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It is certainly possible that the indexes will face further declines next week in the wake of a Nov. 2 report showing sharp unemployment growth in the United States, highlighting that the rapid weakening of the U.S. economy could end in deep recession. Earlier in the week, figures released outlining sharp declines in both U.S. consumer confidence and manufacturing activity added fuel to investor worries.
Losers outnumbered gainers 10 to three on the Baltic List with losses posted by some of the most highly capitalized stocks, counting among them Latvia's gas company Latvijas Gaze and the oil terminal Ventspils Nafta, and Estonia's Eesti Telekom and Hansapank. As a result, the Baltic List capitalization shrank 3.45 percent to 2.24 billion euros ($2.03 billion).
In the absence of large block deals in Baltic List shares, last week marked one of the lowest turnover figures for the Baltic List exchanges, with 2.17 billion euros' worth of shares traded. Estonian stocks contributed 86 percent, Lithuanian stocks 8 percent and Latvian shares 6 percent to the total.
Baltic List stocks were the absolute trading volume leaders only in Tallinn, generating over 90 percent of the total turnover on the home bourse. In Latvia this figure was 25 percent and in Lithuania 1.5 percent.
Estonia: Uncertainty keeps investors sidelined
The Tallinn Stock Exchange last week marched in step with European markets amid general uncertainty burdened with a predominantly negative outlook. Worsening U.S. unemployment figures threaten to further aggravate the situation in Estonia, though expectations are now running high for a slowdown, if not an outright reversal, to falling trends in global markets if the U.S. central bank acts to cut interest rates substantially this week.
The TALSE index dropped 2.3 percent to close at 122.52 ahead of the weekend. Calculated in euros, the price index of the five Estonian Baltic List shares fell 0.85 percent, to 113.65.
Brokers facilitated 362 deals, or 31.8 million kroons' ($1.84 million) worth of securities trades, making this the year's lowest weekly turnover. "On the whole, the market moved down this week; there was no new fundamental news to set a firm direction," Uhispank trader Jaanus Sarv said.
This view is shared by most specialists. "Investors in Estonia lack vision; no one is making major changes in their investments, and because of that trade is very quiet; only forced transactions are being made," Trigon Markets broker Kaur Elviste said.
Hansapank's price fell 3.68 percent during the week, finishing at 137.25 kroons, generating 20.5 million kroons of turnover, equal to 65 percent of the market's total.
Eesti Telekom ended 2.17 percent lower at 56.25 kroons on a turnover of 6.55 million kroons.
On the supplementary list, shares in meatpacker Rakvere Lihakombinaat surged after the release of economic results for the first nine months of the year, jumping 16.13 percent to 7.20 kroons. Rakvere LK's nine month sales turnover increased 21 percent year on year to 779 million kroons. The group's consolidated profit, meanwhile, rose 20 times to 61.8 million kroons.
Latvia: Government indecision, global factors bring down indexes
An absolute majority of Latvian stocks suffered large share price losses, though turnover remained low. The Dow Jones Riga Stock Exchange capitalization index sank 7.81 percent to 166.26, while the price index RICI dropped 2.22 percent to 145.54, dangerously approaching its all time low.
The euro price index of the three Latvian Baltic List stocks likewise lost 7.89 percent of its value, to 176.70. Similar to the DJRSE, the Latvian Baltic index is strongly weighted with Latvijas Gaze shares, and the gas company stock's steep decline last week was unwelcome news to its shareholders. The weekly turnover of shares on the bourse was 287,351 lats ($459,027).
Latvijas Gaze plummeted 10.17 percent to 5.30 lats per share on trade of 52,472 lats. The government's failure to finalize the terms of sale of the state's remaining 3 percent stake in the company gives investors reason to sit on the sidelines and wait for a clearer decision. Apart from the most likely options of selling this stake at auction for cash, or for payment through privatization vouchers, the Latvian government still has not precluded the possibility of selling its holdings in Latvijas Gaze to the company's German shareholders, Ruhrgas and E.ON Energie, despite strong opposition from its Russian shareholders, Gazprom and Itera. A decision is anticipated some time next week.
The oil terminal Ventspils Nafta saw its shares slip 4 percent to 0.72 lats on a turnover of 20,500 lats. Regardless of the company's decision to increase its target profit, negative factors still prevail in the mind of investors.
Negative forces from the outside include falling energy demand due to weakening global economic output, and the resulting drastically lower crude oil prices.Thrown into this mix are renewed Russian threats concerning the redirecting of its oil exports from Latvia's Ventspils port to the Primorsk terminal, located on the Gulf of Finland. In addition, the Latvian Privatization Agency once again has delayed until next year the issue of selling off the state held stake in Ventspils Nafta.
As regards the exchange's official list, attention should be given to OTC trade with shares in the sweets producer Staburadze which, for the moment, are not being traded on the stock exchange. Staburadze's shares generated a turnover of 44,453 lats in OTC trade ahead of the court ruling over the possible reversal of the assignment of the company's assets.
Among the secondary list stocks, shares in Valmiera Fiberglass traded actively at 71,884 lats' worth for the week, with its price slipping 5.45 percent to 0.52 lats, a drop which analysts attribute to profit taking after its recent price surge.
On the free list, 2.35 million shares, or 13 percent, of the knitwear company Ogre changed hands in a series of large block deals totalling 94,000 lats. Analysts at the investment bank Suprema believe that deals with Ogre's shares are related to another deal, one in which Ogre bought from LUKoil 20 percent of the shares in the insurance company AK Allianse, which finds itself in a difficult financial situation.
Suprema's analysts suggest that Ogre's majority shareholders applied pressure to management to purchase the AK Allianse shares, and this "investment" will not produce any synergies in which to benefit the knitwear producer's bottom line. The illiquidity of the insurance company's shares will further cause a loss of value for Ogre.
Lithuania: Dairies drive Lithuanian indexes higher
Shares in Lithuanian dairy operators stole the spotlight on the stock exchange during the short three day work week, posting strong gains in relatively brisk trading; market activity in other sectors remained lackluster. All major indexes ended the week in positive territory: the continuously tracked price index Litin-10 firmed 3.3 percent to 1,067.10, the blue chip official list index Litin was up 2.26 percent to 312.37, and the broad index Litin-G rose 1.06 percent to 833.56.
As calculated in euros, the price index of the six Lithuanian Baltic List shares gained 2.11 percent to 131.15. The bourse's three-day equity turnover reached 44.27 million litas ($11.07 million).
Blue chip Rokiskio Suris shot up 14.31 percent to 29.15 litas, hitting a new 52-week high, on a turnover of 270,200 litas. Another 133,100 litas' worth of shares in the country's leading dairy group changed hands through block deals.
The current listed dairy producers followed suit. Zemaitijos Pienas surged 17.85 percent to 10.50 litas on a turnover of 93,300 litas, and Pieno Zvaigzdes put on 18.58 percent to 1.34 litas with 32,100 litas' worth of shares traded. Traders are hoping that any of the three dairy groups surprise with company related news though as of now they are still waiting. In the meantime, the rise in share prices is attributed to good operating results.
On Oct. 26, Zemaitijos Pienas announced a preliminary net profit of 9.3 million litas for the first nine months of this year, and Pieno Zvaigzdes reported a 11.59 million litas net profit for the period.
On Oct. 30, market heavyweight Lietuvos Telekomas announced a net profit of 97.2 million litas for nine months, a 10.5 percent rise from the year's earlier period. The results, however, were broadly in line with market expectations and had little impact on the shares.
Lietuvos Telekomas ended the week 0.79 percent higher at 1.27 litas with just 77,400 litas' worth of shares traded. Brewer Kalnapilis was off 0.33 percent to 6 litas in trade worth 70,200 litas, TV-tube producer Ekranas jumped 7.95 percent to 4.75 litas on a turnover of 25,500 litas, and refrigerator producer Snaige held steady at 36 litas in trade worth 9,400 litas. Knitwear maker Utenos Trikotazas passed the week without trading.
On the current list, the gas company Lietuvos Dujos slid 2.22 percent to 1.76 litas in trade worth 73,400 litas, while the pharmaceutical firm Sanitas was up 4.55 percent to 2.30 litas with 41,200 litas' worth of shares traded.
Some 15.21 million shares in Akmenes Cementas, representing 32.97 percent of the cement producer's authorized capital, changed owners via four block deals worth a total of 19.55 million litas, at prices ranging between 1.28 litas and 1.36 litas a share.
Some 90,056 shares in Lietuvos Draudimas, representing 15.3 percent of the insurance company's authorized capital, changed hands through a single block deal for a total of 22.6 million litas. The buyer paid 251 litas per share with a nominal value of 35 litas.
Concerning the above-mentioned deals, there was no official information released about the trades. Market participants speculate that Norway's Embra sold shares in Akmenes Cementas, and Denmark's Codan was the seller of the shares in Lietuvos Draudimas. It is believed that the shares in the insurance company were purchased by the European Bank for Reconstruction and Development and by the Investment Fund for Central and Eastern Europe, based in Denmark.