EBM drops investigation

The Swedish Economic Crime Authority (EBM) has dropped its investigation into suspected manipulation of Fingerprint Cards’ share price by five US hedge funds in 2016, saying that trading in the share was not unusual at the time.

However, prosecutor JanTibbling did say that a number of transactions named in the report submitted to EBM were subject to scrutiny in other investigations concerning Fingerprint Cards.

Kristersson accuses government of waste

On Wednesday, the Ministry of Finance revised upwards its forecast for growth to between 2 and 2.5% up until 2020. Net lending has been revised up to SKr 85 billion, and the unemployment rate is expected to be 6.3% in 2018.

The figures show there are major differences between various groups: the native-born unemployment rate is under 4% while the foreign-born employment rate is almost 14%.

Ulf Kristersson, the Moderates’ spokesman on economic policy, accuses the government of wasting the boom in the economy, and calls for long-term reform linked to jobs, integration and the housing market.

The government has said that the number of children and older people in Sweden will increase significantly and forecasts that investment in public welfare services will need to increase by SKr 40 billion by 2025.

Kristersson shares this view, but is critical of government claims that there is no scope for tax cuts, saying this is “qualified nonsense”.

New innovation centre

China Euro Vehicle Technology (CEVT), Geely Holding Group’s development company in Gothenburg, has grown rapidly since its start in 2013. Among other things, the company has developed a new and smaller platform for Volvo and Geely cars, launching a new car brand, Lynk & Co.

Geely has already invested some SKr 10 billion in CEVT, which is outgrowing its present premises, and has decided to build a new innovation centre with offices and housing on Lindholmen. The 80,000 square metre property will also house Geely’s sales and marketing unit, ahead of the launch of Lynk & Co in Europe. CEVT currently has 2,000 in its employ and expects to create a further 1,500 jobs once the centre is built.

Concern over long-term impact

After years of debate, six parties have agreed on a democracy criterion when evaluating arms sales. The new criterion will have an impact on Saab, the defence and security group, which reported sales of SKr 28.6 billion in 2016. Besides the Gripen fighter jet, one of Saab’s most important products is GlobalEye, the multi-role airborne surveillance system. Saab’s export market, which accounts for 60% of the group’s sales, is of huge importance to GlobalEye.

Douglas Lindahl, analyst at Kepler Chevreux, sees the new criterion as bad news for Saab, which has major interests in deals that could now be at risk.

Last year Saab was given the go-ahead to export GlobalEye to Saudi Arabia, which leads the intervention in Yemen, and the company views the Kingdom on the Arabian Peninsula as a growth market, according to Lindahl.

Saab does not wish to comment until it has more information, but a number of analysts DI has spoken to believe that Sweden will circumvent the rules, as it has done in the past, in order to protect its defence industry.

Meanwhile, Tommy Gustafsson-Rask, CEO of BAE Systems Hägglunds is positive to the fact that broad agreement has been reached after two years of uncertainty. Simultaenously, there is concern about the long-term impact of the criterion.

Skills shortage slows housebuilding

The National Board of Housing, Building and Planning (Boverket) has said Sweden needs to build 700,000 homes by 2025 to solve its housing shortage.

However, a shortage of electricians and plumbers is slowing the process of meeting the housebuilding target. Jens Albrektsson, a spokesman for the employer organisation Installationsföretagen, says the industry would need to recruit an extra 20,000 to meet the target.

China trip to pave the way for new deals

Prime Minister Stefan Löfven is to begin a three-day trip to China next week, including a meeting with Chinese Prime Minister Li Keqiang, accompanied by Enterprise Minister Mikael Damberg, Trade Minister Ann Linde and Environment Minister Karolina Skog, along with a business delegation that includes Ericsson, ABB, Astra Zeneca, Scania and Volvo Cars and Volvo Group.

Sweden’s exports to China amounted to SKr 46 billion in 2016. During the first quarter this year exports grew by 33%, compared to the same period last year.

Mikael Damberg says that China’s efforts to move forward on the global political arena in terms of trade and climate makes it easier to find a shared agenda.

Moderates – corporate tax drop is a rise on the sly

Sweden is lowering corporate tax for the third time since 2009, now to 20% (see SPR 20/6 Early Ed.). However the Moderates are calling it a tax rise on the sly.

Finance Minister Magdalena Andersson wrote in a Dagens Industri (DI) debate article yesterday that the lower tax will be compensated for by limits to interest deductions.

The Moderates have welcomed the limits to the tax deduction, which aims to stop companies’ aggressive tax planning, although. Maria Malmer Stenergard, tax policy spokesperson for the Moderates, would have liked a larger cut in corporate tax as compensation.

Meanwhile the Confederation of Swedish Enterprise (Svenskt Näringsliv) welcomes the tax decrease but is critical of limiting the right to a tax deduction.

“We are lowering corporate tax”

Today the Ministry of Finance is putting out a memorandum on new tax for the corporate sector, write Finance Minister Magdalena Andersson and deputy Finance Minister Per Bolund in Dagens Industri (DI).

It proposes a general rule for limiting tax deductions for interest in the corporate sector in order to increase tax neutrality between different forms of financing. The memorandum also includes other proposals such as new tax rules for financial leasing, new hybrid rules, and a primary deduction for rental properties. Additionally, the current interest rate deduction rules are to be tightened. The proposals are fully financed and are proposed to come into force on 1 July 2018.

As limiting the tax deduction for interest means that the tax regulations are tighter, it is proposed that companies are compensated by lowering corporate tax from 22 to 20 per cent. This lower rate is fully financed by tightening the other rule. Thus the proposal is a redistribution of total tax within business.

The proposal is out for consultation before the government makes a final decision.

Telia receiving preferential treatment

In 2014 the Swedish government decided to open the 700 MHz band for mobile broadband, but in 2016 cancelled the auction of the frequency, which is suitable for mobile broadband services in rural areas, pending an investigation into whether the emergency services could use part of band. The government has now decided that the Post and Telecom Agency (PTS) may continue with the auction, starting 1 November. The problem now is that PTS is impairing competition on the Swedish market, writes Johan Johansson, chief executive of 3 in DI on Saturday.

Sweden has four mobile operators providing strong competition on the market, but under new PTS guidelines this will be impaired. Not only will rights cost more, which will make it harder for smaller operators to take part in the bidding process, but in reality just two actors will be able to buy the rights to the entire 700 MHz band, which will probably be used for 5G. The government is thereby giving Telia preferential treatment allowing it to offer 5G services on unequal terms, claims Johansson.

Speculation over Hexagon

Hexagon yesterday commented the news that it is in early-stage talk with rivals on a potential sale (see SPR 14/6 Early Ed.), saying that it had “noted the recent speculation in media regarding a potential acquisition of the company. Hexagon regularly evaluates various opportunities to optimise the company’s positioning and shareholder value. Should these evaluations lead to concrete results, the market will be immediately informed”.

One analyst tells DI that this is nothing less than an invitation to other parties. “They’re talking to someone and want other interested parties to be aware of this.”

According to the Financial Times, Hexagon has been working with Goldman Sachs and HSBC to gauge interest from rivals such as ABB, Schneider Electric, Siemens and GE.

Daniel Djurberg, Handelsbanken analyst, believes Hexagon’s IES would suit ABB Robotics, but leans towards an American conglomerate such as Honeywell, while SEB’s Daniel Schmidt believes GE and Siemens are likely candidates.