The Central Bank of Malta sharply increased its Malta Government Stock bid prices with the bid price of the 5.25% MGS 2030 (I) surging by 160 basis points to 102.3%. This helped the Rizzo Farrugia MGS Index climb by 0.7% to a 3-week high of 989.690 points.
The renewed upturn in MGS prices reflected the significant drop in eurozone benchmark yields from 2.02% to below the 1.80% level. The sharp drop in yields occurred on fresh concerns over the sustainability of Italy’s sovereign debt as yields on 10-year paper surpassed the 6% level. Moreover, yesterday’s decision of the Greek Prime Minister to allow the Greek citizens to decide whether to accept or not the latest bailout package from the European Union through a referendum led to a further sharp sell-off across equity markets and renewed fears in the bond markets. Failure to accept this latest round of funding will have severe financial implications on the whole of the Eurozone as it will most certainly result in a disorderly sovereign default by Greece and a possible exit from the euro.
This uncertainty triggered a sell-off across foreign equity markets particularly in central Europe. Germany’s DAX is currently down over 4% and the FTSE 100 in the UK is 3.3% lower. America markets are also expected to be hit with the Dow Jones and the S&P 500 estimated to open 1.7% and 2.3% lower respectively.
On the local equity market, Bank of Valletta plc reversed some of yesterday’s 6.3% jump as the equity eased 0.8% lower to the €2.53 level across thirty one trades totalling over 36,600 shares. BOV’s equity will trade with the entitlement to the recommended final gross dividend of €0.08 per share until Friday 11 November.
Meanwhile further demand emerged for HSBC Bank Malta plc with the share price climbing for the third consecutive session by a further 1.1% to a 7-week high of €2.72 level across eight trades totalling 5,498 shares. The bank is shortly expected to publish its Interim Statement covering the period since the half-year end.
RS2 Software plc also edged higher today with the share price advancing by 1.7% to regain its 2011 high of €0.60 on a single trade of 7,900 shares.