Dividends season weighing on NOK – Danske Bank

The Norwegian Krone could be exposed to some pressures due to the dividends season in the Norwegian stock market, suggested Morten Helt, Senior Analyst at Danske Bank.

Key Quotes

“EUR/NOK traded higher yesterday in a move which can be partly explained by oil moving lower and EUR rates moving higher. However, according to our models, the move higher cannot fully be explained by the usual short-term fundamental drivers”.

“Another possible explanation for the NOK depreciation is the dividends season in Norway as DNB ASA is set to pay out roughly NOK5.5bn today, which alone constitutes 23% of total dividends payouts (by far the biggest single share). Of the DNB holdings, 38% are on foreign ownership, which in a thin market could weigh on the NOK if investors now decide to exchange NOK to FX”.

“In our view, the latest NOK depreciation should clearly remove the worst fears of inflation falling further. Imported inflation has explained roughly two-thirds of the move in core inflation over the past year”.

“As the housing market is also cooling amid not least much tight er regulatory measures, it will leave Norges Bank in a more 'normal' situation, indicating a more equally weighted setting of monetary policy”.