Thursday, 20 February 2025 Reading time : 2 minutes

The Swiss stock market is off to a good start: the Swiss Market Index (SMI) is up around 10% year-to-date (as of 19 February 2025). It has thus outperformed the technology-heavy S&P 500 (+3.9%), which was one of the top performers last year (+25.5%).

One of the reasons for the Swiss benchmark's strong performance is likely to be its defensive bias, meaning the companies represented are active in sectors that are hardly affected by the economic climate, as consumers demand their products even in difficult times. These include food producers, pharmaceutical companies, utilities and telecommunications providers. In an uncertain market environment, their shares often come under less pressure than those in other sectors.

Nestlé, Novartis and Roche are three defensive heavyweights in the SMI. All three have performed well this year. Roche shares are trading more than 15% higher than at the beginning of the year, followed by Nestlé (+10.2%) and Novartis (+8.9%). This is a different picture from last year, when the slump in Nestlé weighed on the SMI: the food giant's shares lost around a fifth of their value in 2024.

The blue-chip index S&P 500 had a rather subdued start to the year. The index is heavily weighted towards technology stocks, which are classified as information technology: according to S&P Global, the IT sector accounts for around 30% of the index, followed by financials at 14%. While the dominance of tech stocks has driven performance in recent years, concentration is proving to be a stumbling block this year. This is evident from a look at the Bloomberg Magnificent 7 Index, which includes stock heavyweights such as Nvidia, Apple, Microsoft and Alphabet: the index is down 0.2% year to date after rising nearly 70% in 2024.

Barrier Reverse Convertibles on Swiss Defensive Stocks
7.50% p.a. BRC auf BKW, Givaudan, Nestle, Novartis, Roche
Barrier: 67%
Valor: 140 252 410

Indicative terms

 

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