The Malta Stock Exchange (MSE) index ended the week 0.23 per cent lower after three weeks of gains. Last week marked the end of trading for the month of June and for the second quarter of the year, during which the local index posted a three per cent gain.
During the quarter, International Hotel Investments plc (IHI) shares were the best performing large cap, while gains in a number of small caps, particularly from the IT sector, improved sentiment.
In June the MSE gained 1.6 per cent, the highest monthly gain since October 2012 as the two major banks registered positive returns. Over the past six months the MSE has gained 6.4 per cent, which compares favourably to a 2.4 per cent loss during the same period last year.
A number of small caps have performed strongly over the past six months, while among the highly capitalised equities Go plc shares posted a 29 per cent gain. Among the banking equities, Fimbank plc surged by 25 per cent.
Last week, local equities rose in the opening sessions but the gains were rather fragile as investors struggled for direction. The MSE fell in the last two sessions as HSBC Bank Malta plc shares shed some of their previous gains on Thursday, while IHI shares succumbed to selling pressure as demand dried up. At close of business on Friday the MSE index stood at 3,417.379 points.
Throughout the week, six equities gained, another six fell, while Go plc and 6PM Holdings plc ended the week flat.
IHI shares were the main contributors to last week’s decline as one deal of 900 shares on Friday sent the equity 2.2 per cent lower to €0.90. Another trade of 2,000 shares was executed early in the week at the previous week’s close of €0.92. In the second quarter, the equity rallied by 16 per cent.
In the banking sector, all equities gained except for Fimbank plc shares, which lost two per cent, or $0.021, after the bank’s share price edged minimally higher early in the week. But in the final trading session the equity returned to $1. A total of 36,600 shares were traded.
HSBC shares rose by a mere 0.4 per cent to €2.70 after having traded at a weekly high of €2.72. Turnover improved slightly to €58,000 traded in 11 deals. On a quarterly basis, the bank’s share price was down 1.3 per cent while year to date the equity’s share price is unchanged.
Conversely, Bank of Valletta plc (BOV) shares gained one per cent in the second quarter, while over the past six months the equity has recorded a 4.7 per cent gain. Last week a total of 118,000 shares were traded in 40 deals worth €268,000. Despite some intra-week price movements, BOV shares closed four sessions unchanged while it only moved higher mid-week.
Meanwhile, Lombard Bank plc ended the week as the best performer with a gain of 3.5 per cent, or €0.06, to close at €1.80. During the week the equity’s price even touched a low of €1.73 as total trading volume reached almost 30,000 shares exchanged in the final three sessions.
On the other hand, Middlesea Insurance plc shares shed one per cent to end the week at €0.811 as trading volume jumped to 82,000 shares, up from 54,500 shares a week earlier. The insurance firm ended the second quarter with a 5.7 per cent price decline.
As mentioned earlier, second quarter performance of the IT sector was very positive. RS2 Software plc topped the list with a gain of 48 per cent, or €0.413, to close at €1.279, while 6PM Holdings plc rose 36 per cent to close at £0.61. Gains in Crimsonwing plc over the same period were much more contained as the equity’s share price gained nearly two per cent to end June at €1.75.
Last week, thin trading in Medserv plc shares sent the equity 2.6 per cent lower to €3.80, while Malta International Airport plc edged minimally higher to end the second quarter at €2.05, and up by 14 per cent since January. Simonds Farsons Cisk plc closed a meager 0.4 per cent higher at €2.76.
Unusually high volume in Island Hotels Group plc sent the equity 1.7 per cent lower to end the week at €0.536, despite having gained three per cent on Friday on high volume. The hotels operator was among the worst performers over the quarter as it lost 17 per cent, or €0.112.
Overseas, June was a difficult and negative month; however, in the US, the S and P 500 rose 12 per cent over the first six months, thus registering the strongest first-half performance since 1998. Likewise, the Dow Jones Industrial Average gained over 13 per cent over the six months, another 14-year record. The Nikkei grew 31 per cent in the first six months while gains in Europe were low single-digit returns.
Last week, global equities returned to positive territory, despite a slight pull back on Friday, following a sharp drop the previous week. It seems markets have accepted the fact the Fed’s bond-buying programme may be phased out in the second half of this year, as last week, markets preferred to focus on fundamentals and expectations.
Germany’s business sentiment figures rebounded for the second month in a row and consumer confidence in the Europe’s powerhouse rose to six-year highs. The positive announcements supported demand for the single currency, which rose against the safer US dollar.
French business data was in line with forecasts but the not-so-successful bond auctions seen in Italy and Spain reminded investors that the situation in the periphery is still delicate.
Equity markets rallied mid-week following comments by US Federal Reserve chairman Ben Bernanke eased market fears that an exit from quantitative easing (QE) will be harsh. Moreover, headlines suggest that markets have overreacted when in the past weeks the Fed hinted it will bring QE to an end by next year.
Some pundits are now looking at the positive side of the news and outlined that lower QE means economic growth is on a sustainable path. Positive data out last week support these arguments as US home sales rose to five-year highs, and weekly jobless claims fell.
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 is 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 Jesmond Mizzi at 67, Level 3, South Street, Valletta, or on Tel: 2122 4410 or e-mail jesmond.mizzi@jesmondmizzi.com.