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COMMENTATORS have been wondering what will happen to Finland as a result of Nokia’s sale of their handset business to Microsoft. One thing which hasn’t been mentioned yet is the impact upon the Helsinki Stock Exchange. Unfortunately, it doesn’t look good.

NOKIA has dominated the Helsinki Stock Exchange for over a decade. Last year, trading in Nokia made up 57% of our total volume. The Espoo-based company was the favourite of international professional investors as well as individual Finns. As of August, volume on the Helsinki exchange is much less than half of what it was two years ago, and the vast majority of this decline is due to Nokia. Now the company is selling off half of itself and I suspect that trading volume will fall correspondently. With less interest in Nokia, there will be less interest in other Finnish stocks.

THIS is very serious. I believe that a well-functioning stock market is essential for a well-functioning economy. For several years I have occasionally written about the poor state of our exchange, but with this one move Nokia has thoroughly decimated it.

A STOCK market is important for the economy for a number of reasons. For one, it gives liquidity to the owners of a company. It can have a multiplier effect: higher share prices means higher capital gain taxes for the state, as well as increased consumer spending and investment. Most importantly, it is a way for a company to raise capital so they can grow and invest and hire more workers. If a country has a lethargic stock market, they lose all of these benefits. This is a real danger Finland now faces.

NOKIA is not the only reason we are in this position. Our capital markets have been moribund for some time. I have lamented that our best companies, such as Rovio Entertainment, consider New York the place to be listed, not Helsinki.

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David J. Cord
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