Non-resident investors have sold Icelandic securities in the past year, triggering a wave of outflows. According to the CBI’s recently published Financial Stability report, net new investment was negative by ISK 57bn in 2020 and by ISK 58bn in Q1/2021. The report notes that large transactions by foreign investors are responsible for the bulk of this:
- A large bond fund that owned about half of the foreign-owned stock of outstanding Treasury bonds at the beginning of 2020 sold its entire holding during the year. Most of the divestment took place in the autumn, and actually, the CBI ultimately contacted the seller and negotiated an agreement under which the seller would contribute foreign currency in the trade in order to ease pressure in the FX market.
- Foreign fund management companies closed out their positions in Arion Bank in Q1/2021. For instance, hedge fund Taconic Capital, which was the largest single shareholder in the bank at the beginning of the year, sold its entire holding, according to the Financial Stability report.