Equities look set to bring a positive return for the fourth year running on the Swedish market.

Currently hovering at around the 12% mark, analysts are hopeful that performance will be maintained, though are divided as to the extent.

Bjorn Olsen, chief investment officer of Skandia, is cautiously optimistic on the market but expects be-tween 15% and 20% total return by the year end.

Peter Lawrence, head of Scandinavian research at Kleinwort Benson is “reasonably positive” about a good performance by the end of 1996, but is currently keeping Sweden as a neutral market “in a European context”.

“Generally, we are reasonably positive towards Sweden.” he says, adding that it will “obviously depend on what happens with the US and with interest rates in areas such as central Europe.”

Per Henrik Gresberg, portfolio manager at D&B Markets in Oslo, takes a slightly different stand, pointing out that a 10% return by year end, is something to be proud of.

“If they are at 10% this year, then you’ve had a very good performance in the Swedish market. They are already up 12-15% and this is the fourth year you’ve had a positive return on the Swedish market, which is quite unusual.”

The move towards a common European equity market, according to Olsen, will be one of the single most significant factors affecting the market. And with a continued focus on shareholder value and an rise in investment in bank accounts, he believes there is “further potential of re-rating for some companies in Sweden.”

Bond yields are expected to rise towards the end of the year, yielding a possible 6% with money market funds perhaps on 4%.

The government is forecasting 5-year bond rates, this year at 5.7% against 7.2% last year, rising to 5.8% in 1998, which Lawrence warns might be “a bit optimistic”.

However, he sides with the estimates of a year-on-year inflation increase of 0.5% for this year and 1.5% for 1998.

Looking to who will gain from the expected recoveries in the domestic and European economies, Olsen recommends the machinery and engineering sectors, and sees attractive longer term holdings in growth companies such as pharmaceutical group, Ostren and telecom equipment producer, Ericsson.

Lawrence disagrees on the engineering sector, taking a cautious viewpoint, but sees the potential in the medical sector, while Gresberg predicts a “good return on capital goods exporters and exporters in general”.”

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