Bloomberg News

Most Swiss Stocks Advance; Richemont Gains, Roche Drops

August 06, 2012

Most Swiss stocks advanced, following three weeks of gains for the Swiss Market Index, as Cie. Financiere Richemont (CFR) SA rallied, outweighing a retreat by Roche Holding AG.

Richemont surged 5.2 percent, its biggest gain since May, after the owner of the Cartier brand forecast that fiscal first- half profit will jump as much as 40 percent as currency shifts increase revenue. Roche Holding AG slipped 1 percent. Nestle SA (NESN), the world’s biggest food company, lost 0.7 percent.

The SMI (SMI) added less than 0.1 percent at 6,463.01 at the close in Zurich, rebounding from an earlier slide of as much as 0.5 percent. More than five stocks climbed for every four that dropped. The benchmark measure rallied 1.6 percent last week. The SMI has jumped 13 percent from its 2012 low on June 4 as policy makers eased repayment terms for Spanish lenders and central banks took steps to stimulate economic growth. The broader Swiss Performance Index increased 0.2 percent today.

“We’re just seeing a consolidation after the strong market move last week,” said Konstantin Giantiroglou, head of investment advisory at Neue Aargauer Bank in Brugg, Switzerland. “Yields for Italian and Spanish bonds are coming down further, which is a very positive movement and should bolster equity markets going forward. Defensive names like Roche (ROG) and Nestle are suffering a bit amid the thawing of the market, limiting gains for the SMI.”

Bond Yields

Spanish 10-year bonds advanced today, pushing the yield down 11 basis points to 6.74 percent. The yield on Italian 10- year securities slipped five basis points to 6 percent.

Greece’s government agreed to increase its efforts to comply with its bailout terms after more than a week of meetings with international creditors in Athens.

“The news on Greece is also a positive, even though it’s not really a big issue today,” Giantiroglou said. “On a day with almost no newsflow, it’s like icing on the cake.”

Representatives from the so-called troika of the European Commission, European Central Bank and International Monetary Fund met with Greek Finance Minister Yannis Stournaras in Athens yesterday. The talks will determine whether Greece continues to receive funds from two bailouts.

German Chancellor Angela Merkel’s government has backed ECB President Mario Draghi’s proposals on bond buying to help bring down borrowing costs in Spain and Italy.

Richemont jumped 5.2 percent to 58.95 Swiss francs after the maker of Montblanc pens predicted that operating profit in the six months through September will probably increase by 20 percent to 40 percent. The average analyst estimate compiled by Bloomberg had called for an 18 percent gain.

Swatch, Roche

Swatch Group AG (UHR), the world’s biggest watchmaker, climbed 2.8 percent to 397.50 francs.

Roche, the world’s largest maker of cancer drugs, slipped 1 percent to 172.80 francs.

Nestle lost 0.7 percent to 60.30 francs, for the biggest drag on the SMI.

Givaudan SA (GIVN), the world’s biggest maker of flavors and fragrances, slid 1.1 percent to 909.50 francs after Alicia Forry, an analyst at Canaccord Genuity Ltd., cut the stock to hold from buy.

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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