Estonian listed companies bleeding shareholders

Illustration: Allikas: väärtpaberikeskus

While the Tallinn stock exchange index rises and companies increase dividend payments, nearly all listed companies are losing shareholders.

Lately, Tallinn stock exchange has done rather well. Last year, the OMXT index jumped by more than a third, with a dozen per cent added this year. The companies’ economic results have improved, dividend payments to shareholders have increased. For the first time in the history of the exchange, media group Eesti Ekspress and Tallink, this year, pay dividends. At that, the shipping company’s payments are twice the amount predicted by economists.

No matter the good news, the number of shareholders of majority of Estonia’s listed companies is in a downward trend, for a long time already. Tallink, for instance – boasting the largest number of shareholders on the Tallinn exchange – has, over the past year, lost 5 per cent of its shareholders, the level dropping to a five year low of 11,669.

With Ekspress Grupp, surprisingly deciding to pay dividends, amount of shareholders did increase by 17, in May, to 3,699. In its six years on the stock market, Tallink has lost over a third of its shareholders.

Even the ladies underwear maker Silvano FG, with shareholders amount rocketing in 2010-2011 after being seized by Toomas Tool, has started to bleed them, these past months.

A rare exception being Group, with number of shareholders rising to record heights, in April; as well as AS Tallinna Vesi – breaking records monthly since December.

Tallinn stock exchange chief Rauno Klettenberg says the long term trend is rather towards increased amounts of shareholders. From here on, we will be talking of companies listed both in 2008 and June 2013.

«Comparing 2011 and 2013, the aggregate amount of shareholders has indeed decreased, somewhat – by 1,400 shareholders,» admitted Rauno Klettenberg.

«Yet, looking at the long term trend i.e. years 2008 and 2013, the overall amount has actually increased from about 30,000 to 36,500,» explained Mr Klettenberg. Looking at the longer period, according to him, it is justified to say that the trend is increase of shareholders.

According to the stock exchange CEO, it is quite natural for numbers of shareholders to increase one year and decrease the next – therefore, it is prudent to view longer periods of time, statistically.

According to LHV bank’s trading chief Arvo Vallikivi, economic crisis and stock market decline has been followed by continued loss of interest towards the Tallinn Exchange, Estonians turning conservative at heart.

«Now, interest towards securities is being restored, to a degree; surely helped by the interest rates dropping to such lows,» explained Mr Vallikivi. According to him, the Tallinna Vesi dividend rate is a good alternative to fixed-term deposits.

«Harju Elekter sticking out the way it does take me by surprise; the Tallink decline rather being explained by the backdrop of a strong start. The company was listed with extremely high expectation and a positive image, the crisis bringing people back to Earth,» explained the expert. «The dividends decision may, however, get the number of shareholders rising again,» predicted Mr Vallikivi.

But why is the overall amount of shareholders declining, the past few years, while the listed companies’ market values and the stock index are on the rise? According to Rauno Klettenberg, the reasons are numerous. First: some shareholders have decided to use the bull market to cash in their profits. Secondly, retail investors have been in need of liquidity, therefore opting to sell their shares.

«Of course, there are other reasons, as well,» said Mr Klettenberg.