Financial news

Trading at the Malta Stock Exchange for the second day of the week persisted in its downward trend as the Index shed a marginal 0.02 per cent to close at 3,134 points. In a relatively muted day, trading was spread over a total of 12 deals as four equities were active during the day.

Bank of Valletta published its scheduled interim director's statement on Monday evening in which the directors commented that as expected, in the current difficult international environment the Bank has experienced a particularly difficult start to the full financial year 2009.

Trading in Bank of Valletta was struck deep into the session when 3,847 shares were exchanged in rapid succession across five deals. The equity dropped just one-fifth of a cent to €2.598 with most investors deeming the day's news as "priced-in" to the current price. Nevertheless, the offer side thickened during the day with 7,000 shares best supplied at the €2.595 level.

Go also issued a company announcement informing that it has concluded an agreement with NextWeb Ltd for the transfer of Nextweb's customer base. As a result of the agreement Go will be the service provider of Nextweb's customer base. The quadruple play communications company has ended the trading day with a negligible decrease in price to close at one-tenth of a cent lower at €1.85 as a single deal was transacted.

Trading activity for HSBC Bank Malta resulted in no change in price when a total of five deals were exchanged for a market consideration of €4,688. Similarly Lombard Bank also ended the trading session without any shift in price as it closed at €2.75. Trading for the financial services company was spread over one deal.

In the fixed interest sector of the market, trading was spread over five government stocks and four corporate bonds. The highest turnover was registered in the US denominated 8% BOV 2010 as the bond shed by 125 ticks to close at $ 105.

Weekly eurozone economic review

The latest economic data from the eurozone continues to point towards further downward pressure on the European Central Bank's (ECB) interest rates, even though it is very likely that the ECB will stay on hold on tomorrow's meeting, thereby leaving interest rates at two per cent. In recent comments, ECB President Jean-Claude Trichet has actually conveyed such a stance, where he insisted that the next "important" monetary policy meeting will not be until March. Nonetheless, the press conference after the decision will still be important in setting the outlook for March and beyond.

January's drop in Consumer Price Inflation from 1.6 per cent to 1.1 per cent (consensus forecast stood for 1.4 per cent) is well below the ECB's target of "close to, but less than, two per cent." Continued downward pressure on inflationary figures will fuel fear of deflation and should eventually result in further interest rate cuts.

Another development that is likely to intensify the downward pressure on prices is the deterioration in the labour market. Unemployment in the eurozone rose by a further 230,000 in December, pushing the unemployment rate up to a two-year high of eight per cent.

With surveys showing a sharp decline in hiring intentions, further increase in unemployment may well lay ahead.

This article has been prepared by Bank of Valletta p.l.c. (the Bank), which is licensed to conduct investment services business by the MFSA, for your general information only. This information is not a solicitation or offer by the Bank to acquire or sell securities. Nor does it constitute any form of advice by the Bank. Appropriate advice should be obtained before making any such decision. Past performance is not necessarily a guide to future performance and the value of your investments may fall or rise.