Braced for Turbulence

Stockholm (HedgeNordic) – The sell-off in stocks across the globe has taken a pause after several days of heavy losses caused by investor concerns around the possible economic damage from the spread of the coronavirus. “The markets will be controlled by the news about the virus in the coming weeks,” Fredrik Tauson (pictured), Portfolio Manager and Founding Partner at Stockholm-based Nordic Cross Asset Management, tells Swedish newspaper Realtid.

Tauson, a member of the Nordic Cross team mainly focusing on credit markets, tells Realtid that “based on what we know today, the coronavirus will impact operating and financial results for the first quarter and a bit into the second quarter.” He also reckons that “several companies will probably take the opportunity to blame weak figures on the virus effects.” Whereas markets are expected to be dominated by virus headlines and news, Tauson expects “a quick rebound in the world’s stock markets if we see a slowing rate of growth in the number of infections.”

Fredrik Tauson is part of the team running the fixed-income hedge funds at Nordic Cross, namely Nordic Cross Credit Edge and Nordic Cross Total Return Bond Fund. Tauson hopes the increased volatility in equity markets will lead to more volatility in the Nordic credit market too. “Our customers are long-term-oriented and know that we have long been looking forward to increased turbulence in the corporate bond market,” he tells Realtid. “The credit market, particularly in Sweden, exhibits artificially low volatility that is partly driven by a lack of liquidity.”

The two purely credit-focused hedge funds at Nordic Cross employ an opportunistic approach to buying corporate bonds at attractive prices driven by market turbulence. “Since we have an opportunistic approach in both credit funds, we hope for increased volatility in the Nordic credit market so that even better investment opportunities emerge,” Tauson tells Realtid. The two credit hedge funds entered this period of volatility with a large portion of liquidity, and the team at Nordic Cross “will be opportunistic buyers of corporate bonds when turbulence increases and incorrectly-priced bonds appear in our market.”

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About Author

Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index (NHX), as well as being a novice columnist covering the Nordic hedge fund industry for HedgeNordic. Prior to joining HedgeNordic, Eugeniu had served as a columnist for a U.S. journal covering insider trading activity, activist campaigns and hedge fund moves. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018.

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