With the current market situation characterised by the rising of international interest rates, heightened market volatility, and ongoing uncertainty in the global economy, many investors are seeking uncorrelated, reliable, income-generating investment options that can provide long-term stability and a hedge against market volatility.
The Nordic stock markets (Denmark, Finland, Iceland, Norway, and Sweden) are relatively uncorrelated to other major global stock markets & could provide a viable alternative investment universe for several reasons:
Industry composition: The Nordic stock markets are composed of a diverse range of industries, such as technology, healthcare, and consumer goods, which are less influenced by the global economy. This means that changes in other global stock markets are less likely to impact the Nordic stock markets.
Geographic focus: Nordic companies tend to be focused on the domestic and regional markets, which makes them less sensitive to global economic trends and less exposed to global market volatility.
Sound economic policies: The Nordic countries have sound economic policies, including fiscal discipline and stable monetary policies, which have helped to maintain stable economic conditions and reduce their vulnerability to external shocks. This has helped to insulate the Nordic stock markets from the volatility of other global stock markets.
Lower exposure to emerging markets: The Nordic economies are relatively mature and less exposed to emerging markets, which makes their stock markets less sensitive to global economic trends and changes in emerging market stock markets.
In addition to being a viable alternative investment universe, the Nordic stock markets have also demonstrated their resilience and stability during the COVID-19 pandemic. The Nordic region’s strong social welfare systems, flexible labour markets, and strong tradition of social trust and cooperation have enabled them to respond more effectively to the pandemic and with less disruption than many other regions, including the United States.
Overall, the Nordic stock markets have developed strong and diversified economies, with sound economic policies and a focus on domestic and regional markets, which have helped to insulate them from the volatility of other major global stock markets. This makes them an attractive investment opportunity for investors looking for diversification and lower exposure to other global stock markets.
Our Investment Committee are experts in compiling high yielding, low volatility Nordic model portfolio's. If you are looking for a means of diversifying your holdings please get in touch to find out how we can help.
