Money in, money out
Deep space investments / Insurance (un)merry-go-round / Border shopping under fire
Dear Insider,
We’re back…..this time with a streamlined format - but just as many focused insights. 💡
In the meantime, another political cycle has come and gone in Switzerland - with few (real) surprises.
October’s parliamentary elections saw an uptick for the far-right Swiss People’s Party, a fact that most expected.
What did come as an eye-opener was the spectacular failure of former Vontobel CEO Zeno Staub to secure a seat with the centrist “Die Mitte” party.
His corny campaign image and presumptuous attempts to be more “folksy” certainly earned him no extra votes.
The lesson?
Transitions are harder than expected - even from one “top-dog” spot to another.
And - authenticity is always in season.
People in the news
Mario Irminger - The CEO of Migros Group, at his post only since May, faces continued challenges in centralizing control and boosting profitability.
René Benko - The Austrian real estate tycoon has been ousted from his position at Signa Group after financial troubles overtook his empire. The owner of high-end retailer Globus may become a headache for his creditors, including Julius Bär.
Ignazio Cassis - The Swiss Federal Councillor and head of the foreign affairs department will be mandated to coordinate a renewed effort to finalize a framework agreement with the European Union.
🚀 Spacing it up
Billionaire Thomas Schmiedheiny funds cosmos-focused startup
The details:
Thomas Schmidheiny, a renowned Swiss industrialist, has started to invest in Swiss start-ups through his Family Office Spectrum Value Management. His recent investment went to Spacetek Engineering.
Spacetek Engineering is a start-up based in Bern, which specializes in the development of compact mass spectrometers for space travel and the semiconductor industry. Their technology, developed at the University of Bern, has attracted a generous funding amount of 9.2 million Swiss francs so far.
Going forward, Spectrum Value Management plans to expand its investments in the start-up sector. The firm has set a target to invest in 20 to 25 promising start-ups in total.
The big picture:
Much like billionaire Hansjoerg Wyss, who has made major investments in environmentally-focused new companies, Thomas Schmidheiny is branching out beyond the concrete business, Holcim, that he inherited from his father and which made him the 4th richest man in Switzerland.
Space tech is a relatively new field - but one for which Switzerland is well-suited. It ranks top of the list for “deep tech” development in Europe.
With such a high percentage of the world’s offshore wealth (nearly $2.5 trillion in Swiss banks), there is plenty of funding to be had for the right kind of projects. The key is winning the approval of the man (or woman) at the top.
❗️Be sure to follow The Swiss Insider on LinkedIn - right here.
💉Unhealthy Surge
Health insurance premiums jump - and shake up the industry order
The details:
2024 is set to unveil a significant spike in Swiss health insurance premiums, with an average uptick of 8.7%. The result could be historic number of people looking to change providers - up to 15% of all insured persons.
Concordia, the Luzern-based health insurer, has dethroned the previous leader, KPT with the cheapest rates.. They now lead the way in 18 out of 42 Swiss regions, signaling a significant shift in the health insurance landscape.
The health insurance market is diverse - and unequal - with great disparages between highs and lows. Basic insurance through Swica for an adult in Geneva with a 2,500 CHF deductible stands at 440 CHF. In Appenzell Innerrhoden, Atupri offers the same coverage for just 194.50 CHF.
The big picture:
Concerns are growing about the solvency of Swiss insurers. The Federal Office of Public Health (BAG) monitors this through the KVG solvency test which has seen the industry wide ratio drop from 130% in 2022 to 93% in 2023.
Within the industry changes are also afoot. KPT recently announced its exit from the Curafutura association due to differences in policy positions.
The negative publicity surrounding rising premiums hit Alain Berset, Federal Councillor responsible for health, hard - potentially contributing to his resignation. His Socialist Party, however, suffered little from the topic in recent parliamentary elections.
🛑 Cuts across the border
Karin Keller-Sutter proposes reducing duty-free shopping
The details:
Shopping tourism is a big deal in Switzerland, where prices on everyday goods are high. Proposals from the Swiss finance minister would reduce the amount of duty-free goods that can be transported across the border from 300 to 150 CHF.
An estimated 8.5 billion CHF flows across the border to Germany, France, Italy and Austria from bargain hunters.
Despite protests, proponents of the changes estimate that the cuts could reduce lost domestic revenues by at least 33%.
The big picture:
The proposal comes as a relative surprise from the liberal finance minister Karin Keller-Sutter. Her FDP party is generally considered to be among the most free-market friendly across the Swiss political spectrum.
Plugging holes in the domestic GDP may seem an easy way to balance the books and pay for rising costs in infrastructure and social support as the population of Switzerland continues to grow towards 10 million.
Rapid inflation in the eurozone has already reduced the attractiveness of shopping across the border - but the step will be viewed critically as a further move towards protectionism.
💡The Insider Advantage
The role of the state in Swiss money matters has always been limited in comparison to its larger European neighbours. But recent events point to a paradoxical attitude towards where funds should come from - and go to.
Clamping down on duty-free shopping across the border seems justifiable if you don’t engage in the practice, but the principle of forcing citizens to buy more locally rubs the liberally-minded Swiss the wrong way.
And will anyone really notice an improvement in public services because of the extra customs duty collected?
Meanwhile, the pain of higher insurance premiums hits everyone (almost) equally. And no one likes it. Here, more state intervention would be welcome.
But be careful what you ask for…
Proposals have been floated to use a sliding scale - forcing higher earners to pay more for care. And a truly “state-run” system would bring with it all the ills of the British NHS without providing much of a cure.
Perhaps Thomas Schmidheiny shows the way - built great things and then put your money where it can do the most good: in new (ad)ventures.
The Bonus
⚖️ Share alike - The Swiss Federal Council has announced that in coordination with the OECD, the international exchange of tax-relevant information will include data on crypto assets being held in Switzerland. (Link)
💪🏻 Middle domination - Centrist party “Die Mitte” - whose surge in parliamentary elections almost pushed them past FDP - defended a bastion of its support in Wallis with at least one candidate collecting 93% of all votes. (Link)
🤖 Albert on AI - Federal Councillor Albert Rösti anticipates a brewing storm in AI and has said he will make a regulatory proposal for consideration by parliament next year - part of which could include a so-called "grievance office" to handle special cases. (Link)
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