Baltic equities are now at the fingertips of Nordic investors

22.10.2024 RIG, TLN, VLN

To start off with, here’s a fact you likely didn’t know: In 2023, over 40% of the initial public offerings (IPO) on the Nordic and Baltic markets combined took place in the Baltics, and more specifically, in Estonia (2 IPOs) – a country of 1.3 million people, and in Latvia (1 IPO) – a country of 1.9 million people.

Having been in very close relations with the Finnish and Swedish exchanges for more than 20 years by now, the Baltic exchanges have had a fortunate opportunity to keep a close eye on how to build and maintain a healthy and sustainable investment culture.

The recent years have been transformative for the Baltic markets: the number of retail investors started to grow pretty much exponentially around 2016 and has increased about four-fold in the last 7-8 years. This transformation has taken place due to many coinciding reasons: new and highly attractive companies joining the market, tail-wind in the overall market momentum, growing levels of disposable income, and a state-led strategy for increasing financial literacy throughout the society.

The retail investors rule the market

The Baltic investment landscape differs from their Nordic peers in one other aspect. Namely, a lion’s share of trading on the Baltic markets is done by retail investors.

Just to illustrate: When the previously solely state-owned renewable energy company Enefit Green did an IPO in 2021 and listed part of their shares on the Nasdaq Tallinn Stock Exchange, more than 60,000 local investors participated in the IPO. This means about 4.3% of the Estonian population became the shareholders of the company. Although there isn’t comprehensive data available, we are inclined to believe it might be the world record in terms of IPO participation per capita.

The exchanges develop hand-in-hand with the economy

The Baltic stock market indices have been reflecting the rapid growth and development of the Baltic countries throughout the last 30 years. Nasdaq Tallinn and Nasdaq Riga indices have given around 12% in annual return (including dividend) since 2000, and Nasdaq Vilnius index around 11%. Just to add some context, the global stock index MSCI ACWI has yielded just around 6% on average per year over the same period.

As the Baltic companies are gradually becoming more and more international, the so-called stock exchange quality stamp – mostly, but not only, due to the transparency and visibility it provides to the company through a listing – has become increasingly more understood and valued among entrepreneurs.

The stock exchange flagships are rather newcomers

4 out of 5 companies currently in the TOP 5 in terms of market capitalization on the Baltic markets have been listed in the last 8 years. The TOP 5 include:

Ignitis grupe – Lithuanian energy company and the largest utilities and renewable energy company in the Baltic region (market cap 1.3 BEUR)
LHV Group – an Estonian financial group (1.1 BEUR)
Telia Lietuva – Lithuanian telecommunications company (0.9 BEUR)
Infortar – Estonian investment company (0.8 BEUR)
Enefit Green – Estonian renewable energy company (0.8 BEUR)

Although the Baltic stock exchanges are young, they know well that the activity levels on the exchanges tend to go up and down, mirroring the cycles in the wider economy. But leaving the fluctuations aside, it can be said for a fact that the Baltic exchanges are in their best shape yet: there are a record-high number of companies listed, a record high number of investors owning securities and a near record-high trading activity on the market.

Can Finnish, Swedish, and Danish investors trade in shares listed on the Nasdaq Baltic Exchanges?

Yes, they can. And quite easily, actually.

Danske Bank, among others, provides an easy access to the Baltic-listed shares for their clients. Commissions are exactly the same in all markets when buying or selling shares online. Read more at Danske Bank website.