The strong performance and high level of trading activity seen in 2004 reflected not only record-high oil prices and low interest rates but also stronger earnings for many listed companies. Oil prices reached a peak of USD 51.95 on 22 October (closing price for Brent blend), and this helped energy shares to enjoy a very strong year, with Hydro and Statoil shares up by 35,5 % and 31,4 % respectively. The energy index gained over 40 % in 2004, as did the finance, industry and consumer-related indices.
The Benchmark Index has gained 140 % from its low point on 25 February 2003.
Record levels of activity and a dominant role for foreign participants
With average daily turnover of NOK 3,6 billion, 2004 was the busiest year ever for Oslo Børs. Interest in trading showed a further increase towards the end of the year, and December saw average daily volumes of NOK 4,3 billion.
Thanks largely to strong interest from foreign investors, Norsk Hydro, Statoil and Telenor attracted turnover in total of NOK 410 billion, representing 45 % of the year's total turnover. Perhaps the most surprising feature of the trading statistics is that the most heavily traded share on Oslo Børs was the Hong Kong-based dry-bulk shipping company Jinhui Shipping, which attracted turnover of NOK 14 billion equivalent to 1,5 % of total market turnover.
The increased interest in the Norwegian stock market was largely due to strong interest from foreign investors, and not least the international investment firms active in the Norwegian market. The NOREX alliance of Nordic exchanges has encouraged a number of foreign investment firms to start trading on Oslo Børs in their own name over the last years, and over the last two years foreign investment firms have increased their market share from under 10 % to 25 %. It does not seem that this increase has been achieved at the expense of Norwegian investment firms, and it is rather the case that it reflects greater trading activity and better liquidity for Norwegian stocks in general. This demonstrates that the collaboration between Nordic exchanges has had an extremely positive result for Oslo Børs and the investors.
Foreign investors account for between 60 % and 70 % of daily share trading. This is reflected in the ownership structure of listed companies in that foreigners now hold 33 % of the total market capitalisation of companies listed on Oslo Børs as compared to 28 % at the close of 2003.
A stronger Norwegian corporate sector
2004 was characterised by stronger activity and optimism in Norwegian business, and the closing weeks of the year in particular saw a stream of announcements from listed companies on new orders, contracts and acquisitions. This faster tempo was also reflected in more companies joining the stock market, and 2004 saw 22 companies list their shares on Oslo Børs, while 12 companies ceased to be listed. Oslo Børs is currently in dialogue with a number of companies, and expects to see a number of exciting new investment opportunities join the Norwegian stock market over the coming months.
Broadly based gains
Over 20 listed companies - more than 10% of the total list - more than doubled their market capitalisation in 2004. The rise of 38,4 % for the Benchmark Index reflects a broadly based gain in share prices. The rise in oil prices is mentioned above, and many companies in a range of sectors delighted their shareholders with successive increases in earnings. Not least of these was John Fredriksen's shipping company Frontline, which closed a new good year with a 170 % increase in share price. Frontline’s shareholders also gained shares in Ship Finance and Golden Ocean Group as these new companies were created in 2004 from the company's activities. Golden Ocean Group was one of the new companies joining Oslo Børs in 2004, and has made a good start to its life as a listed company.
Virtually all the major listed companies contributed to the year's upturn, and the shares that made the biggest contribution included Stolt Nielsen, Orkla, Tandberg and Schibsted, with gains of 172 %, 56 %, 54 % and 54 % respectively. DnB NOR, Storebrand, RCCL, Telenor, Norsk Hydro and Statoil all saw gains between 29 % and 44 %. In addition many of these companies recorded all-time high share prices during 2004. Among the companies joining the market in 2004, Yara undoubtedly played the biggest role in the general market upturn. From a share price of NOK 41 when first listed on 25 March, the Yara share has gained a notable 94 %.
The shares showing the largest gains in 2004 were Blom, Acta Holding and P4, up by 478 %, 346 % and 338 % respectively. Close behind we find GGS, Nordic Semiconductor, Scana Industrier, PA Resources, Fred. Olsen Energy and Odfjell B, all of which gained more than 200 %.
Few losers
Only a bit more than 30 shares fell in value in 2004, and the weakest performance was seen from companies in the IT, aviation and aquaculture sectors. Norwegian suffered the largest fall of 56 %. The list of losers was largely dominated by IT companies, including Kitron, Opticom, Ementor and Tandberg Data. As it happens, the last of these was the market's strongest performer in 2003 with a gain of more than 1000 %, but 2004 brought a fall of 46 % for shareholders in Tandberg Data. Among the larger companies that held back the overall upturn for Oslo Børs we find SAS, Fast, Golar and Tomra.
Mixed results from international markets
Many of the leading stock markets in Europe and the USA produced a modest performance for investors relative to the Oslo market in 2004. In the USA, Dow Jones and NASDAQ gained appr. 4 % and 9 % respectively, while in Europe the markets in London and Frankfurt both saw gains of appr. 7,5 %, while the market in Paris was up appr. 8,5 %. Our Nordic neighbours fared somewhat better, with the Stockholm market up by 17,5 % and Copenhagen up by 21,5 %.
What can we expect in 2005?
After almost two years of rising share prices, many people are now asking when the upturn will come to an end, as it sooner or later must. Many experts believe that there is still further scope for improvement, and the combination of high oil prices and low interest rates gives continuing encouragement to investors in the Oslo market. However international prospects play a central role for the performance of smaller markets such as Norway, and much will depend on the outlook for the American and Chinese economies as well as the performance of international stock markets. In the longer term, however, the outlook for share prices will continue to reflect earnings capacity and profits. Many listed companies delivered strong earnings and high dividends in 2004, and this provides the backdrop for investors to look for some further growth in the near future.
