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Swiss Stocks Gain as UBS Results Beat Expectations; Credit Suisse Climbs
Swiss stocks gained led by banking shares as UBS AG posted results that beat analysts’ expectations and the Basel Committee on Banking Supervision softened some of its proposed capital and liquidity rules.
UBS, Switzerland’s biggest bank, surged 11 percent. The stock was raised to “buy” from “hold” by Standard & Poor’s equity analyst Frank Braden. Credit Suisse Group AG advanced 5.9 percent. Swiss Life Holding AG gained 5.1 percent after JPMorgan Chase & Co. upgraded Switzerland’s biggest life insurer.
The benchmark Swiss Market Index increased 75.73, or 1.2 percent, to 6,275.19 at the 5:30 p.m. close in Zurich. The SMI has retreated 10 percent from this year’s high on April 15 amid speculation that Europe’s debt crisis may derail the economic recovery and concern that Chinese authorities are cooling their nation’s rate of growth. The broader Swiss Performance Index gained 1.1 percent.
“European banks have been among the leaders in recent weeks and with the break of the 200-day moving average, the sector is gaining momentum,” Michael Riesner and Marc Mueler, technical analysts at UBS AG, wrote in a note today. The Stoxx 600 Banks Index, a gauge of European lenders, climbed above its 200-day moving average yesterday for the first time since April.
Basel Committee
The Basel Committee on Banking Supervision softened some of its proposed capital and liquidity rules while introducing restrictions on how much lenders can borrow.
The panel agreed yesterday to allow certain assets, including minority stakes in other financial firms, to count as capital, according to a statement. The committee set a leverage ratio to apply to banks globally for the first time, which could become binding by 2018, pending further adjustments to the method of calculating banks’ assets.
“We think investors should applaud the proposed changes as another step toward striking an appropriate balance between increased capital and liquidity requirements and banks’ ability to provide credit to the economy,” BofA Merrill Lynch Global Research wrote in a note on European banks.
UBS climbed 11 percent to 17.46 Swiss francs. The bank reported a third consecutive quarterly profit after stemming losses at its securities unit.
Net income was 2.01 billion francs ($1.9 billion), after a net loss of 1.4 billion francs a year earlier, the Zurich-based bank said. That beat the 1.12 billion-franc median estimate of 11 analysts surveyed by Bloomberg News.
“We expect these results to be well received and see scope for upgrades from an unambitious consensus,” Keefe, Bruyette & Woods Ltd. said in a note. The brokerage reiterated an “outperform” rating on the stock.
Credit Suisse Climbs
Credit Suisse, the country’s second-biggest bank, increased 5.9 percent to 47.59 francs. Julius Baer Group Ltd., the 120- year-old private bank, advanced 2.6 percent to 37.45 francs.
Swiss Life rose 5.1 percent to 109.70 francs. JPMorgan lifted its recommendation on the stock to “neutral” from “underweight.” The brokerage, which cited the shares’ recent underperformance, said in a note that “the risk reward is now more balanced.”
Transocean Ltd. gained 4.9 percent to 48.98 francs. Malaysia will receive Transocean’s “Deepwater Expedition” drillship in September and its “Frontier Phoenix” drillship in November, Rosli Hamzah, head of deepwater development at Petronas Carigali Sdn., said in a conference in Singapore. Malaysia needs three new drillships between 2010 and 2015 as deepwater areas will account for as much as 40 percent of its oil output in 10 years, he said.
Roche Holding AG increased 1 percent to 136.20 francs. The world’s biggest maker of cancer drugs received clearance from the U.S. Food and Drug Administration for the CoaguChek XS Pro system, a point-of-care anti-coagulation monitor.
Swiss Reinsurance Co. advanced 2.5 percent to 48.86 francs. The world’s second-largest reinsurer said it has agreed to provide three years of hurricane cover for the Alabama State Insurance Fund.
To contact the reporters on this story: Francesca Cinelli in Milan at fcinelli@bloomberg.net.
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