Abstract: US stocks plummeted, currency appreciation, loss of gold! In 2018, the Swiss National Bank lost 15 billion?
In 2018, the Swiss National Bank lost 15 billion Swiss francs!
[One Niu Finance] News: The preliminary report released by the Swiss National Bank (Central Bank) on Wednesday (9th) showed a loss of 15 billion Swiss francs (about 15.3 billion US dollars) in 2018.
It is worth mentioning that this huge loss has a sharp contrast with the good performance of the previous year! In the previous year, the Swiss National Bank made a record profit - 54.4 billion Swiss francs.
In recent years, the Swiss National Bank has accumulated hundreds of millions of Swiss francs of foreign exchange assets by continually implementing open market operations to stabilize the Swiss franc exchange rate, and has invested a large amount of these monetary funds created “out of thin air” into the stock market and bond market.
What is the reason for the huge losses?
So the question is: What is the reason for the huge losses of the Swiss National Bank in 2018?
In this regard, the main reasons for the loss in 2018 are as follows:
First, global stock markets fell.
According to data released by the Swiss National Bank, about 21% of its total investment is invested in the stock market, including a large number of US stock star companies such as Apple, Amazon, and AT&T.
According to market statistics of Yi Niu Finance, in 2018, the three major US stock indexes hit their biggest annual decline in 10 years, the S&P fell 6.24%, the Dow fell 5.63%, the Nasdaq lost 3.88%, while the major European stock indexes The cumulative decline in the year exceeded 10%.
Second, the appreciation of the Swiss franc has led to a decline in the value of its large-scale foreign exchange investment.
In 2018, the Swiss franc rose about 4% against the euro and 0.8% against the dollar.
The US and European stock markets fell in 2018, and with the exchange rate of the Swiss franc against most G10 countries, it eventually led to a loss of only 16 billion Swiss francs in this portfolio alone.
In addition, the Swiss National Bank said that foreign currency position losses are estimated at 16 billion Swiss francs, and such positions are mainly held in the form of bonds and stocks. Last year, the holdings reached 775 billion Swiss francs, which is larger than the entire Swiss economy.
Third, the Swiss National Bank also expects a loss of 300 million Swiss francs in its gold holdings.
In this regard, UBS analyst Alessandro Bee said: "This year the Swiss National Bank was hit by the stock market crash, the appreciation of the Swiss Franc in 2018 also reduced the value of its foreign currency investment into the Swiss franc."
What will happen in the future?
As mentioned above, despite the losses, the SNB said it expects to distribute 2 billion Swiss francs to the Swiss states and the federal government, after a record profit in 2017 increased the reserves used for distribution.
Ironically, while everyone is paying attention to the rise and fall of Bitcoin, few people have noticed that the SNB’s share price has risen from an all-time high of 8,600 Swiss francs from the beginning of 2016 to April 4 last year. Nearly 700%.
Of course, the SNB's performance report on Wednesday is a preliminary estimate and will provide more details on March 4.
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