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More bad news for Nokia as Finnish equity funds lose faith in the mobile phone makerMonday, 16 July 2012
Mobile phone manufacturer Nokia has lost its position as a trusted firm
for equity funds. Nokia’s percentage in Finnish investment funds has
dropped to a record low as professional investors have lost their faith
in the company and sold their shares.
The company is bracing itself for Thursday’s announcement of its second
quarter result. Nokia has already warned of more bad news ahead.
After the re-analysis of its corporate strategy, the company has become
a ball and chain to investors in Finnish firms because of its drop in
share value. Now fund managers have lost their faith.
At the start of 2010, Nokia constituted 7.5 percent in Finnish share funds; now that figure stands at 3.05 percent.
“Portfolio managers have decided that too much uncertainty surrounds
Nokia. As the company’s share value has fallen so much, many investors
have decided to steer clear,” says Matias Möttöla, a fund analyst at
portfolio management firm Morningstar interviewed by Yle.
In index-linked funds, Nokia has performed better but the trend is
moving downwards. Some funds have dumped Nokia completely but a
majority still remains committed to Nokia despite the gossip
surrounding the firm.
“Surprises could be on the way with share prices so low. Yet something
unexpected like an acquisition bid for the company could turn things
around, " says Juha Varis, a portfolio manager of Finnish funds at
Finnish funds contain over three billion euros of people’s savings and
the cash deposits of large company funds. Deficits will not be
tolerated for long, leaving Nokia with a huge task of restoring
“The threshold is higher for Nokia as these recent drops in share
prices have hit the pockets of many portfolio managers,” comments
Matias Möttöla, a fund analyst at Morningstar.
On the other hand, in the view of Juha Varis from Danske Bank, confidence can return in the blink of an eye.
”It can happen if the company announces a change in strategy very
quickly. One good alternative in my view would be to consider perhaps
the Android alternative alongside Windows,” he concludes.
News sources: Yle Finland
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