Bank gives timely tip on Swatch shares

By Thomas Mulier  |   2008-7-11  |     NEWSPAPER EDITION

SWATCH Group AG, the world's biggest watch maker, fell to the lowest in 18 months in Zurich yesterday after Deutsche Bank AG stopped advising investors to buy the shares because of a luxury-goods industry slowdown.

Growth in worldwide luxury demand will weaken to 6 percent in 2009 from 7.1 percent this year, Jamie Isenwater, an analyst at Deutsche Bank in London, wrote in a research report yesterday.

Swatch, the Switzerland-based maker of Blancpain and Omega watches, and competitor Cie. Financiere Richemont SA have become more dependent on Chinese demand as United States sales slow because of a weakening economy. The Asian nation's economy has decelerated in each quarter since swelling by 11.9 percent between April and June last year, Bloomberg News said.

"The industry faces considerable risks over the next few years," Isenwater wrote.

Swatch Group fell as low as 226.5 Swiss francs (US$220). The stock fell 12.3 francs, or 5.1 percent, to 228.1 Swiss francs on the Zurich bourse, leading declines in the benchmark Swiss Market Index.