Investors returned to safe assets last week, reflecting uncertainty about the global economic recovery and the sustainability of the sharp rise in equity markets during the summer months, which have reached 10- to 12-month highs in recent weeks. Gold, which is considered as a safe asset, rose to a six-month high this week at $997.2 per troy ounce.
US stocks experienced a volatile week as they registered their biggest weekly loss since July despite a rally on Friday. This followed the release of mixed unemployment data with the August jobless figure registering a 26-year high. The major US indices lost between 0.5 and one per cent.
Likewise, leading European indices fell between one and 2.5 per cent despite bouncing back on Friday from a four-day losing streak as data from the US boosted investors' sentiment.
The Malta Stock Exchange index fluctuated throughout last week in a zig-zag pattern to end nearly one per cent lower at 3,054.292 points. Nine equities were negotiated during the week, with six shedding value, and the remaining three closing in positive territory. The larger capitalised listed companies were among last week's losers, thus dragging down the overall index.
There were 94 transactions in the equity market for a total value of €0.3 million, which is considered as a subdued amount of trading compared to weekly average.
Last week's winning streak by Bank of Valletta plc (BoV) was stalled when the bank's shares closed the week at €2.99, a decrease of €0.01, or 0.33%, after 41,715 shares were traded across 41 deals.
HSBC Bank Malta plc shares traded at a high of €2.70 and a low of €2.649, closing the week at €2.65, a 0.93% loss. A total of 23,794 shares were traded in 27 deals.
The share price of International Hotels Investments plc (IHI) also fell last week, after 20,868 shares were traded over four deals. IHI shares depreciated by 2.50% to closing the week at €0.82, a loss of €0.021. IHI's negative performance caused the equity's value to dip further into the red with a loss of 8.38% so far this year.
Medserv plc was the week's best performer. The stock traded on Friday when 30,000 shares changed hands on four deals. The equity closed at €3.745, a very encouraging rise of seven per cent. Following last week's share price boost, Medserv's year-to-date loss in value significantly diminished from last week's 13% to 6.30%.
During the week, the company announced that in the first six months of this year the group had registered a rise of 38.21% in its revenue, from €5.91 million in 2008 to €8.17 million in 2009. Profit before tax rose for the same period increased by €829,563, or almost 125.5%, from €684,166 in 2008 to €1.54 million in 2009.
Maltapost plc was another gainer last week with its share price closing at €0.70 - a 1.45% improvement. The stock only traded on one day last week when 19,500 shares changed hands across four deals.
Few Go plc shares were traded this week, and the share price slipped a mere €0.009 to close at €1.79. A total of 1,230 shares were traded in four deals.
During the week, Go issued its half-yearly report as at June 30. The group registered a pre-tax loss of €5.37 million, compared to an equivalent loss of €1.42 million in the first six months of 2008. Revenue fell 4.8% over the same period.
Malta International Airport plc (MIA), was the worst performer last week albeit on limited trading of just 615 shares in two deals on Monday. The share price fell 6.38% from €2.35 to €2.20.
Tumas Investments plc last week issued its half-yearly report for the period ending June 30. Profit for the period amounted to €11,131 (2008: €9,965). Spinola Development Co. Ltd's overall performance in the first six months of 2009 is in line with forecasts although the hotel's return is slightly lower than expected. However, income from commercial rentals were higher than budgeted.
Gap Developments plc also reported its performance for the six months ending June 30. The results for the period show the group made a pre-tax loss of €240,979 (2008: €107,263 loss). The company said market conditions remained unchanged from 2008, and as the economy contracted, sales did not maintain the same momentum as that experienced ever since the project was launched. The group said that given the challenging scenario, its management would continue to be focused on increased efficiency, tight control and commitment to deliver an excellent upmarket product.
Following the monthly European Central Bank meeting last week, benchmark European short-term yields edged much lower as the ECB indicated it is not planning an early unwinding of its stimulus project for bank lending. This means interest rates should remain at an all-time low of one per cent for the coming months. On the other hand, longer-term yields held steady at their previous week's levels.
These moves were mirrored in the local market with short-term local government bonds gaining value while longer-dated bonds retreated slightly. Nearly 3.7 million nominal stocks were traded this week in 54 deals.
Almost 500,000 nominal local corporate bonds were transacted this week, a slightly lower figure than in previous weeks. The 5.6% Global Capital 2014-2016 bond shed 2.24% in value to closing the week at €83. On the other hand, the 5.35% Bank of Valletta sub 2019 bond reached a new high for the year, closing at €104.40 - a steady climb of 1.26%. Trading in Treasury Bills market amounted to nearly €2.5 million.
Island Hotels Group Holdings plc (IHG) announced that Vassallo Builders Group Ltd and TMC Ltd are issuing €14 million in bonds at a coupon rate of 6.5% per annum, maturing between July 1, 2017, and June 29, 2019, subject to prior notice. The group also announced that Vassallo Builders will offer 17,200,600 ordinary shares in IHG at €1 per share, of which 8,383,300 shares are being offered to the general public while €8,817,300 ordinary shares are being offered to Double You Ltd and T Ltd.
Meanwhile, Caremalta Finance plc informed Caremalta bondholders that they will be given preference over the general public to subscribe to the IHG bonds by transferring their respective holdings of the 6.5% Caremalta bonds 2008-2011.
This article, which was compiled by Jesmond Mizzi, managing director of 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, Tel: 2122 4410 or e-mail jmizzi@jmfs.net.