Don't panic after the SNB abandoned its Swiss franc cap policy versus the euro, Switzerland's biggest bank said in a note.

International investors shouldn’t panic because of last week’s shock move by the Swiss National Bank to stop capping the country’s currency against the euro at a SFr1.20 exchange rate, UBS said in a note.

On Thursday, the Swiss currency skyrocketed by as much – according to some newswire reports and data – as 40 per cent, a move arguably not seen some of the international forex dramas of the 1980s and 1990s, although the recent slide in the Russian ruble is comparable. Market participants were stunned; share prices in Swiss banks, such as UBS, Credit Suisse and Julius Baer were down last Thursday before recovering on Friday.

“The decision came as a complete surprise and has implications for our positioning, global markets, and for the Swiss economy,” UBS said in a note. UBS is reviewing its overweight position on Swiss equities and its bearish stance on the Swiss franc.

The SNB’s change of policy comes, ironically, a few weeks after Swiss voters rejected in a referendum a proposal to force the central bank to hold at least 20 per cent of its reserves in gold, a move that would have put pressure anyway on the euro peg.

“It is important to stress that global investors should not panic in response to the move. While the Swiss National Bank has clearly stepped back from its commitments, central banks elsewhere in the world seem more, and not less, committed to easing than they did just a couple of months ago. In the US and UK, the impact of lower energy prices is likely to push back the timing of the first interest rate rise, even if they are still likely to hike long before the European Central Bank,” UBS continued.

“Meanwhile, we believe that quantitative easing is likely to be announced in the eurozone next week [this week] – something which could in itself be a potential factor in the SNB's decision to remove the franc's link to the euro. This announcement is likely to further weaken the euro relative to the US dollar.

The Zurich-listed bank said that the eurozone is likely to see stronger economic growth later in 2015 and falling energy prices should also be supportive for the US economy, thereby being positive for risk assets.

As a result of such forces, UBS remains confident of its overweight stance on global equities, particularly as regards the US.

“With respect to Swiss assets specifically: we currently hold an overweight position in Swiss equities and an underweight position in the Swiss franc, and we are reviewing these positions in light of the SNB's decision. That said, the current trading environment is highly technically driven, and has been, at times, illiquid. We await a more fundamentally-driven and stable trading environment in the days ahead before deciding on potential changes,” it said.

“Given the substantial impact of Swiss franc strengthening on the Swiss economy – in particular through the export channel – we are revising down our GDP growth forecasts. Assuming that euro/Swiss franc stays around current levels, we would expect to see a negative growth contribution from net exports in 2015, while consumption should be supported by exceptionally low rates and energy prices,” it said. Although economic growth will be lower, UBS said it did not forecast a recession and expects UK GDP growth of 0.5 per cent in 2015 and 1.1 per cent in 2016.