Banking equities drag MSE index lower

MSE Trading Report for week ending November 25, 2016

The MSE Index fell for the second consecutive week, closing the week 1.4 per cent lower at 4,442.867 points. The week was characterised by a drop in equity prices of listed local banks. Elsewhere, the sovereign bond market was still experiencing volatility while corporate bonds were relatively more stable and positive.

Twelve local sovereign bond issues closed in the red, with the biggest decline being registered in the 3.3% Malta Government Stock 2024 falling by two per cent. Ten other issues closed the week in the black.

In the corporate debt market, a total of 32 issues were active during the week, of which thirteen gained ground, eight closed lower while eleven closed unchanged.

In the first half of the week, International Hotel Investments plc announced that it has obtained regulatory approval for the issue of €40m Unsecured bonds with a coupon of 4%, maturing in 2026. The bond will be issued at par, with a minimum subscription of €2,000 and will replace two existing issues, being the International Hotel Investments 6.25% 2017-2020 and the Island Hotels Group 6.5% 2017-2019. Preference will be given to the bond holders of these two issues.

In the equity market a total of sixteen issues were active of which the majority performed negatively, five gained and two lost ground.

Bank of Valletta plc shares declined by 2.6 per cent to close the week at €2.201. The fall in price was mainly due to the credit rating downgrade announced by Fitch on Thursday from BBB+ to BBB. In a reaction published by The Times, Bank of Valletta CEO Mario Mallia explained that the downgrade in the long term rating is driven by Fitch's view that the bank needs to increase its capital levels, in an environment of rising regulatory requirements. He further stated that "the bank has, in fact, already made public its intention to strengthen its capital buffers, through a combination of fresh capital issues, restrained dividend payouts and the review of the business model." Mr. Mallia said the bank is committed towards strengthening its levels of capital, as well as its risk management framework.

The bank also announced that the Annual General Meeting will be held on Friday, December 16 to approve the company’s financial statements for the year ended September 30, 2016, the payment of a gross final dividend of €0.0852 per share and a bonus share issue of one for every 13 shares held.

Total turnover in BOV shares during the week amounted to €458k, spread over 64 deals.

In the same industry, HSBC Bank Malta plc shares also closed the week in the red at €1.80, with a total volume of 39,233 shares, spread over 16 transactions.

In addition, two trades of 10,000 shares in Lombard Bank Malta plc negatively impacted the equity’s price by a small margin as it closed the week at €2.10.

Despite FIMBank plc announcing the finalisation of the acquisition process of commercial International Bank SAE and CIB Social Insurance Fund’s shareholding in Egypt Factors, three deals amounting to $25.3k dragged the price 1.8 per cent lower, to close the week at $0.835.

Two trades of 2,998 sharescaused the share price ofInternational Hotel Investments plc to fall by 4.6 per cent and close at €0.62.

Medserv plc shares closed at the intra-week high of €1.678 as thirteen deals worth approximately €190,000 pushed the price up by a staggering 14.2 per cent. The reasons behind such performance were two announcements issued by the company during the week.

In its interim directors’ statement issued on Monday, the company announced that revenue for the current financial year is expected to be close to the revised forecasted amount of €38 million, which could improve if projects earmarked to commence in the last quarter of the current year marterialise. The company also stated that the decision to invest in the Oil Country Tubular Goods (OCTG) market of the Middle East had a major impact on the group, with Oman operations expecting to surpass forecasts. The UAE is expected to reach the budget profit, while Iraq registered a loss, but the situation is picking up. The company is seeking to expand in new markets such as the Caribbean, whilst operations in Cyprus and Portugal are currently in mothball mode and are expected to commence later on next year.

In a separate statement, the company also announced that it has been re-awarded a contract by Eni North Africa (EniNa) to provide logistics base and associated services for exploration activities taking place offshore and onshore in Libya. The contract has been extended for one year with the possibility of extending for another year.

RS2 Software plc shares fell by 0.9 per cent over the week to close at €1.536 – total turnover reached €123.2k, spread over 28 trades.

In the property sector, Malita Investments plc shares rebounded following last week’s losses, to close the week 2.2 per cent higher at €0.869, with a total volume of 33,405 traded shares, spread over six trades. On the other hand, the share price of Malta Properties Company plc remained afloat, closing at €0.60 for yet another week – the fourth in a row.

Seven trades worth a total of €18k in MaltaPost plc shares managed to push up its price by a further 1.6 per cent, closing the week at €1.88.

In the beverage industry, five transactions amounting to 3,222 shares in Simonds Farsons Cisk plc dragged the share price downwards by 1.5 per cent to €6.45.

GO plcshares fell marginally in value by 0.3 per cent to close at €3.24. Total turnover in this equity amounted to €16k across seven deals.

Santumas Shareholdings plc traded five times, for a total of 39,229 shares during the week and last traded at €2.402. On Monday, the company announced that the one for ten bonus issue allocated to shareholders on the company register as at Friday November 18, 2016, were available for trading from Tuesday, November 22, while the share split as approved at the Company’s Annual General Meeting will be allocated to shareholders on the Company’s register as at close of business on Friday and will be available for trading next Monday.

Notwithstanding fifteen trades of a combined value of €104k executed in Malta International Airport plc shares, its price closed unchanged at €4.08. On the contrary, two trades of 5,000 shares in Global Capital plc led to a decline in price of 2.2 per cent to end the week at €0.44.

Elsewhere, Tigne Mall plc shares experiences an increase in price of 1.9 per cent having closed at €1.10 as six trades were executed for a total turnover of €83,566.