MSE index turns positive again

The Malta Stock Exchange (MSE) posted the best week-on-week performance in the past three trading weeks when it gained 1.2 per cent to end the holiday-shortened week at 3,111.798 points, a level last reached in the month’s first trading session.

Turnover last week fell heavily to €500,000, down from €900,000 a week earlier. All active banking equities closed the week in negative territory while International Hotel Investments plc (IHI) shares surged on Monday and Maltapost plc continued its way to recovery after taking a nosedive some weeks ago. For the second week running Go plc shares remained the most traded equity by volume despite a sharp pull-back week-on-week.

Despite the stimulus measures announced recently by the US Federal Reserve and the European Central Bank investors seem unconvinced that the worst of the financial crisis, now in its fourth year, is over.

Following the positive rally in equity markets the previous week, sentiment once again fell as investors’ attention turned to Spain.

Even though yields on Spanish bonds are off their highs, the serious risks faced by the Spanish economy could easily hamper the euro’s road to recovery. Spain’s 10-year yield has recently fallen to 5.8 per cent from a euro-area high of 7.8 per cent in July.

Last week the feeling that Spain could soon ask for help intensified although an Italian official hinted that a country would only ask for a bailout if bond yields surge to high levels which would not enable the country to tap the bond market.

But on Thursday it was announc­ed that Spain is in talks with the European Commission authorities to facilitate a new bailout program that will be presented on Thursday.

As quoted in a leading financial journal, the plan will focus on structural measures sought by the EU, not on new taxes and spending cuts. On the news the euro gained for the first time in four days against the safer yen while investors grew bullish once again on the euro against the US dollar after some profit taking was witnessed early in the week.

In the US, better housing starts and existing home sales were announced mid-week. Both sets of data rose to two-year highs. The news injected some risk appetite in currency markets as investors sold the greenback in exchange of riskier counterparts.

But the rally was short-lived after weak Asian economic data cut back some risk appetite. Major indices ended the week in negative territory despite a turnaround in European markets on Friday as investors preferred to focus on positive news.

A significant rise in IHI shares was the main contributor to last week’s MSE gain given the equity’s high market capitalisation. IHI gained 6.6 per cent, or €0.055, after 90,500 shares were traded in 14 deals. The higher demand for IHI followed a meeting between the company and the financial community.

IHI chairman Alfred Pisani said several buyers are interested to buy the company’s luxury apartments in London and that IHI has approached potential investors to raise additional equity. The equity traded at a weekly high of €0.90 and a low of €0.84, and ended the week at €0.895. The equity is now six per cent up year-to-date.

Lombard Bank plc shed 1.6 per cent, or €0.03, as sellers were forced to accept lower bids as demand fell to 4,500 shares from 21,000 shares a week earlier. The equity ended the week at €1.90. It is down by 30 per cent since last year’s close of €2.70.

Bank of Valletta plc (BoV) shares lost a minimal 0.44 per cent after closing higher the previous week. The bank failed to break through last week’s close of €2.275 and only managed to end the week at €2.265 after trading at a weekly low of €2.25. The lack of upward momentum can be explained by investors’ insignificant demand for the equity which fell further to just under 20,000 shares.

Demand for HSBC Bank Malta plc remained weak as 23,000 shares were traded in six deals. Despite the lack of demand the equity almost held on to last week’s close as it ended the week at €2.739.

Notwithstanding the lack of interest in the two major banking equities, both are still up year-to-date as HSBC tops the list with a six per cent gain while BoV is up by two per cent.

Middlesea Insurance plc, the only financial equity to trade higher, gained 2.4 per cent to end the week at a 12-week high of €0.65 after touching a four-month high of €0.66 in the week’s final trading session. But volume was weak as just over 1,000 shares were traded in two deals.

Simonds Farsons Cisk plc shares gained a hefty three per cent, or €0.07, as the equity closed at €2.17 after being traded at €2.12 in the week’s opening sessions. But the gain came about after four deals totalling 3,000 shares, worth just over €6,000. The equity tops the list of the best performing equities this year with a 21 per cent gain.

Go plc, the second most active by turnover, lost 0.6 per cent to end the week at €0.85 after trading at a weekly low of €0.82. Most trading took place on Monday and Tuesday during which the share price of the telecoms firm lost 0.6 and three per cent respectively. But mid-week the equity gained three per cent to end just shy of the previous week’s close price of €0.855, on a turnover of just over 132,000 shares.

Malta International Airport plc closed theweek minimally higher as it ended the week at €1.76. Trading volume improved to 65,000 shares, up from 50,000 the previous week.

Maltapost plc shares closed higher for the successive second week. Last week its share price rose three per cent as 10,500 shares changed hands in two deals.

RS2 Software plc gained four per cent to end the week at €0.52 while Midi plc traded unchanged at €0.28. Five deals of 114,000 Midi shares were executed. Malita Investments plc also closed flat at €0.52.

In the government bond market turnover improved to €3.2 million as the two bonds that mature in 2020 took the lion’s share. Both issues fell slightly on the week. The 10-year 4.3% MGS 2022 dropped 23 basis points while the long-dated 5.2% MGS 2031 lost 0.5 per cent.

In the corporate bond market, turnover was just short of €700,000, as 22 bonds were active with the highest turnover being registered in the 7.15% Mediterranean Investments Holding plc euro 2015-2017.

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 [email protected].