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Minor revtdiitlOH 

Japan 's banks get 
a taste of freedom 

P*»* IS 



TheBell Curve 

Intelligence and 
class in US life 

Book review, Pag* 14 


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★ ★ 

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Direct approach 

USAir lays out 
its safety record 



Untangling the roots 


FINANCIAL TIMES 




Italian coalition 
parties call for 
crisis meeting 

Key partners in Italy’s rightwing coalition 
government called for a crisis meeting after magis- 
trates decided to investigate corruption allegations 
against prime minister Silvio Berlusconi. The move 
highlighted the division within the government 
which pitted the populist Northern League of 
Umberto Bossi against its partners. It raised fears of 
whether the government would survive to ensure 
the 1995 budget passed its last phase in the senate 
Page 16 

SB sells animal health arm; UK drugs 
company Smith Kline Beecham agreed to sell its ani- 
mal health business to US rival Pfizer and indicated 
that a $7.7bn series of corporate deals it began in 
May was at an end. Page 17; Lex. Page 16 

EU economy to grow 2.6% this year; 

Economic growth in the European Union will rise 
to an average 2.6 per cent this year, accelerating to 
2-9 per cent in 1995 and 33 per cent in 1996, the 
European Commission forecast Page 3 

French output slips: French industrial output 
in September fell 0.4 per cent below its level in July 
and August, Insee, the government statistics 
agency, reported. Page 3 

US stores Kaxakhastan uranium: The US 

completed the secret transfer of 600 kilograms of 
highly enriched uranium from a storage facility in 
Kazakhstan considered highly vulnerable to theft. 
Page 16 

Britannia orders Boeings: Bri tannia Airways 
of the UK, the world's largest charter airline, 
announced orders and options worth S800m for 
eight Boeing 767-300 aircraft Page 4 

Kohl seeks to create jobs: German chancellor 
Helmut Kohl called for an alliance of business, 
industry and trade unions to create jobs. Page 16 

Russian trade tuns west: Russia now trades 
more wife developed countries, especially western 
Europe, than wife other former Soviet states, fig- 
ures released in Moscow show. Page 4 

US cable group in Si .41m deal: Continental 
Cable vision, fee third largest US cable television 
company, is to buy fee cable operations of Provi- 
dence Journal in a deal valued at $L4bn. Page 20 

Metallgesellschaft seeks DM600m: German 
wiptals and en gineering group Mntallgnsfillschaf t- is 
preparing a capital restructuring package which 
includes a call on shareholders for a further 
DM600m ($387in). Page 17 - 

. ’ . . *e 

Commerzbank hit by bond markets: 

Commerzbank, the German hank , suffered a 27 per 
cent drop in group operating profits to DM660m 
(6425m) for fee first 10 months of fee year because 
of weakness in world bond markets. Page 17 

Tate & Lyle 23% ahead: A strong performance 
from its US arm helped UK sweeteners group Tate 
& Lyle raise annual pre-tax profits by 23 per cent to 
£273 An (6449m). Page 17; Lex, Page 16 

Taiwan set to benefit from US recovery: 

Taiwan is poised to benefit from economic recovery 
in fee US, its biggest export market. Taipei’s cen- 
tral statistics office said- Page 8 

Land-cleaning standards planned: The 

British government is about to announce proposals 
for dealfog wife contaminated land feat are expec- 
ted to minimise the cost to industry of cleaning up 
polluted sites. Page 10 

AVEZ beats expectations: Australia and New 
Zealand Banking Corporation surprised fee market 
with annual profits after tax of A$803.2m (9813.2m) 
compared wife A$459.7m in fee previous year. 

Page 19 

Briton Colin McRae wins RAC rally 

Scotsman Colin McRae 
(left), celebrates Ms Net- 
work Q RAC rally win. 

He and cofeiver Derek 
Ringer finished the 29- 
stage event in a Subaru 
more than three minutes 
ahead of Finn Juba 
Kankkunen. McRae, who 
led the four-day rally 
almost from the start, is 
the first British victor for 
18 years. The world 
champ ionship was won 
by Frenchman Didier 
AurioL in a Toyota. 

Award for FT journalist: Simon Super, an FT 
journalist and author of Football Against the 
Enemy, won fee William Hffl sports book of the 
year award. 

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Clinton seals deal with 
Dole on Gatt trade pact 


US long bond 

SO-year yield (%) 

8J> 


Hong Kong 

Hang Seng Index 
13,000 


8.0 — 


7. 5 


By Nancy Dunne in Washington 

President Bill Clinton and 
Republican Senate leader Robert 
Dole yesterday announced a deal 
paving the way for congressional 
approval of the Uruguay Round 
trade pact. The result of over 
seven years' negotiations 
between more than 100 countries, 
th pact will usher in a new era in 
world trade. 

Leading trading blocs and 
nations, including Japan and the 
European Union, have been 
waiting for the US to ratify fee 
trade pact before they proceed 
with their own legislation to 
bring the accord into being. 

Senator Dole, whose support is 
vital, promised to work for a “big 
big .vote** in favour of the deal in 
fee Senate. A vote is scheduled 
for a week on Friday. Sixty of the 
100 senators must approve a cru- 

Free traders jubSant .—Page 4 

rial waiver of budget rules for 
fee legislation to pass. 

Congress is scheduled to return 
for a special post-election session 
to vote on the pact which would 
lower world trade barriers and 
liberalise global trading. Mr Clin- 
ton said fee US had moved “one 
step closer to gaining broad, 
bipartisan support for the Gatt". 
This, he said, would “ensure that 
we lead fee world for decades to 
come". 

Mr Dole said he would be writ- 
ing to his Republican colleagues 
in fee Senate and suggesting that 
they support Gatt when it comes 
up next week. He denied having 
tried to “kill the pact" but said 
he had needed additional safe- 
guards to assure his constituents 
feat "the new World Trade 
Organisation - to be set 
up by the Gatt pact to arbitrate 
international trade disputes - 


would not impinge on US sover- 
eignty. 

As part of the compromise, tbe 
administration bas agreed to 
establisb a panel of five federal 
judges to monitor dispute settle- 
ment procedures in the WTO to 
ensure US interests are pro- 
tected. President Clinton said 
this meant the WTO would be 
“accountable and fair and will 
meet our expectations". 

Many trade experts fear tbe 
proposed US panel could under- 
mine the dispute settlement pro- 
visions agreed under the Uru- 
guay Round and that other 
countries will establish their own 
review panels. 

Mr Dole's opposition to the 
trade accord had been unex- 
pected because of his history of 
supporting free trade. 

He emerged without any firm 
administration support for lower 
capital gains taxes. 

However, the administration 
gave Mr Dole several assurances 
on continued funding of farm 
programmes. Mr Dole's state. 
Kansas, is the largest producer of 
wheat 

The new review panel will be 
appointed by the President, the 
chairmen of the House Ways and 
Means Committee and fee Senate 
Finance Committee. 

It will review all final WTO dis- 
pute settlement reports adverse 
to the US to determine if the 
organisation exceeded its author- 
ity or acted outside its scope. 

If the judges find the decision 
was unfair to the US, any mem- 
ber of Congress could introduce a 
resolution calling on the presi- 
dent to negotiate new dispute set- 
tlement rules. 

If the judges find any three 
decisions unfair within a five- 
year period, it would trigger a 
vote of Congress on whether to 
stay in the global trade organisa- 
tion. 



Source: Datagram 


10.000 


Jan 

Sovca: FT GrspWta 


World markets 
fall in wake of 
Dow’s decline 


President Clinton with a 50lb Thanksgiving turkey yesterday 


By PhBip Coggan in London and 
Patrick Harverson in New York 

Share prices fell worldwide 
yesterday as the aftershock of 
Tuesday’s 91 point drop in fee 
Dow Jones Industrial Average 
rippled through international 
stock markets. 

Traders continued to worry 
about further US interest rate 
increases, which would slow the 
US economy and corporate earn- 
ings growth. Investors appeared 
to be sellin g shares and opting 
for fee higher income available 
from bonds. 

By early afternoon in New 
York, fee price of fee key 30 year 
US Treasury bond had climbed 
by almost three-quarters of a 
point, pushing the yield down to 
7.95 per cent, its first dip below 8 
per cent this month. 

Meanwhile, after steep stock 
market falls in Europe and Asia, 
US. shares declined again in early 
trading. By 1pm in New York, fee 
Dow. Jones Industrial Average 
was down 25.23 prints at 3,652.76. 
with computerised selling pro- 
grams again responsible for 
much of fee losses. By that stage, 
the Dow had fallen 162 points, or 
more than 4 per cent in three 


days, and was nearing its low for 
the year. 

The Federal Reserve's decision 
to increase interest rates by 
three-quarters of a percentage 
point last week - fee sixth rise 
this year - appears to have been 
a watershed. So Ear this year, the 
Dow average of 30 leading stocks 
bas performed much better than 
the broader US market. But 
investors have now decided to 
sell the interest rate-sensitive 
cyclical stocks which malm up 
much of the Dow. 

“Bonds and equities got a bit 
too far apart in the US and 
they’re correcting back towards 
each other” said Mr Dick Bar- 
field. chief investment manager 
at Standard Life, the UK life 
Insurance company. Mr Peter 
Coriidge, senior equity trader at 
Kidder Peabody in New York, 
said: “I think people feel it’s more 
attr ac ti ve to put their money in 
the bond market right now.” 

Tokyo was dosed, hut the 

Continued on Page 16 
Lex, Page 16; Wall Sheet shake- 
out, Page 17; Editorial Comment, 
Page 15; World stocks. Page 40; 
London stocks. Page 31; Interna- 
tional bonds, Page 21 


UN warns of catastrophe as Serbs attack Bihac 


By Laura SBaer in Belgrade 
and Bfuce dark in London 

The United Nations warned last 
night of a potential humanitarian 
catastrophe as Serb forces, defy- 
ing a fresh wave of air strikes by 
Nato, fought their way into the 
north Bosnian town of Bihac, a 
UN-protected area. 

Nato bombers struck Serb anti- 
aircraft batteries in three places 
yesterday, implementing tough 
new rules of engagement that 
were secretly agreed with the UN 
on Tuesday. 

Mr Y as us hi Akashi, the senior 
UN official in former Yugoslavia, 
said he had worked out a peace 
plan for Bihac with Serbian presi- 


dent Slobodan Milosevic which 
he would put to all the warring 
parties. He also said be had 
secured agreement for a convoy 
to supply the 1,000 Bangladeshi 
LIN peacekeepers trapped in the 
Bihac enclave. 

Earlier. Nato ambassadors, 
under strong pressure from 
France and the US. had held 
emergency talks in Brussels on 
how they could stop Bihac fall- 
ing. They also considered a plan 
for implementing a total UN 
withdrawal from Bosnia, which 
bas been in preparation for sev- 
eral months. 

The prospect of a “nightmare 
scenario” was raised by the UN 
high commissioner for refugees 


as thousands poured into Bihac 
town from outlying villages 
which have fallen to the Serbs. 

Mr Kris Janowski, a UNHCR 
spokesman, said food and water 
could run out if the town, virtu- 
ally cut off from emergency pro- 
visions for several months, 
becomes overcrowded. 

Russia, breaking ranks with 
the US and western Europe, cau- 
tioned against “excessive use of 
force” by Nato and announced a 
new diplomatic initiative over 
Bosnia by Mr Andrei Kozyrev, 
the foreign minister. 

Itar-Tass news agency said Mr 
Kozyrev would travel to Belgrade 
and other parts of former Yugo- 
slavia alter conferring with the 


German government in Bonn 
tomorrow. 

Nato bombers struck Serb anti- 
aircraft positions near the towns 
of Otoka and Bosanska Krupa in 
Bosnia and at Dvor in Croatia, in 
two separate missions. 

They initially intended to aim 
only at Otoka - in retaliation for 


a missile attack on UK fighters 
on Tuesday - but broadened 
their aim after Serb radar locked 
on to some Nato reconnaissance 
aireraft 

Bosnian government radio 
described fee situation in Bihac 
as “real hell”, saying that “the 
Serbs are shelling the town itself. 


and refugees are pouring into fee 
very centre of Bihac”. 

UN officials - who in fee past 
have accused the Bosnian gov- 
ernment of exaggerating about 
Serb assaults - confirmed that 
fighting had spread to the town. 

Editorial Comment, Page 15 


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Iberia to cut 5,200 jobs after 
workers reject 15% pay cut 




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By Tom Bums in Madrid 

Iberia. Spain's financially 
crippled national carrier, faced a 
serious industrial dispute yester- 
day as its management 
announced it would cut 5,200 jobs 


Unions, which had rejected an 


As the confrontation at Iberia 


With tension running high, one 


Mr Javier Salas, chairman of 


Iberia and president of INI, the 
state holding group that owns 
the airline, said after a board 
meeting that the company would 
hive off some of its key units 
under a series of emergency 
measures that Iberia directors 
have called Plan B. 

The proposed measures mean 
that Iberia will in effect renounce 
its ambitions to be a global car- 
rier and become a regional air- 
line. 

Plan B involves the sale of 
Iberia's subsidiaries to INI for 
subsequent disposal. 

Iberia would hive off its 
shareholdings in a string of air- 
lines including Aerrolineas 
Argentinas, Chile’s Ladeco, 
Venezuela's Viasa and the domes- 
tic carriers Aviaco, Binter 
Canarias and Binter Mediterra- 
neo. 

The measures involve the seg- 
regation of the company's han 
dling, main tenance, information 
systems and marketing units and 
their eventual sale. 

Iberia, after such a break-up. 


would consist of a reduced air- 
craft fleet and a staff of about 
5,000. mostly pilots and cabin 
crew. 

Mr Salas said the survival of 
Iberia in its present form would 
only be possible if the earlier via- 
bility plan, which involved pay 
cuts and the loss of 2.000 jobs, 
was accepted by the unions. 
Unions have already staged two 
24-hour stoppages this month 
that grounded 75 per cent of 
Iberia's flights in protest at the 
pay cuts. 

Under tbe viability plan, Iberia 
would also have sought authoris- 
ation for public subsidies total- 
ling Ptal30bn ($lbn) from the 
European Commission. This 
request depended on union agree- 
ment to the pay cuts. 

Iberia is expected to lose 
Pta44bn this year, up on earlier 
estimates of Pta30bn, and its 
accumulated losses by December 
will have effectively wiped out a 
Ptal20bn capital injection that 
was authorised bv Brussels in 
1992. 


Mind-boggling Pentium 
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Brain-baffling price. 
£ 1 , 295 . 

Only Eknc* 'an bring you such an incredible offer. A superfast graphics multimedia PCI computer with 4W stereo 
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EuofMan News — 23 

ttarattan d News 73 

AmericaiNews .6 

Wa«t Trade Mms _ 4 

UK News 9L10 

PBC0B 12 

Wtafter 16 

Lex 16 


16 

Gema* EM*® »«• ^ 

rypir PnsiANClAL TIMES UMrTElTl9»l No 32.532 Week No 47 


Leader Page 

Letters 

toagsmrt _ 

Observer—. 

TectnOogy 

AT6. 

Arts Glide 

Oosswoid 


COSTENTS: 


UK 22 -M 

HL Condones 

ML Cap IMS 2' 

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Convnodbes X 

FT Actusies — Jl 

FT Wort3 Actions . „40 
Foragn Exchanges . — .36 


G<*1 Martee . . _ - 30 Wjt Street 

E£M»Y OpborG 40 

H Bond Service CT Bauwis 

Managed Finis . — M -35 

Mr«y Mafaas . . . _ X ■ Sonej 

Recuffl Iseuas _ - 40 

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Milosevic puts 
pressure on 
Krajina Serbs 


By Laura Slber in Belgrade 

President Slobodan Milosevic 
of Serbia yesterday put pres- 
sure on Serb leaders from 
Croatia to bait their offensive 
on a Moslem enclave in neigh- 
bouring Bosnia, and even 
blamed his former proteges for 
the Nate attack on a Serb-held 
airfield. 

Mr Yasushi Akashi, senior 
UN official in former Yugo- 
slavia, last night met Mr Milos- 
evic and Mr Milan Martic, 
leader of Krajina, the 
self-styled Serb state in Croa- 
tia. 

Senior UN civilian and mili- 
tary chiefs were trying to get 
Mr Milosevic to exert his influ- 
ence on Mr Martic to stop aid- 
ing their kin across the fron- 
tier in Bosnia, who are 
attacking a UN safe area in the 
north-west, said diplomats. 

However Mr Martic and the 
Krajina Serbs appear more 
ready to link their destiny with 
their Bosnian Serb counter- 
parts, rather than adhere to 
orders from Belgrade or the 
international community. 

International mediators, 
aided by Mr Milosevic, have 
tried to drive a wedge between 
Serbs from Krajina and Bosnia. 

Politika, the Serbian daily 
newspaper which is a mouth- 
piece for Mr Milosevic, yester- 
day lashed out at Krajina lead- 
ers for provoking the Nato 
attack on Udbina airfield, 
which was used to launch sev- 
eral air raids on the nearby 
Bihac enclave. 

“The leaderships of the Bos- 
nian and Krajina Serbs must 
understand that they cannot, 
by provoking air strikes, 
change Belgrade’s and Yugo- 
slavia's peace policy," said Mr 
Hadm-Dragan Antic, editor of 
Politika. 

“Advocates of the war option 
are again trying to spread the 
flame of civil war on the terri- 
tory of former Yugoslavia," 
wrote Mr Antic. 




CROATIA 



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But yesterday's commentary 
in Politika contrasted sharply 
to a statement from the Yugo- 
slav federal government which 
is also under Mr Milosevic's 
control. It denonneed as 
'‘unprovoked” and “irresponsi- 
ble” the Nato action, which 
could lead to an escalation of 
the war. 

These mixed reactions indi- 
cate that Mr Milosevic must 
send different, and contradic- 
tory signals, to constituents in 
Serbia and abroad. This 
reflects that he has little room 
for manoeuvre - under pres- 
sure from within his ruling 
elite, on one hand, and on the 
other, faced with a deteriorat- 
ing economy, he is anxious to 
get UN sanctions lifted. 

Furious with Bosnian Serb 
refusal to obey Belgrade and 
endorse an international peace 
plan, which would ease UN 
sanctions. Mr Milosevic in 
August abandoned his Bosnian 
Serb proxies. He turned his 
back on the nationalists which 
swept him in to power in 1987. 

Popular opinion in the dis- 
torted political landscape of 
Serbia appears outraged by the 
Nato attacks which could put 
even more pressure on the Ser- 
bian president His state-run 
media, however, has tried to 
play down the attacks. 



Tram passenger Emira Tanovic after being hit in the chest by a sniper’s ballet In Sarajevo a p 

Nato action will prolong 
bloodshed, says Russia 


By John ThomhB in Moscow 

The second Nato air strike in 
Bosnia “can lead to nothing 
but prolonged bloodshed,” the 
Russian foreign ministry 
warned yesterday in an appar- 
ent attempt to distance itself 
from the more aggressive pol- 
icy recently adopted by the 
international community in 
the former Yugoslavia. 

“We are seriously worried 
about the alarming new infor- 
mation from Bosnia." Mr Grig- 
ory Karaain, the foreign minis- 
try spokesman, told Itar-Tass 
newsagency. ■ 

On Tuesday, President Boris 
Yeltsin had expressed cautious 
approval of the first air strike 
against an atrhase which had 
been used by rebel Serbs to 


bombard the besieged town of 
Bihac. But in subsequent com- 
ments. Russian representatives 
qualified their support with Mr 
Andrei Kozyrev, the foreign 
minister, warning that further 
air strikes might prompt Rus- 
sia to withdraw its peacekeep- 
ing forces from Bosnia. 

The Russian government is 
under increasing domestic 
pressure to act to limi t foreign 
military intervention in the 
former Yugoslavia. The lower 
house of parliament yesterday 
passed a resolution urging Mr 
Yeltsin to use all possible 
means - including the exercise 
of Russia’s veto in the UN 
security council - to halt mili- 
tary action In the Balkans . 

The resolution said although 
parliament recognised that the 


military action was within UN 
mandate it did not believe the 
air strikes were “essential or 
appropriate”. 

Mr Vladimir Zhirinovsky, 
the ultra-nationalist leader of 
the Liberal Democratic party 
of Russia, has been hying to 
whip up opposition to the Rus- 
sian government’s support for 
UN policy saying it is unac- 
ceptable to use force to settle a 
political dispute. “The conflict 
cannot be resolved by military 
means,” he said. 

Mr Kozyrev will tomorrow 
meet Mr Klaus Kinkel, the Ger- 
man foreign minister, in Bonn 
to express Russia's disquiet, at 
the latest events in Bosnia and 
“synchronise watches” for the 
foreign minis ters* meeting on 
the former Yugoslavia. 








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Central 
Statistical 
Office — S 


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Bosnian Serb leaders 
threatened to declare all-out 
war on the United Nations, 
blockading about 150 peace- 
keepers around Sarajevo, in 
retaliation for Nato air strikes 
on Serb targets. 

Sarajevo radio said Serb 
forces web trying to take bads 
their heavy weapons from 
three UN-supervised collection 
sites. 

Fearing retaliation from 
angry Seri) forces, the UN yes- 
terday morning began with- 
drawing the balk of its troops 
supervising nine weapons 
depots, created last February 
as part of an exclusion zone 
round Sarajevo. 

One person was killed and 
three wounded when Serb 
forces opened fire on a tram 
driving through, the centre of 
Sarajevo near the Holiday inn 
where many foreign, journalists 
stay, Bosnian radio reported. - 

The move comes after a 
warning from Mr Jovan Zarne- 
tica, adviser to the Bosnian 
Serb leadership, just before the 
assembly of the self-styled 
state met to consider the deco- 
ration of a state-of-war 
throughout Serb-held territory 
in Bosnia . 

"If they [the air strikes] 
prove to be pore aggression of 
Nato at the request of the UN, 
then Republika Srpska will 
consider that the UN has sided 
with, the enemy,” he told die 
Bosnian Serb news agency. 

“This would mean war with 
the UN,” he warned. About 
half file 44,000«trong UN force 
in former Yugoslavia is vulner- 
able to retaliation by Serb 
forces in Bo snia or Croatia. 

Mr Radovan Karadzic, Bos- 
nian Serb leader, made a shut- 
bar threat of “total war against 
the UN” on Tuesday night The 
UN last night was cm “code 
red”, the highest state of alert, 
in Sarajevo. All aid movements 
into Sarajevo were cancelled 
because of security risks. 

Yeltsin’s 
bank chief 
rejected 

By John CJoyrf in Moscow 

The Russian parliament 
yesterday rebelled against 
President Boris Yeltsin’s nomi- 
nee for the chair of the central 
bank - detenHng the candidacy 
of Mrs Tatyana Paramonova by 
127 votes to 10. The surprise 
vote came “not because we did 
not like Tatyana Paramonova 
but because we did not like the 
way she was proposed and the 
way Victor Gerashchenko (the 
previous chairman) was 
relieved of his post,” according 
to Mr Sergei Baburin, one of 
the leaders of the nationalist 
opposition in the state duma 
(lower house). 

Mr Gerashchenko, with other 
senior nffimaia and ministers, 
was a victim of the sudden foil 
of the rouble on “Black Tues- 
day” last month and the result- 
ing wrath of the president 

The vote leaves Mrs Paramo- 
nova, a former deputy chair- 
woman, as acting head of the 
bank - a weak position at a 
time when the financial 
authorities in Russia are push- 
ing for the acceptance of a 
tough budget aimed at bring- 
ing down inflation next year. 

President Yeltsin faces the 
choice of keeping her in an act- 
ing position, or proposing a 
compromise candidate. 


John Thornhill on prospects for : 
cutting through the bureaucracy 


T hey are easy enough to 
spot: hands . thrust 
firmly into pockets, they 
pace Moscow’s hotel corridors 
muttering obscenities about 
the local population and the 
need to return to “dvflisatkm". 
The western business men , who 
have wearied of trying to con- 
dude deals in Russia, are still 
a common, if unhappy, sight. 

Quite apart from, .the 
m fipiaptiflaM e political and 
economic risks, Russia has, 
retained its reputation as a 
byword for bureaucracy. The 
list of deterrents to foreign 
investors is endless: companies 
are allowed only one hard cur- 
rency bank account; there are 
strict limitations on cash deal- 
ings; the legislative climate 
can change overnight with lit- 
tle possibility of international 
arbitration; taxes can be arbi- 
trarily imposed and lifted; 
there axe conflicting priorities 
between federal and local gov- 
ernment. 

It is perhaps little wonder 
that an Ernst & Young study 
of the investment intentions ctf 
m ultinatio nal companies found 

t-hat only 6 per emit considered 
the former Soviet Union a pri- 
ority compared with 57 per 
font for China. 

But meetings held in 
Moscow this week between a 
group of western business lead- 
ers and Russian ministers 
under file aegis of the Foreign. 
Investment Advisory Council, 
have provided fresh reason for 
hope. Russia's new economics 
team, headed by Mr Anatoly 
Chubais, first deputy prime 
minister, and Mr Yevgeny 
Yasxn, economics minister, 
impressed many with its can- 
dour and- willingness to con- 
front the main concerns. 

Mr fSwhah promised that a 

presidential decree would be -, 
issued “within a few days” 
halving the import duties on a 
range of goods for five years 
for those companies which had 
a minimum iq per cent stake 
in investment projects worth 
more than $l00m. He also 
vowed to ebange- quickly the, 
banking rules preventing for- 
eign companies .opening more 
than one hard currency 
account and to ease the limits 
on dmling" 

Mr Yasin, meanwhile, said 
his ministry would assume 
chief responsibility for 
responding to tin* concerns of 
foreign investors, with Mr 
Alexander Gorokhofinsky, dep- 
uty head of file foreign invest- 
ment department, being named 
as an "ombudsman” to help 
sort out bureaucratic prob- 
lems. 

Although not hugely signifi- 
cant in isolation, these moves 
were interpreted as a sign of 
Intent “We thought here were 
a team of people who wanted 
to find solutions and who 
wanted to encourage people to 
Invest here,” said one business- 
man. 

Mr Michael Henning, chief 
executive of Ernst & Young, 
said It was “extraordinary” 
that such senior ministers 
were prepared to lock them- 
selves in a room for two days 
to discuss foreign investors’ 
problems. Mr Neville Is dell, 
senior vice-president of Coca- 
Cola, said he had never “been 
to a more productive meeting". 

A similar, If less overtly 
excitable, reaction also fol- 
lowed last week's energy and 
law conference, jointly spon- 
sored by the US and Russian 
energy departments. Mr Yury 
Shafranlk. Russia’s energy 


minister, appeared to take &i 
-board many of the . concern^ - 
raised by . w estern , oil; compa-. 
riles and accepted , tfcecneedrfio 1 " 
introduce “strict yules of the .;i 
game". LegJslatlon on tax con- ■ 
cessions a^ pitSducfim^ap* : 
ing agreements was promised -' 
as early as nest moiitii. 

But it is one firing to per- , 
shade senior ministers' .of fie 
necessity, for change, quite 
another to create a stable legte ! . 
lative and fiscal, eavkomnent, ‘ 

' which cm ^ . 

confidence for ‘companies to . - 
invest . substantial tong-term . 
capital. v 

- Russia's reformers have yet 
to fight many - political battles. - 
both within the government 
and with nationalists,, who are .. 
mo u nting an increasingly . 
vocal campaign agahist “sett- 
ing ordT- to fotelgnscs.' ' " ' *' 
Mr Chubais, at least, appears- , 
firmly convinced of the need to 
mobilise bofii domestic and for: •’ 
eign capital investment if the 
country is ever-to^top. using - 
the printing press as* means . 
Of financing industry, ffis prv . 
mary goal of achieving fboah- 
dal stability would be subatan- - 
tiatty . eas6d if he could hft the... 
impediments to foreign forest . 
ment and regulate file stock - 
market to attract productive 
long-term capital 
If successful, the prise for 
both Russian . and foreign 
: i nvestors could be enormous. 


some $60bn of 
foreign capital 
could be . 
forthcoming 


Several' western oil companies 
have completed in-depth feasi- 
bility studies to develop -new 
oilfields. Industry- experts sug- 
gest some $60bn of foreign cap- 
ital could be forthcoming if 
.Russia, could 'establish a mote 
predictable and stable invest- 
ment climate. That is about 
three times Hie size of all for- 
eign direct investment in 
China last year. 

Western companies in other 
areas, such as heavy engineer- 
ing and consumer products, 
also sense big possibilities to 
Russia. Investment banks in 
Moscow say there are many 
potential deals to the pipehne 
which could emerge in a more 
favourable environment 
Mr Percy Bamevik, chair- 
man of ABB, the Swedish- 
Swiss heavy engineering com- 
pany which has already set up 
16 joint ventures in Russia, 
predicts the country could 
attract up to 10 per cent of the 
world's foreign direct invest- 
ment within five years If it 
could successfully reduce its 
internal barriers to trade and 
promote itself more effectively, 
abroad. Russia currently 
accounts for less than X par 
cent of all such investment 
Having just raised expecta- 
tions among western business 
leaders to such a pitch, Rus- 
sia's government would cause 
grave disappointment if it now 
foils to deliver. While in 
Moscow, the western execu- 
tives stressed Russia risked 
being sidelined in a competi- 
tive world for capital if did not 
do more to attract investment 
That would only make the gov- 
ernment’s future economic bat- 
ties that much harder. 


Spring proposed as 
‘rotating’ Irish PM 


By John Murray Brown 
in Dublin 

Ireland’s search for a new 
government took an unex- 
pected turn yesterday with 
Labour proposing Mr Dick 
Spring, the party leader, as a 
possible “rotating” prime min- 
ister in a future coalition. 

Last night a new govern- 
ment composed of Raima Fail, 
the largest party, and Labour 
still seemed the most likely 
outcome, following the collapse 
of the outgoing government 
last week and the resignation 
of Mr Albert Reynolds as prime 
minister over the co n tr ov ersial 
paedophile priest extradition 
case. 

However Labour’s proposal 
announced after a meeting of 
its parliamentary party on 
Tuesday night, is being seen as 
a clear overture to Fine Gael 
the main opposition party - a 
conservative group which has 
been in coalition with Labour 
before. 


With parliament adjourned 
until next Wednesday, Ireland 
is set for a period of intense 
political horse trading 

Fianna Fail's parliamentary 
party was meeting yesterday 
for the first time since the 
appointment of Mr Bertie 
Ahern as new leader. However 
all the attention was on Fine 
Gael and Labour after the 
“rotation" proposal 

Mr Spring is widely seen to 
have been the main beneficiary 
of last week’s crisis with a per- 
sonal rating in weekend polls 

at an all time high of 67 per- 
cent 

Labour yesterday insisted the 
issue would be part of any 
negotiations with either party 
- Fianna Fail or Fine GaeL 

Labour and Fine Gael have 
been to coalition three times 
before, during 1973 and 1987- it 
was a Film Gael-Labour gov- 
ernment which negotiated both 
the Sunningdale agre emen t of 
1972 and the 1985 Anglo-Irish 
agreement 


However relations became 1 
strained after the 1992 general 
election with Labour finally, 
entering government with - 

Fianna Fail. The idea of k 
“rotating” prime minister was 
proposed then by Labour after 
the party's good showing in 
the election — and dismissed 
out of hand by Fine Gael 

Today observers believe Rue 
Gael may prove more recep- 
tive. its leader John Bruton 
has not performed wefl to fie 
pods, although the party has 47 
seats against Labour’s 33. ' . 

Fine Gael’s deputy leader, 
Mrs Nora Owen, refused tu be 
drawn on fie issue saying first 
the party would “put out pro- 
posals on the table when ws 
enter into negotiations.” One 
Fine Gael MP said yesterday 
that “nothing is ruled to arid 
nothing ruled out” A rainbow 
coalition between Fine Gad 
and Labour and one of the two 
!®aller parties is the only way 
Fine Gael wBl be able to form * 
government. 




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FINANCIAL TIMES THURSDAY NOVEMBER 24 1994 ★ 


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EUROPEAN NEWS DIGEST 

EU economy 
to grow 2.6% 

Economic growth in the European Union will rise to an 
average 2.6 per cent this year, accelerating to 2.9 per cent in 
1995 and 3.2 per cent in 1996. according to forecasts published 
yesterday by the European Commission. But the number out 
of work is likely to remain above 17m this year, with the 
average rate of unemployment expected to fall by only l per 
cent to 9JJ per cent in 1996. “This is unacceptably high." said 
Mr Henning Christophersen. the outgoing economics commis- 
sioner. The Commission is pressing for fresh measures at next 
month's European summit in Essen to reduce “structural 
unemployment", including deeper cuts in non-wage costs, 
more vocational education, and a switch in unemployment 
allowances into wage subsidies. 

The solid economic recovery in Europe follows a meagre 0.4 
per cent growth in 1993. As a result, government deficits are 
expected to fall from 5.6 per cent of GDP this year, to 4.7 per 
cent next and 3.9 per cent in 1996. These levels are above the 
Maastricht treaty's targets for monetary union, but the fore- 
casts assume no change in existing policies. Inflation is likely 
to pick up in 1996 but present levels are not dangerous, said 
Mr Christophersen. The worries are rising long-term interest 
rates and a weak dollar undercutting EU exports in world 
markets. Lionel Barber. Brussels 

Optimism on Spanish economy 

Spain has upgraded its growth forecast for this year to about 2 
per cent from 15 per cent. Mr Pedro Solbes, economy and 
finance minister, said yesterday. The recovery follows a 
decline of 1 per cent last year, the worst recession for three 
decades. Mr Solbes told an FT conference the government had 
to aim for rapid enough growth to bring down its “excessively 
damaging” 24 per cent unemployment rate . The outlook was 
for growth of 3 per cent next year and 4 per cent from 1996. 
This could be made compatible with lower inflation and a 
"reasonable equilibrium” in public sector finances and the 
balance of payments. Consumer price inflation was expected 
to come down to around 4.I-4J per cent at the end of the year, 
the lowest annual rate for at least 25 years, Mr Solbes said. 
David White, Madrid 

Action plan for mobile phones 

An action plan urging rapid and widespread liberalisation of 
mobile telecommunications was yesterday sent by the Euro 
pean Commission to the European parliament and the council 
of ministers. After a five-month public consultation with tele- 
phone companies, industry organisations and individuals, the 
Commission has concluded that EU competition rules should 
apply fully to the mobile sector, that a code of conduct should 
be developed for service providers and that the; should be 
granted hill access to the market. The plan also highlights the 
need to promote the availability of frequencies and numbers 
and to promote special programmes that will support emerg- 
ing mobile technologies. Europe's mobile telecoms sector is 
already fairly deregulated with only a handful of member 
states continuing to maintain a monopolistic hold over opera- 
tors. The commission has already taken action against individ- 
ual member states requiring them, under competition rules, to 
license at least a second operator. Italy, Ireland and Belgium 
have not yet complied. The commission is to propose that all 
remaining exclusive and special rights in the mobile sector 
should be abolished soon. Emma Tucker, Brussels 

Row over French media ban 

An amendment to French secrecy laws which would curb 
media coverage of corruption investigations came under fire 
yesterday from French magistrates and the press. The amend- 
ment which was passed through the National Assembly late 
on Tuesday night, proposed a ban on reporting investigations 
until a suspect is brought to trial. It wifi, become law if it is 
approved next month by the Senate, the upper house of the 
French parliament Drafted by Mr Alain Marsaud, a Gaullist 
backbencher, the amendment prompted widespread criticism. 
Le Monde described it as an attack on liberty and said it 
violated freedom of speech. The newspaper questioned 
whether the party funding and corruption scandals which 
have emerged over recent years would have been brought to 
light if the media had not reported the findings of dogged 
magistrates. 

The USM magistrates’ union said the amendment would 
stifle reporting of corruption scandals and that it was a way of 
“putting the lid" on affairs which have shaken the French 
business and political establishment. 

Mr Marsaud said his amendment was designed to protect the 
presumption of innocence, which is “dally flouted”. John Rid- 
ding, Paris 

ECONOMIC WATCH 


German monetary growth slows 

The rate of growth in German 
Germany: Money supply M3 money supply eased more 

than expected last month put- 
ting it nearer the Bundes- 
bank's 1994 target range after 
thsteep rises earlier this year. 
But the improvement is not 
expected to prompt the cen- 
tral bank to lower interest 
rates at today's council meet- 
ing. It said M3 rose at an ann- 
ualised 65 per cent in Octo- 
ber after 7.8 per cent in 
September. But Mr Richard 
Reid. UBS economist, said 
because DM4-3bn went into 
.5 1 1 1 1 i . i .i ■ » i > 1 1 1 " i l l i m - 1 - 1 - 1 I money market funds, now 
1993 94 allowed in Germany, in Octo- 

sovck DHtBtfnam ber, the M3 figure “was not as 

positive as it appeared". Andrew Fisher, Frankfurt 
m Germany’s budget deficit wm be well below target for this 
year and 1995 because of strong economic growth. Mir Theo 
WaigeL finance minister said yesterday. Mr Waigel said the 
federal budget deficit for 1994 would be about DMlObn below 
the forecast DM69.1bn. The 1995 budget deficit will also be 
about DMlObn less than forecast Judy Dempsey, Barm 


Annuafeed rate, « change from 
previous Q4 average 



l-'INANCiAL TIMKS 

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NEWS; EUROPE 

Joker in the pack of Norway’s fishermen 

The country’s seamen are not universally anti-EU, writes Hugh Carnegy in the Lofoten Islands 



The village of Sand in the Lofoten Islands 


When Jens Petter Sollie, a 
young campaigner for Norwe- 
gian membership or the Euro- 
pean Union, yesterday clam- 
bered aboard the MS Joker, a 
trawler tied up in the remote 
fishing port of Svolvaer. he dis- 
creetly slipped off his “Ja” 
lapel badge and braced himself 
for a salty blast of invective 
against Brussels. 

Norway's fishermen have a 
formidable reputation as Lhe 
most implacable opponents of 
the EU in a country famous for 
its deep Euro-scepticism - 
especially in the Lofoten 
Islands, a craggy, snow-blown 
archipelago of jagged moun- 
tains whose Arctic fiords are 
kept open in the long winter by 
the warming currents of Lhe 
Gulf Stream. 

But Mr Sollie. campaign 
organiser for Norway's Euro- 
pean Movement in the county 
of Nordland. was in for a pleas- 
ant surprise. Skipper Arvid 
Sandoe and his four-man crew 
offered a friendly welcome. 
They dropped a few well cho- 
sen insults against Mr Jan 
Henry Olsen, the pro-EU fish- 
eries minister. ("He's only fish- 
ing for votes.” said one). But 
two of the five men admitted 
they would be voting Yes in 
next Monday's referendum on 
EU membership. 

Mr Sandoe said he had 
already cast a No vote through 
a postal ballot but confessed 
he bad been hesitant “I still 
feel a little uncertain about it,” 
he said, offering no objection 


whatever to the decision of his 
son Board, a crew member, to 
vote Yes on the basis that for 
Norway as a whole, member- 
ship was positive. 

The Joker, its home port fur- 
ther south in Trondelag, may 
have been no more than a sea- 
going statistical freak. But. 
taken with outspoken support 
for EU membership expressed 
this week by a group of fish 
fanners and processors, it sug- 
gests that the ranks of Nor- 
way's fishing communities are 
not so rigidly anti-EU as has 
often been portrayed. 

Certainly the vast majority 
of Norway's 25,000 fishing ves- 
sel owners and crew are expec- 
ted by both No and Yes camps 
to vote against membership. 
The fear that Norway's jealous 
husbandry of its fish resources 
may be undone by joining the 
EU's common fisheries policy 
- and its stocks of herring and 
cod plundered by southern 
raiders from Spain and Portu- 
gal - runs deep. 

Their opposition is a key- 
stone of the nationwide No 
campaign, especially in the 
north where opinion against 
the EU is running high. For 
although small in numbers, the 
fishermen have a political 
punch far weightier than their 
numerical strength - as have 
the country's highly-subsi- 
dised. anti-EU farmers. With- 
out strong fishing and farming, 
the popular policy of sustain- 
ing stable population numbers 
in the remote regions could 


begin to unravel. 

The trenchant opposition to 
the EU of Norges Fiskerlag 
(the national fishermen's 
organisation) is therefore of 
strong political significance. 
Mr Olsen's accession deal with 
Brussels on fish gave only mar - 
ginal concessions in Norwe- 
gian waters to foreign fisher- 
men. It confirmed Oslo's 
complete control over its fish 
resources until 1998 - allowing 
Norway to continue tough con- 
servation rules which have 


seen fish stocks and fishing 
quotas in Norwegian waters 
rise significantly. 

But Mr Steinar Jonassen. 
who runs the Nordland branch 
of Norges Fiskerlag, says his 
members are worried about 
what will happen after 1998 - 
and especially after 2002 when 
the EU fisheries policies are up 
for review and Spain and Por- 
tugal are due to be fully inte- 
grated. “Even though the min- 
ister says he has Brussels' 
commitment that the EU will 


base policy on Norwegian prac- 
tices we don't feel we have 
good enough guarantees for 
that.” he says. 

Lately, however, voice has 
been given to concerns in the 
fish farming and processing 
industry that a greater threat 
lies in staying outside the EU. 
A newly formed National 
Organisation of Fish Farmers 
and the Fishing Industry, rep- 
resenting 650 concerns employ- 
ing 11,000 people, declared its 
support for membership this 


week, saying it would be “deci- 
sive for growth in the Norwe- 
gian fishing industry and 
increased activity along the 
Norwegian coast.” 

It argued that the removal of 
EU duties and tariffs on Nor- 
wegian products would give a 
boost to the local processing 
industry, which has, for exam- 
ple, lagged far behind that in 
neighbouring Denmark. The 
□ew organisation said fish 
farmers, who account for less 
than one quarter of Norway’s 
NKriObn (£1.9bn) annual fish 
exports, could double their 
exports to NKr7bn over the 
coming years, but only if they 
had access to EU markets. 

As Mrs Gro Harlem Brund- 
tland, the Prime Minister, mar- 
shals her farces for a last push 
to overturn months of No 
supremacy, she is encouraged 
by such public statements to 
think that in the last few days, 
many Norwegians may finally 
conclude that the potential 
benefits of EU membership 
outweigh some of the more tra- 
ditional fears about joining. 

On Svolvaer's windswept 
quayside, Jens Petter Sollie 
was careful not to deceive him- 
self that his visit on board the 
Joker meant he could win over 
the fishermen. But it did 
encourage him to think that a 
nationwide No on Monday was 
not a foregone conclusion. “If 
we can win a 35 per cent Yes in 
the north, then over the coun- 
try as a whole, it will be a 
Yes,” he said. 


Court orders Tapie to pay $64m to bank 


French 
economy 
catches a 
chill 

By David Buchan In Paris 

French industrial output in 
September fell 0.4 per cent 
below its level in July and 
August level, Insee, the gov- 
ernment statistics agency, 
reported yesterday. 

The Impression that after 
robust recovery in the first 
half of the year, the French 
economy has undergone a 
slight aut umn chill is likely to 
be reinforced later today when 
Insee publishes its estimate of 
gross domestic product in the 
third quarter. 

Mr Edmond Alphandery, the 
economy minister, warned this 
weds that the economy never 
moved in a linear direction 
and that the growth perfor- 
mance could “not be expected 
to be as high as in the first 
halT, when GDP rose 0.7 per 
cent in Jannary-March and by 
1 per cent in April-Jnne. 

However, he said the govern- 
ment was not lowering its 
forecast that the economy 
would grow by more than 2 
per cent this year and by more 
than 3 per cent in 1995. Insee 
economists said that some 
antmnn slowdown was inevita- 
ble given the fact that part of 
the first hairs strong rebound 
was doe to companies restock- 
ing their inventories, which 
had been more or less com- 
pleted. 

The Balladnr government 
yesterday approved a year-end 
correction to its 1994 budget, 
which lopped a fractional 
FFrl62m (£19.3m) off the defi- 
cit bat which in fact showed 
its higher priority of sustain- 
ing economic activity and con- 
sumption in the ran-np to next 
spring’s presidential election. 

Bigger tax receipts from 
higher growth gave Mr Nicolas 
Sarkozy, the budget minister, 
FFr30bn more in revenue than 
he originally anticipated. Bat 
he chose to spend the windfall 
on job, education and social 
security measures rather than 
cut the budget deficit further. 
Bnt over the longer term Mr 
Sarkozy said yesterday that 
whatever government came in 
next year would have to con- 
tinue deficit and debt reduc- 
tion. 


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DENMARK; Financial Tunes I Stand in- 
aviol Ltd, Vimmclskafted 42A. 
DK-II6I CopenhagenK. Telephone 33 
13 44 41. Fax 33 93 53 35. 


By Andrew Jack in Paris 

Mr Bernard Tapie. the 
controversial French politician 
and businessman, yesterday 
lost his fight to keep control of 
some of his most ostentatious 
assets in a long-running legal 
dispute with his principal 
bank. 

A Paris court ordered Mr 
Tapie and his wife to pay 
FFr339m ($64m) to Credit Lyon- 
nais. the heavily loss-making 
state-owned bank because an 


agreement reached with them 
in March was no longer valid. 

The judgment, by Mrs Jac- 
queline Cochard, president of 
the Tribunal de Grande 
Instance, could trigger a rapid 
sale of assets controlled by Mr 
Tapie and pledged as security 
agaiiut a five-year plan to 
repay loans believed to total 
about FFrl^bn. 

The Hotel de Cavoye. his lux- 
urious mansion in the fashion- 
able seventh ammdissement in 
Paris, could be up for sale by 


the middle of December, with 
some valuations putting its 
worth at FFrlOOm-FFrlfiOm. 

His yacht, the Phori-a, which 
is moored in Marseilles, his 
company shares, and his col- 
lection of antiques and paint- 
ings could also be sold. Credit 
Lyonnais said it planned to 
proceed with attempts to real- 
ise the assets as quickly as pos- 
sible. 

However. Mr Tapie has said 
he would appeal against the 
judgment if it went against 


him, as one of a number of 
outstanding legal actions cur- 
rently in train. 

In the run-up to yesterday's 
verdict. Credit Lyonnais had 
areued that Mr Tapie had 
failed to keep his side of the 
accord in March by not produc- 
ing independent valuations of 
his assets to the deadlines pre- 
viously agreed. 

It is likely that his assets are 
less than half his debts to the 
bank. Credit Lyonnais is still 
searching for some of Mr 


Tapie's assets, including 
antiques smuggled out of his 
Paris house over the summer. 

Mr Tapie has instigated a 
series of legal battles which 
will come to court over the 
next few weeks, but which 
Credit Lyonnais described as 
“a strategy to win more time”. 

In his next appearance 
tomorrow, the tribunal de com- 
merce will determine whether 
iiis companies are bankrupt. 


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A world-class player in investment 
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Mike Levett. chairman of Old Mutual, talks to John Spira, Business Editor of a 
leading Johannesburg newspaper. 


Spire: Whnl is tht- current outlook for the South African 
economy? 

Levett: The SA economy was in the doldrums for (he first 
fciv years* ililtis decade. Economic activity declined. invest - 
niL-m in prxxliniivc capacity collapsed and uncnipl»yeniL-ni 
surged. However, over the Iasi year things Maned looking up 
and the economy stepped up J pear. Initially a sharp improve- 
menl in agriculture provided lhe kick start tor the turnaround 
in cconnuiic fortunes. Then, towards the end ■ if lust year the 
political prices* gained considerable nioriienium. culminat- 
ing hi lire hugely sucecssfui election ai lhe end of April this 
year. The smooth political transition provided extra impetus 
to lhe economic, recovery, and presently niusi indicator* sug- 
gest that the economy is running ui a much faster pace aiui 
higher level <•( confidence. Backed up by an improving world 
economy . ihe economic upswing is firmly entrenched and is 
unlikely to he derailed in Ihe near Inline. 

Spira: Can this growth be .sustained over the long term? 

I^ven: Certain adverse development;, such as rhe critically 
low foreign exchange reserves and higher inflation. may slow 
ihe recovery soincwhau hut we do not think lhe recovery is 
in danger of being derailed early. In fact, a temjs trary pause 
in growth in;iy lx- rather welcome U could provide an oppor- 
tunity for ihe tvrlanee of payments ami lores reserves lu 
improve suflicienily in sustain the upswing through next 
year. Wc remain optimistic rhai South Africa is entering a 
long period ol very low levels of dehu and interest payments 
on this Jch only consumes about 7‘»- ol'iis foreign currency 
earnings Somh Alriea also has a sophislii.ilcd business envi- 
ronment Its corjmruic sector is eh.irarirnsed by large well 
organised companies, of which a number .ire world class in 
(In-ir respective industries. 

Spira: With averts oT more than R 128 billion. LMd Mutual 
is .South Africa's largest lire assurer. How Ls it placed to 
ullracl inter rational business? 

I .ovell: t»IU Mutual was esuhlislted in 1X45. During the past 
I4M years, r ild Mutual ha> grown to die largest life assurer in 
Africa, and .■ world player in lemis of international invest- 
ment expertise. Wc have over three million policyhulders and 
lIichi .• • iiiiIhjIiu' >>f our uiiiJer.ianJiiig nf the unique needs 
ol' rhe hie ,is>uriim.v. employee Nmcfils and investment 
requirements in the African and inh.T7v.uiunal markets in 
which we iipcniic. 

l-unlicniiuic. Old Mutual's investment expertise is highly 
regarded locally and there is a rapidly gruwtng awareness of 
our capability, particularly in the Unilcrl Kingdom and 
Europe. In addition to this. Old Mutual's portfolio managers' 
have considerable collective experience of the Southern 
African m vest meni eiivimiiiiteiii. and are supported by one of 
ihe largeM research teams in rhe region. Our internal tonal 
nc'worl als.. gives us a sound understanding of the require- 
ments «tl foreign investors. 

The establishment of the Old Mutual South Africa Trusi 
rUAISA) wav a viviiilieunl -Jep toward aimiejing foreign 
investment. UMSA is aimed at investment in quoted South 
African industrial :tnd financial sucks, with an emphasis on 
medium -.i.’ed enterprises. ( IM5A attracted oxer u5M million 
lor intesliitcill in the Soul It African asset nurkels. We see 
this as |U'| the first of nuny upportumies I'nr encouraging 
international in vestment in Southern African economies. 

Spire: Old Mutual has- a substantial Inlernntional busi- 
ness nperatinn. Whnt is Ihe size und scope of those opera- 
tions? 

Levett: t in I December |9U4. most of Old Mutual's imema- 
I in Hal luhsiji.ii ics will i'urinaily adopt rhe mime of Old 
Miniial. In 1‘wn. Old Mumul acquired die Providence 


Cupitnl Group in the UK. From modest beginnings, the 
Group now manages R1U billion in assets on behalf of ns 
clients. Providence Capitol Life Assurance tPCLAt, 
Providence Capitol Portfolio Managers (FCPMj. Providence 
Capitol Fund Managers (PCFMi and Providence Capitol 
Imcmmiona! tPCIt are wholly owned subsidiaries of Old 
Mutual. These subsidiaries provide life assurance, unit trusts 
and invc.sine.-iit management services to a rapidly growing 
und diverse client base. PCLA und PCFM are both located in 
the United Kingdom ;utd PCI is based in Guernsey. 

In 1993 Old Mutual also established iiself in the Republic of 
Ireland through Old Mutual international tOMIt as a unit- 
linked life assurance company. This was the first time litnl the 
Old Mutual name had been marketed outside of Africa. OMI 
is based in Dublin and provides a range nf investment prod- 
ucts tu meet the needs of invested around the world. 

Spira: What is lhe investment expertise of the Providence 
Capitol inlenulirmal fund management group and what 
is its record of investment performance? 

levett: As an iitiemaiionjl fund management group. 
Providence Capitol has tin enviable trick record. Its group 
weighted performance has been ranked number urte across 
one. two. three, lour and five year periods, measured against 
the top 5t» management groups. The European Portfolio man- 
ager lias been named top I und manager of European portfo- 
lios three times by the Wall Street Journal Europe. 
Furthermore, the specialist skills nf lhe investment team in 
emerging markets, including emerging bond markets such as 
the Far East und Latin America, arc outstanding. However, it 
is not only in speeiahsi areas where Providence Capitol has 
nut performed. The managed tunds run by the group have 
demonstrated excellent performance, both in gixxl market 
conditions and in had. This has led to Ihe group winning 
major industry awards both for Ihe individual funds and fur 
group performance. 

Spira: What Ls the secret behind this success? Is there a 
magic formula? 

Invert: No magic formula unfonunaiely. However. Dr Kevin 
Cuncr. group mvc-iincni director, believes the selection of 
the right individuals to join the leant is of critical importance. 
Ajj exhaustive rccmitmuni procr vs, which includes m -depth 
psychometric testing, ensures that the portfolio managers 
remain un elite leant nl empowered and successful investors, 
who slay with the company. 

Spire: Obviously, this international exposure will be of 
critical importance to Ihe continued success of Old 
MntuuL What presence docs Old Mutual have through- 
out Ihe world and are there plans to increase it? 

Levett: We will continue with our strategy of steadily 
inere.ksmg our exposure, both within Africa and internation- 
ally. At the end or l‘J94. a brunch operation will he estab- 
lished m Hong Kong to market unit linked products through- 
out] (he Far e!p»l This will complement the activities of sub- 
sidiaries already established in Ireland, lhe UK and lhe 
Channel islands. 

Spire: Wbal can Old Mutual offer investors outside 
South Africa? 

Levett: Old Mutual's jniemaiinnal investment expertise is 
nurkeial to inMiiuiional and private clients alike. There is a 
growing awareness of our capability, and in particular, wc 
pride ourselves on the outstanding achievements and invest- 
ment experience we have gained in emerging nuirkeis such as 
the Far East and Latin America And our home ground. South 
Africa, is of course also regarded hy many as an exciting 
emerging market. 



Mike Lewtt 

Generally our produels have broad appeal across the entire 
investment and product range, from savings and investments 
in South African and world -nock markets, to pension plans, 
life assurance contracts and unit trusts. The investments pro- 
vided by the offshore companies offer tniracuve tux benefits. 
However, with bulb UK based and offshore companies, Old 
Mutual is well placed n> lull! I a wide spectrum of differing 
investor requirements - all backed by the some outstanding 
investment ex pert Le. 

Spira-- Old Mutual has achieved re markable internation- 
al investment success. How does Ibis inlernatioiul expo- 
sure benefit South African policyholders? 

Levett: The experience wc have gained from working in 
imcmniiorul markets bus been invaluable in ensuring that wc 
are equipped In deal with the dynamic nature of today's 
investment markets We believe that we will be in (he best 
possible position lo compete and win againsl international 
competition in the markets where wv operate. 

Within the region, our exposure lo international markets 
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OLD 




South African Mutual Life Assurance Society 
Established 1845 

Mutualpark, Jan Smuts Drive. Pindands 74U5 
Box 66, Cape Town 8000 
Telegrams “Mutual" 

Tel: Cape Town 509-9111 
Fax: Cape Town 509-4444 




FINANCIAL TIMES 


THURSDAY NDVEMB^ fo-ffi 4 .- 


NEWS: WORLD TRADE 


Free traders 
jubilant over 
Dole deal 


By Nancy Duraie 
in Washington 

The deal announced yesterday 
by President BUI Clinton and 
Republican leader Robert Dole 
strengthens the chances of pas- 
sage for the Uruguay Round 
world trade pact when it comes 
to a Senate vote next week. 

Although full details of the 
compromise have yet to 
emerge, supporters of the Gatt 
yesterday were jubilant; “I 
think we've just won," said Mr 
Harry Freeman, a free trade 
lobbyist who has been urging 
newspaper editors to endorse 
the Gatt deaL Mr Bill Lane of 
Caterpillar, the US construc- 
tion machinery group, said: “It 
is a great deal for our custom- 
ers and a sad day for our for- 
eign competitors. This is the 
breakthrough we have been 
waiting for" 

Supporters were particularly 
pleased with Senator Dole's 
vow to work for a “big big" 
bipartisan victory in the Sen- 
ate. This may have recovered 
some ground lost by his earlier 
effort to link Gatt passage with 
the Republicans’ long-sought 
cut on capital gains taxes. 

All week lobbyists and mod- 
erate Republicans have been 
grumbling that “he stands for 
nothing" when Mr Dole seemed 
to risk abandoning his long- 
held free trade views to jeop- 
ardise passage of the world's 
largest trade pact for an unre- 
lated issue. In the end he got a 
vague promise from Mr Lloyd 
Bentsen, treasury secretary, to 
work with the Congress on 
capital formation and “to give 
it a serious and careful 
review". “It was never by pur- 
pose to kill the Gatt,” said Mr 
Dole. “I wanted to fix the Gatt 
Maybe I haven't done a perfect 
job but I think. . . we've moved 
it a long way." 

President Clinton said: “An 



Dole: won a vague promise 

understanding has been 
reached with Senator Dole to 
reaffirm our United States sov- 
ereignty and to make sure that 
reaffirmation will be protected 
in the Gatt process." he said. 

The World Trade Organisa- 
tion's (WTO) arbitration of 
trade disputes caused Senator 
Dole and some other members 
of Congress to question 
whether US sovereignty would 
be adequately protected. 

White House officials said Mr 
Clinton had agreed to Mr 
Dole's demand for a special US 
review panel to oversee deci- 
sions of the WTO. This panel 
could trigger a congressional 
vote on US withdrawal from 
Gatt 

However, Mr Ron Brown, the 
commerce secretary, described 
the sovereignty issue as a “red 
herring". 

He said: “There are those 
who want to do damage to the 
agreement who continue to 
raise that issue. It is a non-is- 
sue. There is nothing in the 
Gatt that restricts our ability 
to enforce our own trade 
laws." 


Energy demand soars □ Investors expect 15-22% return □ $1.2bn Guangdong plgjrt 

China likely to approve power deals 


By Tony waiter in Bering China: power sales and generation 


High level meetings in Beijing 
over the next few weeks are 
expected to sanction the first 
of about 50 proposed power sta- 
tion projects worth billions of 
dollars relieving a logjam on 
approvals which has frustrated 
some of the world's largest 
power companies. 

Power industry representa- 
tives will be looking particu- 
larly to an economic "work 
conference" and follow-up 
p lanning sessions for indica- 
tions that argument over rates 
of return payable on equity 
investment in Chinese infra- 
structure has been resolved. 

The Ministry of Electric 
Power Industry declined com- 
ment yesterday on reports that 
China had sanctioned a new 
formula that would satisfy 
investors. Equity participants 
in proposed power projects had 
baulked at a 12-15 per cent 
“cap” on returns on invest- 
ment. 

But a western official in Bei- 
jing, whose responsibilities 
include the power sector, said 
China appeared at last to have 
recognised that if it wanted 
projects to go ahead it would 
have to yield to investor 
demand for more generous 
returns. He said that under a 
proposed new formula returns 
would range between 15-22 per 
cent depending on the effi- 
ciency of new plants. 

Chinese-equipped plants run 
at about GO per cent “availabil- 



Sates fry cu s tomer Generation by fnef igpe 

Agriculture 11. 7% 

Hydro 203%. 


Soiree; Janfrtt Remtnfl Reseercti 


ity". while foreign-supplied 
equipment provided efficiency 
ratios that were close to 90 per 
cent. Higber returns would be 
guaranteed for more efficient 
plants. 

Among international power 
companies involved in negotia- 
tions with Chinese institutions 
are GEC of the UK. and Mis- 
sion Energy, Wing Interna- 
tional. General Electric and 
Entergy Corporation or the US. 

Industry representatives 
regarded as a “promising 
development" the $i.2bn pre- 
liminary agreement announced 
this month for construction of 
twin 660MW coal-fired power 
plants and associated facilities 
in Guangdong province. The 
project brings together 
Entergy, Marubeni of Japan, 
Hong Kong investors and local 


tndugrial 734% Coal 71.6% 


power authorities is Guang- 
dong. 

The representative in Hong 
Kong of a large European 
power utility described the 
Guangdong deal as an indica- 
tion of progress, but he also 
noted detailed discussions had 
not begun on implementation. 
Beijing was also yet to approve 
the agreement 

An official of the Ministry of 
Electric Power confirmed yes- 
terday that the ministry was 
working on its final proposals 
for the ninth five-year plan to 
carry China through to the 
year 2000. These will be pres- 
ented to a national planning 
conference early next month. 

Rapidly rising demand for 
energy, due to China's explo- 
sive economic growth, and an 
increasing shortfall In avail- 



decade to keep pace with cur- 
rent demand. , 

Mr Jiang Sbaqjun, director or 
the General Office of toe Minis- 
try erf Electric Power, estimates 
that China’s “shortfall of 
energy nationwide averages 20 
per cant, with shortages most 
acute in the tost growing 
southern coastal- regions. H® 
said that Chfaa planned to add 
^mother u?,QQCMW of gsnerat- 

u — A — L— TvaAP 9DnTI ti) 


able power have put pressure 
on the government to acceler- 
ate approval of new plants. 

According to a recent report 
by CS First Boston, China's 
“reserve ratio" of available 
power became negative for the 
first tim e in 1991 and the situa- 
tion had continued to worsen 

“The surplus rtf energy has 
seen a precipitous drop 
through the 1980s and into the 
1990s," the report stated. “In 
1981, the surplus was lL8m 
tonnes of SCE (standard coal 
equivalent) or a reserve ratio 
of L9 per cent China has seen 
a rapid and sustained drop in 
its reserve ratio annually since 
1981." The CS First Boston 
report estimated that new 
spending on the power sector 
would “have to exceed" &4bn- 
$i5bn a year for the rest of the 


reach a planning target of 
3DO r OOOMW. He estimated the 
cost of adding U7,000MW at 
YnSTObn (967bn),' somewhat 
less than western estimates. 

Mr Jiang described China's 
ambitions of . reaching its 
power planring targets as a 
“huge task". He also add it 
was wKpntial that China “cut 
down on waste" in the delivery 
flntf ntUiaatinn of power. 

In Hong Kong, Mr Paul 
Schulte, China analyst with CS 
First Boston, said Beijing faced 
a difficult challenge in con- 
vincing equity investors in the 
power sector that their invest- 
ments would be secure and 
reap reasonable returns. 

He described as “stumbling 
blocks" worries, about the arbi- 
trary setting of electricity tar- 
iffs, stability of the currency, 
inflation J and guaranteed rea- 
sonable returns an investment. 
“If these issues are not 
resolved, many of these pro- 
jects involving foreign inves- 
tors will be dead in the water," 
he said. “They are not going to 
have foreign investment" 


DOMESTIC APPLIANCE SALES AND OUTPUT SHOW RAPID GROWTH 


Chinese household and electrical 
appliances are showing rapid growth 
in production, domestic sales and 
exports in 1994, AP-DJ reports from 
Beijing. The China Household 
Electrical Appliances Association 
reported that rising consumer 
confidence had boosted both output 
and sales of refrigerators, washing 
machines and air-conditioners. 

Ms Jiang Feng, the association's 
vice-general secretary, told the China 
Daily newspaper that growing demand 


for smaller electrical appliances, such 
as irons, microwave ovens and electric 
cookers is stimulating producers to 
upgrade their products. 

In foreign markets, nine-month 
exports of Chinese appliances were 
$1.08bn compared with $l-35bn for all 
of 1993, the newspaper said. 
Air-conditioners were the fastest 
growing export item. In the first six 
months of 1994, China exported 156,000 
units, an increase of 90,000 over the 
same period in 1993. 


China has more than 100 
air-conditioner manufacturers, 
including 20 large groups. In the past, 
imports have cut into domestic sales, 
resulting in large stories of unsold 
units, the China Daily said. In 1993, 
China imported more than 100,000 
foreign-made air-conditioners and 
competition from abroad had spurred 
Chinese manufacturers to improve the 
quality of their air-conditioners, 
according to the newspaper. The 
appliance Association predicted that 


Chinese brands would achieve 
dandnmice In the domestic 
air-conditioner market next year, just 
as Chinese freezers, refrigerators and 
washing machines have become 
dandnant in their respective market 
sectors. 

In the first nine months of 1994, 
China produced &&n washing 
machines, a 27 J! per cent increase from 
the same period in 1993. Washing- 
machine output for the fun cu r r e nt 
year is expected to reach 10m units. 


Russian trade turns westward 

John Lloyd on a fall of commerce with other former Soviet states 


R ussia now trades more 
with developed coun- 
tries, especially with 
western Europe, than with 
other former Soviet states - a 
dramatic change in trading 
patterns over the past three 
years. 

The first figures showing 
trade with developed countries 
and the other members of the 
Commonwealth of Independent 
States (CIS) were released yes- 
terday at a conference of 
senior Russian, and European 
Union officials and ambassa- 
dors. 

The data show that, in the 
first two quarters of this year, 
Russia's trade volume with the 
members of the European 
Union, stood at $16.8bn ($99bn 
exports and $&9bn imports) - 
37 pcs* cent of its total trade. 

This compares with $ML8bn 
trade turnover with the other 
CIS member states ($6.2bn 
exports and $49bn imports) - 
24 per cent of its totel trade. 
Trade with the former partners 
in Comecon, the trading bloc 
which used to unite the social- 
ist countries, has fallen even 
Taster, central and eastern 
European countries had a 
trade turnover of only 35.7hn 
with Russia in the first half of 
this year ($3.7bn Russian 
exports and $2bn imports). 

By far the largest part or 
Russian exports to these and 
other countries is raw materi- 
als, especially energy. 

Russia has cut back on 
energy supplies to the CIS 
states, preferring the greater 
ability to pay and the higher 
prices paid by states outside of 
the former Soviet Union - a 
policy which the government 
has said will continue this year 
and which is likely to cause 
problems to the weakerCIS 
members. 

Germany is by for the most 
important trading partner for 
Russia within the EU - and in 
the world. Bonn’s 1993 trade 
turnover with Russia stood at 
$5JBbm compared with China's 
$4.02bn. Mr Reiner Hartmann, 
the Moscow representative of 
Ruhrgas - the biggest foreign 


Russian foreign trade 


4ao-Jun1994 



96 

60 


MnnMhed Dmetopfrio' eaaflHn . Otoor, 

. count! wa . countries -europcum Comecon*. 

V ‘ <w»*He» ' ... _ 


40 — 


Percentage change 

(On first quarter 1993) 
Total 

Exports f 



Source: MMstry erf Foreign Ec o nomic HstaBona 


-CMna. North Korn, i 
fexmor Yugoslavia 


customer for Russian natural 
gas - said that Germany takes 
30 per cent of its gas and 12 per 
cent of its crude oil from Rus- 
sia. 

“Without any doubt Russia's 
market today and tomorrow is 
in western Europe - and for 
the European Union, Russia is 
the most significant trading 
partner on the continent" 

Russia is the fifth largest 
trading partner for the EU 
after the US. Switzerland, 
Japan and China. A back- 
ground paper produced for the 
conference says that there is 
“enormous potential” for a 
growth in trade. 

“In the long run one might 
expect these trade flows to con- 
verge on something closer to 
the scale of the ElTs trade with 
the US, currently seven times 

greater. While it will take 
many years far such economic 
structures to develop, the geo- 


graphical proximity of Russia 
and the EU will facilitate a 
great trade expansion," the 
paper said. 

Russia has progressively lib- 
eralised trade policies over the 
past three years - though it 
re-imposed some tariffs earlier 
this year. The government, 
however, faces calls for more 
protectionist measures in the 
face of continuing decline in 
Russian industrial production. 
The structure of Russian 
imports has switched mas- 
sively from capital goods and 
equipment to consumer goods, 
especially food. 

T he Agreement on Part- 
nership and Co-opera- 
tion, signed by Presi- 
dent Boris Yeltsin and EU 
leaders in Corfu in June, estab- 
lished a legal framework for 
trade in goods and services and 
for the operation of foreign 


investments. The agreement is 
designed to evolve until 1998. 
when a review of its operation 
will be held to determine 
whether or not a free 
trade regime can be estab- 
lished between the EU and 
Russia. 

EU states also play a domi- 
nant role in the formation of 
joint ventures - with over 90 
per cent of total ventures being 
between a company from one 
of the EU states and a Russian 
enterprise. 

However, the expansion is 
not without attendant prob- 
lems. Mr Sergei Krylov, Rus- 
sian deputy foreign minister, 
said EU states still practised 
substantial discrimination 
against Russian goods. “We 
want no particular advan- 
tages" he said, “we want only 
agreed entrance to the Euro- 
pean market" 

Mr Oleg Bogomolov, a for- 
mer official dealing with Com- 
econ relations and now a lead- 
ing deputy, said that “the 
breaking of the links with our 
former partners has been pain- 
ful for them and us - and our 
trade with western Europe 
should not be to the detriment 
of trade with the CIS". 

Mr Georgy Gabunia, deputy 
trade minister, and Russia's 
chief negotiator of the agree- 
ment between the EU and Rus- 
sia on partnership and 
co-operation signed in June, 
said that when Austria, Fin- 
land. Norway and Sweden join 
the EU “it will affect us 
adversely because we have 
freer trading arrangements 
with them than with the 
EU". 

And Mr Sergei Baburin, a 
leading nationalist deputy of 
the state duma (lower house) 
told the conference that “the 
influence of western Europe on 
Russia means an increase in 
pro-communist and nationalist 

sentiment here the western 

European view of Russia as a 
source of crime, of drugs, of 
prostitution is a result of these 
policies which the western 
states have urged upon us". 


Japanese spinners want 
cheap imports squeezed 


By Midtiyo Nakatnoto in Tokyo 

Japan's textiles industry is to 
ask the government for protec- 
tion under the Multi-Fibre 
Arrangement (MFA) to stem a 
surge of cheap imports from 
C hina and otter Asian coun- 
tries. 

Tire Japan Spinners’ Associa- 
tion said it was hoping to file 
an application requesting the 
Japanese government to 
restrict imports of low-priced 
cotton yarn. The Japan Chemi- 
cal Fibres Association is also 
considering an application. 

The moves follow an 
armnnnpgmiint by the Ministry 
of international Trade and 
Industry that it established 
rules for imposing emergency 
restrictions on textile imports 
under the MFA The rules, 
which would apply for three 
years, call for year-long inves- 
tigations and bilateral negotia- 
tions before the imposition of 
restrictions. They are designed 
to give the domestic industry 
time to allow it to carry out 
structural reforms, Afiti said. 


Mr Ryutaro Hashlmoto. 
trade minister, yesterday 
stressed the international 
acceptance of the new rules: 
both the US and the European 
Union had introduced restric- 
tions on textiles imports under 
the MFA 

Japan’s textile industry has 
come under growing pressure 
from cheap Imports, notably in 
the past two years with the 
yen’s appreciation. Textile 
imports rose 13 per cent to 
Yl.511.5bn ($l5.34bn) in the 
first nine months of this year 
compared with the same period 
in 1993, according to the Japa- 
nese government 

The industry, which was 
profitable until 1986, suffered a 
$10bn loss last year, expected 
to rise to |14bn- this year, 
according to the Japan Chemi- 
cal Fibres Association. 

In the first half of 1994, 
imports of cotton yam and cot- 
ton fabrics reached a peak 
according to the Japan Spin- 
ners' Association. The number 
of companies in the cotton 
spinning industry fofl by about 


10 pm- cent last year from 162 
to 145, the association noted. « 

The trade ministry has, how- 
ever, been, cautious in its 
approach to restricting textile 
imports. : 

Japanese retailers have bene- 
fited from being able to import 
directly from low-cost textile 
manufacturers in China and 
elsewhere. Consumers have 
also enjoyed lower prices 
offered by retailers as a result 
of cheaper imports. 

The ministry is aware of the 
technical difficulty In proving 
that imports have damaged 
domestic industry. 

There are also the political 
considerations regarding a 
derision which could alienate 
consumers as well as the devel- 
oping countries which may be 
hurt by restrictions, one indus- 
try official noted. 

The government would also 
be reluctant to risk being 
exposed to criticism that it is 
going against the tide of free 
trade which it has so fervently 
advocated in its trade negotia- 
tions with the US. 


co ntracts and ventures 

Charter 

airline 

orders 



Britannia Airways, tte wodd’s 
largest charter airline* yesfor- 
day announced / orders ' and 
options worth $80Qm for eight 
Boeing 767-300 afrcrafLTte Stir- 
ling. part of tteOTsThomam 
Travel Group', has ordered four 
aircraft, to be delivered in the 
spring <rf 1996, and taken an 
option on- -a further four - 
scheduled to arrive at tte rate 
of one a'year to" the year 2000. 

the acquisition of tte 787- 
300s continues a rolling pro- 


announced last year. The new 
aircraft will replace, existing 
757s and 767-aQQs, said Britan- 
nia, and will be powered by 
General Electric engines- The 
present fleet comprises 13 Boe- 
ing 757s and nine 767-200S with 
an average age of three years. 

The first four new alrcrafi 
will be used infouoily on long- 
baul flights to Australia, New 
Zealand, Africa, the US and 
India, and wHL be configured 
with 328 seats for long-haul 
operations. Mr Roger Burnell. 
Britannia's managing director, 
said aircraft such as the 767-300 
would finable Brittania to con- 
tinue to offer .low cost air 
travel, particularly on long- 
haul routes. . . 

The -aircraft will be financed 
through a mixture of leasing 
and acquisition, hiit Britannia 
said the “fine tuning” had yet 
to be worked out Andrea Bax- 
ter, London ' ~ . ' 

■ The contract to built one of 
the biggest infras t ructure pro- 
jects in the. Irish Republic, a 
£67m ($43m) road tunnel under 
the River Lee at Cork,, has 
been awarded, to a joint ven- 
ture between Tarmac, the UK 
construction .group, and Irish 
contractors P J. Walls of Dub- 
lin. Construction of the 

imiwgn s frrt faih u fanna^ made Of 

precast concrete .boxes, each 
weighing upto 30,000 tonnes, is 
due to start early next year 
and will take 3% years to com- 
plete. Mr Brian Pellard, manag- 
ing director of Tarmac Con- 
struction, said the British 
group also was "making a 
strong bid" to bpild the titmuil 
section, of the proposed bridge 
and tunnel fink between Den- 
mark apd Sweden across the 
Oresund Strait.' Andrea . Tay- 
lor, ConstructionCQrre^xmdent 

■ UK construction group 

John Laing ^partnership with 
Hip King of Hong Kong has 
won a £23.4m contract to build 
the new British in 

Hong Kong. The offices will be 
need by the British Trade. Com- 
mission, the British Council 
and by British representatives 
on the Sino-British Joint liai- 
son group as for' consular, 
immigration and passport ser- 
vices. The building' will be situ- 
ated on the former Colvin 
House rite in Supreme Count 
Road. Construction is due to be 
completed by spring 1996. 
Andrea Taylor 

Repap Enterprises, the 
North American forest prod- 
ucts group, has signed a 
CjnOQm ($73m) three-year year 
pulp supply contract with 
China. Repap is also selling its 
lightweight coated papers 
through its new Beijing sates 
office and plans “an operating 
presence” in China. Bob 
Gibbem, Montreal 


Gatt members near-unanimous in rejecting Boutros Ghali snhs mp. 


New trade group shuns UN links 


By Frances WSHams In Geneva 

The preparatory committee of 
the future World Trade Organi- 
sation has rejected any formal 
links with the United Nations, 
decisively rebuffing a cam- 
paign by Mr Boutros Boutros 
Ghali, the UN secretary- 
general. to bring the WTO 
within the UN system. 

Mr K Kesavapany, Singa- 
pore’s ambassador to the Gen- 
eral Agreement on Tariffs and 
Trade and chairman for insti- 
tutional matters, yesterday 
said that Gatt members had 
found no grounds for “any for- 
mal institutional arrangement" 
between the WTO and the UN. 

Mr Boutros Ghali has been 


lobbying hard in New York for 
the WTO to become a speci- 
alised UN agency or. foiling 
that, to have the same kind of 
looser UN attachment enjoyed 
by the World Bank and the 
International Monetary Fund. 
However, the idea has met 
with virtually unanimous 
opposition among Gatt mem- 
bers in Geneva, including the 
Quad group or leading traders, 
the US, the European Union, 
Japan and Canada. Developing 
countries are equally unenthu- 
siastic, with the exception of 
Egypt, Mr Boutros Ghali's 
home country. 

The WTO, due to take over 
from Gatt on January, l, will 
have to cooperate on various 


aspects of trade policy with a 
number of international organ- 
isations, including the World 
Bank, the IMF and the World 
Intellectual Property Organisa- 
tion, a UN specialised agency. 

However, Mr Kesavapany 
said that, with one exception, 
pragmatic ties between the 
WTO and the various intergov- 
ernmental bodies could be 
established by the WTO’s gov- 
erning council The exception 
relates to co-ordination with 
the IMF over balance of pay- 
ments Issues. 

Officially, Gatt members 
take the view that as contrac- 
tual agreements, Gatt and the 
WTO are legally incompatible 
with the UN structure because 


their roles must be negi 
not imposed by a 1 
authority. Unofficially, 
diplomats are anxious ti 
the WTO well away fro 
political and bureau 
clutches of the UN. Gab 
a relatively small staff of 
450, is generally conside 
be among the most effid 
the international organic 
in Geneva, partly beca 
has managed to .avoi 
destructive politicisation 
rienced by much of the U 
tem. Gatfs relations wi 
UN are governed by ah 
meat of August 1952 co 

ad hoc cooperation 
approach likely to be < 
tied by the WTO. 


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financiai-tmes thurspaVkovember 24 


NEWS: AMERICAS 


Proposition 1 87 violates human rights, says Mexican po liticja g 

Zedillo assails US measure 


By Juft* Martin in Washington 

Mr Ernesto Zedillo, Mexico's 
president-elect, was ready to 
tell President Bill Clinton yes- 
terday that he viewed anti- 
immigrant initiatives like that 
approved in California this 
month as “a violation of basic 
human rights". 

In a breakfast session with 
reporters prior to a White 
House lunch, Mr Zedillo said 
he would insist that cross-bor- 
der issues like illegal immigra- 
tion be dealt with bilaterally 
and not left to unilateral state 
action. 

He pointed out that Mexican 
laws already guaranteed the 
access to education and health- 
care for all, regardless of 


nationality, that California's 
Proposition 187 would deny to 
undocumented aliens. He 
hoped the US would engage in 
an “extensive" public debate 
which would end up by 
reflecting the "traditional 
American values" which had 
always welcomed immigrants. 

Unlike the outgoing Mexican 
government, Mr Zedillo made 
no explicit link between illegal 
immigration and a deepening 
of the North American Free 
Trade Agreement, approved 12 
months ago. 

He argued that Nafta should 
contribute to the sort of eco- 
nomic development which 
would lessen the pressures on 
Mexicans to seek employment 
in the US. The pact has already 


resulted In a 20 per cent 
growth in bilateral trade, turn- 
ing Mexico into the fastest 
growing market for US exports. 
He also foresaw a wider hemi- 
spheric free trade area in the 
foreseeable fixture, starting 
with Chile. 

Mr Zedillo said he recognised 
with gratitude the position 
that Mr Clinton and his admin- 
istration had taken against 
Proposition 187, the implemen- 
tation of which, due next year, 
is already under challenge in 
state and federal courts. 

However, anti-immigrant 
sentiment has been fuelled by 
the California referendum and 
now threatens the social bene- 
fits of those foreigners legally 
resident in the US. 


One version of the draft wel- 

fere reform Mil being consul 
ered by the new Republican 
majority in the House contains 
such a threat, with , a few 
exemptions for the elderly. 

• Tins bill would also require 
that welfare agencies report to 
the federal government any 
case in which a recipient is 
suspected of being an illegal 
immig rant, as Proposition 187 
does for doctors and teachers. 

This week two former Repub- 
lican cabinet members, Mr 
Jack Kemp and Mr William 
Bennett, again voiced their 
misg ivings about immigration 
controls. Mr Kemp, former 
housing secretary and a poten- 
tial presidential candidate, 
warned that the Republicans 


risked turning themselves 
“inwards to aparotediMnstand 
isolationist add moire xenopho- 
bic party", contrary to its ir* 
ditions. 

But their arguments have 
already been directly criticised 
in the National Review, the 
magazine for conservative 
thinker*. 

One article in its latest .edi- 
tion, headlined “America’s 
identity crisis," claims' that all 
immigration, legal and illegal, 
“strengthens and reinforces 
ethnic subcultures”, produces 
minimal economic benefit and 
is directly responsible for what 
the author condemns as the 
flowering of midticulttffaftsm 
and the -gtowth of the welfore 
state. _ 


Metropolitan Phoenix rises as 
construction industry hots up 

Building employment is booming, writes George Graham from 
Arizona, but competitive market is helping restrain pay inflation 


I n a construct! on -driven 
economy like the Phoenix 
metropolitan area, where 
building accounts for 30 per 
cent of ail new job creation, 
you can see the signs of expan- 
sion all around you: in the red- 
tiled homes sprouting among 
newly-planted palm trees and 
saguaro cacti In the north val- 
ley and the shiny office build- 
ings and shopping centres 
downtown. 

Other sectors are prospering, 
too. Intel is putting- up a $lJbn 
microchip plant in the 
southern suburb of Chandler, 
and surging copper prices have 
brought good times again to 
Arizona's old-established min- 
ing industry. 

Employment in the state is 
projected to climb by 5 per cent 
this year, with much of the 
growth in the Phoenix metro- 
politan area, and construction 
employment has been expand- 
ing at an annual pace above 15 
per cent 

"The Greater Phoenix econ- 
omy is booming, and signs 
point to continued prosperity 
aver the next several years." 
proclaims the Greater Phoenix 
Economic Council, a public 
and private sector partnership 
which boosts development in 
the metropolitan area. 

As the Federal Reserve seeks 
to cool down a national econ- 
omy where employment Is 
growing only half as quickly, 
hot spots like Phoenix are the 
sort of area where the infla- 
tionary pressures the Fed fears 
might be expected to be show- 
ing up already. 

But local economists say 
that even the most rapidly 
growing sector of the local 
economy - construction - is 
not showing the kind of wage 
inflation that might be expec- 
ted. 

“There is definitely a lot of 
pressure on wages but I don't 
believe that it Is being trans- 
lated into higher wage levels. 
It’s a sufficiently competitive 
housing market that you 
couldn't simply raise wages, or 
you'd be priced out of it,” says 
Mr Dan Anderson of Arizona's 
Department of Economic Secu- 
rity. 

Home prices in Phoenix have 
risen by 3 j per cent over the 
past year to an average of 
$91,100, but remain well below 
those in nearby cities such as 
Albuquerque or Las Vegas, and 
less than half the average of 
Los Angeles or San Francisco. 

Bottlenecks are emerging, 
however, particularly for con- 
struction skills such as fram- 
ing carpenters. “When you see 
hand-painted signs on building 
lots saying 'Framers wanted - 
apply on site' you know there 





are skill shortages," says Mr 
Bill Stephenson, director of 
economic development with 
Arizona Public Service, the 
largest local utility. 

Skilled framers are more 
likely to look for work in 
neighbouring Nevada - also 
experiencing strong construc- 
tion activity - or in southern 
California, where demand for 
construction labour has been 
heavy this year as the Los 
Angeles area seeks to rebuild 
after January's earthquake. 

“The wages California pays 
are clearly higher than wages 
offered here. We simply could 


not compete with them,” says 
Mr Anderson. 

“Basically, the building com- 
panies have hired all the really 
skilled people they can and 
they are now down to hiring 
people who are really learning 
on the job, and those people 
are not paid that much,” says 
Mr Tracy Clark of the Eco- 
nomic Outlook Centre at Ari- 
zona State University in 
Tempe, a southeastern suburb 
of Phoenix. 

Instead of raising wages or 
prices, builders are simply 
stretching out their construc- 
tion tunes. 


Brazil refineries hit by 
oil workers’ stoppage 


By Angus Foster in Sao Paulo 

Brazil's oil workers went on 
strike yesterday over a long- 
running wage claim which the 
accident-prone government of 
outgoing President Itamar 
Franco seems increasingly 
incapable of solving. 

Most of the country's 10 
main refineries, including the 
three biggest, were reported to 
be affected by the stoppage 
which union officials said 
would be stepped up over the 
coming days. With diesel and 
some household fuel stocks 
low because of recent heavy 
demand, Brazil could face 
shortages of these products if 
the strikes last more than a 
tew weeks. 

The oil workers first went on 
strike for a week at the end of 
September over a 108 per cent 
pay claim and other demands. 
Mr Franco intervened and 


agreed to most of the workm' 
claims without consulting 
their employer, the state- 
owned oil monopoly Petrobrfis. 

The president's accord would 
have cost Petrobras more than 
$400 tn, which the company 
says it cannot afford, and could 
have prompted high wage 
claims throughout the public 
sector and undermined Brazil's 
new currency, the Real. When 
the high cost or his accord was 
explained to the president, he 
cancelled it 

However, initial approval by 
the president and the energy 
ministry has considerably 
strengthened the resolve of the 
workforce. They say they will 
not accept anything but rein- 
statement of the original 
accord and have rejected a 
labour tribunal ruling that 
they should only receive a 13 
per cent rise. 

• Brazil's inflation rate, as 


measured by the government’s 
main IPC-r index, jumped to 
3.27 per cent in the month to 
mid-November, against only 
136 per cent in the previous 
four-week period. 

The increase, which is 
higher than expected, will add 
to the government's problems. 
According to law, salaries have 
to be increased in line with the 
index, which has now risen 
nearly 20 per cent since the 
Real currency was launched in 
July. 

• .Brazil's president-elect, Mr 
Fernando Henrique Cardoso, 
has accepted an invitation 
fiom President Bill Clinton to 
attend the Miami summit of 
American states next month. 
Mr Cardoso will travel with 
outgoing President Ramar 
Franco mid Is expected to meet 
Mr Clinton privately during 
the visit. 




AMZ0HA , 

Phoenix 

* Atjuquerqu^f 

Mgs. MQ l 

Km 800 % 


Construction activity has been centred on single family homes, 
with building closely tied to real demand. But, as this subsides, 
apartment construction may start to pick up the slack, 


Local economists say growth is 
built on much more solid 
foundations than was the 
mid-1980s construction boom 


“Where they might have 
been able to complete a house 
in 90 day* we are now. seeing 
120 or 150 days,” flays Mr 
Anderson. 

In other segments of the 
labour market, however, Ari- 
zona stffl. has a degree of alack. 

“We’ve got tool and die mak- 
ers selling hardware at the 
department store, waiting for 
the right job to come along,” 
says Mr Stephenson of Arizona 
Public Service. 

Local economists say growth 
this time around is built on 
much more solid foundations 
. than the o»structi(m ; bbcim eff 
the mM4980s,. Ulrich - hurst - 
spectacularly when the tax 
breaks which had prompted it 
were repealed. 

This year, construction activ- 
ity has been centred on single 
family homes, with building 
closely tied to real demand. 
The boom to this sector is now 
slowing down, as pent-up 
demand from the recession has 
now largely been satisfied, and 
is expected to glide down to a 
pace tied to the state's popula- 
tion growth, forecast at around 
2J6 pm- cent a year. Apartment 
construction may now start to 
pick up the slack, but the 
budding industry is not expec- 
ted to have all cylinders firing 
at once. 

Still, there is one sign of 
speculative overheating that 
the Fed might want to keep an 
eye on. The Arizona Cardinals 
American football team plays 
in a first rate stadium deemed 
good enough to host the Super- 
bowl national football champi- 
onship game to 1396, but Mr 
BUI BidwQl, the team owner, is 
already talking about building 
a new stadium. 

Cynical Phoenix sports tens 
suggest that Mr Bid will might 
want to build a winning team 
before he starts thinking about 
a new stadium. 


Orders for 
durable 
goods fall 
in value 


Sharply lower orders for new 
cars and aircraft pulled down 
the value : o£ US durable, goods, 
orders to October, the Com- 
merce Department said yester- 
day, Reuter reports from New 
York and Washington. 

Orders fidl L5 per cent to a 
seasonally adjusted :$1523bn 
(£97.3bu)aftera revised .3 per 
emit rise to September. Wan 
Jareet economists had forecast 
a 0.4 per cent gain to October 
orders. 

• It was the first decline to 
durable goods orders to three 
months. The fall was caused 
entirely by a sharp decline to 
transport goods orders, which 
plunged 9 A per cent to a sea- 
sonally adjusted 335.21m. 
Excluding transport, durable 
goods orders rose LI per cent 
after a 0.4 per cent September 
increase. 

Analysts said the foil in 
could signal eariy. signs of 
fatigue to the US manufactur- 
ing sector. This is a warning 
sign for smokestack America," 
said Mr Stephen Roach, econo- 
mist at Morgan Stanley. “It 
certainly does hot suggest the 

econpmy is rowering ahead on 

an i - : V -- 

Some areas of the report dfc 
played surprising weaknesa, 
said Mr Roach, particularly 
non-defence capital' goods 
orders, winch foil 23 per cent 
after a 33 per cent rise to Sep- 
tember. “This suggests the cap- 
ital goods rate of growth wffl 
probably moderate from the 
vigorous gains we had earixer 
this year,’ 1 he said. 

However, others expressed 
caution in interpreting the fig- 
ures. Tm surprised by the 
marked weakness in transpor- 
tation orders, but I hesitate to 
read too much into It,” said Ms 
Carol Stone, economist at 
Nomura Securities Interna- 
tional She pointed to other 
sectors, such as industrial 
machinery, which continued to 
advance at a brisk pace. 

Officials said the value of 
durable goods orders excluding 
transport was a record 
3U7.6bn. 

Defence orders fell to Octo- 
ber by 163 per cent after ristog- 
11.6 per cent to September. 
Electronic and electrical goods 
orders rose 0.5 per cent after a 
43 per cent September gain. 
Shipments of durable goods 
were down L2 per cent to Octo- 
ber after a drop of 03 per cent 
the month before. 


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FINANCIAL TIMES THURSDAY NOVEMBER 24 1994 


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NEWS: INTERNATIONAL 


Saudis flock to private sector 

Growing number leaving traditional careers, reports Mark Nicholson 


Saudi Arabia, short of the necessary manpower for its ambitious 
defence programme, is considering the introduction of 
compulsory military service, diplomats in the kingdom said 
yesterday. Reuter reports from Dubai. 

They said the proposal has come in a draft or the country's 
new five-year development plan due to come into effect in 
January and which has yet to be approved by King Fahd. 

Compulsory military service is among necessary conditions to 
“develop Saudi society, enhance the country’s defence 
capabilities and deepen citizens' loyalty and sense of belonging,” 
they quoted the draft as saying. 

Saudi Arabia, with a population of 17m, of whom 4m are 
foreigners, has embarked on a SlObn programme to beef up its 
defences by the end of the century. 

Deep doubts about Iraq’s intentions despite its defeat after the 
1930 invasion of Kuwait and suspicions of the radical Islamic 
rulers of non-Arab Iran across the Golf are among reasons given 
by diplomats for tbe Saudi arms buildup. 

But military experts have in the past wondered if the country 
had manpower to handle the sophisticated arms it is importing. 

The London-based Internationa] Institute for Strategic Studies 
put Saudi Arabia's active armed forces at 158,000 men, both in 
the regular army and the royal-led National Guard. 

A 1992 census put the number or Sandi males in the 13-17 
age-group, likely candidates for compulsory military service 
over the next five years, at 556^00. 



King Fahd, Saudi mien re-emphasised determination to see a 
rise In Sandi employment in the private sector 


M r Yousef Salman, 
Saudi plant manager 
at the Zoujaj bottling 
factory outside Riyadh, cuts a 
distinctive profile behind his 
desk. 

He sports a polo shirt and 
khaki jeans, rather than the 
otherwise universal Saudi uni- 
form of white chobe (robe) and 
ghuttra (headdress). “Because 
at my dress people don't think 
Tm a Saudi," he says. “People 
address me in Urdu or Hindi." 

Urdu or Hindi, bemuse the 
more usual denizens of the fac- 
tories of Saudi Arabia’s fast- 
growing light industrial sector 
are Indians, Pakistanis, or per- 
haps Bangladeshis and Filipi- 
nos. Until lately, Saudi citizens 
have been a rare sight on the 
shop floor. 

Cheap, contracted labour 
from the sub-continent and 
East Asia still overwhelmingly 
predominates in the dozens of 
furniture, cable, glass, electri- 
cal and other factories in 
Riyadh's industrial zones. 

But Mr Salman is among a 
growing number of Saudis 
departing from the traditional 
career path of most of their 
countrymen - a secure job 
with the government - for the 
higher-pressure work of the 
private sector. 

Zoujaj. which produces 
700,000 bottles a day for clients 
including Coca Cola and Pepsi, 
counts 37 Saudis on its 244- 
strong payroll 
Across the road at the Saudi 
Lighting Company, a Cast-grow- 
ing light fittings group, 50 Sau- 
dis are on the 600-strong staff 
and. says Mr Mohammed Mus- 
tafa, finance director. “They’re 
picking up. We are now getting 
Saudis knocking at our door 
lor jobs: once you had to go 
and look for them.” 

Bankers and hoteliers say 
there has been a dear rise over 
the past three years in the 
n umb er of Saudis willing to 
accept private-sector jobs at 
rates of pay they would pre- 
viously have spurned. 

“We have little trouble these 
days finding Saudis for some 
jobs at about Saudi Riyals 3,500 
($921) a month,” one Riyadh 
banker says. 

Accurate labour statistics 
are not published in Saudi 
Arabia. But it is a fair estimate 
that more thaw 90 per cent of 


Saudis either work directly for 
the government or for parasta- 
tal groups, a proportion repli- 
cated in most other GulT states. 

Hours tend to be undemand- 
ing. working conditions com- 
fortable. salaries start at about 
SR5.000 a month for a graduate 
entrant: government jobs offer 
virtual tenure. 

However, with the govern- 
ment in the clutches of a two- 
year-old cash flow problem and 
ministries this year cutting 
budgets by 19 per cent, state 
bodies have imposed an infor- 
mal hiring freeze. 

Most bureaucracies were 
overstaffed in any case, accord- 
ing to local economists. 

At the same time, the Saudi 
private sector has continued 
growing over the past two 
years, bolstered by an array of 
state incentives, including 
cheap permits on industrial 
zones and concessionary lend- 
ing from organisations such as 
the Saudi Industrial Develop- 
ment Fund. 

According to tbe commerce 
ministry, tbe number of 
licences for private concerns 
rose 28 per cent between 1991 
and 1993, to a total of 423,800. 
More private companies are 
producing more job opportuni- 
ties for young Saadis. 

The population is growing at 
about 3.7 per cent a year, pour- 
ing 90,000-100,000 prospective 


workers onto the job market 
annually - numbers tbe 
bloated state bureaucracy can- 
not swallow. 

Such market pressure is forc- 
ing young Saudis to consider 
working in the private sector, 
although such movement is a 
growing trend rather than a 
tidal wave at present. 

But there have been recent 
signals from the government 
that it might be preparing to 
give this trend a bigger push. 

The government has for 
years tried to encourage Saudis 
to join the private sector, the 
present five-year plan, penned 
in 1990, said it expected 96 per 
cent of new jobs in the king- 
dom to come from private 
enterprise, and state plans 
since 1970 have consistently 
advocated "Saudi-isation” of 
the private sector. 

However, while Saudi labour 
law formally decrees that 75 
per cent of all companies' 
workforces should be Saudi. 
Mr Hussein Sijini, deputy min- 
ister of planning, says the gov- 
ernment has never enforced 
this for fear of impeding the 
private-sector growth which it 
sees as vital to the kingdom’s 
policy of diversification away 
from oiL 

Saudi workers are expensive. 
Where a young Saudi techni- 
cian might come at SR3.500 a 
month, Indians or Filipinos are 


usually paid SRl.400 a month, 
plus a package or board and 
lodging. 

However, King Fahd, the 
Saudi ruler, has recently reem- 
phasised the government's 
determination to see a rise in 
Saudi employment in the pri- 
vate sector. 

A recent visit to Riyadh by a 
team from the UK Inland Reve- 
nue has prompted local bank- 
ers and businessmen to wonder 
if the government is consider- 
ing fiscal incentives to compa- 
nies which hire Saudi workers. 

Such measures may be con- 
tained in the forthcoming Jan- 
uary l budget 

Hpwever, for some Saudis, 
such incentives are unneces- 
sary. “A lot of us just had 
enough of the government sys- 
tem,” says Mr Omar al-Shu- 
waier. who left a government 
department two years ago to 
form and manage Rowad 
National Plastic, Saudi 


Arabia's first plastic sheeting 
company. 

“We don’t want to work for 
the government system with 
its routines, or for the old-style 
private companies where it's 
all on a personal basis: if the 
owners don't like you, they 
kick yon out.” 

Instead. Mr al-Shuwaier says, 
he and some Saudi colleagues 
prefer the more ordered and 
formal board of directors and 
western-style management 
structure. 

"I see more people like me in 
industry,” he adds. 

“Our financial and adminis- 
trative manager used to work 
with the government, but since 
he's been with us, he no longer 
has the time to drink tea and 
read the newspapers. 

“The challenge he has is 
new, the experience - it's 
huge. We’re not the highest 
paid here, but there’s a system 
here - a more reliable system." 


Jakarta 
to try 
30 East 
Timorese 

Indonesia will prosecute 30 
East Timorese for alleged 
Involvement in riots and pro- 
independence protests that 
swept the troubled territory 
last week, it said yesterday, 
Reuter reports from Dili. 

President Suharto said all 
East Timorese were welcome 
to leave for the territory's for- 
mer colonial ruler Portugal, 
including 29 youths staging a 
protest inside the US embassy 
compound in Jakarta. 

The 29 East Timorese stu- 
dents who invaded the US 
embassy prepared to leave for 
Portugal yesterday, saying 
they feared for their safety If 
they remained hi Indonesia. 

Indonesia’s hopes of present- 
ing an open image during this 
month's meeting of regional 
leaders in Jakarta were dashed 
by the US embassy sit-in and 
Dili protests, captured on film 
by the world's media. “We 
have arrested 30 men and they 
will be brought to trial,’* East 
Timor Police chief Colonel 
Andreas Sngianto said. 

The territory's outspoken 
Bishop Carlos Belo said police 
were terrifying many East 
Timorese since last week's 
protests by conducting 
house-to-bouse searches to 
find anyone suspected of 
involvement 

Col Sugianto said eight of 
the 30 men had been arrested 
in Bairo village. 

Dili has been swept by riots 
in the past 10 days, some 
ignited by racial tensions and 
some by political opposition to 
Indonesian rule in the terri- 
tory. Indonesia has accused 
foreign journalists of stoking 
the protests and has asked at 
least four to leave for lacking 
“proper accreditation”. 

Bishop Belo attacked the 
government for its handling of 
the protests and said Indon- 
esia, which invaded the former 
Portuguese colony in 1975, 
lacked a commitment to bring 
peace to the troubled territory. 

He deplored the protests 
which swept through Dili last 
week, but said the most recent 
protest at his cathedral may 
have been instigated by the 
authorities. 


INTERNATIONAL NEWS DIGEST 

Tourists urged 
to quit Gambia 

Hie British Foreign Office yesterday called in tour operators 
yesterday and advised them to bring more than 2,000 holiday- 
makers home from Gambia because of a deterioration in the 
political situation. However, Gambia Experience, one of the 
largest operators to the country, said it would allow its cus- 
tomers to decide whether or not they wanted to continue their 
holidays. 

The Foreign Office said it had been monitoring the situation 
in Gambia since a coup, in which Lt Yahya Jammet seized 
power from Sir Dawda Jawara, and there had been a steady 
deterioration. It said the political situation was uncertain and 
could deteriorate quickly. The advisory notice follows an 
attempted counter coup against on November 11 which Lieu- 
tenant Jammet blamed on former finann* minister Mr Bakary 
Dabo. Michael Skapinker ; Leisure Industries Correspondent 

Zimbabwe moves on rates 

Zimbabwe's central bank, facing an outcry over punitive inter- 
est rates, has cut its lending rates to financial bodies, but 
economists yesterday said tbe action was too little, too late to 
bolster growth. The central bank said late on Tuesday it was 
lowering its rediscount rate - the benchmark rate at which it 
lends to financial institutions - to 29.5 per cent from 30 per 
cent. Citing a foil in annual inflation, it also cut the overnight 
accommodation rate - the punitive rate charged to financial 
bodies for overdrawing - to 35 per cent from 3B per cent 
Reuter, Harare 

Oil groups sued in Australia 

Shell Australia and BP Australia, both part of the larger 
international oil groups, are being sued by the Trade Practices 
Commission, Australia's competition watchdog, over alleged 
price collusion in the Sydney and Melbourne retail petrol 
markets. Shell issued a statement yesterday staling that it 
would “mount a vigorous defence” against allegations that it 
colluded with other oil companies to increase retail petroleum 
prices in Melbourne and Sydney between 1988 and 1991. BP 
Australia confirmed that it, too. was served with legal proceed- 
ings by the Commission yesterday. These, it said, alleged 
certain anti-competitive practices in the Sydney and Mel- 
bourne motor spirit markets between May 1991 and June 1992. 
Nikki Tail. Sydney 

110 killed in India stampede 

At least no people were killed in a stampede that followed a 
police baton charge on tribal protesters in the western Indian 
city of Nagpur yesterday, domestic news agencies reported. 
They said the problem began when a crowd of protesters tried 
to break a police cordon set up to prevent them from marching 
on the Maharashtra state assembly. 

The agencies quoted police as saying their men pushed back 
the protesters with long, iron-tipped bamboo canes and that 
began a panic-stricken stampede. They quoted Kripashankar 
Sin g h, a senior member of the Congress party which rules 
Maharashtra, as saying at least 110 people were killed. Reuter, 
New Delhi 

Correction: Nippon Glaxo 

An article in the Financ ial Times yesterday on a Ylm bribe 
allegedly received by a Japanese doctor from Nippon Glaxo, 
the local arm of the UK drags company, gave an incorrect 
sterling equivalent for the sum. lt is in fact £6,500. 





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NEWS: INTERNATIONAL 


Taiwan set to 
benefit from 
US recovery 


Free-enterprise Marxists support 
mountain kingdom’s monarchy 


By Laura Tyson n Taipei 

Taiwan is poised to benefit 
from economic recovery in the 
US, its biggest export market, 
and continued growth in its 
fastest-growing market China, 
analysts said yesterday. 

The government's central 
statistics office said growth in 
the island’s gross national 
product reached 6.08 per cent 
in the third quarter of this 
year, up from a revised 5.62 per 
cent in the second quarter and 
5.8 per cent in the third quar- 
ter of 1993. 

The forecast for the fourth 
quarter was lifted to 64) per 
cent from the previous forecast 
of 6.44 per cent 

Main factors 
behind growth 
have been 
increased exports 
and improved 
private-sector 
investment 

*"1116 economic picture is 
more optimistic following an 
improvement in export perfor- 
mance.” Mr Daniel Chen, chief 
economist at China trust Com- 
mercial Bank, said. 

The main pumping factors 
behind growth in 1994 have 
been increased exports and 
improved private-sector invest- 
ment. This trend will be sus- 
tained into next year.” 

The Directorate-General of 
Budget, Accounting and Statis- 
tics raised its forecast for 1994 
GNP growth to 6.10 per cent 
from 6.01 per cent, and forecast 
1995 GNP growth at 6.52 per 
cent. In 1993, the island's GNP 
rose 6.02 per cent, revised 
upward from an earlier figure 
of 5.94 per cent 
The statistics office said the 
leading indicator for economic 
growth would in future be 
gross domestic product instead 
of gross national product. It 


Taiwan 

Economic growth rale (%)• 
13 — 



By Stefan Wagstyt in New Delhi 

! Few parties with the name Marxist-Leninist 
have ever won a free election. But Bve years 
after the fall of the Berlin Wall, the Nepal Com- 
munist party (United Marxist Leninist) has 
accomplished this rare feaL 
The communists are on the verge of forming a 
government after success in last week’s general 
election. The red Dag has been hoisted in a 
country with a constitutional monarch who held 
power until as late as 1990. Marx would have 
been impressed with how quickly Nepal has 
apparently moved from feudalism to socialism. 

Yet all is not quite as it seems in the moun- 
tain kingdom. Despite their ideologically correct 
n^ B and the portraits oF Marx and Lenin which 
adorn the party offices, the Nepali communists 
bear little resemblance to Bolsheviks. 

Almost the first thing Mr Man Mohan Adhi- 
kari, the party leader, did after his ejection 
victory was to call on King Birendra and pay his 
respects, telling him he had nothing to Eear, the 
communist party would “firmly support monar- 


chy in Nepal as a symbol of unity” and “pursue 
free- market economic policies”. 

The communists are much more nationalist 
than the purer forms of socialist doctrine would 
permit Mr Adhikari made much on the cam- 
paign trail of the conservative Nepali Congress 
party government's allegedly close ties with 
India. But he is hardly the first communist to 
stoke the fires of patriotism. 

The party has to approach government with 
caution. With only 88 seats in the 205-member 
parliament, it plans to rule as a minority gov- 
ernment. It will rely on tacit support from allies 
either in the Congress party or the right-wing 
royalist grouping, the Rastrlya Praj antra party. 
The prospects seem uncertain. 

The election was called after arguments 
erupted within the party between the three at 
its head: Mr G. Kolrala, 71, the former prime 
minister; Mr K. BhattaraL party president, 70, 
and Mr Ganesfa Man Singh, SO, party supremo. 

After decades of campaigns against royalist 
domination c ulminating in demonstrations that 
ended royal rule in 1990, the three men had 


trouble adjusting to naming the government 
By this summer, the country had. had enough 
of the party's record of in-fighting and nepotism. 
So when Mr Koirala precipitated a general elec- 
tion, voters took the opportunity to vote his 
party out of office. 

Mr Adhikari , who at 72 Is of the same genera- 
tion as Ms Congress counteiparts, started his 
political career in the Indian independence 
movement before moving to Nepal, where he 
spent several years in jail for his attacks on the 
monarchy. For years, his party, was split 
between pro-Soviet and proGbina factions and 
received funds from North Korea. As late as 1988 
it supported the coup against Mr Mikhail Gorba- 
chev. 

But the international decline of communism 
and the advent of parliamentary politics in 
Nepal after 1990 prompted the party into some 
long-overdue revisionism from which it has 
emerged as more sexual democrat than socialist 
A western diplomat in Kathmandu says: “I 
think we could work with these people. They are 
not guerrillas." 



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Communist party leader 1L Adhikari:, be called 
on the king to pay Ids respects «■*» 


1983 86 90 94 

Sourcec Dractonde GerMral of Budgwry 
Acoaunthg & Statistics 

predicted gross domestic prod- 
uct would grow 6.42 per cent in 
1994 and 6.49 per cent in 1995. 

Next year’s growth would be 
the result of a global economic 
recovery and higher exports, as 
well as more investment in 
Taiwan’s electronics and steel 
industries, the statistics office 
said. 

Economists cautioned that 
the demise of China's ailing 
paramount leader, Mr Deng 
Xiaoping, could damage 
Taiwan's share and property 
markets. Uncertainty sur- 
rounding parliamentary elec- 
tions next year, and first-ever 
presidential elections slated for 
early 1996, could also damp pri- 
vate-sector Investment 
The ruling Kuomintang is 
expected take steps to stimu- 
late the economy next year to 
enhance its prospects in those 
elections. Prof Wea Chi-lin of 
National Taiwan University 
said. He predicts the central 
bank is likely to nudge interest 
rates higher following munici- 
pal polls early next month, in 
line with recent US rate rises, . 
but will bring them down I 
again in mid-1995 to encourage | 
investment 

The statistics office said per 
capita income should reach 
$11,629 (£7,260) in 1994, up from 
$11,296 as previously forecast 
The figure for 1993 was revised 
to $10,852. 


Australian unions start to flex their muscles 

High pay claims have prompted Keating to urge employers not to buckle under, writes Nikki Tait ; 


T hese are anxious times 
in Australian board 
rooms. Across a wide 
range of industries, unions 
have been putting in large pay 
claims , and threats of indus- 
trial action have been quick to 
follow. 

Among the most publicised 
demands has been the claim 
for a 15.8 per cent wage rise, 
spread over two years, from 
the 75, 000-member Transport 
Workers Union. This has been 
echoed by the Textile, Clothing 
and Footwear Union, repre- 
senting 40,000 workers asking 
for a similar figure. The 
National Union of Workers, 
which represents blue-collar 
employees in factories and 
warehouses, has claimed 14.7 
per cent, also over two years. 

So for. there has been more 
In the way of sabre-rattling 
than serious industrial disrup- 
tion as the claims have been 
pursued. This week saw local- 
ised strikes by teachers in New 
South Wales and workers at 
Australian Meat Holdings, the 
nation's biggest meat-process- 
ing operation. 

But the upheavals pale 
beside the c haos which could 
ensue if the TWU makes good 


its threat to disturb road trans- 
port services in the run-up to 
Christmas. 

The main issue is where 
these cl aims will eventually be 
settled. Mr Ralph Willis, Aus- 
tralia's treasurer, has pointed 
out that many of the headline 
figures are mere negotiation 
numbers. Moreover, some 

‘There are a lot 
of employers 
being spooked by 
the level of 
claims’ 

degree of “wages break-out" 
was probably inevitable, as 
employees made up for several 
years of recession-enforced 
restraint. 

But this wages round is 
being played out under differ- 
ent rules from previously. 

Over the past two years. 
Australia's traditional system 
of centralised awards and arbi- 
tration, backed by a pact 
between the labor government 
and the Australian Council of 
Trade Unions to pursue wages 


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A positive 

a-H-itude 




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Ar Essar, a S2 billion-asset company with quality professional 
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outcomes which kept the 

nation's inflation rate in line 
with that of its trading part- 
ners. has reduced in impor- 
tance. 

Instead, an increasing num- 
ber of workers have moved to 
company-based wage agree- 
ments. 

According to Department of 
Industrial Relations data, at 
least one-fifth of all wage and 
salary earners are now covered 
by formal enterprise agree- 
ments. The number of agree- 
ments. it estimates, has risen 
from about 360 in August 1992, 
to 2,700 at present But both 
statistics may be understated, 
since they only look at employ- 
ees in the federal awards sys- 
tem, not those covered by 
state-based awards. 

The optimists say the new 
system should be more effi- 
cient because companies will 
only pay above-inflation wage 
rises when justified on produc- 
tivity grounds. 

Given that labour productiv- 
ity has been rising by about 1-2 
per cent annually and the 
inflation target is about 2 per 
cent, the implication is that 
aggregate wages should 
increase by about 34 per cent a 


Australia: wages growth 

Annual percentage change . 




_ Average weekly _j 

3 ■' ordinary time esmtnga ' 


_ Average earnings 

account^ 


{survey) 




1985 86 


year, but with considerable 
flexibility Tot individual com- 
panies around this figure. 

The problem is that wage- 
bargaining psychology is stub- 
born. Economists have noted a 
trend in the latest wage round 
for a standard pay claim to be 
served on aU employers in a 
given industry, regardless of 
their individual circumstances. 

Since last year’s industrial 
relations reform legislation 
beefed up workers’ rights In 
dispute situations, there are 


fears that less efficient compa- 
nies will be p re s sured into set- 
tling at the name level as their 
more productive competitors, 
simply to buy peace. 

“There is a risk that firms 
whose sales have been growing 
quickly will *1011 over* to avoid 
disruption to business, plan- 
ning to push through price 
rises in the face of strong 
demand to offset higher labour 
costs,” analysts warn. 

Already, Mr Paul Keating, 
the prime minister, has urged 


employers to stand firm. Yes- 
terday, Simon Ciean, a former 
union president and -now 
employment minister, added 
that claim s such as those of 
the TWU should be -capable of 
being resolved by “sensible dis- 
cussion”. 

E mployers' organisations, 
which have long sought 
this devolved system, 
are optimistic. “Certainly, 
there are a lot of employers 
being spooked by the level of 
claims , and that In itself , is a 
worry." says Mr Stephen 
Kates, economist at the Aus- 
tralian Council of Commerce 
and Industry. 

“But I think the reality is 
that most businesses will find 
they can’t push the added costs 
[of above-inflation pay settle- 
ments] through to prices.” 

Financial markets seem less 
convinced The yield on Aus- 
tralia’s 10-year braids stands at 
about 10.8 per cent, way above 
that of the US, which stands at 
about 8 per cent, and closer to 
the levels of Spain or Italy. 
While wages are only one 
ingredient in the inflation 
equation, it is not a sign of 
confidence. 


FINANCLAL TIMES 


FT EXPORTER 



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(Senior 


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FINANCIAL TIMES THURSDAY NOVEMBER 24 1994 * 


9 

NEWS: UK ” 


Ministers defy rightwingers’ refusal to support $1.2bn rise in contributions 


Cabinet threatens to quit on EU vote 


By Kevin Brown, 

Political Correspondent 

Mr Kenneth Clarke, chancellor 
of the Exchequer (chief finance 
rainister), yesterday raised the 
stakes in the government's bat- 
tle with its Eurosceptic back- 
benchers by revealing a cabi- 
net pact to resign en masse if 
the government loses a crucial 
vote on Monday. 

The chancellor's disclosure 
followed rightwing anger over 
Treasury figures admitting 
that UK contributions to the 
EU budget will be £732m 
(Sl-2bn) higher than expected 
this year. 

The increase, attributed to 
faster economic growth, was 
seized on by Eurosceptics as 
justification for their plan to 
vote against the second read- 
ing of the European Communi- 
ties Finance BilL 

It prompted rightwing claims 
that up to 24 Tory backbench- 
ers are now willing to back a 
challenge to Mr John Major's 
leadership of the Conservative 
party, probably by someone 
intended to draw out a serious 
challenger. 

But amid mounting specula- 
tion. Mr Clarke demolished 
Eurosceptic claims that the 
defeat of the bill would trigger 


a Tory leadership ballot rather 
than the general election 
threatened by Mr Major. Mr 
Clarke said "the entire cabi- 
net” agreed with the prime 
minister's decision to make the 
bill an issue of confidence, and 
ruled out Mr Major's replace- 
ment by any senior govern- 
ment member. 

"If anything silly were to 
happen on Monday, it would be 
the inevitable consequence of 
the defeat that the government 
would fall,” he said. 

The decision to risk the 
future or the government by 
treating the bill as a confi- 
dence issue was taken by Mr 
Major and a group of five 
senior cabinet ministers over 
an informal supper at Downing 
Street 10 days ago. 

The ministers present - Mr 
Clarke. Mr Douglas Hurd, for- 
eign secretary. Mr Michael 
Howard, home secretary, Mr 
Michael Heseltine, trade and 
industry secretary, and Mr 
Tony Newton, leader of the 
Commons - all backed Mr 
Major's strategy. 

Downing Street officials said 
the issue was not minuted for- 
mally by the cabinet, but other 
ministers were consulted by 
the prime minister and chan- 
cellor. 


Mr Clarke said the increase 
in this year's forecast out-turn, 
from £l.7bn to £2.4 bn. reflected 
faster economic growth and 
factors such as changes in pay- 
ments under the Common 
Agricultural policy. 

Mr Clarke also released fig- 
ures showing that the increase 
in British contributions caused 
by the bill would be limited to 
£75m next year and £250m a 
year by the end of the century. 

Mr Bill Cash, a leading 
Eurosceptic MP. said the gov- 
ernment had “caved in because 
they now have to recognise the 
strength or the determination 
of the Eurosceptics and we are 
once again proved right". 

Ministers remained confident 
of victory in the debate, partly 
because tbc nine Ulster Union- 
ist MPs are expected to vote 
with the government on Mon- 
day. 

• Conservative MPs are 
demanding swingeing public 
spending reductions in Tues- 
day's Budget to pave the way 
for tax cuts before the next 
general election, according to a 
Financial Times survey. 

Mr Clarke's personal rating 
has risen sharply, with 82 per 
cent saying he is doing an 
excellent or good job compared 
with 68 per cent a year ago. 


What Tory MPs 
would like to 
see in the 
Budget 





Resuns drawn in rowded percentages TVaab do not necessaniy aria up » 100 
beaus* rcspanctants have bi some cases efraaen more than one option or haw not 
aneworad way question. Witnen quosaarmaira wore retunod by 70 Conaenattve 
MPs- between November!) and Mownb«2? 


e Wtwrt should Kenneth Clarke set as his ffrsS Budget priority? 


Cuts In spending and/or borrowtng 50% 

Steady narHnfladarary growth 24% 

Boosting Investmerrt/eutting unemployment 12% 

Tax cuts 7% 

9 Should he out Bw basic rate of income tax? 

Yes 11% 

No 88% 

d Should he Impose a wtndfaH tax on privatised utilities? 

Yes 14% 

No 80% 

a Where should spending cuta tail moat heavily? 

Social security 77% 

Education 6% 

Defence 7% 

Health 13% 

Local authorities 34% 

Whitehall overheads 13% 

O Should Mr Clarke raise interest rates soon to pre-empt inflation? 
Yes 28% 

No 67% 


Senior Tory ridicules French and Germans 


By Kevin Brown, 

Political Correspondent 

The Conservative party's divisions over 
the European Union were demonstrated 
starkly yesterday as Conservative cen- 
tral office disowned an outspoken 
attack on the French and Germans by a 
senior Tory official. 

Mr Patrick Nicholls, MP for Teign- 
bridge and a deputy chairman of the 


party, was widely condemned Tor a 
newspaper article ridiculing the Ger- 
mans as warmongers and the French as 
cowards. 

Writing in the Western Morning 
News, his local newspaper, Mr Nicholls 
said Germany’s main contribution to 
Europe had been to plunge the conti- 
nent into two world wars within living 
memory. 

Mr Nicholls dismissed the French as 


“a nation or collaborators,” who pres- 
ented themselves as a nation of resis- 
tance fighters. 

He said France was "incapable of win- 
ning any war unless it is fought by the 
French Foreign Legion, and only then 
because it is officered for the most 
party by English, Americans and Ger- 
mans,” 

Exp lainin g his dislike of the EU. Mr 
Nicholls wrote: "I wish I was not in the 


European Community. If I thought it 
was feasible to leave it, I would be off 
tomorrow." 

Conservative Central Office distanced 
itself from Mr Nicholls, who is responsi- 
ble for campaigning strategy for Wales 
and the South West, and the elderly. 

“He makes it clear that he fully sup- 
ports the government's policy towards 
Europe. His choice of words is his, not 
ours,” a senior party official said. 


Abandonment 
of Maxwells’ 
trial is urged 


Top pay 
levels 
may be 
curbed 

By Ivor Owen, 

ParOamentafy Correspondent 

Shareholders may be given 
increased powers to curb 
excessive pay increases for top 
company executives, Mr Ken- 
neth Clarke, chancellor of the 
Exchequer, disclosed in the 
House of Commons yesterday. 

He revealed that the practi- 
cal issues involved were under 
examination as the govern- 
ment came under renewed 
pressure to condemn the 
75 per cent rise awarded to Mr 
Cedric Brown, British Gas 
chief executive. 

It is understood that the 
chancellor has had prelimi- 
nary discussions with Mr 
Michael Heseltine, trade and 
industry secretary, about the 
legislative implications of 
increasing shareholder power. 

Mr Clarke ruled out renewed 
Labour demands for the impo- 
sition of a windfall tax on the 
excess profits of privatised 
utilities, and for executive sal- 
aries to be brought within the 
regulatory' regimes which 
oversee their pricing policies. 

He said he disapproved of 
large salary increases in any 
company which went far 
beyond what could be deemed 
reasonable 

Sir Edward Heath, the for- 
mer Conservative prime minis- 
ter, described Mr Brown's 
increase as the “unacceptable 
post-privatisation face of capi- 
talism". 

Mr Gordon Brown, the oppo- 
sition Labour party’s shadow 
chancellor, said the profit lev- 
els of the privatised utilities 
had increased by 50 per cent 
daring the recession. 


By John Mason, 

Law Courts Correspondent 

Defence lawyers are seeking to 
have the Maxwell brothers' 
trial on fraud and other 
charges called ofF on tbe 
grounds that publicity over the 
Robert Maxwell affair has 
made a fair trial impossible. 
The brothers are sons of Rob- 
ert Maxwell 

The attempt to halt the crim- 
inal proceedings against Mr 
Kevin Maxwell and his brother 
lan was disclosed in court for 
the first time yesterday when 
the Serious Fraud Office 
applied for a reporting ban on 
a current High Court case con- 
cerning Maxwell pension fund 
assets used to raise a £50m 
($82m) loan. 

A successful SFO application 
would rule out any reporting of 
the attempt by UK pensioners 
to recover £60m from Credit 
Suisse bank, which accepted 
tbe assets as collateral for the 
loan. The SFO claimed the ban 
was necessary to avoid prejudi- 
cing the criminal trials, the 
first of which will start after 
Easter next year. The Credit 
Suisse case is expected to end 
next summer, but if the SFO 
succeeds, pensioners could be 
left in ignorance of the result 
for a further two years, their 
lawyers argued. 

Mr Justice Lindsay, the 
judge in the Credit Suisse case, 
rejected an SFO request for the 
imposition of reporting restric- 
tions on yesterday's hearing. 

Arguments over calling off 
the criminal proceedings 
against all defendants in the 
Maxwell fraud trial will be 
heard next January. First in 


line for trial will be four of the 
six facing various fraud 
charges - Kevin and Ian Max- 
well. Mr Larry Trachtenberg, a 
former adviser to their father, 
and Mr Robert Bunn, a former 
finance director of Maxwell 
Communication Corporation. 

In the first trial, Mr Kevin 
Maxwell will face only two 
charges or a total nine. These 
allege conspiracy to defraud 
over pension fund assets. Mr 
lan Maxwell. Mr Trachtenberg 
and Mr Bunn will ail lace one 
charge of conspiracy to 
defraud. 

Further proceedings against 
the four along with two former 
Robert Maxwell employees, Mr 
Michael Stoney. a former Mir- 
ror Group Newspapers finance 
director, and Mr Albert Fuller, 
a former MGN treasurer, are 
set to follow next 

Mr Michael Crystal, lawyer 
for the Mirror Group Pension 
Fund Trustees, argued against 
a blanket reporting ban on the 
Credit Suisse proceedings. The 
criminal proceedings might 
last until 1997 and such an 
order could prevent pensioners 
being properly informed of the 
result of their action, he said. 

In the action, both the trust- 
ees and the liquidators of 
Bishopsgate Investment Man- 
agement. the main Maxwell 
pension management com- 
pany, are suing Credit Suisse. 
They claim the bank knew, or 
should have known, that 
shares it accepted as security 
for the £50m loan were pension 
fund assets. 

Ten national newspapers are 
opposing the SFO application. 
The hearing was adjourned 
until December 5. 


Cadbury seeks 
to ‘marginalise’ 
trade unions 


Postal 
workers 
set to 
strike 

By Robert Taylor, 

Employment Editor 

One-day post office strikes will 
be hekHn the nm-upto Christ- 
mas as counter staff around 
Britain showed substantial 
support for action in response 
to their union’s call to oppose 
the “back-door privatisation" 
of services. 

Mr Michael Heseltine, the 
trade and industry secretary, 
told MPs that industrial action 
by counter staff was 
“extremely unwise". He said 
strikes aimed to "frustrate the 
management of the Post Office, 
transferring individual post 
offices from the public to the 
private sector”. 

There were majorities in 
favour of striking in only 20 
out of 71 areas. In the ballot, 
tiie entire UK counters’ staff 
rejected the strike call by a 
narrow 51 per cent to 49 per 
cent, but each postal area has 
been allowed to decide whether 
or not to take industrial action. 

The Post Office said tiie 
result was “a resounding rejec- 
tion of unnecessary industrial 
action". Any strikes would be 
"pointless and misguided". 

“Only a small minority of 
crown offices could be affected 
by a few single-day stoppages,” 
the Post Office added. “More 
than 19.000 past offices will be 
open for business as usual 
Whatever action the Union of 
Communication Workers takes 
will have no affect on the 
nation's Christinas maiL” 

The union said that, despite 
the U-turn over privatisation, 
the Post Office counters' ser- 
vice was continuing to shut 
down main offices, franchising 
many of them to retailers. 


Cadbury, the confectionery 
arm of Cadbury Schweppes, is 
planning to weaken the trade 
unions at its plants through a 
new strategy for its 5,000 UK 
employees, according to inter- 
nal company documents 
obtained by the TGWU general 
union, our Employment Editor 
writes. 

An internal company paper 
says: “The role of the trade 
union needs to be marginalised 
by greater focus on direct com- 
munication and consultation 
but without an overt statement 
to this effect" 

The paper is a summary of 
the “personal values agreed by 
senior factory managers” at a 
meeting on September 29. 

The leaked document sug- 
gests that the company will 
need to reduce its workforce, 
and says it may have to con- 
sider a "potential downsizing 
scenario". 

It also says: “Employee sup- 
port for the trade union 
should ... decrease over tune. 
However, it is not likely that 
the trade union would be 
derecognised, given the likeli- 
hood of downsizing. A re- 
defined role for the trade union 
is therefore required.” 

The company adds in the 
paper that, for those groups 
whose unions have been de- 
recognised, “it is important 
they are not exploited by the 
company as this would lead to 
pressure for renewed trade 
union involvement”. 

Cadbury also intends to 
investigate “how involvement 
can continue without formal 
union structures”. 

Cadbury's other plans 
include “severing the link 
between the retail price 


Zeneca, the chemical and 
pharmaceutical company, has 
decided to end collective bar- 
gaining with onions represent- 
ing 8,200 white-collar staff In 
its UK plants. 

The company has given 
onion officials six months* 
notice of its intention to aban- 
don company-wide negotia- 
tions on pay and conditions of 
service inclnding hours of 
work, holidays, working 
arrangements, shifts and secu- 
rity of employment 

From next April, the pay of 
Zeneca’s staff will be deter- 
mined through assessment by 
local management of individ- 
ual performance, ending the 
old system of annual 
across-the-board cost-of-living 
awards in addition to merit 
review rises. Union leaders 
said yesterday that they were 
shocked by Zeneca's move. 


index and pay and replacing 
collective bargaining 
with individualised arrange- 
ments” tied to skill, compe- 
tence and performance- related 
salaries”. 

Mr Brian Revell, the TGWU’s 
national secretary for the food 
industry, said the new strategy 
was disappointing. "It is cer- 
tainly not consistent with the 
company’s respectable Quaker 
image of tbe past,” he said, and 
suggested that it was being 
‘‘basically . . . manipulative". 
Shop stewards from Cadbury 
unions are due to meet this 
weekend to discuss their 
response. 

The company said last night 
that Cadbury was “looking at 
possible options for the 
future”. 


National service could be in place by end of 1997 


BBC backs digital TV plan 


By Raymond Snoddy 


3 has decided in 
to push ahead with 
i of digital terrestrial 
and a near-national 
old begin as early as 
in of 1997. 

study following the 
ut white paper on the 
the corporation has 
positive interim con- 
l di gi tal television, 
ial digital television 
turning the conyen- 
e vision picture into 

language of comput- 
road casting channels 
[-based transmitters 
n by satellite, 
bnotagy would allow 
i of wide-screen tele- 
giving a picture 
e a cinema screen - 
mber of extra chan- 

v as 12 new digital 


television channels could be 
created in the UK and broad- 
cast alongside the conventional 
four national channels. 

No final decisions have been 
taken, but the BBC believes 
digital technology will win 
over existing analogue technol- 
ogy in the end. 

A crossover period of 
between 10 and 15 years is 
likely, however, when the two 
systems will have to be broad- 
cast at the same time so that 
no-one is deprived of their 
basic television service. 

The BBC may carry out its 
first public technical trial in 
March and a limited regional 
trial could get under way in 
late 1995 or 1996. 

The corporation, as a pub- 
licly fund organisation, can 
take the first steps in creating 
a digital terrestrial service. 
Executives emphasise, how- 
ever, that nothing of substance 


will happen unless the project 
is supported by other British 
broadcasters and by the con- 
sumer electronics companies 
which would manufacture the 
set-top boxes and new televi- 
sion sets. 

Mr Charles Allan, chief exec- 
utive of both Granada Televi- 
sion and LWT, recently 
expressed interest in digital 
terrestrial television and the 
possibility of creating new 
channels that it offered. 

The BBC has been having 
talks with consumer electron- 
ics companies such as Sony 
and with representative of the 
ITV system. 

On Monday the BBC will 
announce that it is going 
ahead with two 24-hour a day 
satellite channels for Europe in 
a joint venture with Pearson, 
the media and entertainment 
group that owns the Financial 
Times. 



Beyond the usual. 



Union Bank 
of Switzerland 


N I. V > O K K . 


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..w- V-- 


FINANCIAL TIMES THURSDAY. NOVEMBER 2£ 1994 


NEWS: UK 


Ireland set for 
jobs boost from 



UK NEWS DIGEST 


wrier networks whichcoimecls databases and- 

750 Airbus ■ ,SS 3S§f?Jp% faf* 


peace process 


jobs to go 
next year 


maHon. service. ja&jcre! than-Ttyp atoti£ nse th e 
Internet mostfrequeaiQy tty..saaa, electronic 
mail. - ;to .customers; suppliers adjmlw 
elsewhere In a group; >" _/ . •; 


Dutch group buys 7, 
Polly Peejc pffshbpt^V 


By John Murray Brawn 
bi Dublin 


The International Fund for 
Ireland, set up by the British 
and Irish governments to pro- 
mote investment in the 
depressed economies of North- 
ern Ireland and the border 
counties, could create up to 
20,000 jobs over the next three 
or four years, Mr William 
McCarter, the hind's chairman, 
said yesterday. 

Mr McCarter, who is manag- 
ing director of Fruit Of The 
Loom, the Donegal-based US 
textile concern, said the oppor- 
tunities for US led~ln vestment, 
whether greenfield, joint ven- 
ture or technology transfer, 
had “never been better". 

Speaking in Dublin yester- 
day, he predicted that the 
peace process could provide 
“surprising levels" of foreign 
Investment in Northern 
Ireland and the border coun- 
ties, either taking advantage of 
the Republic of Ireland's 
attractive tax regime or locat- 
ing in Northern Ireland. 

The fund, set up in the wake 


The isolation of Ulster is 
compounded by its lack of 
integration with the Republic 
of Ireland, -says the latest 
quarterly forecast from the 
National Institute of Economic 
and Soda! Research, Stewart 
Dalby writes. It says an end to 
the •‘Troubles* c ould help 
bring about an integration in 
the vital areas of manufactur- 
ing and food. 

The institute calls into ques- 
tion a p e r c e ption that Ulster’s 
fringe position in the UK could 
be a deterrent to inward 
investment, findings transport 
costs from the province to Ber- 
lin and Milan are substantially 
lower than costs to the same 
places from Dublin. Costs to 
New York are 27 per cent less. 



British Aerospace is to shed 750 jobs next year 
at its Airbus plants at Fflton is south-west 
England and at Broughton in the north-west 
In September, Raytheon, the US company 
which recently bought the BAfi executive jet 
division, announced that it would dose the 
Broughton factory by 1997: 

Most of the redundancies announced yester- 
day will be at Fflton, where 550 jobs will go 
with the completion of a contract for the con- 
version of old Vickers VC10 airliners into 
refuelling tankers for the Royal Air Force. 

The Airbus division employs 6,500 at the two 
plants, but BAe has already reduced the work- 
force by 900 this year through contractiDg-out 
and 


Vestel, the listed' Turkish «msumar't3e^im- 
ics subsidiary id the'FoBy j Feck. goup » -pas 
bten sold for an und&dosed sum, adunnlstza- ■ 
ton to Polly Pedtltitemational said yesterday. 
Vestel was set up: hj'Mr,Asfl ftadh ft Po Ry 
peck Jntematkmalgroacp inlffi4.TTieftuit-to- 
electronics empire" foiled inl990. , - 

Proceeds of the sale of tht Sff pet eegfr stake 
in Vestel, 1 which makes oiltto.teleyisians, will 
go to FPL Holdings- BV, an intennafiate Dutch 
holding company, Mr .Cbxte Barlow, lead 
a dminis trator ip TM and 'a psrtoerrWith poo- 


The City of London is stepping up security despite the IRA ceasefire by spending an extra film on 
closed-circuit security cameras to back tbe existing street barriers at entry points to the City. This 
view of the FT building was taken From within tbe City’s secure area across one of the barriers 


Traders demand jail 
term after rampage 


wffl be divisible amongst toe: Baba creditor 
groups of' PPI Holdings BV, . oue olwfcich is 
ultimately Folly- Peck Inte maifonaL T Vestel's 
new owner is Turkish businessman'. Mr Ahmet 
Nazif Zorin, chairman -of- Zarlu- Holdings, a 
tayriia mgriirfMe fairer with a turnover last year 
of$30Qm. 


of the Anglo-Irish agreement of 
1985 to help stimulate private- 
sector investment and cross- 
community business contacts, 
receives contributions hum the 
US, the European Union, Can- 
ada and New 7j»aiaTMi. it has 
about $250m (£l52m) of contri- 
butions already committed. 


The US announced earlier 
this month that if Congress 
approved, its allocation to the 
fond this year would be dou- 
bled to $20m. increasing to 
$30m for eacb of the following 
two years, while the EU now 
gives about $18m to the fund, 
said Mr McCarter. 


The EU is due to meet in 
Essen on December 8 and 9 
when European heads of gov- 
ernment are expected to decide 
on additional support for 
Northern Ireland. 

• Tourism inquiries about 
Northern Ireland have more 
than doubled since the IRA 


ceasefire, it was disclosed last 
rUghL In Belfast, the capital, 
they soared to 16,000 compared 
with 7.000 a year ago. 

Worldwide inquiries in Octo- 
ber rose from 13,300 to 25,500. 
At the same time, hotel occu- 
pancy rates increased by 5 per 
cent. 


Cigarette trade in surplus 


By Gillian Tett, 
Economics Staff 


Exports to all but the 
wealthiest regions outside the 
European Union account for 
almost two-thirds of British 
output of cigarettes, official 
trade figures show. 

Meanwhile imports account 
for only about a fiftieth of the 
total value of the UK cigarette 
market, but nearly two-thirds 
of the total volume of ciga- 
rettes sold, indicating that 
domestic brands are concen- 
trated at the quality end of the 
UK market 

Although tobacco exports 
account for only a tenth of the 
total value of UK cigarette out- 
put they represent more than 
three-quarters of the volume. 

These are the type of statis- 
tics that have emerged in a 


new series of business publica- 
tions that launched in London 
yesterday by the government's 
Central Statistical Office and 
Taylor Nelson AG, the market 
research group. 

The new data, aimed at busi- 
nesses, provides detailed infor- 
mation on the import penetra- 
tion levels of different sectors 
for the first time for seven 
years. Import penetration fig- 
ures used to be issued by the 
Department of Trade and 
Industry, bat were halted in 
1967. 

The new business series, 
which collects statutory infor- 
mation from 28J5Q0 businesses 
under a recent EU, is harmon- 
ised with the trade data, allow- 
ing import penetration levels 
to be calculated for some 4£0Q 
sectors. 

The move follows a decision 


by the Central Statistical 
Office to contract the market- 
ing of this industrial data out 
to Taylor Nelson earlier this 
year. 

Although the new data have 
been welcomed by many busi- 
nesses, some trade groups have 
expressed unease about its 
high cost, with most of the 125 
sectoral reports selling for 
between £65 ($107) and £225. 

The reports on sectors will 
become available over the com- 
ing months. Samples of prelim- 
inary I960 data on the tobacco 
industry were Issued yesterday 
and indicated that the UK is 
now running a significant 
trade surplus in the cigarette 
market 

Nine tenths of cigar sales in 
the UK are home produced, 
while almost all the pipe 
tobacco produced Is exported. 


Land proposals 
favour businesses 


By Simon London 


The British government is 
about to announce proposals 
for dealing with contaminated 
laud that are expected to min- 
imise the cost to industry of 
cleaning up polluted sites. 

Under tbe plans, to be 
announced soon, polluted sites 
will only need to be cleaned to 
a standard suitable for their 
intended use and not restored 
to their original, unspoilt state. 

For Instance land Intended 
for use as a car park would not 
need to be cleaned to the same 
standard as a site on which a 
school is to be built 

By setting such a standard, 
government hopes business 


will avoid the huge dean-up 
costs encountered in countries, 
such as the US, which have 
taken a tougher stance on 
industrial pollution. 

Legislation is expected to fol- 
low principles in a consulta- 
tion paper issued in March. It 
drew fierce criticism from envi- 
ronmental groups but a cau- 
tious welcome from businesses. 

Municipal authorities will be 
told to keep records of all sig- 
nificantly polluted sites in 
their areas. But registration 
will be based on actual rather 
than potential contamination. 
Last year the government 
dropped controversial plans for 
public registers of potentially 
contaminated sites. 


The law should be changed to allow the jail mg 
of a boy of 14 who has been arrested near his 
home in northern England 88 times, local trad- 
ers said. The boy has been convicted of more 
than 100 break-ins in the small town of ETtanri, 
near Leeds, but all the offences were commft- 
ted before he was 14. 

The toughest sentence that magistrates 
could therefore impose was a term of 24 hours 
at a juvenile attendance sentence to be served 
in blocks of two hours every other Saturday. A 
fine was considered Inappropriate because his 
family is on state aid. 

The Elland League of Trade Industry and 
Commerce said the town (population 18 JJ00) 
had suffered a 144 per cent increase in 
burglaries and a 100 per cent increase in acts 

of riamng p riming thft first, whm> mrmfhc of thg 

year. 

The knock-on effect of one young - boy’s 
nights of fun is having serious consequences 
for the town," said league head Mrs Jackie 
Rourke. The government has given os £&n to 
develop 100 acres of prime land in BDamd. 
Potential investors could create 2,000 jobs 
here, but then they crane and see what’s hap- 
pened to the place, with shops boarded up and 
shutters everywhere." 


Durer prints axe found 
during shed clearance ; 


A' collection of prints found by a householder 
clearing a shed had been found to contain two 
original works by Albrecht Dttrer. A collection 
of music by Mozart m the same trunk had 
been chewed into pieces by mice and used for ' 
building their nests. ^ 

They had obviously once been someone's 
much cared for <oUectioh,” said the house- 
holder . who lives about TOkm west of London; 
T thought they might be Worth. £1,000 ($1,640) 
or £2,000." But the confection was lata* esti- , 
mated as likely to make £350,000 at auction. Mr 
Richard Godfrey, a specialist far CM Master 
printeatSoth)^sfoLraMion,saWtheI>uriBrs 
were the finest woodcuts he had Seem for-many 
yeans. “In an age when so many prints have 
been cleaned and spoiled, tins ‘benign neglect* 
suffered by these'prints in the trunk has pre- 
served them in an 'almost perfect condition.”' 


Treasure status is 


urged for bulldogs 


Internet used by almost 
30% of businesses 


Almost 30 per cent of UK businesses are 
already connected to the Internet, market 
research findings showed yesterday. The 
study, conducted by Hi-Tech Marketing on 
behalf of Pipes, an Internet service provider, 
was based rat responses from 300 companies 
and other organisations. 

More than 95 per cent of those not connected 
to the Internet, the informal system of com- 


The gove rnme nt should consider declaring the 
British bulldog a national treasure, says the 
Kennel Club, it says bulldogs should be pro- 
tected in the same way as pafattings anil build- 
ings because of the breed’s associations with 
the British character. . 

In Japan; the Shiba-Inu Is classed as a 
national treasure andbasbeen made air offi- 
cial symbol of the country, tbe dub points out. 
“The number of bulldogs to Britain has 
declined quite significantly since before the 
Second World War and recognising the breed 
as a national treasure would be a way of 
ensuring that it never died out, " the cluh adds. 


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' L ^ 7 DAYS I Can Make YOU One 2 N 'Sal 4 from 

j t fcnages from a bygone era: advertisements for the development of (he physique are no longer featured os prominently in advertising columns as they once were 

US|§ Sold on self-regulation 

u ' ^ : ; re found The advertising code gets a new look in January, writes Diane Summers 

*” U ^ ^dr^nPo A dvnrticere in Dnliin nWTI to J j ■ .1 . : .. .j • 


A dvertisers in Britain will 
be able to start the New 
Year by tearing up the old 
rule book which governs 
what they can and cannot say in 
their copy. 

A new version of the detailed 
codes which underpin non-broad- 
cast advertising’s system of self-reg- 
ulation (television and radio have 
their own rules) will still require 
advertisements to be legal, decent, 
honest and truthful. But from Janu- 
ary, the rules which flesh out these 
principles will be shorter, sharper, 
and more In tune with the current 
demands of the marketplace. 

This thorough overhaul of the 
advertising codes will be watched in 
other countries. Britain's Advertis- 
ing Standards Authority is playing 
a leading part in arguing for the 
principle of self-regulation of adver- 
tising throughout the European 
Union, as well as advising eastern 
European countries on how to set 
up their own systems. 

The new combined British codes 
of advertising and sales promotion 
practice, which until now have been 
separate documents, will, for the 
first time, set out rules in two areas 
where there have been profound 
changes in public attitudes since 
the formation of the codes more 
than 30 years ago: motoring and the 
environment 

The wording has yet to be 
approved, but it is likely that the 
code will outlaw car and fuel adver- 
tisements which encourage “anti -so- 
cial" behaviour or make speed or 
acceleration c laims their main mes- 
sage. Advertisers will be prevented 


from depicting vehicles in danger- 
ous situations or in a way which 
would encourage irresponsible driv- 
ing. 

On the environment, terms such 
as "environmentally friendly" and 
“wholly biodegradable" will have to 
be qualified. Advertisers will need 
to make it clear if there is a division 
of scientific opinion, or if the evi- 
dence for an environmental claim is 
inconclusive. "Extravagant" lan- 
guage and obscure scientific terms 
likely to mislead people will also be 
discouraged. 

A third, less material, addition 
will be the inclusion of a “political- 
ly-correct" catch-all phrase. Adver- 
tisers will have to take care not to 
cause offence on the grounds of 
race, religion, sex, sexual orienta- 
tion or disability. 

The rest of the revision includes 
simplifying the language and 
sweeping away defunct clauses. 
Out, for example, goes a section in 
the code on "height increase 
courses" which bans advertise- 
ments for the “development of the 
physique" from suggesting that 
“thereby, users will become taller". 
These kinds of advertisement, like 
miraculous "bust development" 
courses, are no longer the promi- 
nent feature of the advertising col- 
umns they once were. 

"People were ploughing through 
quite a number of rules to get to the 
ones they wanted," says Marti 
Alderson, ASA director-general 
explaining a general feeling that 
much of the code was no longer 
relevant "One of the objectives of 
the review was to emphasise those 


rules that were most important." 

There is some risk that, in the 
process of simplification and wider 
definitions, the rules will become 
too lax in some areas, argues Step- 
hen Locke, director of policy with 
Consumers' Association, one of the 
bodies consulted during the year- 
long examination of the codes. 

"On motoring, for example, 
there's a reference to adverts Tor 
cars avoiding any practices that are 
anti-social. But it's not clear what 
they mean by anti social - we'd like 
to see examples in this kind of 
area." he says. 


C A put forward a number of 
suggestions for changes in 
the way the ASA operates, 
none of which has so far been 
accepted. Among them was a 
requirement that the ASA accept 
telephone complaints - at present 
these have to be written - and the 
introduction of tougher sanctions 
against repeated offenders. CA 
would like to see a system of fines 
available for use in extreme circum- 
stances: at the moment the ASA 
relies chiefly on adverse publicity 
and help from publishers and the 
postal service to enforce the code. 

But overall, it is in consumers’ 
interests that advertising is regu- 
lated by the industry, says Locke: 
“It's widely seen as a success story. 
There's no doubt we get more out of 
self-regulation than we would out of 
statutory regulation, not least 
because it can be more flexible and 
give the benefit of the doubt to com- 
plainants - it doesn’t have to be 
legalistic in its approach." 


Advertisers are certainly keen to 
keep the legislators at bay. In a 
speech on advertising freedoms, due 
to be delivered at Leeds University 
tonight, Peter Mitchell. Guinness's 
strategic affair s director and presi- 
dent of the World Federation or 
Advertisers, argues that self- 
regulation “has the ability to be 
speedy, cost-efficient, effective and 
available at no charge to the com- 
plainant". 

Self-regulation must continue to 
work well, "otherwise the public 
perception that advertising is legal, 
decent, honest and truthful begins 
to decline" and the pressure for 
intensified regulation would grow, 
says MitcbeLL 

The ASA is convinced that Brus- 
sels recognises the value of self-reg- 
ulation and will, in general, try to 
avoid imposing centralised, har- 
monising legislation on the indus- 
try- The Brussels-based European 
Advertising Standards Alliance, 
which co-ordinates IS self-regula- 
tory bodies across tbe EU. plus Aus- 
tria. Sweden and Switzerland, has 
stressed to the European Commis- 
sion that attempts to harmonise 
would be unwise. Instead, Oliver 
Gray, EASA director-general, sees 
"over time a convergence of princi- 
ples of self-regulation". 

The self-regulation message is 
also spreading east A joint EASA/ 
ASA team has visited Prague to 
help set up a council for the self- 
regulation of advertising in the 
Czech Republic, and there have also 
been requests for help in setting up 
codes from Poland, Slovenia and 
Latvia, says Gray. 


A direct flight to the 
travelling public 

Richard Tomkins on USAir’s unusual method of 
explaining its safety record to passengers 


T here is probably no subject 
more sensitive to airlines 
and their passengers than 
safety. Usually it is the last thing 
airlines want to discuss in 
advertisements: however good 
their safety records, most carriers 
have suffered fatal crashes, and 
the few that have not are 
reluctant to boast about the 
achievement for fear of tempting 
fate. 

How, then, to explain the 
advertising campaign launched 
this week by USAlr, the 
loss-making US carrier in which 
British Airways owns a 24.6 per 
cent stake? In newspapers across 
the US, and some overseas.the 
airline has addressed the subject 
directly, taking full-page 
advertisements to assure tbe 
travelling public that safety is its 
first consideration. 

The danger of such an unusual 
campaign is that it immediately 
prompts travellers to ask why it 
has became necessary'- In VSAir's 
case, the answer is clean the 
airline bas experienced a spate of 
five fatal air crashes over the last 
five years, two of them in the last 
six months. Already bedevilled by 
aente financial problems, it is now 
losing business because of deeper 
customer fears. 

USAir’s advertisement, framed 
as an open letter to travellers 
from Seth Schofield, chairman and 
chief executive, seeks to reassure 
passengers by announcing two 
moves. The airline says it has 
appointed Gen Robert Oaks, 
formerly commander in chief of 
the US Air Forces in Europe, to 
oversee the safety of all the 
airline’s operations, and says a US 
consultancy called PRC Aviation 
has been commissioned to carry 
out an independent safety audit 
"In closing," Schofield's letter 
ends, "let me say that we will not 
rest until each mid every member 
of the flying public shares in the 
certainty of our commitment to be 
the safest of airlines." 

Richard Weintranb. USAir’s 
senior director of public affairs, 
acknowledges that the advertising 
campaign is unconventional, but 
says tbe airline is not In a 
conventional situation. Referring 
to USAir’s fatal accidents in July 


USAlr 


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and September of this year, he 
says: “There really is very little, if 
any, precedent for two accidents 
of this nature occurring in such 
proximity." 

Arguably, the spate of accidents 
is coincidental. USAlr points out 
that there is no obvious link 
between the flve crashes that have 
happened since 1989. The Federal 
Aviation Administration, the US 
government body responsible for 
aviation policy, has had USAir 
under extra scrutiny since 1992 
because of earlier accidents and 
because of the airline’s financial 
difficulties, but says USAir 
continues to meet the highest 
standards of safety consistent 
with the FAA's safety regulations. 

In terms of raw statistics, it is 
true that USAir tops the league 
table of big US carriers for 
accidents per lm flight hours over 
the last five years. But those 
figures weigh particularly heavily 
against USAir because most air 
crashes happen daring takeoff or 
landing, and USAir has more 
short-hanl flights than any other 
US carrier. In terms of accidents 
per departure over the last five 
years, tbe airline ranks behind 


Sreerely. 

j*.' r 


Sew E. Sc hofield 
CttMinan and 
Ctw3fE*ecumO*CQr 


Continental and United. 

Logic aside, however, it is 
hardly surprising to find that 
USAir’s business has suffered. 

Last month, the airline said It 
reckoned the crashes had cost it 
940m (£24.3m) in revenues in the 
quarter to September, contri- ] 

bating to net losses of $180.lm. 
Weintranb says the airline’s latest 
figures show that year -on-year 
bookings were up 12.6 per cent in 
the io months to October, but 
were up only 2.5 per cent hi the 
month of October alone. ! 

Weintranb says USAir has little I 
to lose by nmning tbe 
advertisements because media 
coverage of the accidents has left 
few people unaware of them. On 
the other hand, he says, market 
research and anecdotal evidence 
suggest that the barrage of 
adverse publicity has introduced 
doubts about safety into the minds 
of even its most loyal customers, 
and tbe advertisements could do 
some good if they counter that "It 
is extraordinarily important that 
we reach out and share our con- 
viction about what we know to be 
a certainty, which is that we run a 
safe airline,” Weintranb says. 


INSEAD 


mm 



m 


If service matters to you, so will 
The Strategic Management of Sei 
5-17 March 1995 


Arnoud De Meyer 
Associate Dean 
Executive Education 

This programme ran Jar t he ray 
ftni tittle this year. The kind of 
companies it attracted are relevant 
w roar business. They included: 

British Airways Pic 
World Bank 
Hong Kong Telecom 
ABB Krafrwake AG 

Hewlett-Packard SA 
CNP Assurances 
ICL (UK) lid 

One participant. tAf Chairman of 
Sedgwick UK l imired, commented' 

•The programme was very aaion- 
orientated. h will probably take 
about a year to know the fill 
benefits - but I got lots oj ideas 
which I wit! be implementing, 
especially in the areas af strategic 
marketing and human resources ." 


IV7iat common factor distinguishes such successful organisations as 
McDonalds, British Airways, American Express, Marks and Spencer 
and McKinsey? The answer is outstanding service. 

Good service creates a ‘virtuous cycle’ of For a very practical approach has led us U 


loyal customers leading to higher profits 
and ultimately satisfied employees who in 
turn better serve their customers. 

Last year INSEAD created an entirely 
new two week programme entitled. The 
Strategic Management of Services. 

The programme integrates the three 
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Organisational Behaviour - which have 
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service.- it also addresses other specific 
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strategic cost management, distribution 
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The programme examines two 
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business to meet those expectations. 

Knowledge you can apply immediately. 

Participants will be given the opportunity 
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Tor a very practical approach has led us to 
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simulation which will run throughout the 
programme. As you are no doubt aware, 
at INSFAD we have pioneered the use of 
simulations. 

Who should attend? 

Senior executives at the CEO level will find 
this programme particularly valuable, as 
will genrral managers and business unit 
managers. Equally those who support 
general management will benefit - especially 
if during a period of change they have lo 
ensure customers receive better value. 

Any company committed io service 
will find ii appropriate • including 
manufacturing firms who realise how 
important service is. 

If you would like to know more, 
please return the coupon below or call 
Chantal Poget «»n 33 (I) bO 72 42 90. 
She will arrange for a brochure to be 
sent to you. 


Our new brochure “The Strategic Management of Services" is now available. 

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FINANCIAL TIMES THURSDAY NOVEMBER 


24 1994 


TECHNOLOGY 


Arnold Redhead on why Japan's financial services 
industry is still struggling with new technology 

Slow dawning of 
electronic risk 






I n Japan’s finan cial services 
industry, Information technol- 
ogy boffins tend to work in 
back rooms developing com- 
puter systems to help traders and 
fund managers make the best of a 
changing investment world. Much 
of their work is a mystery even to 
their colleagues in the trading 
rooms. 

The pace of technological develop- 
ment has been slower than in the 
US and Europe, and the pattern of 
computerised applications has been 
strongly Influenced by Japan's 
recent boom-bust experiences. 

In the early 1980s, Japanese ana- 
lysts and brokers relied on paper 
and intuition to make their deci- 
sions in what was a less sophisti- 
cated financial environment. Their 
counterparts in New York and Lon- 
don were already investing in IT. 
But as investment opportunities in 
overseas markets have increased, 
Japan's finan cial sector has tried to 
match competitors abroad. 

Nikko Securities, Japan's second 
largest brokerage, was one of the 
first into the fray. Its computer 
model for picking the best-perform- 
ing stocks, developed jointly with 
Barra of California in 1986, has 
become the standard for Japanese 
equity analysis. Most investment 
houses still use variants of it. 

Tts application took off as the 
stock market boomed In the 1980s. 
Brokerages making large profits 

F uji Bank, Japan's third larg- 
est bank and a big player in 
world derivatives markets, is 
aware of the value of computers in 
the fast-moving environment of 
swap and option trading. 

The company recently bought a 
Cray mini -supercomputer for Its 
New York-based subsidiary’s deriv- 
atives operations, linking it via a 
wide-area network to workstations 
on the desks of its London and 
Hong Kong traders. 

Back at headquarters in Tokyo's 
Otemachi business district, Fuji's 
derivatives traders do not yet have 
the power of a Cray to help them in 
their decisions. “The pace of these 
markets is getting so Cast that we 
cannot compete without comput- 


from index-linked funds saw oppor- 
tunities in computerised analysis. 

"For brokerages, computer model- 
ling and quantitative analysis came 
to mean index funds, r said Hiro- 
f mni Yagi, general manager of 
Nikko's investment technology 
research department. 

Computers virtually ruled the 
trading rooms from 1$37. But faith 
In electronic analysis was under- 
mined when shares tumbled in 1990 

and finan cial houses shifted the 
application towards risk control. 

“Brokerages began to re-evaluate 
what they used their models for.” 
says Yagi. “We saw that our com- 
puter models could be used to con- 
trol risk." 

Now Nikko uses computer tech- 
niques primarily to measure risk in 
investment hinds, to construct port- 
folios and for investment in over- 
seas markets. 

The company says it is still a long 
way behind the Americans and 
Europeans, but it has started to hire 
graduates with higher degrees in 
mathematics and physics to boost 
its 100-strong research operation. 
Nikko is looking at neural networks 
and artificial intelligence for asset 
management and allocation. It is 
also trying to enhance existing 
models that analyse the perfor- 
mance of individual stocks. 

Japan's life insurance companies 
have reached s imilar conclusions on 
the use of computer models. Life 


insurers are some of the largest 
investors in Japanese financial 
markets and most were using com- 
puter models for portfolio risk 
analysis and allocation by the late 
1980s. 

Asahi Mutual Life Insurance, 
Japan's third largest Insurer with 
assets of Y10 trillion (£6^bn), uses 
two types of model to support its 
fund managers. Tbe first is for risk 
analysis based on US techniques, 
and the second is a locally devel- 
oped product that gives tbe opti- 
mum weights for stock and bonds 
in domestic portfolios. 

T he local model took the com- 
pany around a year to 
develop, according to Kouichi 
Kurata. manager of Asahi's quanti- 
tative research division. It uses Sun 
workstations to crunch data on 
company earnings growth, valua- 
tion. historical stock price momen- 
tum and P/E ratios to pick equities, 
and price momentum information 
for domestic bonds. Kurata rates 
the model as quite successful, 
although he says it often underper- 
forms when used on investment 
strategics for periods of less than 
six months. 

Kurata and his five research staff 
are likely to start work soon on new 
models for asset allocation and 
overseas equities. 

Kurata shares the view that com- 
puter trading models were overused 



CD-Rom parts 

Joia ShllUngford on a system 
that makes car repairs easier 


A«htay Aa hwood 

Fairs London traders use price simulation models linked to the New York office 


in the boom years of the late 1980s. 

"There was a lack of understand- 
ing of how these things worked at 
that time.” he says. "Now we are 
learning how to use them properly.” 

Government concerns also limit 
the use of advanced IT In Japan. 
The Ministry of Finance does not 
forbid the trading of derivatives by 
law, but it has “guidelines'' that 
deter financial institutions from 
trading in the more exotic types of 
product such as equity-linked Index 
swaps. The ministry, the finan cial 
industry watchdog, is worried that 
unregulated trading of derivatives 


How Fuji banks on 
the personal touch 


ere,” says Yoshiki Takeshima, gen- 
eral manager of Fuji’s market risk 
assessment division. 

Fuji's derivatives traders use 
IBM and Hitachi workstations run- 
ning price simulation models for 
yen and dollar interest-rate swaps, 
futures trading and options devel- 
oped by programmers hi file bank's 
financial engineering division. 

The models use historical pricing 


data and traders’ simulations of 
future price movements based on 
past trading patterns to give a mar- 
ket price for the derivatives the 
bank offers to corporate clients for 
hedging purposes. Takeshima 
stresses that the models are only 
guides for traders. Although Foji 
also uses some artificial intelli- 
gence, it does not let the computers 
trade automatically. 


“The trader makes the final call 
on the price," be says. Japanese 
investors still prefer their decisions 
to be made by a human being, 
according to Takeshima. Telling 
investors that advanced technology 
is calculating the price of a deriva- 
tive can sometimes actually kill 
demand for the product. 

Takeshima, a 28-year veteran of 
Fuji, is charged with making sure 


may lead to bankruptcies, and 
heavy losses for investors. 

Japan does not yet have markets 
for most of these financial products, 
but Japanese institutional investors 
have set up trading operations in 
London and other offshore centres 
where they can take part. The 
result is that most of their best 
quantitative analysts are working 
overseas. 

Yagi believes the government will 
eventually allow investment houses 
to trade in new financial products 
locally, which may spur investment 
in software and hardware. 

the models contain adequate provi- 
sions for risk. His department 
looks over the models and checks 
that they do not leave the bank 
overstretched. Value-added risk cal- 
culations make the models accurate 
for most situations, except market 
panic. 

Takeshima sees Fuji being drawn 
into a spiral of ever greater invest- 
ment in computing power and soft- 
ware just to stay afloat 

Once Japan's Ministry of Finance 
lifts rules governing the booking of 
profits from overseas derivatives 
trading and allows trading in other 
financial products, the bank will 
need more complicated models to 
stave off co m p eti tion. “Hie game 
will never stop." says Tak eshima. 


L ex Retail, the UK car 
dealership group, is 
equipping its 54 body shops . 
with a systemfor estimating 
repairs based on a CD-Rom disc 
database. . 

The system stores data on 
500,000 car parts on a angle 
CD-Rom (rrad-only-memory) disc, 
which is played on a drive 
connected to a personal computer. 

Several car-rental companies 
and insurers, including Guardian 
Insurance and Royal Insurance, 
also use the system, called 
Glassmatix, to help agree 
estimates more quickly with their 
approved body shops. 

The system, produced and sold 
by Glass's Information Services, 
bases repair times oh data drawn - 
from a UK research centre in 
Thatcbam, funded by UK insurers. 
Car-part prices in Glas sm a tix 
COme from the rupmrfartaimi-fl- 
Steve O’Brien, UK fleet 
maintenance manager at Budget, 
the car rental company, says he 
wanted estimates based oh criteria 
that were standard in the 
insurance industry. 

At Budget, the damage manager 
examines a car and decides what 
new parts are needed. Hie then 
passes a barcode wand over the 
relevant reference in a catalogue. 
For example, he might swipe the 
barcode for a new side wing in a 
1994 Ford Mondeo. The informa- 
tion Is later transferred to the 
PC. 

The PC works out (based on a 
CD-Rom updated monthly) how 
much each repair will cost, 
rnriudmg parts and labour. It also 
works out the most gffirfent order 
in which to do repairs, keeping 
labour costs to a minimum. 

“We basically tell the bodyshops 
what we’re expecting to pay," says 
O'Brien. This has contributed to a 
£lm cut in maintenance costs a , 
year, the company says. 

The system also works out when 
a car is not worth repairing. 
O’Brien says: “If repairs are going 
i to cost more than 3&4Q per cent of 
the car’s value, we replace the car 
with a new one." 

The system means Budget 
spends less time rummaging 
through car-part catalogues or ' 
phoning suppliers and ha g glin g 
over repair estimates. 


Khas also enabled. ^msurec9,.$htf 
other uSers^ to see more clearly .. 


soma garages over the retail pried- . 
of a compQDent“At first we . . . 

. thought the system was wrong, 
says^eremySea^chief motor . 

- angiTWAr at(^iar^mI o ^ n wn ca v 
“Now we’re picking up on over- 
charging, even if H is as small as 
L5 per cent”. 

Guardian Insurance -- part ot- 
Gnardian Royal Exchange 
Insurance r is to equip itestaff 
engineers with a portable version 
of the system to theycan send ' ■- -j 
estimates back to the office via •_ 
the Sam Mobile Data network, the. 
UK mobile data service. . . 

Some insurers, such as 
'Guardian, also plan to usei a ... . . 
related product - ( Haasim age - ... - 
which enables still or moving ...r ■ . . 
video images of damaged vehicles 
to be sent to the insurer down - 
telephone lines, on over a mobile 

- data network. Tbe software, which 
compresses the size of each video 

.' image, was developed in 
conjunction with video card 
company, Videologic. 

Users will need a standard video-, 
camera, a video card amt a modem 
to take and transmit still or 
moving images. '' 

The Thomson Corporation. . . 
which owns the MitobelL’s : -" 
CD-Rom system hi the US <oh : - : 
whidi Glassmatix is based) 
invested £6m to help Glass's ' - • 
develop the UK version of the : 
. product The amqiany says it may 
have to wait several years for a . 
return. But there is a potential 
market of 2#)0.insurance ' ; ^ 

assessors, tire 5,000 biggest 
bodyshops-and principal car 
dealers and fleet managers.' 

Subscribing to Glassmatix costs 
£5,000 a year including paper - 
catalogues, monthly CDs and 
support, butmrcludthg hardware. 
Glasstmage costs an extra £495 a 

year- 

There are similar products oh 
. the market The best known is ‘ . 
Audatex, which is owned by Swiss 
insurers Swiss Re. Its . 
collisjonrepair estimating system 
draws information on parts and 
labour costs from manufacturers. 
Audatex is p lanning to 
incorporate tiie insurers* 

Thahham data by January. 


PEOPLE 


Kleinwort Benson poaches from 
NatWest’s investment trust team 


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Welcome 






Kleinwort Benson Securities 
has broken up the top team of 
stockbrokers covering the UK 
investment industry by poach- 
ing the bulk of the sales and 
marketing staff of NatWest 
Securities investment trust 
team. 

NatWest Securities' Hamish 
Buchan, the doyen of the 
investment trust sector, said 
yesterday that the first he 
knew about it was when ten of 
his staff announced that they 
were quitting. He admitted 
that it was a big blow when a 
team walked out en masse and 
was particularly painful 
because It had coincided with 
his 50th birthday. 

Buchan, who has headed 
Extel's list of investment trust 
analysts for all but one of the 
past 21 years, said yesterday 
that he and Robin Angus, an 
equally big figure in invest- 
ment trust research, intend to 

Non-executive 

directors 

m Joan Bingley, retired 
I company secretary at MAL at 
CADOGAN MANAGEMENT. 

1 ■ Eugene McCarthy at 
WOODCHESTER 
INVESTMENTS; Arnaud dc 
Villepin has resigned. 

■ Michael Sutton, a director of 
Singer & Friedlander. at 
CREIGHTONS NATURALLY, 
m Brian Clayton, chairman of 
Bridon. as chairman at DSRM, 
in succession to Derek Hate. 

■ Graham Lockwood, retired 
deputy chairman and group 
actuary of Eagle Star, at 

LONDON AND MANCHESTER 

GROUP. 

■ Lord Dooro. deputy 
chairman of Vendome Luxury 
Group, as chairman of 
FRAMLINGTON GROUP in 
succession to Hark St Giles 
who remains on the board. 

M Ian Lindsey, a director of 
Save & Prosper and a member 
or the Royal Air Force 
Volunteer Reserve who spent 
two months assisting public 
relations in the Gulf war, at 
NAAFI. 

■ John Parnaby, md of the 
electronics systems businesses 
in Lucas Industries and 
chairman of the government's 
LINK r&d committee, at 
SCOTTISH POWER. 

■ Ross Maries has resigned 
from ROSS GROUP. 

■ Brian Cooper at 
SILENTNIGHT HOLDINGS. 


stay at NatWest Securities and 
rebuild the sales team. “We 
think we have a fairly strong 
franchise," says Buchan. 

It has been known for some 
time that Kleinwort Benson 
Securities has been keen to 
break into the investment trust 
sector which is dominated by 
NatWest Securities, along with 
Smith New Court and S.G. 
Warburg. Margins tend to be 
better than in other parts of 
the equity business and there 
is the added bonus of winning 
big fees on corporate business. 

When Kleinwort Benson 
launched its heavily over-sub- 
scribed European Investment 
Trust earlier this year it had to 
part with several million 
pounds of fees to rival brokers. 
By having its own investment 
trust sales team it could pre- 
vent this happening again and 
further its ambitions to 
become a big player in over- 


seas investment trusts. 

It is understood that the 
team defecting to KB is headed 
by Robbie Robertson and 
Roger Hullett and come from 
the London end of NatWest 
Securities' investment trust 
operation. The best Investment 
trust teams use their research 
analysts to feed their sales 
force and it is significant that 
the two best-known analysts at 
NatWest Securities have not 
defected. 

■ Vicky Sleddon, 27, who has 
been managing Kleinwort Ben- 
son's new £5Q0m European Pri- 
vatisation Trust, has been 
poached by Mercury Asset 
Management to help manage 
its E575m European Privatisa- 
tion Trust The two firms set 
up their new trusts within a 
few weeks of each other and to 
date Mercury has performed 
slightly better. William Hall 



HSBC’s Dick Peterson 
moves to New York 



Good news for the over-fifties. 
Dick Peterson, a 59-year-old ex- 
Chase Manhattan banker, has 
just been appointed chief exec- 
utive of HSBC Holdings’ New 
York corporate banking busi- 
ness. 

In an industry which some- 
times seems to worship youth, 
Peterson has survived longer 
than many of his contempo- 
raries. He worked for Chase in 
Los Angeles, London and New 
York, and joined Midland Bank 
in 1983 at the behest of Herb 
Jacobi, another ex-Chase 
banker. 

Although Midland Bank's US 
ambitions were cut short by its 
disastrous acquisition of Calif- 
ornia’s Crocker Bank, and Mid- 
land was itself acquired by 
HSBC In 1992, Peterson opened 


Midland's branch in New York 
in 1983 and has soldiered on 
when others have opted for 
early retirement 

Peterson has no plans to do 
the same because he still 
enjoys the business. A former 
colleague at Chase describes 
Peterson as a “tremendously 
experienced guy” who has very 
good interpersonal skills, 
sound judgment and is “very 
good with clients". Peterson 
would be the first to admit that 
he is not the only banker with 
30 years' experience under his 
belt with these attributes. But 
he is one of the last to be still 
climbing the promotion ladder. 

His new job involves integ- 
rating the New York corporate 
oaakmg businesses of Midland 
and the Hongkong and Shang- 
hai Banking Corporation into a 
new unit called HSBC Corpo- 
rate Banking. It wtU work 
closely with HSBC’s Marine 
Midland Bank. William HaU 

■ Richard Kellett-Clarke has 
been appointed md of 
AFP-EXTEL NEWS, the joint 
venture between Age nee 
France- Presse and Extel 
Financial, part of the ET. 

■ Albert Stocker, formerly an 
md at Swiss Bank Corporation, 
has been appointed head of 
EUROPEAN CAPITAL’S 
project finance department. 


“Ten years ago I was a tank 
commander based in West Ger- 
many. If anyone had told me 
that a decade later I would be 
swapping vodka toasts with 
Russian tax officials in St 
Petersburg, I would have said 
they were mad." 

Now 36, Stuart Leasor 
(above) hops round east 
Europe, helping governments 
spend European Union grants, 
on public relations campaigns 
to persuade recalcitrant citi- 
zens to pay their taxes. 

He persuaded the Polish 
finance ministry that publish- 
ing a 100-page guide to the new 
tax laws for every household *■ 
was not a great idea - Poland 
ended up gathering 7 per cent' 
more VAT than it had- hoped 
for; saved 450,000 Ecus by run- • . 
ning a successful Bulgarian 
VAT pr campaign rather more 
cheaply than anyone imagined 
possible; and has made sore 
that all 89 oblasts in Russia, 
now have a tax information 
office. 

IDs small pr firm - Wood- 
stock Leasor, formed with 
Sarah Tubbs, formerly of Dewe 
Rogerson - now has people 
working throughout east - 
Europe; dearly he thinks pros- 
pects are good. He must - he's 
planning to marry a Kazakh 
working in Kiev. Gary Mead 

■ Julian Rivers has been " 

appointed commercial 
development director of ; . " 

PENTOS; he is succeeded as 
marketing director of Dillons 

by Stephen Dana, formerly 
“aiketing director of ' ' , 
Thorntons. 

■ Rosie Hill-Davis, he ad of 
programme planning at 
Carlton, has been appointed to . 

tiie same job at BSkyB; Thn 
Rjordan, Carlton Television’s .. 
director of broadcasting, moves 
to the same job at BSkyB. ■" 

Vincent O’Brien, head of 

Presentation at BSkyB, is . - 
appointed director of 
broadcasting at LWT. 

* .John Curtis, formerly md of 

initial Supplies, has been 

8H5H nid reliance 
SECURITY services. 


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FINANCIAL TIMES THURSDAY NOVEMBER 24 1994 


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Cinema/Nigel Andrews 

Yin and Yang 
of festivals 


THE NIGHTMARE BEFORE 
CHRISTMAS (PG) 
Henry Selick 

DEAR DIARY (15) 

Nanni Moretti 

STRAWBERRY and 
CHOCOLATE (18) 
Tomas Gutierrez Alea and 
■Tuan Carlos Tabio 

I LOVE TROUBLE (PG) 
Charles Shyer 

A GOOD MAN IN AFRICA 
(15) 

Bruce Beresford 


T he Nightmare Before 
Christmas fills us with 
terror. Not because it is 
frightening but because it 
is so good. Watching it. 
all our delicate preconceptions about 
popular movie-making start sliding 
around like tables on a sweQ-tossed 
ocean liner. 

We thought that Hollywood never 
extended itself in the cause of 
sophisticated anarchy. We also 
thought that it never fashioned fea- 
ture-length animated films that 
catered for adults as much as for 
children. But this puppet phantas- 
magoria. with its stop-motion figures 
and crazed settings plundered from 
German Expressionism, should 
delight the over-forties as well as 
under-fourteens. 

We start in Hallo weentown, where 
the rocky landscape is combed and 
curled like a frozen seascape and 
where strange-shaped houses (a 
witches' hat, an octopus) disburse 
stranger-shaped citizens. *1116 Mayor 
has a revolving head with two faces: 
one for beaming at the electorate, 
one for gnashing covert teeth. The 
local Mad Scientist is part human, 
part cyber-duck. And our hero, 
accompanied by a ghostly flying dog 
who seems made from origami, is a 
long-legged, wire-thin dandy called 
Jack. (Short for Giacometti?) 

He is the Pumpkin King. But 
bored with Halloween, he wanders 
into the woods one day, stumbles 
down an Alice-like t unn el and dis- 
covers Christmastown. Snow! Col- 
our! Good cheer! He sings a song - 
the best in the movie, called “What's 


I won't take my shoes off, 
don't worry," says the 
eponymous heroine of 
That Woman, a new com- 
edy by John Antrobus. “I don't 
go in for familiarity. " 

Is this ftrnny? In Itself, not 
particularly. With that superb 
character actress Patricia 
Hayes, however, it is the first 
great hoot of a memorably 
hilarious evening. The charac- 
ter she plays - an old eccentric 
who keeps inviting herself into 
young Jack's flat, and any- 
where else, for a cuppa and 
biscuits - is the kind of role we 
seem to have seen Hayes play 
a hundred times, and yet there 
is not a jot of staleness in it. 
Hayes's voice still ranges so 
easily from chest to head 
tones, from urgency to tremu- 
lousness, and her diction is so 
good, that by the time she has 
got to the juicy word “familiar- 
ity”, slowly savoured, she has 
us in the palm of her hand. 

That Woman is being pres- 
ented upstairs in Riverside's 
Studio 3 as if its actors were 
delivering a BBC radio play, 
scripts in hand: which is a 


this?" - and then hurries home to 
report his delight at finding a new 
market for trick-or-treatism. 

I shall reveal no more: or only to 
say that Santa Claus might be cap- 
tured by the Halloweentowners; that 
Pumpkin Jack might take over his 
beard, red coat and reindeers: and 
that Christmastown will almost cer- 
tainly call out the police when 
shrunken heads start falling down 
their chimneys and giant toy snakes 
eat their Christmas trees. 

1 cannot remember when I last 
heard the sound of happy, frequent 
laughter at a Monday morning press 
show. But a film like this rejuve- 
nates everyone. If we thought that 
Tim Burton, the producer and origi- 
nal story writer, had grown old with 
success after Batman, here he is 
returning to the firefly-bright mis- 
chiefs of Beetlejuice. And director 
Henry Selick marshalls an anima- 
tion and special effects crew who 
must have been high and wild on 
overti red ness. (A week's work in 
stop-motion produces about ten sec- 
onds of film). 

Nightmare is 76 minutes of genu- 
ine merriment at the expense of regi- 
mented merriment. Christmas is 
mocked, battered and assaulted: 
from the Halloween town ers' atonal 
rendition of “Jingle Bells” (sounding 
like Schoenberg performed in a 
morgue) to the scene in which a 
Santa Claus sleigh is unceremoni- 
ously blown from the night sky by 
anti-reindeer guns. 

Anarchic? No doubt. Mean-spir- 
ited? Never. The film pushes on, via 
songs, farce and decorative delirium, 
to an ending in which Christmas and 
Halloween are both allowed their 
pre-eminent places as the great Yin 
and Yang - or Jekyll and Hyde - of 
human festivals. 


T he week gets better. 

Nanni Moretti's Dear 
Diary is bliss in three 
parts: an episodic, sump- 
tuously paranoid comedy 
from the Italian performer/film- 
maker - here playing himself - who 
makes Woody Allen seem a well-ad- 
justed extrovert 

to part one our hero, a bearded 
lankshanlrg who might have strayed 
from an El Greco painting, vrooms 
around Rome on his Vespa, voice- 
overing his thoughts on life, love 
and cinema. He lists favourite films 
(Flashdance) and unfavourite ones 
(Henry: Portrait Of A Serial EHIerf, 
he fantasises revenge scenarios on 



. .. 

Trick-or-treatism in Christmastown: one of Jack's ‘gifts' swallows the festive tree in The Nightmare before Christmas' 


film critics: he sobers up for a 
visit to Pasolini’s death-place. 

In part two be walks among the 
Aeolian Islands; where like the hom- 
onymous harp he is “played" by the 
winds of comic happenstance. One 
running gag concerns a friend 
addicted to TV soaps; another 
(inspired) takes off from the simple 
notion of children answering phone 
calls intended for adults. 

In part three he becomes a medical 
guinea pig, as a chronically mis-diag- 
□osed skin itch turns out to be can- 
cer. (He has since recovered.) Here 
and throughout, Moretti has the 
courage to let jokes grow unforced. 
They become coloured with all the 
irony of quotidian calamity and tex- 
tured with all the rueful hilarity of 
everyday frustration and disappoint- 
ments. 

* 

Strawberry And Chocolate is a Cuban 
film about being gay: which earns it 
points for political nerve to add to 
those it can claim as a deft comedy 
of AC/DC manners. Straight David 


(Vladimir Cruz) meets gay Diego 
(Jorge Perugorria). Diego introduces 
David to the sensual delight of 
Scotch whisky, opera records and - 
unselfishly - his man-hungry neigh- 
bour Nancy. David responds slowly 
and with shell-shocked look. 

Be tween -whiles the two men chat- 
ter about art politics and homosex- 
uality. When the director, that vet- 
eran movie guerrilla Tomas 
Gutierrez Alea ( Memories Of Under- 
development ), fell ill with cancer, 
Juan Carlos Tabio completed the 
film. But you cannot see the joins. 
Senel Paz's screenplay is seamlessly 
sly and well-observed. And Havana 
itself winds around the cast like 
some rococo, affectionate ghost, or 
one of those playfully omnivorous 
snakes in The Nightmare Before 
Christmas. 

A large snake should have been let 
loose on both / Love Trouble and A 
Good Man In Africa. The first is a 
stuttering Julia Roberts/Nick Nolte 
comedy thriller set in the Chicago 
newspaper world: a place where long 


raincoats and flying pencils do not 
automatically turn you into Cary 
Grant and Rosalind Russell (though 
a good script might help). 

The second film is based on Wil- 
liam Boyd's colonialism -spoofing 
novel. A Good Man In Africa - 
which surely had same wft on the 
printed page - has been turned into 
something resembling a village thea- 
tricals version of Waugh’s Black 
Mischief. 

The village in question, though, is 
the Global Village. America’s John 
Lithgow essays the frightfully Brit- 
ish ambassador. Sir Arthur Fan- 
shawe. Australia’s Colin Friels 
attempts the frightfully Rn gHah 
junior diplomat Morgan Leafy. And. 
another Australian, Bruce Beresford, 
fairly frightfully directs. 

One moment w e are in “Carry on 
up the cleavage" vein, with Morgan 
losing his cool and his trousers to 
every eligible female in view 
(Joanne Wballey-Kilmer. Diana 
Etigg). The next moment we are won- 
dering how to deal with the film’s 


one real human being who keeps 
wandering across the screen. He is 
Sean Connery as the titular good 
man, a doctor refusing to be cor- 
rupted by African political sleaze. 

Connery’s presence is so majestic 
that he exposes aesthetic fraud or 
triviality merely by standing next to 
it The makers of this film should 
have left the gate open for him to 
escape the lot on day one. That way 
their al fresco children's party could 
have continued without the one 
reproving adult 

Connery has already escaped the 
Highlander saga. Only Christopher 
Lambert is left heaving the clay- 
mores in the tired and excruciating 
H3 (15, Andy Morahan). Why not see 
instead The Seven Samurai. Kurosa- 
wa's classic swashbuckler revived. 
Or - it is a busy week - you could 
catch a small but almost perfectly 
formed Hong Kong film at the ICA. 
Days of Running Wild (15). Hope, 
despair and comedy in the 1960s. 
caught on the wing by director 
Wong Kar-Wai 


Theate/Alastair Macaulay 

That Woman: a 
tour de force 


charming way of ensuring that 
Hayes herself, who alone 
seems in need of a script, need 
not undergo the old actor's 
nightmare of forgetting her 
lines. Indeed, since That 
Woman began as a pair of 
radio plays. How I Met Franz 
and Rats, little camouflage is 
involved. 

Antrobus's writing is a per- 
fect vehicle for Hayes’s gift for 
creating monstrous bizarrerie 
out of her harmless-old-crone 
facade. (Would that we could 
hear again the tremendous 
Sarah Gamp she once created 
in Radio 4*s Martin Chuzzle- 
ioiL) Her obsession here is that 
she has been the sexual play- 
thing or the medical profes- 
sion. By the time she has got 
to “I don't know when I last 
had a stethoscope on my 


chest," convulsions are occur- 
ring all round the audience. 
Yet the role has its pathos (“I 
want to talk to someone"), and 
eventually its bizarrerie goes 
beyond humour into purest 
fantasy. 

In the second half, she sets 
to work on a police inspector. 
She offers herself as a material 
witness, but she wants also (a) 
tea and biscuits, and a proper 
meal if poss. <b) seduction 
("Out comes the truncheon” - 
spoken with fabulous lascivi- 
ousness). Yet her behaviour in 
the police station is more nor- 
mal than the story she has to 
narrate. She tells of her pas- 
sionate affair with her late 
lamented: “I was Josephine to 
his Napoleon, Emma Thomson 
to his Kenneth Banner” (sic). 
The late lamented 's wife had 


repressed his artistic talent: 
"She wouldn't let him express 
himself in oils.” But her he 
painted: '"Let yourself go into 
a pose of the southern seas.' he 
said.” What had she to offer 
him? “Unendurable pleasure 
indefinitely prolonged." 

I would like to take Hayes's 
utterance of that last line to a 
desert island. But, then, she is 
uproarious in her myriad dif- 
ferent ways of saying “Yes, 
dear,” all of them loaded. And 
she is perfectly complimented 
by Brian Murphy and Peter 
Woodward. Murphy, a wonder- 
ful study in working-class per- 
turbation. is a fine comic actor 
who is the more funny for giv- 
ing every attention to Hayes 
and his co-actors; Woodward, 
with his striking presence, 
anchors the first half by 
playing the innocent deadpan 
dupe to this aged visitation. 
Philip Grout directs. On press 
night, the cast seemed scarcely 
able to suppress their own gig- 
gles. And we who watched 
gave our laughter full vent. 

At tbe Riverside Studios, W6. 


T hree centuries ago the 
Stationers* Hall, 
around the corner 
from SL Paul’s in Ave 
Maria Lane, used to promote 
celebrations of St. Cecilia's 
Day - November 22 - with 
music and banqueting. A 
stained glass window in their 
fine 17th-century hall depicts 
that patron saint of music. 

A few years back some sta- 
tioner, or anyhow some mem- 
ber of The Worshipful Com- 
pany of Stationers and 
Newspaper Makers, must have 
remembered the old custom. 
Since 1992 there have been St. 
Cecilia-Tide concerts again, 
with banquets; next year there 
will be a five-day mini-festival 
(sponsored by the FT, as it 
happens). 

These days, the obvious 
thing to put into a 17th-century 
hall is a period-instrument 
band. The Stationers' Hall has 
the Fieri MusicalL a baroque 
ensemble (with chorus) 
founded by their conductor 


St Cecilia's Day celebrated 


Penelope Rapson. On Tuesday 
they gave thoroughly attrac- 
tive performances of Purcell’s 
Funeral Music for Queen Mary, 
and Bach’s Magnificat in D 
and his A minor concerto for 
violin. 

The soloist in tbe latter was 
their leader Peter Fender prop- 
erly a primus inter pares, not a 
commanding voice (baroque 
violin-technique hardly per- 
mits of domineering bril- 
liance), but notably subtle in 
his florid Andante excursions. 
In the great Funeral Music the 
preludial and concluding 
marches and canzonas went to 
sackbuts and “flatt trumpets", 
with processing mourning- 
drums, to imposing effect, and 
the chorus enunciated the 
"Funeral Sentences" - early 
Purcell anthems, in fact: 
nobody knows whether they 
were part of the original pack- 
age - with lucid eloquence. 

Later, we admired Dr Rap- 
son’s unhesi tating dispatch in 
the Bach Magnificat. It empha- 


Concert 

Maazel 
and the 
Bavarians 


G reat Orchestras of 
the Worid is a bold 
title for a concert 
series. It invites 
questions. Tbe latest visitor to 
the Barbican was the Bavarian 
Radio Symphony Orchestra 
with its music director since 
last year, Lorin Maazel. The 
orchestra is well-known from 
its recordings with two earlier 
directors, Rafael Kubelik and 
Sr Colin Davis, as well as its 
radio concerts broadcast in 
Britain by the BBC. 

Maazel offered two monu- 
mental symphonies as calling 
cards, Mahler’s Ninth on Sun- 
day evening and Bruckner’s 
Eighth on Monday. Maazel is 
certainly a vivid conductor - 
some would say a bit a flashy. 
It is hard to Ignore his balletic 
manner on the rostrum, which 
veers between elegant noncha- 
lance and a limp wrist at one 
extreme, and exaggerated 
miming of the expressive 
effect he wants to achieve at 
the other. But he certainly got 
results. 

He had the strings seated in 
a different arrangement from 
usual, with the violas to his 
right, cellos facing the audi- 
ence, and second violins 
behind the firsts on his left 
This produced a good balance 
and it dramatised the contri- 
bution of the violas as well as 
allowing the cellos a more 
direct impact All the strings 
played marvellously; the vio- 
lins were warm and silky in 
the unfolding sighs of Mah- 
ler's first movement and 
superbly controlled, without 
any ragged attacks or frayed 
endings in the long, fading 
farewells of the fourth move- 
ment 

In the two middle move- 
ments the woodwind players 
enjoyed themselves visibly as 
well as audibly, smiling glee- 
fully when the E flat clarinet 
squealed wildly in the Rondo- 
Burleske. For all that, the 
sound as a whole was perhaps 
too healthy and plump to be 
quite as sardonic as Mahler 
intended, and he might have 
wanted tbe second movement 
Lintfler to be more clod-hop- 
ping and uncouth. Still, as a 
whole, it was a really commit- 
ted involving performance. 

Bruckner's Eighth Sym- 
phony on Monday evening was 
even finer, and gave no cause 
for questions about character. 
The warmth of the woodwind, 
with notable rapport between 
principal flute and clarinet, a 
beautifully focused oboe, the 
beefy and absolutely reliable 
brass - all were a joy. And 
again, those ^marvellous 
strings remained disciplined, 
strong and ardent in the sever- 
est test of their stamina. 

The eighth has darker, more 
sinister shadows than Bruck- 
ner’s preceding symphonies, 
and its sense of uplift is 
achieved through sometimes 
painful dissonances; yet they 
are rendered as objective natu- 
ral forces by the immense spa- 
ciousness of the design and 
Bruckner's characteristically 
abrupt juxtaposition of mate- 
rial. Maazel, conducting from 
memory, steered with a totally 
satisfying sense of pace. The 
work lasted more than ninety 
minutes yet it never felt 
protracted: the audience sat 
rapt The Bavarians certainly 
earned their place in this 
series. 


sised the continuity of the Mar- 
ian text through the dozen dif- 
ferent numbers, whilst giving 
full value to their differences 
in weight, colour and address 
(public v. private). Her tempi 
were generally quick, vital and 
nicely braced; her solo singers 
rose confidently to all their 
occasions. 

Kate Eckersley was a poised, 
intelligent soprano, but the 
standout number was the “Et 
misericordia” duet for counter- 
tenor and tenor (Nicholas Clap- 
ton and Nicholas Hurndall 
Smith). Together, their con- 
trasted timbres - the one 
reedy, cultured and elevated, 
the other warm and slightly 
baritonal - made a magical 
amalgam, strange but quite 
beautiful. 

David Murray 

Sponsored by Sinclair Roche & 
Temperley, Galbraith's, Twin- 
star Chemicals. Korea Nordic 
GB and Spicers 


Adrian Jack 


INTERNATIONAL 

Arts 

Guide 


■ PARIS 

OPERA/BALLET 

Champs Bysdes Tel: (1) 47 23 37 
21/47 20 08 24 

• La Dame de Pique: opera by 
Tchaikovsky. Director Valery Gergiev 
at 7.30 pm; Nov 25, 26, 27; Dec 1.2 

• La Khovantchfna; opera by 

Mussorgsky at 7.30 pm: Nov 29, 30; 
De c 3, 4 

■ BERLIN 

OPERA/BALLET 

Deutsche Oper Teh(030)3 41 92 49 

• Dialogues des Carmines: by 
Poulenc, in three parts. A new 
production directed by Gunter 
Kramer at 7.30 pm; Nov 25, 29; Dec 

• Fidel io: by Beethoven. Conductor 
jffi Kout at 7.30 pm; Nw 24 

• The Magic Flute: by Mozart 

Conductor Foster/Lang-L^smg/ 

Soltesz at 7 pm; Nov 26 (6 pm), 30 

■ BONN 

S5S2SS™ (a.* 


• II Guarany. by Antonio Gomes, in 
Italian with German surtrtles. 
Conductor John Neschling, 
production by Werner Herzog at 8 
pm; Nov 30 

• La Fanchilka del West by Puccini, 
in Italian with German surtrtles. 
Conductor Eugene Kohn, production 
by Gian-Cario del Monaco at 7 pm; 
Dec 2 (8 pm) 

• La Traviata: by Verdi. A new 
production conducted by Eugene 
Kohn, with production by JQrgen 
Rose, in Italian with German sureties 
at 8 pm; Nov 26 (7 pm) ; Dec 4 (7 
pm) 

• The Sleeping Beauty: a new 

production of Tchaikovsky's ballet 
Produced and choreographed by 
Youri V&mos. conductor Michel 
Sasson at 7 pm; Nov 27; Dec 1 (8 
pm) ,3 

■ ROME 

THEATRE 

Teatro DelT Opera Tel: (06) 481601 

• L’ Ariosi ana: by Bizet at 7 pm; 

Nov 25, 26. 27 

■ AMSTERDAM 

CONCERTS 

Het Concert gebouw Tel: (020) 671 
8345 

• Bernard Haitink: conducts the 
Concartgebouw orchestra with 
soloists Charlotte Margiono and Jard 
van Nes to perform Mahler at 8.15 
pm; Nov 24 

GALLERIES 

Rtyksmuseurn Tel: 020 673 21 21 

• Art of Devotion 1300-1500: major 
winter exhibition focusing on the 
spiritual function of objects in the 
medieval period; from Nov 26 to Feb 
26 (Not Sun) 


OPERA/BALLET 

Het Muziektheater Tel:(020)551 89 
22 

• Rosa: new production of the 
opera by Andriessen. Directed by 
Peter Greenaway at 8 pm: Nov 25, 
28 

■ LONDON 

CONCERTS 

Barbican Tel: (071) 638 8891 

• Gala Concert London Symphony 
Orchestra with mezzo-soprano 
Marilyn Home and conducted by 
Marvin Hamlish. Includes 
Hamlisch’s, The Anatomy of Peace’ 
at 7.30 pm; Dec 1 

• Grand Operatic Evening: National 
Symphony Orchestra with soprano 
Susan McCulloch under the 
direction of Martin Merry perform a 
variety of operatic pieces at 7.30 
pm; Dec 3 

• Mozart Idomeneo: Sir Colin 
Davis conducts the London 
Symphony Orchestra at 7 pm; Nov 
25, 27 

Festival Han Tel: (071) 928 8800 

• Russia Old and New: Royal 
Philharmonic Orchestra with the 
Brighton Festival Chorus. London 
Choral Society and conductor 
Vladimir Ashkenazy perform 
Schnittke, Prokofiev and 
Rachmaninov at 7.30 pm: Dec 5 
Garrick Tel: (071) 494 5085 

• KoninkJijk Concertgebouworkest: 
with pianist Evgeny Kissin and 
conducted by Sir Georg Solti, play 
Beethoven. Bart ok and Kod4ly at 
2.30 p.m.; Nov 26, 29; Dec 2 
GALLERIES 

Barbican Tel: (071} 638 8891 

• A Bitter Truth: a multi-media 
exploration of changes in attitudes 
towards Worid War 1 throughout its 


duration; to Dec 11 
Hayward Tel: (071) 261 0127 

• Romantic Spirit in German Art 
1790-1990: examines work of early 
Romantic painters. Includes section 
on German Expressionists; to Jan 8 
National Gallery Tei:(D71)839 3321 

• Allegory: selection of paintings 
from the permanent collection on 
the theme of allegory; to Dec 4 (Not 
Sun) 

Royal Academy Tei:(071) 439 7438 

• The Glory of Venice: a major 
survey of Venetian art in the 18th 
century; to Dec 14 
OPERA/BALLET 

Barbican Tel: (071) 638 8891 

• The Kirov Opera: director Valery 
Gergiev brings his entire company to 
the UK for just one night to give the 
first complete British performance of 
Rimsky- Korsakov's opera. The 
Legend of the Invisible City of Kitezh 
at 7 pm; Nov 28 

English National Opera Tel: (071) 
632 8300 

• Ariadne on Naxos: by Strauss. A 
Graham Vick production at 7.30 pm; 
Nov 25; Dec 1 

• Khovanshchina: new production 
of Mussorgsky's opera. Director 
Francesca Zambello at 6.30 pm; 

Nov 24, 30; Dec 3 

Royal Opera House Tel: 071 240 
1200 

• An Ashton Celebration: The Royal 
Ballet Company pays tribute to its 
founder choreographer, who would 
have been 90 this year, with a short 
festival of his work consisting of 12 
ballets and divertissements. 
Performance includes a new 
production of Daphnis and Chlod by 
Ravel af 7.30 pm; Nov 26, 30 

6 La Traviata: by Verdi. A new 
production by Richard Eyre. Georg 
Solti conducts for the first five 


performances, then Phfllipe Auguln. 
In Italian with English surtrtles at 
7.30 pm; Nov 25. 29; Dec 2, 5 

• Mixed Programme: Includes the 
World Premiere of Michael Clark's 
New Clarke Ballet. Fearful 
Symmetries choreographed by 
Ashley Page, and Symphony in C by 
Bizet, choreographed by George 
Balanchine at 7.30 pm; Dec 1 

• The Sleeping Beauty: a new 
production of Tchaikovsky's ballet 
Produced by Anthony Dowell, set 
designed by Marla Bjpmson at 7.30 
pm; Nov 26 (2 pm) ; Dec 3 (2 pm) 
THEATRE 

Gielgud Tel: (071) 494 5065 

• Hamlet: by Shakespeare. 

Directed by Peter Hall, designed by 
Lucy Hall. With Stephan DiUane, 
Michael Pennington, Donald Sfriden 
and Gina Bellman at 7.15 pm; to 
Feb 4 (Not Sun) 

National, Olivier Tel: (071) 928 2252 

• The Seagull: by Chekhov, in a 
new version by Pam Gems. Sat mat 
at 2pm at 7.15 pm; Nov 24, 25, 26 

■ NEW YORK 

GALLERIES 

Museum of Modern Art Tel: (212) 
708 9480 

• A Century of Artists' Books: 
Exhibition of 140 books from some 
of this century's foremost artists; to 
Jan 24 

OPERA/BALLET 
Metropolitan Tel: (212) 362 6000 

• Don Giovanni: by Mozart, sung In 
Italian at 8 pm; Nov 25, 28; Dec 2 

• Lady Macbeth of Mtsensk: by 
Shostakovich at 8 pm; Nov 26. 30; 
Dec 3 

• Madama Butterfly: by Puccini at 
8 pm; Dec 1, 5 

• Rigotetto: Italian opera by Verdi 


at 8 pm; Nov 26, 29; Dec 3 
New York State Theater Tel: (212) 
870 5570 

• The Nutcracker by Tchaikovsky, 
performed by the NY City Ballet 
Tue-Thu 6pm. Fri 8 pm. Ring for 
other times and matinees; from Nov 
30 to Dec 31 (Not Mon) 

THEATRE 

Walter Karr Tel: (212)239 6200 

• Angels In America: Tony 
Kushner’s Tony-award winning play. 
Sun mat at 3pm. Wed., Thurs., Sat. 
at 8 pm; to Dec 4 

■ WASHINGTON 

CONCERTS 

Kennedy Centre Tel: (202) 467 
4600 

• Los Angeles Philharmonic: 
Conducted by Esa-Pekka Salonen, 
with pianist ODie Must on en play 
Lutoslawski, Ravel and Sibelius at 5 
pm; Nov 26 

GALLERIES 

Phiffips Collection Tel:(202) 387 
2151 

• Pictographs of Adolph Gottlieb: 
exhibition of one of the founding 
members of the New York School; 
to Jan 2 

OPERA/BALLET 

Kennedy Centre Teh (202) 467 

4600 

• Le Nozze di Figaro: by Mozart 
sung in Italian with English sur-titles 
at 8 pm; Nov 25, 27 
Washington Opera Tel:(202) 416 
7800 

• Faust: by Gounod. Director, EUen 
Douglas Schlaefer, conductor, 
Richard Bradshaw. Faust played by 
Jianyi Zhang. In French with English 
surtitles. at 7 pm; Nov 26 


WORLD SERVICE 

BBC for Europe can be 
received in western Europe 
on Medium Wave 648 kHZ 
(463m) 


EUROPEAN CABLE 
AND SATELLITE 
BUSINESS TV 
(Central European Ttme) 
MONDAY TO FRIDAY 
NBC/Super Channel: FT 
Business 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; 








14 


Bell ringers for 
a bright future 


T he UK chancellor, 
Kenneth Clarke, 
seems to have been 
born under a lucky 
star. For it is difficult to 
remember when the economic 
and budgetary outlook seemed 
better or wben mainstream 
economists have looked more 
uncomfortable. The real hero 
of the hour is. however, our old 
friend “self-correcting eco- 
nomic forces". 

The new National Institute 
Economic Review is disarm- 
ingly frank about how conven- 
tional expectations have been 
confounded: 

• The rate of increase of 
wages and prices has remained 
low despite the 1992 post-ERM 
devaluation. 

• The current balance of pay- 
ments has improved despite a 
recovery' in domestic demand 
faster in the UK than in its 
main trading partners. Indeed, 
as cautious an economist as 
Andrew Sentence asks in the 
rival London Business Eco- 
nomic Outlook: “Is the UK cur- 
rent account moving into sur- 
plus?" It probably is in surplus 
already If overseas assets are 
valued properly. 

• Consumer spending contin- 
ues to rise despite the tax 
increases announced in two 
1993 Budgets, some of which 
have stUl to come into effect. 

• Unemployment continues to 
fall despite the earlier conven- 
tional view that “even** 
resumed economic growth 
would not make a dent in it 
The NIESR cautions us 
against assuming another eco- 
nomic miracle, but does so for 
interesting reasons. It suggests 
that the pressure of demand in 
both goods and labour markets 
“may have a more marked 
effect on wage and price set- 
ting than we had realised". 
You can say that again. The 
improvement in trade perfor- 
mance is rightly said to date 
back to the 1980s. But the 
recent narrowing of the trade 
gap has taken place despite 
favourable movements in the 
terms of trade - the opposite of 
what is supposed to happen 
after devaluation. 

Cynical readers should note 
that it is not the tradition of 
political economy from Adam 
Smith onwards that has been 
discomforted: nor has the sub- 
sequent analysis of the main 
causes of both market and gov- 
ernment failure. The discom- 
fort has been felt at two 
extremes - tbe mainstream 
short-term economic modellers 
and those who believe finan- 
cial markets are always right. 

If the economic prospect is 
good, the budgetary outlook is 
“brill" ( upper-class female 
shorthand for brilliant). It is 


* The Bell Curve 

deserves atten- 
tion not be- 
cause it revives 
dubious claims 
about large eth- 
BOOK nic differences 

BD1/7PU/ In Intelligence, 
but because it 
makes a plausible case that 
individual brain power or “cog- 
nitive ability" is a far more 
important determinant of eco- 
nomic and social success than 
hitherto recognised. This is a 
“big idea" that, if correct is 
likely to exert considerable 
influence on public policy in 
coming decades. Sceptics 
should note that Charles Mur- 
ray, an early critic of welfare 
spending, has unusually sensi- 
tive intellectual antennae. 

Murray and his co-author, 
the late Richard Hermstein, a 
Harvard psychologist, argue 
that variations in IQ help 
explain many puzzling social 
phenomena. They believe 
incomes are growing more 
unequal, even for people with 
similar qualifications, in part 
because economic competition 
is forcing employers to reward 
personal productivity, which 
depends largely on IQ. 

Low intelligence, meanwhile, 
appears to be closely correlated 
with nearly all social problems, 
incl uding poverty, illegi tima te 
births, school drop-outs, wel- 
fare dependency, divorce and 
crime. To give one example, 
the proportion of American 
whites below the poverty line 
is 30 per cent for the “very 
dull" (IQs below 75) against 2 
per cent for the “very bright" 
(IQs above 125). 

The point the authors drive 
home repeatedly is that IQ has 
become a much more impor- 
tant determinant of an individ- 
ual’s life chances than the 
socio-economic class of tbe par- 
ents - the factor that most 
researchers tend to emphasise. 
Thus a bright child from a 
poor background has a much 
better chance of graduating 
from college than a dull child 
from a privileged background. 

Intelligence was once fairly 
evenly distributed throughout 
society: most high IQ individu- 
als were neither well-educated 
nor rich because arbitrary eco- 
nomic and social barriers pre- 
vented their advancement. 
Ironically, say Murray and 
Hermstein, progress toward 
the liberal goal of genuine 


THE BELL CURVE: 
Intelligence and Class 
Structure in American Life 
By Richard Heimstein 
and Charies Murray 
The Free Press. 845 pages. £251530 


much in the foreseeable future. 
They need this finding to jus- 


tify their impassioned critique 
of “affirmative action" policies 


equality of opportunity is caus- 
ing a pernicious new form of 
social stratification - an aris- 
tocracy of the intellect. To a 
far greater extent than before, 
the very bright are monopo- 
lising elite universities and 
hogging the best jobs in “high 
IQ" fields, such as investment 
banking, law, medicine and the 
higher reaches of public policy, 
academia and the media. These 
meritocrats tend to be segre- 
gated from the rest of society - 
financiall y, culturally and even 
physically (via private security 
guards). 

You may object that this 
puts a ridiculous emphasis on 
IQ: surely many other qualities 
such as perseverance, integrity 
and sociability also influence 
personal performance. The 
authors dub this the “compen- 
sating skills fallacy": these 
other qualities are important 
but people with high I(& are 
no less likely to possess them 
than the less able, they say. 
Superior cognitive ability thus 
becomes the determining 
advantage; hence its power as 
a predictor of performance. 

The book invites criticism on 
many grounds. The argument 
about social stratification by 
IQ, for example, is supported 
mainly by anecdotal evidence: 
the authors do not establish a 
strong statistical correlation 
between IQ and earnings. 

And since the authors 
believe such stratification 
could undermine civil society, 
it is curious that they urge a 
shift of educational resources 
towards gifted children; their 
analysis surely suggests that it 
is the less able who need more 
help. The notion that low IQ is 
the most important cause of 
social problems also sits oddly 
with the experience of the past 
30 years: crime, welfare depen- 
dency and illegitimacy have 
mushroomed, yet measured IQ 
has risen over this period, 
especially at the bottom end. 

More controversial is their 
incendiary claim that the gap 
between the average IQ of US 
whites and blacks is not only 
large but unlikely to contract 


to help minorities. If you allow 
for ethnic differences in IQ, 
they claim, many of the alleged 
signs of discrimination against 
blacks disappear or are 
reversed. Holding IQ constant, 
blacks earn nearly as much as 
whites and are more likely to 
graduate (Tom college and 
enter elite professions. Blacks 
only seem to be discriminated 
against because, as a group, 
they have low IQs. 

Yet Murray and Herrnstein 
admit that environmental fac- 
tors account for 40-60 per cent 
of differences in IQ. Blacks are 
certainly less socio- economi- 
cally privileged than whites, so 
a substantial (but maybe tem- 
porary) measured IQ differen- 
tial is to be expected. 

Moreover IQ is itself a rather 
fuzzy concept: the authors note 
that average IQs may have 
risen as much as 15 points in 
just two generations (a phe- 
nomenon known as tbe 
“Flynn" effect). The only credi- 
ble explanation is an improved 
environment: for example bet- 
ter education and nutrition, 
especially for the poor. Again 
the implication is that black 
and white IQs will tend to con- 
verge as environmental differ- 
ences are reduced - a trend 
perhaps already evident in 
school test results. In the long 
r un, colour-blind social policies 
are desirable: individuals 
should be judged as individu- 
als, not as members of ethnic 
groups. But if IQ differentials 
mainly reflect disparities in 
environment rather than 
Innate differences, short-term 
biases in favour of certain 
groups are not so illogicaL 

The authors deserve great 
credit for attempting to s mas h 
what has become a ridiculous 
taboo on open discussion of IQ 
differences - and for making a 
complex argument lucid. They 
may be exaggerating the signif- 
icance of IQ, but we will not 
know for sure until other 
researchers follow their lead 
into forbidden territory. My 
guess is that The Bell Curve 
will trigger an avalanche of 
research into the social and 
economic consequences of IQ 
variations. 


Michael Prowse 


mm 




riasa 




tpiffgl 






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993266 C 1 


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I 


Nothing's more uncertain. 




^SapGjjqns centre Tokyo ^Washington choisit la moderation 


«?> iV.'.t" . ’ ■ 





Nothing's more reliable. 


Fob people who make decisions every day, access io precise and comprehensive 


FINANCIAL TIMES THURSDAY NOVEMBER 34 1994 


ECONOMIC VIEWPOINT 


The outlook for the 


Budget is ‘brill’ 


By Samuel Brittan 


INFORMATION ON INTERNATIONAL ECONOMY AND MARKETS IS VITAL. IHEY NEED THE 


MOST RELIABLE SOURCE OF INFORMATION AVAILABLE. Ilf FRANCE, THEY READ 


Us Echos, France's leading business newspaper. Nothing's more reliable. 


only a year and a half ago that 
the £50bn UK public sector bor- 
rowing requirement, originally 
estimated for 1993-94, was the 
one economic number every- 
body knew. Indeed, it was 
thrown at one by the most sur- 
prising people and quite often 
soon followed by demands that 
more should be done to stimu- 
late the economy. 

The £50bn figure always 
seemed an exaggeration, and 
has now been revised down to 
£46bn. The Treasury projection 
of a contracting deficit all but 
disappearing near the end of 
the decade was almost univer- 
sally derided. Yet the latest 
projections show the deficit 
has been contracting ahead of 
schedule. Borrowing in 1994-95 
is turning out at little more 
than £30bn, and at £20bn in 
1995-96, according to updated 
Green Budget projections. 

Goldman Sachs, which origi- 
nally made the projections for 
the Green Budget in October, 
has since revised downwards 
by £8bn its projection of next 
year's public sector spending. 
For it now believes that the 
chancellor will try to get the 
full benefits of lower-than-ex- 
pected inflation in a cut of 
£6bn in the public spending 
control total and that there 
will be further savings in cycli- 
cal social security spending 
and in debt interest 

We can then expect a learned 
and inconclusive debate aboat 
whether the chancellor has 
tightened fiscal policy and can 
thus afford to pause before 
raising interest rates again, or 
whether the Exchequer 
finances are simply benefiting 
from the economic upturn. 
Hoare Govett has made an illu- 
minating analysis of the 
Improvements in the fiscal out- 
look over the three years 
between 1993 and 1996, esti- 
mated at 4% percentage paints 
of gross domestic product. 
Business cycle factors are said 
to account for 2’A percentage 
points, pre-anna unced tax 
increases for 2'/« points and 
tighter spending control for a 
farther 1 V< points. Falling asset 
sales are an influence in the 


The vantehlns budget deficit 


UK PS8R projections (£te) 


► treasury auqkwr-1994 
i GweriBaiJgaRupdate- 


!v * i • . 


1889-9* 94-88 . 

Some TfcKBwy. OaHnan SkM, 


0M7 W-60' 


ti» dole and fbr employers to 
offer jobs to less skffled work- 
ers. Ihese probleans were aim*, 
lysed by Stephanie Flanders in 
yesterday's FT.' distinc- 
tions feat need.to.hd made; »» 

• between kick-start changes, 
such as reiievixig newly 
employed --workers from 
National. Insurance and/or 
income tax fora limited period 
and more permanent top-up 
payments which continue as 
long as needed. . ; : 

. Meanwhile the puzzle 
remains why the economic : 
upturn still leaves so 'much of 
the electorate in such a sour, 
mood. A brave attempt at an 
answer has been., made by 
Peter Sjpencer and John Cur- 
tice in a Kleinwort Benson 
paper. They themselves iden- 
tify the missing ingredients as 
tbe absence of Increases in 
' working hours normally expe- 
rienced at this stage of recov- 
ery, raying that higher demand 
has been- met from productiv- 
ity instead. They believe this 
absence makes workers , inse- 
cure about foezr jabs. . 


•.MSB 


opposite direction. The point, 
however, is that tighter fiscal 
policies are already in place. 
The chancellor will mainly 
allow events to take their 
course and introduce a 
so-called neutral Budget 
Much past experience, from 
President Lyndon Johnson’s 
1960s tax increase to pay for 
the Vietnam war onwards, has 
suggested that fiscal tightening 
- whatever its other virtues - 
does little on its own to slow- 
down a rapidly expanding 
economy. The NIESR estimate 
of an increase in non-oil GDP 
of 3 per cent in 1994 may not 
have adequately taken into 
account the very recent 
upward revision in the 
national income estimates. 
Some 3% per cent is a more 
likely guess - well above the 
most optimistic estimates of 
the trend growth of output. . 
Now that the capacity gap 
looks near to closing, a slow- 


down will be necessary. 

.The argument from growth 
and capacity estimates is 
clinched by the signs that busi- 
ness is looking for an opportu- 
nity to pass on in higher prices 
the increase in costs in compo- 
nents and materials already in 
the pipeline. Tbe rapid and 
unforeseen revival of nearly all 
other economies, including the 
continental European ones, 
will add to demand pressures 
in the UK, as will fee-rise in 
investment taking place 
despite the third-quarter blip. 

The interrelated problems, 
which man-inflationary growth 
on its own will not solve are 
structural unemployment and 
widening pay differentials. The 
most important aspect of the 
Budget - one which financiers 
are bad at judging - is what 
Clarke does to improve work 
incentives. Impro vem ents have 
to be made both in the incen- 
tives for workers to move off 


The squeeze on personal Income 


UK real personal d»fx»abtotacaTie(% change) 


10 


' Year <oh year change ' ! , 1- : ‘ 
• Rw yeerrrwwlng avwgge; l \ 




1970 72 74 78 7ft 80 -(& 84 -«* . 88 . 90- OT*,'. 

aouuOnmn ~ ' '■MESftMtipwto*' 


I t is a brave try, but 
unconvincing and old- 
fashioned. Paid overtime 
is largely a blue collar 
phenomenon. Fears over job 
security are felt much more 
widely among white collar and 
professional workers. Thes is, 
however, a traditional type of 
economic explanation to hand. 
This is that , real disposable 
income has been undo'- pres- 
sure for several years. It stag- 
- nated dining the recession a nd 
hag now fallen a gain, against- a 
long-term upward timid - of. 2.7 
per cent per annum. 

- The fall in real disposable 
income Is partly the mirror 
Image of the shift of resources 
into exports. and. investment 
for which ^economists have 
been crying out for decades. 
But it is also amlrror image of 
the increase in fee tax burden 
imposed bo improve govern- 
ment financ es. .Consumer 
spending is . still doing pretty 
well, but at the expense of a 
steeply Calling savings ratio, 
which averaged 12% per cent 
in 1982-93 and is expected by 
fee NIESR to foil to 8% per 
cent next year. ■ ; 

.■ Increased spending financed 
from reduced . saving no doubt 
does not feel as good as 
increased' spending financed by 
higher real post-tax incomes. 
But there are clearly mare 
deepseated factors, such as the 
trend away from *3obs for life" 

■ which, is being experienced in 
all countries. Solutions will not 
be found in. traditional party 
political 10-point programmes 
which imply , that all change 
must come from government 


LETTERS TO THE EDITOR 


Number One Southwark Bridge, London SEI 9HL 

Fax 071 873 5938. Letters transmitted should be clearly typed and not hand written. Please set -fax for finest resolution 


Plan offers no renaissance for Florence 


From EmBuiattL 

Sir, We read your article, 
“David and the car Goliath” 
(October 31) on the new urban 
plan for Florence, with great 
interest However, we take a 
different view on a number erf 
points. 

First, the Franchini-Vittorim 
urban plan is not based on 
“mixed development” princi- 
ples. For instance, fee 1.86m 
square metre Fondiaria area - 
very large by our standards 
and currently empty - will be 
become an extended dormitory 
containing 2.2m cubic metres 
Of new b uilding s. Ori ginally , a 
large park was planned here, 
in a town in which open and 


green spaces are as precious as 
historical monuments. 

Second, the so-called Fiat-No- 
voh plan has been made possi- 
ble by the demolition of fee 
Fiat factory - again, this is at 
odds with fee mixed develop- 
ment concept 

Further, the FLat-Novoli proj- 
ect offers no solution to the 
traffic and mobility problem, 
while it adds thousands of 
inhabitants - plus cars - to a 
heavily polluted area. A total 
of 6m cubic metres of new 
buildings, mostly apartments/ 
bouses, are planned in a town 
where fee population is tailing 
and where there are 18.000 
empty flats. 


Florence is strangled by traf- 
fic. but the new plan offers no 
solution in terms of streets, 
public transportation, even 
underground car parking. And 
there is bad news for tourists - 
the Mlchelucci-designed rail- 
way station is to be demolished 
and replaced by the badly 
served Campo di'Marte station 
on fee periphery. Nobody com- 
ing into Florence by train will 
again have the cupola by Bru- 
nelleschi as their first view of 
the city. 

The plan will cause disrup- 
tion for 10 to 15 years. Why? 
Because the Florence adminis- 
tration accepted in the plan the 
Italian Railways high-speed 


project. This will cost some 
£60Qm, merely to allow 10 per 
cent of train passengers to 
save 20 minutes on the Flor- 
ence to Rome journey and 40 
minutes between Milan and 
Florence. 

It is hard to believe that 
Florence will achieve a second 
re naissance as a result erf Dr 
FTanchini’s project. Many 
intellectuals, environmental- 
ists, political groups in the 
town council, and many citi- 
zens, oppose ft. 

Eva Bidatti, 

'Tjwori in Carso” town council 
group, 

Florence, 

Italy 


Solvency of pensions is a 
decision for government 


Arguments in support of 
boxing not substantiated 


rr - ■ * 




V : !liU 

U* 




From Mr P N Thornton. 

Sir, Norma Cohen's article. 
“Actuaries attack plan on pen- 
sion solvency standards" 
(November 18), and Lex (“Sol- 
vency standards", November 
21) refer to the proposed mini- 
mum solvency requirement 
(MSR) which will be intro- 
duced in this year's pensions 
bill The articles rightly iden- 
tify a debate which has gone 
on since the Goode Committee 
published its report, on the 
basis for fee MSR and, in par- 
ticular. the extent to which 
equity returns are reflected 
in it. 

The fundamental Issue at 
stake is the choice between 
two definitions of a minimum 
solvency requirement One is 
an MSR which provides a very 
high degree of security for the 
members' benefits covered. 
This implies a relatively high 
proportion of gilts and. for 
some schemes, could have 
potentially costly implications, 
as in a significant number of 
cases they will need either to 
increase funding targets or 


adjust the investment strategy 
which they would otherwise 
have followed, or both. 

The other is an MSR which 
includes a more significant 
equity element. This will cause 
fewer problems for schemes, 
but somewhat less certainty 
about the benefits being 
secured for fee members has to 
be accepted. 

It is about this choice that 
there has been so much debate 
within the actuarial profession. 
This debate has been lively, 
but l am glad to say not acri- 
monious. We have worked 
closely with the government 
officials concerned to investi- 
gate the alternatives, but in 
the end we have made it clear 
that we believe the job of stri- 
king fee right balance is one 
for government and not for the 
actuarial profession. 

P N Thornton, 
chairman pensions board. 
Institute of Actuaries. 

Faculty of Actuaries. 

Staple Inn Hall, 

High Holbom, 

London WC1V 7QJ 


Cheers for a tight quango 


From Dr Fleur Fisher. 

Sir, Nigel Spivey's article, 
“Punch drunk and proud" 
(November 19/20), rehashes the 
overused and unsubstantiated 
arguments in favour of boxing. 
His view reflects the current 
attitude of many of boxing’s 
supporters. 

With the evidence for 
chronic and acute damage in 
professional and amateur box- 
ers increasing by the year, it is 
difficult for supporters to claim 
no damage is occurring Box- 
ing supporters therefore turn 
to their back-up arguments 
regarding the benefits of box- 
ing for young boys and to the 
relative dangers of other sport- 
ing activities. 

Boxers must be sick and 
tired of being told that, if they 
were not boxing, they would be 
unable to overcome “their dis- 
advantages". The situation for 
young people In inner cities is 
trf great concern to doctors, but 
fee BMA would recommend 
improvements in housing, 
unemployment, education and 
leisure facilities rather than 1 
promoting an activity which I 


leads to chronic brain injury 
and life-long suffering. 

As for comparisons with, the 
dangers of other sports, the 
data are not beyond -question. 
The one distinguishing feature 
of boxing is that there are no 
accidental injuries; each blow 
is a legitimate and intentional 
part of the- sport If all fee inci- 
dences of significant blows to 
the head were recorded as inju- 
ries in boxing, as they are in 
other sports, the data would 
without doubt reveal that box- 
ing is a uniquely dangerous 
activity. 

Let us hope that the armed 
forces give this new sc ientific 
evidence the respect it 
deserves, rather than casting it 
aside in favour of unsubstan- 
tiated claims about boxing's 
character building and disci- 
plining effects. 

Fleur Fisher. 
bead of ethics. 

Science and Information 
Division. 

British \ Medical Association, 
BMA House, 

Tavistock Square, 

London WClBQJP 


From Mr T W R White. 

Sir, Re your article, “Labour 
attacks ministers over spend- 
ing on wine" (November 21). is 
Mr Alan Milbum, the Labour 
MP, a teetotaller? 

I am sure fee Labour party 
serves wine at its official gath- 
erings and I would have 
thought Sir Gwen Fergusson, 
head of the government hospi- 


tality fund advisory committee 
for the purchase of wine, 
should be congratulated for 
providing wine at an average 
of £5.26 a bottle. He also seems 
to run a tight quango If it only 
costs £1,500 a year to run. 
TffR White, 

48 Somerset Way. 

Richmgs Park. 

Iver, Bucks SLO SAP 


An offer they could not refuse 

ffWim Ur own I I . 


From Mr R T D Wilmot. 

Sir, It is hot surprising that 
the Isles of Scilly t 0 n th e 
school league table of 108 local 
authorities ("Exam results 
improving, league tables 
show , November 22). as Scilfo- 
nians enjoyed fee benefits of 
compulsory education years 
before fee mainland. This was 


due to the foresight of that 
benevolent autocrat, Augustas 
Smith, who charged Scffioni- 
ans a penny a week for atten- 
dance but tuppence if they 
Played truant Is there a lesson 
nere? 

R T D wihnot, 

12 Kylestrome House, 

Cund & Street, London SWl ■ 


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FINANCIAL TIMES THURSDAY NOVEMBER 24 1994 


15 


financial times 


Number One Southwark Bridge, London SE1 9HL 
Tel: 071-873 3000 Telex: 922186 Fax: 071-407 5700 

Thursday November 24 1994 


The markets 
out of sorts 


TWs week’s giddy slide on Wall 

SEtJ* f W ,^ c ^ 1135 P re «pitated 
snarp falls in stock markets 
around the world, was surprising 
chiefly for its late arrival. US equi- 
ties have Jong looked fully- valued 
and their resistance to the pull of 
rising bond yields over the past 12 
months had all the appearance of 
financial levitation. That impres- 
sion was reinforced by equity 
investors' insouciant response to 
the tightening of US monetary pol- 
icy since February. Whatever hap- 
pens in the short run, it is hard to 
believe that stock prices can 
return to peak levels in a hurry. 
The more pressing question is 
whether the slide will accelerate 
The starting point for any 
assessment must be the peculiar- 
ity of an economic cycle in which 
securities markets have been 
heavily distorted by the efforts of 
the US Federal Reserve to prevent 
a debt crisis tur ning into a credit 
crunch. Tlie means employed by 
the Fed to achieve this end was to 
maintain a steep yield curve: 
short-term interest rates were 
kept low for an abnormally long 
period relative to bond rates. 
Banks were thereby encouraged to 
borrow cheaply to invest in higher 
yielding government IOUs. The 
resulting profits helped restore 
their capital base, permitting 
them to finance the economic 
recovery. 


recent successive rises in US 
short-term rates point towards 
lower equity valuations and a 
shift of mutual fund equity money 
back into bonds and deposits. 

Both in the US and across the 
world, economic recovery has 
proved far stronger this year than 
most forecasters expected. That is 
one reason why bond markets 
have worried about resurgent 
inflation and a rising cost of capi- 
tal, and why the Fed has been 
forced to take remedial action. 
The price to be paid for pre-empt- 
ing a further outbreak of inflation 
is a more pedestrian growth rate 
next year. Corporate profits will 
inevitably take a knock. 


Mutual funds 
The strength of the recovery is a 
measure of the success of the 
Fed’s earlier policy. Yet one 
important consequence of that pol- 
icy was that savers removed 
money from low-yielding b ank 
deposit accounts and certificates 
of deposits, and put them into 
bond and equity mutual funds, 
which offered either a higher 
income or the prospect of capital 
growth. By last year the mutual 
fund industry bad acquired JSTObn 
of equities and $760tm of bonds, in 
addition to its money market fund 
holdings of $580bn. Together these 
hinds of nearly * 2 , 000 bn were 
equivalent to about 85 per cent of 
all US bank deposits, against only 
20 per cent in the early 1980s. 

The bond market collapse which 
followed the Fed's decision to start 
tightening policy in February has 
already caused the flow of money 
Into bond mutual funds to dry up. 
The flow into equities has so Ear 
merely slowed down. Yet the 


Gloomy story 

The best reason for thinking 
that the present correction is not 
the end of tbe gloomy story is the 
current pattern of returns in the 
financial markets. The Dow Jones 
Industrial Average has been yield- 
ing less than 3 per cent while two- 
year government paper offers well 
over 7 per cent, and 10-year bonds 
offer nearly 8 per cent The infla- 
tion-adjusted real rate of interest 
is exceptionally high by historic 
standards. Its attractions for 
investors are bolstered by Fed pol- 
icy, which the futures markets 
expect to become tougher still. 
Meantime money is flowing back 
into bank deposits. The distortions 
wrought by the excessive accumu- 
lation of debt in the 1980s are 
be ginnin g to unwind. 

The process nonetheless has a 
long way to go. For the rest of the 
world's markets, that points to an 
unstable climate for equities, since 
they cannot escape some back- 
wash hum Wall Street, even if 
their domestic economies are at 
an earlier stage in the recovery 
cycle. Yet the toll in prices could 
still prove beneficial if it helps 
free a flow of international capital 
that has been disrupted by the 
weakness of the dollar. 

Having lost billions on dollar 
bond holdings since the mid-1980s, 
Japanese investors have been dol- 
lar shy. Their absence from US 
Treasury bonds has contributed to 
higher real long-term interest 
rates. The fell in bond and equity 
prices on Wall Street does at least 
help restore the competitiveness 
of US assets by making them look 
cheaper to international investors, 
paving the way for the much 
needed stabilisation of the dollar. 


Allies of 
circumstance 


This week’s air raids on Serb 
positions in Bosnia and Croatia, 
involving dozens of aircraft from 
at least four nations, have at least 
in technical terms been a spectac- 
ular demonstration of Nato’s abil- 
ity to marshal and co-ordinate the 
use of force. It has taken 45 years, 
billions of dollars, and great firm- 
ness of will to refine the proce- 
dures by which, for example, US 
command systems can guide the 


activities of UK aircraft carriers or 
Dutch bombers based In Italy. 

Yet Nato is getting its first 
chance to show off these hard-won 
qiriiic at the very moment when 
the transatlantic solidarity on 
which it is based is being ques- 
tioned on both sides of the ocean. 
Predsely because Nato succeeded 
so well in the purpose for which it 
was formed - facing down the 
Soviet bloc - it is going through a 
profound existential crisis, of 
which the latest arguments over 
Bosnia are only a symptom. 

The role of aerial policeman in 
Bosnia is one that fell into Nato's 
lap and does not suit the alliance 
particularly weH It leaves unre- 
solved the longer-term question of 
what if anything, the al lianc e is 

^ tbe five years since the Berlin 
Wall came down, most debate 
about Nato’s future has been 
couched in euphemistic terms 
which underestimate the serious- 
ness of the problem. Commenta- 
tors speak of new models fo-Jmr- 

responsibilities were perfectly 

3 S?Sfl» outsta ??^ 

question was how preosely to 
allocate them. 


bflity of an extremist regime in 
North Africa acquiring ballistic 
missiles is something tiiat haunts 
Spain and Italy far more vividly 
than it troubles Norway or Can- 
ada. Non-communist Russia 
remains an uncomfortable neigh- 
bour for Norway, and a tough 
regional rival for Turkey; but in 
the absence of any global east- 
west confrontation, both Oslo and 
Ankara are finding it much harder 
than before to win understanding 
of these concerns from their Nato 
partners. And on the issue of 
whether Nato should expand east- 
wards - at the risk of upsetting 
Moscow - there is no clear agree- 
ment within any of the leading 
western capitals, let alone among 
the alliance as a whole. 


Regional 


challenges 
clarity of purpose did 
%2?SUL. fhe Cold War. 


Such clarity ui — 

"StissM 

common interest m ^“ scussed . 
scarcely 
Today, ’ 
riding 
neously. 
measure, 
lea, wes" 
instead 

challenges 
countries 
extent 


interest in cobu™*" 
needed to be discussed, 
■however, there Is no over- 

challenge whieh simulta- 
and in roughly equal 
threatens North Amer 

■^•-K-SSSi 

' there 


Europe - — — - • 

»re isa host of regional 
which affect different 
to a widely differing 



Western unity 

On the face of things, the Serbs 
of Croatia have done the western 
security system a back-handed 
favour by mounting a series of air 
attacks which so flagrantly vio- 
lated UN resolutions that the 
international community had lit- 
tle choice but to take action. At 
least for a moment, the Serbs 
goaded the western allies into 
rediscovering the unity which 
they formerly displayed in the 
face of the Soviet threat, and 
which had been conspicuously 
Tanking in the previous two weeks 
of ill-tempered sparring over the 
arms embargo. 

The US, its European allies and 
even - at least initially - Russia 
were able to agree on the need to 
stop future air attacks on the Bos- 
nian enclave of Bibac. But there is 
no guarantee that this display of 
unity will be maintained if Serb 
commanders decide to keep on 
testing it Indeed, they may well 
calculate that sooner or later the 
strains within the contact group 
will resurface, and work to their 
advantage. The very survival of 
the western security institutions 
may depend on making sure such 
calculations are ill-founded. 

In any case, the 16 members of 
Nato should not leave it to the 
Serbs of Bosnia or Croatia, or any 
other provocateurs, to provide 
them with a sense of purpose. To 
retain credibility, they need to 
take the initiative in defining 
more clearly those areas where 
they still do perceive a common 
gim, and those where they fed 
they can afford to differ. 


T his morning. Japan's 
stockbrokers will be 
bracing themselves. As 
they wait to see how the 
plunging Tokyo market 
reacts to the latest collapses in 
world stock markets, a serious 
threat to the brokers' viability is 
being Launched. 

Japan’s leading banks are to open 
the doors of their own securities 
companies for the first time, usher- 
ing in the most radical upheaval yet 
in the country's financial system. 

While banks such as Sumitomo 
and Mitsubishi have been r unnin g 
securities operations in foreign mar- 
kets for years, they have been for- 
bidden to sell stocks or bonds in 
Japan. But today subsidiaries of the 
six big retail h anks will join those 
of a few smaller banks which were 
admitted to the securities market 
last year. 

This big step towards universal 
banking was made possible by 
changes last year to Article 65 of 
the Securities Exchange Law. 
Japan’s equivalent of the US Glass- 
S tea gal I act, which prevented banks 
from undertaking brokerage activ- 
ity. 

The catalyst for the change was 
the move by companies towards 
issuing bonds, rather than borrow- 
ing from banks, as a way of raising 
finance. As a result, banks began 
pushing the Ministry of Finance to 
allow them a slice of the bond- 
issuance business. 

Aware or the damage that this 
would cause to existing brokers, the 
ministry decided to limit tbe banks' 
subsidiaries, initially, to bond 
underwriting and sales. 

Though the banks are not yet per- 
mitted to compete with the brokers 
in their core business of equity trad- 
ing, tbe competition for bond busi- 
ness will hurt their rivals. So far 
this year, the subsidiaries of the 
smaller long-term credit b anks have 
taken nearly 10 per cent of the bond 
issuance market, and the larger 
banks are certain to grab a much 
larger share. 

For a while, the finance ministry 
placated the brokers by arguing 
that the relaxation would result in a 
larger market for everyone. The 
banks, too, maintained the fiction, 
saying they posed no threat to their 
new rivals. But in the last few 
weeks, the pretence has been 
dropped. 

“This is going to be very competi- 
tive. Brokers are very concerned 
about what will happen to their 
business as the banks enter the 
market." said Mr Kaname Seki. 
managing director of the Japan 
Securities Dealers Association. 

A slump in Tokyo's securities 
business has already devastated 
stockbrokers. Securities companies 
went from a combined pre-tax profit 
of Y2,200bn in 1989 to a loss of 
Y470bn in 1992. A slight recovery 
last year looks likely to be wiped 
out in 1994. 

At first sight. Japan’s four brok- 


Gerard Baker examines the implications of allowing 
Japan's leading banks to open securities companies 


Ripple effect of 
Tokyo’s Big Bang 


Japan’s stockbrokers: feeling insecure 



Average dafly trading volumes 
(millions) 

1200 


Pre-tax profits of all securfties 
companies (Vbn) 

2600 - - 


Value of new financing by listed 
companies (Vbn) 

25000 - - 


think the outcome will be anything 
other than a further extension of 
the banks’ role. That leads most 
analysts to conclude that the indus- 
try is in for a significant shakeout. 

One medium-sized stockbroker, 
Cosmo, has already had to be res- 
cued by a bank. More are likely to 
follow. Even the banks seem pre- 
pared for it Many of the smaller 
companies are partly owned by 
banks and larger companies, and 
many analysts expect these stakes 
to be expanded. 

"Since the current difficulties for 
the smaller brokers are certain to 
get worse," said Mr Noda, “further 
mergers and consolidation are 
bound to happen." 

One opportunity for brokers could 
lie in the further deregulation of the 
securities market, which might 
expand the volume of business by 
enough to save most of them. They 
have been reluctant to press for 
wider deregulation until now. since 
it would be likely to lead to a 
cut in tbe fixed commissions they 
ebarge. But they xnay have little 
choice now. 



20000 



15000 


10000 


5000 


ISM 90 W S2 90 94 To 

Year to Much Sep 94 


1999 SO 91 
Year to Much 




A wide range of securities 
business is currently 
denied to the broking 
sector. With deregu- 
lation, there are some 
relatively new markets that brokers 
could tap, such as asset-backed 
securities and derivatives, both of 
which are heavily restricted in 
Japan. 

There would also be opportunities 
in a domestic secondary bond mar- 
ket, almost non-existent at present 
due to tbe rules governing the regis- 
tration of bonds, which make it 
almost impossible to sell a bond 


1999 M 91 9a » 04 To 

Year to March Sop 94 


once it has been bough L 
“If the 


Sourcaa: ToKyn Stock Etcfonju. Jjpjn 5acuntas Orators AssoouMn 


ing behemoths. Nomura, Nikko, 
Yamaichi and Daiwa, look like the 
biggest losers: 15 per cent of their 
earnings came from underwriting 
commissions last year, compared 
with an average of 6 per cent for 
smaller and medium-sized brokers. 
But they are large enough to with- 
stand even a sizeable loss of busi- 
ness. And, as the result of a piece of 
reciprocal deregulation, they have 
established trust banking subsid- 
iaries which are expected to provide 
significant compensation. 

The real threat is to the smaller 
stockbrokers. Bonds represent a 
smaller proportion of their busi- 
ness, but the arrival of tbe hnni« 
comes just as their core equities 
business is hitting new lows. 

The finance ministry has reduced 
new equity issues to a trickle in the 
last two years, to avoid flooding tbe 
market. Worse still, in recent 
months trading levels have fallen 
sharply. Trading volumes on the 
stock market have declined from a 
peak of more than lbn shares a day 
in 1988, to a recent low of an aver- 


age 300m a day for this year. 

The collapse of trading has put 
brokers' margins under severe pres- 
sure. For an average broker to 
make a profit, total trading needs to 
be in excess of 400m shares a day. 
Despite radical cost-cutting mea- 
sures, including staff reductions of 
nearly 30,000, or 20 per cent, in 
three years, brokers are still losing 
money, hi the past six months only 
29 securities companies out of 215 
made a profit 

Losing out to the banks in bond 
issuance will turn these difficulties 
into a crisis. One senior executive 
at a medium-sized broker said: “We 
are now in a race for customers, 
and 1 cannot see any other outcome 
than one in which the banks win 
the race easily. Because our profits 
are so weak, b anks can always beat 
us on price, despite their size and 
higher costs.” 

What most upsets brokers is what 
they see as the unfair advantages 
enjoyed by the banks' subsidiaries. 
As well as having tbe world's larg- 
est financial institutions backing 


them, they will have access to an 
enviable client base, in that the 
bank's clients are expected to trans- 
fer their broking business to the 
bank's subsidiaries. 

The new companies are supposed 
to be divided from their parents by 
"fire walls”, preventing the transfer 
of information from bank to broker. 
They will not be allowed to tout for 
customers together, for example. 
But the aggrieved brokers feel that 
most of the divisions are cosmetic - 
with one rule preventing the subsid- 
iaries' staff from wearing the same 
coloured uniforms as those of the 
banks - and will not prevent sub- 
sidiaries from exploiting their links 
with their parent banks. 

“Though we are not allowed to 
exchange information, I should 
point out that, of the 126 employees 
of DKB Securities, 124 came from 
DKB the bank,” said Mr Yasuo 
Noda. president of DKB Securities, 
with a wry smil e. 

In two years the authorities are 
committed to reviewing the new 
framework, but few in the industry 


arrival of the banks is 
accompanied by a genuine opening 
of the whole securities market, then 
we have nothing to fear, and the 
real winner will be the corporate 
customer,” said Mr Akira Ogino, a 
managing director of Nomura Secu- 
rities. 

This suggests the intriguing pos- 
sibility that financial deregulation, 
up to now carefully controlled by 
the Ministry of Finance, might be 
developing a momentum of its own. 
Tokyo's markets are still hidebound 
by restrictions that deter domestic 
and foreign investors and limit the 
scope for raising capital. "The right 
thing to do now,” says Mr Seki. 
"would be to press ahead with 
wider deregulation quickly to 
enlarge the market and create genu- 
inely open competition .” 

It is a happy coincidence of inter- 
est that the action that will proba- 
bly be necessary to save the skins 
of the country’s brokers will be the 
same as that needed to develop a 
capital market commensurate with 
the needs of the world's second larg- 
est economy. The Ministry of 
Finance may find that it has at last 
created a self-propelling liberalising 
machine. 


There’s no time like European time 



PERSONAL 
View 


Boosting a country's 
prosperity is rather 
like keeping a com- 
pany moving for- 
ward. You must 
strive to increase 
revenues, to cut 
costs and to make 
yourself more com- 
petitive. Do this and in financial 
terms you will live to do more for 
your shareholders. 

If into the bargain you can 
improve the quality of life of those 
you are responsible for, you may 
even be liked as well - though that 
is asking a lot! Which has led me to 
wonder if it would not be remiss of 
the government to pass up an 
opportunity to bring in an extra 
£lbn a year for the UK's tourism 
and leisure industries, boost busi- 
ness and employment prospects, 
and consolidate the positions of 
London and Edinburgh as Europe’s 
pre-eminent financial centres, all 
without costing us a penny. 

For that very opportunity is 
before us now. 

It goes by various names and has 


appeared in different guises over 
the years without ever quite mak- 
ing it on to the statute books. It is 
the remarkably simple idea of put- 
ting our clocks forward by one hour 
throughout the year on to what 
Eurotunnel is at present forced to 
call "concession time". This is what 
we operate from Folkestone, and 
what the Home Office has labori- 
ously christened "single/double 
summertime". 

A campaign to achieve this objec- 
tive - unifying the UK with Euro- 
pean Time - was launched recently, 
with the aim of bringing forward a 
private member's bill on the subject 
in the annual ballot that allows a 
backbench member of Parliament to 
introduce a bill to the House of 
Commons. 

The campaign, Daylight 
Extra . . . Now. is rightly pointing 
out the advantages of an extra 
hour's daylight at the end of the 
day. when most of us would notice 
the difference. Most notable is the 
reduction in road accidents, evi- 
dence for which is provided by the 
Transport Research Laboratory and 


endorsed by the Royal Society for 
the Prevention of Accidents. There 
are also the greater opportunities 
for sport and leisure, but from my 
commercial perspective there are 
other benefits too. 

For a start, the change to syn- 
chronise UK time with that in con- 


The campaign rightly 
points out the 
advantages of an 
extra hour’s daylight 
at the end of the day 


tinental Europe would spell an end 
to the current absurdity whereby 
we enjoy a mere four hours of over- 
lap in working time with the conti- 
nent of which we are part and to 
which about three-fifths of our 
exports now go. Never do the 22 
miles separating us seem so long as 
when you try to call a colleague in 
Paris around “lunchtime”. 

But there is far more at stake 
than mere convenience. Putting the 


clocks forward will synchronise 
Britain's financial markets with 
those of continental Europe, it will 
confirm English as the main lan- 
guage of European business and it 
will open up a precious 60 minutes 
of overlap in working time with the 
tiger economies of the Far East 

British executives will also expe- 
rience the novelty of attending nor- 
mal meetings in Paris, Brussels. 
Amsterdam, Geneva and Frankfurt 
without the expensive and time-con- 
suming process of flying over the 
night before to stay in anonymous 
hotels. 

The tourist industry, which is 
heavily dependent on daylight 
hours already, would have its sea- 
son extended - thereby encouraging 
the rapidly expanding domestic 
market in off-peak and short-break 
holidays. 

Small wonder then that the cam- 
paign has the backing of, among 130 
others, the Confederation of British 
Industry, British Tourist Authority 
and tbe Association of British 
Chambers of Commerce. 

It is time to break inertia's grip 


on our parliamentary derision mak- 
ers, and there is evidence to suggest 
that the grip is now slackening 
among MPs. Like all matters that 
affect the way we live our lives - be 
it the compulsory wearing of seat 
belts or imposing a smoking ban on 
public transport - there is an 
inbuilt reluctance to shift from the 
status quo. 

Ultimately, however, passive 
opposition in those examples was 
overcome and I am confident it can 
be in this one. 

As there was reluctance in Down- 
ing Street to include this measure 
in the Queen's Speech, then let 
there be support for a private mem- 
ber's bill which is included in 
today’s ballot Government by lot- 
tery it may be, but this is one issue 
whos^ number must surely now be 
called. 


Alastair Morton 


The author is co-chairman of 
Eurotunnel 


OBSERVER 


Silence is 
golden 


■ Silvio Berlusconi, currently the 
only leader of a G7 country waiting 
to be grilled by anti-corruption 
magistrates, could learn a lesson or 
two from Italy's Enrico Cuccia, 
honorary chairman of Mediobanca, 
the powerful Milan merchant bank. 

Cuccia, who celebrates his 87th 
birthday today, received a warning 
from Ravenna magistrates in May 
that he and three other Mediobanca 
executives were under investigation 
for alleged involvement in false 
corporate reporting by 
Ferruzzi-Montedison, the troubled 
industrial group for which tbe bank 
masterminded a rescue plan exactly 
a year ago. 

Immediately, a terse press release 
(Mediobanca's first ever) was issued 
denying tbe charges, and then there 
was complete silence. 

In contrast, Berlusconi's reaction 
to the magistrates’ warning was to 
record an angry seven-minute 
speech, railing at almost everybody, 
and send it to all Italy's television 
channels. 

Result: Berlusconi loses 
credibility; Cuccia guards his. 


Wheels oiled 


■ Indonesia's President Suharto is 
getting a reputation as a man who 
can get things done. 

Having made sure that the 


leaders at last week's A pec summit 
did not get drenched - he laid on a 
pairang hujan (rain man) to pray 
for dry weather - he seems to have 
been responsible for banging heads 
together at this week’s Opec 
conference. 

Opec has been looking for a new 
secretary general since June and it 
seemed as if the latest Opec 
meeting would pass without a 
decision: both Iran and Venezuela 
wanted their man to get the job. 
However. Suharto broke the 
deadlock with a phone call to Iran's 
President Rafsanjani urging him to 
accept Nigeria’s Rilwanu Lukman 
as Opec's next chief. 

A slightly surprising choice - 
given Nigeria’s reputation as Opec's 
bad boy for consistently flouting 
production ceilings. Even so, the 
fact that Opec can agree on 
something is bound to send the 
right sort of signal to the world's oil 
markets. 


Out in the cold 


■ Whatever happened to Sir Peter 
Holmes? He has gone to ground 
since he stepped down as chairman 
of Royal Dutch Shell nearly 18 
months ago. 

Unlike his predecessors, such as 
Sir Peter Baxendeli. who went on to 
chair Hawker Siddeley. and 
“Fearless Frank” McFadzean, who 
went on to head British Airways 
and Rolls-Royce. Sir Peter has kept 
his head down. 

At 62. he* is still young enough to 



‘It’s a plaster-cast of a bag 
of plaster' 


take bis pick of chairmanships in 
the public or private sector. But he 
seems to prefer spending his time 
trekking in remote areas rather 
than networking in the City. It 
seems to run in the family. His 
daughter. Martha Holmes, has just 
picked up an International Emmy 
award for her documentary Life in 
the Freezer - the product of two 
years spent in the Antarctic. 


Mild and bitter 


■ If November is going to be the 
warmest on record in Britain, what 
next? Unfortunately, Bill Foggitt, 
the Thirsk weather sage, has been 


basking in hospital during Britain's 
unseasonaliy warm autumn 
weather, so he has not been able to 
sniff the air as much as he would 
wish. 

Now recuperating at home, he 
reports that the recent mild autumn 
spell, similar to those of 1944 and 
1947, is not going to last While the 
wet October and November of this 
year were similar to those of last 
year, that is where the similarity 
ends. Though last year's wet 
autumn was followed by a white 
Christmas and an extremely cold 
February, Foggitt is not predicting 
a white Christmas this year. It has 
happened in successive winters 
only once this century, he says: in 
1963 and 1964- 


JUSt say no 

■ Someone in the Tory hierarchy 
has found an ingenious way of 
silencing the Young Conservatives, 
the spotty right-wing ideologues 
who make Lady Thatcher appear 
somewhat to the left of Tony Bonn. 

The dwindling band of teenage 
militants, long a thorn in the side of 
the party leadership, have been told 
by Conservative Central Office that 
it will no longer organise their 
annual conference. They can make 
their own arrangements for next 
February’s Southport jamboree. 

To raise the necessary cash, the 
YCs - as they call themselves - 
have come up with the clever 
wheeze of chafing journalists £50 
for the privilege of covering the 


event The only snag is that the 
main news organisations are 
refusing to pay up and threatening 
instead to ignore the youthful 
shenanigans. 

Who says Central Office doesn't 
have bright ideas? 


Ministering angel 


■ Pity the Earl of Longford, the 
veteran Labour peer and former 
cabinet minister who has been 
championing the cause of penal 
reform for 50 years. He despairs of 
securing any Improvement while 
Michael Howard remains home 
secretary. 

Indeed, the normally restrained 
peer has dubbed Howard "the 
prince of darkness”. He is pinning 
his hopes on Home Office minister 
Baroness Blatch, who helped 
remedy some of John Patten's 
mistakes when he was education 
secretary. Longford calls her his 
"angel of light”. 


Sheepish 

■ Pfizer, the US drugs company, 
has just paid $1.45bn for SmlthEline 
Beecham’s animal health business 
which includes a thriving sideline 
in “swine and companion animal 
vaccines” 

Come, come, Pfizer. If you are 
going to call a pet a “companion 
animal”, surely a swine should be 
an ungulate omnivorous mammal. 
Even swine have feelings. 


I 


i-.j 





16 



Brossette JB77 

Sanitaire-Chouffoge- Canalisation 



FINANCIAL TIMES 

Thursday November 24 1994 



Corruption allegations pose threat to budget . US HlOVeS 


ex-Soviet 
uranium 
to safety 


Italian coalition parties 
call for crisis meeting 


By Robot Graham in Roms 

Key partners In Italy's rightwing 
coalition government last night 
called for a crisis meeting after 
magistrates decided to investi- 
gate corruption allegations 
against Mr SUvio Berlusconi, the 
prime minister. 

The move hi g hli g hted the divi- 
sion within the government 
which pitted the populist North- 
ern League of Mr Umberto Bossi 
against its partners. It raised 
Gears of whether the government 
would survive to ensure the 1995 
budget passed its last phase in 
the Senate. 

Yesterday concern over Italy’s 
political instability forced the lira 
to another historic low of Ll.035 
against the D-Mark, 

President Oscar Luigi Scalfaro 
took the exceptional step of issu- 
ing a statement urging the pass- 
ing of the 1995 budget. This came 
after he met the speakers of the 
two houses, Mr Carlo Scognamig- 
lio and Ms Irene PivettL Mr Scal- 
faro also said the government 
could only be changed by a par- 
liamentary vote of no confidence. 


The longstanding tensions 
within the government have been 
heightened in the wake of Tues- 
day’s decision by Milan magis- 
trates to investigate Mr Berlus- 
coni for alleged corruption while 
running his Fininvest business. 

Mr Bossi made it clear the gov- 
ernment should only survive 
until the budget is approved. But 
yesterday the League leads* and 
other members of his party were 
absent from a crisis meeting of 
the coalition. This was attended 
by Mr Cesare PrevitI, the defence 
minister and chief coordinator of 
Mr Berlusconi's Forza Italia 
movement. Mr Gianfranco Fini, 
Leader of the neo-fascist MSI/Na- 
tional Alliance and Mr Pierfer- 
nando Casini. head of the small 
Christian Democrat Centre. 

Their «n for an Immediate 
clarification of where each coali- 
tion partner stood appeared 
aimed at forcing Mr Bossi's hand 
and assessing survival tactics 
with Mr Berlusconi's six-month 
political career now at risk. 
Mr Fini on Tuesday was slow 
to come to Mr Berlusconi’s sup- 
port and the party's even- 


tual statement was terse. 

Mr Berlusconi seemed deter- 
mined to tough it out. He stood 
by his Haim of innocence and his 
mood was described as one of 
“serene indignation”. 

But Milan magistrates indi- 
cated they had taken evidence 
from 16 different sources. They 
are reportedly anxious to ques- 
tion him about alleged bribes 
paid by Fininvest subsidiaries to 
ensure favourable inspections by 
the tax authorities. 

T alks are due to be held today 
between the government and the 
trade unions in an attempt to 
head off the planned eight-hour 
general strike on December 2 to 
protest against the budget and its 
plans to cut pensions. The 
impending strike has added 
another large element of uncer- 
tainty. 

There were signs last night 
both sides were seeking to reduce 
tension and avoid a head-on con- 
flict. But union leaders were wor- 
ried about finding an acceptable 
last-minute compromise that 
would head off deep grass-roots 
discontent. 


Kohl launches government 
programme with jobs call 


By Judy Dempsey in Bonn 

Mr Helmut Kohl, the German 
chancellor, called yesterday for a 
“national alliance" of business, 
industry and trade unions to cre- 
ate more jobs, and pledged to 
reduce bureaucracy and cut 
social spending. 

In a speech to parliament out- 
lining the government’s pro- 
gramme for the next four years, 
Mr Kohl also said it was crucial 
to speed up central Europe’s inte- 
gration into the European Union. 

It is in the interests of the 
Germans, bat also in the inter- 
ests of Europe, that the western 
border of Poland does not remain 
the eastern border of the Euro- 
pean Union.” he said. 

“At the European Union sum- 
mit in Essen [next month] we 
want a strategy to advance the 
young democracies of central, 
east and south-eastern Europe," 
he added. 

Mr Kohl, who last week won a 
fifth term as chancellor by a sin- 
gle vote over the necessary 


majority, told the Bundestag: 
“We have to bundle all our ener- 
gies to make Germany fit for the 
21st century. We need an alliance 
for the future. I invite everybody 
to join us daring to renew our 
state and society. Work for every- 
one must be our common goal." 

Mr Kohl said jobs must be cre- 
ated for the long-term unem- 
ployed as wen as the disabled. 
But he stressed that part-time 
work should be made more 
attractive and flexible as one 
means of opening up the job mar- 
ket, now considered the govern- 
ment’s top domestic priority. 

But Mr Rudolf Scharping. 
leader of the opposition Social 
Democrats, ruled out any form of 
"grand coalition". “Our opposi- 
tion will aim to make life better 
for people in this country, not to 
keep you [Mr Kohl] in office," he 
said. “Every day you are in office 
is one day too long for us." 

The SPD is determined to 
exploit the government’s major- 
ity of 10. However, the apposition 
in the Bundestag - which 


includes the Greens, the SPD and 
the reformed east German com- 
munist Party of Democratic 
Socialism - is for the moment too 
disunited to present a serious 
challenge to Mr Kohl’s Christian 
Democratic Union-led coalition. 

If anything, CDU officials 
believe the immediate threat to 
the coalition, which comprises 
the Christian Social Union, the 
CDU’s Bavarian sister party, 
comes from the Free Democrats, 
the junior partner. The FDP has 
47 seats after losing 32. 

“Kohl had to be careful in this 
speech not to provoke the opposi- 
tion," a CDU senior official said. 
“He needs the SPD in the Bund- 
esrat [upper house] to get any 
legislation through. This will be 
a tough period for the govern- 
ment" 

Government stability would be 
tested during elections in Hesse 
and North Rhine-Westphalia next 
year. “We are in big trouble if the 
FDP fail to get above the 5 per 
cent, the minimum required to 
enter parliament," he added. 


Dow prompts fall in world markets 


Continued from Page 1 

Asian stock markets reacted 
badly to Tuesday’s Dow decline. 
Hong Kong led, with the Hang 
Seng Index dropping a further 422 
par cent after Tuesday’s &8 per 
cent decline. The British colony, 
which has a currency link with 
the US,, is highly sensitive to 
moves in US interest rates. 


The Thai market declined 5 per 
emit and the Indonesian market 
fell 3.3 per cent 

European equity markets were 
marked down sharply as trading 
began. In London, the FT-SE 100 
index opened around 40 points 
lower mid, with no relief from 
early Wall Street trading, ended 
5122 points down at 3,027.5, its 
fifth largest foil this year. 


Other European markets fell by 
about l per cent to 2 per cent, 
with the Dax index in Germany 
down 1.6 per cent in after-hours 
trading. European investors were 
worried that higher US interest 
rates might slow the US econ- 
omy, hitting the growth of Euro- 
pean exports and the profits of 
the US subsidiaries of European 
corporations. 


FT WEATHER GUIDE 


Europe today 

High pressure from England to France, 
the Alps, Spain and northern Africa will 
stay strong. As a consequence, fog 
may be dense and persistent in 
northern Italy, sections of France and 
northern Spain. England will be mostly 
overcast with drizzle. In contrast, most 
of the Mediterranean coast will be mild 
with dear skies. Disturbances win drive 
mild air into Russia along the northern 
side of thp high pressure, causing ram 
in Poland and parts of Bateaus. 

Northern Europe wfB have strong north- 
westerly breezes bringing snow to 
Norwegian ski resorts. 

Five-day forecast 

High pressure will continue to dominate 
from England to southern Europe and 
the former Yugoslavia, providing 
persistent fog in some areas aid 
abundant sunshine and high 
temperatures in others. Rain is 
expected in central Europe during the 

weekend. Meanwhite, cow arctic for wtH 
hold temperatures below freezing from 
northern Russia to the Ukraine. 


TODAY'S TEMPERATURES 

Maximum Being 
Celsius Betfasl 

Abu Dhabi sun 31 Belgrade 

Accra Mr 32 Berlin 

Algiers sun 21 Bermuda 

Amst e rdam cloudy 11 Bogota 

Athens sun 18 Bombay 

Atlanta sun 14 Brussels 

B. Aires fair 30 Budapest 

Sham cloudy 12 CJtagen 

Bangkok fair 33 Cairo 

sun IS Cape Town 


I 4 


1030 

/ HIGH ft./-' 

/ . \ - 11 




£2) 7 


" \ dS) 


b 


A HIGH 

C\ 17 


17 


” 

•a * ,.£v' ^ 


k i a > I. 'i - if 

" 19 ! oAo.C 1 *-? 7 crti. 16,-. 


rJ. 


1 i * # V M? ' 


low 


Barcelona 


J )' -J 2 

/ --ont jmu*. COM tram 4k. Wind spend in KPH 

Situation at 12 GUT. Temperatn-vs maximum for day. Forecasts by Mateo Consult of the Netherlands 

Caracas fair 31 Fare sun 22 Madrid sun 1$ Rangoon 

Canfitf drzzf 12 FrankSurt l air 11 Majorca sun 20 Reykjavik 

Cssabianca sun 21 Geneva lair 10 Malta sun 21 Rio 

Chicago fair 11 Gforalter sin 20 Manchester drzd n Rome 

Cologne fair 12 Glasgow cloudy 11 Mania thund 31 S. Frscc 

Dakar fair 30 Hambwg drzd 9 Melbourne windy 31 Seoul 

DaBas cloudy 18 Helsinki snow 5 Mexico City sun 21 Singapore 

DeW sun 27 Hong Nong fair 28 Mami sun 25 Stockholm 

Dubai sui 30 Honolulu cloudy 30 M3an fog 10 Strasbourg 

DuMn fog 12 Istanbul fair 12 Montreal snow 2 Sydney 

Dubrovnik sun 17 Jdcaria fair 32 Moscow rain 4 Tangier 

Edinburgh fair 11 Jersey lair 13 Munich 0=3 11 Tel Aviv 



More and more experienced travellers 
make us their first choice. 

© 

Lufthansa 


Karachi 

sun 

33 

Nairobi 

Kuwait 

Can- 

30 

Naples 

L Angeles 

sun 

24 

Nassau 

Las Palmas 

sun 

25 

New Yo 

Una 

cloudy 

23 

Ntca 

Lisbon 

sun 

20 

Nicosia 

London 

doudy 

13 

Oslo 

Lu&bourg 

tog 

9 

Paris 

Lyon 

hazy 

12 

Penh 

Madeira 

fair 

23 

Prague 


sun 

16 

Rangoon 

fw 

33 

sun 

20 

Reyfcftwik 

rafn 

7 

sun 

21 

Rio 

showw 

23 

drzzl 

n 

Rome 

sun 

19 

thund 

31 

S. Frees 

doudy 

16 

windy 

3T 

Seoul 

doudy 

12 

sun 

21 

Singapore 

thund 

29 

SUI 

25 

Stockholm 

wndy 

8 

•os 

10 

Strasbourg 

tar 

10 

srww 

2 

Sydney 

aui 

24 

rain 

4 

Tangier 

sun 

21 

di=3 

11 

Tel Avtv 

thund 

19 

fair 

25 

Tokyo 

fair 

13 

SUI 

18 

Toronto 

far 

A 

fair 

27 

Vancouver 

rain 

8 

SUI 

8 

Vance 

fair 

14 

sun 

18 

Vienna 

drzzl 

11 

shower 

16 

Warsaw 

rain 

9 

fair 

6 

Washington 

sun 

11 

tog 

11 

Wellingion 

fair 

16 

fair 

22 

Winnipeg 

Oun 

-1 

drzd 

10 

Zunch 

lak 

9 


THE LEX COLUMN 

Dow but not 


By Jurek Martin in Washington 
and Steve LeVine in Alma Ata 

The US yesterday completed the 
secret transfer of 600 kilogr ams 
of highly enriched uranium from 
a storage facility in Kazakhstan 
considered very vulnerable to 
theft 

Mr William Perry, defence sec- 
retary. told a press conference: 
“We have put this bomb-grade 
nuclear material forever out of 
the reach of potential black- 
marketeers." He said the ura- 
nium could have been used to 
produce “more than 20“ nuclear 
bombs. 

Mr Warren Christopher, secre- 
tary of state, described the oper- 
ation as “a landmark event in 
President Bill Clinton’s non-pro- 
liferation strategy", along with 
last week's approval by the 
Ukrainian parliament of the 
nuclear non-proliferation treaty 
and the recent agreement with 
North Korea. 

The US operation, codenamed 
Project Sapphire, was conducted 
over the past six weeks after the 
government of Kazakhstan, one 
of the four former Soviet states 
with nuclear capability and a 
signatory to the NPT last year, 
privately advised Washington it 
could not guarantee the safety 
and security of the stockpile at 
its Ust-Kamenagorsk facility. 

Mr Clinton authorised the 
operation on October 7 and it 
was placed under the direction of 
vice-president Mr AJ Gore. A US 
team then worked nonstop in 
Knwlrhirfan to arrange the trans- 
fer in conditions of high secrecy. 

The first shipment left Ust-Ka- 
menagorsk airport last weekend, 
with the final consignment arriv- 
ing in Delaware yesterday morn- 
ing en route to the reprocessing 
plant at Oak Ridge, Tennessee. 

The operation was funded by 
the US under the Nonn-Lngar 
Act which provides about $800m 
in the current fiscal year to 
assist denuclearisation efforts in 
Russia, Belarus. Ukraine and 

Kazakhstan . 

“There is no better example of 
how the Nunn-Lugar programme 
can help eliminate a national 
security threat before it arises," 
Mr Perry said. “This is defence 
by other means and in a big 
way." His remarks were aimed 
at Senator Jesse Helms of North 
Carolina, probable next chair- 
man of the senate foreign rela- 
tions committee, who has threat- 
ened severe cuts to funding for 
such operations. 

Kazakhstan's nuclear energy 
minister said the uranium was 
used during the Soviet period as 
fbel for nuclear-powered subma- 
rines and nuclear reactors, not 
for atomic weapons. 

US concerns that what the 
state department calls “rogne 
states” - such as Iraq and Iran - 
might acquire nuclear capability 
have been high for the past two 
years. Reports of smaller 
quantities of enriched uranium 
intercepted in Germany earlier 
this year had heightened these 
fears. 


Wall Street has defied gravity all year. 
Though world bond markets and most 
other equity markets have tumbled, 
the Dow had stayed remarkably 
steady. One could view this week’s 
slide as Wall Street catching up. Com- 
pared with bond yields of 8 per cent, 
the 3 per cent pay-out on shares was 
looking a bit mean. It also seems rea- 
sonable to shade down estimates of 
corporate earnings growth to take 
account of the latest rise in short-term 
interest rates. The growing feeling 
that a Republican Congress was more 
of a menace than a boon to industry 
hardly h*»i ppH 

The knock-on effect on British and 
other European equities seems less to 
do with fundamentals than sentiment 
True, any slowdown in the US will 
harm exports and reduce thp g grnfwg g 
multinationals receive from their 
American subsidiaries. But UK equi- 
ties have already fallen this year. 
Moreover, the spread between gilts 
and Treasury bonds has narrowed in 
recent months. So the ratio between 
bond and equity yields in Britain is 
not as stretched as in the US. The 
same is true in much of the rest of 
Europe. Perhaps one should not even 
be too worried about Wall Street Two 
promising features this week have 
been the rally in US bond markets and 
the firmness of the dollar. If they con- 
tinue, funds which have been flowing 
out of US markets all year may start 
returning. Japanese investors, in par- 
ticular, may be tempted back into dol- 
lar assets. It win not take a very large 
bond rally for Wall Street to look rea- 
sonably priced. 

Pfizer/SB 

Smi th Klin e Beecham may justify 
the disposal of its animal health busi- 
ness by insisting it wants to concen- 
trate on h uman health. But yester- 
day's sale to Pfizer was motivated 
more by financial needs than indus- 
trial strategy. Although the deal may 
prove marginally dilutive, that wiQ be 
more than offset by the halanre shapt 
impact of £7D0m in net cash. By year- 
end, g laring should have fallen from a 
peak of nearly 350 per cent to just 120 
percent. 

Pfizer's desire to leap from number 
six to the top spot in animal health 
appears initially puzzling. After all, 
the sector’s low margins and relatively 
slow growth, mean it has always been 
a poor cousin to human health. How- 
ever annual growth of the US pharma- 
ceuticals market has decelerated to 
just 5 per cent, little more than animal 


FT-SE Index* 3027.5 (-51.2) 


Indies* rebated j 

• •' : AI-L/i *' fnr : - 


■iDow'Jbw*. 




OS-*r-r“ " 


’• -- FT-SEtWr 

.jam ■ i9»" fte* 


health’s 3 per cent Moreover, the mix 
of SB's business means that during 
the last three years its division has 
enjoyed average growth of 10 per cent 
and margins of 17 per cent That will 
give Pfizer’s operations, whose mar- 
gins fell from 18J> per emit in 1990 to 
just 6.4 per cent last year, a substan- 
tial shot in arm. 

Whether Pfizer has overpaid is 
unclear, the acquisition, is unprece- 
dented in the animal health industry. 
The multiple of 22 times historic earn- 
ings is' probably justified by the busi- 
ness fit There is little product overlap 
and fine geographical synergy given 
SB’s strength in Europe and Austral- 
asia and Pfizer’s In South America and 
Japan. Given the fragmented state of 

the animal hrattti indus try and the 
ran tinning f nrmnil in the drugs indus- 
try as a whole, this is unlikely to be 
the sector's last deal 

Granada 

Granada has become the latest Brit- 
ish group to toy with the idea of buy- 
ing back its shares or paying special 
dividends. Doing so is dearly not its 
priority. Mr Gerry Robinson, chief 
executive, would much prefer to find, 
mare acquisitions into which to pour 
his energies. Indeed, the evidence to 
date on the LWT and Sutcliffe pirn- 
chases seems to show that Granada is 
adept at adding value through acquisi- 
tion. The snag is that suitable avenues 
for expansion are hard to find. During 
the summer, caterer Gardner Mer- 
chant spumed Granada’s advances; 
moreover, the government is unlikely 
soon to change rules preventing the 
group buying another 1TV company . 
As a result, Granada is having to 


OUt . •• t 

• "I’''? 

scout around for catering acqnii^ rt; 
on the continent - so for with ndML- 
Meanwhile, the company, genacafes V; 
cash at a prodigfou&rafe Anther - 
acquisitions are made, Granada wih 
be debt-free in three years and stffi' C-. 
hold a £40Qm investment In 'BSkyBs - 
Under such a scenario, share" bny~ r 
backs would clearly be sensible, Jnves- . . . 
tore should also he reassured by the- 
implication that the. management is.' . . 
not so desperate for deals &at ft wHfr 
overpay. Yesterdays ; prtffininaiy. : 
results show how tightly the badness ; . 
is befog managed. The improvement 
In margins was particularly gratifying. 

But it is hard to argue that Granada is . 
undervalued. The prafictabiKty of Its 
rental and catering arms may compen- 
sate for their duUhess.:But a prospec- 
tive price/earnings premium to the . 
market of around 10 per cent' looks ; 

, large wihu gh. ■ ■ ,yv 


Tate & Lyle 

Tate & Lyle is difficult eriirag&'to 
understand at the best of [times; yes-., 
terday’s decision to present less 
detailed segmental lnfonnation Is. a 
retrograde step. The move may be jns^ 
tified commercially, but it wifi hardly 
help Tate dispel investors’ doubts 
about the quality of its earnings. ; 
These have long been viewed as vul-- 
nerable to swings m the' commodity- 
fike markets to which Tate operates. 

That said, the' swings to the last 
financ ial year "worked, decidedly in 
shareholders' favour. Pre-tax profits 
were at the top end of analysts’ expec- 
tations fold the ifivktand was.up by a 
generous 108 per cent- But with the 
shares up 18 per cant against the mar- 
ket this yen-, and a 20 per cent yield 
premium to- the market converted to a 
small, discount," tibia kind of earnings 
performance hnc already been antici- 
pated. The question now is Hip extant 
to Which profits n*wmntmn ran be 
maintained to the current year. . 

The pamfers are good. The favoura- 
ble supply/demand equilibrium in 
north American and European starch 
and sweetener markets seems set to 
continue. Thane Is Kkely to be a mod- 
est recovery In the US sugar market 
Elsewhere in the group there is amide 
scope for loss elimination - for exam- 
' pie, at recently acquired Oman - and 
for cost-cutting. Hpaltby cash-flow will 
enable Tate to pursue farther acquisi- 
tion opportunities and pay a substan- 
tially higher -dividend- Tate will 
remain a core holding, notwithstand- 
ing the greater obscurity of its 
accounting. 


# h „ mnr 


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engines now entering, or dose service % ^ 

ROLLS-ROYCE GAINS £30 

IN CHINESE MD-90 OF at • ’ -l! 

The People’s Republic of China has recently signed a contract for a totaT^^f? 
V2500-powered McDonnell Douglas MD-90 airliners. The powerplants are 
produced by International Aero Engines, of which Rolls-Royce is a prjS& jfafr 
.shareholder. The deal represents an increase of 14 aircraft over the previo^P^- 

announced number and the value of additional business for R 0 uf%yce is • 
around E30 million. , ■■ ■■' k-. 

PARSONS DELIVERS POWER TO rjiniA, 

The first of two ?50MW generators being supplied by Parsons Power 
Generation Systems .is part of'a £70 million contract for an Indian power 
station, has arrived' at Calcutta. Parsons 'is part of the Rolls-Royce X 

Industrial Power Group. 


R 


Royce 


1HE SYMBOL OF POWER 
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Ovtoseas Moving 
byMichaelGerson 



FINANCIAL TIMES 

COMPANIES & MARKETS 

Thursday November 24 1994 


*5 THE FINANCIAL TIMES LIMPI RD l‘»-W 


For a wealthier Lusme- 
ancl a healthier life 


(Juror David Rnc*‘r> m on 0^52 243262 

Telferd. 


IN BRIEF 


US cable group 

in $1.4bn buy 

SSSS?* 31 Cab,evisjon - toe third largest US 
rable-TV company, is to buy the cable operations of 
providence Journal in a deal valued at Sl.4bn 
Page 20 

Nesfl£ hit by strong Swiss franc 

Nestle, the world’s largest roods group, said sales in 
months were down 1.5 per cent to 
MT«.9bn ($35hn), mainly because of the strength of 
the Swiss franc. Page is 

Stora surges as demand rises 

Stora, Europe's biggest pulp and paper group, yes- 
terday announced a SKr2.04bn ($277m) pre-tax 
profit for the first nine months, a seven-fold 
increase on last year's SKr294m. Page 18 

Thyseen returns to black 

Thyssen, the German steel-based conglomerate, 
said yesterday it was back in profit after the worst 
results fn its 103-year history. Page 16 

Granada focuses on expansion 

Gr anada , the UK television, leisure and services 
group, group is considering expansion in continen- 
tal Europe through acquisitions in catering and ser- 
vices. Page 18 

ANZ surprises with A$803m 

Australia and New Zealand Banking Corporation, 
the big Australian bank, surprised the market with 
news of an A$80S.2m <US$609m) profit after tax 
Page 19 

Czech airline hopes for end to turbulence 

Czechoslovak Airlines, the Czech Republic’s loss- 
making national airline, is hoping an that govern- 
ment money and a new approach to partnerships 
will help it ride out a turbulent period. Page 20 

CourfeauMs pinpoints European plant 

Courtaulds has chosen Grimsby. Humberside, as 
the ate for its European production plant for Ten- 
cel, its new man-made fibre. The plant, which will 
initially create 120 jobs, wQl cost £90m (5147m). 

Page 22 

Harrison & Crosfield shares fall 

Harrisons & Crosfield shares dropped 8 per cent 
yesterday as the UK chemicals, commodities and 
building supplies company sought to rein in profit 
expectations. Page 22 

Aspray fans to £3m 

Asprey, the Queen's jeweller, revealed a sharp pre- 
tax profits tumble from £12_2m to £3.0im ($4.9m), in 
the six months to September 30. The company 
warned in September that the absence of a few 
high-spending customers would depress profits. 

Page 22 

Porton poised for takeover 

Beaofonr Ipsen, the family-owned French pharma- 
ceuticals company, should find out today whether 
its £65 .Sm (5107.4m) recommended takeover bid for 
Porton International, one of the UK's first biotech- 
nology companies, has been successful. Page 22 

Chloride. Group buys security ualt 

Chloride Group’s transformation from a batteries 
business into an electronics group was reinforced 
yesterday by the acquisition of ADE Group, an elec- 
tronic security business. Page 23 

Com panies In this Issue 

ABl Leisure 
ANZ 

Abtrust High Inc Tst 
Adare Printing 
Amber Industrial 
Astra Int 
Banca Antonians 
Sank W Austrate 
Btrkby 
Boeing 

Britannia Airways 
CSA 
Chloride 

Commerzbank 
Contt CaMevteton 
DCC 
Dafwa 

Emerald Energy 
F&C Income Growth 
Bret Ireland Inv 
Fisher (Albert) 

Fleming (Bobt) 

HSBC 

Herring Bator Harris 
1C1 India 

Intflan Shaving Prod. 

John Foster & Son 

John LaJng 

Market Statistics 


24 

Karstadi 

20 

IS 

Ktefcwort Benson 

12 

24 

Legal & General 

24 

24 

McKec/Ktte 

24 

24 

McLeod FtusseU 

20 

IS 

Metaflgeseffschsft 

17 

IS 

Mates Berta 

20 

20 

KSK 

19 

24 

NatWest Securities 

12 

4 

ISflhfco 

15 

4 

Nomura 

15 

20 

Olympia S Vorit 

20 

23 

PflWngton 

24 

17 

FU Reynolds 

20 

20 

RJB Mining 

23 

24 

Repap Enterprises 

4 

15 

SharellnK 

24 

24 

Smith Kflne Beschem 

17 

24 

Staley 

17 

24 

Tarmac 

4 

23 

Tate & Lyle 

17 

23 

Union Carbide India 

20 

12 

Union Mbitere 

19 

24 

Vkleotron 

20 

19 

Von RoB 

20 

19 

Wagon Industrial 

24 

24 

Yamatetil 

15 

4 

Yorkshire Water 

23 


fAmual retwtB sendee 
Benchmark Govt bonds 
Bond futures and options 
Bond prices and yWd» 
CommodBJaa price* 

DMdends announced, UK 
EMS curacy rates 
Eurobond prtoaa 
Ftoi Merest Wfces 
FT-A World W»» BKkPa S 
FT Gold Mines Index 
FTASUA M Wid »« 

FT-SE Actuaries infleas 31 


32-33 

21 

21 

21 

30 

22 

38 

21 

21 


Foreign exchange 

Bits prices 
Utla «pfty options 
London share sente 
London trail options 
Managed tends service 
Money mate* 

Mew W bond issues 
New York Sara service 
Recant issues, UK 
Short-ram W rales 
US Interest rates 
World Stock Merkels 


2? 

31 

32-33 

31 

34-35 

36 

21 


Chief price changes yesterday 


nuamruttriam 


Asia 

BMW 

DabnUrBnz 

HBkkazem 


VMM 


H» YORK (SI 


730 - * 

749 - * 

7445 - » 

: « 

m - « 


MrgenSan 

Pfizer 


Vaiaurac 


MdSkM 
An awn Am 

Dow Own 


Tokyo cfoeML i 


30H 

rm 

61 M 


NrUqriOs 
W BC 
2h Delo France 
1 GMjrtVSiqOB 
kwBi 

York p*w « laaoom. 


5BW - 
7W - 


261.5 ♦ 
m - 

645 - 

667 - 

348 - 

520 - 


31 

30 

21 

37 


% 

2H 


103 

20 

17 

26 

12 

» 


LONDON |Wwl 

194 
133 
253 


BradSstit'W 

DM*»aiiep 

vem 


BuaCKM 


447 

368 


or 

Ob of London 
Courtri* 

»UM 

HndRS iijun w" 


425 - 


1*8 - 




y&fi&nup 

0*6 

- 

40 

+ 

6 

Magauni Power 

125 

- 

13 

+ 

13 

N5M 

98 

- 

5 

+ 

10 

mpeur 

1103 

- 

42 ’ 



ItacriBK 

217H 

- 

1015 

“ 

1 1 

23 

MtfCUt 

82 

- 

Jit 


10 

SOW** 

175 

- 

7 

_ 

5 

Scam DM Coui 

360 

- 

11 

_ 

15 

VodrtBH 

1651* 

- 

a» 

- 

21 

waddngw 

222 

- 

13 


13 

33 


641 

- 

24 


Pfizer makes record purchase 


By Daniel Green in London and 
Richard Waters in Now York 

SmithKlise Beecham. the UK 
drugs company, yesterday agreed 
to sell its animal health business 
to US rival Pfizer and called a 
halt to the S7.7bn of corporate 
transactions it began in last May. 

The $1.45bn deal is the biggest 
acquisition ever made by Pfizer, 
the fourth biggest US drugs com- 
pany. and signals its Intention to 
grow through takeovers. 

"We have several core health 
businesses, and we're looking for 
acquisitions in all of them,” said 
Mr William Steere, Pfizer’s 
chairman and chief executive 
officer. 

Mr Jan Leschiy, SmithKline's 



SnWthKJfne deads since April 



Data 

Company 

from 

Annual 

Sales/S 

Pricers 

Acquisitions 

May 3 

OPS 

United Healthcare (US) 

142m 

2-3£m 

Aug 30 

Sterling Health 

Eastman Kodak (US) 

Ibn 

2.9bn 

Disposals 
Sep 13 

Sterling Health 

Boyer (Germany) 

345m 

Ibn 

Now 23 

in North America 
Animal Health 

Pfizer (US) 

614m 

1.45bn 


chief executive, said the disposal 
was probably the last corporate 
deal for the moment. 

Since Mr Leschiy was 
appointed in April. SmithKline 
has spent 55.2bn on buying Diver- 
sified Pharmaceuticals Services, 
a US drugs distributor, and Ster- 


ling Health. 

It later sold the north Ameri- 
can operations of Sterling to 
Bayer, the German chemicals 
company. 

“I can't rule out further acqui- 
sitions. but what's next is to 
make sure that we make the 


most of our investments through 
synergy and restructuring," said 
Mr Leschiy. 

That restructuring has already 
started, with the merging of all 
businesses outside Europe and 
north America into a single divi- 
sion called SB Healthcare Inter- 
national. be 

With the purchase. Pfizer will 
control the world's biggest ani- 
mal healthcare business, ahead 
of Rhone-Merieux of France, 
according to Mr Matthew 
Phillips, animal health sector 
analyst with London stockbroker 
Wood Mackenzie. 

SmithKline’s animal health 
business had sales in 1993 of 
5614m and operating profits of 
5104m. Pfizer’s division bad 


$578m in sales, S37.5m in operat- 
ing profits and is growing more 
slowly than SmithKline's. 

With this deal, Pfizer is buying 
an entry into European and Aus- 
tralian markets to complement 
its strengths in the US and 
Japan. It will also add animal 
vaccines and pet medicines to its 
product portfolio. 

The companies said the trans- 
action would not dilute earnings. 

The sale should more than 
halve SmithKline’s gearing. Last 
September, the company expec- 
ted ed year-end gearing to be 250 
to 300 per cent. However, after 
this sale it should fall to about 
120 per cent 

Lex, Page 16; Reorganisation, 
Page 22 


Metals 
group looks 
to reshape 
capital base 

By Christopher Parfces 
fai Frankfurt 


A capital restructuring package, 
including a call on shareholders 
for a farther DM600m (5386m) 
and a two-to-one capital reduc- 
tion, Is being prepared for pre- 
sentation at Metallgesellschaffs 
annual meeting next March. 

Describing the scheme as 
"only a concept", Mr Kajo Nen- 
kirchen, chairman of the bat- 
tered German metals and engi- 
neering group, said the aim was 
to offer shares in the capital 
increase at a substantial dis- 
count to the market rate. 

Shares in this year's DM 1.4 bn 
rights issue, part of a DM3.4hn 
rescue arranged by bank share- 
holders, were priced well above 
the market at DH250. 

The stock was suspended yes- 
terday, after dosing at DM143 on 
Tuesday. 

The fact that Mr Neuktrchen 
announced plans for a capital 
write-down suggested German 
creditor banks, which tightly 
control tbe company, bad 
already agreed in principle. 

Restructuring of the group’s 
capital base has long been expec- 
ted and mewed as tbe logical 
consequence of the operational 
shake-out which has led to the 
sale and closure of dozens of sub- 
sidiaries in the year since col- 
lapse threatened. 

The assets sale instituted last 
December has generated more 
than DM4bn, and 90 subsidiaries 
have been disposed of or decon- 
solidated. 

Mr Neukirchen said yesterday 
that the sell-off was virtually 
complete, apart from the planned 
disposal of the Lenfjes plant and 
pipeline construction activities. 

He repeated earlier forecasts of 
operating earnings exceeding 
DMIOOm In the year to toe end 
of September 1995. 

Mr Neukirchen also expanded 
on 1993-94 figures published last 
week which showed a net 
loss of DM2.7bn on sales of 
DM20bn, compared with a deficit 
of DM1.97bn on DM26bn turn- 
over. 

lYadSng and services divisions 
earned DM38m pre-tax on sales 
np DMlbn at DM8.7bn, after 
losing DM33m in the previous 
year. 

Plant construction under the 
Lurgi group fell into a loss of 
DM35m, but only after setting 
aside DMllOm for redundancies 
and early retirements. Lentjes 
profits shrank from DM5&a to 
DM14m; financial services earn- 
ings rebounded to DM37.7m from 
DMllm. 

The scale of the crisis caused 
by over-ambttlous dealings to US 
oil futures showed up In the 
DM2^bn loss at MG Corp of 
New York. 


Patrick Harverson and Philip Coggan report on the falling Dow 


I nvestment Cassandras have 
been proclaiming that the US 
stock market has been over- 
valued for two years or more, but 
Wall Street has stubbornly 
refused to pay attention. 

This week may have seen the 
turning point. On Tuesday the 
Dow Jones Industrial Average 
plunged more than 90 points, its 
biggest fall since the Federal 
Reserve first raised interest rates 
and sparked a stock market 
decline in early Febniary. 

The frenzied selling in Tues- 
day's final hour of trading, com- 
ing after a similar sharp decline 
late on Monday, indicated that 
something was seriously wrong 
with toe US market Just how 
wrong remains to be seen, but 
Wall Sreet's hopes for a tradi- 
tional December rally in share 
prices are fading. 

European and Asian equity 
markets have been almost power- 
less to resist in the face of the US 
declines. In some cases, such as 
Hong Kong, there is a direct 
interest rate and currency link 
with the US, which often turns 
tbe local stock market into a 
more volatile version of Wall 
Street 

In Europe, the health of the US 
economy has a direct impact on 
corporate profits. If the Fed’s 
increases in interest do slow tbe 
US economy, “the result will be a 
net negative for the rest of the 
world both in terms of lost 
exports to the US and lower cor- 
porate profits earned by US sub- 
sidiaries", said Mr Peter Lyon, 
chief strategist at securities 
house Smith New Court. 

With US investors also playing 
an important part in world capi- 
tal Dows, it is hard to see how 
European and Asian markets can 
escape from Wall Street's influ- 
ence. So the immediate prospects 
for world markets depend on 
events in the US. 

This week's losses, while well 
short of Crash proportions, have 
left traders, investors and ana- 
lysts rattled. The Dow lost 3,6 per 
cent of its value on Monday and 
Tuesday, the largest two-day 
decline since March. 

Hie selling was so intense that 
the New York Stock Exchange’s 
"circuit breakers", which limit 
computerised program trading 
during volatile markets, proved 
totally ineffective. Yesterday, the 
market's mood remained grim, 
and analysts were speculating 
whether the Dow would soon test 
its year low of just above 3.600. 

Until tins week, the Dow had 
outperformed the rest of toe mar- 
ket by some margin. At the start 
of tbe week, it was up 1,6 per 
cent on the year, while the Stan- 
dard & Poor’s 500 - a much 
broader measure of the market - 
was down 1 per cent. The main 
indices of financial, transporta- 
tion, and utilities stocks were 
down 10 per cent, 17 per cent, and 
24 per cent respectively. 

The Dow held up so well this 
year because investors had been 
buying cyclical stocks - which 
make up a large part of the Dow 
average - in the hope of riding 
the coat-tails of strong economic 


Wall Street shake-out 
gives markets cold turkey 


US stocks: are they overvalued? 


Standard & Poor's Composite 

Dividend yield (96) 

S.0 . ■ 


Yield ratio 

Long bond/Stocks yield ratio* 

Q 



Dow Jones relative to 

FT-A World index 

Jan 1933=100 An doftar terms) 

110 .• ■■ 


100 


1983 85 87 

Source DaKKSv^m 


recovery. 

However, late on Monday, 
investors - their confidence in 
the economic outlook under- 
mined by last week's interest 
rate rise - began to sell cyclfcals. 
The Fed's move on November 15 
was the sixth (and possibly not 
the last) tightening of monetary 
policy in 1994, and toe largest 
rate increase in more than a 
decade. This, says Mr Bichard 
Hoey, chief economist at the 
Dreyfus fund group in New York, 
spooked investors. “The Dow has 
a lot of cyclical stocks in it, and 
tbe cyclicals were outperforming 
on the basis of a strong economic 
recovery. But then the Fed tight- 
ened aggressively, to the point 
where the fear of weaker earn- 
ings and recession in 1995 
spread." 


v.v * : — .-s 

1983 85 87 89 91 93 94 
30-year bond yWd awl S&P Cawiposte Ovidenj yWd 



per cent to 50 per cent 

By yesterday, it was clear the 
bond market was already benefit- 
ing the switch out of stocks. For 
the second consecutive day, bond 
prices rose as share prices 
dropped. After one of its worst 
declines ever, toe bond market 
now appears poised to capitalise 
an the stock market’s woes. 

The US stock market has also 
been unsettled by the uncertain 
political situation in Washington, 
where the Republicans who 
recently took control of Congress 
are talking of cutting taxes and 
increasing defence spending. To 


investors, this sounds like a rec- 
ipe for higher budget deficits and 
initial Republican threats to 
delay a vote on the Gatt trade 
agreement also upset the market 
Today's Thanksgiving holiday 
may be a welcome break for 
investors and traders on both 
sides of the Atlantic. But those 
bulls who were counting on a 
Dow rally through 4,000 by 
Christmas may feel queasy as 
they tuck into their turkey. 
Editorial Comment, Page 23; 
Lex, Page 24; ‘B&b’ deals. Page 
28; London market. Page 48; 
World stock markets. Page 45 


German 
bank sees 
operating 
profits fall 

By Andrew Fisher In Frankfurt 

Commerzbank suffered a 27 per 
cent drop in group operating 
profit to DM660m ($425 m) in the 
first 10 months of this year as a 
result of weakness m world bond 
markets, but sales of sharehold- 
ings helped the group's pre-tax 
profit rise 43 per cent 

The German bank also said it 
bad agreed to buy 51 per cent of 
Hypotoekenbank in Essen, which 
specialises in municipal and 
mortgage loans. Hypotheken- 
bank made net p ro fi t s of DM34m 
last year and has total assets of 
DM22bn - which will bring Com- 
merzbank's total assets up to 
more then DBS3l0bn. Tbe price 
of the stake was not revealed. 

The fall in Commerzbank's 
operating profits mainly 
reflected the decline in bond and 
securities markets, with earn- 
ings on own-account financial 
dealings down by 88 per cent to 
DM56m from DM475m; losses 
and write-offs on securities were 
partly offset by profits on for- 
eign exchange and derivatives 
transactions. 

The bank reduced loan loss 
provisions by 3 per cent to 
DMl.Sbn. 

Commerzbank, the first of Ger- 
many’s big commercial banks to 
issue its 10-month figures - next 
year, it will give only nine- 
month results - said its pre-tax 
profit was 43 per cent higher at 
DMl^bn. Profits on the sale of 
Its 15 per cent stake in Karstadt, 
the department store company, 
and of shares in toe DBV insur- 
ance company were mainly 
responsible for tbe increase. 

Mr Martin Koblhanssen, chair , 
man, hinted that shareholders 
would receive a higher payout to 
mark next year's 125th anniver- 
sary. He said the DM12 dividend 
would be "at least" maintained, 
and a possible anniversary 
bonus would be considered after 
the year-aid. 

Partial operating profits, 
which exclude own-account trad- 
ing, rose 14 per cent Contribut- 
ing strongly was a 10 per emit 
rise in net interest income to 
DM4-3bn. Increased lending com- 
petition pushed the average 
interest margin down to 1.79 per 
cent from 1.85 per cent, but this 
has Improved since mid-year. 

Commerzbank will open up a 
direct banking subsidiary. Corn- 
Direct Bank. It will offer stan- 
dard securities, deposit and loan 
prodnets by telephone, fax or 
mail. Commerzbank is ahead of 
its big Frankfurt rivals, Deut- 
sche and Dresdner Bank, in this 
area but not the first German 
bank to enter direct banking. 


O 


n top of the concern 
about further rate 
increases and a weaken- 
ing in economic and earnings 
growth, there was a growing real- 
isation on Wall Street that inves- 
tors may be ready to switch their 
money out of shares and into 
bonds because of tbe more attrac- 
tive yields available on the latter. 

As one fund manager said on 
Tuesday: “People are Finally 
understanding that it’s better to 
get 7.5 per cent guaranteed by 
tbe government than a 3 per cent 
dividend from a stock." US divi- 
dend yields are still low in bistor- 
ical terms, and indeed are little 
better than those prevailing at 
the time of the 19S7 Crash. 

This week Morgan Stanley cut 
its recommended allocation of 
stocks in its model portfolio from 
97 per cent to 8S per cent, and 
Dean Witter Reynolds raised tbe 
bond portion of its model from 35 


Tate & Lyle profits rise 23% 


By Roderick Oram, 

Consumer Industries Editor 

A strong performance from US 
cereal sweeteners and starches 
helped Tate & Lyle overcome 
weaker US sugar markets and 
modest growth in Europe to 
report a 23 per cent rise in pre- 
tax profits to a record £273.8m 
(5449m) for the year ended Sep- 
tember. 

The main factor behind the rise 
was toe tumround at Staley, toe 
US subsidiary It acquired in 1988 
for $l-2bn. It reported a record 
profit thanks to higher volumes, 
strong demand particularly from 
the soft drink makers, new uses 
for starch and lower costs. 

Tbe upturn came after several 
yean of labour disputes over the 
introduction of new working 
practices at its Decatur. Illinois 
plant 

Staley's profits, however, 


masked a downturn in the 
group’s sugar profits in the US 
where margins were eroded by 
record beet supplies. 

Tate & Lyle declined to give 
specific figures in line with a 
decision to reduce the data it 
publishes. “We believe it's detri- 
mental to tbe business" to give 
more information than do com- 
petitors, many of which are pri- 
vate companies. Sir Neil Shaw, 
chairman, said. Several analysts 
said they found it difficult to split 
out tbe figures to assess fully the 
results. 

Operating profits from North 
American sweeteners and 
starches rose 31 per cent to 
£147.6m on sales ahead 13 per 
cent at £1.64bn. In the past the 
group gave separate figures for 
cereal sweeteners and starches. 
US sugar and Canadian sugar. 

European profits from sweeten- 
ers and starches rose 5 per cent 


to £136.5m on a similar rise in 
sales tc* £l-3bn. In tbe UK profits 
“held up well" with sales to 
industrial customers rising but 
exports falling. 

Amylum, its European cereals 
subsidiary, enjoyed strong sweet- 
ener profits but weaker starch 
profits. 

Profits from sweeteners and 
starches in the rest of the world 
rose 32 per cent to £20 .8m on a 54 
per cent rise in sales to £513 2m 
Bundaberg. toe Australian sugar 
miller acquired in 1991, per- 
formed strongly. 

Tbe board recommended a final 
dividend of 9.8p making 14.4p for 
the year, up 11 per cent. 

Earnings per share were up 13 
per cent at 37. lp fully diluted 
against 32.7p a year earlier. 

reflecting higher minorities and a 
tax charge of 27 per cent against 
25 per cent. 

Lex. Page 16 



THE LINK BETWEEN THE PAST 
AND THE FUTURE 


Omega Constellation. 

1 S k gold. 

Swiss made since 1848. 



Q 

OMEGA 

The sign of excellence 




At 






FINANCIAL TIMES THURSDAY NOVEMBER 24 1994 


INTERNATIONAL COMPANIES AND FINANCE 


Stora surges on stronger demand 


By Christopher Brown-Humes 
fn Stockholm 


Stora, Europe’s biggest pulp 
and paper group, yesterday 
announced a SKr2.04bn ($277m) 
pretax profit for the first nine 
months, a seven-fold increase 
on last year’s SKr294m. 

Higher volumes, lower finan- 
cial costs, the weak krona and 
capital gains all contributed to 
the surge. Mr Lars Ake Helges- 
son, chief executive, said the 
group had benefited from 
higher prices during the third 
quarter. 

Average prices were up 1 per 
cent, with higher pulp, fine 
paper, newsprint and packag- 


ing paper prices offset by lower 
board, magazine paper and 
light-weight coated paper 
prices. 

Mr Helgesson said the 
impact of higher prices would 
be greater in future, since 
prices for half the group’s pro- 
duction volume were yet to 
improve. Prices for newsprint 
and uneoated ma g az ine paper 
were due to rise by as much as 
25 per cent from January, hfl 
said. 

The upturn in pulp and 
paper demand means Stora is 
operating virtually flat out, 
with capacity use rising to 93 
per cent from 88 per cent and 
deliveries climbing 6 per cent 


to 5.1im tonnes. The increase 
in European demand for the 
group's products ranges from 5 
per cent for newsprint to 18 per 
cent for coated fine papers. The 
trend has helped to push up 
underlying sales by 11 per cent 
toSKi35Jbn. 

Operating income of 
SKr2.94bn included one-off 
gains of SKr590m, arising 
mainly from the sale of the 
Tarkett floor material unit. 
The comparable 1993 figure 
was SKrl.55bn, when there 
were one-off gains of 
SKr ififtm. 

The group's financial costs 
fell to SKr9Q5m from SKrl.26bn 
due to lower interest rates and 


a reduced debt burden. 

All of the group's divisions 
improved their performance, 
except for Stora Financial Ser- 
vices, where operating income 
dropped to SKr249m from last 
year's unusually strong 
SKr7Q2m. 

Stora Feldmtthle lifted prof- 
its to SKrMlm from SKr90m, 
while Stora Papyrus saw prof- 
its jump to SKr509m from 
SKrl58m. Stora Power and 
Stora Building Products were 
the only divisions to remain in 
the red. 

Analysts are predicting a 
full-year profit of more than 
SKr3bn after last year's 
SKr530m. 


bk vision Generate des Eaux names 
UBSaction Messier as heir-apparent 


By Ian Rodger 


By David Buchan in Paris 


BE Vision, the investment 
fund that is the largest share- 
holder in Union Bank of Swit- 
zerland. is determined to go 
ahead with a legal challenge to 
the UBS shareholders' vote in 
favour of converting registered 
shares into bearer shares. 

UBS yesterday appealed to 
dissident shareholders not to 
block the introduction of the 
new share structure. It pointed 
out that a clear majority - 57.8 
per cent of the registered 
shares voted at an extraordi- 
nary meeting on Tuesday - 
endorsed the change. 

Under the new structure, the 
voting strength of the regis- 
tered shares, now five times 
that of bearer shares, would be 
slashed to equal bearers. 

UBS said the majority sup- 
port from registered sharehold- 
ers was a strong argument 
against the granting of an 
injunction to BE Vision to 
block the Implementation of 
the conversion. 

BE Vision, controlled by Mr 
Martin Ebner's BZ banking 
group, has argued that regis- 
tered shareholders should have 
been allowed to vote separately 
on the Issue. 

Mr Kurt Schiltknecht, a 
director of BK Vision, main- 
tained there were several other 
grounds for contesting Tues- 
day's vote. 

Investors seem to believe BK 
Vision will win the injunction 
next week. 


Mr Jean-Marie Messier, a 
37-year-old investment banker, 
was yesterday named number 
two at Compagnie Generate 
des Eaux, the French utilities 
group, In the expectation that 
he will take over at the 
FFrl47bn-a-year ($27.6bn) busi- 
ness from Mr Guy Dejouany, 
CGE’s veteran chairman and 
chief executive, in 18 months. 

CGE said that the decision to 
coopt Mr Messier to the board 
as a director-general was taken 
unanimously, therefore with 
the apparent approval of Mr 


Jacques Calvet Mr Calvet, the 
head of Peugeot, the carmaker, 
had earlier threatened to 
resign from the CGE board if 
so young a man with little 
experience of the group's busi- 
ness were “parachuted” into so 
high a position. 

Mr Calvet left Paris on a 
business trip immediately after 
the CGE board meeting. 

A CGE statement made clear 
Mr Messier was being groomed 
to succeed Mr Dejouany, who 
has run CGE for the past 18 
years and who is due to retire 
in 1996. 

It said Mr Messier “will have 


Granada may expand in Europe 


By Raymond Snoddy 
in London 


The Granada group is 
considering expansion in 
continental Europe through 
acquisitions in catering and 
services. 

The new focus was revealed 
yesterday as the UK television, 
leisure and services group 
announced a record pre-tax 
profit of £265m f$434.6m) for 
the 52 weeks to October 1 - a 
rise of 51 per cent 

Granada, following the ten- 
ure of its attempts to acquire 
Gardner Merchant, the cater- 
ing group, is faced with the 
prospect of increasing profits 
and a debt-free business within 
three years if it makes no new 


significant acquisitions. 

Mr Gerry Robinson, Gran- 
ada's chief executive said: 
“We might look at European 
motorways, European catering 
businesses and public cater- 
ing.” 

The group, one of the largest 
independent television compa- 
nies, owning Granada Televi- 
sion and London Weekend 
Television, can add little to its 
UK television interests without 
a change in regulations. 

Mr Robinson said: “The most 
likely outcome is that we don’t 
have acquisitions over the next 
18 months. I would like that 
not to be true but it will only 
not be true if we find the right 

thing ” 

He conceded the company 


might eventually have to 
return more money to share- 
holders if the right deals do 
not come along. 

Yesterday, Granada reported 
strong growth in its existing 
businesses and in the year's 
two most recent large acquisi- 
tions, Sutcliffe Catering and 
LWT. 

Mr Robinson was also 
bullish about the future. He 
said the company looked for- 
ward to 1995 with confidence 
“in our ability to improve mar- 
gins and with expectation that 
our own capacity to generate 
organic growth from our prin- 
cipal businesses will be 
enhanced by an improving 
economy”. 

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Sales at 
Nestle hit 
by strong 
Swiss franc 


Thyssen returns to 
but omits dividend 


be*! 


By Michael Undemann 
In Bonn 


By Ian Rodger 
in Vevoy 


very broad delegated powers, 
under the control or Mr 
Dejouany. He will head a new 
internal executive committee 
to prepare important decisions 
and a new subcommittee of the 
board dealing with corporate 
strategy and development. 

This puts him above Mr 
Paul-Louis Glrardot, the only 
other CGE director-general to 
.be a board member. 

Mr Girardot was known to be 
unhappy with Mi Dejouany’s 
decision to pass him over by 
choosing someone much 
younger from outside the 
group. 


Nestl6, the world’s largest 
foods group, said sales in the 
first nine months were down 
1.5 per cent to SFr45.9bn 
($35bn). mainly because of the 
strength of the Swiss franc. 

However, Mr Helmut 
Maucher. chairman, forecast 
an increase in net income for 
the foil year, partly attribut- 
able to extraordinary gains, 
and further increases in sales 
and profit In 1995. 

Nestlt's sales volume rose 
2.8 per cent In the first 10 
months, well below its 4 per 
cent target 

Mr Maucher said toe reces- 
sion In Europe had affected 
Important markets such as 
France, Spain and Germany. 

Acquisitions added 2.1 per 
cent to the value of sales and 
price increases a farther L7 
per cent However, the effects 
of the exchange rate knocked 
off 6 .8 per cent, and a change 
in accounting for sales in 
Inflation-bit Brazil shaved oft 
a further 1.2 per cent 

The group will record a 
SFr€20m after-tax profit this 
year on the sales of its inter- 
ests in distributors of the 
French cosmetics group 
L’OrdaJ. Mr Reto Domeniconl, 
finance director, said SFz320m 
would appear as an extraordi- 
nary gain and the remainder 
would be transferred directly 
to the balance sheet 

Mr Maucher said two-thirds 
of sales growth in the past 
decade bad come from acquisi- 
tions, but he foresaw a rever- 
sal of the pattern as sales from 
subsidiaries in developing 
countries expanded. 

Capital spending was likely 1 
to be flat this year at 
SFr3.1bn. 

The gronp recently 
announced some 2,000 redun- 
dancies at three sites in the 
UK. Mr RamOn Masip, chief 
operating officer, said toe cuts 
were “all that are foreseen in 
this country for toe next few 
years”. 

• Mr Maucher said yesterday 
Nestle was interested in buy- 
ing the European petfood 
activities of US breakfast 
cereal manufacturer Quaker 
Oats. 


Thyssen, the steel-based 
conglomerate, said yesterday It 
was back in profit after the 
worst results in its 103-year 
history. However, it will not be 
paying a dividend for 1993-04. 

The group reported a DM90m 
($57 An) net profit for the year 
ended September 30, compared 
with net losses of DM994m the 
year before. Final figures for 
the year are expected in Janu- 
ary. 

Thyssen said a “satisfactory" 
dividend would be paid at the 
end of the present financial 
year. 

The group last paid a divi- 
dend, of DM10, in 1992. 

Its recovery was driven 
mainly by a tumround in toe 
Europan car industry and the 
growing demand for invest- 
ment goods as Germany 


emerges from its worst post- 
war recession. Restructuring 
over the past two years, espe- 
cially in the sh^ dfrision, akto 
helped to lift productivity. : 

Turnover for the year rose 4 
per cent to DM34A up from 
DM33. 5m, while orders 
Increased 8 per cent 

Budd, the US subsidiary, saw 
turnover- rise 17 per emit dur- 
ing the review period, helped 
especially by strong sales of 
pick-up trucks and minivans, 
which are the group’s special- 
ity. 

More jobs are expected to be 
shed in . the coming year, 
mainly .in the steel division, 
which, represents about 30 per 
cent of group turnover and was 
the main cause of the recent 


Steel sales rose 3 per cent to 
DMllbn during the period. 
Although the steel division has 
been reporting monthly profits 


sinceAprftit wffl report along 
for toe year as a whoie, ev«L 
though plants are waiting gat 
out and cannot nfflettbe ajfe. 
pectedly strong detnand^ 
some products. ’7 
Thyssen employed 129,389 
people at the end ofthe pofod, 
about 5 per cent less thap .a 
year earlier- * J ..'s'Z'r ■ '■ 

The group expects to she d 
another 4,000 stedworkers-ljy 
the end of lS^. bringmg 7 ^ 
steel division’s workforces 
about 22,000, down from 30.858 
in September 1993. ■ .V>~y 
• The Steel Federation 4aM 
new orders at German steehaa. 

hers in the toird quarter rose 
16.4 pa- cent, to 95m 
over the same period a - year ' 
ago. ' /J-, . 

However, toe figures repre- 
sent a drop of 0.8 per cent . 
against the second quarter 
mainly because of lower rates 
from China. ' 5 ..- 


National Grid raises payout 


By Michael Smith In London 


The National Grid, the 
England and Wales power 
transmission company, is to 
increase its interim dividend to 
the regional electricity compa- 
nies which own it, by 17 per 
cent to £54m ($84ikn). The Chid 
is exported to be floated on toe 
Stock wtriiang p np-rt g limmer 
The rise is in spite of a 6 per 
cent tell in pre-tax profits, to 
£287.1m from £2853m. The foil 
was blamed partly on a £3&3m 
premium paid on the early 
redemption of £300m of govern- 
ment debt. 


Analysts warned against 
drawing strong conclusions 
about the full-year dividend. 
However, most said toe results 
were in thin, or slightly above, 
expectations, after taking one- 
off factors into account. Most 
analysts were impressed by a 
10 per cent cut in controllable 
costs at the core business. 

The flotation price of the 
company wSL depend on-how 
much debt toe regional elec- 
tricity companies put into the 
National Grid. One analyst 
said £4.2bn seemed the base 
figure, with the likelihood that 
It could be as high as £5bn. 


The regional electricity com- 
panies are discussing flotation 
with; the government, which 
holds a golden share in. the 
National Grid, and are likely to 
announce details within : the 
next tew months. .. 

The flotation is likely to be a 
demerger, whereby sharehold- 
ers in . the .ragumal elecMdly 
companies are given.' new 
shares in the grid. The regional 
electricity - companies, are 
expected to load toe company 
with; debt of about jE75flm to 
help pay a £lbn tax hill -and 
consumer rebates of mnrethan . 
£200m. - 


AT&T confirms interest in Bull 


AT&T, the US telecoms gronp. 
has denied it would only take a 
stake in French computer 
gronp Groupe Bull if the 
French government marfp more 
concessions in opening up its 
markets. Renter reports from 
Paris. 

“Those are separate issues,” 
AT&T said yesterday. “We are 
willing to take a stake in Bull 
and we are whole-heartedly in 
favour of the opening up of 
telecommunications markets 
in France and other countries 


where we cannot operate. 

“The European Union 
decided on Friday to end the 
telecoms monopolies by 1998, 
and that’s fine with us. Of 
course, we would like to see k 
ha ppen earlier.” 

However, AT&T has indi- 
cated it would like to see 
France make concessions 
before the US Federal Commu- 
nications Commission 
approves a proposed link-up 
between state-owned operators 
France Telecom and Deutsche 


Telekom and Sprint, the US 
long-distance operator. - 
“We made a fifing to toe FCC 
on Friday saying we would 
welcome such a link up r- pro- 
vided we were allowed' to do 
similar business In France and 
Germany,” AT&T said. 

• France Telecom, a 17 per 
cent shareholder in Groupe 
Bull, said it would inject 
FFr561m ($105.2m) into the 
computer maker before the end 
of the year, ahead of its privati- 
sation. 



U.S. $65,000,000 

Pacific Electric Wire & Cable Co., Ltd 

('the Company*) 

(Incorporated as a limited liability company in Tklwan, RepubBc of China) 

3% per cent Bonds Due 2001 

(■the Bonds*) 

NOTICE IS HEREBY GIVEN to the hoMera of the outstanding Bonds that 
the Company has announced a bonus issue ot I06.132.74l shares at 
NTSiO.OO per share and a cash issue of 90.000.000 shares at NTS24.00 


per share together with a same record dote of October 20. 1994. In 
accordance with the provisions of the Indenture constituting the Bonds the 
Conversion Price has been arfiusted from NTS31.49 per share to NT531.08 
per share effective October 21, 1994. 


Eftxyxxyxw 

HMC MORTGAGE NOTEStf PIC 

Hosting Bale Notes due 2021 
Notice is hereby given that there 
win be a prindpal payment of 
£3,560 per £95.320 Note an the 
interestpayment date December 14, 
1994. The prindpal amount out- 
standing per Note w$ be £32260. 

By: The One MMMm Bank. H-*. 

Loodge, Agent Bn* 

November 24, 1994 


Pacific Electric Wire & Cable Co., Ltd 

November 2*. 1994 


ITOCHU CORPORATION 
(C 1TOB & CO. LIMITED) 
ANNOUNCE THE FOLLOWING 


It wa« resulted at the Boon! Meeting 
beU on IMt November. tVM that 
die Iruchm Dmdcnd for Ac yar. 
axled 3 hi Man*. B4J, rtiafl be paid 
hi the S tod Mi e w of record at of 
JOl* September, I99f at rhe mK of 
MO Yen per *are c* and after 9th 
Deeewbcf. BH 

flic Semi-Amml Report lor the six 
momhscwiodXmte y Mntoer. NWwflt ■ 
t* avaAatdc at Ilnmbra Bank United 
■ml Booquc [ntenorionau a Lincnt- 
boorg by ibe cud of December. WW. 

Hantbra Bank United J 



FORD MOTOR CRH) IT COMPANY 

US. 5400,000.000 

Roaring Rata Nates One August 1998 
In accordance wUh the terms and 
conditions of the Notes, the interest 
rate for the period 28th November. 
1994 to 27th February. 1995 has been 
fixed ar 8.1075% per annum. The 
interest payable on 27th February, 1935 
win be US $15.640025 par U.S. SI.000 
nominal. 

Agent Bank and 
Principal Paying Agent 


Fiduciary issue by 

KredetbankSA LuKombouigaoee 
tnfundatoanlobemadebyitio 


tstituto per to Sviluppo 
Economico deU’fialia 
Meridionale 


ECU 700,000,000 
Floating Rate totes One 1995 


M*Nowt*oH9M 

*»>*•» 


ROYAL BANK 
OF CANADA 


KU<oa.oaaHo«a<iM 

icuxinsi 


CS Fie«r Itrr-nu 

Aganr 



NOTICE OF PURCHASE 


Caisse Nationale de Credit Agricole 


U-S41 00,000 Zero Coupon Notes doe 
10th February, 1997 (the “Notes’ 7 ) 


Noteholders ere hereby Informed that the Issuer of the Notes 
has the intention to re-puichasa the Notes at a price to be 
agreed between Caisse Nationals de Credit Agricole and the 
noteholder per Q-S.S l.OOO. 10,000 or 100.000 denomination on 
or before 2nd December, 1994 . 

IBJ International pic will be acting as arranger for Ha too*. 
National® de Credit Agricota. Noteholders are requested to 
contact IBJ International pic attention: Capital Markets 
Department fax no: 071 236 0484. 

All Notes to be redeemed should be presented for payment and 
wUJ be payable as provided in tbe Conditions of the Notes. 


LEGAL NOTICES 


A /A 

//A 

7 / 


.'oanaodty & H— M 
History on Compact 
Disk 

Ikcaln hfaturul luluic, prices 
and iunlaamnl MbnMk» 
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: cicrytog yot need in one arr-to- 
u* mHe CRB InfuTcch fcetpn pit perform 
amly'Oi. tactming. 
mo4tl<n(. pevunon nd lob moic_ 

JS YHARS OF IIICTORK.-AI.Pfl ICM FOR 
CASH. FUTURES. OPTIONS AND 
INDEX MARKETS. 

50 YFAKS OF HWJAMF3VTAI. INTORMATTON 

ON OVER TOctawDoniss. 

SMar tu 1 he lafumubm (mad n I he CRB 
CornmAy Year Bowk, rhr of ihc 

looms inJuary In eOdiilnn lo 

fci tl ibia, CR0 InfoTcdi also pravklo ibtljr 
pf« efxiate* via KR-Qoou, Koista-Rildert 
■ 1(1 ware ^sdfirallr dodpnl to 
Jcwatiad and aop>m rodof-iby prtas 
ittnxfly «au yum iltlnhave. 
INI-ORMATKM: llinaifcr Vakil 
KR House. TRPicetSkeel.l^jnilomCCaY IIIY 
Tef; y+i (0) 71 SHUQAJ 


INTERNATIONAL 

GAS REPORT 






maaMssffBrar 


IN HIIJ MATTER OF 
■"IB MRK0ALK CROUP PUT 


To receive a compKmancary copy of 
International Gas Report 
contact Tbny Ashcroft. 
Financial Times Newsletters. 
Number One Southwark Bridge. 
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o mWfc by mbsenpoon IBMI 
ady far £530 (UK) or 
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(24 bum) 


1MTHB MATTER OP 
THE COMPANIES ACT 1985 


THE MATTER OF 
•“SWHIANT MTAIL GROUP ItC 

sad 

IN TUE MATTER OF 

THE COMPANIES ACT IWS 


UPON HIE PGTCTION of ibc Jxwe a.wol 

c™p Mltaonto «iSTS 


r ■ -7- i-sivuMim mdxo use 

fttopwrl whow RnttoercU Ol Ike m sftnaieU 

ml SW BioadeAct Strew. London WIViFF 
pnacWaltolhoOaHtaa I lib October, 1994. 


^JL^ TON ,ICARING Coa W | f or lfce 

MnWHCI 


NOT1C 5 B ffERBBY GIVEN that a Petibaa 
15* ,4 4 9 November 1994 p TC*amui n 1/00 fto 
Mtjwty’s High Court or Justice for the 
coa f li ma I roa of the redaction of the share 


AND UPON READING the uid Pnlfon 

Daccvioaoe 


NOTICE IB FURTHER GIVEN ttal dm 
™*1. PeiWwn * diiocaed 10 be beam be Me Mr 


T HIS C OURT DOTH ORDER ihu Ihc 
jwiwuoo or the Share premhim xeaaM of the 

LilBNBV Dti fl *7 4 d AAA — — - ■ 


w 


" — v »» panun of fk- 

b 7 13.754.000 resolved «TsaS 

effaeted by a Speoai RcaolMloa at (be CWMafc 
ptool w 71 b September I 9 W be nd lbcr»? 
n fcetebt coaflrmriJ in ircunljwv a>;>» 


ANY Creditor Of Shareholder of the Mid 


1 — a! — DC ZDd IflC dw 

n- ^ nofug q!! 1 .*" “n Tniij” wilh ,bc 


r. ■ " 01 tbe Mid 


, , « vwwBBUKm OK BO mk] 

rtuuld ippev or (he Ume of 

PW. « by ComSTEr Om £££. 


COMMERZBANK OVERSEAS FINANCE N.V. 
U.S.5 200.000,000 Floating Rate Notes 1993/2005 

In accordance with the provisions of the Nolos the following notice 
is hereby givon: 

Interest Period: November 23. 1994 to May 23, 1935 (181 days) 
Interest Rate: 6.0125% p.a. 

Coupon Amount U.S.S 151.15 per U.S4 5,000 Note 
U.S.S 3.022^5 per U.S S 100,000 Note 
Payment Date: May 21 1995 

Frankfurt/Main, November 1994 


AWDTT IS ORDERED Ihs. ,hi. Order be 

EBMSKSSiat— 

W-Mjfb.y-Mwtod..* I. ihc K^Bclal 
-Uhl* 21 day, ai,„ ** 


* *e said Pemiai *dl be hnridKd n 


*•7 sweh person requiring the taoc hr the 
Dated lfan24ili day of Noweniber 1994 

WctohotCrshMiiJo^ 

25-31 Moarnie 
landfla EQR fiAR 

s< **«in far the abows-fumtd Ompany 


rWcdlbB iMb day uf Nurcmbcr ( 991 . 


COMMERZBANK Sfe 



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FINANCIAL TIMES THURSDAY NOVEMBER. 24 1994 * 19 

international companies and CAPITAL MARKETS ~~~< 


ANZ beats market expectations 


ACT clears a path through 
risk-management minefield 


By Nikki Talt In Sydney 

Australia and New Zealand 
Banking Corporation, the last 
of the big Australian banks to 
report earnings for the year to 
end -September, yesterday sur- 
prised the market with an 
AS8Q3.2m (US$6l3.1m) profit 
after tax but before abnonnals. 

The figure compared with 
A$459.7m In the previous year 
Including abnonnals, the profit 
was AS82i.9m, up from 
A$246.5m. Earnings per share 
rose sharply - from 30.8 cents 
to 54,5 cents, on a pre-abnor- 

mals basis. 

The final dividend is li cents 
(unfranked), compared with io 
cents a year ago. making a 
total for the year of 25 cents, 
up from 20 cents. 


Belgian 
metals group 
to float 
Swedish arm 

By Kenneth Gooding, 

Mining Correspondent 

Union Mintere, the Belgian 
metals group, is to reduce fur- 
ther Its interests in the zinc 
business by floating Amme- 
berg Mining Corporation, its 
Swedish mining subsidiary, on 
the Stockholm stock exchange 
on terms which value it at 
about SKrL26bn (S170m). 

CM plans an initial public 
offering of nearly Um Anxme- 
berg shares, or 95 per cent of 
the company, at between 
SKrl03 and SKrll2 each. 
Underwriters have the option 
to bny additional shares to 
cover over-allotments and, if 
this is taken up, UM will have 
no farther ownership interest 
in Ammeberg. 

Gross proceeds from the 
offering before the exercise of 
over-allotment options and 
commissions were expected to 
be between SKrl.2bn and 
SKrL39bn, UM said. 

The offering will consist of 
retail and institutional offer- 
ings in Sweden and an interna- 
tional institutional offering. 
About 30 per cent of the 
shares available will be 
offered in Sweden, including 
about 5 per cent to retail 
investors. It is scheduled to be 
completed by mid-December. , 

Ammeberg operates the I 
Zinkgruvan underground , 
mine, in south central Sweden, 
which opened in 1857 and last 
year produced about 63,000 
tonnes of zinc, 15,000 tonnes of 
lead and 30 tonnes of silver. 

UM said last year it wished 
to give up its role as the 
world's biggest zinc producer. 
It has closed its zinc refining 
plant at Overpelt in Belgium, 
and last year cancelled plans 
to double capacity at its Balen 
zinc refinery, also in Belgium. 

In February, UM sold its 
Union Zinc subsidiary in the 
US to Savage Resources of 
Australia for USg200m. Flota- 
tion of the Swedish zinc sub- 
sidiary will round off this 
rationalisation process. 


The result was ahead of ana- 
lysts' expectations, which hod 
been pitched slightly below 
A$700m. The shares jumped 8 
cents to A$3.75, helping to rally 
both the banking sector and 
the Australian stock market 
which had been rocked by Wall 
Street's overnight plunge. 

ANZ said the result came on 
the back of strong income 
growth and a sharp fell in the 
charge for doubtful debts, ft 
noted a particularly strong 
recovery in the profits from its 
core Australian operations, 
which contributed A$456Bm to 
the group's total, compared 
with ASl 99.9m previously. 

International operations con- 
tributed A$250.7m, against 
A$i63.9m, while the New 
Zealand business remained 


By Shiraz SldLhva 
in New Delhi 

Indian Shaving Products, a 
joint venture between Gillette 
of the US and the Calcutta- 
based Poddar group, yesterday 
announced a 150 per cent rise 
in net profit for the half-year to 
September 1994 on the back of 
a 20 per cent increase in sales. 

The company said net sales 
Tor the first half of the finan- 
cial year rose to Rs341.4m 


By Shiraz Sidhva 

ICI India, a subsidiary of 
Imperial Chemical Industries 
of the UK, yesterday 
announced a 77 per cent 
increase in grass profits for the 
first six months to September 
and a 15 per cent advance In 
turnover for the period 
The company's profit before 
tax increased to Rs254.3m 
( 58 . 1 m) from Rs47.4m last year. 
Net sales increased to Rs2£2bn 
from Rs2.36bn reflecting 


Astra International, one of the 
largest business groups In 
Indonesia, surprised the mar- 
ket with an 84 per cent rise in 
net profits for the first nine 
months of the year, Reuter 
reports from Jakarta. 

The company reported net 
profits of Rpl86bn ($88m) 
against RplQ1.33bn a year ago, 
on sales of Rp6 ( 262.32bn. 
against Rp4.110.47bn. 

“The impressive result was 
due mainly to higher automo- 
tive sales, which accounted for 
about 75 per cent of total 
sales," Mr Jos Parengkuan, an 
analyst with tippo Securities 
said 

"But gross profit rose only 41 
per cent due to a lower gross 
margin, which resulted from 
the strong Japanese yen." 


stable, with A$95.7m. 

ANZ said the charge for bod 
and doubtful debts fell to 
A$381.4m, from A$633.7m a 
year ago. with Mr John Gough, 
chairman, describing the asset 
quality Issue as "well under 
control". Net impaired assets 
at end-Septembcr were 
A*L93bn, down from A$2 ,7bn 
in 1993. 

Operating expenses 
increased by A $89. 9m, with a 
reduction in premises and com- 
puter costs being offset by 
higher personnel and other 
costs. 

This meant the ratio of oper- 
ating expenses for net operat- 
ing income stood at 66 per 
cent, down from 69.2 per cent 
in the previous 12 months. 

ANZ McCaughan, the 


(510.9m) from Rs285.5m a year 
ago. with strength in both 
the domestic and export 
markets. 

While domestic sales grew 18 
per cent to Rs30l.2m, export 
sales were up 35 per cent to 
Rs40.2m. 

Gross profits increased to 
Rs54J8m from Rs43.3m, a rise of 
27 per cent. 

This was achieved after 
Investing Rs42.1m in advertis- 
ing and other marketing activi- 


improved trading conditions 
and the intrinsic strengths of 
the diversified product portfo- 
lio of the company. 

Gross profit after the deduc- 
tion of interest but before 
depreciation and taxation 
increased to Rs341.Gm from 
Rsl92J>m last year. 

The company said the explo- 
sives business continued to 
suffer from low prices in an 
oversupplied market. With this 
exception, the company's other 
businesses contributed to the 


He said average gross mar- 
gins edged up to 18 per cent in 
the third quarter from 17.4 per 
cent in the first half. 

Meanwhile, the Bisnis Indon- 
esia newspaper reported yes- 
terday that Astra would secure 
a 5200 m loan from a syndicate 
or several Singapore-based Jap- 
anese banks. 

It said the loans would be 
used to finance Astra's expan- 
sion programme in agriculture 
and financial services. 

Mr Rlni S. Soewandi, the 
company’s finance director, 
was quoted as saying that agri- 
culture currently contributes 
about 4 per cent of the compa- 
ny’s total revenue. 

Mr Rini said that Astra had 
planned to raise 5200m through 
bonds to be issued in the US 


group's stockbroking arm, 
made ASI4.4m. up from A$5.3m 
in 1992-93. 

In Melbourne. Mr Don Mer- 
cer, managing director, said 
ANZ hoped to overtake 
National Australia Bank - the 
strongest of the large Austra- 
lian banks - in terms of 
returns on shareholders’ 
equity. 

"I fancy our chances of pass- 
ing our major competitors on 
return on shareholders’ 
equity." he commented, 
although ANZ achieved only 
15.2 per cent last year, com- 
pared with NAB's 17.5 per cent. 

He added that ANZ had no 
large acquisition plans, nor 
was it looking to divest 
any significant elements of its 
business. 


ties. Net profits increased 150 
per cent to Rs28J>m, after pro- 
viding for a depreciation of 
Rsi4.8m and interest of 
Rsll.5m. 

In 1993-94, the company 
wrote off the difference in 
exchange on a long-term 
advance received from Gillette, 
resulting in a loss of Rsl7.6m. 
and therefore there was no 
exchange loss in this period. 
This contributed to sharply 
higher net profits this year. 


large upturn. The restructur- 
ing of the company’s portfolio 
resulted in a steep reduction in 
interest costs and the effective 
elimination of debt. 

ICI India said it had restruc- 
tured the seeds business dur- 
ing the half-year, resulting in a 
profit of Rs 13.2m- Profit after 
tax rose 59 per cent to 
Rsl50.5m, in spite of the fact 
that the previous period 
included a large gain from the 
disposal of the company's 
fibres business. 


with interest rates of between 
9.5 per cent and 10 per cent. 
That plan was postponed as 
several Indonesian companies 
were reported to have issued 
Yankee bonds with higher 
interest rates. 

According to the company, 
the syndicated loan agreement 
is expected to be signed in 
Singapore on December 16. 

• Semen Gresik, Indonesia's 
state-owned cement company, 
is to acquire Semen 
Padang and Semen Tonasa, the 
other two state-owned cement 
companies, early next year 
prior to listing its 
shares offshore, Antara, the 
official news agency, said yes- 
terday, AP-DJ reports from 
Jakarta. 

No details were revealed. 

NSK In joint 
venture with 
US group 

By John Griffiths 

NSK, the Japanese motor 
components and bearings 
group, is forming a joint ven- 
ture with Inge r soil- Rand, the 
US multinational, to launch a 
broader attack on Europe's 
15m-plus units a year market 
for vehicle steering columns. 

The equally-owned venture, 
Mas tech Europe, initially will 
pool the resources oF Torring- 
ton, I ngersoll -Rand's automo- 
tive subsidiary, and NSK’s 
steering column manufactur- 
ing facilities in the UK. 

Later they will consider 
adding capacity in continental 
Europe. Torrington employs 
400 people at Coventry and 
NSK employs 160 people at 
Peterlee in north-east England. 

The two plants have a com- 
bined turnover of £35m to £40m 
(522.3m-525.5m) a year. 

Torrington supplies tradi- 
tional European customers 
such as Ford and Rover. The 
Peterlee facility supplies 
mainly Japanese transplant 
operations, notably Nissan at 
Sunderland, Toyota in Derby- 
shire and a Suzuki venture in 
Hungary. 

Together they account for 
about 15 per cent of Europe's 
steering column market, 
according to Mr Chris Thomas, 
the new company's managing 
director. 

Large independent rivals 
Include ZF of Germany. But 
about 50 per cent of demand Is 
currently met by vehicle 
makers’ in-house production. 

However, executives of Nas- 
tech Europe, which wifi start 
operations early next year, say 
they believe that the trend of 
vehicle manufacturers increas- 
ingly to out-source components 
should provide good growth 
opportunities in the sector. 


Padua bank 
seeks 81 % 
of Credito 
Lombardo 

By Andrew Hill In MDan 

Banca Antoniana, a Padua- 
based bank, is negotiating 
with Monte del Paschi di 
Siena, Italy's oldest bank, to 
buy an 81 per cent stake In 
Credito Lombardo, Monte dei 
Paschi's quoted subsidiary, for 
about L240bn (5149m). 

Credito Lombardo, based in 
Milan, has only 13 branches, 
bat the acquisition would fit 
into Antonlaua’s strategy of 
extending and strengthening 
its network of 127 branches 
across north and north-east 
Italy. 

The operation is part of (he 
continuing shake-up In Italian 
banking, In which Antoniana 
has played a small role. The 
Padua bank is one of four 
small banks from the Yeneto 
region which decided this 
month to sell their joint 13 .52 
per cent stake In Banco 
Ambrosiano Veneto to other 
shareholders, in effect block- 
ing a bid far control by Banca 
Commerctale Italians. 

Monte dei Paschi said on 
Tuesday that the sale of its 
Credito Lombardo bolding 
should be completed by the 
end of the year. 

Antoniana will have to 
launch a full bid for the out- 
standing shares on the Italian 
market at the same price of 
about L4.400 a share. Trading 
in Credito Lombardo's shares 
was suspended an Tuesday 
morning, having risen 5 per 
cent on Monday to L3.588. 
They remained under suspen- 
sion yesterday. 


Incentive buys 
German cycle unit 

Incentive, the Danish 
industrial group, said it had 
acquired the bicycle accesso- 
ries activities of German’s 
Union Dortmund. The unit has 
turnover of about DKr250m 
(54l.lm), writes Hilary Barnes 
in Copenhagen. 

Incentive owns a Danish 
cycle-lamp company, Basta, 
and Soobitez, the French dyna- 
mo-lamp manufacturer, and 
said the acquisition would 
make Incentive a world leader 
in cycle lights. 


Publication of the Association 
of Corporate Treasurers' guide- 
lines on risk nnaimgpm«»p t and 
control of derivatives could 
hardly have been better timed. 
A succession of losses through 
the use of these complicated 
financial instruments has nur- 
tured an impression that com- 
panies cannot handle t he m - 

The ACT believes that the 
problems lie not so much in 
the complexity of the products 
as to a failure of control at a 
very basic level. The organisa- 
tion, which groups corporate 
treasurers from the UK's larg- 
est companies, elevates one 
simple recommendation above 
all: "Strategies, policies and 
procedures for the use or trad- 
ing of derivatives must be 
clearly agreed by senior man- 
agement and at least endorsed 
by the board of directors." 

Most non-financial corpora- 
tions say the} - only use deriva- 
tives to hedge, or lay off their 
risk. But Mr Derek Ross, 
author of the paper and ACT 
chairman, argues that hedging 
is an ambiguous concept which 
needs to be pinned down. A 
dealer takes a view or the mar- 
ket when deciding when and 
for how long to hedge. 

The ACT policy document 
holds that management must 
not only agree a clear policy 
but "monitor and report all 
derivative activities, positions 
and exposures”. That reads 
like a rather trite sentiment, 
but a basic failure of supervi- 
sion lies behind many of the 
recent corporate losses. 

Another important point is 
the need to provide for an 
internal check on treasury and 
dealers. This separate risk 
management function should 
ensure compliance with limits 
to exposure and independent 
reporting to management 

Some treasurers maintain 
that the ACT’S recommenda- 
tions are over the top and the 
public hysteria is overheated. 
The sanguine view is that 
derivatives, complex and mis- 
understood as they are, get 
more than their fair share of 
blame for losses. For every 
loser there is a winner, ana- 
lysts stress, but the winners 
stay silent 

Companies have proved per- 
fectly capable of losing large 
sums of money, not on exotic 
derivatives, but simply because 
of movements on underlying 


markets. Rolls-Royce, Laker 
and Lyons lead the list of 
examples. Only rarely is it 
mentioned that a company 
should have used derivatives 
to hedge its exposure. 

There may be no boardroom 
panic about derivatives but 
there is concern. For a start, 
about one-tenth of UK treasury 
departments still trade for 
profit according to surveys of 


DERIVATIVES 


corporate treasurers, and that 
can also expose them more to 
losses. Speculating treasurers 
can always do damage but 
highly leveraged derivatives 
can allow them to wreak par- 
ticular havoc. 

It is also possible to lose 
money on a standard but mis 
understood hedge. A company 
can misjudge its underlying 
exposure. It could, for example, 
over-estimate its sensitivity to 
interest-rate movements and 
over-compeosate. 

And some treasurers still 
experiment with complicated 
instruments which are beyond 
them. "There is very good and 
strong sales pressure," says Mr 
Les Hatpin, of Record Treasury 
Management, the risk manage- 
ment research company. "And 
it is natural human nature: a 
treasurer wants to try things 
out" 

The roll-call of corporate 
losses on derivatives is never- 
theless having a salutary effect 
on practices, “ft will make peo- 
ple that much more cautious, 
that much more diligent," says 
Mr Paul Reyniers of accoun- 
tants Coopers & Ly brand. 

Ahead of the ACT guidelines 
a trend towards more robust 
and explicit controls is already 
in evidence. Some companies 
have, for example, restricted 
the use of certain Instruments 
such as the short option. 

Corporate treasurers are 
evaluating their positions more 
frequently. This practice of 
"marking to market" nan be 
misleading, some companies 
claim, and some of the more 
complicated instruments are 
hard to value. The Record sur- 
vey showed only 28 per cent of 
surveyed corporate treasurers 
marked to market every day or 
week. Marking to market is 
nevertheless becoming more 
common as a guide. 

Management can rein in 


their central treasury unite but 
many of the most crippling 
derivatives losses have been 
inflicted by rogue subsidiaries. 
“There are people In subsid- 
iaries that can sefi the com- 
pany ." says Mr Reyniers. Com- 
panies are therefore tending to 
insist that units, as well as fil- 
ing the usual monthly balance 
sheet, also state their off- 
balance sheet positions. 

Corporate treasurers and 
board members are also taking 
to heart the message that they 
should not be using derivatives 
if they do not understand 
them. "If you don’t know what 
you are doing you are dead,” 
says Mr Richard Desmond, cor- 
porate treasurer of BAT Indus- 
tries, the UK tobacco and 
financial services group. 

Some clients have blamed 
their misapprehension on 
investment banks for giving 
bad advice. Fewer than half of 
the corporate treasurers inter- 
viewed by Record said sellers 
of derivatives explained their 
products adequately. In the US 
both Procter & Gamble and 
Gibsons Greetings have sued 
Bankers Trust, a leading deriv- 
atives dealer. 

However, companies' domi- 
nant reaction has been to put 
their own house In order. 
While there has been no obvi- 
ous fell-off in overall use of 
derivatives, a gentle shift has 
taken place: from the captions 
and swaptions that bewilder 
the uninitiated towards simple, 
"plain vanilla" products that 
can be easily explained to 
superiors. 

Explanation is easier if exec- 
utives have solid basic know- 
ledge. Workshops, seminars 
and conferences on derivatives 
for corporate treasurers have 
proliferated. A finance director 
attending one accountancy 
firm’s course said: "My trea- 
surer wants to use more deriv- 
atives. l just don't feel comfort- 
able. She could be doing 
something crazy and I would 
never know.” 

Of course a board may 
endorse a risky move in the 
derivatives market In that 
case there are no guarantees. 
The most Mr Ross can do is to 
argue: "If a company wishes to 
adopt such a hazardous policy 
it should at least be disclosed 
to shareholders." 


This announcement appeal* as a matter oi raoord only. 


November 1994 





Televerket AS 

(To be renamed as Telenor AS from 1st January 1995) 

USD 700,000,000 

Revolving Credit Facility 


Arranger 

Chemical Bank 


Senior Lead Manager* 

Chemical Bank 

Dresjfrw Bank Luxembourg S A, 
Union Bank of Switzerland 


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The Fuji Bank, Limited 


Lmad M anaQM 

The Bank of Tokyo. Ltd. Bayerisehe LandesbankGIrozantrale 

Credit Suisse The First National Bank of Chicago 

HandelsbankenAS The Mitsubishi Bank. Limited 

Morgan Guaranty Trust Company of New York Nomura Bank International pic 


Managers 

ABN AMBO Sank N.v. Caearwagweraa* 
Bard ays Bank PLC 
Den Danske Bank 


Den norske Bank AS 


ZZ chemical 

" fheGlobal Bank 


Banque Nationals de Paris Norge A/S 
Citibank, N.A. 

Deutsche Bank Luxembourg S A. 


Nicholas Denton 


DKB Securities Co., Ltd. 

Is Proud To Announce 
It Has Commenced Operations 

As A New Member Of 

The Dai-lchi Kangyo Bank 
Global Network. 



Beginning today, you can depend on DKB Securities 
to be your trusted financial partner in Japan. 

We're poised, ready to contribute to the world of securities. 




DKB SECURITI 

ES CO., LTD. |! 


Established 

October 19, 1994 


Head Office 

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Capital 

40 billion yen ■ 



Chlyoda-ku, Tokyo 100 

President 

Mr. Yasuo Noda 


Telephone 

(03) 5223-411 1 

Stockholder 

The Dai-lchi Kangyo Bank, Limited ((00%) 

Facsimile 

(03) 5223-4120 


SECURITIES BUSINESS NETWORK OF THE DKB GROUP 
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Indian Shaving Products 
ahead at Rs341.1m midway 


Strong advance at ICI India 


Astra International gains 84% 





FINANCIAL TIMES THURSDAY NOVEMBER 24 1994 


INTERNATIONAL COMPANIES AND FINANCE 


Deal lifts Continental Cablevision’s network to 4m subscribers Creditors of 

US cable-TV group in $1.4bn buy 

By Tony Jackson the said. held by institutions. The subse- pany. to bid for mobile commu- # 

in New York The purchase will add quent flotation is planned for nications licences. pnPfQV IITIm 

750 000 subscribers to Conti- the middle of next year. Time Warner Is entering the Vtlvl U1UI 


By Tony Jackson 
ki New York 

Continental Cablevision, the 
third largest US cable-TV com- 
pany, is to buy the cable 
operations of Providence Jour- 
nal in a deal valued at $l.4bn. 

Continental, which is pri- 
vately owned, also plans to go 
public when the deal is closed 
next year. 

The cable properties of Provi- 
dence Journal, a diversified 
communications company 
which is also privately owned, 
are in seven states across the 
USA. Five of them are close to 
Continental's cable operations, 


the companies said. 

The purchase will add 
750,000 subscribers to Conti- 
nental's network, giving it a 

total of about 4m. 

This still leaves it in third 
place after Tele-Communica- 
tions Inc and Time Warner. 

Continental will take on 
$755m of debt and issue stock 
to Providence valued at about 
$645m. It is believed this will 
give Providence 18 per cent of 
Continental’s equity. 

Some 55 per cent of Conti- 
nental will t hen be owned by 
the company’s founder, Mr 
Amos Hostetter, and by fellow 
executives, with the balance 


held by institutions. The subse- 
quent flotation is planned for 
the middle of next year. 

Continental refused to com- 
ment yesterday on reports that 
it had considered and then 
dropped a separate plan to give 
a substantial share of its 
equity to US West, the regional 
telephone operator. 

Continental has so far 
avoided the general move by 
the big cable companies into 
the US telephone market 

Last month TCI joined forces 
with Comcast and Cox - the 
fourth and sixth biggest cable 
operators - and Sprint, the 
long-distance telephone com- 


pany. to bid for mobile commu- 
nications licences. 

Time Warner Is entering the 
telephone market indepen- 
dently. and also has an alliance 
with US West 

The latest deal illustrates the 
trend in the cable industry 
towards consolidation. This 
results from competitive pres- 
sures between cable and tele- 
phone operators and from 
recent government-imposed 
cuts in prices charged to cable 
subscribers. 

Other smaller cable compa- 
nies are believed to be loo king 
for alliances With larger 
partners. 


videotron falls Study highlights differences in 

despite 10% ^ . , T . ... 

sales increase French and UK acquisitions 


By Robert Gibbons in Montreal By Ancfrow Jack In Paris 


Expanding cable-TV operations 
in Canada and the UK enabled 
Videotron to report a 10 per 
cent rise in revenues for the 
year ended August 31. but 
higher depredation and con- 
tinuing problems in domestic 
broadcasting depressed profits 
overall 

Net profit was C$20.5m 
(US$14-fim), or 11 cents a share, 
down from C$25. 1m, or 15 cents 
a share, a year earlier on reve- 
nues of C$64lm against 
C$584m. 

Videotron has been investing 
heavily in its cable and tele- 
communications franchise 
areas in southern England, 
leading to higher depredation 
and amortisation. 

However, Videotron said the 
UK unit would contribute more 
in 1995 and eventually be a sig- 
nificant source of income and 
cash flow. 

Videotron will also start up a 
trial commercial cable/multi- 
media system in Quebec this 
autumn and is expanding rap- 
idly in the US. 

• Newbridge Networks, a spe- 
cialised telecommunication 
equipment maker, posted a 
second-quarter profit of 
C$45 ,3m, or 56 cents a share, 
on sales of C$191m, up almost 
50 per cent. First-half profit 
was C$87.2m, or C$1.08 a share, 
up from C$69.lm, or 87 cents, 
on sales of C$363m against 
C$243m. 


French companies are more 
strategic in their acquisition of 
businesses while their UK 
rivals are more obsessed with 
detailed numbers, according to 
a survey published yesterday 
by Coopers & Lybrand. the UK 
accountancy firm. 

More than half of the French 
companies surveyed consid- 
ered consolidating their core 
business as the principal rea- 
son for buying others - at the 
expense of carrying out much 
financial analysis, the survey 
showed. 

Acquirers tend to be haphaz- 
ard in the way they buy other 
companies, with time frames 


and deadlines often imposed by 
the target business. In one- 
third of cases, there was no 
due diligence to assess the 
companies, and one-third had 
no direct contact with the tar- 
get before making an offer. 

Mr Alec D'Janoeff, chairman 
of Coopers’ French market sec- 
tor group, said: “British acqui- 
sitions are all very calculated 
while the French make their 
decisions on strategic grounds. 
I believe it reflects a different 
intellectual approach to doing 
business. Both have their 
advantages." 

The findings were based on 
interviews with a representa- 
tive sample of executives in 
French and UK companies. 


These showed that 70 per cent 
of French companies did not 
develop a plan to cope with 
integration until after an 
acquisition had taken place. 

In three-quarters of the cases 
studied, the mergers and acqui- 
sitions had been supported by 
the target’s board of directors 
and was not in any way hos- 
tile. 

Mr D'Janoeff said one of the 
implications of the study was 
that UK-based multinationals 
should be prepared to pay a 
premium when acquiring 
French businesses if they 
wanted to be able to compete 
against French rivals inter- 
ested in a target primarily for 
strategic reasons. 


Capital increase for Von Roll 


By Ian Rodger in Zurich 

Von Roll, the troubled Swiss 
steel and engineering group, 
said it would slash its SFrl84m 
(S140m) equity capital by 90 per 
cent and then increase it to 
SFrl90.9m through a rights 
issue to shareholders and 
bondholders. 

This is tiie second significant 
restructuring programme in 
less than a year for the group, 
in which Proventus, the Swed- 
ish industrial investment 
group, has a 28.1 per cent 
stake. 

Von Roll said in a statement 


that this latest capital injection 
was made necessary only by 
continuing troubles at its toxic 
waste disposal plant in the US. 
Other operations were recover- 
ing as planned. 

The waste plant's start-up 
last year came two years late 
because of blocking manoeu- 
vres by environmentalists, and 
some of its sensitive equipment 
froze during a cold snap last 
winter. 

Recently, it has suffered 
from a slump in the market, 
and Von Roll said yesterday 
that it would continue for 
some time to incur losses. 


The registered shares and 
participation certificates would 
be abolished, creating a single 
class of SFrlQ bearer shares. 

Shareholders would be given 
a subscription right to the 
upcoming capital rise at the 
rate of 11 new shares at SFr25 
for each SFrlOO nominal of 
existing capital. The board 
would be reduced to five from 
the current ninp members. 

Von Roll said it would suffer 
a loss this year, its fourth in 
succession, but expected to 
report a modest group net 
profit in 1995 and a satisfactory 
profit in 1996. 












o no 


flip §sfpp§ i®pL EM 



SAKURA SECURITIES CO., LTD 

has started business on Nov. 24, 1994 

Kasumigaseki Bldg. 24F 
2-5, Kasumigaseki 3-chome, Chiyoda-ku, 

Tokyo, JAPAN 
TEL: 81-3-3595-3900 
FAX: 81-3-3595-8800 


Saknra Bank Group’s Global Securities Network 

LONDON ZOBICH FRANKFURT HONGKONG 

Saknra Finance International Ltd. Salon* Bank (Schweiz) AG Sakura Bank (Deutschland) GmbH Saknra Finance Ash Ltd. 

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TEL 44-71-638-7595 TEL 41 (1)212-3066 TEL 49(69)5970116 TEL 852-8649300 


By Bernard Simon in Toronto 

Creditors of Olympia & York, 
the failed Canadian pr o per ty 
developer, have found an out- 
side investor to inject badly- 
needed capital Into Gulf Can- 
ada Resources, the oil and gas 
producer formerly controlled 
by O&Y. 

Torch Energy Advisors, a 
Houston-based investment 
management group, will pay 
C$300m (US$2 14m) for 55m 
newly-issued units, each com- 
prising one Gulf common 
share and a one-quarter war- 
rant to bny one share at 
C$6.25 over the next two 
yearn. The warrants, if exer- 
cised, would raise another 
| C986m. 

The deal will allow the inter- 
national lender group, led by 
Hongkong and Shanghai 
Banking Corporation, Credit 
Lyonnais, Royal Bank of Can- 
ada and Dai-Ichi Kangyo, to 
CUt its Stake in Gulf Canada to 
52 pm- emit from 70 per cent. 
Torch win have a 25 per cent 
interest 

Torch also has an option 
until December 9 to make an 
offer for Gulf shares held by 
the banks and other share- 
holders for C$5.38 each. This is 
significantly higher than the 
C$4 JO at which Gulf shares 
were trading on the Toronto 
stock exchange immediately 
prior to the announcement 

O&Y pledged its Gulf shares 
to the hanks as partial collat- 
eral for a US$2 .5 bu syndicated 
loan. The banks seized the 
shares when O&Y collapsed in 
1992. 

Mr Ken Croft, analyst at 
Levesque Securities in Cal- 
gary. said the banks have 
faced a dilemma: “They 
believe there’s more value in 
the company than the win w tf 
share price suggests. But to 
realise that gain would require 
someone to put in extra 
money." 

Gulf has extensive 
operations in western Canada, 
northern Russia and Indon- 
esia. It produced an average of 
93,500 barrels a day of liquids 
and 296m cubic feet of natural 
gas in 1993. But the company 
has lost more than C$4 OOm 
since 1990, and has C$L.7bu of 
debt 


NEWS DIGEST 

Metsa-Serla to 
invest FM2bn in 
paper machine 

MetsS-Seria, the Finnish pub? and papa group, 
plans to invest FM2bn ($421m) In a new paper 
machine at its Kirfcnieini plant in Finland, 
writes Christopher Brown-flumes in Stock- 
holm. The machine, due to begin operations in 
late 1996, will be a We to produce 300,000 tonnes 
a year of double-coated fine paper. 

Tins will raise the company's toted a nnual 
capacity for graphic printing papers to lm 
tonnes. 

Mr Thno Foranen, chief executive, said the ■ 
investment was based on rising demand for 
coated afflset printing papers, where growth of 
more than 5 per cent a year was expected 
between 1994 and 1998. He stressed the 
group intended to maintain a strong balance 
sheet 

This is one of the biggest single capacity 
additions to be announced by a Finnish for- 
estry group in the past three years. 

However, it may increase fears that the 
industry is heading for a new investments 
boom now that it is back in profit and prices 
are rising strongly. 

The downturn in the pulp and paper cycle 
between 1991 and 1993 was mainly caused by 
over-capacity. 

Karstadt warns of 
‘marked fall’ in profits 

Karstadt, Germany's biggest retail group, yes- 
terday warned there would he a “marked fall" 
in profits for the year because off stagnant 
consumer demand, writes Michael Lfndemann 

ZD 

The group said turnover had risen 30-8 per 
cent to DM19.4bn ($l2.48bn) in the first 
nine months of the year following the 
takeover of Hertie, the country's third-Wggest 
retailer. Sales at Karstadt itself fell 5.8 per cent 
to DM8.45bn, while Hertie’s turnover dropped 
2 £ per cent to DM3.27. 

Karstadfs travel services were virtually the 
only sectors able to report sales increases. 

While most of the German economy is pull- 
ing out of its worst post-war recession, retail- 
ers have yet to benefit 

Next year is not expected to improve 
because of new taxes and a national pay round 
which is not seen as likely to boost wages 
significantly. 

Hong Kong exchange 
chooses DTB system 

Hong Kong has chosen the trading and clear- 
ing syst em of the German futures and options 
market, Deutsche Temdnbflrse (DTB), for its 
pbmnprf traded options maritat, the IXTB said, 
writes Andrew Fisher in Frankfurt. 

Mr Edgar Cheng, chairman of the Hong 
Kong exchange, said DTB’s system had bean 
selected as the most suitable for thw Hong 
Kong market after it had also looked Into 


many other systems. ^ , 

now be able to move.abead towarte the mfcp: 
diirtion of our traded. options market In the 
. thir d quart©- eff nest year." Mr C heng said. . 

Mr Jflrg Franke, DTB general n^mgri. who 
signed the contract with Mr Oieng yesterday, 
sSptMs was the first st^ in a kmg-t arei 
retattonsWp between to two 
said the system developed by the wortus 
«nna iwi n if i n t p T W fli l notions, and futures 


exchange, had handled mare Ilian 600,000 eon- 
tracts a day at peak times. 


McLeod Russell takes 
control at UCI 

McLeod Russell, part of the Khaiten group tea 


of "a controlling interest of Union Car-; 
bide India (UCI) when it paidRs£9hn ($92.4Sm) 
-for the £&9 p»r holding IfeM by Umim 
Carbi de Corporation of the .US, writes Ktmal 
Bose in Calcutta: ' 

The payment was received by Sir lan Pem- 
val, trustee -of -the Bhopal flbepttal .Trust -to 
- which Union Carbide had entrusted the con--; 
trolling block afUCL Sir Ian said: "The Trust 
will now get down to building a Rsl.Zhn ho$pi-i 
tal for' foe? victims of the-1384 Bhopal gas 
disaster.’’ " \ 

McLeod Russell will now he making an offer' 
to buy the shares df UCI front the 'minority' - 
shareholders at Rsl75 a share, the price It paid -I 
for the Union Carbide holding... 

In the first six months to September 1994, 
UCI made net profits of Rs79m, against Rs55m ' 
in the same period last year. .Turnover rose, to 1 
RsL7bn from Bsl.5BhiL The company has 
about 45 per cent of the Indian diy cell battery 
market ...‘ 

Bankwest advances . > 
ahead of sell-off 

The Bank at Western Australia,' which is due j 
to be privatised by the. -state government but 
already has an unwanted buyer in the form df 
the <tman py Challenge: Bank, yesterday 
announced a profit after tax and atihormals of 
A$82.7m (US$KU2m)for the year to- the end of 
September, against A$37.3m the previous year, 
writes Nikki Tait in Sydney . 

Professor Ross Garnaut, Bankwest chair- 
man, said the bank was ready for a foil flota- 
tion, and that this would be a less risky option 
than a merger with Challeng e 

Russian cigarette deal 

R- J. Reynolds Tobacco International has. 
acquired a controllbg interest in Annavir- 
lahiTr, a itaiEgfam cigarette manufacturing com- 
pany, AP-DJ reports. 

Financial terms were not disclosed. 

Annavirtabak, which now will be known as 
RJR-Annavirtabak, has a capacity to produce 
4bn cigarettes annually and employs about 450 
people. • • 

R. J. Reynolds skid it planned to expand 
RJR-Arma virtabak 's manufacturing capacity 
to i nctud e American-blend cigarettes such as 
North Star. 


CSA adopts a new flight plan 

The Czech airline is seeking a domestic partner, writes Vincent Boland 

C zechoslovak Airlines, 
the Czech Republic's 
loss-making national 


C zechoslovak Airlines, 
the Czech Republic's 
loss-making national 
airline, Is hoping an injection 
of government money and a 
new approach to future part- 
nerships will help it ride out 
the most turbulent period in 
its 71-year history. 

CSA, majority-owned by 
Czech state institutions, has 
been tackling two problems - 
the search for new partner fol- 
lowing the split with Air 
France, and the struggle to 
meet finanoe requirements on 
its Airbus leases. 

CSA split up with Air 
France, its strategic partner, in 
March, after the government 
paid $27m to buy out the 
French airline's stake. It has 
tried to forge another alliance 
with an airline, but without 
success. 

It has now adopted a new 
approach: the search is on for a 
Czech Investor, such as a 
financial institution, willing to 
pump money into the airline. 

The Airbus leases that are at 
the core of CSA's problems 
were signed early in 1989 at the 
peak of the aircraft leasing 
boom and before the demo- 
cratic revolution in the former 
Czechoslovakia. 

“It has been clear for some 
time that CSA is not able to 
carry the cost of these leases," 
says Mr FrantiSek Slab?, the 
airline’s executive vice-presi- 
dent for finance and p lanning . 

The Airbus lease represents 
about 10 per rent of CSA's total 
cost base, he adds. 

The carrier, however, is to 
receive an interest-free loan of 
Kcs586m ($2i.3m) from the gov- 
ernment to help It discharge 



CSA has negotiated new terms for its Airbus leasing payments 


immediate leasing payments 
on two Airbus A310-300S. 

In addition to the loan, the 
airline has managed to renego- 
tiate the leases so that its 
annual repayments will be cut 
to KcsSOOm a year from now 
until they expire In 2001. This 
Will save it Kcs200m annually 

T he airline also leases 
five Boeing 737-SOOs and 
four ATR 72-20OS, which 
it acquired In 1992 and which 
COSt Kcs700m annually 
CSA hopes the new lease 
arrangements will convince a 
local investor to come on 
board. 

It has held talks with several 
North American and east 
Asian airlines, but its financial 
woes and a lingering bitterness 
over Air France’s withdrawal 
have forced it to abandon that 
route. 

Instead, Mr Slab? says. CSA 
is talking to Czech Investors, 
one of which is likely to 

acquire some or all of the 4839 


per cent stake in the airline 
held by the National Property 
Fund, the Czech government 
body that owns companies 
being privatised. 

■ Mr Slab? says this investor 
would most likely he a Czech 
financial institution, and that a 
deal could be finalised next 
year. 

“There are [Czech] institu- 
tions able and willing to be 
fi nan cial partners with CSA," 
he says. 

A possible partner is Ceskd 
PojiSt’ovua, the partly priva- 
tised Czech insurance company 
that owns 4.5 per cent of CSA. 

CSA wifi, however, continue 
talks with other airlines on 
route-sharing, passenger incen- 
tives and catering services. 
Delta Airlines of the US has 
been touted as a likely partner 
to this area. However, Mr 
Slab? says his airline is tail rin F 
to four or five parties. 

A third likely alliance would 
involve a technology and 
know-how agreement with 


another airline or service com- 
pany. The final say on these 
developments rests with tire 
government, whose anger at 
the Air France pull-out has 
been partly assuaged by CSA’s 
improving financial perfor- 
mance. 

The company has reduced 
losses in the first zdne month s 
to KcsZLS^m, compared -with a 
loss of Kcs7385m in the same 
period last year, hi fiscal 1993 
CSA lost KcsLSbn after tax. 

P assenger numbers have 
been rising since March, 
ironically coinciding 
with the Air France pull-out, 
while capacity utilisation is 
also up an last year, peaking at 
nearly 75 per rent in August 
By the end of the year CSA 
will have 20 aircraft. Six Rus- 
sian Ilyushin H 6ZMs were 
withdrawn from service at the 
end of October, but in a dd it io n 
to the western-huflt aircraft it 
also has four Tupolev Tu 
154Ms and three Tu l34As. 

It has recently taken deliv- 
ery of two ATR 42s on operat- 
ing. leases for service on short- 
haul routes. 

In spite of lower losses, the 
leasing commitments make the 
ueed for CSA to find a new 
backer urgent. The European 
Bank for Reconstruction and 
Development, which was Air 
France’s partner in the high- 
profile $60m investment in 
March 1992, says it will soldier 
on as a long-term investor, 
despite losing its board repre- 
sentation. 

The EBRD too must be hop- 
ing CSA’s new plans will pro- 
™ an early solution to the 
airline’s problems. 


FAX: 44-71-638-1285 


FAX: 41 (I) 212-3270 FAX: 49 (69) 555091 


FAX:852-8612316 


TAKE PRECISE AIM 


ftr i’i.aci.xg Yoi.-n t:i:cRT'u ut .xT 
advektiskmkst ix Tin: Fr,x.\x< i\j, 
Times you auf. reach ix<; tiil wor;.»'n 

JiUSIXESS COMMUxn r . 


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Andrew Skar/.ynski on 071-87:1 105 l. 





target 

THE BEST 

For informatiu,, „„ «<hrrtisi„: 

in thiH section please call: 


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FINANCIAL TIMES THURSDAY NOVEMBER 24 1994 


21 




N Ov 






?od Russell , 

&l at ^®s 

- - 

- - „ r i to. S 


• .'.^ih kl }- 


-■-. .i«2ir^ 

- i •..; -“Wa; k 


;'est advances 

i of sell-off 


*****■••’■ , 

•- •- 

• -. '-■■ ! ' r 5i£. 

V. . ’•• -:a? 


international capital markets 


Treasuries post strong gains as sentiment swings 


By Usa Bransten in New York 
and Martin Brice in London 

US Treasury prices posted 
impressive gains on the heels 
ot a weakening equities market 
as investors switched from 
stocks to bonds in search of 
higher yields. 

At the close, the benchmark 
30-year government bond was 
up U at 945. yielding 7.912 per 
cent At the short end of the 
market, the two-year note was 
unchanged at 995. yielding 
7.165 per cent. The market 
closed at 2pm local time for the 
Thanksgiving holiday and will 
remain closed all day 
today. 

After another sharp fall in 
the Dow Jones Industrial Aver- 
age yesterday and losses in 
European and Asian equity 
markets, the long-bond yield 


fell below 8 per cent for the 
first time this month. 

Mr Joseph Lira, chief econo- 
mist at S.G. Warburg, warned, 
however, that there is no guar- 
antee yields will remain this 
low. 

Tf the equity market stabi- 
lises in the next week, bond 
yields will go right back 
through S per cent like a hot 
knife through butter,” he said. 
For die moment, he added, 
bond market investors have 
both eyes on the equities 
market. For nearly all of this 
year the stock market has 
taken its lead from the bond 
market 

Late Monday afternoon, as 
share prices tumbled, however, 
the two markets moved apart 
as bonds benefited from the 
same fears of rising interest 
rates that hit equities. 


Mr Lira attributed most bond 
market gains to speculation 
rather than the much-talked- 
obout asset reallocation, 
because most of the buying 
seemed to be in long bonds, 
which are normally not havens 

GOVERNMENT 

BONDS 

for investors worried about ris- 
ing short-term interest 
rates. Some traders, though, 
reported signs of buying 
In the lu-year sector of the 
market. 

Markets hardly took notice 
of new economic data. The 
Commerce Department 
reported that durable goods 
orders declined 1.5 per cent in 
October from September. Ana- 
lysts had expected an increase 


of about 0.1 per cent Much of 
the decline, however, came 
from a drop in car and aircraft 
orders. Excluding transport, 
orders increased 1.1 per 
cent. 

A drop in aircraft and car 
and truck orders caused trans- 
portation equipment orders to 
decline 9.4 per cent. 

■ European government bond 
markets took their tone from 
the US yesterday, with stron- 
ger sentiment leading to rises 
in both German and UK gov- 
ernment bonds. 

One analyst said: “Inflation 
seems to be under control by 
the Fed and the risk premium 
Is reducing in bond markets." 

■ German government bonds 
followed the US rise and the 
December bund futures con- 


tract ended at 91.07. up 0.62 on 
the day. 

Ms Alison Cottrell at Kidder 
Peabody said bunds had been 
supported by US Treasuries 
rather than the October M3 
money supply figures, which 
showed an annualised rise 
from the fourth quarter of last 
year of 6.9 per cent, rather 
than the 7.3 per cent which 
some had expected. 

■ UK government bond mar- 
kets showed some strength and 
the December long gilt future 
had moved up 5 of a point to 
trade around 1035 by late in 
the day. 

Three tap issues of gilts 
worth a total £550m were 
exhausted yesterday. They 
were: £200m of 9 per cent due 
2008 at a price of 104.18; £200m 
of 9 per cent due 2012 at 105.03; 


£l50m of 2’.'i per cent index- 
linked due 2003 at 16222. 

Mr Kevin Adams at BZW 
said: “People may be feeling 
that bonds are back in fash- 
ion.'’ He said investors had 
shrugged off hints of political 
uncertainty stemming from 
disagreements in the govern- 
ing Conservative party over 
the UK contributions to the 
European Union budget. 

He saict “Investors cannot 
believe any Tory MP will risk 
going to the country when 
they will so obviously get com- 
pletely pasted.” 

■ The yield on 10-year Italian 
government bonds rose 3 basis 
points to 12.14 per 
cent 

Mr Simon Maggs at EBJ said 
the fall in price was due to 
further political uncertainty. 


S.G. Warburg senior debt 
is rated A2 by Moody’s 


By Norma Cohen, 
investments Correspondent 

Moody’s Investors Service said 
it had assigned a rating of A2 
to the long-term senior debt 
guaranteed by investment 
bank S.G. Warburg Group, the 
first debt rating it has given 
tor the group. 

According to Moody's, the 
rating reflects the group's lead- 
ing franchises in the UK and 
international equities markets, 
as well as its conservative 
financial structure. 

However, the rating also 
reflects expectations that War- 
burg’s competitive position 


will be increasingly challenged 
by other, much larger invest- 
ment banks, especially in its 
overseas markets. 

Moody's said that it expected 
competition for business to be 
particularly Intense in develop- 
ing markets, and the size of 
Warburg's much larger US 
competitors would give them 
powerful advantages. 

According to Moody's, “a sec- 
ond challenge is for Warburg 
to decide on the appropriate 
volume and risk limits of its 
securities trading”. The agency 
noted the volatility which trad- 
ing on its own capital base has 
introduced Into earnings. 


iai! cigarette deal 


Correction 

IPE/JLCE volumes 

Average daily volumes traded 
at the Internationa] Petroleum 
Exchange and the London 
Commodity Exchange have 
increased this year. 

At the IPE, daily volumes 


have increased to an average 
of 58,105 contracts a day, com- 
pared with 54,427 a day in 
1993. 

At the LCE volumes have 
averaged 15,502 a day. com- 
pared with 14,659 last year. A 
report yesterday implied that 
volumes were down. 


Issuers choose defensive instruments 


By Graham Bowtey 

Issuers on the eurobond 
market turned yesterday to 
defensive instruments in the 
race of volatility in govern- 
ment bond markets. 

INTERNATIONAL 

BONDS 


Issuance was mainly In dol- 
lars and investors showed 
demand for floating-rate notes 
and short-dated paper. 

“The rally in US Treasury 
prices is likely to bring sellers 
to the market and put upward 
pressure on secondary' market 
spreads,” said one trader. 

Another dealer said: 
“Spreads on lower-quality debt 
have already begun to widen 
and this could have a knock-on 
effect with investors switching 
out of eurobonds and into 
Treasuries in a flight to 
quality-" 

Monte dei Paschi di Siena. 
Italy's flfth-largest bank. 


launched a $200m offering of 
five-year floating-rate notes 
with a coupon of 18.75 basis 
points over three-month Libor. 

Demand for the notes came 
from investors in Hong Kong 
and France, and from Japanese 
investment funds in London 
and Asia. 

Citicorp launched a DM250m 
Issue of five-year FRNs offering 
a coupon of 25 basis points 
over three-month Libor. 


At the short end of the dollar 
sector. General Electric Capi- 
tal Corporation launched a 
5200m offering of two-year 
bonds priced to yield six basis 
points over US government: 
bonds and offering a coupon of 
7% per cent 

Lead manager Goldman 
Sachs said the deal was tar- 
geted mainly at retail investors 
and that most of the bonds 
were sold across Europe but 


with limited interest from 
domestic German investors. 

In another deal targeted at 
retail investors. ABB Interna- 
tional Finance launched a 
5200m offering of bonds due 
January 1997, priced to yield 20 
basis points over US govern- 
ment bonds and offering a cou- 
pon of 7.5 per cent. “The two- 
year area of the dollar sector is 
where European investors 
want to be," said one trader. 


NEW INTERNATIONAL BOND ISSUES 


Amount 

Coupon 

Price 

Maturity 

Fees 

Spread Booh newer 

Borrow ur 

US DOLLARS 

m. 

% 



% 

top 

Monte dot Paschi di Slonoj 

200 

(4 

99.9QR 

Dec. 1999 

CL20B 

Swe» Bank Carp. 

General Becthc CopL Carp 

200 

7.375 

99L96R 

Dec. law 

0.135R 

+6(7<4l6-96) Swiss Bank Corp. 

ABB Intamationof Finance 

200 

7.50 

S9.S8R 

Jan.l9B7 

0.15R 

+20(714%- 96) ABN Anra Bate 

Tubos de Acera da Matico(b) 

65 

13.75* 

99.75R 

Dec.1999 

13SR 

*6W%«-97) Bankers TiUSJ InU. 

Oiaflenga Bonk(c)T 

50 

(cl) 

99.86R 

Dec. 1997 

0J20R 

CSPB/ SG Warburg Secs. 

D-MARKS 

OUtxxpt 

250 

tf) 

S0LS8R 

Dec.1999 

0175R 

Goldman Sachs 

GU0DERS 

Bonque NaUanafe de Pans 

160 

7 DO 

100D3H 

Doc.1907 

O30R 

+40(B%%-97) MG Bank 

AUSTRALIAN DOLLARS 

NSW (Jersey) 

200 

zero 

30.G5FI 

May-2006 

0.20R 

HSBC Markets 


Final (aims and nan-callable isieas staled. The yield spread (over relevant government bond) at bunch is supplied by the lead 
manager. {Boating rale note. oSart-annuai coupon. ft fixed reoffer price: leas are shown at the re-offer level, a) 3-mth Ubor +J%- b) 
Puttabte In 3 yn at par. 0 Issue launched on Tuesday was Increased to £2 50m. el) 3-mth Libor *35bp- efi 3-mth Ubor +25bp. 


Competition steps 
up in loans sector 


By Richard Lapper 

Frogmore Estates, the UK 
property company, yesterday 
announced the successful syn- 
dication of a £i50m loan 
arranged by Barclays. 

As with another deal signed 
this week - a DM65m medium 
term loan facility for Pohjolan 
Voima (PVO), the Finnish 
power company - the terms 
provide further evidence of 
increasing competition in the 
loans market, where margins 
have fallen sharply during the 
past 12 months. 

The Frogmore loan was 
priced at 60 basis points over 
the London Interbank Offered 
Rate (Libor), for the unsecured 
revolving credit facility . com- 
pared with about 100 basis 
points when the company last 
came to market in June 1982. 

The money will be used to 
refinance an £80m revolving 
credit facility maturing in 
June 1996 and for general cor- 
porate purposes. Originally 


launched at £120m to relation- 
ship banks and a small group 
of international lenders, the 
loan was increased to £l50m. 

Mr Gavin Rody, of Barclays, 
said it had been easier to win 
support for the deal in the mar- 
ket than in 1992. “Two years 
ago the market was tough. 
This time it has been more 
comfortable,” he explained. 

Chemical Bonk arranged the 
tour-year loan facility tor PVO, 
designed to refinance a DM65m 
facility signed in August 1993. 

PVO will pay 35 basis points 
over Libor, compared with 95 
basis points for the earlier 
deal, which was also arranged 
by Chemical Bunk 

Banks participating in the 
PVO deal alongside Chemical, 
are all Japanese. They are Fuji 
Bank, Long-Term Credit Bank 
of Japan, Mitsubishi Trust and 
Banking Corporation, and 
Yamaichi Bank (UK). 

PVO was assigned a AA rat- 
ing by the Japanese Credit Rat- 
ing Agency in October. 


Chicago futures volume 
surges as US stocks slide 


By Laurie Morse in Chicago 

The stock market slide on Wall 
Street on Tuesday prompted 
money managers to shift assets 
into higher-yielding securities, 
a shift reflected in rising vol- 
ume in the interest rate pits of 
Chicago’s futures exchanges. 

Globex, the after-hours com- 
puter trading system owned by 
Reuters and operated by the 
Chicago Mercantile Exchange 
and Paris’s Matif, logged 
record business starting at 
2J0pm local time on Tuesday, 
shortly after the CME's euro- 
dollar futures pit closed. 

By the time the electronic 
trading session ended early on 
Wednesday morning, turnover 
had hit 24,365 contracts, by 


far Globex's best night. 

“People moved in to buy 
eurodollars as the stock mar- 
ket fell.” said the CME. Of 
Globex's total turnover over- 
night, 20,681 contracts were 
eurodollar futures. The Chi- 
cago Board of Trade’s elec- 
tronic after-market trading sys- 
tem, Project A, logged a record 
11,000 contracts, mostly 30-year 
US Treasury bond futures, dur- 
ing the two hours it was open 
on Tuesday. 

Tuesday night's volume 
surge also boosted the daytime 
volumes in Chicago futures 
trading. Trading that day 
pushed the CBoTs cumulative 
volume for the year above 
200.6m contracts, a record tor 
any exchange. 


ht plan 


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WORLD BOND PRICES 


BENCHMARK GOVERNMENT BONDS 

Had Day’s Week Month 

Coupon Dale Price change Yield ago ago 


Auamfla 

0000 

09*34 

91.7000 

+1.950 

10.38 

1053 

1045 

Bdghini 

7.750 

10/04 

905300 

+0.490 

027 

031 

058 

Canada * 

6500 

06/04 

83.7500 

+0500 

959 

9.10 

014 

Denmark 

7.000 

12/04 

893000 

+0.550 

063 

079 

9.02 

France BTAN 

8500 

05/98 

101.8150 

+0260 

7.35 

7.47 

755 

OAT 

0750 

10/04 

91.7100 

♦0750 

759 

014 

036 

Geirnany Bund 

7500 

11/04 

1005000 

+0.730 

7.37 

7.40 

7.71 

Italy 

0500 

08/04 

91-2800 

+0200 

11.79T 

11.70 

1153 

Japan No 119 

4500 

OB/99 

103.0940 

+0160 

450 

4.06 

4.12 

Japan No 164 

4.100 

12/03 

903680 

- 

4.67 

4.74 

4.78 

Nrtheriaids 

7550 

10/04 

904600 

+0400 

7.47 

756 

7.68 

Spate 

aooo 

06AM 

82.3500 

+0400 

1158 

11.20 

1157 

LKGHs 

0000 

08/99 

91-10 

+11/32 

025 

041 

080 


0750 

11/04 

88-28 

+16/32 

042 

055 

852 


9500 

10/08 

104-19 

+21/32 

043 

057 

088 

USTraaauY' 

7575 

11AM 

100-10 

+37/32 

753 

754 

7.88 

7500 

11/24 

94-20 

*47/32 

7.97 

656 

008 

ECU (French Govt) 

0000 

04/04 

94.6800 

+0550 

041 

052 

077 


London dadhg. Hum Tort mW-<tey 


t Grass tnduAno wWmokton ten ttlSLfi par CM payaUo by ngraettdsrts) 


YtoUK Loot iturluX Mandrel 


Prices: U8. UK n 3M, otters In cttdimi 

US INTEREST RATES 


Soudk MMS Wsnmtonsi 


UmMbm 


Batear tan rat*. 


Treasuy Bffls and Bond Yields 

Oh iramth 061 Dm fear 

8% IVnanA 553 Hum near 

6% Tin* motet. 5.44 Rwirtnr — . — 

5% Shnnffl WJO ID-]** 

Fed Ante ti htorwdou - Owpw 058 30-yev 


BOND FUTURES AND OPTIONS 
France 

■ NOTIONAL FM34CH BONO FUTURES {MATIF) 


739 

7.45 

738 

785 

788 




Opan 

Senprioa 

Change 

H*h 

Low 

EsL wl 

Open W. 



11154 

112.16 

+080 

112-18 

11172 

204566 

132543 

- .* 


1T150 

11154 

♦aao 

11154 

1)092 

0158 

30.403 

■ j •' 

Jtn 

11012 

11048 

+050 

110.12 

11012 

2 

3.164 


■ LONG TBIM FRENCH BOND OPTIONS (MATIF} 


Strike 

Price 

110 

111 

112 

113 

114 


Dec 

2.16 

1.16 

026 

0.03 

0.01 


CALLS ~ 
Mar 

An 

Nov 

— PUTS 
Dec 

250 

255 

aoi 

094 

156 

- 

002 

151 

1.11 

- 

014 

150 

073 

- 

084 

- 

0.43 

- 

1.84 

- 


Mar 

1.94 


Eat. wL KM, Calk 44^4? PUB 20,109 . PnMouS Ca»M few H. Crib 310563 Puts 278,151. 

Germany 

■ wwnOMAL GERMAN BUND FUTU RES (UFFET DM250,000 lOCtte 0< 100% 

open Seaprico Change Wgh Low Est wl Open W. 

90.98 90 «i +0,45 91.10 90.77 174826 163007 

90.15 90.13 +0.49 9028 


Doc 

Mar 


19214 49953 


m WIND FUTURES OPTIONS (UFFE) DMg5q00q 1«>* 


Strike 
Price 
9090 
0100 
91 SO 


Dec 

0.40 

0 

0 


Jan 

CALLS — 
Feb 

Mar 

Dec 

Jan 

PUTS — - 
Fob 

Mar 

055 

0.85 

1.03 

0 

052 

155 

1.40 

056 

097 

051 

010 

153 

1.54 

1.68 

023 

0-50 

082 

050 

150 

1.87 

1.99 


E*L vrt. tntti, Cafe 37T71 Put* 17808. Piudore day's upon I*. Cats 200970 Plan 233343 


UK GILTS PRICES 


Italy 

B NOTIONAL ITALIAN GOI/T. BOND (BTP) FUTURES 
OiFFET Lira 20Qm lOOtha cl 100% 


Eel ml Open int 
25248 47395 

1351 14060 

0 0 

to ITALIAN GOVT. BOND (BTP) FUTURES OPTIONS (UFFE) UraSOOm lOOtha of 100% 



Open 

Sen price 

Change 

High 

Low 

Dec 

10040 

10044 

040 

10060 

10018 

Mar 

9950 

99.30 

039 

9955 

9009 

Jun 


9850 

O 




Strike 

Price 

Mar 

■ CALLS — - 

Jun 

Mar 

- PUTS ---— 
Jun 

9000 

250 

2.67 

2.00 

357 

8950 

254 

2.46 

254 

366 

10000 

1.00 

255 

250 

3.B5 


Est- ml COOK. Cota 63 0 Pus 235. fYovtou* (tty's opal taL CM 5484 Att 6008 


Spain 

■ NOTIONAL SPANISH BONO FUTURES (MEFF) 


Dec 

Mar 


UK 


Open Sea price Change High Low Eat. vd. Open W. 
87.85 07.87 +038 88.00 87.7B 40,907 82J334 

87.00 87.08 +0.38 87.24 88.90 2.358 8£S9 


■ NOTIONAL UK GILT FUTURES (UFFS)' £50.000 32nda C4 100% 


Dec 

Mar 


Open 

102-30 

102-11 


Sett price Change 
103-07 +0-21 
102-17 +0-22 


High 

103-15 

102-21 


Low 

102-30 

102-10 


Esl vci Open Int 
71925 99454 

12990 19002 


LONG GILT FUTURES OPTIONS RJFFE) CS0.1XX 64UW of 100% 


Strthj 

Price 

103 

104 
106 


Dec 

0-14 

0 

0 


CALLS 


PUTS 


Mar 

1-30 

1 - 0 ? 

0-44 


Dec 

0 

0- 50 

1- 50 


Mar 

1-80 

2- 32 

3- 10 


Est vet Usd, Cafe 5854 Puts 32*8. Pianeus (toy’s span tot. Cafe 87133 Aits 4SS7B 


Ecu 

■ ECU BOND FUTURES (MATIF) 


Doc 


US 


Open Sen pnce Change 
61.60 61.75 *064 


Hfcgh 

81.80 


Low 

81.44 


Esl voL Open tot 
2.619 7,356 


Open 

Latest 

Change 

Hk* 

Low 

EsL vd. 

Open W. 

97-09 

98-08 

+1-03 

08-11 

97-09 

194,463 

372581 

97-00 

97-20 

♦ 1-02 

07-24 

97-00 

15,021 

71587 

97-00 

97-02 

+1-02 

9755 

98-28 

1.171 

12.479 


■ US TREASURY BOND FUTURES (CBT) $100,000 32nds oi 100% 


Dec 

Mar 

Jin 


Japan 

a NOTIONAL LONG TBIM JAPANESE GOVT. BOND FUTURES 
(UPFE) VlOOrn IQQihs Of 100% 

Open Close Change High Low Est vd Open Ini. 
Dae 108.68 108.77 108.60 705 0 

Mar 107.64 109.10 107 84 2536 0 

■ UFFE contracts traded an AFT. All Open Mnest Sga. wa lu previous cay 


Notes 


_vwa_ 

U fled 


_ 1994 — 
Mb iE*er- Up I* 


fled fries £ +cr. 


— 1994 _. 
Utfi law 


.-Yldfl,- .. 1994 _ 

fl) i3 Price f * or- M0I low 


& 52£t«bZ-— - - 10JM 638 

Ti^iilraciW^Tf ~ 1ZJB *3 
iff 1174 789 

1223 lit 

7 *± 

TnwCw7|*iagtt— 711 

imes 13L+PC 1 WW — 

EwhUJljf* 1587-r 

TrattMtfclwrtt 

Ettfl 16pc 1907 

TTwTieiKlMBtt-r- 

UPC 1M8-1 --r 

Tie*15 I sl>cVB8 

Enai ISP® 

magitfCiNW*. — 

Ettta llPaPC I9M- 

S 


7.11 7JB 

1186 7.71 

0,99 765 

858 734 

\Z1i 6W 
0.35 US 
r.44 112 

784 115 

1187 131 
1154 

1088 130 

11 ■ 135 

1074 132 

132 
125 


IMA 

964, 

10211 

10511 

mu 

non 

.1007s 

mu 

uu 

nofi 

10S»2 
10111 
11TB 
104 Is 
ViS 

95% 
117 
IZfia 
112 & 
104% 
114,', 
10W. 
91 Tt 


Finding 3»tfic 1999-4_ 
10li donation 9>zpc 2004 _ 

07* Tires W.pc 2004** 

102*j at»c2BS_ — — 
'sy Com 9 pc 2005 

,ob a — 

193,1 

Trass lllme 3003-7 

110 * Trass Unworn 

1041, I3>jpc 2004-8 

H»a Tie® Ope 2008 ft 

liafi Tram 5pe 2009 — 

wee 

ss% 

B3Q 
USB 
122 
110 * 


Rnb 



CamSpc 

T'r«s13£ i 

1 Dpi 2001 r 

7pe 2O01tt 

fipc2D03++- 


I- 


112 

178 

1035 

134 

ISfi 

115 

125 

118 

1111 


838 107B 
- H8HN 
sjr BBB 
834 102B 

aao ’i0fi 

851 10T* 
843 92A 

856 10612 
8 SO 97*| 
856 tOSB 

869 Il3h 


107* 

_ 9BU 

107)3 

113*1 

117* 

1218 

ii7g 

+i nJi 
+A 100H 
+4 izm 

+»s 11«. 
♦* 11V. 
+* 13IU 
hi 11%j 

+* MU 

+A V02 
131* 
+* 140* 
+A 12S« 
+4. US* 
+.1 128* 
+B IZ1A 
+fe lOItt 


ISS » 

+U 13Bn 

"Vj? Wa , | JIMlIlI _| U I I 

4-tj las* bbb 

lajui lojij Q»8i2«w«L- 

+B !«b 5? 

+il 127.V !0#% QWd*2'2Pe. 


U8 

192 

759 

145 

IBB 

10.18 

115 

la 

1005 

148 

1043 

1G0 

830 


7.1B 741, 

BJI 10811 
142 B8^1d 
841 100* 

146 106U 

876 122)3 
140 951. 

147 964 

179 11B% 
844 

180 129U 

112 I04S, 
142 9B)3 


^ 86* 

125* 

♦*» 106H 

+B 100* 

♦*» 125*2 
♦11 143* 

+B 112U 
"IS 
+S 138* 112), 
+JJ 119* 95ft 
*\ 151* 124jJ 
+11 IMH 99)1 
♦II 115* 91U 


894, 
ioi a 
MB 
97 

102*1 

" 8*1 

90S 

BlU 


2pe % - I«7.fl 

4StfC-fl8tt -.4135* 

2*2pc '01 (713) 

2 >2gcT)3. _ (710 

tfeKWtt ..7135.61 
2pC0G - J685I 

2*2PCU9 4710 

Jtjpt'U 1746) 

2 ‘S* 13 (892) 

2 *jpe'i6 (81 Q 

2 *jtC20 pCLfl 

VltLVm (97.7) 

4SPS ‘3014 —4135 I) 


2.45 

273 

3JC 

3.41 

346 

353 
359 
162 

354 
357 

171 
369 

172 


394 201 

350 107* 
378 166,1 
3 7B 162V 
279 >09* 
179 189* 

382 153*1 

383 15B* 

383 130<a 
184 138)) 
386 133 

363 (TOO 
368 109!) 


T«aBi/«fleano_ — 

761 

859 

82%]d 

♦% 

WA 

77U 

Com too in Mil# — 

as 

840 

IDS), 


1=GH 

I00U 

Tinas ter 2JT 

a ss 

839 

MSB 


127% 

IO0H 

Tina G%pe 2008-12#- 

753 

8n 

TOft 


93% 

71% 

TranSpeXna** 

858 

833 

98H 

+fi 

1171) 

to 

7%petfi2-i5)* 

&S3 

834 

M% 


fMA 

88* 

Trafe8%pe20i7t* 

839 

131 

IMA 


128% 

99A 

EM* 12pC 2013-17 

008 

8S513Z*ri 

*1% 

159% 

128* 


Pronpnahra rati redemption raio on projected irtiaDon ot (1) ION, 
and fi) 5hr. (W Rbuhss in wrenowseo show RP1 base ter 
Mating Be 8 months prior lo issue) and nave been adjusted to 
retort rebating of RPI lo 100 In February 1987. Conversion 
factor 1946. RPI lor March 1994: 142.5 and far October 1994: 
1402. 


Other Fixed Interest 


— 1994 . 


»4pC 


+11 12915 1WS Tiwa.2i»c. 


160 

132 

SB 5 
154 
!« 
140 


195 - s^g 


- *»* *13 BBS 44SJ 

- «*ti +* 54 j) 39)1 

+H 71 56S 


- 29S 

- as 


3SS — 44% 3JJi 

38% 28* 

37% 27ft 


Aston OevtOUPC 2009.^ 

Btam llijcc 20i2 

Mtotfap8<2pc ra 

9pc Cap 1996 

13PC-97-S 

Hidni Ouobec 15pc2DII . 

Leeds uSpcanB 

UnrpMl | 2PClmd 

LCCOpc-aiAfl 

tt ancrisatot fiSpc2tiir.. 

uain.Tttv 

NWlda ARB) 3%ne 2021. 

4Spsta»4... 

umfasnsie*2iK2oa 


W 

fed 

PrtCE? +ti- 

H0b 

Lon 

923 

887 

111* 


138% 

107* 

975 

941 

118 


142 

115 

867 

_ 

98 


118% 

93% 

898 

- 

108% 

— — 

I0J% 

99% 

1138 

— 

108% 


115% 

106 

10.54 

978 

142* 



■89)) 

U7)J 

ID Bl 

- 

127% 



149% 

125 

946 

- 

37 


44% 

33% 

923 


32% 



40% 

28% 

1002 

9.50 

IK* 

. _ 

138% 

<11% 

4K 

80S 

»% 


78 

68% 


451 

133 


150% 

129% 

_ 

4.48 

128 



145% 

I2& 

12X0 


137% 

— 

l»% 

134% 


m-nr rn w*c atron. E Auction basta. *d Ex dMdsnd Cfaslng n*Htoesa on shown to pounds. 


FT- ACTUARIES FIXED 

Price Indices Wed 

UK Gifts Nov 23 


INTEREST INDICES 

Day's Tub Accrued xd ncf. 
chanQB % Nov 22 Interest ytd 


— Low coupon yield MctSuto coupon yMd — —High cot^ton yMd — 

Nov 23 Nova Yr. ago Nov 23 Nov 22 Yr. ago Nov 23 Nov 25 Vr.ago 


1 Up to 5 ysara (23) 

2 5-15 years (23) 

3 Over is years (8) 

4 Irredeemables (6) 

5 Afl stocks (60) 

tadas-lnlwd 


12059 

+024 

12031 

2.05 

083 

5 yra 

852 

042 

8.02 

038 

048 

026 

050 

061 

658 

14156 

+063 

14058 

2.01 

11.49 

15 ym 

853 

042 

092 

044 

053 

754 

060 

8.79 

752 

158.77 

+0B8 

157.42 

251 

1087 

20 yra 

850 

8.40 

752 

044 

n*g 

008 

058 

070 

754 

17944 

♦1,11 

177.66 

094 

13.47 

Irred-t 

857 

046 

7,13 







13858 

+054 

137.83 

2.19 

1093 

















— 

— Inflation 5 % — 

— 

- — 

-Inflation 10% - 

— 



Nov 23 Nov 22 Yr. ago 


Nov 23 Nov 22 Yr. 


ago. 


6 Up to 5 yews p) 

7 Over 5 years (11) 

8 AO stocks (13) 

Dwberrtures and Loon* 


187i)1 

17451 

T74.83 


+013 

18077 

072 

007 

UptoSyre 

353 

358 

2.18 

250 

254 

1-30 

+0.18 

17450 

1.17 

456 

Over S yra 

353 

354 

014 

353 

065 

2.98 

♦0.18 

17452 

1.12 

4.41 

— 5 year yietd — 

_ 

-15 year yield — 



-25 year yield 


9 Debs 8 Loans (77) 12025 +0.81 12021 2.08 1027 9.47 9.58 7.80 9.44 9^2 001 

fenji grass rodsonpBOf »•>** «ns drown atws. Coupon Breds; Umr. ON-7WK: Msdum: ef4-tO«4L rtflfc UN and oner t Hat yMd yftf Yrer tt (Mru. 


049 


8.17 


GILT EDGED ACTIVITY INDICES 

Nov 22 Nov 2f Nov 18 


Navr 17 Nov 18 


FT FIXED INTEREST INDICES 

Nov 23 Nov 22 Nov 21 Nov 18 Nov T7 Vrago High* LoW _ _ 

Govt. Sees. (IRQ 9227 91-88 91.74 91 £9 9152 103 49 107.04 8054 GU Edged bargakn 126.5 1509 1400 174.4 1003 

Rzad Mamet 10068 10033 10015 108.15 10034 123.88 13087 10050 E-day ravarase 141.0 134.4 lias 106.0 87.4 

■ tor 189*. Qownmsra tocwWes hupi stood compiMton: 127.40 fyi/36). tow +9-18 p/l/7^. Fowd ntanwt Nnh stocs eomp ia bon: 133^7 (21/1A4) . tow 50 S3 P71/7S) . Batts 100 Govsrrvnert Secutios 167101 
28 and Rud hifarest 1928 SE acdvily tortoss icbsssd 1974. 


FT/ISMA INTERNATIONAL BOND-SERVICE 


Uitad are lha Utost htonatoonti bonds fir Mhfah 8m to an acfaquaB secondary mariwt Latest prices at 700 pm an November 23 

Issued BU Oder Chg. YMd fassued BU Otter Chg. YMd 


Issued BM Oder CfaB- Yield 


US. DOLLAR STRAIGHTS 
Abbey Nag Treasury 6% Bl _ 

Alwta Retires 7% 98 

Auttta 8*2 00 


Bank Ned Gemamwi 799 . 
Bank ot Tdkyo 8% 86 — _ 

Bdtfum 5*2 03 

BFCE 7% 97 

flrtaiaH02i 

Carab99B . 


Owtofl Kona Fin 5% 98 

ChnsSSW 

Card Eucpefl 96 — 
Ob* Fonder 9% 99 — ^ 
OsiftW54|9B 


East japsn fWwy 6% W . 

ECX8S98 

EECBS98 

EB7S96 

BB 9*4 97 

Sac de Fracs 9 98 

Euotora 91,96. 


&-toi Bank Japai 8 OB — 
Bport Dev Corp 9*2 90 _ 
Fedaal N«ri Mart 740 04 . 
FMnd6S57. 


Fad Motor Credt 6% 96 . 
Gen Bee capital 9% 96. 
GUAC9%96. 


tad Bk Japan fin 7% 97 . 
Inttr Atner Dev 7% 96 _ 
K4y6iZ3. 


Japan Dsi Bk 8% 01 — 
Korea Bee Pw io 96 _ 
Kona Sec Rrato 6% 03. 

LTC8 Fh 8 97 

MtisuMs Bac 7% 02 — 

Otisna 7% 03 


+% 3&i mu 
+*I 113* iog,; 
+ * 17B^ 163*2 
♦* 173% 159* 
+* Il8\r 
*& 184)1 165* 
+* IBB* 1««s 
+A 175% 154% 
♦S 146% 126% 
♦% 157* 134% 
+* 152U 128% 
♦* 129* IfflWi 
♦ A I26|) 105% 


Oder Kbnbototitt 8>2 01 
ISbo-Canacto 7% 96 — 

Portugal 5V 03 

Quabec Hydo9% SB — 

Qjebec Prw9 90 

Seinsbuy 9% 90 

SAS 10 99 


940=9% 98 

Spato B% 99 

Stare B. NSW 8*2 96 . 
Sweden 5*i 95 , 


Swetitii Export 8% 90 __ 
TdficBec AmwOSOQ . 
Tdcyo Meoopote 8% 96 _ 

Taycta Moar 5% 98 

U*d Wuptan 7% 02 _ 

MtoHBankB%99 

Wtartd Bank 9% 97 


DEUTSCHE MARK STRAIGHTS 
Ausra6% 24 _. 

Crock Facet 7% 03 

Oanmatf 6%B8 

DeplaFraice6%03 

Daecfta S( Hn 7*2 03 ~ 

SC 6% 00 

B86%00 

FWtend 7%O0 

Italy 7% 90 


Norway 8% SB. 
Omm 6% 04 . 
Spain 7% 03 _ 
Sweden 8 97 _ 


. 1000 

87% 

88% 

♦% 

- 1000 


99 

♦% 

— <00 

101% 

101% 

♦% 

. 1000 

96 

96% 

*% 

- 100 

100% 

H)1% 

♦% 

.1000 

61% 

82% 

♦% 

- 150 

®7 a 

100% 


-1500 

9% 

10% 

♦% 

. 1000 

102 

102% 


-500 

88% 

88% 

*% 

. 1000 

S3% 

84% 

+% 

_ 100 

100% 

101% 


-300 

104% 

H)5*4 

♦% 

. 1000 

94% 

94% 

+% 

- 600 

88% 

88** 

* 

_ 193 

101 

101% 

♦% 

- 100 

Wl 

101% 


-250 

100% 

100% 


. WOO 

103% 

104 

♦% 

-300 

102% 

103% 

»% 

_ 100 

102% 

102% 


-500 

98% 

99 

+% 

_ 150 

104% 

104% 

+% 

. 1500 

95 

95% 

♦% 

. 3000 

97«i 

97% 

♦% 

. 1500 

94% 

95*4 


-300 

102% 

ICO 

♦% 

-200 

KH% 

vs 

+% 

- 200 

96% 

100 

♦% 

-300 

100% 

100% 


. 3500 

77% 

77% 

1% 

- 500 

100% 

100% 

♦% 

-350 

HD% 

103% 

♦% 

.1350 

04% 

65 

♦% 

-300 

99% 

100% 

♦% 

. 1000 

94% 

94% 

*% 

. 1000 

99*4 

99*2 

+% 

. ym 

M 

94% 

♦% 

-300 

101 

101% 

♦% 

-200 

93% 

100% 

*% 

. 1000 

63% 

63% 

♦% 

- 160 

104% 

105 

♦% 

-200 

101% 

102% 

+% 

- 150 

102% 

102% 

*% 

-200 

103% 

»4% 

♦% 

- 150 

104% 

KH% 

+% 

. 1500 

»% 

94 

♦% 

-200 

101% 

101% 


2500 

88% 

98% 


- TOO 

101% 

101% 


1000 

66% 

66% 

♦% 

-200 

101% 

101% 


1500 

93% 

94 

♦% 

3000 

94% 



1900 

102 

102% 

♦% 

1500 

102% 

103 


1 

2000 

82% 

82% 

♦% 

2000 

07 

97% 

f% 

2000 

97% 

96 


n«i 

91% 

81% 

♦% 

2000 

98% 

99 

♦% 

2900 

97% 

97% 

♦% 

1500 

95% 

95% 

-% 

3000 

100% 

100% 

♦% 

5000 

100% 

100% 

«% 

2250 

88 

86% 

«% 


. 1500 98% 

, 1500 89% 

.4000 97% 

.2500 KBS 


89% 4*4 

97% ♦% 
103% 



Unfed Krottsn 7% 07 

— 9500 

101 

101% 


073 

858 

UcflisisGai tall Rn 7 03 

— 1000 

94% 


-% 

734 

aw 

WdiU Bate 015 

— 2000 

»% 

21% 

♦H 

7J5 

a« 

VKxMBank5%a3 

_ 3000 

88% 

86% 


738 

003 

Wafa Bate 6% 00 

_ 1250 

110% 

111% 

* 

835 

781 







847 

SMBS FRANC 8TRMQH1S 






7.JB 

Astn Dai Bate 6 10 

100 

100% 

100% 

♦% 

539 

aw 

AWtaB4%00 

— ICO) 

S7!g 

97% 

♦% 

OI* 

753 

Cawd Euopri 4% 96 

— 250 

98% 

99% 

J 4 

5.17 

025 

Onnak 4% 09 

— 1000 

96% 

96% 

♦% 

008 

933 

SB 5% W 

— 300 

106% 

M7 

♦% 

OS6 

7SB 

Sscde Francs 7% 06 

— 100 

108% 


»% 

005 

008 

Fsfend7% 09 

— 300 

107 

107% 


057 

7m 

Hereto Mater fin 6% 97 100 

107 

T07% 


5.71 

851 

Iceland 7% 00 

— 100 

10B 

UB 


532 

7J69 

Kobe B% Oi 

340 

101% 

*04 


072 

7J50 

Ontario 6% (E 

— 400 

101% 

M2 


005 

737 

Quebec Hydra 5 09 . — 

— 100 

86% 

88 

♦% 

067 

7J9 

SNCF 704 

— 490 

103 

108% 


090 

aco 

Watt Bank 5 03 

— 150 

86*4 

96% 


055 

7.42 

Wttid Bate 7 01 

— 600 

108 

108% 

*% 

5.45 

024 







am 

YBi STRAIGHTS 






033 

Belgun S99 ... 

. 75000 

102% 

103% 

♦% 

435 

756 

BB6%00 

100000 

110% 

110% 

♦% 

*41 

a2T 

Finland 6% 96 

- 50000 

104% 

105 


3JB 

7.45 

Wer Ante Dev 7% 00 


113% 

113% 

♦% 

Wl 

7.71 

n%3%0J 


92% 

92% 

* 4 

438 

au 

Japan DwGk 6 89 

tooooo 

103% 

103% 

+% 

4.19 

752 

Japan Dev Be 6% 01 

12000Q 

110% 

111 

♦% 

460 

930 

Nppan Tti Td5% 96 

. 50000 

104% 

104% 

* 

334 

028 

Norvcy5% 97 

150000 

104% 

104*4 


041 

7 JO. 

SNCF 6% 00 

-30000 

110% 

111 

«% 

Wl 

an 

5pm 5% 0? 

125000 

106% 

106% 

♦% 

4J0 

an 

Swodsi 4% 96 

150000 

ICC 

108% 

* 

334 

044 

Ifltaid Bate 5*4 02 

250000 

100% 

101 

♦% 

468 

7S 







asB 

onet STRAIGHTS 






027 

Oatenanca Lia 9% 99 U+ 1000 

104% 

105% 


735 

7A8 

KB Deut lUusKik tf i 03 Lft . 

- 3000 

<« 

101 


049 

a 5B 

VltoM Bank 8 96 U+ 

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COMPANY NEWS: UK 


Grimsby chosen ahead of Munich for £90m Tencel production plant 



Trwor Humphries 

Sipko Htdsmans: holds his raincoat made from Tencel 


By David Wighton 

Courtaulds Las chosen 
Grimsby, Humberside, as the 
site for its European produc- 
tion plant ter Tencel, its new 
man-made fibre. The plant, 
which will initially create 120 
jobs, will cost £80m, of which 
£l0m has been provided as a 
grant by the Department of 
Trade and Industry. 

Ur Sipko Huismans, chief 
executive, said it was “a very 
close run thing” between 
Grimsby and a site near 
Munich, where greater finan- 
cial assistance was offered. 

The decision was announced 
as Courtaulds reported a fall in 
pre-tax profits to £80.7m 
(£96. lm) for the half year to 
September 30. The result last 
time, however, was boosted by 
profits of £24.4m from the sale 
or closure of discontinued 
operations, partly offset by 
&um restructuring charges. 

Operating profits fell 3 per 
cent to £86. 4m reflecting Court- 
aulds' Inability to pass on 
sharp increases in raw materi- 
als costs, particularly for vis- 
cose and acrylic fibres. Mr 
Huismans warned that the 
effects would be more marked 
in the second half although it 
planned to increase its fibre 
prices by between 5 and 15 per 
cent from January L 

“I am very confident that all 
will be recovered. Nothing goes 


up as ra pidly as this Without 8 
rapid reversal.” 

Although demand was gener- 
ally firm, operating margins in 
all three division slipped. But 
excluding the new European 
fibres joint venture with 
Hoechst the group figure was 
steady at 83 per cent Turn- 
over was flat at £l.03bn. 

Earning s per shar e were 15p 
(14.8p) excluding exceptional 
and the dividend is 4.l5p (4p). 

Profits from fibres and chem- 
icals were little changed at 
£42m f£4im) held back by stiff 
competition, particularly in the 
US, and increased marketing 
and development costs on Ten- 
cel. As expected, these out- 
weighed Teneel's trading prof- 
its but it is now making a 
positive contribution. Court- 
aulds announced a joint ven- 
ture with Akzo Nobel to 
develop a filament yarn ver- 
sion of TenceL 

Polymer products profits 
dropped to £14m (£18m). 
reflecting the end of the light 
armoured vehicle contract, but 
coatings and sealants were 
unchanged at £36m. 

Interest charges fell from 
£15m to £8m. thanks partly to 
the e limina tion of unwanted 
swaps. Capital expenditure 
rose to £68m (£55m). 

• COMMENT 

Courtaulds' shares have had a 
bad run over the last few 


months as the City has 
watched its raw materials 
costs soar. So the solid figures 
provided some reassurance. 
Although the impact will he 
greater in the second half, 
costs appear to have peaked 
and the other main fibre pro- 
ducers seem determined to 


push up prices. Courtaulds 
tends to outperform late in the 
cycle and as investors tire of 
the early risers its shares 
should make up lost ground. 
On a multiple of about 14.5, 
assuming full-year profits of 
£170m, they take little account 
of Teneel’s potential. 


Shares slip 
just 3p as 
Asprey falls 
to £3.01m 

By Peter Fearse 

Shares in Asprey slipped a 
mere 3p to 141p yestraday - 
their smallest fall for some 
time in response to company 
announcements, press reports 
or market rumours. 

This time the Queen’s jewel- 
ler was revealing a sharp pre- 
tax profits tumble from 
£12 An to £3.01m in the six 
months to September 30. 
Group turnover declined to 
£82m (£87.4m). 

The downturn was foreshad- 
owed in Septan bo - whan the 
company said the absence of a 
few high-spending customers 
would depress profits. That 
day shares fell llOp to 200p. 

However, Mr Naim Attallah, 
chief executive, said that 
although the six months had 
been disappointing, with a 
lack of big-ticket sales in New 
York, Switzerland and Parts, 
the weeks since the warning 
had shown a small Improve- 
ment 

Mr Am and Bamberger, 
managing director of Cartier 
in the UK, part of the Yen- 
dome luxury products group, 

Asprey 

Share price (pence) 

350 


Harrisons seeks to 
rein in expectations 


Research 
Machines to 
join market 

By Alan Coie 

Research Machines, a supplier 
of c om puters and computer 
software to schools and 
colleges, is coming to the 
market through a placing 
likely to value the company at 
about £30m. 

The company is expected to 
publish its pathfinder 
document later today. 

The flotation is not intended 
to raise new money for the 
company, which has about 
£&5m in the bank, but to raise 
the profile and enhance the 
reputation of a 21-year-old 
company which is still 
relatively unknown outride 
the UK education market It is 
anxious to Increase its 
presence overseas where a 
listing would give ft greater 
credibility. 

The flotation wfll also 
provide liquidity for existing 
shareholders including 
Citicorp, 31, Klein wort Benson 
and Rothschild. 

Last year it reported pre-tax 
profits of £2.52m on turnover 


By Peggy Hoflinger 

Harrisons & Crosfield shares 
dropped 8 per cent yesterday 
as th e chemicals, commodities 
and b unding supplies company 
sought to rein in profit expec- 
tations for the second consecu- 
tive year. 

Mr Martin. Anderson, finance 
director, said the expected 
recovery In pig prices had not 
materialised in the second half, 
and malt margins remained 
depressed. In addition, profits 
would be hit by a £10m ration- 
alisation charge. As a result, 
he said, analysts’ profit expec- 
tations might have been too 
high. 

Harrisons had also sought to 
dear up confusion about the 
impact of disposals completed 
this year, which have netted 
the company about si 3 4m. 

Analysts cut profit forecasts 
from about £ll5m to less than 
£90m, excluding the disposal 
proceeds. 

The share price dropped 13p 
to 149p, a far sharper fall than 
the 2 per cent decline in the 
overall market 

“It is a litany of mini-disas- 


ters.’* said one analyst. “The 
management is definitely on 
trial now.” Last year forecasts 
were pulled back by about £5m 
after a dmiiar trading state- 
ment 

The analyst speculated that 
further disappointment from 
Harrisons could leave it open 
to a possible takeover bid. It is 
known that at least one large 
company has examined the 
possibility of a break-up bid in 
the last IS months. 

Mr Anderson said Harrisons 
expected to incur losses of 
about £3J5m in the pigs busi- 
ness this year, similar to last 
tVmp- 

The chemicals division was 
having a mixed year, with 
pressure on margins from 
hi gher raw material costs In 
some sectors and solid 
advances in others. 

Mr Anderson said that the 
UK building supplies business 
had experienced strong first- 
half growth. The US building 
supplies business was ahea d of 
last year. 

Profits from the Papua New 
Guinea plantation would be 
lower in the second half 


Attwoods hits 
at multiple in 
last BFI deal 

By Peggy Ho) finger 

Attwoods yesterday sought to 
convince shareholders they 
should reject the hostile £391m 
cash bid from Browning-Ferns 
Industries of the US by claim- 
ing that the predator had paid 
a substantially higher price for 
its last major acquisition. 

Mr Ken Foreman, chief exec- 
utive, said in a letter to share- 
holders: “BFl's reference to an 
implied multiple for our US 
businesses of one times reve- 
nue conveniently takes no 
account of the implied multiple 
of two times revenues which it 
paid for its 50 per cent interest 
in Otto Waste Service (of Ger- 
many).'’ 

Mr Foreman added that com- 
parable US waste management 
companies traded on an aver- 
age multiple of 1.9 times reve- 
nue, before taking account of a 
premium for controL 

BFI is offering 116.75p per 
ordinary and 92p per prefer- 
ence share. It has promised to 
pay the 3.25p dividend pro- 
posed, to accepting sharehold- 
ers. 


Reed Executive 
leaps to £1.91m 

By Richard Wottfe 

A growing number of 
permanent jobs in the south of 
England contributed to a four- 
fold increase in pre-tax profits 
at Reed Executive, the UK’s 
largest employment agency. 

The company yesterday 
announced profits of £1.9 lm 
(£457,000) on turnover up 33 
per cent to £30. 8m (£2&2m) in 
the third quarter. ' 

Mr Alec Reed, chairman, 
said: “Employers are worried 
about retaining staff and are 
valuing certain temporary staff 
more. This helps our margins 
because people are not so inter- 
ested in negotiating fees." 

Earnings per share rose to 
2.7p (0.4p) in the quarter. 



ioa ■ — > — • — • — • — 1 — 1 

May 1994 Nov 

Souce: FT Graphite 

agreed that customers for the 
most expensive products were 
a “v ery small and confidential 
world" and, as such, volatile. 
However, he stressed that his 
company was not suffering 
similar problems to Asprey, 
“though nobody knows what 
will happen next year". Ven- 
ddme’s interims are due out on 
December 2. 

Asprey’s share price has 
declined further since Septem- 
ber, as the group has been buf- 
feted by City rumours, which 
it has been swift to deny, and 
a leaked and altered memoran- 
dum from its bankers, the 
Bank of Scotland, about Its 
finan cial position. 

Mr Attallah said yesterday 
that he wanted to have a 
“good relationship with the 
Ctty", but that if the shares 
continued to decline, “we will 
buy the shares back”. The 
Asprey family speaks for some 
52 per cent of the stock, lifted 
yesterday by 170,000 shares 
bought by Mr John Asprey, 
chairman, at 143p. 

The expansion downmarket 
of the customer base was now 
over, Mr AttaUab added. 

Stock rose from an “ideal" 
£I35m at the year-end to 
£147m (£i27m), but should 
decline if recent trading 
improvements continne. Its 
most expensive item, a Burma 
ruby and diamond suite of Jew- I 
cilery, retails at more than j 
£4m. Debt at September 30 
was £35. 6m, giving gearing op 
from 14J5 to 22.6 per cent Mr 
Attallah said be was "happy" 
with that but would not want 
to see it rise further. 

Interest payable was flat at 
£1.07m. Interest receivable 
and rents dropped to £392,000 
(£1.08m). Earnings fell to 0.14p 
(8.04p) per sbare with the 
interim dividend held at l-25p. 


af£6&2m. 


DAVID 

T HOMA S 

PRIZE 


David Thomas was a Financial Times journalist killed on assignment in 
Kuwait in April 1991. Before joining the FT he had worked for, among 
others, the Trades Union Congress. 

His life was characterised by original and radical thinking coupled 
with a search for new subjects and orthodoxies to challenge. 

In his memory a prize has been established to provide an annual study/ 
travel grant to enable the recipient to take a career break to explore a 
theme in the fields of industrial policy, third world development or the 


SmithKline to merge 
international divisions 


environment 


The theme for the 1995 prize, worth not less than £3,000, is: 
DOES FREE TRADE THREATEN THE ENVIRONMENT? 


Applicants, aged under 35, of any nationality, should submit up to 1000 
words in English on this subject, together with a brief c.v. and a proposal 
outlining how the award would be used to explore this theme further. 

The award winner will be required to write a 1500 to 2000 word 
essay at the end of the study period. The essay will be considered for 
publication in the FT. 


CLOSING DATE JANUARY 6 1995 


Applications to: 

Robin Pauley, Managing Editor 
The Financial Times (L) 
Number One Southwark Bridge 
London SE1 9HL 


By Daniel Green 

SmithKline Beecham is to 
merge its three international 
divisions into one called SB 
Healthcare International. 

The reorganisation covers all 
operations outside Europe and 
north America with total sales 
of about £1.3 bn. 20 per cent of 
the whole business. 

It combines the resources of 
SmithHine’s consumer health- 
care and pharmaceuticals divi- 
sions with the Sterling Health 
over-the-counter medicines 
unit acquired in August 

SmlthKUne will cut duplica- 
tion of resources, especially in 
Asia and Latin America, but 
no figures were available yes- 
terday. 

The company used, external 
consultants to evaluate which 
parts of each division would 
survive. 

Mr Jan Leschly, Smith- 
Kline’s chief executive, said 
that this was to ensure 
fairness. “We treated all 
three divisions equally. Ster- 
ling was not a second class citi- 
zen." 

He acknowledged that this 
was “a surprise" for some peo- 
ple. 

The reorganisation comes as 


the company completes a 
S7.7bn (£4.7bn) series of acqui- 
sitions and disposals culminat- 
ing yesterday in the $1.45bn 
sale of its animal health busi- 
ness to PGzer of the US. 

Mr Leschly said that the 
reorganisation was a signal 
that the main management 
effort would now be on extract- 
ing the most from Sterling 
Health and Diversified Phar- 
maceutical Services, a US drug 
distributor, which have been 
acquired over the past six 
months. 

West Trust 
expansion 

West Trust, the specialist food 
group, reported a substantial 
rise in interim pre-tax profits 
from £172.000 to £736,000. 

Sales in the six months to 
September 30 advanced to 
£LQ.8m. Last time’s 24.92m 
included £2 Jim from discon- 
tinued operations. 

The interim dividend has 
been raised to 0.5p (o.2p) to 
reduce the disparity with the 
final payment Earnings per 
share came to I.24p (0.74p 
restated for share issue). 


Northern banks to offer 
own financial services 


By Alison Sndth 

The three UK banking 
subsidiaries of National Aus- 
tralia Bowk - Yorkshire Rank, 
Clydesdale Bank and Northern 
Bank - are to become “bancas- 
snrers", selling their own 
financial services policies 
through their branch networks 
from late next year. 

Their move marks a further 
sharpening of competition 
among hi gh street financial 
to life insur- 
ance and investment products 
to their retail K-aTiMng- custom- 
ers. 

The UK's two largest bund- 
ing societies - Halifax and 
Nationwide - are s ch eduled to 
launch wholly-owned life sub- 
sidiaries next year. 

The products offered by the 
three banks will all be 


wr itte n, within National Aus- 
tralia Life, part of the parent 
organisation. But they will 
almost certainly be branded 
and marketed as products pro- 
vided by each bank to its own 

customers. 

Final approval far the project 
was given recently and the 
group has begun recruiting for 
its customer service centre in 
Glasgow. • . ' 

At presort, the three banks 
offer independent financial 
advice for life and investment 
products, .:but- . this is . a. 
small-scale and specialised ser- 
vice, involving only about 100 
staff. . 

The intention is to meet the 
fiwmrfal needs .of most of the 
banks* 3j>m customers with a 


still be offered as. a separate, 
niche service .Tor ihose whose 
circumstances are mcre com- 
plex. ■ A ■ V: 

Mr Ross Pinney, chief exeat 
tive. of NatianfllAnsfraHa Iife^ 
said he expected the banka to. 
be able to meet the finance 


.tfon of fhefrcustamraxthauaf: 


“Many of our oistdmas. are - 
not wmrfng to us ’for financial;’ 
advice, . becaure. tiifiy. «»-aot 
even : .aware' that we trtfer 
life, .insurance : .products,"- he 
sahL ' 7 - *'• - r 

The group ^shcrald bepeflt^pt 
just via -anr extra. stream of 
income coming through, the 
branch networks, but. also, 
through keeping .all tite profit, 
from, mannfecturing tbe~ poli- 
cies as. wefl aa. distriiratteg 
them. 


Higher raw material costs 
limit Waddington’s advance 


By David Blackwell 

John Waddington, the 
pa ckag in g , printing and games 
company, yesterday warned 
that raw material price 

fnn-pgfflM} wptp pntHng margins 

in its packaging businesses 
under pressure. 

Mr Geoff Gibson, finance 
director, said prices ter same 
plastic polymers had risen by 
up to 70 per cent, with four 
increases in the US since ApriL 

Operating profits for the six 
months to October 1 in the 
packaging division, which 
accounts for two thirds of 
group turnover, fell from 
£6 .82m to £6 j68qi. in spite of an 
increase in sales from £72.1m 
to The latest figures 

include contributions of 
£433.000 to profits and £3J6m 
to for nna month from. 
Tmm Beheer, the Dutch car- 
tons business acquired in July. 


The US food services busi- 
ness tiffed operating profits 
from £2.7m to 23.4m, while the 
pharmaceuticals packaging 
business Improved from 
£700,000 to £Llm- These gains 
were offset by the food and 
drinks packaging sector, which 
fell £3 00,000 into the red (£L4m 
profit). * . . 

Total pre-tax . profits 
.improved from £9.01m to 
£9.8&n on file back of a rise in 
turnover from £I18.2m to 
€192 am. 

The specialist prin t in g divi- 
sion tiffed operating profits 
from £L46m to £2 ,17m on sales 
up from BMQm to £27 Jim. - 

Profits from games eased to 
£2.i5m (ct 2m) , held hack by 
supply shortages in the new 
ranges of radio controlled toys 
and pre-school toys. Sales 
improved to fiZflm. (£lL9m). 

Earnings per share were 
static at 7S8p, after restating 


the previous, earnings follow- 
ing the £42m rights issue for 
buying tmoa Tte 
dend is&$p (3-68p). 

• COMMENT . 

Haw material' price rises fra 
plastics, paper and board are 
unavoidable, arid will soak up 
a lot Of management time .as 
very few of the group's , con- 
tracts include automatic price 
increases.. But they are not the 
sole reason that the City is cut- 
ting its forecasts fra this yean 
- tiie attempt to diversify away 

ft vrm margartnA far m tamer s has 

not gohe wdL The .cost of cut- 
ting capacity to meet demand 
win forthra. damage profitabil- 
ity'. Forecasts ter the year have 
beat reduced from as much as 
£2Sm to as low as£20m, giving 
a prospective multiple of 16, 
which looks about right, bear- 
ing in mini! the disappoint- 
ments. and uncertainties. 


Morland advances to £9.7 


ii 


By DavM Btackwea 

The continued success of Old 
Speckled Him helped Morland. 
the Thames Valley-based 
brewer, to boost pre-tax profits 
by 9 per cent from £&87m to 
£9.67m for the year to the end 
of September. 

Production of Old Speckled 
Hen ale has reached 40,000 bar- 
rels, up from 5,000 barrels in 
1992. when Greene King made 
a bid for Morland. 

If the bid had succeeded, 
Greene King would have dosed 
the Abingdon brewery. But 
demand for its beer has 
prompted Morland to invest 
£5m in its brewery over three 


years, culminating in a new 
brewing stream by Easts- 1996. 

Mr Michael Watte, managing 
director, said yesterday that 
the brewery had raised its ale 
production by 21 per cent in a 
market generally seen as being 
in decline. Old Speckled Hen 
accounted for £6m of the total 
tu rn over of £37.1m, 12 per cent 
ahead of a previous £50fen. 

The group plans to take the 
ale from a national brand to 
international recognition. Mr 
Watts said that by -the of 
toe year, the company expec- 
ted to have established an 
export business, with the US 
and Italy as prime targets. 

Like-for-like profits on its 


tenanted estate were down by 
less than 2 per cent Mr Watts 
said the business was under 
attack on three fronts- - 
take-home sales, consumer 
imports of beer from France 
and the continuing effects of 
the recession. 

Earnings were 32p (29.lp). A 
final dividend of 7J55p (&96p) 
makes X0.7lp (9.74p) for the 
year. 

• Mr Jasper Clutterbuck, Mar- 
land chairman and chief execu- 
tive, is relinquishing the rule 
of chief executive in February, 
when he will be 60. Mr Watts 
wiD become chief executive, 
while Mr Clutterbuck will 
remain chairman. 


Porton poised for takeover 


By Pate Taylor 

Beaufour Ipsen, the family-owned French 
pharmaceuticals company, should find out 
today whether its £65 .5m recommended take- 
over bid for Porton International, one of the 
UK’s first biotechnology companies, has been 
successful. 

Shareholders holding 60.2 per cent of Potion's 
shares, which are traded under the Stock 
Exchanges’s Rule 42, have already given irrevo- 
cable undertakings to accept the French bid, 
worth m.40 in cash or notes. Of those inves- 
tors, the largest stake is held by Mr Wensley 
Haydon-Baillie, P orton’s founder and ex-chair- 
man, who stands to receive about £24m for his 
36.6 per cent stake in the private company. 

Under a separate deal Beaufour will pick up 


an additional 6 per cent stake in Porton, lifting 
the total tranche covered by irrevocable under- 
takings to 66.2 per cent Many of Potion's insti- 
tutional Investors, which sank £7Bm into the 
grram during the 1980s but have been disap- 
pointed by its financial performance, are under- 
stood to be keen to sell their holdings 

Potion’s m a nagement is expected to take an 
initial 22 per cent stake in Speywood Holdings, a 
company set up by Beaufour to make the acqui- 
sition. The French group has set a Span deadline 
today to receive more than 90 per amt accep- 
tances for its offer, which has been recom- 
mended by Kleinwort Benson, Potion’s financial 
advisers. 

A potential rival offer for Porton from Scotgen 
Pharmaceuticals, the Anglo-US drugs company, 
has felled to materialise. 


Division makes £9.6m cash call 


By Pate Taylor 

Division, the Bristol-based 
virtual reality computer tech- 
nology company, is raising 
£9.6m through a 3-for-iO rights 
issue of up to 10. lm shares at 
100p each. 

The shares closed I3p up at 
I33p yesterday. 

At the same time, Division, 
which was floated on the Stock 
E xc h an g e in May last year at 
40p a share, estimated that it 
would carry a pre-tax loss of 
not more than £L44m in the 
year to October 31, against a 
£503,000 deficit last time. 

The full-year loss, which 
reflects heavy investment in 
product development and mar- 
keting, was foreshadowed at 
the interim stage. 

The company said yesterday 
that sales ter the second half of 
the year, “have followed the 
trend of earlier years with 
strong underlying growth con- 
tinuing” 

Turnover for the year is 
expected to have more than 
doubled to £5 -27m (£2.08m), 
boosted by strong growth in 
the group's blue-chip customer 
base. 

Mr Charles Grimsdale, man- 
aging director, said the new 
funds would be used “to pro- 
vide additional working capital 


and support the company's 
anticipated growth, including 
future products." 

Since the flotation last year, 
which raised about £5m. Divi- 
sion has made considerable 
progress in the development of 
new virtual reality products 
and in particular, specialised 
3-D graphics technology. 

Last December it launched a 
new high-power graphics accel- 


erator, based on technology 
licensed from the University rtf 
North Carolina. 

The VPX accelerator uses 
t h ousa nd s of tiny micro-proces- 
sors working in parallel to 
compute images on a yr*** 11 
and has been sold mainly ter 
anfdneertng, training and sci- 
entific application*; 

T he issue has been under- 
written by Albert E Sharp. 


DIVIDENDS ANNOUNCED 


Current 

payment 


Oats Of 
payment 


Correa - 
ponding 
dividend 


Total Total 

for last 

V«ar year 


ABI Leisure 

Abtrust »gh Inc Jnt 

Adwe jnt 

Amber industrial int 

MW, —M 

BtrKby — inf 

Chloride Group 
Courtaulds 

DOC- -Jnt 

F*C Inc Growth 

Homing (Robert). Int 

Granada Group — fi n 
Mortand -.fin 


Jnt 


Shareflnk — 

Tate&Lyto 

TR High kicome hr 

W“Mngton|J} Int 

Wagon Industrial—. _Jr* 

West Trust int 

Yorkshire Water int 


2.71 

1.4* 

1.0355* 

7 

125 

2 

0.1 

4.15 

2.4* 

1.4 

6£ 

6.67 

7.65 
3 

9* 

IJSfl 

3-St 

6.65 
0.5 
8.3 


Jan 31 

Mar 3 
Jan 17 
Jan 27 
Jan 11 
Feb 9 
Jan 24 
Jan 5 
Dec 30 
Jan 16 
Apr 3 
Jan 31 
Jan 20 
Feb 7 
Jan 31 
Jan ig 
Feb 20 
Apr 1 
Feb 27 


£51 

0945 

6 

1.25 

1.2 

nfl 

4 


5* 

5.725 

6.96 

3 

8.7 
1.S 
3.68 
0325 

05 

7.8 


4.08 3.76 

1.987 
20 
6.05 
6 . 
nfl 
14^ 


10 

10.71 

14.4 


mr 

8.75 

9.74 

9 

13 

6 

BJ5 

17.825 

5L5 

22J5 


DWArtda shown pence per stew* not ■“ 

sr *•*“ *«* 



FINANCIAL TIMES THURSDAY NOVEMBER 24 1994 


23 




COMPANY NEWS: UK 


Water utility to lose a quarter of its workforce as profits fall 10% 

Yorkshire cuts 600 more jobs 


By Peggy Hoffingor 

Yorkshire Water yesterday 
announced plans to cut 
another 600 jobs. The latest 
cuts are in addition to the 400 
redundancies announced Four 
months ago, before the July 
price review. 

The news came as Yorkshire 
Water reported a 10 per cent 
decline in interim pre-tax prof- 
its and the season's lowest per- 
centage dividend rise so far for 
the sector. 

Mr Malcolm Batty, finance 
director, said be expected fur- 
ther job losses in future but 
could not yet quantify their 
scale or tuning. 

Yorkshire, which in June 
announ ced 400 job losses for 
1994, has decided to cut 100 
more this year and another 500 
over the next two years, 
accounting for about 25 per 
cent of the regulated utility 
workforce. 

Yorkshire’s profits were 
depressed by the £25m charge 
to pay for the rationalisation. 
This Is in addition to the £iom 



Malcolm Batty: expecting 
further job losses in the future 

provision last year. It said it 
expected a two-year payback 
on the £35m provisions. 

Pre-tax profits for the half- 
year to September 30 Tell from 
£74 Am to £67.2m. Sales were 6 
per cent ahead at £275.4m 
(£259 ,4m). 

Profits were helped by a 
higher than expected reduction 
in the pipe maintenance 
charge from £35. 4m to £23, 4m. 
Cashflow was also enhanced 


by a substantial reduction in 
utility investment from £ll2m 
to £72m. 

Yorkshire, along with other 
water companies which have 
reported so far this season, 
also announced plans to devote 
extra funds to issues such as 
foul flooding and discoloured 
water, which were not allowed 
Cor in the price review. The 
company said it would devote 
£316m this year to such discre- 
tionary spending. 

The core utility business 
reported an n per cent decline 
tn operating profits, after 
exceptional s, to £72J2m on sales 
4 per cent ahead at £2-19. lm. 

The non-regulated activities 
contributed pre-tax profits of 
£1.2m against £900,000 last 
time. 

Yorkshire increased its 
interim payout by 92 per cent 
to 8.3p and said it intended to 
maintain dividend growth of at 
least 5 per cent above inflation 
for the next five years. This 
would be achieved without 
substantially eroding its divi- 
dend cover of about three 


Limes, the group said. Earnings 
fell as a result of the exception- 
al from 36. Ip to 31.9p. 

• COMMENT 

The market’s reaction to a bet- 
ter than expected payout and 
the promise of at least 5 per 
cent real dividend growth to 
2000 might be seen as rather 
ungrateful. However, there is a 
perception that Yorkshire has 
been held back by fears that 
higher dividend growth would 
rekindle local controversy and 
further damage its battered 
public image. Financially, 
Yorkshire Is one of the stron- 
gest water and sewerage com- 
panies and it could afford to 
increase the payout by sub- 
stantially more. There is also 
the argument that dividend 
cover should be lower than the 
3.4 times projected by analysts 
Tor the year 2000. Forecasts are 
for about £l57m this year after 
exceptional. The group's non- 
core success and strong finan- 
cials make Yorkshire a solid 
hold, in spite of a yield just 
below the sector average. 


••• i'J ^ 

COMMEKT 

■-■■■ 

- ? 

_ . OTNiptig 

...... ■ P 58 H 

. • -ays* 




Chloride makes £14m security buy 



By Geoff Dyer 

Chloride Group's transform- 
ation from a batteries business 
into an electronics group was 
reinforced yesterday by the 
acquisition of ADE Group, an 
electronic security business, 
for up to £14 ul 

Mr Keith Hodgtcmson. Chlo- 
ride chief executive, said that 
the acquisition would enhance 
earnings per share and gener- 
ate cash. 

Chloride also reported pre- 
tax profits of £L04m for the six 
months to September 30 and a 
return to the dividend list with 
an interim payment of O.lp, the 
first since the 1989-90 interim. 

The profit compared with 
£1.32m, which included operat- 
ing profits of £l.Im from the 


seven battery businesses in 
central Africa which were sold 
in the second half of 1993. 

ADE manufactures control 
panels for alarms and distrib- 
utes electronic security alarm 
products. In the year to April 
30 it made pre-tax profits of 
£1.35m (£l.54m) on sales of 
£18.5m (£15. lm). 

The vendors, principally Mr 
James Chadwick, chief execu- 
tive, and Mr Graham White- 
head, deputy chief executive, 
will receive a £1.5m distribu- 
tion from ADE and an initial 
payment of £5m, satisfied by 
£4m cash and 4m shares. 

There is a further deferred 
profit-related 27.52m, satisfied 
by loan notes. 

Turnover was £50.6m with 
£2.47m from acquisitions. 


against £51. 8m, which included 
£9. 07m from discontinued 
activities. As a result of the 
divestments, tax fell to £415,000 
(£987,000) and minority inter- 
ests to £13,000 (£210,000) giving 
attributable profits of £608,000 
(£124,000.) and earnings per 
share of 0J3p (O.lp). 

Mr Hodgkins on said: “We are 
now in a position where we 
feel confident about returning 
to tbe dividend list." 

In the core electronics busi- 
ness operating profits, exclu- 
ding Ondyne, the power supply 
business it bought in April, 
rose to £lm (£508,000) on sales 
up 14 per cent to £43-5m. 

Margins and sales in the 
uninterruptible power supplies 
business increased and the 
emergency lighting sector 


Chloride 

Store price (pence) 



Jin 1983 
Source: FT Graphna 


1994 


returned to profit for the first 
time in four years. The power 
conversion business continued 
to make losses. 


A Fisher 
chief could 
get £0.6m 

By WJHJam Lewis 

Mr Stephen Walls, the 
chairman of Albert Fisher, the 
food processing and 
distribution group, will be 
paid a minimum of £464,000 
this year and could earn up to 
£618,000. 

One of tbe main components 
is a lump sum pension 

payment which will total 
£155,000 this year. Under Mr 
Walls' two-year rolling 
contract the company most 
each year pay the equivalent 
of half his basic salary Into his 
company pension scheme. 

On September 1 Mr Walls' 
basic salary was increased 
from £300,000 to £309,000. On 
top of this he is also eligible 
for an annual bonus which 
could be as much as half his 
basic salary. 

Payment of the boons is 
dependent on group 
performance and on Mr Walls 
meeting 11 personal objectives 
during this year. They include: 

• "Ensure that by the end of 
the year the group has no 
operations losing money 
(unless new start-ups 
specifically approved by the 
board)". 

• "Continue to raise the 
general morale and motivation 
of personnel at ail levels". 

• "Putting in place planned 
major head office cost 
redactions in line with plan". 

The details are in documents 
available tor inspection by 
shareholders ahead of the 
AGM on December 14. 

Mr Walls' total pay last year 
rose by 44 per cent to £514,000. 
The annual report for tbe year 
to August, published 
yesterday, said this included a 
£150.000 pension payment, 
without revealing that he has 
a contractual entitlement to a 
similar sum each year. It also 
disclosed that he received a 
£46,000 bonus last year "based 
on the achievement of stated 
personal objectives". 


to £9. 7m RJB has ‘overestimated demand for coal by 20%’ 




By Michael SmBh 

RJB Mining ; the coal company bidding 
to take over the English mining assets 
of British Coal, has overestimated by 20 
per cent the demand for coal by English 
power generators in the late 1990s, 
according to an analysis published 
today. 

Goal UK, the Financial Times news- 
letter, says the company has also made 
too little allowance in its calculation for 
toe role of private coal producers which 
will be Its competitors. 


Coal UK estimates the generators will 
buy 23.9m tonnes of coal from English 
coal suppliers in 1998-99, whereas RJB 
says a conservative projection should 
be about 28.9m tonnes. 

"While toe RJB case is its pessimistic 
view, our forecast is our most likely 
scenario," says Coal UK. “Beyond 2000 
difficulties win increase with the pros- 
pect of tighter sulphur limits." 

The newsletter's analysis comes as 
RJB prepares to publish within the next 
few weeks its pathfinder prospectus for 
a flotation aimed at raising up to 


£425m. The company has offered £914m 
for the three regions for which it is 
preferred bidder, although this figure is 
likely to decline in final negotiations. 

In the newsletter. Coal UK says RJB 
fails to take account in its market pro- 
jections of 3.6m tonnes of coal equiva- 
lent a year of heavy fUel oil bum and 
appears to ignore supplies from other 
English mines. It also says RJB under- 
estimates the amount of electricity that 
can be imported. 

RJB's prediction of an industrial mar- 
ket of 6.4m tonnes in the late 1990s is 


described as “unaccountable". Its ambi- 
tions to take 2m tonnes of toe domestic 
market assumes RJB will capture all 
the Scottish and Welsh customers as 
well as the English. 

Coal UK also criticises RJB for its 
high valuation of stocked coaL RJB esti- 
mates total stocks (including non-coal) 
at £314m with £250m of that for 9m 
tonnes of coal. This suggests £27.23 a 
tonne, says Coal Investments. 

Recent prices obtained by British 
Coal suggest that £14.40 to £24 would be 
more appropriate, says the newsletter. 


Robert Fleming makes 
6.3% midway advance 


Robert Fleming Holdings, the UK-based 
Investment bank, yesterday reported a 6-3 per 
cent rise in pre-tax profits for the six months to 
September 30, thus defying an industry trend 
which has seen earnings hit hard by turbulent 
stock and bond markets, writes Norma Cohen. 

Jar dine Fleming, the group's 50 per cent 
owned Hong Kong-based investment banking 
subsidiary, contributed roughly 40 per cent of 
total profits, up from about a third in tbe same 
period last year, according to Mr John Manser, 
group chief executive. 

Pre-tax profits for the privately owned invest- 
ment banking group rose to £97.4m (£91.6m) 
with the investment banking sector contribut- 
ing a marginally lower £48^m (£49.7mK 

However, Mr Manser warned that the group 
was unlikely to match the £71 .8m earned In its 
investment hanking division in the second half 
of last year, so that annual profits would be 


lower overall. "I'd like to think we could, but 
in all honesty, it is not likely." 

In its investment management business, tbe 
group earned pre-tax profits of £48. 6m, up 16 
per cent from £4 1.9m. Assets under manage- 
ment increased from £49.5bn to £50-2bn. This 
represents a net cash inflow of about £2bn, 
mostly from retail accounts in the UK, US and 
Europe, which was offset by a 3 per emit drop 
in the value of tbe investment portfolio. 

Mr Manser said that in Fleming Investment 
Management's core UK business "we have 
staunched the flow " of pension clients who had 
been leaving the firm dne to lacklustre invest- 
ment performance, although it would be some 
time before significant new business was 
attracted. 

Fleming recently recruited a new chief execu- 
tive to its asset management division, Mr Ken. 
Ingtis, who has made several internal changes. 


Far East strength pays off 

Norma Cohen on how Fleming is bucking the trend 


T urbulent world markets 
have been unkind to the 
investment banking 
industry this year, although 
Robert Fleming Holdings 
appears to be bucking the 
trend. 

Yesterday Fleming said its 
pre-tax profits rose by 6.3 per 
cent to £97. 4m and that, more- 
over, its investment banking 
division's profits were off only 
slightly from last year's level 
Investment management, 
which includes a US-based 
joint venture with mutual fund 
company T Rowe Price, con- 
tributed to the group's earn- 
ings stability with a 16 per cent 
profits rise. 

Significantly, much of the 
asset growth came from retail 
products, especially in the US, 
where investors are increas- 
ingly keen to buy non-domestic 
investment funds. 

Mr John Manser, group chief 
executive, attributes the 
group’s ability to withstand 
the current tough markets to 
two key factors. "Our busi- 
nesses are very well spread. 
We are in both retail and 
wholesale markets and we 
have a good geographical 
spread. We operate in 32 mar- 
kets and not all of those do the 
same thing at toe same time." 

And, perhaps most critically, 
Mr Manser says: "We have 
strength in the Far East 
through Jardine Fleming.” 

Jardine Fleming, the invest- 
ment bank owned jointly with 
Jardine Matheson. had post-tax 
profits of $lllm (£67.6m) for 
the six months to June 30, a 44 
per cent increase on last time. 

Mr Manser says the firm's 
strategy, unlike that of some of 
its competitors, is to grow glob- 


ally through joint ventures, 
such as that with Jardine 
Fleming, rather than to try to 
set up new operations with a 
high cost base. "We would 
rather have a smaller part of a 
bigger whole than a larger part 
of a smaller whole." 

He said the group’s resilience 
partly reflected its success in 
integrating the business gener- 
ated from London into its joint 
ventures around the world. 
These also include a 50 per 
cent stake in leading Austra- 
lian stockbroker Orde Minett 
and a South African joint ven- 
ture with Martin and Co. 

T he structure allows deci- 
sion-making to take 
place at the local level 
where management is likely to 
be better informed about condi- 
tions. "It relieves the strain on 
management," he says. "Run- 
ning a global business from a 
single spot will eventually 
overwhelm the management" 
There are only two key deci- 
sion-making committees 
within Fleming; a seven-mem- 
ber body at the Group head- 
quarters in London and a simi- 
lar-sized group at Jardine 
Fleming. 

"There is a strategic issue 
tore,” says a securities analyst 
with a rival investment bank- 
ing firm. "The strategy of 
being in a niche business and 
being risk averse is likely to be 
more successful long-term than 
the integrated houses, who are 
taking a risk-based approach." 

And, perhaps most signifi- 
cantly for the current round of 
earnings, Fleming has no mar- 
ket making capacity in UK 
equities and little of it within 
Europe. Instead, it has concen- 


trated on its role as an agency 
broker, although it Is building 
selected distribution and 
research capacity for European 
shares. 

However, Fleming is not 
entirely risk averse, according 
to its competitors. It has been 
str iking ly aggressive about bid- 
ding for capital markets busi- 
ness, particularly in the priva- 
tisation field. According to 
Euromoney Bondware, an 
industry database, Fleming 
and its Jardine Fleming ven- 
ture were the leading bookrun- 
ner for Asian equity and equi- 
ty-linked deals in 1963 and 
1994; and according to Acquisi- 
tions Monthly, it ranks third In 
advisory business for UK pub- 
lic takeovers so Ear this year. 

Earlier this aut umn Fleming 
drew gasps from some of its 
competitors for agreeing to act 
as global coordinator for a 
$90 Om international distribu- 
tion of warrants for newly pri- 
vatised Pakistan Telecom. 
Pakistan asked a group of 
banks to bid for the business - 
whose most recent accounts 
were two years old - without a 
dne diligence review. 

“Of course we had some res- 
ervations about that fact but 
from our analysis, in relation 
to other Asian telecom compa- 
nies, we felt it was good 
value," a Fleming official 
explained. 

While many competitors 
backed out, Fleming took the 
business on, although shortly 
after it had distributed the 
warrants the price fell sharply. 
This reflected a correction of 
information which had 
appeared in the domestic pro- 
spectus which had been misin- 
terpreted by foreign investors. 


takeover 


- — - 




c as 


■ash call 


This advertisement is issued in compliance with the requirements of 
The Internationa] Stock Exchange erf the United Kingdom and the 
Republic of Wand Limited (“the London Stock Exchange"). It does not 
constitute an offer or invitation to any person to subscribe for or 
purchase any securities in Oy deport pic (“the Company"). 
Application has been made to the London Stock Exchange for all die 
Ordinary Shares of 5p each ("Ordinary Shares") of the Company, 
issued and now being issued, to be admitted to the Official List. It is 
expected that dealings in the Ordinary Shares on the Official list wfll 
commence on 6 Dec ember 1VM- 

CLYDEPORT pic 

Oatmpontnlm &Wlwrf hj«*t Uy Cwopmnrs Act I«WS -Hh WjWmit n«n*«» 7 J 3434 I 

arDEPom 

■wr 

Placing by 

Allied Provincial Securities Limited 
of 

17,908,124 Ordinary Shares of 5p each at 
133p per share 

~ Share Capita] following the Placing 

Issued and 

Authorised . W F*« 

Amour i! Number Amount Number 

£3,500.000 70,000.000 ordin ary shares of 5p each C.0H2.97P -H.259.39fi 

Greenock. Hontersion and Ardrossan. 

Copies of the Listing Particulars may be 

hMiness hours from the Company Announcements Office, the London 
Stock Exchange, London 5 tockExchange T ower. pi pd Court Entrance 
off Bartholomew Lane. London EC2 by CoUecbon only, up to and 
foduding 25 November 1 994 and during norma] business hours on any 
weekday op to and including 8 December 1994 from: 

Allied Provincial Qyde port pic 

Securities Ltd 16 1 Robertson 

155 St. Vincent Street Glasgow 
CLSSKOW CSSLKf 

C2 


i Street 


Allied Provincial 
Securities Ltd 
51-55 Gresham Street 
London 
EC2V7EH 

24 November 1994 


X 



-Ji 




BANGKOK CITY BANK LIMITED 

r ^T f ^ moA thrwth >■» branch 

US$ 110,000.000 
Floating Kate Note* Due November 1998 


l B «oonboeew.ch dre prov***. of che He* ring Rare Nor«, 
noa'cr to ****** I*'"* “ fcIto " BI 5 

P-H-l ■ 

T. I / ICM per iilinuni 
Itaee Of Ioce«*r = 7 

.- USD 1 7.75 4.34 per Now of USD 500.000 each 


Coupon 


Amount 


fiscal A Paying Age* 

London Forfaiting Asia Limited 


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\ -I* 


FINANCIAL TIMES THURSDAY NOVEMBER.^ 199A 



COMPANY NEWS: UK 


II 


Wagon rises to £9.6m 
as markets improve 


By Paul CheeserigM, Midlands 
Correspondent 

Wagon Industrial resumed 
profits growth, as the effect of 
internal changes to raise pro- 
i ductivity coincided with an 

j improvement in market coudi- 

j Hons, especially in the UK. 

] Pre-tax profits for the half 

1 year to September 30 at the 

2 group, whose interests 
embrace storage and retail 
equipment, engineering and 
automotive products, rose to 
£9, 62m (£5.Q6m). 

This lifted earnings per 
share to l2.63p (4.52p) and 
allowed a 5 per cent increase in 
the interim dividend to 6.65p 
(&325p). 

Stripping out exceptional 
costs for restructuring and 
writing off goodwill associated 
with disposals, Wagon said 
that Its underlying pre-tax 
profits rose in the first half by 
28 per cent to £10.4m. 

It said it was optimistic 
about its prospects and antici- 
pated “a continuing improve- 
ment in profits for the year as 
a whole". 

Like other engineering com- 
panies, Wagon is experiencing 
continued pressure on its mar- 
gins. Its profits growth has 


Wagon Industrial 

Start price (pence) 

525 



Jun 1998 
Source: FT GmpNta 


1994. 


been underpinned by produc- 
tivity improvements. “Underly- 
ing profits have moved ahead 
in the UK. but in Europe, prof- 
its were more or less flat," said 
Mr John Hudson, the chief 
executive. 

The group has made a string 
of small acquisitions to bolster 
its varied market positions and 
this was reflected in its turn- 
over. Acquisitions contributed 
£6.49m out of a first half total 
of £163.8510, compared with 
£132 .23m. 

Operating profits moved 
ahead to £11. 15m, against 
£4. 42m when the figure was 


depressed by restructuring 
charges at Forkhardt, the Ger 
man specialist chuck maker. 

The contributions of both the 
storage and retail and the auto- 
motive products divisions rose, 
but there remained a loss from 
engineering, largely because of 
a downturn in the market for 
Wefco, which makes storage 
tanks and pressure vessels, but 
Is now closing two of its four 
factories. 

• COMMENT 

Wagon has delivered what it 
said it would deliver. Its profits 
are moving firmly upwards: 
the UK market Is under its belt 
and European recovery is yet 
to come. Problems at Wefco 
and at Plastics, another 
trouble spot, will be sorted out 
In the current half. The group 
is riding the cycle. Full year 
pre-tax profits of about £25m, 
to give earnings per share of 
37.4p, would not be fanciful. 
That presages a 5 per cent 
increase in the final dividend, 
given group policy of working 
towards cover of two times. 
Such a forecast puts the 
shares, after yesterday's slip in 
the market, when they lost 4p 
to 459p, on a prospective multi- 
ple of 12.3, cheap for the sector. 


Sharelink £468,000 in the 
red and trading 6 very poor’ 


By Paul Cheeseright, Midlands 
Correspondent 

Sharelink Investment Services, 
the Birmingham-based share 
dealing company, continues to 
lose money on its current trad- 
ing. 

For the half year to Septem- 
ber 30, it announced yesterday 
a pre-tax loss of £468.000. com- 
pared with profits of £3.68m - 
this result was foreshadowed 
in the warning or late Septem- 
ber. The shares shed 7p to 
close at 176p. 

But Sharelink also 


announced that it “was trading 
below break even in October.” 
and Mr David Jones, the chief 
executive and biggest single 
shareholder, said present trad- 
ing is “very poor." This, he 
added, made him “cautious 
about the year end result” 

First half turnover was down 
to snaSm, against £lL25m last 
time when business was 
boosted by BT privatisation. 

Loss per share was l.79p, 
against earnings of lfLOTp, but 
Sharelink is m aintaining its 
interim dividend at 3p. 

Share link's basic problem is 


the low level of dealing volume 
on the UK stock market But 
its financial results have also 
been affected by investment of 
£700,000, during the first half, 
on the development of more 
Bffiriwii operating systems and 
the introduction of new finan- 
cial managpmpnt products. 

Inv estment spending in the 
second half will be £600,000. 
Sharelink hopes to protect 
itself against marina fluctua- 
tions by reducing costs and 
bringing in a stream of 
fixed revenue from new prod- 
ucts. 


L&G trust launch will 
raise minimum £29.8m 


Legal & General Group is 
inviting offers for up to 150m 
shares at lOOp each, with war- 
rants attached on a l-for-5 
basis, in its new investment 
trust, the Legal & General 
Recovery Investment Trust 
The minimum investment is 
£1,000 with management 
charges of % per cent 
Fanmnre Gordon, sponsor to 
the offer, has received irrevo- 
cable undertakings for up to 
41.3m shares. With 31.2m 
shares having been underwrit- 
ten the offer will raise, net of 


expenses, a minimum £29 .8m 
and a maximum £143 .4m. 

The warrants can be exer- 
cised for lOOp within 10 years. 
The trust has a life of not 
more than 10 years. 

The aim of the trust is to 
achieve long-term capital 
growth and outperform the 
FT-SE-A All-Share Index by 
investing in UK-quoted equi- 
ties with recovery potential. 

It is being managed by the 
same team as the Legal & 
General UK Recovery Unit 
Trust 


Amber £1. 9m at midway 


Amber Industrial Holdings, the 
specialist chemicals maker and 
distributor, turned in pre-tax 
profits of £1.87m for the six 
months to September 30. This 
compared with £2.43m last 
time, but which Included 
£724,000 on the disposal of 
operations. 

Turnover rose by 5.4 per cent 


to £11 .8m (£lL2m). 

Earnings per share, came to 
26.2p, against 42.5p or 24p 
adjusted to exclude the dis- 
posal. The interim dividend 
has been stepped up to 7p 
<6p). 

The company is 75 per cent 
owned by Caledonia Invest- 
ments. 


McKechnie 
makes A$15m 
purchase 

By Paul Cheeaeright, Mkfands 
Correspondent 

McKechnie, the plastics and 
metal components group, yes- 
terday started to make good its 
promise of more acquisitions, 
with the A$15.4m (£7.48m) pur- 
chase of the packaged products 
division of Hunter Douglas, the 
Australian group. 

The division distributes 
drapery hardware like blinds 
and curtain rails, thus fitting 
in with Phipps International, 
an earlier Australian acquisi- 
tion. The two companies 
should be able to feed business 
back to McKechnie’s alumin- 
ium extrusion operations. 

This latest purchase brings 
to £51m the commitments 
McKechnie has made on take- 
overs since August last year. 
Its spending has been partially 
offset by £2L7m from disposals. 

Last month McKechnie said 
it would buy companies in 
Europe, North America and 
the Pacific area. 


L'OREAL 

9 MONTHS SALES : 

+ 14.4 FOLLOWING CONSOLIDATION 
OF FOUR NEW SUBSIDIARIES 

Further to the recent transfer and purchase of shares (release of 22 Septem- 
ber 1994), L’OREAL has decided to Include COSMAIR Inc. USA, COSMAIH 
CANADA Inc, LORSA/FAGEL (Switzerland) and PROCASA (Spain) In its 
scope of consolidation as from 1 July 1994. 

Consolidated sales for the first half of 1994, ie. before the new consolidation, 
increased by 5% using published figures. Using toe same scope of consolida- 
tion, profit on ordinary activities before taxation, employee profit-sharing and 
capital gains and losses for the six months to 30 June 1994 stood a! FF261 bil- 
lion, an Increase of 6.5% compared to 30 June 1993. 

Consolidated sales for toe first nine months of 1994 under the new scope of 
consolidation amounted to FF 34.46 biKJon, an increase of 14.4% using pub- 
lished figures. 

Under the former scope of consolidation, toe increase, using comparable 
figures, would have been + 7.6% compared with + 6.5% at toe half-year stage 
(30 June 1994) and + 4% after the first quarter (31 March 1994). 

For toe whole of 1994, sales for the new scope of consoOdatfon could amount 
to just over FF 47 billion based on exchange rates at 30 September 1994. 

This would represent an increase of 175% to 18% using published figures. 

Excluding any major changes in exchange rates between now and 31 Decem- 
ber 1994, we can expect a 20% increase In consolidated profit on ordinary 
activities before taxation compared to last year. 


fa further totormatlor^ptBasQ consult your bank, stockbroker orflnandtl Institu- 
tion as weti as your usual newspapers. Mom dotafa can be obtained by writing to 
the Business Information and Investor Relations Director; L'OR£aL, 41, rue Martra, 
92117 CUchy, Franca - Fax: 33 (1) 4Z5&80.0Z 


Birkby to 
float 
vehicle 
hire side 

By Richard Wotffe 

Birkby, the business property 
managers and hire purchase 
group, yesterday announced 
the flotation of its vehicle hire 
division to fond further 
expansion. 

The company, which 
established a national profile 
in March with the £58.7m 
purchase of In Shops, plans to 
extend its chain or business 
units across the UK. 

The group’s gearing reached 
77 per cent by September 30, 
op from 41 per cent on March 
31. It expects to be ungeared 
after the Hill Hire flotation. 

The shares closed down 5p 
at 233p yesterday. 

Birkby Intends to float Hill 
Hire, its commercial vehicle 
hire company, by a placing 
with institutional investors, 
which is expected to value the 
company at more than £26m. 

Mr Bill Cran. chief 
executive, said Birkby would 
retain a 40 per cent stake. “We 
are beginning to restrict the 
growth of Hill Hire, simply 
because we are not a truck 
rental operation and that is 
not a core activity," he said. 

“We want to put our 
resources into space 
management" Hill Hire 
carries a heavy debt burden, 
as is typical in vehicle hire. 

Birkby acquired Hill Hire in 
July 1993 to add heavy 
commercial vehicles to its 
existing light vehicles hire 
business. The division 
reported pre-tax profits of 
£1.76m on sales of £l0.5m in 
the year to March 31. Average 
utilisation rates stand at 72 
per cent on light vehicles and 
84 per cent on heavy vehicles. 

For the six months to 
September 30, Birkby reported 
a seven-fold rise in pre-tax 
profits to £4. 13m (£581,000). 

Turnover expanded from 
£5 .24m to £3&2m, including a 
frill contribution from In 
Shops and Its discount retailer 
Job Lot The figures were also 
lifted by a contribution from 
I-MEX, the manager of 
commercial and light 
industrial units, which was 
acquired in August. 

Occupancy rates in the 
group’s 38 workspace centres 
range from 94 per cent at the 
Birkby sites to 65 per cent at 
the 1- MEX sites. Retail 
occupancy stands at 82 per 
cent in the group’s 65 centres. 

Earnings were 8.2p (6.6p). 
The interim dividend goes up 
to 2p (l-2p). 


Pre-Budget moves to b&b >. ,v 

Peter John on a practice which appears to have gained in popularity 


T he London stock market 
may be wallowing like a 
rudderless ship, but 
down in the engine room inves- 
tors are quietly shifting funds 
In case a well loved loophole 
is plugged in next week's bud- 
get 

Dealers who closely follow 
the patterns of share trading 
have noted that the number of 
“bed and breakfast” deals has 
risen dramatically over the 
past few weeks. 

These trades generally 
involve placing stock shortly 
before the close of the session 
and buying it back the next 
morning to establish a tax loss 
- hence its potential interest to 
the Chancellor. 

On one day last week, daily 
volume was boosted by 60m 
shares, about a tenth of the 
turnover, after large blocks of 
FT-SE 100 stocks appeared on 
the Seaq automated quotation 
system first thing in the morn- 
ing. And on Tuesday some 13m 
shares in second line stocks 
went through the dealing 
screens. 

Both were believed to repre- 


sent one half of this evocative 
but obscure practice. 

Opinion is divided, however, 
on the reasons for the increase. 
And establishing motivation is 
made more difficult by the 
shadowy legal nature of the 
practice. 

In the words of the Stock 
Exchange: “The question is not 
so much whether it is illegal 
but whether it is allowable 
under tax regulations.” 

The pointer to a bed and 
breakfast deal is often a large 
block of shares recorded just 
before the close of dealing at 
below the market price and 
know in the trade as “a 1629”. 
The following morning a simi- 
lar block of shares with match- 
ing price and size wBI show 
up. 

T hese trades are made to 
mitigate the effects of 
capital gains tax. If 
there is no link between the 
sale and the repurchase they 
are perfectly legaL 
Mr Paul Franklin, of the 
Inland Revenue, said: “We 
have no objection to a general 


disposal followed by an acqui- 
sition as long as they reflect 
the market value. If they don?,. 
an inspector will; look, at 
them." 

The StoA Exchange concurs- 
“As far as we areconcerned we 
don’t know if the bargain is 
bought back the next day. The 
rules are that they have to be 
booked near the market price.” 
In other words, if the transac- 
tion constituted price manipu- 
lation it would be breaking, the 
rules. 

Marketmakers say the fact 
that deals are often slightly 
below tire market price can be 
explained by tire size of the 
trade compared with the 
normal market size and the 
general liquidity of the- . 
stock. _ = 

Because of the sensitive 
nature of bed and breakfasts, 
securities houses will not com- 
ment officially on their 
involvement. And none win 
admit to agreeing both 'Sides of 
the daw! , that would constitute 
a. “scheme". 

One senior dealer said: 
“Legally they don’t exist but 


technically they do-happot 
The whole subjects such a hot.' 
potato we woidd ratkhr reagifa 
In the backgDDand.- ;■ Kif -• 

O ne insider at tHS^-the 
Swissowned 'securities 
house, said business 
had grown because a number 
of 'institutional clients ' were 
concerned that. the Chancellor 
would stop the practice . 

. “The nuriom? often rears ifo 
head around Budget thnfc - It 
may. not be founded. .wL^ny: 
tiling' bat there has been iahre- 
worry. around this- year." -He 
added: “I am pot really sure ; 
how the Chancellor can: stop 
people buying or eeHingishares • 
and establishing a tax loss." - - 
It is also possible that much 
of the business might merely 
reflect., prudent cash manage- 
ment The stock market has 
fallen by about 9 per cent since . 
fts highs -at tiie start of flu . 
year. If Mr Clarke is going . to . 
bare his teeth, investors might 
feel that nowlsas good a time 
as any to make .the.best posst 
ble use of capital -gains tax 
allowances. • 





Y. 

:!V : 


rr 

.ik 


DCC shows 24% growth to I£8.8m 


By John Murray Brown in Dublin 

DCC, the Dublin-based diversified holding 
company which came to the market in 
May, reported a 24 per cent increase in 
pre-tax profits from I£7.Um to I£8.82m 
(£8.7m) for the half year to September, 
reflecting improved economic conditions 
in Ireland and the UK. 

The group has interests in 20 companies 
in the foods, energy, healthcare and com- 
puter services sectors, including snack 
food manufacturing, waste oil recycling 
and natural gas distribution in the UK, 


and health care sendees in the US. 

Turnover, after deducting the share of 
associated companies, rose 26 per cent to 
I£119m (t£94.7m). 

Operating profits were up 35 percent to. 
I£10m (IE7.42m). 

Mr Jim Flavin, DOC'S founder and chief 
executive, said the performance was 
“driven by organic growth and not merely 
the result of acquisitions’’. 

The foods sector is the largest contribu- 
tor, with operating profits 44 per cent up 
at I£3m (Ira twi) The result ?rn> inJA< con- 
tributions from its associates, among them 


NEWS DIGEST 


Fyffes, the fruit trader, and Allied Foods. 

Warning s per share amounted to 79p 
(636p) and an interim dividend of 2.4p is 
being paid. . . ■ 

A good outcome was expected, for the 
year as seasonal factors, particularly in 
the energy sector, ■ weighted profits 
towards the second h^ Mr Flarin said. 

DCC spent I£5.lm on acquisitions in the 
period, including a controlling interest hi 
Virtus. a healthcare products maker. - 
DCC has been trading at below its Issue 
price for much of the period since going 
public. ’ . 


I 


Pilkington 

Pflkbigton saw profits double 
to £81m before tax and 
disposal gains in the six 
months to September helped 
by an improvement In most of 
its main markets. Including a 
£16m profit on the sale of its 

i n sulat io n business the 
glass maker reported a 
pre-tax surplus of £77m 
against £30m. 

Turnover from continuing 
operations rose by just 3 per 
cent to £1.29bn, with volume 
growth of 7 per cent offset by 
the fall in the dollar and price 
redactions in Germany. 

Earnings per share were 3p 
(0.4p) excluding the disposal 
gain, while the dividend was 
held at 1.5p. 


26% rise 
at ABI 
Leisure 

ABI Leisure Group, the North 
Humberside-based caravan 
maker, achieved a 26 per cent 
advance in pre-tax profits from 
£2. 84m to £3.58m for the 12 
months to August 31. 

Mr George Shiels, chairman, 
said the improved results 
reflected both a growth in sales 
and increased efficiency in the 
group's manufacturing 
operations. 

Turnover advanced by 14 per 
cent to £70. 6m (£61.8m) with 
exports accounting for 38 per 
cent (31 per cent) of the total 
Mr Shiels said that as well as 
growing organically, the group 
would take advantage of suit- 
able acquisition opportunities 
both in the UK and continental 
Europe. The group has nil 
gearing (15.5 per cent). 

Earnings per share increased 
to 8.7p (7p) and a final dividend 
of 2.7lp (251 p) is proposed for a 
4.06p (3.76p) total 

Herring Baker 

Herring Baker Harris Group, 
the chartered surveyor and 
property adviser, has 
announced a series of restruct- 
uring measures, including the 
disposal of a subsidiary. 

Herring, which incurred 
losses of £430,000 pre-tax for 
the year ended January 31, 
plans to sell James Barr & Son 


to its management for £750.000 
rack The cooperation between 
the two rampant**: would, how- 
ever, continue. 

In addition the group said 
changes to the rental terms of 
its West End and City offices 
would cut payments by about 
£L06m ova: the period to June 
1997. A redundancy pro- 
gramme is expected to produce 
savings of about £750,000 a 
year. National Westminster 
Rank has agreed to an increase 
in and extension to Cadlitfes. 

First Ireland Inv 

First Ireland Investment Com- 
pany raised set revenue from 
£215.000 to £341,000 for the half- 
year to September 30. and earn- 
ings per share grew to 1.14p, 
against 0.72p. 

Net asset value increased by 
6.4 per cent in sterling terms to 
I19.59p at September 30 (112.4p 
at March 31). The rise in Irish 
pound terms was 43 per cent 
to I2l.05p (116J2p), compared 
with a 2.1 per cent increase in 
the Irish Stock Exchange index 
over the same period. 

The company intends to pay 
a supplementary dividend of 
0.25p for the year ended March 
31 so as to satisfy the level of 
payment required by Irish leg- 
islation in order to obtain dis- 
tributor status. Last year's 
final was L52p. 

Emerald Energy 

Emerald Energy, the 
USM-quoted oil and gas 
explorer, is raising £485,000 
through a placing of 25m 


shares at 2p with funds man- 
aged by GFM International 
Investors, the investment arm 
of Metropolitan Life. 

GFM will become Emerald's 
second largest shareholder. 
The shares rose ftp to 2ftp. 

The proceeds will be used in 
the development of its inter- 
ests in the US. 

John Foster 

Continuing progress in the 
reshaping and restructuring of 
its b usiness helped John .Foster 
& Son, the mohair topmaking, 
worsted and spinning concern, 
cut losses from £921.000 to 
£605,000 for the half year to 
August 31. 

The company said the result 
was in I hie with expectations. 
The second half was likely to 
be similar to the first and an 
overall loss was expected for 
the year. 

Although the wool textile 
industry was generally more 
’ buoyant and the forward order 
book stranger than for some 
time, margins remained under 
considerable pressure due to 
the recent sharp rise in wool 
prices. 

Turnover dropped from 
£8.4m to £63 ul 
L osses per share were 5.4p 
(3.4p). 

Adare at I£798,000 

Adare Printing Group, the 
Dublin-based USM concern, 
almost doubled interim pre-tax 
profits to K798300 (£787,000) on 
turnover 59 per cent ahead at 
I£20m. 


Last year's figures for the- 
period' to October 31 were 
I£419,000 and I£12.6m respec- 
tively. • 

Mr Nelson Loane, /chief exec- 
utive, said Alexander Petti- 
grew and Label Converters, 
acquired In tiie first quarter, 
had been “assimilated 
smoothly” and were perform- 
ing to expectations. 

Earnings per share came out 
at 8-77p (5.87p). 

The interim dividend rises to 
L0395p (0345p). 

Ab trust High Income 

Ab trust High Income Trust, 
which aims to provide quar- 
terly income with potential for 
capital and income growth; has 
declared a second interim divi- 
dend of L4p. 

The total dividend so for of 
23p is in fine with the forecast 
in the prospectus. 

Net revenue for the period 
from the trust's incorporation 
in February to September. 30 - 
was Elm. Net assets per share 
stood at 8935p, with earnings . . 
per share of 3J28p. 

F&C Income 

Foreign & Colonial Income 
Growth Investment Trust ' 
reported net revenue of 
£795,000 for the period from 
incorporation ou February 3 to 
September 30. Earnings per 
share came to L85p and than 
is a maiden interim dividend of 
1.4p. 

Net asset value per share at 
the end of September was 2L6p 
against 96p six months earlier. 





PUBLIC WORKS LOAN BOARD RATES 
Effective November 22 


Over 1 up to 2 

Over 2 up to 3 

Over 3 up to 4 

Over 4 up to 5 

Over 5 1 *> to 6 — 


Over 6 up to 7 

Over 7 up to 8 - 

Over 8 up to 9 

Over 9 up to 10 

Over 10 up to 15 

Over IS up to 2S 

Over 25 


"Nonquota taro Ami w earn ... 
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snrxjty 
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LEGAL 

NOTICES 


IN THE MATTER OF 
VKTTJOEX MANUFACTURING LIMITED 
AND 

IN THE MATTER OF 
THE COMPANDS ACT IWf 

NOTICE IS NEJieirv GIVEN Pat a Fcinton 
was tt Ac 2tt day ef October JWM craesna} 
■0 Her Ihgb Coart of Jialn. lot ftr 

co«ftrm*iio 0 of tfac cancel lu las of tfac ifaaic 
fNMtai of ttr above-named Gonqant 

ebeeenof ClQAH/n0. 

AND NOTICE IS FURTHER GIVEN Ital the 
**d PUUka a djrrxnd to hr bard before Ml 
Rcgisv BocUn * (be Rural Can of JMaa. 
Stand, Laadaa WC 2 A SX aq dx 7 B dot af 
December IW. 

ANY Ckdiior or Stallholder of Ac Carapaay 
dang in oppose lie nub to* of u Order lor 
ibe cenfiniattoo of Ok aarihUoq of be nd 
*uo fronton amoafll tbooM near x (he tine 
of dc bortoB la pem or by Omud for Am 


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ujr tath penon requiring Ike <wk by the 

I SolieHon do poytaeoi of tbs 

tq^tadctaige fanheami 

DM*ta2adqofKwntaim. 


Z7Cbuccry Lanc.Umdoa WC2A INF 
Solicitaaforae liiu c iwdCr^iioj. 


FINANCIAL TIMES 


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FINANCIAL TIMES SURVEY 


T hree weeks ago. shortly 
after being named a car- 
dinal. the archbishop of 
Ravenna chose to comment on 
the strictly secular topic of 
takeovers in the Italian bank- 
ing sector. 

Italian newspapers reported 
that Cardinal Ersilio Tonini 
and his counterpart in nearby 
Bologna bad come out in 
support of the local bank. 
Credito Rotnagnolo. which was 
preparing to light off a hostile 
hid from Milan-based Credito 
Italiano. 

The archiepiscopal 
intervention prompted some 
indignant muttering on the 
part of Credito Italiano’s 
advisers, but it should have 
surprised nobody. Indeed, it 
probably helps explain why it 
has so far taken more than 
mere legislative reform to 
restructure the country's 
overcrowded banking sector. 

For one thing, the event 
illustrated how deep the 
regional roots of some of Italy's 
1,037 credit institutions go, and 
how difficult it could be to 
untangle them. For another, it 
drew attention to tbe atmo- 
sphere of papal intrigue in 
which the Italian banking 
shake-up is being carried out. 

Technically, the Bank of 
Italy - responsible for hanking 
supervision - has limited legal 
power to impede bids and 
mergers in the banking sector, 
except in certain circum- 
stances, such as failure to 
observe competition rules, or 
an increased risk of insolvency. 
Indeed, as Mr Tommaso Padoa 
Scbioppa, the central bank's 
deputy director-general, told a 
conference last week: “It is not 
up to the supervisory authority 
to choose the best operation, 
nor to carry out a particular 
plan or direct the outcome on 
the market" 

Mr Lamberto Dini, Italy's 
treasury minister and former 
director-general at the central 
bank, has also publicly stated 
that the treasury will leave the 
outcome of the banking 
shake-up to the market 
But many senior Italian 
bankers believe that the cen- 
tral bank must have a philoso- 
phy and a vision of the future 
of tbe Italian banking sector, 
and, should be exercising 
"moral suasion" - or, as one 


ITALIAN BANKING AND FINANCE 

Thursday November 24 1994 

s Waiting for a puff 
of white smoke 


The authorities prefer that evolution of the sector be left 
to the market, but many bankers would welcome a 
philosophical vision of the future, says Andrew Hill 


banker puts it, "nods and 
winks, like the Bank of 
England” - to ensure that the 
myriad institutions under its 
control move towards that 
vision. 

Meanwhile, within the pri- 
vate sector. Mediobanca, the 
Milan merchant bank which 
has built a network of unparal- 
leled influence over Italy's larg- 
est financial and industrial 
companies, is said to be pulling 
strings to realise its own vision 
of Italian banking. Most out- 
side observers believe that both 
the Credito Italiano approach 
to Credito Romagnolo, and the 
almost simultaneous move on 
Banco Ambrosiano Veneto by 
Banca Commerciale Italians, 
were inspired by Mediobanca. 


ter - the Italian government 
put the Anal element of bank- 
ing reform in place, giving pub- 
lic banks the chance to change 
their identity from foundations, 
trusts and associations into 
joint stock corporations, and 
□oat oil part of their banking 
operations. 

Reform was also supposed to 
set off a spate of mergers and 
takeovers in the sector. Italy's 
second biggest savings bank, 
Cassa di Rispannio di Roma, 
quickly bought 65 per cent of 
Banco di Roma, in October 
1990, to ream Banca di Roma. 
Other cosse di rispannio allied 
with Cariplo, the Milan-based 
bank which claims to be the 
world's largest savings bank. 
But compared with expecta- 


C Credito Romagnolo fights to keep Its local roots 
Cl Share dealing goes on-screen, and more sell-offs are likely 

□ A difficult year in government bonds markets 

□ Why bad news is good news for the insurance sector 


The bank itself, as always, has 
not commented. 

The Idea that anyone should 
covertly tamper with tbe free 
market is anathema to many in 
the new generation of Italian 
investment bankers, weaned on 
Anglo-Saxon attitudes to bank- 
ing and market supervision. 
But the evolution of the Italian 
financial sector has produced a 
unique creature, which may 
require special treatment 

The list of more than 1,000 
Italian banks is the heritage of 
decades of restrictive rules, 
which protected financial insti- 
tutions from competition by 
banka from outside their desig- 
nated territory or sector of 
activity. With the 1990 Amato 
Law - named after the Social- 
ist treasury minister, Mr Gi Ul- 
iana Amato, later, prime minls- 


tions at the time, there have 
been few attempts to consoli- 
date, and even the largest Ital- 
ian banks remain small by US, 
Japanese or British standards. 

However, within the past 12 
months, the sale by HU, the 
state holding company, of the 
rest of its shares in Credito 
Italiano and Banca Commer- 
ciale Italians has triggered off 
what could be a second wave of 
bids and mergers. 

Italian banks are compara- 
tively well-capitalised. But this 
only adds to the concern that 
fear of being overtaken in the 
national league of big banks 
will fuel indiscriminate bin- 
geing by nervous financial 
institutions. The result would 
be to exchange a range of medi- 
um-sized, comparatively lean 
banks for an uninspiring 


collection of flabby giants. 

"I don't believe the Italian 
banking system can afford to 
concentrate just on size," says 
Professor Mario Sarcinelii, 
chairman of Banca Nazionale 
del Lavoro, 54 per cent of 
which is still owned by the 
treasury. “The problem of the 
Italian banking system is prof- 
itability and efficiency, it's not 
size, or just size." 

The past two years have 
exposed this weakness. In 1993. 
for example, banks' net profits 
were hit by heavy provisions 
and tax charges, in spite of an 
overall 28 per cent increase in 
operating profit at the largest 
Italian banks which account 
for most of Italian banking 
turnover. Half-year results for 
this year suggest that the situ- 
ation will be worse in 1994. 
Banks' loan portfolios are still 
in the shadow of recession, 
even as industrial companies 
emerge into a more prosperous 
period; and the increase in 
interest rates has hit revenue 
from securities trading, which 
was particularly strong in 1993. 

Productivity is improving, 
according to the Italian, bank- 
ing association (ABO, and staff 
numbers are dropping, but 
there is still a long way to go, 
and the banks are hampered by 
rigid labour rules, fiercely 
defended by trade unions, 
which have staged a series of 
one-day strikes. Negotiations 
between management and 
unions were completed earlier 
this month, with workers offer- 
ing some concessions on longer 
opening hours, and there are 
indications that a jobs-for-life 
mentality is beginning to dis- 
appear. But, as one senior Ital- 
ian bank executive points out: 
"The average employee takes it 
for granted that we have a sit- 
uation in which there can be 



Sanpaolo, the largest Italian bank: from 1563, 
a tradition of innovation in the Italian Markets. 


1563: Istituto Bancario San Paolo di Ibrino is founded 
in Turin. 1991: Sanpaolo becomes a public company. 
Between these two dates a small credit institution 
grows into the largest bank in Italy, ranking among 
the top 50 in the world in terms of assets. 

As the 21st centuiy approaches, Sanpaolo has 1,100 
branches in Italy and 12 branches located abroad, 190 
trillion lire in assets, over 110 trillion lire in funding 
from clients, and 20,000 employees that offer a 
complete range of products to over 4 million clients. 
The bank’s traditional business activities consist of 
retail & commercial banking, as well as mortgage and 
agricultural banking. Additionally, the bank has 
developed expertise in a wide range of financial 
services, including corporate finance, project financing, 
capital markets, private banking, fund management, 
leasing and factoring. 

Through its principal Capital Market Groups located 
in Turin, London, and New York the bank can offer 
investors direct access to the Italian securities 
markets. Sanpaolo is a leader in the Italian fixed 
income market and its derivative instruments. 
It is a market maker in BTPs, CTEs, Eurolira 
and ECU bonds. Lira and ECU repos. Sanpaolo is 

also a clearing member of 
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no firing or labour-shedding in 
the rtallan banking system. 
This is clearly wrong." 

The reform of the system has 
helped Italy to increase the 
number of branches across the 
country from only 6,000 in 1990 
to 22,100. leading to concerns 
that the network may now be 
saturated. Now the problem, 
according to ABI, is that, 
whereas there is a surplus of 
branches in some areas (for 
example, Tuscany, dominated 
by the ancient Siena-based 
bank. Monte dei Paschi), in 
other areas, particularly the 
poorer, south of the country, 
there is a lack. "The main 
towns are certainly over- 
branched,” warns Mr Luigi 
CocdoK. ABI deputy chairman 
and chairman of Banco di Nap- 
oli, one of the south's biggest 
banks. , 

In that inspect, the consoli- 
dation of northern banks is a 
worrying development, because 
It could deprive southern cus- 
tomers of the efficient, stable 
and customer-friendly banking 


system which should emerge in 
the more competitive north, 
increasing the attraction of 
usury - which is still wide- 
spread in Italy - and other 
dubious financial services. 

Hence the attempts of the 
Bank of Italy and treasury to 
encourage further modernisa- 
tion of the system, and, in par- 
ticular. the increased "privati- 
sation” of the banking 
branches controlled by the 
many charitable foundations 
across Italy. 

"The high proportion of 
hanking activity which, from 
an ownership point of view, is 
still in public-sector hands 
shows that the likely route to 
privatisation for the banks is 
s till long, and the foundations 
will be the ones to complete it," 
Mr Padoa Schioppa said last 
week. 

Clearly, observers will have 
to wait a while before a puff of 
white smoke from the Bank of 
Italy indicates that the new 
Italian hanking sector has been 
fully installed. 




Technically, the Bank of Italy has limited hagai power to impede 
bids and mergers in the banking sector. . . picm hotpmm 

. . . And Lamberto Dini, treasury minister, has said the treasury 
wB leave the banfdhg shake-up to the market pcMMArAMad 



MONTE DEI PASCHI 

DI SIENA 


Bank established 1472 





-ijlirniviif LLnifc. Iirtd>|ii4rr<.-ra •-<! M-jf ue Jet Poi/ii di ikm, tutor Ut 


MONTE DEI PASCHI DI SIENA, 

522 years old but with a very young heart. 

We are offering to our customers worldwide 
services, solutions and opportunities throughout more than 
1000 domestic and foreign branches 
which represent the strength of 
Monte dei Paschi di Siena banking group. 


MONTE 
DEI RVSCHI 
M SIENA 

BANK ESTABLISHED 1472 



tnzmSte 


-r.> - . 















26 


ITALIAN BANKING AND FINANCE 



Andrew Hill examines the banks’ efficiency 


Analysts stress the 
ratios that matter 


Italian banks are usually 
ranked according to their total 
assets or equity, a list in which 
the laurels are always taken by 
the biggest credit Institutions. 

These are the socaUed banks 
of national interest, like Banca 
Commerdale Itahana and Cre- 
dito Italiano; the six former 
“public law credit institutions”, 
like Istdtuto San Paolo di Torino 
and Monte dei Paschi di Siena; 
and tiie largest savings banks 
(casse di risparmio), such as 
Caripk) and the Banca di Roma 
grouping. 

The spate of recent merger 
and takeover proposals has, 
however, reminded Italy that, 
wherever its banks stand in the 
national ranking and whatever 
the outcome of the current bid 
battles. Its credit institutions 
still have a comparatively lowly 
place in world rank in g s . The 
question Is whether this lack of 
bulk matters, and whether a 
rush to consolidate might dis- 
tract banks from the more 
important aim of improving 
internal efficiency. 

Many bankers and banking 
analysts are now looking at 
other criteria to judge Italy's 
biggest financial houses. They 
suggest the banking sector 
should be paying more atten- 
tion to its efficiency ratios - the 
relationship between profit and 
assets, for example, or, quite 
simply, the net profit figure. 

Attempts to assess the rela- 
tive efficiency of Italian banks 
in this way produce a quite dif- 
ferent r anking . For example, 
Credito Romagnolo (Rolo). pre- 
paring to fight off a bid from 
Credito Italiano (Credit), has 
made great play of a list of 
Italy's top 20 banks, which sets 
1993 gross operating profit 
against assets, and ranks Rolo 
as the fifth most profitable 
bank, and Credit only 13th. 

Similarly, Banco Amh msfann 
Veneto, which seems to have 
successfully blocked attempts at 
a takeover, ranks seventh, 
while its erstwhile suitor, 
Banca Commerdale Italiana 
(BCD, comes in 11th. All such 
rankings can be misleading if 
one-off elements are not taken 
into account, of course. If one 
compares gross profit, for exam- 
ple, the level of provisions - an 
important element in judging 
banks' accounts - is not 
included. But it for example, 
only net profit is judged, then 
the distorting effect of tax 
charges can blur the ranking. 

In any case, both BCI and 
Credit have fought back against 
the implication that they may 
be less efficient or profitable 
than Rolo and Ambroveneto. 
They point out that all four 
banks are efficient institutions 
relative to the sector overall, 
and that during the recession 
both Rolo and Ambroveneto 
have been working in slightly 
easier markets (respectively, 
the prosperous areas of Emilia 
Romagna and the Veneto) than 
their suitors. Credit’s support- 
ers argue, moreover, that Rolo 
larks the fr, torn a f i or al presence 
of the larger hank which would 
ease the way for Emilia Romag- 
na’s many exporters. 

Looking at the whole Euro- 
pean banking sector, Mr Wil- 
liam Vincent, European bank- 


ttaty*s biggest banks 


San Paolo dl Torino 
Carfpto 

Banca di Roma 
Banca Naztonde del Lavoro 
Banca Cornmerctale Italiana 
Banco di Napoli 

Credito ItaUano 
Monte dei Paaohi dl Siena 
Banco di SldDa 
Crediop 

Banco Ambrosiano Veneto 
■Alter tremfan la nww*. t h 


told 

customer 

deposits 

(Lbn) 

Net profit 
(loss)* 

(Lbn) 

Number of 

branches! 

109.477 

479 

959 

70,308 

320 

651 

70.102 

110 

1,225 

54,393 

51.15 

582 

52,637 

268 

689 

50,127 

174 

800 

45,409 

219 

641 

42,378 

24.6 

684 

31,140 

(848) 

384 

27,988 

201 

n jl 

24,843 

175 

500 



faulted for ndulgfng 
phase in the 1960s 


ing analyst with Schroder Secu- 
rities, says that the banks 
which stand the best chance of 
succeeding are not necessarily 
the biggest, but those with a 
definite niche in the market 

That sounds positive for 
Italy’s myriad smaller banks, 
particularly as they have the 
closest links to the small and 
medium-sized companies which 
are the backbone of the Italian 
economy. On the other hand, as 
Mr Vincent hims elf points out, 
it IS the same small com panies 
which, have suffered most in. the 
recession, and as a result many 
of Italy's smaller banks have 
been hit by heavy provisions 
against bad loans. 

Mr Luigi Coccioli, deputy 
chairman of the Italian hanking 
association (ABI), sees both 
sides of the problem. He is also 
chairman of Banco di Napoli, 
one of Italy's biggest and oldest 
banks. But Banconapoli's cus- 
tomers also include a large pro- 
portion of small and medium- 
sized enterprises, based in. the 
south of Italy, which has been 
particularly hard-hit by reces- 
sion. The bank had to announce 
a heavy first-half loss this year, 
and suffered the indignity of 
having its credit rating down- 
graded by Moody's because of 
“deteriorating asset quality”. 

Mr Cocckdi still defends the 
ability of a larger bank to pro- 
vide a better service than its 
smaller competitors, however - 
especially for expanding compa- 
nies: “The local cassa di rispar- 
mi n can certainly take care of a 
small textile company In Its 
home town, but if that company 


Souck conpany reports and Madobanc 

wants to export Us products to 
Guatemala or Kuala Lumpur, 
the small cassa is unable to 
guarantee all the paraphernalia 
of bills of lading, export credits 
and so on” He is adamant, how- 
ever, that enthusiasm for 
expansion must be matched by 
a desire to confront the difficult 
challenges of rationalisation 
and improving efficiency. 

In this , Italy's biggest bank- 
ing groups need to learn from 
their past mistakes. Banca Naz- 
ionale del Lavoro, for example, 
erred when it indulged in what 
one observer dose to the bank 
describes as an “imperial” 
phase during the 1980s. New 
subsidiaries were started up, 
the Rome head office expanded, 
and international branches 
were added without paying 
enough attention to the quality 
of staff recruited overseas. The 
phase culminated in the embar- 
rassing scandal of unauthorised 
loans to Iraq made by the 
group's Atlanta branch. Now, 
under new management. BNL 
iS amalgamating its subsidiaries 
info the group structure, and 
will concentrate on efficiency 
improvements to consolidate its 
position as the third or fourth 
largest Italian institution. 

In the same way, IMI, the 
diversified financial services 
group which until the recent 
reforms was oue of Italy's few 
medium-term lending institu- 
tions, tried to expand interna- 
tionally in the 1980s, but had to 
rein in its ambitions when it 
realised that to achieve its aim 
of becoming a global operator at 
that time would have been, in 
the words of one banker, “very 
expensive and very risky”. 

The risks of domestic expan- 
sion are less obvious, and all 
bankers talk of the need to 
reduce the number of hanks in 
Italy from over 1,000 to nearer 
the 200 or so winch analysts 
believe the market can support 

But, as Mr Cocdah of ABI 
points out, there is stni a heavy 
cost to rationalisation. To real- 
ise efficiencies, management 
must take on powerful banking 
unions, backed by rigid labour 
agreements; local politicians, 
who identify the regional bank 
with the future prosperity and 
identity of their constituency, 
and the technological challenge 
of linking up different computer 
systems. 

As one analyst puts it “You 
can see the advantages for Italy 
and Italians of consolidation - a 
greater range of financial prod- 
ucts, and so on - but it's far 
harder for the banks themselves 
to see the benefits.” 


Close to you in Italy and throughout the world. 



If you get in toudi with Banco 
di Napoli, you will find out 
that it is not only a great bank, 
but above ail a large service 
network with more than 800 
branches in Italy and in the 
world; also our extended ter- 
minals form a key part of che 


speed and efficiency in deal- 
ing with thousands of trans- 
actions, from wherever you 
are- In addition. Banco di 
flapoli has a sound structure 
with companies operating in 
every financial and service 

sector, a well-established in- 


stitution granting medium 
and long-term loans in sup- 
port of agriculture, industry, 
exports, building and public 
works. Since 1539 we have 
had a single aim: being al- 
ways close to you, in luly 
and throughout the world. 



BANCOdiNAPOU 


LONDON: 1, Moorgate - EC2R 6JH London 

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T he regional bank with 
powerful roots in the 
local community has 
persisted in Italy long after it 
has waned or disappeared 
elsewhere in Europe. 

But this phenomenon could 
well be about to change as the 
h ankin g system begins to 
concentrate. In this process of 
concentration all eyes are on 
the fate of Credito Romagnolo 
(Rolo), the highly profitable 
Bologna-based bank which is 
rooted in the rich Emilia 
Romagna region of 
north-central Italy. 

The bank dates back to 1896 
when it was founded as Piccolo 
Credito Romagnolo. Over the 
course of nearly a century, it 
has become a local institution, 
symbolising the region's 
tradition of hard work and 
thrift. These deep roots are 
also reflected in the 28,842 
small shareholders who 
possess 22 per cent of the 
stock. 

“Our shares are passed down 
from generation to 
generation," says Mr Emilio 
Ottlengbi. the chairman. 
“Sometimes they are sold at 
marriage to buy a house; but 
then they are bought back 
with subsequent earnings.” 

But as Mr Ottolenghi talks, 
in the bank's magnificent 
board room decorated with 
frescoes by the three Caracci 
brothers - the great 16th 
century Bologna artists - there 
is a sense of apprehension. 
Such solid traditions are at 
risk. 

At the end of October, Rolo 
became the object of a hostile 
bid by the recently privatised 
Credito Italiano, offering 
L2,010bn for 48.2 per cent of the 
shares. In response, Rolo 
revived and enlarged plans to 
merge with its long-standing 
local rival - C-aer, the holding 
for the Cassa di Risparmio in 
Bologna (Carisbo). 

If Credito's bid is successful, 
this would create Italy's 
largest private banking empire. 


Profile: Credito Romagnolo 


Rolo fights to 
keep its roots 


Alternatively if it foils and the 
Rolo-Caer merger 
succeeds, perhaps with the help 
of a big white knigbyt would 
create the 10th largest banking 
group. 

The battle is going to be 
hard-fought and one suspects 
it will be full of surprises given 
the untried and often 
ambiguous nature of Italy's 
1992 take-over laws. Rolo's 
main arguments against being 
absorbed by Credito are quite 
simple. The bank recognises 
the Credito deal may benefit a 
few individual shareholders, 
but it will be detrimental to 
the bank's operating efficiency, 
eliminate its local Identity arid 
prevent Rolo’s own healthy 
“organic” expansion. 

T he bank argues that its 
profit base would become 
obscured and would be 
used to bolster a large, flabby 
organisation. The bank also 
claims that the absorption by 
Credito would lead to the loss 
of of over 1,000 jobs among the 
6,200 Rolo employees. The 
question of Emilia Romagna 
losing its “local” bank to 
Milan, combined with the 
question of potential job losses, 
are clearly the most political 
aspects of the bid. 

Rolo, with total assets of 
L31,164bn, is currently 
controlled by a core of 
shareholders put together 
since 1988 by Mr Carlo De 
Benedetti, the Olivetti 
chairman, iu the wake of a 
tough four-year struggle 
against a rival group led by 


Fiat and the Agnelli fondly. Mr 
De Benedetti controls just- 
under 5 per cent, while the 
biggest single shareholder is 
France's BNP with 6J3 per cent 

In the month-long run-up to 
the bid launched on October 
26, Rolo shares moved from 
just below L1IJ500 a share to 
over U3,TO>, in part reflecting 
Credito's accumulation of a 2 
per cent stake. Bourse gossip 
had it that Credito was talking 
to at least one large Rolo 
shareholder, offering up to 
L18.000 a share prior to the 
announcement of the 

take-over. 

The bank's statutes impose a 
10 per cent celling on 
Individual shareholdings - 
precisely in order to preserve 
the diffused nature of share 
ownership. Persuading Rolo 
shareholders to change this 
norm represents a big hurdle. 
It will need to be overcome this 
statutory block in the case of 
the merger as wefl. The merger 
is on the basis of 1.31 nominal 
LI ,000 Rolo shares for one 
no minal L10.000 share of Caer. 
Caer, controlled by a 
foundation with 93 per cent of 
the capital, would then possess 
30 per cent of the new entity's 
stock. 

The two local banks wifi, also 
have to explain more dearly 
why they should have revived 
so hurriedly a merger project 
which had been dropped only a 
month previously after more 
than a year of discussions, and 
which had the blessing of the 
Bank of Italy. Rolo executives 
insist the merger bad merely 



Emffio OtHenght*Otr shares are passed from generation to generation* > 


been shelved not dropped - 
since the structure of the deal 
was unsatisfactory. -Only a 
limited range of services was 
included in • the original 
merger; and the subsidiaries of 
both institutions were 
excluded. 

Now, the new merger plan-is 
comprehensive and covers 
every aspect of both groups. 
Robs counters' Credito's rfaim 
that the merged bank offers 
limited growth prospects 
operating in a' saturated area. 
Executives say the activities of 
Rolo and Carisbo, the main 
savings bank arm of Caer, are 
remarkably complementary. 
Rolo is involved in retail 
banking and haw a fast-growing 
client portfolio management - 
business: Carisbo, on the other 
band, has a strong presence 
among local authorities and 
does more term landing. 

Ironically, it was the failure 
of the original Rolo-Caiisbo 


marriage that suddenly made' 
Rolo an attractive take-over 
target Until that time it looked 
as though the merger would be 
an effective - barrier against 
raiders, allowing the two to 
consolidate in Emilia Romagna 
and fan, out frorm ; there, 
building oh Rolo’s successful . 
four year-old venture into the ' 
economically . ■: vibrant 
Friuli- Veneto region through 
Banco di Friuli 
to the battle ahead, both 
Credito and Rolo face many 
unseen obstacles. Not least of 
theseis the legal position of 
the' takeover fh relation to the' 
Rolo-Caer merger. ’Which of the 
two options for . instance takes ■ 
precedence? Should'- the 
takeover ' be - allowed first to 
run its /course? The takeover 
was announced first; but it was 
not formally initiated untfl 
after the merger was agreed;. - 



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Robert Graham 


Anxiety 

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Lamborto DM (right) previously worked with governor Antonio Fazio at the bank. They are pictured together In 1993. Problems arose when Mr DM became treasury irtM t rtifr 

Robert Graham analyses the rift between the government and the central bank 


Scars that will not heal easily 



It was always on the cards that 
the Bank of Italy would enjoy 
an uneasy relationship with 
the inexperienced right-wing 
coalition headed by Mr Silvio 
Berlusconi. 

Vet no one foresaw the 
degree to which the central 
bank and the government have 
fallen out. On occasions, the 
two have scarcely been on 
speaking terms as the bank 
has fought a rearguard action 
to protect its autonomy - an 
almost unprecedented situa- 
tion in a G-7 country. Even if 
now both sides are making a 
determined effort to establish a 
proper working relationship, 
the scars left by these scraps 
will not heal easily. 

The bank wffi also continue 
to find itself in a difficult posi- 
tion regarding monetary policy 
and Interest rates, where it 
risks being on the opposite side 
of the fence. The government 
wants interest rates to go 
down to lower the cost of servi- 
cing Italy’s huge debt stock 
and so keep the 1995 budget 
deficit projections on course. 
Mr Lamberto Dint the trea- 
sury minister, believes once 
the 1995 budget is approved by 
parliament then interest rates 
should go down. The bank, on 
the other hand, is far more 
cautious. 

On the other hand. Mr 
Antonio Fazio, the governor, 
has repeatedly said his priority 
is to protect the currency and 
ensure that inflation does not 
return as the domestic recov- 
ery strengthens. This led him 
to raise the discount rate in 
mid-August by half a percent- 
age point to 7.5 percent, and he 
has warned that he will not 
hesitate to do so again if the 
circumstances require. 

indeed, in the bank’s latest 
quarterly bulletin, it politely 
told the government that the 
1995 budget projections for the 


cost of debt service were too 
low and the deficit conse- 
quently greater. The bulletin 
also doubted the feasibility of 
achieving a 2^ per cent ann- 
ualised inflation target next 
year. 

The problematic relationship 
began from the very start of 
the new administration in 
May, when Mr Dini was 
recruited to the treasury from 
being the bank's director-gen- 
eral - the number-two job in 
the bank’s four-man executive 
directorate. As treasury minis- 
ter, he immediately became the 
single most important govern- 
ment figure determining eco- 
nomic and financial policy. 

The Bank of Italy has always 
enjoyed a good and close rela- 
tionship with the treasury, 
with the central bank often 
supplying the latter’s best 
technicians. However, in this 


Italy’s regional offices), and the 
appointment is then approved 
by the cabinet and the head of 
state. 

Traditionally this has been a 
consensual process between 
the various actors. But the Ber- 
lusconi government was 
heavy-handed in trying to 
influence the choice of candi- 
dates - imposing a veto on Mr 
Tommaso Padoa Schioppa, the 
senior of the two deputy direc- 
tors. because be was consid- 
ered too close to Mr Ciampi. 
Instead the right-wing coali- 
tion insisted on an outsider, 
which the bank resisted. 

As a result, the stand-off 
lasted from June until mid-Oc- 
tober when the bank named 
Mr Vincenzo Desario, the 
junior of tbe two deputy direc- 
tors, as a compromise candi- 
date. Even then the govern- 
ment demurred in accepting 


In the bank's latest quarterly bulletin, it politely told 
the government that the 1995 budget projections for 
the cost of debt service were too low, and the deficit 
consequently greater 


case matters were clouded by 
personal sentiment By senior- 
ity, Mr Dini had been the natu- 
ral candidate to become gover- 
nor when, the previous year. 
Mr Carlo Azeglio Ciampi was 
called from near retirement to 
become prime minister. How- 
ever, on that occasion Mr Dini 
was passed over in favour of 
Mr Fazio, then the number 
three in rank in the director- 
ate. 

The friction resulting from 
this promotion complicated the 
choice of a successor to Mr 
Dim. The members of the four- 
man directorate at the bank 
are chosen by the Institution's 
governing council (composed 
of the chairman of the Bank of 


the outcome, and delayed 
approval for almost three 
weeks to maim its displeasure 
plain. 

No one has emerged 
unscathed from this affair. By 
waiting so long to name a Dini 
successor, the bank appeared 
undecided and therefore sub- 
ject to political pressure. The 
bank’s governing council also 
found itself in the embarrass- 
ing position of choosing Mr 
Desario, whose career in the 
bank has been essentially con- 
fined to supervision of the 
banking system, over a more 
experienced and internation- 
ally recognised central banker, 
Mr Padoa Schioppa. 

As further evidence of sensi- 


tivities, the hank decided not 
to name a successor to Mr 
Desario in the directorate until 
the latter’s appointment had 
been digested. The government 
still wants a say In who takes 
his job, and thus it may not go 
to tbe next in line within the 
bank. 

The coalition's desire to 
interfere in the activities of the 
central bank has dragged the 
institution into the political 
arena in a way not seen 1979 
over the affairs of Banco 
Ambrosiano and the late 
banker Roberto Calvi. Mem- 
bers of the coalition have gra- 
tuitously attacked Mr Ciampi 
for his role as honorary gover- 
nor. arguing that it is unac- 
ceptable that, having been 
prime minister, he should be 
allowed to retain this position 
with an office available at the 
bank. It is is nevertheless bank 
tradition that former governors 
have this honorary role. 

The bank has also been crit- 
icised for the way it continues 
to exclude politicians from the 
invitation to attend the gover- 
nor's annual message on the 
economy on the occasion of the 
annual meeting at the end of 
May. Coalition members argue 
the governor’s message is often 
"political” and that therefore it 
is undiplomatic to exclude the 
politicians. 

What is more important, 
members of the coalition have 
been muttering darkly of the 
need to reexamine the central 
bank's statutes. The aim of 
this would be to regulate the 
governor’s currently unlimited 
tenure to a fixed term. Another 
suggestion, vigorously rejected 
by the bank, is that its supervi- 
sion functions be hived off. 

With the banking system 
now undergoing radical trans- 
formation in the wake of priva- 
tisation, the supervision side of 
the bank acquires heightened 


si gnifi cance. For instance, tbe 
bank now finds Itself in a 
highly visible role as arbiter of 
tbe merits of a hostile take- 
over by Credito Italiano of Cre- 
dito Romagnolo. With many 
competing banking - plus 
political and socio-economic - 
considerations at stake, the 
last thi n g the bank needs in 
these circumstances Is a tense 
relationship with the govern 1 
merit 

Perhaps the final casualty of 
the row ova 1 Mr Dim’s replace- 
ment has been rational discus- 
sion of the future role of the 
bank, 100 years old last year: Tfc - 
is the one Italian institution to 
have preserved its dignity and 
respect during the past two 
years of tumultuous political 
change. Nevertheless, as the 
banking system is privatised 
and the state retreats from its 
dominant role in the economy, 
it is an opportune moment to 
reassess the size and precise 
function of the central bank. 
Unfortunately, tempers are too 
heated and the bank has been 
placed too much on the defen- 
sive for a proper discussion. 


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FINANCIAL TIMK$ THURSDAY NOVEMBER 24 l^ 94 


ITALIAN BANKING AND FINANCE 


The stock exchange: on-screen trading has proved broadly reliable, says Andrew Hill 


More sell-offs expected next year 



How the market has moved 


It seems to have been a rood 
year Tor the Italian stock 
exchange, if not for the Italian 
stock market. 

The Comit index of leading 
Italian stocks stands at 
roughly the same level as at 
the beginning of the year 
Equities began a tiring climb 
“P to new highs in March, 
fuelled by optimism about the 
new government, only to come 
tumbling down during the 
summer and autumn because 
or uncertainty about the cohe- 
sion and resolve of the same 
administration. 

Mr Attilio Ventura, chair* 
man of the Milan-based Italian 
stock e xchang e council, is phil- 
osophical about the fluctuation 
of the market: “In the first six 
months of the year, the Italian 
market was the star or Europe 
- it rose to unthinkable levels, 
due mainly to the activity of 
foreign operators. In the sec- 
ond half, they realised good 
gains and are waiting to come 
back when the conditions are 
right," 

Mr Ventura’s principal con- 
cern is to ensure that when 
that moment arrives, foreign 
and Italian investors are not 
deterred from trading on the 
Italian equity market because 
of technical or bureaucratic 
deficiencies, illiquidity or a 
lack of suitable products. In 


Domestic companies listed 








S 


Italjj 210 


Sourco ll*Uw& :xl,E«*««ng« Comic* 

that respect, he is convinced 
that Milan lias made progress 
this year. 

Milan moved to full on- 
screen trading in April, adding 
to its computerised system the 
few’ stocks still traded on the 
floor or the exchange by open 
outcry- The borsa was unlucky 
in that the switch coincided 
with one of the busiest periods 
in the exchange's history - at 
the height of optimism about 
the new government’s pros- 
pects - and the “little bang" 
was postponed for 24 hours as 
special measures were put in 
place to relieve pressure on the 
system. 

Since then, the system has 
proved broadly reliable. 


Bonds’ difficult year 

Anxiety over 
fiscal deficit 




Investors in Italy’s government 
bonds markets have experi- 
enced a rough ride this year, 
with a combination of interna- 
tional economic trends and local 
political uncertainty hitting 
prices. 

As one of Europe's "high 
yielders", Italian government 
bonds were hard hit by the gen- 
eral retreat of international 
investors from bond markets in 
general and high-yield markets 
in particular, in the wake of the 
increase in short term US inter- 
est rates in February. 

In addition doubts have 
gro w n about the ability of the 
government of Mr SQvk> Berlus- 
coni to tackle Italy's high fiscal 
deficit and its heavy debt bur- 
den. The delay in the publica- 
tion of the government's finan- 
cial programme In July 
contributed to initial scepticism. 

The increase in short-term 
interest rates from 7 per cent to 
7.5 par cent in August followed 
pressure an bands and on the 
lira. Investors have subse- 
quently become concerned that 
the proposals to reduce the fis- 
cal deficit contained in the 1995 
budget, currently before parlia- 
ment, are insufficiently radical 
and that political tensions may 
interfere with budget discus- 
sions. 

“Hie budget relies excessively 
on one-off measures, thereby 
postponing more significant 
action for subsequent years," 
says Mr Jose Alzola, analyst 
with Salomon Brothers. 

Bond yields have risen 
steadily, both in absolute terms 
and relative to paper issued by 
Germany. The yield spread of 
the Mian 10-year bond - the 
BTP - over the 10 year Bund 
fell gradually through 1963 and 
early 1994, dropping from a high 
of 671 basis points in April last 
year to 255 basis points In May 
this year. Since then, however, 
spreads have widened, with the 
spread in the 425 to 475 baas 
points range during October and 
November. A 

There are some grounds to 
suggest these fears are over- 
done. Reductions in inflation 
has at least partially reflected 
the success of measures to intro- 
duce flexibility to the labour 
market especially he abolition 
of the sente mobile wage indexa- 
tion mechanism in 1993. 

The economy is growing: uur 
is forecast to increase by 3 per 
cent in 1995. following an expec- 
ted 2L2 per cent rise in 1994. 

Italy has made good progress 
over the past four years in 
improving .the fQciency and 
pro fessionalism of its debt mar 
JSsfand ■ -not withstanding 
this year's setbacks “ 
made some progress 
making its markets more ac- 
tive to foreign investors and m 
increasing the maturities or its 

ther^yreduemgits 

vulnerability to shifts m 
se ntimen t and changes in short 

Italy’s debt has beens^tenm 
art much of it has been inthe 
Snds of Italian fomihes- Smoe 
most of. these bought toejr 

gi-awass 

Ufriuif „ -iqqo and 1993, Italy 
S ra°o ^dium and 


long-term debt The average 
maturity of the debt has 
increased from two years and 11 
months at the end of 1992, to 
three years and two months at 
the end of 1993, up to three 
years and five months in Febru- 
ary this year; although, since 
then, maturities have shortened. 

Stamp duty on bonds was 
abolished early in 1994, and the 
system whereby withholding 
tax was reimbursed to foreign 
investors Improved. Auctions 
for medium and long term 
bonds have been streamlined 
and the time taken to settle 
trades has been reduced. In 
addition, a new two-tier system 
of market making has been 
established, with a number of 
investment banks asked to play 
a more active role in the debt 
market by becoming super pri- 
mary dealers. 

Super primary dealers - so 
far there are three, JJ*. Morgan, 
Morgan Stanley and Bank of 
America - must trade in at least 
3 per cent of new Issues and 
secondary market in all classes 

lO>inr O ovon wi re wt bond 

Redemption yield 


129t — 


ii% Lrjl 


10% -n v- ----- 


Stxjco: DMuuii— i ii 

of debt paper, and account for at 
least 1 per cent of trades in each 
separate class of paper. In addi- 
tion, they must meet higher 
mtnhmim capital requirements. 

Foreign investors bought 
heavily during 1992 and 1993, 
increasing their holding s of tea- 
denominated from 4 per cent of 
overall debt in 1990 to nearly 15 
per emit in 1993, although that 
figure has since fallen back to 
well below 10 pm cent of the 
total. 

The ratio between debt and 
GDP, which is expected to reach 
1285 per cent in 1995, is high 
and remains a source of concern 
for the markets, which fear it 
will Increase government pres- 
sure on a limited pool of savings 
and force up Interest rates. 

However. Italy’s ability to tap 
the international capital mar- 
kets could reduce possible 
upward pressure on interest 
rates. 

Mr Vittorio Griffi, head of the 
treasury's debt management 
and privatisation department, 
says that the aim of the govern- 
ment’s eurobond programme is 
modest It “is a window on the 
world ... designed to help 
increase the foreign component 
of domestic debt" 

Italy completed a $li.6bn 
euromarket borrowing pro- 
gramme for 1994 in mid-Novem- 
ber, when it finalised a Y450bn 
euroyen issue. 

However, the fact remains 
that the government still has 
room for manoeuvre. Even after 
the recent issue foreign cur- 
rency debt Is still estimated by 
analysts at well under 8 per 

cent of the total debt 

Richard Lapper 


although there was a hiccup 
early last month when a tech- 
nical hitch blacked out com- 
puter trading just after the 
country's justice minister had 
announced! his resignation, 
interrupting a sharp fell in the 
value of equities. After an 
investigation, the exchange 
authorities declared them- 
selves broadly satisfied that 
the cause was a technical fault 
and not sabotage, but small 
investors have called for a judi- 
cial inquiry. 

A five-day rolling settlement 
system, to replace the monthly 
account trading system, is also 
being phased in, but Mr Ven- 
tura says it could be “a few 
months’’ yet before full cash 


settlement Is introduced for all 
stocks. 

As far as liquidity is con- 
cerned, market operators and 
stock exchange authorities 
alike are optimistic about the 
impact which trading in new 
equity derivatives should have 
on the underlying equity mar- 
ket. The first futures contract 
on the revamped MIB 30 index 
of heavily traded stocks should 
begin trading next week and 
once the market is under way. 
the exchange is expecting to 
add an option on the Index 
and, in the first half or next 
year, options on single shares. 

Liquidity has also improved 
as a result of the privatisation 
programme launched in 1992. 
In the past 12 months, the gov- 
ernment has turned from pri- 
vate sales to public offers, 
infecting more shares Into the 
market in the case of the 
banks, Banca Commercials 
Italians , Crodito Italiano and 
1MI, which were already 
quoted, and listing shares in 
Inn, the insurer, for the first 
time. 

Under the new government, 
partly because of inexperience, 
the privatisation programme 
has slowed, and concern has 
been expressed about the appe- 
tite of the Italian public for fur- 
ther large sell-offs. Neverthe- 
less. within the next 12 


months, the state should sell 
more of Its shares in Stet, the 
telecoms holding company 
which is one of Italy's biggest 
companies by market capitalis- 
ation, and bring to market 
E ne l, the electricity company, 
and ail or part of Eni, the 
chemicals and energy conglom- 
erate. 

At the same time, the gov- 
ernment has introduced new 
rules to protect minority share- 
holders and bring taxation on 
share investment into line with 
other forms of investment, 
such as bonds, which have tra- 
ditionally occupied more space 
in the ordinary household 
savings portfolio. The stock 
exchange itself has responded 
to small investors' demands by 
introducing a regulated system 
for the trading of small quanti- 
ties of shores, which fell below 
the threshold for on-screen 
trading. 

Privatisation has not been 
the only stimulus for the mar- 
ket. The overall amount of new 
capital raised during 1994 had 
already reached nearly 
LU,500bn in mid-September, 
much of that from opportunis- 
tic rights issues during the 
first half of the year. That com- 
pares with Ll6.i92bn for the 
whole of 1993 and only 
L3,027bc and L4,854bn in 1992 
and 1991 respectively. 



indices rabased 

200 - - -- 


. .. JFT-A Italy —r...l 


150 



* 1 Comrt 


FT -A Europe 
(excluding UK) 


Attffio Ventura: phflosopHcaJ 

The difficulty for the Italian 
authorities is persuading some 
of Italy's small and medium- 
sized companies, the real 
motor of the Italian economy, 
to finance future growth with 
equity issues, rather than with 
bank debt 

Mr Giamnario Roveraro, 
managing director of Akros 
Finanziaria, an expanding Ital- 
ian financial-services company, 
says many family-owned com- 
panies are reluctant to seek a 
listing on the stock exchange. 
“The advantage of being 
quoted isn’t absolutely evident 
for those companies which gen- 
erate enough cash-flow to 
develop the business ade- 
quately” he points out 


1992 1993 

Sara Dai muum ii 

As director of a company 
involved in the development of 
investment and pension hinds, 
Mr Roveraro believes more 
entrepreneurs might be per- 
suaded to take part in the mar- 
ket if the number of such 
binds increased, and it became 
obvious that there was an 
appetite for new equity. To 
help this process, the Berlus- 
coni government Is already 
preparing regulatory changes 
to encourage the launching of 
private pension tends. 

At the same time, the stock 
exchange, securities houses, 
banks, industrialists and 
chambers of commerce are 
making plans for the 
establishment of a second 


market, for small and 
medium-sized co m panies 

Sceptics are worried that 
such a market would 
experience the same 
difficulties as equivalents In 
France and the UK, but 
advocates point to the success 
of Nasdaq in the US as a 
reason for pushing ahead with 
the plan. 

However, even the backers of 
the Italian second market 
agree that this will be a 
difficult task, requiring the 
co-ordination of investors, 
intermediaries, regulators and 
the companies themselves. 
“The potential is there, but it 
could still be a very difficult 
market," admits Mr Ventura. 


THERE ARE MANY DIFFERENT WAYS 
OF LOOKING AT ITALY. BANCO AMBROSIANO VENETO 

SHOWS YOU ALL OF THEM. 


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Viewed from Hong Kong, 

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FINANCIAL TIMES THURSDAY NOVEMBER 34 1994 


ITALIAN BANKING AND FINANCE IV 


T here could hardly be a greater 
contrast between the 
activities of foreign 
investment banks and foreign retail 
and commercial banks on the 
Italian market. 

While investment banks and secu- 
rities firms are building up their 
Italian activities or turning what 
was a mere foothold on the penin- 
sula into a base camp for further 
expansion, their commercial coun- 
terparts have mostly retreated, 
badly bruised. 

Lloyds, of the UK. and First Chi- 
cago and Wells Fargo, of the US, 
have all been and gone from the 
Italian commercial banking sector. 
Citibank sold its Naples-based chain 
of b anks to Banco Ambrosiano Ven- 
eto. Credit Lyonnais is said to be 
seeking a buyer for its investment 
in Credito Bergamasco in northern 
Italy, while others - Credit Agricole 
and Banque Nattonale de Paris, 
National Westminster of the UK, 
and Creditanstalt of Austria, for 
example - maintain only minority 
stakes in Italian partners. 

Only Deutsche Bank has made an 
out-and-out operational success of 
an Italian commercial banking 
investment. It has built on its pur- 
chase of Banca d’ America e d 'Italia 
(BAD from Bank of America in 1986. 
A year ago, it bought Banca Popo- 
lare di Lecco, a regional bank based 


Foreign ban ks: Andrew Hill traces the contrasting fortunes of retail and commercial institutions 

Deutsche Bank builds on purchase of BA) 


near f-aka Como, and now has some 
300 branches in Italy and 4,200 
employees. Underlining its success, 
the bank has just changed the name 
of the old BAI network to Deutsche 
Rank- , a brave move in a country 
which, SO years on, is still sensitive 
to anything that implies German 
occupation. 

Mr Gianni Te&toni, Deutsche 
Bank's chief executive in Italy, puts 
the success down to the German 
parent's capacity to “think globally, 
and act locally" and work “pru- 
dently, gradually and continuously” 
- but he still admits that the bank 
is the exception that proves the 
rule. 

For foreign investment banks and 
securities houses, the market is a 
little more crowded, and is likely to 
become even more so. For example. 
Finanziaria Indasuez. part of 
Banqne Indosuez of France, is 
beefing up its Italian securities 
trading and research operation; 
while Salomon Brothers' New York 
headquarters took a decision in 
June to expand its presence from a 


tiny representative office to a Tull 
bond-dealing operation with a staff 
of nine or 10. 

This is comparatively small beer, 
compared with the activities of 
some of the longer established 
operators. J.P. Morgan. which has 
been in Italy for some 25 years, has 
more than 300 employees in the 
country, while Morgan Stanley has 
registered itself as an Italian bank 
in its push to win even more Italian 
business. 

The main reason why foreign 
securities houses have increased 
their profile in Italy In the past four 
years is the international isation of 
the Italian government bond 
market, the largest in the world 
after the US and Japan. 

This year the Italian government 
has introduced a new category of 
bond dealer - the "superprimary" 
dealer - to encourage the 
screen-based second market in 
government securities. Such dealers 
are entitled to greater privileges on 
the market ifor example, a right to 
participate in supplementary bund 


issues) than ordinary dealers or 
primary dealers, but have to take 
up a greater proportion of Issues 
and trading volume over the year. 
The title may also appeal to the 
vanity of anglo-saxon firms, three of 
which - J.P. Morgan. Morgan 
Stanley and Bank of America - are 

The main reason why foreign 
securities houses have 
increased their profile is the 
internationalisation of Italy’s 
government bond market 

among the 12 authorised 
superprimary dealers, while others 
are believed to be considering an 
application. 

For these banks, the Italian 
market has enough potential to 
justify a little local bureaucratic 
inconvenience, one of the elements 
which has hampered the growth of 
foreign companies in the 
commercial and retail banking 
sector. 


For example, UK merchant banks 
attacked the Italian law which 
restricts direct access to the market 
to locally registered securities 
houses, called Sims, claiming it was 
against EU rules. But most have 
still opted to establish a Sim, or buy 
into an existing firm, rather than 
wait for the European Commission 
or Court of Justice to rule on the 
case. Schroders, for example, is 
poised to receive a Sim licence, and 
by the end of the year should have 
15 corporate finance professionals 
and 25 securities traders working 
mainly out of its Mfian office. 

“At the end of the day, it's 
probably going to take you almost 
as long and cost you more to fight 
the Sims law,” admits one foreign 
banker. 

However, many UK and US firms 

Still maintain important operations, 

including equity-research and 
corporate-finance activities, in 
London, sending professionals over 
to Italy when necessary. Goldman 
Sachs, for example, has a' 
comparatively small office in Milan, 


and Mr Claudio Costamagna, who 
heads the Italian Investment.; 
banking operation, says the 
fragmentation of the market makes 
it almost as easy to work out of 
London as out of Milan, when it 
comes to risittog clients. He adds: 
“By being in London, 'helng exposed' 
to the rest of the international 
business community you can bring 
something to the client that you 
wouldn't otherwise bring.” 

Whether based in Italy or 
overseas, most foreign firms are' 
after a share of corporate finance 
business in Italy. Mediobanca, the 
Milan merchant bank, has a firm 
hold over corporate finance for the 
largest Italian companies, but the 
foreigners believe, they can capture 
a share of international M&A 
business, and carve a niche in 
advice for medium-sized, local 
companies looking to expand, float 
on the stock market, or take- over 
competitors. 

They are also front-runners In the 
competition to advise on Italy's 
large privatisation programme, 


which was launched.tvro yearsggo. - 
- This v has fled . t^ jinch . 
hand-wringing ta -the. uaaan press" 
about the - dearik 
Investment, l banks r- 
. summer, there were^vefcvepS 
-threats from some morefarirefije 
. members -pf t^ v n^iip%ihg 

Italian governments that .respected 
firms like Morgan Similes might-be 

- cut : out of government busSnesslf 
they continued; to put.liiMr -nanies 

to unfavourable research abcatirtte 
Italian economy. Happilyibr foreign 
; gnus, these appear' to be isolated 
incidents' - indeed, Morgan Stanley - 
ha* jnrt woh the manifete to advise- 
1 tlm.-gdveniment on nexfysar’s-salej 
of. shares in Stetthe telecoms 
holding company. Howevet.thsreis, 
certainly. increased;’poJIticai- 

- pressure -to'nurture small Italian 

investment, banks, Which suggests 
that domestic competition could hot 
up over the nest few years. That .Is 
a trend generally welcomed by 
foreign’ bankers. •- -• 

“The culture' of the ^domestic 
participants in the market '-has' 
become much more international,” 
says- Mr :-Hendiik van.. Riel, 
mana gin g director ofiLF: Morgan to' ■■ 
Mian, “Anybody can have a view' 
about whether that could have 
happened foster, but it .certainly 
has, audit’s never slowed down. Em 
convinced it will continue.”; - 



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The insurers: casualties are possible 


Life offices hope 
for new business 
from pensions 


Bad news is proving to be good 
business for Italy's insurance 
sector, with factors ranging the 
funding crisis of the country's 
state pensions system to the 
war in Bosnia helping to raise 
profitability. 

However, with European- 
wide liberalisation and the 
increasing incursion of banks 
into the sector, competition is 
increasing sharply; and, 
despite the upturn, the indus- 
try could see some casualties 
in the next few years. 

Italy’s life assurance chiefs 
hope that the state's difficul- 
ties in continuing to fund pen- 
sion provision will mean that 
more Italians will turn to them 
for savings plans and pension 
policies. Already growth has 
been rapid, increasing by 
between 10 and 15 per cent 
over the past five years, follow- 
ing even quicker growth in the 
early 1980s. 

Even though spending per 
head on premiums has doubled 
since 1988, the Industry 
remains underdeveloped by 
European standards. Per capita 
premiums of only $161 in 1991, 
an amount equivalent to 0.7 
per cent of GDP, compared 
with 1.1 per cent for Spain and 
7 per cent in the UK. 

Recent growth has been 
underpinned by rapid expan- 
sion of the bancassurance phe- 
nomenon, with most of the 
country's biggest companies 
forming links with banks, and 
a number of banks themselves 
forming their own life assur- 
ance subsidiaries. Banks now 
sell some 30 per cent of new 
life premiums, and are expec- 
ted to increase that share to 50 
per cent by the end of the cen- 
tury. 

In the non-life sector, the tur- 
moil in the former Yugoslavia 
is one of several reasons why 
claims costs are falling. Mili- 
tary action is acting as a deter- 
rent to car thieves who previ- 
ously drove stolen Italian cars 
across that territory to the 


east The epidemic of car theft 
which hit Italian insurers hard 
in the early 1990s has shifted to 
Germany and France as a 
result of the war. 

“The war in Yugoslavia has 
closed the main door for car 
theft," says Mr Pier Giorgio 
Bedogni, a senior executive 
with SAL the country's fourth 
largest company and a leader 
in the motor business. The 
improvement also reflects a 
general economic slowdown, 
which has led drivers to make 
fewer journeys, and a decline 
in the number of motorists 
driving leased cars. 

Mr Bedogni says that the 
war camp aign against Mafia-in- 
spired violence has helped to 
reduce crime, especially in 
some southern cities where 
there is a military presence on 
the streets. The fall in claims 
costs is contributing to a 
steady improvement in non-life 
market underwriting results 
after a period of poor perfor- 
mance across the market at 
the end of the 1960s. 

In addition, although Italian 
companies have only recently 
been completely freed from 
government restrictions, pre- 
mium rates have risen over the 
past two years. Mr Bedogni 
says that, following rises in the 
iion-compulsory classes, which 
cover damage to the car itself, 
Italian motor premiums are 
now among the most expensive 
in Europe. Further improve- 
ment seems likely. 

Rate increases averaging 10 
per cent have been introduced 
across the motor market this 
summer, following the 
approval of the European 
Union’s third non-life directive. 
Hitherto, rates in the 
compulsory third-party motor 
liability market - which 
generates an estimated 45 per 
cent of non-life premiums - 
had been subject to 
government control 

Although this should all be 
good news for the industry as a 



whole, there is general 
agreement that competition is 
intensifying and that many 
s mall er companies, among the 
300 or so which populate the 
market, may be unable to 
retain their independence. 

In the life sector, in 
particular, traditionally high 
margins - up to three times 
those achieved by more 
efficient French and British 
companies - are under severe 
pressure. Typically, Italian life 
insurers have distributed only 
70 to 80 per cent of life fund 
investment returns to 
policyholders, retaining up to 
30 per cent as profits. 

Life insurers elsewhere in 
Europe typically retain only 10 
per cent. Companies dependent 
on agents or financial advisers 
for their sales could come 
under especially severe 
pressure, since banks are able 
to sell policies with 
significantly lower overheads. 

The privatisation of the 
Istituto Nazionale delle 
Assicurazioni (INA), the 
former government-owned 
company which was partially 
privatised this year, should be 
completely in private hands by 
the spring of next year - a sale 


David Lane looks at Italy's most traditional banking institutions 

Support for old foundations 


Italian ballet students are 
being helped to aspire to the 
achievements of compatriots 
Carla Fracci and Alessandra 
Fern. Thanks to Turin's Fon- 
dazione Sanpaolo, Milan's La 
Scala ballet school will be leav- 
ing its cramped and inadequate 
facilities for new buildings at 
the end of next year. Work has 
just started on a L5bn project 
in central Milan. 

Assistance for La Scala’s bal- 
let school adds a new dimen- 
sion to the benefaction under- 
taken by the Fondazione 
Sanpaolo di Torino per la Cul- 
ture, la Scienza e l'Arte. Since 
being established in 1985, it has 
financed the L12bn restructur- 
ing of Turin's Egyptian 
Museum, and also the restora- 
tion of the San Fruttuoso 
abbey, at Camogli near Genoa, 
and of the Superga basilica, 
Juvarra's baroque masterpiece 
overlooking Turin. 

Milan's Brera gallery, 
churches in Turin and Rome, 
and the Turin RAJ orchestra 
are also among the beneficia- 
ries to which funds have been 
channelled 

Gianni Zandano, Sanpaolo's 
chairman, explained: “The 
Fondazione allows us to oper- 
ate on two fronts - first, the 
restoration and, in the best 
sense, exploitation of our cul- 
tural heritage; and second, the 
promotion of scientific 


research, paying particular 
attention to the environment 
Both areas of intervention 
directly concern the quality of 
life to society today. . . 

“The establishment of the 
Istituto San Paolo, in 1563, 
arose from participation to the 
life and problems of society, 
the bank's predecessors being 

a charitable 

body, the Com- 

pagnia per il Foundatior 


Soccorso dei told that n 
PovoL and the revise th 
Monte di Pieta 
whose aim was 
to combat usury," Mr Zana- 
dano said, adding that the 
bank had never fallen short on 
social commitment. 

The Fondazione is funded by 
Compagnia di San Paolo, 
which also funds the charitable 
organisations Ufficio Pio and 
Educatorio Duchessa Isabella. 
In 1992 and 1993, they spent 
Ll7bn on welfare activities, 
essentially in assisting people 
at society's margins. The poor, 
drug addicts, alcoholics and 
the handicapped are among 
those benefiting. 

Compagnia di San Paolo Is 
the foundation established 
when the Istituto Bancario San 
Paolo di Torino spun off its 
banking activities in X991. It 
owns the Sanpaolo Bank {fold- 
ing. a joint stock corporation 
owning 76 per cent of the San 


Foundations have been 
told that marry need to 
revise their statutes 


Paolo Bank that was floated in 
March 1992 and is listed in 
Milan, Turin and London. The 
foundation obtains its income 
from dividends from its share- 
holding in the bank. 

San Paolo. Italy's biggest 
banking group, is not alone in 
having ties to a cultural and 
charitable foundation. During 

the past three 

years, other 
: nave been public sector 
iny need to banks, includ- 

r statutes Banco di 

Napoli. Banco 
di Sicilia and 
the savings banks (casse di m- 
pamrio), have settled on simi- 
lar ownership structures in 
which foundations have con- 
troL Indeed, Banco di Napoli 
led the way, being the first to 
transform itself from a com- 
bined foundation and bank 
into a foundation with a sepa- 
rate bank corporation. 

In doing so, Banco di Napoli 
made use of the Amato Law, 
the starting point for the 
shake-up that has been re- 
shaping the public-sector part 
of Italy's banking system. 
Passed in July 1990, the law 
aimed to create the conditions 
for rationalisation and concen- 
tration by offering fiscal incen- 
tives. It was also an early, ten- 
tative step to encourage bank 
privatisations. 

Formerly denominated as 


public law credit institutions, 
Turin's Sanpaolo and Banco di 
Napoli both now enjoy stock 
market quotation. They are 
leading examples or Amato 
Law transformations. Cassa di 
Risparmio delle Provtocie Lom- 
barde (the Milan savings bank 
Cariplo), which ranks fourth 
on assets and leads in terms of 
Tier 1 capital, is another. 

Cariplo was transformed in 
December 1991. the foundation 
spinning off its banking 
operations into the Cariplo SpA 
joint stock corporation. Since 
then, it has been engaged in a 
campaign of acquisitions of 
shareholdings in other savings 
banks, cither directly or indi- 
rectly through sub-holdings. 

It has controlling interests in 
the savings banks of Puglia, 
Citta' di Gastello, Viterbo, and 
Calabria and Lucania. Signifi- 
cant minority shareholdings 
give Cariplo a place in 11 other 
savings banks in central and 
northern Italy. 

While Cariplo has been cast- 
ing its eyes over the savings 
banks and exercising its finan- 
cial muscle and skills of per- 
suasion to drew some of the 
many s mal l and medium-sized 
casse into its orbit. Banca di 
Roma (controlled by the Cassa 
di Risparmio di Roma) and the 
Turin's Banca CRT have been 
doing the same. 

There has been large scope 


' . ~ ‘ •p-TT. T. ' . fjt 

Managed funds: small investors are becoming more Interested in equities , 

Carrot-and-stick from the state S-' 


Italian motor premiums are now among Europe’s most expensive upp 


which will, at least indirectly, 
spur competition. 

In the past, existing Italian 
companies have been obliged 
to cede 10 per cent of 
premiums - and new entrants 
30 per cent of premiums - to 
IN A. 

In the non-life market, there 
are signs that Italian insurers 
are beginning to make more 
use of technology in the way 
they assess risks, a 
development which should 
favour those companies big 
enough to make the necessary 
capital investment. For 
example, although differences 
in rates have traditionally 
depended on the power of the 
car and where it is based, some 
companies are now taking into 
account the risk factors 
associated with the driver, 
varying charges according to 
age, sex and occupation. 

Significantly, Generali, the 
country’s largest company’, has 
launched a pilot direct-writing 
operation, selling motor 
insurance directly to the public 
by telephone along lines 
pioneered by companies such 1 
as Direct Line in the UK. ! 

Richard Lapper I 


Italy may be the land of the 
small company, but it is not 
yet the land of the small share- 
holder. 

Although household savings 
amounted to nearly 19 per cent 
of disposal income in Italy last 
year - a higher proportion 
than in the US. Japan, Ger- 
many. France and the UK - 
less than 4 per cent of those 
household financial assets are 
invested directly in equities. 
Moreover, only 9.7 per cent of 
the average household's finan- 
cial assets are entrusted to 
institutional investors, such as 
fund managers. 

According to the stock 
exchange authorities, however, 
the situation is changing, and 
ordinary investors are begin- 
ning to increase their direct or 
indirect holdings in equities. 

There are two important rea- 
sons for this metamorphosis. 
One is privatisation, and the 
other is the growth of managed 
investment funds and pension 
funds. 

The initial sales in the gov- 
ernment's privatisation pro- 
gramme were made directly to 
private companies; but at the 
end of last year, the decision 
was taken to begin a series of 
public offers of shares in Italy’s 
three state-controlled banks. 
Credito Italiano (Credit), Banca 
Commerciale Italiana (BCI), 
and EMh which were already 
quoted on the stock market, 
and the insurer Ina, 100 per 
cent owned by the treasury. 
The declared intention was to 
stimulate the stock market, 
and, as In the UK and other 
European countries, encourage 
wider share ownership. 

All the offers so far have 
been oversubscribed, but 
although that meant the priva- 
tisations were a success from 
the Italian government’s point 
of view, certain more ambi- 
tious advocates of shareholder 
democracy have been disap- 
pointed by the outcome. In par- 
ticular, they argue that, in 
spite of restrictions on share 
ownership, the two big retail 
banks - Credit and BCI - are 
now "controlled" by big corpo- 
rate allies of Mediobanca, the 
Milan merchant bank which 
has for five decades repre- 



Fount of wisdom: a word in her ear about 


seated Italy’s biggest corporate 
and financial interests. 

To counter such accusations, 
the government has introduced 
new rules, used for the first 
time in the privatisation of Ina 
in June, which allow for a list- 
voting mechanism at share- 
holder assemblies. In the case 
of Ina, that meant three of the 
13 seats on the board were 
reserved for nominees of 
minority shareholders. 

In practice, this has failed to 
satisfy some of the smallest 
shareholders, who found it dif- 
ficult to reach the threshold for 
no minating a list Of directors, 
and claimed that there had 
been little attempt fry the com- 
pany, the treasury and their 
advisers to implement the prin- 
ciples of shareholder democ- 
racy. “We wanted to underline 
the importance of this particu- 
lar assembly in the context of 
Italian privatisation, which has 
been a corporate governance 
nightmare until now," said Mr 
Paul Dionne, of Milan-based 
PVD Advisories, one of the 
only corporate governance spe- 
cialists in Italy. 

Mr Lorenzo PaHesi, outgoing 
chairman of Ina, was particu- 
larly critical of the way in 
which small shareholders had 
been treated. "I'm sorry that 
the majority, though very 
active in supporting its own 
initiatives, hasn’t given space 
to representatives of small 
shareholders; we'U obviously 
need time if Ina is to Live up to 
the pluralism of the new com- 
pany statutes," be said, at the 
Ina shareholder meeting ear- 
lier this month. In the event, 
the three minority nominees 
were elected from the list pro- 


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Household sasteB*;- ■'? V 



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posed by Imigest, the fund 
management arm of IML indic- 
ating another 'path towards 
, shareholder democracy: the 
growth of investment and pen-* 
sion funds. 

This process is likely to stim- 
ulated by the carrot-and-stick 
approach of the Italian govern- 
ment It is cutting back on 
state pension benefits to avoid 
the collapse of the state sys- 
tem, thus forcing ordinary Ital- 
ians to consider more innova- 
tive methods of retirement 
provision. On the other hand, 
it is contemplating the intro- 
duction of Incentives for the 
establishment of pension 
funds. 

All participants in the sector 
are preparing for the growth of 
this area. For example, IMI, 
Banca Nazionale del Lavoro. 
and the INFS state pension 
institute, are collaborating to 
offer advice on setting up and 
managing funds, while insur- 
ance companies are also ready- 
ing themselves to offer more 
life insurance products. 


Whether this wfll prompt a 
revolution to the management 
of quoted Italian companies 
depends on the freedom given 
to fund management groups, 
many of which are directly 
owned by the same big quoted 
groups, which might resent 
any attempt to rock the boat 

That said, there is already 
some evidence that fund man- 
agers are changing froin.a pas- 
sive to an active role in Italian 
corporate life. Earlier this year, 
for example, a group of funds 
warned Sheraton, the US 
hotels subsidiary of ITT, that 
they would be particularly rig- _ 
ilant about how the US com- 
pany exercised its control of: 
Ciga, the Italian luxury hotels 
group in which the funds' have 
a minority stake. 

However, as Mr Pallesfs 
comments indicate, creeping 
change of this sort may not be 
quick enough for the impatient 
pioneers of Italian shareholder 
democracy. 

Andrew Hill 





The abboy of San Fruttuoso dl Camogli, Genoa, after restoration financed by the Fondazkme defl*lstitutD Bancario SaiTpA^fo 

r 4,0,0 <■ Torino, tn 1990 


for rationalisation in n cate- 
gory. nearly 80-strong, where 
most members operate on a 
provincial scale and where the 
average network has less than 
70 branches. Some have allied 
themselves in holdings, a solu- 
tion adopted by groups of 
savings banks to Emilia Rom- 
agna and Tuscany. Projects for 
other alliances and for mergers 
will lead to further concentra- 
tion among savings banks, a 
category with nearly 30 per 
cent of the banking system's 
deposits. 

"The situation is fluid." said 
Pier Giulio Cottini. general 
manager or ACRI, the Italian 
savings banks’ association. He 
noted that the use of holding 
companies has the advantage 
of giving a voice to the small 
participating banks. “It pro- 


vides a way of maintaining the 
savings banks' local ties," 
explained Mr Cottini. 

Change and fluidity charac- 
terise the savings banks* bank- 
ing operations. Uncertainty is 
a feature of their controlling 
foundations. This was made 
clear at the annual meeting of 
the Italian banking association 
ABI in June. Treasury minister 
Lamberto Dini said that most 
foundations were pursuing 
vague objectives, and had an 
unsatisfactory spread of unco- 
ordinated and non-bomoge- 
neous Interests. 

Mr Dini, whose ministry over- 
sees the foundations while the 
banking activities are' super- 
vised by the Bank of Italy, 
reminded the foundations that 
many need to revise their stat- 
utes. The law foresees that they 


should undertake works of pub- 
lic utility in the areas of educa- 
tion. scientific research, art and 
health. Mr Dini wants feasible 
detailed programmes. The trea- 
sury minister considers that the 
foundations should co-ordinate 
their activities, and even merge. 

He may appoint a commis- 
sioner if he considers that a 
foundation is not being cor- 
rectly administered. The trea- 
sury also has the powers to 
give generai or specific indica- 
tions on how foundations 
should invest. Mr Dini said 
that there must be diversifies- 
tion away from banks, a con- 
trolling public shareholding is 
no longer a requirement. More- 
over, foundations that sell 
their bank shares will not 
incur capital gains tax 

Privatisation is not an issue. 


Indeed the real risk seems to 
be nationalisation. The assets- 
or the savings banks’ founda- 
tions, which Mr Cottini esti- 
mates at L30,000bn, make them 
an attractive target for cash- 
strapped public bodies. 

With this kind of money. 
JP“ er . management, even 
though annual dividend 
Probably a modest 
LBOObn to LSOObn. membership 
o* the boards of the savings 
banks’ foundations' offers 
appetising opportunities for ' 

M present - there is 
no statutory requirement for 
independent audit, nor for the 
publication of annual accounts, 
Mr Dim could give a boost to 

^ Put the boot 
into bad old practices, by open- 
ms U P the foundations to pub- 
lic scrutiny. 


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ST* 


30 


FINANCIAL TIMES THURSDAY NOVEMBER : ^4j 


241994 


COMMODITIES AND AGRICULTURE 


•'tfeaiWv'- 


Coffee prices plunge on 
Brazilian stocks surprise 


By Deborah Hargreaves 


Coffee prices tumbled 
yesterday as hedge funds baled 
out of the market leaving the 
January futures contract at the 
London Commodity Exchange 
$265 a tonne lowo: at $2,870 a 
tome. 

Hie sharp M In prices takes 
the market bad: to its level at 
the end of June before the sec- 
ond Brazilian frost sent it over 
$3,000 a tonne. 

Analysts Interpreting techni- 
cal si gnals from price charts 
said the market could rapidly 
slip to $2£2Q a tonne, the next 
support point and after that 
to $2,480 a tonne. If prices 
break through these supports 
they will return to levels in 


place before Brazil's first frost 
damaged coffee trees leading to 
supply fears. 

The downturn was sparked 
off by the news that Brazilian 
coffee stocks were 15m bags 
<80kg each), higher than trad- 
ers expected. But the influen- 
tial hedge hinds have taken a 
very negative view of the cof- 
fee market in recent weeks, 
fuelling the price decline. 

Roasting companies, which 

have seen purchases fall in the 
shqps, have their needs well 
covered and are not rushing to 
buy as the market drops. 

“There is a significant battle 
between producers and con- 
sumers over which way prices 
go,” said Mr Lawrence Eagles, 
analyst at GNI, the London 


brokers. “The market is awash 
with coffee now. but it will be 
tight again next year.” 

• Prices on the London Metal 
Exchange finished lower but 
trading was not particularly 
hectic, writes Kenneth Good- 
ing. Traders said copper led 
the way down and pulled other 
metals with. it. 

Mr Angus MacMillan, 
research manager at Billiton 
Metals, said the metal markets 
were overdue for a more sub- 
stantial downward "correc- 
tion'' but it was too early to 
say whether the fails seen this 
week were the start of this pro- 
cess. Prices could Call substan- 
tially before the year-end if the 
investment funds decided to 
lock-in their profits, he said. 


CAP sweeteners proposed for 






By Lionet Barber in Brussels 


The European Commission 
yesterday proposed short-term 
action to redress the unbalance 
in agricultural trade between 
the European Union and the 
former socialist countries of 
central and eastern Europe. 

The proposals are intended 
as sweeteners to the central 
Europeans ahead of the diffi- 


cult debate on reform of the 
common agricultural policy. 
Without further CAP reform, 
Poland, the Czech republic and 
Hungary, the front-runners, 
have little chance of realising 
their goal of EU membership 
by the turn of the century. 

The commission plans to 
adapt the EU association agree- 
ments with the central Euro- 
peans to take account of the 


Gatt Uruguay Round, which 
will substantially cut the vol- 
ume of subsidised food exports. 

The proposals - which must 
be approved by ministers from 
the member states - rnrirafe- 

• Reduction of all customs 
duties by SO per cent where 
preferential access to the EU 
market has been provided by 
tariff quotas. 

• Acceleration of concessions 


already granted in the associa- 
tion agreements, so they. can-, 
begin in Jtily 1, 1895. _ 

•' An. increase in tariff quotas 
by 10 per cent per year forffye 


_ More flexibility for the cen- 
tral Europeans to take advan- 
tage of tariff quotas. This 
would mean . regrouping indi- 
vidual tariff quotas for a par- 
ticular sector into one global 


quota:: „ ,?;• • l - 

■ The -commission ;■ >also 

prondsfeg fo 

ments with the assodaied EO 
members ^-Poland, flat-Gradr 
republic, Hungary, Soy&Sa, 
Bulgaria and Romania -■on 
sanitary and plant health inat- ' 
ters. The aim is to presort a 
recurrence of the-row.oiyer 
selective -import controls, on 1 







t -■ 

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Moscow sugar futures start next week 


The Moscow Commodities 
Exchange plans to start trad- 
ing rouble-denominated white 
sugar futures cm November 28. 
officials at the exchange said 
yesterday, reports Reuters 
from Moscow. 

Trading will be for standard 
one-tonne contracts with Janu- 


ary the first delivery month. 

Mr Vladimir Totsky of the 
exchange’s futures department 
said he expected both Russian 
and foreign traders to partid- 
pate. “We already have 
E.D. & F. Man [and interna- 
tional trade house] among the 
participants. Sucden will also 


be present at our first trading 
session,” he said. Russian par- 
ticipants were Russky Sakhar, 
the Eastern European Com- 
pany and ProtGmpex. 

Officials said trading would 
be based on the electronic 
board system, and not open 
outcry as planned initially. 


Indonesia mobilises for fight against deforestation 

Manuela Saragosa reports on initiatives aimed at saving the world’s second biggest forested area 


I n iTairmanten , the Indone- 
sian part of Borneo, seem- 
ingly endless forests cover 
the landscape, creating the 
impression of an infinite 
resource. It is difficult to pic- 
ture this vast, rugged, sparsely 
populated region stripped of 
most of its trees. 

Yet the World Bank warns 
that harvests from Ind onesia ’s 
tropical forests, the world's 
largest after Brazil’s, are run- 
ning about 50 per cent higher 
than the estimated sustainable 
cut 

Indonesia's minister of for- 
estry, Mr Djamaludin Suryoha- 
dikusomo, has set in motion a 
plan to deal with the problems 
of deforestation, the first Indo- 
nesian minister to take such 
action. 

In September he introduced 
a restructuring of government 
regulations on forestry man- 
agement, promising to crack 
down on logging companies 
that fail to manage their con- 
cessions responsibly. The regu- 
lations are aimed at loggers 
who cut trees outside their 
concession areas, illegally con- 
vert logged forest land to agri- 


culture or fail to replant 

Mr Djamaludin admitted 
there were only 113m hectares 
of natural forest cover left in 
Indonesia, as opposed to earlier 
rlaima of 141m ha. 

The minister announced that 
as the current 20-year logging 
concessions expired forest 
areas would be converted into 
a new type of management 
unit; operating on a long-term 
b a si s and having an average 
size of 100,000 ha. Tf someone 
is managing a forest area, as 
opposed to just having a 
licence to sell the stock in a 
concession area, then there is a 
far greater incentive to protect 
it.” commented a Jakarta- 
based forestry consultant 

The current duration of con- 
cessions does not encourage 
replanting of trees that will 
take about 70 years to mature. 

Supporters of the new sys- 
tem argue that it will encour- 
age loggers to make invento- 
ries of tree stocks, providing 
the data needed to maintain a 
constant growing stock and 
facilitating sustainable devel- 
opment of the resource. 

Not everyone is convinced. 


however. It could take 25 years 
to implement the system and 
at current rates of deforesta- 
tion, Indonesia's forests do not 
have that much time left. It 
would be far more effective, 
argue some consultants, to cre- 
ate an independent policing 
system to ensure government 
regulations were observed. 

The Institute of Eco-label- 
ling, set up by Indonesia's for- 
mer minister of environment 
Mr tftmil Sntim, mil Id tgltB on 
this task. But progress has 
been thwarted by arguments 
between pressure groups, con- 
sultants and officials, who can- 
not agree on how the institute 
should be managed or what its 
purpose should be. 

The idea initially was to 
label forest products from a 
sus tainab le forest resource as 
“environmentally sound”, with 
manufacturers subscribing to 
the system voluntarily. The 
problem is that most Indone- 
sian timber products are 
exported to Taiwan, Japan and 
Korea, where environmental 
concerns have low priority. 

This has convinced some 
that eco-labelling needs to be 


compulsory- An independent 
inspection team publishing its 
reports would ensure public 
accountability and a degree of 
transparency in the forestry 
sector that has not existed to 
date. 

The punishment of offenders 
would be left to the Ministry of 
Forestry. 

There is no doubt that Mr 
Dj am alu din's team has powers 
to deal with offending loggers. 
Recently, the ministry took 
over 49 per cent of the shares 
in two concessions supplying 
timber giant PT Barito Pacific 
Timber, as punishment for 
irresponsible forest manage- 
ment It was an unprecedented 
move that tackled one of the 
most powerful forces in the for- 
estry sector and was designed 
to send warning signals to 
other concession holders. 


T he question is whether 
Mr Djamaludin hns the 
political clout to deal 
effectively with illegal and irre- 
sponsible logging. Indonesia's 
forestry sector is politically 
powerful and Mr Djamaludin’ s 
crackdown on offenders has 


been irregular and arbitrary as 
a result 

The forest products sector is 
run almost single-handedly by 
timber merchant Mr Bob 
Hasan, who is close to the pres- 
idential family. There are five 
different forestry associations, 
all headed by Mr Hasan. 

The most significant, 
Apkindo, the association of 
plywood producers, is often 
regarded as a major culprit in 
accelerated deforestation. It 
operates as a cartel, setting 
prices for plywood below inter- 
national levels, ensuring that 
Indonesian manufacturers 
keep the lion's share of the 
world market. Indonesia 
earned $45bn in exports of for- 
est-based products last year, of 
which 75 per cent was from 
plywood. 

The association decides who 
gets an export licence, where a 
manufacturer will export to 
and at what price. 

Apkindo's political clout has 
been sufficient to ensure that 
concessions to manufacturers 
are cheap. Royalties on logs 
average about $22 a cubic 
metre, compared with between 


$80 to $80 in other parts of the 
world. “This creates a cavalier 
attitude towards the resource,” 
said a forestry consultant 

In an effort to slow down the 
rate of deforestation, Mr Dja- 
maludin announced that 
total annual allowable cut 
would be lowered to 22m cu m 
from 33m. It is a bold move, 
but does not address another 
cause of accelerated deforesta- 
tion in Indonesia - illegal log- 
ging. 

Mr Indro Tjahjono, a co-or- 
dinator at Skephi, an Indone- 
sian pressure group working 
for forest preservation, says 40 
to 60 per cent of all logging is 
illegal. Other estimates put the 
demand for illegal logs at 
around 60m cu m a year. 

The scale of illegal logging 
underlines the urgent need for 
effective policing. Ms Emmy 
Hafild, of the enviro nmen tal 
pressure group Walfai, points 
out that some 50 per cent (tf 
the Ministry of Forestry's 
employees work in Jakarta. 
“They’re in the wrong place,” 
she says. “They should be out 
in the field guarding the for- 
est” 


Indian coal tender 


* . I* ; ' ’ ‘ ;■ 

^ . 

SrVJV - 


result worrying for 
steel 




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?=$ 


By Gerard McOoskey 


Steel producers have been; 
given a sharp reminder of the 
pra te of the coking coal market 
with the results of a tender by 
the Steel Authority of India. 
Not only has it been under- 
subscribed - there simply is 
not enough coal available - 
but prices are up to $10.50 
hi gher than the current level 
of the Japanese steel mills' 
contracts of $45.45 a tonne. 
Lab. Australia and Canada. 

The tender result comes just 
as coking coal suppliers are 
gathering to Tokyo at the start , 
of negotiations of prices for. 
deliveries in 1995-96. Although 
the steel mills have offered 
roll-over prices, the debate will 
be over not whether there will 
be a price rise but the extent of 
that rise. 

The Indian tender saw just 
l.5m tonnes offered against a 
request for 2m for 1996 supply, 
A further 450,000 .tonnes was 
tod but breached the stringent 
World Bank conditions for 
q ualify ing bidders. The result 
has put the mill in an m i f ra me 
quandary. Not only are the . 
prices high - the lowest Aus- 
tralian bad is $7.50 higher than 
the Japanese price - but the . 
option to offer more tannage to 
exchange for coal producers 
bring flwnhie »n p rice levels is 
not available this yean there' 
simply is no coal available. 

Steel producers in both Asia 


and Europe' are bracing then* 
selves for higher price lerals-- 
parttaUariy mEurope : where 
Lo.b. prices, are between $2^$0 
(For Australlan suppMes>:aad 
$6 (for Canadian supplies) 
lower than for similar, coals 
sold in Japan ' . ‘ * 

As the Indian tender demon- 
strates, the anxieties are not . 
limited to prices; supplies are 
extremely short- While this has 
caused great inconvenience fa 
1994. with steel production 
recovering from. the. dump of 
the previous two years, to 1995, 
when even HgW output 
is expected, the shortage could 
become critical - Although 
some slight -expansion at out- 
put is possible- in Queensland 
and Canada.it isitfaffligjbt that 
this will riot -compensate -for 
. reductions in. US avaflatohty. : _ 
If these ' were not problems 
enough, there has been a major ; 
deraffment of a coal train, to 
Quecnslai^'halttog'the flow of 
whuwr i -add w*hig coal to the 
coal ported ctf Hay- Point and: 

. Dafrymple Bay. 

Although the line is expected 
to be folly operational .within a 
' week; this disruption will be 
felt immediately. Coming hard 
on the heels of two derailments 
of the South Africa coal export 
line to Richards Bay and of 
severe flooding of the pits to 
Colomhia’sGuajira region, the 
Queensland mishap has 
reinforced the: view that the 
1994 coal market is jinxed 




fits 1 * 


COMMODITIES PRICES 


BASE METALS 


LONDON METAL EXCHANGE 

(Prtoea tam Amalgamated Metal Tracing] 


Precious Metals continued 

■ GOLD COMEX (100 Troy oc.; S/troy tgj 


GRAINS AND OIL SEEDS 

■ WHEAT LCE (E per tome) 


SOFTS 

■ COCOA LCE (E/tame) 


MEAT AND LIVESTOCK 

■ UVE CATTLE CME (4Q.OOCBM; centaflbs) 


SMI OBT** 

price c ftn fla Mgk low 


VoL 


Salt Day* 


W 


Sect ttav’a Saw 

price ctmge Hp 1 m M M 



Corah 

3 mOni 

tow 

384 jG 

+■15 

- 

- 49511 27.643 

Hav 

10650 

+0.75 


30 

DK 

976 

-1 

978 

970 16.550 

S40 

DM 


Dk 

3847 

+08 

3855 

3845 

Jm 

106.00 

-050 10650 106.00 

142 

62 

Mir 

991 

-2 

994 

989 52202 

1.650 

Feb 

Chrae 

1902-3 

1967-8 

Jon 

33&2 

+05 

- 

- 43,450 14554 

rnm 

10755 

-050 108.45 10850 

1574 

122 

to) 

995 

-1 

1000 

994 16528 

627 

AW 

FVovtoufl 

1087-8 

1892-3 

Fob 

3884 

+0.6 

3804 

388.1 13535 1588 

War 

11050 

-045 11070 11050 

1,820 

104 

M 

1005 

+1 

1007 

1005 6528 

29 

JH 

hfigMow 

1960 

1970/1930 

Hr 

3802 

+05 

3813 

352.0 16,347 1382 

M 

111J0 

-050 11220 11220 

1590 

1 

Sap 

1012 

-2 

1018 

1012 12567 

340 

AHfl 

AM OfllcH 

1960-1 

1955-65 

Jon 

3985 

+05 

3985 

395.7 11,139 3,140 

tep 

0420 

-020 9430 9450 

129 

a 

Dk 

1026 

-4 

1832 

1026 10.171 

106 

Oct 

Narfa doao 


1958-7 

TU* 




170581 52533 

Tow 



0188 

383 

Total 




112298 3,775 

Total 


Sell ObT» Open . 

price ctaaga M# law HI 
60250 -1,175 09275 66.100 22202 6,797 
08275 -0950 89.175 67.325 27,235 4000 


Open H. 251,847 

Total daily turnover 61467 

■ ALUMNUM ALLOY (S per tamo) 


PLATB4UM NYlffiX (50 Troy or; $/troy at) 


■ WHEAT C8T f5JKWtw min; centaAXHb bushel) 


COCOA CSCE {ID tonnes; Montes) 


64775 -0200 65450 BU50 6,793 

62050 -0825 63025 62750 2JD3S 

63.700 -0200 64275 6X500 809 

7B2« 13,153 
LIVE HOGS CME (400006*; canta/fce) 


419 

13! 

23 


1870-80 

1885-75 


1856-60 


Close 
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AM Official 
Keito cloao 

Open H. 2238 

Total daily turnover 138 
■ LEAPS per tome) 


1800-05 

1900-06 

190671880 

1885-00 

1890-6 


Apr 


Oct 


TOM 


4124 

+15 

4140 

4115 15.043 

1503 

DK 

384/2 

-2/4 

388* 

362/4 

18581 

7501 

Dk 

1282 

-a 

1308 

1278 

1,112 

149 

Dk 

4185 

+1.4 

418.0 

4185 8512 

278 

Mr 

378/2 

-2/4 

381/4 

378/4 

33.909 

10,748 

mm 

1318 

-24 

1347 

1305 44586 2588 

Feb 

4208 

+1.1 

- 

- 1584 

113 

nag 

388/2 

++0/4 

388* 

364/4 

5,«5 

1572 

M*T 

1340 

-25 

1370 

1333 

9,422 

280 

Apr 

4248 

+05 

- 

- 559 

50 

M 

337* 

+0* 

339/4 

336/4 

11,112 

3567 

JM 

1362 

-26 

1386 

1359 

3574 

22 

Job 

C78 

+05 

- 

12 

- 


343* 

-1/2 

345* 

343* 

492 

78 


1388 

-28 

1390 

1385 

1579 

1 

AW 




^580 

1,745 

Dk 

354/4 

*W 

356* 

353/4 

187 

38 

DK 

1416 

-28 

1414 

1414 

5,132 

- 

Oct 

UMI NYMEX (100 Tiny orc; S/lroy atj 

TOW 





07527 23506 

TaW 





71533 3587 

ToW 


667.5-60 
871 .M2 


880-1 


Ckwe 
Pravtous 
Hgh/kw 
AM OfflcW 
Kerb ckwe 

Open W. 42,873 

Total defy tumovar 8,779 
■ WCKELtf per tonne) 


6850-6.0 

680-00 


B7&5-9.0 


Cl ose 
Pmvtoua 
Htfi/low 
Ml Official 
Kerb ckwe 
Open M. 

Total dsBy fcmowr 11,170 
■ UNffi partomal 


7676-86 

7850-80 

7580 

7588-80 


7700-06 

7775-80 

772877850 

7710-15 

77205 


Close 813040 6220-25 

Previous 6216-20 6305-10 

MgMow 62308180 

AM Official 6120-30 8210-20 

KariSctose 6180-200 

Open inL 21,311 

Total deBy turnover 5,786 

ffi XWC. apodal high grade (S par tonne) 


dose 

1143-4 

11705-15 

Prataua 

116&J-06 

1192-3 

Fflgh/km 

1135571135 

117571158 

AM Official 

1135.5^0 

1162-2.5 

Kort) close 


1174-S 

Open InL 

111X585 


Total daBy tumovar 

26586 


■ COPPER, grade A (S per tame) 


dose 

2802-4 

2780-2 

Previous 

2835-7 

2811-e 

FBgMaw 

2778/2775 

2788*753 

AM OfflcW 

2776-7 

3787-8 

Kerb clow 


2779-80 

Open bit 

234,790 


TaW dtfy tanonr 

82589 



■ LIVE AM OfflcW 09 rats: 1.5740 
LME Closing OS rate: 1.5707 


Spot 15720 3 ratal 5721 8sd)ai5709 amBKl5B9G 


■ HIGH ORAOE COPPBl (COMEX) 



b n-i 

Om 



does 

ctaaw ffllfc tow 

tat 

Ual 

Mn 

129.75 

-335 13220 129.70 

510 

189 

Dk 

13QJ9 

-1J0 13245 129.78 21.393 

29W 

Jrai 

128.55 

-050 12850 12800 

1,002 

188 

M 

1Z7J5 

-075 1Z7.00 1Z7JH 

7® 

11 

Mr 

126.15 

-a«J 12730 12S60 19891 

7^87 

Apr 

124.45 

-040 12550 12450 

877 

28 

TMbri 



5*132 11,195 


PRECIOUS METALS 

m LONDON BULLION MARKET 
(Prices suppled by N M Rottechad) 


Gold (Trey at) S price £ qcmy. 

Ckwe 38400-386^0 

Opening 38130084.70 

Morning fix 38450 244.111 

Afternoon fee 384.70 2444S7 

Day's Ugh 38540-3^.70 

Day's Low 384.10-38440 

Previous dose 384.10^843) 

Loco Ldn Mean QoW Lending Bates (Vs U5S 
1 month 456 6 months 5>15 


Dk 

1B&08 

+085 

10880 

15480 1,787 

473 

■Bar 

158A5 

+4L3S 

15780 16000 6,063 

634 

Jun 

157.46 

+0.35 

15880 

15880 577 

7 


15820 

+080 

- 

96 

- 

TOW 




7,523 

1,114 

■ SLVER COMEX (1QO Troy 

cm; Cents/tray at) 

■ov 

■ 5145 

+67 

- 

1 

2 

DK 

5147 

+05 

5200 

5148 39591 

17,038 

Jk 

516.8 

+0-3 

- 

89 

- 

Mr 

523.1 

+08 

3288 

5210 54228 TO850 

■toy 

529.1 

+08 

5348 

5305 5887 

192 

JM 

53S4 

+08 

5310 

5345 0^74 

1 554 

TOW 




1*7808 33889 

ENERGY 





■ CRUDE OIL NYMEX (42^)00 US goto. S/bam*} 


Utott 

Vafw 


0P« 



Prico 

dium# 

■W 

Law tat 

*0* 

Jm 

18.03 

+021 

1007 

17.70107.173 38,418 

Ml 

1403 

♦621 

18.04 

17.72 52.173 

18,430 

■ar 

18JJ2 

+020 

1002 

17.78 31^33 

6058 

Apr 

moo 

+0.18 

1880 

17.79 18575 

35<8 

■toy 

18.00 

+0.14 

1785 

1751 15887 

1.779 

Jk 

17-96 

+0.16 

1788 

1750 26,733 

A321 

Total 




372.753 95898 

■ CRUDE CMMPE (S/brarreQ 




LAM 

oar* 


Offlto 



prioo 

donga 

Ugh 

law tat 

1M 

JK 

17.12 

+082 

17.15 

1092 90682 27.713 

Mi 

18.9B 

+0.10 

1782 

1600 35.168 

9538 

Uar 

1684 

+0.14 

1684 

1658 18,154 

2597 

««r 

1669 

+087 

16.71 

1659 B862 

995 

■toy 

16.70 

+0.18 

1070 

1652 4,169 

270 

Jk 

I&7Q 

+081 

16.70 

1652 4597 

3.170 

1UN 




18838 46JE8 

■ HEATING OIL NVMEX (42400 US aMS^ C*S (WsJ 


LKnt 

Oafa 





prtot 

danK 

Hum 

Law W 

W 

Dk 

50.10 

+095 

5080 

49.15 23513 14.692 

JM 

50J0 

+095 

5090 

4075 46500 

9515 

FM 

5125 

+088 

5180 

5030 36095 

3A42 

HOT 

5180 

+073 

5183 

5075 14065 

2002 

Apr 

5020 

+053 

5025 

50.15 9.472 

914 

■toy 

4980 

+048 

4885 

4900 5.115 

180 

TOW 




151,799 32010 

■ GAS CO. PE (S/ionre) 




S W 

Oar* 


ODK 



PrtC* 

Carnap 

Hgb 

Law tat 

W 

DK 

15180 

+025 

15280 

14075 34.101 

7,488 

JK 

T54J5 

+250 15460 151-25 24,653 

5571 

M) 

155J5 

+Z25 

15025 

15300 14568 

4485 

Mr 

15623 

+223 

15050 

15350 9528 

1584 

Apr 

15175 

+225 15125 15100 3SZ1 

151 

■toy 

15400 

+280 

to 

- 939 

- 

TaW 




9BJ38 10987 

■ NATURAL QAS NYHEX PILDOO imBOu S/HmStiL) 


latest 

Oaf* 


OpH 



Orica 

donga 

m 

law tat 

M 

Dk 

1830 +0.169 

1.630 

1520 1052 

- 

Jm 

1880 +0006 

1S10 

1570 33506 11525 

FOB 

1875 +001Z 

1895 

tJSB4 16,S5fl 

2542 

mr 

1845 +0010 

1855 

1535 14411 

2.003 

Apr 

1.790 

- 

1802 

1790 7.469 

610 

Hoy 

1.788 

-0001 

1810 

1790 7532 

403 


■ MAIZE C8T gCOO Ui mfci; cHe756fc bushel) 

Dec 211/B -312 2154) 21 QM 70234 33224 

Mar 22212 -312 2238 22074 B75S7 34.107 

May 22974 -3/0 232/4 2230 32*88 8251 

M 23319 -3 10 237 A) 232/6 42£21 10271 

Sap 238/4 -2* 241/4 2366) 3*9 300 

OK 243/4 - -2 19 240/0 2436) 21,825 1,481 

TOM 261/461 SENSES 

■ BARLEY LCE (E per tonnej 


■ COCOA qOCO) (SDRVtonna) 


31 £50 -ai50 31873 31JOO 12840 X4Z7 

34300 -also 34.600 34200 11.776 Z3M 

3SJ75 -0.175 35575 3&3H (SJftfi 

41 mO -a 125 413)75 40850 3524 

41550 -0025 41550 40050 081 

38.850 +0550 38560 38525 649 

3W« 8,118 
■ PORK BELLES CME (40j0CWa^ canta/tt^ 


902 

578 

166 

140 



lta« 22 
Daft — 


.999.44 


Pm. day 
100428 


Fab 


■ COFFEE LCE (SAonne) 


DO* 

uaio 

+1.90 

- 

- 

- 

- 

Jk 

103.10 

+0.10 

- 

- 

473 

- 

liar 

10SL2S 

-0.K 


. 

139 


■■ay 

107.40 

- 

- 

- 

44 

- 

Sop 

9350 

•050 

9350 

9350 

20 

10 

tow 

TaW 

103-10 

+8.10 

10100 

10100 

86 

7*2 

25 


■ SOYABEANS CBT ROOOte irtn; cwfflft tesbd) J 


JK 

565/2 

-0/4 

587/4 

559/4 51022 

17001 

Mar 

574* 

-0/2 

576* 

568/2 29.624 

3,114 

■toy 

582/4 

- 

584* 

577* 15327 

1.372 

M 

587/4 

-0* 

589* 

58274 23,414 

1.943 

Ano 

58912 

-on 

590/4 

586* 1010 

185 

Sap 

588* 

■3* 

592* 

587* 1058 

10 

TOW 




13&955 84587 

■ SOYABEAN OH. CBT (BQ,00Ob$: conteAb) 


tow 

2880 

-243 

3065 

2835 

178 

58 

Jan 

2873 

-262 

3100 

2870 

9094 1451 

Mar 

2853 

-264 

3070 

2850 

9070 

2062 

“*T 

2833 

-257 

3050 

WPS 

3090 

796 

JH 

2825 

-250 

3035 

2820 

1063 

238 

S«n 

2780 

-273 

2990 

2890 

2082 

60 

TaW 





27,124 7,415 

■ COFFEE XT CSCE (375000m; cants/lbs) 


Dk 

158.40 

-1.95 

15900 

154.40 

616 

276 

Mar 

18355 

-100 

165.00 

15800 

17.487 7,443 

■w 

16655 

-2.45 

16800 

moo 

1145 

903 

JM 

16700 

-305 

16800 

16405 

2058 

302 

ton 

16350 

-250 

17000 

16500 

1050 

66 

DK 

16950 

-2J0 

17200 

16600 

846 

5 

ToW 





28.741 8018 


Fob 

Total 


35l850 -0.775 36.150 35300 
35525 -0.725 38550 35500 
36350 -0.775 37575 38500 
37500 -0.700 38.700 37500 
36.700 -0500 37500 38700 
42500 +0500 42500 


7502 1544 
1577 293 

449 73 

384 83 

09 14 

1 1 
18113 2509 


CROSSWORD 


No.8,619 Set by ADAMANT 


LONDON TRADED OPTIONS 

Strike price $ tonne —Cobs— — Puts — 
■ ALUMINIUM 


1 COFF6E QCQ) (US oents/pound) 


ton 22 
Corap. <UV 


15 day swage 


15955 

.17151 


tom day 

157.05 

17252 


Dk 

28.14 

•0.07 

2802 

27.75 28.484 

15,190 

Jan 

2704 

♦002 

2701 

2800 28344 

7082 

Mar 

26.19 

♦002 


2505 

21048 

3,786 

May 

2501 

-001 

»35 

zsoo 

15342 

9B3 

JH 

24.71 

+008 

24-75 

2450 

9.481 

2,125 

a*b 

3405 

+005 

24.40 

3434 

2.080 

376 

ToW 




114072 31,798 

w SOYABEAN MEAL CBT MOO tans S/1 on! 


DK 

1590 

+05 

1600 

159.1 

23.185 

9,750 

Jan 

1610 

+00 

1G20 

ieas 

26.185 

6095 

Mar 

165.1 

+0.4 

1653 

1630 21029 

3,847 


169.1 

+02 

1695 

1670 

11382 

2,145 

Jot 

17X5 

-0.1 

1740 

1713 

10590 

U93 

A>g 

1750 

-0.4 

1750 

1740 

2342 

332 

ToW 




103015 24,114 

■ POTATOES LCE CE/tonne) 




Star 

271.5 +1GGl5 


. 

. 

. 

Apr 

2ns 

-10 

2750 

2720 

1.189 

92 


287.5 

-10 

- 

- 

1 

. 

Jm 

250.0 

- 

- 

• 

. 

_ 

ToW 





1,190 

92 

■ FREIGHT (BJFFEX) LCE [510/Index point) 


Nov 

1891 

+1 

1889 

1896 

240 

5 

DK 

1908 

+10 

1915 

1900 

354 

39 

JM 

1811 

- 

1821 

1805 

1,105 

65 

Apr 

1719 

-9 

1721 

1720 

1.050 

13 

Jol 

14S7 

-1 

1510 

1505 

145 

1 

Oct 

1618 

-22 

- 

. 

17 

1 

Tom 

Ctan 

Pm 



2324 

124 

BR 

1864 

1679 






■ NoT PREMIUM RAW SUGAR LCE (cents/ttB) 


Jan 

13.00 

. 

- 

. 

. 

Mv 

14.70 

-0.10 

- 


90 

■toy 

14.79 

-a os 


. 

KQ 

Jot 

14.54 

_ 

. 

- 

450 

ToW 





1000 

■ WWTE SUGAR LCE (SAomO) 


tew 

403.30 

-110 

40000 

399.70 

11,144 1.185 

■toy 

39700 

-200 

401.00 

394.70 

40IB 357 

Aog 

388.10 

-1.70 

39250 

38400 

1209 528 

Oct 

358J0 

-3.10 

36000 

35600 

1572 80 

Dk 

35600 

-3.10 39900 

35900 

IOO 1 

Mar 

35600 

-300 

- 


199 

ToW 





20090 2,131 

■ SUGAR *1T CSCE flia.OOOtoe: oerta/lbs) 

tear 

14.49 

■0.10 

1454 

1408100,92321554 

May 

14.50 

■014 

1456 

1400 

3208310038 

M 

14.25 

■OOl 

1400 

14.16 19010 3081 

Oct 

1352 

-Oil 

1354 

1143 

17058 1007 

tew 

1104 

003 

1307 

1207 

5044 2550 

“ar 

1207 

-009 

1200 

1202 

631 558 

ToW 




177, 1D4 41073 

M COTTON NYCE f5O0OOtt»s; centariba} 

Dk 

7305 

+007 

7450 

7170 

1104 6038 

aw 

78.78 

+0.98 

7803 

7035 29077 8067 

■toy 

7703 

+087 

7705 

7750 

8005 899 

Jte 

7803 

+008 

7805 

7705 

5054 429 

Oct 

7108 

+008 

- 

- 

675 18 

Me 

7055 

+055 

7055 

7000 

3,402 106 

TOW 





5805718058 


(99-7%) LME 

Fob 

May 

Fob 

May 

1900 — 

128 

150 

68 

110 

irai 

101 

177 

81 

136 

2000 

79 

106 

118 

163 

■ COPPER 





(Grade A) LME 

Feb 

Mny 

Fob 

May 

2750 _ 

127 

132 

90 

184 

2800 .. 

102 

110 

114 

194 

2660 

81 

82 

143 

227 

M COFFEE LCE 

Jan 

Mar 

Jan 

Mo- 

3300 

33 

89 

460 

546 

3350 _ 

28 

91 

505 

588 

3400 

23 

81 

550 

628 

■ COCOA LCE 

Dae 

Mar 

Dac 

Mr 

950 .„ 

69 

84 

28 

38 

875 . 

54 

70 

38 

60 

1QH0 . . 

42 

58 

61 

63 

M BRENT CRUDE IPE 

Jan 

Apr 

Jon 

Apr 

1600 

113 

122 

5 

53 

1650 

71 

94 

22 

75 

1700 

42 

71 

37 

102 


LONDON SPOT MARKETS 


■ OHANGE .MCE NYCE (TS.OOOibC conta/lbc} 


Total 


1335SB 19550 


■ IMUEADS) GASOLSE 

HWBWJWUSwmfltSW 


2 morths 

Smonths 

Sfcrar Rx 
S pot 

3 months 
6 months 
1 year 
Gold Calm 
Krugenand 
Maple Leaf 
New Sovereign 


-5.10 12 months . 


..552 


-5.17 


UW Days 

grin dunga JSgh Urn 


op* 

U 


W 


fVtroy gz- 

US cm aquiv. 

Ok 

BS.9B 

-0.J0 

5505 

5400 17067 14722 

32800 

51700 

Jm 

5400 

+O0B 

55.10 

9105 25087 

7.616 

33320 

52455 

M 

6800 

+068 

wan 

5400 11061 

2,141 

338.40 

632.45 

Hr 

55.40 

+056 

EL70 

5400 0333 

554 

35120 

55100 

Apr 

an m 

♦Off 

5860 

57.10 6051 

413 

S price 

£ ogulv. 

May 

57.15 

- 

- 

- 2081 

262 

388-389 

245-246 

TaW 




73077 26017 

38505-397.70 








90-93 

57-60 








Cotton 


Uvwpoot- Ns spot or shipment sales were 
recorded ter die weak ended 18 November 
against 424 tonnes In the previous weak. Activ- 
ity was severely raatrafaiod and tutneas was 
on nanow kies. Cost of raw cotton deterred 
users tram Increasing their purchases. 


JH 

10705 

+170 

10900 

104.60 

14.460 4.735 

tear 

1110S 

+805 

112.40 

10900 

60B1 

420 

**■)/ 

11405 

+090 

moo 

11150 

1097 

29 

JM 

11700 

+1.15 11725 

115.45 

1031 

4 

Sep 

12060 

+105 

12000 

11925 

1,715 

77 

tow 

11905 

+1.70 

11050 

11900 

1J317 

20 

ToW 





27024 VH5 


VOLUME DATA 

Interest and VoLrng ffai.i shown ter 
COMEX, NYMEX. CBT. 
NYCE, Cme, CSCE and IPE Crude OB are one 
day In aneare. 


INDICES 


P®«iaw3i»ioo) 


New 23 Now 22 month ego year ago 

21285 2123.3 20905 

■ CUB Futures Base: 1867=100} 

Nov 22 No* 21 month ago wear mo 

231.15 231.50 232-25° 


■ CRUDE OIL FOB (perbarrei/Jan) 

♦or- 

Dubai 

Sl5.87-5.B4i: 

+008 

Brent Btanrt (dated) 

SI Q.86-6.80 

-008 

Brent Bland (Jon) 

Sl7.01-7.03 

+0.02 

W.T.l. (1pm esq 

SI fl. 00-8. 022 

+0^5 

■ CD. PRODUCTS NWEprornpt dGAway OF ftanna) 

Prendum Gosoine 

SI 74- 176 

-1 

Gas 01 

St 52-1 54 

-1.5 

Heavy Rial 09 

SI 03-104 

-40 

Naphtha 

SI 78-182 


Jet fuel 

S171-174 

+1.5 

Otaaol 

$158-160 

+1 

Astatoum Aigua, Tot London *7lj 339 3732 


■ onsR 



Gold (per trey 02)$ 

S385.00 

+0.70 

SOw (par troy oz)* 

517.5c 

+2.0 

PtaUnun (per tray o=J 

S410.3S 

+115 

Pniladiun (per tray oz.) 

S155.00 

+0.40 

Capper (US prod ] 

1380c 

-3 

Lead (US prod) 

40.75c 


Tin (Kuala Lumpw) 

IS.OBr 

-008 

Tin (New York) 

291 A: 


Cattle (Dve mtojhOf 

It 6.61 p 

+OJ52- 

Sheeo (Evo vreighbt4 

107.1 Op 

+3.03* 

Plga (We wright) 

70u33p 

■04CT 

Lore day sugar (raw) 

£3510 

+90 

Lot. day sugar {wcef 

S4H0 

+80 

Tata & Lyto export 

£337.0 

+5.0 

Barieiy (Eng. feed} 

Unq. 


Main (US Nd8 YeOcm) 

E132.0V 


Wheat (US Dark North) 

cies.o* 


Rubber (Decflf 

68*0p 


Rubber (Janff 

87.75p 


Rubber (KL RSS Nol Juf> 

345hm 

+1.0 

Coconut Oil (Phi)! 

S7l5.0q 

+200 

Palm 04 OiWayjS 

S72O0u 

+320 

CoprejPWjS 

S444.0q 

+80 

Soyabeans (US) 

El 65.0 


Cotton OuSook > A' Index 

78.400 

+020 

WooRopa (64s Super} 

450p 




C pw trana ivAm sewd. p pwcWfcg. c Mria/tL 

r rtnggltAg. m lUqWan cam/kg. y Jan/Mor. v Rtov/Oae. u 
Doc. z Jm. q DscMon y London Phyric s4 g Of Roaor- 
dam. ♦ BiNon marts* doao. ♦ SMap 0Jw wogM pricesL • 
Chrarga on mab O Prices are for prerioua day. t - 147117 
94 Cmcbd Ign lor Wh SI 750-7.92 


ACROSS 

1 Can limo make a detour 
itnmd the arch for the king? 

7 Line taken by a Catholic (3) 

9 The impetus of Venli's work 
(5) 

10 Agreement from all world pol- 
iticians that "friendly state” 
describes Ulster (9) 

11 Shocking painting brought 
back by university graduate 
on time, we hear (9) 

12 Unable to contain his initial 
song (5) 

13 Dealt with, having been 
brought down (7) 

15 See an order for the machin- 
ery (4) 

18 Going to lose one (4) 

20 Out east, cholera's the mate- 
rial for research student (71 

23 Nothing in the trick to dis- 
turb your slumber (5) 

24 Men died, all a-quiver, having 
embraced brief moment of 
low-life (4-5) 

26 12tb December : I go into Ital- 
ian cathedral .(9) 

27 TSWjr* 10 beta* outside 
the Mng^s unit (5) 

28 Invite a couple round for 
some refreshment (3) 

29 Diplomats make second cut to 
reduce the perspective (in 

DOWN 

1 that the other team 
tied (8) 

2 lotoer^)^ * 

3 Cold bkxxled group maninu- 
late the EMU (5) 


4 Initial undertaking ""ft the. 
development were spirited CD 

5 Left after opportunity offered 
by sanctuary (7) 

6 It's said to be waste material 
(9) 

7 Put up a sheet of wood far the ■ 
beast — (6) 

8 — who was firm, yet dith- 
ered with love (6) 

14 Loaf around, time's nothing, 
else scattered inside,, just 
paper (9) 

16 Ringing for information in 
the factory (8j 

17 Fellow oboist who is no km- 
ger bound to work? (JO 

is More sanctimonious to tom 
out the idler CD 

20 Warrant a call (7) 

21 Direct negotiations to get 

__ money in advance (6) \ 

25 up to the reof (6) 

« A few words to pot after the 
car test (5) 

Solution 8,618 

IFImiii 1 ii i i m 1 1 


nnIA S a -H □ o 


§ a S n n 0gDgHQHnBD 

a Q Q 


□aaaa Q I B i a a a ° E g 

i a n a m gogannstai 
□ Q U 
IDS 0DEJE30D 


lg|.9]clgl?g 



> 
jps 







'■ £- •' 





,«a££ u 




r ' 


4 




^ 1 - 
J ~ - 

■i z - r 

15 .3 : “ 


f : . 1 




* 

iwr." '■ -v L - 

■ ! 


- 2"* 

1 : i 
s : ■ 5 - . > 


«r 

i--. - 


Ijty - :■ 


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s. 




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■ *' ■' 1h- " 

» ‘ •- -n,. V 


l 






31 







V.C. 



FINANCIAL TIMES THURSDAY NOVEMBER 24 1994 


A 

LONDON STOCK EXCHANGE 



* 



. 

i***; 

■ 

?*>. 
I/ : . ?rrj iac* 

::iSi 

^SiS 
, %- 

i;: 1 AiihSi 

; 

;; a -5!iatj^y 
* _ 

'••“•t iSrJsj. 

• ••: .iis*. 
••■ roc & 


•• ’ ^ o-. 


• ”-■ 




MARKET REPORT 

Equities stunned by latest Wall Street sell-off 


By Steve Thompson 

The UK stock market posted it< 

£2* JK?* ^ tilis War as th. 

Srt !?«,? M n l VaI1 Street > whicl 
started on Monday, gathered pace 

triggering further sharp ] 0 Vse« 
across world markets. 

*? d °*. a trading sessior 
fraught with anxiety, the FT-SE IOC 
Index closed a further 51 j or L6 pei 
cent lower at 3,027.5. Since the sthn 
«T Uie week the index has fallen 
103-5 points or 3.3 per cent. 

The weakness encompassed the 
second Imers and smaller stocks, 
with the FT-SE Mid 250 Index losing 
56.5 or 1.6 per cent at 3.488.8. The 
market’s negative trend was 
reinforced by a massive derivatives 
operation - believed to be the single 
largest in UK options - carried out 
by NatWest Securities. The house 


bought more than 20,000 puts giving 
the right to sell the Footsie at 2.S00 
in January. 

Dealers commented that the trade 
probably did not represent the view 
that the Footsie would fall to that 
level It was seen as part of an arbi- 
trage possibly enabling the house to 
go short on the Footsie and buy into 
an overseas market, possibly the 
Nikkei or the Dow. However, it still 
represented a gloomy view of Lon- 
don's prospects. 

The extent of Wall Street's weak- 
ness on Tuesday evening shocked 
analysts. The 91-point drop in the 
Dow Average came in the wake of a 
46-point slide on Monday, leaving 
tbe Dow with a fall of above 3.6 per 
cent on the week to date. 

And there was more bad news for 
international markets, including 
London, when the Dow slid more 


than 30 points shortly after the US 
market opened yesterday. 

Marketmakers in London were in 
no mood to absorb stock at tbe start 
of trading, and dropped their open- 
ing prices to head off any Luge- 
scale selling. The Footsie opened 
around 40 points lower a M staged a 
brief rally to the 3.042 mark. How- 
ever. support quickly crumbled and 
the index was soon back on the 
downward path as traders picked 
up the scent of another retreat by 
Wall Street. 

At its worst the FT-SE 100 was 
down 68.6. and tbe market was alive 
with wild rumours that Wall Street 
was about to stage a fall of 1387 
proportions. “For a while the mar- 
ket got very spooky indeed," said a 
dealer. 

Wall Street's opening, although 
weak, brought a measure of relief to 


the market here, and shares stabi- 
lised and then edged up to close 
well above the day’s lows. 

Trends in international bond mar- 
kets gave a measure of support to 
equities. US Treasury bonds 
responded to tbe success of the lat- 
est auction of five-year bonds, Ger- 
man bunds rose sharply in tbe 
wake of better than expected money 
supply news in Germany, and gilts 
made rapid progress. 

Turnover reached 7iOJBm shares, 
with non-Footsie stocks accounting 
for 55 per cent of the total Cus- 
tomer business was “poor", with 
trading between marketmakers. 
always anxious to avoid carrying 
large lines of stock on their books 
in such volatile conditions, said to 
have been exceptionally heavy. 

There was some comfort for the 
market with news that the strategy 


team at UBS, one of the more bear- 
ish securities houses, has increased 
its mid- 1995 FT-SE 100 target by 200 
points to 3,200 and its end-1995 tar- 
get by the same amount to 3.400, 
after positive revisions to its UK 
economic forecasts. 

TJBS’s Mr Bill Martin has raised 
his forecast of UK growth in GDP 
by ‘A percentage point to 4'/* per 
cent, cut his inflation forecast by 1V« 
percentage points to 3*i per cent 
and, most importantly, cut his end- 
1995 forecast of UK base rates by 2 
percentage points to 8 per cent. 

Dealers are hoping for a period of 
calm in European markets, which 
they expect to trade quietly during 
today's Thanksgiving holiday in the 
US. Wall Street opens for a half day 
on Friday. "We are not looking for 
many fireworks until the Budget on 
Tuesday,” said one. 


FT-SE-A All-Share index 


Equity Shares Traded 



Tumomr by volume (mtoonL Exdudng: 
tatra-marfcet business and ovsraKB turnover 



ISM 


■ Key Indicators 


Indices and ratios 


FT-SE 100 

3027.5 

-51.2 

FT-SE MU 250 

34Q8.8 

-563 

FT-SE-A 350 

1521.2 

-25 £ 

FT-SE-A Afl -Share 

1507.88 

-24.64 

FT-SE-A Aft-Share yield 

4.04 

(3.97) 


FT Ordinary index 23238 

FT-SE-A Non Fins p/e 1880 

FT-SE 100 Put Dec 3024.0 

10 yr QBt yield EL50 

Long g) It/equity yid ratio: Z13 


-458 

(1889) 

-55.0 

(8-58) 

(2-19) 


Best performing sectors 




-O.S 






41.8 



-n.Q 

5 

pharmaceuticals 

-1.0 


Worst performing sectors 

1 Telecommunications -3.1 

2 Tobacco ........ —........-28 

3 Printing, Paper & Pekg -2-7 

4 Merchant Banks -2JB 

5 Diversified Inds -2.5 


Profits up 
but T&L 
slips 

Dealers in Tate & Lyle 
reported a badly handled sell- 
ing order early in the session 
which cast a shadow over the 
group's impressive full-year 
figures. 

A block of around 600,000 
shares was said to have done 
the damage, bringing an early 
retreat in the stock. The shares 
closed 9 lower at 430p. 

A further slide in tbe stock 


was prevented by euphoria at 
an impressive 23 per cent 
increase in full-year profits to 
£273.Stn. which topped the 
most optimistic forecasts and 
persuaded many analysts to 
upgrade profit expectations. 

Credit Lyonnais Laing 
increased its current year fore- 
cast by £25m to £3Um and the 
following year’s figure by 
£35m to £354 m. Reiterating 
their buy stance on the stock 
analysts at the securities house 
said: “We believe the company 
will be able to report 10 per 
cent dividend growth for tbe 
□ext three years while at the 
same time increasing dividend 
cover." 

Mr Carl Short at Strauss 


Turnbull raised his forecast by 
a more modest £5m to £29 0m 
and advised investors to take 
profits as he expects “slower 
earnings growth in the year to 
September 1995”. 

SmithKline bounces 

Pharmaceuticals group 
SmithKline Beecham recov- 
ered strongly as the company 
announced a £920m (S1.45bn) 
disposal. The shares, down 12 
at one stage, ended a net 2 
off at 421p, while the Units, 
which tend to reflect US inter- 
est, finished marginally lower 
at 385p. 

SmithKline is selling its 
global animal health business 


to Pfizer and, although the 
move had been anticipated, it 
was only expected to realise 
only one to 1.5 times annual 
sales. In fact, it went for 2‘A 
times sales and is expected to 
reduce the net debt to around 
$l.7bn. 

Mr Paul Krikler of Goldman 
Sachs applauded the deal, say- 
ing: This clearly demonstrates 
that management has kept to 
its promise to reduce debt 
through disposals. In addition, 
the price looks very good.” 

Courtaulds lower 

Hard-hit chemicals group 
Courtaulds fell 15 to 425p as 
several analysts felt the hoped- 


EQUITY FUTURES AND OPTIONS '.TRADING ■ TRADING VOLUME 


Hit by Wall Street's 
devastating overnight 
performance, stock index 
futures had nowhere to hide 
and retreated rapidly from the 


outset in heavy two-way 
trading, writes Jeffrey Brown. 

At the end of pit trading, the 
FT-SE 100 December contract 
was at 3,025, down 54 for a 


three-day drop of 115 points, ft 
closed at a two-point discount 
to the cash market and more 
than seven points below fair 
value. 

For once the price action 
was fuDy reflected In levels of 
volume, with contract numbers 
jumping to 19,932 - compared 
with 11,220 on Tuesday and 
less than 7,000 on Monday - 
having been above 8,000 in 
the first two hours of trading. 

Activity was at times frantic, 
notably when the US market 
came in at 2.30pm London 
time with further heavy losses. 
But traders said there was little 
panic, citing the relatively 
unadventurous cash market 
discount which seldom 
extended beyond two points 
throughout the session. 

Wall Street continues to 
dictate immediate direction. If 
the December contract falls 
through 3,000, the next 
support level is around 2,980. 
in late screen-based trading It 
hit 3.015. 

The volatility washed over 
Into traded options, where 
volume powered ahead to 
80,982 lots, up from 35,852 on 
Tuesday. FT-SE and Euro 
FT-SE turnover accounted for 
almost 50,000 contracts. 


■ Major Stocks Yesterday 



VOL 

Ctoang 

IW9 


OOto 

prtca 

dunae 

jrf 

MO 

326 

-5 

ASOA Groupt 

7.600 

65 


Abbey Noaonolt 

1.600 

403 

-9 

Mberi Hatar 

1400 

41 

-h 

Altod Domocnt 

1^00 

575 

-1 

Aroian Wan 

-«w 

403 

-6 


428 

346 

-5 

Ai«a Gkbupt 

4r)0 Wtanimf 

Astoa. BriL Foadsf 

Z.60G 

4M0 

206 

2£B*3 

266*2 

555 

*2 

-10*2 

-7 

Assoc. BrtL ftorts 

7» 

263 

*2 

BAAf 

3600 

402 

-10*] 

BAT tod-Lt 

5.100 

441 

-12 

BET 

1400 

104 

-1*2 

BCC 

079 

320 

-18 

BOCt 

1-500 

690 

-18 

BPf 

11.000 

410*1 

-2*2 

BPe*«a. 

E70 

303 

-A 

BTt 

M.0OG 

369 

-ia 


12JOOO 

284 

-12 

Bank at Scoriandt 

1.700 

203 

-6 


5.000 

560 

-4 

Bosst 

1^00 

527 

-1 

Blue Orekt 

&A00 

283 

-11 

Booker 

23 

414 

-a 

Boats! 

3J00 

502 


BoMterf 

3Jk» 

447 

S3 

BrtL Aaoepaost 

Oo 

4S4 

t6 

BrtWiAlnwqnt 

2JS00 

374 

-*;/ 

BtiUdlGas! 

GnttariUnJ 

0500 

295 

-2*2 

BTT 

378 

■6 

BntHh Steetf 

6JM 

132 

-1 


LOCO 

181 

-4*2 

Burmidi Caonort 

1.100 

3 

-fl 


. 2*00 

-1 

Cable 4 Wkwf 

7.000 

-IS 

Cadbury SctHreppatit 

3AU 

434 

-a 

Cmadorrt 


260 

-6 

Carlton Commit 

mV. I 

674 

-17 


mil fl 

203 

-2 


2.100 

519 

-7 


2.100 

242 

-6 

Courtsuldst 

2.100 

425 

-15 

mb-t 

54 

366 

420 

SBO 

-21 


2B1 

164*2 

-4 

Esslem BeO-t 

2«0 

B to 

-3 

Easi Midland Ban. 

616 

761 

-12 

EtoctTOGompa 

321 

462 

-8 


1JM 

352 

-10 

EfHsrprtsa Off 

539 

373 

-4 

Eurohroel llnao 

416 

247 

-5 

fW 

982 

163 

-2 


2.700 

123 

JS 

fttiOton & Col LT. 
FarWT 

1500 

1.700 

i3i 

225 

-0*2 

-7 

Gen Acrtdenrt 
Genera) Boa. f 

346 

6200 

S43 

2751a 

-«*3 

G'twrf 

■ 1 ■ 

614 

-7 


■ESN 

32* 

-8 

Granade! 

4.000 

516 


OromiMoLt 

4200 

394 

-9 

oust 

1.100 

556 

-7 

GHEf 

1.900 

163 

-7 

cam! 

663 

£06 

-16 


WSOO 

458*2 

-f'2 

hsbc rr5p shsit 

3000 

706*2 

-161* 

Haranmon 

750 

331 


Hnmont 

iojoq 

229 

-31* 

Kmrtsow Grosfloto 

KMO 

749 

-13 

EZtown 

737 

953 

2B6 

171 

-3 

-1 


1-500 

315 

-12 

ICtt 

3,700 

746 

-IS 


1.900 


-4 

jDlweonfctatiswv 

SO 

557 

-fl 

Un^tahert 

1.400 

464 

-9 

Kvrih Sava 

210 

557 

-3 

LadBrakef 

ziaoo 

1 66 

-6 


1,100 

5K 

-6 


384 

702 

-ao 

LflBal A GorrwBlt 

841 

422 

-7 

Ute AbMy 

UoydsBanht 

1,100 

3,100 

325 

S73 

-a 

-3 

LASMO 

795 

146 

-3 

London Beet. 

972 

©0 

-12 

Lonrtio 

8. 500 

*55*7 

-1*2 


1,500 

501 

-1 

ue>ct 

2i8W 

385 

-5 

MR 

2.500 

139 

-2*2 

Mom»* 

1TB 

781 

-12 

Marts LSpancorf 
Mtdtonds Boa. 

*0X1 

247 

«H 

767 

-fl 

-5 

Momson (wrn.1 

2JOO 

136 

-3 

NFC 

lJM 

171 

-1 

NanwostHonkt 

4.700 

501 

-fl 

ItoJionol PiM«t 

WOO 

498 


Nan 

2.600 

2S2 

-1 

Norm Wsat Wnurt 

371 

632 

-fl 

Northern Bed. 

*8 

79* 

-10 

rtorThnm Fwvbt 

1.800 

203 

-1 

Now*, 

22 

793 

-7 

PlWBOnf 

1.200 

600 

-9 

P&CJt 

1.400 

613 

-11 

POJnatan 

3200 

100 

-J 

PDwwGant 

973 

548 

-9 

-6 

BMCt 

303 

975 

-11 

HIZt 

3.500 

620 

-16 

Ftecal 

3.100 

2171* 

-10*2 

RankO!D.t 

ReddtJ & Cetovmt 

2,800 

2900 

40B 

561 

-9 

Rerftndt 

750 

484 

-10 

Flood liui.-f 

1.400 

7B2 

~ifl 

Bailout 

Rsutemt 

935 

4800 

237 

487 

-1 

-13 

Fto3a Roycot 

0.700 

178 

-8 

By) BV Sccrimrrt 

3000 

IBM 

442 b 
29* 

-9*2 

-6 

Sotostuyt. 

2.100 

406 

-S 

ScWOderaT 


1403 


Scontan a Ne».t 

645 

KM 

-4 

Scot. Hy«*r>-BecL 

307 

323 

-4 

ScotlGn Pmart 

2-000 

355 

-a 

Snorat 

6.400 

IBS'* 

-3 

SodBUdi 

*21 

147 



2200 

4)1 

-6 


712 

651 

-10 

She# Trareecxlt 

4.100 

661 

-11 

Stonet 

2600 

554 

-16 

Skmnn Eros 

2.900 

219 

■fl 

Smith fW.HJ 

3CD 

462 

-a 

Smut, & Neftiviurt 

2Jtt> 

147 


SmW Eirascromil 

2^00 

421 

-2 

SmM Boortram lAs-t 

1^00 

385 

-T 

amttvi tods. 

340 

451 


Southern BecLT 

B60 

796 

-13 

South Wales EtoCL 

602 

79* 

-8 

South Wesl waer 

71 

466 

-10 

South WesL BecL 

362 

763 

-16 

SouOwm Wernr 

771 

580 


Standvd ChrvnlT 

2700 

271 

-9 

SttWBUTO 


218 

-1 


1.400 

317 

-10 


529 

215 

-1 


402 

364 

-a 

TSBf 

4. BOO 

219*2 

**2 


1200 

125 

-2 


5.201) 

430 

-B 


169 

123 

-3 


1100 

239** 

fl 

Thames WNert 

2-300 

481 

-7 

Thorr EMIf 

#44 

973 


ToraUnf 

4.400 

222 

-1 

Tirttlgar House 


80 

-1*2 









UnbM) Brsartat 

i^?ao 

318 

-3 






10.MXJ 

195*2 



1.300 

£51 

-04 

«Wfcome+ 

4.100 


-11 

Wstoi Wafa 




TMssex Winer 









1.900 

345 

-8 




-A 








-J 

YwSjhve EtoeL 




YoAitiEa water 




Zenscof 





Based on Baaing vetume » sntaawn m«tw 
sacuHwdaan mrouaft tr*. S£flO system 
yesMKtav uni 4.30pm. Trados m on* mMon or 
mam nc iwnuwJ <**■«. t Mew** an FT-5E 
iWndwewmmni 


■ FT-SE 100 INDEX FUTURES (UFFE) £25 per fut index po to 


(APT) 



Open 

Sett price 

Change 

Wgh 

Low 

EsL vol 

Open lm. 

Doc 

3045.0 

3024.0 

-SS.0 

3048.0 

3005.0 

20871 

57330 

Mar 

3045.0 

3039.0 

-55.0 

3050.0 

3034.0 

974 

7635 

Jun 


3060.0 

-58.0 



0 

145 


■ FT-SE MP aSQ MD6X FUTURES (UFFE) £10 perfufl Index point 

Dac 3500.0 3486-0 -64.0 3500.0 3600.0 175 3310 

Mar 35378 3622.5 -65.5 3S37.0 3537.0 275 2329 

■ FT-SE MP 260 INDEX RJTURES |OMUQ CIO per fufl Indent point 

Dec 35008 .... o 

M opart htqn ut figure* ora tor pnmoui day. t Enacr Mfcme atom. 


■ FT-SE 100 VJPEX OPTION flJFFE) {*30219 £10 per ftS lnda» point 

2860 2900 2960 3000 3000 3100 3190 3900 

CPCPCPCPCPCPCPCP 
Dec f®*2 14 MSfeafeltft 3S 79 52h 51h 78hi 31 108*2 IB TJfl 10 W 
Jan 219 34 1B2 'j <7^ MB 1 ? 82 1181a 82 U 104 65 134 44h 186 3 Hj2»»2 

Fob 232 42^ 197«Z 55»2 Iffilj 71 133l 2 91 1* 104 113 82«2 141*2 81 172h 46l» 209»a 

Ur MP; 88 212. 78 181 9S*a IS! IlS^lIZh 141 1 OT* IBS 79*2 IMh 82 234 
Jurf MBh 93 188 13212 137>j1B4>z 98 244 

Cafe 10.968 Ml 34JB47 

■ EURO STYLE FT-S6 100 «PEX OFI1PN (UFF9 £10 par Mlndax print 

wt» 2875 29SS 2075 3025 3075 3125 3175 

Dec 209 11 166*2 18 1202 28 92 43 53>a * B1>2 25 125*2 14 164*2 

Jan 228*2 23*2 1802 34*2 151 148 122 65>a 91 87 7D*z M3 SI *j 143*2 38 177*2 

Fab 3*7*2 31>a 175^58*2 117 97*2 78 152*2 

Mar 2S7*2 47 *j 188 7B*i 129*2115*2 83 187*2 

Junf 297 70 231*8 101 174*2140*2 1Z7 189*2 

Ob 1,360 Pia 74a * Underlying Hat Mka. Preratam ttoMi am band on rotuarass pitas. 

t ung *UM ea*r umlhc 

■ BJBO STYLE FT -SE WP 260 INDEX OPTION (Q*4LX) CIO per tufi Index petal 


3400 3450 3600 38G0 3800 

Dec 9* 38*2 85*i 60 43*2 87*2 

cab 0 Put* 0 astern* prlen and wtawt ®» *• i* AJOfnt. 


3850 3700 


3760 


FT - SE Actuaries - Share Indices 



Day's 

Now 33 chgew Nov 32 Nov 31 Nov 18 

Year 

fl&o 

Dtv. 

yield% 

Earn. 

yMd% 

P/E Xct aai. 
ratio ytd 

Total 

Return 


30273 

-1.7 307R7 3131.0 3131.0 

3087 2. 

4^4 

7.25 

16.30 11653 

1150.73 


3488.8 

-1.fi 354SJ 3560 J5 3575.6 

3430.7 

3.61 

5.90 

20.44 122PT 

130781 


3403.9 

-IS 3546.0 357TL5 357R3 

342B.B 

3.76 

8^8 

19.05 127J5 

1307.10 


15313 

-1.6 1548.7 1665i 1570.0 

15305 

4.09 

6.94 

1789 57^5 

1193.00 


1782.75 

-1.1 1782.19 1788.16 179ai6 1736tiB 

3J6 

5.06 

2485 52.08 

1373.77 


1733.83 

-1^1 175050 1754.83 1756.71 1712.88 

3.56 

582 

22.76 53.96 

1355.49 

FT-SE-A ALL -SHARE 

1507.68 

—1.8 1532J2 1550.01 1554^2 1515^1 

4.04 

681 

17.49 5591 

1192.52 

■ FT-SE Actuaries All-Share 

Day’s 

Yaar 

Dhi. 

Earn 

P/E Xd edt 

Total 


Nov 23 chflo% Nov ZZ Nov 21 Nov 18 

“9° 

yfafcrtti 

yteWW 

ratio ytd 

Rotten 


10 MINERAL. EXTRACTlONtia* 
12 Buractiv* tadusWeeW 
15 00. WooraMOCT 
18 Ofl ExotaraMon & ProdtU) _ 


2B33£0 

3753.48 

2599415 

1846.38 

-1.3 2887.10 2708.10 271 1 .78 2408.10 
-24) 3829.04 3870.62 3882.69 3183.70 
-1.1 282757 2673.72 2878.70 2376^0 
-13 187388 187892 187856 1897.00 

3.58 

3.42 

3.74 

24B 

5.19 

5.47 

5.78 

X 

24.34 

22.62 

2154 

i. 

89.83 

88.62 

96.44 

38.03 

1083.19 

1035.74 

1073.30 

106828 

1840.08 

-2.0 1B7Q.86 1B97j49 1899^7 1879.70 

420 

5J4 

22.64 

7a99 

94 284 

101^85 

-1.3 103351 1041.03 1041 JX 1129.00 

3.89 

5ti0 

23.95 

3657 

804.10 

182097 

-1^ 1855.02 1B80.08 1879.B3 1903^0 

4.09 

5.36 

23.59 

70.57 

86517 

2233.10 

-24) 2277.84 2303.78 2319.82 £081.70 

4.21 

4.71 

26.48 

SaB7 

995.38 

1732.77 

-i5 1777.06 180554 1802.02 1048.40 

5459 

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22.62 

82.92 

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1830.18 

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413 

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17.39 

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1797,70 

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-1.1 1573.09 157520 1572.06 1805^0 

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888.7B 


20 GBi aiANUFACTUBBWpS7) 

21 BuBtfng & Ce«**nKBonf33) 

22 Biridng Mads & Mancha(32) 

23 CKamlaato(23l 

24 Wvererttod lnduswab<18) 

25 Bectronlc & Beet Equip(34) 

26 EnglnoBrtnflffi) 

27 Engineering, W4cfae(12} 

28 Printing. Paper & PckgG6) 

29 TexUtea X AppwdCQl 


30 CONSUMER G 0008*871 

31 Bfwwrias(*7) 

32 Spans, Wine# S CfcteraflOJ 

33 Food ManufactunjrsCO; 

34 Household GoodsJ13) 

36 Health Care£1) 

37 Pharmacewtlcatefi8) 

38 Tot»cco(1) 


2724.53 -1-2 S75&3Q 2781.002765^4 2701M 

2194.96 -4L5 220664 2221 .01 2228.69 2022.40 

2754.93 -1.0 27&L43 2604.77 2833.14 2628.60 

2253.50 -1.1 2273.00 231 1A2 2 3 ZS .92 2284.20 

2316.01 -1.B 2353.70 237054 2375-35 2586.20 

1571.32 -OB 1583.93 1560.80 1587.21 1BEEL60 
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41 DiaofiiutorspO!) 

42 Lafsura & HoWte(25) 

43 Me<fta(39) 

44 Rettfem. Food(1B) 

45 Rotaiere. Ganeral(45> 

48 Stfipporl Sorvico3<41) 

49 Traftspoitfie) 

61 Other S nrvim- * a«*rMasf7L 

60 unutiESW 

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3.73 

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71 Bantam® 

73 lnsufanea(17) 

74 LKa Aaaurancetb) 

75 Merchant Banks® 

77 Other Ffnanctol&dl 
79 Pmoeriy(4j}_ 


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an MVESIMBff THUSia iafl. 
89 FT-SE-A ALL-SHARES**! 

■ Hourly movements 

Open 

FT-SE 100 
FT-SE MW 3W 
FT-SE-A 350 


2681.05 


1507 SB 


-1.7 2174.63 2211.82 223439 2248.90 

433 

9.16 

12.66 

90.84 

851.11 

-1.7 2870.54 2942.81 2980.53 280830 

438 

1006 

1138 11639 

84852 

-2.1 123031 1245.16 125331 140530 

5.64 

1013 

1135 

61.95 

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-1.8 2359.68 239033 240330 2577.60 

531 

804 

1516 127.82 

897.06 

-23 2856.12 285832 £879.94 299330 

3.74 

1032 

1132 

97.76 

842.73 

-13 1876.93 1984 33 189133 1693.10 

3.76 

853 

14.02 

67.63 

994 00 

-13 141834 141842 T430.73 1699.30 

436 

4.63 

27.08 

46.97 

804.73 

-3.0 273816 2762.97 276832 2661 .90 

9Vt 

2.00 

50.49 

59.44 

90364 

-1.6 1532.32 155031 155432 151531 

4.04 

6.81 

17.49 

55.91 

1192.52 


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30353 
3501 3 

1525.5 

10X10 

11.00 

1230 

1330 

14.00 

1800 

16.10 

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30300 

35003 

15233 

3033.8 

34987 

15247 

80213 

3483.9 

1519.4 

3017.7 

34888 

15174 

30153 

34885 

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3488.7 
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30201 

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3042.0 

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18083 

18085 

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2845.4 

28559 

2855 2 

2857.7 

29063 

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965.7 965.1 


FT-SE Aduatos Hlcw Ssitifc*. which tw«rs aj mgr rt deemmic mi paper 

a**- 0-1/ EfMorOt Strew. Lwooo^ECZA *OL. 

Qrtted. One 30l4ha**.“2^TMa*lB lmn> lOtt the FT-SE IM 250. FT-SE Actum** 360 md the FT-SE Amorist InduMiy 

KTFf^ar MW eaen a** aenwias and aw faoHy w Aouetos wjk a mnaati m a gum mtoa. 

w* BMC anilha RaacMlimse Lmtellto FT-Sfi MaarH Snore 

Ttoaw*^ cmrpow. t *>** ** r 


***- 




for turnaround bad yet to 
arrive. Rising raw material 
costs ensured that interim 
profits were down to £8lm 
from £96m previously. UBS 
maintained its bearish view 
and bottom of the range full- 
year forecast of £150m, while 
Klemwott Benson reduced its 
estimate by £lOm to £155m. 
arguing that it was too soon to 
be an aggressive buyer. 

More enthusiasm emanated 
from Hoare Govett, which 
responded to news that Court- 
aulds is to raise its own prices 
from January and invest £30m 
in a plant for Tencel, the com- 
pany's new fibre. Mr Martin 
Evans of Hoare confirmed his 
top of the range estimate of 
1 170m, saying: “The bull points 
far outweigh the well worn 
negative issues." 

British Aerospace moved 
ahead against the market, 
although there was some con- 
fusion caused by the adjust- 
ment for the group's two-part 
rights Issue. 

Tbe shares closed at 434p. 
with the group collecting 
£178m for the first tier of its 
planned rights issue and thus 
- as the market saw things - 
ensuring that BAe can press 
ahead with rationalisation of 
its turbo-prop business. 

The second part of the cash 
call hinges on the group win- 
ning its £560m bid battle with 
6EC for submarine maker 
VSEL GEC dipped 6 to 275p. 

Telecom shares were active, 
with BT. tbe most heavily 
traded Footsie stock, turning 
over 14m shares and proving 
the star performer in the 
traded options market. The 


NEW HIGHS AND 
LOWS FOR 1994 

HCWHUHSHV 

CHLTS (II ELECTRMC 4 ELECT EOUP HI 
Ccrom Tocti. EMQ, VEHICLES (1| Aettm 
Smtore, EXTRACTIVE INOS fl] Vogcto. 
OTHER SERV5 « BUSKS (q Banxn. Grammy. 
WATER p| SUi gntftm 
MEW LOWS (SKQ. 

BANKS 0 ) Rrs tid Rrace 7 pc PI, UautMN, 
Sana. BREWERIES (T) Km. BUUUM A 
CNSTRN (14 BUM MAILS A MOOTS (IQ 
CHEMCALS (SI BTP. Cauatoi. Hctasi M.. 
Mnm, Venshn Owra.. nsrnBUTORS 
(Ml Cmy kAosor Aucnans. Cnanta 

Sony. EW Foci. Canfinor. Haaflurv HMn 
liosv*. Ptny. Vftrey (FQ. CuvERSUttD MDLSl 
(IQ ELECnWC A ELECT EOUP ( 0 ) Bmwrerpa. 
CMLMcra. DRS Daa Rep, Preasae. Sony. 
Taiemetruc ENGOVEBUNQ #5} Barry MAnN. 

Cl toe Btowere, Cooper (ft), Eado, Tita>« Uoyd, 
Wagon Musnel PI. ENO. VEHICLES (T| BSO. 
EXIRACTIVE MBS (14) FOOD IIANUF M 
tern a Hum. AXerr Fahn. Fray IB. 
Haripwood JU. Pscoe'a. HEALTH CARE (G) 
Ajrwrahan Ira. touc Nmmg Stnvs, Bwreca. 
Eyacan Pndx Hamaoaa. HOUSEHOLD 
OOOBS M CenhMl Pnnrer 'A 1 . Cn^non 
Msuraty. EbW. INSURANCE B Aon. FAI. 
M^enoeie Nbco. J& Mnmh A McLennan. 
INVESTMENT TRUSTS | 8 q INVESTMENT 
COMPANIES (7) LEISURE 4 HOTELS (2) Atom 
Aapons, Mmfim Oriental boL UFE 
A 8 SUMMCE tO London 4 ICanefasMr. Habigo. 
MBXA M GoW Grantam TitiB. Gooctrad. 

Hdmas Marcfmo. Mdann hd Mn. Ofl. 
EXPLORATION A PROD (4) Com-ToK Re*. 
Copm Rm. Pin Pattn. Vanguard Pectin-, 

OTHSI FINANCIAL H OTHER SERVS A 
BUSHS (fl Leigh Mennan. 

PHARMACEUTICALS f» Anoom (Wrrg. 

POTNO. PAPBt A PACKS » API. BMiatna, 

BnL Tfaaimn, Bnacn, Fold. Plynu. Sort. Wko 
8pe PI.. PROPHCTY UN nETABJRB. FOOD (Q 
Dotiy Fam Gmo. RETAILERS, QENBIAL (q 
CMon CBdo, Essex Fiannra. Ftao Ail Dantaa.. 

Ganaa Woriatop. Ubwly. UJHn. PwhWqb Fine 

Am. SeiMiys HUa Ho Oaaa A. WE W. 
support seme tin 

TELECOMMUNICATIONS (8 CaMa A WtiMom 

Do. 7M Ow. 2008. TEXTUS A APPAREL M 

AUdra, BaM (Wmi CokKurt tinm, Rgadaa, 
TRANSPORT (7) AMERICANS (11) CANADIANS 

a 

stock ended 10 lower at 389p. 

Cable and Wireless, also a 
heavily traded stock option, 
shed 15 to 37Dp in 7m turnover 
In spite of a buy recommenda- 
tion for its HE Telecom subsid- 
iary from Salomon Brothers. 


Vodafone retreated 8 Vi to 
195 Vi p as the market took stock 
of the bad debt charges in 
Tuesday's results statement. 

Having slipped to wi thin a 
half-penny of its 182p flotation- 
price, TeleWest Communica- 
tions ended all-square at 
ISSHp, with tbe shares again 
heavily traded between London 
and New York. 

Investors said yes to TSB fol- 
lowing encouraging reports on 
mortgage lending margins 
from rival Abbey National on 
Tuesday. The shares stood out 
in tbe Footsie with a rise of a 
half-penny to 219'/:p. High 
Street bank Lloyds, which will 
also be a leading player assum- 
ing the Cheltenham & 
Gloucester Building Society 
deal goes through, eased 3 to 
573p. Abbey National slipped 9 
to 403p, with Credit Lyonnais 
Laing a keen seller. 

Paper group Bowater was 
one of the leading casualties in 
the market as it transpired 
that the company's meeting 
with its broker was less posi- 
tive than previously thought 

The shares fell 23 to 447p. 

News that BTR's chief oper- 
ating officer was stepping 
down (although staying on the 
board) helped depress senti- 
ment at the diversified indus- 
trial group. Bob Faircloth is 
effectively number two to chief 
executive Alan Jackson. The 
shares dipped 12 to 2S4p In 11m 
turnover. 

Harrisons and Crosfleld fell 
8 per cent on a gloomy state- 
ment about dispopsal losses 
with the shares tumbling 13 to 
149p to very heavy trading vol- 
ume for H&C with 12m shares 


c han gin g bands. 

Engineering shares with a 
heavy bias towards the US 
economy came in for stern 
treatment, notably Siebe which 
tumbled 16 to 554p and TI 
Group, down 8 at 364p. Both 
companies get more than 40 
per cent of turnover from 
North America. 

Food retailer Argyll Group 
was one of a handful of stocks 
that bucked the poor market 
trend. The shares advanced 2 
to 26Tp, on an unconfirmed 
report that BZW bad advised 
investors to switch into the 
stock and out of J Sainsbury. 
Others simply attributed the 
rise to catching up after a 
period of underperformance, 
ahead of next week's figures. 
Sainsbury relinquished S to 
406p. 

Reports of a sell note on WH 
Smith Group left the shares 
trailing 8 to 462p, th o u g h Pan- 
more Gordon was said to have 
advised investors to buy the 
stock on weakness. 

Shares in Granada Group 
resisted the market slide to 
close unchanged at 5i6p, 
unchanged on the day, after 
the group reported better than 
anticipated interim figures. 

Fall year profits rose 51 per 
cent to £265m and the dividend 
increased by 14 per cent One 
analyst said, "the profits are of 
course wonderful but the cash 
generation policy Is particu- 
larly impressive." 

MARKET REPORTERS: 

Peter John, Joel fGbazo, 
Jeffrey Brown. 

■ Other statistics. Page 21 


LONDON EQUITIES 


UFFE EQUITY OPTIONS - 






cans 



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16 

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19ft 

- 

- 

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354 

- 

- 

- 

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Jan 

Apr 

JU 

Jan 

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28ft 

38ft 

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6ft 

11 


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500 

12 

24 

31 

17 

28 

27ft 

Danes WH 

460 

31ft 

43ft 

53 

7 

13 

23 

(*481 1 

500 

lift 

22 

32 

25ft 

38 

44 

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Mar 

Jtn 

Dec 

Mu 

Jen 

Atibey Han 

390 

19ft 

30ft : 

55ft 

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17 

23 

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420 

5 

15 

21 

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34 

40 

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6 

6 

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1ft 

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X 

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3 

4 

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550 

37 

52 

99 

4ft 

17 

24 

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600 

8ft 

X 

34 : 

an 

32ft 

50 

Sub Ode 

280 

18ft 

27ft 32ft 

3ft 

9ft 

16ft 

1*293 ) 

son 

7ft 

IBft 

22 

12ft 

16ft : 

36ft 

Brifeli Gas 

280 

17 

a 

32 

2ft 

8 

13ft 

(*394 | 

300 

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14 

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23ft 

taxons 

IX 

10ft 

16ft 

22 

4ft 

9ft 

14ft 

(*1B4 1 

200 

3 

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13 

17 

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X 

Hfcdowi 

160 

13 

17 

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(*170 ) 

180 

2ft 

Oft 

10 

10ft 

14 

19ft 

Lonrtio 

140 

17 : 

20ft 

25 

1 

5 

7ft 

H55) 

160 

4ft 

9ft : 

14ft 

3ft 

13ft 

17 

Nall Power 

460 

X 

SO 

61 

1ft 

11 

IBft 

(*497 ) 

500 

9 : 

28ft 

X 

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27 

X 

Scot Pome* 

330 : 

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96ft 

48 

3 

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360 

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31 

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24ft: 

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220 

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650 

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AW 

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lllitHI 

600 

X 

51 

65 

16 

32 ‘ 

lift 

reis j 

650 

13ft ; 

27ft 42ft 

44 

61 

89 

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700 

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22» 

47 

56 

(*707 ) 

750 

14ft; 

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43 

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460 

23 

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24 29ft 

{*466 1 

500 

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17 

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47 

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Feb 

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tate-Roycs 

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21 24ft 

- 

3 

7 

(176 1 

in 


9 

13 

4 

11 

18 


- Uhdstana ssartrv pr*» Rrentona ahmm ara 
based cn swaemert prices. 

Noverii Me S3:T«<4 contracts: 79.362 Cols: 
EJ.60? Put* 3L670 




Nor % eba Hot *» Saar Gross d* 

22 so day 21 19 S9Q ***» % 


M# Lm 


!(34) 


Mncadq 
Austiatwa (7) 
North AaiMlca ( 11 ) 


1B4&94 

-1.9 

198830 2019.18 207&68 

121 

2367-40 178ZJB 

3235.66 

-(LB 

3263.93 3301 54 295589 

4J4 

3711.07 2304.45 

252129 

-39 

2624^9 2647.41 2302.78 

200 

301009 217186 

1481.15 

-2.0 

1511.76 1544.96 IW.W 

0MB 

rOMJS MflS.1T 


CopimsF*. The FtiwKM Times Ltinud IBM __ , 

figures In brec to* enow number at canpaMee. Baud US Dotore. Base Wtoa: 1000410 31/1 2/9 2. 
Ptwtaeaoor Sold Mm Wk Noe 33: 2318 ; ito/s chans* -M p««* T«f **>1 T 


Leieet puces were unaMdafito for trw Mttfcm. 


RISES AND FALLS YE S T E RDAY 



Rteea 

Fate 

Sam 


80 

0 

10 


_ „ 2 


12 






_ 22 




19 

111 



.. 20 




... __ .. 1 

36 

7 


43 

188 



. 28 



Others — 

_ 17 

80 

20 

Totals 

225 

M«3 

859 


Dots baud an those oom p enlei Med an the London Share Swvtos. 


TRADITIONAL OPTIONS 

Hist Dealings November 21 Expiry februaiy 23 

Lest DeoBngs December 2 Settlement March 9 

Cato: Andrew, Hiignun Power, Senior Big, Signet, Tuflow Ot. Puts; SharaOnk, 
Titiow OL Pub S Cals: Cavetdale. 


LONDON RECENT ISSUES: EQUITIES 


Issue Amt 
pm* paid 

P up 

MkL 

j~*P 

(CmJ 

IBM 

Hpti Low Stock 

Close 

price 

P 

♦/- 

Net 

cflv. 

Dtv. Gra 
cov. ytd 

P/E 

net 

_ 

FJ>. 

1&8 

88 

70 AWiust Latin Am 

84 

-2 

- 

- 

- 

- 

- 

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1.82 

63 

48 Do Warrants 

48 

-2 

ta 

- 

- 

- 

- 

F.P. 

11r4 

190 

180 ftAdaro Pmtg 

189 

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11-0 

100 

FP. 

B&8 

93 

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85*2- 

- 1 I 3 

- 

- 

- 

re. 

_ 

FP. 

5.78 

47 

37 Do. mm 

37 

-2 

- 

- 

re 

re 

- 

FP. 

4B-9 

104 

65 fCatvoa 

87 

-a 

- 

- 

- 

re. 

280 

F.P. 

30-3 

287 

SBO CfticM China 

285 


RN9.80 

22 

4J 

110 

- 

FP. 

485 jO 

495 

48S Hdeity Spec Unts 

485 

-a 

- 

re 

- 

re 

- 

FP. 

84.2 

178 

108 FUrortc CTtfiX 

193 

-a 

RND.76 

2X 

0.6 

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100 

F.P. 

11A 

101 

100 Finsbury 3n+ C 

100 


- 

- 

- 

re 

100 

FP. 

28.6 

102 

98*; For S Cd Emrg C 

98* 

t*4 

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82 

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54 

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2.40 

30 

24 Do Hbrrants 

24 

-1 

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100 

FP. 

303 

102 

98 Hoere GcrveU 1000 

101 


- 

- 

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re 

- 

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29.1 

100 

90 INVESCO Korea C 

97 

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- 

- 

- 

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180 

FP. 

1655 

223 

206 Irish Pamanert 

217 

-3 

uN9j> 

2.9 

S3 

7JB 

215 

F.P. 

603 

332 

229 JJB Spate 

231 

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RN0J) 

2.4 

12 

14,1 

- 

FP. 

403 

483 

475 PrtSfto Inc A/L 

478 

-8 

- 

- 

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120 

FP. 

835 

131 

120 SeaPerfert 

129 

-e 

- 

- 

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V 

IX 

F.P. 

603 

156 

IX Sorvtoar 

150 

-6 

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32 


115 

F.P. 

2208 

126 

117 TLG 

124 

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WNM 

2.0 

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17* 

170 

FP. 

194 

173 

185 Tote-One Cel 

IX 


HN5j44 

22 

4.1 

11.4 

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am 

62 

57 KWiflctanai 

80 


RWf45 

SUV 

2JS 

liS 


RIGHTS OFFERS 


Issue 

price 

P 

Amount 

paid 

up 

Latest 

Renim. 

dole 

1964 

Htgtl Low 

Stock 

Closing 

price 

P 

+OT- 

77 

W 

30/12 

3pm 

2 pm 

Apolo Metals 

2 pm 


310 

NU 

20/12 

41pm 

Item 

Kenwood App( 

19pm 

-5 

295 

Nl 

571 

80pm 

37pm 

Laird 

37pm 


27 

M 

28711 

3*2pm 

2 * 2 pm 

Martin tall 

3pm 


37 

(fl 

371 

Spm 

3pm 

Qmi 

3pm 

-1*2 

85 

Ni 

23712 

15pm 


Pressac 

8pm 

-J 

285 

Nl 

671 

571/pm 

43pm 

Seun Health. 

43pm 

-10 


FINANCIAL 

TIMES EQUITY INDICES 

Nov 23 Nov 22 Nov 21 Nov 18 Nov 17 

Yr ago 

High 

■Low 

Ordinary Stare 

Z323J3 

2389.1 

2399.8 

2407.0 

2406.7 

232&9 

27134) 

224016 

Ord. civ. yield 

4.49 

4.39 

4.33 

4.32 

4.32 

4.01 

4£1 

3.43 

Earn. yld. % hri 

6.81 

6.44 

6.35 

633 

6.33 

4.S2 

&81 

3.82 

P/E ratio ner 

17.45 

17.83 

18.18 

1624 

1823 

2720 

3343 

16.94 

P/E ratio nl 

17 M 

17^5 

17S0 

17.88 

17S5 


30430 

17D3 


-Tor 1994. Ordwry Eh»e tndm Hnca CCrip4e B or«: Mgh 27: a a 2/0 2794; tow 494 SBKfaO 
FT Ordtiwy Store ndm base dam 1/7/35. 


OftOnaiy Share hourly dumgea 

Open BJOO KLOO 11JX) 12J0 134)0 144)0 15JOO IftjQO Hjflh Low 
23352 2338.6 2334.4 2334.8 2321.5 2317^ 2316 3 2322-8 2323^ 23428 2311 A 


Nov 23 Mew 22 Nov 21 Nov 18 Nov 17 Yr ago 


SEAQ bargains 27^43 24^84 24805 25.114 

Equity turnover (tinff - 1331.3 1446.5 1280.6 

Equity bargaJnst - 25.980 27807 28840 

Shams haded pn Of - 8486 £684 5485 

lExdudtog MriMnartart butonie end w w ii bmovw. 


26.210 

14353 

30374 

852.9 


26JJ45 

1380.0 

29893 

4908 


A Prime Site for your 
Commercial Property Advertising 

Advertise your property to approximately 
1 million FT readers in 160 countries. 

• For details: 

Call Emma Mullaly on +44 71 873 3574 
or Fax: +44 71 873 3098 


* 














































































FINANCIAL TIMES THURSDAY NOVEMBER 24 1994 


LONDON SHARE SERVICE 


-Xk *1 


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451 4719 
119 25Z.1 
97h 1022 

37 443 

28 495 

72 855 
2SS 39LZ 
136 W9 

17 2JE 
94 1U 
48 274 

73 MUD 

11 364 

25*2 524 

222 53.1 

22 341 
G4 ISO 
« Z74 

173 T74 

55 448 
268 61.1 
132 164 

333 1064 
265 768 


7«i 748 

58 170 

1B*i 443 

20*i 168 

IO*i ZjOI 

153 140 

84 3574 
S3 117 
62 1267 
72 114 

43 161 

43 145 

141 214 

87 914 
137>i 6ES 
96 04 

115 114 
50 04 

19 34.1 

343 6449 
102 2JB 
46 17.7 

105 749 
34 214 

42 745 

54*1 HI 
238 25.1 


m 


xx 


53 * 


We 




jzx: 


+ * 1994 UU YU 

pucb - Mnh k» cspEm a-s m 

441a] -12 570 37213491 59 114 

55* wu ids - 

418 -7 489 337 6774 19 224 


tor 1994 MU 
- BHi Hm CapEm 

93 58 SJH 

-8 777*. 619*. 16138 

171 1Z7 514 

♦2 *313*2 229 148S 

-10*1 *541*1 «0 MW 

-1 128 103*2 1028 

-*, Cl BA nz 660 
-4*‘ ■486*2 344 3471 

3a 235 159*1 604 
-U. 132 85*2 VtB 

-1 MB 75 214 

-3 178 140 2*0 

-S 458 305 1162 

-S *02% 195 1J097 

— *4 42*1 5*2 427 

n so no 

-3 508 405 1324 

-J, C29U E2**i <784 

_! an 156 822 

-1 161 113 511 

-3 209 125 MU 






*482 2C?>2 rVL3 

155 129*1 41J 

71 39 164 

til 52 567 

478 315*1 KU 

























































































































































































































36 


CURRENCIES AND MONEY 


MARKETS REPORT 


Dollar takes its lead from firmer US treasuries 


The dollar yesterday took its 
lead from the firmer US trea- 
sury m ar k e t, to fmigft higher 
on the day, unites Philip 
Gawith. 

The yield on the benchmark 
30 year bond dropped below 8 
per cent for the first time in 
five weeks, and this set the 
tone for the dollar, rather than 
the continued weakness in 
equity markets. 

The dollar (dosed in London 
at DM1. 5537, from DM1.5536, 
and at Y9&335 from Y98.075. 

Short term interest rate 
futures were also beneficiaries 
of the weaker equity markets, 
with investors assuming that 
tins diminished the need for 
higher interest rates. The 
March 1995 short sterling con- 
tract closed at 93.09, up from 
9JL98- 

The Italian lira stabilised fol- 
lowing losses after it was 
announced that Mr Silvio Ber- 
lusconi, the prime minister, 
would be investigated- in con- 
nection with corruption 
charges. The lira finished at 


LI ,034 against the D-Mark from 
LL033. 

Sterling had a quiet day, 
with the trade weighted index 
finishing at 79.9 from 79.8. 

■ Analysts have likened the 
behaviour of markets this 
week to the 1987 crash, albeit 
on a smaller scale. Mr Nick 
parsons, treasury economist at 
CIBC in London, notes that in 
the two weeks after the 1987 
crash, the bond market rose by 
ten points, while most G7 short 
term rates were cut 

These moves were prompted 
by fears of systemic risk in the 
few king system, and possible 
damage to consumer confi- 
dence and corporate invest- 
ment. 

This time round, though, 
while the fell in equity mar- 

■ Pond b Haw Tor* 


■or 23 

— lamer- 

— Re*, dtas- 

£sptt 

14725 

14895 

1 mft 

14724 

14696 

3aBi 

14724 

1489* 

1 yr 

14692 

14EB2 


kets did not compare with 1987. 
“the thought processes and 
price action have been simi- 
lar,'' said Mr Parsons- Refer- 
ring to the firmer short ster- 
ling prices, he said markets 
regarded falling equity prices 
as an effective monetary tight- 
ening, in the same way that 
declining bond prices earlier in 
the year amounted to a mone- 
tary tightening. 

“The pace of rate rises is 
going to be nothing like the 
pace which the market is cur- 
rently discounting," said Mr 
Parsons. He said It made little 
sense that the UK yield curve 
was steeper than the Italian 
yield curve. 

The spread between March 
and September 95 short ster- 
ling contracts was 105 basis 
points, compared to a 98 basis 
point spread for the equivalent 
eurolira contracts. 

■ Traders said turnover in the 
dollar bad been quite brisk, 
despite markets winding down 
ahead of Thanksgiving day 


Lira 

Against tbs D-Mark (Lire per EM) 
990,"- • - ' 


1,010 


1,030 


Source- FT GrapUHa 


1994 Nov 


today. 

Mr Michael Burke, economist 
at Citibank, said this time 
round the dollar was benefiting 
from its link with the bond 
market. For much of the year, 
weakness In the US bond mar- 
ket has been a factor in drag- 
ging the currency down. 

He said the feet that the dol- 
lar tracked bonds, rather than 
equities, was probably a reflec- 


tion of capital flows; foreign 
Investors have larger holdings 
of bonds than equities in the 
US. 

Mr Burke said the dollar 
appeared to be fairly well sup- 
ported, given the way it had 
reacted to what had been a 
potentially serious blow to sen- 
timent. He cited this as further 
evidence that the dollar was mi 
a recovery path. 

Mr Michael Gallagher, direc- 
tor of IDEA in London, said 
nervous equity markets were 
ambiguous for the dollar. On 
the one hand, foreign divest- 
ment from US equities, and the 
feeling that the next tightening 
of Fed policy would be delayed, 
were negative for the dollar. 

On the other hand, tumbling 
world equity markets could 
prompt US mutual funds to 
repatriate some of their off- 
shore investments. This would 
help the dollar. 

■ Analysts said the stability in 
the lira probably reflected the 
fact that the market is already 


pricing in a lot of bad news, 
including Mr Berlusconi’s pos- 
sible resignation. Mr Gallagher 
said a survey of client* showed 
that m os t felt the lira would 
not slip below Ll.045-50 should 
he resign as prime minister. 

Elsewhere in Europe, the 
focus today shifts to the Bund- 
esbank council meeting. Mr 
Gallagher said a lower than 
expected October M3 money 
supply figure -had renewed 
speculation that the Bundes- 
bank “might give ns an early 
Christmas present (in the form 
of lower interest rates).” 

■ Overnight money traded 
between 2 per cent and 5% per 
cent as the Bank of En gland 
cleared a £60Qm dally shortage 
in UK money markets. 


NW 23 £ S 

turn T7U5B - 171703 100230 - 10U30 
teal Z7CL00 • ZM&m 17000 - T7500D 
tow B OlOBZ • 04705 02909- 02998 

Pdari 37241.1 - 37299.4 2372SO - 237500 
(testa 5057 JO - 506200 322100 - 322400 
UAL 57M5-5J771 30715 - 30735 


Now 23 


Ckumg 

rnld-ooint 

— — 

teuropa 



Austria 

(Set!) 

17.1730 

BefaMTi 

(BFr) 

50.1804 

Danmark 

(DKrJ 

84627 

FHand 

(FM) 

7.4486 

Franco 

(FFt) 

84758 

Qermwiy 

(DM) 

2.4384 

Greece 

(Dri 

375.786 

Ireland 

w 

1J7I1B 

Italy 

w 

2S33-94 

LiMembourg 

(L ft) 

50.1804 

Netherlands 

(R) 

2.7344 

Norway 

(NKr) 

10. 6790 

Portugal 

m 

246783 

Spain 

(Ptaj 

206587 

Sweden 

(SKr) 

114838 

Swftariand 

(SFO 

24675 

UK 

(E) 

- 

Ecu 

- 

1.2824 

SORT 

- 1 

3.334045 

Americas 



Argentina 

(Peso) 

14697 

firazfl 

m 

14283 

Canada 

(CS) 

2.1556 

Monica (Now Peso) 

5X067 

LISA 

(S) 

14701 


Day's MM 
hfah low 


+0006 647 - 
-00061 908 - 
+00078 579 - 
-00047 389 - 
+0001 767 - 
-00008 384 - 

+032 661 - 
-0.0019 111 - 
+087 251 - 
-00051 688 - 
_n norri 333 . 
-0.0065 740- 
+0084 484 - 
+0205 486- 
+00288 831 - 
-0.0035 682 - 


PaoMc/Mddto East/AMca 


AuatraCa 

(AS) 

24656 

Hong Kong 

(HKS) 

12.1404 

Indta 

(Rrt 

484521 

Jdpwi 

m 

154486 

Malaysia 

(MS) 

4.0113 

New Zealand 

(NZS 

24231 

Phiappkiaa 

(Paao) 

37.4841 

Saud Arabia 

(SR) 

66881 

SteBdpere 

(SS 

24010 

8 Africa (ComJ 

<H) 

54538 

S Africa (Ha) 

(R) 

65317 

South Korea 

(Won) 

124844 

Taiwan 

ra 

414670 

ThatoxJ 

(BU 

384368 


-00003 682-702 1-5705 1.5660 
+00144 264 - 302 1.3310 1.3172 


+0.0027 029- 104 54200 54000 
-00006 697-705 15785 1.5607 


-00149 336 • 705 49.4470 485270 
+0349 317 - 474 154490 154.130 
+0002 095-131 4.0259 44089 


One montti 

Three months 

Rffll %PA 

One year 
Rote %PA 

Bank of 
Eng. Mat 

Now 23 


Ctostng 

mtd-pomt 








Europe 



17.1687 

04 

17.1568 

0-4 

- 

- 

116.3 

Auetna 

(Sen) 

109375 

60.1554 

0.6 

50.0704 

0.9 

49.5604 

14 

1174 

Belgmm 

(BFr} 

314600 

94609 

04 

94676 

-04 

9.5546 

0.1 

116.7 

Denmark 

(DKi) 

60905 



_ 

_ 


884 

Finland 

(FM) 

4.7440 

84789 

0.1 

84716 

0.4 

8.3094 

04 

1104 

France 

(FFrJ 

5.3372 

2X383 

04 

2.4345 

04 

2.403 

15 

128.3 

Germany 

W 

1 5537 




. 

- 

- 

- 

Greece 

d» 

239 345 

t411B 

04 

1.0113 

04 

1.013 

- 0.1 

1054 

tr eland 

(K) 

1.5518 

253044 

-34 

254144 

- 2.8 

2581.89 

-2.7 

734 

Italy 

(U 

160740 

60.1554 

04 

5a070* 

04 

494804 

1.2 

117.0 

Luxembourg 

(UFO 

31.9600 

2.7333 

65 

2.7294 

0.7 

24976 

15 

1206 

Netherlands 

F) 

1.7416 

1 a 6787 

ao 

10482 

-4.1 

104811 

0.0 

85.7 

Nonway 

(NKr) 

64015 

2S0413 

-84 

253.683 

-7.9 

- 


- 

Portugal 

(Ea) 

156.450 

203.957 

-2f 

204.612 

- 2.0 

207.497 

-1.9 

85.5 

Spain 

(Pta) 

129465 

114124 

-14 

11.6504 

-1.9 

11.8124 

-14 

76.1 

Sweden 

(SKO 

75842 

2.0643 

1.9 

2457 

20 

2015 

25 

1204 

Switzerland 

(SFO 

15168 



. 

. 

- 

. 

795 

UK 

m 

14701 

14624 

04 

14827 

-41 

14759 

04 

- 

Ecu 


14244 

- 

- 

- 

■ 


• 

- 

SDRf 

Americas 

- 

1.46477 

. 

- 

- 

- 

- 

- 

- 

Argentina 

(Peso) 

09998 

- 

. 

- 

• 

- 

- 

- 

Brazil 

(RO 

0 6460 

2.1559 

- 0.1 

2.1546 

04 

21545 

0.1 

664 

Canada 

(CS) 

1.3729 

. 

- 

- 

- 

- 

- 

- 

Mexico (New Peso) 

3.4435 

147 

ai 

14701 

ao 

14668 

04 

626 

USA ($) 

PacMc/Mdcfle East/Africa 

24679 

-14 

24706 

-04 

20845 

-04 

- 

Austrada 

(AS) 

1.3157 

12.1314 

04 

12.1271 

04 

120B19 

0.5 

- 

Hong Kong 

(HKS) 

7.7323 

. 

. 

. 

- 

- 

. 

- 

Inda 

(Hs) 

31.3888 

153466 

3.3 

152.976 

3.7 

147458 

44 

1909 

Japai 

(V) 

96.3350 

- 

- 

- 

- 

- 

- 

- 

Malayan 

(MS) 

2.5548 

24278 

-24 

2437 

-24 

24568 

-15 

- 

New Zealand 

(NZS) 

14070 


+0008 350 
+0409 550 
+0.0073 890 
-00012 390 
+0.0027 365 
+0 0001 534 
+0496 320 
+0.0022 511 


Day's mid 
Nflh low 


104400 104880 
31.9930 314400 
6.0920 6.0668 
4.7586 4.7240 
5.3378 5.3130 
1 5539 1.5470 
240.660 238 300 
14555 1.5503 


One mcmh Tina months Ona jwr JJ 3 Morgan 
RAe 96 PA RM MPA Rate KPA hdn 


268.095 —124 
14481 02 


WORLD INTEREST RATES_ 


Betgkan 
weak ago 


weak ago 
oamarer 
weak ago 


weak ago 

If 

weak ago 


736 ; ,fe20. 

7& fl&L 



2A .2)4 




I mm am tor ttw U3 < 


rand Tba ttn'M (tty* ndfc*. - - 
88 (MA71F) Plarie kricrDartt ottered nSn 



Open 

Sett price 

Change 

. ■ 

’ Low' 

EaL+m . Opaq ki 

Dec 

9457 

9458 

+004' 

94X0 

9*56 

18509- ■ 

41.131 

Mv 

8448 

04.12 

+0.10 

94.14 

' 9456 

33.125 

42534 

Jun 

9344 

9349 

HOlIO 

- 93.71 

- 93BB8^ 

12046 

32587 

Sap 

9348 

9354 

+011 

9358 ‘ 

9346 

5.825 

27529 


+2.5 

700 - 800 

IGfO.00 1SBEL50 

1G11.45 

-25 

161 &5 

-27 

1654 

-23 

745 

| ■ Tina MONTH fiUROOOUiUttUR^ Sim poirdagfiODM 


r ■ 

+0.0005 

413 - 416 

1.7418 

1.7344 

1.7408 

05 

1.7383 

a7 

1.7218 

1.1 

1055 


Open 

Sett price 

Change- 

- High 

. Low, ;• 

'EsLwoi 

Opan+nt ■ 

-0.0015 

000 - 029 

6.8032 

6.7740 

K POM 

-15 

nrems 

- 1.1 

8.8285 

-OX 

85 5 

Dec 

mm 

9286 

+006 

. 93.83 

9353 


2833; 

+ 0.12 

300 - 600 

158.600 157470 

158.Q25 

-4.4 

160.15 

-4.3 

163.7 

-35 

955 

Mar . 


93X0 

+007 



0 . : 

1454 ", 

♦0.18 

640 - 690 

129.690 129.030 

12959 

- 2.1 

13051 

-20 

132415 

-21 

SOLS 



9284 

+ 0.10 



0 . - 

388 : 

+ 0.0212 

792 - 832 

75900 

75371 

75954 

-15 

7.4187 

-15 

75382 

-21 

815 

Sap 


9246 

+012 



-0 

177- 

-00017 

163 - 173 

1.3173 

1.3097 

15147 

20 

15101 

20 

14861 

23 

106.1 








-0 0006 

697 - 705 

15765 

15697 

1.5702 

-at 

15701 

05 

15669 

04 

«n q 

■ THREE 

MOUTH 1 

EUROMAm 

tWllUHM(LB^g-DM1mpointaoM00% 


-0.0013 

241 - 246 

14296 

14241 

14244 

05 

14348 

-at 

14282 

-03 

- 


Open 

Sett price 

Change' 

Htft 

Low, 

Eat vtt 

Open M. 












Dec 

9454 

945S 

+002 

9455 

9454 

.15434 

130290 

+0 0002 

997 - 996 

0.9998 

0.9995 








Mar 

9472 

9472 

. +004 . 

84.73 

.94.70 

•41294 

182389 

+0.0095 

460 - 470 

0.8470 









Jun 

9457 

94X0 

+058 

9443 - 

5457 .. 

29780 

124612 

-0.0008 

72® - 731 

1.3763 

15726 

15728 

04 

15722 

04 

15784 

-03 

826 ! 

Sap 

9400 * 

9402 

+057 

9453 

9358 .. 

.13881 

83952 

+0 003 

420 ■ 450 

3.4550 

3.4390 

3.4445 

-0.3 

3.4463 

-05 

3X537 

-05 

- 

N THREE 

MONTHS 

EUROURA anJEMN WTUMM LI 000 m points Of 100% 



“ 

“ 

" 

" 

“ 



“ 

964 


Open 

Sett pries 

Change. 


•. low : 

Est VC* 

Open. fed. 

+0.0056 

153 - 161 

15184 

1.3094 

151 64 

-0.7 

15182 

-08 

1531 

-14 

885 

Dec 

8158 

91-12 . 

’ +O.D5 ' 

-81.12 

9153 ' 

: 5751 

31010 

+0.0006 

320 - 325 

7.7325 

7.7319 

7.7302 

05 

7.729 

04 

7.7368 

-ai 


Mar 

80X2 

80X2 

+054 • 

80X2 

gp+ut 

-4108 

34453 

+0.0025 

650 - 725 

315725 315660 

31.4388 

-2.7 

315838 

-2.7 



_ 

Jut 

8953- 

B 2 B 6 • 

+005 

8956 

BQ(tp 

1068 

16263 

+056 

100 - 600 

985600 974500 

on not 

3.4 

87.435 

3.7 

9457 

AO 

151X 

Sep 

8040 

88X4 

+055 

88.44 

8958 . 

G19 

. 21821 


PhHpptaas (Peso) 37.4941 -0-2028 060 - 821 374100 37.4050 - - 

Sautf Arabia (SR) 5.8891 -04024 873-908 54130 54862 

Singapore fSS) 24010 +0.0008 996-024 24085 99fKK - - 

S Africa (CofTL) (R) 5-5538 -04061 512 - 584 54760 54903 - - 

S Africa (Ha) (R) 6.5317 +04S2S 143-490 84506 64998 - - - 

South Korea (Won) 124694 -0.16 864 - 933 125345 124842 • - - 

Taiwan (T$) 414670 -0.1524 378 - 963 41X643 414357 - - - 

Thakmd (BtJ 394368 -04307 111 - 626 394820 394100 - - 

1SOR non far Nov 22. DdMtar apraadi In d» Pound Spar lotto show orfy the bet three doconal pttoaa. Rowan! tttoo aro not dreefly < 

moriitt but we onpfad by aarant rtwaa t mn. Staring Indus by Ora Bank at B sfesL Base niinaun 1995 =■ lOOBkL Offar as! Md 

Ufa aid Bio Ode Spat tattre derived Mm THE W MMHIIBM CLOSING SPOT RATES Some wriuao am rauafad by Bw F.T. 


New Zealand (NZS) 14070 +0.0019 057 -082 1.6082 1.6051 

Phttppmes (Peso) 23.9800 -0.12 300 - 300 24.0500 23.8300 

Said Arabia (SR) 67508 -0.0001 506 - 509 67510 67506 

Singapore (SS) 1.4655 +0.0011 650- 660 14660 1.46+5 

S Africa (Com.) (R) 65373 -0.0025 365 - 380 34405 65360 

S Africa (RnJ (R) 4.1600 +0.036 500 • 700 4.1700 4.1360 

801181 Korea (Won) 795.450 +04 400 - 500 795400 795.000 

Taiwan (IS) 264830 -0067 710 • 950 264300 284710 

ThrilwxJ (Bt) 24.9900 -041 800 - 000 25.0000 244800 


1.4 24473 14 

-0.7 14104 -08 


2-5753 -04 
14194 -04 


-1.1 67813 -1.1 

14 1.4605 1.4 

-54 65849 -44 

-8.1 44325 -74 

-44 80145 -63 

-04 28443 -09 

-1 X 25.1105 -14 


1SOR m, ter Nov 22 . BktfeOsr weeadt in few (Me Spot ette thorn arty B» lew On 
but m »I+Ju d by curat l ew rWae. UK. Mm] 4 ECU am quoted fl US cumncy. . 


67755 -07 
1.444 14 

67498 -&0 
4.47 -74 
82045 -61 


t dtaetiy quoted to dw r 
— n.iwntw IflBQ-IDO 


Open Sett price 
.9641 9641 ■ 

95.73 85.71 

9640 ' 9641 
«na 9643 

t ■ofrm ecu putuh 


> WtAHC PUTURNS pJFFE) STrlm poinle of 10055 
Change _-Hflh - Ixwr tst vd Open W. 
+0.01 ~ 9642 9648 -.1524 18035 

+0101 ‘ 95.74 9670 ' 3824 20336.' 

+043 9643 ' 9639 . 747 5975 

+042 . 9645 9643 ' 90 3053 

B9 (UFFQ Eculm points of10016_ 



- Open 

Saltprioa 

Chmge ' 

" «Bh 

LOW 

Est wo 1 

Open kit 

Dec 

94.12 

94.12 

+003 

94.14 . 

94.10 

846 

7947 

Mar 

93.77 

9350 

+007 

3353 

93.76 

9S2 ’ 

7810 

Jim 

9227 

9351 

+008 

9353 

9357 . 

174 

4095 

Sep 

8277 

8281 

+056 

9283 

9277 

142 

2481 


CROSS RATES AND DERIVATIVES 


EXCHANGE CROSS RATES 


Now 23 


BFr 

DKr 

BFr 

DM 

EE 

L. 

H 

NKr 

Ea 

Pta 

SKr 

SR 

C 

CS 

S 

V 

Ecu 

Daifllum 

(BFi) 

100 

1958 

1070 

4581 

2515 

5028 

3448 

2158 

495.6 

4055 

23.10 

4.119 

1593 

4595 

3.129 

307.5 

2555 

Danmark 

PKi) 

5248 

10 

3783 

2551 

1557 

2B39 

?IKB 

1.1.16 

260.1 

2128 

1212 

2162 

1546 

2564 

1.642 

181.4 

1541 

Franca 

m 

SO 59 

11.41 

10 

2511 

1507 

3011 

3563 

1273 

2965 

2429 

1353 

2467 

1.193 

2572 

1574 

1845 

1530 

Germany 

(PM) 

2057 

3520 

3435 

1 

0X15 

1034 

1.121 

4575 

1020 

83X4 

4.752 

0847 

0X10 

0584 

0644 

8356 

0528 

Ireland 

(B 

4853 

9X58 

Ronn 

2X12 

1 

2496 

2704 

1055 

2485 

2015 

11X6 

2045 

0889 

2132 

1553 

1526 

1568 

Italy 

« 

1589 

0579 

0532 

0.097 

0540 

100 . 

0108 

0X23 

9567 

0086 

0X69 

0082 

0040 

0.085 

0062 

6.116 

0051 

Nethertreida 

(B) 

1855 

3X87 

3565 

0892 

0570 

8228 

1 

3503 

9097 

74X3 

4539 

0756 

0566 

0.788 

0574 

56.44 

0X69 

Norway 

(NKr) 

4753 

8.962 

7.863 

2586 

0548 

2365 

2562 

10 

233.1 

1907 

1058 

1587 

0537 

2520 

1.471 

144.6 

1501 

Portugal 

Ob 

2018 

3845 

flarea 

0581 

0X07 

1014 

1599 

4590 

100 . 

8153 

4560 

0831 

0402 

0.867 

0631 

6204 

0515 

Spate 

(Pte) 

2458 

4699 

4.117 

1.199 

0X87 

1240 

1543 

5543 

1222 

100 . 

5595 

1518 

0X81 

1559 

0.771 

7552 

0.630 

Sweden 

(SKr) 

4350 

8550 

7530 

2104 

0572 

2177 

2359 

9506 

2145 

1755 

10 

1.783 

0863 

1559 

1555 

133.1 

1.106 

Sail— tend 

(B ft) 

2458 

4528 

4554 

1.160 

0X89 

1221 

1523 

5.182 

1203 ' 

9045 

5507 

1 

0484 

1.043 

0780 

74.65 

0620 

UK 

ff) 

50.18 

9562 

6579 

2438 

1.011 

2523 

2734 

10.67 

248.7 

2035 

1159 

2067 

1 

2156 

1570 

1645 

1562 

Canada 

<PQ 

2359 

4X37 

3588 

1.132 

0X69 

1171 

1589 

4551 

115X 

94X3 

5578 

0559 

0464 

1 

0729 

7150 

oses 

US 

fBi 

3156 

3090 

6537 

1554 

0644 

1607 

1.741 

0796 

158.4 

129.6 

7582 

1517 

0837 

1573 

1 

9858 

0817 

Japan 

m 

MB? 

6.197 

5X30 

1581 

0855 

1635 

1.772 

6515 

1615 

1315 

7511 

1540 

0648 

1597 

1.017 

100 

0531 

Ecu 


3014 

7X59 

6.536 

1.802 

0788 

1968 

2133 

8523 

1945 

1507 

0041 

1.612 

0780 

1.881 

1525 

1204 

1 


I uVi i 1 


nWi Kroner, Fraieb Feme. Nonmglan Kronur, and nmrttti Manor per 10 c Belgian firao. Yra. Ea oudo. Lka 1 
IMUIKnini«aS{IMM)OM12S,OOOperOM ' ■ 4A 


Open Latest Change Hfept Low Eat vol Open fed. 
ec 66436 04455 +00030 04487 04488 30413 97.720 Dec 

w 04480 04468 +04026 04474 66460 394 8*75 Mar 

m 66490 66480 +04029 04460 04490 34 . 1434 Jun 


■S yeh nnunn (mm) Yen 125 par Yen 100 


Open Latest Change ttgh Law Est vol Open inL 
1.0195 14221 +04034 1.0230 1.0187 21,779 75417 

14300 14307 +60031 14315 1.0300 1.084 10439 

1.0389 - - 19 836 


&OFHONS 


RWANKPHCWIT 
« 1 'jMPtTmvE segvv.t: 


nunc RmnmB OMM) SPr 125400 par SPr 


■ romowmi— S QkW) 262400 per c 



ImrtnnkSMng 5^-2 4-6 5% - Sh 6 & - 6 fc - 6 % 7h - P a 

S®** 00 ® - 5JJ-5A 5S-5H 8%-6J« 7* - 612 

Treasury HOs - 54 - 5*s 6 |Z - 

***■» - 54-54 53-51* 6^1-8^ 

Local authority daps. 4H - 4)1 6 ‘« - 4JJ 5% - 6 % 8-5* 64 - 64 74 - 74 

Ottoman Mwfcat daps 4* - sij 54-412 

l# Clearing bartt base fencing rata 5* per cant from September 12, 1994 

Up to 1 1-3 3-6 60 9-12 

UHHMii UMtfl months months months 


Carts of Tax dtp. (91004013 1*2 4 3V 3\ 3>2 

Carta of Tat dam under Cl Og pOOB r>gpc. Oapoata uMttmmfercadi lipc. 

Amu. trader rale of decant 342Kpc. ECGD teed rata SSa. Expert Branca. Make up dey Oct 31, 
1894. Ageed rata to parted Nov 26, 1994 to Dec 26 199*. Schemes a A ■ 743pc. Rettrenca ratt far 
parted Oal. IBS* ts Oct 31. IBM, Sctwmea IVLVUefac. Finteica Houm Brae Rett Bpc tram No* 
1, ISM 

■ THHn BBOWTH CTMW Rm—l 8 JFH 3 8500400 poktl. at 100 % 


N a Ww r iiei d a 619872 614338 -040102 -2.43 6.96 

Betokaa 404123 394402 -04195 - 2.17 568 

Germany 144964 141234 -600083 -1.91 5.40 

►eland 6803628 6794442 -6000342 -1.75 543 

R ta i ua 653883 647019 +0.00182 648 249 

Danmark 7X3879 7X9511 +040857 67B 658 

Portugal 192454 195467 +6046 1.16 240 

Spain 15X250 159X73 +6073 349 0.00 

NON ERM fcO*BERS 

Greece 264413 294458 -041 1148 -7.16 

Italy 1793.19 197748 +635 1627 -624 

UK 6786749 6784301 -6001369 -041 171 

Ecu cwora] ran eat by 9a Empara Oearafasten. Cumncne mm M deeoenAig rUatM ( 
Prranuge enragut eater Bk a pcaebm change denotes a mm* craracy. Dteegran- 


far a curaney, rad dw nradmam 1 
Ecu certral race 

(1 7MQ Bering rad totem Ua a 


I percentage dertatton ct Bra curacy 1 , 1 
d tern SBA Arfruetmt cfatttt by tti 



Open 

Sett price 

Change 

Mgh 

Low 

Esl wof 

Open felt. 

DSC 

93.78 

9179 

+0.05 

9352 

9276 

24282 

133955 

Mar 

9353 

9359 

+0.11 

83.11 

9353 

40133 

90386 

Jun 

92X6 

9250 

+011 

Q? R? 

8244 

7648 

55915 

Sap 

B1S7 

9202 

+0.10 

9205 

91.97 

6023 

64688 

Dadad ra APT. AM Open Ural fgs. 

■a tor prailooe day. 





C/8QPTIOte» E314S0 (etnas per pound) 



I 


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PgtGMBBc.Mirinwiiii Cttdi ni.i«i*T|Wn«nB^ 


'crcs.'-snc 3avs Sr:y c~ \'.z -co-\ 7.31 


■ SHORT S1MHLWQ 0PT10H8 (LBFFS) £500400 pafrtta Of 100% 


SHca 

Price 

Dec 

— CALLS - 
Jan 

Feb 

Dec 

— PUTS ~ 
Jon 

Feb 

1525. 

452 

554 

555 

004 

038 

082 

1550 

274 

353 

350 

055 

055 

153 

1575 

1.16 

1.90 

254 

151 

155 

254 

1500 

055 

095 

1.53 

263 

243 

4.00 

1525 

005 

041 

068 

552 

558 

5.79 

1560 

OOI 

014 

044 

7X4 

7.52 

7.79 


Tel: 07! 493 7050 
Fu: 071 4996279 


Ye arrange faus up to 905b Lora m Valoc. PRDPFPTV 
Mo« competiUve rad ncxibfc tenra far _ V ' rC,Rl 1 
rpwlily UKcoraraerctel property 6 FINANCE 
dcvdopnirms upwards uf£ I m. Iik • ■ 

COacKa; RWnnl me GBBca 


Dw toi * deyS wl. (Mb 74*4 Putt 674* . Rev. de/e open ete. Cate 39UH7 Putt 3*9263 






■Bij 

Open 

Latest 

Change 

High 

Low 

Est ml 

Open kit 

Dae 

3290 

9295 

+009 

3298- 

8390 

51531 

380.1M 

Mar 

9233 

9359 

+008 

9241 

8353 

94555 

459577 

Jut 

9273 

3282 

+009 

8284 

8273 

75,196 

315,189 

M US TTtUSURT BILL FUTURES £MM) Sim per 100% 




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Can 071 231 3556 or lax 071 231 0449 now tor dattfs. 


Mam&Oompany — 675 

AfcJUustBartr _5J5 

ABBank 675 

•henry Aretechar..^- 5.75 

BaAafBnda — 575 

Banco Bfiro Vtaoaya- 675 

Bank ol Cyprus— 6.75 

Barit ofliBtmd 5.75 

BaftaUnda _575 

BankofSeoBand 5.75 

BanriaysBenk 5.75 

BrtBkriUWEan.— 5.75 
•Breen SMpbySCa Ltd 5.75 
CL Bank Nederland... 5.75 

OfcaritNA _&75 

CfeJostJate Bank 5.75 

Ilia Cooperative Bank. 575 

CouBs&Co _&7B 

OetBLyomris 5.75 

CyprtB IfepuW Bank „675 


□tmcaiLomte 573 

BraarBerAUriAed— 675 
Rn8riCiri& Gen Bank- 65 
4ritabartFterrtng4Co_5J5 

Gfreba* 675 

•GunMaBlWm 675 
Kabb Bank AQ2kikh. 675 

•Hambraa Baric 675 

H9rMtiB&GenkwBk.575 

•HiSorual S7S 

CLHaae&CD 675 

Kong(«ig& Shanghai. 5.75 
JctoiHodgo Bor*..- 575 
atiupaU A Sara 675 

Lloyds Bar* 675 

MotfmBarfcUl 5,75 

MUand Baric 5.75 

*Uouit Banking 6 

NatWaArinafar -,676 

•ftaBrotiwa 675 


*R«hii9heGuararree 
Oapocnon LbritBd kt no 
tergar autinfaed as 
a banking Inaftilkn. B 
Royal BkafScoOand - 5.75 
•Briffi A VMBman Sacs . 675 

TSB 5l75 

■OntedBkttfKliwatt— 675 
urqr -nut Bank nc- 675 

Western Trial 675 

Vttttsawty Laklaa .... 5J5 
YartoMraBank -675 

• Marrinrari London 
bneabnantBanfcmg 
Assodation 

* kiafriMabation 


Dec 

9437 

94-59 

+007 

9450 

9457 

Mar 

8293 

9452 

+OL10 

9453 

9293 

Jun 

83X6 

9245 

+0.10 

90X8 

9245 


re Open Mnat tige ire far predoia day 
■ ■UROMAWC OPTIOM (UFg OMIm prints of 1009t 


Strike 

Price 

Dec 

Jan 

CALLS - 
Feb 

Mar 

Dec 

Jar 

PUIS 

Feb 

Mar 

8475 

p.12 

059 

012 

014 

052 

012 

015 

017 

9800 

002 

002 

004 

055 

017 

030 

052 

033 

9525 

0 

0 

051 

051 

0X0 

053 

054 

054 


Mi, cm 7814 Putt 9960. Prautaos doyte opra fee, Crttt 2196*1 PM 201362 
1 SMSV HWMC WTIOM QJFFQ 8Fr Itn points o( lOCK 


SHca 

Prfoa 

Dec 

- GALLS - 
Mar 

Jim 

Dec 

9000 

006 

006 

006 

055 

9625 

051 

n m 

0.02 

02S 

9850 

0 

051 

OOI 

0X9 


CM 0 AM 0. PirniiM days opra ke. Qdte 2915 Putt IBIS 



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INDEX i 

m v 
































FINANCIAL TIMES THURSDAY NOVEMBER 24 1994 


*io ' 

■ ifj - 

>vj <io M 

. *Ji] *v. 


EUROPE 

MBnM(N»23/Scti) 


E 1 I 

MZcn 808 
MMi 33S 
StwpD 178 
W IK 1JS5 
vattMa 32S 
wasm sss 
IMMr 408 
WtaBBO 3.780 


-1OZ2Q01 
-1 1 .270 
-5 834 
-45 4.280 : 
-7 I JI3 1 
-B 1.387 
-6 744 

-01.HW 
— 1.050 
-4 408 
-a 2M 
-7 1.180 
-4 4M 
-4 781 

-4 ana 
-30 4-340 : 


SHttATETTOSm 


»u53S 3iw 


1-raET SPBCDLffl® 
1 in FtiTCKgl 


5553^: 




k*t^£ 

SStfEQg 99. 


&1M 


-&&****% 










*** 


*2 




138 
800 
80 46 

705 502 
ISO 100 
247 140 
250 138 
2S8 1BG 
280 188 
712 287 
108 88 
104 S9 
102 
/30 
120 
258 
31 



INDICES 


MW MW 


23 ZZ 


1857.1 1877J 18095 23*®> W 
5SSSSST W8-7 Ml 


rSTiMtartinaM 3B4S7 38354 3B154 «flfl 2/2 

SS/2SST S 1D3157 103358 122228 1/2 

££(1/181) 138405 1381.11 1W.11 U*as 02 

EL»m M 449480 ^ a ’ wflnM 


1887.10 23/11 
00*80 SIS 


JSKM 25/10 
1011-38 6® 


lU* MUS«1975| 
Onvada+PSTO 

Mumvwsa 


M 3778.12 885874 fflWB OTO ®»» *« 

M 405820 407430 «BB» 23JI 305MB 2« 

U 1&7Z46 107805 21*2* M2 186148 


js^pi/iow wi wa « 

S5S, *»*/.«» » 34525 34728 41530 « » •>' 

£3^*12* 

RW 15au4 izn« 120002 »» M 22 «/ 

SSlilMl 1*733 258MB 2/2 «i 25/ 

SSUvtaw igj So JS sSS If aSSa s/j 

g^g^ /,2Ba SS2 207477 210528 2271.11 1M «■ 

SamSEpi/12«? 86144 80437 W7 ' ffl 1Bn * WOT 

B5U, 

g 1 **™, 

5—^ -»««■““ *“ ,a 

SSU™. — — — — " “ ,1 “ 
KBSr SB S5 ss s s “ s 


837.18 ani 

lem.iB an 

122728 25/10 
182142 25/10 

74204 5/10 
211838 5/10 
186089 7/10 

BOUT 22/11 

838044 VS 

J464U0 5/1 

44032 127 

1884.14 1/7 


3wZ3(1B/W9) S 18 5» WJB 31171 13 ® 

BUBi300lWUW2J 2 150202 151223 17023 J 3 * 

asRw a — ——* 

I5eCTO> 4^ 100120 1D251B 104538 im ® _ . 


13® 1788034 VI 

28022 4/1 


1462/ 4/1 
107133 4/1 



if* 


T«4 W>1 54 

+»S S194 1B*4 
175 


ia -S M ia 

a^saii 

'K 3«a«£ 


-htmaii 

S*M 

Mi 


m 


TW 

m 

4J0 

_ 

1.7 

__ 

12 

. , 

SLO 

_ 

1.7 

__ 

12 


03 

— 



11 

__ 

73 


13 



04 



33 


33 

__ 

43 


13 

r _ 

43 

_ 

43 


83 


13 


13 




ft! 


-V J14V 141* 

-tgSMHh 






m 


rrr 


Kawasaki Steal 
Toray Inda — 
Sanyo Sac ...» 


An/ 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 
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US INDICES 


H 1757727 1736044 250040 18/2 17W44 21/11 KJ*m 


(4 245126 2428.19 2801.17 8/2 105733 2W 


Cm 40 CI/TJOSf 195233 200821 203132 2*3004 3/2 

0*»*Wn/B3| 103725 101826 105737 1211.10 2 0/2 

Mnucmp enm znzn zeatoot 2880/0 330037 4/1 
8T*nB77) 2042.7 2042.7 28372 322B08 1B« 


CBSnRHMEMtaS) 4Z72 4311 438.1 «42B 3V1 2T* 

^ JUSfr&S 83) 3884 271.7 2742 20*80 31/1 2S780 21/B 

Sf«(ww^ 19a33 200811 aD,JB ***** w 194551 " n 

0*»*Wn/B3| 103725 101826 105737 1211.10 WZ 98001 21* 

MflUQnp BfUOSt Z72S.7S 2 W 620 t 288070 330037 4rt 250723 *3 

STSStJ 2042.7 2042.7 20373 322038 157 201220 2M 

®JS3pa«!Mnq 54237 54835 5B221 6*131 V\ S02S 4/4 

SafSaro zo*63f 20015 21017 km30 m immb 

JSE ML (28W7Q 3071.1? 6984.1 0942J BBilO 22/11 54*038 13H 

^Malpfi«V1/80r 100537 110070 111728 113075 8/11 M37 2rt 

UbM SE (30/12/BS 29072 30237 30437 3S021 31/1 28085 26/10 

■ -- — « MTCdnMMrvH' 15300) 180330 31/1 133170 B/7 


Mbfltti 387738 37BELS1 381530 397038 358335 W3» 

(Sin) (4/4) (31 /1IW) 

Hon Bonk 9178 93.75 KL78 10001 KL75 10UJ 

(Sim ( 2 i/ii) nano®) 

Transport 144022 14S045 148854 188828 143050 IIBffl 

^ am emu anm 

i«te 173.94 17047 174.47 2Z728 17334 »84B 

p/1) (22/11) (31/8/93) 

DJInd.De/BM0n 3787.34 

Da/* HWl S7B821 (383343 I Low 387729 0783.79 ) WkaW 


•realtime share prices 
•updated financial reports 


•daily unit trust prices 
• personal portfolio facility 


Knvuswnaor 100537 110010 11172 a 113075 a/ii 
Seek) 

MOU SE p0rt2«5) 29972 30237 30437 35831 31/1 

0Mdm 

il fc l WIItt i (1/2/37) 1475.40 1400007 152020 100380 31/1 


Cwwatta t 
nutrtda? 
FkaoeW 
NYSE Con*. 
Aran MB W 
NASDAQ Cap 


45029 4S 8WI 481^47 48220 

(M) 

53735 54018 552XB 583.10 

( 2 anoj 

3927 4080 4121 4031 

H4/B) 

24632 25038 25230 207.71 

m 

43014 44130 44424 48788 

m 

7*131 757.74 78437 >0333 

ns/3) 


SHta'skM pi /1 358) 120328 1211.79 122488 142334 31/1 113832 Z7/10 

SBC Gawd (1/4ffl7) 00187 91143 924.17 108020 31/1 07M7 Z7/10 

WddnrrJ90«E8r 8371 834027 640*02 7101.13 3M 510*03 10P 

Bn** SET (304/75) 133285 140281 14*058 17S173 4/1 110058 4/4 

ustad 1088 288201 2660*2 208004 2B8 8SB1 13/1 128*170 24/3 

NEQMd H (1/1/70)5 6073* 8113 B102 B*B80 ZH1 0B1H1 4« 

artnJntt^lOffi 131133 133133 1351.17 164010 3V1 «»« 5J1D 

Baa DS-100 (2M*Q 115039 117057 110*38 131101 2/2 1 1?5 

JCWOOWB (3V12fla M KUO 38148 381111 5/1 f?** 

M m* was an i*i3B zi« 

U CAC 40 8T0CK IB8X HJTIIMI (MA71P) 

Open SeaPrtoe Owqo Hjjh Low Est val. Open M. 
Nov 18873 10002 -22-0 1004.0 18812 26317 1M70 

qbc 1887.0 1900.0 -22.0 19112 18822 2290 253M 

Jen 1905.0 10172 -222 1005.0 10052 - 337 

Opm Marael tor prartw dm 


■ RATIOS 

Nov 18 

Dow Jones Ind. DTv. Yield 2.70 
Nov 10 

E & P Ind. DN. yield 228 

S & P bid. P/E ratio 1923 

■ STANDARD Atm POOBS 800 Mfl 

Open LBttM Chongo 
Dec 440.60 44826 +120 

Mar - 45020 

Jon - 45425 

open nm nourai an to pravtoua «fcy. 


Nov 11 Nov 4 Year ago 
2.78 2.78 2-71 

Nov 9 Nov 2 Year ago 
SL39 2.38 228 

2033 2035 2828 

Pt WmjBKS S500 tbnas Max 
High Low EeLvoI. Open tnL 
449.15 44020 03.413 21 0239 

8 £77 *2.454 
82 4.618 


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FINANCIAL TIMES 


I YOHK ACTM STOCKS ■ THABWfl A«.ilWKjf 

Stocks Goss dm** • **"“ _ 

Dried prtt on day **“ "* 

7202.200 57 -2 * “S *? 


0031300 17H -3M 

5.131.000 50 -H 

*468300 S'* -« 

3390300 30 -M 

3380.100 350 -1M 


Nor 22 Nw 21 MOT 18 
383348 292.986 3SB36S 
10428 17337 17364 








mm 

mm 

L 


-W NYSE 
-M Issues Traded 


- n« 18: jwlSMWSS* 

MkwnW i dPAX - v fJgg 

mnu M. ♦ T otoiin. 


Gw Motors 33*011*1 »» ^ 

UMri 3.498^00 20M -M Unctw«ed 

Ottcap 3^93300 41H -41 Mow rtflhs 

WBMM 0Z702OO 23H +K Nsw LDM 

I Enhdng band*. X InduriM. pl us Hfcw *. Rnendel «nd Ti 
i and low* am *• awragn <4 tto Ngheat ml knmt priori i 
m [■rmlkil b* TeMaril rapnnwn m» rvghaal and kwaer « 
, 0 Sotwoi b oMoM racBcriaitoL 


2333 2B2B 2324 

474 798 795 

1.B0B 1380 1.408 

563 6*8 721 

8 12 21 

325 195 219 


had suing tt» day Writ*; 
itta! tha mdri hw nattied 


J . nl , Invite fir.anci.il pager on the market. Try 

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gw.1r.r~.7T — 
















































38 


FINANCIAL TIMES 


4 pacta* November 23 


NEW YORK STOCK 


COMPOSITE 


M W lb Ohs 

h 1 (« W !■ M 

0.46 4J) 21 102 12% 011% 1! 

018 1,1 37 96 17% 16% 18% 
1.68 2.4 21 3929 70 67% 70 

106 7802 51% <8% 50 

12 95 3% 3% 3% 

2X0 4X 28 825 44% 43% 43% 
070 14 17 9277 31% 30% 31% 
OlSO 4.1 11 B5 12% 12 12% 

052 18 12 39 20% 20% 20% 
8 784 1Z% 12% 12% 
044 II 20 75B 22%d21% 21% 
14911.5 9 528 9% 9% ' 

386 7% 7l 
TUB 7% 



17% 12% MR 
19% 12%ALLtoA 
79% 57% AMP 
72% 48% AMR 
5 3%ARX 
98% 38% ASA x 
33 25% MM. 

1S% 11% AMU Pr 
23% 17% ABM kid 
18 li%Acpmati 
31 21% ACE lid 
12% SAacnk 
% 6%ACMB0» 090 103 
10% 6% ACM 04 SO 000112 
12 7% MM art Si mill 502 

11% 7% ACM MM mils 485 

9% 6 ACM Ikwgd 072 07 M5 8% 

15% 8%AGMOr 044 4H 22 87 11% 

13% 8% Acme Beet 13 118 12% 12% 1: 

28% 23 Acnda i 060 11 14 7 28% 2B% 28% 

13% 5%AOSa 038 18 2 235 9% 9% 9% 

10% 11% Acuna 26 312 18% 15% lS% 

19% 1S% fttansBpr* 088 43 0 109 18015% 15% 

84 48% Ad Mm 100 05 63 54% 54% 54% 

100111 810664 25% 24% 24% 

016 10 15 145 5% 5% 5% 

010 08 17 180 18% 18 18% 

1j47 13 12 72 63 62% 02% 

178 04 S 2519 43%d42% 43% 

046 13 12 1570 34% 33% 34% 

008 5A B 4591 18%015% 16% 

1 87 1% 1% 1% 

on 13 20 4046 44% 43% 43% -1% 
030 IX 9100B 19% 19% 19% 

31 1787 25% 23% » -% 
1 M 11 X 11 15 i£a 15% 15% +% 
114220V 27% 25% 20% -1% 
120 11 2B 827 IB 16% 16 

035 10 23 10B 17% 17% 17% -% 

020 10 17 1335 13% d13% 13% 

028 1.1 18 467 25% 25% 25% 

DOB 11 17 281 23% 23% 23% 

044 IX 20 3016 29% 2B% 29% 

BOO 1011914250 23% 22% 

1X4 IX 49 2115 54 63 

070 20 4 3219 26% 25% 

010 05145 1140 18% 18% 

19 18% 

21 

019 07 20 333 24% 

044 1.8 IB 734 

0 103 U d 

1.64 OO 10 360 19% 17 

010 21 100 8‘ 


31% 16% AaMe 

6% SMNBt&p 

» 15AAakS 

64 48% Aegon ADR 
fi6% 43% AetnaL 
30% 25% AfeEX 
22% lS%Ahnnn 
4 1% Atom he 
60% 38% AMC 
38% lOAMnRt 
29% 19%Mgwte 

17 14% Aflame 
30% Zl%AtTeh 
18% 13%/tetaAlr 
21% ie%Ahmyto 
T7% 13$ Atari 
26% 19%AKBB 
24% 17% NOMA 
30% 25% Atom 
28% 1B% AluiMx 
B5% 49%Afca9x 
30% 23% AhaSram 
22% 14MUAI 
34% ITAtogbLudX 048 16 77 1305 

S 19%AlqP 1 M IS 10 2702 

13% Aim Ctxi 
30% 20 Atoigmx 

4% A ATkn 
27% 17% Atom Cap 
10% B% ABncaB 
27% 21% AHbW 
40% 31 AMSgx 

11% 8% Atom 
29% 24 AIM Op 

7% 4%Ato H a 
35 21% Akira 
90% 64% Aim 
30% TTAfcaCpA 
11% 7AoOxmc 
8% B% Are Recta 
8% B% Amxxfid 
25% 18% Anew! tad 
52% 44AoxUKa 
9% 8% AdiAifR 
31 ‘ 


On 18 13 11 23% 23% 23% 

100% 30% 




0X7 22 II 8887 31%L _ 

084 82 70 9% 9% 9% 

098 14 17 3070 28 27% 27% 

17 638 8% 

14 3700 27% 

1A) 21458 8460 79% 

44 2691 19% 

096128 365 7% 

025 14 16 75 7% 

008 1J 11 401 6% 

052 15 12 82 21% 

080 1-3 60 2891 45% 

024 18 112 9% 

to Bam* x 010 05 2512884 21% 

29% AnBnxf 100 6.1 10 1836 33% 

18% An BmPnl 080 4.1 11 288 19% 

8 6% Am cop hex qj& as 167 a% 


20% IBAnfepBd 
23% 18% to Cm CV 
37% 27% Anfirtr 
33% 25% AnBcr 





S AnGHth 
Ain MUR 
20% 18% As Hems 
65% 55%AmHma 
2% 3% Am totata 
08% 81% AnM 
11% 8% Andpphc 
30 22% AnAwe 
34 IB Am Plant 
7% to MB 
21 AuStor 


2§ 


43% 36%Antti 
43% 31% Ararat kc 
16% 11% Aintok 
64% 50% Amoco 
9% 8% Anpeam 
5% 3% Anna he 


4% f%tommp 
58% 42 AmkrtO 

38% 23% AntoO 

SiSE 

34 19% Antom 
18^ 14%Mtxxiyki 


17 


3 


2S% (227% 
2% 82% 


1X4 &B 30 132 17% 

in 55 0 103 18% 

140 75 11 9682 33 32% 33 

050 11 1123815 20% 28% 29% 

1.18 45 20 4092 20% 25% 28 

077115 829 6% 6% 6% 

130 110 45 272 19% 18% 19% 

009 17 10 60 17% 17% 17% 

350 45 12 7B40 63 61% 62% 

075 285 43 12 2% 2% 

046 05 13 6779 91% 69 

150 111 714 7% 7% 

088 45 11 297 22% d21% 

040 1J 10 374 23% 23% 

044 80 4 KB 7% 87% 

. _ 040 13 14 1380 28% 25% 

22% 16% Anwar W in 7.4 0 17 

32% 26 Am War 1.08 41 11 214 28% 

152 45 10 0081 40% 

in 40 5 221 32 

054 15 65 807 17% 

UO 17 19 8959 @S % 59% 

. . ... HO 15 8 12 

5% 3% ton he 012 12 59 51 

34% 2BAnmdh 152 55 91030 

4% 2%MmmV 91544 

050 07 462085 

24 2415 32% 32% 32% 

094 17 17 20 25% 25% 25% •% 

150 12 12 9015 49% 48% 4S% -% 

a 847 31% 30% 31% -% 

044 16 15 51 17% 17% 17% 

29%AonCp in 42 103519 30% 23% 30% ♦% 

29% 22% Apadn Op 028 1.1 344131 24% 24% 24% 

10% 7%ApKllhFx 072 82 762 8% 6% 8% +% 
25% 14%AFH 2B1289 23% 22% 23% V 

7% Z% AppMHaQ 1 371 3% 3 3%+% 

25% 18% AppIPwA 012 05 18 119 23% 23 23 % 

29% 21% ArcHOn 015 OS 1910829 28% 27% 28% 4% 

si <3% Am cam 2905510202 ««%«%-% 
61% 45%Anneo45P 450100 14 46% 845% 45% -% 

7% 4% Aram 120 1828 6% 5% 6 -% 

29 22Anncol1P 110 05 11 21% 021% 21% -4 

67% 39% Amafllf in 13 11 4881 40d38% 39 -% 

<5% 33% Arrow Bee 12 2089 38% 35% 38% -% 

7% 3% Alta &p 1 319 4% 4 4% 

33% 23AretaM 070 11 131834 24% 24 24% -% 

34% 21% Asms 040 15325 8339 26 24% 28 

31% 22%ASMdCMiX 040 15 33 19 29% 29% 29% -% 

44% 33% ASKS* 1.10 11 11 2300 35% 34% 36% -% 

25% 15% Ash Pic F 027 17 445 15% 816% 15% -% 

3J» 151 Amt Dir 052105 5 279 2 1% 2 

38% ZB%AmNtfiax 012 05 30 2953 37% 37% 37% -% 

57% 49% ATST 152 25 1642957 50% 49% 50 -% 

l AO Rkh 2x 100 1.1 2 249% 249% 249% 

iNkitaGux 108 05 12 256 30% (129% 30% 

. 5% ACM Bax an 45 7 500 B% 8% B% 

21% IS AUcEgy 194 00 9 843 17% 17 17% +% 

112% 92% AMWlx ISO 04 81 2988 104% 102% 102% % 

18 2% Altai 1 305 

20% 16% ManxEUJi 082 04 17 5 

12% 5% ABmhADR 034 35 68 



16Au(Bt 

12% 8 Autttatd 

19 7% AM 
48 30% Amt 
63% 48% AnrfVx 
14% 10%%»Cup 
7% 5% Aim 


016 09 14 9563 17% 


010 13 
080 1.1 22 3884 
044 11 11 18 

004 04 13 844 
050 1.7 13 922 
100 13 16 5569 
ID IBB 
12 370 



- B - 


38% 31% BCE 268 
8% 8% BET ADR 021 
S% 3 Balnm 020 
17% 14% Mar FM 030 
22% 17 Marti 048 

27% 21% ante Be 048 
»% 24%BaBCp 050 
15% 8% BUM 005 
9% 6%toto 
25% 2D%BMGE 152 
zo% mwa*qii 020 
38 24% EtacQne 124 
2B% 20% BenuftaV 094 
12% 9% toncoCMH 072 
34%24%Bam*rtx 1X4 
l% ’a Bandana 
63% 48% Baretag 080 
S8% 38%Ba*tox 150 
9BB1%B«*BBd 5.48 
29% 22%B»aitn 158 

48% 44nam»p an 
33% aBsawr in 
50% 42 Bomba 325 

85 TOBmkNnB an 
84% 55%R*M 350 

40 wBetor* m 
30% 22% Bm>(CFQ 060 
39% 29% Burns ap in 
48% 37% Bsnfik 154 
13 B%BU8D( 005 
53% 30% Bran on 
2B% 21% torn 155 
28% 23 Bar St6B* x T.46 

22% 18% U TV 1838 122 
23*2 14% Bar am on 


27% I 


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DEM 


1981 

nwflum 

SBMFr 
40 MAO 
13% Mh 
B3% 50% MS8i 
43% Bek) A 

..20%Bmtox 

6950% Band 4JP 

44 34% Brad 
36% 23%BmeOsnA 

1% % BmsoetB 

19% 13% GtogBr 
19BSD15100 BlM 
10% 8 Bmp Mr 

45 19B8SBD7 
28% 25% BlOiSl 
55% 50% BBOhm PI 
24% 16%BBBS 
G3% 42%MxL 
16% 

21% 11%Becan 

32% 21% BhnhOOiS 
25% 10%BCto* 
3% 17% Ax* H PL 
10% 7%BUodiM> 
8*2 rfattadte 
10% SBttrcKTyt 
4$% 33 am 
8% 6% Bin Otp 
16% 9% EMC tod 
50% 42% i 

30% 10 1 

21% lOBoBB&N 
23% 9% BantaOm 
15% 11 Bardm 

24% 18% Bactn Cat 





45% . 

33% 17%H*B(M 
60% 50%Bfl)8n 
74% 54% BrMr 
54% 39MBB 
85% 55%BPx 
27 18% BP radn 
27% lOBSHi 
71% 53% Bf 

28% 2i%a«nu 

38% 31%Bramn 
8 5% Bnarfih 
31% 26%BimB 
32% M%Brftrr 
4% 3% BIT 
25% 17%BiMHkX 
13% 13% Brush TM 
41 33% Buctew PI 
28% 10% Bud CM 
BC% 47 BuM 
40% 35>z Buh Ram 
10% 14% Burton Pc 


TIL W Eh „ _ 

Oh % G «0» m l* tom 

036 72 11 14 5 U«% 5 

176 05 IS 4395 50% 49% 50% 

040 15 14 144 22% 22 22% 

275 01 19 5347 53 52 52% 

050 U <7 107 52 51% 51% 

054 13 17 9K 23% 23% 23% 

4n 05 2 50% 50% 50% 

1JZ AJ 81998 36% 36% 36% 

047 15 14 74 24% 24 24% 

054 4.9 16 108 U 8% H 

048 25 12 561 IWb 17% 18% 

26 rl0 185001950018500 
040 17 72 61 U10% 10% 10% 

39 6281 41% 40% 

2HD 95 320 23% (125% 

5.00 95 11 50% d50% 

040 24 66830 16% II 

154 12 21 680 46% 

13 5B39 14% 1 

O10 06 67 SOS 16% M’ 

040 15 16 2039 Z1% . 

040 1 J 20 6325 23% 23 23% 

152 09 11 78 18 18% >8 

073 65 357 

075115 2197 

070 01 

155 15 2235BB1 

0.12 15 280 6% dB% 6% 

an 05 14 130 15% 14% 14% 
150 12 15 8381 44% 44% 44% 
OSO 16 51479 23% 22% 23% 
008 03 39 BOB 18% 17% 18% 

2X6105 10 1722 20% 19% 20% 
004 03 1024324 13% 13% 13% 

in 55 6 11 22% 22% 22% 

on 18 as 320 23% n% 23% 

027 08 521 32% 31% K% 

140 75 15 BO 30% 30% 30% 

in 35 9 13S 34% 33% 33% 

1929858 18% >7% 17% 

252 51 14 9251 57% 58% 57% 

1.77 10 12 706 58% 59 ffl% 

140 13175 15 46% 43% 45% 

in 14 4726199 77% 7B% 77% 

t.74 01 11 278 19% l?% 19% 

032 1.4 47 1699 24% 23% 34 

177 85 13 1260 58% 57% 57% 

1JS 65 12 S82 22% 22 22% 

in 11392 256 31% (01% 31% 

032 4.0 3 83 8 1 ! 8% 8% 

089 03 14 5*7 X 29% X 

on 15 17 5964 27 28% 27 

X 15 3% 3% 3% 

044 2 A 141412 18817% 18 

0J2 12 13 75 14% 14% 14% 

2JQ 85 8 115 32% 02% 32% 
10 3103 11 mo% II 

in 18 11 2899 4784812 46% 

055 1.5 30 3633 36% 35* 35% 

1.44 08 16 414 14% d14% 14% 


to* 


34% 35% +2% 


- c - 

048 13 23 11S2 20% 20% 20% +% 
040 07 15 2352 55% 53% 5S% +1% 
084 18 11 9006 22% 21% 22% 

15 207 62 61% 61% +% 

in 22 23 1806 51% 51% 51% -% 

on 10 28 91 10% 19% 18% -% 

1.78 18 12 2348 87% a85 87 +1% 

<L40 M 13 50 20% 29% 20% 

24% 17%C80MMb 064 17 18 2304 1Bd17% 17% -% 


35% acax 
72% 50%C8Sx 
25 19% CMSEn 
62% 59% CM Fa 
54% 44% CPC 
21% 14 CH Carp 

92% 85%C5XX 
31 1B% CIS Carp 


19% 15%Qfiv 
15% 9%T 


63 33 CsUMran 23 3B17 47% 48% 465 -1% 

29 24% GXXXCX 056 12 131(775 28% 25% 25% -1% 

23*2 IB cabal 086 X 01B 1JM15 413 18% 1B% 16% +% 

21% 10% CadraDopi 37 3280 20% 19% 20% 

»36%CmsnW 13 2170 41% 40% 41% 

2% 1% CUflM E 020113 1 20 1% tf1% 1% 

15% 10% Worn On 0.16 1X 28 717 10% d10% 10% 

17 500 16% 18% 18% 

0 3313 10% 9% 10% 

040 11 X 319 10% 18% 10 

in 2X 16 3784 44 43% 43% 

50 841 A % % 

032 11 X 7472 15% 15% 

020 02 20 2130 81% 

Z78 11% 1 

ii ia% di 


35% 30%CMOox 
24% 18% Onto Q 
13 8%Cm*aFr 
X 22% CbPAL 
9B%54% CpraT 
28% 9% CMrtM 
1B% 12% Canale H 6 

21% 18% esaep 
10% 7%CHhAm 
60% saewdr 
19 10% cn cup 

a 28% Carte Fair 
8% CsKBi 
45% 20% CMK 
30% 22%CMrHdn 

25% 2D% CertrUmt 

IS l0%0Mrlwn 



8 % 


MU 

25% 17%Catont0a 
48 34% CUpUS 
H %CmpUft 
18% 14% CMto 
85% 80% Capa 
14% 10% Quid in x mux 
37% l^capsuix in 05 
42% 20% CaptttMoe 13215X 6 702 2fi 
15% Caremark x 004 02 17 2212 17% 

OBO 14 14 109 32% 

11 837 21% 20% 

020 22 10 144 9% 0 _ 

1.70 05 12 4207 26% S% 25% 

ZAO 45 11 80 54% tS3% 53% 

033 16 21 890 13% 12% 13 

098 72 19 61 13% 13% 13% 

an 1.1 II 3020 18% 10% 18% 

005 OB 15 480 B% 8 8% 

an 1.1 1214490 ®% 51% 52% 

t9 350 17% 17% 17% 

125 00 10 406 28% fQ8% 28% 

OHO 9.1 1 8398 8% 8% 8% 

(L» IX 6 1064 n% 20% 20% 

106 05 8 152 24% 23% 24% 

1A0 08 10 206 21% (00% 21% 

090 7.1 01194 12% 12% 12% 

X 24%CmtltMp On 11 18 89 27% 28% 28% 
n 12% ftrt-wnt 1.42 109 0 177 13% 12% 13 

1J0 BX 11 3812 21% 20% 21% 

032 1.1 18 3843 30% 29% 30% 

1381803 25% 24% 25 


38% 20% OmBW 
32% 21% CMuyU 
27% 18% Carfto 
40 zaChuito 
12% 7%0tomal 
15% 5%0raiHn 
40 30%GhosaM 
6% 1%ChmmB 
21% lO%Ox*Sy 
38% 30%Oandx 
4Z% 33%OrauBk 


On OX 33 1518 33% 32% 33% 
an 17 14 12 7% d7% 7% 
20 484 10% 9% 10% 
in 45 5 5713 35% 34% 35% 
1 317 5 4% 4% 

54 231 18% 19% 19% 
104 04 18 G8S1 31% 31% 31% 
1.76 40 6T348B 38% 33% 36% 


7%0unWMl OX 11 31 820 
"" ~ 072 13 23 M 


S5% 22% I 
47% 3B% Omni 
88% <®%BiBhud 
19% n%Chiqax 
8% 5 Duck hi 

«1% 32000 
34%24%( 

63% 

83% 68% CM® 

74 57 Dpli 
9% e%0gnHlx 
37% 28% Qcarp hx 
2E% 15% On Bel 
27% 18% CUM x 
4% 2% Chu|daxO 
27% 2D%Omgy 
30% 25%apmox 
27% 18% OraMCt 
40% 20% Clew a- 
47%86%CMcp 
28% 24%Ctoip9L1Z 
98 70% C!cpPt2Ad 
130% 83% CCpPDM 
17% 12%ChHlMA 
17% ISCbuWB 
12% 7%CtoNM 
12% 7% CRH 
23% 9%(Mfcaa9t 
71% 90% ChrICq 
2fi% 16 Ctojta hri 
11% 9%0amanuB 
BH 840H67XB 
45%34%OnCI 
BO 57 Oerdd B 
58% 47 done 

28% 21%OttlM 


8% 9% 8% 

31 ®J*-2 38% 


1X5 43 20 6851 42% 42 42% -% 

' 1% 43% *1% 


13 B%CNAheana 1.HIM 


18% 11% 

19 iSComtSn 
33% 25% COasflx 
53% 38% OonC 
19% 14CBOED 
28% 16 COm 1 DU 

38% 25% atom 
49% W 


1W 44% 43% _ w 

931 12% 12% 12% -% 

8 5% 5% -% 

33% 33% 33% •% 
X 31% 31% 

48 45% 47% +1% 

® 8B% 70% +1 

®?% 63 +1% 

7 7-% 

29% 30 +% 

17% 17% -% 

i 

3 


1X5 3X 

on ix 

7 149 
12 1711 
30 13 

1X0 11 523303 
1X4 18 112071 
3X4 48 13 2278 
090119 670 

146 02 11 2040 
an 45 20 290 
Q38 1X 34 560 

0X1 IX 71 5982 21 
1X0 7 A 11 319 27 

ato 04 16 4731 25% 23 
14 4212 20% «1' 
an IX 041173 41% 41 

120 02 19 24%d24% 

UO U Z3 70% 

7X0 02 14 85 85 85 

17 SB4 13% dlZ% 13% 

1JB11X 6 518 13% 1713 13% 
On 11 12 934 1^9 9% 9% 

OLOB IX 52 580 7% 7% 7% 

012 1.1 10 409 11% 11% 11% 

91597 56% 54% 65 

008 05 13 2091 16% 015% IB 

057 6J 102 8% d9 9% 

7X611X 3 B5% 84% 05% 

in 17 10 COO 35% 34% 34% 

7X0115 13 39% — 

1.92 3X 10 2013 57% 

030 IX 11 150 ‘ 




ll|jl 0% CUaa hi on 7.1 



0X4 1.8 8 150 14% 14 . 

032 13275 313 13% 13% 

040 IX 12 4555 25% 04% 

078 IX 2721M 52% 51% 

0X5 03 41 1354 15% 18% 

0.15 09118 788 18% 015% 

24 475 32% 30* 

1X4 17 IB 5991 ©1% 

On 7.1 248 9% 

. 8% CokxdUHx 0X0 03 950 7% 

7% 5% GcAxMlx 070 11.4 322 8% 57 

8% BOtoblHx 038 01 1036 7% 

30% 21% Coda 2J2 9£ 5 828 24% 23 % 

48% 30% CaHCA 012 05 1813103 37%lB5% 

24% I7%axmtoa>x 038 1.7 IB 782 72 21% 

31% 25%CUnarica in 4X 8 1558 26% 25% 

20% 12Contrrtte 050 18 15 1W 18% 11' 

29% 21 QxmdlM 048 1X 14 39 24% a 

25% ZOCormtmX 1.90 OO 18 21% 20% 

28 21% ceauceexo kb u 2rrco 2i% 21% 

19 8% Ctmnui PXf 030 3X 41 2854 9% 8% 

42 24% Oorapui 132*277 38% 36% 381. 

1% %Cdaopntom 18 115 87% 5% 6% 

sa%27%cwiAB on 052313214 44% 42% 44 

48% 31%CUp5d 23 1308 45% 43% 45 

10% 6% OxqurTOp OlO IX 3 490 7% 7% 7% 

30 19 Onto on 4X101081 13% 019 19% 

33% 25% CnXgra 083 2.7 16 302/ 31 30% 31 

31% 22% Connect NG 1.48 85 12 59 22% 22% 2Z% 

25 19 Convct En in OB 11 42 19% 419 19% 

8 2102 12% 11% 12 

4X5 8X moo 55 55 55 

100 OX 8 3904 25% 24% 25% 

5X0 05 7 59% 5B% 58% 

19 3847 20% 019% 19? 

1X4 57 18 1511 — 

128 ZX 26 202 44 
1X0 3X 15 8017 


20h 10% 

71% S3CM&1GS 
32% 23DMSGdZ 
75 57% CUU Ed Pf 
29% 20% Doftt 
47 33% CMOS 
52% 41% Ctxfjp 
83% 48% MUl 
20% n%CW»58w 
68% £S% Oreeco 
60 47% CPHT4.16 
100 82% CPnr 7X5 
«D% B3%CUlP7n 
12% 6%CadUBto 
28% IZCdPtCp 
10% 8% Canute 
11% 10 cun H PI 

8% 4%CDnwc0n 
S% ACDqiuChB 
52% 34% Cacph 
29% Zf 

15% 5% Care W 

mh w%am 

3S 27% Ostap 
16% 11%0MNirTm 
18 l2%C«eMryCr 
IS 15%C«BiHft 
12% 10% (Mb 
29% 24% Qm 
17 14%&a«fard 
33% lACnqfls 
49% 35% WBl 
12 7%QBfi 
8% 4%CnUqfe 



171483 16 

050 IX 5 2513 _ 

4.16 OS 250 *7% 647 r* 47% 
7.4S 9X 4 82% d82% 82% 

7n BX H00 V 87 87 

7 230 7% 7% 7% 
1X0 72 57 1261 13% 13% 13% 
004 04 183 9% 8% 9% 

1.19 11X 88 10% 010 10 

21521 7 6% S% 

3 581 2% 2% 2% 
1X2 17 15 1BD 35% 35% 35% 


CHpuTSfll 024 1.1 15 2510 
On 13 10 64 
in 5X 8 4790 
on 13 55 8991 
012 OX 200 
032 13 9 2979 
099 01 18 107 1 
21 5 T 

075 15 16 234 _ 

050 13 13 79 15% 15 

81232 19 15% 

1X0 42 9 706 38% d3S% 

1.1B11S 9 301 B% 8% 

__ 0X811 X 4 420 5 04% 

24% 13% Qunphn&K 048 32 15 971 15% 14% 

41% 33% Crimes 253292 37% 36% 

13% BbOSSkr 0.12 1.1 31 107 10% 10% 

§ 6%CSU8 072 19 449 7% 6% 

7%CSFBoSr 0X1100 10 8% 8% 

2SGUGU 32 3088 "* 

17% 12% Cuftm 
CumCo 




10% 

7% 

. 8% 

28% 28% •% 
IUO S3 63 2 13% 13% 13% -% 
1X0 14 7 2343 43% 41% 42% -1% 


13% 1Q%Curantbx 095 05 12 81 11% 10% 11% +l£ 


1904 

MU’ Lob StNk 
37 33% CrtSWr 
11% 8%CVM 
13% 7%Cyrare5fS 
24% !3%CnxSm 
33% 23%CwAna 
41% 12%CyW 


nt pr tt — 

n «[ Mi np w to 

(00 29120 7100 35 35 35 

1 08 12 0 8 23 9 9 9 

10 31 12 11% 11% 

28 3041 21% 20% Z1 

OBO 3 * 30 5402 34 % 023% 23% 

TUI 1205 38 34% 35% 


Wpe 


13% 

12 

7% 

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Faaatri 004 ■ 
FHpra 

FfmTbrd 124 1 
fifty Off 

FiQgfeA 024 
fitou t 

RrsAffl 1X0 
FsBcQBdx 1X0 

Facofflk 060 

Fa Seay * ix« 
Fa Ten 188 
FafedMcx 056 
FLrsner 1X4 
F kw n ta 
fissre 
Horn hi 

FocfiA 009 
FaoOLB huh ! 
%— 1X8 
Forshoer 
FoeotA 

Fnh fin 1X4 
fiXFW 040 
FaHawM 1.18 ' 
Fixer KB 05B 
Fidtonfio Q5B ' 
Fum 024 
FutmedADR 


4% 04% 
6*2 6 % 
40% 39% 
26% 25% 
«% 48% 
<% 4% 
7% 6% 
25% «% 
27026% 
22% 021% 
19% 19% 
24%024% 
41% 40% 
1B%016% 
31% 30% 
9% 9 


32% =% 
11% 11 
3% 3 

JO 29% 
14% 14 

Z7 26% 
30% £9 
17% 17 
21% 20% 
2% 2 A 


4% 

6*2 -% 
40* * 

26% 

49*2 +% 
4% J 2 
6% -% 
34% -% 
27 

22% -% 
19% 

24% -% 
41% *% 
1« *% 
30% -% 
9 -% 
20% -% 
6% -% 
5% 

5% Wt 
32% 

11 

3% 

29% +% 
14 -% 
26% -% 
30 -% 
17% -% 
21% +% 
2 A -A 


6MAPP 
68* Sera 0X7 
Garrim 
BarwHs 
GettCo ai6 
GariBfedx 042 
Gerriyto 
GenritaPh 
GenttxCp 4X0 
Genus he 
Genzyme 
GkfiDD G1 040 
SdUno9Lxai2 
GftenA 0X0 
GWiBiaa 
Gam Guys 
Gotttfap 0X0 
SadooSys 
Grarrile 020 
Green AP 034 
Grasamans 
GmdWtr 
GIL Corn 
eaMrsyg 


HsnringA 
Karteryvt 058 
Harper Go 020 
HartlsCrep 

isosco oi6 

Heamcs 
HeaBse 0X6 
Heakhdyn 
H e Uringer 016 
Hedml 
HekfeTroy 
Hertrif 058 
Hogan Sys 015 
tkriogk: 

Hotp Berf icOJD 
Han feds x 044 
Hontfeck 
HaraetStos 044 
Hr* JB 020 

Huatnofe oeo 
HocoCto OXB 
HulchTedi 
HycorBkj 


- 6- 

33 BZ7 2% 
21 B 16% 
5 60 2,% 

10 30 3% 

8 339 6% 
17 108 19% 

9 116 4 

1 1418 4% 

23 BIB 22% 
21 1182 5% 
413223 31% 
12 809 13 

132788 14% 
8 24 13% 
12 17 6% 

11 506 12% 

21 244 21 

96 74 4 

12 345 21 

13 2 18% 

64 328 2% 
17 241 14 

20 239 18% 

4 626 7% 


- H - 

30 281 7% 6% 
16 114 23% 22% 

14 22 14% 14 

198 12% 11% 

378820 30% 28% 
21 8372 29% Z7% 

15 31 12% >2 

20 801 8% 8% 
152830 10% 10% 
18 504 9% 9 

10 68 18 17% 

10 714 17 1$% 

151430 5% 5% 
18 GOO 13% 12% 

9 7 19%01B% 

15 25B 26% 26 

21 443 13% 12% 
28 164 5% 4% 
14 1128 15% 015 

55881 18 17% 

1 28 4% 3% 

22 757 24% 23% 

11 294 4% 04 


Rtsys 

08 Conns 

E few 

fexnteor 

tuumnogen 

Imped Be 

fed fes 

riffles 

btormix 

feptesMU 

Its vOn 

wgBfrrs 

mtgkfWSI 

ton 


4* S3 9% a 9% -% 
414271 9 8% -A 

7 622 2% 2% 2% *it 
52 54 6% 5% 5% 
21909 4% 3% 4% +1 

040196 1110 13% 012% 13% -% 
02* 28 99 11% 10% 11% ■*% 
VCD 1335 14% 14 14 ■% 

2915147 27 3% »% -% 

056 II 141 10% 010 10% -% 
1418590 26 24% 26 +1 

36 125 1S% 15% 16 

ID 689 2& 2% 2% 

024 1170604 66% 62% 65% *% 
9 21 2% 2% 2% +A 
040 11 3221 13%d12% 1253 V« 
13 40* 6 7% 7% -A 

024 13 1211 10%dT0% 10% 

3 844 8% B 8% 

2 463 4% 4 4 -% 

7 1682 17% 16% 17% +% 
328 3941 13*2 12 13% -% 

13 90 17% 16% 17% +% 
0X2 11 433 2% 02% 2% -% 
2re 19 5% 5% 5% 

0X5 18 484 31% 31 31% -ft 

2 420 4 3!J 3% -% 

13 105 16015% IB -% 

1.14155 5211%211%211% -1% 


JU Snack 
Jason fee 
XChd 
jahnafeW 
Jones kB 
Jones Med 
JasiynCp 
■S3 fin 
XrnoUg 
Jusdfl 


- J - 

122 12 % 
B4 8% 
139 40% 
38 20% 

I 64 14 

! 345 8% 
58 26% 
222 23% 
i 469 1B% 
902 *2% 


11% 12% +% 
8% 8% 

38% 40% +1% 
20 % 20 % -% 
13% 14 

8% 8% -% 
26 28% *% 
23 23% -% 
18% 18% 4* 
12% 12% -% 


Hraamr 

KLAkttr 

KnaMraftpi 

KaflA 

Kanos km 

nrikkaS 


(UO 9 180 2i% 

0.44 12 IBS 10 
21723 5% 
072 17 120 27% 
011 31 22 6% 

OB4 14 634 24% 
25 21 10% 

28 9141 SO 
2 233 3% 
1 347 A 
421772 25% 
14 4138 19% 


20% 21% f% 

9% 10 

4% S% +% 
26% 26% -% 
05% 5% -% 
23% 23% -% 

10 % 10 % 

46% 48% -1% 
3% 3% -% 

U ii 

24 25 tg 

18% 18,1 -1A 


3 % 3 A +A 
2% ih 
S S 

i6% i7A *a 
8% 8% -ft 

mi a -% 

17% 1B% ♦% 
51% 51% -1% 
19% 19% -% 
4% 4% 

11% 11% +% 
13% 13% 

1% 1% 

2 % 2 A *A 

*% 4% 

55% 56% -% 
6% 6% 

11% 1t% Jj 
19% 20% -1% 
04% 5% 

15% 16 -% 

20 % 20 % •% 

12 12 % -% 


Lancs nc 

Lanfcntfiph 

Lsnatmcs 

La sa is cp e 

lamceS 

Larson FT 

LOOS 

LU Cp 

Lectass 

LegartCp 

Life Tran 

Uterine 

L^itadA 

LfeBr 

LfectrinT 

LDxhayM 

(JnearTac 

LkprOor 

Lonwenl^ 

Lone Star 

liteitf l 

LTXCp 

LVMHi 


072 33 663 
012 23 901 
219231 
056 IS 5D4 
OXB 17 178 
4681360 
13 3 

25 661 
13 2648 
04 8 i* 271 
2112B61 
016 1 54 

119 934 
205789 
020 14 70 
19 230 
028 14 213 
123 1816 
05214 B11 

12 130 
028 274134 
040 15 B 
OXB 29 12*5 

13 509 
38531420 

31020 
046 21 175 


MU Cm t 0X5 1624250 
MS Cars 19 121 
Mac MB 060 19 24 
MttbonGE 1X8 14 18 

Magra Pwr 141351 
Marea Grp 076 101492 
Mail Ben 24 187 
IhnanCp 105 37B 


01% 2 -% 
15% 16% +% 
2 2 -% 
3% 3% *% 
6 B 

18% 18% -1% 
3% 3% -% 
4% 4% 

20% 21% -1 
5% 5% -% 
29% 29% -2% 
12% 12% -% 
014 14% -% 
13% 13% 

5% 5% -% 
11% 12 +% 
20 % 20 % -% 
3% 3% 

20 % 20 % -% 
18% 18% -% 
2% 2 A +A 

13% 14 

15% 16% •% 
7% 7% 4% 


UarsbSmkA 044 11 16 
Manmarix OH) 20 7797 
Unac IK 23 
Mann bit 412233 
ManwCp 01807 
McGrath B 044 10 18 
MCComie 0.48 14 1989 
Menu Inc MB IS 403 
MedctaaScOXB 12 39 
Hefentto 034 67 34 
Mentorty 01613 387 
MM(6 024333063 
MKtttX 0X0 10 377 
MartuyG OJ0 10 37 
MwMan 1X6 92751 
Metfeei 103702 
MttiodeA 01215 957 
1*5011 222450 

tfcftaalF 030 21 603 
McbNaffi 2X0 52109 
IBoUrim 8 B 

Manage 62125 
Henna 551B68 
ItagW 9 250 
tfcrpcfc 3 582 
Hcril 3053999 

MdAdM 24 6 

Mdbnttc 068 54573 
MdwGrefe OSD 15 9B6 
MBerH 052 14 138 
MOcrtl IIBl 

MhfeUrii 16 B3 
■feririteTel 69 6894 
Modern CD 020 21 SO 
MaUns 1*4052 15 189 
MOB 0X4 630 

MOa fee 004 24 1073 
Akscare 00*150 572 
Marine P 036 17 6 

MTS Sys 056 0 * 

Mured 12 6455 
Uyagrn 4 4*0 


Nab* Gen 
NetxkS 


NewEBua 
Hew image 


7% *% 
22% 

14% +% 
11% -% 
30%+!% 
28% -1 
12% 

9% -A 
10% +% 
9% 

17% 

17 +% 
5% +% 
13% -% 
19% -% 
26 

13% +A 


17% +% 
4,', +% 


018 12 232 24% 24% 
072 10 44 16% 15% 
036190 3041(15% 14% 
020 18 990 14 13% 

6X0 5 2 15% 15% 

043222 519 56% 57% 
253021 33% 33% 
253787 20% 19% 
99 4049 7% 6% 
8 142 6% 6 

080 14 24 18% 18% 
291311 5% 05% 
22 1414 30*2 29% 
0X4 21 90 7% 6% 

307707 6% <B% 
0X4 23 59 SB% 56 
040 I63SBT 45% 43% 
12 23 19% 18% 
4 13 6% 5% 
1X4 103m 33%d32% 
7 2014 18% 17 

2436CCI 19% 18% 
235641 51% 50 

11 M ft 05% 
11 82 2% 2% 


OOedaya 

Doe) am 

OdEbcsA 

ORahnlg 

Ogfebayti* 

OBfaOs 

Old Kent 

OMM08 

OUancop 

One race 

Orectofi 

orb Sore* 

O Lx riach 

ftchr fffepD 

OragooMel 

Oahn 

OsMSAx 

OririrashT 

OttnTtt 


19 325 
53 B3B 
19 an 
12 124 
120 5 18 
148 10 604 
124 91218 
082 16 46 
1X0 6 403 
12 439 
3772878 
80 2567 
039 21 132 
14 14 

031 12 7B 
11 218 
02B44S 187 
050 8 209 
1.72 13 19 


11 % 10 % 
21 20 % 
8% 5% 
13% 12% 
31% 29% 

28% 2&u 

31% 30% 
38% 36% 
25%U24% 

9% B% 
3Bii 38% 
19% 18% 
7% 07% 
0 8% 
6% B% 
2 % 01 % 
13% 13% 
11 % 10 % 
30*4 29% 


■P-Q* 


Payctwi 

Payee Am 

Paries 

PBmTrty 

tanVfegx 

Paifflk 

Fanadrl 

PtrerestL 

PeopteH 

PenXte 

Pharmacy 

RieaniTQi 

FUN 

Hcmrata 

PHkanai 

PtonaarCp 


PradOpa 

PtifeanB 

Pyramid 

Oadrirg 


1.00 8 1198 
062 51 176 
122 14 129 
21 726 
3822007 
DJB 34 1805 
17 14 

050 7 80 
7 165 
1X0 21 25 

072 16 595 
TI 329 
020 26 30 
0*0 72067 
1.12 15 5 

27 477 
5 296 
046 13 6 

82 2090 
40 IB 
040 17 542 
068 142254 
012 12 699 
5 319 
35 805 
009 31511 
1B71587 
2812197 
19 909 
21 1977 
024 18 343 
012 11 9328 
51664 
9 90 


41 040 
10%d10% 
29K 29% 
66*2 64 

33% 31% 
37 35% 
8% 7% 
11 % 11 % 
15% 14% 
33% 33 
40 39 
*% 04% 
22 % 21 % 
11 % 11 % 
26% 026% 
16 15% 
6% 6% 
B 07% 
19% 18% 
17% T7 
45% 44% 
34% 33% 
18% 17% 
7% 07% 
5% 5% 
5 04% 
42% 38% 
15 14% 
5% 4% 
27 25% 
22% 022 
21% 19% 
9% 9% 
BOD 8% 


Stock to E n M Da tMM 

QrokBOm 062 81 34 18% 16 18 -% 

Dual Food 020 IS 485 21% 20% 20% -% 

(kantra 4 7036 15% 15% 15,’* +A 

QoickSlM 17 907 16 15 15% +% 

OVCn <2 3149 41% 41% 41% +-% 


16% 16% 16% -% 
6*8 5% 6 -% 

40% 36% 39% -1% 
32% 31 32% +1 

17%016% 17 -% 

18% 18 18% +% 

6 5% 5% 

4 3% 3% •% 

18% 16% 16 -% 
25% 25 25% +i** 

21% 20% 21% 

5 4% 4% -% 
17% 16*i 16% 

30% 28% 29% -% 

17 16% 16% -% 
5% 6% 5% +% 
13% 13 13% +% 

140138^138% "% 
15% 14% 14% -% 
29% 29 29% +% 

46% 44% 46% +% 
33032% 33 -1 

25 25% 25% -% 
7% 7 7%+% 

39% 36*4 38% -2 

4% 4 4 \ -a 

31% 31 31 -.17 


21 % 021 21 % 

21% 20% 21% 

12J6 12*g *2X8 +.11 
33 32% 33 +A 

36% 35% 36*4 -% 
17*2 017 17% +% 
10 % *0 10 % 

10 9% 9*2 
3% d3% 3% -% 
41% 41 41% +% 
1% *% *% 

8% 8% 8% ft, 

11% 10*2 10% 

20 19% 20 *B 

7% 7% 7A -A 
64 62% 83% -% 
4% 37g 4 

16% 15% 16% +% 
1B% 17% 18% +% 
16% 15% 16 -% 

23% 23 23 -% 

10 9*2 9% 

16% 16 16 -% 
13% 12% 12% +% 
19% 19*4 19*2 -% 
26% 28% 26% +% 
27026% 26% -% 
9 8% 8*2 -% 
15% 15 IS -% 

36 33% 34% -1% 
10 % 10 % 10 % -% 
75% 73% 73% -1% 
3% 3% 3*2 +% 

11% 11 11A 

10 9% 9% -% 
5% 5% 5% -% 
8% 8% 8% 

G2& 61 61% -% 

3 27% a 
25*2 25 25% +% 

27% 28% 27 
24% 24% 24% ft, 
27% 28% Z7 -% 
14*2 13% 14% -ft, 
18% 17% 18% +% 
8 7% 7% •% 
27% 2B% 28% -1 

38% 36% 37% ft, 
40% 38% 39*2 -1% 
9% 6% B +% 
24% 024 % 24% 
21020% 21 ft* 

a a% 23 +% 

9% 09% 9% +% 


floct&Sk 

flNSewK 

RotsSk 

RdechMed 

ffeau 

HPUlnc. 

RSFfe 

FtyanFnriy 


- R - 

15 753 14% 13% 
2 646 3% 3% 
1 522 3% 2% 
14 85 19% 16% 
1713BB 19% 17% 
21 46 a a 

1 290 3% 2% 
7 8 4 3% 

18 1769 13% 12 

037 31 1487 44% 43% 
9 49 6% 5 

050 >0 72 33*2032% 
1^0 40 14a 51%049% 
012 14 156 8% S% 
040 51739 16% 19% 
044 171778 14% T<% 
020 B1S3B 13% *3 
a 315 26% 26 

OGB B4 346 17% 17% 
056 18 376 18% 17% 
080 11 21 21% 21,’. 
11 1003 6% 6% 


T4 

3% 

2% 

18% ■% 
18 -1% 
33 


14% +% 
13% -% 


18% +% 
21% 


Safeco 196 84795 

Sanderson OJO 12 150 
SdriBiMA 030 a 794 
SaUedL 200 3440 
SQSpsta IB 1904 
Sou 610*1 

StitbCpx 052 12 7K 
Score Snf 6 675 

SeMridx 120159 26 
SUM 89992 

sa Cp 016 a n 

SefeG&B 038 6 1B1 
Means 1.12 9 5X2 
Serpent 1122581 

SfiOKfe 5 484 

Sere Tech 5 70 
ScntriO 18 3 

Sereaconx 022 12 272 
Smtoed 0X4 191567 
5M.Systn 20 957 


SHLSystre 
Snmnod 
SnewbbP 
Siena On 
SlenaTuc 

9gnM 

supnaDes 


a 1880 

IB 540 
22 2070 
3 SB 
036 15 1798 
312807 


SUctWec 0X6 16 149 
SOMVGP 25 4160 

Stepan 040 143273 
SnritriU 16 278 

&tapptefiv 2617130 

SoftwareP 12 268 
Sonocd i 056 15 670 
SaUhtritx OXB 61450 
SphgeiA 02D 17 48B3 
aXmelH 040 175113 
StPHriBC 030 103264 
SttyS 0 2246 

Sarins 354315 

Slate Sh 0X0 129677 
SB Mao 12 2413 
SURB03X OGB 10 B60 
Stare Tec x 0X6 121061 
SnktyUSA 020 10 400 
Skriw 40 6 

Shurtxa 1.10 9 21 
StnjctDy 12 688 
Stryker 028 247199 
SttmD 17 734 
SumnumoB 080 14 282 
SunakBoXX* a 277 


SuantTa 

SinSpai 

SurAOc 

Swot TO 

Sybaeahc 

S y man te c 

Syioooy 

SyMiconi 

Synaygen 

Sfaxc 


23 1812 
11 88 
1320MB 
23 872 
3613914 
100S6B8 
040 14 82 
17 237 
28135 
92 386 


SyremSoB 012 162030 
syamBco 211343 
juried 412B55 


47% 046% 47% -% 

19% 18% 19% +% 
27% 25% Z7 +% 
48% 47 48 ■% 

17% 17% 17% +% 

6*2 6% 6,’* +ft 

18% 17% 17% -% 

4% 3% 4% -% 
33% 33*2 33% -% 
24% 23% 23% -% 
19% 18% 19 +% 

2 % 2 ft 2 % +A 
24 23% 24 +% 

16*2 17% 18 -% 

3S 3li 3% +A 
6% 6% 8% +.16 
4% 4% 4% 

16 16 16 -2 
29% 28% 29% -% 
4ft 04% 4% -% 
IB 18*4 1B% 

7% 7% 7*2 -% 
26% 24% 25% -% 
3 3 3 -% 

34% 34 34% +% 

6 % 6 % 6 % -% 
12 % 11 % 12 % 

16 17% 7B% -% 
11 % 10 % 11 % 

26% 27% 28% ft, 
13% 13% 13% +% 
5% *% 5% -% 
22% 2T% 21% -% 
17% 17% 17% +% 
12%d11% 12 
39% 38% 39% +% 
17% 16% 17*4 
1% tft 1 -% 
21*4 19% 21% +% 
31% 030% 31% +1 

22 % 21 % 21 % -% 
16% 01 6*2 16% +% 
11% 11 11*4 ft* 

9 B% B% -% 
19% 19*4 19% 

22 21*2 21 % ft * 
6 5 % 6 

34% 33% 34% ft, 
13%012% 13% 

23% 22% 23 
19% 18% 19% +% 
31% 29% 30% +% 
4% 4% 4% 

32 28ft 31% -% 
16% 17% 18% ft, 
43% 41% 43 -% 

17% 17 17% ft, 

16% 17% 17% 

*S *% <B -A 

9ft 9 9 

16% 14% 14% ft, 
14 13% 13% -% 
19% 18% 18% ft, 
6*2 6% 6% fta 


2*» +ft 
16% 

15% +% 
13% 

15% +% 
57% -1% 
33% ft, 


5ft +ft 
18% -% 


18% -1% 
S% +% 
33% +% 
17% -% 


T-Ceri Sc 4 73 

TjpMPr OS 34 BOB 
TBCCp 131694 

TCACairia 044 24 594 
TecWJata 17 4537 
Tecwnsah QXO B 27 
Trereiac 151142 
Tata) Sys 312564 
TlriCniA 55028948 
TMrit 231 1254 
Tates 32 8333 

Teuton Cp 001 » 856 
TetraTac 36 409 
TbwRtfORxOZI TO 5141 
Three Com 85ZB21 
in 14 432 

TJfet 022 191288 
Totalled 5 897 
Tokyo Mr 034 33 13 

Tore Brawn 354 1092 
Tgpps CO 023111217 
TR Enter 21440 

TnUMtd 13 5 

Tremrick 1X0 12 319 
TrtCtok 16 302 

Titrable JO 999 

ThretcaM 1.10 12 3a 
Ts8flgLaXx029 14 1093 
TyafdA OOK5B21222 


2% 2% 2% 
a% a% a% fta 
9% 09 9% -% 

H% a% 72h ft* 
17 19% 10% 
43%d40% 43% +2% 
a 23% 23*2 -% 
15% 14% 15 -1% 
a»2 2i% a -% 
4% 4% 4% -% 
44% 42 44% +% 

11% 10% 11% ft, 
9% 6% 8% -% 
25 24% 24JJ +ft 
43*2 41% 43% +1% 
8ft B 6 ft, 
IB 15% IB +% 
6% 6% 6% +% 
55% 55*2 55% ft, 
10% 010% 10% -% 
5% 5% 5% +% 
4% 04 4% +% 

10% 10% 10% ft, 
37% 36% 37 -% 

2*e 111 2 

14 12% 13% Hi 
19% 1919X1 -SB 

9% 6% 5% +J3 

a% a% 22% -% 


10*2 -% 
20 % 

5% 

12% -% 
31 +X5 
28% +% 
30% -% 
36% 

25% -ft 
9% •% 
39 •% 
19% +% 
7% -% 
9 

5*2 +% 
2 -*8 
13% -fta 
11% 

30% -% 


41 +1 

10% -% 
29% -*a 
66 +% 

32 -1% 
36 •% 

8% +% 
11% 

14% -% 

33 -% 
40 

4*2 -*a 
22% +% 
11% -% 
a% 

IB 

B% *% 
7% -% 
19% +% 
17 -% 
45* 2 -% 
34% +1 
18*2 +% 
7% -% 
5% -% 
5 

41% +1% 
14% -*a 
5 

28% -% 
22% -% 
20% -1% 
»% -% 
6JP 


UStMar 

Unfed 

UOnaaStx 
US 1st 
United SI 
(tettagx 
Untofe 
USBanep 

US Energy 

UST Cap 
Utah Mad 
UW Tatar 

into 


084 1912*3 

a aoo 

1X2 12 47 
2X0 13 1376 
0X0 TI 277 
OXB 17 211 
1X0 30 247 
1X0 15 1882 
6 174 
1.12 23 BD3 
12 634 

18 a 

19 150 


45% 43% 
4% 4% 
15% 15% 
63 82% 
9% 9% 
18% 17% 
44% 43% 
a%d a% 
4% 4% 
9% t»% 
8 7% 
52% 51% 
3% 3% 


45% +*2 
4% 

15% +1.27 
62% -% 
9% •% 
17% -M 
44% +% 
22% +% 
4 % +A 


- V - 

OJO a 34 16% 16% 16% +% 
116 563 27 26% 2fiU -ft 

IB 1975 21% 20% 20% 
a 864 24% a% 24 -1 

15 360 17% 16% 18% ft, 
296 1707 21% 20% 20% -% 
1311006 11% 11 lift -% 

OT7 18 148 19% 19% 19% -% 


Warner En 0.10 
Wanrteai 
WfedriilutSB 07B 
WBdritriSL QB4 
WaterindA 02 
muauPUOS* 
WD-40 240 

urea* 

West One 0X8 
mmanc oee 
WSPUS 
wrepStA 
WriSaaiA 
WtenXax 096 
HtaSnnm 
WriohanL 02B 
Wtongt 040 
WT&rnp 0X3 
Uyman-GdnOlO 


- W - 

15 3077 23% 821% 
43 837 5Ji 5 ft 
68202 16%015% 
7 1606 17016% 

13 884 19%41B% 

15 477 34% 24 

a 102 42% 41% 

4 877 3% 3% 
91141 25% 025% 
10 156 30 29% 

9 888 11% 10% 
2 308 14% 14 

14 a 3% 3% 

17 4540 42% 039ft 
40 7826 28% Z7 
12 126 IBft 15% 
20 922 20 19% 

2 615 3% 3ft 
1 2X5 5% 5% 


22ft -ft 
«4 +ft 

16% i% 
17 +% 
19% +% 
2*% +% 
42% 


-X- Y- Z - 

XHW 304019 58% » SB% +1% 

XOnaCtBp 1 817 3% 2% 2% J, 

Tea* 094171 2153 19 18% 18% 

YtBkfedl 106 219 4% 4*4 4% -% 

ZbnUtati 120 B 143 % 034 35 +% 


l 


f 


40 


WORLD STOCK MARKETS 


FINANCIAL TIMES 


Thursday November 24 1994 


4 H 


AMERICA 


EUROPE 


Dow adds to losses as 
bond market benefits 


Bourses steady after painful morning 


Wall Street 

US share prices added to the 
week's losses yesterday morn- 
ing, but did not go into the 
freefall that some analysts had 
predicted, writes Lisa Bnmsten 
m New York. 

By l pm the Dow Jones 
Industrial Average was down 
25.23 at 3.652.76. The more 
broadly based Standard & 
Poor’s 500 fell 3.72 to 44R36, 
while the American Stock 
Exchange composite lost 4X0 
at 431.54. The Nasdaq compos- 
ite was down 1CX26 at 730-95. 
Trading volume on the New 
York SE came to 270m shares. 

The bond market was a 
mqjor beneficiary of the drop 
in share prices as the long 
bond yield fell below 8 per 
cent for the first time this 
month. It was one of the first 
times this year that stock and 
bond markets moved in oppo- 
site directions. 

Program trading poshed the 
market down by nearly 40 
points by early afternoon after 
a volatile morning that had 
seen the Dow momentarily in 
positive territory at the open- 
ing bell. The index was down 
for most of the morning, how- 
ever, and even news that the 
Clinton administration had 
won important support for the 
General Agreement on Tariffs 
and Trade failed to boost 
shares. 

Senator Robert Dole, who 
had been wavering in his sup- 
port for the world trade pack- 
age which is viewed as benefi- 
cial to businesses, said he 
would back the passage of the 
Gatt 

Some analysts believed that 
Tuesday’s plunge in the Dow 
was simply the blue chip index 
catching up with other indices 
that had fallen further. 

Morgan Stanley's index of 
cyclical stocks fell more 
steeply than the Dow, which 
may foreshadow further weak- 
ening, arannfing to an analyst 
at the investment hank 

Major cyclicals were mostly 
down. Allied Signal foil $% at 
$30%, Al uminum Company of 


America lost $2% at $77%, 
United Technologies shed $% 
at $55 Vi. Dow Chemical lost $i 
at 361%, Motorola dipped $% at 
$59% and Hewlett Packard 
decreased $% at $95%. 

Shares In interest-rate sensi- 
tive commercial banks posted 
increases: Citicorp up $% at 
$41%, NationsBank was up $l 
at $44%. Chemical Banking 
gained $% at $34% and Chase 
Manhattan increased $% at 
$34%. Reaction was mixed 
among major investment 
banks: JP Morgan gained $% at 
$56%. while Salomon Brothers 
fell $Vs at $36 and Morgan Stan- 
ley dropped $% at $56%. 

HJ Heinz shares fell initially 
after Nestle, the Swiss food 
group, announced that it was 
not interested in purchasing 
the US food company, but by 
early afternoon Heinz shares 
were up $% at $36%. 

Pfizer shares declined $2% at 
$72% after the pharmaceutical 
company announced that it 
would buy the animal health 
business of SmithKline Bee- 
cbam for $1.45bn in cash. 
SmithKline Beecham ADSs, 
traded on the NYSE, dropped 
$% at $33 on the news. 

Brazil 

Shares in Sdo Paulo were 2.6 
per cent lower at midday as 
investors remained worried 
about the prospects for the 
banking sector. The Bo vespa 
index fell 1,157 to 43,791 in 
turnover of R$143Jm ($170. Im). 

The central bank had liqui- 
dated four Small finanrlial 
institutions over the previous 
10 days, bringing the total to 
seven since the implementa- 
tion of a new currency on July 
1. 

Some small banks faced 
financial problems after recent 
central bank measures, aimed 
at slowing consumption in Bra- 
zil, created a sharp liquidity 
squeeze. 

Among the blue chi p s Tele- 
bras preferred dropped 3.4 
per cent to RS36.40, Vale do Rio 
Doce was off 2J per cent at 
R$14&50 and Petra has down 3.0 
per cent at R$U3. 


• Smith Barney said yester- 
day that it had reduced its 
Latin American equity portfo- 
lio weightings in Mexico and 
Argentina because both mar- 
kets were vulnerable to the 
rise in OS interest rates. 

The broker was raising its 
weighting m Brazil and Chile, 
since US interest rate fluctua- 
tions had less influence over 
equity market movements in 
both countries. 

Canada 

Toronto sank at midday as 
investors continued to move 
out of equities and into bonds. 
The TSE 300 index fell 43J26 to 
4,014.89 in volume of 24J>m 
shares as sharp losses in gold, 
consumer products and mining 
issues overwhelmed slight 
gains in financial services, 
pipelines «*rri Mwiwimiei t innii. 

Of Toronto’s 14 sub-indices, 
11 groups posted losses at 
noon. Gold and precious metals 
spiralled down 262.63 to 
8,768.12. 

Euro-Nevada led tarnished 
gold stocks, falling C$2% to 
C$32%. while American Bar- 
rick dropped C$l% to C$28%. 

Strong sectors were led by 
financial services in the wake 
of Bank of Montreal’s C$% 
advance to C$24% after its 
hi gher fourth-quarter earnings. 

Newbridge Networks lost 
C$l% at C$43% in spite of 
reporting stronger second- 
quarter results on Tuesday. 

SOUTH AFRICA 

Shares in Johannesburg were 
sharply lower in reaction to 
the worldwide foils in equities. 

Golds softened in spite of a 
firmer bullion price, largely 
because of losses on Nasdaq 

nvpnilght. 

The overall index lost 109 or 
1.8 per cent at 5.799.9, the 
industrial Index was off 117.2 
at 6.866J) and the golds index 
was 45J down at 2,046.6. 

De Beers declined S3 to 
RS2.75, Anglos died R5.50 to 
H234 and Mmorco fell R 5 to 
R96J50. Among banks, Absa 
receded 20 cents to RIO JO. 


EMERGING MARKETS: IFC WEEKLY INVESTABLE PRICE INDICES 

DoSartanns Local ciarancy tanns 

No. of Nov. 18 % Change % Change Nov. 18 % Ctrange % Change 

Market stocks 1994 over week on Dec *33 1994 over week on Dec *93 

Latin America 

(207) 

707.62 

-33 

+83 




Argentina 

p4) 

840.98 

-5.0 

-15.4 

516,14834 

-5.0 

-15.4 

Brazfl 

(57) 

42233 

-3X 

+81.8 

1321.758376 

-33 

+1XOQ.7 

crate 

(25) 

807X1 

-0.7 

+46.4 

1344X8 

+0.1 

+41X 

Colombia' 

fll) 

779X5 

-2.4 

+20.9 

1.142X9 

-23 

+233 

Mexico 

(67) 

808X3 

-3.8 

-13.7 

1X93-84 

-3A 

-4.1 

Pern* 

(11) 

183.80 

-33 

+62.0 

245X9 

-33 

+54X 

Venezuela 1 

(12) 

458.41 

-3.7 

-22X 

1,78230 

-3.7 

+234 

Asia 

(558) 

264X0 

+0.4 

-9.0 




China 4 

(18) 

98.72 

-0.7 

-33.9 

106X1 

-0.7 

-353 

South Korea* 

(1 50) 

152X9 

-1.8 

+28X 

159X9 

-13 

+263 

Philippines 

(19) 

313.77 

-1.4 

-7 X 

37031 

+03 

-16.6 

Taiwan. China 1 

(90) 

144.14 

-3X 

+6X 

14238 

-23 

+6.4 

India’ 

(78) 

129.68 

+23 

+113 

14430 

+23 

+12X 

Indonesia 1 

(38) 

107.42 

-0.9 

-133 

128.98 

-1.0 

-103 

Malaysia 

(104) 

28831 

+13 

-14X 

273X0 

+2X 

-18.9 

Pakistan* 

(IS) 

30130 

-IX 

+OX 

54439 

-IX 

+3.1 

Sri Lanka" 

(5) 

193.89 

-IX 

+93 

20831 

-OX 

+83 

Thariand 

(55) 

419X7 

-2.1 

-12X 

41635 

-IX 

-133 

EurWMId East 

(125) 

123X7 

+0.7 

-273 




Gresoe 

(25) 

21331 

-1.4 

-63 

345.98 

♦03 

-1D.0 

Hungary" 

(5) 

172.65 

-2.4 

+3.6 

22731 

-1.7 

+12.7 

Jordan 

(13) 

157.75 

+2.0 

-4.7 

232.13 

+2-6 

-3.0 

Poland* 

(12) 

474.57 

-13 

-42.0 

710.00 

-0.7 

-35.7 

Portugal 

(25) 

126.43 

-1.4 

+11.1 

137X5 

+03 

-0.1 

Tishay** 

(40) 

13133 

+3X 

■38.1 

2X57.15 

+3.1 

+55X 

Zimbabwe 14 

(5) 

28132 

-OX 

♦29.4 

31938 

-13 

+49.7 

Composite 

(890) 

347.48 

-13 

-23 





Mbm m cafcuwed at a ntf waa fc and amngat amparcamg a m am a m* tan am pi—fa m Pridv- Baa dame the (MM 00 adapt Vmaa aM 

19B1; pJDac 31 rWZ fi JSW* Mt*C 31 1032; &Jm 3 19SE: «Jar> * 1901: fl 1SBZ Otar » 1990; fSOAOhr- 1 Ml; fTfl> 
Dae 31 109Z (li/Oae V T93£ PQDac 37 19BZ (l&vg * 188% paj My 3 1003. 

As one of the best performing Aston emerging markets so far this year, Sooth Korea has 

began to attract attention from fond managers and strategists, writes John Pitt 

Baring Securities suggests that the market is undervalued by almost any standard. “It trades 


contrast the 1994 average price/earniiigs ratio for the major Asian countries is 27.2 times." 
What strategists find attractive about the country over the longer term is the prospects for 
economic expansion when political reunification with North Korea becomes a possibility- At 
present trade with China Is growing quickly and, an the domestic agenda, rising industrial 
productivity, moderating wage growth and diminishing labour disputes all point the 
way toward increasing international competitiveness. Although the limit on the foreign 
ownership of stocks is to be raised to 12 per cent from 10 per cent next month, and to IS 
per cent during 1995, analysts expect the new limits to be reached quickly. 


Bourses, trailing US equities, 
had a painful morning after 
Tuesday's Wall Street plunge; 
bat, in the afternoon, they 
seemed in no hurry to follow 
the Dow's extended decline, 
writes Our Markets Staff. 

Morgan Stanley's European 
strategist Mr Richard David- - 
son. followed the lead from his 
US colleagues and cut the 
weighting of equities in his 
European mixed asset portfolio 
from 58 to 50 per cent. He 
moved the money into bonds, 
reckoning that equities will 
underperform over the next 
two quarters; yet he empha- 
sised his house’s longer term 
view that stock prices should 
outperform over the course of 
the cyc le. 

FRANKFURT dropped 2 per 
cent on the session, the Dax 
index losing 41.46 at 2,03331; 
however, it had recovered to 
2,040.05 by the end of Ibis 
trading for a 24-hour drop of 
1.6 per cent. 

Dealers said investors were 
seeking refuge in relatively 
hi gh band yields. Turnover in 
German equities, reflecting t h * 
switch, moved up from 
DM55bn to DM7.5bn. 

Individual stocks still man- 
aged to respond to events. 
Deutsche Bank, a major share- 
holder in, and creditor to 
Metallgesellschaft, dropped 
DM2L80 or nearly 3 per cent to 
DM722.70 an the session after 
the troubled trader unveiled 

ASIA PACIFIC 


FT-SE Actuaries Share .Indices 


Nov 23 THE EUROPEAN SBlCS 

Haifrctanoa Open 1230 tlJQ T2J0 1300 1400 ISM OM 

Fr-SEBnfe«kioo mi.is i3i2m mao 131MO isizie tail* 1312m 131 ass 

rr-SEamwAao ianup im.n xmm raaat ijbm taga istoji 1370x1 

• to»ZZ Hu 21 Maria Hw 77 Bor 18 

FT-SE Bratsk 100 133L93 1351.17 134408 135059 13SLB9 

FT-SE EMU* 200 1M1J8 1411.82 W0281 1412X3 1421.32 

Bm 10® (ZVKMQ; M04SF 100 - OK® ZD - tSZU MUv W0 - 1318SB SB - ISO* t MS 


capital reduction, and new 
share issue plana. Deutsche 
recovered to DM727.50 after 
hours. 

BASF and Bays- were rela- 
tively strong ahead of the 
chemicals results season, down 
just DM 1.20 to DM304 mid 
DM1.10 to DM335.40 respec- 
tively. BMW led carmakers 
down with a drop of DM26 to 
DM749 after a fall In October 
re gistr ations. 

ZURICH was still preoccu- 
pied with developments at 
UBS, although the SMI index 
fell 25.7 to 2,546.1, with the 
weakness of the dntiar aim^g 
to its more general concerns. 

UBS bearers shed SFi34 or 
Z9 per cent to SF71425 after a 
low of SFn.115. with the bank 
a gain hM to be a large seller. 
The registered gave 19 SFrlS 
to SFr252, further reducing to 
m n per emit their premium 
over the bearers. The pre- 
mium, which stood at 34.4 per 
cent when battle lines were 
drawn with Mr Martin Omar's 
BK Vision on September 29. 


had shrank to lfi.6 per cent by 
Tuesday, when shareholders 
voted to support the board's 
proposal for a single class of 
equity capital. 

Nestle eased SFr9 to 
SF1I496, its 10-month figures, 
proving in line with expecta- 
tions, although forecasts for 

volume growth during 1995 
helped the shares up fr om a 
low of SFrUSL 

Holderbank gave up a fur- 
ther SFrl5 to SFrl.015, Still 
awaiting the outcome of the 
European Commission's five- 
year Investigation into alleged 
illegal market-sharing agree- 
ments between some of 
Europe's biggest cement com- 
panies. 

PARIS managed to recover 
some of its early losses, helped 
by some institutional short- 
covering on the last day of the 
account The CAC-40 index 
shed 18J& or 1 per cent to 
1396.09, after a session's low of 
1372. Turnover was FFr4bn. 

Soci6t6 G6n6rale went' 
against the trend with a rise of 


FFr3 to FFr601. However; it 
had its rating reduced yester- 
day fay Merrill lynch, which 
said that the stock was now 
folly valued after a strong 
performance oyer the last 
three months. According to 
Merrill, the stock hadoutper- 
formed the market by 12 per 
cent in that period. 

Alcatel Altibom was annfiiar 
stock to rise, by FFr4.60 to 
FFr419.60, as some bargain 
hunters emerged. The shares 
hit a year’s low of FFr411 ear- 
lier in the week a s the head at 
a subsidiary was detained over 
allegations that France Tele- 
com had been overcharged for 
equipment supplied. 

MILAN'S Comit index fall 
1133 or 13 per cent to 62334 as 

investors worried that the anti- 
comiptkm magistrates' investi- 
gation of Mr Silvio Berlusconi, 
the prime minister, risked the 
parliamentary passage of the 
budget, and threat en ed its defi- 
cit-cutting measures. . 

Mr James Cornish at Nat- 
West Securities said, however, 
that political developments 
were unlikely to halt the coun- 
try's economic recovery. The 
market was not yet cheap 
enough to be an irresistible 
buy, and the likelihood of 
farther political upsets nwmt 
it was likely to become cheaper 
in the weeks ahead. Mr Cor- 
nish viewed further weakness 
as an opportunity for selec- 
tive buying. ■ 


.. AMSTgwnAM dragged itself 
had from an AEX index ses- 
sion tow of 399-46, dosing 440 
down at 403.00. 

Akso Nobel fell FI 400 to 
FI 1933ft ft said it planned an 
investmeit of SRr575m in two 
Swedish factories. 

In the finance sector. INC 
slipped 40 cents to F178J20. 
Thera were domestic media 


to shed approximately 1,500 
employees, which could result 
in savings of some FI 735m. 
ING js expected to show an 
improvement in its third-quar- 
ter earnings today. 

Fokker announced job cuts 
cf 160 at its special products 
division, due to falling sales, 
and the shares dropped 2.7 per 
re nt to FI 1450. 

MADRID, once again, regis- 
tered a lower than average 
the genera l index daw* 
ing back around half of its 
early loss to end 2.65 or 03 per 
cent off at 299.72 In turnover of 
nearly Pta27bn. 

Pryca ri tiphovi fa bric from an 
eady decline of nearly 4 pea: 
cent to finish Pta55 or 23 par 
cent down at Pta2,130. Mr 
Christopher Cooper at James 
Cape! said there had been sto- 
ries in the Spanish press about 
limitation of opeating hours for 
supermarket groups. 

Written and mttMJ by WDBam 
Cochrans, John PAt and Mchael 
Mor ga n . 


Region tumbles in response to US worries 


Wall Street's overnight fall 
took a hefty toll of a region 
lariring 1 the influence of Tokyo, 
which was dosed for the Japa- 
nese Thanksgiving holiday. 

HONG KONG tumbled a fur- 
ther 43 per cent in reaction to 
US worries, the Hang Seng 
index finishing 372.40 down at 
8376.03 after plunging to the 
day’s low of 8,37938 in the 
opening minutes of trade. 

Among the index heavy- 
weights. HSBC fell HKS2.75 or 
3.1 per cent to HK$8530 and 
Henderson Land nhclrt 
or 5 per cent to HES4330. 

Analysts noted that an auc- 
tion of two plots of government 
land, which produced results 
close to those predicted, faflpri 
to give the market significant 
support 

Turnover amounted to a pro- 
visional HK$53bn, compared 
with HK$4J8m an Tuesday. 

The H -share index of nhfagse 
stocks listed in Hong Kong fell 
19.48 or 1.6 per cent to 1,166.75. 

SHANGHAI'S B share farirer 
was down 43 per cent by the 
close, led by a newcomer, 
S hanghai Lujiazui Finance and 
Trade Zone Development, and 
in line with the sharp foil in 
Hong Kong. The index lost 3.04 
at 67.63 in heavy volume of 
2Llm shares. 

Shanghai Lujiazui, which 
made a strong debut on Tues- 
day, encountered heavy over- 
seas selling and weakened 
$0,072 or 83 per cent to $0,750 
in volume of 1 73m shares. 

BANGKOK’S SET index hit a 
low of 1303 before finishing 
69.96 or 5 per cent off at 
1.332.85 in turnover of 
Bti3.7bn. The biggest falls 
were in banking, down 53 per 
cent in Bt33bn of turnover, 
and finance, 63 per cent tower 
with shares worth Bt2.7bn 
exchanged. 

The mild recovery in the 
afternoon appeared to be 
encouraged by foreign inves- 
tors picking up cheap stocks in 
energy and petrochemicals, 
among other sectors. 

JAKARTA retreated 33 per 
cent as selective bargain hunt- 
ing failed to halt a broad 
sell -off, and the official i nUar 
dropped 16.66 to 482JUL 


FT -ACTUARIES WORLD INDICES 


Jointly corapted by The Fi nan cial Thau Ltd-, Goldman, Sacha a Go. and NalWeat Securitas 
NATIONAL AND 


Ltd. in ccr framm vrih the Inssuta at Actuates and tta Faariy o I Actuates 


REOIONA1. MARKETS 
Rgue9 in paranttaoM 
thorn runber at firm 
af slock 

US 

OcBar 

Index 



BNgluniae - - 

16834 

171.11 

Canada (103).- 
Denmark (33) 

128X7 

248.16 


Germany (58) — 

Hong Kong (SB) 

Inland (14) — . 

Italy (59) 

Japan (408) 

141X6 

3S8.80 

202.62 

7KOB 

153.77 


Day's 

Change 

K 

Pound 

Staring 

Yen 

Index 

DM 

Max 

Local 

Currency 

Index 

local 
% Chg 
on day 

Groas 

ON. 

Yield 

us 

Defer 
ted ex 

Pound 

Soaring 

Met 

Yen 

Index 

DM 

Index 

Locri 

Curancy 52 weak 52 *mak 
Index ffigh Low 

Year 

■Bo 

(appreor) 

-IX 

155.16 

101X0 

132.77 

143X3 

-IX 

3X6 

10056 

157X8 

103X8 

133X4 

145.43 

1SB.15 

149X8 

153X7 

OX 

168.71 

110X0 

144X6 

144X4 

-OX 

1.13 

178X8 

168X6 

110X3 

144 62 

144.47 

198X9 

167X6 

173X5 

0.1 

157X1 

100X4 

13431 

131X2 

-03 

4X1 

16044 

157X6 

103X0 

134.93 

131X0 

177X4 

161.70 

151X0 

-OX 

16132 

106X8 

138X1 

283*47 

-04 

0.78 

17048 

163X5 

107X4 

139X1 

26443 

_ 

_ 


-IX 

119.78 

78X5 

10237 

126X0 

-05 

2.71 

126.16 

121.19 

79.71 

103X2 

128X2 

145X1 

120X4 

132X1 

-ox 

234X6 

1S3XG 

200.44 

205X2 

-1.0 

1XS 

25014 

23849 

155X5 

202.79 

207X8 

275.79 

290X7 

235 SB 


Malaysia (97) 

Mexico pB) 

NetfMrtand (19) 

Nwr Zealand (14) 

Noway (23) 

Stnoapore (44)- 

South Africa (50) 

Spain (38) 

Sweden (36) 

Suritzafand (47) 

Thatand (46) 

United Kingdom (20^-. 
USA (516) 


Americas (0B4) 

Europe (708) 

Nordic (118) — I 

Padfic Brain (783) 

Euro-Padflc (1501) 

North America (BIS) 

Europe Ex. UK (504) — 
Pacific Ex Japan 5326).. 
World Ex US (1709) 
WBrid Ex UK 0020) — 
World Ex. Japan (1756). 


506.18 

—-ZOOMS 

21081 

73X7 

195.15 

— 3782S 

336.70 

141 -55 

239J31 

190X3 

— ..isazr 

19a TO 

184.19 


172.15 

16126 

-22aea 

162.41 

165.19 

180.83 

150X31 

246X33 

168X8 

169X7 

183.10 


-IX 

175.84 

115^48 

15046 

185X1 

-1.7 

076 

18X65 

178X6 

117X1 

1S2X4 

186.75 

201.41 

116X5 

-04 

15068 

102X0 

134.0B 

136X9 

-08 

3X9 

166.72 

167X2 

10X67 

135.16 

139X6 

165X7 

159X4 

-09 

133.15 

07.46 

11X93 

11X93 

-IX 

1X2 

142X1 

134X5 

MM 

11X37 

115X7 

180X0 

128X7 

-4X 

33070 

2ZL44 

289X1 

35017 

-4X 

X36 

37X04 

354X9 

233X2 

304X6 

372X9 


341X9 

-04 

191X7 

125.02 

16X86 

184X4 

-OX 

X47 

20X47 

192X8 

128X3 

184X8 

1BSX1 

218X0 

172X5 

-3.1 

71X3 

46.78 

60X9 

9045 

-2.7 

1.75 

77X7 

73X3 

48X3 

6X14 

SUB 

97.78 

57X8 

-03 

14016 

95X3 

124X0 

95X3 

-08 

061 

154X2 

145X0 

95X0 

125X3 

95X0 

17010 

124X4 


477.62 313.81 408X5 497.60 
1888X2 1240.48 161&1B 752691 


SI 6X4 488X5 320X8 417X6 509X1 621.63 430X1 
1968X39 1861X4 1224X6 1596X1 7435.11 2647.06 1898X8 


-08 

189.00 

13069 

17027 

167X2 

-IX 

X45 

212X9 

201X0 

13220 

17238 

189X7 


167X1 

187X1 

-IX 

68X7 

45X0 

66.02 

62X7 

-1.4 

4X6 

74X2 

axe 

46X3 

6201 

6214 

77,50 

01X7 

8219 

-06 

184X1 

12098 

157X2 

180X0 

-09 

1X4 

198X8 

185X7 

12212 

159X1 

181.78 

211.74 

185X2 

178X0 

-XO 

357X6 

234X0 

30SXQ 

255X8 

-X.1 

1X5 

38097 

36270 

242X0 

3121S 

263X1 

401X8 

29*X8 

31262 

-02 

317X3 

208.74 

271.95 

303LS7 

0.1 

2.12 

33742 

319X1 

group 

273X5 

3Q3XS 

3*260 

305X5 

22BX2 

-03 

133.71 

87X2 

114X1 

138X6 

-OB 

421 

14206 

13433 

8235 

11218 

139.77 

155.70 

12288 

135X1 

-IX 

225X2 

148.18 

193.05 

260X2 

-IX 

1X4 

24281 

229X7 

15099 

198X8 

26*X5 

24281 

175.83 

184X7 

-1.0 

151X3 

99X2 

129X0 

131X2 

-IX 

1X5 

16212 

153X7 

10081 

131.43 

132X0 

176X6 

14204 

146X4 

-3X 

154.12 

101X2 

131X7 

158.42 

-ax 

2X0 

169X2 

16009 

105X9 

137X8 

164X9 




-1.1 

-IX 

18S.73 

173X7 

121X8 

114.19 

158X3 

14077 

106.73 

184.19 

1 1 

fall 

4.14 

2X7 

198X9 

18748 

18213 

177X3 

123.74 

11257 

161X3 

151X7 

16213 

187.46 

214.96 

19204 

181.11 

17295 

183X7 

18277 

-1.6 

162X0 

108.72 

139X4 

143.12 

-1.8 

2X0 

175.01 

16246 

10283 

141X8 

145.46 




-1.0 

159.77 

104.93 

136.71 

150.64 

-IX 

3.11 

17096 

161X0 

106X2 

136X2 

15249 

172X8 

154.79 

154.79 

-IX 

213X9 

140X4 

183.10 

211.64 

-1.4 

1A0 

229X8 

217.13 

142X1 

196.19 

714.70 

233X1 

17219 

180X3 

-07 

153X1 

100.09 

131.18 

105X6 

-IX 

1.16 

16255 

164.63 

101.70 

13260 

106X0 

172X6 

134.79 

14264 

-OX 

155X3 

102.41 

133X2 

123.11 

-1.1 

2X1 

106X7 

15748 

103X8 

13204 

12446 

175.14 

143X8 

151X7 

-1.7 

17051 

111X8 

145.90 

18020 

-1.7 

296 

1B278 

17278 

114X8 

14299 

183.30 

192.73 

175X7 

183X9 

-09 

14245 

83.55 

121X9 

129X9 

-IX 

2X0 

1523* 

144.03 

94.73 

123X0 

131X4 

15212 

13294 

138X6 

-2.7 

233.00 

153X2 

199X7 

217X0 

-ax 

3X0 

26278 

239.93 

157X1 

20274 

22274 

296X1 

23254 

23254 

-OX 

157X2 

103X2 

134X7 

12475 

-1.0 

2X1 

168X2 

159.13 

104X5 

132*5 

1230* 

176X5 

145X8 

15SX3 

-1.1 

169.78 

104X4 

13072 

14041 

-IX 

215 

171X0 

161X6 

10246 

13279 

14221 

178X9 

155X6 

180X8 

-IX 

172X3 

113X1 

147X6 

173X9 

-IX 

297 

165X2 

175X8 

11555 

1506* 

178X0 

13520 

178X4 

177X9 

-1.1 182X6 10X44 13X67 144.46 -IX 2X4 17X64 164.17 107X3 140.77 146X1 130X0 168X6 162X9 


Copyright. Th* FVwctt To** Unfed. Qottnon, Soeta and Co. and NXWa: Sacumn brnBad. 1987 
LAM prioaa — tiuuaiiflia to Bu ton 


Among the losers were 
Indosat and Gajah Tunggal, 
which fell almost 4 per cent to 
Rp7325 and 6 per cent to 
RpSjOO respectively. . 

SDiGAFORS picked up from 
its lows as 9ome bargain hunt- 
ing- appeared amnng the blue 
chips, but the Straits Times 
Industrial fnrtor ariTT finiahgri 
5k24 or 23 per cent down at 
23173L 

OCBC foreign dipped 90 
cents to S$143Q, Cycle and Car- 
riage also 90 cents to S$12.60 
and Juroug Engineering S$L05 
to SS8.45. 

lnTAiA LUMPUR followed a ■ 
nhnflar course, Im p ni u i n g from 
ea rly low s with the emergence 
of bargain hunters. Tfre com- 
posite index ended 2438 off at 


130130 after a morning's tow 
of 990.09. Volume increased to 
an estimated 1703m shares 
from Tuesday's 1063m. 

SEOUL saw hwtii n iituBii sell- 
ing of bhie r-hipa for ft* fifth 

gt raigti t day «»nri fha composite 
index dipped 10.73 to 1,09537. 
Brokers said tight liquidity 
also hurt the market as firahi 
were squeezed to meet their 
reserve reqofremenis from the 
cmrtral bank. 

Samsung Electronics went 
limit down by Won8,000 to 
Wonll93Q0, while Korea Tele- 
com lost Wbnl2,000 to dose 
limit down at Won559300. 

SYDNEY was well off its 
lows after bargain hunters 
gave shares a late lift. The All 
Ordinaries faring nwrinri 203 or 


U pm cent down at 13573; 
but tins was 23 per ceat better 
than its intraday low of 13143 
- the lowest level for the All 
Ordinaries since July 28, 1993. 

Dealers said the market was 
hn niring am g recovery on Wall 
Street Banks were the target 

Of lwir pin fam ton a fttff ANZ 

reported a stranger than expec- 
ted final profit ANZ gained a 
net 7 cents at A$3-74 after an 
early foil of 12 cents. 

Pffja mwteil Iggnoq nlnn wiaria 

a spectacular recovery, with 
tha diversified mining groups- 

f!BA anri Western Mining him. 

ing round early foils to dose 
modestly ahead. However, 
golds were the weakest stocks 
on the day in s pite of a higher 
goM price in New York. 


TAIPEI combined textile 
fn rimi tTy ftmi)amMihik the rul- 
ing party's 100th anniversary 
today and speculation that the 
government might support 
equities to achieve a good 
recovery. The weighted index, 
which hit a tow of 634136 at 
one stage, closed 2631 up at 
6371.48. Turnover expanded 
from T$8039bn to T$39.4bn. 

The textiles sector index 
ended 3 per emit stronger on 
renewed expectations of an 
Industry recovery. Hualon, the 
most active stock in the sector, 
pot on TSL40 at T$22.70, fol- 
lowed fay Shinkoug Synthetic 
Fibres, which jumped by the 
daily 7 per* cent limit to 
T$3320, and Far Eastern Tex- 
tile, T$L70 ahead at T$3930. 


Leadership in Indian Financing 



■V r v? £SK 7* 



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