Swiss Franc Crisis: Hello Switzerland ETFs (EWL, FXF, FSZ)

Swiss Women

Swiss women - beautiful. It's ecomony -- not.

How to play the country's demise of the Swiss Franc and now doomed economy. You could short or find the bottom in the iShares MSCI Switzerland Index Fund ETF (EWL), CurrencyShares Swiss Franc Trust (FXF), or the First Trust Switzerland AlphaDEX ETF (FSZ).


Beware that out of the three the FSZ trades on thin daily volumne, thus it is difficult to find a buyer or seller for the price you may want to trade on. The EWL even pays out a divdend once a year in the summer.  Since last Wednesday (Jan 14th) these ETFs have been flooded with bets. The EWL and FSZ are up around 2% where the FXF jumped 16%.  

Thanks to the Swiss crisis that is just beginning expect these tickers to get some attention.  More about that crisis which could lead to a recession or worse are detailed below via the BBC.

Here are the current prices for these funds:

 Ticker Company name Price Mkt Cap Dividend
EWL iShares MSCI Swit... $32.36 $990.41M 0.79
FXF CurrencyShares Sw... $110.74 $206.55M  
FSZ First Trust Excha... $38.37 $51.76M


Via the BBC.

So the quiet little press release slipped out last Thursday morning caused shock.

The Swiss decision pushed the euro off a cliff, the franc soared over 20%, and markets around the world went into panic mode.

In Switzerland itself, ordinary people queued to buy euros at knockdown rates, banks ran out of currency, and Swiss railways laid on extra trains for weekend shoppers keen to grab bargains in neighbouring France and Germany.


Recession fears

But many Swiss business leaders don't agree. In the days following the abandonment of the currency peg, orders from European companies for Swiss products have been cancelled.

The Swiss government has warned of the de-industrialisation of Switzerland. Employers say they expect to introduce short-time working and even pay cuts.

In short, just about everyone in Switzerland now expects a recession; growth will shrink, and unemployment rise.

The move by the European Central Bank to buy European bonds and thus stimulate eurozone economies has not inspired confidence in Switzerland.

As ECB President Mario Draghi made his announcement, the euro fell against the franc, and so too did the Swiss stock market.

Nobody expects the euro to strengthen anytime soon, but at its current level (99 Swiss centimes will buy a euro today), many Swiss businesses say they face bankruptcy.

So while the initial rise of the franc against the euro may have provided some Swiss consumers with the equivalent of a short but wild party, the after-effects are likely to be a very long, bad hangover for the whole country.