(Bloomberg) -- The Swiss Market Index has taken more than a decade to achieve a feat that U.S. benchmarks have been pulling off with monotonous regularity -- reach a record.
The SMI on Friday climbed to a fresh intraday peak of 9,557.06, topping its June 2007 high. Its heavy weighting of defensive shares such as drugmaker Novartis AG and food company Nestle SA have made it a 2018 favourite at Morgan Stanley, whose strategists predict a “trickier” year for global equities and are overweight Swiss shares.
The gauge’s ascent has been one of the slowest among major European benchmarks that have recovered from losses post the global financial crisis -- both the U.K.’s FTSE 100 Index and Germany’s DAX have climbed to multiple records in the past year, while the broader Stoxx Europe 600 last rose to a fresh high in 2015. The SMI came within a whisker of its own record close that year, but missed it by fewer than 5 points.
Switzerland’s benchmark climbed 14 percent last year, almost twice as much as the Stoxx 600. Novartis, Nestle and Roche Holding AG, which comprise more than half the index, also contributed the most to gains. A weaker franc in 2018 will offer further support for Swiss equities to outperform, Morgan Stanley strategists led by Graham Secker wrote in a Nov. 26 note. They also noted good earnings momentum and an indicator of economic output near to a four-year high relative to Europe.
While the SMI may have lagged some peers in rising to a record in recent years, it’s not the last to achieve it. France’s CAC 40 Index and benchmarks in peripheral markets such as Italy and Spain remain well below pre-crisis highs.
To contact the reporter on this story: Namitha Jagadeesh in London at firstname.lastname@example.org.
To contact the editors responsible for this story: Celeste Perri at email@example.com, Paul Jarvis
©2018 Bloomberg L.P.