Swiss Stocks Retreat for a Third Day as Holcim DeclinesNamitha Jagadeesh
Swiss stocks retreated for a third day as investors speculated the Federal Reserve will start reducing its monthly bond-buying program this year.
Holcim Ltd. dropped the most in 21 months as UBS AG downgraded the world’s largest cement maker. UBS and Credit Suisse Group AG, Switzerland’s biggest banks, retreated more than 2 percent. Roche Holding AG, which accounts for 17 percent of the Swiss Market Index, advanced 0.9 percent after Citigroup Inc. said the drugmaker was among its most preferred stocks.
The SMI fell 21.89 points, or 0.3 percent, to 7,939.42 at the close in Zurich. The gauge has slipped 1.7 percent since Aug. 14, the biggest three-day drop in eight weeks. The SMI has still gained 16 percent this year, driving its valuation to 15.2 times estimated earnings, compared with an average of 13 times over the past three years. The broader Swiss Performance Index slipped 0.2 percent today.
“Some uncertainty about Fed tapering still remains,” said Christoph Riniker, head of strategy research at Julius Baer Group Ltd. in Zurich. “For the Swiss market, with its very defensive sector composition, the current constructive macro environment is causing more headwinds than tailwinds. The valuation is quite expensive. We don’t think the market looks very attractive going forward.”
The yield on 10-year Treasury notes rose four basis points to 2.87 percent, before the release of minutes on Wednesday from the last Federal Open Market Committee meeting. The minutes from the July 30-31 meeting will probably provide details of the risks from allowing inflation to fall below the central bank’s 2 percent target.
Holcim lost 4.4 percent to 67.75 Swiss francs after UBS downgraded the cement maker to neutral from buy. The brokerage lowered its estimates for the company’s earnings in 2013 and 2014 because of increased costs from currency fluctuations and downward pressure on its profit margins.
UBS, Switzerland’s biggest bank, declined 2.2 percent to 18.83 francs and Credit Suisse, the second largest, dropped 2.1 percent to 28.38 francs. Banks lost 1.8 percent, contributing the most to a decline by the Stoxx Europe 600 Index.
Julius Baer, Switzerland’s third-biggest wealth manager, slipped 1.1 percent to 43.14 francs.
Roche gained 0.9 percent to 238.30 francs after Citigroup analyst Andrew S. Baum said he expects the world’s biggest maker of cancer drugs to rise more than GlaxoSmithKline Plc in the next three months. Roche’s pipeline of drugs provides enough options to outweigh concern about competition for existing cancer treatments including Avastin and Rituxan, he wrote in a note.