Risk aversion declines as investors favour equities

MSE Trading Report for week ending June 4, 2010

Risk aversion declines as investors favour equities

The Malta Stock Exchange (MSE) Index slipped further in negative territory having closed lower all five trading sessions, bringing its tally of negative results to nine consecutive sessions. Due to these recurring losses, the Index’s position year-to-date moved 0.32 per cent in the red. Throughout the week fewer equities were active, however investors’ risk appetite augmented as trading volume in the equity markets increased, while liquidity in safer alternatives, such as bonds and government stocks declined significantly. Outlook towards banking equities remained unclear as three slipped lower while the share price of Bank of Valletta moved against the trend in positive territory. A total of 12 equities were active throughout the week, four of which gained, seven closed in decline while one equity ended the week unchanged.

Transactions across all traded securities increased slightly to 291 deals for a total value of just over Eur1.6m compared to Eur18.5m last week .In the equity market, 334,760 shares were dealt over 183 deals. In the Corporate Bonds market 514,819 nominal was dealt across 80 deals, while in the Government Stocks market 28 transactions of 430,828 nominal were executed. No trading took place in the Treasury Bill market.

Despite the Index’s negative performance, Bank of Valletta plc (BOV) shares moved higher by 1.54 per cent. The equity kicked off the week strongly with a gain of nearly 1 per cent, edging slightly higher during three of the four trading sessions that followed. Trading volume increased to 67,501 shares over 68 transactions. BOV’s share price barely fluctuated as all trades were executed between a weekly low of Eur3.27 and a high of Eur3.30, the week’s closing price. Year-to-date BOV is the only banking equity in positive territory, still showing a 6.59% gain.

Negative outlook towards HSBC Bank Malta plc shares persisted after the equity failed to move up for the second consecutive week. On the week the equity tumbled by a further 3.3 per cent to close at Eur2.93 even reaching a yearly low of Eur2.90 during yesterday’s session. The equity was however the week’s most liquid as 87,417 shares were traded over 61 deals.

Activity in the other banking equities was rather weak as both Lombard Bank plc and FIMBank plc were active during one trading session. On Monday the latter equity lost a hefty 6.48 per cent as four deals of 6,675 shares depreciated the price to an all time low of $1.01. Meanwhile, Lombard Bank plc headed downwards by nearly 2 per cent or Eur0.055 as one deal of 1,300 shares was executed on Thursday.

For the second week in a row GO plc closed the week in decline with this week’s loss amounting to 3.37 per cent or Eur0.07. Trading volume stood at 9,500 shares dealt over seven transactions. This week’s negative performance worsens further the equity’s performance year-to-date which now stands at 4.29 per cent in negative territory.

International Hotel Investments plc shares failed to maintain last week’s positive stance having closed Friday’s session at Eur0.82, hence down by 1.2 per cent on the week. Trading volume also declined to nearly 29,000 shares as seven transactions were executed.

Middlesea Insurance plc regained some of last week’s losses as the equity edged slightly higher on the week to close at Eur0.86. Liquidity declined further to 14,600 shares dealt over 3 transactions. The insurance firm’s performance on the year stands just shy of 7 per cent in positive territory.

The week’s top performing equity was MaltaPost plc which posted a gain of Eur0.029 or 3.33 per cent to end the week at Eur0.899. Despite a significant increase in trading volume over the week, activity remained on the low side with just nine deals being executed across two trading sessions. On Monday’s session, the postal operator gained 3.45 per cent over 81,000 shares, retracing some of this gain on Thursday.

The share price of Malta International Airport plc started the week unchanged at Eur3.15, however on Thursday the price adjusted to Eur1.575 to reflect the share split of two shares for one approved in the company’s Annual General Meeting on May 10, 2010. The equity edged minimally higher by 0.32 per cent to end the week under review at Eur1.58. A total of 30,150 shares were active across 19 deals.

Similarly to last week Simonds Farsons Cisk plc was active only on one trading day, during which the equity lost 2.7 per cent or Eur0.05 as two deals of 733 shares were recorded. Medserv plc was the only equity that traded flat at Eur4.30 as just one deal of 400 shares was executed.

In the IT Sector Loqus Holdings plc was the only active equity closing down by over 19 per cent as one deal of 2,548 shares lowered the price from Eur0.186 to Eur0.15.

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 or on Tel: 21224410 or email [email protected].