ZURICH, April 27 (Reuters) - Switzerland's watch industry
exports rose in March for the first time since June 2015 as the
Hong Kong market ended 25 months of declines.
Swiss watch exports rose 7.5 percent in nominal terms to 1.6
billion Swiss francs ($1.61 billion), Swiss customs data showed
"March exports are pointing definitely in the right
direction after weakness in January and February," Zuercher
Kantonalbank analyst Patrik Schwendimann said in a note.
The results were helped by two additional trading days as
well as a particularly weak comparison in the prior-year month.
Watchmakers such as Swatch and Richemont
have been suffering ever since China's government took measures
to crack down on gifts for favours about four years ago.
Political protests in Hong Kong in 2014 worsened the problem.
The reversal, which wrong-footed watchmakers and retailers,
has been exacerbated by weaker demand in tourism hot spots in
Europe and high costs triggered by a strong Swiss franc.
But in March, exports to Hong Kong, where mainland Chinese
used to buy luxury goods due to lower taxes, reversed
double-digit falls, increasing 18.1 percent over the year
before, the Federation of the Swiss Watch Industry said.
The mid-price segment -- an important part of Swatch Group's
business -- saw the greatest improvement across all markets.
Timepieces exported for between 200 and 500 francs, which retail
at a somewhat higher price point, grew more than 20 percent.
"We continue to expect that Swatch Group will find its way
back into revenue growth in 2017, thanks among other things to
the important Chinese market," Schwendimann said, maintaining
its "overweight" rating on the stock.
UBS had upgraded Swatch to "buy" on Wednesday.
Even as trade was rising, watchmakers told Reuters at an
industry fair in March they expect the market to stay
challenging this year.
"It is going to be a patchy recovery -– sell out trends are
improving but there is still plenty of stock in the channels,"
Kepler Cheuvreux analyst Jon Cox said on Thursday.
Vontobel analyst Rene Weber said he expected lower growth in
April and May than seen in March.
"But positive growth should now continue to reach our
expectation for plus-1 percent for 2017," he said.
($1 = 0.9932 Swiss francs)
(Reporting by Brenna Hughes Neghaiwi and Ruppert