The real test of the Helsinki Stock Exchange is just beginning – “That’s probably where the next winners will be found”

The strong rise of the Helsinki stock exchange last year does not make the stock market expensive and is not an obstacle to the continuation of the stock market rise.

The Helsinki stock exchange suffered strongly last year, and with that the undervaluation of the stock exchange was corrected. Kauppalehti’s Markkinaraad experts believe that the rise will continue.

“The valuation level is not an obstacle to the continuation of the price increase of the Helsinki Stock Exchange. What is needed now is profit growth”, Actian head of equity portfolio management Antti Raappana says the Market Council.

He points out that the profit development of listed companies as a whole was negative last year. Therefore, the next step in investors’ expectations is that earnings development would also improve.

According to him, the Helsinki Stock Exchange has now recovered after several bad years to a neutral level or slightly above it, when the valuation is compared to other markets or the Helsinki Stock Exchange’s own history.

“If the profit growth is realized as expected, then the valuation coefficients will return to below the long-term average again.”

Also of Proprius Partners portfolio manager Mika Heikkilä looking forward to a positive year on the Helsinki Stock Exchange.

“I expect the growth to continue, but not at that rate.”

One thing that supports stock market development is the return of foreign investors. Stock Exchange Foundation CEO Sari Lounasmeren according to the report, foreign investors have traditionally owned about half of the stock pot of Helsinki stock exchange companies. Now, according to him, the statistics show that during the last year the ownership share of foreign investors has increased again.

“It would seem that big foreign investors have returned to the Helsinki Stock Exchange,” says Lounasmeri.

New distribution line

However, the strong stock market development has focused a lot on large companies, such as in the front nose To Nordea, Wärtsilä and Metsoon. Heikkilä points out that the stock market is now showing a polarization trend. Only a selected group of companies have been able to participate in the rise and many, for example, small companies have rather been forgotten.

“When the money only goes to the same big companies, there are excellent positions left in the gap for those who operate by selecting and picking stocks and not investing only in indexes.”

Also according to Raappana, a trend can be seen where investments are directed to large and high trading volume companies and away from small ones.

“Yes, we ourselves look at the small company field with the view that the next winners will probably be found there,” he says.

The stock market is about to start its accounting season, when companies also announce their dividends. The Markkinaraad trio expects a good, but not excellent dividend spring.

According to Mika Heikkilä, investors are waiting at least as much as dividend proposals for what kind of instructions the companies will give.

“It is particularly interesting in this environment, that is, what the companies say. And when I say this, I already know that I will be disappointed with those instructions. They will be very roundabout.”