Swiss Stocks Snap Four-Day Rally; UBS, Credit Suisse Decline
Stock Chart for UBS AG (UBSN)
Swiss stocks fell for the first time in five days as investors speculated that the European Union may withhold Greece’s next aid payment, increasing the risk that it will default.
UBS AG (UBSN), Switzerland’s biggest bank, dropped 1.9 percent after saying its loss from unauthorized trading was more than it had first reported. Credit Suisse Group AG plunged 6.2 percent. Swiss Life Holding AG (SLHN), the country’s largest life insurer, slid 3.6 percent. Temenos Group AG (TEMN), the banking-software maker, slumped 7.4 percent after Morgan Stanley lowered its recommendation for the stock.
The Swiss Market Index (SMI) of the largest and most actively traded companies declined 1.7 percent to 5,360.56 at the 5:30 p.m. close in Zurich. The SMI has tumbled 20 percent from this year’s high on Feb. 18 as the Swiss franc’s strength curbed exports and concern mounted that the global economic recovery is stalling. The broader Swiss Performance Index also lost 1.7 percent today.
Stocks around the world rallied last week after Germany and France said Greece will remain a euro member and the European Central Bank announced coordinated measures with the Federal Reserve to ensure the region’s lenders have enough dollars.
“The markets don’t believe anymore that Greece can meet the conditions, but investors still hope for a good solution,” said Roland Schuermann, a trader at Luzerner Kantonalbank AG. “Uncertainties just remain and that is poison for the stock markets.”
Greek Aid Payment
In Greece, international monitors will assess whether Prime Minister George Papandreou can meet the conditions of rescue loans. European Union and International Monetary Fund inspectors hold a teleconference call today with Greece’s finance minister, Evangelos Venizelos, to judge whether the government is eligible for next month’s aid payment.
“Evidence is needed of a more stable economic environment and a lasting solution to the euro-zone crisis before any rally in equities can be sustained,” Dirk Wiedmann, chief investment officer at Rothschild Private Banking & Trust in Zurich, wrote in a note to clients today.
UBS declined 1.9 percent to 10.07 Swiss francs after the bank said its loss from unauthorized trading amounted to $2.3 billion, more than the lender initially reported, while Chief Executive Officer Oswald Gruebel dismissed calls to step down.
The loss, first estimated on Sept. 15 at $2 billion, came from trading in S&P 500, DAX and Euro Stoxx index futures in the past three months, the Zurich-based bank said in an e-mailed statement yesterday. UBS made the latest disclosures on Sept. 18, two days after London police charged a 31-year-old trader with fraud and false accounting.
Credit Suisse Falls
Credit Suisse Group AG (CSGN) retreated 6.2 percent to 21.31 francs for the worst performance on the SMI, while Julius Baer Group Ltd. (BAER), the 121-year-old wealth manager, fell 2.7 percent to 29.26 francs.
Swiss Life slid 3.6 percent to 98.30 francs as a gauge of European insurers was among the worst performers of the 19 industry groups in the Stoxx Europe 600 Index. Zurich Financial Services AG (ZURN), Switzerland’s largest insurer, slipped 4.2 percent to 167 francs and Swiss Reinsurance Co. fell 4.7 percent to 39.20 francs.
Temenos slumped 7.4 percent to 14.35 francs, its lowest price in a month, after Morgan Stanley downgraded the stock to “equal weight” from “overweight” and cut its price estimate for the company’s shares to 17 francs from 25 francs.
Swatch Group AG (UHR), the world’s largest watchmaker, declined 3 percent to 369.70 francs and Cie. Financiere Richemont SA, the owner of the Cartier brand, sank 3.9 percent to 47.22 francs.
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