Thin trading erases last week's gains

Last week's gains on the Malta Stock Exchange were totally erased in this week's trading. Three consecutive negative sessions saw the MSE index gradually lose 1.66% in value to close at 3,035.347 points. An undulating pattern persists as the local market fails to find proper direction and continues to generally trade sideways, mirroring major equity markets abroad.

Furthermore, trading volume was light, partly suggesting a lack of conviction behind the recent moves and also due to Tuesday's power cut, which reduced this week's trading sessions to four. Such thin trading is, however, very typical of the local market at this time of year.

There were 92 transactions in the equity market, totalling €125,302 in value. Nine equities saw their equities being traded this week, with seven ending the week negatively, one positively, and another unchanged.

Go plc was this week's outlier, being the only equity that gained value, while International Hotels Investments plc (IHI) shares lost most in value, very probably due to profit-taking following a very steady climb over the past months.

Nearly half of the volume traded this week - 52,632 shares - were those of Bank of Valletta plc (BoV), which were transacted in 38 deals. Although compared to last week the price of this equity appears to have remained unchanged at €2.65, intra-week the price fluctuated between €2.685 and €2.65, with gains on Monday's session being totally nullified in the subsequent trading sessions.

On the other hand, Go's share price kept the gains achieved in the early sessions, closing this week on a positive note with the share price climbing to €1.75, an advance of 0.575%. A total of 26,200 shares in the equity were traded in over 11 transactions. This week's price movement brings the equity's price just €0.002 shy from its level at the end of 2008, and places Go among the top performers this year.

HSBC Bank Malta plc was the worst performer this week, with 26,200 shares being traded in 11 transactions. The equity's share price closed this week at €2.55, a fall of €0.05, or 1.92%. This decrease occurred on Friday on minimal volume following a flat week with price held mainly constant.

By contrast, Malta International Airport plc shares went through some choppy trading throughout the week, albeit on very light volume. Steady declines in the price of this equity in the first part of the week were partly offset by a large gain on Friday, which however failed to erase the overall negative effect brought about by earlier trading. The equity's price reached a weekly high of €2.18 and a low of €2, closing 3.67% lower at €2.10. A mere 10,150 shares changed hands in seven deals.

Plaza Centres plc and IHI both traded about 5,000 shares during the week. Both equities lost ground, with Plaza slipping 1.22% to close at €1.699, and IHI falling 3.94% to end the week at €0.951.

Although IHI was the equity that lost most value this week, it still maintained its position as the top performing equity this year. Notwithstanding this week's loss, IHI has gained 6.26% since January.

IHI this week announced the issue of €30 million 6.25% bonds maturing between 2015 and 2019 subject to an over-allotment option of an additional €5 million. The purpose of this bond issue is mainly for general corporate funding and financing IHI's expansion and acquisition policy in line with its investment objective and strategy. The opening date of these bonds will be June 30.

Lombard Bank plc experienced a minimal fall as 1,000 shares were traded in a single deal, dragging the price down to €2.58, a 0.77% fall from last week's closing price.

Contrary to the heavy trading experienced in previous weeks, Fimbank plc had a quiet week with just 100 shares exchanged in a single deal, which however led to the price falling by 0.78% to close at $1.27.

Similar minimal trading reduced the price of Global Capital plc shares by 3.23% to €1.50.

The government bond market saw some hefty trading this week with 60 transactions across 16 bonds for a value of €5,283,779. The advance in the European benchmark yields over the past weeks proved unsustainable, and most European government bonds saw their prices recover as yields settled lower.

Uneasiness in equity markets worldwide, a calming of inflation fears and a renewed appetite for safe investments were all factors which led to falling yields and rising government stock prices. Local government bonds followed suit, with most bonds seeing improved prices. The 4.8% MGS 2016 performed best, rising nearly 0.76% to end the week at €102.89.

Next week, the government will be accepting applications for two fungible issues of Malta Government Stocks for a total aggregate amount of €100 million, subject to an over-allotment option of a further €20 million. The 3.6% MGS 2013 issue is priced at €99.50, and the 5.2% 2021 issue is priced at €103.50.

This week, 49 trades took place in corporate bonds for a value of slightly above €0.4 million. Trades occurred in 19 bond issues, with most prices remaining unchanged.

In the Treasury bill market 24 deals took place for a value of nearly €12.3 million.

This article, which was compiled by Jesmond Mizzi Financial Services Limited (JMFS), does not intend to give investment advice and the contents therein should not be construed as such. JMFS is licensed to conduct investment services by the MFSA. The directors or related parties, including the company, and their clients are likely to have an interest in securities mentioned in this article. For further information contact JMFS at 67/3, South Street, Valletta or on Tel: 2122 4410 or e-mail jmizzi@jmfs.net.