Global financial turmoil impacts MSE index

September 19, 2008

MSE Trading Report weekly round-up for the week ending 19th September 2008

The Malta Stock Exchange Index (MSE Index) closed at 3,795.391 points, losing 4.88 per cent on the week, after last week’s gains of 1.31 per cent. Despite this drop, the MSE Index recovered 1.676% on Friday but year to date the index is now down over 23 per cent. This week, ten equities were negotiated, with eight equities closing in negative territory and just two equities closing in positive territory. During the week, Lombard Bank plc was the best performer, whilst Bank of Valletta plc lost most ground.

A total of two hundred and sixty seven trades were registered on the stock exchange, with a total turnover of over EUR 9.09 million. In the equity market, one hundred forty nine deals were executed for a total value of EUR 705,961 million. In the government bond market, fifty five deals were carried out, for a value of over EUR 4.64 million, whilst in the corporate bond market, forty one deals were executed for a total value of EUR 304,201. In the Treasury Bills market, twenty two deals were executed for a total value of over EUR 3.44 million.

In the banking sector, Lombard Bank plc was the best performer. Lombard registered an increase of 0.33 per cent on the week. The closing price for the week was EUR 3.06, a rise of EUR 0.01, with 6,097 shares changing hands over nine deals. On the other hand, HSBC Bank Malta plc lost last week’s gains, as it registered a loss of EUR 0.20 from last week’s share price, closing the week at EUR 3.20, decreasing by 5.88 per cent on the week, with a volume of 59,397 shares traded over fifty one deals, for a total value of EUR 192,959. FIMBank plc continued to lose some of its share price. The equity closed at USD 1.904, a fall of USD 0.004, or 0.21 per cent, as 104,100 shares changed hands on three deals. Bank of Valletta plc continued its negative run, as it lost EUR 0.509 on the week, closing the week at EUR 4.181, therefore decreasing by 10.85 per cent, with 30,702 shares being traded over thirty nine deals. Following a company announced late on Monday, BOV shares did not trade on Tuesday and Wednesday but fell on Thursday by Euro 0.801 or 17.41%. The share price recovered some of this week’s losses on Friday, registering a rise of EUR 0.382. This week, BOV traded at a high of EUR 4.689 and a low of EUR 3.75.

In the company announcement, Bank of Valletta plc stated that with reference to the Company Announcement issued on 1st August 2008, were BOV commented on the results for the third quarter of the current financial year, the Group noted that after a period of relative calm between mid March and mid June, the international capital markets had witnessed a renewed bout of volatility that had been predominantly experienced in the equity sector, with the fixed income markets being affected to a much lesser extent, particularly when compared with conditions earlier in the year. It was also noted that any additional markdowns that had been required to the date of the announcement had been comparatively modest. The Directors observed that, subject to this state of affairs continuing, and the volatility not spreading to the fixed income sector, the Board expected that the results for the second half of the current financial year would show a significant improvement over those reported for the first half.

The collapse of Lehman Brothers announced on Monday, triggered a fresh round of disruption in the wider global credit markets, resulting in greater volatility and the widening of credit spreads. Coming so close to Bank of Valletta plc’s financial year end (30th September), it is likely that these conditions will have a material adverse impact on the results for the last quarter of the current financial year.

The Bank’s portfolio includes a holding of Senior (non-subordinated) Lehman paper. Although it is too early to determine what recoveries will be made therefrom, it is believed that any ultimate loss that may arise from this holding will be modest in the context of the results of the Bank for the current financial year to date. The results for the Bank of Valletta Group for the year ending on 30th September 2008 will be notified to the Malta Stock Exchange on 31st October 2008.

GO plc was the only other equity to register a rise in its share price, as it registered an increase of EUR 0.001, closing the week at EUR 2.31, thus increasing by 0.04 per cent from last week, as 13,500 shares changed hands on ten deals. On Friday, GO plc announced that Forgendo Limited (“Forgendo”) (the joint venture company between GO plc and Emirates International Telecommunications (Malta) Limited) has acquired a further 125,000 shares in Forthnet S.A. (“Forthnet”) issued share capital, for a total consideration of EUR 269,450.

International Hotel Investments plc decreased by EUR 0.045 on the week. The closing price for the week was EUR 1.015, therefore decreasing by 4.25 per cent on the week, as 48,327 shares changed hands over fifteen deals. Crimsonwing plc registered a loss of 3.47 per cent on the week, after closing the week at EUR 0.50, decreasing by EUR 0.018, with 47,377 shares changing hands on eight deals. Middlesea Insurance plc also experienced a loss in its share price. Middlesea closed the week at EUR 2.95, a fall of 3.28 per cent on the week, or EUR 0.10, with 31,410 shares changing hands on two deals. Grand Harbour Marina plc traded once during the week, registering a loss of EUR 0.05 in its share price. The equity closed the week at EUR 2.10, losing 2.33 per cent on the week, after trading 3,000 shares. Maltapost plc was the other equity to register loss in its share price. The closing price for the week was EUR 0.79, EUR 0.01, or 1.25 per cent, less than last week, having traded 27,500 shares over eleven deals.

On Monday, HSBC Bank Malta plc announced that it published a Prospectus dated 15 September 2008 in respect of an issue of EUR 25,000,000 5.9% Bonds 2018 of a nominal value of EUR 100 per Bond issued at par subject to an Over-allotment Option not exceeding EUR 5,000,000. Application has been made to the Listing Authority for the admissibility of the Bonds to listing and to the Malta Stock Exchange for the Bonds to be listed and traded on its Official List. Applications open on Wednesday 24 September 2008, and close on 30 September 2008 or before. The minimum investment possible is that of EUR 2,500.

This article 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 please contact JMFS at 67/3, South Street, Valletta or on Tel: 21224410 or email [email protected].