Financial news

On a relatively muted session at the Malta Stock Exchange, the MSE Index yesterday registered a marginal decline of 0.075 per cent with the reading closing at 3,305 points. Steep gains in the airport operators share price were set off by losses in the two largest banking components.

Two trades amounting to 2,200 shares in Malta International Airport saw the equity trade at the higher end of the day's allowed range to close 6.96 per cent higher at €2.396. At the end of the day 380 shares were best bid at €2.396 against a supply of 9,840 shares at €2.50.

HSBC Bank Malta was the most liquid component, with 4.320 shares dealt over five transactions. Trading was executed down to the €2.879 level, only to recoup slightly to close one-tenth of a cent higher; this equates to a 0.66 per cent discount over its previous closing price.

Trading in Bank of Valletta consisted of seven transactions amounting to 3,505 shares, with the price discounted to €3.599 which equates to a 2c1 or 0.58 per cent reduction over the its last traded price.

Two investors swapped 1,500 FIMBank shares, failing to change the prior closing price of $1.30.

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

The 5.1% MGS 2014 (III) attracted the highest turnover, with 25,829 nominal, pushing the price lower by 1.35 per cent to €105.93.

The highest percentage increase in the local bond market was registered in the fungible October issue of the 5% MGS 2021 as 2,700 nominal were swapped at a price of €107.21, therefore trading higher by 2.47 per cent.

Weekly eurozone economic review

The ECB moved with an unusual degree of readiness last week - cutting policy rates by 75bp to 2.50 per cent, the largest cut in the bank's history. The bank played its cards very close to its chest during the press conference that followed, by no means closing the door to lower rates but giving little indication of any immediate impetus towards further easing.

As anticipated, the bank's new growth and inflation projections were both revised sharply lower relative to where they were at the time of the last forecast in September. GDP is now seen ranging between one per cent and 0.0 per cent in 2009 from a previous estimate of 0.6-1.8 per cent only three months ago. As for 2010, growth is expected to stage a modest recovery to stand between 0.5 per cent and 1.5 per cent.

With regard to inflation, the downward trend is expected by the ECB to continue, driven by falling commodity prices and significant economic deceleration. The Consumer Price Index (CPI) is seen between 1.1 per cent and 1.7 per cent next year and 1.5 per cent and 2.1 per cent the following year. The latter is key given it encompasses the policy relevant time horizon - as such the mid-point, coming in a shade below the bank's target, hints at further easing ahead but only subtly so. Elsewhere, the absence of a note seen during much of this year - that the current stance of policy will contribute to achieving the bank's objective - implies that rates have yet to hit an appropriate level.

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.