 shares with a decrease of 2.35 per cent to close at the €4.15 level.

Go dropped 5c or two per cent to close at a multi-year low of €2.45 as investors reacted negatively to news that the company has been ordered by the Court of Appeal to implement a pension scheme which should be considered to be brought into force from January 1, 1975. The judicial proceedings in question was filed in April 2002 by a number of former employees of Cable and Wireless Ltd, who became employees of Telemalta Corporation in 1975, with Maltacom plc succeeding to all the rights and obligations of Telemalta by virtue of law in 1998. The financial cost of the ruling has still to be quantified and Go will be seeking legal advice whether there is further legal redress to impugn the judgment of the Court of Appeal.

Malta International Airport was the only non-mover for the session, with two trades of 970 shares being matched at €3.04.

In the fixed interest sector of the market, activity was spread across five corporate bonds and 12 government stocks with the 3.8 per cent European Investment Bank 2009 attracting the highest turnover of over 1.23 million nominal, while the 5.1 per cent MGS 2022 registered the biggest percentage gain of 0.99 per cent moving higher to close at €98.48.

Weekly eurozone economic review

The European Central Bank (ECB) kept interest rates unchanged at 4.25 per cent last week and insisted inflation was still its major fear. However, the recognition of an increase in the number of upside risks to price stability was somewhat offset in the Question and Answer session by ECB President Jean Claude Trichet's admission that the downside risks to growth mentioned in the past are materialising.

Mr Trichet's comments have raised further questions with regards to the eurozone's gross domestic product figures for the coming quarters and increased significantly the probability of any possible downgrade in forecasts. Fears of slowing economic growth were also reconfirmed yesterday by executive board member Lorenzo Bini Smaghi, who said that "The European economy is slowing down, more rapidly than forecast due to a number of factors."

Mr Trichet acknowledged that the eurozone growth in the second and third quarter looks "particularly weak" after a very robust first quarter. Overall the ECB has sent a neutral message with no particular bias on the prospecting interest rate direction.

The single currency and treasury yields reacted negatively to the ECB press conference with the euro currency losing ground against most major currencies as markets participants were expecting a more hawkish tone on inflation from the ECB president.

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.