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AstraZeneca’s ‘ABBA Effect’ Makes Sweden The Winning Bag In 2021

The OMX 30 is 26% against the 21% that the S&P rises and 18% of the EuroStoxx50

Forty years after their separation, ABBA became a trending topic on Thursday afternoon after revolutionizing social networks by announcing their return with new songs under their arms and a hologram tour .

Such is the influence that the quartet has and continues to have today in the music scene that it is not surprising that their song The winner takes it all (the winner takes it all) gave a name in marketing to the ABBA effect , or whatever. It is the same: the tendency to always buy the winning brands and leaders in their sector.

This is the case, extrapolated to the stock market, of AstraZeneca , the pharmaceutical giant that was born in 1999 as a result of the merger of the Swedish Astra AB and the British Zeneca Group and that more than two decades later is the largest listed on the Swedish stock market with a capitalization of about 154,000 million euros.

The company, associated with the University of Oxford, created one of the most administered adenovirus sera worldwide against Covid-19 in 2020 and is one of the winners of the race for the vaccine on the stock market . It scores 21% in 2021 and is the preferred value of the selective for the market consensus that FactSet collects with a clear purchase advice since the beginning of 2020.

A rise that has not gone unnoticed in the behavior of the OMX 30 in Stockholm, where it is listed in addition to London. The Swedish indicator is revalued in the year by 26%, compared to the 21% that the S&P 500 rises , the 18% that the EuroStoxx 50 adds and that brings the colors to the Ibex 35 with a ridiculous 10%. If this closes the year, 2021 will be the best for Swedish equities since 2009, when it bounced around 44%.

Evli: “The Swedish stock market has been on the sidelines of some political events in the EU, Brexit has had no impact on the country, and neither has the pandemic”

“On the one hand, this reflects the gains of Astrazeneca ?? the highest value of the OMX 30 index ??, which outperformed the MSCI Europe Pharma Index by 10 percentage points thanks to the successful launch of the Covid vaccine”, argues Luca Colussa , portfolio manager at Generali Investments Partners.

“On the other,” he adds, “the strong economic recovery supported Swedish cyclical stocks and, in particular, industrials and financials, the latter also benefiting from strong capital ratios and sustained outperformance.”

Outside of AstraZeneca, games firm Evolution Gaming , Nordea Bank and industrial services provider Atlas Copco are the most bullish of the big stocks, with gains of between 40% and 76%.

“The Swedish stock market has performed well, since it has been on the sidelines of some political events in the EU, Brexit has not had an impact on the country, nor has the pandemic. The expectations of profits of Swedish companies by analysts have risen throughout the year and along with this the valuations have grown “, says Janne Kujala, portfolio manager at Evli Fund Management, who furthermore downplays the impact of AstraZeneca on the OMX 30.

Monetary policy and currency
On the other hand, the expert from the Nordic firm also does not believe that monetary policy has played a determining role. “A monetary policy independent of the Fed or the ECB can, of course, pose an unexpected problem, at times. The Swedish krona broke its weak trend in early 2020 [it has risen 10% against the euro since then] and has strengthened since then, but companies have managed to manage their exposure to currency exchange, “explains Kujala. The manager believes that the adverse effects of the conversion on company revenues and profits have already been seen on the Swedish stock market.

“Even so, both 2020 and this year have been very good for the Swedish market, but I do not think that the Riksbank rate hikes at the end of 2019 have had any effect,” concludes the expert.

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