Financial news

During the final trading session of the week, buyers and sellers at the Malta Stock Exchange agreed to negotiate equities at or close to their previous closing levels as investors analysed the latest bout of interim financial results.

FIMBank remained the most liquid and actively traded equity with 178,508 shares being exchanged across 10 transactions. The trade finance specialist, which is still trading with the attached rights to receive a net extraordinary dividend equivalent to $0.033 per share, closed lower by the slimmest of margins at $1.958.

RS2 Software also closed lower as investors purchased 4,300 shares across two transactions collecting shares on offer at the price of €0.829, which represents a 0c1 discount to its previous closing level.

Go closed the day flat at €2.20 following the exchange of 2,100 shares over three trades. After Thursday's close, the telecommunications service provider reported a loss of €1.4 million for the six-month period ending June 30, 2008 following the recognition of an additional provision of €11.8 million, mandated by the Court of Appeal in favour of former employees of Cable and Wireless. The board of directors resolved not to declare any interim dividend.

Trading in Bank of Valletta consisted of 6,890 shares which were struck across 10 deals. All activity was conducted at the €4.30 level. Elsewhere a single deal for 2,300 shares was executed in Lombard Bank Malta at €2.949.

Otherwise 2,800 shares of Plaza Centres were exchanged without altering its previous closing price of €1.70.

GlobalCapital failed to trade following the publication of its first half results. The diversified financial services group registered a pre-tax loss of €4.9 million compared to a profit of €335,152 for the corresponding period in 2007. In a separate announcement the company informed that it would not be proceeding with the acquisition of Medifin Holding Ltd, which holds 99.9 per cent of the issued share capital of Mediterranean Bank plc, nevertheless the board remains active in its pursuit to add banking to its existing business lines.

Weekly US economic review

The US economy received a much needed boost from the external sector. Solid growth in net exports added 3.1 percentage points to a revised Gross Domestic Product figure for the second quarter. This second print on GDP provides us with the first look at corporate profits. During the second quarter, profits declined by 2.4 per cent versus 1.1 per cent decline in the first quarter. This is the fourth consecutive quarter of negative profit growth.

Meanwhile, minutes of the August 5 Federal Open Market Committee (FOMC) meeting confirmed the expectations of broad-based ailing economic activity in the coming quarters. Members of the Committee were particularly concerned about a tightening of credit on both households and businesses and "nearly all meeting participants saw continuing risks to downside risks to growth".

The committee also commented on inflation and stated that "although measures of core inflation might well edge up later this year, given the pass through to final goods prices of earlier increases in prices of energy and other inputs, most participants anticipated that core inflation would edge back down during 2009". Lastly, while policy makers generally expect the next move to be a rate hike, although they are uncertain on the timing, most members acknowledged that the current stance of monetary policy is not particularly accommodative given the dragging problems in the credit markets and other macroeconomic risks.

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.