Infrastructure companies should save markets?

Last week, activity on the Baltic securities markets dropped considerably. Turnover on the Latvian, Estonian and Lithuanian exchanges decreased by approximately 25 to 60 percent.

Trading in bank shares has slowed to a trickle as long- and medium-term investors worry that earnings may worsen further after international auditors complete their reviews for 1998.

Potential investors are also a little concerned about the potential losses of Scandinavian banks in Latin America, especially of Swedbank and Skandinavska Enskilda Banken, both of which have significant stakes in the Baltic banking market.

The lack of investors' interest in banking stocks may be partially compensated by the appearance of infrastructure companies on the market.

In Tallinn, hopes are pinned on the appearance of Estonian Telekom on the market. Given the expected issue price and the company's expected 1999 earnings, Estonian Telekom could be one of best telecom investments in Central Europe.

Investors in Riga are looking towards the appearance of Latvijas Gaze on the market. Specialists note strong interest in the company's shares on the OTC market.

The further privatization of the Lithuanian Shipping Company is the current focus in Vilnius. However, the government's contradictory position and partial changes to the privatization rules have dampened enthusiasm here from speculators. Investors, too, were disappointed last week by the government's surprise move to keep a "golden share" in LISCO, an attempt to control the company's strategy after privatization.