Throughout the past week, global markets initially saw steep falls in share prices and an immediate rush towards the safe havens of gold and highly rated government bonds.
Although such moves were triggered by a credit rating downgrade for the US, the negativity spiralled, as worries regarding the US and European debt levels escalated.
Ultimately, panic selling ensued on a global scale, resulting in stomach wrenching volatility in nearly every asset class worldwide. This volatility was mostly acute for equity markets, currencies and commodities, impacting on government and corporate bonds to a lesser extent.
Trading on the local stock exchange was not immune from such volatility and nervousness. Such correlation between local and most foreign equity markets, however, has rarely been the case for the past year or so.
Indeed, the local equity market had been underperforming against most indices abroad year to date, with minimal impact on local trading from foreign developments in equity markets.
Trading volume was understandably high throughout the week. Wild swings in share prices often attract a lot of attention, with trading volumes spiking as volatility skyrockets. Shares exchanged nearly hit the 450,000 mark last week, with a strong concentration on the local financial sector.
The local index fluctuated sharply dropping to 3,117.717 last Tuesday, slowly reversing some of the losses in a yo-yo fashion during the remaining sessions.
Volatility and losses on the local exchange were much more subdued than those registered in the major equity indices worldwide. At worst the local exchange was down by 4.63% last Tuesday, yet ended the week 3.37% below the previous week’s closing.
As expected, nearly half of all the weekly trading occurred in Bank of Valletta plc’s shares, with nearly 230,000 shares changing hands throughout the five sessions. Trading kicked off in a rather uneventful manner last Monday, yet selling pressure was unleashed last Tuesday with the share price plunging by 8.9% in a single session.
The following day mimicked equities abroad, with the share price seeing a strong reversal and a sharp 6.1% climb. Volume was significantly lower on the upside.
BoV’s share price remained fairly intact throughout the remaining sessions, climbing minimally by last Friday’s session and ending the week 2.97% in the red. Volume gradually picked up as the week progressed. The share price closed the week at €2.61, having traded at a low of €2.45.
The share price movement for HSBC Bank Malta plc was similar to that of its counterpart, yet both volatility and volume were somewhat subdued. Nearly 92,000 HSBC shares were exchanged last week with the share price plunging by 4.5% by the end of the week as buyers failed to erase the 5.9% decline seen during last Tuesday’s session.
Last week’s decline saw HSBC’s share price slide to its yearly low of €2.72, but it closed the week slightly higher at €2.76, erasing 15.2% of its value since the start of the year.
Lombard Bank plc saw heavier volume than usual as nearly 53,000 shares exchanged hands over eight deals. Price action was immune from any volatility or even any sharp losses. The share price was one of the few outperformers, actually ending the week in positive territory as it moved slightly upwards from €2.69 to €2.699.
This equity is among the top performing local equities since the start of the year, despite a nominal loss of 3.6% since the end of last December.
Malta International Airport plc came under strong selling pressure last Tuesday, shedding 6.25% of its value. Volume was minimal yet further trading in subsequent sessions failed to reverse any of such loss.
The share price remained intact at €1.50 till the end of the week. Last week’s decline led MIA to close at a new yearly low, sustaining an overall downward trend noticeable since the start of the year.
International Hotel Investments plc got hammered again last week as the share price slid from €0.78 to €0.75. Volume totalled 22,374 shares with no particular upward inclination or reversal during the week.
On the other hand similar volume led to a 1.82% climb for RS2 Software plc, which is currently the best performing equity on the local stock exchange, having gained 17% in value year to date.
Very unusually low trading volume saw Go plc share price initially plunge by 6.13% and reverse by 4.13% the following day. Ultimately, the share price ended the week 2.25% in the red, yet volume barely approached the 3,000 level.
Middlesea Insurance plc (MSI) share price saw a hefty 10% decline last week, on a volume of a mere 406 shares. Last week MAPFRE Internacional S.A. published the offer document for a mandatory bid in respect of all issued shares in MSI, after having acquired the shares previously owned by Munich Re. Offer price to shareholders was set at €0.965 per share.
FIMBank plc issued its interim financial statements for the period ended June 30. The FIMBank Group posted an after-tax profit of USD 4.08m, compared to USD 3.39m for the same period in 2010, an increase of 20%.
Nearly €0.6 million worth of local corporate bonds were traded, very much in line with the recent trading value of previous weeks.
Activity in local corporate bonds was unaffected by the overall nervousness. Corporate bond price movements were also subdued, barring the 5.9% jump in the price of the 7.5% Mediterranean Investments Holding plc maturing between 2012 and 2014. This bond continued to be highly volatile as it transacted between €85 and €90 over the past weeks.
Activity in Malta Government stocks was very much above average, with slightly more than €21.5 million in value traded throughout most stocks.
Such heavy trading was similar on a global scale as investors dumped risky assets and parked their money into safer instruments. This sharp inflow led to higher government stock prices.
This article, which was compiled by Jesmond Mizzi, Joint Managing Director of Atlas JMFS Investment Services Limited, 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. For more information contact Atlas JMFS at 67/3, South Street, Valletta (tel: 21224410) or e-mail jesmond.mizzi@atlasjmfs.com.