Swiss Stocks Rise, Extending a Four-Year HighCorinne Gretler
Swiss stocks rose, extending a four-year high, as Swatch Group AG rallied and Federal Reserve Bank of Chicago President Charles Evans said that the central bank should continue to support the U.S. economy.
Swatch gained 4.2 percent after agreeing to buy the Harry Winston watch and jewelry brand for about $1 billion. Transocean Ltd. increased 2.9 percent after billionaire investor Carl Icahn acquired a 1.56 percent stake in the world’s largest offshore-rig contractor. Givaudan SA and Clariant AG fell after HSBC Holdings Plc recommended selling the shares.
The Swiss Market Index climbed 0.2 percent to 7,202.52 at the close in Zurich, paring a rally of as much as 0.6 percent. The equity benchmark still rose to its highest level since Sept. 12, 2008. The gauge advanced 1.8 percent last week amid optimism that U.S. companies’ earnings would beat estimates. The broader Swiss Performance Index also added 0.2 percent today.
“What’s very supportive of the Swiss market is Swatch’s rally after the acquisition as investors see it as a well-positioned company that has more potential,” Alessandro Fezzi, a senior market analyst at LGT Bank Schweiz AG in Zurich, said in a telephone interview. “The Fed comments surely help market sentiment on a day without much newsflow. Generally it looks like a positive day without a special driver.”
The volume of shares changing hands on the SMI was 12 percent greater than the average of the past 30 days, according to data compiled by Bloomberg.
The U.S. government should put “in place policies that slowly but surely bring the prospects of future revenues into balance with future spending,” Evans said in Hong Kong today. “Under this scenario, monetary policy has an important contribution to make.”
Federal Open Market Committee minutes, released on Jan. 3, showed policy makers had split on how long their $85 billion monthly bond-purchase program should last. Members were evenly divided between those who wanted to end the purchases in the middle of 2013 and those who supported continuing them after that time.
Swatch jumped 4.2 percent to 513 Swiss francs, its highest price since at least July 1993. The biggest maker of Swiss watches agreed to buy Harry Winston in its largest-ever acquisition. Swatch will pay Harry Winston Diamond Corp. $750 million and assume as much as $250 million in debt.
“The acquisition of the Harry Winston luxury brand is a great fit to the Swatch Group as it fills the gap of the high-end jewelry watches and adds a well known jewelry brand,” Rene Weber, an analyst at Vontobel Holding AG, wrote in a note to clients today.
Transocean gained 2.9 percent to 50.80 francs, its highest price since April 2012. Icahn notified the company that he’s seeking regulatory approval to acquire more than $682 million of shares -- a stake of 3 percent -- Transocean said in a statement. The oil-rig supplier said on Jan. 3 that it agreed to pay $1.4 billion in penalties for the explosion of the Deepwater Horizon platform in the Gulf of Mexico. The subsequent blowout led to the world’s worst accidental spill.
Credit Suisse Group AG climbed 2 percent to 25.60 francs. Mediobanca SpA raised Switzerland’s second-biggest bank to outperform, the equivalent of buy, from neutral.
Cytos Biotechnology AG surged 16 percent to 3.90 francs, extending its 12 percent gain on Jan. 11. The maker of biopharmaceuticals has posted its largest two-day advance in more than 11 weeks.
Givaudan, the maker of flavors and fragrances, declined 0.5 percent to 983.50 francs and Clariant, a chemical maker, slipped 2 percent to 12.15 francs after HSBC cut both stocks to underweight from neutral, meaning investors should sell the shares. HSBC cited the European chemical industry’s performance in 2012 and said the companies will probably not grow at the same pace in 2013 unless macro data improves.