The so-called “Trump effect” is boosting some businesses in Norway, but troubling those involved in international trade who rely on long-term export income. The Oslo Stock Exchange has jumped since US real estate tycoon and showman Donald Trump became president, but his protectionist attitudes are also fueling the most trade uncertainty in years.
Newspaper Dagens Næringsliv (DN) reports that Norwegian defense contractor Kongsberggruppen is among local companies that may “become great again.” Since Trump was elected in November, Kongsberg’s stock value has jumped by more than NOK 2.6 billion. Its share price is up 20 percent, because of expectations that the US and other countries will spend a lot more money on defense in the years to come.
The rise in Kongsberg’s shares is nearly double the growth of the main index at the Oslo Stock Exchange. It’s up 11.6 percent since November, even more than the New York Stock Exchange, which is up 10 percent.
“We’ve had strong growth in our market,” Frank Stølan, who leads Kongsberg’s communications systems division, told DN. Last week the company won a contract worth NOK 52 million for its antenne and radio systems from Comrod, another Norwegian company doing business with the military. The Rogaland-based firm thinks volume will increase.
“The signals are there,” Comrod chief Ole Gunnar Fjelde told DN. “There’s little indication, at any rate, that there will be any reduction.”
‘Generally positive effect’
Trump promised to boost defense spending during his presidential campaign and made it clear he expects US allies in NATO to do the same. “Many countries see that they need to boost the defense budgets they have,” Stølan told DN. “I don’t think they’re going to go down in either America or Europe.”
Anne Gjøen, chief analyst at Handelsbanken, calls it the “Trump effect.” She said Trump “has had a generally positive effect on the stock market, but an extra good effect on the defense industry.” Elisabeth Holvik of Sparebank1-gruppen agrees. Defense is one of several Norwegian industries that can make money on the new US president, she said. Technology firms and shipyards are others.
While Trump has confounded and angered world leaders over his rash of executive orders that included a ban on entry to the US for refugees and citizens of seven mostly Muslim countries, his promises on tax reform, investment in infrastructure and deregulation can all spur growth in the minds of investors. Others think Trump may get undue credit for it, though, since several leading economic indicators were rising long before the election was held. Norway’s economy, battered by the dive in oil prices, was believed to have bottomed out last fall and be back on the rise.
That’s clear in the still-booming real estate market and especially in the strong sales of holiday homes that can cost millions of kroner. Even in hard-hit Rogaland, the traditional heart of Norway’s oil industy, demand for luxurious cabins in the mountains of Sirdal is high. “There’s still a lot of money in the district,” Njål Østerhus, who talks about a “bonanza” in holiday home sales, told DN. “Not everyone was working in the oil business. There are many companies that are doing well and many people who are inheriting large sums of of money.” They’re not hesitating to spend anywhere from NOK 7 million to more than NOK 12 million on a vacation home.
Warning bells
Norsk Industri, however, the national trade association for industrial employers, was ringing some warning bells this week when it issued a report showing that uncertainty among Norwegian export firms was higher than it had been in many years. Trump has jeopardized the future of many multilateral trade deals that lots of countries have spent lots of time negotiating, and his “America First” slogan raises fears of protectionism that will make it much more difficult to do business in the US.
“For a country like Norway that bases itself on so much export, we don’t like protectionism,” Knut Sunde, a director of Norsk Industri, told Norwegian Broadcasting (NRK) on Tuesday. Norwegian farmers are famously protectionistic and fear competition from abroad, but not most of the rest of the country’s business and industrial base.
“International agreements form the foundation for export industry, and when they’re thrown out and we don’t know what the outcome will be, it generates a lot of uncertainty,” Sunde said. “The problem now is both Brexit (which will require a new trade deal Britain) and that Trump is coming with completely new attitudes that are tearing up agreements and creating great uncertainty for the international economy and export opportunities.”
He calls that “bad news for a small, open economy like Norway’s.” Restored diplomatic and trade relations with China will help, however, with seafood sales alone expected to boom.
newsinenglish.no/Nina Berglund
