UBS Switzerland AG has upgraded its profit growth forecast for Swiss equities to 11% for 2026, up from a prior estimate of 8%, as corporate earnings and economic indicators strengthen. The bank also raised its 2027 earnings growth projection to 8% from 5%, citing sustained momentum in corporate profitability.
The Swiss Market Index (SMI) is expected to climb to 15,000 by December 2026 under UBS’s central scenario, with a further target of 15,300 by June 2027. An upside scenario places the index at 16,000 by mid-2027, contingent on robust profit expansion and sustainable dividend growth. Conversely, a downside scenario forecasts the SMI at 11,000, reflecting risks from economic slowdown, currency pressures, and geopolitical uncertainty.
UBS noted that SMI profit growth accelerated by more than 3 percentage points in both the first and second quarters of 2026, driving the upward revisions. The bank also highlighted that the sustainable dividend yield for Swiss equities stands near 3%, exceeding historical averages and outpacing Swiss bond yields in a low-rate environment. The SMI closed at 14,347 on the report’s publication date.
Strategically, UBS recommends focusing on companies with strong management quality and profitability, while tactically favoring mid-cap stocks and quality cyclicals as economic conditions improve. Mid-caps have underperformed large caps by 27% since their relative peak in June 2018, though UBS views their valuations as increasingly attractive due to superior organic growth and improving profitability trends.
