2023-08-21 16:42:53
There are many reasons why inflation in Switzerland is so much lower than in the euro area at 1.6 percent (July). One is: The Swiss National Bank sells foreign exchange reserves and thus ensures that the Swiss franc appreciates. This makes imports into the Confederation cheaper. The rise in prices is therefore slowed down. However, there is a catch: Swiss companies with a strong export focus sometimes suffer significant losses after the conversion of foreign income into Swiss francs. “This is leaving skid marks on share prices,” says Lorenz Reinhard, senior investment manager at Geneva-based private bank Pictet.
In fact, the Swiss Market Index (SMI), which brings together the 20 most important Swiss stocks, has fared relatively poorly so far this year. While the Dax and Euro Stoxx 50 have risen by 13 and 11 percent since the beginning of the year, the SMI has only increased by 1 percent. In addition to the strength of the franc, this reflects the defensive character that characterizes the leading index with heavyweights such as Nestlé, Roche and Novartis. In the first half of the year, investors were primarily interested in cyclical, i.e. economically sensitive stocks, explains Reinhard. In the meantime, however, the economic prospects have clouded over significantly everywhere. He therefore expects the Swiss stock market to be more resilient than most other markets over the course of the year. “I expect another downside correction in the third quarter. But then the worst is behind us. Things should start to pick up again in the fourth quarter.”
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