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    Florian Marini, CFA, CMT

    Florian Marini, CFA, CMT

    Head of Research

    Friday, 10/02/2026 |

     
    The burden of proof has shifted to earnings

    "Since our August edition, Switzerland’s recovery has gained support from hard data. Real GDP grew 1.5% in the second quarter, and SECO raised its 2026 growth forecast from 0.9% to 1.7%. Improving manufacturing surveys reinforce that picture. However, exceptional pharmaceutical output contributed substantially to the growth surprise, leaving the breadth of the recovery to be confirmed.

    Three developments shape the fourth-quarter outlook. A softer franc offers exporters relief, supporting competitiveness and overseas earnings translation. Equity valuations have become less demanding: the SPI trades around its ten-year median, while the small- and mid-cap premium has returned to its long-term average. Higher bond yields may nevertheless constrain multiple expansion, placing greater emphasis on earnings growth to drive returns.

    These changes reinforce our August investment case while shifting the burden of proof to earnings delivery. Expected operating margins are near historical highs at around 19%, leaving limited room for disappointment. Stronger orders must now translate into profitable sales and cash flow.

    We favour a financially strong large-cap core alongside selective additions to small and mid caps, where normalised valuations and accelerating forward earnings strengthen the investment case. Electrification, datacentre infrastructure and healthcare investment provide complementary growth drivers; improving manufacturing momentum would support broader outperformance.    
     As ABB CEO Morten Wierod put it: “Our results reflect high demand in the majority of our customer segments, strong execution and solid cash flow.” We expect this combination to become more visible across Swiss companies in the fourth quarter.

     On behalf of the Syz Research team, I wish you a good start to the fourth quarter."

    Florian Marini CFA, CMT, Head of Research

    Swiss Equities

    The case for broader participation

    The investment case for Swiss equities is broadening as earnings expectations strengthen and valuations normalise. The SPI’s forward P/E has fallen from around 20x in Q1 to 18x, its ten-year median, as earnings growth has outpaced share-price performance. The SPI Extra now trades at 21.7x, down from 28x in 2022, while forward earnings have accelerated to record highs. Its 25% valuation premium to the SMI is now close to its long-term average, improving the relative case for Swiss small and mid caps.


    Manufacturing momentum strengthens the opportunity
    Swiss small and mid caps provide significant exposure to industrial exporters and specialised healthcare companies. Improving manufacturing momentum in both the US and Europe should support internationally exposed Swiss suppliers, while the franc’s roughly 3% trade-weighted depreciation since June provides additional relief through better earnings translation and lower pressure on Swiss-based production costs. Expected operating margins have reached around 19.4%, a new high. At the same time, Swiss equities remain attractive relative to bonds, with the SPI offering an implied earnings yield of around 5.6% compared with approximately 0.6% on ten-year Confederation bonds. Our Q4 preference therefore combines a strong large-cap core with selective additions to small and mid caps.

    Economy

    Surprisingly strong growth and higher inflation

    Swiss GDP rose 1.5% quarter-on-quarter in Q2 2026, adjusted for sporting events, its strongest increase since 2021. Pharmaceuticals accounted for nearly half of the gain, while services and domestic demand also expanded, suggesting that the headline number somewhat overstates underlying momentum. We expect growth of close to 2% in 2026 and somewhat above 1.5% in 2027, supported by gradually improving consumption, investment and leading indicators.

    Inflation increased to 1.0% year-on-year in September, mainly due to higher energy prices, while core inflation remained modest at 0.5%. We expect inflation to average slightly above 0.5% in 2026 and rise toward 1.0% in 2027. The SNB kept its policy rate at 0% in September and reiterated its willingness to intervene in FX markets. Given our positive growth outlook and somewhat higher inflation forecast, we expect the SNB to begin raising rates in March 2027. 

    Forex

    The Swiss franc is going through a weak patch
    The Swiss franc weakened further against both the euro and US dollar in September. EUR/CHF reached 0.945 on 28 September, compared with 0.939 at the end of August, while USD/CHF rose to 0.832 from 0.808. The move largely reflects widening interest-rate differentials, with both the ECB and Fed tightening while the SNB kept rates unchanged at 0%. Higher foreign bond yields and stronger US growth data have also supported the euro and dollar against the franc. 
    The recent depreciation does not necessarily signal a lasting reversal. The SNB estimates that the franc has weakened by around 3% on a trade-weighted basis since June, providing some relief to Swiss exporters. Switzerland’s inflation remains low by international standards, while renewed geopolitical stress could restore safe-haven demand for the currency. Over time, Switzerland’s lower inflation differential may also provide renewed support for the franc against both the euro and the dollar. 

    Fixed Income

    Rising rates weight on long maturities
    Swiss bond yields have moved higher alongside the global repricing in fixed income markets. The ten-year Confederation yield reached 0.66% on 25 September, its highest close since March 2025, pushing most Swiss fixed-income segments into negative territory year-to-date. Rising global inflation concerns, deteriorating public finances in several major economies and growing capital requirements linked to AI investment have contributed to higher long-term yields. 
    Swiss bonds have nevertheless been relatively resilient. Government yields have risen less than in most major markets, supported by Switzerland’s subdued inflation outlook and strong public finances. Markets currently expect the SNB to wait until December or March 2027 before tightening, while the Fed and ECB have already raised rates in 2026. This divergence has supported CHF bonds on a relative basis, although it has also contributed to recent weakness in the Swiss franc. 
     

    Technical Takes 

    Swiss equity trends remain constructive
    The technical picture for Swiss equities remains positive despite September’s pullback. The SPI continues to trade within a rising primary trend, supported by an upward-sloping 200-day moving average. The 5.7% correction from its August record held the previous February high, preserving the sequence of higher highs and higher lows. Momentum remains constructive, although the short-term rebound is becoming stretched.
    The picture is also improving for Swiss small and mid caps. The SPIEX remains in an established uptrend, while relative strength versus blue chips has begun to recover after a year of underperformance. The SPIEX/SMIC ratio crossed back above its 200-day moving average in September, although a sustained turn higher in that average would provide stronger confirmation of an emerging outperformance trend.
     

    See our full Outlook in the PDF attached.

     

    Disclaimer

    This marketing document has been issued by Bank Syz Ltd. It is not intended for distribution to, publication, provision or use by individuals or legal entities that are citizens of or reside in a state, country or jurisdiction in which applicable laws and regulations prohibit its distribution, publication, provision or use. It is not directed to any person or entity to whom it would be illegal to send such marketing material. This document is intended for informational purposes only and should not be construed as an offer, solicitation or recommendation for the subscription, purchase, sale or safekeeping of any security or financial instrument or for the engagement in any other transaction, as the provision of any investment advice or service, or as a contractual document. Nothing in this document constitutes an investment, legal, tax or accounting advice or a representation that any investment or strategy is suitable or appropriate for an investor's particular and individual circumstances, nor does it constitute a personalized investment advice for any investor. This document reflects the information, opinions and comments of Bank Syz Ltd. as of the date of its publication, which are subject to change without notice. The opinions and comments of the authors in this document reflect their current views and may not coincide with those of other Syz Group entities or third parties, which may have reached different conclusions. The market valuations, terms and calculations contained herein are estimates only. The information provided comes from sources deemed reliable, but Bank Syz Ltd. does not guarantee its completeness, accuracy, reliability and actuality. Past performance gives no indication of nor guarantees current or future results. Bank Syz Ltd. accepts no liability for any loss arising from the use of this document.

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