MSE index down 2.76% year-to-date

Last week marked the end of the first half of 2010, and over the past six months the Malta Stock Exchange index has shed 2.76%.

Although price movements on the local exchange were not as volatile as those on global markets, they were far from moderate. Indeed, price volatility was significant - particularly in January, when the index jumped just over 14%. This sudden euphoria evaporated in the subsequent months, with all the gains being gradually eroded week after week.

However, it is worth noting that the local market managed to outperform most major foreign equity markets, with the FTSE All-World USD index falling by 10% year-to-date.

Local market price movements were, however, somewhat erratic and very disconnected from international events and global market movements, most of which moved in a very comparable manner throughout the six months, with steady gains till April and sharp corrections in May and June.

This, however, cannot be said of local government stock prices, which perfectly mimicked benchmark German government yields and prices. Most government bond prices improved steadily as European debt crises ballooned over the past months.

The huge divergence of individual local equity performances is worth highlighting. Indeed, the past six months resulted in a split scenario on the local stock exchange. While seven listed equities recorded significant gains, most of the remaining equities dragged the MSE index lower due to their substantial negative performance, especially given their hefty market capitalisation. Half-yearly performances ranged from the 108% gain of Loqus Holdings and the 21% loss registered by 6PM Holdings.

HSBC Bank Malta plc, the largest equity on the MSE in terms of market capitalisation, fell a hefty 12.4% since January. The year started with a continuation of a very positive momentum brought forward from the final months of 2009. HSBC's share price had been improving at an increasing rate since September 2009, reaching a peak of €4.05 by mid-January. However, the price snapped sharply by March, starting a steady downturn which saw the equity fall to €2.83 by the end of June.

Bank of Valletta plc's share price movement was similar movement to that of its main counterpart, with a rise in the equity price in January being gradually eroded throughout the remaining months. However, price movements in this stock were less volatile, with the half-yearly loss amounting to a mere 0.23%. The equity reached its highest price of €4.10 in January, dropping to €3.089 by the end of June.

Notwithstanding International Hotel Investments plc's large market capitalisation, there was minimal price movement and minor trading in its shares so far this year. Over the six-month period the share price fluctuated between a low of €0.755 and a high of €0.85, and is currently unchanged at the average price of €0.80.

Go plc's share price suffered a substantial 9.52% loss over the past six months, yet this company's negative trend seemed to have been ignited much later on in the year than that of the major two banks. Indeed, the share price reached a peak by the end of February, with the bulk of the downturn occuring in May, similar to most foreign equity markets. Nevertheless, the equity contributed significantly to the MSE's overall negative performance.

The share prices of Lombard Bank plc and Fimbank plc fell by 3.01% and 5.5% respectively since the start of the year, yet traded volumes were fairly low throughout the months.

On the other hand, Malta International Airport plc had a bumper six months, with an overall gain of 35%, clearly outperforming nearly all locally listed equities. Both trading volume and news flow were encouraging throughout the past months.

Encouragingly, Middlesea Insurance plc's (MSI) share price shot up by 30.9% to a new yearly high of €1.052 since the start of the year, following hefty losses - particularly in the last quarter of 2009. These gains followed the moderating of investor uncertainty after the closure of MSI's loss-making Italian subsidiary, besides positive news relating to the local insurance operations.

Steady trading volume saw Maltapost plc's share price soar by nearly 29% over the past six months, starting the year at €0.70 and ending June at a yearly high of €0.90, backed by healthy news and optimistic projections. Similarly, Simonds Farsons Cisk plc improved by nearly 6% following encouraging results notwithstanding the economic downturn.

Last week, the volume of shares traded on the MSE fell to a third of the average trading volume of the past weeks. Less than 100,000 shares changed hands during the holiday-shortened week, with drastic reductions in volumes traded in HSBC and BoV. The MSE's negative trend persisted with the index sliding a further 0.67% to reach 3358.969 by Friday's session.

Share price movements were slightly volatile, with the shares of four listed companies gaining in value, those of four others losing value, and one traded equity remaining unchanged.

The best-performing equity was Loqus Holdings plc, whose share price increased by 40% on a single deal involving 1,000 shares. Go plc, Crimsonwing plc and Fimbank plc were all up in the region of 4% on the week.

The negative performers were BoV which shed 2.9% and IHI, which lost 2.32%, while Medserv and HSBC fell a mere 0.7% and 0.35% respectively. MIA retained the previous week's price of €1.62.

Nearly €900,000 worth of corporate bonds were traded last week with prices remaining generally flat. On the other hand, almost €1.2 million were traded in Malta Government bonds, most of which reignited their upward move, reaching once again very high year-to-date prices.

The total value of trading in Treasury Bills was close to €1.3m.

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.