Flat week for local equities

The past week marked the end of August, which was the second worst month this year for the Malta Stock Exchange as the local index lost 4.8 per cent.

The index remained generally negative till the last day of August but turned modestly positive during the first two days of September to close only 0.15% lower. The index hit a low of 3,070.104 on Wednesday, before closing slightly higher on Friday at 3,078.788.

Therefore the MSE has shed just over 18.5% of its value so far this year.

Trading volumes in equities were similar to previous weeks, barring an exceptional amount of trading in RS2 Software plc on Friday. On the other hand, trading in local government bonds moderated slightly compared to the hefty volumes of the previous month.

Foreign equity markets performed somewhat differently. Initially, stock markets maintained an upward bias, yet this cautious optimism was quickly eroded towards the end of the week as worries resurfaced.

Anxiety regarding global growth prospects and uncertainties surrounding European issues re-emerged, resulting in a quick sell-off, particularly on Friday.

Last week, trading occurred in nine local stocks, with four gaining in value, three ending the week lower, and two remaining unchanged.

The best performing equity last week was RS2 Software plc, which climbed a steady 5.45% by Friday’s session. The rise was backed by moderate trading at least till Thursday. However, on Friday nearly 355,000 RS2 shares were exchanged at this higher new price, therefore providing important support.

After last week’s performance RS2 has climbed higher into positive territory this year. Having risen nearly 21%, this stock is clearly the best performing equity on the local market over the past eight months, therefore totally defying the strongly bearish sentiment.

Similar to previous weeks, trading in Bank of Valletta plc shares was fairly hefty, with nearly 143,000 shares changing ownership throughout the week. Price action was somewhat muddled last week with minimal volatility. The share price fluctuated between €2.499 and €2.531, ending the week 0.4% higher at €2.52.

Last week’s positive performance snaps the negative spell cast over BoV for several weeks.

Similarly, HSBC Bank Malta plc ended the week in positive territory, climbing 0.75% to close at €2.67. Price movements were also somewhat subdued given investors’ indecisiveness and the murky international outlook. Although volume totalled 56,400, it was nevertheless much lower than that of its major counterpart.

A total of 26,200 Lombard plc shares were exchanged last week. The share price oscillated between €2.68 and €2.70, closing un­changed at the latter price. Lombard remains the best performing local financial equity on a year-to-date basis notwithstanding the slight decline of circa 4.3%.

Go plc fell to a new yearly low last week on moderately low volume. The share price slid down to €1.20 by Thursday, closing slightly higher at €1.201 on Friday. Indeed, Go was the week’s worst performer, having shed just over 5%.

The negative performance started on Wednesday just before the release of the company’s half-yearly report. In the first half of the year Go group’s operating profit was €9.2 million, €2m less than last year.

The results of both periods were negatively impacted by voluntary retirement costs and increased pension obligations, items considered to be of an unusual nature, size or incidence

The encouraging improvement in the group’s operating performance was due to improved revenues and continued efforts to control costs. The group has experienced sustained growth in broadband, data and TV services which have continued to compensate for the decline in traditional fixed-voice services.

Both Malta International Airport plc (MIA) and Midi plc lost value last week with MIA dropping by 3.8% and Midi shedding 2.33%. However, trading volume was minimal. On the other hand, Maltapost plc improved by 0.93% albeit on low volume. International Hotel Investments remained unchanged at €0.73.

Last week, Medserv plc issued its six-monthly performance report showing pre-tax profit of €141,137, compared to €147,753 for the same period last year. Lower profits had been expected due to the uncertainty in Libya. However, strict cost controls and revised accounting estimates of the useful life of plant and equipment, resulted in the group moderating any such losses.

Similarly last week Grand Harbour Marina plc issued its interim directors’ report for the six months ended June 30. Improved revenue management, and higher occupancy levels led profit to rise from €73,511 to €487,776. The group expects higher revenues from the marinas and improved performance going forward.

Trading in local corporate bonds was very similar to the previous weeks, totalling nearly €540,000. Price changes were moderate. The worst performing bond was 7% Midi plc maturing between 2016 and 2018, which fell by nearly 3%. On the other hand, the Sterling-denominated 7.15% Mediterranean Investments Holding plc maturing between 2015 and 2017 improved by 2.6%.

Although Malta Government Stocks are generally considered as a stable market, price action has nevertheless become fairly moody over the past weeks. Volatility seems to mimic that of equity markets albeit to a less extent and obviously in an opposite direction.

Last week, most government stocks retreated from their previous weeks’ highs as equity markets abroad improved slowly. However, towards the end of the week, risk aversion resurfaced, triggering renewed buying in safer assets, with most MGS prices ending in positive territory for the 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.