Russia and Saudi Arabia have been fighting over oil market share after their three-year agreement to hold back production collapsed this month.  At this time of reduced global demand amid the spread of the coronavirus their pumping of crude oil flat out pushed crude prices to near 20 year lows this week.  Oil prices dropped for a third session on Wednesday with US crude futures dropping to a 17-year low as travel and social lockdowns lowered demand outlook amid the coronavirus.  The last time oil was trading that low was when the US had invaded Iraq and China had only begun to rise as a major global economic power and boosted the world’s oil consumption to record highs in subsequent years.  Brent crude was trading 95 cents or 3.31 percent at $27.78 a barrel, after dropping to $27.76, its lowest since early 2016.  The effect on demand is starting to show in the official statistics with Japan’s trade bureau stating on Wednesday that crude imports in February dropped 9 percent over that of a year earlier.  Meanwhile, Iraq’s oil minister pleaded for an emergency meeting between member of the Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC producers to discuss imminent actions to support the market. Meanwhile, the Kremlin on Wednesday said that Russia would like to see the oil price higher than current levels.  On Thursday US President said that he would get involved in oil price war between Saudi Arabia and Russia at the appropriate time, stating that low gasoline prices were good for US consumers even as they were hurting the industry. As aid poured in in the global economy to stop the impact of the recession from the coronavirus, oil prices rose on Friday.

Market Wrap

On Monday Southern European bond yields jumped to multi-year highs as investors fled from more riskier assets after a second rate cut by the US Federal Reserve and Coordinated central bank action to address the impact of the virus. Southern European Bond markets that are often referred to as the ‘periphery’ are the most indebted in the eurozone.   Spain went into partial lockdown on Saturday as part of a 15-day state of emergency.  In France non-essential venues were closed.  Spanish and Portuguese 10-year bond yields rose to nine-and-a half month highs at 0.76 percent and 0.95 percent respectively, up around 15 bps on the day.  On Tuesday the main US Stock Indexes opened higher a day after their biggest drop since the 1987 crash, as business sentiment was dampened.  The Dow Jones Industrial Average rose 1.48 percent to open at 20,487.05, while the S&P 500 opened higher by 1.66 percent at 2,425.66.  Meanwhile the NASDAQ Composite Index gained 2.42 percent. Also, on Tuesday Germany’s benchmark 10-year Bund yield rose to a one-month high on growing expectations of higher government spending to combat the effects of the coronavirus epidemic.  Meanwhile, borrowing costs in France and Spain hit their highest since last May. Germany’s Economy Minister Peter Altamier said on Monday that Germany is ready to take on new debt if necessary, to cushion the impact of the virus.  This indicates that Berlin is willing to end its domestically cherished policy of keeping its budget balanced.  Germany’s 10-year yield rose to one-month high at -0.38 percent while the French 10-year bond yields rose to 0.32, their highest level since May last year.  That of Spain was up above the 1 percent mark for the first time since last May and that of Portuguese 10-year bond yields held above the 1 percent for a second straight day.  Italian yields reversed their early falls and were broadly higher on the day as volatility continued to mark bond market trading.  According to analysts, selling in the US and European bond markets has increased as investors sold big, liquid assets they hold to make up for the losses on other markets.  Boeing Co gained 2.6 percent after the plane maker said it was in talks with senior White House officials and congressional leaders about short term assistance for the entire US Aviation sector.  Other airlines such as United Airlines, Southwest Airlines and Delta Air Lines also rose more than 1.4 percent.  Meanwhile in the healthcare sector stocks such as Pfizer Inc gained 3.4 percent after the drug maker signed a deal with Germany to co-develop a potential coronavirus vaccine.  Regeneron Pharmaceuticals climbed 10.5 Percent after the company said it identified antibodies to potentially treat COVID-19.  On Wednesday European shares tumbled amid fears of the relentless spread of the coronavirus that has overshadowed stimulus measures to support business and contain the damage from the pandemic.  The pan-European STOXX was down 2.2 percent remaining at their near seven-year lows, with Bourses in London and Germany leading the declines.  European shares have lost more than 30 percent since hitting a record high mid-February as some countries in the EU imposed national lockdown to stop the spread of the COVID-19.  After dramatic monetary policy easing by some of the world’s biggest central banks earlier in the week, US President Donald Trump pressed on Tuesday for a $1 trillion stimulus package, while many other governments looked to fiscal stimulus.  While equities in Europe closed higher on Tuesday  after a huge stimulus package from Spain, optimism faded again on Wednesday amid pressure selling of traditional safe-haven assets by battered investors. Panic selling pushed the 10-year Italian bond yields above 3 percent on Wednesday raising concerns about the sustainability of its debt, before ECB purchase pushed it back to around 2.3 percent.   Also, on Wednesday European shares marked their worst close in nearly seven years as the recent stimulus measures failed to placate investors seeking to exit equities.  On Thursday US stocks managed to post gains as policymakers around the world engaged in further emergency actions to try to help financial markets cope with the economic damage arising from the pandemic.  The NASDAQ outperformed other major indexes by ending 2.3 percent higher fuelled by gains in Amazon, Microsoft and Facebook.  Meanwhile European shares ended higher on Thursday after more emergency stimulus from the Bank of England, although questions remained over as to whether it will be enough to dampen the economic shock from the pandemic.  On Friday Asian shares made a partial comeback from the global rout on Friday, while bonds rallied, and oil extended its gains.  European shares were set for similar gains.


On Monday the FED in a severe move cut interest rates to near zero and pledged hundreds of billions of dollars in asset purchases sending the S&P 500 to late 2008 lows, marking its third biggest daily percentage drop on record, beaten by the 1987 rout and the Great Depression crash.  Meanwhile, in the US, eight largest US banks said they would jointly access funding from the Federal Reserve’s so called “discount window.”  Meanwhile on Thursday the Federal Reserve opened swap lines with central banks in nine new countries to ensure the world’s dollar-dependent financial system continued to function.


The European Central Bank launched 750-billion-euro emergency bond purchase scheme in a move to help the eurozone economy from the rout arising from the pandemic.  As most of Europe is in lockdown economic activity has practically come to a near standstill and markets have been in a tailspin.  In order to bring down borrowing costs for indebted countries such as Italy, the ECB has launched a new dedicated bond purchase scheme bringing its planned purchases for this year to 1.1 trillion euro.  The new agreed purchases alone are worth 6 percent of the euro area’s GDP.  The bond purchases shall continue until the “crisis phase” of the epidemic is over and non-financial commercial paper will also be included for the first time among eligible assets, said the ECB.  This time round the purchases will include for the first time debt from Greece which has been shut out of the ECB buys because of its low credit rating.  The ECB has left its minus 0.5 percent deposit rate unchanged just as it did last Thursday, a sign that policymakers may now see a further cut doing more harm than good.

The Bank Of England

Banks borrowed more than $15 billion from the Bank of England’s US Dollar repo operations on Wednesday, which is the largest sum since the financial crisis.  The BOE said it lent $8.210 billion of seven-day funds in its usual weekly dollar repo operation, and $ 7.245 billion in a new operation for 84-day funds which forms part of the new liquidity measures as announced with other central banks. On Thursday the Bank of England cut interest rates to 0.1 percent from 0.25 percent at an emergency meeting and ramped up its bond-buying programme by 200 billion pounds to a total of 645 billion pounds in its latest attempt to shield the economy from the coronavirus outbreak.


France will mobilise EUR 45 billion in crisis measures for its companies with the economy expected to contract 1 percent this year, said on Tuesday Finance Minister Bruno Le Maire.

Bank Of Japan

Bank of Japan on Tuesday made its largest injection of dollar funds since 2008 and South Korea also pledged to act soon as major central and commercial banks joined forces to reduce shortages of US Dollar financing in global markets.   The move came along from banks and companies rushing to secure their dollar cash piles amid growing fears of a blow up to their business from the crisis of the coronavirus.  The Bank of Japan conducted an 84-day dollar funding operation, its first after global central banks agreed this week to offer three-month dollar credit to ease funding constraints.  On Thursday the Bank of Japan bought 200.4 billion yen ($1.84 billion) of Japan stock exchange traded Funds (ETFs), data from the central bank showed, a record amount as the rout in global stock market intensified.

Currency Roundup

On Monday the dollar stabilised after an initial fall following the actions of the FED, however, traders sought safety in the Japanese yen despite the efforts undertaken by major central banks to relieve the dollar shortage and provide extra liquidity.  On Tuesday sterling dropped to its lowest level against the US Dollar since early September as Britain toughened its approach to containing the coronavirus outbreak.  Fears from the pandemic sent investors fleeing to assets seen as relative safe havens, including the dollar.  Meanwhile, analysts are stating that the sterling is vulnerable given the Britain’s high current account deficit.  Against the euro, sterling dropped as much at $1.2192 on Tuesday whilst against the euro it edged up to 0.2 percent to 91.06 pence per euro.  On Monday British Prime Minister Boris Johnson tightened restrictions and placed restrictions on social life in the country.   The dollar extended its gains on Wednesday and hit new multi-year highs against both the Australian and New Zealand dollars, as companies and investors were worried and rushed to the world’s liquid currency.  The Norwegian crown hit a new record low of $10.4564 reflecting the stress worldwide.  The Australian dollar sunk to a fresh 17-year low of $0.59215 on Wednesday.  Only the perceived safe-haven currencies managed to hold their ground against the strengthening greenback with the yen rising around 0.2 percent to 107.42.  The Swiss franc also increased by a similar magnitude to $0.9598 francs.  On Thursday sterling rebounded against the dollar and the euro after the Bank of England cut the interest rate to 0.1 percent helping support the pound after sinking to its lowest level since 1985 versus the dollar, as investors rushed to hold the latter.  The British Central bank also ramped up its bond buying programme so as to shield the British economy from the pandemic.  Sterling has fallen around 12 percent against the dollar over eight days of trading hitting a low of $1.1450 on Wednesday.  The package by the BOE on Thursday helped the pound to claw back some of its losses, however, it quickly lost momentum and was up just a quarter of a percent on the day at nearly $1.17.

Malta – Harmonised Index Of Consumer Prices – February 2020

In February 2020, the annual rate of inflation as measured by the Harmonised Index of Consumer Prices (HICP) was 1.1 percent, down from 1.4 percent in January 2020.  The largest upward impact on annual inflation was measured in the Food and Non-alcoholic Beverages Index, while the largest downward impact was recorded in the Clothing and Footwear Index.

Malta:  International Investment Position of Malta – 2019

When compared to 2018, total foreign assets increased by EUR 7.5 billion in 2019, while total foreign liabilities went up by EUR 7 billion, resulting in an overall increase in the net international investment Position (IIP) of EUR 0.5 billion.  The level of Malta’s total foreign assets abroad, amounted to EUR 255.2 billion as at the end of 2019.  Portfolio investment accounted for 47.3 per cent while Direct Investment represented 28.8 percent of total foreign assets.  The increase in Malta’s foreign assets was driven mainly by a EUR 5.2 billion increase in Portfolio investment and a EUR 3.2 billion increase in Other Investment.  As at the end of 2019, the Maltese economy recorded a net International Investment Position of EUR 8.3 billion and Malta’s foreign liabilities were recorded at EUR 246.9 billion.

Malta:   Mini-Budget Announced To Combat COVID-19

A mini Budget has been announced in light of the Coronavirus’s impact on the Maltese economy.  The measures did not go through Parliament but will come into effect from Monday 23rd March.  The package was announced by Prime Minister Robert Abela and amounts to EUR 1.8 billion mainly in tax deferrals and loan guarantees.  This financial package amounts to about 13 percent of GDP and EUR 3,600 per person. The Deadlines for payments which are due by employers and self-employed for Income Tax, VAT and social Security and maternity fund contributions for the month of March and April will be postponed.  This is expected to cost the Government between EUR 400 million and EUR 700 million.  There will also be a direct capital injection of 1.5 percent of GDP (EUR210 million) in the Maltese economy.  Up to EUR 900 million will be used in government guarantees for soft loans, or temporary moratoriums on personal and business loans.  The latter will give companies if taken all access to credit and additional liquidity amounting to EUR 4.7 billion.  Meanwhile, EUR 35 million has been allocated to the health sector to combat COVID-19.  This is however subject to review.

With regards to mandatory Quarantine leave of 14 days, the government is giving EUR 350 per employee.  In Malta there are circa 12,000 families with children with both parents working in the private sector.  If both parents are unable to do telework an additional 2 months leave for the parent who needs to stay at home because of their children amid school shutdown is given and with an EUR 800 per month benefit.

For companies that had to suspend their operations such as providers of accommodation, food and beverage, language schools and entertainment venues, the government is covering for 2 days of employee salary also capped at EUR 800 per month.  For the self-employed suffering a complete suspension of operations, the government is covering 3 days where the self-employed employ others.  Those companies that did not close but whose revenue has dropped by at least 25 percent the government will cover 1 day of employee salary per week which is also capped at EUR 800 per month.  The self-employed whose operations decreased by at least 25 percent, are being covered for 1 day of employee salary per week at a maximum salary of EUR 800 per month.  This would increase to 2 days in the case of self-employed individuals who employ others.

Those people who ended without work since the 9th March 2020 will receive a special unemployment benefit of EUR 800 per month.  People with disability who had to stay home or those who had to stop working because of health concerns will also receive a temporary benefit capped at EUR 800 per month.

Those who rent and did not qualify for the rent subsidy before, and where one dependent has his/her employment terminated will now qualify for the subsidies.  Meanwhile, those who rent and previously benefited from the government subsidies will be eligible for an increased subsidy should one dependent have his/her employment terminated.

Meanwhile, with regards to foreign workers, when a company makes an employee redundant, the employer cannot apply for a work permit for a third country national.  Also, with immediate effect Malta will not accept applications for work for third country nationals (only exceptions will be made for highly skilled workers).  Jobsplus will help Maltese, EU and third country nationals who end up redundant to find alternative employment and to answer queries.

Antonella Mercieca

Client Relationship Manager


Reuters, https://nso.gov.mt


March 20th, 2020

‘Disclaimer: The information provided on this website is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning investments or investment decisions, or tax or legal advice. Similarly, any views or options expressed on this website are not intended and should not be construed as being investment, tax or legal advice or recommendations. Investment advice should always be based on the circumstances of the person to whom it is directed, which circumstances have not been taken into consideration by the persons expressing the views or opinions appearing on this website. Timberland Finance has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website. You should always take professional investment advice in connection with, or independently research and verify, any information that you find or views or opinions which you read on our website and wish to rely upon, whether for the purpose of making an investment decision or otherwise. Timberland Finance does not accept liability for losses suffered by persons as a result of information, views of opinions appearing on this website. This website is owned and operated by Timberland Invest Ltd.’

Timberland Finance,
Aragon House Business Centre,
Dragonara Road,
St Julian’s, STJ 3140,