Baltic index up for the week

An absolute majority of the Baltic List stocks saw their prices, in euros, rise in the outgoing week, pushing the Baltic index up 1.2 percent to 130.08. Of the 15 blue chips comprising the list, shares of the Estonian retail chain Tallinna Kaubamaja ended the week as the only loser, in volatile trading. Nonetheless, there was very little real price growth for Latvian and, in particular, Lithuanian Baltic List stocks in local currencies, as the price gains in euros were mostly due to a weaker euro exchange rate against the lat and the litas.

Rising prices for the largest Estonian companies, Hansapank and Eesti Telekom, boosted the Baltic List capitalization by 2.3 percent, to 2.62 billion euros ($2.30 billion) as of May 11. The total Baltic List turnover was 6.25 million euros, as compared to 5.6 million euros the previous week. Estonian stocks contributed 96.4 percent, Lithuanian stocks 2.2 percent and Latvian stocks only 1.4 percent of the weekly turnover. Estonia's Hansapank accounted for over 50 percent of the total Baltic List turnover. Baltic List stocks led trading on the Estonian stock market, where they generated over 80 percent of total volume. In Latvia this figure was 30 percent, while in Lithuania the Baltic List volume was 5 percent of the total.

Estonia: Equities strong; vouchers disappoint

A positive mood engulfed the Tallinn Stock Market last week, particularly in terms of the major shares, in spite of EVP privatization vouchers losing nearly a fifth of their value. The TALSE stock index climbed 3 percent to 138.80 on a total turnover of 117.4 million kroons ($6.57 million), in 626 deals. The price euro index of the six Estonian Baltic List shares posted a moderate increase of 1 percent, ending at 126.07. A slide in Tallinna Kauba-maja's shares limited a stronger performance.

Analysts believe that the market mood was much better than could be expected. "The market was strong, sometimes even surprising," Uhis-pank broker Jaanus Sarv said. "Previously, our market went along with falls on Western markets; this did not happen during the week and the market moved up," Sarv told BNS.

Hansapank stock gained 3.6 percent, ending at 148.25 kroons, a new yearly high. Deals in Hansa shares accounted for slightly less than half the week's trading turnover, nearly 55 million kroons.

The price of EVP privatization vouchers suffered a big fall, plummeting 18.4 percent to 0.501 kroons. Total turnover of the deals was 3.1 million kroons. Voucher prices went into a free fall after the Finance Ministry announced that if the land reform continued at the present slow pace, it was possible that the effective term of the vouchers would be selectively extended. Selective extension of voucher terms means that, upon the date of the current deadline, use of the vouchers will halt in all spheres except in the privatization of profit-yielding land and perhaps also in the acquisition of apartments. The opinion of the Finance Ministry is that such a step may lower the EVP vouchers' market price and make them available to buyers of agricultural and forest land. At present, the official deadline of the EVP vouchers' validity is July 1, 2002. "In the case of EVPs, a lot will depend on the government's further decisions," Sarv said. The broker noted that the EVP was a sensitive instrument, particularly to information published in the media.

Eesti Telekom ended the week 2.6 percent higher at 78.50 kroons on a 15 million kroon turnover.

Latvia: Interest shifts to secondary markets

The Latvian stock market saw a rather sluggish response to news concerning its leading shares. Nevertheless, substantial price gains by low-liquidity stocks on the second list boosted the price index RICI by 3.7 percent, to 156.88. The Dow Jones Riga Stock Exchange capitalization index was up just 0.5 percent over the week, to 135.44, and the price euro index of the three Latvian Baltic List stocks inched up 0.9 percent to 161.08, mostly due to the falling euro exchange rate against the lat. Total stock market turnover increased slightly over the week, but still remained extremely low at 168,000 lats ($265,000).

Slow trading in shares of such large and popular companies as the oil terminal Ventspils Nafta, Latvijas Gaze and the insurance company Balta can be explained by the market being dominated by several large shareholders, who have already accumulated almost all available outstanding shares.

In the given situation, shares in stable companies on the second list may bring out interest among small investors. The fiberglass producer Valmieras SS was the stock market leader by turnover, generating 53,500 lats in trade, while its price per share climbed 2.1 percent to 0.48 lats. Latvijas Unibanka analyst Arnis Skapars believes that heightened interest in Valmieras SS shares is due to better financial results and to reports that the owners of the controlling stake intend to make a buyout offer to small shareholders.

Active trade continued in shares of the distillery Latvijas Balzams, shares which sold for a total of 36,000 lats and lifted 10.8 percent to 0.41 lats. "The gains by this stock are quite logical, considering that these shares are the most undervalued on the stock exchange, with an expected change of ownership," said Skapars.

Latvijas Gaze saw trade of 42,000 lats, with the price per share up 0.5 percent to 3.77 lats. The gas company is likely to see share strength into the future, as its 2000 results turned out to be better than earlier estimates and, at week's end, the council raised its proposed dividend payout, from 0.12 to 0.13 lats per share, though this must still be submitted at the shareholders meeting. At the same time, the situation with gas rates for large customers still remains unclear, as Latvijas Gaze's council resolved to file in court a complaint against the government, which for now will not allow for unregulated rate increases. The sale of 8 percent of state-held shares in the gas company also is uncertain because the Latvian Privatization Agency for weeks has been unable to make any decision on the matter.

Ventspils Nafta's share price remained flat at 0.6 lats amid trade of only 5,700 lats, ahead of the shareholders' meeting, scheduled for May 17. Additionally, in a few days the LPA will finally sign an agreement with the consortium led by investment bank Raiffeisen Investment AG, approving it as the financial adviser in the privatization of 38.62 percent of the oil terminal's shares currently held by the state.

Lithuania: Bourse caught in early summer lull

Trading was subdued amid a lack of market-moving news on the Lithuanian stock exchange; most share prices were stable or drifted lower. The bourse's benchmark price index Litin-10 edged down 0.18 percent to 1,060.18, the blue chip official list index Litin was off 0.39 percent to 383.18, and the broad index Litin-G edged down 0.5 percent to 947.52. The price euro index of the six Lithuanian blue chip Baltic List shares rose 1.5 percent to 118.61. However, this growth was fully attributed to the weakening of the euro against the litas. The bourse's equity turnover reached 8.88 million litas ($2.22 million). The bourse's overall turnover reached 26.87 million litas, of which 1.27 million litas were generated through T-bill trading.

It seemed like the nice weather lulled investors to sleep as the summer season began on the stock exchange. Besides, with the most recent round of corporate shareholder meetings ended, there was a lack of news for the market, brokers said. On the official list, blue chip Lietuvos Telekomas generated a turnover of 380,600 litas. Telekomas slid to 1.77 litas on May 10, its all-time low, so for the week it fell 0.5 percent to 1.79 litas.

Other stocks of the official list met with even less investor interest. The brewer Kalnapilis was up 0.9 percent to 4.16 litas on a 44,600 litas turnover; the TV-tube producer Ekranas was off 0.3 percent to 6 litas in trade worth 17,000 litas and the cheese maker Rokiskio Suris closed flat at 18 litas on a 42,700 litas turnover. The refrigerator producer Snaige was steady at 34.50 litas with 3,100 litas' worth of shares traded; the knitwear maker Utenos Trikotazas ended without trade.

On the current list, the shipping company LISCO climbed 3 percent to 3.40 litas with 195,700 litas' worth of shares traded amid expectations that the Danish company DFDS Tor Line will soon announce its position regarding a possible minority shareholder buyout in June. The paper producer Grigiskes sank 8.3 percent to 0.22 litas amid a 12,900 litas turnover; the gas company Lietuvos Dujos edged up 0.6 percent to 1.56 litas in trade worth 12,800 litas.

The electronics component maker Vilniaus Vingis was off 0.6 percent to 5 litas with 178,600 litas' worth of shares traded. Another 32,500 litas' worth of shares changed hands via block trades. Investor interest in Vilniaus Vingis has been fueled by the company's upcoming shareholders' meeting, where plans to lower the face value of the company's shares are likely to be approved. The shareholders should receive 1 litas per share in a special payout as a result of this move.

The apparently good news for investors has been overshadowed by unwarranted worries that Vilniaus Vingis will have to borrow funds after the authorized capital reduction is approved. If Vilniaus Vingis currently has little in the way of new investment projects, and is currently running a strong and stable positive cash flow, this is a good way to take cash out of the company and allow owners to reap the rewards of their investment, and it will have absolutely no effect on operating risks. Investors also worry that the problems the TV-tube producer Ekranas, which is one of the major buyers of Vilniaus Vingis' beam-deflection systems, is facing in Turkey might hurt Vilniaus Vingis as well.

The savings bank, Lietuvos Taupomasis Bankas, edged up 0.1 percent to 9.51 litas amid a 103,700 litas turnover; the oil concern Mazeikiu Nafta sank 3.3 percent to 0.57 litas in trade worth 106,600 litas as its public row with the Russian firm LUKoil continued to spread. In block trading, 7.2 million litas' worth of shares in the furniture maker Klaipedos Baldai changed hands.