Something Bullish in State of Denmark as Stock Gains Double U.S.

The low birth rate in Denmark has been enough of an issue that a travel agency launched a campaign called “Do It for Denmark,” claiming that more holidays to romantic locales could remedy the baby shortage.

Whether or not patriotic Danes will take up the challenge remains to be seen, but there’s one part of the country that can certainly claim the bragging rights of “Doing It for Denmark”: The stock market.

The OMX Copenhagen 20 Index has returned about 21 percent this year including dividends for the best gain among national benchmark indexes in 24 developed markets. The Standard & Poor’s 500 Index has returned about 9.6 percent this year.

Only part of the outperformance can be explained by a weaker currency, which tends to lift stock prices of companies that book a lot of revenue in dollars. (A weaker currency may also cause “patriotic” vacationers to spend more time in their hotel rooms rather than shopping, but that’s a topic for another day.) Priced in dollars instead of Danish krone, which is pegged to the euro, the index has still returned 18 percent in 2014.

And it’s not just this year. The Danish benchmark has returned 280 percent including dividends (299 percent in dollar terms) since its low in March 2009. The S&P 500 has returned 229 percent since its trough three days later.

The Danish equities index trades for 22.7 times its companies’ reported earnings, 28 percent more than the S&P 500’s multiple of 17.7. The Copenhagen 20’s valuation has shown a premium to the U.S. benchmark most of the time since the bear market ended in 2009. It mostly sold at a discount for the decade before that, except for a few anomalous months in 2000 when its P/E swelled to twice the S&P 500’s at its frothiest.

Wind Power

Vestas Wind Systems A/S, the best performer in the Copenhagen index this year with a 69 percent gain, today reported better-than-estimated quarterly profit and said it expects stronger orders in the second half of the year. Vestas, the world’s largest maker of wind turbines, hasn’t turned a full-year profit since 2010.

Pandora A/S, the jewelry maker, is up 45 percent while Coloplast A/S, which makes medical products, and Danske Bank A/S are up more than 27 percent.

Of course, those are all small potatoes compared with Novo Nordisk A/S, the world’s largest insulin maker that accounts for 38 percent of the Copenhagen 20, more than 10 times the most heavily weighted stock in the S&P 500 (Apple Inc.). The shares, the second-biggest holding of billionaire Jim Simons’s hedge fund firm Renaissance Technologies LLC, are up 28 percent this year even as revenue growth slowed to 2.4 percent from as much as 19 percent in 2010.

Novo Nordisk gets about 47 percent of its revenue from North America, according to data compiled by Bloomberg. Pandora and Vestas book about 46 percent and 28 percent, respectfully, of their sales in the Americas.

But make no mistake: They’re doing it for Denmark.

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