30 years and no return from Oslo exchange, warns Nordea man

Robert Næss, CIO at Nordea Investment Management in Bergen, Norway, has said that equity investors in Norway could find it hard to make any money at all from the local stock market over the next three decades.

He said that with inflation expectations of 2% and a nominal interest rate at 2%, it ws difficult to make a real rate of return over zero, and the implied real rate over 30 years was now at 0.57%, according to Dagens Næringsliv, which in turn quotes business daily Finansavisen.

However, all is not lost, Næss added. The recent falls on stock markets made equities attractive, and show that the gap between yield from European equity and yield on 10 year German government bonds has never been greater than right now.

Yield on European equity is expected to be 4.5% this year, but the yield on the bonds is under 2%. The difference is now as great as during the worst part of the financial crisis.

The danger to Norway lies mainly in its overheating economy, Næss said. By way of example, Nordea Investment Management calculated ticket prices in different markets for the “Last Girl on Earth Tour” by US artist Rihanna.

In Bergen, Norway the tickets cost NOK665, and in Oslo NOK600. But the equivalent tickets sell for NOK440 in Switzerland, NOK413 in Denmark, NOK392 in the UK and NOK243 in the US.

“This shows that we are willing to pay high prices in Norway. For Norway it is a danger signal, that we are [the most expensive].”



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