Swiss Stocks Slide as SEC Charges Goldman Sachs; Banks Decline
Stocks in Switzerland plunged the most in 10 weeks as the U.S. Securities and Exchange Commission sued Goldman Sachs Group Inc. for fraud and China’s government moved to cool the nation’s real-estate market.
UBS AG (UBSN) lost 2.8 percent and Julius Baer Group Ltd. (BAER) dropped 3.2 percent. Xstrata Plc retreated 4.3 percent on concern about the outlook for demand in China. Swatch Group AG (UHR) declined 1.7 percent after JPMorgan Chase & Co. downgraded the world’s biggest watchmaker.
The Swiss Market Index (SMI), a gauge of the biggest and most actively traded Swiss companies, fell the most since Feb. 5, losing 73.87, or 1.1 percent, to 6,893.69. The gauge advanced 0.1 percent this week. The SMI has rallied 5.3 percent in 2010 as central banks maintained record low interest rates and the European Union agreed a contingency rescue plan to help Greece. The broader Swiss Performance Index (SPI) slid 1 percent today.
Goldman Sachs was sued by U.S. regulators for fraud tied to packaging and selling collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. The U.S. bank misstated and omitted key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter, the SEC said.
“Any surprise news of such entity will spook the entire market especially when Goldman Sachs is involved,” said Thomas Laschetti, a trader at Tullett Prebon Ltd. in London. “Goldman has most recently been taken as a benchmark for solidity.”
UBS, Switzerland’s biggest bank by assets, fell 2.8 percent to 17.93 Swiss francs. Julius Baer, the 120-year-old Swiss private bank, dropped 3.2 percent to 37.13 francs. Credit Suisse Group AG (CSGN) lost 1.9 percent to 55.35 francs, erasing an earlier gain of 3 percent.
Xstrata dropped 4.3 percent to 20.25 francs. Basic-resource producers were the worst performers in Europe today on concern for demand in China in light of government measures to cool the real-estate market.
China’s cabinet yesterday increased down payment ratios for some home purchases, saying “more forceful” steps are needed to cool speculation. China’s economic growth in the first quarter was the fastest pace in almost three years.
Swatch fell 1.7 percent to 326.4 francs. JPMorgan downgraded the watchmaker to “neutral” from “overweight,” saying that the company had “the biggest positive surprise of second-half 2009 in the sector” and as that already lifted consensus estimates, there’s now “little scope for positive surprise.”
Lonza Group AG (LONN) climbed 2.8 to 84.65 francs. UBS AG said in a note that it expects the world’s largest maker of drug ingredients “to reiterate all guidances” and indicate that “long-term growth is sound.” Separately, Credit Suisse Private Banking Global Research set a “speculative buy” recommendation on the shares.
Clariant AG (CLN) advanced 1.3 percent to 15.21 francs. The world’s biggest maker of printing-ink chemicals said earnings in the first quarter beat company targets following a pick-up in demand and a purge on costs.
The company will report a “very good performance” as customers replenished inventories depleted last year, Chief Executive Officer Hariolf Kottmann said in an internal memo obtained by Bloomberg.
To contact the reporter on this story: Francesca Cinelli in Milan at firstname.lastname@example.org.