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Equity markets rally in Malta and abroad

The Malta Stock Exchange (MSE) index returned to positive territory after International Hotel Investments plc (IHI) shares surged while Go plc ended the week at a 16-week high. The banking sector barely contributed to last week’s again as none of the listed banking equities gained value except for Bank of Valletta plc (BoV), which edged slightly higher.

Trading volume fell to 600,000 shares across 15 equities, down from 900,000 a week earlier as the value of transactions amounted to €500,000. RS2 Software plc was the most liquid equity in terms of value as investors reacted to the positive interim directors’ statement issued a week earlier.

Last week the MSE index gained 1.6 per cent after rising in four sessions. It pulled back 0.7 per cent on Tuesday but the significant gains mid-week and on Friday sent the index once again above the 3,100 level when it ended the week at 3,130.40 points, the highest level for the last 14 trading sessions.

Abroad, foreign equities rallied amid renewed optimism over Greece, while later in the week, positive economic data regarding Germany and China gave markets more room for risk taking.

Luxembourg’s Prime Minister Jean-Claude Junker said negotiations over Greece’s long-term debt outlook have progressed, while mid-week German Chancellor Angela Merkel confirmed that she remained optimistic that a way forward for Greece would be found by tomorrow when leaders meet again to discuss debt reduction measures.

On Monday, Moody’s downgraded France’s credit rating on the belief that structural challenges in the labour market are expected to continue hampering the country’s competitiveness. Yet the news failed to dent sentiment as investors appeared more willing to focus on developments regarding Greece.

Risk appetite took a further boost on Thursday after positive manufacturing data regarding China was published, suggesting that exports were particularly strong, which could indicate that foreign demand is once again picking up.

On Friday, equities rallied and the euro gained against the safer US dollar after German business confidence unexpectedly climbed. Moreover, optimism that Greece will secure a fresh injection of capital from the bailout fund intensified and sent risky assets further up, while yields on German bunds and US treasuries increased.

Back to the local equities, IHI shares last week gained a hefty 12 per cent, or €0.089, as the hotels operator’s share price jumped to €0.84 after trading at €0.79 earlier. However last week’s gain came over insignificant trading volume as just over 15,500 shares changed hands in three deals that took place in two sessions. The equity’s price is now just down by 0.5 per cent down since January.

Last Monday IHI announced that it will be issuing a new bond with a coupon of 5.8 per cent and maturing in 2021. The company added that it will be granting preference to the holders of its maturing bonds.

In the banking sector, BoV posted an insignificant gain as the equity closed the week at €2.40 after it traded at a weekly low of €2.365. Demand for the equity fell heavily to 54,000 shares as 36 transactions worth €130,000 were executed. However, this was somewhat expected given that the equity is now trading without the entitlement to the next dividend payment, which will be paid on December 20.

Meanwhile, HSBC Bank Malta plc ended the week down 1.8 per cent at €2.652 as liquidity dropped by more than half that traded a week earlier. The lack of demand forced investors to accept lower bids as the equity’s price hovered around the €2.70 level initially but it fell as interest dried up. A total of 18,000 HSBC shares changed hands in 13 deals.

Lombard Bank plc failed to move higher as the banking equity ended the week at €1.78 after trading at a weekly high of €1.80.

Meanwhile, Go plc gained four per cent as the telecoms firm closed the week at €1.05. A total of 27,000 Go shares were dealt over 15 transactions.

In the IT sector, RS2 Software plc shares gained 8.3 per cent or €0.05 to reach €0.65. The equity was the most sought-after equity last week as 248,000 shares were traded in 15 deals. Likewise, Crimsonwing plc gained 5.3 per cent to end the week at €0.42 while 6PM Holdings plc lost 3.2 per cent to close at €0.30.

Maltapost plc ended another week higher as the postal operator surged by four per cent to €0.78 as nearly 12,000 shares were traded in the week’s opening and closing sessions.

Malta International Airport plc shares had an uneventful week as the airport operator’s share price experienced minimal changes during the week and closed flat at €1.77. Trading volume ammounted to just 10,500 shares. So far this year the equity is up five per cent.

Plaza Centres plc also traded flat at €0.52 while three deals of 26,000 shares in Malita Investments plc left the equity’s price intact at €0.50. Midi plc also closed unchanged at €0.25 after 178,500 shares were traded while Medserv plc fell by 3.5 per cent after one deal of 4,050 shares.

In the fixed-income market turnover reached almost €6 million, with the bulk of trading taking place in the Malta Government Stock market. Yields closed generally higher as the Central Bank revised its bid prices lower as equity markets abroad moved higher. The 4.8% MGS 2028 gained 170 basis points to €103 while the 5.25% MGS 2030 lost 0.4 per cent to end the week at €104.43.

In the corporate bonds market the 5.35% Izola Bank 2015 was the most liquid issue as just under €400,000 was traded across three deals. The 5.6% Global Capital 2014-2016 gained 2.5 per cent while the 7% MIDI 2016-2018 EUR lost 2.2 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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