Delving into global stock markets: The SMI

Julie Brownlee, Fsp Invest, 02 Nov. 2015

Tags: smi, stock market, stock market index, six swiss exchange, swiss stock market, swiss blue chip index



Switzerland may be renowned for its banking sector, but it also has a thriving stock market. And you may be surprised to learn that you’ll be familiar with some of the companies listed on it.

The Swiss stock exchange is called the SIX Swiss Exchange. Its blue-chip index is the SMI.

Let’s take a closer look at the SMI…



The ins and outs of the SMI


The SMI (Swiss Market Index) consists of 20 stocks. Together these 20 stocks account for about 85% of the overall capitalisation of the SIX Swiss Exchange.

What makes the SMI quite unique is it has a low component of cyclical companies. In most developed markets there tends to be a heavier weighting of cyclical stocks to defensive stocks, with an average ratio of 65:35.

On the SMI, cyclical stocks only account for around 38% of the index. On the other hand, around 62% of the index are defensive stocks. This means its ratio is 38:62, almost the complete opposite of what many other developed stock markets are like.


The big companies making up the SMI


Another important thing to note about the SMI is that just five companies out of the 20 it holds make up 70% of the index. These are:

  • Pharmaceutical giants Novartis and Roche;
  • Consumer group Nestle;
  • Banking group UBS; and
  • Engineering group ABB.

The heavy pharmaceutical presence means that the health sector accounts for 41.1% of the SMI. Consumer goods account for 26.1%. Banks account for 17.7%. Industrials, basic materials and telecoms make up the rest of the index.

Together, the 20 companies making up the index make 92% of their sales outside of Switzerland.

So there you have it. The SMI.

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