Back to basics

THE Swiss National Bank is such a party spoiler. It moved suddenly in January to unpeg the Swiss franc from the euro on the day just before half the Swiss watch industry opened the doors to one of the two big annual watch shows in Switzerland to unveil their new creations. And it was a special occasion this year too for that watch fair, the Salon International de la Haute Horlogerie in Geneva (SIHH); it was celebrating its 25th birthday. The central bank's action sent the Swiss currency surging, especially against the euro, making Swiss exports more expensive. Shipments of Swiss timepieces dipped 1.2 per cent in January-July compared to a year ago, the first drop since the 2009 recession. Exports to Hong Kong, the biggest market, plunged 20.8 per cent.

The stronger Swiss currency took a big bite out of earnings - by over a third in net terms for the fiscal year ended March 31 - of the Richemont Group, which owns 11 of the 16 brands on show at SIHH. Its chief Swiss rival, the Swatch Group, blamed the Swiss franc shock, along with negative interest, for the 19.4 per cent tumble in its after-tax income for the first half of 2015.

But the rise in the Swiss currency could not have stopped where luxury timepieces were already heading. Swiss watchmakers, who supply nearly all the world's luxury timepieces, could re-adjust output and prices but were too late to alter the watch collections rolled out in SIHH and in BaselWorld two months after. In any case, why would they want to? The Swiss franc shock would only reinforce the forces that have come to shape the trends in the watch world in recent years.