Financial news

The Malta Stock Exchange Index dropped another seven points yesterday to close at the 3465.408 level in another quiet session of trading where only four equities managed to trade across 11,660 shares in 10 deals.

Shares in Bank of Valletta plc lost 1c, or 0.3 per cent, to close at €3.24 in a single trade of 500 shares. Yesterday’s loss comes on top of the 2c loss experienced in Tuesday’s session.

HSBC Bank Malta plc, meanwhile, lost 2c, or 0.7 per cent, to close at €2.88 in five deals for a total of 5,660 shares.

Also in the banking sector, Lombard Bank Malta plc also traded in the day yet closed unchanged at €2.88 in a single deal of 500 shares. On Tuesday, the bank announced its financial results for the six-month interim period ended June 30. Pre-tax profit for the period increased to €6.76 million from €6.44 million for the same period in 2009, representing a 4.9 per cent increase. The company attributed its improved performance partly to an increase in net interest income of 18.6 per cent, to €8.17 million while tight treasury management allowed it to increase its operating income to €19.73 million, an increase of 7.4 per cent over the same period in the previous year.

Also trading in the day, while also finishing unchanged, was Go plc which ended the session at €1.89 in three trades of 5,000 shares.

Weekly eurozone economic review

In the United Kingdom, sales volumes at British stores rose nearly by three times than expected in July. According to the Office for National Statistics, retail sales rose 1.1 per cent from June, the strongest growth since February and well above the 0.4 per cent increase expected by analysts. On a year-on-year basis, retail sales increased by 1.3 per cent, above 0.6 per cent expected and also higher than the 1.1 per cent registered the previous month.

Also on a positive note, the country posted a smaller budget deficit in July than economists had forecasted, as a stronger economic growth has boosted tax receipts. The public sector net borrowing requirement was £3.2 billion, lower than the £4.8 billion forecasted and much lower than the £13.9 billion borrowing which was required the previous month. Meanwhile, a preliminary measure of the money supply showed that it increased by 0.4 per cent during July, up from the 0.1 per cent increase registered the previous month.

Finally, the 10-year gilt yield declined to 2.84 per cent on Tuesday.

This was the lowest yield on record, after Martin Weale, an incoming member on the Bank of England Monetary Policy Committee, warned that the United Kingdom could slip back into recession.

Positive indicators and evidence that the recovery is persisting, may aid Chancellor of the Exchequer George Osborne’ argument that the economy can withstand the fiscal squeeze as he is preparing to detail £61 billion of cuts to government departments to narrow the deficit of 11 per cent of Gross Domestic Product (GDP) to 2.1 per cent by 2015.

This article has been prepared by Bank of Valletta p.l.c. (the Bank), which is licensed to conduct investment services business by the MFSA,  for your general information only. This information is not a solicitation or offer by the Bank to acquire or sell securities. Nor does it constitute any form of advice by the Bank.  Appropriate advice should be obtained before making any such decision.  Past performance is not necessarily a guide to future performance and the value of your investments may fall or rise.