OMX Iceland 15

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Index performance from 15 January 1998 - 6 May 2009 OMXI15.jpg
Index performance from 15 January 1998 – 6 May 2009

The OMX Iceland 15 (formerly the ICEX15) is a defunct stock market index which consisted of a maximum of 15 companies listed on the OMX Iceland Stock Exchange with the highest market capitalization. At the final official review of the index effective in January 2009, 12 companies made up the index, four of which were Faroese. Calculated daily since 1998 and starting at 1,000 points, it was a market value-weighted index and the constituent companies were reviewed twice a year. [1]

Stock market index method of measuring the value of a section of the stock market

A stock index or stock market index is a measurement of a section of the stock market. It is computed from the prices of selected stocks. It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments.

The Iceland Stock Exchange, operating under the name Nasdaq Iceland and also known as ICEX, was established in 1985 as a joint venture of several banks and brokerage firms on the initiative of the central bank. Trading began in 1986 in Icelandic government bonds, and trading in equities began in 1991. Equities trading increased rapidly thereafter. A wide variety of firms are currently listed on the exchange, including firms in retail, fishing, transportation, banks, insurance and numerous other areas. Because of the small size of the Icelandic economy and the low cost of public listing, many of the companies traded on the ICEX are relatively small and are relatively illiquid.

Market capitalization total value of a public companys outstanding shares

Market capitalization is the market value of a publicly traded company's outstanding shares.

Contents

Over the year 2008 and over the entire decade 1998–2008 the OMX Iceland 15 was the worst performing stock index in the world, [2] being heavily affected by the 2008 Icelandic financial crisis which saw a number of index constituents become insolvent, be nationalised or opt to delist from the exchange. The index was discontinued in July 2009 and replaced by the OMX Iceland 6 as the exchange's benchmark stock index, which had run concurrently for the previous six months. [3]

Insolvency is the state of being unable to pay the money owed, by a person or company, on time; those in a state of insolvency are said to be insolvent. There are two forms: cash-flow insolvency and balance-sheet insolvency.

Nationalization is the process of transforming private assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to private assets or assets owned by lower levels of government, such as municipalities, being transferred to the state. The opposites of nationalization are privatization and demutualization. When previously nationalized assets are privatized and subsequently returned to public ownership at a later stage, they are said to have undergone renationalization. Industries that are usually subject to nationalization include transport, communications, energy, banking, and natural resources.

2008 decline

OMX Iceland 15 closing prices during the five trading weeks from September 29, 2008 to October 31, 2008. OMX Iceland 15 SEP-OCT 2008.png
OMX Iceland 15 closing prices during the five trading weeks from September 29, 2008 to October 31, 2008.

OMX Iceland 15 suffered a great loss during the financial crisis in 2008. Trading in the stock market was suspended for three successive trading days, October 9, October 10, and October 13. Trading was resumed on October 14, 2008, and OMX Iceland 15 closed at 678.4, which corresponds to a fall of about 77% compared with its close at 3,004.6 on October 8, 2008. This reflected the fact that the value of the three big banks (Glitnir, Kaupthing Bank and Landsbanki Íslands) which formed 73.2 percent of the value of the OMX Iceland 15, [4] had been set to zero.

Glitnir (bank) bank

Glitnir was an international Icelandic bank. It was created by the state-directed merger of the country's three privately held banks - Alþýðubanki, Verzlunarbanki and Iðnaðarbanki - and one failing publicly held bank - Útvegsbanki - to form Íslandsbanki in 1990. At the time, Íslandsbanki was the only major privately held commercial bank in Iceland. It was publicly listed on the Iceland Stock Exchange, in 1993. Íslandsbanki subsequently merged with FBA Icelandic Investment Bank in 2000.

Kaupthing Bank was a major international Icelandic bank, headquartered in Reykjavík, Iceland. It was taken over by the Icelandic government during the 2008–2011 Icelandic financial crisis and the domestic Icelandic based operations were spun into a new bank New Kaupthing, which was subsequently renamed Arion Banki. All the non-Icelandic assets and debts remained with the now defunct Kaupthing Bank. Prior to its collapse it also allegedly loaned money to various parties with the purpose of buying Kaupthing shares.

Landsbanki company

Landsbanki, also commonly known as Landsbankinn which is now the name of the current rebuilt bank, was one of the largest Icelandic commercial banks that failed as part of the 2008–2011 Icelandic financial crisis when its subsidiary sparked the Icesave dispute. On October 7, 2008, the Icelandic Financial Supervisory Authority took control of Landsbanki and created a new bank for all the domestic operations called Nýi Landsbanki so that the domestic bank could continue to operate, the new bank continued to operate under the Landsbanki name in Iceland.

Final composition

The index consisted of the following companies at the final index reshuffle effective on 2 January 2009. [5] Both Straumur and SPRON were delisted from the exchange before the index's retirement six months later.

Straumur Investment Bank hf. was founded as a regional investment bank headquartered in Reykjavík, Iceland. Although the bank initially survived the financial turmoil in late 2008, The Financial Supervisory Authority of Iceland (FME) assumed control of Straumur on 9 March 2009.

Company GICS Sector Ticker symbol
Alfesca packaged foods and meats A
Atlantic Airways airlines FO-AIR
Atlantic Petroleum oil and gas exploration and production FO-ATLA
Bakkavör packaged foods and meats BAKK
Eik Banki regional banks FO-EIK
Eimskipafélag Íslands marine HFEIM
Føroya Banki regional banks FO-BANK
Icelandair Group airlines ICEAIR
Marel Food Systems industrial machinery MARL
SPRON regional banks SPRON
Straumur-Burðarás investment banking and brokerage STRB
Össur health care equipment OSSR

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References

  1. ↑ "OMX Iceland local indexes". OMX . Retrieved 2008-12-14.
  2. ↑ A closer look at a decade performance, AmsterdamTrader.com, January 9, 2009
  3. ↑ "Samsetning nýju úrvalsvísitölunnar óbreytt". Fréttablaðið (in Icelandic). 11 June 2009. Retrieved 2 November 2010.
  4. ↑ OMX Nordic Exchange (30 June 2008). "Definitive list of constituents in OMXI15 index".
  5. ↑ "OMXI15 Index Information: Definitive list of constituents in OMXI15 index" (Press release). NASDAQ OMX Nordic. 30 December 2008. Retrieved 2 November 2010.
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