Eesti Telekom ignored by Baltic index

The sharp rise in the global equities markets, continuing now for a second week, plus gains in a few Baltic company shares, has not managed to generate any considerable change in momentum in the Baltic index. The 15 Baltic List company shares barely moved last week, ending at 130.14. Stability is the word, due mainly to the fact that gains in Eesti Telekom and Ventspils Nafta were balanced by losses in many other Latvian and Lithuanian company shares. Additionally, the index was affected negatively by a rise in the euro exchange rate against the U.S. dollar, causing a significant fall in Latvian and Lithuanian company share prices. Losers outnumbered gainers amongst the 15 most highly liquid stocks in the Baltic states.

The rise in Eesti Telekom shares raised the Baltic List capitalization index, as of April 20, by 2 percent, to 2.55 billion euros ($2.3 billion). The Baltic List weekly turnover amounted to 18.45 million euros, against 5.22 million euros the previous week. The jump in turnover can be explained by the share transfer of 5.7 percent of the Latvian gas company Latvijas Gaze from one account to another. Thus, Latvian share turnover - from actual deals in Latvijas Gaze stock - accounted for over 80 percent of the aggregate Baltic List turnover. Estonian shares provided 17 percent of the turnover and Lithuanian shares only 3 percent. The Baltic List shares held leading positions on their respective Riga and Tallinn bourses, ensuring each more than 85 percent of the total turnover. For Vilnius this figure stood at below 30 percent.

Estonia: "Just-be-happy" mood won't last, warn brokers

A buoyant mood prevailed on the Tallinn bourse last week, but specialists do not predict this will last long, as world markets already began to retreat after previous, sharp gains. The TALSE stock index climbed 3.1 percent to 131.94. The price euro index of the six Estonian Baltic List shares was up 0.8 percent to 122.60. Total turnover for the week's 565 transactions stood at 55.3 million kroons ($3.18 million).

Eesti Telekom shares moved up 7 percent to 76 kroons, and with 18.9 million kroons in turnover, it was the most traded issue. "The price rise in Eesti Telekom is welcome. There was buying interest from the West, and shares were bought also in London," Hansabank Markets broker Lauri Lind commented to BNS. "There was an echo of NASDAQ and the Federal Reserve's decision on the lowering of interest rates in Telekom's price movement," Trigon Markets broker Kaur Elviste said. However, brokers are cautious in predicting future growth for the stock. "Buying interest in Telekom stock held up, but buyers are generally cautious and therefore the turnover was rather low," Lind said. "Markets are expecting a fall in the NASDAQ," the broker added.

During the week, shares in Hansapank climbed 1.1 percent to 137.50 kroons on trade of 11.6 million kroons. "There was stable trading in Hansapank stock, but the buying interest was mainly from the West, not local," the broker said.

Shares in the seatbelt maker Norma rose 1.8 percent to 50.90 kroons on trade of 5.33 million kroons. "The price of shares in Norma, which rose before the publication of 1Q results on April 19, then came down a little," Lind said.

Shares in the brewery Saku Olletehas were traded rather briskly besides those quoted on the main list. For shares in Saku, April 18 was the last cum-dividend day of trading and they were actively trading leading up to this date. However, for the week, Saku fell 10.6 percent to 59 kroons on 3.23 million kroons of turnover. "Shares in Saku fell more than the rate of the dividend," Elviste said. The broker explained that shares in Saku were accumulated speculatively with expectations of greater dividends. This provides another example of investors not understanding that company value is not changed by its dividend policy; the price of a share will drop by the same amount of the dividend paid. The amount of cash paid to its shareholders is reflected in the downward adjustment of its share price.

Shares in Pro Kapital slipped 0.6 percent to 48.70 kroons on a turnover of 12.07 million kroons. The large turnover is accounted for mainly by one large block deal in which 269,000 shares traded, at 43 kroons, on April 19.

Latvia: Large Latvijas Gaze transaction masks market weakness

Even though all the price indexes gained on the Riga Stock Exchange last week, with record high trading results, specialists aren't rushing to proclaim any optimistic forecasts. Over the week the Dow Jones Riga Stock Exchange index gained 1.2 percent to 132.42. The RICI price index gained 2.5 percent to 151.29. The price euro index of the three Latvian Baltic List shares gained 0.7 percent, to 157.86. Share turnover for the week was notably high, at 8.42 million lats ($13.41 million).

Nevertheless, these strong figures offer no reason to celebrate. This is because 99 percent of the turnover can be attributed to just one large transaction, an 8.31 million lat deal, consisting of Itera's transfer of a 5.6 percent stake in its Latvijas Gaze shares from one account in Latvijas Unibanka to another account at Hansabanka. The Itera company is currently under investigation in how it has been accumulating and transferring its assets among various "insiders." It would therefore be premature to start speaking of higher trading patterns on the Riga Stock Exchange.

Latvijas Gaze shares fell, to 3.50 lats from 3.57 lats, down 0.5 percent. The gas company's price has stagnated as of late, due to several reasons. The company's largest shareholders have still not decided on what to do with the remaining 8 percent of state-owned LG shares, which the state wants to sell off. The Russian and German shareholders have battled each other to a stand-off. Russian Gazprom wants the shares to remain in the hands of the state, while German Ruhrgas wants to acquire additional shares, though at a price lower than the current market price. Latvijas Gaze's management and the state government have also come to a standstill on gas rates. Latvijas Gaze wants to eliminate gas rate regulations for its industrial customers, allowing it to drive up corporate heating costs, which some feel would threaten to generate considerable inflation in Latvia.

Balta insurance shares toppled by 16.2 percent to 4.23 lats. Perhaps the management's decision on dividends, at 13 santims per share, disappointed shareholders.

Ventspils Nafta shares rose by 6.8 percent to 0.62 lats. Even though the company's results look hopeful for the first quarter, its current rise can be explained only as a technical bounce from the large drop of the last couple of weeks. It seems that until the Ventspils Nafta shareholders meet in mid-May, these shares could see directionless trading, with share prices moving widely in either direction, depending on global oil prices and on results from the oil terminal's competitors.

Lithuania: LISCO close to privatization deal

Shares in Lietuvos Telekomas and LISCO were the focus of trading on the Lithuanian stock exchange. Telekomas led the way in terms of trading volumes, but brokers said activity in LISCO shares was much more intriguing as news about the shipping company's privatization kept coming in. The bourse's continuously tracked price index Litin-10 eased 1.1 percent to 1,164.35, the blue chip official list index Litin inched down 0.02 percent to 412.38, and the broad index Litin-G was down 0.3 percent to 1,001.49. The price euro index of the six Lithuanian Baltic List stocks fell 1.2 percent, ending at 123.83, as a 1.5 percent eurocurrency gain against the litas contributed most to this decline. The bourse's equity turnover came to 6.45 million litas ($1.61 million). The overall turnover came to 26.31 million litas, which included 19.8 million litas in T-bill transactions.

Listed on the secondary current list, LISCO generated a turnover of 291,500 litas. LISCO's share price rose to 4.05 litas after the government approved the company's privatization agreement, with President Valdas Adamkus supporting the government's position. However, later it yielded to selling pressure and fell back, closing the week 2.4 percent lower at 3.84 litas as some uncertainty remains over the privatization deal. Brokers said the market is now waiting for the planned signing of the LISCO privatization agreement, expected April 23, and is awaiting more details about the company's restructuring and a possible buy out of minority shareholders.

Trading in Telekomas' shares, which typically reacts to developments on global markets faster than other Lithuanian stocks, was rather volatile, too. Telekomas slid 1.8 percent at the start of the week, following a drop in technology stocks on major foreign markets, but bounced back at the weekend to close at 1.89 litas, just 0.5 percent lower off its week earlier price. Telekomas' weekly trading volume reached 920,600 litas on the central market. An additional 517,900 litas' worth of shares in the monopoly fixed-line telephone operator were sold in block trades.

The TV tube maker Ekranas closed up 2.6 percent at 7.90 litas in trade worth 120,600 litas, and the refrigerator producer Snaige was down 2.5 percent to 35.00 litas, with 61,600 litas' worth of shares traded. Other official list stocks posted modest turnovers. The brewer Kalnapilis was stable at 4.35 litas, the cheese maker Rokiskio Suris firmed 3.5 percent to 18.90 litas, and the knitwear producer Utenos Trikotazas held steady at 3 litas.

Back on the current list, the oil company Mazeikiu Nafta dropped 4.4 percent to 0.64 litas in trade worth 86,400 litas, and the savings bank Taupomasis Bankas climbed 1.6 percent to 9.20 litas amid a turnover of 85,200 litas ahead of signing the bank's privatization agreement, due on April 23. In block trading, bank Snoras saw deals worth 2.13 million litas.