30 years at a glance

SMI as underlying


As we have just heard, the SMI was created in the context of the SOFFEX derivatives exchange, known today as EUREX. The first index-based products launched on the SMI were therefore index derivatives:

  • Around six months after the SMI had been launched, the first options appeared on the index on 7 December 1988.
  • A little later on 9 November 1990, the first future was allowed onto the SMI.
  • More than ten years after that on 15 March 2001, the first ETF was launched.

 


Comprehensive rule changes


The legal framework conditions have also changed over the past 30 years. With corresponding changes in the rules, we have ensured that the SMI meets the current requirements and continues to be a basis for financial products. I would like to briefly mention the two most important rule changes.

Until 24 September 2007, the SMI comprised a fluctuating number of stocks - in actual fact, it was between 18 and 29 companies. Until that date, a maximum of 30 stocks were simply defined. The Swiss stock exchange implemented the biggest change to the rules in 2007 by setting the limit at 20 stocks.

The second biggest change took place last year when the SMI aligned itself with the ESMA UCITS Directive by limiting the weightings of the constituents. The capping at 18% was carried out in two stages on 18 September and 18 December 2017 respectively. Since then, the major stocks Nestlé, Novartis and Roche have had a weighting of 18% in the SMI. The means that the SMI complies with the EU’s provisions on diversification and can be used as a reference index for the Swiss stock market in the European Union. The EU provisions on diversification are particularly important for the use of index derivatives, as they are a financial product regulated by the EU.

 


Relevant mergers


The limit of 20 stocks depends among others on the many mergers and takeovers on the Swiss market. The universe of equities has therefore become somewhat smaller over time. But there were definitely two mergers that were of particular relevance for SMI securities:

  • 7 March 1996: Announcement of the merger of Ciba-Geigy and Sandoz to form Novartis. Both the new Novartis shares (registered and bearer shares) had a joint weighting of at least 26% in the SMI at the end of 1996.
  • 8 December 1997: Announcement of the merger of Union Bank of Switzerland and Swiss Bank Corporation to form UBS.
  • Even in 2017 after so many years, its consistency was emphasized by the takeovers of Actelion and Syngenta by foreign companies. In this instance, two new companies - Lonza and SIKA - moved up into the SMI.

 


Performance-relevant events


The SMI has performed very well in the past 30 years, but it has had to deal with a number of short-term challenges that arose due to economic or politically difficult situations around the world. Let’s have a look at some of these events:

  • 16 October 1989: Black Friday on the U.S. stock exchange catches up with Europe and Switzerland at the start of the week. This resulted in the largest daily loss on the SMI of -10.54%. 
  • 13 October 2008: The announcement of the part-nationalization of big banks in the USA brought the highest ever daily gain for the SMI of 11.39%.
  • 15 January 2015: The Swiss National Bank’s lifting of the minimum exchange rate of the Swiss franc against the euro. On that day, the SMI lost -8.67% which corresponds to the second-highest daily loss in the SMI’s history.

 


Periods with exceptional performance

  


But the SMI has been heavily influenced by predominantly longer periods. Let’s have a look at the key cycles in the SMI:

  • 1996 – 1998 Introduction of full electronic trading
    The marked rise in the SMI in these two years was a result of the changeover to full electronic trading. The Swiss stock exchange was the first exchange in the world to introduce this between 8 December 1995 and 16 August 1996.
  • 2000 – 2003 Dotcom bubble (new economy)
    After the peak of the new economy boom, the SMI lost over 50% of its value between 2000 and 2003. It hit the bottom on 12 March 2003 by falling to around 3,675 points. This downturn was also overshadowed by two tragic events that happened in less than a month, namely
    • the attacks on the World Trade Center in New York, better known as 9/11
    • and the grounding of Swissair on 2 October 2001.
  • 2007 – 2009 Financial crisis
    The US property crisis began in summer 2007 just after the SMI exceeded the 9,500 mark for the first time. In September 2008, the crisis reached its peak with the investment bank Lehmann Brothers filing for bankruptcy. This event resulted in the part-nationalization of a number of big banks, which also exacerbated the overindebtedness of some government budgets.
  • 2011 – 2018 Period leading up to the all-time high
    It took years before the markets recovered to their 2007 levels. The SMI returned to its pre-financial crisis level in 2015, but it was only this year that it exceeded its previous peak from 2007 by reaching a new all-time high of 9,558 points on 5 January 2018.

 

1988 - 1997


30 June 1988
The SMI was launched at 1,500 points as standard value.

7 December 1988
Less than half a year later, the first options on the SMI were tradable on the derivatives exchange SOFFEX.

16 October 1989
Black Friday on the American stock exchanges catches up with Europe at the start of the week. This resulted in the largest one-day loss on the SMI of 10.54%.

9 November 1990
The first index future on the SMI was permitted for trading on SOFFEX.

14 January 1991
All-time low of 1,287.6 points (closing rate basis)

19 August 1991
Due to the attempted coup against the then Soviet President Mikhail Gorbachev, the SMI closed down 8.04%, its third highest one-day loss.

6 January 1993
Credit Suisse (today CS Group) announces that it is to take over Swiss Volksbank.

17 May 1995
The stock exchanges in Basel, Geneva and Zurich merged to become Swiss Stock Exchange SWX. This simplified the way the SMI was calculated, as until then the prices of three stock exchanges had been used.

9 May 1996
Due to the merger with the Swedish company ASEA, the SMI bedrock was renamed ABB.

7 March 1996
Announcement of the merger of Ciba-Geigy and Sandoz to form Novartis. Both the new Novartis shares (registered and bearer shares) had a joint weighting of at least 26% in the SMI at the end of 1996.

5 May 1997
The SMI exceeded the 5,000 mark for the first time. The sharp rise in the SMI within two years was a result of the changeover to full electronic trading. The Swiss stock exchange was the first exchange in the world to introduce this between 8 December 1995 and 16 August 1996.

1 July 1997
With the adoption of Adecco as a constituent of the SMI, a previous SMI member - Adia - returned after merging with the French company Ecco.

8 December 1997
Announcement of the merger of Union Bank of Switzerland and Swiss Bank Corporation to form UBS.

 

1998 - 2007


27 March 1998
The 7,500 mark was exceeded for the first time on this day.

6 October 1998
After previous losses, investments by professional investors in financial stocks led to a recovery and the second highest ever one-day gain  of 7.75%.

19 October 1998
Swisscom became the only stock to have made it onto the SMI after just one month of being listed.

6 October 1999
First index fund issued on the SMI.

15 March 2001
Two years later, the first ETF was created on the SMI from the index fund.

24 September 2001
After days of worrying about war caused by 9/11, international markets and the SMI closed 6.70% up. This was the third highest ever one-day gain.

1 October 2001
The free-float weighting was introduced for the SMI. This meant that only the tradable part of stocks in the index would be taken into account.

8 October 2001
Due to the grounding (on 2 October 2001), SAir Group shares were suspended from the SMI as they no longer met the criteria of the index regulations.

12 March 2003
After the dotcom bubble burst, the SMI reached its lowest ever point of some 3,675 points.

4 June 2007
First time that the index exceeded the 9,500 mark.

24 September 2007
Until that date, the SMI comprised a fluctuating number of stocks (between 18 and 29), as only a maximum of 30 were defined. The Swiss stock exchange implemented the biggest change to the rules by setting the limit at 20 stocks.

 

2008 - today


13 October 2008
13 October 2008: The announcement of the part-nationalization of big banks in the USA brought the then highest ever one-day gain for the SMI of 11.39%.

15 January 2015
The Swiss National Bank’s lifting of the minimum exchange rate of the Swiss franc against the euro. On that day, the SMI lost 8.67% which corresponds to the second largest one-day loss in the SMI’s history.

16 July 2015
Following the merger between SMI bedrock Holcim (previously known as Holderbank) and the French company Lafarge, the stock was renamed LafargeHolcim. Since then, it has become one of the world’s largest manufacturers of building materials.

21 March 2016
Swiss Life Holding AG shares returned to the SMI six years after the delisting of Transocean.

18 September 2017 / 18 December 2017
By limiting the weightings of the individual constituents to 18%, the SMI aligned itself with the ESMA UCITS Directive. The capping at 18% was carried out in two stages on 18 September and 18 December 2017 respectively. Since then, the major stocks Nestlé, Novartis and Roche have had a weighting of 18% in the SMI. This means that the SMI complies with the EU’s provisions on diversification and can be used as a reference index for the Swiss stock market in the European Union. The EU provisions on diversification are particularly important for the use of index derivatives, as they are a financial product regulated by the EU.

5 January 2018
The SMI reached a new all-time high of 9,558 points (closing rate basis).