Bloomberg News

Most Swiss Stocks Decline as Swatch, Richemont Retreat

July 11, 2012

Most stocks in Switzerland fell, with the Swiss Market Index dropping for the third time in four days, on concern that slowing global growth is hurting company earnings.

Swatch (UHR) Group AG and Cie. Financiere Richemont SA (CFR) led losses, each sliding at least 1.8 percent. Syngenta AG (SYNN), the world’s biggest supplier of agricultural chemicals, dropped 1.1 percent after UBS AG recommended selling the shares. Logitech International SA (LOGN), the largest maker of computer mice, lost 4.8 percent.

The SMI decreased 0.3 percent to 6,174.75 at the close of trading in Zurich. Fourteen stocks of the 20-member gauge fell, while six rose. The measure has rallied 4 percent this year as the European Central Bank disbursed more than 1 trillion euros ($1.25 trillion) to financial companies and the region’s leaders opened the door to directly recapitalizing lenders using the European Stability Mechanism. The index has still fallen 2.6 percent from its 2012 high on March 16. The broader Swiss Performance Index lost 0.3 percent today.

“Corporate earnings season is definitely in investors’ focus,” said Alessandro Fezzi, senior market analyst at LGT Capital Management AG in Pfaeffikon, Switzerland. (SMI) “First results seem to confirm concerns of the impact of slower global growth and insecurity about the economic outlook. Markets will tend sideways with a slight negative bias today as risk appetite remains fragile.”

Companies in the Stoxx Europe 600 Index (SXXP) will earn 23.95 euros a share in fiscal 2012, according to analyst estimates compiled by Bloomberg. The projections have been cut from more than 25 euros a share at the start of the year, the data show.

In the U.S., profits for S&P 500 companies fell 1.8 percent in the second quarter, according to analyst estimates compiled by Bloomberg. That would be the first decline since 2009, even as revenue is forecast to rise 2.5 percent. Analysts project profit growth of 3.9 percent and 15 percent, respectively, in the third and fourth quarters of 2012.

U.S. Deficit

A Commerce Department report showed the U.S. trade deficit narrowed in May, with the gap shrinking 3.8 percent to $48.7 billion from a revised $50.6 billion in April. Purchases from abroad fell to the lowest level in three months, while exports climbed to the second-highest on record.

Separately, minutes of the Federal Reserve’s June meeting scheduled for release at 2 p.m. in Washington may shed more light on its decision to extend the maturities of assets on its balance sheets.

The cost of bearish options on Swiss stocks rose to the highest level ever as concern increases that the nation’s equities will fall whether or not euro-area policy makers contain the region’s debt crisis.

Puts protecting against a 10 percent decline in the Swiss Market Index cost 1.54 times more than calls betting on a 10 percent gain, according to data on six-month listed options compiled by Bloomberg. The price relationship known as skew reached a record 1.67 on July 3.

Haven Assets

Should Europe’s debt crisis deepen, investors will seek haven assets such as the Swiss currency and the central bank will find it harder to defend a ceiling of 1.20 francs per euro established in September to help exporters, according to Manish Singh of Crossbridge Capital. At the same time, were conditions to improve, investors would send money to markets with more companies that have earnings tied to economic growth, he said.

Swatch, the world’s largest watchmaker, retreated 1.8 percent to 360.90 Swiss francs, while Richemont, the owner of the Cartier brand, fell 3.4 percent to 50.55 francs.

Syngenta dropped 1.1 percent to 321.40 francs. UBS cut the company’s shares to sell from neutral.

Logitech lost 4.8 percent to 9.64 francs after peer Applied Materials Inc. cut its fiscal 2012 sales and profit forecasts.

OC Oerlikon Corp AG (OERL) lost 5.6 percent to 7.80 francs after Societe Generale SA cut the industrial equipment maker to hold from buy.

Clariant AG (CLN), the world’s biggest maker of printing-ink chemicals, jumped 1.3 percent to 10.11 francs after UBS listed the stock as a key call in its “most preferred” list.

Ypsomed Holding AG (YPSN) rose 0.6 percent to 51.50 francs after the maker of devices for diabetes patients said it’s examining options for capital spending that include discussions with existing cooperation partners. No talks have been held with potential takeover targets so far, the company said.

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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