Investors wait for discouraging spell to pass

  • 2001-06-28
  • Boriss Epsteins
The decline in trade on the Estonian stock market in the outgoing week resulted in trading activity subsiding for the Baltic List in general, while share prices remained without any significant changes except for Lietuvos Telekomas, which continued moving downwards.

The Baltic index, comprising 15 Latvian, Lithuanian and Estonian blue chips, inched up 0.44 percent to 133.37 points over the week with gainers outnumbering losers 10 to three. Two Estonian stocks, Merko Ehitus construction company and Eesti Telekom, remained unchanged.

The falling euro exchange rate against the U.S. dollar, litas and lat somewhat contributed to the growth in euro prices for Latvian and Lithuanian stocks.

Nevertheless, the effect of exchange rates on indexes in the outgoing week once again cannot be described as decisive.

Due to Lietuvos Telekomas shares, plunge to another record low last week, the Baltic List capitalization was reduced a further 0.4 percent to 2.56 billion euros ($2.18 billion).

In line with the trend prevailing in recent weeks, the Baltic List turnover fell to 4.3 million euros in the outgoing week from 5.1 million euros a week before.

Estonian stocks contributed 72 percent to the weekly Baltic List turnover, with Latvian stocks bringing in 25 percent and Lithuanian stocks only 3 percent.

The Baltic List stocks were absolute leaders on the Estonian and Latvian stock markets in the outgoing week, generating over 90 percent of the total turnover on their respective home bourses. For Lithuania, this figure was below 5 percent, however.

Estonia: Bourse sharply down

Turnover at the Tallinn Stock Exchange shrunk further over the past week to a modest 53.72 million kroons ($2.9 million), as compared with 85.2 million kroons the week before.

The TALSE stock index eased by a marginal 0.1 percent in the course of the week to finish at 138.70 before the weekend.

The price euro index of six Estonian Baltic List shares was up 0.37 percent to 126.07 points.

Baltic List shares still contributed the lion's share of the Estonian bourse turnover - 49 million kroons, or 91 percent of the total.

"Summer threw open the door and stepped inside, sending the turnover tumbling, which culminated in a record low turnover on June 22," Trigon Markets trader Kaur Elviste said.

As news is in short supply too, the stock market here is increasingly vulnerable to impulses from outside markets. The reaction to such impulses apparently will be minimal, however, due to the holiday period and low liquidity.

The most traded issue during the outgoing week was Hansapank's share which lost 0.67 percent of its value to close at 148.50 June 22, with a turnover of 31 million kroons and 153 deals concluded during the five days.

Eesti Telekom was flat at 71.50 kroons with 11.1 million kroons in turnover and 106 deals concluded.

The trading activity with other shares was very limited as Norma closed 1.03 percent lower at 3.07 kroons with 4.5 million kroons in turnover and Pro Kapital was up 2.66 percent to 3.70 kroons over the week as turnover reached 2.1 million kroons.

Merko Ehitus and Tallinna Kaubamaja remained virtually unmoved.

Latvia: Price index plunges

Substantial losses posted by Liepajas Metalurgs metallurgy plant and Riga Transport Fleet in the ourgoing week made the Riga Stock Exchange price index RICI slip down 3.98 percent to 150.65 points.

Meanwhile, the Dow Jones Riga Stock Exchange capitalization index gained a little over the week, inching up 0.21 percent to 140.03 points. The local euro price index of three Latvian stocks included in the Baltic List was up 0.81 percent to 172.43 points.

The weekly turnover of stocks on the Latvian bourse was 600,000 lats ($940,000), a more than fourfold increase over the previous week. Latvian Baltic List stocks accounted for the lion's share of this turnover - 580,000 lats or 97 percent of the total.

The aggregate weekly turnover on the Riga Stock Exchange (including deals with debt securities) made up 15.8 million lats.

Regardless of the growing turnover, an analyst for Latvijas Unibanka, Aigars Gamuls, said that for the third consecutive week the bourse had one "quiet" day when turnover remained below the 10,000 lat line. In the outgoing week, it was June 20 when the daily turnover on the Riga Stock Exchange was just 1,500 lats.

The upward movement of the capitalization index and the Baltic List index was due to a small gain by Latvijas Gaze gas company, whose shares climbed from 3.98 lats to 4 lats or by 0.5 percent on a turnover of 106,000 lats.

The meeting of Latvijas Gaze shareholders did not bring any unexpected turns, therefore one can assume that the stock is not likely to see any significant price changes in the near future. Many experts believe that at the auction of the 2 percent of the state-held shares in Latvijas Gaze, the price will be close to the current quotation of the gas company's shares on the stock exchange.

Shares in Ventspils Nafta oil terminal stayed flat at 0.59 lats, generating only 18,000 lats in trade. Most anaylsts believe that a majority of market members are satisfied with the current price. Therefore no major price changes should be expected for Ventspils Nafta.

Liepajas Metalurgs shares plummeted down 21.1 percent to 0.15 lats over the week on a turnover of just 328 lats. The downward trend was probably due mainly to news about the U.S. Department of Trade's adopting the decision to keep in force the anti-dumping duty of 17 percent on imports of steel reinforcements from Latvia.

Furthermore, an additional shadow over the future of the Latvian metallurgy plant has been cast by the recent activities of the largest Russian steelworks concern, Severestallat, which has bought the premises of the former railway carriage plant in Riga and uses the facility to store its finished products.

Although Severstallat representatives made a public statement claiming they intend to cooperate with Liepajas Metalurgs, the prospects of such cooperation seem uncertain at the moment considering that the two companies are obviously players from completely different leagues.

Riga Transport Fleet's shares last week sank 16.7 percent to 0.05 lats on a turnover of 13 lats. The price fell over gloomy market forecasts for the company, which were confirmed at a recent meeting of shareholders.

The situation at Riga Transport Fleet is so bad that the company's strategic investor, the Greek company Lavinija, decided to abstain from making planned investments prescribed under the privatization agreement even at the risk of getting into conflict with the Latvian Privatization Agency.

Shares in Latvijas Balzams distillery jumped 2.6 percent to 0.4 lats in the outgoing week after news about Russia's Soyuzplodimport acquiring actual control over 49.9 percent of shares in Latvijas Balzams, but the stock generated only 6,600 lats in turnover.

Regardless of positive remarks made about the acquisition by brokers and analysts, who expect the move to boost Latvijas Balzams' export potential, a lack of information about the detailed terms of the deal is preventing investors from developing growing interest in the stock.

Moreover, as only 49.9 percent of shares in Latvijas Balzams changed hands, the Russian concern is not required to make a public buyout offer to other shareholders in the Latvian distillery.

In the latest update on the Latvian market, the Danish insurer Codan obtained almost 100 percent of the Latvian insurer Balta as a result of a buyout offer to small shareholders.

Lithuania: Government crisis determines trends

The Lithuanian Stock Market saw highly volatile trading in the outgoing week. Fuelled by good news for oil concern Mazeikiu Nafta it picked up at the beginning of the week, but as the government crisis drew nearer to its peak, trading slowed midweek and has not shown signs of recovery since then.

The stock exchange's benchmark price index Litin-10 edged up 0.59 percent to 1024.42 points, the blue chip official list index Litin was off 3.63 percent to 347.83 points, and the broad index Litin-G edged down 0.25 percent to 907.52 points.

The price euro index of six Lithuanian Baltic List stocks edged up 0.25 percent to 121.13 points over the week.

The bourse's equity turnover reached 11.1 million litas ($2.8 million), of which just 500,000 litas or less than 5 percent of the total was generated in Baltic List trading.

The bourse's overall turnover reached 24.59 million litas, of which 13.5 million litas were generated in T-bill trading.

Brokers said the resignation of Prime Minister Rolandas Paksas undoubtedly dampened the enthusiasm of traders, who had previously been active over the news that the U.S. company Williams International, operator of the oil concern Mazeikiu Nafta, and Russia's Yukos had signed an agreement on long-term oil supply.

Due to the political crisis, which creates doubts as to the stability of the country's ruling coalition, investors decided to stay on the sidelines, waiting for news about the formation of a new government.

This had also a negative impact on trading in Mazeikiu Nafta's shares. Although all the mainstream political parties supported the Williams-Yukos deal, the Parliament's economics committee voiced its disapproval of the deal and required economic and legal analysis about it.

Mazeikiu Nafta surged 25.81 percent to close at 0.78 litas in trade worth 184,400 litas on June 18, but due to the government crisis (the government's approval of the agreement is necessary) Mazeikiu Nafta's rally lost momentum after this.

On June 20, following the resignation of the prime minister, Mazeikiu Nafta started losing ground. Brokers said such trends may prevail until the government crisis is over. It is not clear at what price Yukos is going to buy the shares. Analysts said it should range from 0.79 litas to 0.88 litas.

Nevertheless, Mazeikiu Nafta rocketed up 20.97 percent to 0.75 litas over the week.

On the official list, Lietuvos Telekomas closed 4.88 percent lower at 1.56 litas in trade worth 60,300 litas. On June 21 it reached 1.55 litas, a new all-time low.

"According to many brokers, the price of Telekomas' shares is so low that it is necessary to buy them. But the problem is that everyone who is interested in telecom shares has already acquired them. Taking into account the low demand and downward trends on the market, telecom shares may lose ground further," Tomas Andrejauskas of Hansabankas said.

Brewer Kalnapilis remained stable at 40.30 litas with a turnover of 18,000 litas; cheese maker Rokiskio Suris ticked up 0.06 percent to 18.01 litas with 66,500 litas, worth of shares traded; and refrigerator maker Snaige slid 2.94 percent to 3.00 litas on a turnover of 14,700 litas.

In block trading, 62,100 litas' worth of shares in Kalnapilis changed hands.

TV-tube maker Ekranas held steady at 6.20 litas amid a turnover of 8,600 litas. Knitwear producer Utenos Trikotazas ended without trade this week.