Advantages
- Export driven Swedish economy together with global economy recovered strongly after the recent crisis. Even though there are still many risks in Europe regarding debt problems, it is regarded that we are in the middle of global growth cycle that started in 2009. World economy should grow by around 3% this and next year, according to Swedbank analysts. These forecasts are based on very accommodative monetary policy in developed world (very low interest rates, other measures like loans from ECB to European banks in the beginning of this year), softening monetary policy in emerging markets (lowered reserve requirement for banks in China), falling unemployment in US and so on.
- As Sweden is exporting country, its companies’ results depend not only on what tendencies are in Sweden, but also abroad. These companies work around the world and receive part of their revenues from abroad, including emerging markets. Thus higher growth, increasing wages and consumption in emerging countries are also beneficial for these companies as their results are improving from foreign activities. Also, Swedish companies are known for their high competitiveness level.
- Companies in the basket are chosen by Swedbank Equity trading analysts based on companies’ data analysis. All companies are viewed as having good potential to grow.
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Risks
- Economic growth in this growth cycle is very uneven, "good" periods when economy is improving, is quickly changed by "bad" periods when analysts are again downgrading forecasts. Last couple of months that we again saw good news could potentialy again be quickly changed by some more negative scenarios.
- Increasing fuel prices threaten to stifle growth in private consumption, with consumers becoming more pricesensitive and limiting their spending, which may affect economies growth and the financial results of companies.
- Relatively strong Swedish crone (SEK) exchange rate is not benefitial to Swedish companies as it makes their export goods less attractive (more expensive) on world market.
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