Swiss Balance of Payments and International Investment Position: Q2 2019

Current Account

In summary: Nearly any change against the second quarter of 2018. About the same figures. But clearly and – as usual – a massive surplus.

Key figures:

Current Account: Down 2.07% against Q2/2018 to 21.3 bn. CHF

• of which Goods Trade Balance: Minus 1.52% against Q2/2018 to 14.24 bn.
• of which the Services Balance: Plus 0.85% to 4.72 bn.
• of which Investment Income: Minus 1.67% to 10.61 bn. CHF.

Current Account Switzerland Q2 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 acquisition of CHF 11 billion (Q2 2018: net reduction of CHF 30 billion). Other investment contributed CHF 7 billion to this net acquisition (Q2 2018: net reduction of CHF 36 billion), in part because the SNB increased its foreign claims in connection with repo transactions. Direct investment saw a net acquisition of CHF 3 billion (Q2 2018: net acquisition of CHF 19 billion). Resident companies reinvested earnings in their non-resident subsidiaries, although they also withdrew equity capital, albeit to a lesser extent. Reserve assets also posted a net acquisition, of CHF 3 billion (Q2 2018: net acquisition of CHF 3 billion). Portfolio investment, by contrast, showed a net reduction of CHF 2 billion (Q2 2018: net reduction of CHF 15 billion), mainly because resident investors sold equit y securit ies of non-resident issuers.

Net incurrence of liabilities

The liabilities side of the financial account registered a total net incurrence of CHF 5 billion (Q2 2018: net reduction of CHF 31 billion), partly as a result of portfolio investment. Non-resident investors bought equities of resident issuers amounting to CHF 9 billion (Q2 2018: net reduction of CHF 2 billion). Direct investment registered a net reduction of CHF 4 billion (Q2 2018: net incurrence of CHF 3 billion). As in previous quarters, non-resident parent companies withdrew equity capital from resident subsidiaries. This reduction was offset by an inflow of funds resulting from the reinvestment of earnings and from intragroup lending. In the case of other investment, the transactions balanced each other out (Q2 2018: net reduction of CHF 32 billion). The SNB increased its amounts due to non-residents, while commercial banks reduced their amounts due to banks and customers.

Net

The financial account showed a balance of CHF 6 billion (Q2 2018: CHF 2 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 position resulting from cross-border investment.

Switzerland’s International investment position

Assets

Stocks of assets were up slightly, by CHF 6 billion to CHF 4,804 billion compared with the first quarter of 2019. Revaluations due to price and exchange rate changes moved in opposite directions, largely offsetting each other. On the one hand, all components recorded valuation losses on assets in foreign currency; on the other, prices on foreign stock exchanges rose, resulting in valuation gains for portfolio investment and reserve assets. Portfolio investment recorded an increase of CHF 8 billion to CHF 1,379 billion and reserve assets rose by CHF 6 billion to CHF 811 billion. Stocks of derivatives were up CHF 3 billion to CHF 92 billion. Other investment stocks, by contrast, were unchanged at CHF 838 billion – exchange rate losses were offset by financial account transactions. Direct investment stocks declined by CHF 10 billion to CHF 1,683 billion.

Liabilities

Owing to revaluations, stocks of liabilities rose by CHF 30 billion overall to CHF 4,008 billion. Valuation gains driven by increases on the Swiss stock exchange significantly outweighed foreign exchange losses, as only a small proportion of liabilities is held in foreign currency. Portfolio investment accounted for all the valuation gains; stocks grew by CHF 34 billion to CHF 1,220 billion. Transactions also contributed to this increase, as non-resident investors purchased equities of resident issuers. However, statistical changes partly offset the rise; in previous quarters, the stocks reported by reporting institutions were too high, and this was corrected in the quarter under review. Direct investment stocks grew by CHF 1 billion to CHF 1,513 billion. Here, statistical changes offset the foreign exchange losses and transaction-related reduction. Stocks of other investment receded by CHF 4 billion to CHF 1,182 billion, and stocks of derivatives by CHF 1 billion to CHF 92 billion.

Net international investment position

Given that stocks of liabilities (up CHF 30 billion) showed a more pronounced increase than stocks of assets (up CHF 6 billion), the net international investment position fell by CHF 24 billion to CHF 796 billion.

Switzerland International Investment Position, Q2 2019

Source: snb.ch - Click to enlarge