The shares of such companies are now overweight – “A lot of potential”, says senior strategist Kaisa Kivipelto

Disappointments in the recovery of industry can be seen in the development of the European stock market, which has remained rather sluggish since the spring, estimates Danish Bank senior strategy Kaisa Kivipelto.

“We have a bit of an old-fashioned corporate structure in the stock exchanges. There isn’t even a first techno giant”, he also analysed Actian chief economist Lasse Corin.

In its investment outlook in September, Danske Bank estimated that European shares have the possibility of a positive surprise. According to Kivipello, this is based on the fact that the valuation levels are affordable.

“We are also overweight in global industrial companies. As long as the industrial sector starts to recover with interest rate cuts, there is room for growth,” says Kivipelto.

“For example, we have global social service companies overweight within the sectors and we see that the drop in interest rates supports them. They are also historically good dividend payers, so they are perhaps an alternative to fixed-income investments if interest rates fall even more,” says Kivipelto.

In addition, according to Kivipello, the social service sector is supported by certain structural drivers, such as the energy demand increased by artificial intelligence.

“There is a lot of potential,” Kivipelto continues.

Income from fixed income investments as well

Compared to the time of negative or low interest rates, even interest rate investments are now an interesting part of investment portfolio diversification, sees Nordic chief analyst Jan von Gerich.

“Longer interest rates have already dropped quite a bit, but short interest rates yield interest income,” says von Gerich.

Corin states that there are still quite good returns available on the corporate loan side.

“Even when inflation is so slow, it’s definitely a sector that’s also worth monitoring,” says Corin.

Kivipelto, on the other hand, says that Danske’s loans from developing markets have been overweight for some time.