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SEB funds "flew away" from the Baltics

  • 2000-11-30
Last week trading accounts were settled in Swedish Skandinaviska Enskilda Banken's (SEB) purchase of Latvijas Unibanka and Vilniaus Bankas, closing the door on expected substantial future trading activity on the Baltic bourses. Moreover, with most Baltic Index shares either stable or down, it seems that investors are content to sit on the sidelines now that the buyout excitement is over. The Baltic Index of 15 blue chips listed on the Riga, Tallinn and Vilnius bourses dropped 1.2 percent over the week to 133.61 points. Gainers and losers were nose to nose, at seven apiece, on the Baltic List, with one stock unchanged.

The index was pulled down by a sharp 25 percent fall of Lithuania's Kalnapilis, to 0.95 euros ($0.79), as rumors about the expected sale of the com-pany's controlling stake proved to be premature. Estonia's auto safety belt manufacturer Norma didn't help matters in posting substantial losses on top of news of significant changes in AvtoVAZ company plans. Eesti Telekom and Lietuvos Telekomas, the most highly capitalized Baltic stocks, meanwhile posted slight gains, pushing the Baltic List's capitalization up by 0.3 percent to 3.24 billion euros. Estonia's share in the Baltic List's capitalization on Nov. 24 was 1.83 billion euros (unchanged), Latvia's 614 million euros (up 0.55 percent) and Lithuania's 801 million euros (up 1.8 percent).

The Baltic List's turnover last week amounted to just 6.5 million euros with Estonian stocks making up 60 percent, Latvian stocks 34 percent and Lithuanian 6 percent. In Latvia and Estonia the Baltic List stocks contributed over 70 percent of their home bourse turnovers while in Lithuania this indicator was around 40 percent.

Estonia: Norma grabs limelight on bourse

The auto seatbelt manufacturer Norma drew the attention of players on the Tallinn bourse last week owing to reports that a competing belt factory was to be built in Russia. The TALSE index finished the week 0.17 percent higher at 143.22. The euro price index of six Estonian Baltic List stocks was off 0.2 percent to 116.8.

"Speculations surrounding the Norma share lent color to the week," Trigon Securities broker Kaur Elviste said. "Unshakable faith in Norma cracked a bit." Norma fell 5.6 percent to 48.7 kroons ($2.61). Despite Russian auto producer AvtoVAZ' considerations to consolidate all production operations in Russia and to open talks with several companies about establishing joint ventures, Norma company executives are still upbeat on the company's future in Russia. Norma CEO Peep Siimon said the firm has an assembly plant in Russia that is fully able to satisfy additional orders from auto manufacturers. Siimon said several belt manufacturers have in recent years sought to establish themselves in Russia, but have had no success, with Norma holding on to its share of the market.

Movement of other stocks was pretty colorless, Elviste added. Hansapank lost buying support above the 140 kroon level and sank back to 138 kroons, down by 1.4 percent from the previous Friday, with trading volume of 26.2 million kroons for the five days. Eesti Telekom was steady, gaining 1.0 percent to 96.5 kroons. On Friday Suprema investment bank said it still maintains its 'buy' recommendation for the share, but lowers its share price target from 137 to 126 kroons.

EVP privatization vouchers saw in the outgoing week brisk trading on a firm downward trend. "EVP lost buying support arising from the Compensation Fund issue," Elviste said. The privatization voucher plunged 15.1 percent to 0.595 kroons in deals worth 14.8 million kroons.

TSE weekly turnover totaled 82.7 million kroons.

Latvia: Stock prices stable amid subsiding activity

Trading was mostly calm last week on the Riga Stock Exchange, with stock indexes stable despite a significant drop in turnover. The capitalization index DJRSE jumped 0.09 percent to 143.78, while the price index RICI dropped 0.08 percent to 185.49. The composite Latvian index of the Baltic List stocks grew 1.3 percent on significant gains posted by Balta insurance company, which shot up 5.2 percent to 3.65 lats ($5.81). The attractiveness of the stock is attributable to the company's high profit forecast for 2000.

Staburadze pastry factory was the only stock causing unrest as it rocketed up 10 percent, to 0.9 lats, on news of its purchase of a controlling block in Laima, the biggest chocolate maker in Latvia.

Trading in Staburadze, though, was suspended as market makers were not provided information about the details of the deal. One can only guess if this is yet another example of the lack of transparency investors here in the Baltics face, and must continue to lean on stock exchange officials in demanding that trading and information flows are conducted fairly and honestly for the protection of all investors, both large and small. The resumption of trade in Staburadze stock may be decided next week.

Although the deadline for SEB's stock buy-out offer to Latvijas Unibanka shareholders has expired, the bank's shares are still actively traded on the bourse, with last week's turnover reaching 593,000 lats. The experts are unanimous in their opinion that the Swedish bank is still buying the shares on the open market at 2.05 lats per share, and that the buying will continue as long as they remain on offer.

Latvijas Gaze remained in focus on the Riga bourse with turnover at 454,000 lats, with its price almost flat for the week, down just 0.2 percent to 3.55 lats. It seems apparent the major shareholders value the gas company's shares between 3.5-3.6 lats, therefore the price is unlikely to change anytime soon.

Ventspils Nafta (Ventspils Oil) meanwhile lost 3.3 percent to 0.87 lats on a modest turnover of 44,000 lats. The fall in demand for the oil terminal's stock may have fuelled the slight decrease in the stock price but, taking into account the high oil price on world markets, the shares are unlikely to become significantly cheaper.

As of the next week Pirma Latvijas Komercbanka will begin formal listing and trading on the Riga bourse, although most analysts have said they don't expect active trade in the nearest future.

Turnover on the Riga Stock Exchange last week was 1.3 million lats.

Lithuania: Trading calmer, prices weaker

Trading on the Lithuanian stock exchange was rather placid, with most stocks weak after the previous week's run-up. The benchmark price index Litin-10 slid 1.3 percent to 1103.52, the Official List index Litin dropped 1.2 percent to 449.49, and the secondary Current List index Litin-A edged up 0.5 percent to 1158.26. The euro index of five Lithuanian Baltic List stocks tumbled 4.9 percent to 129 due to sharp losses posted by Kalnapilis' stock.

Martynas Kulvinskas, head of the securities trading unit at Zemes Ukio Bankas (Agricultural Bank) said that no proceeds from sales of shares in Vilniaus Bankas returned to the market. "The major part of the sold shares in Vilniaus Bankas belongs to foreign investors, who gradually retrieve from the Lithuanian stock exchange. Therefore, in my opinion, only a small part of funds received by foreign nationals will come back. Meanwhile, the local investors, following last week`s rapid growth of the market, decided to take a break and wait till share prices stabilize," Kulvinskas said. Audrius Ziugzda, head of the financial institutions department of Vilniaus Bankas, said that Lithuanian investors received about 70 million litas ($17.5 million) from the total of 349.9 million litas paid by Sweden`s Skandinaviska Enskilda Banken for shares in Vilniaus Bankas.

Lietuvos Telekomas was the most traded stock on the central market this week, posting 1.07 million litas in turnover. The stock edged up 0.9 percent to 2.09 litas. Other Official List stocks saw more cautious trade. Refrigerator producer Snaige dropped 1.4 percent to 29.34 litas amid 150,300 litas turnover, and cheese maker Rokiskio Suris slid 5.0 percent to 20.90 litas on 53,700 litas turnover.

Brewer Kalnapilis slumped 25.5 percent to 3.2 litas, posting 36,600 litas in turnover. Finasta broker Aurelijus Rimkus said that Kalnapilis was pulled down by the news that Carlsberg would likely wait until next year to make decisions as to which of Lithuania's three leading breweries it would sell.

Ekranas was the most traded stock on the Current List, posting a turnover of 830,800 litas; it slid 4.8 percent to 7.00 litas. According to brokers, this was expected, as Ekranas' shares were unjustifiably high due to its recent sharp price increase. All the same, some analysts remain optimistic. "The turnover of this stock suggests that shares in Ekranas should be one of the first to attract the returning proceeds from sales of Vilniaus Bankas," Rimkus said.

Oil concern Mazeikiu Nafta climbed 5.0 percent to 0.84 litas amid 282,400 litas turnover. "A high turnover of Mazeikiu Nafta, as well as the steady average price, show that the current share value satisfies both buyers and sellers," Kulvinskas said. According to him, investors who expect that Mazeikiu Nafta will soon sign an agreement with Russia`s oil company LUKoil are buying shares; however, there are many who view this possibility with skepticism.

The bourse's overall equity turnover reached only 3.4 million litas.