Financial news

During yesterday's session at the Malta Stock Exchange activity consisted of 30 deals, spread over five equities. The MSE Index closed practically flat at 3,335 points with declines registered in two of the five companies trading.

Bank of Valletta was the day's most liquid and actively traded equity with a grand total of 13,480 shares changing hands across 13 transactions. The equity was active throughout the session with buying pressures scooping up offers up to the €3.64 level, which translates into an increase of 1.11 per cent over its previous closing.

International Hotel Investments suffered a slight decline as 13,000 shares were sold across six transactions down to €0.90, the lowest price level reached this year. This selling activity left 1,080 shares best bid at the said closing level against a supply of 1,560 shares offered at €0.93.

Trading in FIMBank shares to the tune of 2,500 shares over two deals resulted in a marginal drop at the trade finance specialist equity closed at $1.39,9.

The share price of Go closed unchanged when 2,436 shares were swapped across three trades at €1.89,9. A relatively average volume in HSBC Bank Malta failed to change the price which remained at €2.92 on a turnover of 8,100 shares.

In the fixed interest sector of the market, activity was spread across four corporate bonds and five government stocks.

The five per cent MGS 2021 attracted the highest turnover, with 86,187 nominal, pushing the price up to €104.63. The highest percentage increase in the local bond market was registered in the 4.8 per cent MGS 2016 (II) as 43,176 nominal were swapped at a price of €104.45 therefore trading up by 1.4 per cent.

US economic review

Recent dreary economic data coupled with market concerns regarding the possibility of bankruptcy among the "Big Three US" auto manufacturers put further downside pressure on the economy in general.

A concerned tone was voiced in last week's published minutes from the October 29 Federal Open Market Committee (FOMC) meeting, where major reductions in staff forecasts for growth and inflation were published. According to the minutes "participants generally expected the economy to contract moderately in the second half of 2008 and the first half of 2009." The central tendency for 2008 real GDP is now 0.0 per cent to +0.9 per cent compared to +1.0 to +1.6 per cent as of last June. Participants also agreed that inflation is likely to diminish materially in the coming months.

Declining inflation was confirmed on the same day the minutes were issued as October's Consumer Price Inflation (CPI) plunged one per cent, thanks to an 8.6 per cent decline in energy. Thus far, energy prices have continued to move sharply lower in November, so it is highly likely to see another drop in CPI. This has huge implications on the Fed due to deflationary fears and the possible impact on real interest rates due to falling inflation. The FOMC will use what little interest rate ammunition remains as the Fed fund rate approaches zero.

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.