The Baltic Index calculated in euro currency was considerably affected by the significant rise of the euro against Latvian and Lithuanian national currencies, the lat and the litas. The index was pushed down mostly by the sudden decline in three stocks - Pro Kapital real estate company in Estonia, Latvia's oil terminal Ventspils Nafta and Lithuanian cheese maker Rokiskio Suris - where each lost from 10 to 17 percent in euros.
Losses experienced by the shares in local currency terms, together with the effects of a strengthening euro, resulted in a further reduction of Baltic List capitalization, by 1.7 percent to 3.10 billion euros ($2.74 billion). As of Dec. 8 the capitalization of Estonian Baltic List stocks was 1.76 billion euros (-0.2 percent), for Latvian stocks it was 576 million euros (-4.3 percent) and for Lithuanian stocks 766 million euros (-2.5 percent).
The total Baltic List turnover for the week was just 3.7 million euros, down by one-third from the previous week. Estonian stocks contributed 75 percent, Latvian stocks 13 percent and Lithuanian stocks 12 percent to the weekly turnover. In Estonia the Baltic List stocks accounted for over 80 percent of the total turnover on the home bourse. In Latvia this figure was 60 percent and in Lithuania only 30 percent.
Estonia: Quiet week leaves prices flat
Stock prices changed little during inactive trading on the Tallinn Stock Exchange last week. The TALSE index finished the week 0.6 percent lower at 138.26. The index of six Estonian Baltic List stocks was off 1.8 percent at 112.02. Hansapank Markets trader Romet Tepper said trading volumes were declining because of the pre-Christmas period.
The GDP figure released on Wednesday had no effect on trading in the short term, Tepper observed, adding that it could rather serve as a positive signal for foreign investors in the longer term.
The leaders in turnover were shares in Hansapank, 20.3 million kroons' ($1.14 million) worth which changed hands during the week. Hansa finished the week 0.5 percent higher at 134.75. Tepper said Hansa's resistance level was at 135 kroons with a support level at 134 kroons. "Apparently there won't be any significant change in the price of the share in the next couple of weeks either, but there will be next year," experts Tepper, adding that for those buying with a longer-term vision the share was a bargain.
Eesti Telekom saw a turnover of 15.5 million kroons, closing flat at 92 kroons. In Telekom's case sellers continued to predominate in London, Tepper said, adding that local investors were rather positively minded and were trying to buy cheap.
With a turnover of 5 million kroons, the EVP privatization voucher slid 0.4 percent to 0.639 kroons. Turnovers of more than three million kroons were also posted by shares in the car seat belt maker Norma and in real estate company Pro Kapital Group, which unexpectedly lost 17.4 percent to 37 kroons over the week.
On Thursday (Dec. 7), Optiva Bank announced its plan to reduce stock capital through a cancellation of shares. The plan suggests that the bank would cancel 17.2 million shares. Optiva's share should make a proportional correction upwards, the trader predicted. "Theoretically the new price should be 13.40 kroons," Tepper said. A buyout offer for Optiva's shares to small shareholders was made at 7.80 kroons per share, which is also the price at which the bank's shares traded at in a single deal this week.
The week's total stock market turnover was 53.9 million kroons.
Latvia: Weakness on Russian oil relations
Last week turnover on the Riga Stock Exchange dropped to a critical minimum with most leading shares lower. Dow Jones Riga Stock Exchange capitalization index (DJRSE) was off 1.6 percent to 140.50 and the price index RICI dropped 4.3 percent to 170.96. The euro price index of four Latvian Baltic List stocks fell by 3.7 percent to 158.45 due to the increasing euro exchange rate against the lat and a significant loss posted by shares in Ventspils Nafta oil terminal.
Ventspils Nafta's shares sank by 7.0 percent, from 0.85 ($1.37) to 0.79 lats, which was the response to press reports about deteriorating relations between the oil terminal's management and its largest Russian clients. Although the market participants do not question Ventspils Nafta's ability to meet its annual target figures for turnover and profit, in the long run the Latvian oil terminal is bound to encounter problems related to falling world prices on oil and the ever increasing tax burden of Russian oil companies. In the given situation Ventspils Nafta will have to lower its rates again next year and the company's profitability will suffer accordingly.
Last week saw a turnover of around 100,000 lats from deals with shares in Latvijas Gaze gas company and Latvijas Balzams distillery. Interest in Latvijas Gaze, which was flat at 3.57 lats for the week, is stimulated by the upcoming auction where a 2 percent stake of state-held shares will be sold off. At the same time, sudden interest in Latvijas Balzams shares can be explained by frequent rumors that a contolling stake in the distillery could be changing hands soon. Shares in Latvijas Balzams gained 2.8 percent to 0.36 lats.
Latvijas Unibanka's shares, still being bought by the Scandinavian bank SEB, remained unchanged at 2.05 lats throughout the week. Meanwhile, shares in Balta insurance company jumped 3.1 percent on a quite substantial turnover of 66,500 lats. Investors find Balta's shares attractive on account of its expected high profit levels. In addition, the statement by a representative from the Finnish financial group Sampo/Leonija, who said that it was "theoretically possible" for the Finns to resume talks about buying Balta's shares, adds extra intrigue to the market with the prospect of two Scandinavian insurers, Codan and Sampo, competing for control over Balta.
As expected, trading in Staburadze's shares was slow due to continuing uncertainty over its acquisition of Laima chocolate maker, and the stock plummeted 11.1 percent to 0.80 lats. It is obvious, however, that investors have decided to wait for details about the deal. As soon as more information becomes public, analysts will better be able to put a value on the company's future prospects, with trading activity picking up again.
The weekly turnover on the stock exchange was just 425,000 lats, or less than 100,000 lats per day.
Lithuania: Market lacks clear direction
Trading on the National Stock Exchange of Lithuania (NSEL) showed no surprises this week, and as each day a different stock would jump into the spotlight, brokers were apt to explain higher turnovers as random events. The benchmark price index Litin-10 dropped 3.4 percent to 1,073.76, the Official List index Litin climbed 1.3 percent to 455.23, and the secondary Current List index Litin-A sank 12.3 percent to 1,016.74. The drop in the Litin-10 and Litin-A was influenced by the drop of Lietuvos Energija shares which, with no price fluctuation limits applied due to changes in its authorized capital, plummeted 50 percent.
The euro index of five Lithuanian Baltic List stocks was off 4.1 percent to 125.80, mostly due to the strength of the euro against the US dollar and the litas. Lietuvos Telekomas remained the market leader with a rather stable turnover. Telekomas climbed 2.4 percent to 2.10 litas ($0.525) on around 1 million litas turnover. Brokers say that Telekomas followed the sharp increase in the prices of US technology stocks at the beginning of the week. However, they also feel that a rather large supply of shares remains on the market, so continued growth is doubtful.
Cheese maker Rokiskio Suris dropped 6.6 percent to 21.00 litas amid a 384,100 litas turnover, and refrigerator maker Snaige climbed 3.3 percent to 31.00 litas on 201,500 litas turnover. "Buying interest in Snaige's shares remains fairly strong, obviously, somebody is trying to buy a large block of the shares," Dmitrijus Dutovas, director of Baltic Securities, said. Some 387,000 litas worth of shares in Snaige traded in block deals.
Vilniaus Bankas held steady at 50.00 litas with 131,700 litas turnover. The market has little doubt that Vilniaus Bankas shares are being bought up either by the strategic investor, Swedish bank Skandinaviska Enskilda Banken (SEB), which has increased its shareholding in Vilniaus Bankas to 97.9 percent through its buyout offer, or by an SEB-related company.
Brewer Kalnapilis and knitwear producer Utenos Trikotazas saw slower trade this week with sharp price fluctuations and small turnovers of only a few hundred litas each.
TV-tube producer Ekranas soared 9.7 percent to 6.89 litas but lagged Lietuvos Telekomas in terms of turnover. Ekranas posted 808,100 litas in turnover, which, according to brokers, was in line with expectations. The price fell due to profit taking, though now has started to recover. However, analysts say Ekranas' resistance level is seven litas and don't see any stabilization above this level.
Oil concern Mazeikiu Nafta posted 292,300 litas in turnover. Trade here became more active following news about its intentions to acquire Polish oil concern Rafineria Gdanska. "I think investors overreacted to this news - Mazeikiu Nafta has no financial resources to acquire this plant," Vytautas Plunksnis, analyst at the brokerage firm Jusu Tarpininkas (Your Intermediary), said. According to him, one Polish investor offered 200 million US dollars for a 75 percent stake in Rafineria Gdanska. Taking into account the fact that Mazeikiu Nafta needs funds for the planned restructuring of its plant, its chances to acquire the Polish consortium are rather glim. Mazeikiu Nafta issued a press release Friday (Dec. 8) evening, saying that following the public announcement of its plans to acquire the Polish concern, it is forced to cease all current efforts on the Gdansk privatization.
The bourse's equity turnover reached 5.6 million litas.