This line was a familiar saying of our Dad’s who liked to “borrow” the title of the 1960- something satirical programme by David Frost (I had to google that!) to round up a busy or eventful week.

And this week really was a busy one:

We had the Dutch going to the polls -normally a run of the mill event but in view of the current populist fever this was seen as a potential litmus test for such sentiments. As it turned out, Europe got a reprieve as Prime Minister Mark Rutte was re-elected over populist contender Geert Wilders. In the meantime the Dutch government fought a diplomatic spat with Turkey. In the UK, Theresa May obtained assent to trigger Article 50, only to be overshadowed by Nicola Sturgeon’s declaration that Scotland will seek another referendum on independence. It would seem that Mrs May wants to give her Scottish counter-part short shrift and has tersely stated that “ now is not the time” for a Scottish referendum. In France, Marine Le Pen’s has received an inadvertent leg up from scandal ridden Francois Fillon who faces charges of embezzlement of funds as it emerged that Fillon has pocketed more than €880,000 in state funds for employing his wife and two of his five children in fake jobs. A poll released earlier this week saw Fillon out of the race in the first round of the two tiered presidential elections, taking only 20% of the vote vs Emanuel Macron’s 25% and Le Pen’s 27%. On Wednesday the US Federal Reserve, as largely expected, raised interest rates by .25% for only the third time since the financial crises. And rounding up the week, Angela Merkel meets Donald Trump in the White house today in – Reuters words it beautifully – “a clash of style and substance”.

However, when analysing events, most of us tend to be mainly concerned with the ones that hit closest to home. It is quite likely that with so many investors still have exposure to Sterling, the Brexit ruling is among the ones we are more concerned with. A natural consequence of the expected trigger of Article 50, begs the question:

What can we expect from Sterling when Article 50 is triggered?

Some analysts feel that the reality of Brexit has already been priced in.
In the immediate aftermath of the Brexit referendum, the pound slumped 17% against the Dollar and 16% against the Euro giving rising to gloomy predictions. But the economy has been surprisingly resilient and as Theresa May’s speeches signalled more clarity on Brexit, sterling has largely kept its footing. It has not fallen below $1.20 against the Dollar since January.

With Article 50 now set to be triggered by the end of the month, some of the more sanguine foreign exchange analysts expect the moment itself to have only a modest impact on sterling. Strategists at Morgan Stanley are amongst them as they feel that a lot of uncertainty about Brexit is now priced into Sterling. “We don’t think that triggering Article 50 will be a big event for the currency” they said while actually confirming their bullish position on the pound.

Nonetheless the actual invoking of Article 50 is still expected to elicit some reaction and it is not unreasonable to expect some weakening.

It really is a tightrope to walk as although sterling is considered cheap, which could present a buying opportunity for some, there are a number of unknown factors which need to be taken into consideration; particularly the progress of what will be two years of Brexit negotiations.

A currency strategist at Deutsche Bank, George Saravelos, is rather bearish about Sterling’s prospects forecasting that a pound will only be worth $1.06 by the end of the year. (it is currently worth around $1.23)

“We think people will realise it will be very, very difficult to conclude a deal within two years and the market will sell on the risk of no deal” he commented.

However, for now the market appears relatively confident about Sterling’s prospects during the two year Brexit negotiations. Forex analysts polled by Bloomberg expect the pound to strengthen to $1.24 by the end of 2017 and to $1.29 by the end of next year.

Apart from the protracted uncertainty over Brexit, it is likely that that sterling’s movements will be influenced by developments in other countries – the strengthening of the Eurozone economy and a more hawkish stance from the ECB could certainly lead to the pound’s weakening against the euro. Then of course there is the uncertainty about the outcome of the French election. It may sound improbable but where would you place your bets if Brexit gets a little brother in Frexit?

Local Market: MSE pauses for breath

The MSE continued were it left off last week, on a fairly subdued note. On the plus side, while last week only one equity closed in positive territory, this week we had three in the plus column. Nonetheless the majority –10 of the 19 equites which were active – ended the week lower with 6 unchanged on a total turnover value of just over €1.5million, on a virtual par with last week’s turnover. The MSE index slipped for the second week on the trot, 0.6% lower at 4715.17.

The MSE continued were it left off last week, on a fairly subdued note. On the plus side, while last week only one equity closed in positive territory, this week we had three in the plus column. Nonetheless the majority –10 of the 19 equites which were active – ended the week lower with 6 unchanged on a total turnover value of just over €1.5million, on a virtual par with last week’s turnover. The MSE index slipped for the second week on the trot, 0.6% lower at 4715.17.

Lombard Bank Malta plc was the top performer advancing 3.45% to a 13 month high of €2.40. In all, 23,471 shares traded for a market value of €55,361. Shareholders as at close of trading on 24 March 2017 will be eligible to receive a net dividend of €0.026 per share subject to shareholders’ approval during the Annual General Meeting to be held on 27 April 2017.

Santumas Shareholdings plc was a close second climbing 3.03% to an all -time high of €1.70. Volume however was thin with a mere 8,122 shares traded for a value of just under €14,000.

The only other positive performer was Maltapost plc which advanced 1.5% to €2.03. Here again, there was only a handful of trades for a market value of €14,724.

The losers’ side was a crowded place this week. The top position was occupied by Tigne Mall plc., down 3.45% (incredibly the top gainer and top loser shared the same percentage of 3.45) to €1.062 on turnover of almost 20,000 shares for a market value of €21,070.
Mapfre Middlesea plc and Plaza Centres plc shared second place both nursing a 1.83% loss with the former falling to €2.15 and the latter down to €1.07.
HSBC Bank Malta plc was next in line, giving up 1.44% to €2.05 on strong volume of 184,267 shares for a value of €376,822.

From the banking sector Fimbank plc (FIM) and Bank of Valletta plc (BOV) also lost ground this week.
The former gave up 1.11% to US$0.89. This week FIM announced their annual results for 2016 which showed a considerable turnaround: a pre-tax loss of US$12.04 million has been turned into a pre tax gain of US$4.75 million. Subject to regulatory approval, the Board is proposing a 1 for 80 bonus issue to shareholders on the register as at close of trading on 7 April 2017. The Bank will hold its AGM on 11 May 2017.
BOV eased 0.45% to Eur2.20 on turnover of nearly 200,000 shares for a value of €439,724
Trading in Corporate Bonds totalled €1.7 million spread over 186 deals. The 5% Dizz Finance plc Unsecured 2026 was the most active with 9 trades for a value of €208,950 closing at €105, followed by 4.8% Mediterranean Maritime Hub Finance plc Unsecured bond where turnover totalled €179,000. The 4.25 % GAP Group plc Secured 2023 remained very popular with 26 trades for a value of €174,478.

In Government Bonds turnover more than halved from last week’s €18.93 million to this week’s €8.6 million. The prices of most issues again came under pressure again. Inflation in the Eurozone area was confirmed at 2% year on year causing the yield on the German 10 year bund to climb (ie prices dropped). The longest dated MGS (2.4% MGS 2041) closed at €97 while the October 2016 issue of 2.1% MGS 2039 ended the week at €94.01 and the recently listed 2.2% MGS 2035 dropped to €98.4.