2011 will be remembered by many principally for the uncertain and volatile macroeconomic conditions seen around the world. Financial markets have been particularly affected by the economic problems that several European countries have experienced as a result of a high level of national debt. Here in Norway, we will remember the 2011 stock exchange year principally for the record level of activity in the primary market, as well as for the North Sea oil discoveries in the Avaldsnes and Aldous fields that have given renewed optimism for Norway’s future as an energy nation.
The OBX Index, which comprises the 25 most traded shares listed on Oslo Børs, fell by 10.7% in 2011, while the OSEBX Benchmark Index fell by 12.5% and ended the year at 384.95. The Oslo Børs equities marketplaces saw average daily trading volume of NOK 6.1 billion in 2011, with an average of around 90, 400 transactions per day.
Fears proved justified
At the beginning of 2011, there were many who saw good prospects for the Norwegian economy and Norwegian companies. The experts were not unanimous in their view of the outlook, but there did seem to be some degree of optimism for 2011. However, it was also very apparent that the unresolved European debt crisis and the risk of global economic slowdown could affect Norway and the companies listed on Oslo Børs. Fears that international macroeconomic conditions would affect the financial markets proved to be justified around end July/early August, and the markets took a bigger hit than most commentators had expected. Since August, downgrades of European countries’ debt and banks, together with a flow of bad macroeconomic news, have resulted in falling and highly volatile markets. The Benchmark Index has fallen by 7.8% since 1 August.
Oil prices were somewhat higher at the end of 2011 than at the start of the year. The spot price of Brent oil was around USD 93 per barrel at the start of 2011, but was trading at around USD 108 per barrel at the close of the last stock exchange trading session in 2011.
Another year of records in the Norwegian bond market
The Oslo Børs fixed income marketplaces have performed very strongly over recent years. The marketplaces set new records in 2011 both in terms of the number of issues listed and in the volume of debt issued. By the close of 2011, a total of 1, 218 bonds and short-term bonds were listed on the Oslo Børs and Oslo ABM (Alternative Bond Market) marketplaces, of which 493 were listed on the Oslo Børs marketplace and 725 on the Oslo ABM marketplace. This is the first time that more than 1, 200 issues have been listed at year-end. In addition, the volume of debt issued beat the previous record set in 2010. New issues and increases in existing issues on the Oslo Børs and Oslo ABM marketplaces in 2010 totalled NOK 214 billion. Even before increases in existing issues in December 2011 are included, the provisional total for debt issued in 2011 is NOK 262 billion.
In the derivatives market, the number of contracts traded daily averaged 57, 000 in 2011. This is somewhat higher than the daily average of 53, 811 contracts in 2010.
Worthwhile year for new share issues
The start of 2011 saw a good level of activity for new listings, with a long list of companies working towards listing on Oslo Børs or Oslo Axess. However, new listing activity dried up towards the summer in pace with growing uncertainty in the international financial markets. While 10 companies had been admitted to listing by mid-July, the total for the year was 13 new listings. Of the companies admitted to listing, 7 are rig companies. The year’s new listings saw 9 companies listed on Oslo Axess and 4 companies listed on Oslo Børs. The companies listed in 2011 were: Hofseth BioCare ASA, Awilco LNG ASA, Nordic Financials ASA, Asia Offshore Drilling Limited, Kværner ASA, Höegh LNG Holdings Ltd., Awilco Drilling Plc, Sevan Drilling ASA, Discovery Offshore S.A., Norway Royal Salmon ASA, S.D. Standard Drilling Plc, Aker Drilling ASA and Prospector Offshore Drilling S.A.
New issue activity in the equities market followed much the same pattern as new listings, and the majority of activity in 2011 took place up to and including the summer. In total, companies raised NOK 38.9 billion on the Oslo Børs marketplaces, of which Oslo Axess accounted for NOK 5.2 billion and the Oslo Børs marketplace accounted for NOK 33.7 billion. The NOK 20 billion issue carried out by Norsk Hydro in connection with its acquisition of Vale was the dominating transaction in the Norwegian market in 2011.
Funcom was the best performing share in 2011
In a falling market, many companies closed the year with a fall in value, and only very few companies achieved a strong increase in share price. However, three companies managed to more than double their share price over the course of the year, namely: the on-line games company Funcom (+227%), Det norske oljeselskap (+225.9%) and the LNG shipping company Golar LNG (+207.3%).
At the other end of the scale, there were several companies that lost virtually all their value over the course of the year. The worst of these was Eitzen Maritime Services, with a fall in share price of 99.8%. Five other companies saw their shares fall by more than 90%, namely: the chemical shipping company Jason Shipping (-98%), the offshore installations company Sevan Marine (-97.5%), the seismic data company SeaBird Exploration (-92.1%), the chemical shipping company Eitzen Chemical (-91.2%) and the seismic data company Rocksource (90.9%).
Competition for trading continues to increase
European regulation has paved the way for new marketplaces to be established that compete with the established marketplaces for trading in securities. A number of venues now offer trading in shares listed on Oslo Børs. Oslo Børs maintained a market share in 2011 of approximately 70% of all trading in shares listed on Oslo Børs that was carried out through electronic trading systems in Europe. If the comparison also includes the volume of off-market transactions traded directly between brokers and subsequently reported, Oslo Børs’ market share in 2011 was around 54%.
Oslo Børs has implemented a number of measures to maintain its competitiveness in the face of these developments. These include continuing improvements to the trading microstructure in areas such as rulebooks, prices and products, as well as introducing new functionality in the trading system. In addition, towards the end of 2012 Oslo Børs will migrate to the Millennium Exchange trading system, which will be a new and faster system for equities and fixed income instruments.
Comprehensive statistics and up-to-date information for all the products listed and traded on the Oslo Børs marketplaces can be found on the Oslo Børs website: www.oslobors.no