Swiss stocks rose to a four-year high as Japan’s approval of stimulus measures to accelerate its economic recovery offset concern that China will refrain from monetary easing.
Nestle SA climbed after Bank of America Corp. advised investors to buy the stock. GAM Holding AG rallied 4.7 percent after Credit Suisse Group AG raised its rating on the shares.
The Swiss Market Index advanced 0.6 percent to 7,188.22 at the close of trading in Zurich, its highest level since Sept. 12, 2008. The gauge rose for a second week, gaining 1.8 percent. The broader Swiss Performance Index added 0.6 percent today. The volume of shares changing hands was 4 percent above the average of the past 30 days, according to data compiled by Bloomberg.
“This is good news for Japan, which has had difficulties coming out of the low growth/deflation scenario,” said Benoit Peloille, equity market strategist at Natixis in Paris. In China “inflationary tension may limit the maneuvering room of economic policy. In terms of asset allocation, we are favoring developed countries.”
Japanese Prime Minister Shinzo Abe said the country will spend 10.3 trillion yen ($116 billion) to accelerate a recovery from recession as speculation rose that the Bank of Japan will increase monetary easing.
China’s Shanghai Composite Index dropped 1.8 percent today as the nation’s inflation accelerated faster than estimated, limiting room for easing. The consumer price index rose 2.5 percent in December from a year earlier, the National Bureau of Statistics said today in Beijing. That compares with the 2.3 percent median estimate in a Bloomberg News survey and a 2 percent gain in November.
Nestle climbed 0.7 percent to 61.25 francs. Bank of America’s Merrill Lynch unit raised its recommendation on the world’s largest food company to buy from neutral, saying it expects 9 percent to 10 percent earnings-per-share growth in 2013-2014.
Julius Baer Group Ltd. rose 3.5 percent to 35.43 francs for the best performance in the SMI. UBS AG increased 1.4 percent to 15.85 francs.
GAM, the Swiss asset manager that split from Julius Baer more than three years ago, jumped 4.7 percent to 14.55 francs. Credit Suisse raised its rating on the stock to outperform from neutral, citing its attractive valuation relative to its peers, improving risk appetite and a reduction in outflows from legacy private banking clients.
Givaudan SA, the maker of perfumes and fragrances whose customers include Nestle and Danone SA, rose 0.9 percent to 988 francs. Kepler Capital Markets re-initiated coverage of the shares with a buy rating.
Swatch Group AG, the world’s biggest maker of Swiss timepieces, lost 0.7 percent to 492.30 francs. UBS cut the shares from its most preferred list, citing the stock’s valuation.