MSE negative vibe persists

March kicked off in a subdued manner on the Malta Stock Exchange, sustaining February’s overall negative vibe.

Unlike most international equity markets which saw mixed-to-positive weekly movements, most local equities maintained a negative bias, with the index improving only slightly on Friday.

Most trading remained focused on the two large banks, influencing the overall slide in the MSE index. By Friday, the index had shed a further 1% to end the week at 3,573.925 points. The MSE index has fallen 5.48% so far this year, erasing two-and-a-half-months of gains.

Over 369,000 shares were exchanged over 173 deals last week. Eleven equities were traded, six of which closed lower, two improved, while three were unchanged.

Investors focused once again on Bank of Valletta plc, with just over 136,000 BoV shares changing hands during the week. Losses worsened throughout the week as shareholders intensified their selling efforts.

BoV’s share price shed 3.04% of its market value to close the week at €2.899.

The correction in the share price has been relentless, particularly since the start of February, with the year-to-date loss now standing at 9.83%.

Last week, the credit rating agency Fitch downgraded BoV’s long-term issuer default rating from A- to BBB+, with a stable outlook. The short-term rating was affirmed at F2, the individual rating at C and the support rating at 2.

Fitch said the downgrading was due to a “more cautious view” that it was adopting regarding the level of concentration in Bank of Valletta’s loan book, “given the small size of the domestic economy”.

HSBC Bank Malta plc’s share price movements were somewhat muddled as initial falls were followed by a slight upswing later on in the week. The share price’s overall weekly loss was therefore limited to 0.67% to close at €2.96.

Obviously, this very moderate loss has to be seen in conjunction with last week’s very sharp drop. This equity has tumbled 9.06% since the start of the year.

Trading in Malta International Airport plc (MIA) was also jittery last week with the share price fluctuating between €1.70 and €1.751. MIA ended the week moderately lower, falling from €1.75 to €1.735. A total of 32,790 MIA shares were exchanged in four trading sessions.

Nevertheless, MIA shares are outperforming the MSE index by nearly 10% so far this year.

A total of 40,000 Fimbank plc shares were traded last week, solely in Monday’s session.

The share price remained unchanged at $0.90. Compared to the two major local banks the loss in Fimbank’s share price year-to-date has been subdued at 5.26%.

On Friday, Fimbank issued its statement of annual results for the year ended December 31, 2010. It reported an a net profit of $6.74 million compared to $1.57m in 2009, with group basic earnings per share of $4.97.

In a statement the group said “as the global banking crisis started to stabilise during the year under review, the group cautiously renewed its appetite for business, helped by continuous improvement in emerging market conditions and stead pick-up in trade flows”.

It said Fimbank will remain generally cautious in 2011, particularly due to current geopolitical unrest, yet still eyeing inroads into new geographic and product markets.

The board is recommending the payment of a scrip dividend $0.02480242 per ordinary share to registered shareholders as at March 30, to be paid either in cash or by the issue of new shares.

Maltapost plc’s share price rose 1.15% last week to close at €1.052, thereby slightly retracing the previous week’s hefty fall. However, trading was limited to 13,432 shares in four deals.

Conviction in Go plc appears lacking as few investors seem willing to sell or buy this stock.

Just 10,160 shares changed hands last week, leading to a 1.7% fall in the share price to €1.77. The equity had not traded at this low price since November 2009.

A total of 12,681 Loqus Holdings plc shares were traded last week, resulting in a very volatile share price.

The equity price rose to €0.17 on Monday yet fell back to its initial level of €0.161 by Friday.

Plaza Centres plc’s share price soared 18.4% while 6PM Holdings plc’s sank by just over 13%, albeit both on minimal volume.

Plaza Centres plc issued its preliminary statement of annual results for the financial year ended December 31, 2010. It said reported a pre-tax profit of €1.309m compared to €1.315m in 2009.

The board is recommending the payment of a final net dividend of €0.075 per share on May 6.

Middlesea Insurance plc shares edged 0.8% lower last week while low trading led to no change in Island Hotels Group Holdings plc share price.

Although still on the high side, trading in local corporate bonds fell slightly last week. Just over €0.865m worth of corporate bonds were traded last week, and once again, most bonds lost in value.

The worst-hit bond was the 6.25% Corinthia Finance plc bond maturing between 2016 and 2019 which slumped by 12.6%.

On the other hand, the 6.3% International Hotels Investments plc bond maturing in 2013 saw a quick reversal of 5.5%, climbing from €90.01 to €95.

A sudden turnaround in foreign equity markets led to outflows from the safety of benchmark government bonds, into possibly higher-yielding equities. This led to an increase in government yields, with a corresponding fall in prices.

Malta Government Stock prices followed suit, with most MGSs heading lower following the slight improvement in the last weeks of February.

The volume of MGSs traded was substantial, totalling €2.8m in value. Half of this trading occurred in the 5.25% MGS 2030.

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.