Global equities rebound but MSE trades sideways

The first week of October was characterised by substantial volatility in global equity markets with an initial decline and a sudden turnaround from Tuesday onwards.

Most equities slumped to yearly lows on Monday, triggering a barrage of buyers to step in and start a four-day rally, steadily pushing up most indices, amid speculation as to whether the markets have hit their lows.

Several matters contributed to this shift in sentiment, yet probably the most plausible is the heavily over-sold position present in most equity markets worldwide.

Unfortunately such euphoric reactions were not replicated on the local market. The Malta Stock Exchange index remained fairly flat last week, with local investors seemingly ignoring the sudden improvement in risk sentiment on a global scale. The index closed slightly negative at 3,105.699, a minimal decline of 0.08%.

Notwithstanding the flat performance, trading volume was slightly shy of 300,000 shares spread over nine equities. Six of these lost market value last week while two gained ground. A single equity remained unchanged.

Last week the largest traded volume was recorded in Inter­national Hotel Investments plc, with 111,416 shares exchanging hands in two trading sessions. The bulk of this trading occurred on Friday, which coincided with a slight decline of 0.63% in the share price, which therefore closed the week at €0.795. This fall moderately reverses the significant gain achieved the previous week.

Just over 84,500 Bank of Valletta plc shares were traded last week, but the price remaining practically stuck at €2.50, a mere €0.001 lower than the previous week’s close. Trading volume was somewhat erratic between the trading sessions.

Such minimal volatility was also the case for HSBC Bank Malta plc. The share price climbed minimally from €2.63 to €2.65 at which price it continued to trade for the entire week. There was no trading in HSBC shares on Friday. Trading volume was fairly low compared to previous weeks, barely surpassing 22,600 shares.

Malta International Airport plc shares initially dropped 1.27% on Thursday, with Friday’s session seeing nearly an exact reversal brought about by much larger volume. The share price ended the week at €1.569, a mere 0.06% decline.

Last week MIA announced its traffic results for September. Passenger movements reached 382,389, the highest number ever registered in September.

Passenger movements rose 2.4% compared to the same month last year.

A total of 22,200 RS2 Software plc shares changed hands last week and pushed the share price higher by 1.7% to €0.59. This performance reversed some of the slight fall ion RS2’s share price in September, thus aiming back towards its yearly high of €0.60.

There was little trading in Go plc last week, yet its share price was very volatile. Initially it rose from €1.12 to €1.14 but later in the week it slumped to €1.10 at which it closed on Friday.

The negative vibe surrounding this equity remains intact with the share price having shed a whopping 43% over the past nine months.

Although over the past months the equity seemed to mimic global sentiment, last week Go was largely detached by the quick recovery in overall equity markets.

Similarly there was hefty movements in Lombard Bank plc’s share price last week, yet once again this was on minimal trading. The share price initially fell 2.20% which was immediately reversed some trading sessions later. However, by Thusday Lombard again succumbed to selling pressure to end the week 3.32% lower at €2.59.

Notwithstanding last week’s disappointment Lombard is still the best performing financial equity this year. Since January it has shed only 7.5% which is significantly better than the nearly 18% drop in the MSE index. Santumas Shareholding plc shed 9.52% last week on very minimal trading while Middlesea Insurance plc closed unchanged.

Trading in local corporate bonds ballooned last week, surpassing €1.4 million in value. Bond price movements were moderate; however the 5.6% Global Capital bond maturing between 2014 and 2016 gave up some of its recent gains and lost just over 5% in value.

As overall market sentiment turned sharply positive last week. Investors worldwide liquidated their safe-haven government bonds, flooding the equity markets with the proceeds. This under-standably led to an overall fall in benchmark government bond prices as investors saw more value in risky assets.

As is often the case, Malta government bonds reacted in a similar fashion, with most prices falling after having gathered significant upward momentum for nearly the past two months.

Last week the European Central Bank kept official interest rates at 1.5% yet declared several actions aimed at pumping much more liquidity in the overall markets. These actions further helped bolster the renewed optimism in most equity and risky markets.

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.