Losses spiral initially, partly reverse by Friday

The mood on the Malta Stock Exchange darkened further last week, as the losses intensified rapidly by Wednesday’s session, plunging the MSE index to 3,207.798, the lowest point this year.

This hefty fall spurred some buying as local investors took the opportunity of much cheaper equity prices. By Friday’s session the index managed to crawl slightly upwards, thereby diminishing the overall loss to 1.5% and, bringing the overall loss so far this year near to 15%.

Notwithstanding the downward spiral in the index, equity trading on the local market was actually mixed.

Four equities ended the week with gains yet failed to outdo the negative effect of other four shares which closed the week in negative territory primarily due to the latter equities’ larger capitalisation. Three other equities kept their price intact for the week.

The sharp volatility in share prices led to a rise in trading volume, with the bulk of deals backing the downward move. In all, over 305,000 shares were dealt during the week.

Internationally, equity markets turned negative amid uncertainties coming from the US over whether or not to extend the limit imposed on government debt.

Uncertainty is disliked by investors, and thus most equity indices worldwide edged decisively lower nearly every day of the week.

As has been the case for several weeks now, local investors’ attention remains focused on Bank of Valletta plc shares. Indeed, half of all the trading last week focussed on BoV shares, therefore heavily influencing the performance of the overall index. Most of the trading in BoV shares led to hefty falls on Monday and Wednesday, with the stock price tumbling to €2.55. Modest trading later in the week led to a slight turnaround, with the share price climbing back up to €2.59, thereby reducing the weekly loss to 2.3%.

A BoV interim directors’ statement last week affirmed that during the third quarter of the current financial year the bank continued to experience subdued demand for new personal and corporate credit. Growth of customer deposits during the quarter was, however, satisfactory. The directors also said the ongoing Libya crisis and nervousness in the eurozone due to the sovereign debt crisis continued to impact investor and consumer confidence, resulting in sluggish economic growth.

Go plc’s weekly performance was somewhat similar as the share price succumbed to selling pressure, falling to €1.24. But by Friday the loss was nullified as the share price soared back to its starting point of €1.30. A total of 36,588 shares were traded. Volume was particularly hefty on Monday but very moderate in the remaining sessions.

A total of 27,500 RS2 Software plc shares were trading in last Friday’s session. The share price was upped 3.77% to €0.55. Last week’s move sees the share price reach a yearly high. It has climbed 14.6% since the start of the year, clearly the best performing equity on the local exchange for the past seven months.

Similarly, Midi plc ended the week 1.15% higher as 18,000 shares changed hands in Tuesday’s session.

International Hotel Investments plc’s share price edged €0.01 lower in Friday’s trading. Total volume traded barely surpassed the 18,000 mark last week. The share price has fallen by over 14% since the start of the year.

Trading in HSBC Bank Malta plc remains fairly subdued, with only 12,617 shares changing hands last week. The share price slid further down, reaching €2.80 by Wednesday at which it closed for the week. Contrary to its main counterpart, this equity failed to reverse some of its losses at the end of the week and ending Friday’s session 3.11% lower.

On Friday, HSBC’s board of directors approved the interim financial statements for the six-month period ended June 30. The board declared the payment of an ordinary interim dividend of 8.2c gross per share. Pre-tax profit rose 19% compared to the same period in 2010.

Lombard Bank plc retreated into the red on Wednesday, following the major banking equities. A moderate reversal on Friday reduced slightly the sharp losses, with the share price ending the week 3.93% below the previous week closing.

Malta International Airport plc outperformed last week, climbing a steady 2.58% as the share price improved from €1.55 to €1.59. This equity’s share price had fallen significantly since early June, falling from €1.74 to €1.55. Trading was on the low side last week, barely surpassing 8,600 shares.

At a meeting held last Wednesday the group’s interim financial statements for the six months ended June 30 were approved. The directors approved a net interim divided of €0.03 per share payable by September 15. Profit for the period was up 11.3% compared to the same period in 2010. This positive result is expected to continue in the second half of the year albeit at a reduced rate.

Simonds Farsons Cisk plc improved 5.88% last week while 6PM plc and Plaza Centres plc closed the week unchanged. Trading volume, however, was very moderate.

Just over €425,000 worth of local corporate bonds was traded last week. Prices were generally stable except for two Mediterranean Investment Holdings bonds in different currencies which saw opposing sharp changes.

On the other hand, trading in local Malta Government Stocks was hefty last week, surpassing the €16.6 million mark. Prices were generally mixed to positive, as yields mimicked foreign benchmarks. The decline in equities abroad led to a rush to safety towards government stocks, hence diluting yields and improving government stock prices.

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.