Well-documented has been the impact faltering oil prices have had on scores of single-country exchange traded funds that track stocks in major oil-producing nations.
Among the afflicted are the Global X MSCI Norway 30 ETF (NYSEArca: NORW) and the iShares MSCI Norway Capped ETF (BATS: ENOR). Few developed markets ETFs are as intimately correlated to oil prices as are the two Norway funds.
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]
ENOR allocates nearly 30% of its weight to the energy sector, or more than 800 basis points more than its weight to financial services stocks, the ETF’s second-largest sector allocation. NORW, the bigger and older of the two Norway ETFs, has an energy sector weight of 32.3% at the end of the first quarter. That paints the picture of the vulnerability of Norwegian stocks to oil’s struggles.