In the middle of 2025, the global economic environment is differentiated. In the USA, there are increasing signs of an economic slowdown. Private consumption is losing momentum, the unemployment rate is falling slightly, but the labor shortage in the service sector is nevertheless beginning to ease. At the same time, the new US government's large-scale fiscal package - the "One Big Beautiful Bill" - is causing unrest on the capital markets. Tax relief and spending cuts are intended to stimulate growth in the short term, but are massively increasing the structural budget deficit. Estimates assume additional government debt of up to USD 5.5 trillion over the next ten years.

In Europe, the first signs of a cyclical bottoming out are emerging. Leading indicators are stabilizing, inflation rates are falling noticeably, at the same time, the unpredictable US tariff policy is improving the competitiveness of European exports outside the US. The fiscal policy framework and infrastructure and climate neutrality programs - such as in Germany, Italy and Spain - are also being interpreted more expansively again. In China, on the other hand, the economic recovery remains fragile. Switzerland is fundamentally robust, but is increasingly suffering from the persistent strength of the Swiss franc, which is becoming a burden for large export-oriented companies.

Capital market development: divergences and currency effects shape the balance sheet

The financial markets recorded mixed developments in the second quarter of 2025. The regional differences become particularly clear when the performance is adjusted for currency effects. The US dollar has lost over 13% of its value against the Swiss franc since the start of the year. For CHF and EUR investors, this means that nominally positive developments on the US stock markets have often turned into negative returns in real local currency terms. The Dow Jones, the S&P 500 and the Nasdaq recorded losses of between 7% and 9% from the perspective of a Euro or Swiss Franc investor.

The second quarter was also mixed in Europe. The STOXX EUROPE 50 fell by 2 %, the French CAC 40 and the Swiss SPI by 1.6 % each and the SMI even lost 5.4 %. At the same time, individual markets performed well: the DAX rose by 7.9 % and the Austrian ATX by 8.7 %. The Spanish IBEX and the Norwegian OBX both rose by 6.5%, while Japanese equities were among the global winners with +13.7%.

These developments show that simple benchmark-related or broad index investments are no longer sufficient to ensure capital preservation and real returns.

Strategic positioning: quality, selection and active currency management

The company's own opportunity barometer (CAIB) remains positive for equities overall, but is selectively weighted. The international market reports - in particular the analyses by UBS (House View) and the CIO Strategy Bulletin (Citi) - confirm this assessment.

Geographic focus: European markets - in particular Germany, Italy, the UK, Austria, Spain and Italy - are weighted more heavily. Active economic programs, solid corporate balance sheets and political stability speak for above-average potential there. Switzerland should be assessed selectively, particularly with regard to export-oriented SMI companies that are suffering from the strong franc in terms of their balance sheets. A neutral stance is adopted for US equities, whereby new investments in innovative companies with a currency-hedged structure are recommended. Politically unstable and currency-sensitive emerging markets, such as Brazil, remain underweighted.

In addition, the focus is clearly on quality stocks. Preference is given to growth companies with stable cash flows, high pricing power and resilient business models. These include medical technology companies, infrastructure providers, software companies and reinsurers in particular. High-dividend stocks from the telecommunications and utilities sectors offer additional stability. Cyclical consumer stocks, automotive stocks and commodity-dependent companies remain critical as they react strongly to global demand and geopolitical developments.

The recent weakness of the US dollar once again highlights the importance of structured currency management. For new exposures in USD, supplementary hedging appears advisable; alternatively, an overarching reduction of the USD allocation in other asset classes can be considered.

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Rico Albericci, CEFA

_{Sources: Citi Wealth, UBS, Chefinvest, Marketmap}

‍^{As of: 07/07/2025}

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