Swiss bourse breaks record

Keystone

The Swiss Market Index (SMI) - the barometer of performance of major Swiss companies at the Zurich stock exchange - has bettered its previous high, set over eight years ago.

Investors are optimistic, with oil prices falling and the economic outlook for Switzerland and the eurozone expected to be good for at least another two years.

Mirroring the efforts of other European bourses, the index rose above 8,413 points on Wednesday – driven by shares in the pharmaceutical and insurance sectors. The SMI has gained ten per cent so far this year.

The last record was set in July 1998, during the so-called internet bubble.

Investors were buoyed by news that the slowdown of the American economy was not as bad as feared, although it will continue next year. The US housing market is expected to weaken further, but analysts believe this will be partially compensated by lower energy costs and higher salaries.

They point to other signs that America’s economy is not doing so badly. “Capital goods expenditure is strong in the US and exports are rising,” Alfred Roelli of the Pictet private bank told the Cash business newspaper.

Mergers and acquisitions

Oil prices, which have dropped 17 per cent in the past two weeks to around $60 (SFr74.70) a barrel, also boosted share trading. Investors feel that companies’ bottom line will not be as affected by energy costs as previously thought.

Mergers and acquisitions contributed to higher share prices. The sale of biotechnology specialist Serono, announced last week, was just the latest in a series of major deals.

Shares in pharmaceutical specialist Roche carried the SMI upwards, with gains of over two per cent. Competitor Novartis benefited as well, its stocks going up half of one per cent.

The insurance sector made serious gains too against a backdrop of merger and acquisition rumours. Baloise shares rose four per cent (46 per cent this year), while Swiss Life and Zurich Financial services were up by one per cent or more.

Technology stocks are generating interest at the moment. Electro-engineering concern ABB gained 0.6 per cent on the day, but has seen its share value rise by a quarter since the beginning of the year.

Kudelski, which has specialised in pay television systems, was up 2.2 per cent, while semiconductor manufacturer Micronas gained 6.5 per cent.

Only the banking sector was down. Shares in Switzerland’s second-biggest bank, Credit Suisse, fell after it was announced earlier this week that the bank had lost up to SFr2 billion in the collapse of a hedge fund.

swissinfo with agencies

In brief

The Swiss Market Index is Switzerland’s blue-chip index.

It is made up of a maximum of 30 of the largest and most liquid stocks traded at the Swiss bourse.

The securities contained in the SMI currently represent more than 90 % of the entire market capitalisation, as well as of 90 % trading volume, of all Swiss and Liechtenstein equities listed on the SWX exchange.

To be accepted into the SMI, a given issue must meet stringent requirements with regard to liquidity and market capitalisation.

The SMI’s composition is reviewed once a year.