Baltic stock markets experience decline for the year so far

The Baltic stock markets are having a tough time of it, as most of the market indicators show declines for the first half of the year.

The declines manifested themselves as increasingly low activity on the stock exchanges. In the first six months of 1999 the turnover fell by nearly three times in Estonia and almost double in Latvia.

This year blue chip prices are up only in Estonia, with considerable drops in Latvia.

The Latvian stock market has the worst results among the three Baltic markets, when looking at absolute indicators. Pegging the total turnover and capitalization of the Baltic stock markets at 100 percent, Latvia's share is just 7 percent of turnover and 12 percent of capitalization. For Estonia it is 48 percent and 53 percent respectively, and for Lithuania, 45 percent and 35 percent, respectively.

I. Price movement on the Baltic stock markets

In the first half of this year stock prices climbed only in Estonia. In the first six months, the TALSE index grew by nearly 20 percent to 109.63 points. It has to be said that in May and June of this year the Tallinn stock exchange reported a downward trend.

Latvia was definitely an outsider on the markets. In six months both stock exchange indexes dropped by 11 percent to 14 percent, while Lithuania reported a minor decline in blue chips by one percent to four percent.

II. Turnover on the Baltic stock markets

The analysis of stock exchange turnover in the first half of 1998 and 1999 shows that among the Baltic states only Lithuania was able to report increased activity on the market. The average daily turnover at the Lithuanian bourse grew by 43 percent compared to the same period last year, with volume jumping to $1.3 million.

It should be pointed out, though, that controlling stakes in large companies acquired through the stock exchange accounted for turnover growth in Lithuania. Most of such transactions were made in late April. If we disregard those deals, it can be said that this year the turnover on the Lithuanian stock exchange remained roughly the same as last year.

At the same time it should be recognized that the said Lithuanian indicators did not take into account the transactions with T-bills, which constitute most of the turnover on the Vilnius bourse.

The Tallinn stock exchange reported the greatest decline in turnover. In six months this year the daily turnover was just $1.43 million, a fall of 73 percent over the same period in 1998.

The average daily turnover at the Riga stock exchange shrank by nearly half this year to a lethargic $221,000. By absolute indicators the turnover on the Riga bourse in the first half of this year was one-sixth to one- seventh that of the Lithuanian and Estonian bourses.

III. Market capitalization up only in Estonia

The Estonian market realized a significant increase in its market capitalization due to the Eesti Telecom telecommunications company's share flotation on the market, as well as from the increase of its listed stock prices.

In Latvia and Lithuania market capitalization has remained virtually unchanged over the year.

In Latvia falling stock prices actually nullified all capitalization growth that was realized by the listing of major companies, such as Latvijas Gaze and Ventspils Nafta.