Bloomberg News

Swiss Stocks Retreat; Moody’s Reviews All EU Members’ Ratings

December 12, 2011

Dec. 12 (Bloomberg) -- Swiss stocks declined, paring last week’s advance, after Moody’s Investors Service said it is reviewing all national credit ratings in Europe following last week’s European Union debt summit.

Swiss Re Ltd. dropped 3.7 percent after the world’s second- biggest reinsurer said Chief Executive Officer Stefan Lippe has decided to step down next year. Holcim Ltd., the second-largest cement maker, slipped 3 percent.

The Swiss Market Index, a measure of the largest and most actively traded companies, declined 0.8 percent to 5,747.09 at the close in Zurich. The broader Swiss Performance Index decreased 0.9 percent.

The benchmark measure rose on Dec. 9 after European Union policy makers agreed to tighten budget rules for the 17 countries in the euro area to prevent debt building up in future. They also brought forward the start of the planned 500 billion-euro ($659 billion) European Stability Mechanism and dropped a demand that investors share the cost of bailouts.

“Events last week did not change things fundamentally,” said Luca Bindelli, a senior investment strategist at Credit Suisse Asset Management in Zurich, where he helps oversee a discretionary portfolio of 110 billion Swiss francs ($118 billion). “What would have changed things would have been more bold movements towards a fiscal union and closer integration: something that was a bit more credible in terms of enforceability.”

Moody’s said it will review the ratings of all EU countries in the first quarter, saying the summit failed to deliver “decisive policy measures” to end the debt crisis.

Budget Rules

Bundesbank President Jens Weidmann told the Frankfurter Allgemeine Sonntagszeitung that governments, rather than the Frankfurt-based ECB, must resolve the debt crisis. Germany’s top central banker added that the new accord on budget rules represents progress.

“The mandate for redistributing taxpayer money among member states clearly does not lie in monetary policy,” Weidmann told the newspaper in an interview published yesterday. “Financing of sovereign debt through central banks is and remains forbidden by treaty.”

German Finance Minister Wolfgang Schaeuble yesterday said that euro-area policy makers have to implement the Dec. 9 accord quickly.

“We have to regain the lost trust of the financial markets and investors across the globe,” Schaeuble said in an interview on Germany’s ARD television.

“The market seems to be split in two, with one part looking forward, seeing the results of the summit as something to build on,” said Witold Bahrke, a senior strategist at PFA Pension A/S, which manages $45 billion, in Copenhagen. “The other half is thinking nothing changed after the summit.”

Credit Suisse Slides

Julius Baer Group Ltd., the 121-year-old Swiss wealth manager, dropped 3 percent to 33.75 Swiss francs and Credit Suisse, Switzerland’s second-biggest lender, retreated 3.6 percent to 22.15 francs as financial shares contributed the most to the SMI’s slide.

Swiss Re dropped 3.7 percent to 47.63 francs after saying Lippe has decided to retire early and will stand down next year. The Zurich-based company said it will “soon” name a successor to Lippe, 56, who it appointed CEO in 2009.

Holcim slipped 3 percent to 50.95 francs after a report showed that China’s exports rose last month at the slowest pace since 2009.

--Editors: Will Hadfield, Srinivasan Sivabalan

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net

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


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