Trading activity in decline

Trading activity on the Baltic bourses continues to decline, and with the sharp drop in share prices on many of the world's top exchanges, there is litte prospect of a return of investor interest in Estonian, Latvian and Lithuanian stocks. The Baltic Index slid 0.49 percent last week to 114.81, with four stocks moving up on the Baltic List, eight dropping and three unchanged. The only real gains were made by the Latvian stocks, which despite a government crisis, rose 2.17 percent to 126.64 points. Speculation surrounding the Finnish group Sampo, which is concluding its deal to buy a majority stake in Balta, has driven the company's shares up 6.93 percent to 6.64 euros ($6.34).

Turnover of Baltic List shares dropped nearly three times from the previous week to 4.1 million euros. Estonian stocks had a weekly turnover of 2.35 million euros or 57.57 percent of the total, followed by Latvian stocks with 1.32 million euros or 32.23 percent, and Lithuanian stocks with 0.42 million euros or 10.20 percent of total weekly turnover. Baltic List shares accounted for 80 percent of turnover on the Tallinn Stock Exchange, 66 percent on the Riga Stock Exchange and 33 percent on the Lithuanian National Stock Exchange.

Market capitalization of Baltic List stocks dipped 1 percent last week to 2.76 billion euros.

Estonian stocks dropped 1.4 percent to 2.046 billion euros, Latvian stocks gained 1.1 percent to 434 million euros, and Lithuanian stocks were unchanged at 202 million euros.

Last week was a disaster for many investors, with New York's Dow Jones Industrial Average and London's FTSE-100 dropping 6 to 8 percent. This was nothing compared to the spectacular 25 percent meltdown in the NASDAQ last week as investors fled technology stocks.

Estonia: Following the NASDAQ down

Inactivity prevailed on the Tallinn Stock Exchange during the past week as the market took its cue from the movement of Nasdaq, which had its heaviest impact on Eesti Telekom. The TALSE index dropped 1.49 percent in the week's count to 158.46. The total market volume for the week was down nearly 35 percent from the previous week. The Baltic List's Estonian composite index dipped 0.95 percent to 107.15 points.

Trigon Securities dealer Kristel Kivinurm said that Hansapank's shares had settled in a technical band between 133 and 140.50 kroons ($8.58) with thin turnovers. In the course of the week deals were concluded with Hansa's shares at between 136.25 and 139.50 kroons. Hansa closed on Friday at 137.75 kroons, with 15.3 million kroons' worth of the shares having changed hands during the week. The dealer also said that the more speculative local investors had taken positions with next-week's release of the banks' first-quarter results in mind. The market is expecting a profit of 250 million kroons from Hansapank. "If the profit is bigger than that, an upward movement may follow," the trader said. "But it may happen that speculative money will start moving out of the share already on Monday."

For Uhispank there was a light wave of buying from Scandinavia at above 30 kroons. The share traded between 29.60 and 31 kroons during the week, closing at 30 kroons.

Optiva Bank, meanwhile, seems to have stabilized, the dealer added. "It seems that the price level of eight kroons is acceptable for local investors," she added. Optiva closed unchanged from last week at 8.10 kroons on Friday.

Kivinurm said the good news of the past week was the size of the dividend to be paid by Merko Ehitus, whose shareholders approved the dividend for 1999 at 0.90 kroons per share. She said investors showed trust in the company. Merko gained 0.69 percent during the week to close at 29.20 kroons. Kivinurm said there were enough sellers of Merko at 29 and 30 kroons, which in the short term may satisfy the demand of buyers.

On a turnover of 2.25 million kroons, the EVP privatization vouchers continued to post gains during the week, closing Friday at 0.48 kroons. The exchange's weekly turnover was just 46 million kroons, of which Baltic List stocks accounted for almost 80 percent.

Latvia: Government collapse doesn't rattle investors

Latvian investors appear to have gotten used to the regular changes of government as they hardly reacted to the resignation of Prime Minister Andris Skele. In fact the Latvian composite index of the Baltic List rose 2.17 percent to 126.64 points. The Riga Stock Exchange's DJRSE cap-weighted index rose 0.84 percent to 114.98, but the RICI price index dropped 1.43 percent to 197.16 as investors fixed their profits in several second list stocks.

Speculation over the Finnish group Sampo concluding its deal to buy a majority stake in Balta has driven the company's shares up 6.93 percent to 6.64 euros. The approach of a shareholders meeting on April 19 is only adding interest, as many expect some news about the deal by that date. The other Baltic List stocks also gained, on average by 1 percent, ignoring the government crisis.

While there may be little for the market to worry about concerning the government crisis in the short term, since the same parties will likely reform a government, political compromises are often forged at the expense of fiscal discipline, which if loosened would definitely have a negative impact on share prices over the medium term. The sharp drops on the major international exchanges will more likely have an immediate effect on the Latvian market if international investors need to raise cash by unwinding emerging market positions.

Among non-Baltic List stocks, Valmiera Fiberglass' shares took an 11.7 percent beating, to 0.45 lats ($0.75). Turnover dropped by four times from the previous week, to 1.12 million lats. Baltic List stocks generated a turnover of EUR 1.3 million, or 66 percent of the total.

Lithuania: Stuck in neutral

Last week trading was once again in the doldrums, but share prices of most blue-chips remained stable. The Lithuanian bourse's LITIN-10 price index dropped 1.64 percent last week to 1180.69, and the current list LITIN-A dropped 1.56 to 1083.69. The official list LITIN index gained 0.25 percent, however, to 589.06. The Lithuanian composite index of the Baltic List dropped 2.47 percent to 116.38, mostly due to investors trying to fix their gains in Kalnapilis.

Except for trading in Vilniaus Bankas' shares, trading was practically non-existent in Baltic List shares. "Nothing is changing on the market - trading isn't becoming more active," Baltic Securities broker Dmitry Dutov complained.

Vilniaus Bankas gained 2.17 percent to 32.05 litas ($8.01) on a turnover of 1.54 million litas. "The total turnover isn't so relatively big, but we can expect trading in Vilniaus Bankas' shares to pick up next week," said Finasta broker Aurelijus Rimkus.

On the current list trading in Lietuvos Energija's shares remained somewhat active, with the price per share holding at 5.00 litas on a turnover of 400,800 litas.

Share turnover on the Vilnius bourse totaled 4.76 million litas last week. Baltic List shares accounted for about one-third of the total at 416,000 euros.