(originally published on Seeking Alpha at end of October 2016)
The current article will take a closer look to the incredible rise of the Swiss National Bank stock and suggest why taking a short position could be the right trade at this level.
The Swiss Central Bank: Mandate and Monetary Policy
According to the Swiss Federal Constitution (Art. 99) the Swiss Central Bank is an independent institution with the mandate to conduct the monetary policy in Switzerland by ensuring price stability, while taking into account the economic growth.
Capital Structure
Different from many other Central Banks, the SNB is a private company with a nominal Shareholder Capital of CHF 25mln, co-owned by public and private entities. The Shareholder capital is based on 100’000 shares with a value of CHF 250 and it is listed in the Swiss Stock Exchange (OTCPK:SWZNF).
According to SNB website, at the end of 2014 the shares were divided as follow:
Swiss Cantons and Public Institutions were holding 55%
Swiss Cantons’ Banks were holding 19%
Private Entities (Swiss people or foreigners) were holding 26%
According to the National Bank Act (2003), the voting right iscapped to 100 shares for private entities and the dividend can be maximum 6% of the shares nominal value (e.g. CHF 15).
It Is Time To Short The Swiss National Bank!
February 27, 2017