Stock markets: weekly report (October 27 - NovemberÊ2)

  • 1998-11-05
Last week the rise of the Lithuanian securities market stood out against the stagnating Estonian and Latvian bourses. The turnover on the Lithuanian exchange nearly matched the turnover of the Tallinn bourse, and the rise of its indeces beat the performances of its Baltic neighbors.

Nevertheles a small rise on the Latvian and Estonian stock markets may be predicted. A rebound here would be tied with an overall rise in world share markets. Last week the G-7 countries announced significant support for emerging markets.

Another positive sign was the stabilization of interest rates on the interbank market in Latvia. In Estonia interbank rates continued their growth last week.

The weekend's news that Rigas Komercbanka plans significant layoffs can also be looked at two ways. While it signals that the bank does not foresee a rebound, it also shows the resolve of the bank's management to take the tough decisions needed to limit losses. This will also make the bank a more attractive investment for potential investors. Rumors about this are still circulating.

Latvia: Stagnation still prevails

Last week did not bring any positive changes to the Latvian stock market. Macroeconomics and company news were mostly bad and only the desire to improve balance sheets at the end of the month helped the DJRSE avoid dropping more than 0.77 percent to 88.35 points.

The RICI index dropped by 6.5 percent, however. The difference is due to the greater importance of Unibanka and Rigas Komercbanka in the capitalization-weighted DJRSE index. Unibanka's shares gained 2.3 percent last week to 0.89 lats ($1.56) while Rigas Komercbanka's shares rallied 21.5 percent to 0.46 lats.

Rezekne Milk Cannery - posting a 25 percent gain - and Liepajas Metalurgs - which soared 23.8 percent - were also among the big gainers last week.

The two recent shares to the exchange - Ventspils Nafta and Latvijas Balzams - appeared to find their stable price level last week as there were no sharp fluctuations as in previous weeks.

The list of losers, as in previous weeks, is quite long. Large industrial shares (metallurgy, pharmaceuticals, and construction) which are directly or directly dependent on Russia were hit once again. Shares in Daugvapils Drive Chain Factory dropped to just eight santims. Shares in Grindex plummeted 24 percent to 19 santims and shares in its rival Olainfarm slipped 13 percent to 48 santims.

Shares in Mangalu KRR took the top honors by losing half their value. Shares in the brick factory Lode crumbled by 37 percent.

Turnover last week totaled 425,000 lats, with 60 percent in deals with Unibanka shares. Trading in Ventspils Nafta shares came in second at 18 percent. The rest of the market is practically illiquid.

Market participants remain pessimistic. No local or foreign specialists risk predicting a quick rebound. So far, all of the bad predictions of Western experts have come true.

In particular, last week Deutsche Bank's forecast of a rapidly worsening current account deficit was confirmed.

Estonia: TALSE falls to below 100 points again

In the apathetic trading characteristic of the Tallinn Stock Exchange recently, the TALSE index fell by 6.97 percent to 96.21 points.

Uhispank broker Rein Ratsepp said that brokers can run out of work on such a quiet market.

Trading is apathetic and even the nine-month results of the Hansapank group failed to have any effect on the market.

Also speculation about Uhispank's strategic investors is dying down and the price level of the share has fallen back to the level it was at before the "bubble".

Last week, the most traded were shares in Uhispank, producing a turnover of 22.2 million kroons ($1.68 million). The share fell by 19.30 percent and ended the week at 22.30 kroons average.

In terms of turnover, Uhispank was followed by EVP privatization vouchers.

The price of the vouchers rose by 3.57 percent to 0.29 kroons during the week.

The total turnover of the stock market was 60.7 million kroons.

Such extremely slack trading should continue for several more weeks, Ratsepp said.

"With such low turnovers and such an insolvent market there's no sense attempting to read any trends from the TALSE movement," Ratsepp said.

By a decision of the Stock Exchange Listings Committee shares in AS EMV and Tallinna Farmaatsiatehas were transferred from the main to the supplementary list, as the average market value of the shares has been under the required 200 million kroons during the past six months.

Lithuania: Trading in bank shares livens market

Last week trading on the Lithuanian National Stock Exchange was characterized by extremely active trading in shares in Vilniaus and Hermis banks.

Trading in cheese-maker Rokiskio Suris stocks was quite active as well.

The total turnover of those top three stocks was 12.7 million litas ($3.2 million) or nearly half of the total turnover last week.

Suprema brokerage's analysts predict that investors' interest towards these three securities will not die out in the nearest future.

Bank Hermis stocks were highly popular the past week. On the central market the bank's stock turnover was 1.35 million litas, but 8.93 million litas in block deals were conducted.

Hermis' stock price shot up by 33.44 percent to 69.31 litas.

Vilniaus Bankas' stock attracted investors as well and its price rose by 11.21 percent to 19.05 litas in 1.94 million litas of trading.

Compared with the banks' securities, the turnover of Rokiskio Suris' stock was a little more modest - 476,000 litas. Its share price slid 3.05 percent to 17.14 litas.

As in recent weeks trading in current-list stocks was light on the central market. Share prices continued to fall minimally throughout the whole week.

Block trading of current list stocks was a bit more active. The biggest block deals were concluded in Panevezio Pienas dairy stocks. Their average price in these deals was 4.21 litas with a total turnover of 1.09 million litas.

The rise of Vilniaus and Hermis banks' stock prices substantially increased the bourse's official list Litin index, which rose by 11.26 percent to 419.17 points. Meanwhile, the current list LitinA index slid by 3.57 percent to 1186.70 points.

The total turnover of the Lithuanian National Stock Exchange was 25.7 million lits. Block deals accounted 85 percent of the total turnover.