The Baltic index comprising 14 Latvian, Lithuanian and Estonian blue chips rose 3.74 percent to 142.47 as gainers swept aside losers 11 to two. As a result of the upward moves by shares in Eesti Telekom, Hansapank and Latvijas Gaze, the Baltic List capitalization increased 5.1 percent to 2.43 billion euros ($2.14 billion).
Total Baltic List turnover, however, fell slightly week-on-week to 7.46 million euros, as compared with last week's 9.89 million euros in trade. Estonian stocks contributed nearly 90 percent of the weekly Baltic List turnover, with Latvian and Lithuanian stocks each adding about 5 percent.
The Baltic List stocks prevailed in trading on all Baltic bourses, accounting for over 70 percent of total turnovers on their respective home stock exchanges.
Estonia: Favorable decision pushes up Telekom
The Estonian bourse sported an upbeat mood during the week as the luster returned to shares of Eesti Telekom, which registered gains of almost 12 percent for the trading period. The index TALSE moved up 5.67 percent to finish at 135.27. Calculated in euros, the price index of the five Estonian Baltic List shares gained 2.18 percent to 117.97. The total turnover from 731 deals was 107.8 million kroons ($6.1 million).
"It was a positive week on the market as the prices of blue chips rose amid large turnovers," Trigon Markets trader Kristel Kivinurm said. Shares in Eesti Telekom and Hansapank enjoyed a surge in interest from abroad, both posting healthy gains. "Telekom and Hansapank stayed strong because the outside markets were strong," the trader said.
"Central and Eastern European telecoms and the banking sector moved upwards last week; money was flowing into our shares this time as shares on other markets had earlier benefitted from investor attention," Kivinurm observed.
Supported by the Communications Board's decision that it won't declare its mobile subsidiary EMT as having a significant market share, Telekom padded its share price by 11.98 percent, closing at 67.75 kroons on a turnover of 40 million kroons.
Hansapank climbed 3 percent to 146 kroons, and with a turnover of 55.8 million kroons was the most traded issue for the week.
Several of the less traded issues attracted interest as well, one of them Norma, which broke through the 50 kroon level, Kivinurm said. "Norma is at the moment one of the few stocks that trades at the year's highest levels, dividends taken into account," the trader said. Norma firmed 3.07 percent to close at 51 kroons, its five day turnover at 7.62 million kroons.
Candy maker Kalev meanwhile surprised investors by its purchase of a majority stake in the IT company Baltcom, noted Kivinurm. Its venture into unrelated territory has impressed shareholders, who apparently believe that management can keep separate bits and bites, as Kalev rose 4.27 percent over the week to close at 22 kroons.
Latvia: Decision on gas share sell-off revives market
The Latvian government's decision to sell its remaining state held shares in the natural gas company Latvijas Gaze in exchange for privatization vouchers, and at a minimum sales price of 7 lats ($11.10) each, when combined with news of the company management's plan to raise gas rates, served to generate renewed interest in these shares. At the same time, other stocks saw their trading volumes shrink back to embarassingly low levels.
Gains by Latvijas Gaze helped to boost the Dow Jones Riga Stock Exchange capitalization index 3.17 percent to 174.50 over the week, while the euro price index of the three Latvian Baltic List stocks also climbed, by 3.68 percent, to 187.61 points. Meanwhile, the official stock exchange price index RICI slipped 2.43 prcent to 148.5 due to the downward movement taken by most of the shares listed on the official and secondary lists at the Riga Stock Exchange. The stock market turnover for the week stood at 245,000 lats.
Latvijas Gaze shares rose 7.4 percent to 5.8 lats in trade of 200,000 lats. Thanks to the government's decision to sell off the gas company shares against payment in privatization vouchers, individuals who acquired the vouchers, at prices from 3.5 lats to 3.7 lats apiece, are likely to be able to buy their limit of 200 shares in the company at the differential cost now of 0.9-1.0 lats per share, or six times lower than the stock's current market price.
The share price of Latvijas Gaze will seem even more attractive to those already holding privatization vouchers. Even if the voucher price reaches 5 lats to 6 lats each, it will nevertheless be very profitable to buy shares in Latvijas Gaze against payment in vouchers. As some brokers have suggested, the given government decision is sort of a 'Christmas present' to the Latvian population.
At the same time analysts have cautioned, saying that Latvijas Gaze shares may take a serious tumble if all new shareholders decide to immediately take profits and sell. For now, the current rise in the gas company shares can be explained by management's intention to raise gas rates for all consumers, residential and household, by a considerable amount. The key motive here, as cited by company's management, is the rising price for gas delivered by their Russian suppliers, Gazprom and Itera.Uncertainty on this issue remains, however. Gas prices on world markets are directly linked to fuel oil prices, but with fuel and crude oil prices down substantially in recent months, it cannot be ruled out that Latvijas Gaze's management is using the cover of alleged gas wholesale price increases as a ruse. If true, the company's management's intent to punish Latvian customers through an unjustified price hike is being guided by the interests of large shareholders wishing to squeeze more profit from their shares.
Trade in other stocks on the Riga Stock Exchange was extremely sluggish, and in any event saw prices heading mostly in the negative direction. Under pressure by the continued price drop on the world oil markets, shares in the oil terminal Ventspils Nafta shed 4.2 percent to 0.69 lats on 5,500 lats' of trade.
In the absence of strong demand, shares in Riga Transport Fleet lost as much as 29 percent, to 0.05 lats, and shares in the fiberglass company Valmiera Stikla Skiedra sank 8.6 percent to 0.53 lats. The steelworks company Liepajas Metalurgs also slumped, by 7.7 percent, to 0.12 lats per share, Riga Shipyard lost 5 percent to 0.19 lats and shares in the distillery Latvijas Balzams shed 2.6 percent to 0.37 lats.
Lithuania: Shares up as investors found
Shares in Lietuvos Telekomas were at the center of trading interest throughout the week, with the price fairly stable; in other sectors, trading activity was quite volatile. All major indexes ended the week in positive territory. The continuously tracked price index Litin-10 firmed 2.26 percent to 1,106.96, the blue chip official list index Litin rose 1.99 percent to 309.30, and the broad index Litin-G was up 1.29 percent to 835.93. Calculated in euros, the price index of the six Lithuanian Baltic List shares gained 4.91 percent to a new record high of 140.31.
The bourse's equity turnover reached just 2.17 million litas ($542,500). Treasury securities trading contributed an additional 5.42 million litas in turnover.
Lietuvos Telekomas edged up 0.83 percent to 1.22 litas on a turnover of 893,000 litas. Commenting on the relatively active trading, Robertas Berzinskas, head of the securities trading unit at Vilniaus Bank, said the company's shares were a very attractive investment at the 1.20 litas to 1.25 litas price level. Rokiskio Suris climbed 5.06 percent to 29.49 litas in trade worth 311,400 litas. Secondary listed dairy producer Pieno Zvaigzdes followed suit, rising 8.59 percent to 1.39 litas on a turnover of 88,200 litas.
Aurelijus Rimkus, a broker with Finasta, said the increased interest in the dairy operators could be attributable to recent visits by representatives of the Swedish-Danish cooperative dairy group Arla Foods, who have been in talks with Zemaitijos Pienas and Rokiskio Suris. Arla Foods already controls 33.4 percent of shares in Pieno Zvaigzdes. Zemaitijos Pienas' shares were stable at 10 litas with 19,500 litas' worth of shares traded.
Snaige put on a rally on Nov. 14 after reporting strong results for the first 10 months of this year. Its total gain for the week, however, was modest. The refrigerator producer's share price ticked up 0.11 percent to 37.99 litas in trade worth 116,000 litas.
Also on Nov. 14, Utenos Trikotazas, Lithuania's leading knitwear manufacturer, announced plans to issue 26.27 million ordinary registered shares using its own resources and to distribute the new shares among shareholders in proportion to their existing holdings. The news pushed Utenos Trikotazas' share price up, but trading volume remained modest. Thanks to one day's gains, it ended the week 15.41 percent higher at 3.52 litas with just 24,500 litas' worth of shares traded.
"The buying interest was fuelled by the announcement about the authorized capital increase. Apparently, people found the 3.40 litas price attractive enough to offset a possible decline after the equity dilution," said Berzinskas. There will be no dilution of earnings, though, if management uses the additional capital raised to invest in projects with strong growth potential.
Brewer Kalnapilis edged up 0.33 percent to 6.04 litas on a turnover of 78,200 litas. In the electronics sector, the blue chip TV-tube producer Ekranas jumped 3.09 percent to 5 litas in trade worth 46,000 litas, and the secondary listed TV-and radio-component maker Vilniaus Vingis firmed 4.46 percent to 3.75 litas with 13,700 litas' worth of shares traded.
Lietuvos Dujos rose 2.81 percent to 1.83 litas on a turnover of 111,000 litas. Rimkus predicted that the gas utility's share price might rise further next week when the company's privatization process is expected to get underway.