The Malta Stock Exchange Share Index “skidded” 18.2 per cent during 2012 to 3,094.799 points, mainly due to the double-digit declines in the three largest capitalised companies, according to Edward Rizzo, a director at Rizzo, Farrugia & Co (Stockbrokers) Limited.
The uprising in Libya dented sentiment
Mr Rizzo says in his Stock Market Review in today’s The Times Business that after a very active start to the year when €15.1 million worth of trades passed through the equity market in Q1, volumes declined rapidly in subsequent months.
“Similar to the trends across international markets, the equity market in Malta had recovered somewhat following the 2008 decline after advancing by 7.9 per cent in 2009 and climbing by a further 9.3 per cent in 2010. Although volumes across the equity market increased by 4.1 per cent to €37.5 million, these are still significantly below the levels achieved in 2008 and prior years,” he says.
He adds: “Undoubtedly, the political uprising in Libya dented local investor sentiment to a large extent in February and March 2011 and triggered a sell-off in the share price of International Hotel Investments plc and also across the bond prices of the Corinthia Group due to their investments in the country. Although the third largest capitalised company on the MSE recovered some of these declines in line with the improved operational performance reported by the IHI Group at its Tripoli Hotel and its European properties, IHI’s equity still ended 2011 with a loss of 10.7 per cent. Meanwhile, the bond prices all regained their par value after dropping below 80 per cent in some instances”
Mr Rizzo says the share price of HSBC Bank Malta plc shed 20.8 per cent and Bank of Valletta plc slid by 22.2 per cent over the past 12 months. “The local banking sector seems to have been affected mostly by the escalating eurozone crisis while BoV’s equity was also significantly impacted by the ongoing saga of the La Valette Multi Manager Property Fund.”
Mr Rizzo says bond markets also had a volatile 201, adding that the Rizzo Farrugia MGS Index – which tracks the movements of the indicative bid prices of Government Stocks – declined by 0.4 per cent to 988.877 points.
“During the first six months of 2011, the MGS Index declined by 1.91 per cent reflecting the sharp increase in eurozone benchmark yields (from 2.968 per cent as at December 30, 2010 to 3.51 per cent) as a result of the ECB raising interest rates by 50 basis points to 1.50 per cent,” he says.