Sentiment improves

Following weeks of continuous declines, last week global indices took some respite as risk aversion eased and appetite for risky assets improved, yet market volatility re­mained as investors reacted to a barrage of market updates. Investors were kept on their toes as they awai­ted figures from the US and Germany, and the results of two Spanish bond auctions held last week.

Early in the week positive retail sales figures from the world’s largest economy encouraged some risk-taking, and the optimistic mood was improved further as most US companies reported better than expected first quarter figures. So far, out of the 93 companies reporting earnings, 79 beat analysts’ expectations.

These figures somewhat clouded the lacklustre economic data released on Tuesday in the US, where new home starts dropped. As risk appetite improved, investors became more bullish on the euro though concerns about the single currency’s strength remain.

On Thursday, Fitch rating agency announced it may lower France’s sovereign debt rating and German investor confidence figures further helped global indices while the euro rose against the US Dollar on Friday.

On Tuesday, a short-term Spanish debt auction was well received, despite a surge in Spanish yields on Monday. But investors were already heading into Thursday when a long-dated Spanish bond auction was expected.

This was a bigger test for Spain as long-dated bonds carry higher risk. Demand was strong, even though some borrowing costs rose, but as a result, sentiment improved and equities continued to move higher.

As is often the case, the Malta Stock Exchange (MSE) index remained unaffected by developments abroad. Last week it closed 0.2% lower to end the week at 2,922.377 points. Midi plc shares headed the list of fallers as the equity remains in the limelight following various media reports.

In the banking industry, Bank of Valletta plc (BoV) shares closed lower for the second week running while HSBC Bank Malta plc’s share price improved.

Last week, 500,000 shares changed hands on the MSE as 128 deals worth €0.7m were executed. Over two-thirds of last week’s volume took place in BoV, Maltapost plc, and Midi plc.

BoV shares shed a further 0.5% to end the week at €2.10 after touching a weekly low of €2.09 and a high of €2.13. The equity was last week’s the most liquid with €243,000 worth of trading, more than double that traded in Maltapost plc, the week’s second most traded by turnover.

On Tuesday, BoV announced that the bank’s board of directors is due to meet on Friday to consider and approve the group’s and the bank’s interim financial statements for the six months ended March 31 and to consider the declaration of an interim dividend.

HSBC’s share price rose 0.8% on improving volumes. A total of 32,500 shares were traded in 20 transactions as the equity closed the week at €2.52. Since January the equity has lost 2.3%, which compares fa­vourably with the MSE index’s 5.6% fall so far this year.

Last week the bank held its annual general meeting and all resolutions were approved. A gross dividend of €0.072 per share will be paid to shareholders on Friday.

On the other hand, Lombard Bank plc was the hardest hit with a significant 2.6%, or €0.065 drop. Two deals in the final minutes of trading mid-week pushed the equity’s price to €2.40 after having traded at €2.46. Trading remained low as a total of 20,000 shares changed hands.

On a positive note, Go plc shares recorded a 4%, or €0.03 gain last week. There were 13 deals with a total turnover of 30,000 shares,up from 10,450 shares traded the previous week.

Meanwhile, the company’s AGM is expected to be held on May 9. Among the special business at the AGM, the shareholders will consider a resolution which states “that there is no confidence in the present board of directors and senior executives of the management team”.

Meanwhile, Maltapost plc posted a significant 3.2%, or €0.03 gain after a sharp increase in volume. In fact, the postal operator, which was only active on Tuesday, saw over 110,000 shares being traded as the equity crept higher to €0.96.

Midi plc shares lost a hefty 10.3% last week as investors reacted to the news which has surrounded the equity since the resignation of the company’s chief executive officer in the first week of April.

Reports in some sections of the local media suggested that Midi is in discussions with the government to unravel itself from the Manoel Island deve­lopment. But on Wednesday the company announced it is not in any such discussions or negotiations with government or other parties in respect of the Midi project.

The board of directors is scheduled to meet on April 30 to consider and approve the financial statements for the year ended December31, 2011.

Plaza Centres plc lost 2.8% to close the week at €1.75 as just under 30,000 shares were traded. Both International Hotel Investments plc and Island Hotels Group plc traded flat at €0.74 and €0.85 respectively, as turnover remained low .

Malta International Airport plc managed to close unchanged at €1.70 after the equity traded at a low of €1.68. Simonds Farsons Cisk plc remained intact at €1.77 as almost 30,000 shares were traded. The board of directors is to meet on April 25 to consider the financial state­ments for the year ended January 31 and to consider a final dividend to be recommended to the AGM.

During the week, Grand Harbour Marina plc issued its preliminary statement of annual results for 2011. The company made a loss for the year of €213,247 compared to a loss of €771,442 in 2010, whereas the group made a loss of €664,052. Despite the announcement of the results investors did not react as no trades took place last week.

6pm Holdings plc also issued its financial results for 2011. The group reported a loss of GBP354,888 for the year compared to GBP293,057 in 2010. Again, there was no activity in the equity despite the company announcement last week.

In the fixed interest market, last week the prices of the Malta Government Stocks remained more or less in line with the previous week’s price range, as price changes hovered around 0.5% bar a few. There were no noteworthy movements. Turnover fell heavily to €5.4m.

In the corporate bond market, yields generally moved higher as eight issues closed lower, while another six gained. Tomorrow, trading is expected to start in the recent 4.25% BoV 2019 issue.

This article, which was compiled by Jesmond Mizzi, managing director of Atlas JMFS Investment Services Ltd, does not intend to give investment advice and the contents therein should not be construed as such. Atlas JMFS is licensed to conduct investment services by the MFSA and is a member firm of the Malta Stock Exchange. 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 Atlas JMFS at 67/3, South Street, Valletta, or on tel: 2122 4410 or e-mail jesmond.mizzi@atlasjmfs.com.