Stock markets: weekly report (September 29 - October 5)

  • 1998-10-08
The outlook for the Baltic stock markets is still gloomy.

Indexes fell sharply on the rumors about the next banking crisis in Estonia, and additional Baltic companies' losses in Russia.

The only positive sign for Latvia is election and referendum results. In case a workable majority government is created soon, some positive market trends might be expected.

Estonia: TALSE crashes below 100 points

Last week, share prices crashed on the Tallinn Stock Exchange and the TALSE Index fell below 100 points.

The TALSE ended the week down 19.68 percent at 95.23 points.

Uhispank broker Priit Jarviste said the TALSE's 100 point dive was the event of the week. It has yet to reach its lowest level, he said, and it will fall further in the future.

Jarviste doesn't see any major changes ahead, and says prices will continue to fall. "The market is dominated by speculative interest and illiquidity," he said.

The broker believes low trading volumes will continue for some time.

Trading with additional list shares with poor liquidity will apparently be conducted on an order book basis starting from Monday. "What this means is that continuous quotation of these shares is not obligatory," he said.

Shares in Tallinn Pharmaceutical Factory and Rakvere Meat Factory recently began being traded on the order book system.

The market reacted pessimistically to the Bank of Estonia's decision to force EVEA Bank into bankruptcy and take control of Investment Bank and Forekspank.

Jarviste believes Friday's fall was due to the failure of Forekspank's shares to return to quotation after being suspended on Oct. 1.

Recent interest in Uhispank is likely speculative, Jarviste believes, as there are no serious investors on the market.

Trading in bank shares totaled 34.2 million shares.

Shares in Uhispank fell 16.24 percent to 23.10 kroons ($1.77). Shares in Hansapank were the most heavily traded, totaling 42.8 million kroons. After news that SEB has sold its stake in Hansapank to Swedbank, Hansapank's market price fell. It fell the most on the main list, crashing 26.62 percent to 50.42 kroons.

Shares in Norma and Forekspank both lost around a quarter of their value, to 10.28 and 14.00 kroons.

Eesi Naitused's shares took the steepest dive last week, plunging 35.42 percent to 7.75 percent.

Baltika garment factory fell 25.78 percent 8.61 kroons following its announcement that it had purchased a controlling stake in Virulane.

Latvia: Riga still unattractive to investors

Last week, the Latvian securities market was still not attractive for investors. Unibanka was the only more or less liquid security traded on the Riga Stock Exchange.

As in previous weeks, the market was governed by many negative factors - both domestic and foreign. Therefore one cannot expect an upward trend on the Riga bourse in the near future.

The DJRSE index plummeted 16 percent last week to 101.66 points. The RICI index sank 11.5 percent to 221.74 points. At present, the RICI index is on the same level it was at the end of June last year.

Last week the total turnover was nearly 700,000, with trading in Unibanka's shares accounting for 80 percent of the turnover. The bank's stock price plummeted 16 percent to 0.97 lats ($1.67).

The prices of other stocks on the stock market cannot be regarded as truly indicative as their turnovers were extremely low.

Foreign news - the dramatic financial situation in Russia, as well as the steep slump in the world financial markets - had a very negative impact on the Latvian market

In this situation of overall volatility, one could hardly expect new investors to appear on the Baltic states' stock markets.

The situation on the Latvian market could be worsened by negative news from Estonia, as trading with Forekspank and EVEA Pank stocks was suspended on the Tallinn bourse.

The majority of investors on the Baltic market have until now been interested primarily in Estonian stocks, so it is hardly likely that Western investors leaving Estonia will reorient to the Latvian or Lithuanian stock markets.

The news from Latvian companies hasn't been particularly good either. For example, Olainfarm and Rezekne Milk Cannery's stocks were removed from the DJSRE index calculations last week.

Kaija's huge losses - 100,000 lats - also does not stimulate optimism in the market, although this news was not a surprise.

It's unlikely the market will become more active after the quotation of shares for Latvijas Balzams, Ventspils Nafta, Kvadraprints and Latvijas Udensceli start on the Riga bourse, because the interest for these shares on the over-the-counter market was insignificant.

In the nearest future the market will be driven by volatility and the low liquidity of most Latvian stocks. This situation could last until the New Year, if there will be no unexpected bad news on the market.

Lithuania: Share prices continue to slide

The slow slide in share prices on the Lithuanian National Stock Exchange continued last week, although experts believe the situation is better than it was one month ago.

The Litin index dropped another 4.36 percent to 401.15 points. It spent a couple of days below the 400 mark.

The LitinA fell 3.01 percent last week to 1321.80 points Oct. 2.

Vilniaus Bankas led trading on the central market with 1.16 million litas ($290,000) in turnover. Due to a tapering off of demand at the end of the week, its price dropped, finishing the week down 10 percent to 17.38 litas.

Shares in Hermis Bank were stable, with trading (including direct deals) totaling just 329,000 litas. Shares in Rokiskio Suris had a similar turnover.

On the current list, there were practically no signs of life, with all activity in these shares in direct deals.

Experts don't see any improvement in the market in the near future and expect share prices to continue their downward slide.

Most experts believe the situation on the market is somewhat better than one month ago, when steep falls in turnover led to sharp dips in share prices.

"Currently there are buyers and sellers on the market who are willing to conduct deals at low prices," said Vilniaus Bankas broker Linas Grinevicius.

Many experts believe that prices on popular shares shouldn't fall too much further - Rokiskio Suris, Vilniaus Bankas and Hermis are near their nominal value and will become attractive to serious investors.

Grinevicius noted, however, that a quick rise in share prices can't be expected since the market isn't reacting to good news, just bad.

Moscow: still no light at the end of the tunnel

The activity on the Russian stock and bond market was closed to zero

There are still no buyers and no sellers, as average daily turnover was just $300,000. The Russian Trading System index (RTS - Interfax) went down to 39 points (17 percent) during a week. The ruble was stable at 16 RUR/USD.