Global equities register staggering gains

Global equity markets returned to a positive mood as companies reported either surging profits, strong growth or better-than-expected earnings. In the US, Goldman Sachs and JP Morgan reported strong second quarter growth, while Bank of America and Citigroup reported profits but disappointed the markets. This led the three leading US indices to gains of about seven per cent this week.

Resurgent growth in the economy of China - one of the world's leading consumers of oil and industrial metals - has once again raised investors' hopes that the global economy could be at a turning point. As a result, equities in Asia performed extremely well, with the best performer being India's Sensex index, which gained over nine per cent, while Hong Kong's Hang Seng index was up 6.4%.

In Europe, the leading equity indices had a five-day positive run, with banks and car firms leading the rally. Energy shares were also up on Friday as the price of oil moved forward again. The pan-European FTSE Eurofirst 300 index registered its best week this year as it gained seven per cent.

Similarly, the FTSE 100 index in London recovered 6.35% this week as it registered the best week since March, following weeks of decline.

Participation in Malta Stock Exchange (MSE) was again lacking this week as less than 64,000 shares were traded. Trading was mostly concentrated in two sessions with absolutely no equity trading being carried out on Thursday. Similarly, trading in government stocks was also significantly lower than in previous weeks.

Most investment assets on the MSE were locked in very narrow trading ranges, barring Maltapost, which rallied nearly six per cent. Such minimal price changes kept the index relatively flat, clicking a notch higher on the last trading session, and closing the week at 2,965.752 points or 0.6% higher.

The lack of volatility is understandable given that investors are mostly holding back prior to the local interim reporting season, which starts on July 27.

Seven equities saw their shares change ownership this week, with one remaining unchanged, three improving and the other three deteriorating slightly. The two large banks were among the positive performers, providing uplift to the index, given their large market capitalisation. The week's worst performer was Malta Inter-national Airport plc (MIA), with its shares sliding 2.43%.

Bank of Valletta plc (BoV) shares were the only ones traded in nearly every session. As in the past weeks, this was the most traded equity, although volume continues to fall. This week 19,253 BoV shares were exchanged in 23 deals, upping the price by €0.021, or 0.79%. The equity's price saw minor volatility and ranged between a low of €2.63 and a high of €2.70 , ending Friday's session at €2.68.

A slight jump of 1.92% in HSBC Bank Malta plc share price on Friday was the main reason for the overall MSE's modest rebound this week. A total of 9,328 shares were transacted in 13 deals. The share price closed at €2.66, a level not reached since the beginning of February, and thereby possibly snapping out of this equity's stagnant trading range of the past several weeks.

HSBC announced this week that the board of directors will be meeting on July 31 to approve the group's and the bank's interim accounts for the half-year ending June 30, and to consider the declaration of an interim dividend.

A total of 10,000 Go plc shares changed ownership over nine deals. This equity price fell €0.03 over the week, closing at €1.79. The equity has therefore recouped some of the gains achieved in prior weeks and remains one of the best-performing equities this year.

Lombard Bank plc saw its share price lose a fraction of its value on Tuesday - the only day it traded. One deal for 7,000 shares lowered the price from €2.55 to €2.549.

There was no change in the share price of Simonds Farsons Cisk plc (SFC) this week. A single deal for 7,200 shares at €1.68 took place on Tuesday.

Following SFC's bonus issue which was finalised on June 30, and the realignment of the share price to reflect the new amount of share capital, this week's closing price has been readjusted and is 3.16% higher than last week's closing price of €1.629. The closing price at the end of 2008 was €1.90.

Light trading of 7,200 shares in four deals lowered the price of Malta International Airport plc (MIA) to €2.05 - a 2.43% reduction in value. On the other hand, Tuesday's trading session saw Maltapost plc strengthen by 5.97%, closing at €0.71 following a single deal of 1,000 shares.

Plaza Centres plc and Fimbank plc announced they will publish their half-yearly results on July 27 and August 13, respectively.

Benchmark German government bond yields saw some volatility last week as equity indices improved. The steady increase in government bond prices experienced over the past four weeks was therefore abruptly halted and slightly reversed.

Malta Government Stocks went through the same type of fluctuation, with falls in most issues. Market value traded was a fraction of the €15 million reported last week, with only €1.1 million being traded in 37 deals.

Trading in corporate bonds amounted to €0.53 million, with most bond prices remaining unchanged, although seven out of the 20 bonds traded registered gains. However, the heaviest trading was still concentrated on the 4.6% HSBC Bank Malta plc 2017 bond and the 5.35% BoV Subordinated 2019 bond. The BoV bond has retreated from its highs of €103 and closed the week slightly lower at €102.90.

This week trading in the Treasury Bills market amounted to nearly €3.7 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.