Stock markets: weekly report (February 12 - 19)

  • 1999-02-25
Estonia: Telecom mania cools

Euphoria over shares in Estonian Telecom subsided on the Tallinn Stock Exchange during the past week, and shares in Hansapank came back as the focus of attention.

The TALSE index finished the week 1.36 percent lower at 112.99.

Telecom's shares moved lower each trading day, taking their cue from the GDR traded on the London bourse. Telecom stock fell 7.49 percent during the week to close at 116.80 Friday.

Telecom's turnover in five sessions last week totaled 210 million kroons ($15.06 million), which is 203 million kroons less than that recorded in just two days when the Telecom issue was launched.

The euphoria started to wane already on Wednesday, when the share price dropped 5.15 percent to 119.75 kroons on a turnover of 52 million kroons.

Sten Sumberg, of Talinvest Suprema, told the Baltic News Service that relatively quiet trading in Telecom shares had been no surprise.

"The locals have to a large extent sold their shares to foreign investors," he said, adding that the amount of Telecom shares remaining in Estonians' hands was not large.

Sumberg said there were no buyers of Telecom at the present price levels. "If the price goes further down, an opportunity will open up for those locals who didn't get enough shares in the subscription", he said.

Estonian banks on Monday released their January results. Uhispank's report contained news of a substantial increase in their original loss figure due to additional provisioning. Additional provisions made at the auditor's recommendation will increase the bank's 12-month loss by 90 million kroons, to 383 million kroons.

Uhispank's share moved between 23.40 and 25 kroons during the week, closing at 24.60, or 3.66 percent below its previous weeks final.

Hansapank gained 9.16 percent during the week to finish at 74.50, supported by both interest from foreign investors and a profit forecast of 650 million kroons issued by Hansa Investments. Sumberg said Hansapank still had the potential to rise even further as no negative surprises were expected from the bank's consolidated report for 1998, to be released on Feb. 26.

"Increased provisioning is expected, however, from Hansapank's subsidiaries", he said.

Latvia: Pilot light goes out on Latvian Gas

Last week's main event was the appearance of Latvian Gas' shares on the official list of the Riga Stock Exchange. Unfortunately, the audience stayed home - less than 90,000 lats ($155,172) of its shares traded hands. Brokers say trading in its shares continues to be more popular on the OTC market than on the bourse.

Despite the market's thinness, prices of the more liquid shares rose. The RICI index climbed 3.31 percent to 173.38 points, and the DJRSE picked up 1.21 percent to close at 91.27 points.

Among the leaders last week was the pharmaceutical company Grindex, whose shares shot up 23 percent to 0.27 lats. The tide came in for Mangalu KRR shipyard's shares, up 9 percent to 0.24 lats; Komercbanka, up 8.3 percent to 0.26 lats; and Riga Shipyard, up 7.7 percent to 0.28 lats.

Experts warn against any euphoria regarding the increase in share prices.

Trasta Komercbanka's top broker, Uldis Bulavs, noted that the rise in Mangalu KRR's and Grindex's share prices is unjustified by the market situation. He did not exclude the possibility they might immediately fall back to their previous levels, as did shares in Kaija, which had enjoyed a sharp rise over speculation about Ave Lat Group selling its controlling interest in the fish cannery.

ICI-Invest's Janis Hermanis also claimed the fall in Riga Pharmaceutical Factory's shares, down by 23 percent to 0.48 lats, was justified. Analysts had been issuing warnings that the shares' rocketing price in January and February did not have any economic basis.

Despite announcing significant dividends, Balta's share price slid 2.5 percent last week to 1.95 lats. The lack of interest by investors is explained by caution over the fate of the insurance company's investments in Russia.

Official turnover on the bourse last week surpassed 800,000 lats, but more than half of it was due to the placement of mortgage bonds by Latvian Mortgage and Land Bank. Previous experience has been that there is little secondary trading in these types of instruments, so this is likely to have been a one-off boost to turnover.

Lithuania: Bank stocks on center stage

Last week saw limited action, with only three trading sessions taking place on the Lithuanian National Stock Exchange. No significant changes were recorded as investor interest stayed focused on stocks of only a few companies.

Nevertheless, both stock indexes rose with the Litin index climbing 1.10 percent to 545.13 points, and the LitinA by 1.24 percent to 1160.65 points.

No trading took place on Monday and Tuesday as Lithuania marked its National Day.

On Wednesday it was revealed that the Swedish energy company Vatenfall is set to acquire a 10 percent stake in Lietuvos Energija, and that Rokiskio Suris, the cheese producer, has concluded a contract with the European Bank for Reconstruction and Development on a new stock issue. Both news items triggered investor interest in these companies, but unfortunately, this interest was insufficient to have any real effect on securities prices.

"Trading proceeded as usual in Vilniaus Banka's and Hermis Bank's shares, while Lietuvos Energija's shares traded more actively," VB Vilfima broker Kestutis Kvainauskas told the BNS agency.

Shares in Hermis were the most actively traded with the week's turnover reaching 6,426,000 litas ($1,606,500) though its share price dropped by 1.26 percent to 105.01 litas.

Nevertheless, there were quite a few deals completed in Hermis' shares, and most probably, the buyer was Hermis Bank itself, said Kvainauskas. If so, Hermis' management is staying one step ahead of its rival, Vilniaus Bankas, in the race to acquire a controlling stake in Hermis.

Shares in Vilniaus Bankas, meanwhile, chalked up a turnover of 1,266,000 litas with the share price rising 1.51 percent to 27.64 litas. Rokiskio Suris' shares surged 9.24 percent to 18.91 litas on a turnover of 174,000 litas.

From the second-list companies, Lietuvos Energija stood above the rest with a turnover of 398,000 litas and the share price jumping by 11.56 percent to 4.92 litas.

Block deals in the dairy Panevezio Pienas' shares produced a turnover of over 1.91 million litas. Although a shortened trading week, turnover was rather impressive at more than 21.3 million litas, with government bonds accounting for about half this figure at 10.7 million litas.