Bloomberg News

Stocks in Switzerland Advance; Roche, SGS Shares Climb

February 22, 2013

Swiss stocks advanced, posting their second consecutive weekly gain, as a better-than-forecast German business confidence report outweighed a European Commission forecast that the euro area’s economy will contract in 2013.

Roche Holding AG (ROG), the world’s largest maker of cancer drugs, and SGS SA (SGSN), the world’s biggest product inspector, posted the best performances on the equity benchmark. Tecan (TECN) Group AG dropped the most in four months after UBS AG downgraded the maker of laboratory equipment.

The Swiss Market Index (SMI) added 0.7 percent to 7,554.38 at the close of trading in Zurich, taking its advance this week to 0.7 percent. The benchmark measure has jumped 11 percent this year as U.S. lawmakers agreed on a compromise federal budget and the Swiss franc depreciated against the euro. The broader Swiss Performance Index rose 0.6 percent today.

“We’ve seen enormous gains on stock markets in the past few months and markets are extremely optimistic,” said Oliver Dettmann, an investment strategist at Wellershoff & Partners Ltd. in Zurich. “Any slightly positive economic data supports the positive sentiment. Stocks are still relatively attractively valued compared with bonds, but it’s not like they’re extremely cheap on a standalone basis.”

The volume of shares changing hands in SMI-listed companies was 18 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

The European Commission predicted that the gross domestic product of the 17 nations in the euro area will shrink 0.3 percent this year. In November, the Brussels-based executive arm of the European Union projected growth of 0.1 percent.

German Confidence

German business confidence rose to a 10-month high in February. The Ifo institute in Munich said its business-climate index, based on a survey of 7,000 executives, climbed to 107.4 from 104.3 in January. That was its fourth straight gain. Economists had predicted confidence would rise to 104.9, according to the median of 38 forecasts in a Bloomberg survey.

The European Central Bank said financial institutions will repay 61 billion euros ($80 billion) of its three-year loans next week, half the amount that economists had forecast. The lenders will return the money on Feb. 27, which is their first opportunity to do so under the second tranche of the central bank’s Longer Term Refinancing Operation.

Roche added 1.5 percent to 212.20 Swiss francs. Roche and ImmunoGen Inc. won U.S. approval for a breast cancer therapy that’s designed to narrowly target the disease.

SGS climbed 1.6 percent to 2,363 francs, its highest price since at least October 1989.

Straumann Rises

Straumann Holding AG (STMN) increased 4.3 percent to 130.40 francs after Barclays Plc raised its price estimate for the world’s biggest maker of dental implants by 5.8 percent to 127 francs.

“Straumann is now at a point where it is comfortable with a dual-brand strategy, but only under the right circumstances in the right markets,” Alexander Kleban, an analyst at Barclays, wrote in a report today. “We see this as a net positive as it is likely to appease investors with significant concerns over deterioration in the premium market.”

Tecan dropped 2.7 percent to 85.45 francs after UBS downgraded the stock to neutral from buy.

“Whilst we now believe the valuation discount has been partially removed, we cannot yet justify lowering our weighted average cost of capital further to increase our price target and maintain a buy rating,” Ian Douglas-Pennant, an analyst at UBS, wrote in a note to clients today.

Swatch Group AG (UHR) retreated 1.4 percent to 518 francs, posting the worst performance on the SMI and dropping for a second day.

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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