MSE Share Index drops 18.2% in 2011

Today marks the last trading session for 2011 with the MSE Share Index closing the year in negative territory after two years of gains. In 2009, the local equity market had advanced by 7.9% and climbed by a further 9.3% in 2010. The MSE Share Index tumbled 18.2% during the last twelve months to 3,094.799 points mainly due to the double-digit declines in the three largest capitalised companies.

In fact, HSBC Bank Malta plc shed 20.8% and the share price of Bank of Valletta plc slid 22.24% during 2011 as the prevailing eurozone sovereign debt crisis and the challenging global economic and political climate resulted in a downward pressure on profits.

The political uprising in Libya triggered a sell-off across International Hotel Investments plc shares during the first quarter of 2011. Although the equity has recovered some of these declines in line with the improved operational performance reported by the IHI Group at its Tripoli Hotel and its European properties, IHI’s equity still ended 2011 with a loss of 10.7%.

GO plc ranks as the worst performer with a 49.4% plunged to €0.98 reflecting investors’ concerns over the substantial investment in Forthnet S.A. which is facing financial difficulties. In recent weeks, GO’s equity traded at a new all-time low of €0.94.

The only large cap equity which closed in positive territory was Malta International Airport plc with a yearly increase of 1.8% to €1.69 on the back of another record number of passenger movements. Moreover, the airport operator is set to continue diversifying its revenue streams with the launch of the SkyParks Business Centre during the first quarter of 2012.

Only three other equities closed the year in positive territory with RS2 Software plc ranking as the star performer of 2011 with a rise of 25% reflecting improved financial performance and the hike in dividends. Plaza Centres plc and Simonds Farsons Cisk plc advanced by 6.5% and 5.9% respectively.

On the bond market, the Rizzo Farrugia MGS Index closed a volatile 2011 with a decline of 0.4% to 988.877 points. Eurozone yields initially surged to 3.51% from 2.968% as at 30 December 2010 as the ECB raised interest rates by 50 basis points to 1.50%. However, yields dropped to end the year at 1.83% as the eurozone sovereign debt crisis took centre stage pushing investors towards the ‘safe haven’ sovereign paper of Germany and as the European Central Bank reversed the interest rate rises communicated earlier on in the year.

Trading on the Malta Stock Exchange will resume on Tuesday 3 January 2012.