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Created on 05.07.2018

How is the SMI made up?

Happy birthday! The Swiss Market Index (SMI), affectionately known as “Smiley”, is celebrating its 30th anniversary this year. It was launched in June 1988. This gives us a good opportunity to ask what lies behind the SMI and what importance it has for daily trading on the Swiss stock exchange.

Let’s start with the basics: an index indicates and documents a selection of share prices. The SMI is to Switzerland what the DAX is to Germany and the Dow Jones is to the USA. It is the nation’s most widely observed stock market barometer and indicates the share price performance of 20 leading Swiss companies. The SMI shows how these prices perform on average.

20 companies determine the trend

The 20 securities that make up the SMI account for a total of 90% of market capitalization in Switzerland. In financial jargon, these are known as blue chips, which are extremely high-revenue shares in major corporations. That’s why the SMI is also known as the blue chip index. It actually contains securities from various categories, such as luxury goods, insurance, electrical engineering (ABB) and banks (UBS, Credit Suisse). Over 50% of the index’s weighting is nevertheless accounted for by three companies – Nestlé (food products), Novartis (pharmaceuticals) and Hoffmann-La Roche (pharmaceuticals).

Diagram – the SMI consists of the following companies: Nestle, Roche, Novartis, UBS, ABB, Sika, Richemont, Zurich Versicherung, Swiss Re, Credit Suisse, Holcim, Givaudan, Lonza, Geberit, Swisscom, SGS, Swatch Group, Adecco, Julius Bär, SwissLife

What does the index mean for the Swiss stock exchange?

The Swiss Market Index is the most important barometer of the Swiss stock exchange and provides a realistic picture of the Swiss stock market. However, it is worth bearing in mind that its composition does not cover all sectors of the economy. Investors who structure their portfolio in line with the SMI therefore have a relatively low level of diversification.

SMI and SPI – what’s the difference?

Besides the SMI, the Swiss Performance Index (SPI) is Switzerland’s most important share index. It includes almost all of the exchange-listed Swiss private limited companies – totalling over 200 securities – and is seen as the overall index for the Swiss stock market. The SPI is a so-called total return index. In contrast to the SMI, the SPI also takes account of dividend payments in index performance. The SMI on the other hand is purely a price index. The index value is determined solely on the basis of share prices.

“The SMI closes up 0.2%”

The value of the SMI is indicated in points. These points reflect how the value of the SMI has increased compared to the level at the outset in 1988. The initial value was set at 1500 on a purely arbitrary basis. If the exchange closes today at 8,530 points, for example, the SMI is above the value in 1988. The statement “the SMI closed up or down X%”, which is often heard in stock market news, refers to the value on the previous day.

Five facts about the SMI

  • The SMI was established on 30 June 1988 with a value of 1500 points.
  • The SMI is regarded as being representative and is used as a base value for other financial products.
  • In June 2007, the SMI closed on over 9,500 points for the first time. It hit its historical peak in terms of closing price in January 2018 (9556.98 points).
  • It fell to its historical low in March 2003 when the dotcom bubble burst. It plunged to 3,675.43 points at one point.
  • The number of securities has been set at 20 since 2007. It was 29 in 1993.
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