Morgan Stanley analysts are urging investors to buy the Swiss franc as the standout safe-haven asset, arguing it's undervalued and poised for stronger appreciation than markets currently expect. In a note dated Feb. 23, the U.S. bank highlighted the franc's superior performance across various market shocks compared to bonds, the Japanese yen, the U.S. dollar, and gold.

While investors broadly agree on safe-haven categories, Morgan Stanley found that many assets perform inconsistently during extreme stress periods. The Swiss franc, however, has proven most reliable in maintaining value across different crisis types. The analysts believe the Swiss National Bank may be more willing to tolerate franc strength as long as it doesn't threaten inflation targets, a stance investors appear to be underestimating.

Morgan Stanley projects the EUR/CHF could fall to 0.87, representing a 5% decline from current levels, contrary to consensus expectations for franc weakness. The bank also sees potential for USD/CHF to drop to 0.64 in a bearish dollar scenario. With investors currently most concerned about inflation, currency debasement, fiscal soundness, and asset safety, Morgan Stanley positions the Swiss franc as particularly attractive given its strong fundamentals in these areas.