Baltic index closes week at another record high

  • 2001-08-09
  • Boriss Epsteins
Last week speculative interest in Latvijas Gaze shares, as well as in a number of Lithuanian companies, pushed the Baltic index again to a record high. The index of 15 blue chip Baltic stocks, as calculated in euros, gained 2.8 percent to 140.75. Winners outnumbered losers eight to six on the Baltic List of the 15 largest capitalization Baltic stocks, while Estonia's Pro Kapital, Ernesto Preatoni's investment juggernaut, was unchanged after trading in its shares was suspended.

Corresponding with the strength in Latvijas Gaze shares, the Baltic List capitalization gained 2.9 percent to 2.71 billion euros ($2.38 billion). It must be added that Latvijas Gaze's share capitalization, at 530 million euros, not only considerably exceeds that of Lietuvos Telekomas, at 329 million euros, but has just about caught up to the former Baltic List capitalization leader Eesti Telekom, valued at 549 million euros. The current leader on the Baltic List in terms of capitalization is Hansapank, at 798 million euros.

The aggregate turnover for the Baltic List was 7.9 million euros, compared with 5.1 million euros the previous week. Lithuanian shares accounted for 53.5 percent of this total, Estonian shares 37.5 percent, while Latvian stocks added just 9 percent. Last week Baltic List stocks again dominated local stock exchanges on all three Baltic states' markets, making up 80 percent of the total volume.

Estonia: Telekom has no support, for now

Last week was a quiet one on the Tallinn Stock Exchange, with Eesti Telekom dropping to a new record low, and shares in brewer Saku Olletehas contributing a little excitement with record sales figures for July. The TALSE stock index rose 0.9 percent to 137.22. The euro price index, as calculated for the six Estonian Baltic List shares, was up 0.5 percent, closing at 127.41. Turnover for the week was 52.2 million kroons ($2.93 million) in 509 deals.

Shares in Eesti Telekom fell 0.4 percent to 62.50 kroons, a new low. The turnover was 29.5 million kroons. "The week's main character and turnover leader was Eesti Telekom, and attempts were made midweek to buy up its price," Trigon Markets broker Kaur Elviste said. The broker said that a rise in the price was expected, though limited, as sellers held large positions, and buying power was ineffective against them.

Shares in Hansapank gained 2.2 percent to 158.25 kroons on 13.3 million kroons' worth of turnover. "Hansapank's share price ticked quietly upward, but the buyers are in no hurry," Elviste said. The broker said that the share was likely to remain strong until the publication of half-year financial results on the presumption that the world markets remain positive.

On August 1, the brewer Saku announced record sales numbers for July, and on the next day its share price rose 4.5 percent, to 63.25 kroons. For the week, the price of the share ended 2.8 percent higher, at 62.50 kroons, on trade of 1.33 million kroons. "Saku's results caused a brief euphoria, but it was all over by the weekend," the broker said.

Shares in Norma gained 2.1 percent during the week, closing at 51.90 kroons on a turnover of 2.86 million kroons. Norma is exceptional among the leading shares, Elviste said. "Cum-dividend, the price of the share is moving at its highest price of the year and keeps rising," he said. Last week analysts at investment bank Trigon Markets raised Norma's year-end price target from 51 kroons to 55 kroons per share and also revised upwards, by 14 percent, its full year sales forecast. Norma's new sales forecast is 792 million kroons, 25.2 percent higher than for 2000, Trigon reported.

Latvia: Gas shares still on upward swing

The main event last week on Latvia's stock market continued to be the speculative rise of national gas utility Latvijas Gaze shares. The Dow Jones Riga Stock Exchange index gained 8.7 percent to 204.64 - another record - while the price index RICI gained 2.1 percent to 156.39. The Latvian Baltic List index gained 8 percent to 220.41, also a new record. Along with the relatively high price for Latvijas Gaze shares, the trade turnover on the Riga Stock Exchange amounted to 522,129 lats ($824,124). Trade in government issued T-bills reached 7.2 million lats.

Nevertheless, Latvijas Gaze gains aren't giving much hope to specialists tracking the Riga stock market. Over the past week Latvijas Gaze shares have gained 11.5 percent, to 7.42 lats. As of July 19, when a 2 percent state-owned Latvijas Gaze stake was sold at 12.51 lats a share, the open market share price has gained 80 percent. Suprema investment company analyst Reinis Ceplis believes that such a large price rise "makes investors and speculators nervous." In fact, the price/earnings ratio for the share is currently at 35, indicating a rich valuation at the current price.

Latvijas Gaze shares still trading on the stock market are obviously being fought over by a small number of investors, most likely German and Russian. Many specialists, hoping that the shares will continue rising, are nevertheless worried about what may happen after either one or both of the investors lose interest. It seems that the shares will then fall faster than they have gained. The only question is: when will this fall occur? Apart from the investors, this can only be answered by the Latvian government and the privatization agency, and after all market players understand the fate of the remaining state-owned Latvian Gaze shares.

An auction of 3 percent of the remaining 6 percent state-owned Latvijas Gaze shares will take place on August 30. Most market participants believe that the price for these shares will not be as high as the 12.51 lats they sold for in the last round. A decision on the fate of the final 3 percent of state-owned shares will most likely be made next week, on August 10.

Along with Latvijas Gaze shares, the Riga bourse also noted interest in the oil terminal Ventspils Nafta, the distillery Latvijas Balzams, and the pharmaceuticals concern Grindex; however, total turnover in these shares was below 60,000 lats.

Lithuania: Investors content with positive corporate earnings

Trading was subdued on the Lithuanian stock exchange last week, with the market-moving news holding investor interest only briefly. The bourse's benchmark price index Litin-10 edged up 0.5 percent to 988.71; the blue chip official list index Litin was up 1.3 percent to 324.65, while the broad index Litin-G closed 0.3 percent lower at 820.47. The euro price index of the six Lithuanian Baltic List stocks was up 0.8 percent, closing at 114.26. The bourse's equity turnover reached 15.77 million litas ($3.94 million). Treasury securities trading generated an additional 11.79 million litas in turnover.

Shares in blue chip Lietuvos Telekomas were the focus of trading, generating a turnover of 301,100 litas, with investor interest fuelled by the company's first-half operating results. Telekomas reported an unaudited net profit of 66 million litas for the first half of this year, a 3.1 percent rise from the same period last year. The company's first-half results exceeded analysts' expectations. The Baltic financial brokerage house Trigon Capital earlier had predicted that Telekomas' profit would reach 61.1 million litas. Investor interest quickly waned, though, and Telekomas shares closed flat at 1.42 litas.

TV-tube maker Ekranas soared 9 percent to 6.00 litas in trade worth 61,100 litas, though brokers restrained their optimism. Arvydas Jacikevicius, broker with the financial brokerage company Finansta, said that marked fluctuations in Ekranas shares can be attributed to the general trends of a non-liquid market. Generally, one or two deals made on the market cause large price fluctuations. On August 1, 4,424,044 shares changed hands for 13.27 million litas at a price of 3 litas per share via block trades. Aurelijus Rimkus, broker from the financial brokerage company Finasta, said that, judging from the low buying price of the shares, it must have been a repo deal.

The cheese maker Rokiskio Suris rocketed up 14 percent to 21.00 litas with 8,800 litas' worth of shares traded. The stock rallied on the back of its first-half financial results - the Rokiskio Suris group reported an audited consolidated net profit of 8.06 million litas for the first half of this year, up by 2.2 times from the 3.63 million litas in the same period last year. Another 1.16 million litas' worth of shares in Rokiskio Suris changed hands in block trading.

The refrigerator maker Snaige plummeted 9 percent to 30.00 litas with 21,600 litas' worth of shares traded. On July 31, Snaige reported that it decided to suspend negotiations on the sale of a controlling stake after offers from the Swedish company Electrolux and the Italian company Antonio Merloni had been declared unfavorable by Snaige shareholders.

On July 31, Suprema, the Baltic financial brokerage house, issued a "buy" recommendation for shares in the Lithuanian knitwear manufacturer Utenos Trikotazas, saying that the company is likely to pay healthy dividends and buy out shares held by minority shareholders. Suprema predicted that Utenos Trikotazas' share price should reach around 3.75 litas. The share price of the stock, however, was unaffected by the good news. Utenos Trikotazas fell 3.4 percent to 2.80 litas amid a turnover of just 7,812 litas.

On the current list, the oil company Mazeikiu Nafta was in focus. In spite of the news that the Seimas (parliament) endorsed the amendments to the law on privatization of Mazeikiu Nafta, which were needed to facilitate the agreement with U.S. Williams International, Mazeikiu Nafta slumped to 0.58 litas. Market analysts said investors were digesting the company's first-half financial results. Mazeikiu Nafta confirmed that it had suffered a loss of 71.6 million litas in the first half of this year versus the same period a year ago. Morevoer, Mazeikiu Nafta's share price dipped ahead of the shareholders meeting, scheduled for Aug. 6, where the decision of an authorized capital increase or reduction will be discussed. "If the meeting is successful and trade in the company's shares is resumed, everything will be all right. But investors probably fear that their money will be frozen, having in mind the reorganization of the Lithuanian gas company Lietuvos Dujos," said Aurelijus Rimkus, broker with the financial brokerage firm Finasta.

It seems that the broker's negative forecasts may be fullfilled in full, as the shareholders meeting has been postponed until the end of August

For the week, Mazeikiu Nafta slumped 4.6 percent to 0.62 litas with 188,000 litas' worth of shares traded.