Daily Market Highlights (29.07.11)

  • In the last trading session of the month of July, the MSE Share Index edged minimally higher to 3,223.711 points as MIA, GO, Lombard and RS2 Software closed in positive territory. On the other hand, IHI closed lower whilst BOV traded unchanged. The local equity benchmark closed the week 1.5% lower thereby increasing this month’s drop to 3.1%. The MSE Share Index is trailing behind most international stock indices with a year-to-date decline of 14.7%. Download a copy of today’s Equity Market Summary.
  • On the bond market, the Rizzo Farrugia MGS Index also moved marginally higher as Eurozone yields this morning continued to retreat below the 2.60% level after Moody’s changed Spain’s outlook to negative whilst the US continues to debate an increase in its debt ceiling. In line with this morning’s drop in yields, the Central Bank of Malta raised it Malta Government Stock bid prices with the exception of the 5.25% MGS 2030 (I) bid price which was lowered from 102.60% to 102.55% possibly due to the increasing amounts on offer at higher levels.
  • BOV maintained the €2.59 level across six trades totalling 6,253 shares to end the week 2.3% lower. Earlier this week, the Bank issued its Interim Statement, covering the three months ended 30 June, revealing a slower demand for credit and a continued satisfactory growth in deposits. Moreover the Directors stated that although net interest income grew, commission and trading income dropped due to the prevailing political developments in North Africa and the Eurozone sovereign debt crisis. The latter also resulted in further fair value mark downs while loan impairments continue to reflect the current scenario of certain sectors of the economy. Overall, the profitability for the first nine months of the current financial year is slightly below that of the previous year before accounting for the one-off cost of €14.5 million relating to the buy-back offer of the La Valette Multi-Manager Property Fund shares. Further details available here. Meanwhile, BOV reported that the offering of €40 million in Notes carrying a coupon of 4.8% and maturing in 2018 closed early due to oversubscription.
  • HSBC remained inactive for the second consecutive session ahead of the Bank’s results publication this afternoon. The Bank reported a 19.2% increase in profitability to €32.6 million on the back of higher net interest income and non-interest income which offset the higher administration expenses, the €3.7 million loss on the sale of ‘available-for-sale’ investments and a further €4.3 million in impairments. The growth in profitability was only partially reflected in the gross interim dividend of €0.082 per share which is only 3.2% higher than last year’s interim dividend. At this level, the payout ratio for the first six months has been reduced from 54.7% to 47.6%. Shareholders as at the close of trading on 5 August will be entitled to this dividend which will subsequently be paid on 24 August. Further details available here.
  • This morning the Spanish insurance company Mapfre Internacional S.A. purchased 18.3 million Middlesea Insurance plc shares from Munich Re at a price of €0.63 per share via a special trade affected on the Malta Stock Exchange. The agreed price level between the two international insurance companies is marginally above the Net Asset Value per share of Middlesea Insurance plc as at 31 December 2010. Details of this transaction first emerged on 29 April when Middlesea had revealed that Mapfre Internacional S.A. was seeking regulatory approval to acquire the 19.9% shareholding of Middlesea held by Munich Re. Approval for this trade was granted by the Malta Financial Services Authority on 17 June. Following this transaction, Mapfre Internacional S.A. became the majority shareholder in Middlesea with a shareholding of 50.98%. As such, in terms of Chapter 11 of the Listing Rules, Mapfre is obliged to launch a takeover bid for the remaining shares of Middlesea in the coming days. Bank of Valletta plc, who holds a 31.08% shareholding in Middlesea, have already announced that they will not be tendering their shares to Mapfre and will maintain their shareholding in Middlesea.
  • A single trade of 2,500 GO shares helped the equity to further recover from its all-time low and close the week unchanged at the €1.30 level. Other offers unsatisfied at the closing price whilst best bids now placed at the €1.261 level. Earlier this week, the Greek telecommunications Group Forthnet revealed that it successfully managed to restructure €90 million of its outstanding debt through the issuance of new long-term debt by a syndicate of banks. Further details available here. Forthnet’s share price initially reacted positively as it traded up to the €0.50 level. However this was short-lived as the share price of the Greek telecommunications Group dropped back to €0.43 by the end of the week.
  • MIA’s share price up 1.9% today to €1.59 representing a weekly rise of 2.6%. Last Wednesday the airport operator revealed an 11.4% increase in profitability to €3.96 million during the first six months of 2011. The improvement was mainly due to the 2.2% increase in revenue to €26.67 million on the back of a 12.7% rise in passenger movements during the same period. Further details on the results and a copy of the Interim Report may be obtained here.
  • The strongest performer of the day was RS2 Software. The equity of the IT company advanced by 3.8% to a fresh 8-month high of €0.55 on volumes of 27,500 shares. The IT company also currently ranks as the best performing equity since the start of 2011 with a year-to-date increase of 14.6%. RS2 has yet to announce the date of the Board Meeting scheduled to approve the publication of the interim financial results.
  • Lombard only edged minimally higher to €2.565 on volumes of 4,200 shares. On the other hand, the third largest cap IHI edged 1.2% lower to €0.81 after dropping to an intra-day low of €0.80. Both equities ended the week lower.