23 December 2016 – Swiss and global market roundup.
Brought to you by Investec Switzerland.
Ahead of the Christmas break, trading volumes were thin this week amid a lack of new market catalysts. Swiss and European equities were generally unchanged through the week, tracking global stock markets. Overall, sentiment appears to be positive as investors close their books for the year.
The European banking sector was this week’s main story with Deutsche Bank, Credit Suisse and the world’s oldest lender, Banca Monte dei Paschi di Siena, all making headlines. According to reports, the Italian cabinet has approved a state-bailout of Monte dei Paschi, the country’s third largest bank, to avoid the lender collapsing and causing a domino effect across the sector reminiscent of Europe’s 2011 banking crisis. Monte dei Paschi failed to lure sufficient demand for its 5 billion-euro capital increase last week, leading to what is expected to be the country’s biggest bank bailout in decades.
Deutsche Bank’s appeared to make progress on its woe’s with the US Department of Justice this week after apparently reaching a $7.2 billion agreement to resolve a years-long U.S. investigation into its dealings in mortgage-backed securities. Investors responded positively to the news as the deal is far below the Justice Department’s initial request of $14 billion. Officials at the US Justice Department appear to be tearing through a backlog of crisis-era banking cases this week after reports on Friday said that the US Justice Department will also receive $5.28 billion from Credit Suisse to resolve a similar investigation into its previous mortgage-backed securities business.
Back home, the Swiss trade balance worsened again in November. Both imports and exports fell during the month with exports declining to all major regions, apart from North America. Swiss watch exports posted another decline of 5.6% compared to November last year, although this was at least the best monthly performance in the last nine months from the embattled sector.
In company news, Actelion surprised investors this week after it apparently re-entered takeover negotiations with Johnson & Johnson. According to reports, the two sides are in final deal talks. Last week, Johnson & Johnson pulled out of discussions after Actelion unexpectedly asked for a higher bid.