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Rocks in the surf in turbulent times

Tuesday, 10 November 2020 Reading time : 4 minutes

In March 2020, the SMI® index stood at 9,311 index points, which was the low point during the corona crisis in spring. Looking at this year's performance of the leading Swiss index, it is currently back at roughly the same level as it was in mid-April 2020. There is nothing wrong with fearing that the coming weeks, if not months, will be marked by uncertainty. Throughout Europe, many countries are fighting the current second wave of corona with containment measures. Overseas, the US presidential elections caused fluctuations and corrections in the financial markets, and the Brexit is not exactly creating a good mood in the markets throughout Europe. The ammunition of the central banks has largely run out and the possibilities of a low interest rate policy have been exhausted for the most part.

According to this background, it is not wrong to take a closer look at the best performers of the SMI® Index during a certain period in 2020. At the crash in the spring, the SMI® members there were only relative winners, as all stocks went down. Between February 19, 2020 and March 23, 2020, the three stocks that stood out were Swisscom, Nestlé and Roche, with returns of -15.74%, -15.97% and -20.66% respectively, while most stocks showed much worse returns. However, if we look at the period between 25.10.2020 and 30.10.2020, these three stocks again stood out with returns of -0.74%, -3.25% and -0.89%.

Swisscom, Roche and Nestlé, as non-cyclical stocks, show some resistance to turbulent markets. In addition, the demand for PCR and antigen testing gave Roche "relative" protection in the spring, and the prospect of a lucrative business with strong demand for Roche's "rapid tests" could give the company a boost.

We offer a Callable BRC on worst of Swisscom, Nestlé and Roche (termsheet) with a barrier of 66%* and a coupon of 5%* p.a.. The product has a maximum maturity of 18 months and is callable quarterly (first time on 12.02.2021). We also offer a BRC on worst of Swisscom, Nestlé and Roche (termsheet)with a barrier of 67%* and a coupon of 3%* p.a. with a term of 1 year. Both products are in subscription until 12.11.2020

*indicative

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