Swiss National Bank

While the broader market for Swiss stocks has risen modestly this year, one 'entity' has outperformed its peers by such a staggering margin, it has left bamboozled market experts struggling for an explanation.

And that company is…the Swiss National Bank.

The price of a share in Swiss National Bank in August rose above 3,000 francs ($3,143) for the first time, more than double the level of a year ago, and up 50% since mid-July, as the Financial Times noted in a story about its performance.

In the second quarter of the year, one in which unlike in Q1 fund flows showed a persistent and perplexing outflow from US stocks and into European and Emerging Markets, a trading desk rumor emerged that even as institutional traders dumped stocks and retail investors piled into ETFs, a "mystery" central bank was quietly bidding up risk assets by aggressively buying stocks.

Authored by Marcia Christoff-Kurapovna via The Mises Institute,

“Switzerland will have the last word,” wrote Victor Hugo in the late 19th century.

 

“It possesses one of the most perfect forms of government in the world.” A contemporary of his, Frederick Kuenzli, a scholar of the Swiss Army, boasted: “No purer type of Republican ideals, no more fixed and devoted adherence to those ideals can be found in all the world than in Switzerland.”

Overnight, the Swiss National Bank disclosed the composition and breakdown of its FX reserves as of June 30. There were no notable changes, as the central bank kept most of its asset allocations unchanged from the previous quarter, with equities, government bonds and "other bonds", at 20%, 68% and 12% respectively. There were also no shifts in the currency composition as shown in the table below.

This is an extract and summary from "New Gold Pool at the BIS Basle, Switzerland: Part 1" which was first published on the BullionStar.com website in mid-May. 

Part 2 of the series titled "New Gold Pool at the BIS Basle: Part 2 – Pool vs Gold for Oil" is also posted now on the BullionStar.com website.