Oslo salmon shares up $1Bn on algae fears

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While the world’s stock exchanges shudder, Norwegian salmon shares rise sharply on fears of toxic Chilean algae

On Jan. 26th, 2018, SalmonBusiness was able to report the loss of 110,000 salmon caused by a deadly bloom of algae in Chile. After that, a steady stream of messages about increasing losses in the Latin American country’s three salmon-producing regions.

On January 31st, a “worrying increase” in algae was registered in Chile’s core salmon areas in the border zone between Region X and Region XI. Two days later, it was confirmed that 11 percent of Chilean salmon-farmers had incurred increased fish mortality attributed to Alexandrium catanella, also known as Red Tide.

On that same day, fisheries agency Sernapesca reported “massive mortality” in five producing areas. Fish deaths of 790.9 tonnes were blamed firmly on algae.

Overreaction? On Tuesday, the numbers of lost fish rose to a new 600 t. This time it was the country’s southernmost county, Region XII Los Magellanes, that has hard hit.

On Monday, Sparebank 1 Markets analyst Tore Tonseth was compelled to ask investors to “calm down” and to assure them that the market was overreacting to the algae bloom. Tonseth has a standing “sell” recommendation on a number of salmon stocks.

In aquaculture, it’s often been the case that one man’s loss is another’s gain. Exchange-listed Norwegian salmon-farmers have now profited on the algae bloom.

Well-run growers not exposed to Chile have been especially pumped up on an Exchange firmly planted in a correction.

Exposure
Norway-based SalMar has all of its operations in Iceland, Norway and Scotland and has climbed over 13 percent since January 29th. Thursday, SalMar shares rose four percent.

None of Leroy Seafood, Grieg Seafood or Norway Royal Salmon are active in Chile. They’ve climbed by 11 percent, 10 percent and eight percent over the same period. Faroese Bakkafrost is in the same category, notching a 12 percent uptick.

Even Marine Harvest is up. Although the big firm has issued production guidance of 52,500 t of salmon from Chile this year, the bulk of the company’s 410,000 t comes from other countries. It’s exactly this that’s helped send the share up 11 percent, a 10-day jump in value worth nearly USD 1 billion.

Tidal effects
For comparison, Oslo Børs fell a scant three percent during that time. Its only listed Chilean salmon-farmer — Salmones Camanchaca — hasn’t gained an inch since its IPO on February 2nd.

It remains to be seen how extensive the losses from this year’s algae bloom will be. In the spring of 2016, the Chileans lost 25 million fish to an enormous algae bloom.

This time, too, it’s another Red Tide.