After some fragile gains at the end of April, the major indices abroad fell at the beginning of May. US figures early in the week helped boost sentiment, but this soon faded as the week unfolded. Lack of conviction among investors coupled with a bleaker eurozone economic outlook weighed heavily on sentiment across foreign equity markets.
Early in the week, figures out of the US suggested manufacturing activity rose in April, while several Federal Reserve officials confirmed they see little reason to increase quantitative easing. But on Friday, job data showed US employers add-ed fewer workers in April than a-nalysts estimated. This extended the loss of the US S&P 500 index to 2.4% last week, its worst week in 2012.
European indices were highly volatile last week as a series of important data and events unfolded. Unemployment figures across the 17-member eurozone jumped to 15-year highs while manufacturing activity remain contained.
The European Central Bank left interest rates unchanged despite the lack of improvement in economic data. ECB president Mario Draghi gave no indication of further easing, hinting that the money recently injected in the banking system should stabilise the eurozone economy over the coming months.
As the news hit the wires, the euro gained ground both against the US Dollar and the Sterling. But as investors headed into the weekend, pre-election pressure in France did not help sentiment as markets fear management changes may lead to renegotiation of fiscal controls introduced in 2011, and thus most European indices ended the week down two to three per cent.
The Malta Stock Exchange (MSE) index again closed the week higher following the previous week’s 1.3% gain. Last week the index rose 0.6% as investors traded on market updates and local developments, barely influenced by the Spanish sovereign debt problems that have kept foreign equity markets uncomfortable for quite a while now.
Last week the MSE was closed on Tuesday due to a public holiday. But turnover did not disappoint as there was €1.3 million worth of trades, more than double the previous week’s trading.
Last week, trading was affected by the positive results of Bank of Valletta (BoV) announced the previous Friday after close of trading. Upbeat sentiment brought about by positive earnings of the two major banks, usually tends to spread across other financial equities. But this was not case last week as the two major banks were the only gainers out of the listed financials, while Fimbank plc closed a hefty 8% lower.
Fimbank plc succumbed to selling pressure on Monday, after no trades were recorded in the last week of April. The equity closed the week at $0.81 after reaching a high of $0.95 in mid-March. Trading value was high but less than its peak earlier this year. A total of $160,000 was traded in four transactions. Despite this fall, since the beginning of the year, Fimbank shares have clearly outperformed other banking shares, with a 5.2% gain.
BoV shares experienced another volatile week, despite strong results for the six months ending March 31, 2012. Last week the equity edged a minimal 0.5% higher to close at €2.15. Monday’s session was the first trading day for investors to react to the bank’s results. Strong demand pushed the equity’s price to a weekly high of €2.20. The equity then settled at €2.15. As the week progressed investors were reluctant to bid the price higher and sellers had to accept lower bids, as low as €2.10. At the lower prices investors flocked in to get a better yield on their entitlement to the next dividend which will be paid on May 24 to those registered shareholders as at the close of business on Thursday.
HSBC Bank Malta plc shares benefitted from the upbeat momentum that surrounded its largest peer on and off. HSBC gained 2% or €0.05 to close at €2.55. But turnover was a disappointing 26,300 shares over 20 deals.
Meanwhile, Lombard Bank plc shares closed flat at €2.40 despite reaching a weekly high of €2.42, albeit over insignificant volumes. Since January, the bank has been among the hardest hit, with a hefty 11 % fall.
Go plc shares took another nosedive last week as the equity lost 5% or €0.038 over a significant rise in turnover. Go was the second most liquid equity as €0.4m was traded. The company’s annual general meeting is scheduled for Wednesday.
Trading in Grand Harbour Marina plc shares last week was abnormally high as 77,000 shares changed hands in Thursday’s session. Despite reaching a high of €2 early in the session, the equity crept lower thereafter to end the week 1% doen at €1.87.
Malta International Airport plc (MIA) gained 4.2% or €0.07 to close at €1.72. Investors were probably anticipating an improvement in passenger movements ahead of the traffic results that MIA announces every month.
On Friday the company said passenger movements rose 1.4% in April compared to April 2011. The French, Spanish, German and Italian markets all increased in April, while the UK market fell slightly.
Low turnovers in Maltapost plc and Island Hotels Group plc shares left the equities’ price intact at €0.96 and €0.85 respectively.
In the fixed interest market, prices of the Malta Government Stocks (MGSs) closed higher as equity markets abroad struggle to find upward momentum.
Safer government securities are beneficiaries in times of uncertainty as investors hedge themselves against the price volatility of riskier bonds and equities by moving into bonds issued by safer sovereign issuers, such as the German bunds.
All traded MGSs gained last week except for one short-dated issue.
In the corporate bond market several bank bonds and two Corinthia Group bonds fell while the 7% Fimbank plc euro 2012 – 2019 gained 1.7%.
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 is 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.