Plenty of single-country exchange traded funds are being pinched by oil’s decline, but some developed markets funds are proving far from immune as well. Norway is a prime example.
Over the past 90 days, the United States Brent Oil Fund (NYSEArca: BNO) is off 25%. That decline is having a significant impact on ETFs tracking Norway, one of the largest developed market producers of oil. During that period, the Global X MSCI Norway 30 ETF (NYSEArca: NORW) and the iShares MSCI Norway Capped ETF (BATS: ENOR) have plunged 12.4% and 13.8%, respectively.
Those ETFs; woes and those of Norwegian stocks in general boil down to Norway’s status as one of the world’s largest non-OPEC, developed market oil producers. Only two non-OPEC producers – Russia and Mexico – depend on oil for a higher percentage of government revenue than Norway does, according to Quartz.
Oil production drives about 30% of government receipts in Norway, barely less than in OPEC member Ecuador. That percentage is also far greater than oil’s contributions to government revenue in Canada and the U.S., also two of the largest developed market oil producers. [Oil Plagues Frontier Markets ETFs]
“Falling oil prices already pushed the jobless rate to 4.3 percent in May, the highest in at least 11 years, and that was before a renewed drop in Brent crude,” reports Saleha Mohsin for Bloomberg.