Baltic Index up despite blue-chip weakness

  • 2001-02-15
The outgoing week saw little action among the more liquid Baltic stocks, which stayed in a tight trading range, while several of the relatively illiquid stocks on the Baltic List rocketed up. These trends, coupled with continuing strength in the dollar over the euro, pushed the Baltic Index higher.

The euro price index calculated for the 15 Latvian, Lithuanian and Estonian blue-chips making up the Baltic List climbed 1.5 percent to 133.94 over the week, approaching its all-time high of 135.59. Even with most blue-chips falling last week, including Eesti Telekom, Hansapank, Norma and Lietuvos Telekomas, gains of between 10 and 13 percent from EstoniaÕs supermarket chain Tallinna Kaubamaja and Lithuanian knitwear producer Utenos Trikotazas were enough to push the Baltic Index higher by weekÕs end. At the same time, the Baltic List capitalization remained almost unchanged over the week at 2.75 billion euros ($2.52 billion).

The total weekly turnover of Baltic List stocks was 3.75 million euros, down from 5.45 million million euros during the previous week. The Estonian Baltic List stocks accounted for 76 percent of the total weekly turnover, Lithuanian stocks contributed 9.5 percent and Latvian stocks 14.5 percent. The Baltic List stocks led on the Estonian and Latvian stock markets, accounting for over 80 percent of the turnover on each respective market. In Lithuania, however, the Baltic List stocks made up only 25 percent of local stock market trading.

Eesti Telekom disappoints with weak numbers

All eyes were on Eesti Telekom last week, much in anticipation of the scheduled release of its unaudited 12-month results. ÒIn the first half of the week one was waiting for the Telekom results to be released on Thursday, the second half of the week was influenced by insecurity on global markets and TelekomÕs mediocre results,Ó Aivo Kangus, capital markets strategist at Uhispank, said.

The stock index TALSE finished the week off 1.1 percent at 139.39. At the same time, the price index of the six Estonian Baltic List stocks was up 2.2 percent to 124.95 amid a speculatively driven jump in Tallinna Kaubamaja. Total stock exchange turnover came to 55.4 million kroons ($3.26 million), with Baltic List turnover accounting for 80 percent of the total.

The beginning of the week saw investor anxiety over EVP privatization vouchers. ÒThat the EVP would calm down by the end of the week could be anticipated,Ó Kangus said. The government on Feb. 6 agreed in principle to a proposal by the Finance Ministry to compensate uncancelled EVPÕs with bonds or cash after the EVPÕs term of validity expires. The compensating mechanism is to be established with a separate bill in March. EVP gained 1 percent during the week to finish at 0.670 kroons on Friday with a five-day turnover of 4.96 million kroons.

Leading the weekÕs trade was Hansapank with a turnover of 21.2 million kroons, its price falling 2.1 percent to 140 kroons. Eesti TelekomÕs shares posted a turnover of 13.10 million kroons, dropping 1.1 percent to 85 kroons. Merko was down 1.1 percent to 42.60 with turnover of 3.4 million kroons.

Next weekÕs trend should be determined by events surrounding Hansapank, as the groupÕs year 2000 results are scheduled to be released. More information is also expected next week with the privatization of the savings bank Lietuvos Taupomasis Bankas, a likely acquisition by Hansapank. However, over the weekend the Lithuanian government accused Hansapank of Òinterference in the internal and management affairs of Taupomasis bankas, before signing an agreement to acquire a majority stake.Ó Hansapank called such a position Òa regrettable misapprehension,Ó with the outcome of the conflict remaining unclear.

The situation in the Estonian market will also depend on that in European and especially Scandinavi-an markets. Last week Helsinki and Stockholm bourses were both treading on negative territory.

Lack of news and indecision keep Riga bourse quiet

As expected, the outgoing week did not see any increase in trading activity on the Latvian stock market. Share prices followed a slight downward trajectory under low as usual trading conditions. Dow Jones Riga Stock Exchange capitalization index was off 0.2 percent to 141.11 while the price index RICI fell 2.3 percent to 163.77. The euro price index of the four Latvian Baltic List stocks remained comparatively stable, edging up 0.1 percent to 155.73. The weekly turnover on the Riga Stock Exchange was 375,000 lats ($605,800).

Balta insurance company was the unquestioned leader by market turnover. Last week 215,000 lats worth of BaltaÕs shares were traded as the price dropped 3.5 percent, to 4.10 lats per share. This comparatively small price reduction is quite logical for Balta, considering that early in the year the stock was quoted at just 3.65 lats. BaltaÕs shares should stabilize in the range of 3.90 to 4.30 lats per share as investors wait for the holding companyÕs audited results covering last yearÕs performance.

Other Latvian Baltic List stocks remained flat for the week. Shareholders of Ventspils Nafta oil terminal feel quite comfortable at the current price of 0.73 lats per share, considering that world oil prices remain very high. The possibility that the Russian government reduces oil export duties by more than two times will also be to VentspilsÕ advantage. Turnover of Ventspils NaftaÕs shares reached 49,000 lats.

Scandinavian SEB bank bought 34,000 lats worth of Latvijas UnibankaÕs shares at the steady price of 2.05 lats per share. At the same time, shares in Latvijas Gaze gas company, at the steady price of 3.72 lats, saw trading activity virtually evaporate as the Latvian Privatization Agency still has not reached an agreement with other large shareholders concerning the mechanism for sale of an 8 percent state-held block of shares in the gas company.

As to developments outside the Baltic List, the significant drop of some shares which pushed the price index RICI down should be noted. Kaija fish cannery shares plummeted 16.7 percent to 0.15 lats each. It is clear that hopes that the company has been able to overcome, in full, the consequences of the Russian crisis have so far been unfulfilled. Liepajas Metalurgs metallurgy company suffered a 13 percent drop, to 0.20 lats, in the outgoing week as the previous loss of sales to the US market is now compounded by a nearly complete loss of access to the Canadian market as well, due to introduction of quotas and restrictions.

Daugavpils PKR motor chain plant shares lost 10 percent to 0.09 lats as investors remained unimpressed over reports about a large contract to be signed with an unspecified Germany company.

Lietuvos Telekomas' new pricing plan fails to impress traders

This week trading on the Lithuanian stock exchange was sluggish, as foreign investors retreated, turnovers decreased and share prices declined. The continuously tracked price index Litin-10 slid 1.9 percent to 1215.45, the blue-chip Official List index Litin skidded 1.08 percent to 466.67, and the broad index Litin-G was off 1.5 percent to 1072.71. The price euro index of the five Lithuanian Baltic List stocks was up 1.9 percent to 127.29 due to the speculative sharp growth of Utenos TrikotazasÕs stock. ÒYou wouldnÕt call it a brisk trading session. Foreigners are staying away from the market while local investors donÕt have enough funds to generate larger turnovers,Ó Martynas Kulvinskas, head of the Securities Trading Unit at Zemes Ukio Bankas (Agricultural Bank), said. The bourseÕs overall equity turnover reached just 5.37 million litas ($1.34 million).

Current List stock Vilniaus Vingis was the most actively traded stock on the central market. The electronic component maker edged up 0.8 percent to 5.75 litas in trade worth 679,500 litas. ÒThe higher turnover of this stock is determined by one or two deals, which cannot be called market deals, as they were made for the share price, which was much lower than the current market price. Trading in Vilniaus Vingis would not be so active but for these deals,Ó Tomas Andrejauskas, broker at Hansabankas, said.

Official List stock Lietuvos Telekomas skidded 1.3 percent to 2.16 litas, posting a turnover of 413,800 litas. Another 345,700 litas worth of shares in Telekomas changed hands via block deals. On Feb. 8 Lietuvos Telekomas, LithuaniaÕs monopoly fixed-line telephone operator, announced that starting with July, a connection fee of 0.17 litas would be introduced, rates for local (calls within Lithuania) and long-distance calls would be reduced, and Telekomas would charge for telephone calls on a per-second basis. Vytautas Plunksnis, an analyst at the financial brokerage firm Jusu Tarpininkas, forecast that the intentions of Telekomas would not exert influence on the market. ÒI believe that the decision of Telekomas not to announce its performance results until March 28 will have a much greater impact on the market,Ó Plunksnis said.

Refrigerator producer Snaige held steady at 36.50 litas amid 433,400 litas turnover, and cheese maker Rokiskio Suris ticked down 0.5 percent to 20.40 litas on 116,800 litas turnover. Brewer Kalnapilis slid 3.4 percent to 4.25 litas on 31,300 litas turnover, and knitwear producer Utenos Trikotazas rose 8.3 percent to 3.25 litas in trade worth just 9,800 litas.

On the Current List, gas utility Lietuvos Dujos dropped 5.7 percent to 1.65 litas on 306,400 litas turnover. ÒThe stock is a ÔpoliticalÕ one and is linked to the companyÕs privatization in many ways. Several interest groups clash here. Perhaps some small shareholders are building up stakes, too, hoping for growth in the long term,Ó Kulvinskas said.

Shipping firm LISCO tumbled 9.1 percent to 2.89 litas, generating 230,900 litas in turnover. Andrejauskas said that the drop was due to the news that a representative of the Dutch shipping company DFDS Tor Line, which intends to acquire LISCO, postponed his meeting with the companyÕs small shareholders. ÒThe recent growth in LISCOÕs share price was of a speculative nature, fueled by news about the companyÕs privatization, rather than its performance results. Therefore, after unfavorable news was announced, the price went down,Ó the broker said.