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Iceland Stock Exchange
Icelandic Investment Abroad
Thordur Fridjonsson, President and CEO of ICEX
Sixth Consular Conference - 8 May 2006
Topics
• The Economy
– Performance and prospects
– Structural improvements
– Strong fundamentals
• Iceland Stock Exchange
–
–
–
–
–
–
–
–
–
ICEX – NOREX Alliance
Size of the Icelandic securities market
Equity market capitalisation in relation to GDP
Exceptional growth - Remarkable price performance
Valuation on the equity market
Acquisitions abroad - International companies
Revenues generated abroad (ICEX 15)
New capital raised in the market
Reasons behind the success
Economic Growth
– average annual GDP growth1996-2005
4,4%
4,5%
3,3%
4,0%
3,5%
3,0%
2,5%
2,0%
2,0%
1,5%
1,0%
0,5%
0,0%
Iceland
USA
Euro area
Source: OECD
The Phases of Economic
and Financial Development
Wave of
acquisitions
Final
Inflation
abroad
phase of
From
targetingprivatisation
Incorporation budget
Independant of state
of state
deficit to Central Bank owned banks
The final
owned
banks
surplus
phase of
Setting EEA
and
Containing the
established liberalising
capital flows privatisation
inflation
Fundamentals
1990
1995
2005
Iceland is doing well in
International Comparisons
Standard of living
Competitiveness
Creativity
Low corruption
Economic freedom
Quotes:
Ranking
2
4
7
1
5
United Nations Human Development Index, Human Development Report 2005
The IMD World Competitiveness Yearbook 2005, IMD Switzerland 2005
The Flight of the Creative Class: The Global Creativity Index, Professor Richard Florida 2005
Transparency International: The International Corruption Perception Index 2005
The Heritage Foundation / Wall Street Journal: Index of Economic Freedom
20
05
20
03
20
04
20
02
20
00
20
01
19
99
19
98
30
25
20
80
15
60
10
40
5
20
0
0
Per cent of GDP
Yearly real increase %
19
96
19
97
19
95
19
94
19
92
19
93
19
91
19
89
19
90
19
88
19
87
19
85
19
86
19
84
Pension Fund Assets 1984-2005
Per-cent of GDP
140
120
100
Population over 65
per cent of working population
US
Japan
Europe
Iceland
1950
12
8
12
8
1975
16
12
21
10
2005
18
30
25
13
2025
30
50
37
21
2050
33
70
50
27
External Position
Per cent of GDP
400
350
300
250
200
150
100
50
0
2001
2002
2003
2004
2005*
-50
-100
Source: Central Bank of Iceland
Total Assets
Total Liabilities
International Investment Position
* Preliminary figures
Examples of Foreign Debt
in a Few Countries
Per cent of GDP
1400%
1200%
1000%
800%
600%
400%
200%
Ze
al
an
d
Ne
w
ar
k
De
nm
bo
ur
g
Lu
xe
m
nd
Ic
el
a
UK
Sw
it z
er
la
nd
Ire
la
nd
0%
Source: Jón Steinsson
Mbl. 24.3.2006
NOREX Alliance
Helsinki
ICEX / VMF
Tallinn
Stockholm
Vilnius
Riga
Copenhagen
Size of the
Icelandic Securities Market
30
24,3
EUR billions
25
20
15
13,3
14,5
GDP
Bonds
10
5
0
Stocks
Source: Central Bank of Iceland and ICEX
Stocks: Market capitalisation - December 2005
Bonds: Market capitalisation - December 2005
GDP: Nominal 2005
Equity Market Capitalisation
Per cent of GDP 2005
200%
186%
180%
160%
139%
140%
136%
125%
121%
120%
100%
80%
72%
69%
Denmark
Norw ay
60%
40%
20%
0%
Iceland
UK
USA
Finland
Sw eden
Exceptional Growth on ICEX
Turnover EUR Billion
Market cap EUR Billion
40,0
35,0
35,0
30,0
25,0
9,7
16,1
30,0
24,1
25,0
20,0
7,4
14,7
20,0
15,0
4,3
10,0
5,0
20,0
0,7
2,9
3,1
12/00
12/01
17,7
13,7
10,9
2,5
9,4
15,0
6,7
10,0
5,4
5,4
10,7
5,0
0,0
12/02
12/03
Fixed incom e
Equity
12/04
12/05
5,4
6,7
8,0
12/00
12/01
12/02
13,4
14,7
12/04
12/05
0,0
Fixed Income
12/03
Equity
30.03.06
30.12.05
30.09.05
30.06.05
30.03.05
30.12.04
30.09.04
30.06.04
30.03.04
30.12.03
30.09.03
30.06.03
30.03.03
30.12.02
30.09.02
S&P 500 INDEX
30.06.02
4.000
30.03.02
ICEX-15
30.12.01
4.500
30.09.01
30.06.01
2.500
30.03.01
3.000
30.12.00
3.500
30.09.00
30.06.00
30.03.00
30.12.99
Top Performer
NASDAQ COMPOSITE
FTSE 100
OMXC20
DAX
2.000
1.500
1.000
500
0
Valuation on the Icelandic
Equity Market
70
S&P 500
60
FTSE
50
ICEX-15
40
30
20
10
•
20
06
e
03
.0
5.
20
06
20
05
20
04
20
03
20
02
20
01
20
00
0
19
99
P/E ratios
Source: Landsbanki
Islands, Bloomberg
Number of Listed Companies
& Average Market Value
75
67
70
60
1.200
71
64
51
48
50
800
34
40
32
30
20
1.000
24
600
26
27
26
17
11
400
200
10
0
0
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006*
– Delistings mostly due to M&A activities
– Companies more liquid and larger than 2-3 years ago
* 27.02.2006
EUR Millions
75
80
Acquisitions Abroad by Listed
Companies on ICEX
14
13,3
EUR billions
12
10
8
6,4
6
4
2,8
3,5
2004
2005
2
0
GDP 2005
2004+2005
Source: Central Bank of Iceland and ICEX
Value of Acquisitions by Countries
40%
35%
33%
30%
25%
22%
21%
20%
15%
8%
10%
7%
6%
1%
1%
Germany
Faroe
Islands
5%
0%
Sweden
France
Norway
USA
Denmark
UK
Source: ICEX
St
ra
um
nk
i
M
un
ni
r
ur
ða
rá
s
Da
gs
br
ún
G
lit
Ís
la
nd
s
Kö
g
-b
an
ki
At
or
ka
P
ar
el
G
RO
U
KB
ur
-B
sb
a
ag
a
Ac
ta
vi
s
Fl
r
A
on
s
ör
Ö
ss
u
Fa
sh
i
Ba
kk
av
FL
os
ai
c
La
nd
M
Revenues Generated Abroad
(ICEX-15)
Per cent of total revenue
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Listed Companies
Division of Employees Between Iceland and Abroad
90%
81%
80%
70%
60%
50%
40%
30%
20%
19%
10%
0%
Iceland
Abroad
Source: ICEX
New Capital
Per cent of Market Value
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
a
av
i sl
at
Br
e
X
rs
M
Bö
O
he
sc
ut
De
s
xt
ge
ne
an
ro
ch
Eu
Ex
is h
an
Sp
on
nd
Lo
e
ng
ns
ha
xc
he
At
kE
oc
St
sh
Iri
rs
Bø
sl o
na
O
l ia
Ita
a
rs
Bo
na
lj a
ub
Lj
us
pr
se
Cy
ör
rB
ne
ie
W
ue
ag
g
Pr
ur
bo
m
xe
Lu
EX
IC
2005
2004
International Investment - 1
Actavis Group:
Balkanpharma, Pharmamed, FAKO, Zdravlje, Amide, Alpharma’s human
generic business, Higia AD, Sindan
Alfesca:
Labeyrie Group, Lyons Seafoods
Atorka Group:
Promens, Ilanta, NWF Group Plc. (16%), Romag (11%), Interbulk (23%),
AMIAD Filtration System (10,9%)
Avion Group:
Excel Airways Group, Travel City Holdings Plc., Kosmar Holidays, Star
Airlines, Star Europe, Xtra Airways, Aviation Services, Avia Services,
Technical & Logistics Services, Shipping & Logistics, Innovate,
Farmaleiðir, Faroe Ship, Heri Thomsen, Daalimpex, CTG, Halship, Euro
Container Line, Harbor Grace, Dissaco GSS Airfreight NV, Traxx
Intercontinental BV, Kirkenes Agency AS
Bakkavor Group: Wine & Dine, Katsouris, Geest, Hitchen Foods, Creative Foods, New
Primebake, Laurens Patisseries
Dagsbrun:
P/F Kall, 354 Media Scandinavia A/S, Wyndeham, Press Group Plc.
Flaga Group:
Sleep Tech, Medcorp.
International Investment - 2
FL GROUP:
Sterling, Aktiv Kapital, Finnair, Royal Unibrew, Bang & Olufsen, Refresco
Holding B.V.
Glitnir Bank:
Kredittbanken, BN Bank, Norse Securities, Union Group (51%)
Icelandic Group: Seachill Ltd, Barogel S.A., Pickenpack–Hussman & Hahn Seafood, Saltur
A/S, Dalian Three Star Ltd.
Kaupthing Bank: FIH, JP Nordiska, Aragon, Sofi, Norvestia, Singer & Friedlander
Kogun:
Hands ASA Norway, Specialists in Custom Software Inc.
Landsbanki Islands: Heritable Bank, Theather & Greenwood Holdings, Kepler Equities,
Merrion Capital Group Ltd.
Marel:
Carnitech, TVM, CP Food Machinery, Geba, AEW Thurne, Delford
Sortaweight
Straumur Burdaras Investment Bank: Old Mutual Plc., Finnair Oyj., Cherryforetegen AB,
Pricer AB, Polimoon
TM:
NEMI Forsikring, Invik & Co AB
Ossur:
Royce Medical Holdings, Innovation Sports Inc., Innovation Medical
Products Holdings
ICEX-15 – End of April 2006
Market Cap
EUR m.
% of
MV
Kaupthing Bank
6,761
26.1%
Glitnir banki hf.
3,246
12.5%
Landsbanki Íslands hf.
3,246
12.5%
Actavis Group hf.
2,717
10.5%
Straumur-Burðarás Fjárfestingabanki hf.
2,344
9.0%
FL GROUP hf.
1,595
6.1%
Bakkavör Group hf.
1,063
4.1%
Mosaic Fashions hf.
699
2.7%
Össur hf.
564
2.2%
Dagsbrún hf.
383
1.5%
Alfesca hf.
307
1.2%
Atorka Group hf.
271
1.0%
Marel hf.
234
0.9%
Kögun hf.
192
0.7%
36
0.1%
ICEX-15 total
23,658
91.2%
Total MV of listed comp.
25,954
Flaga Group hf.
Reasons Behind the Success
• Economic reforms during the last 10-15
years
― Liberalisation
― Privatisation
― Entrepreneurship and flexibility
• ICEX has played an important role
― Providing capital for expansion and restructuring
The Message
•
•
•
•
The economy is fundamentally sound
The market is well functioning
From local to global
Adjustments in wake of exceptional
growth
Iceland Stock Exchange
Laugavegur 182
IS-105 Reykjavik
Iceland
www.icex.is