Following the recent sell-off of European sovereign bonds as yields rebounded from their record lows, last week there was a similar scenario in local government securities as turnover increased almost five-fold. All 25 traded stocks closed in negative territory, with the heaviest sell-off being in those issues with the farthest date to maturity. In fact, the long-dated three per cent MGS 2040 (I) issue plunged 2.7 per cent to close the week at €113.19.
Nevertheless, most bonds recouped some of their losses in Friday’s session, as industrial production in German unexpectedly fell in March, missing analysts’ estimates, while the price of oil reversed some its recent gains. The current volatility in equity and sovereign securities is mainly influenced by investors’ interest rate expectations going forward – on speculation as to how effective the European Central Bank’s recently launched bond-buying programme will be in stimulating economic growth across Europe.
The Malta Stock Exchange (MSE) index continued to gain ground reaching a fresh four-year high of 3,818.565 points by Wednesday. This positive momentum eased by the end of the week as HSBC Bank Malta plc shares more than reversed their gains on Monday. The index closed on Friday at 3,790.141 points, reflecting a week-on-week gain of 0.6 per cent. Pushing the index higher were shares of Simonds Farsons Cisk plc (SFC), RS2 Software plc, Maltapost plc, Go plc and Medserv plc, all of which traded at multi-period highs.
Turnover in the more volatile equity market rose almost 140 per cent from €743,900 to €1.78 million. Activity was spread over 16 securities, of which nine rose, five fell and two closed unchanged. The three most traded securities were Bank of Valletta plc, HSBC Bank Malta plc and Go plc, representing over 82 per cent of total trading value.
BOV was the only banking security to close in positive territory as buying interest pushed the equity’s price to a one-month high of €2.351 – reached in intra-day trading – to then end the week at €2.30.
Investors appear to be still digesting the bank’s interim results issued the previous week, with trading volume soaring to 243,364 shares.
HSBC failed to sustain a one-year high of €1.93 on Monday as selling pressure towards the end of the week dragged the equity’s price down to €1.86, a weekly decline of 0.6 per cent. €402,200 worth of HSBC shares were traded in the week’s second highest turnover.
There was a similar decline in Lombard Bank Malta plc shares, albeit on much lower volume, as four deals of just 4,430 shares led to a 0.5 per cent fall in price, to end the week at €1.89.
Shares of Fimbank plc dipped by one per cent to $0.45, as 55,713 shares changed hands in four deals after adjusting for the bonus issue of one share for every 10 owned.
Two deals of 738 Middlesea Insurance plc shares left its price intact at €1.22. An interim directors’ statement last Friday reported that positive momentum continued in the year’s first quarter, as premium volumes and revenues rose. The group’s statutory solvency position remains strong and well in excess of regulatory requirements.
After five deals of 16,390 shares, Medserv plc headed the list of gainers, rebounding from the previous week’s one per cent drop. The oil and gas logistics and services company rose 8.4 per cent to close at an all-time high closing price of €2.20.
Go plc and SFC shares also recorded strong gains. Go ended the week at a seven-year high of €3 after a total trading volume worth €499,000. On Monday, Go’s board of directors announced that the company was exploring new options regarding the portfolio of immovable property owned by its subsidiary Malta Properties Ltd. The board is analysing options to restructure the group to allow the necessary focus and expertise to be brought to bear on its portfolio of 11 immovable properties valued at about €50 million. One option is to spin-off Malta Properties Ltd and its property portfolio pro-rata to Go shareholders.
SFC shares appreciated by 5.2 per cent on thin volume to close the week at a fresh-record high of €3.525.
RS2 shares touched an all-time high of €3.20 on Wednesday, before turning ex-dividend on Thursday, resulting in an adjustment in price of 1.3 per cent. A payment of €0.044 final dividend will be made on June 15 to shareholders who held or bought RS2 shares prior to Wednesday’s closing session.
6PM Holdings plc retreated by 2.6 per cent from its all-time high of £0.76 to close at £0.74 as six deals of 19,374 shares were struck.
Maltapost plc strengthened by two per cent on low volume to end the week at an all-time high of €1.45 ahead of the company’s interim results due to be released on Tuesday.
International Hotel Investments plc (IHI) shares reversed the previous week’s 1.5 per cent decline as 50,000 shares changed hands in three deals.
Midi plc partially recouped the previous week’s 3.5 per cent drop in value, as two deals of 135,964 shares lifted the equity’s price by 1.8 per cent.
The week’s other gainer for the was Malta International Airport plc (MIA), whose shares inched 0.1 per cent higher to €3.465, after failing to sustain an intra-week high of €3.49 reached on Monday. Last week, the company released its traffic results for April, which showed a 4.2 per cent increase in passengers hosted compared to the same month last year. Most of last month’s growth came from traffic to and from Italy and Germany.
Santumas Shareholdings plc shares contracted by 0.3 per cent after two deals of 398 shares.
Tigné Mall plc shares closed the week unchanged at their all-time high of €0.80.
Last week, activity in the corporate bond market more than doubled, with total trading volume reaching a value of €856,600, compared with the €388,100 traded the previous week. Out of the 27 traded issues, 12 rose in value, four fell and 11 closed unchanged.
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 Jesmond Mizzi at 1/2, St Joseph High Street, Ħamrun, or on Tel. 2122 4410 or e-mail jesmond.mizzi@jesmondmizzi.com.