Two-front attack

One of the welfare sector’s heavyweights has attacked both the government and the alliance for the political handling of profits in welfare.

“This type of reform must have support in reality. We are talking about hundreds of thousands of children, thousands of health centres and elderly care homes. It is a very important part of the Swedish model,” says education giant AcadeMedia’s CEO Marcus Strömberg.

“Of course the government has the ultimate responsibility but I also think that the alliance parties have contributed to this polarisation,” he adds. He believes the threat of a vote of no confidence has damaged the climate for discussion and he defends compromising across the political divide.

He adds that one way of creating margins in the case of a profit cap on welfare would be to increase operating capital by buying school premises but “we do not want to be a property company. We are experts at education but since they have put forward the proposal we have to take a stance on how we go forward.”

Haldex conflict escalates

On Thursday an extraordinary meeting of Haldex’s shareholders ordered the board to fully comply with the bidder, German Knorr-Bremse. The board withdrew its support for the bid in June as it believed the European Commission would likely turn down the deal. Since then Haldex has chosen to break off all collaboration with Knorr-Bremse over the bid.

After the meeting CEO Jörgen Durban kept his stance to ignore the board’s order. “We cannot implement the decision as it would benefit one owner, but damage Haldex.”

Temporary factors help push inflation over 2%

The Consumer Price Index (CPI) rose by 0.5% in July. The 12-month rate was 2.2%. Price increases on package holidays contributed 0.3 percentage point to the change, while increased prices on international flights and electricity contributed 0.2 percentage points each.  The underlying inflation rate (CPIF) rose from 1.9% in June to 2.4% in July, its highest level since December 2010.

The Swedish krona strengthened on the news while the stock market fell. The reaction is justifiable given that the inflation rate is over the 2.0% target set by the Riksbank, which could bring forward plans to raise the benchmark repo rate, argues DI.

But, even if the July data may lift the mood at the central bank, it is too early to celebrate. A number of temporary factors contributed to the increase, as did a new way of measuring inflation and tax hikes on electricity.

Fall in global markets a threat to Sweden’s GDP

Oxford Economics has said that a stock market correction could affect global growth; a 10% fall in global markets could have the potential to pull down growth and consumption in developed economies by as much as 0.3%.

The actual impact on consumption would vary from country to country, depending on the circumstances. However, economies with higher market capitalisations would be worst affected by the correction, argued the think tank, noting that Switzerland has an unusually high market capitalisation in relation to GDP. The same is true of Singapore, the United States and Sweden.

Telia hikes landline prices

The operator Telia has announced that it will increase landline rental charges for households by 24% per month, starting 19 September. Its basic landline package will increased from SEK 165 to SEK 205 a month.

The hike is said to be due to falling demand for copper landlines as consumers switch to mobile or fibre-optic solutions.

Few in parliament own shares

Only 32 of a total 362 politicians have declared shareholdings in listed companies, according to an excerpt from the Riksdag’s financial register. Joakim Bornold, from Nordnet, is surprised about the low figure.

H&M is the big favourite among those politicians who do hold shares. Sharing second place are SAS and the investment company Kinnevik. Furthermore a majority of shareholding politicians are alliance politicians while not a single Left Party politician holds shares.

Only one party leader, Jan Björklund has reported any holdings. The Liberal leader has invested in the bank SEB and in a Sweden fund.

Finance ministerial candidate Oscar Sjöstedt (SD) owns shares in the prospecting company Africa Oil, which Joakim Bornold considers to be controversial. “Africa Oil has, to say the least, a turbulent history and is a company that has been called into question a good deal, which means it is surprising that it turns up in a portfolio of this kind of politician.”

Big banks’ mortgage profits rising

The total net interest for Sweden’s big four banks amounted to around SEK 30 billion for the second quarter – an increase of over one billion kronor since last year. The profits come mainly from mortgages.

“This is a completely unreasonable figure,” says Håkan Larsson, housing economist at the Swedish Homeowners Association. Håkan Larsson says that the development is due to the low repo rate, which has meant there is a huge difference between the interest banks themselves pay and what they offer mortgage customers.

During the same period mortgages have grown in importance for banks. For Swedbank and Handelsbanken, the mortgage share of the group rocketed from 25% in 2010 to 49% and 42% respectively in 2015.

Håkan Larsson points out that the four big banks have very similar interest rates for mortgage customers, calling it a price-fixing cartel. He believes politicians ought to act and the state SBAB bank ought to lead the way by bringing down interest rates.

Many traders going to refuse cash

Two thirds of Sweden’s traders believe they will stop accepting cash by 2030, according to a new, as yet unpublished, report from the Royal Institute of Technology (KTH).

Niklas Arvidsson, lecturer in industrial dynamics at KTH, is one of the authors and predicts that Sweden will be a cashless society by 2030. “It is moving very quickly just now.”

According to the Swedish Trade Federation, 80% of all transactions in retail are currently made by card, and this is increasing constantly.

Paulsen takes over after Borg

The Dane Henrik Poulsen is taking over as deputy chair of the board in Kinnevik after former Finance Minister Anders Borg’s hasty exit. Henrik Poulsen is CEO of Dong Energy and is being pointed out as a future name within the Kinnevik sphere.

On Saturday Anders Borg left the investment company’s board after media attention concerning his behaviour at a party last weekend.

Dagens Industri (DI) also reports that Anders Borg is leaving another prestigious post – that of senior advisor at banker Citi. “We have come to this conclusion together. I believe it is the best for everybody in the current situation,” says Eirik Winter, CEO for Citi’s Nordic investment bank.

Merger created negative value

Intrum Justitia’s board, the banks and short sellers are the only ones to have gained from the debt collection company’s merger with Lindorf, reports Dagens Industri (DI). The board’s fees have been raised by 20% while shareholders have seen the value of their holdings fall by as much in the past ten weeks.

In order to meet EU regulation, Intrum Justitia is having to divest a number of units. “It’s a buyer’s market – everyone knows that Intrum has just six months in which to sell the units. And they have paid excessive fees to their advisors, while short sellers love the share,” say experts to the business daily.