Finnish companies forecasted to suffer financially from Brexit are instead benfitting it, an unexpected trend since the UK is one of Finland’s key trading partners.
Companies, such as the Metsa Group, that deal in US Dollars benefit the most as the USD strengthens against the weak Sterling Pound. According to Metsä Group CFO Vesa-Pekka Takala, the company’s products are priced in Dollars while expenses are incurred in Euros. As such, Dollar-denominated earnings will increase while expenses in euros remain unchanged.
“Companies that sell in Dollars benefit,” said Mr Eero Färkkilä, an equity strategist with Nordea. “On Helsinki’s stock exchange there are more companies that deal in Dollars than those dependent on the pound. The changes of the last few days have been a positive sign for many companies.”
Finnish forestry industry shares initially plunged following Brexit, but the market turbulence has now actually turned to their advantage.
Tuomas Virtala, head of Danske Capital Finland, said, “Stocks were sold off without thinking about what was being sold off and what actually comprises the price level.” He was referring to decisions to sell stocks of companies that do a lot of business with Britain.
The UK is an important market for forestry companies such as UPM and Metsä, which are affected by the weak pound and insecurity regarding Britain and Europe’s future.
Global stock markets fluctuated after the UK voted to leave the EU. Leading Nordic banks believe that the biggest currency instability has already taken place.