Swatch shares drop on concern over new Apple Watch

GENEVASwatch 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 Tuesday, with prices starting at US$329 (RM1,382). Swatch shares dropped as low as 377.3 francs (RM1,647.68) as of 11:50am in Zurich yesterday.

“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 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 18.5 billion francs 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, fell 1.5% as the Swiss company reported a gain in sales in the first five months of its fiscal year yesterday. — Bloomberg