August has been a relaxed month for equity trading and extremely busy one for debt trading. Total Latvian capital market turnover amounted to EUR 167.98 million, equity trading volume contributing just EUR 8.14 million, while debt trading reached a record-high figure of EUR 159.84 million. Equity market capitalisation at the end of the month was LVL 301.4 million (EUR 551.41 million), which is by 19.1% more than at the end of July. Both indexes have appreciated to the previous month: Dow Jones RSE by 17.45%, and RICI index by 8.88%.
Owing to a portfolio transfer of 3,688,808 Daugavpils PKR shares to Ditton Nams, giving the new owner a 49.8% interest in the company, Daugavpils PKR became the turnover leader in equity market. Shares worth of LVL 1.75 million were traded, leaving traditional leaders behind: Unibanka with a LVL 0.98 million turnover, Ventspils nafta with a LVL 0.78 million turnover.
5 year Government bond (to mature on March 24, 2005) was an absolute favourite in the debt market - trades were concluded LVL 78.3 million worth. The total value of the debt market was EUR 486.45 million.
The announcement of Skandinaviska Enskilda Banken, a majority shareholder in Latvijas Unibanka, of its intentions to make a formal cash offer for the outstanding shares in Unibanka, has left a significant impact on the market. Since the promised buy-back price is very attractive - LVL 1.90, or 43% premium over the close price of August 25, Unibanka price increased by 25% over the previous month. Though the minority shareholders will benefit from the generous offer, the capital market may lose Unibanka as a public company. The offer start date is expected in September, yet, the final approval still has to be obtained both from the Latvian and Swedish authorities.
Tallinn
On August 28, Swedish banking group SEB announced a cash offer to acquire the remaining shares in the Estonian second largest bank Eesti Ühispank. SEB intends to make a formal cash offer for the outstanding shares at a price of EEK 38 (EUR 2.43) per Ühispank share, which represents a premium of 41 per cent over August 25 closing price. SEB has currently a 49.7% stake in Ühispank.
Finnish Sampo Finance increased its holding in Optiva Pank to 92.94% after the take-over offering to small shareholders, which ended on August 25. Shares acquired by Sampo Finance Oy in the course of the take-over offering account for 62.57% of total shares for which the take-over bid was made, and 11.79% of total outstanding ordinary shares of Optiva Pank. Sampo has said it also plans to apply delisting of Optiva.
Estonian economy grew by an annual 7.5% in the 2nd quarter of 2000 compared to a growth of 5.2% during the previous quarter, according to the preliminary estimates of the Statistics Office. Fitch, the international rating agency, placed Estonia's long and short-term foreign currency ratings of 'BBB' and 'F3' respectively on rating watch positive. The review is expected to be completed in mid- September and may result in an upgrade of the foreign currency ratings to 'BBB+' and 'F2'. Attention will focus on the outlook and sustainability for Estonia's external position, long-term prospects for public finances and progress towards EU accession.
Vilnius
At the end of August, there were two very important events at the NSEL. First of all, the Swedish banking group SEB informed about its intention to announce tender offer to buy up shares of Vilniaus Bankas from smaller shareholders. SEB intends to make a formal cash offer for the outstanding shares at a price of LTL 40 per share, which represents a premium of 40 per cent over last closing price. Secondly, employee share issue of Lietuvos Telekomas was assimilated with the share issue on the Official Trading List. Assimilation with 40 million employee shares increased the free float capitalisation of Lietuvos Telekomas by LTL 100 million (almost by EUR 30 million).
Due to the buying up of Vilniaus Bankas shares, turnover of the NSEL should improve considerably, which has already been felt right after SEB informed about its intentions. However, as the number of smaller shareholders will decrease, liquidity and turnover of Vilniaus Bankas shares will drop too. Assimilation of share issues of Lietuvos Telekomas had only positive consequences since the liquidity of trading and the company's share price improved and there was no share supply surplus as it had been expected. LITIN index, having reached this year minimum value of 387.76 points on 24 August, jumped by 23.6% to 479.12 points by the end of August due to the surge of Vilniaus Bankas and Lietuvos Telekomas shares.
