The Swatch Group AG

China and Switzerland have reached a new trade agreement, under which China will exempt import tariffs on 99.8% of the current value of Swiss exports, covering key goods such as watches, pharmaceuticals, and high-precision instruments. Swiss investors will also gain greater access to the Chinese market. The agreement marks a significant upgrade in trade relations between the two countries and supports shares of Swiss companies with business tied to the Chinese market, especially luxury goods makers such as Swatch Group and Richemont. China is currently Switzerland's third-largest trading partner after the European Union and the United States, with bilateral trade last year worth about 34 billion Swiss francs, or around 43 billion dollars. The new agreement also adds provisions on labor rights and the environment in a chapter on sustainability, and for the first time China has agreed to reference the Universal Declaration of Human Rights within a free trade agreement. The two countries plan to formally sign the new agreement by the end of 2026.

Kepler Cheuvreux upgraded Swatch Group to Buy from Reduce and raised its price target to CHF225 from CHF180, citing stronger-than-expected sales momentum and improving profitability. The brokerage noted local-currency sales growth has been stronger than expected, supported by the successful launch of the Royal Pop collection in the lower- and mid-tier segments, higher price points at Omega, and improving demand for Breguet. Kepler raised its earnings-per-share forecasts by about 11% for 2027-28, with revised estimates around 40% above consensus for 2026-28, and expects profitability to continue improving into 2027. The brokerage said Swatch continues to trade below book value and believes positive earnings surprises could narrow the valuation discount, with the new target price implying roughly 16 times 2028 earnings and about one times book value.

Swatch Group reported higher attributable profit in the first half despite a lower net result, as net sales grew 2.0 percent to 3.121 billion francs. Net income attributable to shareholders rose to 9 million Swiss francs, or 0.04 franc per share, from 3 million francs a year earlier, while the overall net result slipped to 16 million francs from 17 million francs. Operating profit fell to 52 million francs, representing a margin of 1.7 percent, partly due to negative currency effects and the deliberate maintenance of production capacities. The company noted strong sales acceleration in May and June, with sales up 13.1 percent at constant exchange rates and an operating margin of 8.6 percent, and projects continued growth and improved profitability in the second half of 2026.

Prada, Michael Kors, and Alaïa recorded the strongest combined digital brand rankings among soft-luxury names in the second quarter, according to Bank of America's latest Brand Leading Indicator. The indicator ranks 43 soft-luxury brands based on social media followers, online searches, and website traffic, with momentum weighted at 60% and digital presence at 40%. Prada ranked first overall, followed by Michael Kors and Alaïa, while Michael Kors led three-month momentum after Google searches surged from a low base, lifting it from 33rd place in the first quarter. Prada and Alaïa were identified as the strongest brands in the first half of 2026, maintaining consistently high positions across both quarters. Chanel showed the biggest improvement late in the period, climbing from 10th in April to first in June as interest grew around Matthieu Blazy's collection, with Alaïa and Coach ranking second and third for June. Gucci's quarterly momentum ranking improved by 20 places to sixth, supported by stronger US website traffic, online searches, and promotional events, while Saint Laurent rose five positions to 16th, though fellow Kering brand Balenciaga dropped from 13th to 35th. Among LVMH brands, Loro Piana returned to the top 10 at seventh, Louis Vuitton climbed to 10th from 28th, and Dior finished 31st after Chinese search activity weakened. Swatch led hard luxury, helped by online interest surrounding its Royal Pop pocket watch collaboration with Audemars Piguet, with Jaeger-LeCoultre and Tissot placing second and third. Digital engagement across the soft-luxury sector increased 18% year over year, marking a fifth consecutive quarter of acceleration, as Google searches rose 47%, website traffic grew 39%, and Chinese Baidu activity remained down 18%. Excluding unusually strong Google search figures, overall online activity still improved by 7 percentage points from the first quarter, supporting expectations for continued luxury demand recovery led by the US and South Korea.

Swatch is seeking $170 million in damages from Samsung in what it calls the largest-ever trademark case of its kind in the UK, accusing the South Korean electronics group of allowing digital replicas of Swatch timepieces on its smartwatches. A ruling on damages is expected soon after a trial concluded on Friday, following a 2022 finding by London's High Court that Samsung was liable for trademark infringement over third-party apps on its smartwatches. The apps enabled users to replicate popular models by Swatch-owned brands including Omega and Tissot. The case, which began in 2019 before Britain completed its exit from the European Union, also covers alleged infringement within the bloc, and the forthcoming ruling could pave the way for a parallel claim by Swatch against a Samsung subsidiary in the United States. A June 19 filing by Swatch's solicitors says the $170 million in damages is based on hypothetical licence fees across 10 Swatch brands and reflects the prestige, reputation and drawing power of the group's portfolio. Samsung called Swatch's demands extravagant and outsized in a separate filing cited by the Financial Times.