RSE (Riga) Market Overviews

This week the Riga Stock exchange market experienced a slight increase. OMX Riga index increased by 1.73 % reaching value of 618.22 thousands. The number of deals was only 245 compared to previous week's 575. Changes in the main list again do not show anything unexpected. The loser of the week is SAF Tehnika (SAF1R) which stock value fell by -7.26%; the winners of the week may be considered: Latvijas Kuģniecība (LSC1R), Olainfarm (OLF1R), and Ventspils Nafta (VNF1R) with stock value rose by 2.65%, 3.15%, and 3.51% respectively.

Latvijas Kuģniecība (LSC1R) Latvian shipping company experienced a stock value raise of 2.65% and ended at 1.95 EUR per share. It is associated with positive company's performance which has established good perception of the company among investors. However, there might be changes in the next week, since on this Thursday (December, 13) Hansabanka plc. announced that it has sold its portfolio of 13.27% of Latvijas Kuģniecība's shares to unknown party. In case it is perceived as getting rid of the shares by one of the main shareholders then it might follow with a decline in value of stock, as company might be seen as becoming weaker.

Stock value of Olainfarm (OL1R) increased in this week by +3.15% and reached the price of 3.27 EUR at the end of it. Compared with the previous week the increase has diminished. The published financial results for the nine months of 2007 showed positive information for investors. That is also the reason why the price continues to increase. Sales of Olainfarm (OL1R) are seasonal. Therefore it is predicted that stock value will increase also next week because of growing demand of medicine in winter.

The increase of Ventspils Nafta (VNF1R) stock price this week was +3.51%. At the end of the week the price reached EUR 3.13. This week the stock value fluctuated a lot because of instability in the world’s oil market. The reason for growth in stock price is the announcement made by the company about the growth in handled amounts of oil during the previous 11 months. The reason for such increase is involvement of co-owner Vitol Group in company’s activities. It is expected that stock value of Ventspils Nafta (VNF1R) will continue to increase because of positive results published. Another reason for these expectations is the decision made by Latvia’s government that starting with the year 2008 prices of gas will rise and that is beneficial for investors.

This week SAF Tehnika (SAF1R) faced a stock value decrease by 7.26 % and reached the price of 1.65 EUR at the end of the week. The decrease during the week was rapid. The decrease of stock is based on overall negative situation of the company because of choosing possibly not the right business model. After announcements of Riga Stock Exchange of SAF Tehnika (SAF1R) as the best in two categories of “The Baltic Market Awards” in the previous week the situation appeared to be negative this week again. It is likely that stock value will continue to decrease because of general situation in Latvia. It is assumed that Scandinavian investors tend to leave Latvia’s stock market because of sharply rising inflation, reduction in economic growth and threat of devaluation. Stock value will continue to decrease because investors are acting upon situation and selling their stock.

By Kristine Katlinska,