The Oslo Stock Exchange (OSE) suffered through another terrible day on Monday, as the price of Norway’s biggest export product, oil, also sank to less than half its value just earlier this month. Despite a steady stream of layoff notices, not least at Norwegian Air, even one of Norway’s most critical commentators thinks few countries are better equipped and able to tackle the Corona crisis.
“It’s not patriotism or Norwegian self-importance that’s behind it,” writes Terje Erikstad, commentator and finance editor of Norway’s biggest business daily Dagens Næringsliv (DN). “Its the way we’ve organized our society.” A huge stockpile of oil revenues from the boom years helps as well.
It seemed like there was no end to the bad business news as the week got off to a miserable start. The OSE’s main index was down by more than 10 percent before it “recovered” to close 5.34 percent lower than Friday’s already reduced close. It’s fallen from more than 800 just a week ago to 639.05 Monday evening.
The oil price collapsed, down 11.2 percent at one point Friday evening after even dipping under USD 30 a barrel earlier in the day. Oil price declines always hit the shares of companies in Norway, where the oil- and oil service industry dominate the economy. State oil company Equinor actually recovered from steep declines earlier in the day to close down just 1.26 percent at NOK 102.15 a share, but other major issues like DNB, Telenor and Yara International were all down more than 6 percent.
Little effect from crisis packages
The hammering came despite huge Corona crisis packages introduced by the Norwegian government and sweetened by the Parliament early Monday. The government offered NOK 6.5 billion worth of tax relief and deferment measures on Friday and another NOK 100 billion to shore up liquidity on Sunday. Not even news that the state would also cover most of business’ costs of laying off thousands of employees held back the market massacre on Monday.
“There’s hardly any crisis package that could be enough, when so many have decided they just want to get out of the stock market,” Magny Øvrebø, chief executive at Holbergfondene, told DN. “People want cash, it’s just that simple.”
Norway’s crisis packages are aimed at providing that to laid-off workers, so they can keep paying their bills, and to strapped businesses like Norwegian Air. It went ahead on Monday with layoffs now likely to affect 7,300 employees as it also cancelled 85 percent of its flights. It was commissioned to pick up Norwegians stranded in various popular winter destinations in southern Europe, and domestic routes are expected to keep running, but that’s about it.
“Aviation is facing an extraordinary crisis,” Norwegian Air’s CEO Jacob Schram wrote in a press release Monday. “We in Norwegian must ground most of aircraft and lay off a large portion of our colleagues.” He said it was “extremely positive,” meanwhile, “that Norwegian authorities have said they will do what it takes to secure Norwegian aviation, so that important infrastructure and tens of thousands of jobs are saved.”
Hotels closing and laying off, too
Major Norwegian hotel chains Nordic Choice and Thon laid off nearly 4,000 people on Monday as well. That’s because most all their hotels are empty, conferences and other big events have been cancelled, and reservations have vanished because of Corona fears and containment measures.
“No one is booking rooms and folks are stuck at home,” explained Torgeir Silseth, chief executive of Nordic Choice Hotels. “There are few flights running and our country is all but closed. We’re left with a few business travelers who risk landing in quarantine even if they only travel between Tromsø and Oslo (because Tromsø and the Lofoten area are issuing quarantine orders for everyone returning from south of the Dovre mountains).” The company has had little choice to but to close hotels and lay off their employees.
Many restaurants have also closed, and shopping centers are cutting their opening hours after the government asked most all Norwegians to work from home and just stay home last week. The goal is to hinder the spread of the Corona virus and the self-imposed quarantine and closures is due to last just two weeks, but may be extended.
Oil field development halted
Norway’s biggest offshore oil field development at present, Martin Linge, was also shut down just before the weekend, with all 776 of its workers from various companies being flown off the installations in helicopter shuttle traffic. Norway’s first offshore case of Corona infection was detected at Martin Linge and then the oil price collapse made things worse. “It’s a dramatic situation, a very dramatic situation,” oil service entrepreneur Ståle Kyllingstad, who’s in Corona quarantine himself, told DN on Saturday.
Commentator Erikstad of DN nonetheless had some unusually reassuring reaction to the state of emergency ushered in by the Corona pandemic, even before the government’s crisis packages were enhanced. In crisis situations, Erikstad noted, there’s a high degree of political agreement in Norway that allows relief measures to be put into place quickly. Policies are imposed based on transparent, professional and scientific advice. As King Harald V himself noted in an address to the nation Sunday night, there’s also a high degree of confidence in Norway among people and between them and the authorities.
“There’s reason to rely on the authorities, that they’ve found the best solutions to the Corona crisis even though they’re dramatic and affect us all,” Erikstad wrote.
Solid financial resources
At the same time, hardly any country in the world has such solid financial resources as Norway does. Even though the country’s huge sovereign wealth fund has been hit by the recent stock market chaos, it was still worth a dizzying NOK 9,600 billion on Monday evening.
The central bank also has the ability to lower interest rates, and already did so last week. That gives them needed room to stimulate the economy. Norway also has profitable banks with solid reserves thanks to strict capital requirements meant to make them tolerate an economic decline.
Finally, noted Erikstad, Norway has a good public health service that’s being challenged by Corona but responding as best it can. So are the Norwegian people, with streets quiet in the capital and most staying home to keep the virus from spreading. “Norway will be able to ward this off,” Erikstad wrote. “Unfortunately it’s much more demanding for other countries.”