Stock markets: weekly report (September 15 -Ê21)

  • 1998-09-24
Estonia: Share prices plummet

Last week on the Tallinn Stock Exchange share prices fell sharply with the TALSE index plummeting 20 percent to 124.16 points.

The Tallinn bourse experienced only two sharper falls when in November of last year the bottom fell out of the summer rally.

The drop in the market was due to the sharp drop in Hansapank's share price, which spiralled down 33 percent to 71 kroons ($5).

The bank's share price fluctuated sharply last week, with nervousness over the actions of the bank's management.

As it became clear that all investors could participate in the bank's current share emission the market calmed down somewhat, but on Friday Hansapank's shares fell sharply once again.

Uhispank broker Mart Helmja said the bank's share price dropped again as it became clear that the battle of Scandinavian banks for control of Hansapank has finished.

"It's certain now that the strong buying pressure, which sustained the share price until now, is over," he said. "The time of big turnovers is past." He believes the share price will continue falling.

Helmja said the factor influencing the market the most was the impact of the Russian crisis on Estonian companies.

Shares in Forkespank sank 12 percent last week and Uhispank's share price slid 4 percent.

Helmja believes trading in these two banks will remain unsteady. "Speculators are going to wait for the appearance of some kind of strategic investor from Scandinavia," he said. "In the near future nothing will become any clearer."

Shares in Tallinn Pharmaceutical Factory and Rakvere meat packers were the hardest hit last week, diving more than 35 percent.

Shares in Farma, which last summer traded at 200 kroons, closed this week at seven kroons.

Rakvere's shares traded at 3.74 kroons on Friday.

Specialists believe investors have begun to liquidate their holdings in low liquidity industrial shares, believing them to be high risk investments.

Only Viisnurk ski and furniture manufacture and EVP privatization vouchers ended the week on the positive side.

Turnover totaled 196.9 million kroons last week, with two-thirds of trading dominated by Hansapank shares.

Latvia: Financial sector dominates trading

Last week the Riga Stock Exchange's management admitted that trading on the bourse has become concentrated in several liquid financial sector shares. To be more exact trading on the RSE has become dominated by Unibanka, which last week accounted for more than 80 percent of turnover.

The situation on the RSE was revealed by the discrepancies between the DJRSE and RICI indexes. With 20 to 30 percent gains by Balta, Unibanka and Rigas Komercbanka the DJRSE rose almost 10 percent. A capitalization-weighted index, the DJRSE is very sensitive to the movements of larger securities.

At the same time the catastrophic falls (10-45 percent) of some of the more Russia-dependent firms - Olainfarm, Riga Shipyard, Daugavpils Drive Chain Factory - kept the RICI almost unchanged at 268 points.

Last week Olainfarm's share price fell by almost half - from 1.54 to 0.86 with a turnover of just 161,000 lats ($277,586). It is obvious specialists don't believe the company's management that the situation with deliveries to the Russian market will soon be back to normal. Attaining even half of the company's 3.5 million lat targetted profit seems unrealistic.

The situation at Latvia's other pharmaceutical company - Grindex - which stabilized last week at 0.45 lats, is no better. Besides problems with the Russian market the company is having trouble digesting its Estonian acquisition. In April it paid 96 kroons per share for its controlling stake in Tallinn Pharmacuetical Factory. As it is now trading at 7 kroons per share Grindex has lost 92 percent of its multimillion dollar investment into the company. The situation for Farma is unlikely to improve.

Although the situation on the RSE was much better last week than on the Tallinn or Vilnius bourses, most market analysts are not optimistic about this week.

With "crazy Scandinavian" investors doubling Hansapank's price and then falling back nearly as much, analysts are concerned such a situation could happen with Latvian bank shares as well. Some investors may want to get out with their profits early, which may lead to a slight correction in Unibanka's share price.

Western analysts believe that the Baltics are likely to feel the fallout from the Russian crisis throughout the winter. Only in the spring will the full picture emerge on the amount of bank credits and budget resources which were needed to get firms through the Russian crisis. In the winter speculative pressure on currencies could begin.

Lithuania: Share prices slide

Last week trading on the Lithuanian National Stock Exchange was not very active and share prices fell steadily.

The Litin index ended the week down 8.6 percent at 440.49 points after some fluctuation during the week. The LitinA was down 6.6 percent at 1335.99 points.

All of the Official List shares ended the week down with the exception of Medienos Plausas - which was removed from the list on Monday at the company's request.

Shares in Vilniaus Bankas tumbled almost 14 percent to 20.85 litas, although they were one of most popular generating a turnover of more than 1.5 million litas ($37,500).

Shares in Hermis also tumbled 13.7 percent to 77.17 litas.

On the Current list shares in Lietuvos Energija were the hardest hit, with demand dropping sharply and the share price plunging 23.32 percent to 3.5 litas.

The almost complete lack of demand for the shares can be explained by the Swedish energy company Vattenfall buying more than five percent of Lietuvos Engergija in a block deal, after which it abandoned the central market.

The deal registered Sep. 11, was for 44.354 million litas or 4.83 litas per share.

According to Suprema brokerage's analysts Lietuvos Energija's share price has bottomed out and shouldn't go any lower.

Turnover totaled 21.5 million litas, although trading with shares accounted for only 8 million litas. Specialists believe this trend will continue this week.

Vilniaus Bankas broker Kestutis Kvainauskas told BNS that investors are likely to focus their attention next week on Official List bank shares and Rokiskio Suris. Experts believe prices for these shares should stabilize.

Russia: Market completely illiquid

The RTS1-Interfax index, the official indicator of the Russian Trading System, plunged 4.18% to 50.12 points Sept. 18, hitting another record low for the second day running.

Since Sept. 11, the stock market prices have decreased by 20 percentage points.

Traders said nothing is happening in the country that can affect market liquidity. Price changes are purely indicative since they are not backed by real trades. There were only 37 trades confirmed by counterparts on Sept. 18.

The market is absolutely illiquid and there is no trading as such, Aleksei Bychkov, deputy head of investment at Sovfintrade told Interfax. The market is still pessimistic and investors have differing opinions about the new government, which is having a negative impact on liquidity.

Confidence in the government must be restored, said Valery Fotchenkov, a senior trader at Analaize. So far the new government has only proposed printing money, which shows its weakness, he said.