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20.10.2022 6 MARKETS Symbol Volume Value Trades High Low Open Closing Change Code Traded Traded Trades Price Price Price Price EQUITIES APS 10,000 6,350.01 2 0.635 0.635 0.635 0.635 0.000 BMIT 25,000 11,550.00 1 0.462 0.462 0.462 0.462 -0.002 BOV 21,329 18,689.98 5 0.900 0.870 0.880 0.900 0.000 GO 1,000 3,020.00 1 3.020 3.020 3.020 3.020 0.020 HSB 2,390 1,768.60 1 0.740 0.740 0.740 0.740 0.000 TRI 792 1,156.32 1 1.460 1.460 1.460 1.460 0.000 CORPORATE BONDS BN32A 20,000 20,000.00 1 100.000 100.000 100.000 100.000 0.000 CB27A 6,000 5,952.00 1 99.200 99.200 99.200 99.200 0.200 EF27A 4,000 4,000.00 1 100.000 100.000 100.000 100.000 0.000 HP25A 4,500 4,567.50 2 101.500 101.500 101.500 101.500 0.000 IB25A 99,500 101,987.50 2 102.500 102.500 102.500 102.500 0.000 IH26A 5,600 5,656.00 2 101.000 101.000 101.000 101.000 0.000 IH26B 4,800 4,776.00 1 99.500 99.500 99.500 99.500 0.000 IH31A 12,000 11,460.00 4 95.500 95.500 95.500 95.500 0.000 MD26A 17,800 17,801.12 4 100.040 100.000 100.040 100.000 -0.040 MF24A 100 102.60 1 102.600 102.600 102.600 102.600 0.600 PC26A 4,500 4,485.00 4 100.000 99.500 99.500 100.000 2.000 ST27A 10,000 10,000.00 1 100.000 100.000 100.000 100.000 0.000 Malta Stock Exchange Regulated Main Market Trading Date: 19 Oct 2022 Global economies preparing for a temporary economic down-turn RECENTLY, the IMF has issued a gloomy global forecast for 2023, as expected. For market specta- tors, the market situation has not been improving. is is mainly due to consequences arising from the onset of the pandemic and the Russian invasion of Ukraine occurring shortly after, with the latter complicating matters from an inflation point of view. In light of this, measures were taken to combat any meaningful economic set-backs that could occur on the back of a sustained spike in inflation. Namely, the Fed lifted its benchmark policy rate this year from close-to-zero rates to those fluctuating around the 3 per cent region. e reason for raising interest rates is mainly in relation to consumers struggling to cope with the current inflation levels, which will eventually re- duce overall economic activity. As a deterrent, an increase in rates was implemented to pre- vent things from getting worse. However, if the cost of borrow- ing becomes too high, companies might be discouraged from taking on new projects that may in turn stimulate economic growth, while paying mortgages might become unsustainable, to mention some of the negatives associated with elevated borrowing costs. An indicator of economic sta- bility is the ability for borrowers to repay their debts. In this area, the six largest US banks—JP- Morgan Chase, Bank of America, Citigroup, Goldman Sachs, Wells Fargo and Morgan Stanley—have been provisioning for loan-loss- es for the third-quarter earnings period, according to analysts at Bloomberg. Banks have been in- creasing provisioning, consecu- tively. To add to this, the KBW Bank Index was down significantly in 2022, underperforming the benchmark S&P 500 index by over 2 per cent. e fall is reflec- tive of concerns that further loans might sour on the back of the lack of repayment ability, despite high- er interest rates providing more interest income to banks. Putting it simply, the magnitude of lower loans being taken is greater than the higher interest rates, which, in turn, might negatively condition the net interest income for banks over time. e situation in the UK is not much better, as employment fell to historic levels going back dec- ades. is tells us that despite the UK government's best efforts, productivity does not seem to be increasing in the short term, thus making companies less willing to invest, train new staff, and pursue opportunity. Unfortunately, most investors only take risks when they are not afraid, thus com- pounding the effect of poor eco- nomic performance. e global labour market sit- uation is also quite tight as em- ployers offer higher wages to old employees in an effort to retain them, as well as to new ones in hopes of attracting talent. is ac- tivity is one of the main concerns for the Fed as it interferes with companies' strategy in order to restrain demand and reduce price pressures through its policies. Officials say that in their effort to try and curb inflation, subse- quent job losses might occur. is is noticeable in certain markets and the possibility of recession- ary market conditions cannot be ignored, as Fed chair Jay Powell recently warned. However, officials have said that inflation can be curbed without devastating increases in unem- ployment due to the fact that employers may think twice about cutting their workforce given cur- rent labour shortages still linger- ing from 2020. All things considered, the no- ticeably aggressive rate-hiking cycle by the Fed has been consist- ent and an apt reaction to global events. e next Fed meeting, which will be held in November, will help paint a clearer picture of how difficult it will be to combat further global economic down- turns should they persist. is article was written by Shaun Frendo, Research Analyst at Calamatta Cuschieri. e article is issued by Calamatta Cuschieri Investment Services Ltd, which is licensed to conduct investment services business under the Investments Services Act by the MFSA and is also registered as a Tied Insurance Intermediary under the Insurance Distribution Act 2018. For more information visit https://cc.com.mt/. e information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. 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