The
Swiss Market Index is a blue-chip stock market index that represents the stock trading of twenty largest stocks in Switzerland. Also known as SMI, Swiss Market Index is the most important stock index in the country.
The components of the
Swiss Market Index are the twenty most liquid and largest stocks listed in the SWX Swiss Exchange. The SMI is a price index and is not adjusted for the dividend values but is influenced by the performance of the stocks. In the year 1988, the Swiss Market Index was introduced with 1500 points. Once in a year, the value of SMI is formally reviewed. The index calculation process of the SMI is done in real time and hence as soon as a new stock transaction is carried out, the corresponding updated index is calculated.
The stock components of the SMI now reflect more than 90% of the total market capitalization of SWX Swiss Exchange. The SMI components also represent the 90% trading volume of the entire listed equities on SWX Swiss Exchange. Approximately 85% of the total free-float capitalization of the Swiss equity market is represented by SMI value. In simple words it can be said that the SMI mirrors the overall trading of the Swiss market and hence is used as the underlying index for the futures, options and index funds.
There are some stringent requirements set with regard to market capitalization and liquidity that an issue must satisfy in order to be included in the SMI listing. The first requirement is that 50% or more of the average liquidity of Swiss Performance Index (SPI) constituent issues must be represent by the given issue. The issue should also have a minimum free-float capitalization that should be at least the minimum of 0.45% of the entire SPI capitalization. The market capitalization and market trading volume are the other factors that determine the quarterly rankings in SMI.
As of the review made in September 2007, the Swiss Market Index lists 20 securities. There used to be 25 security listings with SMI before September 2007. The companies are ranked according to the annual turnover and average capitalization . Based on the rankings it is decided whether a company would remain or not with the SMI .