Swiss Stocks Snap Five-Day Drop on European Manufacturing
Stocks in Switzerland 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), the biggest Swiss banks, advanced more than 1.5 percent. Swatch Group AG climbed 1.1 percent as Swiss watch exports rose in July. Kuoni Reisen Holding AG gained 1.3 percent after Switzerland’s largest travel company reported first-half results. Nobel Biocare (NOBN) Holding AG soared 11 percent after posting a profit.
The SMI increased 1.2 percent to 7,978.87 at 12:34 p.m. in Zurich, the biggest jump in two 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 gained 1.1 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 percent to 18.72 Swiss francs, for the biggest gain in the SMI. Credit Suisse rose 1.6 percent to 28.13 francs. A gauge of banks was the second-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 42.36 francs.
Swatch, the biggest maker of Swiss watches, advanced 1.5 percent to 569.50 francs. Exports of timepieces rose 2.2 percent on the year in July, the Federal Customs Offices said today.
Kuoni (KUNN) increased 0.7 percent to 342.50 francs. First-half earnings before interest and taxes amounted to 16.2 million francs ($17.5 million), compared with a loss of 31.2 million francs a year earlier.
“The first-half report was solid and corresponded roughly to the market expectations,” Patrick Hasenboehler, an analyst at Bank J. Safra Sarasin, wrote in a note to clients today. “The key strength of Kuoni compared to its peers is the strong free cash flow generation. A major advantage of Kuoni compared to its peers is its asset-light model with low fixed costs.”
Nobel Biocare jumped 11 percent to 14.25 francs, the highest price since August 2011. The world’s second-largest maker of dental implants reported second-quarter net income of 8 million euros, 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 1.3 percent to 15.21 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 Safra Sarasin, wrote in a report. “It will strengthen the competitive position in an attractive market with strong growth rates in the future.”
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