Nordic & Swiss


Scandinavia & Switzerland: Values to rise further

The rebound in economic activity and robust investor demand paved the way for a continued improvement in Scandinavian and Swiss property markets in Q3. Office and industrial values rose further, as strong competition pushed down yields. Retail yields also fell in Stockholm. But we think its too soon to call a turning point for retail. Indeed, retail rents also fell, indicating that conditions in the sector are still weak. Nevertheless, the better outlook for the other sectors means we think that all-property values will rise further. That said, with economic growth expected to slow in the coming months and structural shifts weighing on retail and office sectors, the pace of improvement is likely to moderate.

23 November 2021

Fossil-like Norway won’t go the way of the dinosaurs

The UN’s annual climate change conference, COP26, will not have any discernible impact on Norway’s intention to keep pumping oil and gas over the coming decades. The irony is that Norway’s success in handling its resource windfall means that it is well placed to navigate the transition to a greener economy.

10 November 2021

Norway Consumer Prices (Oct.)

The fact that the Norges Bank’s target measure of inflation fell to below 1% in October and is likely to remain at around this level until early 2023 will not stop policymakers from pressing on with their plan to raise interest rates again in December.

10 November 2021
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Déjà vu at the SNB; labour shortages reach Greenland

The renewed rise in the Swiss franc has lifted it back to territory that will ring alarm bells at the SNB, and the usual release of sight deposit data on Monday morning will indicate whether the Bank has put its money where its mouth is by intervening to stem the appreciation. Elsewhere, we expect data from Norway to show that CPI-ATE inflation remained well below the Norges Bank’s target in October, and that mainland GDP rose by 2.5% q/q in Q3, which would have left it about 1.5% higher than its Q4 2019 level.

Norges Bank treads water before rate hike resumption

Following yesterday’s taper announcement by the Fed, and ahead of the knife-edge decision by the Bank of England later today (we forecast a 15bp rate hike), this morning’s announcement from the Norges Bank was less eventful. Norwegian policymakers reiterated that they will “most likely” resume the tightening cycle in December, and we expect them to raise rates a bit faster than investors anticipate next year.

Well placed to navigate choppy waters

As highly-open economies, Switzerland and the Nordics are far from immune to the issues of slowing global growth and supply-chain shortages that are currently vexing investors. Sweden is perhaps most exposed; the impressive rebound there looks to have peaked in July and momentum will fade in H2 2021.

Few signs of inflation in Scandinavia

While global financial markets are obsessing over the possible rebirth of inflation, there are precious few signs that it is about to take off in Scandinavia. The increases in headline inflation for September in Norway and Sweden were due to higher energy inflation. This should drop sharply next year as the supply of renewable electricity rebounds. Meanwhile, the US Treasury is due to publish its latest report on “currency manipulators” in the coming week or so but Switzerland should again get a free pass.

Monetary policy divergences

The Norges Bank’s tightening cycle began at the end of last month and we suspect that investors are underestimating the pace of rate hikes to come. By contrast, the Riskbank looks set to leave interest rates unchanged for some time, instead adjusting its monetary stance by shrinking its balance sheet. And interest rates at the SNB remain closely tied to those at the ECB, which means they are going nowhere fast.

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