Analysts throughout Europe are cautiously monitoring the effect of the euro on equity markets in those countries that are not part of emu, and Sweden is no exception. After only a few weeks trading, the long-term effects remain to be seen but there may be some tantalising hints. The Swedish equities market is already seeing some polarisation between the interests of international investors and smaller, domestic players. Two equities traded both in Stockholm and in Helsinki demonstrate what may be the start of a trend. Up until the launch of the euro, Nokia, the telecoms company, was traded 50/50 between the Swedish and Finnish markets. However, in the early days of euro trading, much of the volume has moved out of Sweden and into Finland. Conversely, with shares in newly merged Stora Enso, an amalgamation of a Finnish and a Swedish company, the Swedish market has captured around 75% of the volume. This is despite the fact that the new entity has overall Finnish management and is not really perceived as a Swedish company, although it has dual headquarters in the two countries.
One reason for the discrepancy between the two shares may be in the nature of the investors they attract, according to Torgny Krook, senior vice president, institutional clients, at Trevise Unibank in Stockholm: Stora Enso possibly attracts more local investors, while Nokia ap-peals far more to the international market.
Nokia is an interesting situation, although it may not be the start of a trend,” Krook says. “What we may be seeing is that companies that are traded both in the euro and in Stockholm may be predominantly traded elsewhere. The debate over the last six months has been about whether large companies will keep their headquarters in this country.” Some companies, such as Ericsson and Astra, have already decided to move some head office functions out of the country. This debate was also mentioned by Roland Jonsson, an analyst at Deutsche Morgan Grenfell in London. According to Jonsson, the euro is more of an issue politically than financially in Sweden at the moment. “The prime minister has been outspoken about joining as soon as possible. Swedes overall are optimistic about joining, and some unions have even been asking to have their salaries paid in euro. In corporate Sweden, there have been a lot of discussions about the locations of head offices. But as far as equities go, there has not been much of an apparent effect.” So far, Swedish equities have not lost their attraction for international investors. “The Swedish market should have been seen as less interesting, with foreigners buying less, but this has not been the case,” says Jonsson. Overall, around 30% of Swedish equities are held by foreign investors, who account for around 45 to 50% of the daily volume of turn-over. However, since the second half of 1998, there has been a decreased interest in the shares of smaller companies - Jonsson maintained that it is still too early to predict whether this will have a lasting effect on country’s overall corporate structure.
Today, Stockholm is a well-diversified equities market, which includes some interesting names particularly in telecommunications and pharmaceuticals among the largest listed companies. Such companies are closely watching the market these days. As Krook warns: “If we see a trend for large US or European institutional in-vestors to diversify only with-in Euroland, then the Swed-ish companies may seek listings outside the country, in the euro-zone.” In the 1980s there was a trend for Swedish companies to seek multiple listings, but that was an ex-pensive experiment. “It was learned that you only should list where you see action. Will Frankfurt be-come an alternative to London?” Stephanie Schwartz”

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