Stock markets: weekly report (March 19 - 26)

  • 1999-04-01
Estonia: Stocks move every which way

The Tallinn Stock Exchange's TALSE index closed at 116.21 on March 26, 0.11 percent lower than the previous week's close, with the market's leading shares showing no leadership. The week began with extremely thin trading, just a little over 7 million kroons' ($489,000) worth of shares changing hands on March 22.

Of the week's total turnover of 94.5 million kroons, 37 million came from deals in Hansapank shares and 20.5 million kroons from deals in Telecom. Telecom's price was supported by strong 1998 results released by its subsidiary Eesti Telefon on March 23, prompting analysts to revise their forecasts on Telecom's shares. While Telecom declined 0.93 percent, finishing the week at 106.50, Hansapank climbed 1.8 percent to 84.75 kroons.

Analysts at Hansa Investments increased Hansapank's target price, predicting that a share should reach 95 kroons within one month, and at the end of 12 months hit 110 kroons. Hansapank securities trader Romet Tepper said these forecasts might have an impact on the market next week.

"Investors didn't react to this yet," Tepper said. "They may make a decision on investment also on Monday."

Hansa Investments said the increase of Hansa's target price was prompted by both a reduction in Estonian kroon interest rates and the expectation of strong consolidated results from Hansapank for its first quarter.

"Every brokerage may offer its forecast, this shouldn't serve as an important indicator for investors," he stated, discounting the role of the securities analyst.

He said Hansapank was doing excellently compared with other Estonian banks, but added that this assumption was already factored into the share price.

"Hansapank had already accomplished its rise," Tepper offered. He said the share was expected to remain stable during the coming week. The industrial sector underwent a correction during the past week, with most shares suffering from profit-taking, Tepper again contributed.

Norma met selling pressure after an earlier rise which analysts attributed to speculative buying and anticipation of dividends. Norma dropped 3.27 percent on Thursday and a further 3.38 percent on Friday. The share price moved between 18.40 and 23.40 kroons during the last five sessions, closing on Friday at 20 kroons, 0.5 percent higher for the week. Tepper is hinting at a buy signal on Norma at 19 kroons. A relatively large turnover in EVP privatization vouchers was the result of a large number of small sellers dumping their holdings, which were snapped up by a few major buyers, he said.

"Next week we will see the price at the level of 0.3 kroons," the trader asserted. He said preparations were under way for a closed share issue of the Compensation Fund.

Latvia: Latvijas Gaze continues to fuel RSE

Latvijas Gaze continued to dominate trading on the Riga Stock Exchange last week, accounting for 74 percent of turnover. That figure does not even include the successful auction of 720,000 shares in the company.

Unfortunately LG was the only positive news on the exchange. Both RSE indexes proved the biggest losers in the Baltics for the week. The DJRSE slid 2.66 percent to 83.26 and the RICI 2.61 percent to 166.24 points.

Next week, LG will be included in the calculation of both indexes although it is not expected to help much in their performances, as exceptional returns in LG's share price are probably over. Last week LG's share price slid by 1.26 percent to 1.57 lats ($2.71). Excluding LG, the turnover of other shares totaled just 250,000 lats.

Shares in Ventspils Nafta, Riga Transport Fleet and Riga Shipyard each dropped between 7 percent and 8 percent last week. The drop in Ventspils Nafta's share price was due to the company's reducing its reloading tariff, which is expected to cut into profits. The company explained its move by the need to remain competitive given the low price of oil and the possibility of a reduction in Russian oil exports. However, taking a longer-term view, recent events are more positive than negative for the company. First, the world price of oil rebounded strongly in the last week.

Second, Russia's growing international isolation over its position on NATO's bombing of Yugoslavia reduces the prospects of obtaining Western financing for the construction of an alternate oil pipeline and terminal in the Bay of Finland. The low turnover in Unibanka was due to most of the bank's shares being blocked for a shareholders meeting. Nevertheless, the bank's share price slid 2.33 percent to 0.88 lats. Among second list shares, investors showed interest only in Valmiera Fiberglass, which posted a seven percent gain to 0.46 lats. Shares in Jekabpils Sugar Factory soured 29 percent after it was revealed that the company is having serious difficulty in repaying a major loan to Unibanka. Unibanka shareholders should also pay attention.

Shares in pharmaceutical companies also dropped, with Grindex down 13.3 percent and Olainfarm 9 percent.

Lithuania: Trading rebounds strongly

The Lithuanian stock market finally woke up from its long winter snooze last week to more than a few interesting developments, with everyone keeping one eye glued on Vilnius Bank's backdoor attempt to gain control over Hermis Bank. Despite the record volume of 107 million litai ($26,750,000), share prices did not move much. The Litin was off just 0.13 percent to 568.87 points and the LitinA just 0.06 percent to 1099.37.

Hermis was the center of trading, with most of the deals taking place in block trading, its total activity accounting for nearly half of overall market turnover.

"The uncertain situation with Vilnius and Hermis banks, with Vilnius Bank still wanting to merge with Hermis, creates opportunities for speculators," said Hansabank Markets broker Aivaras Abromavicius.

Most brokers share the same opinion, with interest in Hermis shares explained by investors wanting to acquire more votes before the bank's shareholders meeting on March 31. Trading in Hermis' shares totaled 60.51 million litas, 59.29 million of that in block deals. Hermis' share price started its ascent on March 22, before the announcement of a major repo deal with Unibanka selling 28.14 million litai's worth of Hermis shares.

The bank's share price continued to rise, even after it announced audited results that showed 1998 profits down by 14.48 million litai due to higher provisioning. Hermis' shares hit their peak on March 25 at 125 litai per share. It dropped to the 110 litai level the next day.

"It appears that interest in the share has burned out. All those who wanted to buy before the shareholders meeting have and no one else wants to buy at that high price, so it slid," said PFM Sumprema broker Arvydas Jacikevicius. Hermis's shares finished the week up just 1.2 percent at 110.33 litai. Interest in Vilnius Bank's shares was noticeably smaller, with just 2.69 million litai changing hands. It finished the week on a positive note, up 0.36 percent at 28.10 litai. On the current list there was interest in Lifosa Phosphoros Mine, with 7.83 million litai of its shares trading hands and its price soaring 20 percent.

On Thursday, the Swedish energy company Vattenfall's official offer for Lithuanian Energy shares expired. The Swedes bought 6,105,214 shares (3.3 percent) of Lithuanian Energy for 30.53 million litai at 5 litai per share. Such a share price can only be maintained if the Swedes continue to buy shares, said Jacikevicius.

Turnover totaled 130.64 million litai last week, hitting a record daily turnover of 63.08 million litai on March 25.