Pre-Christmas surprises not enough to excite markets

  • 2000-12-21
Last week all three Baltic states' bourses experienced surprise developments, though nothing worthy enough to significantly impact key stock index movements. The Baltic Index of the 15 highest capitalization blue-chip stocks listed on the Riga, Vilnius and Tallinn bourses gained 1.5 percent over the week, closing at 129.93 and boosted by sharp gains from one of Estonia's Baltic List stocks.

The most unexpected development on the Estonian bourse was the sharp 30 percent rise in low-liquidity Pro Kapital shares. These shares fell by approximately the same amount just the previous week.

In Latvia the big news was about French Gaz de France's interest in Latvijas Gaze (Latvian Gas) shares, along with news about the sharp cut in Ventspils Nafta's (Ventspils Oil) profit forecast for 2001. In Lithuania meanwhile focus was over news about the possible appearance of a foreign investor for refrigerator maker Snaige.

The Baltic List's capitalization remained almost unchanged, moving up just 0.3 percent to 3.11 billion euros ($2.74 billion). Capitalization of the Baltic List's Estonian stocks amounted to 1.76 billion euros on Dec. 15, down 0.1 percent, Latvian 578 million euros, up 0.3 percent and Lithuanian 776 million euros, up 1.3 percent. Turnover of the Baltic List stocks was 4.2 million euros, up 13 percent over the week, of this Estonian stocks accounted for 48 percent, Latvian 34 percent and Lithuanian 18 percent. On the Estonian and Latvian national bourses the Baltic List stocks accounted for over 60 percent of the turnover while in Lithuania the figure was 32 percent.

Estonia: Pro Kapital attracts interest

Trading was very thin with negligible price changes on the Tallinn bourse last week. The TALSE stock index ended the week 0.59 points, or 0.4 percent, higher at 138.85. The index of six Estonian Baltic List shares was up 3.7 percent to 116.24 due to the sharp increase of low-liquidity Pro Kapital's share price, which posted a 29.7 percent gain to 48 kroons ($2.709).

Hansapank, the turnover leader at 13.9 million kroons, closed 0.19 percent down at 134.50 kroons. Uhispank capital markets strategist Aivo Kangus said some uncertainty over the shares may have been introduced by the announcement of a postponement of the Lithuanian Savings Bank privatization deal. Also, regardless of fresh reports of Hansapank having reached an agreement with Hoiupanga Tootajate AS (Savings Bank Employees Ltd.), nothing has as yet been signed here, either, Kangus observed.

Eesti Telekom was influenced by the flagging U.S. dollar and general weakness in the telecommunications sector. The share finished at 90 kroons, down by 2.1 percent. Even rumors on a possible Telekom acquisition of a stake in Latvian communications monopoly Lattelekom failed to bring about brisker trade in Telekom's stock. "As long as there's no concrete decision this remains just a speculation," Hansapank Markets broker Lauri Lind observed.

Interest in minor stocks has been haphazard, Kangus said, which is why price movements here have been bigger. "Trade is bound to continue along the same lines next week," he said. "In the new year, the ground may be white and the picture prettier, especially as regards Hansapank."

The aggregate weekly turnover of TSE was only 52.4 million kroons, almost unchanged compared with the previous week.

Latvia: French see profit in gas

Oil and gas stocks were in focus on the Riga bourse as news about Latvijas Gaze and Ventspils Nafta gave significant impetus to trading activity. But, as the news came out both positive and negative, effects were to a great extent cancelled, making little impact on overall stock indexes. The price index RICI edged up 1 percent over the week to 172.67, while the capitalization index DJRSE dropped 0.5 percent to 139.8. The composite Latvian index of the Baltic List stocks edged up just over 0.1 percent to 158.64.

The news was clearly positive concerning Latvijas Gaze as, with less than a week before the planned auction of the gas company's shares, for cash, the French company Gaz de France announced it was interested in buying. The statement pushed up shares by 0.5 percent to 3.59 lats ($5.691) on a turnover of 354,000 lats. The market now seems assured that the auction planned for Dec. 18 will see a sale of the full supply of Latvijas Gaze shares. Moreover, it seems that the Latvian state is unlikely to have any problems in selling off to private hands its remaining 8 percent of the gas company's shares. The decision to sell these shares could be made early next year.

Concerning Ventspils Nafta meanwhile, negative news brought down the company's share price by 2.5 percent to 0.77 lats on a significant 324,000 lats turnover. Compounding a cooling of relations with Russian oil suppliers, a strong commitment from the Russian government to raise oil and oil products export duties led Ventspils Nafta late last week to warn of a significant reduction in the company's profit forecast for 2001. The company's net profit forecast for 2000 was 16.3 million lats while for 2001 the figure now is 4.9 million lats, a 70 percent drop. It seems likely that, by issuing a lower profit forecast for next year already at this point, the company's management may be trying to avoid paying dividends for this year citing the need to build additional reserves. Against this backdrop a reverse in the downward trend the oil terminal's shares have been taking of late can hardly be expected.

Looking at other stocks, Latvijas Balzams was noteworthy in posting gains of 2.8 percent, closing the week at 0.37 lats per share on a turnover of 74,000 lats. It is difficult to assess at this point the possible effect on Balzams future corporate performance and share price, due to the Baltic's business as usual murder on Dec. 15 of the company's former president, Dainis Peimanis, who still controlled a substantial block of shares.

Share turnover on the Riga bourse last week rose more than twofold to 1.08 million lats.

Lithuania: Snaige house cleaning lifts market

Trading on the National Stock Exchange of Lithuania (NSEL) remained rather calm this week with the blue-chip refrigerator manufacturer Snaige being the only company to stand out, the result of news about the appearance of a potential strategic investor. The benchmark price index Litin-10 climbed 2.1 percent to 1096.65, the blue-chip Official List index Litin edged down 0.3 percent to 453.47, and the secondary Current List index Litin-A jumped 3.0 percent to 1047.53. The price euro index of five Lithuanian Baltic List stocks was almost unchanged edging up 0.19 percent to 126.12.

Not included in the Baltic List, Official List's shares of Snaige rocketed 19.5 percent to 37.05 litas ($9.2625) on 1.13 million litas turnover. According to brokers, Snaige's rally was fuelled by recent news that the company was going to replace its supervisory council during the shareholders meeting planned for Jan. 13, as well as by rumours about the arrival of a strategic investor. "It is possible that a fight between Snaige's shareholders is going on and this induces the rise in Snaige's share price. I think that the active trade in Snaige will continue until the actual shareholders meeting," Suprema broker Arvydas Jacikevicius said. Meanwhile, Wednesday's announcement that Snaige earned just 0.84 million litas in pre-tax profit for the first 11 months had little impact on the market, according to brokers.

Lietuvos Telekomas edged down 0.9 percent to 2.08 litas amid 941,000 litas turnover. Cheese maker Rokiskio Suris was immovable at 21 litas amid 1.7 million litas turnover. Brewer Kalnapilis slid 0.28 percent to 3.50 litas with 14,800 litas turnover. Knitwear producer Utenos Trikotazas and Vilniaus Bankas saw almost no trade this week. However, the price of Utenos Trikotazas fell by 4.8 percent to 3.0 litas while Vilniaus Bankas remained unchanged at 50 litas.

Mellow moods prevailed on the Current List. Aurelijus Rimkus, Finasta's broker, said that as supply dominated there, share prices of many companies have dropped. Electronic component maker Vilniaus Vingis slid 1.4 percent to 4.23 litas, generating 214,300 litas in turnover. Another 2.46 million litas worth of shares in the company changed hands via block deals. TV-tube maker Ekranas tumbled 5.9 percent to 6.48 litas amid 197,300 litas in turnover. And finally, oil concern Mazeikiu Nafta skidded 5.8 percent to 0.80 litas on 240,900 litas turnover.

The bourse's overall equity turnover reached 8.17 million litas for the week.