Issue link: https://maltatoday.uberflip.com/i/453115
maltatoday, WEDNESDAY, 28 JANUARY 2015 12 Business Today Money Market Report for the week ending January 23, 2015 ECB decisions On Thursday, January 22, the Governing Council of the European Central Bank (ECB) decided that the interest rate on the main refinancing operations (MRO), the marginal lending facility and the deposit facility will remain unchanged at 0.05%, 0.30% and -0.20% respectively. Also on Thursday, January 22, the Governing Council of the ECB decided that the interest rate on the remaining six targeted longer-term refinancing operations (TLTRO) would be equal to the rate on the Eurosystem's MROs prevailing at the time when each TLTRO is conducted. As a result of this decision, the 10 basis point spread over the MRO rate which had been applied to the first two TLTROs has been eliminated for the forthcoming TLTROs to be conducted between March 2015 and June 2016. Furthermore, on Thursday, January 22, the Governing Council of the ECB announced an expanded asset purchase programme to fulfil the ECB's price stability mandate. The programme will now see the ECB add the purchase of sovereign bonds to its existing private sector asset purchase programmes to address the risks of a too prolonged period of low inflation. It will also encompass the asset-backed securities purchase programme and the covered bond purchase programme, which were both launched late last year. Combined monthly purchases will amount to €60.00 billion, which are planned to be carried out until at least September 2016 and in any case until the Governing Council sees a sustained adjustment in the path of inflation that is consistent with its aim of achieving inflation rates below, but close to, 2% over the medium term. ECB Monetary Operations On Monday, January 19, the ECB announced its weekly MRO. The auction was conducted on Tuesday, January 20, and attracted bids from euro area eligible counterparties of €125.26 billion, €11.27 billion higher than the bid amount of the previous week. The amount was allotted in full at a fixed rate equivalent to the prevailing MRO rate of 0.05%, in accordance with current ECB policy. On Wednesday, January 21, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This operation was carried out at a fixed rate of 0.63% and did not attract bids from euro area eligible counterparties. Domestic Treasury Bill Market In the domestic primary market for Treasury bills, the Treasury invited tenders for 28-day and 91-day bills maturing on February 20 and April 24, 2015, respectively. Bids of €7.00 million were submitted for the 28-day bills, with the Treasury accepting €2.10 million, while bids of €41.00 million were submitted for the 91-day bills, with the Treasury accepting €13.00 million. Since €2.00 million worth of bills matured during the week, the outstanding balance of Treasury bills increased by €13.10 million, to stand at €198.54 million. The yield from the 28-day bill auction was 0.020%, i.e. 0.5 basis point higher than on bills with a similar tenor issued on January 9, 2015, representing a bid price of 99.9984 per 100 nominal. The yield from the 91-day bill auction was 0.023%, i.e. 0.2 basis point lower than on bills with a similar tenor issued on January 16, 2015, representing a bid price of 99.9942 per 100 nominal. During the week under review, there was no trading on the Malta Stock Exchange. On Tuesday the Treasury invited tenders for 28-day and 90-day bills maturing on February 27 and April 30, 2015, respectively. Regular market closed – 27/01/2015 Symbol Code Volume Traded Value Traded Trades High Price Low Price Open Price Close Price Change Twap l 6PM 2000 1400.000 1 0.700 0.700 0.700 0.700 0.000 0.700 s BOV 45528 93673.820 20 2.079 2.052 2.052 2.070 0.010 2.057 s GO 28616 74174.790 10 2.600 2.570 2.570 2.600 0.005 2.592 t HSB 23084 46629.680 3 2.020 2.020 2.020 2.020 -0.010 2.020 t IHI 13300 8362.000 3 0.640 0.625 0.640 0.640 -0.010 0.629 s LOM 26831 49621.750 6 1.850 1.845 1.845 1.850 0.020 1.849 l MIA 2800 6860.000 2 2.450 2.450 2.450 2.450 0.000 2.450 s MLT 1000 670.000 1 0.670 0.670 0.670 0.670 0.018 0.670 s MTP 4271 5552.300 1 1.300 1.300 1.300 1.300 0.040 1.300 s TML 245000 159250.000 2 0.650 0.650 0.650 0.650 0.034 0.650 t G15A 1270824 1297892.550 4 102.130 102.130 102.130 102.130 -0.050 102.130 t G15B 11678 12141.610 2 103.970 103.970 103.970 103.970 -0.020 103.970 t G15F 1000000 1029850.000 2 102.990 102.980 102.990 102.980 -0.050 102.990 t G16A 11647 12513.540 1 107.440 107.440 107.440 107.440 -0.040 107.440 t G17C 35000 38696.000 3 110.560 110.560 110.560 110.560 -0.030 110.560 t G20B 7000 8309.700 1 118.710 118.710 118.710 118.710 -0.130 118.710 s G21A 63880 79613.640 5 124.630 124.630 124.630 124.630 0.080 124.630 s G22B 18300 22269.270 3 121.690 121.690 121.690 121.690 0.220 121.690 s G24A 15000 17400.000 1 116.000 116.000 116.000 116.000 0.240 116.000 s G28A 86800 114154.400 4 131.720 131.000 131.000 131.720 0.740 131.510 s G28B 336100 430717.950 14 128.160 128.150 128.150 128.150 0.740 128.150 s G29A 15400 20811.600 2 135.180 135.000 135.000 135.180 0.860 135.140 s G30A 131200 179264.120 9 136.930 136.040 136.040 136.930 0.930 136.630 s G31A 161000 218369.520 9 135.720 135.000 135.000 135.720 0.990 135.630 s G32A 51800 66024.280 4 127.460 127.460 127.460 127.460 0.910 127.460 s G32B 92900 115679.070 7 124.530 123.600 123.600 124.530 0.930 124.520 s G33A 269700 327915.250 17 121.590 121.000 121.000 121.590 0.930 121.590 s G34A 555000 659879.100 25 119.100 118.000 118.000 119.000 1.180 118.900 s BV18A 5000 5300.000 1 106.000 106.000 106.000 106.000 0.490 106.000 l BV20A 17600 18656.000 2 106.000 106.000 106.000 106.000 0.000 106.000 t HB17A 6830 7171.270 2 105.000 104.990 104.990 105.000 -0.200 105.000 t HM24A 38600 39989.700 6 103.950 103.500 103.950 103.500 -0.450 103.600 t IG24A 67800 69984.000 7 104.500 103.000 104.500 103.000 -1.500 103.220 t MB24A 100000 106250.000 5 106.500 106.000 106.000 106.500 -0.030 106.250 s MD18A 155500 167197.700 6 107.540 107.000 107.000 107.540 0.540 107.520 t MI17A 31000 27900.000 4 90.000 90.000 90.000 90.000 -6.000 90.000 s MS23A 17600 19261.000 6 110.000 108.750 108.750 110.000 0.250 109.440 s PG20A 5500 5937.000 2 108.000 107.900 107.900 108.000 0.500 107.950 t PG22A 10000 10600.000 1 106.000 106.000 106.000 106.000 -0.500 106.000 s PT24A 135000 142911.080 10 106.000 105.500 105.500 106.000 0.500 105.860 s UF23A 50000 52500.000 1 105.000 105.000 105.000 105.000 0.500 105.000 Market Summary as at January 27, 2015 Equity Official List Session State ................................................................... closed Number of trades ............................................................. 215 Volume Traded ................................................................. 5,166,089 Value of € denominated securities .................................... 5,769,953.69 Value of US$ denominated securities ................................ 0.00 Value of GBP£ denominated securities .............................. 1,400 Current Index ................................................................... 3426.744 Previous Index ................................................................. 3426.717 Change in Index (%) ......................................................... -0.001% 6pm Holdings plc ........................... 0.700 0.00% Malta International Airport plc ........ 2.450 0.00% Bank of Valletta plc ......................... 2.070 0.49% MaltaPost plc .................................. 1.300 3.17% Crimsonwing plc ............................ 0.850 0.00% Medserv plc ................................... 1.470 0.00% FIMBank plc ................................... 0.570 0.00% Middlesea Insurance plc ................. 0.990 0.00% GlobalCapital plc ............................ 0.800 0.00% MIDI plc ......................................... 0.230 0.00% GO plc ............................................ 2.600 0.19% Plaza Centres plc ............................ 0.686 0.00% Grand Harbour Marina plc .............. 1.820 0.00% RS2 Software plc............................. 2.974 0.00% HSBC Bank Malta plc ...................... 2.020 -0.49% Simonds Farsons Cisk plc ................ 3.090 0.00% International Hotel Investments plc 0.640 -1.54% Tigné Mall plc ................................. 0.650 5.52% Island Hotels Group Holdings plc .... 0.990 0.00% Pefaco International plc .................. 2.190 0.00% Lombard Bank Malta plc ................. 1.850 1.09% Santumas Shareholdings plc .......... 2.000 0.00% Market commentary: Politics over economics As we progress through the week, so far the macro arena has been characterised by politics over eco- nomics. Noise keeps on coming out of Greece after Syriza's victory this weekend, yet its effect on the mar- ket at large has been subdued. The Syriza party had mentioned many times that they want to renegotiate their debt restructuring. Yesterday, European finance ministers met in Brussels and the evening news was characterized by respective finance ministers having their say of what they think should be done and what in their opinion is fair. Whilst Greek markets closed lower on Monday, the major European stock markets closed higher. Yields on the Greek paper climbed whilst elsewhere edged lower. The latter may be explained by a number of factors. Fears that a Greek exit from the Eurozone will affect the market have been subdued. Firstly because despite the Syriza victory, analysts believe that Greece will remain in the Eurozone and there is commitment to keep the nation within the euro group. Secondly, because if a Greek exit had to happen, its effect will somehow be contained. After Draghi announced a full blown QE last Thursday, yesterday he appealed again to euro zone ministers for acceleration of structural reforms. Draghi had vividly stressed over the course of last year that whilst QE will help to fight deflation, long term growth is dependent on structural reforms. Over in Russia, for the first time in 10 years, the super power has been cut to Junk Status. This had been expected, yet the Ruble sold off. Furthermore, President Obama threatened to renew sanctions on Russia, as violence continued in Ukraine over the weekend. Yesterday was a relatively quiet day for data, with the only two important figures being the Spanish PPI and the latest German IFO confidence index. The Spanish PPI came in lower than expected whilst the German IFO printed above analyst expectations. Today, we will await UK GDP figures for the 4th quarter. Out of the US we will await the December Durable goods orders and PMIs for the month of January. The market will also be looking to receive house price data out of the US. Pfizer, Caterpillar, P&G, AT&T and Apple all report today. Analysts have an average 12 month price target of $124.12 on Apple. As at yesterday's close it was trading at the $113.10 level. This article was issued by Darin Pace, Treasury Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, view and opinions provided in this article is 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. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website. Hailing his electoral victory - Alexis Tsipras