Interest rates, inflation and recession
Swiss stock market in a downward spiral – CS share at all-time low
Major economic concerns, major declines on the stock markets. The Swiss leading index SMI is also suffering, CS shareholders need particularly strong nerves.
Depressed mood on the stock markets, prices are pointing downwards worldwide.
It doesn’t work without pain. Fed Chair Jerome Powell made it clear on Wednesday that battling record-high inflation would require sacrifices to get prices back on track: “I wish there was a painless way to do that. But there isn’t one.”
Sixteen central banks tightened their monetary policy this week alone. The number of those with increases was higher than ever, above all the US Federal Reserve. At the end of the year, they want to see the key interest rate at an unexpectedly high 4.25 to 4.5 percent. The Swiss National Bank SNB, for its part, increased the key interest rate by 0.75 percentage points to plus 0.5 percent.
The central banks move the stock exchanges and ensure that the stock markets continue to fall, also in Switzerland. The leading index SMI is currently at around 10,221 points (as of 11:00 a.m.).
At the beginning of the year it was almost 13,000 points. The decrease is 20 percent. It was not just central banks that were putting pressure on prices, but also recession concerns.
CS share with mega loss
Credit Suisse shares are by far the biggest losses at the end of the week. On Friday alone, the CS paper lost over 6 percent and is currently trading at CHF 4.33 – an all-time low. The loss in value since the beginning of the year: 48 percent.
A media report about a possible capital increase shocks CS investors. The ailing big bank is said to be in talks with major investors about a multi-billion dollar capital increase, as Reuters reports. CS only confirmed talks about the future strategy of the big bank.
This week, the “Financial Times” recently speculated that the investment bank would be broken up in order to prevent a capital increase. According to the media report, consideration is currently being given to splitting the investment bank into three parts: the advisory business, which could be spun off at a later date, a “bad bank” for risky assets to be wound up later, and the remaining business.
No stock recovery in sight
The general weather situation in the world economy, worries about a recession and further interest rate hikes by major central banks are currently not in the cards for a recovery on the stock markets. It would be like reading a crystal ball to see if prices go much further down.
Important: It would be wrong to keep your hands off shares or to sell your shares blindly on the market. Anyone who invests in stocks should keep in mind the longer-term profit from the growth of the company. And don’t let your chosen risk strategy be influenced by short-term setbacks.