The Malta Stock Exchange (MSE) gained 4% in October and thus registered the best month-on-month gain this year as it ended the month at the 3,264.182 level. Since the beginning of the year the local market has moved higher by 5.5%, as nearly all large caps gained. Throughout the month of October Bank of Valletta plc (BOV) shares were the main contributors to the registered gain. The bank reported record profits for the year ended 30 September and as a result the equity’s price soared after the results were announced. The upbeat sentiment shifted somewhat on to other equities, yet not much as expected, as the share price of HSBC Bank Malta plc (HSBC) failed to hold on to its monthly high of €2.80 despite ending the month on a positive note. Go plc closed another month higher while International Hotel Investments plc (IHI) was also among the best performing equities. Turnover in the equity market improved from €2.7m in September, to €4.2m, of which €2m was transacted in BOV.
Across the fixed-income market, turnover in the Malta Government Securities reached a hefty €41m while 300 deals worth €6m were executed in the Corporate Bond Market.
On the month, BOV shares surged by almost 10% as the Banking equity finished the month at €2.489 after touching a monthly high of €2.50. Ahead of the bank’s financial year results investors started to moderately push the price higher as demand increased. After close of trading on Friday, 26 October, the bank announced its full year results for the year ended 30 September. The BOV Group registered a profit before tax of €110.73m for the financial year, compared to €64.373m registered in 2011. Net interest income for the period under review amounted to €147.8m, a rise of 7.7% when compared to the previous year. The board of directors further resolved to recommend for the approval of the Annual General Meeting, the payment of a final gross dividend of €0.13 per share making for a final net dividend of €0.0845 per share which, if approved by the AGM, would make for a total gross dividend for the year of €0.19 per share. A bonus share issue of one share for every nine shares already held will be allotted to shareholders on the bank's share register as at close of business on Thursday, 17 January 2013. On the next day of trading the equity found support and moved swiftly higher as investors sought to acquire the equity at the best possible price to gain entitlement to the bank’s next dividend which is expected to be paid on Monday, 19 November.
Meanwhile, HSBC shares gained 1% as the bank ended the week at €2.76 after trading at a monthly high of €2.80. Last month the bank’s equity was the second most liquid as €0.6m were dealt over 74 transactions. Year-to-date the equity is up by 7%.
Lombard Bank plc also closed the month on a high after the equity returned to the €2 level in the final week of trading after trading at a low of €1.80. A total of 31 deals worth €0.4m were recorded. FIMBank plc slipped lower by 1.3% as the bank closed the month at $0.79. The share price of Middlesea Insurance plc gave away some of the gains witnessed across the previous month as the share price of the insurance firm closed the month at €0.74 hence down by 2%.
Go plc shares ended another month on a high, this time with a 6.2% gain or €0.059 as the share price of telecoms firm closed just above the €1 level. However, last month trading volume dropped almost five-fold as over 0.2 million shares were traded.
IHI shares posted another positive month with a 5.6% gain, following a 6% gain back in September. The hotels operator closed the month at €0.95. Conversely, Island Hotels Group plc shares lost 5.4% to end the month just shy of the €0.80 level.
Moreover, Plaza Centres plc lost a hefty 9.5% or €0.055 as the equity closed the month at €0.525 after trading at a high of €0.59. Nearly €0.35m was dealt across 11 trades. Midi plc lost almost 11% from its September close as the equity ended the month at €0.25 while Malita Investments plc returned to its IPO price of €0.50 hence down by 2% in October.
Meanwhile, Simonds Farsons Cisk plc shares gained a remarkable 9% to finish at €2.40 while MaltaPost plc shares gained 3% or €0.02 to end the month at €0.72. Malta International Airport plc shares edged minimally higher to finish the month at €1.77.
In the IT sector 6PM Holdings plc was the only faller as its equity declined by 3%. On the other hand, Crimsonwing plc jumped by 34.6% on 81,000 shares while RS2 Software plc gained 15.4% as 28,000 shares changed hands.
Overseas, at the beginning of the month of October foreign equity investors were initially reluctant to take on more risk as a string of weak economic data coupled with the debt problems faced by Spain and Greece loomed over markets. Moreover, gloomy growth forecasts from the International Monetary Fund (IMF) and World Bank did not help sentiment and as such investors fled risky assets. The euro declined against the safer US dollar. To make matters worse Standard and Poor’s downgraded Spain’s sovereign debt rating one notch above junk, as the country continues to fight unemployment and an ever-slowing economy.
However, as the month unfolded risk-appetite somehow returned on positive data. In fact, in the US retail sales figures were better than forecast, while forecast-beating US industrial production gave more steam to the positive sentiment. Moreover, a German investor sentiment survey suggested that Europe’s number one economy could still drive growth in the euro area. However, in the final week of trading risky assets took a set back after corporate earnings in the US disappointed. Companies in the US have warned that they are facing weaker demand, which will have a negative impact on hiring. During the month, Moody’s announced that it was downgrading five of Spain’s 17 regions. The selling pressure in the single currency intensified while equity markets headed even lower as uncertainty surrounding Greece and Spain resurfaced.
On the month foreign indices closed rather mixed as European indices managed a minimal gain while in the US ahead of the Presidential elections the three major indices closed lower. In Europe, the German DAX gained 1% while in the US the Dow Jones Industrial Average declined by 3%.
This article, which was compiled by Jesmond Mizzi, managing director of Jesmond Mizzi Financial Advisors Limited, does not intend to give investment advice and the contents therein should not be construed as such. The company 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 Jesmond Mizzi Financial Advisors at 67 Level 3, South Street, Valletta. Tel: 2122 4410; email [email protected]
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