Losses in 10 equities drag MSE index down 3%

The sell-off on the Malta Stock Exchange that started a week ago persisted in last week's trading. The prices of local equities started February very negatively, losing ground throughout the week, with the losses gaining momentum in the final sessions. By Friday the MSE index had shed nearly 3% to close at 3,731.892.

However, notwithstanding these past two negative weeks, the index is still up nearly 8% since the start of the year. Besides profit-taking, the main reason for the fall may easily be attributed to global factors. Indeed, woes over the fiscal health of certain European nations and some disappointing jobless claims numbers in the US last week fuelled a selling frenzy that culminated in most international markets seeing heavy drops in their equities.

Locally, given that the financial sector carries more market weight than any other sector, weakness in the two major banks resulted in a considerable drag on the broader index. Volume of shares traded was also much lower than in previous weeks although it still amounted to just over 300,000 shares changing hands. Of the 15 equities traded, 10 lost ground, one remained un-changed, but four defied the negative trend and actual gained value.

Bank of Valletta plc shares traded in the red nearly on every trading session bar Monday when prices remained unchanged. Heavy volumes backed this downtrend, implying conviction. The share price indeed fell more than the overall index, losing 4.44% to end Friday's session at €3.249, after having traded at a low of €3.20. Volume traded was very similar to previous week, with just over 90,000 shares changing ownership.

On the other hand volume traded in HSBC Bank Malta plc was half that of the week before and was therefore fairly low considering this equity's huge market capitalisation. Initially, trading in this stock kept the price unchanged at €3.90, but sellers took the upper hand in the last two sessions, with the stock taking a pounding especially on Friday. This sharp 3.6% drop impacted the overall index very negatively.

However, it is worth noting that the bulk of the low volume actually occurred in early trading, with barely 10,000 shares backing the fall. Overall, volume for the week totalled nearly 27,000 shares.

HSBC's board of directors is scheduled to meet on February 22 to approve the bank's accounts for the financial year ended December 31, 2009, and to consider the recommendation of a final dividend.

Maltapost plc continued to be traded in decent volumes as just over 50,000 shares changed hands in the week's last two sessions. The equity's price fell to €0.75, a correction of 6.13%, thereby erasing some of the swift gains recorded since the beginning of the year.

Go plc outperformed the general index to end the week in positive territory as the share price climbed from €2.28 to €2.299, a new high for the year. Last week's performance therefore sustained the four-month upward trend which has seen the price soar by 53%.

However, trading in this stock was somewhat choppy, with Thursday's session recording a slight fall which deteriorated further during the early trading during Friday's session. But as trading progressed on Friday, the losses were nullified and buyers managed to push the price to a 16-month high.

Volatility returned to Middlesea Insurance plc's share price which deteriorated sharply from €0.859 to €0.73. MSI was therefore the week's worst performing equity having lost 15% of its value. Volume was similar to that of the previous week, with nearly 30,885 shares traded in 14 transactions.

Fimbank plc and Grand Harbour Marina plc lost 3.39% and 1.58%. respectively, backed by similar volumes of trading as the previous week.

The share prices of Malta International Airport plc, Lombard Bank plc, Plaza Centres plc and Santumas Shareholdings plc, traded negatively last week based on low volumes of trading. On the other hand, Global Capital plc, Datatrak plc and 6PM plc all recorded gains last week albeit volumes were generally on the low side.

The week's only non-mover was Island Hotels Group Holdings plc as a single transaction on Tuesday maintained its price at €1.01.

Several factors affected price movements in government bond prices last week, but the two most significant issues were the reluctance by central banks to move interest rates higher and the re-ignition of the risk aversion trade. Both factors lowered yields yet again, resulting in a small spike in most government bonds abroad and locally.

€3.3 million worth of Malta Government Stocks (MGS) was traded last week, most of which saw their prices improve. On the other hand most local corporate bonds traded saw no movement in their prices. Trades in the Treasury Bills market totalled €2m in value.

The Accountant General announced last week that an aggregate of €100m worth of MGS is being offered in any combination of the following issues: (i) 3.75% MGS 2015 (VI);(ii) 4.6% MGS 2020 (II) F.I. (February '10) and (iii) Floating Rate MGS 2013 (V) linked to the six-month Euribor. The issue is subject to an over-allotment option of €50m. The prices of the issues will be determined on Thursday while applications will open on February 15.

This article, which was compiled by Jesmond Mizzi, managing director of Jesmond Mizzi Financial Services Ltd (JMFS), does not intend to give investment advice and the contents therein should not be construed as such. JMFS is licensed 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, on Tel. 2122 4410 or e-mail jmizzi@jmfs.net