As the year progresses, the two-speed global economic recovery continues to become more evi-dent. Last week, negative figures from Europe coincided with the release of further positive data from the US, together with encouraging comments from the Federal Reserve.
On Tuesday, the Federal Open Market Committee minutes revealed that the likelihood for further quantitative easing is diminishing. As a result, investors bought the Dollar as the US economy’s outlook now looks brighter.
Conversely, Europe continues to lag behind as Purchasing Managers Index manufacturing figures suggest the sector’s downturn is spreading to core European economies. Moreover, the rate of unemployment rose to levels not seen in 15 years.
As the week unfolded an ill-received bond auction in Spain, together with comments by the European Central Bank president Mario Draghi added further woes to the single currency. In fact, the euro tumbled while stock markets headed downwards as investors sought shelter in safer assets.
The ECB indicated that it does not intend to bring to an end the recent extraordinary aid gi-ven to financial institutions. It also left interest rates unchanged as it remains concerned over the expected higher levels of inflation.
But on Friday, news on the US economic recovery was somewhat bleak as the Labour Department said employers had added 120,000 new jobs in March, the fewest in five months and less than had been forecast. Meanwhile, US unemployment fell to 8.2%, the lowest since January 2009. As a result, the US Dollar fell while US Treasuries and gold rose on the news, as global equity market fell on the week.
The local equity market closed the holiday-shortened week 0.4% higher at 2,950.060 points. Volatility was once again evident as investors remained uncon-vinced as to the direction of the market. The Malta Stock Exchange (MSE) opened the first session of the month higher but fell in the following session. On Thursday, due to gains by the two major banks the MSE index managed to erase all of the previous sessions’ losses. Last week, trading volume was unevenly spread, with Bank of Valletta plc (BoV) being the most liquid, followed by Go plc and Fimbank plc.
Following a 2.6% fall in the final week of the first quarter, Fimbank plc returned to green territory, with a 3.5%, or $0.03 gain to end the week at $0.85. Despite this gain, investors’ interest towards this equity seems to be waning as trading volume fell by more than half compared to the previous week. A total of 116,000 Fimbank shares changed hands across six deals. Since the beginning of the year this equity is up by 14%, thus somewhat outperforming the broader market.
The two major banks closed the week with similar gains despite the divergent volumes. HSBC Bank Malta plc gained 1%, or €0.025 on lower volumes as 24,700 shares were traded across 10 deals. Meanwhile, 39 transactions of 122,000 shares were executed in BoV. Last week this equity gained 0.94%, or €0.02, to close the week at €2.14.
On the downside, Go plc shed a hefty 8.2% or €0.069 as it closed the week at €0.77 after having touched an intra-week low of €0.756. Since the beginning of the year the equity has wiped away over 21% from its market capitalisation. Last week the telecoms firm was the second most liquid, with over 116,000 shares traded.
Likewise, in the IT sector, Crimsonwing plc shares lost 11% as nearly 75,000 shares changed ownership mid-week. The equity’s price now stands at €0.16. Maltapost plc also closed lower, falling by 1%; however, trading volume remained weak and insignificant. RS2 Software plc shares failed to move higher after the equity remained intact at €0.55.
Malta International Airport plc also closed the week flat at €1.70 after trading at a weekly low of €1.689. Late on Thursday the company announced that during the first quarter of 2012, passenger traffic dipped by 4.7% compared to the same period in 2011.
The company added that this result is in line with expectations. Moreover, during March the company experienced a 5.5% fall in passenger movements if the effects of the unrest in North Africa last year were excluded.
Meanwhile, on a positive note, Simonds Farsons Cisk plc recorded a 3% gain as 18,400 shares were exchanged in Tuesday’s session as the equity closed the session at €1.77. Conversely two thin trades in Middlesea Insurance plc and Medserv plc left the equities’ price unchanged at €0.70 and €3.95 respectively.
Last week, International Hotel Investments plc announced that during 2011 the company made a loss after tax of €10.7 million, despite higher revenues. The company said the conflict in Libya were the main contributors to last year’s performance. Despite the announcement of the financial results the equity failed to trade.
Malta Government Stocks (MGSs) took some respite following the continuous week-on-week falls experienced in the first quarter of the year. Last week, Malta government bond prices generally increased as a result of lower equity markets abroad. As investors grew more bearish on the eurozone’s growth prospects, money fled equities to find a more cautious home.
Last week, €45m was traded in MGSs with the 4.6% MGS 2020 taking the lion’s share. A total of €17.3m was traded in this issue while activity in the long-dated issue dried up as buyers were reluctant to bid the price higher.
Meanwhile, a total of just under €650,000 was traded in the corporate bond market as investors focused on the new BoV notes issue which closed on Tuesday.
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.