Despite the often weak seasonal stock markets and new pharmaceutical tariffs, the stock markets managed to gain ground. This was also thanks to the interest rate cut by the US Federal Reserve. The rally around artificial intelligence (AI) is primarily driving tech stock prices in the US and Asia. We remain constructive and are increasing our position in the US technology index Nasdaq, while taking some profits in emerging markets (EM). We remain slightly overweight in pharmaceutical companies following the latest, rather vague announcement of US tariffs.
Author: Nicola Grass
September is traditionally the weakest month of the year on the stock market. In 2025, however, it defied the odds and the equity markets continued to rise. The Fed's interest rate cut (-25 basis points) gave the global AI rally further momentum. Thanks to new partnerships and lenient antitrust rulings, the American IT and telecoms sector in particular, with companies such as Oracle and Micron (both +40%) and Alphabet, were among the clear winners. Nevertheless, our sentiment indicators show no signs of euphoria, and the fundamentals remain solid. We are therefore increasing our tactical position in the Nasdaq and remain overweight in convertible bonds, which have a bias towards smaller IT issuers.
Tech stocks also performed well in emerging markets (see chart). Alibaba's share price shot up by an impressive 50% in September thanks to increased investment in AI infrastructure. The MSCI EM Index reached its 2007 highs and is approaching its all-time high of 2021. A weak USD, robust economic data (+4.1% GDP in 2025), low inflation (3.2%) and falling key interest rates continue to provide tailwinds. Nevertheless, we are taking some profits after the strong rally, as earnings growth has not been able to keep pace and valuations have risen (P/E ratio from 12 to 14). We also expect growth in China to slow in the second half of the year. However, our overweight in emerging market bonds remains unchanged, as they continue to benefit from historically high real yields and a weak US dollar. EM bonds also have a different regional distribution than Asia-heavy equities.
Among the losers in September was the Swiss stock market, which suffered from the weak performance of heavyweights such as Nestlé and Novartis. However, the 100% tariffs on pharmaceutical imports into the US announced by US President Donald Trump are not the reason for this. Firstly, even higher tariffs had been feared, and secondly, Roche and Novartis could be exempt from these tariffs due to their already announced investments in the US. EU pharmaceutical companies, which account for 60% of US pharmaceutical imports, are also likely to be exempt. The markets reacted calmly to this news. We remain neutrally weighted in Swiss equities and are slightly overweight in global pharmaceutical stocks.
Swiss government bonds are once again offering negative yields on maturities of up to five years, and there is hardly any potential for returns at the long end either (10-year yields at 0.18%). Corporate bonds in CHF are performing slightly better, but we continue to see more attractive opportunities in alternative investments. We continue to overweight gold despite its sharp rise in price and are benefiting from high coupons on catastrophe bonds, which are performing strongly thanks to the absence of hurricanes. Private equity and liquid hedge fund trackers have also had a successful year and remain important diversifiers in our portfolios.
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