Providers of reverse convertible and turbo certificates linked to Swiss shares are expected to deliver losses to clients this month. Stocks in Switzerland dropped last Monday after the resignation of Swiss National Bank President, Philipp Hildebrand, following media reports that his family may have used insider knowledge to its advantage.
According to SRP.com's data, there are 62 Swiss products linked to Novartis AG, UBS and Credit Suisse shares which will be maturing in January. These products raised an estimated CHF269m ($282m) and will not be paying any returns as the protection barriers were breached following their drop in value. Moreover, another 24 products linked to the Swiss Market Index (SMI), which raised an estimated CHF85m ($89m), will be maturing during that same time frame incurring losses, or paying back the initial investment if they included capital protection features.
Novartis AG led losses, followed by UBS and Credit Suisse. The SMI, representing the largest and most actively traded companies in Switzerland, had also lost 0.4% at its close in Zurich. Novartis, which accounts for about 19% of the SMI, retreated 1.2%. According to a Bloomberg report, the company's share price was also negatively affected by its voluntary recalling of some over-the-counter products in the US. Moreover, UBS and Credit Suisse both fell 3.5%, as these companies suffered additionally from the fact that Exane BNP Paribas resumed their coverage with an 'underperform' rating.