Finland is the only Scandinavian country that is part of both the European Union and the Eurozone. With an advanced economy and a stable macroeconomic situation, investing in Finland can be an option to add diversification to our portfolio. We will analyze the three most important stock market indices in Finland.
With financial markets becoming ever more correlated, many investors are seeking opportunities outside traditional borders. In this sense, Finland emerges as an alternative for those interested in adding diversification to their investment portfolios.
With a population of just over 5.5 million people, Finland has managed to excel in various economic sectors and offers an environment conducive to investment.
One of the most remarkable aspects of Finland is its economic stability. Despite being a small country, it has proved very resilient over the past few decades. Their focus on quality education has been a key factor in their success, resulting in a highly skilled and productive workforce.
In addition, the Finnish government has implemented prudent fiscal policies and sound financial regulation. As a result, Finland has kept its public debt low. Unlike many other European countries, the Scandinavian country has managed to keep its public debt under control, which reduces some risks associated with investing in a jurisdiction, such as possible tax increases in the future.
The main stock exchange of the country is the Helsinki Stock Exchange, nowadays part of the Nasdaq group, alongside most exchanges in the rest of the Scandinavian and Baltic countries. Approximately 150 companies are listed on Helsinki.
Finland is also at the forefront of sustainability and clean energy. Companies such as Fortum, a leader in renewable energy, offer investment opportunities in a growing and increasingly relevant sector worldwide. And Nokia remains an important technology company for the country.
For those interested in investing in Finland without having to pick individual stocks, an ETF can be an excellent option. For this reason, we will make an analysis of the three most relevant stock market indexes for Finland. It is worth highlighting that the valuation of many of its companies is low compared to similar companies in other countries, reflecting how neglected Finland is by many investors.
OMX Helsinki 25
The OMX Helsinki 25 is a stock market index calculated and distributed by Nasdaq, the company in charge of the Helsinki Stock Exchange. It is composed of the 25 companies with the highest transaction volume in the country.
The constituents of the OMX Helsinki 25 are updated twice a year, with the aim of keeping the index relevant and up to date as the economy evolves and the relative importance of the different sectors changes.
Within the index, stocks are weighted based on market capitalization adjusted for free float. Hence, only those shares actually available to most investors are taken into account. And it is important to note that no company can exceed a weight of 10% in the index.
This last rule was introduced so that Nokia, a leading company in the mobile phone industry during the 1990s and early 2000s, would not completely dominate the performance of the overall index.
If you are looking for additional details about the OMX Helsinki 25, you will find them on the Nasdaq website.
FTSE Finland 25
The FTSE Finland 25 index is very similar to the OMX Helsinki 25. Owned by FTSE Russell, a subsidiary of the London Stock Exchange that calculates financial market indexes, the FTSE Finland 25 is composed of the 25 largest companies on the Helsinki Stock Exchange.
These 25 companies are updated every 6 months and weighted according to their free float adjusted market capitalization. In this case as well, no one company can exceed a 10% weight at the time the index is rebalanced.
You can find more details about the FTSE Finland 25 on the FTSE Russell website.
Finally, the US company MSCI also calculates its own stock index for Finland. We are talking about the MSCI Finland, whose construction rules are very different from those of the two other stock indices we have analyzed previously.
The MSCI Finland is made up of those Finnish companies that can be found in the MSCI World index of developed markets. Thus, the exact number of stocks within the index fluctuates over time, depending on how many companies meet the eligibility criteria to be part of the global index.
In general, this is a more concentrated index, composed of between 10 and 15 companies. Additionally, the MSCI Finland does not apply any caps to the weighting of its constituents. Some of the most important stocks are Sampe and Nokia.
If you are looking for additional information about it, you will find it on the MSCI website.
I hope you found this article about Finnish stock indices useful. If you are also interested in the neighbor country, you can take a look at the following link:
Top 3 Stock Market Indices Sweden
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