Positive MSE mood continues

The positive momentum continued last week taking the local stock market more than 2.5% higher. The Malta Stock Exchange index closed the week at 3,482.328, reclaiming all lost ground experienced in the month of June and resurfacing back in positive territory year-to-date.

Financials, particularly the larger two banks were a primary source of strength in the index's rebound. This upswing was backed by encouraging volume, considering the typical summer slowdown in trading. Nearly 236,000 shares were traded over 186 deals, with most of these transactions occurring towards the start and the end of the week.

Of the 11 traded equities, only one closed the week in negative territory. Five equities improved helping to push the index higher, while the remaining five closed the week unchanged.

Nearly a third of all trading this week occurred in HSBC Bank Malta plc shares. A total of 77,123 shares changed ownership in 52 deals. As is often the case, hype around this equity intensifies as the date for the issuance of this bank's semi-annual results approaches. The share price improved drastically last Monday soaring from €2.91 to €3.03 on a substantial volume of 34,062 shares.

Subsequent trading days saw a moderation of trading volume and a stickiness of the share price around the €3.029 level at which it closed the week. Overall, this equity climbed 4.09% this week, therefore nearly halving the year to date losses over the past two weeks.

A similar trading pattern occurred for Bank of Valletta plc shares, with an initial jump in the share price and subsequent side-ways trading later on in the week. The share price soared by a healthy 5.6%, possibly free-riding on the overall positive momentum surrounding the local banking sector. Trading volume was however nearly half that of its main counterpart, as 36,628 shares changed hands over 57 deals.

Both International Hotel Investments plc (IHI) and Malta International Airport plc (MIA) saw a decent volume of nearly 40,000 shares being traded throughout the past week. MIA, however, saw some jittery price action with the share price falling to €1.56 last Thursday only to be reversed back to €1.58 last Friday, therefore ending the week unchanged.

On the other hand, IHI's share price remained intact, closing at €0.80 on each of the three sessions during which it was active notwithstanding a weekly low of €0.78 having been reached.

In a company announcement issued last Thursday, MIA highlighted its traffic results for the month of June which once again registered an increase of 19.3% equivalent to an increase of 53,512 passenger movements over June 2009.

Overall given the positive results achieved during the first six months of the year, MIA is expecting passenger movements to reach 3.15 million in 2010, an estimated increase of 8% over 2009.

Following a fairly quiet and uneventful week, Go plc saw its price being upped slightly from €1.90 to €1.93 last Friday, yet this move occurred on minimal trading volumes. This 1.6% improvement however retraces the previous week's fall to end the past fortnight unchanged at €1.93.

Similarly, Middlesea Insurance plc ended the week unchanged at €1.15, nonetheless a very encouraging sign given that this price represented a 9% gain the previous week. Trading volume was however slightly lower than that of previous weeks as 16,099 shares were traded.

This equity has bounced up by 43% since the end of December 2009. Last week, the company stated that the board of directors is scheduled to meet on Thursday August 12 to consider and approve the financial statements for the half-year ended June 30.

Both Island Hotels Group plc and Lombard Bank plc improved slightly this week yet volumes were fairly low to end the week at €0.999 and €2.91, marking a gain of 0.10% and 0.87% respectively. On the other hand, GlobalCapital plc and FIMBank plc kept their prices intact at €1.50 and $1.05, yet similarly trading amounts were minimal.

Maltapost plc was last week's only loser, with the equity price plunging from €0.85 to €0.806, a decline of 5.2%. Over the past two weeks, this equity has seen its share price succumb to profit-taking and lose significantly in value yet such losses were backed by very uninspiring traded volumes. Over the past fortnight, trading in this stock barely reached a cumulative 13,000 shares.

Trading in local Corporate Bonds last week totalled nearly €1.4 million in value, yet the lion's share of this trading occurred in two issues - the 8% Bank of Valletta US$ bond maturing later this year and the 7% GAP Developments plc Euro bond maturing between 2011 and 2013.

Both bonds, however, had minor changes in prices. Last week saw the newly listed 6.2% Tumas Investments plc 2017-2020 start trading last Friday with a quick 2.5% jump on minimal volume.

Improved sentiment in most foreign equity markets due to a positive start of US earnings season, led to a moderation in most benchmark Government Stock prices. These investments are often viewed as safe havens, consequently improving in value upon declines in equity markets following a rush-to-safety effect.

However, during periods of stability and renewed confidence, safe government stocks prices tend to suffer as investors worldwide re-balance their portfolios towards riskier assets.

The local Malta Government Stocks therefore gave up some of their gains last week with the longer duration stocks declining slightly more than those of shorter duration.

No Treasury Bills were traded last week.

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 to conduct investment services 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 2122 4410 or e-mail jmizzi@jmfs.net.