Tuesday, 10 March 2026 Reading time : 4 minutes

Following a strong start to 2026, stock markets around the world are undergoing their first stress test. The escalation of the conflict in the Middle East has led to significant price declines in some markets, demonstrating how quickly market sentiment can change.

This is evident in the EuroStoxx 50®, which comprises the largest listed companies in the eurozone. At the end of February, the index was at a record high, but it lost almost 6% in the first two trading days of March after the US declared war on Iran. A similar picture emerged in the Swiss benchmark index SMI®, although the losses were slightly lower.

It is currently difficult to predict how the geopolitical situation will develop in the coming months and how events will affect the financial markets. However, it seems clear that a period of increased uncertainty lies ahead. Investors are therefore asking themselves how they can take advantage of investment opportunities while reducing the risk of loss.

In this market environment, investors may be interested in an investment product that allows them to participate in any further gains on stock markets while reducing potential losses compared to a direct investment.

Structured products for uncertain times
Benefitting from rising stock markets while limiting the risk of loss: investors may find the solution for these needs in the range of structured products, specifically in the form of a cushion participation certificate, which can be structured on individual stock indices.

As the name suggests, this is a participation product, meaning investors participate in both price gains (upside participation) and losses (downside participation) of the underlying asset. The certificate's appeal ultimately lies in the structure of these two components. If the upside participation is, for example, 100%, investors will participate fully in any upward movement of the respective index. However, the certificate often has a cap that limits the profit potential. The term is fixed and it should be noted that no dividends are paid.

In return, the downside participation cushions a possible decline, as price setbacks are partially offset. For instance, if the downside participation is 50% and the share index closes 10% below its initial level, the loss is reduced to 5%. Compared to investing directly in the index, therefore, the loss at expiry is reduced.

Individual market expectations are key
Cushion participation certificates are suitable for investors who believe that the selected underlying asset will experience moderate upward movement, but do not expect any dramatic price increases during the term and want to reduce the risk of loss at the same time. The product thus allows investors to benefit from potential returns in uncertain market phases without taking on the risk of direct investment. However, if investors expect a stock market rally, this structure is not suitable for reflecting these market expectations as the profit potential is often limited by a cap. Individual market expectations are therefore always decisive for the investment decision.

Zürcher Kantonalbank currently offers three cushion participation certificates – on the SMI® Index, the EuroStoxx 50® Index and the S&P 500® Index – each of which is in subscription until 23 March 2026.

ZKB Cushion Downside Partizipation Zertifikat with Cap SMI Index
Upside: 100%
Downside: 60%
Cap: 115%
Valor: 151 093 893

ZKB Cushion Downside Partizipation Zertifikat with Cap EuroStoxx 50 Index
Upside: 100%
Downside: 50%
Cap: 122%
Valor: 151 093 894

ZKB Cushion Downside Partizipation Zertifikat with Cap S&P 500 Index
Upside: 100%
Downside: 60%
Cap: 119%
Valor: 151 093 895

Indicative terms

 

Disclaimer
This communication is for marketing purposes. It is neither an offer nor an invitation to submit an offer, to purchase or to subscribe to securities and does not constitute investment advice. You should consult your advisors before making an investment decision. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, financial condition, development or performance of the issuer to be materially different from any future results, financial condition, development or performance expressed or implied by such statements. The present document has not been drawn up by the research department as defined in the rules of the “Directives on the Independence of Financial Research” published by the Swiss Bankers Association, hence these rules do not apply to this document. If securities are mentioned in the communication, the base prospectus, the final terms and any key information document may be obtained free of charge from Zürcher Kantonalbank, Bahnhofstrasse 9, 8001 Zurich, VRIS, and from www.zkb.ch/finanzinformationen.
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