Swiss Stocks Advance on Earnings, Jump in Watch Exports
Novartis, the second-biggest listed company in Zurich, increased to the highest level in 18 months. Actelion, the Swiss maker of the Tracleer blood-pressure drug, soared 5.7 percent. Swatch Group AG (UHR) and Cie. Financiere Richemont SA rallied more than 2 percent after watch exports jumped 22 percent in June.
The Swiss Market Index (SMI) rose 0.9 percent to 6,323.64 at the close in in Zurich, the highest since March 19. The gauge has rallied 11 percent from its 2012 low on June 4 amid easing concern the euro-area debt crisis is hurting the economy. The broader Swiss Performance Index added 1 percent today.
“Investors have probably been calmed by reasonable corporate earnings,” Torben Hoeyer, the chief equity adviser at Nordea Private Bank in Copenhagen, wrote in a note to clients. “Equity markets will remain uneasy, but the underlying sentiment has become more positive, and we believe there is a good chance stocks could gain even more in the near future.”
The U.S. economy expanded at a “modest to moderate” pace in June and early July, as retail sales and manufacturing cooled in some regions, the Federal Reserve said late yesterday in its Beige Book business survey.
“Manufacturing activity continued to expand slowly in most districts,” the Fed said in the survey, which is based on reports from its 12 district banks. “Employment levels improved at a tepid pace.”
Novartis rose 1.7 percent to 56 Swiss francs, the highest since Dec. 29, 2010. The company, which has a 19 percent weighting in the SMI, reported second-quarter profit that declined less than analysts forecast, helped by increasing sales of new products such as the Gilenya treatment for multiple sclerosis and the Afinitor cancer drug.
Earnings excluding some costs fell 6 percent to $3.36 billion, or $1.38 a share, from $3.56 billion, or $1.48 a year ago, the Basel, Switzerland-based company said. Analysts had predicted profit of $1.33 a share, the average of 14 estimates compiled by Bloomberg showed.
Actelion advanced 5.7 percent to 43.60 francs, the largest gain since April. Second-quarter product revenue rose 1.3 percent to 445.9 million Swiss francs ($456 million), topping the 434.8 million-franc average of 10 analyst estimates compiled by Bloomberg.
Core earnings, or sales minus cash operating expenses and excluding currency effects, will increase in a “mid single- digit” percentage range, the Allschwil-based company said. The drugmaker had expected earnings to remain unchanged from 2011 figures.
Swatch, the biggest Swiss watchmaker, rose 2.1 percent to 372.80 francs while Richemont (CFR), the owner of the Cartier and Mont Blanc brands, advanced 3.1 percent to 53.90 francs.
Swiss watch exports jumped 22 percent in June from a year earlier, according to the Federation of the Swiss Watch Industry. Citigroup Inc. analysts also said some global luxury companies, including Richemont, may benefit from the rebalancing of the Chinese economy to focus more on consumer spending than investment.
The volume of shares changing hands in companies listed on the SMI was 48 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.
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