The head of Iceland’s stock exchange says the planned removal of capital controls is speeding up plans among companies to list shares as cash flows back into the island.
"We’re in a position where there’s an unusual amount of action behind the curtains," said Pall Hardarson, head of the Nasdaq Iceland stock exchange, in an interview in Reykjavik.
Iceland in June announced it would grant its failed banks Kaupthing Bank, Glitnir Bank and LBI until the end of the year to complete settlements or face a 39 percent tax on all their assets. Creditors of the banking trio have now approved settlements and the caretakers of the estates are set to complete winding up proceedings by March 15.
Now investors are pouring back into Iceland, snapping up securities to benefit from a so-called carry trade. Iceland’s central bank has been raising interest rates to cool growth and keep a lid on inflation, unlike the rest of Europe where rates are at rock bottom.
The country’s currency, up about 5 percent against the euro since June, was little changed at 141.61 per euro as of 11:47 a.m. local time.
The June announcement “was a turning point for the economy," said Hardarson. Daily stock trading has grown by more than 65-70 percent and bond trading is up 60 percent since then, he said.
“Now, all of the sudden, one of the main challenges is how we prevent an excessive inflow,” he said. “Concerns over possible outflows have disappeared."
The exchange is rebuilding itself and comprises 17 companies, down from 75 16 years ago. Hardarson said that as many as five companies may list on the main exchange next year and three are looking to list on the First North market, which would double the number of listings there.
Selling shares in the three banks is “manageable,” he said, adding that there has also been talk of listing Skeljungur, which runs gas stations, and Advania, an information technology company.
"So next year could be lively in the market -- also because of macro reasons, strong economic growth, good profits and a better outlook for companies,” he said.