Winners and Losers in the New Europe

Don't tell Johannes van der Wielen about the virtues of the euro.

"The single currency won't be good for my company's stock," says the head of Nutricia, a Dutch baby-food company. "And investors won't like it if [the euro is] weaker than the Dutch guilder."

The move to a common currency, called the euro, a year from now aims to stimulate and strengthen Europe's economy. But as Mr. Van der Wielen's comments suggest, the gains won't be spread evenly.

He does predict rapid growth in baby-food markets outside Europe.

But the euro means comparison shopping on a Continentwide scale.

Nutricia now charges far more in Italy, where competition is weak, than in the Netherlands.

"When consumers are able to compare prices directly, it should bring them down throughout the Continent," says Gerard Rijk, a stock analyst at ING Barings in Amsterdam.

Especially hard hit could be makers of big-ticket items such as cars.

And even after Europe launches the euro on Jan. 1, 1999, Italian mothers won't buy the same powdered milk as French mothers, Van der Wielen says. Safety regulations, too, will remain diverse.

So investors, beware. The new currency promises to boost European stocks, but not uniformly, analysts say.

Many companies will be able to create more efficient Continentwide operations. But the single currency will also generate unwanted uncertainty and complications.

One uncertainty concerns the single currency itself. Which countries will use it; who will run monetary policy; and what about its rate against the US dollar?

These decisions will come over the next year. In May, European Union leaders are expected to name 11 countries ready to adopt the euro, leaving only Britain, Denmark, Sweden and Greece out of the club.

When launched, the euro will combine the traditionally strong German marks and Dutch guilders with weak Spanish pesetas and Italian lire.

Companies such as Nutricia from strong-currency nations could suffer, while stocks in weak-currency Italy and Spain have already felt a boost.

Still, German stocks should benefit from corporate restructuring, says Philip Menco, chief strategist at ING Barings.

Across Europe, banks should get a boost. They'll be busy aiding corporate mergers in virtually all industries, and creating euro-based products for investors and insurers.

"In Switzerland, we have seen two of the giants throwing in the towel and acknowledging they are not large enough," says Matthew Czepliewicz, a bank analyst at Salomon Brothers in London. The merger of Swiss Bank and United Bank of Switzerland "will make everyone reconsider their position."