Weekly Report 43/2025

Nestlé share price jumps

The Swiss Market Index (SMI) rose significantly last week to 12,644 points (+1.3%). Financial stocks (banks, insurance companies, etc.) suffered widespread losses. The jump in the SMI is mainly attributable to Nestlé (+10%). The new duo at the helm of Nestlé got off to a flying start at their first press conference. They showed their determination to end the weak growth of the manufacturer of Nespresso, Maggi, and Kitkat.

Nestlé’s culture has many strengths, but there are also areas where further development is needed. A ruthless analysis of the group, with its more than 2,000 brands, would now be carried out. CEO Philipp Navratil also emphasized that the world is changing and Nestlé must change faster. The company also announced the reduction of 12,000 office employees around the globe and 4,000 employees in production and along the supply chains.

In our portfolios in risk classes 2 to 5, we took profits on Novartis shares (-1%) after an outstanding performance and slightly reduced our position. The purchase also serves to diversify individual stocks within the pharmaceutical sector. We invested the proceeds in the supplier Lonza (+5%).

We sold Lonza in early spring, enabling us to avoid the volatile market phase in April caused by reciprocal tariff threats. Stability has since returned to the industry, and Lonza remains excellently positioned. The company should be able to largely avoid potential tariff measures, particularly thanks to its production sites in the US. Lonza is also an impressive earnings compounder: by reinvesting profits, long-term core EBITDA growth of around 15% to 16% is expected.

Overseas, markets fluctuated more between hope and caution. Since the beginning of the month, the SMI has risen significantly (+4.4%), while the major US stock markets have declined slightly (-0.5% Dow Jones, -0.4% S&P 500). European markets remained in positive territory in October, with the French benchmark index CAC 40 (+3.5%) performing the strongest. Some stocks in our portfolios, such as Engie (+8%), Schneider Electric (+4%), Vinci and Veolia (both +3%), were relaxed after a political crisis in highly indebted neighboring France was averted for the time being. However, the luxury goods group LVMH remained the frontrunner, reporting encouraging, broad-based demand dynamics.

The French government is once again able to act with its latest draft budget, and risk premiums on bonds have fallen. But this stability is fragile, as the respite has come at a high price with the retirement age set at less than 63. Under Macron, the high tax and contribution burden compared to other countries was reduced and investment conditions improved. For six years in a row, France was the most popular country in Europe for foreign investment. The long-term damage caused by short-term stabilization is probably greater than Paris believes.