Yahoo Finance Which stocks could bounce back from the Swiss market crash?
The Swiss National Bank's recent decision to abandon its policy of pegging the Swiss franc to the euro caused the country's SMI index of leading shares to nosedive by more than 14%. The unexpected move caused mayhem on the money markets and spooked equity investors, with stocks marked down across the board. The full impact of all this may well take some time to play out. But at Stockopedia we couldn't help wondering whether it might be an opportunity to pick up some good quality Swiss shares at knock-down prices.
Over the past 12 months the SMI - which is made up of Switzerland's 20 largest and most liquid stocks - rose by a steady 10.4%. In fact it was trading at a near 7-year high just before the Swiss central bank caught everyone off guard.
What happened when the Swiss peg was ditched?
Regulators introduced a ceiling of 1.20Fr / 1 euro back in 2011 at the height of the eurozone debt crisis. It was meant to limit the potential damage caused by investors piling into the country's 'safe haven' currency. At the time, there were big concerns that the Swiss franc was strengthening too far, which was making the country's exporters uncompetitive.
To keep the wheels on that policy, the SMB had to swell its balance sheet by buying up foreign currency. Even before it ditched the peg, questions were being asked about how sustainable that policy was. And with EU regulators soon expected to kick off a round of quantitative easing, the Swiss peg would likely have become even more expensive to maintain.
Switzerland's biggest share fallers over the past week have included some of its best known names:
That said, the SMI has already drifted back by more than 4% since the close last Friday. So has the Swiss Performance Index, which tracks most of the country's traded shares. We took a closer look at the market to see which of them might be best placed to recover from the recent shock.
Top ranking Swiss stocks
The table below shows Swiss shares that currently rank highest against Stockopedia's StockRanks. Those ranks sort each stock across their fundamental company quality, share valuation and price and earnings momentum. These factors are proven to be some of the key drivers behind long term stock market returns.
The 1-week percentage price changes show the severity of the market-wide falls. But traders may be interested to see that a handful of these stocks are now trading ahead of their 50-day Moving Average, indicating that they may have been better protected from the volatility and might be recovering lost ground. Subscribers can see the full, constantly updated list of shares here.
Name | Mkt Cap £m | Stock Rank™ | % Price Chg 1w | % 50d MA | Sector |
2,060 | -10.9 | +5.40 | |||
242.4 | -13.2 | -9.28 | |||
238.6 | -7.55 | -7.53 | |||
182 | -10.0 | -7.85 | |||
357.2 | +3.27 | +9.98 | |||
689.6 | -8.22 | +1.77 | |||
609.1 | -6.58 | +4.84 | |||
1,267 | -19.3 | -13.8 | |||
324.4 | -8.83 | -4.45 | |||
1,014 | -0.86 | +0.64 | |||
652.5 | -3.29 | +1.13 |
Topping this list is long-time high StockRanking company BB Biotech, which is a biotech investor. Its shares have been on a strong run over the past six months but they lost 11% last week (see graph). It's followed by Kardex, a storage and materials handling business, which derives the bulk of its sales from the Europe, Middle East and Africa region. It was one of the worst affected among the high ranking stocks here, with a 13.2% price fall. As you can see from the StockRanks analysis, that decline has caused its MomentumRank to dip by 6 to 82 /100 over the past 30 days.
Holding up slightly better were consumer defensive stocks like food products group Huegli Holding and meat producer Bell, which both saw their declines limited to around 8%. Both companies sell into foreign markets, with more than half of Huegli's revenues coming from Germany in 2013.
Coltene Holding is the only healthcare company in the top 10 highest ranking stocks - currently ranking 97 / 100. It makes consumables and equipment for the dentistry market and its shares have already climbed 14% from the recent dip. The overall biggest faller was Forbo Holding, which makes floor coverings, power transmissions and conveyor equipment. The company has made efforts to increase its presence in international markets in recent years but saw its performance impacted by currency effects in 2013. Could that get worse with a stronger Swiss franc? Its shares have sunk by 19% over the past week.
One of stocks least affected by the turmoil has been newspaper and magazine publisher Tamedia, which owns one of Switzerland's best selling newspapers, Tages-Anzeiger. No reliance on exports could be one reason why its shares have lost less than 1% of their value. And despite the volatility Autoneum, an auto components maker, has seen its shares hold up better than most, with a 6.7% fall. That leaves it trading 4.8% above its 50-day moving average. The StockRanks analysis show that improving quality and robust momentum have actually improved Autoneum's overall StockRank over the past 30 days, up by 8 points to 95.
Seeking opportunities in market dislocations
It's far from clear how long it will take for Swiss stocks to recover from the recent and very sudden currency swing. Plainly, the soaring value of the Swiss franc is bound to impact negatively on a number of the country's companies, particularly those with significant international exposure - so it's important to look closely at that. Warren Buffett once said: “...be fearful when others are greedy and greedy when others are fearful." To take him at his word it's worth have the strategy and tools at hand to find those stocks that could bounce back the quickest. If you want find out more about hunting for big winners in the stock market, a free investment guide from Stockopedia could make a big difference.
Stockopedia's Guides to Making Money in Value & Dividend Stocks can help you become a more successful investor in 2015 and beyond. They are simple and straightforward reports on what works in the stock market and explain how to find shares that can enhance your returns.
Click here to find out more about Stockopedia and see our Subscription Plans to take a two-week free trial.
Read More about Bell AG on Stockopedia
Discuss Bell AG on Stockopedia
