Catastrophic Swiss Trade Balance, Swiss Pharma performing strongly

9 years ago - Published by IG Bank in Commodities, Expert opinion, Finance

Switzerland published its March Trade Balance this morning and this one was catastrophic. The figure came out at CHF 2.16bn vs CHF 4.02bn previously. Switzerland did not publish such a low figure since February 2015, so more than a year. The components of the trade balance show a terrible trend : exports decreased from 2.1% to -1.1% and imports increased drastically from -1.5% to 9.3% ! Due to its size and resources, foreign trade is very important for the Swiss economy and trade statistics can have a significant impact on markets, especially the Forex market. With such a low figure, we can imagine that in the coming days, the Swiss franc will resume its downward trend, quickly reaching 1.10 against the EUR and even 1.15 by the end of the year.

On a corporate level, Novartis and Actelion published their figures today. Novartis published better than expected results with an earning per share (EPS) at $1.17 vs $1.15 expected and an operating profit above consensus at $3.261m vs $3.151m expected, leading to an improved operational margin of 28.11%. Sales of Sandoz were roughly in line with what analysts expected. Emerging markets were slightly lagging behind at 5% vs 4% in the previous quarter. Alcon sales, which were slightly lower than expected, will be closely watched this year, since Novartis invested significantly in the company. We continue to believe that the stock is set for a good year and should reach the 81 CHF level within the next 12 months. The stock should improve today on this news.

Finally, Actelion also published good figures. The EPS was published at CHF 1.64 vs CHF 1.624 expected. All figures were positive : the net profit rose 12%, the turnover 14% and the operating profit 10%. The operational margin is now as high as 42.1%. The company rose its expectations and so did we. Actelion now believes that it should experience a growth of a high single-digit percentage. This shifts our expectation on the stock. Our target on the stock is now 155 CHF. Thanks to this news, the stock should improve significantly and will probably lead the Swiss market today.

 

LAURENT BAKHTIARI
IG Bank Premium Client Manager (Apr 2014 – July 2016)