Finland’s battered stock market could offer investors a benefit next year as a potential global economic recovery could lift cyclical stocks that dominate the index and NATO membership eases risks related to Russia, according to Finland’s stock market managers.

Finnish stocks are the worst laggards in Europe this year as risks related to tensions with Russia and concerns about China’s stalled economic recovery have hurt that country’s exporters. In addition, large funds are favoring global mega-stocks over the smaller companies that make up much of the Nordic country’s stock landscape.

The top 25 stocks in Helsinki are worth a total of $150 billion. Europe’s most valuable company Novo Nordisk alone is worth three times that amount. This year, the OMX Helsinki 25 index has lost 10% compared to the STOXX 600’s 8% gain.

Thomas Hildebrandt, senior portfolio manager at Scandinavian fund EVLI, sees Finnish stocks as cheaply valued and poised to benefit from the economic recovery, which he believes could gain momentum in 2024.

Industrial stocks have been hit by the global manufacturing downturn, which began in 2022. But a recent Deutsche Bank survey found that some leading indicators – such as South Korea’s semiconductor exports, which rose in October for the first time in 16 months – point to growth.

The recovery should benefit other export-oriented European markets, although Finnish stocks look a better bargain. They suffered a bigger fall due to their greater exposure to China and selling linked to concerns over tensions with Russia.

Finland joined NATO in April, ending seven decades of military non-alignment and roughly doubling the length of the border the organization shares with Russia.

Elevator maker Kone, Helsinki’s largest industrial company, sold its Russian assets in October, 20 months after Russia invaded Ukraine. The company has been struggling because its shares are heavily tied to the Chinese real estate sector.

Kone’s updated report for late September showed orders fell less than expected, thanks to what CEO Henrik Ernroth called a “fantastic quarter” in China. After falling 14% this year, the stock is 10% cheaper than rivals Schindler of Zurich and Otis of the U.S., having traded at about the same premium to both companies over the past five years, according to LSEG data.

Other laggards include cyclical commodity companies such as forestry firms Metsa Board and Stora Enso, and stainless steel producer Outokumpu.