Stock markets: weekly report (January 4 - 8)

Estonia: First week of year takes prices higher

Prices on the Tallinn Stock Exchange went along with the general euphoria which took stock markets higher with the launch of the euro at the beginning of the week, but the week here ended with profit taking and a decline in prices.

The index TALSE rose 7.22 percent during the week to 97.29. Massive buying and support from price rallies on neighboring markets took the index above the 100 point mark for some time during Wednesday's session.

"It seems that the high tide is over," Hansapank trader Mattias Mustonen said. As stocks in Uhispank and Hansapank declined, they also pulled down the prices of other shares, he explained.

"Stock prices for sure won't remain at those levels," Mustonen said. He predicted that profit taking will continue and prices will go down to the level where they stood before the rise. "The money that is invested simply is so short-term," the trader said. "Investors won't take positions for longer terms."

Trading in Hansapank and Uhispank shares in Helsinki was relatively thin toward the end of the week.

Mustonen attributed the price rally at the beginning of the week to a general rise on European markets which followed the launch of the euro, as well as to relatively good macroeconomic indexes, news about the privatization of Estonian Telecom and a few major orders.

Estonian Telecom submitted an application for quotation of its shares to the Tallinn Stock Exchange on January 4. All shares in the main list of the Tallinn Stock Exchange finished the week higher despite profit taking which prevailed at the end of the week. The biggest rise was made by Uhispank, which rocketed up 16.58 percent to close at 22.50. Hansapank went up 8.46 percent to finish the week at 54.50, after hitting 58 kroons ($4.33) once during the week. The overall rise also affected Optiva Bank, which climbed 7.14 percent to 7.50.

The turnover of the stock exchange system during the outgoing week was 41.17 million kroons, of this 34.45 million kroons from deals in main list shares. The supplementary list's turnover was 5.95 million kroons. Hansapank shares gave more than half of the week's turnover, while Uhispank accounted for one quarter, or 10 million kroons.

Latvia: Brokers worried

about drop in liquidity

Last week trading on the Riga Stock Exchange was disconcertingly low, with an average daily turnover of just 45,000 lats ($78,950). In addition to the post-New Year low, the new trading rules were also likely to blame for the low trading. Rietumu Bank specialists say that removing free list shares from continuous trading led to a drop in liquidity on the bourse.

Rietumu Bank Trading Department Director Dmitri Krutik did not exclude the possibility that the new trading rules would lead to an increase in off-bourse trading.

Introducing the new trading rules and an increase in fees on a "dead" market was not enthusiastically received by specialists. With such anemic turnover the slide in the DJRSE index by 1.4 percent and the RICI by 0.5 percent is quite natural. One of the more interesting events of the week was the price correction in Staburadze, dropping 10.74 percent to 1.08 lats.

The 4.44 percent slide in Unibanka's price is most likely due to LPA's announcement that it will soon auction the state's remaining 2.17 percent stake in the bank. It is almost certain that the LPA will not fetch the 1.33 lats per share that Skandinavska Enskilda Banken paid Unibanka for its stake.

Investors turned their attention to Riga Shipyard and Valmiera Fiberglass. Both companies announced they finished the year with significant profits. Riga Shipyard's share price remained steady, but Valmiera Fiberglass' shot ahead by 13 percent to 0.42 lats.

The decision by Valmiera Fiberglass' shareholders to cancel unplaced shares will be positively viewed by investors. The company has a strong Western investor and a stable Western market.

The chairman of the company's council, Jurgen Preis-Daimler, said Valmiera Fiberglass' shares are currently undervalued on the RSE, and their optimal price was around 0.90 lats. At that price its P/E would be about 12-13 instead of its current level of 5.5 points.

Lithuania: Apathy prevails

during first week of new year

Apathy prevailed on the Lithuanian stock market during the first week of 1999, although trading picked up during the second half of the week with Hermis Bank's shares. The Litin stock exchange index sank 4.97 percent over the week to 509.96 points, while LitinA dropped 0.1 percent to 1132.5 points.

The total turnover for the week was relatively high at more than 41.30 million litas ($10,325,0000), but the trade in government bonds accounted for the bulk, generating 85 percent of the turnover.

Brokers cited amendments to the law on private income tax entering into force in the new year as the chief reason behind the low activity on the stock market. Under the amendments, capital gains on share trading is subject to 15 percent taxation.

Brokers said their clients were not evading the tax but did not know the collecting procedures and are willing to wait until these procedures become clear to avoid problems with the tax officials.

Shares in Hermis Bank enjoyed the most popularity on the central market with the bank's share price climbing by 1.16 percent to 83.42 litas over the week.

1,693,000 litas worth of Hermis' shares were sold during the week. The trading in Vilniaus Bankas shares was virtually inactive with the sales volume reaching a mere 365,000 litas over the week and the share price slumping down 9.49 percent to 26.61 litas.

"Obviously shares in these banks will remain most attractive in the future as well. Even more so because the market is in for processes linked to the banking consolidation or entering of investors," said VB Vilfima broker Kestutis Kvainauskas.

Shares in the cheese factory Rokiskio Suris were practically not traded at all with the company's share price falling 14.66 percent to 16.41 litas and the weekly turnover reaching only 147,000 litas. Hansabank Markets expert Aivaras Abramavicius said the investor confidence in these shares ought to shrink because the company's director sold a part of his stake for 54 litas per share.

From the second list, shares in LISCO attracted some investor attention triggered by the anticipated statement about the participation results in the company's privatization tender. The share price surged 2.74 percent over the week to 2.37 litas while the turnover was 255,000 litas. In direct trading, shares in Siauliu Bankas and Ukio Bankas were most actively traded with a turnover of 2 million litas and 492,000 litas respectively.