Stocks in Switzerland slid to a two- year low as stress tests showed European lenders may have to raise additional capital amid concern the region’s debt crisis is worsening.
Credit Suisse Group AG (CSGN) and UBS AG (UBSN), Switzerland’s biggest banks, tumbled more than 3 percent. Kuehne & Nagel International AG, the world’s largest sea-freight forwarder, dropped 4.2 percent as earnings missed estimates. Holcim Ltd. (HOLN), the second- biggest cement maker, declined 3.3 percent.
The benchmark Swiss Market Index (SMI), a measure of the largest and most actively traded companies, lost 1.9 percent to 5,826.26 at the 5:30 p.m. close in Zurich, its lowest level since July 2009. The gauge fell 3.5 percent last week, the most since March, as concern mounted that the sovereign-debt crisis is spreading from Greece to the bigger economies of Italy and Spain. The broader Swiss Performance Index also retreated 1.9 percent today.
“The concerns about contagion of the sovereign debt crisis into core Europe have taken center stage and only a substantial change in the governments’ approach could change the current trend,” Dirk Hoffmann-Becking, a senior analyst at Sanford C. Bernstein & Co. in London, wrote in a note to clients today.
European leaders are meeting this week as they seek to contain the region’s debt crisis, after eight of the region’s banks failed stress tests and European Central Bank President Jean-Claude Trichet reiterated the ECB won’t accept as collateral bonds from a nation that defaults.
Regulators said on July 15 the eight banks that failed EU stress tests, including two from Greece, had a combined capital shortfall of 2.5 billion euros ($3.5 billion). As many as 16 more lenders will need to bolster capital after scraping through, the European Banking Authority said.
A default rating would make Greece’s debt ineligible as collateral for cash from the ECB, impairing the lifeline to the country’s banks and sparking contagion across the region. The ECB is the main source of finance for Greek lenders.
Credit Suisse slid 4.7 percent to 28.72 Swiss francs, the biggest drop since February, and UBS fell 3.4 percent to 13.23 francs. A gauge of European banks was the second-worst performer of the 19 industry groups in the Stoxx Europe 600 Index, losing 3.2 percent to a two-year low.
EFG International AG (EFGN), , slumped 4.7 percent to 8.27 francs, a seventh day of losses. The private bank controlled by Greek billionaire Spiro Latsis and his family said its exposure to Greek banks is 0.3 percent of assets and its exposure to Greek government bonds is 0.2 percent.
Kuehne & Nagel Slips
Kuehne & Nagel slipped 4.2 percent to 113 francs after reporting second-quarter net income of 158 million francs ($193 million), trailing analyst estimates of 163 million francs. The company also agreed to buy Grupo Eichenberg, a Brazilian logistics company with 700 employees.
Holcim dropped 3.3 percent to 54.65 francs. The cement maker’s profitability may suffer “some pressure” from raw- material costs, Finanz & Wirtschaft reported, citing Chief Executive Officer Markus Akermann.
Swatch Group AG, the world’s largest watch maker, slipped 3.1 percent to 408.40 francs after Rene Weber, an analyst at Vontobel Holding AG, said the strong franc may hurt the company’s operating margins.
“The strength of the Swiss franc is a big drag of the sales development,” Weber wrote in a note to clients today. “It has a direct impact on the operating margin as well, as the cost base is mainly in Switzerland.” Cie. Financiere Richemont SA, the owner of the Cartier brand, declined 3.3 percent to 52.15 francs.
The Swiss currency rose to a record today against the euro and pound.
Syngenta AG (SYNN), the world’s biggest producer of crop- protection chemicals, dropped 1.1 percent to 271.30 francs as UBS forecast the shares will underperform. Clariant AG (CLN), the maker of pigments and emulsions, slid 3.3 percent to 14.60 francs, its lowest price since March.
Schaffner Holding AG (SAHN), an electrical components maker, slumped 12 percent to 290 francs, its biggest drop since October 2008, after Andreas Escher, an analyst at Vontobel Holding AG, reduced his price estimate for the company’s shares to 325 francs from 360 francs.
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