Oslo Stock Exchange Monthly Report: January Trading Record

Whether measured in number of trades or in kroner, activity in the stock market has never been as high as in January. Trading in the derivatives market was also unprecedented. The all-share index, which recorded unusually wide day-to-day fluctuations, dropped 2.1 per cent. Substantial price movements are one reason for the heavy trading. On 11 of 21 trading days in January the all-share index fell or rose more than 1 per cent. This was largely under the influence of international events, with the US stock market experiencing one of its most volatile months ever. After the record year 1999 many fear that stock markets have risen too far. Fear of quickening inflation and higher interest rates are also contributing to the nervous mood. The Internet has opened up the Norwegian stock market to a far larger public. Brokers' commissions have dropped sharply, information is more readily available and the new trading system enables investors to relate directly to the market place and the electronic order book. The 45.5 per cent rise in the all-share index is another reason for the heavy trading volume. Such a high return attracts investors. In January shares and primary capital certificates worth NOK 54.2 billion changed hands in 196,710 trades. An average of 9,367 trades to a value of NOK 2,582 million were transacted daily, compared with last year's figures of 5,292 trades and NOK 1.77 billion respectively. 90.3 per cent of January's trades were automatically matched. Average transaction size is steadily declining. Since 1997 it has fallen from NOK 414,000 to NOK 275,000. Last year's average was NOK 334,000. In krone terms Norsk Hydro was the most traded share in January. Competitive bidding made NCL the second most traded share, with Opticom in third place. In terms of number of trades Opticom, PGS and Norsk Hydro were the most popular. The primary market also made a good start to the year. Listed companies brought in fresh capital totalling NOK 1,027 million. One company - Crew Development - joined the Exchange, bringing the number of listed companies on the Oslo Stock Exchange to 216 representing a total capitalisation of NOK 577.7 billion. The heavy trading in the derivative market is feeding through to the derivatives market which set a trading record for the second straight month. An average of 22,818 option contracts were traded daily compared with last year's figure of 14,532. Kreditkassen, Norsk Hydro and Orkla were the most popular share options. OBX options accounted for 24 per cent of the traded volume. The oil price rose in January to its highest level since 1991, and aluminium prices are the highest since August 1997. Even so, several commodity sagged. Elkem for example dropped 14.9 per cent and the Hydro share edged down 2.4 per cent. Another commodity share, Norske Skog, lost NOK 2.3 billion or 14 per cent of its value in January. The financial index dipped 6.1 per cent in January, which was the biggest fall for any index. Contributory factors were a fall of 9.8 per cent for Storebrand and 8.5 per cent for Den norske Bank. The shipping index climbed 3.6 per cent in the wake of an 11 per cent advance for NCL and 12.3 per cent for RCCL. The high oil price boosted several offshore shares. Fred Olsen Energy gained 17.1 per cent, Smedvig 7.4 per cent, Stolt Comex Seaway 11.1 per cent and TGS Nopec 15 per cent. On the SMB list Northern Offshore climbed 48.7 per cent. Nortrans Offshore is having talks with possible bidders and gained 22.1 per cent. Ocean Rig advanced 23.1 per cent. PGS stands out among offshore shares with a price fall of 12.6 per cent after the company's warning of weaker-than-expected fourth quarter figures. Led by IT and offshore shares, the SMB index climbed all of 13.8 per cent in January. Itera tops January's winners´ list with an advance of 151.6 per cent. Next come Office Systems, Iterated Systems and Infostream - all of them IT shares on the SMB list. The French Integra has put in a bid for Infostream, and other IT companies are hoping to boost their valuation by highlighting their focus on the Internet. Of the biggest IT shares, Enitel performed best. A rise of 15.2 per cent took Enitel to 20th place on the list of the 25 biggest Norwegian companies on the Exchange. Tandberg Television fell 34.2 per cent and dropped out of the top-25 list. Tandberg Television delivered weaker-than-expected results for 1999. A marked price fall for Tandberg Data, PC LAN and Evercom Network did not stop the IT index from rising 2 per cent in January, however. Helsinki and Stockholm were the only major western bourses to advance in January, largely thanks to Nokia and Ericsson. The Finnish and Swedish general indexes rose 2.8 per cent and 2.2 per cent respectively in January. Other leading European bourses experienced a fall, in some cases steep. The FTSE index ended the month 9.6 per cent down. The Zurich bourse dropped 6.1 per cent in January, and CAC edged down 5 per cent. The US market also corrected down after a record surge at the end of last year. The Standard & Poor 500 index fell 5.1 per cent while the Dow Jones lost 4.8 per cent. Technology shares performed best, with the Nasdaq dipping a mere 3.2 per cent. Both short and long rates rose about 0.20 percentage point. Foreign long rates showed a similar increase. This was related to expectations of increases in key European and US rates to dampen pressures in the economy. Bonds worth NOK 2,548 million (apart from repos) changed hands each day compared with last year's figure of NOK 3,081.