International Firms Get Hit Hard
Global Emerging Markets (GEMs)



Emerginvest is a global finance portal connecting investors worldwide with high-quality investment research, data, and tools covering 125 stock markets globally.

In the wake of the current global financial crisis, not all markets have been affected the same way. Emerginvest points you to the international markets and sectors that have already begun growing, so that you can build a strong, globally diversified portfolio.

In the midst of the global economic crisis, four major international firms had their stock fall sharply after they announced their quarterly reports. ArcelorMittal, the world’s largest steel producer based in Luxembourg, Banking giant UBS based in Switzerland, and Credit Suisse Group, also based in Switzerland all fell sharply after their quarterly announcements. In addition, drug maker Sanofi-Aventis based in France, all fell 76% as it announced it was curtailing production of two cancer drugs.

According to a NYTimes article entitled: “Credit Suisse Posts a Record Loss,” Credit Suisse posted a record “net loss of 6 billion Swiss francs ($5.2 billion), taking its biggest-ever annual loss, due to poor trading and restructuring charges.” According to Emerginvest, Credit Suisse has fallen nearly 50% in the last year, culminating in an additional 5.5% drop after their newest announcement:

According to the article, “Credit Suisse had already warned in December that it made a net loss of about 3 billion francs in October and November and would take restructuring charges of about 900 million in the quarter as it moves to cut 5,300 jobs, or 11 percent of the workforce.

Analysts were also anticipating the 538 million franc loss it booked in the quarter for selling part of its fund management arm to Aberdeen Asset Management, but said they were surprised by the extent of trading losses in December.

Credit Suisse said its investment bank made significant losses in December due to standard hedges becoming ineffective due to market turmoil and as credit spreads widened.”

How much of the toxic assets remains on Credit Suisse’s books is uncertain, however it might be possible that the worst of the write-downs are over for Credit Suisse.   

Credit Suisse’s rival, UBS also announced a massive quarterly loss – actually, the largest ever in Swiss history: $6.9 billion. According to another NYTimes article: “UBS Posts $6.9 Billion Quarterly Loss,” the bank is continuing to cut jobs and drastically shrink its investment banking business: “UBS said on Monday that it planned to reduce the number of jobs in the investment banking business to 15,000 by the end of this year, from 17,000 last year. UBS already cut 9,000 jobs globally in the 15 months through last December.” Marcel Rohner, UBS’s CEO announced that the company had a good start to the year as some new inflows of money countered rumors a mass exodus of fleeing clients. UBS was the recipient of a massive $59 billion bailout from the Swiss government and some experts agree that this might be one of the most drastic belt-tightening periods for the shell-shocked company. According to Emerginvest, Stocks actually rose on Wednesday approximately 5% as investors believed it might be the bottom of the trough for the embattled financial firm:

Lastly, Arcelor Mittal, the world’s largest steel producer, which is based in Luxembourg, reported a $2.63 billion loss due to inventory write-downs and dwindling contracts worldwide. According to another NYTimes article: “ArcelorMittal Reports Loss on Soft Sales,”

“ArcelorMittal faces softening demand as construction, auto and machinery activity slows in the West and in China and India.

Lakshmi N. Mittal, chairman and chief executive, said: ‘ArcelorMittal’s generally excellent performance in 2008 was overshadowed by the considerable slowdown in the world economy.’

Still, investors took heart from some comments about the outlook in China and a suggestion that there would be no further substantial write-downs.

‘The first positive signs are coming out of China,’ Aditya Mittal, the chief financial officer, said during a conference call. ‘Demand and prices are improving.’”

As negative as some of these reports are, market reaction indicates an ironically positive sign as the stock price was buoyed by the idea that the worst of the write downs were over, in the case of UBS. It will be interesting to see how this sampling of negative economic reports contrasts with the Q1 2009 reports, to track whether the crisis is worsening for major international firms such as UBS, Arcelor, and Credit-Suisse.

Disclosure: Emerginvest is an international finance portal, providing analysis and data on 120+ world markets to help individuals find investments from around the world. The author, Jonathan O’Shaughnessy, does not have any holdings in the companies listed.


Posted 02-13-2009 4:30 PM by EmergInvest