Swiss investors face a “moment of truth” in the second half of 2026, as rising inflation and slowing economic growth force central banks to keep monetary policy restrictive despite weakening momentum. Raiffeisen experts recommend a more defensive stance, broad diversification and a tilt toward high-dividend Swiss stocks.
After a strong start to the year, financial markets were shaken by the Iran conflict in March, only to recover on hopes of a lasting Middle East peace settlement and ongoing euphoria around artificial intelligence. But Raiffeisen warns that high valuations and an economic slowdown are now capping further upside.
Inflation and Growth Send Warning Signals
Inflation in the US and eurozone remains significantly above central bank targets, while economic momentum is weakening.
“Despite the weakening economic momentum, there is currently no room for a more expansionary monetary policy. The interest rate cuts that the market expected at the beginning of the year are therefore off the table,” said Matthias Geissbühler, Chief Investment Officer of Raiffeisen Switzerland.
At the same time, the supply shock in fossil fuels is weighing on growth. Raiffeisen economists expect Swiss GDP to grow by just 0.8% in 2026, with growth rates in the eurozone and US also below their respective potential.
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Concentration Risk in Indices
Despite geopolitical uncertainties and mixed economic prospects, stock markets gained ground in the first half of the year. Emerging market stocks and US securities, in particular, posted significant gains, with AI-related investments boosting semiconductor and hardware names.
But concentration risks have increased sharply. The US accounts for almost three-quarters of the MSCI World Index, while technology stocks make up nearly 35%, a share likely to rise further following the inclusion of SpaceX and planned IPOs of Anthropic and OpenAI.
“Investors who closely track an index often unknowingly take on concentration risks, as the current high concentration significantly limits diversification. This is a clear argument for active asset management, which also includes consistent active risk management,” Geissbühler said.
Swiss Dividend Stocks Shine
With savings rates negative in real terms, alternative sources of return are gaining appeal. The Swiss Performance Index (SPI) currently offers an average dividend yield of around three percent.
“Looking ahead to the second half of the year, we consider defensive, high-dividend Swiss stocks – for example, from the healthcare, food, or insurance sectors, to be attractive,” Geissbühler said.
Raiffeisen is more cautious on international equities. The bank took profits on emerging market stocks mid-year and tactically reduced its allocation. “Emerging markets have performed disproportionately well, with the performance driven by a few large technology stocks. Now the moment of truth has arrived, and the potential for further gains is limited in the short term,” he said.
Real Estate and Gold Provide Balance
Swiss real estate funds remain attractive, with persistently high housing demand and low construction activity pointing to moderately rising prices. Investors can also benefit from distribution yields of around two percent.
Gold, despite volatility in the first half, remains a valuable portfolio component. “The sharp rise in energy prices and capital market interest rates due to the Iran conflict, as well as the temporarily stronger US dollar, abruptly halted the precious metal’s upward trajectory. However, central bank demand remains high and should support the gold price,” Geissbühler said.
Raiffeisen recommends a real estate allocation of 6.5% and a gold allocation of 7.5% in a broadly diversified portfolio.
Defensive Stance Advised
Given geopolitical and economic uncertainties, increased price fluctuations are expected in H2 2026. Following the strong performance of technology stocks, Raiffeisen advises taking some profits and reallocating to more defensive sectors.
“The high concentration in the indices, the ambitious valuations, and the wave of IPOs are signs that the AI-driven market cycle is already well advanced,” Geissbühler said.
The current environment favors a somewhat more defensive portfolio orientation. Regardless, investing in a zero-interest-rate environment remains the only option, which is why the long-term investment strategy should be maintained.
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