US April payroll data on Friday showed an improvement over the previous month as the jobless rate now stands at 7.5 per cent. The news sent risky assets soaring, even though it has reminded investors of world economy’s two-speed recovery. As a result, the S&P 500 index in the US surpassed the 1,600 level for the first time ever and the Xetra Dax index in Frankfurt similarly reached record highs.
Global equity markets also gained on the back of more stimulus measures from the US Federal Reserve and the European Central Bank (ECB). Earlier in the week the Fed hinted it may still add to its monthly bond purchases, while in Europe the ECB cut rates to an all-time low.
More stimulus measures suggest that the world economy is still fragile, and as a result, ECB president Mario Draghi signalled that the bank might not stop there to boost the economy, which is still stuck in reverse. After the announcement, the euro plunged against the safer US dollar after having rallied to two-month highs early in the week.
Locally, the Malta Stock Exchange (MSE) closed the week 0.4 per cent higher after having closed unchanged the previous week. A gain of 1.6 per cent on Tuesday was enough to send the equity market higher despite the MSE closing lower in the three other trading days. No trading took place on Wednesday due to the public holiday.
International Hotel Investments plc (IHI) was the main contributor to last week’s gain as the two major banks closed the week in the red. Lombard Bank plc shares experienced a torrid week while noteworthy losses were recorded in both Malita Investments plc and Santumas Shareholdings plc.
The MSE closed the week at 3,339.368 points after having closed Tuesday’s session at a 22-month high just shy of 3,360 points.
Last week also witnessed the close of trading for the month of April, during which the local equity index rose just over one per cent as IHI and Bank of Valletta plc (BOV) shares gained. Financials failed to move in line with each other as HSBC Bank Malta plc and Lombard Bank plc fell while both Middlesea Insurance plc and Fimbank plc gained.
In the IT sector, 6PM Holdings plc and RS2 Software plc closed April on a high while Crimsonwing plc plummeted by four per cent.
Last week across the equity market, IHI shares soared by 7.6 per cent to regain the €0.85 level. A total of 28,300 shares were traded in six deals. Over the month the equity jumped 7.1 per cent and the equity is now just one per cent short of managing to recover all its losses year-to-date.
In the banking sector, BOV shares lost 0.7 per cent. The share price failed to break through the €2.30 price level, closing at €2.285 after having touched a weekly low of €2.25. A total of 52,300 shares were traded in 34 deals worth €119,000.
Tomorrow is the last time BOV shares will trade with the entitlement to the next interim dividend as it turns ex-dividend on Tuesday. All shareholders who appear on the bank’s register of shareholder at close of business on Thursday are entitled to a gross dividend of €0.06, which will be paid on May 24.
Likewise, HSBC shares lost 2.2 per cent, or €0.059, as the equity ended the week at €2.601. The equity was the most active last week as 105,000 shares were exchanged in 37 transactions. In April, the equity shed 2.4 per cent and it is down almost four per cent since January.
On a similar negative note, Lombard Bank plc ended the week badly with a hefty drop of 7.7 per cent, or €0.15, to close at €1.80. A total of 48,000 shares were traded as just over 30,000 shares changed ownership on Monday while liquidity dried up significantly thereafter. As demand fell so did the price as sellers had to accept lower bids.
On the other hand, Fimbank plc gained one per cent to close at $1.01 as nearly 80,000 shares changed hands in nine deals. The equity has now gained 26 per cent since January. It is the best-performing banking equity year to date.
Likewise, Go plc shares gained 0.6 per cent as the last trade of the week reached €1.59, with nine deals worth €21,000 being executed during the four trading sessions. RS2 Software plc posted a two per cent gain as the equity reached €1.02 on Monday, after which no further deals were recorded.
Similarly, Malta International Airport plc (MIA) gained two per cent in the week’s opening session as the airport operator returned to the €1.92 price level. During April the equity gained 3.2 per cent.
Simonds Farsons Cisk plc gained 0.8 per cent as it traded at €2.56 while Island Hotels Group plc closed flat €0.60 after trading at a weekly low of €0.55. Likewise, Maltapost plc managed to hold on to the €1.05 level despite some minimal price movements, and thin trading in Medserv also had no impact on its price as it traded flat at €3.95.
On the downside, Malita Investments plc lost four per cent as it closed at €0.50 while Santumas Shareholdings plc closed at €1.60 after falling by six per cent as six trades of 19,000 shares were executed.
In the bond market, Malta Government Stocks gained further with the highest gains recorded by those bonds at the far end of the maturity ladder, while minimal price declines were posted by four issues that are due to mature this year and next year.
Among the winners were the long-dated 5.25 per cent MGS 2030 and the 5.2 per cent MGS 2031, which gained 63 basis points, while the 5.1 per cent MGS 2029 gained 0.3 per cent and the 4.3 per cent MGS 2022 gained 0.4 per cent after having traded at €108.48.
This article, which was compiled by Jesmond Mizzi, managing director of Jesmond Mizzi Financial Advisors 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 a member of the Malta Stock Exchange and a member of the Atlas Group. 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 Mr Mizzi at 67 Level 3, South Street, Valletta, or on Tel: 2122 4410 or e-mail jesmond.mizzi@jesmondmizzi.com.