Baltic Index strength tempered by euro jump

Investors last week enjoyed large gains by blue-chip stocks such as Latvia's Ventspils Nafta, Estonia's Norma and Lithuania's Lietuvos Telekomas, though a weakening dollar exchange rate counter-balanced the Baltic Index rise, when calculated in terms of the euro. The euro climbed 3 to 4 percent against Latvian and Lithuanian national currencies. As a result, the Baltic Index comprising 15 Latvian, Lithuanian and Estonian blue-chips finished 0.36 percent lower, at 129.63.

Latvian industry contributed the most to the Index's growth. Even in euros, Ventspils Nafta's shares gained 19.9 percent, to 1.66 euros ($1.43). Latvian stocks listed on the Baltic List have been on a tear, having already risen by 65.7 percent since the beginning of the year, and certainly deserve the attention of international investors.

Total Baltic List turnover for the week was 11.27 million euros, including 6.14 million euros, or 55 percent, dominated by trading in Estonian shares. Latvian stocks accounted for 39 percent, or 4.4 million euros, and Lithuanian stocks for 6.5 percent, or 0.72 million euros, of the weekly Baltic List turnover. In all three Baltic states the Baltic List stocks accounted for between 60 and 80 percent of the total turnover on their respective home bourses.

Due to the gains posted by Ventspils Nafta and Lietuvos Telekomas, Baltic List capitalization was up 0.6 percent, to 3.20 billion euros. As of Nov. 3, capitalization of Estonian Baltic List stocks was 1.81 billion euros (-0.3 percent), for Latvian stocks it was 611 million euros (+5.9 percent) and for Lithuanian stocks 777 million euros (+0.5 percent).

Estonian bourse expects benefit from reinvestment of proceeds after sale of Latvijas Unibanka and Vilniaus Bankas

The Estonian stock market was propped up in the outgoing week as investors reinvested their profits from Swedish SEB's open market purchases of shares in Latvia's Unibanka and Lithuanian Vilniaus Bankas, while activity in EVP privatization vouchers as well attempted to grab center stage. The TALSE index ended the week at 141.26, down by a tiny 0.21 percent from the previous Friday amid trade worth 122.2 million kroons ($6.73 million).

"The market became more active thanks to reinvestment of money from the sale of Latvijas Unibanka and Vilniaus Bankas shares," Trigon Securities broker Kristel Kivinurm said. In her estimation, the rising trend will continue through the coming weeks, with additional funds released as a result of SEB's offer. "Investors unloading Unibanka and Vilniaus Bankas shares this week and over the next couple of weeks will be taking up positions in other securities on the Baltic market," the broker said. In her opinion, Hansapank, Eesti Telekom and Norma will see this money flow.

Of the less liquid shares, Viisnurk, Merko Ehitus, Saku Olletehas and Baltika will attract attention, Kivinurm predicted. These shares were among gainers this week as well. "On the whole, the money that is being released must support the Estonian market in the next two weeks," Kivinurm hopes.

Norma led the market last week, up 9.42 percent to a new all-time record of 51.10 kroons on turnover of 19.26 million kroons. Hansapank, the week's most-traded share on turnover of 38 million kroons, posted gains of 1.67 percent, closing at 137 kroons. Telekom meanwhile dropped 1.79 percent to 95.75 kroons amid volume worth 23.8 million kroons.

EVP privatization vouchers moved from strength to strength, hitting an all-time record of 0.735 kroons Thursday. On Friday, the Compensation Fund council decided to issue bonds in the amount of 20 million kroons, at 141 EVPs per bond. Kivinurm said this means that the voucher price will stabilize in the coming weeks at 0.71-0.72 kroons. EVP vouchers ended Friday at 0.72 kroons. The voucher's turnover during the week stood at 17.8 million kroons.

Ventspils Nafta leads upward trend on Latvian market

Ventspils Nafta oil terminal's shares attracted the most interest on the Riga Stock Exchange. The stock grew steadily, pushing up all stock exchange indexes. Dow Jones Riga Stock Exchange capitalization index (DJRSE) climbed 5.23 percent to 143.39, and for the first time in 20 weeks, not only catching up with the Estonian TALSE index (141.26 points) but even outpacing it. Price index RICI also moved upwards, gaining 2.3 percent to 180.68.

Ventspils Nafta's shares rocketed up 22 percent last week, from 0.73 to 0.89 lats ($1.43) per share. It is clear that the stock has become increasingly attractive for investors for several reasons, especially after the Latvian state has lost effective control over the company. This was demonstrated at the last shareholders meeting, where the state's opinion was generally disregarded in corporate strategic decision-making. It cannot be ruled out that the largest shareholder - LNT - is trying to increase its holdings in the oil terminal. Further, when Latvijas Unibanka's shares become delisted, Ventspils Nafta will remain among the two or three relatively liquid stocks on the exchange, a condition that is likely to remain attractive to investors.

Considering that Latvijas Unibanka's shares produce average weekly trading volume of about 2.0 million lats, compared to that in Ventspils Nafta's of close to only 115,000 lats, a considerable difference in market float persists. A purely technical analysis would assume that Ventspils Nafta should therefore experience upwards pricing movement, as Unibanka's delisting will force this newly freed capital to look for new trading opportunities. It will be up to the opinions of fundamental analysts to decide if a higher price is justified. The bank's shares remained flat at 2.03 lats for the week.

The price per share in Latvijas Gaze seemed to stabilize between 3.55 and 3.60 lats. The market seems to concur with the opinion of the gas company's largest shareholders, Russia's Itera and Germany's Ruhrgas, which believe that the current price is too high.

Finally, the 3.2 percent gain posted by Balta's shares, which climbed from 3.15 to 3.25 lats, can be explained by investors' hope that the insurance company will be able to meet its profit target this year. Balta's nine-month results indicate that they may well succeed. In addition, market interest in this stock is still being fueled by rumors about negotiations between Balta's owners and Denmark's Codan insurer, which already holds a controlling stake in Lietuvos Draudimas, the largest insurance company in Lithuania.

The weekly stock exchange turnover reached 3 million lats, or 5.6 million euros, on the Riga Stock Exchange.

Lithuanian markets positive for the week

Last week's trading on the Lithuanian stock exchange was quite volatile. Slow to start, the second half of the week saw trading in Lietuvos Telekomas became active as the price rebounded after first touching a record low on Tuesday (October 30). Sluggish but progressive growth prevailed, however, the bourse's benchmark index Litin-10 increased 1.27 percent to 1025.03, the blue-chip Official List index jumped 4.22 percent to 436.51, and the secondary Current List index Litin-A edged up 0.92 percent to 1108.64.

Lietuvos Telekomas' price in litas bounced everywhere, rocketing up 7.93 percent to 2.04 litas ($0.51), solidly up after hitting its record low of 1.83 litas on Tuesday. In eurocurrency the growth was 3.6 percent, to 0.59 euros. Lietuvos Telekomas posted 1.4 million litas in trading turnover for the week. The company posted a net profit of 211 million litas in its nine- months operating results for the year 2000 and could meet profit forecasts for the full year. "The performance results of Telekomas are either too good, or the price is too low at the current price. I think that the price will be slowly going up," a Hansabanka broker said.

Vilniaus Bankas edged up 0.44 percent to 49.75 litas amid 986,209 litas turnover. Finasta broker Aurelijus Rimkus said that trading in the shares of Vilniaus Bankas somewhat resembled that of power utility Lietuvos Energija, at the time when the Swedish company Vattenfall was buying shares of Lietuvos Energija. "Trading is taking place, but in real terms the stock is not interesting to either speculators or investors at the moment," Rimkus said. SEB has offered to pay 50 litas a share for all outstanding shares in Vilniaus Bankas.

Other Official List stocks saw little interest on the buying side. Cheese maker Rokiskio Suris edged up 0.19 percent to 20.84 litas amid 60,500 litas turnover. Brewer Kalnapilis dropped 4.67 percent to 2.86 litas on 6,500 litas turnover. Electronic component maker Vilniaus Vingis was the most actively traded Current List stock, posting 222,000 litas in turnover. However, later in the week its price dropped 15 percent to 3.57 litas. "The market reaction to the change in Vilniaus Vingis` shareholder structure was not positive - the price fell and turnover shrank. I should say investors have taken a wait-and-see attitude," Rimkus said. Last Friday Vinvesta, the subsidiary company of the asset management firm Hermis Fondu Valdymas (Hermis Fund Management), acquired a 29.56 percent stake in Lithuania`s electronic TV and radio component producer Vilniaus Vingis for 12.94 million litas in one block deal.

In other news oil concern Mazeikiu Nafta charged ahead by 5.71 percent to 0.74 litas amid 67,100 litas turnover. Equity turnover on the bourse reached 3.9 million litas.