Three banks explain the effects of the Ukrainian conflict on the investments of the population, reassure and advise.
Do not panic. Here is the substance of the banks’ message to Mr. and Mrs. Everyone. The Ukrainian conflict and the uncertainty it generates on the markets should not impact the savings of the population. This reassuring analysis is shared by James Mazeau, economist responsible for French-speaking Switzerland at UBS, Jeffrey Hochegger, investment strategist at Raiffeisen Switzerland and Valérie Lemaigre, chief economist at BCGe. Point by point, they detail the concrete consequences of the crisis on the wallets of the Swiss and distill concrete advice.
Are savings threatened by inflation?
“Inflation in Switzerland remains very low,” observes UBS. If it just passed the 2% mark last month (while it reached 7.9% in the United States over the same period) it was negative in 2021. Thus, UBS expects that it only progresses “by 1% over five or ten years”. In the coming months, however, the trend “will depend on the situation in Ukraine and the price of oil. The main criterion is energy,” notes UBS. But the BGCe notes that “Switzerland is less exposed than other countries to imports of Russian gas and oil.”
In addition, inflationary pressures come from rising commodity prices, a dynamic that “already existed before the outbreak of the war, but which did not create new sources of inflation, such as a rapid increase in wages “. In other words, this inflation “does not correspond to a long-term event”. UBS sums it up: “Don’t be afraid, the price of bread is not going to double, and the value of savings is not going to melt.”
Do those who save through investment funds risk losing everything?
“Losing a lot, in a disaster scenario, yes, judges UBS. Lose everything, no. She estimates that an equity portfolio could lose up to 15% this year and a defensive fund made up mainly of bonds “a few percent”. But all banks remember this simple principle: “Until you have sold, you have not lost.” Thus, no one recommends removing its balls. “We must not panic above all”, affirms the BCGe.
All of them also explain the importance of having a diversified portfolio. “The more a company is affected by the sanctions against Russia, the greater the risk” explains Raiffeisen. Here again, the BCGe is reassuring. “To imagine that a share is no longer worth anything is to imagine that a company no longer has any activity and that its value is zero. Can we think that of a company like Nestlé or Novartis, for example? The answer is no, of course. Therefore, to sell after a negative day, “is to deprive oneself of the possibility of taking advantage of the positive day which frequently follows in a short horizon”.
Are there safe havens, like cryptocurrencies or gold, into which converting your savings would be wise?
Cryptocurrencies are no. All the banks consider them unsafe, too volatile. “They tend to react in the same way as risky assets,” says UBS. If stocks go down, they follow suit. “It’s speculation,” slice the BCGe. Putting your money there is not indicated.
Gold, on the other hand, is like the Swiss franc “part of the safest investments”, judges Raiffeisen. “They are currently in high demand and their price has increased.” But the metal “does not offer long-term growth,” says UBS. The BCGe confirms. “It does not create value, unlike an investment in a company. But buying it can reassure you and allow you to sleep at night.”
While the Swiss franc and the euro are at parity, is switching your savings to euros a good idea?
“If you are spending your holidays in the euro zone next summer, then why not buy euros”, advances UBS, which considers such an acquisition useful only for consumption – which explains why cross-border workers, paid in Swiss francs but living in France, rushed to the European currency ten days ago. For others, the economist advises keeping your savings in Swiss francs. “Switching one’s assets from one currency to another because one thinks that it is a key moment corresponds to speculation, not to savings”, warns the BCG. To save money, buying euros in the long term is therefore not a panacea, confirms Raiffeisen, because of “chronically lower inflation in Switzerland than in the euro zone”.
Does the crisis have an impact on housing costs?
For tenants, the impact is nil, explains the UBS, except of course on the charges, which are likely to increase due to the rise in the price of fuel oil and natural gas. Homeowners may feel an impact if their mortgage expires and they have to refinance it. “It will be a bit more expensive than before. We expect a rise of 0.2% on 10-year rates by the end of the year, which is not very significant”. BCGe abounds. “For the events in Ukraine to have consequences for the owners, they would have to push the SNB to quickly raise its interest rates. However, in times of crisis, this scenario is not favoured.
Are the sums placed in the third pillars affected by the crisis?
“If they are in a third pillar linked to a bank account, in cash, there is no impact, considers UBS. If the linked third pillar is invested in an investment fund, then yes, it is impacted. But the sums being blocked with a very long-term perspective, there is not too much to worry about. Because of this long-term horizon, Raiffeisen even recommends betting on a third equity pillar. “As the managers invest regularly, entry prices are smoothed and weak price phases are used to make purchases.”