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Switzerland in sight

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1 Job market How to apply via online video. Page 27 Trouble over patent protection Roche boss Severin Schwan has trouble with the US judiciary and with competitor Novartis. Page 3 The stock market goes and goes Why political events have little effect on stocks in the long term. Page August 2016 the swiss weekly newspaper for business since No. 32 fr euro 4.80 AGGRESSIVE SHAREHOLDERS Targeting Switzerland Why more and more activist investors are chasing Swiss companies. Page 8 IN THIS ISSUE Insurance broker Knip is losing cadre and is in crisis. Company Page 12 World Economy Series The era of low interest rates has only just begun. Page 5 Free-lunch-blog Julian Niema Alamy Stock Photo Philipp Hildebrand on populists and financial markets. Opinions on page 21 Pillar 3a providers charge savers with high fees The state encourages Pillar 3a savings. Those who pay in consistently can save up to several thousand francs in taxes per year, regardless of whether they choose a 3a savings or fund account. Many providers still have preferential interest rates on their savings accounts. But the low interest rate environment is taking its toll. No institution pays more than 0.8 percent per year, and some banks no longer give any interest at all. It only seems to be a matter of time before negative interest is charged. This forces the pensioners to take higher risks, for example by choosing a fund account with a high share of shares. But while savers bear the risk, many providers shamelessly enrich themselves with high fees such as front-end loads or custody and fund management fees without risking a single franc. The average annual returns are partially eaten up completely and inexpensive index solutions are still offered cautiously. They are also expensive compared to regular index funds and ETFs. Above all, this should disturb the federal government, after all, so much money is being redistributed from savers to banks and insurance companies, even though this is not actually the intention of private retirement provision. (pm) Page 24 Tourism Brexit drives up Swiss flight tariffs for London The decision of the British at the end of June to leave the EU triggered a tourist boom. Attracted by the low rate of the pound, tourists from all over the world are increasingly traveling to the British Isles. This boom is also evident in Switzerland. Local tour operators such as Kuoni and Hotelplan report increased travel demand for England, Scotland and Wales. The trend is also affecting air travel to the English capital. Search queries for flights from Basel, Geneva and Zurich to London increased by 14 percent in the period after the Brexit decision, according to the travel search engine Kayak for the “Handelszeitung”. “That is an unusually high increase,” says Kayak Regional Director Julia Stadler. The surge in demand has consequences for ticket prices. The airlines are apparently coming to a special Brexit economy. According to the study, you can enforce higher prices. Compared to the monthly period before the Brexit decision, Kayak has determined average price increases of 41 and 23 percent from Basel and Geneva airports, and 14 percent from Zurich. "This price development can be attributed to the increased demand that generated the lower pound due to the Brexit referendum," says Stadler. (ag) Page 4 NEstlé Health becomes a top priority For the first time, Nestlé President Peter Brabeck speaks about the election of future CEO Ulf Mark Schneider. Stefan barmettler Peter Brabeck, President of the Nestlé food company, is stepping down for reasons of age in spring 2017. Even before the Austrian retires, he realigned the compass in the company. In the future, the company is to transform itself into a nutrition, health and wellness company. This realignment is underlined by the election of Ulf Mark Schneider as CEO. "We brought Schneider mainly for strategic reasons," says Brabeck in an interview. In particular, the health sector at Nestlé is to be markedly upgraded and, according to Brabeck, given "central importance". That is why the two health areas in the Health Science and Skin Health Group will in future be personally managed by CEO Schneider. Schneider had the health care company Fresenius 90 billion in sales for ten years, Nestlé reports. headed in Germany. It operates over 100 clinics and 3,000 dialysis centers, and it also sells medical devices. Nestlé now wants to benefit from this specific knowledge. Brabeck: “It's about additional know-how, that from the health industry. Those were the considerations for this CEO election. " Schneider, who has no experience in Nestlé's core business of food and consumer goods, will accompany CEO Paul Bulcke from September. From January 1st, Schneider will assume overall operational responsibility. At the 2017 Annual General Meeting, his predecessor Bulcke will take over as Chairman of the Brabeck Board of Directors. After his retirement from Nestlé, Brabeck will take care of his family office and startup investments and will remain Chairman of the Board of Formula 1 umbrella company Delta Topco. More on the subject of interviews on page 17 Founders promote the Swiss start-up place. Management Page 28 Style Volvo wants to stir up the luxury class. Page 30 Editorial department Förrlibuckstrasse 70, 8021 Zurich, telephone subscriptions Telephone advertisements Telephone AZA 8021 Zurich, 155th year advertisement

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3 handelszeitung No. August 2016 Business & Politics 3 Battle of the Giants Patent protection Roche is at the center of a heated judicial debate in the USA. Right in the middle is the rival from the other bank of the Rhine. Roche boss Schwan (left) and Novartis boss Jimenez: Not always peaceful coexistence. Photos: Chris Radcliffe / Bloomberg, Qilai Shen / Bloomberg, HZ-Montage Marc Iseli They are the giants of the Swiss pharmaceutical scene: Novartis boss Joe Jimenez and Roche boss Severin Schwan. One directs the affairs on the right bank of the Rhine, the other directs the events on the opposite side. Together they have a market capitalization of almost CHF 430 billion. The coexistence of the two pill and powder kings is still largely peaceful. While it is customary in the financial sector to take the top managers out of the competition, there is hardly any personnel damage between Novartis and Roche. The two giants quarrel in court even more rarely. And yet Novartis and Roche recently met in Washington before the Supreme Court, the highest court in the United States. The focus is on the diagnostics specialist Ariosa. The company belongs to Severin Schwan's realm. The company, based in San José, California, makes a prenatal blood test that determines the risk of Down syndrome and other genetic abnormalities. Schwan let jump over half a billion dollars for the takeover. It was the most expensive investment of 2015 in the diagnostics division and at the same time a door opener for a lucrative business area (see box). But that's only one side of it. The new daughter has led Schwan into the middle of a legal squabble. Numerous companies have filed patent lawsuits against Ariosa, including the startup Illumina, which is backed by financially strong investors such as Amazon founder Jeff Bezos and Microsoft guru Bill Gates. Most of the dust was caused by a dispute with the US company Sequenom. This tried for years to legally ban the blood test of the Roche subsidiary. With this venture, Sequenom failed in the first instance in 2013, followed by the second setback in 2015. The Americans persisted, however, and took the case to the Supreme Court. The controversial swan scare received support from Novartis, of all places. Novartis as a Third Party It's not the first time Schwan and Jimenez have crossed blades in court. In the United States, it is normal for Courant to harass one another with lawsuits. Especially in the relatively young market for biosimilars, everyone is taking everyone to court. Novartis, with its subsidiary Sandoz, is one of the leading companies in this field and is therefore often dragged before the judges by the competition. The dispute between the US pharmaceutical company Amgen and Sandoz over the blockbuster drug Enbrel is currently receiving a lot of attention. Roche appears as a joint plaintiff against the Novartis subsidiary. In the dispute between Sequenom and Ariosa, Novartis, on the other hand, hands out a good deal. The group has turned to the Supreme Court in a so-called Amicus Curiae letter. This enables the company to participate in the legal process without being a party itself. In addition to Novartis, other large corporations such as Eli Lilly, Pfizer or Microsoft have submitted such a letter, all of them beating up on their competitor Roche. The letter from Novartis is dated April 2016 and is signed by the Group's chief patent attorney, Corey Salsberg. The USA, it is said at the beginning of the submission to the US Supreme Court, is extremely important for the Basel company. Around half of sales come from 565 million. Acquisition Roche bought the US company Ariosa in 2015 for 565 million dollars. It was the biggest acquisition of the year in the diagnostics division. With the takeover, the Basel-based company has opened up the market segment for non-invasive prenatal tests. Diagnostik Ariosa sells the Harmony blood test. The test examines the risk of trisomies 13, 18 and 21. It is also available in Switzerland. The costs of around CHF 1,000 have been covered by the health insurance company since mid-2015, subject to certain conditions. Health Blood tests protect the health of both mother and child. Before their development, expectant mothers had to undergo an invasive chorionic villus or amniotic fluid test. A miscarriage occurred in around one percent of the cases. Issue in dispute The Roche blood test is based on a discovery for which a patent application was filed in 2001. At the time, a team of researchers demonstrated that fetal DNA circulates in the mother's blood at an early stage of pregnancy. from the America region, a large part of it from the USA. The country is important not only because of its size, but also because the company has several research facilities on the east and west coasts. “No question about it, the strength of the US patent system is one of the key factors behind our decision to locate our research activities here,” writes Salsberg. The verdict of the judges in the legal dispute between Ariosa and Sequenom throws a spotlight on the location, which is why Novartis is forced to take action against it. Salsberg speaks of a "systemic crisis", of a "paralyzed patent law" and of a "bleak future". He leaves no stone unturned: The 23-page argument is stirred with a large ladle. The Novartis attorney relies on two icons of US history: writer Mark Twain and founding father Thomas Jefferson. Should the US Supreme Court support the judgment of the lower courts, Novartis would only have the option of withdrawing staff from the USA or of giving up certain research activities entirely, said Salsberg. "Research companies must be careful in the future." Nic Alexakis Swiss Biotech Association warns of the consequences The threat was not heard. The US Supreme Court decided, despite the noise, not to deal with the case any further. The Supreme Court thus confirms the judgment of the lower courts of a victory for Severin Schwan, a defeat for Joe Jimenez. "We welcome the decision of the US Supreme Court," says Roche spokeswoman Ulrike Engels. "This decision is extremely problematic," says Novartis lawyer Corey Salsberg. "We care about the entire innovation ecosystem." The Swiss Biotech Association is also dissatisfied with the verdict from Washington. Its managing director Nic Alexakis has also turned to the US Supreme Court. Together with organizations from the EU, Australia, Japan and Canada, Alexakis urged that the US Supreme Court overturn the judgment of the two lower instances and is just as disgusted as Novartis. “Not a good decision,” he says of the assessment of the US judge and adds warning: “There will be an erosion of patent rights in the USA. Research companies must be careful in the future. " For Roche, the battle on the judicial front continues. Sequenom has filed lawsuits against Ariosa not only in the United States, but also in the United Kingdom and Australia. Roche spokeswoman Engels: "The proceedings are aimed at the same questions that we successfully defended in the USA." One is confident that one can also decide these cases for oneself. In the meantime, Novartis is female on the Capitol for its own point of view. There, only a few meters away from the US Supreme Court, the members of the US Congress join hands. Laws are made here. And here Novartis lobbyists are trying to enforce what did not work in court. In an informal atmosphere, some representatives of the US Congress have already expressed sympathy for the Novartis point of view, says Salsberg. The Basel dispute goes into the next round. Content NO. 32 COMPANIES & POLITICS Patents Why Roche and Novartis are in the middle of a legal battle in the USA. Page 3 Brexit The cheap pound fuels trips to England. Now the airfares are rising ... Page 4 Amazon The technology multinational relies on cloud services. Zurich should also benefit .... page 4 Endgame Our new macro series starts with the era of zero interest rates .... Page 5 Bureaucracy The Swiss SME patron Lionel Schlessinger sees red .... page 6 Activists How active Shareholders make the listed Swiss companies steamy .... page 8 SBB Why the Federal Railways have to renovate the Basel train station for millions .... page 10 Sika How the ex-president wanted to do things together with Saint-Gobain .... page 11 Knip The former Swiss flagship fintech is struggling with lousy numbers ... Page 12 Swiss Eyewear Group How a Zurich startup is lighting up the market for sunglasses ... Page 13 Markets & Opinions Interview Nestlé President Peter Brabeck about the new head of the group. ... page 17 invest shares Brexit? Was there something? Why politicians usually leave the stock market cold .... Page 22 Pension provision The product providers in particular earn money from Pillar 3a .... Page 24 Goldvreneli money advice which vintages are valuable and which are not ... Page 25 Management videos on LinkedIn Why the career network now allows moving images .... Page 27 Dream of the Swiss Valley How the Kickstart Accelerator wants to stir up the startup scene .... Page 28 style Auto Volvo brings a breath of fresh air into the luxury class: The V90 and the S90 are supposed to dominate Audi, BMW and Mercedes break .... page 30 Art Bernheimer Fine Art in Lucerne is showing Horst P. Horst's first solo exhibition in Switzerland since page 31 until September 24th Flashback Money question Shortlist Money advice Imprint Digital life Philipp Hildebrand Vice Chairman Blackrock Page 21 Urs B0chsler In silent sadness we say goodbye to our colleague Urs Bochsler . Urs died on August 2nd after a short, serious illness. He worked for twelve years as the prudent head of the Handelszeitung proofreading department. We will keep fond memories of him and his warm-hearted manner. The employees of Ringier Axel Springer Schweiz AG

4 4 Business & Politics handelszeitung No. August 2016 Free view Olympics without doping Reiner Eichenberger Everyone wants the Olympics without doping. But doping cannot be dealt with with today's penalties and bans. Even his release would not bring a solution, but fatal doping races. So what to do I represent the following: The athletes should be paid their income from prize money, advertising, government bonuses, etc. to a personal blocked account. You can receive a certain amount of this annually. If they are found doping, a portion of the credit depending on the severity of their offense will be distributed to their current and previous undoped competitors. So if, for example, a former Olympic champion is caught, graduated payments flow from his account to the second, third, and fourth athletes at the time, as well as to the athletes he beat on other important occasions. Athletes who have doped themselves are not eligible. This system, which can be easily managed electronically, provides effective incentives against doping: Firstly, doping sinners no longer only lose the direct income from their successes under doping, but part of their total income. Second, the current "Whoever is convicted of doping will lose part of their credit." Income depends less on short-term success and thus on doping. Thirdly, the lifetime income of the undoped increases thanks to the remittances of the doping offenders. Fourth, it is worthwhile for athletes to uncover the doping of others and provide information about it. Thanks to the strong anti-doping incentives, today's unproductive penalties such as personal and collective bans could be reduced. Of course, not all doping problems would be resolved, especially not in sports where hardly any money flows. However, the proposal should not be measured against an unrealistic ideal, but against today's reality. One example are misjudgments. This will also be available with the new model. But they would be less of a problem than they are today. If an athlete is banned for a long time because of a wrong judgment, the injustice can hardly be made good if the mistake is later recognized.The financial compensation represented here, however, can easily be reversed. Plane over London: Brexit special boom for the airlines. Big surcharges for airlines After the Brexit decision, travel bookings for England increased. The airfares as well. andreas güntert When the outcome of the Brexit referendum became known in the early morning of June 24th, it sent shock waves around the planet. The fact that the British want to turn their backs on the EU sent stock exchanges downhill and tore the pound exchange rate down. The currency melt also forced Swiss tour operators to act: "On June 25, we adjusted our prices," says Hotelplan spokeswoman Prisca Huguenin. The eight-day “Beautiful Southwest” rental car tour from Bristol, for example, a classic, was still available for CHF 1,055 per person until June 24th. Since June 25th, it has been CHF 900. The fact that tour operators pass on price gains immediately is good news for Swiss consumers. And it did not go unnoticed by customers. Unexpectedly and almost overnight, the pound zone moved way up in the Swiss travel menu. "Since Brexit, we have mainly received more short-term bookings," says Hotelplan-Ms. Huguenin. This is also evident at Kuoni Switzerland, said spokesman Marcel Schlatter: "We have seen a significantly stronger demand since the Brexit decision." While trips to London are primarily in demand at Kuoni, individually designed round trips and active holidays run significantly better at Hotelplan. The post-Brexit demand pull is evident worldwide. The cheap pound boosts the tourist business on the islands enormously. The British travel wholesaler Tourico Holidays, for example, expects the number of overnight stays in the UK to increase by more than 30 percent in the second half of 2016 compared to the previous year. The boom is also being fueled by the fact that the lower pound exchange rate has made tourist ancillary services such as gastronomy, shopping and entry to attractions cheaper. Reverse midsummer trend Contrary to the more favorable price conditions on the islands, however, the airfares have increased. This is shown by the figures that the travel search engine Kayak determined for the “Handelszeitung”. At the subsidiary of the US American The Priceline Group, the offered average airline prices from Basel, Geneva and Zurich to London have been analyzed once for the month before the Brexit decision and once for the month after. The result: prices from all three Swiss airports have risen by a double-digit percentage. At 14 percent, a little less in Zurich, with 23 and 41 percent, respectively, much stronger in Geneva and Basel. The airlines, especially the low-cost providers, appear to be experiencing a special Brexit boom due to the British boom. The fact that prices rose from Basel, Geneva and Zurich to London in the middle of summer 2016 is an “unusual development”, says Julia Stadler, Regional Manager for Germany, Austria, Switzerland and the Netherlands at Kayak. As a rule, airfares on these routes would fall in July because fewer business trips to London are made in midsummer. The fact that the price situation developed exactly the other way around in the summer of 2016 is due to the unexpected pull of Cool (and cheap) Britannia: “This price development is due to the increased demand that Brexit made prices rise . Development of average flight prices in 2016 one month before and one month after Brexit in% Zurich London Geneva London Basel London source: kayak British pound in francs TeleTrader.com Publisher generated lower pounds due to the Brexit referendum. " For Swiss travel fun that means: You can benefit from better price conditions on the islands (if there shouldn't suddenly be usury in the local currency), but the journey to the English capital has become more expensive. London boom is likely to continue The pull is likely to continue, says Kuoni Switzerland spokesman Schlatter: "We assume that this trend will continue to accentuate over the autumn and winter months." For the industry this is positive news not only for the airlines, which have to live with notoriously low profit margins, but also for the tour operators themselves, says Schlatter: “London is clearly one of the winners. Good news in times when city trips have generally lost popularity. " franckreporter / istockphoto International sports organizations could prescribe the proposal in general. But it would be even more elegant and effective to introduce it as a voluntary “no dope” certificate. Especially when not all athletes and countries are forced to participate, those who enter into a corresponding contract with the certification body can signal far more credibly than today that they are not doped. The “no dope” athletes could be specially marked in the ranking lists and their own medals could be awarded to the best. This would make them much more attractive for viewers, advertisers and sponsors, even if or precisely because they lag a little behind. This column alternates between “Handelszeitung” chief economist Simon Schmid, “Handelszeitung” author Urs Paul Engeler and Reiner Eichenberger, professor of finance and economic policy at the University of Freiburg. Free view All column articles on the Internet: handelszeitung.ch/freiesicht Dance in the clouds Amazon The cloud computing business for companies is flourishing. The role of Switzerland is becoming more and more important. bernhard fischer Amazon is working on another data center in Europe, Switzerland. The aim is to expand the range of outsourced IT services for corporate customers in Europe. The demand for software-based management of data, booking systems and the entire accounting of a company can be handled worldwide via the mail-order company's cloud services. In Switzerland, Amazon is now setting the pace with this offer. On July 20, the internet retailer founded Amazon Jeff Bezos to expand its cloud services. Amazon boss Jeff Bezos is now making around 8 billion dollars with cloud services from Amazon Web Services. According to Bezos, it should even be $ 10 billion at the end of 2016. Data Services based in Zurich. It is the second company set up in Switzerland within a year. In September 2015, the online retailer opened an office for Amazon Web Services (AWS), also based in Zurich. That was the starting shot for Amazon's data cloud in Switzerland for the use and analysis of large amounts of data up to business applications for companies. Some of the best-known Swiss companies are already AWS customers, such as the industrial company Endress + Hauser, Novartis and NZZ. The extended services are not only offered to customers in Switzerland, but throughout Europe. With the expansion, however, the Zurich location will play an increasingly important role. The rise of Switzerland to a regional location is not ruled out. "Currently, AWS customers can choose from 13 regions," says Amazon spokesman Robert Belle. Roughly speaking, Amazon speaks of a region when the location comprises several data centers, sometimes up to a dozen or more. That could also mean data centers in Switzerland. Amazon does not want to reveal how many employees there will be in this country. In Frankfurt there should be 130 employees by the end of the year. Fourth regional location The reason for the expansion in Switzerland is the growing customer base as well as the protection against data loss. If one data center fails as a result of floods or earthquakes, another can step in. If the Zurich branches were upgraded to regional locations, this would be the fourth of the US group in Europe, alongside Frankfurt, Dublin and Great Britain. The latter will be ready in 2016/2017.

5 handelszeitung No. August 2016 Business & Politics 5 Long march towards zero yields on ten-year government bonds, in percent 10 8 Germany USA Switzerland Source: Bloomberg, SNB ECB tower in Frankfurt: The European Central Bank's low interest rate policy expresses the steady downward trend in interest rates. Jean-Peter Boening / Leif / Keystone Frozen at zero interest rates Banks and investors are threatened with a decade-long era of low returns. A rethink is needed when it comes to pensions. Simon Schmid counterfeiters! Sorcerer's apprentices! Expropriators of savers! Central bankers like Mario Draghi have recently received a lot of criticism. The main reproach to the monetary authorities concerns the interest: The savings in the bank no longer yields any income. An end to the zero interest rate policy is demanded accordingly. The frustration is understandable. But the criticism of Draghi and Co. has a catch: the central banks are only to a limited extent to blame for the low returns on the capital market. This becomes clear when you look at the last few decades in fast motion (see graphic). Then it turns out that the decline in yields began long before the financial crisis and the zero interest rate policy. At the beginning of the 1990s, US or German government bonds with a ten-year term still yielded 9 percent. In the case of the “Confederates” it was almost 7 percent. However, even in the run-up to the financial crisis, these yields had dropped significantly. 3 to 5 percent was still offered for ten-year government bonds in the mid-noughties. After the crisis, the fall continued to zero to 2 percent, the yields of Swiss Confederates even fell below zero recently. However, according to economists, monetary policy only played a minor role. "Perhaps a third of the fall in interest rates since the financial crisis is due to the central banks," says Jeremy Lawson, chief economist at British asset manager Standard Life Investments. "The loose monetary policy is more of a symptom than a cause of the low returns on the financial market." A whole cocktail of factors If not monetary policy, then what caused interest rates to fall? One of the most detailed studies on this was published by researchers at the Bank of England. According to this, two main trends are responsible for the low interest rates. First: There was more savings on the financial market. Second: there was less demand for investment. These two changes resulted in a lower equilibrium interest rate globally. This interest rate, which brings the supply and demand of savings in line with one another 4.5 percent real interest rate decline since 1980, fell over the last 30 years by a total of 4.5 percentage points in real terms, i.e. after deducting inflation (which also decreased in the same period ). Just under one of these 4.5 percentage points can be explained by demographics (many working baby boomers wanted to save a lot of money), just under half a percentage point with increased inequality (rich households save more than poor people), just under a quarter percentage point with globalization (the trade surpluses from emerging countries flowed back to the West as savings). That already makes a good 1.5 percentage points. Half a percentage point was also due to the lower prices of capital goods (dot-com companies need less capital than locomotive factories), just under a quarter percentage point due to lower public investments (less infrastructure was built) and one percentage point was due to a higher need for security on the part of investors (secure government bonds were specifically asked). That adds up to another 1.5 percentage points. Finally, another percentage point with the endgame on the world economy series. Eight years after the financial crisis, the economy is still stalling. The industrialized countries face profound, unsolved problems. In a five-part series, the “Handelszeitung” sheds light on the causes and ways out of the misery. Part 1: Low interest rates Part 2: High national debt Part 3: The single currency Part 4: Social inequality Part 5: Globalization creates economic growth that has slowed compared to the post-war era (less growth means that the pot of company profits that is distributed to savers can grow less rapidly). Half a percentage point remains unexplained (an indication of the activity of the central banks). The list shows that there is a complex network of different causes behind the low interest rates. However, the conclusion of the study is clear: A significant change in the equilibrium interest rate is unlikely in the foreseeable future. Because most of the driving forces behind low interest rates are not cyclical, but structural in nature. The authors estimate that the neutral real interest rate, which is currently around zero percent, will "perhaps level off at 1 percent or just below" over the next two decades. Economist Jeremy Lawson thinks this is plausible. Especially since, in his opinion, there is little evidence in the short term that the major central banks will soon change their course. "The ECB will probably buy bonds on the market well into 2018," he says, referring to the European Central Bank's quantitative easing program. This was announced in January 2015 and should originally have run until autumn 2016. As a result of Brexit, the Bank of England has just lowered its key interest rate and is holding out the prospect of further measures. The Bank of Japan also continues to buy securities on the market. Meanwhile, the US Federal Reserve is hesitant to raise its key interest rate away from zero towards the 3 percent, which until recently was still a target. Back to the 1960s It has now been eight years since the financial crisis. But interest rates remain frozen at zero. Another fact speaks in favor of the fact that nothing essential in this constellation will change: the high debts. The big industrial nations are in the chalk with around 100 percent of GDP. From a historical point of view, this is almost a guarantee that a significant rise in real interest rates will not be tolerated, because otherwise the interest burden on public budgets will rise beyond tolerable levels. "In major economic or political crises, the monetary and fiscal authorities usually pulled together," says economic historian Niall Ferguson in a study. Specifically, his observations show that central banks in heavily indebted countries have always prevented a sharp rise in interest rates. In these circumstances, it was part of their policy to let their balance sheets shrink very slowly. In other words, they rarely sold the government bonds they had previously bought straight away because this would have put upward pressure on interest rates. The history of the post-war period has another lesson in store: prolonged periods of low interest rates are not all that rare. Federal bonds, for example, yielded significantly less than 1 percent real return in the 1950s and 1960s (see chart). Other industrialized countries even had negative real bond yields after deducting inflation, and this over a longer period of time. Seen in this way, today's situation is not really an exceptional case. What is unusual from this perspective are the high, risk-free returns that investors were able to achieve on the capital market in the 1990s and 2000s (more on this in Part 2 of the series). Saving for old age is becoming more demanding If interest rates remain low, the main challenge is old-age provision. Especially the 2nd pillar, because it depends less than the 1st pillar on domestic economic growth and more on global conditions on the financial market. The high returns of 6 to 8 percent that local pension funds generated in the years 2012 to 2014 could have been the last rebellion before a lean era. The returns for 2015 and 2016 give a foretaste of the new reality: zero to 2 percent. The provision will have to adapt to the new era. If retirement assets grow less quickly, there are three options: higher savings contributions, lower pensions or work beyond the age of 65. If it is to work financially, there have to be cutbacks somewhere. The analyzes of the low interest rate environment show that even a Mario Draghi cannot change this dynamic. Free-lunch-blog In detail: The Bank of England study on the causes of low interest rates: handelszeitung.ch/tiefzinsen} Low interest rates How did the problem arise? Various factors have contributed to the decline in real interest rates since the early 1980s. The most important of these: lower growth rates in industrialized countries, the high propensity to save in demographically aging countries, unevenly distributed incomes. In addition, there is a flood of savings from emerging countries and a decline in investment. The loose monetary policy of the central banks also drove interest rates down. What are the solutions? In the next 15 years, interest rates are unlikely to rise sharply “by themselves”, since no rapid reversal is to be expected in trends such as demographics. It would be all the more important for the industrialized countries to stimulate growth. In the short term, public investments are in the foreground. In the long term, structural reforms are imperative. Only when the economy grows and becomes more productive can interest rates rise again a little. Who will bear the costs? Low interest rates affect professional and private old-age provision and, insofar as they are due to low growth, also the AHV. Cuts in the amount of pensions will be necessary if people are not willing to work longer. In addition, low interest rates are also depressing banks' profits. This applies to the mortgage business as well as to asset management. Historic exceptional years Inflation-adjusted yield on ten-year government bonds, in percent Switzerland USA 1 60s 70s 80s 90s 0s 10s current Source: St. Louis Fred, SNB, Bloomberg

6 6 Company & Politics He sees red when it comes to laws Lionel Schlessinger and his company mix colors for the whole world.If the SME boss thinks of the Swiss bureaucracy, the blood pressure rises. Flavian Cajacob Employees and bosses can still throw colored powder at each other in the colorful company brochure. The entrepreneur Lionel Schlessinger is definitely no longer laughing. "The development in this country is going in the wrong direction," says the 51-year-old and strides through the halls of his Monopol Colors in Fislisbach AG. "Instead of creating framework conditions that enable us SMEs to be productive and innovative, the state is constantly issuing new laws and regulations that prevent precisely this." Schlessinger is not alone in this opinion. The “decline of Switzerland as an industrial location” is repeated like a mantra by SMEs. The fear of the return coach This is blamed on the one hand on the strength of the franc, on the other hand by politics, authorities and administration. While the course of the National Bank is quickly branded, entrepreneurs prefer to hold back when it comes to publicly criticizing those who enact laws, implement them and ultimately monitor compliance. The fear of pulling in the return coach at the next best opportunity is too great. Lionel Schlessinger is different. The change in the minimum size for a handrail has brought the barrel to overflowing for him. Now he's looking for the public. And hopes that many SMEs will do the same. In order to put an end to the "madness of the authorities," as he calls it. «The employment figures in industry are now below the level of At the same time, the number of employees in the administration has risen by over 40 percent. That is a fatal development. " Schlessinger pauses at the foot of a small staircase and grabs the handrail! «In 2002 this employee access was removed by the factory inspector. Its successor recently demanded that the handrail be raised from 90 to 110 centimeters. On the grounds that people have grown in the meantime. " The Aargauer takes a deep breath and thinks that the tone is dipped in the deepest sarcasm: display

7 handelszeitung No. August Color game: Lionel Schlessinger has his employees powdered. "A plus of 20 centimeters in body length in 14 years of respect!" A few steps further, Schlessinger brakes again abruptly, this time in front of an emergency exit. “Last year we received a visit not only from the factory inspector, but also from Suva. Both Jürg Waldmeier authorities have given us totally different target distances at which the escape routes must be attached. Nobody talks to the other, and the entrepreneur pays the bill in the end. " Color for the Roche Tower In his office, the company boss, who is also President of the Association of the Swiss Paint and Paint Industry and also has a seat in the Swiss Chamber of Commerce, turns on the video player. In mid-March, in a report on the news program “10vor10”, he vented his displeasure with the conditions at the Swiss industrial site, with the lame politics and with what he thought were too many regulations. “The next day the Sturm phone rang: colleagues, strangers, entrepreneurs, even a farmer's wife. And they all told me: That's exactly how it is and much worse! " Schlessinger took over Monopol from his father in 1991. He, in turn, had built up the company in the post-war years, and in the course of the 1950s the trading company became a production company. Today Monopol Colors is involved wherever high-quality paints and varnishes are in demand. And that worldwide. The prestigious projects include the Roche Tower (Building 1) in Basel, the Nespresso factory, Zurich Airport, the Mercedes-Benz Museum in Stuttgart, the new hospital in Vigo, Spain, the Central Station Arnhem (NL) and the City Airport of Panama City. In the worldwide unique Fislisbacher Color Lab, in which colors can be mixed together according to one's own taste, the crème de la crème of the international architecture scene goes in and out: Sir Norman "You have to withdraw funds from officials, otherwise there will be more and more laws." Lionel Schlessinger owner Monopol AG Foster, for example, Luis Vidal or the people from Coop Himmelb (l) au. 50 people are employed at the Fislisbach site near Baden. Once again, twice as many employees in India and Kenya ensure supplies on the Asian and East African markets as well as in the Near and Middle East. «We don't import anything. On the contrary: we manufacture certain products exclusively in Switzerland and then export them to future markets, ”emphasizes the boss. Future markets. Switzerland and Europe were no longer one of them. It rumbles and hisses, stirs and mixes in the workshop. State-of-the-art equipment is used in production Tons of paint was mixed by Monopol in the last year alone. Color tones are stored in the system. The raw materials are imported from the EU and are in turn subject to the EU chemicals regulation (REACH) introduced in 2007. This is an incomprehensible duplication in times of bilateral solutions, says Schlessinger and shakes his head. The SMEs would have to do the work again. “At least two man-months have to be spent on clarifications, the operation will cost our company francs. Money that is then missing for production and innovation. " The entrepreneur is gripped by holy wrath when he comes to talk about laws and regulations. His demand: “You have to withdraw the funds from the officials. The more employees an administration has, the higher the number of new laws. In turn, the more officials it takes to check them. " “I can't do the Minder” inevitably one feels reminded of Thomas Minder at Schlessinger, the mouthwash producer and father of the “rip-off initiative”. At first, Minder broke his collar, then he got into politics, today he sits on the Council of States for the canton of Schaffhausen. And Schlessinger? He waves it away. “I can't do the minder, I have to run a company with three locations. If I got into politics, business would automatically suffer as a result. I don't risk that. " Forest in the thicket So he'd rather keep his fist in the sack, right? The graduate in business administration shrugs his shoulder. “I actually don't have a specific solution. But the regulatory madness has to stop. " What particularly struck Schlessinger: "Nine out of ten laws and ordinances are enacted by the Federal Council and the authorities, not even by the parliament that we elect." If one wants to strengthen Switzerland as a business location again, it is of central importance that an existing one is deleted when a new law comes into force. "Or even better, two of them!" Adds Lionel Schlessinger and himself considers allowing civil disobedience to prevail in the case of regulations that seem senseless to him. "But actually it only takes one thing to get out of this vortex that is slowly but surely pulling Switzerland down." He taps his forehead: "Common sense." display

8 8 Focus on activist shareholders You are smart and know exactly where the shoe pinches with companies. With a lot of know-how, investors take the carpet floor to the task. With eagle eyes on the foray Shareholder campaigns in Europe Number of public campaigns per year * * YTD (until May 2016) Source: Activist Insight 120 billion dollars This is how much fixed assets were in activist hedge funds at the end of 2014 according to the HFR Industry Reports. According to the HRF, the activist fund managers achieved an average return of 13.3 percent over the past three years. Sven Millischer The showdown takes place in front of the most beautiful scenery. On the shores of Lake Lucerne, the listed cable company Komax invites you to its general assembly in mid-May. But the chic culture and congress center in Lucerne does not want to create a feel-good atmosphere. Komax has a new major shareholder, and he is putting pressure on the board and management. The holding company Veraison wants to place its informants in the Komax VR with a good 5 percent (see interview on the right). Veraison co-founder Gregor Greber is involved in the general meeting of the Lucerne Small Cap with a stick and a carrot. One expects “goals and a timetable” from the tour. The share is "clearly undervalued". In return, they want to be prepared not only to “demand responsibility, but also to share it”. But Komax President Beat Kälin lets the Zurich active owners drain in advance. Veraisons VR candidates seasoned industry captains are not even invited to preliminary talks. No need, according to the Komax headquarters in Dierikon. The fundamental opposition seems to be bearing fruit. Veraison can only win a fifth of the votes for her VR plans, including those of the co-activists of Teleios Capital (see box below). The attack on a long-term VR from Komax also fails. What seems like a bitter defeat is actually a stage win for Veraison. The AGM increased the voting right restriction from 5 to 15 percent. Veraison can therefore expand her Komax position with full voting power. Greber's vote, "We are convinced: when the time comes, advice comes" therefore acts like a threat. Especially since the next battlefield has already been ordered. This month the Komax management presents its new strategy. A certain Americanization The episode at the cable company is an example of how activist investors in Switzerland are eagerly on the prowl. You start out wanting to change a lot with little capital and usually rely on thorough analyzes. Management has to leave its comfort zone and face these active owners. In the middle segment in particular, activist investors are increasingly present in this country, says Martin Blom, CFO of the Langenthal-based machine manufacturer Mikron, where Veraison is also invested. Some of the activists would act briskly and would like to see their capital increased. "So up to a certain extent one can speak of an Americanization," says the Mikron CFO and emphasizes at the same time that the contacts with Veraison have so far been "characterized by mutual respect". Blom's qualitative findings are supported by numbers. Whether RBR at Gategroup, Teleios at Vögele or Cevian at ABB, the number of activist engagements in listed local companies has been increasing steadily for years (see number box). Switzerland is therefore in good company. "2015 was the most important year so far for shareholder activism in Europe," says Josh Black from British industry service Activist Insight. The public campaigns by active investors are only the tip of the iceberg. The US investment bank J. P. Morgan estimates that half of all activist interventions are never made public. The figure corresponds to the statements of an investment banker who advises company executives who are targeted by “active shareholders”. "On the old continent, quiet persuasion usually does more than just pillory the management in a media-effective manner," says the London-based banker. Anglo-Saxon “pure blood” activists like Elliott or Laxey, who are not very squeamish, had to “In Switzerland, people don't like to step into the deep end. Activist investors use this and insist on change. " Martin Blom CFO, Mikron apologize. They came up with their aggressive, sometimes personal attacks against Actelion and Implenia managers. The remaining shareholders refused to follow the activists. Finally, the Anglo-Saxons left, exasperated. The most recent frontal attack against the Gategroup leadership around President Andreas Schmid by the local hedge fund RBR caused a lot of displeasure (see box below). RBR boss Rudolf Bohli is still on the public campaign: "I would criticize the Gategroup leadership so sharply again." He was convinced of the intention and the procedure. At the same time, the hedge fund manager sees huge potential for activist investors in Switzerland. There are many badly run companies. «The shareholder and his interests are hardly represented. The board of directors is solely pursuing its own intentions. " Activists for corporations can be quite cathartic: “In Switzerland, people don't like to step into the deep end. The companies are agile on a small scale, but they take time for the big, strategic throws, ”says Martin Blom. Activist investors would use this and “insist on change”. Continental European blueprint The commitment of Cevian Capital to ABB is exemplary. With their well-founded input, the financially strong activists around the two founders Lars Förberg and Christer Gardell at least moved the ABB management to rethink the architecture of the widely ramified industrial conglomerate. The result of this portfolio review is still pending. The structured approach of the Swedes nevertheless forms the blueprint for activism with continental European characteristics. It takes months, if not years, to analyze the target company before Cevian invests: Suppliers, managers, customers - they are all questioned dozens of times. No financial metric escapes the careful Swedes. What at the end of the day is a multi-hundred-page strategy report has a sharpness of facts that, as a rule, even the carpet floor cannot escape. Rather, the quality rubs off. "If Cevian is on the board, the other board members are also better prepared," says an expert on Sweden. In addition to the power of the factual, their alliance policy is typical of the activists from the far north: "Cevian never joins without the approval of the major or anchor shareholders." At ABB, this is the Wallenberg family, who support or at least tolerate Cevian's fresh ideas. It is this succession of (institutional) large investors and fund houses that smaller Swiss activists first have to develop in order to develop the corresponding capital leverage. "In principle, we would have been prepared to expand our group, but the institutional groups did not want to be involved," says Gategroup activist Bohli in retrospect. In the low-yield environment in particular, however, the pressure to justify fund and pension fund managers is increasing. They have to take a stand to justify their management fees. However, it is still difficult for activists in Europe to get hold of capital. 75 percent of the Cevian billions come from US pension funds. There, the investment style of the active investor is better understood, says Veraison co-founder Valentin Chapero. This basic knowledge is still lacking in Switzerland. "Insurance companies and pension funds in particular, but also family offices, which have a long investment horizon, should really love our approach." Because Veraison's value creation agenda in the target company is designed for several years. Or as co-founder Greber likes to say: When the time comes, advice will come. The most important activists in Switzerland Hedge funds on the Zugerberg flying visit From Walchwil on Lake Zug, Teleios Capital has been targeting listed small and mid caps with a market capitalization of less than 3 billion euros across Europe for two and a half years. In Switzerland, “perfect capital” was first noticed during a financial flying visit to Charles Vögele. Last winter, Teleios briefly held a good 15 percent of the ailing fashion retailer. For several weeks, the activists wrestled behind the scenes with the Vögele management team around the Bern hedge fund manager Igor Kuzniar over the strategy. Then Teleios pulled the rip cord. The fund, which is endowed with over 100 million francs, is currently active primarily at the auto parts supplier Kongsberg. They also hold shares in Komax. Bohli's one-man-show campaign Little capital, a lot of activism is the recipe of the RBR Capital Adivsors from Zurich's Gold Coast. The hedge fund around founder Rudolf Bohli declared war on the management of the airline caterer Gategroup in 2014 after discussions with the management had not been fruitful. In the meantime, RBR held up to 14 percent of Gategroup and at the same time orchestrated a campaign against its president ("Andreas Schmid is no longer acceptable"). In the style of the Anglo-Saxons, the hedge fund emphasized its demands on their own website. Although RBR failed, the Gategroup share price development of over 100 percent since the end of 2014 is impressive. Whether despite or because of Bohli's activism remains to be seen. Successful quiet people Steady drops The active shareholders of Veraison have been around for barely a year and a half. But the powerful troop around financier Gregor Greber (ex-zcapital and Bank am Bellevue) and the industrialist Valentin Chapero (ex-sonova and Siemens) has already collected a good 300 million francs in capital from the wealthy and institutional. Veraison actively contributes their money to local small and mid caps and promises dream returns. In order to close the “potential gap” (chapero) in the companies, Veraison tries to take a seat on the board of directors (Ascom, Goldbach, Komax) or to enforce statutory changes (Mikron). Like Cevian, Veraison puts pressure on management without running aggressive public campaigns.

9 Activists in Europe want bosses away Reasons for campaigns in percent 11 Change to board or management 10 Change of strategy Resistance to M&A plans 7 51 Restructuring 6 Compensation 4 Higher dividends 4 Sale of company divestments 3 Source: Morgan Stanley Number of companies in the activist focus Europe Switzerland source: Activist Insight Focus on financial service providers Investment goals (in percent, by sector) 34 Small caps predominate Size of target companies (market capitalization) Share in percent Finance Service providers Consumer goods Technology Unlisted 50 billion eurosEuro Source: Activist Insight Source: Activist Insight handelszeitung No. August «Our main weapons are facts that we share with the company» Valentin Chapero The co-founder and partner of the holding company Veraison on the power of arguments, in-depth analyzes and various levers for value creation. Your investment company Veraison is considered an activist investor. Can you do anything with the label? Valentin Chapero: We don't call ourselves that, we see ourselves as active shareholders. That might seem like splitting hairs. But our investment philosophy differs significantly from the aggressive "activist" Anglo-Saxon character. In what way? We see ourselves as a hybrid between entrepreneur and investor. Veraison examines the listed companies in advance like a private equity company. We each carry out an extensive and detailed risk assessment as an outsider and make possible control and value levers in the company before we finally deploy the capital. What does the process look like up to the investment? The lead time for a company is two to six months in which we talk to customers, suppliers and competitors. That can be a good 20 to 50 interviews. So it is a comprehensive outside-in analysis, similar to an investment company that wants to buy an over-the-counter company. And then? Before investing, we talk to the board of directors and top management to get a feel for how welcome we are. We usually present our analysis in a presentation. What Veraison is presenting would cost the company up to CHF 1 million if an external consultant provided it. Your recipe may be free. But Veraison demands influence. That's true. But we're not going to do this with a crowbar. Our main weapons are perceptions of the capital market and facts that we share with management and the board of directors in an open dialogue. How does top management react to your suggestions? There is a whole range: from broad approval to a clear indication that one currently has other priorities. With such a presentation, we are primarily concerned that our ideas and operational suggestions are at least understood by management. Valentin Chapero is invested in Leonteq, Mikron, Komax and Ascom, among others. frans lemmens / alamy Stock Photo What is your goal? We want the company to be valued on the stock exchange in line with its intrinsic value. The reasons for the discount can be varied. For example, that the company moved away from its successful core business and got bogged down. Or that the company is simply misunderstood by the capital market. Ultimately, the aim is always to close the potential gap with operational or other measures and to achieve future increases in value. This is also in the company's interest. Is a seat on the board of directors compulsory or optional? The “boardseat” is just part of the kit. We only aim for one seat at a time if this actually brings added value for society or our investors. For example at Ascom, where I've been on the top board since this year. With my proven professional experience in medtech and telecommunications, I can ideally support the company in its transformation into a mobile healthcare provider. How long does Veraison sit on top management's necks? Our time commitment is not limited. Normally we aim for a 3 to a maximum of 20 percent equity stake in a company. Thanks to our long-term capital commitments on the part of our investors, we can definitely act as an institutional anchor shareholder. Style-shaping Swedes Razor Sharp The two Cevian founders Lars Förberg and Christer Gardell have Europeanized Anglo-Saxon shareholder activism. Instead of media bustle, Cevian has been relying on razor-sharp, fact-based company analyzes since 2002. Before the Swedes take hundreds of millions of euros into their hands for a large-cap investment, the respective group is put through its paces by teams over a period of months. This is also the case with the Swiss groups ABB (5%) and Panalpina (12%), where Cevian is always looking for an informal exchange with the major shareholders Wallenberg and the Ernst Göhner Foundation. This silent influence carries weight. Cevian manages over 14 billion euros in institutional funds. Active finance knight Trennbank Eric Knight, domiciled in the tax haven of Monaco, and his activist fund Knight Vinke have been hooked on UBS since 2013. Knight publicly and loudly demanded that UBS should finally spin off its investment bank and concentrate on asset management. With $ 1.5 billion in assets, Knight Vinke cannot develop voting rights levers in European large caps, but has to hope for followers. The fund never represented more than 1 percent of the capital at UBS. Even if Knight fell on deaf ears with his ideas at Ermotti & Co., he was able to gild his position: the return at the end of the exit was 95.8 percent. Now he is considering returning to UBS. Nevertheless, Veraison needs the success rate of other major investors in order to make a difference. How do institutions react to their active nature? Usually benevolent. Because it is also in the interests of large pension funds or fund managers that the value of a company is increased in the long term. But we don't do an ox tour with other investors or go public with our improvement agenda. Only to push through our agenda at a general meeting against the will of management. Rather, we rely on the power of our arguments and the free play of shareholder democracy. At the Lucerne-based cable processor Komax, Veraison, as the largest shareholder at this year's AGM, was dismissed with all of her requests. In the case of Komax, it was indeed a bit unfortunate. Unfortunately, the candidates we proposed for the Board of Directors were never considered by the Board at all. We could not understand this attitude. However, other value enhancement levers have been implemented. Interview: Sven Millischer

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