NOK: Limited headwinds from dividend payments – Nordea Markets

According to Joachim Bernhardsen, Research Analyst at Nordea Markets, dividend season is about to start in Norway and potentially this can be a source for weaker NOK if foreign holders of NOK assets reallocate dividends into other markets. However, the volumes are small thus the effect should be limited, he further adds.

Key Quotes

“Latter part of April and May is the height of the dividend season in Norway. Looking at the biggest companies at OSEBX indicates more than NOK 40bn in dividend payments over the next two months.”

“However, there are two factors limiting the effect on NOK. First of all, Norwegian ownership is on average high in the big Norwegian companies. Therefore it is likely that a large share of the dividends will remain in NOK.”

“Secondly, Statoil pays it dividend on a quarterly basis and it is paid in USD. With high Norwegian ownership the Statoil dividend payments actually indicates fairly big NOK purchase.”

“All though the dividend payments could give some flow driven weakness in NOK the dividend effect should be limited and short lived. Through March alone foreign banks’s net NOK purchases were around NOK 35bn. All though not insignificant NOK 5,4bn over the next two months seems limited in comparision.”