This year has brought a little stockmarket cheer, with the Oslo equity market recovering some of the 26% it lost in 1998. According to Viktor Jabobsen of DNB Nordic Equities, part of Den Norske Bank: “Last year Norway was the bad spot on the map - year on year South Korea had a better year then we had.”
Tom Kaveli, chief strategist at Orkla Finans says, “We are on the way up and are optimistic as we have already had two interest rate cuts and are expecting more. The currency is strengthening des-pite these cuts.”
It is not the euro that im-pacted on the market, in fact the analysts puts its influence as minimal, rather it is what OPEC is doing for the oil prices which is changing the picture. As Jakobsen puts it: “The oil price has had such an impact, that the euro has had no effect, which is not so surprising since the stockmarket and economy are so sensitive to the oil price.”
Another analyst agrees that things are looking better, but all is “pending due to the linkage to the oil price”. That, he adds, is also crucial for earnings development in a number of important sectors, such as energy and oil services.
Jaksobsen says: “We expect the price will rise in the second half of the year and that the market will discount in $14-15 (E13-14) per barrel. That would imply a revaluation of the market, with a gain of 20 to 30% in the year.”
The extent to which this will benefit the oil services is un-certain, where some areas have seen their wheels of fortune turn dramatically in the past year. Jakobsen argues that there is severe oversupply in some sectors, such as seismic and rig suppliers, and that they have been badly mauled in the process. But Kaveli thinks the oil services sector could be a winner if oil prices go up. Should commodity prices firm up, that could affect those companies involved in natural resources.
The interest rate reductions have benefited the financial- related stocks and the further privatisations planned for the state holdings in Christiania Bank and Den Norske are awaited. Also the merger of the state-owned TeleNor and Telia of Sweden and flotation will account for a large part of market capitalisation.
The full effect of this will depend on the extent to which the stock is traded in Oslo, points out Jakobsen. Consolidation in the lively IT services area could help drive this part of the market.
The analysts welcome any moves to broaden the base of industries away from oil, shipping and commodities. There are concerns as to the future marginalisation of the Norwegian market, with opinions varying as to how far this has occurred.
“We are not a preferred market in euro terms, which could be a bit negative for the future,” says one, referring to the fact that few Norwegian companies make it to the European indices. There could be a permanent effect as local institutions diversify their portfolios in a sector focused European direction. Market volatility has also had a negative impact on the smaller markets generally.
But another is hopeful that the ultimate technology ef-fects will be favourable and allow more active trading in local exchanges, which will reduce the “liquidity premiums for stocks listed in Norway”. It could mean that oil stocks, like Royal Dutch Shell, could be traded successfully for even investors in London.

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