Financial news

Trading during the mid-week session at the Malta Stock Exchange resulted in another marginal decline as the Index shed 0.30 per cent to terminate at 2,718 points. Activity during the day was relatively subdued with only four components trading on the day. Activity was spread over 25 deals with an aggregate of 55,018 shares.

HSBC Bank Malta was the day's best performer as the equity increased by 3c or 1.40 per cent to close at €2.18, registering the second consecutive rise for the week. A total of 18,650 shares were exchanged over five deals and a market value of €40,147.

Similarly, Go was also a gainer for the day as the quadruple play communication's company climbed a further 1c to terminate the session at €1.50. Trading activity for the day was spread over 6,600 shares dealt over two deals.

Bank of Valletta was the session's sole loser as the equity lost 10c or 4.55 per cent to end the day at €2.10. The financial services company was nevertheless the day's most liquid and actively traded listing with 17 deals transacted for a market consideration of €44,776.

Plaza Centres was the day's only non-mover with the price closing unchanged at €1.70. Activity for the equity was spread over 8,960 shares on a single deal.

FIMBank's Board of Directors issued a preliminary statement of results for the financial year ending December 31, 2008. The trade finance specialist registered an after-tax profit of US$24.8 million in 2008. The bank also increased its net interest income from US$6.01 million to US$8.51 equating to a 41 per cent increase. The equity was not active during the day's trading session.

In the fixed interest sector of the market, activity was low and spread over two government stocks and a single corporate bond. The only two government securities that were active for the day both registered losses with the 5.7% MGS 2012(III) incurring the most noticeable decline as it shed 77 ticks over 2,330 nominal.

Weekly UK economic review

The reduction in interest rates acted as a spectator to last week's announcement of the much awaited "Quantitative Easing". The Bank of England decided to cut rates by 50 basis points to an all-time low of 0.5 per cent. Rates could fall further, that is closer to zero, emulating the Federal Reserve but at the moment interest rates decision carry little weight.

Quantitative easing took centre stage as the Monetary Policy Committee signalled that it will purchase assets, the majority of which will be gilts. The amount is currently set at £75 billion for the next three months but with the possibility of going up to £150 billion. This will be financed by an increase in banks' reserves at the BOE, in order to increase the money supply and increase the amount of credit available to households and firms. The key issue will be the extent to which banks will use excess reserves to increase lending.

Meanwhile, at the close of the week under review, industrial production figures were issued, unfortunately bringing further gloom to an already dreadful economic environment. The 2.6 per cent monthly drop in total production pushed the yearly rate to a significant 12.8 per cent. A slightly positive note came from the service Purchasing Manager's Index earlier during the week, where February's figure rose to 43.2 from 42.5, but still below the 50 level mark that separates growth from contraction.

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.