Investor expectations for the Swiss economy slipped in February as uncertainty over global economies and falling prices came to the fore. But even at -5.9 points on the Swiss ZEW index - down from -3.0 in January - investor sentiment remained a far cry from the dismal outlook posted in the financial crises of recent years.
"Most of the analysts surveyed (82 percent) continue to rate the present state of Switzerland's economy as being 'normal'," Credit Suisse, which issues the indicator in cooperation with ZEW, the German economic research institute, said on Wednesday. The split among the remaining analysts, however, tipped the current conditions balance to -6.0 in February, up from -8.5 a month earlier. Nearly a third expected conditions to worsen.
The darkening mood comes during a sell-off in banking stocks that has seen Credit Suisse's shares hit their lowest since 1991, and amid concern over growth in emerging markets that hit UBS's shares on the day it posted full-year results. Investors were largely upbeat about the economy's prospects in the latter half of 2015, then changed course in January as stock markets churned and oil prices plunged. During the same period, however, the Swiss franc surprisingly weakened, which should help the country's export-heavy economy.
Experts say the central bank will need to continue to defend the Swiss franc from strengthening, but investors now consider its fair value lower than it was a few months ago. "Back in November 2015, the highest probability was assigned to an EUR/CHF fair-value range of 1.00 to 1.10," Credit Suisse said. "In February 2016, the survey respondents now see the fair value of the EUR/CHF exchange rate most probably in the 1.10 to 1.20 range."
While dim, the current outlook doesn't come close to the negative consensus of a year ago, after the Swiss National Bank abandoned its cap on the value of the franc, 1.20 francs per euro, or during the 2008 financial crisis, which economists and investors are beginning to compare to current markets.