Credit Suisse / CFA Society Switzerland: Economic Outlook of Swiss Financial Analysts Brightens Mittwoch, 25. Januar 2017 - 10:00

Optimism among Swiss financial analysts regarding their economic expectations for the next six months rose for the fifth time in a row in January, and is now at 18.5 points. This is one finding of the financial market survey on the mood of financial market analysts in Switzerland which was conducted for the first time in January by Credit Suisse and CFA Society Switzerland. The equity market expectations of the analysts surveyed also increased significantly in January, exceeding 60 points for the first time since October 2015 for the Swiss market. In the past, such high expectations of stock prices in Switzerland were often followed by a fall in prices rather than a rise.

In January, the survey of financial analysts was carried out in collaboration with CFA Society Switzerland for the first time. 74.1% of those surveyed expect that the Swiss economy will neither accelerate nor slow down over the next six months. 22.2% anticipate an acceleration and only 3.7% a slowdown. This results in a balance of 18.5 points (difference: positive minus negative) for the expected short-term economic momentum, which has therefore improved for the fifth time in a row. The analysts anticipate a rise in economic momentum in the medium term too. On average, the analysts estimate annual GDP growth of 1.4% in 2017 and 1.6% in 2018. In January 2017 their belief that the rate of inflation in Switzerland will rise in the next six months reached its highest level ever since the survey began in 2006. The analysts thus clearly expect the current inflation rate of 0.0% to increase. The respondents expect an average annual inflation rate of 0.3% for 2017, which would be the first positive annual inflation rate since 2011. They anticipate that this will rise to 0.6% for 2018.

2017 Harbors Potential for Political Turmoil

In 2017 the financial analysts are concentrating in particular on political events that have the potential to impact the equity markets. The analysts surveyed see the French presidential elections as the event most likely to result in large movements in the Swiss equity market (30%), closely followed by the referendum against the Corporate Tax Reform III and the federal elections in Germany, each at 29%. By contrast, they are skeptical that the elections in the Netherlands or a referendum on the implementation of the mass immigration initiative would have any significant effect on stock prices in Switzerland.

A New Partner in the Monthly Financial Market Survey
 CFA Society Switzerland assumed responsibility for conducting the monthly survey for the Swiss financial market mood barometer at the beginning of this year. This role was previously performed by the Centre for European Economic Research (ZEW). No changes will be made to the range of indicators which have provided such a nuanced picture of the mood among financial market analysts over the past ten years.
Christian Dreyer CFA, CEO of CFA Society Switzerland: "CFA charterholders are active in many key areas of the economy and the financial sector. We are delighted to be able to use this network, in partnership with Credit Suisse, for the Swiss financial market survey."
Lukas Gehrig, an economist at Credit Suisse with responsibility for the financial market survey, adds: "For over ten years now Credit Suisse has been conducting the Swiss financial market survey and delivering a reliable picture of the mood in the Swiss economy."

Collective Expert Knowledge
The results presented here are based on a monthly survey which samples the views and predictions of around 30 individuals from the banking and insurance sectors with in-depth knowledge of Switzerland. The survey focuses primarily on their expectations for economic growth while also looking at key financial market data (economic trends, inflation rates, interest rates, stock prices, exchange rates, gold prices, and oil prices). Respondents are asked, for example, how they expect the Swiss Market Index (SMI) to perform. According to Credit Suisse economist Lukas Gehrig, these share price expectations are a valuable indicator that needs to be interpreted correctly. "Over the past ten years, the SMI has often fallen just when there were widespread expectations that stock prices would rise," explains Lukas Gehrig. In four out of seven cases when the figure for stock price expectations rose above 60 points (which is the case if 60% expect to see price rises and none expects price falls), the SMI fell over the following six months. However, the opposite does not apply: Low equity market expectations were also usually followed by falling prices. The figure for share price expectations reached 60.9 points in January 2017, the first time it has topped 60 points since October 2015.

The results of the financial market survey conducted by Credit Suisse and CFA Society Switzerland will in future be published on the last Wednesday of each month, provided that this is a working day, and otherwise on the next working day. 

Please find below details of the current financial market survey on Switzerland:
Financial Market Survey Jan 2017