Swiss Stocks Snap Five-Day Drop on European Manufacturing
Swiss stocks rallied for the first time in six days, snapping the longest losing streak in 15 months for the Swiss Market Index (SMI), as manufacturing in the euro area and China grew more than forecast.
UBS AG (UBSN) and Credit Suisse Group AG (CSGN), Switzerland’s biggest banks, rose more than 2 percent. Swatch Group AG gained 2 percent as Swiss watch exports rose in July. Meyer Burger Technology AG soared 17 percent as Macquarie Group Ltd. recommended buying the shares. Nobel Biocare Holding AG surged the most in more than 13 years after reporting earnings. Forbo Holding AG (FORN) retreated.
The SMI increased 1.3 percent to 7,988.6 at the close of trading in Zurich, the biggest jump in almost three weeks. The measure has surged 17 percent this year, driving its valuation to 15.2 times estimated earnings, compared with an average of 13.2 times over the past five years, according to data compiled by Bloomberg. The Swiss Performance Index also gained 1.3 percent today.
“We’re seeing better economic data out of Europe and China, with several positive surprises,” Thomas Haerter, who helps oversee about $54 billion as chief strategist at Swisscanto Asset Management AG in Zurich, said in a telephone interview today. “Getting better-than-forecast numbers out of Europe is even more positive for stocks than better-than-forecast data out of the U.S., as the growth problem is mainly in Europe.”
Euro-area manufacturing expanded for a second month in August, according to a gauge from Markit Economics. An index based on a survey of purchasing managers rose to 51.3 from 50.3 in July, where a reading greater than 50 signals growth. A services measure indicated the first expansion in 19 months.
A Chinese manufacturing index rose in August from an 11-month low, adding to signs the world’s second-biggest economy is stabilizing. The preliminary reading of 50.1 for a Purchasing Managers’ Index (EC11FLAS) released today by HSBC Holdings Plc and Markit compared with a final figure of 47.7 in July and the 48.2 median estimate in a Bloomberg News survey of economists.
Minutes released yesterday from the Federal Open Market Committee’s July meeting showed officials were “broadly comfortable” with Chairman Ben S. Bernanke’s plan to start reducing bond buying this year if the economy improves, with several members saying tapering might be needed soon.
“The Fed tapering is as good as certain,” Haerter said. “It shouldn’t affect markets much when it happens, as the whole negative influence is already priced in. We’ve already had a noticeable market correction.”
FOMC participants continued to expect that economic growth will pick up in the second half of 2013 and “strengthen further.” After the July meeting, policy makers affirmed a pledge to continue bond buying until they see evidence “the outlook for the labor market has improved substantially.”
UBS climbed 2.6 percent to 18.82 Swiss francs, for the biggest gain in the SMI. Credit Suisse rose 2.3 percent to 28.31 francs. A gauge of banks was the best performer of the 19 industry groups in the Stoxx Europe 600 Index. Julius Baer Group Ltd., an asset manager, added 1.4 percent to 42.37 francs.
Swatch, the biggest maker of Swiss watches, advanced 2 percent to 572 francs. Exports of timepieces rose 2.2 percent on the year in July, the Federal Customs Offices said today. Cie. Financiere Richemont SA, the owner of the Cartier brand, added 1.9 percent to 94.10 francs.
Meyer Burger soared 17 percent to 9.28 francs, the highest price in 10 months. Macquarie raised the provider of equipment to the solar industry to outperform from underperform, meaning investors should buy the shares, and more than doubled its price estimate for the stock to 15 francs.
“We believe the new solar machinery upswing cycle can almost match the all-time highs of late 2010,” Robert Schramm-Fuchs, an analyst at Macquarie, wrote in a note. “With an expanded product portfolio and a restructures cost base, Meyer Burger should be able to reach peak margins again.”
Nobel Biocare (NOBN) jumped 15 percent to 14.75 francs, the largest rally since January 2000. The world’s second-largest maker of dental implants reported second-quarter net income of 8 million euros ($10.7 million), in line with projections. Operating profit amounted to 12.1 million euros, compared with the average analyst estimate that called for 11.3 million euros.
Clariant AG (CLN) rose 1.5 percent to 15.23 francs as the chemical maker entered a joint venture with Lummus Novolen Technology GmbH to develop polypropylene-catalyst technologies.
“The new partnership with Lummus Novolen looks another promising milestone for Clariant’s catalyst activities,” Philipp Gamper, an analyst at Bank J. Safra Sarasin, wrote in a report. “It will strengthen the competitive position in an attractive market with strong growth rates in the future.”
Forbo lost 0.7 percent to 680 francs. Credit Suisse cut the maker of floor coverings to neutral, the equivalent of hold, from outperform, saying it sees no imminent triggers that could drive the stock to higher levels.
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