Bloomberg News

Swiss Stocks Snap Three Days of Losses; Novarti Advances

January 23, 2013

Swiss stocks rose, after three days of losses, as Novartis AG (NOVN) gained after reporting better-than- expected profit, and before the U.S. House of Representatives votes to suspend the country’s borrowing limit.

Novartis AG climbed 4 percent after fourth-quarter earnings beat estimates and it appointed a new chairman. SGS SA (SGSN) and Straumann Holding AG (STMN) advanced at least 1.6 percent after the shares were upgraded at Goldman Sachs Group Inc. and Credit Suisse Group AG, respectively.

The Swiss Market Index (SMI) rose 1 percent to 7,366.17 at 11:50 a.m. in Zurich, after the biggest three-day slide in more than two months. The gauge has rallied 8 percent so far in 2013, the best start to a year since the measure was formed in 1988. The broader Swiss Performance Index also added 1 percent today.

“Novartis’s numbers could give the market support today,” Peter Buergler, a trader at Luzerner Kantonalbank AG, wrote in a note to clients. “Numerous upgrades from various analysts also give the SMI some foundation today. It seems as if the market didn’t give investors too much time to engage amid low stock prices.”

The volume of shares changing hands in companies listed on the equity benchmark was 60 percent greater than the average of the last 30 days, according to data compiled by Bloomberg.

In the U.S., the Republican-led House will vote today to pass legislation suspending the government’s $16.4 trillion debt limit until May 19. At that point, the U.S. borrowing authority would be automatically increased to accommodate the amount the Treasury borrows during those three months.

Spending Cuts

By postponing a decision on raising the debt ceiling, Republicans plan to focus on other deadlines to seek deeper spending cuts from President Barack Obama and Congressional Democrats. Lawmakers have until March 1 before automatic spending reductions start and until the end of that month to pass a bill to fund the government.

Swiss investor confidence rose in January for the fourth straight month to the highest level since May 2012.

An index of investor and analyst expectations that aims to predict economic developments six months in advance climbed to minus 6.9 from minus 15.5 in December, the ZEW Center for European Economic Research in Mannheim, Germany, and Zurich- based Credit Suisse Group AG said in a statement today.

In a speech in Frankfurt late yesterday, European Central Bank President Mario Draghi said the “darkest clouds” over the euro area have receded because of policy steps taken last year, including the introduction of an unlimited bond-buying plan.

Novartis Gains

Novartis added 4 percent to 62.50 Swiss francs after saying Chairman Daniel Vasella will step down from the board after 17 years, and Bayer AG’s Joerg Reinhardt will take over as non- executive chairman.

Earnings excluding some costs climbed 3 percent to $3.1 billion, or $1.27 a share, in the fourth quarter from $3 billion, or $1.23, a year ago, the company said in a statement. Analysts had predicted profit of $1.25 a share, the average of 14 estimates compiled by Bloomberg.

SGS advanced 1.6 percent to 2,162 francs, its highest price since at least 1989. Goldman raised its recommendation on the world’s largest product-inspection company to buy from neutral, saying it expects 2013 to be a key year for margin progress.

Straumann, the world’s biggest maker of dental implants, gained 2.6 percent to 120.70 francs. Credit Suisse upgraded its rating on the stock to outperform, meaning investors should buy the shares, from neutral, citing the company’s cost-reduction program and benefits from a weakened franc.

Adecco Raised

Adecco SA (ADEN), the world’s largest provider of temporary workers, rose 1.8 percent to 52.50 francs, its highest level since July 2011. Exane BNP Paribas raised its price estimate for the shares by 17 percent to 62 francs, citing its resilient margins.

Ascom Holding AG (ASCN) surged 5 percent to 9.92 francs, its highest price since October 2011. The Swiss provider of mobile communications said its operating margin almost tripled in the second half as it cut costs at the network-testing unit.

Ascom implemented measures to reduce costs at its network- testing unit by 20 million francs ($21.5 million) in 2013, the Dubendorf-based company said in a statement today. The unit’s second-half sales were 15 percent higher than in the first half, bringing its full-year revenue to about 130 million francs.

To contact the reporter on this story: Tom Stoukas in Athens at astoukas@bloomberg.net

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


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