Flash boursier


Flash boursier


Key data




1. Investors relatively upbeat

2. Bond yields on the rise


Trump looking for a “good” deal with China

Despite conflicting information about the trade talks between China and the US, investors remain relatively upbeat about the outcome and have accordingly rotated out of sovereign bonds into equities. Moreover, cyclicals and banks have most recently outperformed defensive consumer stocks.

Bond yields have also trended up, buoyed by the prospect of better growth and resurgent inflation. In the US, for example, the return on 10-year Treasuries is back at 1.9%, its highest reading since early August. In Switzerland, the yield on the equivalent bond has improved from -1.2% to -0.45% in the same period. Some Fed brass have commented that no more rate cuts are needed this year, considering the solid state of the economy.

Regarding the trade talks, initial remarks suggested that both sides would cancel the increases in customs duties planned for December. However, there seems to be opposition from within the White House, and the meeting between Donald Trump and Xi Jinping to sign the ‘partial’ agreement could be postponed until December. Trump is adamant that everything is on track but he wants to sign a “good” deal. The US election campaign is already under way, and the sitting president can neither afford too much of a downturn in the economy or financial markets, nor renege on his ambitions to redefine China’s trade practices. However, the Chinese are in no hurry. Their economy is resilient, and their government is not facing an election in 2020.

The IMF has again lowered its growth forecast for the Eurozone as it sees trade barriers spreading from manufacturing to the services industry. It now forecasts a 1.2% increase in GDP this year and a growth rate of 1.4% for 2020 and 2021. In contrast, latest economic data are encouraging. In Germany, factory orders rose by 1.3%, fuelled by domestic demand. Exports also recovered, gaining by 1.5% relative to August. In China, exports dipped by 0.9% in October, marking a third consecutive monthly decline, but the figure was better than expected. Imports dropped by 6.4% year on year, which was better than the forecast 7.8% decrease and therefore calmed investor fears. In the US, consumer confidence is sitting at its highest level since July.


Cie Financière Richemont (ISIN: CH0210483332, price: CHF 74.68)

Richemont was sold off last Friday following the release of quarterly results. A closer look reveals figures that were not so bad. Sales rose quite solidly relative to the same quarter last year. So there is no underlying issue. The luxury goods sector is still growing, albeit not as quickly as before. In April to September, sales advanced by 6% at constant exchange rates. The problems is earnings, which fell by a reported 60% relative to the same period last year. This was due to a one-off gain last year skewing the basis for comparison.

Richemont’s business in China and Hong Kong shrank in double digits, hurt by exchange rates (Richemont reports in EUR) and store closures in Hong Kong in connection with the demonstrations. Nevertheless, sales in the Asia-Pacific region were up 5%, helped by Japan.

Management is still cautious about the future but no dark clouds are gathering. The slowdown in China and Hong Kong will probably be temporary. In our view, the correction has gone too far.

Share price in the past month

Graph. 1. MSCI CHine / MSCI World



Download the Flash boursier (pdf)


This document is provided for your information only. It has been compiledfrom information collected from sources believed to be reliable and up to date, with no warranty as to its accuracy or completeness.By their very nature, markets and financial products are subject to the risk of substantial losses which may be incompatible with your risk tolerance.Any past performance that may be reflected in this documentis not a reliable indicator of future results.Nothing contained in this document should be construed as professional or investment advice. This document is not an offer to you to sell or a solicitation of an offer to buy any securities or any other financial product of any nature, and the Bank assumes no liability whatsoever in respect of this document.The Bank reserves the right, where necessary, to depart from the opinions expressed in this document, particularly in connection with the management of its clients’ mandates and the management of certain collective investments.The Bank is a Swiss bank subject to regulation and supervision by the Swiss Financial Market Supervisory Authority (FINMA).It is not authorised or supervised by any foreign regulator.Consequently, the publication of this document outside Switzerland, and the sale of certain products to investors resident or domiciled outside Switzerland may be subject to restrictions or prohibitions under foreign law.It is your responsibility to seek information regarding your status in this respect and to comply with all applicable laws and regulations.We strongly advise you to seek independentlegal and financial advice from qualified professional advisers before taking any decision based on the contents of this publication.