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Unlike Tallinn and Riga stock markets, this week Vilnius Stock Exchange was moving in a somewhat positive direction, as the OMX Vilnius index finally, after a month of extreme decline, leveled off and recorded a slight increase of 0.21% to 463.26 points (see Figure 1). However, the grand total weekly turnover of only 8,131,379 EUR signals that there is little activity in the market, suggesting that the majority of participants in the market are small, rather than institutional investors, as the latter have retreated during January’s decline, while the former are now starting to come back, carefully searching for the bottom. Significant increases in price of stock were recorded in Rytų skirstomieji tinklai (RST1L) (6.19%) and Lietuvos energija (LEN1L) (4.29%), while Panevėžio statybos trestas (PTR1L) and Apranga (APG1L) decreased the most by 5.73% and 5.06% respectively. In total, there were 14 winners and 20 losers in the main and secondary lists.

 

Figure 1. Changes in OMX Vilnius index during week 5 of 2008. source: http://baltic.omxgroup.com

 

Whether this is the end of the extreme downward rally, we will still have to wait and see, but meanwhile the recovery is supported by good news from markets abroad, as “U.S. stocks post biggest weekly gain in five years” after the Fed gave new hope to the economy with another cut on overnight interest lending rate. Moreover, an economist at JPMorgan Chase & Co. says that the Baltic countries do not face the risk of a recession but rather a slowdown in economic growth “to between 5 percent and 8 percent”. (http://www.bloomberg.com/)

 

TEO LT (TEO1L), the so-called flagman of Vilnius Stock Exchange, was under the spotlight this week with 984 deals and a weekly turnover of 3,445,348 EUR – quite big considering this week’s overall inactiveness in the market. The price of this stock gained 2.38%, reaching 0.62 EUR (see Figure 2). Such activity was caused by good news from the company concerning results from activities in the 4th quarter of 2007. Income increased by 12% comparing to the previous year, which is a very good result, supported by the fact that the sources of income have changed. The company is increasing its activity in broadband internet and digital television services, and offering these together with fixed telephone services as one package is providing positive results. In addition, investors are in favor of this position due to high dividends that are given out every year. Thus, TEO LT remains an attractive stock in today’s unstable market.

 

Figure 2. Positive movements in TEO LT. source: http://baltic.omxgroup.com

 

Rytų skirstomieji tinklai (RST1L), a distributor of public supply of electricity, looked very positive this week: an increase of 6.19% to the price of 1.39 EUR, with 107 deals. The weekly turnover was 86,692 EUR, yet the biggest part of it, as well as the biggest increase in price, were recorded on February 1st. Demand for shares of this stock came from those believing that the Parliament will pass the law on the new nuclear power plant, which would eventually lead to shares of RST being bought back at the price of 5.5LTL (about 1.6 EUR). Trading of shares of this as well as other energy companies depends heavily on the news concerning the nuclear plant project.

 

In contrast, Apranga (APG1L), a distinct leader of retail trade in clothes in Lithuania, is still looking grim this week (see Figure 3). Its price of stock decreased by 5.06% during the week, ending up at the price of 3.37 EUR. As usually, it was one of the most traded positions with 337 deals and a weekly turnover of 429,066 EUR. Apranga is one of the stocks that suffered the most from the recent bearish frenzy, despite the company‘s ever positive results and plans for expansion. After trading was closed on Friday, Apranga announced that its turnover for January of 2008 increased by 41.5% in comparison to the same period last year. The company has plans to increase its turnover by 32,6% in 2008. Hopefully, this news will bring back buyers for this position as its current price level is already very attractive.

 

Figure 3. Changes in price of Apranga during week 5. source: http://baltic.omxgroup.com

© 2007 SSE Riga Investment Fund