BoV shares up by 1.8% ahead of annual results

After a five-week positive rally, last week the Malta Stock Exchange (MSE) index edged 0.2 per cent low­er to close on Friday at 3,179.449 points. Following last week’s fall the equities index performance year-to-date now stands at 2.7 per cent.

Losses on Monday and Wednesday where enough to erode Tuesday’s gain and the MSE index closed un­­changed in the last two sessions a fall in HSBC Bank Malta plc’s price was offset by gains in other banking equities. Contrary to the previous week of trading, financial equities did not help much to lift sentiment, with the exception of Bank of Valletta plc (BoV), which closed another week higher.

Go plc managed ano­ther weekly gain while Simonds Farsons Cisk plc (SFC) headed the list of gainers. Eleven equities were active, of which Plaza Centres plc was the most liquid in terms of value and volume.

Risky assets were solid across foreign equity markets last week but risk-appetite faltered somewhat in the last sessions following a three-day rally. Early on Monday investors seemed unwilling to take more risks ahead of the European leaders’ gathering on Thursday. But as positive data started to emerge, the mood in financial markets turned positive.

In the US, retail sales figures were better than expected, while forecast-beating US industrial production gave more steam to the positive sentiment. A German investor sentiment survey suggested that Europe’s number one economy could still drive growth in the euro area. As a result the US dollar was seen drifting lower against the riskier euro as the latter rallied sharply to a one-month high against the greenback.

But on Friday in the US, the Standard and Poor’s 500 Iidex fell 1.7 per cent, its worst drop since June 21, due to disappointing company results and the eurozone leaders’ failure to discuss aid for Spain.

Last week, yields on Spanish bonds fell as comments by two German lawmakers and rating agency Moody’s suggested an “easier” bailout for Spain. In fact, early in the week two German lawmakers supported giving Spain financial assistance. This was somewhat unexpected given the lack of willingness by German leaders to support further indebted countries.

Moody’s maintained Spain’s debt rating after the agency said the European Central Bank’s new intervention programme has provided stability for debt-ridden countries.

Locally, banking equities failed to move in line with each other after both HSBC and Lombard Bank plc closed lower while BoV gained 1.8 per cent. The latter traded between a weekly low of €2.20 and a high of €2.27, the week’s closing price. However, last week’s gain came following a sharp fall in trading volume from 326,000 BoV shares a week earlier to 136,000 shares changing hands in 55 deals worth €300,000.

On Tuesday, BoV announced that the board of directors will meet on Friday to consider and approve the group’s and the bank’s audited fi­nancial statements for the year ended September 30, and consider the declaration of a final dividend to recommend to the bank’s annual general meeting. The bank’s share price is up two per cent year-to-date.

On the other hand, HSBC failed to move in line with its larger peer after the equity posted a 1.8 per cent, or €0.05, decline to end the week at €2.75. Last week’s fall follows a 3.7 per cent rally in the previous week’s last session of trading. A total of 83,000 shares were traded in 20 deals as the equity traded at a weekly high of €2.80. Since January, HSBC shares have gained nearly seven per cent.

Lombard Bank plc lost a mere 0.5 per cent as the banking equity ended the week at €1.87 after trading at a low of €1.80. Last week’s fall came after improved volume of trading as just under 54,000 shares changed ownership in 17 deals. Meanwhile, Middlesea Insurance plc shares lost almost four per cent, or €0.03, to end the week at €0.75, as five deals of a total of 10,400 shares were executed.

On the positive side, SFC shares gained two per cent, or €0.05, as the equity ended the week at €2.40. The beverage producer is up 33 per cent since January, and since announcing its half-yearly report at the end of September the equity has jumped nine per cent.

But trading volume continues to be weak as shareholders are now unwilling to let go of their shares. In fact, last week a total of 3,000 shares were traded, while the number of shares traded since the beginning of the month barely surpasses 18,000.

There was more good news for Go plc shareholders as the equity managed to close another week higher, this time by one per cent to end the week at €0.99. Price movements were minimal last week as the equity gained until Wednesday but closed flat in the week’s last two sessions. Last week’s gain means the equity’s year-to-date performance is up by a fragile one per cent.

It was a negative week for Plaza Centres plc which plummeted by a hefty 13.6 per cent, or €0.08, to end the week at €0.51. Trading activity in the shopping complex operator soared as over 600,000 shares were traded mid-week. Malta International Airport plc traded at €1.75 in all five trading sessions but gained just under one per cent, while Malita Investments plc lost two per cent as the equity returned to its initial public offering price of €0.50.

Maltapost plc lost a minimal 0.14 per cent in thin trading to close at €0.709 while Santumas Shareholding plc end the week at €1.701.

In the government bond market, running yields improved further after the Central Bank of Malta revised stock prices even lower as appetite for risky assets improved, and so safe government bond prices fell. The 10-year 4.3% MGS 2022 lost 80 basis points while the long-dated 5.25% MGS 2030 lost one per cent to end at €103.51.

On Friday the Treasury announc­ed that it will be offering to the public €100 million in new bonds subject to an over-allotment option of €40 million. The Government will offer three different issues: 3.75% MGS 2017, 4.3% MGS 2022 and 4.8% MGS 2028.

The prices of these issues will be determined on Thursday afternoon and applications will be accepted thereafter. Applications close on October 31 or earlier at the discretion of the Accountant General.

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 jesmond.mizzi@atlasjmfs.com.