As the crypto market shakes after the fall of FTX, we take a look at the investment alternatives available to diversify your savings. The Norwegian economy, its national currency and one of its energy companies caught our attention. Discover 3 investment opportunities that have gone under the radar of traditional financial media to develop your capital.
Why take an interest in the Norwegian economy?
Inhabited by only 5 million inhabitants in 2021, Norway is a sovereign and independent Scandinavian country. this nation knows strong economic expansion since the end of World War II. This can be explained by the discovery significant oil and gas resources. At the time of writing these lines, the Norway is the 3rd largest natural gas exporter in the world and the 11th largest oil producer.
Moreover, the Kingdom of Norway is considered by the Funds international currency like the 4th richest country in the world in 2021. The Norwegians can count on a healthy economy valued at 445 billion dollars, either a GDP per capita of $82,000.
Finally, if we take into account GDP per capita, life expectancy and level of education, the country rises to the 2nd place in the ranking of countries with the best human development index in the world (behind Switzerland).
Although Norway has never wished to join the European Union, it is part of the European Economic Area and participates in the Council of Europe, the OECD and NATO.
The policy pursued by its leaders, organized like the United Kingdom with a constitutional monarchy has proven its effectiveness in recent years. During the Covid-19 pandemic that hit Europe in 2020, Norway experienced one of the weakest recessions in Europe (-0.8%), before returning to significant growth from 2021 (+4.2% over one year).
Norway, a financial and ecological leader
We can also underline the surprising progress of the country on the financial and ecological level.
Since the 1990s, a part of the revenue from hydrocarbons is transferred towards a funds sovereign investment scheme led by the country’s central bank and subject to the authority of parliament. In 2021this investment structure held 1.5% of the world’s financial assets and was considered as the 1st sovereign wealth fund in the world.
At the same time, Norway is also recognized as one of the most advanced countries in terms of ecological transition and decarbonization of its economy. In 2021, 92% of the country’s electricity came from hydroelectric dams and 90% of its car fleet is now electric or hybrid.
3 investment options to gain exposure to the Norwegian economy
Taking into account the elements mentioned above, we have selected three investment solutions to allow you to expose yourself to the economy of Kingdom from Norway. It is important to remember that despite the many advantages that the Norway, these investment solutions involve risks that we detail in the last part of this article.
Diversification: investing in a AND F geographical
The first investment solution available is to invest in a AND F (Where tracking in French) which copies the performance of the best companies in the country. For remindera AND F is a funds exchange-traded index that passively replicates the performance of a basket of financial assets.
This solution offers two notable advantages. First of allyou are exposing yourself to a set of values in a single transaction. So your capital is exposed to the average growth of these companies, which makes it possible to optimize risk management.
Furthermore, brokerage fees associated with the purchase of a AND F are weak and the entrance ticket is accessible from a few tens of euros.
👉 Norwegian ETFs available to invest in 2022
Participate in the growth ofEquinor SAA: the Total-Eenergys Norwegian 2.0
The second option we have selected concerned I‘company Equinor SAA in the old days called StatoiI. Equinor ASA is the 1st local company specializing in the exploitation of hydrocarbons. While the state retains a majority stake in the company, it is listed on the Oslo and New York Stock Exchanges.
In a geopolitical context under tension in Europe, Norway is considered as a strategic energy ally for the European Union and a serious alternative to Russian hydrocarbons.
Even if the demand for fossil fuels could potentially slow down to meet long-term climate challenges, our globalized economy is still highly dependent on these mineral resources.
Equinor HASHER therefore benefits from the rise of oil and gas in the markets and this translates into record financial results in 2022. Finally, despite a significant carbon footprint, the management ofEquinor ifengaged to decarbonize 100% his activities and exports by 2050. And for good reason, Equinor ASA is already positioned as an industry leader on this theme with nearly 50% less carbon emissions than all of its competitors.
👉 Equinor Bourse share: All you need to know
Forex : invest part of your savings in Norwegian krone
Our last investment solution directly concerns the national currency of the country: the Norwegian krone (NOK).
There are several reasons to believe that the latter perhaps an interesting financial stock to watch over the coming months.
Indeed, as explained above, the Norway is today recognized as a strong nation on the international political scene (founding member and elected to the Security Council of United Nations), a key player in the energy sectorand one pioneer of the ecological transition.
Although the Norwegian krone remains a secondary currency in the Forex As these lines are written, the country’s ability to withstand periods of economic crisis gives it a certain attractiveness.
Moreover, in a context of energy crisis in Europe, Norway could agree to meet part of the demand for hydrocarbons from countries such as Germany or Poland. If such OK had just been signed, the payment of this aid would theoretically increase the buying pressure on the NOK/EUR pair.
👉 Shouldhe buy Norwegian kroner?
The precautions to to know before investing in Norway’s economy
Like any investment in traditional financial markets or in cryptocurrencies, the latter involve risks that are important to highlight.
Despite his many strengths, the Norwegian economy remains positively correlated to the European economic situation (the country’s leading trading partner) and the health of the energy market.
the Russian-Ukrainian conflict, widespread inflation and Europe’s loss of influence It front of emerging countries are all factors to be taken into consideration before investing their savings in one of the 3 solutions mentioned above.
In addition, the hydrocarbons market is also under pressure. The establishment of a possible cap on gas and oil prices, could negatively impact the country’s economystill mostly dependent on these the last to replenish its coffers.
Ultimately, if a ETF associated with the economy of Norwayan action Equinor ASA or even the Norwegian krone appear to be promising financial stocks for retail investors, it is important to measure the risks of the latter before investing.
If you are new to the stock market, the application of an investment strategy programmed over several weeks rest, in our opinion, the most suitable solution for optimizing your entry points while preserving your capital in the event of a decline.
Sources: Govt Economy, Investissons.fr
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