Bloomberg News

Swiss Stocks Decline on Greek Referendum Call; Bank Shares Slide

November 02, 2011

Nov. 1 (Bloomberg) -- Swiss stocks retreated the most in almost six weeks amid investor concern that a proposed Greek referendum may push Europe’s most indebted nation into default and derail euro-area efforts to contain the debt crisis.

Credit Suisse Group AG and UBS AG, the country’s biggest banks, led declines. Swatch Group AG, the world’s largest watchmaker, fell 5 percent.

The Swiss Market Index, a measure of the biggest and most actively traded companies, dropped 2.5 percent to 5,588.57 at the close in Zurich, the most since Sept. 22. The gauge has retreated 17 percent from its high this year on Feb. 18. The broader Swiss Performance Index lost 2.6 percent today.

Greek Prime Minister George Papandreou said he will put the European Union’s new agreement on financing for Greece to a referendum and called a parliamentary confidence vote.

“Papandreou surprisingly decided to let the Greeks vote on the rescue package,” said Christoph Riniker, head of strategy research at Julius Baer Group Ltd. in Zurich. “Consequently, markets are very irritated, which leads to substantially lower prices.”

Papandreou’s gambit risks pushing Greece into default if rejected by voters. His popularity has plunged after austerity measures cut pensions and wages and increased taxes.

Uncertainty Reigns

An opinion poll published Oct. 29 showed most Greeks believe the accord on a new bailout package and a debt writedown is negative.

“Greece is unpredictable,” Riniker said. “Investors don’t know what is going to happen, so they prefer to sell positions today to reduce the overall risk in their portfolios.”

Swiss manufacturing output contracted more than economists forecast in October. The Procure.ch Purchasing Managers’ Index fell to 46.9 from 48.2 in September when adjusted for seasonal swings. That’s the lowest since July 2009. Economists had projected a drop to 47.7, the median of 11 forecasts in a Bloomberg News survey. A reading below 50 indicates contraction.

Credit Suisse led banks lower, falling 8.2 percent to 23.50 Swiss francs, the most since Aug. 18. The bank said it will cut about 1,500 more jobs and reorganize its securities unit after the division reported its first quarterly loss since 2008.

Third-quarter net income rose 12 percent to 683 million francs ($776 million), missing the 979 million-franc mean estimate of 12 analysts surveyed by Bloomberg.

UBS, Temenos

UBS dropped 4.9 percent to 10.66 francs, while Julius Baer Group Ltd., the fifth-biggest wealth manager, slipped 3.3 percent to 32.25 francs.

Temenos Group AG, the banking-software maker, tumbled 10 percent to 15.10 francs, the most since Aug. 18.

Swatch slid 5 percent to 353.10 francs, the biggest drop in a month, and Cie. Financiere Richemont SA, the owner of the Cartier brand, slumped 5.8 percent to 47.35 francs.

Phoenix Mecano AG fell 3 percent to 451 francs. The maker of plastic and metal boxes for electronic goods said it expects full-year operating profit and sales to be at about the same level as last year.

Kudelski SA, the world’s largest maker of security cards for pay television, rallied 5.7 percent to 9.65 francs, its highest price since July 29, after UBS raised the stock to “neutral” from “sell.” The company late yesterday said it plans to cut 9 percent of its workforce to reduce costs.

--Editors: Srinivasan Sivabalan, Randall Hackley

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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