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The Swiss economy has played a significant role in leading the region in global innovation and competition. In fact, Switzerland has one of the world’s most highly advanced economies, and as such, is dependent on its advanced financial sector as well as its popular tourism sector. The services sector also plays an important role in Switzerland’s economy, making up a large percentage of the country’s gross domestic product. As reported by the United Nations, Switzerland is the world’s 3rd wealthiest landlocked country after Luxembourg and Lichtenstein. It is also one of the few countries in the world with a gross domestic product per capita above $65,000 US dollars, that is not an island nation.
Unlike many of its neighbors, Switzerland has only a small minority of workers involved in its agricultural sector. Like most first world countries, the majority of the country’s employed population labors in the services or tertiary sector, with a small minority employed in the manufacturing or secondary sectors. Switzerland also has managed to maintain a strong jewelry and luxury goods industry that is renowned the world over. This article will cover the financial system of Switzerland, as well as a range of market information covering currency, futures, and stocks.
show moreSwitzerland’s own stock market, formally known as the Swiss Exchange (SIX), is headquartered in Zurich. The exchange is Switzerland’s primary equities exchange, however the secondary exchange known as the Berne Exchange is also worth noting. The SIX trades primarily equities but also deals in other financial instruments especially bonds, derivatives, options, and exchange traded funds (ETFs).
The Swiss Exchange (SIX) became one of the first financial exchanges in the world to include completely automatic clearing, settling, and trading in the mid 1990’s. The SIX is controlled by a total of almost 60 banks country-wide and every one of these financial institutions is given equal clout when voting on rights that concern the regulation and management of the exchange itself. This Swiss Exchange is also a part owner of Eurex, a large derivatives exchange also owned in part by German Deutsche Börse, the German Exchange. These partners have considered merging at different times over its short history; however a successful union has never been successfully concluded as analyst and investors alike have determined that this would undermine profitability of the exchange.
Switzerland has long been the capital of one of the world’s most popular safe-haven currencies. The Swiss franc (CHF) has become the 6th most popular currency to be traded on the foreign exchange market, and tends to be exceptionally popular during times of economic volatility around the globe. The franc’s reputation for being conservative and stable is somewhat contradictory to its status as a minority reserve currency, however investors have long favored the legal tender as a popular option when risk aversion seems prudent. The currency is popularly traded against the American dollar (USD/CHF) as well as the euro (EUR/CHF).
The Swiss National Bank is responsible for the currency’s monetary oversight and regulation. However, the central bank does not usually engage in manipulating the currency as most first world countries have been known to do. The country’s conservative management of franc value has been light but despite this laissez-faire attitude, the Swiss franc has maintained a steady value over its history. As Switzerland is famously neutral in most of the world’s confrontations, it has managed to avoid the lows that other neighboring economies have experienced and sticks to its low-debt fundamental supports backed by a reliable economy and strong banking industry.
The Swiss franc, known as SFR or Sf, has long been known as one of the most stable currencies in the world. It is one of the few currencies to totally withstand the economic condition of its neighbors and completely avoid conflicts over the last century. The Swiss franc is printed in 10, 20, 50, 100, 200, and 1000-franc bank notes, each depicting quadrilingual adaptations of the notes value. This is a huge testament to the country’s openness to other countries as well as its acceptance of their cultures. The coins minted by the Swiss national bank are made in 5, 10, 20, and 50 cent denominations called centimes, but are also minted in 1, 2, and 5-franc denominations as well.
While the Swiss Exchange (SIX) is one of the favorite financial exchanges in the world for international investors, its benchmark index named the Swiss Market Index (SMI) has long been favored over the rest of the exchange. Although the index is not adjusted for dividends, the SMI is Switzerland’s blue-chip stock index which tracks the twenty most liquid companies available on the exchange. The companies represent some of the safest and least volatile companies in the world while still maintaining a healthy reward opportunity. It is worth noting that although only a handful of financial securities are listed on the Swiss Exchange, equities have long been a favorite choice for investors who favor the Swiss economy for its strength and stable investment opportunities.
