Positive global sentiment doesn’t reach local market

Equity markets, both locally and abroad, seemed to stabilise last week, with most markets in major economies actually improving encouragingly following the previous week’s slump.

However, whereas leading global indices gained between two and four per cent last week, the Malta Stock Exchange index slid gradually lower, albeit with limited volatility.

The volume of local trading rose last week but was quite erratic, with the bulk of trading concentrated in two equities which rarely see heavy trading.

On the other hand, trading in the two major banks fell significantly as buyers and sellers battled for direction.

The index closed Friday’s session at 3,478.545, a drop slightly shy of 0.5%. Of the 10 traded equities, four ended the week higher, while another four saw their share prices deteriorate. Two equities remained unchanged for the week.

Lombard Bank plc experienced an unusually high amount of trading last week, with 160,679 shares changing hands over 43 deals. Consistently high trading pushed up the bank’s share price to reach €3.075 by Thursday.

When the equity went ex-div on Friday its share price retreated slightly to €3.06; nevertheless it ended the week 1.66% higher.

Lombard’s share price has been on the rise since December 2010, selling off only occasionally. The equity is among the forerunners so far this year with a gain of 9.29%.

There was also hefty trading in Fimbank plc, with 106,507 shares changing owners during three trading sessions. However, the share price stagnated at $0.90, therefore closing the week unchanged.

This lack of price activity has been ongoing for nearly a month, possibly indicating a stalemate between buyers and sellers of this stock.

Week after week, activity in Bank of Valletta plc shares continues to fall. Last week only 43,193 BoV shares were traded.

Price action was also fairly muddled, ranging between €2.95 and €2.90. The share price closed Friday’s session at €2.915, thereby shedding a meagre 0.85% last week and slowly heading back to its yearly low of a few weeks ago.

On the other hand, HSBC Bank Malta plc’s share price rose by 1.07% as it climbed from €2.889 to €2.92 by the end of the week. Albeit small, this gain comes as a very welcome improvement following several weeks of downward movements.

This stock is still 10.3% lower than its closing price at the end of 2010. However, volume was very subdued with just over 24,000 shares dealt in 19 transactions.

Go plc spiralled lower last week, with its share price heading down to €1.55, or 6.63% below the previous week’s close. However, this fall was backed by very limited trading as only 15,200 shares changed ownership last week.

Selling activity seems to be drying up as the share price reached a new low, having lost nearly 20% of its value this year.

Contrary to the above, low volume led to a further increase in Malta International Airport plc’s share price which climbed 1.73% last week. However, the share price fluctuated between €1.73 and €1.76, at which it closed on Thursday. No activity occurred in this equity on Friday.

The share prices of both Middlesea Insurance plc and Global Capital plc fell last week, with the Global Capital plunging by a third of its value albeit on very minimal trading, whereas MSI fell by 4% despite its positive results announced the previous week.

Maltapost plc closed the week moderately higher though volume traded was low. Island Hotels Group Holdings plc’s share price remained unchanged at €0.997 following three trades totalling 2,500 shares.

Value traded in local corporate bonds last week was halved compared to that of the previous week.

Price volatility remained high. Worth noting was the recovery by well over 3% of two International Hotel Investments bonds. But two Mediterranean Investments Holding bonds plunged by a further 5.88%.

Last week, International Hotel Investments plc announced that the company has implemented the relevant restrictive measures in respect of the shareholding in the company held by the Libyan Foreign Investment Company.

The said measures are aimed at freezing the shareholdings held by certain Libyan entities in companies worldwide, not at disrupting the operation of the companies themselves, particularly in instances where other shareholders also have stakes in the companies.

By contrast, activity in Malta government bonds increased last week, with nearly a third of all trading concentrated in the 5.25% MGS 2030 (I) issue.

Malta Government Stock prices fell moderately last week, mimicking benchmark German bunds, as renewed risk appetite saw investors shift out of the safe haven of government paper into equities.

Furthermore, the Treasury Bill market was the main contributor to this week’s surge in trading volume, as over €3.3 million were traded in four transactions.

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.