Brokers lick their wounds, brace themselves for 1999

VILNIUS - Last year proved to be a difficult one for the National Stock Exchange of Lithuania. Stockbrokers were quick to say January is too early to make solid predictions about 1999's potential, but they were able to serve up some conflicting analyses.

Directly after the onset of the Russian crisis, the lists experienced a serious slump. Though they were slightly more lively later on, January's activity on the bourse has thus far remained sluggish.

Despite all the uncertain factors, Tomas Andrejauskas, Suprema stockbroker, even showed a gleam of reserved optimism. He said he is generally pessimistic about January results and does not believe this trend will continue throughout the year.

"This amount of activity is fairly normal for this time of year," said Andrejauskas. "Other markets around the world are doing quite well at the moment and I think foreign investors will eventually begin looking around at the emerging markets again. Of course, it is always difficult to say what will happen at the beginning of the year."

Robertas Berzinskas, head of the securities trading department at Vilniaus Bankas displayed more pessimism. He called the Russian financial crisis the most important factor which influenced the capital market. He said one way to alleviate the situation was for Lithuanian companies to find new markets.

"With companies [that export to Russia], the factors remain the same," said Berzinskas. "It's still unclear and in some cases it is not easy to get an idea of sales. When operating in new markets, let the investor see that our companies can work in new conditions."

New domestic wild-card factors may also play a role in 1999. As the new year was launched, so was a brand new 15 percent tax on capital gains. The original Parliament-proposed 30 percent plan was eventually cut in half after economic experts voiced their adamant opposition to the timing and the amount. Despite a reasonable victory by capital market experts, there is still disagreement on what affect the tax will have on investor interest.

Andrejauskas did not make predictions about the future effect of this tax but was willing to say it was not a major factor to the current situation.

"It wouldn't be tied to the introduction of the tax," said Andrejauskas. "It's largely related to microeconomic factors."

Berzinskas shied away from claiming it was a great factor but did state it has some influence.

"Some foreign investors left [the Lithuanian capital market] last summer and local investors were able to become main players," said Berzinskas. "When the tax is applied to local individual investors in this situation it has [an influence]."

Perhaps as the next couple of months unfold, a clearer and more unified picture will develop. For now at least, it does seem that last year's results should not be impossible to beat.