Europe’s Worst-Performing Bank Stock Is a Big Favorite in Sweden

(Bloomberg) -- It bombed more than any other European bank stock, yet Swedish retail investors couldn’t get enough of it in 2019.

Swedbank AB, which is being investigated in Europe and the U.S. amid allegations of money laundering, became the ultimate go-to stock of 2019 for non-professional Swedish investors. That’s according to online brokers Nordnet AB and Avanza Bank Holding AB, which cited net figures.

Frida Bratt, a savings adviser at Nordnet in Stockholm where Swedbank is based, says the bet is that the bank’s 30% share-price plunge this year was simply too big.

“Many retail investors have seen Swedbank as discounted since the share price fall,” she said.

Swedbank spent much of 2019 dealing with allegations of money laundering after Sweden’s main TV broadcaster, SVT, published reports implicating the bank in over $100 billion of potentially suspicious transactions tied to the former Soviet Union. Swedbank has said it’s cooperating with the authorities, and fired a number of top executives in response to the allegations.

Swedbank’s market value shrank by about $8 billion in 2019, as the money-laundering scandal erupted. That’s its worst stock-market performance since the global financial crisis more than a decade ago. Its share-price losses far outweigh the potential fine Swedbank may be facing, which according to Bloomberg Intelligence may be less than $500 million in the U.S.

Most analysts are advising clients to either hold on to their existing Swedbank shares or buy more, with the average target price indicating the stock could rise about 15% over the next 12 months.

The second-most popular stock among Swedish retail investors was Nordea Bank Abp, which has also faced allegations of money laundering and of helping clients evade taxes. Nordea has since changed its management team and is pushing through a set of severe cuts to squeeze better returns out of the biggest Nordic lender. Its shares are up about 2.5% this year. For Nordea, analysts generally don’t expect the stock price to move much in the coming year.

While banks proved popular in 2019, Swedish retail investors at Nordnet dumped Modern Times Group AB, a holding company that focuses on gaming and esports. They also ditched construction giant Skanska AB.

Johanna Kull, a savings adviser at Avanza, says fashion giant Hennes & Mauritz AB was the most sold at her brokerage, which she attributed to “profit taking.”

“If there’s anything we’ve learned this year, it’s that the mood of the market can change quickly,” Kull said. Aside from basic diversification, she advises her customers to “have a strategy and stick to it, despite temporary volatility.”

She also says that “there’s reason to be positive ahead of 2020.”

Read more: Investors Rallying Around Swedbank Are Warned It’s a Risky Bet

To contact the reporter on this story: Hanna Hoikkala in Stockholm at hhoikkala@bloomberg.net

To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Kati Pohjanpalo

©2019 Bloomberg L.P.