Financial news

Following the weekend break, investors remained focused on banking sector equities which continued to recover ground following months of selling pressure. As a result of positive movements in the largest and second largest listed equity, the MSE Index gained 0.4 per cent to terminate yesterday's session at 3,352 points.

HSBC Bank Malta was the day's most liquid and actively traded equity with 15,480 shares carrying a market consideration of €44,895, being exchanged across eight transactions. All supply up to the €2.91 level was cleared, leaving the best unsatisfied bid for 2,900 shares at €2.90 against supply of 2,520 shares best offered at €2.915.

Interest for Bank of Valletta shares remained strong with the price moving higher as sellers upped their offer prices in return. The equity gained 6c or 1.7 per cent as 4,726 shares were purchased across six transactions. The equity is currently trading ex-dividend, however the one for five bonus share issue will become effective on January 15.

Grand Harbour Marina shed 10c or 4.7 per cent as 4,400 shares were sold down to the €2.00 level across two transactions. Unfilled supply at this level amounts to 5,600 shares, while the best demand is for 6,000 at €1.90.

Elsewhere a single trade in Maltapost saw the equity drop by 5c5 or almost seven percentage points as 2,500 shares were exchanged at the €0.735 level.

In its interim director's statement, Medserv commented that its turnover and profits reported in the half yearly results have been sustained during the third quarter of the year and notwithstanding the fall in the price of oil, the company has no indication that current and future drilling operations will negatively affect its operations from both its Libya and Malta bases.

On the other hand, GlobalCapital commented that similarly to other financial institutions, disruptions in international markets continued to have an adverse effect on the group's investments portfolio while investor demand for its products has also waned. However, its property, agency and brokerage divisions continue to perform well while the company reiterated its commitment to add banking to its existing business lines.

US economic review

The financial markets enthusiasm for Barack Obama's resounding election win did not last long as deteriorating economic data indicated the huge challenges that lie ahead.

October employment was very weak, especially considering the large downward revisions to the previous two months. October non-farm payrolls declined 240k but this was after September payrolls were revised down from -159k to -284k and August payrolls were revised down from -73k to -127k. The US economy seems to have gathered a downward momentum as it heads for the fourth quarter of the year. Worryingly, the monthly average job losses have risen further. In comparison, this cycle is beginning to produce more job losses than the last three recessions. As a result of all this, the unemployment rate went up to 6.502 per cent from 6.125 per cent, the highest level since March 1994.

While it came close in the 1990-1991 and 2001 recessions, the Institute of Supply Management (ISM) survey broke the 40 level for the first time since September 1982, down to 39.8 from a previous figure of 43.5. Subcomponents in the survey like new orders, production, employment and export orders all registered declines.

In the meantime rumours have resurfaced that a much larger fiscal package is on the way, with bond futures pricing in a 90 per cent probability of a 50 basis point cut at the next Federal Reserve meeting next 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.