Financial news

Trading for yesterday's session at the Malta Stock Exchange resulted in a marginal gain for the Index as it rose by just 0.01 per cent to close practically unchanged from Monday's session at 2,726 points. A total of five listings were active in the equity market with only one component supporting the Index.

HSBC Bank Malta was the only gainer for the day as it increased by a marginal 2c or one per cent to terminate the session at €2.15. The financial services company was the day's most liquid listing as 18,300 shares were swapped over 10 deals.

Bank of Valletta was the most actively traded equity when a total of 15 deals were struck for a market consideration of €38,211. The bank was a non-mover for the session as it closed unchanged from the previous day at €2.20.

Similarly, International Hotel Investments remained stationary as the price closed at €0.80. Trading activity for the hotel propriety and management group was spread over just a couple of deals on relatively low volume.

Malta International Airport was the day's worst performer as the airport operator lost 12c or five per cent to close the session at €2.25, a new low for the year. There was no momentum behind yesterday's move as on 1,300 shares were traded over a single deal.

Lombard Bank Malta was also a loser for the session as the equity depreciated by a further 2c1 which represents a 0.83 per cent decline to end at €2.50. Trading for the day was spread over two deals and a market value of €6,261.

In the fixed interest sector of the market, activity resumed from Monday's session and was spread over four government stocks and nine corporate bonds. The highest turnover was registered in the 4.8% MGS 2016(II) as 750,000 nominal were transacted over a single deal as the security lost 54 ticks to close at €103.80. In the corporate debt issues the 5.9% HSBC Bank Malta 2018 was the sole gainer as it increased by 80 ticks over two deals with an aggregate of 8,000 nominal.

Weekly eurozone economic review

The European Central Bank did not disappoint, and as it was widely expected, it lowered rates by 50 basis points to 1.5 per cent, a new low for the euro area. President Jean-Claude Trichet last week said that the current rate should not be seen as a floor and that further reductions were possible. On the other hand, he also stated that a base rate at 1.5 per cent is already a "very, very low rate". The statement accompanying the rate decision noted that "risks to the economic outlook now appear to be more balanced" thereby halting expectations of immediate rate cuts in the coming months.

When asked if the ECB will embark in any quantitative easing measures in line with the recent measures taken by the Bank of England, Mr Trichet responded that the ECB is already pursuing such unconventional policies, as it increased its lending to banks and providing as much liquidity as the banks wanted for a fixed rate.

On the same day of the rate decision, a breakdown of the Gross Domestic Product was also issued. Investment spending registered a significant decline on the back of business cut-backs and excess capacity.

Consumer spending fell for only the third time since 1995. Trade was also a drag, as imports fell but exports fell even faster. The ECB staff is now expecting the region's economy to contract by between 2.2 per cent and 3.2 per cent this year, and a rather more optimistic outlook for 2010 where growth is projected to be between -0.7 per cent and +0.7 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.