Stock markets: weekly report (October 13 - 19)

  • 1998-10-22
The prospects for the Baltic financial markets became clearer last week after Estonian Hansapank and Latvian Unibanka, two of the largest Baltic banks, declared their intention to find new(foreign) strategic investors for themselves.

It seems, that super-banking tandem Swedbank-Hansapank might find a good foreign investor faster that Latvian Unibanka alone, considering that Hansapank already has a branch in Latvia and is going to speed up the process of establishment a bank in Lithuania.

The only way for Unibanka to win the battle with Hansapank for the best foreign investor is to speed up the cooperation process with Estonian Uhispank and Lithuanian Vilnius Banka. In case of such merger the united bank will be more attractive to a big foreign financial institution.Estonia: Restless week takes TALSE over 100 points

The stock index TALSE climbed above 100 points in a relatively restless week of trading as pessimism which prevailed on the Tallinn Stock Exchange in the early part of the week turned into buying euphoria on Thursday.

The stock index TALSE finished the week at 107.92, up 9.92 percent from the previous Friday.

Talinvest Suprema securities department chief Sten Sumberg said the week started in a more pessimistic mood than when it ended. "The whole week was relatively unstable and restless," he said.

Seen against the background of gains elsewhere in the world, the market was weak on Friday, Sumberg said.

The index had made a jump of more than 8 percent on Thursday.

"Since the market rose relatively much on Thursday, no strength was left for a rise on Friday," Sumberg said. But he added that it was supported by the good news from other markets that the exchange here avoided stronger selling pressure caused by profit taking.

Commenting on the decline of Hansapank shares in Friday's session, Sumberg said Hansa had risen much during the week in anticipation to the decisions at Saturday's shareholders meeting and that the share had run out of strength.

Hansapank rose 14.17 percent to 63.65 kroons. Some deals with Hansapank shares on the Helsinki stock exchange took the share as high as 68 kroons on October 15.

Ninety-five percent of the market believes that Hansapank shareholders will endorse all proposals by the board and that there will be no last minute changes in connection with the issue, he said.

Sumberg said the results released by Hansapank and Uhispank were routine figures which failed to bring about any major change in the price of the banks' stock.

"There's no correlation between the share price and the released data," he said.

Uhispank finished the week 8.83 percent higher at 25.03. Forekspank recovered well during the week, gaining 4.65 kroons or 76.86 percent and averaging 10.70 kroons on October 16.

"Such a sudden rise of Forekspank shares was a surprise for most of the market," Sumberg said. He said the only explanation to the rise was that it was caused by the activity of one or two major buyers who were determined to get the shares.

Also rising substantially on the main list were shares in the car seat-belt maker Norma, which put on 36.46 percent to average at 13.10 on Friday.

The week's absolute record was a 170.55 percent rise of the computer maker Pennu, up 9.4 kroons to 15 kroons.

Tallinna Kulmhoone, which returned to the stock exchange system after a brief period of suspension, dropped 56.86 percent during the week to 11 kroons.

Shares in Uhispank produced this week's highest turnover of 26.5 million kroons. Next came shares in Hansapank with 20.9 million kroons and Forekspank with 14.7 million kroons.

The week's total turnover on the stock market was 85.7 million kroons.

Latvia: Investors begin to differentiate

If all of the shares on the Riga Stock Exchange were previously forced lower because of the Russian crisis, last week it appears that investors began to differentiate between those companies which depend on the Russian market and those which don't.

As a result of such a division, there was a group of strong gainers and heavy losers.

Shares in Rezekne Canned Milk Factory plunged by one-third, shares in Lode factory sank 27 percent, Kombercbanka by 18 precent and Grindex by 14 percent.

Shares in Valmiera Fiberglass, which has minimal sales in Russia, rocketed up 18.5 percent. The factory has met its annual profit target in nine months.

Grindex's poor performance can be explained by its unfortunate purchase of the Tallinn Pharmaceutical Factory. While Grindex was selling 25 to 30 percent of its output on the Russian market, Farma's dependancy on the Russian market was a staggering 70 percent.

It can be stated with certainty that the market has stabilized itself at the current level. Last week the DJRSE index fluctuated around 94 points. The RICI slipped seven points, however, to 181 points.

The halving of turnover on the exchange, from 937,000 to 491,000 lats, is explained by several factors. The announcement by Unibanka that it is seeking a strategic investor has given shareholders a reason to hold onto their shares in hopes of better prices.

Second, investors were waiting for the announcement of the nine-month results.

In addition to the blue chips, attention next week will focus on shares in Latvijas Balzams and Ventspils Nafta (which appear on Tuesday). Analysts expect both stocks may stabilize between 0.80 and 1.20 lats.

Shares in Ventspils Nafta are likely to be affected more than Latvijas Balzalms by external factors, such as the pace of construction of the Butinge terminal in Lithuania and the low price of Russian oil on the world market.

Lithuania: Slow week for Vilnius bourse

The activity of investors on the Lithuanian National Stock Exchange dropped considerably last week, but the fall in Official List shares slowed.

After a sharp fall the Litin index recovered to finish the week up .22 percent at 369.37 points. The LitinA index fell another 3.45 percent to 1226.72 points.

Total turnover fell by more than half last week to 20 million litas, with trading in shares totaling just 4.6 million litas.

Brokers explain the passivity with investors waiting for nine-month results. So far just several banks and factories have released their results.

Vilniaus Bankas releasing solid earnings results didn't help its share price very much. It gained just 2.69 percent last week to 16.05 litas.

Despite much less favorable results, Hermis Bank's share price jumped 11.38 percent to 56.05 litas.

Brokers say that good news isn't moving the market, that psychological factors are more important.

Rokiskio Suris shares continued to dominate trading on the Official list at 1.46 million litas last week. Despite starting the week up, the company's shares fell sharply to end the week down 8.14 percent at 16.36 litas.

Brokers believe the shares lost ground as the company has not begun to buy up its own shares, which it promised to do to support their market share.

Current list shares were of little interest to investors or they conducted direct deals.

Suprema brokerage's analysts expect trading to pick up this week as more firms announce their nine-month results.

Russia: stocks soar sharply but fall before weekend

Russian stocks ended a week-long rally on a sour note at the weekend with shares off three points by late-afternoon as nervous traders cashed in profits from a five-day fight-back during which equities soared almost 30 percent.

Dmitry Starenko, co-head of trading at Troika Dialog Investment Bank, said the spurt in activity had come on the back of a cut in US interest rates and the decision by the U.S. Congress to make available a further 18 billion dollars to the International Monetary Fund.

Positive corporate news, such as the decision by Moscow's electricity outfit Mosenergo to pay a eurobond coupon despite a moratorium on payments to foreign creditors, also helped market sentiment, traders said.

However, despite volumes of around six million dollars most trading remained largely speculative and vulnerable to market news. Next week's talks between Russia and leading Western banks hurt by August's default on domestic government debt, will play a key role in determining market sentiment, dealers said.