Stock markets: weekly report (August 22 ÐÊ28)

  • 1998-09-03
Estonia: Hansapank carries the market again

The interest of Scandinavian investors in Hansapank's shares led to the rise of the Tallinn Stock Exchange last week in stark contrast to the slide on other exchanges in the region.

The TALSE Index shot up 10.05 percent to 150.90 points.

Talinvest Sales Manager Veiko Varipuu noted that the movement of the Tallinn exchange was contrary to neighboring exchanges. A number of specialists have pointed out the danger of share prices moving in the opposite direction of the world trend.

The domination of trading of Hansapank shares, which for the past two weeks has accounted for more than 80 percent of turnover, opens up other problems for the Tallinn Stock Exchange. If this trend continues it may soon be renamed the Hansapank Stock Exchange.
As in the previous week, Swedbank's aggressive buying led to a rise in HansapankÕs shares and kept the entire market from a large slump.

On Friday Swedbank announced that it had accumulated 20 percent of Hansapank's stock. After this announcement the bank's shares sold for under 82 kroons ($5.85) according to Maripuu.

"The bank's share price rose to Thursday's close when the Bank of Estonia gave its approval to Swedbank to acquire a stake in Hansapank," he said.

Maripuu said that when Swedbank's buying stops everything will depend on the action of other Scandinavian investors which have been operating on its coattails.

"Whether they will keep on buying when Swedbank stops is the question," he said.
Maripuu believes a small correction is likely.

"American investors liquidated their positions in the Baltics in the wake of the Russian crisis and will stay on the sidelines for several months," he added.

Hansapank's average price rose 30.32 percent to 88 kroons last week.

Forekspank's share price did not receive any support from its additional share issue. It closed the week at 34.61 kroons, down 6.10 percent.

Uhispank's share price sank 7 percent to 30.52 kroons.

Only one other share on the main list ended the week in positive territory besides Hansapank - car seat belt manufacturer Norma. Good news from its main client, Russia's AutoVaz, helped it end the week up 1 percent at 24.40 kroons.

Turnover on the exchange totaled 590.45 million kroons. Hansapank dominated trading at 498 million kroons.

Latvia: Riga hit by regional slide

Last week the Riga Stock ExchangeÕs DJRSE Index slid by 16 percent - from 150 to 127 points - in step with other exchanges in East Europe.

The sharp rise in turnover - to an average daily turnover of nearly 500,000 lats ($833,000) - was due to several large block deals with financial companies Unibanka, Rigas Komercbanka and Balta. Trading in these companies shares accounted for almost 95 percent of turnover.

The large block deals indicate big changes in the shareholders of these companies, but it is doubtful that they are so significant as to talk of a cardinal redivision of the banking sector.

All signs indicate that the major Latvian banks, including Unibanka and Rigas Komercbanka, can maintain their positions. And despite reduced profit forecasts their shares will remain attractive to investors.

Industrial shares did not interest investors last week. Manipulation of share prices in a thin market was very interesting to observers, however. Grindex's share price rose 50 percent on a turnover of just 15 lats.

Most analysts still point to future developments in Russia as guiding the direction of the RSE. To take a controversial position, however, almost nothing depends on Russia now because the Russian securities market is dead and its revival will take months if not years.

And it is also possible to argue with several Latvian politicians who maintain that Latvian companies and banks should learn their lesson and reorient towards other markets.
It should be remembered that the worse the situation is in Russia the more Latvian banks, which have already learned how to operate in Russia's chaos, can earn. Already at many Latvian financial companies a wave of new clients from the East is visible.

Latvian food producers will not be left out either. Their inexpensive products will always enjoy a demand and their Russian competitors will not be able to invest to increase their production. Latvian banks will be willing to help solve newly complicated settlement problems.

Industrial manufacturers may be worse off, but the news that AvtoVaz has sold all of its huge backstock under the recent surge of demand is good news not only for Estonia's Norma but for Daugavpils Drive Chain factory as well.

Lithuania: Pessimism seizes exchange

Share prices continued to fall at a fast clip on the Lithuanian National Stock Exchange last week. Experts forecast nothing better for this week.

Despite a slight correction at the beginning of the week, the litas ended the week down 13.16 percent at 520.46 points, a historical low. The litas is now at almost half its value of April 7, 1997.

Experts forecast a continued fall in share prices in connection with the crisis in Russia as offers outweigh demand.

The fall of the Litin was caused by the sharp drop in the share price of Vilniaus Bankas, which sank 27 percent to 20.28 points. Hermis also moved into low territory, dropping 10.44 percent to 105.23 litas ($26.30).

On the Official list, only shares in the refrigerator manufacturer Snaige ended the week up, climbing 4.22 percent to 20.99 litas. This price rise was mostly technical, however, due to a small number of orders at a high price.

Shares on the Current list were not down quite as sharply, but still down. Of the more liquid shares LISCO was the worst hit, sinking 13.53 percent to 2.42 litas.

There were no changes with Lietuvos Energija. As in previous weeks its shares enjoyed strong demand and held firm at five litas.

Russia: Short-lived crumbs of comfort for gaunt stock market

Russia's gaunt stock market put a tinge of color back into its pale cheeks on August 28, climbing back from an historic low as the Central Bank returned to the fray after a three day absence to help the beleaguered ruble.

The main RTS index rose 5.66 percent to close at 66.77, clawing back some of a massive 17 percent collapse which had taken the market to an all time closing low of 63.20 on the previous day.

Dealers said the weak rebound was linked to the Central Bank's decision to intervene in currency trading for the first time in three days. Sergei Alexashenko, deputy bank chairman, told NTV television that an official rate of 7.905 rubles per dollar had been set as a result.

The Bank also said it would ease liquidity problems by resurrecting short-term borrowing next week, issuing a billion dollars of two-week bonds in the first such issue since the market was frozen in a de facto debt default August 17.

The issue aims to throw a lifeline to crippled banks by providing another instrument with which to manage its painful liquidity problems, three days after the authorities announced a savage domestic debt restructuring which has saddled banks with mountains of worthless paper.

Nevertheless, brokers remained depressed about the stock market's immediate future.

"People are just trying to withdraw the remains of their money from the market," said MFK Renaissance trader Mikhail Koltsov, adding that the market was "non-existent."

"Volumes are so small ... it doesn't mean anything in investment terms," said Tom Brackenbury, trader at Rinako Plus brokerage.

"Such news as there's been today has been slightly positive, I guess," he added. "The ruble strengthened a little bit during the course of the day, so the slight feeling is that things are calming down, pending whatever happens early next week."

(Contains information from AFP)