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Most of the week's turnover was delivered by deals in shares of Eesti Uhispank, 25 million euros ($21.4 mln) or 70 percent of the total Baltic List turnover, and Latvijas Unibanka, 2.7 million euros or 9 percent of the Baltic List turnover, which is currently a takeover target of Sweden's SEB banking group.
Despite a similar buy-out offer made by SEB in respect to Vilniaus Bankas, the Lithuanian stock exchange saw insignificant turnover from trading in Vilniaus Bankas shares - 1.69 percent of the Baltic List weekly turnover. It now seems quite obvious that SEB is not likely to acquire all shares in Vilniaus Bankas, and the issue still remains open as regards Latvijas Unibanka because some of the bank's shareholders, who jointly control a considerable number of shares, have announced their intention not to sell their holdings at SEB's offer price.
If SEB succeeds in obtaining 75 percent of Latvijas Unibanka and Vilniaus Bankas, with remaining shareholders stubbornly holding onto their shares, it is very likely that SEB will decide not to raise its offer price. A 75-percent stake in the bank will allow SEB to make its decisions uncontested, with the ability to disregard the opinions of its other shareholders. If this happens, it is quite possible SEB ends its buying spree, with the remaining listed share prices weakening.
Today it seems that SEB actually stands a 100-percent chance of securing 75 percent control in Eesti Uhispank, and the prospects are also very good in the case of Latvijas Unibanka. As regards Vilniaus Bankas, the SEB position is not as confident, especially considering that contrary to Latvijas Unibanka and Eesti Uhispank, the Swedish group currently holds less than 50 percent in Vilniaus Bankas.
The small gain posted by the Baltic Index was due to strength in the Latvian sector of the region. Support from Estonian stocks on the Baltic List was evident as investors placed some of their proceeds from selling Eesti Uhispank and Latvijas Unibanka shares into Norma and Hansapank. The falling euro exchange rate, together with rising Kalnapilis share prices, nudged upwards the five Lithuanian stocks on the Baltic List.
Baltic List turnover jumped to 31.6 million euros, almost triple the level of the previous week.
Estonian stocks, led by Eesti Uhispank's shares, accounted for 87 percent of the total turnover, or 27.4 million euros. Latvian stocks contributed 10 percent or 3.17 million euros and Lithuanian stocks only 3 percent or 1.03 million euros. Baltic List stocks also accounted for more than 65 percent of the total turnover on their respective home bourses last week.
The Baltic List capitalization fell by one percent over the week, to 3.19 billion euros. As of September 15 the capitalization of Estonian Baltic List stocks was 1.84 billion euros (-0.45 percent), for Latvian stocks it was 523 million euros (+1.1 percent) and for Lithuanian stocks 830 million euros (-2.5 percent).
Estonian blue chips up slightly
Key blue chips moved within a rather narrow range on the Tallinn Stock Exchange during the outgoing week, the unrivaled leader in turnover being Uhispank, at 386 million kroons ($21.3 mln). For the week's final count, the TALSE index eased 0.36 percent to finish at 143.69.
Turnover of Hansapank's shares during the five days was 26.9 million kroons. The share closed 0.76 percent higher at 132.75 kroons. Trigon Securities trader Kristel Kivinurm said trading in Hansapank's shares during the week showed that 130 kroons is Hansa's support level for the moment. "But the shares have been moving up on small turnovers, which suggests the previous rise may be seen as short-term," Kivinurm said. In the absence of major buying interest the share may fail to gain strength in the coming week, the trader added. Kivinurm also said that the relatively big turnover could be the result of placement of some of the proceeds freed up from the sale of Latvijas Unibanka shares. It's namely money from the sale of Unibanka stocks that may support Hansapank, the trader added.
As regards Eesti Telekom, the share will remain weak as long as the sector remains weak. Kivinurm noted that Telekom's price in Estonian kroons has been stable thanks to the rising dollar. During the outgoing week Telekom slid 1.92 percent to 102.25 kroons on turnover of 2.4 million kroons.
EVP, which put on three percent to finish the week at 0.58 kroons, probably will continue trading between 0.57 and 0.58 kroons, the trader added.
In the course of the week gains of more than 10 percent were posted by the industrials Viisnurk, Baltika and Kalev. Traders say investors are speculating on the possibility that these companies may be new targets for buyouts.
TSE weekly turnover was 440 million kroons.
Latvijas Unibanka in play
The developments concerning Latvijas Unibanka's shares still remained the focus of the Latvian stock market last week. The leading stocks kept inching up and so did almost all stock exchange indexes. Dow Jones Riga Stock Exchange capitalization index (DJRSE) was up 0.8 percent to 126.17 and the price index RICI grew 1.22 percent to 176.3.
Statements by some Latvijas Unibanka's shareholders, jointly representing up to 20 percent of the bank's shares, have indicated their position not to sell their holdings in Latvijas Unibanka at the price offered by SEB, 1.90 lats ($3.05). It cannot be ruled out that someone else besides SEB is speculatively buying shares in Unibanka. The efforts by these "stubborn" shareholders, and possibly speculators, are likely to pay off only provided they succeed in obtaining control of over at least 25 percent of Latvijas Unibanka. Only in that case would SEB feel compelled to begin negotiations about a higher price.
It can be presumed that these existing "hostile" shareholders will have to offer a price above the initial offer by SEB to secure the required 25 percent. As a result, Latvijas Unibanka's shares may still rise from its current levels of 1.89 lats per share. A significant risk is inherent in such a strategy, however. If SEB does succeed in getting 75 percent of total shares, it very likely would not make any concessions concerning the price for further purchases, and the market price for remaining Latvijas Unibanka's shares could suffer a sudden drop.
Alongside Latvijas Unibanka, interest still remains with respect to several other issues as well. Latvijas Gaze shares rose above the 3-lat level, to 3.03 lats by the end of the week. Gas company share turnover also grew, to 320,000 euros, as quite a large number of shareholders have been willing to sell their holdings at over 3 lats per share. Ventspils Nafta's shares remained an attractive investment opportunity mostly due to growing world oil prices. From a long-term perspective, however, considering the growing competition from oil terminals in Primorsk and Butinge, the future of Ventspils Nafta faces plenty of uncertainty.
Ventspils Nafta's shares gained 2.11 percent for the week, to 1.31 euros.
In other Latvian shares, Latvijas Balzams has been surrounded by rumors about negotiations with Russia's Soyuzplodoimport about the sale of a controlling stake in the Latvian distillery. So far Latvijas Balzams has neither denied nor confirmed the reports, and its shares have remained flat at 0.36 lats.
Trading in Latvijas Unibanka's shares in the amount of 1.46 million lats helped to boost the total stock exchange turnover to 1.74 million lats.
Lithuanian stock market sees volatile trade
Lithuanian stocks moved mostly downward amid somewhat nervous trading last week. The benchmark price index Litin-10 eased 1.56 percent to 1036.58, the blue-chip Official List index Litin eased 3.87 percent to 467.98, while the secondary Current List index Litin-A rose 1.05 percent to 1093.75. "This is a chronic disease of the Lithuanian market - the illiquidity and inactivity. The market lacks money, and there are too few buyers and sellers," Finasta broker Aurelijus Rimkus complained to BNS.
Blue-chip Lietuvos Telekomas and Vilniaus Bankas continued to lead the way on the bourse, taking 65 percent of the weekly central market turnover. Vilniaus Bankas ended the week 0.4 percent higher at 39.35 litas ($9.83) amid 1.85 million litas turnover.
Brokers say many investors are waiting until Skandinaviska Enskilda Banken (SEB) launches its offer for the remaining shares in Vilniaus Bankas, at a price of 40 litas. Vilniaus Bankas should stay more or less stable if SEB's offer closes in a month's time, and may drop slightly if it lasts for two months, Hansabanka's broker Tomas Andrejauskas said. Lietuvos Telekomas slid 4.7 percent, to 2.44 litas amid 1.6 million litas turnover. Telekomas share price is unlikely to show any major volatile movements next week because buying interest is limited, while an increase in supply would be easily absorbed in London, Rimkus said.
Other Official List stocks posted modest turnovers last week. Energy utility Lietuvos Energija, flat at its usual 5.00 litas, was the most-traded stock on the Current List, generating a turnover of 254,600 litas. Taupomasis Bankas [Savings Bank] charged ahead by 14.38 percent to 7.00 litas on 178,100 litas turnover. Natural gas firm Lietuvos Dujos jumped 7.96 percent to 1.22 litas on 74,600 litas turnover, with another 1.12 million litas of shares sold through block deals. Brokers attributed the increased activity in the two companies' shares to their upcoming privatization.
Martynas Kulvinskas, head of the Securities Trading Unit at Zemes Ukio Bankas [Agricultural Bank], predicted that investor attention would remain focused on Telekomas and Vilniaus Bankas next week. "Investors who have sold shares in Vilniaus Bankas are looking to companies that are undergoing privatization, like LISCO and Lietuvos Dujos, or other banks as possible investment options," Kulvinskas said.
The overall equity turnover on the bourse came to 5.7 million litas.