MSE starts year on negative note

Trading on the Malta Stock Exchange kicked off the year with a considerable correction as a significant number of local equities’ prices retreated, following a strong rally in December. This move is probably the result of profit-taking across the board, with several equities reversing some of the hefty gains achieved particularly towards the last few weeks of 2010.

The banks, particularly given their large market capitalisation, were a significant drag on the overall index, which slipped by 2.30%, ending the first week of the year at 3,694.277 points.

Trading was steady throughout the week with the volume of shares exchanged surpassing the 510,000 mark. Once again, the bulk of the trading was concentrated in the major banking equities.

Only two of the 11 equities traded ended the week higher, while a single equity remained unchanged. Most equities experienced various levels of declines, with Wednesday’s session being particularly negative.

The lion’s share of the week’s trading occurred in HSBC Bank Malta plc which accounted for nearly half of all shares traded last week. Indeed, a total of 255,081 HSBC shares were exchanged throughout the week as the share price edged lower session after session, shedding nearly 3% by Thursday as it fell from €3.255 to €3.16.

However, a sudden turnaround on Friday saw the equity price spike by 1.27% on decent volume, therefore limiting the weekly loss to 1.69%, with the share price closing at €3.20.

Bank of Valletta plc also ended the week lower, with this equity being sold off aggressively. Unlike its counterpart, losses gained momentum as the week progressed, with the equity ending 4.10% lower by Friday’s close. Although hefty, the value of trading was just under a third that traded in HSBC.

Last week’s negative performance therefore totally nullified the previous week’s gains as the price retreated back to €3.70 from the price of €3.858 on December 30, 2010. Shares bought in this equity up to and including last Friday’s session were entitled to the bonus share issue of one share for every five shares.

Nearly 54,000 International Hotel Investments plc shares changed hands last week, with the bulk of this trading backing a sharp pullback in mid-week. Indeed, Wednesday’s session saw the share price being hammered by nearly 4.8%, falling to €0.90 at which it closed Friday’s session. Notwithstanding this fall, the current price is still well above the average closing price since mid-summer last year.

Maltapost plc continued to trade at its highest price for most of the week, yet succumbed to selling pressure on Friday, with the share price retreating 1% to close at €0.99. Volume of shares traded in this stock totalled nearly 44,000.

On Wednesday, Maltapost plc issued its preliminary statement of annual results for the year ended September 30, 2010. Profit before tax stood at €3.2 million, maintaining last year’s record level, thus providing earnings per share of €0.07.

Increased cross-border mail, combined with higher philatelic sales, compensated for lower volumes in traditional mail, resulting in a 1% increase in revenue. Furthermore, cost savings following re-engineering of processes contributed to a capping on overall costs.

Maltapost’s board of directors is recommending that shareholders approve at the annual general meeting a final net dividend of €0.04, to be paid on February 11 to shareholders appearing on the company’s register as at last Friday. Once approved, shareholders will also be given the option to receive this dividend as new shares valued at €0.92 per share.

Middlesea Insurance plc’s share price settled in the red last week as 19,440 shares exchanged ownership. The share price closed at €1, therefore erasing the slight blip recorded at the end of 2010. MSI’s share price performance has disappointed over the past two months of the year, underperforming the overall index and edging gradually lower, therefore moving in the opposite direction of the local index.

Both Go plc and Malta International Airport plc were shielded from the overall negative vibe, with the MIA closing the week unchanged following some intra-week volatility. On the other hand, Go managed to extend its three-month climb, ending the week slightly higher at €1.94. However, volume traded in both stocks was on the low side.

Low volumes resulted in wide fluctuations in prices, particularly for Island Hotels Group Holdings plc, which climbed 4.2%, and Loqus Holdings plc, which shed 20%. Both Simonds Farsons Cisk plc and Lombard Bank plc closed the week slightly lower, yet trading volumes were minimal.

Lombard Bank announced last week that the board of directors is scheduled to meet on March 10, to consider and approve the group’s and the bank’s audited financial statements for the financial year ended December 31, 2010, besides considering the declaration of a final dividend.

Market value of local corporate bonds amounted to nearly €600,000, with only moderate changes in prices. However, the 7% Gap Developments plc bond maturing between 2011 and 2013 gradually climbed from €97 to €98.51, at which it closed on Friday.

Trading in local Malta Government Stocks was much heftier last week as €1.37 million worth of MGSs exchanged ownership. However, prices continue to head gradually lower as benchmark yields climb moderately higher as international risk-aversion subsides.

A total of €0.95m worth of Treasury Bills was traded 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.