The Nordic markets have been resilient compared to those of the rest of Europe over the last few years, and in Sweden, the junior market, Nasdaq’s First North Growth Market, is becoming the continent’s hottest. Ian Johnston writes for the Financial Times:
Sweden’s junior market became Europe’s hottest market to raise funds for growth companies in the first half of the year as retail investors took advantage of favourable tax policies to snap up the index’s tech and healthcare stocks.
Companies on Nasdaq’s First North Growth Market, based in Stockholm, have raised £1.6bn to date this year, compared with £1.5bn on London’s Aim, the traditional market leader, according to Dealogic data*.
Retail investors’ participation in global equity markets has slowed this year as the war in Ukraine, a global economic slowdown and rising energy and food costs dampen investors’ appetite for taking punts on the small and often lossmaking companies.
But they have kept faith in First North companies, including Embracer, Europe’s largest gaming group and the most actively traded name on the index, and a series of tech and healthcare companies.
The total raised is a considerable swing from last year, when companies raised more than £9.5bn on Aim, almost double the £5.4bn raised on First North. While retail investors have stepped back from Aim, they accounted for half of all flow into small-cap listed companies in Sweden in July, Nasdaq figures show.
“The Nordic market seems to have weathered the tribulations of the past few years better than the rest of Europe,” said Thomas Thygesen, head of strategy at Swedish investment bank SEB. “The investor base is more confident and has more capital available for risk.”
Tax policies encourage Swedes to invest in stocks, including investment products that do not require investors to pay capital gains taxes on transactions. This has meant that the proportion of the market made up by retail investors tends to be higher than on rival markets, although Aim also offers tax breaks on capital gains.
Retail traders represented between 31 and 52 per cent of trading in the 10 days after Volvo Cars’ listing on the main exchange in 2021, according to data from Nasdaq.
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