Erik Fruytier: “Switzerland is fortunate to benefit from stable growth and a strong currency”

While 2021 remained difficult for the economy, some sectors and companies managed to grow. However, the Covid-19 pandemic is still there and the emergence of new variants is blowing a wind of concern about the global economic recovery. So what solutions to revive the economy in 2022? And which stocks should you invest in? To discuss this, we mobilized Erik Fruytier, investment director at Banque Gonet. He answered your questions about the 2022 economic outlook for Switzerland and the world during a video conference to revive in this article. This was moderated by Sebastien Colmeia, business journalist for Time.

What state is the world economy in today? (Lionel)

Erik Fruytier: Since March 2020, we have been plunged into a deep pandemic crisis. Things have changed a lot. Vaccines arrived and the world learned to live with the virus. The economy was saved by central banks in 2020 thanks to very accommodative policies aimed at avoiding financial crises. Governments have done what is necessary to allow the economy to get through this difficult period.

And is Switzerland doing well? (Married)

EF: Switzerland lost just 3% of its GDP in 2020. This is very little compared to the scale of the crisis it has suffered. The financial markets took all the events into account, also anticipating a way out of the crisis. This trend continued into 2021, with an additional surprise effect: variants. However, the stock market understood that the economy would restart without problems. And that’s what happened: we are now in a recovery phase. Most economies will continue to see real growth even as the post-pandemic period remains. intended for at least 2023.

So the variants don’t worry investors? (Sebastien)

EF: True, investors were worried when the new variants were announced. However, as soon as the studies were reassuring, with the responsive vaccines still around, the Stock Exchange was no more disturbed than that. By the end of December, the markets had already restarted.

To read: Swiss companies stand firm against Omicron

Will Switzerland experience an inflationary period in 2022? (jiro)

EF: Inflation is a big problem for any investor. To solve this problem, eyes often turn to central banks. Switzerland is fortunate to benefit from stable growth and a strong currency. This allows you to pay less for the goods you import, with the effect of mitigating inflationary effects. The SNB evokes an inflation of 1% for our country. This is extremely low: in Europe and the US, it would be around 5-6%.

To read: “The dominance of tech stocks may decline this year”

What about the “metaverse”, that universe that everyone talks about where the real and the virtual would end up merging? (Factory)

EF: In my opinion, saying “I believe that” or “I don’t believe that” makes no sense. We are talking about an evolution here, with gigantic players that intend to spend billions to develop products that they want to impose on the world population by creating demand. During the California Gold Rush (1848-1856), there were those looking for gold and those selling shovels to find it! Many companies – totally unknown today – will evolve to allow these new systems to be developed. Brands are already investing a lot of money in the “metaverse” just to be there. Because? Because they want to be first and they think the consumer will arrive sooner or later. It may sound crazy, but it’s a reality.

What are the sectors to invest in in 2022? (Kelo)

EF: As the economy improves, we can focus on cyclical actions: that is, everything around consumption (tourism, leisure, automobiles, etc.). After a difficult period, people just want to have fun. At the end of 2022, it is more complicated to anticipate because it will depend on what the FED (US Federal Reserve) will do.

I am 30 years old, how do you advise me to invest? (Xavier)

EF: At your age, you should invest in stocks. They are ideal for the long term. You shouldn’t worry too much about the dips they might experience in the markets. These are logical and unpredictable.

And the future of the Chinese economy? (Ernest)

EF: The Chinese economy held up very well in 2020. However, the Chinese government also adopted an ultra-restrictive policy (“zero covid” strategy). This very harsh strategy led to the temporary paralysis of many parts of the economy with the closure of entire cities. Due to its slowdown, the Chinese market underperformed in 2021. In addition, the Chinese government is heavily involved in economic life, drastically regulating, dictating conduct to private companies and influencing people’s behavior. Frankly, this is not ideal for reassuring foreign investors. The Chinese economy is now in transition. It had problems last year, in particular the Evergrande case – this real estate giant, strangled by a debt of around 260 billion euros – which ran the world. However, it retains interesting long-term potential.

To read: Chinese banks no longer follow Beijing

The new technology sector experienced a boom at the beginning of the pandemic crisis. Is it still attractive? (Factory)

EF: The pandemic has caused a boom in the stock market in everything related to staying at home: computer equipment for telecommuting, sports at home, online leisure… However, many people have learned to operate differently, creating new followers. However, we should not extrapolate to 2022 what happened in 2020.

Tesla announced strong growth for its business in 2021, announcing over one million cars sold. A value to always bet on? (Nathalie)

EF: Tesla makes vehicles that people love. The brand is very comparable to Apple, with a very strong consumer affection for it. They managed to explode the electric car industry. However, Tesla’s market capitalization today is close to a trillion dollars… Do you see? That’s more than almost all the classic car companies put together… It’s like buying a CHF100 box of chocolates instead of a CHF1 one. So yes, maybe their cars are great, but do those amounts make sense compared to other players who also make great products? Especially since they are not idly by and are now investing a lot of money in the same niche as Tesla. And when others also offer high-performance electric vehicles, which is increasingly the case, will Tesla still be worth that much? However, it must be recognized that it is always easier to be a brand whose entire base is based on a niche of the future than it is to make a complete transition when you are an old company that relies entirely on a technology that we can estimate will soon be outdated: the thermal.

To read: Is the SNB letting the franc go up (a little)?

And cryptocurrencies, any advice on this matter? (Married)

EF: Our business is to manage our clients’ wealth with a focus on preservation, not speculation. I have a hard time getting you the value of a bitcoin today. On the other hand, I can evaluate in a much simpler way, with very precise tools, the value of a company and its actions. Cryptocurrencies are speculative assets. However, I recognize that the technology behind it, particularly blockchain, is very interesting, it has a lot of future.

Can we invest protecting the planet? (FB)

EF: Sustainable financing is a growing trend. All banks are adapting to perform well in this niche. Different approaches are possible when you are an investor. For example, you can exclude assets that you think are harmful or even contact companies you invest in to encourage them to change. Be careful though, the transition remains an extremely complex process. An example: we put a lot of pressure on the oil companies. What’s happening today? They no longer dare to invest, while this could have led them to change. In Europe, there are problems with gas prices and dependence on Russia. In the end, who is dissatisfied is the consumer, because the price of their energy is very high…

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