The Swiss anomaly

Economic and market environment

“There are many factors at play, and the environment is characterised by a high degree of uncertainty, both economically and in equity markets. In Switzerland, however, inflation remains relatively well contained, which is an important strength. At the same time, organic growth is solid. Swiss companies have demonstrated a strong ability to adapt, innovate and protect margins, even with costs denominated in Swiss francs. That said, the strength of the Swiss franc can act as a long-term headwind, potentially weighing on competitiveness and innovation.”

Impact of the strong Swiss franc 

"While the Swiss franc reflects the strength and stability of the economy, it can penalise companies over the long term. A strong currency makes exports less competitive and can put pressure on margins, particularly for businesses operating internationally, and may ultimately weigh on their capacity to innovate."

Tariff impacts on Swiss pharmaceutical sector 

“There has been a lot of focus on US policy, especially under Trump, and the potential impact of tariffs on pharmaceutical companies. However, despite this political pressure, companies continue to invest heavily in the US, with planned investments of between USD20 billion and USD50 billion over the next five years.

This highlights the structural strength of the pharmaceutical sector. A key driver remains the growth of new products and ongoing innovation. Over the past three years, the sector has delivered strong, if not very strong, performance.”

Companies and sectors standing out in the current environment 

“UBS is a notable example. It has reported net profits of around USD3 billion, supported by strong trading activity and elevated market volatility. This has been beneficial for that part of its business, and more broadly for overall performance.”

Credit Suisse’s integration into UBS

“The takeover of Credit Suisse by UBS has been highly politicised and continues to be so. Credit Suisse had already been facing significant challenges with investors, and while the state facilitated the process, it did not directly intervene.

The result is a much larger and more significant institution. UBS is now even more focused on wealth management, with a relatively lighter capital base. This raises some concerns, as there is a risk – albeit smaller – of encountering issues similar to those faced by Credit Suisse.”

Regulatory outlook for UBS

“This is now a key area of debate. Swiss authorities are pushing for higher capital requirements, while other regions tend to regulate banks less strictly. Despite this, UBS is generating strong results, with significant inflows and growth in assets under management.

This demonstrates the potential of the business, even in a highly competitive global landscape. Wealth management is becoming increasingly important, and UBS is extremely well positioned in this space.”

Technology sector outlook

“At present, parts of the technology sector appear less attractive, as some areas have missed out on growth and the industry is undergoing structural change. However, innovation remains strong, particularly in AI and semiconductors.

Many Swiss companies are participating in this trend and investing accordingly. That said, there is a risk of excessive optimism. We may be seeing elements of euphoria or even a bubble, so it is important to focus on which companies are ultimately able to generate sustainable profits.”

Switzerland’s neutrality from an investor perspective 

"Switzerland officially remains neutral, and this has historically been one of the foundations of its success. However, the country faces pressure to increase its own defence spending, and decisions around arms exports remain a sensitive and somewhat controversial topic internationally."