Bloomberg News

Swiss Stocks Decline on Fed Minutes; Temenos Shares Drop

July 12, 2012

Swiss Stocks (SMI) declined the most in more than two weeks as minutes released by the Federal Reserve disappointed investors looking for a more definitive sign of potential new quantitative-easing measures.

Temenos Group AG (TEMN) plummeted the most in 3 1/2 years after the banking-software maker cut its revenue-growth forecast and said its chief executive officer will step down. Swatch Group AG (UHR) and Cie. Financiere Richemont SA slid at least 4 percent. Sonova Holding AG (SOON) and Nobel Biocare Holding AG (NOBN) shares retreated more than 1.5 percent.

The Swiss Market Index fell 0.4 percent to 6,147.57 at the close of trading in Zurich, the biggest slide since June 25. The measure has dropped 3.1 percent from its 2012 high on March 16 amid concern the euro-area debt crisis is hurting the economy. The broader Swiss Performance Index retreated 0.6 percent today.

“Investors expected the Fed’s wording to hold out the prospect of further QE, but the minutes give the impression the Fed will wait for clearly worse economic indicators before finding the majority for further measures,” said Thomas Haerter, chief strategist at Swisscanto Asset Management AG in Zurich, where he helps oversee 51.7 billion Swiss francs. “In addition, the current reporting season looks like it won’t help support the market in light of bad macro data, and that we’ll see at least slight disappointments.”

The volume of shares changing hands in companies listed on the SMI was 27 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

Fed Meeting

A few members of the Federal Open Market Committee said the U.S. central bank should ease policy to move the economy toward its targets for full employment and stable prices, according to minutes of the June 19-20 meeting released yesterday in Washington. Several others said more action could be warranted if growth slows, risks intensified or inflation seemed likely to fall “persistently” below their goal.

A report today showed that fewer Americans than forecast filed first-time claims for unemployment benefits last week. Applications decreased by 26,000 in the week ended July 7 to 350,000, the fewest since March 2008, the Labor Department said. Economists had forecast 372,000 claims, according to the median estimate in a Bloomberg survey.

Temenos slumped 28 percent to 10.25 Swiss francs, the biggest drop since January 2009, after it cut the top end of its 2012 revenue growth forecast to 1 percent from 6 percent. The company also said Chief Executive Officer Guy Dubois will step down for personal reasons and be replaced by David Arnott, who’s currently chief financial officer.

Temenos Downgrades

Bank of America Corp. downgraded the stock to underperform, which means investors should sell the shares, from buy, while Exane BNP Paribas cut its price estimate for the shares by 5 percent to 18 francs.

“Companies’ earnings may not be catastrophic in the current reporting season, but the outlook is very cautious and doesn’t look as good any more,” Haerter said.

Swatch, the world’s largest watchmaker, dropped 4 percent to 346.60 francs, while Richemont, owner of the Cartier brand, declined 4.2 percent to 48.41 francs. Bernard Fornas, the head of Cartier, told the Wall Street Journal that demand for its high-end watches is slowing in China.

Health-care shares declined, with Sonova, the hearing-aid maker, dropping 1.6 percent to 91.20 francs and Nobel Biocare, the world’s second-biggest maker of dental implants, sliding 3.8 percent to 8.81 francs.

Kuoni Reisen Holding AG (KUNN) slumped 5.6 percent to 235 francs, its lowest price since Jan. 12, after MainFirst Bank AG cut the stock to sell from neutral.

Schlatter Holding AG (STRN) retreated 6.8 percent to 130.50 francs after the welding machinery maker said it expects a loss for this year because of the “difficult economic environment in the euro area” and the strength of the franc.

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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