Bloomberg News

Swiss Stocks Slide, Posting Worst Quarterly Loss Since June 2010

September 30, 2011

Sept. 30 (Bloomberg) -- Swiss stocks declined, posting their biggest quarterly in more than a year, as reports on Chinese manufacturing and German retail sales added to concern the global economy is slowing.

Watchmakers led losses as Swatch Group AG and Cie. Financiere Richemont SA tumbled more than 5 percent. Panalpina Welttransport Holding AG, the freight-forwarding company, slumped 6.1 percent as Morgan Stanley downgraded the stock. Tecan Group AG, a maker of laboratory equipment, plunged the most in seven weeks.

The Swiss Market Index, a measure of the biggest and most actively traded companies, dropped 1.4 percent to 5,531.74 at the 5:30 p.m. close in Zurich, trimming its biggest weekly gain in five weeks to 4.4 percent. The SMI has tumbled 11 percent since June, the biggest quarterly decline since June 2010, as the global recovery showed signs of faltering and the Greek debt crisis eluded resolution. The broader Swiss Performance Index lost 1.5 percent today.

“Investors are clearly on standby, assessing the likelihood of a double-dip recession and also the situation in the euro zone,” said Jean-Maurice Ladure, head of investment strategy at RBS Coutts Bank Ltd. in Zurich. “To make further progress, you will need improvement in the fundamentals, either from the economic newsflow, where data should stop surprising on the downside, but more likely from policy-maker interventions.”

China Economy

In China, the reading of 49.9 for the September purchasing managers’ index, released by HSBC Holdings Plc and Markit Economics today, was unchanged from August and compared with a preliminary 49.4 figure published last week. The gauge has been below 50, the level that separates expansion from contraction, for eight months through March 2009.

A report from Germany showed that retail sales declined the most in more than four years in August. Sales, adjusted for inflation and seasonal swings, slumped 2.9 from July, when they had risen 0.3 percent, the Federal Statistics Office in Wiesbaden said. That’s the biggest drop since May 2007. Economists had forecast a 0.5 percent drop, according to the median of 18 estimates in a Bloomberg News survey.

European inflation unexpectedly accelerated to the fastest in almost three years. The euro-area inflation rate jumped to 3 percent this month from 2.5 percent in August, the European Union’s statistics office in Luxembourg said. That’s the biggest annual increase in consumer prices since October 2008.

KOF Indicator

A monthly gauge that aims to predict the Swiss economy’s direction about six months ahead dropped to 1.21 this month from 1.61 in August, the KOF Swiss Economic Institute in Zurich said today. That’s the lowest since September 2009. Economists had forecast a drop to 1.3, the median of 11 estimates in a Bloomberg News survey showed.

Swatch, the world’s largest watchmaker, fell 7 percent to 302.30 Swiss francs and Richemont retreated 5.2 percent to 40.95 francs. Both stocks had the biggest two-day drops since November 2008.

Panalpina slumped 6.1 percent to 78.05 francs, the most in almost four weeks, as Morgan Stanley analysts including Menno Sanderse cut the company’s shares to “underweight” from “equal weight.”

Banks Decline

UBS AG and Credit Suisse Group AG, Switzerland biggest banks, slipped 6.7 percent to 10.54 francs and 3.9 percent to 24 francs, respectively. A gauge of European banks was the second- worst performer of the 19 industry groups in the Stoxx Europe 600 Index.

Julius Baer Group Ltd., the 121-year-old wealth manager, fell 2.9 percent to 30.70 francs after saying it may cut more than 150 jobs unless the market picks up.

“We’ve already trimmed a lot of the fat elsewhere, so the next round will involve personnel cuts,” spokesman Jan Vonder Muehll said in an interview with Bloomberg News today, adding there is no target for cutting positions. “It could be less than 150, it could me more.”

Tecan Group slumped 6.8 percent to 65.25 francs, the biggest drop in seven weeks, after saying a project to develop a diagnostics instrument has been delayed, leading to higher costs.

Alpiq Holding AG, a Swiss energy company, gained 1.7 percent to 198.30 francs after Chief Executive Officer Giovanni Leonardi resigned. Chairman Hans Schweickardt will replace him on an interim basis.

“A smooth transition period is guaranteed and we clearly welcome his nomination,” Andreas Escher, an analyst at Vontobel Holding AG wrote in a note to clients today. “Although today’s news flow came somewhat as a surprise, we rate the change rather positive as a younger generation could bring fresh dynamics to the industry.”

--Editors: Srinivasan Sivabalan, Andrew Rummer

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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