News from Oslo Exchange: braving the biggest drop in oil prices

Børsen trosset tidenes største oljeprisfall

Hovedindeksen steg fem prosent i 2014 og trosset tidenes største oljeprisfall. Sterk kursutvikling i «fastlands-sektorer» reddet oppgangen for Hovedindeksen, mens store kursbevegelser sørget for rekordhandel. Samtidig hentet selskaper mer penger enn noensinne på Børsen.

The price of North Sea oil halved in 2014. This year’s price fall, which saw oil fall to around USD 53 per barrel, is the largest drop in recent times, and, in percentage terms the drop of just under 50% for Brent spot is the largest since 2008 (see the table below).

This has of course affected the oil-exposed Oslo Børs marketplaces. At the start of the year, shares in the energy sector represented 43.6% of the value of shares listed on the Oslo Børs marketplaces. They now represent 33.2%, and the Oslo Energy Index fell by 33.2% during the course of 2014.

Despite this, the Oslo Børs Benchmark Index has risen by 5% in 2014. This rise in share prices in Norway reflects similar growth in stock markets around the world, and represents a better performance than London and Frankfurt, the two leading stock markets in Europe. London, as measured by the FTSE 100 Index, fell by 3.1% in 2014, whilst the German DAX Index rose by 2.7%.

The Oslo Børs marketplaces are increasingly diversified and less exposed to oil
Strong growth in the share prices of companies in ‘mainland’ sectors such as seafood, IT, consumer discretionary and materials was responsible for the overall gains seen in 2014. A weaker Norwegian krone helped exporters. Lower energy prices were also welcomed by some companies, such as Royal Caribbean Cruises and Norwegian. The industrial companies Borregaard andNorsk Hydro were amongst those who se share prices rose the most, and together they helped send the Materials Index up by nearly 50%. The Seafood Index rose by the same amount. Despite the Russian boycott, the share price of several salmon companies, such as Bakkafrost and SalMar, rose by more than 80%.

The reduction in the contribution of energy shares to the total value of shares listed on the Oslo Børs marketplaces has also coincided with increases in the share prices of companies in other sectors. The Oslo Børs marketplaces have thus become more diversified and less exposed to oil during the course of 2014.

Large price movements led to a record trading volume 
In terms of the number of transactions, more equity instruments were traded on Oslo Børs in 2014 than ever before. There was an average of 95.600 transactions per day. In NOK terms, the value of trading was markedly higher than in previous years. The average daily value of trading reached NOK 4.44 billion, which is 28% higher than last year.

Price movements were unusually large in 2014. The rises and falls seen in November and December were the largest seen since 2011. This is in contrast to 2012 and 2013, which were two quiet years by historical standards, and which saw steadily rising prices.

The large price movements contributed significantly to a new record being set this year for trading volume and coincided with a larger proportion of trading in Norwegian shares taking place on the Oslo Børs marketplaces. Over the last few years, an increasing amount of trading has taken place on competing marketplaces, but in 2014 this trend was reversed and Oslo Børs regained market share. About 60% of trading in the most liquid shares listed on Oslo Børs (OBX-shares) now takes place on Oslo Børs.

Large influx of new companies and high volume of issues
Not since 2010 have so many new companies been listed on the Oslo Børs marketplaces. 2014 also saw large companies come to the market. When XXL listed in October, it was the largest new company to be listed since 2010 in terms of market capitalisation.Entra, which made its debut on Oslo Børs a few weeks later, had an even higher market capitalisation. In total,  19 new companieswere admitted to listing during the course of 2014.

More equity capital was raised in 2014 than in any year since 2011. Companies listed on Oslo Børs and Oslo Axess raised NOK 27.5 billion in new equity capital. Approximately half the amount issued was raised by companies new to the stock market.

New records in the fixed income market
2014 was again a year in which companies raised more loan capital than equity capital.

More loan capital was raised on the Oslo Børs marketplaces in 2014 than ever before. During the course of the first 11 months of 2014, companies raised NOK 296.8 billion of loan capital through new issues and increases to existing issues. This is NOK 17.1 billion more than last year, when the existing record of NOK 279.6 billion was set.

This strong growth is related to the increasing number of companies choosing to have their fixed income securities listed on the Oslo Børs marketplaces. The number of fixed income securities listed has increased strongly, with the value of outstanding fixed income issues exceeding NOK 1, 500 billion for the first time in November. In total, 56 companies listed fixed income securities on Oslo Børs and Nordic ABM in 2014.

Key figures by year:

Brent spot and Oslo Børs Benchmark Index: