Prices fluctuated last week on the Tallinn Stock Exchange, and the TALSE index closed 0.85 percent lower at 146.18 points on July 24. Hansapank's broker Mart Meerits said the closing value should not be called an adjustment because the decline was too insignificant for such a determination.
The broker predicts that low volatility will continue this week. On the other hand, he said the market could be livened up by positive news.
"The Russian move to tighten customs policies may have an adverse effect on the price of the car safety belt producer, Norma. Undoubtedly, the enterprise will have to make additional spendings to pay the taxes or to dodge them," Meerits said.
Once an entry on the merger of Uhispank and Tallinna Pank is made in the commercial register, the price of Uhispank's shares is expected to grow remarkably.
Meerits said that short-term factors, like the Helsinki market and news about consolidation of banks, would be replaced by new developments as reports on the macroeconomic performance and tougher norms are introduced by the central bank.
"It means that economic indicators will be more stable in the second half-year and the economic growth prospects even more moderate," according to the broker.
The beginning of last week was marked with nearly a 5 percent rise in prices, while on Tuesday and Wednesday a selling mood prevailed and the market subsided. On Thursday, prices edged up again, just to go down once more on Friday.
Specialists attribute the lack of a clear tendency to the situation of investors themselves and the absence of significant developments that could determine a clear market trend.
The same factors affected the turnovers, which were shrinking incrementally throughout the week. The total turnover made up 157.5 million kroons, down by one-third from the week before.
Latvia: Bourse's turnover plummets
The Riga Stock Exchange (RSE) turned over just 530,000 lats last week, almost two times less than in the previous week, but the main stock indexes RICI and DJRSE still rose by respective 3.33 percent to 388.08 points and 1.72 percent to 199.2 points.
If not for the extremely low liquidity of shares, the Latvian situation would allow cautious optimism, considering the respective drops in indexes in Estonia, Lithuania and Russia by 1 percent, 4 percent and 10 percent.
The biggest turnover of 230,000 lats was created by the Staburadze pastry company's shares. Staburadze also enjoyed the biggest price rise, nearly 21 percent, from 1.58 lats to 1.91 lats. The interest of investors in Staburadze's shares can be explained by its half-yearly performance that met predictions. Moreover, the company's management pledged to pay half the year's profit in dividends.
The P/E ratio of Staburadze and Rigas Komercbanka (seven points and five points), whose attractiveness for investment was predicted a month ago, still permits them to be characterized as good buys. Rigas Komercbanka's price increased last week by 3.5 percent to 1.75 lats.
The rise in the price of Valmiera Fiberglass shares, which was also anticipated by BNS, gained 10 percent to 0.46 lats during the week.
It was previously reported that the Grindex pharmaceuticals company, whose shares are traded on the second list of the Riga Stock Exchange, may pose a certain risk from the viewpoint of investment due to its close links with the Tallinna Farmaatsiatehas pharmaceuticals company. Indeed, the Tallinn enterprise has found itself in trouble, which has also affected the attitude of investors toward Grindex. In addition, Grindex posted worse-than-expected results for the first six months of this year.
The Balta insurance company was marked last week by the extremely low liquidity, as its turnover hardly reached 400 lats in nine trading sessions, which means that an increase in its price from 2.8 lats to 3.2 lats should not be overestimated.
Serious investors may take interest again in Unibanka's shares, which went down by 1.75 percent to 1.68 lats last week. Given the P/E ratio of 7.5 points, the price may soon be expected to rise again.
Unlike in Unibanka's case, the investor interest in Riga Transport Fleet's shares may only be speculative and short-term, as one would remain remain baffled by its performance indicators: a profit of two million lats on a several times smaller net operating turnover. The annual profit target of the company has been set at 700,000 lats.
This week's situation on the Riga Stock Exchange will likely be determined by three main factors: the holiday season's weather forecast, developments on the markets of neighboring countries, and the publication of six-month indicators of issues.
Lithuania: Calm end to a tumultuous week
After a sharp rise in prices on the Lithuanian stock exchange at the beginning of the week, trading became sluggish towards the end of last week. Regardless of some activity by local investors, which allowed modest gains in some shares, the overall tendency was that of a slide.
The Litin index lost 4.08 percent of its previous value to close at 691.08 points. On Friday, the Current List index, LitinA, edged down by 0.55 percent to 1569.17 points.
The total trading turnover grew from 24.8 million litas to 32.4 million litas last week thanks to active sales of state treasury bills.
Almost all the Official List shares closed lower last week. Some exceptions to this were shares of the Medienos Plausas cellulose plant that were largely untraded and the shares of Snaige refrigerator maker that rose by 2.5 percent to 20.5 litas.
Brokers are generally pessimistic about the situation on the Lithuanian market. Without interest of foreign investors and a lack of indicators of a possible end to the decline, brokers predict a further slump.
Russia: stocks sag amid fresh concern over bond market
Russian stocks sagged for a fourth day in a row on July 24 ending a dismal week in which equities lost 18 percent of their value despite IMF approval of a fresh loan for the ailing Russian economy.
Stocks lost more than 1 percent on very thin volume as the bond market - a key barometer of confidence in the government's economic policies - dropped sharply.
On July 24, the leading Russian Trading System (RTS) index stood at 157.74, down 1.32 percent from the previous day's close and down by about 18.5 percent from last Friday's close. The yield on the nine-month government bond rose sharply to around 70 percent from 55 on Thursday, traders said.
"It's been a very bad week on very thin volume, and people are still reasonably depressed," said Gary Kinsey, a trader with Brunswick Warburg securities.
"If GKOs (treasury bills) stay at this level it will be extremely bad and once again raises the question of ruble devaluation," Kinsey added.
The ruble lost further ground on July 24 to change hands at 6.27 to the dollar, down more than 1 percent on the week. The central bank however decided to cut its leading refinancing rate to 60 percent from 80 percent in a move which traders said could presage a further gentle depreciation of the Russian currency.
"The idea seems to be that the authorities want the ruble slide slowly, so they can help oil companies become more profitable," said Alex Gorelik, a trader with the Rinako Plus brokerage.
"A slide devaluation of 10 percent will help oil companies, and so help the budget, without overly hurting the banking sector that would be killed off by a forced sharp devaluation," Gorelik said.
"Other than that I don't see why they need to lower rates," he added, "Lower rates send the signal that we're out of the woods, but that's clearly not the case."
Kinsey said the bad week was due mostly to profit-taking. He said traders had largely bought up Russian stock during a rally last week in anticipation of IMF approval for the 11.2-billion-dollar new loan for Russia.
Once this had been rubber-stamped, however, no larger institutional buyers emerged as a result of persistent deep-seated fears over the long-term prospects for the Russian economy. Investors, therefore, began to take profits.
"It's been very volatile and very confusing, but basically no real institutional buyers are interested," Kinsey said.
(Compiled from BNS, brokerage companies reports.)