Foreign equity markets rallied last week on positive earnings and further positive US economic data. Record low US weekly jobless claims and a better-than-expected US manufacturing report, sent the US dollar and yields on US treasuries higher.

US jobless claims fell to a five-and-a-half year low. The long-awaited non-farm payroll report on Friday showed that employers added fewer workers than anticipated in July but the jobless rate dropped to 7.4 per cent. This news sent yields on US treasuries lower as demand for the risk-free asset increased.

In Europe the single currency fell on Thursday as European Central Bank president Mario Draghi reiterated that the bank planned to keep interest rates low and did not rule out a further rate cut. The ECB acknowledged that economic data has improved as of late but the risk of Europe remaining in recession remains. The euro fell against the safer US dollar as Draghi failed to define for how long the ECB is expected to keep rates low.

Locally, the Malta Stock Exchange (MSE) index failed to rise last week after the one per cent gain the previous week. The local equities’ index shed 0.4 per cent after it closed four sessions in negative territory and only managed a minimal gain on Friday to end the week at 3,446.81 points.

Sentiment turned sour last week after none of the large caps managed a gain while only Crimsonwing plc and Island Hotels Group Holdings plc (IHG) rose during the week. Trading activity jumped to 600,000 shares, up from 453,000 the previous week, as 104 deals worth €700,000 were executed. Unusually high volumes were traded in Crimsonwing plc, followed by Bank of Valletta plc (BOV) shares, which investors sold off after the equity gained almost three per cent the previous week.

Last week also saw the end of trading for July, during which the MSE gained 0.8 per cent to extend its monthly gains to eight consecutive months.

IHG gained a hefty 29 per cent during the month while shares in the IT company Crimsonwing plc rose by almost 20 per cent following positive annual results and the reinstatement of a dividend.

In the banking sector, nearly all bank equities rose, but these gains were much more contained. Go plc shares rebounded from the previous month’s fall as it recovered 10 per cent in July.

In the fixed-income market, yields across Malta Government Stocks were generally higher last week as the Central Bank adjusted prices lower while foreign equity markets headed higher. The medium-dated 4.6 per cent MGS 2020 lost 40 basis points as it closed the week at €112.41 while the 7.8 per cent MGS 2018 shed 30 basis points. Among the gainers, the 5.1 per cent MGS 2029 gained 0.34 per cent and is now yielding 4.3 per cent.

Across the corporate bond market the biggest move took place in the 6.7 per cent AX Investments plc 2014-2016, which gained 150 basis points, while the 5.6 per cent Global Capital 2014-2016 lost 1.2 per cent.

Turnover across the fixed-income market reached €2.3 million.

Back to local equity scene, last week BOV shares lost 0.85 per cent to end the week at €2.32, a level only reached in the final minutes of trading on Friday, after having closed the previous four sessions in the red. A total of 31 deals worth €167,000 were executed.

On Thursday, minutes after close of trading, the bank announced its interim directors’ statement whereby interest margins remained under pressure due to competition and low interest rates. Net commission income increased on the same period last year, while the bank reported that expenses are in line with last year’s levels. Price movements in the bank’s investment book remained positive.

Meanwhile HSBC Bank Malta plc shares shed 0.7 per cent after ending lower on Monday. Thereafter, investors’ interest waned as the share price closed flat in three sessions while posting an insignificant gain mid-week. The bank closed July almost flat at €2.701, the week’s closing price.

In the IT sector, focus remained on Crimsonwing plc as the company gained eight per cent, or €0.05. Demand for the equity did not wane despite posting a 10 per cent gain the previous week. The equity’s closing price remained at €0.69 in all five trading sessions.

The company announced that the equity will trade with the entitlement to a dividend until October 17. A gross dividend of €0.01 will be paid to all shareholders on October 22.

Meanwhile, in the leisure industry, IHG shares jumped 4.6 per cent, or €0.03, after two deals early in the week. The equity’s share price is now just shy of €0.70, which it last reached in mid-July.

On the other hand, there were no price movements in International Hotel Investments plc after two thin trades at the previous week’s close of €0.89.

Likewise, Malita Investments plc remained flat at €0.51 as one deal of 5,000 shares was struck, while on similar trading volume, Lombard Bank plc remained unchanged at €1.85. Malta International Airport plc also traded flat at €2.04.

On the downside, Maltapost plc shares lost three per cent after no trading took place in the first four sessions. On Friday, there was some volatility in the share price as the first trade was executed at €0.90 while in the final minutes of trading the equity moved to €1.

Go plc shares fell 0.6 per cent to close at €1.65 after trading at a weekly high of €1.68 and a low of €1.601. Over 49,000 Go shares were traded.

On Tuesday, Fimbank plc announced that the share transfer of 36,254,467 shares took place from Fimbank to United Gulf Bank BSC (UGB), whose shareholding in Fimbank has now increased to 30.25 per cent. Over the week, just one deal of 5,000 Fimbank shares was executed at $0.99.

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 2122 4410 or e-mail jesmond.mizzi@jesmondmizzi.com.

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