Bloomberg News

Swiss Stocks Sink, Completing Biggest Weekly Drop in Year

November 16, 2012

Swiss stocks fell for a third day, pushing the benchmark Swiss Market Index to the biggest weekly drop in almost a year, as U.S. President Barack Obama hosted talks with Republican lawmakers on the country’s fiscal cliff.

UBS AG (UBSN), the biggest Swiss lender, retreated 2.7 percent. Georg Fischer AG (FI/N) declined for a fifth straight day after CA Cheuvreux recommended clients reduce holdings in the maker of auto parts and piping systems.

The SMI (SMI) lost 1 percent to 6,508.66 at the close in Zurich, the lowest since Sept. 28. The gauge has tumbled 3.1 percent this week, the biggest drop since Nov. 25 last year. It has fallen 3.5 percent since Obama won a second term on Nov. 6 as investors turned their attention to the U.S. fiscal cliff, the name given to tax increases and spending cuts that come into force if Congress fails to approve a new budget. The broader Swiss Performance Index also sank 1 percent today.

“Obama’s meeting with Boehner is the only thing with potential to move the market,” said Witold Bahrke, a senior strategist at PFA Pension A/S in Copenhagen, where he helps oversee $55 billion. “We’re heading for a week with very little to excite investors so stock markets continue to be influenced by apathy.”

Obama held his first face-to-face talks with House Speaker John Boehner since the presidential election today. He also hosted House Minority Leader Nancy Pelosi, a California Democrat, Senate Majority Leader Harry Reid, a Nevada Democrat, and Senate Minority Leader Mitch McConnell, a Kentucky Republican. Obama’s insistence on higher taxes for top earners and Republicans’ refusal to raise rates leaves negotiators with arithmetically complex and politically fraught choices.

Debt Ceiling

Today’s meeting features the same people who failed to reach agreement during debt-ceiling negotiations in 2011. Obama leaves for Asia tomorrow and Congress is departing Washington until Nov. 26 for the Thanksgiving recess.

Industrial production in the U.S. unexpectedly declined in October as superstorm Sandy knocked out power. Output at factories, mines and utilities dropped 0.4 percent last month after a revised 0.2 percent increase in September that was smaller than previously estimated, Federal Reserve data showed. Economists forecast a 0.2 percent gain, according to the Bloomberg survey median.

Stocks extended losses as Hamas fired rockets at Jerusalem and Tel Aviv and Israel extended its bombing of the Gaza Strip. The escalating conflict threatens a region still unbalanced after a wave of popular uprisings last year, including one in Israel’s neighbor Syria that has turned into a civil war. Hundreds of thousands of protesters staged demonstrations from Cairo to Tehran and Istanbul to denounce Israel’s attacks.

Greek Aid

Italian Finance Minister Vittorio Grilli said he is confident that euro-region finance chiefs will reach an agreement on aiding Greece when they meet next week.

Greece was granted an additional two years to reach budget- deficit goals in its bailout program. European finance ministers will discuss ways of plugging the funding gap resulting from that extension at a Nov. 20 meeting in Brussels.

“We know that there are several options for helping Greece get through this very important challenge,” Grilli said in an interview with Bloomberg Television in London. “I am clearly optimistic that we can come to a decision.”

UBS retreated 2.7 percent to 13.90 Swiss francs. Michael Ambuehl, Switzerland’s state secretary to the finance ministry, said the nation doesn’t “want to be a financial center for undeclared assets.” Julius Baer Group Ltd. (BAER), the third-biggest Swiss wealth manager, declined 1.3 percent to 30.98 francs.

Georg Fisher

Georg Fischer fell 1.5 percent to 309.25 francs after Cheuvreux cut its recommendation on the stock to underperform, the equivalent of a sell rating, from outperform.

GAM Holding AG (GAM) slid 5.5 percent to 11.10 francs, a fourth day of losses. The $25 billion-trust Texas Permanent School Fund plans to shift $666 million away from GAM and Mesirow Financial Inc. as a cost-cutting move.

The step, recommended by the fund’s finance committee at a Nov. 14 meeting in Austin, would follow agreements with both investment managers to curb fees. The shift would occur over several months, starting after contracts expire in February.

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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