A recovery in Europe will take three to five years amid “subdued” economic and stock market growth, said Investor AB (INVEB) Chairman Jacob Wallenberg.
“I am very concerned about where we are right now,” Wallenberg, who heads the Swedish investment company, said in an interview with Bloomberg Television in Hong Kong today. “It’s longer than what we used to see. We will have subdued economic growth and subdued markets for some time to come.”
The euro area debt crisis has pushed at least five nations into recessions and eroded investor and business confidence, forcing companies to cut costs to help weather the turmoil. European Central Bank President Mario Draghi said last month that the weak outlook for the economy is weighing on credit demand and the Greek government yesterday predicted a bigger economic contraction next year.
Wallenberg said he expects the euro area to hold together and for Greece to remain in the monetary union. Europe is “converging in many ways” and will continue to do so, Wallenberg said. He supports the European banking union.
Investor AB (INVEA)’s total shareholder return, including share price and dividends, is 19 percent so far this year, according to the company. In the past three years and five years, the company’s total shareholder return has been 28 percent and 12 percent, respectively.
Investor AB will not invest directly into Asian companies, said Wallenberg, who is the vice chairman of Swedish bank SEB AB (SEBA), Scandinavian airline SAS AB (SAS) and Ericsson (ERICB) AB. He also sits on the boards of ABB Ltd. (ABBN) and Coca-Cola Co. (KO:US)
“We primarily work through companies that we already invested in,” he said. “They then invest in different areas. So ABB or Ericsson or SEB make their decisions how they want to develop regionally.”
Investor AB, controlled by the Wallenberg family, has stakes in about a fifth of the companies listed on the Stockholm OMX 30 Index (OMX), which tracks Sweden’s largest publicly traded companies. Holdings include Ericsson, the world’s largest maker of mobile-phone networks, Atlas Copco AB (ATCOA), the world’s largest maker of air compressors, and Saab AB (SAABB), the maker of the Gripen fighter jet.
“We know the management principles of Scandinavian companies or Nordic companies,” Wallenberg said. “We know that the managements of these companies are experienced and skilled at working in the world at large. To us, it’s much more straightforward to invest that way, rather than to go out to be a direct owner out here or in a Southern European or Brazilian company.”
The Wallenberg Foundations -- Knut and Alice Wallenbergs Foundation, Marianne and Marcus Wallenberg Foundation and the Marcus and Amalia Memorial Fund -- own a combined 22.4 percent of the share capital and 48.2 percent of the voting rights in Investor AB, according to information on the company’s website.
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