Financial news

Trading activity during yesterday's session at the Malta Stock Exchange was restricted to a single equity. There was no percentage change for the MSE Index which terminated the session at 3211 points.

Bank of Valletta was de facto the only equity that traded during the session as a total of 13,316 shares were exchanged between investors across 18 trades for a market consideration of €35,952. The bulk of the day's transactions were struck during the first minute of trading, with the final deals executed a quarter of an hour before the session ended. In the fixed interest sector of the market trading was spread across seven corporate bonds and 10 government stocks, the latter of which, all ended the day in negative territory after comments from European Central Bank members downplayed risks of deflation.

In addition foreign governments are currently issuing a significant number of new bonds in an effort to combat the ongoing recessionary scenario. This inundation of sovereign securities in the Eurobond market has pushed euro yields higher. Consequently, the Central Bank broker has lowered its bid prices to keep yields on the Malta Government Stocks at an appropriate spread to their European counterparts.

The 5.50 per cent MGS 2023 was the worst performer as it lost 342 ticks over the previous closing price as a total of 18,247 nominal were transacted over three deals. The segment's biggest deal was struck in the 7.80 per cent MGS 2018 where institutional investors swapped 500,000 nominal in a single deal which was fixed at €124.25.

Fresh buying activity returned to the battered 5.60 per cent GlobalCapital 2014/16 and 7.00% GAP Developments 2011/13 which moved higher by 50 ticks and 200 ticks respectively. The euro tranche of the seven per cent MIDI 2016/18 traded in good volume at €101.00 for the second consecutive session since listing last Friday, while both issues of HSBC Bank Malta attracted activity.

Weekly eurozone economic review

All in all the economic data coming out of the eurozone was slightly above expectations but still deep into negative territory.

The European Commission (EC) published its forecasts last week, where it now expects Gross Domestic Product (GDP) to fall by 1.9 per cent this year, far below its previous forecast of a slight positive increase.

The EC also expects the average eurozone government deficit to reach four per cent of GDP this year, rather than 1.8 per cent in its previous estimate.

Meanwhile, the small rise in the Purchasing Managers' Index Composite was a very much welcomed piece of economic data. Nonetheless, with surveys pointing to further contraction, the near term outlook for activity remains very challenging. The rise in the euro-zone composite PMI from 38.2 to 38.5 was above consensus levels of 37.4 and was the first monthly increase since August.

However, it is important to point out that a reading below the 50-level mark points to contraction in the service and manufacturing industry.

On a more positive note, European Government Council member Axel Weber said that the Council does not see any danger of deflation in the medium term although there is the possibility of negative annual inflation rates for this year.

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.