New appeal for the Nordics among investment giants

Large corporates and financial institutions show a growing interest in Nordic equities, according to SEB – the area’s leading stockbroker in this segment. Two other current trends on the bank’s radar are an upswing portfolio protection solutions and IPOs.

According to Johan Nyquist and Kristian Gårder, co-Heads of SEB’s equities operations, the current geopolitical climate has seen Nordic equities treated as Cinderellas, with the markets regarded as small and sensitive to fluctuations. International investment giants – including both hedge funds and more traditional equity funds – are now, however, rediscovering their interest in these equities.  

The shift is largely due to the fact that the valuation of Nordic equities has begun to look very attractive. PE ratios – which measure companies’ equity prices relative to their profits – are historically high on the US markets, whilst those in the Nordics are substantially lower.  

“We’ve seen enormous capital inflows in the past, primarily to the USA, resulting in a very real concentration risk,” says Kristian Gårder.

And concentration risks result in a need for diversification, which is another piece of the puzzle when it comes to explaining why more and more international investors are starting to take a look at the Nordics.

“Over half our customers are outside the Nordics and we often act as brokers when foreign investors want to buy large blocs in Nordic companies. The percentage of small and midcap companies is, after all, higher here than in the rest of Europe and the daily trading volumes are generally lower for the market’s smaller companies. Our networks enable us to close the deals,” says Johan Nyquist.

But it’s not just the bank’s brokerage services that are increasingly in demand: the same can be said of a range of financing solutions.

“We offer a full-service package that gives clients access to trading, securities lending, and financing as part of our Prime Finance offering. Several of the world’s biggest institutions have chosen us as their partner in the Nordics on the basis of our strong creditworthiness and extensive experience of electronic trading,” says Kristian Gårder.

Coming back to the last few years’ almost fevered investments in the US markets, there are a number of signs that the protection requirement is now increasing, with American investors increasingly starting to hedge their portfolios.

“Quite soon, this will probably happen in the markets here, too, with different portfolio protection solutions and derivative structures, such as futures, increasingly in demand. It’s about finding ways of warding off political risks and higher levels of market volatility,” says Johan Nyquist.

Open doors for more IPOs

One general trend with regard to listings is that companies are now waiting longer and longer before market flotation, as shown by Morningstar, amongst others. Several companies are now quite simply relying on private capital, rather than market funding. SEB’s co-Heads nonetheless suspect that there are new IPOs on the horizon.

“There are a number of Nordic companies that have been lying in the portfolios of private equity companies for some time, and which are now ready to make their public entrance. We’re also starting to see more and more indications that investors are interested in these types of listings,” says Kristian Gårder.

Johan Nyquist agrees.    

“The IPO door is ajar, and we will probably see a number of interesting listings in due course depending, of course, on market conditions going forward.”

Anyone interested in the markets’ newbies would, in other words, do well to keep an extra eye on the Nordic trading markets going forward. 

Article published:1 April 2025