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SEB buyout a done deal as turnover sets record

  • 2000-11-23
Official completion of Skandinaviska Enskilda Banken's (SEB) buy-out of Latvijas Unibanka and Vilniaus Bankas last week brought the Baltic List stocks turnover to a record level of 175 million euros ($150.1 million). Trades in Vilniaus Bankas shares accounted for 58 percent of the list's turnover, or 102 million euros, and Latvijas Unibanka, 38 percent, or 67 million euros. The remaining Baltic List stocks gathered the remaining 4 percent of the list's total weekly turnover.

Although most banks' shares saw their prices declining slightly over the week, the Baltic Index of the 15 blue chip stocks listed on Riga, Tallinn and Vilnius bourses nonetheless turned in a gain of 1.7 percent, finishing at 135.28. Gainers edged losers eight to five, with two of the list's Estonian stocks unchanged. With banking stocks losing their representation on bourse listings, shares of smaller companies now have a chance to show greater impact on index movements. This past week saw Kalnapilis, Rokiskio Suris and Balta posting the biggest gains, up respectively by 25.8 percent to 1.25 euros, 4.2 percent to 6.4 euros, and 4.5 percent to 6.49 euros. These shares benefitted as investors reinvested profits taken from selling their banking stocks to SEB.

Eesti Telekom was the "leader among the outsiders" with its stock losing 3.2 percent, to 6.1 euros. Analysts believe the stock was negatively affected by the options market, as last week a significant number of Telekom stock options were to be redeemed. The fall by Eesti Telekom pulled down the Baltic List's capitalization by 1.7 percent, to 3.22 billion euros. The Estonian shares capitalization Nov. 17 was 1.83 billion euros, Latvian stocks stood at 611 million euros, down 0.2 percent, and Lithuanian at 787 million euros, up 1.2 percent.

Estonia: Market ignores continuing U.S. election debate

Share prices traded on the Tallinn Stock Exchange were relatively stable during the week, with Norma and Eesti Telekom reacting to pressure from sales in their underlying options. The TALSE index finished the week 1.2 percent lower at 142.97, with total turnover at 102.3 million kroons ($5.6 million). The price euro index of six Estonian Baltic List stocks was flat over the week at 117.10.

"It was a generally positive week on the stock exchange," Trigon Securities trader Kaur Elviste said. "On the background of the world markets' instability the stock prices on the Estonian market held steady." Without pressure apparently caused by the options deadline, the picture would have been even better, he added.

Hansapank demonstrated an extreme aversion to volatility during the week, closing at 140 kroons, and limited to a trading range between 139 and 140 kroons all week. Of Hansapank's five-day turnover of 44.6 million kroons, 26.6 million kroons worth turned over on Friday.

Norma and Eesti Telekom fell under selling pressure on Thursday. In the week's count Telekom dropped 3.2 percent to 95.50 kroons, with turnover of 12.1 million kroons. Norma climbed nearly 3 percent on Friday to end at 51.60 kroons, still 0.39 percent below its week earlier close. Investment bank Suprema reaffirmed Norma's fair value estimate at 55 kroons.

The price of EVP privatization vouchers was supported by a bond issue by the Compensation Fund. EVP moved 2.3 percent lower to 0.701 kroons on turnover of 18.3 million kroons. Elviste predicted that the price of EVP may decline a bit further next week due to lack of demand.

Turnover of the Estonian Baltic List stocks was 4.9 million euros, or 75 percent of total TSE turnover.

Latvia: Unibanka's days on Riga bourse over

Completion of SEB's buy-out of Latvijas Unibanka last week pushed up Unibanka's turnover to 36.5 million lats ($58.5 million), which accounted for 99 percent of the total Riga Stock Exchange weekly turnover. Thus the period of active trading in Unibanka can be regarded as having come to an end, as SEB has now acquired 98 percent of the bank's stock. For other, less liquid stocks, the prices last week were either stable or pursued an upward trend. The capitalization index DJRSE was 0.38 percent higher, at 143.65, while the price index RICI climbed 1.5 percent to 185.64. The composite Latvian index of the Baltic List stocks rose 0.28 percent, to 166.49.

The RICI grew on gains by fiberglass maker Valmieras Stikla Skiedra, Staburadze and Balta insurance company. But these stocks' capitalization is substantially smaller than capitalization of oil company Ventspils Nafta, Latvijas Gaze and Unibanka, therefore the DJRSE is directed less by their price movements. Stabu-radze's optimistic plans, made public last week, seemed to comfort investors, who pushed the stock up by 10.8 percent to 0.82 lats. Valmiera Fiberglass shot up 10.2 percent, closing at 0.43 lats. Investors are apparently investing some of their gains from Unibanka sales, putting their faith in Valmiera Fiberglass, which is one of the most stable manufacturing companies in Latvia.

Balta insurer saw its stock post gains of 5.1 percent to 3.47 lats. Unibanka analyst Janis Purgailis believes that investors, happy about Balta's successful nine-month operating results, hope to receive good dividends for 2000. Latvijas Gaze meanwhile fell 1.2 percent during the week to 3.56 lats on a turnover of 320,000 lats. Ventspils Nafta gained 3.4 percent to 0.9 lats on a turnover of 62,000 lats.

Unibanka's shares last week fluctuated between 2 and 2.7 lats. Judging by movement of Estonia's Uhispank stock following the completion of its SEB buy-out, most analysts believe SEB in the future will continue as well in buying Unibanka's shares at a price near the public offer of 2.05 lats, possibly until delisting of Unibanka from the bourse is complete.

Lithuania: Investors find new opportunities after SEB

A bullish mood prevailed last week on Lithuania's National Stock Exchange as some specialists predict trading focus could shift from Official to Current list stocks soon. The bourse's continuously tracked price index Litin-10 soared 6.4 percent to 1118.41, the Official List index up 2.4 percent to 454.95, and the secondary Current List index Litin-A rose 3.8 percent to 1152.28. The price euro index of five Lithuanian Baltic List shares climbed 5.6 percent to 135.76.

"I do not think that it is worth paying much attention to the Official List. Instead, Current List's Vilniaus Vingis and Ekranas have seen active trade recently," Arunas Rascius, analyst with the brokerage firm Jusu Tarpininkas (Your Intermediary), was quoted. Most analysts believe that funds received by investors from selling Vilniaus Bankas shares to Sweden`s Skandinaviska Enskilda Banken (SEB) began flowing back into the market. Brokers say that these funds triggered the growth in share prices and in more active volume on the central market.

On Friday, SEB's official offer to buy all outstanding shares in Lithuania's largest commercial bank, Vilniaus Bankas, expired. SEB purchased 6,997,156 shares in the bank for 349.8 million litas ($87.4 million), which comprise 45.3 percent of the bank's authorised share capital, and increased its stake in the bank to 97.9 percent. On the central market Vilniaus Bankas saw sluggish trading, posting a turnover of 147,300 litas. Its price edged up 0.1 percent to 49.85 litas. According to brokers, trade in this stock will stop, and will soon be delisted from the stock exchange.

SEB has said that following the implementation of its offer it intended to discuss the possibility of transferring remaining shares in Vilniaus Bankas, currently quoted on the Official List, onto the pages of unlisted securities. Vilniaus Bankas should be delisted from the Baltic List as well.

Lietuvos Telekomas rose 1.9 percent to 2.08 litas amid 1.35 million litas turnover, opposing downward movement of neighboring telecom shares of Eesti Telekom. "The good news is that the stock has moved upwards. This fact gives hope that it will keep to this upward track next week as well," Martynas Kulvinskas, head of the securities trading unit at agricultural bank Zemes Ukio Bankas, indicated.

Among the Baltic List stocks cheese maker Rokiskio Suris increased 4.8 percent to 22.00 litas and brewer Kalnapilis rocketed up 26.4 percent to 4.3 litas. Brokers said that Kalnapilis shares should continue to see strong demand as the market still expects Kalnapilis to be one of the three breweries sold by Carlsberg. Knitwear producer Utenos Trikotazas rose 3.4 percent to 3.0 litas.

Outside the Baltic List companies, refrigerator producer Snaige jumped 23.7 percent to 29.76 litas amid 316,900 litas turnover. On the Current List, TV-tube maker Ekranas continued its bull run, gaining 42.9 percent, to 7.36 litas, and posting 631,800 litas in turnover. "Ekranas may keep this high turnover, however, a part of investors' funds will be directed towards shares in the electronic component maker Vilniaus Vingis, which is one of the main suppliers to Ekranas," Kulvinskas said. Vilniaus Vingis soared 23.6 percent to 4.45 litas on 534,300 litas turnover.

Textile producer Linas charged ahead by 8.7 percent to 0.62 litas, and oil concern Mazeikiu Nafta grew 5.2 percent to 0.80 litas. "News about the resumed negotiations between the Russian oil company LUKoil and the Lithuanian oil refinery Mazeikiu Nafta was the reason for the more active trading in this stock," Kulvinskas said.

Overall equity turnover on the bourse reached 375 million litas, with lion's share going to block deals in Vilniaus Bankas.