The Swiss Market Index (SMI), is the most important index in Switzerland, comprising the largest and most liquid stocks on the Swiss Performance Index. The index currently tracks 20 large-cap and mid-cap companies, which cover more than 80% of the total Swiss equities market.
Given that the SMI is the primary benchmark for the performance of the Swiss economy, it is highly popular among speculators and traders across the world.
Therefore, traders who want to access opportunities in the Swiss market can take advantage of the deep liquidity and large intraday movements offered by the SMI.
Some of the constituents of the index include companies such as Nestlé, Roche, Novartis and Credit Suisse.
Factors affecting the value of the SMI
Switzerland’s economy heavily relies on the exports of pharmaceuticals, commodities such as gold and other precious metals and stones as well as watches and other machinery.
As such, international trade plays a major role in the strength of the Swiss economy and the performance of the Swiss Market Index.
Also, similarly with all other major indices, the monetary policy of the Swiss National Bank (SNB), trade agreements with major trade partners and international economic developments can influence prices in the SMI.
Did you know?
On January 15, 2015 the Swiss National Bank abandoned the self-imposed cap of the Swiss franc to the euro with dramatic consequences across the financial markets and the SMI.
The cap held the exchange rate of the EURCHF pair at 1.20, but its removal sent the CHF soaring against most major currencies. The surprise decision caused heightened volatility in the markets and as a result the SMI crashed by more than 9% – it’s largest daily drop in 25 years .