Financial news

Volumes remained soft during yesterday's trading session at the Malta Stock Exchange with most investors turning their attention away from investments in the run-up to the Christmas festivities. As a result, just three companies witnessed trades being struck in their equity with the MSE Index barely shedding 0.1 per cent to close at 3,304 points.

Go was the day's worse decliner shedding 4c5 or 2.4 per cent to close at a new multi-year low of €1.85, and is currently languishing 41 per cent below its highest level of the year of €3.145 touched in mid-March.

The quadruple play telecommunications provider has dropped out of investor favour since the government had announced its intention to dispose of its majority stake in the company at a substantially discounted level to the then prevailing market price in April 2006. However, since then the company has gone through a major restructuring programme, acquired a local digital terrestrial television network operator and an indirect stake in the Greek telecoms company Forthnet S.A., but with no respite for shareholders.

Bank of Valletta was, relatively speaking, the day's most liquid and actively traded equity with 5,840 shares, carrying a market consideration of €20,993, being exchanged across seven transactions. The equity moved higher by 1c9 or 0.5 per cent ahead of today's 35th Annual General Meeting. If approved, registered holders at the close of business will subsequently receive a bonus share for every five shares held on January 15, 2009.

HSBC Bank Malta was the other banking equity to trade with 4,200 shares changing ownership during the session. All four deals were struck without altering its previous closing price of €2.84 and at the end of the day best demand stood for 1,000 shares at €2.815 while supply was for 5,099 shares best offered at €2.85.

Weekly eurozone economic review

In just two months the European Central Bank (ECB) cut the policy rate by 175 basis points to 2.50 per cent, its strongest response yet to an economic downturn.

The tone at the December press conference suggested the Council sees this as a significant easing of policy and subsequent comments by ECB officials signalled that the market should not take a January rate cut for granted.

On top of this, ECB President Jean-Claude Trichet said in an interview that the key goal for the Central Bank at this stage is to drive interbank rates down, as the spread between those rates and the ECB main reference rate is still too wide.

As suggested by the rise in the euro exchange rate, the relative prudence of the ECB is now having an impact on the currency markets that could put an additional headwind in front of the euro area economy.

On the data front, eurozone output dropped by 5.3 per cent year-on-year, more than twice the rate of decline seen in September. France, the second largest economy in the region, saw production shrink by seven per cent, almost twice the pace of its larger neighbour Germany.

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.