Last Friday the Malta Stock Exchange closed up for the first time in four weeks. It gained 0.7 per cent to close just shy of 3,050 points. Last week’s gain came after the volume of shares traded rose to 300,000 from 70,000 shares a week ago.
Bank of Valletta plc (BoV) was the main contributor to last week’s gains as the equity moved higher in four trading sessions. But BoV’s upbeat tone failed to shift on to other banks whose losses ranged between 0.3 per cent for HSBC Bank Malta plc and seven per cent for Lombard Bank plc.
Meanwhile, foreign equity markets fell following a string of positive week-on-week performances, despite a marginal recovery on Friday. However, last week as Spain was given some respite, Greece returned to the picture and some profit-taking was witnessed ahead of the meeting between the German Chancellor Angela Merkel and the Greek Prime Minister Antonis Samaras on Friday.
Last week, Merkel said Germany is ready to help the Greek government take the necessary steps to resolve the country’s worsening economic situation. Moreover, investors hope that the support to Greece will not come to a halt and that some form of agreement is reached between EU leaders and Greek politicians.
This optimism lifted the euro against most major currencies to reach a seven-week high against the safer US dollar.
The single currency found further support on the back of better than expected data, although in some cases data indicated a sluggish rate of growth. This served to limit the upbeat euro in the week’s final sessions, although on a weekly basis the single currency moved higher.
In the US, the Federal Reserve took markets by surprise after the minutes of the Federal Open Market Committee’s last policy meeting, which were issued on Wednesday, indicated that the Fed was not only preparing to introduce another round of quantitative easing but was also considering its policy of low interest rates beyond 2014 as economic growth might remain fragile.
Moreover the Congressional Budget Office announced that the US economy might enter a recession in 2013 should Congress persists with tax increases and spending cuts.
Locally, BoV shares snapped a 5.7 per cent, or €0.12, gain after the equity started the week on a high which it maintained throughout the week after a short setback on Tuesday. Turnover improved to €154,000, the highest in five weeks, as 42 deals were executed.
Throughout the week the bank’s share price fluctuated between a weekly low of €2.10 and a 22-week high of €2.22, the week’s closing price. After last week’s gain the bank has almost pared its loss so far this year to just -0.1 per cent.
The bank’s financial year closes at the end of September and investors will start eyeing the results thereafter.
HSBC’s share price failed to move in line with its peer as the equity shed 0.3 per cent and liquidity dried up even further.
A little over 12,000 HSBC shares were traded last week in eight deals worth €32,000. The lack of demand for the equity forced sellers to accept bids as low as €2.60 but the banking equity managed to return to the €2.64 level.
Lombard Bank plc shares continued to fall. Last week the bank’s share price fell a further seven per cent or €0.15. As investors shunned the equity the share price has fallen continuously, probably in anticipation of lower profits for the six-month period ending June 30, 2012.
This equity is the worst performer on the MSE so far having lost 26 per cent since January.
On Tuesday, the bank approved its interim financial statements for the six-month period ending June 30. The group made a pre-tax pofit of €4.3 million, compared to €7 million in 2011, while Lombard Bank Malta plc’s pre-tax profit was €4.9 million, compared to €6.2 million for the same period in 2011.
Meanwhile three thin trades in Fimbank plc shares sent the equity’s price 3.6 per cent lower to $0.80. The equity was active mid-week following an absence of 13 trading sessions. Notwithstanding this loss the bank’s share price still enjoys a four per cent gain since the beginning of the year.
Simonds Farsons Cisk plc shares moved higher for the second week running. The equity posted a one per cent gain to close the week at €2.05 after two transactions worth €11,000.
Last week Go plc shares returned below the psychologically-significant €1 price level when it closed the week three per cent lower at €0.99. Turnover jumped to €71,000, up from €10,000 a week earlier, with the bulk of trading taking place between Wednesday and Friday.
Go’s board of directors is due to meet on Friday to discuss the group’s interim unaudited financial statements for the six-month period ending June 30.
Trading activity in the newly-listed Malita Investments plc remained weak as just one deal of 2,000 shares was executed at €0.52, the previous week’s closing price.
RS2 Software plc, the most liquid equity by volume last week, traded flat at €0.50 as 111,000 shares changed hands in six transactions, while Malta International Airport plc closed unchanged at €1.74 after 18,000 shares were traded in five deals.
In the corporate bond market a total of €0.7 million worth of trading took place in 13 issues. The 6.8% Premier Capital 2017-2020, which traded flat at €105.50, was the most liquid with nearly €250,000 worth of deals in the bond. The 7.15% MIH Euro 2015-2017 gained 1.3 per cent while the 4.25% BoV 2019 lost two per cent.
On Friday GAP Developments plc announced that during July it repurchased nearly €744,000 7% GAP Developments 2011-2013 from its bondholders.
In the government bond market, yields closed rather mixed as the prices of a number of short-dated issues fell while those of almost all medium- and long-dated bonds rose. The 5.2% MGS 2020 gained 2.5 per cent to €111.18, while the 5.25% MGS 2030 gained 100 basis points to end the week at €104.69.
This article, which was compiled by Jesmond Mizzi, managing director of Atlas JMFS Investment Services Ltd, does not intend to give investment advice and the contents therein should not be construed as such. Atlas JMFS is licensed to conduct investment services by the MFSA and 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 Atlas JMFS at 67/3, South Street, Valletta, or on Tel: 2122 4410 or e-mail jesmond.mizzi@atlasjmfs.com.