Bloomberg News

Swiss Stocks Post Biggest Weekly Decline Since November

May 18, 2012

Swiss stocks fell, for their biggest weekly drop since November, as industrial goods and services companies slumped amid signs of slowing growth in China and as Moody’s Investors Service downgraded Spanish lenders.

SGS SA (SGSN), the world’s largest industrial-inspection company, dropped 2.7 percent and ABB Ltd. (ABBN), the world’s biggest maker of power-transmission gear, retreated 2.8 percent. Financial shares declined, with UBS AG (UBSN) and Credit Suisse Group AG (CSGN) dropping more than 1 percent.

The Swiss Market Index (SMI) dropped 1.3 percent to 5,797.76 at the close in Zurich after China’s home prices fell in a record number of cities last month and car dealers posted inventory levels that foreshadowed deeper price cuts. The measure has retreated to the lowest level since Dec. 19 after sliding 2.6 percent this week. The broader Swiss Performance Index also slipped 1.3 percent today.

“House-prices data coming out from China raise fears of a hard landing,” said John Plassard, director at Louis Capital Markets SA in Geneva. “China’s central bank will have to intervene again in the coming days. The downgrade of Spanish banks may not actually have been so surprising, but it comes at a time when markets are weak and sentiment nervous because of increasing contagion-risk worries.”

The combined volume of shares changing hands in SMI-listed companies today was 58 percent more than the average of the last 30 days, data compiled by Bloomberg show. The Swiss Exchange was closed for a holiday yesterday.

Chinese Economy

Prices of new homes in China fell from a year earlier in 46 of the 70 cities tracked by the National Bureau of Statistics, the agency said today. Dealerships for Honda Motor Co., Chery Automobile Co., BYD Co. and Geely Automobile Holdings Ltd. had more than 45 days of inventory at the end of last month, according to an official from the government-backed China Automobile Dealers Association.

Moody’s lowered debt ratings at 16 Spanish banks, citing a surge in soured loans, the country’s recession, restricted funding access and the reduced ability of the government to support lenders as its own creditworthiness diminishes. The moves follow Moody’s May 14 downgrade of 26 Italian banks and its Feb. 13 cut of Spaimsgn’s sovereign debt.

Almost $4 trillion has been wiped from global equity markets this month as Greece moved closer toward leaving the euro currency union. The country’s credit rating was reduced one level to CCC from B- by Fitch Ratings amid concern it will not muster the political support needed to sustain its euro membership.

Risk Aversion

“Until the upcoming elections in Greece on June 17, uncertainty and hence the strong risk aversion will remain,” Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt, wrote in a report today. “Politics still set the agenda for the markets.”

SGS dropped 2.7 percent to 1,678 Swiss francs after the company said it acquired Scotland-based Vitrology Ltd., which has revenue of more than 3 million pounds ($4.8 million).

ABB retreated 2.8 percent to 15.22 francs as a gauge of European industrial goods and services companies lost 1.6 percent. Adecco SA (ADEN), the world’s largest supplier of temporary workers, fell 2.3 percent to 37.75 francs. Kuehne & Nagel International AG, the world’s largest sea-freight forwarder, lost 2.4 percent to 100.90 francs.

UBS and Credit Suisse Group dropped 2.4 percent to 10.69 francs and 1.3 percent to 18.67 francs. Swiss Re Ltd. retreated 2.9 percent to 54.25 francs. Julius Group Baer Ltd. slipped 4.1 percent to 30.90 francs.

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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