MSI share issue approved

Last week, the rally in the Malta Stock Exchange index lost some momentum following its recent strong bounce. The MSE index closed on Friday at 3,293.489 points, a slight 0.67% down from the previous close. Since late October, the index had soared 7.5%, so a slight cutback was not surprising.

Trading volumes were still on the high side, yet slightly lower than the previous week. Nearly 230,000 shares were traded this week spread over 195 deals. Transactions occurred in 13 equities, five of which ended the week higher, three equities remaining at the previous week's price, and another five losing value. The price of two equities fell dramatically, yet given their small market share, they failed to significantly influence the overall index.

The bullish sentiment surrounding Bank of Valletta plc shares remained intact at least till mid-week with the share price climbing even higher, reaching €3.84. However, BoV shares subsequently lost just over 1% to end the week unchanged at €3.80.

The change in atmosphere mostly took place on Friday as Middlesea Insurance seemed to cast a shadow on the optimism surrounding local equities, particularly BoV, which is a shareholder in the company. Trading volume in this equity was also notably lower with 36,730 shares changing hands over 52 deals, nearly half that traded the previous week.

By contrast, trading in HSBC Bank Malta plc doubled last week, with 50,253 shares exchanged in 49 trades, mostly early in the week. Trading on Thursday pushed HSBC's share price up to €3, a 0.33% increase which, however, is the highest it has reached in 2009. The bank's shares have gained 11.1% so far this year.

Go plc's share price continued its upward trend last week, gaining significant momentum and, most encouragingly, sustained by larger volumes week after week. Nearly 55,000 shares changing hands in 36 deals, pushing the price up €0.10, or 5.8% higher, to reach the summer peak of €1.82 on Friday. This closing price is still slightly shy of its year high of €1.86, which was reached in January. Nevertheless Go's performance to date has shifted from negative to positive, having improved nearly 3.9% since January.

Similarly, Malta International Airport plc shares had a very positive week, with its share price climbing 6.8%, to become the week's best-performing equity. The price increased on decent volume mostly on Wednesday but retreated slightly on Friday to close at €2.35.

Lombard Bank plc's share price improved 1.8%, closing the week at €2.799. Since mid-October, this equity's share price has had a sharp rally of just over 14% but it has still a further 6.7% to go to shift from negative to positive territory on a year-to-date basis. Volume traded last week was, however, on the low side as only 4,200 shares changed hands.

Following six trades involving 10,236 shares on Friday, Maltapost plc's share price strengthened 3% to close the week at €0.62, thereby snapping a sharp downtrend experienced over the past weeks.

Fimbank plc gave up its previous weeks' gains, losing nearly 4%, mostly following trading on Friday. Similar losses resulted for International Hotels Investments plc, whose share price shed nearly 6% last week. There was decent volume of trading in both companies, albeit on different days of the week.

Low volumes traded in RS2 Software plc, Global Capital plc and Medserv plc resulted in a fall of 3.2% in RS2's share price while the latter two remained unchanged. RS2 announced last week that it expected profits in the second half of the year to remain similar to the first half.

The value of Datatrak Holdings plc and Middlesea Insurance plc (MSI) fell drastically last week. The former plunged 63.2% following slight volume traded on Thursday and Friday. The latter tumbled 44% mostly on Friday, after a single deal of a mere 100 shares. MSI's share price is down an aggressive 73% so far this year, clearly the worst performer on the local exchange.

MSI was very much in focus last week particularly following a company announcement issued on Thursday which reiterated and highlighted the fact that "during the third quarter of 2009, the Italian subsidiary Progress Assicurazioni SpA continued to report material negative results, including an exceptional incidence of late reported claims which negatively impacted the Group's results".

The MSI board also announced that the extent of these losses has placed an unprecedented strain on Middlesea Group's capital resources. The company announced a rights share issue offering current MSI shareholders new ordinary shares of a nominal value of €0.60, subject to approval of resolutions at an extraordinary general meeting last Friday.

These resolutions were approved at the EGM, and two of its main institutional shareholders - BoV plc and Mapfre Internacional - agreed to buy any new ordinary MSI shares not taken up by other shareholders. The 67 million new ordinary shares will be offered in the ratio of 2.68 new shares for every one existing share at €0.60 per share.

Last week, long-term benchmark German Government Bond (Bunds) yields edged lower as equity markets went through a slight correction.

On the MSE, government bonds that traded varied in performance but were generally flat throughout the week. The volume of trading was higher than that of previous weeks, amounting to just over €800,000, mostly concentrated in the 2013 issue.

Trading in local corporate bonds totalled €688,000 in value. Both the 8% BoV USD 2010 bond and the 7% GAP Developments plc euro 2011-13 bond rose in value by just over 1% over the previous week.

Trading in the Treasury Bills market amounted to €1.9 million.

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.