MSE | Wednesday, 04 February 2009

GlobalCapital Financial Management Ltd - Malta Stock Exchange Review

A low volume session

Yesterday, during the second session of the week, the local market was somewhat sedated with not many trades being put through and subdued volumes. The Malta Stock Exchange index lost 0.02 per cent to finish at 3133.77 points.
On the banking front, the shares of Bank of Valletta p.l.c. decreased €0c2 lower to settle at the 2.598 level across 3,847 shares. These shares were swapped in five trades and carried a market value of €9,994. Week on week Bank of Valletta p.l.c. surrendered 3.78 per cent from its closing price of €2.70 on Tuesday 27 January. On Monday 2 February Bank of Valletta p.l.c. announced that as notified to shareholders in the Annual Report and at the Annual General Meeting, the first quarter of the current financial year witnessed a continuing period of extreme nervousness and volatility in the international financial markets. As anticipated, the impact has been that Bank of Valletta’s (BOV) Financial Markets portfolio has witnessed further unrealised fair value mark downs during the period from 1 October 2008 to the date of announcement. BOV’s Financial Markets portfolio continues to be deployed across a wide spread of holdings of predominantly highly rated sovereign/supranational, corporate and financial sector debt securities of moderate duration, and the expectation of the Board remains that much, but not all, of the unrealised mark downs will be clawed back over time, as the majority of holdings are retained through to redemption. To date, the experience has been that all but a very small number of the holdings in the portfolio have and continue to pay interest and meet redemption obligations on due date. Co-ordinated measures taken by central banks have included radical reductions in interest rates, in an attempt to counter the sharp downturn in economic activity being experienced on a global basis. BOV passed on much of this rate reduction to customers, and this will have an adverse effect on the profitability of the bank. On the corporate, retail and home loans sides of the business, there has, to date, been no evidence of any significant deterioration in credit quality, but a modest slowdown in the demand for credit, particularly on the home loans side, has been seen. Demand for investment and insurance products has remained subdued, although there has been something of an improvement since the turn of the year. Commission income on other banking services has shown a satisfactory increase over the corresponding period last year. Costs remain under tight control, running at close to FY 2008 levels. Satisfactory growth in customer deposits has been sustained throughout the period under review. Overall, and as expected in the present international environment, BOV has experienced a particularly difficult start to FY 2009.
Remaining on the banking front, HSBC Bank Malta p.l.c. and Lombard Bank p.l.c. finished the second session of the week unchanged at €2.70 and €2.75 respectively. Following a company announcement issued by HSBC Bank Malta p.l.c. on 2 February, the Board of Directors announced that they shall meet on Friday 20 February 2009 to consider and approve the Group’s and the Bank’s Final Audited Accounts for the financial year ended 31 December 2008. Furthermore the Board of Directors shall consider the declaration of a final dividend to be recommended to the Bank’s Annual General Meeting.
On the telecommunications front, GO p.l.c. slipped by €0c1 at €1.849 across 230 shares. On Tuesday 3 February GO p.l.c. announced that it has concluded an agreement with Nextweb Limited for the transfer of Nextweb’s customer base. As a result of the agreement GO will be the service provider to the said customers.
On Monday 2 February Simonds Farsons Cisk p.l.c. announced that its subsidiary companies Anthony Caruana & Sons Limited and Guido Vella Limited are to be merged into Wands Limited. All three companies are engaged in the business of importation, wholesale and retail of beverages including wines and spirits. This merger process which will be initiated with immediate effect, is intended to consolidate the operations of these three companies under one legal entity as part of a restructuring exercise.
In the fixed interest market, a total of €47,057 (Five deals) were transacted in Government Bonds. Meanwhile, a total of €51,501 (Eleven deals) were transacted in Corporate Bonds.
The turnover value in the Treasury Bill secondary market amounted to €127,859 (One transaction).

Issued by GlobalCapital Financial Management Ltd, 120 The Strand, Gzira, GZR1027 for information purposes only and is not intended to constitute any financial, legal or tax advice. This write up is not to be taken as investment advice to buy or sell any investment. Investors should seek professional advice prior to taking investment decisions and should note that the value of investments may fall as well as rise. Readers who would like more information are invited to send an E-mail to or Tel: 21 342342. GlobalCapital Financial Management Ltd is a member of the Malta Stock Exchange and is licensed by the Malta Financial Services Authority (MFSA).


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04 February 2009

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