Baltic bourses slow down

  • 2000-10-19
Trading activity on all three Baltic stock exchanges has slowed considerably as compared to levels from September and early October. The weekly turnover of Baltic List stocks was just 6.86 million euros ($5.93 mln) in the outgoing week compared with 8.5 million euros the previous week, and 20 to 30 million euros each week during September.

The most liquid stocks remained mostly price stable in Latvia while telecom stocks in Lithuania and Estonia moved down, following the lead from the world's largest stock markets.

The loss suffered by telecom stocks was counter-balanced by strength of the Latvian and Lithuanian national currency against the euro, however, and the Baltic Index comprising 15 Latvian, Lithuanian and Estonian blue-chips remained almost unchanged, slipping just 0.1 percent to 121.84 points for the week. In Latvia, a strong local currency (against the euro) and rising prices for other blue chips compensated for the loss by Ventspils Nafta's shares.

Total Baltic List turnover in the outgoing week of 6.86 million euros included 4.63 million euros, or 67.5 percent, contributed by Estonian stocks. Latvian stocks accounted for 23.7 percent, or 1.63 million euros, and Lithuanian stocks for 8.8 percent, or 0.6 million euros, of the Baltic List turnover. In Latvia, Baltic List stocks accounted for 90.5 percent of the total turnover on the Riga Stock Exchange but in Estonia and Lithuania Baltic List stocks constituted 85 and 66 percent, respectively, of bourse turnover.

Due to the loss by telecom stocks, the Baltic List capitalization fell by 2.02 percent over the week to 2.99 billion euros.

Slipping stocks set the tone on Tallinn bourse

While negative trends on world markets did not trigger massive selling on the Tallinn bourse, the stock market here still closed lower from the previous week. The TALSE index ended at 132.71, down by 2.82 percent.

"Estonian stocks on the whole held their own against the background of drops on world markets," Trigon Securities broker Kaur Elviste said. Eesti Telekom finished 5.26 percent lower at 90 kroons ($4.97) in deals worth 10.2 million kroons. Elviste maintains that a drop of the same magnitude as that of key western European telecommunications companies is not justified, as Eesti Telekom was previously not overvalued to the same extent as these shares were. Investors' interest dried up at the start of the week, and quotations were brought down to levels at which buyers began to return to the market, the broker said.

Eesti Telekom traded at between 88 and 95 kroons. Hansapank continued to slip quietly during the week. The bank's shares dropped 1.94 percent to 126.50 kroons amid trade worth 15.7 million kroons. Norma ended at 42.30 kroons, down by 1.86 percent from last Friday, on a turnover of 11.5 million kroons.

Next week should see more interesting trading as Hansapank's third-quarter results are due for publication, SEB's offer to Uhispank's shareholders ends, and October options expire, the broker said. "These events may cancel one another out and in this case major movements needn't take place at all," Elviste noted. It's more important now to keep an eye on investor psychology driving world markets, in his opinion.

The exchange system's turnover for the week totaled only 85.6 million kroons.

Latvian stocks remain stable for now

Prices of the most liquid Latvian shares remained stable in the outgoing week, with the trend evidenced by relatively small fluctuations in stock exchange indexes. Dow Jones Riga Stock Exchange capitalization index (DJRSE) was off 0.26 percent to 131.85 and the price index RICI edged down 0.99 percent to 176.79. Investor attention was still on Latvijas Unibanka's shares, which held steady at 1.90 to 1.92 lats ($3.10) per share. Over the week the bank's shares gained 0.5 percent, to 1.91 lats. The "trench warfare" between the Scandinavian bank SEB and the High Bridge Services (HBS) company fighting over Latvijas Unibanka's shares continued last week as SEB announced it will extend until November 10 its cash offer for shares in the Latvian bank at the price of 1.90 lats per share. Towards mid-week, presumably on Oct.18, HBS is expected to make an official statement about its interest, or lack of it, in an acquisition of Latvijas Unibanka's shares at a price above SEB's offer.

Latvijas Gaze gas company shares also remained the focus of the Riga Stock Exchange last week, climbing 0.93 percent to 3.25 lats. In the last three months the price for Latvijas Gaze shares nearly tripled, playing into the hands of the Latvian Privatization Agency (LPA), as the agency's board had made a decision to set the minimum price at 2.32 lats at the upcoming auction of 2 percent of shares in the gas company. It cannot be ruled out that Latvijas Gaze shares may well be sold at this auction at a price above 3.50 lats per share.

Ventspils Nafta was the only loser among Latvian stocks, dropping 2.5 percent to 0.78 lats. The reason for considerable fluctuations experienced by this stock is hardly to be found in the company's financial results. Most likely, the volatility is due to short-term speculative interests of one or more shareholders, especially as the company's general shareholder meeting closes in. Considering current high global oil prices and the medium-term agreement signed with Russia's LUkoil concerning oil shipments, Ventspils Nafta has good earnings prospects for the next few years. Judging by the P/E (price/earnings) ratio of Ventspils Nafta's shares, currently sitting at 6, some analysts believe the fair price of the stock to be around 1.0 lat per share.

Stock exchange turnover reached 970,000 lats.

Lithuanian stocks slide amid post-election lull

Lithuania's major stock indexes moved down amid slow trading activity last week after Sunday's general elections, though this was just before weekend foreign investors started returning to the market. The bourse's benchmark index Litin-10 slid 2.72 percent to 1012.66, the blue-chip Official List index eased 3.72 percent to 420.45, and the secondary Current List index Litin-A fell 2.53 percent to 1091.26. "Foreign investors were very inactive this week, and this was the reason why prices and the stock indexes declined. On Friday, however, there were signs that foreigners were returning, which gives grounds for hope that the bourse will recover somewhat next week," Suprema broker Arvydas Jacikevicius said.

Blue-chip Lietuvos Telekomas ended the week 3.33 percent lower at 0.6 euros, the lowest level since August 24, amid just 193,714 euros turnover. Hansabanka's broker Tomas Andrejauskas said Telekomas was following a recent weak performance by technology and telecom stocks on world markets.

Vilniaus Bankas ended the week steady at 11.4 euros. On Thursday, Oct. 12, the Scandinavian financial group SEB formally launched its cash offer for the outstanding shares in Vilniaus Bankas at 40 litas ($10.00)per share, but this had little effect on the market. Vilniaus Bankas' shares now may be considered a fixed-yield security, with a price dependent on the number of days left before the closing of SEB's offer, Jacikevicius said. The offer period ends on November 17.

Cheese maker Rokiskio Suris was stable at 20.80 litas on 25,400 euros turnover. Other Official List stocks were completely neglected last week.

LISCO led trade on the Current List, posting a turnover of 149,700 litas. The stock slumped 8.02 percent to 1.95 litas following reports that the shipping company's sell-off might be shelved. On Thursday, Lithuanian President Valdas Adamkus said he had asked law-enforcement bodies, the State Security Department and state controllers to evaluate the privatization of LISCO from the legal point of view. Jonas Lionginas, the Liberal Union's candidate for the finance minister's post, said on the same day that the incoming government might put the LISCO sell-off process on hold.

Overall equity turnover on the bourse reached 917,291 euros.