The price of crude oil fell to below $60 a barrel last Friday despite a mildly-bullish mid-term outlook from the International Energy Agency (IEA), the energy watchdog of the developed world. The weakness in the oil price continued notwithstanding the IEA's forecast that global oil demand will increase by 1.7% next year. The price of oil has fallen 10% this week and 16% from recent highs.
This had an impact on the three US equity indices which last week fell between 1.6% and 2.3% and are now back to their May levels. This is the fourth negative week for the indices as investors continue to be concerned with the low domestic demand evident by falling retail sales.
Similarly, the FTSE 100 in London fell to a two-month low, closing at the 4,127 level, 2.53% down on the week and nearly seven per cent down this year.
In Europe, the CAC 40 in Paris and the Xetra Dax in Frankfurt fell 4.28% and 3.02% respectively this week, as investors await companies' second quarter results. This was also the fourth consecutive negative week for both indices, which are now down 8% and 6% respectively this year.
Although, the Malta Stock Exchange saw barely any trading in equities this week, the opposite was again true for Malta Government Stock (MGS). Indeed, the shift of focus from high risk to safe stocks continues to dominate as the volumes of trading in MGS increased steadily, coupled with sustained improved prices throughout most of the week.
Benchmark German Government Bonds headed for a fifth weekly gain this week as a global retreat in equities over the past month increased demand for the relative safety of government debt. This was again mirrored by the MGS with prices generally on the rise. Value traded was slightly higher than that of last week amounting to almost €15.7 million over 49 deals. However, the bulk of volume occurred in two issues mainly, the 5.4% 2010 (IV) and the 5.7% 2012 (III).
Similarly, traded volume in the corporate bond market exceeded that recorded last week with total value amounting to nearly €300,000. One third of this trading occurred in the newly listed 5.35% Bank of Valletta bond maturing in 2019. This bond has maintained its upward momentum, reaching €103, a 0.49% rise since last week.
Trading in the Treasury Bill market this week amounted to nearly €3.6 million.
The MSE index ended the week on a slightly positive note following some minor volatility, particularly in the last two trading sessions. Friday's session saw the index climb to 2,948.241, advancing 0.25% over last week. However, this minor increase failed to claw back or even reverse convincingly the current negative trend that began a month ago. The index has fallen 4.5% since the upturn in mid-June.
A total of 77,283 shares were traded this week spread over 64 deals, with trading nearly drying completely in two mid-week sessions. Half the total volume occurred in the two largely capitalised banks, with the remaining volume spread almost equally among eight other equities.
Volatility in the equity price movements was lower than in previous weeks with the worst performer losing 6.7%, while the best gainer climbing nearly three per cent. Only three equities posted a negative performance this week, with the rest either remaining unchanged or rising moderately.
Bank of Valletta plc shares continue to be the most traded equity both in volume and value terms. The share price was mixed throughout the week, but it closed at €2.659 or 0.34% higher. A total of 25,516 shares changing hands in 22 deals. A late run on Friday saw the share price erase the previous session's losses, yet this occurred on an insignificant amount of shares.
A similar change occurred in the price of HSBC Bank Malta plc shares which ended the week at €2.61, a gain of 0.38%. This equity has barely seen any noteworthy movement for the past eight weeks with few deviations away from the average €2.60 level. A total of 13,440 shares were traded in 13 deals.
This week saw a slight shift in the price of Go plc shares. The share price saw a moderate retreat in the mid-week session, possibly due to profit-taking after its encouraging performance over the past weeks. However, a single deal of 2,000 shares late on Friday realigned the share price to that of last week. The equity therefore closed the week unchanged at €1.82.
Simonds Farsons Cisk plc shares stumbled into the red this week, closing the week 6.7% lower at €1.68, clearly the worst performer of the week, following a light volume of shares sold on Monday and Friday. The intensity of the downward spiral that started in mid-May seems to be gathering momentum. So far this year the value of this equity has fallen nearly 11.6%, under-performing the general index by over 3%.
The second worst performer this week was Plaza Centres plc. The equity succumbed to selling pressure following two trades involving 6,000 shares on Monday. The share price dipped by 2.88%, yet there was no more trading in these shares in later sessions which closed the week at €1.65. Nevertheless the equity is still outperforming the local market with a year-to-date loss of 'only' 4.62% compared to the market's fall of 8.10%.
On the other hand, two deals of 4,618 Malta International Airport plc shares increased the price by 0.48% to close at €2.101.
Gains were also achieved in International Hotels Investments plc shares, with the price improving by 1.25% to end the week at €0.81.
The best performing equity this week was Maltapost plc with a steady rise of 2.92%. Three deals of 2,000 shares resulted in a €0.019 price increase to close the week at €0.67.
Fimbank plc shares edged 0.85% lower this week following two deals involving 1,325 shares. The closing price in Friday's session was $1.17.
Lombard Bank plc remained unchanged at €2.55 notwithstanding a deal of 1,000 shares on Thursday.
This article, which was compiled 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, call 2122 4410 or e-mail jmizzi@jmfs.net.