The market rally on Friday, July 13, prevailed at the start of last week but it later faded as bad news from Europe returned. The Chinese government’s announcement that it would do more to stimulate the economy was well received by equity markets. As a result, the US dollar fell, but declines were moderated given the International Monetary Fund’s downward revision of forecast global growth.
Initially, attention was diverted away from the European debt crisis, as several important inflation and growth figures were expected. Moreover US Federal Reserve chairman Ben Bernanke hinted that the risk to US growth arises not only from Europe’s debt problems but also from the fiscal problem the US faces.
Despite his comments’ lack of optimism, markets still moved higher after housing starts jumped to a four-year high. But subsequent economic data was rather gloomy. The positive sentiment faded and demand for safer assets improved while the euro declined.
On Friday equity markets fell further amid concerns that the European debt crisis is worsening. Concerns over the strength of Spanish government together with that of the financial system resurfaced. As a result, European markets took a nosedive on the week’s last trading day as investors sense that the worse is not over.
The Malta Stock Exchange (MSE) index extended its gains for the third week running by 1.6%, the highest gain since mid-November 2011. The MSE index closed the week at 3,090.258 points, a level last seen in January. Since the beginning of July the MSE has jumped 2.6% while on a year-to-date basis the MSE index is now almost flat.
Last week, despite a number of equities’ losses the MSE managed to close up in four sessions despite a minimal mid-week pullback. The two major banks moved in opposite direction while Go plc managed to recover some of last week’s sharp fall.
HSBC Bank Malta plc closed another week on a high, this time with a 6.7% gain. The equity, which was active in four trading sessions, kicked off the week at €2.68, a price it maintained until Wednesday. But in the last two sessions the share price spiked to €2.85 on increasing volumes, although on a weekly basis trading volume remained more or less at the previous week’s level. In fact, just under 35,000 shares were traded in 22 deals.
Notwithstanding the doom and gloom surrounding financial equities globally, HSBC’s share price is up 10.5% since January, while in the past four weeks it has surged 14%. The bank’s board of directors is due to meet on Friday to approve the group’s and the bank’s interim accounts for the half-year ended June 30, and to consider the declaration of an interim dividend.
Conversely, Bank of Valletta plc (BoV) shares returned to negative territory following the previous week’s fragile gain. BoV lost 2.7% or €0.055 to end the week at €2.
The equity closed the first four trading days at €2.05 and only managed to rise above this level in a couple of instances on Monday and Thursday when BoV shares reached a weekly high of €2.065.
But on Friday, BoV’s share price fell to a low of €2. Initial volumes at this price were weak and the price swiftly returned to the €2.05 level, which it failed to maintain as offer prices fell again to €2.
Trading volume improved significantly at this price as investors flocked in to acquire the equity at the best possible price. Turnover for the week rose to €200,000.
On Tuesday BoV announced that in the third quarter of its current financial year, the bank continued to experience very subdued demand for new credits, both in the personal and corporate sectors. However, customer deposits growth during the quarter was sustained. Commission and trading income remained restrained while demand for investment-related services fell.
Fimbank plc shares traded flat at $0.86 after one deal of 595 shares. Meanwhile, two thin trades of 350 shares in Global Capital plc sent the price 3.6% lower by to €0.80.
Lombard Bank plc lost 1% as the equity closed the week at €2.18 after trading at a weekly low of €2.15. Eight deals worth €18,000 were executed. The bank announced that the board of directors will meet on August 23 to consider and approve the group’s and the bank’s financial statements for the six months ending June 30.
An uneventful week in Maltapost plc shares left the equity’s price intact at €0.89 after it failed to record any trades in the previous week.
Go plc shares ended the week higher after closing the previous three weeks down. Volume improved significantly to 187,000 shares as the equity’s price touched a high of €1.20 early in the week but it settled at €1.08 after trading at an intra-week low of €1.
One trade of a mere 100 shares in International Hotel Investments plc left the equity at €0.85 while Midi plc lost a further 3% to bring its year-to-date negative performance to just over -21%. But last week’s fall came after an insignificant 1,000 shares were traded.
Malta International Airport plc shares closed unchanged at €1.75 after five deals worth €12,000 were recorded. On Tuesday MIA announced its interim financial statements for the period ended June 30. Pre-tax profit rose 13% to €4.48 million, which compares favourable to the €3.96 million recorded in the same period of 2011.
The group’s turnover for the period rose marginally, while staff costs fell 18% following the early retirement schemes implemented in 2010 and 2011. Other operating costs rose by nearly 6%.
Plaza Centres plc edged minimally lower to end the week at €0.578 while RS2 Software plc’s share price fell 4% or €0.02 to €0.48.
In the government bond market yields fell once again as bond prices rose. The five-year 3.75% MGS 2017 gained 10 basis points while the 10-year 4.3% MGS 2022 FI June 12 rose 0.3% to just under €102. Gains across the long-dated issues were more or less in line with each other, with the 5.25% MGS 2030 closing with a gain of 40 basis points at €104.
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.