Swiss export rise in April defies franc rally

* Demand in China, Hong Kong Swiss supports watch exports

* “Massive increase” in imports from Italy, Germany

* Economic recovery abroad key export driver

By Catherine Bosley

ZURICH, May 28 (BestGrowthStock) – Swiss exports rose for a second
consecutive month in April, helped by robust Asian demand for
luxury watches, which offset the potentially dampening effect of
a strong Swiss franc.

Exports rose by 3.2 percent in April from a year earlier to
15.755 billion Swiss francs ($13.6 billion), the Federal Customs
Office said on Friday. That lifted Switzerland’s merchandise
trade surplus to 2.022 billion francs, from 1.696 billion in
March.

Demand for Swiss watches was notably strong in Asia,
particularly China, in a further sign that the luxury goods
industry is holding up well as fast growth in sales to emerging
economies is offsetting subdued demand in many developed
markets.

“Again China and Hong Kong are the growth drivers. The watch
makers are a Chinese story,” said John Cox, an analyst at Kepler
Capital Markets.

Swatch Group (UHR.VX: ), which supplies the bulk of watch
parts to Swiss watchmakers including Richemont (CFR.VX: ) with
brands including Omega, Longines and Blancpain, said this week
it expects record turnover and profit this year even though
exchange rates are not in its favour. It cited particularly
strong demand in China, as well as Russia and the Middle East.
[ID:nTOE64P070]

Data on Friday from the Swiss Watch Federation showed watch
exports rose 11.5 percent in nominal terms from a year earlier,
largely thanks to demand in emerging markets.

“The data confirm the trend in exports continues to be
strong. The strong Swiss franc only plays a relatively moderate
role in this. Much more important is the economic recovery
abroad,” said Credit Suisse economist Fabian Heller.

As the euro has been pummelled by concerns about sovereign
debt in southern Europe, investors have been flocking to the
franc, which is seen as a safe haven.

The franc rose nearly 3 percent against the single currency
between April 1 and May 19, when it hit a record high just below
1.40, despite repeated intervention by the Swiss National Bank
(SNB).

“We consider 1.40 not to be dramatic, we would need a much
stronger franc to dampen exports.”

On Friday the franc was down 0.4 pct from its New York close
at 1.4286 per euro at 0835 GMT.

SNB Vice Chairman Thomas Jordan said last week that Swiss
exporters had coped comparatively well so far with a stronger
currency, adding that global demand and not the exchange rate
were key to their success. [ID:nLDE64J1XQ]

Swiss imports in April from euro zone members Germany and
Italy saw a “massive increase”, the customs office said in a
statement. The value of imports overall rose 2.3 percent in
April to 13.733 billion francs, from 12.945 billion francs a
year earlier.

Watch exports in April meanwhile were weaker than the
previous month after air traffic in Europe was disrupted by ash
cloud from an Icelandic volcano, said Cox at Kepler Capital
Markets. Underlying demand was probably stronger than the
numbers indicated because of the travel disruptions, he said.

Investing Research

(Editing by Susan Fenton)

Swiss export rise in April defies franc rally