Tuesday turned out to be a bitter chocolate for Switzerland as yields and equities both declined. The currency initially was flat but later in the day caught some upside momentum on speculation that the Swiss National Bank might intervene to raise the value of the currency.
[B]Swiss Lawmakers Vote to Tighten Insider-Trading Law:
[/B]Swiss lawmakers voted unanimously today to close a legal loophole that allows insider trading on advance knowledge of company earnings and M&A transactions. Switzerland’s penal code requires jail terms or fines for insiders who capitalize on knowing what the rest of the market doesn’t know. However, it limits such cases to a planned sale of new shares, a merger or ``circumstances of comparable significance.’’
[B]Swiss await showdown over guns and bullets:
[/B]A lively debate this summer is scheduled to take place in Switzerland over the long-standing tradition of keeping army guns and ammunition at home. Oppositions to “guns-at-home” culture seem to have gained momentum and critics are launching a people’s initiative on this issue. On Wednesday parliament will discuss a compromise proposal.
[B]Iraqis seek a safe home in Switzerland:
[/B]The Swiss government has refused to take in official groups of Iraqi refugees however; Iraqis are continuing to arrive independently in Switzerland. More than 6,000 Iraqis are living in Switzerland currently. Of which 2,500 have been granted refugee status and 2,690 have provisional right to remain. A further 1,000 people are still going through the asylum process. They are part of the mass exodus of Iraqis since the war began.
The Swiss currency was mostly flat against its counterparts on Tuesday morning in New York as no economic data released overnight. However, later in the day the volatility increased and franc gained on speculation that central bank might take action to curb inflation. According to central bank the franc?s value does not match economic fundamentals and is relatively weak. The franc has fallen versus 14 of the 16 most heavily traded currencies this year as investors favor higher yield regions. In general, the Swiss currency is near a weekly high against the dollar. As of 1:30 pm EST, USD/CHF traded at 1.2399, up 15 points since the start of the day.
The Swiss market index, though opening higher, could not sustain its strength and closed at 9365.73, down 30.02 points or 0.32 percent. The drop was led by Julius Baer Holding AG, the country?s largest money manager, which fell 1.2%. Losses in the heavily weighted pharmaceutical sector further pulled the index down. Other notable decliners included insurance stocks, with Zurich Financial down 5.00 sfr which was the market’s worst performer today. Fighting the fall, financial and banking stocks returned earlier gains with Credit Suisse dipping 0.05 sfr to 91.70 and UBS eased 0.05 sfr to 77.85.
Swiss government bonds gained. The yield on the 10-year bond fell 4 basis points to 3.18% as yields worldwide declined.