On Oct. 1, the TALSE index dipped below the 100 point for the first time in two years. It lingered below the 100 mark until last week, Oct. 14, when active trading of Hansapank stock pushed it back above the 100 mark.
In order to find out when was the last time that the TALSE index slipped below the 100 mark, one would have to look all the way back to June 1996. During the first month that the Tallinn stock exchange was operational, the TALSE fell to 86.14.
Last week's increase was mainly dependent on activity surrounding Hansapank. There was a large buying frenzy of Hansapank stock in anticipation of the new shares that the bank was expected to release after their meeting on Saturday, Oct. 17. Hansapank accounts for 50 percent of the value of the Tallinn stock exchange so any movement of Hansapank stock has a huge impact on the TALSE index.
"As always when Hansapank share price increases it will pull the others along as well," said Toomas Reisenbuk, a banking analyst with Hansa Investments.
At Saturday's meeting, Hansapank officials decided to issue 14.7 million new shares of Hansapank stock, at 100 kroons ($7.66) per share. The main buyer of the new stock will probably be Swedbank, the main investor in Hansapank.
Norma, the seatbelt manufacturer that exports most of its production to Russia, also experienced gains last week, a sign that they might be pulling out of their crisis. Their share price moved up 4.12 percent to 10.10 kroons.
"Maybe there was a feeling that the worst was over," said Reisenbuk.
The TALSE index isn't the only indicator that has shown volatility in the last few months. The financial situation in Russia and the rest of the world has caused markets all over the world to fluctuate madly.
"They have all dropped dramatically," said Reisenbuk.
The TALSE index began to rise in August of 1997, when many investors began taking out loans using securities as collateral on the loans. The loan money was then put back into the stock market, creating a false high.
Eventually, Eesti Pank (the Estonian Central Bank) began putting the brakes on the economy, by requiring that banks have more capital and other safety measures. Less and less people put money into the stock market.
"People got scared of putting in new money," said Peter Treialt, of Hansa Investments.
Tallinn tends to have a much more volatile stock exchange than either Vilnius or Riga, said Reisenbuk, because of the structure of their market. On the Tallinn stock exchange, there are so-called "market makers." These are people who have to buy or sell shares if there is someone who wants to buy or sell their shares. These people create or "make" a market where one does not automatically exist. Neither the Vilnius or Riga stock exchange uses market makers, so their stock exchanges are less volatile.
"What you have is a huge volatility," said Reisenbuk, who said that the movement on the Tallin stock exchange, is comparable to the Russian stock exchange. "The only market that I know that's as volatile as last year's is the Russian market."
Almost 60 percent of the people who buy stocks listed on the Tallinn stock exchange are foreign investors. Banks and a few local investors do the remainder of buying and selling.