Investors’ focus shifts to equities

Trading in equities on the Malta Stock Exchange surpassed the €1 million mark in value last week, which seems to indicate that the summer lull is over. More than half a million shares changed hands, with trading spread evenly throughout the five sessions.

Improved trading volume generally promotes overall liquidity and leads to meaningful price security by signifying a solid backing by investors.

However, this flurry of activity only led to a meager positive result, with the MSE index closing the week at 3,348.155, a mere 0.04% higher than last week’s close and still perilously close to its lowest level this year to date.

By contrast, most foreign equity indices extended the gains achieved since the start of September. Following a slight boost at the beginning of the week most indices subsequently flattened out but nevertheless ended the week with encouraging gains.

As equity indices improved, most investors ventured away from the safety of government stocks in search of higher returns in riskier equities. In fact, Malta Government Stocks fell out of favour last week, with much lower trading than in previous weeks.

The clear shift of focus from trading in MGSs mimicked benchmark government yields abroad. Government stock prices often move contrary to movements in equity markets in general.

This shift led to higher yields in benchmark government stocks, and therefore lower prices. However, the fall in government stock prices was moderate on the whole, given a slight uncertainty seeping through international equity markets towards the end of the week.

The shares of 14 companies were traded on the MSE last week, with three recording strong gains, which helped mitigate the moderate losses suffered by seven companies’ shares. The other four companies’ share prices remained the same as those of the previous week.

Following several weeks of low volumes, trading in Maltapost plc shares reignited strongly last week, with almost 110,000 shares changing ownership, mainly in Wednesday’s session. Notwithstanding this increased activity, the share price remained stuck at €0.90, confirming its strong resistance to go beyond this level.

Over 80,000 Go plc shares were traded last week, with the price edging down slightly to €1.84 by Friday. The downfall this equity has experienced this year seems to be slowing down, with the share price possibly reaching a trough, at least for the short term. Overall, however, Go remains one of the worst performers on the local stock exchange so far this year, with accumulated losses since January surpassing 12%.

Activity was also very encouraging in the two major banks, with over 70,000 shares in each bank being exchanged last week. There was a lot of fluctuation in Bank of Valletta plc’s share price which last week ranged from a low of €3.20 to a high of €3.27. However, the intra-week climb failed to erase its earlier losses, with the share price closing on Friday nearly 1% lower at €3.24.

By contrast, HSBC Bank Malta plc’s share price movement was less volatile last week but it similarly maintained the negative vibe surrounding the financial equities. HSBC’s share price drifted lower by 0.25% to close the week at €2.798. At one point the share price even reached a new low for 2010 of €2.795. The equity’s total losses since the start of the year have therefore risen to just over 13%.

Improved trading volume in Malta International Airport plc resulted in a rise in its share price following several weeks of subdued trading and a slow yet constant fall in its share price. The equity was an obvious outlier this week given the gradual increase in its share price in nearly every trading session.

MIA’s share price climbed 3.87% by Friday’s close, backed by 54,000 shares spread throughout the week. With the addition of this week’s share price gains, MIA secured its position as second best performing equity on the local exchange with its year-to-date share price appreciation reaching nearly a dizzying 30%.

The other gainers last week were Middlesea Insurance plc, which rose 5.26% to close at €1 and Simonds Farsons Cisk plc, which shot up by a hefty 7.03% to end the week at €1.75. However, both these gains were achieved on light volumes, hence adding to the overall volatility of both these companies’ share price movements.

Despite increased trading, Grand Harbour Marina plc, International Hotel Investments plc and Plaza Centres plc remained unchanged at €1.96, €0.80 and €1.685 respectively.

Fimbank plc, Santumas Shareholdings plc, and Lombard Bank plc all shed over 1% last week over mixed trading volumes, while Medserv plc lost 0.23% on two trades.

Value traded in corporate bonds increased on the week, but barely surpassed the €750,000 mark. Prices of most corporate bonds remained fairly unchanged last week.

During the week, Pavi Shopping Complex plc announced that it has decided to buy on the market at any price the company may determine to be in its best interest, any amount of its 7% Secured Bonds 2014-2017 prior to their redemption on October 26, 2017.

Trading in Treasury bills totalled nearly €1.2 million in value 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.