Swedbank, another Scandinavian bank, also can not be very happy with its success in the Baltics, as its efforts to privatize Lietuvos Taupomasis Bankas received a cool reaction from Lithuanian and international rating agencies. Moody's, the international rating agency, is considering downgrading its financial stability rating of Estonia's Hansapank, which has applied for Taupomasis Bankas' privatization. Swedbank is the majority owner of Hansapank.
In Lithuania, meanwhile, dissatisfaction prevails as just one bidder has applied for the bank's privatization, a situation in which the state believes it would not get a fair price from a sale.
But the Baltic Index of 15 blue-chip stocks traded on the Tallinn, Riga and Vilnius bourses maintained its level during the last week, dropping just 0.18 percent to 121.96 points. The index was weighed heavily by 7-9 percent losses posted by Estonia's Pro Kapital and Latvia's Ventspils Nafta. The sliding price of Ventspils Nafta did little to support index prices as well.
In Estonia the drop in Pro Kapital shares was balanced by a 7 percent gain in Tallinna Kaubamaja, in addition to increasing share prices of Hansapank and Eesti Telekom. In Lithuania stock prices were mostly stable.
The Baltic List turnover dropped nearly threefold, to 8.5 million euros ($7.42 mln). Estonian stocks accounted for 50 percent of the total turnover, or 4.2 million euros. Latvian stocks accounted for 43 percent of the Baltic List's turnover at 3.7 million euros while Lithuanian just 7 percent, or 0.6 million euros.
The Baltic List's capitalization last week remained unchanged at 3.05 billion euros. Capitalization of Estonian stocks on the Baltic List October 6 was 1.75 billion euros (+0.6 percent), Latvian 549 million euros (-1.95 percent) and Lithuanian 754 million euros (-0.15 percent).
Estonia: Trading dull despite interest in privatization shares
The Estonian privatization security (EVP), which hit a new record Wednesday, emerged as the most interesting issue trading on the Tallinn Stock Exchange last week as activity in corporate shares was quite sluggish. The stock index TALSE finished at 136.56 on Friday, up 0.68 percent from the previous week, with total weekly turnover at 79.4 million kroons ($4.43 mln).
"The instrument generating the most interest this week was the EVP, which made a sudden leap on Wednesday," Hansapank trader Romet Tepper said. "Towards the end of the week its rally subsided a little," he added. In the week's count, the EVP rose 8.06 percent to close at 0.67 kroons. The highest price at which the voucher changed hands was 0.75 kroons, with the lowest at 0.61 kroons. Deals in EVPs generated a turnover of 10.3 million kroons. "There will be no such sudden jumps next week like we saw in the outgoing week," Tepper said of the EVP. He added that given the EVP's volatility, the price may move in both directions if big orders come in.
Hansapank was impacted during the past week by news about Hansa's offer in the privatization of the Lietuvos Taupomasis Bankas. "In the long-term outlook it is believed that this is a good deal for the bank," the trader said. "Obviously, the investors who are buying are not short-term investors and they're looking at the investment with the perspective of a few years." Hansapank, which rose 1.98 percent to 129 kroons, was the market's leader in terms of turnover at 26.8 million kroons.
Despite some interest from local investors, trading volume in Eesti Telekom continues to be quite weak. The share, which analysts believe to be underpriced, edged up 0.80 percent to 95 kroons, with volume of nearly 12 million kroons.
Tepper added that October has traditionally been a relatively bad month for stock markets. "It's being expected that the situation on the world stock markets should improve in November and December," he said. "Then also outside interest toward Eesti Telekom can be expected." It is also possible that interest in Telekom will pick up as investors, who sold their holdings in SEB as a result of SEB's buyout offer, will need to place these available funds, Tepper said. The value day of the SEB offer is October 27.
Of the 5.07 million euros of TSE turnover trading, Baltic List stocks were responsible for 83 percent, or 4.23 million euros.
Latvia: Unibanka drama continues
Trading activity softened on the Riga bourse last week, with Latvijas Unibanka still the focus of investor interest. Although Unibanka's share price was essentially unchanged over the week, stuck at 1.9 lats ($3.06), the market indexes showed weakness amid a notable fall by Ventspils Nafta. The capitalization index DJRSE fell 1.86 percent closing the week at 132.2 while the price index fell 1.51 percent to 178.55.
The primary factor behind these indexes was the 6.65 percent fall by Ventspils Nafta, to 1.47 euros. Several experts attributed a growing demand for Ventspils Nafta shares, reflected in its consequent rising share price observed in early September, to several shareholders increasing their holdings in the oil terminal ahead of the planned mid-October shareholders meeting.
These shareholders, evidently, reached their target in the middle of last week, though, reducing the likelihood that Ventspils Nafta's share price would see more upside pricing pressure.
Last week saw significantly decreased turnover in Unibanka as most investors were on the sidelines awaiting further developments. Positions strengthened among those shareholders who are not willing to sell their holdings to SEB at 1.90 lats per share. With little doubt, Trigon Capital and High Bridge Services together currently control more than 25 percent of Unibanka. SEB's chances, therefore, of increasing its holdings in Unibanka to over 75 percent, at the current price, and halting the stocks' quotation on the Riga bourse presently seem rather obscure. Moreover, the possibility that SEB will have to raise its Unibanka offer price at this point seems rather high, therefore analysts have suggested that shareholders sit back and take a wait-and-see attitude.
Latvijas Gaze meanwhile reached a new record high, trading at 3.29 lats which, though, appeared to be too high to attract more buyers, therefore the price fell to 5.95 euros, ending the week almost unchanged.
Total share turnover on the Riga bourse was 2 million lats, and of this the Baltic List's stocks accounted for nearly 100 percent.
Lithuania: Trading slows ahead of general elections
Lithuania's major stock indexes pointed downwards last week. LISCO privatization news gave a boost to the market at the start of the week, but later trading ebbed as foreign investors decided to stay on the sidelines ahead of Sunday's general elections. The bourse's continuously tracked price index Litin-10 eased 2.19 percent, to 1040.96, the blue-chip Official List index Litin was off 0.85 percent to 436.70, and the secondary Current List index Litin-A ticked down 0.07 percent to 1040.96.
Brokers said the pre-election mood prevailed on the market. Market reaction would be negative if leftist parties, which speak out in favor of boosting spending on social needs and call for a slower approach to the privatization process, win the elections, but the bourse should recover if the center forces emerge as winners in the polls, they predicted.
Lietuvos Telekomas and Vilniaus Bankas traditionally led trade on the Official List. Telekomas ended the week 1.8 percent lower in the local currency at 2.17 litas ($0.54) amid 976,900 litas market turnover.
Hansabankas broker Tomas Andrejauskas attributed the relatively active trading in Telekomas shares to a recent decline in their price and the news that mobile operator Baltkom GSM was sold for a very high price in Latvia. The deal had a short-term positive impact on all Baltic telecommunications stocks, he said.
Monday's announcement that SEB had raised its shareholding in Vilniaus Bankas, to 52.6 percent, and would seek registration of a mandatory offer to acquire the remaining shares in the bank immediately stirred up trading in the stock, but investor interest later waned. Vilniaus Bankas ended the week almost even in local currency at 39.82 litas amid 758,300 litas market turnover. SEB's offer was registered with the Lithuanian Securities Commission after the close of trading on Friday. Small shareholders, holding a combined stake of around 26 percent in Vilniaus Bankas, have said they are going to oppose SEB's offer, but some analysts still are skeptical about their chances of success.
Elsewhere on the Official List, cheese maker Rokiskio Suris held steady at 20.80 litas on 222,400 litas turnover. Other blue-chip stocks were largely neglected.
On the Current List, LISCO stole the spotlight following Wednesday's news that the government approved a deal to sell a 75 percent stake in the shipping company. The stock had reached 2.28 litas at some point, but later gave up some of the gains to end the week at 2.12 litas, up by 6.53 percent from the previous week, on 425,200 litas turnover. Brokers say LISCO is likely to stabilize in the near-term amid a lack of detailed information about the deal with B.B. Bredo B.V., a consortium registered in the Netherlands.
Power utility Lietuvos Energija stayed flat at its usual 5.00 litas on 343,100 litas turnover, and fertilizer firm Lifosa climbed 3.72 percent to 18.67 litas on 198,800 litas turnover.
On Monday, it was announced that Estonia's Hansabank had been the sole bidder to acquire a majority interest in Taupomasis Bankas (Savings Bank), Lithuania's largest state-owned bank. Market reaction to the news was negative: the stock sank 15.2 percent to 6.36 litas, with 154,600 litas worth of shares traded.
Overall equity turnover on the bourse came to 4.25 million litas. Lithuanian Baltic List stocks were responsible for 578,579 euros turnover, 62 percent of the total.
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