What role is the Swedish krona fit to play in institutional investors’ portfolios?

The stocky — a nickname derived from the country’s capital, Stockholm — used to be one of the ultimate bets on global growth, perking up whenever global equity markets did so because of its high exposure to international trade. Sweden’s exports total 50 percent of gross domestic product — a much larger share than that of several larger European countries such as France or Italy.

The currency’s reliably positive correlation with equities and other risk assets, however, has recently begun to fade. The Dow Jones Industrial Average put in an extremely strong performance in September, for example, but the Swedish krona eased down slightly.

If the stocky is no longer a global risk play, what is its new identity?

In the past “the stocky has always had a high beta to global growth,” says Daniel Green, currency strategist and vice -president at J.P. Morgan Asset Management in London. “When the global economy was strong, the Swedish krona did pretty well.” However, Green adds, “what’s changed for the krona now is that there’s been, to some degree, a safe-haven flow going into Sweden” — reducing the beta to growth.

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