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Sentiment improves as bank equities gain

Locally investors’ sentiment during the year’s last full trading week closed on a high as equities gained, while the Malta Stock Exchange (MSE) index surpassed the 3,200 points level as it gained 1.4 per cent to end the week at 3,211.984 points. None of the active equities closed lower while gains in the two major banks’ equity prices, together with that of Go plc sent the MSE to a seven-week high.

Last week’s gain came on the back of improved turnover as the two major banks, led by Bank of Valletta plc (BoV), headed the list of gainers. Nearly €800,000 was traded in 130 transactions. Out of the 22 listed equities, 16 were active and 10 gained while another six closed unchanged.

Abroad, foreign markets closed lower on Friday as the US fiscal cliff took centre stage. The US Budget talks, which have been taking place in the past few weeks, took a turn for the worse after House Republican leaders cancelled a vote on higher taxes for top earners.

If an agreement is not reached, new tax increases and spending cuts will come into effect as early as January, which could hinder the US economy’s recovery and probably send it back into recession.

Events abroad rarely impact local investors as the MSE remains sheltered from such developments. It is local news together with industry-specific events and company announcements that tend to shift sentiment.

Last week was a case in point for HSBC Bank Malta plc shares. Trading volume in the bank jumped to 64,000 shares, up from 10,000 shares a week earlier.

This surge in demand came after the bank announced that the board of directors is due to meet on March 4, 2013, to approve the group’s and the bank’s final audited accounts for the financial year ended December 31, 2012, and to consider the declaration of a final dividend to be recommended to the bank’s annual general meeting to be held on April 18, 2013.

Over the week the equity’s price rose by over one per cent, or €0.03, as the share price closed at €2.70 after trading at a weekly low of €2.66.

BoV shares also closed the week on a high after the bank’s share price gained three per cent, or €0.069, to end the week at €2.419. Initially there were no major price changes as the equity closed flat but it closed in negative territory mid-week over declining volumes. But on Thursday im­proved demand sent the equity 2.6 per cent higher following the AGM, and it gained further ground on Friday.

Last Wednesday the bank held its AGM where all resolutions were approved. A final gross dividend of €0.13 per share was paid on Thursday, while on January 17, 2013, shareholders will receive a bonus of one share for every nine they already hold. Since January the bank’s share price has surged by nine per cent, clearly outperforming the broader MSE index’s 3.8 per cent increase.

Lombard Bank plc moved in line with its larger peers with a 1.1 per cent or €0.02 gain as the bank ended the week at €1.86. A total of 12 transactions worth nearly €51,000 were executed. Meanwhile, thin trading in Middlesea Insurance plc shares left the equity’s price intact at €0.74.

Last week Go plc shares were among the best contributors to the rise in the MSE index after its share price rose by 5.4 per cent, or €0.04, to close at €1.18.

The equity ended all five sessions in positive territory as its price fluctuated between an intra-week low of €1.13 and closed at a weekly high of €1.18. Since January, Go shares have gained a hefty 20.4 per cent.

In the IT sector, investors continued to place bullish bets as shares in both RS2 Software plc and Crimsonwing plc gained. The latter shot up 6.5 per cent to reach €0.49 while RS2 shares gained 2.1 per cent to end the week at €0.74. Nearly 74,000 shares, spread equally between the two equities were traded.

Meanwhile 6PM Holdings plc ended the week flat at £0.31 as 12,000 shares were traded.

Plaza Centres plc was the week’s best performing equity with an 11 per cent rise. The equity closed at €0.60 but only one deal of a mere 130 shares was executed.

Midi plc gained two per cent to end the week at €0.275 as trading volume dried up, down to 5,620 shares, from 84,000 shares traded the previous week.

Meanwhile, Malta International Airport plc, which was the third most liquid by value, closed the week flat following an uneventful week. In fact the airport operator’s share price barely changed from the €1.80 level as nine deals worth €97,000 were executed.

On the contrary, one small deal in Grand Harbour Marina plc improved the equity’s price slightly to €1.82 while International Hotel Investments plc traded unchanged at €0.86.

Both Simonds Farsons Cisk plc and Maltapost plc closed flat at €2.50 and €0.80 respectively while Santumas Investments plc gained six per cent as it closed at €1.80.

In the fixed-income market a total of three million euros, spread equally between Malta Government Stocks (MGS) and corporate bonds was traded.

In the MGS market the 10-year 4.3 per cent MGS 2022 was the most traded issue with €400,000 traded in eight deals. Among the long-dated issues the 5.25 per cent MGS 2030 closed at €105.7 and is now yielding around 4.8 per cent.

In the corporate bonds market the recently issued 7.5 per cent Mediterranean Bank 2019 was the most traded issue with three deals worth one million euros.

I wish all readers a Happy Christmas.

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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