Bloomberg News

Swiss Stocks Drop on Debt Concern; Adecco, Holcim Fall

November 07, 2012

Swiss stocks dropped the most in two weeks, erasing earlier gains, as investors’ focus returned to the euro-area debt crisis and impending U.S. fiscal tightening after President Barack Obama won re-election.

Adecco SA, the world’s biggest supplier of temporary workers, and Credit Suisse Group AG (CSGN) paced declining shares. Holcim (HOLN) Ltd. fell 2.4 percent after earnings missed analyst estimates. Barry Callebaut AG, a chocolate maker, rallied to a two-month high as full-year profit and sales beat projections.

The Swiss Market Index (SMI) decreased 0.7 percent to 6,697.63 at the close in Zurich, having earlier climbed as much as 0.9 percent. The gauge has still rallied 17 percent from a June 4 low as European Central Bank policy makers approved an unlimited bond-buying plan and the Federal Reserve announced a third round of quantitative easing. The broader Swiss Performance Index also lost 0.7 percent today.

“The election result leaves the status quo firmly in place -- divided government which accentuates the sharp ideological differences between Democrats and Republicans,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, wrote in an e-mail. “Attention will swiftly turn to the bigger challenge of averting the U.S. fiscal cliff.”

Obama defeated Republican Mitt Romney, winning at least 303 Electoral College votes, more than the 270 needed for victory in yesterday’s election. Obama faces a partisan divide in Congress, with Republicans retaining their House majority while Democrats kept control of the Senate, and the so-called fiscal cliff of automatic spending cuts and tax increases set to begin next year unless a compromise is reached.

Growth Forecast

The European Commission cut its growth forecast for the euro zone as the debt crisis ravages southern Europe and gnaws at the economic performance of export-driven Germany. The 17- nation euro economy will expand 0.1 percent in 2013, down from a May forecast of 1 percent, the Brussels-based commission said today. It cut the growth outlook for Germany, Europe’s largest economy, to 0.8 percent from 1.7 percent.

European Central Bank President Mario Draghi warned that the debt crisis is starting to hurt Germany.

“Germany has so far been largely insulated from some of the difficulties elsewhere in the euro area,” Draghi said at a conference in Frankfurt today. “But the latest data suggest that these developments are now starting to affect the German economy.”

Greek Austerity

In Greece, Prime Minister Antonis Samaras will seek parliamentary approval for austerity measures needed to obtain further aid from the European Union.

Lawmakers began debating the 238 pages of proposals, which range from raising the retirement age two years to 67 to eliminating Christmas and holiday payments for pensioners, today, with a vote expected after 8 p.m. Athens time. Parliament also needs to approve the 2013 budget before Nov. 12 for the country to get the next 31 billion-euro ($40 billion) portion of international aid.

The volume of shares changing hands in companies on the SMI was 41 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.

Adecco (ADEN) fell 3.1 percent to 45.14 Swiss francs. The stock climbed 3.2 percent yesterday as the company reported third- quarter profit that best estimates.

Credit Suisse, Switzerland’s second-biggest bank, slid 3.6 percent to 21.98 francs, the biggest drop since September.

Holcim, the world’s largest cement maker, retreated 2.4 percent to 63.90 francs as third-quarter earnings trailed behind analysts’ forecasts.

Barry Callebaut

Barry Callebaut climbed 2.9 percent to 910 francs, the highest price since Aug. 28. Full-year profit of 241.1 million francs ($256 million) exceeded the 234.8 million-franc average estimate. The company reported revenue of 4.83 billion francs, beating the 4.72 billion francs that analysts had projected.

Leclanche SA jumped 43 percent to 3.60 francs for the biggest increase in the SPI. The shares had plunged 75 percent over the previous two days after the maker of batteries for the Swiss Army said its 2012 loss will be bigger than previously predicted.

To contact the reporters on this story: Adria Cimino in Paris at acimino1@bloomberg.net; 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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