Erik Fruytier: “Switzerland benefits from stable growth and strong currency”

While 2021 continued to be difficult for the economy, some sectors and companies managed to grow. However, the Covid-19 pandemic is still present and the emergence of new variants is blowing a wind of concern about the global economic recovery. So, what solutions to revitalize the economy in 2022? And which stocks should you invest in? To discuss this, we mobilized Erik Fruytier, investment director at Banque Gonet. He answered your questions about the economic outlook for Switzerland and the world for 2022 during a video conference to relive in this article. This was moderated by Sebastien Hive, business journalist for Weather

What state is the world economy in today? (Lionel)

Erik Fruytier: Since March 2020, we have been plunged into a deep pandemic crisis. Many things have changed. Vaccines came and the world learned to live with the virus. The economy was rescued by central banks in 2020, thanks to a very accommodative policy to avoid financial crises. Governments have done what it takes to help the economy get through this difficult period.

And is Switzerland doing well? (Married)

EF: Switzerland lost only 3% of its GDP in 2020. This is very little compared to the magnitude of the crisis. The financial markets have taken all events into account and are also anticipating a way out of the crisis. This trend continued in 2021, with the added surprise effect: variants. However, the stock market understood that the economy would restart without any problems. And that’s what happened: we’re in a rebound phase now. Most economies will continue to see real growth even as the post-pandemic period continues to provide for at least 2023.

So variants don’t worry investors? (Sebastian)

EF: It is true that investors were concerned when the new variants were announced. But once the studies were reassuring, with vaccines still responding, the stock market was no more disrupted than that. By the end of December, the markets had already started up again.

Read: Swiss companies hold out against Omicron

Will Switzerland have an inflation period in 2022? (Jiro)

EF: Inflation is a big problem for any investor. To solve this problem, the eyes generally turn to central banks. Switzerland is fortunate to benefit from stable growth and a strong currency. This reduces the country’s need to pay for the goods it imports, mitigating inflationary effects. The SNB calls for an inflation of 1% for our country. That is extremely low: in Europe and the United States it is preferably around 5 to 6%.

Read: “Tech stock dominance could wane this year”

And the “metaverse”, this universe that everyone is talking about, where real and virtual would eventually merge? (Factory)

EF: In my opinion it makes no sense to say “I believe in it” or “I don’t believe in it”. We’re talking about an evolution here, with giant players willing to spend billions to develop products that they want to impose on the world’s population by creating demand. During the California Gold Rush (1848-1856) there were people who searched for gold and people sold spades to find it! Many companies – totally unknown today – will evolve to be able to develop these new systems. Brands are already investing a lot of money in the “metaverse” to get there. Why? Because they want to be the first and they think the consumer will be there sooner or later. It may sound crazy, but it’s the reality.

In which sectors should investment be made in 2022? (kelo)

EF: As the economy improves, we can focus on cyclical stocks: that is, anything related to consumption (tourism, leisure, car, etc.). After a difficult period, people just want to have fun. By the end of 2022, anticipation is more complicated because it depends on what the FED (American Federal Reserve) is going to do.

I am 30 years old, how do you advise me to invest? (Xavier)

EF: At your age, you should invest in stocks. They are ideal for the long term. You don’t have to worry too much about the waterfalls they can experience in the markets. These are logical and unpredictable.

What about the future of the Chinese economy? (Ernest)

EF: The Chinese economy held up very well in 2020. However, the Chinese government has also adopted an ultra-restrictive (“zero covid” strategy) policy. This very harsh strategy led to the temporary paralysis of many parts of the economy with the closure of entire cities. Due to the slowdown, the Chinese market underperformed in 2021. In addition, the Chinese government is heavily involved in economic life, regulating drastically, dictating behavior to private companies and influencing people’s behavior. Frankly, this is not ideal for reassuring foreign investors. The Chinese economy is now in transition. It had problems last year, especially the Evergrande case – this real estate giant strangled by a debt of some 260 billion euros – that went around the world. However, it retains interesting long-term potential.

Read: A Chinese banks no longer follow Beijing

The new technologies sector experienced a boom at the start of the pandemic crisis. Is it still attractive? (Factory)

EF: La pandémie a provoqué un boom boursier sur tout ce qui était lié au fait de rester à la maison: équipement informatique pour le télétravail, sport à domicile, loisirs en ligne… Avec le retour à la normal, le boom est un peu derrière we. However, many people have learned to work differently, creating new followers. However, we should not extrapolate what happened in 2020 to 2022.

Tesla announced strong growth for its company in 2021, announcing more than one million cars sold. A value to always bet on? (Natalie)

EF: Tesla makes vehicles that people love. The brand is very similar to Apple, with a very strong consumer preference for it. They succeeded in blowing up the electric car sector. However, Tesla’s market cap today is close to a trillion dollars… Do you realize that? That’s more than almost all classic car companies combined… It’s like buying a CHF 100 box of chocolates instead of a CHF1. So yeah, maybe their cars are great, but do those amounts make sense compared to other players who also make great products? Especially because they don’t stand by and are now investing a lot of money in the same niche as Tesla. And if others also offer powerful electric vehicles, which is increasingly the case, will Tesla still be worth that much? However, it must be recognized that it is always easier to be a brand whose entire foundation is based on a niche of the future than to make a complete transition if you are an old company based entirely on a technology that we can estimate quickly exceeded: thermals.

Read: Is the SNB letting the franc rise (slightly)?

And cryptocurrencies, any advice on this subject? (Married)

EF: Us business is to manage our clients’ assets by focusing on conservation, not speculation. I am having great difficulty in being able to give you the value of a bitcoin today. On the other hand, I can estimate the value of a company and its actions much more simply, with very precise tools. Cryptocurrencies are speculative assets. However, I recognize that the technology behind it, especially the blockchain, is very interesting, it has a lot of future.

Can we invest while protecting the planet? (FB)

EF: Sustainable financing is a growing trend. All banks are adapting to perform well in this niche. As an investor, different approaches are possible. For example, you can exclude assets that you consider harmful or even contact companies you invest in to encourage them to change. Be careful though, the transition remains an extremely complex process. An example: we put a lot of pressure on the oil companies. What’s happening today? They no longer dare to invest, even though that could have prompted them to change. In Europe there are problems with gas prices and dependence on Russia. Ultimately, it is the consumer who is unhappy, because the price of his energy is too high…

Leave a Comment