Daily Market Highlights (27.06.2016)

The MSE Share Index extended last Friday’s decline as it opened the week with a minimal drop of 0.03% to 4,478.669 points. The performance of the local equity index was negatively affected by the decline in the share prices of RS2 and HSBC which marginally outweighed the gains registered in the equities of BOV, Lombard and Malta Properties. Trading activity was weak as only €0.13 million worth of shares changed hands today. Download a copy of today’s Equity Market Summary.

After recording the steepest decline in the last five months on Friday, the RF MGS Index bounced back by 0.25% to 1,151.136 points today. In another volatile day for financial markets, negative sentiment continued to reign following the UK’s decision, through a referendum held last Thursday, to leave the EU. While equity markets continued to decline, the dominating theme was the flight to safety. Indeed, the 10-year benchmark German Bund yield trended further into negative territory (-0.108%) whilst the 10-year UK gilt fell below the 1.0% mark for the first time ever and touched a record low of 0.934%. Furthermore, in sharp contrast to last Friday, the yields of the 10-year Italian and Spanish Government papers (i.e. the two largest peripheral countries with similar credit ratings to Malta) also lost ground. In particular, the 10-year Spanish yield fell by 20 basis points to 1.44% – possibly reflecting a better than expected performance by the ruling People’s Party in Sunday’s general election.

RS2 Software plc retreated by 1.1% to the €3.46 level across 3,558 shares. Trading in the new shares following the 1 for every 18 bonus share was possible as from today. Meanwhile, the cut-off date for the 5 for 3 share split is on Thursday 30 June. Last Thursday, RS2 held its Annual General Meeting (AGM) during which the Group’s Chairman and the CEO gave a detailed overview of the globalisation plans of the Company particularly in the US and Asia-Pacific region.

The other negative performing equity today was HSBC Bank Malta plc which lost 0.2% to the €1.596 level on volumes totalling 15,865 shares. Last Thursday, HSBC revealed that it received a cash consideration of €7.6 million (to be recognised as a one-off gain in the 2016 financial statements) as well as €1.4 million worth of convertible preference shares and a deferred cash payment (expected to be paid in 2019) in connection with the sale of its shareholding in Visa Europe Limited to Visa Inc. HSBC will publish its interim financial statements on 3 August.

A similar announcement was also issued by Bank of Valletta plc. BOV’s share of proceeds amounts to €29.1 million comprising €22.0 million in cash and a further €7.1 million in Visa Inc. preferred stock. The total consideration will be reflected in the Bank’s financial statements for the financial year ending 30 September 2016. BOV will be retaining the cash consideration within its reserves in order to strengthen its Core Tier 1 regulatory capital. The equity ended the day marginally higher at the €2.203 level after touching an intra-day high of €2.23. A total of 27,344 shares changed hands.

Also in the retail-banking sector, Lombard Bank Malta plc posted a gain of 3.4% to the €2.09 level across 4,426 shares. The Bank’s Board of Directors is scheduled to meet on 25 August to consider and approve the interim financial statements covering the six months ending 30 June 2016.

Malta Properties Company plc recaptured the €0.51 level (+0.6%) on light volumes totalling 2,100 shares.

Meanwhile, International Hotel Investments plc maintained the €0.689 level across 4,251 shares. The equity will start trading ex-bonus as from tomorrow. On Friday, IHI issued an announcement in which it revealed its intentions of issuing a new €55 million secured bond maturing in 2026. Subject to regulatory approval, IHI shareholders as at today will be given preference to subscribe to the first €30 million of the new bonds.

Also among the large companies, Malta International Airport plc held on to its five-month low of €4.10 across 3,532 shares.

A single deal of 1,000 shares left the equity of Simonds Farsons Cisk plc unchanged at the €6.28 level. During the AGM to be held tomorrow, shareholders will be asked to consider and approve a number of resolutions including the payment of a final dividend (out of tax-exempt profits) of €0.0733 per share to be paid on 30 June.

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