Stock markets: weekly report (February 6 - 12)

Estonia: Telekom gives market wake-up call

Opening of trading in February with Eesti Telekom shares brought a long-awaited boost to activity on the Tallinn Stock Exchange.

Deals with its shares accounted for 84.7 percent of the week's total turnover of 487.9 million kroons ($35.28 million).

Telekom's sharp rise pushed the TALSE up 11.4 percent in one week to 114.54 points. The price of Eesti Telekom shares rose between Feb. 11-12 by 9.78 percent to 126.25 kroons. Comparing it to Wednesday's auction results, Telekom's share price shot up 48.5 percent.

On Feb. 12 alone, shares in Telekom changed hands for 248 million kroons, breaking the Tallinn Stock Exchange's daily turnover record for trading in one company's shares. It belonged to Norma, whose shares traded for 178.8 million kroons July 19, 1997.

"It's the case of deficit," said Optiva Bank broker Sulev Raudsepp. "Price levels given by analysts do not apply in this case. For its fundamental indexes, Eesti Telekom's share is already the most expensive among its East European peers."

The equilibrium price of Telekom's share was established at 85 kroons in the initial offering. On Thursday, trading on the Tallinn Stock Exchange opened at 110 and continued in a rising trajectory.

The overwhelming majority of Estonian small investors sold their shares on the first two days of trading, earning a profit of more than 30 percent per share.

Raudsepp believes that those foreign investors who did not get the amount they wanted as a result of the offering are now increasing their positions.

"However, if they do not get the amount they desire, they may start getting rid of the shares," the broker said. If one major institution does this, it will not yet cause a drop in the price.

The broker said that it is difficult to predict when the demand and offer balance may change direction. Over the next month short-term investors should be replaced by long-term ones and, therefore, the emotional activity will probably die down too, he forecast.

Raudsepp said that local investors must now decide on their strategy. Raudsepp's recommendation to short-term investors was to sell.

"The market shows that bank shares do not move along with those of Telekom, to the extent that it was earlier expected," Raudsepp said. "Everybody's thinking about Telekom. We hope that there is interest left over for other shares after these shares have been redistributed."

The share price of Hansapank rose 10 percent to 68.25 kroons, and Uhispank's stock by 3 percent, closing at 24.60 kroons Feb. 12.

Hansapank share turnover totalled 53.8 million kroons and that of Uhispank, 7.4 million kroons.

Latvia: Unibanka auction fails to liven bourse

Hopes that a successful auction of Unibanka shares would liven up trading on the Riga Stock Exchange did not pan out last week.

The market also ignored a sensational allegation in Dienas Bizness that the bank had suffered worse losses than it has declared.

The news that Skandinaviska Enskilda Banken had bought the entire package of 2,111,700 Unibanka shares at 1.27 lats ($2.23) per share also failed to shake the market.

Last week both RSE's indexes slid. The DJRSE was off 0.42 percent at 90.18 points and the RICI finished the week down 3.13 percent at 167.82 points.

The fall in the indexes was due to the slide in a number of liquid and highly capitalized shares, including Balta (-4.76 percent), Riga Shipyard (-3.70 percent), Rigas Komercbanka (-4 percent), Riga Transport Fleet (-2.94 percent) and Valmiera Fiberglass (-2.38 percent).

The average daily turnover jumped 73 percent to approximately 80,000 lats, but most brokers say trading is still lethargic.

The week's biggest price gainer was Kaija, whose share price soared 50 percent from 0.14 lats to 0.21 lats. The jump was due to the news of the appearance of new investors in Kaija. Nevertheless brokers are cautious, waiting for more infomation withreference to the new investors' plans.

Specialists remain pessimistic. Harrijs Shvarts of Tallinna Pank Securities Latvia noted that the market has lost its attractiveness for both long-term investors and speculators.

Shvarts pointed to the lack of reaction to the publication by Dienas Bizness speculating that the bank lost more last year than it has acknowledged publicly.

Next week the main event will be the listing of Latvijas Gaze's shares. Parex Bank's Edgars Stobovs predicts that in the first few days the stock will trade between 1.10 lats and 1.20 lats per share, based on its current price on the OTC market.

Lithuania: Market passive while shares rise slowly

There were hardly any changes on the Lithuanian National Stock Exchange last week. In minimal trading, minor deals prevailed on the central market and only Friday did trading pick up pace.

Prices had been declining for some time, but last week this tendency was replaced by slow growth. The Litin blue-chip index was up 4.10 percent to 539.16 points. However, the LitinA edged up only by 1.38 percent to 1146.21 points.

The total turnover on the exchange was almost 24.94 million litas ($6,235,000), but the central market accounted only for 7 percent of the aggregate amount.

Trading of Vilniaus Bankas and Hermis, traditional leaders on the official list, was also sluggish last week.

"The absence of the banks from the stock market stands for the overall passivity on the market," said Kestutis Kvainauskas, a broker from VB Vilfima.

"There is no light to be seen at the end of the tunnel for now," Alterna Invest customer service department chief Arvydas Skanas noted.

He said that the low activity on the market was, to a great extent, due to the introduction of income tax returns. Even foreign nationals who have found a local representative have to declare their capital gains on a monthly basis now.

It is true, though, that the weekly turnover yielded by shares in Hermis looks pretty impressive - over 8.80 million litas. Nevertheless, only a small part of it (534,000 litas) came from trading on the central market.

During the week Hermis' shares grew 10.37 percent to 106.35 litas per share.

Shares in Vilniaus Bankas climbed 4.09 percent to 27.23 litas over the week and accounted for a weekly turnover of 496,500 litas.

Kvainauskas said that the only stock still attractive to buyers was Ukio Bankas even though its shares were traded very slowly last week.

Shares in Ukio Bankas soared 20.63 percent to 6.14 litas over the week on a turnover of 302,000 litas.

As usual, shares in Panevezio Pienas sold well in direct deals for a total of 2,683,000 litas.

Siauliu Bankas' shares were sold for a total amount of 851,000 litas and Litimpex bank's shares, for 400,000 litas.

Nevertheless, Kvainauskas believes that trade on the stock market will get brisker in the next two weeks. He expects the privatization of and scheming around Hermis and Vilniaus Bankas to bring interesting news.