“Spring makes all things new,” goes an old folk saying. It normally refers to the changes that occur in nature and life in general. The capital markets also often go in for a spot of spring-cleaning, as it were, when investors get rid of clutter and create space for fresh ideas. Similarly, professional index operators like to upgrade their portfolios as well. It is always in May, for instance, that the editorial team of the respected business paper “Finanz und Wirtschaft” adjust the FuW Swiss 50 Index, which they launched at the end of 2022, to the current market situation. This much we know so far: three stocks will have to leave the representative barometer of the Swiss equity market, with three new companies joining the index in their place.
Taking one thing at a time, though, the erratic policies of new US president Donald Trump, who is not only throwing tariffs around but has also since called into question the independence of the US central bank, have recently created considerable uncertainty on the financial markets and triggered correspondingly significant price movements. The S&P 500 has plunged almost 18% from its peak this year, pulling stock markets in Europe and Asia down with it. Although the temporary suspension of the mega-tariffs has brought about a return to some sort of calm, it is still too early to sound the all-clear. The situation could come to a head again when the 90-day pause in tariffs called by Trump in April elapses.
In the interim, investors are taking a close look at company balance sheets. Swiss groups have made a relatively good start to the current reporting season, with the two heavyweights, Roche and Nestlé, among those delivering positive news. Thanks to new drugs, the pharmaceuticals concern posted a significant improvement in sales in the first quarter and reaffirmed its targets for the year. Roche is also making a USDbn 50 investment in an attempt to appease the US government pending negotiations on an exemption from possible new tariffs. Food giant Nestlé likewise recorded growth at the start of the year and confirmed its forecast. The logistics group Kuehne + Nagel was also able to defy the global uncertainties surrounding economic development, increasing its sales by 15% from January to March while improving the operating result by 7%. Given the lack of clarity concerning the effects of the US trade tariffs, however, boss Stefan Paul remains cautious for 2025. Logitech has already had to row back from its forecast: the computer accessories manufacturer has withdrawn its targets for the current 2025/26 financial year (31 March) in response to the uncertainty around tariffs.
Amidst the ups and downs of the volatile news coming from the White House and the current reporting season, Swiss groups have performed significantly better than their US counterparts. The SMI has been flat since the turn of the year, while Wall Street is still in the red. Anyone wanting to invest in Switzerland, though, isn’t necessarily restricted to the 20 large groups in the Swiss Market Index, particularly as the SMI is dominated by the trio of Nestlé, Novartis and Roche, which make up more than half of it. The FuW Swiss 50 Index offers less of this trio in return for greater diversity. It brings mid caps into play alongside the large caps – and they often have more to give when it comes to growth opportunities and price movements. That the index concept works is evident from a retrospective view: the FUW Swiss 50 Index has risen by 49% over a period of five years, some 25 percentage points ahead of the SMI.
Source: Refinitiv