Baltic blue-chips continue advance

  • 2000-01-20
Baltic blue-chips continued to gain last week, with the Baltic Index
of the 13 Baltic List stocks gaining 3.73 percent, to 102.75.
Lithuanian stocks on the List outpaced both Estonian and Latvian

The composite of Lithuanian stocks rose 6.76 percent, to 104.99,
slightly better than the Lithuanian stock exchange's LITIN-10 price
index, which climbed 5.22 percent to 1231.10. The Estonian composite
climbed 2.09 percent to 99.16, closely tracking the movement of the
Tallinn stock exchange's TALSE index, which climbed 2.15 percent to
139.31. The Latvian composite climbed 2.77 percent to 104.99, with
Riga stock exchange's RICI index gaining 2.88 percent to 181.96.

Polish and Russian shares outperformed Baltic stocks for the week,
with the Russian Trading System index up 9.27 percent, to 202.71, and
the Warsaw exchange's WIG-20 up 9.33 percent to 2041.10.

Leaders on the Baltic List included banking shares Hansapank in
Estonia, Unibanka in Latvia and Vilniaus Bankas in Lithuania.

From the table below it appears that, according at least to P/E
ratio's, Latvian and Lithuanian bank stocks are still considerably
underpriced compared with their Estonian counterparts.

Hansapank's P/E on January 14 (using the optimistic profit forecast
of 51 million euros) was 11.5, while Vilniaus Bankas sat at 5.85, and
Unibanka's at 5.3.

Estonian stocks continue to dominate trading volume on the List.
Turnover of Estonian shares totalled 8.9 million euros, 74 percent of
total List volume of 12.02 million euros. Latvian shares generated
volume of 2.3 million euros and Lithuanian stocks 0.81 million euros.


Unibanka was the undisputed leader among Latvian stocks last week.
Despite a considerable correction on Friday, the stock soared 13.2
percent, to 2.50 euros ($2.52). The shares peaked on Thursday at 2.80
euros. Volume in the bank's shares totalled 1.73 million euros,
almost 70 percent of the total turnover on the Riga Stock Exchange.
Unibanka's continued climb helped push the RSE's DJRSE index to
99.88, 3.93 percent for the week. The RICI price index climbed 2.88
percent to 181.96. Unibanka's shares have been on a rally since
Christmas, up 43 percent since the holiday. Last Thursday the
international ratings agency Fitch IBCA assigned Unibanka an
investment grade BBB long-term rating - the same as that of Latvia.
This should reassure investors about the stability of the bank.

By week's end shares of Latvijas Gaze shot up 6.93 percent, to 3.26
euros. Market analysts explain this with Latvia's announcement of the
auction of its 10.7 million shares in the utility by the end of March.

An announcement from Ventspils Nafta concerning falling exports from
Russia and a sharply lower profit forecast for 2000 had an immediate
toll on the oil terminal's share price, which fell 9.68 percent to
0.902 euros. The Latvian Privatization Agency indicated that it will
try once again this year to get Ventspils Nafta's private
shareholders to increase dividends from the current level of 0.03
lats per share, an ill-advised decision here as Ventspils most likely
needs this money to be put towards re-investment in its operations.


Hansapank carried the market last week, as Tallinn's TALSE index
closed at 139.31, up by 2.15 percent. "All days resembled each other,
with trade in Hansapank in essence keeping the market up," Uhispank
broker Mart Helmja said. "Interest in Hansapank did not abate all
this time and the share moved every day on a positive course," he
added. Hansapank, which accounted for half of the week's turnover,
rose 8.90 percent to 7.43 euros for the week. Helmja said that
Friday's trading did not wipe out interest in Hansapank, though the
bank's economic results due to be released Monday may influence the
share's next move. "In summing up the week, there's nothing much to
say about the rest of the leading shares, all of them have
essentially remained on the same level," the broker stated.

The exchange system's turnover in the last week totalled 158.5
million kroons, of which Hansapank took 82 million, Telecom 21.7
million and Norma 17.7 million.

Of stocks not on the Baltic list, the week's biggest star was the
much-speculated XXL.EE, which skyrocketed 100 percent, nearly 43
percent on Friday alone. Hemlja said the share's liquidity is
extremely poor and that there's no substantial trading in it. XXL.EE
attracted a great deal of interest in Germany.


The markets here stayed positive, as most liquid shares rose. The
official list Litin index climbed 4.05 percent to 553.42, with the
LITIN-10 index up 5.22 percent to 1231.10.

"The market is moving up, and that is most noticeable in the changes
in prices of liquid shares. On neighboring markets the growth
tendency is also visible, so it should continue in Lithuania for some
while as well," said Suprema broker Arvydas Jacikevicius.

Trading in Vilniaus Bankas' shares was active at 2.4 million litas
($0.6 million), with the share price climbing on average 3.0 to 3.2
percent to 6.85 euros. "I think that now Vilniaus Bankas' shares can
be called cheap, therefore one can hope that they will soon start to
rise in price," commented VB Vilfima broker Kestutis Kvainauskas. In
direct deals 1.852 million litas of Vilniaus Bankas' shares traded

Rokiskio Suris cheesemaker's share jumped 10 percent to 5.95 euros.
Shares in the Lithuanian Shipping Company have become popular among
speculators before its upcoming privatization, as well as energy
sector shares amid talks Mazeikiai Nafta is holding in Moscow about
oil supplies.