€232m demand for MGS

A strong demand by both members of the public and institutional investors resulted in an over-subscription amounting to €82 million in the latest Malta Government Stock issue which closed on Friday. In fact, a total of €232m was subscribed for by 2,677 applications and bids, of which €69m from the public were accepted in full. Interestingly, out of the total allotment of €150m, the government allotted €93.7m to the MGS 5.25% maturing in 2030.

MGS prices maintained their upward bias, with longer-term stocks surging the most. As risk aversion increased on a global scale, there was a rush towards 'safe' government bonds. This resulted in further gains in MGS prices, most of which neared or reached all-time highs, and pushed yields of benchmark government bonds lower.

Trading in Treasury bills totalled €5m last week.

A total of €481,150 was traded last week in local corporate bonds, resulting in moderately mixed price movements. Worth noting, however, is the 2.9% gain in the 6% Gasan Finance Company plc maturing between 2014 and 2016.

Meanwhile, the local stock market continued to trade sideways last week, with an overall gain matching the previous week's losses. This directionless trading has been in place since mid-April, following the correction experienced in earlier months. Notwithstanding this lack of clear direction, volume was nevertheless encouraging, with just over 363,000 stocks traded in 184 transactions.

It is worth noting that trading was spread across several equities rather than concentrated in the larger two banks. Indeed, Bank of Valletta plc and HSBC Bank Malta plc shares accounted for barely 20% of the whole volume dealt in. Furthermore, the Malta Stock Exchange index has significantly outperformed most equity indices abroad which saw heavy declines as international investors' mood turned sour yet again.

Trading occurred in 16 equities last week, seven of which ended the week in positive territory, clearly helping in pushing the overall index upwards. However, five equities lost ground and the remaining four ending the week unchanged. Surprisingly, Middlesea Insurance plc enjoyed the most generous gains last week, while Global Capital plc shed the most market value.

The largest volume of equities traded last week were in Go plc, with just over 66,000 shares changing ownership. Most of the trades took place on Friday, with minimal trading in other sessions. However, despite all this volume, the equity price closed the week unchanged at the previous week's closing price of €2.12.

An announcement issued by Middlesea Insurance plc (MSI) helped set the tone for last week's trading in this equity. It stated that during the first quarter of the current financial year, operating profits have been satisfactory, with a pre-tax profit of €2.8m for the period, compared to a €5.3m loss in the first quarter of the previous year. An improvement in insurance operations, the turnaround of the capital markets and the discontinuance of its Italian subsidiary's operations all contributed to this improvement.

MSI's share price initially spiked on minimal volume, and a pick-up of volume helped push the price even higher, reaching €0.891 by Wednesday. Significant volume then led to some profit-taking, with the share price dropping slightly to €0.88 by end of Friday's session.

Over the course of the week the equity bounced by over 17%. This strong move has helped the equity climb from negative to positive territory on a year-to-date basis, with a gain of 9.45% over the closing price of 2009.

Bank of Valletta plc's share price continues to oscillate, with last week's positive performance offsetting the previous week's loss. The equity climbed 3.37% last week on reduced volume, with 52,080 shares traded over 44 deals. However, most of the gains were achieved on Friday backed by moderately low volume.

Similarly, HSBC Bank Malta plc nullified the previous week's losses, ending the week 0.82% up at €3.06, the same price as two weeks ago. However, volume traded in the equity dried up, with less than 19,000 shares exchanged throughout the week.

Maltapost plc's upward trend remained solid last week, with further gains accumulating, and with new highs being achieved week after week. A steady volume of 40,745 shares backed a rise of 2.3% in the share price to reach a year-to-date high of €0.90. This year's gains now total 28.5%.

After nearly two months of no movement, RS2 Software plc's share price climbed a hefty 6.9% last week, upping the price from €0.48 to €0.513. This has cut the year-to-date loss by nearly half. A slightly above-average total of 27,200 shares were traded last week.

Following the previous week's correction, Malta International Airport plc's share price advanced by a slight €0.01 last week to close at €3.15. The equity is still the second-best performer, with gains of 31.3% since the start of the year.

Both Plaza Centres plc and International Hotel Investments plc's share price fell last week by 0.55% and 3.42% respectively on trading volumes of circa 10,000 shares.

Lombard Bank plc equities improved by 0.69% on minimal volume while the share prices of Global Capital plc and Medserv plc lost 11.8% and 0.7% respectively. Medserv plc announced last week that during its AGM on May 18, shareholders approved the payment of a net dividend of €0.135c per share as recommended by the directors.

Notwithstanding decent volume traded, both Simonds Farsons Cisk plc and Fimbank plc prices remained unchanged last week. Similarly, the share price of Crimsonwing plc remained intact yet on minimal trading.

In an interim directors' statement last week, Fimbank plc said the group continues to enjoy strong capital and liquidity ratios with a healthy and growing balance sheet. It added that performance for the period from January 1 to May 15 is very satisfactory, supported by improved cost management and mild recoveries in fair value write-downs.

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.