Interest in local shares continues

The Malta Stock Exchange last week sustained the upward momentum of the past few weeks with the MSE index adding a further 1.13% to close at 3,694.17 points. This positive move was again backed by busy trading with the bulk of the deals in the two main banks and Middlesea Insurance plc.

There was some sharp intra-week share price volatility, with the index soaring in the first two sessions only to erase most of those gains in the subsequent sessions. Indeed, on Tuesday the index hit a peak of 3,805.775 - a level not reached since late September 2008.

However, at this point buyers lost steam and sellers took over. Profit-taking in HSBC Bank Malta plc shares and this negatively affected the overall index. The correction was exacerbatied by a sudden U-turn in investors' viewpoint towards the highly speculative Middlesea Insurance plc shares.

Trading volume in the equity market was once again very encouraging with a total of 575,124 shares changing hands over 399 deals. The value of trading amounted to €1.3m compared to the previous week's €1.1m. Trading was evenly spread throughout the week, during both the upturn and subsequent correction. A certain nervousness was noticable last week as investors feared that a correction was due following a three-month long steady climb.

Once again, investors' attention was focused mostly on Middlesea Insurance plc (MSI) shares which had improved considerably over the past weeks. Nearly 157,000 shares in this equity were traded last week, slightly more than the previous week, with nearly half the volume being traded on Monday. Initially, the price remained unchanged at €0.94, but the share price plummeted 22.2% to €0.731 from Wednesday onwards.

The fall occurred following a company announcement regarding MSI's Italian subsidiary Progress Assicurazioni Spa, which said that "the fourth quarter performance of Progress is likely to cause the overall Middlesea Group consolidated loss for the year to exceed that forecast". It added that preliminary unaudited data for the fourth quarter showed a marked deterioration in claims.

Bank of Valletta plc's share price was adjusted following the bonus share entitlement of one share for every four shares held. It closed at €4.10 on Tuesday and was re-set to €3.28 on Wednesday. Bonus share issues and the ensuing lowering of a share price is generally viewed positively given that it makes the shares more tradable. Following the adjustment, the share price climbed throughout the remaining trading sessions, outperforming the overall market to close at €3.35 or 5.7% higher. Just over 120,500 shares changed ownership.

The volume of trading in HSBC Bank Malta plc was also considerably high, with nearly 113,000 shares exchanged throughout the week. The share price fluctuated significantly, reaching a weekly high of €4.05 in Wednesday's session but ending at a weekly low of €3.65, a drop of 1.35%. The bulk of trading backed the initial boost in the price, with moderate volume lowering the price later in the week. Last week's price volatility may be easily explained as profit-taking following the hefty upward price movement over the past few weeks.

Fimbank plc's share price is increasing in small and often conflicting moves. It oscillated intra-week and closed the week 2.7% higher at $1.15. The share price had reached $1.18 on Thursday. This upswing was backed by nearly a third of the week's total volume of 74,321 shares. This was among the highest volume of shares traded in this equity for a number of months.

Go plc's share price last week soared higher, re-igniting the upward trend which had somewhat waned in the past few weeks. The share price improved by a very encouraging 5.61% to close at €2.26, backed by steady volume. But on several occasions, last-minute trades in this equity nullified or at times, reversed intra-day losses. So although the upswing seems intact, there appears to be some conflict between buyers and sellers of this equity.

Last week, Maltapost plc added to its previous week's gains with the share price climbing 2.78% to close at €0.74 back by average volume. On the other hand, Lombard Bank Malta plc gave up some of its previous week's gains to close the week 1% down at €3.139. However, with just 6,804 shares traded, volume was low. Low volume trades of circa 4,000 shares, led to the the price of International Hotels Investments plc and Global Capital plc to increase by 2.25% and 3.88% respectively. Meanwhile, Island Hotels Group Holdings plc's share price fell by 0.88% to close at €1.01 also on similar volume.

Light trading in Medserv plc and Crimsonwing plc shares did not affect their price. However, the share prices of Plaza Centres plc, Malta International Airport plc (MIA) and Simonds Farsons Cisk plc improved, albeit backed by very low volumes. MIA was in fact the best performer of the week, rising 6% to close the week at €2.65.

Last week, there were some sharp upward moves in the prices of government bonds, particularly in the Eurozone, and therefore locally, with longer-term maturities increasing most. This occurred following a European Central Bank's monthly meeting where reference was made to the persistent challenges in the European economy. Investors interpreted this message as an indication that official interest rates in the Eurozone will most likely remain subdued for a longer period than expected.

Yields therefore fell, while government bond prices soared. This was also the case locally as nearly €0.62 million worth of government bonds was traded.

On the other hand, local corporate bond prices were mainly unchanged with volume reaching 923,580 nominal. Trading in the Treasury Bills market amounted to €4.23 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 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, on Tel. 2122 4410 or e-mail jmizzi@jmfs.net.