Local, foreign stockmarkets move in opposite directions

Unlike foreign equities, which picked up in the first days of September following positive economic figures, the downward spiral in the Malta Stock Exchange index gathered momentum last week, shedding a significant 2.37% to close at 3,395.12.

This negative performance plunged the MSE index back to negative territory on a year-to-date basis, with a loss of nearly 1.9% since the start of January. Notwith­standing this fall, the index is still above the lowest point, which was reached in early July.

The local market started the month with three negative trading sessions. Traded volume picked up slightly last week but this was mainly due to substantial trading in two equities, namely Malta International Airport plc (MIA) and Middlesea Insurance plc (MSI), which accounted for two-thirds of all traded shares.

The broader market was mainly hampered by the financial equities. Eleven equities were traded over the five sessions, of which only three equities registered a gain while the remaining eight closed the week in the red.

MIA was the most widely traded equity last week with 108,100 shares changing ownership over 10 deals. The bulk of this trading occurred mid-week and pushed the price up to €1.58 from the previous week’s €1.56, making MIA one of the very few gainers last week and snapping a month-long moderate slide.

After trading closed on Friday the company announced late that MIA had handled an all-time record number of passenger movements in August, equivalent to a 13.4% increase compared to the same month last year. The company said this positive result came about following an improvement in every core market with a strong increase in seat capacity being the main driver.

Following several weeks of slow activity, there was a resurgence of trading in MSI last week with nearly 108,000 shares changing hands, mostly on Tuesday. However, the share price movement was very unsettled throughout the week. An initial trade of 354 shares on Monday plunged the price down by 6.30%. This lower price triggered activity later in the week, with buyers rushing in and upping the price by nearly 2%. The share price closed the week 4.5% lower at €1.05.

The two major local banks sold off last week, with Bank of Valletta plc shedding 3.03% and HSBC Bank Malta plc falling by 1.74%. However, volume was on the low side with a total of barely 75,000 shares in both equities being traded. Last week’s downward drift saw HSBC’s share price once again reaching its lowest level year-to-date, thereby erasing all gains achieved during the initial weeks of summer. On the other hand, BoV is still in positive territory year-to-date, and is outperforming the overall market by just over 4%.

A total of 20,480 shares in International Hotel Investments plc (IHI) were traded last week. The equity came under a bout of selling pressure particularly on Friday with the share price closing the week 5.62% lower at €0.84. On Tuesday the IHI directors approved the group’s half-yearly financial report for the period ended June 30, which reported a loss after tax of €9.19 million compared to a €2.81m loss in 2009.

Go plc slipped 1.06% on Monday and failed to recover any of this loss in further trading throughout the week. However, overall traded volume only amounted to 12,500 shares.

Last week, Go issued its half-yearly report for the six months ending June 30. The group achieved an operating profit of €11.35m, a 46.1% increase over the normalised operating profit of €7.77m in the same period last year. It said this strong improvement is due to both higher revenues and lower costs.

Notwithstanding this, the company reported a net loss after tax of €5.22m compared to a €4.86m loss in 2009.This loss mainly arose as a result of the group’s share of the results of its investment in Forgendo Ltd, which amounted to €7.03m.

Maltapost plc was one of the few stocks to make it through the week unscathed. It also managed to garner significant support parti­cularly on Wednesday when the share price jumped well over 7.7% to bring the weekly gains up to a whopping 9.09%.

Once again, this equity’s share price was pushed towards the €0.90, a psychological ceiling which, however, it has failed to break several times over the past few months. However, traded volume was uninspiring with 17,298 shares being exchanged in seven deals.

Both Fimbank plc and Lombard Bank plc ended the week in the red with moderate losses following very light trading. On the other hand, minimal trading resulted in Simonds Farsons Cisk plc gaining a meager 0.06%.

Global Capital plc’s share price tumbled nearly 14.7%, leading to this equity falling back in negative territory on a year-to-date basis.

There was less trading in local corporate bonds last week compared to previous weeks, much of which was concentrated in the maturing 8% Bank of Valletta US$ 2010 bond. Bond price movements were also limited, with most prices remaining unchanged. However, both the 6.75% United Finance plc 2014-2016 bond and the 6.25% Tumas Investments plc 2017-2020 improved nearly 1%.

The sudden shift in mood in world markets towards mid-week led to a turnaround not only in equity markets but concurrently improved safe bond yields. A spike in yields was well overdue following record-low government bond yields across the whole spectrum of maturities.

Hence, following several weeks of gains, benchmark government bond prices saw a slight correction, moderately easing towards the end of the week. The local Malta government bonds followed suit with the most volatile long-term Malta Government Stocks shedding the largest value. Similar to the past few weeks, trading was strong in local MGSs, with the lion’s share of trading once again occurring in the 5.25% 2030 MGS.

There was just over €4m worth of trading in Treasury bills last week.

This article, which was compiled by Jesmond Mizzi, joint managing director of Atlas JMFS Investment Services Ltd, does not intend to give investment advice and the contents therein should not be construed as such. Atlas JMFS is licensed to conduct investment services by the MFSA and is a member firm of the Malta Stock Exchange. 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 Atlas JMFS at 67/3, South Street, Valletta, or on Tel: 2122 4410 or e-mail jesmond.mizzi@atlasjmfs.com.