December 6, 2022

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Fears of capitulation in the Oslo Stock Exchange: - Declining stock markets can be divided into three stages

Fears of capitulation in the Oslo Stock Exchange: – Declining stock markets can be divided into three stages

Unfortunately, we are in a demanding and nervous market, says Atle Hauge of fund manager Odin.

As the stock market trembles like an aspen leaf, expert directors and stock experts warn the CEOs who will present the accounts in the coming weeks: Poor, whoever looks nervous this time, or has to present negative prospects for sales in the lead-up to Christmas. During the winter and the rest of next year.

The unfortunate statements immediately cause stock prices to react, says Director Frederic Byland at Skagen Kon-Tiki.

Since the end of August, Oslo Poor’s has fallen more than ten percent. In what is described as a nervous market, where small deviations have big consequences, shareholder reactions to disappointing results, poorer guidance, or pessimistic statements can be ruthless.

I mean, bear markets, bear markets, can be divided into three stages: first we get a discount valuation, then sharp discretionary cuts, and finally investors give up, says Haug and continues:

Perhaps we can opt out of the first of these three steps, as higher interest rates means future earnings are discounted to smaller amounts, which in turn lowers the value of the stock. I am afraid that now during the fall we will quickly move to the second of the three stages.

– well-known phenomenon

Gauge concerns that development may have worsened significantly over the past few months and that momentum from the third quarter may be weak.

“Over the course of the year, we’ve seen poor sales drive up inventories in a number of industries, and I’m curious if the situation has become more urgent,” Hauge says over the phone from the Biltema store.

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– That the goods have already begun to accumulate in the stores, i.e. in the last stage towards the consumer. We will now see how this has spread backwards into the production chain as there are already bottlenecks in the system. The outlook will get a lot of attention, and negative data here could quickly trigger a harsh market reaction, says Hauge.

He himself can show that he was a stock analyst, based on experience from that time:

It is a well-known phenomenon in the stock market that earnings estimates for a particular year are usually over-optimistic. Analysts tend to make significant corrections only when the third-quarter numbers come in. Then there’s only a quarter left, and then you realize you’ve been too optimistic, he says.

Cutters in cages

Storebrand manager Hans Thrane Nielsen stated that company valuations in Oslo Poor’s have fallen somewhat. In agriculture, it has been declining regularly, following the government’s proposal for a land rent tax.

– Here, 40 percent of the profits quickly disappear when the analysts finish the cut. On top of that, there will be weak returns on securities in banks and insurance companies, and that will reduce estimates for the third quarter somewhat, says Thrane Nielsen.

At the same time, the experienced portfolio manager notes that the discretionary trend of the leading index has already increased throughout the month of September. According to Thar Nielsen, the main reason is the strengthening of the dollar, that higher interest rates lead to higher net interest income in banks and that most of the shipping sectors also performed well in the third quarter.

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Overall, everything is believed to point to very good earnings in the company’s reports that will be submitted to Oslo Børs in the coming weeks. Next week, among others, DNB and Yara will be in the earnings bonfire.

Hans Thrane Nielsen's manager at Storebrand.

Hans Thrane Nielsen’s manager at Storebrand. (Photo: Michaela Berg)

But then there was this with estimates and expectations. Thren Nielsen notes that analysts have entered into some loan losses for banks in 2023, and that the prices of many commodities have fallen.

Internationally, during the third quarter, there were a large number of cutbacks in the last month. Raw materials, information technology, media, banking and industrial sectors all received some discretionary cuts from equity analysts. I think this trend will continue, global macroeconomics points to a marked slowdown in earnings growth through 2023, says Thrane Nielsen.

But with the benchmark index trading at eight times earnings estimates for 2023 – cheap from a historical perspective – Thrin Nielsen thinks the market has already appreciated a lot of misery.

Hauge believes that there are still some buying opportunities between energy players and industrial companies. In addition, moderately priced companies that have been affected by general sales pressure, such as savings banks, Veidekke and Multiconsult, could be attractive candidates.

We are very positive about the seafood industry market, but these stocks are much more difficult now because we don’t know exactly where the new tax system will end. There were more political risks than most, us includedHe was waiting, says Hauge.

– Not that crazy

In the wider world, third-quarter accounting reports have already been reported in large numbers, with many providing raw numbers or following skewed fiscal years.

The results aren’t too bad, but there’s quite a bit of uncertainty and anxiety over the next six to twelve months, says Byland at Skagen Kon-Tiki.

The fund invests globally in emerging economies, and thus Peland is looking very broadly for signs that say something about the development of demand.

Some reports are submitted a few weeks after the actual accounting period ends, so the data is given a lot of weight because it says something about potential earnings for the rest of the year. Some are also in a position to say something about taking up orders and forecasts for 2023, Biland says, and they’re getting a lot of attention.

heading forward Taiwanese TSMC, the world’s largest manufacturer of semiconductors. Since last summer, the stock has fallen from $90 to nearly $60 in New York.

Since the end of the quarter until now, the company has seen a decrease in this demand. And then the stock market becomes uncertain and wonders if it’s a temporary issue or if it’s permanent, and whether it’s something that will again lead to lower investments and thus a sign that the cycle is about to turn.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using links that lead directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.