Oslo Brs (OMX Oslo) Norwegian Market Overview 19.03.2012 23.03.

2012

All share index

Figure1. All share index during week 12. Source: http://www.oslobors.no

The result of trading this week is decreasing in All share index (OSEAX) by 1.42%. ITS lowest Value has been observed on 22nd of March, but as is it is clearly seen from the graph, the index has been decreasing the whole week, except Friday. According to Wall Street Journal, this week European stocks have the biggest weekly loss of the year. Spanish stock market was among region's worst-performing indexes, as banks there declined again. BBVA fell 1.1%, Bankinter declined 1.3% and Banco Santander lost 1%. Similar processes have happened to commodities, caused by weak global PMI data (meaning that PMI indexes reflected the slowdown in the development of the Chinese economy, as well as slowdown of recovery in the US). This definitely make traders to be afraid of Oil dropped 1.6% to 105.53, natural gas plummeted 4.2% to 2.261, and gasoline eased .3% to 3.3473. Copper shed 1.9% to 3.7725, silver fell 2% to 31.58, and gold ticked down .3% to 1645.30. Norways krone rallied as oil prices surged amid concern about supply disruptions. This week, the price on Norway bonds decreased, thats why it became more profitably to hold bonds, then to buy shares. For example, the index for government bonds for 3 years (ST4X) has increased rapidly, that leads less activity on share market. Graph for ST4X

Figure2.Graph for ST4X during week 12.Source http://www.oslobors.no

Forecast

Figure3. Changing in OSEAX during this year. Source http://www.oslobors.no

This week the index dropped, but if we look for a longer period (this year), we can easily observe the tendency of increasing. From the beginning of the year index has increased by approximately 40 points.

Figure4. Changing in OSEAX during last year.Source: http://www.oslobors.no

This graph shows the dynamic for the year. As we can see there was a huge decrease, but now the index returns to high positions. It is possible that for some time it will keep increasing, but it will achieve the highest point and will drop down again. However, it can take a long time before it will happen.

Turnover

Figure 5. Changing in OSEAX & Turnover: left-during week12; right-during 2 months. Source http://www.oslobors.no

Turnover has increased this week. And the graph for longer period shows that it increases slowly, but continually after previous recession. We think it happens because investors confidence and believe in financial markets and companies is climbing back again after the uncertainty caused by long recession. That makes us believe that turnover will keep increasing further.

This weeks best performer, Yara International ASA, is the worlds leading supplier of fertilizers. It is selling more than 20 million tonnes of fertilizers in more than 20 countries. The stock price climbed +4.7% on Friday morning due to a discovery of unacceptable payments from the companys joint venture in Switzerland. The stock has rapidly fallen from the end of February, but since the middle of March it has been gradually rising and there is a possibility that such a positive tendency will continue in the near future because of the positive news.

Figure 6: Price development of Yara International during the week. Retrieved from: http://www.oslobors.no

Subsea 7 SA became second best winner of this week in Oslo OMX stock market. It increased its profits for the week by 1.75%. As we know, it specializes on designing, fabricating, building and installing equipment for the offshore oil industry. One of the reasons why the company has experienced the growth this week was the announcement that one of the companys diving support vessels, called Seven Havila, became the most popular tool in its field (especially in Mexico Gulf). In fact, the company has achieved a world first in the number of divers working on the seabed. This popularity with clients was appreciated by the investors, and they preferred to buy more shares issued by Subsea 7 SA in order to gain higher dividends. Second reason for Subsea 7 SA success was their declaring a special dividend paying and saying it will buy back the shares it has previously bought. This claim automatically increased willingness of investors to hold more of the shares, because it meant that Subsea 7 As shares would bring higher dividends to their holders soon enough.

Figure 7: Income statement for SUBC. Retrieved from: http://www.bloomberg.com/quote/SUBC:NO

Since the price for oil has decreased by 1.6%, it would be logical to expect the decrease o price per share of Subsea 7 SA. However, it still increased due to the fact that showed good profits in the Income statement for year 2011. It means that investors believe that the company will pay its dividends back even in case, the price of the company goes down in short term. By this we can expect that the profits of the company will continue climbing, because it is able to generate profits even if the others company from the oil field do the opposite. It is most likely, that next week the price of oil will increase a bit, causing the price of Subsea go up even more.

The third best performer of this week, SCH (Schibsted), is a provider of Media houses with leading positions on print and online, as well as Online classifieds with leading positions and high profitability combined with good growth in several European markets. The stock climbed 1.75% on Friday, therefore, providing positive change in the stock value during this week. Although, there has been only a 0.2% increase, the company is one of few that has maintained positive trend in a downward sloping Norwegian market. There is a possibility that the stock value will decrease in the nearest future, however the value of the company will fluctuate on the same level.

Figure 8: Price development of Schibsted during the week. Retrieved from: http://www.oslobors.no

In conclusion we can say that, most probably, the price of crude oil will go up a bit next week (because in a long perspective it has been increasing for quite a while, and this week was rather an exception with its decrease). Therefore companies connected with extraction of oil, such as Subsea 7 A, will increase their prices per share even more. We also expect that increase in turnover will become even more pronounced, and by this will improve the development of All share index, even making it positive again. Therefore, trust in Oslo OMX is going to be restored and there will be more companies who will end next week with a positive profit than those with negative. Review by: Margarita Cernova, Yauheni Hanchyts, Viktorija Juskevica.