The relative resilience of Swiss equities

The year 2018 has been characterised by a return of volatility on the markets after years of appreciation without big movements. In fact, after the sharp decline in global equities in February, followed by a recovery that erased the decline, we again witnessed a sharp drop in equities in October. This volatility is a characteristic of the end of a cycle. That does not necessarily mean that we are going into recession; however, it is important to take into consideration the exceptional duration of economic expansion, the inversion of the yield curve and the potential for future economic growth, given that central banks have become more restrictive. In this context, a diversified approach in quality securities is justified and a part of Swiss equities corresponds to this criterion. Indeed, if we compare the evolution of European equities (Stoxx600) with the Swiss market (SPI), we observe that the latter behaves much better in relative terms. During this turbulent period, the defensive characteristics of Swiss equities were confirmed thanks in particular to pharmaceuticals less sensitive to economic uncertainties, but also thanks to Nestlé or Lindt & Sprüngli, for example.

I wish you a happy festive season and send you my best wishes for 2019.