May 24, 2022

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Swedish stocks anger Norwegians - Swedish director thinks one sector in Norway is standing out

Swedish stocks anger Norwegians – Swedish director thinks one sector in Norway is standing out

Online stock trading has made fast and cheap global stock markets accessible to investors and small savers. However, Norwegians mostly stick to the neighborhood, particularly Swedish stocks at the top of the list, according to brokerages.

One of its beneficiaries is Matthias Montgomery (31), who since 2019 has managed Carnegie Småbolagsfond, an equity fund that invests in small and medium-sized businesses in the Nordic region – with a primary focus on Sweden. So far this year, the fund is up 29 percent.

One of the criteria is that companies should be relatively small, as Montgomery believes that these companies have historically had better price development than large companies. Reason? They have more growth opportunities, are acquired more often and generally have higher earnings growth.

Another important criterion is that the business model should be easy to understand. To date, up to 45.7 percent of the fund has been invested in the industrial sector.

Montgomery believes that there are many differences between the Swedish and Norwegian stock markets, and cites real estate as an example.

The real estate sector in Sweden is very large and dynamic, with many more opportunities than Norway, including many new listings. You can learn about everything that is possible in social services, logistics, industry and housing. But it’s also an expensive sector and its multiples are high, so I largely avoid real estate for my fund, he says.

He also noted that there is a lot more technology and industry in Sweden, while there is more fish and energy in Norway. But on the technology side, he thinks a lot of exciting things are happening inside SaaS (Software as a Service) in Norway.

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– If you are Swede and have a look at the SaaS sector, you should look at Norway as well. Smartcraft, for example, targets artisans, and a focus on one of the least digitized industries has proven well suited to the company’s organic growth in recent years. Carnegie Funder believes this growth will continue, based in part on our private conversations with existing and potential Smartcraft customers, he says.

His fund also invests in Sikri Holding, which was formed after the merger between Evry and Tieto, and helps publicly funded companies digitize, for example, applications for building permits. Montgomery notes that Sicre has a target for organic growth of more than 15 percent annually, has a strong major owner in Janes Rogseth and insiders with significant holdings. Overall, he believes the stock is “too cheap for such a forward-looking company.”

Where environmental and technology startups have dominated the listing wave in the past two years at Euronext Growth in Oslo, activity in Sweden has been a little different.

– There are many new rolls also in Sweden, but they are of high quality and not particularly cheap. The main trend is the so-called “combined sequential takeover”, that is, companies that grow through the acquisition of other companies and exploit arbitrage in the valuation of these companies. I’m not a big fan of that, and I prefer those who have more organic growth or who do mergers and acquisitions to make the group stronger through revenue or cost synergies. For example, the Humble variety, which is a variant of the Swedish Orkla, but is developing faster and more globally, he says.

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Nearly eight percent of trading in Swedish stocks

Pareto Securities has seen strong and growing interest in the Swedish stock market.

Press contact Ola Alsberg at Pareto Securities says the brokerage is seeing strong interest in Swedish stocks.

Press contact Ola Alsberg at Pareto Securities says the brokerage is seeing strong interest in Swedish stocks. (Photo: Pareto Securities)

Press contact Ola Alsberg at the brokerage house says its Norwegian private clients traded shares in Sweden for around NOK 9 billion last year, while this year there is a chance to double from that level.

In recent months, about 7-8 percent of the shares of Norwegian private clients have been traded on the Stockholm Stock Exchange. As a Nordic broker, we think it gratifying that interest in stocks across national borders is growing, and that Norwegians are opening their eyes to the opportunities in the Swedish stock market, he says.

Alsberg notes that the Swedish stock market displays sectors and trends that are not significantly represented on the Oslo Stock Exchange, such as major technology, real estate, industry and investment companies, as well as a number of exciting companies in the health field. and the gaming and goods industry.

– See that what distinguishes the first list. But our client base is generally active in the market and is in and out of positions frequently, so the top lists should be taken with a pinch of salt, he adds.

He thinks there are three factors that make Sweden attractive

NordNet investment economist Mads Johansen also sees strong and growing interest in Swedish individual stocks and funds among the online broker’s Norwegian clients.

Investment economist Mads Johansen at Nordent tests that Norwegians often turn to smaller Swedish companies.

Investment economist Mads Johansen at Nordent tests that Norwegians often turn to smaller Swedish companies. (Photo: Gorm K. Gaare)

Norwegians largely own the smallest and most exciting Swedish stocks, while the Swedes themselves largely own the large, trusted companies such as Investor, Hennes & Mauritz, Volvo, Ericsson and Handelsbanken. This can also be seen in Norway, where Swedes own more Neil than Equinor, he says.

Johansen believes that there are three main reasons for the attraction of Norwegian investors to Sweden:

Technology sector. Sweden has long proven to be far ahead in technological development, for example Spotify, Ericsson, Klarna.

Good spread. Where the Oslo Stock Exchange is highly dependent on oil prices, Sweden is more diversified across sectors. Historically, the Stockholm Stock Exchange has had a better return on shares than the Oslo Stock Exchange.

Liquidity. It is much higher in Swedish stocks than in Norwegian stocks, which makes it possible to trade without being affected too much by price fluctuations. I know a lot of people appreciate this.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.