Weekly market round-up

UK recession persists but FTSE 100 still up

In London the FTSE 100 gained another 1% this week despite the fact that the UK economy shrank by 0.4% in the third quarter. On Friday, a National Office for Statistics report indicated that since the beginning of 2008, the UK economy has shrunk by 5.9%. Economists expected the economy to return to growth in the third quarter. As a result, sterling fell on Friday both against the euro and the dollar, after having recovered from recent lows, amid expectations that the Bank of England would have to increase the quantitative easing programme.

On the other hand a survey produced by Markit, a leading global financial information services company, indicated that the Eurozone economy has entered the fourth quarter on a strong note, with growth accelerating in both manufacturing and services. Quoting the chief economist of Markit, the Financial Times reported that "the data are consistent with GDP rising at a quarterly rate of around 0.4% in October". However, European markets fell marginally last week.

The dollar fell to $1.5060 against the euro, a 14-month low last seen in August 2008. Week-on-week the US dollar also fell by 1% against the Swiss franc and the Australian dollar and by over 2% against the New Zealand dollar. Good corporate earnings reported during the week increased investors' confidence, which seems to have continued the negative sentiment for the US dollar.

However, despite good overall company reports beating expectations, on Friday US markets fell last week, thus retreating from this year's highs, with the S and P 500 falling 0.7%. Meanwhile, US crude oil hit a new 2009 high of $82-a-barrel but fell back to below $80-a-barrel on Friday.

The Malta Stock Exchange (MSE) ended the week down 2.05 % at 3,114.326 points. The index's loss this year now stands at 2.93%. Twelve equities were traded on the MSE last week, in 137 deals valued at over €555,000. Three equities closed in positive territory, five fell in value while four remained unchanged. The week's best and worst performers were Go plc and Fimbank plc respectively.

Go plc increased 2.53% to close at €1.62 last week, after 28,765 shares were traded across 20 deals, including a significant 11,000 shares on Friday. Despite this upward move, the equity is still in negative territory for the year, with a 7.53% decline since January.

A total of 245,244 Fimbank plc shares were traded in 16 deals last week. The bulk of this trading occurred on Monday when Fimbank's price tumbled from $1.20 to $1.117. The equity's price crept lower on Tuesday, edged slightly upwards mid-week and closed the week at $1.10, a 8.33% loss over the previous week, and a substantial -25.47% since January.

Also in the red last week were International Hotels Investments plc (IHI) and HSBC Bank Malta plc, Malta International Airport plc (MIA), and Simonds Farsons Cisk plc (SFC). A total of 19,972 IHI shares changed hands over three deals, with the equity's price falling 6.7% from €0.88 to €0.821. Meanwhile, HSBC decreased by 2.10% to close at €2.75 after 21,225 shares were traded over 19 deals. The price fell 1.68% when a mere 460 shares were traded on Friday.

MIA lost 2.22% over the previous week to close at €2.20 after 1,058 shares were exchanged over four deals and SFC edged down 0.62% on the week, closing at €1.60, when 4,790 shares changed hands on five deals.

Among the gainers last week were Lombard Bank plc and Medserv plc which gained 2.04% and 1.24% respectively over the previous week. Lombard's price climbed to €2.50 from €2.45 after 8,800 shares traded on seven deals while Medserv's rose from €3.95 to €3.999 as 23,150 shares changed hands in eight trades.

Bank of Valletta plc's price remained unchanged at €3.35 despited 31,403 shares being traded last week. Since January this equity has increased a substantial 15.85%. The bank is due to publish its audited financial statements as at September 30 on Friday.

Island Hotels Group Holdings plc (IHG), San Tumas Holdings (STH) and Maltapost plc also traded during the week but their prices closed unchanged. IHG initially traded 5% higher on Tuesday but its share price subsequently fell to its previous close of €1. STH's share price remained static at €2.50 as a mere 2,500 shares changed hands mid-week. Meanwhile, Maltapost plc remained at €0.70, despite 10,346 shares changing hands in nine deals.

Nearly €14 million worth of Malta Government Bonds traded in 33 transactions last week, including €10m in the 7.5% MGS 2011 in just one deal. In total 13 government stocks traded during the week. The 5.75% MGS 2010 (11), 3.6% MGS 2013 and 6.65% MGS 2016 gained around 0.3% from their opening price last week, while the 4.8% MGS 2016 (11) and 5% MGS 2021 fell 0.58% and 0.28% respectively.

Over 27 corporate bonds worth nearly €1.4m were traded in 101 deals. Meanwhile, in the Treasury Bills market a total of eight transactions were carried out for a value of just over €2.5m.

On Thursday, Mizzi Organisation Finance plc announced that it has formally submitted an application to the Listing Authority with respect to a proposed new €25m bond issue. The company said it intended to give preference to the existing bondholders who are willing to exchange their current holding for the new bonds. In this respect, the board of directors announced that bondholders registered as at the close of trading on Tuesday will be entitled to this preferential treatment.

This article, which was compiled by Jesmond Mizzi, managing director of Jesmond Mizzi Financial Services Ltd (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, Tel: 2122 4410 or e-mail jmizzi@jmfs.net.