Stock markets: weekly report (November 16 - 22)

  • 1998-11-26
Last week the Baltic securities staged a major rebound after the news that Sweden's Scandinavska Enskilda Banken to acquire about 30 percent of three of the Baltic's leading banks: Estonia's Uhispank, Latvia's Unibanka and Lithuania's Vilnius Bank.

It appears that the rumors that Vilnius Bank is selling its shares to SEB at a higher price may have a basis in truth. The shareholders of the Lithuanian bank have held out signing the agreement with SEB hoping for a better price than Uhispank's and Unibanka's. The last attempt to increase the price will likely be the trip to London Nov. 23-24 by VB's and the investment company Vilfima's leadership to meet with their main foreign consultant, Nomura.

Vilnius Bank's main argument is that it has remained profitable while Unibanka and Uhispank have fallen into the red. It appears that at least the Lithuanian stock market believes this argument, as VB's share price shot up nearly 30 percent last week. Over the past month Uhispank's share price has climbed just 14 percent and Unibanka's only 10 percent, while VB's share price has soared 63 percent.Latvia: Riga bourse loses source of intrigue

The news of Skandinaviska Enskilda Banken's investment into Unibanka was of course the major event of the week. The news was undoubtedly positive for the Latvian securities market, but several experts noted it reduces the interest of speculators in the bank's stock.

"The intrigue with Unibanka shares has ended, maybe it will spur interest in Ventspils Nafta's shares," a Trasta Komercbanka broker noted.

Last week Unibanka's shares jumped a record 17.44 percent, from 0.86 lats ($1.48) to 1.01 lats. On Thursday it was trading at 1.06 - 1.08 lats.

The rise in Unibanka's share price lead to a jump of 8.26 percent in the DJRSE index. As Unibanka's rise did not lead to gains by other stocks, the RICI index rose just 3 percent.

Latvia's macroeconomic indicators continue to worsen (except for inflation). There is still no new government and the political struggle around the privatization of the remaining large state-owned companies (Latvenergo, Latvian Shipping, Latvian Gas) has intensified, which is unlikely to help trading on the stock exchange.

It also appears, unfortunately, that Latvian exporters to Russia will not see an improvement in the situation before the new year, if even in the first half of 1999.

In this situation, players on the Latvian securities market are likely to focus on three shares: Ventspils Nafta, Riga Transport Fleet and Valmiera Fiberglass.

These three companies have been able to maintain stable profits.

Trading in these three shares accounted for 15 percent of turnover last week, with trading in Unibanka accounting for 74 percent.

Shares in Ventspils Nafta will likely attract the interest of portfolio investors due to the large amount of shares in circulation. Trasta Komercbanka broker Uldis Bulavs believes VN's shares are currently undervalued.

Ventspils Nafta is heavily dependent on the situation in Russia, however. The Russian government's decision last week to reduce export quotas for the major oil companies will likely hurt VN's revenues.

Ventspils Nafta will also soon begin to feel the competition from Mazeikiu Nafta when it opens its terminal at Butinge. Whether the market will be too crowded for both these companies remains an open question.

Uhispank shapes stock market in Tallinn in outgoing week

Uhispank shaped the market on the Tallinn Stock Exchange in the outgoing week, but speculation surrounding the bank culminated with a more modest reaction than expected after news broke of its directed stock issue to Skandinaviska Enskilda Banken.

The TALSE index rose by 1.67 percent to 104.19 points over the week.

Talinvest Suprema securities specialist Sten Sumberg said that the share prices are actually moving between very narrow margins. Also, trading with Uhispank stock was more modest than expected after the long-awaited news.

If last week, the price of Uhispank's share rose by more than 8 percent under speculative pressure, then in the outgoing week, the price of the share rose by only 4.8 percent. Both on Thursday and on Friday the share closed at 25 kroons ($1.85).

Sumberg said that a pattern has been established in the past few days where there are no buyers for shares in Uhispank at over 25 kroons and no sellers at under 25 kroons. "The share has not started to move in any direction yet," he said.

The directed stock issue for SEB will be at 40 kroons a share.

Sumberg said that the whole market, including Hansapank stock, has been positively charged as a result of SEB's new ownership in Uhispank.

There has been a lot of buying pressure on Hansapank stock also from outside Estonia, Sumberg said. Hansapank's share averaged at 63.7 kroons on the Tallinn stock exchange on Friday, after a rise by 7.68 percent over the week.

The advent of two strong strategic partners is not going to bring life to the Estonian market yet because the overall market is still sliding downhill, Sumberg said.

The total turnover of the stock market for the week was 53.27 million kroons, of which Uhispank accounted for 45 percent at 24.1 million kroons and Hansapank 32 percent at 17.2 million kroons.

The turnover from deals with shares in Forekspank reached 2 million kroons. Deals with Norma, ASA Kindlustus and Pro Kapital also produced slightly more than 1 million kroons of turnover each.

Lithuania: Trading in Vilnius Bank dominates market

Last week trading in Vilnius Bank's shares dominated the market.

"Trading focused on Vilnius Bank," Suprema broker Arvydas Jacikevicius told the BNS agency.

"I don't remember such active trading of those shares," said the director of PFM Alterna Invest's analytical department, Gintaras Lesinskas.

At the beginning of the week VB's share price slid slowly in active trading. But after the news that the negotiations on Skandinaviska Enskilda Banken's purchase of a stake in VB have neared conclusion, the bank's share price soared.

Vilnius Bank's share price rocketed up 29.06 percent to 28.29 litas ($7.07) in 4.37 million litas of trading.

The increase demand for Vilnius Bank's shares rubbed off on Hermis Bank.

Lesinskas said the interest in Hermis' shares is natural as SEB's investment will strengthen not only Vilnius Bank, but the entire Lithuanian banking sector.

Hermis' shares posted a 3.12 percent gain for the week at 67.76 litas in 1.16 million litas of trading.

Trading in other shares was sluggish. Even trading in Rokiskio Cheese shares, which usually have a steady demand, was slow last week. Interest in the dairy's shares only picked up on Friday after it became known that the EBRD is interested in its new share emission. Rokiskio Cheese's share price rose 4.34 percent to 127.78 litas on a turnover of 600,000 litas.

No major changes occurred on the Current List, with share prices stabilizing somewhat compared to the fall of the previous few weeks.

The sharp rise in the Official List shares caused the Litin to jump 11.13 percent to 491.15 points. The Litin edged up 0.20 percent to 1126.88 points.