SMI review 2024: thwarted by Nestlé
Published: Wednesday, Dec 18th 2024, 11:00
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The Swiss stock market year 2024 will hardly go down in history as a particularly remarkable one. After a weak 2022, there was a slight gain for the second year in a row. Compared to US and German equities, however, there was only a small gain in this country.
Investor sentiment is likely to be somewhat divided at the end of the year. After a buoyant first half of the year, with the SMI up almost 8%, hopes for a strong year as a whole have been dashed: although the high for the year of 12,484 points was only reached at the end of August, the second half of the year has so far seen a decline. The overall market was held back in particular by the weak Nestlé shares.
To date, the SMI has advanced by around 5% on balance to a level of around 11,690 points (as at midday on December 17). The range between the annual low in February at 11,065 and the high in August reached 1419 points. It is still a long way from the all-time high of 12,997 at the beginning of 2022.
Internationally weak also due to Nestlé
In an international comparison, the SMI has performed modestly this year, as it did in 2023. The Dow Jones Industrial, the world's leading index, has so far recorded a gain of around 16%, while the Dax has even risen by over 20%. Even if you take into account the fact that, unlike the SMI, the Dax is not adjusted for dividend outflows, the difference is significant.
The boom in artificial intelligence also pushed the Nasdaq technology index up by around a third. The "glorious 7" from the tech sector, Alphabet, Amazon, Apple, Microsoft, Meta, Nvidia and Tesla, already caused the Nasdaq Composite to rise by more than 40 percent in the previous year.
The defensively oriented SMI was unable to keep up. Nestlé's annual loss of around 23% weighed heavily, as it is still the number 1 in terms of market capitalization with a share of around 18% of the total weighting. And Novartis' and Roche's almost positive annual results of around 4% each did not provide any momentum either.
Nestlé is also mainly responsible for the weak second half of the year compared to the first. The shares of the French-speaking Swiss food giant already weakened in the previous year and also in the first six months. However, the downward trend has gathered pace since the summer, and even the appointment of a new CEO and a strategy update in the fall could not change this.
The two halves of the year on the Swiss stock market therefore presented a different picture. The home-made burdens were then joined by overarching ones. Concerns about the US economy and the continuing economic weakness in China were mixed with the increasingly gloomy outlook for the European and especially the German automotive sector, such as VW. In addition, nervousness about the upcoming presidential elections in the USA increased.
Trump's re-election brought a breath of fresh air to the US markets towards the end of the year due to the prospect of a more liberal economic policy, while in Germany the so-called "Trump trade" led to further losses. The prospects for the US economy and those in Europe are currently too different.
Switzerland lagging behind
"The stock market year 2024 can be characterized by the motto: Switzerland lagged behind," Remo Rosenau, Head of Research at Helvetische Bank, told AWP.
Looking at the other main indices in Switzerland, the picture does not change much compared to the SMI. The broad Swiss Performance Index SPI performed only marginally better than the SMI with a gain of just under 7%. In the Swiss Leaders Index SLI, which comprises the 30 largest stocks, the limited weighting of the heavyweights did allow a gain of around 9 percent. The SMIM, which tracks the 30 largest companies behind the 20 largest companies in the SMI, rose by around 5 percent.
At the level of the individual stocks within the 30-stock SLI, Lonza led the way shortly before the end of the year with a gain of around 54%, followed by Swiss Re (+40%). ABB (+39%) and Holcim (+35%), two companies with a strong foothold in the USA, also performed well.
The major bank UBS is still busy with the integration of Credit Suisse, but the shares are still a good 8 percent higher than at the end of 2023 after the increase of over 50 percent in the previous year.
The weakest shares were Adecco (-45%) and Kühne+Nagel (-30%), after both had gained a good third in the previous year.
Kuros as a high-flyer
In the broad market, the price of the biotech company Kuros increased almost sixfold. Relief Therapeutics, which doubled in price, and a traditional company such as the manufacturer of large turbochargers Accelleron (+80%) were also among the best-performing stocks in 2024. By contrast, an investment in Hochdorf and Meyer Burger almost resulted in a total loss.
Conclusion: Individual investments were gilded, while others made us break out in a sweat. After the weak performance of the last four months, however, things could start to pick up again in the new year, at least according to the more confident forecasts.
"The Swiss market now seems to have become very favorable by international standards," says Remo Rosenau. He is therefore more optimistic about the coming year 2025 for Swiss equities - also in the wake of the sharp fall in interest rates.
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