It seems the Baltic equity market could use a good dose of anti-depressants this year. Benchmark returns barely scraped 1.5%, while price returns slumped to -3.8%. (Friendly reminder: reinvest your dividends, folks). Meanwhile, global stock markets (MSCI World) posted 28% return. The capital flow back to Western markets was about as subtle as a sledgehammer—chasing liquidity and growth.
Closer to home, the macro situation wasn’t exactly rolling out the red carpet for companies and investors. Labor inflation chewed into earnings margins, while GDP growth in Estonia and Latvia took a long walk off a short pier.
But let’s not write off the Baltic markets just yet—they have their charm, especially when crises hit. During the global panic sell-off in August, Baltic stocks barely flinched, proving they’re the market equivalent of a sturdy, if sleepy, Nordic troll. While this zen-like patience is admirable, it does come with a downside: missing red flags and holding on too long, sometimes turning paper losses into real ones.
So, with that in mind, we present our traditional year-end nominations, celebrating the highs, lows, and quirks of the Baltic financial market. And of course, we’ve paired them with a playlist to set the mood. Turn up the volume and let’s dive in!
A bird in hand is worth two in the bush
This year, Baltic investors continued to flock from equities to bonds, chasing stability and almost sure returns. Contrary to the old proverb, bonds outperformed equities. With Euribor rates slipping, refinancing costs are expected to decline further, making bonds an appealing choice for those seeking a “bird in hand” through consistent coupon payments. The number of bond emissions reached 35, and 250 mn EUR attracted in total.
A word of caution: Always do your analysis. Don’t just buy based on the name—no company is ever “too big to fail.”
Lessons in Liquidity
The winners in this nomination are PR Foods, a salmon and trout trader and processor, and Auga Group, an agricultural holding known for its champignon growing and milk processing. Auga is never short on ambitious ideas, though execution remains an area for growth. PR Foods weathered a particularly rough storm during the COVID era when the HORECA sector, its main client base, ground to a halt, but it had its long-term consequences. With year-to-date performances of -80% and -64%, respectively, these companies have had their fair share of hurdles. Both are basically in the restructuring process.
Dealmaker and Market Star
This category shines a spotlight on a rising star among Baltic stocks: Infortar. Although a newcomer to public trading after its IPO just a year ago, it has already become the market’s headline act. With +78% returns, thanks to generous dividend announcements, good Tallink’s results, and ongoing business expansion, Infortar is both a crowd-pleaser and a strategist’s dream. Its acquisition of Polish gas assets for €120M was undoubtedly the Deal of the Year, setting a high bar for future contenders.
The Buyout Debate: Fair or Foul Play?
One of the most debated events this year involved the Latvian Gas management buyout, with regulator stepping in to mediate. Investors cried foul when the buyout price landed at three times below market value, but a closer look reveals that low trading volumes allowed the price to be pegged to book value. This valuation declined significantly after Latvian Gas sold huge chunk of its assets—an event that barely registered on most investors’ radars.
Emerging Horizons
While IPO activity was modest, the Latvian market showed sparks of revival. Notable entrants included Eleving, which raised €29M, and Kalve Coffee, which secured €1.1M. The real highlight was the growing participation of private Latvian investors, marking a turning point in financial literacy, trust in equity markets, and an appetite for new investment opportunities. A promising trend that bodes well for the future of Baltic markets!
Back to Basics: Strength in Simplicity
While premium specialty coffee gets plenty of love, the real winners this year were Lithuania’s dairy producers. Companies like Vilkiškiu Pienine (63%), Pieno žvaigždes (32%), and Rokiškio Sūris (28%) delivered steady earnings growth, buoyed by their export operations to Europe, cream and cheese being the major earnings drivers. Sometimes, simplicity really is the ultimate sophistication.
Big Plans Ahead
The much-anticipated IPO of AirBaltic has been the talk of the town, with initial plans to raise around €300M. Comparisons are already being drawn to heavyweights like Ignitis (€450M) and Enefit Green (€175M). While timelines have been nudged (as often happens when governments are involved), 2024 could be the year the Latvian capital market gets its icebreaker moment. The wait is almost over, and the stage is set for a transformative year!
Best of luck in 2025!
Disclaimer: This article is for information purposes only and constitutes neither an offer nor a recommendation to undertake any type of transaction or to buy or sell securities or financial products in the broadest sense. Alphinox Quality AS offers no guarantee of the completeness, correctness or security of this article. Alphinox Quality AS accepts no liability claims that might arise from the use or non-use of the content of this article. Alphinox Quality AS employees might have shares of the mentioned companies in personal investment portfolio.
