To welcome Sweden’s music-streaming star Spotify Technology on its trading debut this month, the New York Stock Exchange briefly, and mistakenly, flew the Swiss, rather than the Swedish, flag.
The Swedes took it in stride. Now it looks as if investors could be underappreciating another Swedish strength: its big banks. This could also be temporary.
Sweden’s big-bank stocks have slumped over the past year, weighed down in part by worries about their exposure to a domestic housing market that, after a period of running hot, has cooled. The selloff appears overdone and presents an opportunity, according to the bulls.
Investor should consider buying shares in four Stockholm-based banks, says a team of UBS strategists led by Daniel Waldman in a recent note. They suggest placing equal bets on Swedbank SWEDA, +0.99% , Skandinaviska Enskilda Banken SEBA, +0.93% , Svenska Handelsbanken SHBA, +1.77% , and Nordea NDASEK, +1.38% . Sharp moves in global markets and a shifting macroeconomic backdrop have presented challenges this year, but investors “should not refrain from taking risk,” and these stocks provide a way to catch a ride on broadening European economic growth, they write.