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a Bang np to date 

The lessons 
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Page 12 



Baseball hit 


How a Japanese bank 
set interest rates 


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Turkish Finance 
Consumer Credit 

' Separate Sections 


FINANCIAL TIMES 


£•• S KrfWSOXl'ii 


THURSDAY NOVEMBER 3 i994y 


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Share sale price 
values Renault at 
nearly FFr40bn 

Renault shares will go on sale to the public today at 
FFr165 ($32.18) a share, the French government 
announced. The price values the company at 
slightly under FFrtQbn ($7.8bn). Economy minister 
Edmond Aiphand€ry said the tranche of shares 
offered to institutional Investors was 10 timqg over- 
subscribed. The state is selling nearly 30 per cent of 
Renault's capital but will retain a 50.1 per cent 
stake. The price set for institutional investors was 
FFr176. The sale to institutions will end today while 
the public offering will last until next Thursday. 

Italian b an k s merge: Ambroveneto is to be 
taken over by Banca Commercials Italiana to create 
tbs' country's second-largest banking group, while 
Bologna-based Credit© Romagnolo plans to merge 
with regional savings institution Cassa di Rispar- 
mio di Bologna. Page 17 

Car bomb kflls Palestinian.* Anti-Israeli 
protests brake out in Gaza City after a car bomb 
f* fatally wounded Hard Abed, 35, a leader of the 
" extremist Islamic Jihad faction. Wamnq moderates 
arid Israel edge towards talks, Page 6 

Japanese re f o rms passed: Japan s lower 
home of parliament passed a sweeping electoral 
reform bill which replaces multiple-seat electoral 
districts with 300 first-past-the-post seats and 200 
proportional representation seats. Page 16 

French unemployment reached a record 3.35m 
or 12.6 per cent of the workforce in September. 
Page3' 

BAT Industries of the UK raised third-quarter 
taxable profits by 21 per cent to £551m ($870. 6m) 
helped by higher tobacco profits in the US and 
recovery in Brazil Page 17; Lex, Page 16; BAT 
warns of challenge, Page 9 , 

Storms kills 410 in Egypt: More than 410 
people died as a result of storms in southern Egypt 
At least 229 were killed when blazing fuel from a 
military depot struck by lightning flooded into the 
village of Dronka. 

Deutsche Tetokom's partial privatisation is 
likely to mean key roles for US and UK banks, chief 
executive Helmut Ricke said. The 1996 privatisation 
is expected to raise about DMISbn (£L0bn). Page 17 

Murtfei- trial ©pens: . Three man alleged to have 
Trilled wrilorf I ranian premier Shapour Bakhtiar in - 
1901 went op trial In Paris amid heavy security. Six 
others are being tried in absentia. 

Britain npy Jdbs; The British - - 

government is cutting up to 500 jobs at GCHQ, Chel- 
tenham, a L secret -listening centre where satellite 
communications andLtelephbne conversations are 
monitored. 

' Kidnap ©aspect Bi-court The alleged leader of 
the group which kidnapped four western tourists in 
New Delhi was charged tn court under India’s anti- 
tenorist laws. Bailee said the man had confessed to 
membership of a Pakistan-backed Kash miri Moslem 
group. 

CbQd support agency reform calk MPs in (be 

UK have called for reform of the widely-criticised 
Qhhf Support Agency. Their key demand is that • 
the agency take account of “clean break” divorce 
settlements which include cash and property. 

Kenyan tycoon denied ball: Kenyan 
buejnessman Kamlesh Patthi, accused of stealing 
more than Ks2£bn ($7&9m) from the central bank, 
-was denied bail after the prosecution argued be 
might abscond. 

Prix invVtos bidders; Prudential, Britain’s 
biggest life insurer, has asked 10 banks to bid for its 
gkfoal custody business, which holds £40tm' 

($63v2bn) in UK andiinfematioiial securities. The 
banks are- thought to include Chase Manhattan, 

‘ nftiho nir, Barclays. Royal Bank of Scotland ami 
MkfiancLFage 17 

LcMHtio meets today? The international trading 
group whose joint chief executives Tiny Rowland 
and Dieter Bock are at loggerheads, today holds its 
a first board meeting since two of Mr Rowland’s clos- 
™ est aUfesretired. Mr Bock tried unsuccessfully to 
oust Mr Rowland two months ago. Page 26 . 

Direct or quits over pr ele c t; Jennifer d’Aho 


Development Board. She said the lDB failed to 
answer her queries about legal and financial 
arrangements fin: a £157m ($2S5m) project by Ehia- 
1cm of Taiwan to buQd a Belfast textile plaid. 

Page 16. 

Beyeod tbelflUky Way; Astronomers in the 
Netherlands say they have detecteda large galaxy 
hidden behind the Milky Way and believe the solar 
system could have more hidden neighbours. 


US currency hits post- 1945 low of Y96.05 U Tokyo warning over recovery 

Fed steps in to back dollar 


By George Graham in 
Washington, William Dawkins in 
Tokyo and PttiDp Gawtth in 
London 

The Federal Reserve intervened 
repeatedly in support of the dol- 
lar yesterday and the US Trea- 
sury tried to talk the US cur- 
rency up after it sank to Y96.05, a 
fresh post-1945 low. 

The dollar's renewed weakness 
prompted Mr Masayoshi Take- 
mura, Japan's finance minister, 
to warn that the country's eco- 
nomic recovery was under threat. 
Mr Lloyd Benfcsen, US Treasury 
secretary, said the dollar's dive 
was ‘‘inconsistent with the funda- 
mentals of a strong investment- 
led recovery” in the US. 

He said: “Continuation of 
recent foreign-exchange trends 
would be counterproductive for 
the US and the world economy. A 
stronger dollar will reduce infla- 
tion pressures, improve Ameri- 






can living standards and promote 
investment" 

He promised to monitor devel- 
opments closely in co-operation 
with the other six members of 
the Group of Seven leading 
industrialised nations. However, 
apart from the Bank of Japan, 
which regularly buys dollars, the 
Fed was alone in its support of 
the currency. Traders estimated 
that it spent $500m-$lbn. 

Its intervention was welcomed 
by Mr Hans Tietmeyer, Bundes- 
bank president. “I welcome the 
fact that the American monetary 
authorities have clearly 
expressed their interest in a 
strong dollar." 

Fed support helped to take the 
dollar back above Y97.75 in New 
York trading, and lifted it to 
DM1.52 from an earlier low of 
DM1.491. 

Signs or continued expansion 
in yesterday's “Beige Book” 
report on US economic conditions 


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Dollar 

Against the Yen (V per Si 
106 - 



Jun 1994 Nov 

Source; FT Grapttie 

added to the dollar turmoil. The 
report alarmed financial markets, 
initially depressing the dollar, by 
renewing questions over whether 
the Fed has acted fast enough to 
head off inflationary pressures. 

European stock markets were 
weighed down by the dollar’s ini- 
tial decline and by Tuesday’s 
falls on Wall Street. In Paris, the 
C AC-40 index was 1.7 per cent 


Lex.... Page 16 

Currencies Page 32 

World stocks Page 36 

London stocks ... -..Page 27 


lower, while the Dax index fell 
1.3 per cent in after-hours trad- 
ing. In London, the FT-SE 100 
Index, having been 26 points 
lower, rallied on news of Fed 
intervention to end the day 15 
points down at 3,081.3. 

The intervention helped US 
stocks recover from early falls. 
At 1pm in New York, the Dow 
Jones Industrial Average was up 
3.7 points at 3,867.07. 

Since taking office at the start 
of 1993, the Clinton administra- 
tion has been dogged by the per- 
ception that it was happy with a 
fall in the value of the dollar, a 
perception often abetted by 
senior officials’ remarks. Mr 


Bentsen’s strong statement yes- 
terday was needed in part to off- 
set the damage he had himself 
caused with recent remarks that 
seemed to suggest the US bad no 
plans to intervene. 

But analysts said the dollar 
would go lower without the 
active support of the Bundesbank 
and other central banks. Mr Avi- 
Tiash Persaud, head of currency 
strategy at J. P. Morgan in Lon- 
don, said: “1 think the market is 
going to brush this aside unless 
it sees the Bundesbank come in.” 

There is also widespread agree- 
ment among analysts that the 
Fed will have to raise interest 
rates by at least 50 basis points, 
to arrest the dollar's decline. 
Some analysts believe a move 
may come as early as Friday. 

Analysts said one of the teeters 
behind the stronger yen was the 
better- than-expected performance 
of Japanese companies in the 
current results season. 


Top ministers targeted in 
Moscow reshuffle talks 


■ 

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. *. f • n. • 






Russian Security Council secretary Oleg Lobov passes behind Boris 
Yeltsin before a council meeting devoted to the rouble crash rw® 


By John Lloyd In Moscow 

A shake-up in the Russian 
government appears to be on the 
cards. Mr Ivan Rybkin, chairman 
of the state duma flower house;, 
said after a meeting with Presi- 
dent Boris Yeltsin that a cabinet 
reshuffle would take place within 
two weeks. 

A spokesman for Mr Rybkin 
said the posts discussed included 
those of the economics and jus- 
tice ministers and “a "mge of 
changes among the deputy prime 
ministers". The economics portfo- 
lio is held by Mr Alexander 
Shokhin, a reformer who is 
thought to be vulnerable but may 
retain his parallel post as deputy 
prime minister. 

The meeting came after details 
emerged of the report on “Black 
Tuesday’’ - October 11. when the 
Russian rouble collapsed by 25 
per cent against the US dollar - 
by the Security Council commis- 
sion, which is staffed wholly by 
military and security chiefs. 

The presidential press service 
says the report accuses a number 
of senior public servants of “ill- 
timed. if not incompetent, deci- 
sions" and says that there is 
"insufficient co-ordination 
between the federal bodies of the 
executive branch", ft orders the 
government to take immediate 
control of the currency exchange 
rate and “cons oh date the legal 
backbone of the financial, includ- 
ing the currency, market". 


Report by military chiefs may 
decide future of cabinet leaders 


The Interfax news agency, 
quoting “well-informed sources”, 
said the council's report names 
the economics aw a finance minis- 
tries, the central bank and sev- 
eral commercial hanks as having 
"profited directly and considera- 
bly from destabilising the 
national financial system”. 

The acting finance minister 
and the governor of the central 
bank both resigned after the col- 
lapse of the currency last month. 

The report says, according to 
Interfax's sources, that the col- 
lapse will "entail long-term and 
deep negative consequences for 
the Russian economy” because 
foreign investors “now doubt the 
expediency of investing in Rus- 
sia”. It recommends continuing 
investigation and. if necessary, 
criminal proceedings. 

Mr Rybkin said the recent 
high-level departures would be 
followed by “bringing to book 
some of their deputies”. On Mr 
Shokhin’s fate, he said ‘it will be 
decided by the government”. 

The Itar-Tass news agency said 


the discussion with Mr Yeltsin 
took place in the context of a 
state duma vote of no-confidence 
in the government last week, 
which failed by only 30 votes. 
Only 54 deputies from 450 
actively voted for the govern- 
ment 

It also comes after a Moscow 
by-election last weekend which 
was won by the candidate backed 
by the ultra-nationalist Liberal 
Democratic party, and local elec- 
tions in St Petersburg which saw 
a strong showing for the commu- 
nists. 

Neither the nationalist nor the 
communist parties have any rep- 
resentative in the cab- 
inet 

Rumours abound about who 
would replace Mr Shokhin. Since 
his removal would come follow- 
ing a report drawn up by repre- 
sentatives of the security services 
and the military, it is widely 
assumed that a more conserva- 
tive figure would emerge. 

Grachev’s job at risk. Page 2 






American 
politicians 
seek votes 
on global 
network 


By Louise Kehoe 
in San Francisco 

Political candidates in California 
have discovered that the infor- 
mation superhighway can be a 
fast and inexpensive route to 
voters. They are using the Inter- 
net, a global network of comput- 
ers, to answer questions and 
deliver election campaign 
pitches in the nzn-np to next 
week's US mid-term elections. 

Fed up with television cam- 
paign ads filled with more barbs 
than substance, thousands of 
computer users are going online 
to find out where the candidates 
stand on particular issues and to 
research details of their past 
records. 

Over the past month, more 
than S,000 people have logged on 
to the California Online Voter 
Guide, a non-partisan service 
funded by groups and businesses 
ranging from the California 
Teachers’ Association to Pacific 
Bell, the regional telephone com- 
pany. 

Many more are accessing Proj- 
ect Vote Smart, a service spon- 
sored by the League of Women 
Voters that provides voting 
records, campaign finance data 
and performance evaluations of 
candidates by special interest 
groups. 

Several candidates are using 
electronic mail to communicate 
directly with voters. E-mail 
addresses for the two main 
gubernatorial candidates in Cal- 
ifornia - incumbent Pete Wilson 
(Republican) and his challenger 
Kathleen Brown (Democrat) - 
have been widely published and 
their campaign staff regularly 
answer voters' questions. 

Both have also personally par- 
ticipated in online chat sessions 
with subscribers to America 
On-line, CompuServe and Prod- 
igy. the commercial online ser- 
vices. Ms Brown also has an elec- 
tronic presence on the World 
Wide Web, the fastest growing 
portion of the Internet which 
provides easy ways to scan 
the globe for information 
resources. 

“Having a presence on the 
Internet demonstrates that Ms 
Brown is looking to the future," 

Continued on Page 16 




Quaker Oats to pay $1.7bn 
for US soft drinks group 


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By Richard Tomkins fn New York 

Quaker Oats, the US food and 
drinks group, has agreed to pay 
$L7bn in cash to acquire Snapple 
Beverage, a company that has 
changed the shape of the US soft 
drinks market with its highly 
successful “new age" iced teas 
and fruit-flavoured drinks. 

At the same time, Quaker said 
it would start seeking buyers for 
its European pet food business, 
maker of Felix cat food and Fldo 
dog food, and its Mexican confec- 
tionery business, maker of La 
Azteca chocolate. 

Snapple, based in Valley 
Stream, Long Island, has expan- 
ded rapidly in the US by selling 
bottled drinks that appeal to a 
health-conscious public. Typical 
products indude Raspberry Iced 
Tea, Amazin' Grape Juice and 
Mango Madness Cocktail 

Annual sales Jumped from 
$44m in 1990 to $5 16m last year. 
Recently, however, Snapple’s 
profits and share price have been 
hit by the cost of expansion and 
by competition from companies 
such as Coca-Cola and Pepsi- 
Cola, which have jumped on to 
the alternative drinks band* 


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wagon. Yesterday Snapple 
reported that net profits had 
sunk from 526.9m to S7.1m in the 
quarter to September. 

Chicago-based Quaker Oats, for 
many months the subject of bid 
speculation, has been under pres- 
sure to realign its businesses 
because of its lacklustre financial 
performance. Last week the com- 
pany reported a fall in net 
income from S91.4m to £5 7. 3m in 
the quarter to September, blam- 
ing low European pet Food sales 


— Page 16 


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and increased marketing costs, 
especially for its Catorade sports 
drinks in North America. 

Yesterday Mr William Smith- 
burg, Quaker’s chairman and 
chief executive, said the combina- 
tion of Gatorade and Snapple 
would create North America's 
largest “good-for-you" drinks 
company, with market leadership 
in teas, juice drinks and sports 
drinks. 

Quaker expects to benefit from 
the acquisition by feeding 
Snapple's products through Gato- 
rade’s distribution channels. At 


CONTENTS "-V 


present, Snapple sells mainly in 
convenience stores and delicates- 
sens, and has barely 1 por cent of 
its sales outside the US. Gato- 
rade, in contrast, is well estab- 
lished in supermarkets and sells 
in 25 countries. 

Mr Smitbburg said Quaker was 
selling its European pet food 
business and Mexican chocolate 
businesses because it wanted to 
concentrate on faster-growing, 
higher-margin businesses. 

The European pet foods busi- 
ness has annual revenues of 
about S800m and Mexican choco- 
late has annual revenues of 
about gloom. Mr Les Pugh, an 
analyst at Salomon Brothers, the 
Wall Street investment bank, 
said the two would probably 
fetch about S7fiCim, most or it 
coming from the pet foods busi- 
ness. He cited Nestle, the biggest 
European food company, as a 
possible buyer. 

Quaker's shares sank S5'< to 
S69 17 * after Mr Smithburg 
acknowledged that the transac- 
tions would dilute earnings per 
share in the year to June 1996. He 
said the purchase of Snapple 
should start to benefit earnings 
in the year to June 1998. 


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ffTHEFIK^ TJMTTED 1994 NO 32^14 Week No 44 LONDON « PARIS ■ FRANKFURT * NEW YORK • TO KYO 








2 


FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 


NEWS: EUROPE 


Moscow Cloud over Grachev 

stance on « . , . • , 

Bosnia after deputy is fired 


worries 

Nato 


By Broca (Sark in London and 
Laura Sfiber fan Belgrade 


By John Lloyd in Moscow 


Nato is worried by Russia's 
cool reaction to its tough new 
procedures for carrying out air 
raids in Bosnia, according to 
western diplomats. Moscow's 
position is one of several fac- 
tors that could cloud the pros- 
pects for further joint action 
by the contact group on Bosnia 
- the US, Britain, Russia, 
France and Germany. 

Diplomats said Russian dip- 
lomats in Brussels had been 
briefed on the new air strikes 
policy as soon as it had been 
formally endorsed by Nato 
ambassadors last Friday. 

Nato officials had tried to 
assure their Russian counter- 
part that the policy did not 
take away the “dual key” sys- 
tem under which any bombing 
raids in Bosnia have to be 
approved by the United 
Nations as weQ as Nato. 
However, subsequent Russian 
comments - suggesting that 
Nato was grabbing more power 
for itself - indicated that these 
assurances were not accepted. , 
Apart from the air strikes , 
policy, strains in the contact I 
group have been highlighted j 
by its members' contrasting | 
reactions to the recent offen- 
sive by the Moslem-led Bos- 
nian army. The offensive has 
been endorsed in Washington 
and criticised In Moscow, while 
British officials have avoided 
commenting either way. 

Bosnian Serb forces claimed 
yesterday to have halted the 
government's offensive south 
of Bihac in northwestern Bos- 
nia. UN officials reported 
intensifying mortar, machine- 
gun and artillery fire around 
Bihac, which Is supposed to be 
a UN-protected safe area. 

On Tuesday night, Mr Rado- 
van Karadzic. Bosnian Serb 
leader, said the Moslems would 
be “trounced militarily”. He 
blamed Belgrade for the big- 
gest Serb setbacks since the 
fighting started 31 months ago. 

President Slobodan Milosevic 
of Serbia imposed an embargo 
against Bosnian Serbs three 
months ago, and he is also try- 
ing to prod rebel Serbs from 
neighbouring Croatia into 
making a deal with Zagreb. 

Mr Karadzic said the losses 
were “largely the consequence 
of the. . . blockade”. Sources 
dose to the leadership yester- 
day blamed the defeats on 
‘'treasonable conduct by some 
Bosnian Serb officers dictated 
from Belgrade”. 

It was unclear whether Mr 
Karadzic's warning of a “fifth 
column" was aimed at high- 
ranking Bosnian Serb officers 
who, despite the embargo, still 
receive their pay from the 
Yugoslav army. He said that 
“anyone who spread rumours 
or lies about a Serbian sell-out 
would be shot". 

South of Sarajevo, Bosnian 
Croats and Moslems co-ordi- 
nated an attack on the strate- 
gic plateau round Kupres, 
known as the “door to Bosnia”. 
The Bosnian Croat entrance 
into the war casts a pall over 
peace talks set to resume today 
between Zagreb and rebel 
Serbs from Croatia. 


The future of General Pavel 
Grachev. Russia's defence min- 
ister. was in question yester- 
day following the sacking on 
Tuesday of his deputy, Gen 
Matvei Burlakov. His deputy 
was removed after allegations 
of corruption in the Western 
group of armed forces which 
he had commanded until 
September. 

Mr Sergei Yushenkov, head 
of the state duma (lower 
house) defence committee, said 
“the next logical step should be 
the resignation of Grachev. 
This would accord with the 
officer’s code of dignity and 
would help the moral cleansing 
of the army". 

President Boris Yeltsin’s 
derision to fire Gen Burlakov 
"shows civilian control over 
the army exists and that the 
president is listening to press 
and public opinion”. 

Mr Yushenkov’s remarks 
were underscored by Gen Alex- 
ander Lebed, commander of 
the R ussian 14th army in the 
Moldovan province of Trans 


Dnestr and the most popular 
figure in the forces - according 
to polls taken of officers. 

He told the Itar-Tass news 
agency he welcomed Gen Bur- 
lakov’s dismissal and said the 
sooner the army was cleansed 
of corruption “the stronger the 
army and the stronger the Rus- 
sian state will be". 

The army's top command is 
clearly in turmoil. Gen 
Grachev, appointed after 
playing a key role in foiling the 
attempted putsch in 1991, has 
been close to Mr Yeltsin and 
may still have enough influ- 
ence to survive. Ms Elena Aga- 
pova, an aide, said last night 
that the decree removing Gen 
Burlakov “came as no sur- 
prise Gen Burlakov has 

repeatedly requested the 
defence minis ter to relieve him 
of his duties". 

Mr Yuri Yerin. former mili- 
tary prosecutor for the West- 
ern group, said yesterday that 
Gen Grachev had been cleared 
of any corruption by "numer- 
ous" commissions and inqui- 
ries. The purchase with extra- 
budgetary fUnds of two Mer- 


cedes cars for his use was “not 
improper”. However. Gen 
Grachev is not, and never has 
been, the defence establish- 
ment’s favoured candidate for 
minis ter - and his alleged 
acquiescence in corruption is a 
serious weakness. 

Communist and natio nalis t 
politicians have long 
demanded his resignation 
because he ordered his tank 
units to fire on the Russian 
parliament last October tn obe- 
dience to Mr Yeltsin's requests. 
Now the reformist parties have 
deserted him following the 
murder of a young journalist 
three weeks ago who was 
investigating corruption in the 
Western group. 

Though popular, Gen Lebed 
is regarded by the top brass as 
too inexperienced for tbe top 
job. Mr Yushenkov named as 
possible candidates army chief 
of staff General Mikhail Koles- 
nikov. former Soviet defence 
minister Marshal Yevgeny Sha- 
poshnikov, and Gen Andrei 
Nikolayev, chief of the border 
guards - which are not under 
Gen Grachev's control. 



General Pavel Grachev, whose future as Russia’s defence 
minis ter has been put in question nunr 


Poles read Russian anti-Nato signals 


The last-minute postponement of a long 
delayed visit to Warsaw by Mr Victor 
Chernomyrdin, the Russian premier, 
has been interpreted in Warsaw as con- 
firmation that a Russian effort has 
begun to block new US initiatives on 
Nato membership for Poland. 

Tuesday’s derision, ostensibly caused 
by tbe Polish government’s failure to 
make amends for a recent incident 
when police at a Warsaw railway sta- 
tion beat several Russian travellers, 
was sudden and unexpected. Teams of 
experts had been in Warsaw all week 
preparing for the two-day visit. 

Mr Yuri Kashi ev, the Russian ambas- 
sador, stressed in a newspaper inter- 
view yesterday the depth of Russian 
opposition to any expansion of Nato to 
the east “In our view, having the cen- 
tral European countries join Nato is not 
a rational option," he said. “We think 
such a development would reduce our 
own security.” 

Mr Chernomyrdin was to have signed 
agreements on a new gas pipeline 


Christopher Bobinski on how Warsaw sees 
the postponement of Chernomyrdin’s visit 


across Poland as well as a mutual write- 
down of Comecon-era debts. The latter 
covered the $2bn and 4bn transferable 
roubles owed by Poland and the $330m 
and TRhs75bn Russian debt to Poland. 
The debt deal is seen as a way of wiping 
the slate clean of past problems and 
paving tbe way for future trade growth. 

Polish sales to Russia rose by 68 per 
cent to 5623m over the first eight 
months or this year but remain a mere 
6 per cent of its total exports. In the 
communist era the Soviet Union took 
more than a third of Polish exports. 
Similarly, Polish imports, at 5850m, rose 
by 40 per cent above last year’s levels 
but still account for only 6.5 per cent of 
total imports. 

After this year's trade growth, Rus- 
sia’s share in Polish trade turnover has 
returned to 1992 levels, but that was 


when the slump in mutual trade was 
already well established. 

In spite of the postponement, Mr 
Chernomyrdin is believed to have been 
keen for the visit to go ahead. He 
recently made the highly symbolic ges- 
ture of travelling to Katyn near Smo- 
lensk. burial site of thousands of Polish 
officers murdered by the NKVD, fore- 
runner of the KGB, on Stalin's orders In 
1940. He intervened to end opposition 
by local officials to Polish efforts to 
construct a cemetery for the murdered 
officers. The gesture showed that Mr 
Chernomyrdin, like President Boris 
Yeltsin, is keen for the two countries to 
put their troubled past behind them. 

Russia needs a friendly Poland for 
strategic reasons. Routing the planned 
gas pipeline across Belarus and Poland 
to Germany, for example, would avoid 


Ukraine, which has in the past threat-' 
ened to block Russian gas sales to the 
west. 

The pipeline, whose Polish section 
will cost $2.5bn, will raise annual sales 
of Russian gas in Poland to I4hn cubic 
metres. Mr Chernomyrdin's visit was 
needed to sign a protocol confirming 
the commitment as well as to clarify 
financing arrangements. 

The Russian ambassador also con- 
firmed in his interview that Russia 
wants Warsaw to open a new crossing 
point on the Polish-Belarus border 
which would enable Russians to travel 
to and from their Kalining rad enclave 
without going through the Baltic states. 

Yesterday, Mr Andrzej Olechowski, 
Poland’s foreign minister, said there 
could be no question of apologising for 
the incident at the railway station until 
the case had been thoroughly Investi- 
gated. But the government is expected 
to come under pressure to conciliate 
Russia from local businessmen keen to 
see an expansion in bilateral trade. 


Baltic neighbours feel chill from east 


By Anthony Robinson 


The chill in Polish-Rossian 
relations symbolised by tbe 
last-minute postponement of 
prime minister Victor Cherno- 
myrdin’s official visit to War- 
saw tills week may he part of a 
new hardening in Moscow’s 
relations with with its Baltic 
neighbours. 

In London yesterday the 
Lithuanian prime minister, Mr 
Adolfos Slezevidns, said that 
his country is facing unex- 
pected difficulties in its negoti- 
ations with Russia over a mili- 
tary transit agreement 

A law regulating the move- 
ment of Russian troops and 


equipment through Lithuania, 
en route to and from the Rus- 
sian Baltic province of Kali- 
ningrad, was due to come into 
force in September. But Rus- 
sian negotiators have objected 
to the troop transit rules being 
incorporated into a general 
law which also regulates tbe 
transport of hazardous materi- 
als across Lithuania. This Bal- 
tic state sandwiched between 
Poland and Belarus is on the 
most direct route from Russia 
to Kaliningrad. 

Moscow, meanwhile, is seek- 
ing an alternative transit 
route to its Isolated province 
which would avoid the Baltic 
states entirely and go through 


Belarus and north-eastern 
Poland. This was to have been 
one of the subjects for discus- 
sion at the aborted Folish-Rns- 
sian summit meeting. 

Kaliningrad, the former Ger- 
man port city of KAnigsburg, 
and the surrounding province, 
was occupied by Soviet forces 
at the end of the war. Moscow 
has retained control, using it 
as a staging post for the repa- 
triation of troops and equip- 
ment from former east Ger- 
many and Poland. Some 
100,000 Russian troops are 
believed to be in the enclave. 
Lithuania, together with other 
Baltic basin states, is hoping 
to persuade Moscow to demili- 


tarise both port and province 
over time. 

Mr Slezevicins, a former 
minister under the Soviet-era 
government, and whose Demo- 
cratic Labour party heavily 
defeated the nationalists led 
by Mr Vyatautis Landsbergis 
in the 1992 elections, was in 
the UK to encourage greater 
trade and investment 

A priority project is con- 
struction of a 5100m (£63.2m) 
oil pipeline from the port of 
Klaipeda to the refinery at 
Mazeikia to reduce dependence 
on Russian oil. Lithuania is 
also seeking $l50m to modern- 
ise the refinery whose 12m 
tonnes a year capacity is cur- 


rently less than half used. 
Shell has just completed the 
first of a siring of planned pet- 
rol service stations. 

Last month the IMF 
approved a 5201m standby 
agreement loan in support of 
economic reforms which have 
led to rapid privatisation and 
a resumption of economic 
growth. In April Lithuania 
pegged the Litas, its internally 
convertible currency, to the 
US dollar. Inflation Is expected 
to foil to 40 per cent this year 
from 189 per cent in 1993 and 
gross domestic product is 
expected to rise by 1.5 per cent 
in 1994 and by up to 6 per cent 
next year. 


Ukrainians take wintery road to market 


Matthew Kaminski finds despair in Kiev as economic reforms send prices soaring 


THE FINANCIAL TIMES 
Published by The Financial Times 
(Europe) GmbH. NibelongenpLatz 3. 
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Telephone ++49 69 156 SS0, Fax ++49 
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ited, Number One Southwark Bridge. 
London SEI 9HL, UK. Sharebokkn of 
the Financial Tima (Europe) GmbH 
are: The Fmandal Tima I Europe) Ltd, 


A t the Khreshatyk metro 
station in central Kiev, 
a new monthly trans- 
port pass was pasted behind a 
grimy window, with the price 
scribbled in pencil “Today it’s 
175,000," a middle-aged woman 
laughed scornfully. Last month 
it was 20,000 coupons (about 20 
US cents). “I don't know how 
we’re going to live through 
this ," shp said. 

Across Kiev this week, dras- 
tic price increases affected 
transport rents, utilities and 
food, along with other retail 
goods under an IMF-tailored 
austerity programme unveiled 
by President Leonid Kuchma 
last month. 

The price increases are the 
clearest Indication yet that 
painfol “shock therapy” mar- 
ket reform, which was pio- 
neered by Poland five years 
ago and is already transform- 
ing the economy of much of 
eastern Europe, has Anally 
made it to Ukraine. learning an 
average monthly wage of 
around 2.3m coupons (about 


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$23). Ukrainians are tn for a 
painful passage into the mar- 
ket economy. 

But if Kiev’s leaders - emu- 
lating their neighbours in War- 
saw, Prague and Tallinn - can 
ignore public grumbling long 
enough to put into place the 
remaining pieces of a compre- 
hensive reform programme, 
their country could have a 
chance to join in the economic 
boom now taking off in the 
more progressive nations of 
eastern Europe. 

This week's metro fare 
increase was accompanied by a 
drastic 10-fold rise in the price 
of trolley and tram tickets, and 
a seven-fold increase in rents, 
and utilities. Food prices var- 
ied across regions, bat with 
state subsidies completely 
turned off they are also set to 
rise quickly. 

The first wave of price 
increases is due to be followed 
by another on January l. 
Uk rainian wages and pensions 
went up last month, but only 
to 80 per cent of expected price 


increases. “It’s impossible to 
live on our salaries," said Mrs 
Olha Stepanovich, a teacher 
who shops at the popular Vla- 
dimirsky market “Only a busi- 
nessman can afford tomatoes 
for 150,000 coupons per kilo- 
gram. So most people just do 
not eat well” 

Ukraine's social fabric is 
already stretched thin. The 
country has Europe's lowest 
minimum wage and highest 
hidden unemployment rate. 


T he average real wage is 
down 70 per cent since 
1990. However, many 
supplement their incomes in 
the black economy which, by 
one count, makes up 60 per 
cent of economic activity. 

However, as in Poland dur- 
ing “shock therapy", people 
expect to improvise and sur- 
vive. “It's hard but we get by," 
said Mrs Valentina Mykhailov- 
ych, a pensioner, standing out- 
side a state bread store on Karl 
Marx Street. "My son has a 
dacha outside Kiev where he 


grows vegetables. So my hus- 
band and I get fresh potatoes 
and carrots.” 

Factories have been hit hard, 
with higher all and coal prices 
and an inability to acquire 
cheap dollars to import energy. 
Many enterprises are expected 
to close and lay. off workers. 
State spending cuts also are 
needed to reduce Ukraine's 
large budget deficit 

Reformers hope the pain will 
be brief - and checked by high 
Interest rates to stop inflation. 
They are also relying on for- 
eign capital being lured back 
as the currency stabilises and 
supplies of Russian and Turk- 
men energy are guaranteed - 
bought with western aid such 
as the $371m IMF loan 
approved last week. 

But Mr Kuchma recognises 
the public disquiet. "To my 
great regret, ordinary people 
will not be affected by the 
arrival of this small amount 
[the IMF loan],” he said. “That 
is why I appeal to our people to 
have more patience.” Tbe pres- 


ident also knows western 
donors, sitting on up to $4bn in 
aid, have little patience. 
Ukraine must implement the 
first radical macroeconomic 
reforms in the next nine weeks 
to qualify for further IMF aid. 
Talks on a $1.5bn stand-by 
begin later this month. 

But tbe political opposition 
is gathering steam, too. Parlia- 
ment, dominated by a commu- 
nist coalition, railed an emer- 
gency session for tomorrow to 
discuss the price rises. Organ- 
ised labour, quiet since last 
year’s coal strikes, this week 
threatened to walk out in pro- 
test against price increases and 
low, or often unpaid, wages. 

Mr Kuchma yesterday suc- 
ceeded in convincing munici- 
pal leaders to implement bread 
price increases in all regions 
alter widespread resistance to 
implementing his decrees. 

At the Karl Marx bread 
store, the night delivery man 
shrugged his shoulders as he 
unloaded the daily rye; "Sadly, 
all these changes are needed." 


EUROPEAN NEWS DIGEST 


ich W 


Czech official 


on graft charge I wj eCO 


So** 


A senior Czech privatisation official . has been arrested in -a 
"sting” operation by anti-corroption police. Mr Jaroslav Liz- 
ner. chairman of the Centre for Couim Privatisation, which' 
processes applications from investors seeking to' buy stakes in 
state companies, was arrested outside a Prague resteuraxt on 
Monday night carrying a briefcase containing KcS^m 
($305,000). He is to be charged with accepting bribes. Three 
others were arrested and later released. Mr laznerts arrest has 
reopened allegations of high-level corruption in the Czech. 
Republic's privatisation programme, which has seen billions of' 
dollars of state assets sold to private investors. A privatisation 
m i n ist ry official is in prison after being convicted of bribery in 
connection with a privatisation deal. . Mr Vaclav Klaus, the 
Czech prime minister, described Mr LizoeTs arrest yesterday, 
as “a bolt from the blue” bat denied that it would have a 
negative impact on the privatisation programme, due to' be' 
completed early next year. Vincent Boland Prague . . 


German holiday ruling 


1 " 


Germany’s federal cartel office yesterday recomme n ded that 
two of the country’s largest holiday agencies be prevented 
from having tbe exclusive right to block book rooms in 15 
Spanish hotels because it hinders competition. Touristic Union 
International (TUI) and NUR Touristic said they would fight, 
the decision. The cartel office's recommendations follow com-, 
plaints by other German travel agencies that TUI and NUR 
had stifled competition in the Canary and Balearic Islands last] ' 
year by block-booking hotel beds for almost the entire season. 
Alltours, a German-based agency, said it had been Impossible 
to reserve rooms even in other hotels because of tbe prices 
offered by TUI and NUR, which they claimed were beyond 
what it could offer. The cartel office recommendation coin- 
cides with a surge of renewed German interest in Spain, and 
in the inlands particularly. This Is because tens of thousands ta 
of holiday-makers switched their vacations from Turkey, a . . 
favoured resort, after attacks on Gomans in the region. Judy 
Dempsey, Bonn 


Strike grounds Iberia flights 


Iberia, Spam’s financiall y crippled state airline, has been 
forced to ground most of Its flights today as unions stage the 
first of two 24-hour strikes this month. Tbe unions are Eject- 
ing to the company's refusal to make up back pay that was 
due at the end of October and to its plans to reduce salaries by 
an average of 15 per emit over the next two years. Tbe airline 
cancelled all its international flights serving routes that are 
covered by other airlines, as well as 70 per cent of its domestic 
flights. Iberia is on course to lose Pta44bn $352m) this year. 
The industrial dispute could delay its efforts to gain European 
Union authorisation for fresh public funding of at least 
Ptal25bn. Unions say Pta200tm will be required to assure ! 
future viability. A second strike is planned on November U, 
Tom Bums, Madrid 


Uglo-Gei 
jjnel ques 


East German jobs warning 


il 1 regula 


Between a quarter and a third of east Germany’s labour force 
win be without permanent work by 2010 unless productivity 
and competitiveness improve sharply. The east German econ- 
omy will have to become modi more export-oriented to create 
new jobs, concludes a joint study by the Halle Institute for 
Research and the Hamburg-based KOiber Foundation. The 
study contradicts more optimistic forecasts released last week 
by the six economic institutes which advise the federal gov- 
ernment. These showed that unemployment in east Germany 
had fallen to about 15 pa - cent of the 6. Bin-strong labour force 
and should stabilise at that leveL However, the Hafle-Kdrber 
study says this figure could rise if the privatised sector in 
particular is not supported by more risk capital Tbe report 
says productivity is still only 40 per cent of west German 
levels. Judy Dempsey, Bonn 


Slower growth for Norway 


Norway’s economy win expand more slowly next year, accord- 
ing to Mr Torstein Mofand, governor of the Bank of Norway. 
At a seminar in London yesterday Mr Moland forecast GDP 
growth in 1995 would foil to between 2L and 3.0 per cent, as 
growth in consumption became more subdued. The rise in 
consumer prices was down to 0 £ per cent in April but has 
since grown to L7 per cent, reflecting an increase in excise 
duties implemented in July. Mr Moland said that if wage 
inflation could be limited to 3.0 per cent in 1994 and 1995, 
overall inflation would remain at 2.0 per cent next year. 
Traditional exports, excluding oil and shipping, have risen in 
value terms by 12 per cent this year, according to Mr Moland. 
Tbe improvement in the economy has reduced Norway’s vul- i 
ne rability to oil price fluctuations and the current account 
would remain in balance next year, he said. Karen Fossli, Oslo \ 


ECONOMIC WATCH 


Industrial output on the rise 


West German Industrial 
Western Germany production gathered pace 

again in September after fall- 
irakistiW production, amu* K change ing during August, according 


8 — — to provisional data from the jfrj, 

6 ■ economics ministry. 

J\ ~ Although preliminary calcula- 

4 7-1- tions showed output fell a 

2 _a / .. \ seasonally adjusted 0.2 per # 

w cent during the month, after 

0 / a revised 2.6 per cent month- 

„ N_ ; _ on-month drop in August, the 

j ministry said it expected the 

-4 J- — latest figures to be revised 

- _ mj upwards by “a good two per- 

/ “ centage points". This implied 

-8 1 .J production increased by more 

9 * than 3 per cent in comparison 

awHEniMiwi with September last year, 

according to independent analysts. James Capel in London 
said gross domestic product in the region appeared to have 
grown only 0.6 per cent in the third quarter after 1 per cent in 
the second. However, other data on business confidence and 
economic developments in export markets elsewhere in 
Europe suggeste d the apparent weakening was merely a lull 
within a strong underlying growth trend. Christopher Parker 

Frankfurt 

■ The Greek unemployment rate was 6.1 per cent in Septem- 
ber against 6.7 per cent the previous month and 5.9 per cent a 
year earlier. 

■ Romania’s trade surplus fell to in September from 

$82.fim in August Unemployment rose to 103 per cent 


You don’t have to leave the country 

to find a tax haven. 


sS Ernst & Young 


Making sure your company pays no more tax 
than it needs to is simple. Contact Ernst & Young from 
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1 


FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 ★ 




^iai .Dutch to cut 

c ' Hr i 3,000 jobs 
lift in telecoms 


: -.7^^ 

- • • • • ■■=• -- r s ‘ 


■mi;.. 


Uiiiig 


By Ronald van da Krai 
In Amsterdam 

The Dutch telecommunications 
and postal group, KPN, said 
yesterday it is to cut 3,000 jobs 
over the nest three years in its 
telecommunications business, 
it Is the first round of job 
losses since the company was 
partially floated on the 
Amsterdam stock exchange in 
June. 

PTT Telecom. KPNTs tele- 
communications arm, said the 
job losses, representing nearly 
10 per cent of its workforce of 
3l$&l people, were necessary 
to boost productivity. 

It hopes to be able to shed 
most of the jobs through natu- 
ral attrition, avoiding the need 
for large and potentially con- 
troversial forced redundancies. 

“Increasing productivity is 
necessary if the company 
wants to continue delivering 
high-quality services at low 
prices in a fully deregulated 
telecommunications market," 


'jf* fr'PTT Telecom said. 


fiight s 


The job loses should boost 
productivity, measured by the 
number of telephone lines per 
employee, by 15 to 20 per cent 
by the end of 19 97. By pursuing 
this goal, PIT Telecom said it 
wants to emulate the “Baby 


Bell" telephone companies in 
the US. which have achieved 
an average 6 per cent annual 
improvement in productivity 
over the past few years. 

The telecommunications sub- 
sidiary said the job losses were 
a continuation of restructuring 
begun in 1990. 

PIT Post. KPN’s postal com- 
pany. has cut around 6,000 jobs 
since 1990 and now employs 
around 3&411 people, KPN is 
the Netherlands' largest pri- 
vate-sector company. 

The job losses in telecommu- 
nications will come across the 
board but will concentrate spe- 
cifically on employees in tele- 
communications maintenance. 
Digitalisation of the Dutch tele- 
communications network 
means that fewer people are 
needed for maintenance work. 

However, PTT Telecom said 
it expects to hire additional 
employees in future in “cus- 
tomer-contact” jobs such as 
sales and marketing, as well as 
in mobile communications and 
new media. 

The Dutch state’s sale of a 30 
per cent stake in KPN was the 
country’s largest ever flotation, 
raising FI G.9bn (£2J5bn) for the 
government A second tranche 
of shares is scheduled to be 
sold by the end of 1997. 


w arrv’ro 


Anglo-German 
panel questions 
EU regulations 


By David Marsh 
--j! European Editor 


A panel of British and German 
businessmen yesterday took 
aim at European Union 
employment rules in a joint 
drive to eliminate unnecessary 
BrussasTegnldtions. 

A 10-man Anglo-German 
deregulation group, set up by 
the London and Bonn govern-' 
jnents, drew, up a “substantive 
TBst” of Bnssels measuresseen 
as unhelpful to business, 
according to Mr Francis 
Maude, who led the UK delega- 
tion. 

Mr Maude, a former financial 
secretary to the UK Treasury, 
who now works for. the US 
bank Morgan Stanley, said the 
businessmen on the panel 
agreed that proposed new EU 
employment legislation was 
’immensely damaging”. 

This view was backed by Mr 
Johann Eekhoff. state secre- 
tary at the Bonn economics 
ministry, who led the German 
delegation. He said proposed 
Brussels rules on workingtime 
and part-time working were 
“not flexible enough." 

The panel, which examined 
measures affecting in particu- 
lar the chemicals, transport 
and food production sectors, 
will send its findings to the 


two governments, which will 
then pass them on to Brussels. 

The UK businessmen 
included representatives from 
the Asda supermarket group 
and brewers Youngers, while 
the German side fielded senior 
figures from chemicals com- 
pany BASF and car group Mer- 
cedes-Benz. 

Mr Eekhoff said there was 
particular concern that undue 
Brussels bureaucracy could 
spur European companies to 
transfer activities outside the 
EU.' 

- Along with, planned Brussels 
rules on working-time and 
part-time working - neither of 
which have yet passed into law 

- Mr Maude said the panel also 
criticised proposed tightening 
of legislation on transport of 
hazardous substances. 

Mr Eekhoff - whose ministry 
is traditionally the most active 
proponent of free-market ideas 
in tiie Bonn government - con- 
gratulated Britain on being 
“more successful than we are 
on deregulation and privatisa- 
tion." 

This was music to the ears of 
Mr Maude, who deregulated 
himself in. 1992 - after losing 
his parliamentary seat - and 
now is in charge of interna- 
tional privatisation operations 
at Morgan Stanley. 




Thornton is a specialist fund management 
subsidiary of the Dresdncr bank, one of Europe’s largest 
and most important banks. Funds under management 
currentlv exceed US$3 billion. 



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They will have responsibilities for the marketing and sales of the whole range of 
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will be considerable. 

Please write in confidence' with past career details, to me personalty, Mark Lynam, 
Joint Managing Director. Thornton Management limited, Swan House, 33 Queen 
Snee^SSEC4RiAX. ' ' 


NEWS: EUROPE 


Italians 
protest 
against 
state TV 
changes 

By Robert Graham in Rome 


A chorus of protest has greeted 
the reorganisation of tbe edito- 
rial management of the RAI, 
Italy's state broadcasting 
organisation, carried out by 
the appointees of tbe govern- 
ment of Mr Silvio Berlusconi. 

A group of prominent intel- 
lectuals and broadcasters have 
petitioned President Oscar 
Luigi Scalfaro to intervene 
over what they claim are curbs 
on the freedom of expression. 

The opposition, headed by 
the former communist Party of 
the Democratic Left (PDS). has 
protested that the government 
has tightened its hold on infor- 
mation; and unions working at 
the RAI have threatened to 
take court action against the 
management. 

One of the new board mem- 
bers, Mr Alfio Marchini, per- 
sonally endorsed by the 
speaker of the chamber of dep- 
uties in the Italian parliament, 
has also resigned in protest 
The reorganisation, com- 
pleted on Tuesday, came i 
almost 45 days after the first 
editorial changes were intro- 
duced and involved the 
removal of some personnel 
only recently appointed. 

Government supporters have 
justified the appointments and 
| the overt political interference 
on the grounds that the RAI 
has always been politically 
controlled. The appointments 
involve programme controllers 
and channel director generals 
for the RAI’s three TV 

p.haTrneflq 

The populist Northern 
League, usually an opponent of 
its coalition colleagues on 
media matters, has been 
noticeably silent over the past 
24 hours, not least because 
some of its appointees have 
gained a foothold and the third 
television channel will have a 
federal/regional framework. 

The complaints follow three 
main lines. The first is that the 
right-wing coalition govern- 
ment has deliberately placed 
its own sympathisers in the 
key positions, regardless of 
individual professional qualifi- 
cations. The neo-fascist MSI/ 
National Alliance has done 
well in securing a substantial 
foothold; but at the same time 
a number of persons once iden- 
tified with. Socialist leader Bet- 
tmo Craad and recycled as 
Forza Italia are hack in power. 

A second line of complaint is 
that the financially troubled 
RAI risks being seriously 
weakened by the changes so 
aiding the competition - the 
three television channels of 
prime minister Berlusconi's 
Fininvest This in him raises 
the running sore of Mr Berios- 
cam’s conflict of interest 
The third issue concerns the 
absence of any independent 
control over state-run televi- 
sion. Tbe management board is 
headed by Mrs Letizia Moratti, 
a prominent stockbroker 
brought in by the government 
The board in him is monitored 
by the parliamentary media 
committee that is dominated 
by the governing coalition. 


Balladur suffers political setback but underlying employment trend is good 

French jobless reaches record high 


By Andrew Jack in Parts 

French unemployment levels 
for September jumped to a 
record high of &35m, 12.7 per 
cent of the labour force, 
according to government sta- 
tistics released yesterday. 

The figures were disappoint- 
ing news for the conservative 
government of the prime min- 
ister, Mr Edouard Balladur, 
whose undeclared presidential 
ambitions rest on his ability to 
prove he can bring down 
unemployment, the main con- 
cern of French voters. 

However, economists noted 
that the poor figures disguised 
an improving underlying 
trend, and said there was no 
question but that unemploy- 
ment would be on an overall 
downward path in the run-up 
to next April’s presidential 
election. 

The government did its best 

to play down the significance 


Francs 

Unemployment rate % 

12.6 — - 


12.6 



12.5 - - 


NO J FMAMJ JASON 
1993 94 

Source: DoaMreem 

of the rise, although some com- 
mentators expressed concern 
at the high rate at a time of 
economic recovery within the 
country. 

The seasonally-adjusted 
number of people seeking work 
rose by 13.900 people or 0.4 per 
cent to 3,351.900 during the 


month, following an increase 
of 0.5 per cent in the August. 

Mr Michel Graud, the minis- 
ter of labour, said tbe increase 
reflected a number of people 
joining the workforce for the 
first time who were inspired to 
apply for jobs because they 
perceived the economy to be 
recovering. 

He said that much of the rise 
was because of women enter- 
ing tbe workforce. 

Mr Giraud said the govern- 
ment was sticking to its fore- 
cast that unemployment would 
stabilise at the end of the 1994 
and fall in 1995, a view that 
economists said they still 
believed. 

However, the rise was critic- 
ised in the French parliament 
by Mr Martin Malvy, the leader 
of the socialist group, who said 
it showed “the bankruptcy of 
the solutions put in place by 
the government”. 

Mr Malvy said the jobless fig- 


ures cast doubt on Mr Baha- 
dur’s ability to deliver on a tar- 
get of cutting lm from the job- 
less roll in tbe next few years 
and 200.000 in 1995 alone. “How 
can one. in these conditions 
have the slightest faith in the 
promises of Mr Balladur as a 
candidate (for president),” he 
said. 

Reactions to the figures from 
analysts were mixed yesterday. 
Mr Gwinn Hacche, a European 
economist for James Capel, 
said: “This is a bit disappoint- 
ing. We had expected unem- 
ployment to remain unchanged 
but this is a new record." 

He said it was surprising to 
see the increase at a time when 
there was strong economic 
recovery in France above the 
levels in much of the rest of 
Europe, and reflected an 
underlying high level of struc- 
tural unemployment in the 
country. 

Mr Hacche said there was a 


“worrying trend” of structural 
unemployment “ratcheting up” 
after each recession in France, 
aided by a minimum wage and 
a generous social security 
system. 

“The government must be 

finding it increasingly difficult 

to find new schemes especially 
for the young unemployed," he 
said. "The budget deficit 
means they cannot embark on 
general reflation and it may 
favour Mr Jacques Chirac who 
has called for more domestic 
action to tackle joblessness." 

However. Ms Esther Bar- 
oudy, senior economist at 
Credit Lyonnais, said: “It looks 
like things are going the gov- 
ernment's way. 

“The trend is really improv- 
ing. We are seeing a stabilisa- 
tion rather than any dramatic 
increase. What influences con- 
sumer confidence is the rate of 
change, not the absolute 
numbers." 


Swedish fiscal package targets debt 


By Christopher Brown- Humes 
in Stockholm 

Sweden’s Social Democratic 
government yesterday promised new 
measures to stabilise the country’s 
fast-growing debt, saying the moves 
would reduce the country’s budget defi- 
cit and bring down interest rates. 

In a fiscal package announced yester- 
day, tbe government included 
SKr31.6bn (£2-7bn) in tax increases and 
SKr25.5bn in spending cuts, SKrfibn 
more than the SKrSlbn “budget 
strengthening” total outlined by the 
party in the run-up to the September 
election which brought it to power. 

A farther SKr20bn of unspecified 
new measures, mainly spending cuts, 
will he presented in Sweden’s Janizary 


budget Mr Gdran Persson, the finance 
minister, said the proposals should be 
sufficient to enable Sweden to stabilise 
centra] government debt by 1998 or 
even earlier. 

But the markets took a more scepti- 
cal view and some commentators 
suggested further savings would be 
needed. Bond yields rase a few basis 
points. 

The package was denounced by Mr 
Carl Bildt, leader of the opposition 
Moderate party, who called it “the big- 
gest tax increase in Swedish modern 
history” and a return to the “failed” 
Social Democratic policies of the past 

The Federation of Swedish Industries 
regretted the emphasis on tax increases 
and the delay In implementing badly 
needed savings. The size of Sweden’s 


budget deficit, projected at 13 per cent 
of gross domestic product in the cur- 
rent financial year, and the growth in 
state defat are the main symptoms of 
the country's financial crisis. The diffi- 
culties have led Moody's, the US rating 
agency, to consider downgrading Swe- 
den's debt rating. 

Tbe minority Social Democratic gov- 
ernment hopes to get the SKr57.1bn 
package through parliament with tbe 
support of the former communist Left 
party. 

Tbe government forecast GDP 
growth of 2J5 per cent in 1994, rising to 
3.4 per cent next year. This is a more 
optimistic view of the outlook than 
most independent commentators have 
taken. Inflation is forecast at 3.0 per 
cent next year while unemployment. 


excluding those on training schemes, is 
expected to fell to 6.9 per cent from 8.0 
per cent in 1994. 

Mr Lars Heikensten, chief economist 
at Svenska Handelsbanken, said the 
government could not have risked 
more drastic measures yesterday in the 
run-up to Sweden’s referendum on EU 
membership on November 13. But he 
believed the government was “tatting a 
risk” by not proposing tougher mea- 
sures in January. 

Mr Persson urged Swedes to vote Yes 
to EU membership, warning that tbe 
economic costs of staying outside were 
greater than those of joining. Member- 
ship would cost Sweden around 
SKr20bn a year, but he said this would 
largely be funded by the groups which 
would most benefit from membership. 


Finland Investor Conference 


Finland Investor Conference will be held in London on November 1 Oth. organized by Finnish Stockbrokers Association id collaboration with 

the Finnish Ministry of Trade and Industry. - - 

THE THEME FOR THE CONFERENCE 

is the presentation of the Finnish state-owned companies to investors on international capital markets. The event offers the delegates the opportunity to hear 
the views of the Ministry of Trade and Industry (Mr Marti Vuoria, Secretary General) as the majority owner of the state-owned companies. 

A current macroeconomic review (Mr. Pcntti Varna. Managing Director. Institute for Economic Research) will give background for the presentations of 
the participating scare-owned companies that all represent different branches of the Finnish economy. 

The opening ceremony will be given by Mr. Juhani Erma, President, CEO, Helsinki Stock Exchange. 


COMPANIES TO BE PRESENTED: 


mSO-GUTZEITOY Enso is one of Europe's leading forest indus- 
try groups. Its operations are focused princi- 
pally on three sectors: liquid and food packaging boards and graphic boards, 
publication papers, and fine papers. Enso is also Europe's largest producer of 
sawn timber, in 1993 Enso's net sales were i I .(>85 million and the balance 
sheet total was £ 3,590 million. 

The presentation will be given by Mr. Esko Makda. Senior Vice President. 


M KEMIRA Kemira is an international chemical group 

whose main products are water treatment 
chemicals, pulp and paper chemicals, titanium dioxide pigments, palms 
and planr nutrient's. In (993 Kemiras's net sales were £ 1,527 million and 
the balance sheet total was £ 2,024 million. 

The presentation will be given by Mr. Heimo Karinen. Chairman and CEO. 


S/7yWW7//7 Finnair, the national airline ot Finland has 

focused on top qualiry service in selected 
niche markets. Helsinki, the main hub of Finnair. is an ideal gaLewav for 
connections on many intercontinental flights and to the emerging markets in 
Russia and the Baltic States. In the financial year 1993/^4 rhe Groups 
turnover amounted to £ 72C> million and the consolidated balance sheet 
totalled £ 83S million. 

The presentation will be given hy Mr. Petri Pcntti. Group Treasurer. 


1VO is a leading Finnish energy group which operates in 
GROUP the domestic and international energy markets. The Group 
supplies power and heat and offers a wide range of services relating to energy 
systems and power transmission. In 1993 IVO’s net sales were £ 870 million 
and the balance sheet total was £ 2,0~0 million. 

The presen ration will he given by Mr. Kalevi Numminen, President and CEO. 


^NESTE Neste is a Finnish-based international oil and chemi- 
cals company active in nearly 40 countries worldwide. 
The Corporation provides services for the transport and energy sectors, and 
solutions for industry's chemical and material requirements. In 1993 
Nesrc's net sales were £ 8.J37 million and dbe balance sheer (oral was 
£ 5,848 million. 

The presentation will be given by Mr. Jaakko Ihamuotila. Chairman and 

CEO. 


up RAUTARUUKKI Rautaruukki is a highly diversified 

company with comprehensive exper- 
tise in steel and its many applications. The Group has production Ktcilities 
in six European countries and sales companies in three continents. In 1993 
Kautaruukki's net sales were £ 904 million and the balance sheer total was 
£ I.42S million. 

The presentation will be given by Mr. Mikko KjvimaJa. Managing Director. 


THORNTON 


A member lit Use Oresdra Bank Croup 


^ STOCK EXCMANCE 

The Helsinki Stock Exchange provides an efficient and well-regulated environment for trading in Finnish Securities. 

Formallv established in 191 > with roots in rhe IKtiO's, the HSF.ol today has to offer an automated and decentralised trading system, 
a realtime information system, and an integrated clearing and settlement service. 

Share price development on the HSH has been among the best in tbe world for the past two years. In 1993 the change was over 90 per ernr while this year 
the upswing hits continued at some 20 per cent. The trading volume of equity shares has increased by some 80 per cent during rhe past 1 2 months. 
The accu in ula teJ value of trading flu's sear w.u over L 6.5 billion at rhe end of September. 


THE CONFERENCE WILL BE HELD AT: 

1 lie Conference Forum. The Sedgwick Centre. London El 8DX 

FOR MORE INFORMATION, PLEASE CONTACT: 

Charles Palmer, Gavin Andcr.son&Gumpany, New Liverpool House, 15-17 Eldon Street. London EC2M 7LA, United Kingdom 

SPONSORS: 

Ministry of Trade and linhivrrv. 1 leUinki Stock Exchange. Finnish Options Exchange 


FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 


NEWS: THE AMERICAS 


A year of divided loyalties 



This is the 
season of fall* 
ing leaves, 
struggling can- 
didacies and 
the frantic 
search for 
political 
endorsements. 
Rarely, how- 
ever, have 

US MD-TERM th ® re been 

striking 

— — endorsements 

which depart from political 
norms. The big questions are 
whether this year's batch win 
make a difference in key races, 
the extent to which they have 
been dictated by local circum- 
stances and candidacies and, 
since the majority of endorse- 
ments have been of Democrats 
by prominent moderate Repub- 
licans, if there is a revolt brew- 
ing against the opposition’s 
dominant right-wing. 

Mr Ross Perot, who admits 
to no party allegiance, joined 
the parade on Tuesday by com- 
ing out for Ms Ann Richards, 
the Democratic governor of 
Texas whose re-election strug- 
gle against Mr George W Bush 
Jr, son of the former president, 
is too close to call 
The Immediate interpreta- 
tion of the Texas billionaire’s 
endorsement is that it was a 
further manifestation or his 
animus for the Bush family so 
evident in the 1992 presidential 
election and since exacerbated 
by some acid comments in Mrs 
Barbara Bush’s memoirs. 

Mr Perot, whose political 
organisation. United We Stand, 
has not been a coherent force 
this election year, has gener- 
ally urged a vote for Republi- 


cans in the November 8 mid- 
term elections and most of his 
supporters are identified with 
conservative positions. So he 
will spend this weekend cam- 
paigning In Washington state 
for the opponent of Mr Tom 
Foley, Democratic Speaker of 
the House. But he has also 
endorsed the re-election of Mr 
Roy Rohmer, the Democratic 
governor of Colorado. 

Other endorsements to catch 
the eye include the Republican 
mayors of New York and Los 
Angeles backing the Demo- 
cratic candidates for governor 
and the Senate respectively, 
though, in California, Mayor 
Richard Riordan also came out 


of the fact that Governor Wil- 
son has made support for the 
initiative a centrepiece of his 
campaign. 

Opposition to hard-right can- 
didates has also surfaced from 
well-known local Republicans 
in Minnesota, Michigan, Penn- 
sylvania and Iowa. But a con- 
trary trend is observed in some 
newspaper editorials, with the 
Washington Post and the Los 
Angeles limes, both generally 
liberal in outlook, coming out, 
respectively, for Republicans 
as mayor of the nation’s capi- 
tal and for governor of Calif- 
ornia. 

Conservative candidates 
have also been endorsed by 


Rarely have there been quite so 
many endorsements departing from 
political norms, writes Jurek Martin 


for Governor Pete Wilson, the 
Republican incumbent. 

Virginia has seen the most 
conspicuous variation on the 
theme with Republican stal- 
warts from the Reagan and 
Bush a dminis trations, joined 
by Mrs Nancy Reagan, con- 
demning Mr Oliver North, the 
Republican Senate candidate. 

The conspicuous exception 
has been Mr James Baker, for- 
mer secretary of the treasury 
and state departments, who 
may be eyeing a presidential 
run of his own in 1996. 

Mr Jack Kemp and Mr Bill 
Bennett, cabinet secretaries 
under President Bush, came 
out sharply against the Califor- 
nian proposition that would 
deny social services to illegal 
immigrants. This was in spite 


powerful lobbies. The National 
Rifle Association, for example, 
is seeking its revenge on those 
in Congress who supported 
gun control. 

The impact of endorsements 
has been varied. Mayor 
Rudolph Giuliani's backing 
seems to have helped turn New 
York Governor Mario Cuomo's 
campaign around. When it 
came early last week, he was 
behind Mr George Pataki, the 
Republican, but polls out in 
the last 24 hours put him 12-18 
points ahead 

There is no polling measure 
yet of Mr Riordan 's Sunday 
support for Senator Dianne 
Feinstein, holding a slim lead 
over Congressman Michael 
Huffington, but it certainly 
cannot harm her in southern 


US economy continues to expand 


All regions of the US are continuing to 
expand, and higher prices are starting to 
work their way into the economy, the Fed- 
eral Reserve said in its “beige book" sur- 
vey of economic conditions, writes George 
Graham in Washington. 

Hie beige book, which is released two 
weeks before each meeting of the Federal 
Open Markets Committee, which sets Fed 
interest rate policy, said consumer spend- 
ing remained strong and labour markets 
are tight or ti ghtening in most of the coun- 
try’s 12 Federal Reserve districts, though 
only in specific sectors. 

Hie latest report was prepared by the 
Dallas Federal Reserve Bank and will be 
used at the November 15 FOMC meeting. 


at which the Fed is widely expected to 
raise interest rates by at least half a per- 
centage point 

The Fed said there was little rise in 
retail prices, but "pressure is building in 
some districts.” The Commerce Depart- 
ment’s index of leading economic indica- 
tors, however, was flat in September, 
despite a sharp rise in building activity 
that had been expected to drive the index 
higher. The department said yesterday the 
index was unchanged at 1022 in Septem- 
ber, after rising 0.5 in August, with weaker 
orders for consumer goods helping to off- 
set the jump in building permits 
announced last month. 

Separately, the Commerce Department 


said that new orders for manufactured 
goods decreased by 0.2 per cent in Septem- 
ber. While orders for durable goods 
increased by 0.4 per cent, non-durable 
orders dropped by 0.8 per cent, their first 
decline for almost a year. Shipments of 
manufactured goods fell by 0.6 per cent in 
September, after rising 4.6 per cent in 
August; inventories dropped 0.2 per cent. 

The index of leading economic indica- 
tors is compiled from eleven statistics and 
is intended to signal turning points in the 
economic cycle six to nine months before 
they occur. The Commerce Department 
said six of the eleven components pushed 
the index higher in September, while four 
pushed it lower, with one unchanged. 


I'M SORRY / 



California, where she is weak- 
est. Governor Wilson now 
holds a solid lead over Ms 
Kathleen Brown, even though 
support for the anti-immigrant 
proposition, still likely to pass. 
has been falling. 

Both mayors argued the toss 
that Mr Huffington and Mr 
Pataki. if elected, could not be 
relied on to help their cities. 
Mr Giuliani was also motivated 
by dislike of Senator A1 
D’Amato, the New York 
Republican who is Mr Pataki’s 
patron. 

A Texas poll yesterday gave 
Governor Richards a s mall 
three-point lead over Mr Bush, 
but it was taken before Mr 
Perot's endorsement. In Vir- 
ginia, diehard supporters of Mr 
North, in a virtual dead heat 
with Senator Charles Robb, 
seem impervious to advice 
from Republican grandees. In 
Michigan, Governor John 
Engle r is on a cakewalk to re- 
election. 

In Washington, DC, few 
think the Post's endorsement 
of Mrs Carol Schwartz can pre- 
vent the return to city ban of 
Mr Marion Barry, a prospect 
which so horrifies residents of 
the city's only predominantly 
white ward that a semi-serious 
movement has been launched 
to secede to Maryland. 

More broadly. Democrats 
have taken some heart from i 
Republican ideological divi- i 
sions. with President Bill Clin- 
ton himself doing his best this t 
week to play them up in the 
company of Democratic candi- , 
dates who once spumed him 
But, mostly, it is the Demo- 
crats who are on the defensive 
and the Republicans who are 
more likely to vote. 





MIXED SUCCESS FOR SOTHEBY’S 
CONTEMPORARY ART SALE 


Sotheby's sale of cont- 
J y , emporary works of art in 
- New York on Tuesday 

■■SpjK • ' night well illustrate the 
* current state of the world 
art market: buyers were 
^ willing to pay reasonable 
prices for the best paintings bat there was 
no interest at all in the second rate, writes 
Antony Thomcroft. 

The auction totalled 512.145m (£7.48m) 
but 40 per cent of the 66 lots were unsold. 

One of the icons of “Pop” art, Roy 
Lichtenstein’s “I...Fm Sorry" (pictured 
above), showing a comic strip blonde 
shedding a tear, complete with balloon 
caption, sold, on estimate, for $2.47m to 
the Californian collector Eli Broad. 

Top" art has been the main casualty in 
the collapse of the contemporary market 
since 1990 and this was a reassuring 
price. There was an artist record in the 
$805,500 paid for Ellsworth Kelly’s 
"Green, Red, Yellow, Blue", four panels of 


those colours. Estimates and reserves had 
been kept low but jndging by the results 
even more caution will be needed next 
time. 

There were encouraging signs. "Let us 
now praise famous men,” a sQkscreen by 
Andy Warhol based on portraits of the 
artist Richard Rauschenberg and his 
family, was fought over by seven bidders 
and eventually went for $ 1.058m, ahead of 
estimate, while a drawing by de Kooning, 
"Monumental Woman,” which the artist 
gave to the late Harold Rosenberg, art 
critic of The New Yorker, on his birthday 
in 1954, also beat its forecast making 

$695,500. 

Its provenance made it desirable, as did 
the eight paintings sold by the New York 
publisher SXNewhouse, seven of which 
found buyers. 

However, the failure was the most 
important lot "Untitled,” by Cy 
Twombly, which was expected to make 
around 51m. 


IMF, World 
Bank begin 
talks in Haiti 

this week 

By Canute James in Kingston . . 

A to?™ from the International -Monetary 
Fund and the World Bank will begin a 
visit to Haiti at the end of this week for 
talks which will mark the start of interna- 
tional efforts to rebuild an economy enfeo 
bled by decades of dictatorial role and 

three years of economic sanctions. 

Mr Jean-Bertrand Aristide, Haiti’s presi- 
dent who was reinstated last month after 
three years in exile, has indicated he is 
willing to implement a range of sweeping 
reforms to breathe life into the economy. 

Mr Smarck Michel, the prime minister 
nominated by Mr Aristide, is also reported 
to lwp-k the reforms. However, even among 
Mr Aristide’s closest supporter, there is a 
view that the changes proposed are too 
radical and their unpopularity could dis- 
rupt the government’s other weak. 

The true indication of Mr Aristide's com- 
mitment will be known by the month-eud. 
The letter of intent to the IMF, which 
gHnniri be prepared within 10 days of_the 
visit of the joint team, wffl eontain. the 
economic targets to lay the ground for 
wider reforms. 

The mission will be led by the head of 
the Tnta»rAnwi«m Development WawTr Ml- 

Enrique Igiesias, and include officials from 
the World Bank and the UN. 

The framework for the economic pro- . 
gramme, which will not be completed ini 
the remaining 15 months of President ' 
Aristide's term, was agreed by a group of 
donor countries and Mr Aristide's govern- 

thin year 

It proposes extensive deregulation of the 
economy, the divestment of state enter- 
prises to local and foreign investors and 
tariff reform. Hie bureaucracy, is to be 
trimmed ar> d insti tutions, such as ^ judi- 
ciary an d pol ice, rebuilt 

Of the $770m needed for the programme 
over the next 15 months. World Bank offi- 
cials said yesterday $80m will be required 
to clear arrears to foreign creditors. This 
will open the door to further bilateral and 
multilateral financial assistance. 

Political calm should also elicit an 
increase in two other sources of finance - 
fimds for charities working in the country 
and remittances from Haitians overseas. 

Many Haitian businessmen believe the 
programme offers the best chance for eco- 
nomic revival. They say assembly indus- 
tries (garments, electrical appliances, base- 
balls - all for the US market) will 
theoretically be easy to restart if stability 
is maintained. But some US suppliers may 
be less enthusiastic to renew contracts for 
the assembled products because of -con- 
cerns about longer-term political stability. 
Furthermore, the US reimposed quotas 
recently on Haitian clothing imports. 


L,— 1 








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WORLD 


FINANCIAL TIMES TELECOMMUNICATIONS 

G.in/t'jvmw 


London - 6 & 7 December 1994 

The Financial Times annual conference will review developments changing the shape 
of the telecommunications industry worldwide and provide a high level forum to 
exchange views on the way ahead. 

ISSUES TO BE ADDRESSED INCLUDE: 

• Whither International Telecommunications Alliances? 

• Creating an Informations Society in Europe 

• Information Superhighways - the developing US scene 

• Regulating competition in Europe 

• Selling telecommunications equipment in a liberalising market 
SPEAKERS INCLUDE: 

• Dr Martin Bangemann • Dr Michael Nelson 

Member Special Assistant for Information Technolog 

European Commission The Office of Science & Technology Poficy, 

• Sir Iain Vallance • The Rt Hon Lord Young of Graffham 

Chairman Executive Chairman 

BT Cable & Wireless nlr 


Mr Robert B Morris III 
Managing Director. International Equity Research 
Goldman Sachs International 
Mr Donald Cruickshank 
Director General 

Office of Telecommunications (OFTEL) 


Dr Michael Nelson 

Special Assistant for Information Technology 
The Office of Science & Technology Poficy, US 

The Rt Hon Lord Young of Graffham 

Executive Chairman 

Cable & Wireless pic 

Dr Edward F Staiano 

Ptesktenl and General Manager, General Systems Sotor 

Motorola Inc 

Dr Hans Baur 
Member of the Board 
Siemens AG 


Arranged in association with the Financial Times newsletter “FT Telecoms Markets” 
There are some excellent marketing opportunities attached to this conference, please contact 
Lynette Northey on 071 814 9770 for farther details. 


WORLD TELECOMMUNICATIONS 

Please lick relevant boxes. 

O Conference information only. 

□ Cheque enclosed for £799.00. made payable to FT Conferences. 

□ Please charge my Masiorconj/Visa with £799.00. 

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Please return to: Financial Times Conference Organisation, 
PO BOY 3651. London SW12 8PH. Td: 081 673 9000 
Fax: 081 673 1335. 

World Telecommunications £680 + Vat 


Name Mr/MrVMiss/Ms/Other . 


Job Title Dept 

Company 


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FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 


a&na*-*3 • ,a * 


NEWS: WORLD TRADE 



WORLD TRADE NEWS DIGEST 


Lome ‘will not 
survive century’ 

'Hie Lome convention, the treaty nnrfpr which the European 
Union grants trade and aid concessions to the former Euro- 
pean colonies, will not survive the century in its current 
exclusive form, a senior EU said yesterday. 

Mr Peter Pooley, director-general of the development direc- 
torate, said in Tiondon: “I don’t see Lome lasting as an exclu- 
sive club beyond the end of the century.” The EU this year 
began to negotiate the fifth Lome accord with developing 
country governments, but he said; "If there is a Lome V. it will 
be a more generalised one.” There was no reason to exclude 
such countries as Bangladesh from the convention, he said. 

A new accord would also seek to differentiate between 
countries of different development levels, and differentiate one 
region from another, be said. Lome IV was agreed as the 
Berlin Wall was falling, but failed to take account of the 
consequences. Stephen Fidler, Latin America Editor 

Union Carbide files appeal 

VS c hem i c a ls company Union Carbide has ffjpri an appeal to 
the European Court of Justice over the European Co minis - 
sion’s approval of a $3bn (fl.Sbn) plastics joint venture 
between Royal Dutch/Shell group and Italy’s Montedison. 
Union Carbide said in its presort form the proposed venture 
threatened competition in polypropylene manufa cturing 
The Commission gave its go-ahead to the d e?i in June in 
spite of the fact that Shell and Montedison have at least 
partial control of the two main polypropylene manufacturing 
methods. Daniel Green, London 

Australia/NZ aviation talks 

Mr Laurie Brereton, Australia's transport minis ter, yesterday 
Mid be would meet his New Zealand counterpart, Mr Maurice 
Williamson, next week to discuss an aviation dispute between 
the two countries. Mr Brereton also stressed that a memoran- 
dum of understanding, which would have allowed. Air New 
Zealand to fly domestic Australian routes from November l, 
bad not been cancelled. 

A row erupted last week when the Australian government 
announced unilaterally that it was “freezing'' the memoran- 
dum for an unspecified period on the grounds that some of the 
conditions had not been fully complied with. This prompted 
speculation that the Australian government was trying to 
protect the flotation of its 75 per cent interest in Qantas, due 
nest year. Nikki Tait, Sydney 

Contracts and ventures 

■ SNC-LaValin, Canada's biggest engineering nnwrrifcm^ is 
to modernise and upgrade the Volvograd oil refinery for 
Lukoil, Russia’s biggest integrated oil company. The project 
will cost $400m and is due for completion in late 1996. The 
refinery's capacity is about 200,000 barrels dally. SNC-La valin 
win provide engineering services, procurement, project man- 
agement and start-up sendees using a Russian engineering 
firm as sub-contractor. Robert Gtbbens, Montreal 

■ Siemens has won a DMl50m (flOOm) contract for the 
gy pansitm of a pomped-storage water power plant in Guang- 
dong province, China. The plant will be one of the largest of 
its knid in the world, with a total output of 2.400MW. Reuter, 
Munich 

■ Toshiba Corporation has announced an agreement to 
license advanced semiconductor-related technology to Char- 
tered Semiconductor Manufacturing of Singapore. Michiyo 
Nakamoto, Tokyo 


India seeks private capital for toll roads 


By Stefan Wagstyi 
in New Delhi 

India is turning to private 
investors in an attempt to give 
a huge boost to developing its 
primitive road network. 

The government is issuing 
letters of intent worth $50m for 
the construction of three pri- 
vate sector-operated toll roads 
and one bridge - a first step 
towards attracting private cap- 
ital into an industry long domi- 
nated by the state. 

The four schemes are among 
about 30 projects totalling over 
$6 bn, including $5-8bn worth of 


motorways, earmarked by the 
ministry for surface transport 
for possible private sector 
development. Companies 
would build roads and bridges, 
collect tolls to recoup tbeir 
investment for a fixed period 
and then transfer ownership to 
the state. 

The ministry's plans are an 
extension of the government's 
efforts to liberalise the econ- 
omy and to expand India's 
infrastructure after years of 
underinvestment 

Officials say 42 companies 
have expressed interest in 
build-operate- transfer schemes, 


including Renong, Malaysia’s 
largest business group, which 
has suggested investing up to 
$ 25 bn building a 12,000 kilo- 
metre national motorway net- 
work. Other interest has come 
from US, European, and Asian 
companies. Mr Rajeev Talwar, 
a senior transport ministry 
official, said; “The amounts of 
money we need to invest are 
immense. But we have had an 
overwhelming response from 
private industry." 

The projects include a letter 
of intent with Costain, the Brit- 
ish construction group, to 
build a $l5m bridge across the 


Narmada river on the west 
coast of India along a trunk 
road linking Bombay with the 
fast-growing state of Gujarat 
The other three schemes cov- 
ered by the letters of intent are 
for by-passes at Nellore, in 
Andhra Pradesh, Coimbatore, 
in T amil Nadu, and Hubli- 
Dharwad, in Karnataka. The 
Nellore project has been 
awarded to HSSl of Malaysia, 
and an Indian partner, and the 
other two projects to SPIC, a 
diversified south Indian group. 

Companies say negotiating 
contract terms could take some 
time since privately operated 


roads and bridges are a nov- 
elty. The biggest problem will 
be ensuring that rules govern- 
ing toll-collection are free from 
future political interference. 
This may prove difficult in a 
country where many people 
have come to expect that pub- 
lic services, including trans- 
port, cost little or nothing. 
Simply ensuring that travellers 
do not ignore toll booths will 
be a challenge. 

Also, even though Mr Jag- 
dish Tytler. the transport min- 
ister, and his senior officials 
are enthusiastic about private 
investment, some officials are 


dragging their feet. Parliament 
last year authorised private 
investment in roads, but the 
ministry has yet to publish a 
new highways policy incorpo- 
rating the change. 

Meanwhile, the ministry is 
also trying to attract private 
investment in ports. Private 
companies are working on 
schemes worth $3Q0ra to install 
privately operated terminals, 
container bays, berths and 
storage areas. Projects worth a 
further $4bn are under consid- 
eration, including a $500m 
chemicals terminal in Bombay 
and a $600m harbour in Goa. 


US in new open 
skies gambit 


Market to get one’s teeth into 

Taiwan’s Gatt quest puts betel-nuts on agenda, writes Laura Tyson 

m 1 niilf^n'c mu>ct In lumrnio mi, cl nhoni hinnJnvtn Iho 


By George Graham 
In Washington 

The US transportation 
department plans to sidestep 
the larger European countries 
in its quest to open up the 
skies for US airlines by 
starting negotiations with nine 
smaller European na tions. 

Mr Federico Pena, the trans- 
portation secretary, said the 
US plans to build on the open 
skies treaty already signed 
with the Netherlands, and 
hopes to conclude agreements 
in the next few months. 

US officials refused to say 
which countries would be 
involved in the negotiations, 
but they are all smaller 
nations in western Europe, 
including same members of the 
European Union. France, Ger- 
many, Italy and the UK are not 
involved. Aviation experts said 
the list was likely to include 
Switzerland, Austria, Den- 
mark, Sweden and Norway, 
and probably Ireland, 

Belgium and Luxembourg. 

The US is deadlocked in avia- 
tion negotiations with the UK 
and France, and the new policy 
appears to abandon the 
attempt, urged by same big US 
airlines, to seek a global open 
skies agreement 

In May, Mr Pena said that 
the current system of bilateral 
treaties which regulate inter- 
national air transport was 
“designed to limit not to fos- 
ter, competition, and inhibits 


or distorts globalisation”. 

But in a draft policy state- 
ment issued for comment this 
week, the department said it 
would concentrate on open 
skies agreements with “a 
group or countries that share 
our liberalisation vision and 
offer important flow traffic 
potential for our carriers,” 
while renewing efforts to 
achieve more liberal agree- 
ments with larger partners 
such as Canada and the UK. 

Mr Jeffrey Shane, a lawyer 
with Wilmer, Cutler & Picker- 
ing in Washington and former 
head of aviation policy in the 
Bush administration, said the 
Clinton administration bad 
found “some way of advancing 
the ball”, as there appeared to 
be no one ready to sit on the 
other side of the table for mul- 
tilateral talks. 

“Notwithstanding the fact 
that we are talking about 
smaller countries, which will 
not on the surface provide 
great access opportunities for 
US carriers, by talking about a 
cluster of nine of them it will 
certainly shake thing s up," Mr 
Shane s aid 

The Netherlands agreement 
has already brought dividends 
by paving the way for approval 
of a co-operation agreement 
between ELM. the Dutch air- 
line. and Northwest Airlines. 
Government approval of a sim- 
ilar arrangement between Brit- 
ish Airways and USAir was 
much more conditional 


T aiwan's quest to become 
a signatory to the Gen- 
eral Agreement on Tar- 
iffs and Trade has invited 
demands by its trading part- 
ners that it first open its rela- 
tively closed economy to more 
cars, beef, fruit, fish and. of 
course, rice. No one has yet 
mentioned betel-nuts. 

Yet Taiwan's market for this 
mild stimulant, chewed in 
many countries throughout 
I east and south-east Asia, is 
I believed to be worth more than 
that for rice. And as with rice, 

! imports are banned. 

Indeed, the Taiwanese appe- 
tite for betel-nut has led to 
environmental, health and 
even criminal problems in 
small, crowded Taiwan as 
fanners across much of the 
island have converted paddy 
fields into betel-palm groves. 
Of 21m Taiwanese, some 2.5m 
chew the nut, whose total 
street value is estimated at 
US$2bn (£l.2bn) a year. 

“It's much more profitable 
than rice, and cheap and easy 
to grow - no hard work, no 
fertiliser," says Mr Antonio 
Chiang, publisher of The Jour- 
nalist, Taiwan's leading weekly 
political magazine. 

It was Mr Chiang who coined 
the now widely used appella- 
tion “Taiwanese chewing gum” 
for the much-maligned betel- 
nut, called binglang in Chi- 
nese, some 10 years ago. His 
family grows betel-nut in their 
paddy fields near Taichung in 
central Taiwan. 

“If you drive a truck, you 


must chew binglang . . . the 
only alternative is amphet- 
amines," says Mr Chiang. “But 
binglang is much better, 
because amphetamines are 
stronger and addictive." 

The market for betel-nut has 
grown in the last decade and 
now rivals rice, which has 
declined in importance, as 
Taiwan's biggest cash crop. In 
1993, the total value of betel- 
nut production sold by farmers 
was T$lQ.3bn ($396m1, com- 
pared with T$405bo lor rice, 
according to official figures. 
But officials concede that those 
figures may be misleading, not 
only because it is difficult to 
monitor betel plantings. 

“If you take the farm price, 
then rice is a bigger market. 
But the street value of betel- 
nuts is much higher than rice 
because of the huge mark-up," 
says Mr Tai Teh-fang. a 
researcher in the economics 
and planning department of 
the agriculture ministry. 

Betel-nut chewing has 
become increasingly popular in 
recent years, in part due to ris- 
ing income but also because it 
is seen as an emblem of ethnic 
Taiwanese consciousness. Chi- 
nese who came to the island 
from mainland China in 1949 
as a rule do not chew. 

Mr Wu Hui-lung, chief of the 
soil conservation division in 
Taiwan’s agriculture ministry, 
says: “Because the price of 
betel-nut is getting higher and 
higher, farmers are now ille- 
gally cutting down forest to 
grow betel-palms. On the flat 


Taiwan: betel-nuts gate ground 


Harvested areas 

Betel-nut 
■000 heetacnos 


Rice 

'000 hectacres 
■ - 700 ■ 





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3 4989 es 87 59 91 92 

Stuaoa Food Buraou. TPG 


4983 85 87 89 91 93 


land there is no problem, but 
in the mountain areas it is 
causing severe erosion and 
problems for water conserva- 
tion.” 

Officials say fanners could 
earn at least US$25,000 a hect- 
are each year from betel-palm 
plantings, far more than 
US$2,000 a hectare for rice. 
“Those betel-nut farmers are 
very rich," says Mr Tai from 
the agriculture ministry. 
“Some of them even drive Mer- 
cedes- Benzes." 

The country's health authori- 
ties are concerned about tire 
medical effects of betel chew- 
ing which i nclude a high inci- 
dence of oral cancer. The gov- 
ernment is also worried about 
gangster control of the whole- 
sale industry, smuggling and 
road-side betel-nut stands that 
have proliferated across the 
island. 

Mr Wu says the ministry is 


studying the possibility of 
legalising betel-nut imports to 
reduce the economic benefit to 
fanners In the hopes of stem- 
ming cultivation, but no deci- 
sion has yet been made. Such 
imports have been banned by 
the ruling Nationalist govern- 
ment for more than four 
decades but in recent years 
smuggling from Thailand, the 
Philippines and China has 
become rampant 

Mr Lan Min-chuan, a trade 
specialist in the agriculture 
ministry's economics and plan- 
ning department, says that in 
any case Taiwan would be 
obliged to open its market to 
imports of all agricultural 
products once the island signs 
up to Gatt 

“The market will not be 
opened all at once to imports, 
but when it is we will defi- 
nitely impose an import duty.” 
he says. 


.'or •. 



DGB4NK6 









6 


FINANCIAL TIMES THURSDAY NOVEMBER 3 19^4 


NEWS: INTERNATIONAL 


Banks hit by interest rate curve ball 

Gerard Baker on the latest chapter in their long struggle to survive 


W hen Ichiro Suzuki of 
the Orix Blue Wave 
baseball team slug- 
ged his way into the record 
books this summer, becoming 
the first player in Japanese his- 
tory to make 210 hits in a sea- 
son, he was not just propelling 
his club to one of its best sea- 
sons ever. He was also setting 
interest rates for thousands of 
customers of the leading local 
bank in the port city of Kobe. 

As the season ended Hyogo 
Bank came up with a novel 
scheme that neatly exploited 
the country's two modem 
obsessions - baseball and sav- 
ing. It offered customers an 
interest rate on five-year 
deposits of one-tenth of the 
prolific hitter's batting percent- 
age for the season. 

Ichiro, as everyone knows 
him, achieved a club high bat- 
ting average of 38.5 per cent, 
meaning he scored a hit on 
more than one in three 
attempts. So the bank offered 
customers a rate of 3A5 per 
cent for a minimum invest- 
ment of Yl 00,000 (£630). 

The rate was just a little 
above prevailing market rates 
of around 3.7 per cent, and 
Hyogo’s managers acknowl- 
edge that it was probably the 
enticement of an autographed 
baseball as much as an extra 
few thousand yen a year that 
brought the crowds queueing 
outside Hyogo’s branches 
when the offer opened. 

But the real significance of 
the “Ichiro Time Savings" 
account was that it opened a 
new chapiter in the continuing 
saga of Japanese banks’ strug- 
gle far survival 
The bank was able to offer 
the special interest rate thanks 




Banking on baseball 

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to the final stage of the liberal- 
isation of Japanese interest 
rates last month. The finance 
ministry removed the last con- 
trols on banks’ deposits by per- 
mitting them to open five-year 
deposit accounts, and to set 
their own interest rates on all 
hitherto regulated time and 
demand air oifnts . 

The effect was predictable. 
Hyogo's innovation was the 
most novel of the banks' 
responses to the arrival of a 
new era of market economics, 
but the effect was the same 
everywhere - a smaD rise in 
savings rates. 

But while the reform was 
good news for customers, it 
spelt further problems for the 
banks themselves since it 
could hardly have come at a 
worse time. His removal of the 
last regulations now makes 
them more sensitive to interest 


rates at precisely the moment 
when the cost of borrowing is 
starting to rise. 

For the last four years inter- 
est rates have been falling as 
Japan has grappled with its 
worst recession since the sec- 
ond world war, but as the econ- 
omy starts to recover a period 
of rising interest rates will 
weaken banks' profitability. 

A ccording to Mr Nozomu 
Kunishige, banking 
analyst at Kleinwort 
Benson in Tokyo: “Deregu- 
lation of deposit rates means 
banks’ funding costs are set to 
rise sharply, while their reve- 
nues are likely to remain slug- 
gish-" Deposit rates tend to 
rise more quickly than l anding 
rates, l oading to thinner mar- 
gins. 

Since the end of 1993. banks’ 
short-term prime lending rate 


has remained unchanged at 3 
per cent, while deposit rates 
have risen. The three-month 
certificate of deposit rate has 
risen from around 2.0 to 23 per 
cent in the same period, cut- 
ting margins by 30 per cent. 
Worse still, the enormous 
hangover of bad debts from the 
collapse of the “bubble econ- 
omy". a period in the late 1980s 
of rapidly rising property and 
other asset prices, mean banks 
face limited demand for lend- 
ing. That makes it difficult for 
them to raise their lending 
rate. Indeed in the last few 
months, some banks have been 
offering loans to blue-chip cus- 
tomers at rates well below 
prime lending rate. 

The position is even more 
precarious for the smaller 
regional banks such as Hyogo. 
They draw a far higher propor- 
tion of their funds from indi- 


vidual customers, where liber- 
alisation is forcing rates even 
higher. Interest income 
accounts for more than 80 per 
cent of gross business profits 
at such banks. They are 
already heavily laden with bad 
debts which require substan- 
tial provisions from profits. In 
the past they were at least 
offered some protection by a 
very low cost of funds, as 
deposit interest rates were 
fixed at low levels. Now that 
advantage has disappeared. 

The likeliest implication, 
according to most analysts, is 
the Further fracturing of the 
oligopoly that has character- 
ised Japanese banking. In the 
past, banks have been notori- 
ously hidebound by a desire to 
stay close to the pack. This 
natural inclination was 
reinforced by the strict control 
of the finance ministry. In the 
absence of competition in 
interest rates, differentiation 
was achieved by minor disttnc 
tions in marketing approaches 
According to David Thread 
gold, h ankin g analyst at Bar 
clays de Zoete Wedd in Tokyo 
“ there is no doubt that banks 
strategies are now diverging, 
and the deregulation of the last 
few years means pricing is a 
key part of that”. 

T he strongest banks are 
likely to exploit their 
muscle: for the first 
time the gap between the 
strongest and the weakest will 
take on meaningful propor- 
tions. Though few dare say it 
now, that could even mean 
that the Japanese banking sec- 
tor may come to experience 
what baseball has had all 
along - winners and losers. 


Palestinian aid scheme lags by six months 


By Jutian Ozame 
in Casablanca 

The World Bank said publicly for the 
first time yesterday that the interna- 
tional aid programme to Palestinians 
was mare than six months behind 
schedule, amid growing concerns about 
the potentially explosive impact of eco- 
nomic stagnation on the peace process. 

Mr Caio Koch-Weser. the body's Mid- 
dle East and North Africa vice-presi- 
dent said that by the end of the year 
donors will have disbursed only about 
$220m (£137m) to the Palestinians out of 
a total $700m committed for the year. 

The Palestine Liberation Organisa- 
tion has complained about the bottle- 
necks and bureaucracy in the donor aid 
mechanism and warned that failure 
urgently to raise living conditions in 
Gaza is eroding Palestinian support for 
peace with Israel and fuelling an 
Islamic opposition. 


Mr Koch-Weser conceded that, with 
hindsight, donors could have found tes- 
ter ways of disbursing money. 

But he said: “Success is not about 
disbursing money fast but doing so in a 
way to have a visible and rapid 
improvement in the economic and 
social con ditions that mother and 
child in the refugee camps can see the 
change on the ground.” 

Donors had over-estimated the Pales- 
tinian ability to build sronoirifc man- 
agement institutions and clearly dt-ffne 
and streamline decision-making pro- 
cesses. It had been hard to get adequate 
donor co-ordination and avoid overbur- 
dening embryonic Palestinian institu- 
tions with second-priority projects. 

Delays in aid disbursement reflected 
delays in political talks between Israel 
and the PLO. also more than six 
months behind schedule. Donors had 
assumed the still Israeli-occupied West 
Bank would have been transferred to 


the Palestinians by last July, a move 
now unlikely before early next year. 

The transfer of the West Bank is vital 
to Palestinian economic viability and 
public finances owing to its consider- 
able revenue potential. 

The revenue base of the impoverished 
900,000 residents of Gaza-Jericho is 
insufficient to sustain creation of a cen- 
tral Palestinian authority and bureau- 
cracy and pay running costs, and the 
salaries for 10,800 policemen and 12.000 
civil servants. The PLO estimates it can 
collect a maxim inn $5m a month locally 
and a further $Gm Customs duties and 
income taxes levied by Israel but trans- 
ferred to the Palestinians through a 
clearance mechanism. 

Control over the West Bank would 
add at least a further $20m a month in 
clearance from IsraeL and considerably 
reduce the need for donor financing of 
recurrent costs of the Palestinian 
authority. 


But Mr Koch-Weser said donors were 
determined not to let political delays 
continue to obstruct the aid effort. “In 
future one must make sure the ups and 
downs of the peace negotiations don't 
have a major impact on the momentum 
or the economic reconstruction and 
rehabilitation efforts.” 

There has been vociferous condemna- 
tion of Israel's unilateral closure of Its 
borders with Gaza and the West B ank 
two weeks ago which put 65,000 Pales- 
tinian migrant labourers out of work. 

Donors say the closure, and Israeli 
prime minister Yitzhak Rabin's descrip- 
tion of Gaza as a terrorist territory have 
sent worrying signals to the aid com- 
munity and potential investors. 

Donors said in Casablanca there was 
an urgent need to revise the aid pro- 
gramme and focus efforts on high-im- 
pact job creating schemes such as pub- 
lic works to tackle huge unemployment 
and poverty. 


Hamas moderates and 
Israel edge towards talks 


By Eric Saver in Jerusalem 

Just two weeks after a Hamas 
suicide bomber killed 22 bus 
passengers in the heart of Tel 
Aviv, Israel and his Islamic 
Resistance Movement are edg- 
ing towards a dialogue. 

Two West Bank ffamas lead- 
ers yesterday came out in 
favour of talking to the “Zion- 
ist enemy". Sheikh Jamil 
Hamaxni said in East Jerusa- 
lem: “Dialogue is not forbid- 
den. There must be a dialogue 
to stop the bloodshed on both 
sides.” In Ramallah. Hussein 
Abu Kweik, said: “We would 
like to see such a dialogue as 
soon as possible under Arab, 
international or Palestinian 
sponsorship.” Mr Abu Kweik 
was one of 400 Islamic activists 
Israel deported to Lebanon two 
years ago. 

Both insisted, however, that 
Israel must first stop arresting 
Hamas members and must 
release those currently in 


prison, including Sheikh 
Ahmed Yassin, the organisa- 
tion’s founder, who has been 
behind bars since 1989. 

They were responding to sig- 
nals by Israeli ministers that 
they were ready to talk to 
“moderate” Hamas leaders. Mr 
Moshe Sbahal. police minister, 
told Labour MPs on Monday: 
“All Arabs would prefer the 
state of Israel not to exist. 
Some of them will not come to 
terms. But even in Hamas 
there are differences. Israel is 
making a mistake when it is 
not ready to talk to people." 

Mr Yossi Beilin, deputy for- 
eign minister, said on Tuesday: 
“I don’t know what we are 
going to speak about if there is 
such a contact But all those 
who tried to boycott their ene- 
mies eventually had to back 
off. It happened to us with the 
PLO, it happened to the British 
with the IRA. Just boycotting 
the other side because of its 
past, or Its official view, is 


wrong. It doesn't mean that we 
have to negotiate with Hamas 
about the destruction of IsraeL 
Then we won’t talk to them. 
But if there are some moderate 
forces in Hamas which believe 
that terrorism will not solve 
their problems and are ready 
to talk to us. I do not believe 
that we should exclude the pos- 
sibility of contact with them." 

Mr Beilin, of the initia- 
tors of the secret dialogue with 
the PLO that led to the 1993 
Oslo agreement, took a simi- 
larly flexible stand on possible 
Hamas participation in elec- 
tions to the Palestinian 
National Authority. 

“Movements or parties 
which see the destruction of 
Israel as part of their platform 
should not participate,” he 
said. But he saw no reason to 
oppose participation by Islamic 
groups which wanted to chal- 
lenge the PLO leadership, so 
long as they accepted the legit- 
imacy of whoever was elected. 



A Palestinian woman closes her bag after a search by a woman 
Israeli soldier on the Gaza-lsrael border yesterday 


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INTERNATIONAL NEW DIGEST 

India sees spurt 
in investments 

India saw a sharp spurt in foreign investment Inflows in the 
first months of 1994-95, according to a finance ministry report 
published yesterday. The ministry estimated the total inflow 
in the five months to August reached $2.1bn (£L4bn), com- 
pared with $4-lbn in the whole of 199334. Direct investment 
rose to $38 lm in the five months to August, against $620m for 
the 1993-94 year. Ministry officials said total fore ign Invest- 
ment in 1994-95 might, on present reckoning, surpass last 
year's levels. The figures do not yet include any significant 
contributions from planned large-scale projects in power gen- 
eration and oil refining which could start producing invest- 
ment inflows in the next 12 months. “The surge in foreign 
investment in recent times is one of the direct manifestations 
of the success of the economic reforms," the ministry said in a 
mid-year review of the economy. 

The report paints a positive picture of the economic outlook, 
saying economic growth in 1994-95 is likely to exceed 5 per 
cent, “much higher" than last year's &£ per cent Agricultural 
output is good, industrial production is recovering, inflation is 
being controlled and exports continue to grow, although more 
slowly than last year. Stefcm Wagstyl, New Delhi 

Vietnamese inflation soars 

Vie tnam has foiled in its push to keep price increases in single 
figures for 1994, the government's statistics department said in 
its weekly review, when reporting 11.3 per cent inflation in the 
first 10 months. A big increase in food costs, apparently 
because of higher prices for rice caused by floods in the 
Mekong Delta and market fluctuations, fuelled a L3 per cent 
rise in the retail price index in October, The National Assem- 
bly again set single-digit inflation as the target when it fixed 
economic goals for 1995 at its last meeting of a 12-day session 
on Tuesday. Reuter. Hanoi 

Sihanouk warns off tourists 

King Norodom Sihanouk 
Cambodia's head of state 
(left), warned tourists yester- 
day to avoid his country as 
tiie bodies of three western 
hostages killed by Khmer 
Rouge rebels were recovered, 
bound and shot, from graves 
found near a southern rebel 
base. Saying Cambodia is 
“clearly insecure", he joined 
foreign embassies in advising 
tourists to avoid Cambodia. *1 
condemn with the greatest 
severity the contemptible and 
unpardonable murderers who 
are responsible for the deaths 
of these three young gentle- 
men," the fcfog said in a state- 
ment. Mr Serey Kosal, deputy governor of Battambang prov- 
ince. said meanwhile that the Khmer Rouge kidnapped 71 local 
villagers and then executed 50 of them after a four-day forced 
march to a guerrilla base. Reuter and AP. Phnom Penh 

Chinese move against Jardine 

China yesterday demanded that the Hong Kang government 
provide it with details on the award of a HK$79Qzn (£63m) 
contract to build a base for the Chinese navy in Hong Kong 
harbour. The contract was won by Gammon Construction, 
owned jointly by Jardine Pacific, a subsidiary of the Jardine 
Matheson trading house, and Trafalgar House, an associate of 
the group- China is furious with Jardine. which is to delist 
from the Hong Kong stock exchange at the year's end. In 
retaliation Beijing has withheld its approval for the extension 
of Hong Kong's container port, in which Jardine has a large 
interest In a statement the Chinese foreign ministry said: “As 
the project is related to the defence of Hong Kong’s Special 
Administrative Region beyond 1997. we demand that the Brit- 
ish side provide us with relevant information on the project’s 
bidding." A senior Hong Kong government official said last 
night that Gammon had won the contract against six other 
bidders in an open tender. Simon Holberton, Hong Kong 

Standard Chartered fined 

Standard Chartered Securities, the stockbroking arm of Stan- 
dard Chartered Bank, has been fined HK$500,000 by the Hong 
Kong stock e x c h an g e and publicly censured for its stock 
manipulation and “rat-trading" activities * whereby trades for 
customers are booked through an employee's private accounts 
with other stockbrokers to the detriment of the client and 
advantage of the broker. The exchange's disciplinary commit- 
tee found Standard Chartered Securities foiled to exercise 
proper supervision of its employees between July 1991 and 
March 1993. which led to the company breaking several rules. 
Louise Lucas, Bong Kong 

Jakarta ‘clean-up’ criticised 

Indonesian authorities are cracking down on government crit- 
ics. labour activists and alleged criminals to “clean up" the 
capital Jakarta before next week’s Asia Pacific Economic 
Co-operation summit, according to Amnesty International, the 
London based human rights organisation. It said yesterday the 
crackdown began with with an anti-crime campaign in April 
but had been broadened to include “arbitrary arrest of politi- 
cal detainees, some of whom had been tortured and ill treated, 
the unfair trial and arbitrary imprisonment of labour activists 
and the dramatic escalation in the number of unlawful innings 
of alleged criminals." 

In Washington. Mr Mickey Kantor, the US trade representa- 
tive. said America would raise American concerns over Indon- 
esia's rights record at the summit Our Foreign Staff, London 
Unlikely champion. Page 15 

■ South Korea’s industrial output in September rose 8.0 per 
cent on the year, down from a 10.4 per cent rise posted a year 
earlier and an 11.7 per cent increase in August, provisional 
National Statistical Office figures showed. Reuter, Seoul 



Hundreds die in 
Egypt fuel blaze 


More than 410 people were 
killed in southern Egypt yes- 
terday, most of them when 
blaring fuel flooded into a vil- 
lage from a depot struck by 
lightning, officials in the town 
of Assist said, Reuter reports 
from Assiut 

A health official said hospi- 
tals had received 223 corpses 
from the stricken village of 
Dronka; a security official said 
another 122 corpses were still 
lying on the ground there. 
Flooding killed 63 otters, the 
official Bald. 

Lightning struck the com- 
plex of eight fuel tanks hold- 
ing 15.000 tonnes of aircraft 
and motor fuel after a 
thunderst o rm had raged for at 
least five hours, an Assiut offi- 
cial said. 

Hie complex was still ou fire 
at 6 pm local time. A new 
blaze had started in another 
storage tank. Firefighters 


derided to let the fire burn 
itself out 

The governor of Assiut Prov- 
ince declared a state of emer- 
gency, sending In rescue units 
and army firefighters to try to 
control the flames. 

The missing included at 
least 10 men trapped in a 
mosque during prayers and a 
maintenance crew working 
inside the storage complex. 
Hie fuel tanks are operated by 
a subsidiary of the state-run 
Egyptian General Petroleum 
Corporation (EGPQ. 

EGPC officials in Cairo 
declined to comment on the 
incident One said a team of 
experts was travelling to 
Assiut to assess the damage to 
die tanks, used as a strategic 
fttel reserve for the defence 
ministry. Meteorologists in 
Cairo said the storm was one 
of the worst in Egypt's his- 
tory. 


border yesterday a<* National Statistical Office figures showed Reuter, Seoul 

Burma’s junta defiant as 
US presses for reform 

By Victor Maflet In Bangkok talks with Lt Gen Khin Nyunt. aid funds from me 

head of military intelligence, bodies mirh ao th*» w r 


By Victor Maflet In Bangkok 

The most senior US delegation 
to visit Burma in six years left 
Rangoon yesterday without 
apparently receiving any 
assurance from the country's 
military rulers that they 
intend to embark on signifi- 
cant political reforms. 

Mr Thomas Hubbard, US 
deputy assistant secretary of 
state for east Asian and Pacific 
affairs, said in Bangkok after 
the two-day visit that moves by 
the junta towards political rec- 
onciliation would improve US- 
Burmese relations, but failure 
to make progress “would lead 
to further restrictions on our 
political and economic ties”. 

Mr Hubbard, accompanied 
by US officials from the 
National Security Council and 
agencies concerned with 
human rights and drug traf- 
ficking, bad three hours of 


talks with Lt Gen Khin Nyunt. 
head of military Intelligence. 
The US visit follows two meet- 
ings between Geo Khin Nyunt 
and Ms Aung San Sun Kyi, the 
democracy campaigner held 
under house arrest in Rangoon 
for more than five years. 

Few details of those meet- 
ings have emerged, and Mr 
Hubbard said Gen Khin Nyunt 
did not divulge any details; nor 
has the junta let the US delega- 
tion meet her or other political 
prisoners. Burma’s armed 
forces have been In power 
since 1962. They crushed a pop- 
ular uprising in 1988. and 
ignored the results of an elec- 
tion in 1990 which Ms Suu 
Kyi’s National League for 
Democracy won overwhelm- 
ingly. 

Hie US has pursued a policy 
of isolating the junta, down- 
grading its diplomatic ties and 
preventing the disbursement of 


aid funds from multilateral 
bodies such as the World Bank. 

“We would like to see a gen- 
uine national reconciliation,” 
said Mr Hubbard. “We hope it 
won’t be necessary to down- 
grade our relationship fur- 
ther." The US officials were 
subjected to a long lecture by 
Gen Khin Nyunt about Bur- 
mese history since the time of 
British colonial rale, and they 
in turn lectured the general 
about the need for moves 
towards democracy. 

It emerged from the meeting 
that the International Commit- 
tee of the Red Cross would 
soon be allowed “a role with 
regard to political prisoners”, 
that Gen Khin Nyunt had 
promised to continue talks 
with Ms Suu Kyi, and that the 
junta had authorised a survey 
of Buraia’s opium crop, which 
accounts for much of the 
world's heroin supply. 


Beijing 
push to 
mediate 
in Korea 

By John Burton in Seoul 


China's premier Li Feng, the 
most senior Chinese official to 
visit Sooth Korea since the two 
countries normalised ties in 
1992, is promoting China's rede 
as diplomatic referee between 
North and South Korea: 

He is also trying to boost 
Chinese exports to South 
Korea, which enjoys a heavy 
trade surplus with Beijing, 
while resisting Seoul's 
demands for fewer trade and 
investment barriers. 

Mr U agreed to a South Kor- 
ean request that China. North 
Korea’s closest and most influ- 
ential ally, should help in 
ensuring Pyongyang abides by 
its recent agreement with the 
US to dismantle its nuclear 
programme. China has 
endorsed the US-North Korean 
accord as a vindication of its 
recent policy to promote dia- 
logue between Washington and 
Pyongyang to solve the nuclear 
dispute. 

But the message brought by 
Mr Li to Seoul is that both 
Koreas need to make new con- 
cessions to increase stability^ 
on the peninsula. 

China expressed support for 
North Korean proposals to 
replace the armistice that 
ended the 1950-53 war with a 
peace treaty with the US. Bei- 
jing last week withdrew its 
representatives from the truce 
supervisory commission, to 
promote this policy. But Seoul 
is cautious about a treaty, 
since it could lead to US troops 
quitting South Korea. 

It worries that North Korea 
might try to use the treaty to 
isolate South Korea from its 
US ally, since Pyongyang 
insists Seoul cannot be a party 
to the pact because it refused 
to sign the armistice in 1953. 
But China is backing South 
Korea’s call for renewed talks 
with North Korea, a proposal 
Pyongyang has proved reluc- 
tant to accept. 

China wants to stabilise the 
Korean peninsula, but analysts 
believe Beijing's long-term goal 
is to maintain two separate 
Koreas rather than see a 
united. Korea on its doorstep. 
“There is nothing to rule out 
that China may try to keep 
North Korea as a buffer state ” 

Mr Stephen Linton of the 
Korea Studies Centre at 
Colombia University, says. ** 
Potential disputes could also 
affect the growth of dose eco- 
nomic ties between China and 
South Korea. South Korea 
views China as a potentially 
huge market for its products 
and a cheap production base, 
but fears China’s growing com- 
petitiveness abroad. China 
already sells more TV sets to 
the US than Korea. 

China views South Korea as 
a prime source of vital technol- 
ogy, but has imposed trade bar- 
riers on some Korean products 
and restricted investments 
because of the threat they pose 
to the development of key 
industries. Several Korean car 
companies, tndmttng Hyundai 
and Daewoo, want to set up 
plants in China, but Beijing 
has so far refused their 
requests. 

It is demanding Korean car- 
makers first set up car compo- 
nents factories, which would 
benefit the C hine se motor 
industry, as the price for . 
acquiring manufacturing fadli-fea 
ties. Moreover, Korean foe to- r 
ries operating in C hina are 
mostly producing goods for ^ 
export rather than the domes* * 
tic market, because of market- 
ing curbs. 

To try to persuade the Chi- 
nese to flavour Korean inves- 
tors, the chairmen of the coun- 
try’s four biggest 
conglomerates. Samsung, 
Hyundai. Lucky-Goldstar and 
Daewoo, are guiding Mr Li 
through their production facil- 
ities this week. 

The two countries have 
agreed to co-operate on several 
industrial projects, including 
aerospace, cars, high-definition 
television and automatic tele- 
phone switching systems. This 
week, they signed a memoran- 
dum of understanding on 
co-operation in nuclear power 
generation. South Korea hopes 
that in return for providing 
technology, it will gain exten- 
sive market access in China. 

Samsung Electronics yester- 
day said it plans to invest S3bn 
over 20 years to build a manu- 
facturing complex in Tianjin; 
Kumho, South Korea’s biggest 
tyre-maker, has agreed with 
Nanjing Tyre Factory a joint 
venture to produce tyres in 
Jiangsu Province. 

One indication the partner- 1 
ship may not be smooth came 
yesterday when the scheduled 
signing of a joint-venture pact 
on a sew commercial aircraft 
project was postponed, owing 
to disagreements over the loca- 
tion of the aircraft factory 
planned by Samsung Aero- 
space and Aviation Industries 
of China. The two governments 
approved the joint venture on 
Monday. 



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We’ve always rejected the 
idea of a luxury limousine. 

A traditional one that is. 


The words “luxury limousine” conjure up visions 
of long black cars with tinted glass, oceanliner 
suspension and zero excitement. 

Which is why we’ve taken our time developing 
the new Saab 9000 CD. Its a luxury limousine 
alright. But it’s a different kind of luxury. And a 
different kind of limousine. 

AIRCRAFT HERITAGE. 

With the Saab 9000 CD, we’ve stayed firmly away 
from the kind of luxury that puts you to sleep. 
Instead, we’ve drawn upon our aircraft heritage 
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fatigue, help you drive more efficiently. The 
result is a car that combines the luxury 
of a premium quality limousine 
with the sports tradition 
that is so very Saab. 



UNDERSTATED LUXURY. 

However, you’ll be relieved to know that we 
didn’t spend all our time on totally practical mat- 
ters. Life at Saab, thank goodness, is more than a 
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THE SAFEST CAR IN SWEDEN. 

The Saab 9000 CD is also a very safe car. In- 
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We don’t rely merely on 
laboratory tests carried 


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h.:;t '^.Etrs.t*.. the 9000. CD*.: has. the space you need to 

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THE FIRST SAAB. 1947. 


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ANEW KIND OF V6. 

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FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 


NEWS: UK 


Irish PM applauds Clinton backing for 50% aid boost 


By John Murray Brown 
in Dublin and 
Stewart Da&y in London 

The peace process in Ireland has 
been given another boost with the 
US administration announcing a 
package of measures to help the 
economy of Northern Ireland and 
neighbouring counties in the Repub- 
lic of Ireland. 

Under the deal, Washington's 
annual contribution to the Interna- 
tional Fund for Ireland is to increase 


Insurers 

disappoint 

regulator 

By Attson Smith 


About one in six life insurance 
companies showed serious 
weaknesses and flaws in 
the second round of routine 
inspection visits by financial 
watchdogs, the annual report 
on the sector's regulation says 
today. 

The report describes the 
result as a “disappointment", 
though it notes that the posi- 
tion has improved since the 
first inspection visits when a 
third of life insurers Galled reg- 
ulators' scrutiny. 

Record fines of £300,000 were 
imposed earlier this year on 
Norwich Union and on Pre- 
mium Life, and the life indus- 
try has been warned for sev- 
eral months that continuing 
failures would be severely pen- 
alised. 

The report from Lautro. 
which has now been succeeded 
as life insurance regulator by 
the Personal Investment 
Authority, shows admits that 
plans for inspection visits were 
disrupted considerably for nine 
weeks in the spring by the set- 
ting up of the P1A. 

Lautro says there have been 
some signs of improvement in 
standards, citing the shift in 
the causes of disciplinary 
action away from harm 
inflicted on investors towards 
the risk of harm, and the fact 
that the number of investiga- 
tions was only about half that 
of the previous 12 months. The 
number of complaints has 
risen, however. 


subject to congressional approval 
from $20m in 1995-96 to $30m for 
each of the following two years. The 
increases will take the total commit- 
ment of the Clinton administration 
to the fund to 9100m. 

Mr Albert Reynolds, the prime 
minister of the Irish Republic, said: 
“I am delighted that Northern 
Ireland is still at the top of the 
agenda of the American president 
The new package will certainly be 
welcomed in the places that have 
been devastated by the violence over 


the past 25 years. The best thing 
anybody can do for Northern Ireland 
is to put jobs back into both commu- 
nities, where many have not known 
what normal living is ail about " 

Mr John Hume, leader of the 
Social Democratic and Labour party, 
said: “This is a very welcome 
announcement by Mr Clinton and 
confirms the undertakings which he 
previously gave to help build on the 
peace. I deeply appreciate the 
involvement which the president bas 
shown and I am very aware of Iiis 


willingness to assist us economi- 
cally." 

In addition Mr Clinton has said he 
will host an international trade and 
investment conference on Ireland 
next April in Philadelphia. 

It was also announced that Mr Ron 
Brown, US commerce secretary, will 
be in Belfast for the investment con- 
ference organised by the UK govern- 
ment in December. Mr Brown will go 
on to Dublin for consultations. 

Forty US companies are already 
operating in Northern Ireland pro- 


viding 9,000 jobs. The International 
Fund for Ireland, set up in 1986 by 
the US and European Union, last 
year stood at £225m. The body pro- 
vides venture capital for small and 
medium sized businesses in the 
province's most depressed areas. 
Last year it helped create more than 
2,600 jobs. 

There was a more guarded wel- 
come for the new package from the 
Ulster Unionist party, the largest of 
the unionist parties in terms of seats 
in the UK House of Commons. 


Mr James Wilson, the party's gen- 
eral secretary, said: "Financial aid is 
always welcome provided it is fairly 
distributed in the province and pro- 
vided it is directed to areas of real 

need and in support of real jobs. He 

added: “What we do not want is 
money thrown around at the 
socaUed peace process." 

• The republic's National Forum 
for Peace and Reconciliation estab- 
lished following the IRA ceasefire 
will meet in Dublin today for the 
second time. 


Police 
to join * 
probe into 
fake fax 


By Kevin Brown, ' 
Pdtticai Correspondent 




Tories condemn 
privatisation 
of Post Office 




iiii 


Mrs Jennifer d’Abo, who resigned 
yesterday as an outside director of the 
Northern Ireland I ados trial Development 
Board in protest at the the deal on a 


textiles plant with Hnalon of Taiwan. 
“One of the key reasons I am resigning is 
that I still don't know who the EDB is 
doing this deal with," she said. “I 


resigned because 1 cannot get to tbe bot- 
tom of this thing. This is a very big proj- 
ect, and in ray opinion there are too many 
unanswered questions." 


Early rise in base rates ruled out 


By Peter Norman, 

Economics Editor 

UK bank base rates appeared 
last night to be on hold for this 
month after yesterday’s mone- 
tary meeting between Mr Ken- 
neth Clarke, the senior Trea- 
sury minister, and Mr Eddie 
George, governor of the Bank 
of En gland . 

But higher interest rates in 
the months ahead remained a 
possibility after both men, in 
public comments before and 


after their 45-minute discus- 
sion, stressed their commit- 
ment to low inflation as the 
best way to promote UK eco- 
nomic growth and competitive- 
ness. 

Mr Clarke made clear in a 
BBC radio interview yesterday 
that he and Mr George were at 
one In wanting underlying 
inflation, which excludes mort- 
gage interest rates, below 2.5 
per cent by the end of this par- 
liament 

Mr George, giving a lecture 


on unemployment last night 
told a London audience that 
“timely > and in the end. 
smaller - increases in interest 
rates" were less Likely to dam- 
age Investment and Industrial 
confidence than inflation. 

As usual neither the bank 
nor the Treasury would com- 
ment on yesterday's meeting. 
However. It is believed that Mr 
George did not press for an 
increase in interest rates this 
month. As the governor has 
been more insistent than the 


chancellor on the need for 
timely interest rate increases 
in recent months, it was 
assumed that yesterday's meet- 
ing decided to keep base rates 
at 5.75 per cent for the time 
being. 

The bank this week indi- 
cated that base rates would 
probably have to rise over the 
coming months, but it has 
shied away from recommend- 
ing an immediate rise while 
monitoring developments 
“very carefully". 


By David Owen and James 
Blitz at Westminster 

The government was last night 
on the brink of shelving plans 
to privatise the Post Office in a 
move that would deal a bitter 
blow to Mr Michael Heseltine, 
the trade and industry secre- 
tary. 

A final decision on whether 
to include a Post Office bill In 
next year’s legislative time- 
table was scheduled for today's 
meeting of the cabinet. Minis- 
ters are expected to conclude 
that privatisation would be too 
risky. 

The likely retreat follows a 
meeting at Westminster yester- 
day at which a group of some 
15 Tory backbenchers - more 
than enough to cancel out the 
government’s Commons major- 
ity of 14 - bold Mr Heseltine 
they would be unable to sup- 
port any sell-off proposals. 

Some rebels are understood 
to have told him that they 
would regard even the sale of a 
minority stake as unaccept- 
able. Sir Keith Speed, a Conser- 
vative MP who attended the 
meeting, said afterwards: 
“There is still plenty of blue 
water between us.” 

Downing Street said last 
night that Mr Heseltine and Mr 
David Hunt, a senior minister 
with the title of chancellor of 
the duchy of Lancaster, would 
report back to their cabinet 
colleagues today. 

Mr Heseltine told MPs earlier 
this week that, unless privati- 


sation plans were included in 
the legislative programme of 
the next parliament, the proj- 
ect would have to be dropped 
until after the next general 
election. Yesterday's develop- 
ments came after Mr Heseltine 
tabled a complicated plan for 
partial privatisation in a 
last-ditch, attempt to rescue the 
proposed rale. 

This would have involved a 
40 per cent sale of the Royal 
Mail, the Post Office's letters 
division, and the transfer of 
another 20 per cent to an inde- 
pendent trust. The remaining 
40 per cent would have 
remained in the public sector 
for a minimum of two parlia- 
ments. 

Mr Heseltine’s move was 
being portrayed last night in 
some circles as a tactical error. 
One Tory backbencher said it 
had given MPs the impression 
Mr Heseltine was trying to pri- 
vatise the Post Office by the 
back door. 

A retreat would also deal a 
blow to Mr Kenneth Clarke, 
the senior Treasury minister, 
who has been every bit as vig- 
orous as Mr Heseltine in pro- 
moting privatisation. 

MPs who attended yester- 
day’s 45-minute meeting, at 
which a government whip is 
also understood to have been 
present, afterwards expressed 
confidence that Mr Heseltine 
would have to abandon his 
plans. 

Editorial Comment, Page 15 


Use of a fake 
fax by The 
Guardian 
newspaper to 
investigate Mr 
Jonathan Ait- 
ken’s stay at 
the Paris Rite was yesterday 
referred to the police and the 
privileges committee of the 
House of Commons. 

Amid fresh allegations about 
the business activities of Mr 
Aitken, a junior Treasury min. 
ister, Downing Street con- 
firmed that Ur John Major, 
the prime minister, knew 
about the fake fax nearly six 
months ago, but took no 
action. 

After a rancorous debate 
marked by Conservative alle- 
gations of theft and fraud 
against Mr Peter Preston, The 
Guardian’s editor, MPs voted 
for a privileges committee 
inquiry by 313 to 38, a major- 
ity of 275. 

Mr Preston, who has admit- 
ted using tbe Commons logo 
on a letter to the Rftz seekfrjgi 
details of Mr Aitken’s bill, wiJF 
be tailed before the committee 
in the next parliamentary ses- 
sion. 

He said The Guardian had 
sent the fake tax to acquire a 
documentary basis for ques- 
tions about Mr Aitken’s behav- 
iour. 

“We could not sit on it 
because something unpleasant 
might be done to us," he said 
on Channel 4 TV news. 

Mr David Wflshire, the Con- 
servative MP whose complaint 
prompted the debate, said he 
had also asked the police to 
investigate Mr Preston's 
“criminal” use of the logo. 

Downing Street confirmed 
claims by Mr Mohamed Fayed, 
owner of tbe Ritz, that Mr 
Major and Sir Robin Butler, 
cabinet secretary, were aware 
of the faked fax in May. hot 
took no action. 

Mr Aitken denied allega- 
tions in the Daily Mirror that 
he was involved in undeclared 
deals which gave control of 
the TV-am television station to 
Saudi investors. 




HOW EVOLVED IS YOUR LONG HAUL AIRLINE? 


' /f the majority of long distance travellers have anything to declare on arrival, 
it's usually the wish that they'd been treated a little better. With service at their convenience, not the flight 
attendant’s. And an attitude more akin to "What can I do for you?" rather than “What do you want now?". 

South African Airways flies some of the world's longest nonstop routes. 

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competitive “edges”. Coed food, for example. In recognition of both quality and the rich variety of our menu, a 
worldwide award almost exclusively dished out to Gne restaurants, the 'Chaine des Rotisseurs' Blazon Shield . 


has been awarded to SAA for its culinary fare. And our wine list, which reflects the Cape's most outstanding 
wines, has been rated among the five best in the world by the much-trusted Decanter magazine. 

But these elements alone will not allow us to promise you'll feel like the picture on the right. Only the cabin 
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FINANCIAL times THURSDAY NOVEMBER 3 1994 ★ 


9 


NEWS: UK 


UK NEWS DIGEST 

BAT may sue 
regulator in row 
about advisers 

BAT Industries, which owns insurers Allied Dunbar and Eagle 
Star, said it mi g h t issue a l e gal challenge to regulators' plans 
for paying compensation to people who followed poor advice 
about taking a personal pension 
Hr Martin Broughton, group chief executive, said BAT 
believed life companies operating through direct sales forces - 
as Allied Dunbar largely does - should not have any compen- 
sation liability for investors who have been wrongly advised 
by Independent finanniai advisers which then go out of busi- 
ness. 

The Securities and Investments Board, the City of London's 
chief regulator, last week published a report on identifying 
and compensating people who bad been wrongly sold personal 
pensions. It said lift companies and advisers should review at 
least 350,000 cases within the next two years- Some estimates 
put the bill at up to £2bn ($3-2bn). 

L ex. Page 16; BAT results. Page 17 

Credit cards pay prostitutes 

A pimp whose prostitutes were paid by credit card was sent to 
prison for four months yesterday. "Modem business practice 
has entered the world of prostitution,” said a London judge as 
he sentenced Justin Golding, aged 44, who admitted four 
charges of living off the earnings of prostitution. 

“In essence, Mr Golding provided the prostitutes with a 
factoring account,” explained Ms Sallie Bennett-Jenktns, pros- 
ecuting. He provided each prostitute with imprinting 
machines without the usual trader’s f ranking plate, and a 
variety of credit vouchers. 

After card details had been recorded, the slips were given to 
Mr Golding, who ran them through another roller imprinter to 
record his business details before paying them La. He then 
paid the prostitutes their money after talcing a commission of 
at least 15 per cent. 

Call for adverts on BBC TV 

The BBC2 television channel should be allowed to accept 
advertising and sponsorship, the Incorporated Society of Brit- 
ish Advertisers said yesterday in response to the government's 
white paper on the future of the BBC, which is still financed 
entirely foom the proceeds of the licence fee levied by the state 
bum all users of television sets, whether or not they watch 
BBC programmes. 

A mixture of funding from the licence fee and advertisers 
would enable the BBC to compete with growing satellite and 
multimedia rivals, said the society, which represents many of 
the UK's largest advertisers. Mr Ken Miles, society director- 
general, said reliance on the licence fee alone was a "high-risk 
strategy”. 

Lottery protest by church 

The Church of Scotland, which opposes gam- 
bling, is to decide in January whether to dis- 
pose of its 320,000 shares in Cadbury-Schwep- 
_ ^ pes. The food company is one of five groups in 
ntf the Camelot consortium, which is running the 
M lottery starting later this month. The shares 
form part of the Protestant church’s invest 
nd ment fund, the Church of Scotland Trust The 
church’s Board of Social Responsibility has 
Ttc national already recommended that the church should 
lottery refuse all money from funds that will be made 
available to charities from cash paid by the public for lottery 
tickets. The church said yesterday that it had bought shares in 
Cadbury-Schweppes long before the lottery was announced. 

Life insurance tax to change 

Changes in the taxation of life insurance are to be introduced . 
with the aim .of enahling UK life insurers to compete more 
effectively in the rest of Europe. The most important shift will 
affect taxation of “services business” where the insurer does 
not have to have an office in the country in which the 
policyholder lives. • 

This has been allowed only since the changes in European 
law on life insurance which took effect at the beginning of 
July. The UK taxes income to policyholders as it builds up in 
the funds. Most other European countries tax income when ft 
is withdrawn from the fund and reaches the individuaL 
Sir George Young, a junior Treasury minister, said the 
British tax system already took account of this differmue 
between tax regimes in the way it treated business carried out 
through overseas branches of UK life insurers. The changes 
represent an extension of that arrangement The new system 
wBT apply from the next new accounting period. 

Another likely change, but one which has not been 
announced, is the dosing of a loophole in the existing system 
to make sure that the investment element of offshore reinsur- 
ance does not slip through the tax net 

Bank chief backs single currency 

The government should bow to the inevitability of a single 
Eur opea n currency, said Sir Nicholas Goothson, chairman of 
the TSB bank. “1 believe It will come anyway as trade develops 
and producers and consumers increasingly see the nonsense of 
dealing in 12 or more different currencies in the conduct of 
their day-today trade,” be said in a lecture at the London 
School of Economics. “The UK should remain firmly within 
the circle of European nations considering It It will do us no 
commercial or financial good to be left out” Sir Nicholas said 
that a much greater sense of commitment to the European 
Union was needed by the UK. “Parhament should not be 
frightened of delegating decisions upwards or downwards.” 


Private sector to 
run state network 


By David Owen 

A new £150m computer system 
to hold records on National 
Insurance contributions is to 
be financed and operated by 
the private sector. The present 
sy s tem , which holds more than 
61m records, is more than 20 
years old. 

The government is seeking 
private investors to develop, 
■ test ami operate a replacement 
for the ageing National Insur- 
ance Recording System, one of 
the largest computer systems 
in Europe. 

The aim is to have the new 
system in place by April 1997 
when extensive government 
pension reforms are expected 
to take effect 

The project will be the first 
of its hind to be funded 
through the government’s pri- 
vate finance initiative, which 
aims to encourage private sec- 
tor investment in the delivery 
of public services. 

If successful it could provide 


a model for the way the gov- 
ernment handles other large 
investments in information 
technology. Bidders are expec- 
ted to come from the ranks of 
large private information-tech- 
nology companies. 

The successful bidder will 
bear the entire initial capital 
cost of the project The bidder 
would aim to recoup its invest- 
ment and generate a profit by 
charging a small fee for every 
transaction to users - princi- 
pally the state Contributions 
Agency, which is responsible 
for collecting and recording 
National Insurance contribu- 
tions. 

Bidding companies will 
therefore be taking a commer- 
cial risk both on the future vol- 
ume of transactions and the 
amount of spare capacity they 
decide to build into the new 
system. 

The government is expected 
to try and build in an incentive 
for the successful bidder to 
keep its technology up to date. 


Businesses chafe at 
impact of ‘green’ laws 


The weight of environmental regulations 

Pf'rcisrtt.iC'j vTspcriLT'clns dihicuiUcir* 


By David Lascetes, 

Resources Editor 

C o m pliance with strict envir- 
onmental rules is hampering 
British access to markets in 
other countries, the Confedera- 
tion of British Industry, the 
country's largest employers' 
organisation, said yesterday. It 
added that many of its member 

pimpaniwi faced liiffinilt iff; in 

UK markets because the Euro- 
pean Union's environmental 
regulations were enforced 
more strictly in the UK than 

elsewhere. 

The CB1 published the 
results of a poll of members 
about the effects of the grow- 
ing number of laws framed to 
protect the environment. A 


quarter of respondents to a CBI 
poll said they were experienc- 
ing difficulties gaining access 
to markets in other countries. 
Thirty pa- cent said that they 
suffered specific British disad- 
vantages because of the 
stricter enforcement of EU leg- 
islation in the UK. "We think 

the co mpetitiv eness dimension 

chmiM get a fairer hearing,” 
said Mr Howard Davies, 
d ir ector - general of the CHL 
Many of the points in the 
report challenge the line taken 

by government on environment 

taJ issues, and are likely to pro- 
voke a response from Mr Mich- 
ael Heseltine, trade and 
Industry secretary, who will 
address the conference. 

The GBI says there is little 


evidence for the government’s 
claim that envi ronmental legis- 
lation makes business more 
competitive by creating pres- 
sure for greater efficiency. This 
claim "has not been justified 
by a M3 analysis of the costs 
»nH liHTwfibi of legislation." the 
organisation s ays. 

Nor, in the CBTs view, are 
new environmental initiatives 
providing "massive new oppor- 
tunities for products and ser- 
vices” in the way trumpeted by 
ministers. "At present, too 
many businesses are failing 
foul of the pitfalls rather than 
wdring the opportunities,” the 
employers' body says. 

Mr Davies said industry was 
keen to get into a "win-win” 
situation where well-planned 



British dttdmrtagn . 
dM to natkmri fagWatkm 


Biggest prabtem to tfnrt of 
lower onvfronmant rtarKteKte 
h nrih-EU countries' 


Minister 
fights cuts 
inroads 


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) Rscyctfng 
* requirements 







regulation brought benefits to 
business the environment. 
"This is not a report which 
says ‘We can’t afford all this 


environmental regulation’,” he 
added. "But it does reflect frus- 
tration over a lot of wasted 
effort” 


Employers win concessions oyer pensions 


The go vernm ent plans to make 
concessions to employers in its 
pension reform legislation by 
watering down earlier solvency 

requirements that could have 
forced schemes to sell shares 
and buy UK government gifts, 
our Investments Correspon- 
dent writes. 

It is understood that a bill 


will be presented to parliament 
in the second week in Decem- 
ber. Although the proposals 
are cm ren t government think- 
ing, "they haven’t been etched 
in stone yet,” and same further 
changes could be made, accord- 
ing to one party familiar with 

<Im feiTk fl 

The gove rn ment proposed in 


June ifra* scheme should 
bold enough assets to be able 
to provide all mambas with 
the "cash equivalent” of their 
accrued pension wititiwnAnic 
The government intends to 
allow equity yields to be used 
for ralnrTlntjng- cash Infeotirmq 
for people with in 10 ye ars of 
their nffldai retirement date. 


However, only holdings of UK 
equities will count for this pur- 
pose. 

Moreover, ft is intended that 
even when calculating the 
value of assets needed to pay 
current pensioners, equity 
yields can be used. Schemes 
will be allowed to use the 
higher equity yields when tak- 


ing into account ughfKtwc of 
pensioners with at least 10 
years longer to live although 
again, only UK equities will 
count 

This new rule would apply 
only to large schemes, which 
are likely to he defined as 
those with assets of £100m 
($l58m) or more. - 


programme 

Dr Brian Mawfainney, trans- 
port secretary. Is. resisting 
heavy cuts in his department’s 
budget amid signs that the 
Treasury wants to cut spend- 
ing <m next year's roads pro- 
gramme by up to £400m, 
James Elite writes. 

■ Although tiie government's 
public expenditure survey is 
due to be completed in the 
next few days. Department of 
Transport officials have been 
last-minute attempts 
to resist reductions of up to SO 
per cent in annual spending on 
motorways and other main 
roads. 

Officials at tire department 
have told the Treasury that a 

cut of that size would be exces- 
sive, making ft difficult to pro- 
vide maintenance for existing 
routes. 

However, Dr Mawhinney 
and his colleagues have 
accepted that the annual £2bn 
roads pr o gramm e will have to 
be cut in the next fi na nci al 
year. 

They have decided that 
spending cuts must be tar- 
geted an Mg new projects and 
not iGrhan bypasses. Five of 
the six biggest government 
projects are threatened. 




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11 


FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 ■* 

MANAGEMENT: MARKETING AND ADVERTISING 



mix 



artin Sorrell, chief 
executive of marketing 
services group WPP, 
tapes to capture the interest of 
.up to five “ambidextrous 
brains" at Cambridge University 
today; WPP is offering a three- 
year graduate trainee pro-' 
gramme spanning the advertis- 
ing; public relations, design and 
research Interests of the group. 
The trainee places - rather 
grandly dubbed “marketing fel- 
lowships" - are among the first 
of their kind in the sector. 

Sorrell's presentation to final- 
year students will outline the 
d eman ds of the constituent hurt- 
ness as including “Hair and 
slog; .intuition and logic; left 
brain and right brain". 

The programme, which is 
likely to extend to recmitzaent 
from other UK universities next 
year, and the US and East Asis 
in su bsequent years, is part of 
WPP’s efforts to strengthen 
cross-disciplinary understand- 
ing. Clients are looking, says 
Sorrell, for solutions that may 
not be primarily based in media 
advertising. 

Rec ruits will move around 
WPP sponsoring companies - 
including J. Walter Thompson, 
Ogflvy & Mather, Hill and 
Knowlton, MiUward Brown, 
Sampson Tyrrell, and the Hen- 
ley Centre - before taking up a 
p erman ent post 
WPP’s move coincides with 
another to develop practitioners 
capable of implementing the 
much vaunted “integrated mar- 
keting" approach. 

The Integrated Marketing 
Communications Initiative, 
launched last week, embraces 
such bodies as the Public Rela- 
tions Consultants Association, 
the Institute of Practitioners in 
Advertising, the Direct Market 
ing Association and the Sales 
Promotion Consultants Associa- 
tion. 

Members of the trade bodies 
are being asked to sign up to a 
charter, pledging support for 
cross-diseipUnary’ traiiting and 
weak j^ir^hfepts- An advertis- 

^ r , for,. example, -mi ght 

a work placement to some- 
one from a PR, company, and 
viee versa. 

; V- ■ - 

vv — o-. ere 



ake it simple. Make, it 
!. -direct. Arid tap into 
issues with which peo- 
ple can identity. This 
was the message Dominique 
Kahane, a director of the Trialon 
advertising agency, used for a 
highly successful federal election 
campaign in eastern Germany. 

Staff at Trialon. which repre- 
sented the Party of Democratic 
Socialism, the successor to east Ger- 
many's former communist party, 
believed they had a considerable 
advantage over its competitors from 
atnruip Germany's other established 
political parties. 

“We are all easterners," says 
Kabane. "Our office is in east Ber- 
lin. Some of us grew up with the 
candidates. We knew the day-fcHiay 
problems the easterners have been 
having since unification." 

Instead of focusing on general 
issues, Trialon homed in on unem- 
ployment and housing issues which 
preoccupy most east Germans. "The 
success of our campaign is in the 
result," says ETahane. The PDS 
polled more than 22 per cent of the 
vote throughout eastern Germany. 
“If anyone wants to come to eastern 
Germany and try to market a prod- 
uct or a party, you have to do your 
homework “ Kahane adds. 

Germany's Free Democrats and 
BQndnis 90/Greens may be regret- 
ting that they did no t take to the 
streets. Indeed, both parties are 
slowly coming to terms with the 
disastrous results inflicted on them 
in eastern Germany. 

The FDP failed in eastern Ger- 
many to gain 5 per cent of the vote 
in the last federal elections. And 
along with the Greens, it failed to 
get represented in the eastern state 


German agencies underestimated the 
differences between east and west in 
recent elections, says Judy Dempsey 


Polls 

apart 


parliaments of Thuringia and Meck- 
lenburg-Vorpommern - neither 
could muster enough support to win 

5 per emit Of the VOte, the minimum 
to enter these parliaments. 

“If we want to do better in fixture, 
we will have to adopt a completely 
new strategy." says Wulf Oehme, 
the PDFs party manager in Berlin. 

The lesson drawn by the FDP and 
other political parties during the 
federal election campaign is that 
east Germany is different - the 
results confirm this. Chancellor Hel- 
mut Kohl's victorious Christian 
Democrats (along with its Bavarian 
sister party, the Christian Social 
Union) gained 3R5 per cent of the 
vote in the east compared with 42J2 
per cent in the west; the opposition 
Social Democrats 31.9 per cent and 
37.6 per cent respectively; the FDP 4 
per cent and 7.7 per cent; and the 
Greens 5.7 per cent in the east and 
7.8 per cent in the west. 

But the question is what kind of 


lessons the FDP and other parties 
have actually learned from the vot- 
ing trends among east Germans. 

“During the campaign, we had 
made no distinctions between east 
and west," says Oehme. “But we 
soon found out that several of the 
party organisations in the east say 
they would not even put up the 
same posters, even if they included 
Klaus Kinkei (leader of the FDP1” 

The FDP (which used Ogilvy & 
Mather) also soon learned that its 
slogans and posters which tended to 
concentrate on LeistungsfShigkeit, 
or efficiency, meant nothing to the 
easterners. “There is. as yet, no 
strong entrepreneurial middle-class 
elite in eastern Germany. Also, if 
we used slogans extolling libertar- 
ian values, which is also the basis 
of our support in the west, we found 
out that these values had little rele- 
vance for the easterners.” says 
Oehme. 

The SPD also tried not to make 


Daserste 



BeimKiissenAugenzu. 

BeimWahienAugenatif! 


mm 


TriaJon’s camp a ign for the PDS was aimed spedfleafly at an east German audience 


any distinction in its election cam- 
paign between east and west Ger- 
many. But Frank Stauss from But- 
ter, the SPD’s advertising agency, 
says the party sometimes did focus 
on specific east German themes. 
One of these included property, a 
controversial issue in the east 


because former owners have been 
allowed to return and reclaim land 
which had either been confiscated 
by the Nazis or expropriated by the 
communists. 

“We found an east German family 
and used them in our posters in the 
east The slogan we used was “What 


is ours, remains ours’." explains 
Stauss. “The easterners could iden- 
tity with that" 

Throughout the campaign, the 
SPD discovered other differences 
between the two Germanys. “In 
west Germany those who come to 
the market place to hear a politi- 
cian come because they support 
that party. In east Germany we 
found out that the same people 
came to the CDU and SPD rallies to 
find out more. You just cannot 
assume you have your supporters at 
each rally.” Also in the east the 
SPD could take out a page of adver- 
tising spelling out policies in detail. 
“The easterners read more and 
want to know more than in the 
west." says Stauss. “Anyone coming 
into east Germany should know 
that there is still an insatiable appe- 
tite for information.'’ 

Kohl’s CDU, however, refused to 
make any differences between east 
and west. “Our strategy had two 
main aims,” explains Elke Ton- 
scheidt, a CDU official involved in 
the campaign. “The first strategy 
was to regard Germany as one 
country. So we kept the same slo- 
gans throughout The second strat- 
egy was the Chancellor himself, it 
was his personality we were selling 
both in east and west Germany. We 
never deviated from that.” 

All parties concede that personali- 
ties mattered during the campaign, 
but they also agree that knowledge 
about local or regional conditions 
proved crucial. “Despite five years 
or German unification, no market- 
ing agency should take anything for 
granted in the east. The differences 
are narrowing. But there's a long 
way to go yet before both Germanys 
are realty united,” says Kahane. 


M ust hove a good credit 

rating, yet be sufficiently 
relaxed to spend regularly 
without wanting to pay off the bill 
each month. 

It may sound like a mercenary 
“lonely hearts" advertisement but 
the line neatly sums up the 
qualities that all credit card issuers 
are looking for these days. Despite 
the £ 10-£12 annual foe most of their 
profit comes from the annual 
percentage rate charged on 
outstanding bills. 

Their common aim 
notwithstanding, players in this 
increasingly cut-throat business 
have adopted a diverse range of 
marketing strategies over the last 
year. 

An important catalyst was the 
launch of the GM card from 
VanxhaU last October, followed by 
the entry of other surprising 
issuers, such as newspapers. No one 
expects the contest for customers to 
do anything but intensity. * 

GM stepped up the competition 
for credit card customer?.- who . . ^ 
splashed out almo6t £2&bn hrfhe ~ 


Credit cards go awooing 

Alison Smith on an increasingly cut-throat UK market 


first nine months of this year - by 
ottering an annualised percentage 
rate (APR) of interest below that 
charged by the largest issuers, no 
annual fee, and points towards a 
discount on buying a Vauxhall car. 
One year later, there are about 
450,000 GM cards in circulation. 

Save & Prosper, the investment 
house, has found that a 
combination of advertising and 
close targeting pays off. The card is 
available only to UK home owners, 
and its main selling point is an APR 
among the lowest on offer. Mark 
Christopher. S&P marketing 
manager, admits the strategy cuts 
across conventional wisdom, but 
says press advertising gives a better 
cost per inquiry than direct mailing 
- or did when the latter was last 
'tried in 1990. 


Advertising’s effectiveness may 
lie in the fact that S&P is content to 
have built up gradually to its 
current 200,000 or so cards issued 
jointly with Robert Fleming. 

A further factor is that it is 
aiming to attract a relatively 
narrow group of people who know 
they intend to borrow and so are 
“rate sensitive”: for others the 
existence of an annual fee is more 
of a deterrent, since they pay off the 
bill in time to avoid interest 
charges. 

The marketing campaign for the 
GM card, by contrast, has been 
intended to win market share more 
quickly and more broadly for a 
brand previously unfamiliar to the 
UK market 

Emina Serednyj, marketing 
manager for the GM card, says the 


campaign has been based on an 
integrated approach, involving 
television and press advertising, 
posters and direct mail shots with 
the aim of ensuring that someone 
who receives a letter would already 
be aware of the card and have some 
idea of what it offered. 

For cards issued by the main 
clearing banks and some building 
societies the marketing challenges 
are different 

The aim may be simply to reach 
the customer with whom the 
organisation already has another - 
probably more important - 
relationship. 

At Halifax Building Society, for 
example, credit cards are outside 
the core business of savings and 
mortgages, but part of offering a 
full range of financial services. 


John Walsh, assistant general 
manager of banking at Halifax, says 
there is therefore little point in 
television or press advertising, and 
much more to be gained from 
targeting the society’s 12 m 
customers. 

Although Halifax is one of only 
two issuers to offer interest on 
credit balances, Walsh sees such 
peripheral benefits as little used 
and admits it can be difficult to 
differentiate credit cards. “There is 
a great deal of inertia [among 
customers in personal financial 
services!, and so we want to be first 
to offer the service,” he says. 

For Bardaycard, which with &8m 
cards has the largest share of the 
27m card UK credit card market, 
the issue has been different again. 
While it is part of the Barclays 


group, as a credit card operation it 
wants to emphasise its availability 
to customers of other banks as welL 

Its most striking marketing 
strategy this year, however, has 
been its offer of rebates of up to 
£150 to credit card holders 
transferring outstanding debts from 
other cards. 

This tactic - typically used by 
small issuers trying to break into 
the market - is a further sign of the 
increasing competition. 

Shaun Powell, Barclaycard’s 
commercial director, believes that 
this win see the market split into 
two types of card; the “vanilla” 
product with no annual fee and a 
low APR but no extra benefits; and 
cards that have higher costs but are 
marketed on the basis of “added 
value” - including insurance, a 
range of discounts, and the 
opportunity to benefit good causes 
and even political parties. 

However desperately card issuers 
seek the ideal customer, it seems 
the need to develop and market a 
card offering everything for nothing 
indefinitely is still a long way away. 


industrial history 
j^VjtouW enjoy : the .start motorway 
, Ariv^from,. : »clfas t to the town of 
Carrie kf ergjis on th e shores or Belfast 
Lough. ' 

T -- Endesce of a . pOTleos industrial boom 
Is vwlble in the slope of former tobacco and 
; maa-made -fibre factories. But within the 
. space of a few miles he would be 
. transported across three decades by the 
sight of a modem factory erected by the 
Japanese company Ryobi, ooe of the world’s 

V riiQwftiimn dlfrCMlCtl. 

Following in the footsteps of Japanese giants 
such as. Nissan, Toyota and Honda, Ryobi was 
■ attracted by the United Kingdom's high growth 
rates and low production costs. Its Northern 
Ireland operation - Ryobi Aluminium Casting 
. (UK) - was named yesterday as a winner of (he 
. 1994 Management Today Best Factor; Awards 
oat of a record entry of 283. Since commencing 
full scale production in Northern Ireland in 
1992 Ryobi has found that its highly productive 
workforce has given it a very definite 
competitive advantage. Company executives 
also claim that overhead costs for its 
Camckfergus plant are the lowest in the groop. 

The judging panel from Management Today, 
Cranfield School of Management, the 
Department of Trade and Industry and the 
Confederation of British Industry also made a 
special award to another Northern Ireland 
factory - European Components Company 
(ECC) - which was recognised as hiving made 
an outstanding achievement in world class . 
manufacturing. 

Both Ryobi and ECC are in the automotive 
sector, which employs some 4,600 in Northern 
Ireland. Both ate Japanese owned - part of the 
growing community of Japanese manufacturing 
. investment in the province which now consists 
of eight companies with existing and potential . 
employment totalling almost 2,800. And 
perhaps surprisingly, both have management 
teams .drawn exclusively from within Northern 
Ireland,' making their Management Today 
awards successes aO the mom remarkable. 

in many ways the two winners symbolise the 
new face of manufacturing in Northern he land 
and the improving fortunes of the regional 
economy as a whole. While economic growth 
in the 198% lagged behind tint of the rest of 
(he United Kingdom, economists are now 
charting a different and vastly more 
encouraging story. 

Pitring fae recession industrial production in 
Northern Ireland showed no overall decline. 
Growth during the recovery has been strong - 
and manufacturing production rose at an annual 
rate of 3.5% from the second quarter of 1992 to 
the fourth quarter of 1993. 

The strength and the nature of economic 
performance has' led economists to conclude 
that a dear improve meat has been taking place 
in Northern irelaKTs. rclaiiyc competitiveness. 
Improvements in labour costs relative to Gl 
B ritain have been cited as possibly the most 
. important source of competitive advantage. 

: Record levels' of overseas investment an 
befog achieved, a trend that was obvious long 
before the process towards peace in foe divided 
Northern Ireland community took its recent 
. drimiiitic tunL The ceasefire by paramilitary 
groups has raised genuine hopes that the 
encouraging upward, trend in investment, 
typified fry Ryobi' dud many others, will gather 
fresh momentum fa an era of peace. 

. . Industries such as automotive components 
. and electronics have been targeted in the . 


Advertisement 


Northern Ireland 

DEMONSTRATES ITS WORLD CLASS 


■ fr'.wv.v .■ ijw Lts-rxt-sii--'. 



The Industrial Development Board for Northern Ireland congratulates 
■ RYOBI and ECC for their success in the ■ 
MANAGEMENT TODAY BEST FACTORY AWARDS. 

If you would like information on how you too can benefit from 
• our world class location, contact: 

Maynard Mawfamney at the Industrial Development Board for Northern 
Ireland, BOB House, 64 Chichester Street, Belfast BT1 4JX. 

Tel: 01232 233233 Fax: 01232 231328 




The recent arrival of world dasa companies 
snch as Seagate refects Northern Ireland's 
growing reputation as owe oT Europe's most 
profitable manufacturing location/,. 

investment drive spea rh eade d by the Industrial 
Development Board for Northern Ireland 
(IDB). It has identified key sectors and 
geographic areas which it believes wiH deliver 
the best results. For instance, it now has a 
representative office m San Jose in California 
with an eye on the computer hardware industry. 

The prospect of stability opens up a whole 
new range of opportunities. The Northern 
Ireland Economic Council, on independent 
body set up to advise Government, says it 
provides an economic scenario that has never 
been better in the past 25 years. Moves to 
exploit the new situation have been taken 
quickly. Government, at all levels, is stepping 
up tiie drive to demonstrate Northern Ireland’s 
investment environment to those whose 
decisions cook! be vital to the future prosperity 
of the region. 

This exercise is being led from the top. The 
Prime Minister, Mr John Major, in a recent 
speech to the Institute of Directors in Belfast, 
announced that the Government would convene 
an investment conference in Belfast in 
December. Influential British industrialists and 
senior City figures will join potential investors 
from Europe, the United States and the Far East 
to learn of the region’s advantages and to 
dfacass. how industry and Government can in 
tandem develop opportunities for job creation. 

The Fame Minister's 1QD speech highlighted 
the changes which just a few weeks free of 
violence have made. Trade in the High Street 
had gone up by six per cent in just a single 
month, be said. The Piesktent of the European 
Commission had established a task force to took 
at new European Community programmes for 
the region, wife the objective of funding new 
projects to re g e nerat e city centres so that long 
term unemployment could be cut, investment 
attracted and tourism stimulated. Mr Major 
yoke of a substantial package of "new measures 
and of new money" from the EC in addition (o 
the Government's own spending plans. 


Recent International Investment 

T he new dynamism of Northern Ireland's industrial base is demonstrated by the variety ol' 
inward investment attracted to the province. Among the companies from throughout the world 
which have seen the advantages of a location in the region are: 

O Seagate TecmnOuocy of the United States which has a £45m manufacturing plain and a 
£l5m R&D facility underway at Londonderry. 

O McKechnik Vehicle CoMTONorrs of Gi. Britain which is manufacturing fuel lines in 
Newtownards, Co. Down. 

□ MKF Foukn GmbH of Germany which has invested f 10m in a packaging factory in Ntrwiy, 
Go. Down. 

□ Shinsung Industrial of Korea which is making printed circuir boards at a £Sm factory in 
BaUymena, Co. Antrim. 

D Benelux International of Hong Kong which has chosen Ltmavady. Ca Londonderry for its 
£36_6m investment in a CD box factory. 

O Daewoo Electronics of Korea which makes VCR head mechanisms at a £l7m facility at 
Antrim. 

D Schrader Automotive INC. of the United States which has a 12. 3m investment in a pressure 
gauge factory at Antrim. 

O TransTec plc of Gt. Britain which has a £16m car components operation in Londonderry. 


28E 



Itl the hunt for that vital new investment. 
Northern Ireland starts ahead of the field. 
During 1993-94 the region won more than six 
times its per capita share of ail greenfield 
investment coming into the United Kingdom, 
some 18 per cent in ail. The IDB Has just 
reported its most successful year ever, during 
which it announced projects from 26 overseas 
investors worth around £300m and with an 
employment potential of Z300 jobs. 

Its results in the year to March 1994. in terms 
of job opportunities, represented a 17 per cent 
increase on its previous best figure achieved in 
1988-89. Among those US and Asian companies 
choosing the province for new operations were 
Seagate Technology from America's Silicon 
Valley, Shinsung Industrial of Korea and 
Benelux international of Hong Knng. 

They and other companies have sound reasons 
for their choice of location. They see Northern 
Ireland as a strong springboard into Europe 
because of Ihe quality and availability of the 
local workforce, the area's mature and efficient 
business and transport systems, low operating 
costs and a generous incentives package. 


Desmond McVeigh, Chief Executive of the 
IDB, points to the quality as well as to the 
quantity of new investment. 

"The arrival of high calibre companies such 
as Seagate and Shinsung reflects the fact that 
Northern Ireland's reputation as one of Europe's 
most profitable manufacturing regions 
continues to grow and that we are enjoying 
increasing credibility as a top class business 
location in the ejes of industrialists around the 
world," he says. 

McVeigh says the prime factor convincing 
some of the world's leading companies to site 
manufacturing plants in Northern Ireland - and 
the reason for their subsequent success - is the 
quality of the labour force. Not only is labour 
abundant, he says, hut it is flexible and 
adaptable; and the province has fewer industrial 
disputes per head than most other parts of 
Europe. 

"It was the availability of such people which 
originally helped persuade Seagate Technology 
to set up a £45 m computer components plant in 
Londonderry. They were so impressed that in 
January this year, even before the new factory 


Flexible and highly productive workers 
have helped give Ryobi a very definite 
competitive advantage is Northern Ireland 

was finished, they announced they would locate 
a £!5m research and development facility - 
their first in Europe - on the same site," he says. 

The second main attraction of the region is 
its cost structure. Labour costs are among rhe 
lowest in Europe. Low accommodation costs 
and the fact that all manufacturers are exempt 
from property taxes combine to ensure that 
operational costs for a company in Northern 
Ireland can be modi lower than in many other 
areas in Europe. 

This cost advantage was an important 
consideration for the Korean company, 
Shinsung Industrial, which is putting a printed 
circuit board plant in Ballymena in County 
Antrim, Mr McVeigh adds. This factory will 
produce components on a ’just in time' basis for 
other Asian electronic companies in Europe. 
These will include another Korean company - 
Daewoo Electronics, which has a state-of-the- 
art video cassette recorder plant nearby in 
Antrim and which is in the middle of £15m 
expansion programme. 

The IDB believes its incentive package is the 
third most important factor in Northern 
Ireland’s favour. McVeigh calls it 
"comprehensive and flexible" - with generous 
depreciation allowances, revenue giants to help 
with start-up costs, training, interest relief and 
product and marketing development, and 
capital grants of up to 50 per cent of the cost of 
hui tilings, machinery and equipment 
The fourth top attraction frequently referred 
ro by investors is the transport network which 
offers fast and cost-effective road, air and sea 
links to every major international market. 
Given Northern Ireland's geographic position, 
the quality of these links is crucial - and the 
evidence proves tbat manufacturers are more 
than satisfied they can reach their markets 
witliuui any competitive disadvantage. Hong 


Kong-based Benelux Manufacturing has set up 
its first European plant in Co. Londonderry. 
Boastiqg customers such as Sony, Olympus, 
Philips and 3M, Benelux is one of Asia's fastest 
growing companies. At the £36m purpose-built 
Northern Ireland facility it is making compact 
disc boxes for the European and American 
markets. 

Inward investment has clearly helped 
Northern Ireland to perform well during a 
recession and in recovery. But growth has also 
been fed by the increasingly competitive 
nature of indigenous industry, particularly 
those companies who are serviag world 
markets. The ability to tap markets in buoyant 
economies, the level of spending on research 
and development and a growing commitment 
to training tend to suggest that these companies 
are set to make a long-term contribution to 
growth. 

Northern Ireland has faced deep-seated 
economic challenges- For the past 30 years it 
ha suffered chronic high levels of 
uncm ploy men t. Improvement, though not 
dramatic, is now evident. Employment in the 
province grew by 1.1% in 1993-94, and 
unemployment has been in steady decline over 
the past two years. 

The extent of the so-called peace dividend is 
difficult to forecast However, Government and 
the Confederation of British Industry share the 
view that if violence is eradicated permanently 
a net increase of 20,000 jobs is possible over 
five years. 

The CBI believes the impact of an end to 
violence would be profound. It says there are 
dear significant benefits principally relating to 
inward investment opportunities, tourism, the 
indigenous industrial base and the freeing up 
of public expenditure for wealth creation 
activities and social needs. 

In the short term, the rising mood of 
confidence engendered by peace is in itself a 
dividend. Hopes for higher levels of economic 
activity have been buoyed by activity in 
sectors such as property and retailing. Hilton 
International and Radisson have recently 
signed multi-million pound deals for new hotel 
development in Belfast and Londonderry. 
Holiday Inns are expected to announce three 
new hotels in the Belfast region soon. In 
retailing. Habitat, Walt Disney and Monsoon 
will open major new stores in Belfast later this 
year. 

Manufacturing investment of the quality 
exemplified by the Management Today Best 
Factory Award winners remains the chief 
priority becanse of the direct and indirect 
employment opportunities it creates and the 
new technologies it introduces to the economy. 
Northern Ireland's recent record shows it to be 
an industrial location of world-class quality in 
which multinational companies can maximise 
profitability- 

An increasing number of companies are 
taking note of the region's advantages and of 
the prospects which could lie ahead. A senior 
executive of Ford Motor Company, Bob 
Womac, the general manager of the company's 
electrical and fuel handling division, has 
indicated that lasting peace would encourage 
the company to consider future investment at 
its Belfast pUnL 

"Ford Belfast is a key player in our drive to 
be the world's leading automotive company," 
he said on a recent plant visit "Belfast provides 
best-in-class components for company vehicles 
and we look forward to future success building 
on today's success.” 







FINANCIAL TIMES THURSDAY NOVEMBER, 3 1994 




TECHNOLOGY 


... -A 
-X*' . 


T he agreement that North 
Korea is currently prepar- 
ing to sign with the US to 
limit its nuclear pro- 
gramme may avert a potentially 
dangerous proliferation of atomic 
weapons material in Asia. It also 
has ramifications far the handling 
of the nuclear non-proliferation 
treaty, due to be renewed next year. 
How the west handles its own 
nuclear disarmament, and how it 
deals with developing countries’ 
nuclear ambitions are central lathe 
debate about nuclear proliferation. 

But the story of the North Korean 
nuclear programme has a more dis- 
turbing resonance from the west’s 
recall past Two boohs published 
recently about the British and 
Soviet atomic bombs show just how 
closely the Koreans were following 
the path winch the second world 
war allies trod SO years ago. 

The kind of nuclear reactors 
Korea buflt recently, and the pur- 
pose for which they were intended, 
are almost identical to those con- 
structed by the US, the UK and the 
Soviet Union during the 1940s. 

Those interested in the science 
and engineering of how an aspiring 
weapons state might go about build- 
ing a nuclear bomb can learn much 
from either of these books. David 
Holloway's* is the more serious, 
and is an important addition to the 
history of the Bomb. Brian Catfa- 
carfs account** is lighter, and sadly 
misses out much of the detail that 
gives Holloway bis authority. 

Yet the saentiflc detective story, 
the romance, and ultimately the 
horror of the original development 
and use of the atomic bomb is s till 
best set out in Richard Rhodes’s 
award-winning and definitive story 
first published in 1986***. As well as 
technical detail, Rhodes picks out 


Bernard Gray reviews two books 
which show that the story of how the 
Bomb was bom has lessons for today 


Bang up 


to date 


the human side of the story; the 
struggles of physicists, many Jew- 
ish fugitives, against technical chal- 
lenges and political obstacles makes 
compelling reading. His account of 
Hiroshima is harrowing. 

The two more recent books lack 
the thrill of the initial chase and its 
sickening conclusion, but they 
throw fascinating light on the simi- 
larities and differences between the 
US, Britain and the Soviet Union. 
Cathcarfs book is written in a less 
academic style, but both books tell 
parallel stories about the same 
period and inevitably view the same 
incidents through different lenses. 

In all three countries bureau- 
cratic bungling held back develop- 
ment It was more than two years 
after Einstein wrote to Roosevelt, 
wanting the president of the possi- 
bility of the Bomb, that there was a 
significant US effort to produce 
atomic weapons. 

fa the Soviet Union Stalin had 
received excellent intelligence from 
Britain and the US on the critical 


issues in bomb development, but 
Russia in the early part of the war 
was thinking of survival in terms of 
weeks, rather than the years that 
the new superbomb would take. 

Even when the USSR regained 
the initiative, Molotov, the foreign 
secretary, did not trust his own sci- 
entists and believed the reports 
could be a plot by the west to make 
Russia waste resources on a point- 
less scheme. Only Hiroshima finally 
shifted official Russian attitudes. 

Britain had more mundane con- 
cerns. Having been ahead in 1940, 
thanks largely to a b rillian t analy- 
sis of the main problems by Frisch 
and Peierls at Birmingham Univer- 
sity - leaked wholesale to the Rus- 
sians - Britain refused to share its 
work equally with the US. The 
Americans soon pulled ahead and it 
was not until 1943 that the US read- 
mitted the UK to the project 

Despite the UK effort to help 
develop the Bomb, the US cut 
Britain off from atomic research 
after the war. Attlee then deter- 



mined that Britain must have at 
least the capacity to build nuclear 
weapons. William Penney was 
encouraged to head the project but 
he ran headlong into Whitehall. 
Other departments were so jealous 
of resources that they refused to 
supply half a dozen draughtsmen 
for a project the prime minister had 
given the highest priority. 

There are many such vignettes in 
both books. Beria, the secret police 


chief in charge of the Russian 
Bomb, made a list of those to be 
shot or deported to Siberia if the 
project failed. When it worked, he 
used the same list those who would 
have been shot were made Heroes 
of Soviet Labour; those to have 
been deported received lesser hon- 
ours; those who would merely have 
been sacked got commendations. In 
the UK, Penney got a knighthood. 

The Americans, once persuaded 


of the viability of the Bomb, were 
typically thorough and threw euor* 
mous effort and scientific skill atiti 
By 1945 the project had cost $2bn 
(£uam). The British were typically 
proud of the fact that they built 
their Bomb on a shoestring. The 
Russians poured in the full 
resources of the command 'economy 
and had no idea how much they 
spent "Give them what they want,'’ 
Stalin told Beria, "we can always 
shoot them later” 

Neither the British nor the Rus- 
sians matte much of the fad that 
their first atomic bombs were direct 
copies of (he original US design. 

CMUiugty, given how much tech- 
nology has progressed since, that 
design is nearly the one that would 
be used by a nascent, weapons state 
today. Those trying to learn the les- 
sons of 50 years ago can see clearly 
that once the physics had been 
established, getting plutonium or 
enriched uranium was the hardest 
problem. Producing it requires enor- 
mous, expensive sites, which are 
relatively easy to spot, as in Korea. 

Controlling the production and 
flow of piutoninm is the only Way to 
keep the nuclear genie even half 
way in the bottle. The destructive 
power of the Bomb, vividly 
described in these books, makes 
that an urgent task for the negotia- 
tors to take on. 


Power 






be worid’s first pre&type- 4 

stmercondnctorpower?:^'] 


X cable is to be madehy'a li : 
consortium of companies and n--: 
laboratories with backing &m 
the US Department ttf Enecgy^. , r . 

American Superconductor, ft ^ 
tender in the development of 
superconducting wires; PkriH ? 
Cable, a division of the Pirelli i. 
group, and the Ele ctric P ower. - 
Research Institute (EPRI),. which 
is funded by US electrical nfiByr 
companies, will undertake the 


*StaUa and the Bomb: the Soviet 
Union and Atomic Energy 1939-1955: 
David Holloway, Yale University 
Press 1994, £1995 

**Test of Greatness: Britain’s 
struggle for the Atom Bomb, Brian 
Cathcart John Murray (Publishers) 
1994, £1999 

***The Making of the Atomic 
Bomb, Richard Rhodes, paperback. 
Penguin 198& £1099 


I n one respect, president Saddam 
Hussein’s imitation of the grand 
old Duke of York in marching 
his men to the Kuwaiti border and 
then marching them back again 
came at just the right time far the 
French government. 

It helped remind France's politi- 
cians, taxpayers and European 
partners how essential satellite 
intelligence was to tracking the 
vagaries of Iraqi troop movements 
this time, just as it was daring the 
Gulf war of 1991; It reminded 
everyone of why Paris plans to 
raise spending on military space 
activities, mostly spy satellites, by 
24 per cent to FFr5bn (£590m) in 
1995 alone. 

France’s overall political aim is 
to make itself In particular, and 
Europe in general, less dependent 
on the US for military satellite 
Information. In the 1991 war 
France's Spot civil satellite pro- 
duced a useful complement to the 
Pentagon’s KH (Key Hole) military 


David Buchan on a French project to make Europe’s spy satellites less US-dependent 


Military eyes in the sky 


satellites, because Spot produces 
stereoscopic photos, providing a 
three-dimensional image. Bat Spot 
lacks the pinpoint detection of 
America's "Big Birds”, as it is 
unable to detect anything leas than 
10m wide. 

France has been spending heavily 
on military satellites since 1986 
when it started the Helios X pro- 
gramme with Italy and Spain 
which are funding, respectively, 14 
and 7 per cent of the programme. 

Early next year Ariane is due to 
pot Into orbit the first Hellos 1 sat- 
ellite, whose images will be pro- 
cessed at Tarrqjon in Spain. This 
ex-US Air Force base near Madrid 
has been converted into a satellite 


picture processing unit run by the 
Western European Union, the 
defence wing of the European 
Union, which has so far only been 
ted by images from Spot 
The French are well aware, how- 
ever, that Hellos I is far from com- 
pletely answering Europe's needs. 
It may cost more than FFrllbn, but 
it is simply an optic system and can 
take photographs only during the 
day and in good weather. Enough, 
perhaps, to cope with the interests 
that Helios I*s three partners have 
in the Mediterranean, but not much 
good for covering the aften-cloudy 
regions of northern and eastern 
Europe. Nor will the planned suc- 
cessor programme, Helios H, be 


much better in this regard; its 
infra-red imaging will penetrate 
night, but not heavy cloud. Spain 
also said this rammer that it would 
drop out of the FFrTbn Helios H 
programme because it could no lon- 
ger afford Ms 7 per cent share. 

But hopes are rising in Paris that 
Germany may at last join In - not 
necessarily in Helios, hot possibly 
in France’s Osiris project for a 
radar satellite, or in a much more 
ambitions Europe-wi de p roject 
being discussed in the WEU. The 
German go vernm ent and industry 
are much more interested in spy 
satellite detection by radar that 
pierces clouds and can even reveal 
subterranean objects, such as bun- 


kers, lying in several metres of 
loose soil, such as sand. 

A f easibility study conducted for 
WEU defence ministers by same 30 
companies under the leadership of 
Deutsche Aerospace (Dasa) aid a 
subsidiary, Domier, which makes 
medium-range turboprop aircraft, 
puts the cost of a complete system 
at up to Ecnl4bn (£llbn) over a life 
of roughly 1997 to 2022. This seems 
expensive, bnt perhaps less so 
given that WEU's 10 member coun- 
tries could split the cost over a 
quarter c e ntury and given that the 
system would include a mix of 
manoeuvrable radar and optic/m- 
fra-red satellites with spacehased 
relay stations. The optic/lnfra-red 


satellites would have a resolution 
down to 50cm-L00cm, while that of 
the radar satellites would be 3m. 

Different platforms are needed 
horana- radar imag in g is carried 
out at an oblique angle and there- 
fore on a satellite on a different 
orbit to optic or infrared photog- 
raphy which is conducted vertically 
above the target As for relaying 
images to the processing centre, 
tire only alternative to space-based 
relay stations would be to have 
ground stations around t he glo be. 

Not surprisingly, the WEU proj- 
ect is hanging fire. Cost is the over- 
whelming drawback for all WEU 
members. But there is perhaps 
ano ther clement in the opposition 
of the two most reluctant countries 
- Britain and the Netherlands. 
While both, are attached to Nato, 
the UK is the only Nato ally to 
which the US gives raw images 
from its satellites, rather than the 
processed data Washington gives to 
the rest of the alliance. 


of the TO National Laboratories.-. 
: The goal is tomakeiSOnr : _ 

- superconductor underground V 
power transmission cable, to be 
tested under real o perating - 
conditions by EPRL The $5-8m . 

(£a7m) prpject will be .framed J 
jointly by the Department <rf 
Energy and the companies. 

■ Superconductor materials lose, 
resistance to the flow of electric 
currratatfowtemperatures-The 
first metal snperamductora, . 
discovered early this ; century, : 
had to he pooled to. nearly 4* ~ 
Kelvin, oror -454?F. 

In 1986, however, “high , -. 
tempe rature sapercontoctor” 
(UTS) ceramics were discovered. 
Ttef” materials exhibit 
superconductivity at 
temperatures up to 130°K or 
•225°?, substantially reducing 
the costs of cooling. 

The cab le wi ll be made by 
stranding HTS wires round a . 
holfowcxn^TItesupercoiuhictmg 
material is cooled by naming - ■ 
liquid nitrograthxtragh the . - - 
cable. "We are truly approaching 
th e commercialisation of iti'si 
power transmission cables,” says 
Giuseppe Morchio, general 
manager of Pirelli’s cable 
operations. “The cables 
demonstrated under this . 
programme will show the 
improved performance and 
reliability that HTSfcechnology 
can provide. ” • 

. The prototype cable win be 
able to carry more than twice 
the power of conventional copper 
cffhte * of wtmflur ultimately, 

superconducting cables are. . 
expected to be able to carry j 

many times the power of copper I 
cables with lower energy losses. I 


Louise Kehoe 



PEOPLE 


More feet under Stylo’s table 


European Oil Refining and the Market to the Year 2000 
15 & 16 November 1994 - Amsterdam 


This year’s meeting, timed to coincide with the PetroTech 94 Exhibition, will examine 
the European product market and prices and review refinery activity. Environmental 
issues and new refinery investment will also be discussed. 


ISSUES INCLUDE: 

• Current and Future European Refinery Capacity 

• The European Markets and The Middle East Refiners and Producers 

• Russia's Oil Product Market: Current Patterns and Outlook 

• Cost Effective Approaches to Heavy Oil Conversion 

• Environmental Protection and Fuel Quality 

• The Cost of Meeting EU Environmental Regulations 

SPEAKERS INCLUDE: 

• Mr Tomihiro Taniguchi • Mr Gilberts 

Director, Office of Oil Markets Secretary Gem 

& Emergency Preparedness European Pc 

International Energy Agency Association 

• Mr Phil Trimmer • Mr Chris Ba 

Manager - Strategy and Forecasting Vice President 

BP Oil International The Chase IV 

• Mr Mobammed Saleh Shaikh Ali • Mr James J] 

Chief Executive Chief Executiv 

The Bahrain National Oil Company M W Kellogg 


Stylo, the Bradford-based 
footwear retailer and manufac- 
turer, yesterday promoted 
Michael Frenkel, 50, and Step- 
hen Lewis, 42, to the main 
board, restoring the comple- 
ment to 10 following the depar- 
ture of Mike Smith and the 
retirement of Patrick Ham- 
mond-Turner in the summer. 

Smith, who was finance 
director, went to Athena, the 
Pentos subsidiary, as md. This 
consolidated tbe position of 
Stylo’s group md Michael Ziff 
41, who was redesignated as 
chief executive in yesterday’s 
changes. 

“The change of title is to 
help people outside avoid con- 


fusion with our divisional manr 
aging directors,” Ziff said, 
when asked about the adjust- 
ment in nomenclature. Frankel 
will continue in one such divi- 
sional role, as md of Stylo Bar- 
rett shoes. Lewis, a scientist 
with a PhD, win have overall 
responsibility for information 
technology and distribution. 

Stylo is hardly a household 
name for a company owning 
500 retail outlets, but Barratis, 
the name over most of their 
front windows, Is. It was this 
universal high street presence 
that led to Conrad Ritblaf s 
British Land trying to lever its 
way into the company during 
the 1980s property boom. 


The concerted efforts of 
employee and , ztff family share- 
holders beat off the challenge, 
led by the redoubtable Arnold 
Off now 67, the chairman - 
and Michael’s father. Ziff the 
elder also chairs the Leeds- 
based Town Centre Securities 
and is one of Yorkshire’s busi- 
ness establishment 
Will he now be taking a back 
seat? “He is very much 
Involved and. as usual, tele- 
phoned me from London at 8 
am this morning for Tuesday's 
sales figures,” Michael Ziff said 
yesterday. Thanks to the com- 
puter technology new director 
Lewis is in charge of, they , 
were immediately available. 


Constructive 

careers 


Lord Rodgers to chair ASA 


Mr Gilbert M A Portal 
Secretary General 
European Petroleum Industry 
Association 

Mr Chris Baxter 
Vice President 

The Chase Manhattan Bank, N A 
Mr James J Degnan 
Chief Executive Officer 
M W Kellogg Limited 


The UK’s self-regulatory body 
con trolling advertising stan- 
dards - the Advertising Stan- 
dards Authority - has 
appointed a new chairman to 
replace Sir Timothy Raison 
when be retires at the end of 
his four years on January 1 
1995. 

The new chairman is to be 
Lord Rodgers of Quarry Bank, 
former member of parliament 
for Stockton-on-Tees, later 
Stockton North, between 
1962-83. He held a variety of 
cabinet posts in Labour gov- 
ernments. More widely known 
as Bill Rodgers, he was a 
long-standing member of the 
Labour party until in 1981 he 



defected to be a founder mem- 
ber of the Social Democratic 
Party along with Shirley Wil- 


liams, David Owen and Roy 

J enkins 

In 1987 he gave up being the 
SOP’S vice-president to take a 
£65,000 a year Job as director 
general of the Royal Institute 
of British Architects, a post he 
held until February this year. . 

Rodgers, 66, is now a liberal 
Democrat and was created a 
life peer in 1992. 

During the SDP’s party con- 
ference in 1967 he was reported 
as saying that “politics is a 
painful, damaging and often 
cruel business". With such a 
background, monitoring legal- 
ity, truthfulness and decency 
in the world of advertising 
should be a piece of cake. 


Hammerson’s drive into 
continental Europe has tafcen-a 
step forward with the appoint- 
ment of Oliver Ash as manag- 
ing director of the group’s 
European operations. Ash, 36, 
is a committed EnrophOe, hav- 
ing lived in France, Germany 
and Italy for the past 11 years. 

Between 1987 and 1992 he 
worked for property developer 
Shaftesbury, building office 
blocks and retail centres across 
the continent When the devel- 
opment markets froze with the 
onset of recession. Ash set up 
his own Paris-based consul- 
tancy and was happily r unning 
his own business whan Ham- 
mers approached him earlier 
this year. Hie will continue to 
live in Paris in his new role. 

Since one of Hammerson’s 
declared aims is to expand its 
property portfolio in continen- 
tal Europe, Ash should have $ 
sufficient fluids at his disposal. 

The £250m proceeds from the 
disposal of the group's Austin- ^ 
ban interests are widely expec- * 
ted to be reinvested before 
long, with French shopping 
centres tipped as the most 
likely first move. 

While Hammerson is lookfng 
to buy investment properties 
rather than developments, 
Ash’s experience in develop- 
ment will give the group more 
options. “I have no doubt that 
my developer’s keen eye will 
come in useful," he says. 


Non-executive 

directors 


There are some excellent marketing opportunities attached to this conference, please contact 
Lynette Northey on 071 814 9770 for further details. 


THE NINTH EUROPEAN PETROLEUM AND 
GAS CONFERENCE 


Please tick relevant boxes. 


Please return to: Fmanriai Times Conference Organisation. 
PO BOX 3651, Loudon SW12 8PH.TeL- 081 673 9000 
Fax: 081 673 1335. 

The Ninth European Petroleum and Gas Conference £660 + Vat 


O Conference information only. 

O Cheque enclosed for £77550, imde payable to FT Conferences. 
□ Please charge my Mastercard/Visa with £77550. 


Name MbMrs/Miss/Ms/Olher . 


Job Tide-. 


— Dept. 


Card no 


□□□□□□□nnnnnnnnn 


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Sir Clive Whitmore, 59, the 
former permanent under-sec- 
retary at the Home Office who 
took early retirement, is join- 
ing the board of merchant 
bankers N.M. Rothschild & 
Sons. 

He has already joined the 
boards of Boots and Morgan 
Crucible and joins Rothschild 
as a non-executive director on 
December L Although he will 
be one of more than 20 non-ex- 
ecs at Rothschild, the mer-- 
chant bank has taken the 
slightly unusual step of 
a r mn nnring that “his principal 
task will be in the field of 
human resources'*. Sir Clive 
has much experience in human 
resource work, not least in 
senior appointments and selec- 
tion procedures. 

Rothschild has long had 
close ties to the Conservative 


government and Sir Clive is 
the latest In a growing list of 
ex-civil servants who have 
ended up in Rothschild’s 
boardroom. These include Sir 
Frank Cooper, a former perma- 
nent under-secretary at the 
Minis try of Defence, Lord Arm- 
strong, a former Cabinet Secre- 
tary, and Sir Derek 11100193. a 
former Foreign office official 
and ez-Ambassador to Italy. 

Sir Clive was principal pri- 
vate secretary to Margaret 
Thatcher for the first three 
years of her government and 
subsequently permanent secre- 
tary at the MOD and the Home 
Office. When he resigned from 
Ms last job there was specula- 
tion that his early departure 
may have been linked to policy 
differences with Michael 
Howard, the Home Secretary. 


■ Howard Poulson, chief 
executive of Parnell 
Electro nics, a s chairman of 

PERA INTERNATIONAL in 


succession to Viscount 
Raynham. 

■ Robert Jordan, Mfr gnna 
Mowat and Robert Paine have 
resigned from SCHOLES 
GROUP. 

■ John Stebert, a former 
deputy chief executive of Reed 
Business Publishing, at 
INSIDE COMMUNICATIONS. 

■ Jade Shaw, deputy governor 
of the Bank of Scotland, at The 
SCOTTISH METROPOLITAN 
PROPERTY. 

■ Brian North, chairman, of 
Games Workshop, as chairman 
at GEARHOUSE GROUP. 

■ David Thompson, md of 
Wolverhampton & Dudley 
Breweries, at EXPLORATION 
CO. 

■ Stuart Hepburn, a director 
of Gartmore investment 
Management, at CHARLES 
TAYLOR & Co. 

M Trevor Harrison, retired 
general manager planning tor 
tC L at CH ELSEA BUILDING 
SOCIETY. 


■ Maureen Whalley, formerly 
sales director of Rawlings 
Homes, has been appointed md 
of BOWEY HOMES. 

■ Jon Lloyd, former md of 
Yorkshire Water Estates, is 
appointed md of DTZ DEBEN- 
HAM THORPE in Leeds. 

■ Gerald Kaye has been 
promoted to the board of 
HELICAL BAR. 

■ Philip Cleaver (below), 
formerly md of the «i gin«wyrfwg 
division of Norwest Holst, has 
been appointed md of halt, a 
TAWSE Partnership. 




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Louise Kehoe 


sirucnve 

■ers 


lmost every time a 
famous literary fli aBs k? is 
re-filmed, the director 
makes a pixKincticax num- 
ber OUt Of r.lahmpa r that 
he has “gone bach to the original." 

Ti ns pro mpts several Questions In 
the sceptical mi nd. How many origi- 
nals are there to iteep going bads to? 
Do we want a film to go back to its 
ori ginal ? And how many people, as 
wall as myself; look forward to the 
day when a director 1ms the nerve 
and freshness to say, “We didn't give 
a monkey's about the ori ginal We 
threw the book away unread. We did 
our own thing," 

Kenneth Branagh, the star and 
director of Mary SteBey’s Franken- 
stein, claims that he has gone hark 
to the book. But almost everything 
good about this film lies in its abju- 
ration of the literary; almost every- 
thing bad in its cumbrous invocation 
of it 

Mary Shelley created a great cen- 
tral idea and a two great central 
figures: Victor Frankenstein the 
crazed New Age scientist, and the 
creature he cobbles together from 
other people's spare parts. But the 
stray that the novel sets sp inning 
around this Promethean sun is weak 
and diffuse. Too many satellite char- 
acters are brought In merely to be 
burned up. And the geography tacks 
recklessly, pointlessly across terres- 
trial space from Geneva to the Ork- 
neys to the Arctic. 

The film’s second half 
these miscreant components. Bran- 
agh's Frankenstein, if he lived today, 
would qualify for frequent flyer 
points. Now he is in cholera-ridden 
Germany. Now he is hunting mur- 
dered relatives in Switzerland. Now, 
at a come-and-get-me cue from Rob- 
ert De Niro’s creature, he is backing; 
bis way around the North Pole. 

To compensate for topographical 
jump-cuts, the screenwriters Sfceph 
Lady and Frank Darabont anchor 
the drama at other points with 
leaden, speH-tt-fbr-moixms dialogue. 
Hero's mother (Cherie Ltmgbi): "You 
know, Victor, life shouldn't be all 
study.” Hero’s girlfriend (Helena 
Bonham-Carter): "Victor, you're 
completely obsessed.” Victor: 
"There’s something at work in my 
sodl which I do not understand." 

We know that, Victor. We have 
intuited it We do not need it written 
up on the blackboard. 

. Then suddenly Branagh will throw 
away the book, and the script, and 
the ghosts of the Lake Geneva gang 
of four whose story-writing sympo- 
sium produced this fable, and run 
amok with the camera. The labora- 
tory scenes are magnificent We bob, 
weave and soar through airspace - 
courtesy of director and cinematog- 
rapher (Roger Pratt) - wirOe Bran- 
agh’s bare-torso'd super-boffin 
charges around the Heath Robinson 
bric-a-brac. Steam swirls. Pipes hiss. 
And the overhead trolley-rafl, carry- 
ing the huge copper immersion tank 
containing the first man-made man, 
clatters like a rollercoaster. 

Out of this tank emerges Robert 
DeNlro, scarred and naked and tum- 
bling onto the wet floor for a ftmny- 
horrifle eel dance between Franken- 
stein mid his grisly, slithery catch. 
This scene, as semi-nude creator 
struggles to set wholly-nude crea- 
ture on his feet, has the tone the 



A barnstorming performance: Kenneth Branagh in ‘Mary Shelley’s Frankenstein’ 

Cinema/Nigel Andrews 


A monster with flashes of brilliance 


whole Aim might profitably have 
had. A horror-comedy version of 
Genesis: where God is played by 
man, temptation by a monstrous 
Tnan-flgfi and the Garden of fafan by 
an overgrown attic with its metallic 
jungle of gewgaws. 

But as soon as the creature 
escapes, so does the film's com- 
pacted passion. There is no terror In 
De Niro's lumbering scarface in a 
greatcoat: just a husky-familiar De 
Niro shir delivered with that cocked- 
head abstractedness we know from a 
dozen De Niro roles. 

Watching the film is an exercise in 
frustration. There are Hashes of bril- 
liance as bright as li ghtnin g bolts: 
like the two horrific long-roped 
hang in g - scenes, in which Branagh 
has dreamt up a bungee style of exe- 
cution for early ISth century Europe; 
or like the camera’s queasy gliding s 
over the Frankensteins’ giant stair- 
case (imported from Kane’s Xan- 
adu?) as people stumble up or down 
it carrying fresh disasters. 

As an actor’s director Branagh 
may be the best in the business. He 
wrings the last drop of idiomatic life 
from players like Ian Holm, as tether 


Frankenstein, and John Cleese, 
improbably but effectively cast as a 
grim sawbones. And Branagh’s own 
performance is pure, barnstorming 
splendour. 

But there is a point in this story 
when panache no longer has a pre- 
mium. We want alarm, foreboding, 
cold panic, timer mortis. The movie's 
paster carries a warning: ‘'Certain 
scenes may prove disturbing for 
some viewers." What scenes? Did 1 
miss them? Were they taken out? If 
so: back to the laboratory, please, for 
the “Director's Version." 

F or most of its span 
Charles Teton's Dark 
Summer seems so inert 
that we keep poking it 
with our perceptions, as if 
it were a hedgehog at the side of the 
road. Is it dead or just playing dead? 
A gently chugging reggae score 
accompanies images of a pictur- 
esquely distressed Liverpool - soot- 
black sunsets, grey rivers, dry- 
docked ships - while two scarce-con- 
structed characters meet, love and 
drift apart 

He is Abe (Steve Ako), a coffee-col- 


MARY SHELLEY'S 
FRANKENSTEIN (15) 

Kenneth Branagh 

DARK SUMMER (12) 

Charles Teton 

LOVE IN THE STRANGEST 
WAY (15) 

Christopher Frank 


cured mechanic and would-be boxer. 
She is Jes (Joeline Garner Joel), a 
white girl temping at her father’s 
scrapmetal yard. They meet and link 
destinies. Then they go through 
pregnancy, miscarriage and 
break-up. 

It is hard to convey the extent to 
which nothing happens. For 84 out 
of 85, the filmgoer fidgets while 
first-time director Teton sets up his 
Merseyside tableaux vtvants, like a 
neighbour readying hapless friends 
for his holiday slides. 

Only in one magically pained 
scene does the film gel. The two 


lovers are in bed. she turned away 
from him. He braves a single, 
cramped, anxiously reaching word, 
“Jes”; she does not answer. The 
camera, on his face, watches that 
moment of numbed, irradiated 
awareness when an entire 
relationship crumbles. A film whose 
"economy" elsewhere seems that of 
artistic poverty stumbles, for a small 
second, on the true economy of 
tragedy. 

★ 

France's Love Jn The Strangest Way 
tells of a married man (Thierry 
Lhermitte) who falls for a bit on the 
side (Nadia Fares). The bit In 
question, a mystery redhead met at 
a cafe, is soon harrying him and his 
wife (Maruschka Detmers; right up 
to the murderous climax. She has 
clearly seen, as has writer-director 
Christopher Frank. Fatal Attraction. 

Early scenes involving marital 
paranoia and an accident-prone 
rocking horse are promising. But 
then the plot becomes progressively 
Hollywoo&sed. Sinister phone calls; 
a death-dealing shovel; a “body” 
behind a wall; and a twist ending 
that succeeds only in knotting 


beyond repair our already tangled 
brain cells. 

But the French film beats the two 
short German "comedies” opening 
together this week. Did the UK 
distributors win these in a raffle? in 
Making Up two love-seeking women 
friends have fun and heartache 
dating two tiresome men. And in 
The Most Beautiful Breasts fn The 
World a pneumatic girl surreally 
swaps mammaries with a man after 
bumping Into him in, a lift. 1-angh* 
At the press show you could hear a 
handout drop. 

In the same programme there is a 
ghastly New Zealand short about a 
girl dating an extraterrestrial What 
did we do to deserve this triple bill? 
Did we all say “trick” instead of 
"treat" last Monday? Never mind. 
There is always the London Film 
Festival. Worth sampling during the 
coming week: one each from Taiwan, 
Cambodia and India ( Eat Drink Man 
Woman. Rice People, Bandit Queen) 
and a clutch of celebrity interviews 
including Hal Hartley, Christopher 
Lee and those nice Creature 
Comforts folk from Aardman 
Animation. 


■ -- • «: ■") 


I 


T - ■ - 


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t is only 26 years since Joe 
Orton’s death. Had he lived, he 
would today be only 61 years 
old. Almost nothing in his black 
comedies has dated. The connections 
between greed, lust; and criminality 
remain heartstoppngiy fenny; and 
some of his jokes about toe Kafka- 
esque British police in Loot are 
astonishingly “now”. 

So it is upsetting to discover how 
seldom bis plays are revived in 
appropriate style. Orton’s supreme, 
joke is in his ironic - Wildean - 
mastery of language. Characters fre- 
quently apeak with precise formality 
about matters carnal and/or crimi- 
nal. Fay to Mr McLeavy Qn Loot): 
"You’ve been a widower tor three 
days. Have you considered a second 
marriage yet?" The lines need maxi- 
mum clarity and minimum interpre- 
tation. The more suave their deliv- 
ery, the more delicious their irony. 


Theatre/AIastalr Macaulay 


Entertaining Mr Sloane/Loot 


Or so it seems to some of us out 
there in the dark. In recent years, 
however, each Orton revival I have 
seen has been less stylish than the 
last The Birmingham Rep is now 
presenting an Orton double bill - 
directed by Gwenda Hughes, 
designed by Kate Owen, with four 
actors performing in both plays - in 
which Loot is creakily entert a i nin g 
ami Entertaining Mr Sloane stagger- 
ingly short of innuendo. 

R does not help Orton’s comedy if 
the hostess Kath, telling her new 
lodger Sloane that she has nothing 
on under her dress, reveals a firm 
petticoat; or if, where Orton specifies 


a “transparent negligee", she wears 
a fluff-lined dressing-gown. Apart 
from these mere external factors, 
Stephanie Fayenoan’s interpretation 
- pigeon-toed, half-gauche and half- 
dainty, hysterical - is woefully over- 
emphatic, making a heavy meal out 
of toe character's non-U nursery talk 
and utterly missing the classic 
English joke of her romantic social 
pretensions ("You have the air of 
lost wealth .. . Did Dr Bamardo give 
you a bad time?"). 

Michael Cashman does better as 
her brother Ed, bnt he usually 
stresses the creepy side of Ed’s 
homoerotic desires while not know- 


ing how to make them disarmingly 
funny too. As Mr Sloane, who 
seduces them both, young lan Pep 
perell (though physically too slight) 
has the right inscrutability, but not 
nearly enough skill in nuance. 
Sloane is a heartless thug who fools 
people he is an innocent - an inno- 
cent in need of firm ... guidance; 
and his deadpan account of his 
sporting . . . activities should be irre- 
sistible. 

When Orton is not well enough 
acted, his originality dissolves. 
Watching the Birmingham Loot, 
however, you are aware of little but 
Orton’s subversive novelty. Each 


character is consistent, but there is 
just enough absurdity in the air for 
us to be undermined by hilarity. 

Too much absurdity, actually. 
Most of the cast - especially Cash- 
man as Inspector Tniscott - have 
such fun with Irish or Scouse 
accents that they stress some words 
more for sound effect than for sense. 
Still, Cashman plainly relishes his 
role; as does John Rogan as the 
bewildered widower Mr McLeavy. 
PeppereH's Hal and Ian Targett’s 
energetic, nervous Dennis give flu- 
ent accounts of the two unscrupu- 
lous young coffin -despoiling bank- 
robbers. Fayerman, as the much- 


married killer nurse Fay McMahon, 
still overdoes the busy gestures and 
oeillades, but here she adopts the 
right basic suavity. (Good Orton 
must hover persistently on the brink 
of camp.) 

Wittily, Kate Owen has located the 
two plays next door to each other, in 
two halves of one semi-detached 
house on the same revolving stage. 
Two of the problems in Sloane are 
that she obliges us to see action (in 
the kitchen, or upstairs) that Orton 
meant to occur offstage, and that she 
shows us the Dock of cuddly-toys 
that Hath keeps in her bedroom. 
(Doesn't much of Orton's essence 
always lie in what he does not show 
us?) In Loot, however, we see little 
save what Orton meant us to see, 
and the comedy of what is seen and 
unseen nourishes. 


13 


At the Birmingham Rep. 


Dance 

Angelin 

Preljocaj 

I t is not the opportunity 
for rabid foxes to race 
into this country that 
bothers me about the 
Channel Tunnel, but the 
increased threat from Euro- 
pean modem dance troupes. 

So I thought during two- 
thirds of a Dance Umbrella 
evening on Tuesday at Sadler’s 
Wells. There on stage were the 
choreographies and dancers of 
Angelin Preljocaj (Albanian- 
French and much admired on 
the European dance circuit). I 
have reported on his work 
before, with same reluctance. 
As with so much French mod- 
ern dance, I find his creations 
intellectually costive, 
top-heavy with meaning and 
woefully thin in movement. 

Prefiocaj’s programme had 
the unmitigated gall to call 
itself a Homage to the Ballets 
Russes. The first piece - On 
trait d’union - was wholly 
unconnected with Diaghfiev’s 
enterprise. It showed two 
chaps trying to pick each 
other up, physically as well as 
sexnally, while having hell 
with a squat chair. It claimed 
to be about the quest for what 
is known today as "a relation- 
ship”. Like so much of this 
kind of modern dance, it was 
about had manners - social, 
sexual, emotional - which are 
as boring on stage as they are 
in life. The men climb over 
each other, and show remark- 
able muscular sympathy, 
while Bach and electronic clat- 
ter ring out. And, of course, 
they end up as they began - 
alone. Someone imported a 
baby into the stalls on Tues- 
day night: its cries of distress 
indicated that a critical fac- 
ulty can be encouraged at the 
earliest age. 

There followed a shameful 
assault on Le spectre de la rose. 
The stage laterally divided. 
Two girls, two matadors and 
two chairs on one side. On the 
other, a crop-headed maiden 
and a man in a rose-petalled 
outfit trying to toss her like a 
caber. The Karajan recording 
of Weber’s waltz - broken into 
by sounds of a dripping tap 
and faint burblings, of coarse. 
Further comment would be an 
act of supererogation. 

All this was Enrotrash of the 
most debilitating kind. With 
his version of Les Noces, Prel- 
jocaj succeeded in a reap- 
praisal of the Stravinsky 
score. His theme is still mar- 
riage, here seen as an event in 
which stereotypical male atti- 
tudes remain potent. Five con- 
pies. Five benches. Five large 
dummies dressed as brides. 
Much throwing of bodies, and 
of the dummies which serve as 
ideals and role-models for the 
women. The choreography 
touches the score hardly at all 
- hearing all those rhythms 
going to waste was rather like 
watching fivers thrown in a 
dustbin. What Prefioca) does 
identify is the persistence of 
social roles - and his piece has 
value because be uses move- 
ment to convey this. The lan- 
guage is not very enterprising 
- his is a cateh-as-catch-can 
style - but the dance has thea- 
trical shape, and comments 
aptly on a Ballets Russes origi- 
nal. It was done with brilliant 
tuning and energy by its cast. 

The end of this week will 
brings a Wells visit by Siob- 
han Davies’ company in two 
works - Wanting to tell stories 
and The Glass blew in (with a 
fine Gavin Bryars score) - on 
which I reported admiringly 
earlier this year. 

Clement Crisp 



n: : 'T 


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A 


■ ATHENS 

Megaron Tomorrow: Anna 
Tdmowa^SbTtow sings opera arias. 
Nov. 8, 10, .12: staged production of 
Fouteno's La volx humaine, stoning 
Jeanne PBouJ Nov 13-16: Bolshoi 
Baftet (01-728 23 33/01-722 5511) 

■ BOLOGNA 

Teatro Commumale Sat, Sun: John 
Nelson -conducts Orchestra. o# the 
Teatro Conmwnale m wort© ty 
Tchatawsky and Shostakovich, -with 
piano.sqfofsf Grigori. Sokolov. Mon: 
Luciano Berio conducts O.RT. 
Orchestra della Toscana in Madema, 
Stratfp^y, GhedW and Berta, with - 
'viri&’sQWst Altto Bermid. The opera 
seesrafbpians on Nov 26 with a new 
pnxftx!tira)^:Rosdrirs II turcoh 
Italia (Nb telephone bookings. 
TrSbriraSoit 051-52999^ 

■ GENOA 

Temro Cterfo FeBce Tonxjirow, Sal 

afternoon: Spkos ArgJris conducts 
orchestral Wort© By Stratinsfcy, . 


Rimsky-Korsakov, with clarinet 
soloist Romolo Tisano. The opera 
season opens on Dec 2 with Dor 
fliegonde HoBSnder (No telephone 
bookings. Information: 010-689329/ 
010-5381 225) 

■ LONDON 

THEATRE 

• Hamlet: the Globe Theatre 
re-opens tomorrow as the Gielgud 
.with Peter Hair’s new production of 
Hamlet, starring Stephen Dfllane, 
Michael Pennington, Donald Sinden, 
Gwen Taylor and Gina Bellman 
(Gielgud 071-494 5065) 

• The Prime of Miss Jean Srodie; 
Patricia Hodge takes on the rote of 
the formidable schoolteacher whose 
mix of romance and witfutness 
inspires her pupils. This is the first 
major London revival since 1968 of 
Jay P reason AHen’s stage version of 
Muriel Spark's novel (Strand 
071-930 8800) 

• Romeo and Juliet Dusseldorf 
Schauspielhaus presents Karin 
Betels German-language production 
of Shakespeare's play tonight, 
tomorrow and Sat fife is the first In 
a series of international Shakespeare 
events at the Barbican, which will 
include an adaptation of King Lear 
from Japan (Nov 9-12) and Peter 
Sellars’ Chicago production of The 
Merchant of Venice (Barbican 
071-638 8891) 

• A Passionate Woman: Ned 
Sherrin directs a new production of 
Kay Motor's play, fast seen at the 
West Yorkshire Playhouse last year. 
Stephanie Cole stars as the 
housewife whose passion for fife 
breaks out to the horror of her 
family. Now in previews, Rees night 
on Mon (Comedy 071-369 1731) 


• Moscow Stations: a one-person 
play, storing Tom Courtenay, 
inspired by Venecfikt Yerofeev's 
acclaimed modem Russian tale 
about an alcoholic who stumbles 
raid dozes his way through a series 
of surreal adventures (Garrick 
071-494 5085) 

• Tie Seagull: Judi Dench's 
Arkacfina heads a splendid cast in 
Pam Gems* new version of 
Chekhov's play about disappointed 
aspirations, (n repertory at the 
National with The Devil's Disciple, 
Bernard Shaw's 1897 satire on 
melodrama, and Racing Demon, 
David Hare's play about tensions in 
the modem Anglican Church 
(National. Olivier 071-928 2252) 

• The Children’s Hour. Harriet 
Walter and Claire Higgins head the 
cast In the National Theatre's new 
production of Lillian Heilman's 1934 
drama about lesbianism, directed by 
Howard Davies. In repertory at the 
Lyttelton with Tennessee Williams’ 
Sweet Bird of Youth directed by 
Richard Eyre, and Arthur Miller's 
new play Broken Dreams (National, 
Lyttelton 071-928 2252) 

• Arcadia: Trevor Nunn directs 
Tom Stoppard's complex but often 
funny drama that won the 1994 
Olivier Award for Best Play 
(Haymartot 071-930 8800) 

• She Loves Me: the charming 
1963 Masteroff, Bock and Hamick 
musical about two longtime pen pals 
who don't know they work in tire 
same parfumerie. Ruthie Henshall 
and John Gordon Sinclair head the 
cast (Savoy 071-836 8888) 
OPERA/DANCE 

Covent Garden The Royal Ballet 
opens its 1994-5 London season 
tonight with a gala performance of 
Anthony Dowell’s new production of 


Sleeping Beauty (repeated Nov 7, 

18, 19, 23, 26). The company also 
has an Ashton celebration opening 
next Thurs The Royal Opera's new 
production of Rom6o et Juliette, 
staged by Nicolas Joel and 
conducted by Charles Mackerras, 
can be seen tomorrow with cast led 
by Roberto Aiagna and Leontina 
Vaduva (repeated Nov 9, 12, 15, 17). 
Gwyneth Jones stars in Turandot on 
Sat (071 -304 4000) 

Coliseum English National Opera 
has final performances tonight and 
next Wed of lan Judge's new 
production of Massenet's Don 
Quichotte. with cast headed by 
Richard Van Allan. Ariadne auf 
Naxos is revived tomorrow with 
Jane EEaglen in the title role (till Dec 
14). Repertory also includes Die 
Zauberflbte (071-836 3161) 

Sadler's Weds Siobhan Davies 
Dance Company gives the world 
premiere tomorrow and Sat of 
Davies' new choreography entitled 
The Glass Blew In. Nov 8-19: 
Northern Ballet Theatre in 
Christopher Gable's touring 
production of Cinderella, music by 
Philip Feeney (071-278 8916) 
CONCERTS 

South Bank Centre Tonight: 
Alexander Lazarev conducts BBC 
Symphony Orchestra in works by 
Tchaikovsky. Rakhmaninov and 
Schnittke, with piano soloist Peter 
jatrfonski. Tonight (QEH): Tabea 
Zimmermann, Michael Collins and 
Imogen Cooper play chamber music. 
Tomorrow: Vladimir Ashkenazy 
conducts Berlin Radio Symphony 
Orchestra in Schumann and Mahler, 
with piano soloist Cristina Ortiz. Sat. 
Maurizio Pollini plays Beethoven 
piano sonatas. Sun afternoon; 
Bernard Haitink conducts Orchestra 


and Chorus of the Royal Opera 
House in Ravel, Mozart and Brahms, 
with piano soloist Murray Perahia. 
Sun evening: Mariss Jan sons 
conducts London Philharmonic in 
Debussy. Ravel and Stravinsky, with 
piano soloist Krystian Zi merman. 

Sun (QEH): Hans Zander conducts 
Ensemble Modem in his composed 
interpretation of Schubert's 
Winterroise. Mon, next Thurs and 
Sun: Nikolaus Harnoncourt and the 
Philharmonia Orchestra continue 
their cycle of Beethoven 
symphonies. Mon (Purcell Room): 
Nash Ensemble with tenor Robert 
Tear. Tues: Yuri Temirkanov 
conducts RPO in Prokofiev, 

Schnittke and Rakhmaninov, with 
piano soloist Dmitri Alexeev. Wed: 
Alexander Lazarev conducts BBCSO 
in Avet Terteryan's Seventh 
Symphony (071-928 8800) 

Barbican Tonight: Mstislav 
Rostropovich conducts London 
Symphony Orchestra in music 
inspired by Shakespeare’s plays. 
Tomorrow: Hobart Earle conducts 
Odessa Philharmonic Orchestra In 
Glinka, Rakhmaninov, Skoryk and 
Brahms, with piano soloist Amaldo 
Cohen. Sat Neeme J&rvi conducts 
Gothenburg Symphony Orchestra 
and Tallis Chamber Choir in Sibelius' 
The Tempest Sun: John Williams 
guitar recital. Next Tues and Wed: 
Seiji Ozawa conducts LSO in world 
premiere of new cello concerto by 
Rodion Shchedrin, with soloist 
Mstislav Rostropovich (071-638 
8891) 

■ MILAN 

Teatro aDa Scala Tonight: Ballet of 
La Scala in works by Balanchine, 
Tudor and Lander. Tomorrow, next 


Tues, Wed, Thurs: Kenneth 
MacMillan's Marion. Sun: Dmitri 
Alexeev piano recital. Mon: 
Jean-Claude Malgoire conducts 
Vivaldi. Nov 14, 16, 17: Murray 
Perahia plays Mozart Nov 21: 
Teresa Berganza Dec 7: opera 
season opens with Die Walkfire 
(02-7200 3744) 


■ PRAGUE 

State Opera Tonight new 
production of Gottfried von Elnem's 
Kafka opera Der Prozess (repeated 
Nov 27, Dec 28). Repertory also 
includes Un ballo in maschera, 
Nabucco, Aida and Hans Krasa’s 
1933 opera Verioburtg Im Traum 
(02-2421 5031) 

Rudolfimim Tomorrow evening, Fri 
afternoon: Zdenek Kosler conducts 
Czech Philharmonic Orchestra in 
works by Smetana and Richard 
Strauss (02-2489 3352) 


■ ROME 

Georges Pretre, conducts the 
Orchestra deH'Accademta Nazionale 
di Santo Cecilia on Sat, Sun, Mon 
and Tues in works by Strauss, 
Dukas and Roussel. Other visiting 
artists in the pre-Christinas period 
include Vladimir Spivakov, Cecilia 
Gasdia, Christian Thielemann, 
Gennady Rozhdestvensky and Carlo 
Maria Giulini. Ail concerts taka place 
at toe Auditorio di Via della 
Conciliazione (06-6880 1044) 


ARTS GUIDE 

Monday: Berlin, New York and 
Paris. 

Tuesday: Austria, Belgium. 
Netherlands, Switzerland, Chi- 
cago. Washington. 
Wednesday: France, Ger- 
many, Scandinavia. 

Thursday: Italy, Spain, Athens, 
London, Prague. 

Friday: Exhibitions Guide. 

European Cable and 
Satellite Business TV 

(Central European Time) 
MONDAY TO FRIDAY 
NBC/Super Channel: FT Busi- 
ness Today 1330: FT Business 
Tonight 1730, 2230 

MONDAY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

Eoronews: FT Reports 0745, 
1315, 1545, 1815, 2345 

WEDNESDAY 

NBC/Super Channel: FT 
Reports 1230 

FRIDAY 

NBC/Super Channel: FT 
Reports 1230 

Sky News: FT Reports 0230, 
2030 

SUNDAY 

NBC/Super Channel: FT 
Reports 2230 

Sky News: FT Reports 0430, 
1730; 




,it- 


FINANCIAL TIMES THURSDAY NOVEMBER 3 1994, 


Why pay should be 
linked to success 


“Executive re- 
muneration is 
both a hi g hl y 
complex and a 
highly emotive 
subject.” is 
BOOK Anthony Wil- 
REVrEW liams's ““lu- 

lUjvwvv sjon t0 tJjJs 

guide to executive pay. About 
tha t there is no argument, and 
a book that is able to establish 
both the facts of the matter 
and a coherent approach 
deserves a wide circulation. 

The studies quoted by the 
author demonstrate beyond 
doubt that something has hap- 
pened to top executive pay 
over the past 10 years or so 
that is not accounted for by 
inflation. Nor can it be more 
than partly explained by the 
catch-up needed after a decade 
in which executives’ net pay 
fell in real terms. 

Large institutional investors 
such as PosTel are often 
accused - as Williams does in 
this book - of being critical of 
executive remuneration. That 
is a misrepresentation of our 
position, however. Apart from 
requesting that reward is 
related to the success or other- 
wise of the company, as seen 
by shareholders, we make no 
such sweeping statement. 

Except in extreme cases, 
institutions cannot pontificate 
about the levels of pay that a 
board votes for its executives. I 
have wnnngh difficulty in deter- 
mining the correct pay levels 
for my own executives, let 
alone those in industries of 
which I have only a sketchy 
knowledge. 

Where the investor has a 
legitimate concern is in ensur- 
ing that the interests of the 
executives and the sharehold- 
ers are aligned in determining 
the structures by which pay is 
determined and the various 
rewards available. 

In the past, many senior 
executives had substantial 
shareholdings in the company 
for which they worked. Shares 
were held by family members, 
not by professional investing 
institutions. 

It is the rise of the profes- 
sional manag er that ha« cre- 
ated the need for new struc- 
tures. The investing 
institutions demand a check on 
the otherwise unfettered power 
of the executives, who might 
be tempted to live well at the 
shareholders' expense. 


JUST REWARD 
- The Truth About Top 
Executive Pay 
By A.P. Williams 

Kp gm Page, £25 


A remuneration committee, 
made up of independent non- 
executive directors, is a body 
that should give us that confi- 
dence. Unfortunately, it does 
not always do so. 

Too often these committees 
seem to be reactive rather than 
to think for themselves. They 
interpret the mantra of remu- 
neration policy - that a pack- 
age should be able to recruit, 
retain and motivate good 
management - as an invitation 
to follow the consensus on 
what the marketplace 
demands. 

This is where the consul- 
tants, among whom Williams 
is counted, must take some a! 
the blame. As be says: “There 
is at least one well-known firm 
of consultants which Is 
believed to be used by certain 
companies ... because it rec- 
ommends the high figures that 
their chief executives prefer.” 

Almost every company falls 
into the trap of wanting to 
reward its executives at top 
quartile levels (fund managers 
offer similar promises to poten- 
tial clients). Yet three-quarters 
of companies will not be in the 
top quartOe: it reminds me of 
the Labour cabinet minister of 
the 1970s who longed for every 
worker to be paid more than 
the average wage. 

Linking executive pay to 
average market levels is sim- 
ply a game of Leapfrog. Each 
company and each job is differ- 
ent, and a different combina- 
tion of reward will be needed 
to recruit the right manage- 
ment 

On what the combination 
should be. Williams's view is 
broadly compatible with Pos- 
Tel's: 

• A reasonable base salary, 
out of which a senior executive 
can lead a comfortable - but 
not excessive - existence. 

• A short-term bonus, of lim- 
ited size, dependent on 
de manding short-term targets 
on internal forecasts or bud- 
gets being met 

• A long-term bonus, perhaps 
capped only at a high level 
dependent on the performance 
of the company, as perceived 


by the shareholder, over at 
least three years. 

The hurdle for the latter 
mi ght be a measure of share- 
holders' total return, against a 
suitable peer group. Boots, for 
example, uses a mixture of 
ratafia's and drug companies 
for comparison. 

There is no place here for 
conventional share options. 
They were a reasonable device 
when marginal income tax 
rates were between 80 per cent 
and 98 per cent, but bave no 

dear role today. 

Many companies now prefer 
to create trusts in restricted 
shares, to which executives get 
access after a period of service. 
The cz-homp run by Reuters, 
the news agency, for example, 
allocates shares after three 
years, but the shares cannot be 
sold for another two years. 
This Is a better way of 
retaining the services of a suc- 
cessful executive than any con- 
tract 

W illiams and I do not dis- 
agree much on the question of 
executives' contracts either: 
the three-year rolling contract 
is almost impossible to justify. 
A three-year fixed contract 
which is succeeded by a one- 
year “roller” should be enough 
to attract someone away from 
a secure job and offer protec- 
tion against a breakdown in 
relations at an early stage. 

A good executive, asked to 
leave for reasons other t han 
lack of competence, will not 
find it diffic ult to be recruited 
elsewhere; the market knows 
the truth. The way to ensure 
that executives t a k e the risks 
necessary to build businesses 
is to offer substantial rewards 
when their risk-taking has 
borne fruit in the long-term 
performance of their company. 

The 1994 Hay survey of exec- 
utive contracts shows a fall in 
their average term, with three- 
year contracts no longer in the 
majority for directors other 
than chief executives. Perhaps 
that will convince the 37 per 
cent of companies which are 
waiting to “see what others 
will do, and will follow the 
market norm” that their time 
has come to move. 

Alastair 
Ross Goobey 

The reviewer is chief executive 
of PosTel Investment Manage- 
ment 


T he danger of trying to 
look at too many sign- 
posts at the same time 
is that the driver will 
be dazzled. This seems to have 
happened with Tuesday’s Bank 
of En gland Inflation Report 
The headline news about 
lower inflation, actual and 
expected, gave one message to 
the markets. The warnings of 
the concluding section on the 
upward risks to the forecast, 
which the Bank in the end 
decided to stress, gave another. 
So the financial markets did 
not immediately realise the 
Rank was hying to sig nal the 
need for a bias towards higher 
interest rates, whether or not 
im plemented this month. 

These misunderstandings 
came from an attempt to be too 
pragmatic and flood us all with 
information, which Is valuable 
for the record, but needs to be 
co-ordinated by a central 
vision. The source of the confu- 
sion is that the upward pres- 
sures on both economic activ- 
ity and prices have increased. 
But they are being imposed on 
an economy operating at a 
lower rate of inflation than 
anyone had dared to hope. 
Thus the aircraft is quite likely 
to be buffeted by upward mov- 
ing air currents; but it is 
starting from much nearer the 
ground than the navigator pre- 
viously realised. 

The Bank’s most favoured 
underlying measure of infla- 
1 tion, known in the trade as 
RPIY. excludes indirect tax 
increases as well mortgage 
interest payments. On this 
basis inflation has been run- 
ning at a seasonally adjusted 
annualised rate of 1.7 per cent 
over the last three months. 
There are other underlying 
indicators which give still 
more favourable results. 

The risk of future upward 
inflation movements comes 
from the pressure of output on 
productive capacity. One 
attempt to measure this pres- 
sure is to look at the deviation 
of output from its trend, 
starting from the bottom of the 
recession. The Bank's chart 
(not reproduced here) shows 
that, altho ugh there is more 
unused capacity than at the 
corresponding period in the 
early 19806, it is still being rap- 
idly eroded. The Bank esti- 
mates that nominal GDP is 
now rising by S per cent per 
annum, as I suggested on Mon- 
day. This is the appropriate 
rate at which to aim, but not a 
basis for complacency when 
subject to upward pressures 
coming especially from the 
prices component 
The crucial point is that the 
pressures on capacity are not 
confined to the UK. They are 


ECONOMIC VIEWPOINT 

Information dazzle 
at the Bank 


By Samuel Brittan 


being felt worldwide, outside 
Japan. One main channel of 
transmission is through rising 
international commodity 
prices, which have had the 
effect of boosting UK 
“imported infla tion" to 6 per 
cent per annum. Tins is one 
reason why the balance of 
firms to CBI surveys expecting 
to raise prices has reached 22 
per cent, seasonally adjusted, 
the highest since 1990. 

Another factor insufficiently 
stressed by the Bank is that, 
under the influence of 
strengthening world markets 
and a highly competitive 
pound, British producers are 
beg inning to summon up the 
courage to pass on cost 
increases in factory gate 
prices. There is no need to gaze 
at the crystal ball The chart 
shows that producer prices, 
excluding the food group, are 
already rising at an annualis ed 
rate of 3.6 per cent. 

So far, the upward forces at 
the producer level have been 
held at bay by intense competi- 
tion in UK retail markets. The 
Bank agonises over bow long 
this countervailing pressure 
will continue. But even if there 
has been a structural change 
to the retail trade, the squeeze 
on margins is essentially a one- 
off event which cannot be 
relied upon to bold down infla- 
tion in future. 

The Bank, which will have 
seen the Treasury’s pre-Budget 
forecast, expects the rise in 
output to slow down. It also 
emphasises the current near- 
zero increases in unit wage 
costs. But the latter are 
already coming under threat 
from the tightening labour 
markets and the tendency of 
productivity increases to slow 
down as full capacity operation 
is approached. Above all the 
Bank needs to put more 
emphasis on the interrelation 
between unexpectedly rapid 
growth rates in different parts 
of the world. These are under- 
stated by the overseas chapter 
in the November Bulletin, 
which does not go beyond the 
inevitably dated official figures 
for co untiles outside the UK. 


Producer output price inflation 


% Increases in prices 
7 


. 'Three-month amuaKsed, eactudlns food- drink, 
tobacco and patraisum, seasonally adjusted 

> Change on year earlier, excluding food, £***, 
tobacco and petroleum, seasonally adjusted 
Change on year eater, totrf. unadjusted 




a .1 


1891 1992 

Sara): Bank of England 

UK paying way with payments 
Aeo 

1982-89 1990 

A Current balance -4.1 -11L0 

B Identified capital 

Rows (inflows -) -1.9 -182 

C Revaluations 4,7 -41.4 

of which: 

Exchange rates -20.8 

Portfolio investment -19.0 

Direct investment -142 

Other net assets \2A 

Securities price effect -14.1 

Other -&5 

D Change in Identified 
assets 2.8 -59.6 

E Net asset level 65.0 -4-0 


F Balancing items {B-AJ 2-3 
Source: Bank cJ Entfand 

The Inflation Report talks of 
the risk of inflation "in two 
years' time" going above its 
central forecast of 2V, per cent 
If this means a few decimal 
points above, and that were to 
be the peak, no sensible chan- 
cellor need lose sleep. The real 
risk is of a cumulative upward 
movement going much higher 
and extending much longer. 
Then why not say so directly - 
instead of to casuistical terms 
which can be easily demol- 
ished by the soft money bri- 
gade, as the Bank was by The 
Times leader yesterday? The 
fragile nature of the present 
low-inflation achievement is 
evident in the obstinate belief 
of most wage earners that 


i deficit (£bn{ 

1991 1992 1993 

S . 2 . -9 A -103 

-as -3.4 -a3 

its 15.7 ,:mo 

103 45.6 4.0 

32 27.7 02 

6.4 27.6 - 3.0 
0.7 -0.7 0.6 

92 . -13J3 1Z7 

-6.7 -16JS 12 

23 122 06 

-•L7 106 203 

-04 62 2.0 


inflation will be stuck at 4 per 
cent for the foreseeable future. 


International Black Holes 
One disadvantage of making 
the Inflation Report into a sep- 
arate publication is that it 
detracts attention from the 
Bank's Quarterly Bulletin, 
which appears on the same day 
and often has fiasrfnating infor- 
mation buried within it 
One example Is the table 
showing how loose is the con- 
nection between the current 
balance of payments, about 
which some people fret so 
much, and the net asset posi- 
tion of UK residents. In both 


1992 and 1993 the UK had an 
estimated current payments 
deficit averaging ClObn per 
annum. Yet the net overseas 
assets of the UK rose.lh value 
by slightly more than these 
sums. The same pattern has 
appeared so far in 1994 
although with a. much -loner 
deficit In 19S0 on the other 
hand there was a drop in iden- 
tified net assets three times as 
large as the payments deficit - 
The main reason .for three 
discrepancies is “revalua- 
tions’'. IT there Is a rise in Wall 
Street, British holders: of US : 
securities will obviously gain. 
A more paradoxical effect 
arises from currency changes. 
The UK had a very large net 
gain in 1992 when sterling was 
devalued following its depar- 
ture from the ERM. The reason 
is that assets denominated in 
foreign currencies then showed 
a large appreciation when con- 
verted into sterling. 

The balance sheet benefits" 
from devaluation are counter- 
intuitive. The only way to get, 
around them is to excess net 
assets in a single external car-, 
rency such as dollars or as, a. 
proportion of GDP. to addition 
very long averages need to be 
taken to smoothe - oat 
extremely large, erratic 
swings. 

I f this is done we see that- 
the UK bmttup a modest 
overseas net asset posi- 
tion during the years of 
large oil surplus, which was 
subsequently run down, but is 
still on average slightly posi- 
tive. The big change in the last 
decade is in the US, which has 
apparently moved from posi- 
tive net overseas assets of 
nearly $400bn to a negative 
asset position of £600bn. Many 
US business economists are 
highly suspicious of this sup- 
posed deterioration because 
they believe that the egHmatPH 
undervalue American direct 
investment abroad. 

The Bank of England Bulle- 
tin also shows how both the 
US balance of payments deficit 
and Japanese surplus are offset 
for the time being by 
short-term rather than 
long-term capital flows. But 
the writer goes out of his way 
to stress this change does not 
necessarily make the imbal- 
ances “any leas sustainable’’. 

The deeper truth is that enti- 
ties such as countries do not 
have either surpluses and defi- 
cits or positive or negative net 
assets. These belong to individ- 
uals. corporations and other 
organisations including gov- 
ernments. The international 
payments figures are only use- 
ful if this health warning is 
always borne in mind. 


f!V V 


# n ‘ 


total fuel 


LETTERS TO THE EDITOR 


Number One Southwark Bridge, London SE1 9HL 

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Welcome To 


Need to 
assess risks 
of fuels 

From Mr DA Gidiow. 

Sir, It is a pity Michael Pett- 
man (Letters, October 29) has 
misunderstood the -main argu- 
ment in the debate over fuel 
composition. It is true that the 
level of benzene to petrol is 
controlled but this is irrelevant 
as other aromatics in the fuel 
undergo change during com- 
bustion to form benzene. It is 
therefore theoretically possible 
to have a ftiel with no benzene 
but to bave significant quanti- 
ties in the exhaust gases. 

Many scientific publications 
have shown this clear relation- 
ship between total aromatic 
content and benzene emis- 
sions. From the data, a recent 
study has shown that premium 
unleaded will emit around 20 
per cent more benzene than 
leaded and super-unleaded will 
emit 30 per cent more benzene, 
if used in cars not equipped 
with catalytic converters. 

Both the select committee 
and the Royal C ommiss ion on 
Environmental Protection were 
unanimous in their call for 
super-unleaded, with the high- 1 
est average aromatic content, 
to be banned. In view of the 
widespread concern over ben- 
zene, it is surely time for the 
government to undertake a frill 
risk assessment of the various 
types of fuel and their appro- 
priate uses. 

D A Gidiow. 
company medical officer. 

The Associated Octet Co, 

PO Box 17. Oil Sites Road, 
Ellesmere Port, 

South Wtrml L6S 4HF 


UK is unaware that I Flawed and 


name of competitive 
game has changed 


explosive 


From Mr R A Bischof. 

Sir. With reference to Robert 
Barro's Personal View (Novem- 
ber 1). as a German business- 
man who has lived and worked 
in the UK for more than 25 
years, l have to agree with 
shadow chancellor, Gordon 
Brown's view on “endogenous 
growth", rather than chancel- 
lor Kenneth Clarke's. 

The reasons are simple: 

First, "hands-on" govern- 
ment in Industrial policy, 
export support, regional aid, 
research and development pro- 
jects. training and skill devel- 
opments, etc, is happening in 
all the countries Britain is 
competing against - at a sig- 
nificant rate. 

Second, the very nature of ( 
the Anglo-Saxon model, with 1 
its focus on short-term profit 
maxi mi sation, makes it harder 


for UK companies to compete 
against their long-term, market 
share-oriented Aslan and Con- 
tinental European competitors. 

In other words, the UK is 
severely handicapped in two 
ways by hanging on to the the- 
ory of pure non-interventionist 
capitalism - without having 
noticed that half the world (the 
successful half) has changed 
the rules of the game. 

Whether this is plain igno- 
rance or an ideological trap is 
irrelevant The result has been 
a steady decline of UK manu- 
facturing industries over 25 
years - and there is no 
improvement to sight 
R A Bischof, 
chairman. 

Boss Group, 

Grovebury Road. 

Leighton Buzzard, 

Bedfordshire LU7 8SR 


From Michael Goldman. 

Sir. The insurance industry 
is rightly being pilloried for 
mis-selling personal pensions. 
When is the government going 
to accept responsibility for set- 
ting up the whole rickety 
framework? The concept of 
portable pensions was laudable 
but the practical realisation 
has been badly flawed. 

The Securities and Invest- 
ments Board should prepare 
the public and life insurance 
industry for the explosion of 
the next time bomb. This will 
be when the time comes for 
employees of certain ages in 
non-pensionable employment 
who contracted out of state 
earnings related pensions 
(Serps) to contract back in. 
Independent financial advisers 
who sold them personal pen- 
sions have no incentive to pro- 
vide this advice. 

Michael Goldman, 

1 Lyndale Close, 

Blackheath, London SE3 7RG 


Demand for capital behind rate rises 


Prom Mr Barry Wheelock. 

Sir, Since January, the US 
has put up interest rates five 
times. High yields on fixed 
interest have become more 
attractive to institutions, put- 
ting pressure on equities. That 
is why. by October 21, the 
FT-SE 100 had fallen 12.25 per 
cent 

These rises are America’s 
pre-emptive strikes to prevent 
inflation. The markets are still 
nervous about inflation and 


the implications of further 
rises in Interest rates. 

Yet there is minimal sign of 
inflation anywhere in the 
world, apart from a few com- 
modity prices. So is this the 
real explanation of the mar- 
kets’ current uncertainty? We 
are beginning to think not. 

Five years ago, China began 
capitalist-type expansionist 
developments, but had hardly 
drawn on the world's capital 
Nor had Latin America, Hun- 


gary, Poland, Czechoslovakia, 
East Germany. India is now 
open for business, as well as all 
the Russian satellites. Given 
such an increased demand for 
the world’s capital, surely this 
is the main reason for the 
recent rises in interest rates, 
not inflation. 

Barry Wheelock, 
director. 

SWG Investment Services, 

2 Deansway. 

Worcester WRl 2JD 


Director’s status crucial to LSO position during inquiry 


• r . ... J X . 


From Mr Clive GUtinson. 

Sir, Richard Fairman, in his 
review of the London Sym- 
phony Orchestra's Gala con- 
cert (“Tireless Solti fires up 
LSO". October 27), raises the 
issue of the LSO’s role during 
the Hoffmann Inquiry in 1993. 
There was one crucial issue 
centrally affecting the public 
position the LSO took - that I 
am chairman of the Associa- 
tion of British Orchestras 
(ABO), as well as being manag- 
ing director of the LSO. 

After the Arts Council 
announced its funding decision 
for London orchestras to July 
1993 and set Up the H offmann 
Committee, I offered my resig- 


nation as chairman of the ABO 
if the board felt that my con- 
tinuing as chairman would cre- 
ate any conflict of interest. The 
ABO board unanimo usly asked 
me to remain. 

As the chairman of the ABO 
is always the manager of an 
orchestra, there can be times 
when the chairman's orchestra 
will be centrally involved to an 
issue the association has to 
deal with. It is the policy of the 
association that, on these occa- 
sions, it should be represented 
solely by its director, which 
was the case to 1993. Libby 
MacNamara. the director, ran 
all the meetings on this subject 
and publicly represented the 


ABO position extremely effec- 
tively. 

Furthermore, during the 
Hoffmann inquiry, the Musi- 
cians' Union called a meeting 
to consult players from the 
London orchestras about their 
views on the very serious 
implications of the inquiry and 
to co-ordinate solidarity 
between the orchestras. By far 
the greatest number of orches- 
tral players from any of the 
four London orchestras who 

?i t ? l tlded that me 6ting were 
LSO members; this does not 
indicate an orchestra which 
was not involved. 

Fairman also raises a point 
about the LSO Millennium 


Fund. In the difficult economic 
climate in which the LSO and 
all the UK orchestras are work- 
ing. the LSO players have 
taken no fee rises for the past 
three years in order to f ulfil 
the orchestra's co mmitmen t to 
the high artistic standards it 
has set itself. The LSO Millen- 
nium Fund has been estab- 
lished to endeavour to try to 
secure the orchestra's future 
and those very standards we 
have worked so hard to 
achieve. 

Clive GiHinson, 
managing director. 

London Symphony Orchestra. 
Barbican Centre. 

London EC2Y 80S 


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Number One Southwark Bridge; Loudon SE1 9HL 
Tel: 071-873 3000 Telex: 922186 Fax: 071-407 5700 


Thursday November 3 1994 


Banking on 
regional peace 


The Casablanca conference on 
Middle East economic develop- 
ment has played a valuable role In 
dismantling psychological barri- 
ers. It also came up with a con- 
crete proposal to that end, in 
agreeing to work towards the cre- 
ation of a regional development 
bank. Pan -regional economic insti- 
tutions - ou trade, for example, 
and water - will be essential if 
peace is to be consolidated and 
trust built between, ancient ene- 
mies. It is questionable, however, 
whether a tank is the best means 
to that end. 

Putting flesh on the bare bones 
of the proposed Middle East and 
North Africa Development Rank, 
and achieving a funding target of 
glObn, will prove challenging. The 
yet to be selected -group of 
experts” who will atamhiP policy 
options for the bank should look 
closely at the chequered history of 
others in Asia, Africa and the 
Americas. One obvious lesson is 
that regional development banks 
have fared best when operating in 
relatively well-managed econo- 
mies where project lending might 
have a better than average ch a n ce 
of proving profitable. 

The experience of the African 
Development Bank shows how dif- 
ficult this can be. At the end of 
last year, over 39 per cent of its 
outstanding loans were to just 
four countries: Morocco, Tunisia, 
Egypt and Algeria, the last two 
scarcely models of third world 
dsvelopment. The percentage of 
loans going to the north of the 
continent is predicted to increase 
as Investment opportunities 


decrease in sub-Saharan Africa. 
Significantly, those four countries 
would expect to be members of, 
and beneficiaries from, the sew 
hank, an unnecessary duplication 
which cannot be left unresolved. 
Similar problems exist with the 
potentially overlapping activities 
of the Arab Fund for Economic 
and Social Development and the 
Islamic Development Bank - not 
to mention the World Bank itself. 

The management of any new 
bank would need simultaneously 
to make Herculean efforts to 
loosen the link in the Middle East 
between politics and economic 
assi sta nc e. Arab countries border- 
ing Israel have long been 
rewarded by one paymaster or 
another, according to political 
stance, not to economic perfor- 
mance. Israel still enjoys substan- 
tial and largely uncritical US 
assistance, while the Palestine 
Liberation Organisation is already 
showing all the symptoms of the 
aid addict in its demands for 
unfettered assistanc e 

Regional governments will con- 
tinue to emphasise the threat of 
Islamic extremism in an effort to 
ensure that political aid is not 
reduced. But it has been the very 
failure of those regimes to manage 
their economies efficiently which 
has created the conditions in 
which extremism flourishes. 

It is welcome that Middle East- 
ern governments are discussing 
ways in which they can work 
together. But a bank along the 
lines suggested Is not the best 
form of cooperation - and cer- 
tainly should not be the only one. 


Postal fudge 


ived and 


iosive 


The UK government has got itself 
into an extraordinary tangle over 
its plans to privatise the Post 
Office. But the .problems are of its 
own making, and it could cut the 
Gordian knot if only the Treasury 
would adopt a less blinkered atti- 
tude Hian it has until now. 

Tha.issueis simple: can the Post 
Office be freed from Treasury con- 
trol if the government continues 
to -hold, a large, majority state in 
the business? Mr Michael 
Heseltine, trade and industry sec- 
retary, has been telling Tory MPs 
. that the Treasury will not loosen 
vl its grip unless a majority stake is 
in the private sector, because of 
rules about the compilation of the 
public accounts and concerns 
about the ultimate liability for the 
debts of a privatised Post Office. 

It appears the Treasury might, 
after all, be prepared to counte- 
nance a relaxation of control if the 
state share .were limited to 51 per 
cent But even that may not he 
enough for discontented Tory 
i MPs, anxious to avoid confronting 
electors with a cause as unpopular 
as selling off the Royal MAIL 
Opposition to postal privatisa- 
tion is motivated mostly by igno- 
rance or by wilful misrepresenta- 
tion. Concerns over the fixture of 
village and high street post offices 
have been met by government 
guarantees to retain the Post 
Office’s counters division in the 
public sector. A postal regulator 
would be charged with controlling 
stamp prices and protecting uni- 
versal collections and deliveries. 
On the experience of British Tele- 
communications, a regulator 
would very likely do a better job 




» r 

t 


ises 


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t 


of defending consumers than does 
the government now. 

Yet allowing for the political 
position, an obvious course sug- 
gests itself provided the Treasury 
is prepared to show the necessary 
flexibility. The Post Office should 
he constituted as a public limited 
company. Only a small minor ity 
of the share capital - say 10 to 20 
per cent - would be sold off but a 
statutory bar would be placed on 
state aid, and the government 
would give a statutory commit- 
ment to exercise no more than the 
ordinary rights of a majority 
shareholder to receive dividends 
and control broad strategy. The 
Treasury should then let the Post 
Office operate freely. 

Treasury theologians wfU doubt 
1 ms shaft* their heads, but such a 
policy may be the best way for- 
ward in the circumstances. The 
Post Office is a profitable enter- 
prise, and has been run on busi- 
ness lines for more than a decade. 
It is not, therefore, a precedent to 


free the few other remaining pub- 
lic sector enterprises from the 
Treasury’s control 
Of course, the government’s 
commitment not to rescue a fail- 
ing Post Office is only as good as 
its statutory wont But equally, 
the state can use - and in the past 
has used - its power to rescue 
foiling private companies, so the 
same argument could apply to any 
strategic industry. In practical 
terms, granting the Post Office 
freedom to develop its national 
and international business is less 
likely to lead to reliance an the 
taxpayer than Is a continuation of 
the status qua 


Swan song 


Today an era ends on Tyneside, in 
the UK's north-east, when the 
HMS Richmond, the last of 2,700 
ships ! built by the 134-year-old. 
Swan Hunter shipyard, leaves the 
river. Next week it will be handed 
over to the Royal Navy. Rs depar- 
ture from the Wallsend yard sig- 
nals the company’s closure and 
the' probable end of shipbuilding 
on the- Tyne. 

-Swans has been in receivership 
since May 1393, and the closure of 
the northeast’s last shipbuilding . 
yard-is hanfly a surprise. But it is 
nonetheless of great symbolic. 
imp ortance: it underlines the 
region’s decline over a century as 
one of the world's leading centres ~ 
of heavy industry. - 
Of more. practical consequence, • 
the closure wfll cost jobs in an 
area with the highest regional 
unemploy ment rate on the British 
mainland. Swim Hunter employed 


2,400 people when it went into 
receivership; It now has only. 400 
left, most of whom will go within 
days, although sales of subsid- 
iaries have presaved some jobs. 

Those losing their livelihoods 
might well ask why the govern- 
ment has. seen fit to use public 
funds to attract inward invest- 
ment to . the region, such' as the 
electronics factory opened by Sam- 
sung, but would not prop up Swan 
Hunter. -The’. sums should he kept 
in perspective; while the region is 
economically depressed, it will 
continue to-receive large transfers 
from central government in the 
form of unemployment benefits, 
which dwarf the industrial subsi- 
dies in question. > 


That point made, the govern- 
ment's strategy in backing Sam- 
sung not Swans is right. The Sam- 
sung project, which could bring 
3,000 jobs to the region, has 
received £8Qm out of the £450m 
total cost of the project in govern- 
ment and regional subsidies. How- 
ever electronics is a growth indus- 
try. and the record of inward 
investment in providing t raining , 
lobs' and growth is good, particu- 
larly, in the north-east, which 
prides itself an being the magnet 
within the UK for far eastern man- 
- n E fu r tn rin g i nve s t ment 
' No such case could be made for 
Swan Hunter. It has been increas- 
ingly dependent on military work, 
a dwindling market Moreover, the 
cost-plus basis of many contracts 
has encouraged a higfcrqaality but 
tughoost culture ill-suited to the 
demands of world competition. 
While shipbuilding is dearly not 
dying worldwide, civil orders are 
pursued ferociously by South 
Korea and Japan; indeed the 
OECD has wanted that planned 


Korean expansion could lead to 
overcapacity , and international 
price-cutting wars. It is for from 
clear that subsidising Swan 
Hunter would have enabled it to 
compete. France, which has subsir 
(Used its industry heavily and has 
threatened to veto limits on such 
aids ag reed-in the OECD this sum- 
mer, has nonetheless seen its 
industry decline. . 

The north-east’s record in 
attracting inward investment is 
admirahla That is of more Mure 
value than propping up dying 
symbols of zts pak success. 





A t first glance, Indonesia 
is an Improbable place 
to celebrate the virtues 
of free trade. The econ- 
omy has for years been 
one of the most protectionist in 
southeast Asia. 

The presidential palace in Bogor, 
near Jakarta, will nevertheless he 
the venue for this month’s Asia 
Pacific Economic Co-operation 
(Apec) summit, to be attended by 
US President Bill Clinton and the 
leaders of 16 other Pacific nations. If 
free traders have their way, the 
November 15 summit will set a tar- 
get date for free trade across the 
Pacific of 2020, or even 2010. 

Mr Suharto sees the summit as 
the clearest sign yet of Indonesia's 
growing stature on the world stage, 
and is determined to make It a suc- 
cess. He has surprised even his own 
cabinet ministers with vigorous 
endorsements of free trade in the 
run-up to the conference. 

There has been a progressive lib- 
eralisation of Indonesia’s trade and 
investment regimes in recent years. 
Average tariffs, for example, have 
fallen from 37 per cent to 20 per 
cent in the last decade. But the 
economy remains protected with 
visible and invisible barriers and is 
ill-prepared to compete in a free 

market. 

Mr S uhar to's sudden enthusiasm 
for free trade is typical of the enig- 
matic army general, who has ruled 
with his “New Order” government 
since 1966. The president who calls 
himself the “Father of Develop- 
ment”, has presided over average 
annual economic growth of 6 per 
cent for the last quarter of a cen- 
tury. Foreign investment in the 
world’s fourth most populous 
nation, with 187m people, has been 
encouraged. Textiles, shoes and 
electronic goods have joined timber, 
ail and gas as important exports 
industries. 

The west has started to pay atten- 
tion, with the US commerce depart- 
ment last year proclaiming Indon- 
esia a “big emerging market”. 
Tempted by Indonesian proposals to 
spend tiie equivalent of $50bn on 
everything fhjm power stations to 
telephones under its new five-year 
plan, the US has chosen Jakarta as 
the first Asian rite for a “US Com- 
mercial Centre”, to help US inves- 
tors and exporters. 

In an Independence Day speech in 
August, Mr Suharto said Indonesia 
wanted to quadruple real per capita 
income (at present about $800 a 
year) in the next 25 years, through 
industrial development. “We shall 
continue deregulation and de-bur- 
eaucratisatioa" he said. “The goal 
Is to prepare for a highly competi- 
tive economy that can survive in 
the increasingly imifipd and com- 
petitive global economy ” 

However, he added a puzzling 
afterthought: “Deregulation and de- 
bureaucratisatlon certainly do not 


Unlikely champion 
of free trade 


Victor Mallet says Suharto’s protectionist instincts make 
Indonesia an improbable venue for the Apec summit 


mean setting up a liberal economic 
system that allows free competi- 
tion.” 

This inability to reconcile his pro- 
fessed belief in free enterprise with 
bis protectionist instincts, is one of 
several unresolved dilemmas in eco- 
nomics and politics that confront 
Indonesia as the president grows 
older and the economy larger. 

Another is the domination of 
domestic business by conglomerates 
with ties of blood or friendship to 
the Suharto family. The president 
has declined to curb the commercial 
ambitions of his children or his 
small coterie of ethnic Chinese busi- 
ness associates. Between them, they 
use their position to acquire lucra- 
tive stakes in almost every big 
investment project 

Typical is the new $i.7bn Chan- 
dra A sri petrochemicals plant at 
Anyar, on the west coast of Java. 
The partners in the project include 
Mr Bam bang Trihatmodjo, one of 
Mr Suharto's sons, and Mr Prajogo 
Pangestu, one of his friends. The 
government has offered a 40 per 
cent tariff on imports to support the 
venture, to the fury of some busi- 
nessmen who fear the higher costs 
will damage their competitiveness. 

Another example of the arbitrary 
way Indonesia Is run came to light 
in July, when it emerged that Mr 
Suharto had decreed the transfer of 
RpttObn (£U3m) from a reforesta- 
tion fund to EPTN, a state aircraft 
manufacturing venture managed by 
Mr B.J .Habibie, the minister of 
research and technology and 
another friend of the president. 

Environmentalists, including a 
prominent group called Walhi (Indo- 
nesian Forum for the Environment), 
have taken the president to court, 
demanding the reversal of the 
decree and asking for Mr S uhart o to 
be fined Rp5m. “A lot of people 
warn us that, alter Apec, Walhi will 
be harassed because or this action,” 
said Ms Emmy Haffid of Walhi. 

The acceptance by the court of 
the case for a hearing is attributed 
to the official policy of kelerbukoon 
or openness in recent years. But 
after a brief period of vigorous 
debate in the media over politics 
and economics, openness is already 
in retreat. 

In June, the government banned 
three leading publications, appar- 


Indovtesla: a big emerging market 



and social role it has added to its 
military responsibilities. “Oar dual 
function will last for ever and ever.” 
he declared. “It is already stated in 
the constitution." 

However, the argument that 
authoritarianism is necessary for 
stability is not as compelling as it 
was in the 1960s. Strikes by workers 
have become more frequent, and 
hardly a week passes without dem- 
onstrations by slum-dwellers or lire 
farmers against well-connected 
property developers who have 
gained control of their land. 

The authorities have sought to 
crush the independent trade union 
that sprang up in the past few years 
to represent workers in Indonesia's 
growing number of factories. Mr 
Muchtar Pakpahan, leader of the 
Indonesian Welfare Labour Union, 
is now on trial, accused of inciting 
workers to riot in Sumatra in April. 
Even before the trial is over. Gen- 
eral Mantiri has said Mb’ Pakpahan 
will get six years in jail because he 
organised in the factories “and we 
cannot tolerate such things, of 
course”. On Monday a fellow leader 
of the union, Amosi Talaumhanua, 
was sentenced to 15 months in jafl 
for inciting worker riots. 


Imports 


Current account balance 



9»>n) 

(Sbnj 

{ton) . 

(% of GDP) 

1991 

29.4 

24.6 

-4.1 

-as~. 

1992 

32.5 

265 

-3.7 

-2.0 

1993 

35.8 

29.1 

-3.0 

-2.1 - 

1994* 

39-3 

32.3 

-2.9 

-1.9 

1996* 

43.3 

35.9 

-2A • 

-1-B ; 


Rea* gross domestic product 
Par capita (S) 

1 , 000 . 


Total external debt 
(Stei). 
__ loo • 



tS91 92 as M* 05* 

’Forecasts 


ently because they mentioned the 
sensitive issue of the succession to 
Mr Suharto - he has declined to 
name a successor or say if he will 
step down - and reported on a dis- 
pute between the armed forces and 
Mr Habibie over his decision to buy 
the 39 warships of the old East Ger- 
man navy. 

Both Mr S uhar tn and the armed 
forces say strong government is 
needed to control ethnic and reli- 
gious conflicts and prevent the dis- 
integration of Indonesia - a scat- 
tered archipelago extending nearly 
5,000km from Sumatra in the west 
to Irian Jaya in the east. They do 


not believe a more open political 
system is necessary to oversee the 
t pyff stage of Indonesia’s industrial 
revolution. 

The army’s leading role in politics 
was tolerated and even welcomed 
by fnrinnraians after the massacres 
surrounding the overthrow of Presi- 
dent Sukarno in 1968. Army chiefs 
are now unwilling to accept a 
diminished role in an increasingly 
sophisticated, urbanised society. 

General FLBX. Mantiri, chief of 
genera] staff recently said the army 
saw itself as the political “shep- 
herd” of Indonesians, and insisted it 
would never relinquish the political 


T he urban middle-class 
professionals who want 
democracy are few and 
ineffective, but they 
grow more numerous 
every year as Indonesia becomes 
wealthier. They are no more con- 
vinced than labourers of the need 
for dissenting views to be silenced. 

As the Apec summit approaches, 
local human rights campaigners, 
journalists and environmentalists 
say harassment by police and mili- 
tary intelligence officers has 
increased, presumably to discour- 
age demonstrations. 

Thousands of extra troops and 
police deployed in the capital for 
“Operation Cleansing” have 
rounded up prostitutes and beggars 
before the dignitaries arrive. 

Brushing aside criticism of its 
record on human rights and the 
environment - in recent weeks vast 
fires in deforested areas of Indone- 
sian Borneo and Sumatra have 
shrouded Singapore and Malaysia 
in smoke - the government in Jak- 
arta portrays the Apec summit as 
an unambiguous sign that the coun- 
try has come of age. 

There is a growing number of 
Indonesians, however, who believe 
that the authoritarian government 
and corrupt bureaucracy are out of 
touch with the views of ordinary 
Indonesians, and may prove incapa- 
ble of taking the right decisions to 
ensure continued political stability 
and economic growth. “I might 
have bought the argument of stabil- 
ity and authoritarianism in 1971 or 
1972, but after all these years I don't 
buy it any more," said Ms Haffid of 
Walhi 


Europe: the spectre of budget deficits 



Over the last few 
months the majority 
of economic fore- 
casters have been 
forced to raise their 
predictions for 
pSSSoSf? Eur °P e ' s growth ia 

■Vr?w L 1994 - 11 would s*** 
— — — — natural to assume 
that there is a common factor 
behind this “surprising” growth, 
but this appears not to be the case. 

The German economic recovery 
has been brought about by a combi- 
nation of buoyant corporate sector 
spending and a fan in the personal 
sector’s savings rate. Both factors 
can be attributed to an accumula- 
tion of money balances In each sec- 
tor, which has led both individuals 
and companies to spend more. 

It is no coincidence that the 
recovery has followed a period of 
above-trend monetary growth. Most 
of the hallmarks of monetary 
expansion are present the current 
account balance has deteriorated as 
the national savings rate bas fallen, 
equity prices have risen, and the 
yield curve has steepened. 

This German monetary expansion 
is partly due to the Bundesbank’s 


action in adding liquidity to the 
economy when defending the 
exchange rate mechanism last year. 
It is also the product of rapid 
growth in domestic credit, mainly 
in lending to the public sector to 
fund Germany’s budget deficit. 

Over the last three years, bank 
lending to the public sector has 
accounted for between a third and 
half of the growth in broad money. 
The banking system has effectively 
been creating money to finance the 
budget deficit and this has been 
spent in the domestic economy, 
stimulating recovery. 

Outside Germany, budget deficits 
have also played a part in economic 
recovery. According to OECD fig- 
ures, the French budget deficit grew 
by the equivalent of 2 per cent of 
gross domestic product last year. 
This year, it is expected that aggre- 
gate GDP will rise by a similar 
amount 

Similarly, Sweden raised its bud- 
get deficit by more than 5 per cent 
of GDP last year but seems likely to 
generate economic growth of only 3 
per cent this year. While these 
countries have seen economic 
recovery, the price appears to have 


been large budget deficit increases. 

Over the past decade, many have 
become blase about budget deficits. 
In this world of freely Cowing capi- 
tal, few would claim that any given 
budget deficit could not be financed. 
Unfortunately, when it requires real 
interest rates of more than 5 per 
cent, the stock of debt is compound- 
ing at twice the rate the economies 
themselves are capable of growing. 


Public indebtedness 
is growing so fast one 
wonders where 
income will come 
from to service It 


It seems surprising that this 
arithmetic attracts such scant 
attention given Its implications for 
tax rates, inflation and interest 
rates in the future. Public indebted- 
ness is now growing so test that one 
is left wondering where the income 
will eventually come from to ser- 
vice it. 

Furthermore, if one were to add 
the problem of Europe's frequently 


unfunded public pensions, the debt 
arithmetic becomes quite impossi- 
ble. Present fiscal trends leave 
many European states effectively 
no hope of fulfilling their public 
pension commitments in the future. 

Perhaps more worrying for this 
generation of Europeans is the 
effect current budget deficits are 
having on Europe’s economic struc- 
ture. 

Many countries in the exchange 
rate mechanism cannot allow their 
budget deficits to be funded by the 
banking system as in Germany. 
Such de facto easing of monetary 
conditions would clearly be incom- 
patible with maintaining their 
exch an ge rates in the ERM. 

Instead, the budget deficits of 
France and other countries have to 
be funded by borrowing from the 
other sectors of the economy, espe- 
cially since foreigners have started 
to sell European bonds in signifi- 
cant quantities. 

Given the high real interest rates 
on offer, it is not surprising that 
French investors should find cur- 
rent bond rates attractive. But there 
is evidence that French companies 
are foregoing capital spending and 


employment creation to invest in 
bonds. 

This surely cannot be a sustain- 
able state of affairs. High real inter- 
est rates and low domestic rates of 
return on private investment are 
allowing the budget deficits to 
crowd out more productive forms of 
fund raising. If this continues, 
Europe could undergo a further loss 
of competitiveness and a conse- 
quent decline in its long-run growth 
prospects. 

Europe must address its budget 
deficits quickly. In Germany, the 
persistently high monetary growth 
rate will eventually force the Bund- 
esbank to raise interest rates to cool 
the economy. 

In other EU countries, large bud- 
get deficits are not only generating 
an unfortunate legacy for our heirs, 
they are distorting the economies 
and will make Europe less able to 
compete internationally. 


Andrew Hunt 


The author is chief economist, 
Thornton Investment Management. 


Observer 


What am 
Ibid? 


■ Bob Bauman, former chief 
executive of SmH-Mninp Beecham, 
may have been known as “Mr 
Restructuring” in the drugs 
industry, but British Aerospace 
shareholders were left wondering 
yesterday whether he needed some 
restructuring himself, after getting 
rathe- mixed-up about BAe’s bid for 
t nihmari ne dnaker VSK | 

Urging shareholders to back the 
group’s bid for the Barrow-based 
shipbuilder, BAe’s new 
twoday-a-week chairman said the 
offer was worth “$14 a share”. 

“You mean pounds, not dollars,” 
shouted one investor from the back 
of the ballroom. Hardly had he 
corrected himself, when another 
shareholder pat Mm right again. 
“GEC has bid £14 a share, not RAe ” 
Apologising, the mastermind of 
the Beediam and SnnthKMne 
Beckman merger quipped “this was 
my first time at this sort of thing”. 
But not the last, eh? 


Spare that tree 

■ When will the UK Forestry 
Commission get a chairman? Two 
months after the retirement of Sir 
Raymond Johnstone. 65, on the 
expiry of his five-year term, it’s still 
lacking a leader. 

Two of the three forestry 
minister s - Ian lang , Scottish 


secretary, and William Waldegrave, 
agriculture minister - favour Sir 
Peter Hutchison to take over. Sir 
Peter, 59, Is a Scottish baronet who 
chairs a family insurance broker in 
Glasgow and is vice-chairman of 
British Waterways. 

But the third minister - John 
Redwood, Welsh secretary - fears 
Hutchison might favour green as 
opposed to commercial forestry as 
much as Johnstone did. Redwood 
might be right: Hutchison is a 
former chairman of the trustees of 
the Royal Botanic Gardens in 
Edinburgh and gives talks on his 
p lant -hunting expeditions in Asia. 

Redwood was thwarted earlier 
t his year in his desire to have the 
Commission privatised. Has he lost 
another fight? 


Dialling Dahling 

■ Hard to get the measure of 
Jennifer D’Abo, whose resignation 
from the Northern Ireland 
Industrial Development Board has 
caused such a stir. 

Some regard her as a female 
Bertie Wooster who wears 
heart-shaped glasses and calls 
everybody "Dahling”. Others regard 
this as a disguise for an extremely 
astute businesswoman who is quick 
to spot money-making opportunities 
but tends to flit around, the sort 
who sparks larger-than-life stories. 

One of Observer's favourites 
involves a visitor to her house on 
the Duke of Marlborough's 
Blenheim estate, who found his way 



blocked by giant gates. Luckily, he 
bad a mobile phone and was able to 
contact D'Abo - who jumped into 
Miss Mink, as she called her black 
Mercedes, and raced down the 
two-mile long drive to let in her 
dinner guest. 


Open sesame 


■ The clamour for open 
government has even reached the 
hallowed portals of the Bank of 
England, which faced criticism 
yesterday from City analysts 
complaining about “misleading 
signals” associated with 
Wednesday's inflation report. 


Analysts felt the report suggested 
there would be no rise in rates; 
newspapers yesterday speculated a 
rise was due in the coming months. 

One economist, quoted by 
Reuters, took a firm line. The 
Bank's tactics, he thundered, were 
“hardly an open and transparent 
way of conveying monetary policy 
messages”. 

Who was this seeker of truth and 
light? Who knows? The economist 
spoke on condition of anonymity. 


Minihell 


■ The old world meets the new. 
Minitel, the ubiquitous French 
hi-tech phone computer information 
system, now has a handy new 
service. By dialling “3615 en gteve”, 
subscribers can learn of the postal, 
transport and other strikes 
currently under way. Is that a 
blessing or an additional curse? 


Coming home 

■ One of Shaftesbury Avenue’s 
leading theatres - the Globe - has 
become the Gielgud, in honour of 
Sir John Gielgud's 90th birthday. 
Sir John was in commanding form 
as be accepted the honour 
yesterday: “In recent years I’ve 
gone down Shaftesbury Avenue 
many times and not recognised any 
of the names on the theatres. Now 
at least I recognise one.” 

He was particularly happy 
because he has been involved in 15 


productions there - including 
Hamlet 60 years ago; and his sister 
worked in its box office 50 years 
ago. 

Janet Holmes-A-Court, whose Stoll 
Moss chain includes the Gielgud, 
was happy to spend £25,000 to 
change the theatre’s sign and place 
Sir John's photograph, by Lord 
Snowdon, in the foyer. 

Few actors names grace a London 
theatre. There is the Garrick; the 
Olivier, at the National; and, if you 
include actor-managers, the 
Wyndham. Sir J ohn would like one 
more - for his old sparring partner 
Sir Ralph Richardson. 


Briefs encounter 


■ What do you call your 
underwear? In South Korea, the J. 
Enterprise company has incurred 
the wrath of US lawyers for 
marketing a range of underwear 
called James Dean. 

Dean died at 24 in a 1955 car 
crash. As elsewhere, he is a popular 
icon in Seoul where cafes and 
restaurants are named after him. 

But in what is turning into a 
rebel without a corset clash, the 
US-based Curtis Management 
Group, representing the family and 
estate of the deceased film star, 
says J. Enterprise Ltd - which is 
likely to sell $31Bm of the 
undergarments this year - has 
violated trademark laws. 

Expensive bumness, trademark 
actions. Far cheaper surely to turn 
the other cheek. 









16 


Carrying the 
nation's goods 



FINANCIAL TIMES 

Thursday November 3 1994 



081 6892266 


IwoRiDWiDB sxpamsEm smmeml 


i 


CO 


Influence of special interest groups to be cut . Fresh 


Japan completes drive 
for political reforms 


storm over 

Hualon 

project 


By WtKam Dawkins in Tokyo 


The final stage in Japan's 
dramatic five-year campaign to 
purge political corruption and 
weaken party factions' grip on 
power was quietly cleared in the 
lower house of parliament yester- 
day. 

It was an unobtrusive climax 
to the most drastic changes to 
Japan’s political system since the 
present constitution came into 
effect in 1947. The reforms have 
cost the lives of four govern- 
ments and have introduced open 
confrontation into a previously 
cosy political consensus. 

The house endorsed, with most 
parties' assent, a bill to redraw 
the boundaries of Japan's multi- 
seat constituencies, to create a 
mixed system of UK-style single- 
seat districts and continental 
European-style proportional rep- 
resentation. 

After approval by the upper 
house about the middle of this 
month - which will be all but 
automatic - the new system will 
take effect in mid-December, 
after a statutory one-month delay 


for the electorate to absorb the 
changes. 

That completes a complex 
series of political reforms, 
designed to make governments 
more responsive to the elector- 
ate’s aspirations and less depen- 
dent on the special-interest 
groups that support the so-called 
Iron triangle'' of business, poli- 
tics and bureaucracy. 

The system will force politi- 
cians to compete harder for seats 
and so end the comfortable 
careers of dozens of older mem- 
bers of parliament, who fought 
reform because their former con- 
stituencies would cease to exist. 

Reform was mooted to counter 
public disgust at the political 
class, after the Recruit shares-for- 
favours scandal in the late 1980s. 

The main part of the reform 
passed parliament in March. It 
consists of four bills to establish 
the new electoral system, ban 
business donations to individual 
politicians, establish a Y30.9bn 
(£253m) annual state subsidy for 
political parties to compensate 
for the curb on binding, and set 
new campaign rules. 


Objections by the conservative 
Liberal Democratic party, then in 
opposition, forced the govern- 
ment to water down the more 
radical original version. 

After last March's agreement 
on the bulk of the reforms, it 
remained for an independent 
panel to draw up the new con- 
stituencies, accepted by the lower 
house yesterday. Two other final 
reform bills were also agreed: to 
invalidate the election victories 
of candidates jailed for buying 
votes; and to set legal qualifica- 
tions to become a political party. 

The LDP's return to power four 
months ago gave it the scope to 
ensure that its own softer version 
of political reform got through 
parliament. While the reforms 
had a smooth passage yesterday, 
the outcome poses a subtle rather 
than radical threat to the politi- 
cal-faction system at the founda- 
tion of old-style Japanese politics. 

Some political analysts argue 
that the tougher competition 
needed to win parliamentary 
seats might, perversely, 
strengthen political factions' 
power. 


By Guy do Jonquieres in London 


Belgium ready to ease rules 
on pension fund investment 


By Emma Tucker 
and Norma Cohen 


The Belgian government is 
preparing to relax investment 
rales for pension schemes, drop- 
ping the requirement that at 
least 15 per cent of assets must 
be invested in government bonds. 

The proposals are part of a 
wider set of reforms of Belgian 
pension law. They will also 
address issues such as the way 
liabilities are calculated. 

The move comes as other Euro- 
pean governments debate how 
much freedom should be allowed 
to pension fund managers 
responsible for investing assets. 
A proposed EU directive intended 
to bar member states from 
unduly restricting investments in 
equities or in non-domestic secu- 
rities was withdrawn because no 
agreement could be reached. 

Belgium, which has roughly 
BFr250bn ($8.05bn) in occupa- 


tional scheme assets, already has 
few restrictions on how assets 
can be invested. 

The Belgian association of pen- 
sion funds expects the 15 per cent 
rule to be dropped over the next 
few months, with legislation 
drawn up before the end of the 
year. It has campaigned for the 
move. 

A representative said: “On pen- 
sions we are closer to the UK 
position than the French or the 
Italian." 

Mr Paul de Smet, partner at 
Conac, consulting actuaries, said 
the new rule would have little 
immediate effect on bond hold- 
ings. 

According to the Belgian asso- 
ciation, 34.8 per cent of a typical 
Belgian fund was invested in Bel- 
gian government bonds at the 
end of last year. Hie next biggest 
component was foreign equities 
(21.7 per cent), followed by Bel- 
gian equities (16.5 per cent). 


Foreign bonds accounted for 
only 12.6 per cent of investments, 
while cash accounted for 7.6 per 
cent of the average portfolio. 

The shares, however, change 
according to company. Funds of 
the big multinationals based in 
Belgium - for example IBM and 
Unilever - diversify more, with a 
tendency to invest more in for- 
eign equities. 

However, while providing some 
liberalisation on investments. 
The proposed legislation will 
make it much harder for employ- 
ers to barrow the surplus assets 
of their pension scheme them- 
selves. The rules that set invest- 
ment restrictions cover only the 
assets specifically needed to cal- 
culate liabilities, Mr de Smet 
said. 

There are no restrictions on 
how the surplus assets are 
invested, and some companies 
have lent the funds back to them- j 
selves. 


Politicians seek network votes 


Continued from Page 1 


her campaign staff say. To reach 
voters who do not have home 
computers, Ms Brown this week 
set up multimedia computer 
kiosks in San Francisco , Sacra- 
mento and Los Angeles. Each 
kiosk contains an Apple Macin- 
tosh personal computer with a 
CD- Rom unit that contains a 
wide range of information about 
the candidate including record- 


ings or some of her campaign 
speeches. 

Claiming to break new ground 
in the use of technology in a 
political campaign, Ms Brown 
said that the technology “com- 
bines two elements that have 
contributed to California’s econ- 
omy and creativity - Hollywood 
and the Silicon Vaney". 

When it comes to election day, 
the Internet will also be the 
place for instant news on elec- 


tion returns. The fall text of the 
bulky California ballot pamphlet 
is online via http://www.elec- 
tion-digitaLcom and the cam- 
paign cybertrail is spreading in 
other states. 

To find out where California's 
gubernatorial candidates stand 
on issues in the election, send 
E-mail to petewfison@delphLcom 
or katbrown@netcom.com and 
wait to see if the computer prom- 
ises are kept 


The government's £61m ($99.4m) 
grant to Hualon, a Taiwanese 
group, to build a Belfast textile 
plant was plunged into renewed 
controversy yesterday when a 
director of Northern Ireland’s 
Industrial Development Board 
resigned in protest at the project. 

Mrs Jennifer d’Abo said she 
had quit because the board, 
which is responsible for the 
$255m project, had failed to give 
her satisfactory information 
about the legal and financial 
arrangements for the deal. 

She said the board had refused 
to answer questions about a 
recent stock market scandal 
Involving subsidiaries and senior 
executives of Hualon. and had 
refused her request for a special 
board meeting to reconsider the 
deal. 

“I am not happy to agree to 
going forward with a vary large 
project when there have been 
accusations of scandal, share 
transactions [andl land transac- 
tions ... to which I have not 
been given satisfactory answers," 
she said. 

She said there should be a 
proper inquiry into the project, 
the largest manufacturing invest- 
ment in Northern Ireland since 
the state-backed De Lorean car 
venture, which collapsed with 
heavy losses in the late 1970s. 

The Commons Northern 
Ireland committee is already 
investigating the proposed plant. 
British textiles manufacturers 
are considering challenging in 
the European Court the Euro- 
pean Commission's approval this 
year of the £61m grant 

Mrs d'Abo is chairman of the 
Moyses Stevens florists group 
and hea ded Rymans, the statio- 
nery chain in the 1980s. She said 
she and other EDB directors had 
repeatedly raised questions about 
the Hualon project since It was 
first submitted to them more 
than two years ago. 

She said she had received con- 
tradictory and unclear answers 
from IDB executives about which 
part of the Hualon group the 
board was negotiating with, and 
about the status of the financial 
guarantees which Hualon had 
agreed to provide on the project 

The IDB said last night that it 
had declined Mrs d'Abo’s request 
for a special board meeting last 
month because it wanted first to 
talk with Hualon executives. 

It said it had made “very con- 
siderable efforts" to answer her 
questions. The last board meet- 
ing had discussed her objections 
and reviewed recent develop- 
ments relating to the project to 
which no grant bad yet been 
paid. 

The IDB said there was no jus- 
tification for suspending the proj- 
ect If no legal challenge were 
mounted by the end of this 
month to the Commission's 
approval of aid, it expected the 
company to go ahead with the 
plant on schedule. 


Picture, Page 8 


FT WEATHER GUIDE 


Europe today 


Most of Europe wfll be sunny and dry as 
high pressure over the Guff of Bothnia 
extends to central and southern Europe. A 
low west of Ireland wili draw warm air 
northwards, bringing rain to England and 
Spain. Temperatures will rise by 5C-7C 
over much of France. Moist air from the 
western Mediterranean will cause heavy 
rain with a risk of floocflng in south-east 
France and the southern slopes of the 
Alps. Scandinavia and much of eastern 
Europe will have a lot of sivi but win be 
rather cool Wintry conditions wiH expand 
over north-east and central Russia where 
below-freezing daytime te m p era tures will 
reach as far south as Moscow. 


"■Oj 1010 1020 1030 1020 

♦ * S 




iU. 990 




. . ? 


7, /■«. 


naiSD 1? 


I* ,f&-‘ 




Five-clay forecast 

Western Europe wiB have seasonable 
temperatures but unsettled conditions wiB 
expand from west to east. Southern France 
and Italy will have a lot of rain. North-east 
Europe will become coder and there will 
be heavy showers near the Black Sea over 
the weekend. 




Jz 

. ’ -V| ... ,0 » £ 

V Warm front .jL*. CM trout Vfind apaod ht KPH 


TODAY’S TEMPERATURES 


SflUHflwia# 12 GMT. Tamwrafurss mewnurn tor day. Forecasts by Metao Consul} of the Netheriands 


Abu Dhabi 

Accra 

Algiers 

Amsterdam 

Athens 

Atlanta 

B. Aires 

BJiam 


Maxknun Befng 
Celsius Belfast 
sun 32 Belgrade 

fair 30 Berfin 

fair 24 Bermuda 

fair 15 Bogota 

sun 22 Bombay 

sun 25 Brussels 

sun 23 Budapest 

cloudy 13 CJtajjen 

fair 33 Cairo 

cloudy 19 Cape Town 


17 Caracas 

12 Caitiff 

17 CasaUan 
11 Chicago 
27 Cologne 
22 Dakar 

34 Dallas 

18 Ddhi 

13 Dubai 
7 Dublin 

25 Ditoownlk 
22 Edinburgh 


32 Faro 
14 Frankfurt 
23 Geneva 
18 Glbrattar 
18 Glasgow 

29 Hambug 
26 HebMd 

30 HangKong 

31 Honolulu 
13 Istsibii 
22 Jakarta 


Our service starts long before take-off. 

Lufthansa 


Kuwait 
LAngeles 
Las Palmas 
Lb™ 

Lisbon 

London 

UDLboug 

Lyon 

Madeba 


20 Morbid 

16 Majorca 

18 Mdta 

20 Manchester 

11 Manila 

12 Melbourne 
-1 Mexico City 
27 Mami 

31 MHan 

19 Montreal 

32 Moscow 

17 Munich 
38 Nairobi 
32 Naples 

18 Nassau 
24 Now York 

21 Nice 

17 Nicosia 
14 Oslo 

18 Paris 

19 Perth 
23 Prague 


16 

Rangoon 

sun 

34 

21 

Reykjavik 

sleet 

4 

23 

Rio 

shower 

32 

13 

Rome 

cloudy 

21 

31 

S, Freca 

sun 

18 

17 

Saoti 

sun 

14 

22 

Singapore 

shower 

32 

28 

Stockholm 

fair 

4 

14 

Strasbourg 

fair 

17 

12 

Sydney 

shower 

20 

0 

Tangier 

Ihund 

22 

14 

Tel Aviv 

iak 

29 

26 

Tokyo 

cloudy 

19 

22 

Toronto 

fair 

16 

30 

Vcncoumr 

showar 

a 

18 

Venice 

fair 

15 

18 

Vienna 

lair 

13 

26 

Warsaw 

Ml 

8 

3 

Washington 

sun 

21 

IB 

WeUngton 

cloudy 

14 

25 

Winnipeg 

snow 

-1 

n 

Zurich 

fair 

16 




THE LEX COLUMN 


irily 


Discounters at bay 




J Sainsbury has seen off the 
imm ediate threat from the discount 
supermarkets. The victory has been 
achieved at the price of a painful 
reduction in gross margins, the group 
conceded yesterday. But fears of a 
profits implosion, which have lingered 
on since the traumatic fall in Sains- 
bury's share price early this year, now 
look overdone. The discounters them- 
selves are not in a fit state to launch a 
fresh assault on prices, as Kwik Save’s 
figures are expected to demonstrate 
today. Against this background, gross 
margins at Sainsbury should stabilise 
from here on. 

The group's rigour in holding down 
costs in its core UK food retailing busi- 
ness was impressive. Equally so, from 
a strategic as well as a financial point 
of view, was the contribution made by 
Sainsbury's other re tailin g activities. 
Operating profits here grew by more 
than a quarter, lifting the total growth 
in group operating profits to 10 per 
cent - well ahead of the 7.7 per cent 
increase achieved by Salisbury's UK 
supermarkets alone. The group's 
diversification strategy, which took a 
further stride forward last month with 
the acquisition of a 50 per cent voting 
stake in Giant Food of the US, has 
proved successful in insulating profits 
from the full ravages of competition in 
UK food retailing. 

One gripe is that the dividend grew 
by only 6.7 per cent, in line with pre- 
tax profits which were held back by a 
high interest charge. Sainsbury should 
consider moving to a progressive divi- 
dend policy. So robust is its cash flow 
that it could clearly afford to do so. 
But Sainsbury is probably husbanding 
its cash for further diversification in 
the US. 


FT-SE Index: 3081.3 (-15.0) 


price relative to the - 

FT-SE-A Al-Share index . 
150 — - 


130 



110 -If 


1992 

Source: FT Graphite 


ran only hasten consolidation in the 
industry and BAT has the money to 
spend on fire sales. On the cigarette 
side, the blocking of the attractive 
American Tobacco deal would be a 
blow. But at least the threat of an 
excise duty hike has receded for the 
moment. 

Nevertheless, the thickness of the 
regulatory jungle is tending to obscure 
BAT's healthy trading picture. The 
shares slipped yesterday despite the 
resilient financial services profits and 
strong recovery from the US cigarette 
business. At this rate, BAT will be 
more tViATi justified in matching the 
8 per cent interim dividend increase at 
the final stage, so pushing the yield to 
6.3 per cent. That looks cheap even by 
the standards of other tobacco stocks. 
Whether it takes full account of the 
regulatory and legal risks is another 
question. 


BAT Industries 


BAT is up to its eyeballs in regula- 
tors. In UK financial services, it faces 
a new disclosure regime and the costs 
of untang lin g the personal pensions 
fiasco. In US financial services, the 
Californian insurance reform move- 
ment has come back to haunt it In 
tobacco, where the US anti-smoking 
lobby is getting ever more vociferous, 
BAT is now fighting to save its $lbn 
bid for American Tobacco from an 
anti-trust challenge. A normal com- 
pany might start to feel persecuted. 
But suppliers of cigarettes and life 
assurance do not expect to be loved. 

Not that the regulatory pressure is 
all bad. While tbe personal pensions 
disaster has done little to dent BAT’s 
new life and investment business, it 


Snapple 

Snapple's headlong rush into the 
arms of Quaker Oats is logical. Sales 
growth at the new-age fruit juice com- 
pany remains heady, but the group is 
facing stiff competition from the likes 
of Coca-Cola. Pepsi and Nestl&. Mar- 
gins are being squeezed and the com- 
pany has been forced to raise market- 
ing expenditure. Snapple needs to 
internationalise but, on its own, has 
neither the necessary financial nor 
management resources to do so 
quickly. Quaker should provide tbe 
extra resources as well as access to its 
distribution system. 

By acquiring Snapple. Quaker Is 
staking its claim to become a signifi- 
cant competitor in the soft-drink 
industry. The company already mar- 


kets Gatorade, . the ■ top^mng : U& .. 
sports drink Which: it. ■ 

push into Europe. But ;i 

mg a steep price for accesS. r fo the, £• 
new-age soft drinks sector, the fastest- 
growing part of the beverage maifeat,; ' 
The ^14-a-sbare offer : may be .wtflP 
below Snapple v s peak of $31 in FebriP 
ary, but it still represents a multiple of ; 

38 times expected 1994 eaixuigs., .The ( 
deal will be dilutive .for at ‘JiagL*##. 

years. ■ . " -"ESS 

Quaker' plans to 
./least, in. part, by 

pet ‘food’ businesi 'Ote r^m^jSeja^ 
largest Both Nestfo andDfdgety, tfiei 
next biggest cafopetitm^w^aM.iffbba- 
bly want ifc But thfe Sw^^topJa^t. r 
be fevdurite. Dalgety is Sfready 4&V 
tracted, trying to buy ALfifed Damecq’s 
food ingredients business. Besides, 
Nestle has the deep^ pockets., ' ^'yi • 

Yen '• v;-. 

The other side, to: the dollar’s Weak- ’ 
ness is the continuing strength of the 
yen. Neither country is" happy . wi% • 
the situation. While: th8 US Federal 
Reserve waded into currency markets 
yesterday for the first time in many •* 
months, the Banfcof Japan's interven- 
tion in currency .-iqark^s has become- 
increasingly frenetic! But buying dol- 
lars and selling yen alone will achieve 
little-. •.. / 

Changes lii monetary policy are- 
needed in both countries. The Fed's 
approach to raising" interest rates has 
been dilatory. Meanwhile, the Bank of 
Japan’s governor, Mr Yasushi Mieno, 
who retires next month, has been giv- 
ing the economy a valedictory twist of 
the monetary screw'. Short-term mar- 
ket rates have been nudged upwards 
in the last few wonfli* rmrf long - term 
rates have joined the global surge. 

The monetary stance is inappropri- 
ate. Japan's economy remains .mired 
in the foo thills of a painfully slow 
recovery. Despite the still low nominal 
Interest rates, pries are falling fast - 
consumer prices dropped by 1.6 per 
cent in the three months to August 
Real interest rates have risen by more 
than L5 percentage points in the last 
year. The risk of a deflationary spiral 
remains real, magnified by the threat 
from a still-precarious financial sys- 
tem. Tbe trade surplus may at last 
have started to decline, but that alone 
will not prevent the yen rising yet 
higher. Chi current policy, Japanese 
investors see little reason to reverse 
the repatriation of their investments 
that has been at the heart of the cur- 
rency's strength for so long. %■> 











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FINANCIAL TIMES SURVEY 



UK CONSUMER CREDIT AND ASSET FINANCE 


Thursday November 3 1994 


r ' — l / J| i 




“VL?5£ 

.... 

• ,ls b»>C : 


While future prospects for the industry look good, 
the pace of recovery in consumer credit and asset 
finance is still relatively slow. Jim Kelly reports 

Reluctant spenders 
put brake on growth 




-t;.. • 


»?15 


i'itw. 

; r ^i\ 

:}* i£ 

p ; . ='*!*> 
; ■■ 4s ^ 


Latest figures from the tJK 
credit and asset finance sec- 
tors, traditional barometers of 
the economic climate, suggest 
consumers and business people 
are still reluctant to accept 
that the recession is really 
over. 

In August this year members 
^ of the Finance and Leasing 
Association (FLA) were owed 
£38-2hn for asset finance while 
j in the year to June they had 
^ provided £l5bn of consumer 
credit Though the figures are 
large,' the overall picture is 
"f described, nevertheless, as sub- 
dued by spokesmen for the sec- 
tor when compared with the 
rapid expansion in the late 
1980s. David Hardlsty, chair- 
man of the FLA, admits to a 
steady rise fn consumer credit 
hut points out, “we are defi- 
nitely not seeing another credit 
boom”. 

Many consumers are repay- 
ing existing debts, as well as 
committing themselves to new 
credit On average customers 
repay the amount owing on a 
store card within six weeks. 

Moreover, the latest FLA fig- 
ures for August show the over- 
all growth In consumer credit 
slowing up. Borrowing on store 
cards fell by 9 per cent in July 
to £375m. Personal loans, at 
. - £256m, were down by 1 per 

- cent month-on-month, though 
. op by 30 per cent on the same 

month last year. 

“Consumers haven't forgot- 
_ • ten the last set of interest rate 

.. - rises. The government unrieres- 

■ tunatedthis fear factor and put 

• - ”-T. ■ up rates when confidence was 

stffl too shaky,** says Mr Har- 
' ' ■■■■•-' disty. Nor has the situation 
•- 1 " ” . been helped by the govem- 
• merit’s tax increases which 

•’ have further militafed against 

a consumer-led recovery. 

\ ■? In asset finance, the srtna- 


r 'Ln . 

Tfe \L 


Co: 


-- O'? 


tion is broadly similar. The 
FLA points out that while 
there was a slight recovery in 
1993 the figures for total 
advances were almost 20 per 
cent below the peak year of 
1990. “At this stage in the eco- 
nomic cycle, the business 
finance figures are frankly dis- 
appointing. We would expect to 
see much more investment 
through hire purchase and 
leasing," says Mr Hardlsty. 

The sector Is looking to the 
forthcoming Budget for help in 
revitalising the sector and, 
coincidentally, to assist the 
government to achieve its own 
aim of promoting an invest- 
ment-led recovery. The FLA 
has suggested in its 1994 tax 
submission that the 40 per cent 
writing-down allowances on 
plant and machinery in opera- 
tion over the 12 months to 
October 3L 1993, be reintrod- 
uced as from budget day. The 
association, and its members, 
say this could provide a vital 
fillip to the industry during an 
uncertain period. 

But while overall recovery 


asset finance has reached a 
“stage of maturity" and must 
develop new areas of operation 
to enable it to grow. 

It will he argues, be difficult 
for the industry to improve 
upon its current performance 
of financing 30 per cent of all 
capital equipment purchases. 
Growth will come in areas 
such as operating leases, 
where the lessor takes a real 
risk in the equipment pro- 
vided, in motor car finance 
through contract hire, and 
through financing privatised 
industries, such as the rail- 
ways. 

Another growth area is 
expected to be so-called “cap- 
tives” - finance houses owned 
by manufacturers. While some 
observers point to the negative 
impact they can have on the 
parent balance sheet, because 
of their higher gearing, their 
n umbers are growing. 

Forward Asset Finance, of 
the Forward Trust Group, a 
subsidiary of Midland Bank, 
which has provided services to 
more than 25,000 companies in 



III IMS SURVEY 

■ Consumer credit the lat- 
est rise tn interest rates has 
highlighted the fragility of the 
recovery 

■ Motor finance: a quiet 
revolution in marketing strat- 
egy is taking place 

Page 2 

■ Small business finance: 
asset financing is increas- 
ingly becoming more flexible 
than overdrafts 

■ Big-ticket leasing: the 
recession Is taking its tod 

3 


■ Car fraud: let the buyer of 
second-hand vehicles 
beware if the seder is a pri- 
vate individual 

■ Leasing: standard reforms 
on accounting practices is 
on the way 

Pages 

■ The Industry: there is a 
wide range of companies 
undertaking consigner credit 
and asset finance 

Pages 

Editorial production: Roy Tony 


While overall recovery may be slow, the 
industry is developing increasingly 
sophisticated forms of finance 


may be slow, the industry is 
developing increasingly sophis- 
ticated forms of finance to sup- 
port its customers during the 
recovery. 

In asset finance, a small 
business can lease a produc- 
tion line which can be paid for 
by instalments out of profits. 
Such devices are designed to 
distinguish asset finance freon 
the services offered by banks. 

Derek Soper, chairman of 
AT&T Capital, believes that 


the past three years, also sees 
innovation ahead. Hire pur- 
chase, it says, is growing in 
popularity, helped by low and 
fairly stable interest rates. 

Improved quality of service 
is seen as an important devel- 
opment. Forward has devel- 
oped “industry specific” pack- 
ages backed by trained staff in 
sectors such as printing, con- 
struction, engineering, and 
commercial vehicles, and 
believes the development of 


such services to be crucial to 
retaining existing business and 
to finding new customers. 

In the high street and in the 
motor trade speed and conve- 
nience. as well as new 
approaches are also expected 
to play an important part in 
overall growth. Customers can, 
for example, be offered low and 
zero interest finance, where a 
finance house provides a loan. 
and the manufacturer pays the 
interest subsidy. 

One comparatively recent 
entrant. Marks & Spencer 
Financial Services, is now 
among the leading participants 
under the FLA umbrella. The 
Fmanrial services it now pro- 
vides have grown from the 
original charge card base to 
personal loans, unit trusts, 
pensions and life assurance. 

In the motor sector, finance 
made available through UK 
dealers rose by 13 per cent year 
an year to £725m in August 
For used cars it was up 33 per 
cent 


Worldwide. Ford Financial 
Services, the captive arm of 
Ford, recorded leasing 
advances of $14.5bn - making 
it the world’s top leasing com- 
pany ahead of GE Capital and 
GMAC (General Motors), 
according to a survey by Asset 
Finance and Leasing Digest 
In 1992 and 1993, point-of-sale 
credit made the arm the most 
profitable part of Ford. Total 
advances to customers world- 
wide exceed £7Gbn. in 1993, 
Ford Credit Europe financed 40 
per cent of new Ford vehicles 
sold in the UK. In the future 
leasing and contract hire are 
seen as likely areas of growth. 
Ford Contract Motoring, for 
example, administers 32,000 
vehicles in the UK. 

In one recent development, 
Midland Bank’s 3m credit card 
customers were offered the 
opportunity to lease a car for 
up to two years, and either 
return it at the end of the 
period or buy it 
Finance houses have devised 


similarly structured deals 
where customers can pay off 
the depreciation on cars rather 
than the capital sum. (See 
motor finance, page 2) 

Paul Gee, managing director 
of Lombard Business Finance, 
predicts that a highly competi- 
tive market will develop in 
asset finance where the strug- 
gle to find a clear image and 
promote service excellence are 
important Growth is expected 
freon projects falling under the 
government's Private Finance 
Initiative, which is intended to 
take private finance into hospi- 
tals, utilities, and railways. 

Management buy-outs have 
also become a new area of 
interest to the finance houses. 
Pascon. the former BTR plant 
hire and scaffolding company, 
acquired by its management in 
a £33. 5m transaction, is one 
example, (see page 6). 

In another innovative deal 
Lombard provided a staged 
payments plan which, it said, 
combined the benefits of term 


funding with the flexibility of 
clearing bank facilities for 
J.PJTuit Distributors. The 
company needed a 3.5 acre site 
at Dartford, south London, for 
34 temperature controlled pres- 
sure ripening rooms. 

Barclays Mercantile, another 
1 parting participant in the mar- 
ket, is using money from the 
European Union to promote 
investment. A European 
Investment Bank scheme pro- 
vided a cash rebate of £2^300 
per new job created, if the proj- 
ect cost more than £20,000 and 
the jobs last five years. 

According to Garry Clarke, 
pricing manager, Barclays 
used its expertise to get clients 
through the machinery of the 
scheme and speedy access to 
the £l2m aid available. Bar- 
clays chums a 90 per cent suc- 
cess rate for clients chasing 
loans of between £250 to 
£30,000 under an earlier EIB 
loan subsidy scheme. 

In consumer credit, the entry 
of new participants, especially 


from the US, has created 
strang new competition in in 
the European credit card mar- 
ket 

Vauxball Motors, a subsid- 
iary of General Motors, was the 
first UK car manufac turer to 
enter the credit-card market, 
launching a British version of 
the GM card available in the 
US. Since the GM card was 
launched in the US in Septem- 
ber 1992, almost 8m people 
have became card holders. 

Such developments have also 
led to expansion in fixe list of 
FLA members - from the 
Automobile Association to 
Rank Xerox, and to the growth 
of niche companies finely 
attuned to a specific market 
Meanwhile, the leading clear- 
ing banks, and the building 
societies, continue to develop 
their finance arms. For all the 
participants the future offers 
an expanding market during 
recovery in a climate of 
intense competition and inno- 
vation. 


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.Fmancal Services is a highly competitive business! To ensure our service is second to 
none we have structured our organisation into discreet operating Divisions, each 
committed to operate a specialist service focused on the particular requirements of its 
mariret sector. Through training and experience, staff in each Division develop a deep 
understanding of the needs of their particular customers. They can thus offer 
knowledgeable advice and provide a service which is both highly professional and 
highly efficient 

So whether you are • in the motor trade, motorcycle trade, high-technology business 
equipment market or home improvement market looking for a reliable supplier 
of financial services • a company looking for asset finance facilities • a member of the 
public or professions seeking a loan, Lloyds Bowmaker a subsidiary of Lloyds Bank, is 
geared up and ready to help you. Written quotations are available on request. 

For further information call Barry DahiH on 0202 299777. 

Lloyds Bowmaker, Group Head Office, 

Finance House, 51.Holdenhurst Road, Bournemouth BH8 8EP 


n ;;.x; KK HN , iNC £ CORPORATE FINANCE DIVISION PERSONAL FINANCE DIVISION BUSINESS TECHNOLOGY ELN;aNC|^S10N;: 

MEDEXTA FINANCE DIVISION RKU’’ FINANCE DIVISION SCOTTiSE' DISCOUNT COMPANY 


The theory’s simple 
the practice rarely is. 



ASSET FINANCE 



ARE EVER 


On the face of it, securing asset 
finance is relatively simple but money 
alone is not the solution. After all, you 
know very well how much you want and 
what you want it for, that’s your business. 

At Hill Samuel, we merge the critical 
skills and knowledge of a merchant bank 
with the balance sheet 
and resources of a 
major clearing bank. 

An advantage 
which, in our 
experience, nobody requiring big ticket 
leasing and asset finance should ever ignore. 

We will involve the best people to 
structure a financing, whether as arranger 
or principal, and with the most innovative 
approach we can cover virtually every 
eventuality. 

If you’d like to see how we turn 
theory into practice made perfect, we’d 
very much like to hear from you. 





THE SAME. 


Hill Samuel 

Asset Finance 

100 Wood Street - London EC2P 2 AJ 
Telephone 071 6006000 ■ Fax 071 9203880 
Hill Samuel Asset Finance Limited is a member of T5B Group 






FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 


CONSUMER CREDIT AND ASSET FINANCE 2 


T he rise in consumer 
credit in the past year, 
which has reflected the 
growing confidence in the high 
street, has not been a smooth 
one, and the latest rise In inter- 
est rates has further high- 
lighted the fragility of the 
recovery. 

However, the trend Is still 
deddedly upwards. Figures for 
1993 showed how much the 
consumer credit market had 
recovered from the recession, 
and 1994 has so Ear built on 
this. 

According to the Finance 
and Leasing Association (FLA), 
new lending by Its members 
was up 25 per cent last year at 
£13Jbn (1992; £10.5bn). The big- 
gest rise was seen in the store 
Instalment sector, where new 
credit rose 46 per cent to 
nearly £lbn (£664m). Store- 
cards themselves showed only 
a 12 per cent rise to £3-4bn 
(£3.0bn), reflecting the trend 
among retailers to offer pro- 
motional credit to bolster sales. 

There was a steep climb in 
tbe number of unsecured per- 
sonal loans which jumped 36 
per cent to £2.1bn (£l-5bn) last 
year. 

Motor finance also staged a 
good recovery. The FLA fig- 
ures show a 34 per cent rise in 
motor finance credit in 1993, 


Consumer credit: Christopher Price looks at evidence from the high street 


Yorkshire Bank. 

Four years ago; GE Capital, 

CnaHrial IWvIPK hhcinae* ■ 


The trend is still decidedly upwards 


£5.5bn being taken out by cus- 
tomers against £4.lbn in the 
previous year. 

The trends so far in 1994 give 
a mixed picture of the demand 
for credit, although an overall 
positive one. The April tax 
increases and the rise in inter- 
est rates in September have 
both had effects, the first feed- 


There was a steep climb 
in the number of 
unsecured personal 
loans which jumped 36 
per cent last year 


ing through slowly to dampen 
consumer spending and the 
second raising the cost of 
credit with a negative effect on 
demand. 

Inflationary evidence since 
then, in the rest of the devel- 
oped world's economies as well 
as in the UK, has raised expec- 
tations of further rises in inter- 
est rates. 


It was just such a fear which 
was attributed to the slow- 
down in consumer credit in 
August. According to the FLA. 
consumer credit was up 12 per 
cent at £3.1bn (£2ffon) year-on- 
year, and up 44 per cent on the 
July’s totaL However, this lat- 
ter jump was due to August 
car sales which received their 
ann ual boost from the impact 
of new registrations. 

The overall consumer credit 
rise on an annnal basis was 
lower than in previous months. 
David Hardisty, chairman of 
the FLA. said: “The govern- 
ment underestimated the fear 
factor and put up rates when 
confidence was still too 
shaky.” 

Personal loans slipped 1 per 
cent to £256m from the previ- 
ous month, although they 
remained 30 per cent ahead of 
the year before. Store cards 
were also down from July, fall- 
ing 9 per cent to £375m, but 
showing a 58 per cent rise year- 
on-year. 


Consumer credit (total advances) 


EmtlUon 
MOO — 


3,000 — 



° Q1 02 03 0-1 

Sauce: faom and LAaalqAaaodalkn 


Ot 02 03 04 

WB3 


Ol 02 
1994 


InfbUnk, the credit informa- 
tion group, has produced simi- 
lar findings. Tracking credit 
inquiries by its customers, its 
research showed demand to 
finance houses - which pro- 
vide finance for cars, store 
cards and “in-house” store 
credit - 18 per cent ahead in 
July year-on-year, retail 6.7 per 
cent up and new car loans 3.6 


per cent ahead. These were 
nearly all less than the previ- 
ous month's rises. Brian Bai- 
ley, chairman of Infnlink, said: 
“It is possible that this reflects 
a stabilisation in the pace of 
recovery, rather than a genu- 
ine lack of spending confi- 
dence." 

Official statistics are some- 
what at odds with industry 


data - although the upward 
trend is similar. The Central 
Statistical Office (CSO) 
reported lending to consumers 
at record levels in August after 
a slight dip in July. On a three- 
monthly basis, total consumer 
lending was put at £L58bn to 
the end of August, up from 
£1.15bn in the previous quar- 
ter. Higher net lending by 
finance houses jumped from 
£3 24m in July to £486m In 
August, according to the CSO. 

Underpinning the recovery 
in consumer speeding are 
changes to the types of credit 
being used. Retailers, for exam- 
ple, have been handing over 
their card and credit systems 
to finance houses. 

“Retailers are focusing their 
attention on retaining cus- 
tomer loyalty and concentrat- 
ing on what they do best,” said 
John Morgan, manag in g direc- 
tor of Personal Finance at 
Lombard North Central, the 
financial services group. 

Retailers have also been 


moving away from option and 
budget cards In recent years, 
opting met pad for promotional 
credit. This might typically 
offer consumers not only more 
frequent sales bargains, but 
aisn cheaper credit with which 
to buy them. Mr Morgan esti- 
mates that as much as SO per 
cent of high street stores’ sales 


Retailers have in recent 
years been moving away 
from option and budget 
cards, opting instead for 
promotional credit 


are bought on promotional 
credit 

Many of the high street 
retailers have farmed out there 
credit businesses. In 1989 Store- 
house. the BH5, Habitat, 
Mothercare and Richards retail 
group, sold its card business 
with 400.000 customers, 
accounting for about 8 per cent 
of the group's turnover, to 


the financial services business 
of General Electric of the US. 
paid £l83m for the financial 
services business of Burton, 
the high street clothes group. 
The deal brought GE -a cud 
holder base of 3m and the man- 
agement of several other 
retailer card operations. 

GE also took over the credit 
card operations of The House 
of Fraser, which has l.lm cus- 
tomers. House of Fraser pays 
GE Capital a fee and the deal Is 
initially for 15 years. GE also 
acquired the motor loans bad- 
ness of Mercantile Credit, a 
subsidiary of Barclays. 

Lombard paid £10Qm for 
Thom EMI Financial Services 
and Trinity House Finance. 
Store cards and consumer 
credit business for Thom 
EMTs retail outlets, farturiing 
Rumbelows, are owned by 
Lombard, which also looks 
after new business for Granada 
and VLslonhlm 

“Consumer confidence la 
returning, although it does 
seem to be slowing down, and 
this is showing through to the 
credit market,” says Mr Mor- 
gan. “But people are shopping 
around and retailers and credit 
providers are having' to 
respond." 


Motor finance: Christopher Price looks at personal contract purchase schemes 


Quiet revolution in marketing strategy 


A quiet revolution is under 
way in motor financing. In 
August, around half the new 
M cars registered will have 
been sold through a personal 
contract purchase (PCP) 
scheme - just over two years 
since the first national plan 
was introduced by Ford, the 
car manufacturer. 

Sine then. Ford’s Options 
has been joined by schemes 
from nearly all car manufac- 
turers, including Vauxhal! 
Choices 1-2-3, Rover Select and 
Peugeot Passport 

The schemes are a return to 
the old-style leasing schemes, 
bat with a significant differ- 
ence: drivers have the option 
to purchase the vehicle. 

Private buyers pay a deposit 
on a new vehicle, typically 
anything over a fifth of the 
value. The dealer will then cal- 
culate the fixture value of tbe 
car at the end of the payment 
period, which can be anything 
from two to five years. The 


buyer pays tbe difference, plus 
interest, as a monthly pay- 
ment. 

At the end of the period the 
buyer has two options: to buy 
the vehicle outright, for winch 
the outstanding future value 
sum most be paid; or to part- 
exchange the vehicle for 
another new car. Thus Instead 
of paying the remaining lump 
sum to own an older car, tbe 
buyer trades it in to pay a sim- 
ilar amount for a new one. 

For the customer this has 
obvious advantages. It makes 
a new car more affordable. 
Monthly payments are lower 
than with a straight loan or 
hire purchase where the entire 
cost of the car is repaid over 
the term of the agreement For 
example, with a PCP, a Rover 
Metro can be leased for as lit- 
tle as £25 a week, after the 
initial deposit It also means 
that the customer will have a 
new car every few years. 
Another bonus is that often 


the warranty on the car will 
mean that many potential 
repair costs are covered. 

As wefl as giving the new 
car market a shot in the arm, 
PCPs carry other benefits to 
the dealers and manufactur- 
ers. They promote brand loy- 


The finance houses and 
the car dealers have finally 
got their act together by 
employing highly-trained 
financial sales staff 


alty, encouraging customers to 
exchange their used cars for 
new. Hie manufacturer bene- 
fits from the regular servicing 
and repair of the vehicle plus, 
at the end of the term, the 
probability of the customer 
trading in tbe old vehicle tor a 
new one of the same make. 

If the customer does decide 
to hand back tbe car, the 
garage is left with a low mile- 


age - most of PCP schemes 
limit annual mileage - car, 
with one owner and which has 
been serviced regularly, which 
can then be sold on. 

But PCPs have not suited all 
buyers. They are unusually 
available only on new cars, or 
sometimes those up to two or 
three years old. For many buy- 
ers, particularly those who do 
not have an old car to trade in 
or a lump sum, it is not conve- 
nient to find a deposit It may 
also not be agreeable to pay a 
lump sum at the end of the 
payment period. 

Another potential drawback 
is that agreed future values 
are covered by a variety of 
clauses, particularly those 
Insisting on the good condition 
of the car, and mileage limits 
- usually 6,000 to 12,000 a 
year. As well as never owning 
the vehicle outright drivers 
are also tied to the same man- 
ufacturer every time they 
change models. 


NOT EVERYTHING WE FINANCE 
FOR BUSINESS 

HAS A WHEEL AT EACH CORNER 


When it comes to funding business vehicles, Lombard 
has a reputation second to none. 

So it may surprise you to learn that we also provide 
finance for just about every business asset available. 
From turbines to telecoms. Production lines to power 
lines. Rolling mills to rolling stock. The complex to the 
commonplace. The one off to the one of many. 
Whether your needs are modest or massive, we'll help 
you choose the best finance package to keep your 
business turning over smoothly - something we’ve 
been doing for more than a hundred and thirty years. 
Which probably accounts for the fact that in Europe 
the group is number one in asset finance. 



Whatever the asset, call Lombard free on 


0800 834998 



BUSINESS FINANCE 


funding the assets of industry 


Lombard North Central He 
A member ol tbe National Weslmmyer Bank group 


Q*' 


However, the overall success 
and popularity or PCPs is 
undeniable, to the extent that 
banks and bnilding societies 
are changing tbeir product 
ranges to meet the challenge. 
Yorkshire Bank, which offers 
car loans with a typical 
annual percentage rate (APR) 
of about 16 per cent, has intro- 
duced an HP-style New Car 
Finance Plan with typical APR 
of between 10.7 and 11.6 per 
cent for loans of £3,000 and 
above. 

Midland Bank recently 
offered its 3m credit card cus- 
tomers Carchoice. in wbich 
they could lease a new car 
from Swan National - the hire 
company bought by the bank 
last year - for two years and 
either return it at the end or 
buy ft outright for an extra 
fee. 

There have been other devel- 
opments in the motor finance 
sector underpinning the PCP 
revolntion. “The finance 
houses and the car dealers 
have finally got their act 
together,” says Graham Wood- 
house, chief executive of Rover 
Finance. “We are at the point 
of sale so that customers get 
not only first-class sales ser- 
vice but also tbe best financial 
assistance as welL” 



Buyer* of new cars are increasingly choosing personal contract purchase schemes 


The result, says Mr Wood- 
house, is an improved service 
and an increase in sales. “We 
have increased the number of 
sales inquiries into actual 
sales." This has been achieved 
through a high investment in 
new technology at garages. 
Customers can be informed of 
terms and conditions for 
potential purchases on a vari- 
ety of options within minutes 
of an inquiry. Neil Tomkins, 
managing director of Lombard 


Motor Finance, said: “Those 
customers who would have 
gone to the bank for a loan are 
now being converted at the 
point of sale through better 
training and new technology.” 

The upgrading of the point 
of sale has occurred while 
dealers’ margins have 
declined. With many manufac- 
turers offering cash-back deals 
on various models, dealers’ 
margins have been cut from 
around 18 per emit to 10 per 


cent. According to tiie Finance 
and Leasing Association, new 
car motor finance was up 29 
per cent year-on-year for 
August. 

“It’s a healthy leap, but the 
biggest part seems to have 
happened at the start of the 
year, and the indications are 
that sales growth is slowing,” 
said Mr Woodhonse. Bnt he 
added: “We do seem to have 
recovered the feel-good factor 
in the industry.” 


full service 


history 


Bui we never rest on our laurels. 


Not content with mere leadership in our 


When it comes to company car 


field we are always looking for new and 


management, tew, il any, can match our 


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thirty year track record. 


Indeed, our entire busings philosophy . Which in ,u,n saves time, reduce, no® 


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company with a glittering past, and a 
bright future, call us today on: 


0800 262 147 


> !!■!- 


A VIS FLEET SER VICES 




OUR 


BUSINESS 


HELPING 


YOURS 

FT2 





,f JYs . 


>o“'- 


FINANCIAL. TIMES THURSDAY NOVEMBER 3 1994 


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CONSUMER CREDIT AND ASSET FINANCE 3 


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L easing and hire purchase 
have rarely had a better 
press. Largely swept ' 
away is the old image of HP 
companies lending more expen- 
sively than the banks. 

In its place, asset financing 
is increasingly being seen as a 
flexible form of finance that' 
can be cheaper for small busi- 
nesses than bank overdraft. 

Asset-based finance re mains 
cme of the few sources of medi- 
um-term finance for smaller 
companies and one of the only 
places that start-up companies 
can turn to for funds. 

While the image of leasing 
suffered as the result of a small 
number of photocopier supplier 
agreements, it is arguable that 
the industry's reputation has 
emerged from the recession in 
more robust shape than that of 
the banks. 

“There have been stories 
recently of the banks relaxing 
their lending criteria,'* says 
Lesley Kay of the finance and 
Leasing Association, which 
represents many of the UK’s 
Ieasaing companies. “But small 
businesses which have had bad 
experiences with banks feel 
more comfortable if they can 
get finance from a finance 
bouse." 

?* Small companies have also 
had heavyweight encourage- 
ment to seek alternatives to 
f the overdraft which is still 
wed more frequently to raise 
finance in the UK than any- 
where else in Europe. 
it’ Responding to the debate 
about small company access to 
capital, the chancellor of the 
exchequer, Kenneth Clarke, 
and the governor of the Bank 
of England, Eddie George, this 
year encouraged companies to 
seek alternatives to overdrafts. 
To finance short-term assets - 
such as working capital - com- 
panies might consider factor- 
ing, both' recommended. For 
fixed assets, they suggested 
companies should look at leas- 
ing. 

The attraction for small com- 
panies is threefold. First, there 
is certainty. Assets cannot eas- 
ily be repossessed by the 
finance house as long as pay- 
ments are maintained. An 
overdraft, on the other hand 
can be withdrawn. 

Small businesses are also 
more likely to raise fixed-rate 
finance rather than the vari- 
able rate of most overdrafts. 

• Finally, hire purchase and leas- 
ing offer a variety of opportu- 
nities to use capital allowances 
in a tax efficient manner. 

The steady growth of financ- 
ing is evident in. the figures. 
According to the . FLA, its - 



Big-ticket leasing: Jim Kelly reports 

Recession takes its toll 


xw 


Heavyweight encouragement: Eddie George and Kenneth Clarke have advised small companies to seek alternatives to overdrafts 

Small business finance: Richard Gourlay looks at asset-based lending 

More flexible than overdrafts 


Business finance (total advances) 


CmBUan 
4000 



w Q1 02 03 04 
isse 

SowMc.flnonM ana Leasing AuocWkm 


members lent £13.9bn In the 12 
months to August 1994, an 
increase of 11 per cent over the 
same period last year. Of that 
leasing was up only 3 per cent 
to £7 .3tra but it is rapidly being 
caught by hire purchase, up 32 
per cent at £&lbn. 

The FLA estimates about a 
quarter of this by value and 
much more by volume is 
finance for small business and 
that about 50 per cent of small 
companies fund their equip- 
ment purchases through hire 
purchase or leasing. 

The rapid rise in hire pur- 
chase can be explained by the 
fact that many companies have 
discovered hire purchase is 
barely more expensive than 
finance leasing where the asset 
reverts to the lessor company 
at the end of the lease. - 

Leasing is particularly 


02 03 04 ■ Ol 02 

1983 1994 


attractive to new companies 
that have no track record and 
would have difficulty raising 
overdrafts. Because finance 
houses are as interested in 
residual values of underlying 
assets as they are in the state 
of the business they are back- 
ing, they have a wholly differ- 
ent approach to banks. 

The finance houses have also 
tended to specialise in certain 
asset classes; close asset 
finance, for example, has devel- 
oped an lmriftr a fanding of the 

value of printing equipment 
which has made it the first 
port of call for companies seek- 
ing to set up printing presses. 

One beneficiary of leasing's 
flexibility is Sheffield Omni- 
bus, a start-up company that 
wanted to buy 12 -year-old sec- 
ond-hand vehicles in 1990. The 
banks would not look at assets 


of that age. But a finance 
house which was familiar with 
the residual value of commer- 
cial buses, was able to finance 
the deal. Now that the com- 
pany buys new assets for its 
expanded fleet it still chooses 
to use a finance house rather 
than the banks. 

Finance and hire purchase is 
attractive for companies with 
assets with long lives such ns 
buses. But companies trying to 
buy computers have less 
chance of raising finance. 
These assets have notoriously 
short lives, not because they 
quickly wear out but because 
they are rapidly considered 
obsolete. Quite simply, a two- 
year-old computer’s market 
value falls extremely quickly. 

The residual value of such 
investments is probably some- 
thing only the manufacturer 
will be fully equipped to 
assess. Such deals will remain 
the preserve of financing com- 
panies that support equipment 
suppliers. 

For the very smallest unin- 
corporated companies. leasing 
may also be about to become a 
more accessible option. Until 
now, the UK's small army of 
unincorporated companies 
have been covered by the Con- 
sumer Credit Act (CCA) when 
they borrow up to £15,000. 

Rather than working in their 
favour, the FLA estimated this 
has denied them access to 
more than £100m of finance 
which finance houses would 


have been willing to lend. 

The problem is that the Con- 
sumer Credit Act weakens a 
finance company's ability to 
repossess assets. If. for exam- 
ple. an unincorporated com- 
pany had already repaid a 
third of the agreed amount 
when it defaults on its pay- 
ments, a finance house would 
need a court order to repossess 
the assets. As a result a num- 
ber of finance houses simply 
chose not to risk the costs of 
deeding with these companies. 

But in June the Office or Fair- 
Trading recommended that 
business lending should no lon- 
ger be covered by the Con- 


Leasing is particularly 
attractive to new 
companies 

sumer Credit Act The depart- 
ment of trade and industry is 
studying the recommendation 
and is expected to announce its 
intentions shortly. 

If business lending is 
excluded for the CCa. this 
would not only boost the num- 
ber of prospects for the finance 
and leasing industry'. 

It could also provide a much 
larger population of companies 
using a more stable way of fin- 
ancing the main assets in their 
businesses, reducing their vul- 
nerability- to banks the next 
time the business cycle turns 
down. 


The British u big ticket” 
market in financial leasing 
has been hit hard by the 
recession and appears reluc- 
tant to recover. 

The government’s privati- 
sation initiatives have pro- 
vided vital new business for 
the big participants but even 
here evidence of new growth 
is patchy. 

With “big ticket** loosely 
defined as in excess of £5m it 
is dear that few businesses 
felt able to take on such lia- 
bilities during the recession. 

In fact, “big ticket” is often 
defined as in excess of SlOQm 

- and rising. Leased assets 
can now- range from an entire 
production line to a new 
power station. 

The significant drop In UK 
investment, particularly in 
providing for expanding pro- 
duction with new plant, has 
been coupled with a restric- 
tion in the tax capacity of toe 
banks. As the banks were the 
parents of many of the big- 
gest names in the industry 
this acted to restrict supply 
to the market 

The value of toe market in 
the second quarter of 1994 
was £245m. compared to 
£5<12m In the preceding quar- 
ter and £542m in the same 
quarter in 1993. The last 
quarter of 1993 reached 
£805m. 

In toe “big ticket" market 
particularly, the Finance and 
Leasing Association's (FLA) 
call for this year’s budget to 
reintroduce greater tax allow- 
ances, ideal for new invest- 
ment in plant, will be wel- 
comed. 

But in the short term the 
sector is flat but not stag- 
nant. “At this stage in the 
recovery we would expect 
more big-ticket leasing. There 
is activity in some areas - 
aircraft power and transport 

- but there is not the invest- 
ment in green field sites that 
we had hoped to see," says 
David Hardisty of the FLA 

Like many in the industry 
Mr Hardisty looks to privati- 
sation for growth and the 
government’s much vaulted 
but slowly emerging Public 
Finance Initiative (PFI). 

In fact, the PFI is a repeat 
of history for the finance and 


leasing industry. Lombard 
Group, one of the leading par- 
ticipants, can trace Its roots 
back to the North Central 
Wagon Co founded in 1861 to 
purchase and hire railway 
wagons for the coal-mining 
industry. 

Mr David Hardisty 
explains: “Leasing is particu- 
larly suitable for privatised 
companies which may not be 
In a position to benefit from 
tax allowances themselves. 

“Through a leasing 
arrangement capital allow- 
ances are accrued by the les- 
sor as and when the expendi- 
ture on the project Is 
incurred. The benefits of 
these are then passed back to 
the lessee through lease rent- 
als. Leasing is one of the 
most efficient ways of using 
capital allowances. Tax losses 
can be tamed into immediate 
benefits." 

T hroughout the industry 
the leading players 
reflect a picture of dis- 
appointing activity and a 
search for new forms of 
financial leasing. 

John Brown, founder or 
NWS Bank, and an executive 
director, characterises the 
market as one flushed with 
capacity but short on projects 
with a resulting tightening of 
margins for the lessors. 

However, he is more than 
optimistic that the sector will 
return to growth. He sees 
Japanese investment in the 
car industry in the UK, the 
privatisation of British Rail, 
and new stock for the London 
Underground as areas of 
potential new business. 

NatWest Markets is prond 
of its involvement in a £290 m 
leasing facility for Humber 
Power for gas and electrical 
plant and machinery. Despite 
tongh trading conditions it 
sees new opportunities in evi- 
dence: “Inward investment is 
particularly encouraging 
especially from toe Far East 
and is highlighted by the 
recent announcement from 
NEC Corporation and Sam- 
sung in respect of major 
investments in Scotland and 
the north-east respectively. 

“The utility sectors remain 
an important area for the 


leasing industry as illus- 
trated by NatWest Markets’ 
recent involvement with 
Humber Power.” 

Peter Graham, Joint manag- 
ing director of Airstream 
^nances, leases 200 commer- 
cial aircraft on six conti- 
nents. Despite a difficult trad- 
ing period he notes that the 
market is hardening with a 
15 per cent rise in rental 
rates In the past 12 months. 

Hill Samuel Asset Finance, 
one or the leading partici- 
pants. has a strategy of “add- 
ed- value'* big-ticket transac- 
tions and has seen a “marked 
Increase in business”. It 
points to successes in air- 
craft ships, shopping centres, 
and accommodation for uni- 
versity students as well as 
financing for more tradi- 
tional assets. 

“The market place in gen- 
eral is seeing a slow recovery 
and is in need of an invest- 
ment stimulus," according to , 
Anthony Jukes, managing 
director. He notes that it 
could be “several years” , 
before investment decisions 
move into “spend mode”. 

Mr Jukes also notes that 
the OECD economics in gen- 
eral have now achieved low 
inflation with growth in GDP 
bnt that there remains con- 
cern that fixed asset invest- 
ment is still showing little or 
no growth. “This trait is par- 
ticularly borne out in the UK 
where despite the tow infla- 
tion conditions the number of 
instances of major new 
investment have been few 
and far between.” 

Mrs Anna Merrick, head of 
leasing at Abbey National 
Treasury Services, says that 
in the present interest rate 
regime margins favour les- 
sees. Recent successes for 
Abbey National include part 
of a new rolling stock order 
of £!50m for Network South- 
East 

For John Carr, business 
director of Royal Bank Leas- 
ing, there “is a huge potential 
in the public sector if only 
the key can be found”. He 
lists successful deals in 
recent months in leasing two 
Boeing 757s, and significant 
contracts with a water com- 
pany. 



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FINANCIAL, TIMES THURSDAY NOVEMBER 3 1994 


V 






CONSUMER CREDIT AND ASSET FINANCE 5 


^ Car fraud: Motoko Rich looks at steps being taken to reform the industry 


Leasing: Jim Kelly examines progress on new accounting practices 


How to beat the swindlers standard reforms on the way 


Purchasing a second- han d car can be a 
risky business. According to HPI, the 
vehicle credit information organisation, as 
many as one to three cars sold privately 
may have been written off by an insurance 
company, reported stolen or may be sub- 
ject to a finance agreement A potential 
buys' is unlikely to be aware of any of 
this. 

The fraudulent sale of vehicles g ri ll sub- 
ject to finance agreements is increasing 
According to a survey conducted by the 
Finance and Leasing Association, its mem- 
bers reported 9,500 cases of such fraud, 
which cost them more than £45m between 
February 1993 and February 1994. 

The incidence of such fraud has 
increased over the past tow years as more 
buyers use a form of finanring to purchase 
cars. According to HPI, more than 55 per 
cent of all new cars are now bought with 
the aid of a finance agreement Six years 
ago, that figure was closer to 25 per cent 
Finance and leasing car fraud can be 
conducted in several ways. Perhaps the 
most common swindle is when a car 
owner sells a vehicle subject to a finance 
agreement without informing the buyer. 
j If the fust buyer of the vehicle used a 
contract hire, contract purchase, lease pur- 
chase, or any other form of lease finance - 
all of which have become increasingly pop- 
ular forms of finance - the new buyer does 
not inherit good title and is legally liable 
for the debt while the finance company 
- would be entitled to take remove the 
vehicle. 

If, however, the car was originally 
bought with a hire purchase agreement 
and the second-hand buyer does not know 
about the financing, the new buyer is 
guaranteed some protection under the 
Hire Purchase Act of 1964. 

The act says that mnn w-nt buyers of 
cars subject to hire purchase agreements 
receive good title to the car and are not 
responsible for the remaining debt on the 
vehicle. But while the consumer is pro- 
tected, the finance company loses out 
because it is unable to repossess the car or 
demand repayment from the new owner. 

Frank Laybom, chairman of the work- 
ing party on aprotectfon of title initiative 
at the FLA, says the 1964 Hire Purchase 
Act is tantam o unt to a “villain’s charter" 
because of this loophole in the law. 

He says fraudsters can orchestrate a 
transaction that is completely protected fry 
the law. “You now have the situation 
where person A, for example, buys a Ford 
Mondeo on a hire-purchase agreement. 
Person B buys another car. That they ' 
meet in a pub and they exchange toe cars 
without telling each other about the hire- 
purchase agreements, and they both get 
good title” he says. "Neither of the 
finance companies can collect the money 
or their property because both, buyers 
have good title." 

To combat these various forms of fraud. 



Bridge ewer troubled water fraudulent sale at 
cars to on the increase 

the FLA, supported by the Consumers 
Association, toe Society of Motor Manufac- 
turers and Traders, the Retail Motor 
Industry and the Driver Vehicle Licensing 
Association, has proposed a statutory car 
ownership register. 

All manufacturers and importers would 
have to register with a centralised service 
which would keep track of all subsequent 
chang es in ownership and finance agree- 


ments. It would also store information 
about insurance write-offs and keep 
records of mileage and cars reported sto- 
len. 

Each car would be registered by its 
vehicle identification number (Vto). a 17- 
digit number allocated at the point of man- 
ufacture. Unlike a registration number, 
which can change if licence plates are 
changed, the Vm is set by a worldwide 
standard and would remain constant 
throughout a car’s life, making it difficult 
for fraudsters to disguise a car’s identity. 

Anyone buying a used car privately 
would be legally required to consult the 
register to check toe vehicle's ownership. 
Since a finance company owns a car until 
the debt is paid off, such a register would 
immediately reveal any finance agree- 
ments. 

The loophole in the 1964 Hire Purchase 
Act which protects “innocent” buyers of 
cars subject to hire purchase agreements 
would be eradicated. Tt would be the buy- 
er’s responsibility to take sensible precau- 
tions before parting with their money” 
says Mr Laybom. “So, for example, toe 
two guys in the pub would not have good 
title because they would be construed to 
have knowledge of the hire purchase 
agreements under the law. They would be 
liable if they did not check toe register.” 

HPI already provides a register service, 
but because it is not enshrined in legisla- 
tion, Mr Laybom says it is not sacrosanct 
“If a finance company does not want to 
register it does not need to,” he said. 

HPI is helping the FLA with its legal 
proposal, and hopes to bid for a tender to 
provide the national service. 

In toe meantime, it collects data for 
seven registers that 18,000 subscribers in 
toe motor trade and 1,100 in the finance 
industry use on a reg ular basis. The out- 
standing finance register, for example, 
contains details of the finance arrange- 
ments on 5m vehicles listed, and the 
vehicle identity register provides confir- 
mation. of the make, model, colour, an gina 
rise, transmission and fuel type for all 
vehicles registered with toe DVLA since 
1966 - now numbering about 19%m. 

In addition, HPTs services are available 
to members of the public. For £25. a cus- 
tomer can access any of the HPI databases 
and make sure the car they intend to 
purchase is dear of finance agreements. 
They can also check that it is not stolen or 
written off by an insurance company and 
makp sure the previous owner has not 
changed registration plates or misrepre- 
sented the car’s age. 

Consumers who check the HPI register 
are technically giving up their legal pro- 
tection. “Once you use our service it could 
be argued that you are no longer an inno- 
cent purchaser,” says Nikki Websper. mar- 
keting manager at HPL “But you would be 
daft to buy a car that had an outstanding 
finance agreement.” 


Most Urge finance leasing 
companies in the UK produce 
excellent accounts and are a 
model of corporate reporting 
in the eyes of standard setters 
and the users of financial 
statements. 

The problem for the indus- 
try, which it readily acknowl- 
edges, is that its image is still 
tainted by the memory of fail- 
ures like Atlantic Computers 
and Court Line: the first a les- 
sor and the second a lessee. 

These collapses, and the 
increasing tendency for les- 
sors to be dealers in assets, 
often give a jaundiced picture 
of a vital industry to those in 
need of a creative answer to 
capital problems. 

The industry, and the gov- 
ernment's own standard set- 
ters, are working hard to 
improve the integrity of leas- 
ing finance. It is worth 
looking at the case of A tlan tic 
Computers to see where many 
of the problems began. 

Atlantic was founded in 
1975 to provide leasing. lease- 
financing, broking, and the 
sale of computers. It was 
floated in 1963 and was swal- 
lowed by British & Common- 
wealth in 1968 for £408m. Two 
years later both collapsed. 

Atlantic had reported aggre- 
gate pre-tax profits of £l27.6m 
between 1983 and 1988. When 
the department of trade 
industry finally got their 
hands on the books its inspec- 
tors were able to report that if 
prudent accounting methods 
had been used no significant 
profits should have been 
reported. 

The problem was Atlantic’s 
core product Flex] ease. This 
product was not viable in the 
long term but this was con- 
cealed by the way in which 
the company accounted for 
profits and faile d to make pro- 
visions for contingent liabili- 
ties. 

Flexlease was in fact three 
products: a six-year lease with 
two options - the "flex” 
option allowed renegotiation 
for a new agreement after 
three years, while the “walk” 
option allowed the client to 
terminate the lease after five 
years. 

The options gave rise to 
large potential liabilities as 


more customers took the 
“walk" option. 

it is this type of “treadmill” 
situation which is often the 
root of the problem in lessor 
accounting: where the growth 
of the business obscures 
unprofitability. Once growth 
diminishes the spiral goes into 
reverse. 

The Finance and Leasing 
Association (FLA) has 
responded to the type of prob- 
lems illustrated by Atlantic, 
and other failures, by pushing 
ahead with 
reform for les- 
sor accounting. -v 

particularly in 
the area of 
residual val- 
ues. 

The FLA’s 
focus on resid- 
ual values is 
understand- 
able in the 
light of several 
corporate 
a dventures 
which have 
ended in fail- 
ure. However, 
many outside 
the industry 


ASC, on the issue. “They 
acknowledged that residual 
value accounting was a prob- 
lem area along with other 
aspects of lessor accounting. 
They suggested that the FLA 
Itself should, in consultation 
with them, draw up a State- 
ment of Recommended 
Accounting Practice (Soip) on 
lessor accounting issues,” 
according to the FLA. 

The ASB has allowed the 
industry to set up a “Sorp- 
making” body and it will meet 
later this 
month. Despite 
some friction 
between the 
standard mak- 
ers and the 
FLA toe indus- 
try will hope 
that the Sorp 
will be an 
influential 
accounting 
standard simi- 
lar to those 
introduced in 

hanlring and in 

pension funds. 

The FLA, 
through the 
Sorp process. 


would like to David HanSsty: pushing ahead with would like to 
see a wider accounting reforms for lessois see residual 


reform, tack- 
ling the need for lessors to 
give realistic information on 
profits. The “treadmill” 
nature of leasing finance 
makes this an area open to 
abuse. 

The FLA does, however, 
deserve credit for campaign- 
ing for reform and realising 
that the future of the industry 
relies on a public perception 
of professional integrity. 

Both the FLA, and its prede- 
cessor toe Equipment Leasing 
Association (ELA), became 
aware of toe problem during 
the mid 1980s - particularly in 
the field of computer leasing . 

The ELA suggested setting 
up a joint working party with 
the Institute of Chartered 
Accountants in 1986. The 
institute felt the issue war- 
ranted a full accounting stan- 
dard and passed the problem 
on to the Accounting Stan- 
dards Committee (ASC). 

In 1993, the FLA approached 
the Accounting Standards 
Board, which succeeded the 


values more 
realistically calculated for les- 
sors. 

Those values should also be 
revalued at intervals. The tim- 
ing of the impact of revalua- 
tion on toe balance sheet Is 
another issue to be consid- 
ered. Should the company 
accounts take a single hit or 
should the impact be spread 
over the life of the lease? The 
Sorp is likely to propose a con- 
servative compromise 
between the two. 

The FLA disagrees with the 
ASB when it comes to reform- 
ing the standards governing 
lessee accounting. David Har- 
disty. chairman of the FLA, 
says: “We take toe view that 
the ASB should be more con- 
cerned to ensure that lessors 
are properly accounting for 
their profits rather than with 
what should be on or off bal- 
ance sheet, which seems to be 
their current preoccupation.” 

The ASB's present financial 
reporting standard is SSAP 21 
- the standard set by the old 


Accounting Standards Com- 
mittee, which became effec- 
tive in 1987. 

It drew a distinction 
between finance leases, which 
were transactions with con- 
tracts in which the lessee paid 
most of the value of the asset, 
and operating leases, usually 
over a shorter period. 

In the first the asset is 
treated as a purchase, appear- 
ing on the balance sheet of (he 
lessee, with the profit and loss 
account incorporating toe cost 
of borrowing and depreciation. 
The second item is allowed to 
remain off balance sheet The 
profit and loss account simply 
shows a charge for servicing 
the lease. 

How do you tell the differ- 
ence between the two? The “90 
per cent test” states that a 
finance lease was any lease in 
which the present value was 
at least 90 per cent of the 
asset’s fair value. 

The result of this rule was, 
as is so often the case in 
accounting, toe creation of a 
small industry dedicated to 
circumventing it, particularly 
in big ticket leasing. Leases 
were engineered to be off bal- 
ance sheet at 89 per cent 

Lessors also abused the 
spirit of the regulations. In 
their accounts the require- 
ments were the inverse of 
those for the lessee and cre- 
ative accounting can remove 
the impact of the lease on the 
balance sheet. 

Third parties were intro- 
duced between the lessor and 
lessee with the result that in 
some cases, the impact of the 
transaction was not shown at 
afi. 

This state of affairs is 
unlikely to survive in toe face 
of toe ASB’s Financial Report- 
ing Exposure Draft 4. and the 
ASB’s statement of principles. 
The first seeks a picture of the 
true nature of transactions in 
accounts and the second 
defines the true nature of 
assets and liabilities. 

All eyes win be on the ASB 
in the medium term for 
reform in this area - and in 
the shorter term on the Aus- 
tralian Accounting Research 
Foundation - which is cur- 
rently considering toe very 
same issue. 


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66 Buddngham Care 
London SW1E liAU England 
071-411-1800 


Making the right credit decisions means having on consumers, limited companies and small 
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Telephone: 0115 941 0888, Facsimile: 0115 934 4905 


• ' V 1 • 







FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 


CONSUMER CREDIT AND 


FINANCE 6 


The industry: Alison Smith looks at the range of finance companies 

Range of participants widens 


, _ * A . \?.T TV** ■ *££ *.!\Y. j-* ^ 



Financial leasing Is helping to build new 
businesses in many ways. Pictured above are 
the management buy-out team at Pascon, 
the scaffolding and plant hire company. The 
success of the buy-out partly depended on 
help from Lombard Business Finance. 
National Westminster Bank and 3i, the 


venture capital group, also helped finance 
the buy-out From the left are Gary Leitch, 
senior executive, Lombard Business Finance, 
Ian Bran, financial director of Pascon, Kevin 
Bright, managing director of Pascon, and 
Richard Priestman, of Lombard Business 
Finance. (See page 3) 


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Would you buy a car through a 
merchant bank? Would you 
ask the people who make or 
sell your television set for a 
loan? 

Though the Instinctive 
answer to both questions is 
“probably not", the percentage 
of individuals and businesses 
who respond positively demon- 
strates the wide range of com- 
panies in the consumer credit 
and asset finance industry. 

A glance down the member- 
ship list of the Finance and 
Leasing Association reveals 
some implausible participants: 
the Automobile Association, 
Kodak, Marks and Spencer, 
and Rank Xerox are all among 
the organisations with off- 
shoots in this area of finance. 

This does not mean, how- 
ever, that these or the more 
predictable financial Institu- 
tions in this sector are all in 
direct competition. Rather, it 
reflects the varied types of 
finance with which the sector 
deals. 

At one end of the scale are 
the unsecured personal loans - 
perhaps with a minim um of 
£500 - offered by all the lead- 
ing high street financial insti- 
tutions. At the other end are 
the asset finance arrangements 
set up by merchant banks as 
part of the financing services 
they provide to their large cor- 
porate clients. 

“We have done tiny, tiny 
deals as favours," says Andrew 
White, joint head of financing 
at Kleinwoit Benson where the 
main lines of asset finance are 
in the vehicle, information 
technology and aerospace mar- 
kets. "But ideally we don’t 
want to do a deal below £2m.” 

Between these extremes is a 
range of finance where there is 
room for mainstream providers 
and companies which have 
identified specific niches to 
win substantial shares of rela- 
tively narrow markets. 

For example. First National 
Bank, the core consumer 
finance arm of First National 
Finance Corporation, speci- 
alises in providing suppliers of 
home improvement goads and 
services with financing deals 
they can offer customers at the 
point of sale. 

Point-of-sale finance is just 
one way in which competition 
to provide or arrange finance 
between merchandisers as well 
as to provide the more conven- 
tional sources of funds is inten- 
sifying. 

Take the case of someone 
buying a new kitchen or dou- 
ble glazing. These customers 
might think first of obtaining 
finance from the bank or build- 
ing society with which they 
deaL But they are also poten- 
tial financial clients for the 
retailer or manufacturer from 
whom they are buying. 

The principles are the same 



Fruitful business: financial leasing for 
big-ticket items is no longer limited to 
single assets. Mark Alien (left), senior 
account executive at the London South 


Business Centre, and Clive Mannertng, 
group financial (Erector of J P Fruit 
Distributors Ltd, have good cause to 
smile. Lombard Business Finance 


provided vital support to help bring a 
project for ripening bananas hi special 
sheds to a successful conclusion. 

(See page 3) 


in corporate business. A com- 
pany replacing a fleet of cars 
might consider approaching 
the merchant bank which 
advises it about the other 
aspects of its financial arrange- 
ments, but, equally, will face a 
determined effort from motor 
companies to win its business. 

The varied backgrounds and 
structures of consumer finance 
organisations enables them to 
put forward different selling 
spiels, from convenience to 
financial expertise or long 
experience in the goods or ser- 
vices being sought. 

All the largest clearing 
banks have their own finance 
houses through which they 
offer leasing and structured 
finance for personal customers 
and small businesses, directly 
or through the bank itself. 

The growing importance of 
finance houses is illustrated by 
their increasing contribution 
to bank profits. In turn, the 
finance houses believe that 
being part of a larger banking 
group can also assist their 
business. 

For example, Forward Trust 
Midland Bank's finance house, 
says the main benefit is in tbe 
competitive and attractive 
funding rates it can offer as 
part of the larger organisation. 

Less important there is also 
the prospect of referrals from 
customers wbo approach the 
banks through its branches. 

Like the finance houses in 
the banks, consumer finance 
arms of building societies say 
that their position in the group 
gives them the benefit not just 
of the scale of inquiries but 
also of the brand name. 

“Customers know and trust 
the organisation," says Rich- 
ard Roche, head of marketing 
at Alliance & Leicester Per- 
sonal Finance. 

There is, however, a restric- 
tion on the type of consumer 
finance building societies can 
offer. Although relaxations in 
rules are on the way. at pres- 
ent societies cannot lend for 
business purposes. 

This can lead to difficult 
decisions in dealing with sole 


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Specialists in small print 

Contact Janet Gregory 
Tel: 01202 786161 


traders. A tad driver applying 
for a car loan would have to be 
turned down if it was obvious 
that the vehicle would be used 
for business, but a plumber 
wishing to buy a car would be 
eligible for a loan unless the 
vehicle was primarily for busi- 
ness use. 

Different restrictions can 
apply where a consumer 
finance arm is part of a 
broader organisation. 

At Marks and Spencer, for 
example, the financial services 
operation is expanding next 
year to add life insurance and 
pensions to the charge cards, 
personal loans and unit trusts 
it already offers. But earlier 
this year, Keith Oates, joint 
managing director, stressed: 
"We are first and foremost a 
retailer. Our financial services 
arm ought to be allowed to 
expand as it thinks fit without 
disturbing the plan for the 
whole group." 

Ford Credit, part of the 
financial services subsidiary of 


Ford Motors, readily acknowl- 
edges it is a “captive". It says, 
however, that this does not 
unduly hamper its operation or 
development Under the terms 
of the European Second Bank- 
ing Co-ordination Directive ft 
is a bank in its own right, and 
in 1993 it was among the top 10 
finance houses in the UK. 

Whatever their parent organ- 
isations, consumer credit and 
asset finan ce operations face 
opportunities and challenges in 
the months ahead. 

The good news is that much 
of it should benefit from the 
recovery as businesses re-tool 
for expansion: in particular, 
the car market generally 
responds quickly to growth in 
the economy. 

What is not such good news 
is that marg ins are narrowing. 
As one asset financier put It: 
“Foreign competitors are com- 
ing back to the UK market a 
bit early, there are not enough 
deals to go round, and so they 
cut prices to buy volume.” 



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Lending Division at Sterling Credit Ltd in Bracknell. It offers a full range of banking and 
credit services including Personal Loans, Deposit and Saving Accounts, Insurance and 
the Beneficial Visa Card. 

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Beneficial supports a growing portfolio of over 40 Visa affinity programmes including 
professional, managerial, alumni and sporting organisations such as Cambridge 
University, the Institute of Directors, Jaguar Cars and Manchester United plc. 

Point of Sale Retail Credit 

Many large multiple retailers including Texas Homecare. Iceland Frozen Foods and 
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facilities for retail sales. 

Acquisitions 

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•7 






FINANCIAL TIMES SURVEY 









TURKISH FINANCE AND INDUSTRY 

Thursday November 3 1994 



Away from it alb wfiat else should the onSnary dozen do when his country's economy comes to a halt? 


Consume less, borrow 

This year’s economic crisis may have shaken 
politicians out of their complacency and crystallised 
public opinion in favour of free-market reform 


T his has been a dread- 
ful year for business 
in Turkey, in March, 
financial markets col- 
lapsed, the Turkish lira lost 
over half its value and infla- 
tion topped 100 per cent 
For a few tense days, the 
entire economy ground to a 
bait Shops emptied, factories 
stopped working. On one 
spring weekend, just one car 
was sold in foe whole of Tur- 
key. After averaging 6 per cent 
growth since 1990, the econ- 
omy is now contracting by 4 
pm 1 cent. 

Yet many executives believe 
this severe crisis may finally 
have shaken politicians out of 
their complacency and crystall- 
ised public opinion in favour of 
free-market reforms. 

Mrs Tansu Ciller, prime min- 
ister since June 1993, bears 
great responsibility for the 
mess, for allowing a consumer 
binge and speculative bubble 
to run out of control. The 
result has been: a 1993 budget 
deficit of 18 per cent of GNP 
and a current account deficit 
civ times larger than the year 
before. 

Confidence evaporated in 
January when Wall Street rat- 
ing agencies marked Turkey's 
debt below investment grade, 
the central bank governor 
resigned and capital flooded 
out of the country. By March, 
Turkey was facing financial 
meltdown. 

Mrs CUler adopted a strin- 
gent stabilisation package In 
April to deal with foe immedi- 
ate crisis. The International 
Monetary Fund agreed to a 
two-year $75&2m standby loan 
in July, based on an aggressive 
programme of emergency taxes 
and spending cots. 

The economy minister, Mr 
Aykon Dogan, now claims total 
success in meeting the IMF’s 
targets, especially on deficit' re- 
duction. He says: “We have 
diminished the public sector 
borrowing requirement to 10 
per cent of GNP, and it will no 
doubt be further diminished to 
7 per cent in 19SS. People said 
our programme was impossible 
to apply. But we are serious 
people." 

The government also asked 
foe World Bank for loans to 
support public sector reform 
that would attack the econo- 


my’s underlying problems. Six 
months an, though, progress is 
barely noticeable. A weary 
World Bank staffer summar- 
ised Turkey's problem as “sim- 
ply a situation where the gov- 
ernment is too big and 
revenues too small”. 

Turkey must privatise state 
companies, eliminate subsi- 
dies, modernise foe tax and 
social security systems and 
sweep away red tape. Determi- 
nation, or foe lack of it. to pur- 
sue public sector reform will 
shape Turkey’s business envi- 
ronment in the years to come. 

Mr Unal Karukpu. chief exec- 
utive of Ankara’s big I§bank 
warns: “We face a tough period 
for some years. Turks must 
accept the fact that they must 
consume and borrow less." 

Privatisation has split the 


weak coalition government of 
Mrs Ciller’s conservative DYP 
party and the social demo- 
cratic SHP. Political stalemate 
is also delaying negotiations 
with Brussels over establishing 
a customs union. This requires 
adoption of European legisla- 
tion. especially on competition 
and intellectual property. But 
these new laws, which would 
further underpin reform, are 
making slow progress in parlia- 
ment 

Mrs Qiller is a US-trained 
economist She knows reform 
is ultimately unavoidable and 
that it would place Turkey on 


a sound long-term footing, 
albeit at the cost of prolonging 
the current recession. 

Yet she is a politician first, 
the leader of a weak and 
divided government. General 
elections are due by November 
1996. Most business leaders - 
who dislike and distrust her - 
expect Mrs Ciller to equivocate 
and for Turkey's economic 
problems to return with redou- 
bled force in 1996. 

Still, economists expect the 
encouraging demand and pro- 
duction trends of recent 
months to build into 2-3 per 
cent growth next year, just 


enough to keep up with popu- 
lation growth. 

Business executives are con- 
fident that public support for 
structural reform is approach- 
ing critical mass. A sound 
economy would certainly make 
management a less seat-of-foe- 
pants affair and investment 
would recover. 

But h anks and companies 
would lose easy pickings in 
financial markets. They would 
miss foe tax system's gaping 
loopholes and lax enforcement. 
Import tariffs are already foil- 
ing. Intensifying competition, 
especially after customs union. 


Picture on the Istanbul waterfront Terry Kbrk 



will further depress industry’s 
high margins Companies will 
also lose big government con- 
tracts and subsidies - although 
these are mixed blessings, 
since debt-ridden Ankara 
always pays late. 

It seems certain that Tur- 
key's handful of conglomer- 
ates, which grew so powerful 
in the old hothouse economy, 
will continue to dominate foe 
business scene. Few others can 
yet match the financial 
strength, market share, politi- 
cal connections and manage- 
ment skills of the preeminent 
Sabanci and Ko? groups. 

Yet small and medium com- 
panies have grown strongly, 
able to deliver intermediate 
technology goods as well made 
and well priced as anywhere 
else in the developing world. 


Recession and murderously 
high interest rates now 
threaten these often undercapi- 
talised companies with bank- 
ruptcy. Fortunately, even very 
gmaii companies can go public. 
Listings on the Istanbul mar- 
ket have grown by one-fifth to 
169 companies since January 
1993. 

Turkey's strengths are its 
typical developing-country 
characteristics - rapid eco- 
nomic growth, a large and fast- 
expanding population, low 
operating costs - with the 
added benefit of some highly 
sophisticated companies, prox- 
imity to Europe and, if all goes 
well, customs union with an 
expanded European Union. 

However, investment is too 
low. A US observer commented 

that under-investment is 
“something [companies] have 
to worry about They have to 
continue improving productiv- 
ity and sophistication, but it's 
not happening.” He says 
research and development 
spending in Turkey is equiva- 
lent to only 0.5 per cent of 
GDP. 

Instability discourages for- 
eign investment: Turkey has 
received just $13.45bn in 
inward investment since 1980, 
mostly in the transport, 
cement and food processing 
industries. The underdeveloped 
legal system, where rulings 
can take years to obtain, may 
further discourage investment 
as business becomes more 
sophisticated and competitive. 

Already a large part of the 
economy has gone under- 
ground to escape the incompe- 
tence and over-regulation - as 
well as the taxes - of official- 
dom. The underground econ- 
omy helps explain why. in a 
year of such difficulties, the 
streets of Istanbul remain 
choked with traffic instead of 
protesters. 

Professor Osman Altug, of 
Marmara University, says the 
unregistered economy has 
grown to 41 per cent of GDP 
from 34 per cent in 1992. Unre- 
gulated sales of consumer 
goods to smugglers from Rus- 
sia, eastern Europe and central 
Asia alone provide about 
200.000 jobs. The textile indus- 
try probably has unregistered 
exports of about $3bn a year. 

But the informal economy 


also spawns corruption, loan- 
sharking and organised crime. 
Press reports of connections 
between gangsters, state com- 
panies, businessmen and 
senior politicians further rein- 
force the public's view or busi- 
nessmen as flashy Mercedes- 
driving racketeers. 

Disgust at corruption in 
state companies, their ineffi- 
ciency - Istanbul ran out of 
water this summer - and foe 
heavy financial burden they 
impose on the country are 
changing Turks' traditional 
view of these companies as the 
heritage of Kemal Atatiirk and 
the economy's bedrock. 

Yet public sector reform is 
blocked by fear of unemploy- 
ment. Mr Dogan hims elf says 
three-quarters of the public 
sector's 2m employees are not 
needed. Mistrust of the busi- 
ness elite is probably another 
important factor delaying pri- 
vatisation. And politicians 
fiercely resist any measure 
that reduces patronage. 

The rise of the Islamic Refoh 
party is frequently seen as a 
reaction against incompetence 
and corruption. The business 
elite and middle classes are 
growing further apart from the 

Survey by 
John Barham 

With contributions by 
David Tonga and Andrew Ftnkel 


4 045m ordinary Turks strug- 
gling to survive on foe land or 
in big city slums. 

Polarisation is not just politi- 
cally dangerous. It is bad for 
business. Turkey needs a 
strong, well-balanced domestic 
market for companies to grow 
and exports to expand. 

But Turkey lacks determined 
leadership. Mr Erol Aksoy, 
owner of Istanbul's Iktisat Ban- 
kasi, says: “We need strong 
governments, not coalition 
governments. We need a gov- 
ernment [to begin reform] that 
is at the beginning of its term 
not at the end." 

Turkey is still waiting for a 
successor to Turgut Ozal, the 
decisive former prime minister 
and president who mapped out 
reform in the 1980s but died 
last year. 


# 





As TnrkeVs leading Ml service merchant banking group, we are here for the right advice on trade and project finance, leasing, 
factoring, insurance, or the capital markets. This is complemented with our integrated world-wide network of banking affiliates 
in Banque Internationale de Commerce. Paris and Geneva, BIC International Credit Pic, London, and, The Park Avenue Bank in 


New York. . . 

Whenever you have business related to Thricey talk to us. For further information, please contact 

the International Division at our Head Office at the following address: 



Head Office: BSyukderCad. 165 Esenlepe/80504 Istanbul, Turkey. Tel: (212) 274 mi. Telex: 26021 . Fax (212) 274 7028 




IKTiSAT 

BAI\KASI 

TURKEY'S MERCHANT BANK 






FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 



TURKISH FINANCE AND INDUSTRY 


W hen Turkey’s econ- 
omy crashed this 
spring, the prime 
minister, Mrs Tansu Ciller, 
reacted by concocting a rem- 
edy so severe that even the 
International Monetary Fund 
feared she was going too far. 

Despite its misgivings, the 
Fund - after prodding Grom 
Turkey's allies in Washington 
and other western capitals - 
quickly agreed to a $756 .2m 
standby loan in July. 

In her letter of intent, Mrs 
Ciller promised policies that 
could only gladden the IMF's 
heart: spending controls, a 
clamp on public sector wage 
c laims , public sector price 
increases and restrictions on 
central bank lending to the 
Treasury. The government also 
imposed a range of one-off 
taxes to help close the budget 
deficit of 12 per cent of GNP. 

Ibca, the London-based rat- 
ing agency, commented: “The 
projected tightening in policy 
is worth more than 10 per cent 
of national income over just 
ninfl months. This is one of the 
most severe fiscal packages 
ever imposed on an economy 
in such a short period of time." 

The government now says it 
has met its principal targets of 
lowering inflation (expected to 
drop to 20 per cent at annual 
rate by December), redressing 
external imbalances (the cur- 
rent account was gl.lbn in sur- 
plus by July) and rebuilding 
central bank reserves (up to 
$7bn in October). 

Mr Yaman TOruner. central 
bank governor, says trium- 
phantly: “All the IMF figures 
are met. We are the best per- 
forming country the IMF has 
ever met." 

However, sceptics are not 
convinced. One foreign econo- 
mist says: “Ollier's package 
was comprehensive, but the 
thing that concerned outsiders 
was that they were not very 
front-loaded. There were too 
many announcements.” 

The key difficulty is dealing 
with the gaping public sector 
deficit, the central cause of 
Turkey's external imbalance 
and inflation. The 1995 budget 
forecasts a deficit only one- 
quarter the size of this year’s. 
Few independent economists 
think the government will hit 
this target. No government 
since 1980 has ever come near 
to meeting its budget targets. 
Ibca calls this “a breathtaking 
record of fiscal incontinence". 

Economists complain that 
Mis CHler has relied on too 
many one-off tax and spending 
measures and is too optimistic 
in her 1995 tax and growth 
assumptions. Furthermore, 
elections are looming, and she 
will certainly be tempted to try 
and spend her way to victory. 

Inflation and interest rates 
will not fall until the govern- 
ment stops overspending. 
Interest charges already con- 
sume one-third of the govem- 



Turkey: macro-economic data 



1994 

1993 

1992 

GNP ($tn) 

na 

175.61 

155.66 

GNP growth (% change) 

over previous period 

-4.2* 

7.60 

7.30 

Population 

612m 

59.9m 

58.6m 

GNP per capita ($) 

njaL 

2,931 

2,655 

Public sector borrowing 
requirement (% of 

GNP) 

1Q.3T 

11.9 

10.9 | 

Consumer prices 

(change 

% over previous period 


6721 

66.1 

70.1 

Exports ($bn) 

7.81* 

15.61 

14.89 

Imports (Sbnj 

10.43* 

29.77 

23.06 

Balance [Sbnj 

-2.62' 

-14.16 

-8.19 

Current account ($bn) 

0.30* 

-6.38 

-0.94 

Capital account ($bn) 

-1.65 

8.96 

3.65 

External debt ($bn) 

67.25§ 

67.36 

55.59 

Exchange rate (average 

Turkish lira/$ rate 

for period) 

25,108* 

10,986 

6,887.5 


Under 
package has 


r. Mis Otter's fiscal 
provoked concern 


Mmot qura 

Sourc BM Tlriey 


The economy: far-reaching reform is proving slow 

Short-term overkill? 


menfs *38bn annual budget - 
the same as its wage bill- Mrs 
Ciller's attempt Last year to 
drive short term-rates down 
unilaterally sparked this year's 
financial crash. She decided to 
print money instead of accept- 
ing the bond market’s high 
price for refinancing maturing 
government debt 
Now, the central bank's tight 
money policy is keeping real 
interest rates at punishingly 


Mr Toruner says he is not lend- 
ing to the gove rnmen t, at the 
moment. 

The government has made 
little progress in talks with the 
World Bank, which it asked in 
April to support public sector 
reform. A World Bank official 
says the main objective is to 
“improve macro-economic 
management, with emphasis 
on privatisation, social secu- 
rity [system reform] and reve- 


Economists complain that Mrs Oilier has 
relied on too many one-off tax and 
spending measures 


high levels. In October, real 
interest rates were as high as 
40 per cent a year. 

Upbeat as always, Mr TOrQ- 
ner says: “We want to have a 
very stable monetary policy. 
After [any crisis] it Is normal 
for there to be some fluctua- 
tions, but [with time] these 
fluctuations will get smaller 
and smaller." 

Even Mrs QiHer's few struc- 
tural changes smack of vacilla- 
tion. She restricted central 
b ank lending to the govern- 
ment, but not too much. This 
year, for instance, the central 
bank can lend the Treasury the 
equivalent of 15 per cent of the 
budget Lending must fell by 
three percentage points a year 
until ending in 2000. However, 


nnes. and then on project lend- 
ing to emphasise health, educa- 
tion, urban infrastructure and 
supporting transformation of 
the economy." 

Mrs Qiller is sh rinking from 
reforms that would strike at 
Turkey’s patronage-driven 
political system. Mr Osman 
Birsen, the technocratic assis- 
tant treasury secretary, says 
frankly: “Adjustment will 
require political determination, 
and this process has only just 
started." 

Privatisation has split the 
cabinet, where partners in the 
unstable right-left coalition 
haggled for months over draft 
legislation to go before parlia- 
ment. However, privatisation 
looks inevitable, simply 


because the state companies' 
deficits are unsustainable. The 
only question is whether it will 
be carried out by this govern- 
ment or after general elections 
to be held by November 1996. 

The government may be 
slow at public sector reform, 
but it is making good progress 
in tax reform. It has reduced 
tax exemptions, tightened up 
on enforcement and reduced 
corporate tax rates to 25 per 
cent from 46 per cent. Next 
year, for the first time, Turks 
will be given individual tax 
numbers and the tax authority 
fully computerised. 

Much still needs to be done. 
Turkey's tax burden of 20 per 
cent of GNP (excluding social 
security contributions) is the 
lowest of any OECD country, 
and is even lighter if one 
allows for the large under- 
ground economy. And the 
country is moving too slowly 
to reform the bewildering 
array of incentives, loans at 
negative real Interest rates, 
duty exemptions and subsidies 
to business. The World Rank 
says these supports are indis- 
criminately accessible and 
poorly targeted. 

Turkey’s economic problems 
are not overwhelming. It has a 
flexible, diversified and ener- 
getic private sector. Its funda- 
mental problems are political: 
retrograde politicians and their 
hunger for patronage are pre- 
venting fer-reaching reform. 


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It's easy to understand why. 

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■ Thirdly, of course, there are the numerous tax 
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freedom from local income tax. Inheritance tax, 
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Now Sabanci Bank Pic, established in London since 
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Sabanci Bank pic is part of die Sabanci Group - one of 
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Many Turks have a European- type Btestyte, observes a Com mi ss i on official 


Europe: customs union is proving a slow process 

Delay will not hamper trade 


The long countdown to 
customs union between Turkey 
and the European Union is 
entering a final, decisive stage. 
The two have set a deadline of 
January 1, 1996, to e limina te 
nearly all trade barriers 
between them - 30 years after 
talks first began. 

Turkey's invasion of Cyprus 
and its 1980 military coup 
halted progress. Return to 
civilian rule and co-operation 
in the 1990-1 Gulf War revived 
negotiations. 

Many obstacles remain. Tur- 
key's parliament is slow in 
enacting European legislation, 
especially competition and 
intellectual-property laws. 
Brussels opposes Turkey’s 
demands for participation in 
EU decision-making processes. 
The European parliament may 
withhold ratification in protest 
at Turkey's bad human rights 
record. 

However, trade seems certain 
to continue growing. Over half 
Turkey’s exports go to the EU, 
which supplies just under half 
its imports. Turkey is the ElTs 
tenth largest trade partner. 


European companies Invested 
$8 . 16 bn in Turkey in 1980-83, 
two-thirds of total foreign 
direct investment. 

Although Europe scrapped 
trade barriers for Turkish 
goods 20 years ago - only agri- 
cultural products and textiles 
suffer significant limit ations — 

Turkey still levies tariffs on 
European 

hnports.^ tts ^pope-in parliament Many Turk- 
weighted pro- may withhold ratification in ish businesses 
tection against protest over Turkey's feci they have 

™8 P ^’r“‘2nt human n ' 9htS reCOnd 
compared with 


co-operation, joint ventures, 
marketing alliances, more 
research and development" 
Customs union should also 
close what he calls Turkey's 
"very big familiarity gap" with 
Europe. He says: "Turkey feels 
unloved, unwanted. Political, 
social, economic [ties] that 
come with customs union will 
have great 


17.2 per cent for third coun- 
tries. 

European companies there- 
fore stand to gain most from 
customs union. A European 
Co mmis sion official says: “This 
is a fast-growing market. 
About 15- 20m Turks have a 
European-type lifestyle. This Is 
a great market for European 
producers.” 

He also argues that Turkey 
will benefit because “005101115 
unions always increase trade. 
There will be more investment. 


little to f ear 
from European 
competition, 
because productivity in many 
industries - textiles, white 
goods, consumer electronics - 
Is already high. 

Still, all will feel the pressure 
from Europe’s larger, more 
sophisticated and better-run 
companies. Sectors with the 
most trade protection will suf- 
fer the most The car industry, 
with a hefty 39-106 per cent 
tariff barrier, is a prime candi- 
date for opt-out clauses In the 
customs union negotiations. 

Mr Ali TigreL ambassador-at- 


large for European affairs, says 
he win push for “derogation" 
privileges for certain indus- 
tries, but wffi not say which. 
Brussels, meanwhile, has 
already warned that it will 
limit Turkish access to its tex- 
tile market unless Ankara 
abolishes tariffe-and adopts its 
competition laws. 

Turkey fogies customs union 
will lead to foD EU member- 
ship. It has already applied 
twice for membership, without 
success. Mr TIgrel says: “Cus- 
toms imimi is the twiH W t of the 
European Union.” Turkey also 
fogies to nnlnric largo aid trans- 
fers from Brussels, blocked by 
Greece since it joined the EC. 

Bat even Mr Tigrel recog- 
nises that Turkey's “increasing 
dement of political uncerta inl y 

Clouds v vw * y t hi ng and makes 

my life more difficult" How- 
ever, he claims that parlia- 
ment’s delay in approving laws 
is not a critical obstacle to cus- 
toms union, as long as it 
adopts essential competition 
rules and shows it is making 
progress in adopting other 
laws. 


Privatisation: public opinion is moving in its favour 

Anxiety over losses and graft 


Mr Engin Civan may go down 
in Turkish history as the man 
who made privatisation possi- 
ble. 

Mr Civan, a former state bank 
president, was shot and 
wounded In September. He 
admitted gangsters were trying 
to recover a $5m bribe because 
he bad been sacked before be 
could authorise their loan. His 
tale of corruption, power poli- 
tics and organised crime 
gripped the country for weeks. 

People always suspected state 
companies were corrupt, ineffi- 
cient and politicised. But Mr 
Civan 's revelations accelerated 
a gradual shift in public opinion 
in fevour of privatisation. 

The state's industrial giants 
are formidable lossmakers. Last 
year, they contributed one-fifth 
of the public sector borrowing 
requirement of $29. 72b n. Next 
year, according to the govern- 
ment’s optimistic draft budget 
their losses will shrink to Slbn. 

State companies control or 
dominate the telecommunica- 
tions, airline, iron and steel, 
mining, petroleum and electric 
power Industries. The state 
owns the biggest banks. State 
companies employ 863,000 peo- 
ple, about half of them surplus 
to requirements. 

The first privatisation pro- 
gramme was announced in 1984. 


But no government was ever 
interested in reducing the pub- 
lic sector. Privatisation has 
raised just $12bn in 10 years. 

Three-quarters came from sales 
of minority stakes in private 
companies. Only $600m were 
“real” privatisations, mostly in 
peripheral sectors. 

The companies’ losses, their 
inefficiency - water is rationed 
in Istanbul, power-cuts are Se- 
quent - and the 

corruption ooz- __ . insists he nan 

tog out of them 1 he government is . still raise SL5bn 

make privatisa- tightening controls on its this year: 

turn seem only companies, now subject “From the 

a matter of to commercial law organisational 

time. point of view. 

In January, privatisation is 


ruled that the government must 
win parliamentary approval 
first She only won the SHP's 
grudging support in October. 
But even MPs from her own 
party and the conservative 
apposition Motherland party, as 
wen as SHP members, threaten 
to oppose the bill 
Mr Yaramanci expected to 
raise $25bn from privatisation 
in 1994. His 1995 target is 
$9-l2bn. He 


the prime minister, Mrs Tansu 
Oilier, recruited Tezcan Yara- 
manci from the private sector 
as her new privatisation 
supremo. He says: “I believe 
today that Turkey has advanced 
more in the last 10 months than 
to the last 10 years." 

But privatisation has split the 
government. Mrs Ciller's junior 
coalition partner, the social 
democratic SHP party, blocked 
privatisation until her DYP 
party approved a political liber- 
alisation package. 

Earlier this year. Mrs Ciller 
tried to impose privatisation by 
decree. The SHP appealed to the 
constitutional court, which 


ready to go. Right now there 
are two or three companies 
ready. International investment 
circles have been contacted. 
There is demand for these com- 
panies.” 

However, even economy min- 
ister Aykon Dogan considers 
these targets far too high, 

Etibank and Sfimerbank, two 
small banks, would be first on 
the block. Fifteen per coot of 
privatisation revenues will go to 
a severance- pay fond for state 
company employees who lose 
their jobs. 

Big companies, such as the 
telephone system or the 
national airline THY. would 


probably find ready buyers. But 
others will be a very hard sell. 
The Erdemir steel works or 
state banks need lots of costly 
restructuring. 

The gove rnment has started 
tightening controls on its com- 
panies. They are now subject to 
commercial law. In theory, they 
can be declared bankrupt. 
Teda?, the electricity distribu- 
tor, is trying to put itself on a 
profit-first footing. Mr Mehmet 
Bozdemir, Teda$ general man- 
ager, says: “before, the state 
came first Now profit comes 
first" 

Mr Yaramanci says he win 
break companies up into indi- 
vidual business units prior to 
privatisation. But “restructur- 
ing [for] productivity increases 
is Left to the private sector after 
privatisation.” 

The proposed regulatory 
systems looks messy. The gov- 
ernment hopes to sell 49 per 
cent of the telephone company 
to strategic investors who 
would hold management con- 
trol. The government, us mg its 
51 per cent stake, would retain 
a regulatory rote. It plans to 
privatise the electricity genera- 
tion industry, but retain a dis- 
tribution monopoly. This is a 
recipe for confusion and con- 
flict, which is unlikely to attract 
many investors. 


In every European country we offer a full range of 
professional and business advisory services, this as 
we can draw on the skills and resources of a 
European organisation of 14,000 partners and staff in 
28 territories, PW Europe is part of a closely knit 
worldwide organisation. Price Waterhouse World 
Firm (PWWF), of some 46,000 people based in over 
100 countries. Except where national laws require 
otherwise, all of our offices operate in the name of 
Price Waterhouse. 

PRICE WATERHOUSE - TURKEY 

• Price Waterhouse is well established in Turkey 
with three firms: 

• Basaran Serbest Muhasebed Mali Musavirlik A.S. 
(a member of Price Waterhouse) 

• Basaran Yeminli Mali Musavirlik Ltd Sti. (a 
member of Price Waterhouse) 

• Price Waterhouse Yonetim Danismanligi A.S. 

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advice, mergers and acquisition, corporate finance, 
tax and other services to business and government, as 


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a part of the Price Waterhouse Europe Firm. The 
principal office of the firm is located in Istanbul, with 
smaller support offices in Ankara and Izmir. 

Since its inception in Turkey in 1981, Price 
Waterhouse has undertaken various assignments for 
its clients in Turkey. Our clients range across the 
broad spectrum of business, government, banking 
institutions and trade association s, and include a 
number of State Economic Enterprises. We are the 
auditors of 4 of the 5 largest companies in Turkey and 
m 1994 undertook the 2 largest privatisations in 
Turkey. The nature and type of our assignments are 
wide ranging. 

Tola! staff is some 110 with professional staff of some 
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1 



FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 


III 


''OVf: 






TURKISH FINANCE AND INDUSTRY 3 




Banking: the credit-rating crisis has exposed the system’s weakness 

Good-bye to easy money 


Turkey's top banks 

Assets (Sbn) 

1932 Change % 


Net moans ($m) 

1932 


• ’ y] 


:rade 

f for -! — 

c's*.;? <*25 

»li n>.> 

' i "• si 

dCV -,i Slit. I 

•■»**■££■. t 

" >Cn% ^ . 

trke. *•, .. 

*• I: hi. 

* *«■ ^ 
■>b. v* T.,_^ 

i M.vr*-.‘-S. *- y 1 

Sr ..... J " :lEBi: 

Jrr.: iS l- ! ' **** 
*, v- a «*» 

i f -V 

K«.f • -r 


Backers are not happy. Most 
expect profits to fall in real 
toms, for the first time in reoent 
memory. Mr Erol Sahsrwi vice- 
chairman of Akbank, part of the 
Bahama business.empfre and one 
of Turkey’s Wggest backs, reck- 
ons 1394 pretax income will slide 
43 per cent to $i842m. 

Bat after years making easy 
money, bankers are in no posi- 
tion to complain. They have 
piled up profits by playing a 
rudimentary arbitrage game 
stacked in their favour. 

Banks used Turkey's once- 
high credit rating to borrow 
cheaply overseas, and used the 
money to speculate in East-mov- 
ing financial markets or to lend 
to the govtanmenL Not wily did 
the government pay high inter- 
est rates, it also allowed the 
Turkish lira to appreciate, hand- 
ing banks a 40 per cent margin. 

So it is hardly surprising that 
net profits at Turkey's 20 biggest 
banks rose 41 per cent in dollar 
terms last year, to the equivalent 
of $806 .2m. Assets rose to 


$47.44fan from $&£3XL 

But the game was up hi the 
spring, when Turkey's credit rat- 
ing dropped below investment 
grade, and currency and finan- 
cial markets collapsed. Luckily, 
only three small banks crashed. 
But the crisis laid bare the sys- 
tem's weaknesses: over-reliance 
on trading, narrow local deposit 
bases, unadventurous le nding 

and investment hanking arms. 

Although bank profits have 
taken a heavy hit, the govern- 
ment's insatiable appetite for 
money is keeping interest rates 
sky high. In May, Interbank 
rates reached Latin American 
height s of 1,000 per cart a year. 
Even when rates settled down to 
85 per cent in the autumn, they 
were still equivalent to a real 40 
per cent as inflation ML 

Clearly, banking can still be 
good business as long as execu- 
tives are careful about their 
risks. Banks with a strong local 
deposit base have lows' cost of 
funds and are less exposed to 
currency risk. 


Mr Sabanci says: “Akbank’s 
main source of funding is local 
currency. Our [foreign currency] 
positions are 10 per cent of lia- 
bilities. Compared with some 
banks with 90 per cent, this is a 
tremendous difference.” 

He says Akbank's strengths 
are a sound balance sheet, a 
healthy Loan book and conserva- 
tive management- Indeed, even 
its 38 per cent leap in profit last 
year looks hesitant compared 
with some competitors' gains of 
80 percent 

The big Turkish banks are 
impressively manoeuvrable. 
They have invested In technol- 
ogy while cutting jobs and 
branches. They have good, pro- 
fessional management teams, 
even though ownership is 
retained by powerful families. 
The hig banks exceed interna- 
tional capital standards. Many 
blue-chip banks also own big 
industrial holdings. Depending 
on one’s point of view, these are 
either a source of weakness ora 
source of strength. 


febank, the largest non-state 
bank, has stakes In 84 compa- 
nies, including control of 5foe 
Cam, Turkey's leading glass 

manufacturer, fiaranti Ranlcag . 

part of the Dogu? industrial con- 
glomerate, also holds stakes in 
group companies. Iktisat Ban- 
kasi, a highly-regarded medium- 
sized bank, has holdings in tele- 
vision, newspapers and manufac- 
turing companies. 

A kbank is a minority part- 
ner in Sabanci group joint 
ventures with multina- 
tionals such as Toyota, Philip 
Morris and tadbrake's. It has a 
leasing company with BNP and 
Dresduer Bank. These holdings 
are usually booked at cost, not 
market, values. Mr Sabanci 
argues that these under valued 
equity stakes represent strong 
hidden reserves. He says that 
although Akbank's equity hold- 
ings are booked at jSOm, their 
market value is now about 
SBOOm. 

But analysts complain that 


Ziroat* 
Emlabank* 
Is Bank 
Yapi 
Akbank 

H 5? 

Vakif 

Pair** 

Garanti 

Turkbank 


banks receive insufficient divi- 
dends on these holdings. 
Akbank's 1993 gains from partici- 
pations and investments was 
just But Mr Sabanci says 
the capital value of these equity 
slakes is growing. 

Furthermore, ownership of 
banks such as Akbank or Gar- 
anti lies with holding companies 
that also own big industrial com- 
panies. Problems on the indus- 
trial side could weaken the bank- 
ing arm and vice versa. Analysts 
complain that, while small banks 
play boo East and loose, big ones 
play it too safe. Akbank, they 
say, should boost profits by 
being less risk-averse. Garanti 
has been slow to develop retail 


products him consumer fmanne, 
credit cards and unit trusts. 

Garanti aims to grow by tar- 
geting smaller, more profitable, 
upscale segments. Us share of 
Visa and American Express cred- 
it-card operations, for instance, is 
bigger than its share of credit 
cards in circulation. 

Some cassandras say banks 
are less profitable than they 
seem. Mr Sefouk Abac, chairman 
of Istanbul’s EBAR bank rating 
agency, says inflation overstates 
profits and is corroding the Sys- 
tran’s capital base. He says banks 
“absolutely need to raise profits 
and productivity”, both to adjust 
for the risky operating environ- 
ment and to rebuild capital 


■tfi&sn/ma 12 

Scwcuc twftamuaf averts and BAR 

Whatever the private banking 
system's shortcoming, they are 
nothing compared with the prob- 
lems of the statcowned banks. 

Ms Arzu TQrksoy, an analyst 
at Global Securities, an Istanbul 
brokerage, says: “State banks 
make inefficient use of their 
huge assets and have very poor 
manage m e nt. Profit is never con- 
sidered the first variable. They 
do not operate as banks. They 
make symbolic returns from 
state sector.” 

Their accounts are not audited 
to raternational standards. They 
do not provision for loans to 
state enterprises and coopera- 
tives, many of which should be 
classified as ntm-performing. 


Even so, nearly all the state 
banks still perform dreadfully. 
The four largest last year raised 
assets by 45 per cent, but net 
income fell 6 per cent in dollar 
terms. In comparison, the six 
biggest private b anks raised 
assets 10 per cent and net 
income 41 per cent 

The state banks' size and inef- 
ficiency distorts the hanking sys- 
tem, raising costs for private bor- 
rowers. Not everyone complains, 
though. Mr Erol Aksoy. UrtisaFs 
owner, says bluntly; “Spreads 
are so nice because of the state 
banks. With a bit of luck and 
good management you can make 

8 MUing ." 

The private banks' fortunes 
should revive in 1995 if, as expec- 
ted, the economy bounces back. 
However, small banks are per- 
ceived as risky and will probably 
continue losing depositors to big- 
ger, safer competitors. The large 
banks with their lower costs wffl 
be the best-positioned to benefit 
from recovery. 

That s pkI , the day will comp 
when the state will stop lining 
the pockets of Turkey’s bankets. 
In other high-inflation countries, 
stabilisation brings a big drop in 
Inc o nw and a painful transition 
period as bankers hit the slow 
lane of corporate finance and 

Cppqnmfly landing 


Investment benkers* hour The stock market has halved in dollar terms this year 

istment banking In Turkey is still in its It may still be a distant prospect, but bankers /V I ■ a^\ ■ gr\ I I I 1 | + | ■ 

ncy. Capital markets are primitive. Mergers are confident that privatisation will generate f \ | J llr^f I I t_ I f I II I I II | 

acquisition activity is limited, and the scope millions in fees, and transform narrow capital m m m 


How the market has moved 


t -> d- 


- -si •> 






/Our 


graft 


_ Investment banking In Turkey is still in its 
- infancy. Capital markets are primitive. Mergers 
and acquisition activity is limited, and the scope 
for advisers even more so. Treasury operations 
are unsophisticated, given the absence of 
complex financial instruments. 

Even so, demand for investment hanking 
services is bound to increase as the economy, 
companies and the financial system develop. 

Already, banks and brokerages are gearing up 
for a big fight in investment banking. Garanti 
Bankasi, Turkey's most profitable bank, bought 
into the Investment banking business as far 
back as 1992 when it acquired Tasarruf Kredi 
Rank and renamed it Garanti Investment Rank 
This year it moved its broking arm to the 
investment bank to further strengthen its 
presence in the market. 

Dormant mergers-and-acquisitions business 
may also pick up with the approach of customs 
union in 1996 with the European Union. Istanbul 
bankers think Europe-based companies will 
want a greater presence in Turkey, just as local 
companies may have to exit competitive sectors. 

Initial public offerings are advancing steadily, 
despite the stock market's poor health. The 
trouble is that deals are usually small by 
mtemational standards, and many companies 
avoid using banks altogether. Last year, there 
ware 18 initial public offerings. There were 13 by 
October this year, with flotations varying Atom 
under $2.0m to nearly $50m. 

^Privatisation will mark the beginning of 
mSgabacfc investment ; bankmg deals in Turkey.**' 


It may still be a distant prospect, but bankers 
are confident that privatisation will generate 
millions in fees, an d transform narrow capital 
markets, enabling bigger and more 
sophisticated deals to follow. Some of the 
biggest companies in Turkey - the telephone 
network and national electricity utility, for 
instance - are on the government’s 
privatisation list. 

A bigger local market would prevent even 
relatively modest deals migrating offshore, 
especially to New York’s ADR market 

The advent of private funding for 
infrastructure projects will also require capital 
market backing. Although the government has 
talked for years about introducing 
b ulld- operate -transfer rules for projects like 
dams, roads and power stations, not a single one 
has come off the drawing board. 

Nonetheless, the bankrupt state will 
eventually have to cede big-ticket projects to the 
private sector. Electricity consumption is 
growing by 10-12 per cent a year. 

BOT deals will probably require a blend of 
conventional project lending with more 
innovative investment banking products. 

The downside is that high-tech investment 
banking is a difficult, fast-moving business in 
which even the biggest local participants will be 
overshadowed by the New York- and 
London-based giants. They will have to 
scramble for the crumbs when it comes to 
handling big projects. 


Jan 1,1994*100 ($ terms) 

■140 


Istanbul Composite 

FT -A Europe (excluding UK) j 


I stanbul has everything an 
emerging-market investor 
could want exotic location, 
loose regulation and 
boom-bust price shifts. It is 
not on usual for average prices 
to move by 4-5 per cent in a 
day. 

It also has all the usual 
disadvantages: sharp 

practices, poor disclosure and 
- shaky accounting rales. 
Liquidity is also a problem 
with daily turnover of only 
$125- 160m. Just 10 companies 
account for over half of 
turnover. What goes up also 
come down with a bang: the 
market index has halved in 
dollar terms this year, after 
crashing heavily in April. 

Turkey's great attraction is 
tiie earnings potential of some 
companies. Migros, the 
supermarket chain owned by 
the Kop conglomerate, had a 
net 3 per cent margin on sales 
last year - roughly six times 
more than a comparable 
company in a mature market 



-,' tf - 7? 


1 













'«7 V ' 


This is not a camel. 


Not long ago,- the European businessmen thought banking in the 
Orient was all about camels and merchants. A misperception? Not at 
all. Just a century ago, the small banking district in Istanbul -then the 
capital city of the Ottoman Empire- was crowded only with Europeans 
who knew their trade. But not any longer. Today, Istanbul is a centre of 
world banking and commerce. And Turkish bankers are talking 
CAMEL ratios, not camels.. 

If you would like to know where Turkish banking stands today, 
please ask how Garanti Bank figures on the CAMEL Rating System 
(Capital, Asset quality, Management, Earnings, Liquidity). As one of 
the pioneers of the dramatic change over the last half a century, we 
will show you how globally competent a Turkish bank can be. 


ARANTI BANK 


63 BHyufcdereCaddesI, Maalak 80670 Istanbul / TURKEY Td, Fax; (90-212) 285 40 40 TcIcju 27b35 gau-ir 
Contact person.- Mr. Husnu Akhaxi, Executive Vkc Picsick'ni. 


Ciment A?, a cement company, 
bad a 1993 net margin of 29 
per cent. 

Last year, big private banks 
lifted earnings by an average 
40 per cent, although profits 
will fall sharply this year. 

The stock market is just 
nine years old, so it is 
understandable that Turkey 

Although more companies 
are using the market to 
raise capital, Istanbul still 
cannot handle big 
flotations 

should have a superficial 
equity culture. 

Mr Albert Nekimken, head 
of research at brokerage 
Global Securities, says: "Even 
listed companies resist giving 
information to analysts. They 
don't can what the price of 
their shares is. Companies 
need education. We are doing 
missionary work." 


Although more companies 
are using the market to raise 
capital. Istanbul still cannot 
handle big flotations. Large 
companies prefer ADR listings 
in the US. both for prestige 
reasons and because the local 
market is too narrow. Brokers 
hope privatisation will change 
this, as big state companies 
come to the market 

Istanbul should also become 
more mature as international 
investors increase their 
presence. According to Mr 
Serhat Gfirleyen, head or 
research at the broking arm of 
TEB, an Istanbul bank, 
foreigners hold about 20-25 per 
cent of the market's free float. 
Only abont 17 per cent ol the 
$2I.28bn market capitalisation 
is traded, giving foreign 
participants a mere $904.4m 
exposure to Turkey. 

The Istanbul Stock 
Exchange is modernising its 
operations. Electronic trading, 
currently used only for the 
most liquid companies, will 



SauaK FT Graphite 

cover all shares. Settlement 
and custody will become fully 
electronic. 

It is thinking of introducing 
a wholesale market. It also 
wants to link up with the even 
newer markets of the former 
Soviet central Asian republics. 
It has applied to the 
government for offshore status 
to become a regional financial 


centre. 

Commissions are 
deregulated, varying between 
0.3-0.7 per cent There Is no 
restriction on holdings by 
foreigners, although they do 
not have voting rights. 
Foreigners pay no tax. 
Although highly unstable, the 
lira is fnDy convertible. There 
are no exchange controls. 






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IV 


FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 


TURKISH FINANCE AND INDUSTRY 4 


Business: the two dominant corporate giants face fresh challenges 


Kog and Sabanci adapt to 
competition and new rules 


Two corporate logos adorn 
nearly every street corner, 
shop and office building in 
Turkey. 

One is the red ram's head 
emblem of the Ko? business 
empire. The other, the big 
white and blue letters SA, the 
first two letters of the Sabanci 
name. 

These two giants have domi- 
nated the Turkish corporate 
scene for over a generation, 
with Interests from chocolates 
to cars to banking to textiles. 
Together their annual revenues 
of $20.73bn are equivalent to 
12 per cent of Turkey's GDP. 

Both face similar challenges 
as liberalisation and competi- 
tion Intensify. The principal 
factors in their success - trade 
protection, strong political con- 
nections and firm management 
- no longer apply as they once 
did. 

Both groups were built op by 
poor men at the dawn or Tor- 
key's industrialisation 70 years 
ago and are still controlled by 
their founding families. Haci 
Omer Sabanci began working 
at 14 and first went into busi- 
ness in 1332. The Sabanci fam- 
ily remains the group's princi- 
pal shareholder and the 
founder's five sons now ran the 
company. 

Vehbi Koc, 94, still comes to 
the office nearly every day. His 
company's headquarters in a 
converted Ottoman palace con- 
trols a far-filing empire with 
animal sales of SI 4.45b □. 

The two became the partners 
of choice for multinationals 
setting up business in Turkey, 
further broadening their activ- 
ities, profits and business skills 
as they learnt from the foreign- 
ers. 

Kop’s first affiance came in 
1928 when it started 
distributing Ford cars. Now ft 
makes Ford Escorts and Orions 
as well as Flat cars under 
licence. Sabanci has joint ven- 
tures with the Hlma of Toyota. 
Philip Morris and Belgian 
steelmaker Bekaert. 

These companies are highly 
profitable: Hop's group pretax 
earnings rose 55 per cent in 
dollar terms to Sl.3bn last 
year. Sabanci advanced far 


more' slowly, rising 3 per cent 
to $633m before tax, giving a 
10 par cent return on revenues. 
Analysts warn that their com- 
plex pattern of interlocking 
shareholdings and the vagaries 
of inflation accounting make it 
hard to monitor the groups' 
true financial situation. 

The controlling families real- 
ise change is needed. In Janu- 
ary, Hop introduced a flatter 
management structure, with a 
headquarters staff of only 200, 
that granted subsidiaries 
greater freedom. Eleven divi- 
sional presidents supervise the 
group's 106 companies, with 
final responsibility In the 
hands of a single CEO, Inan 
Kirap, a profes- 


sional 
ager. 

Mr Kutsan 
Clebican. Sop’s 
finance 
vice-president, 
says “We have 
very strong finanrinl controls, 

but have a general policy of 
leaving companies alone. We 
approve their budget and pro- 
vide targets and indicate expec- 
ted inflation and exchange 
rates." 

Although top managers are 
increasingly young, foreign-ed- 
ucated MBAs, these groups 
have acquired a civil service 
atmosphere. Hop executives 
tend to spend afi their working 
lives in the company. Very few 
are recruited from other com- 
panies. It does recruit some 
senior executives, such as Mr 
Clebican, from the top ranks of 
the finance ministry. 

Eop even likes making five- 
year plans. It abandoned five- 
year planning this year 
because of high inflation, but 
is back at work on a new one. 

Instability is undoubtedly 
bad for business - car sales 
have fallen by a- third this 
year, forcing Kop's To£a$ car 
plant to halt production for six 
weeks. Although executives 
insist that they are not post- 
poning investments, analysts 
say capacity expansion at 
Tofo$ has been scaled back. 

Last year, Eop raised fixed 
assets mid investments 16 per 
cent to $1.68bn. But Saband’s 


As the capital cost of new 
investment rises, outside 
financing will become 
more important 


investments dropped nearly a 
third in dollar terms to 
$385-3m. 

Diversification is out of fash- 
ion these days. Sabanci claims 
it is focusing its business more 
tightly, bat its five core busi- 
nesses still cover all the main 
segments of Turkish industry. 

Mr Erol Sabanci, a group 
director, says: “The industrial 
side is diversified in 50 indus- 
trial sectors, so the risks from 
failure are reduced.” He adds 
that even apparently unrelated 
companies provide synergies: 
the textile companies produce 
cord for the tyre company 
which supplies tbe car com- 
pany. 

Despite its 

wide spread of 
businesses, Eop 
gets 75 per cent 
of its revenues 
from cars, 
white goods 
and consumer 
electronics. Executives argue 
that their do minan t share in 
these sectors is a crucial 
defence to growing foreign 
compe titi on. Divestment from 
unrelated companies may come 
with time. 

In the past, protection pro- 
vided companies with high 
margins, which allowed them 
to fuel expansion with retained 
earnings, keeping borrowing to 
a minimnm - However, import 
protection is declining, so mar- 
gins must fall. Furthermore, 
the capital cost of new invest- 
ment is rising. Outside financ- 
ing will become an increas- 
ingly important issue. 

Eop is already using the 
stock exchange to raise capital. 
Mr Clebican says: “It is the 
founder's policy that when a 
company is financially sound it 
shonld offer shares to the pub- 
lic, because there is not a long 
future for family companies. 
All the money [from share 
sales] is reinvested in the com- 
panies.” 

Efop's Arpellk white goods 
company and its Tofa$ car unit 
are both quoted on the Istan- 
bul Stock Exchange. It has 
recently listed two more sub- 
sidiaries, its Bekotekmk con- 


sumer electronics aim and Tat, 


a big tomato processor. 

But for the time being, nei- 
ther group is even thinking of 
giving up majority stakes. 
Most listed companies have 
just 15-20 per cent of their 
Shares in the market Both 
groups still have plenty of 
headroom to raise debt. Eop. 
for instance bas only 8l6L7m 
in long term debt 

The dominance of tbe two 
companies is gradually dim in- 
ishing as new participants 
appear on tbe scene. The Dogu§ 
group, for instance, began life 
as a civil engineering company. 

It has metamorphosed Into to a 
banking group with a growing 
portfolio of other businesses 
like food, television, retailing 
and tourism. Ayban $ahenk, 
aged 65, founded Dogu? in 1951 
and is still its chairman. 

Last year it reported com- 
bined revenues of 81.38b n, and 
a net profit margin of 17.5 per 
cent 

Mr Zekeriya Yil dirim, vice- 
chairman says Dogu$ aims to 
become a "well-positioned con- 
sumer, service-oriented group." 
He says this should make it 
less vulnerable to business 
cycles. 

Inevitably, Do go? bas also 
adopted a decentralised man- 
agement structure. Mr Yildirim 
says: “Each subsidiary stands 
alone, managed by their own 
corporate bodies.” The holding 
company handles strategic 
planning, financial controls 
and head office services. And, 
like Sabanci, it insists that its 
financial and non-financial 
companies are divided by Chi- 
nese walls. 

Doga? also insists that what 
looks like an opportunistic 
mixed bag of unrelated busi- 
nesses is really a balance of 
inward-looking consumer busi- 
nesses and outward-looking 
tourism and overseas construc- 
tion companies. 

Turkey’s giants grew big and 
strong in a protected environ- 
ment They must learn new 
skills to prosper in less forgiv- 
ing conditions. Turkey's cha- 
otic domestic economy is no 
help. But there is every sign 
that these bine chips mil be 
around for a long time. 






... 


Toyota plant a springboard to Europe 




Toyota's gle aming $400m new car plant 
outside Istanbul (pictured above), opened 
in mid-October, is much more than a 
prestige private investment project. It 
will radically reshape the country's car 
industry. 

As well as raising Turkey s car 
production capacity by one-third, the new 
plant will boost its technological base 
and, some time in the future, become an 
export platform to the surrounding 
region and Europe. 

Closer to home, the new facility will 
break the virtual duopoly that the Tofa$ 
Fiat-Ko? joint venture and Renault have 
enjoyed for 20 years. 

Toyota's timing is unfortunate. 
Passenger car sales this year will fall by a 


third to 234,000, according to DRI World 
Car Industry Forecast, which does not 
expect output to recover to 1933 levels 
until 1997. 

Nonetheless, Toyota's decision to 
invest in Turkey is an indication of the 
market’s present and future importance. 
It Is also a sign of confidence in local 
suppliers' ability to meet stringent 
quality standards. 


Work on the factory began in 1992 as a 
joint venture between Toyota and the 
Sabanci group. Toyota holds 40 per cent 
of the company, Mitsui 10 per cent and 
Sabanci, together with its Akbank 
affiliate, the remaining 50 per cent Half 
the investment was funded with equity 


and the rest with long-term debt 

Toyota's arrival has shaken Tofa? out 
of its complacency. Tofa? claims 45 per 
cent of the local market -but is 
frequently criticised for Its reliance on 
old Fiat models. It has hit back with the 
launch of new Fiat Tipo and Tempra 
models only months after their launch in 
Italy. 

But Ko? is right to worry about Toyota, 
According to its annual report the car 
business represents half Kop's group 
annual turnover and pre-tax profit 

The challenge from Toyota is only the 
beginning. In 1996, customs union with 
the European Union is meant to cams 
into force, exposing Tofa? to more 
competition. 








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David Tonge reviews recent changes in commercial law 


Pressure on state bodies 


September saw a significant change in 
commercial law in Turkey. For the first 
time, state institutions and enterprises can 
have their assets seized or subjected to 
attachment, meaning that judgments 
against them may now be more easily 
enforced. 

Turkish industrialists argue that, with 
Turkey's state sector accounting for 33 per 
cent of manufacturing output, this change 
will force state institutions to improve 
their performance. 

Mr As 11 Ba?gOz. senior partner in the 
Istanbul office of White & Case, a leading 
international law firm, welcomes this step 
forward, as well as the way that. Increas- 
ingly, legislation such as that governing 
the capital markets is prepared with the 
help of those who will be affected. 

Foreign businessmen say that this was 
often not the case in the past They also 
warn that legislation, even if subject to 
frequent change, has often lagged behind 
the heeds or the market place. Those 
entering new areas such as franchising 
have had to rely on the way that the 
principle or freedom of contract is clearly 
established in Turkish contractual law. 
But when specific legislation is required, 
this often takes time to be introduced, as 
is currently the case where financial deriv- 
atives are concerned. 

Turkish law is codified like continental 
European law. with commercial and fam- 
ily law based on the Swiss system, admin- 
istrative law on the French system, and 
c riminal law on Mussolini's cr iminal code. 
The basic legal structure is clear, with for 
more areas codified that in, say. Britain, 
where common law applies. Foreign inves- 
tors are subject to specific protection 
under a 1954 law. 


The basic legal structures are all in 
place and on the whole have worn well, 
despite the underlying shifts in the econ- 
omy and the impact of Inflation. 

“The precedents established in the deci- 
sions made in the 37 years since the com- 
mercial code was introduced have played 
an important role in keeping the code 
fresh," according to Mr Mehmet Okur, 
partner on Okur & Okur, a Turkish law 
practice active with foreign companies. 

However. Yased, the foreign investors' 
association, emphasises the foreign busi- 
ness community’s concern at the lack of 
protection for intellectual property. There 
is no patent protection for pharmaceuti- 
cals, and attempts to introduce a new 
patent law have been dragging on for over 
a decade. Protection of trade marks la 
slightly improving, but service marks such 
as a hotel logo may not be protected. 
Where copyright is concerned, there has 
been progress in combating film and audio 
piracy, but not over books. 

That said, there are grounds for expect- 
ing change. Turkey is under pressure from 
the European Union, which argues that 
the customs union due from the end of 
1995 requires Turkey to match European 
practices. Further, as a signatory to the 
Marakkesh accord of the Uruguay Round 
of Gatt, once Turkey enters customs union 
with the EU, it is obliged to observe the 
Gatt provisions on intellectual property 
within one year of their entry into force. It 
is also under pressure from the DS, which 
has put Turkey on its “priority watch 
list". 

Other areas of concern include: 

■ The fact that you must deliver posses- 
sion of most movable assets in order to 
complete the pledge, which impedes the 


development of leasing and secured trans- 
actions. 

■ The lack of a registration system for 
pledges and hens over movable assets. 

■ Limitations of granting mortgages 
denominated in foreign exchange (which 
constitute an important protection for 
lenders in today's inflationary environ- 
ment). 

■ The limited opportunities for cross-ex- 
amining witnesses in court - the system is 
run by judges, rather than adversarial 

However, except over matters of inheri- 
tance, Turks are generally less litigious 
than people in the US or even Europe. 
“Turks believe there are risks in life and 
business, and do not rash to blame oth- 
ers,” comments Mr Ba$goz. 

Here, an important factor is the limited 
comfort many people expect from the legal 
process. As in many countries, procedures 
are costly and protracted, with hearings 
usually held at three-month intervals, and 
addressing, step by step, the issues 
involved, as Coca-Cola recently found to , 
its cost when it sought to cancel a bottling* 
agreement. 

Turkey has acceded to the New York 
Convention on the Recognition and 
Enforcement of Foreign Arbitral Awards. 
However, delays often occur in 
cross-border cases, particularly when 
proceedings are required against a 
high-profile Turkish national. The 
administrators of the UK company, Polly 
Peck, have found particular problems in 
exercising the rights given to them by 
British courts to act on behalf of the 
company’s shareholders. Lawyers acting 
for tbe fugitive Asil Nadir have argued 
that such rights would not have been 
given under Turkish bankruptcy law. 


I t may seem a perverse com- 
plaint, but older residents of 
Istanbul moan not at tbe 
proliferation of English in 
hotel and restaurant hoard- 
ings, but at the fact that for- 
eign words are now spelled cor- 
rectly. 

A disappearing pleasure of 
Istanbul life is figuring out the 
names of establishments from 
a French transliterated into 
Turkish. Time was. it was /com- 
itfo (read “comme U font”) to 
take tea and pastries in Markiz 
(read “Marquise”) before 
spending a night on tbe town 
at the Fotiberjer (no prizes). 

Nowadays, Istanbul sports 
any number of ortbographi- 
cally correct international 
chains, from McDonalds to the 
Mvenpick Hotel, designed to 
hull the international traveller. 

There is some good in all 
this. The danger of a city with 
Istanbul’s history and skyline 
being turned into tbe prover- 
bial airport lounge remains 
remote. The new wave of 5-star 
hotels and an Immediate glut 
of empty beds means that the 
executive traveller at least can 
bold out for a competitive cor- 
porate discount 
Location, too, is relatively 
important in a city where the 
traffic is designed to ensure 
you are least 20 minutes late 
for an appointment A new Hol- 
iday Inn near the A laky 
Marina is not on top of the 
airport but near enough for an 
early morning flight. Tbe 
Mvenpick is useful for anyone 
who needs to be near the new 
business district in Maslak on 
the upper road to the Bospho- 
rus. The Hotel Merit Antique is 
in tbe historic city. Within the 
last five years, the Swiss Hotel 
(best health dab), the Ciraan 
Palace (best Bosphorus views), 
the Conrad and the Hyatt (ten- 
nis court and good summer 
pool) have opened up in the 
more traditional commercial 
centre. 

The other advantage of the 
grand hotel Is that it provides 
an acceptable place to enter- 
tain. However anxious yon 
may be for an authentic Turk- 


Istanbul: signposts for the visitor 


Look for discount 
at the new 5-stars 


Pasha Hotel, on the Hippo- 
drome Square, has small 
rooms, but a pleasant EamOy- 


ish experience, your opposite 
number would almost certainly 
prefer to taken to the new Ital- 
ian restaurant at the Hyatt or 
tbe Japanese restaurant at the 
Swiss. Hie dining-room of the 
Divan Hotel is still rated for 
Turkish cuisine. If you must 
see a belly dancer, then the 
Show Orientale at the Conrad's 
Manzara is as good a place as 
any. 

Istanbul is desperately short 
of the good small hotel. How- 
ever, with a little bit of nerve 
you can actually stay some- 
where more exotic and still 
catch your flight borne. Few 
businessman frequent tbe 
Hidiv Kasri (built as the Egyp- 
tian Khalil's summer palace) in 
Ubuklu on the Asian side of 
city. It is, however, very near 
the exit of tbe second Bospho- 
rus bridge. This is io tarn 
makes it convenient both for 
the TEM peripheral highway to 
the airport and the industrial 
suburbs on the Ankar a high- 
way. The building itself is a 
model of art noveau. and is set 
in a remote garden over the 
Bosphorus. One day, the hotel's 
handsome dining-room will get 
tbe chef it deserves and be 
declared the best small hotel, 
not exactly in Europe, but just 
outside. 

Another useful alternative is 
the Kariye Hotel on the out- 
skirts of the historic city. This 
gives it a straightish run to tbe 
airport without traversing the 
city traffic. It is a good base for 
someone who has a couple of 
boors to set aside for slightly 
more adventurous sight seeing. 
It is next door to St Saviour in 
Chora, a museum of wonderful 
Byzantine frescos and mosaics, 
as well as a short walk from 
the highly distinctive MJhri- 


mah mo sque - built In the 16th 
century by the architect Sinan 
for the daughter of Suleyman 
the Magnificent. Also nearby 
are the Theodosian city walls, 
including tbe one section that 
has not yet been destroyed by 
the current programme of res- 
toration. 

The Green House (Yesil 
Kouak) is useful for first-time 
visitors wbo want to stay in 
the shadow of tbe Bine 
Mosque. It is run by the Turk- 
ish Touring Club, which has a 
policy of converting historical 
properties like the nearby Aya 
Sofia Pensions. There are now 
several private hotels in the 
same mould. The Ibrahim 


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like atmosphere. 

If you’ve seem the principal 
sights, then take the walk 
down past the classical Sokullu 
Mehmet Pasha Mosque to the 
6th century Church erf St Ser- 
gius and Bachns (also called 
the “small” Aya Sofia Mosque). 
Alternatively, stroll on along** 
tbe Golden Horn from the won- 
derfully tiled Rustem Pasha 
Mosque to the Spice Market to ^ 
pick up pistachios (even res- ' 
sonahly priced caviar) to take 
home. 

A final travel up-date. The 
Turkish foreign ministry has 
decided to avenge itself on all 
those countries that Impose 
visas for Turkish nationals. 

Until recently, British people 
had to queue for a visa before 
joining the line to get their 
passport stamp. Now they will 
be joined by Americans and 
most Europeans as well. 


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brother. 

TYPEWRITERS 
WORD PROCESSORS 
PRINTERS 
COMPUTERS 
FAX 


IN BRIEF 


BCH tumbles 38% 
in first nine months 

Pretax profits at Banco Central ffispano (BCH), the 
S pa nish financial group, tumbled 37.6 per cwrt in 
the first nine months as a result of lower income 
from disposals and an increase in loan-loss provi- 
sions. Page 18 

Cathay redesigns Its Image 

Cathay Pacific, the Hong Kong-based carrier, this 
week unveiled the first of its new long-range Airbus 
A340s sporting a new livery. The redesign is meant 
to shift the airline’s image from that of a British to 
an Asian airline. Page 21 

Komatsu gains wtth public works projects 

Komatsu, the Japanese matter of construction 
equ ipment , posted a 5 per cent increase in non-con- 
solidated recurring profits for the first six months 
of fiscal year 1994-95, helped by strong rfomnnH from 
domestic public works projects. Page 21 

YPP earnings advance 14% 

Higher oil and gas prices helped YPF, Argentina’s 
privatised ofl group, increase net profits 14 per cent 
in the third quarter. Page 20 

NHcrosoft In TV software project 

Microsoft, the world’s largest computer software 
company, aims to establish itself as the leading soft- 
> ware supplier for interactive broadband networks 
t; that will provide interactive television and borne 
'' PC services. Page 20 

Aetna credit rating cot again 

Aetna, the US insurer, suffered another cut in its 
credit rating tins week, the latest in a rash of down- 
gradings that has bit the US property /casualty 
insurance industry in the wake of growing concerns 
over pollution and asbestos liabilities. Page 20 

Loan toss decline fffts SE-Banfcen 

A big drop in loan losses enabled Skandmaviska 
TCnrfdlda Banken to compensate for a weaker 
underlying performance in the first nine months. 
Page 18 

BET rises with better margins 

BBT, the business services group, reported *25 per 
rant increase in pre-tax profits for the six months to 
October 1, and said it was seeing signs of improve- 
ment in its profit margins. Page 23 

Zeneca seeks US heafthcara links 

Zeneca, the UK drugs company is considering form- 
ing joint ventures with US healthcare suppliers as 
an al te rnat ive to the multi-billion dollar acquisi- 
tions made by rivals such as SmtfhKlm e Beecham. 
Page 24 

05 attacks continental wbd d bs 

British Steel has said that It is being put off invest- 
ing in the UK and the rest of Europe by the subsi- 
dies allowed to competitors cm the continent. 

Page 24 , 

Bite cag ey about further btdm 

British Aerospace yesterday refused to ruleoul 
making a revised offer for VSEL, the nuclear sub- 
marine-maker. Mr Bob Bauman, chairman, told 

* RAb sha rohniilBH that although it expected GBC*s 

* rival£532m ($840m) offer to be blocked on competi- 
tion grounds, BAe reserved tlie right to increase its 
own Ud. Page 23 


Companies In AMs i ssu e 






Aetna 

20 

Had Engineering 


24 

_■ 7. 

~ 

— _ 


Alan Nobel . 

18 



12 

■ • ■ 




AsnaxS 

to 

JAL 


19 





American Airlines 

19 

Jl Case 


20 


.. .. 

■ ■ _-i 


Amstrad 

24 

Jeimyn Investment 


24 



j.. - 


Anglo United 

26 

KPN 


3 





BAT 

a 17 

Komatsu 


21 



. •- 


BCE 

19 

London Rductey 


24 



.. . - 


BCE HokXngs 

24 

MEPC Australia 


19 





BCH 

18 

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24 


• - - 



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21 

Microsoft 


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25 

Mitsubishi Materials 

21 



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24 

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FINANCIAL TIMES 

COMPANIES & MARKETS 

©THE FINANCIAL TIMES LIMITED 199* Thursday November 3 1994 



I BUILDER 
CENTER! 



Two deals shake Italy’s banks 


Takeover and merger proposals 
could tighten banking ownership 


UK insurer seeks 
custodian for 
£40bn of assets 


By Robert Graham In Rome 

The shape of Italian banking 
altered shandy yesterday follow- 
ing two moves which will ti ghten 
ownership of the industry in the 
private sector. 

Following days of speculation 

within the industry, Ambrove- 

neto is to be taken over by Banca 
Commerdale Ita liana (Camit) to 
create the country’s second-larg- 
est banking group while Credito 
Romagnolo (Rolo). the Bologna- 
based bank, plans to merge with 
the Cassa di Risparmio di Bolo- 
gna group (Caer) the regional 
savings institution. 

Solo’s merger plan is an 
attempt to fight off a hostile bid 
by the recently privatised Credito 
Italiano. 

The Comit takeover of Ambrov- 
eneto has been market gossip for 
several days; but the RofoGaer 
merger came as a surprise. It 
would create Italy’s 10th largest 
bank and comes less than a 
month after the two had aban- 
doned talks on a smaller-scale 


merger. 

Comit said it wanted to pur- 
chase 51 per cent of Ambroveneto 
but would aim initially for 29 per 
cent of the stock held by the core 
of controlling shareholders. It 
offered L.7,000 per share for the 
144.4m shares among these share- 
holders. 

The defensive move by Rolo, 
controlled by a core of sharehold- 
ers led by Mr Carlo De Benedetti, 
the Olivetti chairman, will have 
to overcome some complex legal 
considerations. These centred 
upon whether a merger could 
occur while a takeover bid was in 
progress. 

The formal takeover by Credito 
Italiano cann ot be launched until 
the prospectus has been 
approved by Consob, the stock 
PTr-hq rigp watchdog and this is 
unlikely to be complete until 
November 15. This could mean 


that the first extraordinary meet- 
ing of Rolo shareholders will 
hear not the takeover offer but 
the merger. 

The L2,0l0bn (S1.3im) Credito 
bid for 4&2 per cent of Rolo's 
stock valuing each share at 
L19.000 was launched last 
Wednesday, and was the largest 
in Italy since new takeover rules 
were introduced in 1992. It fol- 
lowed three weeks of heavy trad- 
ing in Rolo shares which rose in 
price by more than 30 per cent 

Rolo's merger decison comes 
after the appointment of foreign 
advisors, Goldman Sachs and 
Morgan Stanley to assess the 
takeover. Rolo said the merger 
would be on tbe basis of L31 of 
its nominal L1.000 shares for 
every nominal L10.000 Caer 
share. 

Rolo has a market capitalisa- 
tion of L4£95bn. This is a pre- 


mium of some L3.000 per share 
on that offered by Credito and 
applies to all the shares. Caer 
was valued at L£397bn. 

Caer is a holding company 
with 76.1 per cent of the Cassa di 
Risparmio di Bologna (Carisbo), 
the savings bank. Caer in tom Is 
controlled, like most savings 
banks, by a foundation which has 
93 per cent of the stock. If the 
merger were to go through, the 
foundation would possess 30 per 
cent of the new group, probably 
to be called Rolo-Cassa. 

The two have discussed a lim- 
ited merger for the past year. The 
deal collapsed partly because it 
was too narrow in scope and 
applied only to a share-swap with 
Carisbo. Faced with the threat of 
being gobbled up by Milan-based 
Credito. they appear to have 
quickly overcome these reserva- 
tions and broadened tbe scope of 
the original merger. 

Rolo called extraordinary 
shareholders meetings on Decem- 
ber 19 and 20 to approve the 
defensive deal 


By Norma Cohen, 

Investments Correspondent 

Prudential, the UK’s largest life 
insurance company, has asked 10 
leading international banks to 
bid for its global custody busi- 
ness which holds £40bn ($63bn) in 
UK and international securities. 
This follows the Pro’s decision to 
act no longer as its own custo- 
dian for securities. 

Mr David Hanson, a director at 
Prudential Portfolio Managers, 
said that the company is con- 
cerned that it will have to make 
gigniErant investments in tech- 
nology tO maintain s tandar ds in 
its custody service. 

The move is a part of a grow- 
ing trend among international 
fund managers to focus activities 
on titer core businesses and con- 
tract out administrative services. 
It would be the largest individual 
global custody contract to be 
awarded since tbe State of Calif- 
ornia sought tenders three years 
ago for its assets of $80bn. 

Mr Hanson declined to name 
the banks which h»d been asked 
to present proposals. However, it 
is believed the list includes Chase 
Manhattan Bank, Citibank, Bar- 
clays Bank, Royal Bank of Scot- 
land and Midland Bank. The 
banks, which have received the 
offer, have five weeks to prepare 
submissions. 

Custody is the broad term 
which applies to the safe-keeping 
and record-keeping of funds. It 
generally includes the provision 
of cash management, foreign 

mhangq faHjifipc and securities 

lending. For leading interna- 


tional banks, the provision of 
custody - part of transactions 
banking - is a significant con- 
tributor to profits. 

International banks have 
invested heavily in technology to 
improve the services they pro* 
vide to fund management clients 
and the Pro would have to make 
similar investments, he said. 
“You would have to justify that 
spend, and that makes you pause. 
I'm not sure that custody is our 
business.” lie said. However, he 
said the in-house custody service 
was meeting present needs. 

Prudential has been its own 
custodian for its UK domestic 
securities portfolio and has used 
three other banks for the custody 
of its UK gilts and non-domestic 
securities which are invested 
from London. It also manages 
£3Sra in assets which are held 
with custodians in other regions. 
Prudential is not seeking new 
custodians for these funds. 

Mr WainKft i said changes in the 
way the Pro managed funds were 
partly responsible for tbe deci- 
sion. In the past 10 years the Pro 
has begun to manage money 
from centres in North America, 
Australasia and the Far East, 
increasing its need for a global 
custodian. He added that the Pro 
had begun to retain custodians in 
each region. 

Regulatory changes, including 
the introduction of a new 
accounting standard for custodi- 
ans, the advent of the new Crest 
paperless share settlement sys- 
tem in London and the possibility 
of hew UK regulations had made 
it consider its position. 


BAT rises 21% on tobacco profits 


By Roderick Oram, 

Consumer Industries Editor 

A surge in tobacco profits in the US and 
recovery in Brazil helped BAT Industries 
overcome weakness in its general insurance 
business to report a 21 per cent increase in 
third-quarter pre-tax profits from £455m to 
£551m (g870m). 

The stronger than forecast result pushed 
profits for tiip T»fnp months September 
to £L5ta, up 10 per cent from a year earlier. 
'There siinnW be a worthwhile increa se in 
our pre-tax profits for the year, enabling us to 
maintain our progressive dividend policy.** 
Sir Patrick Sheehy, chairman said. 

BAT remained hopeful that a New York 


court would overturn attempts by the Federal 
Trade Commission to block its $lbn takeover 
of American Tobacco. The FTC will argue in 
the case beginning in New York on December 

5 that the deal would reduce competition. 
Tobacco trading profits for the ninp months 

rose 13 per cent to £920m, excluding a £135m 
extraordinary gain a year earlier. Cigarette 
volumes rose by 5 per cent 
In the US, third-quarter profits at its Brown 

6 Williamson subsidiary nearly trebled to 
£lllm and doubled in the nine months to 
cram US profits were depressed last year by 
Philip Morris' savage price cutting on “Marl- 
boro Friday". 

Financial services contributed £674m to 
group trading profits, up 3 per cent from a 


year earlier. Eagle Star’s profits feD £I3m to 
£l04m because of a sharp drop in investment 
returns to £99m. Overseas and domestic mort- 
gage losses offset a £47m underwriting profit 
from UK personal lines. Worldwide premiums 
from general and life insurance were higher. 

Fanners, BATs US insurer, showed a mar- 
ginal increase in profits to £39 Im with its life 
business improving in (he quarter. BAT said 
Farmers claims from last year’s San Fran- 
cisco earthquake are expected to exceed ear- 
lier estimates of $l-35bn. 

A 16 per cent increase in nine-months tax 
to £466m and an increase in minority inter- 
ests to £83m from £71m left earnings per 
share ahead 6 per cent at 30.8p. 

Lex, Page 16; BAT warns of challenge. Page 9 


Kenneth Gooding looks back on a year of price rebounds 


Metals react to new element 


LME3-montti <SOOO per tomel 


Akovkatim 


Copper 

2.8 — - 


0.70 





J 090 L 


taw 


Funds 
fuel the 
fashion 
for metal 

T his week last year base 
metal prices were at an 
all- time low. Now prices 
have rebounded with aluminium 
and copper, the two most heavily- 
traded metals , — up by more than 
70 per cent 

Analysts suggest that prices 
have run well ahead of what can 
be justified by fundamental fac- 
tors such as the balance of sup- 
ply and demand. Stocks remain 
high, twice the normal level in 
the case of aluminium. 

But an important new element 
is fuelling price rises: the activity 
of hmifca and imrec tmont funds. 

The funds are estimated to 
have put ¥L6bn into metals so far 
this year. Meanwhile, the banks 
probably control 75 per cent of 
the London Metal Exchange 
stocks - traders say that as much 
as 85 per cent of tbe I .MB’s alu- 
minium stock is controlled by 
four or five banks. 

Consumers are complaining, 
particularly the Japanese, the 
biggest users of metals markets. 
Mr Kerdcbi Watanabe, chairman 
of the Japan Aluminium Federa- 
tion, said he had little faith is a 
market, such as the LME, which 
could be influenced by specula- 
tors. 

Producers, many of whom were 
virtually suicidal a year ago, do 
not wholeheartedly welcome the 
new element in the metals mar- 
kets either. High prices encour- 
age substitution of other materi- 
als for mate!** and volatile prices 
frighten off potential metals 
users. Also, producers are likely 
to use the futures markets to 
lock in artificially high prices 
either to fond further develop- 
ment or to bolster flagging 
operations, moves that might 
bloat future supply. 

There is general concern 
among metal markets users 
about what happens next 
Many share the view of Mr 
Robin Adams, president of the 
Resource Strategies consultancy, 
who says the funds’ involvement 
is “a fashion craze” and “finan- 
cial fashions like real estate 
investment trusts, loans to Third 
World dictators and junk bonds, 
always end in tsars’ 
Nevertheless, there are appar- 
ently good reasons for the banks 
and- funds' involvement Banks, 
for example, took advantage of 
ch ea p money to buy up stocks of 

physical m etel. 

Mr Chris Harris of Barclays 
Metals describes how the system 
worked: typically a bank bor- 
rowed one-year money at 5 per 
cent and used it to buy alumin- 
ium at $1,200 a tonne. The hank 
negotiated special terms with a 
warehouse to store the metal for 
one year at $52 a tonne. It sold 
the metal forward at $1,315 a 


tonne to gain a $3 a tonne profit 
The volumes involved tended to 
be at least 250,000 tonnes per 
bank and two big players are 
believed to have tied up 800,000 
tonnes each. 

Investment managers, mean- 
while, say interest in metals has 
boomed because clients wanted 
to reduce their portfolio risk 
through asset diversification and 
hedge against unexpected infla- 
tion. Commodities are being 
touted as a new asset class to 
compete with bonds, equities and 
property. But many analysts are 
sceptical “Those three assets 
offer a running return in addition 
to the possible capital gain," says 

Commodities are 
being touted as a 
new asset class 
to compete with 
bonds, equities 
and property 


Mr Robert Davies, mining analyst 
at London stockbrokers, Smith 
New Court "Interest, dividend 
and rental income from the three 
traditional asset classes give 
them a long-term value that is 
totally lacking in commodities. 
Base metals are mined to be con- 
sumed." 

He suggests the main reason 
for tbe funds’ dive into metals 
was that “in an effort to achieve 
better returns than were possible 
on bonds and equities, some 
funds chased esoteric invest- 
ments, l pr3»ding commodities”. 

Whatever the reason for their 
involvement, the funds have cer- 
tainly had an impact on metals 
prices. During the last cyclical 
recovery, between 1984 and 1987, 
metal stocks fell for two years 
before prices started rising appre- 
ciably. This time prices started 
moving upwards six months 
before stocks began to falL 

Mr Nick Mason, analyst at the 


94 


CRU International consultancy, 
says metals prices are now 
behaving more like financial 
instruments and anticipating or 
leading actual fundamental 
developments. “The important 
question for future metals prices 
is to what extend will the market 
anticipate the next major shift in 
tbe fundamentals. It would not 
be surprising if prices begin to 
reflect this expectation as early 
as tbe begining of next year.” 

The consensus is that the funds 
will unwind their positions in the 
metals markets gradually so as to 
avoid any self-inflicted damage to 
their profits. The hope is that 
this will take place coincidentally 
with a surge in metals demand in 
line with a global economic 
recovery. 

Some suggest the funds' timing 
so far has been perfect and there 
are solid reasons underlying 
recent price rises. Mr Wiktor 
Bielski, metals analyst at Bain & 
Co, a Deutsche Bank subsidiary, 
points out that demand for alu- 
minium. copper and nickel rose 7 
per cent in the first half of 1994 
against tbe same period last year, 
while lead and zinc demand was 
up by 4 per cent Meanwhile, sup- 
plies have fallen along with 
atports from the former eastern 
bloc - apart from those of alu- 
minium. Some producers have 
bad to buy metal on the LME to 
cover commitments. 

Ms Rhona O’Connell at 
T. Hoare & Co, London stockbro- 
kers, admits there is always the 
possibility that the funds might 
all sell at once if the herd instinct 
takes over. However, “the diver- 
sity of fund participation and its 
raison d'etre is such that the 
funds will not kill the markets 
that they have helped to rejuve- 
nate. The downside, though, is 
that the acceleration of supply 
caused by artificially high prices 
may als o mean that the troughs 
will be at lower price levels than 
would otherwise had been the 
case. On this basis, one could 
argue that the funds have not 
actually helped the metals’ cause 
at all.” 

Palladium booms. Page 26 


Telekom wants UK, US banks 


By Michael Lndemann in Bom 
and Andrew Fisher in Frankfurt 

Tbe partial privatisation of 
Deutsche Telekom, expected to 
raise some DM15bn ($10bu) early 
in 1996, is likely to involve both 
US and UK banks in key roles 
because of the importance of 
both countries' stock markets, 
said Mr Helmut Ricke, the chief 
executive. 

He did not say which invest- 
ment bank the state-owned tele- 
communications company pre- 
ferred for the main international 
role of global coordinator. 

Goldman Sachs, the VS invest- 
ment bank, is among the most 
likely candidates to head tbe 
international placement, with 
Merrill Lynch, Salomon Brothers 
and Morgan Stanley also in the 
running, along with S.G. War- 


burg and Klemwort Benson from 
the UK. 

Deutsche Bank and Dresdner 
Bank are expected to be named 
tbe overall managers of the pri- 
vatisation issue, which is likely 
to be split into regional consor- 
tiums to cover Germany, the rest 
of Europe, North America and 
the rest of the world. 

Mr Ricke said it was important 
to give banks from the countries 
containing the world’s most 
important stock exchanges a 
decisive say in the share place- 
ment “That naturally applies to 
the US just as much as it does 
for Britain," he said. “I can’t 
imagine that there would be any 
political considerations which 
would exclude a strong Ameri- 
can partner. There is no dis- 
agreement between m anagement 
and the owners [the govern- 


ment] in this matter." 

A final decision is expected 
shortly, with banks standing to 
earn fees or some DM450m from 
the placement 

However, Mr Ricke said a deci- 
sion would not be made this 
week. “We are under a certain 
amount of time pressure but we 
will need to evaluate the matter 
more carefully than that" 

Deutsche Telekom invited 22 
of the world’s leading invest- 
ment banks to a “beauty con- 
test” In Bonn where they pres- 
ented their respective bids to the 
company and the finance and 
postal ministries. 

“They are all good," Mr Ricke 
said- “We now have to decide 
what their particular strengths 
are, what connections they 
might have to companies which 
we regard as our competitors." 


This announcement appears as a mauer of record only 


THE HUB POWER COMPANY LIMITED 

(incorporated as a public company with limited liability in Pakistan) 



International Offer of 
13,412,017 Global Depositary Receipts 
at a price of US$10,825 each 


GLOBAL CO ORDINATOR 

Morgan Grenfell & Co. Limited 

tVrrdin of these securities hare been sold in the United States ta private offerings 
pursuant to Rule I 44.1 under Securities .4rt of 1 933 


H 


Deutsche Bank 

Aktiengescllschaft 

1 

West Merchant Bank Limited Jardine Fleming | 

Crosby Securities Bear, Stearns International Limited £ 


Pakistan Public Offer of 69,284,075 New Ordinary Shares 
of Rupees 10 each at a price of Rs. 13.26 each 


Domestic Adviser 

Bear Stearns Jahangir Siddiqui Ltd., in association with Amin Issa Tai 


MORGAN 

GRENFELL 


l .1 member iff The Securities and Futures Authority 


October 1994 


% 









FINANCIAL TIMES THURSDAY NOVEMBER i 1994 


INTERNATIONAL COMPANIES AND FINANCE 


BCH tumbles 38% at nine months 


By Tom Bums In Madrid 

Pre-tax profits at Banco 
Central Hispano (BCH). the 
Spanish financial group, tum- 
bled 37.6 per cent to Pta45.3bn 
f$303zn) at the nine-month 
stage, as a result of lower 
income from disposals and an 
increase in loan-loss provi- 
sions. 

In contrast, Ben’s core bank- 
ing business unproved sharply 
over the period as the group 
raised operating profit 17.S per 
cent to PtalOiSbn. 

Net consolidated profits fell 
25.3 per cent to Pta32Jbn, by 
far the lowest among the lead- 
ing domestic banks. This raises 
the prospect that BCH could be 
forced to reduce Its dividend 


By Karen Fossil in Oslo 

Christiania Bank, Norway’s 
second-largest commercial 
bank, yesterday reported a 
sharp improvement in its nine- 
month results. The bank bene- 
fited from the continued 
upturn in Norway’s economy, 
which has improved borrow- 
ers' ability to service loans. 

Christiania said nine-month 
pre-tax profits nearly doubled 
to NKrl.l2bn ($171m) from 
NKr628m in the same period 
last year, providing further evi- 
dence that Norwegian banks 
are emerging from a four-year 
crisis. 


By NeB Buckley in London 

J Sainsbury, the UK's largest 
grocery retailer, said yesterday 
that tougher government plan- 
ning restrictions were starting 
to bite, and it expected to open 
only 12 new supermarkets next 
year, compared with plans for 
20. 

Speaking the day after the 
House of Commons environ- 
ment committee called for 
tighter restrictions on out-of- 
town retail development. Mr 
David Sainsbury, chairman, 
reported a 0.5 per cent Increase 
in interim pre-tax profits to 
£444 3m ($702m) from £4172m. 
Last year's figure was restated 
to take account of new depred- 
ation policies. 


next year in order to 
strengthen its balance sheet. 

The bank’s future profitabil- 
ity was nevertheless under- 
lined by an Improved net inter- 
est income, which rose 41 per 
cent to Pta235.3hn over the 
nine months. This was in spite 
of the drop in interest rates 
and the resulting squeeze on 

margins. 

Fees from commissions rose 
6.9 per cent to Pta644bn and 
total net revenue advanced 5.5 
per cent to Pta3082bn. 

The brighter outlook for 
BCE’s pure hanking operations 
was clouded by the continuing 
need to raise the coverage for 
its damaged loan portfolio. 

This drain on resources was 
aggravated over the nine 


However, the group's operat- 
ing profit, before loan losses, 
dropped NKr649m to 
NKrlJ22bn. 

Net interest income was 
unchanged at NKr2.33bn but 
non-interest income fell by 
NKr638m to NKrl.l3bn due to 
reduced securities and foreign 
exchange gains. 

Christiania said that a low 
level of interest rate exposure 
in the securities portfolio, 
helped limit bond losses in the 
third quarter to NKrlOm. 

fn the nine-month period, 
securities gains fell sharply to 
NKr9 4m from NKr591m while 
foreign exchange gains and 


He said the group had won 
only one out of nine planning 
appeals this year, and spent 
fil Bgm in the first half on new 
stores, compared with £309m in 
the same period last year. 

‘"The difficulty of obtaining 
planning consent on appeal 
has become extreme,” he said. 
“That has also led to greater 
difficulty in negotiating con- 
sent with local authorities. We 
do not foresee a reversal of this 
situation in the near future." 

Spending on new UK super- 
stores in the full year is expec- 
ted to be little more than 
caOQm. Twenty stores will be 
built this year, but the number 
will fall to 12 next year. 

Sainsbury will spend more 
t han £ioom on refurbishing 


months by lower revenues 
from its treasury department 
and a frill in gains from dispos- 
als, which brought extraordi- 
nary income over the period 
down 35.2 per cent to 
Pta40.7bn. 

BCH has put aside 
Ptal06.6bn for provisions 
between January and Septem- 
ber, 33.7 pen cent more than 
last year. 

This addresses the concerns 
of rating agencies, which have 
raised questions about the 
quality of BCITs assets and 
downgraded the banking 
group. 

-At the end of September 
BCITs coverage stood at 76.6 
per cent, without taking mort- 
gage-linked guarantees into 


other non-interest income 
dropped NKrlOlm to NKrl45m. 

Nevertheless, the bank 
sharply reduced nine-month 
provisions for losses on loans 
and guarantees, to NKrlOOm 
from NKrl.24bn last year. 
Included in this year’s figure is 
net reversals of NKr284m cov- 
ering previous loss provisions. 

Christiania said credit losses 
to the international fisheries 
industry were the most trou- 
bled sector of its loan portfolio. 

In the third quarter the bank 
made provisions of NKr93m to 
cover fisheries loan losses, 
which for the nine-month 
period reached NKr384m. But 


and extending older stores, and 
£150m on developing other 
divisions than its core UK 
supermarket chain. Both these 
activities will be given higher 
priority. 

“We would prefer to invest 
in other opportunities rather 
than acquire sub-standard sites 
[for supermarkets] with lower 
returns,’' Mr Sainsbury said. 

Sainsbury last month 
acquired 50 per cent of voting 
shares in Giant Food, the 
Washington DC-based super- 
market group, and expects 
Giant's profits to outweigh fin- 
ancing costs this year. Its exist- 
ing US business, Shaw's, 
increased operating profits 44 
per cent to $362m. 

With a strong performance 


account. This figure is compa- 
rable to that of rival domestic 
hanks and up from its 69 per 
cent coverage in June. 

BCIfs non-performing loans 
represented 7 per cent of the 
group's total lending at the end 
of September - above the aver- 
age for the sector, but 1 per 
cent down on the end of last 
year. 

BCH realised Pta30.3bn 
between January and Septem- 
ber through the recovery of 
non-performing loans, 57.4 per 
cent up on the same period last 
year. 

BCITs return on assets stood 
at 0.40 and its return on equity 
at 7.8 per cent, figures well 
below the average for the sec- 
tor in Spain. 


combined gross non-perform- 
ing and doubtful loans were 
reduced by 27 per cent to 
NKrllbn, while net non-per- 
forming loans were cut by 37 
per cent to NKr3.6bn. 

While expressing satisfaction 
with the results, Mr Borger 
Lentb, group managing direc- 
tor, warned there was still 
room for improvement. 

The board may consider pay- 
ing a dividend for 1994, but this 
is understood to be conditional 
on the bank's core capital 
reaching 6 per cent of risk- 
weighted assets at end-Dece ca- 
ber. and on continued improve- 
ment in performance. 


from the D7Y chain Homebase 
- where profits grew 34 per 
cent - the other divisions 
increased operating profits 26 
per cent to £58.1m. That out- 
paced the 7.7 per cent rise in 
UK supermarket profits to 
£405m. 

Total UK supermarket sales 
increased 7.7 per cent, of which 
7.3 points came from new 
space. Like-for-like sales vol- 
umes. excluding new space, 
increased I per cent, with price 
deflation of 0.6 per cent. 

The fall in prices was partly 
a result of Salisbury's Essen- 
tials price-cutting campaign, 
which started a year ago, and 
reduced gross margins by 02 
percentage points. 

Lex, Page 16 


Decline in 
loan losses 
boosts 
SE-Banken 

By Christopher Brown-Humes 
In Stockholm 

A big drop In loan losses 
enabled Skandinaviska 
Euskilda Banken to 
compensate for a weaker 
underlying performance in tbe 
first nine months and lift 
profits to SKr2.87bn ($4 00m) 
from SKr7 im. 

Sweden's leading 
commercial bank said tbe 
SKr2.8bn improvement 
included SKr789m in capital 
gains. 

The main impact on tbe 
figures came from a 44 per 
cent cut in loan losses to 
SKr4.35bn. 

Like other Swedish banks, 
SE-Banken has benefited from 
lower interest rates and 
economic recovery and put 
behind it tbe crisis that 
brought it large losses dne to 
collapsing property’ values in 
1992. 

However, its result before 
loan losses was 7 per cent 
worse than a year ago at 
SKr7.23bn. Excluding this 
year’s capital gains, tbe 
deterioration would bave been 
17 per cent 

The worse underlying 
performance reflected: 

• A 10 per cent reduction in 
net interest income to 
SKr6.36bn, caused by a 
continued drop in lending 
volumes and narrower interest 
rate margins. 

• A 12 per cent fall in 
commissions, fees and foreign 
exchange earnings to 
SKr4.37bn. This reflects lower 
activity in most financial 
markets. 

O A 5 per cent rise in costs to 
SKr5-95bn 

Excluding capital gains, the 
group’s third-quarter profit 
was SKr602m, compared with 
SKr755m in the second quarter 
and SKr730m in the first three 
months. 

The bank said adjustments 
in tbe value of its investment 
portfolio were only taken into 
account at tbe year-end. It said 
the large rise In long-term 
interest rates this year meant 
the market valne of its 
SKr82.4bn bond portfolio on 
September 30 was S£r963m 
lower than the acquisition 
value. 


Christiania Bank posts sharp improvement 


Sainsbury warns on planning restrictions 


Akzo Nobel profit surges 
35% on increased sales 


By Ronald van da Krol 
In Amsterdam 

Akzo Nobel, the Dutch 
chemicals group, said net 
profit before extraordinary 
items rose 34.7 per cent in the 
third quarter. This reflected 
increased sales volumes and 
reduced costs. 

The sharp improvement was 
seen in most divisions, with 
even the weak fibres sector 
producing a small profit after 
losses a year earlier. 

Net profit totalled FI 322m 
($l92m) before extraordinary 
items, compared with FI 239m 
a year earlier. Profits after 
extraordinary items jumped 75 
per cent because the 1993 
result was weighed down by 
FI 55m in charges related to 
spinning off loss-making activi- 
ties into joint ventures. There 
were no extraordinary items in 
the 1994 quarter. 

Mr Syb Bergsma. finance 
director, said the result con- 
firmed expectations that 
second-half results in 1994 


would be above those in 1993. 
The company held its interim 
dividend at FI 1-50 a share. 

Economic recovery in 
Europe, coupled with contin- 
ued good business conditions 
in the US, lifted sales volumes 
5 per cent Average selling 
prices rose 2 per cent but Akzo 
Nobel faced a similar rate of 
increase in its own raw mate- 
rial costs. 

Turnover rose 43 per cent to 
FI 5.42bn. and would have been 
higher but for the dollar’s 
decline. 

Operating profit rose by 
FI 129m to FI 487m. producing a 
margin of 9.0 per cent against 
6.9 per cent "All groups con- 
tributed to this gain in operat- 
ing income, both in absolute 
terms and as a percentage of 
sales,” Mr Bergsma said. 

Chemicals, coatings and 
pharmaceuticals posted 
increases in operating profit 
while fibres produced a s ma ll 
operating profit of FI lm, com- 
pared with a loss of FI 32m a 
year earlier. 



The company, created in 
rally 1994 through the acquisi- 
tion of Sweden's Nobel Indus- 
tries by Akzo of the Nether- 
lands, was already reaping 
some synergy benefits, such as 
personnel cutbacks in Stock- 
holm. But Bergsma said the 
bulk of the savings would 
come in 1995 and 1996, rather 
than mainly in 1995, as origi- 
nally expected. 


SBC forecasts drop in income 


By Ian Rodger In Zurich 

Swiss Bank Corporation, 
Switzerland's third largest 
bank, said annual consolidated 
net income for 1994 would be 
“clearly below" last year’s 
record SFrl.37bn tSl.lbn). 

SBC said operating income 
after nine months failed to 
match 1993 's performance. The 
bank was echoing recent state- 
ments from Switzerland’s two 
other large banks. 

No figures were given, but 
the bank blamed the uncer- 
tainty In financial markets for 
most of the decline. 


By Andrew Jack in Paris 

Roussel Uclaf. one of France's 
largest chemicals companies, 
yesterday reported net income 
up 9.2 per cent at FFr635m 
($123. 75m) for the first nine 
months of the year. 

The company said compara- 
ble net income, excluding 
exceptional items, was 


The trend of tradin g income 
was the same as in the first 
half of the year, when It tum- 
bled 63 per cent. Income from 
securities trading picked up in 
the third quarter, but revenues 
from foreign exchange were 
down. 

Net commission income, up 
11 per cent in the first half, 
was down in the third quarter 
because of a fall in brokerage 
and syndication and placement 
fees. 

Net interest income was 
higher than in the first and 
second quarters of this year 
due to a more favourable fund- 


FFr715m, a 52 per cent rise. 
This was after stripping out 
restructuring costs and capital 
gains from the transfer of its 
crop protection and environ- 
mental health activities. 

The divisions will be trans- 
ferred to part of the Boechst 
group, the German r.hpmirai-a 
company which owns 54 per 
cent of Roussel Uclaf s shares, 


mg structure and falling Inter- 
est provisions, but remained 
lower than in the third quarter 
of last year. 

There was a further drop in 
bad loan provisions in the 
third quarter after tbe 53 per 
cent cut in the first half. 

Total assets of the parent 
company at September 30 stood 
at SFrl95.5bn, SFrl3.3bn 
lii ghar than at the en d of last 
year. Growth in domestic lend- 
ing and interbank business off- 
set the adverse affect of the 
lower US dollar, and the acqui- 
sition of a Swiss regional bank 
added SFr47bn. 


FFr635m 

at the end of this month. 

Sales for the period were up 
13.8 per cent to FFr13. Ibn, or 
up 23 per cent in comparable 
terms. 

• Canal Plus, the French 
media and pay-TV company, 
reported revenues up 83 per 
cent to FFr635bn for the first 
nine months of the year, com- 
pared with the 1993 period. 


Roussel Uclaf up 9.2% at 




REPUBLIC NEW YORK CORPORATION 
SAFRA REPUBLIC HOLDINGS S.A. 


Consolidated Statements of Condition 
and Summaries of Results 


These statements and summaries represent the consolidated accounts of Republic New York Corporation and its 
wholly owned subsidiaries and of Safra Republic Holdings S.A. and its wholly owned subsidiaries. Republic 
New York Corporation owns 48.8% of Salta Republic Holdings S.A., which is accounted for by the equity method. 


Assets 

Cash and due from banks 

Interest bearing deposits with banks 

Precious metals 

investment securities 

Trading account assets 

Federal funds sold and securities purchased 

under resale agreements 

Loans, net of unearned income 

Allowance for possible loan losses 

Loans (ner) 

Other assets .. ... 

Total assets 

Liabilities 

Total deposits 

Trading account liabilities 

Short term borrowings 

Other liabilities 

Long term debt 

Subordinated long-term debt and perpetual capital notes 

Shareholders' Equity 

Cumulative preferred stock 

Common stock and surplus, net of treasury shares .... 

Rerained earnings 

Net unrealized depreciation on securities available 
for sale, net of taxes 

Total shareholders' equity 

Total liabilities and shareholders ' equity 

Book value per share 

Client portfolio assets in custody .. 

Net income, for the nine months ended 

Net income per common share (primary) 

Average common shares outstanding (primary). 


REPUBLIC NEW YORK 
CORPORATION 

September 3Q, 


1994 


1993 


SAFRA REPUBLIC 
HOLDINGS S.A. 

September 30, 


(in thousands oF US$ 


$ 638,380 

9,530,875 
1,577,081 
11,777,08 2 
3,062,180 

838,621 

9,383,733 

(319,578 ) 

9,064,155 

4,721,359 


557.003 

6,130,430 

745,681 

13,875,719 

1,225,570 

1.625.694 
9,031,447 
(281,193 ) 

8,750,254 

5.051.694 


$41,209,733 $37,962,045 


$22,226,145 

2,763,022 

4,486,868 

4,069,514 

2,588,991 

2,405,843 


672,500 

704,877 

1,401,255 

(109,282) 


$ 22,379,887 
225,308 
2,886,001 
5,267,507 
2.643,263 
2,130,635 


556.425 

719.254 

1,153,765 


2.669350 2,429.444 


$41209,733 $ 37,962,0 45 
$ 


37.79 $ 

250,624 $ 
438 $ 
52,738 


35.56 

221.278 

3.82 

52,390 


L 1994 

1993 

$ except per share data) • 

$ 60,731 $ 

52,123 

4,754,683 

3376354 

5,881,392 

5,650,486 

49,617 

59.930 

1,287,237 

1,183.678 

(122.798) 

(96.981) 

1,164,439 

1,086.697 

457,127 

335398 

$ 12,367,989 $10,560,988 

$ 9,140,280 $ 

7,153345 

974,332 

1356.775 

377,331 

' 229,101 

648,600 

650,000 

903,560 

902.204 

407316 

269,663 

(83,430) 

- 

1327,446 

1,171,867 

S 12367,989 $10560,988 

$ 69.21 $ 

66.19 

$ 5,604354 $ 

5,014,627 

$ 119,771 $ 

85,029 

$ 6.75 $ 

4.80 

17,739 

17.701 


Risk-Based Capital Ratios ' - 

As of September 30, 1994, Republic New York Corporation s risk-based core capital ratio was 16 45 % , 

Mai qualifying capital ratio was 28.00% (estimated). The ratios include the asS “t “iS ^ 

requirements of the Federal Reserve Board specifically applied to Republic bfewYo* ^ 

. dated basis and capital of Safta Republic Holding, SA. Total consolidated assets exceeded 5 USS so bifivl V c S mol ‘; 
^ consolidated capital, including minority interest and subordinated debt, exceeded US$ 5 billion. lon and total^ 


Republic New York Corporation 
Fifth Avenue at 40ih Street 
New York. New York 10018 


Republic Holdings S.A. 


1 }r? u "“ c Holdings 
«... 32, boulevard Royal 

J Banking Locations 2449 Luxe mboun> 

Copenhagen, Geneva, Gibraltar, Guernsey, London, Lugano, Luxembourg, Milan, Munrc Girin Mmnw pw 7 gi iu j 
C ayman Islands, Los Angeles, Mexico Clry. Miami, Moaned, Nassau, New York. Buenus Aires fn™ ■,« 'u “-Zunch, Beverly HlUs, 
Rio de Janeiro, Santiago, Beirut, Beijing, Hong Kong, Jakarta, Singapore.^ sSncy Tnfeif tS?* ** 



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FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 


INTERNATIONAL COMPANIES AND FINANCE 



19 


NEWS DIGEST 


Stronger exports 
lift Amcoal 33% 
after six months 


"Ancosf * ■ ’ 



An improved export 
performance helped 
Amcoal, the coal com- 
pany in South Africa's 
Angto American group, 
to report a 33 per cent 
increase in attributable 
earnings to Rl 62 . 2 m 
(OS$462m) for the six 
months to September, 
up from Bm~8m last 
year, writes Marik Suz- 
man in Johannesburg. 

Although total «»lw of 

coal and coke dropped 
slightly to 22 .frim 
tonnes from 22.85m tonnes due to lower 
domestic market sales to Eskom, the state 
electricity utility, turnover rose 123 per cent 
to RLlbn from ES44m. The dividend ha$ fw»n 
Increased to 180 cents from 150 cents. 

However, a rise in exports on the strength of 
the weaker randjdollar exchange rate, com- 
bined with successful containment of working 
costs, led to higher margins, and operating 
profit increased 33 per cent to R237.4m from 
R3.78.6m. 

Mr David Rankin, Amcoal chai rman, said he 
exp e cted earnings for the year to show a skni- 


. 1804 

UdWfflM a A wn 


lar improvement to the first half due to 
Improved prices. However, he warned that two 
derailments an the railway to Richards Bay, 
the port from which exports are shipped, have 
delayed certain shipments and will dent export 
earnings for the second half. 

JAL, American Airlines 
in frequent-flyer accord 

Japan Airlines (JAL) has concluded an agree- 
ment with American Airlines linking the two 
companies' frequent-flyer programmes, writes 
Gerard Baker in Tokyo. 

From January l next year, members of 
JAL's four regionally -based frequent-flyer pro- 
grammes and members of American's Advan- 
tage Travel Awards scheme will be able to 
participate in each other’s programmes. The 
agreement is the latest in a series of tie-ups 
that Wnk the leading airlines in Asia, North 
America and Europe 

American Airlines, AMR Corporation's larg- 
est subsidiary, serves 178 cirtpg th r ou gho ut the 
US, the Caribbean, Canada, Europe and Latin 
America, as well as Tokyo. Japan Airlines 
serves 62 dries in 25 countries worldwide. 

First National Bank 
posts record profits 

First National Bank, the Sooth African bank- 
ing group, performed strongly in the year 
ended September to raise pre-tax income to a 
record RlJfrn, up SOS per cent from R90&3m 
previously, writes Marik Suzman. 

Net Interest income rose 13.7 per cent to 
R2.5Etan from B238bn, white the charge for bad 
and doubtful debts edged up by only 22 per 
cent to R35L3m from R3&& 

Advances increased by. 18.6 per cent to 
R48Jt6bn from R4Q.7bn, while to tal a ssets, 
which Include those of First Bo wring and 
Associates far the first time, rose 16B per cent 
to R6L76bn, up from R534ftm. 

Group capitalisation is at 9 J per cent, down 
from 10 per cent last year but still well within 
the 8 per cent limit required by the Banks Act 
by January 1995. . 


Mr Barry Swart, managing director, said the 
results reflected market gains in both home 
loans and credit instalment across all divi- 
sions. He said he was optimistic the good 
results would continue into the next year in 
spite of pressure on gross margins from higher 
interest rates. 

Mr Swart also voiced Ms support for the 
recant R 2 bn agreement between leading finan 
dal groups and the government to open up 
housing loans to the lower end of the market. 
“It will work to the advantage of both the 
government and ourselves and we are very 
happy to take a reasonable commercial risk on 
the scheme. " 

Seagram opens S Africa 
marketing operation 

Seagram, the Canadian drinks company, has 
launched Seagram South Africa, a wholly- 
owned sales and marketing operation to ser- 
vice the southern African region, writes Mark 
Suzman. 

At the new company's launch in Cape Town 
yesterday, Mr Jake Scott, vice-president of Sea- 
gram for Europe and Africa, said the company 
was committed to building up local employ- 
ment and would sponsor a social responsibility 
programme aimed at South African youth. 

ME PC Australia 
awarded A3 rating 

Moody’s, the US credit rating agency, yester- 
day assigned an A3 long-term debt rating to 
MEPC Australia, part of the UK property 
group, and a prime-2 rating to its A$500m 
(US$370. 3m) commercial paper programme, 
writes Nikki Tail in Sydney. MEPC has 
announced plans to diversify its UK-dominated 
portfolio through greater investment in the 
the Australian propert y market. 

Commenting on the move, and associated 
rating, Moody's said it believed Australia to be 
"the most volatile of MEPCs areas of concen- 
tration” and viewed “additional exposure as 
incremental to the company's risk profile". 

However, it added that such risk was “some- 
what mitigated by the company's long and 
successful presence in this market”. 

Oerfikon-Buhrle sees 
higher sales in 1994 

Oeriikan-BQhrie, the Swiss engineering com- 
pany, expects 1994 group sales to be between 
SFr3.6bn (US$2. 9m) and SFr3.7bn, including 
the acquisition of Leybold of Germany. This 
compares with SFr2.99bn in 1993, AP-DJ 
repor ts from Zurich. 

Mr Hans widmer, chairman and chief execu- 
tive, said "the Leybold acquisition should 
boost sales this year". 

Leybold specialises in vacuum technology, 
which is used to produce compact discs. 

Bfihrie has said it expects to post 1994 group 
net iBMwiB of SFrijSm, airMinp Leybold, up 
25 per cent from SFH2Sm. 

Including the acquisition, however, Mr Wid- 
mer said he expected 1994 net income to be 
even higher , adding that Leybold expects to 
report net profit of about DM47m (US$3L3m) 
this year. 

BCE lifts Teleglobe stake 

BCE, Canada’s biggest telecommunications 
group, has bought 247,300 more shares of Tele- 
globe. Canada's overseas talBcomnunications 
company, to bring its total interest to 24.4 per 
cant, writes Robert Gfobens in MonireaL 


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U.S. $300,000,000 
Perpetual Capital Floating Rate Notes 

for die six' oumths 3 1st Ctcober, 1994 eo 28th April, 1995 the Notes 
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Listed on the Luxembourg Stock E xc h a n ge. 


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BONGEAINSA 


BONGRAIN 

Improved consolidated sales 


Bon grain generated consolidated sates of FFr 7.08bo for the first 
months of 1994, versus FFr 7.00bnforthe same period of 1993, 
an improvemeotof 1.11%- 

Measmed on a comparable consolidation structure and with constant 
exchange cates, the increase is 3.01%. Btcbiftg sales of e xc e ss milk 
and by-prodbds, the rise is 4%; for the fiat six jmmths, if was 3.9% 


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R«e. No. ouoKasne 
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fteptnlcafSouBiAttoaf 

The above mentioned 
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US groups 
in Internet 
commerce 
agreement 

By Louise Kehoe 

Tandem Computers of the US 
has reached a preliminary 
agreement to collaborate with 
Open Market, a software com- 
pany, in the emerging market 
for dectromc commerce on the 
Internet, a global computer 
Information network. 

Tandem sees electronic com* 
merce as a significant new 
market opportunity. Open 
Market, based in Cambridge, 
Massachusetts, has developed 
software that enables compa- 
nies to establish and manag e 
on-line shopping services- 

Electronic commerce is 
expected to reduce substan- 
tially the paperwork involved 
in corporate purchasing - cur- 
rently estimated at more than 
2.7bn pages daily. It also 
offers new ways to reach mass 
markets of c o n su me r s. 

The Internet has more than 
25m users and is estimated to 
be growing at a rate of two to 
three million new users a 
month. 

On-line shopping will gener- 
ate about $4.8bn a year by 
1998, predicts Forrester 
Research, a US market 
research company. 

Growth will be driven by the 
proliferation of home comput- 
ers and by improvements in 
on-line product presentation, 
it says. 

Also boosting growth is the 
expanding use of commercial 
on-line computer Information 
and communications services 
snch as Prodigy, America 
Online and CompuServe. At 
the end of 1993 these services 
had about 3.9m subscribers. 
The number is expected to 
reach about 5.2m by the end of 
this year, according to market 
researchers. 


Banks seek tighter loan covenants 


M any US banks may 
have breathed a sigh 
of relief at the warn- 
ing by Mr Walter Shipley, 
chairman and phtef executive 
of Chemical Banking, rtm t he 
is prepared to give up Chemi- 
cal's leadership of the US syn- 
dicated loans market rather 
than accept looser terms for 

lending 

European banks will hope 
that this example becomes the 
latest development In syndi- 
cated lending to cross the 
Atlantic. 

There were signs last year 
that the revival of syndicated 
lending - in which a loan to a 
large company is arranged by 
one or two lead banks, and an 
unlimited number of banks 
contribute to it - was bringing 
back to banks familiar 
dangers. 

It has become reality this 
year, as European banks 
have followed those in 
the US by narrowing margins 
and slackening loan covenants. 

Many banks fear a repeat of 
the late 1980s, when the driv- 
ing down of margins as hanks 
competed for assets was fol- 
lowed by a wave of corporate 
collapses. 

A form of lending that would 
scarcely have brought an 
adequate return on capital for 
banks, even if every loan had 
been paid back, became the 
latest of a series of collective 
blunders by the banking 
industry. 

Yet, while banks have been 
groping for a floor to lending 
terms, developments such as 
the reentry of smaller Japa- 
nese banks since April have 
made it elusive. 

“One keeps hearing of bank 
credit committees saying they 
will not go below this or that 
line, but one rapidly hears of a 
deal that does so," says Mr 
Stanley Hum, head of loan 
syndication at Midland Rank 
As banks in first the US and 
then Europe have rebuilt capi- 
tal ratios to well above the 


minimum levels set by the 1988 
Basle accord, they have been 
seeking assets again 
“There is an awful lot of 
money chasing very few 
borrowers, and the imbalance 
of supply and demand is driv- 
ing prices down,'* says Mr Jon- 
athan Macdonald, a vice-presi- 
dent of Union Bank of 
Switzerland. 


of European loan syndication. 

However, syndicated lending 
can be more profitable for 
banks than it immediately 
appears. One reason is that the 
cost of funds of large banks, 
such as the UK dealers, is not 
in practice labor. Because of 
their «nri strength, they 
can obtain money at about 10 
basis points below Libor, 


Revival in syndicated lending 
has reawakened old fears, write 

John Gapper and Graham Bowley 


Some deals are starting to 
resemble the notorious multi- 
option facilities (Mofis) of the 
late 1980s, which made hanVg 
bid to take part when 
companies exercised agreed 
farilitire 

“Mofis are so discredited that 
we will not see them again, but 
a facility with a bidding mech- 
anism is a Mof by another 
name." says one head of loan 
syndication for a European 
bank. 

In theory, syndicated lending 
ought to be a dying art. 

Banks have calculated that 
they need a margin of at least 
80 basis points (hundredths of 
a percentage point) over the 
London interbank offered rate 
(Libor) on loans to single-A 
grade borrowers to make ade- 
quate returns. In practice, mar- 
gins have fallen this year from 
about 45 to between 20 and 22 
basis points. 

C ompanies were also 
thought to be shifting 
towards relying on capi- 
tal markets for short- and 
medium-term finance. But 
bond market volatility this 
year lias made many corporate 
treasurers re think. 

“Margins are at historically 
low levels, and borrowers can 
achieve terms similar to 
bond markets," says Mr Peter 
Nightingale, Chemical’s head 


which makes their actual lend- 
ing margins about One-third 
higher than their apparent 
ones. 

A second reason is that 
banks get fees for lending in 
addition to the margin. These 
range from underwriting fees 
for hanks th at syndicate and 
lead manage loans, to partic- 
ipation fees for smaller banks. 
Many larger banks try to 
arrange and lead manage as 
many loans as possible to 
obtain fees, and keep 
only a tiny proportion of 
those loans on tbeir balance 
sheets. 

A third reason is that hanks 
StiQ use tending as a maana of 

attracting other business such 
as cash management and 
cheque clearing. 

All these factors have led to 
a big revival in the global syn- 
dicated loans mar ket. There 
were $795bn of loans in the 
global last year, compared with 
$627bn in 1992, according to 
Euromoney Loanware. About 
$497bn was lent in the first 
nine months of this year, »nri 
activity is expected to inten- 
sify. 

This has led not only to 
margins tightening sharply, 
but banks have also been 
willing to lend for longer, 
locking themselves into 
low-retum assets. Banks were 
reluctant to lend for more than 


three years In toe early 1990s, 
but facilities such as the recent 
10 -year, £l00m loan negotiated 
by Si, the UK venture capital 
group, have become 
increasingly common. 

Furthermore, fees are com- 
ing under pressure. The stan- 
dard commitment fee for 
undrawn facilities has fallen to 
10 basis points or below. 

Some bankers report that 
legal fees charged on standard 
loans by tending UK firms have 
been forced down to abont 
£10,000 from £25,000 two years 
ago. They also fear that banks 
will start to wrap fees into toe 
overall lending marg in 
Potentially the most worry- 
ing development for banks, 
however, Is the relaxation of 
loan covenants. These com- 
monly include fi na nc ial ratios 
such as interest cover, gearing 
and the minimum net worth of 
the borrower. 

I t is toe willingness of some 
banks to accept deals with 
loose covenants - and 
some deals with none - that 
has particularly worried Mr 
Shipley. 

Some bankers argue that 
covenants are not .«ri gnfftomt 
because European credit qual- 
ity is Improving, and cove- 
nants did not prevent the last 
wave of corporate defaults. Yet 
given the ability of a single 
corporate collapse to elimina te 
the slim return on assets in a 
bank’s syndicated lending 
activities, others regard the 
protection of covenants as 
vitaL 

Mr Shipley’s warning may be 
a first step to restoring equilib- 
rium for other banks. But the 
protection of loan, covenants 
will require senior directors of 
banks to back the judgment of 
internal credit committees 
against those of executives 
who market loans. 

Without such tough mea- 
sures, many bankers fear that 
history will repeat itself 
uncomfortably quickly. 


IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIMIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII 


TMs annomrcmmt appears as a matter of record ortfy 



British Telecommunications pic 


has exchanged £960 million nominal of its high coupon Bonds with maturities from 1997 to 2005 held by Her 
Majesty’s Treasury for £1,078 million nominal of Bonds of the same maturities having current coupons. 
British Telecommunications p!c has also redeemed £540 million nominal of these currenr 
coupon Bonds following a competitive tender conducted on behalf of 


Her Majesty’s Treasury 


This redemption of current coupon Bonds was partially refinanced by the simultaneous issue by British 
Telecommunications pic of £300 million Bonds 2020 and U-S.S375 million Guaranteed Notes 1997. 


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BTTp 

British Telecommunications pic 


BT Finance B.V. 

£300,000,000 

8 5 /i per cent. Bonds 2020 


U.S.$375,000,000 

6‘/i per cent. Guaranteed Notes 1997 

British Telecommunications pic 

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U—mi 

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ABN AMBO Bank N.V. CS Km Boston 

Otin £oo(r l.fnaad DroacSc Bant AC London 

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The undersigned acted as financial advisers to British Telecommunications pic 
in relation to the exchange and redemption of the Bonds and as lead managers of the new issues 


Lehman Brothers 


S.G. Warburg Securities 


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FINANCIAL TIMES THURSDAY NOVEMBER 3 *994 


INTERNATIONAL COMPANIES AND FINANCE 


YPF earnings advani 
14% in third quarter 

Bv David PBHnn Mr Jns£ Estenssnrn YPF YPF denies 


By David PBHng 
hi Buenos Afres 


Higher oil and gas prices 
helped YPF, Argentina's priva- 
tised oil group, inc r ease net 
profits 11 per cent in the third 
quarter to friflim from $159m in 
the same period of 1933. 

However, operating profit 
fell slightly over the same 
period to (223m in the quarter 
to September 30, from 5228m. 

Exploration costs more than 
doubled to (122m in the first 
nine months, part of the com- 
pany's ambitious investment 
plans over the next 10 years. 


Mr Jos6 Estenssoro, YPF 
president and chief executive, 
said the rise in net income was 
due to "higher crude oil pro- 
duction and prices, higher nat- 
ural gas prices and lower asset 
taxes”. However, increased 
depreciation and exploration 
spending kept operating 
income flat 

In the first nine mfinths of 

this year, net revenue from 
sales slipped 1.3 per cent to 
(299bn, partly as a result of 
“weather problems" to the sec- 
ond quarter, but in the third 
quarter revenue was up by 3-8 
per cent to $t.09bn. 


YPF denied local press 
reports that it had made an oil 
discovery in Rincon de los 
Sauces, in Argentina’s central 
Neuquen basin, but it did con- 
firm that it was exploring the 
area. 

Mr Christopher Ecclestone of 
brokers toteracciones said the 
results were “good at the bot- 
tom line" but that YPF was 
losing position in some areas" 
with lower sates of gasoline, 
diesel and fuel oil He also 
pointed out that bottom-line 
results were helped by taxes of 
only (2m against fl4m in the 
same quarter of 199& 


Tenneco to 
offer more 
shares in 
Case unit 


By Laurie Morse in Chicago 


Digital unveils new products 


By Aten Cane 


Digital Equipment, the 
troubled US computer manu- 
facturer, yesterday unveiled a 
new product and distribution 
strategy as part of Its drive to 
return to growth and profit- 
ability. 

It announced eight new 
workstations and midrange 
machines based on its world- 
leading “Alpha” technology, 
and discounts for dealers. 

Alpha microprocessors are 
reckoned to be the world's fast- 
est and Digital has staked its 
future on their success. Mr 
Enrico Pesatori, head of Digi- 
tals computer systems divi- 


sion, said yesterday that in the 
first quarter of the current 
year. Alpha sales increased by 
13S per cent Last year sales of 
Alpha technology amounted to 
51 tm. 

The computers announced 
yesterday are an attempt to 
combine the power of the fast- 
est Alpha microprocessors 
with the economics of low cost 
personal computers; this will 
cut both purchase price and 
running costs. The new 
machines are priced between 
(7,000 and (15,000. 

The new dealer discounts, 
coupled with improved terms 
and conditions of service, are 
an attempt to make Digital 


products more attractive to 
dealers and other distributors, 
a group that Digital has 
neglected in the past Now it 
will provide partners with mar- 
keting support to increase 
dpmanri and br oa d en the mar- 
ket for Alpha products. 

The company is already run- 
ning a substantial advertising 
campaign to reassure custom- 
ers and potential customers of 
its commitment to the com- 
puter business and this will be 
complemented by a rash of 
product advertising. 

The Alpha machines, how- 
ever, face stiff competition 
from Power PC computers 
from Apple and IBM. 


These securities have not been registered under the Securities Act of WM and may not be offered or sold in the United 
States or to a UJS. person, absent registration or an applicable axmptinn from the registration requirements. Ml of these 
securities have been sold. This announcement appears as a matter cf record only . 


U.SJ.377, 992,615 


CEMIG 


Companhia Energetica de Minas Gerais 

(Energy Company rtf Minas Gerais) 


4,094,920,000 Preferred Shares 


Price U.Sj$ 24 per ADS 


Global Coordinator 


J.R Morgan Securities Inc. 


International Offering 

1,725,000 American Depositary Shores (Regulation S ADvSs) 
each representing 260 Preferred Sliares 


J.P. Morgan Securities Ltd. 


NM Rothschild and Smith New Court 


Garantia Banking Limited 

Indosuez Capital 


United States Offering 

4,025,000 American Depositary Shores (Rule 144AADSs) 
each representing 260 Preferred Shares 


J.R Morgan Securities Inc. 


Garantia Inc. 


NM Rothschild and Smith New Court 


Bear, Steams & Go. Inc. Salomon Brothers Ine Factual Capital Corporation 


Brazilian Offering 
2^99,920,000 Preferred Shares 


Brazilian Lead Manager and advisor to the selling shareholder 

Banco de Desenvolvimento de Minas Gerais SA-BDMG 


September 22, 1994 


cjv=i> 


Microsoft in TV software project 


f: 




By Louise Kahoe 
in San Francisco 


Tenneco, the diversified OS 
Industrial group, is to issue 
15.8m more shares of its 
J.L Case farm and construc- 
tion equipment unit in a deal 
that will reduce Tenneco’s 
holding in the company to less 
than SO per cent 

The share sale, which fol- 
lows an initial public offering 
of Case’s shares last Jane, is 
expected to net Tenneco about 
(320m, as well as (150m in 
cash benefits related to taxes. 

In the Jane offering, Ten- 
neco sold 29 per cent of Case 
to the public at (19 a share, 
raising more than (380m. Case 
shares were (20% at lunchtime 
on the New York Stock 
Exchange. 

The offering puts Tenneco in 
a race to reinvest the proceeds 
from the Case sales in a way 
that will replace Case's contri- 
butions to earnings. 

The second-largest farm 
equipment maker in the US, 
and the world’s largest 
manufacturer and distributor 
of light and medium-sized 
construction machinery. Case 
had sales of nearly (4 bn last 
year. 

During the fourth quarter, 
Case contributed (73m, or 
almost 20 per cent, of Ten- 
neco’s (363m operating 
income. 


Microsoft, the world’s largest 
computer software company, 
aims to establish itself as the 
leading software supplier for 
interactive broadband net- 
works that will provide inter- 
active television and home PC 


services. 

The company yesterday 
announced an "end-txvend soft- 
ware solution” for interactive 
TV, including distributed oper- 
ating system software for con- 
necting television set-top boxes 
and personal computers with a 
wide variety of services, plus 
media server software for 
delivering video on demand 
and a set of interactive system 
applications. 

The Microsoft software is to 
be tested in an interactive 


TV trial being staged next year 
in Seattle. Washington, by 
Tele-Communications, the larg- 
est US cable-TV operator. 

Microsoft yesterday 
announced agreements with 
other network operators 
including Deutsche Telekom, 
Telstra of Australia and US 
West Communications, a 
regional US telephone com- 
pany, which will also test the 
Microsoft technology. 

Previously, Rogers Cable- 
systems, Nippon Telegraph & 
Telephone and SBC Communi- 
cations also announced plans 
to use the Microsoft technol- 


ogy. 

Hewlett-Packard, the second 
largest US computer company, 
and NEC of Japan, are to 
develop set-top boxes that 
will be used to link TV 
sets to inte racti ve serv- 


ices using Microsoft software. 

They join General Instru- 
ment, the leading maker of 
cable-TV converter boxes, in 
supporting Microsoft technol- 
ogy. 

NEC will also build “media 
servers" for video on d eman d 
services. Intel and Compaq 
Computer have previously 
announced their intention to 
build servers compatible with 
tile Microsoft software. 

Several systems integrators 
including Alcatel Andersen 
C ons ultin g , Lockheed Missiles 
& Space, NTT Data Communi- 
cations Systems and Olivetti 
have committed to provide ser- 
vice and support for testing 
and global deployment of toe 
Microsoft technology, 

“Microsoft is pleased to be 
working with a broad range of 
telecommunications leaders as 


Aetna credit rating cut again 


By Richard Waters 
In New York 


Aetna, the US insurer, suffered 
another cut in its credit rating 
this week, the latest in a rash 
of downgradings that has hit 
the US property/casualty insur- 
ance industry in the wake of 
growing concerns over pollu- 
tion and asbestos liabilities. 

Others to be downgraded in 
recent weeks include Cigna, 
which on Monday announced a 
withdrawal from the reinsur- 
ance business to help rebuild 
the profitability of its property/ 
casualty operations, and Conti- 
nental, which last month set 
aside (400m for possible future 
pollution claims. 

AM Best, the specialist insur- 
ance rating concern, said it 
had reduced Aetna's rating to 
single-A minus from single A. 
U cited the company’s long 
drawn-out attempts to cut 
costs, as well as poor condi- 
tions in the commercial proper- 


ty/casualty business and “the 
ongoing earnings drag and vol- 
atility associated with emerg- 
ing environmental and asbes- 
tos claims". 

Aetna surprised Wall Street 
in July by announcing big 
pollution-related costs. The 
company lost its double-A 
credit rating from Standard & 
Poor’s in August, and in Sep- 
tember was cut to A2 from AI 
by Moody’s. 

At the end of June, the com- 
pany's reserves against envi- 
ronmental losses stood at 
$334m - far less than other big 
insurers, such as Cigna, whose 
reserves were $775 m, according 
to insurance Industry analysts 
at Oppenheimer in New York. 
The contrast suggests that 
Aetna will have to put aside 
significantly greater reserves 
in future, Oppenheimer said. 

Cigna, meanwhile, lost its 
single-A standing in August 
when Moody’s reduced its rat- 
ing to Baal, citing in part its 


Salomon debt 
downgraded 
after losses 


Poor returns from US 


purchases, study says 


By Patrick Harverson 
in New York 


By Richard Waters 
In New York 


Standard & Poor's, the US 
credit rating agency, has down- 
graded the debt of Salomon 
Inc, a week after the group’s 
Salomon Brothers securities 
broking unit reported its sec- 
ond consecutive quarter of 
heavy losses. 

The downgrading of Salo- 
mon's senior debt rating, from 
stogie A minus to triple B plus, 
will make it more expensive 
for Salomon to raise hinds in 
tbe capital markets, because 
issuers with lower ratings have 
to offer higher yields to con- 
vince investors to buy their 
debt 

“The immediate effect is a 
higher cost of funding for Salo- 
mon," said Mr Michael Flana- 
gan, securities industry ana- 
lyst at Upper Analytical in 
New York. 

The loss of an A rating will 
also shrink the pool of poten- 
tial buyers of Salomon's debt, 
because some institutions do 
not invest in securities listed 
below an A rating. 

S&P also lowered its ratings 
on Salomon's subordinated 
debt and preferred stock. 


Foreign companies have 
suffered poor and declining 
returns on their US acquisi- 
tions in recent years, but could 
see a rebound in overall profit- 
ability in the near future, 
according to a study by two 
economists at the Federal 
Reserve Bank of New York. 

Tbe two, Mr David Las ter 
and Mr Robert McCauley, note 
that foreigners have paid 
(316bn to buy US companies 
over the past decade, but lost 
money overall on their hold- 
ings in 1992 - a year of record 
profits for US-owned compa- 
nies. The performance, the 
authors say, “strikes many as 
unbelievable”. 

They attribute the results to 
the tendency of foreign compa- 
nies to buy poorly-performing 
US businesses, and to attempt 
to rebuild them through fresh 
investment “These companies 
paid top dollar for underper- 
forming US firms, borrowed 
heavily, and then spent freely 
on investment and marketing," 
the authors say. 

The overall poor perfor- 
mance of foreign -owned firms 
in 1992 also reflects tbe heavy 


level of purchases in recent 
years, with many of the busi- 
nesses stiff in the early phases 
of planned turnrounds. 

With fewer purchases now, 
and with some foreigners shed- 
ding their loss-making US com- 
panies. overall profitability 
will rise in the coining years, 
according to the Fed study. 

The authors dismiss the sug- 
gestion that a weak dollar has 
depressed the earnings in 
recent years, but say there is 
“some evidence” that foreign 
companies have sought to 
reduce their profits in the US 
to cut their tax bills there. 

• UK companies were the big- 
gest foreign investors in the 
US last year, and this year 
should see their total US 
investments overhaul those of 
Japanese companies, according 
to a study of foreign direct 
investment by Arthur Ander- 
sen. 

The accounting firm puts 
investment by UK firms either 
in acquisitions or creation and 
expansion of businesses at 
(9.03bn last year, four times 
the level of 1992. Japanese com- 
panies, meanwhile, invested 
(ISbn, down from S2£bn the 
year before. These figures are 
well below peaks hit in 1989. 


NOTICE 

to the holders of outstanding 
U.S. $125,000,000 

6.75 per cent. Convertible Bonds Due 2006 
(the “Bonds”) 
of 



PT Astra International 
( the “Company”) 


b m 

Bank of 

Communications 

fUie Dcvrlupmmt Bdnl •.( 

rhr RrpubU: ut Uiutul 

U.S. $100,000,000 
floating Rate Notes due 2001 

fn the Intenat Peri*) )lu OcoJxt. , 
IW «> 28 th Apnl. IW 5 the Note* I 
will carry * Rale uf Inicrat of 6 . 10 % 
per annum, until a Coupon Amount of 
U.S. S 7 . 5 M.M per U.S. $ 250,000 
Note. The relevant Irwcnar Payment 
rtue will ki ukh Apnl. W5, 


NOTICE IS HEREBY GIVEN to the holders of the Bonds chat, the 
Company has distributed to the holders of its common stock dividend 
shares for up to 971,912,800 shares of common stock of the Company. 
Such shares have been distributed pursuant to an Extraordinary 
General Meeting of Shareholders held on 26th May, 1994- 
As a result of the shores distribution, the conversion prke of the Bonds 
have been adjusted from Rp. 23.035.00 to Rp. 5,758.75 effective on 
1st August, 1994. 


□ Banker* Trust 
Corapway.Lor 


Corepuay. London Agra iBank 


3nJ November, 


PT Astra International 


PRICOA Worldwide Investors Portfolio 

SocldW (Tlnvwtiswmenl a CtjrtaJ Variable 
Registered Office: L-244B Luxembourg 
47, Boulevard Royal 
R.C.S. Luxembourg B 39.048 


NOTICE TO THE SHAREHOLDERS 
By regist e red maB October 4. 1994 


■ja ALLIANCE a LEICESTER 
AKaocs & Leicester Building Society 

£150,000,000 

Floating Rate Notes 
doe 1996 

For the three months 3 1st 
October. 1994 to Jlst January, 
1995 the Note* will carry an 
interest rate ut 6.125% per 
annum with an interest nmounr 
ot’ £77.19 per £5,000 and 
£1.543.84 per £100,000 Bond, 
payable an )lsr January, 1995. 

Lb<nf t «1 tl|» LokenkjBf StaicL Ewhaflfc. 


Mb hereby give you natica to tbe Annual General M ooti ng of Shareholders of 
PRICOA WbrWsiM* Investors Portfolio (the “Company") to be heW tat 


PRICOA Worldwide Investors Portfolio (the “Company") to be held tat 
Luxembourg at Ihe registered office, on November 41. t994 at 11.00 a-m. tai order 
to defiberate on ihe Wowing agenda: 

AGENDA 

1. Report of the Board of Directors. 

2. Report of the Audior. 

3. Approval of financial statemeres far the fiscal yuer ended March 3t, 1894. 

4. Discharged Directors with respect to the performance of the* duties during 
fin fiscal year ended Match 31. 1994. 

5. Election as Directors lor a term of one year of; 

Me Robert F. Gurda 
Mr. John A. Morrell 
Sir Michael Sandberg 
Mr. Rogerto C. S. Martms 

6. Determination as to dstrtoudorts. 

7. Other business. 

No quorum on the shares outstanding is retired by law and resolutions of 
items ol Ihe agenda may be passed by the affirmative vtrie of die simple majority 
of the shares present or represented at the meeting. 

By order of the Board of Directors 


I M Banker, Trust 
U Company, Lor 


Company, London AgeuBaak 



we complete the design of our 
system; together we can build 
a basis for the evolving infor- 
mation society” said Mr Craig 
Mundie, vice-president of the 
advanced consumer technology 
division at Microsoft’ 
Microsoft said it would- pub- 
lish details of interfaces needed 
to make use of Its software 
and offer the development 
tools necessary for other devel- 
opers to create services, appli- 
cations and multimedia con* 
tent for interactive TV. 

* “Our strategy is to develop s 
deployable system, where toe 
engineering work is complete, 
and then test it at every 
increasing scale in order to get 
it to commercial operation," 
said Ms Laura Je nning s, sailor 
director of toe advanced corn 

Sumer technology division at 
Microsoft. 


1 ‘ its I u 

i Bong * 


“exposure to adverse loss 
development from asbestos and 
environmental claims". 

Both Aetna and Cigna con- 
tested the agencies’ decisions, 
arguing that they failed to take 
account of efforts made by 
both to boost profitability in 
their property/casualty busi- 
nesses. 

Mr William Wilt, an associ- 
ate analyst at Moody's, said 
yesterday the agency believed 
US insurers generally had ade- 
quate reserves to meet normal 
claims. 

However, he added that 
catastrophe losses among 
insurers of personal insurance, 
along with environmental and 
asbestos losses among commer- 
cial insurers, could eventually 
prove these reserves to be 
totally inadequate. 

Commenting on the possible 
scale of the future losses, Mr 
Wilt said “They're unquan till- 
able. It’s anybody's guess, 
really." 


Columbia/HCA 
boosted by 
out-patient side 


By Richard Waters 


Columbia/HCA, the US’s 
biggest hospital * group, 
recorded a 14 per cent increase 
in operating earnings in the 
three months to toe end of Sep- 
tember on the back of a jump 
in out-patient services. 

The company's operating ; 
profit margin improved to 1&6 
per cent, from 17.9 per cent a 
year ago, said Mr David Vande- 
water, chief operating officer. 

Columbia/HCA has puffed off 
a string of multi-biilion dollar 
acquisitions In the past 18 
months In an attempt to bol- 
ster its market position and 
strengthen profit margins at a 
time whan healthcare compa- 
nies across the US are under 
pressure to reduce their prices. 

The third-quarter figures 
reflect a 2 par cent increase in 
admissions at hospitals which 
the company had owned a year 
before, and a 52 per cent 
Increase to out-patient visits. 
While hospital stays are declin- 
ing overall In the US, Colum- 
bia/HCA has advanced in part 
by buying new hospitals in the 
same areas as its existing facil- 
ities and tool shifting patients 
between sites to boost admis- 
sion rates. 

Operating protits for the 
period were (507m, up 14 per 
cent on a year ago. while total 
revenues were (2.7hn, up 9.5 
per cent Net income for the 
quarter was (153m, or 44 cents 
a share, after a (23m charge for 
the early retirement of debt 
The company reported an 
after-tax loss of (56m. or 16 
cents a share, in the 1993 
period after (193m of one-off 
charges. 


Talisman ahead 
at C$44. lm 


Strong North American 
demand for natural gas and 
gas liquids and the addition of 
oil production from the North 
Sea and Indonesia lifted Talis- 
man Energy's net profit at nine 
months to C$44Jm (US$32.7m), 
or 61 cents a share, from 
C$19 An, or 33 cents, a year 
ago, on revenues of C$387m 
against C$219m, writes Robert 
Glhbens in Montreal. 

Third-quarter net profit was 
C(15.2m, or 18 cents, up from 
C$4jJm, or 7 cents, on revenues 
of Cp80m against C$94m. 


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INTERNATIONAL COMPANIES AND CAPITAL MARKETS 


Komatsu benefits from public works projects 


MlI*. -C* 


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ulijjy - i . " 

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€ By MfcMyo Nafca mo t o 
In Tokyo 

Komatsu; the Japanese maker of 
construction equipment, posted a 5 per 
cent increase in nofrconsolidated recur- 
ring profits - before extraordinary 
items and tax - for the*iirst six months 
of fiscal year 1994-95, helped by strong 
demand' from domestic -public works 
projects. 

The company, winch is. the world's 
second-largest integrated rmflfor of con- 


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struction machinery, increased recur- 
ring profits to Y7.4bn (S76.48m) from a 
previous YTbn, in spite of a 3 per cent 
Hall in sales to Y235£bn from YZ43.ibn. 
Net profits surged 21 per cent to YL3bn 
from-Y3.5bn. 

Strong demand from public works 
projects in Japan helped the company 
overcome a slump in private-sector 
orders, Komatsu said. As a result, 
domestic sales of construction equip- 
ment rose 5 per cent. 

However, the weakness of .private- 


sector d e mand pushed domestic sales of 
its industrial machinery division down 
38 per cent. 

In terms of exports, Komatsu suffered 
from sluggish demand for construction 
machinery in its largest markets in the 
Middle East, Russia and China, which 
aggravated the adverse effects of the 
yen’s sharp appreciation. 

Exports of industrial machinery 
plunged 52 per cent as important cus- 
tomers among vehicle makers in 
Europe and Asia cut capital Investment 


substantially. Komatsu exports mainly 
body presses tor the motor industry.* 

Komatsu expects the weak conditions 
in its export markets to continue in the 
second half. As a result, it has revised 
its full-year sales forecast down to 
YSOObn from the Y510bn forecast in 
May. 

However, Komatsu is restructuring 
its operations and expects to be able to 
achieve its earlier forecast for recurring 
profits of Y17bn, while forecasting net 
profits unchanged at Y9bn. 


The airline has redesigned its livery to emphasise its Asian image, writes Simon Holberton 


Gathay Pacific 
puts its future 
in Hong Kong 


Nwhstop: how Europe»Asia/Pacfffe route services have changed 


<%) 

60 


Non stop [ | One atop |gj Two* otops 


T he twin elements of 
Cathay Pacific’s strat- 
egy for beating the 
recession in the airline indus- 
try came together this week 
when the Hong Kong-based 
carrier unveiled the first of its 
newly-acquired, long-range Air- 
bus A340s sporting its new 
livery. 

The redesign of Cathay's cor- 
porate identity is meant to 
shift the airline’s image from 
that off a British to an Asian 
airline. The acquisition of the 
A3405 is intended to allow 
Cathay to offer a better service 
by providing more direct 
flights - especially In Europe - 
tha-n it has currently been able 
to do. 

Cathay's investment in new 
aircraft - it has orders for $4bn 
worth off Airbus aircraft, pro- 
duced by a European consor- 
tium - and the new corporate 
iraagip linfWKwpc a third, but 
less stressed, aspect of the mes- 
sage it wishes to convey. 'This 
is that Cathay, which is cur- 
rently 52 per emit owned by 
Swire Pacific, the UK conglom- 
erate, has a fixture in Hong 
Kong after 1997. 

“The old livery had been 
with us for. more than. 25 
years," says Mr Peter Stitch, 
Cathay chainnan. 

“It was distinctive and had 
done us proud, but its associa- 
tion is with old Hong Kang. I 
don't like to use the word ’colo- 
nial’, but as with the tail, 
which used to carry tbs Union 
Jack [flag], the old livery was 
outdated. We wanted some- 
thing that reflected ' that 
change: we wanted something 
Asian . in appearance: we 
wanted a qualify look with an 
1 Asian flavour.” 

This desire came from the 
feet that nearly 80 per cent of 
Cathay’s passengers are Aslan. 
The research Cathay con- 


ducted as part of its image 
redesign underlined its over- 
whelmingly Asian customer 
base, and that it was not 
“catering quite as much as we 
should to these customers". 
Although Caucasian travellers 
saw Cathay as an Asian air- 
line, Asians, who perceive the 
airline as being wen- managed 
and safe, did not 

Cathay is trying to change 
that The airline now offers a 
wider range of Asian meals 
and hag begun to communicate 
in Asian languages. In-flight 
information and reading 
materials are now provided in 
Japanese, Korean, Mandarin 
and Cantonese, as well as 

Kn glwth 

Furthermore, as the result of 
a management reorganisation 
last year the airline’s tour gen- 
eral managers in charge of 
routes were given greater 
authority to alter the services 
to reflect local taste. Taiwan- 
ese travellers, for example, 
want to eat real Chinese food 
and want to buy duty-free 
goods on board. Within the 
constraints of a ome-hour fli ght 
Cathay is attempting to meet 
that need. 



M r Sufch says the air- 
line always thought 
the Boeing 747-400 
would serve its long-haul air- 
craft needs, but the recession 
in the airline industry and 
changing consumer tastes 
altered that “Serving smaller 
airports with the 747 became 
exceedingly expensive as land- 
ing fees and over-flight fees 
rose,” he said. 

. As the airline was flying 
half-full 747s to Zuricb via 
Rome it found it was losing out 
to Swissair and Alitalia which 
were offering a direct service 
and operating the smaller 
McDonnell Douglas MD-1X 


SouckOAG, Airbus 

“We had a good formula in 
Asia where we used TriStars 
on the smaller routes but 747s 
on the big routes such as 
Tokyo and Singapore." says Mr 
Sutch. 

“We thought a similar 
approach could be used on 
long haul Zurich couldn’t jus- 
tify a non-stop 747 service - 
(he market is not big enough - 
so it became a choice between 
the Boeing 777 or the A340. At 
the of the day, while the 
777 is a superb aircraft, the 
economies of a four-engine air- 
craft for ultra-long haul are 
better than those for a two 
engine aircraft.’’ 

The Airbus had two other 
advantages. Cathay preferred 
the seat configuration to that 
of the 777. The A340 offers six 
abreast in business class, 
rather than seven abreast for 
the 777, and eight abreast in 
economy, rather than nine 
abreast. Another compelling 
fector was “commonality". 

There are many common fea- 
tures between the A340 and its 
smaller sister aircraft the A330, 
and indeed the even smaller 
A320. This Tneans that pilots do 
not need to spend as much 
time learnin g to fly Others in 
the Airbus family once they 
have learned to fly one. This is 
a large cost saving for airlines 
and leads to greater pilot pro- 
ductivity as they can be 


switched between long- and 
short-haul routes. 

Cathay is probably the only 
airline which has its future 
regularly questioned. The 
change from UK to Chinese 
sovereignty in 1997 is some- 
thing which leads many to 
question whether China will 
allow Cathay to exist in its 
present form while being UK- 
con trailed, 

E arlier this year Cathay 
received welcome reas- 
surance of its future 
when China Southern Airlines, 
the Canton-based mainland 
carrier, withdrew from discus- 
sions to buy Air Hong Kong, a 
small local air freight carrier. 
Cathay was the other bidder 
and when China Southern 
withdrew it snapped up 75 per 
cent of Air Hong Kong for 
HK$20Qm ($25 .88m). 

What was interesting about 
China Southern’s withdrawal 
was Beijing’s intervention- Mr 
Lu Ping, China's top official on 
Hong Kong affairs, personally 
intervened to prevent China 
Southern buying Air Hong 
Kong. 

Failure to have done so 
would have undermined, possi- 
bly fatally, the guarantee to 
Cathay implicit in Sino-British 
agreements that it would be 
the sole airline for Hong Kong 
after 1997. 


Mr Sutch demurs when 
asked about the Air Hong 
Kong talks - in which he rep- 
resented Cathay’s interests. “1 
understand that [China 
Southern] did not have the 
wholehearted support of the 
authorities in China. 

“If that is the case then it 
was just another reflection of 
the policy of the state council, 
namely, that Hong Kong 
should be able to develop inde- 
pendently as it has in the 
past." 

Inevitably, the firmness of 
Swire's 52 per cent ownership 
of Cathay is questioned. Mr 
John Godfrey, conglomerates 
analyst at Kleinwort Benson 
Securities in Hong Kong, 
believes that after 1997 Swire 
may well find it prudent to 
trim its stake in the airline to 
below 50 per cent. 

He believes a merger 
between Cathay and Dragon 
Air might be the answer. “It is 
logically possible to wrap 
them up into one group,” he 
says. 

Without commenting 
directly on Mr Godfrey’s sug- 
gestion. Swire executives con- 
cede that as things develop 
there may be a need to conduct 
some fine-tuning of the Swire 
shareholding, but nothing dra- 
matic. 

“One has to be realistic," 
observes one executive. 


Thai banking sector buoyant 


By WHam Barnes 
(n Bangkok - 

The Thai banking sector is 
proving to be robustly profit- 
able in the third quarter tn 
spite of fears that, increased 
competition and a tougher 
interest rate regime could hurt 
revenues. 

Bangkok Bank, the biggest 
financial institution in south- 
east Asia, reported a 31 per 
cent rise in third-quarter net 
profits to Bt4.33bn ($173m). 


This proved to be a disappoint- 
ment for some analysts, how- 
ever, after Thai Farmers Bank 
had earlier reported a net gain 
of 66 pm* cent to Bt2.77bn and 
Krung Thai a 75 per cent prof- 
its increase to Bt2j36bn in the 
quarter to eud -September. 

Bangkok Bank - like most 
other Thai banks - issues only 
a bare profits figure prior to 
the release of the foil audited 
financial figures. A spokesman 
said net profits should rise at 
least nearly 30 per cent over 


the ton year to about Btiabn. 

Bangkok Bank's lending 
growth climbed 12 per cent 
over the three quarters, ahead 
of deposit growth which rose 
6.3 per cent, according to the 


Czech brewery to take 
stake in SA company 


Analysts say there have been 
three principal reasons tor the 
sector’s buoyant profits - acce- 
lerated loan growth, 
stower-than-expected conver- 
gence of spreads between 
deposit and lending rates, and 
declining loan-loss provisions. 


By Mark Suzman 
in Johannesburg and 
Joe Cook in Prague 

Ostravar Pivovary, the I2th 
biggest brewer in the Czech 
Republic, has agreed in princi- 
ple to take a 25 per cent stake 
in Vivo Beer, a South African 
beer company that is currently 
a wholly owned subsidiary of 
National Sorghum Brewery, 
the country's largest black - 
owned private company. 


The deal was finalised this 
week in Johannesburg and a 
formal announcement is expec- 
ted shortly. The value of the 
transaction has not been 
released. Under the deal the 
Czech brewer will license its 
production techniques and 
management know-how to the 
South African company. 

NSB was established by the 
South African government to 
serve the market for maize- 
based beers. 


2Ur ann uv u ccwiMf b neither mt offer to seB mrr a solicitation qf n offer to bey eepr of these securities. 
These securities hare not been ngM wrf ander the Securities lia of /9J3 and may not be offend 
or soU tn the (Med States or to Untied States persons dbatsa nffstratba or an appBcabb 
trem p tina from the rtg is sratioa reoutremems. These securities having ham previously 
soU. thtt temouneemeat appears as a mater of record oafy. 


tiodtea 


October M.19M 


$122,000,000 

Caribbean Basin Projects Financing Authority 
(A Governmental Instrumentality of Puerto Rico) 

CBf Industrial Revenue Bonds, 1994 Series A Series B and Series C 
(Jamaica Private Power Company Limited Project) 


0> the extent payable Btmapraoxas ana tenon ana-moneys asegaea msrejor. jn 

asifftmeat of rewemes to te derived by the Authorior from three Loan Agreements 
betmeat the. Authority and' 


JAMAICA 

PRIVATE 

POWER 

COMPANY 



t&Ramtf 


HYDRA-CO Entwprim*r Ibc. 
InttesatiiHUil Energy Partner*. LJ*. 


Ci Energy Corporation 
Prvcunor Systems, lac. 


Energy tnreitars Fa>d Q, UP. Ot3 Co Group, Int 

.. CommonweaH)! Devetopment Cnrpontfea 


DeatK&e Bank AG, 

Nnr Yarik Brads 


Buko Santander SA, 

New York Braadi 

bt the case of the SerktB Bid Serbs C Beads 


BOT FSancU Corporxtln 


NationsBank 


CS First Boston 


Ocv-iier 14. 1094 


77tu announcement appears as a maaer of retard only. 


JAMAICA 

PRIVATE 

POWER 

COMPANY 


a bated liability c oatp an y organized under Jamaican lav which ii sponsored and partly owned by 

qffUioierof 



HYDRA-CO Enterprises, lie. 
InemdimBl Energy Partners, L.P. 


U.S. Energy Corporation 
Preen nor Systems, Inc. 


has entered into a loan agreement with 

National Investment Bank of Jamaica 
$8 1 ,000,000 Loan Facility maturing 20 1 1 


which will be funded by 


International Bank tor 
Reconstruction and Development 


Inter-American 
Development Bank 


IB be drown upon the redemption or maturity of CBI Industrial Reven ue Bonds. 1994 Senes A. 
and has alto entered into debt and uandby debt facilities with 

Commonwealth Development Corporation 
514,000,000 Base Debt Facility 
£5,800,000 Standby Debt Facility 


The undersigned acted arfmaatiai advaors to Jamaica Private Power Company l'or the structuring 
of the Financing 


CS First Boston 


International 
Energy Finance, Ltd. 


ASX wins 
legal battle 
over new 
options 

By NBdd Taft hi Sydney 

The Australian Stock 
Exchange yesterday won a sig- 
nificant victory in its battle 
with the Sydney Futures 
Exchange over who should run 
the market for individual 
share futures. 

A Federal Court judge ruled 
that the ASX could go ahead 
with the launch of low exer- 
cise price options (LEPO&). 
These are designed as very 
deep “in the money” call 
options, whose exercise price 
could be as little as 1 cent. The 
options* structur e means that 
they should trade directly in 
line with the underlying physi- 
cal stock, but - because of the 
option market's margin sys- 
tem - the full price only 
becomes payable on expiry. 

The ASX had proposed 
launching LSPOs last May, a 
response to the SFE's decision 
to introduce futures contracts 
on three individual shares - 
BHP, News Corporation and 
National Australia Bank. The 
SEE was the first to offer indi- 
vidual share futures, and it 
has subsequently added four 
contracts (for MtU, Western 
Mining, Westpac, and BTR 
NyJex). 

Hoping to curtail the ASX's 
rival ambitions, the SFE 
mounted a legal challenge to 
LEFOs, arguing that these 
were in effect futures con- 
tracts and hence could not be 
traded on the ASX. Under Aus- 
tralian corporation law, there 
is a strict divide between the 
two exchanges' potential terri- 
tories: SFE is restricted to 
futures trading, while the ASX 
can only trade securities. 

The SFE’s argument centred 
on the feet that an investor 
was actually obliged to exer- 
cise the options, through “eco- 
nomic imperative”, and this 
obligation made the LKPOs 
“eligible commodity agree- 
ments” - brin g in g them within 
the definition of futures con- 
tracts. In his court ruling yes- 
terday. Mr Justice SackvlUe 
said that it was undeniable 
that the taker of the option 
had a powerful incentive to 
exercise the option or close it 
out But, he added, “be or she 
is not bound to do so, in the 
sense of owing a duty to the 
writer of the option or anyone 
else”. 

Accordingly, he dismissed 
the SFE’s claim, and ordered it 
to pay the ASX’s costs. 

The SFE, acknowledging 
that it was disappointed, said 
it was taking legal advice over 
whether to appeal. 


Survey shows 
explanation is 
still needed 


Bankers have been quick to 
emphasise the importance of 
properly explaining their deriv- 
ative products in the wake of 
this year's highly publicised 
losses by companies in the US 
and Europe. 

A survey of UK companies*, 
published today, shows that 
they still have a lot of work to 
do in this respect. But it also 
trjrtirsitps tha t companies could 
more to help themselves. 

DERIVATIVES 

Ninety corporate treasurers 
- all working for companies 
which make up the FT-SE Mid 
250 index - responded to the 
fourth annual survey by 
Record Treasury Management 
a firm of consultants which 
advises companies on how to 
manage currency and other 

financial risks 

Like previous surveys by 
Record, this one covers the 
views erf corporate treasurers 
on interest rate and currency 
trends as well as broader eco- 
nomic developments. But for 
the first time the survey also 
includes a section on deriva- 
tives. 

It found that although nma 
out of 10 treasurers use deriva- 
tives, more than half these 
users believe salesmen are not 
properly explaining the risks 
involved. 

Thirty-six per cent of respon- 
dents said banks explained 
derivatives “inadequately” and 
a further 18 per cent felt the 
risks were explained “poorly”. 
Only 1 per cent of respondents 
said sellers were explaining 
a r»d quantifying the risks “very 
well". 

However, other sections of 
the survey indicate that corpo- 
rate treasurers may not be 
doing enough to monitor or 
manage their derivatives risks 
adequately. 

The survey shows two partic- 
ular weaknesses. First, in spite 
of cnnitmnfng levels of volatil- 
ity in financial markets, nearly 
three-quarters of respondents 
“mark to market” the value of 
their derivatives exposures no 
more than once a month or 
even less frequently. 

Only 12 per cent “mark to 
market” weekly and 16 per 
cent on a daily basis. Mr Les 
Halpin, chief executive of 
Record, says that treasurers 
should “at least have the facil- 
ity to mark to market on a 
daily basis". 

“Control and monitoring of 
exposure to derivative risk is 
essential even with the less 


exotic products on the mar- 
ket,” insists Record. 

Second, a substantial minor- 
ity of companies have appar- 
ently toiled to heed the lessons 
of some of this year’s corporate 
losses and continue to operate 
corporate treasury depart- 
merits as “profit centres". 

Although three-quarters of 
corporate treasurers rank their 
main role as one of “risk reduc- 
tion”, 9 per cent of respondents 
believe they can “add value". 
Mr Halpin believes corporate 
treasuries aiming to add value 
have run into problems 
because they have taken on 
risks unrelated to their ordi- 
nary business. 

“Nearly one in 10 see them- 
selves as profit centres. That is 
enough to give you all the 
disasters you need for the next 
20 years," he claims. 

More generally, there are 
indications that the manage- 
ment controls and systems for 
derivatives may not be in place 
in some companies. Treasury 
departments appear to allocate 
relatively few resources to 
derivative activity, in spite of 
the feet that it is typically of 
high value and importance to 
the company. 

It is “hard to know what per- 
centage of resources should be 
devoted,” concedes Mr Halpin. 
“But this is evidently some- 
thing that needs looking at ” 

There are also indications 
that some treasurers may not 
be keeping their boards folfy 
informed about their deriva- 
tives activities. 

Nearly halt the companies 
surveyed require board level 
approval for transactions of 
Elm (31.58m) and above, but as 
many as one in five companies 
make decisions about deriva- 
tives transactions of £50m or 
more without board-level 
approval 

More generally - and per- 
haps not surprisingly, given 
the nature of its own activities 
- Record suggests that compa- 
nies Tnflfcp insufficient use of 
specialist advisers. “Treasurers 
tend to see derivatives as a do 
It yourself business. In other 
areas of business where speci- 
alised expertise is needed like 
accounting and the law, com- 
panies appoint outside advis- 
ers,” explains Mr Neil Record, 
chair man. 

Richard Lapper 

*Survey of UK Corporate Trea- 
surers, by Record Treasury 
Management, 32 Peascod Street, 
Windsor, Berks SL4 JEA 


Mitsubishi Materials up 26% 


By EmHco Terazono 
in Tokyo 

Mitsubishi Materials, a leading 
Japanese metals and ceramics 
manufacturer, posted firm 
profits for the half-year to Sep- 
tember due to cost-cutting 
efforts and an improvement in 
its financial balance. 

Non-consolidated recurring 
profits - before extraordinary 
items and tax - for the first 
half rose 26 per cent to Y2.6bn 
($26. 8m) on a 0.3 per cent rise 



Mortgage Funding 
Corporation No.4 PLC 

lliUurpnniieJ in EiuionJ nnJ 
tf’.A-r mdi litniuJ luinbri under 
r. m uvrreJ numbet JI5M65I 

Dual -Class 
Mortgage Backed 
Floating Race Notes 
Due 2035 

Class A-l £100,000.000 

Class A-2 £100,000.000 

For rhe interor period 3 1st 
Ocmlx-r. I ‘KM to .list January. 

the CIjm A-l no res u»ll 
hijr interest at 0.4125'fc per 
annum, intcresr payable uf» 

31st January. IV95 will amount 
to £2t*5.07 per I Ip, 400 note. 
The C!.v»t A 2 notes will bear 
interest of 6.01 25** pet an- 
num. Interest payable on Mst 
January, IP 0 ? will amaunr to 
U ,OK> 71 pet 1 100.000 note. 


BonbersTrtiM 

Company, London Agent Bank 


to overall sales to Y344bn. 
While the company saw an 
increase in shipments of alu- 
minium cans due to a sharp 
rise in demand tor soft drinks, 
declines in product prices off- 
set the gains. 

Operating earnings rose 44J3 
per cent to YS^bn. However 
after-tax profits shrank 4.4 per 
cent to Yl.lbn due to an 
extraordinary loss of Y6.4bn 
stemming from loan-loss 
reserves. The company faced 
earnings declines in spite of a 


SAINT GOBAIN 
ECU 125.000.000,- 
VariaMe Interest Rate 
No Fixed Redemption Date 

Bondholders are hereby 
informed that the rate 
applicable for the twentieth 
interest period has been 
fixed at 6,50 %. 

The Coupon N°20 
will be payable as from 
April 28th 1995 
at a price of ECU 164,31 
representing die period from 
October 28th 1994 to 
April 27(fa 1995 (inciudedj. 

The Fiscal and Reference 1 
Agent 


special profit of Y4.6hn from 
asset and securities sales. 

Sales of metals fell 1.4 per 
cent to Yl22J2bn while cement 
sales declined 4.6 per cent to 
Y54.9bn. Sales of aluminium 
cans rose 8.8 per cent to 
Y41.4bn while new materials 
and silicon sales rose 10.6 per 
cent to Y34.7bn. 

For the year to next March, 
Mitsubishi Materials expects a 
35.6 per cent rise in current 
profits to Y3-5bn on a 2.6 per 
cent rise in sales to Y700bn. 


The Council of Europe 
Resettlement Fund for 
National Refugees and 
Over-Population in 
Europe 

I talian Lire 

150,000,000,000 

Reverse Floating Rate 
Notes due 1998 
For rhe Interest Period 31st 
October. 1994 to 28th April. 
1995. the Notes will cany an 
Interest Rate of 11.63736 per 
cent, per annum with an Inter- 
est Amount of ITL290.934 per 
ITL5.000.000 Nine, and 1TL 
2.909.340 per ITL 50.000. 000 
Note, payable on 28th April, 
1995. 

LbkJ .n ihe Luxflntoiag Stuck E>dvuR 


amoefity & Financial 

Kba ory cm Compact 
Disk 

Deride, of historical fames pikes 
cmd fuiKUmesul informal**, 

iOMMdiMcly u y«wr Gap* 1 *!*! By 

Kting cvei)thȣ yna need m one can-to- 
ibc Kerte CRB InfoTerii kelps yon perienn 
analyse, l a dfl es t i afr 
middiag, prcscnouom and lor* more- 
35 YfcAHS OF HISTORICAL PRICES FOR 
CASK, FUTURES. OPTIONS AND 
INDEX MARKETS. 

9) YEARS OF FUNDAMENTAL INFORMATION 
ON OVER »l)Ll*&«ra]ESL 
Sfanda, tu ihc Wonsaboc fcnatd ® *e CRB 
Cbnunodiy Year Book, die Wde 1 of the 
future* Industry. In addition ro 
Uannoj data. CRB bluTsh alio porides daily 
[nice update, via t Jt-Ounc, lUijlU-Ridderti 
urtlwair ■peaficdly deafened to 
(kK.nl.Vk! and unpotl mt-of-day prices 
directly mw year database. 
INFORMATION! Binder VakU 
KJ» Hmm. 7* fleet Seen. Uarim EC4Y JHY . 
Id: *M (til 7| 8«2 <083 | 


Lavoro Bank Overseas N-V. 

ECU150,000,000 

Floating Rate Guaranteed Notes due 2000 

For the six months 3 1st October, 1994 to 28th ApnJ, [995 the Notes will 
cany an interest rate of 6. 28125% per jnnum with an interest amount of 
ECU 312.32 per ECU 10.000 Note and ECU 7.807. 94 per ECU250.CC0 
Note, payable on 28th April, 1995. 

Listed on the Luxembourg Stock Exchange 


Bankers Trust 
Company, London 


Agent Bank 


CrncORPQ 

U.S. $250,000,000 Floating Rate Notes 
Due November 1999 

ithe'Natesn 

Notice b hereby given tbert rho Role of Interest for ihe toured Period November 
3.1994 to ftfanoy 3, 1995 has been feted at 5.825% and fhor the attend 
payable on me relevant Inkeresi Payment Date February 3, 1995. against 
Coupon No. 1 wil be US$74.43 in raped of US$5,000 nonml of he Notes. 


as** 





22 


FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 


INTERNATIONAL 



MARKETS 


Renewed dollar weakness forces Treasuries lower 


By Lisa Bransten In New York 
and Conner Wddetmaw 
bi London 

Early declines in US Treasury 
prices yesterday morning 
pushed yields to 2K-year highs, 
but a recovery in the dollar 
following Federal Reserve 
intervention helped the market 
bounce off its lows. Prices, 
however, remained firmly 
rooted In negative territory. 

By midday, the benchmark 
30-year government bond was 
down £ at 93ft yielding 8.081 
per cent. At the short end, the 
two-year note was down i at 
S9% to yield 6.926 per cent 

Early gains following 
market-neutral economic news 
were quickly overtaken by 
events in the currency mar- 
kets, where the dollar sank to 
post-1945 lows against the Jap- 
anese yen. 

Renewed weakness in the 
dollar unnerved bond market 


investors, who fear it will deter 
foreign investors from buying 
US assets, and contribute to 
inflation 

At one point, the long bond’s 
decline was sufficient to push 
its yield up to 801 percent, its 
highest level since May 1992. 

Prices bounced back later in 
the morning after the Fed 
intervened in the currency 
market, wiping out early morn- 
ing losses. The success of the 
Fed's actions encouraged 
investors, who had previously 
feared that the central bank 
was unwilling to protect the 
US currency. 

The concern over the dollar 
overshadowed earlier economic 
reports. The commerce depart- 
ment reported no change in its 
influx of l ^iWng economic indi- 
cators for September, and 
revised its August reading 
downward to an increase of 0.5 
per cent from the 0.6 per cent 
figure reported last month. 


The government also 
announced that factory orders 
declined 0.2 per emit in Sep- 
tember, a sharp tumround 
from the 4.7 per cent surge in 
orders reported for the previ- 
ous month. 


GOVERNMENT 

BONDS 


Taken together, the data 
were broadly neutral for bond 
market sentiment. 

Weakness in bond prices was 
also partially a reflection of 
investor nervousness before 
tomorrow’s October jobs 
report. The market's concern is 
that a stronger than expected 
report could provoke an imme- 
diate interest rate increase by 
the Fed. 

B The US dollar’s woes and 
further declines in Treasuries 
depressed European govern- 


ment bonds yesterday. Federal 
Reserve intervention to sup- 
port the dollar on the foreign 
exchanges prompted a modest 
bounce, but most markets 
dosed lower on the day. 

“There’s no great deal of 
focus on European fundamen- 
tals these days,” said Mr ffty 
Mam, international economist 
with Merrill Lynch. 

“With the US payroll data 
dominating, the bond markets 
will stm very much eye the 
foreign exchange and Trea- 
suries markets." 

B German government bonds 
ended the day nearly 'A point 
lower, but well above their 
lows. The December bund 
future on DTB closed at 88.76, 
down 0.55 point but off Its 8&56 
low. 

In the morning, prices firmed 
on a leak pointing to lower 
than expected September 
Industrial output data. The 


official numbers were indeed 
lower than forecast, but the 
data were accompanied by a 
warning that the rate could be 
revised upwards by two per- 
centage points next month, 
causing the market to slip 
back. 

Bunds are expected to 
r emain dogged by continuing 
currency and interest rate jit- 
ters in the US and before next 
week's new 10-year supply 
data. Dealers said many inves- 
tors were unwilling to build up 
significant positions as the end 
of a difficult year approaches. 

B Although UR government 
bonds recouped some of their 
earlier losses, they closed 
about % point lower. The long 
gilt futures contract on Liffe 
ended at 100 ‘/i, down ff on the 
day. 

Early in the day, gilts slipped 
on the growing feeling that 
Tuesday's gains on the back of 


the Rank of England's inflation 
report had been overdone. The 
weak US bond market put a 
further damper cm gilts. 

■ Italian bonds were hit by 
the upheaval in the currency 
markets, with the weak dollar 
pushing the lira to an all-time 
low against the D-Mark. This 
coincided with renewed specu- 
lation that Prims Minister Sil- 
vio Berlusconi was about to 
resign - rumours which* were 
swiftly denied. 

However, the fact that cur- 
rency weakness was enough to 
spark rumours of Mr Berlus- 
coni’s demise highlights the 
degree of political unease in 
Italy, dealers said. 

B Swedish bonds fell on disap- 
pointment over the govern- 
ment’s budget package. The 
yield on the 11-year bond rose 
11 basis points to 11.20 per 

cent. 


Four banks handle 
Portugese sell-off * 


By Martin Brice 

A four-bank consortium of 
Merrill Lynch. Banco Essi (the 
merchant banking ar m o f 
Esplrito Santo, one of Portu- 
gal’s leading financial groups), 
UBS and S.G. Warburg is to 
Knuifla the sale of up to 30 per 
cent of Portugal Telecom, 
which is likely to be the big- 
gest global telecoms privatisa- 
tion of next year. 

The deal will consist of four 
tranches, each handled by a 
different bank. The domestic 
tranche, which wfll be listed in 
Lisbon, will ba handled by 
ftflnm Essi; the North America 
tranche by Merrill Lynch; the 
UK tranche by S.G. Warburg 
and the rest of the world by 
UBS. 

Between 20 per cent and 30 
per c en t of the company will be 
so ld in the initial public offer- 


ing, which couM raise between 
SL 2 bn and fl-iSbn- This would 
be Portugal's biggest privatisa- 
tion apd would value the 
whole company at between 
$4bnapd{5bn. V . 

The ‘offering is likely to take 
place in the second quarter of 
next year. 

Throe international banking 
consortia were consulted, by 
the Portuguese government to 
undertake a valuation of the 
company, which was formed 
by the merger earlier this 
year of three state-owned tele- 
communications utilities and 
is the country’s - biggest 
employer. 

Portugal, which has about 34 
telephone lines per 100 pupute- 
tiom, is expected to open its 
telephone services to 
competition by 2003, five years 
after most of the European 
Union. 


Andalucia makes eurodollar debut as activity steps up 


By Graham Bowtay 

The eurobond market saw an 
acceleration of activity yester- 
day with a number of new 
offerings la unche d Into diffi- 
cult market conditions. 

Comunidad AutonOma de 
Andalucia, the southern Span- 
ish province, launched its 
debut eurodollar issue, with a 
8260m offering of bonds due 
January 2000. 

The bonds offered a coupon 
of 8 per cent and were priced to 
yield 47 basis points over US 
Treasuries, although this 
spread widened slightly after 
the bonds were freed to trade. 

Joint lead manager Goldman 
Sachs reported strong demand 
from investors in Aata/Padfic, 
UK institutions and continen- 
tal European retail investors, 
who were attracted by the rela- 
tively high five-year coupon. 

Deutsche Bank, the other 
lead manager, saw strongest 


demand on its books from 
Swiss, German and UK inves- 
tors, with French banks also 
showing Interest 
The proceeds from the offer- 
ing are to be used mainly for 
infrastructure financing. Gold- 


INTERNATIONAL 

BONDS 


man Sachs said. The proceeds 
were not swapped out of dol- 
lars, market sources said. 

At the shorter end of the dol- 
lar sector, Hewlett-Packard 
Finance, another relatively 
infrequent borrower, launched 
a $250m offering of three-year 
bonds priced to yield 25 basis 
points over US government 
bonds. 

The bonds were sold mainly 
to retail investors in 
Germany, Switzerland, and 
Belgium and to institutional 
investors in the UK, lead man- 


ager Deutsche Bank said. 

The bank said that the offer- 
ing was launched partly as a 
result of the damand for three- 
year dollar paper following the 
launch of a similar offering by 
Deutsche Bank Finance last 
week. The proceeds from the 
offering were believed to have 
been swapped Into floating 
rate dollars, market sources 
said. 

The pricing spread widened 
to about 28 basis paints after 
the bonds were freed to trade. 
However, Deutsche Bank said 
that it expected the offering to 
follow a similar pattern to that 
of the Johnson & Johnson 
three-year issue launched last 
week at 15 basis points over 
but which has since tightened 
in price. 

Hewlett-Packard Finance last 
tapped the dollar sector In 
1992, Deutsche Bank said. 

In the D-Mark sector, Depfa 
launched a DM750m offering of 


five-year bonds priced to yield 
30 basis paints over German 
government bonds. Joint lead 
manager UBS said demand 
from institutional investors 
was better than expected, with 
about two-thirds of the bonds 


going to European institutions. 

Depfa is Germany’s largest 
mortgage bank and 85 per cent 
of its new loan business is to 
the public sector. It has raised 
about DMlSbn since January 
and plans to raise a further 


DM2 bn this year, although this 
is likely to be in the domestic 
market rather than the public 
euromarket, Depfa said. The 
proceeds, to be used for gen- 
eral funding purposes, were 
not swapped out of D-Marks. 


NEW INTSmTIONAL BOND ISSUES 


Amount 

Coupon 

Prtcaa 

Maturity 

Fan 

Spread Book runner 

Borrower 

US DOLLARS 

m. 

% 



% 

*H> 

CrodR 5utaaa(London Branoh) 

300 

3SO 

99J21R 

NOV2004 

OJ326R 

+55(7yi%-04) CS Brat Braniin 

AnUudeffl 

260 

600 

99.17R 

Jan .2000 

0276R 

+47(7»%-B9} Deutsche/ GoWman Sacha 

Hewfett-Rachard Finance Co. 

250 

750 

99 831 R 

Dac.1997 

02CR 

+23(6Va%-97| Oeufecriie Bark London 

FTnanoa One(a)§ 

160 

(4U-4V) 

100.00 

Nov.2001 

2-50 

Lehman/ Parfbaa CapJMkta. 

YEN 

Nomuna Bonh0v4A 

8bn 

4.00 

100.00 

Fab. 1998 

undhraL 

Nomura Irtamarional 

D-MARKS 

Depfa Finance 

750 

7.375 

99.60R 

Dec. 1999 

025R 

+30pS!ft%-99) Commerzbank/ UBS 

European Investment Bunkfg) 

too 

7.25 

100.985 

Mar 2000 

1.B25 

DO Bank 

ITALIAN URE 

Bayertoche V5ratnat»nk{6) 

lOObn 

11.00 

10127 

Dec. 1996 

1.125 

Credto Italano 

AUSTRALIAN DOLLARS 

Toyota Finance Au3trt«a 

100 

9.75 

100.73 

Dsc.1997 

140 

Hambros Bank 

Naur StfLMfataa TnSBswy COrp.* 100 

•LSO? 

6S.T6I 

Nov. 1997 

1275 

- Nomura international 


Final terms and non-caMMe unlees stated. The yield spread (over relevant government bond) at launch to supplied by the bad 
manager. wUntated. ^Convertible. VSemi-annual coupon. R: (had re-offer price; fees ore shown at tfa re-offer laveL a) P rt ctog : weak of 
NovjZI. Indicated cor v pram: B-1296. Callable [mandatorty convertible) altar 3 yrs subject to 140% hvtfie. Redemption proceeds 
Rnkad to baht b) Tranche 4 of Y16bn 5- tranche dart. e) Issue launched on 25/10/94 was Increased to L250bn. a) Short tat coupon. 


CS First Boston launches 
global on-line system 


By Conner Afiddetmann 

CS First Boston was today 
launching a global on-lino elec- 
tronic trading system for US 
government bonds and related 
securities. 

GovTrade, as the system Is 
known, allows Investors to buy 
and sell US Treasury bills, 
notes and bonds from the start 
of European trading to the 
close of US trading (18 hours) 
on a live market that can be 
accessed through Bloomberg 
terminals. 

To trade, an investor chooses 
on the Bloomberg screen an 
issue in which CS First Boston 
makes a price, completes an 
electronic dealing ticket and 
transmits the trade to CS First 
Boston's government bond 
traders, who confir m the trade. 

This procedure frees up same 
of the bank's trading and sales 


staff, enabling them to perform 
tasks other than executing 
straightforward client 

orders. 

According to Mr Jim Toffey, 
hpflrt of electronic trading for 
CS First Boston, the bank pro- 
cessed more than 4,200 trades 
elect ronically with its custom- 
ers in October alone. However, 
he says the system wifi ’’com- 
plement, rather replace” 

the salespeople by offering 
speed oS execution in a liquid 
<m/i fast-moving market. 

The is an expansion 

of the firm’s proprietary Gov- 
Trade product which was 
launched in September 1992. 
To date, securities worth 860 bn 
have been traded on the sys- 
tem with more than 400 cus- 
tomers in the US, the bank 
says. Some 75 investors outside 
the US are currently viewing 
the product. 


f&ORLD BOND PRICES 



BENCHMARK GOVERNMENT BONDS 



Coupon 

Rad 

Data 

Price 

Day's 

Change 

Yield 

uu — i- 

VVOOK 

ago 

Month 

ago 

Australia 

SlOOO 

03104 

904500 

-0280 

10.58 

1046 

1020 

Belgium 

7.750 

10/04 

64.7300 

-0.430 

8.56 

628 

821 

Canada * 

8£00 

06/04 

82.9500 

-0-300 

922 

9.14 

9.04 

Denmark 

7.000 

12/04 

66.6500 

-0270 

9.04 

942 

9.16 

France BTAN 

ajxn 

0B/BS 

1014100 

40280 

725 

7.65 

728 

OAT 

6-600 

04104 

01.5900 

-0.620 

829 

828 

620 

Germany Treu 

7500 

09AM 

96.7000 

-0260 

7.6S 

7.71 

720 

Italy 

8400 

06AM 

BO- 7300 

-0.770 11297 

1123 

1129 

Japan No 110 

4,800 

06/99 

1024860 

40279 

4.06 

4.12 

442 

Japan No 184 

4.100 

12/03 

962580 

40277 

4.69 

4.78 

429 

NatfMtanda 

7260 

10AM 

97.0000 

-a BOO 

7.89 

728 

7.71 

Spam 

8.000 

OSAM 

61.1500 

-0200 

1121 

1127 

1121 

l"<G«s 

6400 

08A36 

88-27 

-9Q2 

363 

820 

8.73 


3760 

11AM 

88-27 

-19/32 

374 

392 

392 


6L000 

10/08 

102-14 

-23/32 

370 

626 

828 

US Treasury * 

7250 

06AM 

95-09 

-12/32 

725 

728 

7.78 


7J500 

11/24 

93-12 

-14/32 

849 

846 

725 

ECU (French Govt} 

3400 

04/04 

82.8600 

-0480 

37B 

8.77 

S.7B 


London ftow YQiK rrtd-duy Ytaktc local martMMamtonl 

t Own wflhhokSrq t*x at izu par cent payabki by numabdanTlj 

Prices: US. UK to 32nd* oOwra In deckife Soucs: MWS tawnaffantf 

US I NT EREST RATES 


LuncMJme 


faLtaO a Msmrata- 


7% fen men® _ 

S lim ibnSl. 
Shrew® — 
- Onjnr — 


Trtasmy Bib and Bond Ytobto 

■ ■ ■ . 4.aa T'aoyw . 


5l 33 TtlWJBBT. 
524 Rnyaar- 
5.78 10-jwr 
&2S shm 


BOND FUTURES AND OPTIONS 
France 

■ MOTIONAL FRB4CH BOND FUTURES (MA7TF) 


Italy 

■ NOTIONAL ITALIAN GOVT. BOND CBTP) FUTURES 

tUFFET Um 200m IQOthe of 100% 

Opan Settprtce Change High Low Est vol Open W. 
Dec 99.60 99-36 -a 74 99.78 96.07 38895 S7812 

Mar 9&90 98.60 -0.75 96JK 96.80 272 5210 

■ ITALIAN GOVT. BOND (BTP) FUTURES OPTIONS (UFHE) Ura200m IQOttra of 100% 


Strike CAULS PUTS 


Price 

Dee 

Mar 

Deo 

Mur 

9900 

120 

J-JB 

025 

£66 

9960 

143 

243 

1.18 

2.93 

loom 

0.79 

123 

1.44 

3.23 


Bk. w*. km. Cfea 3120 Puts 2*76. Pnntoua day*a open W. Cafe 24552 Pun 314*0 


Spain 

■ NOTIONAL 3PAM3H BOW FUTURES (MEFF) (Oct 31) 


Deo 

Mar 

Open 

8727 

Settprtce 

6826 

8043 

Change 

-022 

8343 

Um 

88.10 

Eet voL 
41,466 
48 

Open W. 
78237 
148 

UK 

■ NOTIONAL UK QBLT FUTURES (UFFE^* £50400 32nd3 of 100% 


Dec 

Mar 

Open 

100-25 

Sett price 
100-17 
09-23 

Change 

-0-22 

-two 

Hgh 

100-27 

LOW 

100-04 

Eat vol 
89837 

0 

Open int 
106814 
SB 


■ LONQ OB-T FUTURES OPTIONS (UFFEj £50.000 94tha of 100% 



Open 

Sett price 

Change 

High 

Low 

Eet voL 

Open Int 

Doc 

10928 

10020 

-024 

10928 

109.14 

102404 

132,705 

Mar 

10828 

10348 

-O.B8 

10828 

ioam 

782 

12225 

Jun 

107.84 

10728 

-028 

10724 

107.72 

627 

1201 


Siren 

Price 

Dec 

CALLS 

Mar 

Doc 

PUTS 

Mar 

100 

1-23 

2-18 

0-S3 

2-34 

101 

0-52 

1-48 

1-18 

3-02 

102 

0-28 

1-23 

1-68 

3-41 

Eat. wri. total CsSs 4058 Puts tbsi. Pravtoua day's open «, Crts 78138 Pula 43735 


■ LONG TBH FRB4CH BONO OPTIONS (MATIF) 


Strike 

Price 

Dec 

- CALLS — 
Mar 

Jun 

Nov 

— PUTS — 
Dec 

Mar 

110 

027 

1.19 

- 

121 

_ 

_ 

111 

028 

- 

- 

2.00 

- 

. 

112 

Q.12 

028 

- 

241 

- 

- 

113 

048 

025 

- 

. 

- 

- 

114 

043 

024 

- 

448 

- 

- 


Eat vd. KM, Cafe 29.760 Pula 22*12 , Previous day"* open ML, Cafe 2B0JST7 Pum 301110. 

Germany 

O NOTIONAL CBIMAN BUND FUTURES (UFFHT OM250.000 IQOtha of 700% 

Open Settprtce Change Hgh Low Eat. vd Open hit 
Dec 88-96 88.86 -049 69X2 88.61 147010 179284 

Mar 88-15 68.04 -0.50 8&20 8&00 1530 7084 


Ecu 

■ ECU BOND FUTURES (MATIF) 

Open Sett price Change Ugh Low Eat. vol. Open feL 
Dec 80.00 79.68 -046 80.00 79.60 JL273 6.077 


IIS 

■ US TREASURY BOND FUTURES (C87) SI 0QJ00 32nda of 10096 



Open 

latest 

Change 

Hgh 

Low 

Est uoL 

Open bit 

Dec 

97-08 

97-02 

-0-07 

97-14 

97-01 

382444 

387.423 

Mer 

9642 

96-14 

-0-07 

96-25 

90-13 

2.454 

29252 

Jun 

98-03 

95-27 

- 

98-06 

95-27 

177 

11491 


B BUND FUTURES OPTWW [UFFEj DM250.000 points of 100% 

SbftB CALLS — PUTS 


Price 

Dee 

Jan 

Feb 

Mar 

Dec 

Jan 

Feb 

MV 

8850 

0.83 

024 

1.11 

143 

028 

140 

127 

1.71 

8900 

0.68 

023 

089 

142 

061 

128 

125 

148 

8960 

043 

048 

070 

083 

148 

142 

2.16 

9»a 


Eat vnL uu, Cafe 24320 Putt 13800. Fmtaui days opan «, Cafe 28424* Pin 22227V 


Japan 

■ MOTIONAL LONG TERM JAPANESE GOVT. BOND FUTURES 

(UFFE) VI 00m IQOtha of 100% 

Open Cloao Change Ugh Urn Eat vol Open ML 
Dec 108.10 10123 107.99 2954 0 

Mer 107.43 107.43 1072S 126 0 

" LITE caramon traded cn APT. A* Opan lOuuat Sgs. m tor prmtou* day. 


IS 


UK GILTS PRICES 


U M Price e+»- 


... 1904 _ 


~YUd_ _ 199* _ 

ka HM Prtc»E+or- Hgb 


- IMJ_ _l«4_ 

(0 0} Pries £ -t-or- up Um 


Stntr tu**»w lo FWaYew*} 

Treas 9pc 1894& 80 -lOD&d 

I2DC1MG 113* 575 101% 

EaA 3pc Qb 1990-85 504 534 960 

lOW 1995 1000 5(8 102*] 

Trass IZVpe 1985# — 1236 G341B5VN 

I Ape 1996 1237 589 107U 

KkK 1998#. 13.73 734111&N 

Etth lattac 19»'fS 1223 7A310BAN 

COMsdm IQpc 1B9G BLE1 701®^ 

Trass OK 7pe 19974* — 7.17 736 97 A 

Tra*al3%pc1BS7*t 1230 500 lid, 

Ejdi IDtjpC 1BB7 BOB 831 105A 

Trees 81* pc 1997ft 385 324 101 A 

fail 15pc 1997 1281 337 1171* 

MipcWM 543 650 1*0% 

Ti0£C7**(E IBBBtt 7.52 347 96% 

Trans ftltflE 100S-9Stt— 7.12 348 Wl 

14pc 1B90— 1 1237 837 11M 

Tina 1 Slant VW 1235 357 1ZZ*a 

EadiiaxUBB TOflO &67ffl^af 

Traas S;pg 1993J± 9X3 36* «Z* 

ExcaiPatielMS- lOM 373 112* 

Trass lOijflC 1399 956 37V1O0W 

Traas 6pc 1999 ft 399 383 9« 


ftofei 

Cwm*ri TO^ipc 1969- 937 375I05UE 

Tress ng ms iqss— _ - -vat 

8PC200D 327 837 

Cam0pc2a»tt 399 369 101*4 

“ 387 117B 

306 1«A 
7.72 378 & f&t 
1044 


333 382 


— 103H 

— 107A 

— SSH 
1D7H 

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+A 117A 
♦** 12iH 
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121b 

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101*i 

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1053, 
1074, 

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108A 

103A 


Raalnosiape 199B-4-_. 431 732 724, -*0 38J, 

arnemvscmi— 311 384 io*w -a izsa 101 a 

T»BVacZD04tt 7.77 974 BS&d -i IDS', B4£ 

B Tape 2005 856 373 9BA -JS 10SS& 97 

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Tress ITltfC 2003-5 1030 31412Q&5 -tt 143,1 118** 

7*ipC 2006tt- 335 372 92H -11 112U 90h 

apeiarwjtt lm S79 w, -n ms sin 

Trees 11*ur 7003-7 — 1925 314 I14fl -H J3M 112*1 

Tmsatoc 2007 « B35 371 SB*, -ft IlflA flffl 

Utoc 2004-6 1054 aie 126* -fl 151* 124fi 

Tran 9pe 2008 n 379 559 10213 -U 124ft 99tt 

Trees Bpc 2009 340 398 944* -U 115A 8TS 


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376 

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357 165A 
35a 161 AH 
351 ■ ' 

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196 1520 

358 I57A 
180 129*4 

359 13711 

350 132 

357 109V 


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-J* 203*s 197U 

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I46*| 129*4 
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15211 128 1 * 

199* 106*, 
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Zijpc-attt 07.71 

4*spE , 30tt — (1331) 177 351 106^ 

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end 0 5%. M Figure* In pm r Uha w e ahow RPl baaa for 
Indwfeg pa 6 montneprlor to fefua) and have Own ocfcntad tg 
nOms rabsstogof RPl to 100 In Fetnmy 1987. Comenlon 
factor 3549. m tar February 18B4: 142.1 wid for Saptarntw 
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-fl 

i»U 

100)3 

171 

162 

1034 

-B 

17ft 

Wft 

7(48 

833 

73B 

ft 

W% 

71% 

143 

157 

9ft 

-fl 

11713 

92 

142 

136 

«A 

ft 

lift 

884 

&SB 

134 

101% 

ft 

1281, 

064 

928 

179 

1294 

-l 

159*2 

1284 


Other Fixed Interest 


_TUd_ 

W Rad Pitest-rg- 


1994 — 

Low 


tom# — 

9*ptHM2 

epc a»3tt 343 165 94SJ 

10pc2003 139 851 106*2 

Itoss 11*ifK200l-4 1931 90S 117ft 



104U 

m 

^98 

mu wrian 3 * 2 PCR 

CBrnSljpCBIAIl 

32 \ HmSpcVeML 

104*2 OtosotoS^pe 

10 SJ 3 Traas. 2 ijpc 


178 

- 454 

ft 

SB\ 

44)1 

155 

- 4012* 

-4 

S4fl 

m 

182 

- 88*i 


71 

aft 

178 

- 3ft 

ft 

44% 

33B 

10 

- 29% 

-A 

Wa 

aw* 

&B7 

- 38JJ 

ft 

3ft 

27H 


MsnDHiOtopc2a09_ 

81m 11*21X2012 

MadCtoWgiCU] 

9pcCsp199fl 

iSpcV?^ 


Ltarpod3*2PCkrad.. 
LCC3DC-20AL 


U&VLW 

MfeUtAogBa !T%pc 2021 . 
<U0kL2D24. 


931 

80 

no/. 


138% 

1074 

1000 

872 

115 



142 

115 

179 

- 

96% 

-- 

116% 

93% 

10 

— 

108% 



183% 

«% 

110 

— 

10% 



115% 

10 

1081 

187 

141% 


1891) 

137)1 

KUO 

- 

IB 



149% 

IB 

158 

— 

38% 

, 

4ft 

33% 

90 

— 

33 



«% 

28% 

1029 

MB 

111% 



138% 

111% 

iM 

101 

87% 



78 

66% 

- 

427 

131% 

. 

150% 

729% 

— 

40 

I2S 



M5% 

123% 

U.1B 

- 

135% 

— 

10% 

134% 


FT-ACTU ARIES FIXED INTEREST INDICES 


Price Indices 

Wed 

Day's 

Tub 

Aooued 

xd ad 


— Low coqwn yfeld— ■ 

- Martian ooapon yield — 

- J^w~a 

■" Tngn coupon jjotu 

UK Qflta 

Nov 2 

change % 

Nov 1 

Interest 

ytd 


Nov 2 

Navi 

Yr. ago 

Nov 2 

Novi 

Yr. ago 

Nov 2 

Nov 1 

Yr. ago 

1 

Up lo 5 years (24) 

119.01 

-021 

11923 

1.42 

9.83 

5 yra 

170 

823 

8.15 

8.72 

ILK 

627 

820 

824 

820 

2 

5-15 yuara (23) 

13022 

-048 

13828 

1.77 

1120 

16 yr* 

820 

B 22 

723 

6.74 

826 

7.18 

827 

829 

728 

3 

Over 15 yea* ( 8 ) 

15425 

-078 

15625 

228 

1027 

20 yra 

825 

8.47 

7.15 

174 

128 

722 

825 

8.79 

728 

4 

Irredeemables ( 6 ) 

17423 

-023 

17428 

0.10 

13.47 

InredLT 

821 

826 

729 







5 

All stocks 01) 

135.70 

-037 

13020 

1.75 

1085 



















Inflation B% — 

— 


— Inflation 100 


Indeot-flnimd 







Nov 2 Nov 1 Yh ago 

Nov 2 Nov 1 Yr. ago 


8 

Up to 5 yeooe ( 2 ) 

185.63 

- 0.10 

18822 

042 

6.07 

Up to 5 yra 

428 4.01 223 

221 226 121 


7 

Over 5 yeerafll) 

172.83 

-015 

173.10 

027 

426 

Over 5 yra 

329 327 3.12 

3.70 328 225 


a 

At stocks (13) 

17328 

-0.15 

17324 

022 

4.41 

C 



__ rear 

JL 

|U - 



ftl 

Debentures end Loons 







Nov 2 

year yle 
Nov 1 

•a 

Yr. ago 

ID 

Nov 2 

Nov 1 

m ■ ■■ 

Yr. ago 

Nov 2* 

yaar yli 
Nov 1 

w 

Yr. ago 

9 

Debs 1 Loans (77) 

13728 

40.18 

12823 

2.44 

929 


9.77 

9.76 

7.76 

8.70 

9.71 

8.16 

923 

926 

829 


Avorago groan tadampaon yWda am aticmn abam Cajpan Banda: Low: 0M-7*f%; Medium: B%-iOto%: Mato 11% end rarer, t Hat ytaML ytd Y«r to data, 


FT FIXED INTEREST INDICES QILT EDQED ACTIVITY INDICES 



Nov 2 

Nov 1 

Oct 31 

Oct 28 

Oct 27 

Yr ago 

High- 

Low- 


Novi 

Oct 31 

Oct 28 

Oct 27 

Oct 28 

Govt Secs. (UK) 

90.89 

91.06 

81.04 

9121 

9028 

10227 

10724 

8924 

cat Edgad bargains 

782 

802 

717 

81.1 

902 

Rxod totarost 

10728 

107.84 

107.74 

10721 

10824 

12320 

133.87 

10820 

8 -day average 

80.8 

822 

792 

83.4 

84.4 


-hr 1994 Oovemr^SaculfearaBh ilnce comptofl or t pn/rg, tom 48.18 {3W7I9. Fbad htmw Ngh atoce oo oaA U ku 13357 ( 21 rt/»IJ . low 6083 Ort/79 . Bada 10ft Qmennrert SeaalOaa 1V70T 

28 and Breed Hemet 1 B 2 B. BE ocaytty nden rabned 1874. 


FT/ISMA INTERNATIONAL BOND SERVICE 


Ustod m the kriost htomAral bonds far nMOh there to rai adoqurao seoiaxfciy marioat Latest priom at 7110 pm on November 3 
Utotod BM Qftor 0» YtoM Issued Bd Offer Cbg. Y 1 


toeued Bid O0sr Chg. 


LLS. DOLLAR STRAIGHTS 
Abbey NdTraaauy 6*2 03. 

MxraRmtaa74|08 

AuS&taO^OD 


BsrhNsdGanverasn 709 . 

Bank of Tokyo ft 96 

0d£pjn 5*2 03 

EFCE 74, 97 . 


ant* Qrn a 21 
Ctonfegoa . 


Chsing Kong fin ft 00 

OtoaftO* 

CouwlGunp8806 — 
OedS Fcndar 9*2 B9 — 
DnrvkftSB 


Eas Japan Rafeuy ft (M . 

Ecscoksa 

EECftBS 

HB 74,98 

mftw 


Bsc da firarce 0 98 . 
BroSma 9*4 98 


Ea-fenBmk Japan S 02 _ 
Export CBu Crap ft 90 _ 
FaJafd Nad Mwt 7.40 04 . 
FHndft 97. 


Fort Motor Credft ft 98. 
Gtn Bac Cnp#iS ft 98 ~ 
GMACftn 


M Gk Japan fin 7^| 97 . 
Mar km Do» 7% 96 _ 
Uyft23. 


JopreiOwBiftOI ~ 
Ksnsel Bee Air 10 98 _ 
KmaBoc Powor ft 03 . 

LTC 8 Fn 8 97 

Matsusrtta Bsc 7*« 02 _ 

Nanny 71, 97 

OrMoft03 


Osar KmoKstoc ft 01 . 
PaBo-Qraada T\ 98 — . 

Portugal 5^, 03 

CkrebecHyduftn — 

QabeefiovOOB 

SafcrtuyftBS 

SAS10 09. 


SNCFftBa 

spraiftsG 

StttoBhNSWft® . 
SuedsnftB5. 


SareddiExxxlftge — 
Tdcyo Bee Raw ft 03 . 
Tokyo M*tpah ft 96 _ 

Teyau Motor ft 98 

Uhfed Nngdcrn ft 02 — 

Wold Ba* ft 99 

WcrtdBsrkft 97 


DBTISCHE M«K STRBBHTS 

AusHtft 24 

Oradt Fonder 7*« 03 _ 

OnmarkfttB 

Depfa Finance ft 03- 

DsJcte Sk Rn 7*2 03 . 
SSftOO ■ 

EB ft 00 

RrfendftOO 

Uy7>4«. 


LKB Bedm-W»tt ft 08 . 


Orenrioft 04 
SpwT'nOa n 

S4WdHlB37 ^ 


.1008 

87% 

BB 

-% 

867 

.1000 

09 

Bft 

-% 

70 

-«0 

102 

lift 

-% 

m 

1000 

88% 

98% 

-% 

70 

>100 

101% 

W1% 

-% 

7.45 

.1800 

»% 

82 

-% 

148 

_ iso 

100% 

101 

-% 

IM 

.1500 

ft 

10 

-% 

105 

.1000 

102% 

102% 

-% 

70 

-.500 

Bft 

89% 

-% 

an 

1000 

Bft 

84% 

-% 

80 

>100 

101% 

101% 


7.19 

- 300 

*5% 

Wft 

-% 

7 SB 

.1000 

9ft 

95% 

-% 

70 

- 000 

0 

88% 

-% 

152 

_ wa 

101 % 

102% 

-% 

743 

-WO 

101% 

101% 

-% 

70 

-230 

10ft 

101% 

-% 

7.14 

1000 

10ft 

W4% 

-% 

70 

-200 

103% 

104 


7.75 

_ 100 

102% 

TO 


70 

-500 

00% 

Bft 

-% 

828 

_ iso 

105% 

96% 

-% 

70 

1500 

9ft 

Oft 

-% 

10 

3000 

97% 

0 

-% 

773 

1500 

85% 

Oft 

-% 

70 

-300 

103 

raft 

-% 

727 

-200 

ICS 

102% 


7.47 

-200 

in 

100% 


70 

-200 

10ft 

101% 

-% 

773 

3500 

77 

77% 

-% 

an 

-GOO 

10ft 

Wl 

-% 

123 

350 

103% 

raft 


7.14 

1350 

Bft 

B4% 


112 

-an 

too% 

raft 


70 

1000 

94 

94% 

-% 

149 

1000 

99% 

in 

-% 

734 

3000 

94 

94% 

-% 

857 

-an 

101% 

101% 

-% 

117 

-an 

in 

HJ0% 


721 

ion 

83% 

83% 

-% 

881 

-m 

w«% 

Wft 

-% 

823 

-200 

HQ% 

TIB 

-% 

111 

150 

102% 

Kft 

-% 

752 

.200 

104% 

WS 

-% 

175 

150 

105% 

Wft 

-% 

70 

1600 

9ft 

94% 

-% 

70 

.200 

101% 

102% 


70 

2500 

»% 

99 


172 

-TOO 

101% 

101% 


70 

ion 

88% 

Bft 

-% 

843 

.200 

101% 

102 

■% 

70 

tsn 

Bft 

9*% 

-% 

70 

3000 

Bft 

94% 

“% 

80 

15QQ 

102% 

102% 

-% 

70 

m 

103% 

103% 

-% 

w 

2000 

aft 

80% 

-% 

an 

2000 

95% 

0 

J4 

70 

2000 

97% 

87% 


195 

1600 

8ft 

W 

-% 

10 

SWflU 

87% 

97% 


70 

2800 

0 

98% 

-% 

742 

tsn 

«% 

95% 

-% 

70 

3000 

90% 

99% 

-% 

70 

500Q 

100 

100% 


723 

2250 

aft 

80% 

-% 

117 

1500 

97% 

98 

->1 

881 

UJ» 

8ft 

88% 


80 

4000 

aft 

« 

-% 

70 

20) 

102% 

102% 

-% 

7.14 


Unfed Kingdom 7% 97 

590 

ttfloMagon M Rn 7 03 __ 

_ TOO 

Wald ifere. n is 

2nm 

World Bonk ft 03 

1IL-U nV ryi 

— 3000 

8W3S FRANC STRAIGHTS 

— 1250 

Aston Do* BarirB 10 

in 

ibnrere ii, m . 

1000 

GaffdEucps4%88 

250 

Cksmak 4% 99 

1000 

SB ft 04 

am 

Bk da Ham 7% 06 inn 

Ofeid7%l»_ 


Hyjndd Ntatar Ri 8% 97 

=5 

krefend 7S 00 

. inn 

Kfrin ft 01 aan 

OmfaSLin . 

400 

(XrebK Hytoo 5 08 

100 

SNCF704 

460 

World Bark 5 03 

10 

WnMn>rfc7m 

GOO 

YEN STRNQKTS 

Bdgkm 5 99 

- 75000 

BBftOO 

1G00Q0 

FHondALM _ _ 

_ soon 

taw flrvr Dn 7% 00 

Kota, 4L M 

.30003 

JfeoiD»Bk5B9 

anon 

moon 

Jroen Dvr Bk 6 *t 01 

i?nnm 

Nppoi Td Td ft 96 GOQQ0 

Mmmftto . 

150000 

rare nL rn 

30003 

Spain 5% 02 

rwwi 

S««(tai4%M 

15QQ00 

MksUBank5% 02 

25000 

onosTmuoms 

Gantnande Lu* ft B9 LEf 1000 

K8 Dreri hdiaire 8% 03 LFr 

- 3000 

Wcdd Bank 6 0 LFT 

- ton 

ABN Ann 6% 00 R 

-ion 


Oft 

20 

07* 


8 ft 

06 

Oft 

Bft 

105 


379 
305 
751 
750 

lift ft 345 


101 

94 ->s 
2ft 

88 -h 


991, 

98 

Oft 

9ft 

10 ft 

10ft 

107*2 

10 ft 

«ft 


100 ICft 


M 

107 

Oft 


102 


Oft 


10 ft 


100 


10 ft 

10ft 

106 

lift 

9ft 

102 'j 

lift 

10ft 

10ft 

110 

10ft 

ioi H 
10ft 


Bar* NedGemerten 703 R _ 1500 gft 

AbatiPiMnce 1ft 96 CS GOO 10ft 

M Canto 1ft 99 CS ISO 10ft 

EMtfi CakirPta 10 98 CS BOO 10ft 

BB 1 ft 98(3 130 toft 

Brads Renos 9\9BC$_ 275 102*3 

Gai Bra CepM 10 96 CS 300 10 ft 

KW h Fh 10 OT CS 400 102 C 

NtomTdTaiftggcs. 


OtatoHyifeo tft SeCS 
Osier Konodbra* 10*4 99 Cl , 

Quebec Pm 1 ft S 8 CS 

Belgian ft 96 Ecu . 


Cuund&aapeSOI Ecu . 
CradtliwvMisBOOEcu. 
110 07 Ecu . 


Feuudel&S tftSBEaj , 


SpdnBOBEcu. 


- 300 10 ft 

- IS) 10ft 
_ 200 10ft 
.1250 10 ft 
.1100 10ft 
- 125 101S 
.1125 10ft 

- SOO 10 ft 
. 1007 107A 

1000 10ft 


Abbey NO) Thmy 8 03 £ 1000 

Atanca laics 1ft 87 E WO 

BOab Land ft 23 F ._ . iso 

Psranuric ft 00 300 

SB 10 97 C 637 


ft 

ft 

ft 


307 

£56 

316 

331 
6 jOB 

332 
370 
332 
324 
177 
324 


Ha*UlftB7E 

Hansen 1ft 87 E 

HSBC HoUngs 1159 02 £ 

mylft 14 E _____ 

Japan Dov Be 700 E 

LmcfSscsft 07E 

OnMolftOI E 

Poongoift Q3E 


. 100 
.500 


.183 
■ 400 


.200 


.200 


WO 


.250 


6 ft ft 858 
107*3 
Oft 
ttft 


644 

558 

174 


455 

451 
320 
458 
104 
445 
4J9 
345 
■inn 
454 
450 
420 

452 


103 Bft 


EB 7ft SO AS 350 

N3WTtaMWZ6rtQ20AS — 1000 
I Bank 74, 03 AS 125 


Bft 

rh 
aft 
oft 

S8iAaiGa«fin902AS 150 Oft 

UnfewAuaBtfa 12W« 150 10ft 

Vtaton Art Trees 7*i 96 «_ i® ft) 


RllBsr*! 

Start Bk NSW 902 AS. 


94% 

-% 

70 

103% 

-% 

7.70 

105% 


90 

103% 

-% 

79* 

106% 

t% 

am 

103 

-% 

90 

103% 


70 

102% 

-% 

90 

10ft 

-% 

114 

91% 

-% 

177 

106% 

-% 

116 

10ft 

-% 

aiz 

104% 


119 

Wft 


729 

101% 

-% 

an 

102% 


7J7 

104% 


70 

104% 


80 

10ft 

-% 

80 

102% 


MB 

102% 

-% 

80 

in 


mu 

112% 

-% 

1053 

83% 

ft 

17B 

8 

ft 

1045 

83% 

ft 

100 

w% 


mao 

90% 


lftSO 

105% 


100 

»% 


1004 


Trago&cRtowllOl E 

AfchayNattrrt 096 NZ3 

TCNZRnB% 02 NTS 

— 160 
in 

Cradt inert B 01 Rr 


Bra ds Fme 8% Q FFr 

SNCFftWFFr 

-3000 

nOKnm RA1E NOTES 

tasusd 

Abbsy fted Ttaasuy 99 _ 
Banco Efcma 099 

WOO 
— 200 

Brtokm , L , 97 M - 

BR3E.O02« 

— 500 



Canarfaft 99 . 




CndR Lyamats i 00 

_an 

PwriwflUM A 96 DM _ 

_ 10W 

Rrtond 0 97 


htand 096 


fcriylSH 


LKB Bsdtn-WuM Rn ft 0 _ 

- TOGO 

MSfeotoAn ran 

New Zfertand -% 99 


Ontarinom. 


RonfaOflS _ 


Sodeta OenentoOSe 


Staabbar* BstSn -005 90 DM 

State Bi Ifetala 005 SB 

SreadmOOR . 

_ 6000 
— IB 

Swdan-%01 


Uflad Ktogrtam ft 0 

- 4000 


81 *j 91*2 

10 ft 10 ft 
Bft 8ft 
Bft Bft 
10 ft Wft 
10ft 10ft 
10ft Wft 
10 ft 10 ft 
10ft 10ft 
91*2 9ft 
97 Bft 
10 ft 10 ft 
06 Oft 
Wft 10ft 
Wft 108 
oft aft 
67 99 

8ft 8ft 
90 9ft 
10ft 104*4 


ft 157 
ft 058 
ft 1047 
ft BOO 
ft 336 
340 
942 
ft 1042 
ft 370 


ft 

ft 

ft 

ft 

i 

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ft 

-% 

ft 


390 

851 

049 

057 

952 

957 

024 

951 

342 

314 a 
752 


Bd Oder Ctopn 


9041 

9957 

100.10 

00-77 

9954 

9324 


9349 45379 J. 

10042 ** 

10022 91260 

B958 47300 

10044 31000 

9352 4fjff| i 
9322 


3755 9342 55125 


10047 

100.18 

10042 

8951 

10022 

9357 

8450 


52188 

5.1000 

13750 


10315 

6348 

aw 


55000 
18750 
54125 
59375 
54463 
45375 
11250 
£3750 
12000 
51125 
30000 

9388 9376 44250 
3380 3355 54000 


9957 

9856 


9357 

9393 

9356 

9957 


9375 

9383 

9951 

8372 

10000 


CCHVBITBI£ BONDS 


Con*, 
bared Price 


BU Offer Pram. 


Chubb C^pKEd 8 BB _ 
Kdgoorfe 7*2 oo 
H»B 0 nB*j QBE _ 
Hansen Amarica 229 oi 
Horg KOrg law 4 01 
Laid Sea 65, 02 E 
LasmoftOSE — 

MbliBa*2Sg 03 
Ucus ka Rn 6*2 97 

7W Pram 5*, OS £ 
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Sui Atones 7*4 Q 0 E _ 

TsscoOipUBOSe _ 
TtaskBturesus 2 \ 02 , 

* Wa intarnaflai — Hi,,, 
t Osyraw mutai 



9ft 

9ft 

<61X6 


100% 

101% 

«US 


109% 

111% 

4270 


Wft 

Wft 

flS48 


7ft 

73% 



78% 

7ft 

-21JT2 


8 ft 

eft 

■ATS 


81 

82% 



85% 

87% 

+11 £2 


101% 

Wft 

♦70 


118% 

in% 

023 


Bft 

0% 

+5111 


88% 

88% 

+170 


7ft 

7ft 

+19J4 


9ft 

87% 

+120 

a 

113% 

1U% 

+21JS0 

97% 

98% 

f!22 



S17WCKT BOfgi a The y vtl re *e ywd to redrito6on cl tre Wdj»ii» ton amast aausd to h ntocra ai gmney irfe. Qig flay-caOTre <« d»i. 

FLOKnira RATE KHEfa tawriMed n (Mas urtast Mraretos Mtoona Oapon tomrei Is netrun. SpcaabMam> attwa sb^nonei <fto«d m- 

couprat * :TO *v ™ ronreatnorah Satxm nraan qM| far US doBn. Cq*i=The cunws 

OOtflgffto^BCHDBOancnsnni M ndcaaiufeMiaiera m todatortim. i sl u BdtoifedreiisartrtbgrtmthmufewsrohcuiiireyrareMare f— - . .. 

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C lire FY-ncU Ttorea m. 1094. Remuom h vtoeto w to pot in ov loan not pamsud reams hmi ana*. Das B«Ffed a, ttmvftm Saaafflaa atom - mm 


Q Tw* acock. » Ttwftrea u nrawseiduiB on ipftaWi E Aurtksi baafe. red Ex cMdand. Oaring nritfprieaa an otajwri in pwnda. 





COMPANY NEWS: UK 


S OV F ,. 



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'••- Si • 
' ■ ;t ; 


FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 



■Jen ^ 



23 


First get-together since the shift in the balance of power 

Realigned Lonrho board meets 


By Robert Paston 

Lonrho, the international 
trading group whose joint chief 
executives, Mr 'Huy Rowland 
and Mr Dieter Bock, have been 
at war with each other, will 
today hold its first board 
meeting since the retirement of 
two of Mr Rowland's closest 
allies. 

The retirements have shifted 
the balance on the board in 
favour of Mr Bock in his strug- 
gle against Mr Rowland. An 
a ssoc ia te or Mr Row land sa i fl 
yesterday that today’s meeting 
would be si gnifican t in show- 
ing how Mr Bock Intended to 
exploit this power. 

Mr Bock launched an abor- 
tive coup two months ago to 
oust Mr Rowland from his 
executive duties. However, 


hours before September's 
board meeting Mr Bock backed 
off from proposing that Mr 
Rowland should step down 
when he became concerned 
that he could not count on the 
support of a majority. 

A number of Lonrhn’s direc- 
tors belatedly took fright from 
challenging Mr Rowland 
because they were concerned 
that he would challenge any 
attempt to oust him through 
the courts. 

Today's meeting is the first 
to be chaired by the new tem- 
porary chairman, the former 
diplomat Sir John Leahy- He 
replaces Mr Rene Leclezto, one 
of Mr Rowland's staunchest 
allies, who retired last 
month. Another of Mr Row- 
land’s most loyal supporters. 
Mr Robert Dunlop, also retired 


recently. 

It is widely believed within 
Lonrho that Mr Rowland 
would sever his 30-year rela- 
tionship with the company if 
Mr Bock, owner of 18.8 per cent 
of Lonrho’s shares, offered him 
a £50m premium over the mar- 
ket price for his 48.6m shares. 
However Mr Bock is thought 
not to be prepared to pay that 
price. 

Today’s meeting is also the 
first since the disclosure last 
week in the Financial Times 
that Mr Rowland had 
embroiled the company in a 
new court case brought by its 
erstwhile corporate opponent, 
Mr Mohamed al- Fayed, by 
providing an indemnity to a 
former employee of Mr Fayed, 
Mr Graham Jones, who alleg- 
edly defected to Lonrho. 


Mr Fayed is suing Mr Jones 
for breach of confidence and is 
therefore also in effect suing 
Lonrho. It is particularly 
embarrassing for Lonrho that 
it should find itself on the 
opposite side of a case brought 
by Mr Fayed, because it is only 
a year since they settled their 
bitter and costly legal battle 
over the manner to which Mr 
Fayed purchased House of 
Fraser in 1985. 

According to an associate of 
Mr Rowland, the indemnity is 
likely to be discussed by the 
board meeting. 

Mr Rowland will insist that 
he has not damaged Lonrho 
because he will say that Mr 
Fayed is once again his friend 
and would not pursue the 
action if it was seen to be hurt- 
ing him. 


BAe reserves right to lift VSEL bid 


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By Tim Burt 

British Aerospace yesterday refused to 
rule out making a revised offer for VSEL, 
the nuclear submarine make r. Mr Bob 
Bauman, chairman, told BAe shareholders 
that although it expected CEC's rival 
£532m offer to be blocked cm competition 
grounds, BAe reserved the right to 
increase its own bid. 

“Our offer is an open one, which doesn't 
prevent an increase," he said. 

Two and a half weeks ago, BAe offered 
2.474 shares for each VSEL share with a 


cash alternative of £11.40. At BAe's closing 
price yesterday, down 2p at 450p, the bid 
values each VSEL share at £12.36. 

Mr Bauman, however, claimed that the 
VSEL board would recommend the BAe 
offer ahead of GEC’s cash bid because it 
would secure the future of its Barrow ship- 
yard and open new markets for its land- 
based defence systems. 

"It is also in the best interest of VSEL as 
it poses no competition concerns for 
defence procurement in the UK,” he said. 

Shareholders approved a resolution 
allowing BAe to proceed with the offer, 


despite a series of questions to the board 
over a clause allowing it to extend or 
amend the bid. 

Mr Richard Lapthome, finance director, 
sought to reassure investors that a revised 
offer might not be necessary by pointing 
out that if BAe's share price rose by 60p 
the current bid would be worth £14 a 
share. 

Justifying the proposed acquisition, he 
added that VSEL profits would reduce 
BAe’s tax rate from 33 to 25 per cent and 
greatly strengthen Its balance sheet. 

See Observer 


Confident in the ability to deliver 

John Weston puts BAe’s case for taking over VSEL to Bernard Gray 


T he battle over VSEL, the 
Barrow-based subma- 
rine maker, is starting 
to get aggressive, hi part that 
is because the fight is not just 
about the future of one ship- 
yard in Cumbria, but about the 
future direction of the entire 
UK defence industry. And as it 
is so important, it is a fight 
which neither side can afford 
to lose. 

So what kind of industry will 
it be and will British Aero- 
space or GEC lead it? 

Mr John Weston, chairman 
of British Aerospace’s defence 
arm, speaks with obvious con- 
viction about who should be in 
the driving seat. “If the govern- 
ment has to pick a national 
champion in defence, then 1 
think leadership by GEC is not 
the best solution." 

His view is that British Aero- 
space has the right skills, right 
products and the imagination 
necessary to succeed in the 
increasingly complex world of 
defence manufacturing. For 
good measure he adds that 
while BAe has had its fair 
share of problems with Us dvfl 
operations, its defence arm has 
been consistently profitable 
with good margins and is 50 
per cent larger than GECs 
defence operation. 

- “Systems integration and the 
ability to manage prime con- 
tracts are the most important 
areas fbr a defence company 
now," he argues. 

Mr Weston's point is that 
modem military systems are 
so complex that controlling the 
process of putting the parts 
together is as important as the 
ability to design new equip- 
ment itself 

With the ministry of defence 
pushing more of the financial 
risks of developing and manu- 
facturing equipment on to 
defence companies, the skill of 
being able to control a project 
with hundreds of subcontrac- 
tors and suppliers, and mil- 



John Weston: BAe's defence arm has been consistently profitable 


lions of components, is vital 
for profitability. These are two 
skills which, he claims, BAe 
has in abundance. 

“ Thing s have changed enor- 
mously over the past 50 years. 
The Spitfire was probably 
designed by a team of at most 
50 engineers. We have between 
4,000 and 5,000 people working 
on the Eurofighter design. It is 
no longer possible to talk of 
individuals designing aircraft. 
You need the systems to be 
able to control that hugely 
complex process.” 

In the case of VSEL, the job 
of bringing together the elec- 
tronics, nuclear reactor, sonar, 
weapons and manufacture of 
the pressure hull of a subma- 
rine and making them -work is 
a similar job to the production 
of a fighter aircraft Hence Mr 
Weston's belief that, despite 
the obvious differences 


between silent submarines and 
fast jets, BAe is well placed to 
run the shipyard. 

On the wider issue of the 
future of the defence industry 
in Europe, Mr Weston is 
looking to strengthening cross 
border alliances, and as prime 
contracting skills are the most 
important element he thinks 
BAe is well placed to take a 
leading role. 

In military affairs “European 
integration is going on. none of 
the armed forces can now 
afford a fully independent set 
of skills, and they are becom- 
ing interdep ende nt Industry is 
following that trend.” 

The process has been slower 
in Europe than in tbe US, 
where mergers and rationalisa- 
tion have been happening at 
breakneck pace. There is also a 
strong suspicion among many 
observers that when continen- 




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1994 GENEVA 
EXECUTIVE COURSES IN 
FINANCE 

November 21 - 25 

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Emphasizes the strategic implications of moderm 
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focus on concepts and their application. 

November 28 - December 2 
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tal Europeans talk about 
rationalisation, they mean 
someone else. 

"The UK has started to grasp 
the rationalisation issue. Some 
of our continental partners 
have taken a little longer to get 
there, but there is now a con- 
sciousness that change is nec- 
essary.’’ he says. 

Some moves towards cross- 
border links are already hap- 
pening. BAe is negotiating to 
merge its missile business with 
Ma tra of France. It has also 
looked at a merger of its Royal 
Ordnance operation with Giat, 
the French ammunition manu- 
facturer. 

Mr Weston also points to the 
way BAe’s military division 
has retrenched to the 1990s as 
proof that the company has 
taken the hard decisions. “In 
the past five years we have 
reduced the number of people 
in our military business from 
66.000 to 31,000, at the same 
time as increasing sales by 10 
per cent." 

According to Mr Weston. 
BAe is also doing all the other 
Good Things which any 
switched-on manufacturer 
must do to survive in the 
1990s. “We have had a major 
drive to find out what our cus- 
tomers want and give it to 
them. We are now trying to get 
the most out of our people, and 
encouraging them to learn 
from other parts of the busi- 
ness and outside. We want to 
eliminate the 'not invented 
here' mentality which can be 
so damaging.” 

In the end, however, doesu’t 
GEC's greater financial muscle 
give it an enormous advantage 
over BAe? If it does. Mr Wes- 
ton professes not to be 
impressed. “Financial strength 
is undoubtedly helpful. But the 
defence business is not ulti- 
mately about financial 
strength and making black 
boxes. It is about delivering 
systems to spec and on time." 


New Look 
postpones 
flotation 
plans 

By Christopher Price 

The adverse market conditions 
for new Issues were yesterday 
blamed for yet another 
postponement when New * 
Look, the Dorset-based 
women's wear chain, cancelled 
its notation plans. 

Tbe company, which bad 
been hoping for a market 
value in excess of £150m, was 
due to announce the pricing of 
its shares today. 

Schraders, the company’s 
advisers, said: “In this 
negative environment, people 
were looking for any excuse 
not to invest They couldn’t 
believe that its rate of success 
could continue.” 

Fund managers approached 
by the company and its 
advisers to the past couple of 
days said they had been 
offered the shares at a 30 per 
cent discount to the retail 
sector - a surprising figure 
even to the current subdued 
environment for new issues - 
and bad turned them down. 

One institutional investor 
said: “I had reservations about 
the management, the 
management structure and the 
rate of expansion, it’s as 
simple as that” Another 
added: “With such high 
margin rates, we were 
concerned over any further 
room for growth.” 

Some 35 per cent of the 
equity was due to come to tbe 
market through a placing and 
intermediaries offer. The 
flotation was to have raised 
about £10 m of new money. 

New Look, which has 224 
shops, is aimed at the. lower 
end of the women’s fashion 
market It has more than 
tripled operating profits and 
turnover to the past three 
years. Profits of £llm last 
year were almost matched by 
the £9. 92m posted for the six 
months to September 24. 
Operating margins were 16.9 
percent. 

Tbe company, founded to 
1969. is owned by the Singh 
family, with Mr Tom Singh, 
the deputy chairman. Other 
members of the board included 
Mr Louis Sherwood, tbe 
non-executive chairman, who 
was appointed in September. 

Another non-executive was 
appointed last month, as was 
the finance director, Mr Peter 
Phillips, formerly of Hepwortb 
and British Nnclear Fuels. 


BET rises to £58m amid 
signs of better margins 


By Andrew Bolger 

BET, the business services 
group, reported a 25 per cent 
increase in pre-tax profits from 
£46. lm to £57.7m for the six 
months to October L and said 
it was seeing signs of improve- 
ment to its profit margins. 

Turnover fell from £S80m to 
£864m. but last year's figure 
Included businesses sold in the 
first halt Excluding disposals, 
sales rose by 1 per cent 

Operating profits rose to 
£55.7m (£49.3m). Earnings per 
share grew to 4.5p (3j3p) and 
the interim dividend was 
increased to 1.2p (lp). 

Mr John Clark, chief execu- 
tive, said: “The Increase in 
published earnings and the 
early signs of improvement in 
overall gross margins are both 
encouraging. 

“We continue to seek 
improvements to productivity 
which will offset cost inflation 
and price pressure. These 
actions are key to L994-95 earn- 
ings growth.” 

Capital expenditure in the 
first half more than doubled to 
£78m. Net cash at the period 
end was £l8m, against £9m last 
September and £67m at the 
year end to April. Sharehold- 
ers’ hinds increased to £288m, 
against £260ra at the year end. 

Mr Keith Payne, director of 
finance, planning and develop- 
ment, said the group had spent 


BET 

Share price retaiiva to the 
FT-S6-A AB-Shae Index 

120 — 



1994 


Source: FT Grupfutn 

£2m on bolt-on acquisitions 
daring the first half. He expec- 
ted to conclude several deals 
during the second halt 
Mr dark said in May that 
the group was willing to con- 
sider acquisitions again after a 
long period of divestments. He 
said yesterday that he would 
be prepared to let gearing rise 
to about 30 per cent, if the 
right opportunity' arose. 

A £5.2 m gain on disposals 
was offset by a further £7m of 
rationalisation costs. 

Business services - compris- 
ing cleaning, personnel, secu- 
rity, catering and facilities 
management - saw sales 
increase 2 per cent to £370m, 
although operating profit fell 
14 per cent to film. 
Distribution services 


increased operating profit by 
IS per cent to £I5.6m, led by 
the US tanker and Zimba- 
bwean distribution businesses. 

Plant services increased 
operating profit by 13 per cent 
to £20.Sm, excluding asset 
write-offs in the prior year. 
Turnover fell by 9 per cent to 
£190m. 

Turnover from textile ser- 
vices fell 2 per cent to £U9m 
and operating profit was down 
10 per cent to £17.2m. 

• COMMENT 

Mr Clark gets credit to the City 
for stabilising BET, which 
overstretched itself by a series 
of acquisitions in the 1980s. 
The question is: where does It 
go from here? Since the chief 
executive joined in 1991, dis- 
posals and rationalisations 
have reduced the group from 
ISO operating companies to 59 
profit centres. Mr Clark is now 
talking about “growth over 
time", which suggests there 
will be no swift bounce to the 
group’s performance. Forecast 
full-year profits of £105m put 
the shares, up 3p yesterday to 
114V»p, on a prospective multi- 
ple of 13.5 - a small discount to 
the market. The shares are 
unlikely to move significantly 
unless and until BET demon- 
strates that its re maining busi- 
nesses really can deliver 
unproved productivity and 
profits. 


Half of BZW staff may be 
moved to Canary Wharf 


By Robert Peston 

Barclays de Zoete Wedd, the 
investment banking subsidiary 
of Barclays, yesterday told its 
3,500 staff that more than half 
of them were likely to be relo- 
cated to Canary Wharf in East 
London. 

In an internal memorandum, 
it told employees that it was to 
negotiations to rent two trad- 
ing floors, or about 500,000 sq ft 
of space. 

The deal would be a boost for 
the east London property 
development, which was refin- 
anced by its banks last year 
and came out of administra- 
tion. It was built by the Cana- 
dian developer. Mr Paul Reich- 
mann, at the turn of the 
decade. 

BZW's decision to reconsider 


Canary Wharf will surprise 
many in the City, because only 
last month it was widely 
reported that it had decided 
not to move there. 

However, Mr Martin Taylor, 
Barclay’s chief executive, said 
the previous decision was that 
the whole of BZW should not 
move so far from the City. 
However, there was a strong 
case for moving staff to Canary 
Wharf who did not need to 
meet clients regularly. 

Among departments likely to 
move are: markets, which 
include bond, foreign exchange 
and money market trading, 
and debt capital markets, 
which combines the creation 


and trading of derivative prod- 
ucts. 

The firm’s corporate finance 
and equity departments are 
likely to remain closer to the 
City. They are expected to 
occupy Royal Mint Court, the 
refurbished eighteenth century 
building already occupied by 
Barclays' senior management . 

Mr Taylor said that the deci- 
sion of where to house tbe 
investment banking firm was 
one of the most difficult he had 
faced since joining the bank 
last year. 

Barclays was one of the main 
lenders to Canary Wharf and 
has suffered significant losses 
on its loans to the project 


Manchester United plans 
to expand stadium 


Manchester United yesterday 
confirmed plans to expand the 
capacity of its Old Trafford sta- 
dium by 22 per rent to 54,000. 

The company refused to 
reveal how it would finance 
the expansion or how much it 
would cost, saying the applica- 
tion for planning consent was 
only a preliminary step. 

It is expected to use part of 
its £13.6m cash reserves to 
fund the development and 


acquisition of adjacent land. 

Shareholders, however, will 
be asked to reconfirm the 
directors right to launch a 
rights issue, according to the 
annual report published yester- 
day. 

The accounts also showed 
that Mr Martin Edwards, chief 
executive, received a 23 per 
cent pay increase from £174,000 
to £214,000 in the year to July 
31. 


1 DIVIDENDS. ANNOUNCED “ r 


/ ; V: ' 

1 



Current 

payment 

Date ol 
payment 

Corres - 
ponding 
dividend 

Total 

for 

year 

Total 

last 

year 

Beflway — 

— fin 

4.8 

Jan 23 

4t 

7 

6f 

Broadgale Inv — 

. — fin 

1.6 

Dec 23 

i-eV 

1.6 

1.8 

Cooper (Fred) 


1.7 

Feb 1 

1.5 

2.5 

22 

Copy more § 

— fin 

1.7 

Jan 10 

1.5 

4.3 

4 

Mezzanine Cap .... 

ini 

7 

Dec 15 

5.5 

- 

16.75* 

Salnsbury (J) 

— int 

3.2 

Jan 18 

3 

- 

10.0 

Scott Nat Trust — 

— On 

2.1 

Dec 31 

2.1 

7 J5 

7.75$ 


Dividends shown o?nce per share net except where otherwise stated. tOn 
Increased capital. §USM stock, f Adjusted for share aubdMston. tyndudas 
0 25p special dividend. VFor 14 months. *lr>dudes special dividend of 4p. 


Tele-Cine Cell to join 
market with £20m tag 


By Paul Taylor 

Shares in Tele-Cine Cell have 
been priced at 170p. valuing 
the Soho-based group at £20m. 
The video editing and special 
effects group whose recent pro- 
jects have included Guinness's 
'glass universe' commercial, is 
coming to market via a placing 
of 4.7m shares, representing 40 
per cent of the expanded capi- 
tal. 

Half the shares are being 
sold by existing shareholders 
including the group's joint 
managing directors, Mr John 
Rowland and Mr Paul O'Ha- 
gan, who will each retain a 13.5 
per cent stake. They will make 
a little more than £900,000 each 
and Mr John Graves, co- 
founder of Tele-Cine, will 
receive about £2 An. 

The remaining 225m shares 
are being issued by the group 
to raise £4m new funds. This 
will be used to reduce borrow- 
ings and provide working capi- 
tal. 

The group is divided into two 


main businesses, both of which 
operate to fast growing high- 
technology markets. 

Tele-Cine undertakes film 
transfer, video editing and 
sound mixing, together with 
tape transfer, standards con- 
version and archiving. Cell 
uses motion control filming, 3D 
computer graphics and digital 
editing systems to create spe- 
cial effects sequences. 

The group continued to grow 
organically through the reces- 
sion and capital expenditure 
has amounted to £8u3m to the 
last 3% years. 

Last year the group made 
pre-tax profits of £lm <£778,000) 
on turnover of £9.69m (£8.1m). 
Profits grew to £1.28m In the 
six months to June 30 on turn- 
over of £6.19m. Directors have 
forecast full-year pre-tax prof- 
its of not less than £2 An. 

On the basis of the forecast 
earnings per share for the year 
the flotation price represents a 
prospective multiple of 11.8. 
Dealings are expected to begin 
on November 10. 


PUBLIC WORKS LOAN BOARD RATES 

Effective November f 


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uw ae i 

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Quota loans" 

mart* art aft 

6ft 

ratal 

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7 

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■Navquma i&ms A ' p*r cant jnJ non-quow Hans eww htqne "i each case man 

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Ml ytun MvmtfttS to mute pordpe ana wertsfl. 3 WHh of «*« ortv 


Notice of Interest Rates 
To the Holders of 

The United Mexican States 

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NOTICE IS HEREBY GIVEN Lhai the mortal i*ir« "wtrinj; Hu? ijiutcsI pwrd 
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USD DraoounL Scrira B 8 7UW13 M V A USD 34 02 PW USD 1.000 Slay 2 15*35 
YEN asocnuil Serna 3-3120 PetRA VBN l.«Mf.O0rw VEN 100.000 May:!.ll»5 


Novembers!, 199-4 


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FT International Trade Finance is the essential newsletter for tbe 
executive who needs to stay abreast of the opportunities and 
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Published by Financial Times Newsletters, it provides both timely 
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FINANCIAL TIMES THURSDAY NOVEMBER 3 .994 


COMPANY NEWS: UK 


Deal involving investment of up to $300m expected in few months Butte issues 

Zeneca seeks US healthcare links ? m f!|o“ ent 

to 1993 

By Daniel Green The highest profile strategies Zeneca is in talks with sev- he wanted to keep open 

so far have been from Smith- eral HMOs on a tie up. It has options that would be closed oppAlinfc 

tha Hhik cnmnamj io Klino anrl Hun IIS mmnanim' netshlishpd Stuart D19C3SG bV 3 lSTES PUTchaSS. ilvvUlIIllfl 


By Darnel Green 

Zeneca, the drugs company is 
considering forming joint ven- 
tures with US healthcare sup- 
pliers as an alternative to the 
multi-billion dollar acquisi- 
tions made by rivals such as 
SmithKline Be echam. 

A deal Involving either a 
joint venture or close links 
with a US healthcare company 
is likely within four months. 

It would probably involve a 
cash commitment of between 
?200m and 5300m (£190m) over 
several years. 

Creating a free-standing joint 
venture would be an unusual 
approach to dealing with the 
newly cost-conscious US 
healthcare industry. 


The highest profile strategies 
so far have been from Smith- 
Kline and two US companies. 
Merck and Eli Lilly. Between 
them the two US companies 
have spent more than $12bn in 
15 months on buying Phar- 
macy Benefit Managers (PBMs) 
and Health Management 
Organisations (HMOs). These 
are two types of business 
which negotiate deals with 
hospitals and drug makers on 
behalf of employers who pay 
health insurance premiums for 
employees. 

But last month’s decision by 
the US Federal Trade Commis- 
sion to impose conditions on 
the Eli Lilly purchase has put 
the whole acquisition strategy 
in question. 


Zeneca is in talks with sev- 
eral HMOs on a tie up. It has 
established Stuart Disease 
Management in the US. 

Disease management pro- 
grammes are attracting 
increasing interest in the US. 
The idea is that patient care 
should include the provision of 
non-drug treatments, such as 
diet regimes and screening pro- 
grammes. 

Zeneca’s biggest-selling prod- 
uct is Zestrli, the heart drug. 
The company also produces 
low-fat, low-salt foods - of the 
kind recommended for many 
heart disease sufferers - that 
could find new markets in 
healthcare. 

Mr David Barnes, Zeneca 
chief executive, said yesterday 


he wanted to keep open 
options that would be closed 
by a large purchase. 

He said the approach pio- 
neered by US company Pfizer, 
which this year set up 
a 5100m disease management 
programme with HMO Valu- 
Health, was a good 
model. 

Zeneca has already signed 
three preliminary contracts 
with HMOs. The work they 
will undertake, under a system 
called capitation, is designed to 
“share the risk in healthcare," 
said Mr Barnes- 

Under the system a company 
receives a Oat fee for treatment 
per head of population 
rather than a per treatment 
payment. 


BS attacks continental subsidies 


By Andrew Bdger 

British Steel has said that 
it is being put off from invest- 
ing in the UK and the rest of 
Europe by the subsidies 
allowed to competitors on the 
continent 

Mr Brian Mafia tt chairman 
and chief executive, told a 
Commons trade and industry 
committee that these subsidies 
would undermine British 
Steel's profitability as UK eco- 
nomic growth slowed. 

He said: “To take on compa- 
nies whose losses are subsi- 
dised is something we are not 
capable of doing.” 

Mr Moffett told MPs that if 
these subsidies continued, his 
board felt that there were 
much more attractive areas in 
which to invest. He cited the 
group’s recent decision to 
build a £97m mini-mill at TUS- 
caloosa Steel, its Alabama sub- 
sidiary. 

British Steel, Europe's sec- 


ond largest producer after 
France's state-owned Usinor 
Sacilor, has strongly opposed 
aid to public companies to help 
them restructure. 

It even launched an 
action against the European 
Commission at the European 
Court of Justice, accusing it of 
breaking its own rules on sub- 
sidies. 

An EC plan to restructure 
the industry collapsed last 
week after steel companies did 
not come up with the cuts in 


capacity required for the proj- 
ect to proceed. 

Mr Moffatt also said the 
future for the industry was 
bleaker. 

“The economy is moving for- 
ward at the moment, but when 
the next slowdown comes, if 
the subsidy argument is not 
put to bed now. it will be 
back with, us in a few years' 
time." 

This argument was echoed 
by Mr Ian Blakey, director-gen- 
eral of the British Iron and 


Steel Producers Association. 

He said: “We must be storing 
up trouble for the next reces- 
sion. We must stamp out subsi- 
dies and let the market take its 
course and it will take its 
course during the next reces- 
sion." 

Mr Moffatt urged the UK 
government, which cut British 
Steel ofl from aid in 1985, to act 
as a referee on state aid in the 
European Union and be con- 
sistent about its stance on the 


London Fiduciary £6m gold deal 


London Fiduciary Trust, which former England 
cricketer Mr Phil Edmonds aims to build into a 
substantial gold producer, has acquired a heap- 
leach gold project in the Philippines from Run- 
runo Mining Corporation for £6m. 

The purchase is to be satisfied by the issue of 
LFT shares at 5p each, compared with yester- 
day’s market price of 2%poKp. The vendors 
have agreed to retain these shares for at least a 


year from the date of issue. 

LFT said an Independent appraisal of the Run- 
runo project suggests it has reserves for annual 
production of 50,000 troy ounces of gold for eight 
years at an estimated production cost of less 
than US$200 an ounce. 

The independent consultants, London Mining 
and Metal Consultants, placed a net present 
value of S25.46m on the project 


O 

Q. 


The Pfandbrief ■ 

Eight strong arguments for our product 


X 

cc 

111 


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$'•' ri ;: '• ? . 


Wi " • 

V ' •, ■ ■ 

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Erwin Heerich, no name, 
Wilhelm Lehmbruck Museum 
Duisburg 


The yield on our Pfandbriefe is higher than the return on public-sector 
bonds. They guarantee a fixed rate of interest throughout their life. They 
offer a broad spectrum of maturities for individual investment planning. 
Furthermore, they provide excellent liquidity: our Pfandbriefe can be sold 
at any time through the stock exchange. The security given to the investor 
by virtue of the German Mortgage Bank Act makes them an especially 
attractive offering on all financial markets. Their outstanding quality has 
been acknowledged since 1987 by the m AAA m 

rating of the international rating agency Talk to your investment 

consultant, broker or bank 

Standard&Poor's. Finally, the reliability of about our Pfandbriefe and 

Frankfurter Hypo as an issuing house for over 130 the securitv provided by the 

German mortgage bond 

years is a further sound argument. In a nutshell, system. 

Frankfurter Hypo Pfandbriefe provide the solid 
foundation for your capital formation. 

Frankfurter Hypothekenbank AG, Junghofstrafce 5-7, D-60311 Frankfurt, 

Fax 01049/69/29898-219 


Frankfurter Hypothekenbank I tr 

This is an investment advertisement issued by Frankfurter Hypoihenbank AG being approved by Deutsche Bank AG London, a num- 
ber of tha SFA pursuant to the rules of the SFA. Since the investments are issued and regulated in Germany, (he protection provided 
by the UJt regulatory system does not apply and (hose investments are excluded from the U.K. investors Compensation Scheme.' 


ft. 


Recovery continues at 
Frederick Cooper 


vy i - 


By Jim KoOy, 

Accountancy Correspondent 

Batte Mining, the Landon- 
I listed company whose main 
! activity Is pursuing US iaw- 
I suits, has amended its 
! accounts after discussions 
with the Financial Reporting 
1 Review Panel - the accounts 
watchdog. 

Bntte, which is seeking Slbn 
(£600m) in damages from for- 
mer managers and promoters, 
has issued a supplementary 
note relating to Its accounts 
for the year to Jane 1993 in its 
1994 report and accounts. 

The panel’s statement, the 
24th it has issued as a watch- 
dog since its foundation in 
1991, expresses concern that a 
bank overdraft or £750,000 was 
shown in the balance sheet as 
falling due after more than 
one year. 

In Butte’s opinion the over- 
draft could not be shown as 
railing doe within a year and 
still give a true and fair view 
of the company’s affairs. 

It claimed the overdraft pay- 
ment was entangled with a 
Montana law suit and could 
not fall due within a year. The 
company, however, did not 
want to “become party to a 
test case". 

On two other counts the 
company had invoked the true 
and fair override with respect 
to the cash flow statement but 
the panel considered the treat- 
ment incorrect 

It noted that a £560,000 sale 
of an equity investment was 
not shown in the cash flow 
statement but was “incor- 
rectly" treated as a cash equiv- 
alent Also, a repayment loan 
of £500,000 was not shown 
because it was “incorrectly" 
treated as a cash equivalent 


By Peter Pearse 

Frederick Cooper, the 
architectural hardware, metal 
finishing and electrical prod- 
ucts group, continued its 
recovery with a 30 per cent 
advance in annual pre-tax prof- 
its from “underlying 
operations" to £5.45m. 

On an FRS3 basis the rise 
was greater at 53 per cent to 
£&3lm (£4.l2m) for the year to 
July 31. Turnover grew to 
£89.1m (£34. 3m). 

The focusing on core busi- 
nesses continued with the sale 
of Cooper Handling in June for 
£l.46m. This resulted in a 
£896.000 exceptional profit. Mr 
Ed Kirk, chairman, said the 
surplus gave a distorted 
Impression of group progress. 

Since the year-end, Futters 
(London), an electrical compo- 
nent company was sold for 
£3 .75m. Three businesses in the 
electrical products division 
remained, generating only £7m 
of turnover. He expected to dis- 
pose of at least one within the 
next 12 months. 


Frederick Cooper 

Share price (panca) 

120 ” I 


110 -■ — 



40 1 * — 

1993 94 - 

Sarea; FT Graphite 

In spite of the profits rise 
and a 3 per cent increase in 
first-quarter sales in the cur- 
rent year. Mr Kirk remained 
cautious on prospects. 

He said the UK economy 
remained fragile and the archi- 
tectural products side, which" 
makes locks and other door 
and window fittings, catered 
for the “back end of the con- 
struction market". Also, in the 
past 12 months the price of alu- 


minium had risen 30 per cent; 
steel hod risen. 6 per cent since 
the start of the year and would 
rise another 6 percent in Janu- . 
ary; and European polymer 
prices,had risen HLpercant 
Cooper was now also sourcing 
from Brazil and altering its 
plastic compounds "mix*’ to 
help circumvent this. ' / ' . . 

In the architectural hard- 
ware division, profits. jumped 
to £1 jgm (£570,000) on turn- 
over up slightly at £S0.1m 
(£49.6m). In metal finishing, 
profits were £3. 13m (ja&n) on 
turnover of £24.4m . (£20m). 
Organic growth for the group 
would come in the US metal 
finishing side, said Mr Kirk, 
with any acquisitions also in 
thaf area. 

At the year-end borrowings 
were £7m; they were now less 
than £5m and by Jjdly 1995 
were expected to be about 
SZJftn. 

Basic earnings on underlying 
operations were 6p (&5p) and 
under FRS3 8-2p (3.4p). The 
-final dividend is lifted to L7p 
(L5p) for a total of &5p (2.2p). 


. -i 


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7-1 - v' , 

r 2. 

■ s 

v 


NEWS DIGEST 


Jermyn 
declines 
to £55,000 

Jermyn Investment, the 
property investor, reported pre- 
tax profits for the half year to 
June 30 lower at £55,000, 
against £77.000. Net property 
income rose from £371,000 to 
£380.000. 

The figures related to the 
period before the recent £12.5m 
placing and open offer and 
acquisitions as part of the com- 
pany’s expansion plans. It said 
yesterday that a number of 
transactions were being con- 
sidered which might lead to 
Further purchases before the 
year-end. 

Earnings per share were 1.8p 
(2.75p) or 1.19p a.83p) fully 
diluted. The £300,000 arrears on 
the preference shares have 
been declared and the payment 
of a dividend, which has not 
been paid since 1991, will be 
considered at the year-end. 

Amstrad 

Mr Alan Sugar, chairman of 
Amstrad. has increased his 
stake by 4,400 ordinary shares, 
under the distribution of the 
estate of the late Mrs Fay 
Sugar, his mother. Mr Sugar is 
now interested in 205.6m 
shares (35.4 per cent). 

Fleming Chinese Inv 

A fall in China related stocks 
led to a decline in net asset 
value at the Fleming Chinese 
investment Trust, down to 
84.95p on the September 30 
year end. 

This was 12.6 per cent below 
the post launch net asset value 
on October 19 1993. 

Available revenue came out 
at £487,000 for earnings per 
share or 0.81p. A final dividend 
of 0.5p is recommended. 

Celtic Gold 

Celtic Gold, the Irish mineral 
exploration company, reported 
pre-tax losses of I£217,900 
(£215,000) for the half year to 
June 30, against [£302,002 for 
tbe previous 12 months. 

The result included an excep- 
tional charge of [£212,911 
(I£266,493) relating to the costs 
of a placing and the sale of 
Clare Calcite, together with 
expenses incurred in connec- 


tion with the unsuccessful 
offer for Coyle Hamilton, the 
insurance broker. 

The directors said they were 
examining further possible 
opportunities in the financial 
services sector and expected to 
report to shareholders on their 
discussions shortly. 

Claddagh Gold sold its 54 per 
cent stake in Celtic to English 
Trust during the period, since 
when the shares have been 
suspended. 

BCE acquisition 

BCE Holdings, the USM-traded 
snooker and pool products dis- 
tributor. has named Software 
Creations (Holdings) as the 
company it is to acquire along 
with Rage Software for £14m. 

The acquisition of the two 
companies will take BCE into 
the electronic games industry 
and more than treble its size. 

Hall Engineering 

Hall Engineering’s enhanced 
scrip dividend has been 
accepted in respect of 23.6m 
shares or 779 per cent of tbe 
issued share capital Of those 
Kleinwort Benson's cash offer 
has been accepted in respect of 
42 per cent or 9.84m shares. 

Broadgate Inv Trust 

Net asset value per share at 
Broadgate Investment Trust 
fell from 123.62p to lL9.73p over 
the 12 months to September 30. 
The fully diluted figures 
showed a fell from U9.68p to 
116.44p. 

Net revenue for the year was 
£89,574, compared with £106,040 
for the previous 14 months 
from its listing. Earnings per 
share were 1.79p (2,l6p) and a 
single final dividend of 1.6p 
(l-8p) is proposed. 

RPS £t.9m buy 

RPS. the USM-quoted environ- 
mental consultancy, is to 
acquire three subsidiaries of 
MTS International for £1.9m. 
The acquisition will be funded 
by a placing and open offer of 
2.92m shares at 65p each. 

Qualifying shareholders will 
be Invited to apply for shares 
on a l-for-4.1535 basis. 

The three companies, Thom- 
son MTS in MUton Keynes. 
NOHS in Manchester and Envi- 
ronmental Monitoring (Scot- 
land), comprise the environ- 
mental section of MTS 
International which is part of 


the metal technology division 
of Bodycote International 
Their combined operating prof- 
its for 1993 were £463.000. ^ 

Mezzanine Capital 

The net asset value per capital 
share of Mezzanine Capital and 
Income Trust 2001 stood at 
3I2.7p at the September 30 
interim stage, against 295 jp 
six months earlier and 273.4p a 
year ago. 

Available revenue for the 
period amounted to £1.33m 
(£ l.56m) giving earnings of 
7B3p (6.96p) per income share. 
The interim dividend is raised 
to 7p (5.5p). 

The trust recently sold its 
investment in Polaris Pools 
Systems and two US invest- 
ment companies for 525.7m 
(Eifi -2m) - it has also invested 
some $14.5m in securities of 
NRE Holdings, operator of 80 
Buiger King outlets in the US. 

Fleming raises £25m 

Fleming has so tar raised £25m 
during the placing stage for its 
Natural Resources investment 
trust which will specialise in 
companies involved in extract- 
ing, cultivating and processing 
commodities worldwide. 

A public offer bo raise up to a 
further £25m closes on Novem- 
ber 23. jk 

The trust will have a life of*** 
between two and a half and 
five years, to make the best 
use of the commodities cycle. 

A commodities investment 
trust launched last month by 
BZW raised £78m from a plac- 
ing and public offer. 

Dakota agrees offer 

Dakota Group, the USM-quoted 
maker of packaging products, 
has recommended an offer 
made by CBW, a company con- 
trolled by Mr Colum KeUeher, 

Mr William Carlisle and Mr 
Brendan Mowles, all executive 
directors of Dakota. 

CBW has received accep- 
tances totalling 92.58 per cent 
of Dakota's issued shares. 

Capital Gear Trust 

Capital Gearing Trust reported 
net asset value per share down 
at 5i0.ip at October 5, against 
522.5p six months earlier. 

Net revenue for the half year > 
to October 5 was £5,972 com- 
pared with losses of £14373, for m 
earnings per share of 0.33p 
(losses 1.34p). i. 




FIDELITY GLOBAL INDUSTRIES FUND 

Societe d'lnvesrissement a Capital Variable 
Kansallis House, Place dc l’Etoilc 
L- 1021 Luxembourg 

NOTICE OF ANNUAL GENERAL MEETING 

NOTICE is hereby given lhat ihe Annual General Mccling of the Shareholders of Fidelity 
Global InduMnes Fund a societe d uivcMisscmcm a capital variable organised under the laws 
of the Grand Duchy ol Ui^cmbourg ("the Fund"), will be held at the registered office of the 
Fund- Kansallis House, Place dc l Etude. Luxembourg, at 11:00 a.m. on November 24 1994 
specifically, but without limitation, for the following purposes : ‘ 

1. Presentation of the Report of the Board of Directors. 

2. Presentation of the Report of the Auditor. 

3. Approval of the glance sheet and income statement for the fiscal year ended July 31 1994 

4. Discharge ol the Board ot Directors and the Auditor. 3 

5. Election of .six (6) Directors, specifically the re-election of Messrs. Edward C. Johnson 3rd. 

Barry R . Bateman. Charles T. M. Colhs. Sir Charles A. Fraser, Jean Hamilius and UP 
van den Huvcn. being all of the present Directors. us and H F - 

6. Election of the Auditor, specifically the election of Coopers & Lybrand. Luxembourg 

7. Consideration ol such other business as may properly come before the meeting 

Approval of items l ihrough 7 of the agenda will require the affirmative vote or a majority of 
the shares present or represented at the marling with a minimum number of shares present or 
represented in order for a quorum to be present. v or 

Subject jo the limitations imposed by the Articles of Incorporation of the Fund with norms 
ownership of shares which constitute in the aggregate more than three percent 
outstanding shares, each share is cnutlcd to one vote. A shareholder mav act at any meeting by 

Dated: 24th October 1994 

BY ORDER OF THE BOARD OF DIRECTORS 


Investments 


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F1NANCIAJL TIMES THURSDAY NOVEMBER 3 1 994 




COMPANY NEWS: UK 


Bellway’s 
67% rise 
beats City 
forecasts 

■i ■ . i 

Ely Richard Woffle 

Shares in Beltasy rose I4p to 
308p yesterday as the "hoose- 
bnOder outstripped City fore- 
casts to announce a 67 -per 
cent increase In pre-tax profits 
to* the year to July 31. 

Pre-tax profits rose to £28m 
(£16. 7m) (m turnover up 37 per 
cent at £201. 3m (£M7.2m). 
Operating margins were lifted 
from 10 to 1&5 per cent 
Mr Kenneth Bell, chairman, 
said the company's perfor- 
mance was the result of “our 
policy of controlled expansion 
of the manag ement, the organ- 
isation and the I praf portfolio 
throughout the recession". 

The middle-market group 
sold 3,010 homes, a rise of 31 
per cent at an average price 
which rose 6 per cent to 
£65,000. 

Mr Alan Robson, finance 
director, said: “Our sales are 
20 per cent op in the current 
year. We have been wpaniijTig 
over the last four years by 
about 25 per cent per annmn 
and X think there is good 
momentum in the market at 
the moment.” 

He added that the company 
expected prices and margins to 
remain static this year. 

Cash fell from £44.3m to 
£6.42m as the group purchased 
£100m of land at low prices 
last year. Tear-end net cash 
stood at £lm (£44m). 

Bellway has some 12,000 
plots with planning permis- 
sion, representing more than, 
three years' building. The 
company farther committed 
itself to £lBm of land in the 
first three months of the year. 
-The group won £25m of City 
Chant awards to build 649 
units in Manchester and 479 
units in London.- The latter is 
part of a kmg4erin develop- 
ment. to bpild 6,500 houses in 


The preferred route to recovery 

British Coal’s cast-off could be Anglo’s salvation, reports Peggy Hollinger 

A nglo United sharehold- Anglo United ning Coal Products could { 

ers could not believe some way to reducing the del 

their eyes when they stwroprtca (panes) cit in shareholders’ funds. 

60 


Karning K per share rose 63 
per cent to 17J3p (I0.6p). The 
board proposes a final divi- 
dend of 44lp to make a total of 
7p, compared with 6p last 
year. 

• COMMENT . 

Bell way seems to have weath- 
ered file recession with a 
healthy balance sheet and 
strong sales. Testodayk fig- j 
ores owe much to the group's ' 
shrewd purchasing policy, 
which khoukd allow consistent 
growth this year, fi b now 
to gear up to about 
30 per cent to maintain its 
purchasing programme. Pre- 
tax profits are forecast at 
£325m, winch gives a fairly 
low p/e of 10; Given the 
group's steady performance in 
recent years and growth pros- 
pects, fids looks like an undes- 
erved discount to the sector. 


A nglo United sharehold- 
ers could not believe 
their eyes when they 
read their newspapers on Tues- 
day morning. 

Tbe-company they have sup- 
ported through two debt 
restructurings and a rescue 
rights issue had been nomi- 
nated by British Coal and its 
adviser Price Waterhouse as 
one of four preferred bidders 
for its smokeless fuels subsid- 
iary, Coal Products. 

If it succeeds, Anglo will cer- 
tainly have to restructure the 
debt yet again and call on 
shareholders to finance the 
acquisition. It is thought Anglo 
has offered between £G0m and 
£90m in the initial bidding 
round for Coal Products, all of 
which will have to come from 
shareholders. 

On the surface, Anglo's pre- 
ferred status appears surpris- 
ing. The company has incurred 
losses for the past two years 
and has negative shareholders’ 
flmds of about £l46m. 

In the words of one Anglo 
executive, gearing is out in the 
stratosphere. Debt remains a 
weighty £96m and no dividends 
are expected to be paid until 
borrowing ratios return to 
earth. The shares were last 
trading at about 2p. 

Nor does the company's his- 
tory provide much comfort It 
made headlines in the late 
1980s with its £500m hostile 

Demand for 
end to loan 
link abuses 

A group of businesses which 
claims to have paid a total of 
almost 34m (£Z5m) in retainers 
In the hope of raising finance 
which never materialised 
attacked the government for 
faffing to regulate brokers who 
promise to Introduce individu- 
als to funders. 

The Tumberry/Bond Street 
Pressure Group has w ritten to 
authorities rnnfmHng Mr Mich- 
ael Heseltine, the trade and 
industry secretary. Ms Mau- 
reen PasterfLeld, chairperson of 
the group, calls on the govern- 
ment “to close the loophole 
which has caused so much suf- 
fering to British businesses”. 

Pressure group members 
paid fees to corporate brokers 
who said they could introduce 
clients to syndicated finance 
through US contacts. 

“These people take foes to 
put people in touch with 
alleged funders,” said Ms Pas- 
terfield. “Brokers introducing 
people to mortgages need con- 
sumer credit licences and are 
regulated by the Securities and 
Investments Board. Yet those 
who say they will introduce 
businesses to financiers are 
governed by no ona.” 


Welsh Water to buy 
20% of Czech utility 


By Vincent Boland in Prague 

Welsh Water has agreed to buy 
a 20 per emit stake in the big- 
gest water and waste disposal 
operator in the Czech republic. 

The UK utility is set to pay 
the Czech privatisation minis- 
try Kcsl98.&n (E4.4&H) for the 
stake in SeveroCeatoS Vodovody 
a KimflHggrfj, marking its first 
investment in central Europe. 

Although no contract has 
been si gned and the agreement 
must be approved by the Czech 
government, Mr Graham 
Hawker.' uhief executive of 
Welsh Water, said negotiations 
were “at the formalities stage.” 
Officials of SCVK were not 
available for comment yester- 
day. 

The ' two companies have- 
been in negotiations for nearly 
two years. 

Mr Hawker said Welsh Water 
intended to take an active 
management rote in SCVK. It 
was also seeking to buy further 
shares from local investors 
who bold 58 per cent of SCVK, 
tp allow it “to influence man- 


CONFERENCES 
& SEMINARS 


"ROVER SEJX-OFFr 
ECONOMICS OF THE 
EUROPEAN CAR 
INDUSlllY' 

. LecSare ai the Institution of 


agement decisions.” He ruled 
out taking a majority stake in 
the imm ediate future. 

SCVK was privatised in the 
Czech government’s second 
wave of coupon privatisations 
this year, and is expected to be 
listed on the Prague bourse 
next February when second- 
wave shares are released to 
investors. 

It provides water and waste 
disposal services to about lm 
customers in northern Bohe- 
mia, and made profits of 
Kcs5Qm last year on turnover 
of Kcsl2bn, Welsh Water, 
which has nearly 3m custom- 
ers in Wales and western 
Rn gfand, made pre-tax profits 
of £l44J3m on turnover ot 
£5i3Jm last year. 

Mr Hawker said Welsh Water 
had identified the Czech repub- 
lic as a key market in central 
E urop e. The investment in 
SCVK could lead to further 
expansion in the region, but he 
said Welsh Water had “no 
plans other than to consolidate 
in the Czech republic” at pres- 
ent 


covering the rapvBy 
changing emerging 
markets of Central and 


Wednesday, 9 November at 
5.30 pEL What the weakness of 
the Wca European car Industry 


. will be rectified. 

Please anted Emma Webb 
' ioa 1713445425 

PERSONAL 


HiBUC SPEAKHta TaWnfl ««f W»cft- 
pittrig by n nmf wfantoo speaker. FW 
towgn tmcTit (0737) 861133 - 


former Soviet Union. 

To receive a FREE 
sample copyccniact: 
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30 V- 



id IBM annou nced 


I960 90 91 

Source FT GrapMle 

takeover of Coalite, one of 
the UK’s last great leveraged 
bids. 

The bid was the brainchild of 
Mr David McErlain, Anglo's 
former chairman, whose Coal 
Developments company is also 
one of the preferred bidders for 
Coal Products. He intended to 
pay off the debt incurred by 
the Coalite takeover by selling 
off the target’s peripheral busi- 
nesses. 

Unfortunately, recession and 
problems encountered in sell- 
ing assets hindered his plans, 
and by 1991 the company was 
forced to defer loan repay- 
ments. 

Over the next two years, 
Anglo launched a £25m rescue 
rights issue to pay off a bridg- 
ing loan and two debt restruct- 


urings. The most recent, com- 
pleted last year, left the banks 
owning half the company. 
Hongkong and Shanghai Bank- 
ing Corporation is the largest 
shareholder with 40 per cent 
The banks have been crucial 
to Anglo's success in passing 
the initial tests in the bid for 
Coal Products. They are under- 
stood to have given assurances 
of support for the required 
equity funding and debt 
restructuring. 

I t is likely that for Anglo to 
become the sole preferred 
bidder, it will have to bave 
the debt restructuring and 
plans for a rights issue ready 
to go by the end or the year. 

The restructuring is likely to 
be a complex issue. While win- 


ning Coal Products could go 
some way to reducing the defi- 
cit in shareholders’ funds, a 
substantial debt for equity 
swap is almost certain to be on 
the cards yet a gain. 

Anglo refuses to comment on 
its bid or the comfort It might 
have received from sharehold- 
ers. However, winning Coal 
Products could give it the vital 
breathing space it needs to find 
its feet. 

Coalite is its most profitable 
business. Yet the smokeless 
fuel market is declining as con- 
sumers' switch to gas-fired cen- 
tral heating. Still, the business 
is highly cash generative and 
the synergies with Coal Prod- 
ucts could be substantial. 

Anglo's need to squeeze 
value out of a declining mar- 
ket. if it is to survive, could 
give it a substantial edge in the 
bidding. Shareholders might, 
perhaps, be motivated to sup- 
port a higher bid as a result. 

Ordinary shareholders do 
not appear to care why Anglo 
has been included In the short- 
list. They are delighted. “The 
key point is that the batiks did 
not just say let's squeeze every 
last drop out of the company 
until it's diy and walk away,” 
said one investor. “They have 
been prepared to work their 
way out or the situation, give 
the company time to breathe 
and take it forward. We are 
very bappy.” 






Mitoy tamwod 


Food price inflation rise feared 


Mr David Sains bury, above, 
chairman of J Salnsbury, the 
UK's biggest food retailer, 
warned that levels of food 
price inflation were likely to 
rise slightly in the coming 
months, although price compe- 
tition would remain intense, 
writes Neil Buckley. 

Mr Sainsbury said the group 
had experienced selling price 


deflation of about 0.6 per cent 
in the first half of the year 
largely as a result of its 
“Essential for Essentials” 
price-cutting campaign, 
involving permanent price 
reductions on own-label goods. 

So far in the second half , 
sales infiMti mi was running at 
0.2 per cent, and the rate was 
likely to increase slightly as 


Sainsbury reached the anni- 
versary of the “Essentials" 
campaign. 

Mr Sainsbury said the cam- 
paign had “effectively led 
down prices and gross mar- 
gins” for basic products 
“throughout the food retail 
sector”, putting pressure both 
on superstore competitors and 

OH riinmnnt chtrlnw 



AT INDUSTRIES 


Pre-tax profit up 10% 


Nine months unaudited results 
to 30 September 1994 


REVENUE 

PRE-TAX PROFIT 


EARNINGS PER SHARE 


£18,521m 

£l,497m 

30.8p 


+ 2 % 

+ 10 % 


+ 6 % 


Tobacco trading profit of £920 million rose by 13 per cent, excluding the 
£135 million gain on the brand exchange in 1993. Group cigarette volumes 
rose by 5 per cent, with particularly strong growth in exports. 

Financial services trading profit from continuing operations rose by 3 per cent 
to £674 million, with the general business contributing an improved 
£384 million and the life and investment business higher at £290 million. 

The US Federal Trade Commission's 27 October decision to oppose the 
•• acquisition of American Tobacco is subject to a judicial process, which should 
be completed by the first quarter of 1 995. B.A.T Industries remains convinced . 
that the transaction would actually enhance competition: 

“In terms of the Group as a whole, I am confident that, as I said at our AGM 
in May, there should be a worthwhile increase in our pre-tax profit for the 
' year, enabling us to maintain our progressive dividend policy.” . 

Sir Patrick Sheehy, Chairman 


itnuMcuLnxBS 




The fitf quarterly report is being posierf to shareholders and copies are available from the Company Secretary. B A.T Industries p.t.c.. Windsor House, 50 Victoria Street. London 5W1H 0NL. 








financial times 


THURSDAY NOVEMBER 


3 1994 


British partner is first to 
share in Ukraine oil find 


COMMODITIES AND AGRICULTURE — — ~ 

;o Cuba struggles to revive sugar sector 

if] Pascal Fletcher reports on problems dogging the mainstay of the country s economy 

lXM ~ .. of a bite workers in Cuba’s tourist 

ubx's sugar harvest, norznahv loath to make auv Cuba's more than ISO mills will have been tue wig' industry. 


By Matffiew Kaminski in Kiev 
and Robert Cardne in London 


The first commercial oil 
production by a western joint 
venture in Ukraine is to begin 

later this mmith 

The Poltava. Petroleum Com- 
pany, a UK-Ukrainian joint 
venture, yesterday said it had 
successfully tested its first well 
in the Novo-Nlkolaevskoye 
fields in north eastern Ukraine. 

“The preliminary results are 
very encouraging, well in 
excess of what had been expec- 
ted," said Mr David Davis, the 
company's general director in 
Poltava, 500km east of Kiev. 

JKX Oil and Gas, the UK 
partner, said the well produced 
2J.T5 barrels of oil a day and 
2m cubic feet of natural gas. 

The company believed the 
three fields that made up 
Novo-Nikolaevskoye could hold 
as much as 60m barrels of oil 
and l,100bn cubic feet of gas. 


Peak daily production could 
approach 20,000 barrels of ofi 
and 200m cubic feet of gas, It 
said. 

Full-scale development of the 
field would cost about $53m, 
and would mark a small step 
forward in Ukraine’s efforts to 
wean itself of dependence on 
Russian oil imports and exploit 
natural resources largely 
undeveloped in the Soviet era. 

The former Soviet republic 
now depends almost exclu- 
sively on Russian oil and gas 
supplies - a sensitive issue in 
often strained Russo-Ukiainian 
relations. 

JKX, which has so far 
Invested $15m in Poltava, has a 
49 per wait stake in the project 
The rest is split between Ukra- 
gasprom, the giant state oil 
and gas concern, and Ukraine’s 
State Property Committee, 
which directs and oversees for- 
eign investment in state com- 
panies. 


Ukraine has the option to 
buy 100 par cent of the oil and 
gas produced at world prices. 
But half of the revenues from 
domestic sales have to be con- 
verted to Ukrainian coup ons. 

Mr David Robson, JKX man - 
a g in g director, said the “forced 
conversion to coupons doesn't 
concern us that much” because 
the company would have sig- 
nificant coupon costs during 
the two and a half years or so 
that would be required to drill 
the 58 wells needed to fully 
drain the fields. 

Any hard currency exports 
from the development would 
not be subject to the forced 
co upon conversion. 

JKX's other Ukrainian ven- 
ture, the Crimean Petroleum 
Company, is now assessing 
prospects in the Black Sea off 
the Crimean peninsula. It 
expected to begin exploratory 
drilling late next year, accord- 
ing to Mr Robson. 


Jamaica sells 
banana farms 


UK apple growers hope 
to turn back French tide 


By Canute James In Kingston By Alison Maitland 


The Jamaican government has 
divested two of the island’s 
largest banana forms to Fyffes 
of the UK and Producers 
Group, a local company. The 
pnmpanipg which market all of 
Jamaica's export bananas, paid 
U5$8m for a 95 per cent inter- 
est in the two farms, with 
Fyffes being the minority part- 
ner. 

The government is expecting 
improved production of 
bananas with the divestment 
Mr Seymour Mullings, the agri- 
culture minister, raid exports 
of the fruit next year should 
reach 105,000 tonnes, which is 
the island's quota to the Euro- 
pean Union. This year's 
exports are projected at 85,000 
tonnes. 

Meanwhile, the marketing of , 
bananas produced in the Wind- 
ward Islands is bang restruc- 1 
tured with the creation of a 
new marketing company. 


A group of English apple 
growers has decided to take on 
the powerful French Golden 
Delicious by producing its 
own, home-grown variety. 

“Le Crunch", which has been 
heavily promoted in Britain 
and twite to undercut En glish 
varieties on price, has an esti- 
mated 20 per cent share of the 
market 

But about 24 per cent of con- 
sumers feel chauvinistic 
enough about apples to avoid 
buying French varieties, while 
57 per cent say they prefer to 
buy English apples, according 
to an opinion poll by Research 
Surveys of Great Britain. 

So the English Fruit Com- 
pany, a Kent-based co-opera- 
tive of 300 gr ower s, has devel- 
oped an English Golden 
Delicious, which is from the 
same family as the French 
variety but has a different cell 
structure. This makes it swee- 


ter, smaller and crisper. It is 
also slightly greener than the 
yellow French apple. 

“We’re trying to develop 
something which has the edge 
on flavour,” said Mr Michael 
Green, the company’s sales 
director. a T don't think we'll 
ever have the French tonnage 
per hectare, because we don’t 
have the climate to cope with 
that." 

A quarter of a million 401b 
cases of the new apples are 
being promoted by a super- 
store chain, Asda, for two 
weeks this month. If they 
prove a success, the fruit grow- 
ers plan to market the Golden 
Delicious on a wider scale next 
year. 

English apple growers com- 
plain their traditional variet- 
ies. such as the Cox. are being 
forced off the market by an 
influx of apples from low-cost 
producers such as Chile and 
South Africa and from a glut of 
apples in the EU. 


C uba’s sugar harvest, 
mainstay of the island’s 
economy, could soon 
begin to level out after its 
recent nosedive, but a return 
to cruising altitude looks a 
long way off. 

Just five years ago output 
was running at a comfortable 
8m tonnes a year. But then it 
went into a tailspin. The crop 
fell to a historic low of 4m 
tonnes in 1993-94 from 4.2m 
tonnes in 1992-93 and 7m 
tonnes the previous year. 

This represented lost export 
earnings over two harvests of 
$lbn, a heavy blow for a sugar- 
dominated, recession-hit econ- 
omy whose total export reve- 
nue in 1993 was an estimated 
$1.7 bn. 

Faced with continuing 
severe input shortages and a 
reduced level of harvestable 
cane, the best Cuba can hope 
for from the 1994-95 season is 
to slow the decline in its lead- 
ing export industry. If it can do 
this , the island may be able to 
lay some foundations for a 
future recovery. But it will be 
a hard slog. 

Sugar market analysts, such 
as London trade house 
E.D. & F. Man, have already 
predicted that Cuban output 
will continue to foil in 1994-95. 
Even the Cuban authorities. 


normally loath to make any 
public pre-harvest forecasts, 
are signalling that they expect 
a crop as low as or lower than 
last year. 

“Tills Is not a time for spec- 
tacular results measured in 
large volumes of sugar,” the 
official workers' daily Trabaja- 
dores said in an October 10 edi- 
torial 

“Sugar production suffers 
from a syndrome of cycles, 
either good or bad. . . if you 
had a bad previous harvest, 
recovery is difficult," said Mr 
Juan Triana Cordovi, deputy 
director of Havana University's 
Centre for Studies on the 
Cuban Economy. 

It was the sudden collapse 
after 1990 of crucial Soviet sup- 
plies of fuel, fertiliser, herbi- 
cides and spares that knocked 
Cuban sugar production off 
course. Recent harvests have 
also been buffeted by unsea- 
sonal bad weather and slowed 
by declining efficiency. 

The antidote proposed by Mr 
Nelson Torres, Cuba's minister 
for sugar, is a short, sharp and 
above all efficient 1994-95 har- 
vest 

This year's campaign, if it 
starts this month as usual , will 
not be allowed to extend 
beyond April. In another 
change of strategy, all of 


Cuba's more than 150 mills will 
be required to join the harvest 
to maximise production. Last 
season, more than a dozen 
below-par mills did not oper- 
ate, with the result that their 
machinery was “cannibalised'’ 
far other uses and their work 
forces dispersed. 

The over-extended 1993-94 
harvest, which lasted well 
beyond May, cut into growing 
cane reserves and delayed field 
cultivation and mill repairs. 
Mill managers, struggling to 
meet pre-set production targets 
and to compensate for indus- 
trial breakdowns and ineffi- 
ciency, harvested cane that 
could have been left for the 
coming season. 


G ranina, the official 
Communist Party 
newspaper, said in a 
September 2 article: “There is 
going to be once again - it’s no 
secret - a serious shortage of 
cane". That echoed an August, 
E.D. & F. Man report warning 
that the protracted 1993-94 
campaign, continuing input 
shortages and reports of delays 
in the planting programme 
meant that "further degrada- 
tion of [Cuba's] sugar produc- 
tion cannot be e limina ted". 

As the start of the harvest 
approaches, sugar workers 


of official criticism. State 
ffl pdia have accused them of 
f faririHg out of eight-hour wore 
schedules, using Quality 
seed and foiling to weed grow- 
ing cane. “Why is the cane to 
such poor state. . ■ so toff m 
weeds?" state-run Radio 
Rebelde asked back to Septem- 
ber. 

Especially targetted for criti- 
cism were the cane growing co- 
operatives, the so-called basic 
units of co-operative produc- 
tion (UBPCs). created in Sep- 
tember, 1993 as part erf a decen- 
tralising reform of -Cuba's 
state-run fanning system. 
“Why have these UBPCs still 
not been able to contain and 
reverse the sharp collapse of 
the nation’s greatest 
resource?" Mr Trabajadores 
said six weeks ago. 

Reasons cited for poor pro- 
ductivity in the cane coopera- 
tives were the lack of incen- 
tives. delays in obtaining 
promised benefits like new 
bousing and even shortages of 
work clothes like boots. Gov- 
ernment officials were study- 
ing the possibility of introduc- 
ing greater material incentives 
for sugar workers - whether in 
local or hard currency or to 
access to consumer goods - 
like those already available for 


MARKET REPORT 

Metals absorb 
profit-taking 


Palladium thrives on phone connection 


BASE METALS enjoyed 
another active day at the Lon- 
don Metal Exchange, with all 
markets leaping to new highs 
and mostly absorbing late prof- 
it-taking, traders said. 

At the London Commodity 
Exchange white SUGAR 
futures registered sharp gains, 
buoyed by talk of renewed Chi- 
nese buying and expectations 
of fresh Russian interest But 
COFFEE prices closed sharply 
lower on trade and commission 
house selling and liquidation 
of long positions. The January 
contract was down $85 at $3*160 
a tonne. 

Compiled from Renters 


By Kenneth Gooding, 
Mining Correspondent 


Booming world-wide demand 
for mobile telephones has 
helped the price of palladium 
to double in the past year. The 
precious metal is needed for 
the multi-layer ceramic capaci- 
tators used in these tele- 
phones. as well as in a wide 
variety of other electronic 
equipment such as personal 
computers and the new wide- 
screen televisions. 

Yesterday in London palla- 
dium reached $160.35 cents a 
troy ounce at one stage, its 
highest level for five years. 

The steady rise over the past 


12 months was spurred by gen- 
uine demand because the palla- 
dium market was not liquid 
enough for speculators to take 
much interest, said Mr Andy 
Smith, analyst at Union Bank 
of Switzerland. 

Apart from demand from the 
electronics industry, which 
was battling to keep up with 
soaring sales of mobile tele- 
phones, car makers were usin g 
much more palladium in auto- 
motive anti-pollution, catalysts, 
where it was being substituted 
for morenexpensive platinum. 

According to Johnson Matt- 
hey, the world's largest plati- 
num group metals marketing 
organisation, last year abont 


COMMODITIES PRICES 




BASE METALS 


LONDON METAL EXCHANGE 

(Prices from Amdgvnsted Met* Tradbig) 

■ AUHflNIUM, 89.7 FURRY <S per tonne) 


Precious Metals continued 

■ GOLD COMEX (100 Troy CO.; Sfinyy ozj 


GRAINS AND OIL SEEDS 

■ WHEAT LCE (£ per tome) 


SOFTS 

■ COCOA LCE (E/tom# 


MEAT AND LIVESTOCK 

■ UVE CATTLE CME (40.00CBbs; cotisAbt# 



Caoh 

8 mths 

Close 

1B37-S 

1858-60 

Previous 

1832-3 

1856-6 

Ffigh/low 


1896/1650 

AM Official 

18SB-9 

1S7BX-9X 

Kerb dose 


1662-3 

Open bit 

258,968 


Total dally turnover 

75,443 


■ AUUMMUN ALLOY ($ per tonne) 


Close 

1840-50 

1876-60 

Previous 

1830-40 

1885-70 

MgMow 


1696/1870 

AM Official 

1656-60 

1880-5 

Kuril dosa 


1880-5 

Open bit 

2X07 


Total deBy turnover 

378 


■ LEAD ($ per tonne) 



CJobg 

667-6 

683.5-4 

Pravtaue 

601X-2X 

878-9 

FlgMow 


884/B78 

AM Offidd 

663-4 

682-2X 

Kerb dose 


BS2-3 

Open hL 

43X76 


Told defly tixnouer 

11X36 


B NICKS, (t pertonro) 


Case 

7430-40 

7550-60 

Previous 

7415-25 

7536+10 

FOgWtow 


7650/7550 

AM Official 

7466-70 

7590-5 

Krab doee 


756S-70 

Open bit 

67X97 


Total daBy banouor 

11X97 


B TM(S per toms) 



Clooe 

6135-45 

6230-5 

Pravtaua 

699040 

6075-80 

FfighAow 


6250/6120 

AM Official 

6095-100 

6190-6 

Kerb dosa 


6245-50 

Open il 

19X96 


Total daOy turnover 

9X70 


■ ZMC, epactel MW* pedi (S per tome] 

Close 

1148X-9X 

1170-1 

Previous 

1135-6 

1157-8 

MgMow 

114SX 

1173/1160 

AM Offldd 

1145-6.6 

1168-9 

Kerb doee 


1 166-0 

Open hit 

105X75 


Total da>y turnover 

19,741 


■ COPPER, grade A (5 per tonne] 


Ctbea 

2712-4 

2801-3 

Previous 

2712-3 

28906-7 

Hgh/low 


2725/2670 

AM Official 

2711-2 

2695-fi 

Kerb dosa 


2686-7 

Open bit 

221X02 


Total dafly turnover 

71X82 



SP0C1X346 3 m9tt1.63T8 6mUa:IX296 9m»K1X264 

■ HIGH GRADE COPPH8 (COMBQ 


ten 


(teea 

Oom change 

Hgta tow 

tat Vol 

bdv iz7xo +o.ra 

127X0 124.70 

1X01 121 

Dec 12530 +0.70 

126X0 12X40 40.490 2.999 

Jan 12550 +0-70 

125X0 123-60 

812 91 

FA 124.70 4X70 

12X60 122X0 

573 20 

Hto 123.70 +050 

124X5 121.10 

9X75 2X07 

fer 122.45 +050 

- 

702 10 



Sen 

price 

Dayto 

donga 

mu 

Opea 
tow tat 

Wot 


8atl 

price 

P wte 
ctnmge 

nob Lew 

Open 

tat 

Vri 


Sett 
price i 

Day's 

tenge 

ffigfe 

Open 
law tat 

Vol 


Sell Day's 
prica change 

Mgh 

LOW 

Open 

tat 

Vri 

Hov 

3842 

■XI 

- 

14 

14 

Nn 

10525 

- 

10630 105X5 

780 

SB 

Dec 

942 

-1 

943 

937 20500 

BG6 

Dec 

70550 +0950 

70650 

09550 

30,086 

6,738 

Dae 

3855 

-02 

388.7 

3842 85516 23,700 

Jan 

106X5 

■0.15 

107.10 103X0 

1587 

87 

MW 

970 

-2 

971 

965 42,911 

2225 

Fee 

69.400 +0 650 

£9475 

68.875 

20,382 

2X74 

JM 

3872 

-02 

- 

. 

- 

Bar 

109X0 

-0.10 109.10 100.10 

1579 

39 

May 

97B 

-4 

980 

973 14,631 

309 

Apr 

69500 +0279 

59550 

69.475 13,164 

JX« 

m 

389.1 

-02 

38X5 

387X 21248 

1X90 


110X5 

■015 

111.10 111X0 

1552 

01 

Jri 

990 

-8 

993 

989 8.401 

46 

Jim 

65525 +0250 

58X00 

65X50 

4X17 

546 


apw 

-02 

392.6 

3815 9570 

88 

Jri 

11225 

- 

- 

120 

- 

Sep 

1004 

-5 

1009 

1004 12,641 

81 

Aeg 

64.800 +0225 

65X00 64500 

1X02 

60 

Jm 

Total 

3965 

-01 

398.7 

395-9 9X23 809 

163X*3 28566 

Sip 

Tom 

9650 

0.10 

* 

80 

8X74 

283 

Dae 

Tetri 

1021 

-4 

10Z2 

1020 8,651 691 

111547 4282 

Oct 

Tetri 

65550 +0350 

65500 

65.450 

266 16 
10X32 11289 


PLA1WUM NYMEX (50 Tray (ml; Sfttoy az.) 


WHEAT CBT (5.OO0bu win oents/BOfc buahri) 


COCOA CSCE (10 tonnes; S/tonnes) 


LIVE HOGS CME (40,000103; centoflba) 


Jn 

421X 

+1X 4220 4192 18X04 

3X38 

Dec 

332/2 

+5/6 

383/0 

388/4 38X41 

9X79 

nee 

1326 

+17 

1328 

1306 25,127 5,962 

Dec 

N* 

42BX 

+1.1 4260 4245 

4150 

301 

Iter 

mo 

+5M 

403/4 

337/4 24X80 

5X14 

Bar 

1357 

+4 

1366 

1343 27X84 4X50 

Ml 

Jri 

4307 

+05 429.0 4295 

1X82 

101 

Mw 

301/0 

+5/4 

381/4 

375/4 4168 

010 

m 

1385 

+4 

1390 

1381 7X71 519 

*pr 

Oct 

4355 

+12 

444 

2 

Jri 

340(0 

+2/2 

346/4 

347/0 9X04 

804 

Jri 

1410 

+3 

1415 

1408 3X29 17 

Jm 

Jaa 

4385 

+U 

10 

12 

$W 

352/4 

+1/4 

353/0 

351/4 277 

19 

sap 

1429 

-5 

1430 

1428 1X87 7 

Hog 

TOW 



24790 

4354 

Dac 

364/0 

+3/2 

- 

- 150 

6 

Dee 

I486 

+5 

- 

- 4.068 15 

Oct 

■ PALLADIUM NYMEX (100 Tiby ol; t/tray az.) 

Total 




75X93 16717 

Tetri 




75X57 4737 

Total 

Dec 

1625G 

+1.70 164X0 160X0 

4JM2 

1X33 

■ MADE CBT (5X00 bu mh; cante/568) bushel) 

■ COCOA (KXXJ) (SOHVtome) 

■ P< 

Bar 

164X5 

+1X0 16460 16260 

4503 

300 

Dae 

21 fill) 

. 

217/0 

21 5/4 114715 

17229 

Kmxriwr 1 



Price 

Pita, day 

Ml 

Jm 

1IKZ 

+1X0 166X0 168X0 

466 

- 

Mar 

22B/B 

- 

228/0 

228/4 62X01 

4016 

Date 



.901.07 

996X0 

Mar 


34275 +0-175 34X00 33.775 17.558 4,142 

3&800 +0-200 37.400 36J00 6X83 2.615 

37.250 +0-350 37.700 35500 4,722 800 

4EX0Q +0200 42.700 42000 2205 291 

41.750 - 41.900 41.600 405 B0 

32600 - 32900 3a 600 310 26 

id 34,228 *252 

PORK FffO J IFS CME (40.0002)3; cents/lbs) 


Sep 106.00 + 1 X 0 -. 31 - 

hh 7 jm 1,333 

■ M.VEB COUffiX (100 Troy ox; Centa/boy 02 ) 
KM 531 jB 44.1 

DM 5335 +433 534.0 S260 72225 22658 

538.1 +4J3 5365 5312 88 17 

Mar 5420 +44 5420 5345 20,144 1J610 

Mar 547.9 +4.0 550.0 542.5 4X93 SB 

JM 554.1 +40 5520 5460 4.124 359 

TWBl 113JBB 20,171 


May 234/6 - 23870 28474 25,586 1,340 

M 240(2 - 24172 240(0 33,099 2JE5 

Sap 24510 - 24516 245/D 3JB8 323 

IMG 248/4 -0/2 250/2 248(2 14.251 707 

Total 254^738 29X73 

■ BARLEY LCE (C per tonne) 

■a* 101.00 -025 101.25 101X0 119 48 

Jm 10090 -025 103.75 103X0 410 55 

lire 105.75 -030 130 

May 107X0 -025 - - 48 - 

Sap 93X0 -025 - - 5 - 

TOW 718 in 

M SOYABEANS CBT (5,00Cbu nkc UBttAMl DudKQ 


COFFHE LCE (S/lonm) 


Hov 

3323 

■70 

3390 

3325 

1.144 888 

Jaa 

3363 

-82 

3435 

3360 11X95 3X12 

Mar 

3338 

-79 

3405 

3336 

5X74 1.168 

»tey 

3321 

-77 

3360 

3320 

3,107 317 

Jri 

3310 

-76 

TO? 

3310 

1X40 32 

Sen 

Tetri 

3298 

-62 

3310 

3310 

1,461 4 

27X03 5X21 


41X75 +0500 41200 41250 7X60 3220 

42X75 +0800 41125 41X50 1235 313 

41100 +0350 44250 42.750 314 27 

43X00 +0250 45.100 43X50 319 28 

43X00 +0.900 43X00 42.400 74 1 

9X02 3X89 


LONDON TRADED OPTIONS 


■ COH-fct; 1? CSCE (37.500ft»: cents/tbe) 


ENERGY 

■ CRUDE Oi. NYMEX (42X00 US ( 
Lotos* Day's 


0pm 
M Vri 


Dae 18X5 -013 18.76 10.49 90X38 58,141 

1823 -Oil 18X1 1029 71X33 29/10 
Fab 1017 -Oil 1823 18.14 36.180 9X03 

am 18X7 -OIO 18.18 10.07 23X67 3X33 

«<r 18X2 -002 18.10 18X4 18X28 1403 

Bay 17X0 -004 17X9 17X7 11.459 1X03 

Tuts! 388X74180,114 

■ CRUDE OIL IPE (Vbarrod 


Latest Day's 0pm 

prica donga Ogh Lbh tel 4 M 

1727 X. 06 17.45 1725 75XS9 28280 

16X9 -013 17X5 18X8 55X19 14X59 

1070 -017 18X8 1820 17259 2X88 

16X8 -018 1071 18X8 12,514 2X28 

18X4 -OIO 16X5 16X4 4X23 150 

1040 -0.12 1048 18X6 3X08 185 

180,107 47X59 


■ HEATING OB- KYMEX (42X00 US gafa; c/US eafaj 

Latest Day's Opm 

ptea change Hgb Ism W M 

Dac 5060 -012 5120 5040 47,745 18X18 

Jan 91.10 -009 51.75 5090 33238 6231 

Fob 51X0 -019 51.70 5140 21X34 2X56 

Bar 5120 -009 5125 51X1 11X83 1293 

Apr 5045 -009 5055 5045 7X3S 818 

■ay 49X5 -OM 48X5 4085 5X61 384 

Tetri 183X11 29290 

■ GAS OIL PE (S/kau4 


SaB Oafs Open 

prica change Hob Law M Vol 
Hov 152.75 -050 154X0 15225 24211 5X55 

Dac 155X0 - 156X0 154X0 28X20 1478 

Jaa 156X0 -025 157X0 156X0 2026* 848 

Fab 157X0 -025 158X0 166.75 8X38 534 

Mar 157X0 -050 15725 157X0 714 2241 

Apr 155X0 -050 155J5 155X0 0747 132 


ROf 

545ft 

+3/4 

540 (4 

541/4 1X123 17X19 

Jan 

557/4 

+3/2 

550/4 

553ft 57X10 26,156 

Mar 

5B77B 

+3/0 

570ft 

504ft 

25X01 

2X84 

May 

578ft 

+3/4 

570ft 

573ft 12X53 

1X75 

Jri 

502/4 

+2ft 

584/4 

578ft 

20X50 

1X10 

*09 

588/2 

+2/8 

587/4 

582ft 

1X61 

200 

Tote) 




141X07 56X71 

■ SOYABEAN 06. CBT (BOXOOttn: centa/ta) 

Dec 

26X4 

+060 

2044 

25.73 3X593 

11X2B 

Jaa 

25.43 

+058 

25X0 

24.85 

17,772 

2X64 

Otar 

24X6 

+8X0 

24X9 

24X7 13X64 

3,469 

m 

24X2 

+0X8 

2457 

24X5 12.017 

628 

Jri 

2428 

+OX3 

24X5 

24.10 

7,074 

1X07 

frag 

24.19 

+0X7 

24X5 

24X2 

2X47 

219 

Tetri 





01X86 20X30 

IT SOYABEAN MEAL CBT flOO tons SrtorJ 


Dec 

156X 

-0.7 

1607 

159.4 40,430 

6.602 

Jan 

161X 

•OX 

162.1 

181.1 

1X132 

1X58 

Bar 

1653 

-02 

185J 

164X 15X70 

2X72 

■w 

189.4 

+0A 

1Q9X 

16X8 

X635 

375 

Jri 

17X5 

+0X 

17X0 

172X 

8X30 

1X51 

Mg 

176.1 

+0.6 

17X2 

174X 

1X55 

3S1 

Mat 





97X40 1X327 

B POTATOES LCE (E/toeneJ 




tan 

1500 

. 

_ 

_ 

_ 

_ 

Mar 

105.0 

- 

• 

_ 

_ 

_ 

*m 

222X 

-3.7 

224X 

22X5 

1.485 

36 


242X 

- 

- 

- 

- 

- 

Jm 

107X 

■ 

• 

• 

• 

- 

Total 





1X89 

30 

■ FREIGHT C&b-FEX) LCE ($10/lndBX pdnQ 


Nor 

1500 

-10 

1820 

1020 

275 

3 

Doc 

1724 

-0 

1735 

17=0 

305 

30 

Jan 

1663 

-8 

1663 

1655 

1X54 

16 

Apr 

1645 

+2 

- 

- 

893 

- 

Jri 

1440 

-23 

- 

- 

137 

- 

Oct 

1480 

-30 

- 

- 

17 

- 

Total 

Ctaaa 

Pm 



2X81 

49 

sn 

1818 

no 






DSC 17820 -8X5 185.10 17550 11,828 3200 

Mm 18110 -825 19010 181X0 12,759 1248 

Hay 187X0 -6X0 192.10 187X0 1019 367 

Jri 188X0 -6X0 193X0 1B8X0 1X01 17 

Stp 19020 -OOO 195.10 19025 913 28 

Dac 191X0 -&00 198X0 191X0 886 5 

TSW 32X32 4X81 

■ COfW* 0CO! (US centa/feoundl) 


Mwmteer 1 Price Pie*, day 

Conn daRy 176X6 17727 

15 day average 18323 18132 

■ Ho7 PREMIUM RAW SUGAR LCE (canta/Bn) 

Jan 1100 .... 

Hte 1105 BO 

■ay 1145 +025 - - 400 

M 1113 - - - 450 

TOM 940 

■ WHTC SUGAR LCE ffrtOTM} 


386.40 +030 365X0 359X0 1972 539 
350X0 +0X0 351X0 351X0 8,577 1203 

356.40 +9.10 35&90 350.00 2,789 435 

352.10 +040 354X0 34170 1790 SOI 

327.10 +7X0 327X0 321X0 B07 22E 

32190 +7 JO 321X0 321X0 14 3 

17X60 1997 


Stifco pries $ tonne 

-Can*—- 

— Puts — 

■ ALUMNHiM 

(99.7%) LME 

Doc 

Mar 

Dec 

Mar 

1800 — 

102 

133 

42 

67 

1825- - - 

67 

118 

52 

7B 

1850 . 

74 

106 

64 

90 

■ COPPER 
(Grade A) LME 

Dec 

Mar 

Dec 

Ur 


147 

14T 

45 

102 

2650 

116 

117 

64 

127 

2700 — 

BO 

96 

87 

154 

■ COFFEE LCE 

Jan 

Mar 

Jon 

Mar 

3400 ._ 

216 

90S 

253 

364 

3450 __ _ ... 

198 

285 

285 

397 

3500 __ 

160 

260 

317 

431 

■ COCOA LCE 

Doc 

Mar 

Dec 

Mar 

050 __ 

13 

65 

21 

45 

975 

S 

53 

38 

58 

1000 

2 

43 

80 

73 

m BRENT CRUDE IPE 

Nov 

Dee 

Nov 

Dec 

1650 

88 

91 

7 

91 

1700 

48 

68 

18 

68 

1750 

18 

48 

43 

49 


LONDON SPOT MARKETS 

■ CRUDE OIL FOB (pm brnnl/Dec) w 


■ SUGAR IV CSCE (112.000B>s; certa/lbsl 

■Bar 1121 +0X1 1137 12X8 98X8511.316 
HV 1321 +0X7 13X8 >2X8 25X88 4X57 

Jri 1111 +0X3 1320 12X7 15X18 1100 

Oct 12X3 +0.19 12X5 1240 14X84 2255 

Bar 1213 +0.1 B 12X0 12X7 2226 5B2 

Bay 1213 +0.16 - 81 45 

TOW 154X6021965 

B COTTON NYCE (BO-POOfas canta/tefl 

Dac 7227 4117 7277 71X5 24X55 7,796 

Mar 7155 -0XB 74X5 7130 18X23 2X92 

May 74X7 -0X9 75X0 7441 8X30 433 

Jri 75X5 -0.15 7SX5 75X0 4268 101 

Oct 70.43 -0.45 7050 7050 578 83 

DSC 8940 -0.48 59.75 89.40 2X38 199 

TOW 55,11011X74 

■ ORANGE JUICE NYCE (15.000UK cente/toa) 


Dubai 31 5.65-6.1 Qz +0.160 

Bren* Blend (doted) $17.81-7.64 +0.175 

Brent Bond (Dec) $17.28-7X1 +0.115 

W.T.L (1pm nst) S1056-8XSz +0.115 

■ OIL PRODUCTS NWE prompt deUwy CTF (krnto) 


Premium Goaodne 
Os? OH 
Heavy Fuel OB 
Naphtha 
Jet ftid 
Diesel 


II 82-106 
$156-157 
$100-102 
$170-172 
$180-181 
$161-182 


Pmraloum Argm. JW London (0711 3SS 073? 

m OTHER 


PRECIOUS METALS 

■ LONDON BULLION MARKET 
(Prices supplied by N M HoBiaeMd) 


Trial 102X64 14250 

■ NATURAL OAS WW3t (10X00 naaBbL; StariBu) 


Gold (Trey 02 } 
Close 
Opening 
Meaning Bx 
Aft e rn oo n Bx 
Days Mgh 
Day's L 0 * 

Previous clow 


S price £ equlv. 

303X0-38190 
334.40-384, BO 

383X5 234298 

38185 231084 

384.70-385.10 
382X0-383X0 
383X0-384.00 


Latest Day's 0 tad 

price change llgb Uw ML Vri 
1X90 -0X48 1X44 1X78 28.777 13X29 

2X43 -0X25 2075 2X35 18X25 2,732 

1X85 -0.020 1X95 1375 12JS6 7,727 

1X30 -0X15 1X40 1X25 12,181 1,559 

1X7S -0X10 1X75 1X75 8X81 631 

1X75 >0X11 1X80 1X74 6X20 178 

131X80 23X87 


Hov 

107.45 

+1X0 

107X0 105.75 

935 

381 

Jan 

111X0 

+1X5 

111X0 

109X0 14X63 

S2S 

mm 

115X0 

+1.40 

115X0 

113X0 

5X45 

164 

■aw 

116X5 

+1.65 

117.75 

117X0 

1X77 

95 

Jri 

ia« 

+1X5 IJflXO 

12&.00 

906 

38 

$ep 

Total 

12445 

+1X0 

124X0 

124X0 

BOB 11 
29,160 1X29 


■ UNLEADED GASOUNE 


torn uei M«6a ww ixnamfl tow (v» ucaf 

1 month 4X0 6 months 5.12 

KYMEX (42,000 IIS gaH; C/US gtfej 


2 months 

3 months 

4X7 


LUMt 

prtea 

DBf> 


Open 
Lew tat 

«ri 

Staler Ft* 

pAroy ox. 

US eta wprfv. 

Dec 

59X5 

-OS 

60X0 

99.10 094 

342 

Spot 

322X0 

527.75 

Jwi 


■0.43 

58X5 

56X0 30481 

13X26 

3 months 

327.10 

535X0 

F* 

55X0 

+0.15 

56X0 

5BX5 18,447 

4X64 

G months 

332.00 

542X0 

Mar 

58.10 

+0X5 

5025 

56.15 6,715 

1X61 

1 year 

344X0 

581.10 

ter 

5SX0 

- 

59X0 

5140 3X60 

492 

Odd Coins 
Krugerrand 
MaptaLeaf 
New Sovereign 

S price 
386-389 
394.45-396.95 
90-03 

E ecMv. 
238-238 

55*58 

■tay 

Trial 

6635 



- 4.704 266 

S7<B2 20X88 


ClUKM 

Spot and Shipment sales In Liverpool 
amowrted to 42 tonnes for the week ended 
October 28. against 483 tomes bi the previous 
week. Subdued offtake <fid not tying many 
operations Smport was fo rth co ming to certain 
apectea-a ■tyVw, notably In tfw central Aslan 
and tecaril range. 


VOLUME DATA 

Open Interest and Voftane data shown fry 
onffi a cte traded on COMEX. NYMEX. CBT. 
NYCE. CME, CSCE and IRE Cnids 01 ana one 
day in areas. 


INDICES 

■ REUTERS Pa BK 18/9/31-100) 

Nov 2 Novi month ago yew ago 


2105.0 2099.3 20803 16122 

B CRB Puhaea (Base: 1987*100} 

Navi Oct 31 month ago year ego 


Gold (per troy oatf 
Silver (per tray ca& 
Platinum (per tray az.] 
Paftadfcm (per trey at) 
Copper (US prod.] 

Lead (US prod.] 

Tbi (Kuala Ltanpur) 

Tin (New York) 

Come (fce wrigMJt 
Sheep five wdghttt* 

Pigs lira might} 

Lon. day sugar (raw) 
Lon. day sugar (wte) 
Tats & Lyta export 
Bariey (Eng. teed) 

Mom (US No3 Yellow) 
Wheat (US Dali North) 
Rubber (Dec)f 
Rubber (Jwite 
Rubber (KL RSS Nol JuQ 
Coconut 01 IPtrifi 
Palm OR (Matey 
Copra (PhfO§ 

Soyabeans (US) 

Cotton Outlook' A 1 Index 
Woohops (B4« Swot 


£ err man untoas Mhowtee fltsMd. p pecalfag. c oara/tL 
r mggMu. m Mrinrrian oem/ka V OO/Dec. * Norths. 11 
OrtMa*. 1 Dsc f Nool f London Pnyrieri. 8 OF (tattr- 
aton. $ Etdtan moftoX ousb. 4 S?w (law »Wg« " 
Change on emh C Price* am tar previous day. 






4.13m ounces of palladium was 
produced. Russia accounted for 
2.3m ounces, South Africa 
i Jm. while the rest was pro- 
vided by North America. 

Mr Smith said it was widely 
assumed to the market that 
the Russians would sell 
heavily from stocks once palla- 
dium reached about $150 an 
ounce in order to keep the 
price down. They feared other 
metals would be substituted by 
the Japanese electronics indus- 
try once $150 was reached. He 
said the recent weakening of 
the US dollar meant that the 
yen price of the metal was “hot 
unbearably high". 

Nevertheless, Russia 


remained the “wild card” in 
the market as if must be 
assumed that its stocks were 
high, given that palladium was 
mainly used in Russia for- mili- 
tary purposes and military 
spending there had dropped 
dramatically. 

Another analyst mristed that 
there was no substance to 
rumours that the Russians 
were withholding palladium to 
keep prices rising. There were 
shortages of palladium in the 
prefered form - the powder 
used by the electronics and 
autocatalyst industry — but tlw 
market had rnnu gh ingot, or 
solid, palladium, the only type 
supplied by Russia. 


5T 717 


No. 8,601 Set by ALAUN 



ACROSS 

l He can't afford to buy food in 
the pub (6) 

4 Notice a trap set inside and 
scatter (81 

9 Say she doesn't have the 
heart to be opposed to (6) 

10 They don't believe in buying 
stock (8) 

12 Held up as an anti-revolution- 
ary, indeed (8) 

13 After the upheaval, trouble's 
sure to follow (6) 

15 Decline to exclude from one's 
circle of friends (4) 

16 Like the kindly granddad hav- 
ing a drink? (3&4) 

19 An air of ferocity? (6,4) 

20 1 write in the last name (4) 

23 Behind time, setting 1 the mam 
outside (Si 

25 Up Lo the standard of - or 
very nearly (2A2) 

27 The very one to gain access 
to, for the robbery (8) 

28 Having a sweetheart back in 
Sicily (6) 

29 The wind does damage, then 
abates (4,4) 

30 Secured and wolfed the food 
( 6 ) 

DOWN 

1 Lived in. though it’s shut up 
(7) 

2 Excellent paint for the ward- 
robe (9) 

3 The farmyard animal, be 
indisposed to attack (6) 

6 From Australia, they won’t 
fly me back to America (4) 


6 Shakes and the sands run out, 
pouring into it (8) 

7 Declares to be an unfinished 
work of the poet's (5) 

8 Part of London in which a 
man has to cany a gun (4^3) 

11 Yells and a cry of pain muf- 
fled by the peals (7) 

14 In a brilliant finish, disappear 
right through it (7) 

17 Convinced it's where you’ll 
find the stay-at-home (2&5) 

18 Chased inside, conclude it's 
serious (g) 

19 What the so-and-so wind did? 
CO 

21 Drop something you were 
holding in your hand (7) 

22 The master goes in twice to 
get something to eat (6) 

24 Years has the fine point (5) 

26 Describe the tie (4) 


w 


ities 




industry. 

To offset -harvest manpower 
shortages; Cuba's official trade 

yin inn organisation,, the CTC* Is 

preparing to mobilise 61,000 
cane cutters across the island, 
25,000 4 more than last year. 
This.-mannal cutttagforce will 
also help to compensate for 
cutbacks in machine harvest- 
ing resulting from shortages of 
fuel, lubricants and spare 
parts. '■ : 

On the commercial front; 
Cuba has maintained a. her- 
metic silence over the state of 
its strategic sugar trade con- 
tracts with Russia and nhtnq 
Traders in London and -New 
York reported as early as June 
that the country might have 
problems meeting all of its 
export commitments because 
of the second consecutive low 
harvest. The Cubans were 
expected to have sought to nidi 
over many of- their commit- 
ments into the next , crop 
period, a tactic widely used 
even when the Island was prod- 
ucing harvests of about 8m 
tonnes. 

The roll-over mechanism is 
considerably less drastic than 
the force mqjeure declared by 
Cuba to June, 1993, when tor- 
rential rains devastated an 
already flagging harvest . - 


j^rton 

Ofl 


jffer 




; ;C S T & ' 


f.*IC3- ■■ 


Kr-J- :<t- v. .- 




'it 

=‘S 


•ftj; •; - 






Solution 8,600 


□□anna aanaQBEQ 

□ a a a m □ o 
SQQEIQn QEQHQEafl 
a □ s Dana 
□DHcioa QEsacinnQ 
ana ejeq d q e 
anaass a a 

a a oanciEiEEi 0 □ 

r, an OBQQEQ 

o aniH ana 

□anaaona qqehoh 

□ n a q a e □ 
□□□□□hog] aQrasaB 
naan b b a 
BaBauniDB □□□mno 



„ 


V- ^ n ^2s Cl 






FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 



- 1 * WVn 


- lr < 


- 

=11 .f 
V 

<**- 
7‘ ! 

: r _ 

- :.*: 

!w! ri. r .: 

Miv f: 

• -***•* Bin* 







27 


MARKET REPORT 


FT-SE-A AB-Sham Index ■ Equity Shares Traded 


Equities rally following currency intervention 


By Terry Byland, 

UK Stock Market Editor 

Currency market developments set 
the pace for UK equities yesterday, 
pushing aside the market's second 
thoughts on the Bank of England's 
inflation report as it - weighed the 
outcome of the regular monthly 
meeting between the chancellor of 
the exchequer and the Governor of 
the Bank of England Share prices 
slipped away steadily in the after- 
noon. but rallied sharply when the 
US Federal Reserve stepped in to 
rescue the dollar. 

A fall of 26 points on the FT-SE 
100-share index was cut to 15 at the 
close for a final reading of 3,081.3. 
The FT-SE Mid 250 Index finished 
5L3 off at 3,522. The equity market 
was led by British government 
bonds, which reacted sharply to the 


dollar’s performance. Wall Street 
also recovered an early fan to edge 
into plus territory as London closed 
for the day. 

The session opened with the Foot- 
sie climbing just above 3.000 as the 
market at first extended its favoura- 
ble response to the Bank of England 
inflati on report announced late on 
Tuesday. But the mood had already 
been damped down by wider publi- 
cation of the Bank's hint that UK 
base rates may still have to rise 
over the coming months to keep 
inflation on target Equities were 
soon unsettled by falls in UK bonds. 

Confidence continued to crumble 
further during the morning, but it 
was not until London began to 
assess prospects for the opening on 
Wall Street and its reaction to the 
dollar’s weakness that the blue chip 
international stocks turned dis- 


tinctly downwards. 

London analysts doubted whether 
currency intervention alone would 
solve the dollar's problems, and 
noted that there had been no con- 
certed action involving European 
central banks. Some suggested that 
markets would not settle down 
unless the US Federal Reserve took 
the next step in dollar support by 
lifting interest rates. However, such 
a step would apply pressure for a 
similar move in UK base rates. 

Oil shares, in spite of this week's 
good results from Br itis h Petroleum 
and horn the major US companies, 
slipped lower. The chemicals sector 
was upset both by the dollar and by 
trends in some European chemical 
stocks. Pharmaceuticals, also 
closely influenced b; the US dollar 
and by Wall Street, closed with 
minor losses. Good results from 


BAT Industries failed to protect the 
stock against weakness in the US 
currency. 

On the domestic front, views on 
the implications of the Bank’s infla- 
tion report shifted a little after ana- 
lysts had taken a closer look. Strate- 
gists returned to the perception that 
base rates would rise either at the 
end of this year or the beginning of 
next, whatever happened in the 
meantime. 

Suggestions that the Bank might 
want to act sooner were parried 
with the comment that it would be 
difficult to explain an early rate rise 
in the wake of the Bank's favoura- 
ble comments on inflation. 

Retail stocks, always the most 
closely linked to interest rate pros- 
pects. edged higher yesterday but 
this in part reflected good trading 
news from J. Sains bury, the food 


supermarket group. 

Seaq volume rallied from a slow 
start but the day's total of 493.6m 
shares was below Tuesday’s figure. 
Traders believed that much of the 
day's business reflected hurried 
position switching by marketmak- 
ers as the mood turned In what has 
become a highly volatile UK stock 
market 

Customer, or retail, business has 
remaind fairly satisfactory, and 
returned a worth of just above £lbn 
on Tuesday. But some analysts 
point out that a significant fan in 
the daily total of bargains trans- 
acted implies that genuine invest- 
ment business in the UK stock mar- 
ket is being concentrated in fewer 
and fewer institutional deals. These 
deals benefit securities houses with 
good lists of institutional clients but 
leave others on the sidelines. 



■ Key Indicators 



Indices and iwttes 



FT-SE 100 

30813 

-15.0 

FT-SE Mid 250 

3622.0 

-23 

FT-SE-A 350 

1546.4 

-6 lQ 

FT-SE-A All-Share 153092 

-5.59 

FT-SE-A A8-ShareyteW 

385 

{3.93J 


Best performing sectors 


1 Retailers, Food +1.8 







_ . +0.8 

S 

Extractive Inds — 

.. ..+as 


Timowr by volume (mfflonj. ExcfcxSns: 
Intra-market Business and overseas turnover 
1,000 



1994 


FT Ordinan' index 

2355.4 

-4^ 

FT-SE-A Non Fins p/e 

18.80 

C1S.88) 

FT-SE 1 DO Fut Dae 

3097.0 

-22.0 

10 yr Gilt yield 

8.85 

(8.75) 

Long gllt/equlty yW ratio: 

2.24 

fL24) 

Worst performing sectors 




.-1.4 



-1.0 



-1.0 



-..-.-09 

5 Bectnrity __ 


—....-0.9 


Burton 
line on 
offer 

Shock news that New Look, 
the fashion retailer, had 
decided to postpone its flota- 
tion, “in the light of current 
market conditions for new 
issues" , unsettled the rest of 
tiie retailing sector and in par- 
ticular Burton Group. 

A poor performance for Bur- 
ton shares throughout the ses- 
sion was compounded by the 
pulling of the New Look issue. 


Dealers said several blocks of 
Burton stock had come on offer 
during the session, but what 
really spooked the market was 
a story that a block of 10m 
shares, equivalent to a short 1 
per cent of the company's 
issued capital, was being 
offered around the market 

Burton shares dropped to a 
session’s low of 61V«p before 
stabilising and closing a net 2% 
down at 62%p. Turnover was 
3.1m shares. Burton is sched- 
uled to announce preliminary 
figures a week from today, 
with analysts expecting pre-tax 
profits of around £40m to 42m, 
compared with 1993's £38m. 

Kingfisher was another 
weak spot in the sector, sliding 


7 to 465p after two blocks of lm 
apiece were sold into the mar- 
ket at 460p and 46lp. Talk of 
internal strife at Kingfisher 
was one of the reasons put for- 
ward as behind the weakness 
in the stock, as was talk of a 
Eleinwort Benson sell note. 

Vickers hint 

Vickers continued to move 
against the market, adding a 
penny at 179p for a three-day 
advance of more than 8 per 
cent The company is due to 
make a City presentation to 
analysts and the suggestion is 
that It could use the opportu- 
nity either to clear the air over 
persistent rumours of a link-up 


outside the UK or to say some- 
thing about US demand for 
Rolls-Royce cars. 

Vickers is known to be 
searching for a joint venture 
big brother in order to provide 
a new 3J> litre engine for its 
new, smaller Bentley model. 
According to the market, it 
may have managed to sew np a 
deal with Daimler-Benz, Ger- 
many's biggest industrial com- 
pany. 

There is also something of a 
buzz in the air over North 
American sales of RoII-Royce 
cars. The group needs to sell 
1,300 of the marque to 
break-even. Some analysts 
have begun to make bullish 
noises about the company’s 


EQUITY FUTURES AND OPTIONS TRADING 


TRADING VOLUME 


Sock index futures slipped 
lower for the second day 
running, moving through an arc 
of nearly 50 points in improved 
trading volume, writes Jeffrey 


Brown. 

The FT-SE 100 December 
contract stood at 3,097 at the 
official 4.10pm dose for a 
decline of 22 points. The 


■ FT-SE 100 IHOBC RmiBES (LiFFQ E2S par M Indat point 


(APT) 



Open 

Sett price 

Change 

Hgh 

LOW 

EsL vd 

OpentaL 

Dec 

SI 05.0 

3097.0 

-224) 

31 ISO 

30714) 

13530 

53711 

Mr 

3131.0 

3117.0 

-21.5 

3131.0 

31060 

64 

3868 

Jin 


31394) 

-213 



0 

BO 


■ FT-SC HP 260 NOEX FUTURES (UFFE) BID per fufl Index point 


Dec 


35300 35324 


-3.0 3532.0 3527.0 


77 


4260 


■ FT-SE MP 280 BtDBt HfTURES Q3MUQ CIO per tuB Index point 
Dec • - 3535.0 

M opart tamest figures an for previous dey. t Errant 


■ FT-SE 100 MPEX OPTION (UFFq (*30821 £10 per M index port 

2900 2060 3000 3060 3100 3160 3200 32E0 

CPCP C PCPCPC PCRCP 
Mm 2B2 5 156 9 It* 73% 30*2 Mh 51*? 24 62 11 121 4*2 168 
Dec 21912 22*2 179 31fe 143 46 79 64 57 11 21*37*2 Wfe a 182>? 

An 243*2 37*2 Slh 171 65*a 140 84»z «9 105*2 83*2 131 62 ISO 46 195 

Mr 28112 45 225*? SO 188*72*2 19 93* 2 19 114 104 140 88 170 63*2 202*2 

An* 304 75*2 237b 109 176b 147 133 2Q2b 

caUMKReeipTr — 

■ EURO STYLE FT-SE TOO INDEX OPTION (LIRFQ CIO per Mi Indt petal 


17B 7 t3tb 13 92 23 
1*b 9 19 39 124b 53 
150b 70 

in 91 

22M14 h 


3075 3125 3175 

9 39 32b 63b 16*2 
M 72 


sera 

_ Wb 97b 7 137 2b 183 
9 95b 46 123b 29 156 17b 194 
9BbH4b 9 172b 

82 187b 
120 b 203 


125b 133 
Wb 154 


3225 

______ W 

Dec 

Jn 219b « 

Mr 2C7b 9 
Junf 29 82 

CMh 983 tab SU • Itadnifes ton «ha. IMn earn a* taaad on 
t lone d Md «q*f has. 

■ EURO STYLE FT-SE MP 2SO MDEX QP110W (OMLX) CIO per to! index point 

.3400 3450 3600 3550 3000 309 379 379 

Oct 116% 62b 9 85% 67b 112b 

Cafe 0 Mb 0 Safflsaant Prim and ntaesi an Men it 4Sqpm. 


premium to the cash market 
was 14 points and fair value 
was around 1 1 points. 

In spits of toe clay’s 
extensive trading swing - the 
December contract moved 
between a high of 3,118 and a 
low of 3,071 - activity was 
again below average with 
12,261 contracts, against 
9,600 on Tuesday. 

Traders said the quality of 
business remained weak, with 
the market nervous and unsure 
of direction. Local, or 
independent, traders set the 
tone for much of the session. 

There were occasional 
pockets of arbitrage dealing 
but the pickings were dearly 
vary slim, institutional business 
was nowhere to be seen. 

Volume in the traded options 
market improved to 28,484 
lots, from 22,515 on Tuesday. 
FT-SE and Euro FT-SE activity 
accounted for just over 1 7,000 
contracts. 

There were a number of 
features among individual 
stock options. British Steel 
saw 2,007 lots traded and 
Guinness 2,000 contracts. 
Barclays - reflecting big 
switching In the banks sector - 
British Airways and ICi ware 
cdso active. 


■ Major Sto ck s Yesterday 

VoL Gating Day's 

OOfe Orica dm 

3ft 

A8UACraupt 
Mtty Naferatt 
Ato+nfidtw 
Ataed Donacqt 


Aim 


ifcodst 

ABOC.B1L Pom 

BAAt 

BAT Vida, t 

BET 

E9CC 

BOCf 

BPt 

Gramm 

arJrt 

Btnk of Soofendt 

i £r f 

Blue OcJ»t 


Boast 


Bra. , 

Brtdrt, Airways t 
MHiOfef 
Mdi Land 
BrttWiSwert 
Bund 

Bwnati Caonoff 
Burton 

Cobto & What 
Cadbuy Schvrapp 
Candont 
Carton Coirara.t 

CoaaVTyota 
Comm. Ureorf 
Coakoon 
Coudaufefart 


Deffflust 


L* 


East Midland 1 
Bostiocomoo 
EngChtaOm 
BitwprlaoOBf 
Baotumel Unta 

na 

Ram 

iSCoLLT. 


*:&s. br;a 


indices 




Nov 2 


0»ya 

chge% 


Nov 1 Oct 31 Oct 28 


Year 


Dfv. Earn, 
ytajdta yield* 


P/E 

ratio 


Xd adj. Total 
ytd Return 


FT-SE 19 3081-3 

FT-SE Md 29 3522.0 

FT-SE Md 29 « taw Trusts 35225 

FT-SE-A 39 154&4 

FT-SE taaKap 17789 

FT-SE SmrrtCop «r tar Trusts 174024 

FT-SE-A ALL-SHARE . 153092 


-OS 30903 3097.4 30838 316&3 

-0.1 3584J 35109 3501 S 35172 

3S35L8 3514.1 34905 3517.1 

-04 1551 A 1661.1 15442 1S76A 

1779.76 178091 1777S3 180425 

174038 1749181 J74&04 1787^2 

-04 153051 153031 152082 191.19 


■ FT-SE Actuaries Ad-Share 


Now 2 


D*V» 

dwelt 


Nov 1 Oct 31 Oct 28 


Year 

■00 


4.13 705 

336 520 

O 71 027 
400 077 

034 MM 
054 5L54 

095 064 

DN. Earn 
ytekmjWdS 


1075 110.69 
2082 11182 
1939 11034 
1733 5486 
2531 49.79 
2008 51.78 
1782 5283 


1160.12 

131015 

131389 

119934 

138486 

138584 

129.47 



P/E 


Xd Total 
ytd Return 


10 MWRAL EXraACTKMffai 
12 Extractive Industries^) 

15 00, Maorated(3) 

18 06 Exploration A ProdtlD _ 


2723.00 

-ae 274033 2774.58 27SZ- 71 245350 

3^46 

503 

25.15 

8253 

109629 

3801-84 

rOS 38734J2 388229 3887.96314020 

3^0 

E27 

23.45 

98.82 

107192 

288843 

-0.0 271320 2754.70 2729.13 244800 

3.82 

5.59 

2227 8838 

110844 

1887.41 

-02 18922S 190353 188927 1953.10 

o on 

1- 


384)3 

1092.02 


MngfWurrt 
KwCSm 
Uttmket 
UmdSaasttast 
lApem 

Lagu SGenaatt 

UOW»Aht*f 
iBankf 


Lloyds B 
LASMO 


20 . OBt IAANUFACnlRBtSt267) 

21 BlAftig & Constnjcdonf33) 

22 BUfcfrg Malta 6 Marche(32) 

23 awntaata(239 

24 OvareOed tadustitato(16) 

25 Becbonlc & Beet Eq«>(3q 

28 EnginaartaolTl) 

27 Engtaearins, Vehfctaa(12J 
2B PtMne. Paper 0 Pcfcgge) 

29 TaadHae 8 AmatatBO) 


1853^4 

-02 185921 186B.68 18584)8 193420 

4.12 

5.19 

2328 

67.81 

B48.14 

London B«CL 

10494X1 

^04 1044.79 1038.78 103947 118720 

3.78 

532 

2480 

36.06 

826.66 

Lucas 

1811.76 

-02 1814J0 181123 180728 187820 

4.11 

526 

22^5 6620 

85814 

l«FCf 

MR 

2286.79 

-07 2306.94 226829 22S4.82 224080 

44X5 

451 

27.75 

7058 

1018.12 

1757-16 

-08 1771450 1773450 1782.01 2001 4» 

522 

525 

22.06 

82.75 

90871 

Mads & Spencarf 

1B83.12 

+02 1857.51 184728 18524)4 21 5920 

44)4 

075 

17.67 

61.88 

91322 

Mremonpmv) 

178948 

-02 179221 179881 178&48 171720 

819 

54)5 

2844 

■arm 

102738 

2247.00 

224649 2247452 2228.90 184120 

445 

1.65 

80430T 92^4 

1099.05 

tteswen Barat 

2788.86 

-05 280143 2795.85 27914X3 245890 

34)9 

541 

21.64 

7871 

108940 


157028 

+08 1581.43 158245 1555.74 197840 

429 

6.B9 

17.79 

4058 

88943 



30 CONStJftBI 00008(97) 272921 

31 aravrdftes(17) 224737 

32 SpWta. Wtaas & CWws(10) 2839.14 

33 Food Manuteeturera<23) 227026 

34 HouBahdd GoodsflS) 241786 

38 Hcofth CareC21) 181024 

37 Ptwmacaullcalsn2} . 298091 

38 Tobaccofl) 3S4036 


-08274188 274681273231290050 4.40 735 15.72 108.73 94383 
-05 22Sal6 2209.49 224061 2062.10 431 784 15.07 61.43 100091 
-08 266582 285073 283580 268580 383 681 1090 10133 95582 

-0.7 229282 225431 2281.70 234040 436 785 1534 8025 961.77 

-03 242330 241782 240338 272&80 078 7.51 1683 8988 87580 

403 160039 161438 161087 173780 012 334 4010 4024 93989 

299040 300682 298833 3182.10 481 731 l6l05 12538 95888 

-0.7 386003 368281 388730 4066.10 S86 9.44 1137 217.07 83081 


NortwmFbodSt 


40 SERVICESC218) 

41 ObMbutcrapO) 

42 Labura & Hotofa<25) 

43 MadaPQ 

44 RataSero -FdodtyQ 
46 RocaBera, General 
48 SRpport Sarvtaas(41) 

.48 TtansportflQ 

SI OthW Servtoa & Buadnmam 


190848 

401 190643 1BQSL34 1901^3 188830 

335 

641 

1065 

52.10 

83018 

249038 

+03 248850 250051 251136 2687.00 

878 

12& 

1008 

85 25 

869.12 

2031.79 

-ID 2052.13 2043-72 204043 195840 

841 

491 

2887 

5748) 

100454 

280057 

-0.1 266278 285215284083 284090 

243 

624 

2224 

6061 

995458 

1725.72 

+1.6 1994.77 180457 1702.41 1581 4XJ 

877 

a of> 

1832 5800 

103846 

162928 

-0.1 1631^5 183227 163237 1691 JO 

824 

068 

1078 

4487 

37892 

151886 

+05 150084 1G0232 1492^2 181810 

881 

638 

1848 

3092 

32253 

22524)7 

-fld na 7X03B ??dA5l 232320 

3.73 

OB2 

2062 

8132 

885.06 


+04 123892 12344)6 1235.73 121080 

4.08 

815 

47.95 

2063 

106048 


P«Ot 

PHuai 

I Vi a mO ant 

Prudartirft 

HTZt 

Bertandt 
JMdWLt 

nwntnfiT 


60 ununEspq 

62-B«aridty(17] 

84 Oas DtatrtxitionCZ) 

88 TelecoHBiiijnicatiorw(4) 

68 Wtterfl3) 

2452.18 

256039 

193296 

20524)8 

19394)2 

-062467^9245266 242041 253150 
-09 239028 2558L29 250052 2193.70 
+06 192227 1838453 1944.88 221870 
-1.0 207891 20B85T 204038 236000 
+02 1934£7 1915.60 187070 191810 

•LSO 

867 

020 

44)2 

004 

7.67 

9.81 

* 

7^8 

12.19 

15.87 8137 
1241 8346 
ft 117^6 
1089 An» 
094 6985 

94734 

108726 

90697 

875.48 

96920 

89MOf«WNCtALS(IB37) 

166845 

-03 1856.10 185089 1651-83 188093 

893 

ft'ta 

1850 55.90 

1172.43 


RylBK! 
ftowlfcL 

ISSft 

Sconrti 4 Nan-t 
Scot Hy rt o- O act 

Sconsti POwarf 

8amf 

Sedgwick 


I FMANC1AUSf104) 
Benka(10) 
i lnsuunce(17) 
i Ufe AaauanoaM 
Ma rotin nt Barksfl 
Other Hnandfl^24) 

L BS PBM flL 


217388 -08216072 2184.60217730233830 

286988 -07287930287782.2881832909.10 

125088 -06 126787 125781 125238 1473.70 

235689 -1 A 2391.75 239887 2410.19 274280 

271011 -Ol 271980 2722.68 288487 325380 
'183681 -03 188986 1B3381 182184178010 

148049 408 145072 1442.72 144084 170680 


WVECTBtmtusrareM mtM -03 273ftOO 273077 272730 2713A0 


89 FT-SEA ALL-SKAKBPSS) 

■ Hourly movements 

Open 080 


153082 . -04 1536.51 153031 J 52982 1561.19 


4.45 

94)1 

1297 89.® 

866.00 

422 

994 

1192 11039 

85959 

041 

9.43 

12.12 61.61 

863.70 

5.42 

791 

1542 12792 

91290 

332 

12.13 

ALSO 87.78 

82076 

397 

051 

14.06 6391 

9854)0 

4.16 

4.42 

2034 4499 

838.78 

226 

197 

5124 SS51 

915.94 

396 

084 

1792 5283 

120047 


1080 1180 1280 1880 1480 1S80 WL10 WtfVday Low/day 

c non ? 90838 3082.7 308&4 30798 30803 30788 30627 31003 ai _ 

^ iXt «n 35258 35224 33213 36203 36193 39163 35203 3527.1 35148 

^XaSO WOi 16518 16508 16498 15478 15448 1544.7 1542.7 15407 15638 15401 

. <d Ff^e 100 Owi tvt WBtan toft W OiBpm. FT-SE 100 W tW>= aS2na( sa ) lok sstu 

FT-SE Actuaries 390 luduatry baskets 

Opa, gap 1000 ' 1180 1280 1P00 U80 1680 1010 


Severn Tramt . 
She* TranBtxxrt 
SWart 
StoaghSm 
SnWi |WK) 
Srrfei&Nephaat 
SmM B aa rtra nt 
SmHj De a cf n Ut*. 
SmUsEnda. , 
Southort Qaa-t 
SounmaaBect 
Scum Waat water 
South WcsL Beo. 
Southern Wrier 
Gtandad Qartt.t 
Staranousa 
Sun ABancet 

hk 

TBBt 

Tarmac 

TrtaSLyto 

Taytor Woa*ow 

Tseeot 

Thamn Wtearf 
Hwn Bid 

Tomtantt 

IraWgv House 
Urrgffla 
UnfeMrt 
(MaedBBcufet 
Lhi Mewopapore 


Close PiMtaui Change 


ACnstreo ■ 8864 9893 9893 9900 8843 962.7 992.7 9908 8800 986.9 9836 +28 

iS 2W8 2001.7 28693 2S6SL8 29S83 29405 29500 29603 2965.1 2SB13 29607 +03 

" Si tfloon t9283 1924.7 18853 18243 19243 19220 1S378 19378 1933.1 +4.7 

A ■' - 39^8 29118 2S0&O 29001 29008 28918 28923 2884.1 28098 2B3« 29l58 -20.4 

FT8E AckralM Sw» Wfcw la ptaMwdta Stfctday la**a. ttata d eonflUMB are nrfeHi taw The AmralTlnaa 
Bfi. 7ft» FT-SE Acfeosto SMrataSeae Bwvka. artefr man a nog* at cfmric and p^cr-tarad 
. to ihm -«S«rtaM6feta ton RMSIAT, WaW How^ 13-T7 EfMonh SbaaL Union EC2A 40L 
r Fr^xniafaMtM^n^AltavFtatcWa Wa*. The FT-SE lOOi «» FfiSE Md 2S& rf-SE ActDarioa 3E0 and ft* FT-6E teuartaa tadway 
SdtlSSwa rt As UNM Ktagdoro and RepOto d MM and fee FT-SE Aetuefea tadra Is 

nertunoiM MM fee teflon of Actuate and to FaaJty at Mm ■ Btrdrt sat rt gnami n*=- 

SrSJSS-SrSSVnSiirttti ulead^ oSctam m of natand UNtad 1884. 9 Tlta FtancW Ttawa Unfed iBW. AB dona wseraad. 

of tt» London Stack Eaetoge and T*» RramoW Tlnak Umoad-Tha FT-SE Actuate fee 


221 

31912 

-1*2 

1OQ0Q 

B1 «2 

«1 

1/40D 

4)3 

-5 

356 


41 

21Q0 

503 

-e 

sia 

HI 

«2 

1.400 

325 

-2 

8400 

2094 


1,700 

273 


?1S 

W7 

-1 

337 

274 

-1 

1.700 

515 

-3 

4.700 

434 

-3 

12400 

1 14*2 

+3 


Ml 

+13 

1,000 

887 Ij 

til** 

7,200 

4231; 

-2** 

610 

266 

-2 

5200 

385 

-J*; 

8400 

302 

-4 

1200 

206 


3.700 

583 

-4 

083 

540 

-1 

1,400 

281 

-1 

525 

403 


1.100 

529 

-2 

1200 

443 

-4 

3.400 

450 


2200 

880* 

-2 

7/400 

291 

+1*2 

522 

408 

+12 

B2O0 

42S 

1S6 

100 


1+1 

884 

+4 

+.400 

82* 

-2*; 

3200 

403 

-7 

1900 

406 

-*h 

746 

269 

1.100 

874 

-0 

1900 

201 

+5*5 

1.700 

538 

-7 

1200 

246 

+1 

1+00 

454 

+5 

097 

427 

-1 

197 

977 

-4 

020 

194 

♦2 

970 

814 

-7*2 

805 

704 

-17 

iie 

+» 

+6 

wn 

300 

♦1 

+41 

3B6 


569 

225 

-6 

6.100 

821 

IM* 

114 


568 

133>j 


1900 

2341; 


1200 

577 

-7 

6900 

3B24 

+1** 

5200 

597V 

♦*> 

175 

334>; 


300 

620 

-6 

4200 

413 

-a 

891 

556 

+2 

2.100 

188 

-3 

BS8 

600 


2100 

468 

-3 

1.700 

712 

-7 

680 

339 

-2 

S900 

228'j 

-2 

1900 

165 

+1 

739 

290 

+5 

1900 

106 

-c 

481 

305 

♦3 

2700 

774 

-25*5 

862 

430 

-3 

39 

566 


3900 

*85 

-7 

209 

538 

-a 

1900 

'« 

-1 

1200 

626 

*5 

254 

688 

-5 

638 

438 

-11 

382 

347 

-4 

5,100 

572 


672 

146 

-i 


7*6 


2300 

1301; 

-*! 

074 

194 


670 

428 

.2 

1400 

131*; 


255 

635 


3900 

417 

*1 

95 

791 

-8 

2700 

135 

+3 

790 

180 

-a 


503 

-6 

1.700 

400*2 

-6*2 

2.000 

248 

“1*2 

456 

566 

-3 

1S1 

838 

-e 

1200 

200 

-3 

237 

826 

-1) 

1.000 

836 

-b 

827 

638 

-2 



tl 

1200 

5®*1 

-6*1 

3900 

312 

-4 

248 

979 

+1 

3200 

882 


3200 

240 

-11 

42D0 

400 

■4*3 

1900 

S88 


646 

482 

-2 

2100 

746 

-7 

684 

227 

-*2 

2800 

408 

*5 

1900 

17 a 

*1*2 

2900 

457 


5,700 

30) 

tC 

4900 

411 

♦ir 

B 

1356 


108 



2500 

325 


2300 

354 

-*J2 

B12 

107'j 

+*2 

1.100 

145 


183 

432 

-« 

897 

683 

-C 

4900 

718 

-10 

810 

537 

-3 

680 

228 

*4 

405 

464 

-1 

1200 

142*7 

+^. 


405 

♦1 

6.400 

373 

♦ 1 

627 

454 

•3 

1200 

814 

-4 

26B 

8M 


461 

521 

-4 

782 

79* 

-12 

740 

623 

+5 

713 

288 


2900 

216 

-1 

2400 

338 

«2 

23S 

216 


478 

356 

-1 

2100 

224 

-A 

4.900 

133 

-1 

1200 

416 

-6 

583 

1» 


3.800 

235*; 

*1 

1.100 

530 

-1*2 

1,700 

983 

-16 

2900 

208 

-a 

908 

K 

+1 

336 

344 

i« 

B46 

1128 

-14 

1,400 

317 

+2 

7W 

503 


5.400 

212 


1200 

610 

+? 

707 

830 


710 

677 

t2 

74* 

320 

+3 

523 

563 

-4 

2900 

344 


701 

1*2 


1.400 

139 

-1 

*97 

780 


1900 

757 


487 

55S 


758 

866 

-2 


WMtuuISQrf 
Wrtcwnat 
WebhVAaer 
WawWaw 
WlMtawtt 
weamaHdgal 
WfesCcarcon 
VWmpey 
WobaM 

YouMaSKt 
Vorfenra Watar 
Znacaf 

Baaad dll (raSng voUiw (Or a utawi Ol nraor 
aaeuwas daaB ilmiDn ma SEAO syswni 

ywtanky ad a JOpen. Trades d one mBonor 
men am nuaMd dram, t Mtoaiea on FT-SE 
100 IndB* crarsntuora 


operational gearing in this 
division. 

Food retailers sprang to Ufe 
following top of the range 
interim profits from J. Sains- 
bury which - read in conjunc- 
tion with Tesco’s recent results 
- suggested that the stock 
market's price-war fears could 
be down-scaled, at least as far 
as the sector leaders were con- 
cerned. 

Sainsbury moved ahead 12 to 
4llp and Tesco put on a penny 
at 235'/jp. In active trading. 
Argyll gained 6V i at 269'4p and 
Asda firmed a penny to 61*Ap. 
Turnover in Argyll was 8An 
and no less than 16m Asda 
shares changed hands as con- 
cern over possible loss of mar- 
ket share triggered a signifi- 
cant two-way pulL 

There was some slight disap- 
pointment with the interim 
dividend increase, but Salis- 
bury's comments about the 
resilience of sales in the cur- 
rent six months led an 
all-round upgrading of fore- 
casts. BZW is now going for 
profits of 51825m, against earlier 
expectations of £800 m. 

Most securities houses were 
expecting current half sales to 
be on the flat side so growth of 
1.5 per cent was seen as a clear 
bonus. 

Racal depressed 

Racal Electronics was one of 
the Mid Cap 250's outstanding 
casualties, the shares meeting 
persistent pressure in the wake 
of stories of a profits down- 
grade by one of the market's 
leading agency brokers. 

James Capel was said to 


NEW HIGHS AND 
LOWS FOR 1994 

NEW KGHS (tOL 
CHCMCALS tH European Colour. 
UMRUUTORS P) Adam S Haney. Faber Pres. 
REA. EMOJMEBBNa («| Boyne* «. Fft. Kelsey. 
SptfKx-Sarco. OTHER FINANCIAL (1| 

Srraasoem, SUPPORT SERVS ft) Con^xjttr 
People. 

NEW LOWS (111L 

BANKS p| Espeno Sente. Mre&sTfl, Sunflomo. 
BBEWSBES (t) FuBar STA. BULBING 4 
CNS11W n AMEC. Da &5p M. Bree. CraN 
NKhd SMpc PH, QoUorL BLOG MAILS S 
MCH1S (1) LBMIM 9pc Pit. CHSBCALSn 
Cemereano. Do Wra.. Enoefeard. 
OtSTTOtnORSa Bndflend. Eumtoto. 
WNaleatla Btenpa. DIW amHtO BOL8 HI B1H 
Wits. 1895*8. era f+AaiL, Surer. Do Wn&, 
BSCimc 4 SECT SOUP PS Gaoramr. 
Jomon. ENOWEBMNQ (7) FKL GB bOL. 
Hampaon SSp Pit 91AD. Hurtng 6%nc Pit, 
McKaChrw. Moira. Moryon CrucUe 7V»pc Prl- 
EXTRACTIVE INDS P) Reerejta, Sl Barbara. 
HEALTH CARE PI KawnooNl. HOUSEHOLD 
GOODS p} WyeteU. INSURANCE (T) 

FenductL INVESTMENT TRUSTS (M) 
MVEBTMBfT COMPANIES (B) LEISURE 4 
HOTBS rrj Alrtoura 6Hp PH, Bran Weber. CTly 
Centre Rnrantt, Ron, Manx Theat Etn 
Wcmbtay. MEDIA (Z] Hodder HeraSna. Seepy 
Kkte. OTHB) FINANCIAL p) Towry Im. 

OTHER SERVS 4 BUSHS P9 Eredta. Heediray. 
PHAHMACHII1CAL3 (1) Hiatangden Infl.. 
PRTNtL PAPBI S PACKG M Feny Hdrarlno. 
tmwwsk. 1m» Martian. PttOPBTTY (Ilf 
toefaw, BrtfltitMone. doiieired Truer. Dee ML 
HeWcN Bar SUpe Pit 2012. Prel, Rfetai. Do 
Wits., SovBs, Slraftaebury. SmCh UL 
RETAILERS FOOD PI Sbopt* RETNLHW. 
QBIB1AL P9 IGtgbNier, tOeenare, SUPPORT 
SERVS a Omartam TNocomputlng, Hogg 
Rabnscn. TEXISES ft APPAREL C* FB. 
HststQne, SrnriB. TRANSPORT (S| Noneh. Sea 
ContJnere, Van AS, AUBKANS M Artiauerr 
-Busch, Bankcre MY, CaHotnle Erargy, 
KonaymA KMNy. Undrta 

have lowered its current year 
profits estimate by £l4m to 
£238m. Racal shares, which 
reached an all-time high of 
261p on September 1. have 
fallen sharply in the past few 
sessions, and closed a net 11 
lower yesterday at 240p. Turn- 
over of 3.1m was one of the 
highest this year. 

There were a number of 
strong performers in the com- 


puter services sector, where 
Computer People, boosted by a 
NatWest Securities buy recom- 
mendation, moved forward 17 
to 225p. 

M.R. Data Management 
advanced 13 to 127p after news 
that it had won a contract with 
the Metropolitan Police. 

Macro 4 edged up 3 to 438p 
after S.G. Warburg Securities, 
the group’s broker, bought in a 
further 150.000 shares at 440p 
apiece via a series of agency 
crosses. 

Business support services 
group BET saw 12m shares 
traded and improved 3 to 
114'Ap following a strong set of 
interim results which included 
a 20 per cent dividend increase. 
In spite of the clear two-way 
pull in the shares It looked as 
if most analysts were edging 
op their profits estimates for 
the full year. 

Id was the worst performer 
in the FT-SE 100 list, the 
shares retreating 25%, or 3J2 
per cent, to a session's low of 
774p after keen selling of the 
stock overnight on Wall Street 
Dealers said the shares had 
run out of steam after last 
week's interim figures. Turn- 
over was a relatively high 2.7m 
shares. 

Northern Ireland Electricity 
was the pick of the electricity 
sector, the shares moving up 13 
to 377p as the market reacted 
to the stock’s recent under- 
performance against the 
English recs and also to hopes 
of electricity sales to the 
Republic in the wake of the 
recent peace moves in the 
province. 

Northumbrian Water out- 


paced the rest of a generally 
firm waters sector after broker 
buy recommendations. North- 
umbrian shares forged ahead 
20 to 726p; the company is 
scheduled to announce interim 
figures a week from today. 

Royal Bank of Scotland 
shares touched their highest 
level since the end of Febru- 
ary, with dealers citing talk of 
a chart break-out driving the 
stock forward to a close of 
457 p, up 8 on the session. 
Switching from National West- 
minster Bank and into Bar- 
clays cushioned the de cline in 
the latter and left the former 6 
weaker at 503p. Hoare Govett 
was said to have been a keen 
supporter of Lloyds Bank, 
which held at 572p. 

Cater Allen, the discount 
bouse, advanced 7% to 485p, 
with the market said to be 
Increasingly optimistic about 
the interim results expected 
shortly. 

Bellway's preliminary fig- 
ures, showing profits up 67 per 
cent and a 16 per cent increase 
in the dividend total, were 
given a warm reception by the 
market and saw the shares 
race up 14 to 2Q6p. 

English China Clays finned 
a penny to 360p in the wake of 
a UBS buy note citing the 
group's success in diversifica- 
tion into speciality chemicals, 
the strong balance sheet, 
secure yield and a foiling price 

earnings ratio. 

MARKET REPORTERS: 

Steve Thompson, 

Jeffrey Brown. 

■ Other statistics. Page 22 


LONDON EQUITIES 


UFFr EQUITY OPTIONS 


— Cals Puta - 


Opart 


tan 

Apr 

Jul 

Jan 

Apr 

M 

WcdOareeq 

550 

40W 

59 

85 

"T 

12W 

2IW 

rssa) 

600 

16H 

30 

36W 

27 

34 

45*i 

Arffttl 

260 

18 

2SW 

23W 

9 

14 

19 

mo ) 

280 

»W 

18 

19V? 

19W 

24W 

30 

ASDA 

60 

5V» 

7W 

9 

3 

4W 

5b 

no i 

70 

1V» 

3W 

5 

9 

10W 

11 

Bril Always 

330 

36 

45W 

51 Vi 

6 

11 

17 

r35S) 

360 

*8 

28 

35 

18W 

23W 

30 V? 

SeflfctaiA 

390 

2816 

35W 

42 

12 

19 

24 

r«5 1 

420 

1ZH 

21 VV 

28 

a 

35 

39W 

Boras 

500 

37 

SI 

57 

8 

15 

22h 

fS29 J 

550 

11* 

2SVt , 

31W 

34W 

30W 

47H 

BP 

420 

20 

28W 

35 

14 

21 W 

MW 

T433 ) 

460 

5’+ 

12W 

1*17 

40W 

45W 

4BW 

anweswi 

140 

1819 

23 

25Vi 

7b 

4W 

6W 

n») 

ISO 

6H 

12 

15 

10W 

13 

15W 

Bare 

500 

53W 

S7W 

84 

B 

13 

10V, 

r&«) 

550 

17W 

a 

37 

29W 

35 

41 W 

esretWH 

390 

28 

40 . 

4BVi 

14V? 

21 

28W 

<■403 ) 

42) 

15 

26 

35 

30 V? 

36W 

44 

Dourtaukti 

420 

42 

52 

57V. 

8b 

11W 

18W 

r«4 1 

460 

17W 

79 

35 

24W 

ZB 

37 

Cora Won 

493 

S7W 

63W 

— 

4 

17b 

- 

TWO ) 

543 

24 

32W 

“ 

20W 

34 

- 

D 

750 

48W 

62 

71 V! 

15W 

32 Vi 

41 W 

(■774 1 

BOO 

72b 

3GW 

47 

40W 

59W 

saw 

Ktagfeto 

460 

27 

a . 

«W 

18 

25W 

32W 

T46b ) 

500 

10W 

24W 

28 

39 

48 

55W 

land Sects 

600 

34’.* 

46W! 

5SW 

ION 

14 

24W 

r®5 > 

650 

to 

22 : 

Z7W 

3/W 

40 

51 W 

Mtrto & S 

390 

33H 

43 < 

KW 

4W 

9 

13 

r«w 1 

420 

15 

75 ; 

28W 

15W 

21W 

26 

NMW 

500 

77b 

3BW 

45 

19 

34 

38W 

rsm 1 

550 

9 

17 : 

25 Vj 

51 W 

60V? 

69W 

Safentuv 

390 

29 

41 W 1 

BW 

9W 

15 

22H 

T410 1 

420 

13 

2SW 

34 : 

xtw 

29W 

37W 

Shell Trans. 

700 

38 

47 

54 

12 

25W 

30 

C717 ) 

750 

11W 

21 : 

aw 

38 

S3 

57W 

Storehouse 

200 

2DW 

24 

28 

4 

5 

7 

<•216) 

220 

8 

13 

17 

12 

13W 

16W 

Trafalgar 

m 

GW 

9V» ■ 

I1V? 

«W 

6W 

7W 

rS2 ) 

90 

2W 

5 

7W 

I0W 

12 

13 

IHever 

1100 

9 

73W 

85 

aiw 

30W 

47W 

rii^j 

1T50 

27 

47 ! 

S9W 

45+ 

62W 

73 

Zeneca 

eso 

40W 

54W 

a 

25 

43 

51 

C856 | 

900 

18 

3tb 

44 

54 

72 

79W 

OpOor 


NOV 

Feb I 

tart 

taw 

Feb 

May 

Stand Mai 

390 

MW 

34 1 

WVi 

2 

12 

16 

(“412 ) 

420 

G 

17W: 

aw 

I3W 

27 

31 

Ladbrahr 

140 

11 

17W ; 

aw 

1W 

5 

8W 

n40) 

160 

1W 

8 ' 

IIW 

12 

15 

19W 

UUBKtuts 

300 

20 

30 

35 

2 

6 

14 

rti7 1 

330 

4 

14 

20 

15W 

M : 

30W 

Option 


OK 

Mar 

Jon 

OK 

» 

Jun 

FlSORS 

110 

15 

19 

22 

IW 

3W 

5W 

nu > 

120 

4W 

8W ' 

I2W 

11 

13W 

15 

Option 


Nov 

Feb Mai 

NOV 

Feb 

VBf_ 

ant Aore 

420 

38 

54 G1W 

6 

17 

26 

r«o j 

460 

14 

S3 

4Z ; 

Z2W 

35 , 

45W 

BAT Ms 

420 

20 

34W 

a 

4 

i2w: 

»W 

r«M ) 

460 

2W 

15h 

23 : 

KW 

33W 

48 

BTH 

300 

9 

19S>23V» 

514 

12 

19 

ran \ 

330 

Ji 

7V? 

12 

21 

26 

31 

BrilTNecom 

390 

It 

1BW2GW 

4V? 

15 

I9W 

C395 ) 

420 

1 

7 1 

I3W 

25 

JS ; 

J7W 

CMtayta 

420 : 

tow : 

)3W 38W 

2W 

9 

18 

r«38 1 

460 

2W 

14 

19 ; 

I*-? ; 

MV? 

40 

Eastern Bee 

boo : 

Z7W 

53 

68 

a) 

42*4 

53 

1*814) 

aso 

8 

31W46W- 

lib 

70 

79 

Gunn 

460 

13 : 

25 V, 

34 

5 

12w; 

2ZW 

T465 ) 

500 

1 

9 

16 

34 

37 - 

I5W 

GEC 

280 

7 ■ 

I4‘5 2014 

4 

rm 

I3H 

res. 1 

300 

w 

6W 

12 

16 ' 

23 Si ; 

2Ste 






Cafe 

— 

— 

Pda 

— 

Option 


ta- 

FA 

toy 

No* 

W) 


Hanson 

220 

ll 

IS 

18h 

2 

7H 

11 

(*228 ( 

240 

1 Vi 

8 

Sh 

I2h 

IBh 

22 

Laarao 

134 

1th 

— 

— 

h 

— 

- 

H<6 ) 

154 

2h 

- 

- 

9h 

- 

- 

Lucas tads 

180 

Ifih 

zzv? 

26V? 

1 

5 

8 

no* j 

an 

3V4 

11 

I5h 

Bh 

13h 

17 

PS fl 

600 

41 

SBh 

66h 

3 

12 

27 

rs 36) 

650 

lOh 

a 

40 

22 

3Zh 

Sth 

Ptalngtan 

180 

15h 

18K 

23 

1 

4W 

7h 

fra* ) 

200 

3 

8 

12h 

Bh 

14h 

17 

Ptudortbi 

300 

15V? 

2Sh 

ZB 

3 

Bh 

16 

m2) 

330 

2 

11 

14V, 

19W 

24 

32W 

HTZ 

850 

Z 

51 

B2 

10 

76 

43 

(*862 ) 

900 

5 

27V4 

38V? 

40h 

53 

71 

Rodtaoa 

460 

12 

a 

37 

10 

20h 

35 

r*60 ) 

500 

1 

13 

21 

40 

45 

Bih 

Rtyal tasce 

300 

12 

22 

a 

8 

(6 

22K 

f»1 ) 

330 

2W 

10 

16h 

29h 

34h 

41 

Tesre 

220 

17 

» 

a 

1 

4h 

9h 

(*235 1 

240 

Sh 

12 

18 

8 

13 

19 

Vodafone 

200 

14 

7B 

26h 

1h 

7h 

10 

(*211 ) 

217 

4 

llh 

— 

8W 

15h 

- 

WWams 

325 

Zt 

- 

- 

f 

- 

- 

(*343 1 

354 

3h 

- 

- 

12W 

- 

- 

Opttn 


Joe 

AW 

Jrt 

Jan 


Jii 

BAA 

500 

"IT 

38 

ev» 

11 

t5h 

21 

rsu) 

525 

14 

24 V? 

- 

23h 

27h 

- 

ThameaWN 

500 

3BK 

50 ! 

57h 

llh 

16 : 

aw 

T530 ) 

550 

12 

25 

32 

37 

43 

53 

Option 


Dae 

Mar 

Jrat 

Dec 

M- 

Jun 

Ataev Natl 

390 

3th 

40' 

mvT 

4h 

14 

20 

1*413 ) 

420 

13 

23 

aw 

i6h 

a 

35 

Amstrad 

25 

5 

5h 

6V? 

h 

i 

2 

r=9 ) 

30 

a 

3 

4 

2h 

3h 

4h 

Batdavs 

550 

« . 

saw 1 

S5h 

6h 

18 

25 

rSB4 j 

GOO 

i5h 

30V? 

40 

26h 

42 

50 

Btae Circle 

280 

13 

aw 

a 

10 

14h 

22 

r28i ) 

300 

5 

12 

17h 

22 

26 

34 

B-ttfeh G8S 

280 

17V, 

26 

70 

4W 

9 

15 

(*291 ) 

300 

7 

15 

1 9V, 

13 

18 

76 

Dions 

180 

19 : 

23W 

ah 

3h 

6h 

IIW 

H94 ) 

200 

a 

13 

t8h 

llh 

18 : 

21h 

HUMown 

>60 

ion? 

14 

18 

4 

7 • 

11K 

H65) 

1B0 

2V, 

5 

9 

16 

18 

24 

Lonrtn 

130 

8 

llh 

t4h 

5h 

10W 

12 

(*130 1 

140 

4 

7Vi 

low 

IIW 

16h 

18 

Naa Ports? 

460 

36 1 

C7h 

33 

6 

14 : 

22h 

(-490 1 

500 

>4 ; 

®w ; 

rm. 

23«. 

JIW41W 

Scot Pomr 

330 

32: 

»w- 

(7b 

5V? 

13W ' 

I7h 

r354 j 

360 

14V, 

73 

32 

17W 

27 

32 

Seas 

100 

10 

I2h 

14 

1 

3 

5 

T107) 

110 

4 

7h 

9 

5 

7h 

10 

Fate 

220 

19V 

2sv? : 

aw 

3h 

B 

11 

(*234 j 

240 

7b ■ 

14W 

19 

12 

14W 

21 

Tarmac 

120 

8W 

14 ' 

I7W 

5 

8h 

12 

(*122 ) 

130 

4 

9 

13 

11 

I4W 

I7W 

Thom EM 

960 ' 

37h! 

S3V> 

78 

17h: 

34h< 

Ch 

(*962) 

1000 

i4w: 

30V? 

SO 

45 

62 esw 

TSB 

220 ■ 

IZW 

ITWZh 

7 

13 

16 

1*224) 

2«) 

4 

9 13W 

law 

25 

76 

Tor+dra 

200 

14 

IBh 

23 

4K 

9 llh 

(*207 | 

220 

4b 

9h 

14 

15 

20 !Zb 

WeRCOme 

600 

*9 

67 

79 

i3h; 

aw 

37 

f630) 

650! 

22W 

41 

5S 

37 

48 6IK 

Option 


Jan 

Apr 

JW 

Jan 

Ap> 

Jd 

Sara 

$50 1 

94h ; 

TShSSh 

9 

21 2fih 

(*599 ) 

boo: 

32h 

46 

69 

28 ' 

I2h 

49 

KKnodB 

700 

481 

53h 

78 

26 

49 58K 

f714 ) 

750 

26 

40 53V, ! 

53W 

78 S7h 

Room 

460 40*4 H1W 

59 

10 

17 21 h 


f«7 ) 500 17h ZSh 38 2734 35* 

Option Mat Fa tfey Nw fan May 

Rcus-ftom 160 18 24 27 H 3H HI* 

(-178 ) 18D 5 12Vfr 16 6 *i It ISb 

‘ ihOsrfyng GKUiTy prico. PrerAare, shram are 
baaad on MtOrenenl prlcft 


rtowmha 7. T«d mneaev 2&5S3 Cate 




Nw ihtag Od on Ynr Grass dhr 

1 hi day 31 28 ago ytaid * 


field tataea lades (34) 

■ Regtaeal traders 
Alta (16) 

Ausoalastj |7) 

North America {HI 
CamngHL Tha FnaiWN Tare, untied l&H 

Fnir.fi n bnK*£C runtvr ot goktvmws. Bs» US More. Base Vataes lOOttOO 31/12/82. 
Pradecessct (Ml Mnet Indu. ffc* 2 . 28* * , day’s rhange- «13 poaas. Y«ar 000 220.B T Parfal 
Latest cocos amro truva'iabto ic rhrf oomcn 


213527 

-IJ3 

215891 216885 193041 

230 

2387A6 1782JB 

3449.21 

-U 

3502.31 KBS 71 282142 

3LS2 

371187 2304.45 

776566 

-23 

2831 09 7814,53 2301 84 

1.78 

30I3S 2inj66 

1651^0 

-03 

1656.06 1653 M 1677 16 

081 

203985 1468.11 


RISES AND FALLS YESTERDAY 


Itaee 

Felte 

Same 

11 

54 

e 

0 

0 

14 

20 

90 

88 

80 

156 

397 

22 

54 

111 

62 

114 

319 

11 

24 

9 

45 

142 

178 

28 

164 

273 

7 

78 

32 


British Frarda 


Other Fixed Interest — 

Mineral Extraction 

General ManutacUBis . 
Consumer Goods 

Services - 

U tmtaa , 


Rnandate 

Investment Trusts. 
Others 


Totals 


286 


876 


1425 


Dare baaed on ttnre cornpanl re Bread on iha London Stare Santee. 


TRADITIONAL OPTIONS 

First Dealings October 24 Expiry January 20 

LostDeetagL November 4 Settlement February 9 

Cans: Kuntck, Signet; Seepy Kkts, Scxithand Prop, Stanhope, lUtow 08. Puts & 
Calls; Kimlcfc, TUhnv OIL 


LONDON RECENT ISSUES: EQUITIES 


issue Ami 
pfce paid 

p *r> 

MkL 

cap 

pn) 

1884 

Hfl h Lrar Stock 

Close 

price 

P 

+/- 

Net 

rtv. 

Dlv. Ore 
cov. ykS 

PTE 

net 

_ 

FP. 

088 

B«2 

4 APTA Wmta. 

6 h 

4*2 

_ 


- 

- 

- 

F.P. 

10P 

180 

180 itAdsra Pmtg 

180 


- 

- 

- 

- 

- 

F.P. 

083 

73 

63 Artedan Eds. 

73 


- 

- 

- 

— 

100 

FP. 

172.0 

83 

85b B2W Commodieaa 

88 

-1 

- 

- 

- 

— 


FP. 

mo 

47 

39 Do. Wrts 

40 

-3 

- 

- 

- 

- 

- 

FP. 

488 

92 

86 ^Cafluna 

87 

-5 

- 

- 

- 

- 

280 

FP. 

303 

287 

280 CtKJcffl China 

285 


RN9-68 

22 . 

4J3 

13.0 

63 

FP. 

102 

68 

85 EnnamU 

67 


RN0J71 

U 

\3 

04 

- 

FP. 

SOB 

140 

108 Rtoonfc (TW 

133 

-2 

RN0.75 

2.6 

a7 

44.7 

115 

FP. 


126 

115 Games worhshop 

123 


RN4-8 

2 2 

4.7 

me 

- 

F.P. 

2.16 

as 

26 Gtaatv Dv Cap Wts 

28 


— 

- 

- 

- 

- 

FP. 

290 

62 

58 Kambras Sm Aslan 

58 


- 

- 

- 

- 

- 

F.P. 

2.70 

30 

27 Do Waruaa 

27 


- 

- 

- 

- 

1B0 

F.P. 

1608 

223 

205 taah Patmanant 

211 

-9 

uNBlO 

4 £ 

as 

7 A 

180 

FP. 

436.9 

181 

180 Man a & F 

170 


HN0-6 

t.e 

&3 

94 

- 

FP. 

3402 

488 

475 ProfiSc Inc. 

486 


- 

- 

- 

- 

TS5 

FP. 

57.9 

148 

1S8 Seratsatr 

144 

-J 

FNLB 


3-3 

23.4 

- 

FP. 

0 a 

82 

57 Whtohureh 

62 


RM125 


26 

133 

- 

FP. 

2a 2 

360 

335 Wieatiam Water 

338 


- 

- 

- 

- 

- 

F.P. 

4.74 

330 

320 Da NV 

320 


- 

- 

- 

- 


RIGHTS OFFERS 


issue 

price 

P 

Amount 

paid 

*4> 

Latest 

Renun. 

date 

1894 

H)gh Low 

Stock 

Closing 

price 

P 

+or- 

17 

Ml 

2712 

2pm 

*+pm 

APTA Health 

%pm 


20 

►a 

9712 

4’apm 

3*2pm 

BJers 

4pm 


118 

w 

28711 

20 pm 

6pm 

Catties 

15pm 


Wp 

NB 

2S711 

*4 pm 

Vpm 

Dragon 01 

*+pm 


500 

Ni 

1271Z 

50pm 

28pm 

Matthew Oar* 

28pm 

-8 

26 

N8 

22/11 

'<pm 

*+pm 

Novo 

*+pm 


180 

NI 

8/12 

l^ri 

5pm 

SUm 

14pm 


It330p 

NI 

29/11 

5Bpm 

25pm 

SmurfH (J) 

33pm 

-2 

5 

Ni 

15/11 

2*2pm 

*pm 

jAJrton Square 

V*n 



FINANCIAL TIMES EQUITY INDICES 



Nov 2 

Nov 1 

Oct 31 

Oct 28 

Oct 27 

Yr ago 

*HH* 

■Low 

Onflnary Shore 

2355.4 

23803 

23S13 

2345.1 

2310-8 

2383.7 

271 3 j 8 

2240.6 

Did. dv. yield 

4.38 

458 

437 

4.38 

4.45 

3.87 

451 

3.43 

Earn. ytd. % fuD 

6.S4 

R90 

023 

6JS 

034 

4A8 

851 

082 

P/E ratio net 

17.45 

17.52 

17.4S± 

17.44* 

17.1B* 

37B1 

3343 

1094 

P/E ratio nB 

17.08 

1SDS 

iam 

17.98 

17.70 

2587 

3030 

17to 


-Far 1891. CMhary Share txto c aim oomotoaon; htgh 2713LB S/OSJB*: low 404 SBMMO 
FT Odnay Share mdar bear date 1/7/35. tConaC W d values. 


OreSnary Shore howly changes 

Open 93D 1000 1130 1230 1380 1480 1S80 1680 W» Low 

2359.1 2366.7 23853 2365.7 2361.0 2355.5 23S58 2351.4 23S3.6 23698 2346.1 


Nov 2 Nov 1 Oct 31 Oca 28 Ocl27 Yrago 


SEAQ bargains 19.193 

Eqraty turnover (Em)t 
Equity baigainst 
Stores traded (mljt 


24.499 

10753 

28360 

4358 


27,021 

1111.7 

29,117 

392.6 


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FINANCIAL TIMES THURSDAY NOVEMBER 31994 


CURRENCIES AND MONEY 


MARKETS REPORT 


Fed intervention pulls dollar off post-war low 


The US Federal Reserve 
yesterday intervened repeat- 
edly in currency markets to 
support the dollar after it 
touched a fresh low against the 
yen of Y 96.05, writes Philip 
Gaurith. 

The dollar recovered on the 
intervention to trade around 
Y97.8Q and DM1.51 in the New 
York afternoon. 

In the absence of concerted 
intervention, and supportive 
monetary policy changes, how- 
ever, most analysts remained 
resolutely bearish of the dollar, 
with predictions that it will 
soon fall to DML45 and Y95. 

Yesterday the Fed was alone 
in Its intervention; in May and 
June it had the support of 16 
other central banks. The Fed 
first intervened to support the 
dollar on April 29 when it was 
at Y101.45 and DM1.6590. 

Some observers believe there 
is a good chance of concerted 
intervention before the week- 
end, quite possibly accompan- 
ied tomorrow by a rise in inter- 
est rates, after the release of 
the US payroll figures. 


Elsewhere, the Twain market 
move cama from the lira which 
fell to LL.030, from U027. The 
stronger D-Mark, as the dollar 
fell, and ongoing political 
weakness, were the main fac- 
tors behind the lira's Call. 

Sterling had a steady day, 
with the trade weighted index 
finishing at 81.1, from 80.9. 


B There was no apparent trig- 
ger for the dollar’s decline, 
though analysts cited the viola- 
tion of the November l dead- 
line for a US-Japan agreement 
on fiat glass, and rumours that 
the Bank of Japan had stopped 
intervening to support the dol- 
lar, as souring sentiment 
A further factor supporting 
the yen has been the better 
than expected performance 
from Japanese corporates in 
the current results season. 


■ Pound in Km York 


tan 2 

——4 ■ 

-Re*, doss 

enw 

18345 

1.8335 

1 rath 

18337 

1.6326 

3 mill 

1.6330 

1-9320 

1 T 

1.BZ42 

18223 


This, said one analyst, lay 
behind the heavy dollar selling 
during Japanese trading, as 
the realisation set in that the 
stronger yen was not hurting 
Japanese corporates as much 
as had been predicted. 

Short term money market 
rates also nudged up in Japan 
yesterday, and this provided a 
further incentive for Japanese 
investors not to buy the dollar. 

Mr Neil MacKinnon, chief 
economist at Citibank to Lon- 
don, said "This move looks like 
it has Y90 written on it" He 
said there was "very little" the 
authorities could do to stop the 
dollar's foil as it was funda- 
mentally based. 

The Fed first bought dollars 
at Y96.10 and DM1.4955, and 
continued with waves of buy- 
ing up to and beyond Y97.75 
and DM1 .5130. 

The Fed's move was sup- 
ported by both the Bundesbank 
and the Bank of France, but 
analysts agreed that the dollar 
needed monetary, rather than 
verbal, support. 

Mr Avfnash Persaud, head of 


Dollar 


Against the Yen (V per SI 
114 



Sousa: FT GrapNto 


currency strategy at JP Mor- 
gan in Europe, commented: “I 


ful in stopping the dollar's 
decline," said Mr MacKinnon. 

Another problem with inter- 
vention is that the market is 
not correctly positioned for it 
to succeed. The general view is 
that the market is roughly neu- 
tral to terms of its $/D-Mark 
positioning, and still under- 
weight yen. 

A key factor in how the Fed 
proceeds will be the response 
of US bond and equity mar- 
kets. Some analysts believe the 
Fed is more concerned in the 
stability of these markets than 
protecting the dollar. 

A measure of bearishness 
surrounding the dollar comes 
from Swiss Bank Corporation, 
which is forecasting the dollar 
at Y90 and DM1.45 a year out 
Furthermore, the bank 


think the market is going to . believes that the dollar is more 


brush this aside unless it sees 
the Bundesbank come in. It is 
not a strong enough signal that 
the US and Japan are serious 
about changing their monetary 
policy to support the dollar." 

“This intervention buys 
tune, but it will be unsuccess- 


likely to reach DM1.25, than 
DMl.70, and thinks that the 
risk with its yen forecast is 
that it will reach Y90 much 
sooner. 


■ OTHER CUKRHKCIES 


B Analysts said the lira's 
weakness was attributable 


Nov 3 E S 

tomgay 175J70 - 175.630 106.790 - 106890 

ban 286200 - 2805 00 I748JOO - 175000 

KOK* 0.4666 - 0.4880 02963 ■ 02970 

MsH 377708 ■ 378382 230000 - 230300 

Russia 5085.49 - £09208 309600 - 310000 

UAE. 50949 - 6 0038 30715 - 30735 


POUND SPOT F GfivV A R D "AG A I M-ST : T H E -POUND 


DOLLAR SPOT =0=t.'/APD AGA-NS7 I^E-DGL^P/,. 


Day's MU 


Ona month Three months One yaw 


Europe 

Austria 

Belgium 

Denmark 

Finland 

Franca 

Germany 

Greece 

Ireland 

Italy 

Luxembourg 

Ngfhertanda 

Norway 

Portugal 

Spain 

Sweden 

Switzerland 

UK 

Ecu 

SORT 


(Sell) 17.2802 
(BFr) 500264 
(DKr) 90120 
(FM) 70744 
(FFrt 8.4153 
(DM) 2.4548 
(DU 376036 
(IQ 1.0137 
(U 252a 13 
(LFr) 500284 
(FQ 27528 
(NK4 10.7133 
(EsI 250.907 
(Ptn) 204.728 
(SKr) 11.7900 
(SFi) 2.0451 

n 

1.2892 
- 0.911210 


on day 

Opraad 

high 

low 

Rato 

HPA 

Rato 

%PA 

-00828 

718-885 

17.3584 17.1822 

17.2788 

03 

17.284 

04 

+0.1301 

812 - 716 

505715 50.1770 

50.4964 

07 

50.4264 

08 

+0.0231 

080 - 180 

9.6180 

94478 

9 BOBO 

0.3 

9.8243 

-as 

+0.0687 

643 - 844 

7.5870 

7.4960 

. 

- 

- 

- 

+0.0275 

118 - 187 

S.4187 

8JS85 

64 142 

ai 

8.4083 

03 

+0.0038 

638 - S58 

24658 

24395 

24538 

06 

24499 

OB 

+0.35 

903 - 160 

37BJ317 376JJ28 

- 

. 

- 

- 

+00007 

130 - 144 

1JJI54 

1.0106 

1.0135 

02 

1JJ132 

02 


Closing Change Btt/offar Day's mid One month Throe months One year J.P Morgan 
mid-point on day spread high tow Rale %PA Rate It PA Rale %PA index 


+11.34 603 
+0.1301 812 • 
+0.0063 517 
+0.0308 090 
+0.387 764 
+0.763 635 . 

+0.0466 763' 
+0.0008 437 ' 


022 2630.22 2506.42 283888 
716 606715 501770 604864 
S38 2.7538 2.7362 2.7515 

176 107182 108476 107133 
050 251.050 240657 252.637 
616 204.816 202320 200098 
007 11.8138 11.7007 11.606 

484 2.0464 2.0330 0042 


-2.7 2546.23 
07 60.4264 
05 2.7477 

QjQ 10716 
-&3 255.017 


-2.7 2591.73 -25 

OB 408514 1.1 

07 2.7119 1.5 

-0.1 10.7139 0.0 


Europe 

Austria 

Belgium 

Denmark 

Finland 

Franca 

Germany 

Greece 

Ireland 

Italy 


(Sch) 

105200 

-00895 

175 - 225 

10.6075 105025 

1052 

aa 

105198 

OO 

10.445 

07 

104.6 

(BFr) 

30.7600 

-007 

400 - BOO 

30.7880 306950 

30.76 

0.0 

30.725 

05 

30.645 

04 

106-3 

(DKr) 

5.8517 

-00143 

507 - 527 

5.6600 

5.8380 

5.8567 

-0.8 

5.8642 

-0.9 

5.9027 

-0.9 

105B 

(FM> 

4.6112 

+0.0135 

062 - 

. 162 

4.6341 

4.5644 

4.6119 

-05 

4.60B7 

02 

4.6052 

0.1 

83.0 

(FFr) 

5.1232 

-0.0081 

223 - 240 

5.1303 

5.1110 

5.1249 

-0.4 

5.1232 

ao 

5.1152 

02 

707.0 

W 

1-4945 

-00049 

942 ■ 

947 

1.4970 

1.4915 

1.4946 

-0.1 

1.4927 

0.5 

1.4823 

08 

107.8 

(ft) 

230.145 

-0805 

120 - 170 

230.710 230.120 

230.415 

-14 

230.97 

-14 

233J2 

-U 

605 

W 

1.6204 

+00087 

196 - 2ft 

1.6211 

1.6138 

1.5203 

0.0 

1 6205 

OO 

1.6074 

08 

- 

■ (U 

1539. IQ 

-OSS 

820 - 000 

1541.00 1532JS0 

1543.35 

-13 

15509 

-3.1 

1590.0 

-3a 

74.7 


Luxembourg (LFr) 307600 
Netherlands (R 1.6733 


-03 255.017 -7.8 

-22 210121 -10.5 208J221 -1.7 

-1.9 11.8515 -2.1 11.896 -1.7 

ye 20353 1.9 1.993 05 


(NKr) 6.6221 
(Es) 152.750 
(Pta) 124.835 
(SKr) 7.1777 


Swttzwtand (SFr) 12450 


1.2896 12818 12882 OO 12883 0.0 12823 05 


Argentina (Poao) 1.8412 +00089 407-417 10419 1.8329 - - - - 

Brazil IRO 13856 +0.0051 844 - 887 12867 12797 - - - - - 

Canada (CS) 22259 +00118 249 -268 22281 22177 22252 0.4 22233 02 2217 0.4 

Mexico (New Peso] 52481 +00273 426 - S36 6.6636 5.6250 - - - - - - 

USA (S) 1.6426 +00079 422 - 430 12440 1.6347 12418 06 1.6413 02 12321 02 


UK 

Ecu 

SORT 

Americas 

Argentina 

Brazfl 

Canada 


(£) 1.6426 

- 12742 

- 1.49166 


-007 400 - 800 
-00043 756 - 761 
-00129 211 - 231 
-0.5 700 - 800 
-014 610 - 660 
-00084 729 - 824 
-0.0056 445 - 455 
+02079 422 - 430 
+0.004 738 - 745 


30.7880 305350 
1.8815 12727 
6.5315 05045 
153.100 152.650 
124.900 124.370 
72116 7.1551 


0.5 30645 0.4 

0.4 1.6836 0.7 

-T.0 62696 -0.7 

-42 159 —4.1 

24 127.78S -15 
-i5 73817 -22 

1.6 12225 1.8 

0.3 1.6321 02 

02 12712 02 


030) 03992 

(PI) 06436 
(CS) 13561 


Padfla/Mkfcf e East/AMea 
Auatrate IAS) 221 


AustraBa (AS) 22130 +00055 117 - 143 22172 22081 22151 -1.1 22176 -09 22317 -02 

Hong Kong (HKS) 12.6933 +00616 998 - 968 107037 122330 126867 06 126806 04 122112 06 

Indta (Rs) 51.6105 +0307 816 - 305 512395 513160 - - - - - 

Japan (Y) 158.027 -0133 947- 106 158.180 157310 157.602 32 156202 26 151387 42 

Malaysia (MS) 4.1964 +00148 945 - 982 4.1891 4.1813 - • - - - 

New Zealand (NZS) 26612 +0.0047 594 -829 26660 26S47 26656 -21 26751 -2.1 2695 -12 

mippmes (Peso) 402187 +01976 286 - 107 409107 403275 - - - - 

Saudi Arabia (SR) 01613 +0.0296 594 - 632 6.1682 01324 - - - - 

Singapore (SS) 24087 +03098 075 - 098 24101 23961 - - - - 

S Africa (Com.) (R) 5.7405 +03209 378 - 432 5.7460 5.7063 • - - - - 

S Africa (Hn) (R) 07183 +00816 084-261 07281 62459 - - - - - 

South Korea (Won) 1311.37 +624 097 - 177 131241 130252 - - - 

Taiwan (IS) 427339 +02168 013 - 666 427665 424267 - - - 

TTnlflnd (Bt) 40.8917 +0.1848 776-058 409220 406960 - - - - - - 

tSOPI roteo ter Nov 1. BUfcMv spnods In the Round Sprt tads show omy me last Dime decUra* pbratu Foment rates m nrt tmttty quoted 
but on ImpSod by um fntaest rates. SMng indn ctoculatad br #» Bn* of England. Spaa mnn 108S =■ iOOlBU. Off* and Md+atas in 
the Oarer Spat ttXat darind bom THE NMtRSJmiS tXOSMQ SPOT RATES. Soma MuW are iQumtad by the F.T. 


to Bib marker 
bath Mi aid 


Mexico (New Peso) 3.4385 
USA (S) 

hcWdMdda East/ Africa 
Auetrnla (AS) 13473 ■ 

Hong Kong (Wt) 7.7276 
bvaa (Re) 31.4200 

Japan (V) 963050 

Malaysia (MS) 25547 ■ 
New Zealand (NZS) 1.5201 
PWKppinea (Peso) 24.9500 
Saud Arabia (SR) 3.7510 
Sfrigapora (S$) 1.4664 - 

S Africa (Com) (R) 3.4948 - 

S Africa (pre) R 4.0900 
South Korea (Won) 798350 
Taiwan (T$) 26.0160 

Thstaid (Bt) 24.8945 

I 8 DR t*b fcr Nov 1 . BidtolMr apruad* I 

bur are tnpsad by curent interest rates. 


991 - 992 
430 - 440 
548 - 553 
380 - 410 


0.9992 0.9991 - - - - - - 

0.6440 0.8430 - - - - 

1.3575 13545 1.3649 0.1 1.3548 21 1.3801 -0.4 

3.4410 3.4360 3.4395 -03 24413 -0.3 3.4487 -03 


468 - 477 
273 - 278 
100 - 300 
800 -300 
542 - 552 
194 - 207 
000 - 000 
507 - 512 
660 - 667 
940 - 955 
850 - 950 
300 - 400 
025 - 295 
820 - 970 
ur spot care 
d&ECUwei 


1.3476 -02 13483 -03 13556 -0.6 85.3 

7.7280 0.1 7.7282 0.1 7.7361 -0.1 

31.505 -33 3135 -29 

95.985 27 95.405 33 9284 3.5 151.0 

25455 43 25342 22 26077 -21 

1.6211 -07 1.6229 -0.7 1.6232 -0.5 


ahowenly MlMtlhn 
juataJ m U8 currency. 


3.7523 -0.4 3.7564 -0.8 3.775 -0.6 

1.465 1.1 1.4831 0.9 1.4564 0.7 

3.5103 -5.3 33386 -5.0 3.6153 -3.4 

4.1237 -9.9 4.1825 -9.0 - 

80135 -43 80435 -33 82335 -31 

23036 -0.9 28.078 -03 - - 

24367 -35 25.0945 -32 25.5745 -2.7 

i* derem* placm Forward rana ju not ifracllp quoted do 0» mwfcat 
J.P. Morgan nomas* Moss Nov t. Base average 1990.100 


CROSS RATES AND DERIVATIVES 


EXCHANGE CROSS RATES 


Nov 2 


BFr 

DKr 

FFr 

DM 

K 

L 

H 

NKr 

Ea 

Pta 

SKr 

SFr 

£ 

CS 

$ 

V 

Ecu 

Oelghwi 

(BFi) 

100 

19.02 

16.65 

4958 

2007 

5003 

5.448 

2190 

4969 

405.1 

2393 

4947 

1.979 

4405 

3952 

3127 

2551 

Danmark 

(DKr) 

52^7 

10 

8.765 

2954 

1955 

2830 

2884 

11.14 

2819 

213.0 

1227 

2128 

1.040 

2918 

1.709 

1644 

1941 

France 

(FFr) 

6005 

11.42 

10 

2917 

1905 

3004 

3972 

1273 

2989 

2439 

1A01 

2430 

1.188 

2845 

1.952 

1879 

1932 

Germany 

(DM) 

2058 

3J15 

3.428 

1 

0.413 

1030 

1.121 

4963 

1029 

8398 

4.802 

0933 

0407 

0907 

0689 

6498 

0926 

Ireland 

00 

49.83 

9.479 

0299 

2.421 

1 

2493 

2716 

1058 

247.4 

201.9 

1193 

2017 

0.988 

2196 

1.620 

1559 

1971 

Italy 

(U 

1499 

0.380 

0333 

0097 

0940 

100. 

0109 

0424 

9925 

8.097 

0488 

0081 

0.040 

0088 

0066 

8950 

0951 

Netherlands 

<H) 

1835 

3.491 

3957 

0982 

0368 

9189 

1 

3990 

91.14 

7498 

4983 

0743 

0983 

0809 

0597 

5799 

0468 

Norway 

(NKr) 

47.18 

0975 

7967 

2292 

0947 

2360 

2970 

10 

2349 

191.1 

11.01 

1.909 

0934 

2078 

1934 

1479 

1904 

Portugal 

m 

2014 

3931 

3954 

0978 

0404 

1008 

1997 

4969 

100 

8199 

4.699 

0915 

0399 

0887 

0655 

62-97 

0514 

Spain 

(Pta) 

24.60 

4966 

4.111 

1.198 

0495 

1235 

1945 

5932 

1226 

100. 

5.780 

0999 

0489 

1.087 

0903 

77.18 

0630 

Owodon 

(SKi) 

42.68 

8.153 

7.137 

Z062 

0880 

2144 

2935 

9964 

2128 

173.8 

10 

1.736 

0848 

1988 

1994 

1349 

1.093 

Swtaariand 

(SFr) 

24.71 

4.700 

4.115 

1900 

0498 

1238 

1948 

5937 

1227 

100.1 

5.785 

1 

0489 

1.089 

0903 

7796 

0630 

UK 

(£) 

50^3 

9.612 

0415 

2455 

1914 

2528 

2783 

1071 

2509 

204.7 

11.70 

2045 

1 

2928 

1.843 

158.0 

1989 

Canada 

1C « 

22.70 

4918 

0780 

1.103 

0458 

1138 

1937 

4911 

1127 

9198 

5986 

0919 

0449 

1 

0738 

70.98 

0.579 

US 

n 

3075 

5950 

5.122 

1.494 

0917 

1539 

1978 

6919 

1527 

1249 

7.178 

1945 

0609 

1955 

1 

98.17 

0785 

JN»«i 

ro 

31^8 

6984 

5926 

1954 

0.642 

1600 

1.742 

0778 

1608 

129.8 

7.482 

1994 

0933 

1409 

1940 

100 

0916 

Ecu 


aa?n 

7A67 

6928 

1905 

0.787 

1961 

2136 

8909 

1949 

1608 

8.147 

1987 

0778 

1.727 

1975 

1226 

1 





i : * 

rnr ~ “2 


trn 

II Ml 


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[FUTURES QMM) DM 125,000 per DM 


I TEH WnVWW (1MM) Yen 123 per Yen 100 



Open 

Latest 

Chonga 

High 

LOW 

EaL vol 

Opan frit 


Open 

Latest 

Change 

HWi 

Low 

Eat vol 

Open IrtL 

Doc 

06891 

06697 

+09016 

06708 

06883 

39988 

88945 

Dec 

19384 

1.0433 

+0.0048 

1.0437 

1.0384 

22320 

81991 

Mar 

06716 

06710 

+09016 

06718 

08688 

254 

5445 

Mar 

19470 

1.0518 

+00050 

19520 

1.0470 

440 

7,408 

dun 

- 

09711 

- 

- 

- 

5 

1957 

Jun 

1.0800 

1.0815 

+09026 

1.0815 

19600 

56 

723 


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■ SWISS FTUUaCWITIBtB8(IMM)3Fr 126.000 per SFr 


I QMM) £62300 per E 



20359 41366 

lOt 2374 

1 179 


1.6360 +0.0052 13380 13330 11,153 44,973 

1.6360 +0.0006 13360 13348 113 613 

13300 - 13300 - 8 13 


UK INTEREST RATES f 


EMS EUROPEAN CURRENCY UNIT RATES 


LONDON MONEY RATES 

Now 2 Over- 7 day) 

night notice 


One Three Six 

month months months 


Interim* Sterling 5% - 4 3% - B% 8% - 6ft BA - 6,V 6% - 8% 7 A - 7 A 

Storing CDS - - 6S-5 % - 8 6% - 6% 7,», - 7A 

Traawy B8a - 9H - 6& 5% -5% 

Ba*Ms - 5|J-5B (i/ ( -6 6iz-^ 

Local authority dr*ra. 5H - 511 5JJ ■ &A 614-5*8 6,% - 8£ 8fi > flA 74-74 

Discount Market daps 6% - 5% 5% - 5% .... 


UK deering bank base taming rate 5% per cent from September 12, 1994 

Up to 1 1-3 3-6 6-9 9-12 

month month months months months 


Nov 2 

Ecu can. 
rates 

Rato 

against Ecu 

Change 
on day 

% +/- from 
con. rota 

% spread 
v weakest 

NsBrarhmds 

219072 

214676 

-090125 

-227 

593 

froland 

0808828 

0791882 

+0001171 

-207 

5.71 

BaWun 

409123 

394005 

-09159 

-202 

596 

Germany 

194964 

191508 

-0.00111 

-1.77 

599 

Franca 

893883 

898558 

+090401 

041 

3.10 

Danmark 

7.43878 

7.49SS2 

+09024 

084 

265 

Portugal 

192954 

195924 

-0058 

199 

1.80 

Spain 

154950 

159.678 

+0L117 

392 

090 

NON EftM MEMBERS 





Graoca 

284913 

298911 

-0176 

1191 

-795 

Italy 

1793.19 

1967.46 

-3.12 

9.73 

-6.65 

UK 

0.788749 

0782138 

+0901576 

-099 

4.13 


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• TocWawy w fre e Grade tuhow your Rmnriri P oota ad gy on bdp 
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Certs of Tax dep. (£100,000) 

QaAi of Tax dep. under Cioama b 1' 
Am rendar rare d docount 5.«S«po. 


4 a\ 3\ 3lz 

aix W id roim lor cash tepc. 
rats Sdg. Export Flnanoa. Moha ip dre Oct 31. 


1984. Agreed rate frx ported Now 86. IB94 to Pec 2S, 18P*. Sctwmae 1 4 ■ TJtSpc. ll al W onca rare to 
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Goi central rates set by the European Ctmnlretan. Cumndae ora ki descendtag rebttwe atrangih. 
B a ce n t a ge changee aw far Box a posatiaa change donacee a week currency. Otwganca rtoais me 
mUo benrean (w apiaedE Die pareanbga dMaranca batman the actual inotM end Ecu cenmd ndes 
lor a curren cy, and Pie oxabnum permtaed p a tcw rtge dentadon ot ttw curancy*! merit rate from te 

(17/8T3g Sweng and Boren Lira siapended bran E8M. AcfraSnant cWcubled by Hie Rrxmcre rmee. 


Cell Jcne Pcrguhcticn al Chcii Analysis L!a. 7 S.vci:& 
7HD. UK Tol: London 1 7 1 -437 4961 (01 7 1 in 


- . Shoot. Lcndcn. . 

UK) or Fan. 17! -439 45*6 
i.'-ie-r 



Open 

Sett prion 

Change 

High 

Low 

Eat. vol 

Open hft. 

Dec 

93.47 

93.52 

+091 

9394 

9346 

26880 

145136 

Mar 

SQ98 

9272 

+002 

0276 

9292 

26258 

71677 

Jun 

9200 

9211 

+098 

9215 

9290 

10605 

56610 

Sap 

9197 

9196 

+098 

91.71 

9197 

5751 

54456 


Haded on APT. Al Open Manet Sga. ere kr prentota day. 


- snatLin opno w a ojff^ eeoaooo polnta of ioo% 


■ fMLADBLPKIASB 

C/3 OP nOHS C31950 (cants per pound) 

rua m* — 


Price 

Nov 

Dec 

Jan 

Nov 

KUIo 

Dee 

Jan 

1980 

8J9S 

9.17 

009 

- 

004 

04B 

1975 

048 

6.91 

7.01 

- 

021 

081 

1900 

495 

4.79 

6.10 

093 

057 

1.17 

1925 

193 

200 

348 

092 

147 

203 

1950 

093 

1.71 

227 

146 

241 

219 

1976 

098 

OB6 

198 

216 

399 

4.77 


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WEEKDAY, INSTANTLY DELIVERED TO YOUR FAX 

USING THE HANDSET ON YOUR FAX MACHINE DIAL 444 81 332 7426 
IN CASE OP DIFFICULTIES CALL US ON; +44 Sf 84883,0 


Straw CALLS PUTS 

Prioa 

use 

Mar 

Jun 

Dec 

Mte 

9350 

017 

006 

008 

015 

094 

9373 

096 

002 

006 

049 

1.05 

9400 

092 

0 

003 

060 

148 


Pimfcui oay<e waL Ctfa MTO Puts VW3 . Pisv. dey^ open hL, Cdb 469294 Pule aiAWr 


Currency or Bond Fax - FREE 2 week trial 
also daily gold and silver faxes 

Iren Cfisrl Analysis Ltd 

7 S,fWl ' L:nd0n W,a 7H " UK • - C 1 7 . -439 496 


exchange rate specialists for over 20 years 
oc sy Srrt.jr:.- Au'.ici V 


•uj'.' Anno Whitby 
Tel. 0171 -73d 7! 74 
Fc 


■ TKMSH MONTH MWDOULAH JMM) 61m points of 10044 


Cere 13294 Pub 7904. Prerioui da/a open hU Cata 350308 PUB 209B19 



Open 

1 rtw. 

Chanoa 

High 

Low 

EaL vol 

Opan tot 

Dec 

9298 

8298 

•0.02 

9491 

9298 

62883 

417478 

Mar 

8252 

8250 

■002 

9393 

9249 

129990 

406942 

Jlrt 

9392 

09 00 

-004 

9394 

8289 

80384 

292077 


CDRRKhCT MANACRMKNT 
CORPORATION PLC 
II OUloviy 
Loiakm BC3K SOU 
Trt Wl -663 0600 
Fix: 371-7720970 


BASE LENDING RATES 


■ US TREASURY BU FUTURES QMM) $1m per 100% 


Mam&Comperv. — 5.75 

Med Trust Banh 5.75 

AIBBank 5.75 

SHsreyAnsbachGr 5.78 

BankolBereda 575 

Banco BrteaVfacaya. 5.75 
Bs* of Cyprus ......... 5.75 

Bank a( belaid 5.75 

Ba&afinda 175 

BankafScoaoid _5.75 

BaidnyeBank 5.75 

BritBkatMdEttt..^. 5.7S 
•Brain St*fey 6 Co Ud ATS 
CL Berk Nederland... 5.75 

OBJarttNA 3.75 

Oydoedata Bonk 5.75 

The Cb^penfSra BML 5.75 

Coutts&Co —6.75 

CnedbLyonneta 5.75 

Cyprus Pcputar Bank ^6.75 


% 

Duncan Laerie 575 

Exalar Boric limed— 8.76 
Rnandre & Gen Bor* _ 68 
•RobErt Ftamhg S Co _ 5.75 

Oebash — 6 l76 

•Quhnroi Mahan 5.75 

Hebb Bonk AG Zurich. 5.75 

•HorrimsBank -B.75 

Herietria & Goi Iiw Bk. 5.75 

•HOSomuoL — 5.75 

C. Ham & Co 5.75 

Honing IShan^wl. 5.75 
Jiritan Hodge Bank 576 
SLeopdd Joseph & Sana 576 

Lloyds Bank 573 

M^rajBaUrUd 578 

MUandGank &7S 

* Mouit BanHhg — 6 

NNWaabTrinsler 579 
•HaaBraSm.. 575 


* Ftaxburghe Guarantee 
Corporaflon Unted b no 
tarnaetohortsedes 
abanMnginsIhjBan. 8 
RopIBkotBtt ***)- 575 
•Snrin & VWmai Sece . 579 

TS8 575 

SUrritadBkofHniM*-. 575 
Ulnfly Trust Bo* Pte- 579 

Western Trust 575 

WMaowayLaklav..-. 575 
YtotahheBank — &7G 


Dae 

9498 

8498 

-002 

9491 

9498 

1448 

17.763 

Mar 

9497 

9498 

■091 

94.07 

9496 

471 

10444 

Jun 

9257 

8397 

•002 

9257 

8257 

102 

5952 


M Open Hares flgL are tar prasnous day 
■ EUnOMARK 0PT7ON3 (JLHTB DM1 m palms of ICON 


T K E N D 


Strike 

Prioa 

Nov 

Doc 

CALLS — 

Jan 

Mar 

Nov 

Dee 

OC78 

010 

013 

007 

012 

093 

098 

9600 

091 

003 

002 

005 

019 

021 

9838 

0 

0 

091 

002 

043 

043 


•FOREX -METALS •BONDS ‘SOFTS 

Objectiv* analysis for professional Jnvosfors 

0962 879764 

Fiemes Hcirse, 32 Southgate Street. Wirt Chester. 

HilrtS S023 S£H Fir 0424 774067 


DO YOU WANT TO KNOW A SECRET? 


tal. Cads 7480 Are 8040. Prtn4ou» dreTi opan tnt. Crib 209718 Pure 18S029 

i rnrus wuuic opnowai (uffh) sft im points or ioo% 


• Merribasof London 
bMoMnentSarfdiiB 
Asaodafion. 

• InadMhUnriai 


Strika 

Price 

Dec 

- GMJLS “ 
Mar 

Jun 

Dec 

“ PUTS 
Mar 

9575 

016 

Oil 

096 

008 

032 

9600 

004 

005 

092 

019 

091 

9B2S 

091 

092 

091 

041 

0.73 


The LCLS, Qmn Sgmkurwfl stww you how me marimto HEAU.V wortc. The amazing 
traOkig wchrtquea of riw tegonday W.D. Gam can tnoBaaa yo ur proto and contain your 
tosses. How? Thah Dn secret Rng 061 <74 0080 to booh your FFEE ptaea 


ISS 

rCFFY 


, cm 100 MB a Prentaas Gr/a opan tnu Cm 3483 Pun 1148 


B O OK 


J Hk Marital Leaden to ^xcad bettlns ■ Ftaanetal iiai Spreii. Fori 
TNJ|f|rX.i brochure n) mjcojum tppgcaUnn Bum call 071 2S1 4#17 

A£™uMiirewxB^op«»dwkH»7Sta«. 

'/‘hi 5reogup-ni-dMepifcciBa.nl to 9pm oa Tdchal pm 60S 




Vi INTEREST RATES 


MONEY RATES . ^ ^ on. Lom5 Ob. 

No * wnbwa nfeM n Smh mthe nrtha ywr Inter. . mto 

40 hw 5A fl| 7.40 A6Q 

S Ja 15 sj 64 7-40 ,U0 


more to dollar weakness, and 
commensurate D-Mark 
strength, than Italian factors. 

Mr Giorgio RadaelU, interna- 
tional economist at Lehman 
Brothers, said insofar as the 
lira was weaker than other 
European currencies, this 
reflected ongoing political 
uncertainly in Italy, and the 
fact that the budget had not 
yet been approved. 

He predicted that if the dol- 
lar fell to DM1.45, then the lira 
could go to LI, 040. 


■ The Bank of England 
cleared a £1.2bn shortage in 
UK money markets at estab- 
lished rates. The December 
short sterling contract closed 
at 93.52, from 93.51, and three 
month LIBOR was unchanged 
at 6V> per cent. 


Sefehm * 

w«* are 5; 

Franca 6 

wwk ago 5 

Germany *-£ 

week ago 4 - 5 

froland ® 

week ago s 

*“7 i 

week age 81 

ItethortaiKfa ** 

week ego 4i 

Swftwfland 3 

week ago 3 

us * 

week ago * 

Japrei £ 

week ago * 

■ $ UBOB FT London 
mtarbank Rxfag 
week ago 
US Dolor CDs 

week ago 
SDR Urikod Da 
week ago 


S « « s «* f? 

ei Oi 6% 57i 6% 5.00 . _ 

Js 435 519 sjfi aac aoo 450 . 

IS 4J5 5.16 EM 5.6S W» «Q 

Si W Si 6K w - .- 

51 Eli 5j W ” . “ 


Hi R W 10H 

8» M H » < g l 

tM 503 523 538 578 

4^84 503 5^0 536 574 


m 104 ' - • 760. 

L38 578 - 528 

135 574 - -525 


SB ' 4i 4} 444 5825' 560 
gg 4i 4» 4« 5826 ■ ISO 


f - 


4)( 61 S» 6S « 

43 54 6W 53 Oft 

24 2M 24 24 2* 

£ 2)4 24 24 -2» 


- -LOO 

- 4JOO 

- - ..1-78 
-. 1.7S 


Stt 69 

514 63 


e m 
o 84 


4^8 537 574 541 
4.98 ' 538 574 532 


34 M 
34 3* 


ecu Urriraf ita old 1 nilh Slfc 3 ml* 6ft 6 mri* B4!ii« ^UBOH Wort 

icr atom 

SSSiSK WSSKWStWBl SSf KTSS* , 


EURO currency INTEREST rates 

Nw 2 S8on 7 day* One Throe 

notice 


Beigbui Franc 4H 

Danish Krona S*j 

D-Mark S ■ 

Dutdi Girtter 5 ■ 

Frinch Franc 5** 

Portuguese Esc. 9 1 * 

Spanish Peseta 7A 

Storing 5% 

Swiss Franc 4 - 

Can. Ocriar 5% 

US Oder *\ 

ItsUrai Lira 9 - 

Yen 2*+ 

Aslan S9ng 2% 

Start unn mm ere cel 
N IWU MONTH I 


-4% 4{| 

-51* 6% 

■4% 411 

4% 5- 

-5^ S& 

■ 9*9 

■ 7h TV 

-5% sh 
3% 3\ 

-4'J 5js 
- 4*8 4H 
7*2 8% 

-24 

■ 2 \ 2 \ 

lor me US t> 


■4^ 5-4% 

5>* 5H - Sfi 
4}i 5-4% 

4% 5-4% 

■BA 6&-9A 

-9% 10-9*2 

7,1 7% - 7% 

5% 5% -SB 

3 H 3%-3% 

411 5% - 5 

4» 5%-fi 

8% 8% - 8>4 

2% 2& - 2% 

2% 3-2% 

tar and Yen, odiare: t 
HB8 (MATTF) Patta 


5%-5% 
6 % - 6 % 
SA-6& 

sa-6% 

5*8-6% 
10*2 - 10 
8-7U 
8 %-8 
4& - 3H 
54-54 
54-54 
B%-8% 
2% -24 
3% - 3% 


54-54 

8H-6H 

5%-B% 

3-S 
10 % - 10 % 
8% - 8% 
8 h-fit 
4% -4% 
fl%-8 
6-9% 
9 % - 9 % 
2 % -24 
3%-3% 


..'.one .V 

y*w 


54-<4 

Tfi-7% 

m - 6i' 

5% - 5% 
6%-6% 
10 % - 10 % 
9% -9 
7&- 7 A 
4%-4% 
7-6% 
B%-8% 
10% -10 
212 - 2 % 
4% -4 


Interbank offered ritae 



Open 

Sett price 

Change 

W 

Low 

EaL yd 

Open Ml 

; :“• 

8448 

9446 

-003 

8429 

9445 

2783 

55459 

* r - 

9281 

8281 

-094 

8264 

827B 

0977 

37,710 

S -■ 

9239 

8238 

-096 

8241 

8398 

8931 

22842 

Wi • rr. _ 

9286 

9299 

-008 

8392 

9298 

3.771 

19478 



ONTH RNtODOlLAR OJPFQ* Sim pokria of ICON 
Opan Sett price Cbange Mgh low 


Eat. eat Open frit. 


Dec 

9298 

8288 

•003 

8298 

9298 

2 

2480 

Mar 


9248 

-008 



0 

1388 

Jun 


9299 

-007 



0 

360 

Sep 


9292 

-OIO 



0 

68 


■ THREE MONTH BUROMARK FUTUIMS (LJTQ- DM1 m points of 1009* 




Open 

Sett price 

Orange 

Htfl 

Low 

Eat vd 

Opan bit 

Dec 

94.81 

9492 

- 

94.84 

8490 

16906 

158317 

Mar 

9490 

9492 

-OOI 

9495 

94.48 

44648 

158071 - : 

Jun 

94.10 

94.12 

-002 

94.18 

94.07 

28011 

110354 

Sep 

8270 

9271 

-004 

8277 

8268 

11641 

77B46 


MONTH eUHOlim nrURATK RmBMES (UFFg LIOOQm points of 100% 


Sett price 
90-85 
90.09 
80.40 
88.12 


Change High Low Eat vof 
-0.06 90.88 90.78 5730 

-0-06 90.12 89.96 3184 

-OOB 89.57 89.43 947 

-0.09 88.13 89J» S8Z 

t FRANC HITORBS (LIFFQ SFTIm pofrria 


Open kit 
33483 
30702 
18649 
20491. 
oM00% 



Open 

Sett price 

Change 

Hgh 

LOW 

BA. vd 

Open InL 

Dec 

9581 

9695 

- 

9296 

8281 

1119 

20408 

Mar 

8593 

95JS4 

+001 

9556 

8590 

1488 

18110 

Jun 

9210 

9214 

+001 

9214 

9210 

334 

9234 

Sep 

84.77 

94.77 

-002 

94.77 

94.77 

20 

1040 

■ THROE MONTH NOU PUTUNBS (UFFQ Eculm points of 10096 



Open 

Sett price 

Change 

High 

Low 

EaL vd 

Opan bit 

Dec 

9265 

9286 

-003 

8287 

8281 

1046 

7836 

Mar 

3239 

9240 

-003 

3243 

9236 

619 ' 

6828 

Jun 

9288 

9288 

-004 

8292 

8288 

201 

3888 

Sep 

8241 

9239 

-005 

8243 

8298 

197 

2461 


■ UFFE Uura traded on APT 



HSBC GLOBAL INVESTMENT FUNDS 
Socttt (ffancrtitacsKoi fr capital vsrirtta 
ttag rai ered alfioK 7 Reed* MareM-rax-Hnrtm, L-1728 Luxcrn bcxig 
R-C. hnnul»i*ig 8-23087 



NQmCK 

1 StaarebaUBs are hereby laftxmrd that the ahnehoMea of HSBC CBobal Inv uiimiH Rads- 
Cuadiu Equity (*Canadnn Equity*), of HSBC Olabol In ve s tm e nt Audi - Sontfr Pacific 
Equity (’South Pacific Equity*), of HSBC Globa! lavestoraie Fanils - Hated Kingdom Equity 
[’United Kingdom Equity') of HSBC Global Investment Fends - European Equity 
(’European Equity”) hare, at Ike respective class meeti ng s held in Luxembo u rg on October 
27tt 1994, voted m fa+onr at tha foflowing nmljpm«rin n« nf anb-tonrte 


C a imfi an Equity to be a ra algB ura oxI urkfr HSBC Oiotal luvestmera Funds • North American 
Equity. 


South Pacific Equity to bo nulgnatod with HSBC CHobal I n vest men t Fads - Aston 

Equity. I 


United Kingdom Equity to be am a lga mated wfth HSBC Global Investment Funds - Pan 
European Equity. 


European Equity id be s m slg sm ai rri with HSBC Global investment Ponds . Pan European 
Equity 


Such amalgamations will beoonio effective one nXMth {allowing this notice. 

: Shuhokkwof O a ra dh a Equity, of South tacific Equity, of United Kingdom Equity ud of 
European Equity, who do not approve the a m al gamai h im an entitled to redeem their shares 
I until December 2nd 1994. without rertaaptron rhitgr, or >3 swfafa then aharea ado ibana ol 1 
another sub-fbnd of HSBC Global faraertnea Fuatfc. 


1 Oo December 5th J9H mexcfrBqge for thdr abaca to ibe sab-tomb being abtarbed by ray 
ot oootributioa of tbeir net assets to the recipient sat+ftmds, ihareholdea of Canadoii Eqiriqr, 
of South Pacific Equity, of United Kingdom Equity and of European Equity not having 
redeemed Midi shares will be entitled Vo and will auionratfcilly receive an appropriate number 
of shares in the respective absorbing sab-food*, corresponding to their respective 
riwtoddqi to the original sub-funds. Confirmation advices of tbeir number of shares to Ibe 
absotblag otb-Amds will be scot Id tha registered shareholders concerned. 


; J : ■ ' 
i'.'.V. "V 


Holden of hearer shares abouM then return their certificate* to (he registered office of RSBC 
Global Investment Ftoxto to receive new certificates reflecting their new sbarehoUlng. 


Tbe number of shores to be allocatad to each ahwMder shall be based on the respective act 
asset values of the absorbing portfolio aad the origtoil portfolio oo December 5th 19M. 


TTja^Jlleutiou of the shareholders of tbe potttottaa being jbaatbed hi specifically down to (he 


■ The ^ Investment policy of North American Eqtoty to lotovea primarily to pravida maxtorem 
rapital growth through tbe United States of America, Canada and Mexico, whereas the 
investment policy of Omwfi an Etpfcy is to achieve the same objective by investing ody to 
awpairiei whose activities ire principally bated in Canada or which are queued or traded on 
an Eligible Market in C anad a 


TTie currency of denomination of North American Equity to US Dollar as to ttw case tor 
Canadian Equity. 


The iirratraenl adviser to North American 
i who ore also the investment adviser to Cis 


y is HSBC Asset Mamgemeut Americas tac. 
Bqeity. 


The uTVdfmcoi advisory fees ud the diaribuiion polkj of North American Equity are 
identical to tjx»e applied to Canadian Equity. ^ 1 


Wberees South F»*ffle Eqtoty wek, m achieve long wrm mpksl growth ttooegh investment 
maw equby marken pri no pally of AmtreJto and New Zeafamd, tbe aim of Aston Eqaity is to 
I •vestment elective few „ lively mahaged pooWio of quoted 
secnrtoa on tbr rcgnhued *oct exchanges of the cconoroira to Asia, exdu&tg hipaL The 
raa^rpropartooe oT fumfs taveattneno w HI be to tbe marker* of Hong Kong. 

^^to nijjkwwira. the other atodt maritet* of the regkra. todatflag 
Korea. ShMgtou Mul Shenzhen, drina. Tarwtw. the Pfrilippfaes. ludooeato aad Bombay. 
tiidUL. nay be held from time to tunc. 


Tfre^cutrency of deaomiiuckM of Aston Equity t, us Dollar as to tbe com for South FadBc 


2T &prtty to HSBC Asset Mananmnent Hone Kn* LbnharL 


1 P^bcy of Aalaa Ptjutoy is identical to the aoc applied B> South Pacific Equity, 
man Bqufry toveats to rtares of torn Continental Eurouean cuonroimnDated 


b 7 estaWnhed Unttod Kingdom CbmpStaT tbh^eatment 
P—Earapraa Equity alms to bwen in a wide ranwirfmr^Ity 

^“ rkra fa bo *h toe Uohed Ktogdom and faotoer Cbuto^d 


B “ ilT " " Ml “’ 
“ Po ^ Eon, P c « Equity is HSBC Ajaet Miungena 


who are also the tovcatmcal adviser n ^crapean Bqidiy and United Kingdom Eqaity 

pw tot eslmcrtt advtooiy fern and the dtotributaon policy of Hailed Ktoodom p n „Uv mmd 
European Equity are Identlml u those applied n Pan Em^eu Eq!!^ ““ 


By order of the Ootid of DIrccun 


OptionTrader 


V*«: V ■ 

:jk » r; a 


t Ktu I isRSIOOO I i 

AnUKanttaamn * wKfOft r -. _ 





V 


V 











m m 


NOv 



FINANCIAL TIMES THURSDAY NOVEMBER 3 1 994 ★ 


WORLD STOCK MARKETS 



wj/t 


Ltijse- 




♦ /- W H»W M 


»<■ mt u»w m 


EUROPE 

MSrBH0tor2fScfl) 




f 



+801200 1,750 as 
+25 1.270 7BQ u 
-6 634 B37 IjB 

0.6 

-8l.mi.lB0 1A 
-101^87 1050 05 
-1 744 ESS _ 
+2 1 ,067 — 

« idso 

■+3 4SB 
-t 258 
-81.180 
+5 408 
♦2 791 

-a 


845 1 0 
895 £2 
386 2-5 
171 3.1 
874 

312 1JI 
548 14 
<W 1.7 


+154040 30|f 1-0 


B&aaw/uixa4 o o (CT (>to2/Fr&) 


Mod 

BMji 

w 


Ajarn 

7.460 

4350 

4320 

18300 

22,100 


w Y* 
» Y.- • 


ires 





cmb 

S5£ 

BMD 

BMC 
Forth 
SOL 
GSUdv 
as «p 

Gwiflnq 

BoM 

GhM 


KKfcflk 

HMtAFV 

Hour 


v. 


a 


SBnWY 

SAa 

Sohat 


£5 

11375 

« 

7390 

2339 

2.480 

3300 

3390 

1308 

7/460 

B3B0 

4300 

2370 

6360 

8300 

5390 

1370 

10300 


470 

•380 

4,430 

2.100 

2.106 

1237S 


UC8 

IHUbl 


9.660 

yi yji 

2.1 30 


-104.450 5706 13 
*100 8390 7390 33 
-60 5300 41,: _ 

+35 4380 3390 4.6 

-USE 1 ®* 0 18 

_24.SSO7S.i0B is 
-275 4297934300 03 
-3528801105 13 
-3269031020350 1.7 
+50 037511,775 33 
+1027001190 14 
4002005300 43 
♦1 216 i9« 8,7 

-80 83001100 1.7 
+12 1350 1.1BB 11 
-20 8320 6,110 73 
-15 3,781 2370 4 3 
-.26702380 _ 
-TO 4,590 3,825 5.1 

— 4,470 3350 53 

— 1.6801300 10 
—30 9.180 7,140 8.1 

-150 IflJHD 2720 1 3 
-00 53S0 4,180 15 
+70 3385 2.7SO S3 
-40 1200 5310 10 
-50 7,990 6390 13 
-.6.400 5000 44 
-4 1330 1350 83 
moo iyoo _ 

-10 W 77S 0.250 ZB 

—BO 3,880 2620 5.1 
-6 688 420 17 
-B0 8l200 4J£0 4.7 
-70 5300 4J20 43 
-80 2336 2025 53 

— 23381016 33 
— 15.700 12350 43 

— 1376 1,460 63 
-350 17350 idjBO 4_5 

—10 11300 9320 4.7 
-50 S.ID0 21200 14 
-10 2330 1440 44 


4111 

eiwa 

48730 -JO (W 42® 
211 -430 2742B7.1D 

— State 118 +30138588730 

— Nnttd 350 +161348 888 

— KrdEst 11730 -51819011110 

— Omw 200 .. » W 

— PmtB 336.90 -380 SOS 315 

— PartaR 31430 -630 535*131 
•" Vtctwrt 161 +130 234 13850 

PtnRJc 28280 -4 00 S7128UO 
' “ 7BB +17 936 752 

^ §§ 4SWS 21 

Modi 512 48 6043S2.W 

HesnyC 206 -1 2B71951D 

Haft 12450 -250 1S73B 11358 
HfcW 501 -*18 752 642 

SLIC 718 +15 945 80S 

&SS 4 S? ^HR 

-• SUM 1.437 —13 UBS 1340 

Sctatar 37600 -1130 48650 *57.10 

— SUM 582 +S GOO <72 

— Saftna 38130 +30 81036050 

— Sana 400 -130 700 382 

— SMS R 2350 +10 2.470 1.790 

— Socfien 570 -3 792 523 

-- Soomuft 1378 -44 2300 1,710 


1165 -145 43102376 — 
6300 -23011788 1700 43 

111A -uowmajoi 5 .1 

137® HBZ 1730 13B2 17 
4346 -175 5.105 3383 21 
22350 -5503630822400 13 


+ /- m> !<■« hi 


./- 


Uw YU HE 


♦/- wab lam Stitt 


>/- mat um 


__ su 

_ 6nMP 
_ Taman 

— Torate 

_ TodFr ... . 

— IMctan 10300 -800 


336 

821 +1 


450 302 13 
971 782 1.7 


i£ 


18300 -1007438215308 33 
19,700 9358 13 


itaaEx 

044 

*9 

KetoT 

554 


KMOT1 

S3T 

-Ti 

ranrien 

1D7D 

-20 1 

KbMH 

821 

-4 

Km 

Kiraa 

’•SS 

-201 

-5 


- METHBUMDS (Nov 2 / Ft) 




“ Stott 

— TbJCji 


— 1 l-MO -rtMIW UIW 

— SpH« 262.10-1130 62923110 
nm 23B30 -RBO 37722940 

21130 +300 2370O1BL5D 
2320 *138 3.120 2361 
" ThmCSF 138.40 -JO 21413119 

— Tans 331 -230 3845025019 

— IMP 136.10 -.70 2245012630 

— UHJLDC 357 -12 494 333 

— IMM 439 -1 BSD 42750 

— UOmfr 410 +S 800 403 

— 1UOO 26430 +4.70 307 2 21 

— VMre 281.90 +140 335 240 

— Worm 23630 -.10 3S5SZ7.10 


53 

7.4 
33 

7.7 
13 

13 

£4 

23 

1.4 
10 
13 

3.4 
17 
23 
11 
73 

7.7 

33 

LB 

5J 

23 

13 

65 

14 
3.3 
4J 

6.8 
8.0 
33 
14 
4.7 


DewwKfMovS/ni 


2*i 

? ; i ? 

73* V 



MPA 

Bom 

DM 

Codon 

rvsizA 

Onto) 

DonOak 

EMM 

R SB 

BWpRi . 

tSSB 

JirauR 

uta® 

MOWS 


Soma 

Saphofl 

S 

Tonoan 

ttSnA 


600 

185 

284 

3,400 

203 

3=0 

158 

AOO 

500 

164 

987 

915 

328 

E5Z . 

488 

HW 

S10 

388 

337 

830 

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_ 760 565 15 
_ 281 170 17 

+8 333 J60 1.1 
_ 7300 6.300 as 
— OMMauao 05 
-2 22B176.M 1.4 
+4 427 907 18 
-820125 1 60 17 
+8 615 375 10 
-6 843 448 11 
+4 276 1GB 13 
-3 426 930 11 
+15 1350 890 0.* 
-T 365 252 10 
+47RUI1 *8® 07 

-7 737 418 1.1 
— 815 497 03 

-3 876 413 03 
-e «5 321 18 
-235833 300 _ 
+10 1372 510 13 
-9 26720736 43 


“ GHMCW (Kcnr 2 / Dm.) 

~ AM 15030 —330 19630 140 1.1 

— AQndV 52630 -130 635 408 23 

— MMI) 1300 -30 1,446 1300 13 

~ *B 127S -292311 2,122 0L8 

*■“ ABene 840 _a9S.S0 575 1 3 

— AMO 800 +101.101 700 __ 

“ AUrft 705 *61325 61 S 1.1 

— BASF 31130 4UXUD 278 18 

— Bftiwric 49830 _ 510 435 1.0 

— Bnkgn 381.50 +130 485 MB 23 

— Boyer 34120 -fl.W4waB astro 3 2 

— B ayerR 39730 -150 62635150 33 

— BMWBr 774 -2 929 639 1 3 

— BayarV 430 -fl 576 386 93 

— BW> 1360 — 1,103 SIS 1/4 

— Burner 200 +1.50540® 298 11 

— BKF Bfc 392 -3 526 374 3.7 

BMBo 851 -5 B51 760 13 

CKAGPt 800 +18 1330 755 1.4 

CMC 1,285 -6 1330 1.140 08 

Cmmzbfc 312 -530 39028150 33 
Coin 213 -7 209 11 250 18 

— OLW 415 +3 60030050 03 

— Dakntr 75430-1050 004 689 f.1 

— Doutaa 443 -11 688 428 1 3 

— DtDnb 223 50 -.7DJS6S0 210 __ 

— DsABk 729 -6309875065150 19 

— DMMk 146 +1 IBB 131 23 

4B5 -2430 607 482 33 


Mtfd 
HQOH 208 
PqMM 9330 
BUMK 9730 
CSM 88.70 
C8M 14130 
D8a#n 197.708 
Banr 18.80 
FhkDpfl 15 
FAmOR 8830 
O wimw 41 W) 

mm 44 .70 
ttnmr 19430 
ittin 24130 
HQIBO 286 
HgvOpfl 7820 
HunM KXt 

RUn MJZO 
NJ9 47.90 
KWBT 487Q 
53.10 
45.1D 
SS.S0 
Nfrenc 8320 
HuaoA 88.70 
Oc*UGr 7320 
PIMP 54.70 
PWjSr 7310 
rtUMU 11230 
Rodmcc 5030 
Rofinc 115 
Rum 82 
ROukR 100 
StokN 4430 
(MOp 18830 
VMU ITS 

IIWOpR 46 
mom 11B.00 


-3073.70 54 4JB 

-.90110509020 16 
-3053304230 14 
-330 229 18730 3.1 
+.10 47 JO 3160 33 
-.10 523430 19 

-307730 6230 _ 
+JD 1S&5D 10580 1.1 
-3 208 17170 15 
-3018301430 - 
-30 25 1330 63 

-1 8840 6530 43 
MUD 89.10 43 
-.40583041.40 23 
♦ ID 157 JO IS _ 
-830 250*630 IS 
-13033838 2M 14 
-1 83 4830 83 

+30 0830 6830 23 
-vlO 45J0 34.70 18 
-30 84.707110 02 
+130 8830 7430 19 
-1305730 4030 11 
-.10 5230 4110 0.9 
-30 55.10 47^1 — 
-AO 5730 43J0 33 
-120 8530 47.70 63 
... 18030 72 2.4 

-13092.40 85.76 
-130 8930 6630 11 
-30 5930 40 03 

-30 8430 7030 13 
-30 131 11130 11 
-30 88 4930 62 

-130 13548 11100 23 
-.1010030 81.70 5.4 
-2302154018430 43 
-1.10 5030 4030 13 
-.70 230 17840 33 
*30 203164S) ID 
-.70 5530 45 12 

-T.B013U31S1.i1l 13 


... Kneaar 908 

Korun 7S2 

_ Hnos 917 

“ Kubota 788 

_ KfflGwm 488 

_ Kunbo 443 

_ Kuran 1310 

Kurata 652 

“ Kuna 
rreeia 
” intosn 


-20 091 685 1 3 

+16 1,075 IrWI 2.1 
_ 1.17B -7 1.437 1.083 11 

oanga laoso +aco its hub .. 

PgMft T^go 1.73813® 43 - .££=-- 
HM* asas +7B 5340 3370 _ 

— 263 178 63 KiUuin 
~ 1340 13W — 

...1UM0 10375 14 
+107^70 5,180 03 
+6230013*0 15 

-2 7.055 842 13 
-38 227 146 13 
+3 888 695 — 

+3 870 806 _ 
+4513501X0 23 
+4 1.100 646 10 
-fl 531 361 43 
-3 25816399 4.7 

BIS 584 1.4 

+1 772 515 13 
+12 888 735 _. 
*313031365 23 
+W 832 5M 18 
1.168 -313151.125 1.7 


: PACIFIC 

~ -MK» [Nov 2 / Yen) 


-101.4201300 .... 

-7 737 486 _ 

-101310 881 03 
-10 1380 976 _ 

*101300 891 _ 

-2013901370 _ 

*4 74« &ea 16 

—10 1,700 940 _ ____ 

+1 534 <0! 13 _ 2350 

-40 8300 1910 ... .... ESSE, ^ 




8 0 601 _ 
5 515 _ 
870 814 IS 

*5 950 737 _ 
-20 2,460 1,700 _ 
-3017601150 
-6 987 732 — 
*10 787 BOS _ 
-7 »B (Mt .. 
S 767 551 ... 
_ 573 <25 13 
-19 6& 3l8 - 
-2013S0131D _ 

-a 545 406 

1750 — 3.000 2320 — 

7310 -12073205380 _ 



— UCorp 


- man 

- ffiSS 


— mnmr9iw2/KrorMrt 




— smtM (Mov 2 / pta.) 


-80 5340437D 03 
_ 1350 1350 
+20 1350 1,000 
-8 811 580 13 
-10 1300 I.MO ... 

-5 BOS 410 0.6 

— 513 380 1 3 
-ID 676 660 _ 

+6 93B 855 

-10 1 390 1 JfiO 03 
-2 SOI 415 — 

-70 3340 2310 _ 

-61320 642 46 
-5 785 436 _ 

-SO 1,8301 1330 _. 

-70 3390 2390 — 403 Maul 

— 1310 1320 13 — IMEnS 
*2 ait ora __ 

>6 482 337 13 
+5 B07 B41 .... 

-3 BB3 4B0 

+30 1.440 1340 0.4 
-31 788 571 1.1 

-SO 1070 2340 
_ 1330 l.aa> ... 

-3D17B0 1380 _ 

*101370 1310 — 

-7 984 772 1 0 
-22 898 738 _ 

-12 525 410 

-Z 691 387 _ .. WmsaM S 77 
13701300 _ _ MorlS 2360 

— 13801350 03 
-20 2.000 1.7110 
*101310 1.400 _ 


_ non 
_ TKatCb 
_ TMdco 
tmuM 
_ Tkjpomo 



>— 

DtOMh 

30B 


337 

280 ID 



300 —4 JO 48640 

346 3.4 


GEHE 

520 

*9 

SIB 

465 ID 

• 


251 

-A 

307 

246 10 

— 

GMKtl 

820 

-7 


JBO 1.7 

— 

HontoQ 

220 


245 

190 3D 

— 

Kek&ni 

1D68 


““ 

HataaO* 

503 

-1 

881 

ses u 

— 

tMB 

327 

+1 

440 

310 11 

— ■ 


068 

*2B1D99 

BS7 1/4 

— 1 





Iflzrann 

856 

+18 1.015 

ref id 

— - 

Karlen 

207 JO 

+J0 

753 

205 19 

— 


25Bto 

-2 

313 

25* 3D 



342 


433 

325 13 


sr 

BOM 


Bpgptr 

B&uKd 


1250 

3315 

4300 


FBIUUD (Nov 2 / Mka} 


MS 


ms 





+1 164 98 T 3 

+4 176 121 13 

*1 105 54 — 

-.10 4030 3530 13 
— 233 141 23 

+321730 111 — 
+1 BO 46 13 
+21 705 

+4 160 
+2 247 
+1 290 


502 1 3 
TOO 03 
140 13 
138 13 
200 1 3 
190 13 
287 03 


59 13 _ 


_ 260 
-S 704 
+130 108 
*4 104 
+330 102 54.10 13 
-30 6730 41 — 

+130 120 B430 13 
+4 258 175 15 
+30 311430 — 

+.10 2030 12 — 

+3 129 69 — 


SSL 

PWA 

PhKwnn 

Poracb 


- RWEPI 307i 


IMM 

IS3. 


f»MNX(Mw2/fta7 


209 -130 55820250 — 
768 504 33 
.710 -10 814 855 33 

46120 -630 913 454 43 


r •». ' • : \ .1+ 


4 


AfiF 

tear 815 

AblJq 

MM ... t 

Aa 23B -vTO S*J 217 MS. 

BK 045 +10 718 370 4.7 

BM> 25050 —430 28860 227 12 

Bncak 500 +7 88344&18 19 

1785 -203J50 1680 33 

639 +11. 7MJ 503 13 
1.1B0 -4 1,<980 1 JJ33 4.0 

COM+ 831 -18 1,155 704 43 

OrnGom 19620 -13022B31UUO 60 
UHK 18530 +1302132813690 — 
OrtDur 1233 -97 23701,711 E3 

162 -530 205132B0 43 


„ vew 

■=ar 

Z vw~ 






Own 1264 -113701204 33 

CktbMd 44(30 +30 466 346 10 
CCP 21420 -13030090 201 ZD 
OfbnF 770 -12 1265 708 72 
OLya 466 +1 068 370 32 

Crtorf 30330 -30 40038120 — 
OMat ■ 374 -1030 737 370182 
OHnart 5,780 — 8,1805300 17 

Dm 713 -12 1302 685 32 

DOCfcrf 70S -11 830 610 _ 

OHkB 319 -4 47830.10 13 

BBf (106 -22 977 700 15 

Semen 462.90 -830 74S 418 18 
Era 662 —3 740 500 23 

387 DO— 1270 4358GB.M 53 
81920 -630 302 290 8.1 
24330-1630 282 101 148 

SS3 +21,t®a. S85 — 

erfica 7oo _ aes B50 83 

Eettr 780 -10 830 835 1.7 

Bex 3,450 _. *487 17SO 23 

BnOk- 1.790 +8 1680 1,700 43 

BAECQ 660 -20 734 550 IB 

bulks 820 - 20 18-70 6.16 BlO 
Rod 10430 +4D0 182 100 83 

Fond-T 630 +85 939 560 15 

rnafti 1059 _ 6320 4,340 13 

UTUErt 383 -10 578 383 23 

BU 1200 ._173*13T0 D.7 

6mm 30430 „ aaazfia 10 

G*P«V3 358 -2 645 355 34 

HUM 427 —130 MHO 306 23 
knout 533 -17 880 435 33 

tamfi- 4 24 S m 4T7 5.7 
InsnDrq 730 _ 1,078 002 12 

3530-230 110 3530 83 


Kell&s 16630 -.70 160 181 _ 
KraM 61*50 -430 640 615 11 
Ifflior 509 -3 55B 451 17 

KHD 125- _ 16180 1151D 

MockW 13150 —330 ITS >02.70 33 
Umyr 635 -IS 500 015 14 

Loan era _ aw nm sd 

Unm 890 -7 066 030 1 3 

LtooH 326 -4 410 311 13 

Lufflai 193 +6 9101^15730 _ 

LdDPI 180 +4 209 151 1 J 

IMM 398-1130 470 378 13 

MAN Pf 304 -+V 70 367 293 23 

Menrurn 40530 +3048050 389 12 
tfcnrtlV 63030 *050 022 050 _ 
153 -3 2BS 101 32 

,745 -20 33171670 03 

-230 262 21 0 — 
505 — 530 403 33 

630 -« 050 B22 S3 

432 -8601JD 418 13 

8 -730 S29S0 S99 10 
-Z 424 329 33 
m -81 1320 1130 O S 
B -3 372 234 15 

a -230 267 200 17 

a *3 31323389 14 

8 — 13 ussu asa ia 
-1 438 asfflia 
3 -5.7079050 607 11 

_J7 -1 605 610 ID 

SudCIni 516 -9 5B0 400 12 

TRy an 286 -2 S2023O5Q 11 

Marta aos -10 sao an *a 

495 -6SSOKJ 453 ZB 

37BJ0 _. 400 317 10 

320 -3 416 318 2D 

40050 -£80 528 438 ID 
437.50 -7 JO 564 418 05 
347 JO —0.58 443 337 08 
1D13 *71JD73 780 ID 

205 -13 270 205 2D 


- nwr(Nm2/Lb4 


BCornm MOO -1005DB2L340 5D 
BNozAo 1S40 -6Q3DB5L341 — 
BRnma 1DOO -40 1480 1D2E ID 
108 — 211 78 _ 

-400 S9D50 1&500 2D 
-380 12,458 8.110 _ 
-01 3/100 1DM 3D 
' -802D12 1D02 — 
-35 1395 1DB9 5 D 
-40 1010 940 _ 

-521510 1,540 5.4 

-18O7D30 4D71 ID 
-120 4D202.118 2D 
+03 6,190 3,101 4D 
-410 17880 10/m SJ 
— 441D8S 1D30 14 
-1DS04422333D3S ID 
-10 4J80 2D78 ... 
-550303015^0 1.1 
-TOO 8,580 SDK 2D 
-DSMDWBL770 _ 
-0014301000 _ 

-T101IDM8D32 ID 
-80 Bj440 4.455 14 
-30 1*350 11500 11 
-32019JOOU21O ID 
-37 1D40 870 _ 
-40 3.1401.750 _ 

-103 6,100 3,440 ID 
-8D13861D70 „ 
-620 34D50 TTjSffl ID 
+106 12100 7DS0 14 
,184 7D00 2D 
400 — 


CEPSA 

CBAM 

CllMB 

Dmdoa 

gnMO 

BWes 

EnoeBr 

Foam " 

GrOurF 

IWCan 

M 

Mpt 

**n*0 


Pnnv 


Santo 

Sw0 

TebacA 

Telein 

Up Fen 

UnM 

UrrdB 

wm 


8S0 
3DB0M 
4D70 
7. BOO 
iD6Sm 
1J75 
1395 
SjEBO 
706 
580 
3D90 
817 
ajom 
6D10 
4J0SO 
10/200 
1046 
1955 
217 
455 
629 
1250 
1D80 
570 
1JKO 
1D15 
1185 
1120 


-100 0280 5,150 2D 
-50 6.700 4.700 G_2 
-W3D3517B0 2D 
*1614001415 7.0 
-25 4.475 1975 41 
-270T7.7tNJHDB9 11 

-70 1321 4,400 5.B 

-4 1.435 700 21B 
+103D901410 11 
_ 1110 3^00 17 
-250 11.B80 7.010 10 
-5 1715 1,745 4D 
+S 7,773 IDIO ID 
-5 3D80 1300 3D 
-60 1100 1100 15 
-5 1.100 703 17 
-12 024 416 15E 
-110 1140 3,630 3.7 
-6 1,210 TOO 7JS 
*iDio ajoao 4 doo id 

-20 7J30 4,000 19 
—50 6.400 1900 U 
-40 128DD BD20 ID 
-15 2500 1,000 _ 
-60 4DQ01B05 2D 
—3 SSS 102 OJ 
-12 6B6 351 HD 
-< SIS 595 88 
-120 4D50 1005 14 
-3S 1185 1,595 17 
-6 739 640 73 
-OOZ400 BED 17.4 
*6 1.710 1,150 17 
-S511S01DB0 2D 
-96 1580 2D3S ID 


DanLto 

BumAU 


Z SBH1BI JNok 2 y Kronar) 


A6AA 
ASA B 
Asm A 
AeenB 
AM 


Burgo 

OR 


aam 

CrB» 

□PM 

FerRn 

Ftat 

HnlPr 

Hdh 


11700 
0,1 BO 
1D» 
1.730 

1DM 

984 
1JB1 
1585 
1.245 
0,100 
1000 
3D75 
11D40 
1D35 
37D60 
3D90 

^$8 
0970 
1186 
10,100 
■dm 4J2D 
liter iBDTD 
MBdDnG 11480 
MonUd 1224 
OKMt 1D00 
PM 3.650 
PkSpa 1200 
RAS 18DB0 
Rto« 1330 
SASBe 7/800 
SJA 7 ED 

Sltl 

BnflaA 


AUnA 

AM8B 

aw 

Btetfj 

smm 

FnBnH 

smmB 

H6MB 

HbntoA 

tocdA 

ktenffi 

tontA 

kune 

Undo B 

FMmA 

SCAA 

SCAB 

SKFA 

SKFB 

SnukA 

JllUNil 

SEBnk 

SSsjiSb 

ShnftB 

StoraA 

StoroB 

SvHenB 


Treat 

MwA 

VUKfi 


71 DO 
71 DO 
SIS 
515 
10160 
101 JO 
96 
07 
36160 
432 
95 

2 ? 

83 

384 
44 
23OJ0 
232 
177 
177 JO 
321 

133 

116 

114 

129 

132 

111 

12050 

4150 

129 

157 

438 

440 

BO 

93 

86 

111 

138 

140 


-2 93 

—IDO 9575 
-6 6&0 
-6 685 
-IDO 197 
-DO 194 
IHLSa 
-DO TORSO 
-150 430 
-244160 
-1 134 

+JO 164 
-1 


58 MJ 
57140 
2SO ID 
438 ID 
15 OB 
144 OJ 
65 92 
70 0D 
282 1.7 
320 ID 
67 2-8 
. ... 05 2D 

1107BJ0 6D 
430 251 ID 
69 38DD 15 
311 137 3D 

173 3D 
159 3D 
162 10 
17 _ 
14 ID 
109 1.7 
102 3D 
00 3D 
122 — 
124 12 
14389DD ID 
142 EDO ID 
7339D0 _ 
-1 1MLS0 07 DO ID 
-150 233 120 11 
-0 47S 
-0 480 

-a 144 
-2 110 
+ JO 122 6150 IS 
-1 128 70 — 

-1 iao ms sd 
-DO 179 105 5D 


-12 1.020 _ 

-11 1,220 731 
-14 BIO 55T 
-1 570 415 

-201.270 993 
-1D2D31DW ._ 

-10 527 345 .... 

-3 1.380 720 . 

-1 005 687 ID _ 

-101.120 951 _ _ 
„ 1.710 1.320 ... 81 2 
-30 1070 1130 0.7 _ 
-70 4.860 1000 OJ — 
-16 70S 545 ID _ 
-12 636 489 _ 

-CO 1*10 1250 _ _ 
*301,9801030 _ .... 

+201.160 993 _ _ 

-TO 4D40 3.600 _.. ._ 
-2 7D8 521 OD ... 
_2^S01D20 _ __ 
-1 603 445 — 

-10 1080 1000 _ __ 
-25 730 55& 1.1 ... 

-8 513 275 — 

+3 505 3G0 _ 

-131D40 719 _ ... 

_11iO 9» _ 

*30 ZSOO JDSO — _ 

-10 1,100 841 — ... 
-16 788 514 _ _ 
+2 933 707 _ 
-101D5O 088 _ 

+20 700 426 0.9 
—5 1/250 038 — 

_ 639 440 
-0 734 092 1.1 

*0 640 577 _ 

-n 

+121,130 705 — 

-3 530 387 ID 
-22 9S0 679 ._ 
+71D40 628 _ 

-20 BLS30 1700 _ 

_ 078 560 _ 

-11 1,120 812 _ 

-8 048 712 „ 

+10 1040 1.090 _ 
*201,120 020 _ 

-10 2DB0 1D10 - 
-101 


— UiUai 

... NEC 

— Noth 
... UGKSp 

— WWSp 
... MX 
... NOK 

— NSK 

_ mu 

-. NcMFu 





_ .___ 480 _ 

— NpTVNw 24,400 -100 27. 
BORDOO -12000 
585 *6 


556 375 1.1 
-2 ABB 730 
-6 IDSa 90S „ 

-10 1680 2.420 
-10 7B2 B3B ... 

— 1.230 788 .. 

-201DW 006 00 
-9 960 512 .... 

+2D 2120 1.750 .... 

-5 580 428 _ 

-16 SCO 730 20 
-6 483 321 _ 

-30 1010 1.420 ID 
+10 2D20T.7DC _ 

-20 1D20 1DOD _ 

.. 1,220 9S0 1.1 
-40 3D40 2D60 — 

+1 SCO 711 .. 

+7 640 397 
+3 802 065 ... 

-4 7K 557 .. 

-9 702 562 0.7 
+20 1D40 1350 OD 
*4 963 400 .... 

.... 333 380 

-7 1.230 790 OD 
-40 3D10 2D50 - 
-0 504 425 — 

+ 101.330 1D20 _ 

-17 m 520 _ 

-201.300 905 _ 

-1 550 336 ... 

-6 633 603 ... 

-4 504 394 _. 

♦4 1DTO 706 ... 

-60 1130 042 _ 

-12 792 487 _ 

*2 500 407 

-7 404 315 -. 

-12 BBS 395 — 

-10 1D60 1.140 
-10 1D10 1.450 _ 

... 690 459 .. 

-IB BBS 072 . . 

+2 400 301 _ 

-20 1.420 1.020 08 

+3 890 723 19 

-1 4m 378 ... 

-0 453 337 _ 

*18 940 570 - 

-2 940 770 0.7 __ _ 

-O 449 310 — 70S Tonen 

-10 1.400 B45 _ IB*?* 

-15 1.110 760 _ 

-20 2130 1/230 0.4 

-1 702 BOS 

-201.210 059 ... 

2,500 1D83 *4 
*1 824 495 OD 

_ 1760 2.1)00 . . 

-..4,490 3.472 _ 

-20 1 DIO 050 — 

... 1.170 965 .... „ - 

-30 1.460 1D38 __ Toyctto 

-0 830 305 — _ IRKA 

-4 SOI 231 ... 

-7 939 585 — 

—3 705 528 1.0 — - 

-7 787 483 _ — TogOO 

-3 494 315 _ _ l aOlMn 

-11 QlO 611 — TW»™ 

-1 1.040 761 08 _ UK 

♦1 588 500 .... 

-X 1000 1.410 .... 

1.100 087 _ 
*101.0501.310 .... 

-4 015 690 „ 

-5 BIO 626 — 

+0 5 SB 400 or 
-13 051 570 ... 

-3 52D 412 ... _. 

-10 1.4401 DEO OD „ VmTran 
-6 1.140 855 — — rmzBak 

+30 7.:/.80 5.040 .... ” ' 

-11 6,660 802 — 

-5 482 316 
-20 1130 1 DIO _ 
-1013001.230 — 

— 1,110 937 — 

-1 002 683 ID _ 

-0 DM 450 YomLnd 

-10 2.190 IBM 07 ... ItATPlt 
-4 860 626 — 

-15 70S 470 ... 

+20 1D80 1.400 1 0 
-9 794 653 ... 

+6 780 500 — 

-15 708 464 ... 

*10 1D90 T.DCO 1.0 
-9 617 450 ... 

-10 1.200 1.930 OD 
-7 015 441 — 

*23 1,110 742 — 

*10 1.E40 1J7D 
-50 Urn 1.150 .. 

+3 S67 335 — 

-5 403 302 — 

534 345 — 

1DSOT OA 


-5 312 381 ID 
+X8DE0 7D30 — 
-30 1/910 1.520 — 
_ 2X0 1380 ... 
-10T.no 775 _ 
-20 1320 1.010 _ 
-1G1D40 640 _ 
*20 1/230 1,130 — 

- 1200 ID M - 
-13 638 <33 1.1 

-6 610 411 — 
-3 385 2SG 
-8 TOO 500 
-16 823 401 ... 

— 1X0 1110 _ 

- 1820 1050 — 
*10 626 7QQ OlD 
-70 6X0 6,400 _ 

.„ 852 BIB — 
... 747 425 _ 
—10 £290 1,780 — 
-5 587 404 — 
-21.100 837 - 
-CO 1/580 1,280 ... 
-10 476 350 .. 
-3 485 2B8 — 
+5 1JX30 651 OD 
-2 367 252 _ 
-10 1 DIO 664 
-12 573 432 , 
*11 734 611 ID 

-1 1,120 615 _ 
-10 1JBD ID® _ 
-5 815 674 _ 
-20 1 520 1D50 — 
4:700 -120 5.050 3,780 _ 
632 -7 740 610 — 

-2017101,750 T.1 

— 722 5SO _. 
-12 862 679 DD 
-10 1-650 1D70 — 

.... 1/3401 DWJ — 
_ 1D40 BIS — 
-O SOS 400 — 
.... 826 816 OD 
-0 1.100 705 OD 
+1 051 568 0.7 

-12 556 367 ID 
-1 720 602 _ 

-21 903 B/Q _ 

*21 607 533 .... 


- SttUfl 
_ TNT 

— TerCpN 


wrung 

WtotfHd 

WMfTr 

WMO0C 

tVwdPt 

ynwti 


las 

140 

4J2 

ODD 

BlZ7 

6.15 

134 

*M 

432 

2300 


-D7 170 IBS 8D 204 
— D1 174 1S1 — — 

— 4,72 3DB 3J — 
-.05 BD8 110 4D — 

- ISO 620 ID ... 

-05 BJ2 7 JO 16 — 

-D5 185 116 4D — 
-D4 555 4.03 11 _. 
-.11 122 170 TJ — 
-D4 3DZ 170 4J _ 


HPH6 KONG (Nov 2 / H.KL£) 


— srwsre 1200 

- Skyto 2,100 

— small 782 

— Sony 5X0 

— sore m 

— SunBM 720 

— Struflr* 1,790 

— Sumcrm 569 

— SunCp 996 
SutnEM 1,410 

— Suaduv 400 
SUtoUM 411 

— SrmMu- 8SD 
Sumia 383 

— SunMM 043 
“ SurnOea 475 
" SurnMI 644 

— Sumdbr 999 
“ SwnTrS 1.410 

— SuuMftm 730 
” Sundd 1230 
•” TDK 

Tatoel 
” TanoPti 
' ' TflkBn 
“ TKraSh 
rnnw 
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— Tenser 

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_ TefeM) 

— I”?*” 

_ Ttmtfu 
_. ToaaCp 

Tod _ _ 

.... rra 16,100 +1002150017.200 

Tof*S* 2X0 *10 12301450 ... 


AirayPr 

HEAato 

CUM* 

DW"0 

CHLlgn 

CMW 

OnEst 

COUP 

Otueb 

DFann 

«*■ 

fu«W 

HSBC 

HUngO 

HSemS 

HaraQa 


1,760 

580 

776 

1D80 

1.170 

025 

555 

70S 

ISO 

730 

406 

614 

002 

787 


HenLnO 

MtoG 

W9H 

WAT 

>K Bn 

MUM 

MOM 

IK TM 

Hopeit 

Hutenw 

Kyra 


TMTome 

TliBPw 
TkOoi 
— T*l0S 
... TVRopn 
_ nsn 
TkSM 
_ TtaiCa 
_ TtarCni 
__ TkuLrn 


_ Tory* 
IMM 
TsftoEC 
_ TsnfaMa 

_ T ardor 
Towdi 
.._ Toto 

._ TovoOl 
_ TOaAU. 
Toycdn 


Z TjdfaM 
__ ToynTt) 
Z ToyoTB 


tmuk 

MOV 

wacmd 

Vmetnc 


__ YamSnc 
ymncU 
— vmwon 

Yam ton 1D60 

I no 


1.100 

450 

544 

1,160 

609 

ixa 

1.050 

1.7B0 

2.BOO 

3/710 

447 

564 

2.400 

1D60 

609 

658 

506 

1.520 

1,420 

750 

744 

999 

735 

736 
424 

1.500 

509 

1000 

080 

589 

3,190 

2120 

483 

7.110 

415 

5EO 

040 

41S 

386 

1JM 

1.160 

1/250 

910 

761 

ljac 

1X0 


Yartuo 
Yaska 
YasHr 
YwTlD 

_ JSS. 

VhrsnAb 


Yuasa 

Z 2rxti 


1040 

1,030 

550 

711 

042 

1D70 

B70 

683 

918 

875 

641 

879 


— 1.4201.110 ... ... 

— 536 326 — — 
+8 507 41 G — — 

+ 101.3901.120 17 _ 
-10 620 421 _ _ 
-30 1.720 1.460 — _ 

-40 2.020 1D10 — — 

—2D 1200 1D70 — — 

-io 3.6+0 iaoo — — 

—20 3.460 1740 - ... 

-2 570 428 — — 

-9 7D5 520 _ 

—30 1750 1200 _ 

-io 1140 idio od .... 

-29 7B0 450 — — 
-11 620 B57 _ — 

-0 730 S08 — 

-10 1.050 1X0 — _ 

-10 1,580 1.190 — — 
-8 786 S7S — — 
-0 878 870 — — 
-31 1.260 970 — — 
-11 779 433 ... — 
-8 823 695 — _. 

-B 437 2B5 _ _ 
-10 1090 1.470 _. _ 

*1 596 4?T ID — 
+1010601.430 —584 
*8 754 SIS — 

-4 733 534 - 

-10 3.480 1B80 — — 
-2L250 1.780 — 

-10 527 330 - _ 

-2D 1.350 965 — 

-11 505 330 — — 

+4 680 432 — — 
-5 685 345 — _ 

-10 436 285 _ ..- 
418 272 — — 
-40 1DOO 035 — — 
+10 1.3301.090 12 -. 

— 1.430 930 _ — 

*4 969 620 _ — 

-2 1D10 502 1.0 — 

-10 2230 1340 _ — 

_ 1D101DSO — — 

+301150 800 — — 
-10 TD50 1.110 — — 
*3012901,040 OD 
1350 IDIO _ 

-1 584 350 1.0 

-3 80S 705 ID 48.0 
-IB 1/030 734 — -.. 
-SO 1.120 700 — _ 

_ 989 035 _. — 

-S 745 528 _ _ 

+101.180 080 __ 

+15 1.180 927 
+1 763 442 _ 

+3 745 496 _ ... 


.man 

jam 

KM Bus 

Mn«r 

NnriNU 

nsDuA 

SHKPT 

SbfwOr 

SheBE 

SfenaD 

SCHMP 

SMI CO 

SertreA 

DudrsO 

Tetoa 

wnari 

WMdcK 

WklfiOn 

HRnsat 


455 
33 JO 
11 JO 
30D0 

39.10 
68/25 

7 JSO 
ZUB 
16.70 
10UD5 
4D8 
35£tnf 
90 
1175 
5575 
10/55 
BD5 
50 
1*25 
10.85 
3070 

24.10 
19D5 
IfiDO 
15D0 

7.75 

35 

20.10 

aoE, 

54 

2QD5 

14JW 

10 

24DS 

35.40 
5701 

1150 
173 
10.15 
4DO 
3 DO 
5125 
190 
34DO 
29 70 

15.40 
10 

10.65 


-.10 15 JO S/SS 4.3 02 
_ 50 28-90 1222D 

+.10 1670 1040 3.7 — 
-DO 62 3050 2.7 
-M 57 37 3.1 3RD 

— 31 SB 2d 656 

-.10 M 6.15 — _ 
-.1527/20160) ID — 
-D5 19.10 18.30 3D 14D 
+D5 1620 9D5 OD - 
-D2 8-05 4.10 25 _ 

-.TO 49 2020 ID — 
-1 131 BO ID _ 
-.10 21X1 IDO 4.7 401 
_ 0Q JO 4775 3.4 ZOD 
„ 1630 9 DO 3D 2.8 
-.10 ODD 60S 43 _ 
-.75 SOM 3220 52 — 
-152476 13 2D 21.0 

-D5 1SD0 10.10 ID 6D 
-.10 64 2680 3.1 13J 

+DS 3SD0 4030 3D — 
-D5 51.75 17. BO as _ 
-75 3025 7610 3D 502 
-4017.70 12 3D — 

-JO 1090 5D0 4D _ 
-JO 4150 27 JO ID — 
-15 3125 19-25 4J „ 
-JOS 1110 7 JO 0.7 _ 

+ JS 04 JO 46.76 OD _ 
-.15 3650 2430 OA _ 
-JO 2S11G02S7 23.1 
+.10 12.60 820 OD _ 
-30 4150 2020 43 — 
-.10 39 JO 3.0 65.0 

-J8 77 41D0 64E7D 

1£LE0 11 2D 462 

_ ais 3.10 4J1U 
-251SX 9J5 104 31.7 
+.10 645 *90 61 — 

-D8 7 BO 3J8 65 — 
-125 71 50 2.0 102 

-JO 11-30 B 2JB152 
-JO 37 JO 23 2D „ 
-.40 41 2600 12 — 

-.10 23-50 14.75 12 — 
-JO It LOO 6.00 13 — 
+ 20 17 M 9JS 7 J _ 


204289 Bnntea 

052*4 grain 

6863 Bmcor 
7550 DIE 
50500 Cmpefis 

iooo cnOo 
400 CntfdA* 
60600 Dims 
1ST IT CBOTbSl 
112870 Canweo 
570380 Cardmji . 
1537% CsnOcc 
500*41 CHMC 

200 Dnir 
HM47 CanTtA 
10500 canUtA 
900 IhnUIB 
640040 Center 
son CanTng 
932 CanGoi 
700 cam 
2 cmcao 
15200 OneOd 
153041 comes 
24175 

103171 

IIDOO Draan 

56480 GM 
38K4 CTOwnX 
3800 Dorian 
12*7*00 Dafecn 
3874 DemklT 
61659 Donga 

15050 OuPntA 

6416 DinfiA 
0000 Bnpfes 

63720 ECtWB 
46E3 Emm 
143790 EurNeir 

ocu m 
20500 Ftontex 
200 FbMA 
1700 F«IW 
13057 ftttm 
BOO runV 
22706 FettnA 
144200 450301 
9000 Gtamb 
54500 Oman 
1150 gw/Lh 

300 GeacC 
200 DMA 

47780 Gam 


SSS -15 3050350 
2D% -1* SSOfc 201] 
244* -4* 5JU; Z4 1 * 
7 1* 7L, 

90 -1 91 90 

340 -10 340 340 



1B>« 

175 
2Sft 
25 
17 
440 
25H 

no 

* 

365 

1BV "Slit IBS 
iD)a +i**k»j ioC 

&'*- 
8 -1* 58 
sa S38 
G% +<OT __ 
2fli - 521 HA 
19 *1. *13 O 
28^ —14 527 26% 

®i 1 i" ,laa ss B, i 

6»a 



200 SeoHP 
100 SBC 
43000 Sonora 
2900 SflTel 
3281 S6 nt* 
11760 Sraffi 
20250 SnfflH 
24 1206 Sngnn 
1000 Sean c 

06727 SWA 
53811 9utG 
01545 BK. Sy 
28838 Souam 
116000 SowAe 
131277 
3140 Tiarfl 
198097 TeUaE 
779030 Tack B 
1900 Tuhdb 
164515 TaUu 
..500 turn 
12WW0 Tboman 
777807 TorDom 
181310 TracnP 
1K216 Tim 
2000 Trknac 
173810 Tltac 
7200 IMP A 
1760 UCorp x 
1567720 UUDam 
30600 VK*ro 
1800 WSCB 
136314 YAadM 
6700 WtanB 


14 *>* *14 14 
19>i SIBis 1B>2 
13 14 13 

12 512 11% 

n -Tjtin. 11 
124 +>o 5131* 12 

•0% 

Vi Oh Bh 
45 +>4 545 44% 
14% -% 314^1^ 
1 -%S7I* 0? 
14% -h *15d14% 
10 -% SltU. BIO 
tt S3 Bh 
23V . SZ3V »V 
29% +VS»lj 78% 
ZSV -V 335% 25V 
17 +V St? 17 
15V — V SIWi 15V 
74V +V*W%14V 
15% -V SWj 15% 
20V -V3%2DV 
17V -VH7%17V 
13% -V SMI* 13% 
14V -V 514% l*V 

30V saov 30 

16% +%fM%16V 
22V +V 6S>9 22V 
39 -VSBV 39 


16 


MONTREAL. (Nor2/CanS| 
4 pro dose 


11 


MALAYSIA (Nm 1 / MYR) 


Bound 4D0 
Genbip KM 
HlOta 1520 
UaBnk 17JOd 


■AAap 4.18 
PBB 4 JO 

srrnen 7 

Tetekm 20.70 
Tarawa 13 


— 6D0 352 10 
_ 2SJ5 1675 1.1 
_ 10.10 1160 OD 

— 19J0 13JD 1.1 
_ 030 310 ID 

— 80S 198 04 
_ 6DS 352 ID 

— 0X 5J0 31 

— ». 10 IBJO 0.7 
-. 20.90 1180 — 


40200 SuBC 
45300 MVSIA 
10432 Haurt£d 
20185 Harata 
37000 ramUG 
2700 Mkinr 
44SS70 Hm 01 
10367 Honten 

00357 HudRoy 
1*682 91. En 
156868 mm 
141570 race 
442690 toco 
SOO HUM 
0000 MOB 
2400 Muau 
9525 liNAB 
2107 hacnA 
7185 Jmnoc 

50 KarrM 
552 Ltorpe 





AFRICA 

SOUTH AfWCA {Not 2 /ftenCO 


1015 

27 
121 
215 

Anghn 237 75 
Amgcdd 475 
AnnM 124(8 
Baton 3175 


DBS 

FAN* 

GBHAa 

HawPra 

mehep 


OUB 

SAUF 


Sp«T 

smut 

TotLes 

UOB 


(Nwl/SS) 


1020 
17X 
157 
348 
655 
1320 
IS JO 
720 
14 JO 
1610 
122 
104 
4JB 
1120 


4180 

728258 tAali 
seal Loom 
55930 Hadmz 
HITS Martoto 
15642 NOS B 
1421 GO Mecoch 

92673 UacnMI 

35030 
5059 
■WOO 

171143 . ._. 

3453 MMHWx 
339400 M0U 
75342 Motnl 

Moore 



NORTH AMERICA 


AUSTRALIA (Nov 2 /AuSt$) 


_.. Abtoyi 
_ Amcor 
_ Ampoh 
_ Aura 
_ ANlton 
._ AlCflk 


3.90 -D5 695 356 OD .... 

6BC + 11.12 642 3J32J 

3D8 -.03 610 305 ID 


TORONTO (Nov 2/ Can S) 
4pmdosa 

Salaa 

- 340403 Atm a 
114680 AmEng 
257450 AllCdB 
23960 AflMBE 
2000 AtoNtfi 
323632 AicnAl 
295312 AmBsn 
78400 AbaO 
1*1875 Aaenor 


0*0 _11 JO 7J5 3J313 

3 -D4 352 2.B0 17 _ 

3-84 — D4 37? 373 5-2 _ 

4 JO — D4 4.79 380 5.1 __ 

1,47 -D2 155 1.41 61 4.7 

... 2034 -.16 20.79 18 1.1 31D 

_ BTRNy 2J2TO -D3 3JB 230 4.6 02 

Bran! 335 -.05 4JC 3.15 60 


._ BHP 


-250 

-1 

-IDO 

-6 

-2 

-IDO 

-IDO 

-2 

-1 

+J0 

-DO 

-IDO 

-DO 


512 

590 

Z15 

372 

165 

1S5 

IBS 

mss 

154 

188 


HToiEP 1400 

ISP T s 

HeeFB 2D2D 

ir* ^ 

% s 

tom 1D00 
MS 2J0O 

SSn i/S 

WAS 436 
teuaDS 518 
Itochu 748 

to*dB 795 



30340 BCSugAx 
28410 BCTri 
348102 BCE 
24300 BCE Mb 
6040 BfiflA 
11177 Bmewk 
UW1969 BhMmx 
1 193580 BhNWS 
37279 BoauEk 
104509 BmtOrB 


vjva 

' ms» 7*15)1 _ 


Z 13® -.12 ISM 1230 45 333 ■ TOKTO - MOST ACTIVE ffTOOCSc Wedneadny, HawM2, 1984 



10V -v sift toS 

20V +V S2M. 20>j 
8V -VSBV 01* 
9V +V»V 9 
1*V 814% 14V 

Z0TJ +V»V 28 

la ^ 3Sg& 

11V +V811V 
24 +v 524 
12% -V *13 



;52l‘. 
j OP: 24V 
too -s too moo 
9% ‘ ' 

32-A.2XSS! 

17V 517% 17V 

47V -IV 548% 47V 
13 — V 813% 13 
! 18V 




14% i4% 

19V -V*19%19% 
31 -1 31 31 

8V SBV 8% 
58 —3 SO 56 
460 470 450 

41V -2% 543% 41V 
20 520 19% 

11% *n% iti 

128S 


12J0 

30 

Engen 34 
FNaSk 21 JO 
Frogol 87 JO 
Bancor 1610 
GFSA 127 
Hhi un y 41 JO 
Hrtni 21JS 
HhadO 33 
tSCOR 455 

ram 98 

JO 107.76 
rara 7450 
Uoffi 

-JDO 

T650 

Nedeer 332s 
PetebM 76 
Prem^i S.2S 
Randtn 4350 
RntorCp 24 75 
RnriaCn 1750 
RustPI 11? 
Sefften 11 JS 
SndnCG 1750 
SAftmr M.75 
SAMMm 65 
SLtfU 32JB 
«M IS 
T%PB> 48 
MU 4SD5 
mats 412 
WAraa 7625 
W Deep 200 
Mlnkti 83 


+ 7- Ugh Low YH WE 

_ 1085 670 43 — 

29 1750 ll _ 
_ Y23KUU 2J _ 
+15 255 113 13 _ 
+.752G4S0 18250 1.7 
+5 606 344 10 .... 

+2 140 102 ID ._ 
—28 57 2650 ._ 

+50 31 2675 19 .... 

— GO 42 60 — 

_ 450 3.45 1.0 _ 
... 121 JS 9550 0.4 „ 

_ 1025 6-BO 26 _ 

+225 7350 48 IB _ 

+50 1425 725 40 — 

_ 35 2150 63 _ 

-DO 42 30 45 ... 

+JO 2350 1950 14 _ 

+50 BO 5175 5J — 
+.101675 7D4 1.0 _ 
+1 130 BT JO 1.7 ... 

_ 472325 _ _ 

+25 2675 167S 7/4 _ 

+.75 34 IB 15 — 

— 4.95 11b 15 _ 

+2-50 104 SS 1/4 _ 

+26 122 76 1.9 — 

+50 9450 6X50 18 ... 

+2 75 41 2D 

+50 100 75 u _. 

_ 22 1550 _ _ 

+25 35 28 1.7 _ 

.... *1 68 50 6 9 _ 

+20 7.75 4.76 B_B _ 
+.75 G650 37.60 B4 ._ 
+2B 36,75 2350 15 
+50 2650 1650 15 _. 

_ 120 72 ID ._ 

-25 1350 8.70 _. 

_ 20 1b ID _ 

+.751IM.SB 79 15 _ 

— 69 2650 12 _ 

— 37 27 25 _ 

— IG4 102 13 — 

58 40 15 _ 

-JS 4676 2125 ID ... 

-2 498 359 33 — 
-25 7050 33 4.1 

-1 230 161 17 .... 
_ 804450 32 — 



nraraptetf #y rmra 


NOTES - ftfcea an Idi page an a aided » IS* 
Mrirtat a uim end « nradi tanraiM 
Mta Ntraum m to 189*. mml Tdohb A 
IBxdnU gum 1 Datm wTOMded. «l b 
MM it b bee* «r B rtf* “ f* * 

FT FREE AfAUAL mPORT* SEBV1CE 
Mama nwranamatu «u 

BMIR Mngoti 7TO B7J0 hyan «* tea* ham* 
■grand » m 081 RD *£2 1 rang taa ram te 
IK, m <44 to 770 B7I0 B la «*4 si 77D 3B22. 

Mean m be we m n nm ram da, mski ■ 


HU 

IHL 

M 

Inn 


- SYPlZBttJUB (NW 2 / FlS.) 


*500 -ISO 6360 4 DBS 12 — 
4.740 +180 7200 4,145 _ _. 



_ 292 1*1 _ 

—12 721 BBB 2D 
-11 713 567 2D 
+70 3509 2,173 1/4 
-00 1D48 1.015 1.7 
_ Z6D 190 1.7 
+7 747 500 32 
-7 070 7112 11 
-8 942 ©SS 11 

— 422 327 _ 

— 3/800 1560 ID 

_ 1,700 1J0B0 17 

+20 19321140 12 
-6 BBS B59 ID 



1.100 

Ml 

1370 

- Memo 1J8O 

- IAMB 303 
— MtOnk 1DS0 
— Namum IQid 

... — MltttvE 752 
_ _ OdEBtw TOO 

+4012TO1JJD Z Z SST 759 
-4 457 zaz _ otama &05 

-11 585 348 _ _ OkumGm 770 

4340 


_1 

-1013401D60 OD 

Z 

■3S8 

-SO 1,140 



-1 810 Sffi Brieri 

3 1 ® B’JzBT 

—16 034 7Z7 — — CRA 
+10 1570 1.240 _ _ CaKBDt 
-10 1520 IjOTO _ CarefH 

791 _ ... ccAmm 

32S _ Cawakl 

815 _ _ CmUcu 
401 _ _ Cernmfih 
780 _ ... Cm®* 

...... S ’i 0 z S T* 

-fliSiS z _ 



lDUr 

344 

454 

1682 

308 


—14 788 622 _ — . 
-3 910 770 13 _ 


130 +1008,730 


8,730 5.1X0 __ _ OnpPI) 4J40 

+3oiSSi.^ z z 8ssr ^ 

+6 B64 52S — _ Orbc 

— 1,770 1,490 05 _ OsdaG 

-1 440 284 PerraO 

♦1 778 605 67 _ PKtof 

-18 SOI 39B — PrtonM 

_ &S6 479 — _ 

-TO 1^0 1510 - _ 


+5 946 MO „ 
-12 715 431 _ 
+70 1340 022 DD 

-20 2500 1050 OD 

10D00 -10013400 6780 _ 
name 1500 *20 1D7D ijtro OD 

todtoia 878 -18 USD 825 — 

KrSnPn 1/310 -101D80 1DBO _ 
KndMto 1/750 +3014821.700 _ 
rtanahq 357 -0 420 330 _ 

Kara** 700 _ 626 516 69 

fSwntau 55D +6 57D 430 _ 

KuME) 1420 _ 1970 1*10 ... 

KaaOto 913 -1 623 425 _ 

Ken 1.150 _ 1510 1.140 _ 

Xmffry 407 -8 500 338 _ 

K8HKRI 413 -4 422 271 .. 

ItaaStl 4S3 -4 457 303 - 



^ S 2 z z SS?r 

-16 S33 533 _ QOAus 
-12 990 575 _ .... GMKrdg 
-11 U10 761 ID . SdrnnnF 
+101J40 999 _ HMe 
-10 1.B90 1.460 _ _ HlgldS 
6510 4570 05 . MnMB 

-20 1.SOOID60 1.4 ._ Bite 

+3 744 611 _ _. Kahtn 

3800 —130 4D20 2/BOO 64 59 7 UmdLs 
536 408 Uon N 

-7 779 579 ID 
-I0 3D401410 - 
._ 582 390 1.1 
+5 610 440 ID 

-131.020 705 ... 

—104.850 3230 - 
-30 1,770 1.080 .... 

+8 058 447 _ 

UTiSHIz 

tSSHSW 8“ 

-101370 1D50 .... 

-14 1D00 BBS _ 

-14 (09 415 _.. 

. . 1.000 870 
♦10 7J80 6/350 OD 
+70 9540 4,430 ... 

-20 4DSO3J70 .. 

-10 1D20 1JB0 66 
-ID 1.380 l.OEO .... 

+30 1510 1.120 
+81.160 050 _ 

-101.400 1.060 1 7 



HI! 

JSE?* 

imih 
_ NAB 

z JSSSp 

9NM< 
__ NmdPoe 
_ NBWWt 
PacOui 
.. Praan 


PtoUto 


In 

OCT Rs 
Fkanod 
Ronnn 
Serial 
SnMHw 


SOKt, 


-2 220501SJ0 37 
3D0 »« 3/2 
350 +DZ 340 2D0 34 
636 -D7 1250 7D0 32 
-MB 370 389 45 
-.16 380 450 1.1 
-06 B JS 650 62 
-D4 152 Q.76 0.4 
_ 058 CL35 5D 
+D2 602 395 5 9 203 
... 192 1J0 
-D2 1/40 
♦ 3.46 
+.03 3 88 
-D2 1.47 
-05 380 
-.04 360 
-92 1.76 
1+5 -D2 1.78 
312 -93 388 

‘ -92 292 1 12 30 

-DG 2.02 1.65 ... 
-941150 67S 39 438 
4. BO 163 69 
-.04 1864 1370 *9 31.0 
-.05 3*0 2.45 5D _ 
... 339 155 1.7 715 
-.15 1094 302 4.8 219 
-.06 4JT 385 49 _ 
-94 1306 697 45 12D 
-OS 750 325 19 
- 10 1090 7.72 0.4 75 
-06 628 370 35 
_ 179 190 35 
-.03 4.15 305 1834.4 
„ 5 9B 390 35 -. 
-.05 2.15 1.36 _ _ 
-.Ob 2.43 153 ... _ 

-.04 346 160 4.7 134 
-15 425 2*9 62 — 
-.13 925 380 09 _ 
+.02 4 JO 383 18 _ 

-93 6* 4 30 SD 
-91 1 74 1 15 67 
_ 0-25 428 05 
-52 620 492 _ 

-99 4 52 358 72 BD 
-.08 7.10 .5.90 4 0 _ 
...1310 610 4 5 — 

+.02 3 00 365 38 _ 


4.18 

360 

756 

1.26 

038 

4.06 

155 

0.76 

2.75 

3S0TO 

1.14 

222)0 

129 

120 


1.*B 

1.76 

11.40 

350 

1344 

15S 

190 

7.15 

i£3 

345 

008 

4jd 

140 

384 

4.06 

190 

316 

£2 

035 

352 

4.72 

1.34 

315 

516 

377*d 

610 

1122 

184 


R A 

Stocks 

dosing 

Change 


Stocks 

doeing 

Change 

8D 

Traded 

Prices 

on day 


Traded 

Prices 

on day 

Z wstsuWflhica 

loam 

980 

-60 

NKK .. 

32m 

2S7 

-4 

— Nippon Steel - . 

7.7m 

398 

-6 

Gunma Bank . _ 

3_2m 

1100 

+10 

NlkfcjO Secs — 

4.4m 

1110 

-10 

Hachguni Bank 

2-9m 

1200 

-10 

— Kawasaki Steel «... 

4.1m 

463 

-4 

Hitachi 

ZSm 

999 

-11 

— Pacific Mtis 

4.0m 

516 

-5 

Sumitomo Mti Ind 

2.8m 

363 

-2 


INDICES 


US INDICES 


Itar No* Oct 

2 1 31 


-19M 


m 


lorn 


N w Od 

1 31 


-1994 


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■ STANDARD AND POORS BOO INDEX FUTURES $500 tones Index 



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Dec 

46005 

46800 

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470.16 

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204,208 

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■ NEW YORK ACTIVE STOCKS ■ TRADING ACTIVITY 




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1882.0 

1879.0 

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1894.0 

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23,020 

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2,863 

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1041 

1046 

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1014 

1.157 

621 

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685 

612 

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25 

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FINANCIAL TIMES 


THURSPAY NOVEMBER 3 $994 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


MBh tra Stack 
17% 12% AAR X 
78 72%AL1jBKA 
J9%57%AMPi 
72% 48%A*K 
5 3% MX 
55% SB 5 * ASA 
32 25% AthOL 
15% 11 %AW»Pr 
23% 17% ABM W 
18 ll%Amksaln 
31 22ACEIM 044 15 
12% 9% «* Mb US 1 1.7 
18% 7 AQHGkOpp 080115 

10% 7AteMSp 090112 

12 8 % AM&tSe 15913.1 
11% 7% ACM Ha* 1.08115 
BACH Maraud 0,72 85 


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04B 35 20 84 12% 1 

018 1.1 39 282 17% » 

158 22 28 3809 7B% 

96 6790 55% 

13 101 3% 

200 42 31 232 48% 

078 25 18 7427 31% 

0M 35 11 213 13% .. . 

062 26 112 20% 20% 

30 184 10% 18% 



OS 45 2 
18% 11% Aon IS 

18% 16% Adam* Ebqpr 048 28 0 
S4 48% Ad Han 350 55 
31% 18% Adrift 
8% 5 Attest Grp 

20 ISAdwta 

84 49%AqjonACR 
85% MAetaaLx 
36% 25% Aftc 
22% 18% Mima 
4 1%Afcuilac 

S 38% AkPrC 
18 Aktm Fit 
19% My b e 

30% 21%AATdl 
18$ 13% Atari* Air 
21% IB%A*«nykit 
17% 13% ABml 
25% 19%AUUx 
23% 17% AKUw A* 

30% 20% Alltel 
28% 19%«cnAI 
85% 49% Alena 
90% Z3% MaOomnx 070 ZS 
22% 14 Abril O10 05118 

24% 17 MrftiLud 

28% 19% AH if 

25% 13% Affantei 
28 20A8 UHM S 
4% A«*n 
27% 17% AftwCtpi 154 85 21 77 

10% IftBS 0.18 15 80 




6 % AomChx 044 13 16 4S 14% 13% 13% 

8 % Aobb Bad 10 137 11% 11% 11% 

SAesnfi 080 11 14 141 "* 

5% Aetna OS 45 2 302 

11 

458 1C 
4178 

100115 1110741 38% 

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1 46 11. 

098 11 2S 2081 46% 

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5t 184 29% 

154 115 12 5 15% 

6089 29% 2B 26 

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035 15 34 388 20 19% 19% 

020 15 172 16% 14% 14% 

028 1.1 18 306u28% 25% 2E 
028 1.1 18 382 n24% 24 24% 

044 15 23 3557 30% 29% 29% 
030 1.1 HU 6607 28% 26% 28% 
150 1.7 40 2843 58 58% 

8(6 27% 26% 

148 20 

048 24 IB 408 20 

154 80 10 682 20% 

016 07 2D 590 25 

044 1.7 16 338 25% 

0 137 ft 


34% 34% 
18% IBb 
1 % 1 % 
45% 45% 
IB 19% 
29% 29% 
15% 15% 


27% 21% AW Man 
40% 33%AU90 
11% S%Mmv 
29% 24 AIM Op 

7% 4%A8mte 
35 21% Alum 
90% 84% Alcoa I 
30% 17 Aba Cp A 

11% 7AmGma)ex 
8% 6% Am PiocS 
8% 6% Aanfitf 
25% 19% Amcari tad 
52% 44Aadaft 
9% 8%AmA4Rx 
31 S% An Bark* 

37% 29%AaftM( 

25% 18% Am BuiPri 080 3.7 13 
8 6% Am Cap be 0.65 08 

§ 16% Am ftp Bd 
18% Am Cap « 

42% AmCyan 
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33% 25% AnCrar 
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050 3.7 15 7 24% 

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054 95 129 B 08% 9 

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25 885 8% 6% 6% 

14 1946 29 27% 

150 1.9487 8050 84% 02% 

33 3280 18% 17% 
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025 35 25 52 7% 

048 1.1 12 2551 7% 

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024 IB 80 9% 

0.10 04 31 5964 23% 23% 23% 
100 55 10 2816 34% 34 34% 

18 21 § 21% 71% 

207 6% 6% 6% 

154 09 30 47 17% 17% 17% 

148 55 0 25 19% 19% 19% 

155 15 57 1644 93% 90% 99 

140 75 18 2322 32% 31% 31% 
030 ZB 13 7717 31% 39% 31 1 
1.16 45 23 1884 27% 



»% 24 . _ 

9% 5% Am GlNt MX 077114 622 5% 

27% 19% AaHOlftx 23011.4 7 272 20% 19% 20% 


30% 31% 4% 


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100 4.7 13 5314 64 63% 

075 284 9 MOO 2% 2% 

0.48 05 16 5037 35% 



11 %Amriak 
64% 50% Aim 
8 % B%tepcri« 

S 3% Aon Inc 
XAnuflh 
4% 2 % Anacunp 
58% 42%Aradata 
38% 21 % AnriDp 
29% 24% Anuta 
55% <7% AdBxtl 
34 19% Aritwn 
18% 14% Artfawytl 
36% SOtalCp* 
29% 22 % Apart# Op 


276 25% 25% 251 
9 202 24% 24% . 

5 81 7% 7% 7% 

7 1657 H27% 2B% 20% 
MS 18 18 18 


35 


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20% 18% AmHemjp 
65% 55%/WtaW 

§ 2$ An Motels 
8l%Airtn« 

11% 8% AmOnphc 
30 22% Aroftwn 
34 19 Am Prusdt 

8% 7%AmRariEs 
27% 21 Anfila 


140145 
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040 15 
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22% 17% AmtttrSX 12 65 
32% 26 Am Watr x 148 11 11 IS 25% 25% 

43% 36% Amrttf) 142 45 14 2343 40% 39% 

43% EAaeranticilX 17 5 9 X 35 

18% 11%Amrtak 044 15178 363 18% 17% 17% 

23 15 17 7BB3 63% 62% 03% 

0.10 15 5 12 7% 7 7 

012 23131 295 uS% 5% 5% 

1.40 45 9 608 29% 29% 

10 380 2% 2% 

030 06 57 2417 48 48% 

34 2517 35% 34% 35% 

094 16 23 113 26% 25% 2B% 

1.60 12 23 2814 50% 50% 50% 

22 1386 33% 32% 33% 

044 26 17 37 17% 17% 17% 

148 39 7 1791 32% 31% 32% 

. £S UJ 39 2352 27% 27% 27% 

10% 8%ApnMuiF 071 65 485 8% 8% 8% 

34% 14% AM 38 1 290 22% 21% 22% 

7% 3% ApjAdtteg 0 823 3% 

25% 16%ftrtFtaA 012 05 S 506 24% 

29% 21% Actum x 015 05 2D 8763 28% 

51 43%ActoOnri 250 02 21 309 48% 

51% 45%Annt045P 450 95 3 46% 40% 46% 

7% 4% Aram 3 2300 7% 7 7 

29 22% AraeoZIP 210 01 9 23% 23% 23% 

57%X%tamsHX 148 11 31 3429 41% 41% 41% 

15 2238 38% 38 38% 

1 313 4% 4% 4% 

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040 I J 93 2225 31% 30 30 -1% 

045 15 12 37 30% 30% 30% -% 


&& 
20 20% 
48% 48% 


45% 33% Ante BCC 
7% 4% Alta Op 
33% 23An*lM 
34% 21 %Aamc 
31% 22 % AaMd Coal 
44% 33% ArtOI 
25% 15% Asia Re F 
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30% X% ABrtsEU 
9% 5% AOniaSan 
21 % IGAOnlcEfll 
10 % 92% AtMeh 
10 3% 


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027 15 82 17% 17% 17% 

02B112 6 294 2% 2% 2% 
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1-32 24 13178 54% 54% 54% 

280 1.1 MW 256% 256% 255% 
208 6 4 13 75 32% 32 32% 

028 44 7 8 6% 6% ' 

154 01 B 450 16% 16% li 

550 52183 3075 107% 106% 1 

2 148 3% 03% 

20% 16% AteuEngy 088 54 8 54 17% 16% 17 

12% 8% A9M0* ADR 034 35 10 498 9 B 9 



24% 17% Aftrt 

12% BAaaJmfd 

58% 87% 1 

20% 13% J 
19 7% Mai 
45 30% HIM 
63% 40% Anxfr 
14% 10% Ayitaitep 
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38% 31%DCE 

§ 8% BET AM 
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27% 21% Beta Be 
30% 24% ftflCp 
15% 8%BBMd 
9% 8% Wf 
25% 20% OeKE 
20% 13% BdtBrtop 
38 28% BncOn# 
26% 20% BanoaBIV 
12% 9%tacaCanlH 
34% Z7BopHwM 
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016 05 24 1919 20*2 19% 20% +% 

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060 1.1 25 1586 57% S7 57 -% 

044 29 11 10 15% 15% 15% 4% 

054 04 41038 10% 10% 10% -% 

050 15 205953 39 38 38% +$ 

2W 34 18 887 63% 82% 83% 4% 

9 77 10% 10% 10% 4% 

22 421 6% 6% 6% 


- B - 


96 81% BankBsri 
29% 22% Bttate a 
49% 44 Bk Basin P 

33% 29 Bn Mff 

50% 43% BankAm A 
95 74Bu*AaB 
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48% M% Burt* 

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28% 23% Bey St Ges 
22% 19% 86 IV 1838 
23% l5Baa-S»ia 


37% 27% Bmtips 


288 7522B 
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050 21 73 
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152 08 12 
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144 04 9 
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5.48 6.7 
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75B 34% 

154 7% 

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125 76% 

4964 20% 

120 28% 

1093 28% 

363 9% 

2253 6% 

1401 23 22 

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142 1% 1 

181 58% 58% 
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MOO 44% 44% 
2440 31% 31% 
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5 78 75% 

3079 64% 64 

73033% 37% 
1500 24% 2 4 

12 36% 38% 
2001 41 40% 

8109 11% 11 

5640 34% 33% 
4883 26% 25% 
47 24 23% 

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8 44% 044 

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FINANCIAL TIMES THURSDAY NOVEMBER 3 1994 ★ 


35 


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NYSE COMPOSITE PRICES 



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AmvHn 4 274 

Airing*: 16 64 

Analysts r 053 17 744 
AnangrUm 1JX> 13 371 
AnmwCp 30 95B 
Andros An 9 133 

Apogee EnxOJ2 36 1317 
AFP Bn 48 1875 

AqMIIU 3X17571 
AnptfC 048 36)9223 
Aoptaioes 004 49 4047 
Alter Dr 024 <7 838 
Aleut 019 15 436 
Argonaut > I16 B 268 
Armor Al 0£4 22 102 
Anridin 044 IS 2037 
Asmetlta 32 1450 
As90cConun 323 100 
AST Rsmh 8 9543 
Atunaon 13 19 
Ad SEA* 032 12 4035 
Auuish 024 13 5501 
AUnHo 9 502 

Awnoale 093 20 1176 


up U- Iritag 

14% 14 14% +l 2 

16% 15*4 1S% 

17% 17% 17% 

20 19% 19% 

Il30 28 % 28% 

23% 23% 22% 

47 45% 48% -% 
11 10% 10% +% 
35% 3S% 35% -% 
37% 35% 35% -1% 
1D% 10*4 10% *% 
4% 4% 4% 

4% 4% 4% 

1071 15% 16 +% 

27% 26% 27% +% 

17*4 16% 17*4 *% 
12 % 12 % 12 % -% 
27% 27% 27% 

82 61% 61% -1% 
23 tC2 22% % 

10% 10% 10% -% 
36% 36 36% 

7% 07% 7% 

14% 14% 14% 

13% 13*4 13% 

3% 3% 3% 

*% *ix 

40% 38% 38% 

30 19% 20 

17% 17 17% 

16 16 16 
16% 16ft 16% 

6% 6 % 6% 

4% 04*a 4% 

31% 20% 20% 

27% 26% 26% 

1ft 1ft *% 

47d46% 47 

18% 17% I7J* -ft 
17% 17 17% -ft 

55*4 54% 54ft 
10*4 9*4 I0% 

9*2 9% 9% 

17% 17 17% 

20% *9*4 3D 

15% 15% *5% 

52% 51% 52 

17% 17% 17ft -ft 
18 17% 17% 

5% 5% 5% -*a 
52 49% 5lft *1ft 
43% 41% «J% -1% 
19*2 17*4 19% *1% 
31% 21 21 -% 

30*4 20% 30% «-% 

28% JB% 28% *1ft 

r*4 22 22% -% 

22*4 r 23% -% 
35% 33% 35*4 *1% 
25% 25*4 25% +% 
13% 12*4 12% -k% 
10% 10% 10% 

17% 16-% 16% 

33*4 32 % 32% 

2% 2% 2}* 

8 7% 7% 


*% 


+% 

+% 

-% 


♦*Z 

*% 

-*a 

-*2 

-% 


6 E ■ B 

Bafibages 

BtaxrHWl 

Baker J 

BUwHB 

Bxncuc 

BdkSouDi 

BankersCp 

Baiunth 

Btaita Geo 

BdrielF 

Bay Vim 

Baynanks 

BBSTRn 

BE Aero 

BeaiUCos 

BeoEJeny 

BarktoyWB 

BHA Grp 

She 

Big B 

Blmlfly W 

Bingen 

Bamei 

Block Dig 

BMCScihw 

Bodmer S 

Bob Evans 

Botae 6 8 

Borland 

BorimEb 

Basrat Ir 

BradyWA 

Branco 

BnxtoSx 

BSB Bncp 

BrSMpng 

Buflets 

BridenT 

But ft*n 

Busfnessfl 

BintaARg 


- B - 

OOB 27 2298 5% 

11 58 13*4 
7310 ft 

006 10 788 17 

024 3 2480 15% 
14 204 20% 
052 101103 17% 
040 7 902 1 4% 
06(1 13 43 23% 

052 15 2574 31% 
080 15 467 27% 
080 12 12 22% 
1J0 13 853 58% 
1.16 9 612 30 

20 374 8% 
042 34 290 15% 

12 589 13% 

044 13 9 35% 

012 18 14 13 

97 138 5% 
016 17 126 12% 
008 15 485 13*b 
4427354 41% 
20 1253 11% 
1 08 13 65 35% 
1 510005 48% 
1.38 91311 28% 
029 19 1749 21 \ 
16 I7u32% 
11 3767 11 

076 5 278 30% 
798871ul8% 
080 19 K 48% 
024 28 80 12% 

026 19 2544 9% 
088 9 42 27% 
048 5 80 2% 
16 2644 10% 
19 645 n% 
46 544 13% 
65 9 35% 

040 8 669u35% 


d5 5 
13*2 13% 

Os'* ft 
18% 17 

14% 15*4 *-% 
19% 20 +*b 

16% 17% *% 
14% 14% -% 

22% 23% 

30% 31% 

28% 27% 

22 22 
57% 58% 

29% 30 

8*4 8*2 
14% 15 

12% 13 

35% 35% 

12% 12*4 
4% 4% 

12 % 12 % 

13 13% 

40% 41 

11% 11% 

35% 35% +% 
46 47% +1% 
29% 29% -% 
20% 21% *% 
32 32% +% 
10% 10% -% 
29% 30*z *18 
18% 17% +)3 
47% 47% 

11% 12% 

9% 9% 

27 27*4 
2% 2*4 
10 % 10 % 

11 % 11 % 

13% 13% 

34% 34% 

34% 34% 


*% 

+*Z 

+% 

*% 


-% 

-% 

*4 

+% 

*i 

*% 


+% 

+% 

-% 

•% 

*% 

*% 

*% 

-% 


- C - 

C Tec 280 27 28 

rwuMed 6 234 s% 
CadSctWps 099 16 203 28? e 
i^dmusC0mO20 21 102 18 


3 

0 53126 


843 2581 u!7 
225 5J? 97 9 

» 4071 lOI *4 
i 8 2% 

100 1*4 

18 91% 
103 6-V 
5 287s 

31 23*4 
0JJ8 18 477 13% 

5 245 6*4 

19 18 13 

6 4 573 16% 

1.12 10 361 29*4 

22 59 11% 

9 25 <% 

Chapter 7 r 068 7 xM 10% 

CJvmSti 009 in 1552 7% 

CJtemtati 17 22 12% 

Diem power iz 122 4 

DubST* 11 5815 6% 

COfcrCp 6077246 63% 

lint Fin 1J8 12 470 51 

017 34 244 15% 

306S0D .^9% 
146 2381 3% 
1766(64 32% 
1 08 IS 74 28 

23 85 6% 

43J10Q 12% 

b 24*. 3? 0 


Caere Cp 

Gayane 
Cal Micro 
CanddaL 
Dries 
Canon Ini 
Canme 43 

CafttonCra 0 53 2< 
C«xide 060 22 
Casey S < 

(tag Mi 
CBUCo 
Cemocor 
Cilil Fid 
CntdSpr 
Chandler 


Once Cp 
DmeLnr 
CSTnh 
DscoSys 
Co Banco 
Dean Htx 
CUUD 
CtolhKWi 


CocsCntaB 1 00 16 10 26% 
Coda Engy U7 1456 r 
CodeAtam z: 262 11 

Cognex CO 17 6216 2« 

Cognos 132 273 i4?j 

DXierere 18 <55 14% 

Codagen 040 R6 1293 21% 
itaniGas 12612 12 19% 

CdniGrp 0® 13 I5j 35 
Comar < 03.' 73 2035 20% 

CmcaA noa 101556 16% 
DraslASp 009 391S36 16% 
CommtkshsD® n 650 32% 
Comma 070 «9 11 17 

CommnC 
itanprLabs 
Comshau 
limsftiCkB 
DiitstBum 
CaiteCel 
CtariEmn 
toorsA 
Copytele 

Cottas Cp 
Cap a A 
Cracterfl 
Cray Cano 
Down Res 
fylagui 


19 1881 u29 
283 407 8% 
64 1025 14% 
35 W 3% 
5 T2T 6 
80 72 24% 

JK> 12* 6% 
050 19 830 17% 
M 309 5 

25 3355 57% 
47 5S5 17 

007 26 2381 22*4 

1 644 1,i 
33 179 5% 

2 899 3*4 


27% 

5 

28% 

17*2 

16% 

8% 

30% 

02% 

1% 

81% 

6% 

2U7 8 

23*; 

*:% 

6% 

»2% 

17% 

28% 

ID 

4’c 

70*4 

7% 

12 % 

3% 

6 
£0 
50 

35% 

28% 

: 7 s 

30% 

27% 
6% 
12*4 
03% 
25 
6% 
10*4 
21% 
74% 
14 
21 
1B*4 
34% 
19% 
16% 
15% 
31% 
I? 
28% 
B% 
13% 
3% 
5% 
2<% 
6% 
1*% 
<% 
56% 
16% 
21 ft 
in 
5% 
3% 


28 

5 

28*2 

17% 

18*8 

31% 

2% 

1% 

91% 

5% 

28% 

23% 

12% 

5% 

*2% 

*7% 

28*4 

11 % 

4 7 a 

19% 

7% 

U% 

3% 

6ft 

62% 

51 

35% 

2R% 

**IS 

27% 

6% 

12*4 

3*4 

26% 

6^ 

10 % 

23% 

145s 

14*4 

21 % 

18% 

*4% 

19% 

15^ 

15% 

32% 

17 

28% 

3% 

14% 

3ft 

6 

24% 

6^ 

17*8 

A 7 S 

57% 

17 

22 

HI 

5% 

3m 


.s 

■h 

-% 

♦% 

♦ft 

*% 

-% 

-1% 

*4 

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-1% 


•% 

•1% 

*l'» 
0% 
♦ % 
-% 


DSC Cm 

Dart Orxr 0 >3 
OauStnch 
[ratHfUyi 
Dalasaxie 
Baa'hmCp i(tu 
Oet> Stups >020 
MJb£n 03? 
Dekalb Ge 080 
DetetamtK «(U4 


. D - 

32% 30% 31% +% 
94 84 84 
2% 2% 2% -% 
9% 9 9>8 +% 

17 16% 17 *ft 

?3% r% a% »% 

47j 4% 4<8 ♦% 

16 15% 15% 

»% 29% 29% 
1M17% 18 +% 


SEWU 

22 5 
39 263 
® ;ao 

16 1225 
10 1630 
14 .!4e 

23 154 
44 ;1Q0 
9 10 


Dei Comp 

Dntrty 

Desay 

tenon 

DHTedi 

DfcrelB 

agim 

OgUtaD 

(Xg Sound 

ffidSyst 

Dtamcp 

DttttTm 

DHA Plant 

DriarGn 

Dmh Htn 

DrecoEngy 

EXesaBam 

Drey GO 

OragEmpn 

DS Bancor 

Dtxkon 1 

Dynaecft 


IV Etc 

Hi ( wr Up tw 

45l(M35u45% 43% 
0X271147 31% 30% 
1.12 8 48 29*4 2061 
020 4 S 8 8 

20 943 U26 24% 
080 30 2S5 21% 21 
18 218 16% *0 
& 1463 14% 14*4 
782240 3*4 2% 
321684 9% 8% 
17 216 37% 37 

020 37 304 7% (16% 
1 *2 3% 3% 
020 29 4217 29*2 20% 
068 14 130 13 12% 

9 204 9% 8% 

10 721 9% 9% 

024 22 99 2S% 25*4 
008 43 44 4% 4% 
109 14 102 25% 24% 
04? 131961 18% 18 

11 1176X30*4 28% 


43J3 lift 
31% ♦% 
29*4 

a -% 

25% ♦% 
21% -*2 
16*2 «■% 


14*4 

3ft 

37% 


6% -% 
3*4 •% 
29*4 +*4 
13 -% 
8% 

9% -% 
25% *h 
4*8 

25% -% 
IB -ft 

30 *1 


EagfeRi 

Easel Cp 

Eaa&rvmt 

Ed Id 

Eggtaad 

BPasaQ 

BecnSci 


EJectAm 

EmconAs 

Emulex 

Engyimn 

EnvtrSvs 

Ereonhc 

EqriyOi 

ErtcsnB 

Ethld 

Evans sth 

Exabyte 

EMAc 

ExpetBi 

EroorpAnv 


Fall Dp 

FarrCp 

PastBri 

FHPind 

HtSiTM 

Fifty on 

figgwA 

Ftanet 

Ptrsj Am 

FstBcOhto 

FdOtaBk 

Fasedy 

FalTernt 

Fawacrn 

FrietMc 

Fksder 

Ftatmns 

Hsenr 

FkMim 

FnodLA 

FoodLB 

Foremost 

Forecimer 

Foster A 

FtthRn 

HUFW 

FstHamti 

Frier ISx 

FiXtofln 

Rnm 

FrinaMOR 


- E - 

l II 2% 2% 
1 962 2% 02*2 
4 13 1 B’J 

032 26 9945 20% 19% 
285 412 8% 6% 
0 382 1% 1 

!74634u17% 15% 
069 52 3 52 51% 

25 5383 22*4 21% 
14 4(E 5% 04% 
2199 11% 10% 
51 ZlOO 14% 1«% 
64 10 1,'£ 1]! 

3 406 2 % 2% 
01D 2D 91 5% 5% 
048165 3278 60% 59% 
125 7 7 

28 19 11*2(111% 

30 81D1 u23% 21% 
ID 1091 8 7ft 

12 134 17*2 16% 
010 24 614 21 £0*2 

18 413 II 10% 


- F - 

10 11 4% «% 

024 35 24 5% 5% 

004 71 370 45% 44% 

17 1 778 28% 28% 

104 15 1014 53 51% 

IS 903 5% 47 s 
034 0 3 8 d7% 

35 1448 25% 25% 
100 7 730 30% £9% 
100 11 193 24% 23*2 
060 19 507 2?% 23 

1.04 3 422 25*2 K2S 
108 10 1164 47 46% 

036 8 82 ulD 9% 

058 6 882 20%d19% 
1JM 8 ID 32% 31% 
58 ZlOO 9% 9% 
28 2007 23% 22% 

18 200 6% 6*4 

OOB IS 2568 5% 5% 
009593 1225 6 5% 

108 ID 32 32% 32% 

10 34 11% 11 

40 79 3’i 3% 
104 12 2160 U33 30% 
040 7 507 14%d13% 
1.18 10 957 27*2 26% 
058 21 65 33 32% 

088 10 47 19*2 18*2 
024 27 351121% £1 
It 120 2*2 2% 


2% +% 
2% -% 
II 

M*2 **ft 
8ft +ft 
1 

17ft *1ft 
61*2 

21*2 -% 
4% J, 

n 

14% 

US -ft 
2% 

5% -% 
59% -% 
7 -*« 


11 % -% 
23% +1% 
B -% 
17% +% 
20% *h 
11 +% 


4% 

5% 

45 

28% -% 
51*2 J 2 
5% ♦% 
7% 


25*2 

30 

24% 

22% 

25% 


46% -1% 
10 

19% -% 
32% ■*% 
8% «% 
23 +% 
6*2 -ft 
5% -% 
53 -ft 
32% +% 
11% -% 
3ii 

31*2 -t 
14% 

27% -% 
33 +% 
1B% +% 
21% +% 
2h -% 


fittApp 

BSKSenr 

Cantos 

Camel Rs 

GeNCo 

Gen Bind 

Genyte 

GetEriTi 

Centex Cp 

Gens Inc 

Genzyme 

BltmnD 

Grddingd. 

Mbert A 

Star Horn 

Good Guys 

GorifcPmp 

DricoSys 

Grante 

Gr»n AP 

GmeriiFft 

Grossmans 

Cm! Wt7 

GllOofp 

GDNYStg 


-G - 

8 zlOO 3% 
007 25 438 17 

0 566 2% 
10 30 3% 

016187 363 7% 
040 22 53 21% 
17 24 4% 

1 979 4% 
400 41 2474 25% 

280 1158 6% 
43 3199 32*2 
040 19 468 15% 
012 11 1930 15*2 
000 15 37 14% 
It 48 ri 
15 533 12% 
080 19 115 21% 
412 306 u4% 
020 73 352 22 

3 18 

0 2247 Ji 
75 618 3 

73 12*2 
12 654 17 

5 997 9 


024 11 


6» 


3% 3% -% 
16*2 17 

2 2-% 
3*2 3*2 +*b 
7% 7*2 -% 
21 21 
4% 4% •♦% 
4% 4% -eft 
24 24% +% 
6*2 6% -*8 
31% 31*2 -% 

1«% *5ft *ft 
15 15% -% 
13*2 14% 

5% 5% 

11 % 12 % 

21*2 21% 

3% 4% 

21% 

18 

Jl ii -ft 

2i2 3 

12 12% +*3 
16% 16% *% 
8*2 8J1 -ft 


-% 
-% 

. +% 
22 +% 
18 


- M - 


IWtffflft A 

Hartevwn 

Roper Op 

HamsCmp 

*0 S Co 

Hoaflncar 

Heaimcre 

HeahMyn 

Hadinger > 

Hftttnl 

RetenTnty 

HeabB < 

Hogan 3ys 

Bungle 

Home Beat 

Hqt into 

Htxnbtc* 

HoreeWtes 

Hunt J8 v 

ftenngtn 

HixcoCo 

HnctiTecb 

Hyca Bk> 


65 38 

068 B 13 
000 13 1698 
319 

016 28 5135 
26 5775 
006 20 88 
II 310 
016 1B10437 
33 
II 915 
008 11 1B2£ 
015 19 166 
67 234 
080 B ZlOO 
044 19 50 

172198 
044537 2 

020 16 229 
000 71801 
008 I 7 
131 1921 
17 305 


7% 7% 

34 23% 
14% 13% 

14 13% 
34% 32% 
28% 28% 
12*2 1Z% 

8% 7% 
11% II 
9*2 a% 
18% 17% 
16*2 15*2 
6*2 6 % 

15 14% 
30*4 20*4 
27*2 26% 
15% !<% 

5% 5% 

17 16*2 
f7%d17% 
3% 3% 
24*4 23 

4% 4% 


7% -% 
24 -% 
14% 4% 
13% -% 
33*2 «t4 
28% -*4 
12*2 

7Ti -% 
11 -ft 
9% +% 
18% +% 
16*2 +% 
6% «-% 
14% eft 
20% 

27 +*2 
15% *% 
5% e% 
16*2 '*2 
17% +% 
3% -% 

23% e% 
4% 


FA 5ys 50 3M 8*2 8 8%+% 

DS Camrti £6 4959 9% 9 9 -ft 

IS Intel 8 508 3ft 3ft 3ft +,*. 

knmucor 35 334 6*; 5% 6 +% 

Invnuiogen 1 867 3% 2% 3 

huger! Be 040 30 39 16% 15*2 15% -% 

trid Ins 0r«157 37 11% 10% 11 ♦% 

MBes 131014868 17% 16% 17 ♦% 

hi arm lx 33 6296 28 27 % 27% +% 

tnqteJUkl 066 15 17 11% 107j 11% 

WeVtJW 351S7B8 29% 28% 3% +^i 

IniflldSya 38l3£6ul6% 14% 18*4 +£ 

incgidWsi 7 GO 2% 2% :% 

Intel x 024 1257310 63% 61% 6£% +1% 
IhEi B 310 2% £% 2% 

hOgtnB 040 £7 80J^. 16*2 l5 7 g 16ft +% 

knaTd 18 366 8% 8% 8% 

hte1»A 024 15 5 11% 11% 11% +% 

Wflph 3 659 8% 8*2 B% e% 

tnterfeof 2T£83 4 % 4% % s „ +ft 

taersive 7 2460 17% 16% 17% +% 

trrarvtnc 27 3052 15% 15 -% 

htDaxyQA 13 144 1&{i 16% 18% -% 

Ini Res 002 17 111 2% 2% 2% -% 

hi Talal 275 IS 5% 5*2 5% 

towcere 0® 20 534 31% 30 31 +1% 

Iomega Cp 3 445 4% 4% 4ft -ft 

fewraadx 17 146 18% 18 18% -% 

SoVWBdo 1.J2 36 14215*2213%2I5*2 2% 


JU Snack 

11 

- J 

48 

11% 11*2 

11% 

♦ft 

PxmwrSt 
Ponce Fed 
ftnwfl 

Jasarlrc 

026 13 

BB 

9*2 6% 

9 


Pres LBb 

JLGW 

010 72 

66 

37*2 36 

37ft 


Preasto. 

Jannson W 

5C 

5 

Eft 2*2 

22*2 


PtiDosI 

Jonas M 

10 

63 

13% 13ft 

13% 

+ft 

rite Pm 

Janes MM 

0 IB 13 

55 

8ft 8% 

Bft 

♦ft 

Prinbail 

Jost/n Gp 

1JB 28 

71 

36% 30% 

26% 

-ft 

Rod Ope 

JSSFmx 

060 15 

634 

24% 3% 

23% 

+.31 

PiftomB 

■taw up 

0£8 IB 

IBS 

19 18*2 

18*z 

-% 

Pyramid 

JiRbn 

016 9 

388 

13% 12% 

*2% 

-ft 

QuadraLag 


Ok. E into mk Ln Lrt Gkm 


KSHte 

KsnanCp 

KsHyOl 

Kriyte 

XoXDCfey 

KMrir 

Nredmer 

KLAbrir 

KAndedge 

KlIA 

Ksnaglnc 

KufickaS 


- K - 

008 IT 258 2 3 2*% 

044 5 118 9% 9% 
31410 6% 6% 
072 251887 30*4 29% 
011 11 155 8*2 6% 
004 T3 490 24 23% 
21 noo 10% 10% 

70 4352 u54 $2 
2 816 4 3% 

I 211 ji % 
227 2680 35*4 M 
123871109% 18% 


21% 

9% 

8% -% 
30% 

6*2 +% 
ZSk -% 
10% -% 
52% +% 
4 +*4 
040 
SS 
19% 


% 


Labors 072 21 79 
IridFun 012 38 209 
laraftsch 513050 
uxieaser 048 153173 
Lance hex 090 173174 
LarxtnkGpii 25 842 
Lmoptics 9 17 
Lasercepe 28 263 
LriUce 5 15S060 

Larnon Pr 048 18 91 

LDOS 32610586 

UVCp 016 2 17 
Lohttn 221257 
18 7121 
020 16 27 
25 59 

028 12 88 
IS) 392 
052 15 258 
13 10 

UteerTec x 026 39 5081 
UnuBax 040 17 5 

Laewen Gp 008 30 3147 
LmeSsr 12 2EB 
LoOjsO 33227395 

LTXCp 31135 

LV1H 046 4 71 


Legem Cp 
Lite Tech 
Liteane 

LOytodA 

UiBr 

LtncdnT 

LhtbayMf 


- L- 

17*2 17 

6% 6% 
45% 44% 
35 33% 
17S 17*2 
20*4 19*4 
6% 6% 
4% 4% 
18% 17 
25% 24% 
24% ZZ% 
5% 5% 

18*4 17% 
32 28% 
1B% 18% 
5% 4% 
13*2 13% 
139137% 
16% 15% 
30% 30% 
49 47 

33% 33*2 
25*2 25 

6% 6% 
39% 36% 
1*4% 4% 
31% 31% 


17 
8*8 

46% +% 
+% 
17% -% 
19% -% 
GT, -% 
4% •% 
17% 4% 
25*. +*2 
2?% -1% 
5% +% 
17% +% 
30% +1% 
18% 

4% -% 
13% +% 
138 +% 

18 

30% +% 
47% +% 
33% +% 
25% +% 
B% -*a 
39*4 +1 

4% +% 
31% -% 


MCI Cm 005 1930745 22% 
MS Cars 20 871 24 

Mxlfll 060 42 44 13% 
MedtoonGE 108 14 93 33*2 

Magma Pw 184141 37 

Magna Grp 076 13 112 20% 
Mafi Box 15 43 10 

Marram Cp 100 75 9% 


IfertoeOr 
Martel Cp 
Marquest 
Uairaoa 


11 8696 4ft 
9 11 41% 

2 30 1% 

171000 8 


UanhSmkA044 11 2 M n% 
Uerahai 060 11 1517 S>*2 
Master 9 230 7% 

Marin H 51 6a7u07% 
tor Cp 0 1890 3% 
Me&aAR 044 12 24 15% 
McCormlc 04815 878 20 
Medexhc 018 18 247 14% 
MsdkiteS 04813 2419 23% 
Metamtne 024 74 298 io% 
UemorCp 016 56 210 17 

MeiiiG 024 381084 13% 
UenamLB 080 11 288 20% 
MercuyG 070 B 456 30% 
Mrtdbn 106 11 4146 £9% 
Mertsel 92101 10 

MrinneA 012 19 71 19% 
ITSCm 401282 39 

UtamelFx 020 20 582 10% 
UWl NalH x 2.00353 114? 78% 


UCRHil 

Manage 

Alarcon 

Magrefx 

MtapaAs 

Mvn 

MdADM 


1? 209 5*4 
9 3207 12% 
8 2843 uB* 4 
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WORLD STOCK MARKETS 


FINANCIAL TIMES 


Thursday November 3 1994 


Fed support for dollar Switch to growth stocks mooted for Q4 

A , „ . . , „ . K/fRantime BCI fell L95 to a number of receat broki 

• 1 • Bourses TO^ened following .vm £ani met to dis- recommendattona; Mr Bfai 

aids recovery m Dow SS — ■ Isss 


EUROPE 



Wall Street 


US share prices were mostly 
flat In early afternoon trading 
yesterday after Federal 
Reserve intervention to sup- 
port the dollar helped both 
stocks and bonds to recover 
from early losses, writes Lisa 
Bransten in New York. 

By 1 pm. the Dow Jones 
Industrial Average was up 3,70 
at 3,867.07. The more broadly 
based Standard & Poor's 500 
was also slightly higher, up 
156 at 469.68, while the Ameri- 
can Stock Exchange composite 
was down (L37 at 455.15. The 
Nasdaq composite was up 4.35 
at 776-54. Trading volume on 
the NYSE totalled 196m shares. 

In early trading, the stock 
market fell in the wake of 
lower bond prices, which were 
palled down by a weakening 
dollar. At one point, when the 
dollar had dropped to a post- 
1945 low and the 30-year bond 
yield was at a two-and-a-half 
year high, the Dow dropped by 
more than 20 points. 

Share prices, however, 
quickly recovered after Federal 
Reserve intervention in the 
currency markets wiped out 
early morning losses in the dol- 
lar, and helped bond yields to 
retreat from their earlier 
highs. 

The Fed's Intervention was 
welcomed by investors who 
had feared that the central 
hank would allow the dollar to 
keep falling. Apart from the 
damage a weak dollar Inflicts 
on the bond market, equity 
investors feared that a weaken- 
ing US currency would make 
stocks unattractive to foreign 
buyers. 

The day's economic news, 
meanwhile, had little impact 
on trading. The commerce 
department reported no change 
in its index of leading eco- 
nomic indicators for September 
and revised August's figures 
downward to an increase of 0-5 


per cent from the 0.6 per cent 
reported last month. The gov- 
ernment also reported that fac- 
tory orders declined 05 per 
cent in September, a tumround 
from the 4.7 per cent reported 
the prevous month, and 
released Its Beige Book report 
on the economy showing con- 
tinued expansion In business 
activity. 

Among individual stocks, 
Quaker Oats fell $5% to $69% in 
volume of L4m shares on news 
that the company planned to 
buy Snapple Beverage, the soft 
drinks group, for $14 a share or 
$1.7bn in cash. Quaker also 
said it would seek buyers for 
its European pet food and Mex- 
ican chocolate businesses. 

The sharp fell in share prices 
killed recent bid speculation 
surrounding the company, 
while the acquisition indicated 
a dilution of Quaker's earn- 
ings. Snapple’s share price, 
which trades on the Nasdaq 
market, fell $-& to $13% in 
heavy trading. 

Technology stocks were in 
favour, with IBM, Compaq and 


The TSE 300 composite index 
fell 1182 to 4,280.63 at noon in 
turnover of 31.9m shares. 
Declines led advances 323 to 
236, with 303 issues steady. 

Only two of the market's 14 
sub-indices were higher at mid- 
day. Transportation stocks led 
the downward trend with a 15 
per cent fell, while real estate 
and construction stocks were 
0.6 per cent lower. 

The precious metals group 
was also down as Comes gold 
came under pressure from the 
rebound in the US dollar after 
the Fed intervention. 

Pure Gold Resources shed 4 
cents to 30 cents after Tues- 
day's sharp rally, while Thom- 
son was C$% off at CSlSYi. 


Venezuela 


Share prices in Caracas fell in 
thin activity, the Merinvest 
index losing L84 or 1.3 per cent 
at 142.08 after a drop of 25 per 
cent on Tuesday. 

Confusion was reported over 
rights to a one-for-six, $65m 
offer of shares by the bench- 


Digital Equipment each up by . mark utility Electricidad de 
$1, at $74%. $41% and $30% Caracas. Affected by this the 


respectively, and Hewlett-Pack- 
ard better $1% at $99. 

Ell Lilly rose $1% to $63 on 
expectations that the Federal 
Trade Commission will 
announce an agreement today 
with the company to allow the 
drugmaker to purchase PCS, a 
drugs distributor. 

On the Nasdaq market, tech- 
nology issues led stocks 
higher. Intel climbed $1% to 
$63%, Microsoft added $1% at 
$63%, Sun Microsystems tinned 
$% to $33% and Lotus Develop- 
ment rose $1% to $39%. The 
exception was Apple Computer 
which eased $% to $43. 


stock fell sharply in midses- 
sion. prompting the exchange 
to suspend trading while it 
consulted with the company. 

Trading in the stock did not 
resume. At the moment it was 
suspended, a half-hour before 
the end of the two-hour ses- 
sion, Electricidad was trading 
at 305.00 bolivars, down 8.50 
bolivars on the day. 


Bourses weakened following 
the overnight drop in US equi- 
ties, and yesterday’s Federal 
Reserve support for the dollar 
came too late in the day to 
engender any recovery, writes 
Our Markets Staff. 

There was change to come, 
however, said Mr Francois 
Langlade-Demoyen of CS First 
Boston; his scenario was that 
growth momentum will start 
to fed e in the fourth quarter of 
this year, and that cyclicals 
will lose their charm to the 
benefit of growth stocks. 

FRANKFURT followed 
CSFB's inclinations, or 
appeared to do so, with big 
gains in construction stocks 
and the computer software pro- 
ducer SAP, and falls in chemi- 
cals. The Dax index dropped 
2758 to 2,04255 on the session, 
easing a little further after 
hours, and turnover more than 
doubled to DM6.1bn following 
Tuesday’s holiday in some Ger- 
man cities. 

SAP rose DM17 to DM957 
and. In construction. Hochtief 
and Holzmann put on DM29 at 
DM968 and DM18 at DM855. At 
Robert Fleming in Frankfurt, 
Mr Hans Peter Wodniok 
observed that construction 
shares tend to outperform in 
late autumn and winter, pro- 
vided that sites are not frozen 
up for months on end. 

Among cyclicals, by tbe end 
of the afternoon, Bayer was 


FT -SE-. AcitkVi^s'-Sl iaiv; 


Meantime, BCI fell L95 to a number of recent brokers’ 
L3.461 as the board met to dis- recommendations; Mr Martin ■ 

141,1 JL 111/ ‘ nika . 


Nqv 2 THE EUROPEAN SERIES 

Houlycftwpw OpW MX30 M00 12.00 1100 1400 1530 Chae 

FT-SE Eud&k* 100 13a* 1321.17 1321* 1321.10 1310.44 131070 1317.79 131601 

FT-5E Bn*** ZBQ 138668 1387.98 13893) 1387.70 1385.16 13*31 138344 138237 

Nwi Oct 31 0020 Oct 27 Oct 3 


FT-5E BnKnck an 


FT-5E Eurotrack 100 
FT-S Etrofexk 200 


BnsiaoapMIM&HpAW: 100 - I1713S; 200 ■ IJU.41 IMtBF MB ■ 1H50B 2B0 - 1381 f Part* 


down DM8.60 at DM341, 
Hoecbst by DM7 at DM321.40, 
Continental, the tyremaker, by 
DM7 at DM213 and MAN. the 
truckmaker and engineer, by 
DM11.10 at DM369.90. Here, Mr 
Wodniok said that sector per- 
formance charts for the Ger- 
man market suggest periods of 
outperformance or under- 
performance lasting between 
2% and 4% years; chemicals 
had been outperforming for 
close to 4 years in the present 
cycle, suggesting that this 
period was coming to an end. 

PARIS came back from two 
days' holiday to a Tall of 1.7 per 
cent following Friday’s 2.6 per 
cent gain, the drop of 32.09 in 
the C AC-40 to 1.873.90 
reflecting weakness in US cur- 
rency. bond and equity mar- 
kets. Turnover was FFr4. 05b n. 

However, the bourse Eound 
the ability to celebrate a 145 
per cent rise in nine-month 
sales at Peugeot which added 
FFr17 at FFr788, and to antici- 
pate good nine-month results 


after hours from Roussel Uclaf, 
the Hoechst subsidiary, which 
climbed FFr16 to FFr591. 

MILAN turned hack as Cre- 
dito Romagnolo began to erect 
defences against Credito Itali- 
ano which, last week, hid 
U.OQOhn for a 48 per cent stake 
in the Bologna bank. The 
Comit index dropped 959 or 15 
per cent to 625£L 

Romagnolo fell L654 to 
L 16,295 in early trade before 
the shares were suspended as 
the hoard announced plans to 
merge its operations with 
those of Casse Emfliano Rom- 
agnole. a Bologna-based 
savings bank. 

Mr Bryan Crossley at Hoare 
Govett said that the move was 
clearly an attempt to make 
Romagnolo “indigestible". He 
noted that Romagnolo and 
Emiliano had previously dis- 
cussed links and said that any 
such move would make strate- 
gic and commercial sense. 

Credito Italiano finished L51 
cheaper at L1.589. 


cuss future strategy, prompt- 
ing further speculation that it 
might be about to launch a bid 
for Ambroveneto. However, 
analysts were sceptical about 
any such move in the short 
term, pointing to the 314 per 
cent rise in the Ambroveneto 
share price between Wednes- 
day of last week and last Mon- 
day. Ambroveneto was marked 
91 per cent lower in early deal- 


Ebner’s BK Vision was also 
rumoured to be a buyer/ 

OerUkon-Bahrle picked tip 
SFr&50 td SFtl305Q after the' 
chairman gave a poskhre ;ddt- 
look foreamings developments 
in the coming years at an amt 
lysts ' prese ntation in Zurich. - : 

AMSTERDAM saw the ASX 
index close 4^0 down at 405.75, 
and Akzo Nobel lost FI 3.40 at - 
FI 208 although its thir&quar- - 






ings, as investors digested, ter results woe in-fine. with 
developments at Romagnolo, most expectations. -Merrill 


before bouncing- back to finish 
L 79 hig her at L5515. 

ZURICH’S SMI index eased 
3.9 to 2,500.0. UBS bearers 
remained at the centre of 
attention, giving up SFrll to 
SFTU55 as investors continued 
to swap into CS Holding. SFr7 
ahead at SFr564. 

SBC came under pressure, 
the bearers losing SFr6 to 
SFr353 after the bank repeated 
nine-month figures arid wanted 
that it expected significantly 
lower full-year results. 

Exporters were unsettled by 
the weak dollar. Nestle losing 
SFr7 to SFT1467, BBC easing 
SFr20 to SFr 1,060, and CSba giv- 
ing up SFr6 at SFr721. 

Schindler bearers picked up 
SFr450 or 6.7 per cent to 
SFI7.200 on the view that the 
recent correction had been 
overdone. One analyst com- 
mented that the stock had seen 


Lynch -said -tite company was 
on track fear good performance' 
over tiie next few years, and 
recommended using the recent 
share price weakness as ah ■ 
opportunity to buy. 

DSM picked up:40 cents to 
FI 14L4Q after Tuesday's sharp 
losses whfoh followed its Hunt 
quarter results. ..*:'■■■ 
Among companies expected 
to report today, Philips shed 90! 
cents to FI 54.70 and KIM gave . 
up FI L20 at FI 4750. , . . " 

MADRID was dominated -by 
outside influences as the gen- 
eral index reheated 3.06 points 
to 293/24 in turnover of 
Pta23.0Ibn. BCH rose Ptalfi to 
Pta3,015 before disclosing, after . 
hours, a 25 per cent decline in. ■ 
net profils for the first nine 
months of 1994. 


*5 to sot 






Written and edited by WHDam - Yj 
Cochrane aid Michael Morgan - . J 



ASIA PACIFIC 


Strong yen hits Nikkei as Taipei rebounds 


Canada 


Toronto was easier at midday, 
in spite of the recovery on Wall 
Street after the Fed's interven- 
tion to support the dollar. 


SOUTH AFRICA 

Johannesburg overlooked 
softer world markets and a 
weak gold price to post steady 
gains as local interest propped 
up prices in mostly lacklustre 
trade. The overall index 
improved 30 to 5,738, industri- 
als were 27 better at 6,605 and 
the golds index rose 33 to 
2541. Anglos put an 75 cents 
at R237.75 in R25m turnover. 


Tokyo 


EMERGING MARKETS: IFC WEEKLY INVESTABLE PRICE INDICES 

Dollar terms Local currency terms 

No. of Oct 28 % Change % Change OcL 28 % Change % Change 

Market stocks 1994 over week on Dec *93 1894 over week on Dec *93 

Latin America 

(208) 

738.85 

+0.2 

+13 JB 




Argentina 

(25) 

918.84 

-2 A 

-73 

562,652.45 

-2.3 

-73 

Brad 

(57) 

426.02 

+9.2 

+83.1 

1350385,929 

+8.8 

+1329.4 

CMe 

(25) 

835.47 

-0.2 

+51.4 

1,37475 

-02 

+442 

Cotombra 1 

(11) 

824.53 

-3.6 

+273 

132412 

-33 

+32.0 

Mexico 

(67) 

918.35 

-45 

-07 

135930 

-40 

+03 

Peru* 

(11) 

193.60 

+2.6 

+60.1 

262.94 

+2.5 

+65.3 

Venezuela 3 

(1Z) 

549.70 

+23 

-7.1 

2,146.60 

+2.4 

+51.0 

Asia 

(557) 

27659 

-1.0 

-5.0 




China 4 

(18) 

101.48 

-1.5 

-32.0 

109.35 

-13 

-33.4 

South Korea 0 

(156) 

148.76 

-1.5 

+25.9 

155.72 

-1.6 

+24.1 

Philippines 

(19) 

323.00 

+<L2 

-5.1 

38834 

-1.0 

-123 

Taiwan, China* 

(90) 

151.71 

-3.4 

+12.2 

14832 

-04 

+103 

India 7 

(76) 

132.36 

-1.1 

+13.6 

147.50 

-1.1 

+143 

Indonesia 0 

(37) 

109.94 

+0.4 

-11.8 

129.65 

+03 

-83 

Malaysia 

(104) 

304.44 

-1.0 

-102 

286.81 

-1.0 

-149 

Pakistan 1 

(15) 

412.23 

-0J9 

+6.3 

57022 

-03 

+05 

Sri Lanka 10 

(5> 

191.84 

-2 J5 

+02 

203.75 

-23 

+8.7 

Thailand 

(55) 

444.21 

-1.4 

-7.0 

439.45 

-13 

-9.1 

Euro/MW East 

(125) 

116.69 

+1.0 

-31.1 




Greece 

(25) 

220.44 

-1.9 

-02 

34633 

-1.0 

-93 

Hungary" 

(5) 

182.32 

-08 

+9.4 

233.40 

+0.1 

+153 

Jordan 

(13) 

154.12 

+0^ 

-63 

22334 

-03 

-63 

Poland 0 

(12) 

515.90 

-103 

-383 

749.08 

-93 

-323 

Portugal 

(25) 

128.89 

-1.2 

+113 

134.48 

-04 

-23 

Tizkay" 

(40) 

114.17 

+5.6 

-463 

1,935.14 

+63 

+33.0 

Zimbabwe* 4 

P) 

26402 

-1.5 

+30.6 

323.85 

-13 

+51.6 

Composite 

(891) 

360.35 

-03 

+13 





Mon are cataJUad or mhNA and ms ** changes an pemamge nmwnmnr tan too presteue Fndo y. Bam oHr Ok issbiaa except thoco noted 
HH(A ac f!*W> I IS 01; PJOae 31 199% PMan 5 I ago: note 31 1333; (%Jan 3 199 St (HJJfln 4 1331: pjNor 6 138* &Sep as 133* flMtr 1 1991; fits 
Ok 31 193* (tVOac 31 139* OHOoc 01 199* flWug 4 1989: fMU* 3 1393. 

The smallest of the world’s emerging markets recorded the biggest gains in the nine 
months to the end of September, according to data compiled by Kleinian International, 
the US-based independent analysts. In loou currency terms Egypt rose by 115 per emit 
since the start of the year and Ghana by 150 per cent 

However, there was also dear evidence that among the more important and liquid 
markets, Latin America had staged a robust recovery Grom setbacks earlier in the year. 
Brazil’s performance was boosted by what was semi as the successful introduction of 
the last stage in the economic reform process in July - the switch to a new currency, 
the real. Since then the S8o Paolo equity market has retreated, bat analysts consider 
that it is now poised for a year-end rally- Salomon Brothers said this week that, along 
with Mexico, an Improvement in the outlook for company earnings and a more 


with Mexico, an improvement in the outlook for company earnings and a more 
promising political outlook should provide tbe incentive for a rise in prices. 

In contrast Salomon has lowered its asset allocation to Argentine equities on expecta- 
tion of higher US interest rates, given that this market is the most vulnerable m the 
region to rate moves. 

• The IFC has launched new stock indices for South Africa, available both in global 
and tnvestable versions. The indices are composed of 63 stocks with a market capitalisa- 
tion of some $l39bn, or 62 per cent of the stock market’s total capitalisation. 


The continued strength of the 
yen hit investor confidence 
and the Nikkei 225 average lost 
ground as market participants 
closed their positions ahead of 
today’s national holiday, writes 
Emiko Terozono in Tokyo. 

The index was off 165.83 at 
19.750.65 after a day’s high of 
19591.78 and low of 19,71354. A 
decline in the futures market 
due to Tuesday's fell in stock 
and bond prices on Wall Street 
prompted arbitrage unwinding, 
while corporate investors were 
also seen selling shares. Large- 
capitalisation steels and ship- 
builders were lower on institu- 
tional profit-taking. 

The dollar reached a record 
low of Y9655 in spite of heavy 
Bank of Japan intervention, 
hurting export-oriented high- 
technology stocks and car 
makers. Nomura Research 
Institute, the research arm of 
the leading brokerage com- 
pany, forecast that the yen 
could rise further in the long 
term. 

Nomura took the view that 
the widening of Japan's trade 
surplus with the US, due to 
growth in the global economies < 
and the J-curve effect, could ( 
put further pressure on the , 
yen-dollar rate. 

Volume totalled 2S0m shares, 
against 247m. The Toplx index 
of all first section stocks 
slipped 10.67 to 1568.68 and the 
Nikkei 300 shed 2.18 to 287.01. 
Falls led rises by 671 to 303, 
with 194 issues unchanged. In 
London the ISE/Nikkei 50 
index lost 059 at 1,288.60. 

Mitsubishi Oil, the most 
active Issue of the day, plunged 
Y60 to Y98Q. The company con- 
firmed that it had felled to 
extract oil from its second well 
off the coast of Vietnam. Other 
petroleum distributors were 
also weaker, with Cosmo Oil 
down Y22 to Y738 and Japan 
Energy losing Y16 at Y410. 

Electronics shares were 
weak. TDK declined Y120 to 
Y4.700 and Sony Y70 to Y5550. 
Heavy electricals fell, NEC 
retreating Y20 to Yl.210. Car- 
makers were also lower. Nis- 
san Motor dropped Y16 to Y814 


FT -ACTUARIES WORLD INDICES 


JaMy compied by Tlw Financial Timas Lftl. GoWmwi, Sachs & Co. »xJ NalWoat Securities LM- ki conjunction wfth the inafltute ot Actuaries and the Faciity of Actuaries 
NATIONAL AND 

REGIONAL MARKETS TUESDAY NOVEMBER 1 1904 MONDAY OCTOBER S1 1884 DOLLAR INDEX - 


Rguree In parentheses 
show iwnbor ett Ines 
of stock 

US 

DoBar 

Index 

Australia f88)- — 172.44 

Belgium (35) 

Brazfl (28) — 

17079 

178.BS 

Canada (103) 

13639 


Franca (iai) 

17138 

Germany (50) 

145-90 


Day's Pound 
Change Staling 
K Index 


Local Local 
Currency % chg 
Index on day 


Local 

Currency 62 weak 52 weak 


15039 10547 
16014 11205 
154.89 10448 


174.16 15036 106.73 

18020 16058 11227 
189.72 154.32 104.01 


13052 15007 189.15 14036 

14060 14062 19069 167.46 

133.03 12945 177.04 14033 


Ireland (14) 209.61 

Holy P8) 7089 

Japan (488) 183.70 

Malaysia (97) 53562 

Mexico (18) -208038 

Nethafand (19) 221.36 

New Zealand (14) 7070 

Norway (23) 203.70 

Stagapore (44) 390.51 

South Africa (59) 33726 

Spain pB) 14323 

Sweden (30) 242.68 

SwiearlWld (47) 16526 

ThaSandm 1 6234 

United Kingdom (204) 20047 

USA (515) 19128 


-2-0 

10040 

10017 

13737 

27433 

-23 

075 

18044 

16437 

11030 

141.44 

28030 

_ 


_ 

-13 

122.70 

82.74 

105.46 

132.70 

-08 

236 

13634 

12434 

0074 

107.10 

13083 

14531 

12054 

13331 

-0.7 

22831 

154.64 

197.10 

201.73 

-13 

1.47 

25437 

23138 

15037 

19932 

20439 

275.79 

23037 

23830 

-07 

17009 

12077 

15333 

19054 

-13 

074 

19838 

18083 

12130 

16539 

19238 

201^41 

11635 

123.71 

06 

165.70 

10530 

13333 

13019 

OO 

3.14 

17062 

166.13 

10430 

133.73 

138.19 

18637 

15934 

106.73 

OS 

13231 

8023 

11073 

11073 

-Ol 

1.82 

14S33 

13236 

8930 

11004 

11334 

16040 

12837 

132.72 

-06 

352.45 

23738 

30235 

38536 

-OB 

010 

39130 

35533 

23932 

306.49 

38730 

50836 

34139 

38439 

Ol 

19009 

12020 

16040 

18003 

-04 

046 

20939 

18039 

12032 

164.13 

18331 

21830 

171.86 

171.68 

02 

72.45 

4088 

8238 

9138 

03 

1.71 

79.74 

7230 

4837 

8230 

9138 

97.78 

67.88 

68.06 

-03 

14040 

10012 

12731 

10012 

-03 

0.77 

104.12 

14833 

10038 

12065 

10030 

170.10 

12434 

16053 

-13 

485.40 

327.40 

41730 

527.40 

-13 

139 

54237 

49008 

aaaaa 

42536 

53330 

021.63 

43071 

474.72 

-07 

190027 

128132 

163337 

7877.47 

-07 

130 

211131 

181937 

128070 

1854.88 

783034 

264738 

189028 

185014 

-09 

20075 

135-38 

17236 

189.75 

-13 

330 

22330 

20334 

13084 

175.03 

17028 

22330 

187.01 

19439 

05 

6936 

4631 

59.79 

8018 

05 

3.07 

7634 

6042 

48.79 

5934 

6533 

7730 

5932 

68.38 

-08 

18479 

12462 

158.83 

18074 

-1.1 

133 

20531 

18838 

12082 

16033 

182.88 

211.74 

165.52 

18138 

-Ofi 

36232 

24434 

311^43 

27017 

-07 

130 

40138 

36436 

24538 

314.62 

27135 

40138 

294.68 

31B33 

-1.4 

29744 

20059 

265.67 

291.05 

-04 

230 

332.71 

30232 

20330 

260.79 

23234 

34230 

202.72 

212.07 

03 

12938 

0738 

111.73 

135.48 

OO 

431 

14236 

12933 

8737 

111.74 

136,48 

155.79 

12838 

14236 

00 

22000 

14043 

189.18 

25010 

-03 

135 

24232 

22001 

1483S 

190.1B 

25836 

24238 

17533 

20138 

08 

14938 

101.13 

12830 

12031 

02 

139 

10437 

149.18 

10055 

12060 

12738 

17056 

14184 

14550 


16545 111.64 14230 ITS. 42 

18034 12068 16017 18034 


134.07 11056 


Americas (684) 179.00 

Europe (707) 175.75 

Norite (116) 23253 

Poetic Basin (780) 17204 

Ewo-Padflc (1500) 1 74.00 

North America (B18) 18701 

Europe Ex. UK (503) 156.10 

Poetic &. Japan (325) 283.17 

World Ex. U3(f 70S) 175.82 

World Ex. UK (2019) 17700 

World E)l Japan (175^ 19042 


18203 109.48 13903 14475 
16909 10748 13700 15040 


21088 14021 
16&84 105.77 


18130 21082 
18482 11098 


167.80 106.42 136*1 128.79 

17032 114*8 14040 18726 


18929 


18079 106.43 
172.70 116.40 


9631 121.73 128.41 
16096 205.15 233.56 
10741 13090 13046 
106.43 13021 14543 
110.40 14044 177.88 


The World Index C2223)„„ 


18041 

12634 

16070 

1BG41 

21496 

1B1.11 

19008 

17639 

118.14 

161.11 

192.78 

19634 

17096 

191.08 

184.07 

11036 

14144 

14934 

_ 

_ 

_ 

15839 

107,42 

137.40 

15035 

178.58 

15479 

16023 

21239 

14235 

18233 

21240 

23331 

173.19 

19062 

157.78 

10634 

13632 

11133 

17B38 

134.79 

15033 

15834 

10072 

138.50 

12735 

17S.14 

14088 

15059 

172.12 

11630 

14837 

188.72 

192.73 

17S37 

18730 

14139 

65u43 

12238 

129.73 

15012 

13534 

141.07 

24132 

16244 

207.77 

235.15 

29631 

23234 

244.25 

15933 

107.79 

13737 

13036 

17065 

145.58 

16035 

16131 

109.13 

13938 

14627 

17639 

15536 

16731 

17087 

117.19 

14939 

17836 

19520 

17034 

18134 

16407 

11036 

141.44 

14934 

16080 

15085 

16069 


CopyHeM. Th" Fhandal Hmes LMnd. Gcttnan. SaChs and Co. rod NriNest Gecuridm UmBad. 1987 
Louaz priow were irwrioUo lor Ms edtion Maris*# dosed 1/11fl4i Austria, Qrfghni, nonce. Rdy end Spah. 




, 4 - 


and Isuzu Motors Yll to Y51S. 

Japan Tobacco dipped 
Y30.000 to Y 10.8m and Nippon 
Telegraph and Telephone 
declined Y12.000 to Y 908, 000. 
Japan Telecom sagged Y90.000 
to Y3.53m, while East Japan 
Railway lost Y2.000 at Y482.000. 

In Osaka, the OSE average 
receded Ul.57 to 21,976^7 in 
volume of 59.2m shares. 


Roundup 


Wall Street inhibited trading in 
some Pacific Rim markets, 
while Kuala Lumpur, Singa- 
pore and Bombay were closed 
for holidays. 

TAIPEI rebounded 2.3 per 
cent after Tuesday's 5 per cent 
fell, with rises led by paper, 
steel and conglomerate shares. 


The weighted index gained 
141.45 at 6,342.66, off a 6,372.65 
day's hig h , but turnover was a 
modest TS57.81bn- 

Buylng emerged in the last 
20 minutes as two new funds, 
with T$5bn each, entered the 
market Paper stocks led the 
rally, rising 4.6 per cent on 
pulp price increases, with 
Chung Hwa Palp up its 7 per 
cent limit to T$4L90. 

HONG KONG saw selling by 
foreign investors which left the 
Hang Seng Index 121.64 or 1-3 
per cent lower at 9.45L76, in 
spite of comments by a senior 
government adviser that the 
long awaited Sino-British air- 
port financing pact would be 
signed within days. 

Blue chips bore the brunt of 
the spiling. Swire Pacific “A” 


fefi HK$L25 to HK$5625, HSBC 
HK$i to HK$90 and Cheung 
Kong 60 cents to HK$36.40. 

Hong Kong Telecom, which 
announced interim results on 
Tuesday, fell further on profit- 
taking, relinq uishing 40 cents 
at HK$15.80. 

SYDNEY was lower in light 
volume, taking its direction 
from Wall Street The AH Ordi- 
naries index ended 16.8 down 
at 2JJLL2. 

The debut of Acacia 
Resources, the minerals sub- 
sidiary floated off by Shell Aus- 
tralia, saw strong institutional 
support, the stock finishing at 
a 38-cent premium to the 
A$2.00 issue price. 

MANILA was supported by a 
strong nine-month earnings 
report from Petron, and the 


composite index picked up 
2213 to 8,090.65. Tbe oil refiner 
jumped 5.9 per cent to a new 
high of 27.00 pesos. 

SEOUL saw profit-taking 
coupled with WonlObn of sales 
by the market stabilisation 
fund which pulled the compos- 
ite index 2.69 lower to 1,105.74. 

Construction shares lost 
ground on market talk that the 
government might taka puni- 
tive action against some com- 
panies for corruption; the sub- 
index shed 1L82 to 569A5. 

In a separate situation, 
Dong- Ah Construction went 
limit down on reports that its 
chairman would be summoned 
for questioning in connection 
with the collapse of a Seoul 
bridge last month. It fell 
WonL300 to Won29,600, 


In Russia You Should 
Deal with Proprietors 


Judy marked the end of the last six months of 
voucher privatisation in Russia. 

The bulk of privatisation cheques (vouchers) have 
been redeemed, their owners have received shares of 
privatised enterprises. The concept of large-scale peoples' 
privatisation has provided each Russian citizen with an 
opportunity to become an owner of part of the state 
property. Not everybody used this opportunity, however, a 
majority of Russian citizens have acquired equity in 
privatised enterprises and investment funds. 

In turn, investment funds, banks, commercial 
structures hold a large amount of interest in former state- 
owned enterprises. 

Actually, grounds have been created for the formation 
of a civilised stock market in Russia. What hinders 
successful development of the process? 

The first obstacle is lack of complete and consistent 
legislation regarding the stock market. A majority of the 
laws emerged in those times when market orientation was 
merely a dream, however, the bulk of amendments to 
these laws is being made by state bodies of the Ministry of 
Finance and State Committee for Property Management 
to respond to their own needs. This makes the situation 
still more complicated preventing stock market 
development. Besides, the emerged opportunity for 
uncontrollable securities trading leads to large-scale fraud 
(of population in the first place). Only well-drafted 
legislation based on international experience and specific 
needs of Russia adopted at the State Duma level can 
direct development of the Russian stock market towards 
world standards. 

The second obstacle is lack of infrastructure servicing 
the stock market. Stock exchanges have practically 
suspended their operation, the major part of securities 
trading is done outside the stock exchanges practically 
without information infrastructure. Shareholders' 
registers are kept with no regard to regulations. Lack of 
infrastructure obviously affects share liquidity, impedes 
their trading, which often prevents share value from 
reflecting conformity between demand for them and their 
supply. 

A year or two ago there were no stock market experts 
in Russia. Even though the Ministry of Ministers of 
Russia and the State Committee for Property 
Management have recently authorised the specialists to 
perform transactions with securities and vouchers, their 
professional level leaves much to be desired. This is a 
third factor impeding stock market development. 

Can Western experience be of any help to Russia in 
this situation? Yes it can. Especially with regard to stock 
market infrastructure development and specialists 
training. However, all this cannot work in Russia until a 
consistent stock market legislation is adopted including a 
regulation on companies operating on the stock market 
and on investment funds. 

Lack of legislation is Russia's internal problem, and 
only when it is solved, favourable conditions for 
collaboration with leading investment banks, stock 
exchanges and companies can emerge. 

What is awaiting the Russian stock market in 
the next six months? 

Evidently, one of the major problems will remain 
actual lack of investment demand for shares of privatised 


enterprises. Considering the fact that these shares 
comprise 80% of the stock market volnme, one can 
suppose that a tendency of very few transactions on the 
securities market is likely to persist. The situation could 
be radically changed by foreign investors. Large voucher 
investment funds, investment companies and banks hold 
share packages which can be of interest both to financial 
investors and companies who seek to establish themselves 
on the Russian market of certain commodities and 
services. At the moment they find themselves in the most 
favourable situation: virtual lack of competition makes 
investment costs available not only for the world leaders; 
willingness of the Russian Government and local 
authorities to cooperate gives hope for possible tax 
exemptions and favourable conditions for production and 
development. What is most important - actually unlimited 
demand for most goods and services in Russia guarantees ' 
high production proceeds and short payback period. 

Unfortunately, for the past eighteen months there 
have been very few cases where Western companies 
participated in voucher auctions and bought shares on the 
secondary market, and no case where such investments 
were further developed This cautious strategy does not 
always pay and may even turn out to be wasteful both in 
terms of capital and time for those companies who have 
come to launch large- scale projects in Russia. 

There is a general view in the West that investment in 
specific Russian enterprises is a highly risky business. We 
consider this belief to be based on ignorance of the real 
situation in Russian industry. 

Flor a long time investments were direc t ed to Russia 
through government agreements and were allocated by 
government officials. Ineffectiveness of this cooperation 
has long become evident. It is high time investors to 
Russia not so much to render assistance as to purchase 
property, develop production and work on the internal 
market The best way to do this is through collaboration 
with real proprietors in Russia. 

If a company makes a knowledgeable investment in a 
specific business, works with a serious Russian partner 
and has a clear understanding of the legal situations, this 
will be a sure formula of success. 

Alfe Capital specialises in development projects and 
major equity purchases in enterprises. Investment Co 
"Alfa Capital" manages assets of Alfa Capital voucher 
investment fond, which is one of the largest voucher 
funds in Russia (the Fund's Charter Capital is 23.2 billion ; 
Roubles, it has over 1.1 million shareholders). As a result - 
of pri vatisation Alfa Capital partially owns a number of 
Promising Russian enterprises. The assets collected have 
been highly appreciated by experts and by several leading 
economic publications. A number of interesting recovery 
projects involving the large enterprises are under way. 
We are open for cooperation with Western companies. Our 
specialists employing Western methodology are 
conducting analysis of Russian enterprises, evaluating 
prospects of various economic sectors and projecting the 
situation in different sectors of the stock market 

If you have decided to come to Russia long-term, with 
serious intentions, we will be your reliable partner. 


Andrei Kosogov, Chairman of Board of Directors, Alfa Capital 




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