Political crisis impacts investor sentiment towards capital market

The Maltese capital market has been negatively impacted by the political developments that erupted in the past few weeks. The MSE Equity Price Index, which measures the performance of the shares quoted on the Official List of the Malta Stock Exchange, had advanced by 7.2 per cent until the first week of November after reaching the highest level in over 11 years on September 30. However, as the political landscape began to change and new revelations unfolded almost on a daily basis, the index eased while volumes plunged reflecting the immediate reaction by the investing public as investor sentiment was impacted. In fact, over recent weeks, the MSE Equity Price Index shed 4.7 per cent thereby reducing this year’s gain to a mere 2.3 per cent. The impact on investor sentiment is also very evident from the trading volumes across the equity market. Until the first week of November, the average weekly volume across the equity market amounted to just under €1.9 million and this shrank to under €1.1 million in recent weeks reflecting the immediate impact from the worrying political developments that unfolded. While not all movements across the equity market may be directly attributable...