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FINANCIAL TIMES 


b,;- ; :ee'-; Gys-rc*. Ne.vseaofc' 


WEDNESDAY NOVEMBER 9 1994 


D8523A 


frauStere ^ mteBA ^ quiet on the White House front as US votes 


travellers lifts BA 
to record quarter 

British Airways announced record second quarter 
profits and an “encouraging" outlook for the full 
year as .it reaped the rewards of a campaign to win 
business travellers. Pre-tax profits for the six 
months to September rose 45 per cent to £34 1m 
($55&n), with £25 3m coming from the second quar- 
ter, which covers the key summer period. 

Sir Cohn Marshall, chief executive, said the com- 
pany was on target to achieve its previously-stated 
aim of £150m of cost savings for the full year, but 
warned that it might have to make provisions 
agains t its $40Qm investment in USAir if a dispute 
with the US carrier’s unionised employees was not 
settled. Lex, Page 16; Qantas results. Page 21 

Greece postpones telecoms flotation: 

Greece postponed the partial flotation of state tele- 
communications monopoly OTE because of unfa- 
vourable conditions on rntomaHnnai capital mar- 
kets. Page 16; Delay puts flotation at risk. Page 2 

Meeting signals Ulster breakthrough: Sir 

Patrick Mayhew, the UK’s Northern Ireland secre- 
tary, and Irish foreign minister Dick Spring are set 
to meet in the Irish Republic on Monday amid signs 
of a breakthrough in efforts to agree a joint docu- 
ment on the province's future. Page 16 

fcffiC to lift stake in Qroupe Bulk NEC, the 
Japanese electronics group, plans to increase its 
stcike in Groupe Bull as part of the privatisation of 
the loss-making French computer group. Page 17 

Record fall in Japan’s bank lending: Japan's 
Economic Planning Agency upgraded its outlook 
slightly, hut the fragility of the country's recovery 
was underlined by a record fall in hank lending last 
month. Page 6 

South Africa moves to compensate Macks: 

South Africa's national assembly passed a restitu- 
tion of land rights tall in a first step towards com- 
pensating blacks dispossessed of their land under 
apartheid. Page 7; Mandela seeks new mines policy. 
Pages 

Israel and PLO reach accord on timing: 

Israel and the Palestine Liberation Organisation 
agreed measures to speed the expansion of Palestin- 
ian self-rule amid growing concerns about the polit- 
ical and economic crisis in the Ga2a Strip. Page 7 

TNT back in the Mack: Australian 
transportation group TNT reported first quarter 
profits of ASIfLSm ($13-5m) compared with a loss of 
A|3£2m In the same period last year. The company 
said'Spmn remained a problem area;- but other 
European interests had ma^ progress. Page 20 : 

EU refuses to abandon steel quotas: 

European Union industry ministers refused to back 
proposals from the European Coirmrission toahan- 
dem qtidias.on steel imprats frorn Slovakia and the 
CzediRepublfc-Piige 2 

UN tribamri'Stotafcs qfcttMBUoiK TheUnited 
Nations- Yugoslav war crfanes tribunal ended its 
first public sitting by making a formal request to 
Germany for the extradition of an alleged Bosnian 
Serb war criminal being held in Munich. 

Page 2 

US shipping lines seek to reflag abroad: 

American Presidential Lines and Sea-Land Services, 
the US’s biggest commercial shipping lines, sought 
permission to reflag some ships abroad to reduce 
operating costs. Page 5 

Sears Tower to bo hold by trust: Sears, 
Roebuck is transferring ownership of Sears Tower 
in Chicago, the world's tallest building, to a trust 
The tower has suffered from high vacancy rates and 
competition from newer offices. Page 17 

Marks and Spencer lifts European sales: 

UK food and clothing retailer Marks and Spencer 
lifted European sales by 20 per cent after passing to 
customers cost sayings made through improve- 
ments in efficiency. Page 17; Lex, Page 16; M&S 
advances 15% to £354m. Page 26 

End of war Is Sri Lankan voters’ priority: 

Ending Sri Lanka's 11-year civil war is the main 
issue in today’s presidential election. The tvro main 
contenders, both widows of assassinated politicians, 
promise peace, but differ on how to end the revolt 
in the 3 -2m Tamil minority community. Page 16 

Tycoon jalled for 25 years: Former Greek 
banking tycoon George Koskotas was jailed for 25 
years in Athens for embezzlement. He was the cen- 
tral figure in a scandal which brought down i 

Greece's socialist government Page 2 I 

Warburg Mt by trading losses: UK-based 
investment bank S. G. Warburg said it would 
-review staff levels and delay investments to cut 
costs after losing money . an trading in the six 
months to September 30. Page 18; Lea; Page 16. 


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By Jurek Martin in Washington 

It was a glorious autumn 
morning in Washington yester- 
day and the White House seemed 
pretematurally calm in advance 
of the evening's mid-term elec- 
tion storm. 

Most visible inside the gates 
was a gaggle of Finnish journal- 
ists, there because President 
Martti Ahtisaari was somewhere 
inside. They did not seem to have 
many opinions on the day’s vot- 
ing which was for all 435 seats in 


the House of Representatives, 35 
or the 100 Senate seats and 36 
gubernatorial contests. 

Outside were four police cars, 
three motorcycles and the occa- 
sional uniformed gentleman - 
minimal visible protection for a 
building which had 27 bullets 
pumped into it two Saturdays 
ago by a furniture upholsterer 
from Colorado Springs. 

Across Pennsylvania Avenue 
in Lafayette Park, the handful of 
little groups bearing home-made 
placards was there as always. 


Several seemed to be living 
rough, including Concepcion and 
W. Thomas whose sign proudly 
announced that they were in the 
14tb year of a “peace vigil". But a 
closer reading did not reveal they 
wanted an end to political wars 
of the sort just witnessed in the 
mid-term campaign. 

Another sign said, cryptically: 
“All decisions should be made 
with the Seventh Generation in 
mind." This may or may not refer 
politically to the 16-year-olds vot- 
ing for the first time yesterday. 


The FT was over at the presi- 
dent’s house for a session on poli- 
tics with what we discreetly cadi 
“a White House official". But it 
was postponed because Mr Leon 
Panetta, the chief of staff, had 
called a meeting - presumably to 
work out the line to be taken 
with the media as the night's 
results, with Democratic losses 
likely to loom large, unfolded. 

President Bill Clinton was up 
early, as usual, on the telephone 
to half a dozen radio stations. He 
again said he was willing to work 


with a Republican congressional 
majority if the worst push came 
to shove and if the opposition 
proved reasonable, which he 
doubted. Naturally be suggested 
political paralysis could be 
avoided by voting for Democratic 
candidates. 

Senator Phil Gramm, the 
Republican from Texas, was also 
up early to respond to the presi- 
dent His distinctive chainsaw 
howl sounded on the verge of 
breaking more than Democratic 
dead wood as he predicted 11 


party gains in the Senate, includ- 
ing a few not generally foreseen, 
and early passage of a balanced 
budget amendment 
Sizeable lines were reported in 
Washington and suburban poll- 
ing stations, tentative evidence 
that the most negative campaign 
in years had not turned every- 
body off. But if turnout is much 
over one in three eligible voters 
it will confound recent history. 

Spiders, cookies and 
a lot of abuse, Page 5 


Emergency 
declared 
after floods 
hit Italy 

Rome promises $1 .94bn in aid after 
60 die and 5,000 are left homeless 


Pasqua says Islamic extremist network in Europe uncovered 






*- III & * 




By Robert Graham in Rome 

The Italian government declared 
a state of emergency in the north 
yesterday and set aside L3,000bn 
($1.94bn) in imm ediate aid to 
areas hit by the most cata- 
strophic floods this century. 

The moves were intended to 
head off criticism of the authori- 
ties’ slow response to the floods 
! that have led to the loss of at 
least 60 lives, left more than 5.000 
homeless and caused damage 
conservatively estimated at 
LlO^OQbn, .... 

Friday has been declared a day 
of national mourning. 

The aid funds were agreed at 
an extraordinary cabinet meet- 
ing, and are only an initial 
response. The government is 
expected to cover the rescue 
costs in lull because few compa- 
nies or individuals have adequate 
insurance. 

The disaster comes as the 1995 
budget targets have been under- 
mined by higher interest rates on 
Italy’s debt and the unions want 
proposed public spending cuts on 
pensions to be eased. 

The unions yesterday declined 
to call off a demonstration in 
Rome on Saturday - at which 
more than im people are expec- 
ted to attend - to protest against 
the pension cuts. 

Mr Silvio Berlusconi, the prime 
minister, has consistently 
opposed an increase in taxes; but 
last night bis coalition partners 
suggested that the flood damage 
costs be covered through a spe- 


cial tax. The government has also 
asked the European Union for 
financial help. 

Opposition politicians also 
hinted they would mount further 
attacks on the government's 
plans to introduce a pardon on 
building carried out without 
proper permits. This pardon, a 
key source of revenue in 1995, Is 
seen as condoning widespread 
abuse of town and country plan- 
ning regulations - abuse which 
has contributed to the flooding 
problems. 

Tba worst-affected areas are in 
Piedmont, where flooding has 
damaged industrial plant, agri- 
cultural crops and livestock as 
well as the region's infrastruc- 
ture. A meeting of all the main 
agricultural organisations in 
Piedmont yesterday estimated 
damage at Li,350bn. However, 
the local association of small 
fanners said total damage could 
be more than L3,Q00bn with the 
loss of autumn seed, land that 
could not be planted until 1996 
and the effect of flooding over 
400,000ha. 

Fiat's Turin production lines, 
the flagship of northern industry, 
began to operate yesterday after 
production was halted on Mon- 
day because of a lack of compo- 
nent supplies. 

The floods, caused by torrential 
rain last Friday and Saturday, 
were beginning to recede yester- 
day. But Alessandria, with a pop- 
ulation of 90,000, was still lm 

Continued on Page 16 




Paris police with one of about 90 suspected Moslem fundamentalists held in a crackdown on supporters of an Algerian guerrilla group n 

French arrest 90 in raid on militants 


By John Ridding in Paris 

French police yesterday launched 
a crackdown on suspected 
Islamic militants, seizing a cache 
of firearms and detaining more 
than 90 people, including alleged 
supporters of an Algerian guer- 
rilla organisation. 

Mr Charles Pasqua, the interior 
minister, said the operation 
revealed a support network for 
Algerian guerrillas which has 
links in four other western Euro- 
pean countries and in Canada. “It 
provides evidence of a network of 
extremists determined to pursue 
clandestine or terrorist actions 
from our territory or other 
nations,” he said. 

Mr Pas Qua said surveillance 
carried out since mid-October 
had confirmed the existence of a 
support network for the Armed 
Islamic Group (GIA) with 
branches in Germany. Britain. 
Italy, the Netherlands and Can- 


ada. The interior minister 
declined to comment on whether 
he expected arrests in those 
countries, but has previously 
demanded that France's allies 
take stronger action against sus- 
pected Moslem terrorist groups. 

Yesterday’s operation reflects 
the tough line taken by the 
French government, anxious to 
avoid the spread of the conflict 
between the military-backed 
regime in Algeria and its Islamic 
opponents. The GIA is the most 
radical of the Moslem fundamen- 
talist groups attempting to over- 
throw the Algerian government. 


The conflict In Algeria has 
escalated in recent months, fuel- 
ling fears in France of a possible 
wave of immigrants from its for- 
mer colony. At the end of last 
month. Mr Ltamine Zeroual, 
Algeria’s president, admitted that 
negotiations had failed to end 
violence in the country. 

Yesterday’s action was the sec- 
ond large-scale operation against 
Islamic fundamentalists in 
France since the summer. In 
August 20 suspected extremists 
were expelled following a nation- 
wide stop-and-search operation. 

The French government has 


maintained the pressure on sus- 
pected Islamic extremists. Mr 
Pasqua warned Moslem clerics in 
France earlier this week that for- 
eign religious leaders who 
“preached against the institu- 
tions of the Republic", would be 
expelled. Last Sunday, France 
deported an Algerian Moslem 
cleric accused of spreading fun- 
damentalist propaganda. 

Mr Pasqua claimed yesterday's 
operation demonstrated the 
threat to internal security posed 
by militant Is lamic groups and 
justified the government's policy 
of vigilance. 


Munich Re to cut exposure 
as natural disasters increase 



By Andrew Fisher in Munich 

Munich Re, the world's largest 
reinsurance group, warned yes- 
terday of a trend towards increas- 
ing natural disasters which is for- 
cing it to reduce or end exposure 
to some high-risk areas of busi- 
ness. 

It said this policy was the 
result of high population growth, 
greater concentrations of people 
and property in vulnerable areas 
and climatic changes, associated 
with global warming, which are 
causing unusually severe storms 
and floods. 

This more selective approach 
to business will lead to much 
slower growth this year but 
strengthen future profitability, 
said Mr HansJflrgen Schinzler, 
the chief executive. Premium 
income growth will be well under 
5 per cent after a 12 per cent rise 
to DM28.6bn ($l9bn) in the year 
to June 30 1994. 

Although Munich Re benefited 
from a reduction in natural disas- 
ters and higher premiums last 
year - underwriting losses fell 


European News 2.3 leader Page . 

Mmatosl News & Id fcra — - 

American Nam -5 Mawgamert 

Woriri Trade New A Owner— 

UK News 8,10 Raai*w»_ 

Peepto 12 Tadmotoro- 

Wafter... .....18 Arts 

lex — 16 Arts Guide — 


from DM1.3bn to DM379m and 
earnings rose by 4.6 per cent to 
□M300m - Mr Wolf Otto Bauer, a 
director, said it was convinced 
the global trend to more frequent 
and damaging catastrophes 
would continue. 

“If 1 was a betting man, I could 
offer you a bet that the records of 
recent years will be beaten by 
new damage records." he said. 
Munich Re therefore placed great 
stress on risk management, and 
one area it studied closely was 
the danger of changes in climate 
through global warming. 

“The .signs that we are exper- 
iencing such a change in climate 
are increasing," he said. The 
industry was having to pay out 
not only for damage by storms 
and floods but also on claims for 
buildings, vehicles and crops 
damaged by hailstones. A hail- 
storm in the Cologne- Bonn area 
in July, for example, will cost the 
company around DM40m. 

Mr Schinzler said the earth- 
quake in Northridge near Los 
Angeles this year would lead to 
claims of an estimated DM 2 50m 


for Munich Re, although the fig- 
ure would be higher if it had not 
previously reduced its exposure 
there. With total damage of 
around $30bn and insured losses 
of SlObn. this was the second 
most costly loss in insurance his- 
tory since Hurricane Andrew in 
1992. 

Last year was the first since 
1987 without a record being set 
for insurance losses on a natural 
catastrophe. Munich Re took the 
opportunity to stock up its provi- 
sions for earthquake and other 
risks, as well as for outstanding 
claims, by DM850m. It has 
already announced a DM1 rise in 
the dividend to DM12; earnings 
per share were DM48.60 
(DM30.70). 

Ahead of tighter German dis- 
closure regulations, it revealed 
stakes of just over 5 per cent in 
BHF-Bank. Bayerisehe Hypoth- 
eken- und Wechsel-Bank, LKB 
Deutsche Industriebank and 
Maunheimer Versicherung. It 
also owns more than 8 per cent of 
the Aachener und Munehener 
insurance group. 


In July 1994, MD Hikan Johnsson led an MBO of 
Carls hamn Mejeri AS, a kading Swedish producer 
of edible fins and ice cream, from KF (the Swedish 
Co-operative) , relying on CVC to raise a total 
financing of SEK 270 million. 


6 We chose CVC after contacting 
people they had backed before. 
CVC shared our vision of 
independence and worked with 
us to create an MBO. The buy-out 
gave us the freedom to sell to the 
whole Swedish retail market as 
well as expanding abroad. 9 


•COMTENTSlltt 


We are turning managers into owners all over Europe 

Contact us for a copy of our portfolio of case histories of the 
acquisition of companies by management. 


FT Wtortd Actuaries. - .38 

Fmacm BteDongne- _ . _34 


Letters 

12 

CBBjimfce 

IK ."A-?? 

QM Mathers ... — .. 

28 

..38 

Wa* Sreer ..„ 

Otatnsr ■■ , 

15 

W.CapMWS- . -22 

hL Bond Serw» — 

22 

Bourses— -. 


hfl. Gompenra 
ttwferi* 

Canunodtas — 
FT Actuaries 


Manages Funds 

Money Martcts — —3* 

Recent bsu« - & 

Snae InfcnrwM*' — 30.31 


Traififlnal Options. 38 

London 3E .... 29 

Wa* Sreer .... — —.36-38 
Bourns 3536 

Surveys 

BoftliJ Soon 


CVC Capital Partners 

Hudson house 8-10 Tavistock Street icmoonwc 2E7PP TeioTt^jeiaaa 

CmipefficnkuiliJm AMSTERDAM - FRANKFURT - MILAN • PARIS 
CVC GqrtM Pmun Laucd b • at CVC Capital Partncn Europe Liattcd, 

lb ImmjDMmjt Uvtaw M CUnry. 


ftTWyiNANOAL TSMES UMSTED 1994 No 32,519 Week No 45 LONDON - PARIS ■ FRANKFURT • HEW YORK ■ TOKYO 




* r.~ ' U;. ' 

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*-> r--VT>- . .. . 

. 






FINANCIAL TIMES 


WEDNESDAY NOVEMBER 9 1994 



NEWS: EUROPE 


Delay puts Greek telecoms flotation at risk 

Kerin Hope on the latest hitch in efforts to sell part of the OTE monopoly 


Former Greek hanking tycoon George Koskotas, central figure 
in a multi-million dollar which dragged down the 

country's Socialist government in 1988, was sentenced yeste rday 
to 25 years In prison for embezzlement, Reuter reports from 
Athens. An Athens appeal court found him guilty of emb ezz li ng 
millions from the of Crete and forging bank documents, 
court officials said. Seven other senior bank officials received 
prison terms ranging from 10 to 16 years. A financial tycoon and 
press baron during the 1981-1989 Socialist government, Mr 
Koskotas went on trial on January 22, 1992, sis days after a 
special court acquitted Prime Minister Andreas Papandreou of 
ail charges in the case. The 13 judge court, set up by parliament 
in 1989, convicted two former minis ters of involvement in Che 
gra mini More than $200m Is missing from the bank which came 
under state control in 1988. 



I t was always going to be 
difficult for Greece's Social- 
ist government to push 
through the Dotation of OTE, 
the state telecoms monopoly, 
given the strength of trade 
onion, opposition even to par- 
tial privatisation. 

Yesterday's decision to post- 
pone the flotation of 25 per 
cent of the company, set for 
early December, marks a seri- 
ous political setback for Mr 
Yannos Papantoniou, the econ- 
omy minis ter, who is leading 
the campaign to modernise 
Greece’s economy. 

He hoped to raise at least 
Dr320bn (£846m) from the offer- 
ing, which would go towards 
reducing Greece's huge public 
debt, which amounts to mare 
than 110 per cent of gross 
domestic product 
Mr Papantooiou's underlying 
fear is that last year's failure 
to float OTE may be repeated, 
with possibly calamitous 
results. The conservative gov- 
ernment collapsed a year ago 
following defections by parlia- 
mentary deputies opposed to 
the planned sale of 49 per cent 
of the company. 

The latest postponement 
came one day after parliament 
finally approved legislation to 
permit the sale, restructure the 
company and increase tariffs 


for domestic calls. The bill per- 
mitting all of thin had already 
had a stormy passage through 
parliament, with 12 deputies 
from the ruling Panheilenic 
Socialist Movement (Pasok), 
m ainly ex- trade union leaders, 
abstaining or voting against it. 

Although Mr Papantoniou 
insisted the flotation would go 
ahead early next year, its 
future must now be in doubt. 
Parliament Is due to vote for a 
new president next April and 
the governing So cialis ts will be 
keen to avoid a fresh confron- 
tation over OTE. 

Mr Andreas Papandreou, the 
country's ageing prime minis- 
ter, had given his backing to 
the economy ministry’s plan to 
sell minority stakes in state 


utilities and dispose of several 
state-controlled banks. But if, 
as expected, he runs for the 
post of president of the parlia- 
ment as a prelude to retiring 
from politics, the privatisation 
programme is likely to be 
placed an hold. 

Potential foreign investors in 
OTE will be worried by the 
divisions within Pasok over 
the company's future. The cli- 
mate of political uncertainty 
over the flotation has been poi- 
soned anyway by recent 
threats from opposition conser- 
vatives in parliament to take 
legal action against govern- 
ment officials if the offering 
price is too low. 

"The row in parliament 
shows just how contentious 


this flotation could become. It's 
obviously going to have a 
downward impact on pricing," 
one analyst said. 

The government was plan- 
ning to sell 18 per cent of the 
company to institutions in 
Europe, the US and Japan 
through a bookbuilding proce- 
dure. and the remaining seven 
per cent to domestic investors. 
Greek television and newspa- 
pers have already started 
advertising the issue and road 
shows for the offering were 
due to begin next week. 

However, underwriters are 
concerned about last minute 
changes in the terms of the 
partial privatisation made after 
the parliamentary dispute 
erupted. Although government 
officials stress that the restruc- 
tured OTE will operate like a 
private sector company, the 
unions have been promised 
that redundancies will not be 
permitted. 

Like other Greek utilities, 
OTE is stuffed with patronage 
appointees. Trimming its 
26.500-member staff is seen as 
crucial to improving profitabil- 
ity. 

The Dotation's postponement 
also raises broader questions 
about the Socialists' commit- 
ment to economic reform. 
Under the terms of Greece's 


convergence programme, 
aim ed at meeting the Maas- 
tricht targets for European eco- 
nomic and monetary union, 
partial privatisations are proj- 
ected to raise Dr400bn in the 
next three years to offset debt 


After last year's failure to 
meet any convergence plan tar- 
gets, confidence remains low in 
Greece's ability to keep to the 
terms of a revised plan, which 
was grudgingly approved by its 
EU partners in September. 


EU minis ters refuse to abandon steel quotas 


By Emma Tucker In Brussels 

European Union industry ministers 
yesterday refused to back proposals 
from the European Commission to 
abandon quotas on steel imparts 
from Slovakia and the Czech Repub- 
lic. 

The ministers were meeting in 
Brussels to discuss the commission’s 
decision to tear up its two-year res- 
cue plan for the EITs steel industry 
after steel companies failed to deliver 
capacity cuts essential for the suc- 
cessful restructuring of the troubled 
sector. 

Full abolition of the plan implies 
an end to quotas on steel imports 
from the two east European countries 
from the be ginning of next year. But 


ministers from some member states 
were concerned about the impact of 
increased east European imports and 
argued that the quotas should be 
extended. 

Yesterday the commission was 
backed by the UK, the Netherlands 
and Denmark but opposition from 
other member states meant no deci- 
sion was reached about the quotas. 
This has been delayed until the new 
year when four new member states - 
Austria, Finland, Sweden and Nor- 
way - have joined the Union. 

Mr Tim Eggar, UK industry minis- 
ter, said be very much regret te d the 
failure to agree to end the quotas. 

“It seems to me that one of the 
things which is giving the commis- 
sion and the whole of the EU a credi- 


bility problem is that when they 
reach agreements they don't stick to 
them,” he said. “I was disturbed by 
the attitude of a number of my col- 
leagues who were prepared to see the 
end of the plan but wanted to keep 
the quotas in place." 

The lack of a decision on quotas 
raises questions as to whether the 
rescue plan has been abandoned. 

Ministers agreed to drop quarterly 
production guidelines and framework 
agreements between the commission 
and the industry. But they also 
agreed to maintain the social mea- 
sures of the steel plan - designed to 
ease the problems incurred with 
installation closures - for another 
year, even if there were no proposals 
to increase the Ecu240m 


(£ 188.88m) originally earmarked. 

Furthermore, a number of delega- 
tions in Brussels yesterday said they 
regretted that the commission had 
abandoned the plan, and the council 
of ministers as a whole reaffirmed 
that it was “very concerned at the 
persistence of structural overcapa- 
city, the main cause of the difficult 
situation in which the European steel 
industry found itself. 

It added that notwithstanding the 
“favourable" trends in the steel mar- 
ket, “a lasting solution to the prob- 
lem of overcapacity must be found". 

Ministers also discussed the future 
of Eko Stahl, former east Germany's 
biggest steel mill. The commission 
has recommended that Eko Stahl 
should be granted aid from the Ger- 


man government to permit the take- 
over by Cockerill-Sambre of Belgium. 
However, the move has to be agreed 
unanimously and yesterday the Brit- 
ish asked for more details on the 
level and type of German subsidy. 

In addition, the French said they 
were not ready to reach a decision 
and a vote was delayed. The French 
are understood to be using delaying 
tactics over Eko Stahl in order to win 
concessions on French shipyards, 
threatened with extinction if subsi- 
dies are withdrawn under an interna- 
tional agreement 

In spite of this, Mr Karel Van 
Mlert commissioner responsible for 
competition, yesterday said he was 
confident an agreement on Eko Stahl 
would soon be reached. 


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Chirac criticised over proposal for new referendum on monetary union 

France’s centre-right split over Europe 


By David Buchan in Paris and 
David Gardner in Brussels 

The fragile consensus of 
France's ruling centre-right 
coalition on European policy 
yesterday appeared to be frac- 
turing fast under opposing 
pressures from Mr Jacques 
Chirac, the newly declared 
Gaullist contender for the pres- 
idency, and German Christian 
Democrats. 

Mr Pierre Mfihaignerie, jus- 
tice minister and president of 
the CDS, which is the coali- 
tion’s most pro-European ele- 
ment, yesterday said he 
“greatly regretted" Mr Chirac’s 
call two days ago for France to 
put its eventual participation 
in any European monetary 
union to a second referendum, 
in addition to the 1992 plebi- 
scite that very narrowly 
approved the Maastricht 
Treaty. 

Another prominent French 
centrist, Mr Jacques Barrot, 
chairman of the National 
Assembly’s finance committee, 
said the referendum call might 
serve Mr Chirac well in 
the first round of voting 


in the presidential election, 
but would prevent him 
winning the final run-off 
vote. 

In suggesting another refer- 
endum on economic and mone- 
tary union (Emu), Mr Chirac is 
plainly paying his dues to anti- 
Maastricht politicians such as 
Mr Philippe SSguin, National 
Assembly president, who are 
backing his Elysge bid, in the 
hope of gaining the quick boost 
he desperately needs in the 
opinion polls to rival prime 
minister Edouard BaDadur. 

But his tactic could backfire 
by increasing the chances that 
Mr Jacques Delon, the outgo- 
ing European Commission 
president, might enter the 
presidential race as the Social- 
ist challeng er in order to keep 
a Eurosceptic out of the Ely- 
s4e. The opinion polls have 
consistently shown Mr Chirac 
not only trailing Mr Balia dur 
hut also far more likely than 
the prime minister to be 
beaten by Mr Delors in a two- 
candidate run-off. 

In the time-honoured tradi- 
tion of French would-be presi- 
dential candidates, Mr Delors 



Jacques Chirac: paying his 
dues to supporters 


has just published his personal 
ruminations in the form of a 
400-page book called “The 
Unity of One Man". In Brussels 
yesterday, the Commission 
president insisted: “This is not 
a [presidential] programme but 
a book of reflections. If you're 
looking for a programme, don't 
buy the book." 


But the Socialist party is 
also looking for a candidate, 
and the country's pundits are 
unanimous in seeing the new 
tome as paving the way for Mr 
Delors to announce his candi- 
dacy after he leaves Brussels 
some time next January. 
“Delors-for-president" commit- 
tees are mushrooming daily 
now. 

Meanwhile, Mr Karl Lamers, 
chief architect of the German 
Christian Democrats' recent 
paper calling on France and 
the Benelux countries to join 
Germany in a new “hard core" 
to the European Union which 
would set the pace for faster 
integration, was in Paris yes- 
terday to press his case. He 
avoided making direct criti- 
cism of Mr Chirac but said: 
"We must do all we can not to 
endanger putting Emu into 
effect at the earliest opportu- 
nity, in 1997." 

Mr Chirac had claimed a sec- 
ond referendum would give 
France the same right to 
accept or reject Emu as the 
Bundestag already enjoyed in 
Germany. But the Bundestag 
has already ratified the Maas- 


tricht Treaty and Mr Lamers 
recalled that the Bundestag 
now merely had the power to 
express its views on whether 
individual countries fulfil the 
technical economic criteria for 
Emu, not on the principle of 
Emu itself. “It is therefore not 
a second ratification," Mr 
Lamers said. 

Mr Bahadur's officials regard 
the Chirac referendum call as 
impractical and unconstitu- 
tional. though the prime minis- 
ter himself has refrained this 
week from commenting. But 
the Lamers plan opens up a 
further division in the govern- 
ment 

While his centrist coalition 
partners generally favour the 
idea of France joining Ger- 
many and Benelux in declaring 
themselves to be Europe’s hard 
core implementing all Maas- 
tricht's policies, Mr Bahadur 
has criticised this as too rigid. 
Instead, he sees European inte- 
gration taking the form of sev- 
eral “inner circle" arrange- 
ments, bringing, for instance, 
Britain in on defence but 
respecting its wish to stay out 
of monetary union. 


EUROPEAN NEWS DIGEST - 

Pay-TV talks 

get nowhere 

Last-minute to win approval for a cable and payTV 
venture between German media group Ber te l smann , thefflrch 
Group and Deutsche Telekom have foiled, a European Union 
rtfflroaT riafmflri yesterday. The official, who aged not to be 
riantPH said: “It’s a clear-cut case. so.. -it wffl also tea 
clear-cut answer from the [European] C ommis sion that this 
cannot go an." 

Earher, Commission officials had said that the joint venture 
could still win EU backing if last-minute contacts between 
Ber telsmann, Kindi and Deutsche Telekom yielded results. Mr 
Karel Van Mlert, competition commissioner, has recom- 
mended that Brussels block the venture known as Media 
Service GmbH. Mr Van Mlert argues that MSG will effectively 
I pfk other competitors out of the multimedia m arke t. 

Bertelsmann is Germany's largest media comp any and 
helped launch the country’s first pay-TV channel . Premiere, 
which boasts 800,000 subscribers. The Kirch Group holds 
shares in Premiere and has the largest German-language fBm 
library. Deutsche Telekom, Germany’s telephone monopoly, 
controls the country's cable-TV market, which lias 14m sub- 
scribers. AP. Brussels 

UN tribunal seeks extradition 

The Yugoslav war crimes tribunal yesterday ended its first 
public sitting by pairing ' a formal request to Germany for the 
extradition of an alleged Bosnian Serb war criminal being held 
in Munich. Germany has already said it is willing to hand over 
Mr Dusan Tadic to the United Nations tribunal, bat it must 
first amend its laws to allow extradition to an international 


body. Mr Tadic, who was arrested an a visit to Germany in 
February, has denied that he was responsible for the killing of 
three Moslem prisoners in Serb-held Bosnia. If extradited, Mr 
Tadic is likely to stand trial early next year in what would be 
the first international war crimes trial to take place since the 
Nuremberg and Tokyo trials began in 1945. 

The case against Mr Tadic underlines the tribunal’s 
dependence on the co-operation, of national g o vernments and 
tts inability to apprehend war criminals while fighting contin- 
ues in the territory of formes- Yugoslavia. On Monday night, 
the tribunal’s prosecutor issued an arrest warrant for Mr 
Dragan Ntkoiic, commander of the Snsica camp in the Bosnian 
city of Vtasemca, on charges of murder, torture and mutilation 
of Moslem prisoners. However, Mr NQcolic is believed to he In 
a Serb-held part of Bosnia, and chances of his arrest and 
extradition are considered to be slight Ranald van de Krot 
Amsterdam 

US backing for Polish minis ter 

US officials in Poland for talks on Nato expansion yesterday 
backed Mr Piotr Kolodziejczyk, the defence minister, who is 
under strong pressure from President Lech Walesa to resign 
Mr Joseph Kruzel, US deputy assistant defence secretary, said 
that Poland “was fortunate to have dedicated public servants 
such as Mr Kolodztejczyk” and he reiterated that Nato mem- 
bership was impossible for a country without civilian control 
over the military. 

President Walesa has sided with army generals who blame 
Mr Kolodzfejczyk for foiling to wrest sufficient funds out of 
the government and want one erf their number to replace him. 
The drive is seen as a severe weakening of civilian control 
over the military- ' 

Mr Kruzel said discussions with the central European coun- 
tries about Nato membership would start next year. Christo- 
pher Bobinski, Warsaw 

ECONOMIC WATCH 


Fewer Germans without a job 


Western Ooilnaflf - -/.;i 

Unwnptoynwnta&'a pacanteoaof 
total labour force ' ' 'V. 



West German seasonally 
adjusted unemployment fell 
again unexpectedly last 
month by 23,000. Although 
more than 15,000 people laft 
the jobless register by signing 
on for government-sponsored 
-i job creation or training 
schemes, the federal labour 
office said the jobs market 
was responding strongly to 
the economic recovery. 
Almost 185,000 vacancies 
were registered during the 
month. The western unad- 
justed total fell only slightly, 
leaving the jobless rate 
unchanged on the month at 
7.9 per cent. In the east, 
where adjusted data are not yet available, the rate fell from 
135 to 135 per cent, reflecting a drop of 40,000 in numbers 
unemployed. However, a review from the BHF bank said there 
were still no grounds for believing that the continued recovery 
would lead to substantial cuts in the jobless total Christopher 
Fortes, Frankfurt 

The Dutch visible trade surplus was around FI 100m (£36m) 
in July, sharply lower than a revised total of FI L2bn in June, 
and FI 15bn in July 1993. 

■ Czech Industrial output grew by 3 per cent in real terms in 
September compared with the same month in 1993, but slowed 
from August's growth of 7.7 per cent 

■ Hungary’s unemployment rate fell to 105 per cent in Octo- 
ber from 109 in September, and 12.0 per cent in October 1993. 


• . Nawaz 1803 
SMrwDaBMfreem 


1904 - Ott 


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FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


3 



NEWS: EUROPE 


Yeltsin recalls elder statesman of reform 


By John Lloyd in Moscow 

President Boris Yeltsin of 
Russia yesterday named Pro- 
fessor Yevgeny Yasin, the 
elder statesman of Russian 
reform, as the new economics 
minist er. 

As he did so, Mr Lewis Pres- 
ton, president of the World 
Bank, declared after meeting 
most leading members of the 
administration: “I don't rtimir 
there is any change in the 
reform effort” He was refer- 
ring to the hectic and contra- 
dictory shifts in the cabinet 
over the past Few days — which 
are set to continue. 

Prof Yasin will work under 
Mr Anatoly Chubais, new first 
deputy prime minister for the 
economy and finance. Prof 
Yasin has in the past five years 
lost the talents of the young 
economists who formed the 


first wave of reformers while 
keeping open his lines of com- 
munication with successive 
governments, industrialists 
and latterly Mr Yeltsin, to 
whom he was an adviser 

He takes one of the two posts 
vacated by Mr Alexander 
Shokhin. who resigned as dep- 
uty prime minister and eco- 
nomics minister last Friday in 
protest against lack of consul- 
tations over the naming of a 
new finance minister. 

Though Prof Yasin is gener- 
ally admired for his openness 
of mind to reformist ideas and 
his ability to steer clear of the 
backroom brawls, which char- 
acterise much of Russian polit- 
ical life, he has acquired that 
reputation by sticking to anal- 
ysis and academic work and is 
not expected to emerge as a 
political heavyweight. How- 
ever, his appointment at the 


economics ministry, heading a 
generally reformist team, will 
support Mr Chubais in his 
efforts to open up the securi- 
ties market and complete the 
second stage of privatisation. 

Mr Preston underscored his 
optimistic assessment by say- 
ing that Mr Vladimir Panskov, 
the new finance minister, told 
him he supported the tough 
budget strategy adopted by the 
cabinet - after expressing only 
lukewarm support immediately 
after his appointment. 

The budget strategy, which 
calls for massive support from 
the international financial 
institutions to bring inflation 
down to 1 per cent a month by 
the end of next year, will soon 
be sent to the state Duma 
(lower house) for a difficult rat- 
ification process. 

However, asked if he thought 
President Yeltsin fully sup- 


ported the budget. Mr Preston 
replied: “The prune minister 
and the deputy premier (Mr 
Chubais) reaffirmed their 
strong support. I had no 
chance to visit with President 
Yeltsin and the issue did not 
come up." 

Mr Yeltsin's moves in nam- 
ing both conservative and 
reformist figures to his cabinet 
over the past two weeks are 
expected to continue - with 
question marks remaining over 
three ministers who are 
strongly opposed by an appar- 
ent majority in the Duma. 
These are General Pavel 
Grachev, the defence minister 
who is due to address the 
Duma on Friday, General Vic- 
tor Yerin, the interior minister, 
and Mr Andrei Kozyrev, the 
foreign minister. The two gen- 
erals are thought to be particu- 
larly vulnerable. 



World Bank president Lewis Preston (left) is welcomed to talks 
in Moscow by Russian prime minis ter Victor Chernomyrdin somr 


Russians seek imported goods at any price 


By John Lloyd 

The growing wealth or Russia's new 
rich and its burgeoning bourgeoisie 
has made it a mecca for exporters of 
consumer goods - from Cherokee 
Jeeps selling at around $60,000 (three 
times the US price) to packets of 
cornflakes selling at $3.50 (double tbe 
average western price). 

Foreign consumer goods now make 
up the bulk of Russia’s imports 
because of four factors: the liberalisa- 
tion of trade lVom 1992; the explosive 
growth of private trading companies; 
the increase in medium and high sal- 
aries; and “the continuing crisis” in 
Russia's consumer goods industry. 


The trend is particularly marked in 
Moscow and St Petersburg. 

In these two cities, imports make 
up a huge 70 per cent of consumers’ 
purchases of food, according to a 
report* by tbe Russian company. 
Business Analytics. In Moscow alone 
there are now some 6,500 trading 
companies, while individuals can 
enrich themselves by becoming 
“shuttles” - people who make a liv- 
ing bringing in consumer goods in 
their personal luggage from abroad. 

The “shuttle” business is in fact a 
wbole industry operating outside the 
framework of normal foreign trade 
turnover, the reports says. 

The “shuttles” bring no profit to 


the national budget and until 
recently were virtually beyond tbe 
scope of customs statistics. Tbeir 
operations have no legal provisions 
whatsoever. The prices fixed by the 
“shuttles” are not liable to national 
taxes, enabling them to undercat the 
prices of the official importers. 

Records of customs clearance of air 
travellers from Turkey and the 
United Arab Emirates, tbe report 
says, showed that 3 per cent of tbe 
passengers brought in as many goods 
as the remaining 97 per cent. The 
“shuttle" business involves bringing 
in up to 70 per cent of imported cloth- 
ing; most cheap jewellery; abont half 
of all leather articles; and up to 30 


per cent of audio and video 
equipment. 

Tbe report says tbat consumer 
goods accounted for 70 per cent of 
total imports last year - estimated at 
$26.9bn (£I6.4bn), SlObn down from 
1992 - and remain at roughly tbe 
same level this year. This tendency 
wiD grow, the report says, because of 
the growth of real incomes, up 80 per 
cent over tbe past three years. 

Imports of foreign cigarettes have 
ail but wiped out the local cigarette 
industry, except for those plants 
which have concluded joint ventures 
with western manufacturers. Imports 
now account for 90 per cent of all 
cigarettes smoked. However, 


increased customs duties imposed in 
July are curbing tbe sales growth of 
some consumer goods. 

Food, for example, attracts duties 
of between 10-25 per cent of its cus- 
toms value. These import duties were 
aimed at protecting the domestic 
market. However, according to the 
report it Is only when tile price gap 
widens to 50 per cent between 
imported and domestically-produced 
foodstuffs tbat consumers begin 
switching heavily to the latter. 

* Distribution of Imported Consumer 
Goods m Russia : Markets, Legislation 
and Infrastructure. Business Analy- 
tical 23 Ulitsa Profsoyuznaya, Moscow 
JJ7S59; Russia 709>128-185a 


German parties near deal on coalition 


By Judy Dempsey in Bonn 

Talks between the three 
German parties hoping to form 
the next government are due 
to end on Friday, Mr Peter 
Hintze, general secretary of 
Chancellor Helmut Kohl's gov- 
erning Christian Democratic 
Union, said yesterday. 

At the same time, the CDU, 
the Christian Social Union, its 
Bavarian sister party, and the 
Free Democrats , the junior 
partner in the coalition, expect 
to elect the Chancellor on 


November 15. A cabinet is 
expected to be chosen within 
the next 10 days. 

Unlike previous coalition 
negotiations which lasted sev- 
eral weeks, these talks, which 
have drawn up a rough policy 
agenda for the next parlia- 
ment, have traded to highlight 
similari ties rather than differ- 
ences. The main differences, 
many of which were narrowed 
if not resolved yesterday, have 
focused on taxation. 

One disruptive., issue - 
increased powers for police to 


introduce bugging in private 
homes - has been deleted from 
the agenda, while greater 
access for citizenship for the 
6.8m foreigners in Germany 
will be discussed on Friday. 

During yesterday’s session. 
Mr Hintze said a controversial 
“solidarity” or income tax sur- 
charge or 7.5 per cent would be 
decreased over time if the 
annual financial transfers to 
the five east German states 
were gradually reduced. 

More than DMlfiObn (£65.3bnj 
each year is allocated to east 


Germany for. among other 
things, modernising the infra- 
structure and subsidising pen- 
sions and consumer spending. 
However, these transfers have 
increased the budget deficit 
which this year is expected to 
be DM68bn. As a means of 
reducing the deficit, the incom- 
ing coalition government will 
re-impose the solidarity tax 
which had been introduced 
after German unification in 
1990 but was dropped in 1993. Jt 
is expected to raise DM28bn. 

CDU and CSU officials 


stressed, however, that any 
reduction in the annual finan- 
cial transfers and the solidarity 
tax was linked to a continuing 
economic upswing, in eastern 
as well as west Germany. 

All sides also agreed to raise 
the threshold at which income 
tax is payable, said Mr Erwin 
Huber, general secretary of the 
CSU. However. Mr Theo Wai- 
gel. the German finan ce minis- 
ter. yesterday found himself at 
loggerheads with a commission 
of experts, which he appointed, 
about how to finance this. 


agenda 

After a year's work, the 
eight-man commission told Mr 
Waigel he would need around 
DM40bn in order to raise the 
threshold to DM13.000, up from 
DM5,616. Mr Waigel must intro- 
duce the changes by the begin- 
ning of 1996 to fulfil a ruling by 
the constitutional court Ger- 
many’s supreme court, but has 
said he will need only an extra 
DM35bn to do so. Mr Waigel 
also rejected the commission’s 
suggestion that unemployment 
and other welfare benefits and 
pensions should be taxable. 


Basque steel 
plant’s retreat 
raises fears 

Tom Burns reports on a new 
threat not linked to terrorism 


C heaper energy in 
France has prompted a 
leading steel company 
in Spain's Basque country to 
cross toe frontier and invest 
Ptall^bn (£55m) in a new 
plant in Bayonne. 

Tbe decision by the family- 
owned Marcial Ucin group, 
which makes rods and long 
bars for the construction 
industry, adds a new dimen- 
sion to Spanish fears about 
foiling competitiveness. These 
concerns were fuelled earlier 
this year by the relocation 
plans of the loss-making Span- 
ish subsidiaries of Gillette, the 
US consumer products multi- 
national, and of Suzuki, the 
Japanese vehicle maker 
The move also has political 
overtones for the Basque gov- 
ernment. led by the local 
nationalist party. Yesterday, it 
accused the Madrid authorities 
of forcing companies out of the 
area by f ailing to frame a 
coherent industrial policy. 

The Bayonne plant, one of 
the largest single production 
investments for many years by 
a Spanish private company, 
will produce 900,000 tonnes of 
crude steel a year. Tins may 
prove troublesome to the Span- 
ish government, which is plan- 
ning to build a mini - mill or 
roughly s imilar capacity in the 
Basque port city of Bilbao, an 
hour’s drive away. 

“This is a very serious devel- 
opment because we are losing 
business instead of attracting 
it,” said Professor Ignacio 
Marco of Deusto University, 
the Bilbao business school, and 
former chairman of the Basque 
Energy Board. “It is a very big 
investment by a leading local 
company that has always been 
closely identified with the 
Basque steel industry 
But Mr Enrique Portocar- 
rero. an executive of the Cir- 
culo de Empresarios Vascos, a 
Basque employers’ association, 
said tiie investment was more 
a psychological than an eco- 
nomic blow. “1 doubt we are 


going to see a flight of Basque 
industry to the other side of 
the Pyrenees.” be said. 

Marcial Ucin opted for Bay- 
onne despite strong pressure 
from local authorities. The lat- 
ter were willing to subsidise up 
to 30 per cent of the invest- 
ment if the plant remained in 
the Spanish Basque province of 
Guipuzcoa. alongside the 
French border, where the com- 
pany has its headquarters and 
where four of its seven Spanish 
plants are located. 

The steel manufacturer said 
the attraction of Bayonne lay 
in the feet that electricity in 
France costs 20 per cent less 
than in Spain - mini- milk melt 
scrap metal with huge charges 
of electricity. French scrap 
metal was also cheaper and 
Bayonne had offered it a site 
near the harbour. It will begin 
building the plant in 1996 in a 
venture with the Japanese Mit- 
sui group, which will provide 
25 per cent of the money. 

I n order to soften the 
impact, however, Marcial 
Ucin said it would also 
invest Pta4bn in its Guipuzcoa 
plants to increase productivity 
and maintain the 850-strong 
labour force. 

Spain's high electricity 
prices have been consistently 
criticised by manufacturers 
based in the frontier zones of 
the Basque country and Cata- 
lonia which are barred from 
hooking up directly to the 
French grid by the govern- 
ment’s monopoly over the 
import of France's nuclear- 
based energy. 

The competitive disadvan- 
tage became a serious issue in 
the recent Basque elections 
when the local nationalist 
party criticised Madrid. 

Prof Marco says: “We are 
being made to compete with 
Europe and we are strapped by 
high inputs at every stage, 
from electricity tariffs to har- 
bour fees, and from high inter- 
est rates to labour costs.” 




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4 


financial, times 


WEDNESDAY NOVEMBER 9 1994 


NEWS: WORLD TRADE 


Malays cast 
shadow over 
Apec summit 


By Peter Montagno n and 
Neran Cooke In Kuala Lumpur 

Malaysia yesterday put in 
doubt the outcome of next 
week’s Asia Pacific Economic 
Cooperation forum summit in 
Indonesia by saying that it 
could turn into an elaborate 
public relations exercise and 
would not lead to any binding 
agreements on regional trade 
liberalisation. 

Pres ident Suharto, who is to 
host the meeting, has been 
pressing for a declaration 
promising trade liberalisation 
by the year 2020 in an area 
which produces roughly half 
the world's economic output. 
He is supported most strongly 
by the OS and Australia, both 
of which want a binding agree- 
ment. Mr Suharto sees the 
Apec meeting as an opportu- 
nity to establish Indonesia as 
an important player in world 
economic matters. 

However. Mrs Rafidah Aziz, 
Malaysia’s trade minister, said 
yesterday that Apec had no 
mandate to enforce any agree- 
ment. “Why have all this exer- 
cise of doing something which 
you know cannot bind people?” 
she said. “It’s a very elaborate 
PR exercise. 

“Anything that happens in 
Apec is non-binding. That's the 
principle of the organisation," 
said Mrs Rafidah. As long as 
Malaysia sticks to its position 
it wifi be impossible to estab- 
lish a meaningful consensus 
among the 18 Apec members at 
next week's meeting. 

Mrs Rafidah said Apec's emi- 
nent persons group which pro- 
posed the 2020 target date 
should be disbanded and that 
the group’s private sector 
fortun which suggested an ear- 
lier date for trade liberalisation 
only represented the personal 
views of Individuals. 

She reaffirmed Malaysia's 
view that the General Agree- 
ment on Tariffs and Trade was 
the appropriate forum for bind- 


ing commitments on trade, and 
was vehement in her criticism 
of the US and Japan for their 
slow progress in ratifying the 
Uruguay Round. 

Mrs Rafidah said that Malay- 
sia was "just a bit disgusted” 
that Japan and, especially, the 
US have not ratified the Uru- 
guay Round. "The profound 
statements made by the US 
over the past seven years when 
the negotiations in Gatt were 
taking place indicated that 
they would be the first to rat- 
ify. 

"If the US and Japan need 
pressure to ratify,” she contin- 
ued, "why don’t they give up 
the economic leadership of the 
world? Let the small countries 
rule the world.” 

Malaysia is concerned that 
the US and Australia are seek- 
ing to build up Apec in a way 
that would eclipse the smaller 
Asean regional grouping, 
which has its own more mod- 
est agenda for trade liberalisa- 
tion. Apec was conceived as a 
loose, consultative forum. Mrs 
Rafidah said. 

Malaysia’s stand is, however, 
likely to cause problems within 
Asean. It risks upsetting not 
only Indonesia, but also Singa- 
pore which is a strong Apec 
supporter and a firm advocate 
of trade liberalisation on a 
broad front. Outside Asean. 
China is more in sympathy 
with Malaysia and has 

expressed opposition to a firm 
timetable. 

Underlying Malaysia’s tough 
approach is its desire to 
develop a new grouping - the 
East Asian Economic Caucus 
(EAEC) which would include 
Japan but not the US. Malaysia 
has recently criticised Japan 
for its non-committal attitude 
to this proposal "There is a 
difference between the official 
stance of Japan and the stance 
of Japan as we know it” Ms 
Rafidah said. Japan must 
decide whether it is part of 
East Asia, she added. 


Brittan bids to boost Europe’s image m 



By Tony WaBcer in Beflkig 
When Sir Leon Brittan, the 

European Commissioner for 
Tirtpffljii Trade Relations yes- 
terday inaugurated a Eurppe- 
an- ftintteri management school 
In Shanghai the gesture went 
beyond the Ecu25m ($31 -75m) 
being invested. 

Indeed. Sir Leon has been at 
pains on bis second visit to 
nfrfmt this year to emphasis 
Europe's role as a trade and 
investment partner, and to dis- 
pel what he clearly regards as 
a damag in g perception of the 
EU as a trading fortress 
uns ympathetic to Asian aspira- 
tions. 

His mission, he says, is part 
of attempts by the European 
Commission to develop a 
"sharper focus” on Asia and 
also to spread the message that 
Europe is not only a huge trad- 
ing bloc, but also a political 
entity open to the outside 
world. "We are not a fortress.” 
he says. “We encourage our 


people to follow open trading 
policies and be involved in the 
multilateral system.” 

Sir Lem'S comments reflect 
concern in the Commission 
over negative views of Europe 
expressed recently by Asian 
leaders meeting in Singapore. 
It is also, of course, a result of 
the growing importance of 
Asia, and China in particular, 
to EC traders and investors. 

Between 1979 - when China 
opened its doors to the outside 
world - and 1993 EU-China 
trade grew 13 times from 
Ecu2.4bn to Ecu31bn. China, 
which registered an Ecu&2bn 
trade surplus with the Commu- 
nity last year, is now the ED’S 
third largest trading partner. 

European investment, how- 
ever, lags well behind that of 
Hong Kong, Taiwan, the US, 
and Japan. Among top 10 
investors in China at the end 
of 1993 the UK ranked sixth 
with pledged investment of 
$3.3bn and Germany ninth 
with $1.4bn_ This compares 


with $14.6bn for the US and 
Japan’s $8-9bn_ 

Europe's new interest in the 
region is also being driven in 
part by a recognition that insti- 
tutions such as the Asia Pacific 
Economic Co-operation forum 
(Apec) are beginning to pro- 
vide a regional focus where 
none existed before. 

But Sir Leon says that con- 
trary to suggestions that 
Europe might fear competition 
rrom Apec, it welcomes its 
emergence as a consultative 
forum and force for trade liber- 
alisation. “We t hink that a 
body of that kind, if it moves 
towards free trade, will provide 
greater opportunities for us so 
long as it remains attached to 
a multilateral system and 
doesn't seek to create new bar- 
riers,” be said. 

Sir Leon concedes that 
Europe has been “somewhat 
slow” to recognise the extent 
of the change overtaking the 
Asia Pacific region and thus 
the need to respond more 


actively to the demands of 
such a dynamic region. 

Early this year be proposed a 
thorough review of the ElFs 
Asia policy, and this resulted 
in a series of recommendations 
circulated within the Commis- 
sion in July. These would lead 
in time to an agreed policy on 
Asia. 

As far as China was con- 
cerned the European initiative 
would involve an enlarged 
political and economic dia- 
logue aimed at expanding 
Euro-Chinese trade and invest- 
ment, anti assistance to flhina 
in its effort to integrate itself 
into an open, market-based 
world trading system. 

European support for Chi- 
na's entry to the General 
Agreement on Tariffs and 
Trade was part of this process, 
and in ways may not be 
entirely subtle EU officials 
seek to draw distinctions 
between their approach and 
that of the US. 

“The Chinese know, for 


EU urged to end rum quotas 


By Canute Janies in Kingston 

Rum producers have rejected 
an EU plan to maintain import 

quotas on dark (traditional) 
rum until the year 2001 while 
abolishing the quota on light 
rum from 1996. The producers, 
most of whom are in the Carib- 
bean, want all EU import quo- 
tas on rum abolished by Janu- 
ary to end shortages of the 
spirit in Europe. 

Maintaining the dark rum 
quota was requested by the 
French gove rnment, which has 
consistently objected to any 
increase in rum imports fear- 
ing damage to the rum indus- 
try in its overseas territories, 
mainly Martinique, Guade- 
loupe and Reunion. Caribbean 
producers view this as a set- 
back to their efforts to increase 
sales In Europe beyond their 
current annual quota of 240.000 
hectolitres. 

The European Commission 
had earlier proposed a quota of 
a), 000 hectolitres per year on 
rhum agricole which is made 
from sugar cane juice and pro- 
duced mainly in the French 


overseas territories. “While 
being opposed to any quota, 
the West Indies Rum and 
Spirits Producers' Association 
would have no objection to 
such a quota on rhum agricole 
if it is deemed necessary for 
the French departments, ” said 
the Caribbean producers. 

Traditional rum. however, is 
made from sugar cane molas- 
ses, not juice, and is an impor- 
tant part of rum exports to the 
EU. "To suggest that a quota 
should be maintained on this 
type of rum is entirely con- 
trary to the spirit of the overall 
abolition of the quota system 
and would seriously damage 
existing mar kets for traditional 
rum in Europe,” the associa- 
tion said. 

The row is the latest 
between rum producers and 
the EU over access to the mar- 
ket. The producers have 
claimed for the past two years 
that the EU has not done 
enough to prevent a shortage 
of the spirit in Europe by 
increasing the rum import 
quota and t btm abolishing it. 
The shortage is caused by the 


EU quota for ACP rum 

Hectofitrcs 

1987/88 

172.000 

1988/89 

172,000 

1988/90 

172.000 

1990/91 

192,000 

1991/92 

200,000 

1992/93 

220.000 

1993/94 

240,000 

1994/95 

240,000 


Soukk MM Mm fttm arc Sfitot PKKtKati 


EU failing to honour its obliga- 
tion under the Lome Conven- 
tion - the trade and aid treaty 
between the EU and the Afri- 
can, Caribbean and Pacific 
(ACP) countries - to increase 
the quota in line with rising 
consumption. 

According to the Caribbean 
producers, the quota for the 
current year (July to June) will 
be exhausted by end of Decem- 
ber. By October 7, there 
remained 152817 hectolitres to 
complete the quota, with peak 
demand expected at Christmas. 

Producers fear that their 
markets in Europe, which they 


riaim are highly price-se na- 
tive, will be destroyed by early 
quota shipments to satisfy 
dpmand, to be followed by a 
shortage and then by high- 
priced product after the impo- 
sition of customs duties for 
shi p m ents not covered by the 
quota. “The rum quota has 
now reached a level of chaos 
where it is destroying the mar- 
kets which the producers have 

painstaking l y built OVer the 

years,” the association said. 

Before the Lome Convention, 
there were no quotas, but rum 
was subject to duty. With the 
first Lom£ agreement, France 
insisted on a quota for duty 
free imports. As demand rose, 
rum producers twice requested 
an increase In the quota. Nei- 
ther was granted, mainly 
because of French pressure. 

The just, equitable and only 
solution is now to bring the 
quota abolition date forward 
by one year to January l, 1996. 
Any measure short of tins will 
inevitably contribute to the 
disarray of the Community 
rum markets ” said the produc- 
ers’ association. 


W oriel’ s car makers prefer the Thai tiger 

An opening market in a sea of protection makes 
Thailand the region’s leader, writes Victor Mallet 


Thai land: rising vehicle sales 

IfoMde sates by segment fOOOs) 

500 


The campaign by US 
manufacturers to break into 
south-east Asia's vehicle mar- 
kets - including a recent trade 
mission to Bangkok, Jakarta 
and Kuala Lumpur - has high- 
lighted the importance of Thai- 
land in the rapid growth of the 
motor industry in the region. 

Hardly a week passes with- 
out an announcement of plans 
to invest in the manufacture of 
cars or trucks somewhere in 
south-east Asia. 

Toyota is considering 
increasing production capacity 
at its factories in Indonesia 
and the Philippines; Chrysler 
is planning a $l00m joint ven- 
ture in Vietnam to b u i l d mini- 
vans and possibly Jeeps: 
Rover, the UK carmaker con- 
trolled by BMW of Germany, 
has signed a memorandum of 
understanding with Malaysia’s 
Proton about the possible man- 
ufacture of Rover engines in 
Malaysia. 

But it is Thailan d that has 
emerged as south-east Asia’s 
most attractive investment 
location for vehicle and compo- 
nent manufacturers. “I’ve 
never seen it as active and 
energetic as it is now,” says Mr 
Michael Dunne, president of 
Automotive Resources Asia, a 
Bangkok-based consultancy. 

Honda, for example, 
announced in October that it 
was investing more than SlOGm 


in a new plant that would dou- 
ble its capacity in Thailand 
and could produce a popular 
small car for Asian markets. 
Toyota has set aside more than 
$500m for expansion in Thai- 
land. 

Japanese brand names 
account for more than 90 per 
cant of vehicles sold in Thai- 
land, the Philippines and 
Indonesia. But US carmakers 
want to use their new-found 
confidence and profits to invest 
in a region they abandoned to 
their Japanese rivals 20 years 
ago. 

Ford, which closed its assem- 
bly line in Thailand in 1976, is 
considering producing pick-ups 
in th e country in association 
with Mazda; Thailand is the 
world's second-largest market 
for pick-ups after the US. 

Thailand’s regional preemi- 
nence as a car market is partly 
a function of its size and 
wealth. The population of 60m 
is large enough to create a via- 
ble domestic market, and with 
an average annual income per 
head of over $2,000, more and 
more Thais are rich enough to 
buy cars or pick-ups. 

Another reason is that since 
1991 Thailand has liberalised 
the motor trade. It has ent 
Import tariffs and encouraged 
new foreign investment, espe- 
cially in the components sec- 
tor. in an attempt to make 


itself a regional automotive 
centre. 

Indonesia and Malaysia, on 
the Other hand, maintain high 
protective barriers around 
their domestic markets. Malay- 
sia, which protects its Mitsubi- 
shi-derived Proton cars 
because of what Mr Dunne 
calls "romantic nationalism", 
limits imported cars by quota; 
Indonesia has lifted an import 
ban but applies tariffs of up to 
275 per cent 

"Relatively speaking, Thai- 
land is way ahead of its neigh- 
bours in terms of opening up 
the market,” says Mr Dunne. 
"Thailand’s com ponent indus- 
try is five years ahead of the 
others.” 

Even Thailand, however, is 
likely to remain a well-pro- 
tected car market for several 
years. Although it is the larg- 
est vehicle market in south- 
east Asia, the country does not 
have the economies of scale 
that are regarded as necessary 
in Japan and the west; a dozen 
different assemblers accounted 
for Thailand’s total 1993 sales 
of 456,461 units. 

"Japanese manufacturers 
and their Thai joint venture 
partners have a formidable 
store of vested interests and 
carry tremendous influence in 
policy-making circles," noted a 
report last year an the Thai 
automotive industry prepared 



1888 85 -88 - 87 

Sous* Ttui 


for the country’s Board of 
Investment. “Liberalisation 
policies directly threaten the 
comfortable operating environ- 
ment they have constructed 
over the past 20 years." 

US vehicle makers will And 
it bard to establish networks of 
Thai suppliers to match the 
ones that now cater to Japa- 
nese companies and help them 
fulfil local content rules, but 
the Thai authorities appear to 
be serious about allowing new 
entrants to compete fairly. 

When Chrysler wanted to 
assemble Jeep Cherokees in 
Thailand, it found that the 
Cherokee was defined as a pas- 
senger vehicle subject to an 
excise tax of 36 per cent while 
the equivalent Mitsubishi 
Pajero was treated as a pick-up 
with zero excise. Bat in March 
this year the Thai government 


pot both vehicles into a new 
four-wheel-drive category with 
a 27 per cent excise, and Chrys- 
ler is proceeding with its 
investment plans. 

Even the comfortably pro- 
tected Japanese assemblers 
and parts suppliers and Thai 
component makers are starting 
to accept the Inevitability of 
gradual liberalisation and are 
trying to improve the prospects 
for regional trade in automo- 
tive parts. 

One way of doing this - espe- 
cially for companies such as 
Toyota with a strong presence 
throughout the region - is to 
use the “brand-to-brand com- 
plementation" scheme embrac- 
ing Thailand, Mai , 

aysia and the Philip p ines . 

The scheme, which has 
worked only fitfully so for 
despite the best efforts of the 


Japanese beneficiaries, gives 
companies rewards in the form 
of tax benefits and allows them 
to enjoy economies of scale 
by centralising production of 
different components in differ- 
ent countries instead of produ- 
cing small volumes in each 
market 

Thai exports of vehicle parts 
continue to rise steadily. In 
1991 such exports were worth 
Bt3.7bn; last year the amount 
was Btl3.2bn ($528m) - and 
that has already been exceeded 
in the first seven months this 
year. 

A pattern is emerging of a 
small but growing trade in 
vehicles and parts, both within 
south-east Asia and with 
industrialised countries, partic- 
ularly Japan. T hailan d is likely 
to be one of the main beneficia- 
ries. 


Exports to China v V " -*ivv . }■' 


i 




p||Sl 


■- °1886 8? « B9 S0 4rtv«Z j” 

saiwwF!;.-: ”v ts.- 


example, we are playing a very 
much more positive role 
towards their membership of 
Gatt than some others,” said 
Sir Leon on the eve of a meet- 
ing on Monday in Beijing with 
Ms Wu Yi, China’s minister of 
foreign trade. 

Differences between the US 
and Europe over terms for Chi- 
na’s Gatt entry may not be 


great - the Europeans' appear 
willing to be more lenient 
about transitional arrange: 
merits - but the fact that EU 
want it to be noted 
that, they are predisposed to be 
more helpful at this stage 
throws an interesting light on 
competition for Influence in 
.the world's fastest growing 
market 


WORLD TRADE DIGEST 

Canada, China 
in reactor deal 

fThma {r od Cana da y este r day signed an agreement in principle 
for the sale of two Candu nuclear reactors worth about 
C$JL5bn <S2£9bn) to be built at Qinshan, south of Shanghai 


next to an existing Chinese plant Canada would be responsi- 
ble for C$2hn financing of the reactor sale, said Mr Bob Smith, 
presid ent Of Atomic Energy of Canada-' 

The Candu deal was part of a C$8_6bn package of contracts 

and nnufflorandiTmc of imdarafanding aignad yesterday til Bei- 
jing by Canadian businessmen in the presence of Canada’s 
prime minister Jean Chretien. Other agreements involved tele- 
communications, power plants, building materials, gold explo- 
ration, real estate and pipeline production. Our Be&ing Corre- 
spondent 

Ford in $ 15m Chinese venture 

Ford, the US carmaker, is to invest $15m. in a joint venture in 
China to produce automotive electronic components, its third 
rrnnpftnunts venture in China fins year. The world’s second 
largest vehicle maker hopes that the components operations 
will open the way for it to begin ««gmhiinp -vehicles in China 
in the near future. 

"We are eager to establish vehicle assembly projects in 
China at the earliest opportunity," Mr Rank Macher, Ford 
vice president and general manager of the automotive compo- 
nents division said yesterday. Ford si gned an agreement yes- 
terday with Shanghai Automation Instrumentation for the 
production of a range of automotive electronic components to 
supply v ehicle mafcerH both, in China and in other Asian 
markets. " ' ........ 

A new plant is to be built in Shang hai with production 
scheduled to begin in June, 1986. Earlier this year Ford agreed 
joint ventures with Shang hai Automotive Industry fra* the 
production of plastic automotive components - output begins 
this month - and with Shang hai Yao Hua Glass Works for the 
production of automotive safety glass, which has already 
begun operations. Mr Macher said that a further venture to 
make climat e control systems, including air-conditioning, 
heating and ventilation, could be signed by the end of the 
year. Hus would involve an investment of $20m-$30m. Kevin 
Done, Motor Industry Correspondent 

ILO links trade and labour 

The International Labour Organisation should pursue the pos- 
sibility of incorporating certain basic labour standards in 
inte rnation al fair trade rules, according to a secretariat paper 
for discussion by the ILO’s governing body next week. 

The paper suggests incorporating some ILO conventions 
relating to trade union rights and prohibition of forced labour 
in the rales erf the new World Trade Organisation. The ILO 
would judge whether violations had occurred, leaving the 
WTO to take decisions an trade sanctions. 

Trade liberalisation “at the very least” calls for recognition 
of conditions "enabling workers to negotiate freely, both indi- 
vidually and collectively, their conditions of work”, says the 
paper. However, it rejects the notion of equalising levels of 
wages and social protection across countries. If approved, the 
proposal may give new life to the currently stalled 
debate on U niting trade and labour rights, strongly backed by 
the US but bitterly opposed by many developing countries. 
Frances Williams, Geneva 

Snake charmers win new rights 

India will offer copyright protection to jugglers and 
charmers under an amen ded copyright law to enforce intellec- 
tual property rights. The rules flesh out a law passed in May 
to protect creativity and would be formally notified soon, Mr 
YU. Chatnrvedi, from the Human Resource Development Min- 
istry. said. He said special police units would be set up 
nationwide to check Infringement of the law, passed to 
strengthen the new General Agreement on Tariffs and Trade 
world trade pact 

1*** framed the law to ensure Indian artistes and 
performers are not cheated in copyright purchases, he gam 
Reuter, Nino Delhi 


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FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


5 


It- 







NEWS: THE AMERICAS 


US campaign unwholesome, hypocrisy rampant and invective childish 

Spiders, cookies and a lot of abuse 


By George Graham in 
Washington 



Forget Flee- 
twood Mac’s 
“Don’t stop 
thinking about 
tomorrow," 
which echoed 
endlessly 
through Presi- 
dent Bill Clin- 
ton’s campaign 
, r rallies in 1992; 

US MID-TERM *** Wt PfS?*? 1 

ELECTIONS o 0f 1394 > 

November 8 “® r *, J*® 1 ' 

gnantly, The 

itsy-bitsy spider.” 

Film of Senator Ted Kennedy 
singing along with the chil- 
dren's ditty provided one of the 
few high points in a campaign 
season that almost everyone 
agrees is one of the dirtiest in 
recent memory. 

The image must have been 
so memorable Congressman 
Jim Nussle of Iowa filmed a 
campaign advertisement solely 
of him singing the Spider with 
his three children. 

Acting with kids or animals 
carries its own risks. Mr Mich- 
ael Hufflngton, who has spent 
as much as $25 m, mostly his 
own money, in a bid to unseat 



Democratic Senator Dianne 
Feinstein in California, cam- 
paigned last month at the 
Bundy Scott Child Care Centre 
in Pasadena, reading “The lit- 
tle seed” and “The little boot" 
to the toddlers. 

“They seemed to like him, I 


don't know why,” said Mr 
Anthony Henry, the centre's 
director. This endorsement 
may have two edges, but could 
be important in a campaign 
where one of the principal 
issues has been the immigra- 
tion static of Mr Huffington's 


nanny. 

In other races the central 
issues have sometimes been 
even stranger. In the race for 
Wyoming's only seat in the 
House or Representatives, 
Republican Barbara Cubin's 
campaign has been rocked by 


“Cookiegate" - charges that 
she once passed around sug- 
gestively masculine-shaped bis- 
cuits at a meeting. The Casper 
Star-Tribune reports that Ms 
Cubic admits passing the cook- 
ies around, but says she did 
not bake them herself. 

In most parts of the country, 
the campaign has been 
unwholesome, the hypocrisy 
rampant and the invective 
childish 

A spokesman for Congress- 
man Jim Cooper, who is run- 
ning Tor one of Tennessee’s 
Senate seats against Republi- 
can lawyer Fred Thompson, 
calls his opponent “a Gucci- 
wearing. Lincoln-driving, Per- 
rier-drinking, Grey Poupon- 
spreading. millionaire Wash- 
ington special interest lobby- 
ist." 

But tbe prize for the funniest 
political advertisement in a los- 
ing cause goes to the campaign 
of former Congressman Jim 
Jontz to unseat Republican 
Senator Richard Lugar of Indi- 
ana. Mr Jontz drives around 
Indiana towns such as Leba- 
non, Peru and Moscow, in a 
search for the billions of dol- 
lars of foreign aid Mr Lugar 
has voted for. 


Top two US shipping 
lines seek to reflag 


By Nancy Dunne 
in Washington 

The two biggest US 
commercial shipping lines 
have begun to request permis- 
sion to reflag their ships in for- 
eign countries to reduce the 
costs of their operations. 

American Presidential Lines 
has asked the US Maritime 
Administration to put six new 
container ships under foreign 
flags, and is expected to seek 
reflagging of part of its l&ehip 
fleet now under the US flag. 

Sea-Land Services yesterday 
was expected to notify the 
administration that it wants to 
reflag about half of its 25-ship 
fleet It hopes to begin with 
five foreign-based ships. 

■ The - reflagging is strongly 
opposed by maritime labour. 


which joined with shipping 
interests last year in a congres- 
sional drive to get a new $lbn 
maritime operating subsidy 
programme. Union officials say 
American Presidential Lines 
worked against the legislation 
and should not be rewarded 
with waivers which permit the 
reflagging. 

The Clinton administration 
had hoped to create “a renais- 
sance for the American ship- 
building industry” with gov- 
ernment-backed loans, 
investment in new technology, 
streamlined regulations and 
higher exports. 

Shipping lines agreed to hold 
off reflagging until Congress 
passed legislation on operating 
subsidies. Subsidies, were 
approved twice in the House 
with bipartisan support but 


killed in the Senate. Congress 
did however pass legislation 
providing for shipyard modern- 
isation and export subsidies. 

The number of US-flagged 
vessels has been declining for 
years. As of last February the 
US had 366 large ocean-going 
vessels under US flag. Of these. 
340 were active. Without subsi- 
dies the US fleet is expected to 
dwindle to about 30 vessels 
after the year 2000. 

The willingness of ship- 
owners to reflag reflects the 
lower cost of operations using 
foreign crews and lower taxes 
abroad. It also represents the 
devaluing of the protection 
granted by cabotage rules, 
which permit only US flagged 
ships to sail from one US port 
to another, as trade becomes 
incr easing ly global. 


Argentine budget 
deal curbs Cavallo 


By David PtiUng 
in Buenos Aires 

Mr Domingo Cavallo, 
Argentina's combative econ- 
omy minister, may fail to win 
extra powers he sought to cut 
public expenditure following a 
pact by governing Perooist and 
opposition deputies. 

The agreement, which 
should dear the path for con- 
gressional approval of the 1995 
budget within 10 days, 
exdudes from the budget pack- 
age a controversial article that 
would have given Mr Cavallo 
additional powers to push 
through privatisations and cut 
state bureaucracy. 

Mr Cavallo had hoped article 
14 - which included authority 
to merge or eliminate state 
bodies and to cut the number 


of public employees - would 
have saved the treasury about 
$lbn next year. But many con- 
gressman were reluctant to 
grant Mr Cavallo what they 
considered sweeping powers to 
bypass the legislative branch. 

The issue has taken on par- 
ticular relevance because of 
the emergence in the third 
quarter of a budget deficit, the 
first in more than two years. 
Mr Cavallo has sought to 
blame the deSdt on growing 
pensions payments, but many 
commentators argue that fiscal 
laxity in other areas explains 
much of the deterioration. 

The deficit has forced Mr 
Cavallo to ask Congress to 
amend the 1994 budget grant- 
ing extra expenditure of $1.3bn 
to meet pensions and bonuses 
over the next two months. 


Investors keep eye on 
Zedillo’s peso policy 

Damian Fraser on pressure for Mexico devaluation 


W hen Mr Ernesto 
Zedillo, Mexico's 
next president takes 
office on December 1, domestic 
and foreign, investors alike will 
be watching for his administra- 
tion's views on exchange rate 
policy. 

Despite a depreciation of 
more than 10 per cent against 
the dollar this year, some econ- 
omists worry that the peso is 
over-valued. Mexico’s current 
account deficit is expected to 
widen to about S28bn this year, 
or more than 7 per cent or 
gross domestic product With 
capital flows insufficient to 
finance the deficit, reserves 
have fallen by about $10bn 
since February, and short-term 
interest rates have risen to 14.1 
per cent, more than 7 per cent 
in real terms. 

Normally sanguine econo- 
mists now conclude that for 
interest rates to come down 
and economic growth to accel- 
erate from the modest 3 per 
cent expected for this year, a 
devaluation is necessary. "It is 
a medium and long-term prob- 
lem rather than a short-term 
one: but eventually we are 
going to have a change in 
exchange rate policy,” says Mr 
Jonathan Heath, head of the 
economic consultancy Macro 
Asesoria Economica. 

Mr Zedillo publicly backed 
the renewal of the poclo 
between government, business 
and unions in late September, 
which permits a daily slide of 
the peso against the dollar 
equivalent to 4JJ per cent in a 
year. Anything more than that 
would require central bank 
intervention. 

However, partly due to the 
rise in US bond yields and con- 
tinued political uncertainty in 
Mexico, the pacta has failed to 
bolster confidence in the cur- 
rency. or reduce interest rates. 
Yesterday the peso was trading 
at 3.43 to the dollar, just below 
the central bank limit of 3.45. 

Mr Zedillo's close advisers 
insist - as they must - that 
there is no need to devalue. 
"Capital account inflows deter- 
mine the deficit and not the 
other way round," says Mr 
Jaime Serra Puche, the trade 
minister who is one of the 
front-runners to become 


finance minister under Mr 
Zedillo. “The day you stop hav- 
ing capital inflows then tbe 
rhythm of imports will slow 
down.” 

Such a relationship has not 
held this year. In the six 
months to June the current 
account deficit grew by 23.9 per 
cent to reach S14J?bn; the sur- 
plus on the capital account foil 
by 21.6 per cent to $12.45bn. 
While lower capital inflows 
will eventually reduce imports, 
many observers believe the 
best mechanism to induce the 

Mexican peso 

Against the $ (pesos per $) 

3.0 



3.5 Llj - 1 * ■ * 1 1 1 ., 4 . 

1993 94 

Source. Datastream 


adjustment is through a deval- 
uation of the currency. 

Using a different argument, 
Mr Serra predicts that import 
growth will fall as the rapid 
restructuring in Mexico’s 
industrial sector slows. He 
says import growth in recent 
years has been unus uall y high 
because companies have 
replaced obsolete machinery 
with imported capital goods. 
Once this process is over, he 
says, new capital goods 
imports will complement 
rather than substitute for 
existing capital goods, leading 
to a narrowing between the 
rate of growth of imports and 
exports. 

But for the moment indus- 
trial restructuring is continu- 
ing, iruti eating that the econ- 
omy wifi be dependent on 
foreign capital for some time. 
With high US interest rates 
turning sentiment against 
most emerging markets, Mr 
Zedillo may seek to bolster 
confidence in the currency by 
announcing a series of pro- 


market economic reforms, such 
as new privatisations, further 
opening of sectors such as 
energy to private capital, and 
deregulation. 

Such steps or similar ones, 
along with an expected 
improvement in the political 
climate after Mr Zedillo takes 
office, may prove sufficient to 
calm the markets. But if inves- 
tors remain nervous. Mr 
Zedillo faces three unpalatable 
choices: maintaining or raising 
current high interest rates to 
draw in short-term capital; 
increasing the current rate of 
maximum depreciation of the 
currency; or p ushing for a one- 
off devaluation. 

Keeping interest rates high 

would hurt economic growth 
and make it difficult for Mr 
Zedillo to reach his target next 
year of 4 per cent. It would put 
further pressure on Mexican 
companies that are struggling 
under high financing costs. 
And as Mr Serra argues, high 
interest rates are one of the 
causes of the trade deficit; 
Mexican companies, he says, 
are finding it difficult to com- 
pete with importers of interme- 
diate and capital goods because 
they cannot offer attractive 
credit terms to customers. 

Some members of the Salinas 
administration have argued in 
favour of increasing the daily 
depreciation of the exchange 
rate band, believing that such 
a move would improve compet- 
itiveness and take pressure off 
tbe currency. But with inves- 
tors expecting a more rapid 
depreciation of the currency 
over time, they may demand 
higher interest rates to com- 
pensate for the greater 
exchange rate risk. “Widening 
the band would be the worst of 
all worlds,” says Borja Ussia of 
Grupo Moneda in Mexico City. 

Government officials insist 
that a one-off devaluation 
would be even more damag in g . 
They argue that interest rates 
would rise after a devaluation, 
with investors concerned that 
inflation would rise as import 
prices increase. And many of 
Mexico’s largest companies 
would be hit with huge losses 
on the foreign currency loans 
they have taken out In recent 
years. 




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FINANCIAL TIMES 


WEDNESDAY NOVEMBER 9 1994 


NEWS: INTERNATIONAL 


Bank lending fall underlines fragility of Japan’s 



By WflEam Dawkins and 
Gerard Baker in Tokyo 


Japan's official economic 
forecaster yesterday upgraded 
its outlook slightly, but the fra- 
gility of the recovery was 
underlmed by a record fall in 
hank tending last month. 

Bright economic spots are 
continuing to spread, said the 
Economic Planning Agency’s 
m onthly report for October. It 


pointed as evidence to a “grad- 
ual uptrend" in industrial pro- 
duction and “signs of a 
pick-up” in corporate profits. 
This contrasts with September, 
when the economy was seen 
h parting for recovery, the first 
nfftefoi recognition of the end 
of Japan’s three-year economic 
downturn, the longest in post- 
war years. 

Subtle changes in wording 
from one EPA report to the 


next are closely watched as an 
influence on monetary policy. 
So the Bank of Japan can be 
expected to take the latest 
prognosis as further evidence 
Hiat it has no domestic eco- 
nomic reason to cut official 
interest rates, despite the dol- 
lar's renewed fall last week to 
a record low against the yen. 

The EPA’s cautious opti- 
mism is the latest sign that 
Japan's economic cycle has 


slowly turned, as Y45,0Q0bn 
(£286bn) of government spend- 
ing programmes over the past 
two years and an income tax 
cut last summer have started 
to feed through into corporate 
activity and private spending. 
On the corporate front, indus- 
trial production rose 1.6 per 
emit in the three months to 
September, the third quarterly 
rise in a raw. 

Meanwhile, the jobs market 


has become slightly less weak, 
shown by a rise, for two 
months in a row, in the num- 
ber of jobs available per 100 
applicants, from 63 in August 
to 64 in September. The labour 
market is still tough, especially 
in manufacturing, which em- 
ployed fewer people than ser- 
vices In September for the first 
time recorded, but the worst is 
over, said an EPA o ffic i al . 

Yet the fall in bank lending. 


announced by Federation of 
Bankers’ Associations yester- 
day. is equally a sign that con- 
sumption may be lagging and 
that banks* lending policies 
continue to get tighter. 

The balance of lending by 
the II “city banks”, the coun- 
try’s main retail banks, fell by 
a record L8 per emit in October 
from a year earlier, the tenth 
consecutive monthly foil, and 
the largest yearonyear decline 


since the statistics were first 
collected in 1954. The fall was 
blamed on weak demand for 
personal housing loans, con- 
sumer credit and corporate 
ronitnl investment f und s. ■ 
The rapid growth in problem 
loans produced by the collapse 
of property and other asset 
prices in the last few years has 
at the time forced b ank s 
to adopt a more cautious 
approach to domestic loans. 


Over a quarter of all lending 
by top bante & secured on 
property. Land ..prices "have 
kept felling In the main cafes 
in ffie past year, as a result 
hanics have reduced credit 
jnigs to many smaller custom- 
ers. Lending by the three 
long-term credit banks fell 0.9 
per cent from a year before, 
but loans • from the Seven 
cmaiter trust banks registered 
4.5 per cent up an a year ago. 



NTT battle with competitors hots up TV ‘people-meters’ 



By Mfchlyo Nakamoto fn Tokyo 


The battle between NTT, Japan's 
largest telecommunications com- 
pany, and its smaller competitors 
over use of NTT’s local network 
intensified yesterday as three 
long-distance telecoms operators 
asked the authorities to step in. 

DDL Japan Telecom and Teleway 
Japan have asked the Ministry of 
Posts and Telecommunications to 
intervene In folks with NTT, stalled 
because of differences over rates set 
by NTT for use of its local network. 

The companies, which have been 
negotiating with NTT for the past 
five years, claim this prevents them. 


from offering discounts to custom- 
ers equivalent to the discounts NTT 
can offer for the same services. The 
three compete with NTT as 
long-distance carriers but depend 
on using NTT’s local network. 

They want to set up socalled vir- 
tual private networks (VPNs), 
allowing users to cut their commu- 
nications bills substantially by 
using public networks as though 
they were internal networks. NTT 
has already started providing VPN 
services. 

This is the second time in recent 
months that NTT has been accused 
of using its monopoly over the local 
network to impede the business of 


its longdistance competitors. 

The latest row is likely to support 
claims that NTT should be broken 
up into separate local and 
long-distance businesses to intro- 
duce greater competition into 
Japan’s telecommunications market 
and ensure existing competition is 
given a fair chance. NTT feces a 
decision by the Japanese govern- 
ment next year on its fixture status. 

The three longdistance carriers 
have been asking NTT to allow 
them to set thei r ow n rates for VPN 
calls made on NTT’s local network 
so that they can offer their own 
customers similar discounts to what 
NTT offers. 


NTT counters it is happy to link 
the three carriers to its local net- 
work for VPN services but cannot 
allow them to set rates for use of its 
own network. "The local network is 
NTT’s business.'* an NTT official 
said. 

Japan's telecommunications pol- 
icy, which separates long-distance 
and local operations, has not kept 
up with developments in the indus- 
try, such as the emergence of new 
services such as VPN. 

To accommodate the emergence 
or these new services, policy should 
reflect the need for telecoms opera- 
tors to provide end-to-end services, 
the NTT official noted. 


By Emiko Terazono in Tokyo 


Japan's leading commercial 
networks yesterday hit at Nielsen 
Japan, the Japanese arm of the US 
marketing group, over its launch 
this month of an automated system 
measuring television ratings. 

The television networks, stake- 
holders in Video Research, a rat- 
ings research company which bolds 
a virtual monopoly of the business, 
said Nielsen's decision to offer the 
ratings service was “regretta b le". 

Video Research measures ratings 
per household, rather than individ- 
uals as in the US and European 
countries. The data is supple- 
mented by diaries kept by individ- 


ual viewers one week in a month. 

The networks had previously 
warned that Nielsen's move mold 
cause “confusion" in the television 
advertising business. They had not 
wanted Nielsen to start its service 
until all four parties involved in 
the ratings business (advertisers, 
advertising agencies, networks and 
ratings co m panies) had all agreed 
to the launch. 

Nielsen’s move to go ahead 
despite networks’ strong opposition 
has frustrated network officials. 
“We really weren’t expecting this,” 
said Mr Yasuharu Untshido of Nip- 
pon Television Network. Corporate 
advertisers and foreign advertising 
agencies, which have been calling 


for individual ratings .for oyer a 
decade, have backed Nielsen's deci- 
sion. They want more detailed data 
on the age and sex of viewers. 

As a compromise, Nielsen and 
corporate a d verti se rs had agreed to 
use 4?fo from the “people meter” 
system solely as “marketing data” 
and not as a base for negotiating 
advertising rates with the -net- 
works. The company offered to pro- 
vide the networks with the date 
free for the first five months. 

The networks describe the “peo- 
ple meter” Systran as imperfect and 
the data inaccurate. Nippon Televi- 
sion and Tokyo Broadcasting Ser- 
vice said they had resected Niel- 
sen’s offer of free data. 


French president skims over French role in Rwanda 

Mitterrand defends Africa record 


France's President Francois 
Mitterrand mounted a strong 
defence of his record in Africa 
yesterday but did not reply to 
harsh critics of France’s policy 
before and after this year’s 
Rwandan genocide. Reuter 
reports from Biarritz. 

Addressing his last Franco- 
African summit, the 76-year-old 
leader said France remained 
Africa's firmest foreign friend 
and its biggest aid donor. 

In a valedictory message 
ending his 86-year association 
with Africa, Mr Mitterrand 
appealed to whoever succeeds 
him as president next May to 
maintain France’s strong ties 
with the world's “most fragile 
continent”. 

Bat he skimmed over 
France's much-criticised role 
in Rwanda where hardliners in 
the ousted Hutu-led govern- 
ment organised the genocide of 
up to lm people between April 
and July. Under President Mit- 
terrand, France gave sustained 
military mid political support 
to the former regime. 

The new Tutsi-led govern- 
ment accuses Paris of orches- 
trating efforts to destabilise it, 
citing the blocking of Euro- 
pean aid and delays in bring- 
ing the culprits to interna- 
tional justice. 

For the first time since 1975, 
Rwanda was not invited to 
attend the Franco- African sum- 
mit France said it preferred to 
see the situation “evolve" in 
Kigali, but many African dele- 
gates said they regretted the 
new government’s absence. 

Delegates expected Rwanda 


’ r. .viY'";. 


1 '■ 



Mandela 
seeks 
new mines 
policy 


By Mark Suzman 
in Johannesburg 


President Mitterrand with Presidents Bongo of Gabon (right) and Mobutu of Zaire (centre) 


to be at the centre of the sum- 
mit’s two plenary sessions 
before today's close. But 
France was promoting a debate 
on the creation of an African 
intervention force to respond 
quickly to the continent's fre- 
quent and bloody conflicts. 


French media and African 
opposition parties accused Mr 
Mitterrand before the summit 
of betraying his early promises 
to help end the autocratic rule 
of African political “dinosaurs” 
personified by Zaire's Mobutu 
Sese Seko. 


Mr Mobutu, who earned 
French gratitude for his sup- 
port on Rwanda, was in Biar- 
ritz and bad; in limited favour 
with France despite Zaire's 
continued state of economic 
chaos and political in- 
stability. 



UN to seek 
police for 
Rwanda 


United Nations Secretary 
General Boutros Boutros Ghali 
said yesterday he would ask 
the Security Council to 
consider sending a police 
contingent or “rapid deploy- 
ment force” to tighten 
security in Rwandan refugee 
camps, Reuter reports from 
Geneva. 

But the UN chief, speaking 
after chairing a crisis meeting 
on Rwanda, conceded he might 
face donor-fatigue among 
states being asked to provide 
cad or troops to the new oper- 
ation. 

Mr Shahryar Khan. UN spe- 
cial envoy for Rwanda, said a 
series of options would be put 
to the Security CotmciL The 
largest foresaw deployment of 
up to 41300 troops for at least a 

year to halt intimidation and 

violence in the camps by Hutu 
militiamen 

Mr Boutros Ghali wifi return 
to New York late tonight to 
relay several proposals from 
the Geneva talks, also attended 
by the UN high commissioners 
for refugees and human rights. 


President Nelson Mandela 
yesterday called on South 
Africa’s mining houses to 
expand their dialogue with the 
government and trade unions 
by establishing a permanent 
forum of big stakeholders to 
help shape a new policy frame- 
work for the industry. 

Addressing the Johannes- 
burg meeting of the Chamber 
of Mines, an umbrella body 
representing mining industry 
interests. Mr Mandela said 
such a forum could improve 
productivity and help mines 
develop education and train- 
ing initiatives for workers, 
while improving health and 
safety measures. 

“The mining industry’s 
impressive technological 
achievements still confront 
archaic social conditions and a 
workforce built on a low skills 
base and largely confined by 
illiteracy.” 

While praising the achieve- 
ments of the industry as 
“truly remarkable,” Mr Mand- 
ela avoided addressing the 
question of mineral owner- 
ship, merely saying he hoped 
that “under whatever form of 
ownership,” mining would 
seek “to uplift the most disad- 
vantaged of our society”. 

Since last year, a debate has 
been under way in Mr Mand- 
ela's African National Con- 
gress on whether the state 
should assume ownership of 
all mineral rights, to release 
under-used deposits for possi- 
ble exploitation by foreign 
investors and small black- 
owned mines, or whether it 
should accept the private own- 
ership system. 

Talks between the ANC. the 
mines and the Department of 
Mineral and Energy Affairs 
have been continuing since the 
April general elections, but 
the government has yet to 
make a definitive policy state- 
ment on the issne. For the 
moment, Mr Mandela's 
address appears to indicate the 
state’s willingness to accept 
the status quo while encourag- 
ing farther social responsibil- 
ity programmes by the mines. 

Mr June Geldenhuys, outgo- 
ing president of the chamber, 
responded by urging “a syner- 
gistic and co-operative rela- 
tionship” between government 
and mining , and praising the 
administration’s non-interven- 
tionist approach to the private 
sector as a whole. 

But Mr Geldenhuys critic- 
ised planned alterations to 
labour laws, such as more pub- 
lic holidays and a 40-hour 
maximum work week, as well 
as tighter environmental con- 
trols, charging they consti- 
tuted “an anachronism" that 
could prove extremely costly 
to the industry. 


South Korea eyes the 
North’s attractions 


John Burton on economic benefits of Seoul’s 
easing of business links with Pyongyang 


S eoul has opened the door 
to economic co-operation 
with North Karra, offer- 
ing the possibility of long-term 
peaceful integration between 
the two bitter foes. But invest 
ment by South Korean compa- 
nies Is likely to be modest for 
the immediate future. 

Investment guidelines 
announced by the Seoul gov- 
ernment yesterday will guaran- 
tee a gradual expansion of eco- 
nomic ties. 

South Korea's decision to 
ease trade and investment 
curbs follows the settlement of 
the TTitowiatinnai dispute over 
North Korea's nuclear pro- 
gramme last month. Seoul 
suspended economic co-opera- 
tion with Pyongyang two years 
ago after North Korea threat- 
ened to withdraw from the 
international nuclear safe- 
guards agreement. 

Initial investments win be 
limited to light industry, but 
large-scale infrastructure and 
energy projects will be post- 
poned until progress Is 
achieved on such political 
issues as intra-Korean nuclear 
inspections. 

South Korean businessmen 
and technicians will be allowed 
to travel to North Korea to 
conduct feasibility studies, 
establish branch offices and 
manage factories. Machinery 
can be shipped to the North to 
equip factories handling repro- 
cessing orders from the South. 

South Korean companies will 
also be permitted to employ 
cheap North Korean labour in 
third countries for construc- 
tion and natural resources pro- 
jects. 

They will also be allowed to 
participate in investment pro- 
jects through joint ventures 
with other countries, primarily 
China, or multilateral pro- 
grammes such as those spon- 
sored by the UN Development 
Programme. 

South Korea’s President Kim 
Young-sam’s decision to 
resume economic ties is meant 
to encourage the opening of 
North Korea and promote the 
gradual reunification of the 
divided peninsula, while 
acknowledging Pyongyang’s 
new leadership under Mr Kim 
Jong-IL 

But the South Korean invest- 
ment guidelines are the result 
of a domestic political compro- 
mise on the issue. Full-scale 
economic co-operation would 
have angered conservatives 
who argue that industrial 
investments would only resus- 
citate North Korea as its econ- 
omy appears headed for col- 
lapse. 

But South Korea's powerful 
conglomerates, or chaebol , 
have been lobbying strongly 
for an easing of investment 
restrictions because they want 





P 


Presidents Kim Yonng-sam (left) and fim Jong-0 


to take advantage of North 
Korea's cheap labour force and 
the country’s potential as a 
new market for consumer 
goods. 

They have also expressed 
fears that US, European and 
Japanese companies may 
establish a foothold in North 
Korea before they do, if the 
restrictions are left in place. 

The chaebol appear ready to 
live with the re maining eco- 
nomic restrictions since they 
are cautious about committing 
large amounts of investment to 
North Korea. Concerns range 
from the country's poor infra- 
structure to the absence of 
investment guarantees and a 
double taxation treaty. 

South Korean companies 
have been scouting production 
sites in North Korea since 1989, 
with 13 chaebol having sought 
government approval to con- 
duct negotiations with Pyong- 
yang on investment projects, 
according to ministry of trade, 
industry and energy officials. 

Proposed investments 
mainly concern the production 
of light industrial goods, 
including textiles, electronics, 
and food products. Several 
companies also want to 
develop tourist facilities near 
Mount Kumkang, one of 
Korea’s most famous scenic 
areas. Samsung and Lucky- 
Go Ids tar are reprocessing tex- 
tile products in the North. 

Short term, Samsung wants 
to expand activity to inr.lnde 
manufacture of electronics 
products. Lucky -Goldstar plans 
to produce daily consumer 
items, while Daewoo hopes to 
establish an electronics assem- 
bly complex in the port of 
Nampo, near Pyongyang 

The chaebol eventually want 
to win construction orders for 
infrastructure projects and 
operate gold, zinc and iron 
mines in North Korea. Hyun- 
dai has expressed interest in 
establishing a ship repair yard 
in Wonsan and producing rail- 
way carriages, while Lucky- 
Goldstar would build oil refin- 
ing and petrochemical facili- 
ties. 


These Investment plans will 
he affected by Pyongyang’s 
conditions governing foreign 
investment North Korea has 
been seeking foreign invest- - 
ment to revive its troubled Y 
economy, which has contracted 
by an annual 5 per ran t in tiie 
past four years. It has recently 
copied many of China's foreign 
investment laws. 

But North Korea still has 
ambivalent attitudes to chaebol 
investment 

“The North Koreans fear 
they will become an economic 
colony of the chaebol and 
would prefer doing business 
with smaller South Korean 
companies," said one western 
business consultant who trav- 
els frequently to Pyongyang, 

“but they also realise the chae- 
bol are the only ones possess- 
ing enough financial resources 
to undertake the big industrial 
projects that would benefit 
North Korea.” 


N orth Korea may try to 
place geographical 
restrictions on where 
tiie chaebol can operate to pre- 
vent the population from being 
exposed to foreign influences 
that could undermine support aA^ 
for the Pyongyang govern- 
ment It has been trying to 
limit foreign investment to the 
country's north-eastern region, # 
but potential foreign investors 
complain the area is too iso- 
lated and lacks transport links. 

The confidence of the South 
Korean government and chae- 
bol concerning North Korean 
investment will be strength- 
ened if Seoul is allowed to 
build new and safe nuclear 
reactors to replace Pyong- 
yang’s current nuclear pro- 
gramme, scheduled to be dis- 
mantled under its recent 
nuclear deal with the US. 

The project is considered a 
key test of North Korea’s will- 
ingness to co-operate with 
Seoul and accept the presence 
of at least 1,000 South Korean 
workers who will help build 
the reactors - the first signifi- 
cant venture between the two 
countries. 


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FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


NEWS: INTERNATIONAL 




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INTERNATIONAL NEWS DIGEST 

S Africa land 
bill moves on 

South Africa's national assembly yesterday passed a 
Restitution of Land Rights Bill in a first step to pnmpgnpa Kng 
millions of blacks dispossessed under apartheid. The bill, the 
first sig n i fic ant legislation aimed at redressing the wrongs of 
apartheid to go through parliament, provides for a Commis- 
aon on the Restitution of Land Rights to help claimants bring 
their cases to a Land Claims Court. Tire legislation provides 
tor hearing of any claims dating back to 1913. Most parties 
support the idea of land restitution for the &5m blacks forcibly 
removed from their lands, but most claims will be difficul t to 
assess-. Also, the government will find it hard to provide 
fin a nci a l compensation for those whose claims are upheld. The 
bfll stiQ has to be passed by the Senate before it can be signed 
mto law. Aforfc Suzman, Johannesbur g 

Thailand may ban visit 

Thailand may cancel a visit next month by an Australian 
parliamentary delegation in response to comments by Mr 
Gareth Evans, Australian foreign minister, that Cambodia's 
Khntftr Rouge rebels continued to receive unacceptable ass is- j 
tance from Thailand. On Sunday, Mr Evans said he would 
urge the Thai government to stop its businessmen and soldiers 1 
supplying Khme r Rouge guerrillas. He was not accusing senior i 
levels of the Thai government of directly helping the Cambo- 
dian guerrillas, he added. Reuter, Bangkok 

Australia ‘adjustments’ needed 

Adjustments in Australia's policy settings would be needed to 
keep i n fla ti on at bay. Mr Ralph Willis, treasurer, acknowl- 
edged yesterday. His comments followed fierce debate over 
whether the government should adopt a tighter Pforai strategy 
to stop Australia lurching into another “boom and bust” cycle. 
To achieve a 2-3 per cent target of underlying inflation, “we 
have to adjust policy to curb the natural tendency of the 
economy to spiral. That means from time to Him* policy has to 
be adjusted.” Nikki Tail Sydney 

Secret deal claims denied 

Mr Brian La ton. Broken HSU Proprietary chairman, and Sir 
James Balderstone, former chairman, yesterday denied oiaima 
they knew of an alleged “secret arrangement” between Elders 
KL, the group formerly controlled by Mr John Elliott, and 
companies associated with Mr Allan Hawkins, the now-jailed 
New Zealand businessman, relating to purchase of BHP 
shares. The alleged agreement is at the centre of a Melbourne 
c ommi ttal hearing following filing of theft and conspiracy 
charges against Mr Elliott and other Elders IXL executives 
last year. Elders is alleged to have used sham foreign 
exchange transactions to cover transfer of A$G6J>m C£30j>m) to 
Mr Hawkins, a payment supposedly related to purchase of 
BHP shares by him in the late 1960s. Nikki Tait, Sydney 

Japan to review profits burden 

Japan will review the tax bur- 
den on corporate profits as 
Japanese manufacturers shift 
their plants abroad to ride out 
the impact of the high yen, 
Mr Masayoshi Taken? ura. 
finance minister (left), said 
yesterday. “It’s inevitable the 
percentage of firms moving 
abroad will increase. We will 
rM review the taxation an corpo- 
*Jq. rate profits to this effect,” he 
told the tax reform committee 
of the lower house. Corporate 
^ taxes levied by Japanese 
“ regional governments were 
higher than in other leading 
industrial nations, while Jap- 
anese factories were shifting 
overseas relatively slowly. Reuter, Tokyo 

Gas utilities face tough test 

Japanese natural gas utilities will be exposed to greater com- 
petition next year when the first steps to deregulate the 
industry take effect, Mr Koshiro Godo, Japan Gas Association 
senior managing director, said. The amendment to the Gas 
Industry Law would ease rules an who can supply gas and at 
what price, he told a conference in Indonesia- Rader, Jakarta 

Why Manila acted on peso 

The Philippine central bank is not trying to reverse the rise of 
the peso but is using “limited interventions” to smooth volatil- 
ity, Mr Edgardo Zialcita, acting governor, said. The bank’s 
intervention in the market yes today was designed to “stop a 
sharper decline in the dollar value”. The central bank bought 
$40m as the peso surged 68 centavos to hit a 29-month high of 
Pesos ZL50 to the dollar before easing. Bailer, Manila . 

Indonesia murder trial 

An Tmtonwgian court has begun trying five policemen on 
charges of killing a student, after it jailed two others for 
inastennrDdmg the alleged murder. Antara News Agency said. 

| The five accused face up to three years' jail if convicted of 
mmdering Mr Jerri Manafe. Amnesty International claimed 
tins month the policemen took Manafe from a hospitaL "A few 
hours later the abductors tods him to another hospital where 
he was pronounced dead.” Reuter, Jakarta 
\ ■ Libya has devalued the dinar more than. 15 per cent, hankers 
in Lflbyaand Tunisia said yesterday. Reuter, Tunis 
■The frawiari parliamen t has voted to doublefuel prices from 
next March despite warnings about the inflatio n ary effect Mr 
Gholamraa Aghazadeh, oil minister, had pleaded he needed 
the extra revenue to implement projects. Reuter. Tehran 



Israel moves to speed Palestinian self-rule 


By Julian Ozanne in Jerusalem 

Israel and the Palestine Liberation 
Organisation agreed a series of mea- 
sures yesterday to speed the expan- 
sion of Palestinian self-rule, amid 
growing concerns about the political 
and economic crisis in the Gaza Strip. 

After a meeting with Mr Yassir Ara- 
fat chairman of the Palestine Libera- 
tion Organisation, Israeli prime min- 
ister Yitzhak Rabin said Israel had 
agreed to complete transfer of admin- 
istrative power to Palestinians over 
West Bank health, welfare, taxation 
and tourism by the end of the month 
under an agreement known as early 
empowerment which has already 
transferred education to Palestinians. 

Mr Rabin also said Israel would add 
talks on Israeli troop redeployment 
from the West Bank and the transfer 
of authority to continuing negotia- 
tions about Palestinian elections and 
had agreed to ease Israel’s closure of 
Gaza and the West Bank by increas- 
ing the number of Pales tinian work- 
ers allowed to cross into Israel by 
10.000 to 23.000. 

The package of measures completes 
the transfer after months of delay and 
growing mutual suspicion. 

Israeli officials said Mr Rabin 
appeared to have made a strategic 
decision to implement the Israeli- 
PLO agreements despite opposition 





Yassir Arafat making a point to Yitzhak Rabin yesterday as Israeli General Danny Rothschild tries to interject 


from senior military officers. 

They said Mr Rabin recognised that 
unless the peace process is imple- 
mented much faster Mr Arafat's frag- 
ile support base will collapse in the 
face of a resurgent Islamic opposition. 

Mr Arafat said the meeting bad 


been very positive. “We hope that in 
this atmosphere we will follow up and 
implement accurately and honestly 
what we agreed upon.” 

However, even with Israel's com- 


Israeli army would leave Palestinian 
population centres before the middle 
of next year a full year behind sched- 
ule. 

The pace of future negotiations. 


mitment to accelerating the process which Mr Rabin said would start 
officials said it was unlikely that the within two weeks, will depend largely 


on what instructions Mr Rabin gives 
to the four-person Israeli negotiating 
tsam. But observers said the inclusion 
of two foreign ministry officials 
should help to speed the talks given 
the clear enthusiasm of the foreign 
ministry for quicker implementation 

“They will certainly be complex 
negotiations in which we, as Israelis, 
will have to ensure ourselves all the 
components of security. I cannot esti- 
mate how many months the talks will 
last.” Mr Rabin said. 

Mr Rabin also said early empower^ 
meat would depend on an agreement 
with donors to meet the additional 
funding gap the P alestinian authority 
will incur as it takes over responsibil- 
ity in the West B ank. Israel, the PLO 
and donors are close to completing an 
accord under which Israel will assist 
the Palestinians with tax collection, 
tax training and the transfer of tax 
data in Arabic and donors will meet 
an estimated additional deficit of 
$27m (£i7m) for the next six months. 

Donors have agreed to meet the fin- 
ancing gap but have warned they can- 
not continue funding Palestinian run- 
ning costs indefinitely while Israel 
continues to collect millions of dollars 
of customs duties from the West 
Bank. The customs duties will only 
accrue to the Palestinian treasury 
after Israeli troop redeployment and 
Palestinian elections. 


Biotechnology drugs can save ‘millions of lives’ 


By Frances Wfliams in Geneva 

Vaccines and other drugs 
derived from biotechnology 
have the potential to save mil- 
lions of lives, especially in 
developing countries, and to 
mm hat diseases ran g in g from 

cholera to cancer and Aids, 
according to scientists advising 
the World Health Organisation. 

Sir Gustav Nossel of the 
Royal Melbourne Hospital, 
Australia, said yesterday that 
genetically engineered (recom- 


Pakistani 
hostages 
are freed 


Pakistani Islamic militants 
yesterday released about 50 
government officials taken 
hostage in a remote north-wes- 
tern region at the start of a 
violent campaign for Islamic 
laws, Reuter reports from 
Peshawar. 

The officials, freed at Matta 
town in the North West Fron- 
tier Province, were unhurt, 
provincial police chief Masud 
Shah said. The hostages 
included two judges, a senior 
local civil servant and a senior 
police official. 

Yesterday's release was the 
largest group of hostages freed 
after the heavily armed mili- 
tants began a truce on Sunday 
on the orders of their leader, 
Sufi Mohammad, after two 
days of battles with security 
forces in which at least 25 peo- 
ple from both sides died. 

Provincial chief minister 
Aftab Ahmad Sherpao, who 
ordered the enforcement of 
Islamic laws last Thursday, in 
an Interview published yester- 
day linked “foreign involve- 
ment” to the militants’ action. 

Last Thursday, the militants 
lolled a provincial parliament 
member of Prime Minister 
Benazir Bhutto's Pakistan Peo- 
ple’s Party after taking him 


Mr Safi says the demand of 
his Tehrik Nifaz Shari at-l-Mo- 
hammadi organisation has 
berni met and he is satisfied by 
the Sherpao order. 

But some local TNSM lead- 
ers say they do not trust the 
government, hinting at a rift 
in the fundamentalist group. 

Despite a sharp political 
polarisation in Paidstan, there 
has been little sympathy for 
the militant cause. 


Moscow wins Iraqi pledge 
over Kuwaiti sovereignty 


Russia's mediation drive 
‘ between Iraq and Kuwait 
• mdVed into top gear yes terday , 
when Mr Tariq Aziz, visiting 
Iraqi deputy prime minister, 
. hande d over a letter, dealing 
. with Baghdad's recognition of 
' its former Gulf .War foe, Reuter 
reports from Moscow. . . 

' “Tariq Aziz:.. handed Pres- 
. .dan* Boris Yeltsin a message 
'from Iraqi President Saddam 
' Hussein on Iraq’s recognition 
/ of Kuwait's sovereignty and 
borders under United Nations 
Security Council Resolution 
833 ," a foreign ministry state- 
ment said.: 

Foreign ministry officials 
: would not comment on 
whether , the letter had spea- 
■ fled Xraq would now officially 

- -recognise Kuwait. But the 
statement said Mr Yeltsin had 

.'Briefed Foreign Manstoj^d- 
iciKozyrevtoflytoBaghdaa 

- “to take part in completing tne 
‘appropriate constitutional pro- 
cedures”- Itar-Tass news 


agency said he would leave for 
a three-day trip to Iraq today. 

1ft* Kozyrev has been push- 
ing: for weeks for Iraq formally 
to recognise Kuwait, and for 
the international community 
to lift trade and oil sanctions 
against Moscow’s did ally in 

response. 

The talks with Mr Aziz fol- 
low Mr Kozyrev’s announce- 
ment on October 13 that he 
had won ah apparently uncon- 
ditional promise from Mr Sad- 
dazn to recognise Kuwait’s sov- 
ereignty and borders. But the 
Security Council insisted this 
pledge had to be folly ratified 
in legal form before sanctions 
could be eased. 

In return for full Iraqi recog- 
nition of Kuwait, Mr Kozyrev 
last mobth promised that R us- 
sia would support a lifting of 
the embargo on Iraqi oil 
exports after six months. 

Iraq has been under UN 
trade sanctions since shortly 
after it invaded Kuwait In 


August 1990. The embargo 
includes a ban on crude oil 
exports, which were the coun- 
try’s main foreign revenue 
earner before the Gulf War. 

Although food imports are 
allowed under the ban, Iraq 
has refused an offer to sell a 
limited amo unt of oil under UN 
supervision and use part of the 
proceeds to meet domestic 
humanitarian needs. 

Yesterday's meeting in 
Moscow, from which reporters 
and photographers were kept 
at arm's length, continued 
moves by Moscow to recover 
lost status as a player in high- 
profile Gulf diplomacy. 

Apart from raising the Krem- 
lin’s faded profile in the Middle 
East, a settlement with Iraq 
allowing it to resume its oil 
exports would clear the way 
for Baghdad to resume paying 
Moscow an estimated debt of 
between $lObn and S16bn for 
arms supplied in the 1370s and 
1980s. 


binant) drugs were “purer and 
safer” than conventional vac- 
cines, highly effective and 
could be manufactured in large 
quantities. Far from introduc- 
ing additional regulations to 
control such drugs, the need 
was to make them as widely 
available as possible, he said. 

Sir Gustav was speaking 
near the end of a three-day 
meeting, which he chaired, on 
the safety and ethics of using 
recombinant DNA vaccines 
and drugs to tackle disease. He 


said the meeting, which 
brought together doctors, sci- 
entists, ethical experts and 
consumer and industry repre- 
sentatives, had found no 
innate disadvantages in the 
use of genetically-engineered 
products compared with con- 
ventional ones and many bene- 
fits. 

Recombinant DNA products 
already in use include hepatitis 
B vaccine, insulin and erythro- 
poietin, which helps patients 
dependent on artificial kid- 


neys. Products in the pipeline 
include vaccines against chol- 
era, typhoid. Aids, certain can- 
cers such as melanoma and 
birth control drugs producing 
temporary infertility in women 
and men. 

A new whooping cough vac- 
cine that would avoid the 
“nasty" reaction now shown by 
one in 2,000 children could be 
available “quite soon”. Sir Gus- 
tav said. Clinical trials on a 
drug to combat genital herpes 
were well advanced. 


The WHO pointed out that 
some of these products, such 
as erythropoietin, could not be 
made by conventional means 
while manufacture of insulin 
once required the slaughter of 
30m pigs a year. Biotechnology 
can also help makt> drugs safer 
by avoiding infection risks. 

The UN agency sees some of 
the biggest benefits coming in 
developing countries where up 
to 12m people die each year 
from infectious diseases. The 
hope is that genetically engi- 


neered vaccines may overcome 
the limitations of oricring- vac- 
cines. 

The new drugs tend to be far 
more expensive than their con- 
ventional counterparts. But 
delivery costs, which account 
for 90 per cent of the cost of 
immunising a child , could be 
slashed by development of 
heat-stable vaccines which do 
not need expensive refrigera- 
tion and “one-shot” vaccines 
giving protection from several 
diseases in a single dose. 








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FINANCIAL, TIMES WEDNESDAY NOVEMBER 9 1994 


NEWS: UK 


United Biscuits adopts EU rule 


Group creates 
Europe- wide 
works council 


S Africa and Hong Kong may join lottery C ancer 


By Raymond Snoddy 


By Richard Donkin, 
Labour Staff 


United Biscuits yesterday 
became the first British com- 
pany to establish a works 
council of the type recom- 
mended by the European 
Union. The British government 
has opted out of the KlTs direc- 
tive on works councils. 

UB’s voluntary agreement 
with UK and other trade 
unions is the first of what are 
expected to be a number of 
such agreements involving UK 
multinational companies in 
spite of the government’s 
stance on the issue. 

Some 90 UK-based multina- 
tional companies - each with 
more than lJMO employees in 
other EU states - will be 
required by the directive to set 
up works councils for their 
workers outside the UK. Even 
though they will not be 
required to include their Brit- 
ish workforces, many are 
expected to do so. 

The GMB union, one of the 
biggest in the UK, predicted 
that the agreement would be 
the first of several such deals 
with UK multinational compa- 
nies. Mr David Williams, the 
GMB national secretary who 
led the negotiations with the 
company on behalf of UK 
unions, said: “United Biscuits 
should be congratulated as the 


first UK-based transnational to 
voluntarily establish a Europe- 
an-wide works council." United 
Biscuits argued yesterday that 
the works council, which it is 
railing a European information 
and consultative council, made 
sound business sense. 

The company It would 
be "counter-productive" to 
omit British employees from 
the council structure. 

The agreement to establish 
the works council was negoti- 
ated with nine UK unions in 
addition to unions represent- 
ing United Biscuits' seven 
operations in other EU coun- 
tries. 

Some 30 employee represen- 
tatives from all eight countries : 
will meet annuall y just after 
UB's annnai results are pub- 
lished. 

Mr Mike Wilkinson, United 
Biscuits human resources 
director said: “We believe that 
a workforce that understands 
the objectives of business and 
the pressures on it is better 
able to respond appropriately 
to necessary operational 
change.” 

The agreement was wel- 
comed by the Trades Union 
Congress, which said: “It 
shows that one of Britain's 
leading employers does not 
accept the rhetoric that says 
consultation on the European 
model is bad for business." 


The UK’s National Lottery, 
which is to be launched on 
November 19, could become 
international next year. 

Mr Peter Davis, director-gen- 
eral of the Office of the 
National Lottery (Oflot). said 
yesterday he would consider 
allowing non-UK residents to 
fakp out a subscription to the 
lottery. The main possibilities 
are probably areas with long- 


standing British connections 
such as South Africa. Hong 
Kong or Cyprus. Oflot has had 
requests from potential players 
in a number of countries 
including Australia. 

When the lottery begins, 
players will be able to go to 
retail outlets and choose num- 
bers for up to eight weeks 
ahead. From some time next 
month it will be possible to 
take out a six-month subscrip- 
tion to the lottery under which 


the same number will be 
entered into the weekly £2m 
jackpot draw each week for six 
months once the subscriber's 
cheque has been cleared. At 
the moment only those with a 
UK address and a UK bank 
account will be accepted as 
subscribers. 

Mr Davis says he Is 
prepared to look at extending 
the subscription rules 
as long as he feels able to cany 
out his regulatory duty to look 


after the interests of all 
players. 

Came lot, the consortium 
which operates the National 
Lottery, said yesterday it 
would be interested in the pos- 
sibility of international sales 
once the launch period was 
safely over. 

Sales in countries of the 
European Union other ftian the 
UK are very unlikely. The 
European Court recently 
upheld the right of the UK to 


prosecute German citizens Jot 
selling German lottery tickets 
in Britain. The court held that 
lotteries were a matter for 
T j ptirmHl jurisdiction. 

Moreover, in the US consid- 
erable limits are placed on lot- 
tery sales. Tickets cannot, for 
■trample, be posted across state 
boundaries although they can 
be sent by courier. , , 

UK National Lottery tickets 
mil go on sale next Monday at 
£1 each. 


vaccine is 
about to 
be tested 


A neVV 


By C&ve Coofcson, 
Science Editor 


P 5 


Imports 
of coal 
-could be 
reduced 9 


By Mdiael Smith 


RJB Mining, the company 
selected by the government as 
preferred bidder for British 
Coal's English mines, baa told 
miners that UK coal should be 
able to displace more than a 
third of the 17m tonnes of 
imports annually. 

It did not, however, assume 
displacing any of the coal in 
making its bid. 

Mr Richard Budge, RJB chief 
executive, says in an interview 
with Coal News, the British 
Coal newspaper for employees, 
that “our commercial calcula- 
tions are based on there being 
no upturn in prices and no 
upturn in sales". 

His comments will fuel the 
controversy surrounding RJB’s 
bid which, at £900m, ($l,476m) 
was at leak 50 per cent higher 
than the next highest offer. 



Company fined for 
statistics breach 


By Peter Norman, 
Economics Editor 


Richard Budge: said no mine making a profit would be closed 


Rival bidders believe there 
will be considerable contrac- 
tion in the market Some doubt 
whether RJB can make signifi- 
cant profits if it pays as much 
as £900m, and are puzzled that 
the company believes it can do 
so without displacing imports. 

In the Interview Mr Budge 
says UK coal should be able to 


displace between Gin and 7m 
tonnes of the 17m imported 
into the UK every year. 

The company is not planning 
closures in the short term. “We 
will not close any minp that is 
making a profit" he said. 


Renationalisation ruled out. 
Page 10 


Intrastat, the system for 
collecting trade statistics 
among European Union coun- 
tries. has acquired teeth. 

This week magistrates in 
Southend-on-Sea, Essex, fined 
Dams International, a furni- 
ture dealer based in Liverpool, 
a total of £11£50 Including £300 
costs after it pleaded guilty to 
failing to supply Customs offi- 
cers with information on goods 
acquired from and supplied to 
EU countries. 

Dams, Which has annnai 
turnover of about £12m and 
exports of £1 JSm to the EU, is 
the first UK company to be 
prosecuted for failing to supply 
statistics under the system 
introduced in January last 
year to provide trade figures in 
the European single mar ket 

It is one of 31,000 businesses 
registered for value added tax 
with annnai EU trade of more 
than £140.000 that are required 


to supply data on sooaDed sup- 
plementary declarations. 

These forms, which must be 
sent to Customs within 10 
working days of the end of the 
month, oblige companies to fill 
in nine boxes on each type of 
goods traded. They provide 97.5 
per cent of the statistics for 
Intrastat 

Customs and Excise is gener- 
ally satisfied with the level of 
compliance of UK companies. 
Fewer than 200 cases of non- 
compliant traders are under 
consideration. 

But this case is a sign that 
the agency is prepared to take 
recalcitrants to court when all 
other means of persuasion 
have foiled. 

Mr Paul Nelson, Dams’ com- 
pany secretary, said problems 
with the computer system 
caused the failure to comply 
with the Intrastat rules. He 
was having to work t hrou gh 
2JW0 invoices a month to com- 
plete the forms and the job was 

too tinmyrnianning 


A personalised cancer vaccine 
which uses genetic material 
dmed from the patient’s- own 
tumour ceDs is to begin a clin- 
ical trial this month. . 

The trial was approved yes- 
terday by the UK Medicines 
Control Agency. It is the latest 
example of “gene therapy” - 
one of the fastest-growing 
mcdirat research fields- - and 
the first in which a vaccine is 
tailor-made for each indlyld- 

n»i. 

Scientists from the Cancer 
Research Campaign and Medi- 
cal Research Council, working 
at the MRC Protein Engineer- 
ing Centre in Cambridge, 
devised the approach. It is 
aimed initially at B-cell lym- 
phoma, a relatively rare can- 
cer of the lymph nodes affect- 
tog about 2,500 people a year 
in Britain. It could later be 
extended to more common can- 


Eurotunnel chief criticises ferries 


Labour courts industrialists 


Sir Alastair Morton, co- 
chairman of the Channel 
tunnel operator Eurotunnel, 
last night accused the UK 
government of failing to 
impose the same high safety 
standards on ferry companies 
as it had on Eurotunnel, our 
Transport Correspondent 
writes. 

Sir Alastair broke with the 
tradition that has prevented 
the ferries and the tunnel 
operator from commenting 


publicly on each other's safety 
problems in a speech to the 
Association of Insurance and 
Risk Managers in Industry and 
Commerce. 

“We object fiercely and with 
intensity when we observe cost 
given by the ferries as the 
reason for failing to remedy 
what appear to be inherently 
unsafe ship designs," he said. 

“The government made us 
spend tens, even hundreds of 
millions of pounds from our 


own capital - including the 
vast cost of transverse 
bulkheads between every 
wagon on our shuttles. And yet 
that government steps back 
from burdening the ferries 
with a few milli on in essential 
costs,” he said. 

The French and British 
governments had compelled 
Eurotunnel to prepare a 
300-page “safety case," 
describing its safety features 
and procedures. As a result it 


was 20 times safer than an 
equivalent stretch of railway. 
Sir Alastair said. 

Other complex industries 
such as nuclear power 
generation, and aviation had 
also to operate by high safety 
standards. But the ferries had 
only been required to reach “a 
very modest and clearly 
inadequate level of partial 
safety" under international 
rules for safety at sea, he 
added. 


Mr Tony Blair, leader of the 
opposition Labour party, yes- 
terday promised business lead- 
ers that his party would retain 
the government’s central trade- 
union reforms, our Political 
Correspondent writes. He said 
it would consult industrialists 
before introducing a minimum 
wage. 

Speaking to senior execu- 
tives at the Per Cent Club. Mr 
Blair said: “We are not in the 
business of sweeping away the 


trade-union and labour-rela- 
tions laws of the 1380s." 

He said strike ballots, union 
elections and curbs on mass 
picketing woe “here to stay", 
and ruled out any return to 
high marginal tax rates. 

His co mments coincided with 
a blunt warning by Mr Roy 
Hattersley, a former deputy 
leader of the party, that 
Labour must consider breaking 
its links with the trade union 
movement If it wants to win 


the next general election. 
Giving the George Orwell 
lecture in London, Mr 
Hattersley said victory was 
possible only if Labour became 
a party of Ideas rather than 
.vested interests. He said: “It is 
difficult to pursue truth 
wherever it may lead if two or 
three mighty unions, which 
dominate the policy debate, 
have decided which way to 
vote before the discussion 
begins. " i 


cers. 

B-cell lymphoma is espe- 
cially suitable for treatment 
with a persons] - vaccine 
because the cancer cells have 
marker proteins - targets for 
attack by the body’s immune 
system — which vary distinctly 
between individuals. 

The experimental procedure 
involves remov ing the marker 
gene from the patient’s lym- 
phoma cells arid splicing it 
into bacteria which make mil- 
lions of copies of the gene as 
they multiply hr a culture. The 
genes are cot out of the bac- 
teria with special enzymes, 
purified and injected into the 
patient 

The idea, backed by promis- 
ing results from anhnai exper- 
iments, is that the reintrod- 
uced genes will make 
relatively large amounts of the 
cancer marker. This should 
stimulate the patient’s 
imminw system to attack the 
cancer cells more effectively 
than before. 

Ten patients at Adden- 
brooke’s Hospital, Cambridge, 
and the Royal Bournemouth 
Hospital will take part in the 
initial trial. If they respond 
well the trial will be extended. 








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A new breed of engine. 


The same breed of Saab 


(Or proof that big can be beautiful, too.) 


At Saab, we have a tradition of making powerful 
engines compact and efficient. That’s why we’ve 
resisted the idea of simply increasing the size or 
amount of cylinders to add performance. 

Consequently, the Saab view of the V6 engine 
has tended to be on the frosty side. But lately, 
there’s been a perceptible thaw. 

The reason is the development of a new kind of 
V6. The one you’ll find in our new Saab 9000 CD 
saloon. This isn’t an ordinary V6 engine. Any more 
than the 9000. CD is an ordinary car. It’s the kind of 
car that's big in terms of space and performance 
and comfort but very modest in terms of weight 
and fuel consumption and engine emissions. 

It’s big. But it’s not stupid. At heart, 
it’s still a Saab. 


(Traction Control System), a feature that signifi- 
cantly reduces wheelspin. They’re the sort of fea- 
tures that do something useful without drawing 
attention to themselves. Very Saab. 


BIGGER ON THE INSIDE. 

We tried to design the body on equally generous 
but practical lines. We made sure it gives you plen- 
ty of room for heads and legs and feet and bottoms 
and luggage (the Saab 9000 is one of the few 
European saloons classed as a large car in 
America). Yet it doesn’t force you to take up unne- 
cessary road space. It’s one of those cars that 
seems a lot bigger inside than outside. 


INNOVATIONS. 
Consequently, we’ve given 



LOW KEY. 

It’s the same with the fittings, 
k The 9000 CD is truly luxu- 


rious without banging on 
about it. You can have the 


THE FIRST SAAB. 1947. 


the Saab 9000 CD 3.0 V6 a number of 
technical innovations you don’t normally see on a 
V6. A new three-step variable intake manifold that 
delivers consistent power throughout the rpm 
range. A Motronic engine management system that 
constantly monitors engine emissions. And TCS 


wood, the custom designed audio, the 
highly sophisticated alarm system, the natural glove 
leather. It even has reading lights in useful places. 
Yet it’s all low key, unobtrusive, functional. It’s 
not trying to make an impression. It’s trying to 
make you feel comfortable. 



THE PERFECT PARTNER. 

In spite of its size, the new 3.0 V6 engine is true to 
the basic Saab values. It’s compact. It’s efficient. It’s 
environmentally friendly. Yet it gives you the su- 
perbly comfortable ride and smooth power surge 
of a true V6. It’s the perfect partner to our turbo, 
supplying a different kind of motoring to a different 
kind of driver. 


FOR PERSONAL REASONS. 

We know that everyone has their own reasons for 
choosing a Saab. 

So if you’re a V6 driver looking for some inter- 
esting twists on a familiar idea, consider taking a 
test drive. It might be interesting to experience this 
new breed of engine 
for yourself. 



FOR FURTHER 


INFORMATION. A TEST DRIVE OR DETAILS OF OUR INTERNATIONAL/ DIPLOMAT SALES 


? V’.V- 









NEWS: UK 


Minister is determined to limit state financing of public investment 


More private funding sought 


By Kevin Brown and Phfllp 
Coggan in BtmUngham 


Ur Kenneth. Clarke, the 
chancellor of ther Exchequer, 
yesterday unveiled plans to 
bring private finance Into the 
heart of government by forcing 
its departments to seek outside 
contributions to funding for all 
capital spending. 

In a clear bid to combat 
right-wing claims that Urn gov- 
ernment h as run out of steam, 
Mr Clarke told the conference 
of the Confederation of British 
Industry in Birmingham that 
private finance would be “the 
main source of growth” for 


public investment projects. 
However. Ur Clarke's attempt 
to demonstrate a firm grip on 
public spending was under- 
mined by the failure of a spe- 
cial 3K-hour cabinet meeting 
to agree to his plans for a cut 
of more than £42m ($6.6bn) in 
next year's £263bn expenditure 
control totaL 

As the cabinet struggled 
with the details, Ur John 
Major, the prime minister, was 
forced into a highly unusual 
postponement of his weekly 
audience of the Queen. "He has 
been delayed," Buckingham 
palace said. “As and when be 
is finished, he will come up 


here." Mr Major’s staff in 
Downing Street said ministers 
had held a “very productive" 
debate on the package, which 
rails for cuts in the transport, 
social security and higher edu- 
cation budgets. 

Minis ters said that a handful 
of outstanding details - 
thought to centre on cuts in 
the £8bn housing benefit bud- 
get - were expected to be 
agreed at a second cabinet 
meeting tomorrow. 

Mr Clarke's attempt to pump 
fresh life into the flagging pub- 
lic finance initiative was given 
a mixed reception by Industri- 
alists. 


Mr Clarke published a note 
setting out progress on the pri- 
vate finance initiative by 12 
government departments, 
showing that £500m of private 
capital will have been 
employed by the end of 1994-95. 

“Much more is on the way." 
he said. “There are to be pri- 
vately financed prisons, the 
new Royal Armouries Museum 
in Leeds is under construction, 
there will be hundreds of mil- 
lions of pounds of water and 
sewerage projects in Scotland 
and Northern Ireland.” 

The chancellor told the CB1: 
“This is just the tip of the Ice- 
berg." 


Training 
levy on 
employers 
proposed 


By Paul Cheeseright 
in Birmingham 


Renationalisation 
of coal ruled out 


Privatisation; what has been sold so far? 


By Michael Smith 


The Labour party does not 
intend to renatinnalise the coal 
industry once it has been pri- 
vatised, Mr Martin O'Neill, the 
opposition party's shadow 
energy minister, said at a 
meeting of the Coal Industry 
Society. His comments 
appeared to contradict previ- 
ous party statements. 

Last year's party conference 
backed a motion seeking to 
renationalise the industry, 
which is now being sold off. Mr 
Robin Cook, former shadow 
trade secretary, told parlia- 
ment in March he would be 
“astonished if our plans to res- 
cue the coal industry did not 
Involve public ownership”. 

But party leaders have never 
been comfortable with the pol- 
icy, particularly since the elec- 


The government should 
demonstrate that It still 
believes in privatisation, Ur 
Norman Lamont said yester- 
day. Mr Lamont was dismissed 
from the job of chancellor of 
the Exchequer earlier this 
year. 

“There Is no point In being 
in government unless one has 
an agenda and wishes to 
achieve something,” he wrote 
In the Dally MaiL “Perhaps we 
could build on the health ser- 
vice reforms and give more 
encouragement to private 
health insurance." 


1978 St&e-in BP sold . 

1980 Stahed in Ferranti and (CL sold . .. 

1981 se*aa *1 British Aamapaae. Cable & Wireless and British Sugar sold 
198k National Freight Corporation andAmereham International sold; major- 
ity stake in Britos so<d 

1983 Stakes irt Aesodated British Ports, Cable & Wrratess and BP soW 

1984 Safe of British 'fafecom begins; Seafink and rest of Associated British 
Porta said 

■ 1985 Restoferffish Awospaca, Brtafl and Ctfcte a Wireless 
1968 Brash Gas wtf National Bus Company 

1987 Royal Ordnance, Laytand Truck and Weight Rover sold; final stake In 
BP sold. Buyouts crf. Unipart and Leytand Bus 
1968 Rover oar group sold - 

1989 English and Welsh water companies for sale; Jaguar sold 
19® Regional electricity companies fix sale 

1981 States in Kgfenal Power, and PowerGen on sale; second sals of 
British TeJeCormxjfilcations shares 1 

1993 Rest of British Telecom sold; rail authority split into state-owned 
companies ready for pri v a tisa t i on 

1994 Sole of €196 of Royal MaB and Rarcetforce (post Office subsidiaries) 
abandoned-' 


tion of Mr Tony Blair as leader. 
Mr O'Neill said Labour was not 
in the business of “making 
blanket promises to renational- 
ise”. 

Mr O’Neill said that if any of 
the companies which are buy- 


ing British Coal's mines got 
into difficulties, “government 
would have to look afresh at 
the question of ownership. “We 
will intervene at any time we 
feel that safety is endangered.” 
he said. Fleshing out the lead- 


ership's thoughts on energy, 
Mr O'Neill said: “We will have 
to keep at arm's length those 
who advocate a particular kind 
of energy - nuclear or gas or 
coal - because they see it as a 
job-creation scheme." 


Trains company attacks lease contracts 


The companies which will run 
trains after British Rail is pri- 
vatised are being forced to sign 
inflexible contracts with the 
companies set up to lease them 
rolling stock, says South West 
Trains, which runs services 
from London Waterloo to 
Southampton and Portsmouth, 


our Transport Correspondent 
writes. The company said it 
was being asked to sign four 
and eight-year leases when it 
would like at least some of its 
fleet to be on one-year leases. 

Mr Peter Field, managing 
director of South West Trains, 
told a conference on rail priva- 


tisation; “If there Is a reces- 
sion, you need to be able to 
escape quickly [from a long 
lease]. In the last recession we 
had to withdraw 20 per cent of 
our rolling stock.” 

The long leases mean the 
rolling stock companies, which 
are early candidates for priva- 


tisation, can forecast their rev- 
enues with a greater degree of 
certainty. But train operators 
bear most of the risk of a 
downturn. 

The train operators say they 
are being “bounced” in negoti- 
ations with the three rolling- 
stock companies. 


A union chief told employers 
yesterday that industrial com- 
panies will bave to be made to 
pay a training levy if the UK is 
to overcome the problems of 
having tbe least skilled work- 
force in Europe. Mr Bill Jor- 
dan, president of the Amal- 
gamated Engineering and 
Electrical Union was speaking 
at tbe annual conference of the 
Confederation of British 
Industry, the country's biggest 
employers' organisation. 

He said the voluntary 
approach to training had 
failed. “If the CBI is serious 
about wanting a strategy to 
deliver skills for the next cen- 
tury, we should not be debat- 
ing whether to have a training 
levy but tailoring the shape of 
one,” Mr Jordan said. 

He said budgets “to improve 
skills” had been cut by 35 per 
cent in the past five years. It 
was “dangerously complacent” 
to praise Britain’s best compa- 
nies when the nation was lag- 
ging behind on productivity by 
up to 40 per cent compared 
with rivals elsewhere. 

The CBI responded cau- 
tiously to the idea of a train- 
ing levy. Mr Dominic Cadbury, 
chairman of Cadbury Schwep- 
pes and the CBl’s education 
committee, said: “The CBI has 
not supported the concept in 
the past, but we will be asking 
our members to express their 
views and we will be consult- 
ing all members via the 
regional councils." 

Some CBI delegates critic- 
ised Mr Jordan's argument Mr 
John Phillips, chairman of 
Reliance-Barker-Davies, engi- 
neers, dismissed the idea of a 
levy as “simply an additional 
payroll tax” and “a pure addi- 
tion to costs, a deterrent to 
employment 1 *. 

Earlier, Mr David Simon, 
chief executive or BP, had 
warned that even well-trained 
employees faced uncertainty, 
and that jobs for life were 
unlikely. “I think most of ns 
recognise that such a prospect 
is no longer wholly appropri- 
ate,” he suggested. 


FINANCIAL TIMES WEDNESDAY NOVEMBER? 1994 


UK NEWS DIGEST 


Truce in war 
of babies’ 
bottoms 


Spending on adverts 
rises sharply 


Spending on advertising in all the mam media 
sectors increased during the second quarter of 
1994 with particularly strong increases in 
spending on radio and posters, according to 
figures released today by the Advertising 
Association. The figures show the continued 
recovery of the advertising business from 
recession, said the association, which is a fed- 
eration of advertising trade associations and 
professional bodies. 

Advertisers spent, in current prices, a total 
of £1.2bn ($L96bn) on press advertising in the 
second quarter of this year compared with 
£l.lbn in the second quarter of 1993. Televisual 
advertising spending increased from £564m in 
the second quarter of- 1993 to £S24m in 1994; 
posters from £80m to £94m; and radio 
increased from £43m to £51m. Advertising 


Some companies say they’re 
joining forces to mak e international 


network communications simple. 





\ / 


mending on colour supplements is the only 
aSTtoshow a decline - in constant prices, an 
almost 12 per cent drop. 


Two men are jailed For 
murdering a stranger 


Forget soap wars. The latest battle is for 
babies' bottoms, as Pampers disposable nap- 
pies slug it out with rival brand Huggies, and 
both gjrfpR complain about their opponent's 
dirty tactics. Procter & Gamble, which makes 
Pampers, complained to the Advertising Stan- 
dards Authority, the advertising watchdog, 
about ma gnzinp advertisements from Buggies 
manufacturer, Kimberly-Clark. The advertise- 
ments claimed Huggies were “si gni ficantly 
thinner than the leading nappy, yet incredibly, 
they keep your baby just as dry"- P&G. which 
said the “leading nappy" reference was clearly 
to their brand. Pampers, complained that the 
Kimberly-Clark claims were false. Kimberly- 
Clark replied by sending both in-house and 
external laboratory research to the ASA in 
support of its advertisements. 

Kimberly-Clark submitted its own complaint 
to the ASA about P&G’s advertising, objecting 
to the wording of magazine and direct-mail 
ads. These read: “The driest nappy ever for the 
driest, happiest babies". Again, both sides sub- 
mitted research w™wngB on performance of the 
nappies. 

Both were sent away by the ASA to see if 
they could agree a “mutually acceptable test- 
ing procedure in order that such disputes 
could be resolved satisfactorily in future". In 
the m eantim e, both parties were told by the 
authority not to f*imm “anything more than an 
equal best ability to keep babies dry”. 

• Calvin Klein Cosmetics was condemned by 
the ASA for the way it used model Kate Moss 
in a magazine advertisement for its fragrance. 
Obsession for Men. The authority said the 
model's naked pose, together with her “child- 
like form" and the brand name of tbe product, 
were “inappropriate and Irresponsible". 


Two 19 -year-old men were sentenc ed to life 
imprisonment in London yesterday for mur- 
dering a complete stranger in what was 
described at the Central C riminal Court as 
ultimate dare”. Judge Neil Denison, the 
Serjeant of London, told James Pehno- 
Hni and Richard Elsey: “You created a world 
in which you were both playing out your fan- 
tasies. It started with relatively h armle ss' 
pranks and progressed to crimina l offences 
and it developed into an obsession with kill tog 
and death. . . 

“That led to tbe brutal and senseless slaugh- 
ter of a complete stranger who just happened 
to be in the wrong place at the wrong time," 
The court baud that -both men craved the 
lifestyle »nd image of the British army’s, elite 
Special Air Service. After “training missions" 
which in cluded impersonating policemen and 
stealing from hotels, they decided to MIL They 
jumped into a passing car as it paused at a 
traffic sign. The driver, Egyptian bom 
Mohamad el-Sayed, a 44-year-old chef, was 
jrjUpd in bis car with a commando dagger. - 


Tighter rules urged for 
fish factory ships 


Stricter lifeboat controls were urged yesterday 
for east European factory ships operating off 
the Shetland Islands to the north of Scotland. 
A woman died when the Estonian-registered 
Vagula struck some rocks on Monday night 
Mr Frank Duffin, district chief surveyor for 
the Marine Safety Agency, said aQ 87 fish 
factory ships now working off tbe Shetland^ 
were to be 9ent a list of lifeboat recommenria- 
t io iBi including tbe use of all-round lighting, 
emergency flares and band-held radios. 


Whisky exemption 


Scotch whisky producers have been offered a 
five-year exemption from new EU safety rules 
which they claim could alter the whole charac- 
ter and taste of the spirit maturing in the cask. 

Proposed Euroamtrols on the transport of 
flammable goods would make the wadmnm 
aim consignment of hazardous Tir pri ds carried 
by road or raft 250 litres - a ruling which 
would affect a third pf * hg 18m naslrg rtf whisky 

currently stored in warehouses in Scotland. 

But thB exemption was rejected as nonsense 
by the Scotch Whisky Association last night 
“Five years is nothing in an industry which is 
500 years old this year,” said a spokesman. 


Queen’s piper chosen 


Army warrant officer Gordon Webster has 
been appointed the ninth Queen’s Piper since 
the pest was created by Queen Victoria in 
1843. He will succeed Pipe Major Brian 
MacBae, a former Gordon Hi ghlander , who Is 
retiring after 15 yeans. His job is to play the 
bagpipes for 20 infantas each morning at what 
ever royal residence is occupied by the Queen. 


>■ > 


, at 


■ #s- ; - 


f/ m 










FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


11 


MANAGEMENT 




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H- -" V 


University challenge 
at De Montfort 

John Authers looks at issues forcing departments to 
think in terms of cost-efficiency and rapid expansion 

v# ■. 

ii 


D« Montfort Uni- 
versity in Leicester 
has a grand vision. 
:m ■* J& Ifa aim is to be 
■ “internationally 
g j| g ® competitive" and 
“everywhere excel- 
P WtwurAc ca i ent ”. Bold words 

ntartag * nie<rt from an institution 
known as Leicester 
Polytechnic unto two years ago. 

But De Montfort is well on the 
way to making a reality of this 
vision. It is western Europe's fast- 
est growing university, according 
to the World Bank, and attracts 
investment from both the UK gov- 
ernment and the private sector tor 
projects such as its new, massive 
and imaginatively designed engi- 
neering faculty building. 

The university is also making a 
new role tor itself in local commu- 
nities. Kenneth Barker, vice-chan- 
cellor, believes that higher educa- 
tion “has been too busy chasing 
N obel P rizes instead of giving 
industry and the community the 
service they really need”. 

This breezy attitude to the 
opportunities created by higher 
education expansion has mani- 
fested itself in a sheaf of plans to 
boost recruitment. De Montfort's 
marketing department has ex- 
tended tor a second year the most 
expensive university advertising 
campaign mounted in the UK. 

Innovations to coarse str u ct ur e 
are also planned to chisel away 
fingering perceptions of De Mont- 
fort as a former polytechnic. Mike 
Brown, an executive pro- vice-chan- 
cellor and one of the key managers 
in the university's expansion, has 
held discussions with independent 
schools about allowing pupils to 
start a De Montfort degree coarse 
in their last year at school 

The university's cause will algo 
be helped by saving industry as 
directly as posable. A limited com- 
pany, Leicester Expertise, now 
markets the university’s know-how 
to companies, and has helped fun- 
nel consultancy fees to the univer- 
sity's technical specialists. 

All thjs institutional change has 
been managed during rapid expan- 
sion. In 1987, 8,000 students were 
on Leicester Polytechnic’s roll in 
the current academic year that flg- 



Mlke Brown; cafls for academic aspirations to meet resource reality 


ure is nearer 18,000 while new cam- 
puses in Lincoln and Bedford will 
bring numbers up to 25,000 this 
year. Managing change on this 
scale is not easy. 

The main dements in De Mont- 
fort’s strategy, according to 
Brown, are an innovative execu- 
tive structure modelled on private- 
sector companies, and an approach 
to cost control that makes individ- 
ual departments directly responsi- 
ble for both costs and revenue. 

Beneath the board of governors, 
which includes Howard Davies, 
director-general of the Confedera- 
tion of British Industry, is a 
vicechanoeDor who doubles with 
the role of “chief executive”, and 
then four executive pro-vicedhan- 
cellors, including Brown, whose 
jobs are chiefly managerial 

Below them come “cost centres”, 
which Include both support ser- 
vices, such as those for accommo- 
dation and catering, and academic 
cost centres. These include the uni- 
versity's “schools” - applied sci- 
ences, arts and humanities, built 
environment, business, combined 
studies, computing studies, design 
and manufacture, engineering and 
manufacture; health and commu- 
nity studies, and law. 

These cost centres are “the first 
point where academic aspirations 
meet resource reality”. Brown 


says. “The philosophy was to have 
the academic and the resources 
units coinciding, headed by some- 
one who was an eminent academic 
with the ability to manage." 

Each school was required to set 
targets for the next five years, in 
the form of a series of performance 
indicators. Brown ensured they 
were aware of their costs and the 
attributed income they brought in 
pflrTi year - including government 
tuition fees, government and cor- 
porate research f unding . 

He also made it “quite clear” to 
the schools that if they could not 
justify their existence in financial 
terms they would be shut 

In feet, several schools have seen 
a sharp increase in the effective 
profits they have generated - in 
one case exceeding £im. This was 
not the victory of commercial 
incentives over academic freedom: 
De Montfort's growth strategy 
allowed for the possibility that 
some departments might deserve a 
cross-subsidy, to help nurture the 
standing of the entire institution. 

Brown's contribution was to 
establish a mechanism that made 
the cross-subsidies transparent, 
and forced academics to think in 
terms of cost-efficiency. Without 
this discipline, De Montfort’s sharp 
expansion would almost certainly 
not have been possible. 


F or almost a decade, just in 
time (Jit), a manufacturing 
management philosophy 
and practice developed and 
very successfully applied by Toyota, 
has been enthusiastically embraced 
by many managers and academics 
in the west Papers with titles such 
as ‘What is your excuse not to use 
just in time?* preached Us virtues 
without reservation. 

Now, critics are questioning its 
impact on profitability. An article 
in this newspaper on August lo 
cited a study published by the Uni- 
versity of Cambridge which con- 
cluded that a higher use of Jit was 
associated with lower operating 
profit margins for UK companies. 

Should we infer that these tech- 
niques work in Japan but not in the 
UK (or other parts of Europe)? Or, 
is it unrealistic to expect profit mar- 
gins to improve automatically by 
applying these Japanese practices? 

The Cambridge study has initi- 
ated a healthy debate about this 
management philosophy without, 
however, answering the above ques- 
tions. To do this, it is critical to 
consider the degree of applicability 
of Jit to different companies and 
how it has been implemented. 

Our research at the International 
Institute for Management Develop- 
ment shows that the actual applica- 
tion of Jit varies very much from 
industry to industry. In the automo- 
tive industry, almost ail European 
car manufacturers have adopted 
these techniques, while in the phar- 
maceutical field only a few compa- 
nies are starting to use them. 

Given that the last recession has 
affected some industries more than 
others, it is probable that the lower 
profitability found in the Cambridge 
study has much to do with the 
industry in which companies com- 
pete, rather than with the applica- 
tion of any particular technique. 

While advocates of these tech- 
niques argue that its principles are 
universal the reality is that Jit does 
not have a dramatic impact on cer- 
tain types of production process. 
For example, one of the objectives 
of Jit techniques is to transform the 
factory so that a continuous flow in 
materials is achieved, resulting in 
lower work-in-process inventory 
levels and shorter production lead 
times. 

Its application to many electronic 
manufacturers has resulted in sig- 
nificant benefits because these com- 
panies used to operate with high 
work-in-process inventory levels 
and long lead times. By comparison, 
many chemical companies have 
always had continuous production 
processes and relatively low inven- 
tory levels because the high vol- 
umes they manufacture do not 
allow thum to do otherwise. There- 
fore, in this type of business, the 
application of Jit does not make the 
same impact on the production pro- 





Doing justice to 
just in time 

Success with this controversial philosophy depends on 
the manufacturing process, writes Carlos Cordon 


cess as it does in electronic compa- 
nies. To expect improvements of 
similar proportions is therefore 

nTtmalifitte 

At the opposite extreme of the 
manufacturing spectrum there are 
companies making non-repetitive 
products to customer specifications, 
such as special machine tools or 
large electric motors. These compa- 
nies usually apply Jit only in the 
most repetitive part of the factory, 
where it is possible to achieve a 
continuous flow. After such applica- 
tion these factories are, quite often, 
effectively divided in two parts: the 
Jit part, where there is a quasi-con- 
tinuous Oow of materials, and the 
traditional job shop where the less 
repetitive operations are made. 

The introduction of Jit will usu- 
ally not significantly affect profit- 
ability, because only a fraction of 
the operations change. Further- 
more, an unexpected consequence is 
that some oF these companies mak- 
ing customised products, embrace 
Jit too enthusiastically and decide 
to drop or to out-source the prod- 
ucts or processes that do not fit in 
the new system. Thus, products 
whose manufacturing process fell 


out of this new quasi-continuous 
process are abandoned because they 
are no longer a “core" product 

While these decisions may be 
sound in some cases, in others they 
could imply reduced volume and 
lower profitability. Even if Jit 
improves the factory operations, 
this practice Implies a radical 
change in the “factory culture”; 
thus, its implementation requires 
many resources and a high dedica- 
tion from top management. This 
represents an opportunity cost that 
should not be underestimated. 

For instance, if a company wants 
to become a Jit supplier it is likely 
that customers will demand the 
supplier has a quality certification, 
so that products need not be tested 
for quality when received and an 
almost continuous flow of products 
between supplier and customer is 
achieved. 

However, some companies com- 
plain that they were too busy 
obtaining the certification to dedi- 
cate any effort to actually Improv- 
ing quality. In some of these cases, 
it is not clear whether the benefits 
outweigh the implementation costs 
and opportunity costs of manage- 


ment distraction. 

Lastly, to expect superior finan- 
cial profits by just applying Jit 
could even be absurd in some cases. 
In an industry where all the com- 
petitors adopt Jit, it becomes a nec- 
essary but a not sufficient condition 
for comparative advantage. 

If a company in such an industry 
does not apply this technique it 
could be forced out of business. In 
other cases, companies faring seri- 
ous problems have tried to apply Jit 
as a last resort While in some cases 
Hii< has saved thp. company, in oth- 
ers the companies have gone bank- 
rupt and have given birth to the 
circulation of Jit horror stories. 

Jit Is neither a manufacturing 
panacea nor the manufacturing 
equivalent of alchemy. The profit- 
ability of a Jit application depends 
strongly on the company and the 
type of manufacturing process 
rather than on the UK culture being 
different from the Japanese. 

The author is professor of manufac- 
turing management at the Interna- 
tional Institute for Management 
Development, Lausanne, Switzer - 

land. 


% 


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* FINANCIAL TIMES WEDNESDAY NOVEMBER 91 *4 

BUSINESS AND THE ENVIRONMENT — — — • - 


E urope's electronics and 
electrical industries are 
about to meet environmen- 
talists and European Com- 
mission officials to renew efforts to 
find a solution to the growing 
mountain of end-of-life products 
that the two industries produce. 

Electronic waste comprises every- 
thing from old computers, photo- 
copiers and stereos to telephones, 
cables and light bulbs. The range of 
products and diversity of interests - 
more than 60 representatives will 
meet in Rome - have hampered 
negotiations, and the group's aim to 
deliver a document detailing practi- 
cal solutions and regulatory propos- 
als by next July looks increasingly 
ambitious. 

For Brussels, this latest meeting 
of the Rome project group on “elec- 
tronic waste", one of the “priority 
waste streams’ 1 identified by the 
Commission as requiring specific 
action, has a particular urgency if it 
is to head off unilateral action by 
EU member states frustrated by the 
lack of progress so far. 

German manufacturers fear that 
the German minis try of environ- 
ment may not wait and will push 
through laws nest year that would 
compel them to take back a broad 
range of electronic waste and meet 
specific recycling targets. Manufac- 
turers could charge to recycle 
equipment already on the market, 
but would have to take back their 
future products free of charge. 

"The model proposed by the min- 
istry entails huge problems." says 
Bernhard Diegner, project group 
representative for ZVEL a German 
electronics manufacturers associa- 
tion, which claims that such a pol- 
icy could add between S per cent 
and 15 per cent to the price of elec- 
tronics goods sold In Germany. 

The annual cost of a Europe- wide 
end-of-iife scheme for consumer 
electronics could be around 
Ecu2.25bn (£l.77bn), according to 
the European Association of Con- 
sumer Electronics Manufacturers. 

ZVEI wants take-back schemes to 
be generally voluntary, with manu- 
facturers obliged to take back only 
bulky own-brand products. Environ- 
mentalists counter that voluntary 
schemes do not work and cite bat- 
tery recycling programmes, where 
collection rates remain low - 
between 15 and 40 per cent - even 
when collection is free. 

A take-back bill for electrical and 
electronics goods was presented in 
the last Italian parliament in 1993 
and could soon be presented again. 

Denmark, France and Austria are 
among the European countries cur- 
rently considering specific legisla- 
tion for electronic waste. Manufac- 
turers now fear a patchwork of 
conflicting, national schemes that 
will add substantially to their costs 
and distort competition by sucking 
in cheaper imports from EU or 


Negotiations on the best fate for discarded equipment in 
Europe are growing more urgent, writes Geoff Naim 

EU’s electronic 
mountain 




Material breakdown by weight 


l I j§: 

. ", j ! 

1 • 

■ ■’ > I >V 

I • 

• 1 I.":.-..... !*., 


. • . 
• / 




* Metal casings 


, Cathode ray tubes 


■ Cables 


Recoverable components 1.7% 


yfetTpl Precious metate 

*• - «*•. 2 1 ". *• • I 'kaaVSI' ' it. Doc-ilo 


iw 

Internal reuse 

22 % 

w 

Batteries 

0.7% 


Rustic casings 

244% 




SeAutxK Hewtatt-PSKtastf 


non-EU countries with less strin- 
gent rules. 

Their worst nightmare is a repeat 
of Germany's Duales System 
Deutschland compulsory packaging 
recycling scheme, which produced 
more used paper and plastic than 
German recyclers could handle. 

The manufacturers say that elec- 
tronic waste In quantitative terms 
is less of a problem than in other 
sectors. In France, for example, it 
amounts to 1.3m tonnes each year, 
against 20m tonnes of household 
rubbish and 150m tonnes of com- 
mercial and industrial waste. 

However, much electronic waste 
is difficult to recycle, the quantity 
is growing - new products now 
entering the market in France 
amount to 2.1m tonnes a year, for 
instance - and environmental cre- 
dentials have become important 
spiling points for manufacturers. 

“The market Is very conscious of 
the ecological image and contents of 
products,” says Bruno Mapelli, envi- 
ronmental director for IBM's 
southern European operations. 


According to a recent survey by 
the German environmental organi- 
sation Bund (Bund fur Umwelt and 
Naturschutz Deutschland), most PC 
manufacturers now use recycled 
plastics, have banned CFCs and sol- 
vent-based paints, use snap-together 
construction (for easier dismantl- 
ing), mark new plastic parts for 

Several 

manufacturers in 
Europe are acting 
in advance of 
take-back laws 

recycling and reuse old components 
for repairs. Four have free take- 
back schemes operational in Ger- 
many: Vobis. Apple, Actebis and 
Acer. 

While manufacturers stress how 
environmen tally-friendly current 
models are, they are less enthusias- 
tic about taking back products now 
reaching the ends of their lives. 


since they were never designed to 
be recycled. 

To disassemble an old computer 
can take one and three-quarter 
hours, says Helmut Finchk. head of 
Hewlett-Packard's three-year-old 
recycling programme in Germany. 
To cover its costs, HP Germany 
charges DMio (£4) for each returned 
unit for monitors, where the lead 
and other metals in the cathode ray 
tube causes particular recycling 
problems, the charge is DM35. The 
products must be predominantly HP 
ones and the customer pays for 
transport. 

HP's European subsidiaries cur- 
rently send unwanted equipment to 
a specialist recycling centre. Hard- 
ware Recycling Europe, in Gren- 
oble, France. Less than 5 per cent of 
the 100 tonnes that arrive each 
month goes for land-fill: four years 
ago. the figure was more than 30 
per cent, but HP can now separate 
and recycle nearly all materials. 

Disc drives are reused as spares, 
circuit boards are- refined to recover 
precious metals, plastic is stripped 


from copper cables, old micropro- 
cessors and memory chips end up in 
electronic toys, high-grade plastics 
' are recycled, low-grade mixed plas- 
tics are burnt in a nearby cement 
kiln for their energy content 

The recovered copper, precious 
metals and components are sold to 
help pay for the costly treatments 
of batteries, cathode ray tubes and 
mixed plastic. 

“Today we break even, but it all 
depends on the volumes handled 
and we still do not know whether a 
large-scale scheme would be eco- 
nomically viable,” says Denise 
Furet environmental project man- 
ager for Hardware Recycling 
Europe. 

The costs of transporting end-of- 
life products to Grenoble from other 
countries have prompted HP to set 
up similar recycling plants in the 
UK and, soon, Germany, but ulti- 
mately the company would like to 
contract out recycling, as it is not 
seen as a core activity. 

Several manufacturers in Europe 
are acting in advance of take-back 
laws. At the beginning of this year, 
for example, Deutsche Telekom 
formed a consortium with equip- 
ment manufacturers Siemens and 
Alcatel SEL to recycle a planned 
12.000 tonnes of telephones, facsim- 
ile machines and other equipment 
this year. In Italy, IBM sent 4^00 
tonnes of end-of-life equipment for 
recycling in 1993, with a recycling 
ratio of more than 90 per cent. Digi- 
tal Equipment operates a similar 
scheme in the Netherlands. 

However, left to market forces, it 
seems unlikely that electronic 
waste recycling can be extended 
throughout Europe. Specialist recy- 
clers are rare in many countries 
and spot prices for recycled materi- 
als are volatile. White goods and 
consumer electronics contain little 
valuable material. For other prod- 
ucts, the time and effort required to 
dismantle, separate and identify the 
different materials can make recycl- 
ing uneconomic. 

DST Logistics, the recycling sub- 
sidiary for IBM in Italy, has tested 
specialised X-ray and infra-red 
equipment to sort recovered plastics 
into more than 30 recyclable clas- 
ses, but not all recyclers can justify 
such investments. 

Ferruccio Mori, chairman of DST 
Logistica, identifies a more general 
problem: “It costs L50-L60 [a few 
pence] a kilo to damp in Italy. If 
land-fill were to rise to Ll.000 a kilo 
the economics [of recycling] would 
change," he says. 

Maria Almeida-Teixeira, the Com- 
mission's co-ordinator for the elec- 
tronic waste group, set up nearly a 
year ago, admits that progress has 
been slow, bat believes that with 
two Further meetings next year 
there is still time to achieve a broad 
consensus. However, “it is too early 
to say what will come out" 


Time running 
out in Bulgaria 

Tough choices on power must be 
made, writes Jane Martinson 


F aced with heavy dependence 
on nuclear power to serve 
growing energy demands, 

the Bulgarian government is 
urgently looking for a way out of 
a dilemma. , 

Last week a report outlining 
options for Bulgaria’s energy 
sector was presented to tire 
Bulgarian authorities and to the 
safety regulator’s office by 
Bne rgoproekt, a Bulgarian 
institute. No decision is likely 
until a new parliament is in place 
year, bat the government is 
und er pressure from safety 
organisations to act as soon as 
passible. 

Three years ago, the nuclear 
power plant at Kozloduy on the 
i Danube, which supplies up to 45 
per cent of Bulgaria’s power, was 
dubbed the most dangerous in the 
world by the International 
Atomic Energy Agency- The two 
I oldest units, Russian-designed 
440MW WWER pressurised water 
reactors built in 1974 and 1975, 
were closed for two years for 
repairs, and work on a second 
plant on the Danube at Belene 
was stopped. 

The government says it has 
spent some LvS50m (£55m) on 
safety improvements at Kozloduy 
since then. The European 
Commission and the European 
Rank for Reconstruction and 
Development have committed 
£58m for further work. 

The £19m being managed by the 
EBRD is Intended to facilitate the 
earliest poss ible clos ure of the 
four 440MW WWER reactors at 
Kozloduy. The EBRD recognises 
that alternative energy sources 
must be found before the units 
could close, but the pressure in on 
Bulgaria to find a safe, reliable 
and affordable alternative. 

The Energoproekt report sets 
out options ranging from closing 
the plant immediately, which has 
little support in Bulgaria, to 
allowing Kozloduy to work at foil 
capacity until the oldest reactors 
reach the end of their design life. 

Ivan Ivanov, deputy manager of 
the plant, believes the oldest 
units could last until 2006. 

Although a great deal of safety 
work has been carried out, there 
are still concerns among western 
safety organisations. There are 


worries over weaknesses in the 
design of the 44QMW units, 
in putting - Am embrittlement of 
the pressure vessels and an ‘ 
a h*??™** of containment for • .. 
primary pipe ruptures , . . 

The lack of storage for spent . 

fuel at the plant is also causing ■■■ 
concern. Russia, which supplies ‘ 
the uranium, used to reprocess'. 
Bulgaria’s spent fuel at a nominal 
fee, but now charges &L000 per ■ 
kilogramme of heavy metaL The 
Bulgarians cannot pay this and - 
wet storage tanks at the plant are 
nearly full. 

Prof Ivan Uzabov, at the 
department of nuclear physics at. 
Sofia University, is pafticdLady 
concerned about storage, fa c ili tie s 
for the 600 tonnes of spent fuel in 
an area prone to seismic activity. 
“If a catastrophic earthquake 
leaves this spent fuel without . 
cooling water, it is easy to' 

. calculate that the emitted activity 
could be four times more than 
from Chernobyl,” be says. 

Nikita Shervashidze, president 
of the governmenfs energy 
committee, says several western 
companies have tendered for a 
contract to build new storage 
facilities, but there will be no 
decision until the end of the year. 

Yanko Yanev, Bulgaria’s atomic 
safety regulator, says a “medium” 
option of dosing units one and 
two, perhaps as soon as 1996, and 
devoting more resources to 
thermal-powered plants, might be 
the best He believes that 
coal-powered plants can be made 
economic, bat that Bulgaria will 
need help from western agmdes, 
such as the World Bank. . 

Stops are also being taken to 
find funding for the c ompletion of 
two 1.000MW WWER reactors at 
Belene. When these are finished, 
says Shervashidze, two Kozloduy 
units can be closed. 

The Bulgarians are in talks 
with Russian and Turkish private 
Investors about funding the 
plant’s completion, which would . 
take up to 10 years. 

Energy consumption in 
Bulgaria increased by 3 per cent 
between 1993 and 1994, against 
all predictions. Such figures 
suggest that the time for 
decisions on an alternative to 
Kozloduy may be running out 


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PEOPLE 



Wellman recruits 
out of the furnace 


Torino 

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Wellman, the specialist 
engineering group, announced 
five senior appointments yes- 
terday as part of a reorganisa- 
tion following the £46m acqui- 
sition of three businesses from 
FKI, the electrical engineering 
and components concern. 

Two external appointments 
have been made. Andrew Car- 
negie takes over as md of Well- 
man Robey, which makes 
industrial boilers and pressure 
vessels. He was formerly md of 
a competitor, NE1 Cochran. 
Don Lupton has been 
appointed operations director 
of Wellman Furnaces. He too 
was previously at a competitor. 


■ Andrew Williams has been 
appointed manufacturing 
director at Reten Acoustics. 
Martyn Pitman has been 
appointed md of Analytical 
Development, and Tony 
Reynolds, formerly finance 
director of The Expanded 
Metal Company, has been 
appointed to the same post at 
Elfab. Philip Bell has been 
appointed md and Kevin Breen 
vice-chairman, of MXS, and 
Rob Holditch promoted to 
sales director of Memco; ail 
companies are subsidiaries of 
HALMA GROUP. 

■ Chris Horton, formerly 
assistant secretary at 

Hep worth, has been appointed 
group secretary of LEIGH 
INTERESTS on the retirement 
of Derrick Armstrong. 

■ Kerin Day has been 
promoted to the board of 
KONTKA UK as director, sales 
and marketing. 


Finance moves 


Davy Priest Furnaces. 

Three internal promotions to 
md have also been announced 
- Alan Phillips at the Wellman 
Data Recording Group, Craig 
Pilkington at Wellman Garage 
Equipment, and Jim Wright at 
Wellman Service Group. 

Carnegie has replaced Ken 
Homans, who is retiring, but 
the other posts are new. They 
are the first stage in a planned 
post-takeover reorganisation at 
West Midlands-based Wellman, 
says chief executive Alan Bax- 
ter. 

Baxter was a former main 
board director at FBI, joined 
Wellman last November, and 


first approached FKI with the 
acquisition proposal. The deal 
was completed in August, and 
has increased Wellman’s 
annual turnover from £25m to 
about £125m. 

■ At Spirax-Sarco Engineer- 
ing, the Cheltenham-based 
steam equipment specialist, 
Chris Tappin has retired as 
executive chairman but will 
remain part-time chairman. 
Tim Fortune, who was named 
managing director in 1992, 
became chief executive on 
November 1. 

Tappin, 57, said the change 
was “one little click further in 
our succession planning". Tap- 
pin joined Spirax-Sarco in 1964 
and was appointed to the board 
two years later. From 1988 to 
1992 he was chair man and 
chief executive. Andrew Baxter \ 


Non-executive 

directors 



Biffa’s Bettington floats 
up at Severn Trent 



Welcome To 

1^1 ."T ,7*^ . V .*'*"■* 

£a-.y" w ‘ •- i.=- r r 




Geoff Henry, 50, is to be the 
next chief executive of the 
Merchant Navy Officers Pen- 
sion Fund. He takes over from 
Tony Ashmore, 57, who retires 
at the end of the year after ten 


Severn Trent yesterday 
reaffirmed its commitment to 
the waste management busi- 
ness, Biffa, with the appoint- 
ment of two new executive 
directors to its board. 

Brian Duckworth, 45, and 
Martin Bettington, 42, are join- 
ing the board in advance of the 
retirements next year of Rod- 
erick Paul, chief executive, and 
Michael Upstone, former direc- 
tor of customer service. Paul 
and Upstone are both retiring 
at the age of 60. 

Bettington, manag in g direc- 
tor of Severn Trent's waste 
management business, joined 
the company in 1991 when it 
bought Biffa from BET for 
£212m. 

Severn Trent said yesterday 


years at the helm of the £2bn 
fond. 

The MNOPF is one of the 
largest industry-wide pension 
schemes although the decline 
in Britain's merchant navy 
means that the number of con- 
tributing members has fallen 
from around 40,000 In the 
1950s to just 6,000. However, 
the fond services 17,000 pen- 
sioners and also has another 
33.000 deferred members. 

Henry, who used to work for 
British Shipbuilders pension 
fond, has been the MNOPF’s 
director of finance for the past 
nine years and managing 
director of its pensions admin- 
istrations subsidiary for the 
past four years. William Hall 

■ Tony Haire has been 
promoted to md of CATER 


that Bettington 's appointment 
signalled the company’s “com- 
mitment to developing the 
waste side of the business 
through Biffa" 

The appointment was seen 
by analysts in London as Sev- 
ern Trent’s attempt to dampen 
speculation that it was consid- 
ering selling the waste busi- 
ness. Severn Trent has been 
criticised in the past for lock- 
ing itself into onerous financ- 
ing for Biffa. 

Duckworth is strongly HwIcpH 
with the regulated utility side 
of Severn Trent, and led the 
price negotiations with the 
industry regulator in the last 
review. He was recently 
appointed customer services 
director. Peggy HoUmger 

ALLBN Bank ('Jersey). Sonny 
Maiti has been appointed to 
the board of Sheppards 
Mbneybrokers. part of Cater 
Allen Group. 

■ Chris Cottrell, chief 

executive of Fle ming I 

Luxembourg, has been given 
responsibility for SAVE & 
PROSPER Broker Services and 
joins the main board. 

■ Bill Brown has been 
appointed a director of 
BARONSMEAD. 

■ John S harm an, formerly a 
director of Allied Dunbar Asset 
Management has been 
appointed head of global fixed 
interest at HENDERSON 
INVESTMENT 
MANAGEMENT. 

■ Alan Smith has been 
promoted to md of The BANK 
OF BERMUDA (Isle of Man). 


■ Sir Clive Whitmore (above), 
retired permanent under-secre- 
tary of state at the Home 
Office, at RACAL ELECTRON- 
ICS. 

■ Charles Nunneley, chairman 
Of IMRO and deputy Chairman 
of Robert Fleming Holdings, at 
NATIONWIDE BUILDING 
SOCIETY; Sheila Heywood Isa. 
retiring. 

■ Peter Hedges has resigned 
as chairman of WARD HOLD- 
INGS. 

■ Angus Clark, a director of J. 
Sains bury and this year’s pres- 
ident of the Freight Transport 
Association, at AAH. 

■ Bob Simm, former UK chair- 
man and senior partner of 
KPMG Management Consult- 
ing. at LAMP DEVELOPMENT 
MANAGEMENT. 

■ Chris Duckworth, former 
finance director, at VEGA 
GROUP. 

■ Roger Leverton, group r-htef 
executive of Pilkington, at 
SMITHS INDUSTRIES. 

■ Peter Morgan, former direc- 
tor general of the Institute of 
Directors, at ZERGO. 

■ David Langridge at The 
WOODGATE FARM DAIRY. 

■ Fred Crawley, nhalrman of 
Girobank and the Alliance and 
Leicester Building Society, as 
chairman of the LEGAL & 
GENERAL Recovery Invest- 
ment Trust. 

■ John Forrest (below), deputy 
chairman of NTL, at ATS 
TECHNIRENT. 


Ml 

%! 

















FTJVANCXVL TIMES WEDNESDAY NOVEMBER 9 1994 


13 


*r 


ARTS 


Television/Christopher Dunkiey 

A dramatic lack of originality 


T hey bad a fail house at the 
Everyman Theatre, Chelten- 
ham, oq Sunday, not for an 
early panto but for a tribute to 
a television playwright' a local 
ooy, me late Dennis Potter. There were 
re fU B f s and video extracts from his 
worfc, from Stand Up Nigel Barton (1965) 
to Lipstick On Tour Collar (1993), and then 
8 “***?. on toe question of whether new 
uid Challenging' writing could find a place 
m television drama during the 1990s. It is 
a suhtect on which Potter was characteris- 
tically vituperative, claiming that there 
was an occupying power in our society, 
threatening our personal sovereignty, a 
power sustained most subtly through the 
broadcasting media. He was pessimistic 
about the idea of anybody setting out in 
the 1990s as he had in the 1960s to get his 
voice beard via television drama. 

So what is the state of television drama 
in Britain today? Judging from what 
could be seen last week there is far 
greater freedom now than there was 30 
years ago to show, say, sexually explicit 
material, one of several “difficult” areas 
with which Potter was particularly identi- 
fied- The Spanish film Lovers, shown by 
Channel 4, about a young man seduced by 
his landlady, an older but decidedly 
attractive woman, contained remarkably 
vivid erotic scenes. Dropping a silk scarf 
onto he r young lover’s naked backside the 
woman murmurs “Put it in", promptly 
adds “No, you’re so clumsy, I will" and 


does. Then the camera pans down to mat- 
tress level to show her whipping it out 
again at the moment of climax. There was 
more : no hints, no trains rushing into 
tunnels, but the sort of explicit material 
which, even 10 years ago, would have 
been available only in stag movies. It 
made the much-protested balking scene 
in Potter’s The Singing Detective look gen- 
teel. Of course a late night movie is oot 
what we generally mean by “television 
drama", yet it is drama cm television, and 
what is in movies today will be in televi- 
sion's own material tomorrow. I am not 
aware of any protest about Lovers. 

Of course you would not find such mate- 
rial on I TV. There the most drastic 
changes following the last lot of broad- 
casting legislation have been not in jour- 
nalism, as some of os feared, but in 
drama. 1TV is now using drama like 
extruded plastic building blocks: 55-min- 
ute series about firemen, soldiers, doctors 
and policemen are being spat out for the 9 
o'clock slot as though by automata and 
used to build the ratings edifice. Cracker 
is the high quality end of this phenome- 
non, a special-edition, hand-finished 


example which is well worth watching; 
Bobbie Coltrane is on top form as the 
intolerable yet fascinating Filz in the cur- 
rent story about a girl in the clutches of 
religious loonies. 

Revelations, the late night ITV soap, 
looked at first as though it might break 
some new ground. 'However, time is prov- 
ing that even though we have a bonking 
bishop, with a nymphomaniac schoolgirl 
daughter, a drug addicted son, and a wife 
who personally administers the son’s 
methadone injections, it has none of that 
chutzpah with which Dallas captured so 
many viewers. Ninety per cent of ITV 
drama today is forgettable the instant it 
finishes, and the idea of ITV - the chan- 
nel which, during Potter’s career, took os 
from Amidunr Theatre to Jewel Jn The 
Crown via The Naked Civil Servant - even 
bothering to consider the work of a new 
young non-conformist iconoclast like Pot 
ter nowadays is laughable. 

And the BBC? Far more difficult to sum- 
marise. Pessimists will note that Peter 
Ransley. who in 1981 gave ns the deeply 
felt and unforgettable account of 19th cen- 
tury rural life in Bread Or Blood, is now 


giving us the 1940s saga Seaforth which i$ 
highly professional but looks as though it 
was made for that 9 o’clock slot on ITV. 
There was a striking science fiction 
drama in The X-Files on BBC2 last Thurs- 
day about a killerbuilding driven by arti- 
ficial intelligence: the washroom dunnit 
(killed the unsympathetic boss). It was 
not only entertaining but thoughtful, yet 
no more so than many episodes of The 
Twilight Zone, and The X-Files is another 
American import. 

I n the area where it is so often urged 
to put its main drama effort, the 
classic repertory of Shakespeare 
and Dickens, the BBC has looked 
pretty impressive in the past week. 
True, there were infelicities in Measure 
For Measure, for example in the scene - 
so heavily trailed - where the director 
bad Angelo drag Isabella across the floor 
and fling her on the sofa. He says 
“Redeem thy brother by yielding up thy 
body to my will", but scarcely in the heat 
of passion since he adds “Answer me 
tomorrow”. So much for the dragging and 
flinging inserted by the director. This pro- 


duction was, however, bent to television’s 
purposes pretty successfully and, consid- 
ering how odd the scale of values seems to 
many of ns today (particularly death 
before loss of virginity) a difficult play 
was made impressively accessible. 

Better still is Marini Chuzzlewit. As 
with the Shakespeare, this is not one of 
the author's easiest texts, but the opening 
episode of David Lodge's dramatisation 
took os straight into the essentials and 
established many of the key elements - 
Pecksniffs humbug, his daughter's affi- 
ance of offence and defence. Tom Pinch’s 
naivety - astonishingly fast When back- 
bench Tory UFs call on the BBC to stick 
to its last and keep delivering those pro- 
grammes which cannot make a nice profit 
for commercial broadcasters, it is doubt- 
less the likes of Martin Chuzzlewit that 
they are thinking of. This is cosy winter 
television of a deeply comforting sort; 
watching it is like pulling a rug round 
your shoulders and sipping a whisky-mac. 

Which was never the purpose of Dennis 
Potter. In the week before The Singing 
Detective began in 1986, this page carried 
the most enthusiastic review I have ever 


written, including: “If all this sounds 
complicated, so it is - but in a wonder- 
fully entertaining way. Here we have not 
some old novel adapted for television but 
an original work created specifically for 
the electronic medium, by a master crafts- 
man who has served a long and produc- 
tive apprenticeship. Today Potter uses 
television with the familiarity and assur- 
ance that Dickens brought to the writing 
of oovels.” 

We now know that we are to receive 
Potter’s legacy next yean two drama seri- 
als, Karaoke and Cold Lazarus, the first 
produced by the BBC with repeats on 
Channel 4, and the second produced by 
Channel 4 with repeats on the BBC. So 
there are still two of Britain's four terres- 
trial networks which will finance and 
screen his work. But long before he died 
Potter had won himself a very special 
position in British television, and there 
was never much chance of these being 
turned down. Going back to Potter’s own 
doubts, the question is: wbat would be the 
reaction if someone came along now 
whose work seemed as different and diffi- 
cult as Potter’s was by the standards of 
his day? Despite the presence of Michael 
Grade from Channel 4 and Alan Yentob, 
Controller of BBC1, on the stage of the 
Everyman, and their co-operation over the 
legacy serials, there must be great doubt 
whether the work of such a person would 
make it to the screen given the new ethos 
in British broadcasting. 


Theatre/Alastair Macaulay 


A Passionate 
Woman 


T hat Stephanie Cole is a 
superb actress should be 
news to no-one. True, there 
are moments during A Pas- 
sionate Woman, Kay Mellor's new 
comedy, when it surprises us that 
she is quite so good at bringing to 
life Betty Derbyshire (n4e Wilson). 

Betty, the menopausal Yorkshire 
wife of Donald and doting mother of 
Mark, is so affected by the prospect 
of losing her only son on his wed- 
ding day that she retires to the 
attic, where she is visited by the 
ghost of Craze, her one true love. To 
make such a character funny is one 
thing; to make her touching is 
something else. But Cole succeeds 
in. both, and she also prepares us, 
stroke by subtle stroke, for the 
Romantic heroism which Betty 
finally attains. 

After the attic, Betty takes to the 
root and then . . . Mellor has con- 
structed her play so deftly that we 
cannot guess, what Betty will do. 
StiDL as the play does and, we may 
recall how far Mellor, in only two 
hours, has brought Betty since the 
start - when she climbed up into 
the attic and announced to us Tve 
been to the new Asda." What’s 
more, it turns out her chat about 
Asda was not irrelevant, for she 
tells her husband that it was in 
Asda that she stopped in her tracks 
- when she saw her hand, unrecog- 
nisably aged, and yet recognisable 
because it bore her wedding-ring. 

This terrain has already been 
charted by Alan Ayckbourn. In A 
Woman in Mind, Ayckbourn 
showed a middle-aged woman who 
similarly withdraws from her 
household, moving hot to the attic 


but to the garden. She too is 
haunted by spectral figures-A 
Woman in Mind is a more daring 
play than A Passionate Woman, 
which at times is rather more light 
than its subject Yet this does not 
make Betty the less real Betty’s 
pain in relinquishing her son - or 
rather, in Act One, her refusal to 
consider the matter - is acute; and 
more acute is the way she retreats 
to the one brief time in her life 
when she discovered her passionate 
inner self. 

Most acute oT all is the way that 
Betty's min d keeps flickering 
between (me subject and another. 
Cole’s timing is such that she can 
make us laugh at lines that hardly 
seem funny in themselves, and can 
turn a more obviously “funny" fine 
(“1 have to be careful with cheese, 
because it tends to put on weight 
with me") into something cherisha- 
ble. We need to see Cole in a play 
that makes a more disturbing 
impression - she has a rare capac- 
ity for moral force and vehemence. 

Neil Morrissey (as son Mark), 
Alfred Lynch (as husband Donald), 
and James Gaddas (as bien-aime 
Craze) all make fine contributions. 
Patrick Connell an’s two-sided 
house-top set is splendid. Ned Sher- 
rin directs. The pacing, and comic/ 
poignant fluctuations of tone, are 
remarkably finely timed. At two or 
three moments (no more) I thought 
that a line had been wrongly 
weighted - but in each case, I later 
discovered that the weighting of the 
line had in fact prepared me for the 
way the play was to develop. 


Comedy Theatre, London SW1 



Ayckbourn territory: Neil Morrissey and Stephanie Cole in Say Mellor’s new play AiastairMoir 


Opera/David Murray 


‘Ariadne’ revived 


F or the English National 
Opera, Graham Vick pro- 
duced Richard Strauss's 
Ariadne on Naxos eleven 
years ago. His master-stroke was to 
insulate the high-flown Ariadne 
story completely from the low 
comedians’ antics; but since the 
original Strauss-Hofmannsthal p lan 
was to engineer comic friction 
between the competing troupes, 
respectively opera seria and comme- 
dia deU'arte , the Vick version was 
perverse in principle and dreary in 
effect - and not especially happy in 
its principal singers either. 

As revived once again by Lynn 
Binstock, it looks better. The edges 
have been softened; the mechanical 
high-jinks in the prologue act are 
still tedious, but the singing come- 
dians get a looser rein later, and 
soon hit upon the right improvisa- 
tory, happy-go-lucky spirit If Peter 
Snipp’s sturdy Harlequin scores low 
on romantic appeal, his colleagues 
(all new) are an engaging crew: 
Timothy Robinson, Alasdair Elliott 
and particularly Mark Richardson 
as a daft Truffaldmo. There is a 
sparky Dancing Master from John 
Graham-Hall, too. and a Malvolio- 
Like Major-Domo from Nicholas Le 
Prevost. 

Above all there is Cyndia Sieden’s 
Zerbinetta. whose charm and spar- 
kling accuracy are a great tonic. 
This American soprano misses only 
the note of wry. world-weary 
amusement - but that is not per- 
haps compulsory. Her scene with 
the young Composer is hobbled by 
his being a mature, matronly 
mezzo, the Canadian Judith Foret: 
an admirably dignified singer, but 


no substitute for the slim youth 
Hofmannsthal had in mind. 
(Another breeches-role like the 
Rosenkavalier Octavian was not 
what he intended, but Strauss 
insisted that most opera companies 
could field an intelligent mezzo 
more reliably than a second tenor.) 

As for the heavies: well, there is 
much to admire in Jane Eaglen's 
monumental Ariadne, and lan Caley 
has a good stab at Bacchus, a part 
that requires more sustained bel- 
lowing than Caley's usual reper- 
toire. But the modern habit of doing 
Ariadne with Wagnerian voices in a 
large theatre has meant that thou- 
sands of people have heard the 
opera only on that inflated scale; its 
real delights suffer, and not least its 
wistful intimacies. 

T here are plenty of those 
written into the score - 
almost a miniature score, 
by Strauss’s standards - 
and they evaporate easily in a big 
house. The conductor Alexander 
Sander lets them do that rather 
often, though he makes a workman- 
like job of it all. He is curiously 
brisk and un-tender with the 
nymphs’ music, forthrightly sung 
by Maria Bovino, Judith Douglas 
and Yvonne Barclay (whose Echo 
never sounds like one when it 
should). If Ariadne must be staged 
In the cavernous Coliseum, the 
present production will do, I sup- 
pose; but as seen and heard in, say, 
Munich’s little Cuvillies-Theater, it 
is a different and much more lov- 
able opera. 


In repertory until December 14. 


Chase Manhattan boost for BM 


Friers 'Molly Sweeney' 


here are times when you 
have to be patient with the 
Irish; it can pay off in the 
end. The first act of Brian 
Friel’s new play seems slow. Char- 
acters (there are only three of them) 
seldom move. Even the unmistak- 
able rhythm of the Fried. l an guage 
begins to seem repetitive. 

This is deceptive. Taken all in all, 
MoOy Sweeney is a marvellous piece 
of writing. To rejuvenate a efidfe, 
there is more than meets the eye - 
and what does meet the eye if you 
have been partially blind for over 40 
years, then have your sight 
restored? 

The territory is familiar Friel- 
land; Ballybeg, Donegal, rural 


Ireland and, yes, dancing is still a 
kind of magic formula. There is also 
science, culture and international 
communications. It is in the mix- 
ture of paganism. Christianity and 
the modern world that Friel excels. 

In the old days Molly’s sight 
might have come back by praying 
to the Virgin Mary or a local saint 
Now it is restored by a surgeon 
with contacts an over the world. 
Never mind, the effects are much 
the same; it is not certain that the 
surgery has worked. 

Molly is not totally unhappy with 


her blindness, which came upon her 
at the age of 10 months. She can 
recognise flowers, laugh and swim; 
she has a job and marries. The men 
In the piece are Molly's husband, 
Frank, and the eye surgeon, Mr 
Rice. Frank is peculiar perhaps 
even by the standards of Donegal It 
is not remotely clear why an unem- 
ployed Irishman should take off to 
lead a food convoy to Ethiopia, and 
stay there, while his wife is recu- 
perating. This is a weakness in the 
structure of the piece. 

Mr Rice fits in better the surgeon 


invited by Frank to perform an 
operation that has almost never 
been successful and brings interna- 
tional repute. He treats the operat- 
ing theatre much like the stage, but 
admits that even when operations 
appear to work, it is not always 
clear why. 

There is some intellectual ram- 
bling. Diderot. John Locke and 
Bishop Berkeley are all thrown in. 
Good and bad jokes come in about 
equal measure. I liked the story 
about the imported Iranian goats 
who refused to adjust to Irish time. 


On the other hand, some of the ref- 
erences to the third world struck 
me as patronising - rather in the 
way the English used to talk about 
the Irish. 

The production at the Almeida 
comes from the Gate Theatre, Dub- 
lin where the piece had its premiere 
in August Friel directs himself. The 
speaking of the lines by Catherine 
Byrne as Molly, Mark Lambert as 
Frank and T.P. McKenna as Mr Rice 
is immaculate. Their performances 
might be even better if they were 
allowed to act a bit more. Fine Irish 
writing does not automatically 
amount to a play. 

Malcolm Rutherford 


T he British Museum yester- 
day announced the first 
step in its ambition to ren- 
ovate its galleries to cele- 
brate its 250th anniversary in 2003. 
Chas e Manhattan Bank is giving 
film, spread over five years, to pay 
for a new gallery of North Ameri- 
can ethnic art 

At the moment the BM"s ethno- 
graphical collection is housed in the 
Museum of Mankind, off Piccadilly. 
The aim is to return it to Blooms- 
bury to fin the space left by the 
departure of the British Library to 
St Pancras. It will also occupy some 
of the additional square footage the 
BM will gain if Sir Norman Foster’s 
£50m plan to enclose the inner 
courtyard conies to fruition as a 


millennium funded project 

The BM has one of the finest col- 
lections of ethnographical material 
from North America in the world, 
with around 20.000 objects, few of 
which are currently displayed. The 
artifacts of Innuit and Indians, from 
northern Canada to southern Calif- 
ornia, are well represented, with 
confirmed datings of items stretch- 
ing back to 1702. 

This will be Chase Manhattan’s 
first major sponsorship in Europe, 
although it has a reputation for 
backing contemporary art in the 
US. The new gallery will open in 
1997, even if the British Library has 
still not moved out 

Antony Thomcroft 



plays Beethoven’s Third Piano 
Concerto with Mecklenburg 
Staatskapelle. Tomorrow: Hermann 
Prey song redtaL Fit Gary Bertirt 
conducts works by Stravinsky and 
Mahler (0221-2801) 


■ COPENHAGEN 
Royal Theatre Tonight new Danish 
choreography. Tomorrow, next Tues: 
Hemming RindPs new production of 
Prokofiev’s opera The Love for 
Three Oranges. Fii: Rdelio. Sat, 

Mom FDndt’s staging of Thomas 
Koppal’s ballet The Triumph of 
■ BONN • Death (tel 3314 1002 fax 3312 3602) 



Oper This month’s repertory 
consists of Verdi's La travtata 
starring Marts® Vrtafi/Hasmik Papian, 
PucdnTs La fendulla del West with 
Barbara Danfefa/Katfttesn McCaila, 
the new Schnittka/George Whyte 
dance drama Dreyfus, Janacek s 
Jenufa and n guarany, an opera by 
19th century BrazBIan composer 
Antonio Carlos Games. Youri 
tfemos' new- production of Sleeping 
Beauty opens on Nov 27 
(022^773667) ■ 


bright, Sat. next Tubs: 
tek conducts Michael 
i production of Lulu, 
ded by Patricia Wise, 
irz and Wolfgang 
ated Nov 18, 23); Frfc 
[eduction of PeerGynt, 
id by Jbchen Ulrich. ■ 
da. Next Wed and Sab 
>va sings In concert 

at BeffinTsLa 


Pnninhfc CocOe UC&d 


■ DRESDEN 

Semperoper Tonight members of 
the Dresden Staatskapelle play 
chamber music. Tomorrow: La 
traviata. Fri: Stephan Those’ 
production of Prokofiev’s ballet 
Romeo and Juliet Sat at 1 1am, Sun 
at 11am and 8pm: Giuseppe 
Sinopdl conducts Dresden 
Staatskapelle in symphonic works 
by Mahler and Strauss, with soprano 
Elizabeth Norberg-Schutz. Sat 
evening: Harry Kupferfs production 
of Handel’s Belshazzar, starring 
Jochen Kowalski. Next Tues: The 
Bartered Bride (0351-484 2323) 
KutturpaJast Sat and Sun; Miltiades 
Caridte conducts Dresden 
Philharmonic Orchestra and Chorus 
ill woks by Mahler. Mozart and 
Bruckner (0351-486 6686} 


■ FRANKFURT 
Afte Oper Tomorrow: Johnny 
Haltyday. Fri: Kent Nagano conducts 
Lyon Opera Orchestra and Chorus In 
works by Strauss and Ravel, with 


soprano Cheryl Studer. Sat Nagano 
conducts concert performance of 
Berlioz's La Damnation de Faust, 
with cast including Susan Graham, 
Thomas Moser and Josd van Dam. 
Sun: Klaus Maria Brandauer and 
Rudolf Buch binder in a programme 
of literature and music (069-134 
0400) 

JahrhunderthaOe Hoechst 
Tomorrow: Emmanuel Krivine 
conducts Bamberg Symphony 
Orchestra In works by Beethoven, 
Rakhmaninov and Musorgsky/Ravet, 
with piano soloist Lars Vogt Fri and 
Sat Slovak National Opera of 
Bratislava presents an Italian opera 

gala (089-360 1240) 

Oper Fri: Cornelius' comic opera 
Der Bartxer von Bagdad. Sun; new 
production of Schoenberg's Pierrot 
Lu naira and Janacek's Diary of a 
Young Man who Disappeared 
(069-236061) 


■ GOTHENBURG 

Operan Tonight, Sun, next Tues: 
Robert North's production of 
Prokofiev's ballet Romeo and JuiieL 
Fit Blomdahi’s 1959 space opera 
Aniara (031-131300) 

Konsertftuset Fit Alexander 
Dmitriev conducts Gothenburg 
Symphony Orchestra in works by 
Rosenberg, Britten and 
Shostakovich, with cello soloist Tntis 
Mark. Next Tues: Christer 
Thorvsldsson violin recital 
(031-167000) 


■ HAMBURG 

Staatsoper Tonight, next Tues, 
Thurs and Sun: Hamburg Ballet in 
John Neumeier*s production of The 
Nutcracker. Tomorrow, next Mon, 


Wed and Sat: Neumeier’s Requiem, 
music by Mozart Fri: Lortzing's 
comic opera Der Wildschutz. Sat 
Andreas Homoki's new production 
of Rigoletto, with cast headed by 
Franz Grundheber and Hellen Kwon. 
Sun: Wagner's Siegfried, with 
Wolfgang Fassler in the title role and 
Simon Estes as the Wanderer 
(040-351721) 

Musikhalle Tomorrow: Frans 
BrDggen conducts Orchestra of the 
18th Century in works by Schubert 
and Beethoven. Sun, Mon: North 
German Radio Symphony Orchestra 
and Chorus in Bach's Matthew 
Passion (040-354414) 
St-Michaelis-Kirche Next Tues 
evening, Wed afternoon: Gerd 
Albrecht conducts Hamburg State 
Philharmonic Orchestra and Chorus 
in Brahms' German Requiem, with 
soloists Maria Bayo and Boje 
Skovhus (040-351721) 


■ HELSINKI 

Finnish National Opera Tonight, 
next Wed: Otelfo. Tomorrow, Sat, 
next Tues: Nureyev's production of 
Die Nutcracker. Fri: La boheme. 
Sun, next Fri: Miguel 
Gomez-Martinez conducts concert 
performances of Falla's Adontida 
(0-4030 2211) 


■ MUNICH 

OPERA/DANCE 

Staatsoper Tonight, Fri, Sun: Colin 
Davis conducts Nicholas Hytnerfs 
new production of Don Giovanni, 
with cast headed by William Shimell, 
Lucio Gallo, Matti Salminen, Sheri 
Greenawald and Alison Hagley. 
Tomorrow: Der fliegende Hollander 
with Ekkehard Wiaschiha and Julia 


Varacfy. Sat Bavarian State B aliet in 
Peter Wright's production of Giselle. 
Mon: Carmen. Tues: La traviata with 
Tiziana Fabbricini as Violetta 
(089-221316) 

Deutsches Theater Tonight: 
opening performance of two-week 
run of a flamenco show by Rafael 
Aguilar's Ballet Teatro Espanol 
(089-5523 4360) 

CONCERTS 

GasteJg Tonight: Philip Glass 
Ensemble provide live musical 
accompaniment for Jean Cocteau's 
cult film Beauty and the Beast Fri, 
Sun morning, Mon, Tues: Gianluigi 
Gei matti conducts Munich 
Philharmonic Orchestra and Chorus 
in Rossini’s Stabat Mater. Sat 
Puccini gala with Agnes Baltsa, 

Gabriel a Benackova, Edita 

Gruberova, Gwyneth Jones, Eva 
Marton, Anna Tomowa-Sintow and 
Mara Zampieri. Next Wed: Orchestra 
de Paris (089-4809 8614) 
Herkulessaal der Residenz 

Tomorrow: Thomas Mandl conducts 
Ukraine State Philharmonic 
Orchestra in works by Tchaikovsky, 
Brahms and Rakhmaninov, with 
soloists Vadim Repin (violin) and 
Gustav Ravinius (cello). $at 
Hermann Prey sing® Schubert’s 
Winterreise. Mon: Hilliard Ensemble 
(089-299901) 

Olympiahalle Sat Joe Cocker 
(089-5481 8181) 


■ OSLO 

Konserthus Tomorrow, Fri: Michael 
Stem conducts Oslo Philharmonic 
Orchestra in works by Thoresen, 
Mendelssohn and Rakhmaninov, 
with violin soloist Solve Sigeriand. 


Nov 17, 18; Mariss Jansons 
conducts Strauss, Shostakovich and 
Ravel (2283 3200) 


■ STOCKHOLM 

Royal Opera Tonight Fri, Mon: 
Yevgeny Polyakov's new staging of 
the Nureyev production of Minkus' 
ballet Don Quixote. Sat Le nozze di 
Figaro- Tues: La boheme (tickets 
08-248240 information 08-203515} 
Konserthuset Tomorrow, Sat 
afternoon: Gennady Rozhdestvensky 
conducts Royal Stockholm 
Philharmonic Orchestra in works by 
Weber and Shostakovich, with 
clarinet soloist Sdtve Kingstedt 
(tickets 08-102110 information 
08-212520) 


■ STRASBOURG 

Thdfrtre Municipal Tonight, Fri, Sun 
afternoon: Friedrich Haider conducts 
Paul Stem's new production of 
Madama Butterfly, with cast headed 
by Asayo Otsuka and Marcus 
Haddock (8875 4823) 

Palais de la Muslque Tomorrow. 

Fri: Jerzy Semkow conducts 
Strasbourg Philharmonic Orchestra 
in a Tchaikovsky programme, with 
cello soloist Raphael WaJlfisch (8852 
1845) 


■ STUTTGART 

Staatstheater Tomorrow, Sat, Sun 
afternoon: Stuttgart Ballet in John 
Cranko's Onegin. Fri: Cosi fan tutte. 
Sun evening: concert of Janacek 
chamber music. Nov 24: new 
production of Janacek's From the 
House of the Dead (0711-221795) 


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 

Euronews: 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: 




financial times 


WEDNESDAY NOVEMBER 9 1*94 


Edward Mortimer 



If there is one 
indisputable 
success story 
in post-commu- 
nist central 
Europe, five 
years after the 
fall of the 
Berlin Wall. 
It is surely Slovenia. 

1 think of Slovenia as “the 
one that got away”. It was part 
of Yugoslavia, but succeeded 
in extricating itself at the price 
of a phoney war lasting one 
week, in which only eight of its 
people were killed. Since then, 
its leaders have been at pains 
to explain, to anyone who will 
listen, that Slovenia is not a 
Balkan country. 

It is, they tell you, a central 
European country: normal, 
peaceful, a showcase of tran- 
sition to democracy and the 
market Already 60 per cent of 
its foreign trade is with the 
European Union, and that will 
rise to more than two-thirds 
when Austria joins the EU in 
two months. E’er capita income 
is higher than that of Greece 
or Portugal. 

Like the Czech lands, Slo- 
venia was formerly in the Aus- 
trian part of the Habsburg 
empire, whereas Croatia, like 
Slovakia, was in the Hungar- 
ian part It may not be pure 
coincidence that Slovenia and 
the Czech Republic are the two 
central European countries 
identified by the European 
Commission as likely to be 
ready for EU membership by 
the end of the decade. Cer- 
tainly Slovenia, with its lush 
Alpine scenery and evident 
prosperity, feels like a south- 
ward extension of Austria, 
only with much lower prices. 

British minis ters will have 
heard all this ad nauseam in 
the past two days, as they have 
been entertaining the Slove- 
nian prime minister, Mr Janez 
DraovSek. Slovenia’s leaders 
have an obsessive fear that 
their achievements are not 
recognised in the west They 
react instantly to any implied 
hint that Slovenia is still in the 
“Balkan" or "former Yugoslav” 
category. 

Ironically, in its haste to 
escape from the Balkans and 
join western Europe, Slovenia 
has tripped up on a dispute of 
what might be considered the 
"Balkan” type, only with a 
west European country. 

What would be a typical Bal- 
kan conflict in the sense in 
which Slovenes and west Euro- 
peans use that term? One in 
which ethnically defined states 
make claims on each other in 


The 

Balkan 

disease 

West Europeans 
may not be 
immune, as the 
Slovenia-Italy 
dispute shows 

the name of kinsfolk living the 
"wrong” side of a frontier. One 
in which the crimes of people 
long since dead are called in 
evidence to justify an alarmist 
interpretation of the behaviour 
or intentions of people wearing 
the samp, state or ethnic labels 
today. And. perhaps, one in 
which inter-state quarrels are 
exacerbated by domestic power 
struggles, as some politicians 
raise nationalist slogans to 
advance their cause, while oth- 
ers fear losing popularity and 
influence if they resist 
All those elements are pres- 
ent in the dispute between Slo- 
venia and Italy. Its roots lie 

Slovenes fear 
being bought out 
of house and home 
by superior Italian 
purchasing power 

deep in the more unpleasant 
episodes of 20th century Euro- 
pean history, when nation 
states in the grip of totalitarian 
ideologies tried to set their 
exclusive stamp on lands 
where different identities had 
long coexisted and overlapped. 

The eastern coast of the 
Adriatic was such a land. For 
centuries its ports and fishing 
villages had a Roman or Vene- 
tian culture, while the shep- 
herds and farmers of the over- 
looking hill country spoke 
south Slavonic dialects - but 
goods, ideas and vocabulary 
were freely exchanged between 
the two. Only in the 19th cen- 
tury did the difference become 
political, as Italian nationalists 
laid rfaiVin to the area and thp 
Habsburg authorities count- 
ered by encouraging education 
in the Slav vernaculars. 

After Hie first world war, 
Italy, as a victor power. 


annexed the Istrian peninsula. 
Soon afterwards Mussolini 
came to power and set about 
ensuring its Italian character 
with all the tact and subtlety 
for which he was famous. In 
the second world war the 
wheel of fortune turned. Italy 
was defeated. Tito’s partisans 
triumphed and incorporated 
the area into Yugoslavia, 
except the city of Trieste, from 
which the western allies 
evicted them. In 1954 the great 
powers converted de facto con- 
trol into de jure sovereignty. 
Italians living in what became 
Yugoslav territory were given 
the choice of accepting Yugo- 
slav citizenship or moving to 
Italy. Most of them moved, pre- 
ferring democracy among their 
kith and kin to life in an alien 
and unsympathetic communist 
state. 

Altogether some 350,000 Ital- 
ians left Istria after 1945: 
roughly 60 per cent from the 
Croatian part and 40 per cent 
from the Slovenian. In 1983 
Yugoslavia agreed to compen- 
sate them for the property they 
had left behind. Slovenia, as a 
successor state, is happy to 
continue its share of the pay- 
ments. But Italy now refuses to 
accept compensation, arguing 
that Italians should have the 
sam p rights given to Slovenian 
citizens - to claim back prop- 
erty taken from them by the 
Yugoslav state, and to bid for 
publicly owned real estate 
when it is put up for sale. 

Slovenes fear being bought 
out of house and home by 
superior Italian (and German 
and Austrian) purchasing 
power. They also see the Ital- 
ian request as an attempt, 
egged on by neo-fascists in Sfl- 
vio Berlusconi’s government, 
to reopen the postwar borders: 
a dangerous precedent for 
Europe as a whole. Italy is now 
blocking the opening of negoti- 
ations on an association agree- 
ment between Slovenia and the 
EU until the bilateral dispute 
is settled. Last month Slovenia 
sent a lame-duck foreign minis- 
ter to negotiate, then repudi- 
ated the compromise text that 
he brought took. Which side, 
one is tempted to ask, is behav- 
ing in a more “Balkan" man- 
ner? 

But perhaps that is the 
wrong question. The right 
question is whether west Euro- 
peans are justified in thinking 
themselves immimn from "Bal- 
kan” reflexes - or whether. If 
they do not find better ways to 
treat It, they will not gradually 
fall victim to the Balkan dis- 
ease themselves. 


F or the world's chemi- 
cal giants, the good 
times are rolling. Sales 
are rising, prices are 
rising, and profits are soaring. 

Yet in this notoriously cycli- 
cal industry, the next down- 
turn is never Ear away. How Ear 
depends on whether this year's 
rising chemicals prices owe 
more to increased demand or 
to temporary constraints on 
production, providing only a 
short-term fillip. 

The industry is divided on 
the matter, but not on the fall- 
out: third-quarter results have 
been excellent. Dow Chemical 
of the US reported post-tax 
profits 102 per cent higher than 
a year earlier, while US rival 
Du Pont turned a $680m loss a 
year ago. affected by a 
restructuring charge, into a 
$650m profit In Europe, ICTs 
pre-tax profits were 59 per cent 
higher than a year earlier. 
There were spectacular figures 
too from BP Chemicals in the 
UK, France's Rhdne-Poulenc, 
DSM of the Netherlands, and 
Dutch-Swedish combine Akzo- 
Nobel. 

Industry leaders have been 
only too w illing to claim the 
credit for this turnround. "The 
majority of the improvement 
has come from hard-won mar- 
ket volume gains and 
improved productivity," says 
Sir Denys Henderson, ICI 
chairman. 

Mr Edgar Woo lard, Du Pont 
chairman, says: “This perfor- 
mance confirms that transfor- 
mation efforts to make all oF 
our businesses globally com- 
petitive are working." 

But this pride would seem to 
he inflated. The previous five 
years of depressed prices and 
heavy losses brought only 
modest restructuring to the 
industry and few real capacity 
cuts. 

Efforts were made to secure 
deeper cuts, but they proved 
unsuccessful A year ago. Euro- 
pean producers of ethylene, 
perhaps the most important of 
the ingredients for plastics, for- 
mulated a plan to shut more 
than 10 per cent of capacity in 
Europe. Prices were so low 
that all but the largest and 
most efficient plants were los- 
ing money. 

But the plan collapsed 
because each Individual pro- 
ducer feared it would have to 
bear the brunt of the cuts. 
Piecemeal closures followed, 
including the BP Chemicals 
plant at Baglan Bay in Wales. 
But European capacity fell by 
less than 3 per cent 
US producers also restruc- 
tured only modestly. So mod- 
estly that, in ethylene for 
example, ^parity continued to 
rise throughout the recession. 


The buoyant chemicals industry is preparing for 
the eventual downturn, says Daniel Green 

Formula for 

explosive reaction 


The story was repeated in 
other sectors, such as propyl- 
ene and styrene in Europe and 
North America. 

Rather than plant closures, 
the recovery in chemicals has 
been driven by economic 
recovery in the US and contin- 
ued growth in Asia, says Mr 
Richard Sleep, a consultant 
with industry consultancy 
ChemSystems. 

Chemicals and their immedi- 
ate derivatives such as plastics 
are vital to almost every sector 
of manufacturing, and are par- 
ticularly important to the pro- 
ducers of cars and trucks, 
packaging and construction 
materials. As economic activ- 
ity has picked up, so has the 
demand for chemicals. 

In the face of increased 
domestic demand, US and 
Aslan producers have all but 
abandoned exports to Europe, 
thereby boosting the fortunes 
of European producers in their 
own home markets. European 
producers have also been gain- 
ing export markets in the US. 

"Petrochemicals and poly- 
mers production in the US and 
Europe is up about 10 per cent 
But in Europe, what’s really 
driven prices up is exports to 
the US. This is very unusual" 
says Mr Sleep. 

Increased demand has been 
pushing up chemical prices for 
several months. But traders in 
the world's chemical markets 
have been just as affected by a 
series of accidents, which have 
curbed the industry’s produc- 
tion capacity. 

Some of these have been 
plant failures, blamed on tired 
machinery struggling to cope 
with a sharp rise in produc- 
tion. “It's like running a rather 
old car very gently for several 
years and suddenly putting 
your foot down." said one 
industry executive. 

Among the biggest were fires 
and an explosion at Exxon 
Chemical's complex at Baton 
Rouge, Louisiana, on August 8 
which hit the US ethylene mar- 
ket. A ruptured pipe and fires 
at Enichem’s Priolo plant in 
Sicily cut production of ethyl- 
ene and polyethylene in 
Europe. The industry has even 
suffered natural disasters, such 


Chemical industry; fazing again 

Ethylene prices (DM per totma) 

1500 



Post-tax profft/toss 

800 -MHT. ' .T — 


atfqtrifi 


[Otfija-ISM 



Source; Conwy "part* 

as last month's floods in 
southern Texas. 

All these accidents have 
caused capacity cuts. In 
August and September, US and 
Italian producers experienced a 
3m tonne fell in their naphtha 
cracking capacity - a vital 
early stage in petrochemicals 

‘It's like r unning 
an old car gently 
for years and 
suddenly putting 
your foot down’ 

manufacture. This was equiva- 
lent to an 8 per cent cut in 
capacity for ethylene produc- 
tion. 

At a time of rising demand, 
chemicals markets have 
proved highly sensitive to such 
unplanned cuts. An explosion 
on October 12 that shut a 
420,000 tonnes a year methanol 
plant in Texas - closing more 


■ Pre-fax poofflt- 

than 6 per cent of US capacity 
- triggered a 14 par cent rise in 
European spot methanol 
prices. Methanol is used in the 
manufacture of petrol and of 
plasterboard for the construc- 
tion industry. 

Mr Edmund Clinckspor, 
director for supply and plan- 
ning in basic chemicals at 
Exxon rhpmirwij says that the 
combination of economic 
recovery and plant shutdowns 
has triggered price rises that 
have, in themselves, pushed up 
demand. 

"Prices are rising, so people 
want to buy today before the 
price rises again,” says Mr 
Clinckspor. 

Such restocking can be only 
a temporary phenomenon, 
however. Within months, dis- 
tributors and customers will 
have tied up as much working 
capital in stocks as they feel 
comfortable with. 

But optimists argue that the 
initial causes of the price rises 
are likely to continue for same 


time. It takes at least .three, 
years, from app roval , to 
achieve significant production j 
levels in- new plant, they say.' 
Furthermore, even' if exports. ' 
from Europe dry -up as new . 
plants are commissioned in 
north America and Asia,, they- § 
argue that the European recov- 
ery that is only just starting 
will take up the Black. . 

More cautious -voices -gay., 
that damaged factories can be 
repaired within months. They 
a)sn argue that European and 
Asian manufacturers wifi find 
the US a more difficult market 
once Dow Chemical’s new 
cracker capacity has come on 
stream in the US next year. 

In addition, some of the 
greatest growth in demand has 
been owning from price-sensi- 
tive Asian customers, such as 
China. 

“China will not stop buying' 
at once, hut if prices are mov- 
ing too high too fast, there, 
may be some slowdown [in. 
sales]," says Mr Philippe Goe- 
bel vice-president of planning 
at France’s Elf Atocfaem, part 
of the petrochemical giant Elf 
Aquitaine. 

Mr Clinckspor echoes his 
concern: “We can’t count on 
Chinese imports remai n ing at 
this level I wouldn't he sur- 
prised if profit margins across 
the whole industry peaked in 
the first half of 1995." 

T hat profit margins will 
recede is a matter on 
which optimists and 
pessimists alike agree. 

High prices will trigger capital 
investment that will lead to 
overcapacity and price compe- 
tition. The cycle will continue, .A 
and the industry will be faced ** 
with Its next downturn. 

However, the industry is 
determined that there will he 
no return to the loose cost con- 
trols of the 1980s, when ineffi- 
ciency and under-investment 
proved sustainable thanks to 
high demand. 

Some companies claim that 
they have done enough 
re structuring to stay 
profitable through another 
recession. 

Mr Ettore delTIsola, chief 
executive of EVC, the PVC 
manufacturing joint venture 
between ICI and Enichem, says 
that EVC would not have made 
losses during the last recession 
with the cost base it hopes to 
have by the end of next year. 

Others pl ace more emphasis 
cm the shift in their attitude. 

One such is Mr Earl Timmons, 

Du Ponfs vice-president of 
finance, who says: “Although 
our formal restructuring pro- 
gramme is over, we don’t think 
that cost-cutting will ever 
and." 






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Better environment 
not costly exercise 


From Sir Anthony Cleaver. 

Sir, Dr David Slater's call for 
volunteers to help prove that 
tighter environmental controls 
need not be as expensive as 
critics believe (“Pollution cost 
plea to industry", November 2) 
is most welcome and timely. 

All my experience of work- 
ing with companies which 
have Invested in upgrading 
their environmental perfor- 
mance has persuaded me that 
it is often possible both to do 
this and to improve profitabil- 
ity at the same time. 

The experience of AEA Tech- 
nology as a leading environ- 
mental consultancy confirms 
that the key to success lies in 
integrated environmental solu- 
tions which embrace the entire 
plant or process, rather than in 


spending money on “end-of- 
pipe” add ons. 

Wider adoption of the inte- 
grated approach will deliver 
significant competitive advan- 
tages for UK industry and a 
cleaner environment for us all 

As well as volunteering for 
Dr Slater’s experiment inter- 
ested companies would be well 
advised to participate in the 
Environmental Technology 
Best Practice programme. This 
is being managed by AEA 
Technology and aims to pro- 
mote better environmental 
practice at the same time as 
increasing competitiveness. 
Anthony Cleaver. 
chairman, AEA Technology. 
Canard House, 

15 Lower Regent Street, 

London SW1Y4LR 


Deal within guidelines 


From Mr Mark Callanan. 

Sir, To set the record 
straight the Royal Mail's pay 
deal with the executive of the 
Union of Communication 
Workers ("Royal Mail flouts 
pay freeze with 3.4 per cent 
offer”, November 5) does not 
breach government pay guide- 
lines. 

The deal consists of an 
increase in basic pay of 2.5 per 
cent plus a further 0.3 per cent 
in respect of current unre- 
warded productivity improve- 
ments. Its effect on the annual 
pay bill Is a net reduction of 
about 0.2 per cent provided 


by a Tali in headcount. 

The “supplement” of £1.50 
does not add a further 0.6 per 
cent to earnings as stated by 
you. It is. in fact, a straight 
transfer from non- pensionable 
pay to pensionable pay or that 
amount, and it will lead to a 
small reduction in take-home 
pay because of the employees' 
contribution to the pension 
scheme. 

Mark Callanan, 

national head of remuneration 
and employment. 

Royal Mail 
148 Old Street, 

London EC1V9HQ 


Chuzzlewit dull in part, 
but mostly absorbing 


From Ms Elizabeth Wells. 

Sir, I should be grateful for 
the opportunity to enlighten 
Christopher Dunkley (Televi- 
sion, November 7) on Martin 
Chuzzlewit. Even Dickens’s 
Victorian readers, who were 
blessed with much wider atten- 
tion spans than most people 
are able to demonstrate today, 
found the novel's American 
chapters extremely dull and 
uninteresting. It is possible 
that they were invented by the 
author to promote the novel’s 
disappointing early sales. 
Indeed, then and since, these 
chapters have proved so much 


of an annoyance that they 
have frequently been skipped 
over and -left unread so that 
the enthusiastic reader can 
concentrate an the wonderful 
characters and thoroughly 
absorbing events contained 
in the main part of the 
book. . 

I urge Dunkley to read the 
novel I am sure that once he 
has, he may well find that he 
agrees with these sentiments. 
Elizabeth Wells, 

16 Fir Cottage Road, 

Barkham Wood, 

Wokingham, 

Berkshire RG16 TRY 


Shortcomings prejudice 
move to European unity 


From AfrJMPaton. 

Sir, Karl Laniers (Personal 
View, November 7) puts for- 
ward a compelling case for 
monetary union in the develop- 
ment of the European Union. 
The Treaty of Rome put the 
case tor free trade within 
the community in the 
1950s in much the same 
way . 

Some 40 years down the 
road, however, we have the UK 
with the most efficient steel 
industry in Europe but with 
companies being forced out of 
business because of ongoing 
blatant internal subsidy of 
many European steel produc- 
ers elsewhere, not least in Ger- 
many. is this not an aspect of 
national sovereignty which 


Germany and others choose to 
ignore? 

Let us put first things first, 
before moving on to more 
sophisticated alignments 
which win generate more prob- 
lems than economic unity. 

When will continental 
Europe understand that we in 
the UK are not opposed to 
European union but are sick- 
ened by holier-than-thou 
appeals proclaiming higher 
aspirations while ignoring fun- 
damental shortcomings in 
meeting the requirements of 
the Treaty of Rome? 

Doctor heal thyself. 

J M Paton, 

Culver House, 

Chester Road. 

Middletoich, Cheshire 


*9 

4 


Market has the right AIM for young companies 


More confused 


From Mr Gavin Don. 

Sir, Your epitaph tor the 
Alternative Investment Market 
(Lex: “Questionable AIM", 
November 7) is premature, to 
say the least M&G's statement 
that its funds will avoid the 
market comes as no surprise to 
those involved in the design of 
the AIM. and indeed we would 
have been more surprised had 
M&G indicated that it would be 
investing. 

The AIM has from the outset 
been conceived as a market for 
the larger retail investor, and 
the stock exchange's proposals 
have quite rightly focused on 
balancing the needs of those 
investors with the need to 
reduce access costs tor young 


companies to the minimum. 
The likely size of AIM compa- 
nies will automatically lead the 
great majority of institutions 
to ignore the new market. 

You lament the absence of 
private sector initiatives to 
meet the needs of young com- 
panies. Past experience of such 
markets has shown that the 
confusion created by a diverse 
portfolio of products obstructs 
their growth and acceptance 
(witness the confusion among 
investors, intermediaries and 
companies over the relative 
merits of the Unlisted Securi- 
ties Market, Rule 5952/42 and 
the Third Market). 

A single, effective solution, 
launched on the back of an 


infrastructure already in exis- 
tence and paid for. which can 
provide one forum tor the rais- 
ing of capital in amounts well 
below the range of the Official 
List should be welcomed as a 
significant tool for the support 
of industrial investment The 
USM. m being too much like 
its elder brother, failed in this 
respect, as would the European 
Venture Capital Association's 
proposals. Provided the 
exchange remains true to its 
current vision, the AIM has 
every chance of meeting an 
urgent need. 

Gavin Don. 

Equitas, 

2 Clermiston Terrace, 

Edinburgh EH 12 SXF 


From Mr Paul Richards. 

Sir. Norman Lamont 
describes the Conservative 
backbenchers who forced the 
U-turn over Post Office privati- 
sation as “a taxi-foil of flotsam 
and bobtail" (“Tory right 
threatens EU revolt after 
retreat on postal sell-off" 
November 7). 

What a confusing use of 
English. 

Does he mean “flotsam and 
jetsam”? Or is the phrase be is 
grappling for “rag, tag and hob- 
tail”? 

Mind you, he wasn't much 
good with figures either. 

Paul Richards, 

109 Hammer smith Bridge Road 
London W6 9DA 


FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


5 


★ 


financial times 

Number One Southwark Bridge, London SE1 9HL 
Tel: 071-873 3000 Telex: 922186 Fax: 071407 5700 

Wednesday November 9 1994 


Europe’s big 
challenge 


The events of 1989. symbolised by 
the fall of the Berlin wall five 
years ago today, presented Europe 
as a whole with its greatest chal- 
lenge since the Berlin blockade of 
1948. and Its best chance to build a 
“Just and lasting peaceful order" 
since 1319. 

It was a challenge to the peoples 
of eastern and central Europe 
themselves, but also to the west, 
which was asked to put its money 
where its mouth had been for 40 
years. And not only money. Dur- 
ing those 40 years western Europe 
had achieved unprecedented secu- 
rity and prosperity through a 
model of economic and political 
integration which, even while rhe- 
torically deploring the division of 
the continent, tacitly assumed 
that it was here to stay. Now west- 
ern Europe had either to renege 
on its proclaimed ideals, or find a 
way of sharing its security and 
prosperity with the rest of the con- 
tinent 

Three questions were unavoid- 
ably posed: 

• Which west European institu- 
tions could he expanded to take in 
the newly free countries? 

• How much adjustment of those 
institutions would the expansion 
imply? 

• Were some existing institutions, 
on the contrary, rendered redun- 
dant or anachronistic by the end 
of the cold war? 

Only in relation to one small 
part of the former east were those 
questions given a definitive 
answer. West Germany absorbed 
18m East Germans into the whole 
gamut of its internal laws and 
external commitments. Even this 
relatively small-scale exercise 
proved almost ruinously expen- 
sive for toe strangest economy on 
the continent Clearly the model is 
not applicable to the continent as 
a whole. 

Nato, the successful guardian of 
western Europe in the cold war, 
has proved itself largely irrelevant 
to file challenge of peace. It feared 
to jeopardise its previous success 
by reaching out too quickly to 
new member states where democ- 
racy was new and fragile, and it 
allowed itself to be manoeuvred 
into giving Russia an impfait veto 
over any future expansion. It tried 
to . find a new raison d'itre in 
peacekeeping, but in the former 
Yugoslavia it is now deep in the 
conceptual quagmire between 
peacekeeping and peace enforce- 
ment 


Strategic leadership 

The European Community (as it 
still was in 1989) has been less 
troubled by self-doubt Its special 
stock in trade, economic integra- 
tion. was clearly what the east 
was looking for. But its first 
instinct was to reinforce the inte- 
gration of its existing member- 
ship, in order to forestall any dis- 
integrative effect that the sudden 
cr umbling of its eastern border 
might have, and to endow Europe 
with a political centre capable of 
giving strategic leadership. 

The instinct was sound but the 
rationale was not clearly spelt out, 
nor the measures proposed dearly 
related to it; and the economic cli- 


mate was hardly conducive to an 
enthusiastic response. The result 
is a European Union in name 
more than substance: divided, 
sulky, and offering more difficul- 
ties than attractions to potential 
new members in the east But at 
least the EU has paid lip^ervice to 
the need to absorb the states of 
central Europe. Several of them, 
meanwhile, have risen impres- 
sively to the challenge. They 
already look more credible poten- 
tial members than they did a year 
or two ago. 

What is needed now is a plan to 
make the next five years a period 
of adjustment for both east and 
west, during which an eastward 
expansion of the EU can be seri- 
ously prepared. The intergovern- 
mental conference scheduled for 
1996 should mark an important 
stage in that plan, but it can do so 
only if it takes full account of the 
views and interests of candidate 
as well as existing members. 

Radical reform 
The plan will have to include a 
complete opening of the west 
European market to central and 
east European products (including 
“sensitive'’ ones), and a more radi- 
cal reform of the common agricul- 
tural policy and the regional and 
structural funds than so far envis- 
aged. That is not an agenda that 
France and Spain, which will hold 
the presidency next year, are at all 
keen to embark on. But they have 
to face the reality that the EU 
does not have the resources to 
bring central European food prices 
up to west European levels, even 
if that were an economically sensi- 
ble thing to do. Nor does it have 
fluids to dish out to central 
Europe cm the scale that it now 
does to southern Europe. Yet the 
EU is committed in principle to 
eastward expansion, and Ger- 
many, the biggest net contributor, 
will not let it renege on that com- 
mitment. 

Germany will also keep p ushing 
for a central core of countries to 
lead the way in forming a fully- 
fledged federation, with political 
integration as the counterpart to 
monetary rminn. France appears 
less and less sure of the value of 
this bargain, but is more than 
ever keen on a joint European 
defence, partly to provide a frame- 
work within which German mili- 
tary capabilities can be cultivated 
without seeming dangerous to 
Germany’s neighbours. Britain too 
is keen on this aspect of European 
integration, but it must be 
doubted whether a common 
defence will really be credible 
unless there is also a unified polit- 
ical leadership to give it its orders. 

In any case, the existence of 
such an integrated hard core will 
be of interest to the candidate 
members only if It provides 
Europe with the strategic leader- 
ship that has been lacking for the 
Last five years. Most of them now 
understand that their security 
depends less on military guaran- 
tees than on being fully integrated 
into a pan-European economy and 
society. By November 9 1999 
that process must be well 
under way. 


Small business 


management 


Policymakers frequently trot out 
the view that public support is 
n ee ded if managers in the UK's 
smaller com panie s are to be com- 
petitive. Unfortunately,, neither 
the g f j i w r mrumt, nor consultants 
in the training-and-advice game, 
have dared ask whether such, sup- 
port actually works. That failure 
.should be remedied by investiga- 
ting what benefit, if any, this sub- 
sidised consultancy is providing. 

in a refreshing departure from 
its previous position, the Confed- 
eration of British Industry 
acknnw ledged this on Monday by 
questioning whether government 
sp ending an management develop- 
ment is being wisely focused. 
Kcktog-np on research carried out 
by "Warwick Business School ear- 
lier this year, the CBI warned that 
nobody knows whether taxpayers’ 
money Is waH spent in this area. 
The point is not that there is proof 
that spending on management 
dev elop ment does not work, but 
rather that the opposite presump- 
tion. is unfounded. 

' The warning Is timely. Each 
year, the.’ government indirectly 
spends mort than £lWta on man- 
agement support - business coun- 
selling, export support, the Imres- 
tors in People programme and a 
host ’of other schemes - mainly 
for owner-managed businesses. 
Most of tins is from the Depart- 
ment of TTade and Industry and 
th e Department .for Employment 
and is delivered via Training and 
Enterprise Councils and Business 
Tjnifg - the network of one-stop 
advice shops being P«t to P* 81 * 
across the country. . 

The. skills these organisations 
are frying to enhance are doubt- 


less lacking in many smaller busi- 
nesses. Some companies recognise 
this and pay a full market rate to 
consultants to help solve the prob- 
lem. But when government ped- 
dles subsidised services, there is a 
danger companies are being 
encouraged to use programmes 
that do not work to tackle man- 
agement Issues that are not impor- 
tant In that case, both the sub- 
sidy and the companies' own costs 
are all wasted. 

The GBTs questioning of man- 
agement development spending is 
particularly timely given the 
advance of the Business Link net- 
work. Later this month, when 
London’s application is approved, 
the government will be more than 
half way towards Us goal of open- 
ing 80 Business Links in England. 
These new organisations may be 
keener to meet their targets for 
providing services - hours of con- 
sultancy given and numbers of 
companies supported - than they 
are to evaluate the benefits their 
customers derive. 

The CBI should be congratu- 
lated mi questioning the worth of 
public support in fids area. This is 
so quite apart from the potential 
for waste and economic (fetortkm. 
Medium-sized companies increas- 
ingly provide the jobs big business 
is shedding. For this reason, they 
need to be helped in the most 
effective possible ways. More 
effort should be devoted to deter- 
mining what kind of state-aided 
support for management develop- 
ment wo iks best Only then could 
taxpayers and medium-sized com- 
panies feel confident that the most 
effective possible assistance- is on 
offer. 


When the people 
went over the top 

In the first of a series, Anthony Robinson analyses the 
consequences of the fall of communism five years ago 



Crowds clamber over the Berlin Wall, symbol of Europe’s division, in a night of celebration in November 1989 


The overnight 
transformation of 
the Berlin Wall five 
years ago today 
from the symbol of 
The <oB of the divided Europe into 
WALL a quarry for souve- 

Mr hunters marked 

the end of a 200-year historical 
cycle. The wall which symbolised 
oppression was built by the heirs to 
a violent revolutionary tradition 
which began in Paris with dreams 
of libertt fyalite. fmtermti. 

The French revolution led inexo- 
rably from liberty through anarchy 
and terror to tyranny before crash- 
ing to military defeat The bloodier 
communist revolution ended with 
the internal collapse of the militar- 
ised Soviet dinosaur and the joyous 
shouts of liberated East Berliners. 

The climactic moment of the “six 
months that shook the world" In 
1989 remains the surge of delirious 
crowds through the Berlin Wall on 
November 9. But the spark that 
exploded communism and ended 
the cold war was struck at the 
round table power-sharing talks 
between Solidarity and Polish com- 
munist leaders that began six 
months earlier. 

The talks began in the spring and 
ended in June with an agreement to 
hold multi-party elections, heavily 
rigged in favour of the communists 
and their allies. But the elections 
produced a tidal wave of anti -com- 
munist votes that gave Solidarity 
most of the freely-contested seats In 
the Sejm, the lower house, and all 
100 seats in the largely decorative 
senate. It was a crushing moral 
defeat for tbe communists and 
opened the way for post-war 
Poland's first non-communist gov- 
ernment, led by Mr Tadeusz Mazo- 
wiecki. 

The Poles had shown that it was 
possible to remove a comm unis t 
government peacefully. But that 
was not enough for others to follow 
suit Fear of violent reaction from 
Moscow remained until Mikhail 
Gorbachev and his small band of 
close advisers let It be known that 
Moscow would no longer intervene 
in what they hoped would be lim- 
ited to a generational change of 
leaders and style. 

The Brezhnev doctrine, which 
had led to the invasion of Czecho- 
slovakia in 1968, was replaced by 
the “Sinatra doctrine”. Each coun- 
try would be free to follow its own 
path, and “do it my way”, as Mr 
Gennadi Gerasimov, Mr Gorba- 
chev’s smooth and cynical press 
secretary, crooned in reply to jour- 
nalists’ questions about Moscow’s 
policy on the changes in central 
Europe. Throughout the region, 
subject peoples took the hint and 
regimes began to fall like skittles in 
a bowling alley. 

In September. Hungary’s reform- 
ist communist leadership cut open 
the frontier with Austria and thou- 


sands of East Germans fled through 
the holes. Soon afterwards, old 
tyrants such as East Germany's 
Erich Hoonecker and Bulgaria's 
Todor Zhivkov were elbowed aside 
by younger apparatchiks. They in 
turn were rejected by milling 
crowds in central Europe's towns 
and squares. 

A month after the Berlin wall col- 
lapsed, Czechs and Slovaks exulted 
in a “velvet revolution”. The com- 
munist leaders were peacefully 
replaced by dissident writers, poets 
and. unremarked at the time, a 
steely-minded group of passionate 
free- market economic reformers. 

There was bloodshed only at the 
tail pnd of this extraordinary pro- 
cess of rebirth. On Christmas day 
1989, Nicolae Ceausescu, the Roma- 
nian dictator, and his even more 
hated wife. Elena, were summarily 
tried and executed after fleeing Buc- 
harest by helicopter. Bloody street- 
fighting followed. 

Overall, freedom brought eupho- 
ria. It did not last long. The cold 
light of day and freedom of expres- 


sion quickly revealed the extent of 
moral decay, physical deterioration 
and economic backwardness 
bequeathed to the entire region by 
45 years of communism. 

All over the former Soviet world, 
previously unknown and untried 
leaders have since faced the daunt- 
ing tasks of constructing a demo- 
cratic state out of the totalitarian 
wreckage and transforming their 
planned economies into market 
systems. 

In tbe European parts of tbe for- 
mer Soviet empire, there have been 
few witch-hunts. In Lithuania. 
Poland and Hungary, former com- 
munist politicians have been 
returned to power in free elections 
as new-look social democrats. 

All over, historic roots and 
ancient rivalries have been redis- 
covered. The Soviet doctrine of 
“proletarian internationalism” was 
quickly rejected by peoples who 
were deemed by communist ideo- 
logues to have submerged their 
identity into international working 
class solidarity. 


In Europe, this led to the violent 
disintegration of Yugoslavia, insti- 
gated by former communist officials 
re- packaged as rabid nationalists. 

Further east, ethnic wars broke 
out in the Caucasus and parts of 
central Asia. Russia itself faced dis- 
integration as peoples subjugated 
for centuries by Tsar and commis- 
sar alike re-opened claims for 
greater autonomy and the revival of 
old customs and laws. 

There remains a danger that a 
wider conflagration will erupt out 
of the Balkans, the Caucasus or cen- 
tral Asia. Bat the threat of nuclear 
destruction has been lifted from the 
world. Large parts of central Asia 
and the Baltic and Black seas have 
been opened to normal trade and 
commerce. Above all, economic, 
political and human rights and free- 
doms have been restored over one 
sixth of the globe. 

Western leaders have been slow, 
however, to recognise the momen- 
tous challenge presented by the col- 
lapse of Soviet control over eastern 
Europe - not least because the 


events of 1989 came largely as a 
surprise. 

Germany singie-mlndedly concen- 
trated on re-lntegratlng the five 
eastern Ldnder into a re-united 
state. But the Initially generous 
emotional response of western 
Europe was blunted by recession as 
the European Union grappled with 
rising unemployment Governments 
and lobbies often reacted to cheap 
eastern labour and products as a 
threat rather than an opportunity 
to lower costs and expand trade and 
investment 

Slowly Brussels embarked on a 
series of bilateral trade negotiations 
that have resulted in “association 
agreements” with the six former 
Warsaw Pact countries, it began 
with the Czech republic, Hungary, 
Poland and Slovakia, the fast-track 
reform states known collectively as 
the “VIsegrad 4" after the Hungar- 
ian town where they sealed their 
loose alliance. The four, and Slo- 
venia, are working hard to bring 
their institutions, laws and econo- 
mies as close to EU standards as 
possible in the hope of toll entry by 
the turn of the century. The EU 
Copenhagen summit in 1993 opened 
up the prospect of foil membership 
but remained tantalisingly impre- 
cise as to timing. 

T be timetable stretches 
further into the future 
for Albania, Romania 
and Bulgaria and 
remains obscure for the 
former Soviet Baltic states, Belarus 
and Ukraine, and the war-entangled 
former Yugoslav states. The great- 
est fear of all the countries of east 
and central Europe is of being left 
in limbo between a prosperous 
western Europe defended by Nato 
and an eventually resurgent Russia 
claiming special privileges and 
influence over what it terms “the 
near abroad”. 

The fall of the Berlin Wall sig- 
nalled the end of the cold war and 
removed the physical barriers to 
the creation of a united Europe. But 
creating the political and economic 
structures needed to keep such a 
rich, varied but potentially frac- 
tious family of nations pointing in 
the same direction without frighten- 
ing Russia back into its old aggres- 
sive defensiveness is a task which 
has only just begun. 

The next milestones are the forth- 
coming summit of EU leaders at the 
European Council meeting in Essen 
next month and the Intergovern- 
mental Conference of 1996. But it 
would be an illusion to imagine that 
the architecture of such a Europe 
could be drawn np by politicians 
and bureaucrats alone. They are 
already way behind the business- 
men, bankers and investors whose 
contribution to the creation of a 
pan-European market will be 
reviewed in the second article of 
this series. 



Goodbye to ‘good chaps’ government 



Sir Robin Butler, 
cabinet secretary 
and head of the Brit- 
ish civil service, 
subscribes, it has 
been said by a for- 
mer senior civil ser- 

^ E lfiFU' iL vant> to tfie “B°° d 
1 chaps theory of gov- 
ernment”. 

And why not? When I first came 
to the UK in the 1950s. everybody 
did. 

Good chaps ran the royal colleges, 
the chartered institutes, the inns of 
court, the merchant banks, public 
companies, Lloyd's insurance mar- 
ket, Oxbridge colleges, public 
schools and the House of Commons. 

Former prime minister Harold 
Macmillan - a little too clever to be 
a really good chap - presided over 
the nation with wit and cynicism, 
turning aside from cares of state to 
read Aeschylus in the originaL 

Bowler-hatted good chaps poured 
from the underground every morn- 
ing, properly dressed for their sta- 
tions in life, umbrellas rolled, 
detachable collars firmly held in 
place by studs and waistcoats with 
the bottom button undone. They 


wore tbe right ties and held the 
right views. 

They knew what was done and 
what not. After six o'clock, one put 
on black shoes. Gentlemen and 
players changed in separate dress- 
ing rooms at Lord's cricket ground. 

r remember asking a director of 
the Hamburg bank where I trained 
why we lost consortium business to 
the City. “Ah." he replied sadly. 
“We cheat. They play according to 
the rules.” 

The good chap was a type. The 
English gentleman belonged, along 
with the Jesuit father, the German 
general staff officer or the southern 
American planter, to a group of 
h uman beings instantly recognisa- 
ble and. even mare important, 
utterly predictable. 

As Gilbert and Sullivan, whose 
comic operas chronicled the Victo- 
rian good chap, put it, “he never 
thought of thinking for himself at 
all", and this was his greatest 
advantage. 

Educated at Marlborough and 
Balliol, he knew how "to play the 
game". His degree in classics helped 
him to learn Urdu or Swahili. He 
could be sent up the Zambezi or 


into the Indian hill country for 
months without orders from head- 
quarters or modern means of com- 
munication. 

He kept a straight bat. main- 
tained no concubines and remark- 
ably rarely took a bribe. The less he 
thought for himself, the more rapid 
his promotion. 

The good chap was the product of 
brilliant Victorian social engineers. 


They belonged to a 
group instantly 
recognisable and, 
even more Important, 
utterly predictable 

men like the Reverend Elijah Woo- 
dard. who founded Lancing, Ard- 
ingly, Denholm, Bloxham and 
countless other public (ie private) 
schools. These schools created the 
“gentleman", a social type which 
blurred the distinction between 
noble and bourgeois, a cause of rev- 
olution on the continent. 

Rules were understood, not writ- 
ten. Hence Britain ran its affairs 


without those cumbersome docu- 
ments known as constitutions, with- 
out state examinations to regulate 
the professions, without govern- 
ment agencies to control business 
and commerce. 

Victorian and Edwardian govern- 
ments probably produced better 
value for money than any govern- 
ments in modern history. The sys- 
tem responded heroically to the 
challenge of two ware and the intro- 
duction of the welfare state, but it 
began to creak in the 1960s and 
1970s. Unwritten rules turned into 
cosy arrangements to avoid conflict, 
and economic decline wrote its ver- 
dict on British performance. 

Margaret Thatcher - not a good 
chap herself - understood that the 
system had to go and she dealt it 
every sort of blow. She hated estab- 
lishments, corporate bodies and 
restrictive practices, closed societies 
and tacit understandings. 

Like her great predecessor, Robes- 
pierre. she was a Jacobin democrat, 
the descendant of those furious 
Parisian shopkeepers who destroyed 
ancien regime France. She hoped 
that banishing the good chap would 
liberate Britain from the dead hand 


of customary rule. Her great experi- 
ment failed. The boom of the 1980s 
proved artificial, rouge on the 
cheeks of a corpse. But in forcing us 
to be free she centralised the state 
and destroyed local autonomy. 

The legacy of her unfinished revo- 
lution is state power without con- 
trol Now good chaps no longer reg- 
ulate themselves, nothing has taken 
their place. Britain has tbe least 
representative electoral system and 
offers its citizens tbe lowest civil 
rights of any developed state. 

They have neither the written 
constitution and bill of rights of the 
Americans nor the continental sys- 
tem of administrative courts which 
protect citizens against the agencies 
of the state. 

Sir Robin Butler may still believe 
in the “good chaps theory of gov- 
ernment”. Tbe rest of us can see 
that it no longer works in practice. 

Jonathan Steinberg 


The author is reader in modem 
European history. Trinity Hall. 
Cambridge 


Observer 


Low poll 
turnout 

■ When Americans went to the 
polls yesterday, choosing the best 
candidates wasn’t tbe only 
challenge some faced. What we 
must term the “vertically 
challenged" voters - observing all 
due political correctness - 
apparently don’t get a fair crack at 
democracy, because they aren’t tall 
enough to read the name at the top 
of the huge voting machines. 

A researcher at Ohio State 
University has videotaped 19 people 
in a mode polling booth. She finds 
that 44 per cent did not record any 
vote at the top of the machine. “It 
was too high for shorter people to 
see comfortably - 67 inches from 
the floor. The average American 
woman’s eye height is only 60 
inches," says Susan King Roth. 

This sits rather uneasily with 
other US research showing that 
Americans usually vote for the 
tallest candidate. In all but one of 
the presidential elections this 
century the taller candidate won; 
the exception was Jimmy Carter's 
victory over Gerald Ford in 1976. 
And look what happened to him. 


Rich pickings 

■ It’s ironic that, at a time when 
increased activity and rising prices 
have raised the profile of 
commodities trading organisations. 


thus making them attractive- to 
people on the lookout for 
acquisitions, Marc Rich should 
finally quit. 

Rich, one of a handful of 
internationally-known Belgians, has 
built up his eponymous Marc Rich 
International since 1974 into a 
world-class trading business. In 
turnover terms it became 

Switzerland's second biggest 
corporation alter Nestle. 

But Rich iuis last a power 
struggle with Willy Strothotte - 
now chairman and chief executive - 
and since March last year lias been 
slackening his grip on the company 
until yesterday he sold his final 25 
per cent to management and 
employees. 

Apart from being one of the most 
feared adversaries in the oil and 
aluminium trading world, Rich is 
also one of the best-known fugitives 
from the US legal system. He was 
charged with tax evasion and other 
offences by the US authorities in 
1984 and so far has refused to 
return to answer the charges. One 
spot he probably won’t be spending 
his retirement in. 


Ghost buster 

■ Try 1, it must. Britain's new-look 
Labour party will have a struggle 
on its hands to convince the 
financial markets that it is not 
“soft" on inflation. 

Take Ruth Kelly, a bright young 
economics writer on the Guardian, 
who moonlights hv writing an 



occasional column for Tribune, the 
traditional Labour party weekly. 

In her latest offering there she 
notes that “if inflation were allowed 
to rise from its 27-year low in the 
first few years of a Labour 
government, with a drop in the rate 
pencilled in towards the end of its 
term, that would allow government 
and companies to tackle the 
bottlenecks in the economy and 
raise it on to a higher growth path, 
uninhibited by an absurd inflation 
constraint”. 

This sort of thinking is not going 
to shock Kelly's normal followers. 
For them the belief that there’s 
nowt like a whiff of inflation to sort 
curt the problems of the British 


economy is still conventional 
wisdom. 

But it may raise a few eyebrows 
at the Bank of England, where she 
starts work on Monday morning as 
deputy head of its inflation report 
division. If people working on the 
inflation report do not believe in 
the importance of the target it is 
evaluating, why should anyone 
else? 


Black deed 

■ Conrad Black, chairman of the 
Daily Telegraph, has a way with 
words. Peter Jay, Britain’s former 
ambassador to the US and former 
Robert Maxwell employee, told 
yesterday's Wall Street Journal how 
once, when walking next to Henry 
Kissinger, he was “more or less 
knocked to the ground physically” 
by Black trying to get between 
them. 

According to the WSJ, Black 
describes Jay’s account as “a wild 
bowdlerisation”. Thomas Bawdier, 
it will be recalled, made his name 
by publishing an edition of 
Shakespeare with the dirty bits left 
out. Which raises the question - 
what was really going on between 
Black and Kissinger? 


Old hat 

■ Roy Hattersley, former deputy 
leader of Britain's Labour party, 
has always had a bit of a love-hate 
relationship with trade unions. Now 


he reckons that there should be a 
“judicial separation, if not a 
divorce, from the unions” to help 
Labour win the next general 
election. 

A scribbler of great fecundity, 
Hattersley has written so much in 
his time it's no wonder he forgets 
bis earlier words. Back in 1987 in 
his book Choose Freedom - The 
Future for Democratic Socialism he 
said: “We have to persuade trades 
unions and trade unionists that 
they have a vested interest in 
socialism and they should conduct 
themselves in a way that socialism 
requires.” 

Seven years on it's clear what 
that vested interest is - to clear off. 


Dog tired 

■ Exeter police have fingered a pig. 
It has to take part in an identity 
parade, they say, and sniff out its 
rightful owner - ownership is being 
contested by four people. 

Of course, this problem could be 
avoided If yet another Japanese 
idea were to be rapidly imported. 
Japan's health ministry is now 
thinking of implanting 
identification microchips into dogs. 
A hand-held radio decoder - s imilar 
to technology used by shop-workers 
- would give instant details of the 
dog’s owner. 

This could be highly 
embarrassing: "Excuse me, sir, but 
we have a dog here c laiming to bo 
Fifi-tinkerbelle and that you are its 
owner. . 



16 


! A FINANCIAL TIME i 

( for change f 

| inpt | 


FINANCIAL TIMES 

Wednesday November 9 1994 


MAPOFFSBCUR mES 
INTERNATIONAL LIMTIS? . 

43 London Wall London ECZM i>IB Tel 071 374 0891 


leading market maker 

US EQUITIES 


Mamba of the Securities and Brtmw Authority 
and the London Stock Ebdadge 


Greece forced to delay 
telecoms privatisation 


By Kerki Hope ki Athens 

Greece yesterday postponed the 
partial flotation, of OTE, the state 
telecoms monopoly, because con- 
ditions on international capital 
markets were considered unfa- 
vourable. It would have been one 
the largest privatisations in the 
European Union this year. 

Although the government said 
postponement of the 25 per cent 
flotation, set for early December 
and expected to raise about 
Di320bn ($L4bn), was temporary. 
Greek analysts believe it could 
now be delayed indefinitely. 

Mr Yannos Papantoniou, the 
economy minister, said: “The sit- 
uation in world stock markets 
would not guarantee a satisfac- 
tory price for OTE shares." He 
said the flotation would go ahead 
early next year. 

However, Athens-based ana- 
lysts yesterday voiced donbts on 
whether thw offering would take 
place, because of rising opposi-. 
tion to privatisation within the 
governing Panhellenic Socialist 
Movement 

The postponement was 


announced only a few days 
before CS First Boston and 
J. Henry Schroder Wagg. globa l 
coordinators and lead underwrit- 
ers for the offering, were to begin 
three weeks of soliciting bids 
from investors for the issue. 

A member of the Schroders’ 
team yesterday dismissed fears 
the flotation might be called off, 
saying: “It's just a temporary 
delay." 

Ten other international invest- 
ment hanks are in the underwrit- 
ing syndicate for the issue’s 
international tranche, amounting 
to 18 per cent of the company. 
National Bank of Greece, the 
other joint coordinator for the 
issue, is lead manager for the 
domestic tranche of 7 per cent 

OTE is one of only a few profit- 
able Greek state enterprises, it 
reported pre-tax profits of 
Dr77.8im cm sales of Dr2l0-8bn in 
the first half of 1984. 

However, the issue has not 
attracted much interest in 
Athens, where investors were 
invited to pre-register for shares 
last week. An Athens stockbro- 
ker said the company’s growth 


“would be limited because the 
government insists the company 
should remain under state man- 
agement". 

Hie postponement came amid 
growing political tension, with 
Mr Papantoniou under attack by 
radical Socialists intent on main- 
taining government control over 
industry. 

It comes after the failure of last 
year's attempt by the then con- 
servative (New Democracy) gov- 
ernment to privatise OTE. which 
aimed at selling a 35 per cent 
stake plus management rights to 
an international telecoms opera- 
tor and floating another 14 per 
cent on the Athens stock 
exchange. 

That plan brought down the 
conservative government when a 
group of its parliamentary depu- 
ties defected to a rightwing splin- 
ter party. The Socialists can- 
celled the OTE privatisation 
when they returned to power last 
October, hut revived it in a morti- 
fied form a few mon ths later as a 
revenue-raising measure. 

Flotation put at risk. Page 2 


Widows of civil war promise 
peace to Sri Lankan voters 


By Mervyn de SQva in Colombo 

The effort to end Sri Lanka's 
11 -year dvil war has emerged as 
the most important issue in the 
counter's presidential election 
today in which the two main can- 
tenders are the widows of assassi- 
nated politicians. 

Both women have promised 
peace, but have differed sharply 
on how to end the revolt in the 
ft gm Tamil minority community. 
The civil war has led to the 
deaths of more than 30,000 people 
and costs the country nearly $lm 
a day. 

Mrs Srima Dissanayake. the 
opposition United National party 
candidate, has taken the place of 
her husband, Gamini, killed a 
fortnight ago by a suicide 
bomber, thought to have been a 
T amil. 

She is challenging Mrs Chan- 
drika Kamaratunga, the populist 
prime minister and dominant 
force in the left-of-centre People’s 
Alliance coalition which came to 
power after pa rliamentar y elec- 
tions in August ended 17 years of 
UNP rule. 

Mrs Kumaraiunga, whose hus- 
band was killed by a leftwing 
assassin in 1988, is most likely to 
win the contest and become the 
first woman to hold the most 




I a 

rmmt 

■ 



M 

..-Jg 


Candidate: Srima Dissanayake 

powerful post in the land, as Sri 
Lanka’s president. 

Her People's Alliance govern- 
ment, elected partly on a “peace 
dividend” platform, introduced 
confidence-building measures 
with the Liberation Tigers of 
Tamil Eelam (LTTE) in the 
northern Jaffna p eninsula It 
relaxed the economic embargo, 
restored electricity and opened a 
safe travel route from the penin- 
sula to the mainland. 

It also sent a delegation to the 
north for talks with the rebels, 
though a second round was 
called off after Mr Dissanayake’s 


assassination. Mrs Dissanayake 
has accused the government of 
planning a sell-out of majority 
Sinhalese interests and ceding 
territory to the Tamils 

She wants the rebels to lay 
down their arms before negotia- 
ting peace with them. and has 
accused the government of bend- 
ing ova* backwards to please the 

Tigers by not naming thpm as 
suspects in the killing of her hus- 
band “A vote for Cbandrika is a 
vote for LTTE,” opposition post- 
ers around the island proclaim. 

The People’s Alliance peace 
moves have led to the release of 
some prisoners, mainly police- 
men held by the Tamils. But the 
LTTE has insisted that some 
heavily fortified army camps 
should be dismantled and a 
ceasefire declared. 

The ar my i s strongly opposed 
to the LTTE demands and Mrs 
Eomaratunga has angered the 
high co mman d by saying that 
soldiers are keen cm peace, while 
senior officers are opposed to the 
idea. 

Together with the police, the 
army is a large vote bank. Public 
servants and servicemen voted 
by post yesterday and the result 
could be a due to the mood of the 
armed forces, now an important 
factor in the island’s politics. 


State of emergency declared in north Italy 


Continued from Page 1 

deep in water. Many areas of 
Piedmont and parts Of inland I.ig- 
uria lacked proper water supplies 
and electricity. About 5,000 
police, firemen and dvil defence 
personnel and 7,000 volunteers 


were working in the disaster 
zone. The death toll is expected 
to rise, with more than 25 still 

missing 

Andrew Jack adds from Paris: 
French insurers yesterday said 
the total cost of the floods in the 
south of fixe country at the end of 


last week could exceed FFr500m 
($9&3m). 

Five people were reported to 
have died , four in Loz&re and 
one in Corsica. Another person 
was still reported missing in 
Aveyron. 


Signs of 
progress 
on plans 
for future 
of Ulster 

By David Owen, Stewart DaBjy 
and Jotai Murray Brown 
!n Dublin 

Sir Patrick Mayhew, Northern 
Ireland secretary, and Mr Dick 
Spring, Irish foreign minister, are 
set to meet in the Irish Republic 
on Monday amid signs of a break- 
through on agreeing a joint docu- 
ment on the province's future. 

This emerged as the Irish gov- 
ernment yesterday sought to play 
down its plans for the early 
release of IRA prisoners, 
announced on Monday, following 
an angry response from unionist 
politicians and warnings that it 
could derail the peace process. 

The meeting, expected to be 
informal, follows the postpone- 
ment of talks due last week. It 
will come after a meeting 
between British and Irish offi- 
cials this Friday to resume 
detailed work on the so-called 
framework document 
Expectations are mounting 
that the document could be com- 
pleted by mid-December. 

A meeting to discuss it last week 
is understood to have madepro- 
gress on the issue of north-south 
relations, one of the sticking 
points that has impeded progress 
since the summer. There are also 
long-standing differences over 
constitutional issues, in particu- 
lar Dublin's claim over Northern 
Ireland enshrined in articles 2 
and 3 of the Irish constitution. 

A mid-December completion 
date would coincide with the first 
anniversary of the signing of the 
Downing Street declaration on 
December 15, 1993. 

Two days before the anniver- 
sary, Downing Street announced 
yesterday, Mr John Major, the 
prime minister, is to launch an 
international investment confer- 
ence in Belfast. 

Irish officials said yesterday 
that the release of IRA prisoners 
did not have an immediate bear- 
ing on the framework document 
The issue is not controversial 
in Dublin and Mr Albert Reyn- 
olds, the Irish prime minister, 
and other government officials 
had signalled the prospect of an 
early release of IRA prisoners 
several times since the IRA 
ceasefire on August 31. 

The Irish government’s move 
was attacked by the Rev Ian Pais- 
ley, leader of the Democratic 
Unionist party, and some British 
politicians. Mr Paisley claimed 
the British government had a 
secret agenda and it was working 
on plans for prisoner releases of 
its own. 

The Irish government said it 
would not release anyone con- 
victed of killing a member of the 

gnrria 

• An IRA commander in the UK 
was jailed for 25 years yesterday. 
English-bom Dr Feilim OHadh- 
mflill, 36, a social policy lecturer 
at the University of Central Lan- 
cashire, Preston, was sentenced 
for spearheading an IRA bombs 
plot in mainland Britain before 
the August ceasefire. 


THE LEX COLUMN 


FT WEATHER GUIDE 


Europe today 

Low pressure south of Ireland will push 
warmer air Into the UK on a south to 
south-easterly flow, producing rain over 
the south-east This low wffl also drive 
colder ak Into France and Spain. Rain will 
mainly occir in western Ranee and 
eastern Spain, but it wffl also rain in north- 
east Spain. Elsewhere in the UK, France 
and Spain, cloud wffl be interspersed with 
sun. The Benelux, Germany, Austria, 
Switzerland and the north-west Balkans 
wffl stay dry with some sun but the 
southern Balkans should have significant 
rain and some thunder showers. Northern 
Scandinavia wffl be cold and wintry as 
high pressure builds. 

Five-day forecast 

Former hurricane Florence wffl approach 
Europe as a new depression. Its 
associated fronts wffl make the UK 
unsettled at the end of the week. Cold, 
arctic air is expected in parts of northern 
Europe and Its Influence wffl extend further 
south. Parts of the Mediterr an ean wffl be 
unsettled. A lot of rain is e x pected In Italy 
and the south-west Balkans towards the 
weekend. 


fi 


‘ l-rGHa 


■■ ••• AA 12 • 


CTs's 


hsy-'J&S Li )/<&s 




Im WAk' Cokl front uLifct., Wind ap— <* In i(PH • 

Situation at 12 GMT. Temperatures maximum for day. Fbrecests by Mats o Consul! of the Netholanda 



Maximum 

Being 

sun 

13 

Caracas 

tor 

30 

Faro 


Celsius 

Belfast 

shower 

12 

CartHf 

ratal 

14 

Frankfort 

Abu Dhabi 

Mr 

31 

Belgrade 

ctasl 

13 

Casablanca 

lata 

21 

Geneva 

Accra 

fair 

30 

Berlin 

fata 

10 

Chicago 

shower 

7 

Gibraltar 

Algiers 

Mr 

23 

Bermuda 

fata 

26 

Cologne 

tor 

IS 

Glasgow 

Amsterdam 

Mr 

13 

Bogota 

shower 

21 

Dakar 

SW1 

29 

Hamburg 

Athens 

fair 

20 

Bombay 

Mr 

33 

Dallas 

fata 

24 

i luff Ini, 1 

Atlanta 

fair 

20 

Brussels 

shower 

14 

DeW 

sin 

28 

Hong Kong 

B. Aires 

fair 

24 

Budapest 

fata 

11 

Dubai 

Mr 

31 

Honolulu 

BJiam 

ratal 

13 

Ohagan 

Mr 

7 

DubBn 

rain 

12 

Istanbul 

Bangkok 

fata 

33 

Cairo 

fata 

23 

Dubrovnflc 

rain 

18 

Jakarta 

Barcelona 

fair 

18 

Cape Town 

ahower 

21 

EdHxagh 

shower 

13 

Jersey 


More and more experienced travellers 
make us their first choice. 


Lufthansa 


Karacrt 

Kuwait 

L Angeles 

Las Rafmas 

Lina 

Lisbon 

London 

Lunboisg 

Lyon 

Madeira 


tor 

21 

Madrid 

drzzl 

14 

Rangoon 

lota 

31 

fair 

12 

Majorca 

fata 

21 

Reykjavik 

Mr 

7 

shower 

13 

Mafia 

tor 

23 

Rio 

Mr 

25 

rain 

20 

Manchester 

ratal 

14 

Rome 

fair 

20 

shower 

13 

ManBa 

shower 

30 

S. Frsoo 

ratal 

17 

fata 

11 

Metmme 

sun 

23 

Seoul 

shower 

16 

cloudy 

-2 

Mexico City 

fata 

23 

Singapore 

rain 

29 

Mr 

28 

Man* 

thund 

28 

Stockholm 

8WI 

1 

fair 

29 

Mtei 

cloudy 

13 

Strasbourg 

fata 

13 

shower 

18 

Mortreel 

cloudy 

4 

Sydney 

Mr 

27 

tor 

31 

Moscow 

ratal 

2 

Tangier 

riwwer 

18 

rain 

13 

Munich 

sun 

12 

Tel Avhr 

tor 

21 

SW1 

34 

Nataobi 

fata 

25 

Tokyo 

fair 

20 

tor 

28 

Naples 

fata 

19 

Toronto 

shower 

7 

cloudy 

21 

Nassau 

fata 

28 

Vancouver 

ratal 

10 

fair 

24 

New York 

cloudy 

13 

Venice 

tor 

14 

cloudy 

20 

Mce 

shower 

17 

Vienna 

fata 

12 

fata 

19 

Mcosla 

fata 

18 

Warsaw 

cloudy 

8 

rain 

13 

Oslo 

ateet 

1 

Washington 

fair 

14 

shower 

12 

Paris 

ratal 

13 

WeBtaigtan 

ahowor 

12 

shower 

16 

Perth 

fair 

24 

Whrtpeg 

tab- 

0 

tor 

23 

ftague 

swi 

10 

Zurich 

shower 

13 


Waiting for take-off 


BA’s second-quarter figures were so 
good that for a moment the market 
could almost forget the continuing 
headache that is USAir. BA's stern 
cost control was again in evidence and 
the strong growth in business traffic 
brought a healthy increase in overall 
passenger yields. Year on year growth 
is bound to slow now, if only because 
the business traffic recovery started in 
the third quarter of BA’s last financial 
year. But BA still has plenty of 
momentum behind it and there are 
even signs that tariffs are firming. 

It is the size of the final bill for BA's 
international expansion that is the 
worry. Losses from France and Ger- 
many were unchanged in the first half 
as the flag carriers attacked BA’s Tro- 
jan horses. But it is USAir which is 
the imm ediate concern. The S500m of 
cost reductions being asked of the 
unions would barely offset its current 
losses and as the negotiations grind on 
its low-cost rivals are leaving it fur- 
ther behind. The real fear is not that 
' BA will have to write off the £260m 
1 value of its stake, which it could han- 
dle comfortably. It is that USAir will 
slowly die. threatening the £70m of 
benefit BA expects this year, or that 
BA will feel compelled to pour more 
money in to keep it alive. 

The loss of £8m in preference divi- 
dends will be the only pain BA will 
suffer from USAir in the c u rrent year 
which should see group profits jump 
by over 40 per cent to around £430m. 
With the shares trading an about 1L5 
times prospective warning s , it is hard 
to argue that they are expensive. But 
until there is better news from USAir 
they are likely to re main grounded. 

Marks and Spencer 

At first sight, the 5.5p drop in Marks 
and Spencer's shares yesterday 
seemed a churlish reaction to a char- 
act eristi rally robust performance from 
the UK's leading retailer. After all, 
M&S brushed off fierce competition to 
turn in a 15.1 per cent increase in 
pre-tax profits, ahead of brokers’ best 
estimates. The interim results did 
however give rise to slight mystifica- 
tion over the composition of the prof- 
its. 

M&S could have helped dispel this 
by digringing more information about 
how it achieved the 15.7 per cent 
increase in UK operating profits. It is, 
for example, disingenuous on its part 
to claim that it cannot produce mean- 
ingful data on “like for like” sales, as 
other retailers do. M&S should also 
have disclosed more about the impact 


Maries and Spencer 

Share price relative to the 
FT-SE-A AB-Share Index 
180 



1980 91 

Source: FT GrapMJo 


93 94 


of the group’s cost control programme 
- a central if unquantjfiahle factor 
behind the increase in operating mar- 
gins. The absence of such information 
raises questions about the quality of 
the profits, taking the shine off M&S’s 
success In increasing Its share of the 
non-food retail market, and apparently 
holding its own in food 

M&S’s ambitious expansion plans 
for the UK and continental Europe 
ensure that despite its size, growth 
prospects remain excellent relative to 
the retail sector. Yet earning* growth 
is not expected to outpace the market 
as a whole. With the shares on a 25 
per cent premium, assuming pre-tax 
profits of £950m for the full year, this 
is demanding. The record and the 
group’s financial strengths ensure that 
M&S is in no danger of losing its 
standing as a core holding within the 
sector. But there is better value else- 
where. 

S.G. Warburg 

S.G. Warburg faced two problems in 
the half-year to end-Septemben failing 
revenues and rising casts. Sharehold- 
ers will be encouraged by yesterday’s 
promise to remedy both. But they may 
be mystified about exactly how the 
inv estmen t hank plans to deliver. 

On the cost side, Warburg is not 
planning to reduce staff. And though 
bonuses will be lower this year than 
the bumper payments made last year, 
there is no indication that the remu- 
neration system will change. Warburg 
continues to pay its staff more than 
rival British merchant banks. But 
given its global amhitinna it will be 
hard pushed to cut remuneration 
much below the levels of its big US 


competitors. The only concrete cost- 
cutting measure Warburg would point 
to yesterday was its intention to curb 
investment in information technology. 

On the revenue side, the bank's 
main hope is that dealing profits - the 
half year’s black spot - will rebound. 
Cer tainl y, bear markets cannot last 
forever. But Warburg^spoor perfor- 
mance continued long after bond, mar- 
kets collapsed in February. It takes a 
leap of faith to believe that the group’s 
return on equity over the medium 
term will average the 15-20 per cent it 
thinkfl reasonable. But the vagueness 
of Warburg's plans for improving its 
performance does not m ea n the shares 
are overvalued. When the group's 75 
per cent stake in fund m a n agement 
group MAM is stripped out, the bank- 
ing business is being valued by the 
market at only £5SSm_ One would have 
to take an extremely gloomy view of 
its prospects to argue that it is worth 
less. 

Mercury Communications . 

Cable & Wireless may be furious 
about tile fees its Mercury Communi- 
cations subsidiary has to pay BT for 
channelling ; calls over its rival’s net- 
work. But it is a bit rich to blame 
yesterday's management shake- op on 
the regulatory regime that governs 
such fees, as some in C&W are prone 
to. True, the system is ungainly and 
flawed. But Mercury has known about 
it fin* over three years. It has spent too 
much time complaining about the raw 
deal it received and not done enough 
to make the most of a difficult situa- 
tion. Now the chickens are coming 
home to roost Not only are network 
fees rising; BT is making sharp cuts in 
long distance call rates. Sven that 
Mercury has set out its stall as little 
more than a discount competitor, it 
has had no option but to match BTs 
price cuts. Today's results from Cable 
& Wireless are expected to confirm the 
uncomfortable squeeze in which it 
finds itself. 

The management shake-up should 
enable Mercury to attack its cost base. 
The new chief executive should find it 
easier to cut back parts of the opera- 
tion since he was not involved in 
building it up. But cost reduction 
alone win not be enough to give Mer- 
cury a sustainable competitive advan- 
tage. ff it is to diffe rentiate itself from 
Its rivals. Mercury will also need to 
place a much greater emphasis on 
innovation and improving the reliabil- 
ity of its service. 


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A coming of age as 
a shadow is lifted 

Hugh Carnegy assesses the impact of the country’s 
significant decision last month to vote in favour 
of joining the European Union 


FINANCIAL TIMES SURVEY 


FINLAND 


Wednesday November 9 1994 




O n October 16, as the 
first snows of the long 
Nordic winter fell 
across much of the country, 
Finland accepted the most 
important change in the politi- 
cal alignment of the nation 
since it achieved independence 
from Russia in 1917 when the 
electorate voted in favour of 
joining the European Union. 

The referendum result - 
acceptance of membership by a 
margin of 56.9 per cent to 43.1 
per cent - was decisive with- 
out being overwhelming. There 
was little sense of drama on 
the day and no jubilation when 
the outcome was announced. 
Indeed, there was considerable 
disquiet over the way the issue 
had divided the country 
between the more urbanised 
south, which voted heavily 
Yes, and the rural, remote cen- 
tral and northern regions, 
which voted No. 

But the decision was wel- 
comed with satisfaction and 
relief by the vast majority of 
Finland’s political establish- 
ment, the leaders of industry 
and the trade unions and the 
nation's media. 

After Finland's uncomfort- 
able neutrality in the shadow 
of the Soviet Union since the 
second world war and the 
hardest recession since the 
1930s, stepping into the EU fold 
is regarded by its supporters as 
a vital step towards long-term 
strategic and economic stabil- 
ity. “It is a coming of age for 
Finland,” declared Mr Paavo 
Upponen. leader of the opposi- 
tion Social Democratic party 
and, if the opinion polls are 
right, the man who will be 
prime minis ter after the gen- 
eral election next March. 

For the European Union, too, 
Finland's entry will be a signif- 
icant moment. The EU will 


acquire its first direct frontier 
with Russia in the form of the 
l,270km-long Finnish -Russian 
border. EU territory will 
extend for the first time into 
the Arctic Circle, taking in 
expansive forestry resources - 
which will be even greater if 
Sweden and Norway also join. 

Some uncertainties persist 
which contributed to the sub- 
dued mood after the referen- 
dum. Finland will be deeply 
disappointed if its Nordic 
neighbours, with which it 
worked closely as they all pur- 
sued their EU applications last 
year, vote against membership 
in the Swedish and Norwegian 
referendums on November 13 
and 28 respectively. 

Opponents of membership 
also mounted a tenacious fili- 
buster to postpone this week's 
scheduled parliamentary vote 
needed to confirm accession 
until after Sweden's referen- 
dum in the hope that a Swed- 
ish No might swing enough 
MPs to form a blocking one- 
third minority. But if the gov- 
ernment wins, as expected, 
Finland will join Austria as a 
new member of the EU on Jan- 
uary 1 next year. 

What will membership mean 
for Finland? 

In economic terms, there are 
some immediate difficulties 
which, again, were part of the 
reason why the country 
reacted coolly to its decision. 
Above all, joining the EU is set 
to trigger a fall in incomes of 
up to 45 per cent over the next 
few years for Finland's influen- 
tial fanners. Helsinki has long 
subsidised agriculture at levels 
well above those provided by 
the EU, partly to ensure the 
continued population of rural 
areas and partly as a political 
pay-off for support from rural 
communities. 


But under the terms of its 
accession agreement. Finland 
must adjust immediately to the 
farm price regime of the com- 
mon agricultural policy. Brus- 
sels rejected Helsinki’s demand 
that the whole country be 
treated as a special case for 
subsidies because of its harsh 
climate. A national package of 
. transitional supports has been 
outlined, but its cost, on top of 
Finland's “membership fee" 
will add FMlObn to govern- 
ment spending next year, deep- 
ening the budget deficit. 

As a member already of the 
European Economic Area 
agreement, Finland will not 
achieve any significant imme- 
diate economic benefit from 
membership, apart from the 
removal of customs barriers 
with the EU. But the strong 
belief in government and 
industry is that membership of 
the EU will serve to undepin 
Finland's economy just as it is 
pulling out of a severe reces- 
sion. Between 1990 and 1993. 
the economy shrank by some 
15 per cent following file col- 
lapse of the Soviet Union (with 
which Finland enjoyed lucra- 
tive trade ties), the impact of 
the international recession and 
the collapse of a credit boom at 
home. Unemployment neared 
20 per cent of the workforce. 

An export-led recovery is 
now under way, producing 
growth this year of some 4 per 
cent and probably more than 5 
per cent in 1995. The hope is 
that EU membership will help 
foster confidence in the econ- 
omy both at home and abroad, 
ease long-term interest rates 
which presently stand at 
around 10 per cent and gener- 
ate a much-needed revival of 
investment and consumptlon. 

On the strategic front, join- 
ing the EU is of great signifi- 



HetsinH, capital of Finland, which will be deeply disappointed if Its neighbours, Sweden and Norway, decide later this month to vote against European Union membership Tony Mem 


cance for Finland, which was 
ruled for centuries by Sweden 
and then by Czarist Russia. 
Finland's 77 years of indepen- 
dence have been marked first 
by conflict and subsequently 
by cold war tensions. 

Finland fought several 
bloody wars to preserve its 
independence, first a battle 
against tbe nascent Soviet 
Union complicated by a simul- 
taneous virtual civil war and 
then, during the second world 
war, an awkward struggle ini- 
tially against Moscow and then 
against Nazi Germany. In the 
post-war period. Helsinki 
adopted a neutral stance in 
which it maintained a delicate 
balance between its capitalist 
economic and instinctive cul- 
tural ties to the west and its 
pragmatic political and trading 
ties with the Soviets. 

N ow. Finland is taking 
advantage of the 
changed circumstances 
brought about by the disap- 
pearance of the Soviet Union to 
move firmly Into the west’s 
political and strategic orbit as 
an insurance poLicy against 
future threats from Russia. 
“No one can say Russia is a 
country of stability today. 
There is a certain hazard in 


Russia today, so it is a ques- 
tion of security.” says Mr 
Pertti Salolainen. deputy prime 
minister in the centre-right 
government of Mr Esko Aho, 
the prime minis ter. 

"The mere fact of being a 
member of the EU will give 
security because then you are 
untouchable militarily - with 
out having to make any new 
military arrangements. The EU 
could never accept any aggres- 
sion against one of Us mem- 
bersr says Mr Salolainen. 

Nevertheless. Finland is 
treading cautiously over its 
strategic and military future. 
Helsinki has joined Nato's 
Partnership for Peace initia- 
tive. Mr Aho says the country 
will take up observer status in 
the Western European Union. 
In addition. Finland will partic- 
ipate in the EU’s move under 
the Maastricht Treaty towards 
a common foreign and security 
policy. 

But Mr Aho, mind ful of Rus- 
sia's continued sensibilities 
about the stance of a neigh- 
bour that commands the Baltic 
approaches to St Petersburg, 
says Helsinki does not intend a 
sudden change in Finland's 
military stance- “It is in the 
interests of tbe EU that the 
present stability in this part of 


the continent be preserved. We 
have no intention of changing 
this stability and that is why 
we have no intention of chang- 
ing our basic political orienta- 
tion," Mr Aho said last month. 

Instead the prime minister 
likes to stress the opportuni- 
ties for Finland Russia and the 
EU offered by Finnish member- 
ship. He sees Finland acting as 
a conduit for increased trading 
and political links between 
Brussels and Moscow. “Our 
skills and experience In deal- 
ing with Russia will be at the 
disposal of the EU for the 
development of the Russian 
economy,” he says. 

As for Finland's stance in 
the evolving debate over the 
future structures of the EU, 
both Mr Aho, leader of the 
rurally-based Centre party, and 
Mr Upponen say Finland will 
play a pragmatic role. It has 
accepted the Maastricht Treaty 
with its plans for European 
Monetary Union and closer 
political co-operation. 
Although some way from meet- 
ing EMU convergence targets 
because of the size of its public 
debt and budget deficit, Hel- 
sinki is committed to achieving 
them. 

For the time being, however, 
all the main political parties 


are being careful not to become 
Identified as belonging either 
to the federalist camp within 
the EU or the anti-federalist 
camp. Mr Lipponen accepts 
that if EMU occurs it will 
require closer political ties, but 
he. like the prime minister, 
stresses the importance of 
avoiding over-centralisation 
and, above ail, of protecting 
the interests and influence of 
the smaller nations. 

In this approach, Finland 
will undoubtedly be joined by 
Sweden and Norway if they 
also become members. With 
Denmark, they would form a 
Nordic bloc, which is likely 
instinctively to resist federalist 
pressures. 

But Finland is not comfort- 
able with talk of different 
grades of membership accord- 
ing to a willingness to push 
towards federal structures. Mr 
Salolainen, who as trade minis- 
ter was one of Finland's negoti- 
ators with Brussels, put it 
thus: “They may be onion 
rings in the European Union, 
but from the outset we do not 
accept a situation where cer- 
tain countries constitute a core 
and the others are outside. 
There must be organic develop- 
ment that is not artificial or 
imposed.” 


IM THIS SURVEY 

□ The economy; recovery 
starts to take root 

□ Companies: trend away 
from conglomerates 

□ Nokia: Mobile phone 
success story Page 2 

□ Banking: the bad news 
may be over 

□ Investing in Finland: a 
chance to catch up Page 3 

□ The next prime 
minister? Profile of Paavo 
Upponen 

□ Forestry: pulp and 
paper near peak 

□ Agriculture: facing a 

shake-up Page 4 

□ Masa-Yards: specialist 
shuns subsidies 

□ Privatisation: stakes cut 

gradually Page 5 

□ Russia: neighbour that 
always wins 

□ Design: a gift for order, 
serenity and logic Page 6 

Editorial production: 

Gabriel Bowman 

Graphics: Bob Hutchison 

Design : Robin Coles 





















FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


FINLAND 




After a severe recession, the country hopes for growth of 5 per cent in 1995, writes Hugh Carnegy 

Economic recovery starts to take root 


FACTS 


/ r * . 


_ ....... 338,000 sq Ton 

APBB -...-.if— ' 

Djiruiliitinn *- — ~ — 5.04 miUtOn 

Population - Marffi AhHe-nri 


.Inlinn _ ....... IUIUKX1 . < 

- Martfl Ahtfsaart 4 A 

“ - Finnish Markka l * A 

Average exchange rate 1993 j 1 ** 11 * aJX 2 = 2S 

Exchange rate 18 October 1994 — $1=Fmk 4.83 £1^Frnk 2.87 


i: 1 $ 


flC® 


For the first Httib since 1990. 
economic activity in Finland 
shows signs of reviving. 

Between 1990 and 1993, the 
country suffered the hardest 
recession to have hit any mem- 
ber of the Organisation of Eco- 
nomic Co-operation and Devel- 
opment since the second world 
war. 

The economy, hit simulta- 
neously by the international 
recession, the collapse of trade 
with the neighbouring Soviet 
Union, the bursting of a credit 
boom and the burden of an 
expansive welfare system, 
shrank by some 15 per cent 
over the period. Unemploy- 
ment shot up from 3.4 per cent 
Of the workforce in 1990 - one 
of the lowest rates In Europe - 
to today's level of 18^ per cent, 
putting Finland alongside 
Spain and Ireland at the top of 
the European jobless league. 

This year, however, a recov- 
ery that began to show itself in 
late 1993 has taken root. 
Driven by a powerful surge in 
exports, gross national product 
is set to grow by 4 per cent this 
year; with domestic demand 
also beginning to revive, offi- 
cial estimates forecast up to 5 
per cent growth in 1995. 

“That is regarded by many 


economists as too cautious and 
I hope they are right.” remarks 
Mr Sixten Korkin an. the 
finance ministry’s chief econo- 
mist. 

The sense of rekindled opti- 
mism was reinforced on Octo- 
ber 16 when a referendum of 
the electorate approved Fin- 
land's entry next year to the 
European Union. The result 
was greeted with enthusiasm 
by business leaders, the trade 
unions and most of the politi- 
cal establishment as an impor- 
tant confirmation of Finland's 
trading position and a spur to 
new investment 

“EU membership is good for 
our economy," says Mr Rork- 
m*n_ *rt should help to sustain 
the momentum of our recovery 
and help to bring down long 
term interest rates. Investment 
activity should benefit because 
there will be more certainty 
about the rules of the game." 

Several factors have com- 
bined to provide the turn- 
around. Above all, the coun- 
try's exporting industries - 
notably the big forestry compa- 
nies and manufacturers such 
as Nokia, the telecommunica- 
tions group - have been able to 
exploit fully a pick-up in inter- 
national demand, thanks to the 


sharp devaluations of the Finn- 
ish markka ip 1991 and 1992 
and productivity gains that 
have made them much more 
competitive than previously. 

This year exports are set to 
rise by some 15 per cent over 
last year, producing a surplus 
on the balance of payments 
current account equivalent to 2 
per cent of GDP, after 10 years 
of deficits. 

Meanwhile, both consump- 
tion and investment are set to 

grow this year 

and next after . 


Finland, too. has experienced 
a sharp deterioration in its 
public finances. But under the 
stern guidance of Mr liro 
VUnainen. finance minister in 
the centre-right government, 
fiscal policy has been kept 
largely under control. State 
debt has gone up fast from 
very low levels to approaching 
70 per cent of GDP. But by 
sticking to a policy of not 
allowing government spending 
to grow in real terms, the debt 

has not 

reached the 


long periods of international demand has levels of almost 
contraction, picked up, thanks 100 per cent of 
but annual to the devalued markka GDP reached in 


but annual to the deva 

inflation is 

among the low- 

est in Europe at less than 2 per 

cent. 

The prospect of a vigorous 
recovery after such a tough 
recession has caused consider- 
able satisfaction in Finland 
that the country has managed 
its affairs better than neigh- 
bouring Sweden. Although 
Sweden has suffered much less 
of a contraction in its econ- 
omy, its recovery is threatened 
by a deep budget deficit and 
rapidly growing public debt 
that have pushed up interest 
rates. 


led markka GDP reached in 
Sweden. 

Even in his 
1995 budget, with the unpopu- 
lar government facing defeat in 
the March general election, Mr 
VUnainen has pushed through 
a small cut in expenditure in 
real terms, despite having to 
allow for some FMiObn in net 
extra spending stemming from 
Finland's accession to the EU. 
Finland's debt growth will 
peak next year and the country 
should start meeting the Ell's 
convergence criteria of budget 
deficits not exceeding 3 per 
cent of GDP by 1997. 

But the optimism about the 


recovery is dampened by the 
overwhelming political and 
social problem posed by unem- 
ployment. Just how difficult 
this will be to reverse was out- 
lined by a special commission 
appointed earlier this year by 
President Martti Ahtisaari to 
study the problem. 

The commission concluded 
that to achieve a target of cut- 
ting unemployment to 200.000 
from the present level of 
480,000 by the year 2000 would 
require annual growth of 5 per 
cent a year. Even if that was 
achieved, unemployment 
would still be running at 8 per 
cent of the workforce. 

A key factor In attaining 
such growth wifi be invest- 
ment and consumption levels. 
Both were depressed during 
the recession. Household con- 
sumption was cramped by high 
levels of indebtedness while 
public consumption has been 
squeezed by the need to con- 
trol the public finances. 

The latter will continue to be 
depressed. But there are now 
signs of renewed private con- 
sumption and investment is set 
to grow by 3 per cent this year 
and by 15 per cent in 1995. 
However, with long-term inter- 
est 1 rates still around 10 per 


cent, and many households 
and businesses still wary of 
borrowing, the conditions for 
expansion are still limited. 

The presidential commis- 
sion’s prescription for engen- 
dering sustained growth 
included more stringent spend- 
ing cuts - that would inevita- 
bly cut into popular welfare 
provisions - a cut in marginal 
income tax to 50 per cent from 
the present rates of around 60 
per cent, cuts in employers’ 
social security contributions 
and a variety of labour market 
measures. These ranged from 
trade union-friendly proposals 
on sabbatical leave to employ- 
er-friendly measures on more 
flexible working hours and 
hiie-and-fire regulations. 

Members of the commission, 
a mix of non-overtly political 
academics and industrialists, 
clearly hoped their report 
would attract a political con- 
sensus behind it It has at least 
achieved the merit of having 
set the economic agenda for 
the general election. But politi- 
cal action to enact its recom- 
mendations before then is far 
from certain as the Social Dem- 
ocratic party has so far hesi- 
tated to join the government’s 
call for early legislation. 


THE ECONOMY 


Total GDP,(Rnk bo) 7 . 

Real GDP growth (%) 

Components of GDP (%) 

Private consumption 

Total investment — 

Government consumption 

Exports 

Imports — — 

Annual average % growth In 

Consumer prices (%) 

Manf. production (%) 

Unemployment rate (%) 2 

Share price index (%) *... 

Discount rate {%) •. — - 

Govt bond yield (%) — 

Money growth (M2).. 

Reserves minus gold ($bn) 

Trade 

Current account balance fS bn).. 

Merchandise exports ($bn) - 

Merchandise imports (Sbri) 

Trade balance (Sbn) - 

Main trading partners (%) “ 

Germany. — 

Sweden 

us.:;z:::zz:.... 

Russia- 

EU 


1992 

1993 

475.7 

478.7 

-3.8 

-2.6 

53-5 

52^4 

20.8 

18.1 

23.7 

22.9 

26.5 

‘31.8 

-24.5 

-25.2 

2.9 

- 2.2 

2.6 

4.7 

13.0 

17.7 

12.8 

96.0 

5.50 

8£0 

8.60 

6.91 


-4.95 
23.98 
21.19 
2.79 
Exports 
13.2 
11.1 
10A 
7 A 
4.5 
46.9 
17.0 


-0.98 

23.45 

18.05 

5.40 

Imports 

16.4 

102 

3.9 

7.3 

7.6 

47.2 

19.0 s. 


(1) Current prices. (2) OECD standard sad rata. 

(3) FT-A index, % change year-end. (4) End period. (5) 1993- 
1 Sources: IMF, BU, OECD, DatBstnxm 


L ike many International 
corporations, Finnish 
companies have in recent 
years undergone a marked 
trend away from diversifica- 
tion. But the process has still 
left a clutch of oddly-shaped 
companies whose activities 
include such strange combina- 
tions as tennis racquets and 
cigarettes, sweets and contra- 
ceptives and diesel engines 
and lavatories. 

Finnish companies branched 
out into increasingly diverse 
areas of industry and business 
in the 1970s and 1980s. partly 
to find ways of continuing to 
grow In a limited home mar- 
ket and partly to take advan- 
tage of the relative lack of for- 
eign competition, kept out by 
restrictions on foreign owner- 
ship. 

The rigours of recession, the 
falling of regulatory harriers 
and growing pressure to focus 
operations in areas where 
maximum returns can be 
gained have meant Finnish 


companies have followed the 
international fashion away 
from conglomerates. 

The most famous example is 
undoubtedly Nokia. Originally 
rooted in the forestry indus- 
try, by the late 1980s Nokia 
encompassed a sprawl of busi- 
nesses covering forestry, engi- 
neering, computers and tele- 
communications — to name but 
a few. Its concentration since 
1992 on fixed and mobile tele- 
phony has reaped Nokia huge 


The effect of the trend away from conglomerates on big companies 


Diversity takes some odd shapes 


Some companies have 
become overwhelmingly 
dependent on 
foreign markets 


rewards (see article below). 

Other less well-known com- 
panies have followed a similar 
path with some success, 
becoming overwhelmingly 
dependent on foreign markets. 
Bat they have nevertheless 
remained. If no longer con- 


glomerates, at (east strangely- 
shaped groups with unlikely 
collections of interests. The 
following are three prominent 
examples: 

• Amer Group. With annual 
turnover of around FM8bn. the 
group combines ownership of 
Wilson Sporting Goods, one of 
the world's top sports equip- 
ment labels, with concessions 
to sell Toyota, Citroen and 
Suzuki vehicles and make 
Philip Morris tobacco brands 
in Finland and a printing and 
publishing division. 

The group was set np in the 
1950s to manufacture Ameri- 
can-style cigarettes for the 
Finnish market - hence the 
name Amer. But Mr Seppo 
Ahonen, the chief executive 


brought iu from Nokia two 
years ago. Is steadily narrow- 
ing the group's focus down to 
sporting equipment and lei- 
sure products. Sporting goods 
already account for almost 50 
per cent of group sales. 

This year Ameris remaining 
interests In the paper industry 
are being sold off. Mr Ahonen, 
who announced a three-fold 
rise in pre-tax profits in die 
first eight months to FM135m, 
says he is ready to consider 
offers for all non-sporting 
goods operations, which are 
all profitable. 

If they are sold, Amer will 
be a company whose dominat- 
ing interest is a high-profile 
company involved in a highly 
competitive and marketing- 


sensitive business based thou- 
sands of miles away in Chi- 
cago. But Mr Ahonen is 
undaunted. He sees advan- 
tages in being headquartered 
in Helsinki, guiding a business 
with worldwide sales. "I like 
the European way," he says. T 
think we are prepared to give 
more time for long-term 
investments to develop than 
they are in America." 

• Huhtam&ki. Started by 
Finnish confectioner Heikid 
Huhtamdki in the 1920s, the 
group bad grown to encom- 
pass' more than 10 business 
areas in the early 1980s. Since 
then a pattern of re stru cturing 
has left Hnhtamaki In three 
industries - confectionery, 
food packaging and pharma- 
ceuticals. 

Like Amer, annual sales 
stand around the FM8bn 
mark, with 41 per cent in 
North America where the Leaf 
business Is the third largest 


player in the non-chocolate 
confectionery market. Leaf 
accounts for more than 60 per 
cent of sales, followed by the 
Polarcup packaging division 
with 25 per cent and Leiras, a 
company focused on contra- 
ceptives. with 1 2 per cent. 
Group profits in the first eight 
months were FM309m on sales 
of FM5.6bn. 

“We don’t think of ourselves 
as a diversified company any 
more,* says Mr Eero Aho, 
chief financial officer. “Gener- 
ally speaking; we are a food 
company as confectionery is a 
branch of the food industry 
and Polarcup is a food service 
industry." 

Hnhtamaki does not make 
any attempt to pretend that 
there are great synergies 
between the divisions, how- 
ever. And Mr Aho admits: 
‘There is some kind of con- 
glomerate discount in onr 
share price, but it is difficult 


to say how much.” 

Bnt the group says it is 
happy with the shape of the 
company and has no plans for 
further ration alistion. 

• Metra. In its present form, 
the group was founded in 1991 
through the merger of two 
diversified groups, WdrtsilS 
and Lohja. Today it revolves 
around the WfirtsilS main 
businesses of diesel engines - 
in which it is a world leader - 
bathroom equipment and secu- 


Diesel engines sit oddly 
with sanitaryware, but the 
latter is seen as a 
counter-balance 


rity systems. 

After the merger, Metra, 
which last year had group 
sales of FM9.5bn, began a pro- 
cess of slimming down the 
newly-formed group. That 
included, divestment of snch 
diverse interests as Lohja Car- 
avans, the largest supplier of 
caravans in the Nordic region, 
and Lohja building materials 
operations in the US. 

This year a farther big step 
was taken when agreement 


was reached to merge Abloy 
Security, the groop'slocks and 
security systems unit, with the 
lock operations of Sweden’s 
Securitas to form AssaAbloy, 
in which Metra will eventually 
have a 40 per cent holding; 

The move will leave Metra 
heavily weighted towards 
Wfirtsilfr diesel, which in the 
first eight months of this year 
accounted for FM3.7bn out of 
Metro’s total sales, including 
Abloy, of FM7bn. The diesel 
operations are widely spread 
around the globe and W&rtsilfi 
is a market leader in diesel 
generators. 

It sits oddly with Sanitec, 
the sanitaryware operation 
that remains Metre's second 
largest area of operations. But 
with sales and profits in the 
diesel division hit this year by 
project postponements and 
engine line development costs, 
Metra can argue that a simul- 
taneous improvement in Sani- 
tec’s profitability is a valuable 
counter-balance, contributing 
FM195m in operating profits 
to the group's eight-month 
operating profit of FM413m - 
more than WSrtsila. 


Hugh Carnegy 



Profile: NOKIA 


Mobile phone success story 




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Finland has no other corporate 
success story to match Nokia. 
Europe's biggest manufacturer 
of mobile telephones has per- 
formed spectacularly over the 
last two years with explosive 
profits and sales growth driv- 
ing a 15-fold rise in its share 
price. 

The company now accounts 
for more than 25 per cent of 
the value of the Helsinki Stock 
Exchange. Such is the domi- 
nance that its market capitalis- 
i ation at around FM50bn is 
greater than the combined 
: value of the country’s four big 
listed forestry groups: Repo] a. 

I Kymmene. Enso-Gutzett and 
| Metsa-Serla. Foreigners have 
been particularly enthusiastic 
buyers of the shares and now 
hold more than 50 per cent of 
the company. 

Two years ago, with Nokia’s 
share price languishing at less 
than FM50 compared with a 
peak of more than FM700 this 
year, such a revival was for 
from predictable. At the time 
the group was heading for its 
second successive year In the 
red amid substantial losses 
from its troubled consumer 
electronics division. 

Factors which have driven 
the recovery include surging 
worldwide demand for Nokia's 
cellular equipment and mobile 
phones as well as an Internal 
reprogramming which has 
transformed the group from a 
sprawling conglomerate to a 
focused telecommunications 
company. Cost-cutting, the 
weak markka and a halting of 
the haemorrhage within con- 
sumer electronics have also 
helped. 

The rapid growth in the 
world mobile telecommunica- 
tions market has probably 
been the most important fac- 
tor. “The two things which 
have helped us most have been 
the entry of new operators into 
cellular market and the shift 
from analogue to digital." says 
Mr Jorma Ollila, Nokia chief 
executive. 

This year, for example, 
around 25m mobile phones are 
expected to be sold worldwide, 
well above last year's 14m. 
Nokia, which is the world’s 
second largest mobile phone 
supplier after Motorola of the 
US, will manufacture around 
5m phones, double last year's 
production, to achieve a 20 per 


cent market share. 

The outlook is no less posi- 
tive. Mr Ollila forecasts that 
the world market for handsets 
will continue to increase by 
between 50 and 80 per cent for 
at least the next two years. 

If growth rates like this 
materialise, the biggest con- 
straint on the group could sim- 
ply be its capacity to deliver. It 
has already had to turn away 


global scale of its activities and 
its readiness to take on some of 
its toughest competitors in 
their home markets. In Japan, 
for example, the group talks of 
capturing a 25 per cent digital 
market share by 1996 despite 
tough competition from domes- 
tic manufacturers. 

The going has been tougher 
in the US. where the company 
has been hampered by a rela- 


A stategic focus has seen the group pul( 
out of data, forestry and chemicals, while 
tyres may be sold off. The emphasis on 
telecoms is likely to continue 


some orders. The group is tack- 
ling the problem by investing 
and taking on additional staff. 
It has recently expanded 
mobile phone capacity in the 
US and last month it 
announced a FM280m pro- 
gramme to increase plume and 
cellular network production at 
Salo in Finland. 

The dominance of telecom- 
munications wi thin the group's 
business is increasing all the 
time. Partly this reflects the 
strategic focus which has seen 
the group pull out of such 
areas as data, forestry and 
chemicals. Partly it reflects the 
annual 50 per cent growth in 
the core telecom businesses, 
when the company’s other 
remaining activities - con- 
sumer electronics, cable and 
machinery, tyres and power - 
are hardly growing at all. 

There is little doubt that the 
emphasis on telecoms will con- 
tinue. The trend will be 
reinforced by a likely disposal 
of the cable and machinery, 
tyre and power businesses if 
they fail to produce adequate 
cash flow. The group is already 
considering floating off most of 
its 80 per cent stake In Nokia 
Tyres. 

By contrast, the company 
seems to intent on hanging 
onto its consumer electronics 
unit, which is finally within 
sight of profits after hefty 
losses and considerable 
restructuring over the last 
three years. Retaining the 
operation will assist its ambi- 
tions to build a presence in 
multimedia. 

The group’s confidence is 
reflected in the increasingly 


tively low profile and a poor 
distribution system. But oppor- 
tunities will increase in the US 
market with the planned auc- 
tion of broadband licences next 
year. 

In any case, the group's US 
profile was lifted in the sum- 
mer when it became the first 
Finnish company to list its 
shares on the New York Stock 
Exchange. This was after it 
had raised FM2.4bn in the larg- 
est international share issue 
ever made by a Finnish com- 
pany. 

The group's main problem 


now will be to meet the mar- 
ket's high expectations of it Its 
capacity for pleasant surprises 
was on display again recently 
when it announced a near-five- 
fold surge in pre-tax profits to 
FM2.29bn for the first eight 
months, comfortably ahead of 
market predictions. Net sales 
were FMl8.2bn, a 40 per cent 
increase adjusted for curren- 
cies and restructuring. 

One danger is that bigger 
competitors with greater 
resources will push Nokia 
aside through technical inno- 
vation. 

As analysts from Lehman 
brothers said recently: “Nokia 
operates in the world telecom- 
munications market alongside, 
significantly larger compete' 
tors . . . Many of these compa- 
nies spend more in absolute', 
terms on R & D than NoMa.’ 10 

Another danger is that the 
group will simply not be able 
to manage Its growth, becom- 
ing cumbersome and bureau- 
cratic where until now it has 
been fast and flexible. This, for 
Mr Ollila, appears to be the 
greater threat and he has made 
tiie achievement of disciplined 
growth one of his mam priori- 
ties. 


Christopher Brown-Humes 



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FINLAND 3 


Profile: INVEST IN FINLAND BUREAU 


A chance to catch up 


Few people in Finland can 
have had more reason to cele- 
brate the October 16 decision 
to join the European Union 
than Mr NiteChristfan Berg, 
head of the government’s 
Invest in Finland Bureau, 
writes Hugh Camegy. 

The bureau is charged with 
attracting direct foreign 
investment to the country, so 
a referendum vote to stay out- 
side the EU would have been 
a severe handicap to its work. 
Finland already ]3gs far 
behind most of Europe’s 
smaller peripheral countries 
in winning inward invest- 
ment. Inclusion in the inn er 
circle of the continent’s top 
political and economic club is 
a vital step if Finland is to 
catch up. 

“We have made several sur- 
veys outside Europe - notably 
in the US and Japan - and we 
can clearly see that for a 
country like Japan it is a 
must for us to be in the EU 
before companies even think 
about investing in Finland,” 
says Mr Berg. “They want you 
to be inside the EU market. 
That is a fact and you cannot 
overcome it any other way 
except by joining.” 

Now that Finland is set to 
become an EU member from 
January 1 - barring unfore- 
seen obstacles in parliament - 
the Invest in Finland Bureau 
can get on with its job with 
much greater assurance and 
confidence. It faces a formida- 
ble task. 

The bureau was set up only 
in 1992, long after Ireland, 
Portugal and Scotland, for 
instance, had established 
sophisticated agencies to pur- 
sue foreign investment, armed 
with alluring inducements in 
the form of generous tax 
breaks, subsidies and other 
incentives. 

Indeed, while such -coun- 
tries were attracting multina- 
tional corporations to their 
shores in the 1380s, Finland 
maintained barriers against 
foreign investment, requiring 
any foreign investor to gain 
government or, In some cases, 
parliamentary approval for 
the acquisition of mere than 
20 per cent of a Finnish com- 
pany. The last of these restric- 
tions was dropped as recently 


as the beginning of 1393. 

Big names such as Asea 
Brown Boveri, the Swiss/ 
Swedish engineering giant, 
Sweden's Saab Automobile. 
Norway's Kvaerner and 
Britain’s British-American 
Tobacco have established a 
presence in Finland, but the 
list is not long. 

Mr Berg’s mission is to 
make sure that the list now 
starts to grow. The extent to 
which he is successful will be 
an important element in 
restoring long-term growth to 
an economy deeply scarred by 
recession. At last Finland 
realises that it can no longer 
rely on protected home indus- 
tries and a privileged trade 

The bureau's sales pitch 
is that Finland is the hub 
of this new region 

with a Soviet Union that no 
longer exists to sustain 
employment levels. 

The Invest in Finland 
Bureau is not attempting to 
lure foreign investors with 
state incentives. Instead, it 
seeks to establish Finland as 
a centre for investment in 
what Mr Berg calls “New 
Northern Europe”. Central to 
this concept is the geographi- 
cal proximity and established 
trading links that Finland hue 
with other industrialised Nor- 
dic countries to the west and 
with the newly emerging mar- 
kets of the Baltic countries 
and Russia to the east 
The bureau describes New 
Northern Europe as a region 
of 80m people, including more 
than 40m in north-west Rus- 
sia. The bureau's sales pitch 
is that Finland has all the 
geographic, economic, legal 
and cultural attributes to be 
the hub of this region as its 
new markets take off. The 
most important of these could 
well be St Petersburg, with its 
population of 8m. just 150km 
across the Finnish border. 

“ Finland is the only place 
that can reach and deliver 
throughout this region within 
24 hours.” says Mr Berg. 

The obvious potential weak- 
ness-in this argument is that 
the concept may make more 


sense in theory than in reality 
as western companies either 
prefer to invest directly in 
Russia and the Baltics, or 
may shy away altogether 
from such uncertain and unst- 
able countries. 

But Mr Berg insists that 
Finland is already becoming a 
popular stepping stone for 
doing business In Russia. A 
number of western companies 
operating in St Petersburg use 
Finland for forwarding mail 
and as a telecommunications 
pivot The bureau says west- 
ern investors and Russians 
alike can benefit from setting 
up joint ventures in Finland, 
where the legal structures 
lacking in Russia are in place 
and transparency is assured. 

Mr Berg says using Finland 
as a base can help speed up 
approval of projects from 
financial backers such as the 
European Bank of Recon- 
struction and Development 
which worry about the secu- 
rity of such investments. 

Above all, Finland believes 
it can offer the benefit of 
experience and contacts in 
Russia gained by Finnish 
companies. “Finland has 
always traded with Russia - 
long before the creation of the 
Soviet Union.” says Mr Berg. 
“In Czarist times, when we 
were ruled by Russia. Finland 
was a conduit for trade with 
the west.” 

He cites a joint venture 
project involving Conoco of 
the US in oil production in 
Ardalin. western Siberia. The 
US$400m project was in dan- 
Ger of falling behind schedule 
last year because Conoco ran 
Into problems inhull ding the 
infrastructure of roads, dwell- 
ings and rigs. The Finnish 
contractor YIT was brought 
in to help and got the project 
back on schedule. 

But to foster more such suc- 
cess stories, the Invest in Fin- 
land Bureau must first 
reverse the old image Finland 
has of being hostile to foreign 
investors. Being a member of 
the EU will help. But Mr Berg 
has a big marketing task 
ahead of him. As one erf the 
bureau’s own brochures can- 
didly admits: “Not many peo- 
ple know -. the place to invest 
in now is Finland." 


F inland's battered banks 
are still struggling to 
overcome the huge credit 
losses which engulfed them 
two years ago. But though the 
path to recovery is long and 
hard, the banks are sticking to 
their forecasts of a return to 
profit next year or in 1996 at 
the latest. 

Overall, the Finnish 
Bankers’ Association expects 
the sector's total losses in 1994 
to be about two-thirds of the 
FMl3bn deficit run up in 1993 
- which was in turn a sharp 
improvement on the worst 
year, 1992. when losses 
exceeded FM20bn. 

This year has been a 
frustrating one. In the early 
months, there was a burst of 
optimism as interest rates 
tumbled and Finland's 
economy began to emerge from 
severe recession. But a jump in 
long-term interest rates over 
the summer, the resultant 
turbulence in bond markets 
and additional credit losses 
slowed down the banks' recov- 
ery process. 

Finland's banks fell victims 
to a wicked combination of 
circumstances in the early 
1990s. The recession, which hit 
elsewhere in Europe, was 
deepened by the loss of the 
country’s big trade with the 
Soviet Union. The slump 
exploded a frantic credit boom 


The banks are still 
burdened by credit 
losses - and vulnerable 
to unexpected twists 
in the economy 


which had been fuelled by 
financial deregulation. As 
interest rates shot up and asset 
values collapsed, hundreds of 
companies were forced into 
bankruptcy, particularly in 
real estate, construction, 
trading and tourism. 

By the end of 1993, the banks 
as a whole had non-performing 
assets of FM53bD. only slightly 
less than a year earlier. This 
was after write-offs of 
FM16.5bn - equivalent to 5.2 
per cent of average balance 
sheets. In 1992, the banks had 
been forced to write off 
FM22bn. 

Most leading figures in the 
hanking sector say the worst is 
now over. Mr Pertti Voutil- 
ainen, chairman of 
Kansallis-Osake-Pankki, the 
leading commercial bank, 
summed up the position facing 
his bank: “I think we have 
come to the situation where we 
know where we stand. The 


Hugh Carnegy reports on the banking sector 

The bad news may 
be over 





The Union Bank of Finland in Helsinki and (below) the central bank 



. , ■■'C ' ‘ 1 ’ ‘ y ■■ 7 V.'ii'S'L ‘ 



worst risks have already been 
written off, so when the 
economy gets better - and it 
has turned around - that will 
help us to return to profit.” 

But KOP's own difficulties 
this year highlight how heavily 
the banks are still burdened by 
credit losses - and how 
vulnerable they are to unex- 
pected twists in the economy. 

KOP announced a new bad 
loan charge of FM800m in its 
eight-month results, triggered 
by problems in the construe- 
tion .company Puolimatka. This 
pushed credit losses in the 
period up to FMl.67bn. not far 
below last year's loss at the 
same stage of FMl.96bn. 
Meanwhile, a FM150m loss in 


bond trading helped push net 
income from financial 
operations down 7 per cent to 
FM1.48bn. 

Overall. KOP’s operating 
losses in the first eight months 
rose to FMl.3bn from FM869m. 
The bank has been forced into 
a further round of fundraising 
to strengthen a capital base 
drained far beyond the 
expectations of most share- 
holders. It has launched a 
FM2bn share issue and the sale 
of FMlbn in assets this 
autumn, on top of share issues 
last year worth FM2bn and 
hefty bonds issues. 

In the case of Unitas. the 
main rival to KOP. credit 
losses rose by FMi37m in the 


first eight months to FMlA2bn 
compared with the same period 
last year, due mainly to the 
collapse earlier in the year of 
two companies - a construc- 
tion group called Haka and 
Eka. a retail and wholesale 
group. 

But, like KOP. Unitas insists 
that all the bad news is now 
known and accounted for. The 
bank says credit losses in the 
last four months of the year 
will be sufficiently reduced to 
make overall loan losses for 
the year less than those of last 
year. Unitas expects to halve 
last year's overall pre-tax loss 
of FM2.57bn and hopes to 
break even in 1995. KOP still 
forecasts a profit in 1995. 


Although borrowing demand 
remains low in Finland, Mr 
Vesa Vainio, the president of 
Unitas, believes the country’s 
return to significant growth - 
GNP is expected to rise by 5 
per cent next year - and its 
entry into the European Union 
will trigger' more investment 
“We are still on the track we 
estimated,” says Mr Vainio. “I 
am quite confident the worst is 
over." 

Part of the dogged optimism 
shown by the banks is due to 
their belief that a significant 
post-crisis restructuring of the 
bank sector will work to their 
benefit. At the end of 1993, the 
government sold off the 
savings banks of Finland in 
four equal parts to KOP, 
Unitas. state-owned Postipanki 
and Okobank, the umbrella 
bank of the country's big 
co-operative bank sector. 

The SBF and Skopbank, 
which acted as a central bank 
for the savings banks, were 
taken over by the state at the 
height of the loan loss crisis 
and swallowed most of the 
FM60bn that the government 
was forced to pledge to keep 
the banking system afloat. 
After transferring FM40bn in 
non-performing SBF assets to 
Arsenal, a specially created 
state “bad bank”, the 
government parcelled out the 
rest of the FM86bn in SBF 


The banks believe that 
a significant 
post-crisis restructuring 
of the sector will work 
to their benefit 


assets to the four main players. 

The effect has been a 
significant boost in customer 
base and assets for the buyers, 
combined with a narrowing of 
competition. Mr Voutilainen 
says this has helped restore 
interest rate spreads which 
previously were extremely 
tight. “The competition 
situation is much sounder - it 
is causing less damage to the 
banks, 1 ' he says. 

Certainly, the rationalisation 
has reinforced an overdue 
trend to slim down the 
banking sector. The recipient 
banks were free to close SBF 
branches they acquired and in 
many cases have done so. The 
Bankers Association says the 
numbers now employed in 
hanking have fallen to 37,000 
from 53,000 in 1989 and will fall 
further to around 30,000. 
Meanwhile, the number of 
bank branches has contracted 
by almost 900 to 2,500. 


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FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


FINLAND 4 


Profile: PAAVO LIPPONEN 


Liberal who may be 


next prime minister 


If the opinion polls prove 
correct, Finland's next prime 
minister will be Mr Paavo Lip- 
ponen, the personable and 
pragmatic leader of the Social 
Democratic party (SDP). 

The Social Democrats were 
the losers in the last general 
election in 1991. winning just 
22 per cent of the national 
vote. The government was 
formed by the Centre party 
led by Mr Esko A ho. now 
prime minister, which surged 
ahead to win 25 per cent of 
the vote and forged a coalition 
with the Conservative party - 
which had been in coalition 
with the SDP - and the small 
Swedish People's party and 
the Christian League. 

But under the leadership of 
Mr Upponen, who took over 
from Mr Ulf Sundqvist as 
party leader last year, the 
SDP has consolidated a 
rebound in the polls which 
has shown the party winning 
well over 30 per cent support 
throughout this year. 

With the incumbent govern- 
ment, suffering in popularity 
because of the deep recession 
and high unemployment, the 
Social Democrats are now 
widely expected to lead the 
new government after the 
election due in March next 
year. At this stage, the party 
is reluctant to speculate on 
the shape of an SDP-led coali- 
j tion - which could include 
either or both the Centre and 
Conservative parties. But the 
one certainty is that it would 
be headed by Mr Upponen. 

A political scientist and 
journalist by profession, 53- 
year old Mr Lipponen is a 
Social Democrat who, like 
many of his left-of-centre col- 
leagues in Europe, has moved 
his party significantly away 
from old-style western Euro- 
pean socialism to embrace 
market reforms to achieve a 
“citizen’s society". A keen 
advocate of Finnish member- 
ship of the European Union, 
he summed up his position in 
an article published during 
the EU referendum campaign. 

“An efficient market econ- 
omy adhering within the con- 


text of the EU to the basic 
values of Nordic welfare 
states will produce a better 
society of citizens in Finland." 
he wrote. 

In an interview for this sur- 
vey, Mr Lipponen explained 
his approach Anther. “I am a 
liberal in the sense that I 
believe people have really suf- 
fered because of a lack of 
competition. We need a real 
paradigm chang e. Ours has 
been an economy of big com- 
panies, big cooperatives, big 
hanks, big wholesale compa- 
nies and, if you like, big gov- 
ernment. There hasn't been a 



Paavo Upponen: moved party 
from socialism to market reforms 


role for a citizen's society." 

His remedy for unemploy- 
ment, the country's biggest 
political and social problem, 
is therefore unequivocally 
reformist He readily accepts 
that his aim is to foster a 
more entrepreneurial c lima te 
in Finland. "Yes, absolutely ,** 
he says. “It is a question of 
getting unemployment down. 
The public sector cannot 
employ more people and the 
export sector is already effi- 
cient. So it is mainly in the 
small service companies that 
future employment will come. 
We have to get more flexibil- 
ity and reduce labour costs - 
and social security costs." 

But if Mr Lipponen's mes- 
sage contains elements more 
familiar from the righfrof-cen- 
tre in recent years, he still 
offers a distinct policy change 
from the present government 
He is especially critical of the 
coalition's record on unem- 
ployment saying the failure 


to provide training schemes 
for more than one-fifth of the 
almost 500,000 unemployed 
has been a “waste of human 
capital". 

He attacks the govern- 
ment's protection of Finland's 
hi g hl y subsidised farmers and 
the maintainance of subsidies 
to Industry - especially the 
big and once again profitable 
forestry industry. These are 
areas where he believes 
savings can be made to help 
trim Finland’s budget deficit 
and control a state debt set to 
reach the equivalent of 70 per 
cent of gross domestic policy 
next year. 

His approach is also to 
defend the basic structure of 
the country's welfare system 
which, like those of neigh- 
bouring Sweden and Norway, 
far exceeds most in Europe in 
the extent of benefits it offers. 
His intention is to carry vital 
interest groups such as the 
trade unions with him when 
it comes to reforms by involv- 
ing them in the changes. Tm 
sure the elected members of 
the trade unions know what 
is needed. It is just that they 
need to feel the policies are 
fair and just" 

As prime minister, Mr Lip- 
ponen would play a key role - 
along with President Martti 
Ah tisaari - in framing Fin- 
land's positions in the ElTs 
vital 1996 Intergovernmental 
Conference on the future 
shape of the union. A former 
head of the Finnish Institute 

of International Affair s, he is 

at ease - but cautious - in 
discussing such tricky topics. 

"Finland should not take 
any dogmatic line In the 
debate between the federalists 
and the anti-federalists. That 
way we would lose our influ- 
ence,” he says. “European 
Monetary Union has to come 
sooner or later and if it comes 
you need greater political 
integration. But there is a 
need to guarantee the influ- 
ence of watinnal parliaments 

Subsidiarity should be made 
to work." 


Hugh Camegy 


H eavily protected and 
generously subsidised 
for years, F innis h agri- 
culture has looked ripe for a 
shake-up for a long time. The 
crunch will finally come on 
January 1 with European 
Union membership. 

Producer prices will fell by 
as much as 50 per cent in an 
overnight alignment with 
European levels. There will be 
compensation, but average 
incomes will still fall by at 
least 10 per cent. In the longer 
term, as transitional payments 
are phased out, the pain will 
increase, threatening a big 
wave of restructuring In three 
to five years' time. 

With this sort of future 
ahead, it is not surprising that 
farmers were at the heart 
of the campaign against Finn- 
ish EU membership. Their 
economic argument was 
relatively weak - after all, 
farmers account for only 7 per 
cent of the working population 
and as little as 25 per cent of 
gross domestic product. What 
counted far more were the 
psychological and political 
factors. 

Psychologically, the farmers 
benefited from the Finnish 
population's strong attachment 
to the countryside - 35 per 
cent of the country's inhabit- 
ants still live in rural areas - 
and a security-related reluc- 
tance to see large areas of the 
country being depopulated. 

Politically, they were helped 
by the fact that the Centre 
party, the dominant power in 
the centre-right coalition gov- 
ernment. has traditionally 
drawn much of its support 
from rural areas. 

The irony is that despite the 
importance Finland gave to 
agriculture in its EU negotia- 
tions - no other issue received 
greater emphasis - the fanners 
ended up getting a deal which 
even EU supporters felt could 
have been better. The Finns 
complain that this was partly 
because neighbouring Sweden, 
which radically overhauled its 
farm support system in 1990, 
did not make an issue out of 
agriculture in its own EU 
accession talks. 

Finland’s settlement allows 
it to provide fanning support 
over a five-year transitional 
period in return for accepting 
immediate price alignment. 
Next year’s aid will be worth 
around FMS^Sbo, FMl-Sbn less 
than would be needed to make 
up the entire Income shortfall. 

The immediate adjustment 
to EU prices, together with the 
scrapping of import controls, is 
one of the matn grievances of 


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Christopher Brown-Humes on the likely impa ct of jo i ning Europe 


Agriculture faces shake-up 


f al 








m 




Farming In the countryside near Sak> 


the MTK. the farmers' union. 
The MTK believes a transi- 
tional regime, with prices 
being lowered gradually over a 
five-year period, would have 
helped farmers to adapt and 
plan ahead. 

Its second complaint is over 
the way the country has been 
carved up into different areas 
qualifying for different 
amounts of support Around 53 
per cent of the country's arable 
land qualifies for assistance 
under a special “Nordic" cate- 
gory. while 85 per cent has 
been designated a so-called 
Less Favourable Area (LFA). 
Both areas qualify for subsi- 
dies on top of normal EU price 
support. Excluded, however. 


from either category Is 15 per 
cent of the country in the 
south, where most of the coun- 
try's cereal and vegetable pro- 
duction is based. 

According to Mr Antti Haav- 
isto, MTK director of trade pol- 
icy, the designations are com- 
pletely arbitrary. “Neither line 
hag any justification in terms 
of agricultural conditions. It's 
a lottery he argues. 


T he situation is unfair, 
say the Finns, because 
thousands of farms in 
more productive areas of the 
EU further south are treated 
more generously since they are 
part of LFAs. The MTK says a 
farm in Schleswig-Holstein in 


Germany, with an average 
yield of 6.8 tonnes per hectare, 
could end up getting three 
times the support available to 
a farmer in southern Finland, 
where the yield Is 3.1 tonnes. 

The final grievance is the 
uncertainty that still remains. 
Even though the overall sums 
have been agreed and a gen- 
eral payment mechanism out- 
lined, it is still not clear how 
much individual fanners will 
receive and when. Part of the 
reason for the delay is that the 
packag e has to be approved by 
the European Commission. If it 
is rejected, the farmers frustra- 
tion will only grow further. 

Mr Bfikko Pes&lS, agriculture 
minister and a member of the 


Centre party, is confident of 
EU backing- But, acknowledge , 
ing the uncertainty, he says . 
his “top priority is to ensure-: 
the national support, measures 

are applied in January". 

The transitional .support 
meas ures should cushum ferm-' 
ere from the worst effects of. 
the abrupt changes, at least 
initially. However, life for . 
farmers in. the south- of /the ... 
country could become very 
tougher towards the end 
of the transitional period if . 
Finland cannot grant them . 
support under article 141 ofrthe . 
commission's code covering,. 
serious economic hardship. 
This has still to-be negotiated. 

In any case, it is bard ta 
believe there would hot have 
been a clampdown on agricul- 
tural support, even If Finland 
had remained outside the EU.- 
Many feel that farmers have- 
been cassetted at- the taxpay- 
er's expense for too long and-, 
they will be glad to see. food - 
prices faiL Domestic budgetary 
pressures would almost cer- 
tainly have forced the issne - 
sooner rather than later, if Fin- 
innd had rejected £U member- 
ship and the farmers were 
blamed. 

The point is that everyone: 
expects the numbs: of farms to 
shrink as the sector consoli- 
dates towards the end oTft*® ’ 
decade. Mr Pesftia saj5 : ;he;- 
expects the number of farms to 
fell to 70,000 within 10‘ years-; 
from 120.000 today, at tire same- 
time as the average farm size 
rises from 20 to 30 hectares, ffej 
hopes those who stay the . 
course will be able to compete v 
sate for the drop in thelrV- 
in comes through lower costa: : 
and advantages of scale. V- 






HTT5 1 


M 


I UM 


Nobody cares if the country relies on its forests when things go well 


Pulp and paper near peak 


The fortunes of the Finnish 
economy are inextricably 
linked to the health of the 
country’s pulp and paper sec- 
tor. It Is no accident that both 
are pulling strongly out of a 
slump at the same time. For- 
estry accounts for 36 per cent 
of Finnish exports and its suc- 
. cess has done much to promote 
the country’s export-driven 
revival over the past two 
years. 

This overdependence on one 
industry is widely acknowl- 
edged but critics find it harder 
to make their case when thing s 
are going well And. right now, 
thing s are going welL 

In 1994 the Finnish pulp and 
paper sector will produce total 
profits of about FM5bn - a 
massive improvement on last 
year's breakeven level At the 
eight-month stage the coun- 
try’s four big quoted forestry 
groups. Repola, Kymmene, 
Enso-Gutzeit and MetsS-Serla, 
produced combined pre-tax 
profits of FM2-9bn. compared 
with a loss of FM64m in the 
same 1993 period. 

Although combined operat- 
ing profits at FM5-52bn were 
higher than FM4.49bn in 1993, 
the major component of the 
improvement has been a reduc- 
tion in financial costs. Debts 
are lower, average interest 
rates are down, and there have 
not been any big currency 
losses. 

At the operating level, a 
number of conflicting influ- 
ences are at work. On the posi- 
tive side, demand has risen 
strongly, driving up operating 
rates, and prices are increasing 
across all product lines. On the 
negative side, there has been a 
significant strengthening of 
the markka and wood and 
waste paper costs have risen 
sharply. 

Pulp and fine paper produc- 
ers will undoubtedly benefit, 
with pulp prices up 80 per cent 
and fine paper prices around 50 
per cent higher. But in other 
product lines - publication 
papers, for example - the 
stronger markka and higher 
costs will outweigh the impact 
of increased demand and 
prices, leaving earnings in 
markka terms lower than in 
1993. 

Even so, there is no doubt 
that the pulp and paper sector 
is on the way to its next cycli- 
cal peak. Finland with its mod- 
ern machines, its value-added 
emphasis. Its stringent cost- 
cutting during the downturn 
and its still weak currency, is 
well positioned to benefit 

Mr Jarl KOhler, head of the 
Finnish forest industries feder- 
ation, cautions against over-op- 
timism, saying profits this year 
will still fall short of the 
FM7bn level which he calls 
“normal". Past experience 
shows that gains can easily be 
squandered, he warns. 

It is a question both of costs 
and strategy. Can companies 
keep wood costs down? Can 
they keep wages down? Will 
they restrict investment? 

The 1991-92 downturn in the 
Finnish forestry sector was 
undoubtedly exacerbated by a 
huge corporate investment 
spree In the late 1980s which 


- • 





I* • » ■■■«. j 



o... ■id v 




The Kymi paper mfi at KuraantosM, outside Helsinki 


drove debt up sharply. Compa- 
nies invested as much as 20 per 
cent of their annual turnover 
to create the world's biggest 
and most modern paper and 
board machines. When the 
markka fell by 30 per cent 
between 1991 and 1993, the cost 
of servicing the foreign portion 
of the debt rose sharply. 

The situation Is improving 
rapidly due to consolidation, 
increased cash flow and 
reduced investment. But debt 
as a percentage of turnover is 
still around 75 per cent - down 
from a peak of 110 per cent but 
still higher than rivals in Can- 
ada and Sweden. 

“The Finnish companies' 
most important task is to get 
their capital structure in a tet- 
ter condition. Debts must be 
paid back," says Professor Eero 
Artto of the Helsinki School of 
Economics. 

However, it remains to be 
seen whether the big compa- 
nies have learned their lesson. 
Ironically, the late 1980s Invest- 
ment programmes, widely cas- 
tigated as over-ambitious at 
the bottom of the cycle, are 
now giving the Finns a real 
competitive advantage. Will 
they be tempted to go on 
a nother binge? 

So far, the signs are encour- 
aging. Most current invest- 
ment programmes involve 
upgrading and are designed to 
ease bottlenecks and add value 
rather than increase capacity. 
A significant exception is a 
FM3bn project to build a new 
pulp mill at Rauxna in the west 
of the country. 


In any case the constraints 
will be greater. Greater levels 
of foreign ownership mean 
company strategies are being 
viewed more critically, says Mr 
Jukka Huuskonen, a forestry 
analysts with Protos Securi- 
ties. He believes EU member- 
ship will force companies to 
keep costs under control to 
remai n competitive. In the lon- 
ger term, EU membership wifi 
take Finland along the path to 
monetary union so it will be 
unable to devalue its currency 


(as it has in the past) simply to 
rescue its forestry sector. 

There is, on the other hand, 
a strong chance that expansion 
will come through acquisition 
rather than investment Enso- 
Gutzeit has just agreed to buy 
a 35 per cent stake in Veitsllu- 
oto, the country's fifth largest 
pulp and paper group, for 
FML5bn, in a move which sig- 
nificantly strengthens its 
operations in fine papers and 
light-weight coated (LWC) 
magazine paper- $ 

lie move in effect involves a 
switching of assets between 
one arm of the state and 
another as the state owns 91 
per cent of Veitsiluoto and 52 
per cent of the votes in Enso. 
Logic suggests Enso will 
acquire the state’s remaining 
stake in Veitsiluoto as and 
when the government decides 
to sell 

A much bigger merger 
involving Finland’s two biggest 
forestry groups. United Paper 
Mills (the main unit in Repola) 
and Kymmene, was almost 
clinched during the summer. 
This would have created a 
company as big as Stora, the 
Swedish group which is cur- 
rently Europe's largest pulp 
and paper producer. The plan 
is understood to have found- 
ered because Kymmene's main 
owners were unhappy with the 
valuation placed on the com- 
pany. Rumours have since cir- 
culated that the deal might be 
revived, although there have 
also been suggestions that the * 
two companies are seeking * 
other partners. 

A big question will be J 
whether Finnish groups seek 
to expand at home or abroad. 
Already 26 per cent of the for- 
estry industry’s production 
capacity is based abroad - 
most of it in Europe near the 
big markets and sources of 
recycled material. There was 
always a danger that more 
Investments would have been 
directed towards Europe if the 
country had voted to stay out- 
side the EU. 


Mss cu 


Christopher Brown-Humes 


0 ; v; 




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FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


V 


11 (j* 1 - 




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rr'.r. 


FINLAND 


Profile: MASA-YARDS 


Specialist shuns subsidies 



Kvaerner Masa-Yards 


I.J iCS 




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Masa-Yards concentrates on bidding a strong position In niche j 


There was a moment in early 
1993 when Mr Martin Saarikan- 
ga£, president of Masa-Yards. 
took on the status of national 
hero. 

It was the day that Masa 
clinched a si bn contract to 
build four sophisticated 
liquefied natural gas carriers 
for the Abu Dhabi National Oil 
Corporation, beating off 
intense competition from Japa- 
nese and European yards. 
Hailed as Finland's biggest 
ever export order, its impor- 
tance to the country at the 
time could hardly have been 
greater, with the economy- 
stuck deep in recession and 
other industry stalwarts, such 
as the forestry companies and 
Nokia, apparently still not on 
the path to recovery. The stock 
market celebrated and tabloid 
newspapers suggested Mr Saa- 
rikangas should run for the 
presidency. 

The achievement was all the 
more remarkable because only 
a few years earlier the yard 
had almost gone out of busi- 
ness with the bankruptcy of its 
former owner, WSrtsila 
Marine, in 1989. The Norwe- 
gian group, Kvaerner, eventu- 
ally came to the rescue, buying 
the yard for NKr700m in March 
1991. 

The purchaser is unlikely to 
have had any regrets about its 
move, given the spectacular 
revival of Masa-Yards in the 
past three years. Its order book 
has more than doubled to 
FMISbn, providing work for its 
} 4,700 employees - at yards in 

^ Helsinki and Turku - until the 
end of 1997. 

Finlan d, with generally high 
wage costs, is not a natural 
home for shipbuilding and it is 
therefore something of a sur- 
prise to find one of Europe's 
biggest shipyards located 
TonyAnama there. Masa has managed to be 


>eak 


Elections may stall pace of state asset sales 

Stakes cut gradually 


The momentum of the Finnish 
privatisation programme - 
! stalled for so long by the coun- 
try's deep recession - has 
increased sharply in the last 12 
months. 

The government has sold out * 
stakes in five companies,- rais- 
ing a total of FM7.4bn both for 
itself and the companies con-, 
cerned. The question is 
y whether the pace of the pro- 
gramme will be maintained 
after next March's general elec- 
tions when the Social Demo- 
crats look likely to return to 
power. 

The Finnish privatisation 
programme has been a cau- 
tious one. Indeed, privatisation 
is probably too strong a word 
for a process that is better 
characterised as a broadening 
of ownership. The government 
has chosen to reduce its stake 
gradually in a number of the 
country's biggest industrial 
groups and, in most cases, it 
still .retains more than 50 per 
cent of the shares. 

The companies themselves 
have been the main beneficia- 


ries of the process, garnering 
FM5.84bn out .of the proceeds 
to strengthen their recession 
and debt-weakened balance 
sheets. The government could 
have done with the hinds to 
reduce its budget deficit, but it 
is precisely because of budget 
constraints that it has not been 
able to service the risk capital 

Privatisation is probably 
too strong a word as the 
state retains more than 
50 per cent of the shares 

needs of the companies itself 
Over the past 12 months, 
stakes have been sold in Outo- 
kumpu, the mining and metals 
group; RautaruukM, the steel 
producer, Valmet, the paper 
machinery manufacturer, Kem- 
ira, the chemicals group, and 
Veitsiluoto, the pulp and paper 
group. 

In the case of Outokumpu, 
Rautaruukkt and Valmet. 
which were already listed com- 
panies , the targeted buyers 


have been domestic and inter- 
national institutions. With 
Veitsiluoto, on the other hand, 
an industry buyer was pre- 
ferred, which resulted in Enso- 
Gutzeit securing a 35 per cent 
stake for FMUjbn. Kemira was 
introduced via an initial public 
offering which raised FMl.Mho 
and cut state ownership to 75 
per cent 

The government is free to 
sell more shares in all five 
companies before it reaches 
the limits of its parliamentary 
authorisation. Outokumpu is 
the only member of the group 
where state ownership has 
already fallen below 50 per 
cent 

Altogether, there are some 12 
groups on the government’s 
privatisation list, including 
Neste, the oil and petrochemi- 
cals group; Enso-Gutzeif the 
pulp and paper group; Fin nai f, 
the Tiwtinnal air line ; and Ima- 
tran Voima, the big energy 
company. 

Some commentators believe 
Continued on next page 


Fredericks Michael 

&Co. Private Merchant Banking I 















.. '/.v ■*.*■■ 


Productivity gains have contributed to Masa-Yards 1 success. As its woddoad has grown, the company has increased sub-contracting 


successful, even without the 
subsidies enjoyed by some of 
its competitors, because it has 
concentrated on building up a 
strong position in a few niche, 
technically-sophisticated areas. 

Take cruise ships, for exam- 
ple. Here, the group has built 
up a 25 per cent world market 
share through orders from 
leading operators such as Car- 
nival Cruise and Royal Carib- 
bean Cruise Line. The com- 
pany currently has seven 
cruise ships on order two each 
from Carnival and RCCL, two 
from the German operator DSR 
and one from the Japanese 
group NYK. 

It has been a good industry 
for Masa to specialise in. given 
the average 10 per cent a year 
expansion of the cruise market 
over the past 10 years. Mr Saa- 
rikangas is confident that the 
trend will continue. “The 
Caribbean has been the main 
focus of cruise market develop- 
ment so far, there is a great 
deal of potential in other parts 
of the world." he says. 

LNG vessels are the compa- 
ny's other big speciality, with 



Martin Saarlkangas: alarmed at 
strengthening of the markka 

the Abu Dhabi order alone giv- 
ing it a 20 per cent market 
share. It has also penetrated 
other niches including cable 
layers and ice-breakers, and 
hopes one day to build a pres- 
ence in the Arctic market for 
vessels trading in the icy 
waters of northern Russia and 
Canada. 

“We are not series-building 


ships like a lot of yards," 
stresses Mr Saarlkangas, "Our 
vessels are tailor-made." 

The group's results would 
seem to vindicate the strategy. 
Last year it achieved a 
FM386.9m profit on turnover of 
FM2.76bn. the best figures in 
its history. Return on invest- 
ment has been around 25 per 
cent a year for each of the last 
three years. 

Mr Saarlkangas dismisses 
suggestions that the yard's 
success has hinged on the 
hefty devaluation of the Finn- 
ish markka since 1991. "All our 
results until now have been, 
based on orders placed before 
the devaluation." he states. 

Having said that, the weak 
markka was crucial to the 
yard's success in winning the 
LNG contract and Mr Saari- 
kangas is alarmed at the recent 
strengthening of the currency. 
“I am looking forward to the 
time when the markka reaches 
its proper level, which is 
weaker than today,” he says. 

Productivity improvements 
have been the other factor in 
the group's success. Despite 


the big expansion in the Masa- 
Yards order books over the 
past few years, the company 
employs 1,800 fewer people 

today t han when Mr Saarlkan- 
gas took over. Although num- 
bers have risen slightly from 
their lowest point, the compa- 
ny's main response to its 
greater workload has been to 
increase sub-contracting. 

The impact of EU member- 
ship on the yard is likely to be 
limited. However, it will gain 
access to EU research and 
development funds, and per- 
haps more importantly, it will 
get a say in the community's 
shipbuilding policy. 

Mr Saarlkangas says the 
yard will certainly make its 
voice heard if competitors are 
unduly favoured by subsidies 
and other state support. "I con- 
sider all kinds of subsidy 
unfair. You are not allowed to 
have drugs in sport. Why 
should you have them in 
industry? I would like to have 
a doping committee in indus- 
try.’’ he adds. 

Christopher Brown -Humes 


ft KANSALLIS-OSAKE-PANKKI 

TALLINN REPRESENTATIVE OFFICE 
MEMBER OF THE KANSALLIS BANKING GROUP 

Kansallis was the first foreign bank to quote Estonia's new 
currency the Kroon. The representative office that was opened in 
Tallinn in January 1994 is the most recent addition to the bank's 
network of international resources. 



'vpv 

* , 




-.’3 1 


uf F* 

rerod ,n 

rid. 


Advisors to 
Finnish 
Companies 
Considering 
Mergers, 
Acquisitions, 
Divestitures or 
Joint 'Vbnrures 
• in Europe 
and North 
America. 


KANSALLIS BANKING GROUP IS AT YOUR SERVICE ALL OVER THE WORLD. 


Two 'Mill Street 

New York, New York 10005 

Telephone: (212) 732-1600 
Telefax: (212) 732-1872 


HELSINKI 
LONDON 
NEW YORK 
CAYMAN ISLANDS 
SINGAPORE 


KANSALLIS-OSAKE-PANKKI 

Tallinn Representative Office 

Aulis Rautio 
Chief Representative 
Tallinn Business Center 
H-.lrju h 

EK 0001 Tallinn 
Tel: + 172-0-3 10 551 
Telefax: +.172-6- 110 552 


LUXEMBOURG 

FRANKFURT 

ZURICH 

MOSCOW 

STOCKHOLM 


PARIS 
TOKYO 
HONG KONG 
TALLINN 


KANSALLIS-OSAKE-PANKKI 
Head Office 

Tapio Aho 
VP, Area Manager 

Country Risks and Financial Institutions 
Aleksis Kiven katu 3-5 
FIN-00500 Helsinki 
Tel: +358-0-163 9010 
Telefax: +358-0-163 4213 


Lines 5 













financial times 


WEDNESDAY NOVEMBER 9 1994 


FINLAND 


Christopher Brown-Humes on the country’s relationship with Russia 

Neighbour that always wins 


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NORWAY 


“Finland has fought many 
wars with Russia and it has 
come second every time." 
Finns will joke when discuss- 
ing their sensitive relationship 
with their giant eastern neigh- 
bour. 

The most recent confronta- 
tion was during the second 
world war. On that occasion, 
the country achieved one of its 
better results, managing to 
preserve its independence 
despite the sacrifice of a tenth 
of its territory 

The sensitivity in the rela- 
tionship is hardly surprising. 
Finland was ruled by Russia 
for more than 100 years until 
1917. During the cold war it 
was forced to adopt a stance of 
strict neutrality to avoid pro- 
voking Moscow. More recently 
it has had to endure the taunts 
of Vladimir Zhironovsky. the 
Russian nationalist, and even 
talk that a starving Russian 
population was about to flock 
over its borders In search of a 
better life. Even today, insta- 
bility in Russia almost auto- 
matically provokes a sell-off on 
the Helsinki stock exchange. 

Agains t this background, it 
is not surprising that Finland's 
desire to anchor itself firmly in 
the western camp was one of 
the main reasons that its elec- 
torate voted to join the Euro- 
pean Union by such a clear 
margin on October 16. In the 
back of many people’s minds 
was that the thought that Fin- 
land would gain more security 


without any new military alli- 
ances or commitments. 

The irony is that Finland 
would probably not have got 
its chance to apply for EU 
membership without .the 
momentous changes which 
have swept through Russia in 
the past five years. Its ability 
to chart a more independent 
course came with the ending of 
the cold war and the collapse 
of the former Soviet Union. Mr 
Mikhail Gorbachev, the former 
Soviet president, signalled in 

1990 that Finland was able to 

Instability in Russia 
almost automatically 
causes a sell-off on the 
Helsinki stock exchange 

go its own way. Then, in mid- 

1991 Sweden applied for EU 
membership. When Finland 
duly followed suit in March 
1992. the move passed almost 
unnoticed in Russia. 

In the run-up to October’s 
referendum, both supporters 
and opponents of EU member- 
ship used the Russian issue to 
back their argument. 

Mr Esko Aho, the prime min- 
ister. said: “Finland will be 
able to be very active and play 
a very important role In pro- 
grammes the European Union 
has for assisting Russia 
“My impression is that on 
the Russian side they see the 
membership of Finland as an 



hralo 


LAPPI 


Kemijarvi 


RUSSIA 


k_Pi4u 


OUUI 


.Kajaanl 


KUOPIO 


KE90- Kuopio 
SUOMI 


POHJOIS- 

KARJALA 


Outokumpu 


Poh, TURKU 

• PORI 
RaumaL 


HAME 


JyvBSkyta 

MSKKEU 


Lahti 


The Lutheran Cathedral, a landmark in the centre of Helsinki Ton, 


UUSIMAA 

NKI 

Gulf of Finland 
. A 

ESTONIA 


RUSSIA 


opportunity also for Russia 
because of the fact that 
resources for cooperation will 
be increased." 

Opponents are not so sure. 
They believe Finland will 
slowly be drawn through EU 
membership into less neutral 


defence structures, which 
could in a future east-west con- 
frontation put the country in 
the front line. Mr Risto Vola- 
nen. a member of the “No" 
camp, says: “l am worried we 
are putting ourselves on the 
chessboard in such a way that 


we are not in control of the 
moves that are made.” 

The aim is still to hang on to 
the spirit, if not the fact, of 
neutrality. Thus. Finland has 
joined the Partnership for 
Peace, while stressing this is 
not a staging post on the way 


to full membership of Nato. As 
for the Western European 
Union, the country says It will 
seek observer status but has 
declined to give any commit- 
ment beyond that 
This shows a continuation of 
the pragmatic stance which 


Finns have adopted in their 
R ussian dealings for most of 
this century. It is an approach 
that has benefited them in 
many ways. 

The best example has been 
trade. During the cold war, 
Finland had a privileged trad- 
ing relationship with the 
Soviet Union. Under a clearing 
system arrangement, agreed at 
government level and imple- 
mented through five-year 
plans, the country built up a 
dangerously high dependence 
on its eastern neighbour. Most 
of Us oil and gas imports came 
from the Soviet Union: in 
exchange it supplied ships, 
machinery and equipment, 
chemicals and consumer . 
goods. 

At its peak in the mid-1980s, 
the Soviet Union accounted for 

It remains open to doubt 
whether Finland can 
market itself as the 
“Gateway to Russia" - 

26 per cent of Finland's trade. 
The total fell during the late 
X980s. but even so the Finnish 
economy felt a massive shock 
when the clearing system was 
abandoned - at Soviet insis- 
tence - at the beginning of 
1991. The blow deepened Fin- 
land’s three-year recession 
between 1991 and 1993 at a 
time when it was already reel- 
ing from the consequences of 
1980s oyer-heating and a down- 
turn in the international eco- 
nomic cycle. 

Finnish-Soviet trade, having 
been worth FM36.6bn in 1983, 
fell to just FM9.7bn in 1992. 
However, there are already 
clear signs of recovery, hi 1993 


the trade was worth EMl39fin 
and this year it .is predicted to 
reach FMlfibn, of 7.2 per cent 
of the country's total.' This 
makes Russia Finland’s. fifth 
largest trading partner^: . 

But the structure of tbe%: 
trade today is totally different ' 
Waving. been centralised and 
largely the domain of Finland 's . 
big exporters, the picture is 
now more fragmented and 
thousands of Finnish compa- 
nies are involved; Moreover, - 
the type of trade has changed. 
Today, Finland is exporting (dr;.-, 
re-exporting) far more' con- 
sumer goods than in the past - 
Trade is also more complicated 
due to the absence of a sound 
legal and banking infrastruc- 
ture on the Russian side. 

Finland is confident it will, 
benefit in the long tram from - 
its geographical proximity to . 
Russia and, in particular, its 
closeness to' St Petersburg - ., 
where Finnish companies are 
already among the most active 
foreign investors. The. Finnish - 
port industry has already bene-.' ' 
fited from congestion and obso- 
lete facilities on the Russian 
side, helped by toe. fact that 
the two countries share a com- 
mon rail gauge. 

Whether Finland can suc- 
cessfully market Itself more 
broadly as the "Gateway to 
Russia” and attract foreign ■' 
investment on the back of it 
remains open to doubt Finland v 
has more experience of dealing 
with Russia than other west-’ 
era countries. But -its experi- 
ence derives from a different . 
era and different conditions 
when different people were in . 
charge. In many respects, it is 
having to start afresh, just like 
everyone else, in its dealings 
with the "new” Russia. 


T he glory days of Finnish 
design are, for the 
moment at least, over. 
Way back in the 1950s and 
1960s, anybody who knew any- 
thing at all about design knew 
that the F inns were much of 
what modern design was at. 
Though Finland came into 
design prominence later than 
its northern neighbours. Swe- 
den and Denmark, the impact 
it made was huge. 

Alvar Aalto's beautifully 
lucid and tranquil designs, 
often based on laminated 
blond Finnish beechwood. 
from the 1930s found a new 
audience in the young Euro- 
peans hungry for a new aes- 
thetic after the dreary war 
years. Eero Aarnio's chairs 
became models of ergonomic 
rectitude. 


Finnish design should not be ignored, though it is out of the limelight 

A gift for order, serenity and logic 


Designers such as Tapio 
Wirkkala and Umo Sarpaneva 
brought a new approach to 
glass-making and bounced 
upon the international stage 
at the Milan Triennales during 
the 1950s. But it was probably 
the colourful cotton textiles of 
Marimekko that made the big- 
gest impact round the world. 
Her fresh, joyfnl, sunny 
approach brought a new inno- 
cence and vivacity to the busi- 
ness of weaving textiles. 

Today the works of these 
designers may be no less beau- 


tiful or attractive but they are 
somehow, subtly, out of tune 
with the times. In spite of an 
inherent feel for quality com- 
bined with simplicity and a 
deep aversion to pretentious- 
ness, Finnish design currently 
seems to be out of the lime- 
light 

A look through the Interna- 
tional Design Yearbook for 
1993 edited by Borek Sipek 
reveals scarcely a Finnish 
object - during the 1950s and 
1960s this would have been 
unheard of. 


Nevertheless, behind the 
scenes, all Is not lost. The 
high-profile names may not be 
there (this is currently a niche 
market for the Italians and. 
surprise, surprise, the British) 
but profitable, if less starry, 
markets are being developed 
in office, school and other con- 
tract areas. These have always 
been particularly suited to the 
Finnish gift for order, serenity 
and logic. Isku, for instance, 
uses light Finnish birch and 
pine for shelving, simple, 
orderly chairs and tables. 



PS IN PULP, 
D POWER. 


A. Ahlstrom Corporation art: leaders 
in the fields of pulp and paper making 
equipment and sy stems, boilers for 
steam and electricity generation, and 


speciality papers. We work hand-in- 
hand with our customers to develop 
products and services that arc suited 
to their needs. 


AHLSTROM 


while Lepo Product’s Paletti 
collection of chairs, tables, 
office furniture, lamps and 
storage units is durable, 
sturdy and much in demand 
among interior designers. 

E ven though Finland is 
unlikely ever to prove a 
rival to Paris, Milan or 
New York, it is building up a 
surprisingly successful and 
profitable business in clothing. 
Exports have grown continu- 
ously and steadily. The open- 
ing of the Russian market has 
given the clothing industry a 
big boost but ranges such as 
Lubta ski wear have built a 
steady International following 
for their combination of prac- 
ticality, fashionability and rea- 
sonable prices. 

Anne Linnomaa had built up 
a niche business, too, with her 
ecological clothing collections 
for the eco-aware. The com- 
pany was producing simple, 
naturally dyed cotton clothing 
long before ecology became 
fashionable. 

FriTtala bas always been 
renowned for its exquisitely 
made and classically designed 
suedes and leathers. It has 
managed to walk that fine line 
between tbe classic and the 
modem, updating tbe suedes 
(reindeer mid pig) and leather 
styles with ent and colour. 
Popular in St Petersburg, as 
well as Peking, it is concen- 
trating on selling through spe- 
cialty boutiques. 

Lapponla is Finland's big- 
gest most internationally suc- 
cessful jewellery company. It 
uses gold in a rich, almost 



Kalevala Koru designs celebrate the myths and legends of Finland’s past 


sculptural way, combining it 
with aquamarines, opals, ame- 
thysts, tourmalines or pearls 
of diamonds if you wish, to 
make rings, brooches, neck- 
laces and bracelets. Less eth- 
nic in its appeal than Kalevala 
Koru and more contemporary 
in approach, it has an interna- 
tional following. 

Hackman Housewares has 
long been a byword for solid 
quality, sturdiness and clean 
lines. Its range of stainless 
steel, coated aluminium, cop- 
per and cast iron cookware is 
scarcely bettered anywhere. 

Though Finland is on the 


whole irredeemably associated 
with the contemporary, there 
are niche businesses that hath 
back, or perhaps more politely 
put build on a more nostalgic 
past. J. Marttiini’s hunting, 
fishing and camping knives, 
derive from a traditional way 
of life and have a strong, 
visual appeal even for those 
who will never gut a fish or 
skin a reindeer. 

Kalevala Kora makes jewel- 
lery that celebrates the myths 
and legends that are part of 
Finland’s past. Many of the 
pieces are inspired by exca- 
vated artefacts - rings are 


intricately worked, a menag- 
erie of ""iiwaig ranging from 
serpents to horses and birds . 
appears on brooches, rings, 

• necklaces. Pectoral crosses 
based around tbe “praying 
Mary” and Karelian ribbon 
winding Are richly dramatic. 
Stones such as amethyst and 
spectrolite as well as rock 
crystal are combined with sil- 
ver and bronze to produce jew- 
ellery with a distinct national 
identity. All the jewellery is 
made by tbe Women of Kale- 
vala. a non-profit organisation 
’ formed to ensure that Fin- 
land’s rich, cultural history 
lives on in a vital way. 

The Nostalgia Home Collec- 
tion looks as if it comes 
straight out of a quintessen- 
tially English conservatory - 
here are elegantly light and 
graceful shapes, tables, chairs, 
storage shelves, all made from 
lightweight, sandblasted and 
powderpainted iron, which 
could happily live indoors or 
out 

Aalos managed to combine A 
traditional woodworking skills 
with a contemporary approach 
to children's play in its beauti- 
fully crafted wooden toys all 
made from Finnish birch. 

Those who have forgotten, 
or those who are too young 
ever to have seen, Alvar Aal- 
to’s serene and classic furni- 
ture might like to know that 
Artek, the company which is 
forever linked with his name, 
is still going strong. As trends 
go in and out, Aalto's furni- 
ture may be more or less in 
fashion, but something about 
them endures. There is noth- 
ing that is modish or ephem- 
eral about them. As long as 
men need seats to sit on, 
tables to eat off and quelque 
chose pour I'oeil" Aalto's furni- 
ture will ltve on. 

Lucia van der Post 




Continued from previous page Government ownership and privatisation 


that the state could have been 
more aggressive, selling out 
more stakes earlier In the 
cyclical upturn which has 
favoured the country's big 
exporters and driven the stock 
market up sharply in the past 
two years. 

But there are good reasons 
for the government's caution. 
One is Finland’s three-year 
long recession between 1991 
and 1993 which dragged many 
companies into the red and 
sent share values plunging. 
“We have always had a very 
company specific orientation," 
says Mr Matti Vuoria, sec- 
retary-general of Ministry of 
Trade and Industry. 

Another consideration has 
been the small size of the 
domestic market which could 
easily have been swamped if 
the government had been too 
ambitious. 

The momentum of the pro- 
cess has shown no signs of 
abating. Indeed, one of the 
most ambitious parts of the 
programme - a partial privati- 
sation of Neste, the oil and pet- 
rochemicals group - is likely 
to be next, possibly as early as 
the spring of 1995. Neste has 
been valued at FMlQbn, so that 
even if only 20 per cent of the 
company is sold initially, it 
would be the biggest F innis h 
privatisation so for. 

In addition, tbe government 
is looking for parliamentary 
permission to reduce its stake 
further in three other compa- 
nies: RautaruukkL Valmet and 
Kemira. 

A key question will be the 
attitude of the Social Demo- 
crats who. the polls say, will 
return to power in general 


Minimum ownership 


Current ownership Previous ownership 


r.~ 


- - i 
? - 




Veftsfluoto 
Valmet 
Rautaruukki 
Outokumpu 
Neste 
Kemira 
Imatran Voima 


MS 




* 


ana 




10% 20% 30% 40% 




Soutdk Prctm 3tDCMjroK«n 


50% 


BO% 


70% 


80% 


90% 100% 


Stakes cut gradually 


elections next March. They 
have been less enthusiastic 
about the privatisation process 
than the current centre-right 
administration and they could 
try to slow the process down. 

International investors have 
played a crucial role in the pri- 
vatisation programme, largely 
because there has been too 
much stock for domestic insti- 
tutions to swallow and there 
has only been a limited retail 
element. More than 50 per cent 
of the shares offered so far 
have been taken up by foreign- 
ers. 

This reliance on the interna- 
tional market has helped to 
drive up foreign ownership of 
Finnish companies at a time 
when foreign buying has in 
any case been heavy due to 
strong fundamentals and the 
1993 liberalisation of rules on 
foreign ownership. Today 
around 30 per cent of Finnish 
shar es are in foreign hands. 

In some companies, the level 


is much higher. For example, 
more than 50 per cent of Nokia, 
the high-flying telecommunica- 
tions group which launched a 
FM2.4bn share issue during the 
summer, is now foreign -owned. 
This prompted the group to 
seek a listing on the New York 
Stock Exchange, the first Finn- 
ish company to do so. 

Some commentators worry 
that high foreign ownership 
levels and the contin uing pri- 
vatisation programme could 
unsettle the development of 
the stock market at a time 
when it is within striking dis- 
tance of its 1989 all-time high. 

A sudden withdrawal by for- 
eigners could quickly cause the 
market to plunge simply 
because domestic institutions 
could not handle It. This is 
what happened in the Finnish 
bond markets earlier this year. 
The risk of profit-taking in the 
equity market has been height- 
ened by the strength of the 
markka which has amplified 


dollar earnings. 

With privatisation, the worry 
is one of over-loading. Mr Ari 
Lahti, managing director of 
Protos Stockbrokers, says par- 
liamentary authorisation exists 
for a further FMllbn worth of 
privatisation excluding Neste. 
He argues that this is too big a 
burden for the market to 
absorb in the short term, when 
the total supply of cash from 
mutual funds, foreigners and 
domestic institutions is 
unlikely to exceed FMlSbn. 

Mr Vuoria says foreign insti- 
tutions will continue to play a 
crucial role both in the privati- 
sation process and the develo^gt 
ment of the stock exchange, 
but he expects their interest to 
become “more focused” and 
“selective". At the same time. 
he believes the growing domes- 
tic interest in the country's pri- 
vatisation process will con- 
tinue. 

Christopher Brown-Humes 


i 

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FINANCIAL TIMES SURVEY 


BOLIVIA 





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Wednesday November 9 1994 






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t is the poorest country in the western 
hemisphere after Haiti. Seventy per 
cent of the population live in poverty; 
average life expectancy is 60 years; 86 
out of every 1,000 babies die before they 
are a year old. 

Bolivia is still suffering the legacy of 
four centuries of plunder capi talism its 
IS52 revolution nationalised the mines, the 
centrepiece of the Bolivian economy, and 
opened the countryside to land reform. 
But in driving out the mine owners and 
landowners, the revolution drove away 
capital too. 

The state, beset by corruption, proved 
an ineffi cient investor and little better at 
improving the lot of the population. In a 
country of more than 7m people, fewer 
than Jm have formal jobs and only 350,000 
have bank accounts. The indigenous 
majority of Bolivians does not speak Span- 
ish, suffers the racism of the European-de- 
scended minority and still ekes subsis- 
tence from the land or From petty 
commerce. 

Landlocked, with prices for its main 
commodity exports plunging in the 1880s, 
Bolivia’s survival without continued for- 
eign aid in a competitive world market 
remains in doubt. 

Yet, despite this bleak background, or in 
part perhaps because of it, there is now a 
strong sense of change in many parts of 
the country. Some regions - in particular, 
the plains to the east around the city of 
Santa Cruz - are enjoying growth led by 
agricultural exports. 

The caricature image of a country beset 
by military dictatorships and political 
instability - Bolivia has experienced 78 
governments in 169 years of independence 
-is losing its relevance now that elected 
governments have been in place for 12 
years. 

There have been nine years of economic 
stability since 1985. when inflation topped 
23,000 per cent. This year, inflation should 
fall to 7.5 per cent or less -only Argen- 
tina’s will be lower in Latin America. 
Once heavily protectionist, the country 
now has a maximum tariff of 10 per cent 
and allows free inflow and outflow of capi- 
tal 

Yet, economic stability has not been fol- 
lowed by sufficient overall growth to 
improve the lives of the poor majority. 
Slow growth, the present government 
believes, is an inevitable consequence of 
low investment over many years. Sharply 
increasing the investment rate is therefore 
its prime objective. 

The architect of the successful 1985 eco- 
nomic stabilisation plan is now Mr Gon- 
zalo Sanchez de Lozada, the president The 
cornerstone of his policy to increase pri- 
vate investment - he hopes it will reach 
more than 20 per cent of gross domestic 
product by 1996 compared with about 14 
per cent at present - is a plan to transfer 
six state companies responsible for one- 
etghtiz of the country’s economic activity 
to the private sector. 

The process is being called capitalisa- 
tion. It aims to entice foreign private oper- 
ators to make a significant equity invest- 
ment in the businesses, typically 50 per 
cent, and to distribute the remaining por- 
tion to Bolivians through newly created 
pension fmjdaccounts. 

The process is expected to start with the 
capitalisation of the state electricity gener- 
ator. 

The single most important capitalisation 
will be that of the state oil company. 



Anttmb&am 


Two feces of La Pas the capital's modem city centre reflects nine years at economic stability ... but on the fringes at the city, the homes of the poor majority have not changed 

Economic growth is the key 

Despite a bleak background, or in part perhaps because of it, there is now a strong sense of 

change in many parts of the country, writes Stephen Fidler 


YPFB, which, despite its poor investment 
record, still accounts for about 9 per cent 
Of GDP. 

Mr Edgar Sara via, the senior official 
responsible for guiding through the pro- 
cess, says that by next year the first stage 
of capitalisation - transferring the compa- 
nies to the management control of the new 
foreign shareholders - should be com- 
pleted by July next year. Already though, 
he admits capitalisation is running six 
weeks behind schedule. 

The completion of the process - let alone 
its ultimate success - cannot be taken for 
granted. It requires a heavy legislative 
programme and although the government 
coalition has with difficulty retained 


majorities in both houses of Congress, 
they may not be reliable or durable. 

Furthermore, because the Bolivian mar- 
ket is small, the amount that foreign 
investors are willing to plough into the 
companies will depend significantly on the 
extent to which they can use the compa- 
nies to penetrate foreign markets. 

Bolivia is therefore depicting itself as an 
entrepot - particularly for energy and 
transport - for South America's southern 
cone. And with regional economic integra- 
tion proceeding apace, both at the govern- 
mental and entrepreneurial level, the idea 
of Bolivia as a hub is no longer the pipe- 
dream it would have been a decade ago. 

But, while capitalisation may be a neces- 


sary condition for accelerating economic 
growth, nobody sees it as sufficient. If 
potential foreign investors are less worried 
about the country’s political stability than 
they were, they have significant concerns 
about other obstacles to business. 

One big obstacle, particularly to invest- 
ment in agriculture, is land titling. The 
country’s competing titling authorities 
have now more or less ceased to function 
and the present law allows for different 
owners of the land, the underground 
resources beneath it, and the forest above. 

Mr Jose Guillermo Justiniano. the minis- 
ter of sustainable development and the 
environment, says “complete chaos" sur- 
rounds the titling issue, but that the gov- 


ernment is drafting a law to address the 
problem. 

Corruption remains another pressing 
problem - and the aim of reducing it pro- 
vides a further reason for ending state 
ownership of productive enterprises. Con- 
gress is wrangling over whether to lift the 
diplomatic immunity of the previous presi- 
dent, Mr Jaime Paz Zamora, who has been 
accused along with other members of his 
party of ties with drug traffickers. 

The company running La Paz’s cable 
television channel, for example, has com- 
plained it is being targeted for bribes by 
city' officials. There is a price for not pay- 
ing; the frequency with which the compa- 
ny’s cables get damaged by municipal and 


other vehicles. Other obstacles cited by 
foreign investors Include poor infrastruc- 
ture, the continued strong influence of the 
trade unions, and the legal system. 

Mr Guido Antesana, a former head of 
Bolivia’s banking association, describes 
the legal system as "morally bankrupt and 
technically obsolete”. For business. It pres- 
ents "a big roadblock. There is no cer- 
tainty that any contract will be enforced,” 
he says. 

The government has already begun to 
move on this, although the task is enor- 
mous. Constitutional reform has, among 
other things, established a new tribunal 
aimed at cleaning up the judiciary. In 
another unprecedented development, two 
supreme court justices were impeached for 
corruption. 

It is not only in the economic domain 
that the government has directed its 
reform efforts. It has overhauled the exec- 
utive branch, the drawback being that get- 
ting accustomed to this new structure has 
delayed other aspects of the government’s 
programme. 

It has passed a law aimed at decentrali- 
sing political decision-making. Called pop- 
ular participation, it is designed to devolve 
power and finance to local municipalities 
and community groups in all parts of the 
country, many parts of which have never 
had local government Education reform 
has for the first time permitted instruction 
in languages spoken by the country’s 
indigenous majority. 

By any standards, this is an ambitious 
reform programme, and unlike some lead- 
ers, the US-educated Mr Sanchez de Loz- 
ada does not lack the “vision thing". 

What is in question, however, is applica- 
tion. The president, a philosophy graduate 
from the University of Chicago, loves 
“brainstorming” sessions. He follows opin- 
ion polls closely - too closely, say some of 
his supporters. And, partly as a result, he 
makes decisions and then often reverses 
them days later. 

Because of the country's heavy depen- 
dence on foreign aid - which he hopes his 
economic programme will end -his deci- 
sion-making has to take Into account the 
often conflicting opinions of the interna- 
tional financial instit utions, the more than 
400 non-governmental organisations oper- 
ating In the country, and the US and other 
donor governments. 

The president has no love either for 
Bolivia’s pork-barrel political culture, or 
the cut-and-thrust of politics, which he is 
widely said to see as an obstacle to his 
reform ideas. 

Another subject he is said to despise is 
the controversy over the growing of coca 
leaf, the raw material for cocaine. The 
importance of coca to the Bolivian econ- 
omy has declined over the past five years 
- the area under cultivation has remained 
more or less stable, while it has quintu- 
pled in Peru -but it remains a thorn in 
the government's side. 

He has been caught in the middle of 
Washington's policy of repressing coca 
cultivation and the Bolivian population's 
romantic, if possibly misguided, attach- 
ment to the growers of the plant. 

Already. 15 months has passed of a short 
four-year presidential term. The president 
makes no bones about the enormity of the 
task he is undertaking. But he says he has 
a consolation: “There’s one thing that 
makes me see the light - there's no way I 
can do it worse than the others have 
done." 


, resident Gomnlo Sanchez 
de Lozada talks to Step- 
hen Fidler, Richard 
Bauer and Sally Bowen 

Question: Your government 
gives the impression of having 
a. lot of vision, a lot of ideas, 
which seem forward-looking 
and coherent. But some of the 
measures you have introduced 
-for example the reform of 
the executive- may have pat 
back other aspects of your 
reform. And after 15 months 
of yoar government, its practi- 
cal impact seems to have been 
^ limited. 

^Answer In the first year of 
▼ this government, the legisla- 
tion which came about, includ- 
ing constitutional reform, was 
simply extraordinary. But that 
is very far away from people’s 
lives. 

Let's start with our reform of 
the executive branch. If you 
don’t take that step at the 
beginning of a new govern- 
ment the cement gels and you 
can never change it. But 
there’s a cost - in time lost 
until people adjust and un ti l 
the system works - but the 
steps that have been made 
have been very important 
. Let’s go to step number two 
- popular participation. For 
the first time in 500 years we 
have recognised the existence 
of native communities. Why 
Bolivia works with, a low level 
of violence, and is a working, 

■ functioning democracy with 
our terrific, critical poverty is 
basically because the family 
and the community 'is very 

important. We*ve. created terri- 
torial municipalities - true 
local government -as opposed 
to the traditional, colonial, 
Spanish, city where the land- 
. owners .fived and which gov- . 
emed the countryside. 

We’ve given economic and 
b pnirticfll power back to the peo- 
r r jp]&. TwotWrds of Bolivians are 
Indian . communities and the 
great majority of Bolivians 
don’t speak Spanish - as toe 
president doesn't speak it well. 
We also took 20 per cent of the 
central government's income 
mid distributed it according to 
the population, so for the first 
time in 500 years people 
received money instea d of 
gpnriitig . money to central gov- 
ernment. They’re deciding 


INTERVIEW 


‘Very important steps 
have been made’ 


what they’re going to spend 
the money on, and we’ve also 
given them the administration 
of health and education. 

The central government will 
proride the teachers and the 
doctors, but the community 
will administer them. Of 
course, the teachers' unions 
are indignant and the doctors 
are outraged because they 
have these poor, dirty Indians 
telling them what services 
they need. 

It started on July 1, so the peo- 
ple are starting to get the 
money. Of course, they’ll wake 
up and realise the money’s 
nothing to the problems, 
but before they had nothing. 
Aren’t yon worried about local 
corruption? 

The church asked me about 
that and I said if that should 
happen we’d- be the first coun- 
try to have democratised cor- 
ruption. Why should only the 
big gays steal? Let the little 
guys steal But I don’t think so 
-I asked that of the local 
mayor in a community I vis- 
ited and he said: ’I can’t 
because everybody’s looking at 
me’. 

What about central govern- 
ment? 

The third thing was constitu- 
tional reform, and we’ve gone 
for the German {electoral] sys- 
tem where we have propor- 
tional representation in the 
congress, but half the legisla- 
tors are voted by districts. 

Now, we just have a fist, so if 
you vote for the president in 
every department you get the 
president’s men. But they’re 
going to have the right to vote 
for the guy that represents 
( ft pm and for the preside nt , but 
we will still have proportional 

representation. 

In the constitutional reform, 
we’ve brought in the ombuds- 
man, and we’ve brought in 
complete reorganisation of the 
judicial branch. 


Finally, we come to capitalis- 
ation which is probably the 
cornerstone of the whole thing. 
In traditional privatisation you 
sell the state-owned assets and 
whoever buys them has to 
invest and modernise. 

What we’re saying is, don’t 
buy it from us. put in the 
money to modernise it and 
what is left in the hands of the 
state, which would be up to 50 
per cent, we then distribute to 
the Bolivian people for pension 
plans. That’s easier said than 
done: individual capitalisation 
pension plans. 

Are you optimistic that capi- 
talisation will work, will 
attract investors? 

We’re very sure that it will. 
Let me give you a reason why: 
Bolivia is a relatively large 
country but it’s a small, poor 
economy. But we had never 
taken into account, living up 
here in the Andes, that it is a 
hub: its location is what makes 
it valuable. 

Let’s take the electric energy 
sector we have 31 companies 
interested in the capitalisation 
which we hope to have fin- 
ished by March. What they've 
told us is you're sitting at 4,000 
metres and an awful lot of 
water goes down to sea level. 


and it’s environmentally 
friendly. We can sell the elec- 
tricity into southern Peru, 
northern Chile and Argentina 
and into Brazil. 

You take the second sector 
hydrocarbons. Bolivia, on top 
of very important reserves, is 
situated strategically so that it 
can export into northern Chile, 
southern Peru. Sao Paulo. 

For big oil companies, gas 
was a nuisance and an unnec- 
essary by-product. But in an 
environmentally-conscious 
world, big companies have to 
be gas-orientated. We think the 
prices are ridiculously low, we 
think we are being taken to the 
cleaners, but we know that the 
trend as people get used to gas. 
and see the benefits of an 
abundant, economic and clean 
fuel, we're sitting on a gold 
mine. 

The last thing on the agenda 
is educational reform. Here 
we're talking about something 
that nobody ever accept- 
ed -that you should leant to 
read and write in your native 
language. 

Nobody can learn another 
language until he's learned to 
read and write and think in his 
own language. This doesn't 
sound like much, but this is 



President Sanchez de Lozada: ’We’ve given economic and poKIcal power back to the people’ na» Rogers 


revolutionary. They grab these 
poor children, they throw them 
into school, they have a 
teacher that talks to them in 
Spanish and are prohibited to 
even use their native clothes. 
Secondly, we've decided that 
all schools, public or private, 
must be accredited. We want to 
have standard testing: we've 
created a regulatory body 
that's elected by a two-thirds 
majority to do this. The school- 
teachers are outraged because 
they will be dependent on the 
community. 

Isn't it true tbat you’re really 
not informing people much 


about capitalisation? 

In a way. you’re right. We 
learn from Machiavelli that 
change is not advisable 
because those affected realise 
it immediately and those bene- 
fiting take a long time. So 
there's a terrific problem in 
communications, and it’s basi- 
cally because the president 
isn't talking to the people. The 
reason he's not talking to them 
is that we are in this gestation 
period - these are very hard 
policies to put in place. 

This is the critical year we 
must finis h capitalisation this 
year, we think we can do it 


ON OTHER PAGES IN THIS SURVEY 

Trade and foreign policy: New exports M " rhe fi" 3 " 0 * 35 sector is one of the 

are boosting revenues. The debt burden, fastest-growing areas of the Bolivian 

Key Facts and BoBvia in brief .... Page II Spf - economy Page IX 

Infrastructure: the roads system is f polrt,cal system: obstructing the 

getting a face-lift. Energy exports: a \ president’s grand vision. Drugs: from 

cherished ambition Page IV ■»•'* lR* |f SS? teargas to handshakes. The 

yy- *:*“£$*' Jjyjy environment: forestry issues Page XI 

The mining industry: minerals account ifjB 

for almost half of export revenue: some A: "TS£.vJ W///&& City profiles: La Paz - 'delightfully 

S380m last year Page V The Indians: Mr Victor Hugo Cardenas, provincial’ - Cochabamba and Santa 

Bolivia's vice-president, is greeted Cruz, gateway to the Amazon .... Page Xli 

Capitalisation alms to shift companies (above) by villagers in his home town 

responsible for 12.5 per cent of GDP to on the shores of Lake Titicaca. ... 

theprtvate sector Pages Vl and VII Symbols are important Page VIII Production Editor Philip Sanders 


-easily we’ll get it done by 
1995. But people won't see any- 
thing till 1906 because the peo- 
ple who capitalise this country 
will have billions of dollars on 
deposit but then they have to 
do the studies, they have to 
place the orders and then 
they’ll be seeing it moving. 

Do you have a clear strategy of 
what you will do about Boliv- 
ia’s illegal coca production? 
Obviously not; who has a clear 
strategy with drugs? The day 
somebody invents a synthetic 
cocaine it's all finished. But 
the damage is to us because 
our institutions are too weak 
to resist the cartels. 

Hie amount under cultivation 
hasn’t grown In the last few 
years. Is that good news? 

In drugs, all I can say is it’s 
like having cancer and saying 
it’s not growing. You haven't 
got free of the cancer but at 
least it’s not growing. 

Are the armed forces and 
police Involved? 

Well, no. The aimed forces 
were intensely involved before 
democracy came back. These 
institutions have a great abil- 
ity to cleanse themselves 
through promotions, and they 
retire so quickly and they, 
move up, and we have isolated 
the armed forces; they only 


give a support role to the 
police. 

The police, who were terribly 
corrupt have again been puri- 
fied. I won't say lily-white, but 
I think that the area of great- 
est preoccupation is the judi- 
cial branch. We're working 
very hard because a country 
without justice is like a land 
without water. We’re working 
very hard to depoliticise it; 
make it independent; make it 
impartial; make it competent. 

Generally, institutionally 
we're doing relatively well. 
Where we're not doing well is 
that the so-called farmers' 
unions are the bottom rung of 
drug trafficking. I’m not saying 
they're taking It to England or 
taking it to the US, but they're 
definitely getting the paste to 
the boys in the line. 

Colombia’s integrating back- 
wards; they want to produce 
their own coca so they don't 
have to depend on Bolivia. The 
Bolivians want to produce 
their own cocaine so they can 
sell it directly to the market 
It's a very, very dangerous sit- 
uation and I must admit that 
we're racking our br ains . 




Don't forget that Bolivia was, 
like most countries, not only 
ineffective at providing goods 
and services, it was really inef- 
fective at providing social ser- 
vices. We recognise that that's 
the role of the state - the real 
mechanism of redistribution of 
wealth - hut we think govern- 
ments, including the developed 
countries' governments, are 
awful at doing that. They're 
better at producing electricity 
or oil than they are at produc- 
ing health and education. So 
we’re giving it back to the peo- 
ple. . . 

There’s one thing that makes 
me see the light - there’s no 
way 1 can do it worse than the 
others have done. When they 
say How can you give all these 
Indians all this political power 
and economic power?' I say 
■They can’t do worse than 
we’ve done/ 

You're worried about corrup- 
tion, you’re worried about 
them having a party; at least 
it’ll be a good party. They can't 
do it worse than we've done for 
500 years. 

Note: This is an edited version 
of the full text of the interview : 





FINANCIAL TIMES WEDNESDAY NOVEMBER 9 19S4 





BOLIVIA II 


T he accelerating process 
of opening Bolivia up to 
international markets, 
started in 1985, Ls beginning to 
bear fruit, A combination of 
entrepreneurial thrust and 
bilateral free trade agreements 
has helped close the yawning 
1993 trade gap. Now, in 1994, 
growing non-traditional 
exports are helping put Bolivia 
on a healthier footing with 
trading partners. 

"Bolivia adopted market-ori- 
ented reforms and low import 
tariffs earlier than any rjtin 
American country except 
Chile,'* says Mr Carlos Morales, 
trade and industry minister. 
“It’s been tough for business- 
men but they now realise that, 
with a small domestic market 
and low per capita income, we 
must export in order to pro- 
duce.” 

Official figures show revenue 
from non-traditionals - princi- 
pally soya beans, gold Jewel- 
lery and textiles - jumped 83 
per cent in first half of 1994 
compared with the same period 
last year. By year’s end. the 
trade ministry estimates, non- 
traditionals could earn $400m, 
approaching half of all export 
revenue. 

Last year, almost 40 per cent 
of Bolivia’s trade was with 
other Latin American coun- 
tries. The European Union 
accounted for 28 per cent 
- mainly traditional mineral 
exports - and the US for 24 per 
cent. High transport costs 
mean Bolivia’s present exports 
to Asia are a slim 8 per cent 
- products are mainly natural- 
resource based with little value 
added. 

The US has become the main 
market for Bolivia's non-tradi- 
tional exports. Under the 
Andean Trade Preference Act 
- instituted during the presi- 
dency of Mr George Bush to 
help support alternatives to 
illegal drugs trafficking - some 
6,000 Bolivian products can 
enter the US free of duty. 

Although landlocked, Bolivia 
has the advantage of sharing 
borders with many countries. 
Under the Pa2 Zamora admin- 
istration. Bolivia started nego- 
tiating a series of bilateral 
trade accords with neighbours 
and other Latin American 
countries. These initiatives 
have been stepped up under 
President Gonzalo Sanchez de 
Lozada. 

“The adoption by the 
Andean Pact countries of mar- 
ket-oriented economic policies 
has been good news for 
Bolivia," says Mr Morales. 
Peru is Bolivia's chief cus- 
tomer within the Pact, buying 


Sally Bowen reports on trade and foreign policy 

A healthier footing 



'p -- 'tr.-.ya&sT**,. ^ 

Proper invoices wffl be an innovation for the street-seHera of La Paz and their customers piouk Anana suan* 


$42m in Bolivian non-tradi- 
tional goods (mainly soya and 
its derivatives) in first-half 
1994 - nearly a quarter of the 
total exported and S3 per cent 
more than for the first six 
months of 1993. 

Boosting the chances of 
closer integration with Peru is 
the 1992 agreement which 
granted Bolivia rights to an 
Industrial free trade zone and a 
5km strip of desert coast near 
the southern Peruvian port of 
Ho. In return, Peru won access 
to Bolivian river port facilities 
in Puerto Suarez, on the bor- 
ders of Brazil, with an outlet to 
the Atlantic. 

Bolivia, however, is in pur- 
suit of the largest possible 
number of trading partners. It 
is particularly attracted to the 
Mercosur group of countries 
comprising Brazil, Argentina, 
Uruguay and Paraguay. Bolivia 
was granted "observer status” 
last December. 

"We see ourselves as a hinge 
between the Andean Pact and 
Mercosur,” says Mr Morales. 
“We believe in a larger trade 
area and we're negotiating 
aggressively within the vision 
of Mercosur." 

In January and March this 
year, Bolivia signed prelimi- 
nary free trade agreements 
with Paraguay and Brazil to 
complement its existing 
accords with Argentina and 
Uruguay. These are seen as 
essential, if limited, first steps 
in fulfilment of the ambition to 
join Mercosur. 

A landmark trade accord 
with Chile, signed in April 


1993, has so far proved disap- 
pointing. La Paz businessmen 
claim that Chile is blocking 
Bolivian exports by over-rig- 
idly applying non-tariff regula- 
tions while swamping the 
Bolivian market with Chilean 
consumer goods. Re-negotia- 
tions in October, however, 
should give Bolivians a chance 
to level the trade score. 

Bolivia’s most recent trade 
accord was signed with Mexico 
in September, allowing for 
phasing in of total free trade 
within 15 years. However, 98 
per cent of all products will be 
traded tariff-free within 10 
years and a significant portion 
immediately. 

T rade between the two 
countries is smalt 
- worth less than S20m 
in 1993 - and weighted in 
favour of Mexico. But Boliv- 
ians expect exports of wood, 
alpaca textiles and gold jewel- 
ler)’ to expand fast. Govern- 
ment officials estimate that 
bilateral trade will jump to 
S50m in year one. 

Meanwhile. Bolivia is also 
starting to see benefits from its 
five free trade zones estab- 
lished from 1991 onwards. 
Their objective is to cut incen- 
tives for the flourishing contra- 
band business which for years 
has sliced into state revenue 
from import duties and val- 
ue-added tax. 

Mr Oscar Ewel. general man- 
ager of GIT, the company 
which holds the 40-year conces- 
sions for the La Paz and Santa 
Cruz free trade zones, esti- 


mates that some 60 per cent of 
the S400m or so imported into 
Bolivia via Chile's free port of 
Iquique is smuggled. Mr Ewel 
believes that illegal goods 
entering Bolivia from Brazil 
via Santa Cruz account for 
S300m of a total of some $420m. 

GIT (part of the Banco Indus- 
trial-ICE group) has invested 
S&n in La Paz free zone infra- 
structure to date. Some 350 
Bolivian companies are now 
regular users and GIT expects 
to handle in excess of SlOOm 
this year. 

With a standard 10 per cent 
import duty and 13 per cent 
sales tax, GIT is collecting 
some $25m for the Bolivian 
customs. 

In a late October initiative, 
the La Paz free trade zone 
inaugurated a direct import 
service "to help formalise the 
informal trader who spends 
under $2,000 at any one time.” 
says Mr Ewel. 

Those buying through the 
free trade zone will receive and 
supply proper invoices, an 
innovation for the street-sellers 
of La Paz and their customers. 

Santa Cruz's free trade zone 
started operating in January. 
This year it will handle some 
S30m in merchandise, not yet 
making much of a dent in con- 
traband from Brazil. Smaller 
free trade zones have also been 
set up under concession in the 
cities of Cochabamba, Oruro 
and Puerto Aguirre. 

Still pending is reform of 
Bolivia's customs service 
which is scheduled for privati- 
sation in the near future. 


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• tangaten IMwnky. Engcna 



ESTABLISHED IN 1699 


BHN MULTIBANCO SJL 

The first Bolivian bank to Issue 
Euro-CD's and Euro-Notes. 

Manager of 80% of the mutual 
fund market In Bolivia. 

Leader of securities’ 
underwriting In the Bolivian 
Stock Market. 

The only bank with an 
underwriting facility from the 
I n ter am erican Investment 
Corporation. 

One of three banks with a US 
Export -Import Bank Bundling 
FacflWy, 

The only bank with an 
Overseas Private Investment 
Corporation Line 

CONTACT 

£d»jnl Dwhsen 
CarloaH. Fam ttn da t 
OodngoNavano 
Fair 
PO Bar: 


MULTIBANCO 


1 590-3 340881 
(591) ■ 2 320789 
(5611-2 390597 
(591) - 2 391356 
*824 LB Pax. Battuta 


Stephen Fidler examines the external econo my- 

Debt burden has been eased .* 


Bolivia's inflation rate has 
fallen dramatically and moder- 
ate growth has resumed. Its 
debt burden has been lowered 
through judicious negotiations 
with commercial and foreign 
government lenders. The gov- 
ernment has no outstanding 
debt to foreign banks having 
bought back the loans to 
banks, in two stages,at steep 
discounts to face value. 

The country remains none- 
theless highly susceptible to 
external financial and price 
shacks and over-dependent on 
financial help from foreign 
governments, multilateral 
institutions and non-govern- 
ment organisations from 
abroad. 

The involvement of these 
agencies significantly reduces 
- for better or for worse - the 
government's freedom of pol- 
icy action and undoubtedly 
lengthens the time it takes to 
make decisions. 

Bolivia's exports are still 
highly concentrated in a few 
commodities, prices of which 
are dependent on uncertain 
world markets. 

Between 1985 and 1993, the 
government estimates its 
terms of trade deteriorated by 
60 per cent and tbe deficit on 
tbe current account averaged 
abont 7 per cent of gross 
domestic product. 

Last year, the deficit wid- 
ened to an unsustainable 13 
per cent of GDP, although the 
picture has improved this 
year, helped by a sharp rise in 
non-traditional exports. 

To cover its shortfall, the 
government has needed inter- 
national assistance. In the 
past, this has ran at some 
S700m a year. After the gov- 
ernment signed a Si 40m three- 
year loan agreement with the 
International Monetary Fond 
in Washington last month, 
Bolivian officials headed for 
Paris to secure a further 
Sl.lbn aid package to help 
finance their reform pro- 
gramme in coming years. 

However, the government 
recognises the reliability of 
such future nows is open to 
question. The governments of 
industrialised countries face 
intensified budget pressures, 
and the emergence of compet- 
ing regions for aid -tbe for- 
mer communist countries, the 
Middle East and southern 
Africa - suggest that the 
future availability of finance 
cannot be taken for granted. 

Bolivia has one of the high- 
est per capita dependencies on 
foreign assistance in the 
world. “We are going to lower 
our dependence on aid. It's not 
sustainable.” says Mr Fern- 
ando Candfa, tbe central bank 
president 



Composition of external debt 

j 1985 40,97% Multilateral 55.6% 


1993* | 





Commensal Js-J 


3338% 1.64% &&& 


1 25.65% lateral 42.79% 



Saucer Corn! BanKarBoftm 

Indeed, debt ratios remain 
high. Total foreign debt 
totalled S3.79bn -55 per cent 
of GDP - at the end of last 
year, of which about $1.6bn is 
owed to foreign governments 
and S2.lbn to multilateral 
agencies. The ratio of total 
debt to exports was 536 per 
cent at the end of 1992, and 
debt service accounted for 39 
per cent of export revenues. 

Because the government's 
reform efforts are expected to 
increase the budget deficit in 
the next two to three years 
- the World Bank says the pro- 
gramme will cost 3J5 per cent 
of GDP during the period 1994 


~ mammy fewm 


to 1997 - the government’s 
need for finance will increase. 

The government is expected 
to take on the debt of the rail- 
ways and mining company, 
but other debts are expected to 
be transferred to the capital- 
ised companies. The net effect, 
says Mr Candia, is a net reduc- 
tion of 3300m in public sector 
debt 

After 1997, the government 
hopes that increased tax reve- 
nues from the capitalised com- 
panies will start to improve its 
financial position. Further- 
more, after capitalisation, 
increased foreign investment 
flows should allow the country 


to reduce its dependence on 
foreign aid and increased 
exports lower its need for for- 
eign finance. 

In the meantime, the sharp 
increase in non-traditional 
exports -up 83 per cent in the 
first half of 1994 over 12 
months earlier - has helped 
the current account position. 
This year’s first-half current 
account deficit fell 67.3 per 
cent to to g86.lm from 92638m 
last year. 

The increase in exports has 
also been helped by firmer 
commodity prices. It may also 
be that at last the economy is 
responding to a central hanfc 
policy which aims to avoid 
unnecessary fluctuations In 
the exchange rate and to hold 
It stable in real terms. >! 

At the same time, lower 
interest rates overseas and an 
improved perception of the 
political and credit risk of pla- 
cing funds in Bolivia has 
allowed some repatriation of 
flight capital. As a result, net 
foreign reserves have now ^ 
risen to their highest level in 
Bolivian history: $550m 
-equivalent to about 5% 
months of imports. 


BOLIVIA IN BRIEF 


■ Main towns 

Population in thousands 
(1988): 

1,050 


377 


... 114 


....615 


... 195 

Sucre 

96 

■ Language 


Spanish; also Quechua and 
Aymara 


Ethnic mix 


Some 30 per cent of the 
population is Mestizo, 25 per 
cent Quechua, 17 per cent 
Aymara and 12 per cent white, 
with the balance classified as 
“other'' 


Entry requirements 


1400-1800 

(Sat) 0900-1200 (business only) 
Public offices: 

(Mon-Fri) 0800-1200. 
1430-1830. Afternoon hours 
later in provinces. 

Banking: 

(Mon-Fri) 0830-1130, 

1430-1700 

Shops: 

(Mon-Fri) 0900-1200, 

1400-1800 
(Sat) 0900-1200 


■ Public holidays 

1995: January 1 (New Year) 

April 14 (Good Friday) 

May 1 (Labour Day) 

June 15 (Corpus Christ!) 

August 6 (Independence) 

November 1 ....(All Saints' Day) 
December 25 (Christmas) 


TIME: 


Four hours behind GMT 


Climate 


Passport required by all 
Tourist card or visa required by 
ail except citizens of US and 
certain western European 
countries (not France). Exit 
stamps needed before 
departure. Non-tourist visitors 
are required to obtain a 
‘Determined Object Visa.' All 
visitors must register with the 
immigration authorities. 


Working hours 


Government and business: 
(Mon-Fnl 0900-1200, 

GDP by type of activity 

1993 preliminary Rgires 


Agriculture, toraury. 
food 16.12% 


Tropical below about 1,500m, 
cool above 3,500m. 

Examples: Santa Cruz (437m 
attitude), mean temperature 
23.8°C. average annual rainfall 
1,157 mm; Cochabamba 
(2,553m), mean temperature 
18°C, average annual rainfall 
470mm; El Alto (4,103m), mean 
temperature 8.B°C, average 
annual precipitation 560mm. 

Weather in La Paz (3,658m): 
mean temperature 11.2°C, 
average precipitation: 439 mm, 
hottest month: November 
6°C-19°C (average daily 


KEY FACTS 


Area 1,098,581 sq km 

Population 7.71m (end-1993 estimate) 

Head of state President GonzaJo Sanchez de Lozada 

Currency Boliviano 0>b) 

Average exchange rate 1993 $1=Sb4.27; 1/11/94 $1 =$04.66 


ECONOMY 


1993 


Latest 1 


Total GDP (SbnJ... 6.6 n.a 

Real GDP growth (%) 4.2 4.0 

GDP per capita ($) 856 n.a. 

Consumer prices (%, year end)... g.3 7.5 

Reserves minus gold (Sm) 223 256 

Total external debt ($m) 4,326 n.a 

Debt service ratio (%) 238 n.a 

Current account balance ($m) -471 -451 

Exports (Sm) 710 887 

Imports (Sm) 1,206 1,326 

Trade balance (Sm) -496 _43g 

Mate trading partners 

(1992, % by value) Exports Imports 

us - 16.0 23.3 

Ar 9«ittea 21.5 10.4 

® razH 14.5 

Ja P«i 12.6 

18.1 

Development indicators 20 yra ago latest* 

Life expectancy (years) 47.0 59.6 

Infant mortality rate* 151.0 82 0 

Population growth rate {% pa).... £6 2.5 

Dependency ratio 4 0 g 7 0 83 

Urban population (% of total) 41 5 52 4 

Agriculture as % of GDP 20 3 32 6 

Adult illiteracy (% aged 15+) ni 22.5 

Notes: 'EIU forecasts for 1994 except reserves (May). 

’Estimate 

J per 1 ,000 live births 

‘Ratio of dependent population (aged under 15 or over 
64) to working age population. 

Sources: IMF. World Bank, Economist Intelligence Unit 


minimum and maximum), 
coldest month: July IOC-iT 1 ^, 
driest month: June; 8mm 
average monthly rainfall, 
wettest month: 


January: 140mm average 
monthly rainfall. 

Sources: EIU Country Profile, 
World of Information, Europe 
World Yearbook 1994 


Finance, etc 10.94% 



Some* Doporlrart of Nofzmal AccotiWNtfanoi u p ■[*<■« intfflu&a 


FT REPRINTS 


We can supply reprints of articles/pages of the 
FT reduced to convenient sizes. 
Minimum 100 copies. 

Tel: 071 873 3213 
Financial Times 

Number One Southwark Bridge 

London SE1 9HL 


t 







fk ELECTRICITY 

Bolivia must develop 
r ; " its hydro and 
£ thermoelectric resources 
to improve services nationally 
and supply its neighbours. 




AIR TRANSPORT 

The Bolivian national airline 
and airports will have 
to expand their services to alloiv 
, for increased passenger volume 
within the country and create 
an international nexus for tbe region. 


TELECOMMUNICATIONS 

Bolivia must double the number 
of telephones per head over 
the next few years 
and attain the levels 
of technology required 
by a country needing 
world- wide communications. 





FOUNDRIES 

Bolivia is a mineral 
rich countty, but urgently 
needs the capital to exploit 
these resources to the benefit 
of all its citizens. 




RAILWAYS 

With a modernized rail system 

jk Bolivia will beco me 
a transport corridor , ; 
offering the means 
to interconnect production 
centers and ports throughout 
South America . 




OIL AND GAS 

In order to fully exploit this wealth , 

Bolivia must take advantage 
of its geographical position 
and realize its potential to become 
the hub of a hydrocarbons 
distribution network. 


Bolivia is a successful representative 
democracy with a stable economy . 
It bos one of tbe most liberal 
trade policies in Latin America 
including progressive foreign investment laws. 
Bolivia has an investment law which guarantees 
tbe free movement of capital for payment of interest, 

dividends and royalties . 
This law offers national treatment to foreign investors 
and permits 100% foreign ownership of compan ies. 
Bolivia's low cost labor force is skilled and well-motivated. 



LA NUEVA 


Bolivia is a member of GATT, 

the Ixitin American Integration Association. 

tbe Andean Pact , tbe Amazon Cooperation Treaty 

and the Rio cie La Plata Basin Treaty. It enjoys free trade 

with tbe Andean Pact nations and is a beneficiary 

of tbe Andean Trade Preference Act 

uHth tbe United States. 

Bolivia has also signed preferential trade deals unth Mexico, 
Chile. Brazil, Argentina, Paraguay and Uruguay, 
and has GSP status unth Europe . 

Japan and tbe United States. 


For information call: Winston Moore, Ministry of Capitalization, Direct TeleFax: (591) 811-2823 
P.0. Box 1583, Edificio Palacio de Comunicaciones. Piso 20, La Paz - Bolivia 
Main Telephone: (591-2) 35 1859/5388/7692 



BOLIVIA IV 


A fter years of neglect, the 
vital 500km road link 
between the rich agri- 
cultural flatlands of Santa 
Cruz and Cochabamba in the 
central cordillera is being 
repaired. Along the highway, 
caterpillar trucks and bulldoz- 
ers - many belonging to Brazil- 
ian road-builders Andrade 
Gutierrez and Odebrecht under 
Bolivian government contracts 
-are shovelling, levelling and 
asphalting. Flood-damaged 
bridges are being re-fashioned; 
new ones built. 

The country's road system is 
getting a face-lift, and not 
before time. 

Historically, according to Mr 
Ludo Paz, transport minister. 
Bolivia's road and rail system 
has been the prime obstacle to 
national economic develop- 
ment Only 4 per cent oF the 
country’s 43,000km of roads is 
asphalted; more than three- 
quarters are virtually unusable 
for six rainy months each year. 

Now that Bolivia's develop- 
ment plans hinge on becoming 
a strategic hub for the South 
American continent transport 
is a high priority. The minis- 
try’s ambitious brief is to build 
2,700km of roads within the 
next five years - at an esti- 
mated cost of gl.Sbn - as well 
as improving and asphalting 
many of the existing land con- 
nections. 

“Our road co mmuni cations 
are a hundred years behind 
our telecommunications." says 
Mr Paz. “Unless we can make a 
dramatic leap forward, inves- 
tors simply won’t come to 
Bolivia." Road improvements 
could cut high Bolivian trans- 
port costs by as much as 50 per 
cent, he says. 

Underlining this message is 
the rapidly improving condi- 
tion of the road between Chi- 
le's port of Arica (presently the 
-principal route for Bolivia's 
imports and exports) and La 
Paz. By late next year, travel- 
ling time will have shrunk 
from as much as six days in 
bad weather conditions to six 
hours. 

With the decline in relative 
importance of minerals trans- 
portation, and the boom in 
soya and other agricultural 
exports, roads rather than rail- 
ways have become the focus of 
attention for Bolivia's plan- 
ners. Officials hope to leave 
the new investor-operator of 
soon-to-be capitalised state rail- 
ways company Enfe to resolve 
the problems of upgrading, 
boosting standards and invest- 
ing in the vital “ missing link" 
between Santa Cruz and Coch- 
abamba. 


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Transport is a high priority: ‘Puente de las Americas 1 under construction in La Paz fcum . **»*> sum 

Sally Bowen examines the infrastructure 

Face-lift is overdue 


But road-building is costly. 
One Bolivian kilometre can 
cost 3300,000 on the flat eastern 
plains and Sim or more on a 
mountainous stretch. 

The government has some 
S280m in its present annual 
budget for roads, “but we need 
to find new sources of financ- 
ing construction," says Mr Paz. 
One plan is to hive off as con- 
cessions certain potentially 
profitable sections to private 
companies which would build. 

By the end of 1996, the 
government plans to 
have 17 more provincial 
landing strips surfaced 

collect tolls and maintain high- 
way's. 

Bolivia’s rugged terrain 
means that efficient air links 
are essential Many of the 37 
airports are rudimentary: only 
10 have tarmac and just two 
(La Paz and Santa Cruz) are 
classified as intemationaL By 
the end or 1996, the govern- 
ment plans to have 17 more 
provincial tending strips sur- 
faced and their infrastructure 
improved. 

The government of Japan. 


meanwhile, is donating $30m 
to re-equip the capital's El Alto 
airport, extend the runways, 
upgrade lighting and improve 
communications and traffic 
control systems. Japan has 
also helped out with road- 
building equipment and seven 
bridges to link primarily Japa- 
nese agricultural colonies in 
Santa Cruz department to 
main highways. 

“We're knocking on every- 
- one's door for financing." says 
Mr Paz. He has $12m in the bag 
from the Inter-American Devel- 
opment Bank to upgrade the 
road link from La Paz to the 
Peruvian frontier at Desaguad- 
ero, thus opening up access to 
the as-yet undeveloped free 
port facilities and coarial strip 
granted bv Peru to Bolivia in 
Ho. 

In the other direction, an 
international tender will soon 
be sought for upgrading the 
640km dirt road eastwards 
from Santa Cruz to San Matias 
on the Brazilian border. 

This will open the way for 
thousands of tonnes of soya 
beans from the Mato Grosso in 
south-west Brazil to cross the 
continent through Bolivia for 
eventual shipment to Asia 
through Peruvian or Chilean 


Richard Bauer assesses Bolivia’s role as an energy exporter 

A cherished ambition 


Pacific seaports. 

Also arousing the enthusi- 
asm of top-level politicians and 
planners is the so-called “hid- 
rovia”, a 2.700km Paraguay- 
Parana waterway system 
which provides a link between 
landlocked Bolivia's Puerto 
Suarez, a river port on the 
frontier with Brazil, and the 
River Plate estuary. 

Initial investment - in dredg- 
ing the shallow upper reaches 
and providing proper signal- 
ling so that barges may also 
move cargo by night - is esti- 
mated at about $llm. These 
improvements, say analysts, 
will cut transport time in half 
and slash the high costs 
(between 315 and SIS a tonne) 
between Bolivia and Buenos 
Aires. Financing has already 
been offered by the 1ADB and 
the UN Development Pro- 
gramme. 

A totally new port is also 
planned at Puerto Busch, on 
the Paraguay river and some 
140km south of existing Puerto 
Suarez. The state will build the 
road, say government officials, 
and Leave private enterprise to 
develop port facilities. The 
European Union, and in partic- 
ular the Belgian government, 
has offered assistance. 


Bolivians are sloughing off 
their century-old dismay at 
being landlocked. Suddenly, 
the condition is perceived as a 
positive asset. “We aim to 
become the natural gas distri- 
bution hub for the southern 
cone of Latin America," says 
Mr Mauri cio Gonzalez, presi- 
dent of the state-owned petro- 
leum company YPFB. 

Mr Claude Bess£, adviser to 
the government on the capital- 
isation of state power company 
Ende. is in equally optimistic 
and expansionist mood. “We 
want to use our geographical 
position to satisfy growing 
demand for electric energy in 
I surrounding countries which 
have poor supply and high 
prices." he says. 

| The idea of serving both as 
an energy “bridge" and export- 
ing gas and electricity to its 
i neighbours has become a 
Bolivian leitmotiv. “Macro-eco- 
nomic stability and the possi- 
bilities of sustained growth 
depend in large measure on the 
health of the hydrocarbons sec- 
tor." says Mr Herbert Muller, 
the former Bolivian energy 
minister who helped engineer 
the ground-breaking February 
1993 gas export agreement with 
Brazil. The projected gas pipe- 
line will be the engine for 
Bolivia's economic growth.” 

Bolivia’s proven natural gas 
reserves of 6-7 trillion cubic 
feet are enough to meet 
south-west Brazil’s energy 
needs for the next decade, says 
Mr Fred Drew of the Santa 
Cruz office of Broken Hill Pro- 
prietary, the Australian gas 
exploration and production 
specialists. Bolivian gas output 
has been steady at about 500m 
cu ft a day for the past 12 
years. 

Hydro-electric generation, 
meanwhile, has scarcely been 
touched. Presently, only 2 per 
cent of an estimated 18.000MW 
potential is exploited. Possibil- 
ities for cheap hydro projects 
abound, according to Mr Julio 
Leon Prado, founder and presi- 
dent of ICE, Bolivia's largest 
construction company. He 
believes local construction 
costs will be substantially 
lower than in neighbouring 
countries. 

For 22 years past. Bolivia has 
exported 200m cu ft a day of 
natural gas to Argentina via a 
600km, 24-inch pipeline origi- 


nally co-financed by the World 
Bank, the Inter-American 
Development Bank and the 
New York State Common 
Retirement Fund (NYSCRF). 
The contract expired in 1992 
but delivery continues uninter- 
rupted at SI per ImBtu despite 
recent Argentine deregulation 
and competition from the local 
hydrocarbons Industry. 

But Bolivia's cherished ambi- 
tion is to break into the huge 
Brazilian market For years, it 
has been thwarted by internal 
squabbles within Bolivian gov- 
erning elites on the one side 
and protectionist, oil-burning 
Brazilian state industry on the 
other. Now, the two state 
hydrocarbons companies, 
YPFB and Petrobras. have 
reached a 20-year sales pur- 
chase agreement 


President Gonzalo Sanchez de 
Lozada's personal intervention 
in August Now Petrobras win 
have only a 15 per cent stake 
In the 560km Bolivian section 
and 80 per «>nt in the Bra zilian 
stretch of the pipeline. YPFB 
will have 85 per cent of its 
home stretch and 20 per cent of 
the Brazilian end. 

Bolivia’s partner on both 
sides of the bender will be Tex- 
as-based Enron, which has a 40 
per cent stake in the YPFB 
participation. Petrobras. mean- 
while, gone into associa- 
tion with the “BTB" Group, 
which holds 25 per cent of the 
ho ldin g for the Brazilian side. 
“BTB" comprises BHP, US nat- 
ural gas company Tenneco and 
the experienced distributors 
British Gas. 

Biggest nuts still to crack 



-I £: «** ’ 

* I- ; 


.' tv- H-v* ^ . 


Gas pressure is checked at a plant near Santa Cruz /wuncivm/ Hogan 


Initially, YPFB will supply 
280m cu ft a day rising to 560m 
cu ft within seven years. But 
Brazilian demand for natural 
gas could well increase to 1,500 
cu ft a day by the year 2000 
and 2,300 cu ft by 2005, says Mr 
Gonzalez. 

He predicts: “There will be 
Bolivian gas in Sdo Paolo by 
the end of 1997”. The projected 
32-inch 1,800km pipeline will 
run from Bolivia's Rio Grande 
to Campinhas, 90km west of 
SSo Paulo. In a second stage, a 
420km, 22-inch line would 
serve the town of Curitiba. 
And Petrobras plans another 
570km line r unning south from 
Curitiba to Puerto Alegre. 

Brazili an-Bolivi an negotia- 
ting tensions were relaxed fry 


are finalising flnanra for the 
$2bn-$2.6bn project, the largest 
of its kind ever in Latin Amer- 
ica. and fixing the gas price. 
The World Bank, meanwhile, 
still appears reluctant to com- 
mit itself to a venture where 
Petrobras, a state-owned com- 
pany, holds the majority state. 

Industry sources, however, 
say the pipeline will easily 
secure private sector financing 
provided there are adequate 
guarantees against political 
risk - particularly against a 
possible Petrobras pull-out 

Analysts say Bolivia could 
deliver gas to SSo Paulo at a 
highly competitive rate of les 
than §2 per ImBtu, Half the 
railing price It would cost to 
ship Venezuelan or Nigerian 


liquefied gas to the region. 
Bolivia's negotiating position 
as a purveyor of clean natural 
gas has been strengthened 
«riwffw the 1992 Rio “earth sum- 
mit’’ boosted ecological aware- 
ness in badly-polluted Sdo 
Paulo, according to Mr Muller. 

A -Bolivian government 
adviser points out another cru- . 
clal flactor: “The Brazilians 
have realised that, without 
Bolivian gas, they’ll be suffer- 
ing energy brownouts in two 
or three years " 

A similar project for export- 
ing gas to northern Chile is in 
an advanced stage of planning. 
The 1,100km Villa Montes- to- 
Antofagasta pipeline could 
start delivering to one of Chi- 
le’s main mining regions by 
early 1997. A 20-year agreement 
in principle has been signed 
between YPFB and Enap, Chi- 
le’s state oil company. 

YPFB has entered a joint 
venture with BHP. The two 
will split equally a 90 per cent 
stake in constructing and oper- 
ating the pipeline, while Enap 
will the remaining 10 per 
cent US investment bank Mor- j 
gan Stanley has been selected 
as finanmai adviser. 

While gas exports to Argen- 
tina are already two decades 
old, and new ventures with 
Brazil and Chile are presently 
top priority, exporting electri- 
cal energy from Bolivia would 
be a complete innovation. The 
idea apparently sprang up only 
recently when state power 
company Ende was being 
offered to foreign Investors. 

“We were told our tiny, 
750MW internal market is not 
attractive enough for overseas 
bidders, ” says Mr Gonzalo 
Chavez of the energy ministry. 
“Investors are seeking opportu- 
nities to convert Bolivia into a 
major electrical energy distrib- 
utor for the southern cone.” 

Mr Fernando Campero, a for- 
mer industry minister and now 
chief executive officer of 
Saxxon Capital, a Bolivian 
stockbrokerage, is more scepti- 
cal about this late-in-the-day 
brainwave. “They invented the 
scheme of electrical energy 
exports to speed up Ernie's cap- 
italisation but without proper 
feasibility studies," he says. 

Other experts fear that elec- 
tricity exports may directly 
compete with natural gas in lit- 
tle-developed markets. 


Looking for Business Opportunities in Bolivia? 

TALK TO THE LEADER* 

We are interested in talking to innovative, aggressive, 
successful companies aming to expand their export markets. 






A, : 












teii 


mz. 




•ORBOL has been bestowed the "FIRST BOLIVIAN EXPORT AWARD FOR 1993" 
by the National Chamber of Exporters of Bolivia 

Last year, Orbol S.A. exported US$ 42,500,000 in fine hand made gold and sterling silver jewelry to 
countries throughout the Americas and Europe. As of October 1st, 1994, we have exported $US 75,000,000 
in jewelry products wrch represents 86% of our export target of USS 85,000,000 for 1994. We are the 
largest exporter of fine jewelry in Bolivia and the third largest manufacturer of our style of jewelry products 
world wide. Orbol S.A. is the largest operator of Maquila Production Systems in Bolivia. We are proud to 
have trained more than 6,000 of Bolivia's most highly skilled artisans. Orbol S.A. products are imported tax 
exempt Into the U.S.A. In Europe, Orbol S.A. is tax exempt under the terms of the European Economic 
Union, and is recognized as tax exempt by the Cartagena Agreement countries, (GRAN). In addition Orbol 
S.A. is granted preferential treatment by MERCOSUR, significantly reducing import taxes. If you are 
interested in expanding your business successes into Bolivia, please call us at Orbol S.A. 


The only group 
IN BOLIVIA THAT 
OFFERS A COMPLETE 
FINANCIAL SERVICE. 


(o 


bi-4i 


grupo finctnciero 

The first financial group of Bolivia. 

Telephone (591)2 391030 Fax (591) 2 392013 


H 






V 


ter 


FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 ★ 

BOLIVIA V 

The mining industry is undergoing a series of profound changes, writes Sally Bowen 


‘Si 

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:: u f W 

fr,. 


Out 


isrgSJr 




A tin miner from the ACffura mine near La Paz 


Minerals have always been a mainstay 


Bolivian mining is undergoing a series of 
profound changes - in the types of miner- 
als extracted, in production techniques 
and in patterns of ownership. 

Minerals have always been a mainstay 
of the Bolivian economy, but successive 
price collapses affecting silver, tin and 
antimony drove TnrnpraiK exports down to 
less than one third of Bolivian foreign 
exchange earnings in 1986. Today, with 
zinc and gold output increasing rapidly, 
minerals again account for almost half of 
export revenue: some S380m last year. 

An estimated 80.000 Bolivians still 
depend on mining for their livelihoods, 
some of them literally scratching ore from 
narrow veins in underground shafts with 
long, primitive nails. But the open-cast 
mines and heap-leaching techniques being 
introduced by foreign concerns in joint 
ventures with Bolivians point to a differ- 
ent mining future. 

“Eight years ago. no one would touch 
Bolivia, M says Mr Charles Bruce, chief 
executive officer of local minin g consul- 
tancy Min tec. “Even in 1991. there were 
only four foreign companies operating 
here: now there are 40.” 

Simultaneously, the state is rapidly 


withdrawing from productive mining 
activities. While mining giant Comibol 
was responsible in its 198035 heyday for 
about two-thirds of all Bolivia's tin and 
zinc output, by last year its share had 
fallen to 35 and 20 per cent respectively. 

Comibol 's smelters and refineries are on 
the capitalisation list Mines, deposits and 
exploration areas, meanwhile, are being 
made available to private investors either 
via leasing contracts or joint ventures 
with Comibol to get round constitutional 
restraints on ownership transfer of nation- 
alised assets. 

Only three of Comlbol’s mines are opera- 
tional: Huanuni, Colquiri and Caracoles. 
Continuing losses obliged the remainder to 
be closed down. Comlbol’s workforce, 
which peaked at almost 30,000 in 1984, has 
been cut back severely - mainly in the sec- 
ond half of the 1980s -to some 2.500. of 
whom more than 1,000 are employed at the 
Vinto smelter complex. Cash flow is now 
positive. 

Comibol’s most attractive opportunities 
are in the department of Oruro. on the 
altiplano south of La Paz. Largest is the 
Huanuni tin deposit near the town of 
Oruro. originally owned by Bolivian tin 


magnate Simon Patino. Despite its 
already-long Life, Huanuni has some 8m 
tonnes of proven and inferred reserves and 
mining experts consider prospects for fur- 
ther finds bright. 

Colquiri has good unexploited zinc 
reserves along with its tin. And the poly- 
metallic San Jose mine, non-operational 
since mid-1992. could also prove an inter- 
esting prospect for zinc and gold; its tradi- 
tional lead-silver concentrates will acquire 
new worth if and when the Karachipampa 
smelter is finally started up. 

Corns ur (Bolivia’s largest mining con- 
cern. owned by the Sanchez de Loza da 
family and now in association with Rio 
Tinto Zinc; will be the first private com- 
pany to commence joint production with 
ComiboL Comsur-RTZ has put up $15.8m 
for a lead-zinc concentrator at Comibol’s 
under-exploited Bolivar deposit. Profits 
from the 15,000 tonnes of concentrate, the 
projected output from next year onwards, 
will be split 50-50. 

“We've found Comibol to be very good 
partners,” says Comsur's CEO Mr John 
MacLean. “Reserves are better than expec- 
ted: we're on budget and on time.” 

Part of the attraction for foreign compa- 


nies is the modem 1992 mining code which 
guarantees equal treatment for foreign 
and national companies and free remit- 
tances of profits abroad. 

Foreigners may now also - in joint ven- 
tures with Bolivians - explore and develop 
the previously prohibited but potentially 
rich rones wi thin 50km of Bolivia's bor- 
ders. 

The code is being further modified to 
improve the present chaotic c laims proce- 
dures and to clarify certain elements of 
tax law. Mr Gonzalo Barrientos, under-sec- 
retary of mining, is confident that these 
provisions and promotion of joint ventures 
with Comibol will boost minerals exports 
earnings to $80Om wi thin five years - “and 
that’s without factoring in new explora- 
tion.'’ he says. 

In the brave new world of Bolivian min- 
ing. tr aditional tin and tungsten have a 
declining role: tin earned just (83m last 
year, down from the 1981 peak of S2S6m 
(even though gross production is little 
changed). Zinc, however, is on an upward 
path: last year’s sales of (120m represented 
16 per cent of total Bolivian export earn- 
ings. And revenue from gold should out- 
strip zinc by next year. 


To data, exploration has been restricted 
to the so-called “Cordillera Real”, the tra- 
ditional silver and tin-mining zone. But 
new companies, in search of precious met- 
als, are concentrating on the western Cor- 
dillera and the pre-Cambrian and green- 
stone belts east towards the Brazilian 
borders. 

Among other diversification possibili- 
ties, Bolivian miners are once again 
talking seriously about developing their 
iron reserves. “El Muton” is a 40,000m 
tozrne deposit - one of the world’s largest 
-with between 30 and 50 per cent iron. It 
is located in Bolivia's Busch province, 
some 600km east of Santa Cruz on the 
border with Brazil 

El Mutun's potential has been known for 
decades but development has been limited 
to small-scale open-pit exploitation due to 
local power and transport problems. All 
operations are presently suspended. 

A Brazilian -Japanese consortium, how- 
ever, is reviving a large-scale exploitation 
project. And the Latin American Integra- 
tion Association (Aladi) has recently pro- 
posed construction of iron and steel plants 
nearby to serve Bolivia and export to 
Argentina, Uruguay and Brazil 




i. old crops ap in some of 
I wm Bolivia's most unlikely- 
looking settings. The 
promising Don Mario deposit, 
jointly owned by Billiton of the 
US and Bolivia’s Emusa, juts 
out starkly bare above the lush 
surrounding vegetation of the 
eastern jungle. The rich Inti 
Raymi gold mine. Bolivian-run 
but now majority owned by 
Battle Mountain of the US. lies 
on the barren plains of the 
Altiplano, lifeless but for a few 
small herds of vicuna. 

Inti Raymi claims to be 
South America's most modern 
and technically advanced gold 
mine. It is also one of the larg- 
est, with 1994 output expected 
to top 300.000 ounces. 

“It’s acting as a magnet for 
other prospective investors,” 
says Mr Charles Bruce of Min- 
tec, a private mining consul- 
tancy which operates in 
Bolivia in association with 
Mlnproc. Mr Bruce has been 
evaluating for clients more 
than iso claims in Bolivia's 
western cordillera, hitherto 
neglected by miners. He is 
“convinced well see at least 
fright gold mines developed in 
this area.” 

Bolivia’s gold output an esti- 
mated four tonnes in 1991, is 
already about, three times, that 


The gold sector: from ore to earrings 


Success stimulates 


now - “and likely to triple 
again in another five years,” 
says Mr Bruce. 

Inti Raymi started back in 
1982 as Bolivia's first small 
open-pit operation, leaching 
oxides for gold and silver. By 
1986, it was producing a rela- 
tively modest 30,000 ounces of 
gold a year. But for Bolivians, 
accustomed to traditional 
underground mining , Inti Ray- 
mi’s technology already repre- 
sented. a quantum leap. 

Just two years ago. Battle 
Mountain increased its stake to 
88 per cent An investment of 
$160m (including $40m each 
from the World Bank’s Interna- 
tional Finance Corporation 
(IFC) and Opic, plus $15m from 
CAF, the Andean Development 
'Corporation) permitted con- 
struction of an agitation leach- 
ing plant and a vast 2Jakm-di- 
ameter tailings dam designed 
by Knight Piesold. 

With 22 grams of gold per 
tonne of ore and production 
costs at $220 an ounce. Inti 


Raymi is attractive business. 
In this,- Its first full year of 
operation, sales are expected to 
top $105m. Next year, a new 
recovery plant will boost out- 
put to some 320.000 ounces. 

Inti Raymfs success has 
helped stimulate investor 
interest in Bolivian gold. In 
early October, three foreign 
companies won concessions for 
a total of 175,000ha of poten- 
tially attractive gold deposits, 
owned but never developed by 
state mining company Comi- 
boL in Bolivia's western cordil- 
lera. 

One section went to Ameri- 
can Barrick. another to La 
Barca (a Battle Mountain joint 
venture with Emusa) and the 
third to Samex, a new Canadi- 
an-Bolivian joint venture. The 
three beat off bids from Auspac 
of Australia, and Orvasa, Echo 
Bay and Teck. all of Canada. 

The other facet of Bolivia’s 
incipient gold b onanza is hun- 
dreds of kilometres from the 
ore deposits. Perched above the 


modern city of la Paz lies a 
sprawling, often ramshackle 
town known simply as “El 
Alto”: the heights. Most of El 
Alto’s inhabitants are country 
folk, escaping the crushing 
poverty of the barren Alti- 
plano. Many of them are min- 
ers and their families, refugees 
from the mid-1980s tin crisis 
which threw tens of thousands 
out of work. 

Set amidst tyre repair shops 
and small grocery stores, down 
an unsurfaced side-road, is El 
Alto’s response to the unem- 
ployment problem: a collection 
of buildings where 400 young- 
sters make gold jewellery for 
export. This year, this com- 
pany. OrboL will export brace- 
lets. earrings and gold chains 
worth nearly SlOQm. 

Located in the nearby indus- 
trial free zone of El Alto is 
Christies, a joint venture 
between Bolivian entrepreneur 
Ms Christina Leon and Italian 
jewellery makers Gori & Zuc- 
chi. Christies employs some 



Gold output has trebled since 1991. Worker* unload rock at the start of the extraction process /*uk n*ay ace** 


600 in its main factory with 
another 1.400 outworkers in 
surrounding villages who 
painstakingly thread tiny links 
for gold chain necklaces. 

“Gold jewellery has been an 
enormous success story,” says 
Mr Carlos Morales, trade and 
industry minis ter. In the first 
half of 1994 alone, exports in 
this category earned Bolivia 
$53. 8m, more than three times 


the revenue for the same 
period last year. And most of 
that comes from a handful of 
factories and small workshops 
in La Paz. 

O rbol started operations 
almost six years ago. The ini- 
tial stimulus came from the 
"Ritex” law which allows tem- 
porary duty-free import of 
goods to be re-exported under 
the “maqufla” process. 


“At first, we imported 100 
per cent of our gold as wire 
from the US, transformed It 
into jewellery and re-ex- 
ported,” says Mr Jesus Siller- 
ico, general manager. “Now 
we’re buying 85 per cent of our 
gold locally from small produc- 
ers and cooperatives. Most of 
that used to leave Bolivia as 
contraband with no benefit to 
tbe country.” 


Orbol’s gold Jewellery is 
aimed at mass market, distrib- 
uted through some 40 whole- 
salers mostly within the US. 
The gold is lightweight and 
hollow but workmanship is 
good quality. At start-up, Orbol 
brought in craftsmen from 
Mexico and Peru to train 
locals. 

Orbol and a handful of simi- 
lar outfits now employ thou- 
sands of Bolivians, almost all 
young, often straight from the 
countryside and in their first 
jobs. Working conditions are 
unsophisticated but relaxed 
and workers are apparently 
content with the $1004120 they 
can taki> home frgfb month. 

Mr Sillerico says that even at 
these wages, profit margins are 
slim. The tax drawback sys- 
tem, he says, returns to export- 
ers the equivalent of 5.4 per 
cent of sales; profits are maybe 
L5 per cent. 

"We're doing what the coun- 
try needs most - providing 
work and earning foreign 
exchange,” he says. “But we 
couldn't survive without incen- 
tives. The jewellery export 
business will continue as long 
as the government doesn't 
change the roles of the game.” 

Sally Bowen 


Bolivia, Sustainable Development 


in a New Society 





The great change for Bolivians is on. 

The reforms implemented by the government of President Gonzalo Sanchez de Lozada are the 

pillars of a new society. 

Sustainable Development is possible only in a new society, Bolivia is leading the way in 
capitalizing its main public enterprises with private investment. 

With the redistribution of part of the national income funding greater 

popular participation in our society. 

With more and better education through the reform of its educational system. 


Leading the way to a better future. 

Leading the way to a new society with jobs, participation and education. 

On the way to a new society, today Bolivia is winning the greatest challenge of its history. 



BOLIVIA 




HNANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


BOLIVIA VI 


P resident Gonzalo Sanchez de Lozada 
calls capitalisation the cornerstone 
of his government's reform pro- 
gramme. It aims to shift companies 
responsible for 12.5 per cent of Bolivia's 
gross domestic product to the private sec- 
tor. 

But the idea is not to sell the six state 
companies involved directly to private 
buyers. It is to entice foreign investors to 
make investments in them in return for 
ownership, typically, of half the company. 
The remaining portion - apart from a 
small distribution to workers - will be dis- 
tributed bo an estimated 3.8m Bolivians as 
pensions contributions. 

This, It is hoped, will prevent opposition 
to the proposal from Bolivians who -ac- 
cording to opinion polls - associate priva- 
tisation with a loss of national sovereignty 
and corruption. 

The idea is to stimulate investment and 
thereby boost growth. The government 
estimates that these reforms should allow 
growth to rise steeply to 7 per cent by 
1999. Without this, and other reforms, it 
estimates growth of 4.7 per cent 
The proposal to capitalise, rather than 


Stephen Fidler explains the capitalisation process 


Cornerstone of reform programme 


privatise, has some disadvantages. In the 
early years, rather than bolster govern- 
ment finances, it worsens them - because 
no revenues are received from the sale of 
the company. This risks a short-term 
increase in the government's already 
heavy debt burden. Some potential inves- 
tors are also likely to see the mecha nis m 
as excessively complicated. 

The project has many hurdles still to 
ove r come. A raft of legislation is needed 
following the overall capitalisation law 
passed this year laws to establish an over- 
all regulatory system for the capitalised 
companies, on the electricity, telecommu- 
nications hydrocarbons sectors, a tax 
reform, adjustments to the mining code 
and a transportation reform are all 
required. 


After this, a law for pension fund reform 
is needed. Opposition from employees, 
trade unions and other interest groups 
must also be surmounted. The government 
will lastly need to demonstrate finan cial 
success. 

The keys are the first capitalisation, of 
the electricity company F.nrie and of the 
oil company YPFB - alone responsible for 
9 per cent of GDP. Officials admit there 
may be difficulties in capitalising the state 
airline, the railway and the mining assets. 

However, the impression that many 
Bolivians have - that the public sector 
companies are profitable and contribute to 
the budget is false, says Mr Fernando Can- 
dia, the president of the central bank. 

Although the companies run an operat- 
ing surplus of about 0.8 per cent of GDP, 


debt servicing costs are equal to 2.5 per 
cent of GDP, producing a net deficit of 1.7 
per cent. 

The one-time costs associated with the 
capitalisation and other reforms will raise 
the budget deficit in 1995 and 1996. 


A ccording to a SI 40m three-year loan 
agreement signed with the Interna- 
tional Monetary Fund last month, 
the deficit will rise to 4.4 per cent of GDP 
next year, and closer to 5 per cent in 1996, 
from an expected 3.3 per cent this year. 

Eventually it is hoped that increased tax 
revenues from the capitalised companies 
will more than make up for the initial 
shortfall. 

Mr Edgar Saravia, capitalisation secre- 
tary. says that the capitalisation pro- 


gramme Is about six weeks behind sched- 
ule, but believes that by July next year, 
the first stage of the programme - the 
handover of companies to foreign oper- 
ators - should be complete. . 

The remaining shares will be held m 
trust until the pension arrangements ran. 
be established, to allow them to he dis- 
tributed among' every adult Bolivian- This 
will not be an easy task, in part because 
the state has no record of the names of a 
majority of its citizens. 

The government agonised over whether 
to take the time to legislate the reform 
- as the World Bank was urging - or 
whether to move more rapidly, as toe 
Argentine government had in its privatisa- 
tion programme, by presidential decree. 
“Bolivia is not a country where people 


look at the outset to make their invest 
meats!* To the degree that jve can give 
outside investors more stability -for 

example through 1 

wSbe more successful. said Mr Saravia. 

Problems in establishing satisfactory l 
regulatUm of the Argentine companies * 
^privatisation UW 1 to prnjAi 

government that it should first estaMish 
regulatory regimes before toe companies 
were moved to the private sector. 

Capitalisation will not necessarily shy 
with the sale of existing companies. Mr 
Saravia says some of the money raised by 
toe flotation of Cochabamba Power and 
Tirtif now a subsidiary of toe state elec- 
tricity company, Ende. will be used to 
start a long-awaited project to dril l a tun- 
nel through the mountains to bring water 
to the parched city of Cochaba mba. - ■ 

Foreign government donors were to be 
asked to consider matching. the expected 
$19m f unding with a similar amount. 
Then, once the drilling is complete - no 
private sector investor is likely to take on 
the drilling risk - the whole Misicuni proj- 
ect may be capitalised with a private sec- 
tor investor. 


tit* 


c* 


Enaf metallurgical plants 


YPFB petroleum company 



Details under 
discussion 


Energy wealth wasted 




it-" : 



Humid mine, one of BoBvta'a principal Bn mines, owned by state mining c omp a n y Comfcol naunctoauidtiv 


The Enaf-Vinto metallurgical 
smelter complex just east of 
Oruro. is close to Bolivia's 
principal tin mines. Huammi 
and Colquiri. owned by the 
state mining company Comi- 
bol. Between them, the two 
produce some 7.000 tonnes of 
tin concentrate a year -of a 
national total of about 18,000 
tonnes. 

Comibol officials expect tin 
concentrates output to rise to 
anything between 23,000 and 

39.000 tonnes after Huanuni 
and Colquiri are transferred to 
the private sector through 
joint venture or leasing agree- 
ments. 

Vinto is a Comibol subsid- 
iary. Because it was never 
nationalised, there is no consti- 
tutional obstacle to transfer of 
ownership. 

Rationalisation has cut the 
workforce sharply to about 

1.000 from the 2,000-plus 
employed in the mid-SOs while 
productivity in certain areas, 
such as the tin smelter, has 
increased many times over. 

The German government has 
donated DMIOm for environ- 
mental control project. 

The Vinto complex com- 
prises three metallurgical 
plants, two for tin (high grade 




w r 










ME/?. 


-.m 


'• '*• - ''&'£#■. ' • •' 

■ L ‘ : 


•' L *:’ 




■fo L |V\t 


- " fi 








and low grade) plus an anti- 
mony smelter. All came on 
stream in the 1970s. 

The high-grade. German- 
built smelter uses the fuming 
process, which allows treat- 
ment of complex concentrates 
such as Bolivia's in a single 
stage. 

"Vinto is good business, it 
requires little new investment 
and enjoys a high international 
reputation - the Enaf trade 
mark for 99.95 per cent pure tin 
is known worldwide ," says Mr 
Carlos Morales, adviser to 
Comibol. 

Antimony production was 
recommenced in mid- 1990 after 
heavy operating losses caused 
a 4*. -year stoppage. 

Bolivia has traditionally 
been the world's second-largest 
antimony producer after China 
and ahead of toe former Soviet 
Union and South Africa. 

Output, at some 6,000 tonnes 
a year, is less than half of that 
produced a decade ago. how- 
ever. 

An interesting item on Comi- 
bol's books is the Karachi- 
pampa lead and silver smelter 
and refinery, built in the min- 
ing department of Fotosi in the 
early 1980s by a Gennan-Bel- 
gian consortium. 

The complex cost S147m and 
installed capacity is for 51.006 
tonnes of concentrate a year. 

Karachipampa was ham- 
mered by problems at its 
scheduled 1985 start-up. 

Bolivian lead concentrate 
output slumped to levels inade- 
quate to supply the smelter, 
while the Soviet Kivcet tech- 
nology used for the smelting 
process was seriously ques- 
tioned. 

As a result. Karachipampa 
never went into operation. 

The panorama is now some- 
what brighter. Lead concen- 
trate production is on the 
increase with some 25,000 
tonnes projected for next year, 
and the Kivcet process has 
been given the metallurgical 
green light, with several west- 
ern countries now employing 
it 

According to Mr Morales, the 
plant's unused machinery and 
equipment has been well main- 
tained and is virtually ready to 
SO. 

The government has 
assumed all Karachipampa's 
debts. A private sector opera- 
tor would be free to enter into 
a joint venture or lease option 1 
for Comibol lead-silver mines 
such as San Jose or San 
Vicente, or to buy from private 
producers in the area. 

Precise details of capitalisa- 
tion are still under discussion. 

The Vinto smelter and refi- 
neries could well be offered as 
separate packages along with 
complementary Comibol min- 
ing deposits to ensure a raw 
materials source. 


Sally Bowen 


It is not only the local coca 
growers that have put the sub- 
tropical Chapare region near 
Cochabamba under threat Oil 
and gas fields discovered in 
1993 and developed by the still 
state-owned petroleum com- 
pany YPFB are turning the 
Chapare into an ecological 
danger zone. 

Campo Carrasco, 300km 
west of Santa Cruz along the 
coca trail, is typical. On one 
side of the road, a seedy night 
club advertisement offers engi- 
neers, coca-growers and drug 
dealers “pleasant company”. 
Opposite, a 7km side-road 
comes to a less pleasant end 
- a gigantic gas torch protrud- 
ing from the lush vegetation 
throws ont scorching flame, 
testimony to decades of mis- 
management by histor ically 
corruption-riddled YPFB. 

Day and night, and n ot just 
in the Chapare, gas from YPFB 
wells is burned off. As modi 
as 20 per cent of Bolivia’s non- 
renewable hydrocarbons 
wealth, instead of being rein- 
jected or transported to final 
consumers, goes straight into 
the atmosphere. 

“It's bad planning by previ- 
ous adminis trations,’’ says Mr 
Manriclo Gonzalez, YPFB's 
Oxford-educated president, 
appointed when the new gov- 
ernment took office in August 
1993. He is charged with capi- 
talising Bolivia’s most Impor- 
tant state-owned company. 

"Capitalisation Is a highly 
expeditious and cost-efficient 
way of financing toe SI bn min- 
imum YPFB needs over five 
years for upstream develop- 
ment;” says Mr Gonzalez, who 
prefers to describe the state’s 
quasi-monopoly as a “domi- 
nant position in the local mar- 
ket". 

Bolivia’s only hydrocarbons 
export is natural gas to Argen- 
tina worth 5120m a year. 
National production shortages 
meant ofl-and-gas-rich Bolivia 
was obliged to start importing 
di esel fu el in 1993. 

YPFB is far and away the 
country’s largest company. Its 
14,900-strong workforce pro- 
duces some 400 cu ft of natural 
gas and 27,000 barrel s of ofl a 
day. Revenue frpnv YPFB is 
central government’s single 
most important source of 
income; militant YPFB unions 
its biggest headache. 

Mr Gonzalez says YPFB’s 
new partner will inherit the 
job of restructuring the work- 
force: so far it has been 
• reduced by just 800. 

The YPFB capitalisation 
timetable - and its eventual 
price tag -will be dependent 
on negotiations over new gas 
> markets in Brazil and Chile, 
on a new hydrocarbons law 
and on passage of deregnla- 
tory and environmental 
norms. “These are exciting 
times - we're moving ahead 
terribly fast on all fronts," 
says Mr Gonzalez, wbo alms to 
have the capitalisation process 
completed by mid- 1995. 



Evidence of mi sm a na gement Campo Carrasco gaa flare PkuvHtimaBmitr 


Industry reaction Is mixed. 
“The government is taking the 
right steps,” said a foreign oil 
executive based in Santa Cruz. 
“But no-one knows how they 
intend to get investors on the 
boat” Special concern exists 
about environmental liabili- 
ties such as unplugged holes 
and claims for past damages. 

Whether to offer YPFB as a 
whole or as a series of pack- 
ages -as the World Bank is 
urging - is still being studied, 
according to Mr Alfonso 
Revollo, capitalisation minis- 
ter. 

If th e gove rnment decides to 
keep YPFB as a single entity, 
it must then decide whether to 
allow cme trade buyer to boy 
np half the company. Some 
government advisers think 
this would risk submerging 
Bolivia’s biggest company into 
a foreign oil giant So they are 
proposing a sale of a 20 per 
cent stake to an investor that 
would manage the company, 
and the sale of 30 per cent to 
institutional investors in inter- 
national financial markets. 
This would maximise the 
long-term value of the 50 per 
cent of the company being dis- 
tributed to Bolivians, they say. 

Leading international com- 
panies such as Exxon, Occi- 
dental Petroleum, Amoco and 
Shell have shown keen inter- 
est in partnering YPFB, says 
Mr Revo llo. Newly-privatised 
Argentine oil company YFF is 
also likely to be interested. 

“By smashing the anachro- 
nistic YPFB monopoly anH 
introducing an attractive fis- 
cal regime for upstream activi- 


ties, the 1990 hydrocarbons 
law set the stage for aggres- 
sive ofl. and gas exploration by 
private companies both for- 
eign and national," says Mr 
Herbert Muller, the former 
energy minister. 

Now, on the way to capitalis- 
ation, the hydrocarbons law is 
again under revision - in late 
October a twelfth draft sought 
still more “agile mech anisms 
that will stimulate invest- 
ment”, according to Mr Gonz- 
alez. The new law win re quire 
private companies and YPFB 
to sign hydrocarbons contracts 
directly with the government. 

Latest World Bank projec- 
tions envisage a 12.5 per cent 
royalty for the producer 
regions, a 19 per cent tax on 
production for existing con- 
tract-holders, a 25 per cent 
corporate income tax and a 50 
per cent royalty on output 
from YPFB-operated fields. 
Industry, meanwhile, is press- 
ing bard to be able to write off 
exploration costs during toe 
first year of production. 

Oil companies - mainly for- 
eign-have to date signed a 
■ total of 16 exploration-opera- 
tion contracts or embarked on^ 
joint ventures with YPFB. ThtP 
state company estimates Its a 
operations presently cover 
only 15 per cent of Bolivia’s 
oil and gas-bearing territory; 
joint operating contracts 
account for another 22 per 
emit and 12 per cent Is in the 
final negotiation stage. “The 
rest is up for grabs,” says Mr 
Gonzalez. 


Richard Bauer 


Yesterday: Banco Mercaniil founded in 1905, has had an important and direct 
participation in the different stages of Bolivia's economic history. 


Richard Bauer reports on small privatisations 


Today: We are the most solid, serious and traditional Bank in Bolivia. A select 
team of individuals assure professional efficiency. Excellence in banking 
services is provided through a worldwide network of correspondents. 
Wfe are seriously interested in the process of capitalization of the largest 
Bolivian public companies in the areas of gas and oil, 
telecommunications, mining, electric power, air and train transportation 
and would like to share this opportunity with you. 


Elfec is a special case 


We invite Merchant Banks and potential investors to become part of our 
Tomorrow. 


For more information: 
Telephone (591-2) 371273 
Fax (591-2) 391442 
La Paz - Bolivia 


BANCO MERCANTIL 


ALWAYS A SUPERIOR BANK IN EVERYTHING 


No fewer than 72 Bolivian 
state-owned companies out of a 
total of 160 will come under the 
hammer in the next few 
months. Companies controlled 
by the armed forces or local 
municipalities, and those 
directly dependent on minis- 
tries remain untouched for the 
time being. 

“The companies to be priva- 
tised are small to medium- 
sized so the transaction costs 
involved make capitalising 
them unfeasible." says Mr 
Jorge Harriague, director of 
Bolivia's privatisation pro- 
gramme, the low-profile com- 
plement to the government's 
ambitious capitalisation proj- 
ect. 

“Their economic impact may 
be pretty marginal, but we 
have to privatise fast and get 
the state out of commercial 
activities once and for all. " 

Companies to be offered to 


private investors in straight 
sell-offs range from run-down 
hotels to dairy plants, from 
animal feeds processing facto- 
ries to a small airline. The 
most expensive carries a price 
tag of about $12m, but many 
are virtually bankrupt and 
have book values of less than 
Sim apiece. The whole package 
could fetch between $45m and 
S55m, according to Mr Harri- 
ague. 

Investor interest centres on 
half a dozen promising con- 
cerns. Hilanderia Santa Cruz, a 
yarn producer which cost $50m 
to build, and a sugar mill in ' 
Bermejo, top the list The dairy 
plants in Santa Cruz, Cocha- 
bamba and La Paz, plus two 
cement factories in Sucre and 
Tarija. are also expected to be 
keenly contested. 

Bolivian privatisation com- 
menced under the previous 
administration of Jaime Paz 


Zamora when 24 public compa- 
nies dependent on the regional 
development corporations were 
said by auction. The modest 
proceeds - some S20m - went, 
as the law requires, into soclai 
spending. Nine others were 
simply liquidated. No sales 
have been mad e so Ear under 
the Sanchez de Lozada govern- 
ment 

A special case is Elfec, the 
relatively efficient state-con- 
trolled Cochabamba power dis- 
tribution company. Ninety per 
cent of Elfec's shares, worth 
some S32m, is scheduled for flo- 
tation on the London and La 
Paz stock exchanges in the 
next few months. 

“This will help kick-start the 
capitalisation programme; it's 
a significant milestone in the 
development of Bolivia's capi- 
tal markets," says Mr Peter 
Earl, a director of the Field- 
stone Group of London, one of 




Transfer 


T°ugh 


ch 


the architects of the Elfec 
offer. 

Elfec has had private share- 
holders ever since it was 
founded in 1908 by the Bolivian 
Suarez family. Ende, the state 
electric energy producer en 
ro “ te , t ° capitalisation, pres- 
ently holds 70 per cent of Elfec. 
The Cocha bamb a municipality 
holds a further 22 per cent; 
smaller municipalities 4 per 
cent; and the remainder is split 
among some 2.000 sharehold-, 
ers. “ 

Ende and the city of CochaA 
bamba are expected to dispose^ 
. of their holdings. 
Cochabamba s city fathers plan 
to use toe cash to embark upon 
a long-delayed but increasingly 
urgent Misicuni project: to 
bore a tunnel through the 
And® 8 ood bring water from 
toe Amazonian side of the cor- 
?5!®ra t0 „ the thirsty Cocha- 
bamba valley. 






o* 




O* 


0 ' 


FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


BOLIVIA VII 


Lloyd Aereo Boliviano state airline 

Attractive traffic rights 


vasteu 




Lloyd Aereo Boliviano (LAB), 
tbe state airline, may not be 
the first , or the largest, state 
industry to be capitalised, but 
it may well be the most contro- 
versial. 

Repeated strikes have indi- 
cated labour opposition to the 
planned sale of shares and 
transfer of management of the 
©-year-old enterprise - one of 
the oldest airlines in the world. 

Perhaps more interesting 
than the airline’s assets -the 
average age of its nine fully- 
owned aircraft is more th a n 21 
years - are its attractive traffic 
rights throughout the hemi- 
sphere. LAB presently serves 
its immediate neighbours as 
well as the US. Venezuela, Pan- 
ama, Uruguay and Mexico. 
Other international routes not 
in use include those to Ger- 
many. Spain. Holland, Cuba, 
Colombia and Ecuador. 

LAB had total assets in 1993 
of S153m, yet booked total 
long-term liabilities of S56m. 
The company’s 1991 net profit 
of £L5m dropped to a net loss 
of SllBm and $ 13.3m in 1992 
and 1993 respectively, largely 
v due to big spending on market- 
ing. 

The state holds 97 A3 per cent 
• of the shares in LAB, with 
American Airlines owning 1 

t, per cmt and a nominal Ig hpin- 

participation equalling 0.1 per 
cent 

By mid-November the Minis- 
try of Capitalisation will have 
chosen an Investment bank 
and a regulatory adviser. The 
final bid an an expected 49 per 
cent share in LAB is to be 
made between March and May 
31 of next year. According to 
Mr Javier Burgos, secretary of 
capitalisation and Investment, 
potential buyers will have no 
interest in a majority share 
because they would lose the 
usual benefits conferred to a 
wntinnal airline both domesti- 
cally as well- as in interna- 
tional air traffic agreements. 

A rather innovative aspect of 





m--^***? v'r 






LAB had total assets of $153m in 1993 yet booked total Jong-term labilities of S56m 


the LAB capitalisation pro- 
gramme is the variety of 
investment options given to 
the prospective buyer. Besides 
making a cash offer, investors 
can bid in form of goods or 
services, such as aircraft or 
reservation systems. “With 
this added benefit we hope to 

Due to competition by 
the private Aerosur, 
LAB’s privatisation would 
not violate existing 
anti-monopoly legislation 

attract even more potential 
investors,” says Javier Burgos. 
Unlike the other state enter- 
prises on offer, LAB’s sale does 
not require any additional leg- 
islation. Due to competition by 
the private Aerosur, which 
inaugurated service two years 
ago. LAB’s privatisation would 
not violate existing anti-mo- 
nopoly legislation. 


LAB holds a 65 per cent 
share of Bolivia’s international 
airline market ahead of Ameri- 
can Airlines and Brazil's Varig. 
hi the domestic market, LAB 
has been losing ground to 
Aerosur but still holds a 59 per 
cent share. 

Government officials further 
underscore tHsMarrier's low 
labour costs, its highly trained 
technical staff, and its poten- 
tial to improve aircraft utilisa- 
tion. With Bolivia's strategic 
location in the centre of South 
America, its promoters envi- 
sion the under-employed air- 
port of Santa Cruz becoming a 
type of regional hub. President 
Gonzalo Sanchez de Lozada 
says “it would be a natural 
hub.” but admits, “we don’t 
generate enough of our own 
traffic.” He adds: “We have 
this $250m airport in Santa 
Cruz, which only operates 15 
minutes per day.” 

A previous attempt to sell 
LAB in 1992 failed, due to what 


Ende electricity company 


Transfer is seen as critical 






Electricity company Ende will be be the 
first of Bolivia’s state-owned assets to 
undergo the novel capitalisation process. 
. Transfer of 50 per cent of Ende to a pri- 
ll vate operator-investor - optimistically 
scheduled for February 1995 - is seen as 
’ W critical for the capitalisation programme. 
- “Ende has to be a great success," says 
Mr Edgar Sara via, capitalisation secre- 
tary. *TtTl be used as a concrete example 
to convince Bolivians that capitalisation 
equate a new society. We’re choosing a 
strategic partner for the Bolivian people, 
not justseDing a company.** 

Scbroders, the UK-based merchant 
-bahfc has-been selected to help identify 
the right bridegroom for Ende in what 
(Hastate official cosily calls this “electric 
marriage”. Thirty-one foreign companies, 
meanwhile, have pre-qualified to bid, led 
by. cash-rich and expansionist Chilean 

operators. Best guesstimates put the bride 

price at between J250m and $300m. 

Mr Ramiro BoHano, general manager of 
ICE; Bolivia’s largest construction com- 
pany which mi ght hook up with a foreign 
company to bid, considers Ende tec hni- 
rally well-managed and, with Just 500 
employees, lean arid potentially profit- 
able. Electricity consumption has been 
. g ro w i ng, steadily at about 6 per cent a 
year for several years. 

. - By fete October, the energy ministry 
was into the fifteenth draft of a new law 
designed to end the effective duopoly on 


electric power generation shared between 
Ende mid Cobee, the La Paz-based private 
company. Cobee is 70 per cent controlled 
by the North American holding company 
Leucadia; small shareholders have the 
remainder. 

Ende produces half of Bolivia's electric- 
ity; Cobee a third. Of the total 750MW, 
some 300MW is hydroelectri rally gener- 
ated, the rest coming from largely envt- 
ronmen tally-friendly, natural gas-fuelled 
thermal plants. Distribution is in the 
hands of three principal local companies, 
with Cobee handling 37 per cent 

Capitalisation is designed to meet clas- 
sic World Bank privatisation parameters 
for creation of competition. Generation, 
transmission and distribution will be 
managed by separate companies. 

Initially, the government will retain 
control over the transmission system 
while Ende’s generation plants are 
grouped in three regional packages for 
capitalisation. 

After some grousing. Cobee is expected 
to accept the division of its generation 
and distribution arms in the pursuit of 
competit i on. The three regional genera- 
tion companies will have a three-year 
option on developing strategic energy 
export markets. 

“Growing electricity de man d in the bor- 
der zones of Brazil, Pern and northern 
Chile make that prospect look very attrac- 
tive,” says Mr Claude Bessfc, a former 


Ende general manager and some-time 
World Bank consultant 

According to Mr Sara via. changes in the 
law will ensure that no consumer has to 
pay a service connection charge in 
advance. The Santa Cruz co-operative, for 
example, presently charges S500 to put 
the first power outlet in a home. 

While this may help overcome regional 
consumer resistance to the central gov- 
ernment's radical capitalisation plans, the 
co-operatives themselves may not be so 
enthusiastic. Some, such as that of Santa 
Cruz, have ambitions to expand into gen- 
eration - prohibited under the new law. 

Other criticisms concern the World 
Bank-designed plan to dismember an 
already tiny generation system into three. 
“The boys from Washington are applying 
the Argentinian model but forgetting that 
Bolivia's entire system generates 750 MW 
against Argentina’s 18.000MW,” says Mr 
Julio Leon Prado of ICE. tbe company 
that built most of the Bolivian transmis- 
sion and distribution grid. “The packages 
are too small for a foreign investor." 

At 320kWh a year, Bolivia’s per capita 
energy consumption is one of tbe lowest 
in the continent: 44 per cent of Bolivians, 
mainly in rural areas, have no access to 
electricity. Government and World Bank 
advisers believe capitalisation is the 
surest way to improve those statistics. 

Richard Bauer 


Enfe state railway system 


Tough challenge for team 


Along with the state airline, 
one of the toughest cha ll e n ges 
for Bolivia’s capitalisation 
team will be Enfe, the aged 
state railway system. Resis- 
tance may also expected from 
the 4,000 workers still on the 
company payroll despite suc- 
cessive lay-offs of more t h a n 

3.000 employees over the past 
three years. The World Bank 
estimates that $27io will be 
required for post-capitalisation 
severance payments. 

• - Bolivian railways date from 

1877 when construction started 
on -the first Antofagasta 
stretch. The La Paz to Arica 
' section was inaugurated in 
. . 1913 after settlement by treaty 

• of the war between Bolivia and 

Chile. The eastern section, 
joining Santa Cruz to Santos in 
Brazil and Rosario in Argen- 
Hwa dates from the 1940s ana 
1950s. The three sections have 
a total 3,466km Of track. 

. Tbe national raUway com- 
hmznyEnfe was created m 
.5-at which time the arapany 
^operated 102 steam locpmoj 
tfces- Only in 1976 wsjte 
switch made to * e3et f 2e 2^f 
engines, fo the run-np to 
. taSsation, the fleet comprised 
. 57 locomotives, only 34 of them 
operational Of the 134 passers 

. ger carriages, less^tiian t*o- 
thirds were serviceaWe. and 

last year Enfe earned only 

750.000 passengers- 
Minerals transport has tram 






■mm? 


- jp rry um 

mT 


improvements at Puerto Aguirre terminal pane naxr *ooen 



tionally been Enfe’s staple, 
accounting for some 40 per 
cent of the 1.4m tonnes of 
freight hauled last year. Enfe 
has made some attempt to 
move into the fast-expanding 
business of transporting soya. 
But much of its capacity is in 
the form of converted box cars 
-there are no hopper trucks 
-and soya producers complain 
bitterly about the quality of 
service. Wood, meanwhile, is 
hauled almost exclusively by 
road. 

if, as Bolivian government 
officials and many entrepre- 
neurs believe, the “intero- 
ceani c corridor" - from the 
Atlantic (Santos in Brazil) to 


the Pacific (Arica in Chi- 
le) - represents their country’s 
trading future, the most imme- 
diate investment will have to 
be some 3200m building the 
missing rail link between 
Cochabamba and Santa Cruz. 

Jica, the Japanese interna- 
tional agency, came up in 1991 
with a master plan for upgrad- 
ing the Bolivian railway sys- 
tem. It envisages investment of 
SL46bn over 30 years and pre- 
dicts an internal rate of return 
of H per cent. 

Building the missing Cocha- 
bamba-Santa Cruz link would 
be a priority, as would the 
extension of the eastern net- 
work to Puerto Busch, now 


projected as the principal out- 
let for Bolivian exports to the 
Atlantic via the Paraguay-Par- 
ana waterway. 

By late October, discussions 
were still in progress about 
whether to split Enfe into 
three for capitalisation or offer 
it as a complete package. Most 
international consultants have 
advised against including the 
track Itself in the transfer: 
Enfe is unlikely to fetch its 
book price at capitalisation 
and ret ainin g ownership of the 
track would explain away an 
otherwise unacceptably low 
offer. 

"It’s a politically sensitive 
issue,” admits Mr Edgar Sara- 
via, capitalisation secretary. 
But he is adamant that the 
state will have no future role 
in running the capitalised busi- 
ness: the new operator would 
simply lease the track under 
concession and assume respon- 
sibility for its maintenance. 

Enfe's future shape will 
depend on the capitalisation 
team's decision. Smallish 
regional companies from 
neighbouring Chile. Argentina 
and Brazil could be interested 
if it is divided, while three US 
companies - Burlington North- 
ern. Conra il and Pacific 
Southwest - might he con- 
vinced to bid for the railway 
system as a whole. 

Sally Bowen 



; jSE:>r : :^7. 

■ 

it- ' *** 


Pleat*, ftttsy Hogerz 



the government deemed was 
an unacceptable offer by 
Iberia. 

The Spanish carrier had 
allegedly offered 820m for LAB 
with an option to withdraw 
from the deal wi thin a two- 
year trial period. 

A recent government invita- 
tion to interested buyers to 
attend a “brain-sto rming ses- 
sion” found little response and 
had to be cancelled. 

Yet Mr Edgar Sara via. senior 
official at the ministry of capi- 
talisation, says the problem is 
not LAB, but rather that many 
European airlines are busy 
themselves in restructuring 
their operations, while others 
are simply cash-strapped. 

“In January we will aggres- 
sively hit the campaign trail, 
perhaps having to offer other 
finance options or a manage- 
ment contract combined with a 
lower stake in the company.” 

Raymond Colitt 


A microwave radto station at Copacabana, high in the Boflvten Andes. Enters revenue has grown about 70 per cent over the past five years 

1A# jtb fe^er than four Efltel t6 leCOm HI UDf CatiOnS clear how much resist 


W ith fewer than four 
lines for every 100 
inhabitants, Bolivia 
has one of the lowest indices of 
telephone provision in Latin 
America. But. as Peru proved 
earlier this year when it sold 
off a controlling share in its 
state-owned telecommunica- 
tions industry for more than 
82bn. it is growth potential 
which counts with investors. 

Bolivia's long-distance car- 
rier Entel is second on the list 
of six state companies headed 
for capitalisation. Mr Doyle 
Gallegos, an independent con- 
sultant with previous experi- 
ence in tbe Argentine. Ven- 
ezuelan and Peruvian sell-offs 
and now retained to advise on 
the Bolivian process, describes 
Entel as a “relatively sophisti- 
cated" company. Over the past 
five years, it has invested some 
S150m in satellite and digital 
equipment - 40 per cent of that 
coming from multilateral cred- 
its. 

Entel’s revenue has grown 
about 70 per cent over the 
same period, with interna- 
tional traffic expanding 30 per 
cent and national long-distance 
20 per cent Rates are near to 
or slightly lower than the 
Latin American average: inter- 
national calls are S2.25 per 
minute plus 13 per cent tax. 
Entel hilled SlOlin in 1993. 


Investor interest 
appears keen 


producing cash How equivalent 
to about 33 per cent of revenue. 
The new operator will enjoy an 
“exclusive concession” on 
long-distance traffic for five 
years, after which the Bolivian 
telephone business will be 
thrown open to full competi- 
tion. 

Capitalisation is complicated 
by the fact that on-th e-ground 
service has for more than a 
decade been in the hands of 22 
co-operatives nationally. The 
Santa Cruz co-operative has 
been in existence for 25 years. 
In general, the co-operatives 
have lagged behind in infra- 
structure investments: many 
are alleged to be both ineffi- 
cient and corrupt “adminis- 
tered by people who know 
nothing about telecommunica- 
tions." according to a local 
expert 

At present Bolivians want- 
ing a telephone must pay a dis- 
couraging $1,500 installation 
charge to their local co-opera- 


tive. Finding sources of financ- 
ing is generally difficult for co- 
operatives so they are unable 
to meet demand: the average 
waiting time for connection is 
a year. 

F ollowing the Peruvian 
privatisation model. 
Bolivia’s capitalisation 
team is setting specific condi- 
tions for Entel’s “strategic 
partner”. Existing telephone 
density is to be doubled within 
five years, with a target of 12 
lines for every 100 inhabitants 
by the year 2005. That would 
mean investment totalling 
some $l.6bn. 

A simple price cap formula 
will be applied, diminishin g 
gradually on a real-terms basis 
to • oblige the operator to 
increase efficiency. Currently 
low local monthly tariffs will 
have immediately to be raised 
while international rates will 
gradually fall 

By late October, it was not 


clear how much resistance was 
to be expected from certain co- 
operatives. 

Government strategy seemed 
to focus on reason and persua- 
sion, with the back-up legal 
provision that Enters new 
partner will have the right to 
install parallel infrastructure if 
local cooperation is not forth- 
coming. 

“Most likely, cooperatives 
will transform themselves into 
limited companies,” says Mr 
Gallegos. “Otherwise, their 
chances of expanding will be 
slight” 

The cooperative snag not- 
withstanding, investor interest 
appears keen. Leading interna- 
tional operators such as GTE, 
American Telephone and Tele- 
graph, Telefonica and South- 
Western Bell - who recently 
participated , in the Peruvian 
telecommunications sell- 
off - have attended Entel infor- 
mation seminars. Brazilian and 
Mexican companies are also 
reportedly interested in form- 
ing consortia with larger oper- 
ators. 

Seven investment banks 
have been short-listed for tbe 
job of promotion and a decision 
is expected by late November. 
Pre-qualification of operators is 
scheduled for January. 

Sally Bowen 


WHO SAYS YOU CAN'T MIX BUSINESS WITH PLEASURE ? 

We invite you to Bolivia to enjoy both our heritage 
and our investment opportunities. 

Come and take a closer look. 




cSfiiiuHiuiP” 1 v V-'4*- 



Casa de La Moneda 
Potosi 


After the discovery in ! 545 of the 
fabulously rich silver Mountain of 
Potost. the minting of coins began in 
1575. In the tarty pan of the 17 th 
century. Poion had a population of 
ova 120.000. about in he that of 
Modnd a that tune The mint house 
building comirKnced in 1758. look 
fifteen years fur completion and has 
25U rooms with 132.01)0 square feet 
of construction. The museum has 
unique paintings by the renowned 
colonial artist Melchor Piirec de 
__ Holguin The UNESCO has declared 
r ■* flowrf as "WwM Cultural Manage’. 




Casa de La Libertad 
Sucre 

The chapel in this hi tiding 
belonged to an ohl Jesuit Convent 
and was later used as the Main 
Hall of the University founded in 
1621 . The first cry for freedom in 
Spanish America was heard hen- 
on May 25. 1809. In this same 
chamber Bolivian's first National 
Assembly met in 1825 and 
subserfeed its Act of Independence. 




.... It-- 

.ft ■•••1 V -- 1 






-*-*► • , - w J- p- I 

*■ *•»< jil _x«i N.»h*iV <«,■•«( w •; 

\~yr-i*' -I.—* .•*•*»» tP..K’«. Qi- 

r ^T'. J r- • '- VC- 

. ... 

• 1 t ■ — ■=- . T 


Archivo y Blblioteca 
Nacional de Bolivia 
Sucre 

The archive is unc of the most 
valuunk- in the world related to 
Spanish Colonial limes. Ils 
manuscripts, the oldest dating 
bauk to 1 546. include the 
complete collection pertaining 
10 the administration of the 
'Audienaa de Chareas" 

1 1 540- L«5>. There are 6.6U0 
feet of original manuscnpii and 
the library has over lOOJw 
volumes. 





TP' 


Museo Nacional de 
Etnograffa y Foiklore 
La Paz 

This museum occupies u colonial 
palace built in 1720. It specializes 
in the study of Bolivia's primitive 
cultures and tie production of 
popular ait and endtmanships. its 
coded km includes thousands of 
valuable textiles and pieces of 
pottery. The library has rare 
originals such as the "Alt of the 
Aynmra Language" 1 16 1 2) or the 
"Ait of the Mojo Language" 

11701). 


Banco Central de Bolivia has been looking after the 
country's cultural heritage with as much care as its 
international reserves. 








VIII 


CTMANCIALTIMES 


WEDNESDAY NOVEMBER 


9 1994 



BOLIVIA VIII 



Soya exports totalled $13m in 1983 ncfaq- nogsra 


A gricul tu re remains Bolivia’s single 
most important sector of the econ- 
omy, representing 20 per cent of 
gross domestic product, and agro-indus- 
trial products are presently experienc in g 
the fastest growth of any exports. 

This is not a cyclical trend; agricultural 
development will be a pillar for economic 
growth in years to come. The main reason 
is that Bolivia is discovering that it has 
comparative advantages in specific agri- 
cultural products - and it has enormous 
tracts of undeveloped and extremely fertile 
land in its eastern frontier. 

Contrary to other tropical regions in the 
Amazon basin, the fluvial plains in the 
province of Santa Cruz boast soils 
extremely rich in nutrients that produce 
above-average yields. While soya produc- 
ers -in neighbouring countries harvest an 
average of 1.5 tonnes a hectare, Bolivian 
farmers reap 2L5 to 3 tonnes a hectare. The 
tropical climate allows two soya harvests 
a year, of which the larger one is in the 
wet season between November and April. 

Prospects are so promising that foreign 
investors, especially from Brazil and 
Argentina, are flocking to the area in 
ypiry fr of sizeable tracts of land to grow 
soya beans and other crops. Although 
some of the soya production still leaves 
the country without any processing - soya 
worth Sl3m was exported in 1993 - large 
quantities are being processed into oil. 
flour or animal feed. 

Despite considerable growth figures last 


Raymond Colitt reports on the agricultural sector 

Pillar for economic growth 


year, however, the agricultural sector 
faces significant difficulties. Interest rates 
on loans are still high, preventing capital 
investment in technology. Irrigation is vir- 
tually non-existent and dependency on 
rainfall does not allow for steady returns. 
This year, a prolonged drought caused 
estimated losses of $20m in soya, wheat, 
sunflower and fruit production. 

In addition, the region's limited infra- 
structure complicates the transport of 
agro-exports. Producers complain that 
transportation to Chile's distant Arica port 
is costly and that roads are in poor condi- 
tion. The Paraguay-Pardna waterway, 
which flows into the Rio Plata near Bue- 
nos Aires, provides a less expensive alter- 
native shipping route. But the train ser- 
vice from Santa Cruz to Puerto Suarez on 
the river Paraguay has a limited cargo 
capacity. 

The influential lowland agriculture asso- 
ciation, CAO, demands more support from 
the government as well as a coherent 
development plan for the sector. Mr Erwin 
Reck, CAO’s president, urges the creation 
of a ministry of agricultural development 
and the construction of strategic roads in 


the region, as well as cheaper credits. 

The small-scale farming of more tradi- 
tional products by campesinos of the high- 
lands is a sharp contrast to the large agro- 
industrial production of Bolivia’s low- 
lands. A large percentage of Bolivia's high- 
land rural population ekes out a living in 
subsistence farming, while others manage 
to market excess production of foodstuffs. 


O ne product from the Largely bleak 
and agriculturally poor Altiplano 
that has seen rapid growth - and 
is now being exported - is the quinua. a 
small, disk-shaped grain, which has been a 
staple in the Andes for thou sands of years 
and has recently seen a resurgence as a 
health food in Europe and the US. Quinua 
has higher nutritional value than any 
other grain commercially available. 

The Association of Quinua producers, 
Anapqui. has been promoting exports of 
the product, making Bolivia the world's 
leading producer. Anapqui, incorporating 
3.000 producers of quinua. c laims that 60 
per cent of Bolivia's total is exported and 
this grows by 20 per cent annually. 


Mr Francisco Valderrama, head of 
Anapqui. says that continued growth of 
quinua production in Bolivia will depend 
on the country's ability to satisfy con- 
sumer demand for specific quinua prod- 
ucts, such as ready-to-eat cereals or 
snarks “Above all we have to capitalise 
on the advantage in quality we have over 
other producers to increase and defend our 
market share," says Mr Valderrama. 

Although the US and Canada are produ- 
cing large quantities of quinua, they have 
reportedly not been able to match the size 
and quality of the Andean product. 

Another up-and-coming export product 
that has been grown in the region for 
thousands of years are textiles made of 
alpaca, from a domesticated version of the 
Andean Hama Exports last year totalled 
34m. 

Hand-knitted designer sweaters "made 
in Bolivia" are on sale In boutiques and 
department stores in the US and Europe. 
Mr Gerald Fisher, a US expatriate, who 
has been supplying US department stores 
and mail order catalogues for 20 years, 
says; “Alpaca is a fibre that has awaken," 
ffis sweaters, designed by a well known 


New York fashion designer and knitted by 
indigenous women in the highlan ds, retail 
tor S195 to $235 in the US. 

Beatrice Patiflo’s Coats and suits m 
AlDaca textiles by Beatrice Patino have ■ 
been featured in New York as an alterna- ■ 
tive to garments in traditional luxury 
fibres such as cashmere or mohair. 

Patino moved her business from 7th 
Avenue, to a back street -in a popular 
neighbourhood in La Paz. 

The Bolivian Export Foundation (FBE), . 
a non-profit organisation flinded hy the 
World Bank and the Dutch and Swiss gov- 
ernments, goes beyond merely Identifying 
potential export products to w-finance 
their production. Unlike other, aid organi- 
sations, the FBE conducts detailed feasibil- 
ity studies on specific produ cts b efore 
entering into a joint venture with local 
enterprises or communities. 

Mr Romel Antelo, secretary of the direc- 
torate, says that while other develo pme nt 
non-governmental organisations- are often 
careless about where they put their 
money, the FBE has to make a positive 
return on its investment to continue oper- 
ating. "We operate very much like a pri- 
vate enterprise, carefully studying the 
investment opportunities,” says Antelo. 
The FBE is presently financing a garlic 
producing venture with 120 peasant fami- 
lies in Tarija, southern Bolivia, who conr 
tribute the land as their part of the deal 
The FBE expects to recuperate its $300,000 
investment after the first harvest. 


Profile: Caico farming co-operative 


Rural development programme 


Community effort is the key Income is gradually rising 


When Kotei Gushiken arrived 
In Bolivia in 1954 be had little 
more than hope in bis bag- 
gage - hope to begin a new life 
after leaving behind the eco- 
nomically depressed post-war 
Okinawa. 

With bim came some 405 
Japanese peasants, each of 
whom was given a plot of land 
by the Bolivian government as 
part of a programme to 
expand the agricnltnraJ fron- 
tier into the dense jungle that 
still predominated in the areas 
jnst north of Santa Cruz. 

A mysterious fatal disease 
and the peasants' nnfamlliar- 
ity with the tropical soil and 
climate led nearly half of the 
recently arrived immigrants to 
abandon their new homes. 
Adverse soil conditions forced 
the remaining settlers to move 
their community twice before 
finally founding Okinawa col- 
ony in 1956. 

Attempts to cultivate cotton 
and other crops failed in these 
early stages. 

Yet today Mr Gushiken sits 


in an executive chair in his 
air-conditioned office in a 
brand new community centre 
built with Japanese govern- 
ment aid. Be is now president 
of the Japanese-Bolivian Asso- 
ciation with its 730 members. 

Mr Gushiken says: “In the 
early days I never believed we 
could achieve what we have 
now -and much of that suc- 
cess is due to a communal 
effort-” 

The agricultural co-opera- 
tive Caico. formed by the col- 
ony in 1971, today controls 10 
per cent of the country's soya 
grain production and 35 per 
cent of total soya seed produc- 
tion. 

It was this community that 
began experimenting with the 
cultivation of soya back in the 
early 1970s, before the bean 
became the number one agri- 
cultural export in Bolivia. 

Land and machinery remain 
private property in the com- 
munity but Caico provides 
technical assistance, long-term 
planning and collective bar- 



Botma’s Number One producer and exporter of 
alcoholic beverages wants to expand its international 
market through importers and new representatives 

Sagjc SA. was founded in 1925. For the last 400 years its 
vineyards, winery and distillery in San Pedro have been 
making a famous non-matunsd brandy, distilled from to 
fine wines, called "Singani San Pedro de Oro", also 
known as "Pisco". Today it is Bolivia's national drink. 

Products offered: 

• Singani San Pedro de Oro 

• San Pedro Cabernet Sauvignon Wine 

• San Pedro White Wine 

• San Pedro Vino Espumante 

• Oporto San Pedro 

From our distillery in La Paz: 

• Vodka Zar 

• Whisky 

• Limdn Ardiente 

•Alcohol Toro 

Those interested in further information please 
contact in La Paz, Bolivia: 


Carlos Cal vo 
Telephone; (591-2) 377691 
Telephone: (591-2) 372122 
Fax: (591-2)391354 


Ernesto Reinaga 
Telephone; (591-2) 325408 
Telephone: (591-2) 351640 
Fix: (591-2)391642 


T 


there are many 
business 
opportunities in 
BOLIVIA 
these days... 

But our permanent 
business is offering 
vou the best advice. 


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gaining with wholesalers. 

Quick to realise the 
long-term benefits of adding 
value to its basic product, 
Caico soon began processing 
soya beans on site. 

First, a seed processing 
plant was installed, then facili- 
ties to extract oil and produce 
soya-based animal feed. 

With a long-term ontlook of 
secure but steady growth, 
Caico presently invests heavily 
in training its staff. 

Youngsters in the colony are 
given a scholarship and sent 
abroad to be trained as 
agronomists, veterinarians, 
business administrators and 
lawyers. 

“In order to secure oar 
future we need to invest in our 
people, maintain our high 
quality standards and diver- 
sify our product line.” says Mr 
Masayuki Kudaka, general 
manager of Caico. 


Caico is now studying the 
macadamia nut as a crop with 
a large potential for growth. 
Tree nurseries are already in 
place but the first harvest is 
still two years away. 

The latest success, though, 
is the co-operative's own 
supermarket in the city of 
Santa Cruz as a direct outlet 
for its products. 

Says Mr Kudaka: “With help 
of the co-operative, we 
achieved together what we 
never could have done on our 
own." 

An important factor in the 
community's perseverance has 
been the maintenance of cul- 
tural traditions. Japanese soci- 
ologists who recently visited 
the colony say its people have 
preserved their traditions 
more than their brethren in 
Okinawa. 

Raymond Colitt 


The town of Comanche in the 
province of Pacajes - some 
lll'km south of the capital La 
Paz. on the bleak and wind- 
swept Altiplano - is the site of 
an unusual sustainable rural 
development project, writes 
Raymond Colitt 

Only a few years back, the 
population of Comanche was 
struggling with daily survival 
The inhospitable lands did not 
allow for any type of agricul- 
ture. Water is scarce during 10 
months of the year and the 
temperature at 4.000m above 
sea level often drops well 
below zero. Well-water in the 
area is salty and unsuitable for 
human consumption. 

The Pacajes, a pre-lncan 
indigenous group, had once 
earned their living as mer- 
chants. bringing goods from 
the Pacific coast The coming 
of the railway meant that their 
way of life changed drastically, 


forcing them to rely on agricul- 
tural activities. Yet even cattle 
ranching, the only source of 
income, was not feasible on a 
large scale because of the mea- 
gre vegetation. 

The villagers of Comanche. 
like those in many other towns 
throughout the Altiplano. left 
home to look for jobs in the 
city, to practice slash-and-bum 
fanning in Bolivia's lowlands, 
or to join the multitude of 
coca-growers in the sub-tropi- 
cal Chapare region. 

Then, in 1983, a non-profit 
aid organisation, Semta. 
launched a rural development 
plan. Unlike countless other 
aid projects, this one intro- 
duced simple and inexpensive 
technologies to promote envi- 
ronmentally sustainable and 
economically yielding agricul- 
tural practices. 

One of the earliest and most 
successful projects was the 


The Indians: Richard Bauer reports on the majority indigenous peoples 

Symbols are important 


Mr Victor Hugo Cardenas. Bolivia's 
vice-president, receives visitors in his 
ornate office in La Pax’s legislative palace. 
Seating his guests around him, he indi- 
cates the most elaborate gilded chair and 
jokes: “This is my throne". Symbols are 
important for this first-ever Aymara to be 
elected to such high office. 

Every hour of the day since he was 
sworn in. Mr Cardenas has worn over his 
left shoulder a finely-woven scarf of 
vicufia hair - “except when I'm in the 
shower” says the Sorbonne-trained educa- 
tor and leader of the indigenous MRTKL 
political party. 

“A [native] priest gave it to me on behalf 
of the Bolivian people and told me never 
to take it off. It symbolises authority and 
social controL" Returning the scarf at the 
end of his term, Mr Cardenas will have to 
give account to priest and people of his 
actions in government. 

Mr Cardenas takes his symbolic role 
seriously. He aims to “build in the politi- 
cal arena a genuinely democratic state 
where the indigenous, the peasants and 
the marginalised are not just guinea-pigs 
for experiments made by the government 
of the day." 

Bolivia, like Peru and Ecuador, is a 
country in which indigenous peoples are 
in a majority. Quechua and Aymara are 
widely spoken. 

Whites, proportionately over-represented 


in formal business and government, are an 
absolute minority. 

“We have a dream: that the political 
system which has always excluded the 
majority will accept us. Where does exclu- 
sion lead? Sooner or later to confrontation 
between Bolivians. Because when the 
excluded lack channels of expression 
within the political system, they seek 
other methods. Indigenous and non- indig- 
enous must unite to transform the struc- 


Mr Cardenas has personal 
experience of exclusion, or 
discrimination 


ture of our country." 

Mr Cardenas has personal experience of 
exclusion, or discrimination. “My father’s 
name was Pedro Choquehuanca Pinto: 
because of his indigenous background he 
could not enter university. When he mar- 
ried, be changed his name to Cardenas so 
his children should not suffer the same 
fete. I can understand why he did that but. 
today, conditions have changed and I 
wouldn't do it." 

His own wife's experience - she left the 
teaching profession because she was not 
permitted to hold classes wearing her tra- 
ditional Indian clothes -has helped give 
education a high priority on the Ust of 


reforms. Bolivia is moving towards a bilin- 
gual educational syste where indigenous 
children will be taught first in their native 
language, adding Spanish later. 

Teachers will be permitted to wear tradi- 
tional dress. 

Mr Cardenas hopes reforms such as 
these will help revert the depressing sta- 
tistics: children on average take 12 years 
to complete a six-year course. Not surpris- 
ingly. the drop-out rate is extremely high. 

While Mr Cardenas is certainly a figure 
full of symbolism, he appears to have suc- 
ceeded in escaping the historically non-in- 
fluential and decorative role of a Bolivian 
vice-president. 

“I don't just sell government policy: I 
hear the viewpoints and arguments of the 
excluded and I channel them to the appro- 
priate area in the executive branch where 
they are dealt with. We want to bring state 
and society together." 

Mr Cardenas argues that even, though 
the state has ignored them. Bolivia's mar- 
ginalised have notched up many business 
successes and pressed for a more economi- 
cally liberal society. 

“If many of us have survived, it’s 
because of our strong shared and commu- 
nity ties, even among the migrants to the 
cities. Goni [President Sanchez de Lozada] 
has his traditions, his modernity, and I 
have mine. Together we want to create an 
alchemy - and so far, it’s working." 


Sally Bowen meets two Bolivian visionaries 

Looking east - and west 


Like President Sanchez de Lozada himself, 
two of Bolivia’s most far-sighted men are 
entrepreneurs who, after spending many 
years outside their native land, have 
returned and succeeded in transforming a 
personal vision into reality. 

One is Mr Joaquin Aguirre, author, phi- 
losopher. playwright, businessman and 
now the owner of Bolivia's only genuinely 
functioning port on the Paraguay Riven it 
bears his name, Puerto Aguirre. 

“The Paragnay-Parana hidrovia (water- 
way) is to our continent what the Missis- 
sippi Is to the US," be says, “but over the 
centuries Latin Americans have done 
everything possible to ignore it" 

Aguirre found plans for a river port and 
waterway already gathering dust in the 
foreign ministry's archives when he was a 
young 

Only after 30 years of globe-trotting 
- during which he built the gas pipeline 
to Argentina, founded a supermarket 
chain In Colombia and patented sugar 
made from bananas -did he return to 
Bolivia to explore the waterway route in 
the mid-1970s. 

Since 1903, Mr Aguirre says he has 
Invested $iOm in Puerto Aguirre from his 
own savings and loans: other private 
entrepreneurs have put in another $2Sm. 

The 1986 World Bank report on the 
eastern lowlands of Bolivia, which gave 
the green light - and initial credit - to 
soya forming in the zone, described him 
as “a man of vision, passion and action”. 

Mr Aguirre, now in his seventies. 


believes integration will be achieved by 
entrepreneurs rather than governments. 

A permanent, five-country “hidrovia" 
commission now exists and Is already 
moving ahead with waterway improve- 
ments. 

This year, he says, his “pipe-dream" 
Puerto Aguirre will move 200,000 tonnes 



Transforming personal visions into reeflty. 
Joaquin Aguirre (loft) and Juflo Leon Prado 

of cargo, mainly soya. 

Like Mr Aguirre, Mr Julio Leon Prado 
made most of his money in other Latin 
American countries over a 30-year period 
- chiefly in power transmission lines and 
construction. 

His many-tentacled Banco Industrial 
group is now Bolivia’s leader in financial 
services. 

But Mr Leon Prado is a frontiersman at 
heart Although he is nearly 70 years old, 
in the past few years he has spearheaded 


Bolivia’s booming soya industry and is 
now the country’s largest individual 
farmer. 

“When I expanded to 2,000 hectares, 
they said I was crazy- But I told them, if 
you need two tractors for 2,000 hectares, 
you need twenty for 20,000: it's that sim- 
ple." 

With yields of 3.2 tonnes a hectare, Mr 
Leon can m a t c h the world’s most produc- 
tive soya formers. He praises the Japanese 
settlers in the region east of Santa Cruz 
for realising: the land’s rich potential: 

“They revolutionised aiised Bolivian 
agriculture, proving how fertile It is.” 

For Mr Leon, soya represents the future 
of Bolivia. “Iffs a primary industry and 
best of all, it’s forever because it’s sus- 
tainable. There’s business here for every- 
one.” He is lending money, supplying 
seeds, sharing technology and weather 
reports with small formers in a push to 
get a million hectares of Bolivian low- 
lands under soya. 

“That means 3m tonnes of beans a year, 
which is a point of no return," he says. 
Bolivian soya, pins the prodace from 
south-west Brazil, will exert irresistible 
pressure on governments and private 
companies to get adequate transportation 
infrastructure in place: 

“Joaquin Aguirre is one of Bolivia’s 
great visionaries,” Mr Leon acknowl- 
edges. 

“But I think time will prove him wrong. 
I believe Bolivia’s future lies westwards, 
out through Peru to the Pacific.” 


construction of a new type of 
greenhouse - a low, four- 
walled b uilding covered with 
an “agrofoil" that allows the 
temperature to rise to 35°C, 
while protecting the plants 
from strong winds. 

Other low-cost, high-impact 
projects include the construc- 
tion of ditches and dams to 
retain and channel rain water, 
which is otherwise wasted and 
erodes the already thin layer of 
fertile soil. A programme to 
recuperate 17,000ha of grass- 
land by sowing native grass 
seeds is already bearing fruit: 
the number of cattle able to 
graze there has increased sub- 
stantially. 

Semta’s projects are based 
neither on hand-outs nor on 
“top- to- bottom" coaching. Mr 
Oscar Aguilar Calderon, Sem- 
ta’s executive director, says: 
“Community participation is 
crucial in avoiding dependence 
and in guaranteeing the suc- 
cess of a .project." Farmers 
must, for example, produce 
and hand over to Semta new 
seed for the grassland project 


-in exchange for which they 
get barley seed. 

High-school children are In 
charge of reforestation and 
receive an award for the big- 
gest tree at the end erf each 
year. Management plans are 
also jointly established 
between the community and 
Semta. 

Today, the results of Semta’s 
work are dearly risible. Many 
families are virtually self-suffi- 
cient in grains, vegetables and 
mine. Their income is gradu- 
ally rising through the com- 
mercialisation of cattle-farm- 
ing and their agricultural skills 
have improved significantly. 

However, one member . of 
every family usually still 
migrates to La Paz, Cocha- 
bamba or Santa Cruz to secure 
additional income, and the 
inhabitants of Comanche are 
still uncertain about the future 
of their community. But the 
massive flow of migrants has 
at least been halted. 

The question is whether this 
type of project can be imple- 
mented on a national level. 


4 



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FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


IX 


BOLIVIA IX 


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F inance is one of the fast- 
est growing areas of the 
Bolivian economy. Cen- 
tral bank figures show the 
. financial sector growing by 21 
>per cent in 1992. 14 per cent 
last year and an estimated 12.4 
per cent this year. 

According to Mr Edward 
Derksen, chairman of BKN 
Multibanco, a Bolivian com- 
mercial bank, the country's 
bigger banks are growing by 30 
per cent year. 

“With a stable currency and 
low interest rates abroad, we 
have had capital repatriation,” 

he says. 

Yet this rapid growth is from 
a very small base. The basic 
business of banking remains a 
mystery to a large majority of 
Bolivians. 

Mr Guido Antezana. who 
stepped down this year as head 
of the country’s banking asso- 
ciation, points out that there 
are only 350,000 deposit 
accounts in a country of 7m 
people. 

Some 45,000 depositors hold 


Stephen Fidler reports on developments in the financial sector 


Rapid growth from a very small base 


85 per cent by value of all bank 
accounts. 

‘This shows how deep the 
financial function goes in 
Bolivia says Mr Antezana. 

The financial sector is only 
now recovering from the dev- 
astation wrought on it during 
the hyperinflation of the early 
1980s, which damaged the cred- 
ibility of both the Bolivian cur- 
rency and the banking system. 

By the end of 1985. the finan- 
cial meltdown left the banking 
system with just 850m in 
assets. 

Banking assets have since 
recovered to S3.27bn at the end 
of last year and the banks’ cap- 
ital to 8225m. But, says Mr 
Antezana: “We are barely back 
to the financial assets that 


were held by the banking sys- 
tem in 1978." 

Hyperinflation has left 
another legacy: the banking 
system's switch to dollars. 

The proportion of dollars in 
banks has grown in recent 
yearn as money has been repa- 
triated from abroad and left on 
deposit in the US currency. 


A ccording to the World 
Bank, 85 per cent of 
deposits in Bolivian 
banks were denominated in 
dollars at the end of 1993, com- 
pared with 77 per cent in 1989. 

The majority of local cur- 
rency deposits in the banking 
system are held by the govern- 
ment. 

This switch to the dollar 


clearly reduces the mecha- 
nisms available to the govern- 
ment and central bank for the 
control of economic policy. 

A report from the economic 
consulting firm M tiller & Asso- 
ciates points out that this - to- 
gether with the concentration 
of deposits in 3 relatively small 
number of hands - “makes the 
Bolivian economy more vulner- 
able to external shocks.” 

It also leaves the economy 
more vulnerable to money 
laundering by drug traffickers. 
The US government says that 
the country is still not an 
important centre for money- 
laundering. Yet it argues that 
the situation may change 
because money laundering is 
not considered a crime, “dollar- 


BancoSol: the unorthodox bank 


Writing its own success story 


BancoSol not yet three years 
old and the smallest of all 
Bolivian banks, is writing Its 
own snccess story. 

Inspired by a “bank for the 
V* poor” In Bangladesh, this 
unorthodox financial institu- 
tion presently channels 
through its 29 branches 
short-term “mini -loans” to 
60,000 individuals “who 
wouldn’t normally get through 
a bank’s glass doors,” says Mr 
Pancho Otero, BancoSol’s gen- 
eral manager. 

BancoSol has set np its 
unusual headquarters in a 
bustling, lower middle-class 
district next door to La Pax’s 
San Pedro prison -a far cry 
from the marble hawfrhig haiic 
of El Prado preferred by its 
more traditional rivals. Banco- 
Sol customers make up 40 per 
cent of all Bolivian borrowers, 
but the average individual 
credit is a tiny 8500. Bad loans 
are almost unheard of. The 
first -write-off in BancoSol’s 
history was to October - for 
$1,500. 

Each month, the bank pro- 
cesses 12,000 loans for Boliv- 
ia’s army of informal entrepre- 
neurs - known to economists 
as “the self-employed* and 
estimated to number about 
1m. 

BancoSol’s clients, a major- 
ity of them women, would 
never receive credit, from a 
traditionally-constituted bank: 

J they lack the necessary docu- 
mentation and formal guaran- 



chanml short-term ‘ mint- loans' to 60,000 individuals p > mw Ousm sigom 


The secret of BancoSol’s 
success lies in its policy of 
terming only to small 
. V • groups 


T 

E 


tees. Forty per cent of all cred- 
its gd.to finance the commer- 
cial activities of street-traders, 
the rest to workshops and 
small back-street factories. 

The secret of BancoSol’s suc- 
cess lies in its polity of lend- 
ing only to small groups of 
between three and right who 
coguarantee the loan. Alicia 
Aira, Flora Blanco and Irma 
Gutierrez are a typical group 
of borrowers. All three are 
tough-talking Aymara women, 
proudly dressed in traditional 
bowler bats and many-petti- 
coated skirts. Their Spanish is 
deficient but their business 
talents irrefutable. 

All make their Irving as 
..Atreet-tradeis, with adjoining 
-^pitches in central Avenida 
7 Camacho. One sells sweets, 
another sun-glasses and the 
third, magazines. In October, 
they were seeking BancoSol 
credit for working capital In 



green light from Bolivia's 
banking superintendency to 
become authorised lending 
institutions. BancoSol, mean- 
while, aims to lend a total of 
8150m in 2998. 

With S7m in capital, Banco- 
Sol eschews the mask of phil- 
anthropy. “It’s run along the 
same criteria as any other 
bank,” says Mr Otero, who 
expects profits of Sim for 1994. 
It receives credits at commer- 
cial rates (between 10 and 12 
per cent a year) from other 


International organisations 
such as the lADB's 
offshoot IIC are 
shareholders in BancoSol 


Forty per cent of aM credits go to finance the activities of street-traders 


preparation for the busy 
Christmas season - $500 each 
for eight months at 2.5 per 
cent a month. Without Banco- 
Sol, their only alternative 
would be an informal loan 
sbark who would charge at 
least twice that 
“There’s an unqnenched 
thirst for credit in the infor- 
mal sector,” says Mr Javier 
Villanueva, a young university 


graduate- turned -stockbroker 
at Saxxon Capital who wrote 
his thesis on informal banking 
practices in Bolivia. He has 
identified some 50 nongovern- 
mental organisations which 
presently grant informal cred- 
its outside the banking law. 
But BancoSol is the first for- 
malised bank to attend those 
needs. 

Five NGOs are awaiting the 


banks and large, liquid compa- 
nies to increase volume. A 
pilot programme to attract 
small savers has got off the 
ground, bringing in $4m to 
date. 

Internationa] organisations 
such as Massachusetts-based 
Action International, the 
Fundes foundation of Switzer- 
land for the promotion of 
small enterprise and the 
lADB's offshoot UC are all 
shareholders in BancoSol. But 
so too, encouragingly, are 
some of Bolivia's wealthiest 
businessmen with a social pen- 
chant: President Gonzalo San- 
chez de Lozada. Mr Fernando 
Romero, former planning min- 
ister, and Mr Julio Leou 
Prado, a prominent entrepre- 
neur, all have a stake in Ban- 
coSol and are ready to offer 
professional advice. 


Richard Bauer 



In the heart of South America 


3 


4 





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one of the most prestigious financial 
institutions in the Country, is your best 
contact to open business doors in 
Bolivia. 


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isation” is advanced and the 
banking superintendency 
refuses to share information 
with agencies fighting drug 
traffickers. 

Better liquidity, the percep- 
tion that the banking system is 
more or less secure except for 
a couple of smaller institu- 
tions, and that the country’s 
political and economic risk rat- 
ing have improved, have all 
combined to bring down lend- 
ing spreads. 

The country risk premium 
on dollar deposits is about 5*6 
per cent on deposits. Lending 
spreads are down: interest 
rates on big bank deposits vary 
between 9V* and 11 per cent: 
and on loans from 12-13 per 
cent for the best customers, to 
16-20 per cent. 

A new banking law. pushed 
through under World B ank 
insistence, was passed in 1993. 
it brought capital require- 
ments to international stan- 
dards and set up a superinten- 
dency of banks. Critics say the 
superintendent has been given 
too much discretionary power 
- and provides a poor example 
for the regulatory regime 
which the government intends 
to set up for newly-capitalised 
companies. 

Mr Antezana says that more 
than a dozen banks with ade- 
quate minimum capital are 
awaiting a decision to allow 
them to open, but permission 
has not been granted or 
denied. When the bankrupt 
state banks were formally 
closed -the last in December 
1992 after the World Bank 
made this a condition of a loan 
it was granting - the then 
superintendent was accused of 
reallocating the accounts in a 
discretionary manner. 

According to Mr Fernando 
Candia, the central bank presi- 
dent. the central bank has 
been operating with complete 
de facto independence in mone- 
tary and exchange rates since 
the present government took 
over last year. The government 
is proposing that the indepen- 
dence of the bank in monetary 
and exchange rate policy 
should be granted by law. 

To activate the financial sys- 
tem fully, especially the securi- 
ties markets, a number of 
other legal changes are being 
proposed. A new securities law 



Banking assets recovered to 83£7bn last year 


Pkan Mctay Ropers 


is planned to overhaul the anti- 
quated rules. There is a small 
fixed interest market - turn- 
over this year is expected to 
reach $ibn compared with 
8120m in 1991 - which is 
increasingly being dominated 
by private sector users rather 
than the government. How- 
ever, approval of issues by the 
securities commission is slow. 

There are two independent 
stock exchanges, created as 
part of the IMF and World 
Bank conditions for structural 
adjustment, but there is no 
share trading - although two 
share issues are listed. The La 
Paz stock exchange started 
operation in 1989. trading in 
central bank deposit certifi- 
cates. bonds and fixed-term 


deposits of private banks 
wbich account for 85 per cent 
of 1993 trading volume of 
8578m. The Santa Cruz stock 
exchange trades in bills and 
some bonds, but no fixed-term 
bank deposits. 

The two equity issues are 
likely to be joined in the next 
few months as Cochabamba 
Power and Light is floated 
domestically and internation- 
ally. The possible sale of the La 
Paz electricity distribution 
company next year may add 
another company. But it is 
hoped that the biggest boost to 
the equity market - and to the 
development of national 
savings * will come from the 
capitalisation process. Under 
that process, the shares of up 


to 50 per cent of the capitalised 
companies will be distributed 
equally among Bolivians aged 
over 18. This will involve the 
establishment of some 3.7m 
separate retirement accounts. 

The first task will be to 
establish who the eligible 
Bolivians are - a difficult one, 
because the names of a large 
number of Bolivians are 
unknown to the state. 

Pension fund managers will 
be invited to bid to manage 
these non-contributory retire- 
ment accounts. Already, six 
pension fund groups, mostly 
local banks often with a Chil- 
ean partner, are in place. 

After the bidding process, 
which is likely to take into 
account a variety of factors, 
including commissions, hold- 
ers will be free to shift pension 
fund managers. The law will 
require that those individuals 
who decide to contribute to 
their own private pension 
funds - to be introduced as 
part of the proposed pensions 
reform - will have to hold 
them with the manager who 
has the account containing 
shares in the capitalised com- 
panies. The government esti- 
mates there are some 300,000 
potential clients who will sign 
up for such contributory pen- 
sions. 

According to Mr Ruben Fer- 
raflno, a senior official work- 
ing on the pension plan, the 
likely lack of liquidity in the 
capitalisation shares will 
impose limits on the amount 
that can be sold at one time. 
This liquidity shortage may 
also mean that capitalisation 
shares will be listed on stock 
exchanges outside the country. 

Proceeds from sales of shares 
in the non-contributory funds 
will be directed into contribu- 
tory fUnds. Because of the lim- 
ited investment opportunity in 
the domestic market, invest- 
ment outside Bolivia is likely 
to be restricted to 30 per cent, 
a high percentage compared 
with other countries in the 
region with private pension 
systems. 

Even if the plan can be 
guided through Congress, 
where the government coali- 
tion has a majority, opposition 
is inevitable and is likely to be 
strongest from the national 
trade union federation. Exist- 
ing pensioners worried about 
losing their pensions, and the 
managers of the small existing 
pension funds - all severely hit 
by hyperinflation in the 1980s 
- which coexist with the bank- 
rupt state pension fund, are 
' also likely to oppose the 
changes. 


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FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


XI 


BOLIVIA XI 


n 


workin SS of Bolivia's 
tigtt-tait political system remain a 

iu* 0 t0 ^^-standmg stu- 
new. Some observers reckon it also 
v.ranatas a mystery to its president, who 
k spent most of his fonnatfve years outside 
• .-&£ country. 

from enjoying the cut and thrust of 
political me, President Gonzalo Sanchez de 
Lozada appears to view politics as a rather 
tfrespmfi necessity. Like Bolivia’s coca 
problem, politics stands in the way of his 
grand vision. 

Educated at the University of Chicago 
sad a philosophy student who speaks bet- 
ter .-English i than Spanish, he certainly is 
not from Bolivia's traditional political 
mould -which is a positive rather than 
negative attribute as Car as most of the 
public is concerned. 

While the popularity of his government 
has waned in recent months - in large 
measure -because of the way it handled 
demonstrations by coca growers - it 
remains by Bolivian standards at reason- 
able levels. Many Bolivians figure the 
prudent, one of Bolivia's most successful 
entrepreneurs, is rich enough not to have 
to be corrupt. 

Mr Sanc hez de Lozada describes himself 
as “a very modern type of politician". Dur- 
ing the 1993 election campaign, he 
reshaped his campaign - with the help of 
US political consultants Sawyer, Mill- 


Stephen Fidler assesses the political system 

Obstructing the president’s vision 


er - after close scrutiny of opinion polls. It 
was out of these opinion polls that the 
idea of “capitalising'* rather than privatis- 
ing state industries developed. 

He has followed public opinion closely 
since he took office. “We have used a great 
deal of modem methods - polling, focus 
groups and in-depth interviews. We’ve 
become very effective in not only knowing 
the questions to ask but knowing how to 
interpret the answers," be says. 

But even some supporters think that the 
president is too much of a slave to public 
opinion, and that following the opinion 
palls has added to indecisiveness and 
slowed the government reform pro- 
gramme. They argue that to get things 
done he will have to court public unpopu- 
larity - particularly in the middle of his 

term and since he is forbidden by the 
constitution for standing for a second con- 
secutive term. 

As an example, they cite the fact that 
public support fbr coca-growers marching 
on La Paz to protest against government 
policy aimed at repressing illegal coca cul- 


tivation led him to an about-turn in which 
he met the leaders of the coca fanners’ 
unions, whom he openly condemns. 

Yet Goni - as he is widely known - con- 
tinues to stand head and shoulders in pub- 
lic esteem above the rest of his political 
rivals, according to Mr Carlos Mesa, a 
political analyst and television journalist 

Indeed, most of the parties competing 
against the coalition led by the president's 
MNR party are almost all in turmoil. 

The MIR, the party which provided the 
previous president Mr Jaime Paz Zamora, 
Is viewed by political analysts as highly 
vulnerable. This follows allega- 
tions - brought to the attention of tbe gov- 
ernment by the US Embassy and now 
being examined by Congress - that the for- 
mer president and senior members of his 
party had Units with drugs traffickers. 

The party of former dictator Gen Hugo 
Banzer - the ADN - has also been weak- 
ened by an intensifying debate over the 
succession to the party's ageing figure- 
head and founder. 

Meanwhile the UCS, the party beaded by 


brewery magnate Max Fernandez, has 
been riven by a dispute with tide govern- 
ment. 

Mr Fernandez pulled out from the gov- 
erning coalition protesting at the lack of 
government jobs allotted to his party. 
However, many of his party members 
peeled off and continue to support the 
government, which thereby preserved its 
majority in both houses of Congress. 

O ther significant opposition figures 
include Mr Carlos Palenque, a tele- 
vision talk-show host and populist 
who heads Condepa. Arguing for a new 
economic programme which he calls 
“endogenous development", he so far has 
been unable to extend his support beyond 
the poor people of the highland regions. 

According to one observer, therefore, 
“Goni's biggest problem is with his own 
party." As a modernising president sitting 
atop an unreconstructed political system, 
he has had to cut deals - that means prom- 
ising jobs - with key figures within the 
MNR. Although it is early to judge, many 


political analysts believe, nonetheless, that 
the most likely next president will come 
from tbe ranks of the MNR. 

Among the names most frequently men- 
- tinned are - in the r anks of traditional pol- 
iticians -Mr Guillermo BedregaL now a 
leading l eg islator in the lower house, and 
a senator, Juan Carlos Duran. The candi- 
dature of Mr BedregaL who agreed to go as 
ambassador to the UK before deciding that 
be should stay on in Bolivia, is weakened 
by his links to the violent 16-day dictator- 
ship of Alberto Natusch Busch in 1979, 
when he was minister of external rela- 
tions. 

More technocrats than politicians are Mr 
Fernando Romero, the entrepreneur and a 
former cabinet minis ter ousted by the 
president, and Mr Jose Guillermo Justini- 
ano, the present mi nister of sustainable 
development and the environment. 

All this assumes some measure of suc- 
cess for Mr Sanchez de Lozada's pro- 
gramme, in particular capitalisation, 
which is being relied upon to boost 
growth. “If capitalisation doesn't work, 


everything he does here is dead," says one 
political analyst 

Failure of the programme, according to 
one diplomat, does raise the danger of a 
populist government succeeding the 
administration. If that happens, he argues 
that the intervention of the military can- 
not be ruled out 

In the military - as well as in politics, 
particularly in the eastern city of Santa 
Cruz - the influence of secret societies or 
“lodges" is hard for outsiders to divine. 
Yet the intervention in the near future of 
the military In politics is viewed as 
unlikely by most Bolivian observers. 

Indeed, the military is on the face of it 
today less of a factor in Bolivian politics 
than it has ever been. The involvement of 
the dictatorship of Gen Luis Garcia Meza 
during 1980-31 with drug trafficking and 
the viciousness of the regime caused 
long-term damage to the public standing 
of the army. 

Mr Mesa, the political analyst, says 
morale in the armed forces is low, its 
effectiveness has been reduced by budget 
stringency and it has yet properly to 
define a modern role for itself. The inter- 
national and regional environment is also 
significantly less friendly to military gov- 
ernments than it was a decade ago. Fur- 
thermore, there is no sign of the emer- 
gence of a new military leadership willing 
or able to take a political role, he says. 




F or centuries, Bolivia’s 
natural resources have 
been exploited In a 
free-for-all manner — usually 
- lacking' any environmental 
__ concern. Today, the economy 
' fs still heavily resource depen- 
dent and excessive euviron- 
. . mental degradation is com- 
■ p\ man. .. 

The government, in an amtri- 
(tons plan developed by the 
new Ministry of Sustainable 
Development and Environ- 
ment, is attempting to intro- 
duce the sustainable or ratio- 
nal use of natural resources 
without sacrificing economic 
growth. 

The challenges are daunting. 
Extreme poverty, powerful 
agro-industrial enterprises and 
a general ignorance of envi- 
ronmental issues are tbe prin- 
cipal causes of Bolivia’s eco- 
logical problem. 

The question is, will the gov- 


The environment: Raymond Colitt examines forestry issues 

Ambitious government plan 


emment have the resources 
and political power to enforce 
its scheme? 

On the winding road from 
Santa Cruz In eastern Bolivia, 
trucks head westward loaded 
with enormous trunks of tropi- 
cal timber, winding their way 
up the Andean slopes. These 
shipments, usually made op of 
mahogany from Bolivia’s vast 
Amazon rain forest, are des- 
tined for export. “Forests 
cover 50 per cent of Bolivia’s 
territory, providing the wood- 
working sector with an 
immense natural resource..." 
reads an investment brochure 
for Bolivia. Indeed, the wood 


industry, which increases the 
country's income for each tree 
felled, is growing steadily. But 
manufactured wood products, 
such as doors, make up only 
only a small proportion of the 
income from exports: $7 Jm of 
the $52m total wood exports 
last year. 

M r Juan Carlos Quiroga, 
secretary of natural 
resources, says: “Bra- 
zil extracts the same amount 
of mahogany as Bolivia does, 
but by processing it they earn 
$2 00m instead of $45m like we 
do." 

What makps Bolivia's wood 


industry “unsustainable”, 
however, is that virtually none 
of the wood exported today 
comes from reforested areas, 
so that the country’s stock of 
forest simply dwindles until it 
disappears. In addition, says 
Mr Gonzalo Flores of tbe for- 
est conservation programme 
Probona, “companies evade 
paying the proper taxes and 
have management plans rub- 
ber-stamped by corrupt offi- 
cials. 

A legislative proposal pres- 
ently before congress is to 
institute a 40-year concession 
on forested areas in exchange 
for annual fees per hectare of 


between seventy cents and 
SI. 30, replacing the present 
tax per square foot of lumber, 
which was easily evaded. Man- 
agement plans requiring a 
more reasonable extraction of 
timber would be reviewed by 
international consultants and 
approved by a high-level min- 
isterial council. The idea is 
that the concession would be 
revoked if timber companies 
exploited the area irrationally. 

Wood industry leaders are 
sceptical about the new law. 
Mr Carlos Miguel Gagliardi, 
general manager of the indus- 
trial wood company Cimal, 
says: “the per hectare tax will 



Forest rangers Inspect mahogany trees cut down Qlegaity Hen™ Bc**y ftogan 


drive up our cost because now 
we have to conduct expensive 
inventory studies to be sure of 


tiie amount of marketable tim- 
ber." 

Mr Cristobal Roda, whose 


family made its fortune in 
wood extraction, says he real- 
ises the need for serious for- 
estry management. “We have 
to think of the future because 
my factory and our people's 
jobs are at stake.” Yet few 
wood companies have 
long-term investments. “The 
majority operate only with a 
skidder, a caterpillar and a 
saw mill” says Mr Gagliardi. 

“Our intention is to get 
these companies to think of 
long-term strategies rather 
than just short-term profits," 
says Mr Juan Carlos Quiroga. 

The problem, reply industry 
representatives, is that so for 
government policies have not 
been very consistent Neither 
does the proposed idea of con- 
cessions promote reforesta- 
tion, they say. “There won't be 
much interest in reforestation 
if we cant own tbe land," says 
Mr Roda. 





J 


J 


C& 


f 

-?•'«} 


F irst it was teargas hurled 
from helicopters; then 

dialogue and hantkahakfts 

in the Presidential palace. That 
was. the. government's 1 alternat- 
ing strategy for dealing with 
recalcitrant coca-growers. 

With annual production of 
about 90.000 tonnes, Bolivia is 
- after Tern —the . world’s sec- 
ond-Iargest producer of coca. 
■ leal An estimated £300m to 
$600m.is injected annually. Into 
the -economy by the coca-co- 
cahwbOBhiessTwithaSTMhy a? ■ 

120,000 - Bolivians . directly 
involved either in growing the 
i (legal) leaf or. processing the 
„ (illicit) basic paste from which 
- ^ocalne is made. 

. In the biggest social protest 
demonstration since President 
Gonzalo Sanchez de Lozada 
took office^ last, year, La Paz 
residents opened their arms to 

2,000 down-at-heel “cocaleros" 
when they marched on the cap- 
ital in September. 

Dodgihg poUce and military 
road-blocks, .they had made 
their way from the country’s 
main coatgrowing region - the 
sub-tropical : Chapare near 
Cochabamba - to -clamour 
against stepped-up repression 
measures: adopted by Bolivia's 
drugs police who are advised 
by the US Drug Enforcement 
Administration. They also 
sought more government fund- 
ing for alternative agricultural 
development 

Mr Felipe Caceres, number 
two in Bolivia’s 40,000-strong 
Cocaleros Federation, says tbe 
. government's . . "Operation 
Dawn” had put the Chapare 
■n under ' virtual state of siege. 

- -5 “They .tried to intimidate us. 
feme out at night in the 
or without proper identir 
atfonwas arrested." 

’ The government's objective 
wak. to: force the coca price 
belew. production cost, thus 


obliging the cocaleros to eradi- 
cate more crops and meet 
drugs treaty obligations with 
the US, according to Mr Cac- 
eres. 

Long gone are the boom 
years of the mld-SOs when a 
50kg sack of dried coca leaves 
fetched as much as $900. “At 
$40 to $50 a sack, coca-grow- 
ing’s became bad business. We 
can’t even pay day labourers to 
harvest it,” says Alcira Perez 
of Quechua origin, who immi- 
grated; td the -Chapare" yeafs 
ago. She .says she has half a 
hectare of coca along with a 
variety of cash crops. 

“The record low coca leaf 
mice is an dement in the pro- 
tests;’' says Mr Oscar Freuden- 
thai of Unido (the United 
Naians Industrial Development 
Organisation), who oversees 
alternative development pro- 
jects in the Chapare. 

H e believes coca produc- 
tion in Bolivia is 
decreasing. “Drugs deal- 
ers prefer to do business in 
Peru whore repression is Jess 
harsh - here, peasants are 
trapped and haven’t switched 
to other crops.” 

President Sanchez de Lozada 
says: "We haven't got rid of the 
cancer, but. at least it's not 
growing," referring to the coca 
issue. A senior US embassy 
official m La Paz, meanwhile, 
sees a real reduction in the 
macroeconomic impact of the 
drug economy: "GDP has 
grown and coca has been con- 
tained." he says. 

According to the State 
Department’s Agency for Inter- 
national Development (USAID) 
estimates, six years ago 8.4 per 
cent of gross domestic product 
came from coca-c-ocaine. By 
1993 that had dropped to 2.7 
per cent Coca leaf production 
has stagnated since 1988. 


am- 




Bolivia is about to radically overhaul its pay-as-you- 
;.gp .pensions system arid replace it with a fully funded 
'Competitive scheme based on defined and capitalised 
cohtribufions- Private pension fund administrators (AFPs) 
wifi soonbe able to compete in this new market for 
' services and profitability. 

.; The AFPs will administer standard pension 

t . contributions, and ah estimated US$1 -5bn to be derived 
-frost the capitalization of Bolivia's she major state-owned 
.. ete^rpriseswhich are. to be transferred to the private sector. 

Refom of the Bolivian pension system will open a 
.unique opportunity for investors interested in portfolio 
administration with the overseas placement of these 
instruments at over 30% of portfolio value. . 

- V The minimum capital requirement for setting up an 
• ARP Is one million SDRs, a guarantee of profitability 

P equivalent te a percentage of the administered fund and 
coiiqjHmentary conditions in order to set up a stock 
cqqjoratiqru . . 


|- -fior fm^fearinfoonatibn rail: 

Roben Fenufuio, ‘ 

PensJonsUnder Secretary 

L Teh (591-2) 43 0813/43 0928 or Fax: (591-2) ■431002 


LANUEVA 


Richard Bauer takes a look at the drugs problem 

From teargas to handshakes 


Bolivia's performance on 
drugs control is far superior to 
Peru's, says Mr Sandro Cal- 
v ani. representative in Bolivia 
for the United Nations Drugs 
Control Programme. “Drug 
mafias have not succeeded in 
undermining Bolivian democ- 
racy -and people are not dying 
en masse as in Peru or Colom- 
bia. In the past 10 years in 
Bolivia, only two policemen 
and 18 peasants have been 
killed In drugs-related crimes." 

Government officials com- 
plain that popular views on 
coca and the drugs trade are 


being manipulated locally by a 
handful of old-fashioned trade 
union leaders - mainly faid-off 
miners - and the communica- 
tions media who are “romanti- 
cising" the Issue. President 
Sanchez de Lozada terms the 
reaction of his countrymen 
"devastating; all the people say 
this is a repressive government 
[acting] against poor farmers." 
Many Bolivians consider 
straight interdiction activities 
by the Umopar drugs police are 
a US-inspired conspiracy to 
undermine their national dig- 
nity and sovereignty. 


Mr David Diouhy, US charge 
d'affaires in La Paz. unleashed 
a storm of protest by stating 
publicly that “coca-growers 
have turned Into drugs traf- 
fickers. They are directly col- 
laborating with the coca pro- 
ducers and cocaine dealers 
who sell the drug outside the 
Chapare.” 

"When it comes to coca, 
everyone in Bolivia is playing 
a game." says a foreign drugs 
expert. "You cannot ignore the 
existence of at least 7,000 coca 
maceration pits in the Cha- 
pare. nor tbe 20.000 people 


directly involved in drugs pro- 
duction." 

The apparent hypocrisy 
stems from the foot that coca is 
a legal crop in Bolivia, and has 
served peasants and miners 
down the centuries as a stimu- 
lant when working at altitude. 
The panorama changed radi- 
cally - and illegal cultivation 
grew rapidly - only when 
cocaine became a fashionable 
drug in the US and Europe of 
the 1980s. 

Since 1988, Bolivian law has 
made an innovative distinction 
between legally grown and har- 


vested leaves destined to sat- 
isfy “traditional" demand (that 
is, chewing, drinking as tea or 
reading the leaves) and coca 
for other purposes which is 
“iter crimmis" (on the way to 
illegality). 

If this nice distinction is 
applied, most of the 50,000ha of 
coca fields in the Chapare are 
illegal and should be gradually 
reduced. With, the help of satel- 
lite photography, the US has 
identified 40.000ha for eradica- 
tion. Coca growers get a $2,000 
cash reward for each hectare 
they eradicate. 

The results speak for t hem- 
selves: between 1987 and 1993, 
some 26,000ha have been 
destroyed, with $50m paid put 
in cash compensation. But, as 
if by magic, another 33.000 new 
hectares have been freshly 
planted. 


Mr Alfonso Alem. govern- 
ment adviser and representa- 
tive to Gonadal, the recently- 
revived alternative develop- 
ment council, says the strategy 
has clearly failed; the situation 
is "schizophrenic” and coca- 
growers “the privileged", he 
says. 

“No region in Bolivia has 
received so much development 
aid as the Chapare. and thanks 
to coca, central government 
receives balance-of-payments 
support from the US. The mes- 
sage is: to get money, grow 
coca." 

Asked If his government has 
a clear strategy fbr fighting the 
coca-cocaine business. Presi- 
dent Sanchez de Lozada’s dis- 
turbingly honest answer is: 
“Obviously not. Who [in the 
world] has a clear strategy on 
drugs?” 


TOURISM 




Lots of attractions 


». 7*78 • 


Tourism may well have the 
largest potential for growth of 
any industry in Bolivia. At 
least that is the way the gov- 
ernment sees it 

A plan to develop tourism 
- the first in the history of 
Bolivia according to govern- 
ment officials - aims to boost 
industry income from $H5m at 
present to $lbn within a 
decade. Instead of the present 

265,000 viators a year dose to 
tin are to be enticed to the 
country. 

“We want more tourists; 
have them stay longer, spend 
more money; and speak well of 
our country when they leave." 
says Mr Ricardo Rojas, secre- 
tary of tourism. 

“If you look at other coun- 
tries that have been successful 
in tourism, you’ll notice that 
they’ve focused on a few well- 
targeted, key development pro- 
jects." says Mr Rojas. A new 
tourism law, which the govern- 
ment hopes to have approved 
by March 1995, wifi provide 
long-term tax exemptions to 
attract foreign investment to 
several so-called “mega-pro- 
jects." 

In exchange for foreign capi- 
tal, the government plages to 
provide the basic infrastruc- 
ture for a project, train the per- 
sonnel, and promote tourism 
abroad. A list of proposed sites 
is to be made known shortly. 

The government is aware 
that it feces a challenging task. 
Not only is there an enormous 
information deficit about 
Bolivia among international 
tour operators, but it also suf- 
fers from an image problem 
-that of a politically unstable 
and drug-ridden country. 

Many tourists stOl only visit 
Bolivia as part of a two- or 
three-country tour. "We get 
many tourists venturing into 
Bolivia on a brief excursion fol- 
lowing an extensive tour of 
Peru: that needs to change," 
says the manager of a leading 
tour operator. 

As part of its promotional 
activities, tbe government 
inaugurated a tourist office in 
New York on August 1 and 
plans to open others in Spain 


and Germany by next year. A 
toll-free information line is 
operating in the US. and 
Bolivia plans to attend interna- 
tional tourism fairs, including 
the World Travel Market in 
London between November 14 
and 17. 

The image which the govern- 
ment will be trying to sell to 
the public is that of a safe and 
cheap country boasting enor- 
mous diversity and friendly 
people. One promotional bro- 
chure says that “Bolivia is the 
new undiscovered tourist desti- 
nation” and that "Bolivia is 
definitely the last frontier" for 
those seeking ancient cultures 
or ecological adventure. 

The potential exists. Tourist 
attractions in Bolivia abound. 
Only an 1% hours from La Paz. 
for example, are the crystal- 
clear waters of Lake Titicaca. 
4,000m above sea level and fed 
by the melting waters of the 
snow-capped peaks of the Cor- 
dillera Real, which forms a 
breath-taking backdrop. 

On the island of Paco, the 
villagers of Suriki demonstrate 
their skills in constructing bal- 
sas, or reed canoes, which the 
Norwegian explorer Thor Hey- 
erdahl used in his voyages and 
which the Spanish adventurer 
Kitin Mufioz is soon to take on 
a world tour. 

Nearby, Tiwanaku is proba- 
bly Bolivia's most important 
archaeological site, featuring 
mon ume ntal stone figures and 
the so-called Sun Gate, which 
give testimony to what was 
once the capital of one of the 
world’s longest-reigning 
empires. 

The pre-Incan Tiwanaku civ- 
ilisation, famed for advanced 
agricultural systems that are 
now being revived, is said to 
have had significant cultural 
influence on the subsequently 
larger Inca empire. 

Opportunities for mountain 
climbing or trekking are 
numerous near La Paz. Peaks 
such as the Ilimani or Huayna 
PotosL rising over 6.300m are 
easily accessible and can be 
climbed in two days. Stone 
paved Inca trails, still 
employed by farmers and their 


produce-laden llamas, are ideal 
for treks through the Andean 
mountains. 

A trip out to Bolivia's Ama- 
zon region is worthwhile. Visi- 
tors can see Jesuit missions 
some 220k tn north-east of 
Santa Cruz in the middle of the 
tropical rain forest. 

Missionaries from Bavaria. 
Switzerland and Bohemia went 
there in the early 17th century 
to convert the Chiquitano 
Indians to Christianity and 
train them as musicians and 
artisans. 

Today, half a dozen of the 
world's most unique churches 
make the story of The Mission 
come alive. Thev still serve as 



Women In Ocuri, northern Potosi, don festival finery to celebrate tin Day of the Three Whe Men Hen** a* «**> Euan* 


community centres for thou- 
sands Chiquitanos. 

Eastern Bolivia, with its rich 
biodiversity has enormous 
potential for eco-tourism. A 
large number of local bird spe- 
cies. among them the blue- 
throated or red-fronted 


macaws, make it an ornitholo- 
gist's paradise. Access to, and 
facilities within, the country’s 
protected areas - which boast a 
wealth of natural beauty -are 
rather limited, however. 

A lack of infrastructure is 
also evident at other tourist 


sites such as Samaipata, which 
features important vestiges of 
an Amazon tribe in the 
Andean foothills but is still 
rather unprotected and unex- 
plored. 

Raymond Colitt 






BANCO BOLIVIANO AMERICANO 


The B.B.A. is the leading force in the Bolivian capital 
market. 

It is a financial institution of size, knowledge and 
experience to respond with a high standard of 
professionalism in international business and financial 
needs. 

To succeed in Bolivia call us. 


Phone (305) 372 8838 
777 BrickellAve. Suite 1201 
Miami Fla. 33131 


DQA® 

tm 


. .... • « « lurVfr • -> ■: % 'i'iW: 





XI 



City profiles: La Paz and Cochabamba 


A delightfully provincial Cily 


La Paz squeezed Into a natural bowl beneath snow-capped Mount IlHmanl 


Even world-weary travellers 
should respond to the charm of 
the 400-year-old city of La Paz 
and Its l.lm inhabitants 
squeezed into a natural bowl 
beneath snow-capped Illimani 

The residential order is the 
reverse in La Paz to that of 
many “up-and-down” cities: 
the poorest live in the inhospi- 
table satellite town of El Alto 
(“The Heights”! at 4,100m 
above sea level. 

The business centre and 
hotels are located centrally (at 
3.600m), where the main Span- 
ish colonial city stood. And the 
wealthy, in recent years, have 
withdrawn to the lower slopes, 
where breathing is easier. 

Fortunately, in view of the 
altitude, doing business in La 
Paz is physically undemand- 
ing; most government offices 
and corporate headquarters are 
within easy walking distance 
of the main street. El Prado. 

The westernised occupants 
of these offices look, think , act 
and dress differently from the 
Bolivian man and woman in 
the street. Compared to most 
Latin American cities. La Paz 
is delightfully provincial in its 
manners and the honesty of its 
inhabitants. 

Shared taxis are the pre- 
ferred form of transport for the 
pacefios and one of the few 
places where the social classes 


mingle and exchange political 
chit-chat. 

Bolivians are flexible about 
punctuality for social appoint- 
ments; less so for business. 
Bear in mind what Mr Victor 
Hugo Cardenas, the vice-presi- 
dent who is himself an Aymara 
Indian - says of his indigenous 
fellow countrymen, the major- 
ity in Bolivia: “They never say 
yes or no; always maybe. They 
are never excessively happy or 
disappointed; never over-opti- 
mistic sind never over-fatalis- 
tic. Balance in all things is the 
wisdom of the Andes.” 

• Arriving in La Paz need not 
be as unpleasant as you have 
been told. True, at 4,000m 
above sea level, El Alto Is tbe 
world's highest big air- 
port - but altitude is 50 per 
cent in tbe min d. You may 
experience slight breathless- 
ness or light-headedness at 
first until your body adjusts. 
Follow the advice recently 
given by his personal physi- 
cian to a 74-year-old former UN 
secretary-general, returning to 
the "Aitiplano” after years of 
soft, sea-level living: “Walk 
slowly; eat little; sleep alone”. 
Most important: make no busi- 
ness appointments for the first 
day, while your red corpuscles 
are building up. Drink abun- 
dant liquids (but not alcohol) 
and avoid over-bot baths. A 


mate de coca (coca tea) on 
arrival may help stave off 
soroche (altitude sickness). 

Business travellers from 
most European and North 
American destinations will not 
require visas. Customs formali- 
ties are relaxed and airport 
staff helpfuL A taxi into town 
(about 30 minutes) costs less 
than sio. Cabs have no meters. 
Don't expect taxi drivers to 
speak English; they are, how- 
ever, honest and reliable. A $20 

La Paz*s range of 

eating-houses is 
expanding 

exit tax is payable on depar- 
ture. 

• Hotels: Status-conscious 
businessmen frequent the Rad- 
is son (the remodelled former 
Sheraton), the Plaza or the 
Presidente, all of which are 
well up to international stan- 
dards. The discrinunatmg trav- 
eller may prefer the cosier 
atmosphere of the newly-inau- 
gurated Rey Palace where 
suites are huge and half the 
price. 

• Restaurants: Thanks to the 
expense accounts of a continu- 
ing procession of international 
functionaries, development 
experts and ubiquitous consul- 


From tbe high Andes 



To tbe lowland plains 
and Amazon jungles 


A people proud of their country, 

culture and beauty. 

Majestic mountains, fertile valleys, high plains and pristine forests 
in a unbelievable landscape of endless changes. 

This is Bolivia, the heart of South America. 

A country with over 30.000 archaeological monuments spreading 
across five thousand years of history. 

A nation proud of the many races which have merged to build a 

common heritage. 

A unified people moving forward to strengthen their identity and 
to protect their natural resources. 

This is Bolivia, a place made magical by the warmth and diversity of its people. 


% 

LA NUEVA 


For tourism information in the USA and Canada , phone: 1 -800-BOLl VIA or write to: The Tourism Secretariat, P.O. Box i 868 La Paz, Bolivia. 


tank* showing Bolivia the way 
to “modernity”. La Pax’s range - 
of eating-houses is expanding. 
The utama sky-room restau- 
rant hi the Plaza hotel (excel- 
lent salad bar) has an estab- 
lished and well-deserved 
reputation. For a quiet busi- 
ness lunch or dinner, choose 
between Juhano’s and La Que- 
becoise, both in former private 
houses. Evan more intimate is 
the Restaurant de la Paz. 
where the tables are set. with 
the owner’s own solid silver 
cutlery. 

Newly fashionable - among 
carnivorous Bolivians is the 
Brazilian-styie meat restaurant 
Brasargent (fixed price; all the 
meat you can eat). The Casa 
del Corregidor (Swiss manage- 
ment but Bolivian chef) offers 
Bolivian folk music and local 
and international dishes in a 
colonial setting. If you have 
time, the Oberland (through 
the “Valley of the Moon”) Is a 
pleasant lunch spot And when 
you need a coffee, opposite tire 
central post office is the leg- 
endary Cafe La Paz where 
old-time conspirators planned 
their coups. 

• Typical dishes and drinks: 
Saltenas - a spicy meat or 
chicken turnover traditionally 
eaten before lunch always with 
a cold drink, never coffee or 
tea. Chair o - the soup of La 
Paz, meat-based with at least 
10 spices, made with- dried 
potato flour (dnmo). Picanta 
rrdxto - as a main dish. In its 
complete version, it includes 
jerky, rabbit, tripe and tongue. 


Chuftog- a mixture o£ sbigom\ 
(a locally-distilled spirit made 
of grapes), lemon juice and: 
Seven-Up. Conception - a 
.breakthrough imBolivian wine- . 
Could be Chilean. \ ;; 77: : 

# Communications; Picking - 
up a pre-capffaBsatLon Bolivian 
tele phone can be a nightmare; - 
getting through, locally and 
internationally,- -is time-con- 
suming. Picking up the Boliv- 
ian Times, the country's only 
English-language newspaper, is : 
a more agreeable .experience. 
The one-year-old weakly 
appears an Fridays. 

Co chabamb a: Half and hour’s 
CightfroniLaPaz, this “aty of _ 
eternal spring”, at 2,600m 
above sea level, has lost same 
.of its- former architectural 
charm in the aftermath of the 
1980s coca boom down the . road, 
to tbe Chapare. It remains a 
pleasant and relaxed, but well- 
developed, tn&ness centre. 

Stay at the deceptively gra- 
cious, recently-refurbished 
Gran Hotel Cochabamba. Built . 
adjacent to a small church, 
some’ rooms permit partidpar . 
tion in services next door, a 
R ound the corner is the new™ 
Hotel Portales. not to be con- ‘ 
fhsed with the Patino mansion 
(now a cultural centre and art I 
gallery) in the same block. . 
Both hotels have swimming < j 
pools. 

The Gran Hotel restaurant is 
considered the best in town. 



Richard Bauer 
and Sally Bowen 


Santa Cruz 


Gateway to the 
Amazon 


ally, Santa 
Cruz cannot 
compete with the quaint colo- 
nial cities of Sucre or PotosL 
Yet at the heart of tbe city lies 
the picturesque Plaza 24 de 
Septiembre with its ecliptic- 
style cathedral (Basilica 
Menor de San Lorenzo) and a 
well-kept path with colourful 
native Tajibos trees. The 
arcaded streets surrounding 
the plaza maintain something 
of a colonial air. 

Also in the city centre is El 
Arena!, a type of Centra) Park 
with an open-air market 
nearby and countless food 
stalls. In the centre of the park 
a mural by the artist Lorgio 
Vaca depicts the encounter of 
the Warani Indians with the 
first Spaniards coming to the 
region. The park’s anthropo- 
logical museum provides an 
introduction to the Chiquitano 
Indian culture, but artifacts on 
display are poorly labelled. 

Among the crowds that wind 
their way through a seemingly 
endless commercial district 
and the bustling traffic of the 
city centre are the characteris- 
tically plain-clad Mexmonites, 
of Canadian and Paraguayan 
origin. Another group of immi- 
grants. invited by tbe Bolivian 
government to settle the still 
virgin rainforest surrounding 
Santa Cruz decades ago. are 
the Japanese. They have found 
employment in numerous pro- 
fessions and established half a 
dozen or more good restau- 
rants. 

Visitors seeking a cool »nrf 
shady refuge in the often swel- 


eller a host of 
excellent 
hotels and restaurants. Reser- 
vations are especially recom- 
mended in September when 
the annual Santa Cruz Trade 
Show is on. It attracts vendors 
from all of South America and 
specialises in agro-industrial 
products and services. 

Business travellers are rec- 
ommended to stay in the cen- 
trally located four-star Grand 
Hotel Santa Cruz, which fea- 
tures a swimming pool and 
spacious patio, or the Hotel El 
Arenal, which is somewhat 
less spacious but is a good 
value. 

The city's biggest and most 
exclusive hotel is Los Tajibos w 
which offers a pool and a res- "i 
taurant recommended for it* j 
ceviche (marinated fish). Tift j 
casino is presently dosed. dt> ] 
second five-star apart-hotel^ 
Yatad, has recently been man- ! 
gurated. Both lie in the , 
wealthy residential neighbour- 
hood of San Martin. 

The Dunas de Arenas just ; 
outside the dty are interesting j 
sand formations and are 
becoming somethi n g of a tour- 
ist attraction. They are also a 
warning of the dangers of mas- . • 
sire erosion due to deforests- ; 
tion and unsustainable agri- - 
cultural activities. 

The city’s airport offers ’ 
excellent service and daily 
non-stop connections to La i 
Paz, S&o Paulo and Miami , but 
is not busy. The game appBes i 
to Santa Cruz train station. ■ j 

Raymond Colltt }> 






tf: 


./■ * - ■* r i ■ 

■ ^ • • 


if*' * 


t** 






Santa Cruz de la Sierra, taring mid-day heat of Santa 
misleadingly called “of the Cruz should visit tbe mumd- 
Mghlands”, is Bolivia's agio- pal zoo. For those that cannot 
industrial centre and gateway make it to any of the outlying 
to the Amazon region. national parks to see the fauna 

This sprawling city of about In its natural baMtat, the zoo 
750,000 inhabitants boosts the has a good display of some of 
highest per capita income of the rare and endangered spe- . 
the nation end is riv alling La des from all over Latin Amer- \ 
Paz as the number one city in ica. 

Bolivia. Santa Cruz’s Carnival, cde- 

Tens of thousands of brated before Lent, is famous 
migrants arrive annual- throughout the region. Floats, 
ly- principally from the high- parades and dancers in the 
lands -in search of employ- streets reveal the gaiety for (j 
meat. Some join the growing which the people of Santa Cruz 
service industry, others end up are known. Pedestrians should 0 
sorting through the growing beware the water-filled bal- . 
trash mounds beyond the last loons which youngsters throw 

of the eight • indiscriml- 

higfaway rings nately at pass- 

Hiat sub-divide The Dunas de Arenas just ers-by. 
the city. outside the city are Santa Crux 

Architectur- interesting sand formations off* 3 * 
ally. Santa eller a host of 


fci" irtj* 


fejfc TV 



This index has been compiled for researchers 
and libraries and those who require a sound 
briefing on national and international subjects. 

A useful cross-index of all FT surveys published 

in the above period, listed in alphabetical r V 
order and subject 

To receive your copy, send a cheque for £3.00 
made payable to Financial Times to: 

Department, Financial Times 
Numb w One Southwark Bridge, 

London SE1 SHL 
Tet +44(0)171 873 3213 




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IN BRIEF 


Warburg losses 
prompt cuts 

SG Warburg, the UK-based investment ha nit 
yesterday said it would review staff levels and delay 
planned investments as part of a drive to cut costs 
after losin g money on trading in the six mnnthB to 
September 30. Page is; Details, Page 24; 

BASF looks at Boots pharmaceuticals 

BASF, the German chemicals and drugs group yes- 
to-day said it was “looking at" the pharmaceutical 
divis ion of Boots, the UK high street c hem ist ^nri 
retailer, but refused to comment on reports that it 
had posted a takeover bid. Page 18 

Agnellis strengthen Danone link 

The Agnelli family yesterday strengthened its links 
with Danone, the French food group, by buying a 12 
per cent stake in Danone Asia for S53m. Page 18 

Bolda sells energy operation 

Nokia, Europe’s biggest manufacturer of mobile 
telephones, has taken a further step towards con- 
centrating Its business on telecommunications with 
the sale of its energy supplying subsidiary to Pohjo- 
lan Volina, the F innish power group, for FM1.4bn 
($298.5m). Page 18 

Data General files suit against IBM 

Data General has filed a patent infringement law- 
. suit against International Business Machines, 
charging that IBM has “wilfully” infring ed upon 
seven Data General patents. Page 19 

TNT in the black but payout unlikely 

TNT, the Australian transportation group, returned 
to the black in the first quarter of its currant year 
with a profit of A$lJl3m (US$l&8m). Page 20 

Westpac profits advance sharply 

Westpac yesterday began the Australian banks’ 
reporting season by announcing an after-tax profit 
of A$704-7m (US$533 .8m) in the 12 months to end- 
September, up from A?39J2m the previous year and 
a A$L56bn loss in 1991-92. 

Page 21 

Anglian Water up but sector falls 

Anglian Water yesterday announced a 20 per cent 
rise in pre-tax profits to £120.6m ($1 97.8m) for the 
half year to September 30 and declared a 9.6 per 
cent increase in its interim dividend from 7J?p to 8p. 
Page 25 

Forte, pairs FFrl.821m for MetMlen hotels 

Forte has paid a total of FFrL82bn ($355m) for the 
Meridien hotel chain. The final purchase price for 
Merictten is less than the FFrl-9bn envisaged when 
the deal was first announced in September. 

Page2j6. 

Rees capable of big dividend growth 

The electricity sector has delivered a stream of good 
news to shareho lders since privatisation began four 
yBare .ago. fr the forthcoming interim results sea- . 
sansome of the 32 regional companies are consid- 
ered capable tf dehvermg strong dividend rises. 

Page 27-. : /. _ _ - 

Second high for Sonae . 

Hie share price of Sonae Investimentos, Portugal’s 
largest conglomerate,^ ^hit its second consecutive 
1994 high yesterday. Back Page 


Companies in this Issue 


AG 

AQF 

APL 

Aiwa 

AngOan Water 
Afihbouma -■ 

BASF ' 

BHP 

BPChemkato 
Binm lh gh am Mkfetares 
Boots 

Offish Airways 
Cable & Wiralass - 
Cffizon Watch 
CUfRssourtias 
Danorw '• 

Data General 

Denny's 
Dow Chemteai 
EXrPonl 
Ban 

Equftabie 
Exxon Charrtcal 
Rad 
Forte. 

£3R (Holdings) 

Qancore Wt 
Great Portend Ests 

.Graenway- 
"i r BuB 

i Water 
Vteare Govett • 

IBM 
JCt - 

W rreafr nent Company 
Kymmene - 


26 Uoyd Thompson 24 

18 Loodon Merchant Secs 28 

6 Lyonnateo das Eaux 19 

21 Marks and Spencer 26, 17, 

25 IB 

24 Mercury Asset Mgmi 24 

18 Minolta 19 

20, 7 Munich Be 1 

•14 NBC 17 

24 NTT 6 

18 Mssln Food Products 19 

16. 17- Nolda 18 

24 Omron 21 

- 2f Qanfas 21 

27 Fteflance industries 20 

18 Robert Bosch Telecom 28 

19 SSAB 18 

• 18 SearLand Services 5 

14 SeaPerfect 24 

14 Sears, Roebuck 17 

24 Seflco 21 

19 Seram Thmt 12 

14 Stakis 28 

* TNT 20 

26 Tata Engineering 19 

26 Trimac 19 

19 UPF 27 

26 Visa Inti 19 

28 Vital 19 

17.18 Vodafone 26 

26 WEW 24 

26 Warburg 18 

10 Warburg (SG) 2416 

14 Weftnan 12 

28 Westpac 21 

18 1 Wyndeham Press 28 


Market Statistics 


iferoa] repute ranks 38-31 

Benchmark 8uvt bonds 22 

Bo at tons and options . 22 

Bond .prices and yMife 22 

DwmnHes t>ri«s 3 

DMttandB avwmced. UK 24 

BUS ajnancjr rates 34 

Eumbcrid price* 22 

RNBritntBmtJhdkss . 22 

FT-A World tadfcas BKk'F^P 
Fr.GddMnestatot 29 

FT/tSUA fntl bend sk 22 

Ft-6E Adusi98 hxScss 29 


Fbreisn exettange 
GSs prices 
Liflo equity options 
London share aentee 
London trail opttone 
Managed knda sendee 
Money markets 
New ha bond Issues 
New Tfak sbare eenrice 
Recent Isaues, UK 

Short-term W rates 
US Wterast cries 
Worid Stock Markets 


34 

22 

29 

30-31 

28 

32-33 

34 
22 

38-37 

29 

» 

22 

35 


Chief price changes yesterday 


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* 

FINANCIAL TIMES 

COMPANIES & MARKETS 

©TOE FINANCIAL TIMES LIMITED 19W Wednesday November 9 1994 


; ; tti : 

BARR 


1 C O N S T R U C T 1 O N | 


Expanding by Contracting 


Telephone Ayr (0292) 2 8131 1 


NEC to boost holding in Groupe Bull 


By Mtetilyo Nakamoto in Tokyo and 
Jota Ridding in Parts 

NEC, the Japanese electronics group, 
plans to increase its stake in Groupe 
Bull as part of the privatisation of the 
lossmaking French computer group. 

The Japanese company, which is 
Bull’s largest private shareholder, said 
yesterday it was “considering posi- 
tively” an increase in its 4.4 per cent 
stake. However, the company would not 
reveal how much it was willing to invest 
in BuIL 

The French government plans to 


reduce its stake in Bull from 75.8 per 
cent to less than 50 per cent within the 
next few months through the sale of 
shares to industry partners. French offi- 
cials declined to comment on the size of 
the stake which could be sold to NEC, 
but industry observers believe the Japa- 
nese company could raise its holding to 
about 10 per cent 

The two companies, which co-operate 
in marketing and in the development of 
mainframe computers, have strength- 
ened business ties over the past year. 
NEC invested Y7bn ($72m) in Bull at the 
end of 1993 as part of a recapitalisation 


plan for the French group. 

Earlier this year, NEC announced a 
plan to increase transactions with Bull 
from an annual Y6bn-Y7bn to about 
Y20bn within the financial year. 

NEC said its interest in raising its 
stake in Bull reflected its strategy of 
expanding its operations in Europe. The 
development of a global information 
infrastructure made Europe a partial' 
larly promising market for NEC’s com- 
puter and telecommunications equip- 
ment and systems. NEC said. 

According to NEC. Bull's marketing 
network will assist in the development 


of its activities in eastern Europe and 
the Commonwealth of Independent 
States, where demand for computers, 
electronic devices and communications 
systems is expected to expand. 

The relationship between NEC and 
Bull has provided NEC with a marketing 
channel in Europe and Bull with a range 
of NEC products. In a memorandum of 
understanding signed last year, NEC 
agreed to supply Bull with electronic 
devices including semiconductors and 
colour liquid crystal display panels and 
Bull agreed to market NEC's computers 
and systems in Europe. 


The French government has been 
seeking partners for Bull to enable its 
privatisation. The task has been compli- 
cated by the financial position of the 
group, which has suffered losses of more 
than FFrl5bn ($2.9bn) over the past 
three years. IBM. the US computer 
group, holds about 2 per cent of Bull's 
shares and , France Telecom owns 17 per 
cent The French industry ministry said 
it had no objection to NEC raising its 
holding - is a shift since 1991 when Mrs 
Edith Cresson, then prime minister, 
sought to block NEC’s investment 
Lex, Page 16 


Business class lifts BA to record 


By Simon Dairies in London 

British Airways yesterday 
announced record second-quarter 
profits and an “encouraging” out- 
look for the full year, as it reaped 
the rewards of a campaign to win 
business travellers and tight cost 
controls. 

However, BA said it would 
make provisions against its 
$400m investment in USAir, if 
negotiations with the troubled 
airline's Pilots' Union are not 
“successfully resolved”. A full 
writedown would add 3 percent- 
age points to its current net debt / 


capital ratio of 53 per cent 

Pre-tax profits for the six 
months to September rose 45 per 
cent to £34 lm ($559mj, with 
£253m coming from the second 
quarter. The figures were above 
expectations, and the shares 
closed 8p higher at 365p. 

Sir Colin Marshall, chief exec- 
utive, said the company was on 
target to achieve its previously- 
stated aim of EL50m of cost 
savings for the full year. 

Operating costs rose 7.7 per 
cent to £3.1 8m during the period, 
compared with a 9.8 per cent 
increase in group turnover to 


£3. 63m. The cost base was helped 
by a 5.4 per cent Call in fuel and 
oil costs. 

The airline carried 16.4m pas- 
sengers during the period, an 
increase of 6.8 per cent Its per- 
formance was improved by the 
fact that revenues from the more 
profitable first and business-class 
passengers grew at almost double 
the rate of economy class. 

However, Qantas. the Austra- 
lian flagship carrier in which BA 
has a 25 per cent stake, 
announced profits of A$30l.8m 
(USS228m) for the year to June, 
up from A$32.9m, and it is oper- 


ating in what IATA expects to be 
the fastest growing market in the 
worid over the next four years. 

However, TAT and Deutsche 
BA, BA’s European affiliates, 
reported losses similar to 1993. 
Analysts estimate that the two 
companies will lose more than 
£50m this year after the competi- 
tive impact of the French govern- 
ment’s £2.4bn subsidy to Air 
France. 

Overall, associates contributed 
£2m, compared with a £i3m loss 
in 1993. 

Lex, Page 16: Qantas in China, 
Page 21 


David Blackwell reports on the UK retailer seeking further expansion 


Marks and Spencer 
sales in continental 
Europe rise 20% 


Marks and Spencer, the UK food 
and clothing retailer, has lifted 
co ntinental European sales by 20 
per cent since exporting its Out- 
standing Value Campaign from 
the UK. 

The campaign, run in the UK 
for the past couple of years, 
passes on to customers cost 
savings made through improve- 
ments in efficiency and informa- 
tion technology without damag- 
ing operating margins. It is 
operated jointly with suppliers, 
who benefit from higher produc- 
tion runs. 

Sir Richard Greenbuzy, chair- 
man, yesterday stressed that it 
waa a long-term project to 
improve and sharpen the prod- 
ucts on sale. 

Sales in Europe rose from 
£13A5m to £152 .3xn ($25Qm) in the 
six months to October 1, the 
group said yesterday. Operating 
profits were down from £9.3m to 
£5m after charging £3-8m for the 
opening of new stores. 

Total group pre-tax profits 


were 15 per cent ahead at £354 ,2m 
on the back of a 60 per cent sales 
rise to £3.07bn. 

M&S is accelerating its expan- 
sion plans, and is lifting capital 
expenditure to a record £400m 
this year. While most of this will 
be spent in the UK. Sir Richard 
says there are few high streets 
and out-of-town sites where the 
group has no store. 

In contrast, there are only 25 
stores on continental Europe. 
M&S has already identified a fur- 
ther 45 to 50 sites across France, 
Holland and Spam, but Sir Rich- 
ard stressed that the group would 
proceed with caution. 

The group is also looking at 
Japan and China following the 
success of its Hong Kong 
operations, which are yielding 
better returns than anywhere 
else. 

Sir Richard said a decision on 
whether to go ahead with a first 
store in Japan would be taken 
within 12 months. 

Lex, Page 16; Details, Page 26 


Growth at home and away 



Group operating profit (£m) 1 V " VwtendMwchat 


BOO 
600 
400 
20Q 
0 

1989-90 90-91 91-82 92-83 93-94 84-96 



UK sales (£brt) 
6 - 



Souqs: Company reports 


Overseas sates (£ba) 



: 1 U. — L_ o 

1993-94 94-95 93-94 94-95 


Sears puts 
tower in 
the hands 
of trust 

By Laurie Morse in Chicago 

Sears, Roebuck is transferring 
the ownership of its landmark 
Sears Tower in Chicago, the 
world's tallest building, to a 
trust This is the latest attempt 
to relieve the retail and financial 
services group of the financial 
burden which has weighed it 
down despite the prestige of the 
tower, which attracts tSm tour- 
ists a year. 

Sears, seeking cash for an 
expensive corporate restructur- 
ing, took out the existing mort- 
gages on the UO-story tower in 
1990 after attempts to sell the 
building failed. 

Financed near the height of the 
US property boom, the tower, 
built in 1970, has suffered from 
high vacancy rates and competi- 
tion from newer offices. Local 
property specialists estimate the 
tower's value at less than half of 
the mortgage amount, or about 
$40Qm. 

The arrangement frees Sears 
from interest payments on $850m 
in mortgage debt, which in 
recent years have far exceeded 
rental income from the tower. 

The company said the debt 
restructuring would result in a 
6195m after-tax extraordinary 
gain in the fourth quarter, or 
about 50 cents per share. In addi- 
tion, it expects to save about 
$75m a year in interest expenses 
as a result of the deal. 

Sears moved its operations 
staff to new headquarters two 
years ago, the 3.6m square-foot 
tower’s occupancy rate dropped 
to 55 per cent Although the 
tower is now 75 per cent leased, 
income still does not cover taxes 
and operating costs. 

Under the two-phase restruct- 
uring agreement, ownership of 
the tower and its related mort- 



Sears Tower: expensive 
symbol of power 


gages will pass to a trust that 
benefits AEW Partners, L.P., a 
Boston-based partnership of pen- 
sion plans managed by Aldrich, 
Eastman and Waltch. 

The pension plan of Chicago- 
based Ameritech is included in 
the partnership. AEW becomes 
responsible for overall manage- 
ment of the tower. 

AEW Is secondary mortgage 
holder on the tower, with Metro- 
politan Life Insurance holding 
$600m of the tower's debt 

In the second phase AEW Part- 
ners will take ownership of the 
tower in 2003, a year earlier than 
under the old mortgage agree- 
ment AEW Partners in 2005 will 
have to meet the 1600m mortgage 
commitment to Metropolitan 
life. 


Barry Riley 

Watching for fall-out as 
dollar rates climb 


Now the mid-term 
elections are over, 
the US Federal 
Reserve can 

return from its 
sabbatical. The 
markets are 

assuming that the 
Fed open market 
committee will agree to raise 
short-term interest rates by at 
least half a percentage point 
when it meets next Tuesday. 

Astonishingly, short-term dol- 
lar rates are still lower than 
those on D-Marks, French francs 
and sterling des pite hi gher infla- 
tion, a weak currency and a seri- 
ous trade unbalance. However, 
the money market yield curve is 
artificially steep, and at six 
-months dollars yield about 75 
basis points more than D-Marks. 

. Slrns the Fed last raised rates 
in August the dollar has weak- 
ened markedly, and so las the 
Treasury bond market During 
August and September 10-year 
German government bonds out- 
yielded the corresponding US 
Treasuries but now the T-bonds 
return 40 basis points more. 
Europe has managed to decouple 
from the affmg dollar markets. 

Thus at the long end the 30- 
year T-bond yield has been mov- 
ing up through 8-15 per cent Hus 
has provided a weak background 
for the Treasury's auctions of 
bonds tot alling $29bn yesterday 
and today. 

Although the US funding 
requirement is scarcely formida- 
ble in relation to the size of the 
economy, tins is not a favourable 
thru* in the economic cycle for 
bonds. Not only are Americans 
notoriously unenthusiastic sav- 
ers - nothing new there - but 
several main sources of demand 
have largely dried up. 


Flows into retail bond mutual 
funds have ceased this year in 
the face of capital losses, and 
modest (so far) rises in CD rates. 
Meanwhile foreigners are 
steering well clear of dollar 
bonds, at least until the Fed has 
tightened and it looks as though 
the dollar has bottomed. 

Then there is the problem of 
the banks. Until the bond market 
turned a year ago, US banks had 
bought more than $300bn of Trea- 
sury securities within about four 
years. They are now sellers, as 
the profitable spread over the 
carrying cost shrinks and mean- 
while more attractive lending 


The bulls argue the 
bears have had 
plenty of chances, 
and they haven’t 
taken them 


opportunities appear in the 
expanding US economy. 

The big question is whether 
they might become forced sellers. 
The huge interest rate spread 
available a year and more ago on 
two to five-year paper has been 
narrowed by the rise in overnight 
money costs from 3 to 4.75 per 
cent but it would be much worse 
at 5.25 per cent let alone the pre- 
emptive 5.75 per cent that the 
bears talk about; the positions 
would probably run at a loss and 
the banks might no long be pre- 
pared to maintain them to matu- 
rity. Nor Drill the story end there: 
by’mid-1995 the market expects 
short rates to be at 6.5 per cent. 

A great deal depends on the 
extent to which the leveraged 


exposures in the US securities 
markets have been unwound. 
According to the Wall Street 
newsletter Grant's, very little: 
securities credit outstanding to 
banks, broker-dealers and house- 
holds stood at $274bn at the end 
of June, haring doubled in about 
three years. 

Meanwhile the US equity mar- 
ket wriggles uncomfortably, try- 
ing to pretend that problems in 
bonds can be ring-fenced. The 
stock market is still only 4 per 
cent below its peak, although 
transports and utilities have sold 
off by a fifth. But if the long bond 
yield continues to edge up 
towards 8.5 per cent the pres- 
sures on equities may become 
unbearable. 

However, as the bulls argue, 
the bears have already had 
plenty of chances, and they 
haven't taken them. Meanwhile 
there has been plenty of sector 
rotation to chase. 

The general summary of the 
US economy is that monetary 
policy has for several years been 
too loose. This has not shown up 
in exceptionally high monetary 
growth because the credit has 
been mopped up by the securities 
markets, or dollars have piled up 
abroad where Asian governments 
have been holding down their 
currencies. Nor has inflation 
been particularly high, because 
the balance of payments has 
taken much of the strain. 

Now the dollar overhang has 
become much more threatening, 
however, and policy must be 
sharply tightened. Yet Alan 
Greenspan, the Fed chairman, 
has to move with care. Haring 
saved the banking system in the 
late 1980s he surely does not 
want to hare to rescue the securi- 
ties markets. 





ff 


. r 


Hill Samuel in South Africa 


We are pleased to announce the opening of 
our new offices: 

Hill Samuel S.A. (Pty) Limited 
JSE Annexe 
1 Kerk Street 
Johannesburg 2001 


Hill Samuel provides merchant banking and investment 
management services around the world to corporate, 
public sector and private clients. 

Our services include:- 




ft 

m 

Vfe. 


Corporate Finance 
International Banking 
Project Finance 
Aircraft Finance 
Privatisation 


■ Treasury & Capital Markets 

- Investment Management 
• Shipping Finance 

- Mergers & Acquisitions 

- Structured Finance 


Contacts: Werner Stals • Paul Houze * Dale Schoeman 
Tel: (011) 838 4702 • Fax: (011) 838 4725 

Hill Samuel S.A (Pty) Limited Reg. No. 60/02759/07 . 



Hill Samuel 

Bank 

Head Office; Hill Samuel Bank Limited -100 Wood Street - London EC2P 2AJ 
Contact: Here van Wyk ■ Tel: (0171J 920 27IS - Fax: (0171) 796 3277 
A member of the Securities & Futures Authority • A member of the TSB Group 




18 



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FCM ANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


INTERNATIONAL COMPANIES AND FINANCE 


BASF shows interest in Boots arm 


By Christopher Parkas 
in Frankfurt and Daniel Green 
in London 

BASF, the German chemicals 
and drugs group, yesterday 
said it was "looking at" the 
pharmaceutical division of 
Boots, the UK high-street 
chemist and retailer, but 
refused to comment on reports 
that it had made a takeover 
offer. 

BASF is one of several 
companies that have discussed 
buying the Boots' 
pharmaceuticals division. A 
management buy-out team has 
also shown interest. 

Boots has one of its regular 
main board meetings Later this 


week and the future of the 
pharmaceuticals division is 
certain to be discussed. 

Mr Jens-Uwe Bliesener. a 
corporate development 
executive at Knoll, BASF's 
main healthcare subsidiary, 
said Boots was one of the top 
50 companies worldwide which 
bad been examined in the 
group’s well-publicised search 
for potential partners. 

He declined to say whether 
the UK business was still of 
interest or if talks were under 
way. 

“We have no official 
statement," he said. 

However, Mr Bliesener 
conceded that BASF was 
trying to fill gaps in its market 


coverage, including the UK 
and France. Japan, where 
Knoll is unrepresented, was 
also of interest. 

Boots pharmaceutical sales 
are largely in the UK. the US 
and members of the UK's 
Commonwealth. Its main 
products are Synthroid, a 
thyroid drug, and ibuprofen. 
an anti-inflammatory and 
painkiller. 

Knoll, with annual drugs and 
medication sales of about 
DM2bn (SlJJbn) compared with 
DMllbn at Hoechst. Is 
considered too small to 
compete efficiently with other 
research-based pharmaceutical 
companies. 

Its research budget this year 


Is expected to be about 
DM300m. 

Knoll has no obvious 
successor products to replace 
top-seller Isoptin. a heart 
treatment on which the 
European patents expire in 
1996. 

Sales last year totalled more 
than DM500m. 

Knoll's main advantage is 
that it has an immensety-rich 
parent group whose chairman, 
Mr JQrgen Strube, refuses to 
contemplate withdrawal from 
the drugs business. 

Recent efforts to improve 
prospects include belated entry 
into the German generics 
markets with a new company. 
BASF Generika. 


Profits surge 
at SSAB for 
nine months 

By Hugh Camegy 

SSAB, the Swedish steel group, 
yesterday reported nine-month 
pre-tax profits of SKrl.39bn 

189.1m), a near four-fold 
increase from SRr355m in the 
same period last year. 

The group has reaped the 
benefits of improved demand 
and rising prices in Europe. 
SSAB said it expected full-year 
pre-tax profits to be about 
SKr2bn if trading conditions 
continued. This would be more 
than double last year’s 
SKrTTSm. 

Sales in the first nine 
months rose 20 per cent to 
SKrll.2bn from SKr9-38bn, due 
to higher volumes and 
increased prices, SSAB said. 
Operating expenses advanced 
to SKr9.34bn from SKr8.58bn, 
leaving operating profits after 
depreciation at SKrl.4bn, com- 
pared with SKr343m last time. 

The group's biggest division, 
the Tunnplat steel plate opera- 
tion. saw operating profits 
jump to SKrS29m from 
SKrl42m on sales of SKrSBbn. 

SSAB said steel consumption 
in western Europe was expec- 
ted to increase 6 per cent in 
1994, bringing consumption 
back to 1937 levels. In the US it 
was expected to rise 9 per cent, 
reaching the highest levels of 
recent years. 

Price increases, and the 
effects of a weak Swedish 
krona, meant the group's steel 
prices in kronor rose 17 per 
cent compared with last year. 


Nokia sells energy operation 


By Hugh Camegy 
in Stockholm 

Nokia, Europe's biggest 
manufacturer of mobile tele- 
phones, yesterday took a fur- 
ther step towards concentrat- 
ing its business on 
telecommunications with the 
sale of its energy-supply sub- 
sidiary to Pohjolan Voima, a 
Finnish power group, for 
FML4bn ($29&5m). 

Nokia said the sale of Nokia 
Power, which last year contrib- 
uted FM550m to group sales of 
FM23.7bn, through sales of 
electricity, thermal energy and 
natural gas, would produce a 
capital e^in of about FMTOOm. 

The deal with PohjoJan. 
which supplies about 18 per 


cent of Finland's electricity 
consumption, includes the 
transfer of Nokia 's sharehold- 
ings in four other Finnish 
power companies. 

"Divesting our energy 
operations is a logical step in 
Nokia's . strategic develop- 
ment," Mr Jorma Ollila, Nok- 
ia's chief executive, said. 

The F innis h group is riding a 
wave of fast growth in its tele- 
communications operations. 
Last month, it announced a 
five-fold increase in group prof- 
its in the first eight months of 
the year, to a pre-tax surplus of 
FM2.29bn on sales of FM18^bn. 

Much of the growth stemmed 
from its leading position in 
mobile telephones, where it is 
second in the world to Moto- 


rola of the US in the produc- 
tion of mobile handsets. 

Since taking over at Nokia 
two years ago. Mr OUila has 
set about completing the com- 
pany's transformation from a 
sprawling industrial conglom- 
erate to a group focused on 
telecommunications and elec- 
tronics. More than 60 per cent 
of group sales is accounted for 
by its telecommunications divi- 
sions. 

The next restructuring move 
is likely to be the flotation on 
the Helsinki stock market of 
most of Nokia's 80 per cent 
holding in Nokia Tyres, a move 
signalled by Mr OUila last 
month. 

Nokia Tyres last year posted 
sales of FM862m. 


Kymmene in FM1.5bn cash call 


By Hugh Camegy 

Kymmene, Finland's second- 
largest forestry group, is to 
launch a share issue in Finland 
and overseas which should 
raise more than FM1.5bn 
($3 19 m) to reduce debt and 
strengthen the group's balance 
sheet 

Kymmene, which returned to 
profit this year as the forestry 
products industry swung out of 
recession, will offer up to 15m 
shares. 

The move follows the break- 
down in June of merger talks 
between Kymmene and United 
Paper Mills, the forestry unit 
of fellow Finnish company 
RepoLa, which would have cre- 


ated one of Europe's biggest 
forestry groups. 

“This offering is very signifi- 
cant," said Mr Harri Piehl, 
Kymmene's chief executive. "It 
will strengthen our balance 
sheet and provide a firm finan- 
cial base for our growth." 

Kymmene's net debt to 
equity stands at 210 per cent. It 
had interest-bearing net liabili- 
ties in August of FM 15.3b n. 

Retail and institutional 
investors in Finland will be 
offered 2.5m shares in a public 
offering. The overseas tranche 
will be divided into 4.4m 
shares for North America and 
6.2m for elsewhere, marketed 
on a book-building basis. A fur- 
ther lJ9m shares will be avail- 


able to cover over-allotments 
on the global issue. 

Merrill Lynch International 
of the US is lead manager for 
the global tranches. 

Pricing, to be the same for 
all three geographical offer- 
ings, will be fixed in December. 
This week, Kymmene shares 
have been trading around 
FM123 in Helsinki 

Kymmene reported a 
FM545m pre-tax profit in the 
first eight months of the year, 
compared with a (restated) loss 
of FM337m in the same period 
in 1993, on sales of FM12.llbn. 
The group forecast earnings 
for the full year of FMlbn, 
compared with last year's 
FM256m loss. 


Black-owned 
group to run 
47 Denny’s 
restaurants 


By Richard Tomkins 
in New York 

Denny's, the US restaurant 
chain recently exposed as 
having discriminated against 
black customers in many of its 
1,500 restaurants, yesterday 
annonnced that it had 
appointed a black-owned 
business to run 47 Denny’s 
restaurants in tbe states of 
New York and New Jersey. 

The company is NDI Foods, 
a newly- formed subsidiary' of 
the Atlanta-based NDI Inc. A 
second subsidiary' of the same 
company, NDI Video, owns 
and operates 23 Blockbuster 
Video stores in tbe US. 

Under tbe agreement with 
Denny's. NDI Foods will buy 
17 company-owned Denny's 
restaurants in New York and 
New Jersey this year and 
acquire the right to buy five 
more next year. 

it will also build and operate 
25 new Denny's restaurants in 
the same territory over the 
next five years. 

The deal will be financed by 
the New England based Banc- 
Boston Capital, a subsidiary of 
the Bank of Boston. 

The price of the transaction 
was not disclosed. 

In May this year Denny's, 
part of Flags tar. the Nasdaq- 
quoted restaurant group, 
agreed to pay S46m in dam- 
ages to thousands of black eas- 
terners to settle charges that it 
had discriminated against 
them. 

Some Denny's managers, it 
emerged, had tried to drive 
black customers away by ref- 
using them service or making 
them pay in advance. 

The discrimination came to 
light in April 1993 when six 
black agents on the US presi- 
dent's secret service detail 
w'ere kept waiting nearly an 
hour in a Denny's restaurant 
while white colleagues were 
served. 

In an attempt to rebuild its 
reputation. Flagstar reached 
an agreement with the 
National Association for the 
Advancement of Colored Peo- 
ple in July this year, pledging 
to put at least eight of its res- 
taurants into the hands of 
black franchises by the end of 
this year and at least 53 by the 
end of 1997. 


Agnellis buy 12% stake 
in Danone Asia for $53m 


By Andrew HID fri Milan 

The Agnelli family yesterday 
strengthened its links with 
Danone, the French food 
group, by buying a 12 per cent 
stake in Danone Asia for S53m. 

The acquisition was carried 
out by Ifil the Agnellis' quoted 
industrial holding company in 
Italy, and Exor. which is linked 
to ffl. the family's investment 
vehicle. 

Danone Asia is a holding 
company for Danone's food 
interests in 12 countries, 
including India, Malaysia, New 


Zealand and China, with head- 
quarters in Singapore. 

It claims to he the market 
leader in biscuits in Asia and 
has a strong position in the. 
yoghurt sector, cooked dishes 
and sauces. Its turnover in 
1993, according to Iff], was 
about L700bn ($450m). 

The deal follows last month's 
announcement of planned 
rfiang Rs in the ownership of 
Saint Louis, the French food . 
and paper group, which has a 
small stake in Danone. 

Saint Louis shareholders 
have been asked to approve a 


Warburg hit by trading losses 


By John Gapper, 

Banking Editor 

S. G. Warburg, the UK-based 
investment bank, yesterday 
said it would review staff lev- 
els and delay planned invest- 
ments as part of a drive to cut 
costs after losing money on 
trading in the six months to 
September 30. 

Warburg, which issued a 
profits warning last month, 
saw a slump in investment 
banking profits to £5.5m 
(S8.85m) in the first half from 
from £9S.4m in the same period 
last year. Asset management 
contributed the rest of the 
£62. 5m pre-tax profit, down 
from £148 An. 

Dealing income fell to £45 Jm 
from £ 140.6m in volatile and 
illiquid markets. Lord Cairns, 
chief executive, said it made 
profits on proprietary trading, 
but de alin g for clients - the 


"vast majority” of its trading - 
did not cover costs. 

Lord Cairns and Sir David 
Scholey, chairman, insisted 
that Warburg bad to remain a 
trader and marketmaker in 
securities to support other 
activities. They said it 
remained "strongly commit- 
ted" to becoming a leading 
international bank. 

Total costs rose 10 per cent 
to £378. 8m from £343 ,3m In 
spite of a foil in staff costs, 
from £214Jm to £202 An. Other 
operating charges, including 
investment in sales and trad- 
ing technology, rose to £157. lm 
from £HL5m. 

Lord Cairns said Warburg 
would delay some investment 
in trading systems, particu- 
larly those preparing for 
higher volumes. There would 
not be “a massive redundancy 
programme", but staff require- 
ments would be scrutinised 


carefully. He and -Sir. David 
said M a reduced and more flexi- 
ble cost base will contribute 
considerably to improving per- 
formance". 

Lord Cairns said he was sat- 
isfied with risk management 
systems for trading. Warburg 
had reduced open positions 
after the tightening of US mon- 
etary policy In February, -but 
“if you are a marketmaker, you 
have got to be there". 

Annualised return on equity 
fell to 9.1 per cent from 29.5 per 
cent, with earnings per stare 
foiling to 14.4p from 4L8p. The 
bank declared an unchanged 
interim dividend of 13.1p. 

Mercury Asset Management, 
the fund management group 75 
per cent-owned by Warburg, 
declared pre-tax profits of 
£57m, compared with £50.4m. 
See Lex, Page 16; 

Mercury Asset Management, 

Page 24 


AGF cuts jobs at Spanish division 


By Andrew Jack 
in Paris 

Assurances G6n£rales de 
France, the insurance group 
which is due to be privatised, 
is to cut the workforce at its 
Spanish subsidiary by more 
than a third in the next three 
years to try to make it profit- 
able by the end of 1996. 

The company said yesterday 
it planned to reduce the 2400 
staff at AGF Union Ftaix by 
more than 730 as part of a 
series of management initia- 


tives designed to trim costs 
and reduce its dependency an 
its parent 

F6nix had a Pta35bn ($277m) 
deficit last year. 

AGF gained control of Ffenix, 
the fifth largest insurance com- 
pany in Spain, earlier this year 
from Banes to. the Spanish 
banking group. The French 
group holds more than 60 per 
cent of tbe shares. 

AGF said it was committed 
to expanding the operations of 
F6nix Autos, which it claims is 
the first telephone insurance 


service in Spain and now has 
more than 160,000 customers. 

It said It was beginning to 
use the same subsidiary to sell 
multi-risk household insurance 
and would increasingly use It 
for the telemarketing of its 
products. 

AGF has invested heavily in 
Spain as part of its strategy of 
international expansion, 
espoused in the late 1990s, to 
generate 40 per cent of its turn- 
over from operations outside 
France - a target it achieved 
last year. 



FFrl^bn (|388m> capital 
increase reserved exclusively 
for EQL The operation would 
raise Ifil's stake in the com- 
pany to 253 per cent from 15.7 
per cent, and dilute the stake 
of Worms, the . French holding 
group, to 27.8 per cent from 
31.6 par cent - - 
Ifil is to pay for. half the 
increase in cash and half in 
shares of the Danone - parent 
company, increasing Saint 
Louis’ stake in the food group 
to per cent, and keeping 
Ifil’s indirect stake at just 
under 6 per cent 


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Looking to the 
future of 
petrochemical 
investments 
doesn’t require 
a crystal ball 
it requires 
accurate 
information 
and analytical 
skills. 


ARAB 

PETROLEUM 

INVESTMENTS 

CORPORATION 

POBQX44S OHAHRAN AIRPORT 3T932 
SAUDI ARABIA. TELEPHONE 1031064 74DO 
TELEX B7DOGaAPCSJ FAX ICa BMW 7b 


All of these securities having been sold, this announcement appears as a matter of record only. 


2,550,000 Shares 

Sinter Metals, Inc. 


Class A Common Stock 


November 1994 


510,000 Shares 


PaineWebber International 


McDonald & Company 

Securities. Inc. 


This tranche was offered outside the United Scores and Canada. 


2,040,000 Shares 


PaineWebber Incorporated 


McDonald & Company 

Securities, Inc. 


A.G. Edwards & Sons, Inc. 
Oppeoheimer & Co., Inc. 
Advest, Inc. 


Lehman Brothers 


Kidder, Peabody & Co. 

Incorporated 

Salomon Brothers Inc Wertheim Schroder & Co. 

Incorporated 

Robert W. Baird & Co. Data Bosworth 

lnc orpon ,ica Incorporated 

Ladenburg, Thalmann & Co. Inc. Legg Mason Wood Walker 

Incorporated 

Tucker Anthony 

Incorporated 

The Ohio Company 


Rauscher Pierce Refsnes, Inc. Sutro & Co. Incorporated 
Cleary Gull Reiland & McDevitt Inc. 


First Equity Corporation 

of Florida 

Pennsylvania Merchant Group Ltd Rickel & Associates Inc. 


Unterberg Harris 


This tranche was. •■Hcivd in the United States. 


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FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


INTERNATIONAL COMPANIES AND FINANCE 


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The Limited 
recovers 
with a 10% 
increase 

By Richard Tomkins 
hi New York 

The Limited, a US clothing 
retailer, improved oo its 
recent weak financial perfor- 
mance by reporting a 10 per 
cent increase in net income to 
©0.5m from ©2.2m in the 
third quarter to October. 

Mr Leslie Wexner, chairman 
and chief executive, said: 
"This quarter is early confir- 
mation that the chan g e we’ve 
made In our business are hav- 
ing a positive effect." 

The Limi t ed has been exper- 
iencing good performances in 
its lingerie, men’s, children's 
and Bath and Body Works 
bosinesses. 

How ever, these have been 
outweighed by poor results 
from its core women's fashion 
accessories stores, trading as 
The Limited and Lerner New , 
York. 

Yesterday Mr Wexner said | 
the company bad been focus- ; 
tag on margin recovery at its ■ 
women’s clothing stores for 
several months. 

“We have tightly controlled 
our inventories and expenses,” 
he said. “As the thir d quarter 
aided, in addition to the mar- 
gin rate recovery, we began to 
see improvements in our store- 
for-store sales comparisons at 
our women’s fasbion busi- 
nesses.” 

Revenues for the group as a 
whole rose by 6 per cent to 
$1.7hn, with most of the 
increase coming from the lin- 
gerie, men’s, children’s and 
body care businesses. 

Earnings per share rose to 
25 cents from 23 cents . 

Mr Wexner said the Bath 
and Body Works Joint venture 
in the UK lannched its 
first three stores daring 
the quarter, and initial cus- 
tomer response met or sur- 
passed The Limited's expect- 
ations.. 

• Dillard Department Stores, 
one of the biggest US depart- 
ment store groups with 232 
outlets, increased net income 
by 20 per cent to 950.8m from 
$42.4m in the third quarter to 
September. 

Revenues increased to 
Sl^bn from 9L2hn. naming* 
per share rose to 45 cents from 
38 cents. > 


Data General files suit against IBM 


By Louse Kehoe 
in San Francisco 

Data General has filed a patent 
infringement lawsuit against 
International Business 
Machines, the world’s largest 
computer manufacturer, charg- 
ing that IBM has “wilfully” 
infringed upon seven Data 
General patents for several 
years. 

A computer technology 
leader in the early 1980s, Data 
General is struggling to regain 
profitability as it switches 
from proprietary minicomputer 
technology to “open systems" 
based on industry standards. 


In its suit. Data General 
alleges that IBM’s two most 
profitable product lines - its 
System/390 mainframes and 
AS/400 minicomputers - incor- 
porate patented technologies 
developed by Data General in 
the late 1970s. 

Data General is seeking 
"compensatory damages" 
based on IBM’s mainframe and 
minicomputer revenues. In its 
suit. Data General estimates 
that IBM’s cumulative reve- 
nues from AS/400 systems have 
exceeded $25bn. while those 
from its System/390 main- 
frames, introduced in 1990, are 
more than $50bn. 


Data General claims IBM had 
known of its patents since the 
mid-1980s, but nonetheless had 
used the technology in its com- 
puter systems. “IBM's Infringe- 
ment has been and continues 
to be wilful," Data General said 
in its complaint. 

IBM said that it had not yet 
received a copy of the suit and 
declined further comment. 

Data General said the seven 
patents allegedly infringed by 
IBM were among more than 50 
issued as the result of an ambi- 
tious computer design effort 
called the “Fountainhead Proj- 
ect", undertaken in the 1970s, 
“to design and develop the 


most advanced computer sys- 
tem of its time." 

Data General’s struggle to 
develop the world-heating com- 
puter is described in The Send 
of a New Machine, a 1982 Pul- 
itzer Prize winning book by Ms 
Tracy Kidder. 

The company is seeking a 
permanent injunction to bar 
IBM from further infringement 
of the patents by manufactur- 
ing and selling the S/390 main- 
frame and AS/400 mid-range 
computers. 

“IBM wifi continue to 
infringe unless enjoined by 
this court," the Data General 
lawsuit says. 


Visa plans separate western European unit 


By Alison Smith 

Visa International, the 
international payments group, 
is to create a subsidiary com- 
pany, called Visa Europe, to 
deal with the developed market 
in payment services across 
western Europe separately 
from the newer markets in 
eastern Europe, the Middle 
East and Africa. 

The move is intended to 
allow the group to be more 
competitive in the developed 
markets and to focus on the 
different skills required for 
b uilding a market in the fas ter - 
growing areas. 

Both types of markets are 


currently dealt with in a single 
region called Visa EMEA. 

At the same time there will 
be a shift in Visa Internation- 
al’s arrangements for funding 
investment in developing mar- 
kets, putting it on to a global 
basis. 

Under the new system, 
instead of European members 
of Visa EMEA contributing to 
development within the EMEA 
region, they will contribute to 
a fund held by Visa Interna- 
tional, which will pay for 
development in all regions. 

Mr Edmund Jensen, Visa 
International president and 
chief executive, said the split- 
ting of Visa Europe from the 


rest of the region had been 
driven by the member finan- 
cial institutions, and was a far- 
ther stage in the organisation’s 
evolution- 

The Visa EMEA region is 
made up or 115 countries, of 
which just 24 provide 95 per 
cent of the volume of Visa card 
payments. 

Mr Jensen emphasised that 
the restructuring would also 
give member banks outside 
Visa Europe - in eastern 
Europe, the Middle East (apart 
from Turkey and Israel) and 
Africa - a greater say in deci- 
sions affecting them, as they 
would have a separate organi- 
sation. Currently only one 


director represents these coun- 
tries on the EMEA region 
board. 

Visa also announced that the 
third of the three sets of com- 
mon technical specifications 
for “chip" or Integrated circuit 
cards on which it has been 
working with two other inter- 
national payments organisa- 
tions - Mastercard and Euro- 
pay - had been agreed. 

A common specification for a 
“chip" card terminal is due to 
be agreed by July next year. 
All three payments organisa- 
tions are also working sepa- 
rately on prototype cards, and 
will pool the results of their 
pilot studies. 


Equitable climbs 25% on 
higher investment spreads 


Economic recovery helps 
Trimac double profits 


By Richard Waters 
in New York- 

Equitable, the US financial 
services group, continued to 
benefit from an improvement 
in insurance earnings during 
the third quarter, which more 
than made up for a deteriora- 
tion in profits from investment 

hanking 

The 25 per cent increase in 
net income, to 989.3m, or 42 
cents a share, was driven 
mainly by higher investment 
spreads in the insurance and 
anmiitira business. Mr Joseph 
Malone, chairman of the 
group’s US life insurance arm, 
added that an improvement in 
mortality experience and lower 
unit costs also helped. 

After-tax earnings from 


insurance and annuities rose 
to 963m from $37.4m a year 
ago. Both figures are before 
capital gains and one-off 
restructuring charges, which 
resulted in net charges of 
93.4m in the latest period and 
$7.6bn a year ago. 

Net income from fond man- 
agement and investment bank- 
ing slipped to $3i.6m from 
$56.9m. This was before a 
ptS-Sm after-tax gain from the 
sale of part of the group's 
interest in Alliance Capital 
Management . 

While Alliance's earnings 
rose 15 per cent from a year 
ago, Donaldson Lufkin & Jen- 
rette. Equitable’s investment 
hanking subsidiary, saw after- 
tax naming* fall by 48 per cent, i 
to 925.5m. 


! By Robert Glbbens 
in Montreal 

Trimac. North America’s 
biggest road haulier of bulk 
commodities and the world's 
fourth-largest contract driller, 
doubled profits In the first nine 
months of 1994. 

Trimac, controlled by the 
McCaig family of Calgary, said 
the gain stemmed from the 
north American economic 
recovery and a strong market 
for oil and gas drilling rigs. 
Exploration activity in western 
Canada, for example, was run- 
ning at record levels. 

Third-quarter net profit 
advanced to C914.5m 
(USS 10.7m), or 36 cents a share, 
up from C$9.7m. or 24 cents. 
Nine-month profit was 


C$31 .3m, or 77 cents, against 
CS16Jm, or 41 cents. 

Revenues for the nine 
months were C$495m, up 10 per 
cent. 

Trimac said third-quarter 
trucking results were firm 
and drilling revenues were 
up 47 per cent. Its equip- 
ment leasing business also 
improved. 

• CAE. the world’s biggest 
maker of flight simulators, 
continued its recovery in the 
second quarter, although the 
US military training division 
was hit by US defence budget 
cuts. 

Second-quarter net profit 
was C$l0.9m, or 10 cents a 
share, against $6m, or 6 cents, 
a year earlier, on revenues of 
5265m, up 5.3 per cent. 


NEWS DIGEST 


Minolta suspends 
video-camera side 
in domestic market 


1993 94 

Scwcs Daustnum 


Minolta, the Japanese 
Minolta manufacturer of cam- 

Share price (yen) eras and office automa- 

a*. ■ tion equipment, said 

Ji yesterday it was sus- 

55°-"- f|_' pending production 

500 - IV -> and marketing of video 
A P kj cameras for the domes- 

450 T tic market, AP-DJ 

400 wW . . .. reports from Tokyo. 

w However, a Minolta 

350 spokesman said the 

300 ■ * 1 1 - m. - company would con- 

1993 94 tlnue to export video 

Saxe* Daiastr«n cameras made for it by 

Hitachi on an original 
equipment-manufacturer basis to the North 
American market. 

in recent years, Minolta has lost market 
share to competitors Sony and Sharp as the 
Japanese market has grown increasingly com- 
petitive. 

Minolta's domestic sales of video cameras 
totalled Y2bn <$20.55rn) in fiscal 1992, after 
peaking at Yiobn in 19B7. the spokesman said. 
For the fiscal year ended March 1994, Minolta 
had total unconsolidated sales of Y184.26bn. 
with exports accounting for 77 per cent of the 
totaL 

Minolta stressed that the move did not nec- 
essarily mean the company had left the domes- 
tic market for good. He said that the compa- 
ny’s strengths in optical engineering and 
technology were such that it would continue 
to develop new products with an eye on re-en- 
tering the market. 

Minolta shares closed unchanged at Y502 on 
the Tokyo Stock Exchange. 

Nissin Food Products 
ahead midway 

Nissin Food Products, a leading Japanese food 
maker, said yesterday its unconsolidated 
recurring profit - before extraordinary items 
and tax - for the first half-year to end-Septem- 
ber rose 13 per cent to Y10.15bn from Yli0.Qlbn 
a year ago, AP-DJ reports from Tokyo. 

Net profits were 11 per cent ahead at 
Y5.47bn. compared with Y4.91bn. on sales 
which advanced 1.8 per cent to Yl06.08bn frum 
Y104.18bn- 

Glencore buys back 
Rich stake in group 

Glencore International has bought back for 
cash the filial 25 per cent stake in the diversi- 
fied trading and industrial group held by Mr 
Marc Rich, writes Ian Rodger in Zurich. 

Glencore. formerly Marc Rich & Co. agreed 
in March 1993 to buy out Mr Rich’s 51 per cent 
stake in the business over a five-year period. 

Mr Willy Strothotte. chairman of the 
employee owned group, said he was very 


pleased that the ownership transition had 
been completed much more quickly than 
planned. 

No price was given for the transaction, but 
the group's capital prior to Mr Rich’s with- 
drawal was believed to be in the range of Slbn. 
The shares will be sold among the group’s 
5,000 employees. 

Mr Rich has resigned from the boards of 
Glencore and its quoted Swiss subsidiary 
SOdetekba. 

Lyonnaise des Eaux 
urges Fournier to quit 

Lyonnaise des Eaux. the French construction 
and utilities group, yesterday said it had called 
for the resignation of Mr Jacques Fournier, the 
former director fined on Monday by regulator 
for abusing insider information, writes 
Andrew Jack in Paris. 

Mr Jerime Monad, the chairman, with the 
agreement of the principal shareholders, called 
for Mr Fournier to end his honorific role as an 
adviser to the board. 

Mr Fournier was fined FFr40,000 (97,695) by 
the Commission des Operations de Bourse, the 
markets watchdog, for using privileged infor- 
mation to sell shares in the company in Janu- 
ary last year before the price dropped follow- 
ing warnings of provisions. Mr Fournier has 
said he would appeal. 

Vital hangs on to 
market share 

Vital, the Norwegian pension and life insur- 
ance group, said year-on-year premium growth 
to September 30 reached 22.6 per cent, but 
overall market share was unchanged at 20.5 
per cent, writes Karen Fossli in Oslo. 

The Norwegian Insurance Association said 
domestic Ufa insurance companies achieved 
aggregate premium receipts of NKrl8.7bn 
($2 82 bn) between October 1 1993 and Septem- 
ber 30 1994, representing growth of 22.3 per 
cent, of which Vital's share was NKr3£4bn. 

Aggregate domestic industry group pension 
premiums, according to the N1A, rose by 24.1 
per cent to NKr8.5bn during the period, with 
Vital’s market share falling to 21 per cent from 
23.4 per cent, in spite of an 11.4 per cent rise in 
premiums. 

Domestic industry aggregate individual 
annuity and pension premiums grew 30.8 per 
cent during the past year to NKrtbn. Vital’s 
premium growth was 55.5 per cent to NKzS98m 
as market share rose to 25.1 per cent from 21.1 
per cent. 

Telco sales rise 40% 

Tata Engineering and Locomotive (Telco). 
India's biggest truckmaker. has ended the first 
six months of 199495 with 40 per cent higher 
sales over the year-ago period, Mr Ratan Tata, 
chairman, said. Renter reports from Bombay. 

He said a sharp revival in demand for trucks 
in the current year had boosted sales, but he 
declined to comment on the expected profits, 
saying the first-half results would be 
announced on Friday. 


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Templeton 

Templeton Global Strategy Sicav 

Sociite d’ invest issementa Capital Variable 


| Registered Office: Centre Neuberg, 30, Grand- rue, L-1660 Luxembourg 

! *■* R.C. Luxembourg B-35.117 

Notice of Annual General Meeting 

3 Notice is hereby given that the Annual General Meeting of Shareholders of Templeton Global 
Strategy SICAV (’the Fund") will be held at the registered Office of the Fired in Luxembourg on 
30th November, 1994 at 1 LOO a.m. to consider the following agenda: 

I. Presentation of the Report of the Board of Directors. 

2. Presentation of the Report of the Auditors. 

3. Approval of the balance sheet and income statements for the financial year ended 
3 30th Jane . 1 994. 

2 4. Discharge of the Board of Directors. 

1 5. Election of Directors, specifically the re-election of the following five present 

1 Directors-. Charles E Johnson. Martin L Flanagan. J Mark Mobius. Gregory E 

& McGowan and Dickson B Anderson and the election of the following five additional 

J Directors: Nicholas F Brady, The Duke of Abcrcom. The Right Reverend Michael 

4 Mann, Daniel Marx and Mark G Hoiowesko. 

1 6. Election of Coopers A Lybrand as Auditors. 

7. Approval of the payment of dividends for the financial year coded 30th Jane 1994 and 
authorisation of the Board of Directors to declare fan her dividends in respect of the 
financial year ended 30th June 1994 if necessary to enable the fond to quality for 
"distributor status" under United Kingdom tax laws and amendment of quarter dates for 
payment of quarterly dividends. 

8. Consideration of such other business as may properly come before the meeting. 

Resolutions on the agenda of the Annual Genera! Meeting will require no quorum and wilt be 
taken as the majority of the votes expressed by the shareholders present or represented at the 

I meeting. Holders of Registered Shares who cannot attend may vote by proxy by returning to the 
offices of Templeton Global Strategic Services S.A., Centre Neuberg. 30. Grand-rue, L-1660 
Luxembourg, the form of Registered Shareholder Proxy sent to them. 

Holders of Bearer Shares who wish to attend the Annual General Meeting or vote at the Meeting 
by proxy should contact Chase Manhattan Bank Luxembourg SA. 5. rue-Plaelis, L-2338 
Luxembourg. . 

Tn be valid, proxies must reach the offices of Templeton Global Strategic Services . S. A. by 
November 22, 1994 at noon (Luxembourg time). 

By Order of the Board of Directors 



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When there’s international business at stake, 
we put our best people on the case. 



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International Finance 
Corporation 

Washington, D.C. 

Italian Ure 200 , 000 , 000,000 
- FIoatingratenot.es 1988 

Notice is hereby gii>en that for 
the interestperhd9NQoember 
S94 to 9 February W5 the notes 
imUcarryan interest rate of 
8.48125% per annum. Interest 

payable on 0 February 1995 will 
amount tolTU08J72 per 
TIL 5.00Q.00Q note and 
mi.0S3.7l5 per 
nt50.000.000 note . 

Agent Morgan Guaranty 

TVust Company 

jPMorgan 


NATIONAL BANK OF CAN ADA 

USS 250,000,000 Floating Rata Notes due 1999 

In accordance with the Description of the Notes, notice b hereby 
given that for the Interest Period from November 8. 7S94(DFebru- 
ay a 1 995 the Notes wfl cany an hterast Hats of 5BS % per annun 

The Interest Amount payable on the relevant Interest Payment- 
Date. Febnjery 8. 1996 wfl be USS 152.06 
per USS 10,000 principal amount _ The Calculation 

of Note and USS 1.520.56 per *** 

USS 100.000 prinopa! fPTfYB, KredBetbank 

amount of Note. M Il—ltoig 


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upu.15% 

off electricity 

SIOCO wrrnC'Vr. cr nci op e T^::C.ry. 

0121 423 3018 

Powerline 






We may not have a global branch network. 

Bui we Jo have a rapid-response task force oflast-ihinking sinfT, 
ready to roll whenever you need them. 



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PAN-HOLDING 

Soddi* Anoayme - Inirnbourg 

As of October 31. 18W, me 
uncvsoHdated net asset value 
wnUS03S8^8kBaa48,Uk 
USD BS1 A3 per share of USD 200 
parvBtue. 

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par share amounted as of 
October 31 ,1894 to USD 6BrA2. 


<$§£+ 

mb 


Sovereign (For ax) ltd. 

24hr Foreign Exchange 
Margin Trading Fodby 
GxfipeSfa* Pritas 
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Ik 071-931 9188 
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L-Riink it the development agency 
ol ihe German federal state ul'Radcn- 
Wurliembcrg. Nut the biggest of 
bunks perhaps, hut certainly one of the 
must ambitious. As an international 
issuer. L-H.mk has risen lo jinn the 
world's lop ion. And in global corpo- 
rate finance, too. L-Biinfc maintains 
.i high profile. Not through high-rise 


pomp and splendor but through 
high personal commitment. A single 
call is all it takes to bring one of 
our corporate finance experts jetting 
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L-Bank, SchlossplaU 10/12, 

D -76 1 13 Karlsruhe, Germany. 
Telephone (NT 721/150-0. 

1LBANK 

Landeskreditbank Badan-VVDrttemberg 








FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


INTERNATIONAL COMPANIES AND FINANCE 


TNT back in the 
black but payout 
unlikely this year 


By Nikki Tart 
in Sydney 

TNT, the Australian 
transportation group, returned 
to the black in the first quarter 
of its current year with a profit 
of A$18.3m, compared with a 
loss of A$33-2m in the same 
period of the previous year. 

Sales were A$L45bn, against 
A$L4bn, and operating profit 
before abnormal items rose to 
A$3L4m from A$23.4m. 

The release of first-quarter 
results coincided with the com- 
pany's annual meeting in Syd- 
ney. Mr Fred Millar, chairman, 
told the meeting that in spite 
of the improvement in recent 
profits figures, he still thought 
it was unlikely that TNT 
would pay a dividend in the 
current year. However, he was 
“confident" that dividends 
would resume In 1995-96. 

The chairman said Spain 
remained a problem area Tor 
the company, but other Euro- 
pean interests generally had 
made good progress. 

He also forecast a "signifi- 
cant improvement" at GD 
Express Worldwide, the compa- 
ny’s express delivery venture, 
which it owns jointly with var- 
ious European and Canadian 
post offices, during the current 
period. 

Mr Millar added that TNT 
was in “detailed discussions” 
with potential partners for 
logistics activities in China, 
Thailand and Indonesia, 
although it dfd not expect 
developments in these coun- 
tries to move quickly. 


Share price (AS) 

2.6 



Date for Milan futures 


Futures trading on Milan's 
new MIB-30 index should start 
in the week beginning Novem- 
ber 28, Mr Enzo Berlanda, 
chairman of Consob, the stock 
market regulator said, Reuter 
reports from Milan. The 
MIB-30, based on the existing 
BC1-30 index of leading shares, 
was launched on October 17. 

Mr Berlanda said a full range 
of trading instruments would 


probably not be available 
before September 1995. He said 
there were also hitches in the 
movement of all shares to cash 
settlement because of liquidity 
problems. “Now there are 240 
[shares with cash settlement!, 
but there are difficulties in 
terms of liquidity,” he said. 

A total of 370 shares, from 
204 companies, are currently 
quoted on the Milan bourse. 


Matif president happy to follow his own rule! 

Gerard Pfauwadel can see his legislation at work in the French futures market, reports Andrew Jack 

M r Gtanl FtanmM. our memberehip Is adapted; we SSSrtSS (Sm 

president of Matif. are not a closed shop, he says. •« «; ***“ jErJ?, Equally, Mr Pfauwadel t 

the French futures Mr Pfauwadel argues that o t, ownership for the markeL jo for from settled on 


1993 9* 

Souks Qatastraom 

Mr David Mortimer, chief 
executive, said there were no 
plans at present to float 
Ansett, the airline which is 
owned by TNT and Mr Rupert 
Murdoch's News Corporation. 
He added that TNT bad not 
urged the Australian govern- 
ment to keep Air New Zealand 
out of the Australian Internal 
market, and that it was not on 
the current agenda to bring a 
third party into Ansett. 

The government's recent 
decision to freeze an agree- 
ment which would have 
allowed the New Zealand car- 
rier to fly domestic Australian 
routes from November 1 bas 
caused a row between the two 
countries. 

There has been speculation 
that the government is keen to 
see an alliance formed between 
Ansett and Air Zealand, thus 
extending Australia's domestic 
airline duopoly across the Tas- 
man. 


M r Girard Pfauwadel, 
president of Matif. 
the French futures 
and options market, is In a 
potentially awkward position 
when it comes to assessing the 
legislation that frames his 
work - he is the man who 
wrote the rules. 

Like many of his contempo- 
raries, Pfauwadel has moved 
easily from thp public to the 
private sector. However, unlike 
most of his fellow graduates of 
ENA, the elite French public 
administration college, he is 
now bound directly by the laws 
he drafted. 

He can recall when the legis- 
lation was passed: *T remember 
it precisely - July 13 1985." He 
was then under-deputy secre- 
tary at the French Treasury. 

And now that he can see the 
legislation in practice, would 
he change anything? “Not 
really,” be says bluntly. “If it's 
not broken, don't fix it. It's 
clear the Matif is not broken. 
Why do we need to change 
something that is working 
extremely well?" 

He points out that France 
will have to make a few modifi- 
cations to its laws to align 
them with the requirements 
for free competition, under the 
European investment directive, 
by the start of 1996. 

“Little needs to be changed. 
Our taxation system is good; 


our membership is adapted; we 
are not a closed shop." he says. 

Mr Pfauwadel argues that 
civil servants were among 
those most closely involved in 
and enthusiastic about creat- 
ing a deregulated market for 
the French “big bang" in the 
late 1980s. “There would have 
been no growth in the market 
unless we were sure that the 
environment was adequate, 
with sensible taxation for prof- 
its and losses, for example," he 
says. 

"We had another target in 
building the market." he says. 
"We wanted to modernise the 
Finan cing of the Treasury. The 
deficits were starting to be 
huge and it was important to 
open the way for Investors so it 
would be possible for tbe 
Treasury to issue more bonds. 
Public debt was almost 
exploding.” 

Matif was founded in 1986. 
using a structure distinctly dif- 
ferent from its Anglo-Saxon 
counterparts. It is not an insti- 
tutional exchange owned by its 
.members, but rather a corpo- 
rate entity. 

Mr Pfauwadel says: “We 
were relatively late starting. 
The best way to accelerate 
growth was the entrepreneur- 
ial rather than the 
Anglo-Saxon co-operative 
approach.” 

He argues that one reason 


:a* ■ 

.ipiCK' 




& ±: v 








Gerard Pfauwadel: ‘If it's not broken, don't fix it’ 


for the rapid development of 
Matif has been the French edu- 
cation system. “We have the 
savoir-faire. People in France 
are very well trained in mathe- 
matics. which is essential for 
options. It is clear that the 
level of abstraction is pretty 
high." in contrast, he says, 
London has focused more on 
futures, which he argues are 
“less complex" products with 
which to grapple. 


Mr Pfauwadel says the cre- 
ation of Matif was the first 
time that banks and brokers - 
traditional competitors - had 
agreed to join forces. They 
took a third of the shares each, 
with the remainder going to 
insurance companies as “arbi- 
trators". 

The Matif has proved very 
profitable, generating a surplus 
which helps guarantee all con- 
tracts written and fund new 


investment. Inevitably, there 
have been calls for a broader 
ownership for the market. 

This, he concedes, has come 
from brokers “who were not 
sufficiently involved In the 
equity at the time of the origi- 
nal discussions". 

“It is a very fine-tuned bal- 
ance. We need to keep a third 
of the shares with each of the 
three groups. We may have 
evolution. But it needs to 
work well in the interests of 
everybody." 

If Mr Pfauwadel sounds at 
times a little defensive, it is 
not because he is opposed to 
change. “Pragmatic" is a word 
that springs up often in his 
vocabulary. 

Last month, Matif opened a 
market for its latest product 
rapeseed futures contracts. 

“It is becoming more and 
more difficult to innovate," he 
says. He believes that most 
currency instruments for 
which there is a demand are 
already In place. 

One result has been to focus 
o n commodities - notably in 
agricultural products. “We are 
an agricultural country." he 
says. “Prices have been com- 
pletely obscured by the Com- 
mon Agricultural Policy, not 
determined by the market but 
by technoc rats in Brussels. We 
need a market game [to 
develop futures]." Rapeseed 


has now been introduced; 
wheat and others may follow. - 
Equally, Mr Pfauwadel says 
he is far from settled on the 
“open outcry" trading system, 
so fundamental., to the 
exchange's current operations. 
“If we cannot innovate thotqjh 
products. -another .way Js to 
give our members, access to 
other products in other mar- 
kets," he says. 

T his explains Matif s use 
of the Globex system 
linking it with other 
exchanges worldwide, and its 
recent hook-up with the Deut- 
sche Terrain berse, its Frank- 
furt equivalent. 

He said he believed that if 
the Franco-German platform, 
were successful, it would 
attract other continental mar- 
kets. "The Dutch, Spaniards 
and Swiss have already 

expressed interest,” he sags. 

The British, by contrast, 
have taken another approach. 
Matif approached LLffe before 
Frankfurt to suggest a. trading 
link, but it refused. “It wants a 
big market in the City [of Lon- 
don] to quote all European 
products," says Mr Pfauwadel 
“That is in conflict with our 
strategy to develop a domestic 
niche mid link it to other cen- 
tres. They are two distinct 
strategies. I have no idea 
which will win.” 


BHP considers Chinese site I Reliance merges businesses 


By Nikki Taft 

Broken Hill Proprietary, the 
Australian resources group, is 
to look into the commercial 
feasibility of developing an 
integrated power plant and 
open-cut coal mine near Hah 
hot, the provincial capital of 
the Chinese region of Inner 
Mongolia. 

The company said yesterday 
that a tetter of intent had been 
signed this week with Zhun- 
geer Coal Industry Corpora- 
tion, part of China’s ministry 
of coal industry, permitting a 
pre-feasibility study. The 
study, which will determine 
the size and timing of the 
potential project, should be 
completed within 12 months. 


and will be undertaken by BHP 
Minerals and BHP Power. 

The Chinese project is the 
second significant potential 
development announced in 
recent days by BHP Power, a 
newly-formed “fifth leg” to 
BHP's business. Last week, the 
subsidiary said it had submit- 
ted a proposal to the Vietnam- 
ese government, seeking to 
conduct a feasibility study for 
a large integrated power and 
urea development 

Also included in the pro- 
posed project consortium were 
Japan's Tomen Corporation, 
General Electric of the US, and 
Canada's Cominco Fertiliser, 
although BHP would be the 
lead company. 

Although the Australian 


company declined to speculate 
on the cost of the Vietnamese 
project, it has been suggested 
it could be worth more than 
USSSOOm. making it by far tbe 
biggest foreign investment in 
communist Vietnam. Tbe larg- 
est project io date is a US$288m 
cement plant being built by 
Taiwan's Ching Fong group. 

The Vietnamese project 
could include a “world-scale" 
urea fertiliser plant, producing 
around 600.000 tonnes per 
annum, which would be inte- 
grated with a 680 MW power 
station, using gas turbine com- 
bined cycle technology. 

The project would rely on 
natural gas, from gas reserves 
recently discovered off the 
south Vietnamese coast 


By Shkaz Sitfftva 
in New Delhi 

Reliance Industries (RIL), 
India's largest private sector 
company, yesterday consoli- 
dated its place as a leader in 
the plastics market by merging 
with two of its associates. Reli- 
ance Polypropylene Limited 
(RPPL) and Reliance Polyethyl- 
ene Limited (RPEL). 

The directors of the three 
companies met in Bombay yes- 
terday to finalist* the amalgam- 
ation. which will come into 
effect from January 1 1995. 

Shareholders of RPPL and 
RPEL will get 30 and 25 RIL 
shares respectively per 100 
shares, based on two indepen- 
dent valuations. Itochu Corpo- 


ration of Japan, winch helped 
Reliance set up separate plants 
for the two companies in 1992, 
will continue to be an investor 
in RIL and maintain its earlier 
agreements for export market- 
ing rights. 

Reliance said it would now 
have the benefit of equity- 
funded projects with a short 
gestation period, without 
adding to its existing debt pro- 
file. RIL's weighted average 
equity will now increase to 
about Rs3.6Sbn ($11 5.5m) from 
Rs3.36bn as of March 31 1995, 
and the company’s reserves 
will swell by over Rs8bn. 

Reliance is building a poly- 
propylene plant, with a tech- 
nology licence from Union Car- 
bide of the US. It is due to be 


commissioned by the end of 
next year and will have an' 
annual capacity of 250,000 
tonnes. 

It is also building a polyeth- 
ylene plant with a technology 
licence from Du Pont Canada. 
The facility is expected to be 
commissioned by early 1996, 
and will have a capacity of 
200,000 tonnes. 

With these two plants added 
to RIL's manufacturing capac- 
ity, the company will be India’s 
largest producer of both petro- 
chemical products. The com- 
pany said the commissioning 
of the plants had been timed to 
coincide with the startup of 
the world's largest multi-feed 
cracker project, being built in 
Hazira in Giqarat 




.... \\ 


f#/ 


CONTRACTS & TENDERS 




{£) ESTONIA 

International Tender for the sale of 

INDUSTRIAL ENTERPRISES 

by the Estonian Privatization Agency 

Enterprise number, name (in brackets: preferred % of share bids), location (in brackets: type of business [capacity/year if 
available], [turnover of the first halfyear of 1994 in EKK (Estonian Kroons) if availabie]/number of employees half year 1994) 


■4 Stockholm 380 km 


Helsinki a 82 km “V ► 315 km SLPetereburg 


TRANSPORTATION 


(EE-442) RAS Saku Auto baas (76 %) 
EE3400 Saku 

(International transportation and forwanting 
1 47 Western trucks], [100 % international]. 
[19£ million EEK}/95) 

(EE-449) RAS TalRnna Toiduveod (76 %) 
EE0014 Tallinn 

(Food distribution, transportation and 
fonvareSng [25 % international]. [7.2 miBion 
EEKV335) 

(EE-450) RAS Tartu Autoveod (76 %) 
EE2400 Tartu 

(Transportation and torwanSng [33 Western 
trucks], [55 % international], [27,3 million 
EEKJ/514) 

(EE-451) RAS Saaremaa Autobaas (100 %) 
EE3300 Kuressaare 

(Passenger transport by busses and taxis, 
bus rental, transportation of goods [15% 
International], [8.7 million EEKJ/277) 

(EE-454) RAS Varu Autobaas (100 %) 
EE2710 Vflru 

(Passenger transport by busses and taxis, 
bus rental, transportation of goods [25 % 
international]. [8.4 mBBon EEKJ/27B) 

(EE-521) RAS Kohtla-J&rve Autobaas (100 %) 
EE2020 Kohtla-J&rve 
(Transportation [30 % international], 

(4, 1 mBBon EEKJ/155) 


FOOD INDUSTRY 


(EE-42) RE Narva Uhatddstus, future RAS 
(76%) 

EE2000 Narva 

(Meat and meat products [1.000 tons]. 

[2&2 million EEKJ/1 43) 

(EE-76) RAS KOiia Terko (76 %) 

EE3053 Keita 

(Wheat Hour [160.000 tons], grits [64.000 
tons], concentrated fodder [120.000 tons], 
[56 miition EEKJ/260) 

(EE-69) RE Taffinna Kulmhoona, future RAS 
(76%) 

EE0014 Tallinn 

(Cold storage of meat and milk products, ice- 
cream production [19. 1 mBBon EEKJ/250) 


(EE-90) RE Tartu KGImhoone, future RAS 
(51%) 

EE24O0 Tartu 

(Cold storage of milk, meat and juices 
[4. 1 13 sqm refrigerated area], [55.6 miBion 
EEKJ/137) 

(EE-513) Plant Kohtia-Jdrvs Kasvuhooned 

EE2020 Kohtia-J&ve 

(Heated greenhouses (6 hectaresJ/40) 


CONSTRUCTION 


(EE-203) RAS Eesti Energeetikachitus (100%) 
EE2000 Narva 

(Construction of dwelling houses, office 
buildings, sports facilities, bridges, tunnels, 
sewerage networks [7,8 mBBon EEKJ/208) 

(EE-207) RAS Eesti Elektrimantaaz (100%) 
EE2000 Narva 

(Electrical assembly work [2 notion EEKJ/103 ) 
(EE-338) RAS STET (76 %) 

EE0013 Tallinn 

(Hoad construction in Siberia [41, & million 
EEKJ/353) 


METAL WORKING INDUSTRY 


(EE-134) Rented out assets of 
P3mu Maslnalehas 
EE3600 P&mu 

(Refrigeration installations, ovens, centri- 
fuges. cutting and dosing devices for 
machine tools/24-}) 

(EE-295) RAS Tamsalu EPT (76 %) 

EE2300 Tamsalu 

(Dewatering and amelioration equipment tor 
forestry, wooden products [7 mtition EKK)/ 
199) 

(EE-404) RE Kohfla Eksperimentaalne 
Remondl- ja Mehaantkaiehas 
EE3420 KohUa 

(Road construction machinery, mad graders/ 
156) 

(EE-432) RAS P&mu EPT (100 %) 

EE3600 P&mu 

(Metal- and woodworks, peal production 
[50.000 cbm], [4.2 million EKKJ/107) 

(EE-434) RAS Elva POUumajandustshnlka 
( 100 %) 

EE2442 Elva 

(Metal- and woodworks, peat production 
[100.000 cbm], [3.7 million EKK]/ 146) 


(EE-590) RAS Valga Kulmutusvagunite 
Depoo (100%) 

EE2500 Valga 

(Maintenance and repairs of refrigerated 
railroad cars [37 mifion EKKJ/1 199) 


(EE-282) RAS HoteU Slroomi (76%) 
EE0003 Tallinn 

(Hotel [224 beds], [3.8 million EEKJ/83) 

(EE-290) RAS HoteM Tallinn (51 %) 
EE0003 Tallinn 

(Hotel [170 beds], [2. 1 mBBon EEKJ/131) 

(EE-294) Vlitna Puhkemaja (assets) 
EE2128 VKtna 

(Vacation centre [94 beds], [0,12 miSon 
EEKyiO ) 

(EE-594) K&ga Puhkemaja (assets) 
EE2513 NOpB 

(Vacation centre [35 beds]/2) 


WHOLESALE AND RETAIL 


(EE-249) OG Tartu Hulgikaubanduse Keskus 
( 100 %) 

EE2400 Tartu 

(Wholesale of textiles, footwear, foodstuff. 
paints, metals and metal ores, construction 
materials, household goods (4 mtition EEKJ/41) 

(EE-255) RAS Esmeta (51 %) 

EE0036 Tallinn 

(Metal trading [69,4 mtition EEKJ/1 77) 

(EE-262) RAS Metsakaubandus (76 %) 

EEC 103 Maardu 

(Wholesale of paper and paper products 
[6.7 mtition EEKJ/35) 

(EE-275) RdE Narva Hulgikaubandusbaas 
EE2Q0Q Narva 

(Wholesale of textiles, footwear, construction 
materials, household goods, furniture, paper 
[0.4 mtition EEK}/5) 

(EE-433) RAS Varteko (100 %) 

E 63600 P&rnu 

(Retail and wholesale of agricultural 
machines and spare parts, construction 
materials and household goods (6, 7 mtition 
EEKJ/43) 


(EE-563) RAS Vflru Agrovarustus (100 %) 
EE2710 Vfiru 

(Retail and wholesale of agricultural 
machines and spare parts [3,3 milHon EEK ]/ 
34) 

(EE-607) Maardu Warehouses Holding, 
future HAS (51 %) 

EE0030 Tallinn 

consisting of O0 MARI: (Software consulta- 
tions, data processing, data bases, mainte- 
nance and repairs of hardware [0,9 million 
EEKJ/39): RAS KOMMER : (Wholesale and 
retail of chemicals (27.3 mBBon EEKJ/1 36); 
RAS MASINAKA UBANDUS: (Wholesale and 
retail of machinery, installations and spare 
parts (8.6 million EEKf/47); 

RAS ELEKT RIKA UBANDUS: (Wholesale 
and retail of electrical and electronic 
products [9, 1 miBion EEKJ/96) 


(EE-28) RAS Estop la st(100 %) 

EE01 07 Tallinn 

(Production of /amps (240,000 pcs], [8 mBBon 
EEKJ/277) 

(EE-1 1 1) RAS Sangla (51 %) 

EE2466 Puhja 

(Agricultural peat [10.000 tons], peat briquet 
[50,000 tons], pressed peat [10,000 tons], 
[6.7 miMon EEKJ/274) 

(EE-131) Basketball factory (assets only) 
EE01 04 Tallinn 

(Production of basketballs [ 1 million baltsJ/0) 

(EE-136) RAS Tarkon (100 %) 

EE2400 Tartu 

(Measuring devices for airplanes and 
airports, electrical measuring devices, 
components for radios and TV-sets [8.8 mil-- 
Bon EEKJ/750) 

(EE-170) RAS Walko (51 %) 

EE2500 Valga 

(Mens and womens wear, childrens clothes, 
uniforms, working clothes and sportswear. 
clothes of artificial fur, underwear [7.7 miBion 
EEKJ/675) 


BALTIC SEA Tallinn^ 


iVtoa 210km 


=T>‘ 


Kafla |Satai\ 
IKohfta 


^ Narva) 


\{?> •Tamsalu 


ESTONIA 



PSmui 


LATVIA 


(EE-31 1) RAS Eesti Maaehitusprajekt (100 %) 
EE0 105 Tallinn 

(Engineering, designing [1.6 rrtiSon EEKJ/1 05) 

(EE-493) RE Tartu Preteesltehas 
EE2400 Tartu 

(Appliances for handicapped, orthopaedical 
footwear (2,3 miBion EEKJ/51 ) 


(EE-540) Washing powder plant of 
RAS Eesti KhrBfi ' 

EE2040 Kiviofi 

(Synthetic washing powder [39.250 tons], 
[5.7 million EEKJ/72) 

(EE-996) Formalin plant of 

RAS Eesd KiviOI 

EE2040 KIvfOfi 

(Production of 37 %-formaSn 

[120,000 tons], [20.8 miBi on EEKJ/1 17) 

(EE-500) RAS Eesti N&itused (51 %) 
EE0 103 Tallinn 

( Exhibition centre (7,905 sqm oxhBtition 
area], [6.86 million EEKj/26) 


l ^ § 


For farther information (enterprise profile, data on Estonia, visit authoriz ation) 

EESTI ERASTAMISAGENTUUR 

(Estonian Privatization Agency - ERA -) 

Ravala 6 • EE01 05 Tallinn/Estonia 


l=F E f^ l T^L T,iikik ° da ° k '” ber {EE-500) RAS Eesti Naitused (51 %) 

/S? 01 25? fc - EE0 103 Tallinn 

TnZ^Zl) (Exhibition centre [7.905 sqm exhibition 

[4.B mtition tcKJ/08) areaj. [6,86 million EEKJ&6) 

Tender Conditions 

1. In acoonfcwc® w«h Ns legal mandate. 6w8 Erastanusagonmur (Estonian Privatization Anencw -PPAI ntnwfe tn 

aJoramonlonod ontonxtoas by rma« d a torvter In tfwtokwtng rnanmr " a “ 3D0 ° *> ** *» 

equvmem end mvamaryj. w •a**'®*, rental agnmarera. 

1 and i Jnyona may Md. Logal ontetea In wMdi flte State d ihe ~ ■*. _■ 

®* a 1° Esttnl 8 O' Italr enterprises own one IfiM or mare ot Utg sharecapItalorrt^wvMSa'ifalM 
3 In dockfrig among lha bids. EPAvrii lake tnta considerallan, among onrerrttnos. tea hbirvira „ 

E2L2T25 9 *! n ”? ’ J and Bw hjsIn8Sn ^ ***« 

oontraca. the suooasaftN bidder wM be rwteested to poet a bond 10 guarantee #wse , S^«.^ ilrt0, ^ la ^ UPWI agn ^ a 

1 - ■***»" - - . 
10. The privatization of tee tendered enterprises wd be carded out aoconfing to eopflcabie Emmian bm 
EPA (Estonian Mrattzalkin Agency) 

Vina Sana Or. H. B Setimkl 

General Orador Chief CansutarK 

0«*ce haum far Die EPA era Monday Brough Friday tram 9 a jo. until « p jn. (tocolMnw). 

please contact: ___ 


Tel. +372-6-305600 
+372-6-30561 9 
+372-6-305620 


Fax +372-6-305695 
+372-6-305698 
+372-6-305699 


^8 



5^31 


U* 





FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


21 


★ 

INTERNATIONAL COMPANIES AND FINANCE 


Westpac profits 


Hard times for Japan’s 
two biggest watchmakers 


Interim results to September 1994 (Ybn) 


Sales 

Recurring 

profit* 

Net 

profit 

Citizen Watch 

1994 

962 

2-465 

1.832 

1893 

1242 

6290 

4243 

Est for year 

2052 

Bl 000 

3200 

Seiko 

1994 

108.7 

-1218 

-1.010 

1993 

121.3 

-0208 

-3200 

Est for year 

2192 

- 

- 

• Mb« wmnrfmry tern met au 


Sbwra catnanyrepotts 


By Nikki Taft 
in Sydney 

Westpac yesterday began the 
Australian banks’ reporting 
season by announcing an after- 
tax. profit of A$704.7m 
(US$533. 8m) in the 12 months 
to end-September, up from 
A$39.2® file previous year and 
a AS1.56bn loss in 1991-%. 

'Hie profit figure translated 
into earnings per share of 35 
cents, on a diluted basis, com- 
pared with l cent previously. 
The final unfranked dividend 
was set at 10 cents a share, 
compared with 6 cents, making 
a total for the year of 18 cents. 

The bank attributed the sub- 
stantial improvement to higher 
net interest income, cost reduc- 
tions, improvements in the effi- 


ciency ratio and a significant 
reduction in both the bad debt 
charge and the size of its 
impaired loan portfolio. 

Net interest income For the 
year stood at A?2.76bn, com- 
pared with A$2.63bn, while 
non-interest expenses fell to 
A$2£6bn from A$2.92bn. 

The charge for bad and 
doubtful debts was almost 
halved to A$694.9m from 
ASl.29bn in 1992-93. Westpac 
also said that the ratio of net 
impaired assets to sharehold- 
ers' equity stood at 30 per cent 
by end-September, compared 
with 65 per cent a year earlier. 

The general provision for 
doubtful debts at year-end was 
A$735m (A$700m) - including a 
A$35m provision for drought- 
related problems - while spe- 


advance 

cific provisions stood at 
A$1.6lbn (A$i.98bn). 

The group's tier one capital 
ratio at year-end was 8.9 per 
cent, compared with 7.4 per 
cent previously. 

The bank said it had moved 
from “a recovery phase to one 
striving for improved perfor- 
mance and growth”. 

Its main focus in the current 


sign of “a really healthy bank". 
Although net proceeds from 
property disposals were about 
A$1.6bn last year. Westpac 
says it still has about A$lbn 
worth of property to be sold. 

The net interest margin 
Improved by 50 basis points to 
3£ per cent in the year. West- 
pac said that the reduced cost 
of funding impaired assets, as 
these fell, accounted for an 
improvement of 30 basis 
points. 

The spread on productive 
overseas assets rose by a simi- 
lar amount, as the hank cut 
back overseas operations, 
exited lower yielding corporate 
facilities, and focused on "core 
Australasian customer rela- 
tions”. 

T he cost improvement 
was seen as slightly 
sluggish in the second 
half, with branch restructuring 
taking a little longer than 
expected to implement Aver- 
age staff numbers in the sec- 
ond half were 31,681, compared 
with more than 45,000 in 1990. 
Mr Joss says that staff num- 
bers will fall again in the cur- 


sharply 

year would be on implement- 
ing a retail branch restructur- 
ing programme, further reduc- 
tion in impaired assets, new 
product development and addi- 
tional efficiencies. It said that 
it was budgeting for further 
profits growth - with some 
analysts suggesting it could 
make between A$lbn and 
Atf.lbn. 


rent year, but at a slower rate 
than in previous years. 

The ratio or non-interest 
expenses to income has 
reached 598 per cent overall, 
compared with 65.5 per cent 
previously. 

In spite of yesterday's profit 
news, the jury is still out on 
the management changes at 
Westpac. Mr Joss has brought 
in a host of new senior execu- 
tives - in many cases, from 
outside Australia - and some 
think that the objectivity 
which flows from this strategy 
compares favourably with the 
less radical approach by rivals. 

But not everyone is giving 
the high-profile chief execu- 
tive. whose US-style remunera- 
tion package and management 
approach has caused much 
local comment, all the credit 
for recent financial improve- 
ments. “That's a little bit too 
favourable towards Joss. He's 
benefiting, but it's really exter- 
nal changes i»kp the improve- 
ment in the property market 
and so on,” was one less gener- 
ous comment yesterday. 

Nikki Tait 


Aiwa ahead 
at Y4.6bn 
after six 
months 

By Mtchiyo Nakamoto 
in Tokyo 

Aiwa, the maker of audio and 
I visual equipment, yesterday 
' announced a near-doubling of 
recurring profits - before 
extraordinary items and tax - 
in spite of Japan's sluggish 
market and the impact of a 
high yen. 

N on-consolidated recurring 
profits in the six months to 
September rise to Y4.6bn 
(547.27m) from Y2.3bn a year 
ago as sales rose 35 per cent to 
Y110.2bn from Y81.7bn. 

Net profit in the period 
surged 166 per cent to Y2.ibn 
from Y797rn. Aiwa expects to 
pay a dividend of Y5, np from 
Y3 in the previous first half. 

Among Japan’s troubled 
audio-visual companies, Aiwa, 
a subsidiary of Sony, stands 
out as a success story. 

For several years the com- 
pany has raised its overseas 
manufacturing ratio to SI per 
cent - a strategy which has 
helped it overcome the adverse 
impact of the high yen. 

Aiwa's rapid response to the 
impact of a high yen has 
enabled it to raise profits in 
spite of a high overseas sales 
ratio of 78 per cent 

It has launched a series of 
innovative products, particu- 
larly small stereo units, at low 
prices which have been a suc- 
cess at home and abroad. As a 
result, its domestic sales rose 
17 per cent in spite of the con- 
tinuing sluggishness of the 
market, while overseas sales 
grew 41 per cent 

Sales of audio equipment 
rose 27 per cent on popular 
demand for its miniature com- 
ponent stereo sets. Video sales 
surged 71 per cent due to the 
strength of TVs which incorpo- 
rate a video tape recorder and 
of video recorders which offer 
simple functions. 

Aiwa is expanding its infor- 
mation eqnlpment business, 
and strong sales of PC modems 
helped the division’s sales rise 
by 75 per cent. 

The company forecasts full- 
year sales of Y229bn against 
Yl78.7bn last year and recur- 
ring profits to climb to Y9bn 
compared with Y6.7bn. Net 
profits are forecast at Y4bn, 
up from Y2.4bn. 


By William Dawkins 
in Tokyo 

Japan's watchmaking industry 
is still in the grip of hard 
times, according to the latest 
interim results from Seiko and 
Citizen Watch, the two leading 
producers. 

Both companies suffered 
from the erosion of the yen 
value of their export income, 
because of the strength of the 
Japanese currency and the 
price sensitivity of their high- 
volume products. They provide 
an example of how exporters of 
low-margin products have 
found it hard to adjust to the 
yen’s rise. 

The two groups have tried to 
diversify by making <ma) i com- 
puters. but have met fierce 
competition in the sector. 

The result was a loss for 
Seiko and a sharp decline in 
profits for Citizen at the parent 
company level for the six 
months to September. 

Seiko yesterday passed its 
interim dividend after report- 
ing a reduced interim loss of 
nearly Y1.02bn (US$10.4m). on 
sales down 10.8 per cent at 
Y108.7bn. 

The economic outlook is so 
uncertain that Seiko was 


By Gerard Baker in Tokyo 

Extensive restructuring 
enabled Omron, one of the 
largest makers of automation 
control components, to post 
sharply increased profits on 
slightly- higher turnover in the 
six months to September 30. 

Recurring profits - before 
tax and extraordinary items — 
rose by 42 per cent on the same 
period a year ago to Y3.1bn 
{$31. 85m), while sales grew by 
1.4 per cent to Yl76.2bn. After 
tax earnings increased by 362 
per cent to Yl2bn. 

The company said domestic 
demand remained very weak, 
and that the increase in turn- 
over was produced largely by 
higher exports. Competitive 
cost-cutting and strong growth 
in overseas markets had 
helped to overcome the effects 
of the strong yen. 


unable to make a forecast for 
the full year. 

It warned, however, that it 
was under pressure in the cur- 
rent half from the yen’s volatil- 
ity and a slow recovery in per- 
sonal spending. 

Seiko announced late last 
year that it would reduce costs 
substantially by ending pro- 
duction of personal computers 
for overseas markets, a factor 
in its reduced interim loss. 

Citizen fared slightly better, 
with a 61 per cent decline in 
recurring profits - before 
e xtr ao r dinary items and tax - 
to Y2.4bn. on sales down by 
22.5 per cent to Y96.2bn. 

It will pay a maintained 
interim dividend of Y4.5 per 
share, but forecasts that full 


Among the company’s main 
divisions, only electronic fund 
transfer systems saw substan- 
tially higher growth in the 
period - up 23 per cent - as 
demand for hank automation 
systems remained strong. 

The core control components 
anri syst e ms division achieved 
a grnaU gain in turnover on 
higher exports. 

Restructuring would con- 
tinue in the remainder of the 
financial year ending next 
Marrh the rampany said, and 
would include development of 
new businesses and products 
and the establishment of a 
regional h eadq uarters in China 
in an attempt to expand busi- 
ness there. 

Omron forecast annual 
recurring profits of Y&5bn, up 
by 13 per cent on last year, 
with turnover higher by 2 per 
cent at Y378bn. 


year current profits will fall by 
43 per cent to Y6bn_ 

Sales of watches, which 
account for more than half of 
Citizens' turnover, fell by 112 
per cent 

Like Seiko, the strength of 
the Japanese currency eroded 
the yen value of its export 
sales, which account for just 
over 70 per cent of total turn- 
over. 

However. Citizen’s computer 
products did even worse than 
its core watchmaking business, 
with sales down 46 per cent. 

The company also suffered 
from the cancellation of an 
order to make notebook 
computers for computer 
producers to sell under their 
own names. 


Qantas regains 
right to fly 
direct to China 

Qantas, the Australian fla g ship 
carrier in which British Air- 
ways has a 25 per cent stake, 
has won back the rights to fly 
direct to China from Australia. 
At present, the only carrier 
offering this service is Air 
China, with other carriers fly- 
ing via Hong Kong, writes 
Nikki Tait 

Qantas held the rights previ- 
ously, and operated a service 
during the 1960s. However, this 
was abandoned in 1987, on the 
grounds that it was unprofita- 
ble. The rights were then won 
by Australia Air. a new carrier 
which tried to raise the neces- 
sary capital to begin 
operations last year but was 
eventually unsuccessful. 

The International Air Ser- 
vices Commission, which allo- 
cates routes, said it expected 
Qintas to operate one Boeing 
767-300 service a week. 


Man from Wells 
Fargo hopes to set 


stage for 

M r Bob Joss, the for- 
mer Wells Fargo 
executive imported 
from the US two years ago to 
sort out the turmoil at West- 
pac, the most troubled of Aus- 
tralia’s big banks, was asked 
yesterday whether he had suc- 
ceeded in chang in g the compa- 
ny’s culture. 

"No, not by any stretch of 
the imagination.*’ he replied, 
bluntly. Mr Joss added that 
while he “feels good” about the 
start that has been made, his 
experience and observations of 
other companies suggested 
that this would be a decade- 
long process. 

Shareholders, who sat 
through Westpac’s miserable 
performance in the early 19906 
and are still seeing dividends 
at one- third of 1990 levels, may 
be getting worried. Fortu- 
nately, Westpac’s financial per- 
formance showed a significant 
improvement yesterday, even 
if internal are taking 

longer to effect 
The bottom-line profit figure 
of A$704.7m was below the 
more ambitious market fore- 
casts, causing the shares to dip 
7 cents to A$429. But analysts 
came away from yesterday’s 
afternoon’s briefing suggesting 
that this may have been harsh . 
The shortfall on expectations, 
they said, could be explained 


growth 

by unforeseen items: the provi- 
sion for drought-related loan 
problems, and a A$66.3m 
charge before tax related to the 
pre-payment of superannuation 
expenses, which compared 
with a A$296.lm surplus in the 
previous year. In future, the 
bank proposes to adopt UK 
accounting practice - at least, 
until an appropriate Australian 
standard is agreed - which 
should remove this volatility. 

The analysts' main focus was 
on three issues: Westpac’s 
problem loan experience, its 
net interest margin, and its 
progress in achieving cost / 
efficiency g 

On the first, the picture 
looked a lot brighter than in 
previous years, with total 
impaired assets falling to 
A$3.8bn by end-September 
from A$8bn in 1992 and 
A$6.6bn in 1993. That meant 
that the ratio of impaired 
assets to total loans and accep- 
tances stood at about 5 per 
cent, half the level two years 
ago. “The key is problem 
assets.” said one analyst at 
ANZ McCaughan. “and West- 
pac is getting itself into shape." 

However. Mr Joss is the first 
to admit that more needs to be 
done. The ratio, he commented 
yesterday, “has got to get 
lower”, and he indicated alto 
2 per cent target range as a 



Bob Joss: “feels good” about the start that has been made 


Restructuring helps 
Omron to rise 42% 


Investing in 
Central and 
Eastern Europe 
and the CIS is a 
whole new 
ballgame. 
And Creditanstalt 
International 
Advisers is the 
leading player. 

As the growth of the economies 
in Central and Eastern Europe and 
the Commonwealth of Independent 
States (CIS) gathers speed, investment 
opportunities in the region are emerging 
at an ever-increasing rale. With its 
extensive network of local offices, 
Creditanstalt international Advisers 
is uniquely qualified to assist you in 
taking advantage of both strategic 
and financial investment opportunities 
in this dynamic region. 




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FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


INTERNATIONAL CAPITAL MARKETS 


Treasuries edge higher in light trading 


By Lisa Bransten in New York 
and Conner Mtddehnann 
in London 

US Treasury prices edged 
higher in light trading yester- 
day morning as traders 
awaited news from US elec- 
tions and a producer price 
report due on Thursday. 

By midday, the benchmark 
30-year government bond was 
up £ at 92g, yielding 8.141 per 
cent At the short end the two- 
year note was up & at 9914, to 
yield 7.028 per cent 

Also overshadowing markets 
was the increase in interest 
rates that many expect from 
□ext Tuesday's meeting of the 
Federal Reserve's open market 
committee. 

Traders positioned them- 
selves ahead of the afternoon 
sale of $12bn in three-year 


notes, and the modest firming 
of prices towards the lpm auc- 
tion suggested that they expec- 
ted solid demand for the issue. 

Most analysts expect a 0.1 
per cent rise in the producer 
price index for October. A big- 
ger increase could hurt bonds 
by triggering Gears of a large or 
early interest rate increase. 

GOVERNMENT 
BONDS 

The market kept a watch on 
the elections but with little 
consensus on their impact on 
bonds. 

Mr Robert Brusca, chief 
economist at Nikko Securities 
In New York, said the markets 
could be buoyed if Republicans 
matcft significant gains in both 
bouses of the legislature. 


■ European government bonds 
ended another calm session 
slightly firmer, supported by 
buoyant German bunds and 
firmer US Treasuries. 

However, volume has dwin- 
dled sharply and traders said 
investor flows were few and far 
between. “A lot of people have 
in effect shut their books for 
the year," said one analyst 

■ German bunds recouped 
early losses to end nearly Vi 
point higher, underpinned by 
firm demand for the first 
tranche of the government's 
latest 10-year issue. 

Although demand for the 
paper was said to be subdued, 
dealers reported keen interest 
from several banks, some of 
which were buying bonds to 
cover short positions they had 
established prior to the sale. 


The Bundesbank allotted 
DMSbn of the 7.5 per cent 
paper to the federal bond con- 
sortium at 99.7-5, yielding 7.54 
per cent. A further DM3bn to 
DM4bn of the bonds are expec- 
ted to be sold at today’s auc- 
tion; together with the Bundes- 
bank's market tending 
allotment, the issue is expected 
to total DMlObn. 

Earlier in the day, bunds 
were depressed by news of a 
larger than expected drop in 
the October jobless rate, but 
shrugged off a small upward 
revision in the September M3 
money supply growth rate. The 
December bund future on DTB 
closed at 89.41, up 0.41. 

■ UK gilts rose on the back of 
firmer European and US bands, 
with little in the way of news 
or capital flows to drive prices. 


"Until the FOMC- meeting 
Ion November 15), it’s likely to 
remain pretty trendless,'' said 
one dealer. After that, market 
participants will turn their 
attention to the Budget on 
November 29. H We often have a 
slight bull run up to the Bud- 
get because everyone hopes 
they'll do the right thing,” he 
added. 

The December long gilt 
futures contract rose by $ 
to 101£- 

■ Swedish bonds clawed back 
some of their recent sharp 
losses, with the yield on the 
ll-year benchmark fallin g by 8 
basis points to U.57 per cent 
However, the market is likely 
to remain jittery and volatile 
ahead of Sunday's referendum 
on European Union member- 
ship. 


Strong demand for 
£200m deal from EIB 


By Graham Bowtey 

The European Investment 
Bank yesterday launched a 
£200m issue of six-year fixed- 
rate bonds priced to yield 15 
basis points over UK gilts. 

Lead managers HSBC Mar- 
kets and Warburg Securities 
were surprised by the strength 
of demand from Asia Pacific 

INTERNATIONAL 

BONDS 

investors. Interest also came 
from European central hanka 
and European retail and insti- 
tutional investors, they said. 

The issue brings the total 
raised by the EIB this year 
directly In the sterling market 
to £900m_ The proceeds were 
not swapped out of sterling. 

The World Bank's Y200bn 10- 
year global offer, which was 
launched on Tuesday, was 
priced yesterday at 10 basis 


points over the Japanese gov- 
ernment bond No 172. 

In spite of early concern that 
the issue would foil to attract 
interest from investors outside 
Japan, much of the offering 
was successfully placed yester- 
day with investors In Europe 
and the US. lead managers 
Merrill Lynch, Nikko and 
Nomura reported. 

About 30 per cent of the 
bonds were placed in Europe, 
50 par cent in Japan, 10 per 
cent in the rest of Asia and 10 
per cent in the US, they said. 

A syndicate official at 
Nomura said the bank had sold 
Y25bn of its Y40bn ticket to 
European investors. Sixty per 
cent of this trade was 
accounted for by Investors 
switching out of existing simi- 
lar 10-year yen-denominated 
bonds, while the remaining 40 
per cent were outright sales, 
he said. 

Only about Y6bn of bonds 
had been, returned to the lead 


NEW INTERNATIONAL BOND ISSUES 

1 

Amount 

Coupon 

Price 

Maturity 

Foee 

Spread Book rimer 

Bommr 

US DOLLARS 

m. 

% 



% 

bp 

ESI SA_t 

250 

w 

99.68R 

JUL19S9 

050R 

CS First Boston 

YEN 

Noidc kwestment Bank 

lObn 

5.70 

100 

DecJ2004 

Untosc 

Bk. of Tokyo Cap. Mkta. 

STSTUNO*W- 

European bmestment Bank 

200 

8.75 

96.833R 

Dec 5000 

0^75R 

+■15 ^W-OO) HSBC Mkta/ OG-Wafaug 

CANADIAN DOLLARS 

Bell Canada 

150 

9.375 

100076R 

Dec. 1999 

0.30H 

+38 (7M%-99) Wood Gmdy 

SNCF 

100 

9^5 

99.612R 

Dec.2001 

0.30 R 

+15 (b) BZW 

AUSTRALIAN DOLLARS 
KFW trtL Finance 

160 

1050 

101.78 

Dec. 1999 

2JJ0 

+0 (i2%-99) Deutsche Bank AG 

Coca-Cola Amaffl 

75 

1075 

101.775 

Dec. 1999 

ZOO 

Hamtxos Bonk 

GUILDERS 

Energta Bohoer Nadretand 

260 

7.375 

eae2sa 

DOC.1999 

02SR 

ABN Anso 

DSL 

200 

7.75 

99.40R 

D6O2002 

0.3 OR 

+25 (3K96-02) Rabobank 

SWISS FRANCS 

OKA 

100 

5.625 

102 JO 

Nov. 1998 

- 

SBC 

Final terms and nnvcaOabte untess stated. The yfokf spread (over retovant government bond) at buncri is supplied by the lead 
manager. tFtaaUnu rate note, ft 6xad re-totor prico: fees ora shown at the re-oflor leveL a) Pays 3 month Libor +I0bp. u Over 

toterpoiated yiekL 









Creditanstalt Investment 
Bank rises in the east 


managers, an official at Nikko 
said. The proceeds from the 
offer, which is likely to be the 
World Bank's last yen issue 
this year, were not swapped 
out of yen, a source close to 
the deal said. 

In the Canadian dollar sec- 
tor, Bell Canada, the country’s 
largest telecommunication 
company, launched a C$150m 


issue of five-year bonds with a 
spread of 36 basis points over 
Canadian government bonds. 

Joint lead manager Wood 
Gundy said demand for Cana- 
dian dollar bonds with a five- 
year maturity was strong and 
there was a good response to 
the issue, mainly from retail 
investors in Europe. 

The proceeds from the offer, 


the first time Bell Canada has 
tapped the euromarkets since 
July 1993, were not swapped, a 
source said. 

In the Australian dollar sec- 
tor. Coca-Cola Amatl] launched 
a A$75m issue of five-year 
bonds which found demand 
among retail investors in 
Europe and Asia Pacific, lead 
manager Hambros Bank said. 


T here has been consider- 
able sympathy in Euro- 
pean financial circles 
for the plight of Creditanstalt 
Austria’s second largest 
bank has been largely para- 
lysed for the past three years 
because the country's govern- 
ment has repeatedly foiled to 
cany through its promise to 
complete its privatisation. 

However, the one area where 
CA has nevertheless been able 
to make a significant and suc- 
cessful strategic thrust during 
this uncertain period Is in east- 
ern Europe. 

The bank itself has opened 
branches or commercial bank- 
ing subsidiaries in Prague, 
Budapest, Warsaw and Lju- 
bljana. 

Meanwhile, a fledgling sub- 
sidiary. Creditanstalt Invest- 
ment Bank, has pushed its way 
to the top of the league tables 
alongside the large US and 
British investment banks in 
many eastern European invest- 
ment banking markets. 

Indeed, CAIB ranks well 
ahead of its rivals in a listing 
of 1993 privatisation assign- 
ments in eastern Europe by the 
newsletter Privatisation Inter- 
national, with 30 jobs com- 
pared with only 20 for Samuel 
Montagu, its nearest competi- 
tor. 

That this has happened is all 
a bit of an accident CA Invest- 
ment Bank was created in 1989 
to Focus on Austrian clients. At 
the tune, Austria still operated 
with a house bank tradition 
und er which it was impossible 
for a bank to charge its large 
corporate clients for advisory 
services. 

"We wanted to get them used 
to paying for M&A [merger and 
acquisition] services,” Mr Wolf- 
gang Lafite, CAIB managing 
director, says. The bank was 
capitalised at a mere SchlOm 
and sent on its way. 

However, after the Iron Cur- 
tain lifted, it became apparent 


that there was a great need for 
corporate finance services in 
many of the eastern European 
countries and a wide open field 
for those who could provide 
them. „ . , 

“We went systematically into 
all the countries where we 
thought Austria and Creditan- 
stalt could play a role,” Mr Laf- 
ite says. In general, that meant 
all the former countries of the 
Austro-Hungarian empire 
where ties of language and 
business custom could be 
levered. 


Austria’s second 
largest bank has 
made a successful 
strategic thrust, 
says Ian Rodger 


Today, CAIB has offices in 
Budapest, Prague, Warsaw, 
Bratislava and Sofia and has 
just opened tn Bucharest. Its 
range of activities has expan- 
ded from corporate finance to 
securities business and private 
hanking. 

CAIB’8 first major assign- 
ment in 1989 was a private 
placement for Graboplast, the 
Hungarian plastics group 
which went public earlier this 
year. The h ank has gone on to 
become the largest issuing 
house and broker on the vola- 
tile Budapest market 

Its other coup was to plunge 
into the radical mass privatisa- 
tion programme in what was 
then Czechoslovakia in znid- 
1992. It was the only foreign 
bank to set up a voucher 
investment fond to help Czech 
citizens channel their stakes in 
the first round of privatisation 
of some L500 companies, and 
its fund is still the sixth largest 
In the Czech Republic. 


There is, of course, a danger 
In this. As Mr Lafite says: "We 
have all our eggs in this bas- 
ket If the dock is ever turned 
back ...” 


I WORLD BOND PRICES 






BENCHMARK GOVERNMENT BONDS 

Rod Day’s Week Month 

Coupon Data Price change Yield ago ago 

Italy 

■ NOTIONAL ITALIAN GOVT. BOND (HTP) FUTURES 
(UB^ Uni 200m IOOOb to 10096 

FT-ACTU ARIES FIXED INTEREST INDICES 

Price indees Tue Day’s Mon Accrued 

UK GBtt Nov 8 change 96 Nov 7 interest 

xd adj. 

ytd 

— Low coupon yWd— - Median coupon ylaid - 
Nova Nov 7 Yr. ago Nov 8 Nov 7 YY. ago 

— High coupon yMd — 
New 8 Nov 7 Yr. ago 


Australia 

9000 

08/04 

89.7200 

_ 

ian 

1023 

10.10 

Belgium 

7 . 750 

1QAJ4 

B&5600 

+0270 

8.42 

843 

8.44 

Canada* 

8.500 

OQAM 

82.9000 

+0.100 

923 

8.17 

880 

Dermaric 

7.000 

124)4 

86^200 

-0.130 

9.04 

829 

825 

France BTAN 

snoo 

05/98 

101.125D 

-a 130 

728 

725 

7.48 

OAT 

5.500 

04/04 

822400 

+0.100 

828 

828 

8.10 

Germany Trau 

7.600 

0004 

992200 

+0230 

721 

720 

728 

Italy 

a 500 

08/04 

812300 

+1.020 

1 1.79f 

11.73 

1127 

Japan No 119 

4800 

08/99 

102.7370 

- 

4.10 

426 

4.14 

Japan No 164 

4.100 

12/03 

S&8360 

-0.090 

4.78 

4.73 

4.75 

Netherlands 

7250 

1QU4 

97.2400 

+0.160 

7.65 

720 

722 

Spate 

84100 

05/04 

602000 

+0.050 

1128 

1125 

11.08 

UK cats 

B.000 

08/99 

90-02 

+202 

828 

825 

821 


8.750 

11/04 

87-04 

+8/32 

8.69 

824 

826 


a 000 

1008 

102-23 

+9/32 

826 

821 

B27 

US Treasury ' 

7.250 

08AM 

94-28 

+4/32 

821 

729 

7.81 


7.500 

11/24 

92-25 

+8/32 

8.15 

825 

723 

ECU French Govt) 

84100 

(MAM 

83.1600 

-OjOIO 

828 

BM 

H!^| 


Dec 

Mar 


Open 

toais 

99.20 


Seaprioe Change 
100-35 +0.17 

99.22 +0.12 


Htfi 

100.47 

99.30 


Low 

100.05 

98.09 


Em. vol Open bit. 
22010 52832 

878 8282 


■ ITALIAN OOVT. BOND jBTP) FUTURES OPTIONS (UFFE) Ura200m IQOtha of 100% 
CAULS PUTS • 


1 

Up to 5 years (24) 

11920 

-one 

119-38 

120 

9.83 5 yrs 

8.66 

822 

8.12 

829 

828 

628 

828 

8.63 

620 

2 

5-15 yeas (23) 

13826 

+021 

13824 

1.48 

11.49 15 yis 

B28 

828 

726 

8.72 

B.T2 

7.18 

8.95 

828 

728 

3 

Over is years (8) 

154.78 

+022 

154.73 

2.37 

1027 20 yrs 

824 

823 

7.15 

8.72 

8.72 

723 

8.88 

826 

7.40 

4 

Irredeemables (6) 

174.12 

-0.42 

17425 

024 

13.47 teed.t 

821 

828 

727 







5 

All stocks (61) 

13521 

-021 

13528 

1.67 

1023 

















Inflation G% 

— 

Mflrton 10%' 

— 



Strike 

Price 

10000 

iooso 

10100 


bidex-finloed 


Nov 8 Nov 7 Yr. ego 


Nov 8 Nov 7 Vr. ego 


Dec 

1.01 

0.74 

0£1 


Mo 

2.08 

1.87 

1.07 


Dee 

0.66 

oes 

1.16 


Eh. ml tout, c*a mi Pirn aaa pmhows day's open H. Crib 28390 Pun 31427 


Mar 

8 Up to 5 years G?) 

185,88 

+0.03 

185.82 

021 

527 

Up to 5 yre 

427 

4.07 

222 

228 

2.94 

1.53 

2.88 

7 Over 5 years(ll) 

17324 

+0.04 

17327 

025 

428 

Over 5 yrs 

ass 

328 

3.14 

329 

329 

2.98 

3.15 

3.45 

8 AO stocks (13) 

173.78 

+024 

173.69 

0.91 

4.41 

— Byaar ylald — 

— 

-IB yaar yield- 


— 25 year yield 


Debentures and Loans 


Nov 8 Nov 7 Yh ago Nov 8 Nov 7 Vr. ago Nov 8 Nov 7 Vr. ago 


9 OebS & Loans (77) 12&88 +025 12888 2J36 

Avaraga gram redemption yksMs as shown above Coupon Banda: Low: OK-744H; 


9.67 9.74 9.76 7.71 BJM 9.72 

Module afe-IOWfc Htfc 11* and ovar. t BaryWd ycd Year to data. 


8.15 946 


9.67 


841 


London dosing. Haw Yortt irid-dqr 


1 Gross gnetodtag re U rtidtono on ac 124 pa cent Pre to ria by narmtodanfa) 


Ytakte Local mukat rtandrad. 


Spain 

■ NOTIONAL SPANISH BOND FUTURES (MEFF) 


Prices US, UK In 32nda, otoaea to dacknai 

US INTEREST RATES 


Sana.- MU5 Marrrttonto 


Unchtmw 


fUAnti at tatamoUaa- 


One moats „ 
7% Itoomonii — 
Ttow monOu 
Sh BtMh _ 
0X108 


Si 


Treasury BHs and Ban} YMda 

4J8 lYnifBor 

- — — 545 Tina ywr 

5.40 Rue yea 

__ — - 543 IQ-jta 

038 SOyttr 


748 

743 

7J3 

843 

818 


Dec 


UK 


Opon 

88.10 


Sett price Change 
8819 +0.08 


High 

8819 


Low 

8547 


EsL vat Open tot 
25,949 77.818 


FT FIXED INTEREST INDICES 

Nov 8 Nov 7 Nov 4 Nov 3 Nov2 Vrago Hah" 


Low* 


GILT EDGED ACTIVITY INDICES 

Nov 7 Nov 4 Nov 3 


Nov 2 


Nov 1 


BOND FUTURES AND OPTIONS 
France 

■ NOTIOHAL FRENCH BOND FUTURES (MATT) 


■ NOmONAL UK Gfl-T FUTURES (UFFS' CS0.000 32nda of 100* 

Open Sett price Change High Low Eat vol Open bit 
Dec 100-24 101-00 +0-10 101-04 100-18 28860 106369 

Mar 100-08 +0-10 0 62 


Govt Sees. {UK) 9048 91.04 91.69 91.46 9089 10281 107.04 8864 Qflt Edged ba r gfl h w 786 882 783 87.3 7B.6 

Fixed Intermit 107.69 10801 107.84 107.62 107.58 123.12 13347 10850 6-dey average 814 81.7 780 80.0 808 

* lor 1994. Qomnwnart 3ecuWaa W^i ainoe coratotoaon : 127.40 (BH7J5). low 46.1B {171/751. ftod Interest ISflti atoee comptoUon: 13347 (2171AM) , low OOJP pTVTS) . Baak 10ft Oovu nn ui t Hanrtfaa 16/lto 
28 end Find tamest 1828. 3 E actlvfey tadcos rebesed 1974. 


FT/ISMA INTERNATIONAL BOND SERVICE 


■ LONG CULT FUTURES OPTIONS (UFFE) E50400 84ttw to 100% 


Uated are Ite latest Iriar na Bon to bonda far vrtYcft there ia an adaiprta secondary martcet Luteal pitcaa at 700 pm w Nov om b a r 8 
Issued bm Ofito Ct*. YWd baud BU Ot»a Chg. VI 


Nsusd BM Oder Chg. YWd 



Open 

Sett price 

Change 

High 

Low 

Eat voL 

Open InL 

Strike 

Dec 

110-02 

11028 

-0.12 

11024 

109.78 

128,151 

130269 

Price 

Mar 

10920 

10824 

-0.12 

10928 

10828 

1281 

12.479 

K>1 

Jun 

10828 

108.40 

-0.14 

108.44 

108.12 

784 

2204 

102 
103 
EsL vol 


Dec 

0-60 

044 

0-10 


CALLS 


PUTS 


Mar 

1-47 

1-19 

003 


Dec 

0-60 

1- 24 

2 - 10 


Mar 

2- 31 

3- 03 
3-47 


Eat ML taw, am 3987 PUS 4249. Previous day's open toL. Crts 77335 Pioa 477B4 


■ LONG TE31M FRENCH BOND OPTIONS (MAHF) 


Strike 







Dec 

" CALLS “ 
Mar 

Jim 

Nov 

— pure 
Dae 

Mar 

Price 

110 

0.73 

1/44 

- 

023 

2.19 

_ 

111 

021 

121 

- 

121 

- 

- 

112 

0.12 

029 

• 

222 

. 

_ 

113 

024 

0.44 

027 

- 

. 

- 

114 

022 

028 

- 

- 

- 

- 


Ecu 

■ ECU BOND FUTURES (MATtF) 


IL8 DOLLAR SIHAIGH18 

Abbey NtoTtesuy ft 03 1000 87b 

Atata Bnrtnea 7% U 1000 0ft 

Austria ft 00 400 101% 

Be*NedQmerttfl79B 1000 85* 

Bar* to Tokyo 8% 96 100 101 

Belgium 03 1000 81% 

BFCE7%97 160 W0% 

EMU) Goa 0 21 , 

Gouda 9 90. 


EsL voL tot*. Cato 21681 Puts 21JB72 . Previous day's open tau Cato 200013 Pun 2S3A00. 

Germany 


Dec 


US 


Open Sett price Change 
8002 8008 -012 


Htfi 

8020 


Low 

7888 


EsL vd. Open InL 
8128 8121 


Cheung Kcng Rn ft 88 . 

Ota 02 04 

Canto EuopeS 96 — 
Cretfc Fender ft 89 — 
Downs* 5% 98 


1900 

1000 102*4 

art 

83*4 


900 


■ US TREASURY BOND FUTURES (CH7) ?1 00.000 32nda of 100% 


■ NOTIONAL GERMAN BUM) FUTURBS (UFFE)* DM250200 lOOthaoMOON 


Open 

Latest 

Change 

Hgh 

Low 

Eat vuL 

Open InL 

Open 

Settpricsa 

Change 

High 

Low Eat vol Open bit 

Doc 

88-10 

96-11 

+0-02 

98-15 

9807 

206253 

396211 

Dec 8922 

8925 

+021 

89-44 

8821 134883 188734 

Mar 

85-23 

95-23 

+0-02 

95-27 

95-20 

17217 

31.896 

Mar 88.10 

8828 

+028 

88.44 

86.00 8740 18201 

Jun 

0S-O3 

83-04 

- 

95-04 

95-03 

81 

11219 


EaatJapsiBrtreyftlM . 

BSC 6% 96 

EEC 81+ 99 

BB 7% 98 

SB 6V 67. 


uno 
ioo no* 

MB 
8** 
87* 


.900 


■ BWO FUTURES OPTIONS (UFFE) DMZ5Q000 pokes of 100* 


Strike 

Price 

Doc 

■Jot 

CALLS — 
Fob 

Mar 

Dec 

Jan 

PUTS 

Feb 

Mar 

8900 

0.78 

025 

0.92 

1.06 

043 

127 

124 

1.70 

8980 

021 

047 

072 

027 

096 

129 

1.84 

129 

9000 

0.31 

023 

055 

069 

096 

125 

2.17 

221 


esL voL tot*. Cato 12539 Puts 12344. Previous day's men tat. Cato 2B3830 PUs 22131B 


UK GILTS PRICES 


_YkM — 1994 _ 

M Had MctE+ar- Lea 


Japan 

■ NOTIONAL LONG TERM JAPANESE GOVT. BOND FUTURES 

(UFFg YIQOm IQOtha o( 100% 

Open Ctoae Change Hgh Low EsL vol Open be. 
Dec 107.67 107.74 107.64 2911 0 

Mm 10897 107.03 10894 1193 0 

* HR cons atto Mad on APT. Ml Opon ta m est Bgs. ire tor previous day. 


— Trig — — 1994 _ 

k* Bad PifcaE +W- (pa 


Seeds Fence 096. 
BMbnafttt. 
Ex-tnBar* to»i802 . 
Expat Dev Cap ft 96 , 
Feds* Nafl Mat 740 0> . 
FWmJ0%87. 

FM Motor Gtdi 6*4 99 . 
Gen Sac Capital 9% 96 . 
GMACftn 
hdE»cJapanRn7% 67 . 
ktor Ana Dev 7*| I 

to* 6% 23. 


. 1000 
-600 
_ 163 101 >4 

- 100 101*4 

- 250 tom# 

1000 104 

- 200 H8 


in 102% 


erh 

96% 

101 % 

89 

101 % 

61% 

100 % 

9% 

102*2 

88% 

835a 

101 % 

105*4 

*% 

87* 

101 * 

101 % 

101 

104% 

103% 

1027* 

88*4 

94% 

97% 

35*7 

103»| 

102*4 

100V 

ioo* 

7ft 

1034a 

64 

10ft 

9ft 


Skate* (Lira qi to Fke Yen) 

Treaetyc 1994ft 868 

13*1905 1184 

En*3pc&» 1990-06 _ 304 

iMtpcioBa. oh# 

nan 12%pc 1995ft_ 12JM 

1+pc 1998 1207 

lftpc19SBft 13.72 

EadllSUpC 1996ft 12JZ3 

CB—toMI ItoK 1886 901 

Trass Cm 7pc 1997ft 7.17 

ftaaa 13>spc 1997ft — 1200 

Each I04pe 1997 9199 

TreasAkpc 1997ft &M 

todl lGpc 1997 1290 

94lPC 1999 842 

rises 7*+pc 1999ft 751 

Tiwn 6Vpc 1996-68ft— 7.11 

I4pc 1 906-1 1258 

Tran iftpc '96ft 1284 

&Kfl12tc1996 1271 

Ttaaaftpc 1009ft 023 

End iftpe 1098 1056 

Urn I0*apc 1969 954 

TraMftK 1998ft 657 


Rve to Fftoau Ikare 


-JOOjW 
5.72 101A 

173 am 

144 1D2S 
17110^0 
6 JH 19712 
756 111*1 
733l0fta> 
7.78 KMAsd 
754 6ft 
754 MOO 
756 106A 
851 101k 
831 117* 
245 VO£ 
8.42 9BU 
244 94U 

aaniftsd 

350 I22H 
651 111*4X1 
851 102U 

859 112k 
2B510QN 
BJB 90 


— 103H 

107* 

90S 

1174 

-it 121il 
-A 1T7Q 

-A n« 
-*• 10ft 
-i 121H 

t 

-k 

t 
i 

3 


ftnfcgSfec 1899-4— 
100* Camw4hn9*z|K20O4— 
1 2*i rises ft pc 2004ft 

,S5 B *s»C 2006 

102tl Qm 9k pc 2005. 


JgJ rinel24pc 2003-6 

S TkOC 2000 ft 

10 g flpc2002-6ft 

ios a nawillltpe 2003-7 

Oft rime ftpc 2007# 

MO* 13 * 1 PC 2004-0 

10ft Tan ope 2008 ft— 

•S rim ape am. 


4J8 

209 

7.76 

853 

207 

1239 

352 

B57 

1022 

852 

1060 

277 

247 


7.44 73* 

650 104U 
260 87 A«l 
859 98U 

876 104R 
20812QBN 
857 S3* 

274 

208 113 

267 96* 

BJB 127k 
85S 102k 
854 94U 


-4 66* 
+A T2SA 
+* ink 
— 100a 

*rh 12ft 

+4 143/. 
♦4 112U 
+4 111k 
44 1364 
+4 1194 
+4 1314 
+4 12ft 
-A 1154 


' '122 Over man Vtare 

1104 rianetNpeano 

imQ canropcLizouft — 

1110 rion9pE2012ft 

1094 Tran ftpc B»8-12#_ 

8Mi T)na6pc2D13ft 

7kpc2012-1E# 

rian ftpc 201 7ft 

Bto Itoe 2013-17 


7.79 

051 SQAto 



98* 

874 

S.63 

103 


12BQ 

8-72 

681 

103% 

+A 

127% 

7.49 

8J8 

na 

-A 

93% 

&4S 

8L5B 

M h 


117B 

9.42 

MB 

92b 

■A 

114% 

8S9 

LB4 

101U 


128% 

92B 

arai29%to 

+A 

15Bk 


CtaamMl lOkflc 1999- 

989 

BJIIOkU 

TnaftB M 1999 

- 

- 

BBiM 

ape 2000 

025 

662 

96» 

Cow Ope 2009# 

9S9 

687 

ID1A 

TMHiapeano 

lim 

U4 

tieS 

tope 2001 

a+a 

082 

10SJJ 

TpcKXri # 

7 JO 

673 

uou 

9%pc200Z 

831 

698 

vm 

#C 2003# 

640 

678 95jM 

1 toe 2003 

9l3S 

683 

106U 

Tim 11 ^po 2001-1 

1029 

9.09 

HIH 


121JJ 10ft 

1184 Aft 
I30B 11BU 

IM4 ’S '*krlAn3kPcft 

isoS i«s aasai* — 

113)3 9ft Tran See ■68 Nt 

1274 10ft Ceank2*9pc 

129)5 1090 rina.2kpc 


272 

858 

HIM 

270 

250 

284 


- aft 

- 400# 

- B7B 

- 3ft 

- 294 

- 2BU 


Eft 

-4 B4J3 
-tt 71 
44k 

-4 3ft 
-k 37k 



M 

_(S75) 256 

4kpC96# — |135fl 256 

Zkpcin (7831 356 

2kpcD3 (7851 359 

ikpcW# — (1355) 357 

2PCW PSaLBJ 281 

2‘jpc-os (765) 

2kpcll (74J9 

2kpc*T3 (922) 

ZkpcIS 

2kpCSD 


and (g 5W. (b) Flgun to 
Indexing Qe8 months prior ts 
rafiect retjastag to RPI to 10 
(actor 3545. RPI lor Fkfanraiy 
1994: 1455. 


894 

Man Oc* 10k pc 2on_ 
12M BYneilkpcZOI!—. 
YatandCasSkpc'iC 
9pGCto1B92. 

■toe *97-2 — 

QBetna15pc2011. 

— ^naScSiad. — 

iSf Lccapa-som. 

MmMMT11kpc2007- 

6ft ttoLWtr.SpCB- 

33U IMdltofllk ft 1*2021. 
284 4kpcL20M 


27)3 UU lire SUn Wipe D09 1259 


204 10ft 
259 118k 

- 98k 

- 180 

- 108k 
293 14ft 

- 129 

- 3ft 

- 3»k *h 

958 113k +>lk 
232 68 +k 

454 132 +k 

452 12ft +lk 

- 13ft +1 



Urited Ktagdon 7% 97 

— 5500 

an 

Vtafawagen tod Rn 7 03 — 

— 1000 

an 

World Bank 0 15 

— 2000 

615 

World Bark 5% 03 

agon 

an 

WtoWBankftOO 

— 1250 

754 



680 

9MSS RMNC SIRNOHIB 


7.66 

Adoi Dbv Baric 6 10 

WO 

017 

Atotartkao 

_ 1000 

7JB 

CtuxS B+cpa4% 98 

250 

au 

nrarerkft 99 

— WOO 

044 

FHftru 

300 

7.41 

Bsc da Banco 7%(U 

— 100 

an 

RntandftW 

— 300 

7J3 

Hyundai Motor Hn ft 97 WO 

884 

b*nd7%0D 

— 100 

70S 

Kabx8%01 

240 

73B 

Ototaftn 

— 400 

730 

Quebec Hydro 5 n 

100 

7JI 

«cfth4 __ _ 

460 

722 

World Bn* S 03 

— ISO 

7.19 

Wcrid Boric 7 01 

800 

038 



727 

YHI STOWQHTS 


049 

Bdgkxn5 99 

- 73000 

726 

mnSgm 

. 100000 

018 

FHandftfle 

.30000 

723 

herAnwlMv7%oo 

.30000 

725 



007 

Japan Dor Bk 5 99 

100000 

728 

Japan Dor BkftOI 

120000 

046 

Nppon Td Tal 6% 90 5000) 

030 


160000 

720 

rntfal m . 

. soooa 

929 


125000 

728 

5wadan4% 68 

150000 

081 

WtoU Baric ft 02 

250000 

751 



071 

01HSI Sm/UGHIS 


630 

GerihanceLpift 96 LB 

_ 1000 

728 

MB Dari Mustt ft 03 LB _ 3000 

074 

Wcrid Barit B 98 LFr 

-1000 

638 

AW /ton 6% 00 H 

_ tan 

627 

Birtc Ned Gormaitan 7 03 R , 

- 1500 

757 

AfcartaPravtoM 10 s , 90 C* SCO 

665 

EMI Canada 10% 99 CS 

_ ISO 

602 

EMfah CriLirtb 10 98 Cl 500 

612 

miftOBCS 

— in 

723 

Beo da Ban 9% SB CS 

— 276 

827 

Gen 80c Cepto TO 96 CS 

— 300 

727 

NW It AilO 01 CS 

— 400 

064 

Nippon Td Td 10% 09 CS 200 

740 

Onarto803CS 

— 1900 

7.78 

Crterio Hydro 10% 99 CS 

— 500 

OX 

Osar KaMaric 10% 99 CS 

_ 190 

am 

QuebacBov 1ft 98 CS 

— 200 

7.« 

Brigtam ft 90 Ecu . 

- 1250 


Conct Eucpa 9 01 Ecu 1100 


QeftLyanrete 9 90 Ecu 

— 125 

026 

SB to 97 Ecu 

_ 1125 

724 

Fare cM SUt 10k 98 Eai — 

_ 500 

095 

■sly 10% 00 Ecu 

_ 1000 

728 

SpOTS 96 Ecu 

.1000 

720 

IMad kkudan ft Of Ecu __ 

-2750 

738 

ABC 10 99 « 

— 100 

726 

Carrin Bk Airtrala 13% 90 AS 

-100 

728 

EB7%99AS 

-950 

7.19 

NSWTreeauyZuo020tt — 1000 

018 

R6 IBank 7% 03 AS 

-125 

077 

Stela Bk NSW 9 02 AS 

-300 

am 

SDi Auat Govt Fto 9 02 AS 160 


101 

-% 

064 

AtfeerNUToaMyamE 

woo 

84 


60S 

Afisioa Idea 11% S7E — 

100 

20% 

ft 

760 

Bra* land 8% 23 E 

160 

88 

ft 

7J0 

Denrnarfc6%9B£ 

aoo 

112% 

ft 

050 

BB10 97E 

837 




HaMnl0%97£ 

100 




Hanoi 10% WE 

500 

100 

ft 

on 

HSBC Hcktega 1U99 02 £ 

193 

Bft 


563 

My 10k 14 E 

400 

90% 

ft 

6.12 

Japan Oav Be 7 DOE 

am 

98% 

ft 

528 

Laid Sacs 9k 07E 

— am 

10ft 

ft 

an 

Ortarto 11% 01 E 

— 100 


ft 

029 

Pp—goift (BE 

290 

107% 


089 

Seven Trert 11%90E 150 

10ft 


061 

Tokyo 0BC Paw 11 01 E 160 



018 

Abbay Maknei O 99 NZS 

WO 

10«k 


068 

1CNZ fto B% 02 NZS 

75 

100% 

ft 

017 

CtedlWcalOOIFB 

7000 

85% 


073 

Bac da Franca 8% 22 FFr son 

we 


697 

WCF6%97H=/ 

4000 

80 

ft 

506 




ft 

096 

RXM3WQ RATE NOTES 






kMuad 

102% 


4£B 

Atony Nafl Treasty-! 1 , 99. 

10m 

10ft 


403 

Banco Bare 090 

— 2m 


01% 

61% 


965 

105% 

MB 

-% 

an 

87% 

aft 

ft 

1044 

aft 

93% 


007 

103% 

Wft 

-% 

637 

103% 

10ft 


M 

10ft 

103% 


006 

we 

109% 

ft 

995 

105% 

100% 

ft 

900 

01% 

91% 


&0O 

97% 

97% 

ft 

900 

W7% 

107% 


949 

06% 

9ft 

ft 

9 35 

we 

W6% 


920 

W7% 

107% 

-% 

909 

68 

88% 

ft 

032 

97% 

97% 

ft 

803 

104 

raft 


736 jf 



“No other foreign bank was 
so optimistic, and that gives us 
a very profitable business, plus 
a platform for our securities 
and corporate finance busi- 
nesses ” says Mr Lafite. 

Largely because of its experi- 
ence tn the Czech Republic, 
CAIB is the only foreign bank 
leading one of the 17 consortia 
that are on the short-fist of 
Poland's forthcoming mass pri- 
vatisation programme. 

Now it Is eyeing Bulgaria 
and Romania. Last year, it 
advised Amylum, a US-UK- Bel- 
gian consortium that bought a 
$20m maize products plant at 
Razgrad in Bulgaria. 

"Mass privatisation pro- 
grammes are bound to hap- 
pen,” says Mr Lafite, although 
he expects they will follow- the 
R u ss i a n model with an explo- 
sion of secondary market activ- 
ity following free distributions 
of shares. 

The hank has made profits 
every year since its foundation, 
and half of its present SchllQm 
capital comes from retained 
earnings. 

Mr Lafite says the bank has 
been careful to be aware of its 
limitations. It has eschewed 
Moscow, for example, where 
CS First Boston made a killing 
last year, foiling that it has no 
special leverage there. 

C AIB has neither the 
skills nor the capital to 
compete with the big 
US and UK banks on the few 
very large deals that come 
along. 

instead, the bank points out 
to the large numbers of small 
an d medium-sized eastern 
European companies that it Is 
their neighbour and is exclu- 
sively committed to their 


v. 


BM 


OOa Capa 


Bill 


100 


94k 


61 


101 



112 96 Al . 

« Nto Tran ft 68 AS. 


. 180 
.100 


ft 


104 

82k 


104% 

113 

61% 

KEk 

110 

104% 

103% 

110 

105% 

ioik 

103 


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»■ 




I 






FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


23 


★ 


' e rsr5“^:^3 ictk r- :;i -• v? .tv. ..- 'v:-- . : ■*.. :•* 


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SUPPLIERS AS GOOD AS THESE ARE 
FEW AND FAR BETWEEN. 


Their continuous pursuit of improvement, year after year, is as single- 
minded as ours. We’re proud to present them with our Rover Supplier Excellence 
Awards for 1994. 

GOLD AWARDS: Federal Mogul SA * Brico Engineering Limited. 

SILVER AWARDS: Hitachi Zosen Corporation • Timken • PPG Industries 
(UK) Limited • Miyazu Seisakusho Company Limited ■ Kolbcnschmidt AG 
Elring GmbH • Philidas Limited • Benteler AG. 

BRONZE AWARDS: Eaton GmbH • Caradon Peak Limited • Freudenberg 
Technical Products LP • Eagle-Picher industries GmbH • Codan Rubber Limited 
Caradon Rolinx Limited - Geo W King Limited • Seal Technology Systems 
TRW United Carr Limited • Perstorp Components Limited • Nippondenso UK 
Limited • Marley Automotive Components Limited • Linpac 
Ekco * Fram Europe ■ INA Bearing Company Limited • Richard 
Klinger GmbH - Deico Chassis Limited • Metallifacture Limited 
Linpac GPG International • Motorola AIEG ■ Henkel Tcroson 
Klinger Automotive Limited • Pianoforte Supplies Limited 
Goodyear (GB) Limited • United Parts FHS Automotive 
Systems • Barretts ■ Thyssen Umformtechnik Remscheid Plant 
Prescott Powell Limited ■ Midland Industrial Plastics Limited - Johnson 
Controls Automotive (UK) Limited Leigh-on-Sea Plant ■ Courtaulds Textiles 
Automotive Products - Carrs Paints Limited - Aveneli Engineering Limited 
Oxford Automotive Components ■ UK-NSI Co Limited ■ S.P. Tyres (UK) 
Limited ■ Johnson Controls Automotive (UK) Limited Telford Plant 
ITW Proffitt • Stanton Rubber & Plastics Limited - Plastic Omnium Limited 
Merriott Mouldings Limited • Inalfa BV ■ GKN Hardy Spicer Limited 
Lander Automotive Limited - Miasa - Fagor Ederlan • Premier Exhaust Systems 
Thyssen Umformtechnik Brackwede Plant. 

THE RG2000 AWARD FOR OUTSTANDING IMPROVEMENT: Brico 

Engineering Limited. 



rover Group 








24 


FINANCIAL TIMES 


WEDNESDAY NOVEMBER 


91994 



COMPANY NEWS: UK AND IRELAND 


Bir mingham Midshires 
buys £550m mortgages 


By AUson South 

Birmin gham Mids hires, the 
UK's 13th largest building soci- 
ety, has acquired the £550m UK 
residential mortgage business 
of tiie UK subsidiary of Credit 
Agricole, the French mntually- 
owned bank. 

The purchase is more than 
three times larger than any of 
Bir mingham Mids hires’ mort- 
gage book acquisitions to date 
and is a further example of the 
departure from the UK market 
of the centralised lending sub- 
sidiaries of overseas groups. It 
represents more than 10 per 
cent of the society’s assets, tak- 
ing them to Just over £5 bn. 

The society would not dis- 
close the price, which Is 
thought to be less than 

The Credit Agricole business 
is administered from Rich- 
mond, Surrey. Staff based 
there will continue with the 
day-to-day management of its 
11.000 customers for the time 


being. Birmingham Midshires 
said, however, that in the lon- 
ger term management of the 
business would be integrated 
with that of the other mort- 
gage books it has acquired and 
managed from its Wolverhamp- 
ton office. 

Credit Agricole Personal 
Finance said yesterday that 
the ri«™on to sell had been 
strategic. The company consid- 
ered a customer relationship 
hunted to mortgages alone to 
be insufficient in the UK. 

Credit Agricole is the largest 
bank in France with total 
assets of FFrL67bn (£199m). 

In a similar move, Banque 
Nationals de Paris is leaving 
the UK market: further prog- 
ress of the sale of its outstand- 
ing mortgages of £1.5bn to 
Halifax Building Society, the 
UK's largest mortgage lend e r, 
is expected to be announced 
later this month. 

In a generally flat UK mort- 
gage market, where margins 


are low, acquisition of mort- 
gage books and businesses is a 
popular way for mainstream 
lenders to gain market share. 
Last week Abbey National, the 
mortgage lender and banking 
group, announced that it was 
buying Household Mortgage 
Corporation, the UK|s largest 
centralised lander with about 
£1.6bn in outstanding mort- 
gages, in an agreed cash offer 
of £563m. 

Centralised leaders sell 
through intermediaries rather 
than through branches, so for 
the purchaser there is the pros- 
pect of growth without the 
task of reconciling two branch 
networks. 

Many centralised lenders 
entered the UK housing mar- 
ket in the boom years of the 
1980s and have found condi- 
tions much more diffi cult 
since. Where they are owned 
by foreign banks, the UK is 
often seen as no longer a core 
area of business. 


Ashbourne to join market 
with £80.5m valuation 


Ashbourne Holdings yesterday 
announced its shares would be 
offered to potential investors at 
150p, valuing the nursing 
homes operator at £80.5m. 

Ashbourne, which was the 
subject of a management 
buy-out last year from Stakis, 
the hotels and casinos group, is 
raising £48m after expenses 
through a placing and public 
offer to pay off debt 

Some 15 per cent of the 33.3m 
shares being issued will be 


offered to the public and the 
rest placed with institutions. 
Existing shareholders will 
retain 38 per cent of the com- 
pany. 

The company is coming to 
the market on a p/e of 12.9 
times, based on historic earn- 
ings of 11.6p. Ashbourne said 
that if it had been listed for the 
year to October 2, the board 
would have recommended a 
dividend of 3p. This represents 
a notional yield of 2.5 per cent 


Ashbourne caters for the 
upper end of the private pay 
market and is one of the larg- 
est nursing home groups in the 
UK with 19 homes and 1,599 
registered beds. 

Mr Tom Hamilton, chief 
executive, plans to open four 
new homes and build two 
extensions to existing homes 
by the end of 1995. Ashbourne 
hag the land and p lanning con- 
sent to build homes with a fur- 
ther 515 beds. 


Placing and intermediaries 
offer values SeaPerfect at £59m 


Investors with a yen for 
molluscs are being offered a 
stake in SeaPerfect, the world’s 
largest controlled producer of 
shellfish, for 120p a share. The 
price values the seafood former 
at £59m. 

SeaPerfect, which was 
founded by a US computer 
entrepreneur in the 1980s, is 
noming to the market through 
a placing and intermediaries 
offer of 20 Km shares. The issue 
will raise £25m, of which 
£l8.4m will go to the company 
and £6.6m to existing share- 
holders. 


Of the offer, 15.6m shares, or 
75 per cent, have been placed 
firm, with the balance placed 

mnrfiti n nally and made avail- 

able to intermediaries. 

SeaPerfect forms ahpnfish in 
Chile, Florida and South Caro- 
lina, producing seed in its 
hatcheries and setting the 
young digms and scallops in 
protected coastal areas. 

Mr Bill Lord-Butcher, chief 
executive, argues that with 
declining stocks of shellfish 
in the wild due to overfishing 
and pollution, controlled form- 
ing is the only way to meet 


rising demand 

The company is forecasting a 
loss this year of not more than 
£lm, after 1993’s deficit of 
£2.7m. However, Mr Lord- 
Butcher has said the company 
is malting a profit in the final 
part of this year. 

Sir David Orr, former Uni- 
lever chairman, is chairman 
and lib- Andre Bernard, the for- 
mer co-chairman of Euro- 
tunnel, is a non-executive 
director. 

The issue has been fully 
underwritten by Williams de 
Bros, the stockbroker. 


Currency influences restrict 
growth at Elan Corporation 


By John McManus In Difofin 

Elan Corporation, the 
Irish-based drugs company 75 
P er cent owned by US inves- 
tors, reported pre-tax profits 
of I£19Km (£19.5m) for the 
six months to September 
30. 

The interim results last time 
showed a loss of I£89m but 
included a write-off of I£85m 
for goodwill when Elan 
acquired Dreg Research Corpo- 
ration. 

Excluding the write-off, 
profit before tax amounted to 
I£l6m. 

Turnover rose from I£5Gm to 
T£A9m Manufacturing n od dis- 


tribution income was flat at 
I£29m as an 8 per cent increase 
in sales was offset by the 
strengthening of the punt 
against the dollar. 

The main market for Elan's 
products is the US, which 
accounts for more than GO per 
cent of sales. 

The group’s main product is 
tiie range of hypertension and 
angina drugs known as the 
Cardlzam fondly, which are 
projected to have sales of 
approximately <900m (£550m) 
in the US and Canada this 
year, according to Mr Tom 
Lynch, the chief financial 
officer. 

The drugs are made under 


licence by Marion Merrell Dow 
and Elan takes 5 per cent of 
sales. 

Royalty income fell from 
I£lQm to I£8m, also the result 
of currency influences. 

Contract development 
income increased from 
I£7m to I£llm, representing 
an increased contribution 
from Advanced Therapeutic 
Systems, a research affiliate. 

Earnings per share were 55p 
compared with losses of 206p. 
Earnings before the excep- 
tional charge amounted to 
45p, 

The group is maintaining its 
policy of not paying dividends 
at the interim stage. 


c&w 

moves 

Mercury 

chief 

By Paid Tsylor 

Cable & Wireless, the 
telecommunications group 
which reports Its interim 
results today, announced a 
surprise senior management 
reshuffle - including the 
appointment of a new chief 
executive for its Mercury Com- 
munications subsidiary - last 
night. 

Mr Mike Harris, currently 
chief ex e c uti v e of Merauy and 
executive director Europe, is 
moving to become chief execu- 
tive of Cable & Wireless Fed- 
eral Development, which is 
responsible for developing the 
group’s worldwide services, 
features, applications and 
technologies. 

Mr Harris, who joined Mer- 
cury in October 1991 having 
previously been chief execu- 
tive of Mi dland Bank's Ftrstdi- 
rect unit, is being replaced by 
Mr Duncan Lewis, director erf 
Business Networks and Cable 
& Wireless' US operations. 

The management changes 
come at a time when Mercury 
faces growing competition and 
the need to improve productiv- 
ity and cut costs. 

Comm enting on the changes, 
Lord Young, executive chair- 
man of Cable & Wireless, said 
they reflected “the develop- 
ment of Mercury as it faces 
intensified competition and 
regulatory change”. 

Among other appointments 
Mr Edward Astle is to become 
chief executive of Cable & 
Wireless Federal Communica- 
tions while retaining his pres- 
ent responsibilities. 

See Lex 

£10m law suit 
fears hit Lloyd 
Thompson 

By Ralph Atkins 
Insurance Correspondent 

Shares in Lloyd Thompson, the 
insurance and reinsurance 
broker, feu 16p to I76p yester- 
day after the company warned 
that its principal subsidiary 
was exported to be named as 
defendant in a £10m law suit. 

Commercial Union, the com- 
posite insurer, is understood 
to be planning legal proceed- 
ings following a dispute over a 
marine insurance policy 
arranged via Lloyd Thompson. 
CU, which today announces its 
results tor the first nine 
months of this year, would not 
comment last night. 

Lloyd Thompson said it 
would “vigorously resist” any 
claim. The group said in a 
statement that the proceedings 
had arisen “in the ordinary 
course of business” of its main 
broking business. The state- 
ment added: “Such proceed- 
ings could, if instituted, give 
rise to a claim of approxi- 
mately £10m.” 

Lloyd Thompson has had to 
weather difficult trading con- 
ditions over the past year 
which have curbed profits 
growth. In September it 
announced pre-tax profits up 5 
per cent to £18Jhn for the 13 
months to June 80. 

Correction 

Automagic 

Turnover at Automagic in the 
year to June 25 fell from 
filLGm to £lL2m. The figures 
were wrongly reported in yes- 
terday’s FT. 


Institutional investors demand greater internatio nal experti se 

MAM sets sights on Germany 

O f 


By Norma Cohen, 

Investments Correspondent 

Mercury Asset Management, 
the UK's largest independent 
fund management company, is 
setting up an investment com- 
pany in Germany to capitalise 
on the growing demand for 
international investment 
expertise. 

MAM Is 75 per cent owned by 
SG Warburg, the investment 
bank. Mr Harald Schussler, 
joint managing director of SG 
Warburg Asset Management 
Frankfurt said: “The target cli- 
ent is the German institutional 
market - pension funds, insur- 
ance companies, corporates.’' 

Recent European Union leg- 
islation on insurance funds 
which forced Germany to lift 


restrictions on investment out- 
side the country had prompted 
increased interest In interna- 
tional bonds and equities. 

“Our intention is to market 
our experience in the global 
equities market." Mr Schussler 
added. 

The German institutional 
funds market has grown 
between 40 and 50 per cent in 
each of the last three years as 
corporations discovered that 
professional fund managers 
earned better returns than 
in-house investment managers, 
he s aid . 

MAM has obtained a licence 
to establish a Ka pitaignlag ege- 
sellschaft, which will allow it 
to set up so-called “spezialf on- 
den" carrying special tax 
advantages. 


Mr Schussler said it had sev- 
eral potential clients already. 

MAM Is also setting up a 
continental sales office In 
Frankfurt which wDl target the 
5900m (£55Qm) Luxembourg- 
based umbrella fund. Mercury 
Selected Trust , at the German 
retail market. 

Meanwhile, Mercury Asset 
Management repeated a 13 per 
rent rise in pre-tax profits for 
the six m ftwt hs to September 30 
from £50.4m to £57m. The 
interim dividend rises to 4*>p 
(4p). 

Assets under management 
rose from £55iibn a year ago to 
£62.7bn. Some £l-3ba repre- 
sented net new cash in both 
institutional and retail 
accounts, said Mr Hugh Stev- 
enson, chairman. 


However, with the nse In 
rjjoflts and revenues c ame a 
increase in operat- 
ing expenses. ' 

Operating costs rose from 
ESaSm to 282.2m but were only 
slightly ahead of spending in 
the second half of the last 
financial year.- - 
Mr Stevenson said.. almost all 
the increased expenses related 
to the hiring of additional back 
office support for MAM’S global 
custody operations and its 
growing retail funds business. 

“Spending has been frozen 
for the past three years and we 
had a lot of catching up to do," 
he said. 

However, he added that the 
growth in expenditure was not 
likely to occur into the second 
half of this year. 


Getting policy in sharper focus 

Norma Cohen looks at the changes taking place at SG Warburg 


S G Warburg Group has 
completed an overhaul of 
its senior policy-making 
structure following the most 
rigorous internal m ana g pmpn t. 
review since the Big Bang 
deregulation of London mar- 
kets in 1986. 

The changes sweep away 
what Lord Cairns, Warburg's 
chief executive, described as a 
“fUZZy" rlpHcinn - malrtng struc- 
ture in which too many people 
had to be consulted. Even 
those most informed about key 
areas felt they lacked the 
authority to make choices. 

Lord Cairns said the effect of 
the structure was to make 
decision-making a time-con- 
suming process in a business 
which, by definition, must 
move quickly. 

“Decisions became rather 
fuzzy. Nobody felt ownership 
of anything, and everything 
was referred up to the top.” he 
said. The management struc- 
ture had evolved since Big 
Bang, when various acquired 
businesses were integrated 
into the group. 

The changes, which were 
announced internally in Octo- 
ber at the samw time as War- 
burg issued a profits warning, 
abolish the 18-member invest- 
ment banking management 
committee.. It U replaced by a 
smaller investment banking 
policy committee consisting of 
eight of those 18 executives. 
The old IBMC had been 



Lord Cairns: The environment was right for change 


Timor HwnpMM 


responsible for overseeing the 
decisions of other committees, 
several of which “were in the 
high teens” in their own mem- 
bers, Lord Calms said. Some- 
times the IBMC would be dis- 
cussing matters which some 
members knew little about 

Under the new structure, 
four new committees, each 
with eight members, have been 
created. These committees are 
intended to make the sort of 
decisions which used to be 
referred to the IBMC. 

The management changes 
were unrelated to current trad- 
ing conditions at Warbmg. he 
said. They were put in train 
about a year ago. Mr Peter WEL- 
mot-Sitwell, then chairman of 
SG Warburg Securities, was 


coming up to retirement and 
Mr Herman Van der Wyck, 
chairman of SG Warburg and 
Co, intended to step back from 
executive responsibility. “The 
environment was right for 
change,” Lord Cairns said. 


O verhauling the man- 
agement structure, for 
an institution like War- 
burg, has not been easy. “We 
come from a culture which is 
pretty consensus driven. There 
is a great respect for the views 
of others. What we need is a 
balance between a hierarchical 
structure and a consensus 
s truct u re,” he explained. 

Deciding who should and 
who should not be on decision- 
making committees was a 


“sensitive” issue, he s aid. 

The new policy committee 
consists of Lord Cairns, Mr 
Derek Higgs, chairman of SG 
Warburg Co, Mr Nick 
Verey, chairman of SG War- 
burg Securities, Mr Simon 
Lo athes , group finance direc- 
tor, Mr Michael Gore, chair- 
man of SG Warburg Asia 
Pacific, Mr Piers von Simson, 
head of Europe, Mr Rodney 
Ward, head of Asia except 
Japan, and Mr Thomas 
Wyman, head of US operations. 

Reporting to it is a new 
long-term strategy group 
chaired by Mr John Trueman, 
head of group risk. 

Reporting to the policy com- 
mittee are four functional com- 
mittees: corporate finance, 
equity, fixed interest and trea- 
sury and operations, which 
includes the functions of cus- 
tody, settlement, information 
technology and administration. 
Some former members of the 
old IBMC are on these commit- 
tees. 

Beneath that is a business 
development group, chaired 
jointly by Mr Higgs and Mr 
Verey, whose job it is to make 
short-term decisions. 

Securities analysts welcomed 
the changes. “When people 
start to look internally when 
thing s go wrong, that starts a 
period of self-cleansing," said 
Mr Rodney Maryan Green, 
nvmrhant banking analyst at 
James CapeL 


WEW returns to black with £3.3m 


By Petra- Pearse 

After its first full year at the 
helm, the new management 
team at WEW Group, which 
currently runs 71 What Every- 
one Wants discount stores, was 
yesterday able to announce a 
return to the black. 

Pre-tax profits for the 12 
months to July 30 emerged at 
23.25m, against losses last time 
of £2.09m, on total turnover of 
£lL2m (£106m), of which 22.04m 
was from discontinued activi- 
ties. 

The tumround was helped 
by a reduction in net interest 
charges to £355,000 (£744,000) 
after the injection of £lSm of 
new capital in January. Mr 
Keith Raskins, finance direc- 
tor, said this gave WEW £2m 
cash in the balance sheet, 
against £8m debt 

However, the group has bad 
to take as an exceptional 
charge £397,000, representing 
compensation to Mr Ian Grabi- 
ner, who resigned as managi n g 


director In August 

In addition, there have been 
further provisions of £1.54m 
(£3.2Un) in respect of proper- 
ties and operational guarantees 
from the discontinued Dennis 
Day, the clothing manufac- 
turer and importer now sold. 
This was reduced by a prior 
year provision of £870,000. The 
sale brought in profits of 
£717,000. 

Furthermore, within the cost 
of sales lay a £l.lm provision 
against problems with “aged 
and surplus stock” in the core 
business. 

At the operating level prof- 
its from continuing operations 
were £5.I3m (£6.02m restated). 

Mr Peter Carr, chairman, 
who describes himself and Mr 
Paskins as “a couple of old 
shopkeepers who’ve been 
around a long time”, said the 
c ur re n t management team was 
cautious. 

“The success of this business 
depends on its buying," said 
Mr Paskins yesterday. Sir Carr 


added that some buyers had 
been in place since 1990, when 
turnover was only £3L2 bl Cur- 
rent year sales are targeted at 
2160m, rising to £320m by 1998. 
New buying controllers have 
been recruited for the four 
trading divisions. 

By the end of .the year the 
number of stores rose to 63, 
with 11 opened during the 
period. The plan is for 125 
stares within five years. Mr 
Carr said capital expenditure - 


also covering stare refits - was 
£A5m (£3.7m) and will rise to 
Hl5m in the current year. 

Earnings were L35p (losses 
2.7p) per share. The final divi- 
dend is lifted to 035p (0-25p), 
though the total fells to 0.7p 
(135p). The shares dosed down 
2p at 31p. 

Smith New Court, the house 
broker, remains cautious, 
downgrading current year fore- 
casts to pre-tax profits of fflJSm 
and earnings of 3L3p. 


NEWS IN BRIEF 


CATTLE’S (HOLDINGS): 
Rights issue acceptances in 
respect of 23J2m shares or 94.1 
per cent 

CONTINENTAL FOODS has 
acquired Sykes (Soft Drinks), 
which operates door-to-door 
rounds in the Sunderland area, 
for £447,525 cash. The net asset 
value of Sykes at completion is 
expected to be £397,525, which 
Includes same £215,000 cash. 
GARTMORE EUROPEAN 


Investment Trust: Net asset 
value 147.1p (i3K3p) per share 
at September 30 year end. 
Earnings per share 0.96p 
(L55p). Single dividend held at 
0.9p. 

GROSVENOR INNS has pur- 
chased a 25 year leasehold 
interest in a site in London's 
Kings Road for £650,000 cash. 
The site currently trades as 
The Argyle, a restaurant and 
bar. 


”5r«rr •■«,■« * » 




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THE HOARE GOVETT 1000 INDEX 
INVESTMENT TRUST PLC 

(Manpennalln England and Walts wnler tht Companl* Aa IMS 

RrgtaeraJ \uaba~. :*7i£S2) 

PLACING 

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FINANCIAL TIMES 


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^NwdiMyhsu j^bywhrrm 







FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


25 



COMPANY NEWS: UK 



' focus 

Marburg 



£3.3n 





Anglian Water 
rises 20% but 
sector falls 


By Peggy Hoflinger 

Anglian Water yesterday 
announced a 20 per cent rise in 
pre-tax profits to £12Q.6m for 
the half year to September 30 
and declared a 9.6 per cent 
increase in its interim dividend 
from 73p to flp. 

In spite of the announce- 
ment. water shares closed 2 per 
cent lower yesterday. This con- 
trasts with the reaction last 
week when T ham es Water's 
surprise ll per cent dividend 
increase left the sector 2 per 
cent higher. 

The market interpreted 
Thames's action as a signal to 
increase dividend expectations 
for the sector. “It is not sur- 
prising that the sector is 
weak," said Mr Bill Dale of SG 
Warburg. “Expectations ran 
wild after Thames's results." 

Anglian said it had increased 
the dividend in line with its 
underlying earnings improve- 
ment. The profits advance was 
helped by a £10.3m reduction 
in the provision for water and 
sewerage pipeline maintenance 
to £9 An. 

Turnover was 5 per cent 
higher at £358.3m, against 
£341.4m when pre-tax profits 
were £1 00.5m. Earnings per 
share rose from 322p to 38.7p. 

Mr Alan Smith, managing 
director, said Anglian was con- 
fident it would be able to main- 
tain real earnings growth 
under the new five-year pricing 
regime set by the industry reg- 
ulator in July. 

Customers would also bene- 
fit, he said, with an extra £8m 
to be devoted to issues such as 
low water pressure, sewer 
flooding and cleaning up estu- 
aries. This funding was in addi- 
tion to the £l54m invested in 
the first half and £l70m 
already budgeted for the latter 
part of the year. 


AngBaa Water ' 

•Staraprice (pence) • .y 
BOD- "- .. — 




Alan Smitb: confident of 
mai n tai ning earnings growth 


Anglian, which announced 
plans for 900 job losses earlier 
this year, raid operating costs 
bad been held at £174m t£173m) 
through tight spending con- 
trols and other efficiencies in 
the regulated business. The 
regulated business improved 
operating profits by 18 per cent 
to £139-5m (£1 18.7m) on sales 
5.4 per cent higher at £315.5m 
(£299.3m). 

Lasses in Anglian's two mam 
non-regulated businesses rose 
from £400.000 to £1.6m. Mr 
Smith said this was due to 
marketing and research and 
development costs. The process 
engineering business was 
expected to return to profit in 
the second half. 

» COMMENT 

After the brief excitement 
sparked by Thames, the water 
sector has returned to earth 
with Anglian's results. The 
company's emphasis on a divi- 
dend increase backed by simi- 
lar underlying growth could be 
seen as a warning not to 
expect too much under the 
new pricing regime when earn- 
ings are expected to be flat 
However, the company may 
not be as constrained as once 
thought The substantial cut In 
the infrastructure renewals 
charge has enhanced its cover 
and its prospects for dividend 
growth. An glian is also making 
noticeable progress on effi- 
ciency savings. Nevertheless, 
the non-core business remains 
disappointing. Forecasts are 
for about £225m this year, with 
a prospective p/e of 8. There is 
still little which sets Anglian 
apart, in a sector depressed by 
limited exposure to economic 
upturn and substantial politi- 
cal risk. 


1 DIVIDENDS ANNOUNCED 1 





Correa - 

Total 

Total 



Current 

Dote of 

poncing. 

far 

last 



payment 

payment 

dividend 

year 

year 

AG 

— fln 

325 . 

Jan 6 

2 

52 

2 

AngSan Water . 

-int 

8 

Feb 20 

72 

- 

22.8 

British Airways 

int 

3t5 

Jan 31 

3.18 

- 

11.1 

Gartmore Euro 

..fin 

0.9 

Jan 31 

0.9 

0.9 

0.9 

GR (Holdings) „ 

.fin 

0.7 

Dec 22 

1.4 

23.6* 

1.8 

Greenway — — 

. ...Int 

1 

Jan 3 

nil 

- 

1.5 

Htlapoote Water int 

24 

Jan 1 

23 

- 

60 

Ingham — 

— int 

1.7S 

Jan 13 

1.7S 

- 

5 

Marks & Spencer Int 

2£ 

Jan 20 

ZJ5 

- 

92 

Scottish Natl A 

— —fin 

2.6 

Jan 7 

2.6 

7JS 

7.75 

UPF 

-fin 

1 

Jan 18 

- 

1 

- 

Warburg (SG) „ 

— —int 

6 

Dec 19 

6 

- 

22 

WEW 

fin 

025t 

Dec 16 

025 

0.7 

125 

Wyndeham Press int 

1-4f 

Dec 16 

0.75 

” 

225 


Dividends shown pence per stare net except where otherwise stated. tOn 
Increased capital, *indudes special. ♦Corrected. 



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FT Surveys 


The sombre and sensitive subject of pricing 

Christopher Price looks at the uncertain process by which the market value of new issues is determined 


What price new issues? 

Share prices rotative to the FT-SE-Actuaries A8-Share Index {since flotation) 


I nstitutional investors 
remain in a sombre mood 
over new issues. 

In what has been a record 
year for flotations, a rapid suc- 
cession of profit warnings, 
poor results and share price 
underperformances has rattled 
investors 

It has also served to focus 
attention on the sensitive sub- 
ject of pricing. 

“The feeling remains among 
many fund managers that 
some of the new issues which 
came to the market during the 
first quarter of the year, in par- 
ticular. were overpriced," says 
Mr Geoff Douglas, smaller com- 
panies analyst at BZW. 

This attitude has been 
reflected in several recent 
issues where companies have 
been forced to scale back their 
valuation expectations. 

Cellular components group 
Filtronic Comtek, for example, 
which was expecting a market 
valuation of about £60m, had 
to settle for £44m. 

TLG, the holding company 
for Thom Lighting Group, was 
valued at £205m against hopes 
of about £22fim. 

But significantly, both com- 
panies have been successful at 
the issue prices dictated by the 
market 

Filtronic leapt to a 15 per 
cent premium with in days of 
its flotation, while TLG's offer 
has been subscribed 3.2 times. 


Its shares begin trading tomor- 
row . Fashion retailer New 
Look, however, refused to 
countenance the price institu- 
tions were putting on its 
shares last week, and became 
the latest in a growing list or 
companies to postpone its 
float 

While criticisms have been 
levelled at the quality of the 
companies coming to the mar- 
ket and at investors' eagerness 
to exit at the earliest opportu- 
nity and the highest price, it is 
the financial advisers which 
have borne tbe brunt of the 
disquiet over pricing. 

However, they counter that 
pricing is largely a function of 
investor demand, which was 
high during the last quarter of 
1993 and the beginning of this 
year, helping to push up prices. 
They also argue that, as they 
are often involved in placing 
only part of a company's 
equity, it is not in their inter- 
ests to float a company at a 
price that is not sustainable, 
because there may well be 
more to come. 

Traditionally, new issues 
have been priced at a discount 
to either their nearest listed 
competitors, or to the sector, or 
to the market, the purpose 
being to give investors an 
incentive to subscribe for the 
shares. 

Keen pricing should also 
stimulate demand in the after 


ED&F Man Group 



85 

Bth Oct 1994 Nov 

Solace; FT Grapttte 

market when the shares begin 

trading. 

The two-week period prior to 
the shares being priced is a 
crucial one when the company, 
adviser and broker meet with 
investors and gauge feedback 
to the issue. 

“Although it is not a com- 
pletely passive process, pricing 
is largely a reflection of insti- 
tutional appetite." says Mr 
Paul Hamilton, a director of 
corporate finance at SG War- 
burg. the investment bank. 

Another adviser commented: 
“If the institutions won't wear 
it then it won’t get away. It's 
as simple as that. They call the 
tune.” 

Mr Tim Linacre, corporate 
finance director at Panmure 
Gordon, says that the impor- 


FUtronik Comtek 
140 — 



tant thing is to establish 
benchmarks for a company so 
that a valuation can than be 
more easily established. 

The process is, however, 
more problematic when compa- 
nies are not easily defined. 

“The pricing issue becomes 
less scientific and more selec- 
tive after that,” Mr Linacre 
says. 

Panmure was responsible for 
advising Filtronic. the first 
company in its field to come to 
the London market 

“We had to tell tbe institu- 
tions what we thought the 
company would make and 
apply our own multiple to tbe 
prospective earnings”, says Mr 
Linacre. “Not all of them 
bought the story and we even- 
tually settled for a price at the 


bottom of the range we had set 
ourselves." 

But the company was sup- 
ported by firm American inter- 
est - the placing was being 
undertaken simultaneously in 
the US - and a strong manage- 
ment story. As a result, the 
flotation price put the shares 
on a prospective p/e of about 20 
times, still well ahead of the 
market average of 13.5 times 
for 1995. 

Other companies which have 
jumped or dived on or shortly 
after the day of issue have sim- 
ilar individual tales explaining 
their performances, making 
generalisations over pricing 

difficult 

Finelist, a motor components 
group, jumped to a 16 per cent 
premium on its first day's trad- 
ing, which might indicate a 
slight underpricing. Like Fil- 
tronic, Finelist was a difficult 
company to compare with oth- 
ers and the shares came on a 
slight premium to the market 
on a prospective basis, 
although at a discount to its 
sector. BZW was the broker to 
the Issue and Mr Douglas says 
that the strong early perfor- 
mance of tbe shares enabled 
the company to come back to 
the market in July to finance 
an acquisition. 

Coda, the accountancy soft- 
ware group, came to tbe mar- 
ket in February on a prospec- 
tive p/e of about 19, according 


to analysts, again a hefty pre- 
mium to the market. Unfortu- 
nately, this was also at the 
market's peak, and the shares 
trailed downwards, although 
outperforming the FT-SE-A All- 
Share. However, the group 
dived into the red in July and 
the shares lost 25 per cent of 
their value. 

ED&F Man. the commodity 
broker, also suffered from tbe 
sour sentiment towards new 
issues, having its issue price 
reduced by 15 per cent from 
the expected figure when it 
floated in September. The offer 
price gave it a notional yield of 
6 per cent; the prospective p/e 
was about 9 times a good dis- 
count to the food manufactur- 
ing sector's 12. But the shares 
went to a 10 per cent discount 
within two weeks of their 
issue, which the company’s 
advisers attribute to the falling 
market They have since recov- 
ered but are still trading below 
their issue price. 

Mr Douglas says that inves- 
tor nervousness has prompted 
an increase in yields among 
new issues. “In a growth mar- 
ket, the yield plays little part 
in investor interest. But now 
they’ve started to creep back 
up again.” One Institutional 
Investor added: “Falling prices 
and improving yields is the 
only way tbe new issues will 
come back into favour with the 
big institutions." 


HALF YEAR RESULTS TO 1ST OCTOBER 1994 

MARKS & SPENCER 


CROUP PROFIT 
BEFORE TAXATION 

UP 15% TO 

£354 MILLION. 


• Group sales up 7% to £3.1 billion. 

• Accelerated expansion in UK and overseas. 

• Dividend increased by 12%. 

“The Group had an excellent first half with sales and profits considerably ahead of last year . 
Our performance was particularly strong when viewed over two years , with increases in sales and 
profits of 15.7% and 38.8 % respectively. Although the trading climate remains very competitive , 

1 am confident that the year as a whole will show continued good progress” 

Highlights from the statement by the Chairman. 

SIR RICHARD GREENBURY 


StmichaeL 




26 


Tk 


Forte pays FFrl.82bn 
for Meridien hotels 


By Michael Skaplnker, Leisure 
Industries Correspondent 

Forte has paid a total of 
FFrUffibn (£217m) for the Meri- 
dien hotel chain. 

The Hn al purchase price for 
Meridien is less than the 
FFrl-Stm envisaged when the 
deal was first announced in 
September. This is because 
some minority shareholders 
agreed to accept lower 
amounts in return for earlier 
payment 

Mr Rocco Forte, Forte’s 
chairman, has been appointed 
chairman oF Meridien. 

Meridien will have an eight- 
member board, of whom six 
will come from Forte. 

Mr Jean Didier Blanche t, 
Meridien chairman until the 
purchase, is to be vice chair- 
man. 


Air France, which owned 57 
pa 1 cent of Meridien until the 
Forte acquisition, is to retain a 
place on the board in the form 
of Mr Patrick Durant, an Air 
France director 

Forte has signed a seven- 
year co-operation agreement 
with Air France, under which 
it will jointly market Meridien 
hotels, and possibly other 
Forte properties. Forte said Air 
France nights to Germany and 
the US might be useful in mar- 
keting Its hotels in the two 
countries. 

The cost of purchasing Air 
France's stake is FFrl.09bn, of 
which FF»87lm was paid yes- 
terday. The balance is payable 
on March 8 1995. but is depen- 
dent on both detailed struc- 
tural surveys and on how 
many hotel management con- 
tracts Meridien retains. 


Of the minority sharehold- 
ers, those with 11.35 per cent of 
the shares agreed to sell to 
Forte on the same terms as Air 
France. This meant Forte was 
required to pay FFrl73m yes- 
terday. 

A further FFr43m is payable 
on March 8, again subject to 
the same conditions as Air 
France. 

Minority shareholders repre- 
senting 31.33 per cent of the 
shares agreed to accept final 
payment yesterday at a 15 per 
cent discount to the payment 
received by the other share- 
holders. The cost was FFr508m. 

Forte said yesterday's 
payments were mainly met 
from the proceeds of last 
week’s £175m placing of Forte 
Shares. 

The balance was paid from 
existing borrowing facilities. 


Hoare Govett launches index 


tracking investment trust 


By Bethan Hutton 

Hoare Govett is launching an 
investment trust to track its 
recently developed HG 1000 
index, which covers the small- 
est 2 per cent of UK listed com- 
panies. 

An institutional placing of 
shares in the new trust, which 
Is to be called Hoare Govett 
1000, is expected to raise up to 
£30m. Trading in the shares 
starts on November 15. 


The trust will aim to match 
broadly both changes in the 
capital value of the index and 
its gross dividend yield by 
investing in 300 or more of the 
1.000 companies which consti- 
tute the index. The largest axe 
capitalised at just over £50tn, 
and the smallest at under Elm. 
• The size of the fund is lim- 
ited by the lack of liquidity in 
the target market “The typical 
smaller company trades about 
once a week, and clearly con- 


siderable patience is required if 
a stake is to be built in smaller 
components of the HG 1000," 
said Professors Elroy Dimson 
and Paul Marsh, of the London 
Business School in a report on 
the new index. 

The fund will be managed by 
Broadgate Investment Manage- 
ment, which already manages 
a trust tracking Hoare Govett’s 
main smaller companies index. 
Both have an annual manage- 
ment charge of 1 per cent. 


Acquisitions behind rise 
at Wyndeham Press 


Contributions from three 
acquisitions made earlier this 
year helped Wyndeham Press, 
the printing and packaging 
company, doable pre-tax prof- 
its from £750,000 to £1.5 lm tor 
the six months to September 
30. 

The purchases - of Westway 
Offset. B&P, and Unity Paper 
Tabes - follow the acquisition 
in July last year of the Gait 
group. 

Turnover of the enlarged 
company for the half year was 


□p by 85 per cent from £6-27m 
to £11.6m, of which £4. 03m 
came from acquisitions. The 
pre-tax outcome was struck 
after a net interest charge of 
£141,000 (£28,000). 

Despite the issue of some 8m 
shares daring the period, earn- 
ings emerged at 4.9p <3.3p). 
The interim dividend is raised 
to L.4p (0.75p). 

Since Hie period end Wynde- 
ham has acquired BR Hubbard 
Printers, a label and magazine 
printer. 


Stakis makes 
£7.6m hotel buy 
in Bournemouth 

Stakis, the hotels and leisure 
group, is paying £7.6ra cash for 
the Palace Court Hotel in 
Bournemouth. Dorset The pur- 
chase of the no bedroom hotel 
brings the group's chain to 38. 
It also runs 22 casinos. 

Mr David Michels, chief exec- 
utive. said: "This is one of the 
best hotels in one of the best 
resorts in the country.” Much 
of its business comes from the 
conference and corporate mar- 
ket 


FINANCIAL TIMES 


WED NESDAY NOVEMBER 9 1994 


MEWS: UK 


- — ■ ■ — -- ^ AA 

Clothing, food and financial activities ahead, but furnishing s 

M&S advances 15% to £354m 

■ IM .... _.llnn avsten 


By David Blackwell 

Marks and Spencer, the UK's 
most profitable retailer, lifted 
interim profits by 15 per cent 
on the back of a 7 per cent 
increase in sales. 

Pre-tax profits for the 26 
weeks to October 1 grew from 
£3Q8m to £354m, while sales 
increased from £2.87bn to 
£3.07bn. 

Sir Richard Greenbury. 
chairman, yesterday described 
the trading climate as “com- 
petitive" and consumers 
throughout the group's mar- 
kets as “cautious and value- 
conscious”. 

But the group was well 
placed to contain raw material 
price increases as its suppliers 
benefited from large produc- 
tion volumes. It would also 
continue to build on its “tradi- 
tional strengths of quality and 
value". 

The shares yesterday closed 
at 404p, down S'Ap. 

The UK. where the group 
now has ll.lm sq ft of selling 
space, continues to account for 
most of the turnover and 
profit. UK sales improved to 
£2,52bn (£2.37bn) and operating 
profits to £343m (£297m). 

The group continued to win 
market share in clothing, 
where sales Unproved by 8.9 





TnMrHwnpMw 

Sir Richard Greeubury: Canada no longer a big problem 


per cent to £l-3bn. Food sales 
were ahead by 3.9 per cent to 
El.lbn. 

The group said that food 
sales had suffered from the fact 
that Easter, a traditionally 
strong period, had fallen in the 
previous financial year. It was 
confident the supermarkets 
were not eroding its market 
share. 

Home furnishing sales were 
down by almost 1 per cent Sir 
Richard said the market had 


NEWS DIGEST 


suffered a bad few months, 
with consumers cautious on 
big ticket items following tax 
increases. . . 

The group's financial activi- 
ties lifted profits from £15 .5m 
to £18. 5m following an increase 
in personal lending and a 
better performance on bad 
debts. 

The plan to accept debjt 
cards, although not credit 
cards, will require a massive 


information systems, 
wHii begin after Christmas. 

pay by debit card by next 

SP The' group is planning to 
open most of its stores 
tour Sundays approaching 
Christmas now ^ Sunday 
trading is legal- But Sir Rich- 
Sdd it would continue to 
be “very selective in the 
stores it opened on Sundays for 
the rest of the year. 

At present about 30 are open 
regularly, although this could 

rise to 50. , _ 

Outside the UK and .Europe, 
sales were up from £276m to 
£29im. yielding operating prof- 
its of £l0m (£8.7m). 

Operating profits at Brooks 
Brothers, the North American 
clothing subsidiary, fell from 
£2. 5m to £700,000. The group is 
looking for a US chief execu- 
tive to replace Mr William Rob- 
erta, who leaves next month. 

The loss in Canada Increased 
from £1.3m to £l.9m. Sir Rich- 
ard said the losses could 
mainly be blamed on rental 
costs - but said that Canada, 
with annual sales of £80m, was 
no longer a big problem. 

Eprnings per share improved 
to 8.6p from 7.6p. The interim 
dividend is increased from 25p 


COMPANY 

Gt Portland 

£18.9m 

acquisition 

By Simon London 

Great Portland Estates has 
acquired a portfolio of seven 
freehold properties from a pri- 
vate company for £ 18.9m, sat- 
isfied by the issue of 5m 
shares and £9.6m in cash. 

The portfolio comprises two 
office buildings, one retail, 
and four distribution ware- 
houses located in Cardiff and 
Plymouth. The properties gen- 
erate an annual rental income 
of £l.5m, suggesting that 
Great Portland is buying on a 
yield of about 8 per cent 

The company said that it 
expected rental income to 
increase by 10 per cent over 
the next year as a result of 
rent reviews, which would 
push the yield on the proper- 
ties to 8.75 per cent 

Mr Patrick Hall, deputy 
managing director, said that 
all the properties had been 
built or refurbished within the 
last 10 years and were let to 
blue-chip tenants. The deal 
will leave the vendors holding 
1.5 per cent of Great Port- 
land’s enlarged share capital. 

In Jane, Great Portland 
bought a portfolio of buildings 
from a private company for 
£28m and the Royal Oak 
Industrial Estate for £30m. 

AG down 
5% as UK 
sales fall 

AG Holdings, the 
Doncaster-based cable reel 
maker, reported pre-tax profits 
down 5 per cent at £2.76m for 
the year to July 31, against 
£JL9lm. 

The company blamed a sec- 
ond half reduction in demand 
from the UK cable companies, 
its largest customers. The 
acquisition of a 67 per cent 
stake in EMS, the French cable 
drum maker, was completed in 
June, too late to have an 
impact. 

Turnover was £17.9m 
(£L5.9m). including £ 1.37m from 
acquisitions. Earnings per 
share were i0.6p (ll.4p). A final 
dividend of 3.25p is proposed 
for a total or 55p (2p). 

Mr Richard Battersby, chair- 


man, said turnover for the first 
two months of the current year 
was up 9 per cent but margins 
had come under pressure. 

Hartlepools Water 

Hartlepools Water Company 
reported pre-tax profits ahead 
from £720.000 to £900,000 in the 
six months to the end of Sep- 
tember. Turnover was £2.97m, 
against £2. 76m. 

Earnings per share came out 
at 83p (7lp> and the interim 
dividend is raised to 24p (23p). 

The company is proceeding 
towards conversion to public 
limited company status. 

Greenway down 

Greenway Holdings, the waste 
oil recycling business, saw a 
fall in pre-tax profit for the six 
months to September 30 from 
£1.9im, which included a £L5m 
exceptional disposal profit, to 

£915,000. 

Operating profit was ahead 


at £912.000 (£427,000) from 
increased turnover of £5.l7m 
(£4. 59m). The company said the 
improvement reflected the 
acquisition last year of BCS 
into Qrcol Fuels. 

Earnings per share were 3.32, 
against 10.63p or 1.8p adjusting 
for the exceptional profit on 
the disposal of the US oil and 
gas operations. There is an 
Interim dividend of lp (nil). 

GR (Holdings) 

GR (Holdings), which operates 
the Grayshott Hall health 
retreat alongside investment, 
property and sheepskin mer- 
chanting activities, incurred a 
deficit of £578,756 before tax 
during the year to June 30. The 
group was acquired in June by 
A Stanford, a company con- 
trolled by Anthony and John 
Staibow, both GR directors. 

The outcome, which com- 
pared with losses of £438,168 
last time, came on turnover of 
£3 55m (£A33m). Alter a lower 


tax charge, losses per share 
were 8.5p (9.4p). A proposed 
final dividend of 0.7p brings 
the total for the year, including 
a 2JL5p special distribution, to 
23.6p (L8p). 

Investment Co 

The Investment Company, 
which invests in preference 
shares and convertible stocks, 
reported net revenue up from 
£493,512 to £527,850 in the half 
year to September 30. 

Total income amounted to 
£672,292 (£626,138). Earnings 
came out at ljjlp (l-3lp) and 
the interim dividend is 
increased to 0.75p (0.5p). Net 
asset value per share at the 
period end was 47.64p (49.63p). 

The ultimate holding com- 
pany is New Centurion Trust. 

Vodafone in France 

Vodafone, the mobile commu- 
nications company, > has 
acquired full control of Robert 


Bosch Telecom Service France, 
making it the main French 
marketing company for the 
GSM mobile phone systems of 
France Telecom. 

G6n6rale des Eaux, the 
French utilities and communi- 
cations group, announced an 
extended allian ce with Voda- 
fone last month. 

London Merchant 

London Merchant Securities, 
the property investor, and Gen- 
eral Accident have ended their 
joint property activities. 

However, other investment 
opportunities are being 
explored with further collabo- 
ration in mind. 

The move involves the sale 
of their interests in a property 
in Old Park Lane, London, for 
more than £14m, the transfer 
to General Accident of LMS's 
interests in three further prop- 
erties and the transfer to LMS 
of GA’s holdings in City Com- 
mercial Real Estate Holdings. 


* 


& 


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Director General 

Office of Telecommunications (OFTEL) 


Dr Michael Nelson 

Special Assistant for Information Technology 
The Oflke of Science & Technology Policy, US 

The Rt Hon Lord Young of Graffham 

Executive Chairman 

Cable & Wireless pic 

Dr Edward F Staiano 

President and General Manage General Systems Sector 

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FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


27 


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COMPANY NEWS: UK 


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UPF trebles 
to £4.1 lm 


By Richard Wolffe 

Pre-tax profits almost trebled 
at UPF Group In the vehicle 
cha ssis producer's first annual 
results since it floated in 
June. 

The share price rose 5p to 
161p yesterday as the group 
announced pre-tax profits of 
£4.11m (£1.46m) for 12 months 
to. August 31. It said the figures 
were marginally ahead of 
directors’ forecasts. 

UPF floated at lG8p. Its 
expected value was cut by a 
third owing to the weak new 
Issues market. 

Operating profit rose 29 per 
cent to £5.4 5m (£4.2im> on 
turnover of £42.8m (£35.3m>, 
reflecting growth of the core 
4x4 chassis frame business. 

UPF primarily supplies chas- 
sis for the Land Rover Discov- 
ery and Vauxh all/Opel Fron- 
tera. The 4x4 market accounts 
for 70 per cent of turnover, 
although the group also manu- 
factures pressings for the car 
and domestic appliances indus- 
tries. 

Mr Keith Evans, chairman , 
said: “The prospects for 
organic growth in our core 
business remain good, particu- 
larly given the continued fore- 
cast growth of the 4x4 off-road 
vehicle market." 

Further sales increases are 
expected after BMW's acquisi- 
tion of Rover, as Land-Rover 
takes advantage of BMW’s dis- 


UPF Group 

Share price (pence) 



ADR facility for Cluff 


Cluff Resources, the minerals, 
oil and gas exploration group, 
has been granted permission to 
establish an American Deposi- 
tory Receipt programme. The 
facility Is being sponsored by 
the Rank of New York. 

Each ADR is linked to the 
underlying value of 10 Cluff 


BOARD MEETINGS 


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ordinary shares and is cur- 
rently being traded at about 
S7.15 (435p). 

• Cluff s gold mining 
operations in Zimbabwe are 
expected to produce about 
70,000 ounces this year with 
production rising to 100.000 
ounces from 1995. 


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| Name ; . 

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I Tel 


Country 


Dividend rises expected to shock politicians 

Michael Smith considers the interim results from the electricity companies which begin on Thursday 

I t says something about a Far too good in the view of ■ — - stake in Stockholm Energi Share buy backs mean 

sector when a company is critics. A political row seems ELECIWCITY COMPANIES; DIVIDEND FORECASTS could free up about £150 xil some companies could 
expected to kick off the inevitable. interim Most of the other regional dividend increases per s 


Source: FT Graptae 

tribution network in Germany 
and North America. 

Profits were underpinned by 
a 51 per cent reduction in inter- 
est costs to £l-34m (E2.75XQ), fol- 
lowing debt repayments helped 
by the flotation. Mr Evans said 
those costs would be reduced 
by a further Elm this year. 

Gearing stood at 33 per cent 
at the end of the year. 

UPF was bought from the 
receivers to the collapsed Park- 
field group in 1990, in a £30m 
management buy-out It was 
forced to refinance in 1992 
because of bad debts and prob- 
lems with a new production 
line. 

Earnings per share increased 
to 12. 6p (4.86p) - or 12.19p 
(5J6p) on a pro forma basis - 
and the board proposes a final 
dividend of lp. 


I t says something about a 
sector when a company is 
expected to kick off the 
interim results season with an 
11 per cent dividend rise which 
is likely to be seen as uninspir- 
ing by comparison with its 
peers. 

The sector is electricity, 
which has delivered an almost 
uninterrupted stream of good 
news to shareholders since pri- 
vatisation began four years 
ago. 

The company is Scottish 
Power, which reports on 
Thursday. It may exceed the 
market’s 11 per cent expecta- 
tions but it would have to per- 
form miracles to match the 
England and Wales electricity 
companies. 

Some of the 12 regional com- 
panies are considered capable 
of delivering dividend rises of 
more than 25 per cent, extraor- 
dinary even by their extraordi- 
nary standards. 

National Power and Power- 
Gen, the generators, should 
not be too far behind, with ana- 
lysts expecting about 20 per 
cent in each case, even t bough 
both have lost market share in 
recent years. 

Profit increases for all com- 
panies will be meaningless 
because so much of power com- 
panies’ sales are in tbe second 
half of the year. But the divi- 
dend rises will show that this 
is a sector in very good health. 


Far too good in the view of 
critics. A political row seems 
inevitable. 

The Labour Party will use 
the results to promote its view 
that the electricity companies 
were floated too cheaply and 
are given too easy a ride by the 
regulator. 

Mr Gordon Brown, shadow 
chancellor, warned List week- 
end that his party believed 
some companies should be sub- 
ject to a windfall profits tax, 
especially in view of tbe 
regional companies' forthcom- 
ing flotation of the National 
Grid. 

The Grid is expected to fetch 
at least £4 bn. whereas it was 
valued at just £1.2bn in 1990. 

Shareholders in Scottish 
Power and its neighbour Scot- 
tish Hydro-Electric should suf- 
fer less than the regional elec- 
tricity companies from the 
political row's fall out. 

They have no stake in the 
Grid and have had to cope with 
considerably tighter price con- 
trols than the regional compa- 
nies in England and Wales. 

Furthermore this year's reg- 
ulatory review of prices, to 
take effect from next April, 
was viewed by the market as 
being much tougher on the 
Scottish companies than those 
in England and Wales. 

Hydro agreed. Two weeks 
ago it announced it was reject- 
ing the controls on its distribu- 


ELECTRICITY COMPANIES; DIVIDEND FORECASTS 

Interim 

Results 

date 

Company 

Forecast" 
range (p) 

Previous 

Percentage 

increase 

Nov 10 

Scottish Power 

4.50 

4.13 

10.9 

Nov 15 

PowerGen 

4.7 

3.95 

19.0 

Nov 17 

National Power 

4.6 

3.75 

22.7 

Dec 1 

Seaboard 

3.85 

3.3 

16.7 

Dec S 

N Ireland 

3.9 

3.39 

15.0 

Dec 6 

Midlands 

8.8 

7.65 

15.0 

Dec 7 

Swalee 

mo 

7.5 

46.7 

Dec S 

Hydro- Electric 

4.4 

3.96 

11.1 

Dec 9 

Norweb 

7.7 

6.7 

14.9 

Dec 12 

Nonhem 

B.6 

7.4 

16.2 

Dec 12 

Eastern 

7.9 

6.6 

19.7 

Dec 13 

Southern 

7.S 

6.7 

16.4 

Dec 14 

London 

8.4 

7.4 

13.5 

Dec 14 

Manweb 

8.1 

7.0 

15.7 

Dec 15 

South Western 

8.1 

7.0 

15.7 

Dec 16 

Yorkshire 

7.9 

6.9 

14.5 

Dec 19 

East Midlands 

7.8 

6.8 

14.7 

r Owidena TOaUicnd* ■ Forecast!. ■» ran owfada scope let gratae r , ftrafcnd tmantxmert Mknwig 

roctsm stem ouy Cum 

Soiree: SO nurtuf? onc> ootrtay annual reports- 


tion business, triggering a 
reFeral to the Monopolies and 
Mergers and Commission. 

With such an important 
issue at stake Hydro may be 
relatively subdued when 
announcing its results next 
month. Even so. it is expected 
to produce an interim dividend 
rise or about 10 per cent. The 
City will be looking for guid- 
ance from Hydro as to how it 
sees the referal taking shape. 

The main question investors 
will ask of Scottish Power is 
what it intends to do with its 
likely cash surplus. Unlike the 
England and Wales companies 


Jft 

£ 

f 


it has not sought shareholder 
permission to buy back shares. 

Does it intend to make a 
large acquisition, perhaps buy- 
ing one of the England and 
Wales regional companies? Or 
will it follow the example of 
East Midlands Electricity and 
provide a large special divi- 
dend. 

South of the border similar 
questions will be put to 
Southern Electric and York- 
shire Electricity. Both have 
approval to buy back shares 
but have not yet done so. 

Yorkshire's recent with- 
drawal from a deal to buy a 


stake in Stockholm Energi 
could free up about £l50m. 

Most of the other regional 
companies can still effect buy 
backs since all but two, Mid- 
lands and Northern, have yet 
to reach the 10 per cent limits 
which have been approved. 

Other topics of interest will 
include the regional compa- 
nies’ non-core activities, 
including retailing and con- 
tracting. in which some compa- 
nies are struggling to make 
profits. 

The main focus, however, 
will be on dividends. Opinions 
differ as to how far the 
Kn piand and Wales companies 
dare go. 

One theory is that with the 
regulatory review over and an 
election still probably two 
years away, the companies will 
throw off their inhibitions and 
pump out as much money as 
they can. 

“The gloves are off." said Mr 
Nigel Hawkins, analyst at 
Hoare G ovett, the securities 
house. "Conveniently the Bud- 
get on November 29 pre-dates 
the l main] reporting season, so 
aggressive dividend announce- 
ments will not add to the clam- 
our for the government to 
impose a savage one-off tax on 
the planned disposal of tbe 
National Grid.'' 

Mr Kevin Lapwood, at Smith 
New Court, disagreed. “The 
recs have a political dilemma. 


Share buy backs mean that 
some companies could push 
dividend increases per share, 
rather than total dividend pay- 
ments, past 25 per cent. 

“But companies have to be 
sensitive about what the Tories 
might do to them as a result of 
the Grid sale. MPs are acutely 
aware that a spot of rec-bash- 
ing could do them some good 
in the polls." 

The English generators both 
report next week with Power- 
Gen on Tuesday and National 
Power on Thursday. Their 
results are the last before the 
government sells its remaining 
40 per cent holdings in Febru- 
ary, so there will be more than 
usual interest. 

Issues include the compa- 
nies' diversification and their 
attempts to try to sell up to 
6.000MW of capacity by the end 
of next year, as agreed with 
the regulator. 

Northern Ireland Electricity, 
the last of the 17 companies to 
be privatised, is expected to 
show dividend growth of about 
15 per cent But this is the one 
company where dividends may 
taken second place to other 
issues. 

The main interest will centre 
on the effects of the IRA cease- 
fire. Company engineers have 
already been investigating the 
possibility of re-opening the 
interconnector with the Irish 
Republic. 




/ . 





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Jf you thought cable wa* just about delivering films to your TV, may we add some other dimensions 
True, the cable above can deliver around 36 channels of television. (Or more than 150 channels 
with the future benefits of digital ly compressed signals.) True, it can also carry telephony. 
But its potential capacity, in conjunction with its scope to offer interactive services, makes 

it a future communications medium of epic proportions. TELE WEST 

f-t.Vi i I Till ill | tl 


This advertisement is issued by TtfaWcM Commun.ea.ions pic and h*» been ..pproved by V le.n^mr Bensnn Limited a member of The Secuntus end Futures Au.hor.Iy Lim.led. solely for the purpose of Section 57 of the Financial Services Act I960 






FINANCIAL TIMES 


WEDNESDAY NOVEMBER 9 1994 


28 


★ 


COMMODITIES AND AGRICULTURE 


Former eastern bloc ‘could pose food threat’ 


By Alison Maitiand 

Successful economic reforms in 
the former Soviet bloc could 
turn those countries into net 
food exporters and depress 
world food prices early in the 
next century, a report predicts 
today. 

“If the policies that currently 
distort food markets are 
phased out, eastern Europe 
and the former Soviet Union 
would shift from a net food def- 
icit to a surplus of 30m to 50m 
tonnes of food per year,” says 
the report by the Washington- 
based International Food Pol- 
icy Research Institute. 


The study says international 
grain prices could drop by up 
to 20 per C8nt as bod from the 
former communist bloc enters 
the world market 

Increased food production in 
eastern Europe could upset 
predictions of higher world 
prices resulting from the Uru- 
guay Round world trade agree- 
ment to reduce subsidised 
exports by western European 
countries. 

Lower world prices would 
hurt both big exporting 
nations and poor fanners in 
developing countries, who 
would suffer if food imports 
become cheaper than domestic 


production, the report says. 

The institute carries out 
research into sustainable food 
production, improved incomes 
and nutrition, and better agri- 
cultural trading conditions for 
developing countries. 

“The majority of the world’s 
poor subsist on agriculture and 
agricultural-related activities 
in the rural areas of developing 
countries,” says the author, Mr 
Rod Tyers, an economics pro- 
fessor at the Australian 
National University. 

"Cheaper food would 
decrease the level of economic 
activity from which they earn 
their living.” 


His report highlights the 
impact or the sharp decline in 
consumer demand for meat in 
the former Soviet bloc, which 
has led to a fall In the number 
of cattle and pigs and cut the 
amount of imported grain 
needed to feed them. 

"This change alone has 
caused so substantial a reduc- 
tion in net food imports, it 
could potentially reverse the 
direction of the whole region's 
net food trade,” U says. 

Eastern European nations 
are expected to be self-suffi- 
cient in food by 2000 on aver- 
age, a sharp turnaround from 
the 1980s when the Soviet bloc 


was a net food importer. 

However, the report empha- 
sises that the shift towards 
self-sufficiency and net exports 
of staple foods will take place 
only if collective farms are bro- 
ken up into smaller, more effi- 
cient units and if transport, 
processing and marketing 
systems are reformed success- 
fully. 

Economic Reform in Europe 
and the Fortner Soviet Union 
Implications for International 
Food Markets. Available from 
IFPRl 1200 Seventeenth Street 
NW, Washington DC 20036. 
USA. 


Commission to investigate Australian sugar price ‘war’ 


By NMd Taft in Sydney 

A review of Australia's sugar 
industry is to be undertaken 
by the Trade Practices Com- 
mission, the country's competi- 
tion watchdog, following spec- 
ulation that a sugar price war 
is being waged by Australian 
companies. 

The TPC yesterday noted 
that "media reports have indi- 
cated that long-term sugar con- 
tracts are being executed by 
Australian companies at signif- 


icant losses”. This situation 
would be “unusual" in the 
sugar market and warranted 
investigation, the TPC said. 

The move was welcomed by 
Mackay Refined Sugars, which 
alleges that CSR, traditionally 
the big player In the country's 
refining industry, has 
embarked on "a deliberate 
strategy of selling refined 
sugar at below cost for a num- 
ber of years forward”. MRS is a 
joint venture between Mackay 
Sugar Cooperative Association 


and London-based trading 
house, E J). & F. Man, and has 
established a new. low-cost 
refinery in Queensland. 

MRS claimed that it was 
seen as "a threat to the estab- 
lished market refiners and in 
particular to CSR which has 
historically dominated the 
market”. CSR. which originally 
hoped to establish a joint ven- 
ture with MRS before encoun- 
tering TPC opposition, said It 
would cooperate frilly. 

“All our sales of refined 


sugar, without exception, have 
above our costs of supplying 
the sugar concerned,” it said. 
• Jamaica's raw sugar pro- 
duction is to be increased by 
100,000 tonnes a year with an 
expansion in the capacity of 
three of the island’s larger 
mills, which were bought by a 
private company from the gov- 
ernment earlier this year. 

The Sugar Industry Com- 
pany of Jamaica will spend 
US$70m over the next five 
years to rehabilitate the mills, 


bringing their aggregate out- 
put to 220.000 tonnes per year 
by the 1993-99 harvest Their 
combined production this year 
was 120,000 tonnes. 

The company will also reha- 
bilitate the island's only sugar 
refinery, lifting annual produc- 
tion to 30,000 tonnes, and 
reducing the need for Jamaica 
to import whites. Jamaica’s 
raw sugar production this year 
was 220,000 tonnes, and the 
industry is forecasting the next 
harvest to yield 240,000 tonnes. 


Tea growers have mixed feelings on bumper harvest 


By Kunal Bose In Calcutta 

India, the world's biggest tea 
producer, is racing towards a 
record crop of anything up to 
770m kg compared with 
753.01m in 1993. By August the 
harvest had reached 466m kg, 
up H-flm from the same stage 
last year. 

Producers' associations have 
started thinking aloud, how- 
ever, about whether they 
should be asking the tea 
estates to cut production in 
December, when in the north 
mostly common to inferior 
varieties are plucked. Last 
December’s record production 
of 43.51m kg was one of the 
major factors behind the fall in 
tea prices from which the mar- 
ket has yet to recover. 


It is still being debated to 
what level the December pro- 
duction of the gardens in the 
north and the south should be 
restricted. Moreover, even if 
the associations are able to 
reach an agreement on cutting 
production it is by no means 
certain that all the gardens, 
particularly the small ones, 
will fall into line. 

According to the Tea Board 
officials: "The silver lining is 
that the tea companies today 
are mostly market driven. See- 
ing the p remium available for 
quality tea. they are investing 
in the modernisation of planta- 
tions and tea-processing facto- 
ries. Even the small, single gar- 
den tea companies in the south 
are malting- efforts to produce 
better tea”. 


The Indian domestic market, 
which is likely to grow to 535m 
kg from 578m kg last year, 
wants medium to good quality 
tea. The share of plainer and 
poor end-of-season varieties in 
the total tea production is to 
Sail in the current year, even in 
the absence of an agreement 
on December production cuts. 

In the eight months to 
August, Sri Lankan production 
rose 149m kg to 164.5m. In the 
same period, however, the Ken- 
yan crop, hit by bad weather, 
fell by 18.4m kg to I22.9m. 
While Bangladesh stepped up 
production by l.9m kg to 
31.2m, the Malawi crop was 
steady at about 28m kg and 
Indonesia's was reported to 
have suffered a setback. 

By the end of August, world 


tea production had reached 
870.3m kg. up from 864.6m kg 
in the same period last year. 

In 1993 world production, 
aided by strong growth in 
India, Sri Lanka. Kenya and 
Malawi and despite the crop 
shortfall in Indonesia, rose by 
142.5m kg to 1.47bn. 

As for India, the gardens in 
the north, including Assam, 
produced an extra 482m kg at 
345.24m while those in the 
south harvested 120.67m kg, up 
6.95m. In keeping with the 
trends in recent years, the 
industry had further raised the 
production of CTC (cut tear 
and curl) tea to 409.76m kg 
from 378.11m. while there was 
a drastic cut in production of 
orthodox tea to 52.16m kg from 
72.27m kg. Green tea output 


was up marginally to 3.98m kg. 

Orthodox tea sales have 
fallen as currency constraints 
have cut imports into farmer 
Soviet countries. "While we 
continue to face problems with 
shipments to Iran, Russia, tra- 
ditionally the most important 
destination for Indian tea, is 
not buying enough. The same 
is the case with the other CIS 
countries,” said an exporter. 

However, India is selling 
more tea to the UK, Ireland, 
the Netherlands and Poland. 

The rising production and 
the slow export offtake have 
kept prices low at the Calcutta 
auction. The average for 
Assam leaf CTC up to the end 
of September was Rs50.84 a 
kilogram, against Rs53.30 in 
the same period last year. 


Canadian companies get head 
start in race for Chinese gold 


By Bernard Simon in Toronto 

A company owned by 
American Barrick, the Toron- 
to-based gold producer, and 
Power Corporation, the Cana- 
dian investment holding com- 
pany, is close to finalising two 
gold exploration and develop- 
ment ventures with the China 
National Gold Corporation. 

The letters of intent signed 
yesterday are part of an ambi- 
tious drive by the two Cana- 
dian companies, operating as 
Barrick Power Gold Corpora- 
tion of China, to lead the mod- 
ernisation and expansion of 
China’s fragmented gold-min- 
ing industry. 

Barrick Power, which is 75 
per cent owned by Barrick and 
25 per cent by Power, Is confi- 


dent that it has a head start on 
□ther western mining compa- 
nies in China. It has a staff of 
more i-Han a dozen in its Bel- 
ling office. CNGC agreed ear- 
lier this year to submit pro- 
spective gold-mining properties 
to Barrick Power for evalua- 
tion. , 

Under one of the proposed 
joint ventures, Barrick Power 
Brill acquire a 75 per cent stake 
and provide management, tech- 
nology and financing for the 
Paishanlou project in Iiaoning 
province. The venture will 
have an Initial capital of 
DS$40m. A pre-feasibility 
study, started earlier this year, 
envisages an open-pit mine 
producing 30,000 tonnes of ore 


that Anther drilling was due to 
take place next year near the 
existing deposit and that a 
mining plan would be com- 
pleted by the end of 1995. 

The second joint venture 
centres on the Changkeng 
deposit in Guangdong prov- 
ince Samples from this refrac- 
tory deposit have already been 
tested at Barrick’s Goldstrike 
mine in Nevada,, with "high 
recovery rates”. 

Barrick Power said that It 
planned a “major” exploration 
programme, at Changkeng in 
1995 once the joint venture 
company had been set up. 

The announcements coin- 
cided with a 400-stroug trade 
mission to. China led by Cana- 
da’s prime minister Mr Jean 
Chretien. 


MARKET REPORT 

Coffee futures bounce ahead of 
Brazil’s official crop estimate 


London Commodity Exchange 
COFFEE futures prices leapt 
yesterday as traders took the 
view that Brazil’s official crop 
estimate for 1995-96. expected 
today, might be at the lower 
end of the range of recent fore- 
casts. 

The January contract closed 
at $3,570 a tonne, $10 off the 
day's high but still $131 higher 
on balance, after Brazilian bro- 
ker Wolthers and Associates 
predicted that the crop would 
be 13.95m bags (60kg each). On 
October 26 the Brazilian. Gov- 
ernment it made a preliminary 
estimate of 13m-15m bags. 

Traders said the sudden 
move higher triggered stop-loss 
buying orders, especially just 
above $3,51)0 on the January 
contract And the move higher 
was helped by a rumour high- 
lighted in a Brazilian newspa- 
per that the government was 
considering a 10 per cent 
export tax on coffee. 

White SUGAR futures recov- 
ered earlier losses to trade at 
fresh four-year highs in late 
afternoon. 


“Sentiment is still very 
firm.” said one trader. “People 
are expecting the market to go 
even higher.” He cited contin- 
ued confhsion over the future 
of the Russian) Cuban, oil-for- 
sugar deal as one of the main 
bullish factors. 

At the London Metal 
Exchange BASE METALS 
prices recouped early losses 
and, aided by a strong rally in 


Uto HUBWM STOCKS 

lAs a Monday's daw} 
tonnes 

Akeraeuni 

-0/400 

to 1^82>30 

Mmnun riJoy 

+£20 

to 28.120 

copper 

-S£75 

Co 325.230 

Lead 

-125 

IO389.450 

Mckri 

-144 

to 150^278 

Zinc 

-1.600 

to 1.21&875 

Tin 

-330 

to 30.075 


copper and aluminium, ended 
with most showing gains at the 
close. 

"A sharp correction was on 
the cards early today but they 
tamed round quicker than, 
expected. I think a lot of the 
afternoon baying was short- 
covering,” a trader said. 

“These markets are still 


rather nervous but the [specu- 
lators] are not letting 
go. . . we could be testing the 
highs again soon.” said 
another. 

ALUMINIUM had dictated 
the early trend. News that 
extra metal from the US 
north-west might be available 
as a result of additional power 
and of a possible potline 
restart at Ghana's Valeo sent 
prices lower. 

But once the initial wave of 
setting had been absorbed an 
across-the-board fall in stocks, 
except for aluminium alloy, 
was the signal for buyers to 
return and movements became 
rather choppy. 

Quality buying and short- 
covering helped lift the GOLD 
prices after a bearish start 

A firmer opening in New 
York also contributed as the 
London bullion market price 
rose $2 j 05 to dose at $385.10 a 
troy ounce. But resitance 
appeared to be capping the 
recovery, a dealer said. 

Compiled from Reuters 


# 


0 


COMMODITIES PRICES 


BASE METALS 

LONDON METAL EXCHANGE 

(PWeaa from Amalgamated MetaJ Tiadbig) 

■ ALUMNUM, 90.7 PURITY (S per tonne) 


Precious Metals continued 

■ GOLD COMEX (100 Trey QZ^ S/Voy «.) 



Cash 

s mth* 

Ctom 

1839-40 

1855-56 

Previous 

1840-1 

1861-2 

High/low 1831 E/1 830 

1868/1818 

AM Official 

1831-31.5 

1847-8 

Kart) dose 


1868-9 

Open kit 

261,596 


Total Holy turnover 

71.886 


■ ALUMNUM ALLOY ({ per tome) 


Ckxe 

1820-25 

18S0-63 

Previous 

1856-60 

1880-2 

rtgMcH* 


1855/1836 

AM Official 

1800-10 

1845-60 

Kerb dose 


1855-66 

Open M. 

2J>14 


Total riaiy turnover 

556 


■ LEAD (5 per tonne) 



Ctoae 

667-68 

683^-84.0 

Previous 

6685-05 

684-45 

Hgh/taw 

670 

886/680 

AM Offidri 

889-70 

8845-85.0 

Kart) dose 


683-686 

Open friL 

43,640 


Tow da iy turnover 

15395 


■ NICKEL (S per tome) 


Ctoae 

7345-55 

7465-70 

Previous 

7420-30 

7540-5 

Htfi/taw 

7360 

7500/7380 

AM Offidri 

7360-65 

7478-78 

Kerb close 


7490-600 

Open frtt. 

72,188 


Tetri drily turnover 

18.400 


■ TIN (5 per tonne) 



Ctoae 

6100-70 

6265-60 

Previous 

0150-60 

6240-50 

f M J,4|- 


8200X3160 

AM Official 

6170-75 

-0255-60 

Kerb dose 


6250-60 

Open to. 

20,690 


Total dafly turnover 

5*8 


■ ZMC, special Mgb pads ($ per tome) 

Close 

11S1-5-S2J> 

1174-75 

Previous 

1151-2 

1172-0 

MgMow 


1177/1100 

AM Offidri 

11405-46 

1188-6&.S 

Kerb dose 


117B-7 

Open to 

108.679 


Total defy turnover 

24,038 


9 COPPER, grade A (5 per tome) 


Ctoee 

2707-11 

2880-84 

Previous 

2710-1 

2687-8 

HgMow 

2724/2722 

2895/2669 

AM OfflcM 

2722-23 

2888-89 

Krib does 


2689-90 

Open to 

22Q£B1 


Total duty tunover 

79,653 


a LME AM Official us rate: 1.6155 

LME Closing US rata: uttiaa 


Spot 1 £220 3 attic 1.6208 6 fflhclSim 9nttwiai81 

■ HIGH GRADE COPPER (COMEX) 


Oafs 


Open 

Oran cbxngs 

MU* l-t 

m Vo! 

ton 12445 -050 12625 124.30 

U7B 217 

Bee 12X90 -0.15 

12000 12X60 3t32B 0,172 

ju izloo -aas 

124.45 124.45 

932 30 

ito 122.10 +005 

- 

585 4 

Her 1213 +005 

12280 120.73 

10,262 1.284 

Apr 11905 +015 

- 

708 8 

TWri 


60*10 11*95 


PRECIOUS METALS 

■ LONDON BULLION MARKET 
(Prtcoa auppted by N M ftpUwchfcfl 


Gold (Troy oz_) 
Close 
Opening 
Morning fix 
Afternoon fin 
Day's Hfcft 
Day's Low 
Piwloue dose 


e eqriv. 


237.243 

237.541 


S p ri o 
384^0-385^0 
382.00-382.40 
383.10 
384.65 

38530495.70 
382.00-382.40 
382.90-383^0 
Loco Lcfri Mean Gold Laming Rates (Vg U3S) 

1 morrtfi 4.60 6 month s — „ — -024 


Sett Day's Itoee 

price ebaege to to hi ' W 

toe 383.7 +1.0 - 24 24 

Ok 3848 +1S 38&S 3843 85.129 17.749 

Jto 3885 +IJ - - 21X1 2.151 

W 3885 +15 330.0 3678 9,811 147 

Apr 3922 +15 333J 3929 10.455 895 

•tan 3959 +1.5 3979 396.4 8.175 22 

TUtt W5^84 21,798 

9 PLATWUM NVMEt (50 Troy 0*4 SAroy cc) 

•tan 

4122 

-05 

4164) 

411.3 

14160 

4570 

Air 

4107 

-06 

4204) 

4145 

4585 

141 

Jni 

42M 

-08 

4220 

421A 

1J03 

4 

Oct 

4705 

-08 

- 

- 

499 

- 

Jnn 

4299 

-06 

- 

- 

10 

- 

Trial 





26/167 

4716 

■ PALLADIUM NYMEX (100 Tray 024 Sftroy at) 

Dm 

158,75 

+090 18000 

157S0 

4.338 

758 

Mar 

16030 

+085 

181-50 

15000 

2725 

139 

Jen 

18130 

+083 

161-30 

16125 

405 

- 

S"P 

18205 

+085 

- 

- 

31 

- 

row 





7X7 

687 

■ SB.VEH COMEX (100 Tray 02.; Centeftray 02) 

Dm 

saw 

+21 

- 

- 

250 

250 

Dec 

5225 

+24) 

527.5 

5214) 71.293 13JS13 

Jae 

525.1 

+40 

- 

- 

89 

3 

tor 

531.1 

+41 

5384) 

5300 20999 

2564 

Uay 

S37J) 

+41 

5420 

5364) 

4*13 

85 

Jkd 

5412 

+41 

546.0 

5444) 

4*48 

52 

Trial 




114278 17^18 

ENERGY 






■ CRUDE OtLNVMEX (42,000 U3 gaBe. S/barrri) 


Ltott 

Itayta 



Open 



price 

cfcaege 

MW 

Low 

tat 

Vri 

Dec 

I8J3 

-004 

1641 

1412 

78.783 45,982 

in 

1213 

-003 

1018 

1796 80 £88 27.308 

M 

17-36 

4LQ2 

184)0 

1741 

39485 10682 

■tar 

1766 

-002 

17.86 

17.73 24 921 

5.355 


17.77 

-004 

17.78 

17-07 

17.472 

2381 

toy 

1773 

■003 

17.73 

17.84 

12205 

303 

Itol 




381,881 94497 

■ CRUDE Ott. IPE (S/barrel) 





Laktt 

oays 



<taee 



price 

chogs 

M* 

Lett 

tat 

M 

Dk 

17.17 

-021 

17-31 

174H 72,715 21,848 

•tan 

16.78 

-008 

ism 

1468 63,193 

14008 

FA 

iaw 

-009 

1467 

1453 22388 

3.712 

tor 

1663 

-003 

16-53 

1444 12383 

2397 


16-45 

-004 

16u<8 

1439 

4^45 

105 


ia« 

- 

- 

- 

2052 

- 

Total 




190717 442m 

■ HEATING OIL NYMEX (42JW0 US gto, oUS gafe) 


Latest 

Oaf* 



Qim 



P*« 

dnege 

non 

Lew 

tat 

Tri 

Ok 

5030 

-014 

5IL54 

4490 42,158 10272 


sow 

jino 

51.03 

5445 35.979 

4974 

Ftb 

51J0 

-029 

51 iD 

814B 22381 

isae 

■tar 

50.75 

-0J9 

51.10 

60.75 

12092 

248 

Apr 

50.10 

-029 

50.10 

5010 

7.767 

47 

toy 

507(4 

+070 

- 

- 

4SJ1 

fffl 

Total 




151,718 21,950 

■ GAS OIL K (SAorra) 





Sri t 

Ban 



OPK 



to** 

cfcaege 


lew 

tat 

iw 

HM 

151.76 

-025 

15250 

151.50 21,178 

7238 

DK 

1544)0 

-025 

154 SO 

153-50 31.781 

4448 

Jan 

15550 

-025 

15400 

15400 21.495 

2781 

Fob 

15530 

•080 

15075 

1S5.75 

4302 

1.128 

tor 

isaoo 

-ora 

15026 

1S-50 

7,731 

612 

Apr 

1S445 

-075 

13440 

15425 

4242 

87 

Tew 




1048H 20,189 

■ NATURAL CMS WttEX (10900 imBfet; SftmBta) 


Itot 

Day* 



0p« 



tofca 

ctaege 

MW 

Lea 

H 

M 

DK 

1.780 +04)01 

1-770 

1.740 24937 

15SQ3 

•Me 

1.895 

■0017 

1-310 

1 J80 20,729 

4470 


1.880 

-0004 

1-885 

1-870 12878 

3.724 

tor 

tJSO +0-003 

1455 

1S40 12884 

2263 

Apr 

1-815 +04)05 

14)15 

1J05 

7732 

1^89 

toy 

1820 +5007 

inzs 

1S10 

4735 

1.009 

Trial 




134498 32794 

■ UW£ACB> GASOLME 




wmEX (42000 US gate,- c/US grib) 




2 months 4S8 12 monttis 5.61 

3 months _ 


Lritat 

ptoa 

Oafa 

cfcaegg 

SBver Fix 

p/troy ok. 

US cts eqriv. 

DK 

5470 

+406 

Spat 

32235 

520.86 

Jm 

5420 

-037 

3 months 

327 JO 

52410 

tofa 

5445 

-045 

8 months 

332,20 

535.45 

tor 

5490 

-055 

1 year 

344-85 

55490 

Apr 

5410 

-080 

OoJdCofrm 

Krugerrand 

Maple Leaf 

Mew Sovereign 

S price 
384-387 
385-45-337-95 
88-82 

£ eqriv. 
238-241 

55-68 

toy 

Trial 

57 JS 

+025 


4200 004 

5,250 1.031 
1,883 807 

891896 2*722 


GRAINS AND OIL SEEDS 

■ WHEAT LGE (E per tonne) 

Sot Day's Opto 

pice ctoegs n# Low tat 

MOV 104 00 -tOLlO 10440 10350 628 

Jen 10545 +0JJ5 105.05 10450 1.981 

air i07m *aos mjjs iosjo i&h 

10665 +005 108D5 10050 1.629 

111.15 *005 

93.75 -055 94j00 93.50 


Vri 


MW 

Jri 

Sap 

Total 


120 

40 

M72 


■ WHEAT C8T (5,OOOt>u min; oonts/BOb bushel) 


-410 392/2 366/2 33561 7,071 

-4fl 403/0 397/4 2*373 4,175 

-443 378/4 374 IQ L269 333 

-24) 346/D 341/4 105* 1.132 

-1/8 348/4 3464) 296 10 

-2/4 357/4 357/0 154 6 

755« 12,727 


Dec 388/6 

Mr 398 (0 

May 374/6 

Jel 342* 

Sap 347/0 

Oac 357/4 

ToM 

■ MACE C8T (5J00 bu mar; centa/568) bushel) 

Oao 


217/D 
Wm 228/4 

Hay 2364) 

Jri 241/2 

Sep 248/2 

Dae 251/2 

ToW 

■ BARLEY LCE (E per tonne) 


*0/4 217/1 21^4109^36 3*211 
+0/2 229/D 2284) 60500 8.824 

+0/2 236/4 235 « 26JS2 1.960 

+0/2 241/8 340/4 35JB2 2^75 

+0/6 2408 245/4 3^81 339 

♦14) 251/4 24945 15J93 1,078 

257,728 32,720 


tor 

9995 

- 

6 

- 

Jan 

10250 

+405 

484 

- 

tor 

1M-90 

-405 

IX 

- 

toy 

10425 

- 

48 

- 

Sap 

9225 

♦475 

15 

- 

tor 

9490 

•415 9490 9125 


10 

Total 



E83 

10 


■ SOYABEANS C8T ftflOtoi artHSOfc tlutM) 


tor 

558/0 

*372 

559(0 

553/4 10982 

13904 

Jan 

5BOT 

+3» 

570/4 

564/4 58987 319SI 

tor 

579(0 

+3/2 

680/4 

575/0 2438* 

6J34 

toy 

587/0 

+3/4 

6am 

583/4 13942 

1937 

Jri 

583/4 

+3/2 

494/4 

58EW 21.458 

19<2 

Aug 

588/4 

+3/6 

587/6 

593/4 1922 

161 

Taw 




142758 68,709 

■ SOYABEAN Ott. CBT (GO.OOOBjs cents/b) 

Ok 

2793 

♦448 

77.73 

2890 37,428 

9941 

Jan 

2488 

+447 

26.78 

2403 21277 

8282 

Kv 

2489 

+458 

2593 

2523 14922 

2.739 

toy 

2427 

+048 

2590 

24.70 13.401 

1,163 

Jri 

2492 

+437 

2495 

2*A0 7,129 

1,428 

Ang 

2*95 

+030 

2495 

2450 1980 

34 

ratal 




101,284 21940 


■ SOYABEAN MEAL CBT (100 lore; S/ton) 


Dec 

1800 

-03 

1609 

1544 38962 

6433 

Jan 

161.7 

-09 

1629 

161.4 199/9 

3205 

tor 

1659 

07 

1689 

166.7 

18988 

2920 

toy 

1704 

•03 

171.4 

1704 

9922 

494 

Jri 

1755 

0.1 

1742 

1732 

8937 

1,134 

A«fl 

177.0 

-OI 

1779 

1774 

I960 

13 

Trial 





64042 13930 

■ POTATOES LCE (Dionne) 




tor 

1054 

- 

. 

. 



Apr 

2389 

-07 

2454 

2379 

1958 

205 

toy 

2509 

- 





Jon 

2504 

- 

. 

. 



Trial 





1,253 

205 

■ FRSOtT (BtFFEXJ LCE (SlO/lndex 00M 


tor 

1790 

-3 

• 

. 

257 


Ok 

1710 

*0 

1710 

1709 

371 


Jra 

1645 

■5 

1870 

1645 

1453 

50 

Apr 

1818 

■2 

1623 

1618 

681 


Jri 

1440 

+2 

- 

- 

132 


Jan 

1442 

-8 

- 

- 

17 


Trial 

Ctan 

Prev 



2911 

87 

BH 

T8S5 

JS41 






European free martgst, from Metal Bulettn, S 
per b in warehouse, unless otherwise Stated 
past week's in brackets, where changed). AnH- 
■nony: 895%, * per wine, 5,320-6/320. Bis- 
muth: min. 93.99%, tonne lots 3.60-3.95. 
CHknfcmK nrin. 89.5%, 180-185 cents a 
poind. Cobalt MB free market, 99.8%, 2850- 
27.30; 993%. 2430-25.40 (2430-25.5 0). Mer- 
cury: min BBL3996. S per 76 b flask, 716-135 
(110-135). MoiyMonun: (frunanad motybefle 
axkfe. 620-6.80 (5.90-6.40). Sohju l mu- ntin 
99-5%. 3.45- 4 -65. Timgetan are: Standard min. 
85%. 3 per tome urn {10kg) WO, ctf, 45-55. 
VanttriuoK min. 88%, cB. 1.40-135, Uranium: 
Nuaxco exchange value, 730. 


SOFTS 

■ COCOA LCE (e/lonne) 


MEAT AND LIVESTOCK 

■ LIVE CATTLE CME (40,0008»: cents/tos) 


Sett Deri 
prtoa 


change Mgb Lee 


Open 

tat 


W 


Sett Day's 

price e fcw igo Mgb Lew 


VM 


61 

Dk 

934 

♦2 

935 

926 

19,400 

892 

Dk 

70225 +0550 70425 69.725 20778 

6.398 

157 

Mtt 

960 

+3 

961 

950 

42444 

1.782 

Fad 

68.525 +0350 68425 69.175 21494 

2.440 

9 

May 

957 

+2 

988 

960 

14423 

220 

Apr 

59 975 +03 S 76000 69425 

15462 

1495 

60 

Jri 

979 

*1 

981 

975 

8.602 

11 

Joe 

65.625 +0.125 65450 65475 

5.135 

<63 

- 

Sap 

993 

+1 

994 

993 

12.639 

50 

Aug 

64450 *0-1 DO 64.400 64400 

1429 

46 

6 

Dk 

1010 

+2 

1010 

1005 

9480 

57 

(tat 

65.125 +0.125 65.125 65400 

291 

17 

429 

Trial 




111974 332 

Tetri 


73495 10460 


■ COCOA CSCE (10 tonnes; Slams s) 


LIVE HOGS CME (40.0008s: cents/ba) 


dk 

1300 

+22 

1305 

1281 

15,407 7434 

DK 

Mian -0.050 33450 32400 

17.177 

4455 

tor 

1339 

+23 

1342 

1318 32463 5474 

Fab 

38400 -0.050 38800 36450 

9.737 

2032 

toy 

1363 

+22 

1385 

1342 

8428 1417 

Apr 

37225 +0400 37250 26475 

4497 

1274 

Jri 

1388 

+23 

1388 

1365 

3,427 173 

Jen 

42.450 +0-100 <2.450 42.125 

£457 

380 

Sap 

1411 

+23 

1392 

1382 

1400 so 

Ang 

42000 -OlOSO 42100 41400 

<85 

57 

Dk 

1441 

+23 

1429 

1429 

5468 81 

Oct 

38450 +0.150 39.100 38800 

389 

19 

TaW 





75410W42S 

Triri 


35429 

8430 


U COCOA PCCO) (SOFTs/toma) 


■ PORK BELLIES CME (40,000rhs; cents/lbs) 




Wee 
. 961.65 


Pm. ur 
980.73 


■ COFR3E LCE (&toma) 


to* 

3520 

+112 

3525 

3400 

447 

34 

Jan 

3568 

♦129 

3580 

3437 12,463 3,438 

Star 

3515 

+115 

3525 

339* 

8,115 

1280 

Hay 

3475 

+105 

3*90 

336* 

3204 

338 

Jri 

3440 

+04 

3440 

3350 

1,401 

140 

Sep 

3428 

+103 

3428 

3338 

1,578 

75 

row 





27)350 6813 

■ COFFEE tr CSCE ff7jBOObK cents/lba) 


DK 

18200 

+520 

195.00 

18220 

QgW 

2015 

Bar 

19400 

+5.10 

zoom 

188.00 

12284 

1219 

toy 

196.50 

+435 

197.15 

isaw 

5.421 

502 

Jri 

197.50 

♦4.75 

198.75 

19500 

1.744 

123 

Sap 

19825 

+425 

20000 

19325 

1211 

92 

Dk 

199.15 

+4.90 

20029 

19500 

89* 

36 

Total 





31/BO 5,193 


QCO) (US oenta/poureJ) 


Mae 7 

Comp. daBy — 
15 day areraga 


MM 

.17534 

18034 


Pnr*. day 
17422 
18158 


■ No7 PRBMUM RAW SUGAR LCE (cmtaAba) 


Jri 1100 

- 90 

- 

tor 13.47 

- 560 

- 

toy 1159 

- 450 

- 

JK 1138 

- 

- 

TaW 

m WHITE SUGAR LCE (SAonnei 

1,110 



(Mo 

37030 

-IOO 

372.80 

37000 

1491 

BS3 

Htt 

36300 

-QOO 365.40 35880 

9.109 1001 

toy 

358.40 

■0.40 361-30 38720 

3^9 

761 

AW 

35050 

-020 

353.70 

35000 

2.764 

179 

Oct 

325.10 

-am 327-00 

325.10 

949 

2*5 

Dk 

324.10 

■OOQ 

327 2D 

324.10 

23 

180 

Tetri 





12322 308* 

■ SUGAR 11> CSCE (112.000b.*; cantata) 


tor 

1115 

-0.12 

13L35 

1110103,43013249 

toy 

1324 

-0.06 

1130 

1116 28028 3237 

Jri 

1304 

■aio 

13.16 

1300 

17,721 

1063 

oct 

12-35 

-0.15 

1250 

1220 15.738 

1.897 

tor 

1135 

-a 13 

1210 

1105 

2,559 

470 


row 


■ 199 62 

lesjoezijse 


■ COTTON NYCe (50 JOOtw; oanta/lbs) 

Deo 7239 -027 7X40 7230 22.110 8385 

tor 7433 -0.10 7430 7431 18.001 3310 

May 7532 410 8 7530 7540 7.196 233 

JU 7830 -035 7&40 7835 4298 280 

Oft 7090 -035 - 600 40 

Dec 6930 -030 7000 6070 3323 200 

Tetri 334912.717 

■ ORANGE JUICE NYCE (15300fea: centaflba) 


NOV 

10900 

+3.10 

109AO 

10620 

450 

104 

Jri 

11140 

+325 

114.00 

10025 14,720 

1.742 

Rr 

117.10 

+320 

117.70 

11320 

5/40 

256 

toy 

12025 

+0.45 

117.75 

117.73 

1249 

33 

Jri 

12320 

+045 

- 

- 

910 

1 

S4P 

126.00 

+035 

12000 

12SJN) 

1JH2 

22 

raw 





25/88 2,189 

VOLUME DATA 





Open 

interest 

and 

Vriume 

date 

shown 

lor 

contracts traded on COMEX NYMEX CBT. 
NYCE. CME. CSCE and IPE Ctude 08 are one 

day fri arrears. 







INDICES 

■ REUTERS (Base: 1849/31*100) 

NovB How 7 month ago year ago 
211 02 2)033 2038-5 1613.6 

■ CRB Futures (Base: 1967=1001 


Now 7 
23331 


Ho* 4 

23332 


22733 


21833 


Feb 


Taial 


40475 -0725 41.350 40225 
40875 -0525 41300 40500 
41.750 -0800 42350 41.750 
42.725 -0875 41200 42.450 
41360 -0750 42.400 41350 


0109 1,366 
1229 118 

322 21 

330 9 

77 6 

1O0B7 1518 


LONDON TRADED OPTIONS 

Strike price S tonne — Cato Puts — 

■ ALUMINIUM 


(90.7%) LME 

Jan 

Apr 

Jan 

Apr 

1825 

92 

131 

53 

81 


79 

110 

05 

83 

1675 

07 

106 

78 

105 

■ COPPEH 





(Grade A) LME 

Jan 

Apr 

Jtti 

Apr 

2650 - 

114 

106 

SB 

135 

2700 _ 

88 

88 

88 

184 

2750. 

66 

7T 

113 

196 

■ COFFEE LCE 

Jan 

Mar 

Jan 

Mar 

3400 

285 

388 

138 

273 

3450- _ _ 

277 

383 

159 

288 

3500 

250 

330 

182 

324 

■ COCOA LCE 

Dec 

Mar 

□ee 

to 

925 _ 

17 

ee 

a 

31 

950 

6 

52 

22 

42 

076 

2 

41 

43 

66 

■ BRENT CRUDE fPE 

Nov 

Dec 

Nov 

Dec 

1650 

65 

73 

1 

40 

1700 _ — . 

16 

48 

9 

76 

1750 

5 

33 

39 

107 


LONDON SPOT MARKETS 

■ CRUDE OH. FOB (pw barrel/Dec) +or 


Dubri 

S1525-628Z 

+0-095 

Brent Blend (detect 

S174»-721 

-acwo 

Brent Stand (Dec) 

SI 723-725 


Vtf.T-L (1pm est) 

S1R3M22Z 


■ Ott. PRODUCTS NWEprampt delivery OF (Wins) 

Premium Qesofcne 

S!72-ira 

-6 

Gas Ol 

$150-157 

+1 

Heavy fuel 08 

$100-102 


Naphtha 

$169-170 

-1 

Jet fuel 

$1 79-181 

•1.6 

Diesel 

$161-182 


ArtOrimi Arm T«t London pnj 369 ar33 


M OTHER 



Gold tper troy 048 

$385.10 

+2-05 

Sihrer (per troy az)8 

S26£c 

+2-0 

Plettnum (per troy <x_) 

$410.75 

-2-25 

Pefleriten (per tray az_) 

$167 J0Q 

-1.00 

Copper (us prod.) 

13O0c 

-3D 

Lead (US prod.) 

40.75c 


Tin (Kuala Lumpur) 

l&SOc 

-036 

Tin (Now York) 

2060c 


CatOe ffve vreViQt 

116£3p 

•0.19- 

Sheep (Ke weKfiOt* 

lOO^Ip 

♦ass* 

Pigs rive wrighl) 

TBiip 

+077* 

Lon. day auger (raw) 

$330.30 

*1.70 

Lon. day sugar (wie) 

S376S0 

+040 

Tale 8 Lyle e>9ort 

B317JW 

+1J» 

Batey (Eng. teed) 

Unq. 


Mate* (US No3 Yeflcnv) 

1320 


Wheel (US Dark North) 

105.0 


Rubber (DscjV 

85.76P 

-060 

Rubber (Jon)V 

85,250 

-080 

Rtober (KL RSS Nol Jri) 

343.0m 

+25 

Coconut CM (Phfl)§ 

season 

-too 

Prim QH (Malay J§ 

$687.5* 

-2-5 

Copra (Phfl)§ 

$448. Ov 

+3.0 

Soyabeans (US) 

eisaov 

+2.0 

Cotton Outkxjk'A' Index 

76-55 

+080 

Woottope (84s Super) 

440p 



C par bn untaas o Bra w to mad. p pancWHfl- a contrite, 
r rtnogtota. m Mriramian ceraaftO. 7 tfcWac- * ftariPvo. u 
OrtCHon. z Dec. t New. V Laadon Httrieri. 5 CT Bwar- 
eam. 9 Bitten rater dm. 4 Swap Urn wdri* I**"* ’ 
Change an was* « Weas ora tar pma day. 



CROSSWORD 


No.8,606 Set by QUARK 



l * 
4 


ACROSS 

1 House, home or kerb dam- 
aged? Mediator required (6,6) 

10 Record that is about different 
times (7) 

11 le codes deciphered, see (7) 

12 Alright with a dutiful animal? 
(5) 

13 Ambitious person with 
energy - one to absorb gas 
( 2 - 6 ) 

15 The head's only Just seen 
over this leisure wear (10) 

16 Unspoken demand (4) 

13 The man’s in a whirl (4) 

20 Supply air reports for gas- 
mask (10) 

22 Outside layer for one bowled 
finally after record (8) 

24 Short time in transport 
returning for the plant (5) 

26 Rebel goes to New Zealand by 
a special passage (7) 

27 The runner arrived in yester- 
day in France (7) 

28 Ptx at an earlier time? (12) 

DOWN 

2 One pair could be for the out- 
side (4,3) 

3 Priest’s unusually glib 
English is acceptable (8) 

4 Piles of sand in the river? (4) 

5 Medium’s print for examina- 
tion by special radiation (10) 

6 Monetary unit In Caen or Kiel 
turned up (5) 


7 °L the green terrain to go 
through again (7) 

8 Avoid making decision; one 
needs balance to do it (3 XiS) 

9 O'® devouring the crawlers in 
the office? (9,4) 

14 Puts underground gallery 
ff-ross US borders? (10) 

17 Shandy? if 8 what could give 
tjrising market (8) 

19 belne: &esh - forgot lines 

10 , 2 / 

21 81,50,11 under the hills, 

twisting (7) 

23 Weapon sometimes seen by 
corpora) (5) 3 

26 A duck in novel footwear (4) 

Solution 8.605 




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n n □ 
aaaaa 
an □ 
aaoQa 
„ 0 □ 

QaaEacjaa QqdsBbb 
g D g a H Q i a Raa Q g DQ 

oanagHpng 

□□EQB 

QQQQn 


*> 










[*:•« - 




FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


29 


LONDON STOCK EXCHANGE 


MARKET REPORT 


FT-SE-A Ad-Share Index 


fty Wall Street strength prompts rally in London 


Equity Starea Traded 

Turnover by volume [millonj. Excluding: ■ 
Mre+narket buetnen and worana turnover 
IJMO - 


' tise . 

My* *. . 


■i 


** of 


ills 


(t 


•150a s: 


■sagfc 

p ?' , a--!oor*'»S 

■ rr. 1 ‘Jills bus. * 

tc afo. 


ocus 

irburg 

c 

-.*!£ ** *«L 

■: ts?a^ 

« "aiois. to 
--^'-nnaa of & 
Co Mr £ 

■fWSDlSGiJ 
- J “? -iaanct JJ 
; am* ^ 

■ . ~ VO- StSK> 

Mr 

•{ . '‘■'■IS 

— J * rtife ^jv. 

! v> .»r 

-•••- •-: :-.rn^ 

"=• ;•'• - : t ? 


■/ ■ — - v 


3.3m 




i- *■ 






f 


By Steve Thompson 

London's equity market fought 
back strongly from a dismal open- 
ing, shrugging off another bout of 
intense speculation of an imminent 
UK base rate rise. It responded 
BM Md tate ly to a good opening per- 
fonnance from Wall street ahead of 
the first news from the congressio- 
nal mid-term elections for both 
houses. 

The recovery trend in London 
was boosted by a spate of well 
received trading reports from some 
of the UK's leading companies, such 
as Marks and Spencer, British Air- 
ways and An glian Water. 

At the close of trading, the ET-SE 
100 Index had almost erased an ear- 
lier 17.4 fall, ending the session only 
2.0 down at 3,063.3. The FT-SE Mid 
250 Index, which again put on a 


much more resolute performance 
than its senior index, closed Just 
marginally off, down 0.4 at 3,519.7. 

Dealers in the second liners said 
the trading session was "tedious” 
and activity remained at minimal 
levels. 

Senior traders in London expect a 
good opening from the London mar- 
ket this morning, following a strong 
finishing run by international bond 
markets. UK gilts, down around 'A 
early in the session, gradually 
improved to close ahead on balance. 
German bunds were better on the 
day and the long bond in the US 
was up around half a point as Lon- 
don dosed. 

At the same time, the Dow Jones 
Industrial Average, which opened 
under pressure, rallied strongly to 
show a gain of more than 22 points. 

UK equities opened in reasonably 


good shape with the FT-SE 100 up 
almost 4 points at the outset, trad- 
ers reassured by the resolute show- 
ing by US bonds and equities in the 
face of continued nervousness 
about the US elections. 

But the market suddenly lurched 
downwards as the futures market 
opened and the rumours of a UK 
interest rate rise swept the market 
Although these stories were quickly 
rejected, confidence remained 
severely dented until shortly after 
midday when dealers responded to 
a trickle of US-sourced buying 
orders, always a sure sign of a 
steady opening on Wall Street. 

The FT-SE 100 clawed back most 
of its earlier losses and was show- 
ing a fail of 5 points as Wall Street 
opened, gradually improving to end 
2 points off. 

The lack of genuine customer 


business remained one of the main 
talking points. Turnover reached 
569Am shares at the close, well up 
from Monday's 398.8m, but a figure 
that still prompted widespread dis- 
may among broken and market- 
makers. Monday's total managed to 
produce just above £lbn of cus- 
tomer business. Non-Footsie volume 
accounted for 369.9m, or 63 per cent 
of yesterday's turnover. 

A dealer at one of the top UK 
securities houses was impressed by 
the market's resilience as it dipped 
through 3,056 on the FT-SE 100. 
"The futures boys had a real go at 
driving the market below 3,055 but 
could not keep it there. The fact 
that we closed well clear of that 
level augurs well in the short 
term.” He said a half-point rise in 
the US Fed Funds rate was already 
in the market. Lack of movement 


from the Federal Reserve after next 
Tuesday's FOMC meeting would be 
viewed as weakness and would 
probably bigger a sharp sell-off in 
international markets. 

S.G. Warburg was the FT-SE I00‘s 
biggest winner yesterday, the 
shares responding to the expected 
sharp decline in interim profits and, 
late in the session, revived specula- 
tion that JP Morgan, the US invest- 
ment bank, may be taking another 
hard look at it 

There was intense speculation 
that Ca2eoove, the stockbroker, had 
attempted to place 20m Piltangton 
shares, around 1L5 per cent of the 
issued capital, at 190p but failed to 
find buyers for the stock. 

Marks and Spencer and British 
Airways attracted strong interest 
after delivering excellent results 
and double-digit dividend increases. 



sap 

SMWFTOopMS 

M Key Indicators 
Indices and ratios 

FT-SE 100 
FT-SE MW 250 
FT-SE- A 350 
FT-SE- A All-Share 
FT-SE-A All-Share yield 

Best performing sectors 

1 Other Financial 

2 Transport 

3 Diversified Intis. 

4 Merchant Banks 

5 Spirits, Wines & Cider 


3083J 

-ao 

FT Ordnary index 

234A5 

*22 

3519.7 

-0.4 

FT-SE-A Non Fins p/e 

18.81 

(18.62) 

153&4 

-0.8 

FT-SE lOOFut DCC 

3071.0 

+100 

1524.42 

-a 77 

10 yr OR yield 

8.78 

(8.81) 

3.97 

(3^7) 

Long oBt/6quity yld ratio: 

223 

(2^3) 


+09 

+0.7 

+0.7 

+05 

+0.5 


Worst performing sectors 

1 Telecommunications -0.8 

2 Metfia - 0.6 

3 Household Goods -0.8 

4 Property ......... — 

5 Breweries 


-0.6 


Insurers 
active on 
switching 

Leading life assurance 
companies saw exceptionally 
heavy trade yesterday as a 
technical view on relative per- 
formance clashed with the atti- 
tude towards long-term pros- 
pects. 

Several leading securities 
houses had noted that Legal & 
General had underperformed 
the broad market by 5 per cent 
over the past month, while 


Prudential had outperformed 
by the same amount. 

However, heavy switching 
was counterbalanced by the 
feeling that L&G was more 
prone to regulatory changes 
surrounding the selling of pen- 
sions. And the "feel bad factor" 
was compounded by Tuesday's 
news that its US subsidiary 
faces an $8.7m fine . 

The chartists won the day. 
L&G gained 3 at 431p mi turn- 
over of 73m, while Prudential 
slipped a penny to 320p on 
unusually high trade of 13m. 

Warburg volatile 

Merchant bank S.G. War- 
burg saw its shares whip 


EQUITY FUTURES AND OPTIONS TRADING 


Stock Index futures mostly 
marked time In line with the 
cash market, drifting sflghtty 
higher In continued low trading 
volume, writes Jeffrey Brown. 


There were 10,862 contracts, 
up from 8,091 on Monday. But 
some 2.000 of this was spread 
trading as investors moved 
from the December to the 


■ FT-SE 100 PiDEX FUTURES (UFFE) £25 par Ml Max pokrt 


(APT) 



Open 

Set! price 

Change 

«gh 

Low 

Est wot 

Open M. 

Dec - 

- 30®j0 

- 3071.0 

+10.0 

3079.0 

3048.0 

11421 

64718 

Mw 

Jin 

3073J3 

30880 

3l11i) 

+S.0 

+9.0 

soaen 

3073.0 

10 ® 

0 

39® 

80 


■ FT-SE AMD 260 MDEX FUTURES (UFFE) CIO per lul Index point 


DOC 


asms 


4188 


■ FT-SE MtO 250 SIDEX FUTURES (OMJQ E10 par lull Max point 
Dec - 3530.0 

Al open tetaast Il0ma an for previous d ay. f Bm Mbn Mm. 


■ FT-eE1teBWEXOPTlOW |IJFQr30ei)ei0 par 1u8 Max point 

2800 2950 3000 3050 3100 3150 3200 3250 

cpcpcpcpcpcpcpcp 
N o* 17312 3*a m 7*2 802 16 48 30«a 23 57 9^ 96 3»a 144 1 197*2 

OK 194*2 22*2 158 33*a 128*2 48*a 88 58*2 81*2 93*2 411, 124 25*2 181 18 201*2 

Jon 221 42 185*, 58 150*2 71*2128*2 02 81 114*,m* 2 143 49*2 174*2 35*2 212 
Ml 239*2 «9*2 m 63*2 188*2 80 140*2 101 1f1«al2%88*| 152*258% 133 51 219*2 

JiMf 2811,80*2 218*2 117 181*5 1® 118 21512 

Orta 7.785 M» 7,529 

■ EURO STYLE FT-SE 100 BPEX OniOM (UFF9 £10 par M Max poW 

£075 2925 2975 3025 3075 3125 3175 3225 

Kw 195*2 3 148*2 5*2 104*2 12 35*2 22*j 34*2 41*2 15 72 t 113 1*2 158 

DK 215 20*2 174 29 iaB*£4!*2tUl2 58 75 79 81*2- 105 33 136 19 172 

Jan 235*2 32*2 196*2 43 163 50 131 78 104*2 98 00*2124*291*2 155 44*2 197 

Ur 228 54*2 181^96*2 109*2 144 70*2 203 

Junf 267*2 88 206*2122*2 151*2 IBS 107 216*2 

can 807 PUS 738 ■ IMatWog Ma adua. baton* show am bane on aaUgum ptae. 
t ItaB dated te*T "■*» 

■ EUftO STYLE FT-SE MP 2B0 K4PEX OPTIOH jOMLXj E10 per Ml Index poW 


3400 


3450 


3500 35S0 3800 

OK 107 S£P* 80*2 B2*a 110*2 

CBM 0 ftts 0 SBfflfMwnt prices and nMom hb Mot at +30jm. 


3650 


3700 


3750 


around in an otherwise dull 
market as the effect of poor 
figures was offset by takeover 
talk and a large market deal. 

The shares were down 5 ini- 
tially. Warburg reported first- 
half profits down at £62.5m 
from £14&8m previously. But 
the hank had warned in early 
October that they would be 
badly affected by the global 
slump in bonds and the Call 
had no substance to it so the 
price began to recover. 

Then, whispers resurfaced 
that a US investment bank was 
interested in making an offer 
for the UK bank. Also, one 
dealer crossed a line of half a 
million shares at 635p, well 
above the market price, and 


March contract so underlying 
volume was little changed. 

At the official 4.10pm dose 
the FT-SE 100 December 
contract had dewed back 
above the 3,070 critical chart 
level to end at 3,072, up 11 
points. The premium to the 
cash market was 10 points, 
with fair value around 7.5 
points. 

There was some exertment 
in the early morning when the 
market appeared to take a 
serious run at cash equities on 
the back of rumours of an 
imminent rise for base rates. 
But this fizzled out by 
mid-momlng and the session 
took on a slightly unreal 
atmosphere with very little 
business being done either 
way. 

However, sentiment picked 
up towards the close, with 
Wall Street showing signs of a 
strong rally, and traders were 
hopeful of continued upward 
momemtum today. 

Turnover in traded options 
rose to 28,478 lots after 
21,113 on Monday. FT-SE and 
Euro FT-SE business totalled 
16,500 lots. Lonrho stood out 
among individual stock options 
with 4,230 dealt Cable and 
Wireless and I Cl were active. 


| FT - SE Actuaries Share- indices 






s; T 

'he UK Series' : j 



Oey*a . 




Year 

Ob. 

Earn. 

P/E Xd adj. 

ToW 


Nov 8 

ctveW 

Nov 7 

Nov 4 

Now 3 

ago 

yfakNB 

yWd* 

ratio ytd 

Return 

FT-SE 100 

3063.8 

- 0.1 

3065 a 

30978 

3104.4 

3090.0 

4.16 

7.12 

18.57 11188 

1162.94 

FT-SE MU 250 

3519.7 


3520.1 

35348 

3S30.8 

3438.8 

386 

5.61 

2a 79 11381 

131585 

FT-SE Md 250 ax kw Treats 

3521.7 


3522J3 

36348 

35308 

34418 

172 

888 

ia37 117.70 1313.91 

FT-SE-A 350 

1638.4 

-0.1 

1539^ 

15609 

15558 

15438 

482 

6.82 

17® 54.71 

119488 

FT-SE SmaDCep 

. 177824 


1778J1 1781.73 1780.28 177307 

382 

581 

25.19 5082 

1384.70 

FT-SE SnwBCap sat kw Trusts 

174820 


174888 175080 174067 176078 

382 

587 

22.96 5285 

1365.74 

FT-S&A ALL-SHARE 

1624-42 

-0.1 1526.10 1538.® 1540.02 1528.48 

3.97 

0 .® 

17.78 5148 

1203.85 

■ FT-SE Actuaries All-Share 












Day's 




Year 

Phr. 

Earn 

PTE Xd ad|. 

ToW 


Nov a 

cftgeK 

Nov 7 

Nov 4 

Nov 3 

ago_ 

yMdM 

yfatd% 

ratio yK) 

Return 


10-IMBML EXTRACnOtfllB} 289099 

12 Extractive Industrial 380321 

16 OB, fntegnrtedpj 2662.80 

16 (a Exploration 3 Pnidfll) 187&34 


+02 2686.85 273SL44 2737.34 248850 
+08 3791.54 383483 386026 3059.40 
+02 2856.78 270076 2712.91 250050 
-02 187658 188537 1891.59 1919-60 


381 

588 

24.88 89.83 

1086.40 

388 

5.40 

2281 98.62 

1049.19 

3.06 

584 

22.07 96.44 

109988 

282 

L. 

t 3883 

108380 




20 OBI HANUFACTUnetStaST) 1868.18 

21 BuMng 1 ConMiUc8gnp3) 1Q48JSO 

22 BuMna Matte & Mercha<32) 182485 

29 Ch«7*ati9(23l 2270.10 

2 4 Wveretfled MUBMatefiq 177058 

SS Bacmn/o A So ct Squp(34) 1878.07 

26 Engtaeategpi) 179320 

27 Engineering. VehtataeCIS) 2Z79.17 

28 Printing. Paper 6 PckgPB) 278006 

28 Textiles & AppandBOl *54035 


+02 1852x96 1884.® 1861.78 1809.60 4.11 5.17 23.44 6024 951 25 

+03 1045.50 104020 1044JZ3 113820 3.78 536 24.62 36J3 826.43 

+03 161093 1834.77 1817 J8 1B58.10 4,06 5.32 22.78 6600 86404 

-03 227055 2302.47 2319.15 217030 4.08 4.5S 27.51 79® 1007.38 

+07 1759.02 178081 178056 1967® 5.18 &20 23.11 82.75 910® 

+01 1876.44 1887.15 1884.02 2087.60 4.02 O® 17.84 61® 92086 

-Ol 1794.28 1798.73 179057 1706.70 3.19 S.03 23® 53.69 102052 

+03 2272.07 2268.44 2264® 1951® 439 1.53 80007 9054 1114.78 

-0.1 Z78SL04 2792.43 280091 2394® 3.10 5^t3 21® 75.71 109001 

-0.41550301552.40155050 1913.® 406 7.01 17.49 6129 68077 


30 CONSUMER GOGOS<97] 2724® 

31 BrranrtesTIT) 2232^2 

32 Spirits, Wines A CfcteraflO? 2819.70 

33 Food MarMfecturen(23) 228047 

34 Household QoodsUS) 2304.48 

36 Health Cara(21) 1589-52 

37 PharmacecflcateO?) 300067 

38 TobaccotU 


+01 272026 274037 2753JB 2736.00 4^41 7.38 16.84 10009 942J0 

-OS 2244^3 226031 2256® 201300 4.24 7.71 15.74 61.43 100022 

+05 2W652 2842. 12 2854. 14 2580® 6® 6.85 1679 101J23 949JJS 

-02 2284^4 2293.73 228850 2277.40 428 7.70 1602 88.47 983.® 

-03 2388.B3 2411.01 2414.86 2680.10 3u83 7.62 1672 8908 863.50 

-0.4 1605-20 1613-50 1614.97 1073.40 3.15 337 41.78 4024 931® 
+02 2904.® 3035.54 303706 3094® 4. SO 7.18 1611 12627 960^1 

+013819.® 3840® 3682.81 4116.40 5® 9.49 11 J2 217.07 826® 


40 ssnncEspiq laooo? 

41 OtatributorsfW) 

42 Letaura & HoteteBQ ^021^6 

43 My+tapa) 2823.77 

44 natdters, Food(1fi} 1723J8 

46 RalaBars, G«wraf(45) *80684 

46 Support SetwteOB(41) 1614 04 

49 Tranaport(iq 223639 

51 OMiar Senkxo A BuKnewff) 125021 


-01 189632 IS 

+02 2631.88 2628.44 2510.45 1 

202122 202674 2041® 190670 

-06 2841.® 28S693 267605 2588.70 
+01 1722^8 172617 1736® 1515.40 
-05 101425 181942 162921 1677.® 
+02 161122 152421 1S2727 1816® 
+07 228123 227658 228670 

-02 125322 124647 123723 1219® 


389 

883 

18.50 

5280 

831.® 

3.70 

783 

I8L34 

85-25 

88388 

3A2 

484 

23.85 

57.89 

98a 48 

2.46 

581 

2186 

7005 

982.73 

179 

989 

1030 

5287 

1032.41 

383 

685 

17® 

4680 

8G1D3 

281 

6.42 

1888 35.92 

923.43 

380 

5® 

1987 

61.02 

879.70 

4.04 

3.12 

48.40 

2883 

1078,47 


® ununEsm 

fl 2 .atc*ric«yfth 

64 Gee Otetrtoutloo» 

68 Tdaeommu4catk3ns(4} 
SB WatOrtl3> 


241426 -05 2425.® 244673 245828 2430® 

254651 -03 2554.46 2560.63 256689 2126® 

1941.48 1941.49 193654 1851.09 2141.10 

2004.18 -08 202020 2063-87 £06683 2287.® 

1882^4 -04 1689.42 1920® 192128 179610. 


487 

7® 

1582 

8287 

93388 

3® 

9.72 

1287 

B3-46 

1059® 

6.17 

t 

t 117.® 

91 1JH 

4.12 

785 

15.51 

5082 

854.® 

581 

1284 

&4S 

7630 

94389 


69 NQM-HHANC1ALS|6371_ 


164421 


. TC461B 16S678 i»» 6® 645 1661 5670 116672 


70 nuuMCtALSfioq 

71 BanteJCID) 

73 tnswanc8(l7) 

74 Ufa AaauranceW 

75 Merchant 

77 Other Rncnctait24) 


2177^3 -0.2 218096 2201^4 219637 2276® 

286629 -02 287604 2M6B5 2091^8 2652.00 

1282^5 -0.4 125686 127«8 12W.71 1427.70 

237607 -Ol 238047240015 2382.13 262690 

271604 *0.5 270048 272227 2724.71 312680 

184151 +09 182029 1631.05 1840.® 173090 


4.44 9.01 

421 9.90 

5 M 9.42 
637 7.84 

3J3 12.15 

678 8.57 

429 4A0 


1248 8085 

1146 11639 
1614 6141 
1656 12742 
9® 87.78 
1306 64.® 
27® 44.76 


86676 
WH37 
884® 
920® 
81083 
9® JO 
825.47 


79 PRXMrtVHI) 

TRUS 7 SM 20 

2717.17 

+ 0.1 271688 2737.04 2734.76 2638.70 

2.26 

188 61.13 5097 

91489 

89 FT-ffi-A ALL-SHARE( 886 > 

1524.42 

-ai 1525 . 19 153 & 0 S 1640.03 1528^6 

387 

680 17.78 53.48 

120385 

■ Hourty movomenti 

Open MO 

1080 

TWO 

12 ® 

1380 

1480 

1580 

10.10 

HtahAby UmAfary 

FT-SE 100 ' 

FT-SS IAW 2 S 0 
FT-SE-A 350 . . 

4069 i 7 305 OS 

35193 . 36148 
15406 . 1532.7 

30558 

36109 

16348 

3064.4 

35106 

15348 

30505 

36158 

15358 

30558 

38107 

15349 

30608 

36107 

15388 

30618 

35188 

16378 

30818 

3519.7 

15378 

3068.7 

3619.8 
16408 

30404 

35148 

1532.0 


l’ ft-SE Actuaries 350 hidustiy baskets 


open .600 


1600 114)0 1200 1609 144)0 1600 1610 ClQM Prwteux Chany 


BMg OCnatrcn 
Phanhaamtkda 
Water 



981 J 9800 M1.1 981.1 


. 9628 

9828 

9805 

887.1 

9878 

9618 

+41 

29608 

29602 

29648 

29668 

2S718 

29604 

+5.5 

18804 

18848 

18846 

1880.7 

1880.7 

1W7.6 

-68 

29008 

29040 

29038 

29042 

29048 

2900.1 

-48 



of «» UiMkxci SKack *»d Ttw r 


71mi9 IteteamflOi, Al right* raaei 
.Tha FT-SE Adumf! 






the underlying price leapt for- 
ward to close a net 20 higher 

at 629p. 

M&S caution 

Caution about second-half 
trading from high street 
retailer Marks and Spencer 
saw shares in the group sur- 
render an early advance that 
followed the release of favoura- 
ble interim figures. 

Profits rose 15.1 per cent to 
£354m, beating the most opti- 
mistic of the market’s fore- 
casts, and the stock initially 
rose to 413p. However, the com- 
pany hinted that the market 
should not to be over-optimis- 
tic about the second half. 


TRADING VOLUME 


■ Major stocks Yesterday 

UoL OtoXng Day's 

OOOa mice ctionge 


at 

ASDA G«M>t 
Abboy 
Abort Rotor 
MMdDomoeqt 


1J300 323*2 
7,700 02*2 


1200 

1,400 

1J00 


Aiooa 

AlCNC 

Alfa 


FooUst 


BAAf 
BAT Ind&t 
BET 

BCC 

BOCt 

BPt 

era Ms. 

a 

Bar* at Scaan+t 

Bsrtisyst 

Basat 

Blua Cadet 

BacMr 

Boorsf 

Bawurt 

H. taapml 

BrMh Atwysf 

MMlOasf 

Bnasti Land 
BntBh Steett 
Baal 

Burnati Curtratf 
Biaton 

Cabta ■ IMrsf 


412 
42*2 
697 
534 
234 X&i 
2200 202 
1.600 SSTh 
124 547 


501 

1400 

2JOO 


274 

408 

432 


3.800 109*2 
466 351 

1.000 6S7 

6.900 4(6*2 

304 297 

5.900 304*2 


0.000 

1.400 

2.400 
1M0 
1.100 

100 

1200 

1.100 

5*4 

7200 

0^00 

550 


303 

205 

509 

545 

200 

402 

520 

440 

452 

305 

292 

302 


1.500 153*2 

50 181 


330 

1.000 

MOO 


CadtwySchwppejf ZMO 


Content 
Carton Comms.t 
Cooxa Viyrrta 
Comm. Urtonf 
Cookson 
Coutartdsf 



532 

640 

664 

1200 

S3 

IBS 

402 

322 


870 

“J* 

309 

441 

273 

BBS 

102 

543 

240 

441 

424 

095 


1.100 188 
470 003 


ForeMJ 
fiJrtsf 
Gan. Acckfcnj- 

Genorm Baa_f 
Otexot 
Gt/nmmd 
Gransdst 

Grand MoLt 


OubraiBt 

«BC(7BpWurt 


170 

461 

300 

8+3 

818 

41 

403 

1.400 

T.40O 

872 


704 
*71 
352 
379 
230 
157 
118 
133 
226 
583 
2.600 282*2 
7200 W7‘j 


1S» 

1.000 

1.400 

301 

1.000 

1.000 

2.000 


343 

513 

405 

550 

102 

006 

464 


H a n i s ons CansBrtd 
Hays 


803 721*2 

135 J40 

3.100 227*4 

083 168 


■Of 

i Me o paf 
Johnson Mautwy 


iSara 
Lodtaohaf 
Land Socuriitest 
Lapow 

Legal * GoneraTt 
Lloyds Abbey 
LtoyOS Banhf 
LASMO 
London Bew. 
Lonrho 
Lucas 
MCPCt 
MR 


115 

1.900 

>45 

2.100 

047 

114 

2.000 

13XX7 

5.100 

1.100 

570 

7300 

026 

1.000 

008 

97 


201 
171 
318 
757 
435 
508 
404 
5*a 
149 
613 
713 
*11 
34* 
W7 
145'j 
732 

7.000 151 '2 

3.100 197 

2^00 415 

7.000 132*2 


Mata & Spancart 
Mdtends B«cl 
M bmson pVm.1 
NBC 

NaiWeaiBrrtct 
Ntaorad POworf 
NM 

North VlfcWI Wenrf 


Northam Boodst 


10 

8.700 

106 

586 

1.300 

1.000 

833 

6/0 

1300 

366 


618 

404 

789 

134 

181 

502 

407 

238 

556 

813 


P&Of 

pSSeSant 

PiuternUf 

RMCt 


Ranli Org-t 
Hedott 6 entrant 


2 BOO 200*2 
261 810 
008 515 

636 
182 
657 
320 


Jln«.t 

f+WUOHJt 

Beuwnt 
Haas Bo*c»t 

(M Bh Scoosnrri 

Hoyrt InouranoOT 
Sarehuyt 
Betinxtamt 
SchMi 8 Nrrw.t 
Scot Hyrto^tacL 
ScnoaSi Powetf 
Saoret 


301 

296 

338 

1X000 

238 

1.700 

235 

1500 

0*5 

XSfiO 

389 

225 

1,400 

453 

1,400 

2JOO 

2200 

60 

1.100 

1.600 

705 


041 
244 

393 
576 
457 
752 
230 
473 
176 
453 
298 
412 
1350 
506 
328 
367 
1S4M 107 * S 
3/00 147 




10 

i 


*6*2 

-4 

-3 

t*2 

+3 

♦1*2 

-1 

«2 

-a 

+G 


H 

•S 

t2 

4*J 

n 

-6 

*i 

-1*j 

•1 

-3 

*7 

-1 

-3 

-3 


ta 

♦I** 

t0 

-fl 

*2 

-5 

*3 

(2 

- 1*2 

-4 

+1V 


*2 

♦*1 

-5 


+14 

+3 

-3 


"0*2 

-3 


-2 

-2 

-2 

12 

-10 

+/J 

-5 

-6 


-I , 

*4*2 

-3 


i Tranrl 

She* Transport 


Sfcvgh Est* 

Smrth/W.K) 

Smith & Nqphawt 
SmW BCBdumf 
SmM Beechrm Lhs.f 
Smtha Ms. 

Southern Qad.t 
SoUh Mates Bed. 

South Wsst water 
3rxsti We+L Bad. 
Southern Woeor 

Stenteri ChaUf 


472 

824 

2^00 

*03 

843 

206 


434 

564 
71 J 
545 
227 
457 


627 142*2 

1.400 400 


urn 

295 

BOO 

0 

408 

ioa 

126 


301 

Sui ARanoef 1.200 

UN an 

•rt Group* 667 

TSBt 

Tantac 939 

Tales Lyts 200 

foyfcr VHxxaovy *57 

Teacot 2^cio 

Themes Wuat ito* 

Thom BBt 771 

TonMnst XflOO 

Trataloar House 210 

Untgate 718 

LMerarf 1.700 

UntadBUKrtert 1.000 

UH NesBnaDtra 040 

VodaJonet 5,100 

sisssir as 

Wetar Water 683 

Wessex WMer 315 

WhJbraedt' i.i*» 

waamsM9B&.t MM 

MMs Cannon 150 

1Mnf» *47 

WaMeyt 244 

Yerkshter Etas. 232 

Yoriahre Water 637 

Zenecst *** 

Based on wdng Hossna ter a vteetion ol mejur 

sscuihea dsai dwougn Da SEAO srvem 

ytS MrOBy ml 4 jOpm. Trades ot ‘tea mrten a 
more on namded doom, f taSeams an FT-SF 
100 Men mMtuent 


371 

458 

813 

822 

510 

7B7 

587 

281 

210 

331 

515 
J63 
228 
123 
458 
190 
237 
510 
9B3 
215 
02 

358 

1125 

312 

516 
206 
829 
044 
663 
318 
503 
340 
139 
137 
783 

74J 

540 

867 


Researchers pointed to 
uncertainty over Sunday trad- 
ing, and lower than expected 
sales in women's clothing 
because of continued mild 
weather. The general tone 
remained positive and BZW, 
which held its full-year fore- 
cast at £970m, retained tbe 
stock as a core holding in the 
sector. The shares closed 
off at 404p after heavy trading 
of 8.7m. 

Elsewhere, Boots ended 3 
ahead at 520p following a press 
report that it was about to 
accept an offer of nearly £900m 
for its pharmaceuticals divi- 
sion from BASF, the German 
chemicals group. 

SmithKIine Bee c ham 

remained in positive territory 
as Goldman Sachs reiterated 
its positive stance on the stock. 
The US investment b ank 
believes that the effect of the 
US patent expiry of Tagamet is 
entirely discounted in the cur- 
rent share price. SmithKIine 
ended a penny up at 409p. 

Piikington, the world's big- 
gest glass maker, slipped 3 to 
192p, with dealers saying that 
Cazenove attempted but failed 
to place some 20m shares. 

Composite insurer Commer- 
cial Union held its ground 
ahead of third-quarter figures 
today as Smith New Court 
cited it as its preferred stock in 
the sector. The shares finned 
slightly to S43p, although a 
number of analysts expect 
CtPs exposure to a weak Lon- 
don market to result in disap- 
pointing figures. 

Insurance broker Lloyd 
Thompson fell 16 to 176p after 


NEW HIGHS AND 
LOWS FOR 1994 

HEW HKM3 (231. 

DISTRIBUTORS H Adam 8 Hanwy. Rnafet. 
Wfeftaw. ELECIBMC & ELECT EQUP (4) 
Magmon Ftoner. Tjdpote Todlnotegy. Tetapec. 
Thorpo (FVfl, EHQMEERMQ (9) ESWi pj. 

UncaL EXnuenve MBS (1) Catodorw. 
Mvesnasrr trusts mj leisure & koths 

tin Dated Lloyd. VCL UBHA (1) Ortarn Radio. 
OTHER RNANGtAL (1) Edunbugh Fund 
Mteagsra, OTHER BERKS 8 BUSHS (Q 
Gmnwiy. PtanUDon 6 GanortH. PHTT4G, PAPER 
S PACXG (2) Jarvta Pater. Wmtaon Pram. 
SUPPORT 8B1VS P) Ch>4oL Computer ftnpte. 
Trace Cantwtn, WATER (1) South Sadia. 

NEW LOWS JML 

BANKS (1> MUSubohl BUILDING 8 CNSTRN (4 
AMtnatas, Barnor Homes, GaBfcnl. Wsstson. 
BLOG HATLS A MCHT8 (2) Enplaaa. Heywood 
WSBoma PH. DtSTOBUTORS pj HfMtan. 
room, diversified mols n btr Wit*. 163V 
as. Downs. 149S7B6. Do WHs. 1698. Kwurncr 
te SuMr WAte. BXCTRNO 8 ELECT EQUP |1) 
Hho. BUBUBona n QBE tat. Itott*. 
Rublcan, Vlctodc. EXTRACTIVE MD8 p) 
EtrfMRX. Spa. POOD UAKUF (3) Banoons 
Cteps, BatM. Psocoa-fl, HEALTH CARS HI 
AAK AsaocfaM Nioamg Serva^ ML 
Ubraota. PolartacMra, HOUSEHOLD 
80008 (0 IWP ML, INVB7I1IENT TRUSTS 
(17) INVEB1*KNT COMPANIES P) Biotech Prt. 
WWMrow, LB8URS S HOTOS M Amn 
BHp Pit. Ateta Akpate Mognoio. Priam. UFE 
ASSURANCE (1) UtdL Fttenrty B. OL 
EXPLORATION 8 PROD (1) Coptat. OTHER 
FINANCIAL (1) WE. OTHER SERVS A BUSHS 
(1) Leigh Mrat, PHARMACEUTICALS (1) 
NOW Note* 0. PRING. PAPER A PACXG P5 
API, Brtttoa. PROPHTTY (4) Brtby, Brtdtad. 
Hvinony, PStT, RETAILERS. FOOD 00 Dairy 
Font Wt, Shogrita. RETAILERS. OENBULm 
Beattie W) A, Ebsb Fianttua, Ftee Ait Dna* 

Onto™, tetL. PWtridga Fine Alts. VIEW. 

SPIRITS, WINES 0 CIDERS RJ Metrydoxv 
Seeoam. SUPPORT SEHW8 (2) Capta, J8A, 
TEXTILES & APPAREL (4) AJaaandra WoriOMar. 
Salrd |MD, PjrMeixL RaadcuL TRANSPORT 0 
Sea Qnrtn & vam AS. AMaBCANS n 
Dana. Dial 8 Bradamei. Time Warner. 
CANADIANS (1) Toranto-Domteton Baik. 

the group announced that its 
main subsidiary has been 
named as a defendant in legal 
proceedings. 

Continued speculation that 
Unigate was about to sell its 34 
per cent holding in Nutricia, 
the Dutch food company, 


boosted the shares 3 to 354p. 

Associated British Foods 
succumbed to switching into 
conglomerate Tomkins. The 
former closed 10 down at 547p, 
while the latter gained 4 at 
215p in busy trade of 6.9m. 

Bumper second-quarter prof- 
its put some thrust behind 
British Airways, sending full- 
year profit estimates racing 
upwards and lifting the shares 
8 to 365p in 5.6m turnover. 

The statement made gloomy 
affusions to US Air, but it was 
the rapid progress within the 
underlying business that cap- 
tured analysts' imaginations. 

UBS upgraded their 1994-95 
forecast by £29m to £439m and 
are confident that the airfinp - 
following the 10 per cent 
interim payout increase - will 
pass some of the goodwill on to 
shareholders via a chunky 
final dividend. 

Anglian Water helped stir up 
the water sector, jumping to 
541p on news of robust interim 
results and dividend before lap- 
sing back to 534p, down 4 on 
the day. Hoars Govett is 
looking for ragfim this year, up 
from an earlier £21 3m es tima te. 

Hoare Govett also expects 
strong interims from Northum- 
brian Water tomorrow. But 
given its solid earnings cover, 
tbe main focus is likely to be 
on Northumbrian's dividend. 
The company has French- 
owned North East Water as a 
neighbour and some brokers 
see takeover fears putting 
some real zing into Northum- 
brian's dividend this year. Tbe 
shares lost 4 at 705p. 

News that British Aerospace 


and GEC had negotiated an 
agreement not to bid for each 
other until July 1995 added 
fresh impetus to the VSEL 
takeover saga. BAe slipped 2 to 
452p, shading the value of its 
all-share offer for VSEL to 
1243p a share. GEC has a cadi 
bid on the table worth I400p. 

VSEL closed 12 lower at 
1358p. which suggests that the 
balance of probabilities - at 
this stage - lies with the GEC 
deal not facing a monopolies 
reference. Equally, the betting 
among analysts yesterday was 
that BAe will come up with an 
increased offer later this 
month. 

Several stocks in the prop- 
erty sector were hurt by a 
property bulletin from James 
Capel entitled “mid-term 
blues”. ME PC lost 5 at 415p 
and British Land relinquished 
6 to 382p, after the broker said: 
“The rating of MEPC ahead of 
its finals allows for no disap- 
pointment In spite of its divi- 
dend support we would be sell- 
ers and would sell the stock to 
below 400p. Equally, the rating 
of British Land is very forward 
looking, with little yield sup- 
port" 

Oil recovery group Green- 
way rose 5 to 98p as It was 
appreciated that interim prof- 
its were substantially higher 
once the boost from a one-off 
disposal had been discounted. 

MARKET REPORTERS: 

Peter John, 

Joel KIbazo, 

Jeffrey Brown. 

■ Other statistics. Page 22 


LONDON EQUITIES 


L1FFE EQUITY OPTIONS 


RISES AND FALLS YESTERDAY 


OpHotl 


— Cate Pub — 

Jan Apr Jut Jan Aor Jtti 


WDM 550 51*7 Blh 68 5 11 19» 

1-596 I 600 17V* 31*5 38*4 23*5 31 43 

280 12% am 25» *2 17 22* 
280 5*4 12 10W 25 20 3Ah 
00 5*4 m Oh ZK 4W 5* 

70 1 <+ 316 5 BH 10H 11 


n*2> 

ASDA 

C62 I 


M Airways 380 18 30 381* 14 19* 27 

(■384 J 300 71+ 17* 24 3314 37 44 

MO 8dm A 390 28 37 44 10 17H 21>i 

(-408 ) 420 13 22M 2BK 25 32M 37Va 

Boob 500 28% 41 48 10% 16% 23% 

(-519 } 550 8 M 25» 42 44* 57 

BP 390 24h 42 48V5 5 11 15 

|-415 ) 430 15** 24*4 32 16 23!* 28 

Mall Steel 140 18 21 23*5 2H 5 7 

(-152 ) 160 5 10W 1314 12 14K 1614 

BBSS 500 48*1 53h 00 8 14 19h 

(-544 ) 550 14*4 26H 34 31 37 4414 

BJfclVn 390 27b 38*45*4 14*211+ 28 
r401 ) 420 14 28 32 31*4 37*4 43K 

CourtSliita 420 31 41b 4854 10b 15 23 

("440 ) 480 11b 22 29b 32 38 44*4 

Cam Union *93 58 65 - 3b 13b - 

P542 1 543 24 32b - 20 35 - 

IQ 750 38 40b 98 21*1 40 48 

r758 1 BOO 14b 27 87b 51b 70 77b 

Kingfisher 460 25 37 41b 17b ZSb 33b 

(-461 ) 500 9b 20b 24b 42 49 57 

Lend Setu GOO 24b 38 44 13b 18b 29b 

(-013 J 650 8 18b 27b 48b 49 60 

Mate i S 390 23 32b 36b 7b 13 17b 

(-404 ) 420 8b 18 21b 23b 28 32b 

Rawest 500 24b Eb 43b 18b 34 39 

|‘501 1 550 Bb IB 24 51b 67 70b 

Sstestuv 390 29b 41b 47b 8b 14b 21 

(-412 ) 420 12 29 31b 22 28b 35b 

Shea Trans. 700 32 43 50 13 27 31b 

m2 ) 750 9 19b 28b 41 58 80 

Suduusu 700 10b 23U 27 4b 8 7b 

r215 ( 220 7b 12 18b 12» 14b 17 

Tiauigar 80 8 9 11 4b Bb 7b 

ran » 21 4 tn 11 12* i3b 

Uiflem 1100 49 70 82 20 37 48 

(1135) 1150 24 44b 57b 46 63b 74 

tows 850 42 85 85b 25 42b 49b 

CBS7 ) 900 20b 32 43b 53b 71b 78b 

OpBMi tot Feb H«T few ft* May 

Grand HR 390 18b 28b 39b 2b 14h 19 

(-404 1 420 2b 13 21b 17b 31b 35b 

Latate 140 10 17b 20b 1 5 8b 

ri49 1 160 1 8 11b 11b 15 19b 

(fid Strata 300 14b 25 SOW 2 7b 16 

(*311 I 330 »b 11b 18 19b 23 33b 

Option Dec U ar Jar Dee liar Jun 

Raons 1*0 10 10 10 4b 8 8 

pi IS ) 120 5 lib 14b 9b 13 13 


OpMn 


Hov fft May Nov Fed U27 


EM Am 420 38 S3 B2 3b 15b 25 

(■451 } 460 10b 31 41b 18b 13 44b 

BAT ft* *75 30b 42 - 7 12 - 

(-407 ) 500 18 27b 34 17b 23 28b 

BTO 300 7b 18b 23b 4b 11b 18 

1*302 ) 330 M Bb 11b 28 31 38 

Bnt reton 360 2Sb m 38 b 7 10b 

(-384 ) 390 5 12b 10b 9b 21 25 

CtouySch 420 24 » 41 1 7 16 

("441 | 460 2 b ISb 20b 20 26 37 

Eason Bee BOO 17 44b 62b 20b 4GK 57 

(-803 ) 850 3 28b 41 53 75b 85 

Gutenera 460 0b ZSb 31b 5 12b 23 

(-464 ) 500 - 7» 14b 38 38 47b 

CfC 280 5b 13b 19b 4 lib 14 

(-2B1 ) 300 b 8 11 18b 24 26 





Ctfs 



Pub 



Oj»on 


XOV 

Fab 

■to 

NOV 

Feb 

■to 

Hanson 

220 

9 

18 

17b 

1b 

6 

lib 

(■22 7) 

240 

b 

8b 

9 

13b 

19b 

23 

Laano 

134 

12 

- 

- 

1 

- 

- 

n«j 

154 

1 

- 

- 

10 

- 

- 

Lucas hda 

ISO 

17b 

23b 

27b 

b 

4 

7b 

rise » 

200 

3b 

11 

18b 

6b 

12 

16 

P 8 0 

600 

39 

SB 

85 

1 

lib 

26b 

C635 1 

650 

8 

27 

38b 

IBM 

32 

51 

PMngton 

180 

13 

17 

21 

1 

5 

a 

(192) 

200 

1b 

7 

11 

9b 

15b 

18 

PrudoifoJ 

300 

21b 

30b 

34b 

1 

6 

12b 

ren ) 

330 

3 

13 

48b 

18 

34b 

52 

RTZ 

800 

44b i 

B7b 

75b 

m 

14b 

28b 

1-841 1 

850 

10b; 

37b 

48b 

18 

34b 

52 

RNtafld 

420 

38 

50 

56% 

- 

7b 

16b 

r*56 » 

460 

8b 

25 

33 

9W 

22 

3Gb 

Royal msta 

1 280 

20 

31 

38 

ib 

10 

14b 

ns/ » 

300 

1 

20 

26 

8b 

18b 

24 

Testa 

220 

18 

25 

30 

M 

4 

9 

(-237 ) 

r*o 

3W 

12b 

18b 

0 

12 

18 

Vodatana 

200 

Bb 

15% 

22b 

2b 

9b 

13 

1*305 ) 

217 

1b 

8 

— 

12b 

19 

- 

Warns 

325 

22b 

- 

- 

b 

- 

- 

r348 1 

354 

3b 

- 

- 

10 

- 

- 

Option 


JNl 

Art 

Jrt 

2n 

Apr 

to 

BM 

475 

3ti» 

42 

ra 

7 

12 

- 

7497 ) 

500 

16 1 

Z7b 

34 

17% 

23 

28b 

itumasHB 

500 

27b ■ 

42b 

40 

14 

19b 

30b 

rsio > 

550 

8 

20 

26 

44 

48 

59b 

Option 


Dec 

*or 

Jun 

Dec 

Mar 

Jun 

Adbey Nan 

390 

29b 

38 

42b 

4b 

14b 

20 

r*** ) 

430 

ii ; 

21b: 

26b 

1 6b 

29b 

3SK 

Amstrad 

25 

4b 

5b 

8 

b 

tw 

2 

c™ 1 

30 

1b 

3 

3b 

2b 

4 

4b 

Bardayi 

550 

49 

82 

68 

5 

ifib ; 

23b 

r588) 

600 

is : 

3Zb 

41b 

23 

38b • 

*7b 

BM Circle 

280 

IS 

23 

28b 

7 

12 

20 

1-385) 

300 

8 

14 

Wb 

18 

22b 

31 

British Gas 

290 

17b 

26 

am 

3b 

8b 

14b 

(TSC) 

300 

Sb 

IS 

20 

12 

17 

25 

Moons 

100 

14 

19 

24b 

6 

iob 

14 

nB8 1 

200 

S 

10 

19 

IS 

21 

25 

hmomi 

100 

M 

1 7b 

21 

2 

5 

9 

flTO 1 

180 

3b 

7 

11 

lib 

14b 

20 

Lonftw 

140 

14b 

18b 

23 

2 

6b 

B 

H5I ) 

160 

4 

8b 

14 

11b 

17 

18b 

Had Powr 

460 

31b 

a i 

56b 

eb 

Ub : 

J2b 

T487I 

500 

10b : 

23b I 

15b 

25 

33 

42 

Scot Rwer 

330 

33b 

40 

48 

4 

11b 

10 

1*357 ) 

380 

14b 

23 

33 

is ; 

24b 

30 

Seats 

100 

10 ■ 

12% 

14 

l 

3 

5 

nor i 

110 

3b 

7 

8b 

5 

7b 

10 

Fork 

220 

12b 

iab : 

22b 

6 

8b 

14b 

rzs i 

240 

3H 

9b 

13 

15b 

I9M ; 

25b 

Tbmac 

120 

8 ' 

I3b 

16b 

4b 

8 

11 

f1?3) 

130 

4 

9 

12 

10 

13b ' 

ifib 

Thom Bi 

950 

48 

62 

85 

8b 

24 

33 

rsei ) 

1000 

19 : 

36b ! 

56b 

31 

49 : 

56b 

tsb 

220 

14 • 

18b 

24 

4 

11 

14 

(*22fl) 

240 

5 

8b 

15 

15 

22 ; 

25b 

Tomkins 

300 

18b 

23 

28 

2b 

G 

9 

rifIS) 

220 

6b 

12 

17 

10 

15 

18 

mtems 

500 

56 

75 1 

ttb 

8 : 

am: 

nb 

C643 ) 

m 

25 

47 1 

sa% 

28 

4ib 

55 

Opftjn 


Jan 


M 

Jan 

Apr 

Jul 


Riooa 





15 




3 



82 

124 


General Manufitctiaeis 

._ 118 

395 

Consumer Goode 

_.. _ 41 

74. 

40 

M 

28 

1® 





„ 56 

197 


48 

73 

342 

Others 

_ . 39 

42 

37 

Totals 

434 

824 

152S 


Data based on Hun comp an tea Mad on 8 m London Share Sendee. 


TRADITIONAL OPTIONS 

First DeoBngo November 7 

Leal Dealings November IB 


Expay 

Sattiemw* 


fabruary 2 
February 23 


Gala Amatrad, Croeeroode Oft, Hewtkv Kurtick, M a g nm 
Scotia HUga, ShoprTto Prat, Tuflow 08, Verson taU, Wmertoy 
roads OB, Wravertay MMng. Pirta & Cate: Ohm, Ramco Energy. 


Romeo Energy, 

Pula: Oross- 


LONDON 

bsua Amt Mkt 


ISSUES: EQUITIES 

Close 


xtoe paid 

P I4» 

cap 

ffm.) 

1994 

Low Stock 

price 

P 

+7- 

Nat 

f#v. 

Dv. Grs 
cm. yld 

WE 

not 

- 

FJ 1 . 

a® 

8*2 

4 APTA Hfrnte 

S 


_ 

_ 

- 

_ 

- 

fP. 

17a 

88 

70 Abtnat Lath Am 

88 


- 

- 

- 

- 

- 

F P. 

220 

63 

55 Do Wrote 

55 

-2 

- 

- 

- 

- 

- 

FP. 

11.2 

187 

1® $A<fcmi Pmtfl 

188 

+1 

026% 

&1 

1.4 

102 

- 

FJ*. 

ia.i 

76 

63 Artesian Eats. 

75 


- 

- 

- 

- 

100 

FP. 

179.0 

93 

85*2 BZW CanmodKMS 

89*2 +l<2 

- 

- 

- 

- 

- 

FP. 

18A 

47 

39 Do. V*hts 

41 


- 

- 

- 

- 

- 

FP. 

47,4 

92 

65 fCafeme 

88 


■W 

- 

- 

- 

280 

FP. 

303 

287 

280 CturcM Chim 

285 


flNMfl 

22 

42 

1*0 

63 

FP. 

12J2 

68 

66 Ememfec 

87 


HN0.71 

&3 

12 

A4 

- 

F.P. 

81.7 

147 

108 FBtrertC fftak 

147 

+7 

HNQ.75 

2J0 

0.6 

4SL5 

IIS 

FP. 

36.7 

126 

115 Games Wortatwp 

118 

-3 

FNiB 

22 

42 

112 

- 

FP. 

1.91 

36 

23 Group Dv Cap WB 

23 

-1 

- 

- 

- 

- 

- 

F.P. 

zsa 

62 

67 Hantaoa 8m Aslan 

57 


- 

- 


- 

- 

F.P. 

ZTO 

30 

27 Do Wamnte 

27 


- 

- 

- 

- 

180 

FP. 

ie&o 

223 

205 Irish Pomnanent 

218 


uN&O 

42 

3.4 

r. e 

- 

FP. 

50.8 

4® 

476 Proitlfc he A/L 

488 

+1 

- 

- 

- 

- 

- 

FP. 

8-28 

02 

57 Whitchurch 

62 


RW.2S 

32 

3-5 

13-0 


RIGHTS OFFERS 

Issue Amount Latest 
price pekJ Reren ISM 

p up date Hoh Lena 


Closing +or- 
price 
P ' 


17 

M 

2712 

2pm 

Upm 
lb pm 

APTA Herttti 

20 

Ni 

9712 

4*2011 

Bufar, 

310 

M 

20712 

4ipm 

34pm 

Kenwood Appl 

27 

M 

28711 

312pm 

3pm 

Martin Inti 

500 

Ml 

12/12 

50pm 

18pm 

Matthew CJarit 

26 

M 

22711 

*4 pm 

*4pm 

Novo 

5 

m 

15711 

2*2pm 

lipm 

{Union Square 


Vpm 

1*4pm 


34pm 
3pm 

18pm -2 

*4 P*n 

4pm 


FINANCIAL TIMES EQUITY INDICES 


Ono 550 60W 72 82b 10 21b 27b 

(*536 ) BOO 30b 43 56 SDK 48 5Db 
H5BC7Sp«H TOO 49 67 79b 20 42 55b. 
(•721 ) 750 24 43 SB 46 70 83 

Haters 460 28b 41 49b 13 22 27b 
(-47Z ) 500 10b 22b 31 35 44 49 

Opbcn War Faft May Mw Fab toy 

ftfeWyta 160 15b 21b Mb b 3b 7b 

ri 75 ) lag 2 b 10 h r m u 

• underlying Marty price. Pr e mium drawn are 
meed on sememem prim 
November 8. Toto oortracte 28£90CNte 12£28 
Puts: 15,770 



Nov 8 

Nov 7 

Nov 4 

Nov 3 

Nov 2 

Yr ago 

High 

-Low 

Onfinary Sh«e 

2348.6 

23402 

2371.7 

2377^ 

2366.4 

23303 

27108 

22406 

OrCL dv, ytdd 

4.40 

4.40 

4J95 

404 

4J8 

3.96 

4JS1 

3.43 

Earn, ykl % Ul 

039 

0.32 

026 

024 

6J24 

4.63 

081 

302 

PTE ratio net - 

18.10 

1023 

18.42* 

18.46* 

1030* 

27-09 

33.43 

1B4M 

P/E ratio rd 

17.06 

17.78 

17.80 

10® 

17.® 

25.12 

3080 

17® 

-For 1S04. Ooteory Stare tedax atece cmfMac high J7I18 2/02/S * low 49.4 28/6418 
FT OKfrvry Share Max base date 1/7/95. iConocM vatu. 



-1 

«2 

1 FT GOLD MINES INDEX/ 

i .. 

* . 

; 

+20 


Not % ctlfl 

Ho* Un 

for 

(ton to 

62 nM 



7 on to 

4 3 

800 

ytaU% 

Htfi to* 

n 

GoM Mm index (3q 

211382 -07 

2127.50 212423 20»M 

228 

2387.40 17B2JDZ 

<1 

■ Ragbml kxtices 







Africa (161 

3*8110 -0J 

£0135 3482.28 28(033 

3.98 

37I1J7 2304.46 

*1 

AuSDtoto (7) 

2697 17 -0.7 

271530 272053 2360.82 

1.85 

301389 2171.88 

-6 

Korti America I’ll 

161686 -0.9 

1631 19 163133 1749.10 

003 

203985 1468.11 


Ontinary Share hourty change a 

Opan 900 1ft® 1100 1200 10,00 14J0 1&00 1L0D Ht^i Low 
2350.8 23302 2340.1 2341.0 2341:9 2341 J 234&B 23405 2340.1 23509 2335J 
Nov 8 Nov 7 Hat A tkn 3 Nov 2 Yrago 

SEAQ bacgalns 
Equity turnover (Cmff 
Equity betgeinst 
Shares traded (mdf 

tEadutfng Wnwnadrei businats and oaenen tanner.-* FQeoa+nB nctmlcai prObtam eorradlona 
tare toen made to ptitowd PE Rato rw touae for corrected retiwi pteew (h on 071 4*733090. 


22JJ7S 21,785 

23,645 

23^25 

19,1® 

28,766 

- 1003.7 

1003.9 

17938 

1139JB 

15058 

• 24®2 

27889 

27891 

27822 

32.142 

396.8 

468.0 

6228 

471.6 

6662 


Copynurt. itw Frartal Times Lanurt 19W. 

Ftaoes « tvacerts tteo*. njntnr ol comcertea. Baob US Ctahre. Bom VAho: 1000.00 31/1292. 
Predeceav tWd LSms, te*M. No« 8 2508; cfa,'* dunge: -50 poms. Year ago- 2312 f Partite 
Leresr <tee ifiavratabu ta rNa etetat 


A Prime Site for your 
Commercial Property Advertising 

1 million 1=? r£demn IMcourrhte^ 

For details: 

Call Emma Mullaly on +44 71 873 3574 
or Fax: +44 71 873 3098 


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►S' '.wV* ■ w •*■*■*>*• ^ hrs^ ti/x 
























































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FINANCIAL TIMES WEDNHSOAVNqVHMBE^^ , 


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34 


FINANCIAL TIMES WEDNESDAY NOVEMBER &_1994 . 


CURRENCIES AND MONEY 


MARKETS REPORT 


US elections keep dollar in narrow trading range 


The dollar yesterday again 

traded in a narrow range as 
the m a r ket sat on its hands 
awaiting the result of the US 
mid-term congressional elec- 
tions, writes Philip Gmmih. 

Traders said, however, that 
next week’s meeting of the pol- 
icy-making Federal Open Mar- 
kets Committee would be more 
important fix- the US currency. 

The dollar finished in Lon- 
don at DM1.5097, from 
DML5172, and at Y97.005, from 
Y97.31. It has slipped bade over 
the past two days from the lev- 
els it reached at the end of last 
week, in the wake of support- 
ive intervention by the US Fed- 
eral Reserve. 

With no important, data 
releases, little comment of 
note, and the uncertainty of US 
elections and the impending 
FOMC meeting, foreign 
exchange activity was 
extremely subdued. 

In Europe, the D-Mark was 
stronger against most curren- 
cies, helped by political wor- 
ries in countries like France 


POUND SPOT 'FORWARD A.GAIMS i 


and Italy, and uncertainty sup 
ro unding European Union 
membership in Sweden and 
other S candina vian countries. 
It closed at FFr3.436 against 
the French franc from 
FFr3.427. 

The trade weighted sterling 
index finished at 80-5 from 80.6. 
The pound finished at 
DM2.4432 against the D-Mark, 
about a pfennig lower than a 
week ago. 

■ The general market view is 
that the congressional elec- 
tions ought not to have too 
much impact on the dollar. 
Insofar as they do, it is likely 
to be negative. Mr Rob Hay- 
ward. economist at the Bank of 
America in London, said the 
possibility of Republican gains 
leaving Mr Clinton a lame- 


■ Pm 

Mm 8 

I In New Yoric 

— Latest — -Rev. dose- 

Eqnt 

1.6213 

16145 

1 mte 

1J176 

1.B137 

3 mti 

1.6172 

1J134 

1 fr 

16098 

16059 


duck president would be bad 
news for the dollar. 

Also damaging for the dollar 
is the growing perception that 
las t week's intervention was 
politically motivated, designed 
only to ensure that the Demo- 
crats did not contest yester- 
day’s election against the back- 
drop of a falling dollar. 

'“file market’s view is that if 
the dollar weakens after the 
results, the Fed will be less 
inclined to intervene," said Mr 
Hayward. There were already 
indications that the market 
was again testing the downside 
on the dollar. 

Mr Robert Thomas, currency 
strategist at Natwest Markets, 
commented: “People are 
waiting for decisive action. It's 
not the elections that are going 
to be relevant It's what the 
Fed does next week." 

“The market has hyped itself 
into the view that it needs to 
get more than a 50 basis points 
rise in rates, and it must be 
doubtful it is going to get it” 
“The Fed has got to do some- 


French franc 

Against the D-Meric {FTt per DM) 

3.38 - — - 

3.39 -jl- - 


Sam: Datastron 

thing dramatic, or the need to 
do something dramatic has to 
be seen not to be there," said 
Mr Thomas. "But the market is 
not prepared to give the Fed 
the benefit of the doubt." 

The potential upside for the 
dollar, he said, lay in US short 
term rates rising above Ger- 
man short rates. “Historically 
that has always been good for 
the currency whose rates are 


rising," said Mr Thomas. 

Mr Chris Turner, currency 
strategist at BZW, said the pre- 
sentation of a monetary tight- 
ening was probably as impor- 
tant as its scope. He said the 
Fed's statement last time it 
raised rates, that another tight- 
ening would not be necessary 
for some time, may have 
undermined the effectiveness 
of higher rates. 

■ Probably the main mover on 
the day was the Philippines 
peso, which rose by three per 
cent to an intra-day high of 
23.52 pesos, against the dollar, 
from Monday's close of 24.2 
pesos. 

Mr John Davitte. emerging 
markets analyst at IDEA in 
London, said the peso had been 
buoyed by strong capital 
inflows into the stock-market, 
and remittances from foreign 
based Filipino workers. 

Two other factors helping 
the peso recently have been 
less assertive central bank 
intervention, to curb the cur- 


DOLLAR SPOT 


Closing Change ad/offer 
mid-point on day spread 


□ay's MM One month Three months One year Sark of 
tegh km Rate %PA Rate %PA Rate %PA Eng. Index 


Europe 

Austria 

Belgium 

Denmark 

Finland 

France 

Germany 

anoe 

Ireland 

Italy 

Luxembourg 

Netherl a nds 

Norway 

Portugal 

Spain 

Sweden 

Switzerland 

UK 

Ecu 

SORT 

Americas 

Argentina 

Bra* 

Canada 


(DKi) 9.5769 -0.0139 721 - 617 9.5908 96648 

(FM) 7.6400 -0.0Z61 307 - 493 7.5740 7.5290 

(FFr} 8.3930 +0.0083 677 - 983 8.4038 62743 

(DM) 2.4432 -0.0041 422 - 442 2.4434 24387 

(Dr) 378.683 -0.094 347 - 019 377.404 373.635 

IS) 1.0144 +0.0002 136 - 152 1.0161 1.0122 

|LJ 2510.62 -0.1 619 - 205 251275 2504.73 

(LFr) 503177 +0.0067 826- 528 503870 502280 

(R) 27383 -00038 378 • 408 2.7457 27343 

(NKr) 106710 -04X196 687 - 752 107032 10.6S61 

(Es) 24S31S +0099 010 - 619 24S.822 240877 

(Pta) 203.643 -0174 528 - 758 204.006 203339 

(SKi) 11.7614 -00547 620 -007 113687 11.7800 

(SFr) 2.0407 -0.0079 395 - 418 2.0495 2.0368 

fE) - - 

- 13854 -0-0003 646 - 862 1-2873 13835 


1.6172 +0.0045 167 - 177 
13441 -0008 429 - 452 

2.1660 +00102 950 - 666 


Mexico (New Peso) 53414 +0-0143 376 - 452 
USA ($) 13184 +0.0053 180 - 188 

Padflc/MdOe East/AMea 


1.8189 1.6124 
13501 1-3416 


53453 5-5277 


Australia 
Hong Kong 

India 04s) 50-8401 +0.1479 295 - 627 503920 503840 

Japan (Y) 156393 +0.027 814 - 072 157320 756360 

Malaysia (MS) 4.1391 +0.0059 372 - 409 4.1432 4.1285 

How Zealand (NZSJ 2.8051 +04XM4 034-068 26075 25641 

PhrfpjUnro (Peso) 38.1134 -03418 012 - 656 38.4000 38.8608 

Saudi Arabia (SR) 8.0702 +032 683 - 721 6.0758 6.0502 

SJnpSXre (SSJ 23710 +010052 6S6 - 724 2.3725 23847 

S Africa (Com.) (R) 5.6575 +03001 549 - 601 53651 5.8496 

S Africa (fin.) (R) 6.6060 -0.0269 882-238 63432 6X862 

South Korea (Won) 1290.02 +4.76 052 -132 1292.11 1286.69 

Taiwan (IS) 42.1836 +0.1616 675 - 697 423196 423396 

Thailand (BE) 403306 +0.1325 044 - 567 403570 403120 


(AS) 2.1486 +03088 473 - 468 


S Africa (Rn.) (Ft) 6.5060 

South Knee (Won) 1290.92 

Taiwan (IS) 42.1836 

Thaaand (BO 403306 


4.1432 4.1285 


2.3726 23847 
S36S1 5.6496 
63432 64862 


17.18SS 

03 

17.1736 

04 

- 

- 

115.5 

502877 

07 

506177 

08 

50.0777 

0J5 

1174 

96745 

OJ 

96892 

-0.5 

96688 

0.1 

1176 

. 

. 

. 

- 

- 

- 

886 

63909 

0.3 

66832 

05 

63151 

0.9 

1104 

2.4415 

08 

2.4377 

09 

24062 

16 

1266 

1.0142 

02 

1.0139 

02 

14156 

-0.1 

1056 

251622 

-2.7 

2527.62 

-2.7 

267612 

-27 

74.4 

502877 

07 

5Q2177 

06 

50.0777 

0.5 

1174 

2.7379 

06 

2.7335 

08 

2.899 

16 

1216 

10.671 

OO 

10.6727 

-Ol 

10.8710 

OO 

86.4 

251.045 

-8J 

25462S 

-7.9 

- 

. 

— 

203373 

-16 

206828 

-102 

207653 

-16 

88.0 

11^104 

-16 

11.8529 

-2.1 

116974 

-1.7 

753 

2.037B 

1.8 

2.0301 

2,1 

16878 

26 

1226 

. 

- 

- 

- 

. 

- 

806 

1.2854 

OO 

16855 

0.0 

16799 

0.4 

- 

2-1B46 

0.7 

2-1936 

0.4 

2.1829 

0.1 

866 

1.6176 

06 

1.8172 

06 

16082 

06 

B16 

2.1607 

-1 2 

2-1535 

-0.9 

21874 

-04 

_ 

12.4894 

0.9 

12.4951 

0.4 

124499 

05 

- 

156533 

36 

156518 

£8 

150333 

46 

1904 

2J6097 

-2.1 

2819 

-21 

26389 

-1J3 

- 

- 

- 

- 

- 

- 

- 

- 


Km 8 Closing Change Bid/offer 

mtd-pofrrt on day spread 

Eiaope 

Austria (SchJ 10.6215 -0.061 190 - 240 

BafgUH (BFr) 313910 -0.099 770 - 050 

Oenmaik (DKi) 5.9175 -00276 160 - 190 

Finland (FM) 4.6589 -0.0317 543 - 635 

France (FFr) 5.1880 -0312 B40 - 880 

Germany (D) 16097 -0.0075 094 - 099 

Greece (Dr) 232.750 -0.83 600 - 900 

Ireland ff£) 1.5954 +0.CO49 945 - 963 

Itaty flg 1561.30 -53 080 - 180 

Luxemboug (LFr) 313910 -0.099 770 - 050 

Netherlands (FI) 1.6626 -00079 921 - 931 

Norway (NKr) 6.5635 -0.0278 925 - 945 

Portugal (Es) 154.050 -0.45 9C0 - 200 

Spain (Ptai 125630 -0326 790 - 870 

Sweden (SN) 73858 -0.0581 818 - 898 

Switzerland (SFr) 12609 -0.0091 605 - 613 

UK (2) 1.61B4 +0.0053 180 - 188 

Ecu - 12591 +0.0044 588 - 595 

SORT - 1.48339 


Day's mid 
high k>w 


One month Three months One year J P Morgan 
Rale %PA Rate %PA Rare 1i=?A index 


T80R ralas (or No* 7. BfctfoBre spreads tn nw Pouid Spot laUs show arty too tee Dm dottrel places. Forward ram m not dreefly quoted to me 
but ae npiad by current Interest rens. Stetag MncNaMad by M Bank of EntfwaL 8w tewaga ISOS - IOOlBM, Otter and MkHtare ki bate t 
tee Denar Spot tabtes dntved bom THE WliffiEUlSS CLOSMG SPOT HATEE. soma whies we reundad by ttw P.T. 


CROSS RATES AND DERIVATIVES 


Aigentina (Peso) 0 9993 
Braze fFfl) 0.8305 

Canada (CS) 1 3569 

Mexico (New Peso) 3.4240 
USA (S) 

Pacttlc/Mdrfe East/Afrtce 
Austria (AS) 1.3276 

Hong Kong (HK3) 7.7289 

India (Rs) 31.4175 

Japan (V) 97.0060 

Malaysia (MS) 2.SS7S 
New Zealand (NZS) 1.6097 
PMippineB (Peso) 23.5500 
SauS Arabia (SR) 3.7508 
Shgapore (S8) 1.4650 

S Africa (Com.) (Ft) 3.4958 
S Africa (Fin) (Ft) 4.0200 
South Korea (Won) 797.650 
Taiwan (TS) 263650 

ThaSand (Bt) 24.8200 

1SOR ran Ire New 7. BUMS* unto 
bur ora unpted by current Interest rate. 


-0.0005 392 - 993 0.9995 0.9992 
-03065 300-310 08360 DB300 


271 - 280 1.3289 1.32S2 1.3279 -02 

286 - 291 7.7291 7.7285 7.7269 0.3 

150 - 200 31 4225 31.4150 31.5025 -32 
800 - 300 97.3600 96.9300 96.765 3.0 

570 - 580 £.5630 2.55E8 23463 4J 

090- 103 1.61 19 1.6Q5I 1.6107 -07 

000 - 000 242000 23.4000 
506-510 3-7510 3.7505 3.7521 -0-4 

845 - 855 1.4673 1.4645 1.4627 13 

950 - 965 33070 3.4950 33104 -SO 

100 - 300 4.0500 4.0100 4.0425 -6.7 

800 - 700 798.000 767.400 BOO 66 -4.5 

615 - 685 26.0685 28.0470 26385 -0.8 

100 - 300 24.9300 24.9100 24.9925 -3.5 
te Spot MM mow c*4y ms lost three decreed pieces, 
a S ECU are quoted n US curency. JJ>. Morgan nomr 


7.3238 

-2.4 

7.46S9 

16556 

1 7 

-.2367 

1.6172 

04 

1.60S2 

14564 

C6 

1.2581 

14563 

06 

1 2619 

34268 

-04 

34342 

1.3288 

-03 

14359 

7.7264 

Ol 

7.7344 

31.6475 

-29 

- 

96.155 

36 

9346 

2.537 

£2 

261C5 

1.6125 

-0.7 

16778 

3.7562 

-06 

£.7748 

1.4579 

20 

1.4405 

£542 

-54 

£7011 

4.09 

-7.0 

4425 

80415 

-3.3 

32265 

26.125 

-0.9 

- 

25.12 

-32 

25.6 


r cnt a ic iza za re dreed* oicred re me maker 
tal ndcas fwsw 7. Base iSSfclOO 


EXCHANGE CROSS RATES 


Noe 8 


BFr 

DKr 

FFr 

DM 

K 

L 

R 

NKr 

Es 

Pta 

SKr 

SFr 

£ 

CS 

S 

Y 

Ecu 

Belghm 

(BFr) 

100 

19.03 

1£68 

4656 

2016 

4988 

£444 

2121 

4956 

404.7 

23.43 

4.055 

1.688 

4.365 

£216 

3114 

2554 

Denmark 

PKr) 

5254 

10 

£765 

2651 

1459 

2621 

2660 

11.14 

2604 

2126 

1231 

2130 

1.044 

2493 

1690 

16£8 

1442 

Renee 

(FFr) 

5964 

11.41 

10 

2911 

1206 

2991 

£283 

1271 

297.0 

2426 

14.05 

2.431 

1.191 

2.616 

1428 

1864 

1631 

Germany 

(DM) 

2069 

£620 

£436 

1 

£416 

1027 

1.121 

4468 

1020 

8344 

4.826 

Q.B3S 

£409 

0699 

£682 

6442 

0626 

Ireland - 

m 

49.62 

9A44 

8277 

2409 

1 

2475 

2701 

1062 

24&9 

2004 

11.83 

2012 

0468 

2.166 

1696 

154.7 

1467 

Italy 

(U 

2604 

0482 

0434 

0487 

£040 

10O 

£109 

0.425 

9632 

£112 

£470 

£061 

£040 

0.087 

0.064 

£251 

£051 

IliaUmrlwnrW 

rnuwnwiuD 

(Pi 

1847 

£496 

3664 

obsp 

£370 

9164 

1 

3496 

91.02 

74.33 

4404 

0.745 

£365 

0.802 

0691 

5748 

0.469 

Norway 

PIK») 

47.15 

8675 

7.866 

JMD 

£950 

2352 

2567 

10 

233.6 

1906 

11.06 

1412 

£937 

2058 

1618 

147.0 

1404 

Portugal 

(Ed 

20.16 

£841 

3487 

£660 

£407 

1007 

1499 

4280 

10£ 

81.67 

4.729 

0618 

£401 

£881 

£649 

6244 

0615 

Spain 

(Pta) 

24.71 

£703 

4.122 

1200 

0.498 

1233 

1445 

5241 

1224 

100. 

£791 

1602 

£491 

1479 

£796 

77.06 

£631 

Sweden 

(SKi) 

4267 

£122 

7.119 

2072 

0460 

2129 

2423 

£050 

2116 

1727 

10 

1.730 

£848 

1663 

1472 

133.1 

1.090 

Switzerland 

(SFr) 

2466 

4.884 

4.114 

1.198 

0497 

1230 

1443 

5230 

1222 

9960 

£779 

1 

0.490 

1476 

0.793 

7641 

£630 

UK 

<E) 

5041 

9676 

8493 

2443 

1414 

2510 

2739 

10.67 

2494 

2036 

11.79 

2040 

1 

2196 

1.618 

156.9 

1485 

Canada 

(CS) 

2221 

4481 


1.112 

£462 

1143 

12<7 

4859 

1136 

9271 

£389 

0429 

£455 

1 

£797 

71.45 

0685 

US 

M 

31.09 

5618 

£187 

1610 

£627 

1551 

1.893 

£596 

154.1 

1256 

7487 

1461 

0618 

1457 

1 

9£97 

0.794 

Japan 


3267 

£103 

6449 

1657 

£646 

1600 

1.74$ 

£801 

1586 

1296 

7.514 

1600 

£637 

1.400 

1431 

100. 

£819 

Ecu 


38.13 

7.462 

6632 

1.901 

0.786 

1963 

2132 

£304 

194.0 

1686 

£175 

1688 

£778 

1.709 

1460 

1221 

1 


Margined Foreign Exchange 
Trading 

Fast Competitive Quotes 24 Hours 
Tel: 071-815 WOO or Fax 071-329 3919 


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Oarteh Kroner. Ftondi Fhree. Norwegian Kronor, and Sorer 

■ D-MARK FUTURES 0MM) DM 125400 per DM 


and teredUt Kronor par 10; Bafran Fnro, Yen, Escudo, Us i 


I VMM FUTURES (TMM) Yen 12.5 per Yon 100 



Open 

Latest 

Change 

W01 

Low 

EsL vol 

Open InL 


Open 

Latent 

Change 

Wgh 

Low 

EsL vd 

Open InL 

Dec 

0.6599 

£6619 

+04025 

£8619 

£6597 

30.440 

88422 

Dec 

14308 

1.0337 

+£0027 

1.0345 

14304 

17,107 

62.695 

Mar 

£6620 

0.6633 

+£0026 

£6633 

£6620 

483 

£019 

Mar 

14422 

1.0420 

+£0023 

1.0422 

14415 

1443 

£302 

Jun 

- 

06627 

- 

- 

~ 

6 

1457 

Jun 

- 

1.0504 

+£0021 

- 

- 

79 

716 


FUTURES 

&OPTIONS 

TRADERS 

kur a> EFnrucer 
a r nwcinnc sebv kz 


Berkeley futures limite d 

38 DOVER STREET, LONDON W1X3RB H 
TEL 0171 629 U33 FAX* 0171 495 0022 M 


I nUNC FUTURES 0MM) SFr 125300 par SFr 


l OMM) E62300 per £ 


Dec 

£7*0 

£7937 

+£004 7 

£7940 

£7888 

11613 

4Q437 

Doc 

16128 

16136 

+£0014 

16152 

16124 

14422 

48.095 

Mar 

£7955 

£7967 

+04034 

£7967 

£7956 

87 

2401 

fcfcr 

16110 

1.6130 

+0.0034 

16148 

1.6110 

210 

652 

Jm 

- 

£8010 

- 

06010 

~ 

13 

190 

Jut 

- 

1.6120 

- 

16130 

- 

1 

17 


UK. INTEREST RATES 


LONDON MONEY RATES 

Nov 8 Over- 7 deyr 

right notice 


One Three Six 

month months months 


Wartwk Sterflng ft - 5ft ft . 6ft 5% - 5* 6ft - 6ft 6% - ft 7ft - 7ft 
Staring CDs - - Stf - 5ft 6ft - 0 Blj - ft 7ft - 7ft 

THosteyBB, - - 5R-5ft 5B-5U 

Bank Ms - - 5ft - 6ft 6 - 6% 6ft - 6ft 

Local aulhority daps. 5ft - 5ft 5ft- 5ft ft -ft 8ft - 5ft 6ft - 6ft 7^-71, 

Discount Market depe ft - ft 5H - 5?J 

IfC dewing bar* base landing rate ft per cent from September 12, 1994 

Up to 1 1-3 3-6 66 9-12 

muirUi watt mon ths months mo nths 

Certs of Tax dap. £ 100 , 000 ) 1% 4 Si 3^ 

Certs afTsx <**>. ireeta Ei OOjOOO lei >jpo. nmWMUan lor cmli ^po. 

Aml tendar me d deoount &«342 do. BCCO Itaed rate Srig. Bnsrt ftaancs. Make m day Oci 31. 
MBA Airaed rate for period Nov as. 1*94 b Dae 26, 18S*. 8dwnre I & H 723pe. Beterence me tor 
period On 1. 10S4 u Oct 31. ISM. Schemas IV IV USfra Rrenos Here Bra Area 4 k hem tew 
1. 1994 

■ TUBER MONTH STBUJHC FUTURES (UFFF) E500.000 potnta o( 100% 


EflffS EUROPEAN CURRENCY UNIT RATES 

Nov 8 Ecu can. Rate Change % +/- from 

% spread 

DIV. 

ted. 

lleHis,! rairla 

2.19672 

2.14548 

-0.00093 

-263 

567 



404123 






Germany 

164964 

161400 

-£00082 

-163 

562 

- 

Ireland 

£808628 

£794863 

+0.001375 

-1.70 

£19 

11 

Franca 

£53883 

667309 

+0.00213 

062 

2.60 

-4 

Denmark 

7.43679 

760401 

-0.00352 

061 

2-46 

-6 

Portugal 

192654 

195420 

-0446 

143 

2.14 

-a 

Spate 

154450 

1E&489 

-062 

£40 

£00 

-24 

NON ERM MEMBERS 






Greece 

284613 

294688 

-£128 

1162 

-768 

a- 

Italy 

1793.19 

1965.18 

-0-46 

969 

-5.65 

- 

UK 

0.768749 

0.783146 

+£001142 

-0.46 

£07 

- 


LIVE FROM LIFFE - 0839 35-35-70 

Dal now and hear the Footsie move with Bee commentary tram title, «a it happens. 
For details of all Life Ones and our flnancW InJennatkw sendees, call 071 -895 9406 
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Futures Pager Ltd. 16/21 Great Tower St. Lond on EC3RSAQ. 

Futures Call 


TAX I KI F. SPIX l L VnON 
IX Fi l l RES 


IbtbdainrteCrifcwIn e paltedS larteter ail^ 
yon. ofl Meted Homy or ba>eetei on 07M28729S arwrire 
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Med, in one value far money paxage. Amiable In 



Open 

Sett price 

Change 

Hgh 

Low 

Esc vol 

Open bit 

Dec 

6367 

9365 

-0.01 

8367 

9361 

14073 

146360 

Mar 

9273 

92.74 

+£01 

8275 

9266 

17808 

75508 

Jun 

82.15 

9215 

+£01 

9216 

9206 

4878 

5S513 

Sep 

91.72 

91.73 

+£01 

91.73 

9168 

2702 

65877 


Ecu cenM atee eat by 6w Ereopawi Commtoion. Curwidae are to dascenigng rwwhre W 
Parcentega dwnaea are ter Ecu; a pwatere dwnge d an owe a waah cunency. UN re gance d 
wdobreewan lew aprawlac tha pwcw tt pa dStewica betwean toe acute meAatmdEojc 
teraorrency.andlhainreJrrajmpMnWWdperewa au ederiBriflndtdwcuiinricy'emariwtr 
Ecu central rote. 

(17/0«| Steteg and Mtei Ua nnpaaded »«n BteL Ad|uidmw« cateteeted by the Ftan 


■ PHttAPCLPMA 88 £78 OfTKMO D12S0 (cents per porexl) 


;Market-Eye 

Profe».*.ional tinancial 'nform.'ition direct 
to yo'jr PC lor ;i low fixed covt. 



Traded on APT. fit Open Maaet iga. on tor prateous day. 


• Hwujio ognoijg gjwg eeoojoo powa * ioow 


Strike 

Price 

Nov 

— CALLS ~ 
Dae 

Jan 

Nov 

— POTS — 
Dec 

Jan 

1600 

£41 

662 

662 

- 

0.13 

£46 

1675 

n 00 

466 

466 

- 

046 

£68 

1600 

169 

266 

341 

£06 

1.14 

160 

1629 

0.16 

163 

200 

1.11 

264 

297 

1650 

- 

066 

1.15 

363 

4.03 

466 

1676 

- 

nan 

£60 

562 

£14 

661 


Strike 

Price 

Dec 

- CAULS - 

Mar 

Jun 

Dec 

— PUTS - 
Mar 

Jo 

9360 

£16 

£05 

£06 

£11 

£61 

161 

9373 

065 

£02 

003 

04S 

1.03 

1.63 

9400 

£01 

£01 

£02 

£46 

147 

167 


Prerieue deyte uoL, Cate 19^61 Puta%S04.Prew. day'a open tt, Cate *30,171 Pure42S.1B8 


.Cate 1 1106 Puta lease. Pmvteue day'a open ftiL. Otes 353(37 Puts 213B46 


BASE LENDING RATES 


AdEm & Company — 5.75 

A6ed Trust Bonk 5.75 

AIBBar* 5.75 

•Henry Anabacher.. — 075 

Banket Bamda — 8.75 

Banco Bbso Vizcaya-. 5.75 

8m* of Cyprus 5.75 

Bsnkafrasnd 5.75 

Baikaflnde 5.75 

Bar* dt Scotland 5.75 

BenteysBank 5.73 

BrlBkatMdEBBt 675 

•Brown SNpiey & Cc Lid S.75 
CL Bank Nederland... 5.75 

CMrenkNA .5.75 

OyttasdsiBBsnk 6.75 

The Cecpecatee Bank, 5.75 

CouBaSOu 5.75 

CrecSLyomte £75 

Cyprus Popular Bank -8.75 


% 

Duncan Lawrie — 575 

Boater Bank Umftad_ 6,76 
Fkienctal&GanBreA-. &5 
•Rcban Fleming 8 Co _ 575 

Gbobenk _575 

•GtermssMehon 675 

HatA Bank AS Zbrich . 678 

l lam b ros Bank 675 

Heritable 6 Gan bw Bk. 675 

•HI Samuel. 675 

C.Hoare&Co 675 

Hongkon g AShanghaL £75 
Jdtrt Hodge Ba* — £75 
•Leqic*l Jcnsph & Sons 675 

UoydsBank — 675 

Mstfaef BankUd 675 

MSand Baric £75 

* Mount Brettng B 

NatHteteteatar — £75 

•Ftaa Srothere — £75 


* HoOutfie Quarantaa 
CorparaOon Lbrilsd la no 
kngerrejlhorieedas 
abaretegbwterion. B 
FtayriBkotSeofland- £78 

•Brrili&WtansnSscs. £75 

TSB — £75 

•UhBedBkot Kuwait™ 675 
Urity That Baric Pic — £75 

Wastam Trust 675 

Whbaaaoy Lakfiarr .... 675 
Yort aM re B a ric -...678 

• Meniore ri Londcn 
Investment Bsridng 



Open 

Latest 

Change 

high 

LOW 

Eat vd 

Open M. 

Dec 

9368 

9390 

+£OT 

9391 

9388 

68.420 

411,468 

Mar 

9368 

3340 

+0.01 

8341 

9368 

72689 

409607 

Jun 

9268 

9261 

+£01 

9293 

9269 

41.781 

a 

■ IIS TREASURY BRJL FUTURBS Sim per 100% 



Dec 

9468 

94.49 

+£01 

9460 

94/48 

1688 

17.552 

Mar 

93.36 

9397 

+£01 

9396 

9386 

808 

10002 

Jun 

9348 

9348 

+0.01 

9348 

9348 

248 

5.919 


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Objective analysis for professional investors 

0962 8Z9Z64 , 


Fien.ncs House. 32 Soi-thgate Street. Winchester. 
Hants S023SEH Fu 0424 7740S7 


Strifes 

Pries 

Nov 

Dec 

CALLS — 
Jan 

Mar 

Nov 

Dec 

PUTS 

Jan 

Met 

6475 

a 07 

a 11 

£08 

£11 

aoi 

£05 

047 

062 

9600 

£01 

£02 

£02 

£05 

040 

£21 

£48 

061 

96SS 

0 

£01 

£01 

£02 

£44 

£46 

£72 

£73 


Ml, Crte asao Pure *Sie. Preteu ts^-a open to, Cter sissss Pm iS5C« 

> SteWTO FHAMC OPTKWI5 QJFFQ SFr im points ol 100H 


Signal 


Strte 

Price 

Dec 

- CALLS ~ 
Mar 

Jun 

Dec 

— PUTS - 
Mar 

Jun 

9575 

040 

£13 

£06 

- £02 

£24 

069 

9800 

0.04 

£06 

0.04 

0.11 

£41 

£80 

9826 

061 

062 

061 

063 

£83 

1.02 


o 130+ softrvaro appffceOons O 
O BEALTBE DATA FROM $10AOAYO 
O Sigoal SOFTWARE GlADE O 
CaU London S* 44 + (q) 71 231 3556 
for your guide and Signal price OaL 


. tote. Cate o Pun a Prenoue day's opm m.. Cate 2819 Puts tat 




money rates 

ft Qnr One Three 

*»«**'* month rnths 


reQcy*s rise, and strong eco- 
nomic fundamentals. Economic 
growth is expected to be 5-6 per 
cent this year. 

Mr Davitte issued a note of 
caution, however, saying that 
the central bank would, be 
unlikely to allow the peso's 
rise, from around 26 pesos 
early last month, to continue 
unhindered. Indeed. President 
Fidel Ramos announced yester- 
day that forward foreign 
exchange cover on oil imports 
was being scrapped in an effort 
to halt the peso’s rise. 

■ The Ba nk of England pro- 
vided £680m late assistance, 
and £437m help at established 
rates, in its daily money mar- 
ket operations. The shortage 
was forecast at £l.l5bn. 

■ OTHEH CUBMfiCtES 

taws £ s 

tfcnxn 174.113 • 174261 107J1Q - 107.710 
kai 261200 • 28150) 174800 - USUB 
Kuwrt 0 4620 - 0.453: CL379 - 02336 

Pobrel 37545.7 - 376123 232050 - 23Z350 
Russ 4991 ID • 4996m 3K4G0 - 3087m 
U.4£ 5£3C • SS4S0 26715 - 35735 


Btagkan 

week ago 
Francs 
week ago 
Germany 
week ago 
haiand 
week ago 
Kafr 

week ago 
Netherlands 
weak ago 
Swftreriand 
weak ago 

US 

week ago 


weakago * 

U 5 LEOR FT London 
Interbank Bxirtg “ S 

week ago _ 5J H* 

US Defter CDs - 5 .10 6M 

ago - 5 ll° 

SDR Linked Da ff 

week ago - 3,6 •* * 

P +I ikdred D» into atotfi 1 mb* 5U: S 8^ * 
-m n pdorad rare* ter SI ten quoted bteaeh 
day. The Bar*«» T nret, ter* «ri T riiyft ^! 

Md f+w»« ant sh o wn tor te teites Money ftW 


4* S f* 

4* 6 

sa Si 

54 54 » 

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□Men Krona 5*2 

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10ft- 1ft 
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7ft - 7ft 
4ft- 4,1 
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10 ft -9U 

41,-4 



Open 

Settprtoe 

Change 

Ugh 

Lew 

fid.’ vol 

Open M. 

Dec 

6446 

9448 

- 

9447 - 

9445 

6.733 

53372 

Mar 

9365 

9381 

-£04 

9385 

9360 

14698 

34.164 

Jun 

9341 

9338 

-£02 

9341 

9347 

BJM3 

23494 

Sep 

S3 04 

9303 

- 

9305 

8300 

4430 

20655 


TMWEE MOUTH BWOMUjB (UFFQ* Sim polnta ol 10016 ■ 

Open Salt price Change - High Low EsL vol Open ht 


Dec 

9361 

+GLQ2 

0 

2485 

Mar 

9340 

-- 

0 

1388 

Jun 

nyqfl 

+002 

0 

354 

Sep 

9264 

+0101 

0 

61 


« THREE feMHTH BBWHARK FUTURES (LfFFET DMIm points of 100% 


Open 

Sort price 

Change 

Ugh ' 

Low 

Eat vd 

Open InL 

9461 

9461 

. 

9462 

94.76 

18181 

1S026S 

9464 

9464 . 

+041 

9465 

4462 

17058 

160894 

94.15 

94.18 

+043 

94.19 

94.13 . 

13024 

113285 

9375 

9379 

+£03 

9380 

9374 

4975 

78446 

■ON1N EUROUI1A MTJtATE FUTURBS (UFFfi LlOQOm points Of 100% 

Open 

Sett price 

Change 

High 

LOW 

fitt. Vd 

Open InL 

9161 

9141 

- 

91.02 • 

9098 ■ 

2544 

34054 

9068 

9065' 

-£02 

9037 

9064 

2069 

32464 

8377 

8378 . 

+043 

8378 

8373 

1147 

16368 

8941 

8962 

+£03 

8963 

8329 

1263 

21137 


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Open 

Sett price 

Change 

Mtfl 

. Low 

■EsL vol 

Open tot 

ortoa 

9563 

+042 • 

9543 

9568 

3806- 

20398 

9362 

9564 

+042. 

9355 

9380 

1259 

19026 

9325 

9324 

' +041 

9525 

9323 

203 

4963 

94.90 

6460 

■ +042 

9440 

9440 

306 

1933 


IQJFFqEculm points of 100% 



Open 

Sett price 

Change 

•'Mtf 

Low 

’ EsL vol 

Open M. 

Dec 

■ 9390 

9394 

+044 

9395 

9388 

897 

8014 

Mar 

3344 

93<fl 

+£04 

9349 

834Z 

879 - 

7283 

Jun 

92.92 

9268 

+043 

9248 

8262 

164 

4073 

Sep 

92.42 

92.48 

+044 

8260 

9342 

232 . 

2410 

' UFFE futures traded on AFT .. 











mn » fira AF g»t mhtsis^^ 
flFTKvmuMsiMnir 

International Gas Report provides i lijSs 

a cost-effective source of accurate and 

up-to-date infcv-matkxi on the 

woridvride gas industry. Every 

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Reports cover topics such as 

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International Gas Report Es therefore a definitive source of 
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To receive a complimentary copy of International Gas Report 
please fill In your detafis below or attach your business card and send 
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International Gas Report is 
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of Trading 

-FUTURES- 


Inicnslve Futures, Options A Otneacies 
trafing Courses foe Bcglnnexa to Advanced 
usin* tee* md news ttxhoapias. 

071 976 8101 




* O"® 




FINANCIAL TIMES WEDNESDAY NOVEMBER 9 1994 


WORLD STOCK MARKETS 


♦ /- W HnW HE 


EUROPE 

« 5 TMA(N»B/ 5 di} 


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-« 4^00 £430 oS 
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BGnLPt 22300 
»»y S 38.750 

cenom 12,100 

OB 2370 

SSSP 

cnyt 7300 

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+ 4053 O 04 JM 0 __ 
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+ 35 19390 153 M ZB 
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. 1,775 10 
“SO 2.700 2.190 £4 
-806300 5300 43 
-1 215 154 8.7 
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+* 1 X 50 USB 2.1 
+■208320 5.710 73 
-TO 3.781 £670 43 
+45 2370 2380 
”304300 3325 5.1 
-- 4.470 1550 53 
+24 1380 1300 23 
-10 MBO 7,140 91 
♦ 52 10 £M 8.720 13 
-70 5230 4 . ISO 23 

— 3385 2.750 53 
+60 8300 5310 23 
+10 7 X 50 6,090 13 

+100 6.000 5300 43 
- 2*630 1350 S 3 
— ’ 9.750 ISOM _ 
+ 20 1 D .775 9350 £8 
- 3600 2320 +3 
rj S 80 420 3.7 
-130 6300 4350 4.7 
-40 5680 4320 43 
+6 2638 2325 5.4 

— 2630 2316 5.1 
+160 15700 12550 4_9 

-25 1675 1,450 8.8 
+75176581119 95 
—50 11300 9320 46 
-400 38.100 22200 24 
-10 2630 2440 4.4 


ID 570 340 &S 
19 709 500 66 
818 +11 902 881 2.1 

39150 *33048150 377 3.4 

136.10 *11877010850 — 

1.100 *10 1695 1 jD 05 06 

8.930 +180 7,100 5,480 05 

376 -1 96921950 — 

473 *430 624 428 36 
21120 +60 27 * 97.10 1.1 
113 +.701389 8750 5.1 
21548 888 85 
1 11050 11210 8.7 
__ 280 104 _ 
35040 *230 525 515 5.1 
« 0*0 +50 53530150 73 
17050 *60 234 099 36 

318.10 - 1.10 371 2 BUB 7.1 

B 12 +7 038 762 16 

M 2 +11 1305 7 B 6 ™ 

1628 -7 1 . 1 » 805 12 

-5 804 382.10 — 
+5 287 184.10 12 
21574011350 £7 
3 75 ? 542 1A 

850 -30 945 CSO 22 

-l« 3290229 16 
+8 734 576 16 
+517881240 32 
38330 + JO 46950 337.10 27 
57 D +10 BOO 472 22 

375 +730 81 O 3 E 850 72 
427 +12 700 382 75 

ZK* +» £470 1.790 _ 
flOfi +7 792 523 17 
1500 *10 2500 1710 26 

280 +140 S 2 B 232.10 — 
23550 -30 37722940 46 
203 -2 237 JD 1 B 1-31 2 j 4 

25 TO +10 3.120 2381 13 
1*150 + 1.10 214132.10 62 
33630 + 130 X 4929110 36 

’4230 -1.1027+JO !&3D £j 

3 SO +1 404 333 18 

■**a +0 050*2750 55 

38050 ._ 80038850 8 J 

29450 + 1.60 306 221 3.1 
„ 728 -2 335 ?40 3.4 

25350 - 2.10 355 227.10 4 A 


— S*rt> 3.140 -60 *510 1675 ... 

_ SPaota 8650 + 66 11.700 8,700 4.1 

_ SW 0,73 +31359 8201 52 

_ Srb£P 1671 -1 3730 1282 2.7 

_ Tfltacm 4.075 -15 5.105 3263 2.1 

_ TtaroAt 22650 -3003690069 16 

_ lem 18600 + 45024 JBM 5 JOO 3 L 3 

_ UnOD 10680 -80 iflJD# 8668 15 


ijto 8 /fta 4 


«Wn 61.10 
AEBON 106.40 
AMU 5080 
AX20M3EL409 
BSWU 8 33 
BoWOH 38.10 
68.10 
142.70 
o ran 198.70 
Bamr 10.70 
FttDpfl 15.10 
Rumen 8960 
Grama 92.10 
SraapR 45 
worn* 13860 
Hami 248 
M 8 a 27360 


DBMAHX{Mov S/ Kr) 


— 780 S 85 26 

+3 281 176 26 

-« 333 250 1.1 

I — 7600 6.300 05 

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+1 Z 2817 SL 9 16 
_ 4 Z 7 307 IB 

— 2 KL 2 S 144 02 
_ 016 375 £0 

I +2 643 445 2.1 

— 278 158 15 
-3 426 330 2.1 

— 1650 BOB 0.4 
+2 385 262 11 
-873181 488 07 

+167 737 418 1.1 
-2 B 15 4 B 7 05 
-1 875 413 05 

— 405 321 26 

-1 t*« aao 

-30 1572 510 16 
+3 28720758 45 


mum (Nov B/MkaJ 


-2 154 99 26 

+1 178 121 16 
_ 105 54 

+.10 4860 3560 15 
-3 233 141 26 
-681740 665 _ 
-60 60 45 26 

-3 705 502 16 
-2 150 100 0-8 

— 247 140 1 6 
-1 260 138 16 
„ 258 198 16 
_ 268 190 1 6 
+2 TO* 287 04 

-60 108 88 _ 
„ 104 59 1.4 

-160 102 54.10 16 
. — 5760 41 _ 

- 1.10 120 8460 1.1 

+8 SB 175 26 
+60 ■ 31 1460 _ 

— 215.60 12 _ 

+160 129 88 — . 


FRAME (Nov 8 / Fra) 


SL £ 

5S3 ™ 




HLT&5 


— . Chran 1 

1 ChtoMd 
T CCF 22860 
OfiwF 814 
CflyQ 47 B 
QlocF 41860 
CrW 41860 
Damn £aro 
728 

T13 

DKUS 31060 




+ 1.70 3582(179 _ 
+12 788 504 36 
+12 814 065 26 
-1460 81344670 3.0 
+4 330 217145 
*10 718 570 46 
+980 TUB 9 227 1.1 
+4 883448.10 25 
_ 3.750 2,830 &A 
+1 1 H JD 3 U 
+ 12 1 A 80 1633 46 
+7 1.155 784 4 A 
- 1.10229501899 56 
— 21120 1950 _ 
+68 2678 1 J 11 26 
+ 1.10 206 1B2B0 46 
-13 1670 1 JD 4 12 
+8 483 348 26 
tlJOJOSB 201 15 
♦271685 7 DB 66 
-6 BS 8 370 11 
♦ 11.10 498 351 20 _ 
♦ 10-70 7*7 3701*4 
. +10 8.180 6600 0.7 
+12 1602 886 22 
—3 630 610 _ 
+1120 47 B 302 16 
-8 677 7»0 £5 
+860 748 418 36 
♦8 740 509 22 
+20 435 356.10 55 
-8 302 296 93 

♦460 282 181145 
+151688 885 _ 
— t 60 S 850 85 
+8 830 635 1.7 
_ £407 £ 7 S 0 26 
-61 26 « 1.700 *2 
+8 734 550 26 
+A0 18.70 5.16 75 
+ 4.40 182 100 94 
-11 939 580 3 J 
-180 0520 4648 1.1 
- 14 JD 578 3 B 2 3.1 
+ 80 £754 1 .S 70 0.7 
_ 38373950 26 
-150 64584350 3*4 
-14919 398 26 
—2 080 485 25 
_ 716 403 86 
+5 1678 682 76 
+140 119 32 76 


“ omwir(Nov 8 /Dnij 

14850 + 50 IB 93 D 140 1.1 _ 

A 6 MV 530 ♦S 635 490 22 _ 
16*5 +15 1,446 1600 16 

2294 +7 2511 2.122 05 _ 

650 6*150 575 16 ._ 

700 -10 1.191 700 _ _ 

67 D -5 1625 015 1.1 ... 

31560 tlSOJD 27 B 26 _ 
_ 496 SID 43 S 16 _ 

Bn*** -JO 485 34550 25 _ 

Ba»*f 34360 +360 40460 330.10 12 

BawrH 39860 -.70 528 35*50 17 ._ 

BrtWBr 77460 +760 929 638 16 _ 

BayraV 442 -1 57 G 39 S 26 

1615 -3860 1.105 815 1.4 _ 
308 +830 34*50 238 16 
M 2 -160 528 374 17 _ 
855 +860 051 750 IX _ 

805 -51630 755 1.4 — 

one 1510 + 1 S 1530 1.140 06 _ 

Cmnok 315 +1 38029260 36 — 

Conlrt 21850 +60 298 712 16 _ 

DUN 414-50 GOO 38060 05 

757 +360 90 * 689 1.1 _ 

441 +350 568 426 15 _ 

Dt Bad 22140 + 24028 B 6 D 210 _ 

737 +joaa 7 .nHBaio S2 
0 MM 9 14450 +360 188 191 26 — 

DouQta 435 +7 S 07 42 B 32 _ 

OrjwX 295 -5 337 260 1.7 ._ 

Onxfik 40760 +604050 848 32 _ 
530 +6 618 465 16 „ 

Oaten 24720 + 2 D 307 245 26 _ 
82 S +15 829 500 1.7 ._ 

222 +2 245 190 26 __ 

HoHZm 1250 _. 1680 1,141 16 

588 +10 681 582 1.7 — 

315 440 310 32 

860 +2 1689 857 16 _ 

325 +2036860 2*420 22 — 

850 +8 1616 787 16 — 

207 -60 2 G 3 205 26 _ 

236 —60 913 254 35 M 

342 +7 433 325 26 _ 

183 „ IBB 131 _ __ 

373 -1160 840 515 25 — 

471 -11 568 4 G 1 25 — 

12380 + 16018160116.10 _ _ 
13860 +250 17910270 36 — 
840 -10 800 816 25 _ 

S 3 -7 BSD 612 26 

3 —2 BBC 830 16 _ 

325 -3 410 311 26 _ 

19560 +3 71 * 5 } 15750 _ _ 

191 +360 209 151 15 _ 

_ ..... 40450 +ZA0 470 378 1 J _ 

— MAH PI 91250 +350 387 296 22 _ 

— Manmn 401-70 +. 704885 ) 366 12 „ 

_ NtemflV 6 OT 822 680 _ _. 

__ IMg 155 +4 2 SB 101 52 — 

— Mue»)a 2.790 +403517 2670 06 _ 

_ PWA 233 -1 2 S 2 210 

_ PflKamm S 05 -50 530 483 35 — 

— Poracfl 849 +13 960 822 04 M 

— prang 438 — 59160 4 If 2J3 _ 

— 45350 + 8 J 052 B 6 D 398 2.8 _ 

■ 887 + 1.70 424 329 85 — 

1652 -6 1520 1£30 06 — 

281 +3 372 254 26 — 

220 +4 287 ZOO 35 — 

240 -7 31323960 25 — 

S -2 U «9 888 15 — 
-4 438 360 16 _ 
82120 + 76079*30 607 2.1 — 
030 — 890 810 16 — 

520 _ 560 480 12 — 

_—■«!! S'HH z 

= * >«a i 8 sis = 

~ VMM 32 S +3 415 818 £8 — 

- s? m ssss z 

Z vwpr sen ♦! 443 otoj _ 

— HtateP 1605 —1673 780 15 - 

AFra 214 -3 270 205 15 _ 


RDuMl 18850 
Sturm 44.70 
UnKW 108.70 
VM 1 17860 
VRODpfl 48 
WNDpR 11960 


+ 2073.70 5 * 4.7 

* 20)1060 0020 35 
+ 5053-404250 Z3 
*20 229 »760 32 
-50 4720 37.90 36 
+.10 K 3450 16 
— ^0 7750 6250 _ 
- 2201 X 3010550 1.1 
+J 0 20817179 Zb 
- 2 D 1950 1450 — 
-.10 23 I 960 56 

— 60 88408 S 50 46 

— 1885888.10 45 
-20 9880 41.40 26 

+ 1 1675 a 123 
-50 26029860 1.4 

- 33*60 284 95 
-20 83 4850 65 

-609350 E 850 26 

45.70 34.70 25 

-50 0470 72.10 02 

-509850 74.70 3-4 

+.105760 4060 2.1 
+60 62.00 42.10 06 
-.10 66604760 _ 
+60 S 720 4 X 30 35 
+60 IK 60 47.70 G 6 
+.19 10020 72 2 A 

+.70 40-40 86.75 _ 

— 8860 8560 3.1 

-60 5860 40 06 

-50 8450 7060 16 
-.10 131111 X 3.1 
+.10 88 4950 81 

-JO 13 S+Q 11360 26 
-.1010050 0160 5.4 
+20 21540 184 B 0 45 

_G 06 o«OJO 16 
+.10 230 178.40 36 
+140 20316450 26 
♦50 6660 45 Z2 

- 1.101336010120 15 


-4 450 
•8 971 
-3 100 
-25 981 
-10 1.075 
-4 1.437 
-2 175 
+ 1 S 1,738 
-S 0 S 540 
-1 283 

*201540 
♦M 13640 
-45 7271 ] 
-35 2200 
-8 1666 
-I 227 
+3 888 
+1 870 
-101550 
+10 1,100 
+2 531 
+1 258 
+1 815 
+1 773 

+5 888 
+24 1603 
-8 832 
-10 1615 


302 32 
782 1.7 
1*360 15 
BSD 16 
1.400 2.1 
1.063 2.1 
1 1 850 — 
1690 4.7 
3570 __ 
178 84 
1,001 
10675 84 
5.1 BO 05 
1540 25 
842 15 
148 75 
838 — 
60 S ._ 
1260 25 
B 45 26 
34 S 45 
IBS 4.7 
584 1.4 
513 16 
736 _. 
1655 27 
56 * Zb 
1,126 16 


PACIFIC 

JAPAHDtovS/Yen) 


- MOMAT (Nov B/ Kroner) 


-1 112 68 4.7 

— 175 130 0.7 
+.1019601150 

-I 180 12 s 1.1 
+2 114 6* __ 

_ 148 100 35 

-2 380 257 JO 21 
_ 11550 80 35 

-jorrasD ra i.« 

— 20 B 140 06 
+4 305 180 £2 
— 10450 130 2J 

+50 91 7250 25 

+50 01 70 2.7 

-2 97 72 86 

+50 122 8550 1 5 

-3 191 111 25 

-150 0450 19.10 — 
+ 5 D 89 66 96 


OWM 2,300 
OukjTB 1570 


SMM(Kov 8 /fts .1 


Bfoptr 15580 
BSortd S 58 IM 
Bnarta 870 
CS*SA 3 J 40 
CtetM 4 J 70 
Cutete 8.190 
□njdaa 1585 
BiraAa 1.435 
BVlM 2570 
EndsBr 5.010 
F«aa 721 
6 rfk*F EDO 
HUCSi 362 B 
Bwte 821 
Ko 4 M 7.490 
M apt™ 5500 
- 4.100 

10500 
2.165 
ftepM 3675 


T 40 HA 3590 
Totatn 1 J 89 
Ub Fen 566 
UnM 1650 
inn 152 & 
vraanni 2.325 
Vtactn 2.150 


-80 6680 5 . ISO 26 
-15 6.700 4.700 65 
+23 35 K 2 JB 0 25 
-201400 2.415 72 
-10 4.475 9670 42 
+20 17 J 0 D 146 ® 11 
-30 6521 4,400 5.7 
-9 1 . 43 B 700238 
_ 3580 2,410 3.1 

— 5,1 1 0 3^00 2.7 
+14011500 7 J 10 2 J 

-16 2,715 1.745 46 
+ 101,776 1610 1.7 
-6 3560 25 M 3 >» 
-30 6.100 6.100 25 
+ 21,100 783 65 

— 824 41 B 150 
+25 5,140 9530 36 

1610 790 75 

+190 BJQO 4600 16 
-40 7630 4600 26 
+15 6690 3600 £4 
-SO 12500 9.420 16 
+35 £200 1600 
-SB 4600 3605 Z9 
♦7 366 102 D .4 
+13 886 301 104 
_ 815 696 8.0 
+104650 2605 35 
-10 2.185 1506 3 J 
_ 738 648 86 
-20 2600 950174 
-25 1 . 7101,150 17 
+ 9 D £120 1.980 2-2 
+20 3680 2635 1.4 


I 0 tov 8 /Krono) 


AetraS 18860 

98 


- rraufftwB/Uro) 


382 

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hCKA 23250 
feicrtfl 23250 
M 174 
M 17350 


BGorara 36 io 
BNasX £880 
9 ftomn 1JE0 
Bahirt ii 7 
BneOn 18,780 
Ongo 9 jJ 60 
rm 1J8* 

1JEO 
1601 
1637 


+16 6682 3640 5 J 
- 5360526*1 — 
■IB 2450 1626 16 
+10 211 78 „■ 

+ 5006501 * 6)8 16 
- 106 12 . 4 * 8,110 _ 
-19 3.100 1564 u 
„ 2612 1602 _ 
-9 26951688 &0 
-2 2610 940 __ 
+44 26181619 56 
♦250 13674 0,100 _ 
-7 £ 58 * 1.123 _ 
-80 7630 4671 16 
-25 4.820 2.118 2.7 
+65 £196 £101 46 
+20 175 D 0 W .420 04 
-31685 1536 2.4 
- 45044,72333633 16 
-85 4580 2575 — 
_*a» 15500 1.1 
+80 B-SaO 562 S £0 
10 1450 9.170 
16 2430 2.000 _ 
+10 16046 8552 16 
+30 8440 4465 26 
+ 51*33012600 2-1 
+301070012615 16 
+1 1,640 870 _ 
+2 £140 1.750 _ 
-60 8.100 3440 14 
+53685 1670 __ 
- 6034690176)0 16 
+ 125 12.1 GO 7.980 24 
__ HUM 0.706 £7 
-75 1698 «0 _ 
+ 3 G 6 J 50 46 BS £2 
-60 7500 4,140 _ 


PlWRBA 13250 
Rnfl 13050 
SCA A 111 
SCAB 11160 
SAFA 126 
SKFB 12850 
SMhkA 11650 
SnMB 117 
SEBrtc 44-30 
SMdlB 12760 
StoMlA 16250 
425 

9 DD 42 S 

SvtfcnB BO 

94 

86 

106 

133 

134 


+260 83 X 1*3 

+250 95.75 57 145 

+3 680 250 16 
+2 885 438 1 5 
+2 197 13 06 

+£50 184 144 06 
+16010850 « 94 

+ 2 U 8 E 0 79 9.4 

+3 433 282 15 
+9 44250 326 1.0 
+2 134 87 ao 

+2 134 SE 2 J» 

♦1 no 78-50 B.6 
_ 430 251 1.6 
_ 68 3860 26 

♦150 311 137 £0 
+60 312 178 36 
+250 650 155 36 
+1 215 102 36 

+1 372 17 _ 

+3 166 14 1.7 

+3 1 ® 1 DB 1.7 
+2 186 102 £1 
♦ 2-60 156 90 36 

+50 184 122 — 
+160 IBB 12 * £6 
+1 143 9950 19 
♦1 142 650 16 

+1 73 3890 _ 

♦ 219 B 50 9750 15 
+360 233 129 £1 
+6 47 S 3 SI 15 
+260 480 360 16 
+3 144 85 22 

+2 110 BE 32 
_ 1228260 36 
+1 1 M 78 
+1 109 106 59 

+60 173 106 56 


+10 1.420 1600 
-8 737 488 

_ 1 J 1 D S 91 
_ 1.560 976 
-20 1600 8 S 1 

+20 1980 1570 
+2 744 583 
- 201.700 940 
-8 534 402 
MO 0500 2,870 

-30 5940 4970 
+201650 1920 
*10 I 960 1,000 
+2 811 SOO 

__ 1500 1640 
S 629 410 i 
-6 513 380 ' 
-7 079 550 

-5 990 BS 
+10 1690 1560 l 
♦3 BOl 415 
-30 3640 £410 
-O 1920 842 < 
-10 803 430 
♦20 1620 1.530 
-20 3590 2590 
— Mio 1920 
... 611 315 

+3 482 337 
♦0 997 *41 

-6 603 490 

1.440 1940 I 
-2 708 571 

-20 2.970 2.410 
-10 1.330 1920 

-10 2.780 2550 
-60 1670 1610 
-8 964 763 ' 

-5 896 700 

-7 825 410 
-3 SOI 397 
_ 1670 1.390 
-20 1580 1.050 I 
+20 £080 1.700 
_ 1610 1.400 
+21920 660 
♦1 1920 731 
-11 810 551 

570 416 
... 1,270 993 

-30 2920 1560 
-5 527 345 
- 41 J 80 720 
-6 865 697 
-. 1.120 051 
-ID 1.710 1620 
+101670 1630 C 
♦80 4650 3600 C 
+4 705 64 S 1 
-3 036 480 
_ 1.010 1650 
-20 1,980 1970 
_ 1,180 993 
- 70 * 6*0 3900 
-4 706 521 t 
-10 £450 1920 
+5 003 446 
+20 2680 2.000 
_ 738 SS 6 1 
-fl 513 275 
+8 585 300 
+1 1940 71 * 
+20 1970 9 K) 
-20 2500 1650 . 
-10 1.180 841 . 
-6 788 514 , 
+2 933 758 . 
— 1960 888 . 
-8 7 D 0 428 1 
- 1516 S 0 835 
—14 539 440 
-3 734 802 1 
_ 640 577 


-B 7 BO 590 _ 

-2 1.130 796 _ 

438 +12 550 387 1.8 _ 

_ B 5 G 07 * _ _ 

-8 1940 628 _ _ 

+50 6530 5950 — _ 
—18 878 508 — _ 
- 51.130 812 _ _ 
820 -IS 848 712 — — 

1620 -40 2940 1.390 _ _ 

WMt 1940 -10 1,120 820 _ — 

-£ 2801.810 

-10 


718 

OMMfl >.oio 
OaraH 1920 
I960 
aieo 
I B 4 
DmaMi 670 
1.710 

1500 

f-h+vi 1930 
4580 
557 
£100 


erfirtd 1910 
G0SI1U3 521 


I9kw8/Rs4 


— 292 181 — 

-1 721 968 29 

-6 713 587 29 

-65 3,006 £173 16 
-0 1949 1913 1.7 
-1 250 190 16 
+1 747 800 11 
-a OTO 702 29 
-4 M 2 800 £1 
+7 422 327 _ 

— 3600 I 960 1.8 
+10 1.700 I 960 £7 
-10 2932 £140 22 

-81945 850 16 


HlaiEP £390 
HondaM 1970 
ten*# 066 
Men 2920 
2930 

«n 
824 
B54 
1920 
29*0 
408 
1.740 
414 


faurty 1600 

JEtR 783 

JBC 16 n 

JnS«U 4 325 

JAL 737 


1.180 
£080 
0920 
Manama 1970 
iSfana 862 
KumPti 1600 
Knteto 1.730 



-10 3940 2580 _ 
-7 520 423 — 
-4 7*0 881 — 

— £850 2 560 
+1019801520 .... 

+2 B 50 509 — 

-20 2640 1960 09 
-10 £350 1650 — 
-5 520 393 - 

-01930 525 09 
-91970 723 ... 
+10 1,140 972 — 
-10 3670 £790 — 
-4 525 251 — 
-30 2910 1 J 70 — 

— 457 
-3 580 

-1 768 522 ... 

+3 910 751 1.4 

— 8.150 59*0 — 

-9 744 420 — 

MO 2970 1.730 - 
-22 884 528 — 
-10 1.7701680 Q-B 
-4 448 284 — 
-3 778 005 0.7 
-2 501 333 ._ 

— 886 479 — 

— £ 1201.810 ... 
M *00 286 - 

-14 946 530 — 
+7 715 431 — 
-201940 822 09 
_. £500 2960 19 
-80 11400 0.780 — 
-10 1.470 1910 08 
+ 2 1.050 8 S __ 
- 1.860 1680 — 
-30 2 . 4821.700 — 
-a 420 330 
_ 62 fi STB 08 
-15 570 430 _ 

— £970 2680 — 
+5 823 42 S 

— 1910 1.140 — 
+3 500 338 

— 422 271 

-6 +57 303 — 


+3 720 

.... eis 

-1 *70 
-10 1,936 ■ 
+4 877 
+10 1680 - 
-1 335 

— 960 
-30 £460 1 
-30 2 . 7 W; 

— 097 

+1 767 
-fi 963 
-4 787 
+9 573 
-2 523 
... I6S01 
— BCS 
+20 3900 i 
-40 7600 E 
-5 555 
-1 888 
-3 I 960 

— £ 880 : 
-10 782 

_ 1630 
- 201,340 


MaMtB 1.830 — 2621 ) 1.760 _ _ 

MTOort 547 -7 580 428 — — 

irdHF 740 -1 *00 730 29 _ 

MwutB 404 -7 463 321 ... 

1.720 — 29101,420 16 

1*50 ..£0201900 _ 

1 . 5 BO — 1620 1500 .... 

Mttu 1970 ...1920 800 1.1 ... 

£570 -60 a 640 £570 — _ 

820 -30 860 711 - .« 

Martatl 573 -4 8 « 397 _ ._ 

717 +2 882 0 B 5 _ — 

652 -3 732 557 — 

700 +2 7 B? 582 0.7 _ 

1690 +10 1640 1650 06 _ 

843 -S 963 490 — — 

502 — 53 J 

071 -S 193 C _. 

2680 -10 39)0 2660 — _ 

563 ._ 584 425 ._ ... 

uncap 1.300 _ 1930 i jno .... 

098 -2 738 52 D — — 

1,130 — 1600 905 .... — 

530 -5 660 338 ... ... 

770 -1 033 603 — 

560 +2 584 384 ... ... 

820 - 31.010 7 B 0 — — 

97 S -2 1930 842 _ — 

728 +10 792 487 — - 

481 -1 580 407 — — 

436 -e 404 316 

541 —12 665 395 — — 

1680 -10 1960 1.140 _ _ 

1930 -201910 1,450 ._ — 

855 +5 890 455 — — 

844 - BAS 072 .... - 

343 -1 400 301 

UDFud 1950 — 1.420 1920 0-9 ._ 

742 +4 890 723 06 — 

435 -5 409 37 S — ... 

412 -1 453 337 — — 

900 -1 *40 578 — ... 

040 +3 940 770 0.7 

425 .. 44 * 310 — — 

IJXO -10 1.400 845 ... — 
*00 +13 1.110 790 — — 

1.420 -ID £230 1 930 0.4 — 
815 .... 782 805 - — 

879 -1 19)0 BSB — — 

2910 — 2500 1683 0.4 — 

Hrranra 556 -5 624 435 OJ — 

Moris 2,710 +30 2.760 £000 — 

Mauan £900 -ID 4.490 3,472 — 

NEC 1.170 -10 1.310 058 — _ 

NOKBl 1,010 -10 1.170 965 

NEKSp 1920 *10 1.480 1920 _ ... 

564 -1 830 396 

288 -3 301 231 

013 -8 *39 565 „ ... 

775 +2 795 526 14 ) ... 

720 +1 787 403 ... ... 

430 -3 494 315 — — 

650 -4 910 011 — — 

966 -1 1940 7 B 1 06 — 

488 588 4*8 — ... 

NUHaa 1.420 +20 £080 1 . 3*0 — ._ 

Mmrtd 1.030 -20 1.100 887 — 

“■*“* 1560 + 10 1960 1 J 10 . — 

671 -10 B 15 071 — — 

715 -10 810 820 — — 

448 -1 550 400 0.7 — 

710 -10 051 579 — — 

454 -3 520 412 — — 

1 .100 _ 1,440 I 960 06 — 

mn 965 -11 1.140 B 55 — 

N-Bnd 6970 -50 7500 59*0 — — 

040 — 1 6.650 802 — — 

432 -7 482 318 — — 

2930 -20 £130 1.810 ... 

£080 +10 2900 1930 — .. 

rta&pr 1940 + 101,110 937 _ .... 

690 _. 802 680 1.1 — 

510 +7 620 450 — — 

1 ,700 —£190 1950 0.7 — 

724 -1 8 S 0 626 ... — 

686 - 7*6 476 - — 

Mia -20 1.800 1.400 1.0 — 
688 -2 7 M 653 ... _ 

628 -10 760 508 — 

791 -1 788 484 — — 

NpflOMl IjOSO -101990 1920 1.0 _. 

520 -15 617 450 — — 

19*0 -10 1900 1990 05 _ 

522 — 815 441 — — 

763 — 1.110 742 — 

1.400 - 1015*0 1 J 70 _ 

1,150 -10 1510 1.160 — — 

562 -14 588 335 - „ 

388 -Q *03 30 ? — — 

= 

004 +* 630 364 — — 

050 .... 667 521 — — 

5 BB -4 619 365 — — 

1.010 +121970 MO 19 — 

7*0 M *34 727 Z Z 

MOB IJ 70 — 1 . 5701.240 — 

:t&hb= z 

_ _ 

^ S aiSS:: 

MteiF 0 £370 -JO 3.000 £350 19 .. 

MSUMO IJIO _ 1.710 755 

- - 90 S *1 372 264 _ — 

1930 -10 1.700 1930 _ — 

Nomura 2900 +20 £570 1.790 05 — 


Swrnni 839 
SurnQrt 460 
suran bos 
Sarftr 962 
SnriTrB 1970 

SuziJd 1.190 

4940 


1 SB 0 PTI 1.750 

TakQfl 

Turaa 
Trap 1.370 
ThteOi 1,170 


Tosh 782 
Tote) 18500 
JUMP £470 
TUflk 1.190 


■ a I 960 
TKDome 1.780 
TkCPw £010 
TMBai 5 £10 
TkOtn 447 
Tkftops 600 
TVSo 2540 

SSi '- 820 

nuCra 

nura 



-8 512 381 19 _. 
-20 6900 7r*30 — — 

+10 1910 1920 — 

+20 2960 2960 - — 
-11 1,110 77S _ — 

— 29201910 — — 
-S1.W 9 840 — ^ 

+20 19801.130 — — 

— 19001988 — — 
-13 636 *33 1.1 — 

-9 610 411 — — 
-3 38S 266 ... .„ 
780 500 _ — 

-8 623 481 — 

+201.6901.110 ... ._ 

-3D tmr y nia _ 

-11 828 700 £« .J 
+40M0C 5,490 _. - 
+21 852 818 — 

-2 747 420 _ _ 
+10 £290 1,700 — — 
+1 5B7 40* — - 

-3 1.100 837 — — 
-3019801^0 — - 
—3 47S 300 — — 

M 485 288 - - 
♦21930 851 09 — 
-2 387 2S2 _ — 
+31910 ffi* ... — 

♦2 573 432 — 

-18 734 602 19 — 
-28 1,120 BIS - — 
-201920 1990 — — 

— 815 07-4 — 

+10 1920 1950 — — 
♦50 5,050 3.780 — — 

+3 740 610 — — 

— £210 1.740 1.1 — 

— 722 SSO _ — 

+4 B62 67* 09 — 

+20 19501970 — — 
+20 1940 1930 — _ 

-12 uxa 807 — — 

+8 605 400 ... __ 
-4 026 818 ft* — 
+8 1.100 705 0.9 
-2 851 568 07 
♦0 555 307 19 — 
-3 720 002 — — 

— 983 870 — — 

-13 907 533 — — 

♦ 100 71 .500 17200 — — 

-20 £230 2.450 — — 

— 1.420 1,110 _ 

♦3 538 320 — — 
-18 5*7 415 — — 

— 1990 1,120 0.7 _ 

-S B20 421 ._ _ 

-10 1.720 1.420 __ 

-20 £020 

♦ 10 2500 
+10 £640 
-10 3,480 

-3 670 426 — — 

♦0 705 620 — — 
+20 £750 2900 — — 
£140 1900 09 — 
♦3 7B0 *50 _ _ 
-8 B29 632 — — 
-5 730 *eo _ _ 
+10 1,650 1,480 — — 

♦ ID 7,560 1.190 — _ 

-2 788 575 — — 

-2 878 570 — — 
-1 I960 900 — — 
-4 779 433 — ._ 

-23 823 088 

+1 437 385 — — 

+20 £090 1.470 — — 
-4 508 421 19 _ 
-102960 1.430 — 59.0 
-I 734 5TS — _ 
-4 733 524 — — 
+10 £460 2580 — — 

— £250 1.700 — — 

-4 527 330 — - 

-40 I960 9G5- — 
«1 60S 330 — — 

-5 680 *32 — 

-17 B9S 345 — 

-3 438 285 — — 
-4 418 Z77 — .... 
-10 1900 B35 — — 
-20 1930 1.090 19 — 
-101930 830 — .... 


-11 1910 582 19 — 
— £230 1940 — — 
-10 1910 1950 — — 

— I960 800 — — 
-10 1JS0 1.1 JO — — 
-20 £290 1940 0.0 — 
-10 I960 1910 _ — 

-5 504 SSO 19 
-3 888 70S 19 47.7 
-8 1930 734 — — 
-10 1.120 780 — — 
-5 089 83S — 

-2 745 528 _ 

-4 1.160 

—6 1.180 — 

-7 783 442 — _ 
-6 745 486 _ 


stem zoo 

TWT £40 

nma *J2 
Wtfnar 893 
Wlteg 8.10 
VMBU 895 
mgfTr £33 
wsraac 49 * 
WoodPt 4.75 
WMI 2JBX 


+94 £70 £68 85 2 X 7 
+92 £74 191 — — 
_ 478 398 £7 _ 
+.18 898 8.10 69 — 
..14 850 BJ 0 19 — 
+95 KB 790 £B - 
- £85 £18 49 — 
-07 555 4.02 S 5 — 

+92 £2 £70 1.7 _ 
+92 392 £70 42 — 


516687 BrrtM 
34057 BnanAa 
5756 State 
14812 CAE 
173700 Cmubfti 
1200 CaraOp 


- mGMNIG(Nov8/HX9 


AmafPr SSO 
BETets 3390 
CBiavP 11.15 

3890 

30.70 

67.75 

OaCrt 79 S 
CUEP 2395 
Ottert) 1895 
OFtem 0.46 

State 423. 
Guns 3490 M 
HSBC 9025 
ItingD i£ 7 Q 
KSaneB S 7 JS 
msbpGi aao 
fortm 795 
HrtJW 5190 
Mens 14 
mstefi ioa 
MCAN 3190 
HK BB 2310 
IMrart 19.70 
h*THA 18.05 
Ml Tel 15 J 5 
rtap «9 7 JO 

raacMV 3 t 4 o 
Hvsan 1999 
JartiM a *5 

■ter 03 
JBrra 28.70 
KM Eta 1495 
8.75 


+. 15 19.00 833 45 S. I 
+.10 ED 2890 £1 239 
-.16 15 J 0 10:40 39 — 

_ 52 3050 £7 — 

-90 67 37 £1 365 

-95 81 88 29 85.1 

+90 1 « 8.15 - _ 

-.15 27901880 19 — 
-.10 10.101890 39 149 
-901690 845 08 - 
-93 895 4.10 29 - 
+.70 452830 19 — 

*95 131 BO 19 — 
+9521901190 4 J 399 

— 8090 47.78 3.4 219 

-.40 1350 090 59 29 
+.10 180 EUS 4.1 — 
+.76 BOSC 3290 59 — 
-.15 24-25 13 ZS BOB 

-. 10159010.10 19 69 

_ S* 2890 12 13.1 
-.10 3590 2050 13 - 
+.15 31 JS 1790 09 — 
+95 3025 IS 39 20.1 

— 17 JO 12 32 — 

-95 1090 590 49 — 
-20 *£50 2790 £D — 
-95 3229 I 9 . 2 S 49 — 
+.15 1 £10 790 £7 — 
-50 8490 46 J 6 05 — 
-90 38502*90 09 _ 

+95 25 1298 239 229 

+95 12-60 £20 05 — 
+.10 42.50 2050 45 — 
-.10 39 30 39 85.7 

-55 77 4190 34 079 

-50 1050 11 25 *£3 

-97 6.15 110 45 109 
+95 15.40 £85 105 319 
-92 5.45 390 05 — 

_ 790 £56 8 J — 
-55 71 SO 29 195 

+951150 B 29 165 

_ 3790 23 £4 — 

-.10 41 25.00 25 _ 

-95 2390 14 .TJ 25 — 
-20 1080 080 25 
+ 95 17.40 £80 79 _ 


283 -42 3300275 
ie\ -Jjwjih 
344 * + 4 * 0*4 24 
7 *7 

& *£& 

13 tali I 2 l» 
- 1 * S 29 284 , 
31 4 *Ja»J 3 i^ 

134 * S 04 . 131 * 

114 . Mil. lT^ 
234 , S 23 V 235 

24 — »» S 24 24 
it\ -*t *18 in 
1 « -8 166 185 


13164 FbMI 
*15850 4 SM 31 
32300 samal 

pss 58? 

12365 Geac C 


z MALAVSU (Nov B / 


■50676 MnpOD 
14212 B Incote 


BOUSBI 494 
Gentno 21 90 
HLCrraJ 1490 
ittSnk 17a) 
MaAJNi 392 
Uifup 494 
PBB *98 

SkneO £90 
TeMsn 2X10 
leegl 1£10 


DBS 10 JD 

FrtNv 17 

QfflAa 2-52 

HewPte 396 

ttftcp 5.45 

Knaet 1350 

Odfc 15.70 

OUB 795 

SAkf 1450 

SPreea 1£40 

S-proT 398 

StraS 3.70 

TbBji* 490 

DOB 11 


-92 690 

— 25.75 1 
_ 1 £ 1 D ■ 

-50 1 £BQ 1 
-.06 B 50 
+.12 £85 
+92 695 

— £40 
-90 24.10 1 
-.70 2090 




278850 McoM 
■4900 mn 


-.10 12-70 
-,101990 
-03 £46 
+92 398 
+95 695 
+50 1390 
+.10 1£70 
_ 790 
+50 15.10 
-.10 17.10 
-M £88 
-92 458 
-92 550 
+.101190 


1090 ZD 69 
15 09 ... 
£34 £4 — 
£45 34 — 
492 69 _ 
8 19 — 
11 19 — 
5 . 7 b 09 _ 
1£*0 19 — 
13.10 19 — 
£08 19 _ 
£18 39 _ 
398 1.7 — 
£45 £6 ... 



z NORTH AMERICA 


TORONTO (Mov 8 / Can ^ 
4 pm don 


amOQO tendaFl 
481870 NnrteU 
41 S 34 Mmf< 
1480 SS NtnTNM 
254315 N 0 > 8 | 
4 fl(Kn Ur+J 


■54450 NianacE 
131750 One I 
■ 5700 OsnamA 
29773 PtanMti 
52450 POCOP 


■ 


17 17 17 

360 386 980 

“ ft 

20 +l»t 2 P. IBS 

116 +5 115 no 

13 

04 -4 (BA. B4 
390 +5 390 390 

1 W. , *«?• 1 BJ. 
+4 *»*; 104 
*lft 184 
+46164 16 
84 +4 384 84 

1 Z< 124 

264 6X4 2*1 

on. mieih 

14 814 134 

^ +'!«& ’is 
286 —2 288 286 
204 204 

134 tlM 134 
164 +48199 164 
04 +2 80 S2 

<21 -HAS! 

124 +4 124 

174 -4*17*1 >74 

irS +4^ 134 
ll *18 13 

3 agi: ,7 A 
Jftgg 

*** 884 g. 

iS -%^i§ 

164 +4 B154 154 

144 tM 4 144 

-4*3 & 

814 14 
_ 2fl 27 

cassis: 

^ 124 
+4*74 74 
«« 480 
-4^20^ 
+4 Crf 234 
+6 105 105 

304 +li& 

480 485 480 

11 +4 811 m 
244 -4CM.244 
184 +4 tfttt 18 
401- +4 KP. 434 
+4*134 134 


16 

84 + 4*84 04 
134 - 46)14 134 
sno 184 
» a 
SB 4 e 
53 -3 U 53 
4 TD + 2 D 470 456 


28880 SeoitP 
66100 EMC 
2500 Sonora 
6000 SR Tel j, 


338400 Seaorm 
10044 SmC 
3956 sneiA 
845 » StwiS 
*48387 9 £SV 
*000 - - 
Sid 
5485 
5000 Tntt 
144851 TlUC 
681310 Tech B 
£400 Tet*b 
173034 TNu* 
11 » Terra 
38380 UnM 
814938 TortJom 
442106 TracnP 
158885 TWW 
1000 Trtrao 
14358 Trtrae 
8600 IMP A 
£137 UCopx 


15 15 15 

114 -4*174 114 
104 + 4 mi 0 V 
114 *12 114 

84 -4 04 *4 

394 S394, 334 

& +4^; % 

144 -4 SIB 144 

224 +4 
204 +4 
+> 

IE +4 1618 164 
i*4 +4 IHU 1*4 
184 PKi, in 
2tM* +4S3H, irf 
174 +4 Sits 174 
144 +4619.134 
144 +481*4 144 
104 +4W. 10 
14 *14 14 

304 W, » 
a - 4 H«i 27 ^ 
84 +4 681} 84 

39 


MONTREAL fftove/CanS) 

4 pro does 


J14* #- 3S 214 

1S S+4^^ 

104 -4 *11 104 
g 2 94 

54 -4 854 854 
104 B 1 B 4 1 B 4 

124 +4 * 1*4 124 


AFRICA 

SOOTH MOM (Nov 8 / Rand) 


- AUSTRALIA (Nm 8 / Auti$) 




£77 

£70 

Arapote 398 
Arran £30 
Mtaun 2-86 
ANZBK 398 
49 G 
194 


1.010 +12 1 

540 .... 


%% «ss 


701 *2 809 GK .... 

B 04 ... 773 562 ... _ 

748 -4 833 534 

957 -1 99 C 573 _ _ 

UKUBiwn 785 -5 1.110 761 14 _. 

Olymp 19 B 0 -101940 999 

1.750 -10 1900 1.460 _ — 

Ph *930 -M 5510 4910 £3 .. 
1520 -20 1900 1.050 1A . 

810 -2 744 ran - 

3920 -10 4520 2.900 £ 4€00 

407 -2 536 40 B — 

561 -0 779 560 13 ... 

2910 — 3.240 1410 _ 

422 -10 682 380 15 _ 

461 _ 810 440 1.8 ... 

322 -fl 1.020 70 S 
4,090 -20 4.850 3.730 .. 

1.400 -00 1.770 1980 — _ 

620 ... 858 447 _ — 

Sion 1.310 .... 1 . 5+0 1530 _ _ 

654 +1 70 * 51 G .. 

£470 — I 860 £110 0.4 

1350 —£150 1910 — . 

1900 _. 2570 1950 .. 

BCS - 6 1900 

562 -11 BOB 4 T 6 

8 B 4 -21900 870 — 

6950 +30 7280 655 0 0.6 — 

5920 -140 9940 4.450 - — 

4.030 -60 4.650 1570 _ . 

SanoT 1.870 -10 1 .920 1 980 £6 . 

GetyaF 1,150 1 . 3 B 01960 — .. 

S 6 M 1.190 +10 1.510 1,120 - . 

Severn 940 - 401.160 940 _ ... 

SeWtee 1.100 -20 1 .490 1 980 1 6 ._ 


n (h; 

Bmfi 1£18 


CommBk 750 
One* 1-27 
Domsaig 035 
EHMS 4.15 

sr o^ 

FaFU 7.70 
Rare £68 
Ran 1 15 
SnHTr 2 . 16 a) 

CSQ4UI £20 

aSSiiSS 

Hrtle £08 
KlgnrG 190 

\SS? ,25 

ufcm 150 
LervS _5 16.40 

MM*. £75 

9BT 7M 3 

NAB 1 X 40 
Macnl 8 X 6 
NevraCp S09B 
9 Mwfc £80 
NmtfHjs £25 
Mown £50 
Wkn 4 
Penoon 1.78 
Ponnro 295 
Rorr £50 
PBPflC 374 
PlUtnc £50 
RraGU 3 37 
QBt In 48* 
OCT IW 15 * 
RntnGd 5 
BOTnYI 5 X 5 
Sentra £78 
SratlM* 500 

SonCraall.TMl 
Srncp £78 



INDICES 


MOltata(l/»iq 

Mlte)hgP/UBO» 

IWriria 

• Ora* teflmpyiaefl 

k B * 1 • 

If Bowbob ( 2971383 ) 

CaaMa 

QmnXtf f» 975 ) 

Porttfc§§ (4/t/BS 

0*8 

PGA 6«n 


US INDICES 3. 


-04 £95 £56 
-97 11.12 £42 ; 
-.04 £10 £05 
_ 1190 795 . 
-X 2 £02 290 
-94 5.72 3 X 7 
-92 4.78 £00 
-XI £55 191 ■ 
-.10 20.78 16 

+93 £58 £30 
— X 3 4 X 2 £15 
—95 156 094 
-.14 1590 1290 ■ 
+XD 1.18 0 X 4 I 
-93 5 X 3 £25 i 
*.03 5.48 456 ! 
-.12 2030 1560 : 

- 390 295 I 
-94 3.40 £60 : 
-.10 1290 790 : 

- 5.70 £00 • 
-.10 550 42D 
+90 9.86 050 I 
-91 132 0.78 I 
-91 090 0.35 ! 

— 892 £85 ! 
_ 190 1 X 0 
_ 1.40 0 .BB ; 
+.03 145 £44 ; 
-.08 £60 £30 • 
♦91 1.47 098 ! 

- £80 £07 

- 3 X 0 £12 
-.02 1 . 7 B 1.10 : 
+.01 7.78 1.18 I 

- 295 2 1 

♦92 2 X 2 1.12 i 
-.06 £62 136 
* 18 11 X 0 9.75 : 
-20 480 2 X 3 ; 
+ 9 ? 1894 15.70 . 

_. £40 £45 I 
-.10 398 £65 
-.02 1094 052 ■ 
-.00 491 £95 ■ 
-JO 13 X 8 997 < 
-94 730 525 1 

- 790 5.15 I 
-.06 £28 £70 ; 

_ £70 150 ; 
-.14 4.15 395 
-05 592 390 ! 
-X 2 £15 156 
-98 £43 193 
-95 £48 £60 i 
-.10 4 55 £48 I 
flPA 6 X 0 ' 
-.05 450 293 : 
*.04 096 450 1 
- 9 B 1.74 1.15 I 
.- 623 428 ( 
— 05 524 492 
-92 492 3 08 * 
-94 710 6.90 ! 
-J 4 1£10 8.10 - 
-92 £90 295 I 


■ j"V< 


14<e +HS14V 14^ 
28N -HeA 2rf 
84 . *?JHi B'b 
25>« *251, 251. 

404} M4H 

42 842 42 

144. -3+ SIB 148, 
10> +4* *11 108. 
24< +>Bfli J4J. 
27 +3.B71, 26%, 
215 +3 216 212 


42k *hS42h *2 
104j +4*18*110^ 
11< -!»*!» 11J 

2B4, 

5V ->o ESN 054, 
1 S». + 4 . SI 54 . 15 
SIP, 18 
_ *82 82 


PramGp 590 
Rendfei 44 
RnVflp 2590 
RranrCn 1£2S 
Aran 112 
SatRrai 11.75 
antra 1S90 
SABraw 10190 
SAMnAm 5790 
Site 34 

Strai 123 
TlgOu, 47 
TngHrt 48.26 
VRnrts 403 
WAraa 76 
WDeep 200 
HteMi 83 


+95109B £70 49 
+90 29 1780 21 

... 123 9390 2.9 
_ 255 116 £3 
+22843018239 19 
-B 506 3*4 29 
_ 140 102 09 
-.76 57 2B90 _ 

-25 31 2X75 £0 

_ BO 42 £4 
_ 450 3X5 1.8 
-195 12125 85 80 0.4 
-.15 1025 890 £7 
-195 7390 48 39 

-.15 1495 795 49 
-.75 35 22X0 £5 

—125 42 30 49 

+25 23X0 19X0 49 
-1.75 B0 5£7fi 69 
+.101R76 7X4 1.0 
_ 130 8790 19 
-250 47 2325 

-25 28.75 10.75 79 
-55 34 10 19 

- D6 4X5 £15 19 
-2 104 55 M 

—3 122 a 19 
_ 0*90 6£60 3X 
-2 75 41 2,6 

-190 in 76 1.4 
_ 22 13X0 _ 

+1 3590 28 19 

_ 91 5890 65 

-.15 7.78 4JS £5 
_ 5890 3790 £4 
-a 3075 2390 1.4 
2090 1050 19 
-90 126 72 19 

-26 13.50 070 _ 
_ 20 16 IX 

-1 105 70 IX 

_ 66 31X0 1.1 

_ 37 27 £3 

-2 164 102 25 

-JO 50 40 IX 

_ 47 2325 19 

-0 489 369 £4 
—2 78X0 33 4.1 

-7 230 151 29 
_ 304490 £2 




_ +h 5 SJM. 27 < 
Sh *4eXh 5 % 


■ TOKYO - HOST ACTIVE RTOCK 8 ; Tuesday. Novembers, 1894 
Stocks Closing Change 


Mttsubtahl Bee 

Nippon Steel ...... 

Stanttomo AM tad 
Ntater nattm Const — 
r«K 


NOTTS - Poes* cn Ofc pags oa KWH qe M 
MriM ateegra m m orati u nted 
pflCte MMin a» IgrlBB* ami Tortm 0 
fimrarMt t Drategi ra^raTra Bi 
dhtted c b raiW krae a Br itglte. a & M. 

FT FTTEE^Ate NUAL F^OffTS SEWTCE 

rrmo . 1 ngon natnbran aamraraan 
iralraWteBBI 779 MB. * 1^1 Hi Wlli 81 
IK. M +4* 81 778 0779 W Hi *4* 81 710 *22. 
■ram tel m m n a* in ram am Hflan 


Stocks Closing Change 


Traded 

Prices 

on day 


Traded 

Prices 

on (toy 

BXm 

699 

■2 

Kawasaki Steal — 

3 £m 

438 

-6 

5 . 0 m 

388 

’ -9 

Mitsubishi Hvy 

2 An 

770 

-1 

4 . 4 m 

350 

-2 

Hitachi 

2 An 

969 

-5 

4 . 1 fn 

1.010 

+12 

KEC 

22 m 

1.170 

-10 

3 . 7 m 

268 

-3 

Nakabayoshi 

1 An 

953 

-25 


Any time any place 
any share... 


Instant access to up-to-the-minute share prices from 
anywhere in the world 


Whether you’re doing business in Berlin or hatching deals in Hong 
Kong, FT Cityline International can link you with all the UK stock 
market information you need: 


Nw Nw Nor 

8 7 4 H» 

(Uf 1508.73 1819244 2343X40 1872 

198 7J3 T87BL2 1B0S9 234090 3tt 

10219 10362 10463 1UB.W 9Q 

38S34 388X0 39245 48088 2Q 

1Q2SL41 103597 104432 122235 V2 

137792 T37689 138350 Htt*5 8(2 

M 480860 508879 5686799 4711 

U 3BB8MS 40*185 427802 20710 

M 418797 *16650 4BBB9B 23/3 

(u) SOI 456 202393 Zn 2 £l 1/2 

M gyarfl 55709 567626 WO 


MB V No» 

7 4 


258636 258194 2881.17 B/Z 


Nw 

7 4 


198758 8/11 
90 UB 5(5 


27684 25 /tO 
101138 6 B 


329956 200 
385688 24 A 
188648 26(6 


CBSTta&nptf 83* 4355 

CBS (W Sir fnd 83) 2714 

Cap *Q(1/7*B| 208594 


4359 4361 «490 31/1 
2717 2757 29*80 31/1 


Z 1079 B 211323 


40030 21 « 
25790 Z1K 



Lwr 

•w 

u» 

387138 

358355 

■TUB 

4192 

Ol/JJ 

m 

nv i*« 

cn/sa 

18591 

94.54 

1BJ7 

54.SB 

(21/11 

(7/111 

na/itna 

nftO/Bi) 

I8GZJ9 

143150 

188228 

129? 

en 

BftQ 

G/2/W) 

<8(7(33 

ZZ7XB 

17595 

25148 

1090 

<3ftl 

aon 

pi«aa 

fSM/33 


•real time share prices 
•updated financial reports 


•daily unit trust prices 
•personal portfolio facility 


OUB SQhKnAS 703555 103564 105052 1211.10 26(2 

KM Carp pnm 300651 30(794 309658 330637 4/1 


S 5 M-STxn 04/79 5 B 5 B 1 

SoaRi Mta 

JSE GDH (2BW7S 21819f 

JSE tat G 0 W 7 S G 73 B 9 V 


2B8&9 287790 322650 16(2 


SS 956 5759 B 64191 471 


22279 22*60 253400 7(9 
67679 67329 596290 VII 


174608 14(2 
544698 IB/I 


flpaniU MnS EPttW 337 . 1 B 337 JO 336*4 41538 2/2 
ffiltortpiVISOT 10 KB W 119 19*49 « 7 WD 4 12 


SF2S0 (31/12/BQ 
GAC 40)31/1287) 

Qmmi 

FKZAttnCn/l 2 fi 8 | 
can — *■ 8 0 / 1363 } 

BWpOflMJTff 


1277.12 126648 128197 158526 2Q 

192194 190697 193195 23BS3 VZ 

77443 77244 78091 68837 186 

220390 219650 22109 2*590 26 

205344 284352 2087X6 2271.11 186 


12Z79S 25(10 
182142 25/10 

7*294 5/10 
217E30 5/10 
198658 7/10 


KnraAraB{ 4 /U 8 qr 113&75 113298 111152 113675 8/11 

to* 

Itedid SO ( 90 / 1265 ) 29395 29408 SB 52 35631 31/1 

Swrata 

ASnORhSen ( 1037 ) 144590 142790 144390 100390 3 K 1 


SHMBBkH 01/126* 118*22 

SBcanoscmn actn 


119090 1181.19 142134 31/1 
80771 905.17 103329 31/1 


113632 27/10 
87657 27/10 


BMtfletfrJXWfiGr 834620 632QDZ 638611 7181.13 30(9 


AAetg sysi/taBC) B26J3 B23X3 83197 119*38 18/1 

JtaBS«a31/7(Bf 941509 943*31 9530.40 1220189 Vt 


BSCSM6{1974 429599 43O8J0 « 40&S7 126 

51550 617J9 52669 6T29B B/I 

uLriK/UBf 182656 182644 163324 2082.16 20/1 

bLtamUtm 62X15 mat OTJJ7 JM 

MB GHMfri 10030 100 W) 10130 tSHUW IDS 

MM 22 S(tfi 6«9 1860602 1*192 tiXUM 2 ^] «« 

■m+i m rt/IOSZ MM 264.41 28775 STwl 13(6 
SSSSSr iSi 155591 15 BU 0 m-m 
axis (SoMVlttJ B 7196 218844 221 SO 25055 VT 


Bantfck SET QQM/75) 149591 

Ttetaf 

Handul CnxWKi 1986) 258169 

660 

nec*fiitt(i/i/7ags taar 


150*15 1 S 22 S 4 T 7 E 3.73 4 /t 


25745.7 2545032686380 13ft 


6292 8309 04£9O 2/11 


DJ hd. Dkyt 383040 P 879 M ) Kwr 7781 63 13803 X 1 l (n«www» 0 j 
Day's high 301 “JO ( 386 SJ 9 | Low 3796 10 0807 52 J (A ct u rt AI 

^ST; a,,d P °°<S3JJ7 462J8 467.91 48290 436® 48290 

07) (V4I COTN 

InduartsV 5561 b 549.45 555.96 5EL10 51605 56118 

CB/ 10 ) PIN) CWltWfl 

Ftartw 4£B1 4£B4 4X34 46X4 41 39 48X9 

P4/BI tV4) P8/9/M 

Mrs£ Comp. 25429 3497 25866 2B7.71 24X14 267.71 

p/ 2 ) ( 4 / 4 ) ( 2 / 2/941 

Ami MB VH 450.41 452 X 1 45*57 48799 42297 48790 

P/a PMA ( 2 ( 2(941 

NASBAO Cnv 76231 768 X 6 77110 80133 BB 3.79 B 0 U 3 

(iB/ 3 i pm na® 94 j 


Dow Jonw Ion CMv. Yieki 2.7i 
Nov 

S ft P Ind Dre yfeJd 2J1 

S A P Ind P/E raOo 20-5 

■ STANDARD AND POORS 500 I 


Nw 4 

Ocl 28 

Oct 21 

Year ago 

2.78 

2.70 

2.72 

2.80 

NW 2 

Ocl 26 

Oct 10 

Year ago 

2.39 

249 

2.36 

2.41 

2 Q 95 

20.82 

21.11 

2161 


FT Cityline has proved invaluable to business people and investors 
in the UK for years. And now it is available from anywhere in the 
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: FUTURES S 500 terras Index 


FINANCIAL TIMES 



Open 

Latesi 

C 

rtange 

Httfi 

Law 

Est-vcJ. 

Open inL 

Dec 

464.50 

46525 


+a 75 

465.65 

464 . 4 0 

60,106 

213,057 

Mar 

. 

467.55 




- 

1.521 

18.458 

Jun 

- 

47135 


- 

- 

• 

27 

3.605 


MUZ 12 fl 

189*14 1/7 

52185 10 /! 
94*00 ion 


Gantt* 100GMOT0) 132*29 132296 133172 15*016 31/1 
BsoTcg-100GE*«8 117396 117134 118293 W1.D1 2/2 
XtoaDgstn/UffiB) M 336.14 33830 386.19 5ft 
Brt0lBniO{7/l/Bq TB.12 161 JQ 17032 191J« Jfifl 

■ CAC-60 STOCK — X HfflNB (MATIF) 


128B9B 5/10 
113048 5710 
20028 21/3 
MIS 21/4 


Opor nearest llguss are i« eravwus day 


YORK ACTIVE STOCKS 

Stocks Ouse Chanee 
Bran me on (ter 


■ TRADING ACTIVITY 


• Va&me cmBai) 

Nw 7 NW 4 MW 3 


'INTERNATIONAL 




Open 

Sen Rice Change 


Low 

1738BL74 4ft 

Nw 

1812.0 

19300 

+17.0 

1931 JO 

ie09J0 

2B&22 4/1 

Dec 

18205 

19355 

+17JJ 

1936.0 

1914JJ 

144587 Aft 

Mar 

19405 

1964.0 

+1W 

195S.5 

T94&5 

rasas 4ft 1 

Open Haas: V™ k* prmfcus d«. 






3 oI»JW»} 105796 1070*14 10701 rtUM 6ft . 

Krtra (lam Ed 116591. tta lraheB oC • Mcbb ara 100 raett Attl ■ Q*ray 

** 8tt Nw B-J Ttew. WMNilBtfnttJ SFraw flE MBt Bn. ^88R»0. CAC4Q, Bn Top-lOa BS3 Owtt Tony* CerapJUrate it 
Md IMng - BOR Arath iTra ^ m tateSott - 2045 : NYSE N Ctennon - « raid Stemtert rant Poort - 10 . M 


Sen Wrtm 

iBUjflOO 

38 -V 

-ta 

New York 5 E 

255.021 

TeMon 

3029.900 

57 t* 

+"» 

Amat 

14 .B 61 

CCrystei 

2 . 0 KL 2 OO 

46 ^t 

-1 

NASDAQ 

233Ji 42 

Compaq 

2551^00 

JW 

+ 1 t* 

NTSC 


Souttan 

2 , 624,400 

19 >e 

+Vs 

tsues Traded 

2302 

UokiDta 

2 S 88 .W 0 

561 * 

- 2 «* 

Uses 

824 

Tdacom Cp 

2 . 11 L 900 

53 

•Ik 

F*. 

1.379 

BU 

2 , 275.800 

7144 

+4 

Uncharged 

699 

For) Uslar 

2 , 001^00 


+'+ 

New dghs 

IB 

UmitaJ 

1343.400 

3 D <4 

+>* 

New Laws 

270 


Complete details below and send to: FT Cityline International, 
Number One Southwark Bridge, London SE1 9HL 


T CorscOcn. * Cttatetral at 1590 GMT. • 
A The DJ tod. Mb tiworaoca ckqr*s Wgfta 
mcK «rtraraa Wo actiral dai/B raons and to 

artig ilia day. Hha tgraw to braefcafa «ra 


butedng Boras I IratenN. pfen UWoes. TtoancU and TraraecOatm. 
bp# tow m aw averager* d Ora tegneu ana braes pnoaa readied duing S» My n y each 
M oy Tekram repmeni me raghasi and tmest rakes JhaJ 4 » has reached 

pWus day 'si ¥ 5 db(ocJ K> or wl w aita A rtn h. 


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FINANCIAL TIMES 


WEDNESDAY NOVEMBER ? &94 


4pmokaetittt8mbar8 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


twt 


upt a 
n « e in 


ttw 


17% 12%AWx 
18 12%AlLaiBA 
79% 57*8 ANPx 

724 48% am 

5 3%ARX 
58*9 S8%ASA 
32 25%AttOL 
tt%11%/W»n- 

ZPj 17% ABM M 
18 T1%AcpKsh 
31 Z2ACELU 
12% 9% ACUMhx 159125 
10% e^KMIMnix 04011. 4 

10*9 7MM6MSpt asm? 
84«MBa5ex 149 137 
7% ACH Manx UB12S 
8Mailba(|di 0J2 &S 
AtanOii 
e% Acme Bod 


(MB 34 20 73 12% 12% 12*2 



12 

114 

94 

s 

wi 


0.18 1.1 37 18* 1 
148 22 28 1728 74 
90 2582 61 
13 25 

250 49 31 1Z75 _ 

078 24 18 8201 31 £ 31 V 31 
050 34 11 *8 13 124 12 

042 24 115 

2B SB 
044 IS 29 835 
548 
100 
351 
S06 
3TB 
88 


••r 

& 


23 Manta 

54 Man 


204 

10 1i _ 

24 224 234 

94 54 94 

74 dB% 7 

B4 ® 8 

7% 74 74 

gig g]g gig 

044 X6 IS 170 134 12 <24 

ii SO ii4 ii4 ii4 



0.60 2 2 14 

.... 038 34 2 141 11 

184 114 Mm 138 418 1 

184 184 Adam Bvr 0« 28 0 251 I 
84 <84 Ad llam £00 u 


7 27% 274 274 


314 iBVAdtWe 
B% SAdradfrp 
20 ISMmhc 

84 48% Aegon AM 
664 44 AbMl. 
384 264 Ate 
224 1B%Alauiraix 

4 1 4 Aten lac 
SD%3a%/yrPrC 
394 IBAMnaftti 
294 194 Akgnhc 
17 144 J 



21% AHdl 


AtadaAk 


2i 4 i6%*teW 


174 134 ABnil 
264 10 %»Ci5x 
244 174 AKUwAx 
304 25*a Attfcnx 
284 184 AtcnAI 
85*2 494 AkaSt 
30% 234 Ataman 
224 14 AlnAI 
2(4 17Afc£)Lal 
2812 194 AfcgP 
254 134 Ate Q» 
28 XAtogoi 
* An® 


174 +S 

s i 


♦4 


3.00 11.7 11 2484 28 

aie 31 8 89 54 
aio OG120 437 134 
1.47 £4 13 185 6Z4 
378 30 61230 474 484 47 

046 13 14 438 3«4 344 344 
088 45 13 1834 184 184 184 
1 11 14 14 14 
098 2.1 28 1541 474 47 474 

030 18 11 1081 184 194 194 +.18 
50 251 28% 284 28% +4 
1.84 11.9 11 22 154 154 15*2 -4 
8384 28 274 28 

020 1.2 25 825 174 184 
035 12 31 254 18% 18% 

020 \A 663 14% 144 
028 1.1 18 244 284 254 28 

098 U 18 249 24% 234 24 

0.44 1 5 24 8368 M% 294 304 
030 1.21852791 254 254 254 

1.00 1.7 41 941 584 SS 564 

070 26 4 ISO 204 284 2E4 
O10 05117 SG3 20 194 20 

048 £4 18 189 20 194 194 

164 86 10 1057 204 204 20% 

016 08 20 1151 244 244 244 
044 1-7 IS 78B 2B4 254 264 

I 1S2 4 4 4 

20 194 194 

OIB 16 48 9% 94 

060 37 15 13 254 
067 £0 79M 
064 05 31 . . 

096 36 IB 2538 274 284 

25 355 64 8% 8*2 

14 232 284 Z7% 27% 

160 16483 4897 844 82% 83% 

35 3603 194 18% 194 
098115 331 74 d7 74 

025 3.4 25 56 74 ?4 ?4 
008 16 12 648 6% 84 84 
OS2 26 13 88 20 18% 19% 

060 16 64 83B 484 474 484 
024 £6 107 9% 9% 9% 

am 04 32 8276 2*4 23% 24 

260 IB 10 1648 344 334 33% 

254 1B4 AmBuPid 080 36 13 172 21% 21 21 

8 64 Am Cap Inc 065101 2*2 64 *4 a 4 

204 1&4 Aw Cap 04 16* 03 28 228 18% d1B4 184 
168 57 0 31 18% d1S% 18% 

165 1-B 57 2248U1004 99% 1004 

£40 7.7 18 2136 31% 31 314 

09) 10 1314547 304 30% 

1.16 46 24 2S8S X Z7% 

SIS 

708 19% tflB' 

35 174 16' 


44 ,V 

274 174/UhraCtaX 1.84 86 20 289 
104 BAteaO 
1 214 AM Ml 


40$. _ 

11% 84/ 

294 24 AM Op 

74 4%AMbM 
35 214 Manx 
B04 6*4 Alcoa x 
304 17AtnCpA 
114 /AmGwtax 
84 64 Am tech 
84 6% AmadSd 

25% 19*a AncdM 
524 44«nibtta 
9% 8% AmAd|Rx 
31 2)% AWBajTteX 

374 »% Anted* 



Zj*g 18% Aa Cap CV 


j 424 AnCyoi 
374 Z74AaSPwx 
334 254 Antxpr 
304 2*% AmGsMx 


#4 24% 
94 54 
274 194 


AmeoHhx 077140 
AfflWtiPr £30116 7 


204 184 Am Hcfflga 1 068 36 10 
55%Antanax 


854 . 

2% 24 Ao Hatch 
96% 81% AaU 
114 64Aa0pptao 
so 22% /totem 

3* 19 Am Preact X 040 1.7 

8% 7% Am Had Ea 044 5.7 
274 ZIAmSta 048 16 


160 47 13 6153 6*4 
075 286 9 5 2% 

048 05 15 2749 93% 


1.00146 
DBS IS 



ZZjj 174 Am Vttr 5% x 1.3 7.6 


334 28 Am Mr 
*34 364 Ann# 
434 32 A mu an he 

184 11% Amahk 
6*4 B0% Amoco X 
94 84 Ampcent 
5% 34 Am he 
3*% XAtremta 
*4 2%Araanp 


EGO 74 6% 

173 25% 2*4 
9 170 2*4 34 

5 38 74 74 
7 5047 27% 28% 284 
TO 17% <1164 164 
1.08 46 11 118 2G% 28% 284 

162 46 14 2458 40 394 384 

168 17 5 39 354 34% 34% 

024 19182 274 18% 18% 184 

£20 36 16 5156 624 61% 814 

0.10 16 5 20 74 6% 6% 



Apache Dp 



20 74 

012 26137 153 n5% 5% 54 

1.40 4.7 9 585 29% 29% 29% 

9 638 2% 034 Z% 

030 08 88 1298 474 464 <74 *14 
34 3345 35% 3*4 35% +4 
094 36 23 99 ZB 254 28 

1.60 11 23 44B 51% 51% 5(1 
22 68 33 324 ‘ 

0*4 25 17 60 174 174 17* 

138 46 7 599 32% »% 31 ! _ 

. 028 16 39 2101 Z7% 274 £74 

84 Apa iBn F 071 88 315 84 064 *4 

2*4 1*4 AW 40 171 23% 234 234 

7% 3%A0WKaa 1 1147 3% d34 3% 

2S4 1B4A|*lteA* 012 05 3B 27 2*4 2*4 2*4 

294 214 AldOnx 015 05 19 2747 28 Z74 274 

SI 434 Am Oml I £50 53 21 78 47% 47 <74 

51% *5% Anncn tSP 460 96 2 484 *6% 46% 

7% 44 Aima 3 7GB 7 64 8% 

29 22% Arnica ZIP £10 9.1 zl 00 23 23 33 

574 39% Aims* 1 138 11 31 1512 41% <1% «1- 

15 2178 38 374 

1 55 4% 4% . 

07B 36 14 251 25% 254 25% 

040 16 90 883 29% 28% 28% 

0A6 16 12 20 30% 304 304 

1.10 £9 14 178* 384 374 384 

0LZ7 16 121 174 17% 17% 

038116 8 328 24 24 2% 


45^ 33% Aram Bsc 


. 44 Arts Grp 
334 23Anfciifld 
34% 21%/tswox 
31% 22% Ate Cad 
4*4 33% tell 
25% 16% Ada Pat F 
3*2 1% A3»1mr 
38% 28% Ass HI Gas 
"[/TOT 
! AH RltJl 2 
- 2»4AtahSM 
84 5% An*a6oa 
214 16 Ate: Egr 
112% 924Aflteti 
10 3% A988 


012 03 25 312 384 38 38% 

54 54% 


132 24 1BB75 55% 

260 1.1 2255425542554 

268 85 13 183 32% 32 32 

02B 43 7 12 6% 6% 64 
164 93 9 170 16% 16% 18% 
560 531821777 106 105105% 
_ 2 180 34 U3% 34 

204 164 ADaosEnw 068 5.1 8 83 174 17% 17% 
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BE 

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Corinthia Palace 


When y ou sta y with us 

in VALLETTA (Malta) 

stay in touch - 

with your complimentary copy of the 


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12% ftSprinRfri 046 4.7 80 9% B% 9% -% 

7% 4% Spoon Cp 7 X 5% 5% 5% ft 

18% 12%Sptert) H2 19 22 12% 12% 12% 

41 29% Spring 190 3.1 14 171 39% 38% 39% ft 

40% 81%SmW 190 39 X 5756 »% 32% X ft 

iftlftSPX a 40 29 22 5168 17% 17% 17% ft 

19% 11% SO Cana a40 U s 25 12% 12% 12% -% 


37% 32TrtCM29 150 74 B 
28% IITlklC 7 IX 

84% 50%Tltm 194 29 19 1407 
24% 21 % Ti*® OJD 34 385 

47% 30% 1YMy 098 19 2D 684 
40 31% Timms* m 11 X 837 
37% 24% Titan 110 09 25 1827 
4% 2% Tucson 0 112 TBS 

7% 4% Trim Op HO 34293 6X 
14% B% TuKtoXi 112 14 134 

28% 8%TMtHCenl 164 59 2 484 
24% iftTWnDkGX IX 39 X 164 
5ft <2% Tyco L 140 IB 271B18 
10 ftiycnT 110 1.8 2 712 
ft 3% Tjtw 17 237 


•*» 8 mi 

4% 4% 

1ft 18% 
30% »% 
44% 43% 
24 % 24% 
70% 89% 
14 13% 
18% 1ft 
22 % 22 % 
u«2 40% 
34% 03% 
31% 31% 


10% <no% 

4% 4% 

5 8% 

2S>i 25% 

10% 1ft 
62% 81 
37% 36% 
26% 2ft 
30% 29% 
18% T5% 
3ft X 
11 % 11 % 
50% 50% 
52% 52% 
13% 13% 
14% 14% 
12 % 12 % 
34% 33% 
18% 18 
31% d3l% 
12% 12% 
61% 50% 
22% 2% 
35% 35% 
32% 31% 
37% 37% 
ft 3% 

6 ft 
7% 7% 
11% 11% 
21% 21 
47% 47% 

ft X 
ft 03% 


’St 

51% -h 


44% +% 
24% ft 


53% 44%WCp 
5*% 18% Vhn£x 
8% 4%taHhB 
8% 6%Vawa*vH4 

10% ftVHtatfkri 

12% 9%tariWM4 
7% 5%tartqM 
39>4 2B%VVtai 
50% 20Wtf 
15% lftVBBMI 
78% B0VK8K90 
40% 31%VtatayH 
25% l8%Vfetaim 

a% sftvhnm 

X 24% Usdnfcm 

14 « J 2mimr 
20% 15% VanCes 
37% 30%vmadBx 
56% 44 Vriasi 


1.X 17 13 
155 15 
108 19196 
094 140 
190 13.8 
OH 01 

32 

094 07 12 
27 

196 89 0 
5.00 89 

24 

10 

n 

144 19 10 
rj 
30 

290 64 X 
192 £4 19 


638 51% 50% 
714 21% 20T 8 
99 118% 7% 

50 ft dft 
43 8% 8% 
266 9% dft 
95 7 8% 

855 3ft X 
443 37% 38% 
X 12411% 
220 ED d60 
2118 uSI-'i 40% 
121 21% 71 

£95 28% 37% 
1678 33% 33% 

HI ft S 
829 X 19% 
357 31% 30% 
BOO 47% 47% 


51% *% 

31% 

7% -% 

ft +13 
8% +198 


37 +% 
11% ■% 


21% ft 

X 4% 

33% 

0% 

19% 4% 
31 ■% 
47% -% 


33% +% 
5 +% 


21% 

50% 

52% -% 


12% 

34% ft 


S1 7 

22% ft 


A -v 
R ... 


19% 11%SUC0Bm 140 32 5 25 12% 12% II 
28% 14% SUlfcftf X 132 19 12 74 18% 17% V 
12% 5%SBndPKIAxl12 19108 27B 6% ft 


38% 21% acid 
32% M% SandKx 
37 JJ% StsnAoM) 
44% 38%8tnMk 

44% 37% same 
25% 2ft Sand 


188 29 11 IB 23% 23% 23% +% 

184 2.1 19 IX 31% 31% 31% -% 

1.« 39 10 167 33 32% 33 

IM IB W 174 39% 38% 3ft ft 

190 39 54 38% 38% 38% -% 

m 39 19 II 20% 33% 20% 


20% 24% SkUWJk 194 2.4 7 512 263 
7% ft&krlgBcrp 120 29 6 25 0 
13% 3% SarigCtea Q9B 17145 4354 11^ 
14% ft SMB 98 104 

3ft BSkxVSure 31 10X 317 


3ft BSM^era 31 10X 31% 31% 

10% ftSOrifax 112 20 31171 5% 5% 

33% 27%SUM8MMl 180 19 35 60 33% » 

21% ft Sane Com 171 49 38842 1ft 16 
27% 19% Stop Shop 31 219 29% 24% 

16% iftSSrEqu 098 11 IS IX lft 14% 
41% TSSmctl 94417 2B% 27% 

38% 22%amn 54 430 3ft 37% 

18% 12S8kMta 098 29 11 1581 13% 13% 
M% 23% Sum Hoar 190 49 14 223 28 25% 

4% 2 Sun Shod 0X109 0 41 2% 2% 

11 10% Bui Die flx 1.10109 7 84 10% 1ft 

ft 194 At 4 » 4% 4% 

. 7% 4%SUBMpy OX 49 25 IX 4% 4% 


11% 11% +% 

^ 33 -% 

16 18% ft 
24% 25 ft 

14% 14% ft 
27% 28% ft 


29% 23% UJBRd 194 49 
8 4% DBS 

51% 45% USF564.1 *10 18 
X 17% USO B 2233 19% 18% 

31% 2ft UST 1.12 49 152007 27 28% 

51% 48%USXOwPI 498 12 28 40% 49% 

ISO 83% UAL BE 1024 95% 05% 

110% 1%U0CHm 198711 1 352 2% Z 

24% 17% UG1 Cap IX 17 Z2 831 20% 20% 

11% 5% UHCtae 2 618 5% 5% 

24 X% Uriceoi IX 73 X 4874 22% 91% 

27 20% (M hex 0.40 19 181075 25% 25% 

17% 11% IMtat 110 18 18 9 12% 12 

74% 58%IHhr 290 39 10 10 72% 72 

12D%U0%UriM *54 39 17 945 117% 117% 
50% «% UnCUw IX 14 84 1896 46% 46% 

" 35% 21% UnCMl I IX 24 X10712 31 30% 

14% 8% Union Cdrp 21 5 13% 1ft 

54% 42%UlB3X 390 79 zX 44% 44% 

87 52%IM4X *X 13 2 54 S3 

39%30%UiBk 244 69 12 3844 36% 85% 

87% 48Uri>ta 192 39 14 3093 49% 49% 

28% 22IUB(inrtX 192 49 6 201 22% d21% 
22 1B% IMxYltaKX 090 19 58 907 20% 20% 
ft %UnbFn 0 814 ra % 

1ft ftlMfl 2.77279 7 3577 10% 10% 
3% 2% UUtOxp 25 135 3% 3% 

41% 20% IMAM IM 29 19 680 X% 35% 

15% 12% UtdDonffy 178 69 83 628 tft 12% 

tft IftlMDMnd OX 19 18 51 20% 2D% 
5ft38AUeHBicm 093 11 19 7988 48% 48 

40 ZBDtXUm 296 92 9 231 3ft 29% 
ft ftUUndmtx OX 5 l 5 5 X 5% 5% 
13% ltt% UkBodiiM 105 14 X 11% 11% 
% UUUtaMM 11 X A B}1 

15% 4USA8 112 IB 0 2759 4% ft 
1B%11%USF8fi. OX 1.4 15 4190 14% 14% 
23% 18% OSFtar X IBB 22% 22% 

2ft 14 USHOme 2 371 16% 16 

41% 30% USUCpX IX *1 7 194 32% 32% 
24 11%U8Sx» OX 19 49 3816 17% 1«% 
32*2 15% USSWQ 108 04 8 2782 21% 20% 
48% 35%USWnt 2.14 69 X 2468 37% 37% 
72 sauxta 2X 33 17 1852 81% 80% 
14% 12%UMMtarx OX 69 13 324 1ft 1ft 
21 iftIWnk 34 2» »% 2ft 

34% 27% Unb Foodt x 106 39 11 2405 27% H2B% 
1815%IM»>W 1X100 11 IX 1ft 10% 

% 111 IMrtML 0 X It A 

14% 9% UnlwOpx IX 2.1 17 131 14% 13% 
26% 17%lMWOp OX *3 12 » 22% 22 

30% 24% Unocal IX 29 22 4835 2ft 27% 
SB 43lXJMCap*l» 2 A 1021577 fft'iUft 
37% 23% Upfbn W8 49-MZDn 32% 31% 

24 15% USUCO 094 19 7 84 20% 20% 


- u - 

IX 49 18 1322 28% 25% 
X X 5% ft 
*10 18 X 48% 46% 


’S ’S J * 

45% 45% -% 


' 46% SftSmnr am 1.6 IS 777 40% 39% 3B% 

52 41Sndar IX 29 17 334 48% 45% 45% 

11% aswmmn- 1.10139 - n ft *% ft 
3% i%smeN 2x0 2% 2% 2% 

S1%43%sunw 1X29 131020 49% 49 49% 

14% 10% Super tsed OX 39 12 -21- 1»% 1ft 1ft 

46% 2ft BwMar - 1W 16 18 144 29% X% X 

40% 23%SopMt IM 39- 81484 Sft- 84% 24% 
20%n%SupCwo 116 19 X 648 18% 19% 19% 

Z3% IBSrtnHriv 091 10 148 20% 20% 2D% 

34% 15% SynU Tec 66 708 34% 33% 34% 

10% 7%9ymC«p IX 17 8 14 7% 7% 7% 

18% 146 23 17 367018% X IE 

144 1.7X4071 2ft 26% 25 


29% 21% Sym 


8% BTVBTEtmr 020 39 27 153 5% 5% 5% . 

43% 2ftTCFHw*x IX 2J 12 052 38 37% 37% -% 
ft ftTCWCtwiS 184 19 06 ft dft ft *% 

49% 34% TO Crip A 043 10 48 6 47% 47% 47% ft 

2% -1% T I S Wgd 108 *3 2 127 2 1% 1% -% 

29% 15% TJX X OX 39 8X24 1ft 16% 15% +% 

WVlftlMPtatap OX 6.7 9 105 14% 13% 14 +% 

77% 61 TIWx £00 89 TB U» 98% 67% 67% -A 

3ft 22% Trim Fd 0X 11 277 »% 26 28% -% 

ft fttatalM 142 *8 23 X ft 9% ft 


2% % UnfcFfl 

1ft ftlMyx 
ft 2% UUttap 
41% 20% UdAmd 
16% 12% UMDomWy 
22% T7% Utfiendnd 
55% SSAUUHtacre 
40 XDUBuan 


% UUMtaUCM 
15% 4USAB 

ib% iftisne 

2ft 18% USftar 
2ft 14 USHOme 
41% aftIHJCpx 
24 11%U83ioe 
32% IftUSSwo 
48%35%USHtat 
72 SBUMIta 


ft 5% 

11 


28% *% 
5% -% 
48% 

1ft ft 
26% 

48% +% 
9ft -% 

ft . 


25% +% 

12% . 


54 

35% 4% 
49% +% 
2ft ft 


48% ft 

X 


A 

14% ft 

22% 

18% ft 
E% +1% 

«5 A 

13% +i» 
^ ■*! 

i2 ft 

22% ft 


29% 15%HWM 
32% X%Wn.HgUhx IX 
X% UUUonlK 
3S%30%Welnx IX 
ift iz% mehertw ox 
5% 3% Wrinace 
42% 33% Mgm l IX 
36*4 28% WtacaCS Q64 
29% 22% WMuei 117 
5*4 2% Warner Ins 104 
06% 60 WnrLam < £44 

18% 13%UfehEnanv 100 
42% 33% WashGL Z22 
25% 20% WMU 1 08 
294m% mare ra 
aftlftVHUn 048 
3% 1% Stamen hd 000 
18% 13% Webb (Mx IX 
40% 34 WMigenm 2.78 

Tl 6% Mittal 51 064 

X 24% VMM x IX 
11% 7% lMfcm 121 
34% I7%veknen 024 
110% 127% HOtaf * *00 

iftiftwundyar 124 
£9% 21% ttnt CD 148 
fB%T4%<MRta9£ 092 
S3 38% WAS® 

18% 9% WHHAm 
20% ftWEtag 
35% IBWKrto 020 
25% 18% WanDi Mng 13 
34% 26% WHn Res 1.98 
15%lO%Wbtf< 020 
6% 4% meuCad IX 
2ft I3%mtawese 
20% 14% WHPK 158 
39 20% Mko 1.10 
51% X WyrttJ 1.X 
21% 13% Hftmeun 11D 
7J% 40%HHripl IX 
24% 1ft WHMflfl 
18 14% Wtrimn 134 
X 13% Wtaeker 
32% 25%MearkK> IX 
8% ftWon&G HO 
X%22%MBim 094 
7% 595 MUM 0.08 
12 ft YHDdmem IX 
58% 42% IHraiOi * IX 
13% 7%Mmta|pi 110 
27% 23% WkcEn t 1.41 
33% Z7Wsri>riiS« IX 
1B% 15YHW0 OX 
35 26% WtalCorp 1.12 


30% 22% WMXT 
27% 18% MMverfew 
X% 12% WtaoMnn 


18% 14% WMd MMB 110 
10 3% Wurtdcop 

a m%HY«ley OX 
16% WytB Lear OX 
23% 1B% WynoM 044 


15 717 IB 17% IS +% 

: 6.7 13 447 28% 28 28% ft 

84 468 16% 16% 18% ft 
40 11 1042 33% 32% 32% +% 
£6466 17 14% 13% 14 

52 583 S% E S% ♦% 
1-9 X 1959 «2 41% 41% ■% 

£4 13 3X 27% X% 27% +% 
17 Z3TZ341 24% 23% 23% 

U B 6 3% 3% 3% ft 

32 X 4329 77% 74% 77% +2% 

I 79 6 301 13% 013% 13% -% 
E« 12 137 34% 033% 34% -% 

50 0 44 21% 21% 21% 

1.7 18 15 245%. 545% 246% +1 

1* X 71 33% 33% 33% +% 
*9 5 42 1% 01% 1% +% 

1 1J 17 77 17% 16% 17 

69 25 217 35% 34% 35% +% 

7/4 12 1034 6% 8% 8% ft 

£9 15 X M% »% X -% 

£2 14 260 10% 10*4 19% ft 

OB 24 1419 2ft »% 29% +% 

2.7 18 2203147% 143% 146% +2% 

19 19 SOX 15 14% 15 

1.7 19 57 28% 27% 27% -% 

5.4 U 564 17 18% 17 +% 

«4 45% 44% 45 

19 347 18 17% 17% 

68 3120 17% 16% 17% ft 

09 17 941 22% 22 22% +% 

19153 X 24% 24% 24% ft 
IB 10 711 29% 28% 29*s +% 
T.4 10 3132 14 13% 14 ft 

48 D 13 8% 6*2 6% *% 

23 97 16% 16% 16% -% 

39 5 115 16% 16 16% ft 

33 43 1457 34 X% 33% ft 

3.1 14 7086 39% 38% 31% ft 

07 18 3993 1ft M 14% -% 

£4 16 707 52% 51% 51% 

22 18 2ft X% X% -% 

£0 17 2939 17 16% 16% +% 

21 31 17% 17% 17% -% 

17 15 55 X% 78% 28% -% 

1 5 14 51 7 8% 6% -% 

23 13 1012 28% 28% X -% 
09 14 15 6% ft E% 

£9 16 243 10% 9% 10 +% 

£9 16 389 54% 53 53% +l!J 

1.1 18 95 ft 8% 8% 

5.5 14 840 X% X% 25% ft 

IB 11 111 27% 77% 27% 
25145 56 16% 15% 16 ft 

*1 60 439 27% 27% 27% ft 

2.1 X 6215 28% 20% 28% ft 
17 14 m 24% 34% 24% 

30 3 2910 1ft 15% 15% ft 
17 34 14% 14% 14% 

9 1433 9 8% 8% ft 
1 2 31 13S 47*4 48% 47% +1 

1.4 21 IX 19% 19% 10% ft 


9% 10 +% 

53 53% +lU 

8% ft 

25% 25% ft 
77% 27% 

15% 16 ft 

77% 27% ft 


M 21 IX 19% 19% 19% ft 
1A 14 37 23% 22% £3% +% 


- X - Y - 


112% 87% Xtfat 
53% 40XhiCBrp 
25% XY»mEv 
42% 33% Ytre In 
5% 1 Zapata 

14% 7ad£ 

27% 20%2mDiMit4 

g ftZWxm 
n% zero ■ 

29% iftZUIlM 
13% 1U% ZwrJgFu* 
1(1% 8%2miflTuai 


100 £8 63 
OX 1.1 22 
1 22 SB 12 
116 04 18 
114 35 

9 

7 DO *3 8 
183 1£5 
0.40 3.1 16 
088 44 15 
1X114 
184112 


4083 104% 
777 50% 
IB 22 
1TX 38% 
82 4 

1313 13% 
55 23% 
X ft 
43 13 

234 18% 
344 10% 
288 8% 


93% 104% +4% 
90 50% ft 
21 % 21 % 

37% 38% + % 
3% 4 ft 

13% 13% , 

23% 23% -% 

12% 13 ft 

17% 17% 

10 % 10 % 

08% 8% ft 


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noDraaknCB M. Mart darind an* eteeiraUi dMdend. HM- 
tksd paH n mr. emeue. detan. a no ecdn Mai a W MM 
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dMMM a araen. inmn ana h da pH SZ mala rta raaO-h* raige 
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arid M-iMMd « «*-nrite ute ■ » iWi l tan . n«-HBori «■» 

mrdMMd HlMkM ykPyWL Hria In M 


AMEX COMPOSITE PRICES 


4 pm dose November 3 


Stack MEWilV UMrCkMOMD 
AdrEtagn 4* 7 14% 14% 14% 

ABninc .2 131 1% 1% Ik +ft 

Alpha fed 4 258 7 6% 8% ft 

AabrPa IM 14 9 49 48% 49 

AmMriZE A~16W9 38 23 22% 23 ft 

Andett 0051531226010% 10% 10% ft 
Am Bgd - 21728 1* 1ft 1% , 

AmpBhAnA « « 15 28 7% ft 

ASK hw 172 X 777 2% 2% 2A +A 

ABBOtBCh 23 20 2% (fi% 2% ft 

Mari SSI IS 5% ♦% 4% ft 

S fcMBCUB 0 118 % ft % +i 

1 ™ Airflow A 6 164 7% 7% 7% ft 


Stock om E iota HP LouHoMCtaiB 

Cored R* S 6 9 9 9ft 

CrosaAT Ax 184916 X 15% 15% 15% 

CromCA 140 62100 16 16 18 , 

cmnca 040 12 5 14% 14% 14% ft 

Cubic OX n 5 18% 18% 18% ft 

CBtaXTinrfm 15 10 Z% 2% 2% ft 


BEK Ocean 155 1 » 3H 3% 3% 

K Badgart* 173 19 6 3 24% 24% 

V BrifimTA 104 34 35 A 5% 5% 

BenyBG 24 2S9 24% X% 2*fp 

Baser 171 71 133 13% 13H 

Band 5 ID IK IB ill 

BHaHn 148141 7 10% 19% 19% 

BkHWA « Z13 a% ffl% 28% 
BtamtA 157 47 155 43% 43% 43% 
Bomar 35 231 3% 3% 3% 
Bawd 138 7 128 15%d15% 15% 
Bobhr Ax 1X241 88 14% 14% 


C4nu 2 35 % 

tartmx 120 14 3 28% 

tailtac 114 19 8 11 

CtataxA m 4 S77 2& 
Cbeadwe 4 IX 2 
Itamtilna 48 X 34 
Cbt« 0X41 144 18 

CnWFOA 101 212 ft 

Casta) 130* 12 1$ 
CDnprtnc 1 X % 


i "t* 11 3 B a « 

Dtanrir 27 29 16% 16% 1ft 

Duanoun 9 87 4% 4% 4% 

Oupm 148 B 12 9% 9% 9% 

E&rinCo 148 13 2S 13% 13% 13h 

EcM Bh 107391 2371 12 11% 11% 

EcrtEnA 130 8 15 10% 9% 9% 

Erfettfe 4 12 6% 8 6% 

Ban 16 3564 36% M% 3H% -1% 

X 788 13% Jft 10 ft 

12 BW 20% 19% 19% ft 

Frit Mi 0X11 Tt 31% 30% 30% ft 

FMA 480 IS 80 70% 7ft 70% ft 

MOyBre 020 14 43 11% 11% 11% 

FMm» 1S6 X 27 30% SB X% 

FcrestLa 27 <78 46% 45% 46% ft 

Frequency 3 24 3A iB 3% ft 

Gann 180 5 82 "W 17% 17% ft 
GtartMAx 172 IE 283 23% 23% 23% ft 

GfadflB- 070 » 492 155 15% 1S% ft 

Goldfleid 1 81 % d% % ft 

ameranaB 13 40 6 b 6 

GrtTCda IX 7 271 3% 3% 3% 

MaDk 23 889 4% 4 4% 

fesfesox 128 141518 32% 32% 30 ft 
HariUtOi 4 10 Z% 2% 2% 


Stack My. E ion Mgb LnrCkneOmg 
HBcAffl 1 24 1% 1% 1% 

Hrico 115 42 Z100 9% 9% 9% 
HmataiA 7 69 fl 5% 5% 

Ittriranta 112 28 106 11% ii 11% ft 

bit Cams 3 8S7 3fl 3% 3& , 

Uermagn 74 X lb 14% 14% ft 

Mxx 106 17 27W 17% 17*2 17% ft 

Jen Bn 3 197 5% 5% 5% ft 

Storm 21 Tl I4TM 14 ft 

NnakCp 18 10 3% 3% 3% ft 

nrbyBp 19 114 17% 17 17% 

Kugfeq B5 66 S 7% 7% 

Labarae 9 77 1, r « 1A 1A ft 

UBarnd 14 83 5% 5% 5% ft 

LeaPtmnn 4 TO 8 % % ft 

lismlnc 218 M 13% 13% 1ft ft 

Lynch Cp 9 16 30% 30% 30% ft 

MUBm 5 672 37% 38*2 37% *2\ 

UedbA 144 28 239 28% 27% 27% ft 

IMBCU 020 37 5 5% 5% 5% ft 
Mhld 130 7 7 7 . 


Stack Ur. E 180a Hob LwOanCtag 
Pertd 180 17 17 10% TO 10 ft 

PcOffaB IX 9 2 17% 17% 17% 

Phi Li) 124 18 2402 60% 59% 59% 

PttwayA 050 21 76 u39 3ft 38% ft 

Ply Bern * 112 44 740 10% 19 19% +% 

PMC OX 15 « 13%di3% 13% ft 

PmUoA HO 0 14 % d% % 


38 Z100 33% 33*z 33*2 
4 381 7% 7% 7% 


RaganBrad 

rawcp 


I SJW CDrp x £10 9 2 34ja X*2 X% 


7 17% 17% 17% ft 
6 4% (0% 3JJ ft 


TabPmds 

TriSOia 

Ttamadcs 

Thumotia 

TOIPNA 

ToMiQtry 

Titan 

lUbosMm 

Turner 

TtarfSrB 


120 <7 15 8% 
138 60 763 46% 
68 XI 15% 
33 401 31% 
120 20 669 1 4% 
51791 1% 
1 11 l8 
7 269 ft 
107 88 120 1ft 
QJJ71B5) 144 lB*a 


4ft 46*« ft 
14% 15 ♦% 

31 31 -% 

14% 14% +% 

"it <g 3 
M R j, 

17% 18% ft 


Urn S 8 a $ 3 ■* SS? •»'" » 


Mat Pint 4 221 2,V 2 2& , 

UTTmA 156344 10ZB 24% 23% 24% +% 
ma*** 020 14 2 ift ift 10*8 , 

KumacE 122 31 6% ft ft ft 

NM 281 361 5% 5% 5% 


Ohtan 124408386* 32% 31% 32% ft 
Pegasus G 110 92440 14% 1414% +*2 


uois-otaiun a ii* tie 

Utfbodsfl 120112 20 2 % 2% 2% , 

UnhPIrS 45 14 87, 6% 6% ft 

US Gated 246 34 32 31% 32 +% 

lAacomA 25 2681 39% 38% 39% +1 

VtacomB 6881 38% 37% 37% ft 

WOnherid 26 8222 11% 9% 10% 

yfflET 1.12 17 IX 12% 12% 12% ft 
yrontienx 160 13 122 n% X 28% 

Xytrortt 3 182 3JJ 3,‘i 3% +,*, 



ih 


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p t m 

State Kn C urn* Hgh lew 
ABSMB 120 >9 44 14% 14 

ACCCoip HZ 13 540 17*2 1B% 

AatahnE 22 2423 17 16% 

Anna MBs 151159 1ft 17% 

AatomCk 41 41 26% 28 

Adapted! 22 4240 23% 22% 

ADCTda 35 465 43% <2% 

Adomgum s <u n ift 

Aria Sav 016 21 clOO 35% 35% 

AdooeSyr. 020 28 8979 35*2 X 


Ad«an»C 

am Logic 

AMPgiyin 

AfhTcflLao 

Advanta 

Aftymas 

AgrdcsEa 

AbEta 


7 f41 10% 10% 
9 IK 4% 4% 
6 l» 4% AH 
22 530 16*2 18 
027 132772 27 25% 

13 44 17 16% 

110136 705 12% 12*, 
OX IS 573u2B% 2ft 


AfczDADH 151 211X48 6ft 59*4 
Ataftd) 088 IB 634 24% 23% 

ABeghSW 20 125 10% 10% 

Aten tog 152 1< 2100 38 36 

AfiaiRi 3 953 7% 06% 

AUCapI IX 13 46 14% 14% 
AM Can 0X11 28 13% 13% 

AMU C 032 5 403 2% 01% 

Ana Gnu DD6 70 420 ijj jjj 
won Co 38 5601 39 37% 

Am Banker a 72 8 337 21% 20% 

AmCNOy 016 151 17% 17 

Am CtyBu IS X 16% 16 

Am Msmag 15 349 15% ift 

Am Med B 9 263 6% ft 

AmSrttm 032 3 763 4% ft 
AmFitays 35 738 21% 20% 
AmGftA 156 15 4351 27% 26*2 
AsrdmP 2 535 1,1 1% 

AmNUn £35 7 IX 46*2d45% 
AndtenConv 33 5076 18 17% 

Am Trav 13 114 18% 1ft 

AndEdFh 13 402 22% 21% 
Amgen he 20 7280 54% 53% 
AmseriiCp 108 12 4298 B% 8*2 
AmFln 4 89 9% ft 

Anriogu 17 17 17% 17% 

Analyse: > 052 16 IX 19 1B% 
ArcngriAm 1 00 13 IB 15% 15% 
AndmCp 28 1722 50*2 49 

Andns An 9 X 17% 17% 
Apogee En i032 36 63 18 17% 

APP BIO 45 H16 5% D4% 

AnddKd 3420882 51% 48% 
AppteC 148 3731077 42% 40% 
Appebees OX 47 SIX 19 18 

Arbor Dr 024 48 101 o2i% 21% 
Anas a 19 T5100f 20% 19% 
Argonaut i 1.16 8 234 28% 28% 
Aimer A! 064 21 522 21% 21 

Arnold h 144 18 96 21% 20% 
Aspedld 31 363 X>2 33fJ 
AGSOcConun 315 7 25% 25% 


17*2 ft 

16% ft 

IB ft 
Z8% ft 
23% ft 
43 -% 
10*2 •% 
35% 

35% +1% 

10% ft 

4% 

*JS -A 
16 -% 
26% +1*8 
1ft 

12% ft 
28% +% 
6ft ft 
23% ft 


7 ft 
14% ft 
13% ft 
1% -1 
>13 ft 

38% +1% 
21% ft 
17% ft 
16 

i«i ft 
6*2 ft 


ASlRuch 8 7356 13% 12% 

A&taun 13 18 10% 10% 

ADSEAk 132 12 4388 18% d16 

Autdsh 124 13 2205 33 % 31% 

Aubdnto 10 110 3 2% 

Axntata OJC 20 15 7% 7% 


26% -% 
1% ft 

46% 

18 +% 
1B% ft 
21% ft 
X 

8% ft 
9% ft 
17% 

19 +% 
15% ft 
*9% ft 
17% ft 

17% 

5 ft 
51% +3 

42% +1% 

18% ft 
21*2 ft 
*9% ft 
28% 

21% 

20% 

34% +ii 
25% ft 
13% ft 
10% 

19*2 

32*2 *2 


BakarHWl 

Briar J 

BUwrt.Br 

BMfeC 

BrtSautn 

BartarsCp 

Banfcnanti 

Barte6eo 

Basset F 

Bay View 

BayhHtesx 

KSTFbl 

BE Am 

BeeuBCos 

BenUriiy 

BeddcyWR 

smOrp 

ahe 

BqB 

Btodoyvy 

Biogen 

BtomM 

Bloc*. Dm 

BMC Soflw 
Boatmen 5 
Bob Evans 
Boole SB 
BortaMl 
Boston Bk 
Bosom Tt 
BradyWA 
Bract) 
BnnoS 
SSSBHqr 
BT Shgmg 
Britan 
BtridnT 
Burr Brwn 
BiEtaassfl 
ButUrMfg 


108 27 B 5 

11 37 13% 
66 i t 

106 101338 17% 
124 4 5 1S% 

151SX 22% 
152 10 336 17% 
DAO 7 247 14% 
060 13 3 23 

162 16 407 33% 
080 161434 30 

160 11 1809 22 

1JD 13 298 57% 
1.18 B 317 29% 
21 270 8% 
142 X 4 15*4 

12 219 13 

044 13 547 35% 
H2 19 irui3% 

97 187 5 

H6 1B 362 M3 
0X 14 305 11 

104 5075 37% 
191327 11% 
1X 12 195 35% 
14 4806 4«% 
IX 92238 29% 
129 19 666 71% 

13 X3 U25 
103463 10% 

176 5 90 30 

77 3036 17% 
080 18 3 46% 

024 28 11 12% 

136 191181 9% 
188 8 IX 27*2 
048 6 19 2% 
16 4187 10% 
20 9a 11% 
46 228 13% 
66 20 35% 
140 9 416 35 


d5 5 
13*2 >3% ft 
i It i'< 

16*2 17% ft 
15*2 15*2 ft 

21% 21% ft 
16% 17 
14% 14*2 +% 
23 23 ft 

33 33% ft 
28*2 30 ft 

21 2*1*. +ft 

58% 57% ft 
29% 29% ft 
8% 8% 

15% 15% +% 
12*2 12% ft 
34% 34% -1% 
12% 12% ft 
4% 4% ft 
12% 13 +A 
12% 12% ft 

38% 37% ft 

10% 11% ft 
X%34% ft 
45*2 46% ft 

a a -ft 
21 % 21 % +% 
22*2 25 +2*2 

9% 9% -% 
Z9*z 29% ~£1 
16 17% ft 
47 47 

11% 12% ft 
8% 9% ft 
Z7 27 
2% 2% 

10% 10ft +ft 
11% 11*2 +% 
12% 13% 

35% 35% +% 
X 35 


- c - 

CTcc 267 49 27% 

Cabot Med 7 247 5% 

Cafidwro 099 16 7B8 28% 

Ctanu9Comi20 20 45 17 

Caere Cp 882 7962 17% 

Catgene £25 4 1951 6% 

ca Micro 30 565 J2*z 

CamMaL 18 1S3 2% 

Cirtte. 3 4H 2 

Canon Inc 153126 29 90% 

Canonic 45 22 6% 

CarttonCm 153 23 230 28% 

Cascade OflO 21 137 24% 

Casey S) 008 20 507 13% 

Cdgm 4 250 6% 

CBdCp 18 23 12% 

Certocw 8 3300 16% 

Cran Bd 1.12 10 912 28% 

Cntri Spr 20 18 10 

Chander 9 26 5% 

Cnep» l » 0B8 7 330 19% 

CrwrnSh OQ9 9 2842 7% 

Cue (Utah 17 20 12% 

OiewuthBr 14 noo 3 7 a 

OOpsSTe 11 1999 6% 

OWonCp 5612082 58% 
OnnRn IX 11 173 60% 

Cmos Cp H7 X 1209 35% 

Orrurtgc 39 2944 28% 

CS led) 13* 396 

CecnSya 1645827 31% 
OzBancp iX 15 31 27% 

□ran tin 22 80 6% 

(Ms Dr 42 » 12% 

Ootheam 7 M 4% 

COcaCWaB 100 16 rfi 26% 

Coda Engv 137 535 6% 

CodeAtonti 27 3 10% 

Cognu Cp 38 578 23*2 

Copra 131 159 14% 

Coherent 18 836 14% 

Conagai 040 94 977 X 

CcHGes IX 12 U 19% 

GOnlGfor 060 12 539 33*4 

Coma* < 132 13 709 20% 

CmcfflA fl(» 191662 16% 
CmcaASp OJ» 42 7^6 16% 
CommBkaHOBS u 131 32% 
CommQ 070 89 58 17% 


CommnC 10 1528 27% 

ComprUta 291 562 9 

Comanaro M 176 14% 

CwnsMkR M 261 3*4 

Consaaim 5 2B8 6% 

OartetCel 60 995 u»% 

CnblData 159 143 6% 

C00I8A 150 2< 596 17% 

Cruyirib 35 S38 5ft 

Conks Cp 261192 58% 

tap 01 A 47 67 17% 

CraetafB 002 25 1637 21% 

Cm Comp 1 2277 1% 

Crown Rb 35 192 5% 

Cytogen 2 515 3% 


- D - 

DSC Cm 2017078 31% 
Dad Gnu 113 33 9 85 

DflUSwrch 39 76 2% 
Prialiev 37 M 9 
Dararat* 17 386 17% 
DauphhDp 1.00 10 271 
Drir Show CO 14 2 <% 

DeKalhEn Or 23 8 15% 

Dftcftijp QBO 44 2b 29% 


26*2 26% +% 
5% 5% ft 
28% 28*3 +% 
16% 17 ♦% 

15% 17% 

8*2 8*2 -% 

32 32ft +ft 
«C% 2% ♦% 

1% 1% •% 
90 90% +1% 
6% 6% 

28% 28% ft 

3% 23*4 ■% 
13% 13% +ft 
ft ft 
11% 11% ft 

16 16 ft 

27% 30 +% 

10 10 
4% 4% 

19% 19% 
d7 7% +% 
12% 12% 

3% 3% ft 
5% 6 +% 

56% 57% 

49% SO +% 
35*4 35% 

37% 27U +ft 
2% 2% -ft 
29% 30% +% 
27% 37% 

6% 0% 

72% 12% -% 
3*8 * +% 

£5% 26% ♦% 
8% 6% +% 
10 % 10 % 

22% 23 ft 

14% 14% -ft 
13% 14% +*2 
23 23% ft 
19 19 -% 

33 33 -1 
10*2 20 ft 
15% 18% +% 
15% 15% +fi 
31% 32% ft 

17 17 

27% 27*2 +% 
B% 8% 

13% 14% +% 
3ft 3% 

5% 5% ft 

24% £4% +% 

6% 6% ft 
16% 17% ft 
4% 5 ft 

58 58*4 ft 
16% 17 +% 
n zi% +% 

i% i% -& 
5% 5% +,', 

3*2 3% 


29^ 31% +1% 
83% 85 

2% ft ft 
8% 9 +% 

16% 17% 4% 
23 23% -% 
4% 4% 

15% 15% 

29% 29*2 


State to 

DckhanpEJOu 

MQnp 

Drtpiy 030 

D« By 1.12 

Devon 020 

DHTfldi 
MMB 080 
OHM 
Dig Woo 
Hg Sound 
DtgSya 
MrnnCp 
QMoYm 020 

DNAPM 
Drita&i 02) 
DomaKn 018 
D uat ngy 
DmsSam 
Droy GD OX 
OrugEmoo 008 

DS Bancor tXB 
Durban » 0.42 

DynaUch 


PI to 

E Uta ripb La> 

9 37 I8dl7% 
489199 44% 43% 
27 1323 31 5g 30% 
B 297 29% 28% 
4 120 8% 8 

29 1W 35 25 
29 21 21% 20*2 
15 482 16% 16 
9 448 15% ift 
78 14ffli 3& 2% 
39 2205 011 lift 
17 2100 37 37 

X 41 7% dG% 

2 493 3% 3% 

2915586 030 28% 
15 21 13% 13% 
10 2 9% 9% 

11 1(06 10% 10% 
21 S2 25% 25 

46 63 4% 4% 
13 217 34% 23 

13 BSD 18% 18 
11 12B2U3&% 29% 


Uri Bag 

17% ft 
44% ft 
31% ft 
20% ft 
8% ft 

25 

2D% ft 
16% ft 
13% 

*3* *A 
ii ft 


3% 

29% +1 
13% 

0*2 ft 
10% ft 

25 ft 

ft 

2 ft ft 
IS ft 
29% ft 


BecMrte 

EnconAa 

miiH* 

Engyttitn 
EnriSta 
Enron he 
EqufeyOB 

rinnnlT 

tnCSnD 

EDM 
Evans Sm 


- E- 

I 46 3% d2% 

I 543 3% 2% 

4 141 % 0% 

132 24 4286 16% 18% 
138 <56 8% 6*g 
0 1069 V, 31 

17 972 17% 16% 

039 49 50 49 49 

2312256 20% 19% 
14 IX 4% Oft 
1143 10% 10% 
50 3 14% 14% 

66 10 2 2 
31190 2% 2% 
010 21 8 5% 5 

1481675880 60% 59% 
125 7 7 

30 616 12d11% 

28 2072 22% 21% 
10 106 8% 7% 

II 146 16% 16 

110 26 6231123% 22% 

18 364 11% 10% 


18*2 ft 

8A -it 


49 +% 
20% ft 

4% ft 


5% 

60% +1 A 

7 

12 +% 
21% ft 
8*4 +% 
16% ft 
22% +% 
1*% +% 


Fall Grp 
FWrCp 
Fastanri 

10 X 4% 4% 4% 
(LK 36 47 B% 5% 5% 
OX 69 742 44% 43% 43ft 

-it 

FHPW 

17 

797 

28 27% Z7*e 

ft 

FWiTted 

IX 15 

775 

52 51% 51% 

ft 

FBlyOfl 

12 

330 

5 4% 4% 

ft 

HOP* 

024 0 

167 

B 7% 7% 



Herat 38 709 25% 25% 25% ft 

FMAmx 1JO 7 109 2B% 28% £9,^+1 A 
FsfficOMo 1.00 10 266 24 23% 23,*, ft 

FstCOEK 060 19 169 22*2 22 22% ft 

FstSedy 1J» 9 795 25dM*z 25 +% 
Fri Trim m 105013 46% 45% 48 ft 

Fritfldllc 158 5 357 19% 18% 18% 

FMer 104 8 10 32 32 32 

FWmtai 58 80 9% 0% 9% ft 

Ftaenr 27 BK 22*2 21% 22% ft 

Howlrt 17 115 6% 6% B% -% 

FoortA 009 152892 5% 5% 5% ft 

FootLB 0095751018 6 5% 5% ft 

Foremost* 108 10 10 32% 32% 32%+1.06 
Fonchrar 10 217 11 10% 10% 

Foster A 40 72 3ft 3% 3% 

AthRnrt 104 12 2BB 31% 30% 31 

FriFH 140 7 X 14%d13% 14% ft 
MHwri 1.18 10 838 27% 28% 2B% ft 

UBerHBx 058 21 577 33 32*2 32% ft 

FriUfti 088 10 131 19 18% 18% ft 

Finn 124 28 107 20% 20% 20% +% 

FutmndADR 13 35 2% 2% 2% +% 


18% 
i 32 
9% ft 


5% ft 
5% ft 
32%-f-I.Oe 
10*2 
3% 

31+1A 

14% ft 


GHApp 
GIKSen 
Gatos 
Same* to 
Seri Co 
Seri Btrri 
Gertya 
GemhPi 
GridaCp 
Senua Inc 
Gonzyme 
GBmr Gt 
GbttigsL 
GtaatAx 
GhfiStom 
Good Guys 

GottebPi'm 

fttaeoSys 

Granhe 

&BMAP 

GmwchPli 

GrtramaiB 

Bud tar 

GTICDip 

GvNYSvg 


- G - 

5 58 3% 
OUT 25 59 17 

0 04 2% 
10 25 3% 
H6175 748 7% 
142 22 43 21% 
IB 155 4% 
14459 4% 
400 401942 24 

212 270 6% 
40 9523 29% 
140 1 9 453 15 

112 12 1510 18 

On 9 <1 14% 
13 ST 6% 
15 500 12% 
080 18 578 21% 
425 257 U4% 
020 71 144 22 

124 II 5 18*4 
02247 it 
75 335 3% 
600 SG 12% 
12 25 18*2 

5 782 8% 


Hogan Sys 

Hotogu 

Home Beni 

Hon in* 

Humbert 

HorsahRes 

HurrUBr 

Humtngtr 

Hina Co 

HmdVTech 

KycorBn 


- H - 

88 10 7% 
068 9 16 24% 
120 131Z78 14% 
389 12% 
118 Z7 2343 32% 
27 61731130% 
108 21 140 12% 
12 496 8% 
118 19 814 11% 
9 9% 
10 129 18% 
(TO 11 911 17% 
115 18 1203 6% 
68 244 15% 
080 B 220 20% 
a44 IB 137 27% 
15 2724 14% 
1A4S12 159 5*4 
020 IB 1625 18 

180 7 3591 17% 
108 1 38 4% 

127 1504 24 

17 7 4% 


FF Sys 
DB tarns 
ISbM 
invmucor 
immunoQHi 
Imped Be 
hd bis * 
WRe? 

(ri a mfa 

hglaoMU 

uegrDm 

naldSys 

WgUWst 

Mala 

htafi 

hdfyilB * 

UorTri 

knertceA x 

tttgph 

kiUfteai 

HnM 

Usw 

UDabyQA 

WRes 

WHjbi 

imotarp 

uiugaCp 

kuwb 

lUYriado 


58 52 9% 

27 4018 9% 

8 330 3% 
38 X 6*2 

1 412 3% 

040 29 201 16 

024157 281 11% 

1494442 14% 
3110771 28 

(L6E 15 39 11% 

34 6257 28% 
40 239 16% 

7 624 2}i 
024 1139187 61 

9 250 2*2 
140 25 4085 15% 

18 281 8*2 
024 IS 1460 11% 

32971 8% 

2 7B3 4% 

62160 16% 

27 23S5 15% 
13 390 17 

002 17 35 2% 
275 18 5% 

005 00 BXu31% 

3 494 4% 

16 51 18% 
1.12 39 3214% 


J&J Snart 
Jason litt 
JLfihd 
JrimaonW 
Junes h 
Jones Med 
JnriynCp 
JSfiRn, 
Juno Lig 
Justin 


- J - 

13 58 11% 
OJS 13 1029 9% 
010 32 3 38 

55 *2 23 

10 531 14% 
010 13 200 6% 
120 X 13 26i 
080 15 203 X 
028 19 200 19 

0.1610 B22 13% 


d2% 2% -% 
16*2 16% 

2% 2% ft 
3% 3% 

7 7 ft 

20 21 % + 1 % 
4% 4% 
d4% 4% ft 
23% 23% -% 

8% 8% ft 

28% 29% ft 
14% 15 +% 

15% 15% ft 
14 14+1.81 
5% 6 ft 

11% 11% -ft 
21 21 
4% 4% ft 
21*2 21% +% 
1B% 18% -ft 

ft ft 

2% 3 

12 12 ft 
15% 16% +% 
8% 8% ft 


7% 7»z +% 
23% 23g 

13% 14% -% 

11% 12 ft 
32 32% +% 
29% 29% ft 
12% 12% ft 
«% 8% 

11% 11% ♦% 
9 9%+% 
18% 18% -% 
17 17% ft 
6% 6ft ft 
14% 15% ft 
(GO 20% 

28 28 -1 
14% 14% -ft 

5 5% ft 
75% 10 +% 

17% 17% ft 
3% 4% ft 
22*2 23 -1 

4% 4% -% 


B% 9 +% 
8% 0ft ft 
ft 3ft ft 
6 6% +% 
d2% 2% ft 
15*2 1ft % 
10% 11 ft 
14% 14% 

Z4% 25 +1% 

19% 10% 

27% 28% +% 
15% 16% +1 

2*4 2,i ft 
59% £®J3 ft 
Z% 2% ft 

14% 14% ft 

8% 8ft +ft 
11% 11% 

8% 8% +% 
4% 4% ft 
16 16*8 
15 15% +% 
16*2 16*2 -% 
2% 2% 

5% 5% 

31 31% +% 

ft ft ft 
18 18 +% 
313314% 


11% 11% 

8*2 8*2 -1 
36*2 37% -% 
23% 32% ft 
14 14% ft 
8% Bft ft 
38% 36% 

23% 23% 

18% 1B% ft 
13 13 ft 


to E 10ta Mgb Uw Uri Etag 


Usman Cp 

Ijufcyw 

KrfyBv 

Kentucky 

Hotel 

DEdH 

HAkatr 

Knowledge 

MIA 

Nnagtac 

KifflcfceS 


00811 156 
044 5 946 
3 571 
172 24 355 
111 10 13 
064 13 HOD 
22 21 
68 £50 
2 638 
1 1822 
230 746 
122088 


22 21% 
9% 9% 
6% fi 
39% 29 

ft ft 

24 24 
10% 10% 
53% 51 
4 3% 
U A 
25% 24% 
19% 17% 


21% 

6% ft 
ft 

29% ft 

ft 

24 +% 
10% 

63% +1% 
3 % 

% 

K% ft 
1ft +1% 


MQta 085 1922412 22% 2l£3 
MS ta^ 19 2354 23% 22% 
Mac MK 160 40 105 1 3*2 13 

HsfconGE 188 14 121 3ft 33 
Magna Pw 17 766 37% 38% 
Magne Crji *1UB 13 46 20 19% 

tfcBBux 15 SO 10 6% 
Marram Cp 111 1995 10% ft 
MariraDr 10 365 4% 3% 
IMcdCp 9 132 42% 41 

newest 2 30 1% 1% 

Ab ntbfla 17 411 8% 7ft 
H8nhSmbA144U 48 11% 11% 
Uarerae 0 l 60 11 1853 20% 2D% 
Marine 8 213 7% 7% 

I Marts H SO 794 85% 62% 
Marts' Cp 01581 4 3% 

McfiraSiR 144 12 9 16% 15% 

Itatamic 048 161489 20 19% 

kketabc 118 18 429 15 14% 

HedtthaS 148 14 105 23% 23% 

, Melamine 024 73 257 io% 9% 
MartsrCp 118 55 174 is% 16% 
MertfG 024X1225 13% ift 
ManartB 080 11 iM 20% 20% 
ItatuyG 070 71889 28% 27 

Mertrian* IJB 101540 28% 2ft 
I Mattel 108057 1ft S% 

MflOnde A ai2 191100 1ft 18% 

ITS Cm 41 5090 40% 39 

UrinelFl 020 221625 11 9% 

HrilNaS 1 280360 989 80 79% 

, McreHU 12 29 4% 4*2 

Mange 9Z27B 1211 % 

Mcraeam 83565 tfl% 9% 
Haypnh 9 IX 5% 5% 
Mcrpofa 31915 9 B% 

Moll 3328459 63% 61{i 

IfidAOM X 8 26 27% 

Mdtadicx 088 103453 27% Z7 
Mdwarin ISO 21 20 2Ed25% 

MISer H 052 18 23 28% 25% 

Mian 900 29% 28% 

Mtmerii 19 125 15 14*4 

MoMeTel 75 1860 19% ift 
ModamQiidUD 20 61 8 7% 

UstewMI 152 22 1213u31% 30% 
Hahn 004 1303 39% 38% 

Muter he 004 31 2382 42% 41 

Ifescam 004133 377 8 7% 

MrafettePx036 19 5 27% 26% 

MlSSyi 156 9 12 22% 22% 
MUmed 13 753 29*e 28% 
Mycogen 5 188 10% 10 


22% ft 
22% -1 
13 *£ 
33 

37 -A 

20+1.14 

9% ft 


- H - 

NAG He 01611 22 27% 3ft 
Httb Fort 172 10 120 16015*2 

Mat Compt 136120 62 14% 14 

ms Sta 120 21 117 14% 13% 
MBItgaor 800 6 10 15% 16% 

ICC 043103 142 80% 60% 
NoBcor 20 3172 u32% 32% 

NriwhGen 301811 21% 20*2 
HeteteS 69 756 7% B% 

Neman to 4 6% ft 

HewEBUexQOO 21 837 19 18% 

New Image 31 833 5% ft 
Msnf rti* 22 1414 30*2 29% 
Hewpil Gp 104 22 40 7% 7% 

I NoUaDd 22 966 7% 7% 
Msdaon 058 27 286 60% 5ft 
Ndattm 040 283808 48% 48 

Nuretani 14 7 19% ift 

HStalki 4 30 5% 4% 

NwDriTtt IBB 11 602 35% U35 
HWAk 20 2174 19% IB 

MK I 88120038 18 17% 

NowteB 48 2234 53% 51% 1 

UPC A 82 6% 6% 

HSCtap 7 10 2% 2% 


14% ft 
14% ft 


32% -% 
21 ft 


18U +A 

ft +A 

30 


5ft +2 
4ft 


53% +2% 

ft -*8 
2% 


- o - 

17 89 11% 10% 

161005 21% 21 

18 40 ft ft 

13 195 13*4 « 


OOhbiyN 120 10 16 
ONDCa TAB 8 2800 
OU Kants 1JX 10 978 
DU Nriffi 192 16 33 

Onbancorp 100 6 349 
One Flits 7 376 

OradaS 6515406 
□rbSora 51 403 
OrtXttCh 099 25 35 

OrchdSupp 8 127 
OregonUel 031 12 16 
Oahap 14 6 

OatteBA 0.41441 B57 
0riteDriiTx050 IT 81 
OttarTrt x 172 13 X 


30 30 
31% 31 

32% 31% 

36% 36*2 
25% (Eft 
10% 10 
44% 4 ft 
20% 19% 
9 8% 
0% dB 
5% 6% 
2.52 £52 
14*2 13 

11% 10% 
31% 31 


11% -% 
21% 

ft ft 
1ft ft 

30 ft 

31 -% 
32%+1.49 
36% +A 
25*4 ft 

ID -% 
44% +1% 
20% ft 
ft ft 

B -% 

ft 

£52 -Ol 
13% -t 
11 ft 
31 +1i 


- P > Q - 

Paccar 1JJQ 12 762 44% 

PacDwHop 082 11 83 12% 

fTBtm* 132 16 671 30 

PaaflCre 28 334 69% 
PsamBkc 424250 35% 
Payciw 136 45 3824 3ft 
PBycoAm 21 10 8% 
Peertessx 050 61 X 15 
PemTrty 1071D0 16 
PemTArg 1J0 24 30 34% 
Part* 072 16 140 41% 
Perfect) I 13 142 4% 

PenwBSt LxOLED 25 69 22*2 
nopksHxMO 13 9*7 13% 
Malta 1.1215 S3 28i 

pnamacy 47 61 15% 
Ptnenflqh 361413 8 

Fiona 048 3 3 6% 

RCMrte 4660561122% 

Rnteton 50 rlOO 19% 

mnee^p OX X 216u50% 
Ptoneatfl 068 224474 33*4 
PVneera 01210 ISl 19% 
Pncabh 384 « 

Powel 15 fl 6 

Pm Lite 009 3 S2S 5% 
Prasaak 146 768 41 
PrtCori » 4681 16% 
PrtdoPri 40 50B ft 
Pnnmrt 37 44fl 21% 
Prod Opr) 034 23 3TB 25*2 
Punter B 112 137714 24% 
Pyramid 81670 10% 
OuBdreLog 10 27 6% 


43 44*2 +1% 
12 12% ft 
20% 29% 

68 6ft +% 
X% 3ft +1% 
36*4 38% 

7% ft +1 
14% 14% ft 

16 16 ft 
33 33% ft 
40% 41% ft 
ft 4% +*B 

22 22 ft 
13% 13% ft 
Eft 28 ft 
151ft ft 
7% 7% -A 
8% ft ft 
21% 21% ft 

18% 19% ft 
49% 49% -% 
32% 32% ft 
18% 19% 

7% 7% 

5% 5% 

5*2 ft ft 
39 39% 

15% 18% 

ft ft 
20% 21% ft 
25 25% ft 
23% 24% ft 
9% 1ft 
ft ft -A 


Meek Dtek E total M|b Low Lnz etna 
tkakatOn 082 72 76 18% 18 18 

IkrilFOOd 020 16 544 21% 21% 21% ft 

Quantum 702882 15% 1ft 1&A ft 

Qriekstu 23 524 16% ift ift ft 

WCfeK 296665 43% 42% 43 ft 


Lahore 072 20 M Iftdlft 16% •% 
Ladd Ren 112 36 714 6% B ft ft 
Lena Rich 488161 42% 41% 42% +% 
Lecarite 048 16 584 35% X% 35% 

Lerea hex 09617 173 17% 17% 17% ft 
Lxxtmfcfipb 25 15S 19% 16% 19% ft 
Lanurtha 10 340 7% 6% 7% ft 

Dsectpe 29 226 4% 4% 4% ft 

LriUeaS 141211 17% 16% 17 ft 

Lawson Pr 048 18 576 25% 25 25 

LOOS 333 5715 23% 22% 23 A ft 

UUCP 016 1 4 5% 5% 5% 

Ladilns 21 1468 17% 17% 17% ft 

LegentCp 184408 30*2 » 30 ft 

Lite Tech 020 IB X 1ft 18 18 

LMre 28 292 05% 5 5% ft 

LtytaU 129 13 339 14 13% 14 +A 

LhBr TB2 147139%138%139% ft 

LtateiT 052 18 388 17 16 17 ft 

UttatMT U 31 30% 29% 30 ft 

Uneunac oza 40 1683 49 47% 49 +\ 

UquSot 040 18 17 35% 33% 3S% +1*2 

LuwmGp 10B 30 8S3 28 25% 26 ft 

Luna Star 1412684 7% 6% 7% ft 
LoUsD 38110672 38% 37% 38A +A 

LTXCp 31142 4*2 4*a 4% +% 

LVMH Q46 4 2 31% 31% 31% +% 


-R- 

14 572 15% 
3 209 4% 
11429 3% 
X 367 18*2 
18 113 20 

22 12 23% 
1 563 2% 
7 663 X 
2115181)13% 
037 163477 4ft 
B 324 5% 
06010 21 X 

140172511 X% 

0.1216 130 ft 
040 4 <39 17% 
044 21965 15% 
020 11 2414 14% 
32 an 26% 
188 55 512 18 

056 21 530 19*2 
060 14 167 23% 
12 1799 7 


14% 15% ft 
4 4ft 
3 3 ft 

16 18*2 ft 
1B% 20 
23% 23*2 +% 
ft 2% ft 
3% * ft 

12 % 12 % 

45% 4ft ft 
ft 5% ft 
33% 3ft ft 
53% X% +% 

7% ft ft 
17% 17% ft 
14% 14% +£ 
13% 14 

25 26 ft 
17% 17% ft 
19*8 19% ft 
23 23% ft 
6% EH -A 


SaUerean 

Sdtenbgifl 

SdMrdl 

SOSyrim 


65*8 44% 
3% ft 
15% 

20 ft 
14% ft 
23% ft 
10 % 

18% ft 
13*8 ft 
ZOA +ft 
27 -1% 
2B&+1J& 
10 ft 


11 +% 
79% ft 


9% +% 
5% ft 
8% ft 
63% +1% 
28 

27% ft 
25*4 -% 
25% 

29% +•% 


6 ft 
29% ft 
22% +% 
29*8 +% 

10 -ft 


Sequent 
Sequela 
Sere Tech 

SnvfhO 

Smnaon 

Staled 

Sa Syria 

Shoremud 

Showbiz p 

Stem On 

StoraTuc 

Stymfl 

Sgafeu 

SScrilBc 

sateVGp 

Skapsofi 

SnriMd 

SnappUBv 

StrinoraP 

Sunoco 

SouDiri 

SphgriAx 

StJudeMd 

StPariBcx 


Sid Mere 
Std Ragle 
SKdTac 
SUktyUSA 

sum 

S&mrtra 

SDucMy 

Strykv 

SUhianD 

tarikmoB 

SumrilBc 

Summit Ta 

Son Sport 

sumac 

BwAlka 

Sybauabc 

Symantec 

9PV 

Synenan 

Symrgao 

Synedc 

SystmSflfi 

SyriamBa 

Systmed 


T-CrifSc 

Titan ft 

TBC Cp 

TCACrife 

TacMMa 

Tacumtrii 

TrinklC 

TriCOSp 

TriOnA 

TeW* 

Teflrta 

TrimCp 

Trim T«c 

TmPIMOR 

Tina Com 

n 

TJM 
Trims Wed 
Tokyo Mar 
Tom Brown 
Topps Da 
TH Enter 

TnmsWrid 

TTOnriek 

Tricare 

Trimble 

TrosBoBkC 

Tseng Lab 

TyaFdA 


- s - 

106 7 <787 50% 49% 50A ft 
030 14 143u2D% 19% 19% ft 
030 21 574 28% 28% 26% 

1 315079 U49% 46% 48*2 +1% 
14 2108 1B*a 1&% 18% ft 

61183 6% 6% 6% ft 

152 103383 21% 21% 21% ft 

7 132 4% 4% 4% ft 

1 20 43 60 36 34% 36 

126860 28% 26% 26% ft 

116 25 » 21 20% 20% ft 

036 5 524 2% 2,1 2 ft ft 
1.12 14 110 25% 24% 24% ft 

901469 19% 16% 19 ft 

24 STB JB 3% 3% -A 

9 333 7 d6*2 6*2 ft 

18 3 4% 4% 4*2 

022 17 12 19 16% 19% 

OX 21 521 29% 2B% 29% ft 

2 810 5A bit ft ft 

29 1460 16% 17% 17% ft 

7 557 8% 7% 7% -% 

23 1862 27% 26% 28% ft 

3 21 3 d3 3 ft 

033182025 36% 35% 35% ft 

20 3039 7% 6% 7% +1% 

006 57 80 11% 11*2 11% ft 

SS 1892 19% 18% 19 ft 

140 1 5 167 13% 12% 12% ft 

X 262 28% Z7% Z7% ft 

3612B36 13% 13% 13ft ft 

12 4X 5% 5 3ft 

056 16 1036 22% 22 22% 

IMS 91311 18% 1B*2 18% ft 
120 31 4230 15% 14% 14% -% 
140 IB 4389 38*2 37 30% +1% 

030 9 1224 19% 19% 16, T , ft 
1 173 1A lA 1ft ft 

35 4457 23*z 22% 23,1 ft 

160139032 32 31% 31% 

161505 24% 23% 24 ft 

088 11 344 18 tfI7 17% 

008 15 465 14% 13*2 +21 

020 35 22 9% 9% 9% ft 
145 252 20% 20 20% ft 

1.1013 33 22% 21*2 21% ft 
11X53 5% 4% 5A +H 
028 271317 34*8 33*8 33% ft 
20 13 14% 13% 18% 

080 14 10 23% 23% 33% 

OX 13 5B8 21% 21% 21% ft 
303056 32 30% 31% +% 

10 20 4% 4% 4% ft 

1719980 32*2 31% 32 +% 

43 616 42*2 41% 42*8 ft 
X12845 48% 47 47% -}1 

48 5040 17% 17% 17% +% 

040 18 145 18% 18 18*2 ft 

100 31 5 4% 5 

13747 ft 4% 5% ft 
83 152 15% 15% 15% -% 
H2 151158 13% 12% 13% ft 
33 1506 20% 20*a 20A ft 

49 351 7*2 7% 7,% ft 


- T - 

4 1367 2% 2% 

052 19 774 32 31*2 

131144 9% 9% 
044 28 611 23% 23% 
121878 19% 18% 
080 11 16 4&%d43% 

1717191120% 24% 
11 752 16% IB 
16729754 21% 20% 
7 385 4% 4% 
X5033 48% 48% 
001 73 946 13% 12% 
67 884 B% 7% 

110 262220 26*8 2ft 

78 9049 41% 39% 
431 6% 8 

022 X 548 18% 17% 

5 531 6% 6% 

1X 35 4 58% 57% 

X 10X 12% 11*2 
O282S0 723 S% 85% 
2 193 4% 4% 
15 12 % 12 % 
IDO 10 noo 36% 36% 
16 312 2*8 1% 
75 321 14% 14 

1.10 10 12 19% 10% 

020 13 371 7% 7% 
O0817B 2837 23% 22% 


9% ft 
23% ft 
19 ft 
44% -2% 
26*8+1*4 
16% 

21 % +! 

4% 

<7% ft 
13% ft 


40% +1% 
9% ft 
17% ft 
B% ft 
58% ft 
12% ft 
5H ft 

♦ft 

12% ft 


14% ft 
19% -% 
7% ft 
23% +% 


- u- 

OX 16 6397 45% 
21713 4% 
UB 13 149 15% 
200 14 2Q2uG1% 
DAO 8 998 10*8 
088 14 ziao 18% 
180 X 91 45% 
1J» 91958 23% 
5 48 3% 
1.12 B X 11% 

14 in 8% 
ii noo 51% 
10 216 3% 


45 45% ft 
84% 4% 

15% 15% ft 
60% 60% +% 
9% 9% ft 
18% 10% +% 
44% 44% +ft 
23% 23% ft 
3% 3% 

11 11 % 

8% 8% ft 

51% 51% 

8% 3% 


- V- 

030 38 5 16% 10% 16% ft 

121 1182 28 27% 27% ft 

M 756 22% 21% 22 

401468 26% 24% 23 ft 
10 87 18% 16% 10% ft 
J10 2147 22% 21% 21% ft 
28 2413 13 12% 12% 

017 17 453 1B% 16% 16% ft 


toner En 110 

Whmerii 
WasMUGBzOJB 
WatWedSLOK 
WaUrindA 022 
WUtelFM 024 
MHO £40 
tofefc 

WestOn 086 
WriamBre 068 
waft* 


totSariA 
Mama 096 
wnSonona 
toUHlL 026 
Whngt 040 
wpp Guam am 
wyman-Gttaa 


-W- 

19 78 26% 25% 
X 331 6U Si, 
62032 17%tf17% 
71ST2 17%tf17% 

10 S>1 24% 23% 
151049 25 »% 
16 42 42% 42% 

4 Z70 3% 3% 

11 AM 26% 27% 

27 35 32% 31% 
10 673 12 11% 

2 434 15% 15% 
10 43 3% 3*2 
221079 45% 44% 
733138 33% 31% 
14 9 16% 16 

281308 22*2 21 
21 635 3% 3% 

I 103 5% 5% 


25% ft 

5H 

17% ft 
17% *A 
24% +1