MSE index edging towards 4,000 level

The Malta Stock Exchange's positive performance last week was exceptional, for two main reasons. First and foremost because it defied the very tangible negative vibes in most international global indices, which nose-dived towards the end of the week. And secondly because it gained a total of 6.11%, which is a very remarkable weekly move for an overall index.

Encouragingly, this rise was again backed by heavy trading volume, which has become the order of the day for the local exchange, at least since December. This increased interest by local investors is quite understandable as some locally listed companies prepare to issue their annual or semi-annual results. Anticipation of such results triggers larger buying or selling interest compared to other times of the year.

The index soared to 3,919.719 points, steadily approaching the psychological benchmark of 4,000, now only 2% away. This level has not been reached since end of July 2008.

Of the 15 equities traded this week, only three lost value, while 11 saw their share price move higher and one remained unchanged. Just over 558,000 shares changed ownership, totalling nearly €1.3 million in value. The trading pattern remained generally unchanged, with the two main banks, Middlesea Insurance plc and Go plc, accounting for the lion's share of trading.

Bank of Valletta plc was once again the most traded equity in terms of volume and value, with the share price gaining 5.94%, to close the week at €3.549. However, there was significant intra-week price volatility. The share price reached a high of €3.761 after three very positive sessions. But half these was gains were eroded in the week's last two sessions, very probably influenced by the sudden change in investors' mode internationally. There was steady, decent volume throughout the week.

HSBC Bank Malta plc's share price similarly achieved significant gains in the first three days of trading, but unlike its main competitor, it generally held on to this higher price in the latter two sessions. However, volume fell drastically in the last two sessions, possibly indicating a general uneasiness considering international developments. The equity closed Friday's session at €4, a 9.6% improvement week-on-week.

The volume of Middlesea Insurance plc shares traded fell slightly last week but still totalled 107,000 shares. This equity's share price remains unsettled. Last week it climbed 17.65%, reversing part of the previous week's heavy loss. This stock's price is still extremely volatile, with sharp up and down oscillations. The bulk of shares changed hands on Monday when the stock shed 4.24% to fall to €0.70, only for the price to bounce back to €0.86 by Friday's close. Significantly, the volume backing the upward movement was very limited last week.

Unlike the previously mentioned equities, Go plc experienced very little price volatility. The price rose moderately on two occasions with heavy volume backing and sustaining every higher move. A total of 87,673 shares were traded across 42 deals. The equity closed Friday's session at €2.285, a slight gain of 1.11%.

Maltapost plc's share price surged on Friday after announcing its annual results for year ended September 30, 2009, on Thursday. The company reported a 10% improvement in pre-tax profit notwithstanding the difficult economic scenario. Investors applauded the result by upping the share price by a further 8.11% to close the trading week at €0.80. This equity has erased most of last year's trading losses. Volume was higher than usual with 47,455 shares being exchanged.

Investors in Fimbank plc seem reluctant to push the price beyond $1.18, as this level triggers sellers to take profit and hence drag the price back to its previous level. This was one of the few equities losing value last week, ending just under 1% lower at $1.14 on moderate volume.

Plaza Centres plc shot up 13.33%, Malta International Airport plc climbed 9.43%, International Hotels Investments plc gained 3.63%, while Global Capital plc improved 2.42%, all on moderate volume. MIA's share price is climbing in an exponential manner week after week. It has risen over 23% in the past five weeks.

Both Lombard Bank plc and RS2 Software plc's share price both lost value last week, yet volume was minimal. By contrast, Crimsonwing plc, Island Hotels Group Holdings plc and Datatrak Holdings plc all gained value, albeit on low volume.

Although the local equity market was unscathed by the sudden risk aversion in global markets, this was not the case for the local government stock market, which is often much more in line with international developments. A sharp reversal in equity indices and overall uneasiness was translated onto government benchmark yields, which naturally fell drastically. This rush to safety meant a sharp rise in government stock prices, with the long-term bonds increasing the most.

Corporate bonds were mainly unchanged except for an interesting 3% rise in the 7% GAP Developments plc bond maturing in 2014.

Trades in the Treasury Bill market totalled a mere €11,000 in value.

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