Markets, as we know, are allergic to uncertainty. And what is more volatile on international markets in this period than a dollar and the assets related to it? Donald Trump's trade challenge announced, implemented and then partially postponed has shaken confidence in the United States and investors are taking different paths, taking refuge first of all in gold, which has recorded record after record rising above 1300 dollars an ounce, but also in theeuro which rose above $1,13. And then there's the Swiss franc, also at historic highs against the dollar, and Swiss banks and Switzerland itself, seen as a refuge from Trump's reckless decisions.
So, while The Donald would like global companies to pack up and go start production in the States, a recent investigation by Financial Time he found that instead a good number of super-rich Americans they seem to be doing the exact opposite: flee the United States and they look at the Switzerland as an anti-Trump refuge. Thus, on the occasion of a ski trip in the luxurious Saint Moritz, Gstaat or Verbier, the American multi-billionaires pop into the banks of Geneva or Zurich to discuss with their directors what can be done in this moment so uncertain because of the Trump administration: in short, to study a strategic emergency plan.
According to reports from the Financial Times, private bankers, family offices and wealth management groups have reported that they have recorded a strong increase in customers who wish to open bank accounts and investment based in the Swiss country, especially if compliant with US tax regulations.
Josh Matthews, co-founder of Maseco, which provides wealth management services for Americans abroad, told the FT that the last time he had seen this kind of interest It was during the financial crisis of 2008, when the failure of US banks was feared after the Lehman Brothers crash. Now, he added, the same thing is happening because of "the uncertainty generated by the Trump presidency". Even the Geneva private bank Pictet confirmed that it has seen a “significant increase” in demand from new and existing US clients at its subsidiary Pictet North America Advisors. So the super-rich prefer to take at least part of their wealth to the Swiss fortress, a traditional haven in times of instability. Since 2008, US authorities have cracked down on dozens of Swiss banks for helping Americans avoid paying taxes by exploiting the country’s banking secrecy rules, but in 2013, Swiss banks adapted to US tax rules by increasing transparency and sharing information about US account holders to avoid legal sanctions. That made them “appealing” again to wealthy Americans.
Americans can't just open a bank account in Switzerland today, because of regulations like the Foreign Account Tax Compliance Act (FATCA), which requires foreign banks to report U.S. account holders to the Internal Revenue Service. But if a Swiss wealth or asset manager is registered with the SEC in the United States, they can help clients open accounts and manage their money. Pictet is one of the largest Swiss operators with a division registered with the SEC. Many clients, bankers say, are looking to diversify your investments, moving away from the US dollar, opening accounts in Switzerland.
Swiss Franc Rises to All-Time Highs Against Dollar
After showing signs of recovery at the start of the week, the dollar has begun to slide back toward the previous week's lows. On Wednesday, the greenback fell 1,2% against the franc, falling to 0,8137 francs. The franc has gained ground among G10 currencies, while the euro has risen 5% since the tariffs were announced. After all, Switzerland has some of the characteristics that investors usually like: low government debt, low inflation, stable real estate.
Where do the rich look for homes in Switzerland?
Once the holidays are over and a bank account is opened, the idea of also transferring the place of residence It's not that far away. And the super-rich have already formed clans in many Swiss cities. But not in the most well-known ones, but in towns with names that not everyone knows, but which have the big advantage of offering tax breaks: in Switzerland, there is a strong geographical gap when it comes to income tax, with the lowest tax burden in the cantons of Central Switzerland. According to the Swiss newspaper Neue Zürcher Zeitung (NZZ for friends), 376 millionaires live in the city of Zug alone. In the neighboring municipalities of Baar, Walchwil and Cham there are another 190 or so. But then there are the small municipalities of Freienbach, Wollerau and Feusisberg, known as tax havens, which are home to 225, 216 and 120 millionaires respectively.
Trump's pharmaceutical tariffs hang over Swiss stock exchange
Investing in Switzerland it does not spread on the stock exchange, especially due to the persistent uncertainty caused by the sword of Damocles of the tariffs promised by Trump on drugs: the pharmaceutical companies, which have a notable weight on the Swiss price list, could see significant changes. The Swiss Market Index (Smi) includes several pharmaceutical companies with significant weights: Roche which lost by 15%, Novartis, for 14,86%, Lonza for 3,18% and Alcon for 3,1%. Together they reach 36% of the list. Trump has already raised the possibility of rates at “25% or higher”.
However, the big pharmaceutical groups are evaluating different plans to be able to face this eventuality. Novartis has already announced investments of 23 billion dollars to build and expand 10 plants in the United States over the next five years. The pharmaceutical competitor Roche will invest another 10 billion in the US. But this pro-US approach by Swiss companies can also be seen in other giants like Nestlé, Rolex, Abb, Bühler, Stadler. The latter, for example, has already said it will go to produce trains in the US. In total, the Swiss-American Chamber of Commerce estimates that it will easily exceed one hundred billion, up to almost 150: "These are investments that we would have made anyway for the most part," he said. The Swiss mission in the States also involves professional education and training for their new US employees. Precisely what the supporters of Trump's reindustrialization want.
