Over the last, shortened trading week of the year, the Malta Stock Exchange (MSE) index advanced the most in 17 weeks, as significant gains were recorded in two of the three largest securities by market value – Bank of Valletta plc (BOV) and International Hotel Investments plc (IHI). Nevertheless, these same securities, together with HSBC Bank Malta plc, are the three main laggards that led to the index’s 9.62 per cent decline over the year. These declines were mitigated following double-digit gains in the shares of GO plc, RS2 Software plc and Middlesea Insurance plc.
The index closed the week up by 1.24 per cent, to reach a seven-week high of 3,331.081 points. Turnover for the week doubled to €473,000, as 10 equities were traded – of which six gained in value, three closed unchanged, and one lost ground.
In line with the rest of the year, trading was concentrated on the shares of the two largest banks in Malta – BOV and HSBC. In fact, in aggregate, they accounted for 78.7 per cent of last week’s total turnover, and 50.9 per cent of the €50.76 million in turnover during 2014.
In the banking sector, BOV shares jumped by 1.8 per cent after 38 deals of 131,686 shares, to close at a one-month high of €2.24.
The bank’s shares closed the year down by seven per cent, as it recovered from a multi-year low of €2.01 reached mid-year. Selling pressure reflected investors’ concern as to whether banks would have passed the year-long EU-wide asset quality review (AQR) and a stress test carried out by the European Central Bank (ECB) on 130 banks deemed as ‘significant credit institutions’.
Both BOV and HSBC managed to pass the comprehensive assessment, although the latter’s share price ended the year much closer to its yearly low of €1.849. HSBC shares closed the week unchanged at €1.95, down by 16.7 per cent over the year.
In the same line of business, Fimbank plc shares lost almost a third of their value since the beginning of 2014, as impairment losses stymied the bank’s positive interim results for the six-month ended June 30, 2014.
Furthermore, in November, the bank’s directors said that the outlook for the performance for the rest of the year is difficult and negative. Primarily, this is due to new impairments of several entities across the group which negatively impacted improved operating results over the same comparable period last year.
The bank’s shares was last active on December 4, when it closed just above a multi-year low closing price of $0.599 reached in November.
Lombard Bank Malta plc was the only banking equity to close the year in positive territory, as it yielded investors a capital gain of 4.4 per cent over the year. At a price of €1.799, Lombard shares ended the year at a 10-month high, and just €0.01 shy of their bonus-adjusted yearly high price.
The bank’s positive performance over the year partially reflects an improved performance in its subsidiary, Maltapost plc. In fact, shares in the postal services company closed the year up by 4.4 per cent at €2.20. Following the issuance of its annual results at the beginning of December, the company’s share price surged to an all-time high of €2.25, but then lost much of this gain as it traded ex-dividend last week. Over the week, the equity’s share price fell by€0.04, which is equivalent to the ordinary net dividend per share that investors will receive on January 30, if they held the shares before December 16, 2014.
Six deals of 21,855 IHI shares led to a 5.3 per cent price rise, to narrow the yearly loss to 39.1 per cent.
IHI closed the week at a two-month high of €0.579, and 11.3 per cent up from its all-time low closing price of €0.52 reached last month.
The equity’s negative performance reflects investors’ concern at the group’s overall performance following geopolitical instability in Libya and Russia – in which the group holds two of its largest hotels. However, the group has been making efforts to improve and increase its geographical diversification, such that no one commercial centre on its own accounts for a significant part of the group’s profitability.
Telecommunications company Go plc was among the top-performing equities of the year, as its share price appreciated by almost 40 per cent – after failing to sustain a six-year high of €2.70 reached in October. Much of the upward trajectory was boosted following news in June and July relating to Forthnet SA, in which Go and Emirates International Telecommunications together hold close to 45 per cent of Forthnet’s shares, through their joint venture, Forgendo.
Forthnet had announced that Vodafone Group plc (on behalf of its affiliates) and Wind Hellas Telecommunications SA have shown investment interest in the possible acquisition of all Forthnet shares that they do not own.
Furthermore, a non-binding offer by OTE SA, a dominant telecommunications provider in Greece, was received to acquire the activity of Nova – Forthnet’s pay TV services.
The buying interest in Go plc shares faded by the end of the fourth quarter, as these investment interests have not been concluded as yet. Nevertheless, activity in Go plc shares accounted for over 10 per cent of the total €50.57 million in turnover on the MSE.
Shares of Malta International Airport plc (MIA) extended the previous week’s 1.3 per cent gain by a further 0.9 per cent, to close the year €0.05 below its all-time high of €2.40, first reached in November.
Over the year, the company’s share price rose by 8.8 per cent, reflecting the record number of passengers hosted over the past year.
In the IT services sector, 6PM Holdings plc rebounded from its eight-month low of £0.68, as a single deal of just 5,200 shares lifted the equity’s price by 2.9 per cent. At £0.70, the share price is up by four per cent over the year, after adjusting for the bonus issue of one share for every 25 already held.
Meanwhile, neither of the other two IT equities was active over the past week, with RS2 shares closing the year up by a staggering 35.6 per cent – €0.03 cents shy of its record high closing price of €2.95.
Meanwhile, Crimsonwing plc recouped all the losses registered during the year following positive interim results announced late in November, and the voluntary offer received from KPMG Investments Malta Ltd in respect of all Crimsonwing shares held by shareholders at an offer price of €0.8327 per share.
Midi plc headed the list of gainers last week, as its share price rallied by 14.3 per cent, to decrease its yearly loss to 17.2 per cent. This followed four transactions worth €41,000.
One other gainer for the week was Plaza Centres plc, whose shares ended the year at a fresh two-and-a-half year high of €0.65.
Tigné Mall plc shares closed the week unchanged at their record high of €0.60 following one deal of 12,000 shares.
In the corporate bond market, a threefold increase in turnover was registered, from €644,000 to €2 million, as 21 issues were traded, of which eight ended the week in the black, six fell out of favour, while seven closed unchanged.
Over the year, total turnover stood at €43.22 million, with buying interest in fixed-income securities pushing yields lower.
The vast majority of the tradable bonds are trading at a premium, with the bonds of Mediterranean Investment Holdings plc being the only ones trading at a discount.
Among the recently issued corporate bonds, and maturing in 10 years’ time, the six per cent AX Investments plc € 2024 has gained the most so far, as it ended the week up by one per cent to a record of €108.54, with a yield to maturity of around 4.8 per cent.
Likewise, in the sovereign debt market, 21 stocks were traded, of which 12 edged higher and nine closed in the red.
Throughout the year, government bonds were the best performing asset class, as flight to quality together with a relatively attractive risk-return trade-off, pushed stock prices higher and yields lower, with total turnover for the year surpassing €836 million. In fact, the 10-year yield stands at around 1.87 per cent, whereas a 20-year bond is yielding around 3.25 per cent, which are still substantially above the 0.54 and 1.16 per cent average yields in European government bonds.
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 ½, St Joseph High Street, Ħamrun, or on Tel. 2122 4410 or e-mail jesmond.mizzi@jesmondmizzi.com.