What a week! America elects its first African-American President; the Bank of England slashes interest rates by 1.5 per cent; the European Central Bank cuts interest rates by another 0.5 per cent; the European Union issues its growth forecast for 2009; Finance Minister Tonio Fenech delivers his first Budget speech; and Moody's issues a report on Bank of Valletta plc.
As Americans voted on Tuesday, the Dow Jones rallied in what was the best index performance on a US election day. But after the election result was announced the markets fell again as the focus returned to the economy and the 'r' word - recession. Hopefully, President-elect Obama was referring to the recovery of the economy when he said "we will get there", which will also hopefully mean that positive "change is coming" in the global stock markets. Time will tell what action he will take together with other world leaders to get the economy back on track as the economic forecast worsens and US unemployment reaches the highest levels since 1994.
On Thursday, the European Central Bank (ECB) cut Eurozone interest rates to 3.25 per cent to stave off the risk of recession. The half-point cut followed the Bank of England's (BoE) decision to slash rates by 1.5 per cent to three per cent. Euro interest rates are now at their lowest level since October 2006 but are above UK interest rates for the first time in the currency's history. The ECB discussed the possibility of making a larger cut to interest rates but did not follow the BoE's example by making a deep cut. However, the ECB is likely to make further rate cuts in future in an attempt to stimulate growth.
The Malta Stock Exchange (MSE) index closed the week at 3,339.813 points, after losing a further 0.65% over last week. Year to date, the MSE index has lost 32.37 per cent. During the week, 13 equities were negotiated, with nine closing in negative territory, three in positive territory and one remaining stable. Shares of FIMBank plc lost most, -8.23%, while those of Bank of Valletta plc gained most, 3.82%, during this week.
A total of 278 deals were registered on the MSE for a turnover of over €5.87 million. In the equity market, 167 transactions were carried out for a total value of €636,525. In the corporate bond market, 58 transactions for a total value of €553,214 were carried out. While in the government bond market 36 transactions were executed for a value over €2.25 million. Sixteen transactions were carried out in the Treasury Bills market for a value of over €2.43 million.
In the banking sector, 73 deals were carried out in Bank of Valletta plc (BOV) shares reaching a total value of €255,244.
On Thursday, Moody's Investors Service changed the bank's long-term and short-term local and foreign currency deposit ratings to Baa1/Prime-2 from A3/Prime-1. The rating agency has also downgraded the bank's senior unsecured debt ratings to Baa1 from A3. BoV's Bank Financial Strength Rating (BFSR) was affirmed at D+. All ratings have a stable outlook. Moody's rating action has been prompted after the announcement of the bank's financial statements for the year ended September 30, and in particular, after the material valuation adjustments taken by BoV on its securities portfolio. Notwithstanding this report and the drop in profits announced last week, the bank's share price was up this week after having traded at a low of €3.20 on Monday.
HSBC Bank Malta plc dropped by 0.17 per cent to close at €2.895 as 97,873 shares changed hands across 49 deals for a total value of €280,065. HSBC traded at a low of €2.80 and a high of €2.899. Conversely, Lombard Bank Malta plc appreciated by 0.03 per cent to €2.948 as 3,927 shares changed hands across five deals for a total value of €11,576. All trades during the week were transacted at €2.948.
Middlesea Insurance plc lost 0.11 per cent of its share price, closing the week at €2.697 after 2,000 shares changed hands across three deals. On Wednesday, the company issued an interim directors' statement in which it announced that during the financial period July 1, 2008, to date, no material events or transactions have taken place that would have an impact on the company's financial position. The board of directors further stated that the volatility of the international and local capital markets continue to represent a challenge to the group and unless there is a material change in market sentiment, it expects the group's positive technical performance will be outweighed by the negative investments result for the current financial year.
On Friday, GO plc issued an interim directors' statement stating that the financial performance up to September 30 was characterised by stable revenues, better earnings before interest, taxes, depreciation and amortisation (EBIDTA) and a healthy cash generation. However, this performance was dampened by the provision of €11.8 million for pensions in respect of the July 7, 2008, judgement by the Court of Appeal. The group continues to experience growth in its client base despite the continued disconnections from fixed line telephony.
5,000 Maltapost plc shares were traded over four deals after having been inactive for some time. This led to a drop of 3.4 per cent to €0.79 ahead of the company's annual general meeting due to be held on November 20.
The share price of Malta International Airport plc lost 1.96 per cent to €2.50 as 8,400 shares changed hands across nine deals. On Wednesday, MIA published the October traffic results which showed a decline of 5.9 per cent in passenger departures during October. During the first ten months of this year, passenger departures rose by 6.35 per cent.
The share price of International Hotel Investments plc dropped by 3.19 per cent to €0.91 as 10,600 shares changed hands across three deals. Plaza Centres plc saw its share price drop by 1.14 per cent to €1.73 on two deals for a total volume of 3,000 shares. Crimsonwing plc was another loser this week as its share price dropped by 0.2% to €0.497 on a single deal of just 600 shares. RS2 Software plc remained stable at € 0.75 on eight deals for a total volume of 19,000 shares.
Datatrak Holdings plc was up 3.45 per cent this week on a single deal of 4,500 at €0.30.
This report, which was complied by Jesmond Mizzi Financial Services Limited (JMFS), does not intend to give investment advice and the contents therein should not be construed as such. JMFS is licensed to conduct investment services by the MFSA. 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 JMFS at 67/3, South Street, Valletta, or on Tel: 2122 4410 or e-mail jmizzi@jmfs.net.