Sweden’s Hung Parliament Creates Investor Limbo: Nordic Credit
Investors in Sweden’s bond and currency markets may be facing four years of political indecision that threatens to stall budget talks and add volatility to prices.
“With this election result it becomes very uncertain,” said Carl Hammer, chief currency strategist at SEB AB in Stockholm.
The outcome, which sent the krona to its lowest against the euro in more than two months, ends eight years of an administration that favored tax cuts and budget restraint, turning Sweden into an investor haven from Europe’s debt crisis.
The Sweden Democrats are ready for new elections should last night’s result prove untenable, party secretary Bjoern Soeder said.
“The country has to be governed for the next four years and that’s going to be difficult if one isn’t ready to speak with us,” said Jimmie Aakesson, leader of the Sweden Democrats.
“If there is potential to price in a risk-premium in the krona, the time is now,”Martin Enlund, an analyst at Nordea Bank AB, said by phone.
The Social Democrats now face negotiations with the bloc’s junior partners, the Green Party and the ex-communist Left.
Loefven said after the votes were counted that he’s ready to start government talks and invited the Greens and the Left to discussions.
“The worry is if no decisions can be made whatsoever and if things drag on and if one doesn’t at all understand how they should be able to form a government,” said Annika Winsth, chief economist at Nordea in Stockholm.
Source: bloomberg- Sweden’s Hung Parliament Creates Investor Limbo
