Swiss Stocks Fall; Banks, Acino, Swatch Decline in Zurich
Swiss stocks declined after China raised interest rates on Dec. 25 to cool the world’s fastest-growing major economy.
Acino Holding AG slipped 1.9 percent after it said a court ruling could cost it 4 million euros ($5.3 million), while Swatch Group AG (UHR) retreated after Chief Executive Officer Nick Hayek said the fluctuating euro is a concern for the country’s businesses. Banks fell after the Basel committee said bankers’ pay should be more transparent.
The Swiss Market Index (SMI) of the biggest and most actively traded companies fell 0.5 percent to 6,568.21 at the 5:30 p.m. close in Zurich. The gauge has advanced 0.3 percent this year, trailing the 10 percent increase in the benchmark Stoxx Europe 600 Index. The broader Swiss Performance Index also fell 0.5 percent to 5,890.31 today.
“Markets have been jolted back to reality by the surprise Chinese rate hike over Christmas,” Mads Koefoed, a market strategist at Saxo Bank A/S in Copenhagen, said. “The hike was expected earlier this month but failed to materialize so with several markets closed and a light calendar, the markets are struggling a bit today.”
The People’s Bank of China said in a statement on its website that the benchmark one-year lending rate will increase by 25 basis points to 5.81 percent and the one-year deposit rate will climb by the same amount to 2.75 percent.
China’s monetary tightening in 2011 may be mainly in the first half as officials tackle the fastest inflation in more than two years, JPMorgan Chase & Co. and Morgan Stanley said.
Bankers’ pay should be more transparent to investors to prevent lenders from hiding policies that encourage irresponsible risk taking, global regulators said in draft proposals.
International rules on the disclosure of pay “will allow market participants to assess the quality of a bank’s compensation practices and the incentives towards risk taking they support,” Fernando Vargas, chairman of the Basel Committee on Banking Supervision’s task force on remuneration, said in a statement published on the group’s website today. The proposals will “support effective market discipline,” the Basel committee said.
Acino, the Swiss maker of generic drugs, slumped 1.9 percent to 90.5 francs, the biggest daily fall since Dec. 1. It said a Norwegian court’s ruling against it in a case involving a generic version of the oxycodone medicine may cost the company about 4 million euros if upheld.
The company confirmed its full-year outlook, saying that an extraordinary contribution to net profit from the acquisition of the iclaprim business is expected to compensate for a provision for the ruling.
Swatch slipped 1 percent to 420.9 francs, the lowest closing price since Dec. 9. The world’s biggest watchmaker can absorb the euro’s fluctuations, although how smaller and mid-sized companies as well as Switzerland’s export and tourism industries will cope is a concern, CEO Hayek was cited as saying in a Blick newspaper interview. Hayek was also quoted as saying he sees the franc strengthening further against the euro.