Global equities gain strongly in 2nd quarter

Global stock markets experienced their best quarterly performance in over 20 years as markets rallied from their March lows after hopes of economic recovery emerged. Investors who benefitted most were those in emerging markets, which surged an impressive 35%. Chinese shares rose 25% and Tokyo's Nikkei 225 was also up some 23% in the second quarter.

Malta Government Stocks were once again in the limelight with volume gradually on the rise. Trading occurred in 19 stocks, with a total market value of nearly €15m. The bulk of trading took place on Friday and mirrored movements in the benchmark European Government Bonds.

The European Central Bank's governing council on Thursday kept official interest rates unchanged at 1%. However, this was shunned by investors, with benchmark yields retreating further, particularly on Friday, following the dire US unemployment news which had knock-on effects worldwide.

As is often the case, pessimistic economic news is good news for Government and Sovereign bonds, given their 'safe-haven' appeal. In fact, on Friday, 11 out of 13 MGS traded at higher prices.

Corporate bond prices were slightly more subdued with minimal price changes. There were 34 transactions in 14 bonds with a market value of nearly €0.2m.

In the Treasury bills market there were 19 deals valued at nearly €5.4m. This as the new bond issue offered to the public by International Hotel Investments plc and Tumas Investments plc closed on their launch date.

Trading on the Malta Stock Exchange this week was quite uneventful. Price fluctuations in most equities were minimal except for two companies. However, since these firms' market capitalisation is small they had little impact on the overall MSE index which barely changed throughout the week.

Similar to major foreign equity markets, this was the MSE's third week in a row of negative performance, with the index ending the week a fraction of a point lower at 2,940.944, or a minor 0.02% fall. Despite the negative performance in recent weeks, the index ended the second quarter of the year up 8.98%.

With last Monday being a holiday, the volume of trading on the MSE in the shortened week was noticeably low, matching that of last week. The market also lacked any compelling and convincing direction. There were a total of 76 deals in the equity market valued at about €197,000. Eleven equities were traded, five of which shed value, while another five remained unchanged.

Go plc was yet again the best performer of the week, being the only equity to register a gain. This equity has maintained its positive momentum which started some weeks ago. On the other side of the spectrum, Crimsonwing plc saw its share price lose significant value in a single trading day.

Shares in the local banking sector experienced minor movements in intra-week trading but prices closed unchanged. This somewhat contrasts the slightly negative weekly performance by financials on a global scale.

A fall in Bank of Valletta plc (BoV) share price on Tuesday was totally recouped in subsequent trading sessions. The price range was also narrow, fluctuating between €2.58 at worst and €2.65 at best, which was also its closing price for the week. Trading in BoV was nearly 40% of the total market value traded.

Similarly, HSBC Bank Malta plc's share price remained intact at €2.60 throughout the week's four trading sessions. The price traded in a limited range, between €2.579 and €2.60, possibly indicating a current equilibrium between buyers and sellers. Volume traded amounted to 19,645 shares, exchanging ownership in 22 deals spread out evenly over the week.

Single deals of 2,287 Fimbank plc shares and 600 Lombard Bank plc equities left prices of both banks unchanged at $1.18 and €2.55 respectively.

Further buying interest in Go plc pushed the share price gradually higher this week, to reach €1.82, sustaining the upward trend noticeable over the past weeks. This price movement, however, is not being backed by strong volume, as a mere 10,475 shares changed hands over 12 deals, a far cry from trading volumes in this equity earlier in the year.

Nevertheless, this positive momentum has resulted in an impressive year-to-date performance with Go now clearly in positive territory at +3.88%, as against the MSE's overall negative performance of -8.33%.

Middlesea Insurance plc resumed its downward trend, ending the week significantly lower at €1.86, a 7% fall. This, however, occurred in a single trading session, with 3,000 shares being exchanged in two deals. This week's price move has plummeted this equity's year-to-date performance to -27%.

The only equity to suffer a larger drop over these past six months is indeed Crimsonwing plc, the price of which fell nearly 36% in a single trading session this week. The equity had not traded since May 13. Overall, the company's equity has lost nearly half of its value since the beginning of the year.

Malta International Airport plc fell 0.05% this week on three deals of 8,000 shares with the equity's shares closing at €2.091.

Medserv plc also traded once, when 5,000 shares changed hands at €3.50, a fall of 1.41% over last week's closing price. Similarly, RS2 Software plc equities experienced a slide in their price as a single trade of 5,000 shares lowered the price to €0.651. However, year-to-date, RS2 is still showing a positive performance of +1.87%.

No change was recorded in Global Capital plc shares after a single trade of 266 shares.

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 2122 4410 or e-mail jmizzi@jmfs.net.