MSE Index surpasses the 3,100 level as banks gain
The Malta Stock Exchange index extended its gains for the fourth straight week by 1.24 per cent following a 1.6 per cent gain a week earlier.
Last Monday’s session was the main contributor to the week’s gain, while there were little noteworthy movements in the sessions which followed.
Banking equities were the main drivers to the positive move as Bank of Valletta plc and HSBC Bank Malta plc moved higher, while another five equities ended the week lower.
Once again, a number of small caps closed the week lower; yet trading volume was weak and hardly reflected market sentiment.
The local stock market index broke through the physiological level of 3,100 points as it closed Friday’s session at an eight-month high of 3,128.69 points.
Internationally, the equity markets once again kicked off the week in the same way they have ended the final session of the previous week. Initially, risk appetite was unthinkable, as bad news out of Spain sent demand for safe assets up, while yields on Spanish debt reached new highs.
Greek banks will no longer be able to go to the European Central Bank for funding, as the central bank is rejecting Greek government debt as collateral. Data out of Asia disappointed, highlighting a slowdown in demand from China.
Equity markets declined further and the euro continued to lose ground against the safer US dollar. To make matters worse, economic data from Germany, the UK and the US added to the negative mood.
However, on Thursday the euro experienced some support as investors sense that central banks around the world will come to the rescue this week when they meet to discuss monetary policy. The weak economic data will most probably encourage policy-makers to increase stimulus measures.
Last week’s turning point came on Thursday after ECB’s Mario Draghi pledged that it is within the central bank’s mandate to do whatever it takes to save the euro. On the news, investors swiftly priced in the possibility that the ECB will return to the debt markets at this week’s policy meeting and equity markets soared.
HSBC maintained its upward momentum as it closed higher at €2.895, up by 1.6% or €0.045 on the week. Trading volume improved to 90,000 shares up from 35,000 shares a week earlier. The bank’s share price kicked off the week with a 1.4% gain while it managed to move minimally higher in the two sessions which followed.
However, investors preferred to stay on the sidelines in the final two trading sessions as they awaited the bank’s interim financial statements for the six-month period ending June 30, which were scheduled for Friday, after close of trading.
HSBC reported an increase in profit before tax of 6% or €3 million to €53 million, when compared to the same period in 2011.
Net interest income increased by 5% to €68 million as mortgage lending increased while net fees and commission income for the period stood at €16 million.
The board of directors declared an interim gross dividend of €0.10 per share. This will be paid on August 22.
The upbeat sentiment which lately surrounded HSBC shares has finally shifted on to BoV shares. In recent weeks, the bank struggled to find upward momentum, however, last week the equity posted a 5% or €0.10 move to the upside, thus reaching the €2.10 price level. As expected, trading volume declined as just over 64,000 BoV shares changed hands over 48 trades.
Insignificant trading volume in FIM Bank plc shed the bank’s capitalisation by 1.2% as the equity finished the week at $0.85. A total of six deals worth $5,000 were executed. The board of directors is scheduled to meet on August 28 to consider and approve the consolidated financial statements for the six months ended June 30 and to consider the payment of an interim dividend.
The other active financial equity last week was Middlesea Insurance plc which lost 3% as two trades were recorded. The insurance firm finished the week at €0.621. On Monday, the board of directors approved the unaudited financial statements of the group for the financial half-year ended June 30.
The group’s profit before tax, which is inclusive of the results recorded by MSV Life plc, stood at €7.17 million. Earnings per share for the period stood at €0.03.
The company explained that the improvement in profit levels was a result of an improvement in the pure technical insurance operations in the holding company enhanced further by the positive performance of the group’s investment portfolio.
Meanwhile, Go plc shares returned in negative territory with a 2.8% decline. The telecoms company closed the week at €1.05 as just over 20,000 shares were dealt. Year to date, the equity is still up by 7%.
Malta International Airport plc shares moved higher following a flat close a week earlier. Investors were most probably reacting to the company’s interim financial statements for the period ended June 30, where profit before tax improved by 13% to €4.5 million. The company also announced a gross dividend of €0.046 which is expected to be paid by not later than September 10.
Last week the equity’s share price gained 1% to €1.77 on improving volumes, as 40,000 MIA shares were dealt across seven transactions.
On Friday, 6PM Holdings plc shares lost 12.5% to close at £0.28. However, one deal of 1,000 shares was recorded.
MIDI plc shares lost 3.3% to end the week at €0.29 as 60,000 shares were traded.
In the government bond market, yields were generally lower as bond prices improved. The only noteworthy price movements to the downside, hence higher yield were recorded in the long-dated 5.25% MGS 2030 and the 5.2% MGS 2031 issues. On the positive side the 4.3% MGS 2022 gained 0.6%. Almost €7 million were traded across 22 issues, while another €1 million was traded in the treasury bills market.
This article, which was compiled by Jesmond Mizzi, 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 onTel: 2122 4410 or e-mail [email protected].