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Red-hot US markets spill over

US stock markets were hotter than ever in August, and some of these gains spilled over to Europe, including to Stockholm. Two steps forward and one step back remains the theme, leaving the OMX index of the biggest companies at around 1,800. Although this is below February’s 1,900, it is 40 percent (!) above the panicked 1,300 level in March during the Covid-19 shutdowns.

So, what has happened in these six months? The level of fear in society was initially just as high, if not higher, than after the 2011 terrorist attacks. Governments shut down large parts of the world, forcing a recession, and many unfortunately died. And in addition, there was initially mass unemployment similar to the 1930s.

Now that large parts of the world have opened back up, central banks have poured in money, interest rates have been lowered close to zero, we are approaching a vaccine (although it will probably take six months or more), we have learned a little more about the disease, government debt is now reviving economies and we are looking to 2021-2022.

Of course, there are setbacks in Europe at the moment and this autumn there may be some weak data as the recovery loses momentum, but this year’s GDP drop is still likely to be offset by a sharp upswing next year.

The stock exchange has experienced technical gains not seen since the end of the 1990s, and trading in the US is almost crazy among smaller savers, causing shares to fly on splits (!) and vague news. The gains are also narrow, with a small number of companies as winners.

Here at home, value stocks are finally starting to come to life and we are seeing how several cyclical stocks are starting to rise again, Electrolux and Volvo to name two. However, some cheap shares are totally out in the cold: NCC, Securitas, Skanska, TeliaSonera and Tele2 are several that have hardly moved no matter what they deliver. Sooner or later, cheap companies are awarded their right valuation.

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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...

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