Swiss blue chips outperform euro-area peers as AI trade unwinds

In October, Swiss blue chips outperformed euro-area peers by nearly 8 percentage points, the widest gap since March 2020. The Swiss Market Index (SMI) rose 4.6% while the Euro Stoxx 50 fell 3.2%. This shift was driven by investors reducing risk exposure, favoring companies with strong balance sheets less sensitive to rising borrowing costs. Three companies -- Roche, Novartis, and Nestlé -- accounted for almost half the SMI's monthly gain. The rally coincided with a global selloff in AI shares, where 20 top AI and chip stocks lost over $1 trillion between October 12 and 15. Investors are rotating out of crowded AI trades into more defensive positions.