Sweden has one of the largest and most active equity markets in the European Union. Small companies use public markets to a much larger extent than in comparable countries and the level of household engagement in domestic capital markets is high. This report assesses the Swedish equity market, drawing from original data and in-depth interviews with market participants. It also discusses the policy initiatives that have promoted the growth of the Swedish market, including the local regulatory and corporate governance models.
The Swedish Equity Market
Institutional Framework and Trends
Abstract
Executive Summary
Expanding and deepening capital markets has become a central issue in European debate in recent years. Substantial investment needs coupled with an increased focus in the EU on strengthening international competitiveness have led to renewed awareness about the importance of being able to mobilise long-term, risk-willing capital for high-growth sectors. This has given the development of strong equity markets in particular more prominence in political debate, exposing the limited ability of a primarily bank-based funding model to provide sufficient financing to what are often low-collateral businesses.
Sweden has garnered much attention in this regard. The Swedish equity markets, both public and private, are among the largest in the EU even in absolute terms. Domestic investment in these markets is widespread, ranging from institutional investors to households. Identifying the underlying drivers, as well as possible areas of improvement, can serve as a foundation for formulating a set of policies that help advance capital market development.
This report provides a comprehensive empirical overview of the Swedish equity market landscape and presents an initial assessment of elements that have shaped its development. This assessment, presented in chapter 1, identifies six key areas: a widespread equity culture strengthened by active government policies; a substantial domestic institutional investor base, notably a large asset-backed pension system; policy efforts to promote household investment through both fiscal and non-fiscal incentives; a well-functioning market infrastructure and funding ladder; a flexible regulatory structure; and active ownership engagement, linked to a corporate governance model that focuses heavily on shareholder control. It serves as a first step to inform a longer-term project that will look at specific policy initiatives in greater detail. It is informed by empirical findings (chapter 2), presented below.
Public equity markets. Sweden’s public equity markets have the highest number of listed companies in the EU. Total market capitalisation amounts to 159% of GDP, surpassing that of most peer countries. A key characteristic is the substantial activity by smaller companies. Most public companies in Sweden are listed on a growth market (although these markets have seen net delistings since 2023). The median IPO size since 2000 of USD 8 million is much lower than in peer countries. The growth segments work as a stepping stone to the regulated markets: since 2013, an annual average of 45% of new listings on Sweden’s regulated markets have originated from a local growth market. Returns on the domestic market have been among the strongest in the world; the main broad local market index has consistently outperformed major international indices over long periods of time, including in foreign currency terms.
Private equity markets. Fundraising by Swedish private equity funds has made up nearly a tenth of the European total in recent years, more than triple what its GDP share would suggest. Nearly two-thirds of total fundraising has come from non-European investors, by far the highest share among peer countries in the EU. Swedish companies are also overrepresented as investment targets, having received 40% more private equity investment than economic weight would suggest between 2019 and 2023. Importantly, there is a strong link between the private and public equity markets: uniquely among peer countries, the most common way for private equity firms to divest their holdings of Swedish companies in recent years has been to take them public.
Institutional investors and ownership. The institutional investor base in Sweden is both sizeable and uniquely exposed to the domestic equity markets. The four main public pension buffer funds (AP1-4), managing aggregate assets of more than EUR 180 billion, have an average equity exposure of 53% of total investment assets, of which roughly 28% is domestic equities. The even larger occupational pension fund sector, with total investment assets of more than EUR 270 billion, also allocates half of its aggregate portfolio to equities, as does the insurance sector. Investment funds had an aggregate market value of EUR 760 billion at the end of 2024, of which EUR 540 billion was direct equity holdings. Sweden also has a long history of family ownership through investment firms. The five largest family-owned investment firms collectively hold over 8% of total domestic market capitalisation, with stakes in major listed companies. These are heavily involved in local equity markets, taking an active ownership role.
Household investment. Swedish households have among the highest levels of participation in capital markets in Europe, with 10% of total financial assets allocated to investment funds and 7% to listed equities. In contrast, only 12% is held in traditional currency and deposits – the lowest among peer countries. While direct equity holdings among Swedish households have declined in recent years, this shift has been accompanied by a substantial increase in indirect equity investments through funds.
