Swiss Balance of Payments and International Investment Position: Q1 2019

Current Account

Current Account Switzerland Q1 2019

Source: snb.ch - Click to enlarge

Financial account

The following is from the official press release and gives more details on the other parts of the financial account.

Net acquisition of financial assets

The assets side of the financial account registered a total net reduction of CHF 33 billion (Q1 2018: net reduction of CHF 10 billion). The main factor here was other invest ment, which recorded a net reduction of CHF 27 billion (Q1 2018: net reduction of CHF 41 billion). This was primarily due to the SNB reducing its foreign claims in connection with repo transactions. Direct investment, too, registered a net reduction amounting to CHF 11 billion (Q1 2018: net acquisition of CHF 13 billion), mainly owing to the fact that foreign-controlled parent companies in Switzerland reduced the equity capital of their non-resident subsidiaries. Portfolio investment and reserve assets posted a net acquisit io n of CHF 2 billion each (Q1 2018: net acquisition of CHF 14 billion and net acquisition of CHF 3 billion, respectively). In the case of portfolio investment, resident investors sold equity securities of non-resident issuers, but acquired debt securities to an even greater extent.

Net incurrence of liabilities

The liabilities side of the financial account registered a total net reduction of CHF 29 billion (Q1 2018: net reduction of CHF 24 billion). As on the assets side, other investment played a major role in this, recording a net reduction of CHF 20 billion (Q1 2018: net acquisition of CHF 15 billion), as the SNB decreased its foreign liabilities in connection with repo transactions. Direct investment contributed CHF 4 billion to the net reduction as a result of non-resident parent companies withdrawing funds in the form of equity capital from their resident subsidiaries (Q1 2018: net reduction of CHF 32 billion). A net reduction was also registered in portfolio investment. It amounted to CHF 5 billion (Q1 2018: net reduction of CHF 7 billion) and resulted from the sale of shares of resident issuers by non-resident investors.

Net

The financial account showed a negative balance of CHF 4 billion (Q1 2018: positive balance of CHF 14 billion). The balance is calculated as the sum of all net acquisitions of assets minus the sum of all net incurrences of liabilities plus the balance from derivatives transactions. The financial account balance corresponds to the change in the net investment posit ion result ing from cross-border investment.

Switzerland Financial Account, Q1 2019

Extract from the Balance of Payments Q1 2019 Source: snb.ch - Click to enlarge

Switzerland’s International investment position

Assets

Stocks of assets climbed by a total of CHF 20 billion to CHF 4,805 billion compared with the previous quarter, owing to a sharp increase in prices on foreign stock exchanges. Valuation gains were recorded in portfolio investment and reserve assets. Portfolio investment stocks increased by CHF 49 billion to CHF 1,371 billion. Reserve assets were up by CHF 29 billion to CHF 805 billion. By contrast, stocks in direct investment decreased by CHF 29 billion to CHF 1,695 billion. Stocks of other investment receded by CHF 15 billion to CHF 840 billion, and stocks of derivatives by CHF 14 billion to CHF 93 billion.

Liabilities

Stocks of liabilities advanced by a total of CHF 94 billion to CHF 3,995 billion. As in the case of assets, this was mainly due to valuation gains as a result of the sharp increase in prices on the Swiss stock exchange. Portfolio investment accounted for all the valuation gains, which raised its stocks by CHF 116 billion to CHF 1,186 billion. Stocks in the other investment category fell by CHF 10 billion to CHF 1,186 billion, primarily as the result of transactions recorded in the financial account. Derivatives declined by CHF 12 billion to CHF 95 billion. Stocks of direct investment remained at a total of CHF 1,527 billion.

Net international investment position

Given that stocks of liabilities (up CHF 94 billion) showed a more pronounced increase than stocks of assets (up CHF 20 billion), the net international investment position fell by CHF 74 billion to CHF 810 billion.

Switzerland International Investment Position, Q1 2019

Switzerland International Investment Position - Q1 2019 Source: snb.ch - Click to enlarge