18 December 2023
The week ahead
- On Tuesday, the Housing and Construction Authority (HMS) releases the housing price index for the capital area.
- On Thursday, Statistics Iceland releases inflation figures for December and we expect inflation to increase from 8.0% to 8.1%, then decrease to 7.3% in January, 6.8% in February and 6.7% in March.
- On Friday, the Central Bank of Iceland (CBI) publishes its quarterly Hagvísar.
Image of the week
In the third quarter, individual disposable income was around ISK 443,000 per month and has risen by 54% since 2016, which must be considered substantial. This increase has not resulted in an equivalently higher standard of living if inflation is factored in. The Consumer Price Index rose by 37% in the same period and, adjusting for inflation, the purchasing power of disposable income has grown by around 12% in the same period.
Highlights of the previous week
- 150 foreign visitors travelled through Keflavík International Airport in November. This year to date, 2,087 thousand tourists have visited Iceland and the total this year is likely to reach 2.2 million, just shy of the record 2.3 million visitors to the country in 2018.
- Household payment card turnover contracted by 2.0% between years at fixed prices in November. Domestic household card turnover contracted by 2.7% in real terms in November but increased internationally by 0.7%, measured at a fixed exchange rate. Ecommerce, which falls under international payment card turnover, has increased in November of recent years as a result of special offer days in online shopping. Household payment card turnover has now contracted eight months in a row.
- Household disposable income grew by around 8% between years in the third quarter. Having regard for inflation and population growth, the purchasing power of individual disposable income contracted by 2.7% between years.
- The US Federal Reserve, the European Central Bank and the Bank of England maintained unchanged policy rates last week. The Chair of the Federal Reserve, Jerome Powell, hinted that there would be no further interest rate hikes and that a rate-cutting cycle would commence next year, causing a positive response on stock markets. Inflation in the US measured 3.1% in November with underlying inflation increasing slightly. US monetary policy now aims to pressure inflation down without increasing unemployment levels too much.
- Marel announced to Nasdaq Iceland that the company had received an updated non-binding MoU from the John Bean Technologies Corporation for a potential offer for all shares in the company. The previous MoU from the same party was rejected.
- Activity on the bond market was lively last week, with auctions held by Landsbankinn, Reykjavík Energy, Municipal Credit Iceland, Íslandsbanki and Government Debt Management. Íslandsbanki repurchased shares in the series ISB CBI 24 maturing in March 2024, Arion Bank announced that Moody’s had issued an Aa2 credit rating for its EUR-denominated covered bonds and Municipality Credit Iceland published an issuing schedule for 2024.
Statistics and market data
Disclaimer
This review and/or summary is marketing material intended for information purposes and not for business purposes. This marketing material does not contain investment advice or independent investment analysis. The legal provisions that apply to financial advice and financial analysis do not apply to this content, including the ban on transactions prior to publication.Information about the prices of domestic shares, bonds and/or indices is source from Nasdaq Iceland - the Stock Exchange. Landsbankinn’s website contains further information under each individual equity, bond class or index. Information about the prices of non-domestic financial instruments, indices and/or funds are sourced from parties Landsbankinn considers reliable. Past returns are not an indication of future returns.Information about the past returns of Landsbréf funds is based on information from Landsbréf. Detailed information about the historic performance of individual funds is available on Landsbankinn’s website, including on returns for the past 5 years. Information about the past performance of funds show nominal returns, unless otherwise stated. If results are based on foreign currencies, returns may increase or decrease as a result of currency fluctuations. Past returns are not necessarily an indication of future returns.Securities transactions involve risk and readers are encouraged to familiarise themselves with the Risk Description for Trading in Financial Instruments and Landsbankinn’s Conflict of Interest Policy, available on Landsbankinn’s website. Landsbankinn is licensed to operate as a commercial bank in accordance with Act No. 161/2002, on Financial Undertakings, and is subject to supervision by the Financial Supervisory Authority of the Central Bank of Iceland (https://www.cb.is/financial-supervision/)You may also be interested in
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