The Wall Street Journal-20080117-EuroLinks Daily View- Overseas Havens From U-S- Stocks May Be Unsafe- Online edition
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EuroLinks Daily View: Overseas Havens From U.S. Stocks May Be Unsafe; Online edition
As the U.S. economy slows, investors have turned to fast-growing markets, such as China, India and Brazil. But the payoff might not go as planned. Investors are wondering whether these emerging markets can continue to grow even as the U.S. slows. The larger issue is that even if these economies prove resilient, the same may not be true of their stock markets, which instead of becoming less linked to the U.S. are actually becoming more connected.
Asia shares dropped yesterday as worries about a U.S. recession increased. The benchmark indexes in Korea, Thailand, Turkey, and Brazil have fallen by 8% or more since the start of the year.
Despite concern over the recession, these emerging markets might still prove to be valuable. They have vastly improved their ability to weather weakness in the U.S. economy, and together they are sitting on an estimated $4.1 trillion in central-bank reserves.
As Joanna Slater and Antonio Regalado report, Morgan Stanley is predicting a mild U.S. recession and projecting a more pessimistic scenario for Europe in Japan. However, an analyst for Morgan Stanley notes that decoupling appears to be the watchword" among its experts when it comes to emerging economies.
Read Joanna Slater and Antonio Regalado's report on emerging markets and how decoupling may be their salvation: http://online.wsj.com/article/SB120053579654996387.html
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EU TARGETS DRUGMAKERS: European Union investigators raided drug companies in several countries as the bloc's antitrust watchdog began an investigation of potentially anticompetitive practices in the industry. EU antitrust chief Neelie Kroes said the industrywide inquiry would examine whether large companies are abusing their market power to prevent competitors from bringing new drugs to market, or whether companies were planning to restrain competition. She says the number of new drugs launched annually has dropped from an average of 40 in the late 1990s to 28 from 2000 and 2004.
As Charles Forelle reports, EU officials said one main concern was that companies might be using patent laws to block new drugs made by rival companies. Another potential issue is that companies might strike agreements not to enter competing markets or are being paid to not launch a competitive drug.
These inquiries are general examinations, so they don't always lead to antitrust cases, but they can result in substantial fines for the drug companies.
Read Charles Forelle's report on the EU antitrust raid on drug makers: http://online.wsj.com/article/SB120048256196094295.html
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ROSNEFT NET RISES: OAO Rosneft, Russia's biggest oil producer, said yesterday that third-quarter net profit jumped 80% thanks to organic production growth, bigger refining volumes and acquisitions. The company's production gains were fueled by sending more oil to refineries, benefiting from Russian tax rules that heavily favor domestic refiners.
These earnings are in stark contrast to the flat results of Western oil majors. Rosneft said it more than doubled production of petroleum products in the quarter to 11.93 million metric tons. Rosneft's Global Depositary Receipts were down 3.4%, or 31 cents, at $8.78 in late trading.
Read Andrew Langley's report on Rosneft's successful quarter: http://online.wsj.com/article/SB120048167122194293.html
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RETIREMENT TIPS: Saving up a bunch of cash isn't the only step to retiring. Columnist Jonathan Clements says there are six other key ingredients to living well after quitting the daily grind.
Read suggestions on how to live the good life during retirement: http://online.wsj.com/article/SB120017615659786375.html
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TOO BIG TO SUCCEED? Our editorial writers say Citigroup's latest black-eye, a nearly $10 billion loss for the last quarter, may show the bank is too large to be successful.
Read our editorial writers' view: http://online.wsj.com/article/SB120044489489392889.html
