Much like Britney Spears, the Iceland Stock Exchange went from topping the charts to having a meltdown in 2008 to basically falling off the face of the planet. While Britney’s current whereabouts don’t concern us too much, it occurred to us to check up on the stock exchange to see if it hadn’t ‘come out from under’ the rubble.
Spooling back to the big ‘showdown’ that buried the stock exchange takes us to Tuesday, October 14, 2008. The exchange opened that morning after having been closed for five days due to the unusually volatile market conditions at the time. Recall that Iceland’s three largest private banks had just been taken over by the State. Only this temporary closure was akin to putting a band-aid on a wound in need of many, many stitches to hold it together, and the exchange subsequently plummeted a whopping 76 percent.
Kristín Jóhannsdóttir, a spokesperson for the Iceland Stock Exchange, explained that the 76 percent drop was due to Iceland’s three largest banks being de-listed. However, it only sunk deeper after that. The OMX15 index “peaked on July 18, 2007 at 9016,” Kristín explained. “And its lowest point was obviously after the collapse just before we ceased calculating it on April 1, 2009 at 212,05.”
It’s definitely ‘outrageous.’ But, it’s not surprising given that—as Michael Lewis pointed out in his Vanity Fair article ‘Wall Street on the Tundra’—“From 2003 to 2007, while the U.S. stock market was doubling, the Icelandic stock market multiplied by nine times. Reykjavík real estate prices tripled. By 2006 the average Icelandic family was three times as wealthy as it had been in 2003, and virtually all of this new wealth was one way or another tied to the new investment banking industry.”
WHERE ARE YOU NOW?
Two and a half years later, it looks like the stock exchange is still very much under the rubble, which explains why it hasn’t been in the news much since the big crash. There are currently eleven companies listed on the market, compared to 75 in its heyday. At that time, it traded at 120 percent of Iceland’s GDP. Today, it’s a mere twenty.
Due to the large exodus of companies, the exchange was re-indexed in January 2009 and is now called the OMX16 rather than the OMX15. This makes it complicated to compare the index before and after January 2009. But, one thing is for sure. There has been little growth in the last two years. The new index started at 1000 and peaked just this February at 1009,7.
The exchange did, however, make an appearance in the news last month, with Fréttablaðið doing a kind of ‘meet-and-greet’ with new stock exchange president, entitled “The President Who Didn’t Want To Be A Professor.” We learned that the new president, Páll Harðarson, has an identical twin brother who also works at the exchange. They have done nearly everything together, from attending all of the same schools to spending most of their life living and working together.
But personal details aside, it turns out that Páll thinks this year is going to be ‘hot as ice,’ anticipating a number of companies listing in the market. He says two are in the process of listing and a number of others have expressed interest. Kristín offered that they could see as many as ten, bringing the total to around twenty companies on the market.
Incidentally, Britney is releasing a new album this year called, ‘Femme Fatale,’ which will be the first since that 2008 ‘Circus’ of hers. I suppose we’ll have to check back on the charts later this year.