Fourth positive week in a row for MSE

The Malta Stock Exchange (MSE) had another good week to bring the tally of successive positive weekly performances to four. Last Friday the MSE index closed up by a fragile 0.2 per cent at 3,141.604 points. So far this year the MSE is up by 1.5 per cent, heavily underperforming its European peers.

Once again, banking equities missed on the positive sentiment while International Hotel Investments plc (IHI) and Go plc closed another week higher. Last week’s gain came after improved turnover as €630,000, up from €500,000 a week earlier, was traded in 113 transactions. The two major banks were the most liquid, followed by Medserv plc.

Go plc maintained its recent rally despite the fact that investors are still awaiting the company’s decision regarding Forthnet’s rights issue.

Late on September 28 Go announced that Forthnet, the Greek subsidiary in which Go holds a stake, has not yet issued the prospectus explaining the details of the proposed rights issue. As a result the company will only be in a position to take a decision on whether or not to take part in the capital increase once Forthnet issues the prospectus.

Notwithstanding this Go’s share price gained another two per cent, or €0.02, to close the week at €0.97 after trading at a weekly low of €0.93. Turnover during the week fell to just over €30,000, down from €80,000 the previous week, as 34,000 shares were traded across 10 deals.

IHI kicked off the month on a high as its share price jumped 5.6 per cent, or €0.05, thus reaching a 19-month high of €0.95. In September the hotels operator gained six per cent and since January IHI is up by a hefty 12.6 per cent. Last week a total of 60,000 IHI shares were traded in13 transactions.

In the banking sector, Bank of Valletta plc (BoV) experienced a volatile month after the bank’s share price swung between a weekly high of €2.264 and a low of €2.141, but it managed to end the week at €2.19. This reflected a 3.3 per cent drop in price on the week, and a loss of 1.5 per cent year-to-date. Last week liquidity soared as €240,000 was traded, up from €56,000 the previous week.

On Wednesday, the European Banking Authority released a report on the level of capitalisation of European banks. The report shows that BoV enjoys a strong Core Equity Tier 1 ratio of 10.6 per cent, which is significantly above the minimum of nine per cent required by European regulation.

HSBC Bank Malta plc (HSBC) moved in line with its peer although last week’s drop in the bank’s share price was more contained. HSBC’s share price fell one per cent, or €0.03, to €2.70, as 13 deals worth €114,000 were executed. Year-to-date the bank’s share price is still trading in positive territory by just under five per cent.

The share price of Malta International Airport plc (MIA) shed 1.7 per cent, or €0.03, as three deals of almost 12,000 shares were traded. Last week MIA announced that passenger movements through the airport in September reached 400,000, the highest number ever registered in September and the sixth consecutive record month.

This is a 6.6 per cent increase in passenger movements compared to the same month last year including an expansion of nearly 15 per cent in the Spanish market alone. September’s record result was achieved with a 3.6 per cent increase in seat capacity over the same month last year, with a total of 476,074 seats.

Nine deals of 10,000 Simonds Farsons Cisk plc shares sent the price 4.6 per cent, or €0.10, higher to end the week at €2.30. The company is expected to pay an interim dividend of €0.0133 per share on October 19.

In IT sector, RS2 Software plc gained over 15 per cent, or €0.08, to close at €0.60. This rise came following a company announcement on September 30 that it has concluded a licence and servicing processing agreement worth €500,000 with a major service provider in Latin America.

Maltapost plc shares rose 1.4 per cent to close the week at €0.71. Last week’s gain came after an improved volume of 52,000 shares were traded.

Malita Investments plc traded flat at €0.51 while Medserv plc lost a mere 0.25 per cent to end the week at €3.99.

In the government bond market the yields of a number of short- and medium-dated issues fell while all long-dates stocks gained. The 5.25% MGS 2030 gained 44 basis points closing just over €104 while the 5.1% MGS 2029 rose 0.3 per cent.

Global investors avoided risk following a string of weak economic data coupled with Spain and Greece’s debt problems which loomed over markets.

Data from China and Japan revealed an ever-slowing region as big manufacturers are becoming less optimistic about the future.

As expected, investors kept their focus on developments in Spain amid speculation that Prime Minister Mariano Rajoy would ask for help by the end of the week. But he swiftly assured markets that a request for European help was not imminent.

However, sentiment improved despite all the doom and gloom that surrounded markets earlier last week.

On Thursday, the European Central Bank left its benchmark interest rate unchanged at 0.75 per cent, while ECB president Mario Draghi reassured markets that the bank is ready to start buying government bonds as soon as the necessary conditions are met.

Meanwhile the US announcement of strong employment figures and a surge in applications to refinance mortgages nudged markets higher. The US unemployment rate fell unexpectedly to 7.8 per cent last month, the lowest level since US President Barack Obama took office in January 2009.

During the week the German Dax gained 2.5 per cent while the S and P 500 gained 1.4 per cent despite closing minimally lower on Friday as markets erased earlier gains as investors’ focus turned to the upcoming earnings season.

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 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 [email protected].