Alex_G

A Meltdown in Emerging Markets?

Roger,

Both China and India are very inefficient in converting energy use into GDP, the USA being 4x and Japan being 9x as efficient. Right now, their governments are subsidizing energy costs, to what degree is anyones guess. The net effect of this is transferring a portion of their foreign reserves to energy exporters.

High energy prices will affect these 2 economies (China more than India) far more than the US or Europe. As long as oil and coal prices stay at sustained levels, I believe both of these stock markets will face continued downward pressure.

I don't have the time to delve into the hard numbers and quantify the exact effects to their economies with any accuracy, so if anyone else has done the work, please share!!

Alex