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What if Nordic households start deleveraging?

Our special edition of risk scenarios and implications from macroeconomic developments to single securities if households lose their taste for debt.

Riksbank: High household indebtedness greatest risk in the Swedish economy

Danmarks Nationalbank: Denmark: The Housing Bubble That Burst

Norges Bank: Household debt the most important source of vulnerability in the Norwegian financial system

No other Nordic economic issue has attracted so much attention in recent years as whether households have borrowed too much. The only competitor would be house prices – have they spiraled out of control, and are they about to crash?

As worries have grown, so has the realisation that indebtedness and house prices feed off one another. Cheap credit and feelings of ever-increasing wealth left plenty of room to spend for happy consumers. Some consumers even took on additional short-term loans to keep up. Economic growth thrived.

But political measures aimed at curbing indebtedness and the prospect of even gentle lifts in interest rates have changed the conversation from if the tide will turn to when and how hard it will hit Nordic shores. Denmark’s painful decade after the housing recession in 2008 casts a long and dark shadow.

Is this what lies in store for the other Nordic countries as well? What would it mean for households, corporates, investors and the Nordic economies they live in if the long-lived housing and indebtedness parties come to an end? Is there a more nuanced story behind the alarmist headlines?

Welcome to our unprecedented thematic coverage where we address the impact of the same risk scenario across all four Nordic economies and all asset classes in scope. Welcome to the collective knowledge of Nordea analysts with expertise from macroeconomics to single securities. Welcome to Nordea Research.

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Macro theme: What if Nordic Households lose their taste for debt? (download)

Our special edition of risk scenarios featuring implications from macroeconomic developments to single securities if Nordic households would lose their taste for debt.

Debt-backed consumer spending has driven the Nordic economies for years, but what if things swing the other way? We model just such a scenario, assessing the impact a sharp drop home prices might have on the Nordic economies.


Equity Strategy: Nordic deleveraging risks on the rise

What would happen to the equity risk premium in the Nordics in an asymmetric deleveraging shock? We identify the sectors that would fare best – and those to avoid.

Our securities & sector research is only available to institutional clients.

Financial / Nordic banks: What if households start deleveraging? (download)

In a housing-price-induced household deleveraging cycle, we conclude that the highest risk for the Nordic banks would be intensified pressure on Swedish mortgage margins. We identify the banks with the greatest exposure.

Nordic Real Estate and Construction: Residential construction pain in what-if sccenario (download)

Not all Real Estate or Construction companies would be in trouble if home prices drop and consumers tighten their belts. Exposure matters – and we identify the companies that are best positioned.

Nordic Airlines: What might happen to airlines if households start deleveraging (download)

A segment that responds quickly to changes in spending, Nordic Airlines would certainly feel the pinch when households save more. But the Nordic carriers have different reaches, and are impacted differently.

Nordic Consumer Goods: Spending spree coming to an end (download)

When households start to save, they spend less elsewhere – but not all consumer segments are created equal. Find out which names would weather the storm.

Credit Markets Update: Homebrewed downturn cocktail bitter for some (download)

Domestic spreads would see some impact in our risk scenario of tighter consumer spending, and certain issuer types might find it harder going in international markets. We discuss what to watch for in a deleveraging scenario.


Also released today:


Economic Outlook  – Shaky Ground (download)

We might be a bit more used to the ‘new normal’ now at the start of 2019, but sometimes it’s worth taking a step back and observing just how abnormal the current world situation is.

Nordea On Your Mind – Nordic consumer debt (download)

Nordic consumer debt is on the rise and as the low interest-rate era draws to a close, the risks to the Nordic economies are growing.

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