RSE (Riga) Market Overviews
Latvian Stock Market Overview07/11/2005-11/11/2005
This week was slightly less active than the previous one. The total weekly turnover amounted to 1,859,345.34 EUR (the week before it was 1,972,003.32 EUR). The decrease in activity could partly be explained by a smaller number of announcements concerning OMX Riga quoted companies during the overview period. The leader in turnover as well as in performance was Latvijas Kuģniecība (LSC1R) with 524,103.72 EUR weekly turnover and +12.15% price increase. OMX Riga index added +2,65% to its value while BALTIX index increased only by +1,67%. However, despite overall bull market some stocks still managed to decrease in value. Latvijas Balzams (BAL1R) and Liepājas Metalurgs (LME1R) were the biggest losers of the week with -2,73% and -1,44% respectively.
Latvijas Kuģniecība (LSC1R) experienced a rise in share price by very impressive +12,15%. It is hard to find an apparent reason for such an increase, but most likely it is connected with market participants’ anticipations about strong upcoming Q3 results which will be announced from 23rd-30th November. The new strategy announcement previous week should also have made some impact on the long term outlook of the company. The price of the share most likely will keep rising in value during the next week on the speculations of better than expected Q3 report.
Drug producers Olainfarm (OLF1R) and Grindex (GRD1R) continued showing share price increase of +4.30% and +2.11% respectively, probably on the background of prospective flu pandemic; however, prices are increasing at a decreasing pace, which signals possible correction or sideway markets. Still we expect share price could slightly rise during upcoming week; however, the risk of prices becoming short term overbought increases.
Share price of beverage producer Latvijas Balzams (BAL1R) fell by -2.73% after +12.62% increase last week - a dramatic switch from the top gainer to the top loser. This was probably caused by decision of Parliament Budget and finance commission to increase excise tax on strong alcoholic drinks starting with 2006, which, in contrast with excise tax of soft alcoholic drinks, had remained constant for the past several years. Such changes will doubtlessly have a negative impact on the sales and profits of Latvijas Balzams. It is not suggested to go long on this share in short term.
Although the price of Latvian gas monopolist Latvijas Gāze (GZE1R) increased only by +0.22%, notable information came up last week. Gazprom, a Russian oil and gas producer, made an announcement about increase in export prices of natural gas by 30% instead of expected 15%. Consequently, Latvijas Gāze is planning to increase natural gas tariffs, which are controlled by a regulator, by at least 20% from 01.01.2006. The change in share price depends on the exact tariffs which are yet to be announced; however, changes in natural gas price are likely to have a negative overall impact on economy of Latvia in the future. We do not suggest to go long on this share in short term.
By Niklavs Zemzaris
Arturs Kanepajs
