Oslo’s benchmark OSEBX index climbed to the highest level on record, led by Gjensidige Forsikring ASA, the country’s largest insurer, as an improved global economic outlook boosts the oil-heavy stock exchange.
The gauge rose as much as 0.3 percent to 526.48, the highest intraday level since at least Jan. 2, 1996. The index, which has 54 members, traded 0.2 percent higher at 525.83 as of 11:55 a.m. in the Norwegian capital.
“The macroeconomic picture around us is looking brighter,” Peter Hermanrud, chief strategist at Swedbank First Securities, said by phone from Oslo. “It’s getting brighter in the West with Japan, Europe and the U.S., and China has stabilized - the risk of a shock there is considered lower.”
Stock markets from New York to Tokyo have advanced this year, helped by company earnings and central bank stimulus in countries including the U.S., with the MSCI World Index increasing almost 20 percent. Bourses extended gains after the U.S. Congress last week agreed on a new federal budget, avoiding a default and ending the first partial government shutdown in 17 years.
The performance of listed companies in Norway, western Europe’s biggest petroleum producer, largely depends on the prospects for oil and oil services companies, Hermanrud said. Of the 54 companies that make up the OSEBX, 16 are either oil and gas producers or suppliers to the industry. Of the OBX index of 25 most-traded stocks, 12 depend on the oil industry.
“If global economic growth is accelerating, there will be more demand for oil and higher oil prices, which in turn results in better markets for oil services,” Hermanrud said.
Gjensidige is today’s biggest gainer on the OSEBX, rising as much as 10 percent to 111.8 kroner after announcing an extraordinary dividend and an improved payout policy.
Companies listed on Oslo’s stock exchange are still cheap, according to Swedbank’s Hermanrud, and the OSEBX index could climb to as high as 800, he said. The price earnings ratio of companies listed on the OSEBX exchange is currently at about 11, having previously climbed to as high as 15 during earlier records, he said. “Stocks are cheaper than at any previous all-time high,” Hermanrud said.