Moody’s quarterly report on sovereign debt brought to light issues with large economies around the globe that have been spending like drunken sailors. The four countries with Aaa ratings that are stable, but “their distance to downgrade has in all cases substantially diminished” include the US, UK, German, and France.
The Nordic countries, which also boast an Aaa rating appear to be in better shape according to Moody’s and this has a lot to do with the fact they entered the financial crisis in a better condition than their peers.
From an investment angle there are a number of ETFs investors can consider if they want to gain exposure to the Nordic region. A fairly new ETF, the Global X FTSE Nordic 30 ETF (NYSE: GXF) invests in the regions 30 largest and most liquid companies. Sweden makes up 45%, followed by Norway 19%, Denmark 18%, and Finland 17%. As far as industries represented, the financials, industrials, and technology account for 56% of the allocation.
The only single-country ETF in the region is the iShares MSCI Sweden ETF (NYSE: EWD). So far in 2009, EWD is up 9%, much better than the US or the UK and in 2008 the ETF gained 51%, again beating the US and UK. To be fair, EWD lost nearly 50% in 2008 as the S&P 500 fell by 38% and the UK’s FTSE lost 31%.
Looking ahead the risk clearly appears to be lower for the stock markets of the Nordic region and the upside potential should be equivalent. Offering a more attractive reward-to-risk investment versus its other Aaa-rated peers. | 
