MSE index gains 2.4% as volume drops sharply

The Malta Stock Exchange index climbed higher for the second week in a row, closing Friday’s session at 3,396.892, or 2.41% higher, mostly thanks to a sharp rebound in International Hotels Investments plc (IHI), one of the largest equities on the local market from a capitalisation point of view.

The performances of most other local equities was mixed and share price movements were subdued.

There was a sharp drop of activity on the local exchange, with lower volumes of trading in equities, corporate bonds and government stocks. This possibly indicates an overall vagueness regarding the way forward in markets, with investors preferring to wait on the sidelines, at least until clarity resumes.

A similar situation was somewhat present in global markets, with most risky markets falling in value initially, only to reverse the losses by the end of the week. Apart from uncertainty, low volumes often occur as the summer months approach.

In all, 11 equities were traded, six of which gained ground, three lost value and two remained unchanged.

Trading last week was mainly concentrated around IHI equities, with 94,208 shares changing hands throughout the week. Although initially this stock remained un­changed at €0.70, the price spike by 14.3% in Thursday’s session to reach €0.80. Further hefty trading on Friday sustained this higher price.

This climb came following reassurance from IHI chairman Alfred Pisani in an interview published last week in The Times.

Pisani reiterated the company’s intention to proceed with its secondary listing in London, besides indicating potential expansion of its hotel business in Paris and Rome.

Notwithstanding last week’s hefty upswing, this equity is still 15.3% below its level at the start of the year.

Nearly 58,000 Bank of Valletta plc shares were traded last week. The share price was rather volatile throughout the week, mostly ranging between €2.80 and €2.83. On Friday, however, sellers took over and the price fell by 1.4% to close the week at €2.79.

Last week’s performance therefore sustained the ongoing gradual downward trend since the start of the year. This equity is among the heavy losers this year having shed just over 13%.

Very unusually, barely 9,800 HSBC Bank Malta plc shares were exchanged last week. Similarly to BoV, this equity saw some volatile swings, with the share price fluctuating between €2.94 and €3, yet closing Friday’s session at €2.98. Overall, this equity managed to climb gradually higher by 0.7% on the week.

Contrary to the previously mentioned equity, HSBC’s share price is following a very gradual upward trend at least since mid-March, having risen slightly more than 4% since this year’s lows.

For the second week in a row Go plc’s share price edged slightly higher, undoing some of the hefty losses over the past several months. By Thursday, the share price had shot up from €1.35 to €1.385, closing at €1.38 on Friday.

Over the past two weeks this equity has managed to rebound by 6.9%. Still, year-to-date losses surpass 28% in value, providing a heavy drag on the overall local market.

Following a slight bout of profit-taking over the past month or so, Malta International Airport plc’s share price resumed its upward trend, ending the week 1.8% higher to reach €1.71 by Friday’s close. Trading volume, however, was on the low side with only 14,600 changing hands.

Similarly Maltapost plc’s share price rose 1.31%, ending the week at €1.084, hence once again approaching its all-time high of €1.101.

Middlesea Insurance plc was one of last week’s losers, shedding a mere 0.96% of its value. Volume, however, was meager, hence indicating overall lack of conviction supporting this move.

The board of directors announced last week that the first quarter of 2011 has been characterised by a continued positive technical result emerging from the group’s insurance portfolios.

However, profits were somewhat adversely impacted given the steady decline of investments held on the MSE. Nevertheless, the company is cautiously optimistic about the future.

There was minimal trading in Fimbank plc and 6pm plc, with the latter deteriorating nearly 35% and the former climbing 1.2% higher.

Late last week, 6pm announced that the restructuring of the management team created inherent delays in operating results and consequently these are not expected to be in line with expectations at the half-way mark. However, the successful completion of the rights issue has enabled 6pm to complete the acquisition of the Compunet Group, which should add significant revenues to the group.

Both RS2 Software plc and Island Hotels Group Holdings plc remain­ed unchanged on scant volume.

Nearly €400,000 worth of local corporate bonds was traded last week, yet price movements were moderate to low overall, barring three bonds.

The 5.6% Global Capital plc bond maturing between 2014 and 2016 and the 7.15% Mediterranean Investments Holdings plc maturing between 2015 and 2017 both fell by over 6%.

On the other hand, the 6.75% Corinthia Finance plc 2012 recovered all its losses and closed Friday’s session at €100, or 6.4% higher.

Similar to markets abroad, local government bond prices ended the week fairly flat as global investors initially shunned risk, yet recouped most of the lost value towards the end of the week. Government bond prices often move contrary to equity and risky assets price movements given their appeal as safe havens.

Locally, trading value reached nearly €1.6 million, much lower levels over the past few weeks. Once again, action was mainly concentrated in the 5.7% 2012 issue.

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 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.