Swiss Market Index

The Swiss Market Index (SMI) is a capitalization-weighted index of the 20 largest and most liquid stocks of the Switzerland’s Stock Market. It represents about 85% of the free- float market capitalization of the Swiss equity market. The SMI was developed with a base value of 1,500 as of June 30, 1988.

The index is calculated using the Weighted Average Market Capitalization methodology where the price multiplied by the free float gives the market capitalization of its constituents. The base value of the index is 1500 on 30^th June 1988. The weightage of each company is arrived at by dividing the market capitalization of each company with the total market capitalization of all the 20 companies. The larger the market weightage of the company the larger is the impact due to 1% change in its price on the index.

The changes to the index-basket composition are made once a year after prior notice of at least two months on the third Friday in September after close of trading. The number of securities and free-float shares are adjusted on four ordinary adjustment dates a year on the third Friday in March, June, September and December.

A security is admitted to the SMI if it ranks 18 or better in the selection list. A share ranked 19 or 20 is admitted only if a share included in the SMI meets the exclusion criteria directly (position 23 or lower) and no other share that either meets the admission criteria directly (position 18 or higher) or is rated higher has moved up in its place.

A security is excluded from the SMI if it is ranked 23 or lower in the selection list. A share ranked 21 or 22 is excluded only if a share meets the admission criteria directly (position 18 or higher) and no other share that either meets the exclusion criteria directly (position 23 or lower) or is rated lower has been excluded in its place.

Healthcare constitute 37.66% followed by Consumer Goods at 27.54%, Financials at 17.85%, Industrials at 10.05%, Basic Materials at 4.37%, Oil and Gas at 1.47% and Telecommunications at 1.06% for the sector allocation in the index.

The SMI has given a return of 8.44% on a year on year basis and has remained flat on a month on month basis. The index reached an all-time high of 9531.50 in June 2007. The index has a Price to Earnings ratio of 22.6 in the current scenario. Nestle company has the highest weightage of 21.08% in the index followed by Novartis with a weightage of 19.29%, Roche with 17.53%, UBS with 6.09%, ABB Ltd. at 5.44%, Richemont at 4.64% and CS Group at 4.13% while others have less than 4% weightage each in the index.