The Copenhagen-based DKr 11 bn Finanssektorens pension fund, is reducing its domestic holdings and investing more in foreign stocks, but this is part of a long term process of international diversification rather than because of problems with the domestic market.

We made a plan for a strategic long term allocation four years ago and will keep to it," says Anne Broeng the fund's chief financial officer.

The fund, which manages the pensions savings of some financial sector employees (concentrated on the savings banks), is relatively confident about the Danish market but Broeng will not make predictions for next year.

"We are quite confident, but we won't say that the market will be up say ten or twenty per cent. Everyone does that during December for the next year. One thing you can be sure about is that what you say will not happen.

"We are very much dependent on what is going on outside Denmark for the interest rate level and for the stock market level.

"If you have rumours coming from the US or the Far East, you will see the impact in the market immediately but you will not see a trend specific to Denmark," she adds.

The future of the bond market is strongly tied in with the euro. "The interest rate level will stay at roughly the same level but there will some volatility coming up in the springtime when you have the fixing of currencies into the euro system," she adds.

She also thinks that the creation of the euro will bring an increase in the European interest rate, because of Germany being locked in with other countries that have higher interest rates than those in Denmark. "If you compare Danish bonds against German bonds and then eurobonds you could see the spread narrow."

She notes that company earnings are quite good and as such are helping to drive the market. But with such a small market, stock picking is required.

"In certain sectors we have quite good companies, in others we don't," she adds.

In terms of risks, she says that next year will bring an election but that it will not be the big issue in terms of its impact on the market. Much will depend, however, on the conditions that non-single currency EU countries such as Denmark may have to accept.

" Much depends on what agreement Denmark can reach about movement against this new European currency."

However the risk of serious market volatility will still come from elsewhere.

"Up to this point there will be some volatility in Danish markets, but more depends on the news from Asia and from Japan." John Lappin"

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