FI Newsletter

The Nordic stock markets
In 2004 the KFX index of the Copenhagen Stock Exchange rose about 15%, on par with the general trend in the Nordic region and somewhat better than the performance on the other European bourses.

The Norwegian market was the strongest performer of the Nordic markets, as the OBX index rose as much as 31%. This was due to the fall in interest rates as well as high oil prices and freight rates.

The Swedish market showed an increase of 18% in the OMXS30 index. At the end of 2004 the Copen-hagen Stock Exchange was sold to the OMX Group, which, besides its Swedish operations, also has operations in Finland and the Baltics.

In 2005 we expect the Nordic stock markets to continue to outperform other European equities as M&A activities accelerate, but as neither the region’s equity market valuations nor the global equity market trend is likely to give support to the markets as in 2004, the outlook for price appreciation in the Swedish, Danish and Norwegian equity markets is less favourable than last year.

Danske Bank: the leading Nordic covered bond house
Through Danske Markets (serving the global markets) and Danske Consensus (serving the Swedish market), the Danske Bank Group has established itself as the leading Nordic covered bond house. Covered bonds are (typically) bonds backed by public, private or commercial property loans and supported by national laws that give priority to holders of covered bonds in case of bankruptcy.

Covered bonds are typically sold at auctions through a syndicate of banks. Danske Markets has participated in syndication groups on covered bonds in all the major European covered bond markets. Scandinavian investors are very important for the covered bond market as they buy 15%-25% of all new issues. The Danish and Swedish covered bond markets are the second- and fourth-largest in Europe, with outstanding amounts of some €210bn and €60bn respectively.

To contact the covered bond team:
Research: Martin Gregersen +45 33 44 09 82,
e-mail mgr@danskebank.dk
Origination: Per Høg Jensen: +45 33 44 32 33,
e-mail perje@danskebank.dk
Syndication: Jeremy John Spinney: +45 33 44 69 53,
e-mail spi@danskebank.dk
Sales: Lars Blichfeldt Jensen: +45 33 44 67 28,
e-mail larjen@danskebank.dk

Danske Fund
Danske Fund is the name of Danske Bank’s international mutual fund business. Danske Fund has a broad range of funds, with a special focus on Nordic and European equity and fixed income products. These funds, which are managed by Danske Capital, show impressive returns. Several funds are at the very top in international comparisons. Our portfolio managers have thus shown that local presence and market experience are key components of good returns. We would like to call attention in particular to the Swedish money market fund, which is by far the best-performing money market fund in Sweden. Danske Fund Norge Vekst fund is one of the best equity funds in Norway, and Danske Fund Global High Income fund is among the very best investment-grade bond funds in Europe. Finally we should mention that the Wall Street Journal recently identified our equity fund Danske Fund Eastern Europe Convergence as one of the best Eastern Europe funds in the world.

Danske Research
At the start of 2005, the global recovery is well under way. However, global interest rates are still very low. This is creating an environment of high, rising returns on capital and falling debt among our clients. It is also causing a sharp drop in demand for corporate and institutional loans and an environment of falling credit spreads in the corporate bond market. Competition among banks is forcing down credit standards and margins. Will this trend continue? It is likely to do so throughout 2005. Danske Research – the economic and financial research division of Danske Bank – has issued a series of short research papers on these subjects.