The foreign investors frightened by Russia are now selling their Finnish shares. It is reflected in the steeper downturn of the Helsinki Stock Exchange.
Foreign Investors have started to clear Finnish stocks from their portfolios with a hard hand. Sales, which continued throughout the first part of the year, have only accelerated in recent days as the crisis in Ukraine escalated into a full-scale war.
This has been reflected in a tougher fall in prices on the Helsinki Stock Exchange than many other stock exchanges.
At the same time, Finnish private investors in particular have been refueling the fallen shares in their portfolios at an accelerating pace.
However, the sales of foreign investors are so sharp that they cover the purchase of Finns, and the downturn on the Helsinki Stock Exchange has continued.
The share of foreign investors in the Helsinki Stock Exchange is quite large; at the turn of the year, 42 per cent of the shares were owned by foreign investors.
“Foreign investors are now easing their risks in a marginal market like Finland’s,” says Nordnet’s equity strategy Jukka Oksaharju sales wave.
The statistics of the stockbroker Nordnet show that its customers alone bought shares this week between Monday and Thursday, ie in four days, for a net amount of EUR 72 million. That is almost double what was in February, when the net number of shares bought by Nordnet’s customers was EUR 40 million.
Oksaharju estimates that foreign investors have been on the Helsinki Stock Exchange throughout the first half of the year. Prior to the escalation of the crisis in Ukraine, investors were nervous about central bank interest rate hikes and sold shares in times of general uncertainty.
This can be seen in the fact that the Helsinki Stock Exchange’s OMXH general index has fallen by about 20 per cent since the turn of the year, while on Wall Street the S&P 500, which tracks the price movements of large companies.
“Russia’s attack on Ukraine has only been able to boost the sales of foreign investors on the Helsinki Stock Exchange,” says Oksaharju.
This is especially evident in the share prices of Finnish companies dependent on Russia. One of the worst performers is the Nokian Tires share, which has halved since the turn of the year
At the same time as foreign investors have sold it with both hands, Finnish private investors have bought it for their portfolios.
In February, Nokian Tires’ share was the second most net-bought share on the Helsinki Stock Exchange in terms of trades made through online intermediaries used by private investors. This means transactions made by customers of Nordnet, Danske Bank, Norde and Pohjola.
In addition, Oksaharju believes that international investors want to reduce the Finnish risk of their equity portfolios in general.
“At some point, it is possible that there will be selling pressure on the shares that is no longer based on company analysis. Then investors will want to lighten their stock weight in this market at all. Maybe that’s what we’ve seen in recent days, ”says Oksaharju.
Also Nordea’s main strategy Antti Saari estimates that the wave of sales by foreign investors will easily hit all the shares of the Helsinki Stock Exchange, and not just companies doing business in Russia.
For example, when funds investing in the index reduce their position in Finland, all Finnish shares will easily go on sale.
Of course, the sharper fall in the price of the Helsinki Stock Exchange than in other markets also means that the Russian market is of greater importance to the business of Finnish companies than in many other countries. The share of trade between Finland and Russia in GDP is also considerably higher than in the rest of the euro area, not to mention the United States.
Overall, the European market has received more severe shocks in recent days than Wall Street, where the situation is already calming down. Investors are concerned about the impact of rising energy prices on European economic growth.
“At some point, however, sales may go awry, as is usually the case on the stock exchange, but it’s hard to predict when that will happen,” Saari says.
According to him, the companies’ earnings forecasts do not yet say anything about the changed situation. No common view has yet emerged in the market.
According to Saari, there is already a lot of concern and risk in the share prices. At least if you compare the steepness of the downturn in prices to how big the company has in Russia.
“Much of the risks are already starting to be in the prices. However, it is still difficult to assess at what stage the bottom will come, ”says Saari.
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