True enough, there was a week's winter holiday in February, but an average daily turnover of NOK 1,700 million in the stockmarket suggests that all was not as it should be. Has the confidence deficit in the wake of the Enron scandal reached Norway, or is a fundamental mood of pessimism causing investors to hang onto their money? There is much to suggest that the latter is the case, for world stockmarkets have waited a long time for a recovery - which remains conspicuous by its absence.
Opticom once again
Despite the fact that Opticom was not traded for a week and a half in mid-month, there was little doubt that it was the number one trader share that occupied the attention of market players. After chief executive Robert Keith on Wednesday 13 February commented on the earnings potential of the agreement between Opticom's subsidiary Thin film Electronics (TFE) and the American Intel, Oslo Børs called on Opticom to release enough information about the agreement to enable the market to do the same sums as Mr Keith. After being suspended from Friday the 15th through Monday the 22nd Opticom issued a fulsome announcement to the market. This contained royalty rates, presumed market shares and actual markets for the much talked about memory chips which it was planned to put into production in 2003. Much important information for a news-hungry market, in other words.
Once the suspension was lifted both Opticom and Oslo Børs were at pains to stress that a risk factor still attaches to whether or not Opticom and TFE will make a success of their technology. The market must make up its own mind about investing, and this is an uncertainty that just has to be lived with. During the suspension Oslo Børs levelled some tough criticism at Opticom's at times cavalier attitude to price-sensitive information, and is urging the company to pay greater attention to this area in future.
The Opticom share tumbled 19 per cent the day the suspension was lifted. During the Share's suspension the Nasdaq dropped 7-8 per cent, but the steep fall may none the less suggest some scepticism on the part of investors. Over the month Opticom lost 13.5 per cent of its value.
Downer for IT and telecoms
The IT and telecoms indices slid 7.2 and 2.7 per cent respectively in February. The latter is entirely down to Telenor, which despite presenting a pre-tax profit of NOK 10.3 billion in 2001 suffered a value loss of 2.5 per cent. The reason for the decline is more likely the worldwide negative tendency in the telecoms sector than Telenor's reported profit, which is the best in the company's history.
The IT sector fared little better, and Norwegian IT companies saw a broad-based price fall in step with the American Nasdaq which tumbled 10 per cent in the period. Here in Norway Merkantildata, Opticom, Telecomputing and Tandberg Data found themselves in negative territory with value falls between 13 and 26 per cent. All the companies mentioned have delivered fourth quarter figures. Last year's price rocket, Tandberg, saw its worst month in a long time after its US competitor Polycom lost 30 per cent of its value in a short space of time. Tandberg's sharp upturn last autumn seems to have faded for the time being. The share slid 3.7 per cent in February.
Renewed faith in Tomra
The Tomra share has struggled for some time due to the uncertainty surrounding the introduction of a deposit on non-reusable packaging in Germany, which is regarded as a large, important market. February 22nd, on the other hand, was a gratifying day for the world's biggest reverse vending machine manufacturer, since a German court found in favour of the German authorities in a case brought against the brewing industry. This was a step in the right direction for Tomra in Germany, and the market immediately sent the share up 22 per cent. Since New Year Tomra has none the less dropped 16 per cent. Tomra's upturn was also the reason why the bourse's manufacturing index put on 6.7 per cent in February.
Record result from Statoil
After a volatile past few months due to uncertainty surrounding OPEC's production cut and an uncertain oil price, the Statoil share, the "people's favourite", bounced back in February with a rise of 10 per cent. In the same period the oil price rose by about a dollar.
At mid-month Statoil delivered a record pre-tax profit of NOK 8.8 billion for the fourth quarter. The share fell back slightly in the days following, but recovered towards month-end. TGS Nopec and Smedvig could also report small price advances in February, and the energy index put on 3.7 per cent. Norsk Hydro, figuring in the same index, lost a marginal 0.7 per cent.
New liquidations
Evercom and Telecast took the hard road to the bankruptcy court in February, and were delisted on 7 and 22 February respectively having seen the value of their companies vanish into thin air. Oslo Børs has now seen five liquidations in the past nine months with Customax, Enitel and Alvern already delisted for the same reason. The figure is none the less far lower than several trend-setting bourses in Europe have witnessed in the same period. In Norway as elsewhere the IT and telecoms sector has had the toughest time.
Same international trend
As in Norway, IT and telecoms had the toughest time of it in February. This is reflected in the Nasdaq where values slipped more than 10 per cent. The Dow Jones industry index went the opposite way, rising 1.8 per cent. Europe was roughly in line with the Norwegian market, and the exchanges in London, Frankfurt and Stockholm saw only minor changes.
Interest rates stay put
Once again Norges Bank resisted the temptation to lower the interest rate. It justified this with special reference to the danger of an expansionary wage round. While most market participants expected a rate cut at the start of the month, they changed their mind after the central bank governor's annual speech in mid-month in which he called for restraint at the spring wage round. Although most observers had expected an unchanged interest rate and market rates had crept upwards ahead of the meeting, short rates jumped between 0.1 and 0.2 per cent after the meeting and at month-end stood at 6.71 per cent. Market participants' comments and the level of long rates could suggest that they will remain at this level for some time ahead.
In addition to keeping the interest rate unchanged, the central bank took the opportunity to revise its stance from an easening bias to a neutral bias. A switch to neutral bias essentially means that the question of whether the next interest rate adjustment by Norges Bank will be a reduction or an increase is an open issue. We will be holding our breath up to the next interest rate meeting on 10 April.
Trading in the bond market got off to a good start to the year with high figures in January. Trading dropped back slightly in February, and the average of NOK 2.61 billion for the month in the ordinary fixed income market was on a par with last year's average of NOK 2.65 billion. Despite somewhat lower trading than in January, the daily trading volume so far in 2002 is 11 per cent above last year's level in the ordinary fixed income market and 23 per cent higher in the repo market, at NOK 2.94 and 5.29 billion respectively. Activity in the primary market in February was limited with few new bond issues at Oslo Børs, which is not unusual for the month since many market players are focusing on annual accounts for the previous year at this time of year.
. 0000 . Financial shares showed wide variation on Oslo Børs. Whereas DnB as usual delivered solid figures and was rewarded with a price rise of 9 per cent, Storebrand showed itself from an entirely new angle and fell back 1 per cent. The insurance giant reported a far weaker consolidated result than expected by the market, and in addition had to issue a profit warning for the partially Storebrand-owned non-life company If ……..
Derivatives market
In the period from end-May to 21 September 2001 the OBX index fell from levels around 800 to a low of 521, i.e. a decline of about 35 per cent. Apart from in September, this resulted in sharply reduced volumes in the derivatives market. In January this year we started to see signs of improvement, although volumes were still somewhat adrift of levels one year previously. Since year-end we have seen a sharply improved price picture in the market. This has led to substantial improved spreads, especially in the case of OBX futures.
An average of 11,609 contracts changed hands daily in the derivatives market in February, a decline on the January figure of 13,840 contracts. So far this year the daily average is 12,778 contracts. Of underlying shares the biggest option turnover was in Norsk Hydro at 23,580 contracts per day and Kværner at 21,550 contracts per day. Forwards and futures trading in February averaged 3,203 contracts daily, an increase of 11 per cent over the January figure.
