Swatch shares drop on concern new Apple Watch may be bigger hit

Swatch Group AG shares fell as much as 3.2% on concern Switzerland’s largest watchmaker will face more competition from the latest version of the Apple Watch, which can make calls and send messages without requiring a mobile phone. 

Apple Inc unveiled Series 3 of its smartwatch on Sept 12, with prices starting at US$329 (RM1,379). Swatch shares dropped as low as 377.3 francs (RM1,648) as of 11.50am in Zurich on Sept 13. 

“The fact the new watch is untethered from the phone has the potential to be a game changer,” said Jon Cox, an analyst at Kepler Cheuvreux. “It is a fight for wrist real estate and superb functionality versus a simple quartz watch. In many cases the quartz watch is going to lose.” 

The Cupertino, California-designed smartwatch is eating most into the market share of lower- and mid-range watches, while high-end mechanical timepieces have been left unscathed, said Rene Weber, an analyst at Bank Vontobel. Swatch’s brands include its namesake US$50 (RM218) plastic watches as well as Tissot, with functions such as altimeters and compasses. Switzerland’s exports of quartz watches fell to a seven-year low of 18.5bil francs (RM80.80bil) in 2016. 

“Far from being a flash in the pan, smartwatches are bound to stay and continue to upgrade their functionality – the recently announced new Apple Watch is a case in point,” said Luca Solca, an analyst at Exane BNP Paribas. 

Other companies hardest hit by new competition from smartwatches include Swiss watchmaker Movado Group Inc, fitness-band producer Fitbit Inc and Dallas, Texas-based Fossil Group Inc. 

Richemont, some of whose watch brands command prices higher than US$10,000 (RM43,680), fell 1.5% as the Swiss company reported a gain in sales in the first five months of its fiscal year Sept 13. — Bloomberg