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6 Stocks That Went Up With The Swiss Franc Surge

Published 01/16/2015, 04:30 AM
Updated 07/09/2023, 06:31 AM

A surprise decision by the Swiss National Bank Thursday to scrap its cap on the franc against the euro sent Swiss stocks into a nosedive yesterday, giving U.S. holders of Swiss stocks a surprise of their own.

The move, shockingly suddenly for the normally sober and taciturn Swiss National Bank, is designed to prevent the franc from rising too high against the euro, which would choke Swiss exports to the European Union. More than 50 percent of Swiss exports are sold to its neighboring currency union.

After the country’s central bank announced it would no longer hold its minimum exchange rate of 1.20 francs per euro, the Swiss franc surged more than 16 percent against the euro, trading at €0.9599, and 14 percent against the dollar, trading at $1.1207. The Swiss Market Index (SMI), Switzerland’s benchmark equity index, sank 10 percent on the news.

American depository receipts on widely-active Swiss stocks trading in the U.S., however, gained in early trading Thursday. That’s because the net value of those stocks, measured in dollars, will rise as the franc appreciates against the dollar. While $1 would give an American investor only 89 cents in Switzerland, the rising franc-to-dollar exchange rate is ultimately pumping up the ADR prices for some noted Swiss companies.


Swiss gains


Yesterday in morning trading, food company Nestle (OTC:NSRGY) soared 5.7 percent, up $4.16 to $77.15. Power and automation company ABB Ltd (NYSE:ABB - Analyst Report) advanced 2.56 percent, up 50 cents to $20.00.

Novartis AG (NYSE:NVS- Analyst Report), the manufacturer of pharmaceutical and consumer health care products, rose $3.18, or 3.28 percent, to $99.99. Roche Holding AG (OTC:RHHBY), the pharmaceutical and diagnostic product manufacturer, added 78 cents, or 2.22 percent, to $35.96.

Swiss banks gained as well yesterday, with Credit Suisse AG (NYSE:CS - Snapshot Report) up 11 cents, or 0.48 percent, to $22.92 after jumping 2.5 percent earlier. UBS Group AG (NYSE:OUBS) also rose, by 1.5 percent, on the currency news but later fell 16 cents, or 0.97 percent, after the Securities and Exchange Commission announced yesterday that UBS has agreed to pay a $14.4 million fine for violating trading rules. In Switzerland, however, UBS shares plunged 12 percent, making the U.S. drop look mild by comparison.

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