Switzerland has typically a weaker current account surplus in the winter months than in the other 3 quarters.
Current Account: +39% against Q1/2016 to +11.1 bn. CHF
- of which Trade Balance: +78% to +10.5 bn.
- of which Services Balance: +21% to +5.5 bn.
- of which Investment Income: -50% to +2.8 bn.
Net acquisition of financial assets
The net acquisition of financial assets totalled CHF 15 billion (Q1 2016: net reduction of CHF 13 billion). Reserve assets saw a net acquisition of CHF 36 billion (Q1 2016: net acquisition of CHF 18 billion) as a result of the SNB’s foreign currency purchases. Direct investment recorded a net acquisition of CHF 8 billion (Q1 2016: net acquisition of CHF 38 billion), with resident parent companies reinvesting profits in their non-resident subsidiaries and, additionally, strengthening the subsidiaries’ equity capital. Portfolio investment posted a net acquisition of CHF 3 billion (Q1 2016: net acquisition of CHF 1 billion), as resident investors purchased mainly collective investment schemes from non-resident issuers. By contrast, other investment recorded a net reduction of CHF 32 billion (Q1 2016: net reduction of CHF 70 billion). This was the result, first, of the SNB reducing its financial assets abroad that are not included in reserve assets and, second, commercial banks decreasing their claims against non-resident banks.
Net incurrence of liabilities
Overall, the liabilities side of the financial account registered a net reduction of CHF 4 billion (Q1 2016: net reduction of CHF 30 billion). Other investment recorded a net reduction of CHF 14 billion (Q1 2016: net reduction of CHF 42 billion), primarily due to commercial banks decreasing their liabilities towards non-resident banks. Direct investment saw a net incurrence of CHF 12 billion (Q1 2016: net incurrence of CHF 21 billion). In particular, this was the result of resident parent companies taking out loans from their non-resident subsidiaries. Portfolio investment showed a net reduction of CHF 1 billion (Q1 2016: net reduction of CHF 9 billion); while non-resident investors purchased debt securities from resident issuers, they sold comparatively more shares of resident issuers in terms of value.
As in the year-back quarter, the financial account balance came to CHF 18 billion. This is calculated as the sum of all net acquisitions of assets minus the sum of all net incurrence of liabilities plus the balance from derivatives transactions. This positive financial account balance corresponds to the increase in the net international investment position resulting from cross-border investment.
Switzerland Financial Account(see more posts on Switzerland Balance of Payments, Switzerland Capital Account, Switzerland Current Account, Switzerland Financial Account, )
Extract from the Balance of Payments Q1 2017 Source: snb.ch - Click to enlarge
Switzerland’s international investment position
Stocks of foreign assets were up CHF 7 billion on the previous quarter to CHF 4,489 billion. Stocks of reserve assets expanded by CHF 40 billion to CHF 731 billion, with a large portion of this increase result ing from transactions reported in the financial account (net acquisition of financial assets). The assets under portfolio investment grew by CHF 25 billion to CHF 1,308 billion. This increase was predominantly based on price gains of equity securities on stock markets abroad. Stocks of other investment decreased by CHF 31 billion to CHF 807 billion, chiefly due to transactions. Stocks of derivatives declined by CHF 25 billion to CHF 91 billion, and stocks of direct investment by CHF 3 billion to CHF 1,552 billion.
Stocks of foreign liabilities rose by CHF 21 billion to CHF 3,649 billion compared to the previous quarter. Stocks of portfolio investment were up by CHF 63 billion to CHF 1,125 billion, mainly on the back of share price gains on the Swiss stock exchange. The liabilities under direct investment increased by CHF 19 billion to CHF 1,257 billion as a result of transactions. By contrast, other investment receded by CHF 42 billion to CHF 1,175 billion, and stocks of derivatives by CHF 19 billion to CHF 92 billion.
Net international investment position
The net international investment position declined by CHF 14 billion to CHF 840 billion compared with the previous quarter, since foreign liabilities (up CHF 21 billion) advanced more strongly than foreign assets (up CHF 7 billion).
Switzerland International Investment Position (see more posts on Switzerland Balance of Payments, Switzerland Capital Account, Switzerland Current Account, Switzerland Financial Account, )
Source: snb.ch - Click to enlarge
,Switzerland Balance of Payments
,Switzerland Capital Account
,Switzerland Current Account
,Switzerland Financial Account