Local Weekly Round Up — 27th October — 3rd November 2006

–

During the week the Central Bank of Malta raised the central intervention rate by 25 basis points to 3.75%. The decision was taken by the Governor at the end of the Monetary Policy Advisory Council meeting held Tuesday morning.

–

The Governor concluded that an increase in official interest rates was called for. He pointed out that the decision was taken against the background of a further narrowing of the short-term interest rate differential in favour of the Maltese lira in October, mainly as a result of an increase in euro interest rates, and amid expectations of a continued tightening of monetary policy abroad. By increasing the differential to a level at which it provided stronger support for the exchange rate peg, the rise in the central intervention rate served to reaffirm the importance of exchange rate stability among the Bank’s monetary policy objectives.-The Governor further observed that while the Bank’s external reserves had extended their upward trend in October, this again reflected a number of one-off factors. The economy’s underlying foreign earnings capacity was, however, better reflected in the current account deficit. To the extent that higher interest rates dampen the relatively strong demand for credit by the personal sector and encourage savings, they should limit the demand for imports and help to contain inflationary pressures. Looking ahead, the Bank would nevertheless continue to monitor market developments both domestically and abroad.-The Monetary Policy Advisory Council is due to meet again on 27 November 2006.

– 

With regards to the local stock exchange, the MSE Index fell by 2.04% this week to end at 4,995.943 points. 6 equities registered weekly gains, four equities registered loses while five others remained stable on a week on week basis.

– 

The worst performer of the week was BOV which slumped by 7.5% as it declined by 30c, from Lm4.00 to Lm3.70. This major back drop outweighed the gains registered mainly by Medserv plc, Simonds Farsons Cisk, Middlesea and IHI.

– 

Medserv plc gained 6.06%, Simonds Farsons Cisk 5.26%, Middlesea 4.23%, IHI 3.09%, Lombard 0.63% and Maltacom 0.06%.

– 

In negative territory we find HSBC which fell by 1.71%, GlobalCapital which lost 1.29% and FIMBank which share price shed marginally by 0.06%.

– 

Suncrest, Plaza, MIA, Datatrak and San Tumas all remained unchanged on a weekly basis. 

–