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Business as normal Swiss stock market rebounds from Brexit shock

Stock markets have endured a volatile week


The leading Swiss stock index has recovered all of the ground it lost following the Brexit shock last week. By the end of trading on Friday, the SMI stood on 8085 points having fallen to below 7600 on Monday.

The SMI, which contains the largest Swiss companies such as Nestlé, UBS and Roche, endured the same market turbulence as other stock indices when Britain voted to leave the European Union last week. On Friday 24 June, when the results of the referendum became known, it tumbled 3.9% and fell even further on Monday.

The worst hit stocks were banks with a strong presence in London. Credit Suisse, which was already facing share price pressure from investors who were uncertain of the group’s strategy, sank to CHF10 per share on Tuesday from CHF13 in the hours before the Brexit vote.

By close of trading on Friday July 1, Credit Suisse shares had made only marginal gains to finish the week on CHF10.31. UBS fared only slightly better, falling from CHF15.41 on Thursday June 23 to a low of CHF12.24 before finishing this week on CHF12.87.

However, safe haven pharmaceutical stocks, such as Novartis and Roche, gained ground as investors sought refuge from the volatility.

The Swiss stock exchange experienced high numbers of trades, but the volume – or value of trades added together – failed to post a record for the year on any day since Brexit. This could be attributed to traders knowing the date of the British referendum in advance, if not the result, which calmed any panic activity.

The Swiss National Bank (SNB) worked overtime to prevent the safe haven franc from gaining too much value against other weakening currencies. The euro had traded in a band of between CHF1.08 and CHF1.11 for the previous 12 months, but sank to CHF1.06 on news of Brexit.

But the exchange rate had stabilized to above CHF1.08 by the end of this week. The British pound, however, remained low against the franc, trading at below CHF1.30 from CHF1.43 on Thursday June 23.

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