The Baltic Index would have been up even more if not for a correction in the five Estonian stocks on the List, which slid 2.53 percent to 113.10. The Tallinn Stock Exchange's TALSE index was also down last week, dropping 2.1 percent to 168.20. Most analysts don't exclude the possibility that Estonian blue-chips could continue to slide, as the market has "overheated."
Analysts believe most investors are now focusing on Latvian and Lithuanian stocks that are comparatively undervalued. The four Latvian stocks on the Baltic List posted the biggest gain this week, soaring 8.08 percent to 114.45.
The Riga Stock Exchange's indexes were up as well, but losses by illiquid stocks cut the gains. The cap-weighted DJRSE index gained 4.67 percent to 105.86, and the RICI index climbed 1.94 percent to 178.11.
The Lithuanian stocks quoted on the Baltic List jumped 7.46 percent last week to 116.16 percent. The Lithuanian bourse's indexes also posted gains. The official list LITIN index jumped 6.56 percent to 597.35. The LITIN-10 price index gained 2.48 percent to 125.92.
Turnover of Baltic List stocks jumped 1.5 times for the week, to 9.1 million euros ($8.8 mln). Trading in Estonian shares dominated as usual, accounting for 82.75 percent of the total. The Latvian stocks accounted for 10 percent and Lithuanian stocks 7.25 percent of the total. Trading in Baltic List stocks dominated on the Tallinn Stock Exchange, accounting for 83 percent of the total. In Latvia the figure was 81 percent and in Lithuania only 30 percent.
Market capitalization of the Baltic List stocks totaled 2.75 billion euros on March 3, almost unchanged for the week. Capitalization of Estonian shares totaled 2.17 million euros (-2.5%), Latvian shares 379 million euros (+8%) and Lithuanian shares 195 million euros (+9.5%).
Stocks posted gains on other markets last week. The smaller Russia's RTSi jumped nine percent to 190 points. New York's DJIA finally broke a slide and gained 5.12 percent, ending at 10,367. The Warsaw bourse was finally hit by a correction following several weeks on the bull, slipping 2.27 percent to 2,341.
Estonia: Price correction
Stock prices on the Tallinn bourse underwent a minor correction during the past week, affected by important releases of corporate and economic data, all of which proved weaker than expected. As a result, the TALSE index fell 2.10 percent to 168.20. The five Estonian stocks quoted on the Baltic List fell, posting a combined drop of 2.53 percent to 113.10 points. This was the steepest one-week loss by Estonian stocks since the Baltic List was launched at the beginning of the year.
Uhispank analyst Sven Kunsing said the market had waited the entire week in anticipation of release of last year's fourth quarter gross domestic product results. That figure, which according to provisional data released by the Statistical Office Friday morning, showed 1.9 percent growth, which was below market expectations. Analysts were looking for GDP growth to be from two to four percent. "But since a general economic recovery has taken place, the weaker figure wasn't taken very much to heart," Kunsing said.
"In the shorter perspective doubts about an overly positive development are growing," Kunsing said. "Therefore the prices of blue-chips could move a little lower." Kunsing said a five to 10 percent decline of most shares would be a welcome development which would, in the form of new investors, bring additional life to the market.
Kunsing said the wave of irrational exhuberance had taken its start at the beginning of December. Since that time shares of Telekom have risen by more than 50 percent, Uhispank has posted a rise of nearly 75 percent, and Hansapank has moved up by about 40 percent. "All this seems a bit exaggerated," he said. "Unfortunately the companies haven't shown phenomenal economic progress," Kunsing said. He pointed out that most of the important news recently has failed to meet the market's expectations.
Also short of expectations were Telekom's 1999 results, which showed a profit of 580 million kroons ($35.96 mln), while analysts had anticipated the figure to be close to 700 million. Telekom has not made a decision yet concerning the distribution of its profit.
More bad news to hit the market during the week was that the growth in the number of customers of Eesti Mobiiltelefon (Estonian Mobile Telephone), a subsidiary of Eesti Telekom, slowed in the fourth quarter. Telekom dropped two percent to close at 146 kroons.
On Tallinn stock exchange's main list all shares except for Merko Ehitus and Tallinna Kaubamaja moved lower. Several market participants say the blue chips have not much room left to rise, Kunsing said.
Uhispanks' bank analysts give a target price for Uhispank's shares at 38 kroons, and the recommendation is to "hold," the trader said. Uhispank closed at 34.70 kroons on Friday, down 0.86 percent from its close a week ago.
Shares in Hansapank fell 3.05 percent to 135 kroons.
Three shares on the supplementary list, Farmaatsiatehas, Kulmhoone and Klementi, made huge gains on small turnovers during the week. Farmaatsiatehas shot up 68.42 percent to 16 kroons, while Kulmhoone and Klementi added nearly 15 percent to close respectively at 22.50 and 6.90 kroons.
The total turnover on the exchange climbed 47.8 percent over the preceding week, to 142.47 million kroons. The biggest turnovers during the week were posted by Hansapank and Telekom respectively with 64.1 and 34.3 million kroons.
Kunsing also said some Estonian investors had turned their eyes to the south and were buying shares in Vilniaus Bankas and Unibanka.
Latvia: Blue-chips soar
Trading activity and share prices of most liquid shares jumped last week on the Riga Stock Exchange. The DJRSE cap-weighted index jumped 4.67 percent to 105.86, and the RICI price index climbed 1.94 percent to 178.11. The four Latvian blue-chips quoted on the Baltic List rose 8.08 percent to 114.45.
As with the Lithuanian stocks quoted on the Baltic List, the Latvian stock's prices in euros were positively affected by the slide in the euro versus the dollar. Latvian Gaze was unchanged in lats last week, but gained 2.6 percent in euro terms, to 3.45 euros.
Gains by Ventspils Nafta and Unibanka fueled the gains in the indexes. Ventspils Nafta gushed up 15.7 percent to 0.914 euros and Unibanka soared 8.04 percent to 3.087 euros.
The jump in share prices is likely due to a shift by investors from the Estonian market, which is comparatively overvalued. The spike in Ventspils Nafta's share price was also due to the announcment by the oil terminal that it plans major investments this year, as well as an increase in reloading volumes for February.
The future outlook for Unibanka's shares will become clearer after the shareholders meeting on March 7 when the dividend payment for 1999 is decided. If the proposal of 0.075 lats ($0.126) per share is confirmed, the share price could surge to two lats per share.
While most blue-chips gained, second list stocks suffered. Shares in Grindex and Olainfarm pharmaceutical companies, and Kaija fish cannery, plunged between seven and nine percent.
Daugavpils PKR had the dubious distinction of posting the sharpest drop, slumping 16.7 percent to 0.10 lats.
Turnover on the bourse totaled 690,00 lats last week, almost double the turnover of the week before. Shares in Unibanka accounted for half of the turnover. Baltic List shares accounted for 81 percent of total Latvian markets turnover.
Lithuania: Vilniaus Bankas continues to dominate
Trading in Vilniaus Bankas' shares continued to dominate the Lithuanian bourse last week, accounting for over a quarter of share turnover and once again breaking the 30 litas ($7.50) ceiling. The official list LITIN index jumped 6.56 percent to 567.35, with the broader LITIN-10 climbing 2.48 percent to 1215.92. The current list LITIN-A index was up 0.29 percent to 1097.29. The four stocks quoted on the Baltic List posted the strongest gain, up 7.46 percent to 116.16 points, moving into the top slot among the Baltics.
The Baltic List stocks posted strong gains in euros thanks to the fall in the euro against the dollar, to which the litas is pegged. Utenos Trikotazas was unchanged in litas last week, but climbed 2.38 percent in euros to 0.793 euros.
Shares in Vilniaus Bankas generated a turnover of 2.4 million litas, soaring 8.6 percent to 31.5 litas. This is the highest the stock has been since November 30, 1998; when it commanded 31.35 litas. "Right now it's difficult to say whether the stock can hold above 30 litas or will slip a little below that level, but it is clear the market is re-establishing itself a little," said Finasta broker Aurelijus Rimkus.
Shares in Rokiskio Suris dairy jumped 8.57 percent to 6.063 euros on a turnover of 292,000 litas. "The shares are showing the first signs of a coming rally," said Hansabankas broker Tomas Andrejauskas.
Of shares not quoted on the Baltic List, a rally in Birzai Dairy's share price on speculation of as yet unfinished talks with a potential strategic investor was notable. Shares in the dairy shot up 20.88 percent to 1.10 litas under speculative momentum.
Shares in the Mazeikiai Nafta refinery and oil terminal concern climbed 2.41 percent last week to 0.85 litas on a turnover of 198,800 litas.
Most analysts are positive about the future. "The prognoses of an enlivening of the market driven by Vilniaus Bankas are coming true - investors are sinking money earned on Vilniaus Bankas into other stocks," said Rimkus. Share turnover on the bourse totaled 9 million litas. Baltic List shares accounted for 30 percent of the total.
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