Stock markets: weekly report (September 8 -Ê14)

  • 1998-09-17
Estonia: Investors focus on Hansapank's shares

Last week Hansapank's shares remained the focus of attention on the Tallinn Stock Exchange until Friday when the bank asked to suspend their trading to hold preliminary negotiations on selling a new issue of shares to a strategic partner.

The TALSE stock index gained 6.75 percent during the week and closed at 154.69 points.

Talinvest Suprema head Veiko Maripuu said the market activity was affected by the suspension of Hansapank's quotation on Friday as its shares produced up to 90 percent of the total turnover

"Once Hansapank's trading was suspended, investors dedicated their attention fully to Forekspank and Uhispank. The market was calm and the turnovers not big," Maripuu said.

Several companies, including Norma, the producer of car safety belts, and Baltika, the garments manufacturer, have admitted problems due to the Russian crisis and declared the possibility of lowering profit forecasts.

Maripuu predicted that Hansapank will choose Sweden's Skandinaviska Enskilda Banken or Swedbank as its strategic partner depending on which offers a higher price for 14 million newly issued shares.

He noted rumors were rife that the loser in Hansapank's offer will take interest in Uhispank. Two other Scandinavian banks, Handelsbanken and Merita Pank, have also shown interest in acquiring a strategic stake in Baltic banks, possibly Lithuania's Hermis and Vilniaus Bankas.

It should also be taken into account that the issue may result in Hansapank's shares disappearing from the stock exchange altogether because the public stake may shrink below the minimum 25 percent, he added.

Hansapank's shares soared by 21 percent to 106 kroons last week and Uhispank by 10 percent to 33 kroons.

On the main list the biggest losers were Norma and Tallinna Farmaatsiatehas, which shed respectively 14 percent and 18 percent of their previous price.

Hansapank's shares broke a sales record last week generating a turnover of 624.5 million kroons ($44.6 million). The total market turnover was 704.9 million kroons.

Latvia: Trading remains sluggish

Regardless of the stable turnover of slightly more than one million lats ($1.66 million) and a considerable growth of both stock exchange indexes it would be premature to talk about stability on the market.

The rise in the DJRSE and RICI indexes by 1.4 percent and 4.7 percent respectively does not give grounds for firm optimism yet because market activity was very low except for deals in Unibanka's shares (62 percent of the total turnover) and block trading in Balta's shares (25 percent of the total turnover).

Transactions in all other shares accounted for between 0 and 3 percent of the combined turnover of the stock exchange. Given the scant turnovers, assumptions by some experts that massive buying of the cheap shares has begun seem to be not very serious.

Most investors and market players concentrated on Unibanka, which rose 12.6 percent to 0.98 lats. Interest in the market leader is due to its high liquidity and potential growth prospects.

Unibanka's first-eight-month profit of 1.7 million lats indicates the revised profit forecast might be fulfilled only if no further reserves on bad loans or risky bonds are made. Additionally, the stolen 1.5 million lats two weeks ago have not been retrieved yet, although the thieves have been caught.

The fish processor Kaija enjoyed the biggest jump in price last week, soaring by 50 percent, from 0.20 to 0.31 lats. Yet shares changed hands for less than 4,000 lats.

The leading loser was Grindex, the pharmaceutical company, whose shares plummeted by 60 percent from 1.12 lats to 0.45 lats during the past week. Its shares are still being affected by problems at its subsidiary, Estonia's Tallinna Farmaatsiatehas.

Grindex's rival, Olainfarm, experienced a similar fate as its shares plunged from 2.20 lats to 1.54 lats during the week, with a meager turnover of less than 1,000 lats. Olainfarm is being criticized for giving insufficient information about its financial performance.

Latvian companies hope future prospects for the Russian market may become clearer this week. The market may stabilize to a certain extent allowing companies to absorb at least some of the previous month's losses on the Eastern market.

The companies least linked to the Eastern market, as Staburadze or Valmiera Fiberglass, hope that their prices will go up.

Lithuania: Prices continue rising

The Lithuanian National Stock Exchange saw a considerable rise in Official List shares last week and the combined turnover soared as well.

The Litin index ended the week 4.47 percent higher at 841.92 points. The LitinA index closed 0.57 percent lower at 1424.45 points.

On the Official List the sharpest rise was enjoyed by Vilniaus Bankas whose shares gained 13.96 percent to reach the price of 24.24 litas. Hermis Bankas gained 6.62 percent and closed at 89.42 litas on Friday, while their turnover exceeded 1.7 million litas ($425,000).

Experts attributed the market rise to rumors about Scandinavian banks setting sights on expansion into Lithuania and showing interest in shares of the largest Lithuanian banks, which also prompted the small local investors to start buying shares.

Regardless of an adjustment on Thursday, the other Official List shares lost some of their previous value during the week.

The biggest turnover of 45 million litas was produced by the Lietuvos Energija shares and 6 percent of its capital changed hands. Yet its price shrank by 5 percent to 4.5 litas during the week.

Block trading was comparatively active on Friday, while the demand on the central market dropped sharply at the end of last week.

Russia: ruble continues recovery, stocks waver

Russian stocks ended lower in thin trading Friday amid investors' worries over what kind of economic policies are likely under new Prime Minister Yevgeny Primakov.

However, the denouement of Russia's political crisis appeared to buoy the ruble, which ended at 11.7 to the dollar - up from more than 20 on Sept. 4.

Primakov's approval as prime minister seemed to assuage the markets' worries over possible political and social chaos, but it raised concerns over the government's economic program, traders said.

The stock market closed at 62.31 points, down 1.5 percent from the previous Friday. Trading volume dropped to $2.2 million from $3.1 million the previous day..

"The market was down because although there may be political stability, economic reforms may move ahead much more slowly," said Dimitry Kryukov, a trader at MFK Renaissance.

Primakov announced Friday that Yuri Maslyukov, the head of the Duma's committee for economic policy and former head of the Soviet-era planning agency Gosplan, will serve as first deputy prime minister.

Later the Duma voted to confirm Viktor Gerashchenko as Central Bank chairman - a post he held until he was ousted in 1994 after the ruble collapsed and inflation soared.

"These two appointments, Maslyukov and Gerashchenko, aren't encouraging and aren't likely to boost investors' confidence," Kryukov said.

Meanwhile, Russia defaulted on a portion of its interest payment on the Paris Club debt due in August, Deputy Finance Minister Mikhail Kasayanov was quoted as saying by the Interfax news agency.

In August Russia paid $115 million in interest on its rescheduled Soviet debt, also called the Paris Club debt. But this represented only a fraction of what Russia was supposed to pay.

"The remainder will be paid as soon as the Russian payment system is restored," he said, adding that improved tax and customs duty collection will help solve the payment delay.

Part of the delayed interest payment affected Germany, to which Russia was supposed to pay 800 million German marks by Aug. 31. The delay of interest payments on its sovereign debt is believed to be the first by Russia to an official creditor nation since the crisis began, The Financial Times reported on Sept. 11.