Baltic bourses sink with world markets

  • 2001-03-29
Most Baltic stock exchange indexes last week followed world stock market trends down. The Baltic Index comprising 14 Latvian, Lithuanian and Estonian blue-chips was down as well, 0.8 percent to 129.78 over the week with losers outnumbering gainers eight to six. The most capitalized stocks, Eesti Telekom, Lietuvos Telekomas, Latvijas Gaze and Ventspils Nafta, suffered the greatest losses. As a result, the Baltic List capitalization again declined significantly over the week, from 2.43 billion euros ($2.16 billion) to 2.37 billion euros.

Total Baltic List turnover was 3.36 million euros (as compared to 5.03 million euros the previous week), with 77 percent contributed by Estonian stocks, 14 percent by Latvian stocks and 9 percent by Lithuanian shares. The Baltic List stocks led on Estonian and Latvian stock markets, taking over 75 percent share of weekly turnover, respectively, while in Lithuania this figure was just 9 percent.

Estonia: Weak telecom finding new lows

Estonian investors directed their attention to foreign markets in the outgoing week; on the Tallinn bourse, an all-time low was recorded for Eesti Telekom; however, the stock managed to recover partly before the weekend recess. The TALSE index ended the week down 1.9 percent at 123.73. The price euro index of six Estonian Baltic List stocks was almost unchanged, up 0.1 percent to 117.53. Turnover from the 479 deals made during the week was 46.3 million kroons ($2.64 million). "Starting from the end of last week, the Tallinn bourse was shored up anticipating the U.S. Fed's meeting," Trigon Markets broker Kaur Elviste said. After news broke of a smaller than expected lowering of interest rates, foreign markets sold down and the Tallinn bourse moved down in their wake, he added.

The most-traded security during the week was Hansapank, generating roughly a 16 million kroon turnover. The share lost 2.7 percent of its value to finish at 131 kroons. It traded in the range of 130.50 kroons to 136.50 kroons. News released March 22 showed that the Lithuanian competition board has no objection to the continuation of talks on the sale of about a 90.2 percent stake in the Lithuanian savings bank Taupomasis Bankas to Hansapank. Later in the week the Lithuanian state property fund ruled to carry on LTB privatization talks with the Estonian bank. "The Taupomasis news was positive news," Elviste said. Yet he is of the opinion that analysts will probably have to review stock target prices.

In terms of turnover, Norma came in second with 11.6 million kroons. The share posted a gain of 0.2 percent, closing at 46.10 kroons.

Telecom finished at 68 kroons, down by 2.8 percent from March 23, with 9.26 million kroons' worth of the shares changing hands. On March 22, the share closed at an all-time low of 66.50 kroons. Analysts do not see cause for panic comparable to that on U.S. stock exchanges and the Tallinn bourse is not expected to go into a steep decline. Uhispank analyst Sven Kunsing said Estonia has not seen a euphoric rise in recent years and therefore a wave of panic selling shouldn't occur either. According to fundamental indicators, Estonian stocks are much cheaper than those elsewhere in the world, Kunsing said. The majority of main-list shares on the Tallinn stock exchange are substantially undervalued, he stated.

Trigon Markets analyst Toomas Reisenbuk said the key issue for the Estonian stock market is, to what degree is the fall due to re-evaluation of growth prospects, or to the short-term influences arising from movement of capital. Decline would be justified if there were reasons to believe that the slowdown of economic growth in the United States would bring in its wake a depression in the euro zone and its satellite countries. "Today there are no grounds for such pessimism," Reisenbuk declared. Assuming that the Estonian economy will continue growing at a rate of 5 percent this and the next year, stock prices here may move down some more if world markets continue on a downward trend, but not more than by 10 percent to 20 percent, the analyst believes. The Tallinn stock exchange index TALSE is at present about 11 percent lower than at the start of the year.

Latvia: Oil and gas sector stocks down

The outgoing week was characterized by significant losses by two of the most highly-capitalized Latvian stocks, which are in the oil and gas sector - the Ventspils Nafta oil terminal and Latvijas Gaze gas company. As a result, the Dow Jones Riga Stock Exchange capitalization index dropped 3.2 percent to 135.89 with the europrice index of the three Latvian Baltic List stocks slipping 1.8 percent to 162.19. At the same time, the official price index RICI jumped 1.9 percent last week to 165.76. These uncorrelated movements of the indexes can be explained by the fact that RICI calculations include such low-liquidity stocks as the Liepajas Metalurgs metallurgy plant and Kaija fish cannery, which last week saw their prices increase by more than 25 percent on average on trading volume close to zero.

Nevertheless, it was shares in Latvijas Gaze and Ventspils Nafta which contributed a lion's share to the weekly stock market turnover on the Riga Stock Exchange, which reached 338,300 lats ($536,000). Turnover in government bond and T-bill trading on the stock exchange was 6.03 million lats.

Shares in Latvijas Gaze fell 3 percent, from 3.71 lats to 3.60 lats on a turnover of 235,500 lats. At mid-week the share price fell as low as 3.50 lats per share. The gas company's shares fell after the statement by one of its largest shareholders, Germany's Ruhrgas, which said that the state holdings in Latvijas Gaze should be sold to current shareholders and below the price currently quoted on the stock exchange. This statement by Ruhrgas, as well as the position by Russia's Gazprom which maintains that the Latvian government should not sell its holdings in Latvijas Gaze, is likely to bring the gas company's shares down further in coming weeks. Other news incited interest in these shares as well. In particular, last week Ruhrgas announced its intention to take part in the privatization of the Lithuanian gas company, Lietuvos Dujos. Hence, it is possible that the make-up of shareholders in the Lithuanian gas company will soon become quite similar to that of Latvijas Gaze.

The fall of shares in Ventspils Nafta probably has some indirect relation to the statement by a Latvian representative of the Russian oil company LUKoil about Ventspils Nafta's share price likely to collapse by more than two times after the commissioning of the Primorsk oil terminal. In the outgoing week Ventspils Nafta sank 8 percent to 0.66 lats on a turnover of 34,400 lats. Last week the Interfax news agency reported, however, that the completion of the first stage in construction of the Primorsk terminal, expected to result in annual throughput of 12 million tons of oil and oil products, will not be sufficient for oil exports from Russia's northern regions.

Interfax reported that, to date, the bids from Russian companies for reloading of oil through Primorsk have reached a total of 32 million tons. It means there is no immediate threat to Ventspils Nafta's business for now. It should be noted, that exports to Primorsk and Ventspils will be coordinated by the same company, Baltiyskiye Magistralniye Nefteprovodi. This is good news for Ventspils Nafta as this arrangement will effectively "leave out of the game" Butinge oil terminal in Lithuania.

Balta insurance company's shares hardly changed last week, with its price at 4.30 lats per share on a turnover of just 213 lats. The purchase by Balta of 1.2 million lats' worth of 10-year bonds issued by the Musa Motors car dealership can be seen as a positive move - reliable long-term securities are always welcome among the assets of an insurance group enagaged in, among other things, life insurance, if they are matched to similar liabilities. What remains unclear, however, is Balta's intention to resell these bonds to its customers. It does not seem very wise to mix the insurance business with that of a financial intermediary, even for the noble purpose of diversifying risks.

Lithuania: Got milk? Traders think so in dairy merger

Trade remained subdued on the Lithuanian stock exchange with most bluechip stock prices decreasing; however, Lietuvos Telekomas' transactions and a large number of block deals kept turnover at a comfortable level. The benchmark price index Litin-10 slid 2 percent to 1,154, the blue-chip Official List index Litin skidded 4.2 percent to 418.01, and the broad index Litin-G edged down 1.7 percent to 1,007.02. The europrice index of five Lithuanian Baltic List shares also slipped 1.2 percent to 125.07. The bourse's overall equity turnover reached 12.55 million litas ($3.14 million). Trading in T-bills amounted to 5.33 million litas turnover.

Despite the fact that Lietuvos Telekomas posted a quite high turnover, investors' attention was focused on secondary listed dairy Zemaitijos Pienas amid news about the coming consolidation on the dairy market. The stock charged ahead by 46.1 percent to 13.15 litas, hitting its 52-week record high and posting a turnover of 222,700 litas. According to brokers, the shares are driven by merger rumors in the dairy sector and the news that the company plans to place a new equity issue, shares of which are expected to be sold at the price of 20 litas each.

Meanwhile dairy group Pieno Zvaigzdes tumbled 8.7 percent to 1.68 litas in trade worth 149,000 litas. Aurelijus Rimkus, a broker at the financial brokerage firm Finasta, explained this retreat with investors' disappointment. "Investors expected that a potential buyer of the new issue would buy the shares at the 2 litas price on the bourse, too. No information about buyers and their intentions is available so far, so the price retreated," he said. Another 299,400 litas worth of shares in Pieno Zvaigzdes changed hands via block deals.

On the Official List, Telekomas skidded 3.9 percent to 1.94 litas in trade worth 922,500 litas. Market participants say that Telekomas' share price has been falling for a month and a half, and investors are showing more interest at these lower levels. Another reason behind the interest toward Telekomas might be next week's announcement of 2000 operating results.

TV-tube maker Ekranas tumbled 9 percent to 7.50 litas amid a 175,100 litas turnover, and brewer Kalnapilis skidded 3.1 percent to 4.26 litas with 61,300 litas' worth of shares traded. Cheese maker Rokiskio Suris edged down 0.4 percent to 19.40 litas on a turnover of 42,100 litas. Other Official List stocks posted even less impressive turnovers. On the Current List, shipping firm LISCO held steady at 3.50 litas on a 165,100 litas turnover, and radio and TV component maker Vilniaus Vingis climbed 4.4 percent to 5.85 litas, generating a turnover of 97,800 litas. On March 21, 51.9 percent of the share capital in Vilniaus Vingis changed hands through block trades on the National Stock Exchange of Lithuania. A total of 4,736,068 shares in Vilniaus Vingis were sold via 16 block deals for 5.57 million litas at prices ranging between 1 litas and 1.35 litas a share. The average price was 1.18 litas a share, well below its market price. Another 1.96 million litas worth of shares in Ukio Bank, 1.04 million litas in hardboard producer Grigiskes, 747,000 litas in synthetic textile maker Dirbtinis Pluostas and 224,600 litas in furniture maker Vilniaus Baldu Kombinatas changed hands via block deals.