Following a relatively lacklustre performance in 2023 and the Swiss National Bank’s recent interest rate cut, is now the time to revisit the Swiss equity opportunity set? In this Investment Rendez-Vous podcast, Eleanor Taylor Jolidon, co-head of UBP’s Swiss and Global Equity team, walks us through Swiss business models, current valuations and industries of particular interest.
In 2023, the Swiss equity market faced a rare occurrence of underperformance compared with global equities, largely attributed to the robust performance of US equities, and in particular the “Magnificent 7”. Nevertheless, the underlying business case for Swiss companies remains strong, and in light of the Swiss National Bank’s recent interest rate cut, now could be the opportune moment to refocus attention on Swiss equities.
First, the underperformance needs to be contextualised against the global equity landscape. In 2023, while global equities saw zero earnings growth, Swiss equities demonstrated positive earnings growth, achieving a 14% performance in the same currencies. This performance highlights Swiss equities’ resilience and potential.
Additionally, the 2023 appreciation of the Swiss franc reiterated to Swiss companies the impact currency has, and thus the continuous need for strategic adjustments to their operations.
Last, Swiss equities command premium valuations akin to US equities, justified by strong earnings visibility and value creation. In 2024, and in particular following the recent rate cut, Swiss equities are trading at a discount to their US counterparts, offering compelling investment alternatives.
Ultimately, when these factors are combined, Swiss equities present opportunities for investors seeking value and diversification within global portfolios.
