text: Norways stock exchange has touched record levels propelled by higher oil prices and foreign buying interest. But analysts say the bullish trend probably will not last. Tight restrictions on foreign ownership of shares have held back development on the market they say. While some of these rules could soon be eased Norways unresolved economic woes mean the prices boom is likely to be short-lived. Last Thursday the all-share index reached 325.48 points to beat the previous record of 325.31 set in mid-November 1985. Brokers say the new record spurred by firmer oil prices above 18 dlrs a barrel which are crucial to Norways economy has for now set the Oslo bourse apart from the current fluctuations on other world stock markets. Its an underdeveloped market...Virgin territory Jenny Tora a Scandinavian securities analyst with London-based stockbrokers James Capel told Reuters. But the attraction for foreign investors of the stock market where price/earnings ratios average around a relatively low 11 is tempered by restrictions and some nervousness about the future of Norways economy analysts say. Foreign ownerhsip is limited in all sectors and varies between 10 and 40 pct of the shares of any company - and the class of shares rarely carry voting rights. Its often hard to get stocks as the quotas are full Tora said. There can be problems of liquidity in the market. You can get into the market but perhaps not get out. Analysts said this meant that foreign interest had been restricted mostly to professional trading rather than client buying and that the market missed some speculative impetus. There are also no stock options and bonds cannot be held by foreigners in Norwegian securities trading. Thor Bang chief economist at Den Norske Creditbank A/S Norways biggest bank said he thought the stocks boom had little foundation in Norways economic situation. One of the factors (in the rise) is a belief in...Political stability he told Oslos business daily Dagens Naeringsliv. The minority Labour government has looked increasingly stable since it came to power in May 1986 with the former right-centrist coalition in disarray. But stock market analysts say continued economic problems could soon jeopardise the bourses bull trend in spite of the appreciation of the crown against the dollar. Although firming oil prices mean better news for Norway Western Europes biggest oil producer after Britain analysts point to high interest rates uncertainty over the future price of oil and a weighty current account balance of payments deficit as threats to the bourse. Interest rates stand at around 14 pct while annual inflation is 10 pct. The current account balance of payments deficit stood at 32.8 billion crowns last year against a surplus of 26.8 billion crowns in 1985. Id be very cautious about present stock levels Chris Honnor of London-based brokers Grieveson Grant said. The record-breaking performance last Thursday meant that the all-share index had increased by 16 pct from the start of 1987. On Friday the index leapt another 7.78 points to 333.26. But analysts noted this was largely due to much better than expected profits in the first quarter from Norsk Hydro Norways largest diversified corporation. Foreign investors spurred by the appreciating crown and the rise in oil prices have been more prominent in the market this year although they still trade selectively mainly in Norsk Hydro Norsk Data and a few other top-traded industrials. Earlier this month the government proposed allowing the share of foreign ownerhsip permitted in financial institutions to rise in a bid to boost competition. Depending on the circumstances the share foreign owners can have will rise from 10 pct to between 15 and 25 pct. Saga Petroleum Norways largest fully private oil company has also said it will seek government permission to boost permitted foreign share ownerhsip to 40 pct from the present 20 pct. Saga shares have registered some of the strongest gains on the bourse because of the move adding more than 60 pct to their value so far this year. REUTER
target: NORWAY BOURSE PRICE BOOM WILL NOT LAST - ANALYSTS