Equity markets closed off the week on a high following comments made by the president of the European Central Bank (ECB) which did not disappoint.
Early in the week investors preferred to stay on the sidelines and markets barely found upside momentum, after sentiment was earlier dented by the lack of action taken by the chairman of the US Federal Reserve (FED), Ben Bernanke a weak earlier.
However, on Thursday markets across the globe rallied after the ECB announced a new facility, outright monetary transactions. This facility will give the ECB the powers to buy debt of countries who have requested a bailout.
Mario Draghi assured investors that the amount which will be bought will be unlimited and the ECB will be targeting debt maturing within a one- and three-year time period. Draghi added that the ECB reserves the right to bring the program to an end should it feel that the country asking for bailout has not adhered to the bailout promises.
On the news equity markets rallied and the euro gained against the US dollar as Mario Draghi stated that “the euro is irreversible”. Spanish yields declined as demand for Spanish debt improved. However, the positive sentiment took a slight nock on Friday late in the afternoon, after August payrolls in the US increased less than forecast.
The news failed to weaken the upbeat sentiment as investors bet that the FED will take measures to stimulate the economy when the Federal Open Market Committee meets this week.
The upbeat sentiment with which foreign markets closed the week failed to transpire locally after the Malta Stock Exchange Index lost 1.2 per cent to bring its two week positive run to a halt. The local stock exchange ended the week at 3,054.98 points after closing at a five-week high on Monday.
Liquidity improved further as over 1m shares changed ownership over 119 deals worth €0.8 million. As is usually the case, Bank of Valletta shares was the most sought after equity while trading in HSBC shares dried up. Trading volume in Malta International Airport more than tripled as more than 72,000 shares where traded, up from 21,000 shares a week earlier. Year-to-date the MSE’s position now stands at 1.3 per cent in negative territory after almost recovering all lost ground during final trading sessions of August.
MIA which was the only equity to end the week higher gained 0.6 per cent after the company announced its traffic results for the month. The airport operator announced an all-time record in passenger movements as an increase of 3.6 per cent was witnessed over the previous record, while when compared to the same period of last year the increase totaled nearly 8 per cent.
In August, aircraft movements grew by 6.6 per cent over the corresponding period last year, while another positive result was achieved in cargo and mail with a staggering 14.6 per cent increase over the same month in 2011.
All the core markets registered increases during the month of August with Germany and France growing significantly. Both destinations grew by 14.6 per cent, whereas Spain and Italy recorded an increase of 6.2 per cent and 5.7 per cent respectively.
Passenger movements from the UK were more or less the same with a 0.2 per cent increase. Ahead of the results the equity gained 0.3 per cent as 50,000 shares were traded while on Thursday the equity returned to last week’s close over insignificant volume. On Friday the share price gained 60 basis points to end the week at €1.75 as turnover improved. Year-to-date MIA is up by 3.6 per cent.
In the banking sector BoV shares experienced a volatile week as in the opening two sessions the bank’s share price was seen drifting by eight per cent between its high of €2.35 and a weekly low of €2.155. Thereafter the equity closed three sessions in positive territory; however, trading volume was nowhere near that traded in the first sessions. BoV closed the week at €2.245 hence down by two per cent on the week while since the beginning of the year the equity is still up by 1 per cent.
HSBC lost 0.6 per cent ending the week at €2.735. Once again demand turned weak as just over 4,000 HSBC shares changed hands over four deals worth €12,000, down from €73,000 traded a week earlier.
Lombard Bank closed another week in the red, however last week’s decline reached a mere 0.5 per cent, following a 2.5 per cent a week earlier. The bank’s share price ended the week at €1.94 hence down by 28 per cent since last year’s close of €2.70. Trading volume improved slightly to 8,000 shares dealt across four transactions.
Midi was the hardest hit during last week’s trading, following a 14 per cent or €0.04 decline in its share price. The equity traded at €0.25 after 505,000 shares were traded.
Meanwhile, Go shares failed to keep up to the upbeat momentum with which it opened the week after the equity touched a high of €0.90. The share price of the telecoms firm swiftly returned to last week’s closing price of €0.85 on Tuesday while no noteworthy price changes were recorded thereafter. Investors are still waiting for the company to announce whether it will participate in the rights issue of Forthnet, the Greek telecoms firm in which Go holds a stake.
Following the recent declines Malta Post shares took some respite as the equity traded flat at €0.63 as 83,000 shares were dealt across 24 deals. Investors’ interest in the Malta Post improved last week as turnover reached €50,000 up from €23,000 traded in the previous week.
Two deals of 6,500 shares in FIMbank shares left the equity’s price intact at $0.80 while Simonds Farsons Cisk closed unchanged at €2.08. Malita shares traded flat at €0.52 as turnover declined to under €2,000 while Plaza Centres lost two per cent after the equity finished the week at €0.54.
In the government bonds market yields continue to improve after foreign equities gained as investors placed higher bets on riskier assets and moved out of the safer government bonds. The five-year 4.25% MGS 2017 lost 12 basis points while the 4.6% MGS 2020 lost 0.31 per cent. The long-dated 5.25% MGS 2030 lost 50 basis points and is now yielding just under five per cent.
This article, which was compiled by Jesmond Mizzi, Managing Director of Atlas JMFS Investment Services Limited, 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 on Tel: 21224410 or e-mail jesmond.mizzi@atlasjmfs.com.