Switzerland: “the euro will fall to 0.85 against the franc in 2025”

Market outlook –

“The euro will fall to 0.85 against the franc in 2025”

The stock market year proved to be solid in 2024 for savers. Stocks, cryptos and the franc climbed. What to expect in 2025? The point with an expert.

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• Switzerland remains economically robust thanks to strong domestic consumption.
• The dollar is expected to appreciate, providing an advantage to Swiss exporters.
• Bitcoin could reach $142,000, according to technical analysis.
• Mergers and acquisitions will increase thanks to low interest rates.

What can we expect for growth in Switzerland?

Although affected by the slowdown in the growth of its neighbors, Switzerland should succeed in doing well. Because household consumption remains robust in the country, supported in particular by the strength of the franc.

In addition, the return of low rates will help the real estate sector. I also think that the dollar should appreciate in 2025, which will give a breath of fresh air to the country’s exporting companies.

You think the dollar will rise. Will this also be the case for the euro against the franc?

No, the European currency will fall to 0.85 against the franc in 2025. The single currency will remain weak against the franc due to economic and political problems in Europe. The latter could be the economic zone that suffers the most from a new trade war with the United States.

In addition, Europe is experiencing an increase in the price of its energy and significant pressure on its automotive sector, a historic industrial pillar of the Old Continent.

You are worried about Europe. Do you think that France risks defaulting on its debt?

No, French debt is not at risk, in my opinion. Firstly, the latter is mainly owned by domestic investors, more than 50%, which is a guarantee of stability. Certain institutional investors, such as French insurance companies and pension funds, could also increase their exposure.

Second, in a context where interest rates are falling, ten-year French bonds offer an attractive yield (editor’s note: 3.2%)exceeding German government yields by 0.8%. We also note that the ratios assessing investor demand for French debt remain in line with their historical average.

Ultimately, France will have no other choice than to continue to reform its social system, which has become, as in many other countries, untenable over time.

The American stock market rose by 25% last year, China by 17% and Europe by 8%, while Swiss stocks (SMI index) gained a small 4%. What should we expect in 2025?

For 2025, the strategists’ objectives are very modest. The upside potential amounts to 10% on the American S&P 500 and 4% on the Euro Stoxx 50. It is a little better on the SMI which could rise by 8% to reach 12,500 points. These limited objectives are explained by the fact that American growth is expected to slow in 2025, and that growth in Europe could disappoint again.

As for China, it continues to suffer from the consequences of its real estate crisis and should suffer the consequences of the new trade war with the United States promised by the Trump administration.

Bitcoin has gone from $45,000 to more than $95,000 since January 2024. Will this continue?

A price target of $142,000 can be set for 2025 on bitcoin, based on graphical analysis.

Cryptocurrencies have regained color following the election of Trump. The new American government will be very positive for cryptos in terms of regulation. The Trump family is also planning to launch its own cryptocurrency, called “World Liberty Financial”.

Proof of this craze, investors have started to take an interest not only in platforms for buying and selling cryptos, but also in companies that “mine” them. (editor’s note: process of creating digital currency).

In 2025, stock market performances were boosted thanks to the contribution of some major stocks, notably those of technology groups (Apple, Microsoft, Tesla, Alphabet, Nvidia, Meta, Amazon). Doesn’t this open up other possibilities elsewhere today?

Yes, because there was a big disparity in performance between sectors and companies last year, which provides a lot of opportunity today. Without the “Magnificent Seven”, i.e. the American techno mega-caps, the S&P 500 index would have only increased by 11% instead of the 25% recorded in 2024. Small and mid-caps should benefit, such is the difference in stock market performance. between the latter and the tech giants is important.

A return to the mean seems likely, in a favorable environment for mergers and acquisitions operations. This is very positive for stocks small & mid cap who will see their price revalued.

Any Swiss and European securities to recommend in this segment?

In Switzerland, I would mention BCV, the construction materials manufacturer Sika, Adecco and the industrial bakery Aryzta. In Europe, the stock market outlook seems good to me for Ryanair, the IT group Capgemini and the car manufacturer Stellantis.

Now is a good time for mergers and acquisitions, you say?

Yes. In a decelerating economic environment, most companies will struggle to show profit growth in 2025. The number of mergers and acquisitions could then increase significantly.

In addition, the low level of interest rates will facilitate the financing of such operations. When it comes to cross-border mergers and acquisitions, American companies will have the knife between their teeth to buy European companies. Because, on the one hand, the euro has depreciated against the dollar and, on the other hand, equities in Europe are trading at a valuation discount of almost 50% compared to American securities.

Wars have marked the past year. Are arms titles always interesting?

Defense and armaments remain attractive investment themes. Because military spending will continue to increase for reasons clearly highlighted by the war in Ukraine.

In the event of conflict, the consumption of stocks of shells, missiles and other bombs is much faster than previously thought. In most countries, current stocks are insufficient to last more than a few weeks in the event of war.

In addition, the need for tanks and artillery is greater than previously anticipated. Modern warfare finally requires significant capabilities in terms of drones and other remotely guided devices, as well as equipment for “electronic warfare” (wave jamming and «hacking» adversary systems).

Today, most European countries have militaries with few resources in these areas and cannot win a modern war.