STOCK MARKET – Although the Stockholm exchange is expected to keep increasing there are some companies that may be overheated.

Report season is coming to an end in Sweden and clear majority of the companies have posted better-than-expected profits, mainly on the back of heavy cost cuts and restructuring programs. At Friday’s midday trading the OMX Stockholm 30 was up slightly compared to a week ago.

On Thursday Scandinavian airline SAS climbed 11 percent in early trade as the company unexpectedly swung to a third-quarter profit. The same day construction company Skanska posted stronger-than-expected net profit explained by healthy margins and said economic conditions seem to be improving.

Although revenues in general have been somewhat weaker than analysts’ forecast, outlooks for the upcoming period is optimistic.

Anders Berg, head of Capital Markets at Evli Bank in Stockholm, told The Swedish Wire that increased demand from the companies -- after a long period of cost cuttings and efficiency audits -- may kick off an inventory driven growth.

He believes the Stockholm exchange index will increase some 10 percent up to the turn of the year from today's level.

Still, many investors fear that stock markets have reached a peak and that the Stockholm index may shrink again after having swelled more than 40 percent this year. Anders Berg is not worried about a so-called double dip, where the economy quickly falls back into recession, but said analysts’ outlooks at the moment are sundry and mixed-up.

“The Stockholm exchange as a whole is not overheated. But there are sectors where you can look for potential risk. Building companies are more doped than others”, he said, pointing out NCC and JM.

Since the year start NCC is up 135 percent and JM 165 percent.

“I would be careful about builders with large exposure to the Swedish market. Interest rates are on a record-low and real estate prices are at all time high. If we speculate in higher interest rates next year there are reasons to be cautious”, he said.

Economists at Citigroup in London has also warned that the Swedish central bank’s plan to keep interest rates at a record low risks fueling a house price bubble.

The Stockholm exchange has also been boosted during the week by strong US macro statistics and strong reports from companies such as France’s second-biggest bank Societe Generale and British Marks & Spencer Group. The US Federal Reserve said it would keep interest rates “exceptionally low” as the U.S. economy is picking up.

This article has been published at The Swedish Wire and Nasdaq OMX Nordic.