As the two-month global rally seemed to be losing steam, news emanating from the US Federal Reserve – the US Central Bank – provided a significant boost with most equity indices ending the week in positive territory despite a slight pull-back on Friday.
Applications for the MGS issues open on Wednesday and close on Friday- Jesmond Mizzi
The Fed hinted at further possible help should matters on a global scale deteriorate, specifically in Europe. It also extended its freeze on US interest rates – currently at a record low – till at least 2014.
Very low rates for extended periods are expected to provide ample breathing space for borrowers, possibility facilitating a renewed boost in spending and ultimately a recovery in the economy. This positive vibe spilled over onto global equity indices, which spiked particularly on Wednesday following the unexpected news.
However, the local market remained indifferent, with the Malta Stock Exchange index going through some mild volatility intra-week and closing once again in the red having shed 0.5%. The gradual losses week after week has led the MSE index lower by nearly a full percentage point since the start of the year. The underperformance of the local index vis-à-vis global indices continues to worsen, albeit in a moderate fashion.
Trading volume last week was high both in the equity market and in the corporate bond and Malta Government Stock market. Over 440,000 shares were traded throughout the week.
The most traded shares last week in volume terms were those of Fimbank plc, with over 174,000 shares being exchanged in three deals on Monday. No other trading occurred in this stock for the rest of the week. The share price edged slightly lower, closing Monday’s session at $0.768, a 0.26% decline.
From a value point of view, Bank of Valletta plc continues to be the most traded equity, with 87,234 shares being traded during the week. The share price initially jumped to €2.26 from its previous close of €2.22, having traded at a low of €2.19. Further trades and some volatility led the share price marginally lower to close at €2.25.
BoV is therefore 1.35% up for the week, partly reversing the previous week’s hefty fall. With last week’s performance this stock back up in positive territory this year following significant volatility over the past month.
Trading in Malta International Airport plc (MIA) shares was also high, with just over 57,000 shares exchanged during the week. The share price was very jittery and traded hectically between €1.70 and the previous week’s closing price of €1.75, yet ultimately closed 0.57% lower at €1.74.
Last week MIA announced its general forecasts for 2012. It foresees that passenger numbers in 2012 will be 2.8% less than the record achieved in 2011 but over 3% higher than the previous record in 2010.
MIA’s recently appointed chief executive officer Markus Klaushofer hinted at the European economic crises which could restrict demand for travel this year and therefore remained cautious overall.
There was also unusually high volume of trading in RS2 Software plc shares with over 70,300 shares changing ownership in two sessions. These, however, were exchanged at the previous week’s closing of €0.60.
Trading in HSBC Bank Malta plc remains unconvincing as barely 21,500 shares were exchanged in the week. Changes in HSBC’s share price were minimal, with a slight rise from midweek onwards. The price closed up 0.39% at €2.56. Despite this, the equity remains slightly in negative territory since the start of the year.
Go plc was one of the heavy losers last week, with the share price returning back to its low of €0.90. This move, however, lacked robust backing as only 2,500 shares were exchanged at this low price. In total, 14,600 shares were traded during the week.
A 2.38% fall in International Hotel Investments plc’s share price had a considerable impact on the overall index, given the firm’s large market capitalisation. However, only a meager 9,000 shares were traded during the whole week.
Very minimal trading of 1,388 shares also resulted in a large fall in Middlesea Insurance plc’s share price, which slumped by 10% to close at €0.72. On the other hand, minor trading in Maltapost plc and Lombard Bank plc led to a 1% and 0.8% increase in their respective share prices.
The only other equity traded last week was Simonds Farsons Cisk plc, but its share price remained flat at €1.80 as 4,800 shares were exchanged.
The value of trading in local corporate bonds was also unusually high last week, surpassing €1 million. This led to some bond price volatility, with several bonds scaling back their price gains and closing the week lower.
The largest weekly losses of between 2 to 3% were recorded in the 4% AX Investments bond maturing next year, the 6.25% International Hotel Investments bond maturing between 2015 and 2019 and the 6.25% Mediterranean Bank bond maturing in 2015.
The general fall in bond prices was possibly due to the upcoming Malta Government Bond issues next week, with investors rotating out of moderately risky bond issues into safer havens.
Last week the Treasury announced the issue of an aggregate of €150m worth of Malta Government Stocks (MGS) subdivided into three issues, namely: 4.25% MGS 2017 (III) Fungibility issue, at €103.75 with a yield-to-maturity (YTM) of 3.523%, 4.3%MGS 2022 (II) at €100 with YTM of 4.299%, and 5.2% MGS 2031 (I) Fungibility issue at €101.75 with a YTM of 5.058%.
Applications for these issues open on Wednesday and close on Friday at 5 p.m.
This news led to a flurry of activity on the local exchange as nearly €28.7m worth of MGSs were traded during the five sessions. MGS prices closed fairly unchanged, yet intra-week volatility was high at times.
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.