ROLAND DAHLMAN
HEAD OF ASSET MANAGEMENT
INVESTERUM
Score prediction: SWEDEN 3 – UKRAINE 0
INVESTMENT INSIGHT:
Could the recent inflationary spike perhaps be a tell that the global economy might be in the last phase of its Goldilocks economic state?
During the pandemic supply chains and prices have been disturbed by a collapsing demand, then by a surging demand. Is the inflation we are seeing just temporary inflation related to the whiplash effects of post pandemic price adjustments or is this a sea change?
Well renowned economist Roger Bootle who, 25 years ago, wrote ‘the Death of Inflation’ recently indicated that inflation just perhaps might be brought back to life again. Bootle believes environmental emphasis, particularly the drive towards net-zero, will lead to a whole series of costs and price increases. Also strong demand from households, that were able to save at high rates during the pandemic, could also contribute to price increases.
On the other hand Greek 5-year nominal government bonds turned negative last week, US high yield corporate bonds dropped below inflation and Swedish National Debt Office recently issued the first 50 year bond in its history at 1.39%. It seems as if many out there are not particularly worried about inflation.
Historically, investing in the equity market has been a phenomenal hedge against inflation. In particular in a market like the Swedish one that contains many export driven companies with strong pricing power.
In tonight’s battle of the blues and yellows – I believe in Sweden.
ALEXANDER VERBITSKY
PORTFOLIO MANAGER
UNIT LINKED UKRAINE
Score prediction: SWEDEN 2 – UKRAINE 3
INVESTMENT INSIGHT:
Facing tonight’s opponents, if we are to succeed, we must have Energy!
The opportunities are due, bluntly, to the fact that the system needs a major upgrade. (PSA: that’s the end of the footballing analogies, I promise!)
Heating systems and equipment are estimated to be 80-85% worn, and the electricity infrastructure is similarly decrepit, a hangover from little development on the sector since Soviet times. However this DOES give Ukraine an opportunity to jump from 1970’s infrastructure right to the cutting edge of technology.
Wind, solar and biomass are all showing promise and attracting international investments. Driven by green tariffs meant to increase renewables in the energy mix to 25% by 2035.
DTEK, Ukraine’s largest energy holding, has been particularly active in the field. Recent investments include the construction of new wind farms for which DTEK raised €335m from German banks, followed a more recent €134m deal with Chinese company CMEC.
The future is bright, the future is Yellow and Blue – whatever way the result lands tonight!
