Investment More than EUR 40 billion has melted off the Helsinki Stock Exchange this year – One traditional large company may benefit from boycotts against Russia

Early year has been murderously bad on the Helsinki Stock Exchange. At least if you consider it to be an investor looking to increase the value of your shares.

The general index of the stock exchange has packed almost 14 percent during the first half of the year. This means that the market value of the general index is now more than EUR 41 billion lower than at the end of last year. The drop is hard, but it describes the market sentiment more broadly.

For example, the Stockholm general index has packed about 18 percent in the first half of the year, and the world’s most watched S&P 500 index, which tracks the major American companies, is almost 10 percent.

The drop is mainly due to two factors that also affect each other: the tightening of monetary policy and the Russian war in Ukraine, says OP’s chief analyst Antti Saari.

“Globally, inflationary pressures are strong and monetary policy has begun to tighten rapidly. Then again, the closer we get to Russia, the greater and more direct impact the conflict will have on the market, ”says Saari.

In Helsinki By far the biggest dropouts have been companies with strong Russia risk in their business. For example, Nokian Tires’ share price is more than 60 percent. The drop is huge.

Almost three billion euros of the company’s market capitalization has been lost in a few months. That is a big slice for a Finnish company.

“The value of the Russian business is priced at zero in the market. Nothing is expected of it, ”says Saari.

According to Saari, the largest calculators may start to have value on offer, but the shares are mostly only suitable for the big one risk-tolerant investors. The companies that are still attached to Russia are unlikely to make a significant profit from that activity, at least in the near future.

“In the short term, the situation is unpredictable. If you are sometimes advised to pick the ones that have been hacked the most from the stock exchange, then now it cannot be recommended, ”says Saari.

The corresponding dive at the energy company Fortum and the stove manufacturer Harvia is 42 per cent and the beverage group Olvi at almost 38 per cent. The comparison includes companies with a market value of at least EUR 300 million. The price development since the end of last year has been compared with Monday’s closing prices.

Russia risk in addition, there are signs of the aftermath of the pandemic among the falls.

Retail companies that experienced elevated curves during the pandemic have fallen sharply during the first part of the year. For example, Musti Group, Puuilo, Tokmanni and Marimekko have put on about twenty percent of their jackets. Kesko also fell by almost 20 percent.

“Koronahybris is lagging behind. While sitting at home, people actively bought consumer goods. Now they want to go out to eat and travel, which will normalize the consumption of goods, ”says Saari.

Inflation is also normalizing commodity trade, which has heated up during a pandemic.

“A bigger portion of the money goes to the grocery store and the gas pump. That’s when people wondered if other consumption should be reduced. ”

Inflation is also affecting construction companies. Their pricing cycles are long, so even sharply rising costs cannot be quickly passed on to prices.

“When inflation eats up consumers’ purchasing power, there will also be a limit to how expensive housing consumers can buy,” says Saari.

For everyone for companies, however, the early part of the year has not been a mere pain. Some companies have managed to increase their market value drastically during the first half of the year. Basware has raised its valuation the most among companies worth more than EUR 300 million. The company’s share price has risen more than 31 percent since the beginning of the year.

However, the rise in Basware’s share price will be explained by a takeover bid for the company around mid-April.

The basic industry has also fared relatively well in a market ravaged by the invasion war launched by Russia, as the price of SSAB’s Series B share, for example, has risen by 24 per cent since the beginning of the year. The corresponding price increase for Metsäyhtiö Stora Enso’s Series A share is 13 percent and for Metsä Board’s Series B share about 8 percent.

According to OP’s chief analyst, these companies show a clear upward pressure on raw material prices. Companies producing pulp and metal products therefore benefit from inflation.

Finance companies are also typically doing well in a world of rising interest rates. The exception is Nordea, which is in the red. That’s a little surprising, according to Saari. The explanation may be that Nordea is included in large banking indices that have been pulled down by major European banks.

Of course, Nordea is also shaken by speculation about Sampo’s next share sales, Saari says.

Long The sharp fall in the share price of the energy company Neste has stopped at the beginning of the year. The company’s share price has fallen by 1.7 percent since the beginning of the year. The company’s share price has risen sharply since Russia launched its large-scale offensive war in Ukraine.

At the beginning of the pandemic, Neste’s share started to rise sharply, driven by the responsibility and environmental investment boom, which was followed by a decent recoil, Saari says. Now the green transition is on the surface again, especially as countries want to get rid of Russian fossil energy.

“Neste has successfully announced that it will cut off Russia’s ramparts and announced several attractive expansion investments, yes, it fits quite well in the spirit of the time,” says Saari.