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  • Tracing Investment Opportunities In Finland 0 comments
    Oct 21, 2010 9:46 AM | about stocks: NOK, AGPDY, MX, SEO, UPM, GXF, KMRAF, WOOD, CUT

    Just as every article, newsletter or journal screams out loud how the world is badly trapped in global recession and lows, just about every world rankings initiatives of various agencies across the globe keep on churning numbers with the Nordic nation of Finland at the top. Apart from other statistical accolades, Finland has most recently been ranked as the best nation in the world to live in, according to a survey conducted by Newsweek magazine, scoring high on infrastructure, clean environment and education. Not so long ago, Legatum Institute, a London-based think-tank had ranked Finland as the world's most prosperous nation not only in monetary and financial terms, but also in terms of good governance and strong democratic government.

    Recession or no recession, Finland keeps on ranking high on most these world rankings initiatives of various agencies across the globe. Of course a reason for such a consistent high ranking is the fact that Finland offers a central location in the expanding markets of Northern Europe, which is home to almost 80 million consumers. While Finland boasts of a functional infrastructure and modern logistics and communications networks, most investors are looking at Finland as their ideal business gateway to Russia.

    Although the emergence of Finland has been an economic marvel, but even today managers of large multinational companies see Finland as a fairly uninteresting country for investments compared to Germany and Russia. Finnish corporate environment is not considered to be particularly dynamic, and the competition situation and legislation are considered inflexible. With an economy focused mainly on exports and less dependent on its domestic environment, the Finland economic story might just have a twist in the tale. 

    Finland’s main industrial products are paper and board, electronics and metal products. The engineering and high technology industries, led by telecom giant Nokia, have long been the leading branches of manufacturing.
    The country has been a global leader for hundreds of years in the paper and pulp industry but Modern forestry technology is closely interlinked with the information technology sector, the telecom sector and leading edge engineering industries.
     

    • Finland is also an ideal base from which to reach the massive Russian market and Scandinavian countries can also be targeted from Finland. Finland offers a central location in the expanding markets of Northern Europe, which is home to 80 million consumers.
    • Finland’s workforce is highly educated and computer literate. According to WEF’s Global Competitiveness Report 2008, Finland has the best availability of scientists and engineers in the world and they are trained by the best educational system in the world. The workforce also includes a large number of other professionals with university degrees in diverse fields.
    • OECD statistics show that Finland’s unit labor costs have fallen during the period 1990-2009, improving the country’s competitiveness in relation to the OECD average. Wages are lower in Finland compared to the other Nordic countries.


    Investing Options In Finland

     

    List of Finland Based Companies Traded As ADRs

    Nokia Corp. (NOK): is the largest company in Finland and trades on the NYSE. It is the largest manufacturer of mobile telephones, devices, and networks, with about 36% of the world’s mobile phone market share.

    Fortum Corp. Finland (OTC:FOJCF)

    Amer Sports Cp Sponsored ADR (OTCPK:AGPDY)

    Kemira OYJ Ord Shrs (OTC:KMRAF)

    Metso Corp. (MX)

    Stora Enso Corp. (SEO)

    UPM-Kymmene Corp. (UPM)

     

    Other Finland ADRs include:

    Cargotec Corp OYJ             (CYJBY: OTC)   IndustrialTransport.           
    Elisa OYJ                            (ELMUY:OTC)   Fixed Line Telecom.
    Kesko OYJ                          (KKOYY:OTC)  General Retailers            
    Kone OYJ                            (KNYJY:OTC)  IndustrialTransport.            
    Konecranes OYJ                  (KNCRY:OTC)  IndustrialTransport.            
    Neste Oil OYJ                      (NTOIY:OTC)   OilEquip.,Serv.&Dist            
    Outokumpu OYJ                  (OUTKY:OTC)  Indust.Metals&Mining            
    Outotec OYJ                        (OUKPY:OTC)  Indust.Metals&Mining            
    Pohjola Bank PLC                (POJLY:OTC)   Financial Services            
    Rautaruukki OYJ                  (RUKKY:OTC)  Industrial Engineer.            
    Sampo OYJ                         (SAXPY:OTC)  Life Insurance            
    Sanomawsoy                       (SWYBY:OTC) Media            
    Tieto Ojy                             (TCYBY:OTC)  Software&ComputerSvc         
    Uponor OYJ                          (UPNRY:OTC)  HouseGoods&HomeConst  
    Wartsila OYJ                         (WRTBY:OTC)  Support Services            
    YIT OYJ                                (YITYY:OTC)    Construct.&Materials            
    Stora Enso Oyj                     (SEOAY:OTCQX)   Forestry & Paper          
     
     

    Finland Exchange Traded Funds (ETFs):
     

    The Global X FTSE Nordic 30 (GXF): The FTSE Nordic 30 Index tracks the performance of the 30 largest and most liquid companies in Sweden, Denmark, Norway and Finland. The fund’s components are the 30 largest and most liquid companies in the Scandinavian region. The top sectors are financials, industrials, technology and health care.

     
    GXF Top Ten Holdings


       1. Novo Nordisk A/S ADR (NVO): 10.55%

       2. Nordea Bank AB (NDA SEK): 8.26%

       3. Ericsson Telephone Company ADR (ERIC): 7.90%

       4. Nokia Corporation ADR (NOK): 5.71%

       5. Statoil ASA ADR (STO): 5.50%

       6. Hennes & Mauritz AB (HM B): 3.95%

       7. Volvo Corporation (VOLV B): 3.89%

       8. Svenska Handelsbanken (SHB A): 3.80%

       9. Sandvik AB (OTCPK:SDVKF): 3.69%

      10. TeliaSonera AB (TLSN): 3.53%

     Expense Ratio:  0.50%

     

     Finland Economy: An Overview

    Finland century managed to perform delicate a balancing act – opening up to Westernization whilst simultaneously keeping relations with the Soviet Union positive. The fall of Communism hit Finland pretty hard, with a fair part of the country’s financial situation relying on the well being of the Soviets. Whilst the economy took quite a battering, by the mid-nineties it had recovered in a fantastic fashion and the Finns joined the European Union in 1995, with the country rated as having the fifth best standard of living in the world according to a UN survey in 1998. As Finland no longer had to pay as much attention to its Eastern neighbor, the focus shifted massively to Europe and Finland has since been at the forefront of many pioneering schemes, including being one of the first countries to adopt the Euro as the national currency. The economy is in great shape and the Finns are some of the most technologically switched on people of any in the world.

    The Finnish economy is knowledge-based and strong on innovation.  It is among the top countries globally in terms of R&D spending per capita, the first in terms of utility patents in the EU, and also has the biggest turnover (15.6%) from new products in the Nordic countries.

    FDI in Finland is often related to knowledge-driven investments. Finland has several high-tech clusters with many technology companies that have cutting-edge expertise. These include companies specializing in wireless and mobile solutions, cleantech, health care and life sciences, and new materials and processes.

    The Finnish economy is essentially based on private enterprise, with over 80% of manufacturing output and some 90% of banking services produced by private companies. The main industries in Finland are pulp and paper, metal and engineering industry and shipbuilding. Finland is also one of the leading producers of copper and nickel in Europe. Service and high-tech industries play also very important role in the Finnish economy and the importance is growing.

    Finland is the ideal business gateway to Russia. Most of the transit trade from the EU to Russia already passes through Finland. The countries share the same rail gauge, so rail cars do not require modification or reloading when they cross the border. English is the common language of Finland’s highly international business community. Over 90% of Finns under thirty speak English, while Swedish is Finland’s second official language in addition to Finnish. Many Finns also speak Russian.

     

    Negatives Of The Finnish Growth Story:  Finland along with Cyprus and Denmark have joined the ranks of EU member countries with government deficits deemed high enough to pose a threat to the wider European economy.

    Finland’s economic development is strongly connected to the rest of the world; if there is demand in the global economy, then Finland’s exports usually pick up fast. During the growth phase Finland benefited from globalization more than many other economies and its growth was faster than the rest of Europe. The year 2009 revealed the flip side of this sensitivity, when the Finnish economy clearly contracted more than the average.

    Finland's economy is heavily export dependent and the country's key export markets - Russia and Germany in particular - have evidently been badly hit by the sharp reduction in the volume of world trade. Russia, Finland’s top trading partner has also seen strong negative growth - around 10 per cent year-on-year in the second quarter.

     
    Future Outlook Of Finland: Finland's export-reliant economy has been hit hard by the global economic downturn, and while moderate recovery is expected this year, figures released Wednesday showed the Nordic country had slipped back into recession, posting its second fall running in quarterly gross domestic product (GDP).

    According to Statistics Finland, the volume of Finland's GDP fell 0.4 percent In the first quarter of 2010 versus the fourth quarter of 2009.

    The Nordic country's economy has been hit harder by the global economic downturn than those of most other European Union countries, and going forward, export-reliant Finland's performance will depend very much on recovery in key export countries like Sweden, Russia and Germany.

    Earlier the International Monetary Fund (IMF) called Finland's economic outlook "unusually uncertain" given the depth of the recession and structural challenges like its rapidly ageing population. The eurozone country's economy, which slumped nearly eight percent in 2009, is nonetheless expected to begin recovering this year, with the finance ministry forecasting 1.1-percent growth. Unemployment is meanwhile expected to remain high, around nine percent.


    Disclosure: No Positions
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