Swiss Stocks Retreat as UBS Delays Profitability Target

Swiss stocks fell from their highest level in five months as UBS AG (UBSN) said it may fail to reach its profitability goal until 2016 at the earliest, and a measure of U.S. consumer confidence dropped more than forecast.

UBS slumped the most in more than two years after pushing back the target because of demands for more capital from its regulator in Switzerland. Julius Baer Group Ltd. (BAER) retreated. Huber & Suhner AG (HUBN) slid the most since June after saying its order intake dropped in the first nine months of this year.

The Swiss Market Index (SMI) decreased 0.7 percent to 8,237.03 at the close in Zurich. The equity benchmark climbed 0.5 percent yesterday to its highest level since May 22. The gauge has climbed 2.7 percent so far in October as U.S. lawmakers agreed to increase the federal government’s debt limit and end a partial government shutdown. The broader Swiss Performance Index dropped 0.5 percent today.

“Financials like UBS are underperforming,” Arnaud Scarpaci, who helps oversee $260 million as a fund manager at Montaigne Capital in Paris, said in a telephone interview. “We’ll focus on U.S. retail sales and the consumer-confidence index. We have to focus on the impact of the shutdown.”

UBS sank 7.7 percent to 17.70 Swiss francs. The bank had planned to reach a 15 percent return on equity in 2015. Switzerland’s largest lender also reported third-quarter net income of 577 million Swiss francs ($642 million), beating the average analyst estimate of 561 million francs. UBS said that it has received requests for information from several authorities investigating foreign-exchange trading.

Julius Baer, Switzerland’s third-biggest wealth manager, retreated 2.2 percent to 43.92 francs. Credit Suisse Group AG (CSGN) declined 1.3 percent to 28.30 francs.

Retail Sales

A Commerce Department report showed that U.S. retail sales unexpectedly dropped 0.1 percent in September. The median forecast of economists surveyed by Bloomberg had called for the measure to be unchanged. A separate release showed that the Conference Board’s measure of consumer confidence declined to 71.2 this month from a revised 80.2 in September.

The Federal Open Market Committee starts a meeting today to consider whether to start reducing the $85 billion-a-month of bond purchases that have buoyed global markets. Policy makers will delay paring bond buying until their March 18-19 meeting, a Bloomberg survey showed this month.

Huber & Suhner lost 3.8 percent to 48.80 francs. The maker of radio-frequency and fiber-optic cables said its order intake declined 13 percent amid reduced activity in the solar market and fewer large-scale projects in the North American communications market.

OC Oerlikon Corp. AG climbed 1.6 percent to 12.65 francs. The textile-machinery maker posted third-quarter earnings before interest and taxes of 88 million francs. That exceeded the 86 million francs predicted by analysts.

To contact the reporter on this story: Inyoung Hwang in London at ihwang7@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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