Stockholm Stock Exchange has faced some headwinds recently, but there are reasons to be optimistic for 2025, according to Karl Hedberg, the Chief Equity Officer at Carnegie Private Banking, as stated in a market commentary.
The current focus in the reporting period is on small-cap companies. While most have managed to meet expectations, Hedberg believes there have been significant differences between various sectors. Consumer companies and e-commerce have struggled, as households tighten their purse strings.
“Even though consumers are optimistic about interest rate cuts and tax reductions for the upcoming year, they are hesitant to fully act on that hope,” says Karl Hedberg.
Hedberg believes that with a new interest rate environment, it may be time to gradually reduce defensive exposure and allow more cyclical companies to enter the portfolio. One sector that Hedberg sees great potential in is the construction sector. According to the Chief Equity Officer, construction companies will benefit from an improved construction market in 2025, and many of them have performed worse than real estate companies.
“Several construction companies hold large property holdings to be divested, and these values are not reflected in stock prices,” says Hedberg.
The cyclical banking sector may also be worth considering.
“Banks also become interesting in a scenario where expectations of interest rate cuts have bottomed out, and we are approaching dividend season.”
Hedberg predicts a short-term market rebound, especially after the strong performance on the US stock market following the presidential election. This could also impact the Stockholm Stock Exchange, but he sees a continued positive trend in the long run.
“At the same time, we are now in the seasonally strongest period of the stock market year and have the support of interest rate cuts and expectations of good earnings growth next year.”
In conclusion, while challenges may exist in the current market environment, there are opportunities for growth and success for investors who are willing to navigate the complexities of the financial landscape with strategic foresight and expert guidance.