October: Finance And Offshore Bring Down Oslo All-Share Index

While a sharp upturn for IT and telecommunications ensured new record quotes on our neighbours´ bourses and Nasdaq, offshore and financial shares pushed the Oslo all-share index down 2.2 per cent in October. Warnings about overvalued IT and telecommunications shares are often heard, but so far the pessimists have had to eat their words. Strong growth in earnings, optimism for the future and rumours of mergers and buy-outs are drowning out the warnings. Besides, expectations of higher interest rates already appear to be incorporated in share prices. In October giants such as Microsoft, Nokia and Ericsson surprised the market with record performances. The Helsinki bourse remains supreme. Spurred by Nokia, Helsinki´s general index soared17.2 per cent in October, bringing its advance this year to 62.7 per cent. Ericsson gave Stockholm an 8.2 per cent boost in October bringing overall yield so far this year to 28.6 per cent. Record-high quotes were recorded both in Stockholm and Helsinki. Bolstered by positive inflation figures, the US high-tech Nasdaq bourse also ended the month on a new record, notching up an advance of 8 per cent in October and 35.3 per cent so far this year. Despite the price falls in the past two months, the all-share index has risen 24.6 per cent so far this year. Of the larger bourses, only the Asian ones together with Nasdaq, Stockholm and Helsinki have performed better over the first ten months of the year. In comparison the US Standard & Poor 500 index has climbed 10.9 per cent. The FTSE 100 has edged up 6.3 per cent. In Germany the DAX index has put on 10.5 per cent. Copenhagen marks itself out in the Nordic region with a rise of a mere 1.6 per cent. Our IT and telecommunications shares have followed the upward movement recorded abroad. The IT index has risen 29.1 per cent this year, only surpassed by the shipping and SMB indexes. In October the IT index rose per cent. Several shares benefited from the advance enjoyed by related foreign companies, including Netcom to the tune of 10 per cent and Nera 14.8 per cent. Internet shares are among the winners in the US. In Norway, Opticom climbed 45.8 per cent in October and now figures among the 25 biggest Norwegian companies on the Oslo Stock Exchange. Opticom is the share showing the biggest rise so far this year - 400 per cent - and its market capitalisation now exceeds companies of the likes of Aker Maritime and Fred Olsen Energy. Merkantildata checked the rise in the IT index, losing 16.4 per cent, or NOK 1.6 billion, in value in October. IT shares performed best on the SMB list: whereas IT shares on the Main List gained 1.9 per cent, the same sector on the SMB list advanced 13.7 per cent. Thanks to higher oil prices the shipping index has risen more than any other index so far this year, i.e. by 33.7 per cent, with offshore shares as the main contributor. In the past two months, however, offshore shares have corrected down. Despite continued buoyant oil prices, the value of shares on the Main List dropped 5.6 per cent in September and 13.6 per cent in October. The 19.6 per cent price fall recorded by the seismic company PGS, the biggest offshore company on the Exchange, was the main contributor in October. Offshore shares Stolt Comex Seaway, Det Søndenfjeldske and TGS Nopec all dropped a good 11 per cent. The pleasure cruise company RCCL rose 17.7 per cent in October ensuring that the fall in the shipping index stopped at 2.2 per cent. The shipping company Wilh. Wilhelmsen was also popular in October. The manufacturing index fell 1.6 per cent, Merkantildata and Aker Maritime being the biggest contributors: Aker Maritime plummeted 22.2 per cent in October. The bulk of the fall came with the announcement that Aker RGI had stopped efforts to dispose of shares in Aker Maritime. The financial index weakened 5 per cent in October. The government´s rejection of MeritaNordbankens bid prompted a 8.2 per cent fall in Kreditkassen´s value. Storebrand followed in its wake with a fall of 6 per cent. MeritaNordbanken has extended the time-limit for acceptance of its bid to 12 November and is now relying on the Storting (parliament) to open the way for a takeover of Kreditkassen. The Kreditkassen share ended at NOK 38.20, i.e. NOK 5.80 lower than MeritaNordbanken´s bid. Even so the closing price in October was 17 per cent higher than the closing price the day before the bid was announced. Never before have so many shares and primary capital certificates (PCCs) changed hands as this year. On 22nd October turnover so far this year passed the full-year record of NOK 341.1 billion notched up in 1997. So far this year turnover totals NOK 349.2 billion. In other words shares and PCCs worth NOK 1,671 million have changed hands daily compared with last year´ average of NOK 1,286 million. This year´s trading volume looks set to exceed the 1998 figure by 32 per cent. Buy-outs and mergers are one of the reasons for the growth in trading. The volume traded daily in October came to NOK 1,484 million. Kreditkassen shares accounted for 22.6 per cent of the total, Norsk Hydro shares for 19.8 per cent. The derivative market has seen even stronger growth in trading than the stockmarket. An average of 13,837 contracts have been traded daily so far this year, more than twice last year´s figure. The full-year record for derivative trading was passed as early as August. In October 16,067 contracts were traded daily. Kreditkassen and NCL were the most popular share options. Shares issues in October brought in a total of NOK 3.9 billion. The biggest issues were by Tandberg Television, Ocean Rig and Enitel. So far this year listed companies have brought in NOK 12.3 billion, i.e. NOK 0.9 billion more than in 1998. Two new companies were admitted to listing, while four were delisted, all as a result of takeovers, thereby reducing the total number of listed companies to 219. Long Norwegian interest rates are shadowing their foreign equivalents. Favourable US key figures pushed down foreign and Norwegian rates sharply towards month-end. The Norwegian ten-year-old (S468) dropped 0.27 percentage point from its October peak. For the month as a whole the fall was 0.02 percentage point. Higher central bank key rates in the US and Europe are already incorporated in the interest rate picture. The fall in the long rates is due to expectations that central banks will act to pre-empt inflationary tendencies and signs of pressure.