The market crash at the beginning of the year impoverished Finnish investors drastically, according to recent statistics from the Bank of Finland.
The Helsinki Stock Exchange’s price index was at 13,130 at the beginning of January. At the end of June, the figure was 10,220.
So 22 percent of the value of the stock market melted, which meets the hallmarks of a bear market.
At the same time, a historically large amount of Finnish household wealth was destroyed in January-June.
“As of the end of 2021, the value of households’ stock holdings listed on the stock exchange has decreased by almost 12 billion euros,” says the Bank of Finland in its recent announcement.
The bank monitors the development of domestic entities’ deposits and investments on a quarterly basis.
After the collapse, the value of households’ listed stock holdings totaled 44.6 billion euros at the end of June.
The value of household stock holdings was at its highest in August of last year, 56.1 billion euros, and the holdings had collapsed by 20.5 percent in June.
The funds failed in many ways
The impoverishment of investing households was also realized in fund investments, the value of which fell by 4.5 billion euros at the beginning of the year.
At the end of June, the value of households’ fund holdings was 29.8 billion euros, which means that the decline had accumulated at that time by 13.1 percent – less than in stock investments.
In funds, the decline was presumably softer, because a large number of Finns invest partly in funds other than equity funds.
For example, in popular combined funds, part of the investments are in interest instruments. In the beginning of the year, however, fixed income investments also shrank exceptionally, because the tightening monetary policy began to be reflected in the rise of market interest rates.
“Furthermore, in January–June 2022, households made more redemptions from investment funds than new subscriptions,” says the Bank of Finland.
In net terms, redemptions from the funds were 370 million euros at the beginning of the year.
Stock investors ventured to the apaji
On the stock side, the collapse in the spring, on the other hand, made some investors boldly buy.
With the reduced prices, households bought shares for a total of 1.2 billion euros in January-June.
When you add up the losses of stock investments and fund investments, 16.5 billion euros were destroyed in the investment assets of households in the beginning of the year.
It is a large sum also in relation to the deposit base of households, which was slightly more than 113 billion euros in June.
The growth of deposits declined significantly in the beginning of the year compared to the initial phase of the corona pandemic. The annual growth of the deposit base rose to nearly ten percent in 2020, but is falling below five percent.
92 percent of the funds in household deposit accounts were in current accounts, whose average interest rate was almost zero (0.02 percent) in June.
Source: Arvopaperi by www.arvopaperi.fi.
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