Catella Day 2019 – Knowledge, insight, inspiration, innovation and energy!

The theme of this year's Catella Day was future opportunities, and the content of the presentations included everything from the Swedish economy and its challenges, to opportunities for 5G development and impact investing.

For anyone who was unable to attend, we have put together a brief review of some of the essentials from Catella Day 2019. 

Impact investing, creating a world optimised for both the planet and people! − Tove Larsson, Head of Investment, Norrsken Foundation

Perhaps the most appreciated presentation of the day was held by Tove Larsson, Head of Investment at Norrsken Foundation. Norrsken Foundation focuses partly on financial returns on its investments, but mainly on how these investments have a positive impact on our planet, known as impact investing.

As an introduction to his presentation, Tove claimed that impact investment worth USD 7,000-8,000 billion will be needed to achieve the UN 2030 Agenda, the 17 UN sustainable development goals. These investments today correspond to a little over USD 500 billion, or 6 percent of that figure. The need for more investment in this area is therefore enormous.

Tove presented concrete investment examples of how we can create a world optimised for both humans and our planet. The message from both Tove and Norrsken Foundation is that sustainability and financial returns can be combined and go hand in hand. Which they can prove and confirm through the strong returns their portfolio has generated while the companies they invest in are working to create a sustainable world.

An even faster future with 5G − Lars Klasson, Program Director, Telia

5G is the name of the upcoming telecommunications protocol. 5G will be faster, more available and more stable than the current 4G. Telia’s Program Director for 5G, Lars Klasson, talked about how 5G will expand the opportunities to robotise industry, improve and secure our communication and, not least, reinforce the potential of the internet of things. We will live in a future where smart gadgets, vehicles, cities and social functions will be everyday.

Is Sweden a new Japan? − Mattias Sundling, Senior Strategist, Danske Bank

Mattias Sundling, Senior Strategist at Danske Bank, summed up his outlook for the stock market and the risk of Sweden being caught up in a Japan-like scenario. Japan’s GDP has been at the same levels for the past 30 years. Slow growth, low interest rates. The big question is whether Sweden will end up in the same situation.

No, says Mattias Sundling.

If anything, it is the rest of Europe that runs the greatest risk of falling into a Japan scenario. Swedish interest rates look set to remain at low levels for the foreseeable future, but Sweden nevertheless has quite few similarities with Japan. The risk that Sweden will end up in a Japan scenario is low, even though we are geographically part of Europe. With regard to the Swedish stock exchange, Mattias Sundling says it is slightly overvalued due to these low interest rates.

How professional investors build modern portfolios − Magnus Dahlquist, Professor at Stockholm School of Economics

Magnus Dahlquist explained on theoretical grounds how professional investors today build modern portfolios. He reviewed a number of examples of the major US universities that manage long-term capital with requirements for both returns and good risk management.

Long-term required returns in an environment of low interest rates and low expected returns on stocks place tough demands on allocation in asset classes other than stocks and bonds.

Magnus’s theories and thoughts are based on four possible solutions for investors:

1. Accept the lower expected return – do nothing
2. Increase the proportion of equities in the portfolio – the already dominant risk increases
3. Add illiquid assets – is the risk of illiquidity worth the additional return?
4. Add alternative assets, such as hedge funds – improves risk-adjusted returns over time and enables returns outside the traditional asset classes of equities and bonds

Will major shopping centres and malls survive? – Lars Åke Tollmark, Regional Managing Director Nordics, Unibail Rodamco Westfield (URW)

A big question many people are asking is whether malls and shopping centres have any future whatsoever. URW was created through Unibail Rodamco’s acquisition of Westfield, making it the world’s largest owner of premium malls. In Sweden, URW is perhaps best known as the owner of the Mall of Scandinavia (now called the Westfield Mall of Scandinavia) and Täby Centrum. Lars Åke Tollmark presented URW’s analysis of the future market for shopping centres and malls.  

According to Lars Åke, there is undoubtedly a future for malls and shopping centres, but there will be even greater demand on the overall experience and geographical location. Factors that are key to success are, and will increasingly be, rapid development, news and innovative tenants. One example is Tesla, which is sold successfully in their malls.

The competition from online shopping is one of the biggest threats to smaller shops and malls in less attractive areas. But URW is convinced that the combination of attractive locations and experiences generates more business in its stores and malls.

URW believes that, properly utilised, an effective multi-channel strategy is unbeatable. This is clearly evident for companies that both have shops in attractive shopping centres/malls and work with online selling. Success for tenants enables URW to obtain higher rental income while increasing the values of its attractive malls.

One percent of all plastic in the sea lies at the surface and 99 percent at the bottom! − Magnus Wikström, Executive Vice President Innovation, BillerudKorsnäs

Did you know that 1 percent of all plastic in the sea is at the surface and 99 percent at the bottom? 

Magnus Wikström, Executive Vice President Innovation, described the innovative power of BillerudKorsnäs to develop more sustainable packaging and other solutions that replace plastic products like plastic bottles, straws, fishing line and other packaging.

This is something that is increasingly in demand thanks to laws and regulations, but also because we consumers are increasingly demanding sustainable solutions. BillerudKorsnäs is one of the players innovatively seeking and developing these solutions. 

Have we reached peak office, and are we facing a bear market for commercial property in Sweden? − Arvid Lindqvist, Head of Research, Catella Corporate Finance

Arvid Lindqvist set out by providing a background to the Swedish property market. The number of transactions in the Swedish commercial real estate market has decreased compared to last year. However, the average size of transactions is larger. Deals are fewer but bigger.

Over the past two years, Swedish GDP growth has been negatively impacted by reduced investment in new housing production. This has taken place at the same time that rapidly growing online commerce has impacted increasing groups of goods, which is a challenge to retail property. This is clearly evident in the decrease in the number of real estate transactions since 2016 in the retail property segment.

Another indication that the market is slowing down is that the development of office rents in central business districts has decelerated. There is an imminent risk of a bear market for property companies over the next two years, concludes Arvid.

We look forward to welcoming you to Catella Day 2020!

We have already started planning Catella Day 2020 to make it as packed and useful as this year. Huge thanks to everyone who was there, and we look forward to warmly welcoming you next year.

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