It’s no secret that Scandinavian Countries lay claim to some of the best economies in the world. In addition, these countries have flourishing industries and strong currencies. While Sweden, Finland, Denmark and Norway are all considered to fall under the Scandinavian class of nations, today I want to focus on just one of them and give some tips on why and how you should invest in this Scandinavian gem. That country is Norway.
Norway is a country that is rich with natural resources, especially oil. In addition, it is home to some of the world’s top shipping and ship building companies. For this reason, the economy of Norway and the fluctuations in world trade, measured through the Baltic Dry Index, are key indicators that are watched by not only Norwegian investors but investors around the world. Norway also prides itself on maintaining a strong national currency, the Norwegian Krone, and a strong surplus of funds. Norway is not a heavily indebted country and has $1 trillion in savings to support itself during periods of economic slowdown. Not only that, but it ranks second in GDP per capita according to a recent study by the IMF. Recently, Norway has suffered because of the downturn in oil prices. This temporary problem gives us an opportunity to invest in one of the strongest economies in the world at bargain prices. Here are just a few ways to invest in Norway.
The Norwegian Stock Market
For many international investors, the easiest way to invest in the Norwegian Stock Market is to buy shares of exchange traded funds. There are two ETF’s that currently offer diverse investment across Norway’s best companies. They are the Global X MSCI Norway ETF (NORW) and the iShares MSCI Norway Capped ETF (ENOR). You can also invest in its best oil company Statoil (STL, STO or STOHF) which pays out nice dividends to its investors and is very profitable from drilling and producing oil in the North Sea region. As stated previously, the Norwegian Stock Market and some of its companies are currently suffering due to the global economic slowdown and because of the decline in oil prices. However, Norway is a country with a lot of savings to weather storms like these. Its companies also have the same mindset and do not carry a lot of debt. Therefore, they should also be able to make it through this period with little problem. This presents a tremendous opportunity for savvy investors to get in while the opportunity is still there.
The Norwegian Krone
Another great way to invest in Norway is to invest in its currency. The Norwegian Krone is one of the strongest currencies in the world because of Norway’s strong GDP output and also its low debt load and high savings war chest. There is little chance that Norway will default on any of its debts and likewise there is little reason for Norway to manipulate its currency. There are many Norwegian currency pairs that can be traded via the Forex market like the USD/NOK pair. The Forex market is very complicated to explain and outside of the scope of this article but the main takeaway here is that you want to get out of your local currency and into the Norwegian Krone. In the example above (USD/NOK) this is a trade between the US Dollar and the Norwegian Krone. However, in this case you are buying US Dollars with Norwegian Krone which is exactly the opposite of the goal we are addressing in this article. So to achieve the desired result, you can sell this pair to achieve the same end goal, which is buying Krone with Dollars.
Another way is to actually go to a currency exchange, the booths that you can find in big cities or airports, and literally buy the physical currency. Then you can stash the cash for a period of time and return to exchange it back and hopefully pocket a profit.
There is still a third way to accomplish this which is to work with a company named EverBank to open a currency CD or bank account. With EverBank, you can mix and match currencies, invest in the Viking Basket (which is composed of multiple Scandinavian currencies) or just invest in the Norwegian Krone directly.
Norway is an exciting country with a strong and growing economy, low debt, high savings and strong industries. Now is a great time to invest in this great country while oil prices are low and global trade and economic activity is on the decline. There is no doubt that Norway and Norwegian companies will make it through this period of global economic contraction just like they have every other time and savvy investors that are willing to get on board now will begin to see steady returns as a reward for their patience.