Swiss Stock Index Jumps to Record as SocGen Goes Long on Country
Swiss Stock Index Jumps to Record as SocGen Goes Long on Country
(Bloomberg) -- Switzerland’s equity benchmark jumped to a record as the country’s political stability and steady dividend flow, from companies such as Roche Holding AG and Nestle SA, lured investors seeking a haven amid trade-war worries and uncertainty in other parts of Europe.
The Swiss Market Index was up 1.1% as of 2:04 p.m. in Zurich, boosted by building materials giant LafargeHolcim Ltd., chemicals company Lonza Group AG and Credit Suisse Group AG. The SMI has advanced about 17% this year, beating indexes in countries including France, the U.K., Germany and Italy.
Investors have increasingly turned to Switzerland’s equities and currency as a haven in a market steeped in escalating trade tensions and as other countries in Europe are in turmoil. The SMI is considered less risky thanks to the heavy weightings of Roche, rival drugmaker Novartis AG and Nestle, with the Swiss food giant among the SMI’s top gainers this year.
“We are long Switzerland,” Charles de Boissezon, deputy head of Global Asset Allocation and Equity Strategy at Societe Generale SA, said in an interview in Geneva. “We like companies that have big, safe dividends, so typically recurring earnings. Volatility is very low, the local economy is doing fine and you don’t have a political risk the way you have” in other European countries such as Italy, he added.
“Absent alternatives and fearful of a slowdown and trade war,” investors are piling into defensives and liquid assets and “the Swiss market is full of these: defensively growing super caps, consumer, pharma, medtech, insurers,” Torsten Sauter, head of Swiss equities at Kepler Cheuvreux, wrote in an email.
Investors also tend to buy the country’s currency, the franc, at times of heightened risk aversion. The SMI index has gained for a fourth straight day and traded as high as 9,859.57.
To be sure, it’s not all plain sailing for Switzerland. The equity market is at risk of being cut off from EU investors after Brussels made any regulatory extension for the bourse contingent on progress on a wider political accord governing Switzerland’s relations with the bloc.
Still, Switzerland “in the pecking order of things, is at the bottom of my concerns when it comes to Europe’s fragmented political landscape,” according to Societe Generale’s de Boissezon.
--With assistance from Namitha Jagadeesh.
To contact the reporter on this story: Albertina Torsoli in Geneva at atorsoli@bloomberg.net
To contact the editors responsible for this story: Beth Mellor at bmellor@bloomberg.net, Jon Menon, Namitha Jagadeesh
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