Monthly Archives: February 2014

Another Swiss SIX-listed Company Switches from complex IFRS to pragmatic Swiss GAAP FER

After Meyer Burger (SIX: MBTN) at the end of October 2013 and Burckhalter Holding (SIX: BKRN) beginning of October 2013 today a further company has joined the list of those dissatisfied with IFRS rules, complexity and costs: Kaba (SIX: KABN) released this press release today: kaba-switches-from-ifrs-to-swiss-gaap-fer. Kaba Group sells its products and solutions all over the world. Its main markets are Europe, North America and, increasingly, the Asia-Pacific region.

The press release:

Kaba switches from IFRS to Swiss GAAP FER

The Board of Directors of Kaba Holding AG has decided to change to Swiss GAAP FER for the preparation of the company’s consolidated accounts as from the new financial year (starting 1 July 2014). Kaba’s registered shares remain listed on the SIX Swiss Exchange and are still included in the Swiss Performance Index (SPI).

Kaba Holding has used the IFRS accounting standard since 2004. In recent years this standard has become more and more demanding. It has required increasingly complex and time-consuming details and disclosures, which have tied up ever more internal resources. Swiss GAAP FER takes a more pragmatic approach that meets all the needs of a medium-sized international company like Kaba Group and those of its stakeholders while keeping the work required to a sensible level. Using Swiss GAAP FER, Kaba will continue to report fully and transparently in accordance with the “true and fair” principle.

The application of the new accounting standard will allow Kaba to charge all goodwill through shareholders’ equity. This will reduce the level of total assets and the equity ratio, which, based on the last audited balance sheet of 30 June, will come to around 47%. Now that the proportion of long-term assets is lower, Kaba has defined a new target for the equity ratio of 20%. Even after the switch this target figure will easily be exceeded. The change of system will also make it simpler to value Kaba’s pension fund liabilities. Under Swiss GAAP FER there will no longer be any need to carry out expensive actuarial valuations. For the 2012/13 financial year, the absence of amortisation on intangibles would have left consolidated net profit around 5% higher. As a result of the switch from IFRS to Swiss GAAP FER, Kaba’s registered shares will now be traded in the Domestic Standard. Following the decision by Kaba’s Board of Directors to make this change, an application has been submitted accordingly to the SIX Swiss Exchange AG.

Kaba will produce a detailed assessment of the previous year under the new accounting system when it publishes the 2014/15 results.

United Kingdom vs Spain vs Germany – UK vs Spanish and German Housing Price Index

These figures from the spanish Ministry of Housing and the UK’s Halifax and Bank of Scotland show that the pain isn’t over in Spain in a clear cut way.

UK-housing-price-index Spanish-Housing-Price-Index

These figures from the Deutsche Bundesbank show that Germany is not feeling any pain, on the contrary, it’s attracting investors to their city property markets (red) in particular.German-Housing-Price-Index

Swiss Old Age and Survivors Insurance (OASI/DI – AHV/IV – AVS/AI) – Active Trading

Today I came across the graph below (arrows and highlighting added by me) on the website of the Swiss Old Age and Survivors Insurance (OASI/DI – AHV/IV – AVS/AI). It shows the equity portion of the holdings and how they switched from close to 30% Emerging Markets in December 2012 to 15% by September 2013. And at the same time increased holdings in European Large Caps by close to 10%. What I hadn’t been able to deduce rightaway, whether they sold out after underperforming by 15% and were maybe chasing outperforming indices on a quarterly basis, or if they changed  their strategy ahead of time, i.e. in an adaptive fashion. Two possible conclusions: acting pro-cyclically or using market timing, i.e. active management – or more specfically enhanced indexing (the latter as it turns out). The former would be tough, the latter maybe less so.


This second graph shows the performance of the Eurostoxx 50 vs the MSCI Emerging Markets ETF for the last 12 months.eurostoxx-vs-emerging-markets

The graph below shows that a very large portion of the over CHF 30bn in the Siwss Old Age and Survisors Insurance fund is invested using enhanced indexing. Enhanced indexing is a hybrid between active and passive management and describes strategies used in conjunction with index funds for the purpose of outperforming a specific benchmark.

enhanced-indexing liquidität-ahv ahv-vermögen

Reasons for Flash Crashes: Example Dax Future February 6th, 2014

Certain market participants believe that short sharp corrections, aka a Flash-Crash, are caused by ominous or secretive algorithms.

The action in the Dax Future on February 6th is an example that the F.A.Z. sees as a Flash-Crash, – even though the exchange was quick to point out that they wouldn’t describe it like that.

If you take a close look at what the reason for this ‘Flash-Crash’ was, it boils down to simple supply and  demand dynamics being misjudged by certain market participants during news events. Ahead of a central bank interest rate decision every market maker goes cold on his bids and offers (or widens them massively) so as not to be exposed to surprise news.

Now if you have certain market participans who put in large conditional orders for the moment the news hits their large sell or buy orders will hit an air pocket, i.e. hit a half empty order book with spreads that are unusually wide in comparison to regular trading.

It’s the same in the forex market, just on much smaller % changes. I guess one or two market participants learned this lesson on February 6th.

The fact that even the arbitrage between cash and futures market failed for a short while shows you that the basket execution for hedging the Dax Future isn’t available in any size at every time.



The above article scan is from the F.A.Z. newspaper (Frankfurter Allgemeine Zeitung)

Swiss Mid & Small Cap Off Exchange Most Active – 06-02-2014

This list, exclusively compiled by Zuberbühler Associates Ltd for proprietary client trading strategies, shows which stocks had most off-exchange trading volume (06-02-2014). Interesting on todays list: Peach Property has a large institutional bidding the order book. Currently there are 30k bid in the order book at 10.15. Considering that kind of size is the usual daily volume the off market of close 55k on February 6th and that the price has since risen slightly, one can assume the off-market seller was done around 10.50 and maybe moved to over 11. In Swissquote maybe George Mansour from Amman, Jordania is active off-market (he owns over 5%). Here’s an interesting interview with the CEO of Swissquote regarding MIG Bank acquisition which George Mansour had owned (in french).

Peach Property N CH0118530366 PEAN 7.92% 4693 92.08% 54569
SCHAFFNER N CH0009062099 SAHN 24.78% 473 75.22% 1436
LEONTEQ N CH0190891181 LEON 33.28% 6891 66.72% 13815
EMMI N CH0012829898 EMMN 38.40% 6029 61.60% 9672
SWISSQUOTE N CH0010675863 SQN 41.55% 28007 58.45% 39400
VALORA N CH0002088976 VALN 64.08% 3716 35.92% 2083
TEMENOS N CH0012453913 TEMN 68.27% 245965 31.73% 114294
KUONI N CH0003504856 KUNN 74.39% 4021 25.61% 1384
LOGITECH N CH0025751329 LOGN 86.82% 1214187 13.18% 184329
ST GALLER KB N CH0011484067 SGKN 90.16% 1539 9.84% 168
INTERSHOP I CH0017313948 IS 93.52% 664 6.48% 46
PANALPINA N CH0002168083 PWTN 94.85% 37515 5.15% 2035
PARTNERS GROUP N CH0024608827 PGHN 95.42% 37047 4.58% 1779
SULZER N CH0038388911 SUN 96.72% 148219 3.28% 5022
FLUGHAFEN ZUERICH N CH0010567961 FHZN 97.14% 10150 2.86% 299
SCHINDLER N CH0024638212 SCHN 97.23% 16133 2.77% 460
NOBEL BIOCARE N CH0037851646 NOBN 97.44% 637358 2.56% 16778
GALENICA N CH0015536466 GALN 97.50% 10659 2.50% 273
OC OERLIKON N CH0000816824 OERL 97.59% 2095952 2.41% 51651
FORBO N CH0003541510 FORN 97.73% 4125 2.27% 96

Swiss Mid & Small Cap Off Exchange Most Active – 05-02-2014

This list, exclusively compiled by Zuberbühler Associates Ltd for proprietary client trading strategies, shows which stocks had most off-exchange trading volume (05-02-2014). Interesting on todays list: DKSH (Market Expansion Services Group with a focus on Asia)and gategroup (leading independent global provider of products, services and solutions related to a passenger’s onboard experience) once again (already on 04-02-2014) active. VZ Group was however the largest by % of trades shares off market today. The stock had fallen off a cliff around January 20th.

VZ HOLDING N CH0028200837 VZN 5.36% 400 94.64% 7063
BURCKHARDT N CH0025536027 BCHN 43.04% 4224 56.96% 5590
DKSH N CH0126673539 DKSH 46.39% 137388 53.61% 158786
SCHWEITER I CH0010754924 SWTQ 52.21% 874 47.79% 800
MOBILEZONE I CH0012583404 MOB 53.43% 72269 46.57% 63000
ZEHNDER CH0132557338 ZEH 55.33% 6070 44.67% 4900
INTERSHOP I CH0017313948 IS 62.99% 1489 37.01% 875
MYRIAD GROUP N CH0019624805 MYRN 73.45% 581086 26.55% 210000
CEMBRA MONEY BANK N CH0225173167 CMBN 77.99% 17712 22.01% 5000
FLUGHAFEN ZUERICH N CH0010567961 FHZN 79.86% 3667 20.14% 925
MEYER BURGER N CH0108503795 MBTN 85.60% 488647 14.40% 82232
PANALPINA N CH0002168083 PWTN 85.90% 28765 14.10% 4723
LOGITECH N CH0025751329 LOGN 88.91% 802546 11.09% 100113
TECAN GROUP AG N CH0012100191 TECN 90.17% 18716 9.83% 2040
TEMENOS N CH0012453913 TEMN 90.39% 65228 9.61% 6934
ARYZTA N CH0043238366 ARYN 91.58% 144558 8.42% 13292
AUTONEUM N CH0127480363 AUTN 91.65% 15253 8.35% 1390
BC VAUD N CH0015251710 BCVN 92.90% 12279 7.10% 939
BARRY CALLEBAUT N CH0009002962 BARN 95.22% 5201 4.78% 261
LINDT N CH0010570759 LISN 95.24% 120 4.76% 6
PARTNERS GROUP N CH0024608827 PGHN 97.13% 41759 2.87% 1236

Structured Products and their Importance to Universal Banks’ Profits

The data below is from a large universal bank in Switzerland. It shows that close to a quarter of the entire banks trading profits come from structured products. The fact they make 300% more money with structured products vs equity trading and equity derivatives tells you a lot about margins and how widespread the use of structured products has become. From a client perspective investing in these instruments this can’t be good news regarding the long run accumulation of returns.

This shows that universal banks tend to be milking clients or that they are proposing using a lot of tax-efficient structures, which tends to pose a problem down the road. In the latter case with tax authorities in the former with clients (if they ever get educated to the effects of structured products on long-term wealth creation). trading-profits-universal-banks

Also see my post on equity linked bonds (and the payoff diagram of the equity linked bond in particular) to see how attractive certain structured products are for the investor, and how attractive for the seller (bank).


Equity Linked Bond / Reverse Convertible Bond

Today, reading the F.A.Z, I came across this adequity-linked-bonds for equity linked bonds. These kind of products are interesting as they appeal to people’s need or demand for a high guaranteed percentage return. Everyone knows that current interest rates are close to zero, so you get a lot of regular, even university educated people who are attraced to the high yield shown in the ads (and touted with: “chance for attractive returns, equity bonds with high interest rate on DAX stocks”), but still don’t see the risks associated with them. Their brain has been conditioned to associate a yield and bond price like quote with a safe bond. And who wouldn’t want 7,50 to 8,00% for investing in solid companies such as German automakers. People always need cars.

The role your financial advisor is normally paid for is to recommend good risk-return strategies. Equity linked bonds are rarely such a tool before costs, and even less so after costs. Also they involve you selling short a put. If potential investors saw the phrase: short a put and pocket the premium (for that is what they are doing), they might think twice. The bank guaranteed high nterest rate idea on the other hand hooks the gullible and is therefor the bait. These products get advertised for a simple reason, they allow a higher margin to be pocketed by the firm, in this case Deutsche Bank.

If you look at a payoff diagramm of an equity linked bond payoff-diagram-equity-linked-bond-1you see that your profit is capped and your loss is open ended (apart from interest, i.e. the put premium). Does that sound like a good strategy to pay a bank 100-200bp for? Also note that these products have a time to maturity of 10-14 months. That’s why banks love these products. They simply offer a higher return to them. You are not getting a high enough return as an investor for the risk you’re taking.

In a derivatives lecture my professor pointed this out. One of the young german bankers got pretty aggressive at that point, and very defensive, saying that they were a good deal for the client. The professor said they weren’t. My role as your financial advisor, or of my company, is to make sure you are getting paid for the risks you take and fully aware of the pitfalls.

Swiss Mid & Small Cap Off Exchange Most Active – 03-02-2014

This list, exclusively compiled by Zuberbühler Associates Ltd for proprietary client trading strategies, shows which stocks had most off-exchange trading volume (03-02-2014). Interesting on todays list: Interroll (rollers, components, drives and modules for material handling, storage and automation) had seen a nearly 24% rise since October 2013 and looks to be consolidating on insider trading. More than half the days volume off-market on Monday. Seeing as they are a logistics and automation play they would be a winner in protracted world growth (P/E ratio expansion). And a potentially a loser (P/E contraction) should the emerging debt and FX crisis prove to be a sustained influence.

INTERROLL N CH0006372897 INRN 35.79% 446 64.21% 800
TECAN GROUP AG N CH0012100191 TECN 47.25% 8959 52.75% 10000
BURCKHARDT N CH0025536027 BCHN 57.91% 9489 42.09% 6897
PARGESA I CH0021783391 PARG 59.59% 50414 40.41% 34193
AUTONEUM N CH0127480363 AUTN 59.71% 14820 40.29% 10000
TEMENOS N CH0012453913 TEMN 62.85% 230038 37.15% 135984
GALENICA N CH0015536466 GALN 77.07% 20895 22.93% 6216
BUCHER N CH0002432174 BUCN 77.84% 12769 22.16% 3636
NOBEL BIOCARE N CH0037851646 NOBN 84.45% 693674 15.55% 127754
SCHINDLER N CH0024638212 SCHN 94.45% 47834 5.55% 2811
PANALPINA N CH0002168083 PWTN 94.73% 45487 5.27% 2529
STRAUMANN N CH0012280076 STMN 95.31% 23334 4.69% 1147
LOGITECH N CH0025751329 LOGN 95.79% 703395 4.21% 30906
FLUGHAFEN ZUERICH N CH0010567961 FHZN 95.88% 8596 4.12% 369
ZEHNDER CH0132557338 ZEH 95.95% 3319 4.05% 140
PARTNERS GROUP N CH0024608827 PGHN 96.40% 50259 3.60% 1875
VONTOBEL N CH0012335540 VONN 96.45% 30952 3.55% 1140
FORBO N CH0003541510 FORN 97.32% 2321 2.68% 64
KUONI N CH0003504856 KUNN 97.40% 7415 2.60% 198
Weatherford International N CH0038838394 WFT 97.58% 139217 2.42% 3451