TALLINN (BNS) – The conduct of the Estonian stock market in the second half of the year will be determined by the rise in interest rates and slower lending, which may put the real economy in a difficult situation.
Hoiupank analyst Martti Singi said interest rates were the most important indicator of the market. "If money offer declines and demand jumps up, there will be a reason for interest rates to rise further," Singi said.
High interest rates on the loan market may lead to problems in the economy, which will impact on the financial sector and affect loan portfolios, Singi said.
But higher interest rates also have the positive effect of attracting foreign money to the market here.
Singi said uncertainty was the only certain thing on the market now and that no forecasts should be taken as gospel.
He said the market here was dependent on Russia as foreign investors viewed Estonia as being linked to Russia.
"Salvage packages to Russia are only putting off the problem, the real causes haven't been eliminated," Singi said. He said the rise that had occurred on the Russian market during the week was due to purely emotional reasons.
The analyst expressed hope that Estonian banks will perform better in the second half of the year. He said risks and economic activity in general had to be approached in a more conservative way, such as investing money in fixed-interest securities.
Speaking from Hansapank, analyst Heikk Kallu said a decrease in lending directly affected the stock market.
While lending by Estonian banks grew by nearly 40 percent in the 12-month count during the first quarter, growth had decreased to 30 percent by the end of the first six months. o