Monday fall in share prices on Helsinki Stock Exchange sharpest in four years

print this

Stock markets across Europe and Asia crashed on Monday as investors took fright at a potential US recession, looking more and more likely every day, that could cut the earnings of listed corporations and turn the companies’ shares into bad investments.
      The share prices in Europe suffered such substantial losses that the Dow Jones STOXX 600 index dropped by more than six per cent within one day.
      Monday saw global stock indexes suffer their biggest slump since the terrorist attacks of September 11th 2001.
      According to Reuters, the leading global provider of financial news, a total of more than EUR 200 billion was wiped off the value of the listed shares of European public companies over 24 hours.
     
On Monday morning, the Helsinki general index slid below the magic barrier of 10,000 points, falling back from Friday by 5.3 per cent by the close of trading.
      Monday was an almost entirely gloomy day, with for example Nokia shedding 6.3 per cent, as some EUR 5.7 billion of the market value of its shares was wiped off.
      Bank stocks across Europe also took a big hit, and Nordea escaped relatively lightly with a fall of "only" 5 per cent.
      At the same time, the US dollar was seen to strengthen against the euro.
      ”It could be a sign implying that American investors have continued to transfer their funds back home”, noted Petri Ukkola from the asset management company Tresor.
     
The main culprits for the ashen Monday are banks, which once again have managed to ruin everything, some analysts say, while market information and rumours from Central Europe have reported on large bank write-offs.
      ”The upcoming results of Nokia, the world's largest mobile phone maker, will be decisive as regards the fate of the stock exchanges worldwide. Nokia has saved them even before. The company must not be evaluated in the light of the US recession, as the economic prospects in India and China are much more significant for Nokia”, noted Ukkola. Nokia is set to report on Thursday.
      However, according to chief analyst Pekka Spolander from OKO Bank, Finnish listed companies may have posted too good sales forecasts for 2008. If economic growth slows down, it will first reflect in the volume of orders and subsequently in corporate earnings.
      Moreover, Spolander does not expect the Finnish stock market to calm down rapidly.
     
Private investors should not panic and make any quick decisions, Spolander says.
      Actually the biggest mistake would be to sell all shares now and to decide to buy them back later when they are cheaper, Tresor’s Ukkola believes.
      ”In general, developments in stock markets are so fast that one might end up buying at a considerably higher price than planned”, concluded Ukkola.
     
Stocks plummeted in early trading in Helsinki on Tuesday, but then recovered steadily, and by 13:00 they had regained the lost ground of the morning and were up by around 0.5%.
      Many investors will be watching anxiously later today to see how Wall Street opens. US markets were closed on Monday for a public holiday.


Links:
  OMX Nordic Exchange

Helsingin Sanomat