Most Swiss Stocks Decline; Schmolz Falls, Banks Rally

Most stocks in Switzerland declined after the Swiss Market Index rose to a four-year high, as investors bet recent gains in share prices have exceeded the outlook for company earnings.

Schmolz & Bickenbach AG retreated 4.1 percent, snapping a four-day rally. UBS AG and Credit Suisse Group AG, Switzerland’s largest lenders, advanced at least 1.9 percent after global central-bank chiefs agreed to ease a proposed liquidity rule. Swisscom AG gained after Goldman Sachs Group Inc. recommended buying shares in the country’s biggest phone company.

The SMI slipped 0.1 percent to 7,049.30 at the close of trading in Zurich, as 13 shares fell and seven rose. The gauge rallied 3.5 percent last week, the biggest jump in 13 months, as U.S. lawmakers approved a compromise budget that avoided most deficit-reduction measures that may have pushed the economy into a recession. The SMI gained 15 percent last year. The broader Swiss Performance Index also lost 0.1 percent today.

“It’s not unlikely that we’ll see some near-term consolidation as we probably can’t keep going at this rate,” said Serge Berger, a Zurich-based trader at Blue Oak Advisors LLC. “Investors need to catch a breath and get back into the market. Beyond that, market sentiment still seems to be good and it’s hard to imagine that things would fall apart in January. There’s potential to go higher this month and next.”

The SMI’s valuation has reached 20.9 times reported profit, the highest level since 2009, according to data compiled by Bloomberg. The number of shares changing hands was 16 percent higher than the 30-day average today.

U.S. Debt

In the U.S., Republicans are planning to use the need to raise the American government’s $16.4 trillion debt ceiling to force President Barack Obama to accept spending cuts to entitlement programs such as Medicare. Congress must act as early as mid-February to prevent a default.

Schmolz & Bickenbach slumped 4.1 percent to 3.03 Swiss francs after SonntagsZeitung cited Chairman Hans-Peter Zehnder as saying the company has no information on possible takeover attempts by financial investors. The shares jumped 10 percent last week after Handelsblatt reported the maker of high-grade steel products may be sold.

Cie. Financiere Richemont SA, the owner of the Cartier brand, retreated 1.5 percent to 73.85 francs, posting the worst performance on the SMI.

UBS and Credit Suisse jumped 1.9 percent to 15 francs and 3 percent to 24.38 francs, respectively. Julius Baer Group Ltd. rose 1.5 percent to 34.36 francs. Global bank regulators meeting in Basel, Switzerland, yesterday widened the range of highly liquid assets that banks must keep to meet short-term obligations. The officials also gave lenders an extra four years to fully comply with the rule.

Swisscom rose 0.5 percent to 405.20 francs after Goldman Sachs raised the stock to buy from neutral.

Before it's here, it's on the Bloomberg Terminal.