Valerie MedlevaWe have all heard that the Swiss economy is one of the most stable in the world, but are there any other safe havens that investors and traders can scout out? In this article, we cover one of the most trusted states worldwide from an investment point of view; Norway. Let’s find out what the Oslo Stock Exchange could hold for you?
The land of prosperity
Norway is well known for its beautiful outdoor landscapes and breathtaking northern lights, but these are not what international investors appreciate the country for. This small Scandinavian state of 5.2 million citizens is very different from most of its European counterparts.
Norway is a politically stable and modern country with a very high standard of living. Although Norway is not a large country, its economy has shown steadily robust growth since the mid-19th century. It is known for its low unemployment rates, highly skilled workforce, and exceptional per capita GDP, making Norway an extremely productive country. Today, it has one of the lowest income inequality rankings in the world.
Norway’s strong and prosperous economy is characterised by being open and mixed, with a combination of public and private ownership as well as free market activity. Its economy is fuelled by a variety of natural resources, such as oil, gas, lumber, minerals, petroleum, seafood, hydroelectric power and freshwater. Norway’s fortunes turned in the late 1960s when oil was first discovered in the North Sea. Currently, the country is the fourth largest exporter of oil and the third largest exporter of natural gas. It also channels the world’s largest sovereign wealth fund, which manages its gas and oil revenues, ensuring long-term economic prosperity. Additionally, new oil and gas deposits have been recently discovered in the large Norwegian areas of the Barents Sea and the Norwegian Sea. Therefore, fueled by oil and gas exports, Norway is going to remain one of the richest countries for many more years to come.
The country has always been open to foreign investments; its transparent and efficient regulatory framework facilitates entrepreneurial activity and innovation. Norway’s business environment benefits from monetary stability and an independent judicial system that provides strong protection of property rights. Interestingly, there are more than 6000 foreign-owned limited companies in Norway. Foreign companies represent about 20% of the overall employment and about 25% of all value creation in the country.
Norway is not a member of the EU, however, it is a part of the single market through the EEA agreement, meaning Norwegian companies have equal opportunities, in terms of trade, as those within the Eurozone and EU. It is also a member of several international economic organisations, including the International Monetary Fund, Organisation for Economic Co-operation and Development, the United Nations, the World Bank, the European Free Trade Association and the World Trade Organization.
All of these factors have attracted investors and traders to the Norwegian stock exchange for decades. The country is considered to be a safe haven investment destination, with the Oslo stock exchange offering exposure to shares of thriving local companies.
Benefits of investing in Norway
Norway is a country with a trade surplus, as its exports majorly exceed imports. This is the main reason why investors choose this country as a safe and easy spot for their investments.
Here are just some of the key advantages of investing in the Norwegian stock market:
What is the Oslo Stock Exchange?
Today, the Oslo Stock Exchange (OSE) is the only independent stock exchange within the Nordic countries. The exchange is the central marketplace for listing and trading financial instruments in the Norwegian market. It is divided into five different marketplaces: Oslo Børs, Oslo Axess, Oslo Connect, Merkur Market, and Nordic ABM. The choice between the markets is usually determined by the differences in the requirements for admission to the listings. The OSE offers a full product range including equities, derivatives, ETPs, and fixed income instruments.
The exchange opened its doors for business for the first time on 15 April 1819. Named Christiania Børs, it served the interests of the merchant class in the country’s new capital city. It eventually turned into a home of commerce. The first listing of securities comprised of 23 stocks and 16 bond series, including the Norwegian central bank. Today, the OSE cooperates with the London Stock Exchange on trading systems. It has also established partnerships for a secondary listing of companies with the stock exchanges in Toronto and Singapore.
Currently, Oslo Børs is an online marketplace where all trades are executed through computer networks. Trading hours are from 09:00 am to at 04:30 pm local time (CET) excluding weekends and national holidays.
Norwegian stocks to invest in
The Oslo Stock Exchange offers a full range of securities such as: equities, bonds, derivatives and ETFs. Thanks to the outstanding performance of the country’s economy, there is a multitude of the Norwegian stocks to invest in; the options are truly countless. The list of the most favourable Norwegian stocks includes: DNO ASA - DNO, SalMar ASA - SALM, DNB ASA - DNB, Norwegian Air Shuttle - NASo, Leroy Seafood Group - LSG and Petroleum Geo Services - PGS.
However, the easiest way to gain exposure to the broader market is to choose a market index. In the case of Norway, there are few of them: the Oslo OBX, the OSE Benchmark Index and the Oslo All-share Index. Each of them has distinct features, offering different investment benefits and opportunities.
The OBX Index, also known as Norway 25, is a stock market dividend adjusted index, which lists the 25 most liquid and traded companies on the main index of the Oslo Stock Exchange. All stocks on the OBX list can be traded with CFDs, options and futures. The constituents of the index are revised twice a year, on every third Friday in June and December.
The Oslo Børs Benchmark Index (OSEBX) is an investable free float-adjusted index, containing a representative selection of all listed shares on Oslo Børs. The index was introduced on May 23, 2001, with a base value of 100. It is a total return index, functioning as an indicator of the overall performance of the Oslo Exchange. The OSEBX is semiannually revised, and the changes are implemented on 1 June and 1 December.
The Oslo Børs All-share Index (OSEAX) consists of all listed shares on Oslo Børs. The index is adjusted for daily corporate actions and the current outstanding number of shares. The OSEAX index is also adjusted for dividend payments.
Once you’ve decided on the security or index you want to invest in or trade, it is time to pick the best-fitting financial instrument. There are a few ways you can trade or invest in Norwegian stocks, however, one of the most popular ways to do so is through contracts for difference (CFDs).
How to trade Norwegian stocks CFDs
Trading the Norwegian stocks is easy with CFDs. A contract for difference is a type of a contract between the two parties, typically the "seller" and "buyer", in order to profit from the price difference between the opening and the closing value of the trade. Using CFDs to trade the stocks offers you an opportunity to go short or long on the market without having to deal with conventional exchanges. It also allows you to trade with a cross section of liquid trading instruments on margin, providing bigger exposure to the chosen markets.
Additionally, when trading CFDs, you don’t buy the underlying asset itself, but instead you work with the selling and buying prices of a given financial instrument in order to profit from the price difference. It provides greater liquidity and easier execution. Since CFDs are a leveraged product winnings, as well as losses, are magnified.
Check out Capital.com to learn the latest information and trade Norwegian stocks CFDs.
What the future holds
On 13 May 2019, Euronext, one of the biggest European stock exchange operators, won approval from Norway’s Ministry of Finance to acquire up to 100% of Oslo Bors. Euronext is going to appoint the new CEO of the Oslo Stock Exchange to its managing board, as well as set up a hub that would supervise all commodities transactions in the Norwegian capital.
