The Baltic List turnover meanwhile grew seven times over the previous week, to 44.6 million euros, thanks to transactions in Latvijas Gaze. Of the total turnover, Latvian stocks made up a 93 percent share, Estonian 5 percent and Lithuanian 2 percent. The Latvian and Estonian national stock exchanges were dominated by trade in Baltic List stocks, which accounted for 95 percent of their total turnovers, while in Lithuania this portion was lower at 18 percent.
As the fight for control over Latvijas Gaze subsides, the stock may prove to be completely illiquid, which should sharply reduce Latvia's share of the Baltic List, which already is quite small. The situation is not very good concerning Estonia's share of the list as well. Evidently, Pro Kapital, whose management has been accused of misleading investors, will be deleted from the Baltic List as soon as late September. Moreover, Estonian experts are now speculating that after a possible change in Eesti Telekom's ownership structure, a share buyout by minority shareholders may take place and, subsequently, the stock may be delisted as well. There is uncertainty concerning Hansapank too, and it can't be ruled out that the merged Swedbank-SEB may decide next year to sell the bank. In such a case there will be a share buyout from minority shareholders and the consequent delisting from the bourse.
So, next year will be critical both for the Baltic List and the Baltic index, depending upon what happens in each Baltic states' stock exchange.
Estonia: Stocks slump as investors await corporate news
Last week the Tallinn Stock Exchange showed weakness amid a thin trading volume. The TALSE index closed 3.2 percent lower at 127.64. Calculated in euros, the price index of the six Estonian stocks was off 2.7 percent to 122.57. Turnover was 36 million kroons ($2.1 million) - half of previous week's level. "Turnovers shrank this week and, contrary to last week, the leading stocks weakened,"Trigon Markets broker Kaur Elviste said. Foreign markets, too, took a downward course, he observed. Elviste said, however, that Estonian equities could rally once the world markets firm.
Of the most traded shares, Hansapank suffered the biggest loss, ending down 5.3 percent at 151.45 kroons. It was the turnover leader, with 21.4 million kroons' worth of shares traded. "With a market situation like this, people who want to buy Hansapank will not be in a hurry; the financial sector is generally weak at the moment,"Elviste said.
Eesti Telekom shed 1.3 percent to close at 53.25 kroons with 10.9 million kroons in turnover. Next week will bring a flurry of important news to Telekom's shareholders. First, at the beginning of September Telekom's board will discuss possibilities of a share buyback from its small shareholders. Also, rumors about changes in Telekom's ownership structure might bring some new developments to the market. The rumors appeared last week after a meeting between Eesti Telekom directors and Estonian equity analysts, at which Telekom's CEO Jaan Mannik said the Swedish telecommunications company Telia had made the troubled Finnish company Sonera an offer for its holdings in Baltic telecom companies. Eesti Telekom has formally denied these rumors by issuing a statement to the stock exchange, which states the firm's management has no information of strategic investors having made offers to one another or of there being talks over a change in ownership structure of Telekom. Still, Sonera's difficult financial situation provides quite a large barrel for further rumors.
Analysts believe that potential major deals with shares in Eesti Telekom between the concern's three large owners, Swedish Telia, Finland's Sonera and the state of Estonia, would be an important signal to small shareholders as well. Urmas Riiel, of Hansapank, believes that if Telia takes decisive steps toward acquiring Sonera's holdings in Eesti Telekom, and if the price offered for the shares becomes public, it will be a significant signal to small shareholders. Such a deal would provide information about a strategic investor's opinion on the value of Eesti Telekom, the analyst observed.
In Riiel's opinion, there is at the same time no certainty about the Telekom share price moving up on the coattails of the price agreed upon between the strategic investors, which will most likely be higher than the market price. However, Trigon Markets analyst Toomas Reisenbuk is more optimistic about the fate of small shareholders. He believes that if Telia bought Telekom shares from both Sonera and the state, a buyout offer to small shareholders would be possible. The possible offer will in Reisenbuk's opinion quote the same price as deals with the Finnish concern and the state of Estonia.
The Tallinn Stock Exchange's listing committee ruled Aug. 28 to terminate, from Sept. 29, Pro Kapital Group's share listing. The committee cited as grounds for termination the fact that the real estate group has been engaged in, for quite some time, repeatedly withholding and delaying publication of important information, in full or in part, and publishing incorrect, deficient and misleading information.
Trading in Pro Kapital shares will continue from Sept. 3 to Sept. 28; at the same time the company is considering contesting, in the bourse's court of arbitration, the committee's decision. A spokesman for Pro Kapital said that company management had admitted some breaches in following stock exchange rules and was prepared to take the punishment, but that being removed from the stock exchange listing was something the firm had not reckoned with in its plans. "Naturally this would be most unpleasant,"he said.
Latvia: Latvijas Gaze shares fall after auction closes
The shareholder battle for control over the gas company Latvijas Gaze last week came to an end, with the share price subsequently falling fast, pulling down all stock exchange indexes with it. The capitalization index DJRSE plummeted 13.3 percent to 202.46, while the price index RICI fell 4.4 percent to 154.84. The three Latvian companies traded on the Baltic List saw their prices slump 13.9 percent to 211.5. The index was also pulled down by losses in the insurance company Balta.
The turnover on the Riga bourse reached 23.72 million lats ($38.26 million) due to the auction of a 3 percent stake in Latvijas Gaze and related block deals in the the company's shares. Latvijas Gaze sold at 6.13 lats per share at the Aug. 30 auction, which is two times lower than at the June 19 auction, when shares sold at 12.51 lats apiece. The Aug. 30 auction saw no fierce fighting over the shares because Itera Latvija had already, ahead of the auction, actually met its goal of securing a 24 percent stake in Latvijas Gaze, as well as receiving one additional seat on the company's board. Itera Latvija reached its goal by purchasing large blocks of shares from other shareholders, including Finland's Fortum and Latvia's oil terminal Ventspils Nafta.
At this point, Germany's Ruhrgas and E.ON Energie, as well as Russia's Gazprom and Itera Latvija, together control some 90 percent to 95 percent of Latvijas Gaze's capital. Russian and German companies control approximately an equal number of shares. The Latvian state still owns 3 percent of the shares, but it is almost certain that these shares will not be sold for a higher price than 6 lats per share. Analysts believe the stock price will not return to the level of 11 lats per share again, and therefore the greedy small shareholders who failed to sell their holdings, at the peak, deserve compassion. It seems the stock price now may decrease significantly in the near future. It is unlikely though that Latvijas Gaze's share price will fall below 3-4 lats given the company's high profitability and its stable dividend payment policy. Latvijas Gaze's share price fluctuations into the future may affect the sale of the company's state-owned shares in September or October and, theoretically, also the privatization process of the Lithuanian gas company Lietuvos Dujos. Currently, the list of potential buyers of the Lithuanian state owned shares resembles the list of Latvijas Gaze's shareholders, but it has not been ruled out that the process may be joined by Norwegian and French gas giants.
Trade in other stocks saw relatively low volumes on the Riga Stock Exchange with the bourse in general dominated by negative trends. The confectionery Staburadze plummeted 23.1 percent to 0.3 lats. The stock was affected not only by the company's Icelandic investors' litigation with the finance and capital market commission, the stock exchange's supervisory institution, but also by the decision of the competition council, the competition watchdog, to look into whether Staburadze and the wholesaler group Unifeks have violated the competition law as a result of their agreement.
The insurance company Balta also posted significant losses on the Riga bourse, down 14.8 percent to 2.02 lats, with a similar move by the transportation company Rigas Transporta Flote, which fell 14.3 percent to 0.06 lats. Ventspils Nafta lost 5.5 percent to 0.7 lats.
Lithuania: Snaige and Telekomas gain ground
Blue chip stocks Snaige and Lietuvos Telekomas gained ground in the beginning of last week, helping lift the bourse's major indexes. However, towards midweek lackluster moods set in again and trade got tangled in a web of apathy. The benchmark price index Litin-10 rose 2.1 percent to 1,020.98, the official list index Litin rose 2.6 percent to 315.56, and the broad index Litin-G was up 2.7 percent to 788.19. Calculated in euro prices, the index of six Lithuanian blue chip stocks gained 2.2 percent, closing at 113.62. Equity turnover came in at 15.75 million litas ($3.94 million). Government debt securities trading generated 15.16 million litas in turnover.
The refrigerator producer Snaige shot up to 36 litas, its highest level since March 7. The stock rose 12.5 percent, generating a turnover of 381,900 litas. Another 1.45 million litas' worth in Snaige's shares changed hands via block trades. Market analysts said, however, that there were no apparent reasons right now for Snaige to be up. "I can understand investors who are selling shares in Snaige following the break-off of talks on the sale of a majority interest in Snaige to a strategic investor, but I cannot see any reasons to buy at the moment,"Finasta broker Aurelijus Rimkus said.
Lietuvos Telekomas, as with Snaige, saw brisker trade at the start of the week. On Aug. 28 the stock moved up to 1.38 litas, its highest level in two weeks, though it later began losing ground. Over the week, Telekomas jumped 3 percent to 1.35 litas amid a turnover of 455,400 litas. In block trading, 427,000 litas' worth of shares changed hands.
Other official list stocks saw much weaker trade. TV-tube maker Ekranas rose 1 percent to 6 litas with 45,300 litas' worth of shares traded; the cheese maker Rokiskio Suris inched up 0.1 percent to 21.03 litas in trade worth 22,800 litas; the brewer Kalnapilis firmed at 4.30 litas on a turnover of 4,600 litas. The knitwear maker Utenos Trikotazas ended without trading for the week.
On the current list the gas company Lietuvos Dujos led trade in terms of turnover. Investor interest was fuelled by a possible privatization scheme that had been presented in a meeting between President Valdas Adamkus and Prime Minister Algirdas Brazauskas. The prime minister said the Lithuanian government intends to sell 34 percent of shares in Lietuvos Dujos to a Western strategic investor, with another 33 percent or 34 percent to be offered to gas suppliers, together with Lithuanian partners. The Russian companies Gazprom and Itera could compete for a 25 percent stake, while the remaining 8 percent or 9 percent would be offered to Lithuanian-based companies, including the gas importers Stella Vitae and Itera Lithuania, as well as to the nitric fertilizer producer Achema, the largest natural gas consumer in Lithuania. Lietuvos Dujos jumped 4.9 percent to 1.50 litas in trade worth 48,500 litas.
In block trading, 3,973,137 shares in the dairy Panevezio Pienas, representing 28.15 percent of the authorized capital, changed hands for 8.38 million litas. Pieno Zvaigzdes, another Lithuanian dairy, acquired Panevezio Pienas' shares from Vilniaus Bankas, the country's largest commercial bank, thus boosting its shareholding in Panevezio Pienas to 49.9 percent.
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