Trading up to 2008 level

January proved to be a very busy month for the local equity market as turnover reached €4.7 million compared to €1.8m in January 2009. This figure is close to the €4.8m recorded in January 2008 when the Malta Stock Exchange index stood at the 4,800 level. Total value of deals negotiated in January on the MSE reached nearly €40m. Treasury Bills represented half this value, €11m was in Malta Government Stocks, while the corporate bond market accounted for €3.6m.

Last week, the MSE eventually succumbed to selling pressure, erasing some of the previous weeks' generous gains. The MSE index edge lower in every trading session, dragged down primarily by the highly capitalised equities. By Friday the index had retreated 1.86% to close at 3,846.91, thereby failing to reach the 4,000 level it nearly managed the previous week.

This slight downturn was partly expected due to a general negative vibe dampening investors' enthusiasm worldwide over the past two weeks. This selling mode seeped through the local exchange via lower share prices of the two major banks, which often reflect swings in international equity prices, particularly in the heavily weighted financial sectors. On the other hand, the share price of some lower capitalised rose.

However, despite last week's negative move, the index gained a staggering 11% in January.

Although volume of trading last week was the lowest for the month, it was still very high, with over half-a-million shares being traded. This was well spread out among a number of equities, rather than concentrated on very few, as is often the case.

Nearly 113,000 Go plc shares changing hands - the company's largest weekly volume for the year - shaving a minimal 0.22% off the share price, which closed the week at €2.28.

However, in terms of value of shares traded, Bank of Valletta plc remained the largest, with nearly 99,000 shares worth just over a €0.3m being traded. The share price fell 4.20% to close the week at €3.40, very negatively influencing the overall index.

Following the close of trading on Friday, BoV announced that during the financial period commencing on October 1, 2009, the bank's operating profits for the first quarter were "satisfactory". Net interest margin improved as repricing continues and there was a sustained growth in customers' deposits. On the negative side there were increased impairment charges due to the current difficult economic environment, and the performance of Middlesea Insurance plc.

The jump of nearly 10% in HSBC Bank Malta plc's share price proved unsustainable as the equity came under selling pressure in nearly every trading session. The share price lost €0.10c, or 2.5%, to end Friday's session at €3.90. This correction was, however, characterised by nearly half as many shares traded as usual, indicating certain resilience in this stock.

On the other hand, the volume of trading in International Hotel Investments plc was above normal, with 96,000 shares exchanged. The share price again failed to break through the €0.80 level and retreated back to €0.78, a 2.50% drop from the previous week.

Maltapost plc failed to sustain the past weeks' steep rises and edged down €0.001, or 0.13% lower last week. Volume was above average with only a small percentage of these trades backing the fall in the share price.

Following weeks of significant volatility, Middlesea Insurance plc's share price remained fairly range-bound last week, to close a mere 0.12% down at €0.859. Volume was sharply down with just over 24,000 shares traded, a far cry from previous weeks. This could possibly indicate that this equity is reaching an equilibrium as investors seek further direction with conviction.

Fimbank plc was one of the few equities to gain value last week, with the share price climbing 3.51% back up to $1.18. Malta International Airport plc's share price also headed northwards, gaining 6.55% to sustain the rise that began in mid-December. Volume traded in both these stocks was average.

Datatrak Holdings plc's share price increased by 21.9%, and Global Capital plc's improved by 11%. However, both these gains lacked noteworthy volume.

6PM plc, Grand Harbour Marina plc and Crimsonwing plc registered the steepest falls last week. 6PM plc was the week's worst performer shedding just over 28% on a single trade of 2,000 shares. On Friday it traded at a low of GBP0.30 before recovering to GBP0.48. Lombard Bank plc's share price fell 0.03% on minimal volume.

Simonds Farsons Cisk plc, Medserv plc and Island Hotels Group Holdings plc remained unchanged.

Following last week's sudden improvement in government stock prices, last week these bonds traded in a rather mixed fashion as the general negative overall sentiment seemed to have already been included in the previous week's downward move in yields. Nearly €6.5m worth of Malta Government Stocks was traded, mostly in the 4.8% MGS maturing in 2016, the price of which fell by 0.18%. Corporate bonds were largely unchanged except for the 6.25% Corinthia Finance plc euro 2016-2019 bond which dropped by 2%. A total of nearly €900,000 across 26 bonds were traded last week. In the Treasury Bill market value traded slightly exceeded €1.3m.

Grand Harbour Marina plc (GHM) last week announced the issue of €10m worth of new bonds, maturing in 2017-2020, at 7% per annum, issued at par. Most of the proceeds from the bonds will be used to prepay the GHM's current loan facility of €3.8m, while the rest will be used for potential further waterside and landside investments within the marina or elsewhere in Malta. GHM also indicated a possibility to co-invest with Camper & Nicholsons in existing and new investment marinas outside of Malta with a focus on the Mediterranean. The bonds are unsecured and will at all times rank pari passu with GHM's other unsecured obligations. Subscriptions open on February 11. Copies of the prospectus and applications are available from authorised intermediaries.

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.