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Bank of Valletta shares outperform MSE index

After two weeks of gains and a strong performance during October, last week the Malta Stock Exchange (MSE) index lost a hefty four per cent after the share prices of the two major banks, and those of International Hotel Investments plc (IHI) faltered on Monday.

HSBC Bank Malta plc’s losses worsened on Tuesday and dragged the MSE index even lower. Thereafter there were no significant price movements except for a further drop in IHI’s share price.

Nearly one million shares were traded in all active equities. IHI took the lion’s share as over half last week’s trading took place in the hotels operator. Bank of Valletta plc (BoV) followed, while trading activity in Go plc dried up.

During the first week of November the MSE lost over 100 points to end at the 3,112.039 points, its lowest level in almost seven weeks.

In equity markets abroad, there was no risk appetite at the table last week as equities and the euro fell while safer currencies such as the US dollar and the Swiss franc gained. After the US elections fears mounted about the US fiscal cliff, while reports continue to suggest Spain would not ask for bailout until next year.

Moreover, Greece is back in the picture, and as a result investors seem unwilling to hold risky positions as the doom and gloom that has surrounded the global economy for the past four years, seemed to resurface.

Back to local equities, IHI shares, the most active by volume, lost a whopping 15.8 per cent, or €0.15, to end the week at €0.80. The equity fell a hefty 13.7 per cent on Monday as trading volume reached 500,000 shares. On Thursday, the equity lost a further 2.5 per cent after a sharp decline in volume. Last week’s loss has erased nearly all the hotels operator’s gains this year.

Late on Friday IHI announced that the improvement in its hotels’ performance seen in the group’s last half-yearly report was sustained in the actual results up to the end of 2012’s third quarter. The company said the main contributors to this performance were Corinthia Hotel St Petersburg and the Corinthia Hotel Tripoli.

In the banking sector, BoV was the only equity to close higher with a 1.2 per cent or €0.03 gain. The equity ended at €2.46 after trading at a weekly low of €2.39, as €400,000 was traded in 70 deals, down from €550,000 a week ago.

Initially the bank’s shares closed the week’s first two sessions in negative territory. But it ended the week as the best performing equity after it gained in the three subsequent sessions.

A final gross dividend of €0.13, if approved at the annual general meeting, will be paid on December 20 to the bank’s registered shareholders as at close of business on November 19, including those buying BoV shares up to close of business next Wednesday.

HSBC shares lost nearly four per cent or €0.099 after the equity fell in three sessions. Trading volume improved slightly to just over 37,000 shares traded in 20 deals. Due to last week’s fall the bank’s equity has lost almost half of its gains this year, which now stand at 2.8 per cent.

Meanwhile, Lombard Bank plc failed to hold on to the previous week’s gain of 7.5 per cent after the equity succumbed to selling pressure on Friday after there were no trades in the previous four sessions.

But on Friday investors were forced to accept lower bids and as a result the equity lost 10 per cent, or €0.20, to end the week at €1.80. Turnover fell heavily to 9,000 shares traded in four transactions.

After close of trading on Friday, Maltapost plc announced that the Malta Communications Authority had published its decision on a ‘Price Control Mechanism for Maltapost plc and revised postal tariffs’.

In this regard, the authority has accepted to revise the prices of certain postal products, with the first set of changes taking effect as from November 19. Last week no trading took place in the postal operator’s equity.

Malta International Airport plc (MIA) remained unchanged after no noteworthy price movements were recorded. The airport operator ended the week at €1.75 as seven transactions worth €94,000 were executed.

On Thursday, MIA announced that passenger movements in October reached 348,711, the highest ever registered in October. The rise in passenger movements, when compared to the same month last year, is equivalent to an increase of 0.6 per cent.

The results for the first 10 months of the year, in terms of passenger movements, show an increase of 3.7 per cent when compared to the same period last year. MIA is increasing its forecast for passenger traffic from a 1.5 per cent increase announced in July, to approximately three per cent, which means a record of over 3.6 million passengers.

Fimbank plc traded flat at $0.80 after one thin trade, while Middlesea Insurance plc traded un­changed at €0.74.

The insurance firm announced that the group’s results as at the end of 2012’s third quarter continue to show strong performance after the interim half-yearly review of results reported earlier this year. The financial market movements continue to have a positive influence on the investment portfolio returns, particularly that of the company’s life assurance arm, MSV Life plc.

On Friday, Plaza Centres plc gained one per cent as over 16,000 shares were traded in four deals while Go plc closed unchanged at €1 after a low volume of trading at a weekly low of €0.975. Simonds Farsons Cisk plc closed flat at €2.40.

Crimsonwing plc also maintained last week’s closing price of €0.38 after turnover almost doubled to €48,000. Last week the IT company announc­ed that it had fully acquired Promentum Holdings B.V., which now becomes a fully owned subsidiary of the company.

In the corporate bonds market €600,000 was traded across 24 issues. Last week both GAP Developments plc and Mediterranean Bank plc announced that they have bought back part of their respective bond issues from the secondary market.

In the government bond market a total of €7.6 million was traded. Yields closed generally lower as most of the active issues gained except for two short-dated issues and the long-dated 5.2% MGS 2031, which moved against the trend. In fact, this issue lost 77 basis points while all other long-dated issues gained about 0.4 per cent.

This article, which was compiled by Jesmond Mizzi, managing director of Jesmond Mizzi Financial Advisers Ltd, 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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