MSE index at yearly low

Last week the local stock exchange index was dragged lower again, continuing a sustained downward trend, now well into its third full week. The index ended every session of the week in the red, reaching a low for the current year of 3,414.739.

This 1% fall contrasts with the flat to positive performances of most indices abroad last week, despite the volatility foreign markets are experiencing. Just over 4% has been gradually trimmed from the MSE index since the start of the current downturn.

Interestingly, the local equity market has been fairly active, with volume of shares traded surpassing 365,000, notwithstanding the holiday-shortened week. Also quite unusually, trading was spread nearly equally between a considerable number of equities. Out of the 14 traded companies, eight sold off, five displayed strength, while one closed the week unchanged.

HSBC Bank Malta plc was last week's most traded equity with nearly 57,000 shares changing ownership in sporadic fits of selling, primarily on Tuesday and Thursday. HSBC was dragged further in negative territory, shedding 3.75% by Friday to end the week at €2.82.

Last week's fall has eroded all the gains built over this equity over the past seven months, with the price edging closer to that recorded towards end October 2009. Barring 6PM plc, HSBC is the worst-performing equity on the MSE this year, with losses amounting to 12.7%. This stock's negative performance in particular, coupled with its hefty market capitalisation, has adversely impacted the overall index in the past three weeks.

HSBC's fall had a slight spillover effect on Bank of Valletta plc, whose shares' trading price decreased 1% to €3.27 by Friday. However, the price still remains within the €3.25 to €3.37 range at which BoV has been trading with little volatility since mid-February. Only 29,381 shares were traded last week.

Unusually high trading of nearly 55,000 shares occurred last week in both Middlesea Insurance plc (MSI) and Lombard Bank plc, leading to gains of just over 4% each. With the share price of MSI closing the week at €0.90, it is worth highlighting that this equity's share price has appreciated by 43% from a low of €0.63 back in November 2009.

On the other hand, Lombard's sudden bounce on Friday snapped a five-month-long decline, and pushed the price closer to its 2009 year-end price. The equity's price ranged from a weekly low of €2.80 and a high of €2.98 at which it closed the week.

International Hotel Investments plc's share price continues to fluctuate minimally within a slight range, with last week's trading resulting in a 0.6% rise. However, traded volume was steady as a total of 40,000 shares were dealt across seven transactions during three sessions.

A total of 33,100 shares in Crimsonwing plc were traded last week, with the share price plunging 6.9% to €0.419 on Thursday, only to shoot up the following day to €0.44, thus limiting the weekly loss to 2.22%.

Malta International Airport plc's share price gained a further 1.27% last week, closing Friday's session at €1.60. However, price movements intra-week were quite volatile, with the price trading within a weekly low of €1.561 and a high of €1.64.

This volatility is understandable given the adaptation to the 'new' market price following the previous week's share split. It is worth pointing out that the table accompanying last Sunday's commentary showed a 49.84% drop in MIA's share price, which reflected the price movement without taking into consideration the price adjustment. However, the price actually gained 0.32% in the week following the share split, as indicated in the commentary.

Last week, Fimbank plc announced that the board of directors will meet on August 5 to consider and approve the consolidated financial statements for the half-year ending June 30, and to consider whether or not to pay an interim dividend. The equity price remained unchanged last week at $1.01.

Trading in Go plc last week was uneven, with minimal volume and nearly no change in price till Thursday, and a 1.5% drop on Friday backed by the bulk of the week's trading. A total of 15,200 shares were traded, much lower than the usual volume in this stock.

A single trade of 14,000 Plaza Centres plc shares resulted in a sharp 7% drop in the share price from €1.63 to €1.516 last week. Medserv plc also lost ground, albeit by a minimal 0.47%, after four deals involving 12,320 shares.

Maltapost plc maintained its upward trend last week with a marginal 0.11% increase to close at €0.90, the peak reached two weeks ago. However, trading volume was on the low side with only 12,500 shares changing hands.

RS2 Software plc and Island Hotels Group Holdings plc both lost 0.20%. However, volume was minimal.

Nearly €277,000 worth of local corporate bonds were traded last week with most prices remaining unchanged. However, the 6.8% Premier Capital plc euro bond 2017-2020 soared 2% higher to close the week at €102.

On Tuesday, Hotel San Antonio plc announced that it had obtained full financing from its bankers to cover both the redemption of its 7.5% bonds due to mature on May 30, 2012, as well as to carry out further improvements in the hotel. It said this reflected the bank's complete confidence in the company.

During the week, applications for the Tumas Investments plc 6.2% bonds 2017-2020 were made available to preferred applicants and the general public. The €20 million issue is subject to an over-allotment option of an additional €5m. The bond will constitute the general, direct, unconditional and unsecured obligation of the issuer. Both the principal amount and the interest due under the bonds will be guaranteed by Spinola Development Company Ltd.

Nearly €2.7m worth of Malta Government Stocks was traded last week. Prices of local MGSs edged slightly higher, particularly those with longer maturities, as yields were realigned to foreign benchmark yields, most of which had sharply declined in previous weeks.

Treasury Bills traded amounted to €4.9m on two issues.

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.