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Stockholm shares fall as market fears poor reports

Shares in Stockholm fell 3.4 percent by on Tuesday, following a series of heavy falls in the first two weeks of the year.

Published: 15 January 2008 18:32 CET

Cheap-and-trendy clothing giant Hennes & Mauritz was among the losers on Tuesday, as the markets reacted to weak American retail figures, a pessimistic report on the German economy and falling markets in Asia.

At close, the OMXS Index had fallen 3.4 percent to 314.9. The Stockholm market has now fallen 10.5 percent since the start of the year.

According to Ronny Jacobsson, markets chief at Swedbank, the markets are now being driven by the psychology of fear, with the forthcoming company reports season putting investors on edge.

“People are absorbing the fact that lower consumption and lower growth will be reflected in the prognoses due to be released during the reporting period. That’s what people are discounting at the moment,” Jacobsson said.

Shares in H&M fell 4.6 percent to 325 kronor. Engineering company Sandvik, which had risen sharply on Monday, fell 7.5 percent to 89.25 kronor after US competitor Kennametall reported lower-than-expected orders in the fourth quarter. Atlas Copco fell 5.9 percent to 84.25 kronor.

Bank SEB fell 4.5 percent to 149.50 kronor. Competitor Nordea fell 3.8 percent to 96.40 kronor.

Share prices in Stockholm are being dictated entirely by expectations rather than by any concrete news, Jacobsson said. Barely any Swedish listed companies have actually said that things are looking worse or have publicly revised expectations downwards.

“There’s not new information that can be linked to this downturn. The report period will give us the answer,” he said.

NORWEGIAN

Norwegian shares plummet by more than half on dilution fears

Shares in Norwegian Air Shuttle plummeted 63 percent when the Oslo Stock Exchange opened on Tuesday, as investors reacted to plans announced last week to convert a massive 44.5bn kroner ($4.3bn) of debt into new shares.

Published: 14 April 2020 13:15 CEST
Norwegian shares plummet by more than half on dilution fears
Is the sun finally about to set on Norwegian? Photo: David Charles Peacock
The fall was so sharp that the exchange was forced to place the shares under “special observation”, a measure taken only when valuations are extremely uncertain. The shares then rebounded and by Tuesday afternoon were trading at about a 30 percent down on where they ended the week last Thursday. 
 
Mads Johannesen, investment economy at the online share trading company Nordnet, said that the company's rescue plan threatened to severely dilute existing shareholders.  
 
“Existing stockholders today wouldn't be left with much if they decide to fully dilute the bonds and convert them into equity, so it doesn't look promising,” he told The Local. “I guess they're going to survive in some form, but how they're going to look coming out the other side depends on the negotiations.” 
 
 
The international brokerage Sanford C. Bernstein on Tuesday cut its target price for the company's shares to zero. 
 
“Norwegian is at the end of the line,” the brokerage's analyst Daniel Roeska wrote in a note to clients announcing the decision. “Rounded to the nearest Krone, existing shares are all but worthless.”
 
The Norwegian government last month made the overwhelming majority of the 3bn kroner in loan guarantees it offered the airline conditional it successfully swapping some of its near 80bn kroner debt pile for equity. 
 
Norwegian is now negotiating with banks and bondholders to convert more than half of its debt into shares, before putting the plan to existing shareholders at a meeting on May 4.
 
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