MSE index down 3 per cent
This week the Malta Stock Exchange Index closed at 3,047.036 points, a drop of 3.01%. During the week, seven equities were negotiated, with six closing in negative territory and one remaining stable. Fimbank plc retained last week’s price of $1.47 when on Wednesday, 11,300 shares were negotiated across four deals. Lombard Bank plc lost most ground as its share price dropped by 6.36% and closed at Eur2.65.
During the week 239 deals were registered on the stock exchange for a turnover of over Eur6.3m. In the equity market 98 transactions were carried out for a total value of Eur248,592. In the corporate bond market 87 transactions for a total value of Eur593,057 were executed. While in the government bond market 40 transactions were executed for a value of Eur588,066. Thirteen transactions were carried out in the Treasury Bills market for a value of over Eur4.9m.
On Monday the Central Bank of Malta Stockbroker corrected its Malta Government Stock bid prices as eurozone yields stood at the 3.24% level. A number of bonds were negotiated with most active corporate bonds closing the session unchanged. On Tuesday the Central Bank of Malta Stockbroker increased its Malta Government Stock bid prices but few trades were executed. A number of corporate bonds were traded on Wednesday and following a rise in eurozone yields to 3.34%, the Central Bank of Malta Stockbroker once again revised downwards its Malta Government Stock bid prices. Then on Thursday the Central Bank of Malta Stockbroker marginally changed its Malta Government Stock bid prices as eurozone yields stood around the 3.36% level. Activity within the corporate bond market was low. On Friday there was high activity in both corporate and government bond markets with the majority of stocks closing in positive territory.
During this week Bank of Valletta plc (BOV) was the most active as 38,629 shares were negotiated across 45 deals for a total value of Eur98,866. The share price dropped by 3.85% to Eur2.50. On Monday BOV issued a company announcement in relation to the performance of the Bank from October, 1, 2008 to date.
As communicated to shareholders in the Annual Report and during the Annual General Meeting, of the Bank, the first quarter of this financial year witnessed a continuing period of extreme nervousness and volatility in the international financial markets. This as major Governments around the world took exceptional measures in an attempt to stabilise the global financial system following the widespread fallout in the wake of the failure of Lehman Brothers in mid September 2008. Markets have continued to re-price risk and to turn attention and concerns to the likely impact of the impending recession on the wider economy. This, together with the substantial ongoing deleveraging being undertaken by financial institutions and hedge funds, has kept both bond and equity prices under considerable pressure. Heightened risk aversion has served to cause dysfunctional market behaviour and a marked absence of liquidity. As anticipated, the impact of the above has been that BOV’s Financial Markets portfolio has witnessed further unrealised fair value mark downs during the period under review. BOV’s Financial Markets portfolio continues to be spread across a wide spread of holdings of predominantly highly rated sovereign/supranational, corporate and financial sector debt securities of moderate duration, and the expectation of the Board remains that much, but not all, of the unrealised mark downs will be clawed back over time, as the majority of holdings are retained through to redemption. To date, the experience has been that all but a very small number of the holdings in the portfolio have and continue to pay interest and meet redemption obligations on due date.
Co-ordinated measures taken by central banks have included radical reductions in interest rates, in an attempt to counter the sharp downturn in economic activity being experienced on a global basis. BOV has passed on much of this rate cut to its customers, and this will have an adverse effect on the profitability of the bank both because of the lag or delayed time effect on the re-pricing of term deposits, and also because continuing competition for deposits has resulted in a compression of the net interest rate margin.
On the corporate, retail and home loans sides of the business, there has, to date, been no evidence of any significant deterioration in credit quality, but a modest slowdown in the demand for credit, particularly on the home loans side, has been seen. Demand for investment and insurance products has remained subdued, although there has been something of an improvement since the turn of the year. Commission income on other banking services has shown a satisfactory increase over the corresponding period last year. Costs remain under tight control, running at close to FY 2008 levels. Satisfactory growth in customer deposits has been sustained throughout the period under review. The current levels of volatility being experienced on the international markets on an almost daily basis makes it extremely difficult to forecast forward performance, as does the global economic recession that is presently unfolding. However, the expectation remains that FY 2009 will be a very challenging year for the BOV group.
BOV has continued with its conservative policies insofar as balance sheet management is concerned, and liquidity and capital ratios are being maintained at levels well in excess of prudential regulatory requirements.
During this week 24,561 HSBC Bank Malta plc shares were negotiated for a total value of Eur65,483. The share price dropped by 4.02% to Eur2.601. On Monday the Board of Directors of HSBC Bank Malta p.l.c. announced that it is scheduled to meet on February, 20, 2009 to consider and approve the Group’s and the Bank’s Final Audited Accounts for the financial year ended 31 December 2008. It will also consider the declaration of a final dividend to be recommended to the Bank’s Annual General Meeting.
As mentioned above Lombard Bank Malta plc lost most territory during this week. Ten deals were carried out for a total volume of 10,555 shares for a total value of Eur28,926. On Monday the share price lost most ground among the traded equities as it dropped by 2.83% to Eur2.75, a new 17-month low, as 9,400 shares changed hands across eight deals. On Tuesday a single deal of just 155 shares left the share price unchanged at Eur2.75. Then on Wednesday a single deal of 1,000 shares led to a drop of 3.64% in the share price which closed at Eur2.65.
During this week Go plc lost 5.46% as its share price closed the week at Eur1.749. Seven deals were executed for a total volume of 14,530 shares and a total value of Eur25,639. On Tuesday, Go plc announced that it has concluded an agreement with Nextweb Limited for the transfer of Nextweb’s customer base. As a result of the agreement GO will be the service provider to the said customers. However, on Wednesday Go lost most ground among the traded equities as its share price dropped by 3.73% to Eur1.781 when 5,000 shares were negotiated across three deals. On Thursday the share price of Go plc dropped by 1.74% to Eur1.75 as 4,300 shares were negotiated across two deals. A single trade of 5,000 shares led to a drop of 0.06% to Eur1.749 in the share price of Go plc.
On Wednesday CHI Hotels & Resorts (CHI), the management arm of International Hotel Investments revealed that it signed a 15-year technical services and operations agreement with the Social Security Fund of the Ministry of the Interior of the United Arab Emirates for the operation of a second Ramada Hotel in the centre of the United Arab Emirates’ capital, Abu Dhabi. On Thursday International Hotel Investments plc saw its share price lose 1.38% to Eur0.858 when 17,000 shares were negotiated across seven deals making it the most active equity of the day. Then on Friday, the share price of International Hotel Investments plc dropped by 0.93% to Eur0.85 on a single deal of 2,000 shares. For the week IHI dropped by 2.30% as 19,000 shares were negotiated across eight deals.
On Thursday a single deal of just 400 shares led to a drop of 0.04% in the share price of Malta International Airport plc which closed at Eur2.499.
On Monday Simonds Farsons Cisk plc announced that its subsidiary companies Anthony Caruana & Sons Limited and Guido Vella Limited were merged with immediate effect into Wands Limited. All three companies are engaged in the business of importation, wholesale and retail of beverages including wines and spirits. This merger process, is intended to consolidate the operations of these three companies under one legal entity as part of a restructuring exercise.
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 or on Tel: 21224410 or email [email protected].