September 26, 2022

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Oil and raw materials tempt small savers

Oil and raw materials tempt small savers

The Russian invasion of Ukraine has caused major turmoil in stock markets in the past two weeks, and in such situations it is easy for small savers to panic and veer from their long-term plans in the stock market.

Based on discussions in various stock forums, Kristen Skoog, general manager of AksjeNorge, believes that people often wonder which stocks to invest in with the constant uncertainty.

We already know that people have very few different stocks, and that the lack of diversification is very evident now when the differences between winners and losers are large in the short term.

She also says supposedly “safe and good” companies have been hit. Remember banking and finance as an example, a sector that often goes well when things are going well in the world.

Many Norwegians, mostly elderly people, own only one share of the portfolio – the local savings bank. This has fallen off a lot lately. Never before has it been more important to have a well-diversified portfolio, because the wiggle room is so much. It’s important not to join too many losers too far, as it can take a long time to get the money back. So it’s important to have a plan for both stop loss and hedging profits, says Skoog.

A stop-loss order means that the stock is sold when the predetermined stock price is exceeded, so the investor can protect himself from further price drops.

See also  Paul Harper believes that the current situation is reminiscent of the fourth quarter of 2018 - when the Oslo Stock Exchange fell by 17 percent

In fashion: oil and raw materials

Investment economist Mads Johansen at online brokerage Nordent believes that client trading patterns in recent weeks have underpinned a steady evolution since last fall, when commodity-heavy stocks were popular.

– This trend became stronger after the invasion of Ukraine. With commodity prices near all-time highs, many companies on the Oslo Stock Exchange are having very good times, and I think we can expect very good numbers for the first quarter if commodity prices remain at these levels, he says.

Investment economist Mads Johansen of Nordnet.

Investment economist Mads Johansen of Nordnet. (Photo: Gorm K. Gaare)

In line with rising inflation and rising interest rates, Nordnet’s longtime clients have also traded with Equinor, Vår Energi, Telenor and Aker BP, companies with strong balances, in industries that tend to perform well under inflationary market conditions.

At the same time, statistics of online broker clients show that many freight stocks are widely sold, which the investment economist believes is largely due to the fact that a series of sanctions against Russia can affect the shipment of raw materials and services. Moreover, it is believed that there may be some hedge of profits, because these companies have risen sharply for a long time.

Banking and financial stocks saw a lot of wind at the start of the year, with the potential for a slew of interest rate hikes. However, this has experienced a downturn recently

– At the same time, we have seen that the market as a whole has plummeted banks and financial stocks recently, in line with the possibility of stagflation, which will be especially negative for banks. This is evidenced by the fact that DNB, Storebrand and many national and international banks are down 10-20 percent so far this year. On the plus side, many large, solid financial institutions currently have very good direct returns, and I think clients find them attractive.

green back?

Since February 24, sales from individuals at DNB have increased by 50 percent compared to the period prior to innovation on February 24. This resulted in a record number of retail equity trading in DNB. We’ll have to go back to January and February in 2021 to see a similarly high turnover, says head of equity trading at DNB Markets’ online solution, Bård Kittelsrud.

The stocks most traded are oil stocks, with Equinor, newcomer Vår Energi and Aker BP, taking the top spot, says Kittelsrud.

Bård Kittelsrud, Head of Equity Trading at DNB Markets Online Solutions -

Bård Kittelsrud, Head of Equity Trading at DNB Markets Online Solutions –

According to him, however, DNB clients, unlike Nordnet clients, sold the Equinor network. But they follow each other when they sell Frontline.

Perhaps what surprised Johansen most was Nordnet customers’ eagerness to overweight Aker Horizons’ regenerative canopy company dominated by Kjell Inge Røkke. Green stocks have been sold off for a long time, in favor of profitable companies today.

Most of the reason is probably due to the escalating political discussions about moving away from reliance on gas, rather than turning to renewable sources. Here, Aker Horizons has a good standing with companies in carbon capture, wind turbines and hydrogen. A possible political decision will also escalate this process, which will be very beneficial for the renewed players, of which we have a part on the Oslo Stock Exchange.

Overall growth shares have fallen sharply over the past year, but Johanssen is now feeling the change in mood:

Shares of many green tech stocks are down 60-70 percent from the top, and now you can really get started and calculate reasonable multiples on these stocks. So far, this has led to a rebound among some of those, for example, both Scatec and Nel are up 10-20 percent in the last week.

The fact that several opportunistic fund managers have had to buy renewable shares in recent weeks to cover their short selling may have contributed to pushing up the prices of these shares.

-Johansen adds that it also helps that long-term interest rates have fallen somewhat in the past period, which is separately positive for growth stocks that are priced based on potential future earnings.

Sold Stock Fund

In the latest February monthly report from the Norwegian Association of Mutual Funds (VFF), it was mentioned that retail clients sold net equity funds for the first time in 22 months. In other words, for the first time since the stock market rally started after the corona outbreak.

In turbulent times like now, it is very important to remain calm and not sell the fund units in a panic. It’s normal to be concerned when stock markets go down, but by continuing to save, even in turbulent times, you can expect to get more for sitting with money in the stock market than in a bank account, says VFF director Christian Henriksen in a letter from the association.

Once again urging individuals to stick to long-term savings strategies, it didn’t hold up in February. At the time, retail clients sold net equity funds for NOK 1.5 billion. However, overall purchases increased with managers, as institutional investors bought money with both hands. Professionals increased net by NOK 3.3 billion in equity funds. (Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads 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.