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Baltic index up on renewed investor interest

  • 2001-04-05
The continuing fall in the Baltic states' blue chip share prices ended last week, although one could not yet say for certain that the negative trend has reversed itself.

The Baltic index of 14 Baltic List stocks listed on the Riga, Vilnius and Tallinn bourses rose 1.9 percent over the week to 132.37 on significant gains posted by a number of Lithuanian and Estonian stocks, as well as on the depreciation of the euro against the Latvian and Lithuanian national currencies.

Gainers outpaced losers 10 to four on the Baltic List with the biggest gains posted by Lithuanian stocks including Kalnapilis brewery, up 10.5 percent, Snaige refrigerator maker, up 7.5 percent and Utenos Trikotazas knitwear producer, up 6.6 percent.

The Baltic List capitalization increased slightly for the first time in weeks, jumping 0.8 percent to 2.39 billion euros ($2.1 billion), up from 2.37 billion euros. The capitalization was up thanks to slight gains by Eesti Telekom, Hansapank and Latvijas Gaze.

The Baltic List's weekly turnover was 5.09 million euros, up from 3.36 million euros. Turnover growth was due to massive block deals with investors selling shares in the Balta insurance group. Estonian stocks accounted for 57 percent of the list's weekly turnover, Latvian stocks 30 percent, and Lithuanian stocks 13 percent. The Baltic List stocks were turnover leaders on the Estonian and Latvian national bourses, too, accounting for over 70 percent of their respective weekly volume. In Lithuania, meanwhile, this indicator was just 19 percent. Next week Lithuania's Ekranas TV tube producer will be added to the Baltic List. Unfortunately for the Riga bourse, there is no Latvian company meeting the Baltic List requirements; therefore, as of April 1, the list will comprise six stocks each from Estonia and Lithuania and only three Latvian stocks.

Estonia: Share prices recover after sharp falls

The Tallinn Stock Exchange, which has been under downward pressure from the effects of world markets, managed to recover slightly by the week's end. The TALSE stock index gained 0.8 percent to close at 124.79. The price euro index of six Estonian Baltic List stocks was flat at 117.44. The total turnover for the week's 465 deals was 50.8 million kroons ($2.87 million). "Insecurity has been overcome in the last few days, and panicky sale has disappeared," Uhispank's capital markets strategist Aivo Kangus said, characterizing trading moods. "But trading interest is still low. The week's most memorable event was Hansapank stock falling under the (psychologically important) 130 kroon level and its subsequent resurfacing," he added. Analysts believe the Estonian market to be thin, though there is no justification in panicky reactions to such falls. "There are no grounds for such fast movements," Kangus reiterated.

On March 27, the share price of Hansapank fell to 126.25 kroons, but started climbing again and closed the week at 133.44 kroons, gaining 0.7 percent to 133.44 kroons, with the market's highest turnover of 30.4 million kroons. After the close of trading on March 30, Hansapank informed the Helsinki stock exchange of its intention to pay just 1 kroon per share in dividends for the year 2000. Based on this, Hansapank will pay out in dividends 78.9 million kroons. The remainder of last year's profits, as well as retained profits from previous years, a total of 1.84 million kroons will be retained on the company's books. This is good news for shareholders, if rather than paying profits out now as dividends, management can instead invest in high growth potential projects.

Shares in seatbelt manufacturer Norma gained 0.8 percent, to 46.50 kroons, on trade worth 6.90 million kroons. Norma's majority owner Autoliv announced last week that after transferring a large proportion of its seatbelt production from Sweden to Estonia, it will attempt to find suitable subcontractors within that country. Kangus said the news supported Norma's share price and is an attractive investment as far as the dividend yield is concerned. "In fact, Norma has the highest yield among the shares on our stock exchange," he added.

The fall in price of Eesti Telekom's shares at the start of the week was tied to events including the drop in the U.S. technology firms' NASDAQ index and weakness in the European telecommunications sector. Share prices recovered before the weekend, however. The share price for Eesti Telekom rose 0.3 percent to 68.25 kroons in trade worth 5.17 million krooons.

Latvia: Block deals dominate trading

Large block deals in shares on the official and secondary lists jolted the Riga Stock Exchange during the last week in March. The Dow Jones Riga Stock Exchange capitalization index dropped almost 0.2 percent, to 135.66, while the RICI price index fell a sharp 4.6 percent, closing the week at 157.99. The euro price index of the three Latvian stocks traded on the Baltic List edged up 0.4 percent to 162.95, but this was due only to the depreciation of the euro against the lat.

Large block sales of shares in the insurance company Balta brought the equity trading turnover on the Riga bourse to 1.26 million lats ($1.99 million). Total turnover on the stock exchange was 2.65 million lats, of which 1.39 million lats was from trading in debt securities.

After Balta released its audited report for last year, which showed a profit of 1.7 million lats, shares making up 3.7 percent of the company's outstanding share capital traded in block deals. These deals could very likely be related to the Danish insurance company Codan, which has announced its interest to purchase a controlling stake in the Latvian insurance group. Balta's share price stood firm at 4.3 lats each.

The Ventspils Nafta oil terminal posted gains while the gas company Latvijas Gaze failed to reach the price at which the stock traded at in February. Ventspils Nafta dropped 1.5 percent to 0.65 lats amid a lack of good news concerning the company. At the same time, a plethora of good news was released concerning Lithuania's Mazeikiu Nafta, a rival oil terminal, which has closed deals with Russian oil companies for the reloading and processing of oil.

Latvijas Gaze fluctuated between 3.57 lats and 3.64 lats per share, failing to reach its February trading level of 3.70 lats. Analysts with Latvijas Unibanka believe small investors are selling off their gas company stock, fearing it could fall even lower in the future.

Last week saw large block trading worth 177,000 lats in pastry maker Staburadze, and 188,000 lats worth of shares in the fiberglass company Valmieras Stikla Skiedra . Staburadze stood unchanged for the week at 0.67 lats while Valmieras Stikla Skiedra was up 2.2 percent to 0.46 lats.

The RICI price index was pulled down chiefly by losses posted by illiquid stocks including the metallurgy company Liepajas Metalurgs and the shipping company Rigas Transporta Flote, as these shares fell 37.5 percent to 0.15 lats, and 14.2 percent to 0.06 lats, respectively. The future of these two companies today seems unclear, therefore, investors seem to be rushing towards the exits to unload the shares at any price.

Lithuania: Telekomas thwarts attempted rally

A long-awaited recovery appeared to be on its way on the Lithuanian stock market, but the modest rise was cut short by a surprise drop in market heavyweight Lietuvos Telekomas, which came under strong foreign selling pressure. Over the week, the bourse's continuously tracked Litin-10 price index firmed by 2.2 percent to 1,179.83, the blue chip Official List Litin index rose 1.1 percent to 422.95, and the broad index Litin-G inched up 0.03 percent to 1,007.28.

The price euro index of five Lithuanian blue chip Baltic List shares rose a sharp 5.4 percent to 131.93 aided by big drops posted by the euro-currency against the U.S. dollar and the litas. The bourse's equity turnover for the week reached 11.82 million litas ($2.95 million). Overall bourse turnover came to 83.49 million litas, supported by heavy T-bill transactions.

At the start of the week, brokers predicted that the local stock market would take an upward turn, but Lietuvos Telekomas thwarted expectations as it skidded on March 29, pulling all indexes down. Suprema broker Arvydas Jacikevicius noted, however, that Lithuanian investors did not sell out their Telekomas shares, proving again that this stock represents one of the home-town favorites. Telekomas shares rebounded slightly on March 30.

Developments in U.S. and European markets, where a brief recovery was seen at the start of the week, had an impact on the Lithuanian bourse, but many brokers said the impact was rather limited. Lietuvos Telekomas ended the week 1.03 percent lower at 1.92 litas in trade worth 1.73 million litas. On April 2-6, the telecom company will hold presentations on its year 2000 financial results in various European capitals (London, Paris, Amsterdam, Geneva, Frankfurt, Stockholm, Vienna).

Other Official List stocks posted modest turnovers amid share price growth. Brewer Kalnapilis climbed 9.1 percent to 4.65 litas on a turnover of 255,600 litas. Next week's Baltic List newcomer, TV-tube producer Ekranas, ended the week 12 percent higher at 8.40 litas on a turnover of 223,900 litas, and knitwear producer Utenos Trikotazas was up 5.3 percent to 3.37 litas with 43,300 litas worth of shares traded. Cheese maker Rokiskio Suris slid 3.09 percent to 18.80 litas in trade worth 155,3000 litas.

On the Current List, furniture maker Vilniaus Baldu Kombinatas posted a turnover of 312,700 litas, shipping company LISCO showed a turnover of 288,100 litas, electronic-component maker Vilniaus Vingis' turnover was 278,600 litas, and gas utility Lietuvos Dujos registered a 224,200 litas turnover. VBK edged up 0.8 percent to 4.75 litas, LISCO charged ahead by 5.1 percent to 3.68 litas, Vilniaus Vingis was up 2.7 percent to 6.01 litas, and Lietuvos Dujos jumped 3.3 percent to 1.55 litas.

Shares in dairy companies Pieno Zvaigzdes and Zemaitijos Pienas lost ground amid flagging investor interest and news about Russia's decision to restrict food product imports from the Baltic states. Pieno Zvaigzdes ended the week 7.7 percent lower at 1.55 litas in trade worth 120,100 litas, and Zemaitijos Pienas collapsed by 20.1 percent to 10.50 litas with 166,700 litas worth of shares traded.

In block trading, 2.44 million litas' worth of shares in paper producer Grigiskes changed hands, 2.23 million litas in Vilniaus Bankas, 1.53 million litas in synthetic yarn producer Dirbtinis Pluostas and 898,500 litas in pharmaceutical firm Endokrininiai Preparatai.