The Swiss National Bank (BNS) is a very discrete heavy goods vehicle in US financial markets. In fact, it has become one of the most important investors in American technological values. It maintains shares in US shares worth $ 167 billion, through 2,300 positions, according to Financial Times, which consulted documents presented to the SEC, the American financial market control authority.
Their investments are particularly concentrated in the technological sector. BNS has placed $ 42 billion in five companies (Amazon, Apple, Meta, Microsoft and Nvidia). His shares in the amount of Nvidia, for example, at $ 11 billion.
It is a very unusual practice for a central bank. Their European or American counterparts have very few actions. The BNS balance looks more like the Gulf’s sovereign funds. However, these great maneuvers have a lot to do with the search for yields of petromonarchies.
With these colossal investments, the Swiss Central Bank is actually trying to resist the surprising appreciation of the Swiss Franco compared to the dollar (15% since the beginning of the year).
The fruit of Donald Trump’s devastating policy, the fall in the Greenback continues to strengthen the Swiss Franco, a value of shelter par excellence. This is bad news for the Swiss Republic, faced in addition to customs tasks of 39%. The competitiveness of its industry is sealed. The country’s exports to the United States melted 22% in August.
Above all, the deflation spectrum: a price drop. Consequently, the Swiss National Bank does what it can try to contain the rise of Franc. She buys foreign coins and reinvested this money in foreign actions and obligations.
Financial Times points out that it is a “foreign” quantitative softening, due to lack of being able to carry out a conventional quantitative relaxation, as well as the ECB or the US Federal Reserve buying its state obligations through the newly created currency.
This dynamic is not new, but it tends to strengthen in recent months. The value of BNS shares in NVIDIA, for example, increased by 175% in two years (more than the increase in the value of the title). This strategy is not exempt from risks. The Swiss Central Bank is highly exposed to a fall in stock market prices, especially because it has particularly invested in a very small number of values related to artificial intelligence, such as NVIDIA.
This bubble could explode if the very high expectations of investors end up disappointed, weighing the balance of the Swiss Central Bank.
A negative rates
At the same time, the BNS plays on other levers to contain the rise of the Swiss Franc. Some observers believe that once again they could reduce their guidance rates, while inflation is very low. These rates are already 0% today, the lowest rate of all large central banks. In this situation, money is “free”, but it doesn’t bring anything either.
In doing so, BNS officials expected in particular dissuad foreign investors from buying franc Swiss and restoring some air to the economy. Watchmaker exports were significantly reduced by 16.5% last month, penalized by the increase in customs duties to the United States and low demand to China, Japan and the United Kingdom.
In addition to Switzerland, the entire world is expanding its heads to find solutions against the devaluation of the dollar. Investors are trying to cover themselves in the face of the fluctuations of the US currency, particularly through the use of term change contracts to set the value of the currency in advance. This could last.
Greenback’s devaluation is remarkably one of Stephen Miran’s mantras, the new Governor of the Fed, and especially very close to the economic advisor of the US president. In his eyes, far from being an “exorbitant privilege”, the preeminence of the dollar in the international monetary order would be a ball for the United States, particularly penalizing its industrial competitiveness.
As the Le Grand Continent review, Stephen Miran notably recommended that Donald Trump uses the lever to increase customs duties to force other countries to accept a depreciation of the dollar.
Source: BFM TV
