Baltic shares strong despite uncertainty in rest of world

Substantial gains by several high-capitalization, though not always the most liquid, shares included in the Baltic List boosted the majority of Baltic stock exchange indexes in the outgoing week. This contradicts movements on major world stock markets, which are treading cautiously, as the drama of uncertainty surrounding the U.S. presidential election unfolds. The Baltic Index comprising 15 Latvian, Lithuanian and Estonian blue-chips jumped 2.4 percent to a new all-time finish of 132.93.

Rapidly climbing shares in Lithuania's Kalnapilis brewery, which gained 19.3 percent to 0.995 euros ($0.848), over reports about a planned change in the company's ownership structure, made a major contribution to the index's growth. It will be noted that out of the 15 shares on the Baltic List only one stock moved down, and by a narrow margin at that. The only loser was Ventspils Nafta, which saw its shares drop 1.6 percent to 1.637 euros, while the rest of Baltic List shares posted gains.

The weekly Baltic List turnover reached 9.92 million euros, including 5.01 million euros, or 50.5 percent, contributed by Estonian stocks. Latvian stocks accounted for 42 percent, or 4.15 million euros, and Lithuanian stocks for 7.75 percent, or 0.77 million euros. In all three Baltic states the Baltic List shares generated 55 percent to 80 percent of the total turnover on their respective home bourses.

Due to the gains posted by the majority of high-capitalization stocks, Estonian and Lithuanian telecoms included, the Baltic List capitalization increased by 1.7 percent over the week to 3.25 billion euros. On Nov. 10 the capitalization of Estonian Baltic List stocks was 1.86 billion euros (+2.7 percent), for Latvian stocks it was 612 million euros (+0.2 percent) and for Lithuanian stocks 787 million euros (+1.3 percent).

Estonia: Key shares rise, U.S. elections felt in Tallinn

Uncertainty about the results of the U.S. presidential election affected stock prices in Tallinn in the outgoing week, but the prices of key shares nevertheless rose under the effect of local news. The TALSE index climbed 3.47 points, or 2.4 percent, to 144.73. The euro price index of six Estonian Baltic List stocks was up 3.7 percent to 117.13 points. Both U.S. and European analysts say the uncertainty in the U.S. presidential election is forcing the U.S. stock markets down, and is having an adverse effect on the dollar. These effects were also felt in Europe. "The markets do not like uncertainty," said Trigon Securities broker Kristel Kivinurm. "To a certain extent, the effects are being felt also on European markets." Kivinurm said that on Thursday Eesti Telekom surprised the market with its Q3 results. "Telekom's earnings were extremely high in Q3, and also the profit figure was surprising, although the turnover was slightly lower than expected," she said.

Supported by good results, Telekom hit its highest level for the week at 101.50 kroons ($5.63). Trading volume reached 30.6 million kroons, shares rose 3.1 percent and closed at 98.75 kroons.

According to Kivinurm, there was buying interest also in other key shares. "The money that moved into Hansapank, Telekom and Norma stock has come from shares in Latvijas Unibanka and Vilniaus Bankas," she said. "Some of it ended up also in Merko Ehitus and Saku Olletehas stock." Hansapank gained 2.0 percent over the week to 139.75 kroons, and Norma was up 1.3 percent to 51.8 kroons, hitting a record high of 3.389 euros on Nov. 6. The broker said that speculative investors came turned up to take profits out in the second half of the week, and together with falling foreign markets, weakened the Tallinn market on Nov.10. Kivinurm added that thanks to the results of a Compensation Fund issue released last Friday, the price of EVP privatization vouchers stabilized at 0.718 kroons. She forecast the price would remain at the same level also next week.

The EVP vouchers generated 27.4 million kroons of turnover, but total exchange volume came to 114.09 million kroons. Six Estonian Baltic List stocks were responsible for the turnover of 5 million euros, 68.5 percent of the total.

Latvia: Riga traders to miss Latvijas Unibanka

This week will be the last show for Latvijas Unibanka's shares to enjoy their role as a major contributor to Riga Stock Exchange trading turnover, as the SEB buy-out offer expires Nov. 13, and an absolute majority of the remaining shareholders seem likely to accept the cash offer made by the Swedish banking group. Last week Latvijas Unibanka's shares covered over 70 percent of the total stock market turnover on the Riga Stock Exchange. Total turnover reached 2.8 million lats ($4.49 million), which includes 1.98 million lats in deals with Latvijas Unibanka's shares. The four Latvian Baltic List stocks accounted for a turnover of 4.15 million euros, or 80 percent of the total weekly turnover on the Riga Stock Exchange. Prices and stock exchange indexes did not see any substantial moves in the outgoing week.

Dow Jones Riga Stock Exchange capitalization index (DJRSE), which depends on Ventspils Nafta's shares to a great extent, was off 0.2 percent, to 143.1, while the price index RICI moved up 1.2 percent, mostly due to the considerable gain in Valmieras Stikla Skiedra (Valmiera Fiberglass), which climbed 5.4 percent to 0.39 lats. The euro price index of four Latvian Baltic List stocks was up 0.34 percent to 166.03 points. The index in eurocurrency terms was boosted by a 2.1 percent gain in Balta insurance company shares, which rose to 6.211 euros. At the same time, however, turnover in this comparatively illiquid share was quite insignificant - only 349 lats.

Meanwhile Ventspils Nafta's shares lost 2.2 percent to 0.87 lats. Shares in Latvijas Gaze gas company and Latvijas Unibanka remained practically flat. Next week, when active selling of Latvijas Unibanka's shares is over, thus concluding SEB's public offer, it can be expected that investors will use part of their proceeds to buy shares in Ventspils Nafta. It cannot be ruled out that the oil terminal's shares may shoot above the 1 lat per share level. The main battle for shares in Latvijas Gaze will not be fought on the stock exchange floor, however. It will take place instead at an auction to be held in December to sell 2 percent of state-held shares in the gas company. The minimum sales price at the auction has been set at 3.23 lats, or 12.5 percent below the current market price of 3.6 lats.

Lithuania: Merger activity shifts trading interest

Trading on the Lithuanian stock exchange was rather volatile for the week, in which daily volume followed a roller-coaster trajectory. The bourseÔs benchmark index Litin-10 rose 2.5 percent to 1050.97, the blue-chip Official List index was up 1.69 percent to 443.89, and the secondary Current List index Litin-A edged up 0.07 percent to 1109.38. The euro price index of five Lithuanian Baltic List stocks was up 3.4 percent to 128.56.

Lietuvos Telekomas saw the most active trade, posting 1.62 million litas ($405,000) in turnover. Telekomas jumped to 2.10 litas on Tuesday, gave some back later, and closed at 2.05 litas.

Vilniaus Bankas edged up 0.10 percent to 49.80 litas amid 902,300 litas turnover. Trading in brewer Kalnapilis got more active towards the end of the week. Kalnapilis rocketed up 18.8 percent to 3.4 litas, posting 85,300 litas in turnover. On Thursday, Nov. 9, the Lithuanian Competition Council demanded that Danish brewer Carlsberg sell one of the three Lithuanian breweries that it would own after a planned merger with the beer business of Norway's Orkla. Its choices are Kalnapilis, Utenos Alus and Svyturys. Carlsberg currently owns the Svyturys brewery. The Baltic Beverages Holding company, in which Orkla holds a 50 percent stake, owns the Kalnapilis and Utenos Alus breweries. "Investors think that Kalnapilis is most likely to be sold and that it will be sold at a higher price than its value. This fact encouraged the share price to go up," Martynas Kulvinskas, head of the securities trading unit at agricultural bank Zemes Ukio Bankas, said.

TV-tube maker Ekranas was the most traded Current List stock, leaping 13.6 percent to 5.15 litas amid 286,600 litas turnover. According to Finasta broker Aurelijus Rimkus, the shares of Vilniaus Bankas, which currently enjoy the greatest popularity, should soon be delisted, and it is expected that investors target new investments. In these terms EkranasÔ shares might be the most attractive.

Kulvinskas forecasted that trading should remain quiet next week, with interest picking up only after the expiration of Skandinaviska Enskilda Banken's (SEB) offer to buy all outstanding shares in Vilniaus Bankas. "This fact should encourage more active trading in Lietuvos Telekomas as well," Kulvinskas said.

Overall equity turnover on the bourse reached 4.53 million litas for the week. Turnover of the five Lithuanian Baltic List stocks came to 768,598 euros, 58.7 percent of the total.