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Barron's: Trade-war fears? These lower-risk stocks are weathering the market storms

Looking for a port in a hurricane?

If you’re feeling just a little battered via trade-war fears or other political problems, consider Norwegian stocks, which were maintaining up higher than other equities, thanks partially to the country’s low stage of political menace.

Worrying headlines are “riding some demand towards nations like Norway,” says James Calhoun, a portfolio supervisor at Accuvest Global Advisors. His store is wagering at the stable, oil-rich, and independent-minded Scandinavian nation by way of the Global X MSCI Norway exchange-traded fund NORW, -0.07% “There is an advantage to being in low-risk nations,” Calhoun tells Barron’s. “Our style is choosing up on that—this upper demand for a more protected currency and a lower political-risk environment.” Accuvest puts nation bets in keeping with a style with four categories: menace, momentum, valuation, and basics.

Global X’s Norway ETF, along with the rival iShares MSCI Norway Capped ENOR, +0.25% which tracks the same MSCI index, are among this year’s 5 top-performing overseas equity ETFs, according to analysis company’s data on U.S.-listed, country-specific, nonleveraged funds. Each Norwegian fund is up about eight% as 2018’s first part involves an end, whilst the Oslo OBX benchmark has received about 9%.

Norway’s stocks don’t seem like a scouse borrow, but Calhoun notes that they appear more or less reasonable in relation to value to forward-year estimated profits. They trade round 13.eight times consensus forecasts, whilst the mean is 13.6 a number of the 35 countries that Accuvest ranks each month. And Calhoun issues out that the Norwegian krone rates as the second-cheapest currency via Accuvest’s metrics. That mainly manner a discount for anyone purchasing with bucks. Norway doesn’t use the euro, and it isn’t a part of the European Union, even supposing it's in the European Economic Area—kind of an “EU Light.”

The greatest part for the Global X and iShares funds, which each has 61 holdings, is oil large Equinor EQNR, +0.46% in the past named Statoil, with a 19% weighting. Then come financial institution DnB at 11%, telecom Telenor ASA at 9%, and seafood outfit Marine Harvest at 5%.

Brent crude, the worldwide benchmark, in short traded above $80 a barrel in fresh weeks, a level remaining noticed in 2014, and it’s up greater than 60% during the last 12 months. North Sea oil has been an enormous boon to Norway, making the country’s sovereign-wealth fund the arena’s greatest with $1 trillion in belongings.

Norway’s basics, that means both economic expansion and company profits, have appeared a little bit soft lately via some Accuvest metrics, but Calhoun sees growth ahead. “Another one quarter or two quarters of high oil prices, and the underlying basics—the profits expansion, the sales-per-share expansion, the go back on equity for Norway—will have to begin to come up,” he says.

Broadly speaking, Norway’s economic expansion seems to be solid, albeit no longer stunning like the country’s fiords. Economists surveyed via Focal pointEconomics see gross domestic product increasing via 2% both this year and subsequent.

“The economic picture continues to look constructive, as accommodative monetary prerequisites, a tighter hard work marketplace, upper hydrocarbon prices, and expansionary fiscal insurance policies assist shore up expansion,” said Focal pointEconomics analysts in a contemporary word. Norway’s central financial institution kept its key coverage price at a document low of 0.5% in June, but signaled it most probably will rise in September.

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Victor Reklaitis is a London-based markets creator for MarketWatch. Follow him on Twitter @VicRek.

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