EWL Overview

Voter Decision: Swiss voters overwhelmingly rejected a proposal for a 50% inheritance tax on estates exceeding SFr50 million, with over 80% opposing the measure.

Proposal Background: The initiative, introduced by the Young Socialists party, aimed to fund climate-related projects but faced strong opposition from the federal government and business groups concerned about its impact on Switzerland's financial stability.

Reinforcement of Stability: The outcome is seen as a reinforcement of Switzerland's reputation as a stable business environment, with financial experts highlighting the decision as a reflection of "Swiss common sense" against populist measures.

Expert Opinions: Financial analysts, including Frédéric Rochat and Philipp Zünd, noted that the vote reaffirmed Switzerland's commitment to maintaining a predictable and stable business climate.

Trade Deal Announcement: President Trump announced a framework for a trade deal with Switzerland and Liechtenstein, aiming to eliminate a $38.5 billion goods trade deficit by 2028 and secure at least $200 billion in U.S. investments.

Investment Commitments: Major Swiss companies, including Roche and Novartis, have pledged significant investments, expected to create jobs across various sectors in all 50 states.

Tariff Structure: The deal includes a reciprocal tariff rate capped at 15% and plans to remove tariffs on certain goods, while Switzerland will impose quotas on U.S. exports of specific agricultural products.

Digital Trade and Supply Chain: The framework includes provisions for export controls, sanctions, and digital trade principles, with Switzerland committed to balancing bilateral trade with the U.S. by early 2026.

Tariff Negotiations: Switzerland is close to finalizing a deal with the U.S. to reduce export tariffs from 39% to 15%, aligning with the European Union's rates.

Recent Diplomatic Efforts: The discussions follow a positive meeting between President Trump and Swiss business leaders, although the agreement is not yet finalized and could still fall through.

Trade Deficit Increase: The U.S. trade deficit surged 34% to a record high of $131.4 billion in January, driven by significant increases in imports, particularly in industrial supplies and pharmaceuticals, while exports saw modest growth.

Impact of Tariffs: Economists suggest that the rise in the trade deficit is linked to pre-tariff stockpiling and a surge in gold imports due to tariff threats, indicating potential economic implications for GDP growth this quarter.

Investment Outlook for U.K. Stocks: Societe Generale suggests that investors should consider U.K. stocks due to favorable trends, including expected higher GDP growth compared to the eurozone, which historically leads to better performance of the FTSE100 index.

FTSE250 and Small-Cap Stocks: The bank maintains an overweight position on U.K. small-cap stocks in the FTSE250 despite recent economic challenges, believing that a more aggressive monetary policy from the Bank of England could support their performance moving forward.

Chinese Equities Performance: Chinese equities are currently the most overbought globally, showing an increase of 19.9% from their 200-day moving average in U.S. dollar terms.

Research Source: This information is derived from a global research note by BofA Securities.