Examining large- and small-cap performance on the Stockholm stock exchange 1999-2024
(2024) EOSK12 20241Department of Economic History
- Abstract
- Stock markets around the world bear one thing in common, the presence of stock companies of different sizes, whereby two common representatives of size are small- and large-cap stocks. As of late, newspapers and financial institutes have reported a on a divergence in performance between these assets, associated with the increasing interest rates. The aim of this paper was to further explore the relationship between large- and small-cap performance during the current and previous periods of increasing policy interest rates in Sweden. Additionally, as interest rate hikes are usually short-lived, the study aims to examine the long-term trends of each category over 25 years. Using a quantitative method and collecting index data for each... (More)
- Stock markets around the world bear one thing in common, the presence of stock companies of different sizes, whereby two common representatives of size are small- and large-cap stocks. As of late, newspapers and financial institutes have reported a on a divergence in performance between these assets, associated with the increasing interest rates. The aim of this paper was to further explore the relationship between large- and small-cap performance during the current and previous periods of increasing policy interest rates in Sweden. Additionally, as interest rate hikes are usually short-lived, the study aims to examine the long-term trends of each category over 25 years. Using a quantitative method and collecting index data for each category, one index containing large-caps and one for small-cap stocks, and interest rate data from the Riksbank. The data was used to create graphs, figures and tables with relevant calculations. The results of which were used to examine the long-term performance, and to compare performance during interest rate hikes. Finding evidence of outperformance by small-cap stocks in Sweden for the last 25 years compared to large-caps. The examination of performance during the 4 previous rate hikes in Sweden yielded inconclusive results. On one hand, the recent outperformance by large-caps could be contributed to the outperformance by banks and financials within the large-cap index. Small-caps were increasingly negatively affected, likely due to higher debt financing within these stocks. The three other examined rate hike period presented contrasting results, finding that small-caps performed better than large-caps for three out of the four measured periods. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9168400
- author
- Stromgren, Fredrik LU
- supervisor
- organization
- course
- EOSK12 20241
- year
- 2024
- type
- M2 - Bachelor Degree
- subject
- keywords
- Small-caps, Large-caps, The Riksbank, Small-cap Premium and Rate Hikes
- language
- English
- id
- 9168400
- date added to LUP
- 2024-07-03 07:05:32
- date last changed
- 2024-07-03 07:05:32
@misc{9168400,
abstract = {{Stock markets around the world bear one thing in common, the presence of stock companies of different sizes, whereby two common representatives of size are small- and large-cap stocks. As of late, newspapers and financial institutes have reported a on a divergence in performance between these assets, associated with the increasing interest rates. The aim of this paper was to further explore the relationship between large- and small-cap performance during the current and previous periods of increasing policy interest rates in Sweden. Additionally, as interest rate hikes are usually short-lived, the study aims to examine the long-term trends of each category over 25 years. Using a quantitative method and collecting index data for each category, one index containing large-caps and one for small-cap stocks, and interest rate data from the Riksbank. The data was used to create graphs, figures and tables with relevant calculations. The results of which were used to examine the long-term performance, and to compare performance during interest rate hikes. Finding evidence of outperformance by small-cap stocks in Sweden for the last 25 years compared to large-caps. The examination of performance during the 4 previous rate hikes in Sweden yielded inconclusive results. On one hand, the recent outperformance by large-caps could be contributed to the outperformance by banks and financials within the large-cap index. Small-caps were increasingly negatively affected, likely due to higher debt financing within these stocks. The three other examined rate hike period presented contrasting results, finding that small-caps performed better than large-caps for three out of the four measured periods.}},
author = {{Stromgren, Fredrik}},
language = {{eng}},
note = {{Student Paper}},
title = {{Examining large- and small-cap performance on the Stockholm stock exchange 1999-2024}},
year = {{2024}},
}