Despite of the removal of Estonia's real estate company Pro Kapital from the Baltic List last week, gains by telecoms and Latvijas Gaze were large enough to boost the list's capitalization by 2.2 percent to 2.33 billion euros ($2.14 billion).
The total Baltic List turnover remained almost unchanged week-on-week at 8.7 million euros. Estonian stocks contributed 76.8 percent of the weekly turnover, while Lithuanian stocks added 21.8 percent. Continuing the recent trend, the share of Latvian Baltic List stocks counted for close to nothing for the second consecutive week, as Latvian stocks made up only 1.4 percent of the total turnover. The Baltic List stocks remained absolute leaders on the Estonian stock market, generating nearly 94 percent of the total stock market tunover there. In Lithuania this figure was 75 percent, and in Latvia 59 percent.
Estonia: Telekom's stock still going strong
Picking up on last week's momentum, Eesti Telekom continued to post gains as positive moods prevailed on the Tallinn Stock Exchange. The index TALSE put on 4.56 percent to finish at 128.31 on Oct. 5. Calculated in euros, the index lost 0.23 percent, closing at 114.53. The price index of the five Estonian Baltic List stocks was negatively affected by Pro Kapital's stock de-listing. Total market turnover came to 112.7 million kroons ($6.6 million).
"Lending color to the week were rumors that Telia is interested in acquiring Sonera's holdings of Baltic and Russian telecoms," Trigon Markets trader Kristel Kivinurm said. Eesti Telekom was by far the best performer during the week, closing 12.11 percent higher at 62.50 kroons on trade of 44.8 million kroons. The week before, the shares skyrocketed nearly 22 percent and have become 37 percent more expensive over the past two weeks. Its share price, though, is still 60 percent below its high of 155 kroons, reached in March 2000. However, it was not clear yet if Eesti Telekom would continue its upward march, as one company executive suggested last week that company profit was likely to decrease in 2002 as EMT, the second of its two subsidiaries, would probably be classified by market watchdogs as having a significant market share, to which certain special regulations should apply. According to an earlier release by Eesti Telekom, this possible new status may reduce Eesti Telekom's group profit by 100 million to 250 million kroons. Eesti Telekom has no official forecast regarding next year's profit.
A recent survey by Nomura analysts scouting the telecommunication sector forecasts an operating profit of 875 million kroons for Eesti Telekom next year. Uhispank anticipates Eesti Telekom's profit in 2002 at 700 million to 740 million kroons, while a forecast by Hansapank, which doesn't take into account the possible change in EMT's status, expects earnings to reach 1.2 billion kroons.
With a turnover of 56.2 million kroons, Hansapank was the week's most traded issue, accounting for half of the bourse's total turnover. The price of Hansa edged up 0.89 percent to 141.25 kroons. "The price rise of Hansapank was small, but there were block deals which reveal big buying and selling interest," Kivinurm said.
Norma posted gains too, ending the week in positive territory by a margin of 3.91 percent, at 47.80 kroons, with 3.13 million kroons in turnover. In the past two weeks Norma's price has jumped 10.65 percent.
Latvia: Trading at critically low levels
Trading activity on the Latvian stock market remained close to nonexistent last week, but the share index got an upward push by a sudden speculative rise in the share price of the gas company Latvijas Gaze. The Dow Jones Riga Stock Exchange capitalization index shot up 16.93 percent to 179.26 and the price index RICI jumped 4.26 percent to 151.62. The euro price index of the three Latvian Baltic List stocks soared 15.69 percent to 189.07.
The weekly turnover totalled just 116,725 lats ($187,963), of which some 90 percent were concluded in deals with shares in just two stocks, Latvijas Gaze and over-the-counter sweets producer Staburadze, of which share trading has recently been suspended. Latvijas Unibanka's analysts, using a simile comparing the Latvian stock market to a hospitalized human being, said the market's condition resembles that of the clinically dead, as turnover from trading dropped to a miserable 794 lats on Oct. 3. Experts also do not feel very enthusiastic about the sudden upward leap by Latvijas Gaze shares, which last week rose as much as 25.96 percent to 5.92 lats per share.
Analysts from the investment bank Suprema and Latvijas Unibanka believe that this growth is not commensurate to actual financial figures and is the result of speculative demand on the part of several investors, pasted against the background of thin and lifeless trading.
It cannot be ruled out that the interest in the Latvian gas company results from a statement by Latvijas Gaze's German shareholders, Ruhrgas and E.ON Energie, who announced their intention to buy from the Latvian state the remaining 3 percent stake in a cash offer. The government for now is set to sell Latvijas Gaze shares for privatization vouchers, although there are differences stirring within the ruling coalition over the plan. In particular, representatives from the Fatherland and Freedom/LNNK party oppose a sale of the gas company shares against vouchers.
Weekly turnover of other stocks on the bourse last week failed to exceed more than a few thousand lats. The oil terminal Ventspils Nafta is the only stock worth mentioning as it rose 2.77 percent to 0.74 lats over news about the company planning to revise its annual profit target, setting it at a higher figure.
Lithuania: Telekomas moves higher
Trade remained fairly brisk on the Lithuanian stock market, with stocks broadly moving higher amid increased trading volumes, led by market heavyweight Lietuvos Telekomas. The brewer Kalnapilis and natural gas firm Lietuvos Dujos were also at the center of investor attention. The bourse's continuously tracked price index Litin-10 edged lower by 0.3 percent to 1,015.87; the blue chip official list index Litin was up 2.84 percent to 301.55, and the broad index Litin-G rose 1.68 percent to 804.04. Calculated in euros, the price index of the six Lithuanian Baltic List stocks fell 0.1 percent to 116.10. The week's equity trading turnover reached 9.35 million litas ($2.34 million).
Listed on the official list, Telekomas climbed 4.92 percent to 1.28 litas on a turnover of 1.1 million litas. The stock has roared ahead by 17 percent since Sept. 18 and is currently at its highest level of the past four weeks. Brokers attributed the rally of telecom shares to favorable trends on the global markets, which were due to the decisions by the U.S. Federal Reserve and the Bank of England to cut interest rates. In the second half of the week, signs of growing interest from larger investors overtook the market.
The brewer Kalnapilis closed 2.17 percent higher at 4.70 litas in trade worth 632,600 litas. Tomas Andrejauskas, head of the financial brokerage department of Hansabankas, said investor interest in Kalnapilis' shares might have been fuelled by forecasts that the Scandinavian concern Baltic Beverages Holding may receive, for its stake in the company, anywhere from 121 million litas to 167 million litas, or from 5.5 litas to 7.6 litas per nominal-value share.
Refrigerator maker Snaige rose 1.32 percent to 38.50 litas in trade worth 135,600 litas. As much as 4.65 million litas' worth of shares in Snaige changed hands via block trades. Cheese maker Rokiskio Suris was off 0.38 percent to 23.41 litas amid a turnover of 23,400 litas; TV-tube manufacturer Ekranas skidded 6 percent to 4.70 litas with just 2,900 litas' worth of shares traded and knitwear maker Utenos Trikotazas ticked down 0.36 percent to 2.75 litas in trade worth 25,400 litas. Also in block trading, 336,000 litas' worth of shares in Rokiskio Suris changed hands.
On the current list, the natural gas company Lietuvos Dujos advanced 1.21 percent to 1.67 litas in trade worth 565,300 litas. The Lithuanian government decided last week not to sell part of Lietuvos Dujos' shares via the bourse at least for now, but the decision seemed not to affect investor interest in the stock. Though it was generally expected that Lietuvos Dujos would plunge following the government's decision, this did not happen, as large investors helped to maintain the share price, said Arvydas Jacikevicius, broker with the financial brokerage firm Suprema. Toward the end of the week, investor interest was fuelled by Prime Minister Algirdas Brazauskas' statement that the state would sell its remaining 24 percent stake through the stock exchange at a later date.