Financial news

Trading during yesterday's session at the Malta Stock Exchange resulted in a negative outcome as the Index dropped by a marginal 0.5 per cent to close at 3,218.4 points. Weighing on the Index were single trade transactions affected in International Hotel Investments and Middlesea Insurance.

Bank of Valletta was the session's most liquid and actively traded equity as investors swapped a total of 26,820 shares over 13 deals for a market consideration of €80,358. The bank was a non-mover during the session as it closed unchanged from Monday's closing price at €3, despite registering a negligible intra-day increase of 0c1 when investors suppressed the price back to its opening price.

Similarly, in the banking sector, FIMBank also remained static during the day as the equity closed unchanged at $1.29. Activity in the trade finance specialist resulted when investors transacted 1,000 shares in just two deals.

International Hotel Investments was the day's laggard as the equity shed 2c4 which equates to a decline of 2.7 per cent to close the session at €0.875. Volume was muted for the hotel property and management company as two investors exchanged just a mere 538 shares.

A negative performance was also registered by Middlesea Insurance which declined by1c or 0.6 per cent to end the day at €1.75. A single deal was struck in the insurance company for a market value of €1,750.

In the fixed interest sector of the market, activity was spread over five government stocks and eight corporate bonds. The best performer in the corporate debt market was the seven per cent Gap Developments 2011-13 which increased by 0.82 per cent as €9,200 nominal were transacted over four deals to terminate at €92.75.

In the sovereign debt market the sole gainer was the 4.8 per cent MGS 2016(II) as it increased by 35 ticks when €18,635 nominal were swapped over a single deal to terminate the session at €104.13. The highest turnover was registered in the 5.7 per cent MGS 2012 (III) as €5 million nominal were exchanged over two deals to end at €107.75, signalling institutional activity.

Weekly US economic review

The economic data emanating from the United States during the week has been encouraging with GDP data suggesting that the economy contracted only slightly in the second quarter. There are also signs of stabilisation in the housing market, despite weak consumer spending and overall economic growth.

The Gross Domestic Product contracted at an annualised rate of -1 per cent in the second quarter, which was a marked improvement when compared to the -5.5 per cent in the previous quarter and was better than the 1.5 per cent expected by economists. However, significant revisions to back data show that the economic contraction has been a bit more severe than was previously thought. In fact, output contracted by 3.7 per cent by Q1 2009 on the new figures, compared to just 3.3 per cent on earlier estimates. Meanwhile, US manufacturing contracted at a much slower pace in July as national factory activity rose to a reading of 48.9 from its prior 44.8 in June, bringing the index closer to the 50 reading that signals expansion. Furthermore, US construction spending rose 0.3 per cent in June, with spending for public buildings reaching a record high, after dropping 0.8 per cent in May. This was much better than expected as analysts were predicting a 0.5 per cent decline.

On a negative note, however, both consumer spending and investment spending continued to contract sharply in the three months to June, and without positive contributions from government spending, such as fiscal stimulus and trade, the overall contraction would have been sharper.

This article has been prepared by Bank of Valletta plc (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.