A veritable cash cow
December was another strong month for the Stockholm stock market. A gain of around 2 percent made this year the best in a decade.
Hand on heart, there were few of us who expected this a year ago, but it is worth pointing out that although the Stockholm exchange rose more than 30 percent in 2019, the rise across 14-15 months is more like 10 percent. A lot of the upturn can be attributed to a feared recession not materialising, so the downturn of 2018 was clawed back.
Unusually, December’s gains were led by the banks, a sector that has been very weak, not just in 2019 but actually in recent years. The simple explanation is that the market traded up those stocks that performed worst across the previous year, which often happens at the end of a year as people start speculating on the winners for the coming 12 months. Another explanation is that the Riksbank finally left the negative interest mire behind by hiking rates to zero, which means banks can start to raise mortgage rates and improve their margins.
One of Sverigefond’s winners last year was our old favourite Skanska. During December and into January it sold large office properties in the US (Houston) and Sweden. Orders are rolling in apace and the construction backlog seems to be at record levels. There will always be troubled projects here and there, impairments will hit the share price and the market will get annoyed and punish the stock, but over time this is a veritable cash cow, as proven by profits in 2019.
There is still an asset side of SEK 70 billion, which bodes well for the future. Now we are just waiting for green office property Solna United, which incorporates solar energy, to be sold. Rumours suggest it could achieve almost SEK 100,000 per square metre, indicating a value of SEK 3 billion.
Electrolux restructured its US operations and took a cost for this in December. The share price naturally fell significantly more than that, which led us to increase our holding. We are now looking forward to the demerger, which will give it every opportunity to be this year’s winner.
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Carnegie Sverigefond investerar i svenska börsnoterade aktier och innehåller landets bästa och mest stabila bolag. Vi investerar långsiktigt i värdebolag – bolag med hållbara verksamheter, starka balansräkningar och goda utdelningsmöjligheter. Carnegie Sverigefond...More info