Foreign equity markets started last week on a high as the positive sentiment surrounding global equities last Friday week prevailed in the opening sessions. Equities and the euro initially gained as investors expected more stimulus from central banks around the world while positive US jobs data was announced on August 3. But the upbeat sentiment was short-lived as economic data regarding Germany, the UK and China disappointed.
Germany published another dismal report on its industrial sector while the Bank of England warned that the UK economy will hardly grow this year. But investors’ biggest concern was without doubt data from China where retail sales and industrial output in July dropped more than forecast.
On Thursday the world’s second largest economy announced that imports and exports in July missed analysts’ estimates. Markets were again reminded of a contracting world economy. As a result, flows into safe havens rose and risky assets fell as money poured into safer US treasuries and German bunds, while the euro lost ground against the US Dollar and the Japanese Yen.
Moreover inflation in China fell 0.4 per cent to 1.8 per cent. This drop in price levels might push the People’s Bank of China to introduce expansionary policies to boost economic growth in the near future.
The Malta Stock Exchange (MSE) failed to move in line with its foreign peers as the local market closed 1.5 per cent lower at 3,041.216 points. This was the second week in a row that the MSE fell after a four-week positive rally in July. The MSE’s performance so far this year is once again in negative territory by just under two per cent.
Last week’s fall on the local stock market came about after a sharp drop in activity. A total of €260,000 was traded in eight equities, down from €700,000 a week earlier. Lack of demand for equities again proved to be a setback for the capitalisation of listed equities as there were steep falls in prices despite thin trading.
To make matters worse, banking equities, which have a huge weighting on the MSE, dropped even further, yet the trading volume was unrepresentative of the market.
Last Monday HSBC Bank Malta plc traded ex-dividend for the first time since announcing a gross dividend of €0.10 per share. As expected, the share price fell, as those investors who bought the equity from then on will not be entitled to the dividend to be paid on August 22. But the bank’s share price fell by 6.3 per cent, or €0.181, as 31,000 shares were traded in 14 deals. Despite this fall HSBC shares are still up by 4.7 per cent this year.
Bank of Valletta plc (BoV) lost 1.4 per cent despite the fact that up till Thursday the equity seemed to be heading for a positive close. On Wednesday BoV’s share price touched a weekly high of €2.15 after trading flat in the initial sessions.
The equity remained at €2.15 even on Thursday but volume was weak and on Friday the equity tumbled to €2.08. As the share price fell, demand surged. In fact, trading volume on Friday was nearly two-thirds of last week’s total volume.
Middlesea Insurance plc’s equity’s price fell 2.4 per cent, or €0.015 lower. It closed the week at €0.605 as one deal of 530 shares was executed.
International Hotel Investments plc shares posted a 6.3 per cent, or €0.05 gain as the equity ended the week at €0.85. Just 1,000 shares were traded in one transaction.
Malta International Airport plc (MIA) shares closed almost flat at €1.74. On Monday the company announced its traffic results for July. Passenger movements rose 7.1 per cent to reach 445,232 passengers, an all-time high for any month ever. Aircraft movements were up 4.8 per cent and seat capacity increased 5.7 per cent, compared to the same month last year.
There were increases from all core markets except for Germany in July. Since January, passenger movements rose by almost three per cent compared to the same period of last year, to reach two million.
Despite these positive results investors were unimpressed as demand for the equity fell heavily to 4,400 shares, down from 146,000 a week earlier.
Go plc shares lost two per cent to end the week at €1.02 as 42,600 shares changed ownership.
One deal of 1,500 Plaza Centres plc shares left the equity’s price intact at €0.55.
Maltapost plc shares shed a hefty eight per cent, or €0.07, after one deal of 546 shares. The equity ended the week at a yearly low of €0.82. Since January the equity has fallen 18 per cent.
On Friday Midi plc announced that its board of directors is due to meet on August 27 to consider and approve the group’s interim financial statements for the six months ending June 30.
Meanwhile, Medserv plc’s board of directors will meet on August 31 to consider the company’s half-yearly financial statements for the period ending June 30.
In the government bond market, yields once again closed generally lower as the Central Bank of Malta improved its bid prices to reflect the recent lack of confidence in global markets.
The five-year 4.25% MGS 2017 gained another 0.24 per cent to close the week at €106.34 while the long-dated 5.25% MGS 2030 gained 17 basis points to close at €104.44. There were minimal price falls in three short-dated issues.
In the corporate bond market a total of €350,000 was traded in 18 issues. The 7.5% MIH 2015 gained one per cent while the 4.25% Bank of Valletta plc 2019 posted a 0.3 per cent gain to end the week at €101.25.
On the downside, both the 6.8% Premier Capital 2017 – 2020 and the 6.6% Eden Finance 2017 – 2020 lost 0.5 per cent.
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.