Growth of Baltic stocks suspended

  • 2001-02-01
The growth of leading Baltic stocks nearly came to a halt last week.

The Baltic Index comprising 15 Latvian, Lithuanian and Estonian blue-chips was up 0.21 percent to 131.96 points, but this growth was mostly due to the fall of the euro against the Latvian lat and Lithuanian litas.

At the same time, the absolute majority of local stock indexes on the Estonian, Latvian and Lithuanian stock exchanges fell over the week.

Estonia's Norma suffered the greatest loss among the Baltic List stocks last week, sinking 6 percent over the results for 2000.

As the prices for highly capitalized Baltic List stocks did not see any substantial changes over the week, the Baltic List capitalization remained on the previous level of 2.8 billion euros ($2.59 billion).

Large deals with Estonian blue-chips helped to boost the weekly turnover of Baltic List stocks to 6.5 million euros, up by 50 percent from the previous week.

The Estonian Baltic List shares contributed 85 percent of the weekly turnover, or 5.5 million euros.

Baltic List stocks remained the leaders on the Estonian Stock Exchange, accounting for more than 80 percent of the weekly turnover on the Tallinn bourse. In Latvia and Lithuania, however, Baltic List stocks made up only from 17 percent to 36 percent of the turnover on their respective home bourses.

Estonia: Positive week ends with correction

Friday brought a slight downward correction on the Tallinn bourse where an upward turn prevailed for most of the outgoing week.

The stock index ended at 141.75, down by 0.18 percent from last Friday.

The euro price index of six Estonian Baltic List stocks also fell 1.27 percent to 119.71 points over the week.

Hansabank Markets broker Lauri Lind said the market had an upward trend in anticipation of enterprises' economic results, but it changed with the Norma releasing results that did not quite live up to expectations.

Instead of an anticipated profit of at least 160 million kroons, the car seatbelt maker posted a 157.4 million kroon ($9.46 million) profit for 2000.

Norma fell 6.09 percent over the week, closing at 47.80 kroons on a five-day turnover of 11.7 million kroons.

"The share will probably stabilize after a modest correction at 45-47 kroons," Lind predicted. "From then on, buying interest is likely to revive."

Buying interest will pick up because Norma is expected to pay healthy dividends, which makes the share pretty attractive at the going price level, he explained.

Analysts still give a "buy" recommendation for Norma. As the share's target price is above the current level, one can say Norma is relatively undervalued at present, the broker said.

Hansapank has been fairly liquid, Lind observed. Relatively large quantities of the bank's shares have been changing hands and in the last couple of weeks Western buying interest has also been seen from time to time.

Hansapank ended the week 0.89 percent lower at 139 kroons, generating 49 million kroons in turnover.

Lind said there were few sellers on the market at below 140 kroons and the share could stabilize for some time. He couldn't see Hansapank undergoing a major change in either direction in the next few weeks.

"Speculation will gather strength immediately ahead of the publication of economic results," he predicted.

Estonian Telekom moved steadily up for the whole week, reaching in mid-week the highest level at 90.50 kroons.

Even after the recent retreating, compared with last week's closing price the share posted gains of 1.13 percent, finishing at 89.50 kroons. The turnover was 21.7 million kroons (1.4 million euros, $1.3 million).

"Buyers dominate in Telecom," the broker said. "Relatively, the share has a lot of scope to rise and will be moving quietly upwards in the coming weeks."

World market news was one of the reasons why the market here suffered a setback towards the end of the week.

Besides posting results that didn't come up to expectations, Ericsson announced the sale of its mobile telephone operation to Flextronics, which may in the future lead to the discontinuation of the mobile telephone assembly in Elcoteq's Estonian plant.

The news triggered a major downward correction, Lind said. In Scandinavia, Elcoteq lost half of its value and Ericsson plunged 15 percent in early trading.

The downward movement continued. Elcoteq's nosedive gathered speed with analysts' recommendations to sell.

The turnover of the exchange system totaled 108 million kroons. The turnover of six Estonian Baltic List stocks made up 5.5 million euros, or 80 percent of the total.

Latvia: Stock market remains stagnant

Extremely slow trading on the Latvian market last week was accompanied by a downward movement of most stocks.

The Dow Jones Riga Stock Exchange capitalization index was off 0.31 percent to 140.43 points, and the RICI price index dropped 3.14 percent to 165.13 points.

The different dynamics of those indexes can be explained by the capitalization index being affected mostly by highly capitalized stocks such as Latvijas Gaze, Ventspils Nafta, Latvijas Unibanka, which for most part remained stable last week.

At the same time, the RICI price index strongly depends on the prices of low-capitalization and illiquid stocks, and part of those stocks suffered a steep decline last week.

The euro price index of four Latvian Baltic List stocks was up 0.79 percent to 154.10 points but the growth was mostly due to the fall of the euro rate against the Latvian lat by 1.12 percent over the week. Latvian Baltic List stock prices in lats remained unchanged in the outgoing week, except for the insurance company Balta shares, which lost 1.8 percent to 3.81 lats ($6.15).

Surprisingly enough, Balta's shares led the stock market by turnover as 25,180 lats worth of insurance company shares changed hands last week. Nevertheless, one can hardly take pride in a stock market where the average daily turnover of the "leading" stock makes up $8,000.

Ventspils nafta shares stayed flat at 0.73 lats over the week and came out runner-up by turnover with 23,000 lats.

High oil prices, the crisis in relations between Lithuania and Russia's LUKoil, promises by Russia to pay all creditorsÑall these factors still allow for an optimistic outlook on Ventspils Nafta's future.

Meanwhile, Latvijas Gaze stayed firm at 3.72 lats amid slow trade as the gas company's shares yielded a turnover of just 8,600 lats.

Experts see this as indicative of the fact that too few small shareholders holding an insignificant amount of stocks have remained on the market.

In addition, squabbles around the privatization of Latvian Shipping Co. have again provoked a political crisis, which at worst may result in another government reshuffle and even early parliamentary elections.

In the given situation the matter of timetable and conditions for auctioning the remaining 8 percent of state-held shares in Latvijas Gaze remains unsolved.

It is also one of the reasons why Latvijas Unibanka's experts are advising small shareholders in Latvijas Gaze not to expect the high price of 4.72 lats reached at the previous auction. Today, no large Latvijas Gaze shareholder is likely to pay as much for shares, especially when buying small amounts on the Riga Stock Exchange.

Among other stocks, the steep decline (by 9 percent-14 percent) suffered by the Daugavpils PKR motor chain plant and Staburadze pastry factory should be noted.

Daugavpils PKR stock lost 9 percent to 0.10 lats, a record low since May 2000, mostly due to extremely low liquidity. Morover, the plant's management announced last week that no dividend will be paid to shareholders in the next three years.

Staburadze's tumble from 0.71 to 0.61 lats, or by 14 percent over the week, can be explained by a still incomplete picture as regards Staburadze's acquiring another sweet producer, Laima.

Staburadze's small shareholders evidently do not find as inspiring the pledge of all the company's assets to secure the deal.

The weekly turnover on the Riga Stock Exchange was 184,000 lats in the outgoing week with Latvian Baltic List stocks accounting only for 116,000 euros, or 36 percent of the total.

Lithuania: Bourse runs into price correction

This week's trading on the Lithuanian Stock Exchange reached a turning pointÑan upward trend due to which some stocks reached record highs on Jan. 22 was replaced by profit-taking and a downward price correction on Jan. 23.

Despite the fact that the continuously tracked price index Litin-10 climbed 5.34 percent to 1232.92 points over the week, the blue-chip Official List index Litin slid 1.37 percent to 486.46 points.

Only the sliding euro rate against the dollar and the litas helped to support the price euro index of five Lithuanian Baltic List shares, which grew 1.34 percent to 128.95 points over the week.

According to brokers, the market showed clear trends. Profit-taking and a price correction began. Some share prices had risen 20 percent-30 percent since the start of the year, so some retreating is imminent.

But specialists are not particularly pessimistic over the possible fall in prices.

"I believe that for our market, volumes are now more important than the directions in which the share price moves. Larger turnovers show higher liquidity, and this helps attract new resources and new investors," Finasta broker Aurelijus Rimkus said.

Leading blue chip Lietuvos Telekomas was the most actively traded stock, posting 2.17 million litas in turnover. The share price held steady at the level of 2.25-2.30 litas.

Despite some pessimistic forecasts, the refrigerator producer Snaige climbed 2.8 percent to 36 litas in trade worth 618,364 litas.

"Snaige's stable share price, hovering at around 36 litas, and the fairly large trading volumes are quite surprising. Perhaps we will receive some news about the company in a week or two," Rimkus said.

Cheese maker Rokiskio Suris held steady at 20.80 litas in trade worth 296,000 litas, and the brewer Kalnapilis was almost flat at 4.3-4.5 litas amid a 166,400 litas turnover.

Vilniaus Bankas held steady at 50 litas amid a 62,700 litas turnover, and knitwear producer Utenos Trikotazas tumbled 6.54 percent to 3.00 litas on a 4,500 litas turnover.

On the Current List electronic component producer Vilniaus Vingis charged ahead by 5.70 percent on Tuesday, and climbed 6.90 percent to 5.11 litas in a week posting a 654,700 litas turnover.

Brokers attribute Vilniaus Vingis' rise to the sale of a 23.34 percent state-owned stake in the company on the stock exchange on Jan. 22. Some 2,129,657 shares in Vilniaus Vingis changed hands for a total of 10.64 million litas through public sale.

The buyer of the shares in Vilniaus Vingis has not been announced yet, but rumors are going around that a foreign investor who buys the Lithuanian company's production may be the buyer.

TV-tube maker Ekranas rocketed up 9.10 percent on Jan. 22 and charged ahead by 8.22 percent to 8.69 litas over the week amid a 469.900 litas turnover.

The shipping company LISCO surged 24.26 percent to 2.92 litas amid a 405,000 litas turnover. This growth can be attributed to a government's decision on Jan. 24 to start negotiations on the sale of LISCO with a Dutch company.

"There is no doubt that the increase in LISCO's share price is due to the beginning of negotiations with DFDS Tor Line," Martynas Kulvinskas, head of the securities trading unit at Zemes Ukio Bankas, said.

Gas utility Lietuvos Dujos dropped 5.08 percent to 1.68 litas in trade worth 400,800 litas.

Plunksnis suggested that only a large investor who intends to take part in the privatization tender may buy shares in Lietuvos Dujos.

"This is not a favorable time for small investors to buy shares in Lietuvos Dujos. The company's privatization is still far away and the selling price might be far lower than the set market price," Plunksnis said.

The brewer Ragutis tumbled 8.45 percent to 8.02 litas amid a 162,900 litas turnover, and the dairy Pieno Zvaigzdes charged ahead by 6.87 percent to 1.40 litas on a 110,100 litas turnover. Another 200,100 litas worth of shares in the dairy changed hands via block deals.

Some 1.19 million litas, worth of shares in Ukio Bankas also changed hands via block deals.

The bourse's overall equity reached 19.1 million litas, with just 871,352 litas (17 percent of the total) generated in Baltic List trading.