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MSE index up 4% in October

Last week the Malta Stock Exchange Index (MSE) moved higher by 1.2 per cent, the highest week-on-week gain since mid-October. Bank of Valletta plc (BoV) shares soared as investors’ reacted positively to the bank’s full-year results announced a week earlier.

Last Monday, the positive reaction shifted somewhat on to HSBC Bank Malta plc. However, the upward trend stopped short after the equity gave away all of the initial gains as it ended the week lower. Lombard Bank plc managed a solid week over improved turnover while Go plc experienced a tepid week. Last week’s gain takes the index position to 3,241.769 points hence up by almost 5 per cent since the beginning of the year.

Last week straddled the months of October and November and thus October came to an end with the local stock exchange recording a significant four per cent gain. Noteworthy gains were posted across the highly capitalised equities and given its weighting, the banking sector was the main contributor to the said gains while some solid gains were registered by a number of other listed securities.

Across foreign equity markets, risk appetite returned as investors preferred to focus on the positives while they put on the side the not-so-good news. A case in point was the weak employment figures in the EU and Germany, which did little to dent sentiment as investors preferred to focus on the well received Italian bond auction. That helped to lift the euro against the safer US dollar, while equity markets continued to head higher.

Investors’ outlook improved further mid-week as retail sales in Germany increased at the fastest pace since June 2011, while investors put the concerns surrounding Spain and Greece somewhat on hold after one policy maker said that the European Central Bank (ECB) is not in negotiations with any government in the euro area on conditions for opening the recently announced Outright Monetary Transactions, a measure the ECB has in hand to inject funds in indebted countries.

In the US, markets were closed in the opening two sessions because of Hurricane Sandy, while trading resumed on Wednesday. A handful of positive data was issued last week in the US. Personal consumption data picked up, consumer confidence improved to levels not seen in over four years, an employment report was released above expectations while weekly jobless claims dropped, while on Friday it was announced that in October the US economy added just under 0.2 million jobs.

Back to the local market, BoV shares experienced an outstanding week after the banking equity came under the limelight a week earlier, following the record full-year results announced by the BoV Group, which registered a profit before tax of €110.73 milion. Demand shot up initially and as a result the equity’s price reached a weekly high of €2.50.

However, as demand dropped, so did the price and in the four sessions which followed sellers accepted lower bids as on Friday the equity’s price settled at €2.43, thus up by 4.5 per cent or €0.105 on the week. On the year, BoV shares are up by 9.4 per cent, while throughout October the equity gained a hefty 10 per cent.

The positive sentiment failed to translate on to HSBC shares even though on Monday the bank’s equity moved higher. However as demand weakened the share price declined as it traded at a weekly low of €2.73 while it closed at €2.749. A total of 30,000 shares were dealt over 15 transactions. Over the month of October the equity gained one per cent.

On the contrary Lombard Bank plc closed the week with a hefty 7.5 per cent or €0.14 after two deals of just under 7,000 shares mid-week sent the equity’s price to the €2 level. In October the bank gained nearly 10 per cent, while since the beginning of January it is still down by 26 per cent. Last week a total of 71,400 shares, up from 53,200 shares a week earlier were traded in Lombard Bank. Meanwhile, FIMBank plc closed unchanged at $0.79 as two small deals were executed.

Go plc managed to hold on to the €1 level after the equity traded at a weekly low of €0.945. Over 32,000 shares changed ownership across 16 deals. On Friday, the telecoms company announced that the group results for the first six months up to June 30, 2012, showed a reduction in normalised operating profit to €10.5 million from €12.4 million in the last six months of 2011.

Go outlined that profitability for the first nine months of the year remains lower than last year. It also added that the group continues to generate healthy cash levels from its ongoing operations and holds sufficient cash resources and retains adequate banking facilities to support its invest-ment programme and honour its commitments.

Moreover, the company also made reference to Forthnet, its Greek subsidiary, which is expected to announce its third quarter 2012 results by the end of November. Forthnet is progressing with its plans to increase its capital as it aims to raise €30 million.

In this regard, Go stated that it was awaiting the release of the Forthnet prospectus, at which stage the company would be able to determine whether or not to participate in the rights issue process.

Middlesea Insurance plc lost 1.33 per cent to end the week at €0.74 while in the IT sector 6PM Holdings plc was the only faller. The equity shed three per cent to £0.31. Crimsonwing plc added almost 19 per cent as it ended the week at €0.38 while on a year-to-date basis the equity’s share price is up by 52 per cent. RS2 Software plc closed flat at €0.60.

Malta International Airport plc closed flat at €1.75 while MaltaPost plc closed the week with a two per cent gain at €0.735. Meanwhile Santumas Shareholding plc edged minimally lower to end the week at €1.70 while MIDI plc traded flat at €0.25 as 200,000 shares were dealt over two deals.

Last Friday the Treasury announced that it has received bids having a total amount of €252 million against the issuance sum of €140 million. The Treasury announced that all subscriptions by members of the public will be accepted in full. On the secondary market a total of €1.8 million.

This article, which was compiled by Jesmond Mizzi, managing director of Jesmond Mizzi Financial Advisers Limited, does not intend to give investment advice and the contents therein should not be construed as such. The company 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 Jesmond Mizzi Financial Advisers at 67, Level 3, South Street, Valletta, or on tel: 2122 4410 or e-mail [email protected].

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