Swiss equities should continue to be strongly weighted

Six Reasons to Keep Favoring Swiss Equities 

Swiss equities currently show above-average dividend yields. Nevertheless, there are six reasons for which they can still be favored. 

This year, the Swiss equity market has gone up considerably. Nevertheless, favoring Swiss equities is still worthwhile. Here are a few brief reflections:

  1. Thanks to its size and diversification, the market is appropriate not only for foreigners, but also for Swiss investors with a traditional home bias.
  2. Switzerland has one of the world’s most globalized stock markets. From food and beverages to financial services, pharmaceuticals and watches, Swiss companies have a global focus that is higher than average. At the same time, shareholders as well as employees appreciate the “Swissness” found in the management principles of many companies.
  3. Swiss small and mid-caps currently derive a disproportionate benefit from the strength of the economy. They are likely to maintain their lead in the weeks ahead and thus continue to feature among the preferred segments.
  4. For foreign investors, the strong franc can provide useful diversification. On the one hand, as the franc trends back to normal, it typically gives a boost to the export-oriented stock market. On the other hand, the franc’s quality as a safe haven offers diversification in times of crisis.
  5. Swiss shares may not be cheaper than those of most of its neighbouring countries, but compared to US shares or to Swiss government bonds, they remain attractive.
  6. Despite the defensive traits in many sectors, such as food and beverage, pharmaceuticals and financials, dividend yields on Swiss shares are higher than average. They are interesting in both national and international comparison, and should continue to attract capital inflows.
High Swiss dividend yields

High Swiss dividend yields 

In percentage points. Source: IDC, Credit Suisse