Fund performance was positive and the fund rose 6.5% in SEK during Q1 2024. Market sentiment was affected by expectations of a more persistent inflation and the measures central banks will take to address this.
The rate cuts expected in the spring from European and US central banks were pushed forward to the summer, while the number of expected rate cuts has decreased and market rates have risen. Industrials and the economic state have become much stronger in the US than in Europe where the economy appears to have reached the bottom.
Employment remains strong, although uncertainty has increased as a result of the geopolitical risks. The construction sector in Finland remains weak but there are positive signs within the forestry sector – if the political strikes come to an end.
Industrials was the strongest sector, while real estate was the weakest. The fund made new investments in companies such as Alma Media, Bioretec, Detection Technology, Kemira, Terveystalo and Tokmanni, while we divested Fiskars, Musti, Nokian Renkaat, Orion, Outokumpu, Raisio, Scanfil and Tietoevry and three portfolio companies issued profit warnings. Metso, Konecranes and Harvia were the strongest contributors to returns, while Kojamo, Orion and Kempower had the most negative impact.
We expect the upcoming rate cuts from the central banks to support the economy and the equity market. The situation for consumers in Finland is expected to improve during the year as real incomes increase, inflation weakens and interest rates decline. The profit outlooks for companies are also improving and our outlook is positive.