Handelsbanken, which is Sweden’s tenth most popular share this year, plummeted in value on Wednesday.
How to fail as a major bank when interest rates are sky high seems to puzzle the Stockholm Stock Exchange.
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Bank in crisis
But expenses are rising, income is falling and the puncture is a fact.
In total, Handelsbanken fell a whopping 12.06 percent during Wednesday’s trading day.
This is how Nordnet’s private economist commented Frida Bratt the bank’s big blunders:
– Nordea came with a report that showed increased profits, but from Handelsbanken it was a flat fall, says Frida Brattprivate economist at Nordnet to News24 on Wednesday afternoon.
The pension giant Alecta is already under heavy pressure in several other areas, and owns 2 percent of Handelsbanken’s shares, which have now lost capital in value.
And what’s even worse – several other big banks joined in the slide.
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High interest rates – the banks make a lot of money
The extremely high interest rates of recent years have been a success story for major Swedish banks, which carved out gold month after month, year after year.
It has also made the big banks favorite investments in terms of invested money on the stock market. Nyheter24 has previously reported on how things have gone for the Swedish small savers’ favourites, where millions of Swedes have invested their meager kroner and pennies to see the money grow over time.
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Win or lose for the CEO
For the new CEO at Handelsbanken Michael Green is it now win or lose. After the first quarterly report as CEO, which was a real disappointment, he now hopes to get the bank back on its feet.
– It can’t go on like this, he says Today’s industry about the development.
The banks own each other – everyone falls
Nordea’s report on 18 April was a complete hit. Handelsbanken’s race, however, also meant bad news for Nordea, which lost around 2 percent in Wednesday’s stock market trading, even though they actually had nothing directly to do with Handelsbanken’s report. Except that Nordea is a major shareholder in the “competitor”.
Several billion kroner in market capitalization in the big banks was destroyed – and the small savers and pension funds are some of those who have to pay the most for the black day on the Stockholm Stock Exchange.
Lowered all of Stockholm
The dark banking day unfortunately lowered the entire Stockholm Stock Exchange into the red on Wednesday. Broad index OMXSPI fell by 0.43 percent despite several rockets, such as Oscar Properties and Svedberg for example.
The large company index also fell. The OMXS30, which is a stock market index of the 30 largest companies on the Stockholm Stock Exchange, fell only 0.12 percent.
Popular among small savers
– This of course affects private savers with shares in the individual companies. Handelsbanken is, for example, a very popular share among private savers, says Frida Bratt to Nyheter24.
Many have hoped to buy cheap Handelsbanken shares and then see the value rise. But now exactly the opposite happened.
Don’t cry over spilled milk
– If you own the Handelsbanken share, today you saw your holding fall in value. Anyone who owns Atlas Copco has more reason to celebrate, at least today, says Frida Bratt.
You shouldn’t cry over spilled milk.
But if you, as a small saver, own a lot of shares in, for example, big banks, and not in the engineering companies that have done well so far during the reporting period in general, then it might be wise to review your ownership.
Diversify the portfolio – that’s how you succeed on the stock market in the long term
Dividing your investments into several different companies, in several different countries, in several different types of industries and in different sizes of companies can be a smart way to diversify your stock portfolio.
– The reporting period often results in large price reactions in individual companies and it is a reminder that it is important to own many different shares in order to spread the risks, says Frida Bratt.
Then you hopefully won’t lose the big house when one or more of your favorite companies go out of business.
Another option is to invest in index funds, which divide your savings among tens, hundreds or thousands of companies and can thus almost guarantee you an annual return.
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