The crisis in the real estate sector is weighing on the Scandinavian markets, which had impressively overperformed over the past decade. Since the beginning of the year, the stock markets in Finland, Sweden, Norway and Denmark have risen by ‘only’ 4% on average, compared with 8% (MSCI Europe broad index) for the rest of the EU. These economies represent one of the richest parts of the world, whose inhabitants enjoy one of the highest standards of living due to relatively low wage differentials, a very high employment rate, very high taxation but combined with accessible education and social security: however, something is cracking at the level of social peace with an increasing number of crime cases. Add to that concerns about what is happening in Ukraine, so much so that Sweden and Finland have asked to join NATO. In addition, the Northern European property market, which has seen huge increases in recent years, is now experiencing a sharp slowdown: the skyrocketing cost of mortgages has caused house prices to change direction and they have fallen by 13% since November 2022 compared with their February peak. This is an unprecedented fall in Sweden: house prices were seen as ‘something that could only go up’. ‘Nordea Bank’ estimates that house prices will fall by 20% from their peak. Among the stocks listed on Scandinavian stock exchanges, ‘Novo Nordisk‘ remains the most highly capitalised, accounting for almost 20% of the ‘MSCI Nordic index’ and more than 50% of the ‘Danish stock exchange’. It is a multinational company specialising in the treatment of diabetes, haemophilia, growth disorders and hormone replacement therapy, and produces 49% of the world’s insulin. Novo Nordisk is one of the Nordic companies most closely watched by analysts around the world: in recent years it has decided to focus heavily on anti-obesity drugs (like the US company Eli Lilly), which are expected to be a $50 billion market by the end of the decade. But there are many interesting Nordic companies operating in all sectors, from energy (Equinor) to private equity (Investor), from paper (Svenska cellulose) to aluminium (Norsk hydro), from healthcare (Getinge) to automotive (Volvo). Even in a difficult year like 2022, the Nordic equity markets have shown resilience. A look back over the past three years also shows triple-digit returns such as Norsk hydro (+185%) or Novo Nordisk (+118%), or very attractive returns such as Equinor (+88%) or Investor (+65%).
