CHRONICLE – The Stockholm exchange rose during the week after positive signals from the Riksbank.

The Stockholm OMX 30 index was up 1 percent in mid-day trade on Friday, boosted by a puzzling rally in the Volvo share and news that services in Germany and manufacturing in France unexpectedly expanded.

The stock market gained slightly during the last week after the Swedish Riksbank gave a surprisingly positive judgment with regards to the country’s economy and Sweden's fourth-biggest bank Swedbank launched a 2.1 billion dollar rights issue.

“New information received over the summer tends to indicate a slightly stronger GDP growth than the Riksbank has forecast, but the labour market is continuing to weaken and inflation is low,” Swedish Riksbank’s First Deputy Governor Svante Öberg said in a speech, adding that financial markets have also improved.

Martin Guri, equity strategist at Nordea, said that the statement follows an international positive trend.

“The financial markets have called of the emergency” he told The Swedish Wire. “This has a positive effect on stock markets. Many institutional investors need this for decision-making and official statements”.

The US, Europe and Sweden say they will continue to support the financial markets. Still, investors fear that the central banks will remove the “punch bowl” too soon.

“The question everybody asks is how long the policymakers will step on the gas pedal”, Martin Guri said.

On Monday Stockholm-based Swedbank, which is badly exposed to the troubled Baltic economies, said it would raise around 15 billion kronor ($2.1 billion) by issuing shares in a rights issue.

The rights issue sends out two important signals, Martin Guri said. First, it indicates that there’s once again risk willing capital in the financial market.

“It’s easy to find money. A lot of companies will start asking for capital now in order to expand in the future”, Martin Guri said. “It’s not about crisis management anymore but rather about growth”.

Secondly, for Swedbank the fresh capital means they don’t have to plead for governmental support. It lowers the risk premium and the share price is up more than 12 percent since the announcement.

Since the turn of the year the Stockholm OMX 30 index is up more than 34 percent and has gained almost 6 percent during the last month.