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See How Swiss Bank Policy Unleashed a “Tsunami” on These Stocks

This is a syndicated repost published with the permission of Money Morning - Only the News You Can Profit From. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.

A surprise Swiss Bank policy change shocked the stock market Friday.

On Thursday, the Swiss Central Bank ended a three-year old policy that prevented the Swiss franc from appreciating too much against the euro.

The move sent the Swiss franc soaring 30% against the euro within minutes.

It also caught financial firms unprepared…

You see, the franc is the sixth most-traded currency in the world. While holders of Swiss francs realized gains, financial institutions with large holdings of euros or dollars against the franc were routed – especially smaller firms that cannot bear big losses.

And Swiss exporters saw their goods become 30% more expensive to European buyers in a matter of minutes.

Take a look at the devastating effect the surprise Swiss Central Bank policy had on small firms, big banks, and major Swiss exporters like The Swatch Group SA (VTX: UHR), Holcim Ltd. (VTX: HOLN), and Nestle SA (VTX: NESN)…

How Swiss Bank Policy Slaughtered Small Firms

New York-based currency broker FXCM Inc. (NYSE: FXCM) may be insolvent. FXCM stock fell 15% on Thursday. In pre-market hours Friday morning, shares had plummeted more than 90%. The firm said its clients suffered losses that “generated negative equity balances owed to FXCM of approximately $225 million.”

Swiss bank policy
Alpari, a London-based brokerage firm that sponsors the shirt of English Premier League soccer club West Ham United, was forced to shut down.

Swiss bank policy“Where a client cannot cover this loss, it is passed on to us,” the company’s statement read. “This has forced Alpari (U.K.) Limited to confirm today that it has entered into insolvency.”

And Global Brokers NZ, a New Zealand-based currency trading house, also went bust. It could no longer meet regulatory minimum requirements.

“News of the impact of this event on companies and traders is just beginning to come to light,” Global Brokers NZ director David Johnson said. “As directors and shareholders we would like to offer our sincerest apologies for this devastating turn of events.”

Swiss Bank Policy Shook Big Banks

While not as devastated, big Swiss banks also got zapped…

UBS Group AG (VTX: UBSG)

Swiss bank policy UBSG
Credit Suisse Group AG (NYSE ADR: CS)

Swiss bank policy credit suisse
Julius Baer Gruppe AG (VTX: BAER)

Swiss bank policy JuliusSwiss Bank Policy Crushes Swiss Exporters

The world’s biggest maker of Swiss watches, The Swatch Group SA (VTX: UHR), lost 22.39% Thursday, and lost another 7.09% today. Swatch Chief Executive Officer Nick Hayek said, “Words fail me. Today’s [Swiss National Bank] action is a tsunami; for the export industry and for tourism, and finally for the entire country.”

Swiss bank policy swatch
World’s biggest cement maker Holcim Ltd. (VTX: HOLN) lost nearly 16% Thursday and fell another 5.42% Friday.

Swiss bank policy Holcim
Switzerland-based Nestle SA (VTX: NESN), the world’s largest food company, gets roughly 98% of its revenue from outside its home country. Thursday’s 12.81% fall marked the company’s biggest intraday drop in more than 17 years.

Swiss bank policy nestleThe Swiss Bank policy shook Switzerland’s stock market 9% on Thursday. On Friday, Swiss stocks slid another 5.2%. Additionally, Swiss bond yields turn negative for first time ever.

Get a closer look at exactly what the Swiss National Bank’s move means for the economy – and for central banking – here

And check out Money Morning Capital Wave Strategist Shah Gilani’s timely take on “the brave new world of central bank tyranny”…

The post See How Swiss Bank Policy Unleashed a “Tsunami” on These Stocks appeared first on Money Morning 

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