Swiss stocks closed little changed near their highest level since May, while bank shares tracked regional peers lower as the European Central Bank tightened the definition of capital for next year’s stress tests on lenders.
UBS AG and Credit Suisse Group AG, which together make up more than 11 percent of the Swiss Market Index, posted the biggest losses on the benchmark measure. Syngenta AG climbed 1.6 percent after HSBC Holdings Plc advised investors to buy the shares. Basilea Pharmaceutica AG rallied to its highest price in almost four years after winning European approval for a drug.
The SMI slipped one fifth of a point to 8,214.56 at the close of trading in Zurich. The gauge has gained 2.4 percent so far in October as U.S. lawmakers reached an agreement to reopen the partially closed government and avoid a sovereign default. The broader Swiss Performance Index was little changed today.
“Swiss banks are down today because of empathy with their European peers,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “It’s the read-across from the ECB capital rules that’s weighing on the Swiss market. We’ve had a huge run up in the market. Now we need some breathing time consolidate around this level and take profits.”
The ECB said its definition of capital will become stricter for stress tests on banks, compared with the one it will use for an imminent review of their assets. The central bank also said it will require lenders to maintain a capital ratio of 8 percent.
The ECB will carry out a preliminary risk check early next year to identify asset portfolios needing further examination, followed by a full review of the quality of banks’ balance sheets. The European Banking Authority will then help conduct stress tests to assess their sovereign-debt holdings.
UBS fell 1.6 percent to 18.93 francs and Credit Suisse dropped 1.5 percent to 29.84 francs. A gauge of European banks was the worst performer of the 19 industry groups in the Stoxx Europe 600 Index, the region-wide benchmark.
Syngenta rose 1.6 percent to 365.40 francs. HSBC raised the stock to overweight, similar to buy, from neutral, citing a strong earnings momentum in 2014 and cheap valuation.
Basilea jumped 7.6 percent to 88.40 francs. The company’s ceftobiprole drug for the treatment of pneumonia received regulatory approval in Europe.
The volume of shares changing hands in SMI-listed companies was 4 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.