The last time we talked about Finnish equities
was back on August 5th, 2011 after the benchmark OMX Helsinki 25 Index dropped over 20% in the previous 30 days. Finland's stock market continues to struggle and remains solidly in the red going back to 2007. Today brought more bad news as the OMX Helsinki 25 Index dropped 3.9%, making it the worst performing equity index globally.
It wasn't a good day for equities in general around the planet with 294 out of the 320 equity indexes we track either in the red or flat. The sell off was driven by pessimistic statements from the European and U.S. central banks related to growth prospects and continued stimulus. Yes that sounds contradictory but it's the game that the central bankers play in order to keep a lid on oil prices. Unambiguous talk of QE 3 or ESFS 2 cannot take place with WTI Crude still in the triple digits.
Going back to Finland, their economy continues to struggle under the dual yokes of the global economic crisis and the diminishing fortunes of Nokia. As we mentioned in the Aug 5th post, for a single company, Nokia represents a massive portion of the Finnish economy. Its been true for a while now that if you're in the mobile space and you're not Apple, Google or a pure hardware play like Samsung, you're most likely getting your head handed to you.
The IMF is calling for muted GDP growth over the next four years and equities have not been able to climb out of the red since the 2008 crash (although they came close at the end of 2010).
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