Financial news

Yesterday's session at the Malta Stock Exchange saw a net increase in the Index of 0.29 per cent to end the day at 3,238 points. Activity was spread over three equities with the largest local listed company by market capitalisation supporting the Index. A total of 23 deals were executed on the equity market, with Bank of Valletta remaining the most actively traded equity.

Despite the low number of transactions, HSBC Bank Malta was the day's only gainer with a price increase of 3c or 1.09 per cent. Gains were registered in the last few seconds of the trading sessions, with the equity closing at the price of € 2.78, having initially started trading at €2.75. Volume turnover consisted of 5,000 shares with a total market value of €13,791 which were executed over four deals.

Bank of Valletta was the day's most liquid index component with 7,570 shares swapped over 18 deals for a total market consideration of €22,710. There was no change in the previous day's closing level of €3 when the equity started trading without the right for a one-for-five bonus issue.

Maltapost, which will be publishing its full-year results for the period ending September 30, 2008 today, was the only equity to incur a marginal loss of 4c7 over one transaction to close the trading day at €0.77 per share.

In the fixed interest sector of the market activity was spread across just three corporate bonds and just two government stocks. The highest turnover on the fixed income market was registered in the 5.10% MGS 2022 as a volume of 18,970 nominal were swapped at €104.08 between two investors, increasing the price by 0.83 per cent. The 6.7% Eden Finance 2010 registered the most significant decrease among the corporate debt issues trading lower by 50 ticks to close at €98.50 for an aggregate volume of 6,484 nominal.

Weekly UK economic review

The Bank of England did not disappoint as it delivered yet another 50 basis points cut in last week's Monetary Policy Committee meeting. At 1.5 per cent, interest rates now stand at a 300-year low and there is still further room to go.

The bank justified the cut by noting that while the combination of monetary and fiscal support, falling inflation and lower sterling should provide a "considerable stimulus to activity", there was still a big risk of undershooting the inflation target going forward.

The BOE is running out of options as it moves closer to a zero rate policy. Over the past few weeks the possibility of quantitative easing (printing new money) has been mentioned very often in the UK press, but no official authority has expanded on such possibility. However, before attempting such a measure, the BOE will want to exhaust its monetary arsenal (i.e. interest rates).

In the meantime, UK industrial production saw its largest decline since 1981 in November (-6.9 per cent year on year). Manufacturing production fell into further misery as November figures plunged by 2.9 per cent from their previous monthly figures to reach a year on year negative figure of 7.4 per cent.

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.