Baltic index hits new record on coattails of Latvijas Gaze gains

  • 2001-08-02
  • Boriss Epsteins
The steep rise in share prices of the gas company Latvijas Gaze last week compensated for the loss in the Baltic index of the most capitalized Baltic states' stocks, including losses in Eesti Telekom shares. The Baltic index of 15 Baltic states' blue chips listed on the Riga, Vilnius and Tallinn bourses surged 5.9 percent, to 136.81, which is a new record high. Of these 15 stocks, only Latvijas Gaze and Eesti Telekom showed significant price movement, while the other shares stayed in a narrow trading range, as calculated in euros, of no more than 1 percent over the week.

The Baltic List capitalization rose 3.9 percent, credited to gains in Latvijas Gaze's shares and despite losses in Eesti Telekom, to 2.63 billion euros ($2.28 million), up from 2.3 billion euros a week earlier. Latvijas Gaze's shares, as a result of their strong price, took third place among the Baltic List stocks in terms of capitalization, at 476 million euros, while Lietuvos Telekomas slid to third place at 330 million euros in market capitalization.

First on the Baltic List in terms of capitalization was Hansapank, at 780 million euros, while taking second place was Eesti Telekom, at 551 million euros. The turnover of the Baltic List shares was 5.1 million euros against 21.9 million euros a week earlier. Lithuanian stocks accounted for 50 percent of the total turnover due to large block deals in shares of Lietuvos Telekomas and the refrigerator manufacturer Snaige, Estonian stocks with 42 percent and Latvian just 8 percent. The Baltic List stocks held domineering positions on all the three of the Baltic states national stock exchanges, securing over 80 percent of each market's total turnover.

Estonia: Norma adds color to quiet week

The Tallinn Stock Exchange saw little activity for the week; the only stirrings were caused by the release of economic results for the car safety equipment maker Norma. The TALSE index dropped 1.5 percent to finish at 135.89 by the weekend. The euro price index, as calculated for the six Estonian Baltic List shares, was off 0.2 percent, closing at 126.69. The turnover generated in the 404 deals completed during the trading week totaled 38.1 million kroons ($2.13 million). Eesti Telekom was the most actively traded security with a turnover of 17.8 million kroons. The share suffered the biggest drop among leading stocks, shedding 5.9 percent to close at an all time low of 62.75 kroons. "Investors were selling the telecom shares most of the week because of weaker than anticipated economic results and the unpleasant surprise that repurchase of the shares will begin at the 50 to 60 kroon level," Trigon Markets broker Kristel Kivinurm said. Next week, however, the stock might rebound since European high-tech shares closed sharply higher on July 27, though weak U.S. economic data might put the brakes on any continued upward move.

The high point for the week was Norma's economic results, which surprised analysts with a bigger than expected sales turnover, the broker said. "Seeing that sales on Western markets are steadily growing, Norma shows itself to be a viable business and, owing to that, Trigon raised its target price from 51 to 55 kroons," she added. Norma climbed 0.9 percent to 50.80 kroons, with 4.28 million kroons in turnover.

Trade in Hansapank shares was sluggish, but the price held steady, the broker said. "It looks like most investors want to see second-quarter results, due out on August 23, before changing their positions," Kivinurm observed. Hansapank ended the week 0.3 percent higher at 154.75 kroons with a turnover of 11.5 million kroons.

"Viisnurk's results were a positive surprise as always, and Trigon duly raised the price target, from 56 to 60 kroons with a buy recommendation," the broker said. Shares in the ski and furniture manufacturer gained 2.8 percent for the week, closing at 46.80 kroons on a five-day turnover of 1.27 million kroons.

"Baltika posted surprisingly good results, but the issue was not traded actively," the broker observed.

In other news, trading in shares and convertible bonds of Pro Kapital Group remains suspended as supervisory and law enforcement authorities have launched an investigation into the group's operations. Recently, serious accusations were launched against the Pro Kapital Group regarding compliance of the company's activities in the area of equal treatment of investors, the stock exchange said. It also appears that Pro Kapital has repeatedly misled the public and has not reported important information to the exchange, officials at the stock exchange said. Trading will be resumed after the stock exchange is convinced that Pro Kapital is able to guarantee observance of the principle of equal treatment of investors.

Latvia: Gas stocks maintain influence

The Riga Stock Exchange indexes received a boost from sharp gains posted by shares in the gas company Latvijas Gaze, rising immediately after the July 19 auction whereby the state sold a 2 percent stake during a special auction. The capitalization index DJRSE surmounted all previous growth records, rallying 25.6 percent to 188.31, which is a new record high. The index of Latvian stocks traded on the Baltic List, calculated in euros, also shot up a strong 23.7 percent, to 203.98, during the week backed up by gains in the gas company. The bourse official price index RICI grew 4.3 percent to 153.09. The weekly share turnover was 273,000 lats ($430,600). Action in the government-paper market registered 3.18 million lats' worth of volume.

Latvijas Gaze's shares surged by nearly 40 percent, to 6.65 lats, amid 144,315 lats in turnover. Interest in the stock remains strong, as investors believe the shares should reach the July 19 auction price clearing level of 12.51 lats per share. Analysts, though, are cautious in predicting how fast this can be expected, as the final decision concerning the sale of 3 percent of the state's remaining 6 percent stake has not yet been made.

Moreover, the stock's current market price, not to speak of the auction price, lacks economic merit and is dictated only by the struggle between large shareholders to control the company's direction. In such a situation a mutual agreement between the bidders to cooperate could effectively sink the share valuation.

Interest in the oil terminal Ventspils Nafta was strong last week as well, with shares up 1.6 percent to 0.61 lats per share amid 77,762 lats in turnover. The oil terminal's share price may be positively affected in the near future by the release of successful operational results and the upward revision in its profit forecasts, from 8.6 million lats to 13.6 million lats. The company's strong half year operational results cannot be described as wholly unexpected. However, the flow of bad news from Primorsk has not ceased for the time being, therefore, little upward movement is expected in the oil terminal's shares.

Other market news shows shares in the pharmaceuticals company Grindex up 2.3 percent to 0.45 lats amid a 19,522 lat turnover. The growth was triggered by good first half operating results. The confectionery company Staburadze, meanwhile, is following a completely opposite diet as it closed the first half of 2001 with a significant loss, which pulled down the stock's price by 9.6 percent, to 0.47 lats.

The bourse management decided to maintain the insurer Balta on the official list at least until the end of this year. During this period the Danish insurance company Codan, which holds over 99 percent in Balta, should ensure a 25 percent public stake in the company. The Danes will most likely formally meet this requirement, but it is unlikely that the shares will see increased liquidity. Balta's shares were not highly liquid before Codan acquired its controlling stake.

Lithuania: Bearish mood shows

The Lithuanian stock market ended the week on a bearish note after a short price rise midweek. As a result, most indexes remained unchanged for the week. The Litin-10 continuously tracked price index closed 0.7 percent higher at 983.21, the blue chip official list index Litin inched up 0.06 percent to 320.19, while the broad index Litin-G ticked down 1 percent to 823.66. The euro price index of the six Lithuanian Baltic List shares was virtually unchanged, closing 0.02 percent off at 113.35. The bourse's equity turnover reached 9.4 million litas ($2.35 million). Trading in government notes generated 5.64 million litas' worth of volume over the week.

On the official list, blue chip Lietuvos Telekomas held steady at 1.42 litas amid a central market turnover of 153,800 litas. Telekomas' turnover was strong at the beginning of the week, but interest waned as the week dragged on, as it was with the rest of the market. Next week Telekomas will announce its half year results and trading could be expected to become more active.

Refrigerator maker Snaige saw brisker trade at the close of the trading session on July 27, with its turnover reaching 31,700 litas. Snaige was stable at 33 litas with 95,500 litas' worth of shares traded. Cheese maker Rokiskio Suris climbed 1.1 percent to 18.41 litas in trade worth 73,200 litas. In block trading, 4.77 million litas' worth of shares in Lietuvos Telekomas, 2.62 million litas' worth of shares in Snaige, and 966,000 litas' worth of shares in Rokiskio Suris changed hands. The brewer Kalnapilis closed flat at 4.10 litas on a turnover of 22,800 litas; TV-tube maker Ekranas was unchanged at 5.50 litas with 24,100 litas' worth of shares traded; the knitwear manufacturer Utenos Trikotazas was not traded during the week.

On the current list, the oil company Mazeikiu Nafta slid 1.5 percent to 0.65 litas in trade worth 99,800 litas; the gas company Lietuvos Dujos climbed 3 percent to 1.36 litas amid a turnover of 31,700 litas; Savings Bank was stable at 9.88 litas in trade worth 28,900 litas. The Klaipeda Stevedoring Company was unchanged at 4.50 litas on a turnover of 22,200 litas; the dairy Panevezio Pienas ticked up 0.5 percent to 2 litas in trade worth 23,000 litas; the dairy Pieno Zvaigzdes slid 1.4 percent to 1.38 litas with 19,400 litas' worth of shares traded. Lisco Baltic Service dropped 20.9 percent, and Lietuvos Juru Laivininkyste was down 14.2 percent during the week as share buy-back offers seemed less and less likely.