Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Coffee, chocolates and pills shield Swiss stocks from virus rout

Stock MarketsApr 22, 2020 11:25
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Julien Ponthus

LONDON (Reuters) - Shielded by the resilience of three behemoth defensive stocks, the Swiss blue-chip index has comfortably weathered the coronavirus storm compared with other European benchmarks which have sustained up to three times more damage.

With no direct exposure to oil, airlines or other sectors battered by the pandemic, the Swiss Market Index (SSMI) is down less than 10% since the beginning of the year. The pan-European STOXX 600 (STOXX) index has slumped 21% in the same period.

Switzerland is home to the world's biggest food group Nestle (S:NESN) and pharmaceutical giants Roche (S:ROG) and Novartis (S:NOVN), all of whose earnings typically hold up even when markets are in turmoil and economic indicators turning south.

(Graphic: European stocks by countries: Switzerland outperforms link: https://fingfx.thomsonreuters.com/gfx/buzz/oakpekwxprd/Pasted%20image%201587504345436.png)

Nestle, Roche and Novartis make up over 70% of the blue-chip index, which has a market capitalisation of 1.16 trillion Swiss francs ($1.2 trillion). The trio are the biggest companies by market value in Europe.

Nestle, known globally for its packaged products like Maggi soups, KitKat chocolate bars and Nescafe instant coffee, has been a top pick for investors while restrictions to contain the virus are forcing people around the world to stay at home.

"Markets that are more heavily weighted in defensives in general and pharmaceuticals in particular (Switzerland notably) tend to outperform, while countries heavily weighted in banks and oil and gas tend to lag (typically Italy, France or Norway)," Makor Capital Markets strategist Stéphane Barbier de la Serre said.

Healthcare and foods have clearly found favour with investors since mid-February, when the virus broke out in Europe, leading to much smaller losses than for banks, car makers or travel and leisure stocks.

Within those sectors, Swiss names have been the top picks.

(Graphic: Swiss outperformance: Nestle, Roche and Novartis dominate link: https://fingfx.thomsonreuters.com/gfx/buzz/rlgpdyzevoj/Pasted%20image%201587506360994.png)

Analysts warn, however, that the heavy weighting of a handful of stocks in major indexes can give investors a false sense of security.

For example, never before has the overall weight of the top five S&P 500 (SPX) stocks been as high as now, with Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) (FAAAM) making up 22% of the index with 500 constituents.

A rise in just a few stocks can therefore lift a index even if many of its constituents are actually losing ground.

(Graphic: Swiss stocks more resilient this time than in 2008 IMAGE link: https://fingfx.thomsonreuters.com/gfx/buzz/xegvbdxgvqz/Pasted%20image%201587507753913.png)

Coffee, chocolates and pills shield Swiss stocks from virus rout
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email