– We have long said that one of the most exciting things happening right now is how much the recent increase in interest rates will affect people’s consumption, says portfolio manager Christian Tonal at Alfred Berg.
In the third quarter, Norges Bank raised its key interest rate twice by a total of 0.5 percentage points, making Norwegians’ private finances tighter. Tonal believes this could have negative consequences for consumer companies.
“Businesses that make a living from consumption, whether it’s selling roof boxes, sports equipment or furniture, need to pay special attention because people have less money in their wallets,” says Tonal.
In contrast to consumption, the banking sector has made good money from the frequent rise in interest rates at Norges Bank. In the second quarter, main bank DNB was able to show revenues of more than NOK 20 billion, compared to NOK 16.4 billion in the same period of the previous year.
The banking sector is the only sector that actually benefited from the rise in interest rates. However, when investors have been somewhat hesitant towards banks, it is because they fear credit losses – where people will not be able to repay their loans, Tonal says.
He believes the relationship between a bank’s credit losses and income will be interesting to watch in this year’s third earnings season. Already on Thursday, heavyweight DNB will present figures for the third quarter.
– He obviously earns a lot
While rising interest rates make it more difficult for consumer companies, oil and energy companies continue to perform well in an uncertain market.
The war in Ukraine and, among other things, voluntary production cuts by Saudi Arabia and Russia have kept oil and energy prices high over the past year. On Wednesday and Friday of this week, the leading oil and energy heavy index on Oslo Börs reached new highs in the wake of the conflict between Hamas and Israel.
Considering the price of oil has risen to around $90 per barrel, Odin’s Norwegian director Atle Hauge believes that oil and energy-related companies will do well in the third quarter.
– One thing is the oil and gas companies, which are obviously making a lot of money, but other companies also have positive positions regarding the energy situation and will do well in the third quarter as well. Then I think about companies in oil and shipping services, but also some other industry sectors, he says.
In comparison, Hogg believes that companies in a cyclical industry — that is, an industry that is closely tied to how the economy is performing — will have a more difficult time in the future.
As examples, he mentions Norsk Hydro, Elkem, and Norsk Skog, which all fell on the stock exchange this week. Elcom Industrial Company shares declined the most, at 8.7 percent.
– Passionate about the IT sector
Many companies are accustomed to putting their own estimates of future developments in their quarterly reports. If the Company believes that there is a greater deviation from the estimate in the actual result, it may issue a result notice in which it adjusts the forecast.
– Significant deviations are notified. It has now been 14 days since the season ended. This means that there are no significant deviations from what companies actually expected in the third quarter. Lars-Erik Moen, director of Danske Bank, says there is a lot of uncertainty surrounding what companies will do with next quarter’s estimates.
Therefore, Moen raises his gaze to next year’s quarterly figures. Here he is particularly passionate about IT companies such as Nordic Semiconductor, Atea and Crayon.
All three companies are associated with major product launches from Microsoft or Apple. The launches will take place next year, but Moen is still keen to see if the companies will say anything about whether the launches will increase sales for IT companies. (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. No copying or other use of all or part of the Content may be permitted except with written permission or as permitted by law. For more terms see here.
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