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Cut in Germany’s 
jobless bolsters 
Kohl’s campaign 

Helmut Kohl’s hopes of w inning- a fourth term as 
German chancellor on October 16 were boosted by 
improving unemployment figures - which put the 
unadjusted total down 140,000 to below 3.5m - and a 
favourable opinion poll showing support for the rul- 
ing coalition steady in the east at 49.3 per cent 
Page 20: Mucb too close to ra n , page 19 

Mitsubishi, Japanese conglomerate, bas joined 
the bidding to take over the south Wales region of 
British Coal when the state company is privatised 
this year. Page 20 

Cultists found dead In Swiss villages: 

Swiss police were seek- 
ing two people for ques- 
tioning tn connection 
with the deaths of 48 peo- 

• Pi* 111 what may have 

£ ItfM been a collective colt sui- 

■ cide. Police found 48 bod- 

1 ies after fires in the 

Swiss villages of Cheiry, 
□ear Fribourg, and in 
burnt-out ski chalets at 
G ranges -sur-Sal van, 
160km away. The cult is 
headed by Luc Jouret (above), a 46-year-old homeo- 
pathic doctor who is reported to have fled from 
Ca n ada to Switzerland after facing prosecution for 
weapons offences. In Canada, where the cult is 
known, as the Order of the Solar Temple, police 
launched a probe to determine if an arson fire that 
killed two people was linked to the Swiss deaths. 

Columbta/HCA Healthcare, biggest US 
hospitals group, is to acquire Health Trust, owner of 
the country's second-largest hospital chain, in an 
all-stock deal valued at about $3bn. Page 2i; lire. 
Page 20 

Four die in Paris shootouts: Three policemen 
and a taxi driver were killed and six people 
wourded in two night-time shootouts in the centre 
of / ris. One suspect was captured by police and 
arjther wrs shot in the head and stomach. Interior 
/linistr.' •’harles Pasqua said investigators were so 
far *> -ole to explain the motive of the attackers. 

janwr-^wdey, the UK's most famo us sporting 
gunmaker, announced it was being sold for an 
undisclosed sum to Vendome, the luxury goods 
group which owns D unhill and Cartier. Page 21 

Seoul warms to foreign Investors: South 
Korea win raise its ceiling on foreign stock invest- 
ments from 10 to 12 percenton December l and 
increase the limit to 15 per cent next year, Park Jae- 
yoon. the new finance minister, said. Page 20 

Patten's olive br an ch: Hong Kong governor 
Chris Patten offered a working-level role to mem- 
bers of Beijing’s shadow Hong Kang cabinet in a 
concession aimed at breaking the deadlock on the 
colony's transition to Chinese sovereignty. Page 4 

Little investment In E Europe: Progress in 
attracting private investment for infrastructure pro- 
jects in eastern Europe has been painfully slow, 
said Thierry Baudon. deputy vice-president of the 
European Bank for Reconstruction and Develop- 
ment. Page 6 

Tourists wounded: An Italian and a Spanish 
tourist were wounded in a hand grenade attack in 
Bethany village in the occupied West Bank of 
IsraeL Meanwhile in Cairo Israel- PLO ended talks 
on Palestinian elections ended without any progress 
on key issues. 

Plot fears hit Mexican stocks: Reports of a 
widening conspiracy behind last week's assassina- 
tion of Jos6 Francisco Massieu, number two official 
in Mexico’s ruling Institutional Revolutionary 
party, sent the stock market down 2J3 per cent at 
mid-session. Page 9 

Mol son, Canadian brewing, re tailing and 
speciality chemicals group, confirmed it was to 
start exporting direct to the Chinese beer market 
Page 25 

Bayer, German drugs and chemicals company, 
plans to set up a worldwide chain of businesses to 
sell unbranded, generic drugs. Page 25 

Austrian emergency: Austria was on 
nationwide alert for letterbombs after a judge pres- 
iding over a neo-Nazi trial in Vienna warned that a 
new campaign could be under way in the run-up to 
a general election on Sunday. 

Anna 'not Anastasia': Anna Anderson, who for 
decades claimed to be the grand duchess Anastasia, 
the youngest daughter or Russia’s last tsar, was an 
imposter, and probably a Polish peasant, according 
to DNA tests conducted by Peter Gill, a leading 
British forensic scientist. 


M STOC K MARKET HMMCES 

FT-SE 100 : 2^562 H 5 - 5 I 

fleJd 428 

FT-SE Eurotrack 100 -. 1 ,28848 (- 26 . 49 ) 

FT-SE AAI Stere . — 1 , 477.82 (- 12 %) 

Nikkei - 13 , 751.55 (t 182 .W) 

New Yoric tanchtimE 
Dow Jones ind Aw -^ 753 ^ 

S&P Composite 44325 H- 74 ) 

■ US LUHCHTMHE BATES 


Federal Fumfc: — •**!*} 

3-mo Treas BBs Yld ...&10K 

__7JB5* 17278%) 

■ LONDON MONEY 


3-mo Mertank ®*j 

Lifelong gfli future: 0** 

m MONTH SEAOfl; jflrgusj 

Brent 15-day (No»l -* 16 - 75 

■ GOLD 


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London ....... - -SB 2 - 7 W 


Sumo 

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Dni.250 Hong Kong W® ,a Morocco 


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Egypt 

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HUH KuMrf 


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UDM5 ShgaporaSSLSO 
PI 425 Stowsk RpKSLSO 
NvaSO S. Africa R1ZC0 
NKOTjOO Spam Pu&£ 
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FW0 Swfc SFA30 

JDI.S0 ^ Syrfa SCS&00 

RS.C5 Pctmd 33SJ300 Tt«afa DM500 

TartJ) Tiritey L30000 
UAE 0112.00 


R18S Morocco 
MC15 Netfi 
Re£ 0 Njena 
SMfiKJ ItoWji 
L3000 Oman 
V5O0 P»usun 


Lira and bonds fall as markets react to tension over corruption probe 

Berlusconi 
storm grows 
after inquiry 
warning 


■ STERLING 

New Yak lundAne: 

5 

1.587 

(1-5815) 

London: 



S 

1.5874 

0.5785) 

DM 

2.4488 

(2.4495) 

RFr 

8368 

(9-3637) 

SFr 

2JE94 

(20354) 

Y 

157.884 

(157.356) 

£ index 

802 

(BOO) 

■ DOLLAR 


few York lundttne: 1 

DM 

1.54105 

(1 _5457i 

Fft 

5265 

(528625) 

SFr 

1.278 

(1-2845) 

Y 

90429 

m 

Union: 



DM 

1.5425 

0.5519) 

FFf 

52717 

(52987) 

SFr 

12785 

0.2895) 

Y 

9M7 

(99-69) 

SMex 

62.1 

(62-3) 

Tokyo dose Y 99-58 


Kn mm K***™ 


By Robert Graham in Rome 

The ftiture of Italy's right-wing 
coalition was thrown into ques- 
tion yesterday with Mr Silvio 
Berlusconi, the prime minister, 
at the centre of an escalating con- 
frontation between the govern- 
ment and the judiciary. 

The heightening of the conflict 
followed an outspoken interview 
in which Mr Saverio Borrelli, the 
Milan chief public prosecutor, 
gave a blunt warning that anti- 
corruption investigations were 
closing in around the prime min- 
ister. 

Mr Borrelli also accused Mr 
Alfredo Biondi, the justice minis- 
ter, of misconduct as a defence 
lawyer. Mr Biondi then offered 
his resignation, which was unani- 
mously rejected at a special meet- 
ing of the Cabinet 

Throughout a day of rapid 
events, political tensions 
mounted and prompted scuffles 
outside the prime minister's 
office in Rome. Demonstrators 
who had arrived to oppose cuts 
in pensions turned their atten- 
tion to protest a gains t Mr Berlus- 
coni's continued presence as 
prime minister. 


Financial markets reacted ner- 
vously. The lira tell at one stage 
to 1,018 against the D-Mark, com- 
pared with 1,005 the previous 
day. Government bonds slipped 
to one of their lowest quotations 
of the year and on the Milan 
bourse the index fell 2.5 per cent. 

The interview with Mr Borrelli 
in Com ere della Sera prompted 
an indignant response from the 
government. Mr Giuliano Fer- 
rara, the chief spokesman and 
minis ter for par liam entary rela- 
tions accused the judge of using 
“Mafia-style tactics’’. 

President Oscar Luigi Scaharo 
discussed the crisis with Mr Ber- 
lusconi at a special morning 
meeting; and the two were due to 
meet again last night, accompan- 
ied by the leaders of the two 
houses of parliament 

The talks with the president 
were themselves coloured by a 
row between the bead of state 
and Mr Berlusconi over the pre- 
sentation of the 1995 budget last 
Friday. President Scalfaro pub- 
licly chided the government for 
submitting 400 pages of budget 
text for signature only 15 min- 
utes before the midnight dead- 
line. 



AsoodBM Press 

Workers demonstrate outside the office of Italian prime minister Silvio Berlusconi in Rome yesterday 


In the interview, Mr Borrelli 
was asked about government 
attacks on Milan's anti-corrup- 
tion magistrates the previous 
day. Mr Berlusconi had accused 
them of distorting the path of 
justice to pursue a political ven- 
detta against him and his Fin- 
invest business empire. 

"There is no point hiding 
things,” Mr Borrelli said. “It is 


true we are at a crucial turning 
point What has already appeared 
in the newspapers about Telepiu 
[the TV channel 10 per cent- 
owned by Mr Berlusconi] shows 
clearly we risk touching business 
and politics right at the top.” 

In 1990 Mr Berlusconi was 
obliged under anti-trust laws to 
divest 90 per cent of his stake in 
Telepiu in 60 days. Magistrates 


are investigating whether he 
retained secret control through 
friendly shareholders. 

It is hard to see how a compro- 
mise can be worked out after Mr 
Borrelli's accusation, even 
though last night the Milan pub- 
lic prosecutor formally denied 
that a warrant was pending for 
Mr Berlusconi in relation to Tele- 
piu. 


Brussels lets car dealers off competition rules 


By John Griffiths in London, 

Kevin Done in Paris and Emma 
Tucker in Brussels 

The European Commission 
yesterday allowed Europe's car 
manufacturers and dealers to 
keep their privileged system of 
exclusive car dealer networks, 
with some modifications, for 
another 10 years. 

A long-awaited Commission 
draft document setting out the 
industry's further exemption 
from normal EU competition 


rules was greeted with cautious 
relief by carmakers and dealers, 
but consumer groups reacted 
angrily. 

The Commission claimed that 
proposed changes to the terms of 
the exemption would make it 
easier for consumers to seek the 
best deals in any EU country, 
and would increase competition 
in car sales and servicing. Con- 
sumer groups said they would 
“do nothing” for buyers. 

The changes include a provi- 
sion for dealers to be allowed to 


sell more than one make of car - 
but only from separate sites 
under separate management; for 
dealers to be allowed to buy 
spare parts from makers other 
than the car manufacturers and 
to advertise outside the territory 
allocated to them; for indepen- 
dent repairers to have access to 
manufacturers' technical infor- 
mation; and measures to remove 
obstacles to cross-border trading. 

However, manufacturers will 
still be able to choose which deal- 
ers they supply, and the dealers 


will retain exclusive franchises 
within clearly defined sales terri- 
tories for 10 more years after the 
industry’s current “block exemp- 
tion” from EU competition rules 
expires on June 1. 

The document was described 
by the Commission as the best 
way of serving consumer inter- 
ests through safeguarding stan- 
dards of sales and servicing for a 
complex product with important 
safety considerations. 

Ms Valerie Thompson, head of 
communications at BEUC, the 


European Consumers Organisa- 
tion. said: “They are small steps 
but tkey-have not gone far 
enough.” 

Mr Giorgio Garuzzo. chief oper- 
ating officer of Flat, the Italian 
carmaker, and president of 
ACEA, the European Automobile 
Manufacturers Association, said 
some of the proposals “would 
represent a significant additional 
cost burden”. 

Details, Page 6Editorial Com- 
ment, Page 19 


Russia 
and banks 
pave way 
for talks 
on debt 

By John Gapper in Madrid 


Russia cleared the way yesterday- 
far a rescheduling of its S24bn 
commercial bank debt by reach- 
ing a compromise with iLs 600 
creditor banks on a legal obstacle 
which has blocked progress for 
the past year. 

They agreed a legal framework 
for re-scheduling bank debt - 
part of $90bn Russia owes to 
banks, foreign governments and 
trade creditors. It is likely to 
make an initial payment of up to 
$500m this year. 

The compromise was over the 
banks' earlier call for Russia to 
waive “sovereign immunity”, 
which would have allowed banks 
to seize assets if debt was unpaid. 
Instead of this, Russia made a 
statement commuting itself to 
payment obligations. 

The Russian government 
intends to follow the agreement - 
signed yesterday in Madrid at the 
annual meetings of the Interna- 
tional Monetary Fund and World 
Bank - with attempts to lower 
other parts of its debt burden. 

Mr Christian Vontz, chairman 
of the London Club of commer- 
cial banks, said that tbe agree- 
ment would "give the Russian 
government a breathing space to 
deal with its domestic problems" 
before starting to repay debt 

The banks also agreed to 
accept the state-controlled 
Vneshekonombahk as the body 
assuming legal responsibility for 
the debt. 

"Negotiations may take some 
time, but the result is already 
there,” Mr Vontz said. 

The re-scheduling is likely to 
allow Russia a grace period of 
five to 10 years before it has to 
start making capital repayments. 
The $500m payment covers a por- 
tion of interest on the capital due 
in 1992 and 1993. 

Although the agreement does 
not improve the government's 
financial position - since it has 
not been making payments to 
banks - Mr Alexander Sbokhin, 
deputy prime minister, hailed it 
as “a vote of confidence". 

He said that the deal “signals 
that Russia is beginning to put 

Continued on Page 20 
Low mobility hits Russian 
jobless, Page 5 


Reed pays 
$1.5bn for 
Mead Data 


By Tim Burt 

Reed Elsevier, the Angio-Dutch 
publishing group, is poised to 
become the world's largest pub- 
lisher of legal information after 
its $l-5bn acquisition of Mead 
Data Central, the electronic 
information arm of Mead Corpo- 
ration, the US paper and forest 
products group. 

The dominant factor in what is 
a significant expansion in North 
America will be the integration 
of Lexis and Nexis, Mead Data 
Central’s online legal and busi- 
ness services, with the group’s 


“This acquisition is a perfect 


Mead had been seeking to 


Mr Nigel Stapleton, Reed 


Continued on Page 20 
erica proves the right 
connection. Page 21 


World markets fall 
on fears of further 
rate increase in US 


By Philip Coggan in London and 
Frank McGurty in New York 

World equity and bond markets 
fell further yesterday in the wake 
of new figures showing that the 
US economy is growing strongly, 
lightening tears of an imminent 
increase in US interest rates. 

News of higher-than-expected 
orders for US manufactured 
goods in August caused a sharp 
sell-off in the US Treasury bond 
market Tbe 30-year bond fell by 
nearly a point, driving the yield 
up to 7.96 per cent in early after- 
noon trading, close to the psycho- 
logically important 8 per cent 
leveL 

The weakness of the bond mar- 
ket bad a negative effect on share 
prices. The Dow Jones Industrial 
Average, which tell 45 points on 
Tuesday, dropped a further 50 
yesterday afternoon, triggering 
trading restrictions on the New 
York Stock Exchange. Stocks of 
companies which are closely 
linked to the economic cycle - 
such as heavy equipment manu- 
facturers - were hit the hardest. 

Analysts said the markets 
feared that the Federal Reserve 
would raise rates in response to a 
series of recent economic indica- 
tors, possibly after employment 
figures are released on Friday. 
But some bond investors also 


CONTENTS 


worry that the Fed is acting too 
tardily to slow US expansion, 
making infla tion rise sharply. 

Equity investors are concerned 
that corporate earnings are being 
squeezed by rising raw material 
prices which they cannot pass on 
to customers, say analysts. With 
shares looking quite expensive 
relative to bonds in historic 
terms, any bond market weak- 
ness has prompted shares to 
fall. 

European stock markets fell in 
the wake of the US market weak- 
ness. with tbe German and 
French markets closing at new 
1994 lows. In after-hours trading, 
the Dax index in Frankfurt was 
down 2.1 per cent on the day, 
while in Paris, the C AC-40 index 
fell 2.3 per cent 

In London, the FT-SE 100 index 
closed 45.5 points down, or 1.5 per 
cent, at 2356.3, to stand at its 
lowest level since early July. The 
UK broker James Capel yester- 
day forecast that the index would 
end the year at 2,840. 

Earlier in the day the US 
stocks sell-off hit the Hong Kong 
markets. The Hang Seng index 
lost 205.76 points, or 2.15 per cent, 
finishing at 9,298.36. 

London stocks. Page 33 
World stocks, Back page of 
Section 2 


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Gdd Markets 32 

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Memafand NWS 45 

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FINANCIAL TIMES THURSDAY OCTOBER, o 199-J 


NEWS: EUROPE 


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1 1 Biondi turns the tables on tormentors 


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Minister’s offer to step down could rebound on investigating 
magistrates who have criticised him, writes Andrew Hill in Milan 


T he on-off resignation 
yesterday of Mr Alfredo 
Biondi, Italy's justice 
minister, looks like the 
mirror-image of the events of 
July. 

Then, it was Italy’s most 
famous anti-corruption magis- 
trates - Milan's Marti Pulite 
(clean hands) team - who 
offered their resignation after 
Mr Biondi tabled a decree ban- 
ning the use of preventive 
detention in bribery and cor- 
ruption investigations. The 
public outcry forced the gov- 
ernment into a humiliating 
reversal of its policy, and the 
magistrates returned to their 
posts. 

Mr Biondi’s resignation - 
offered in the morning, refused 
by the cabinet, and then with- 
drawn in the afternoon - was 
in protest at comments by Mr 
Francesco Saverio Borrelli, the 
Milan prosecutor who is in 
charge of the Mani Pulite 
team. 

But in spite of its similari- 
ties, it may have more serious 
implications for Italy than the 
July saga of the magistrates' 
resignation. 

It comes at the end of a tor- 
rid four weeks In which the 
magistrates, in particular Mr 
Antonio Di Pietro, the best- 
known member of the Milan 
team, have been accused of 


wanting to enter the political 
arena, a possibility which has 
made even opponents of Mr Sil- 
vio Berlusconi’s government 
uneasy. 

In the interview, the daily 
Corriere della Sera quotes Mr 
Borrelli as saying that the 
magistrates have reached “a 
crucial moment” in their inves- 
tigations. 

In particular, he warns of the 
risk that their inquiry into 
alleged corruption at TelepiO, 
the pay-television channel 
founded by Mr Berlusconi and 
since sold to other investors, 
“could also reach extremely 
high financial and political lev- 
els". 

hi the interview, Mr Borrelli, 
who refused to comment yes- 
terday on the repercussions, 
went on to attack Mr Biondi. 
not only for his conduct as a 
minis ter but also in his previ- 
ous job as a top defence law- 
yer. 

Mr Biondi could not simply 
sack Mr Borrelli for his 
remarks, because only the 
in agistra hire's governing body, 
which Is now relatively 
independent of political con- 
trol. can dismiss magistrates. 

However, tbe minister’s offer 
to resign is an indication that 
Mr Borrelli. who Is normally a 
shrewd player of media and 
public opinion, may have 


finally overstepped the 
mark. 

On Tuesday. Mr Berlusconi, 
whose Fininvest business 
empire is currently the object 
of seven different legal investi- 
gations. accused the magis- 
trates of distorting justice for 
political ends. 

But this is an opinion now 
shared by a growing number of 
observers outside the govern- 
ment This could turn into a 
backlash against the magis- 
trates, who until now have had 
almost a free hand to investi- 
gate widespread corruption. 

T he Milan magistrates 
lent fuel to the accusa- 
tion of dabbling in poli- 
tics in September, when they 
outlined legislative proposals 
for clearing np the long-run- 
ning corruption investigation. 

Mr Di Pietro himself has not 
helped matters by publishing a 
book on the Italian constitu- 
tion, with a foreword by the 
wily former Italian president 
Mr Francesco Cossiga. who 
said the work marked Mr Di 
Pietro’s "entry into politics" 
and signalled “an exit route 
from the crisis for the coun- 
try’’. 

At the weekend Mr Rocco 
Buttigiione. leader of the oppo- 
sition Popular party, the for- 
mer Christian Democrats, 


warned that corruption accusa- 
tions might be levelled at Mr 
Berlusconi, allowing Mr Di Pie- 
tro to become prime minister 
as the candidate of the extreme 
right coalition party, the 
National Alliance. 

Meanwhile, lawyers for Mr 
Sergio Cusani - the finan cier 
prosecuted by Mr Di Pietro and 
jailed for corruption earlier 
this year.- have lodged a 
complaint against the magis- 
trate, ac cusing him of slander 
and abuse of office during the 
trial 

Mr Di Pietro has vowed not 
to make any more public state- 
ments until after the latest cor- 
ruption trial, in which he is 
again prosecuting. 

Yesterday, in a courtroom 
exchange with one witness, he 
said he had no intention of 
taking part in political cam- 
paigns. 

Tbat approach may prove 
the most fruitful for the magis- 
trates, who are only now 
reaching the core of their lat- 
est investigation into the 
alleged bribery of anti-fraud 
police by big Italian compa- 
nies. 

If the government decides to 
use this latest excuse to rein in 
the magistrates’ powers, then 
the latest phase of cleaning up 
Italy's political and business 
regime could be stalled. 



Brussels aims 
to reduce 
set-aside land 


Mr Alfredo Biondi: offered to quit as justice minister in protest 
at magistrate’s comments ap 


Detergent gets another stain on its reputation 


By Roderick Oram, Consumer 
Industries Editor 

Persil Power. Unilever’s 
controversial detergent sold as 
Omo Power on the Continent, 
is no better overall at remov- 
ing stains from clothes than 
soap powders such as Ariel 
Ultra from its arch-rival Proc- 
ter & Gamble, the British Con- 
sumers’ Association said 
yesterday. 

Three weeks ago, the Dutch 
consumers’ association also 
concluded that Omo Power, 
was only as good as other 


detergents. Moreover, the dam- 
age it caused clothes was 
“more than comparable 
powders". 

Unilever has rejected both 
associations’ reports, saying 
the two organisations are 
unqualified to undertake such 
complex investigations. “ Tests 
by independent research, labo- 
ratories show Persil Power is 
superior," a company spokes- 
man said yesterday. 

Unilever has heavily pro- 
moted the detergent as the big- 
gest breakthrough in a genera- 
tion in cleaning power. The 


product has attracted consider- 
able controversy, however, 
because of allegations that its 
patented manganese catalyst, 
the “Accelerator’’, can damage 
clothes under certain condi- 
tions. 

Shortly after launching Per- 
sil and Omo Power this spring. 
Unilever reduced the volume of 
Accelerator in it. The British 
Consumers’ Association tested 
the original version in June 
and the latest version last 
month and found no difference 
between them in cleaning 
power. “If you were worried 


that you were missing out on a 
revolution in stain-busting 
because of the controversy 
over Persil Power, then rest 
easy." said Ms Helen Parker, 
acting editor of Which?, the 
British association's magazine. 
"Our independent tests show 
that the stain-removing ability 
of new Persil Power is no bet- 
ter than that of some of its 
rival brands and own-brands." 

The association said its long- 
awaited tests for potential 
dama ge by Persil Power to 
clothes will not be completed 
for several more months. Uni- 


lever gained support yesterday, 
however, from the Danish con- 
sumers' association. “There is 
no acute problem and we do 
not advise against Omo 
Power," the association was 
quoted as saying. "If the deter- 
gent damages the garments, it 
wifi be a long-term effect” 

The association also said it 
did not know whether other 
detergents had the same 
long-term effects because “no 
other detergent has been tested 
as thoroughly as Omo Power”. 

Earlier this summer, Uni- 
lever commissioned six inde- 


pendent test institutes across 
Europe to investigate the 
detergent. CTTN-IREN of 
France, for example, concluded 
that Omo Power was superior 
to Ariel Ultra even using a dos- 
age 21 per cent smaller. 

Each negative report has hit 
Unilever's sales of the deter- 
gent, particularly in the 
Netherlands and UK, where 
press coverage has been heavi- 
est. It maintains , though, that 
sales subsequently recover 
thanks to heavy advertising 
and promotion of the product 
and consumer satisfaction. 


By David Gardner in Brussels 

Tbe amount of land European 
Union farmers are obliged to 
take out of production would 
be reduced from 15 to 13 per 
cent, under a proposal 
approved yesterday by the 
European Commission. 

The decision has to be rati- 
fied by member states, but the 
big form lobby, with France as 
its champion, had been push- 
ing for at least such a reduc- 
tion in follow land. 

The decision wlU be wel- 
comed by formers across the 
Union, who regard the obliga- 
tion to “set aside" land as iniq- 
uitous, and whose organisa- 
tions bad forecast that up to a 
third of European farmland 
would be left idle. 

The move is confirmation 
that the 1992 reform of the 
Common Agricultural Policy is 
biting. That reform was meant 
to cut subsidised overproduc- 
tion through price reductions 
of up to 30 per cent over three 
years, and mandatory "set- 
aside" of land. Tbe reform 
envisaged that the amount of 
land to be laid follow would go 
up or down, depending on 
whether output was near tar- 
get 

The 1994-95 marketing year, 
the second year of the reform, 
has seen EU cereals output 
drop significantly to around 
162m tonnes, an increase in 
set-aside from 4.5m hectares to 
5.9m hectares, and a drop in 
grain stockpiles from 33m to 
14m tonnes. 

“The combination of CAP 
reform and a strong world mar- 
ket has resulted in cereals’ 
prices being higher than those 
foreseen or desired." said Mr 
Rene Steichen, EU form com- 
missioner. 

Reflecting the sensitivity of 
the issue, he added: "It would 
be totally unacceptable to pro- 
ducers if EU policymakers 
were to insis t on a level of set- 
aside beyond that which Is 
strictly necessary." 


The UK Britain blocked EU 
efforts to agree a strategy to 
curb carbon dioxide emissions 
and boost the efficient use of 
energy, Mr Klaus TGpfer. 
German environment 
minister, said after a meeting 
of the Union environment 
ministers which ended early 
yesterday, Reuter reports from 
Luxembourg. 

Mr TOpfer told a news 
conference he had hoped to 
combine several existing 
policies on energy use and CO, 
fossil fuel emissions. "We 
couldn’t agree because of the 
specific position of Great 
Britain. No doubt about that" 

His plan foundered on 
objections by Mr John 
Gammer, the UK minister, to 
the term "Community taxation 
measures" in a strategy 
document, a reference to a 
suggested EU-level CO s or 
energy tax. Britain has 
previously opposed any move 
to increase EU-level 
involvement in tax matters. 

A combination of reform and 
drought has led to grain short- 
ages In the European Union 
market and a strong world 
market price. Thus, the CAP Is 
well in line with the reform's 
planned output cuts, but peril- 
ously above forecast price lev- 
els. 

The latter has important 
implications for the EU's abil- 
ity to meet commitments to 
cut subsidised exports under 
the Uruguay Round world 
trade agreement, due to come 
into force in the farm sector 
next S limme r. 

With EU grain prices now 
about 25 per cent above world 
levels, the Union is still paying 
out the export subsidies which 
the Uruguay Round will gradu- 
ally cut back. But the set-aside 
reduction would boost grains 
output by about 4m tonnes, 
weakening prices and the cost 
of inputs for livestock and 
poultry. 


Kremlin impotent 
over large-scale 
managerial fraud 


Crime bosses running Vladivostok, says report 


By John Uoyd and 
Dmitri Volkov in Moscow 

The Russian government 
yesterday heard a detailed 
report on systematic theft of 
property by Russia's top man- 
agers - in the face of which 
senior ministers confessed 
their impotence. This “manage- 
rial looting” - now running at 
tens of trillions of roubles - is 
allegedly hugely increasing the 
load of debt owed to private 
and government enterprises. 

Mr Sergei Belayev. the direc- 
tor of the Federal Bankruptcy 
Agency, told the committee on 
inter-enterprise debt chaired 
by Mr Oleg Soskovets, the first 
deputy prime minister, that 
corrupt contracts had meant 
the delivery or materials for 
which no money was officially 
paid for months or even years 
- though it could be assumed 
that money changed hands 
unofficially. Meanwhile, the 
cost of the products appeared 
on the company books as defat, 
and the managers appealed to 
tbe government for subsidies 
and delayed paying their work- 
ers wages. 

Mr Belayev. whose agency 
investigates the ability of Rus- 
sian enterprises to pay their 
bills and who has compiled a 
dossier on the activities of Rus- 
sia's companies, said “this is 
typical of much of Russian 
industry and is doing large-s- 
cale damage to the Russian 
economy. They [the managers] 
are exporting the working capi- 
tal of the country" 

Mr Soskovets said he would 
recommend a presidential 


decree controlling the actions 
of enterprise managers and 
establishing permanent finan- 
cial control over the larger 
debtors. However, Mr Gennady 
Mel iky an. the labour minister, 
said the managers most at 
fault “are probably too smart 
to be caught" and that "it is 
clear they are getting fat on 
this, but what can we do?" 

Mr Belayev used the 
instance of the Norsi oil refi- 
nery in Nishny Novgorod as an 
example of management 
actions. The refinery had been 
declared unable to pay its 
debts of more than Rbsl.OOObn 
($800,000) - hut in fact, said Mr 
Belayev. it had substantial 
assets mid earning power. 

In. association with the 
“Roman Invest" trading com- 
pany in St Petersburg, the refi- 
nery had shipped a significant 
part of its output without any 
payment at all for a year. Infla- 
tion had- reduced the value of 
the money eventually received. 
In the course of 1993, the value 
of products involved was 
Rbsl2bn. 

When officials from Rosneft, 
the Russian oil holding com- 
pany, attempted to collect its 
38 per cent of shares in Norsi 
in order to exercise control 
over its operations, they were 
barred from entering the plant 
Ministers at the meeting said 
tbat Rosneft's acquiescence in 
this prohibition represented a 
“complete abdication or 
responsibility". 

Mr Vladimir Gusev, head of 
the state taxation service, said 
“everyone has known about 
this for a long time". 


By John Lloyd hi Moscow 

Tbe Russian far eastern region 
of Primorye and its capital of 
Vladivostok, potentially 
among the richest areas of the 
country, are now under the 
control of a "criminal clique” 
who defy federal laws, sup- 
press both opposition and 
independent media and have 
enriched themselves cormptly. 
These claims are made tn a 
report by Russia’s main liberal 
party, Russia’s Choice. 

The report by a group of 
experts caused the country’s 
four main liberal parties - 
Russia’s Choice, Yabloko, 
Party for Russian Unity and 
Accord and the Liberal Demo- 
cratic Union - to appeal to 
President Boris Yeltsin to 
delay the gubernatorial elec- 
tions in the region, scheduled 
for tomorrow. 

They said that Mr Yevgeny 


Nazdratenko, the present gov- 
ernor, had rigged the elections 
for his victory and that any 
voting would be farcical. 

Mr Yeltsin issued a decree 
last week banning all guberna- 
torial elections throughout the 
country - a move aimed, 
according to his own staff, at 
stopping Mr Nazdratenko. 

The Primoye governor at 
first said he would defy tbe 
decree, arguing that elections 
had been called before the 
decree bad been promulgated, 
and then yesterday backed 
down and agreed to postpone 
tomorrow’s vote. 

The report a copy of which 
has been obtained by the 
Financial Times, is a catalogue 
of corruption, rule by fear and 
flagrant abuse of the law - 
though much of the testimony 
is given by tbe governor’s 
political opponents and he has 
refused to comment on it 


The authors of the report 
say that Mr Nazdratenko has: 

• dismissed, harassed and 
even imprisoned many of his 
opponents; 

• closed down most indepen- 
dent press and the indepen- 


open the television station. 

The report says that “most 
of afl. we were struck by a 
general atmosphere of fear, 
recalling the bygone days of 
oar totalitarian past”. It 
quotes the judgment of one of 


Authors spell out catalogue of 
corruption, rule by fear and 
flagrant abuse of the law 


dent television station; 

• created a company with a 
group of business leaders, 
which in turn own substantial 
stakes in more than 200 priva- 
tised enterprises in Primorye 
region; 

• ignored tbe Russian consti- 
tution. federal laws and direct 
instructions from the govern- 
ment - including one to re- 


the last remaining indepen- 
dent papers that the senior 
administrators are "running 
the region while increasingly 
strengthening a lawless, vio- 
lent, corrupt and unpunished 
regime, with the toleration 
and the silence of Moscow". 

Among those prepared to 
speak to the Russia's Choice 
experts who wrote the report 


were Mr V Butov, former pres- 
idential representative in Pri- 
morye. He alleges that he was 
sacked from his post when he 
tried to bring the corruption 
and the violence in tbe region 
to the attention of the Russian 
administration. 

Mr V Cherepkov, a former 
mayor of Vladivostok, said he 
was beaten np by local secu- 
rity forces and dismissed by 
Mr Nazdratenko on falsified 
bribery charges. 

Mr Ivan Ustinov, a member 
of the state dnma Gower 
house) for the region, told the 
experts that a “huge campaign 
of discrimination and discred- 
iting” had been mounted 
against him by Mr Nazdra- 
tenko - Including a false accu- 
sation of building seven 
dachas for rent outside 
Moscow with state money and 
the publication of false testi- 
mony of his illegal activities 


Zhirinovsky’s praise for North Korea a snub to Russian parliament 

Yeltsin faces two-pronged attack 


k . ,%ki 


Zhirinovsky: no time for 
democratic process 


By John Uoyd 

Mr Vladimir Zhirinovsky, 
leader of the ultra-nationalist 
Liberal Democratic party 
which won a large following in 
the Russian parliament in the 
last elections, has said North 
Korea has “a distinguished 
leader, an excellent society and 
a great history ... its excellent 
style of politics has brought it 
great success", according to 
the official Korean news 
agency. 

Mr Zhirinovsky’s visit to 
North Korea, now shunned by 
Russian leaders, coincides with 
the opening of the Russian par- 


liament. and symbolises tbe 
nationalist leader's contempt 
both for the democratic pro- 
cess in Russia and for parlia- 
ment itself 

His party has threatened to 
walk out of the parliament, 
and to back - although not ini- 
tiate - a vote of no-confidence 
in the Russian leadership. 

His star has waned as well as 
waxed since his success last 
December In the parliamentary 
polls. Bnt he has remained able 
to command attention, and is 
now supporting the candidacy 
of Mr Sergei Mavrodi, contro- 
versial (and jailed! head of the 
MMM share dealing company. 


as a candidate for the constitu- 
ency of Mytishi. an industrial 
suburb of Moscow. 

The previous deputy was 
killed there. In what was 
described as a gangland feud. 

The opening of the parlia- 
ment was also marked by a 
direct accusation by Mr Victor 
Ilyukhin, the co mmunis t dep- 
uty who chairs the state 
duma's security committee, 
that Mr Boris Yeltsin "has 
been suffering from alcoholism 
for a long time and cannot run 
the country." 

He said it was “our anguish" 
and "the peak of shame for 
Russia" to watch the Russian 


president’s recent conduct 
abroad. Mr Ilyukhin was refer- 
ring to Mr Yeltsin’s public 
indisposition during a visit to 
Germany last month, and his 
inability to descend from his 
aircraft to meet Mr Albert 
Reynolds, the Irish Prime Min- 
ister, while en route back from 
the US last week. Mr Oleg Sos- 
kovets. the first deputy pre- 
mier who met Mr Reynolds, 
said the Russian president was 
ill - while Mr Yeltsin later said 
he had overslept “The security 
service did not let in the people 
to wake me. Of coarse, I will 
sort things out and punish 
them,” he said then. 


as head of the Nakhodka Free 
Economic Zone. 

Mr T Romanenko, leader of 
the Russia's Choice organisa- 
tion in the region, said the 
governor obliquely threatened 
his daughter after he had pub- 
lished articles critical of him. 

The charges and counter- 
charges in part reflect the par- 
ticularly chaotic nature of 
growth in Vladivostok and the 
surrounding areas - where 
Moscow's laws are far away 
and where trade, criminality 
and self-enrichment have 
grown steeply in tbe past two 
years. 

Journalists appear to have 
been particularly badly 
affected. According to the 
report, 12 have petitioned for 
exit visas to the US, claiming 
the status of political refugees. 


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THURSDAY OCTOBER 6 1994 


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-V” 


europeanne ws digest 

France increases 
space budget 

France is sharply increasing spending on military spy 
sateUitas next year both as an example for its European 
partners to emulate and as a fall back if they do not 

. P ,an ned 23.4 per cent increase in space expenditure 

to FFrSbn (£600m) next year, chiefly on the Helios I and II 
reconnaissance satellite programmes, is the most striking 
Change of direction in the government’s 1995 draft defence 
budget detailed yesterday by Mr Francois UotanL the defence 
muuster. Out of a proclaimed desire to free France and Europe 
of dependence on US intelligence satellites as well as on 
military transport aircraft, the prime minister. Mr Edouard 
Balladur, last month urged fellow Europeans to join France in 
developing “a true European space observation system” say- 
ing that he was counting particularly on German support 
Regardless of this project, however, Mr Balladur forecast 
France would spend enough on the Helios programme, carried 
out in c o-ope ration with Italy and Spain, to give it a spy 
satellite system of its own. Mr Leotard yesterday th jc 
would come as early as next spring with the launch of the first 
Helios I satellite. 

The minister claimed that France and Greece were the only 
Nato countries raising their defence spending. In far* , the 15 
per cent nominal increase in overall Fren ch military spending 
to FFr2025bn (£24J3bn) next year is less than expected infla- 
tion of 1.7 per cent. But expenditure on equipment is to rise by 
2 per cent to FFri02.4bn, constituting the slight increase in 
real terms to which the Balladur government is committed. 
David Buchan, Paris. 

French MPs may face audits 

France's m inisters, MPs and leading local politicians he 
submitted to an annual audit of their personal finan c ial asse ts, 
designed to screen them for possible corruption, the prime 
minister, Mr Edouard Balladur. said yesterday. 

Bowing to increasing public and political pressure for action 
to stem the rising tide of corruption allegations. Mr Balladur 
proposed that the National Assembly set up a system by the 
end of this year whereby a panel of senior magistrates would 
examine politicians' assets and refer, any “pres um ed irregulari- 
ties" to prosecutors. Pressure on’ the Gaullist RPR prime 
minister increased with this week's opening of a judicial 
investigation into allegations that the Republican party, a 
coalition partner in the government, has illegally received 
corporate funds in the past. A communist MP yesterday 
accused Mr Balladur of “covering with his protecting wing 
three members of the government”, a reference to its trio of 
Republican ministers. Of this trio, Mr G€rard Longupt, the 
trade and industry minister, is the most likel y to resign due to 
the sort of allegations about personal financial and real estate 
assets that Mr Bahadur's audit plan is aimed at allaying. 
David Buchan 

Greece moves on telecom sale 

Greece's Socialist government has proposed legislation clear- 
ing the way for the partial privatisation of OTE, the state 
telecoms monopoly, by the end of the year. The government 
hopes to raise some Dr350bn (£91.7bn) through floating 25 per 
cent of the company on the Athens stock exchange. Some 7 
per cent will be offered to local investors, while the remaining 
is per cent is to be sold to institutional investors abroad. The 
new I3W, expected to be approved by parliament this month, 
restructures the company as a public corporation and provides 
for sharp increases in domestic tariffs over the next three 
years, aimed at boosting OTE ’s revenues by DrtOObn yearly. 
But management win remain under government control, with 
six out of 11 board members being appointed by the state. The 
law does not make any provision for appointing an interna- 
tional telecom operator as a technical consultant Local ana- 
lysts described the legislation as a compromise designed to 
appease OTE’s unions, which are opposed to the flotation. But 
they said the appointment of a technical adviser is seen as 
crucial to the flotation's success. Kerin Hope, Athens. 

Swiss set for steady growth 

Switzerland’s gross domestic product (GDP) is expected to rise 
15 per cent in 1994 and growth is forecast to accelerate to 25 
per cent in 1995. the Swiss Federal Institute of Technology's 
centre for economic research said. The centre forecast growth 
for 1996 of 2.7 per cent The Swiss economy started to recover 
in the third quarter of 1993. with demand for exports and 
private consumption picking up appreciably. The report also 
forecast that consumer prices, which rose an average of 35 per 
cent in 1993, will increase 05 per cent in 1994, but jump to 2.7 
per cent in 1995. because of the introduction of a value-added 
tax on January l. The report estimated that VAT would add 
about 1.3 per cent to the consumer price index in 1995- On the 
unemployment front, however, the report forecast only a grad- 
ual decline in the country's jobless rate. It said unemploy- 
ment, which is will rise to 4.7 per cent in 1994 from 45 per cent 
in 1993, will ease to 42 per cent in 1995 and 3.6 per cent in 1996. 
“However, the number of unemployed persons reported in the 
statistics is likely to decrease quite substantially, since the 
figure will exclude those who have reached the end of their 
entitlements to unemployment benefit, those who delay begin- 
ning gainful employment and those taking early retirement," 
the report added. AP-DJ, Zurich 

Azeri president accuses Russia 

President Gaidar Aliyev. Azerbaijan's president, yesterday 
angrily accused Russia of trying to destabilise the country 
after churning he had successfully crushed a revolt in Azerbai- 
jan’s second-largest city. Gence. President Aliyev, a former 
member of the politburo of the Soviet Union, declared a state 
of emergency on Monday following unrest in the country. 
Azer baijan 's prime minis ter. Mr Suret Huseinov, denied sug- 
gestions he had been involved in the coup and declared his 
support for President Aliyev. Tensions have risen between 
Russia and Azerbaijan following a dispute over oil rights m 
the Caspian Sea. Russia refused to recognise a $7bn (£4.4bn) oil 
deal Azerbaijan concluded with a western consortium and a 
Russian foreign ministry spokesman yesterday denied the 
allegations and said Azerbaijan was frying to tamper with 
Soviet-Iranian border agreements. “Russia considerstins inad- 
missible and comes out against unilateral attempts by Baku to 
spread its jurisdiction over certain sections of the Caspian 
Sea,” the spokesman said. John Thornhill, Moscow 

Austrian letter bomb campaign 

The discovery of three letter bombs in Austria this wed: has 
sharpened tensions in the country over immigr ation only four 
days before a national election. None of Urn packages, ddiv- 
ered to a Slovenian publisher in Klagenfurt, a forospere 
advice centre and a paper factory “ 

LSschnak. the interior minister, said the bombs were similar 
to those sent last December to prominent ifcons v^ated 
with refugee and immigration issues. Mr HeimutSIk, the 
mayor of Vienna, lost a thumb and two fingers 
exploded in his hands. A police bomb-squad expert lost both 
hands in August when a pipe-bomb placed next to a b^ual 
Austrian-SIovenian school in Klagenfurt exploded while be 
was examining it- Neo-Nazi activists were believed to be 
behind last December’s bombs, and one ofthis weeks borate 
carried the name of Graff Rfidiger von Stahremberg. a 17th 
military leader who repulsed the Turks and is a hero 
to far right wingers in Austria today. Ian Rodger 

Lufthansa, joins Rushdie curbs 

Lufthansa, the German airline, has refused to carry British 

Sto because it 

gar for ^^.^“.^Sideatotoreat The Tageszei- 
Satanx Verses. ^l^^^Rushdie when the author 

and in October 1993. 

RCtilcr, ,ftoti7i 


NEWS: EUROPE 


Rock’s 

leader 

questions 

British 

motives 

By Tom Bums in Macfrfd 
Mr Joe Bossano, the 

pugnacious chief minister of 

the British crown colony of 
Gibraltar, believes that Lon- 
don, either by neglect or 
through fear of upsetting the 
Madrid government, is under- 
mining bis attempts to achieve 
self-sufficiency for the Rock by 
transforming it into an off- 
shore finance centre. 

In an interview with the 
Financial Times, the Gibraltar 
Socialist Labour party leader, 
who in 1992 was overwhelm- 
ingly re-elected to power by 
the colony’s 31,000 inhabit- 
ants, said the UK was failing 
in its doty responsibly to han- 
dle the colony’s external 
affairs. He also accused the UK 
Foreign Office of “bad faith** 
for suggesting that he bad 
been reprimanded by the for- 
eign secretary, Mr Douglas 
Hurd, at a meeting in London 
last month. 

“I think (the UK) is hamper- 
ing us. It could be a long-term 
strategy to make Gibraltar 
look to Spain for its future," 
Mr Bossano said. “There is no 
absolute proof of this but the 
circumstantial evidence makes 
it difficult to believe that there 
could be such a level of incom- 
petence over the decisions that 
are concerning us.” 

Mr Bossano’s tough talk is 
in character with his sin- 
gle-minded promotion of 
self-determination for the 
Gibraltarians - an option that 
has been ruled out by the UK 
as weQ as by Spain, which 
demands Gibraltar's decoloni- 
sation and its return. 

His bluntness could also 
complicate bilateral talks 
between Spain and the UK 
that were set up in 1987 to 
discuss the future of Gibraltar. 
Spanish diplomats believe that 
Britain is failing to exert 
“effective tutelage” over Gib- 
raltar. “We are coming round 
to thinking that London can- 
not deliver anything on Gib- 
raltar,” said one diplomat who 
questioned the usefulness of 
the negotiations. Spain is 



Bossano: accuses the UK 

viewed as holding the key to 
Gibraltar’s ability to emerge 
from a damaging recession but 
Mr Bossano says that relations 
with Madrid are “in a 
cul-de-sac”. 

However, reversing his pre- 
vious total opposition to talks 
with Spain. Mr Bossano said: 
“I am prepared to negotiate 
directly with Spain, although 
constitutionally 1 cannot do it 
unless I have London’s sanc- 
tion.” 

In August tensions with 
Britain came to a head when 
the colony’s attorney-general, 
who is appointed by London 
and advises the Gibraltar gov- 
ernment, resigned II months 
before completing his three- 
year term in office, citing dif- 
ferences of opinion between 
himself and the colony’s 
governor. 

The UK, which answers for 
Gibraltar in the European 
Union, is understood to be con- 
cerned about the implementa- 
tion of Brussels directives on 
the Rock, particularly those 
concerning the finance sector, 
and it is increasingly worried 
over Madrid's complaints that 
the colony, at the southern tip 
of Spain, has added drag 
smuggling to its traditional 
tobacco smuggling activities. 

The chief minister centres 
his criticism on the UK’s insis- 
tence on stepping up its regu- 
latory powers over Gibraltar’s 
financial sector and thereby, 
in his view, effectively pre- 
venting the colony from devel- 
oping tax efficient services for 
the EU. similar to those in 
Luxembourg- 

He wants Gibraltar, for 
example, to set its own rules 
on the independent auditing of 
the 35,000 companies regis- 
tered on the Rock in order to 
m aintain the secrecy of asset- 
holding companies owned by 
individuals- Should London 
insist on comprehensive audit- 
ing, he said, “I might finish up 
with no companies to audit 
because they will have all 
gone somewhere else in the 
Union, to our competition such 
as Luxembourg”. 


Yugoslav economy in the balance 


James Whittington assesses the war legacy and the pressures as sanctions are eased 

Yugoslavia (Serbia and Montenegro) inflation 

j| \3iaoo o.ooo 


T here cannot be many 
places in the world 
where a central bank 
governor is hailed as a 
national folk hero. But in 
Serbia and Montenegro, the 
two remaining constituents of 
Yugoslavia, the septuagenar- 
ian governor of the National 
Bank of Yugoslavia, Mr Dra- 
goslav Abramovic, is viewed as 
the nation’s economic saviour. 

A former employee of the 
World Bank and the Interna- 
tional Monetary Fund. Mr 
Abramovic is credited with 
reversing the economic col- 
lapse of rump Yugoslavia 
caused by international sanc- 
tions and the war in Bosnia. 
On January 21 he introduced 
an economic stabilisation pro- 
gramme based on a new cur- 
rency, the super-dinar, which 
was pegged at parity with the 
D-Mark and backed by hard 
currency and gold reserves. 

The results, eight months on, 
have confounded his critics 
and exceeded all expectations. 
Inflation was brought down 
from a dizzy 313m per cent in 
January to -0.8 per cent in 
March. Last month it stood at 
0 2 per cent, according to the 
Belgrade Institute of Economic 
Sciences. Industrial production 
is on the increase, wages are 
rising, and shops have been 
surprisingly full in spite of an 
economic embargo imposed by 
the international community 
28 months ago as punishment 
for fuelling the war in Bosnia. 

The psychological effect of 
the affable governor who 
relentlessly seeks to explain 
and convince the population of 
his programme has been 
immense. The lifting of some 
sanctions yesterday in the 
fields of sports and culture, 
and the re-opening of the inter- 
national airport in Belgrade, 
will be a further boost 
But cracks are appearing and 
there are signs that what the 
Serbian press has dubbed “the 
economic miracle” might be 
crumbling. 

The reappearance of black 
market money-changers trying 
to meet an insatiable demand 
for D-Marks has signalled a 
weakening of the dinar. A 


Nato ambassadors, irritated by the caution of the UN 
commanders in Bosnia, agreed yesterday to appeal above their 
heads to Mr Boutros Boutros Gbali, the UN secretary-general for 
a tougher approach to policing the Bosnian sides, write Bruce 
Clark and Frances Williams. 

The ambassadors, meeting in Brussels, resolved to write to Mr 
Boutros Ghali with a list of proposals far faster and more 
effective air strikes in response to Bosnian Serb provocations. 
They will call on him to accept the principle of air strikes 
without warning, and against multiple targets. 

Under the new proposals. UN commanders would retain their 
ultimate veto over air raids, bat there would be an agreed set of 
procedures for responding swiftly to provocations and a “pre- 
sumption” that they would be followed. Diplomats said ranada 
was the only Nato country with reservations about this. 

Differences between the UN and Nato over air tactics in Bosnia 
were left unbridged by a three-hour meeting on Monday between 
Mr William Perry. US defence secretary, and senior UN officials 
in Croatia. Relations deteriorated last weekend when a French 
Mirage was almost shot down by an anti-aircraft missile over 
northern Bosnia. Nato proposed retaliating with air raids but UN 
commanders vetoed this , on the grounds that it was impossible 
to tell who had fired the missile. 

In Geneva, Britain's Lord Owen called for an end to tbe 
bizarre forms of cross-border trade which stoke the Yugoslav- 
war. French officials alleged recently that Croatian sources were 
supplying Serbia with oil in return for weapons. 


SLOVENIA 

. CROATIA 


BOSMA 

HERCEGOVINA 


SERBIA 


/ 


MONTENEGRO 


;ek#oa 



change on 
prewous nomh 
[XWi ig awii 
300. COO 


050500 

2CO.OOO 

150.000 

1CG.OO0 


50,000 


Slobodan Milosevic 


Dm S3 1384 S«p 

Sauce. Belgrade Institute lor Economic Science 


black market rate of 1.2 dinars 
to the D-Mark last week had 
risen to DM1.4 yesterday. One 
money-changer in Belgrade 
explained that the demand for 
D-Marks comes from wide- 
spread smuggling and sanc- 
tions-busting operations. 

“People need hard currency 
to trade outside and buy petrol 
and demand is very high, espe- 
cially from (Serb-held) Bosnia,” 
he says. “Until now supply 
simply met demand but as peo- 
ple are getting rich from smug- 
gling they want more." As the 
black market premium widens, 
people are switching to 
D-Marks for fear of a repeat of 
tbe hyper-inflation of last year. 

Moreover, shop prices are 
showing inflationary pres- 
sures. In the past week there 
have been shortages of milk, 
meat, and cooking oil as shop- 
keepers have removed their 
stocks rather than raise their 
prices. And the price of smug- 
gled petrol is also rising. 

Mr Jurq Bajec. from the Bel- 
grade Economic Institute, 
believes that the central bank 
must quickly intervene to 
defend the dinar while main- 
taining a tight hold on mone- 
tary and fiscal expansion. He 


says that at the beginning of 
the economic programme the 
money supply was increased 
slowly in tandem with the 
growth in foreign exchange 
reserves, but by mid-year it 
began moving ahead. 

“The money supply has 
reached a critical point of 
YD2.ibn of which around 50 
per cent is in cash, which is 
enormous. If it exceeds this 
then inflation wiU return 
which will be beyond control, ” 
he says. 

Foreign exchange reserves, 
which are supposed to be a 
national secret, stand at 
around DMSOOm, which leaves 
little room for manoeuvre. 

Mr Abramovic dismisses 
these fears of inflation. 
“There’s no need to question 
the fate of tbe dinar because 
nothing negative has happened 
so far in the economy," he 
says. He points out that aver- 
age monthly wages have risen 
from DM30 in January to 
DM200 in September, while the 
industrial production index in 
August was up 70 per cent over 
January. 

Instead of maintaining ti ght 

fiscal and monetary policies he 
wants to expand credit and 


increase investment to main- 
tain the rise in output. This 
year gross national product of 
about SiObn is forecast to grow 
by 8 per cent, after contracting 
by 30 per cent in 1993. 

“1 don't believe in a credit 
inflation.'' he says. “The pri- 
vate sector is flourishing and 
our enterprises need more, not 
less, money.” 

Where this is to come from is 
not clear. The domestic banks 
are in so much trouble that 
they can only afford withdraw- 
als of DM30 a month on even 
healthy current accounts. 
Those that can extend credit 
prefer to finance the lucrative 
grey market, or shadow econ- 
omy, which, according to some 
economists, makes up about a 
third of GNP. 

The Belgrade stockmarket is 
all but defunct apart from 
trade in short-term promissory 
notes. And the government has 
no access to international capi- 
tal markets or its foreign bank 
accounts because of sanctions. 

Mr Radoje Djukic, the minis- 
ter for private enterprise, says 
the government is in the pro- 
cess of restructuring the tax 
system to suit the new eco- 
nomic conditions. 

Taxes on corporate profits 
have already been abandoned 
in an attempt to encourage the 
grey market into the registered 


private sector. The government 
is also planning to pay all busi- 
nesses a one-off subsidy of 
DM1,200 per employee fur 
investment. Whether it can 
afford this, along with the 
extra costs of sanctions, is 
questionable. 

Budget figures are compli- 
cated by cross-transactions 
between tbe three different 
budget structures - federal. 
Serbian, aud Montenegran - 
but tbe central bank says that 
the overall deficit is less than 7 
per cent of GNP. 

Most of the ifs and buts sur- 
rounding the economic pro- 
gramme come back tu psycho- 
logy. If Mr Abramovic can 
continue to persuade the Serbs 
that they have never had It so 
good under the sanctions, all 
will be well. 

“We Serbs are survivors." 
says Mr Qjukic who actively 
encourages sanctions busting 
by local businessmen and has 
himself built a modern DM4.5m 
textiles factory, complete with 
Italian fu rnishing s, over the 
past two years. 

Until sanctions are lifted, 
however, the unnatural distor- 
tions in the economy, includ- 
ing the miraculous fixed 
exchange rate, are likely to 
cause more pain that even the 
central bank governor may be 
unable to ease. 


WHAT’S BEHIND 
THE NEW JAGUAR. XJ SERJES? 



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This daily automotive tour de force comes courtesy of Unipart DCM, 
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THE ONLY NAME 


IN A SUIT 


THURSDAY OCTOBER 6 1994 


NEWS: INTERNATIONAL 


Kyushu region: the pace-setter 

Department store sales mwnwy y 

— Rrtuote e= Kyushu — Japan 


Indian 

minister 

faces 

scandal 

inquiry 


HoMUWO 


ried to Mr Qian Qichen, Chi* 
na's foreign minister, by Mr 
Douglas Hurd, Britain’s foreign 
secretary, when the two met in 
New York last week. 

In his speech yesterday, Mr 
Patten said: “We have indi- 
cated to the Chinese side our 
willingness to explore further 
with them whether there are 
informal ways in which this 
can be achieved, perhaps by 
expanding the pool of expertise 
on which the JLG can draw. 
Members of the PWC for exam- 
ple may be able to contribute 
to this process. We would wel- 
come that" 

In a further attempt to speed 
the "snail's pace” of the JLG 
work, Mr Patten outlined a raft 
of issues on which Hong Kong 
would provide practical aid to 
the incoming government and 
related bodies ahead of the 
transition. These matters span 
the layers of future govern- 
ment defence (under the Peo- 
ple's Liberation Army after the 
handover), HKS120bn (£10bn> 
worth of fiscal reserves plus 
Exchange Fund assets, infra- 
structure and the 1997 budget 


By Louise Lucas in Hong Kong JLG's work has decelerated 

sharply since agreement was 
Mr Chris Patten, the Hong reached on the transfer of mfli - 
Kong governor, yesterday tary land last June, 
offered a working-level role to Two big infrastructure pro- 
members of Beijing's shadow jects. a new airport and exten- 
Hong Kong cabinet, in a con- sion of the port, have already 
cession aimed at breaking the fallen victim to JLG inertia, 
deadlock on the colony's tran- while local enactment of laws, 
sition to Chinese sovereignty. rights of residency and air ser- 

Tbe concession, outlined in a vices agreements are among 
policy speech to the Legislative the issues remaining on the 
Council (LegCo), marks recog- agenda, 
nition of Beijing's preliminary Mr Patten said: "What's of 
Working Committee, set up by primary concern to us, without 
China when Sino-British talks being ideological about our 
on Mr Patten’s democratic relations with the PWC, is how 
reform programme broke down we can give more impetus to 
in acrimony last year. the JLG and how, in due 

Until now. the government course, we can co-operate with 
has been wary of the PWC. the Preparatory Committee [to 
which some say could erode be established in 1996) and the 
the authority of the colonial Chief Executive-designate." 
government, and contacts Mr Patten’s gesture, how- 
between the body and Hong ever, was shot down by Beijing 
Kong civil servants have been even before he stood up to 
limited. speak, with the official Xinhua 

Now. PWC members have news agency saying Britain 
been invited to share in expert- lacked sincerity when It spoke 
level talks of the Joint Liaison of a desire to improve co-opera - 
Group (JLG). the official chan- tion and questioning the valid- 
nel for transitional issues, in a ity of involving the PWC. 
bid to speed negotiations. The Mr Patten said he was sur- 


Totioku 


. Knnto 

Chut*. •TOKYO 


By Stefan Wagstyi 
In NewDeN 


Chugoku 


India’s criminal board of 
investigation (CBI) said yester- 
day it was continuing to inves- 
tigate claims that a cabinet 
minister was involved in an 
RsL32bn (£ 26 . 7m) illegal fin- 
ancing scheme In a case aris- 
ing from the 1992 Bombay 
securities market scandaL 

Mr B Shankaranand, the 
health and welfare minister, is 
accused of having authorised 
the diversion of funds from 
the state-owned oil industry 
development board (OIDB) to 
the syndicate bank, a banking 
institution, so that it could be, 
illegally, invested in the stock 
market. 

Mr Shankaranand was oil 
minister and OIDB chairman 
at the time of the alleged fund 
transfers in 1992. He denies 
any wrong-doing. 

The scandal centred on the 
illegal transfer of funds from 
banks into the stock market in 
order to try to make specular 
tive profits, which were 
shared out among the banks, 
stockbrokers and bank 
clients, including private com- 
panies and state-owned enter- 
prises. 

Details of OIDB's transac- 
tions were published in a 
report of a joint parliamentary 
committee into the scandal 
last year. It concluded Mr 
Shankaranand had violated 
prudential norms in his super- 
vision of OIDB's financial 
investments. Mr Shanks ran- 
and’s denials were included in 
a government report published 
in response to the parliamen- 
tary report 

Paul Taylor adds: More than 
half the banks implicated in 
the Bombay securities scandal 
have paid their fines, accord- 
ing to the Reserve Bank of 
India. 

The Indian central hank, 
which earlier this week 
imposed new penalties on 
three more small banks, said 
14 hanks had so far paid the 
fines, which were imposed for 
alleged breaches of its rules on 
securities transactions. 

In July the central bank 
imposed fines totalling 
R$1.47bn on 20 commercial 
banks, including foreign 
banks, which were severely 
criticised in a parliamentary 
report into the scandal pub- 
lished in December and were 
held liable for the bulk - 
Rsl.24bn - of the fines. 


Fii&uokaV 


Shikoku 


Kyuahu 


A sunny spot 
in grey Japan 


prised by Beijing's statement vide a positive response to his 
"1 thought that’s what the speech over the coming weeks. 
PWC is supposed to do,” he saying he was hoping for the 
said. He further added that bek. 

Hong Kong people would be News of a softer stance on 
puzzled if Beijing failed to pro- the PWC had already been car- 


By Emiko Terazono In Tokyo plant on the outskirts of Tokyo 

is estimated to be worth 

O n the Japanese Y240.000 (£1.5581 a sq m, but 
Regional Banking Toyota reportedly paid Y16.00D 
Association’s latest to Y17.000 a sq m for its 
regional banking “weather" Kyushu plant, 
map. which, indicates the Another is that ’The proxim- 
strength of the local econo- ity to south-east Asia is a lead- 
mies, the only sunny area in mg advantage for companies 
the country was the southern moving into Kyushu . says Mr 
island of Kyushu. James Fiorillo. analyst at bro- 

Although the recent spate of fcers Baring Securities in 
economic data has indicated Tokyo. Mr Hiroshi Morlmoto at 
that Japan is facing a lacklus- the Kyushu Economic 
tre recovery, businesses in Research Centre adds that 
Kyushu are feeling more confi- Kyushu will become an impor- 
dent than their counterparts tant back-up base for compa- 
else where in the country. nies which have moved their 

Part of the cheer stems from manufacturing bases to Asia, 
the minimal effects of the asset The increase in population 
"bubble" of the late 1980s. as a result of the investments 
Unlike the economies sur- has supported consumption in 
rounding the larger cities such the region. July department 
as Tokyo and Osaka, which store sales in Kyushu were up 
have been hit by the plunge in 1— per cent on July of 1993, in 
real estate prices, Kyushu was spite of a 29-month consecutive 
relatively unaffected’ by specu- decline for the nation, 
lative activity. The Fukuoka stock 

Confidence is also supported exchange, which expects new 
by Kyushu's provincial govern- listings of about 10 companies 
meats, striving to become the this fiscal year to March, saw 
main crossroads for Japan and trading volume rise by 4.5 
south-east Asia, which have times in June from a year ear- 
been pumping capital into lier, and 7 times in July, 
infrastructure projects in the Lending growth at Kyushu- 
region. based regional banks has been 

Sports facilities and hotels steady in spite of the first fall 
are being built for next year's in loan growth on record expe- 
Universiade games in Fukuoka rienced by the country's large 
city. Convention and shopping commercial banks. Bank of 
complexes are expected to be Fukuoka, says outstanding 
built before the Asia Develop- lending rose 2.9 per cent in 
meat Bank’s convention there August to Y3,988bn- 
in 1997. The real test will come when 

Kyushu has been seeing the the wave of investments 
benefits of capital investment recedes. Some bankers are 
by leading manufacturers over already cautious. “We aren’t 
the past few years. Nissan sure if there will be enough 
Motor and Toyota Motor both demand once the facilities and 
have plants, along with compa- hotels are finished," says Mr 
nies in the semiconductor Toshfhlde Marutani, an official 
industry such as Iwasbita at the Bank of Fukuoka's eco- 
Engineering, and Mitsui High- nomic research department. 
Tech. Others believe the region's 

The main attraction for com- growth will be sustained as 
parties is cheap labour and long as the rest of the country 
land prices. Nissan’s Zama catches up. 


Nigerian presidency ‘should be alternated’ 


tary regimes who have overruled the 
constitution at will. 

Yesterday’s agreement concludes the 
first contentious report on political 
framework; the other big issue is the 
allocation of state revenue. 

The conference is expected to over- 
run its October 26 closing date, but is 
likely to be the nucleus of future politi- 
cal parties if they are made legal by 
Gen Abacha early next year. 

Regional concerns are a delicate issue 
in the vast country, where more than 
lm people died in the 1966-70 Biafra 
secessionist war. About 47m people live 
in the mainly Moslem north, compared 
with 41m in the largely Christian south. 


But the conference set up by Gen 
Abacha in late June has no power to 
re-write the constitution, merely to rec- 
ommend amendments after debating 
the main issues. 

Observers regard the principle of zon- 
ing as unworkable. For most of the past 
three decades the presidency has been 
zoned to the Hausa-Fulanis in the north 
and when last year’s presidential poll 
was won by a southerner, the election 
was annulled. 

The present conference is the third 
time since 1978 that the constitution 
has been examined or re-written. Dur- 
ing all but 10 of. its 34 years since inde- 
pendence. Nigeria has been run by tmli- 


Northerners, often generals, have 
ruled Nigeria for most of the time since 
independence from Britain in i960. 

A political crisis ensued after Mr 
Moshood AbioLa, a business tycoon 
from the south-west, apparently won a 
presidential election in June 1993 which 
the general then in power annulled. 

General Sani Abacha, the present 
ruler, seized power last November and 
has touted the conference as a first step 
towards restoring democracy. Mr Abi- 
ola is on trial for treason. 

Justice Adolphus Karibi-Whyte, 
chairman of the conference, ruled yes- 
terday that the proposal should be 
enshrined in the constitution. 


Nigeria's constitutional conference 
yesterday agreed that the national pres- 
idency should alternate between the 
north and south, an issue at the heart 
of the country's prolonged crisis. 

The decision, which must be 
approved by the r uling junta, followed 
heated argument over power-sharing. 

The agreement was a compromise 
between delegates from the minority 
tribes in the south-east that fixture pres- 
idents should come in turn from each of 
six regions of Nigeria, a plan known as 
"zoning”, and the northern block of del- 
egates who opposed the idea. 


Riyadh 
faces debt 
problem 


Tokyo seeks big 
spending boost 


Saudi Arabia is starting to 
have some problems paying its 
debts but its underlying credit- 
worthiness is sound thanks to 
huge ofl reserves, US Treasury 
Secretary Lloyd Bentseu said 
yesterday, Reuter repports 
from Jeddah. 

“They've begun to have 
credit problems in meeting 
maturities on some indebted- 
ness,” Mr Bentsen said prior 
to a meeting with King Fahd. 
“It’s obvious they have to do 
more tightening of the bud- 
get” 

After building an enor- 
mously wealthy economy, the 
world's largest oil exporter is 
facing a cash shortfall brought 
on by weak oil prices and 
$55bn in payments to help 
finance the 1990-91 Gulf war. 

The government has bor- 
rowed $70bn-$80bn, almost ail 
of it domestic, according to 
one local financial source. 
Riyadh earlier this year nego- 
tiated delays in payments mid 
delivery of some US military 
equipment including fighter 
aircraft and tanks. 

The country, which will pay 
the US government S3.3bn this 
year under those contracts, 
faces a payments bulge of $8bn 
over the next two years on 
those deals. The kingdom is up 
to date on payments on a 
$4.5bn loan it aranged from 
international banks in 1991. 

Mr Bentsen, who arrived 
yesterday for a two-day visit, 
made clear that Riyadh's prob- 
lems were only temporary and 
were similar to those fared by 
the US before the Clinton 
administration took action to 
reduce the US budget deficit. 

In a speech to Saudi busi- 
ness and government leaders, 
Mr Bentsen urged Riyadh to 
modernise its economy by 
tightening its bodget belt, 
opening up its markets, and 
giving private companies a 
bi gger role. Saudi Arabia has 
targeted a nearly 20 per cent 
cut for this year. Mr Bentsen, 
who met finance minister 
Mohammad Ali Abal-Khail 
and oil minister Hlsbam Nazer 
praised that action. 


By Micfiiyo Nafcamoto in Tokyo existing spending programme 

with a view to further 
The Japanese government is stimulating the domestic 
planning significantly to economy, 
increase public spending over In addition to increased pub- 
the next 10 years in an effort to lie spending, the programme 
expand domestic demand and will call for greater allocation 
improve the nation’s living of funds to the building of 
standards. social infrastructure, to 

Mr Kozo Igarashi, chief cabi- improve the country’s living 
net secretary, confirmed that standards and prepare for an 
the government was working ageing society, 
on a new public spending pro- Increased housing, drainage, 
gramme which is expected to garbage treatment facilities 
increase investment to about and educational and social w* 
Y 630, 000b n (£4,100bn)over 10 fare are among priority candi- 
years from 1995. The pro- dates for increased investment 
gramme will replace the cur- The plan is expected to call for 
rent one which began in 1991, greater investment in lifts in 
for which Y 430. 000b n has been public places wider side- 
earmarked. walks to accommodate wheel* 

The beefed-up programme, chairs, 
expected to be put before the The programme will also aim 
cabinet tomorrow for approval to meet the changing needs of 
follows Japan's pledge at the a society in which informs tion 
Group of Seven summit in is expected to play an increas- 
Naples last July to review the ingly important role. 


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FINANCIAL TIMES THURSDAY OCTOBER 6 1994 


NEWS: IMF/WORLD BANK 




* -V 


'tin 

.\ Z M 

. - 


l\ 


■a- t 



VhS 


. bis 



IFC investment first 
for South Africans 


Private sector needs more aid to finance infrastructure, writes Andrew Taylor 

Why World Bank is shifting policy 


By Peter Norman, 

Economies Editor, in Madrid 

The International Finance 
Corporation, a member of the 
World Bank Group, yesterday 
announced Its first equity 
investments in South Africa as 
part of a strategy to encourage 
new businesses among the 
country's poor black popula- 
tion. 

Mr Jemal-ud-din Kassum, 
IFC vice-president for 
operations, said that the 
investments - which will be 
made in a franchise financing 
fund and a life assurance com- 
pany - would “help bridge 
the gap between the first and 
third world parts of the econ- 
omy". 

The IFC, which promotes pri- 
vate sector activity, will invest 
R 12.5m (£2.4m; in the South 
Africa Franchise Capital Fund. 
This will be a R50m vehicle to 
provide loans and equity to 
members of “previously disad- 
vantaged groups" so they can 
acquire franchises in busi- 
nesses such as fast food, dry 
cleaning and photocopying 
chains. 

The IFC will also invest 
R41.6m in a 10 per cent stake 
in African Life Assurance 
(Aflife), a life assurance com- 
pany that does most of its busi- 



Christo Liebenberg 


ness with poor blacks . 

The franchise fund will help 
black businesses overcome 
shortages of capital and give 
them access to accounting and 
marketing expertise as well as 
the research and development 
facilities of larger organisa- 
tions, Mr Tei Mante, director of 
IFC's sub-Saharan Africa 
department, said. 

The life assurance company, 
which is being restructured to 
be predominantly owned by 
black interests, will provide 
a home for savings from 
people in the townships 


and provinces. 

The two investments "are all 
part of building a climate that 
provides a stable base for eco- 
nomic growth”, Mr Mante said. 
The Aflife restructuring, which 
will entail the building up of a 
new sales force to cover black 
residential areas, was an 
“example of the changes in 
ownership and control that are 
necessary for increased partici- 
pation by previously disadvan- 
taged groups in the formal 
economy.” 

IFC's partner in structuring 
and arranging the leasing fund 
was Nedcor Bank of South 
Africa. 

Nedcor will take a 25 per 
cent stake in the fund. The rest 
of the shares will be placed 
with a small group of interna- 
tional and South African insti- 
tutional investors. 

In remarks to the annual 
meeting of the International 
Monetary Fund and World 
Bank, Mr Christo Liebenberg, 
the South Afri can finance min- 
ister, said the Bank's multilat- 
eral investment guarantee 
agency would soon give 
its first guarantee for an 
inward investment into South 
Africa. 

It is understood that this 
concerns an investment in the 
manufacturing sector. 



The decision by the 
World Bank to increase 
sharply the financial 
guarantees it makes to 
commercial lenders 
recognises that private- 
sector investors need 
more help if they are to finance a grow- 
ing proportion of the world's infrastruc- 
ture. 

Governments struggling to contain 
public spending are unable to meet all 
the demands from their populations tor 
better transport, power, water and sew- 
erage systems. 

Private-sector lenders and investors, 
on the other hand, are reluctant to put 
money into emerging countries with lit- 
tle history of private-sector investment 
and where strong political risks may 
remain-Commercial banks lending to 
these countries demand higher interest 
rates and are reluctant to grant 
long-term loans. 

Partial financial guarantees from the 
the World Bank would provide comfort 
to other lenders and allow schemes to 
proceed which otherwise might not 
have taken place, says Dr 
Ashoka Mody, principal 
financial economist at the bank's 
project finance group. 

The Bank, which previously has lent 
mainly to state bodies would still be 
required under its articles to seek 
counter-guarantees from the govern- 
ment of the country in which the proj- 
ect was located. 

In return, it would guarantee 
commercial lenders against the 
failure of state agendesto meet contrac- 


tual obligations. 

These might include: 

■ Maintaining agreed tariff formulas 
and regulatory frameworks; 

■ Making available sufficient fuel, in 
the case of a power station; 

■ Meeting payment targets where 
these have been agreed with state and 
municipal authorities 

■ Providing compensation for delays 
caused by government actions or politi- 
cal events. 

The Bank, however, would not cover 
commercial risks such as construction 
delays, inadequate costing or the failure 
of customers to purchase services in 
expected numbers. 


Governments trying 
to contain spending 
are unable to meet 
all demands 


“We want to use guarantees as a cata- 
lyst By covering some of the risks that 
the commercial market is not able to 
bear or evaluate adequately, we 
hope to attract new sources 
of finance. reduce funding 
costs overall and extend the 
maturity of commercial loans," said Dr 
Mody. 

The decision to increase the availabil- 
ity of fmawriai guarantees to the pri- 
vate sector represents a marked shift in 
the bank's policy. 


The Bank has total outstanding loans 
of S104bn (£69.3bnj. mostly to govern- 
ment and government agencies, com- 
pared with financial guarantees to com- 
mercial lenders covering just $lbn of 
losns. 

The Bank's size, credit rating, special 
relationships with governments and 
experience in negotiating counter-guar- 
antees means it is better suited to sup- 
port large-scale projects than the Inter- 
national Finance Corporation, the 
World Bank's commercial lending arm, 
and the Multilateral Investment Guar- 
antee Agency which deals in areas con- 
sidered politically risky. 

The IFC and MIGA which tradition- 
ally have provided smaller loans, guar- 
antees and credit insurance to the pri- 
vate sector will continue these 
operations but the Bank is expected to 
take the lead role on big privately-fi- 
nanced projects. 

Dr Mody, speaking in London at a 
Financial Times conference on infra- 
structure investments, said financial 
guarantees had already helped a small 
number of infrastructure projects raise 
private capital more cheaply. 

A partial credit guarantee covering 22 
per cent of the present value of a Si 20m 
loan from commercial banks and insur- 
ance companies had enabled Chinese 
authorities to extend the maturity 
of the loan from 5 to 15 years 
for the SI .08 bn Yangzhou tbermal 
power project 

Similar World Bank support for a 
SlOOm bond issue for the Leyte-Luzon 
geothermal project in the 
Philippines had extended the payment 


period from 10 to 15 years. 
The bank's support was equivalent to 
35 per cent of the credit risk exposure 
at present values. 

The fees for such deals typically are 
expected to be 0.25 per cent during the 
life of the guarantee. 

This however would rise to between 
0.4 and I per cent during the danger 
period when the guarantee might be 
triggered. 

in the case of the China and Philip- 
pines power projects, the promoters 
were the state while the World Bank 
guarantees covered credit rather than 
contractual risk. 


Lenders are chary 
of investing where 
strong political 
risks remain 


In future, deals will be done directly 
with private lenders and promoters and 
cover both contractual and credit risk 
of state bodies defaulting on payments. 

Developing countries are estimated to 
spend about $200bn on infrastructure 
investment, of which about WJ per rent 
comes from government sources. 

The proportion paid tor by private 
investors is forecast to rise sharply over 
the next few years and the World Bank 
expects to play an increasing role in 
assisting this market. 


Economists go 


■ ■ "7 .V-;-- 



back to school 

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NpHPI 

...... 



uaisuaj emu urnpua 

Freeland on basic training in Kiev 


W hen Ukraine first 
became an indepen- 
dent state, cabinet 
min isters were apt to tele- 
phone western journalists in a 
frantic search for an explana- 
tion of basic economic terms 
such as “balance of payments". 

Just three years later, Kiev 
has a small but aggressive 
team of economists who last 
week negotiated a $360m 
(£240mJ loan with the Interna- 
tional, Monetary. Fund - 
Ukraine's first IMF deal - and 
hope to launch a coherent pro- 
gramme of market reforms this 
month. 

A World Bank public educa- 
tion project being piloted in 
Ukraine has played a quiet but 
crucial role hi the transforma- 
tion of at least a small part of 
Kiev’s parochial fehte, trained 
only in obediently fulfilling the 
Kremlin's central plan, into 
leaders with a working know- 
ledge of market economics. 

For a year. Mr Daniel KauT- 
mann, the World Bank repre- 
sentative in Kiev, has been 
running weekly economic 
round-tables for journalists, 
politicians and civil servants, 
more formal seminars and 
workshops for government 
bureaucrats, and intense 
one-to-one economic training 
courses for key would-be 
reformers. 

The most able ministers and 
civil servants In the Ukrainian 
government are alumni of this 
project. They remain outnum- 
bered by anti-reformist Ukrai- 
nian leaders, wbo have begun 
to snipe at the IMF deal, but 
Mr Kaufmann claims to “con- 
vert" one or two members of 
Ukraine's communist-domi- 
nated parliament every week. 

The project began when Mr 
Kaufmann realised that meet- 
ings between senior Ukrainian 
leaders and World Bank and 
International Monetary Fund 
delegations were “dialogues of 
the deaF' in which the Ukrain- 
ians solemnly nodded their 
heads but understood nothing. 

That experience convinced 
Mr Kaufmann that before 
beginning standard develop- 
ment projects geared at bol- 


stering market reforms, the 
World Bank - which, if 
Ukraine eventually negotiates 
a stand-by agreement with the 
IMF, could provide Kiev with a 
rehabilitation loan of up to 
2600m - needed to help Ukrain- 
ians learn what a market econ- 
omy is. 

“The conventional World 
Bank approach may have 
served us well in Latin Amer- 
ica and much of Asia where 
the economic elite which really 
rules had a solid western edu- 
cation," Mr Kaufmann says. 
“But this is not the case in the 
former Soviet Union, eastern 
and Central Europe and much 
of Africa." 

Mr Kaufmann also points out 
that because of Hie high gen- 
eral level of education, partic- 
ularly in maths and the sci- 
ences, in the former Soviet 
Union and eastern Europe, 
public education in economics 
gives rapid results. 

“The returns to relatively 
small, focused investment are 
enormous, extremely steep,” 
Mr Kaufmann says. “This is 
not a 15- or 20-year proposition. 
The goal is to make ourselves 
irrelevant in two years.” 

Mr Kaufmann began the pro- 
gramme using funds from his 
office's operating budget and 
small sums of money contrib- 
uted by western governments, 
but his initial success has won 
the admiration of Mr George 
Soros. :ui American financier 
and philanthropist. ,who 
announced last week he would 
like to finance a Ukrainian cen- 
tre to co-ordinate public eco- 
nomic education. 

As the World Bank assesses 
a half-century of operation, Mr 
Kaufmann hopes his project 
will become a model tor a new 
approach in the bank, better 
suited, at least initially, to the 
regions in which the bank 
operates than the large infra- 
structure projects which have 
been its traditional mainstay. 

“For Ukraine it's a matter of 
$400,000 to fund economic edu- 
cation," Mr Kaufmann says. 
“That’s, nothing. Imagine the 
impact" 


Low mobility hits 
Russian jobless 


By David Goodfani, 

Labour Editor 

Regional unemployment levels 
in Russia, ranging between 1 
and 11 per cent of the work- 
force, are likely to become 
entrenched because of low 
labour mobility, according to a 
World Bank report 

The report says the national 
unemployment rate is between 
5 and 6 per cent, as opposed to 
the official rate of about 2 per 
cent, but finds the duration of 
unemployment is surprisingly 
short 

“Unlike in eastern Europe, 
where unemployment turnover 
is very small, Russian unem- 
ployment, at least as yet, can- 
not be characterised as a stag- 
nant pool.” the report written 
by Mr Simon Commander and 
Mr Ruslan Yemstov says. 

In 1993. between 60 and so 


per cent of those leaving unem- 
ployment did so within four 
months. 

In any quarter of 1993 
roughly 5 per cent of the work- 
force made a job transition. 

Big Russian companies have 
generally held on to their 
workers even when demand 
has slumped, but they have 
also been surprisingly persis- 
tent in hiring. Sackings remain 
responsible for only 25 per cent 
of job movement from compa- 
nies, implying that a lot of peo- 
ple are switching jobs volun- 
tarily. 

There are, however, some 
growing problems of “mis- 
match” between supply and 
demand in the labour market. 
“In Moscow, for example, most 
posted vacancies are for man- 
ual and primarily male jobs; a 
significant share of the unem- 
ployed are educated women." 



SmithKline Bcecham asked AEA Technology 
to help them reduce their operating costs and 
increase their manufacturing capability. 

In the process, as you see. we did rather 
more than that. 

Stanelco Products of Fareham is a small 
engineering company which provides furnaces 
for fibre-optics production. 

We extended the life of the heating elements 
they use. 

In some cases., by up to 50 times. 

At the same time, we improved the fibre- 
optic manufacturing process and reduced 
operating costs. 

In science and engineering, a problem in 
one area often has an impact on other areas. 

Or, to put it another way, the right solution 
in one area can have benefits in other areas. 

At AEA Technology, we have the resources 
to understand the whole problem and not just 
part of it. 

And to consider these four inter-related 
areas: 

Plant, Process, Safety, Environment. 

That is why our solutions are more 
complete. 

And it is why the commercial gains are 
greater for our customers. 

(Nuclear Electric had a safety-related 
problem which reduced their revenue. Our 
solution allowed them to gain up to ^200,000 
a day in revenue.) 

As we have shown, our integrated approach 
works with small companies as well as big ones. 

And with small problems as well as big ones. 

Of course, we do start with certain 
advantages. 

Nearly half our staff are science and 
engineering graduates. 

And tor 40 years we have developed leading- 
edge technologies for the UK nuclear industry. 

(Although today, through technology 
transfer, almost half our work is with other 
industries.) 

We wouldn’t want to claim all the credit 
for the results we achieve. 

We work in partnership with the companies 
which consult us. 

The evidence is, though, that they have an 
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13 AEA 

AEA Technology 
Science and engineering 
at your service 


You can only see the complete solution 
if you understand the whole problem. 

FOR FURTHER INFORMATION PLEASE CONTACT JONATHAN FEAKON AT AEA TECHNOLOGY. >2*1 HARWELL. IjIDCOT. OXFORDSHIRE OXI1 ORA. TEL: 0235 432W. FAX. 02J5 4-WiOll 



6 


FINANCIAL TIMES THURSDAY OCTOBER 6 1994 


NEWS: WORLD TRADE 


Commission plans will loosen carmakers 

John Griffiths explains the impact of changes to EU regulation of vehicle sales 





T he European Commis- 
sion yesterday dismayed 
consumer groups and 
brought relief to car manufac- 
turers by proposing yesterday 
that the motor industry keep 
its selective and exclusive dis- 
tribution networks for another 
10 years. 

In a long-awaited draft regu- 
lation, the Co mm ission cited 
the complex nature of cars and 
their safety implications as a 
major reason for continuing to 
exempt car manufacturers and 
their dealers from normal EU 
competition rules gover ning 
the sale of goods. 

After a fierce internal fight 
between the competition and 
industry directorates, the Com- 
mission plans to renew, with 
some alterations, the so-called 
block exemption first granted 
to the European motor indus- 
try for 10 years in 1985. 

The current exemption 
expires at the end of next June. 
There will be a discussion 
period of several months. But 


given the mass of evidence col- 
lected during preparation of 
the draft document, it is 
unlikely to change signifi- 
cantly by the time it is for- 
mally adopted by the Commis- 
sion - early in the new year at 
latest 

The main changes compared 
with the previous exemption 
are intended to achieve several 
objectives. These include 
improving the functioning of 
the internal market, ensuring a 
balance between the interests 
of the parties concerned and 
encouraging manufacturer- 
dealer relations based on part- 
nership. 

In a statement likely further 
to irritate consumer groups, 
the Commission also acknowl- 
edged that a factor in retaining 
the exemption was that the 
existing distribution structure 
allows easy monitoring of Jap- 
anese vehicle movements - and 
thus helps Commission 
bureaucrats manage the EC-Ja- 
pan "understanding" under 


which Japanese car imports to 
the J3U are monitored during 
the transition to an open EU 
market for cars by 1999. 

The main changes to the 
exemption affect the balance of 
power between manufacturers 
and their dealers, rather than 
consumers, although they hold 
out the prospect of considera- 
bly sharpening competition in 
the repairs and service after- 
market The changes include: 

• Allowing a dealer to distrib- 
ute and sell more than one 
make of vehicle. This, how- 
ever, is subject to conditions 
likely to be found Car from sat- 
isfactory by consumer groups. 
There is no prospect of custom- 
ers being able to compare, say, 
a Fiat Pun to with a Ford Fiesta 
on the same showroom floor. 
The draft directive requires 
separate premises, even if on 
the same site, with separate 
management and "no possible 
confusion between the makes”. 
Manufacturers will be able to 
terminate a dealer's contract if 


the dealer wishes to distribute 
other makes, but only if the 
termination is based on “objec- 
tive criteria". Arbitration is to 
be available in the case of dis- 
putes. 

• Allowing these multi-dealer- 
ships will help give dealers 
greater independence vis-a-vis 
manufacturers, claims the 
Commission. In some continen- 
tal European markets such as 
France, where there are no 
large, multi-outlet dealer 
groups, this change could have 
considerable effect However it 
will have relatively little 
impact in the UK, where most 
manufacturers have already 
begun to relax their opposition 
to multi-franchising and a 
number of multi-franchise sites 
- operating under the terms set 
out in the draft - have already 
appeared. 

• The setting of sales targets 
only by mutual agreement 
between manufacturers and 
dealers: This represents a 
.email but significant shift in 


the balance of power between 
manufacturers and dealers. 
Currently, manufacturers have 
the power effectively to impose 
sales targets. Frequently deal- 
ers have regarded such targets 
as unrealistic, and as placing 
them under excessive pressure 
to “move metal”. Again there 
is provision for arbitration in 
the event of disputes, but the 
precise form of such arbitra- 
tion last night remained 
unclear. 

• Allowing dealers to obtain 
spare parts other than those of 
the manufacturer, provided 
they are of equivalent quab- 
tyThere Is an intensively com- 
petitive market for spare parts, 
with many independent suppli- 
ers undercutting original 
equipment prices. However, 
the provision requiring “equiv- 
alent quality” would appear to 
give manufacturers consider- 
able leverage over dealers 
seeking alternative parts 
sources. 

• Allowing independent 






Cars on sale in Essex, Britain: buyers wiH be disappointed by the Commission decision 


garage owners access to the 
technical knowledge required 
for repairing vehicles: This 
measure should act as a bene- 
fit to consumers in stimulating 
after-sales competition. But 
manufacturers will hand over 
such information very reluc- 
tantly and there would appear 
to be considerable potential for 
foot-dragging. 

• Freedom for dealers to 
advertise out of their own sales 


territories: In effect, the draft 
merely formalises a practice 
which is increasingly wide- 
spread, with lag dealer groups 
already advertising in national 
publications. 

• Extension Of the minimum 

duration of agreements 
between manufacturers and 
dealers from four to five years 
And minimum notice of termi- 
nation from one to two years; 

• A ban on anti-competitive 


China vows to defy US 
on Gatt entry terms 


Not so Super 301 after all 

Nancy Dunne on a once feared and loathed US trade weapon 


By Tony WaJker and Martin 
Wolf in Beijing and Frances 
Williams in Geneva 

China will not drop its demand 
that it be readmitted to the 
General Agreement on Tariffs 
and Trade as a developing 
country, in spite of US pres- 
sure for it to be classified as a 
developed nation, a senior Chi- 
nese official said yesterday. 

Mr Li Lanqing, a vice pre- 
mier responsible for trade, said 
it would be "ignorant and 
absurd" for China to be 
regarded as a developed coun- 
try for the purposes of Gatt 
entry. "If we assume the duties 
of a developed country, why 
would we want to rejoin Gatt?" 
he asked. 

His remarks reflect China's 
determination to preserve its 
developing country status in 
international institutions, 
thereby protecting benefits 
such as concessionary finance 
and other privileges. 

Mr Li, who is a former minis- 
ter of foreign trade, said Chi- 
na's growing status as a trad- 
ing nation demanded that it 
become a founder member of 


the World Trade Organisation, 
the successor body to Gatt. 

"We are now the world's Uth 
largest trader... Is it possible 
that the WTO would not 
include the Uth Largest trading 
nation? Can it be representa- 
tive otherwise?" he asked. 

“If they don't let us rejoin 
the Gatt, China will manage. . . 
I just don't believe that the 
world can exclude China. It 
serves nobody’s interests.” 

Beijing has reduced tariffs 
on many categories of imports, 
anH has also dismantled a wide 
range of non-tariff barriers, but 
western nations led by the US 
are demanding further liberal- 
isation of agricultural markets 
and progress in opening up the 
services sector. 

Chinese officials complain 
frequently about “unreason- 
able" US demands, but negotia- 
tions are said to be making 
progress, although it is not 
clear whether they can be con- 
cluded in time for China to 
become a founder member of 
the WTO when it comes into 
being next year. 

In Geneva, intensive negotia- 
tions between China and its 


tr ailin g partners are continu- 
ing in an effort to wrap up the 
terms of entry to Gatt and 
WTO later this year. 

Trade officials say Gatt's 
working party on Chinese 
membership will meet as soon 
as there appears to be the basis 
of a consensus on the acces- 
sion protocol and clear prog- 
ress in parallel talks on 
improving access to the Chi- 
nese market for imports of 
goods and services. 

Nearly 25 countries and the 
EU have been negotiating with 
China over the past month. 
However, the most critical 
talks are those with the CIS, 
which has taken the toughest 
stance in requiring Beijing to 
comply with Gatt/WTO rules 
from the outset 

China, a founder member, 
applied to rejoin Gatt in 1986 
after pulling out in 1950 follow- 
ing the communist takeover. 
Membership negotiations 
began in 1987 but were repeat- 
edly delayed by political and 
trade rows with Washington, 
most notably after the bloody 
suppression of the pro-democ- 
racy movement in 1988. 

P *19 


Eastern Europe ‘failing 
to attract investors’ 


By Andrew Taylor, 

Construction Correspondent 

Progress in attracting private 
investment for infrastructure 
projects in eastern Europe has 
been painfully slow. Mr 
Thierry Baudon, deputy 
vice-president of the European 
Bank for Reconstruction and 
Development, said yesterday. 

Mr Baudon, speaking in Lon- 
don at a Financial Times con- 
ference on international infra- 
structure finance, said the 
telecommunications industry 
had made most progress in 
attracting private capital. 

There had been very little 
private investment in roads, 
power or water projects - 
other than a privately funded 
stretch of the M1/M15 motor- 
way in Hungary linking Buda- 
pest with Vienna. 

Mr Baudon said the failure of 
eastern and central European 
governments to develop ade- 


7= CORRECTION 


quate regulatory and tariff 
structures to cope with the pri- 
vatisation of vital services had 
made it very difficult to attract 
commercial investors. 

Private sector promoters 
needed to be reassured that 
they would be able to levy suf- 
ficient charges on users to 
repay loans and earn adequate 
returns on their investments. 

The cost to the public of 
water and power had tradition- 
ally been very low in these 
countries and it would be diffi- 
cult to increase these charges. 
Governments seeking to min- 
imise costs would have to 
increase the proportion of their 
own state investment 

Private sector investors 
would have to be satisfied that 
tariffs and regulatory struc- 
tures would not be changed in 
the future without adequate 
compensation, he said. 

Poland was most advanced 
in developing a regulatory 


framework to cope with priva- 
tisation but much work still 
needed to be done to satisfy 
international investors. 

Overmanning was another 
problem, Mr Baudon said, 
adding that he had not come 
across a single water treatment 
plant in eastern and central 
Europe which did not have 
twice as many employees as 
needed. 

Potential investors would 
also have to be confident that 
there would be sufficient cus- 
tomers to pay for their ser- 
vices. This was proving diffi- 
cult in areas like energy 
generation, when demand for 
power was falling in many of 
these countries. 

A number of privately 
financed toll roads had been 
proposed in Hungary and else- 
where but these were likely to 
require a significant govern- 
ment contribution before they 
could proceed. 


Pacific Rhn: sales and forecast sales of new motor vehicles (OOOsj 


1 Taiwan 

Thailand 

India 

Indonesia 

PtriSppinea 

Malaysia 

Vietnam 

Total 

1990 

<184.0 

302.7 

3S7.7 

274.5 

132.7 

165.9 

1.8 

1.719.3 

1991 

487.0 

268.6 

344.9 

261.4 

118.6 

181.9 

0.8 

1,663.2 

1992 

547.1 

363.0 

330.3 

169.5 

146.1 

145.1 

8-0 

1.707.1 

1993 

540.1 

456.5 

382.0 

214.2 

163.6 

154.4 

7.5 

1,918.3 

1994 

574.0 

435.0 

405.2 

277.5 

172.0 

175.0 

9.7 

2,048.4 

199S 

596.0 

460.0 

430.0 

313.0 

183.0 

169.0 

13.8 

2,184.8 

1996 

604.0 

490.0 

460.0 

353.0 

190.0 

209.0 

16.8 

2,324.8 

1997 

618.0 

540.0 

490.0 

389.0 

1S9.5 

230.0 

28.2 

2,494.7 

1998 

632.0 

58S.0 

530.0 

430.0 

210.0 

243.0 

36.2 

2.666.2 

1999 

646.0 

025.0 

570.0 

482.0 

223.0 

255.0 

42.7 

2,843.7 

2000 

660.0 

665.0 

610.0 

540.0 

236.0 

266.0 

51.5 

3,028.5 


S uper 301, the most feared 
weapon in the US trade 
expansion armoury, was 
always a bit of a fraud. 

It was written into the 1988 
US Trade law at the behest of 
congressional “trade hawks” 
who felt that barriers to US 
exports were not being ade- 
quately addressed by multilat- 
eral rules. 

The Super 301 provision 
required the US trade represen- 
tative to make a list of "priori 
ity foreign countries" and their 
most protecti onist trade prac- 
tices. The USTR was then 
expected to negotiate away the 
offending trade practice while 
holding the threat of retalia- 
tion as a sword of Damocles 
over the offending country. 

As it turned out, that sword 
never dropped on any coun- 
try's head and the Super 301 
provision expired in 1990. 

A recent book on US trade 
laws. Reciprocity and Retalia- 
tion in US Trade Policy, 
released by the Institute for 
International Economics, says 
Super 301 was viewed as “an 
extension of US unila teralism 
in which the US set itself up as 
judge, jury and executioner 
without regard for interna- 
tional trade rules". 

Trade hawks saw it as a 
means of addressing those Jap- 
anese trade barriers not sub- 
ject to challenge in the General 
Agreement on Tariffs and 
Trade. It was not enough that 
the executive branch had all 
the authority it needed to retal- 
iate against “unfair trade prac- 
tices" under Section 301 of the 
ad They saw Super 301 as a 
bigger, more powerful weapon. 

Mr Thomas Bayard, one of 
the HE authors, says the differ- 
ence between Super 301 and 
Section 301 was the attention 
the former generated. Both 
provisions gave the USTR a 
year to negotiate away trade 
barriers but sanctions at the 
end or the line were not man- 
datory. 

Mrs Carla {fills, the former 
USTR, complained about the 
rigidity of Super 301 but used it 
reluctantly as “a tool” to open 
markets. In 1989, the first year 
of its existence, Taiwan and 
Korea rushed to the bargaining 
table to make deals to avoid 
being put on the Super 301 list 
Japan was named for its trade 










barriers against super- 
computers. satellites and wood 
products. To avoid embarrass- 
ing Japan by have it as the 
only country on the list Brazil 
was added for its import licen- 
sing restrictions and India for 
its investment and insurance 
regimes. 

The result according to Mr 
Bayard's book, would have 
been at most $1.6bn in 
increased annual exports, if 
the agreements had been folly 
implemented. But they were 
not The satellite deal appears 
to be working, but the wood 
agreement awaits tariff cuts 
promised in the Uruguay 
Round and the Japanese gov- 
ernment appears to be dictat- 
ing individual purchases of US 
supercomputers. 

India never agreed to talk 
under Super 301 and was never 
punished. Brazil changed its 
trade policies because a new 
government brought in new 



policies. 

In his campaign to become 
US president in 1992, Mr Bill 
Clinton promised to resurrect 
Super 301. But once in office, 
his interagency trade policy 
team devised a more sophisti- 
cated strategy under which tbe 
US-Japan economic relation- 
ship would be organised. 

All bilateral concerns would 
be brought under a broad nego- 
tiating "framework" which 
combined the elements of pre- 
vious sectoral negotiations and 
the Bush Administration's ini- 
tiative to root out Japan's 
“structural impediments” to 
trade. It would encompass 
macroeconomic measures to 
reduce Japan’s multilateral 
trade surplus and indicators by 
which to measure success. 

When Japan agreed to the 
new approach in June 1993, 
there seemed to be no need for 
a Super 30L But two Japanese 
prime ministers later - at a 


summit in Washington 
between prime minis ter Mori- 
hiro Hosokawa and President 
Clinton - the two sides fell out. 

It was then the administra- 
tion rediscovered Super 301. 

Whether by design or by 
chance, Mr Mickey Kantor, the 
current USTR has used it skil- 
fully to ratchet up the pressure 
on Japan for a deal under the 
framework. With Congress 
threatening to renew Super 
301, he headed off new legisla- 
tion by renewing the provision 
administratively, but in a 
milder form: instead of listing 
erring countries he would list 
trade practices which pose 
obstacles to trade. This was 
considered less insulting. 

Instead of releasing a Super 
301 list in April, Mr Kantor 
moved the deadline to Septem- 
ber 30. This gave Japan nearly 
seven months to resolve its 
political problems and negoti- 
ate under the framework. 

To add to the pressure on 
Japan, Congressman Richard 
Gephardt introduced new and 
tougher market opening legis- 
lation. Mr Kantor warned 
Japan publically that US-Japa- 
nese ties were “in serious dis- 
repair". 

When fear of trade war 
caused the dollar to tumble, 
and the yen to soar, Japan was 
ready to resume the frame- 
work talks. This time, the pres- 
sure of the newly designed 
Super 301 came into play, with 
September 30 as the deadline 
for a framework deal. 

September 30 also became 
the final deadline for agree- 
ment on procurement and Mr 
Kantor warned that if no 
agreement was reached, the 
sanctions process would begin 
immediately. 

With all the pressure in play, 
five deals were reached at the 
weekend under the framework. 
When the Super 301 list was 
released three days late on 
Monday, the Clinton adminis- 
tration declined to list even 
“priority" trade practices, say- 
ing they were all being negoti- 
ated in other arenas. 

The “kinder, gentler” Super 
301 will remain on the books - 
It is contained in the impli- 
menting legislation for the 
Uruguay Round - but nothing 
forces an a dminis tration to use 
it 


Trade push pays off, says Brown 


Sourcxr EXJ- Tttn JuomilM Sector a# 0 m nofc Mn and CNna 


The above table shows sales or new motor vehicles in the Pacific Rim. The figures were incorrectly 
reported on page 8 of the World Car Industry survey published on October 4 1394 


By Nancy Durme 
In Washington 

The Clinton administration 
yesterday said its aggressive 
year-old trade promotion strat- 
egy had helped US companies 
win contracts for 70 big for- 
eign projects w orth SITbn. 

“We can now say that the 
strategy is working and work- 
ing with successful, measur- 
able results.” said Mr Ron 
Brown, the US commerce sec- 
retary, who heads the Trade 
Promotion Co-ordinating Com- 
mittee which devised the strat- 
egy. He predicted that the US 
would exceed the goal it set a 
year ago to export $l,000bn in 


goods and services annually 
by the year 2000. 

Mr Robert Rubin, the presi- 
dent’s economic adviser, said 
export promotion was an inte- 
gral part of the administra- 
tion's economic policy, which 
calls for increasing US produc- 
tivity, opening markets 
through negotiation and help- 
ing US companies to win sales. 

Mr Brown said the adminis- 
tration had “redefined the 
relationship between business 
and government", making gov- 
ernment an active partner in 
the efforts of US companies to 
export. It had created a 17- 
agency Advocacy Co-ordinat- 
ing network "to ensure 


co-operation across the gov- 
ernment” and bad established 
a “war room” in the Com- 
merce Department to track 
over 160 important foreign 
projects. It bad also launched 
high-level sales efforts by Mr 
Brown and other administra- 
tion officials, including the 
president 

More effective use had been 
made of export financing anH 
much progress had been 
achieved in eliminating unnec- 
essary, ineffective export con- 
trols. Mr Kenneth Brody, 
chairman of the US Export 
Import Bank, said the agency 
was “no longer" passive in the 
face of strong competition 


from its foreign rivals. He has 
created a new project finance 
division, which this year ha* 
more than doubled the lending 
of 1993 to $360m. The division 
is now pursuing a KLSbn back- 
log of requests for finance of 
infrastructure projects. 

The bank's Tied Aid Capital 
Projects Fund is aggressively 
countering foreign offers to 
eliminate the use of foreign 
tied aid. In an animal report, 
submitted to Congress yester- 
day, the TPCC said that it 
would support tbe Middle East 
peace process through expan- 
ded trade missions, private 
sector initiatives and finance 
packages. 


clauses in contracts, on pain of 
the manufacturer forfeiting its 
own exemption, from competi- 
tion rules. . , 

• Ranmng practices designed 
to discourage consumers of one 
EU country buying a new car 
in another EU state, such as 
differences in the manufactur- 
er's remuneration to dealers 
depending on the place of des- 
tination of the vehicle. 

See Editorial Comment 


World Trade Digest 


Pakistan 
in $7.5bn 
power 
deal 

Hopewell Holdings 
International, the Hong 
Kong-based group run by 
Mr Gordon Wu, is today due 
to sign deals worth approxi- 
mately $7.5bn in Pakistan to 
build power plants. Mr Wu's 
Consolidated Electrical 
Power Asia may also secure 
contracts for transmission 
lines and oil supply facili- 
ties by the end of the year, 
officials say. Hopewell is to 
develop coalfields at Thar, 
in the southern province of 
Sind. Fortum Bokhari. 
Islamabad. 

EU restores 
textiles duties 

The European Commission 
is immediately reimposing 
import duties on textiles 
and clothes from India, 
Pakistan, Indonesia, Thai- 
land and China. The Com- 
mission said the five coun- 
tries had reached their 
individual export ceilings to 
the European Union under 
the generalised system of 
preferences scheme. The 
commission bad suspended 
the levy of customs duties 
on the countries concerned 
on July 1. The duties apply 
to a range of goods includ- 
ing jerseys, mittens and 
socks. Emma. Tucker ; Brus- 
sels. 

U Swedish telecommunica- 
tions giant Ericsson has 
agreed to supply MFS, the 
US communications com- 
pany, with equipment 
worth more than |300m 
over the next five years. 
The global purchasing 
accord will assist MFS’s 
plans to expand its business' 
service network from 32 to 
75 cities, both in the US and 
outside. Christopher Brown- 
Humes . Stockholm. 

■ Procter & Gamble yester- 
day settled a lawsuit 
against Milor over P&G’s 
toothbrush design patent 
and product configuration 
rights. Milor is prohibited 
from making and selling 
such toothbrushes and is to 
pay P&G damages. AP-DJ. 
Cincinnati. 

■ A consortium of Bony- 
gues, Lyonnaise des Eaux. 
unit-Dumez. the large 
French water and construc- 
tion group, and Soctete Gen- 
erate d'Entrep rises has been 

selected to build a giant 
sports stadium in the north- 
ern suburbs of Paris. The 
stadium will be the main 
venue for the 1998 soccer 
World Cup. Reuter, Paris. 

■ Vietnam has signed a 
$10m contract with US^ 
based Ellicott Machine Cor- 
poration International to 
buy two dredgers for bar 
hour maintenance and port 
construction. Reuter, Hanoi 




DUs 


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P;i Kisian i 

in S7.5bn 

Power ! 

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In the past 
year, we’ve 

seen our storage 
business grow 
30%, our PC 

business grow 100%, and our 


Alpha AXP sales increase 164%. 




Some people think those figures 
already represent a comeback. 

To us, it's just a beginning. Digital 
is changing from a company famous 
for complicated decision-making, 
to one famous for decisiveness. 

At our new Computer Systems 
Division, were applying the 
lessons learned in our PC opera- 
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Now the industry is finally 
beginning work on 64-bit RISC, 
and were happy to see this 
endorsement of Alpha AXP. But 
HP and Intel say it’ll take a few 
years. We have 64-bit RISC now. 
With 6,000 applications. 


OUR SYSTEM: MANY SYSTEMS 

Fact is. Digital is a multiple 
operating system company because 
thats what most of you are. 

In DEC O.SF/-I? we have the most 
standards-compliant, highest quality 
UNIX* in the industry. It gives 
you outstanding high availability 
features through clustering and the 
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We offer Open VMS” because 
millions need it, as it provides 
the best clustering capabilities on 


the market for high-security, 
high-throughput, business-critical 
work. We plan to support it, 
invest in it, keep customers fully 
operational with it. and introduce 
it to new customers as well. 

What’s more. Digital has part- 
nered with Microsoft* to bring you 
the Windows'" operating environ- 
ment, Windows NT™ Workstation 
and Server. 

All these system options give 
you one very important thing. 
Choice without compromise. 

OUR SOFTWARE: TRULY OPEN 

Our openness even extends to 
software. One excellent example is 


But don’t worry, 
were planning a 
comeback. 



our PATH WORKS” application, 
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YOU CALL THE SHOTS 

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One thing that definitely isn't 
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I 



FINANCIAL TIMES THURSDAY OCTOBER^ 


NEWS: THE AMERICAS 



research group to shun federal funding 


By Louise Kehoe in San Francisco 

Sematech. the US government- 
backed semiconductor industry 
research consortium, will pay its 
own way and no longer accept direct 
federal funding after fiscal 1996. it 
said in Washington yesterday. 

Formed in 1987. when the US semi- 
conductor industry was rapidly los- 
ing ground to the Japanese and fall- 
ing behind in chip manufacturing 
technology, Sematech has for seven 
years received half of its funds, or 
about S90m <£57m) a year, from the 
Defence Department's Advanced 
Research Projects Agency. The rest 
is paid by member companies. 

Leaders of the consortium, which 

includes 11 of the largest US chip 
makers, said a resurgence in their 


international competitiveness and 
the increased profitability of the 
industry, which last year regained 
world market leadership for the first 
time since 1985. meant Sematech no 
longer needs government support 

“It Is a matter of principle." said 
Mr Craig Barrett, chief operating 
officer of Intel, the world’s largest 
chip maker, and a member of the 
Sematech board of directors. 

“The industry can now afford to 
support the consortium and we 
should. We are setting an example 
for other US industries and for the 
world." 

“We never intended direct federal 
funding to become an entitlement 
programme," said Mr Bill Spencer, 
Sematech president and chief execu- 
tive. 


Ironically, the consortium is turn- 
ing down government money at a 
time when it has the whole-hearted 
support of the Clinton administra- 
tion - after years of battling political 
opponents to maintain funding from 
Presidents Reagan and Bush. 

Sematech has long been at the 
centre of US debate over Industrial 
policy” with critics - mostly Repub- 
licans - charging that the govern- 
ment was "picking winners and los- 
ers". It has been supported by the 
Pentagon, however, amid concerns 
the US might lose Its leadership in 
technology vital to national security. 

The decision to reject further fund- 
ing has met a mixture of praise, dis- 
belief and suspicion from members 
of Congress, industry executives 
said. “We expected a pat on the 


back. Instead, we have been accused 
by some of rocking the boat” 

Sematech's decision has con- 
founded critics and supporters alike. 
To critics, it is a surprising demon- 
stration that this iS not just another 
industry group looking to sustain 
itself at the federal trough. Support- 
ers, on the other band, are con- 
cerned that without the incentive of 
money. Sematech may no longer be 
a “model" of government-industry 
collaboration. 

However, Sematech officials 
stressed that they aime d to expand, 
rather than end, co-operation 
between the private and public sec- 
tors and that the consortium would 
compete for government research 
grants for specific project on the 
same basis as other groups and com- 


panies. Ultimately, this could mean 
that Sematech will receive more gov- 
ernment funding than its current 
annual stipend. 

Working through the congressio- 
nally mandated, but yet to be 
formed. Semiconductor Technology 
Council, an advisory group of gov- 
ernment. industry and academic rep- 
resentatives. Sematech aims to influ- 
ence a broader spectrum of 
government spending including 
Commerce Department and Energy 
Department research programmes, 
as well as the Pentagon. 

Total federal government spending 
on semiconductor-related research 

has been r unning at about $2bn to 
$2.5bn in recent years. Sematech 
estimates. “If we can influence just 
10 per cent of that so that it has 


commercial relevance we will bo 
able to more than double the impact 
that we have had," said Mr Frank 
Squires, Sematech’s chief adminis- 
trative officer. 

There is little possibility of the 
semiconductor industry reverting to 
its traditional ‘‘arms-length and 
sometimes adversarial relationship 

with the federal government", Mr 

Squires said. 

Public attitudes in the US towards 
the government’s role in ensuring 
economic security, employment and 
the creation of “quality" jobs have 
changed, he believes. “Perhaps 
Sematech has helped to bring about 
that change by demonstrating that 
not every government-industry part- 
nership is larded with pork and 
bureaucracy.” 


Orders 
for US 
goods 
up 4.4% 

By George Graham 
In Washington 

New orders for US 
manufactured goods jumped 
4.4 per cent to $286.5bn 
(£l32bn> in August, the Com- 
merce Department reported 
yesterday. The increase more 
than offset a 2 per cent drop 
the previous month, and is the 
sharpest monthly increase in 
nearly two years. 

The rise included an unex- 
pectedly steep increase in 
orders for non-durable goods, 
which rose by 2.5 per cent in 
August to $132.3bn. This was 
the 10th month in succession 
in which non-durable goods 
orders increased, with all lead- 
ing industries except leather 
contributing to the rise. 

Orders for durable goods 3 
rose by 6.1 per cent to $154.2bn. 
a fractionally bigger increase 
than the Commerce Depart- 
ment had announced in its 
advance durable goods report a 
week ago. 

Coupled with the 0.6 per cent 
rise in the August index of 
leading economic indicators 
announced by the department 
on Tuesday, the rise added fuel 
to the financial markets' grow- 
ing conviction that the Federal 
Reserve will have to raise 
interest rates sooner rather 
than later. 

But some economists pointed 
out the factory orders data still 
relate to August, before any 
effect was likely from the Fed's 
last interest rates increase on 
August 16. More attention is 
likely to be paid to tomorrow's 
employment statistics, which 
will give the first substantial 
information on the economy's 
strength in September. 

The Commerce Department 
said overall shipments of man- 
ufactured goods rose by 4.5 per 
cent in August to $2S7.9bn. 
after dropping by l.l per cent 
in July. 

The backlog of unfilled 
orders dropped by 0.3 per cent 
to $447_2bn. cutting the ratio of 
orders to shipments to 2.89 - 
the lowest in 30 years. With '*■ 
inventories dropping by 0.1 per 
cent to $387.1bn. the ratio of 
inventories to shipments fell to 
1.34, the lowest ever recorded. 


Clean-up reform fails for this year 

Congress abandons 
Superfund legislation 


By George Graham 

Congress leaders yesterday 
abandoned their efforts to 
reform the US's complex 
Superfund legislation on the 
clean-up of toxic waste sites. 

With only three days to go 
before Congress breaks up for 
the election campaign, the 
obstacles in the way of Super- 
fund reform this year - once 
expected to be a centrepiece of 
the Clinton administration’s 
environmental programme - 
bad become insurmountable. 

Although a series of objec- 
tions from industries affected 
by the legislation have been 
resolved over the year, the 
Superfund reform bill had yet 
to come to a vote in either 
chamber of Congress. 

Some members claimed there 
was still a chance of winning 
both votes and then reconcil- 
ing the Senate and House of 
Representatives versions, but 
this was generally regarded as 
wildly unrealistic. 

The ori ginal 1980 Superfund 
law aimed to clean up toxic 
waste sites by requiring pollut- 
ers to clean up dumps listed by 
the Environmental Protection 
Agency. But that law has 
turned into an administrative 
nightmare, with more time and 


money spent on lawsuits over 
who should be held responsible 
than on the actual clean-ups. 

An attempt to overhaul the 
law in 1986 left many problems 
unresolved, and this year's 
reform effort by Ms Carol 
Browner, head of the EPA. has 
attracted the support of an 
unusual alliance of chemical 
companies, insurers, mayors, 
small businesses and some 
environmentalist groups. 

“The bills before Congress 
would have greatly improved 
public involvement in clean-up 
decisions, cut litigation costs, 
brought consistency and trans- 
parency to dean-up decisions 
and retained the core principle 
of *polluter pays'," said Mr Wil- 
liam Roberts, legislative direc- 
tor of the Environmental 
Defence Fund. 

The overhaul was still 
opposed, however, by reinsur- 
ers and a portion of the envi- 
ronmentalist community. 

“This whole thing is about 
saving the money of the pollut- 
ers, and that should be the last 
thing on anyone's mind." said 
Mr Rick Hind of Greenpeace, 
an environmental organisation 
which has opposed the bill. 

Both supporters and oppo- 
nents of the Superfund reform 
bill said the central role in kill- 


Determined Republicans halt 
work on Clinton agenda 


mg the measure was the hostil- 
ity of Senator Bob Dole, the 
leader of the Republican 
minority in the Senate. 

Mr Dole has argued that any 
reform must remove one of 
Superfund's most controversial 
elements: the application of 
retroactive liability to anyone 
involved with a polluted site. 
But his principal motivation is 
widely believed to be his deter- 
mination to deny the Clinton 
administration even slight- 
est legislative victory in the 
closing days of the congressio- 
nal session. 

Industry groups that might, 
in theory, have benefited from 
the changes Mr Dole sought 
had begged him in vain to let 
the bill go forward. 

Other bills on the Clinton 
administration's environmen- 
tal agenda, including tighter 
controls on mining and grazing 
on federal land and the trans- 
formation of the EPA into a 
full cabinet department have 
already fallen by the wayside. 

But last-minute break- 
throughs may still allow pas- 
sage of a law reauthorising the 
Safe Drinking Water Act and 
of a measure setting aside 
around 7m acres of southern 
Californian desert as parkland 
and wilderness. 



Gingrich: architect of obstruction 


By Jurek Martin in Washington 

As the day dawned yesterday, there were 
three Republican filibusters holding up 
bills in the Senate, and more threatened. 
By mid-morning the opposition had scored 
in the House, forcing a delay of at least 24 
hours of a floor vote on the Gatt treaty. 

Across the legislative spectrum, mea- 
sures that had once seemed certain of pas- 
sage - often those which had already 
passed both chambers in different forms - 
were held in jeopardy by the Republican 
determination to block virtually every bill 
that could conceivably be interpreted as a 
success for President Bill Clinton and the 
Democratic party. 

The rules of Congress allow different 
methods of obstruction to be freely 
deployed. In the 100-member Senate, this 
may take the form of the simple filibuster, 
which normally requires 60 votes to over- 
ride but under some circumstances two- 
thirds of those present This hurdle has 
often been too high for the Democrats, 
who have a 56-44 nominal majority but 
face not only Republican solidarity but 
also defections from their own ranks. 

Senate rules also permit 30 hours for 
debate after a filibuster has been defeated. 
This has already been employed on both 
major and minor iss ue r , such as nomina- 
tions to federal office, thus squeezing the 
calendar even further before the scheduled 
adjournment at the end of this week. 

The Gatt delay in the House was also 
the result of a parliamentary device, with 
Republicans demanding that the rule 
under which the trade treaty would be 
debated be changed so as to allow further 
investigation of one provision. 

Specifically. Congressman Newt Ging- 


rich, the Republican whip, is objecting to 
the so-called telecommunications “pioneer 
preference" clause in the bill covering fees 
to be paid by licensees of advanced cellu- 
lar phone technology. This is part of the 
revenue-raising exercise required to offset 
any losses from lower tariffs. 

Mr Gingrich, a clear leader of the con- 
servative forces in Congress, has made 
much of the fact that the Washington Post 
Company, owner of the capital's liberal 
newspaper, is a large investor in this tech- 
nology. A Post editorial yesterday flatly 
denied, however, that it was receiving 
favourable treatment 

Mr Gingrich is also the architect of Sen- 
ate obstruction of the lobbying reform bill, 
now also held hostage in spite of the fact 
that it first passed the chamber by a 96-4 
vote. United We Stand, the political organ- 
isation set up by Mr Ross Perot the 1992 
independent presidential candidate, has 
also demanded that the bill be passed. 

Public disgust with Congress is such 
that failure to act may rebound on incum- 
bents in the mid-term elections on Novem- 
ber 8. But this suits the Republicans, since 
far more Democrats are up for reelection. 

Mr Gingrich's artful argument is that 
the bill would circumscribe the constitu- 
tional right to petition the government - 
especially by religious groups, the most 
vocal and conservative of which are, of 
course, staunchly Republican. 

The mood of Congress, matching that of 
the country, is now fbuL Even one Repub- 
lican, Senator John McCain of Arizona, 
observed: “Most Americans want us to get 
out of town - they think we have already 
done enough harm." One anonymous Dem- 
ocrat acidly said: “There is nothing the 
Republicans want - except our jobs." 


■3 



3 a- 

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2 5 
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i 







FINANCIAL TIMES THURSDAY OCTOBER 6 1994 


9 



NEWS: THE AMERICAS 


Mexican plot 
allegations 
upset markets 


By Damian Fraser 
in Mexico City 

Reports of a widening 
conspiracy behind last weed's 
assassination of Mr Jose Fran- 
cisco Massieu, the number two 
official In Mexico’s ruling 
party, rattled investors in 
Mexico's financial markets yes- 
terday. 

Interest rates on all but the 
shortest-term government 
paper rose sharply in the 
weekly auction. The stock mar- 
ket - also affected by weak- 
ness on Wall Street - was 
down 2.3 per cent at mid-ses- 
sion, with the peso weakening 
slightly against the dollar. 

According to a report in a 
Mexican newspaper yesterday, 
Mexico's legendary former oil 
union boss, Mr Joaquin Her- 
ndndez Galicia, known as "La 
Quina", was allegedly involved 
in the assassination. Mr Man- 
uel Munoz Rocha, the federal 
deputy who is to be charged 
with maste rminding the mur- 
der, told authorities that La 
Quina provided people who 
took pail in the planning of 
the assassination, according to 
Reforma newspaper. Mr Munoz 
Rocha did not give any details 
of the former oil union bosses' 
alleged involvement, except 
to say that he did 


not finan ce the assassination. 

La Quina controlled Mexico's 
powerful oil union until 1989, 
when he was arrested on the 
orders of President Carlos Sali- 
nas and imprisoned on a range 
of charges including storing 
arms. Like almost all the other 
figures allegedly implicated in 
the assassination plot, he 
comes from the north-eastern 
state of Tamaulipas, 

Mr Ruiz Massieu was shot in 
the neck on Wednesday last 
week. The attorney-general's 
office has detained nine people 
allegedly involved in the 
crime. 

According to testimony from 
one of the alleged accomplices 
that was released by the attor- 
ney-general’s office, Mr Munoz 
Rocha and Mr Abraham Rubio 
Canales, a former federal offi- 
cial with links to the Gulf drug 
cartel, plotted the assassina- 
tion for a mixture of political 
and personal motives. 

Mr Ignacio Pichardo, the 
head of the ruling Institutional 
Revolutionary party, has 
denied that Mr Ruiz Massieu’s 
assassination reflects a wider 
fight for power between hard- 
liners and reformists. But in a 
rare show of disunity, a PRI 
senator from the state of Guer- 
rero accused Mr Pichardo on 
Tuesday of hiding the truth. 


Canada social welfare 
reform plans tabled 


By Robert Gibbens 
in Montreal 

Canada's Liberal government 
yesterday issued a discussion 
paper on reforming the social 
safety net. aimed at getting all 
10 provinces to help improve 
work skills and move the job- 
less away from reliance on 
unemployment insurance. 

But Mr Lloyd Axworthy, 
minis ter of human resources, 
left bis proposals vague and 
without cost estimates to try to 
head off a gathering storm of 
provincial opposition. 


The government is commit- 
ted to pruning the social wel- 
fare system by several billion 
dollars. It now accounts for 
nearly C$40bn (£l&Shn) a year 
of federal spending. 

The proposals include limit- 
ing child tax credits to lower 
income families and redesign- 
ing unemployment insurance, 
a solely federal programme, to 
limit benefits. 

Federal funding for univer- 
sity education would also be 
reformed, while retirement 
savings could be tapped to 
finance university education. 


Caribbean 
troops 
arrive 
in Haiti 

By Ted Bardacke 
in Port-au-Prince 

Caribbean troops and a group 
of returning Haitian refugees 
arrived in the Haitian capital 
of Port-au-Prince yesterday, 
which suggests that the US 
military believes it is in foil 
control just 10 days before the 
scheduled return of exiled 
President Jean Bertrand Aris- 
tide. 

The 262 Caricom troops from 
Jamaica, Trinidad, Belize and 
Barbados will be in charge of 
security at the port In the cap- 
ital. This has become a vital 
task as humanitarian aid 
begins to poor in now that US 
troops have set up distribution 
networks. 

Some 492 refugees arrived 
from the US naval base at 
Goantdnamo Bay in Cuba. A 
total of 14.000 refugees remain 
outside Haiti, but US officials 
expect 500 a day to arrive 
should the country remain 
calm 

Political tensions have been 
partly defused by a virtual 
breakdown in the Haitian 
police force now that its 
leader, Lt Col Micbel Francois, 
has fled to the Dominican 
Republic. 

Police officers were com- 
pletely absent from Haitian 
streets yesterday, remaining 
at their headquarters even 
I while sporadic looting took 
i place across the street from 
the US embassy. 

US soldiers have worked 
with Haitians in recent days to 
locate the homes of suspected 
army auxiliaries, who terror- 
ised the population with their 
harsh crackdown against sup- 
porters of Mr Aristide. 

But with thousands of weap- 
ons still reported to be in the 
hands of pro-regime auxilia- 
ries and other extremists and 
some Haitians thirsting for 
revenge, the potential for vio- 
lence remains high. 

Parliament yesterday contin- 
ued to debate the granting of a 
general amnesty, a condition 
for de facto leader Lt Gen 
Raoul CMras to step down, 
but appeared unable to arrive 
at a consensus. 


Cardoso faces some hard choices 

There are worrying signs of high inflation again, writes Angus Foster 


Brazil: The Cardoso account 

InSatiofl (month on month K change) Net foreign investment (Sbn) 

80 . £ 0 



1989 90 91 92 93 94 1989 90 91 92 93 94 

Source: Central Bank of Breal and Finance MWsny 



M r Fernando Henri que 
Cardoso, probably 
Brazil’s next presi- 
dent. will inherit an economy 
apparently in its best shape for 
years. The new Real currency, 
which he planned when 
finance minister, is hacked by 
$40bn of foreign reserves and 
has cut monthly inflation from 
50 per cent in June to less than 
2 per cent last month. This 
year’s per capita growth is 
forecast at 2 per cent, while 
exports are at record levels. 

But serious problems stem- 
ming from years of h igh infla- 
tion and political interference 
in the economy, remain. 
Unless Mr Cardoso acts 
quickly, inflation could return 
to und e rmine the credibility he 
has built with the Real. 

Inflation may already be 
increasing by the time be takes 
over on January L Some food 
prices are rising because of a 
drought- Businesses are likely 
to raise prices in the run-up to 
Christmas, especially now the 
election is over. Consumer 
demand has risen sharply 
since the Real's launch, 
because the fall in inflation 
has left poorer consumers bet- 
ter off. August sales of televi- 
sions were 85 per cent up on a 
year ago and Sdo Paulo’s facto- 
ries are the busiest since 1989. 

These signals of higher infla- 
tion are worrying, although 
most analysts expect the out- 
going government's tight hold 
on credit and interest rates 
will stop any rapid rise. 
“Increasing demand worries 
me but it is not an explosion 
and it is controllable,” said Mr 
Malison da Nobrega, former 
finance minis ter, who esti- 
mates inflation will remain at 
2-3 per cent a month this year. 

A bigger threat on the infla- 
tion front comes from the gov- 
ernment's finances. Part of the 
reason for the Real's success 
was that the government man- 
aged to balance this year's bud- 
get, helped by one-off spending 

CUtS and higher than expected 

tax revenues. Next year the 
picture is less promising. An 
emergency tax on b ank 
accounts, which raises about 
$6bn annuall y, runs out this 
year. Without a replacement, 
next year's budget will have a 
deficit equal to about 1 per 
cent of GDP. 

Mr Cardoso’s advisers are 


well aware of the budget prob- 
lems. Reforms to the fiscal and 
soda! security systems which 
were planned last year when 
he was finance minis ter were 
blocked by Congressional oppo- 
sition. These changes include 
raising taxes and the number 


Cunrangs 

of tax payers - only 7m of the 
economically active population 
of 50m pay income tax. 

The social security system 
also needs thorough reform. It 
is underfunded and, because of 
generous benefits such as early 
retirement introduced in 1988. 


OOP per capita change) 

4 



* Fist six months 


the social security bill is set to 
reach S24.5bn this year, com- 
pared to just Sl4.5bn in 1992. 

Mr Cardoso's apparent big 
election victory could give him 
the momentum to persuade 
Congress to pass unpopular 
measures such as higher taxes 
or reduced social benefits. But 
such reforms would not take 
effect until 1996 or even 1997, 
prompting observers like Mr 
Nobregn to call for a speeded 
up privatisation programme. 

There is increasing consen- 
sus in the private sector that 
these reforms ore needed and 
that the state's role in the 
economy should be reduced. 
Politicians, who often use the 
state for private purposes, or to 
win elections, will need more 
persuasion. 

For example. S5o Paulo is 
Brazil's most important state 
economically, but has a budget 
deficit equal to three years of 
tax revenues because of succes- 
sive years of bad government. 
It owes about $7bn to its state 
owned bank. Banespa, which 
has had to approve politically 
inspired lending, much of 
which may never be repaid. 

Other urgent changes are 
needed to stop state govern- 
ments employing unqualified 
people ahead of elections in 
return for their votes. Corrup- 
tion and waste is seen as 
extremely high in the health 
system, while the federal and 
state governments are expen- 
sively overstaffed yet rarely 
even check if their employees 
turn up for work. 

Mr Eduardo Giannetti, a Sao 
Paulo-based economist, says 
Mr Cardoso needs to confront 
all these problems and end pol- 
iticians' control over state 


banks. “In the abstract every- 
one agrees these questions 
should be tackled, until it 
comes down to Imposing the 
loss. A new president has the 
authority to make people 
accept change, but he needs to 
3Ct quickly. The first year is 
worth more than the last three 
of his mandate.” he says. 

With so much remaining to 
be done, confidence in the 
Real's future remains fragile. 
Unlike other countries fighting 
Inflation, Brazil decided 
against making the Real fully 
convertible or setting it 3t par- 
ity with the US dollar. Instead, 
the Real is backed by foreign 
exchange reserves, and a gov- 
ernment promise not to breach 
its own money supply targets. 

U Mr Cardoso can use his 
first few months in office to 
instigate reform of the state 

Moody’s may 
raise rating 

Moody’s, the US credit rating 
agency, said yesterday it 
might raise its rating for part 
of Brazil’s foreign debt. Rich- 
ard Lapper reports. The action, 
which affects some S7.9bn of 
debt comes in the wake of Mr 
Cardoso's election success this 
week. Moody’s rating on 
so-called “interest due and 
unpaid" bonds and new money 
bonds, now B2, could change. 
The agency said the review “is 
motivated by the likelihood 
that the incoming administra- 
tion will have sufficient power 
to implement comprehensive 
economic and political re- 
forms.” lt pointed oat that in 
recent years Brazil's domestic 
economy has been relatively 
dynamic and commercial debt 
arrears had been restructured. 


and constitution, his momen- 
tum will help underpin the 
Real and inflation can -be con- 
tained. If not, financial mar- 
kets may lose confidence and 
Brazil’s inflationary cycle 
could start again. 

“We are not yet talking 
about [economic] stabilisation 
achieved. Inflation could come 
back and would mean a great 
loss of respect for democracy. 
People would feel they had 
again been cheated ahead of 
elections," said Mr G ianne tti. 



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NEWS: UK 



Task forces 
to promote 
engineering 


By And rew Baxter 

Five new task forces aimed at 
making UK industry more 
competitive by increasing sub- 
stantially the influence and 
involvement of engineers were 
announced yesterday by Mr 
Michael Heseltine, trade and 
industry secretary. 

Action for Engineering is a 
result of the Department of 
Trade and Industry's white 
paper on competitiveness, pub- 
lished in May. It identified a 
number of ways to improve UK 
industrial performance 
through better use of engi- 
neers. 

The programme represents 
the first coordinated attempt 
to address the underlying prob- 
lems for the economy caused 
by the relatively low status of 
engineers. It brings together 
industrialists, educationalists 
and the engineering profes- 
sions in industry-led task 
forces. 

Mr Rob Margetts, a director 
of ICI. has been appointed 

rhairman of the progr am m o’s 

steering group, which was due 
to hold its first meeting last 

ni ght. 

The five main areas for 
action are: 

• Stimulating enthusiasm in 
schools for engineering: 

• Harnessing engineers' full 
potential in industry, 

• Training more technician g 
supervisors and skilled 
workers, and improving 


the quality of training: 

• Attracting the best staff 
and students into engineering 
higher education: 

# TEnhancing the understand- 
ing and status of engineering 
at board level in companies, 
among financial institutio ns 
and opinion formers. 

The task forces' aim is to 
bring greater focus and coordi- 
nation to the many initiatives 
already under way, such as the 
work being done by the Engi- 
neering Council and others to 
encourage more schoolchildren 
to study engineering. 

The task forces would be 
complementary to such initia- 
tives and the long-r unning 
attempt by Sir John Fair- 
ninng h, chairman of the Engi- 
neering Council, to create a 
more unified professional 
structure for engineering. 

Dr David Evans, head of the 
DTTs technology and innova- 
tion division, said the depart- 
ment was participating in an 
enabling and supporting role, 
although “the ownership of 
this work has got to be within 
the engineering comm unity’. 

No specific budget has been 
allocated for the programme, 
which is expected to last 18 
months, but Mr Margetts said 
he would be surprised if addi- 
tional improvements in fund- 
ing were not made. He also 
said he would ensure the task 
forces did not turn into 
talking-shops by appointing 
busy, “action-oriented’’ people. 


Howard bids to 
reassure police 


By Alan Pike, 

Social Affaire Correspondent 

Mr Michael Howard, home 
secretary, yesterday sought to 
reassure senior police officers 
over proposals they fear may 
lead to greater private sector 
involvement in policing. 

He told the Police Superin- 
tendents’ Association confer- 
ence it was “simply not true” 
that a Home Office review of 
police tasks was considering 
encouraging companies or 
local authorities to patrol the 
streets and deal with traffic 

m anag ement 

Mr Howard said, the review, 
due to be completed early in 
the new year, was intended to 
ensure that the money devoted 
to policing achieved the best 
possible results. 

Mr Howard said the “era of 
rapid change” in the police ser- 
vice was almost over. The task 
now was to get on with polic- 


ing. but this had to take place 
within the right framework of 
criminal law and the right 
organisational framework. 

“But let me makp one thing 
clear - I am not asking anyone 
to do the job of the police. You 
are the professionals In what is 
a complex, specialised and 
often dangerous profession.” 

He said the government's 
Criminal Justice Bill would put 
into effect 19 of the 27 pledges 
for tough action on crime that 
Mr Howard made at the Con- 
servative party conference a 
year ago. 

The bill contained a series of 
measures to give the police the 
tools needed to do their job. 
while the Police and Magis- 
trates’ Courts Act would 
improve local accountability of 
policing. It would require 
forces to set clear priorities, 
give managers greater freedom 
over resources and ensure reg- 
ular reports on performance. 



Ton, AMmt 


Under the Stock Exchange plan, trading will be suspended if there is evidence that price-sensitive information has leaked 

Robert Peston on the case behind proposals for new trading rules 

Stock Exchange roused by flurry 


T he Stock Exc hang e’s 
plan to suspend tiading 
in individual companies' 
shares when there is evidence 
that price-sensitive informa- 
tion has leaked was prompted 
by a flurry of dealing activity 
four months ago in Portals, the 
manufacturer of banknote 
paper. 

On May 10 Portals shares 
jumped 44p to 679p, when 
385,000 shares were traded The 
exchange immediately started 
to make inquiries, as the price 
jump and the volume of shares 
traded were unusual for this 
particular security. 

The initial investigation was 
carried out by the exchange’s 
price and media monitoring 
group. The group is a bridge 
between the supervision 
department, responsible for 
ensuring the exchange’s rules 
are followed, and its surveil- 
lance group, whose role is to 
detect and investigate criminal 
trading in shares. 

The group wanted to ascer- 
tain whether there had been a 
leak of confidential price- 
sensitive information concern- 
ing Portals to investors. The 
company had received a take- 
over approach - from De La 
Rue, the b ankn ote printer - 
but no announcement to share- 
holders had been made. 

If some of these purchasers 
of Portals shares had 
known of the takeover talks, 
they might have been insider 
trading. 

However, most were proba- 


Lond on- based securities firms 
reacted with caution yesterday 
to Stock Exchange plans to 
suspend trading if there is evi- 
dence that price-sensitive 
information has leaked into 
the market. 

Suspensions are far less 
common in the London market 
than on Wall Street, and City 
stockbrokers agree privately 
that more frequent nse of the 
exchange’s power to suspend 
trading in such cases could 
prove beneficiaL 

Critics point out that sus- 


pension penalises stock hold- 
ers indiscriminately, not just 
potential investors. 

More frequent share suspen- 
sions could also cause difficul- 
ties with London's market- 
making system, which 
depends on the willingness of 
marketmakers to take on large 
positions in individual stocks. 

Hie plan seeks to pre-empt 
anxiety about the effect of 
more share suspensions by 
introducing two warning 
stages before full suspension is 
imposed. 


bly not “insiders” in the strict 
legal sense. 

More likely is that a group of 
investors got wind that “some- 
thing was up”. They might for 
example have noticed that Por- 
tals shares had been bought by 
a stockbroker known for mak- 
ing well-timed investments. 

So although the bulk of these 
deals were probably not crimi- 
nal, there was an unequal dis- 
tribution in the market of 
information about Portals' 
prospects. Anyone selling Por- 
tals shares at thin time might 
have complained that they 
only did so because they did 
not possess the full facts. 

It was not until four days 
after Portals received an 
approach that it made a state- 
ment, by which time a further 
468,000 shares had been traded. 

It was another three days 
before De La Rue was named 
as a possible bidder, by which 


time Portals’ share price had 
reached 805p. 

The Portals case provided a 
first taste for Mr Michael Law- 
rence - who had joined the 
exchange as chief executive 
two months earlier - of official 
procedures to ensure price- 
sensitive information is prop- 
erly disclosed to the market 
He was extremely uneasy 
about the delay between the 
share price jump and Portals’ 
public statement 

H e initiated a review of 
exchange practices, 
which resulted in the 
publication yesterday of the 
consultation document on deal- 
ings ahead of the disclosure of 
price-sensitive information. 

If the new system had been 
in place last May the chain of 
events would have been very 
different As soon as Portals' 
share-price movement had 


breached a set of parameters - 
fixed on the basis of the nor- 
mal volatility of its share price 
and that of other share prices 
in its sector - a warning would 
have been transmitted to the 
market on the exchange's Seaq 
trading screen. 

Investors would have been 
alerted to an exchange probe 
into a possible leak or price- 
sensitive information - and 
that they should take care 
before buying or selling. 

Under one of the proposals 
made yesterday there would 
also have been a simultaneous 
lifting of the obligation 
on market makers, the whole- 
saler of shares, to deal at the 
prices they quote on the Seaq 
screen. 

Had the monitoring group 
discovered quickly that there 
was an innocent explanation 
for the price movement, the 
alert would have been lifted. 

In this case, however, the 
exchange would have been told 
either by Portals or the take- 
over panel, the City body 
which acts as the referee of 
bids, that an approach had 
been made. 

Portals would have been 
asked to make an immediate 
public statement. If it was 
unable to do so the exchange 
would have called a halt for 24 
hours to trading in its shares, 
by which time Portals should 
have been able to make an 
announcement Failing that a 
further period of suspension 
would have been insisted on. 


Milk board may face legal action 


By Deborah Hargreaves 

A farmers’ organisation 
threatened yesterday to launch 
a legal challenge to the Milk 
Marketing Board if it went 
ahead with plans to charge 
Britain's 28,000 dairy fanners 
up to 4p a litre to provide the 
landing for market liberalisa- 
tion in November. 

Mr Richard Smith T chaim^n 
of the Northern Milk Partner- 
ship representing a group of 
fanners who have agreed to 
sell their milk to Northern 


Foods in the new free market, 
said he was examining ways in 
which any attempt to deduct 
money from his members 
could be resisted through the 
UK and European courts. 

Mr Smith, who has also writ- 
ten in protest to Mr W illiam 
Waldegrave, agriculture minis- 
ter, called suggestions by the 
Milk Marketing Board for the 
levy “astonishing and, if imple- 
mented, nothing short of dis- 
graceful”. 

The mil k board needs around 
£30m to wind up its operations 


and es tablish Milk Marque, the 
voluntary farmers' co-operative 
that will succeed it It said yes- 
terday that the probability of 
the levy being imposed was 
minute, but that it had to have 
funds to hand should guaran- 
tees from its banks not come 
through in time for the market 
deregulation on November 1. 

All formers would have to 
pay the levy, even if they have 
no plans to join Milk Marque. 
Mr Smith said it was “iniqui- 
tous" that the 30 per cent of 
producers who had made alter- 


native arrangements for selling 
their milk should be forced to 
pay. He said it would cost his 
members around £2,000 each. 

The National Farmers' Union 
said it was concerned that the 
money might not be repaid. Sir 
David Naish, NFU president, is 
meeting Mr Bob Steven, chair- 
man of the board, on Monday 
to discuss the issue. 

The board needs to raise 
cash to finance the market’s 
deregulation because the flota- 
tion of its processing arm. 
Dairy Crest, has been delayed. 


THE 


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 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 1 500 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 SEI 9HL 


FT] 


I IXANCIAL l IMI S 


:nture>o>I 

FORUM 74 


EUROPE; 


L ^VENTURE _ 


December 1 & 2, 1994 

Venture Forum Europe “W, the fifth in a well received European series arranged by the 
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Team Leader, Smaller Companies Group 
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FINANCIAL TIMES 


THURSDAY OCTOBER 6 1994 



U 


Blair offer to SDP defectors 


By Kevin Brown and 
Roland Rudd 

Mr Tony Blair offered an olive 
branch yesterday to social 
democrat defectors from 
labour as it became clear at 
the party’s conference in 
Blackpool that his drive to 
drop clause four socialism has 
wide support among delegates. 

Amid increasing optimism 
among party modernisers that 
opposition to his constitutional 
reforms win be short-lived. Mr 
Blair promised to “welcome 
back” defectors to the break- 
away Social Democratic party 
during during Labour’s left- 


right battles in the 1980s. 

"Of course I welcome back 
those people who left the 
Labour party in the early 
eighties for reasons that were 
understandable at that time. 
The Labour party went 
“rough a bad period then." be 
said. 

The party's national execu- 
tive committee last night 
rejected left-wing calls for a 
special constitutional confer- 
ence to debate the proposed 
changes, which would water 
down Labour's historic com- 
mitment to public ownership. 

But opponents will have an 
early chance to embarrass Mr 


Blair today in a debate on a 
resolution tabled by Glasgow 
members offering solid support 
for clause four. 

The resolution, tabled before 
Mr Blair's announcement, will 
be backed by some of the big 
unions, including the TGWU 
general union. 

The NEC will urge delegates 
to shelve the resolution. Mr 
Blair's supporters described 
this as little more than an 
opportunity for delegates to let 
off steam. However, supporters 
said the result could be close. 

In a frank admission of the 
potential dangers of the reform 
programme. Mr Blair told the 


NEC that his promise to 
rewrite clause four was “a bold 
gamble that paid off". 

Mr Blair, who finally decided 
to include the pledge shortly 
before the speech, attempted to 
minimise unease by promising 
widespread consultation with 
party members on the wording 
of constitutional changes. 

The consultation will be led 
by Mr John Prescott, the dep- 
uty leader, who will insist that 
Labour cannot rule out public 
ownership in any form. 

However, the wording of the 
revised statement of objectives 
is likely to lay greater stress 
on the party's commitment to 


community involvement in 
high-quality public services. 

“In order to break through 
and convince the British peo- 
ple that it is right to change 
the government and vote in a 
Labour government, we must 
be clear about where we 
stand. 

“It's not about dumping or 
ditching. It's about being clear 
and precise and offering a radi- 
cal but sensible vision of the 
future," Mr Blair said. 

The leadership is expected to 
shrug off a defeat on defence 
policy which will be 
announced today following 
overnight vote counting. 


Ministry 

abandons 

housing 

sell-off 

Ely Nicholas Denton 

The Ministry of Defence has 
abandoned plans to privatise 
£3.5bn worth of housing stock 
by setting up a non-profit 
trust, and has appointed Nat- 
West Markets, the investment 
arm of the UK clearing bank, 
to advise on new options. 

The ministry blamed “tech- 
nical difficulties" for the shift 
- it yielded to the Treasury 
view that the private sector 
should bear rude. ’“Hie ques- 
tion was whether a trust could 
be classified as a private-sector 
entity " It said. 

The Mod said NatWest Mar- 
kets would advise on fresh 
options to improve the man- 
agement of its property and 
transfer the whole of the mar- 
ried quarters estate - 68.000 
homes - to the private sector. 
The job for NatWest Markets is 
purely advisory and will last 
only a few weeks, but it leaves 
the company well-placed to act 
on behalf of the MoD in an 
eventual transaction. 

Under consideration is a 
sale-and-Ieaseback type of 
transaction which would pro- 
vide funds to offset cuts in the 
1995-96 defence budget while 
still giving the MoD the use of 
the majority of the properties. 

NatWest is expected to look 
at a broad range of strategies: 
from tra n sferring the homes to 
a company which would be 
sold in an initial public offer- 
ing to partial privatisation. No 
action is also a pcssible recom- 
mendation. The size of the 
transaction will depend on the 
terms of the leaseback or rent- 
back arrangement but an MoD 
housing sale could be one of 
the last big UK privatisations. 

The gross value of the hous- 
ing stock is £3J>bn, according 
to the MoD and the official 
valuer. The MoD has budgeted 
for £500m of revenue from 
housing privatisation in 1995-96 
and investment bankers say 
that the proceeds could go as 
high as £2bn. 


Bacteria in chicken 

Percentage of 
chicken 
samples 
found to 

contain , 

bacteria £ 



Which? warning 
on salmonella 


Britain in brief 



Denmark 

Portugal 


'*^^ ! Rance 

60 

53 

•uk. 

.. “ 36.’ 

Slovenia 

47 

Germany 

28 

Netherlands 

45 

France ; • 

25 

UK ' 

: 41' 

Italy 

24 

Denmark 

36 

Netherlands 

23 

Ireland 

29 

Belgium 

16 . 

Spain 

26 

Ireland 

13 

Germany 

22 

Slovenia 

11 

Italy 

' 13 

Spain 

8 

Sweden 

10 

Greece 

4 

Belgium 

4 

Norway 

O • 

Norway. . 

1 

Sweden 

• o 

Greece 

0 


SOUVK WMcil rn^BdOa 


By Alison Maitland 

Only two in five raw chickens 
are free or bacteria which 
cause food poisoning, accord- 
ing to a survey pubiished 
today by the Consumers' Asso- 
ciation. 

Salmonella was found in 36 
per cent of 160 raw chicken 
samples tested in the UK, 
while 41 per cent contained the 
bacteria Campylobacter, the 
association said in a report in 
Which? magazine. Campylobac- 
ter can cause diarrhoea, vomit- 
ing, pain and fever and in rare 
cases can result in Haarti 

Britain had one of the worst 
scores for poultry cleanliness 
in a survey of 14 European 
countries by consumer organi- 
sations, the association said. 
Only Denmark and Portugal 
scored worse for salmonella, 
while the UK was fifth worst 
for Campylobacter. 


Norway had the cleanest 
chicken, with none of its sam- 
ples carrying salmonella and 
only l per cent infected with 
Campylobacter. 

The association said this 
showed that better results 
could be achieved and called 
on the British government to 
clean up chicken production. 
Problems included contami- 
nated feed, poor hygiene and 
cramped housing, it said. 

Ms Charlotte Gann, senior 
editor of Which? magazine, 
said: “There is absolutely no 
way a shopper can tell if 
chicken is contaminated, so all 
chicken must be treated as sus- 
pect" 

The association said some 
magazines were still publish- 
ing recipes using raw eggs 
with no warning of the dangers 
of salmonella. It said that one 
or two eggs in every 1,000 were 
likely to be contaminated. 


Revenue says it pays 
tax-dodge informants 


By Jim Kelly 

The Inland Revenue yesterday 
revealed that it pays infor- 
mants for help in catching tax 
dodgers. Unfortunately for the 
informers it then taxes them 
on the extra income. 

The Revenue disclosed that 
in some cases it has paid up to 
£20,000 for information leading 
to the recovery of unpaid tax. 

The sums can be less than 
£50, and in recent years there 
has never been more than a 
“handful" of payments. In the 
year to March 1994 it paid out a 
total of £7,050, in the year 
before £2,750, and £24^50 the 
year before' that. 

In its annual report the Rev- 
enue pointed out that funds 
recovered with the help of 
informers formed a small part 
of the £4.7bn collected in the 
last financial year - the equiv- 
alent to 2.5p in basic income 


tax. Under legislation dating 
from 1890 the Revenue is enti- 
tled to pay up to £50 for infor- 
mation. Any payments over 
that level must be approved by 
the Treasury. The Revenue 
stresses that payments, calcu- 
lated by a secret formula, are 
made only after the unpaid tax 
has been recovered. 

“In most cases a reward is 
not what they are looking for," 
said the Revenue, "but some 
do ask if one exists. Personal 
grievances between business or 
marital partners are a common 
reason for information being 
offered." 

In one case study released 
with the annual report an 
informant told the Revenue of 
£150.000 transferred to the UK 
by Mr A from an account in 
Jersey. No record existed in his 
tax returns of an offshore 
account. 

Mr A denied the charge but. 


using statutory powers, the 
Revenue confirmed the tip and 
the bank's security video 
showed Mr A withdrawing the 
funds. He was jailed for 12 
months and finpH £10,000 with 
costs. 

In another case, a group of 
Revenue executives known as 
“ghostbusters” discovered 
coach drivers hiding their tips, 
selling refreshments and sou- 
venirs and offering duty-free 
goods by pooling passengers' 
un u sed allowances. 

They also accepted fees for 
stopping at shops and tourist 
attractions and also acted as 
an unofficial bureau de change 
at profitable rates. Others took 
on extra paid work as couriers. 

Much of the extra income 
was not declared. So far 10 of 
the 18 moonlighters have set- 
tled with the Revenue, which 
is seeking repayment of 
£70.000. 


Shinetsu to 
expand in 
Scotland 


By Mlchfyo Nakamoto and 
James Buxton 

Shinetsu Haudotai, the 
Japanese manufacturer of sili- 
con wafers, is to invest a fur- 
ther £23m to increase produc- 
tion capacity at its plant at 
Livingston near Edinburgh. 

The investment will increase 
capacity from 130,000 wafers a 
month to 200,000 by January 
1995 and to 330,000 by April, 
1996. It will bring the compa- 
ny’s total investment in the 
Livingston plant to £53m. 

Last month NEC, the Japa- 
nese electronics company, 
announced it was to build a 
semiconductor plant at Liv- 
ingston. 

Shinetsu supplies NEC as 
well as other semiconductor 
manufacturers based in 
Europe, but its investment is 
not connected with the NEC 
expansion, the company said. 


Nadir aide 
charged over 
stolen money 

Mrs Elizabeth Forsyth, a close 
associate of Air Asil Nadir, was 
yesterday charged with two 
offences of handling money 
stolen from Polly Peck Inter- 
national. the fruit to electron- 
ics empire formerly chaired by 
the fugitive businessman. 

Mrs Forsyth was chairman 
of South Audley Management, 
the company that dealt with 
Mr Nadir’s personal tax and 
property affairs. 

She was charged yesterday 
morning and later appeared in 
court to be remanded on bail 
until November 16. 

The first charge against Mrs 
Forsyth alleges that between 
October 16 and October 22. 
1989 she “dishonestly under- 
took or assisted in the reten- 
tion, removal or disposal or 
realisation of certain stolen 
goods, namely £88,050 in mon- 
ies belonging to Polly Peck 
International pic, by or for the 
benefit of another, or dishon- 
estly arranged to do so, know- 
ing or believing the same to be 
stolen goods”. 

The second charge is simi- 
larly worded bnt involves 
£370,000 allegedly belonging 
to Polly Peck. 


Channel tunnel 
traffic grows 

More than 110 trains now pass 
through the Channel tunnel 
each day. Sir Alastair Morton, 
co-chairman of Eurotunnel, 
said yesterday at an industry 
conference. 

The traffic includes Eurostar 
expresses, under trial before 
the launch of commercial ser- 
vices early next month 
between London, Paris and 
Brussels. More than 100 Euros- 
tar trains have used the tunnel 
since full-scale tests began last 
month, most them achieving 
scheduled journey times of 
three hours from London to 
Paris and 3V* hours from Lon- 
don to Brussels, he said. The 
fastest took 18.4 minutes to 
pass between the French and 
English portals of the tunnel. 


Legal challenge to 
London Tube strike 

The RMT transport union 
faces the threat of a legal chal- 
lenge to stop the 24-hour Lon- 
don Tube strike due to start at 
7.30pm. London Underground 
is questioning the validity of 
the RMT ballot of its 7,000 
members which voted to back 
industrial action. 

"We are considering seeking 
a High Court injunction to pre- 
vent the disruption. There 
were irregularities in the bal- 
lot," the company said. 


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ninforcs& srv 
being destroyed 
da* rate of diottvmd 

trees i minute, ho* can pitting -ms ^ 
just i handful of seedlings make l difference? 

A WWF - World Wide Fund For Nature tree 
nursery addresses son* of the problems lacing pcopfc 
that can force them to chop down trees. 

Where hunger or poverty a die underlying cause 
of deforestation, we can provide fruit trees. 

The vdbgcrc cd* Mugimga. Zaire, lor example, eat 
papaya wd mangoes from WWF trres. And rarher than 
having to seC tmibcr to buy other (bod, they can now 
sell the surplus fruit their nursery products 

Where trees arc chopped down lor firewood. 
WWF and the kx J people can protect them by planting 
last- growing varieties ro lomi a renewable fuel source 
This ts particularly valuable in the Intpcnctnble 
Forest, Uganda, where uaiigenous hardwoods take 
two hundred years ro mature. Tire Altrickimu font 
tree* planted by WWF and loesl villages can be 
harvested within live or six years of planting. 

Where trees are clwppcd down to to used for 
construction, as in Panama and Rduscui. we supply 
other specks that arc las-growing and easily replaced 
These ate nurseries are just pin of the work wv 
do with the people of the tropical forests. 

WWF sponsors students from developing ruunores 
on an agroforcary course ar UPAZ University in 
Costa Rica, where WWF provide, rcchmeal advice on 
growing vegetable and grain crops. 


Uuli» 
help is pven. 
il is exhausreJ 
ts quickly be "slash 
and burn" fa ruling methods. 
New tracts of tropical forest would then have 
to be cleared every two or three wars 

This muiccivary Ji-s ruction can be prevented bi 
combining modern ict'hnii|tir> with traditional 
practices so that the same plot of land can be used to 
pt'Sduce crops over and over again. 

In La PlaiBib, Colombia, our experimental lanu 
demonstrates bow rhow Ifilimqucs un he used to 
grow a Ihmily's Ibod on * small four hectare plot. 
(Instead of clearing die usual sen hectares of lurvsL) 
WWF ikUworicen arc now involved in over 1M 
tropical futot projects m -15 eounmes around the tvurU. 

The idea behind all of this work is that the use of 
lucunl resources should be obtainable. 

WWF is calling lor Hie rate ofdciwesDUnn in the 
tropics to br halved bv I’r'S. and for there 10 be no 
net deforestation by the cud uf tire century. 

Write io the Membership Officer at die address 
below ro find our how von can help us ensure that 
tins generation Joe:, not continue to steal Harare’s 
capital from lire next. It could be with a donation, 
or. appropriately enough, a legacy. 

WWF WotfWda Rvid FwNaue 

Uunt, «»rtJ Mi. f— JI 

[itrcmarioiul SccrvLinit, 11% CibnJ. Switzerland. 


FOR THE SAKE OF THE CHILDREN 

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12 


* FINANCIAL TIMES THURSDAY OCTOBER 

MANAGEMENT: MARKETING AND ADVERTISING 


6 1994 gt 


Mac has 
the Gaul 


to oust 


Disney 


M ickey Mouse has been 
shunned in favour of 
something more Gallic 
in a new. French-inspired mar- 
keting drive for McDonald's res- 
taurants across Europe. 

In place of their American 
confreres at EuroDlsney. near 
Paris, the fast food chain has 
looked to Astertx and his friends 
for its new campaign. 

For the next few weeks, chil- 
dren who buy “happy meals” of 
hamburger, fries and coke at 
McDonald’s will be given one of 
four Asterix characters. 

“Sometimes people think of us 
as a US multinational bull- 
dozing our way in,” says Mich- 
ael Boestam, marketing director 
for the company across Europe. 
“McDonald’s is an American 
concept, but we try to be as 
local as we can." 

Be says that most customers 
are locals, so it is important 
that the management in the 
company’s franchises is local. 
Not only is the choice of decor 
left to individual managers, but 
there are also concessions to 
local tastes - such as salmon in 
Norway and large salad bars in 
Italy. 

Boestam says that Asterix is 
just one example of an increas- 
ingly local focus within Europe 
in recent months. “He is one of 
the most known symbols in 
Europe," he says. 

The promotion - geared to a 
new film, Asterix and the Great 
Crossing - follows an earlier 
campaign based around a 
well-known European toy. Lego. 

McDonald’s has certainly not 
been shy in the past to use Walt 
Disney characters and other US 
themes in Europe. The Lion 
King, a Disney film, provided 
characters for a previous 
McDonald's promotion in 
Europe. So did two other Disney 
films: Aladdin and Beauty and 
the Beast 

And for the future? Boestam 
says Disney characters are a 
“possibility . . . but not defi- 
nite”. Asterix wins out In 
Europe, at least for now. 


Andrew Jack 


F or a couple of years it 
seemed like a good Idea: 
Izabel Lam, a growing New 
York jewellery and table- 
ware design company, farmed out 
production of some of Its cutlery to 
contractors in Thailand, where 
metalworking skills were available 
more cheaply than in the US. 

Now the cost-cutting plan has 
turned sour. Tim McCarthy, Izabel 
Lam president, says Thai factories 
have been churning out hundreds of 
thousands of copies of his compa- 
ny’s knives, forks, spoons and serv- 
ing plates. 

McCarthy reckons the pirates 
have cost Izabel Lam $6J5m (£4. 3m) 
of lost business and £250,000 in legal 
fees as it attempts to remedy the 
problem with a torrent of litigation: 
“Sales of our {genuine] cutlery have 
dropped 90 per cent in the last three 
months." 

Pirated copies of Izabel Lam cut- 
lery have been exported to Japan, 
the US and Europe. As many as five 
Thai companies and 50 distributors 
in 20 countries are involved, 
McCarthy says. “Thailand has 
become the copying capital of the 
world," he says. “Contracts gener- 
ally are not respected." 

There is no doubt that intellec- 
tual piracy is rampant in Thailand. 
It is easy to buy pirated computer 
software, music cassettes and 
videos on the streets of Bangkok, 
although some items become tempo- 
rarily hard to find when the US is 
making its annual assessment of 
Thailand's enforcement of copyright 
rules. 

Copies of clothes and luggage by 
leading French and Italian design- 
ers are also openly on display at 
street stalls, as are “Rolex” watches 
costing a mere $10 each. 

Most of these products are known 
to be copies or fakes by the people 
who buy them in Bangkok. By con- 
trast. exports from Thailand to the 
west which may be in breach of 
international copyright conventions 
- or manufactured secretly by con- 
tractors in addition to their licensed 
production for legitimate brand 
names - are much more difficult to 
identify. 

McCarthy values the total turn- 
over of table-top products, including 
cutlery, at $i8bn-$20bn in the indus- 
trialised countries, and he says 
about $5bn of this is accounted for 
by pirated merchandise from Thai- 
land and elsewhere. 

Unlike most other designers, Iza- 
bel Lam has taken the unusual step 
of making a public fuss about its 
piracy claims, and it has begun 
legal action in Thailand, Germany 
and France after finding what it 
regards as copies of its designs in 
shops in Europe and Thailand and 
on display at Thai stands during 
recent trade fairs in Frankfurt and 
Paris. 

At the centre of the controversy 
is a product called Sphere cutlery, a 


Knives out 


for pirates 


A New York company is taking legal 
action against Bangkok's copycats. 
Victor Mallet reports 



used by Thai companies to ship 
out bogus product,” says 
McCarthy. 

Successful action against pirates 
is rare, but not unknown. Izabel 
Lam was encouraged by the expul- 
sion of an Indonesian company 
from a Frankfort textile fair in May 
after it was accused of copying US 
and European designs. 

At a Fr ankf urt fair in August, 
according to McCarthy, no fewer 
than seven outlets were offering 
variants of Babel Lam designs. He 
says be was told repeatedly that he 
would be killed if he attempted to 
pursue the matter in Bangkok - not 
an unusual threat in the Thai busi- 
ness world. 


MeMdCMSd 

Sparks of inspiration for Izabel Lam, but copyrighting them is fraught with difficulty 


design characterised by wavy han- 
dles c ulmina ting in bulbous ends. 
Izabel Lam, a Hong Kong Chinese 
designer who founded her Brook- 
lyn-based company in 1980. was 
inspired by wavy underwater sea- 


France. Germany and Thailand sell- 
ing what it believes are copies of its 
designs, and some have cooperated 
with Izabel Lam's investigations by 
suspending sales of the products 
and naming their suppliers. 


'Virtually every major trade fair is being used 
by Thai companies to ship out bogus product 7 


grass while scuba-diving, McCarthy 
says. “It's unique ... so there 
couldn't be a case of somebody mis- 
taking the design." 

Since May this year, Izabel Lam 
has served “cease and desist” 
notices against shops and traders in 


The company has also obtained 
German and French court 
injunctions against Thai companies 
and a Thai government department 
promoting exports at trade fairs in 
Frankfurt and Paris. “Virtually 
every major trade fair is being 


I n Paris in September, Izabel 
Lam found one of its Thai sub- 
contractors, N.V. Aranyik, a 
company based in Ayudhya, north 
of Bangkok, selling a design similar 
to Sphere under the auspices of the 
Thai department of industrial pro- 
motion. The Paris trade fair bro- 
chure shows cutlery similar but not 
identical to Sphere, with the 
handle-ends in the form of a loop 
rather than a bulb, but N.V. 
Aranyik denies copyright violation. 
“We are not copying anything." 
says Somchai Wangsilabat, a direc- 
tor. 

Izabel Lam is fo rming a new pres- 
sure group to campaign for the 
rights of designers. Known as TOP 
Design (True, Original, Protected), 
it will be funded by $10,000 from 
each member company. 

McCarthy also intends to pursue 
legal action in Europe and Thai- 
land, but the impact in Thailand is 
likely to be limited by the difficulty 
of proving design theft for common- 
place household items such as cut- 
lery and by the small finas awarded 
in Thai courts for breach of copy- 
right. 

Thai government officials say 
that the mnTirmim award made so 
far has been Bt200,000 (£5,065). 

Until research, development and 
design in Thailand grow to the 
point where Thai companies have 
an interest in copyright protection, 
intellectual piracy is likely to 
remain a problem. 

Nantabhat Bhukkanasut, an offi- 
cial of the Thai Department of Intel- 
lectual Property, says Thai courts 
have yet to decide whether cutlery 
should be covered by universal 
copyright protection or by patents 
for industrial designs. Izabel Lam, 
he says, should have registered its 
design in Thailand before starting 
production. 

McCarthy replies that bureau- 
cracy makes it impossible for a 
small company to register every 
new. design in every country, but 
Nantabhat insists that Izabel Lam 
erred in assuming that its design 
would be protected by world copy- 
right. “It was a false assumption," 
he says. 


Advertising is being urge djojtong 
down maims of its effectiveness, 


writes Diane Suiwners 


The truth of 


the matter 


A dvertising can be its own 
worst enemy. It makes 
exaggerated claims for its 
ability to build brands, the result 
being that finance directors 
sometimes argue that any 
advertising campaign which foils 
to increase sales must be 
worthless. Why go on spending 
money, they say, an something 
that doesn't work? 

Andrew Ehrenberg, research 
professor of marketing at the 
South Bank University Business 
School in London, wants to see 
claims for advertising's power 
toned down. He is leading a 
two-year research project on how 
advertising really works, backed 
by more than 20 participants from 
industry in the UK and the US, 
where he is visiting professor at 
the Stem School, New York 
University. Companies taking part 
include General Motors, CBS, 
Procter & Gamble, British 
Telecommunications, Prudential 
and Shell 

Ehrenberg and his colleague 
Neil Barnard argue in a paper on 
the project that views about 
advertising foil into three camps: 

• Advertising as “natural 
ingredient in the marketing mix” 

- virtually a fixed cost and 
assumed to be effective. Research 
and evaluation are often dismissed 
by this camp as fairly pointless. 
This approach might have been 
just about tenable in the early 
days of marketing but, in more 
accountable times, is no longer 
acceptable. 

• Advertising as an expense 
which is only justified when it 
pays for itself directly, through 
increased sales. The dominant 
position today, this view of 
advertising as valid only when it 
is brand building Is a reaction to 
the earlier, unaccountable 
approach. 

Ehrenberg and Barnard argue 
that the position is restrictive and 
leads to most advertising being 
classified as ineffective because, in 
mature markets, brands cannot 
continually enjoy increased sales. 
• Advertising as a way of 
maintaining sales of a brand. This 


is the area on which Ehrenberg 
and colleagues want to 
concentrate in their research 
project. They argue that brand 
building may be the effect of 
advertising in certain restricted 
circumstances, but simply keeping 
customers should be advertising’s 
more modest aspiration. 

The brand maintenance 
perspective is not new. but the 
Ehrenberg team claims it is 
neglected and underdeveloped. 
Little is known about how 
advertising works for established 
brands, and they say that 
advertising planning is often 
based on misconceptions about 
consumer behaviour. 


F or example. Ehrenberg and 
Barnard believe that the 
nature of brand loyalty 
among consumers is often 
misunderstood and considered to 
be a much stronger force than is 
actually the case. “Your 
customers are mostly other 
people's customers who 
occasionally buy you” is a 
well-established principle of 
buying behaviour which, they 
believe, still surprises many 
advertising and marketing 
professionals. 

To make their point about the 
comparative weakness of brand 
loyalty. Ehrenberg and Barnard 
quote a study of the Instant coffee 
market in the US. This found that 
the average brand was bought 
three times a year by its 
customers, while those same 
customers bought instant coffee 
nine times a year on average - in 
other words, the average brand 
accounted for just one third of its 
customers' instant coffee 
requirements. Loyalty is nothing 
more than a propensity to buy a 
product, they say. 

Ehrenberg says that deflating 
some of the more exaggerated 
claims for advertising and greater 
understanding of consumer 
purchasing behaviour should 
leave advertising more 
accountable and therefore in a 
stronger position to justify its 
existence. 


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BUSINESS INTELLIGENCE 


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UHR 


ESTADO DO PARANA 

SECHETAHADA AfifflCULTUHA £ DOJUUSIBCMBITD 


DOPPLER WEATHER RADAR SYSTEM 
SIMEPAR TENDER N* 002/94 
CALL FOR BIDS 


The AGRONOMIC INSTITUTE OF PARANA - IAPAR will 
receive unlit 2:00 p.m. on the 23 November 1 994, at the Panina State 
Meteorological System - SIMEPAR at the Polytechnic Center of the 
Federal University of Parana. Jardim das Americas. Curitiba- Parana 
- Brazil, the Documentation for Eligibility and Technical and 
Commercial Proposals to manufacture the equipment for the Doppler 
Weather Radar System, the complete description of which is 
contained in the Technical Specification, the opportunity for which 
will begin in public session by the opening of the envelopes 
containing the Documents of Eligibility. 

The bidding will be of a type, for Technical Quality and Price as 
Governed by the Brazilian Federal Statute 8.666/93 and the specific 
conditions comincd in this edict. 

It is projected that the system for tender shall be an integral pan of the 
Parand Stats Meteorological System - SIMEPAR and is to be a 
priority for the work in Scientific and Technological Research, and 
by complimentary to the operational activities. 

Interested parties may obtain more information, analyze. or receive a 
copy of the complete Edict ut the address below: 


Sistema Mctcorolrigico do Parana - SIMEPAR 
Centro Polinicmco da Univcrsidade Federal do Parand 
Jardim das Americas - Caixa Postal 3 IS 
8000 1 -970. Curitiba - Parana — Brazil 
Tcl/fax: +55 141)366-2122 


A complete copy of the document for bidding, in Portuguese and in 
English may be obtained by interested parties on payment of a non 
returnable fee of RS 300.00 (three hundred Rcais) up until 10 (ten) 
days before the above established deadline for receiving proposals. 
The financial resources for payments, resulting from this current 
bidding, are available as part of the Parand State budget. 

At the time the document for bidding is purchased, all Bidders shall 
present a letter containing their complete mailing address (Bidder's 
Name. Street Number. Zip code. City. State, Country, Tel and Fax 
numbers). 


GON£ALO SIGNORELLI DE FARIAS 
Director President 


ESTADO DO PARANA 

SBCfSTMlA HA AGftCULTURA E DO ABASIECHBnD 


TELEMETRIC SYSTEM FOR THE COLLECTION OF 
METEOROLOGICAL AND 
HYDROLOGICAL SURFACE DATA 
SIMEPAR TENDER N* 001/94 
CALL FOR BIDS 


The AGRONOMIC INSTITUTE OF PARANA - IAPAR will receive 
until 2:00 p.m. on the 18 November 1994. at the Parand Stale 
Meteorological System - SIMEPAR at the Polytechnic Center of the 
Federal University of Parand. Jardim das Americas. Curitiba - Parand 
- Brazil, the Documentation for Eligibility and Technical and 
Commercial Proposals to manufacture the equipment for the 
Telcmctric System for the Collection of Meteorological and 
Hydrological Surface Data, the complete description of which is 
contained in the Technical Specification, the opportunity for which 
will begin in public session by the opening of the envelopes 
containing the Documents of Eligibility. 

The bidding will be of a type, for Technical Quality and Price as 
Governed by the Brazilian Federal Statute 8.666/93 and the specific 
conditions contained in this cdicL 

It is projected that (he system for tender shall be an integral part of the 
Parand State Meteorological System - SIMEPAR and is to be a 
priority for the work in Scientific and Technological Research, and by 
complimentary to the operational activities. 

Interested parties may obtain more information, analyze, or receive a 
copy of the complete Edict at the address below: 

Sistema MeieoroltSgico do Parand - SIMEPAR 
Centro Politdcnico da Univcrsidade Federal dn Parand 
Jardim das Americas - Caixa Postal 318 
80001-970. Curitiba — Parand -Brazil 
Tel/fax: +55(41)366-2122 


A complete copy of the document for bidding, in Portuguese and in 
English may be obtained by interested parties on payment of a non 
reiumable fee of RS 300,00 (three hundred Rears I up until 10 lien) 
days before the above established deadline for receiving proposals. 
The financial resources for payments, resulting from this current 
bidding, are available as part of the Parand State budget. 

At the time the document for bidding is purchased, all Bidders shall 
present a letter containing their complete mailing address (Bidder's 
Name. Street, Number. Zip code. City. State. Country, Tei and Fax 
numbers). 


GON^ALO SIGNORELLI DE FARIAS 
Director President 


GOVERN© DO ESTADO DO PARANA 


GOVERNO DO ESTADO DO PARANA 


PEOPLE 


Nurdin & Peacock 
loses David Poole 


David Poole, chief executive of 
cash and carry operator Nur- 
din & Peacock for the past 
three years, is leaving the com- 
pany by mutual agreement fol- 
lowing a clash of management 
styles. 

N&P insists Poole's depar- 
ture after 19 years with the 
group does not stem from prob- 
lems of strategy or its imple- 
mentation, and he leaves with 
full appreciation of his achieve- 
ments. “There is no disagree- 
ment about the company's 
strategy.” N&P says. “In this 
case, it is purely a matter of 


management style.” 

While N&P would not go into 
details, Poole is known within 
the retail trade for being a 
“hands-on" manager with a 
direct forceful style. Richard 
Fulford, the chairman, says 
N&P requires a “new manage- 
ment style and increased team- 
work to progress the key initia- 
tives which were put in place 
earlier this year”. 

Those initiatives include con- 
verting N&P’s outlets to the 
TBW format, offering bigger 
general merchandise and office 
stationery ranges; the acquisi- 


tion of the M6 cash and carry 
chain from Ireland’s Fitzwilton 
- the first acquisition in N&Fs 
184-year history; and the build- 
ing and opening of three US- 
styie warehouse clubs, called 
Cargo Club. 

Poole's departure will reduce 
the executive committee run- 
ning the company from four to 
three. It will now be chaired by 
Tony Hopkins, trading direc- 
tor, and also includes Nigel 
Hall, finance director, and Alex 
Rentoul, commercial director. 

Fulford will also be Increas- 
ing his involvement as chair- 
man, and says he is “confident 
that this taam will take the 
company forward”. 

However, a successor to 
Poole is thought likely to be 
appointed in due course. 


Electronic 

switches 


Steve Rowley’s appointment as 
general manager of Cellnet, the 
highly profitable mobile phone 
joint venture between British 
Telecommunications and 
Securicor, heralds a further 
advance by the IBM faction 
within the higher reaches of 

BT. 

Rowley joins Cellnet on the 
coat-tails of Howard Ford, Cell- 
net’s new managing director. 
Ford was recruited this June 
from IBM. where he was 
responsible for the group's per- 
sonal computer business in 
Europe. Rowley, 35, worked 
with Ford as head of IBM’s per- 
sonal computer business divi- 
sion. 

As manag in g director of Cell- 


net, Ford succeeded Stafford 
Taylor, another former IBM 
executive, who is now manag- 
ing director of personal com- 
munications for BT's main 
business. The key BT post of 
corporate relations director 
was filled this summer by Jan 
Ash - yet another IBM vet- 
eran. 

AD this bears the imprint of 
Michael Hepher, BT's manag- 
ing director, who has been sys- 
tematically filling senior BT 
posts with outsiders used to 
life at the sharp end of sales 
and marketing. Hepher was 
recruited three years ago from 
Abbey Life, the insurance 
group, and has Little time for 
the old utility mentality still 
strong at BT. 

Unsurprisingly, Rowley’s 
brief includes sales, marketing, 
products and customer service. 


■ Mike Watson, formerly 
director of business 
development at Oasis, has been 
appointed marketing and sales 
director at ABA 
TECHNOLOGY, part of the UK 
Atomic Energy Authority 
which is earmarked for 
privatisation. 

■ Mek Rahmani has been 
promoted to vice president/ 
genera l manager - Europe of 
View LOGIC SYSTEMS. 

■ Mike McGoun has been 
appointed corporate 
development director of P&P. 

■ Bill Lloyd, formerly general 
manager of Raxco, has been 
appointed UK general manager 
of PSDI (UK). 

■ Peter Little has been 
appointed chief executive of 
TORCH TELECOM; he moves 
from MDlicom Ip i^fnatinn ni 
Cellular. 


Strategic move for Sandland 


The hunt is on for a new chief 
investment manager for the 
Norwich Union Insurance 
group, (me of Britain's biggest 
mutual insurers, following last 
week's retirement of Mike 
Sandland (right) after eight 
years in the post. 

ggnrilanri , 56, joined Norwich 
Union in 1961 and has spent all 
bis life on the investment side 
of one of Britain’s biggest insti- 
tutional investors. In addition 
to mana g in g £33bn, Sa n dland 
hpa made a name for himself 
as one of a growing band of 
institutional investors who are 
taking a more aggressive 
stance towards the manage- 
ments of underperforming 
companies. 

His most famous clash with 
one such happened three years 
ago when he was chairman of 



the Institutional Shareholders 
Committee and helped oust the 
hoard of Tace, a small com- 
pany mflirinp pollution moni- 
toring equipment. He is a 
member of the Cadbury com- 
mittee on corporate gover- 
nance and has been one of the 
leading institutional opponents 


of long roiling contracts for 
directors. 

After 33 years. Sandland felt 
it was time to “get off the exec- 
utive treadmill" and has 
retired three years early. His 
first retirement job is in join- 
ing Tom Frost, the former 
chief executive of National 
Westminster Bank, on the 
advisory board of The Strategic 
Partnership, a small manage- 
ment consultancy set up ear- 
lier this year. 

Despite his criticism of some 
company boards, Sandland is 
hoping to pick up a few non-ex- 
erative directorships. He has 
plenty of contacts, since his job 
at Norwich Union meant that 
he regularly met the chairman 
and senior management of 
nearly all of the UK’s larger 
companies. (See Observer) 


Le May returns 
to London and 


joins UBS 


■ Martin Elaines has been 
appointed divisional director of 
QUILTER GOODISON'3 office 
in Birmingham; he moves ftran 
Albert E. Sharp. 

■ Peter Newman, formerly 
md, corporate banking at 
NatWiest Markets, has been 
appointed md NATWEST 
Investment Services. 

■ Shi geo Ichikawa, formerly 
md of FUJI Capital Markets 
(UK), has been appointed an 
md of Fuji International 
Finance; he succeeds Kamo 
Matsnda and is succeeded bf 
Kltoshi Soiznmt. formerly 
deputy general manager of m® 
financial engineering division 
in Tokyo. 

■ Paul Myners, executive 
chairman of Gartmore, has 
been appointed a director^. 
Gartmore American Securities 

■ Tom Foley has been 
appointed to the board of 

IRISH INTERCONTINENTAL 

BANK. 

■ Ulf Sylvan has been 

appointed general manage^, 
the UK operation of SVENSa* 
HANDELSBANKEN. 

■ Martin Hamilton-Sharp^® 
been appointed a director » 
JUPITER TYNDALL Merlto- 


PB 


f 


Malcolm Le May, 36, co-head of 
Bzw’s US merchant banking 
business, is returning to Lon- 
don and joining UBS to head 
its European corporate finance 
team. 

Le May, an accountant who 
has worked for Drexel Burn- 
ham Lambert Securities and 
Morgan Grenfell, joined BZW 
four years ago and moved to 
New York early last year as 
co-head of merchant banking 
in New York. His departure 
comes only a few months after 
BZW appointed Ian Peacock, 

46, who had been 19 years with 
Hein wort Benson, as the other 
co-bead of merchant banking 
in NY. 

UBS, which claims to rank in 
the top five for all Euro-equity 
related issues, has around 140 > 

people involved in corporate 
finance in London and another - -j 
40 in Zurich. David Robins, 
chief executive of UBS to Lon- 
don, says Le May has been 
recruited for his “transatlantic 
capability”. Le May, who will 
be a vice-chai rman of UBS In 
London, replaces Stephen 
Brisby, 43, an ex-Schroders 
merchant banker, who was 
appointed head of business 
development for UBS to 
Europe, 


It 

**« 


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FINANCIAL TIMES THURSDAY OCTOBER 6 1994 


13 


FINANCIAL TIMES SURVEY 


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PRINCIPALITY OF LIECHTENSTEIN 


T he tiny principality of 
Liechtenstein, wedged 
between Austria and 
Switzerland in the 
upper Rhine valley, must rank 
as one of the earth’s most suc- 
cessful societies, writes IAN 
RODGER. 

Prosperity is high, unem- 
ployment is virtually non exis- 
tent the economy is well bal- 
anced between highly 
productive secondary and ter- 
tiary sectors and modem social 
problems are almost unknown. 

Indeed, the principality pro- 
vides a case study of the eco- 
nomic virtuous circle taken to 
an extreme. Low taxation has 
attracted ever more invest- 
ment in manufacturing indus- 
try and ever more business for 
Liechtenstein’s trustee-lawyers 
who set up tax avoiding 
schemes for the world’s rich. 
And t heir growth and produc- 
tivity have prevented any need 
for tax increases for a long 
time. 

Individuals pay 8 to 10 per 
cent tax on their incomes, 
active companies 6 to 18 per 
cent on their profits. 

Neighbouring countries may 
complain that the principali- 
ty’s low taxes constitute an 
unfair competitive advantage, 
but the public sector is awash 
with money and would not 
know what to do with more of 
it. The national government 
has budget surpluses as a mat- 
ter of course. The town of 
Vaduz, the capital, mate**; more 
money from investing its 
financial reserves than it does 
from taxes. 

The key to this paradise-like 
state, apart from reasonably 
good management, is Liechten- 
stein's Lilliputian size. With an 
area of only 160 square kilo- 
metres and a population of 
only 30,000, it does not have to 
grapple with the costs or com- 
plexities of big regional or 
income disparities. And the 
demands placed upon it by the 
international community are 
modest 

The problems Liechtenstein 
faces are nearly unique - how 
to preserve its blessed state in 
the face of increasing integra- 
tion in Europe, how to accom- 
modate further economic 
expansion and how to prevent 
its democracy from being cor- 
rupted by a small but super 
rich elite of trustee-lawyers, 
bankers and industrialists. - 
The biggest problem facing 
all Liechtenstein industry and 
commerce is manpower. The 
principality’s economic struc- 
ture has long since outgrown 
the ability of the community to 
provide sufficient labour. 

Foreigners now constitute 
nearly 40 per cent of the princi- 
pality’s 30,000 residents and, 
together with 6,500 commuters 
from Austria and Switzerland. 
60 per cent of the 20,000 strong 
workforce. 

Political leaders say that 
these proportions are exces- 
sively high, provoking some 
disquiet among citizens. How- 
ever, the statistics are not as 
stark as they look. 
Liechtenstein has a very 


T hese are testing tunes for 
His Serene Highness 
Hans- Adam n, reigning 
prince of Liechtenstein since 
1989 and the last monarch in 
Europe with any real power. 

The prince triggered a con- 
stitutional crisis two years ago 
by a rare exercise of that 
power, threatening to dissolve 
parliament if it did not endorse 
his demand that a referendum 
on joining the European Eco- 
nomic Area (EEA) be h eld in 
advance of one in Switzerland 
on the same issue. 

In the end, a compromise 
was worked out, with the 
prince withdrawing his threat 
and the government agreeing 
to promote the EEA cause in 
the referendum campaign. 

While the constitution 
clearly states that the reigning 
prince has responsibility for 
foreign affair s. Prince Hans- 
Adam was really making a 
more general point 
His father. Prince Franz 
Josef n. who led the formerly 
poor agricultural principality 
to undreamed of prosperity in 
the post war period, had gradu- 
ally implicitly ceded some 
princely powers to the parlia- 
ment and government 
The new prince wanted to 
claw back some of th em , mak- 
ing clear in a famous state- 
ment during the constitutional 
crisis tha t he wanted to be an 
active monarch. “If they want 
someone who will Just do rep- 
resentational work, they must 
look for someone else," he said. 

Today, the 49 year old Hans- 
Adam remains pleased with 
the outcome of the crisis. Not 
only did a majority of Lie- 
chtensteiners endorse his 
recommendation to join the 
EEA. but popular sentiment in 
favour of an active monarchy 
was confirmed. 

“There is no majority for a 
figurehead," he said in an 
interview in his palace office 
above Vaduz, a view folly 
endorsed in interviews with 
several other laechtenstemers. 
However, neither the EEA 


This diminutive country has never had it so good. 
But its wealth is the source of its biggest problems 

High finance and 
independence 


Thursday October 6 1994 


SennwakJ 1 






AUSTRIA 


SWITZERLAND 




SWITZERLAND 


ff * '• WEIH6HLAM3S 


! GERMANY _J 


VCZBCHREP 


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mean policy towards immi- 
grants. such that second and 
third generation permanent 
residents can easily be pre- 
vented from obtaining citizen- 
ship. 

Mr Mario Frick, the prime 
minister, wants to change the 
law, and thereby to reduce the 
immigrant population to a 
more tolerable 30 per cent 

Still, the difficulty in finding 
qualified labour together with 
high wage rates have already 
driven many companies to set 
up factories in neighbouring 
Austria and Switzerland, and 
that trend will undoubtedly 
continue. 

As has occurred elsewhere, it 


looks as if Liechtenstein com- 
panies will try to keep their 
higher value activities plus 
research and development at 
home. Thus, growth prospects 
may be limited, but the princi- 
pality will continue to advance 
around the virtuous circle. 

Liechtenstein has followed 
two strategies for securing its 
future independence, both par- 
adoxically aimed at avoiding 
isolation. 

The first, championed by the 
rei gning prince, Hans-Adam XL 
has been to join international 
organisations, such as the 
United Nations, the European 
Free Trade Association (Efta) 
and the General Agreement on 


Interview: Prince Hans-Adam II 


Active ruler 
joins the fray 


nor the constitutional issue is Europe. “1 
yet definitively resolved. Three this way, 
months ago, the prince made a integrated 
series of constitutional a mend- will be in 
ment proposals, mainly to tion than 
adjust the division of powers has econoi 
and to incorporate a formula terms of i 
enabling the people to oust a and expi 
disliked prince. goods." 

The proposals aroused con- On the 
siderable con- 
troversy. “We 
are still dis- 
cussing them," 
the prince said 
with a smile. 

“But we all 
agree that we 
should not 
push for a solu- 
tion before we 
have resolved 
the EEA ques- 
tion." 

Liechten- 
stein's entry 
into the EEA 
has been 
delayed by the 
need to work Prince Hana-Adam Efc officially 
out a system rasponsibfe for foreign affairs 
for preserving 

its customs union with Swit- that the 
zerland, which decided not to intematio; 
join. The prince said arrange- the fores* 
meats had been agreed among remain wi 
officials and documents were if Switzeri 
“ready for signing”. the EEA a 

The government has agreed The pril 
to hold another referendum on deeply < 
the terms, giving the peo- devout Cal 
pie another opportunity to tutional u 
endorse or reject entry. The gest that l 
prince said he was “fairly con- ditionalisf 
fident” that the result would worked vi 
be positive again. years to \ 

He believes fervently that princely fs 
the principality’s future secu- setz). 
rity and independence depend “My fa 
on closer ties with the rest of should adi 



Europe. “If we can progress in 
this way. with the economy 
integrated with the EEA, we 
will be in a much better posi- 
tion than in the past It also 
has economic implications - in 
terms of the inflow of money 
and exports of industrial 
goods." 

On the other hand, he does 
not want Liech- 
tenstein to join 
the European 
Union. “The 
main problem 
is that we are 
too small. We 
would have to 
open our bor- 
ders to people 
and we would 
have an inflow 
of thousands of 
rich people. We 
could only con- 
trol it by rais- 
ing income tax. 
and our people 
would not 
i fc officiary accept that” 
reign affairs He also 

acknowledges 
that the principality's main 
international relationship for 
the foreseeable future will 
remain with Switzerland, even 
if Switzerland remains outside 
the EEA and EU. 

The prince is known as a 
deeply conservative and 
devout Catholic and his consti- 
tutional initiatives might sug- 
gest that he was a diehard tra- 
ditionalist But he has also 
worked vigorously in recent 
years to update the ancient 
princely family code (Hansge- 
setz). 

“My father thought we 
should adapt it to the modem 


Tariffs and Trade (Gatt). 

The second has been to join 
the European Economic Area 
(EEA). Liechtenstein’s indus- 
tries exported goods worth 
SFr2J5bn (SFr83,000 per capita) 
in 1992, with more than half of 
them going to European Union 
countries. 

Thus, the principality could 
not be indifferent to the pro- 
cess of European integration. It 
did not want to join the EU 
itself, partly because it feared 
that EU financial directives 
would compromise its tax 
haven, but mainly because it 
does not have the manpower to 
cany its share of the adminis- 
trative burden. 

The EEA, an expanded free 
trade treaty negotiated three 
years ago by the European 
Union and Efta countries, 
seemed to provide a middle 
way, especially as the princi- 
pality succeeded in negotiating 
an exception to the freedom of 
movement of people require- 
ment 

Industrial leaders have 
enthusiastically endorsed the 
EEA agreement, malting clear 
the consequences if 
Liechtensteiners do not 
approve it in a referendum 
later this year. 

“If we do not join the EEA, 
Industry will run down its 
manufacturing activities here.” 
says Willy Frommelt, 
director-general of the 
Liechtenstein Chamber of 
Commerce and Industry. 

However, there are mixed 
feelings among the leaders of 
the powerful financial 
community, and the outcome 
of the referendum rem ains 
uncertain. Even if it succeeds, 
tile future of the EEA itself is 
in doubt 

If Finland, Sweden and 
Norway join Austria in 
enteri n g the EU next year, the 
only remaining members of the 
EEA would he Liechtenstein 
and Iceland. 

The Liechtenstein 
government's hope is that the 
EEA can be given new life as a 
halfway house for some 
eastern and southern 
European countries wanting to 
join the EU. 

A noth e r advantage of EEA 
membership is that it would 
require companies and 
fin a n cial institutions to adhere 
to EU regulations, thereby 
reducing their local lobbying 
power. 

Until now, political balance 

in this small and tightly knit 
community has been 
maintained in no small 


world. He started working on it 
in the 1960s, and I finally got 
the family’s agreement on it 
last year.” 

The new code sets out clear 
criteria for defining who are 
family members - there are 
now nearly 120 - and prevents 
frhww from exploiting thp namn 
for commercial gain. Offenders 
can have their titles removed. 

The code also provides for a 
process for the family to 
remove a reigning prince if he 
is not behaving responsibly. 
Only the nearly 50 males over 
18 are allowed to vote. Hans- 
Adam regrets that his attempt 
to give women the vote was 
rejected. 

He has also been trying to 
recover the family’s immense 
property holdings in what is 
now the Czech republic. In all, 
the family Haims 1,600 square 
kilometres of mostly forested 
land there, about 10 times the 
area of the principality itself. 

After the second world war, 
Czechoslovakia classified 
Liechtenstein with Germany as 
a country from which no 
demands for recovery of confis- 
cated assets would be accepted 
even though the principality 
was neutral during the war. 

The Czech republic has 
signed treaties that oblige it to 
treat Liechtenstein as it treats 
other countries. But it fears 
that if it gave way to Liechten- 
stein, it would also have huge 
claims from former Sudeten 
Ger mans . 

“We understand that it is a 
touchy problem for them,” the 
prince says. “There is not 
much we can do.” 

Talk has begun in Liechten- 
stein about the prince's possi- 
ble retirement. This has 
become something of a tradi- 
tion in the family. 

“My father retired, and his 
predecessor too. 1 will try to 
turn over the job at the appro- 
priate date. My eldest son is 26. 
He still has some training to 
do.” 






Watch on the Rhine; looking south towards Switzerl an d from the Liec htens tein village of Masescha 


measure thanks to the unique 
position and powers of the 
reigning prince. The story is 
told that the only legislation 
ever vetoed by the previous 
reigning prince. Franz-Josef H. 
was a measure to limit hunting 
licences. He could see that it 
was a scheme put up by the 
super rich who knew they 
could outbid ordinary citizens 
for all the licences. 

“The prince is very 
important. We have to have 
someone here who is 
independent,” says Peter 
Ritter, himself one of the most 
successful trustee-lawyers in 
Liechtenstein. 

Yet relations between the 
prince, the government, the 
parliament and the people are 
unusually tense these days. 
Two years ago, Hans-Adam n 
startled his subjects by 


threatening to dissolve 
parliament if it did not endorse 
his demand for a referendum 
on the EEA in advance of one 
in Switzerland. Last year, he 
had another confrontation 
with parliament. When it 
threw out Maritas Btlchel as 
prime minister, the prince 
dissolved parliament rather 
than let the 25 members name 
someone else as they wished. 

Hie prince, who insists that 
neither he nor a majority of 
the people would be satisfied 
with his having only a 
ceremonial role, has proposed 
constitutional changes to 
clarity everyone’s roles. But it 
has been agreed to postpone 
discussion of them until after 
the EEA question and a clutch 
of niggling bilateral problems 
with Switzerland have been 
resolved. 


First UK ministerial visit 


MR DAVID DAVIS, UK 
minister of state at the 
Foreign Office, this morning 
becomes the first British 
minister ever to make an 
official visit to Liechtenstein. 

Mr Davis, who has 
responsibility for European 
matters, said in an interview 
that be was looking forward to 
discussing European 
institutions and the handling 
of organised crime with the 
reigning prince, Hans-Adam 
n, the prime minis ter and the 
foreign minister. 

As a tax haven, 

Liechtenstein has been 
remarkably successful in 
keeping criminals away, bnt it 
attracted considerable 


attention two years ago when 
it emerged that Mr Robert 
Maxwell, the collapsed media 
tycoon, based some of his 
activities in the principality. 

Mr Davis said Liechtenstein 
officials had been very helpful 
in the Maxwell case, and he 
wanted to bnild on the 
co-operation established. “We 
do not want any boltholes for 
financial criminals,” he said. 

Britain also welcomed 
Liechtenstein's proposed 
membership of the European 
Economic Area (EEA), the 
expanded free trade area 
negotiated between countries 
of the European Union and the 
European FTee Trade 
Association (Efta). 


BARCLAYS PRIVATE BANKING 


Liechtenstein Toundations, 
Establishments and Trusts 
as part of our mte grated 
approach to the protection 
and management of your 
personal assets 


BPB TRUST A.G. 
P.O. Box 86 
Aulestrasse 74 
FL-9490 Vaduz 
Liechtenstein 


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ian Rodger 


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FINANCIAL TIMES THURSDAY OCTOBER 6 .W 


THE PRINCIPALITY OF LIECHTENSTEIN II 


L iechtenstein has been unusually 
active in the diplomatic field In the 
past few years. 

in 1390, it established a mission at the 
United Nations In New York. The follow- 
ing year it opened one in Geneva accred- 
ited to the international organisations 
there and last year it set up an office in 
Brussels. 

The principality makes no pretence of 
having any power whatsoever in interna- 
tional affair s. Its main purpose In building 
up an international presence is to secure 
its legitimacy as an independent state. 
This, in turn, its leaders believe, contrib- 
utes to the credibility of its tax haven in 
particular and to the health of the econ- 
omy in general. 

After living under the diplomatic wing 
of Switzerland for most of this century, 
the principality first struck out on its own 
in 1978 joining the Council of Europe. In 
1SS2, it achieved special status at the Con- 
ference for Security and Cooperation in 
Europe (CSCE) in Vienna and it became a 
full member of the United Nations in 1990. 

In 1991, it became a full member of the 
European Free Trade Association (Efta). 
mainly to negotiate special exemptions 
from the freedom of movement require- 
ments of the European Economic Area 
(EE A) treaty then being negotiated with 
the European Union (EU). Until then, it 
bad been an associate member under Swit- 
zerland's wing. And earlier this year, it 


Ian Rodger examines the foreign policy options of a mini-state 


Tiddler in deep water 


joined the General Agreement on Tariffs 
and Trade (Gatt). 

Ms Andrea Willi, foreign minister, says 
the principality puts most of its efforts on 
the international stage into good causes - 
h uman rights, environmental protection, 
women's rights and culture. 

It has been especially active in the area 
of minority rights. In July, the reigning 
prince donated $467,000 to Princeton Uni- 
versity in the US to fund a research pro- 
gramme on the right to self-determination. 
“We really care about this subject We are 
a small country. Our borders are at the 
door. Every day we see our limits," Ms 
Willi says. 

On a bilateral level, efforts are concen- 
trated almost entirely on Switzerland. 
Although the principality was established 
by the Austrian Emperor Karl VI in 1719 
as a seat for the noble Viennese Liechten- 
stein family, its people have always been 
culturally closer to the Swiss than to the 
Austrians. Thus, when the Austro-Hungar- 
ian empire collapsed in 1921, it was no 
trauma for the principality to attach itself 
to Switzerland. It adopted the Swiss franc 


as a national currency in 1921 and con- 
cluded a postal treaty with its neighbour 
in the same year. A customs union was 
established in 1924 and a formal currency 
union settled in 1980. 

Bilateral relations over most of this cen- 
tury have been remarkably tranquil. It is 
only since December, 1992 that things 
have become complicated. In that month, 
Liechtensteiners voted in a referendum in 
favour of joining the ESA. the expanded 
free trade area proposed between the EU 
and Efta countries. But the Swiss voted to 
stay out 


T hus, the question arose of how 
Liechtenstein could respect its obli- 
gation to provide for the freedom of 
movement of goods with other EEA coun- 
tries and adherence to EEA standards and 
still maintain its customs union with Swit- 
zerland. 

It has taken a long time to find an 
answer to this question although Liechten- 
steiners blame their own frequent changes 
of government in the past two years for 
much of the delay. Officials say there were 


very few problem areas anyway, because 
the Swiss have increasingly aii g rtp d their 
industrial standards os those of the EU. 

One important exception is the motor 
business. Switzerland has long protected 
its car dealers from foreign competition 
with a panoply of special specifications for 
cars to be registered in the country. 

The elegantly simple sedation that has 
been found is that a Liechtensteiner wifi 
be able to bay either an EEA or a Swiss 
specification car, but when it comes to 
selling it, he can sell it only to another 
Liechtensteiner or to someone in the area 
whose specifications it respects. 

This system will be easy to police 
because the Swiss car authorities would 
simply refuse to register an EEA specifica- 
tion car. 

Most other goods on which standards 
differ are industrial intermediates, such as 
poisonous substances, and these will be 
controlled at company level According to 
Willy Frommelt, director-general of the 
Liechtenstein Industry Association, the 
principality wifi need the grand total of 
five VAT inspectors. 



Andrea WBc in pursuit at good causes 


Final agreement an the revisions to the 
customs was achieved this week. 

Liechtenstein must now present the 
details of the deal to its EEA partners for 
their approval and then give its own peo- 
ple an opportunity to approve or reject it 
in a referendum. 

A ssuming all this can be accomplished 
in the next three months so that Liechten- 
stein joins the EEA on January 1. the 


principality’s anxieties will not be at an 

would leave only Switzerland, ice- 
U^dUKteMtein in Eft*- 
Iceland and Liechtenstein as non EU mem 
hT« of the EEA. And it is l*ely that 
Switzerland, and perhaps Iceland too. will 

intention of joining the EU. It is not on 
tbeagenda," declares Ms Willi. Being ffh 
a small state, it would be unable to folfil 
the responsibilities of a full member. More- 
over, ttfeare that EU laws would eventu- 
ally hurt its tax haven. . „ . 

The prince and government leaders 
agree that the EEA is just right for 
Liechtenstein, giving it most of the 
advantages of EU membership with 
protections for its economic and social 

the future of both Efta. which 
has a modest permanent bureaucracy, and 
the EEA do not look exactly secure. Ms 
Willi makes clear that there is little that 
tiny Liechtenstein can do. other than 
make suggestions. 

She says, for example, that EFTA and 
the EEA Twi gM be suitable routes towards 
EU membership for some eastern and 
southern European countries. Efta had 
third country trade agreements with 11 
countries, and the EU had invested a lot of 
time and thought in creating the EEA. "It 
is a useful model," she says. 


FACTS 


Area * 160 sq km 

Language Allemannish dialect of German 

Head of State Prince Hans-Adam II 

Head erf Government Dr Mario Frick 

Papulation — 29,868 at census of December 1992 

(including 11,432 resident aliens) 

Capital Vaduz (population 4,995 in Dec *92) 

Currency - - Swiss Franc 

GDP per capita (1991) SFr89.474 ($62,395) 

Inflation (1991) 5.9% 


Budget (1994) - Revenue SFr518.6m, Exp.SFr505.4tn 

Exports (1992) SFr2.480.9m ($1 ,764m) 

by destination EFTA 18.9%, EU 44.9%, Others 36.2% 

Touist arrivals (1992) Total 72,000 - Germany 33.0% 

..... .... .... Switzerland 21.6% 


Source: Europa, EFTA 


D rive into the centre of 
Vaduz on a normal day 
and you will see at least 
a dozen huge coaches in the 
central parking lots and scores 
of tourists ambling about the 
town centre. 

Tourism, it would seem, is a 
brisk trade in Liechtenstein. 

Well, yes and no. I n terms of 
numbers, it looks pretty 
impressive for a small place. 
Up to 150 coaches a day, 72,000 
visitors a year, 150,000 bed 
nights. Mr Berthold Konrad, 
director of the tourist bureau, 
estimates it accounts for a 
tenth of the principality’s eco- 
nomic activity. 

But behind those figures are 
some disturbing trends. The 


TOURISTS 


Birds of passage 


number of visitors, for exam- 
ple, is down from a peak of 
nearly 86,000 in 1985. Bed 
nights have fallen from 
168,000 in 1985. And there 
would appear to be no stop- 
ping the downward trend. 

The problem is that Liech- 
tenstein is so small that it 
does not have enough attrac- 
tions for most classes of tour- 
ist today. It is not the sort of 
place yon would take your 


family for a fortnight’s sum- 
mer holiday. While the moun- 
tainous back country is beauti- 
ful and the Swiss and Austrian 
Alps are nearby, it would be 
more sensible and probably 
cheaper to stay somewhere in 
Austria or Switzerland and 
make a one day excursion to 
Liechtenstein. 

Similarly, the winter sports 
facilities, mainly the ski resort 
at Malbun, are too modest to 


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"Innovation is very, very 
important to us," says Mr Pius 
Baschera, head of the execu- 
tive board at Hilti, the Liech- 
tenstein-based maker of fasten- 
ing systems for the 
construction industry. 

This year, the company is 
spending SFrTOm (£35m), 
roughly 3 per cent of turnover, 
on research and development 
It is also introducing more 
than 50 new products to its 
range of power drills, screw- 
and nail-guns, chisels, and 
pneumatic and adhesive fas- 
tening equipment. But, says 
Mr Baschera, innovation at the 
company goes far beyond the 
products. It extends to the 
manufacturing process, logis- 
tics and marketing. 

Hilti, which employs more 
than 12,000 people worldwide, 
is also subjecting its manage- 
ment structures and attitudes 
to a decisive blast of innova- 
tion. It has laid down that no 
board member should stay in 
office beyond the age of 56 - 
the average age of the present 
board is 46 - and that their 
contracts should run for three 
years, with renewal depending 
on performance. 

The idea says. Mr Michael 
Hilti. chairman of the (non-ex- 


ecutive or supervisory) board 
of directors and son of the 
founder, Mr Martin Hfiti, is to 
keep management alert and to 
encourage those still climbing 
the corporate ladder. "We want 
to give young people a chance 
to move into the high ranks. If 
they’re 40 to 45 years old. they 
can really contribute their best 
to the company." 

Mr Baschera, he noted, was 
only 39 when he joined the 
executive board. “It*s too long 
if you stay in the board until 
60." Baschera is now 44 and the 
younger Hilti 48. The oldest 
board member is 54. Two exec- 
utive board members in their 
mid-50s retired last year after 
the new rule came in; one is on 
the non-executive board, the 
other has joined the trust own- 
ing the shares in the company. 
Michael Hilti also left the exec- 
utive board, stepping up to the 
supervisory board in a 
full-time role when his father 
bowed out at nearly 80. 

Because Hflti’s markets are 
so widely spread - last year’s 
turnover of SFr2.1bn was 
achieved in more than 100 
countries from plants in Ger- 
many, the UK. the US, Austria 
and Hungary, as well as Liech- 
tenstein - it is keen to focus its 



Michael H8tk youth to the fore 


manufacturing and sales 
efforts as efficiently as possi- 
ble. Thus it has changed the 
way its plants are organised, 
reordered its sales force and 
tightened its management 
Its 6,000 salesmen now con- 
centrate on specialist customer 
areas such as construction, 
mechanical and electrical engi- 
neering. general industry and 
government. This segmenta- 
tion approach, already intro- 
duced in Germany (its biggest 
customer, accounting for 20 
per cent of business) has led to 
much closer links with custom- 
ers. says Mr Michael Hilti 
The company^ new comput- 
erised information system has 
made it possible for managers 



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ARE BY MODEL AIRCRAFT. 


International financial and banking 
centres generally have their own inter- 
national airports. Not so Liechtenstein - 
with a total area of just 160 square kilo- 
metres. the Principality of Liechtenstein is 
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on the other hand, are large enough and 
practically worth their weight in gold to 
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appeal to other than weekend- 
ers. 

The result is that the princi- 
pality has increasingly become 
a two or three hour stop for 
coach tours. They come, they 
have lunch, they visit the 
prince’s castle and the splen- 
did museums, they buy some 
stamps and post some post- 
cards and they leave. 

“Many people who come in 
coaches do not even know they 


to be much more mobile and in 
touch with customers and the 
shopfloor. "We want people to 
be really down in the organisa- 
tion. especially top manage- 
ment- We don’t want them sit- 
ting in a glass house, however 
nice it is,” he adds, gesturing 
to the big office window and 
the mo untains beyond. 

Hilti also places great stress 
on educating up-and-coming 
managers developing their 
potential “We give responsibil- 
ity very young, earlier than 
other companies," explains Mr 
Baschera. “We have a lot of 
general managers in their 
eariy 30s and our experience 
with them has been very 
good." 

On the manufacturing side, 
the company has assigned each 
plant a core technology, thus 
concentrating its efforts. It has 
also introduced a more team- 
oriented approach in the 
plants, with managers respon- 
sible for a range of functions 
such as quality, maintenance, 
planning and persotmeL This 
has speeded up manufacturing ! 
times and boosted productiv- 1 
ity, though Mr Baschera 
declines to give figures. 

As well as motivating 
younger managers, Mr Hilti 
says the more streamlined 
management structure keeps 
the more experienced ones on 
their toes and prevents empire- 
building. Managers tend to 
stay in their jobs for a maxi- 
mum of five years. “This gives 
air to the system." 


are in Liechtenstein," Mr Kon- 
rad complains. 

Since the country has a cus- 
toms onion with Switzerland, 
there are no Liechtenstein bor- 
der controls. Swiss immigra- 
tion and customs officials man 
the border crossings with Aus- 
tria. 

To meet the demands of 
those who want a visa stamp 
in their passports, the tourist 
office hires a student in sum- 
mer who provides the service 
for SFr2. 

Even the principality's once 
lucrative stamp business is 
declining, as more and more 
children travel rather than 
learn their world geography 
through philately. The govern- 
ment issues only four stamps a 
-year and pegs the prices so 
that children in developing 
countries can afford them. 

The tonrism office tries 
gamely to attract new custom, 
always coming up with new 
suggestions for coach tour 
operators to lengthen their 
Liechtenstein schedules. In 
cooperation with hotels, it has 
begun to publish regional itin- 
eraries using the principality 


as a base, complete with 
detailed menus. But it seems 
to be rowing against the cur- 
rent As he admits, there is not 
much night life in Vaduz. 
Many of the principality’s visi- 
tors prefer to stay in Zurich. 

The hotel trade has to strug- 
gle constantly to square a 
vicious circle. Chronic labour 
shortages mean hotel opera- 
tors have to import worktts 
and pay high wages. Bnt then- 
room rates have to remain 
competitive with nearby Aus- 
trian and Swiss prices. 

“I pay higher wages than 
Zorich hotel operators but peo- 
ple would not pay Zorich rates 
for rooms here." one Vaduz 
hotel manager says. 

Many hotel operators have 
already given up, calculating 
that their valuable land can be 
put to more profitable use. The 
number of beds has plunged 
from 1,760 in 1980 to 1.400. 

Mr Konrad says ft is difficult 
to mobilise popular support 
for the tonrism industry- “In 
Vaduz, they think of it as a 
traffic problem,” he says. 


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FINANCIAL TIMES THURSDAY OCTOBER 6 .994 


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THE PRINCIPALITY OF LIECHTENSTEIN III 


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Tg* !? . aven role leav e s postage stamps in the shade, says Ian Rodger 

The Swiss are watchful 


Liechtenstein’s most famous 
business used to be the issuing 
of exotic postage stamps 
Unfortunately, philately is on 
the wane these days, and the 
principality has moved on to 
other things. * 

Now it is known best as a 
tax haven. 

The sector achieved especial 
notoriety three years ago when 
Mr Robert Maxwell's empire 
collapsed. Much of the farmer 
UK media tycoon's skulldug- 
gery was executed secretly 
through Liechtenstein trusts 
including the rather grandly 
named Maxwell Foundation. 

The principality’s trustee- 
lawyers are now in the midst- 
of a tricky row with Switzer- 
land which fears that Liechten- 
stein is competing unfairly for 
this business. 

Liechtenstein's approach to 
being a tax haven has been an 
unusual one. It did not want a 
huge Influx of foreign hanks 
and fund managers over- 
whelming the local population 
as has happened in Mnnanr-^ or 
Jersey, so it maintained severe 
restrictions on banking activ- 
ity. 



Until two years ago, there 

"■ NajL-i 

were only three banks in the 

■ : W 

principality; today there are 

. oj-r- 

five. 


Rather, it proposed to the 

' Ito.:* 

world's rich that they could set 

J w ' 

up unusually flexible Liechten- 


stein domiciled companies. 

ITi-.i-v 

foundations and trusts. 


Through these entities, they 
could hide the ownership of 
their liquid assets on which 
taxation is, in most cases, a 
nominal SFrl.000 a year, 
regardless of the size of turn- 
over, profit or assets. 

However, because of the pau- 
city of local banks and profes- 
sional fund managers, the 
funds in the trusts and founda- 
tions have to be held and man- 
aged mainly outside Liechten- 
stein. 

It has been a phenomenally 
successful strategy. Local esti- 
mates, based on a simple calcu- 
lation from the tax take from 
these domiciled entities, put 


their number at something fflm 
70,000, more than double the 
principality's population. Lead- 
ing bankers and trustees esti- 
mate that 60 per cent of Liech- 
tenstein's tax revenues, some 
SFrSOOm a year, come directly 
and in d i r ectly from the finan- 
cial sector. 

The Liechtenstein approach 
has also, notwithstanding the 

No case of drug money 
laundering has ever been 
uncovered in 
Liechtenstein 


Maxwell case, been remarkably 
troublefree. No case of drug 
money laundering has ever 
been uncovered there, for 
example. 

Trustees say that this is 
mainly because they are in a 
small, tightly knit community. 
A black sheep would not be 
tolerated. And because their 
businesses too remain rela- 
tively small, they have the 
time to examine every transac- 
tion that passes through their 
offices. 

There is increasing evidence 
that foreign clients are com- 
fortable with Liechtenstein 
entities. Mr Peter Ritter, chair- 
man of PrSsidiaL. one of the 
largest trust firms, points out 
that the average age of Liech- 
tenstein trusts and foundations j 
is about 15 years, compared | 
with only six or seven years in 
the British Virgin Islands. 
“With all the problems we 
have had. we are still doing 
our job” Mr Ritter says. 

However, their relatively 
tranquil life is now being 
shaken up. Hie main immedi- 
ate threat comes from the 
Swiss, who have launched a 
two pronged attack to learn 
the identity of their clients. 

Last November, the Swiss 
people endorsed a government 
plan to Introduce a value 
added tax on all goods and ser- 
vices. At the time, nobody 
thought much about Liechten- 


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stein, the Swiss simply assum- 
ing that the principality would 
foil into line and do the same. 

The Swiss finance ministry 
also assumed that it would col- 
lect the VAT in Liechtenstein, 
just as it collects the current 
sales tax on goods there. 

The trustees initially fought 
to be exempted from VAT on 
the grounds that their n iirnfa; 
were foreign, but eventually 
retreated because the basic 
principle of their activity is 
that the trusts and foundations 
they set up for these clients are 
domestic. 

But they are horrified at the 
prospect of turning over their 
client invoices to Swiss VAT 
inspectors. The Liechtenstein 
government took up their 
cause and made clear to the 
Swiss finance ministry that, as 
a sovereign state, it had the 
right to set and collect its own 
VAT. 


The Swiss finance minis try 
halkad, rlaiming that it feared 
that Liechtenstein would 
administer the tax in such a 
way as to give its financial 
b usiness es an advantage over 
Swiss ones. There were threats 
of cancelling the bilateral cur- 
rency treaty, under which 
Liechtenstein banks have the 
implicit ultimate backing of 
the Swiss National Bank. 

Liechtenstein then agreed to 
make the rates and conditions 
of the tax identical to those in 
Switzerland. The dispute has 
still not been settled, but it is 
difficult to see how the Swiss 
can prevail. 

Meanwhile, the Swiss are 
pressuring Liechtenstein to 
adopt a due diligence agree- 
ment that is basically identical 
to theirs. The main difference 
between the two at the 
moment is that Switzerland 
requires bankers to know the 


beneficial owners of all their 
accounts while Liechtenstein 
permits an exception from the 
rule provided that a registered 
trustee knows the beneficial 
owner’s identity. 

Liechtensteiners admit that 
their practice gives additional 
comfort to sock: clients, in that 
they know that fewer employ- 
ees. auditors, inspectors or 
bureaucrats can find out their 
identity so the risk of disclo- 
sure is perhaps less than in 
Switzerland. 

But they say there is no dif- 
ference in substance so the 
Swiss should retreat. More- 
over, they say, they are about 
to put their due diligence 
agreement into law. whereas 
the Swiss one is only an agree- 
ment among bankers. 

In the longer term, the trust- 
ees fear pressure from neigh- 
bouring European countries on 
Liechtenstein to raise its taxes. 
“Liechtenstein should be pre- 
served as an offshore centre in 
Europe. It is better than recycl- 
ing investment funds through 
the Caribbean,'' says Mr 
Edmund Frick, president of the 
Liechtenstein Treuhander Ver- 
einigung. 


BANKING SERVICES 


Nicely, thank you 




Spirit 


Liechtenstein's rugged landscape: reassuring for investors 


Foreigners who think of 
Liechtenstein as an offshore 
banking centre and tax haven 
are often startled to discover 
that the principality has only 
five banks, all of them locally 
owned and controlled, writes 
IAN RODGER. 

Moreover, Liechtenstein can- 
not really be described as a 
banking centre in itself. 
Rather, tt Is a part of the much 
larger Swiss banking scene, 
using the same currency and, 
by and large, the same rules. 

Until two years ago, the 
principality counted only 
three banks. Bank in Liechten- 
stein (BIL), the largest which 
is owned by the royal family, 
Verwaltnngs- and Privat- 
Bank, a bank set up by a 
prominent trustee-lawyer in 
1956, and Liechtensteinische 
Landesbank, which is state 
owned. 

The government long held a 
policy of rejecting applications 
for new banking licences on 
the grounds that the principal- 
ity was too small and bad 
insufficient labour to staff and 
supervise any more banks. 

This attitude was relaxed 
slightly two years ago in antic- 
ipation of the country joining 
the European Economic Area, 
and since then, two new 
banks, Neue Bank and Cent- 
rum Bank, have started up. 

While the three original 
banks are licensed as univer- 
sal hanks , the main business 
of all of them is asset manage- 
ment for individual clients, 
with most referred from local 
trustee-lawyers. 

VP Rank, for example, says 
three quarters of its clients are 
from outside Liechtenstein. 

Ova* the past few years, the 
hanks have prospered enor- 
mously from this arrange- 
ment In 1980, the combined 
balance sheets of the tbree 
stood at SFT4.4bn. At the end 
of last year, the five had com- 


■ Profile: BANK IN LIECHTENSTEIN (BIL-GT) 

High-class family business 


bined total assets of SFrisbn. 

Even the entry of two new 
banks appears to have been 
well timed. “It has been a good 
time to set op. A lot or money 
came from Switzerland to 
Liechtenstein last year.” says 
Mr Heinz Batliner, chairman 
of VP Bank. 

However, the cosy arrange- 
ments of the past are about to 
be jostled a bit. Assuming that 
the principality joins the EE A. 
it trill have to open the way 
for banks registered in any 
EEA country to set up an 
office in Liechtenstein. 

Opinious vary on how many 
EEA banks will choose to take 
advantage of this opening, but 
most people think the number 

The five banks use Swiss 

currency and are part of 
the Swiss banking system 

will be small. “In my view, we 
will not see an influx of credit 
institutions,” says Mr Hubert 
Bilcbel, a senior official in the 
economics ministry. “The prin- 
ciple of home country control 
means that they would be 
supervised by their home 
country anyway. And people 
bringing money to Liechten- 
stein will probably continue to 
prefer to put it in an Institu- 
tion supervised by Liechten- 
stein,” Mr Bdchcl predicts. 

Mr Batliner points out that 
any newcomers would also 
have difficulty finding ade- 
quate staff. 

BIL. which itself has a large 
international presence, wel- 
comes the idea of more new- 
comers. “We have no problems 
with more competition. We are 
present throughout the world- 
If other good banks come here, 
that wfll make ns even bet- 
ter," says Mr Fritz Bflhler, 
chief executive. 

The more substantia] con- 
cern is how long and to what 
extent the principality will be 
able to hold on to its key 
advantages as an offshore 
financial centre - mainly hank 


secrecy and its very low taxes. 

The Swiss, for example, are 
currently pressing the Liech- 
tenstein authorities to accept 
Swiss practice in terms of dne 
diligence. This would require 
banks to know the identity of 
the beneficial owners of all 
their accounts. Under Liech- 
tenstein practice, this rule is 
waived if the account has been 
referred by a registered local 
lawyer-trustee. 

Although the difference 
seems marginal. Liechtenstei- 
ners acknowledge that a lot of 
money has flowed from Swit- 
zerland to the principality in 
the last couple of years since 
the Swiss tightened their dis- 
closure requirements. 

In the longer tern, bankers 
suspect that pressure from 
other EEA countries will build 
up to raise taxes on the letter 
box companies to normal lev- 
els. That would gradually dry 
up the flow of funds from the 
lawyer-trustees and force the 
banks to become more compet- 
itive fhnd managers. 

“We set up a sales depart- 
ment five yearn ago to sensi- 
tise our staff to the likelihood 
that we will not always be 
able to count on new clients 
coming through the door." 
says Rene Ott, international 
director of BIL. 

In anticipation of joining the 
EEA. Liechtenstein is updating 
many of its financial laws. 

A law making money laun- 
dering from drugs or insider 
trading activity a criminal 
offence was passed two years 
ago and will come into effect 
automatically with the entry 
into the EEA. The government 
intends to widen it to cover all 
types of money laundering. 

It is also revising its invest- 
ment fimd law, with the hope 
of stimulating this so far 
undeveloped sector. And a new 
law on insurance supervision 
is being planned. At the 
moment, the principality has 
no insurance industry, and 
some financiers see opportuni- 
ties in the offshore captive 
reinsurance field. 


It would be difficult to find a better 
business address in Liechtenstein than 
that of the BIL-GT group, formerly known 
as the Bank in Liechtenstein. - -- 

The group is controlled, to the extent of 
99.7 per cent of the voting capital, by the 
princely family through the Prince of 
Liechtenstein Foundation, although there 
is a public float of some 727.500 partici- 
pation certificates. 

BErGT has grown very rapidly in the 
past decade to become a global asset man- 
agement group of respectable rank, with 
SFr54bn in fonds under management and 
total assets of 5Fr9.5bn. 

As recently as 1981, Bank in Liechten- 
stein was an insignificant financial institu- 
tion with 150 employees, an of them in 
Liechtenstein. 

That was the year that Christian Nor- 
gren, a young Swedish banker, was hired 
by the princely family to build it up, par- 
, tdcularly outside the principality. 

Over the next few years, there was a 
flurry of acquisitions, three in Germany, 
and one in each of the UK, Switzerland 
and the US, culminating in 1989 with the 
£91-5tn takeover of GT Management, one of 
the UK fund management groups. 

Unfortunately, in the same year Mr Nor- 
gren was caught in an insider trading 
operation and left the group. 

Over the next three years, BIL had con- 
siderable difficulty integrating its big UK 
investment, as reflected both in sluggish 
income and equity price growth. Net 
income fell three per cent in 1992 to 
SFrglm. The BEL participation certificates 
hmiMpH from a high of SFr850 in 1989 to a 
low of SFr260 at the end of 1992. 

At the time, there were still four GT 
subsidiaries outside the UK and three BEL 


subsidiaries outside Liechtenstein and 
very little contact among them. There 
was a total lack of coordination," a BIL 
executive admits today. 

In early 1993, the group considered sell- 
ing GT, but eventually agreed to keep it, 
provided that directors from both sides 
would pursue a sensible integration. 

Prince Philipp, the reigning prince's 
younger brother and the group’s chair- 
man, became chief executive and an exec- 
utive committee of six directors was estab- 
lished. 

Among the simpler changes was to have 

BIL’s net income in the 1994 first 
half rose 40 per cent, following last 
year’s 75 per cent jump 

GT use BIL more and more as the group’s 
bank, notably for foreign exchange, money 
market transactions and financing funds’ 
leverage. “A year ago, the bank got no 
deals from GT. Now it gets deals every 
day," says Rend Ott managing director of 
the bank. 

A more important strategic realignment 
put GT in charge of global institutional 
fund management and BIL in command of 
global private banking. 

Last year's group net profits soared 75 
per cent to SFrl4lim, but Mr Ott sayB the 
result did not yet reflect the impact of the 
restructuring. Cost savings are beginning 
to be seen in the 1994 accounts and will 
become more apparent in the next couple 
of years, be says. 

In the first half of this year, in defiance 
of the general trend among Swiss banks, 
BIL raised its net income another hefty 40 


pm* cent to SFr96.6m. It attributed this 
continuing progress mainly to its concen- 
tration on asset management. 

C ommissions and fees account for about 
70 per cent of its revenues while the more 
volatile trading business, which has hurt 
many other banks this year, represents 
only 8 per cent of total revenues. 

While the BIL group is large, it does not 
believe it has yet reached a sufficient size 
to achieve its goals. “Our goal is to be one 
of the major privately owned international 
portfolio managers. We think we need to 
be managing at least SFrlOCibn,” Mr Ott 
says. 

As a result both GT and the bank are 
still expanding aggressively, using each 
other's infrastructure when possible. GT, 
which has traditionally been strong in the 
UK and the US, is opening offices in Mad- 
rid and Paris next year and strengthening 
its presence in Germany. The bank has 
just opened an information office in Lux- 
embourg. 

This does not mean it is foresaking 
Liechtenstein, but the group has little 
opportunity for growth there. It also sus- 
pects that the principality will have diffi- 
culty maintaining its competitiveness as a 
tax haven over the longer term. 

Significant top level personnel changes 
have just been made. Mr Peter Stevens, 
chief executive of GT in London since the 
acquisition, is leaving the executive com- 
mittee. although he will continue to chair 
the audit committee. Coincidentally, Mr 
Fritz BQhler, chairman, bank, is stepping 
down and will be succeeded by Hans Hau- 
mer, former chief executive of Giro Credit, 
the third largest Austrian bank. 

Ian Rodger 


The Liechtenstein family foundation 
in assets management 

As in the pas! the Liechtenstein family foundation continues 
to enjoy undminished popularity among private clients 
in international assets management and with Ihe banks, 
lawyers, trustees and asset managers advising them. 

FoBowing the growth in cflents' assets which have been significant In some 
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With us they wa find, what they are looking for. 


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Postfacft 838, Haus Gafadura 
MittekJofl 1 , FL-9490 Vaduz, Liechtenstein 
Teteton 075/232 36 33, Telefax 075/232 13 62. Telex 889 341 jura ft 


<S) 

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ASSET MANAGEMENT FOR 
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CENTRUM BANK AKTIENGESELLSCHAFT 
HEILIGKREUZ 8 ■ FL-9490 VADUZ - FCTRSTENTUM LIECHTENSTEIN 
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16 


FINANCIAL TIMES 


THURSDAY OCTOBER 6 1994 


TECHNOLOGY 


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D epending on whom 
you believe, interac- 
tive in-flight televi- 
sion Is either with 
us, about to be with us, or still 
so lost in the planning stage 
that no one can be sure when 
it will arrive. 

Interactive TV will mean the 
end of the communal screen 
and the tyranny of the in-flight 
movie by offering passengers a 
choice of viewing on individual 
video screens. 

It will also mean a new 
source of revenue for airlines, 
which will he able to charge 
economy class passengers an 
extra fee to watch the latest 
films or play computer games. 

It will also tempt passengers 
to do their duty-free shopping 
by choosing items from the 
screen and paying for them 
with a credit card swipe device 
rather than calling the flight 
attendant 

This opens up a new world of 
in-flight possibilities. Satellite 
data links will enable passen- 
gers to book hotel rooms, hire 
cars and send flowers: airlines 
will be able to use interactive 
screens to run instant cus- 
tomer surveys; passengers will 
be able to look up information 
abont their destination: and 
video on demand will be a real- 
ity. with passengers selecting 
the programmes they want to 
watch, when they want to 
watch them. 


In-flight interactive TV is 
coming to a 747 near you, 
reports Charles Jennings 

Front 
row seat 


-me PAiSfcer is ear m Aftwic i'll 
to s be voog mevincM licence 


Virgin Atlantic and United 
Airlines are both working on 
basic video interactivity. In 
Virgin’s case, this means a 
£ 12 m system designed by 
Hughes Avicom of California, 
which can provide 14 TV chan- 
nels, plus video roulette, poker 
and fruit machine games and 
duty-free shopping with a 
credit card swipe. 

United Airlines Is developing 
a similar set-up using hard- 
ware provided by GEC/Marconi 
(at a cost of £65m) and soft- 
ware by Microsoft and Sony. 
Six TV channels, duty-free 
shopping and electronic games 
will be the main interactive 
ingredients when the facility 
appears on United's new Boe- 


ing 777 fleet some time next 
year. 

Virgin's system is already 
operating. Installed in six of its 
12 aircraft earlier this year, it 
has not been without teething 
troubles; but it is at least 
there, rather than merely 
promised. 

Tests on British Airways' 
new in-flight system are not 
due to be held until early 1995. 
and installation throughout 
the fleet will have to wait until 
the end of that year. But BA 
argues that its system will 
offer the fall range of interac- 
tive video facilities, not just 
some of (hem. 

It will take time because BA 
- and any other airline hoping 





to offer a range of facilities of 
this complexity - will have to 
use the latest high-perfor- 
mance hard disc digital servers 
to process the vast quantities 
of information. 

Digital servers are at the 
heart of it alL Their job is to 
parcel out material to each 
user as he or she wants it, 
remember which user is where 
in the programme and give 
him or her the right bits of 


material at the right mom ent. 

A server system must be 
able to cope with all users 
choosing the game programme 
simultaneously as well as at 
different times (a digitised, 
compressed movie takes up 
about one gigabyte of hard disc 
tor every hour of screen time), 
and be feult tolerant so that it 
nan continue to deliver mate- 
rial even if a drive Mi 

It must also be light and 


c omp act enough to fit into an 
aircraft and must avoid high 
operating temperatures. 

BE Aerospace of Irvine, Cal- 
ifornia, is designing the BA air- 
craft installations, each one 
comprising four hard drive 
servers, with each hard drive 
holding 90 gigabytes of infor- 
mation. Other servers will be 
needed to handle such services 
as games, car hire and hotel 
information. 

BA estimates that fully 
installed, the technology will 
cost around £80m. Every sys- 
tem will add about 2 tonnes to 
an aircraft’s payload. 

It is clear that this is not 
something that BA wants to 
rush into. In which case, will 
Singapore Airlines steal BA's 
thunder? 

SIA is being coy about its 
plans, axmoimring. Virgin 
and United, that the new year 
will see than offering a mix of 
fixed-schedule TV channels, 
destination information and 
catalogue shopping, and some 


SIA is widely believed to 
have struck a deal with Micro- 
pa lis, a California-based infor- 
mation storage and video 
systems company. Mlcropolis’s 

rlflhn to faTnw is that it has 

been supplying video on 
demand to h otels in the US tor 
the past six months, using its 
own digital video server, the 
AV Sever 100. 


This is up aud running in 
seven US hotels and already 
allows up to 32 viewers simul- 
taneous access to 20 films. The 
technology can be tailored for 
airline use without having to 
compromise the equipment's 
basic specification. 

Singapore Airlines may be 
least six months ahead of the 
pack and possibly more. 

But this is not the end of it. 
Everyone is talking about 
using interactive video princi- 
pally to access pre-recorded 
material, downloaded on to the 
aircraft before it takes off. But 
there will soon be the option of 
p icking up digital quality live 
TV and other real-time infor- 
mation on an aircraft in flight 
- as demonstrated earlier this 
year, when a Swissair aircraft 
picked up a live CNN broad- 
cast on a flight from Tokyo to 
Zurich. 

This looked like a stunt: the 
broadcast was short and the 
capability to repeat the exer- 
cise is limit ed. But it is there, 
promising live news broad- 
casts, weather checks for your 
destination and all the local 
television viewing you can 
handle at 30,000ft. 

This raises a further point: 
how much TV should an air- 
line allow tor, before the qual- 
ity starts to evaporate? That 
may prove to be a tougher 
problem than all the technol- 
ogy put together. 


G ermany’s Fraunhofer institutes, 
which provide an important 
research lmk between universi- 
ties and companies, are following 
Industry’s lead and moving into the 
export market 

The Fraunhofer-Gesefischaft (organi- 
sation), the largest applied research 
body in Germany, has set up a US off- 
shoot to work with universities and 
help local companies develop advanced 
Industrial technologies. It is also 
looking at ventures in south-east Asia. 

Fraunhofer USA is the first foreign 
unit of the German organisation, 
which has a research volume of DMlbn 
(£420m) and employs nearly 8,000 peo- 
ple in 46 institutes. 

“We took this step because econo- 


The missing link 

German researchers are helping US 
companies, writes Andrew Fisher 


mies are becoming more and more 
interlinked. 0 says Hans-JOrgen War- 
necke, president of Fraunhofer-Gesell- 
schaft 

US technology experts say that 
despite the country’s academic and 
technological resources, the transfer of 
technologies from universities for 
industrial use Is limited. As in Ger- 
many. much of the efforts of Fraunho- 


fer USA will be directed at smaller 
companies, with a str o n g em phans on 
manufacturing. 

“We want to work with the Fraunho- 
fer model in the US because it has 
clearly proved to be a great help in 
promoting innovation in small and 
medium-sized companies. 0 says John 
McTague. vice-president for technical 
affairs at Ford Motor Company and 


head of Fraunhofer USA’s national 
advisory council, which met for the 
first time this week. United Technolo- 
gies. Da Pont and BMW North A-murii-n 
are also represented on the council. 

Fraunhofer USA has its headquarters 
in Michi gan, near the motor industry, 
which it expects to be an important 
client. One Fraunhofer institute, for 
computer graphics research, set up a 
laboratory in Rhode Island ahead of 
the foundation of the new US unit 

Fraunhofer USA has been given three 
years to gather enough contracts to 
pay its way. Until then, it will be 
financed by the parent company in 
Germany, which draws Its funds from 
government, public sector and indus- 
trial research contracts. 


INDIA 


BUSINESS 


INTELLIGENCE 


R El. I ABLE. 

AUTHOR I'l ATIY T. INFORMATIVE. 

India Business Intei.i igence. 

THE NEW TWICE-MONTHLY 

NEWSLETTER FROM 

the Financial. Times 
covering India's economy. 

COMMERCE AND POLITICS 

FOR THE INTI R N A T I O N A L 

BUSINESS COM Ml IN IT 'Y. 

“ India is widely regarded 
as the emerging 
marker of the 1990s" 
Financial Times 26.10.93 


Recent free market reforms and a burgeoning 
internal market are offering increasingly profitable 
business opportunities for foreign investors in India. 

FT India Business Intelligence explores and explains 
the country’s rapid development, identifying new 
business opportunities and advising on overcoming 
problems. 

Backed by the resources of the Financial Times, 
each issue offers: 

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• Incisive analysis of topical events 

• Reliable statistics and authoritative comment 

• An insider’s view of internal competition 

• Coverage of emerging capital and money 
markets 

• Status reports on relations with key trading 
partners 

• Special industry sector surveys 

• Essential business data and trends 

FT India Business Intelligence helps you to go 
behind and beyond the news - and stay ahead of 
the competition. 

For a FREE SAMPLE COPY of FT India Business 
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Registered Office: FT Business Enterprises, Number One Southwark Bridge, 
London SE1 9HL England. Registered Number 980896 IN 300 1 94 


Phone users 
box clever 

Andrew Adonis on a device that 
offers UK long-distance callers 
new choice and new services 


X A Then Energis. the new 

\/\f UK long-distance 

V V phone company, 
launched its network last week 
It gave pride of place to two 
small boxes, one for residential 
consumers end the other for 

small businesses. These will 
make it easier for BT 
customers to switch to an 
alternative supplier as well as 
offering a range of services 
that Energis claims are new to 
the market 

For residential customers 
there is an Energis Box, 14cm 
by 8.5cm. Like a personal 
computer modem, the cable 
from the box fits into a 
standard BT phone socket at 
one end and into a s tandar d 
telephone at the other. AH 
long-distance calls made from 
the phone are automatically 
routed across the Energis 
network, while local calls 
continue to travel via BT. 

This makes Energis simpler 
to access than Mercury, 
although the new company 
concedes that Mercury remains 
cheaper for some calls. With 
Mercury, the standard modes 
of access for residential 
customers are a blue button 
phone or prefixing 
long-distance numbers with 
the code 132. 

The Energis box. however, 
can be fitted in seconds. 


For small businesses, 

Energis has a multiline box for 
customers taking at least four 
lines. This routes all national 
nails over the Energis network 
and records all telephone use. 
Customers receive a monthly 
report that lists not only 
outgoing nails , but also the 
time taken to answer the 
phone by hourly averages, and 
the number of calls lost. 

the multiline box is fitted by 
an Rnprg is engineer. For 
customers with a branch 
exchange it will probably take 
the form of some software 
fitted directly on to the 
exchange. 

The telephone management 
report facility made available 
by the multiline box is a first 
as a standard phone service for 
the small business. It is likely 
to be of great value to 
organisations as they plan 


recent report by the Audit 
Commission, the public sector 
watchdog, indicated that local 
authorities had reduced the 
unanswered calls to less than 
half as a result of telephone 
monitoring reports. 

Many small businesses 
probably have no idea how 
many Mite they are 
missing, let alone how long it 
takes them to answer the 
phone. 


Japan 

rocks 

steady 

T he Great Buddha of 
Kamakura was little 

moved by this week’s 
earthquake in Japan. The 
40ft statue on the outskirts 
of Tokyo rests on steel 
shock absorbers on a 
granite base, allowing it to 
move with the tremor. 

Like the Buddha of 
Kamakura, many Japanese 
buildings today have 
special foundations which 
absorb tremors and allow 
the structures to dissipate 
quake energy by swaying. 
These devices include 
bearings made of rubber 
and steel, or layered steel 
and rubber between the 
building and its 

foundations. 

This technology is used 
mainly in structures under 
200m high- “Buildings 
taller than 30 storeys are 
able to move with the 
earthquake,” says Yftichiro 
Ogawa, who manages 
Shimizn Construction's 
structural technology 
division. 

The problem for 
designers now is to deal 
with the effects of swaying. 
The 36-storey 
Kasumigaseld building in 
central Tokyo, built in 
1968. was the first high-rise 
to include “soft structure” 
technology, allowing the 
building’s beams and 
pillars to vibrate with the 
quake. Further 
technological advances 
have led to skyscrapers 
more than 200m tall, but 
their flexibility means that 
strong winds mid typhoons 
sway them to an 
uncomfortable degree, 
causing symptoms similar 
to seasickness and making 
high-rises unsuitable for 
residential use. 

This has been eased by 
computerised vibration 
control systems. Strong 
winds cause computers to 
activate a large rectangular 
wright, supported by four 
pillars made of layers of 
rubber which move in the 
opposite direction to the 
b uilding ’s movements. 
Shimizu’s system - the first 
to be installed in a 
skyscraper of more than 
200m, two years ago - 
passed Its first big test in 
last week's typhoon, the 
strongest to hit western 
Japan this year. Other 
companies have developed 
and installed similar 
systems. 

Shimizu said that the 

usual degree of fluctuation 
was reduced by two-thirds. 
Occupants of the building’s 
apartments and hotel 
reported feeling hardly any” 
swaying despite strong 
gusts of wind. 

Emiko Terazono 


NEW ISSUE October 4, 1994 


FannieMae 


*400,000,000 
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Dated October 11, 1994 Due October 12 , 2004 

Interest payable on April 12. 1995 and semiannually thereafter. 

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Callable on or after October 12, 1999 

Price 99.84375% 


The debentures of October 12, 2004 are redeemable on or attar October 12. 1999 The - 
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hsfawnematy thereof other thanftnrte Mae. “V agency or 


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Bs Senior Vice 

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Dabrnturee wB beorataae in 5oc*-6ny form only. 
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Linda K. Knight 

smfor wte President 
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_3800 Wisconsin Auame. N.W., Wwhmaton. p q. gpom 


■ ■ ■ — — * * u kj. cauio 




4 








r; „ 


1 u 




* FlNANClALri M^ THURSDAY OCTOBER 6 1994 


E arly \n Forrest Gump, before its 
hero has grown into Tom 
Hanks, he is chased down a 
country road by school bullies 
The braces on his legs - the 
ooy is Ui-developed physically as well as 
mentally - suddenly fly apart and free 
him to run like a sprinter. 

For Forrest Gump read' Forrest Gump. 
This 2%-hom- romedy/fable/history lesson 
must once have seemed the most handi- 
capped project on the HoDywood lot an 
epic hobble across post-war America with 
a holy fool for hero and a road paved, or 
potholed, with 40 years of national good 
intentions and national seizures (Dallas 
Vietnam. Watergate). Our Forrest grows 
up into an Alabama Candide: a man 
around whom great events happen but 
who remains blithely unscathed and unim- 
pressed by them all. 

Would such a movie play in Peoria? 
Even the original novel by Winston Groom 
only sold 30,000 copies in hardback. 

Commercially it has run like the wind: 
$270m at the US bos office to date - it may 
topple Jurassic Park as the highest-earn- 
ing film in history - and an entire nation 
besotted with Gump wit and wisdom. Like 
its innocent-messianic hero, who becomes 
an athlete and spends much of the movie 
jogging across the land as a torchbear- 
er-without-torch for the human spirit, For- 
res/ Gump the film has thrown tts 
leg-braces and left footprints all over Clin- 
ton-era America. 

Indeed Gump may be Bill Clinton, we 
(and others.) opine. One of several inge- 
nious trick-optical scenes has the back- 
woods boy shaking hands with JFK him- 
self. And surely that was a favourite scene 
from the Clinton movie scrapbook too. 

But like the man in the White House 
Forrest Gump spends a deal of trmp trying 
to be all things to all folk. Self-ingratiat- 
ingly, and for this viewer maddeningly, it 
blends the comic with the Christly. the 
satirical with the sentimental, the free- 
thinking with the fuddy-duddy. When For- 
rest overnights at the Watergate Hotel in 
the early 1970s, after a chat with Nixon 
(more state-of-the-art opticals), we chortle 
approvingly as he becomes the first man 
to blow the whistle on the “plumbers.” 

But only minutes before that we are 
watching him in Vietnam behavin g like 
John Wayne in The Green Berets. As he 
runs back and forth through a napalm- 
blaring jungle, finally saving unit leader 
Gary Sinise. a nightmare war is turned 
into an arch cameo of Boy's Own heroism. 
Sinise will adorn the rest of the movie as a 
double amputee, providing a support para- 
digm - Gloucester to Forrest’s Lear - of 
grace under pressure in millennial Amer- 
ica. 

But is it grace or just glamourised gorm- 
lessness? “Stupid is as stupid does’* is one 
wisdom intoned by Hanks's dogged South- 
erner - his face puckered in sage earnest- 
ness, his vowels a lugubrious, elastic 
twang - as be proves that an IQ of 75 does 
not disqualify you as the moral hero of a 
nation. 

Accident is destiny, destiny accident: 
that is the other saw that keeps buzzing. 
From the opening credits sequence, in 
which a feather drifts from the sky down 
to Fbnest's shoe as he sits on a . park 
bench hijacking strangers with his life 
story (a blend of E.L. Wisty and the 
Ancient Mariner), director Robert “Roger 
Rabbit" Zemeckis and screenwriter Eric 
Roth pile on the haphazard while steering 
Forrest unerringly towards fulfilment He 


ARTS 





If sentimentality were a crime, Torrest Gump’ would be put away for life: Robin Wright and Tom Hawke in Zemeckis’s latest film 

Cinema/Nigel Andrews 

Glamourised gormlessness 


gets to love a woman (Robin Wright), an 
ex-flower child whom he saves from the 
hell of 1960s liberalism. He fathers his own 
child. He grows rich from the shrimping 
business. 

He is, we begin to realise, America her- 
self: that dear, untutored land that 
redeems itself by its innocence even when 
it creates tragedy by its ignorance. This 
rose-tinted mirror held up to the USA by 
the USA says, “Zf we have never truly 
grown up - never do grow up - nothing 
can truly be our fault” If sentimentality 
were a crime, Forrest Gump would be put 
away for life. As it is. it will probably be 
with us for life: the ultimate fed-good film 
in an age when no one any longer has the 
courage to feel bad. 

* 

Moviegoing in late-summer Ameri ca has 
been a dangerous activity. Turn away 
from the idiot savant on the park bench 
and you will walk straight into the jaws of 
The Lion King ($2S0m and climbing). 

But this option is more fun. Disney’s 
new animation feature is its first ever 
based on an original screenplay and has a 
real freshness of setting and vision. The 
African wilderness shimmers across the 
wide screen - do not wait for the video - 
as the orphaned lion prince Simba grows 
up to dethrone his wicked unde Scar 


FORREST GUMP (12) 

Robert Zemeckis 


THE LION KING (U) 

Roger AJUers and Rob Minkoff 

MINA TANNENBAUM (12) 

Martine Dugowson 

FUNNY MAN (18) 

Simon SprackUng 

(voiced by Jeremy Irons) who bad his 
regal father run over in a wildebeest stam- 
pede. 

We are all run over by this wildebeest 
stampede. From where I sat It started in 
the north-west speaker, surged down the 
side aisle, roared over the Empire screen 
towards Leicester Square, then rumbled 
out in the south-west speaker. Spectacle 
matches sound: thousands of dust-raising 
shapes shaking the desert as the camera- 
work soars and curvettes overhead. 

The sequence lasts 2 % minutes and took 
two years to create. Jeremy Irons’s voice 
for Scar probably took two hours and is 
just as splendid: a wicked George Sanders 


purr sliding up and down the scale of 
sarcasm like a cat on a polished bannister. 

The film loses its magic towards the 
end, with a gaudy, hurried showdown. We 
miss the burnished charm with which the 
film sauntered round its early scenes. Here 

- and in the middle section where a hip 
meerkat and doleful wart-hog keep Simba 
company in the paradise valley of his exile 

- The Lion King matches the comical and 
painterly bravura of the great Disney car- 
toons. 

* 

Is there such a thing a feel-bad film today? 
Mina Tannenbaum ought to qualify, but 
by some proprietary charm formula fails 
to do so. 

Mina (Romane Behringer) is a p lain, 
introverted Jewish girl tormented by not 
having her best friend Ethel’s vibrant 
social graces. Ethel (Elsa Zylberstein), also 
Jewish, is tormented because she does not 
have painter Mina’s depth and artistic tal- 
ent 

Stir in two passive-aggressive Jewish 
mothers - adding gall to a stew steeped in 
wormwood - and you have this drama of 
interconnecting female lives, bubbling and 
spitting across two caustically observed 
decades. Screenwriter Veronique Heu- 
chenne and director Martine Dugowson 
make sardonically merry with the fashions 


of the 1970s: floor-sweeping trouser bot- 
toms and hats like floppy stovepipes. Then 
they make menacing with the greedy 
1980s. when ambition and love rivalry 
pulls the girlfriends apart. 

We could cry “Woman’s picture" and 
complain that emotion swamps action and 
that the men are pawns in a parable of 
sisterhood. But after the runaway patriar- 
chalism of Forrest Gump and The Lion 
King - where woman’s sole function is to 
be mettle-polisher to the dominant male - 
Mina Tannenbaum is a welcome reminder 
that half the planet has its own mind and 
will and hand on destiny’s filler 
* 

Funny Man, a British horror comedy from 
first-time writer-director Simon Sprackl- 
ing, is the week's booby prize. If you ever 
win a round of poker from Christopher 
Lee. make sure you do not accept his for- 
feit of an ancestral home. It contains a 
homicidal “joker” (Tim James, putty-faced 
□p to resemble a Jimmy SavQe from helD 
whose delight is picturesquely to murder 
you and your friends. 

Sliced heads; pierced eyeballs; electrocu- 
tion; burning. All the fun of the auJ&da-fi. 
And between murders the film returns to 
its normal idling state: a benighted, termi- 
nal catatonia. Wait for the video. And then 
keep waiting. 



Theatre/Ian Shuttleworth 


Less classical than sitcom: the RSC’s ‘Ion’ 


Energetic: Jnde Law as Ion 


T o the classical Greeks, “comedy” 
simply meant any play which 
ended more or less harmoniously 
- without any high-born corpses 
or divine condemnations to speak of. 
Actual humour didn't come into it To 
stage such d rama in the present day is to 
walk a perilous line between the nature of 
the original material and current expecta- 
tions of the genre. 

The two first-ever professional English- 
language productions of Euripides' play 
opened this month. In a fortnight, the Act- 
ors Touring Company stages Kenneth 
McLeish’s translation in Cardiff prior to a 
national tour, but first out of the traps is 
the director-translator partnership of 
Nicholas Wright and David Lan for the 
Royal Shakespeare Company. 

Euripides' world view was far from clear 
cub to him, morality shifted with chang- 


ing circumstances and the gods had their 
own agenda, to which men and women 
were as flies to wanton boys. 

One cannot help thinking that Wright 
and Lan’s version of Ion would perversely 
appeal to the old boy, founded as it is on 
the notion that momentous events - a 
liaison between the god Apollo and a mor- 
tal woman, leading to the foundation of 
virtually the entire Greek race - can be 
recounted in the trite vocabulary of subur- 
ban sitcom. 

Jude Law is cleverly cast as the temple 
servant of Apollo whose reunion with his 
mother forms the narrative core of the 
play. This energetic young man is not the 
stuff of legend: one minute he may be 
musing profoundly. If the gods lie, how 
can we ever know the truth?", but the 
next - as a supplicant to Apollo's oracle 
has just been misinformed that Ion is his 


son - he is sending off over-enthusiastic 
and apparently suspect attentions with, 
“you wouldn’t believe how often I have to 
put up with this... especially from for- 
eigners.” 

As Ion gropes towards the truth of his 
parentage like a less-fraught Oedipus, Law 
conveys the confusion and extremity of 
emotion without lapsing into classical 
angst He is supported in this tonal no- 
man's-land by Peter Guinness as his step- 
father Xuthus, an affable cove but not 
what you would call blessed with diplo- 
macy. 

The women on stage are more unambig- 
uously earnest, but sometimes seem a lit- 
tle too far gone. When Creusa (Diana 
Hardcastle) plots the murder of Ion before 
discovering that he is her own child, 
Wright and Lan fail to integrate the 
scene's cut-price Medea-isms with the 


overall dramatic curve of the play. Also 
awkward is the presentation of speeches 
by the seven-strong chorus of Creusa’s 
maidservants; after a promising be ginnin g 
as a kind of Women's Institute tour party, 
they fall into a habit of what can best be 
described as synchronised writhing. Greek 
choruses are always a devil to stage in 
modem productions; suffice it to say that 
this particular option is less than trium- 
phant 

However, the dominant note of the pro- 
duction remains its determined anti-nobil- 
ity. The gods and their doings are held up 
not to ridicule but to chuckles of banal 
recognition, and Euripides’ lines are ren- 
dered in a style not unlike a kind of 
ancient Athenian Galton & Simpson. 

At The Pit (Royal Shakespeare Company) 
(071-638 8891). 


17 


Dance 

A ‘Giselle’ 
of integrity 

F ighting the good dance fight, 
London City Ballet is embarked 
upon its autumn schedule of 
touring round the country. 

Denied the fall subvention from the Arts 
Council that its work and its attainments 
should merit, LCB goes indomitably on. It 
is sustained for this season by ADT, who 
deserve the thanks of those many 
audiences - LCB gives about 200 shows 
each year, vastly more than certain other 
funded troupes - who would otherwise 
not see ballet. 

I admire LCB for its terrier-like 
persistence, but even more because its 
performances are so whole-hearted. The 
repertory is middle-brow, but then, so is 
much of Its public. Its productions are not 
articles of grand luxe, but wild 
expenditure has little merit, as we know 
from some of the Royal Ballet's 
extravagant mishaps. (Remember Cyrano 
and Don Quixote}. LCB strives to give Its 
public the best that wit and necessary 
cheese-paring (“blessed poverty" said 
Karsavina of Rambert stagings in its 
earliest days) can provide. The result as l 
saw in the Giselle which is this antumn’s 
touring fare, is pleasing. 

The staging is by Gatina Samsova. made 
for the company nearly a decade ago. It is 
sound, on-pretending, telling the story 
and honouring the old choreography with 
decorum. Peter Farmer’s setting is 
sensitive, and in the well-lit forest-scene, 
properly mysterious. Reduced for an 
ensemble of 35 dancers, the drama is 
honestly set out, and the supporting roles 
are played with an integrity that some 
larger companies might envy. (Beverly 
Jane Fry is a fine Bathilde, charming, 
but aware of her nobility; Gary Shaker is 
a Hllarion who wins our sympathy). 
Standards of dancing are variable, 
but nothing is cheated. And in Kim 
Miller, whose interpretation I saw on 
Tuesday night, LCB has a remarkable 
Giselle. 

I reported on Miss Miller’s debut in the 
role when this production was new. We 
now see a performer of beautiful and 
mature artistry. She has always been an 
expressive dance-actress, thrown to the 
wolves on occasion, as in the mad 
Trauiata LCB produced a few years ago, 
bnt true in whatever she has done. As 
Giselle, her every best gift is used. The 
first act peasant is trusting, gentle, her 
gaze ever turned to Loys (the sincere and 
credible Roger van Fleteren). Betrayal 
brings pain that is like his sword to her 
heart - this Giselle Is piteous as she turns 
in accusation on Loys/ Albrecht - and 
then comes madness, shown by Miss 
Mifler with absolute and absolutely 
touching clarity. 

Her performance is the motor force of 
the piece, and she makes the Romantic 
fervours of tile second act very lovely. 
Physically, she has the melting arms, the 
softness at phrasing, that were so 
fascinating with Lynn Seymour in this 
role, and as with Seymour, everything she 
does has meaning. Her WHi~GiseUe is a 
study in compassion set in long, creamy 
sequences of movement The variation 
was exquisite in shape - the outline of the 
foot and the musical lift to the steps its 
especial distinction. The duet (van 
Fleteren a devoted partner) was 
emotionally and physically true. Miss 
Miller is a Giselle of real authority and 
real grace. 

I liked Roger van Fleteren’s Albrecht 
and I liked him most as be responded to 
his Giselle in the second act - the old 
story became urgent again. The attendant 
wllis were well-schooled. The 
performance, and here is the value of 
LCB’s policies, stimulated and delighted 
its audience. Giselle is given with a 
neo-classic curtain-raiser, Vincent 
Redmon's Counterbalance. It involves two 
Vivaldi violin concert!, and steps as 
scratchily active. The cast look as if they 
are trapped in a spin-dryer. 

Clement Crisp 


London City Ballet is in Bromley until the 
end of tins week, then tours to High 
Wycombe, Croydon, Brighton until the 
end of November with Giselle. 

Sponsorship for the year is given by ADT. 


l£ 




1 1 INTERNA TIONAL 1 1 

Ari 

ns 

GUD 

DE 


■ ATHENS 

Megaton Tomorrow, Sun, next 
Tues: Alexandras Myrat conducts 
Michael CacoyannJs’ production of 
Mozart's La demenza dl Tito, with 
cast including David Rendafl. 
Kathleen Cassdlo and Diana 
Montague. Oct 16, 17: Isaac Stem 
violin recital. Oct 23, 24: Kurt Masur 
conducts Leipzig Gewandhaus 
Orchestra (01-728 2333/01-722 
5511) 


■ BOLOGNA 
Teatro Communale Tomorrow, Sat 
LG Jia conducts Orchestra of the 
Teatro Communale in works by 
Giacomo Manzonl, Ivan Vendor and 
Brahms/Schoenberg, with ceUo 
soloist Siegfried Palm. Next Sat and 
Sun: Giuseppe Sfnopoli conducts 
Beethoven’s Ninth Symphony, me 
opera season opens on Nov 26 with 
a new production of Rossini's II 
turco in Italia (051 -529999) 


■ LONDON 

THEATRE 


• The Venetian Twins: a transfer 
from Stratford of Ranjlt Botfs new 
RSC version of Goldoni's 18th 
century Italian comedy, directed by 
Michael Bogdanov. Just opened 
(Barbican 071-638 8891) 

• The Sisters Rosenswetg: 

Michael Blakemore directs Maureen 
Upman, Janet Suzman and Lynda 
Bellingham in Wendy Wasserstein’s 
Broadway hit comedy about three 
American Jewish sisters who have a 
mid-life reunion In London (Old Vic 
071-928 7616) 

• The Playboy of the Western 
World: J.M. Synge’s dark, cruel Irish 
comedy, in a brilliantly perceptive 
production directed by Lynne Parker 
(Almeida 071-359 4404) 

• The Seagull: Judi Dench heads 
a splendid cast in Pam Gems’ new 
version of the Chekhov play. In 
repertory with a new production of 
The Devil’s Disciple, Shaw’s 1897 - 
satire on melodrama (National, 

Olivier 071-928 2252) 

• Moscow Stations: Tom 
Courtenay returns to toe West End 
in the British premiere production of 
Venedikt Yerofeev’s one-person play 
- a modem Russian tale about the 
rich life of an alcoholic who 
Stumbles and dozes his way through 
a series of surreal adventures. 
Previews begin tomorrow, opens on 
Tues (Garrick 071-494 5085) 

• The Winslow Boy. Peter 
Barkworto is ideally cast as toe stiff 
upper-tipped father battling Whitehall 
to prove toe Innocence of his son. 
Who has been expelled from naval 
college. A well-made production of 
Terence Rattigan’s well-made 1946 
play (Globe 071-494 5065) 

• What A Performance: the title 
recalls toe catch phrase of Sid Ffeld, 
the talented comedian who died In 


1946 of a heart attack at the age of 
45. David Suchet of Poirot fame 
dons a cheeky grin in William 
Humble’s biography that relives 
Field's best sketches and backstage 
fife (Queens 071-494 5040) 

• The Slab Boys Trilogy: the first 
London revival since 1982 of John 
Byrne's comic trilogy, which follows 
the lives of three Paisley boys from 
desperate youth to despairing 
middle- age. The three plays can be 
seen individually or as a complete 
package on certain Saturdays 
(Young Vic 071-928 6363) 

• Once on this Island: a special 
Caribbean environment has been 
created at the Royalty for Lynn 
Ahrens and Stephen Flaherty's 
fairy-tale musical about a peasant 
girl’s doomed love for an aristocrat 
(The island Theatre at toe Royalty 
071-494 5090) 

• She Loves Me: the charming 
1963 Masteroff, Bock and Hamlck 
musical about two longtime pen pais 
who don't know they work in toe 
same parfumerie. Rutoie Hen shall 
and John Gordon Sinclair head the 
cast (Savoy 071-836 8888) 


OPERA/DANCE 

Coliseum English National Opera's 
new staging of Massenet’s Don 
Quichotte opens on Sat Emmanuel 
Joel conducts, tan Judge directs, 
and the cast Is headed by Richard 
Van Allan, Louise Winter and Alan 
Opie (runs till Nov 9). Rosalind 
Plowright stars in Tosca (till Oct 27), 
and Nicholas Hytneris production of 
We ZauberflBte Is revived on Oct 20 
(071-836 3161) 

Covent Garden The Royal Opera 
has a much-praised revival of La 
Cenerentola with Olga Borodina, 


Raul Gimenez and Simone Alai mo 
(final performances tonight. Sat, next 
Wed and Sat). New productions of 
Das Rheingold and Die Walkdre 
open next Thurs and Fri, staged by 
Richard Jones and conducted by 
Bernard Haitink, with cast headed 
by John Tomlinson, Ekkehard 
Wlaschiha, Robert Tear, Paul 
EJmlng, Deborah Polaski, Ulla 
Gustafson and Jane Henschel. The 
Royal Ballet returns on Nov 3 with 
Anthony Dowell's new production of 
Sleeping Beauty (071-304 4000) 
Sadler's Wells Cumbre Ramenca, a 
touring Spanish flamenco group, is 
in residence till Sal Oct 11-15: 
Brazilian dance company Grupo 
Corpo (071-278 6916) 

Bladkheath Concert Halls Kent 
Opera's production of Britten's The 
Prodigal Son can be seen next Tues 
(081-463 0100) 


CONCERTS 

Barbican Tonight: Michael Tilson 
Thomas conducts London 
Symphony Orchestra and Chorus In 
Mahler's Third Symphony. 
Tomorrow: Anne Sophie Mutter 
violin recital. Sun, Mon: Tilson 
Thomas conducts LSO in Mahler's 
Fourth Symphony (Rerfee Fleming), 
Feldman’s The Viola in my Life (Yuri 
Bashmet) and toe world premiere of 
John Tavener's The Myrrh-Bearer. 
Next Thurs: Tilson Thomas conducts 
Mahler’s Fifth (071-638 8891) 

South Bank Centre Tomorrow, Sat, 
Sun: Shirley Bassey. Tomorrow at 
5.30pm in QEH: Peter Schreier sings 
German Lieder. Tomorrow at 
8.15pm in QEH: Andrew Davie 
conducts BBCSO in works by 
Magnus Undberg and Berlioz, with 
mezzo Ann Murray. Mon: Andrew 


Davis conducts BBCSO and 
Philharmonla Chorus in Berlioz's Te 
Deum and world premiere of Kaija 
Saariaho's Du Cristai. Tues: Neville 
Marriner conducts Academy of St 
Martin in the Fields in works by 
Mendelssohn and Schumann, plus 
world premiere of Sally Beamish's 
Walking Back. Wed: Leonard Slatkin 
conducts Philharmonia Orchestra in 
Mozart, Previn and Mahler, with 
soprano Kathleen Battle. Next Wed 
(QEH): Steven Isseriis and friends in 
an evening of words and music 
entitled The Life of Schumann. The 
South Bank has a variety of events 
this month focusing on toe theme of 
The Romantic Spirit in German Art 
1790-1990 (071-928 8800) 


■ MILAN 

Teatro alia Scela Tomorrow, Mon, 
Tues: Zottan Pesko conducts 
orchestral works by Beethoven and 
Petrassi, with piano soloist Rudolf 
Buchbinder. Oct 14: first of five 
performances of Gilbert Defio's 
staging of Monteverdi's 
Llncoronazione dl Pop pea. 
conducted by Riccardo Muti. The 
October programme also includes 
concerts by Ruggero Raimondi, 
Francisco Araiza and the London 
Symphony Orchestra under Georg 
Solti (02-7200 3744) 


■ PRAGUE 

Dvorak Hall Mon: Josef Suk is viola 
soloist in a chamber recital by 
Wihan Quartet featuring works by 
Smetana. Taneyav and Dvorak. 
Tues: Prague VWnd Quintet with 
pianist Daniel Wiesner. Wed: Czech 


Trio plays piano trios by Martinu, 
Ravel and Dvorak (02-2489 3352) 


■ ROME 
The Audltorio di Via della 
Conciliazione has been refurbished 
for the 1994-5 season of concerts 
by the Orchestra dell'Aceademia 
Nazionale di Santa Cecilia. Pierre 
Boulez and the Ensemble 
InterContemporain open the 
chamber music series on Mon, and 
the subscription series of orchestral 
concerts begins on Oct 15 with a 
Bach and Stravinsky programme 
conducted by Daniels GattL Visiting 
soloists in the pre-Christmas period 
include Barbara Hendricks, Krystian 
Zhnenman, Vladimir Spivakov and 
Cecilia Gasdia. The conductors' 
roster Includes Myung-Whun Chung, 
Georges Pratre. Christian 
Thielemann, Gennady 
Rozhdestvensky and Carlo Maria 
GiUlini (06-6880 1044) 


■ TURIN 

Teatro Regfo The 1994-5 season 
opens on Oct 16 with Donizetti's 
L’eltsir d’amore. The season also 
indudes Donizetti's La fiite du 
regiment. The Nutcracker, Britten’s 
A Midsummer Night's Dream and 
The Turn of the Screw, Verdi's 
Simon Boccanegra and Jerusalem, 
Mozart’s Mi tridale and Puccini's 
Gianni Schicchi and Tosca 
(011-8815 241/011-8815 209) 


ARTS GUIDE 

Monday: Berlin, New York and 
Pals. 

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

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

Friday: Exhibitions Guide. 

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

MONDAY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

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

WEDNESDAY 

NBC/Super Channel: FT 
Reports 1230 

FRIDAY 

NBC/Super Channel: FT 
Reports 1230 

Sky News FT Reports 0230. 
2030 

SUNDAY 

NBC/Super Channel: FT 
Reports 2230 

Sky News: FT Reports 0430, 
1730; 



■i 








FINANCIAL TIMES 


THURSDAY OCTOBER 6 1994 


Private motives of X 

1 -| • compete 

a public man s 


>Yx When Richard 
>s -i Branson, the 
I \ founder of the 

/ _ \ Virgin group, 

was preparing 
to cross the 
BOOK Atlantic in a 

REVIEW ^ ot 

came across a television sta- 
tion's video monitor running 
his obituary. 

The station was demonstrat- 
ing no more than prudence: 
the Atlantic crossing almost 
ended in disaster when Bran- 
son's balloon ditched in the sea 
off Ireland. 

Branson. 44, has since for- 
sworn dangerous sports, and 
the obituaries spawned by his 
penchant for life-threatening 
exploits remain in the 
archives. 

Few of them, in any case, 
would have offered great 
insight into the private Bran- 
son. Tim Jackson, a journalist 
who writes for the Indepen- 
dent, has tried to fill the gap 
with a book that attempts to 
answer the question: what is 
Richard Branson really like? 

The principal facts of Bran- 
son's business life are 
well-known: he created one of 
the world's leading music com- 
panies. which he later sold for 
£560m: an airline. Virgin Atlan- 
tic, which attracted much 
attention: and several other 
businesses, including a world- 
wide record re tailing chain. 

More difficult to capture are 
the many contradictions that 
surround him. Of the three 
young British entrepreneurs 
who rose to great prominence 
during the 1980s - the others 
being Alan Sugar of Amstrad 
and Anita Roddick of Body 
Shop - Branson remains the 
most difficult to understand. 

Sugar trod the path from 
Jewish working class to entre- 
preneurial success which many 
others had walked before. Rod- 
dick is currently fighting off 
allegations that she has not 
lived up to the ideals that moti- 
vated her and her company. 
There has never been any 
doubt, however, what those 
ideals are: respect for the natu- 
ral environment and for 
human rights, and opposition 
to cruelty to animals. 

What motivates Branson has 
never been clear. He seems to 
embody the libertarian ideals 
of the 1960s, appearing in the 
most august company without 


VIRGIN KING - 
Inside Richard Branson's 
Business Empire 
By Tim Jackson 

Harper Collins. £17.50. 383 pages 


a tie. He lived on a houseboat 
and promoted the sale of con- 
doms. Yet he was a favourite of 
Margaret Thatcher. 

His talent for publicity is 
notorious. He launched his air- 
line dressed in an old-fash- 
ioned leather flying helmet and 
goggles. He submitted his 
unsuccessful application to run 
the UK national lottery in the 
company of a horse. 

Yet for all the apparent love 
of attention, the private Bran- 
son finds it difficult to look 
people in the eye. He is surpris- 
ingly inarticulate. If the idea 
were not so ludicrous, one 
would think he was shy. 

Urn Jackson’s book is filled 
with such puzzles. 

Branson has used his vast 
wealth to buy a Caribbean 
island. He flew a pair of Bali- 
nese craftsmen to bis Oxford- 
shire home to build a cricket 
pavilion in the style of a tradi- 
tional temple. Yet Branson 
seemed not to notice that the 
paint was flaking off the back 
of Ins Holland Park home. 

When Branson decided to 
cross the Pacific in a balloon, 
he paid £87,000 for Shinto 
priests to bless it before depar- 
ture. But he quibbled with Per 
Lindstrand, who piloted the 
balloon, over a bill for £150. 

The book has its rough 
edges. The collapse of Air 
Europe is thrown into the nar- 
rative without any explanation 
for the non-expert reader of its 
relevance. Jackson recounts a 
row about the Social Demo- 
cratic party between Branson 
and a dinner guest but frus- 
trating! y omits to say which 
side Branson took. 

Overall, however. It is an 
admirable biography. Parts 
make gripping reading: the bal- 
loon expeditions, the struggle 
to establish the airline and 
British Airways’s dirty tricks 
campaign against it. 

But does it bring us any 
closer to the real Branson? We 
understand his business style 
better by the end: his determi- 
nation to make new ideas work 
and his need to move ou to 
something else when they 
have. As to the person, the 


conclusion has to be that there 
is no resolving the contradic- 
tions: they are part of the Ttian. 

What is clear is that, if any- 
one is going to explain who 
Branson is. Branson would pre- 
fer to be the one who does it. 
One of the reasons he took the 
group private after floating it 
on the London Stock Exchange 
was that he disliked having 
what he saw as ill-informed 
stockbrokers’ analysts com- 
menting on it 

He initially refused to co-op- 
erate in the writing of this 
book. When Jackson decided to 
go ahead anyway, however. 
Branson met him for long and 
detailed interviews and encour- 
aged his friends and colleagues 
to do the same. 

According to Jackson, Bran- 
son later changed his mtod and 
decided the book would be 
biased against him. Branson 
was then offered the chance to 
read the manuscript and cor- 
rect mistak es, on condition 
that he did not send his law- 
yers in afterwards. 

Branson's solicitors told him 
to reject this offer. As Jackson 
makes clear, Branson always 
pays for the best legal advice. 
Any lawyer who advised him 
to waive his right to legal 
action before he knew whether 
the book contained anything 
defamatory would not be 
worth his fee. 

There is much for him to dis- 
like in this book. Some youth- 
ful indiscretions, including a 
near-prosecution by the Cus- 
toms & Excise, are not new. 
More hurtful will be the views 
of Virgin Music employees who 
worked for the company for 
years, but had no shares to 
cash in when it was sold. 

Yet Jackson clearly admires 
Branson for his energy, his 
originality and his regard for 
people often ignored by other 
business leaders: women, 
clerks, cleaners, customers. 

Jackson's conclusion that, 
despite Branson’s apparent 
lack of political convictions, he 
could emerge as a British Ber- 
lusconi. appears to be a lapse 
from his usual sceptical stan- 
dards of judgment But then 
the sceptics sneered at the idea 
that anyone could get an air- 
line flying four months after 
being presented with the idea 
- and that is exactly what 
Branson did. 

Michael Skapinker 


T he British army's 
plans for a new fleet 
of attack helicopters 
have generated the 
competition of the decade for 
the world's aerospace manufac- 
turers. 

The £2bn order for 91 heli- 
copters - to be decided next 
; spring - is likely to be the larg- 
est helicopter purchase in the 
1 world for at least the next five 
years. 

As the UK Ministry of 
Defence last week took final 
bids for the order, it was shap- 
ing up as a fierce contest 
between some of the world’s 
largest aerospace companies. 
The winning bid will be expec- 
ted to offer a fixed price for the 
contract and assurances that 
much of the work will go to 
UK industry. 

Military planners in the US, 
and now in Britain, see attack 
helicopters as essential to the 
armed forces of the future, 
with tanks and helicopters 
becoming the main battle zone 
weapons. 

A new fleet of attack helicop- 
ters, now the British army's 
highest priority, will allow 
high mobility and flexibility of 
response from bases at the rear 
of battle zones to targets for 
behind enemy lines. 

Attack helicopters estab- 
lished their value in the Gulf 
war. McDonnell Douglas, the 
US aircraft manufacturer, 
proudly boasts that its Apache 
attack helicopter fired the first 
shots in the allied attack 
on Iraq, destroying radar 
installations to allow stealth 
fighters to fly unobserved to 
Baghdad. 

In futuristic scenarios, 
attack helicopters are seen as 
essential to protecting British 
tanks from well-equipped 
enemy armour. Lurking behind 
cover a mile or so from the 
main action, helicopters will be 
able to pick up advancing 
enemy tanks with their sen- 
sors. loose off a salvo of mis- 
siles, and dive for home before 
the enemy commanders know 
that they are being watched. 

In placing the contract for 
the UK fleet of helicopters, the 
MoD is looking for three char- 
acteristics in the winning 
bid. 

First, companies must offer 
an “off-the-shelf" product 
which is already in service 
with armed forces elsewhere. 
This will avoid the time and 
expense of developing an 
attack helicopter specifically 
for the UK. 

Second, bidders must agree a 
fixed price for the contract, so 
that the risk of cost overruns 
is born by the contractor 
rather than the taxpayer. 
Third, potential suppliers 




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Helicopter makers 
in a spin 

Bernard Gray on the fierce international 
competition to win a large UK defence order 


will be expected to place as 
much of the work on the heli- 
copters in the UK as possible. 
As well as proving the military 
worth and cost-effectiveness of 
their products, bidders have to 
o utline what level of involve- 
ment UK industry will have In 
production. 

Four main competitors are 
attempting to win the contract 

The favourite is the Apache, 
some 800 of which axe already 
in service with the US army. 
With its proven service record 
and firepower, it is the helicop- 
ter favoured by the British 
army. 

A large helicopter, Apache 
can carry a heavy load of anti- 
tank missiles. It will be 
equipped with the new sophis- 
ticated Longbow radar, which 
is currently under develop- 
ment by US defence companies 
Martin Marietta and Westing- 
house. Longbow allows the 
pilot to identify a target such 
as a tank from cover, lode a 
missile on to the target, and 
move away as soon as it is 
fired. 

The Apache bid is led by 
Westland, the only UK helicop- 
ter manufacturer. Westland 
would make the helicopter - 
and bear the risks of the fixed- 
price contract - under licence 
from McDonnell Douglas. 

Westland's chairman. Mr 
Alan Jones, says that more 
than half of the £2bn contract 
will be placed directly with 
British companies. The Apache 
team would also place a far- 
ther £ibn of contracts an other 
aerospace projects as Indirect 
“offset” work with UK indus- 
try. 

The mam European competi- 
tor is the Tiger, designed by 
the Franco-German Eurocopter 
group. Tiger is a lighter heli- 
copter than the Apache and is 
still und er development for the 
French and German armies. Its 
main armament is the Trigat 
anti- tank missile , developed by 
Britain, France and Germany. 

British Aerospace is the 
main UK participant in the 
Tiger bid. If the bid succeeds, 
BAe will get 20 per cent of con- 
struction work for all the 500 
Tigers expected to be sold in 
Europe. BAe niaima that this. 






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combined with the value of its 
contribution to the Trigat mis- 
sile, would bring high-technol- 
ogy work for British companies 
worth more than the full value 
of the attack helicopter fleet. 

The company also says that 
the Tiger’s new design means 
that it will have much lower 
running costs than its competi- 

Military planners 
see attack 
helicopters as 
essential to the 
battle of the future 

tors, which are based on older 
technologies. 

The other large UK defence 
contractor, GEC. is also field- 
ing a bid. Its candidate is 
Venom, an updated version of 
the Cobra, a veteran of the 
Vietnam war built by Bell, 
another US helicopter manu- 
facturer. 


It, too, is a light helicopter, 
acknowledged by GEC as offer- 
ing less in performance than 
the Apache. But Venom has 
cost on its side: a Venom 
helicopter may be only two- 
thirds the price of an Apache 
and, says GEC, it will 
be substantially cheaper to 
run. 

The wild card in the competi- 
tion is the South African 
Rooivalk, made by Denel, a 
subsidiary of Atlas, the state- 
owned arms manufacturer. 
Rooivalk entered the competi- 
tion late, and was not taken 
seriously at first. However, its 
brute strength means that it 
can cany heavy loads and has 
won admirers. The aerospace 
company Marshalls of Cam- 
bridge would act as prime con- 
tractor for the UK. 

Plenty of mud has been 
slung in the fight to win the 
UK contract 

Opponents of the Apache say 
that it has proved expensive to 
maintain in the past and that 


the US government will . not 
chare details of the state-otthe- 
Sftongbow radar with the 

Tiger is criticised Tor 
being too light for the job. as 
expensive to buj as the 
Sache and of unproven tech- 
££*. The Venom g 

said to be too old, while 
development work on a new 
cockpit leaves its real cost 

^Rorivalk. meanwhile, is also 
based on an ageing design and 
comes from a country which w 
going through enormous poll to 

S change- The MoD wdl want 
to be certain that the order can 
be completed and mamtoin- 
ance continued over the life of 
the fleet. 

Despite their competing mer- 
its the Apache remains the hot 
favourite. The large number in 
service with the US army and 
the heavy weapons load it can 
carry argue strongly in its 
favour. 

P olitically, it may also 
be attractive. Giving 
the order to Westland, 
which is based in the 
south-west of England, might 
help Conservative MPs defend 
their seats against the 
advance of the Liberal Demo- 
crats. 

Even the Apache's mam 
drawback, cost, may be 
reduced by the pressure of 
competitive bidding. Westland 
- like all the bidders - will 
have to provide the MoD with 
extensive guarantees capping 
the maintainance costs of the 
aircraft 

There is. however, one obsta- 
cle that could trip up the 
Apache. The UK is currently 
ho lding another competition to 
replace the RAF's ageing fleet 
of Hercules transport aircraft 
This involves a bitter battle 
between Lockheed, the US 
manufacturer of the latest gen- 
eration of Hercules, and BAe, 
which is offering the Airbus- 
produced Future Large Air- 
craft. 

If the MoD buys the Lock- 
heed Hercules as it originally 
wanted, there will be a huge 
outcry from the UK manufac- 
turers about buying American 
rather than European equip- 
ment To soften the blow, the 
MoD might be tempted to 
award the attack helicopter to 
the European Tiger. 

That would not please West- 
land, and would not be the out- 
come BAe was looking for 
either. 

“My feeling.” said one execu- 
tive involved in the competi- 
tion, “is that buying Hercules 
and Ap3che will be one Ameri- 
can purchase too many For 
the MoD." 


’ l'i N 


LETTERS TO THE EDITOR 

Number One Southwark Bridge, London SE1 9HL 

Fax 071 873 5938. Letters transmitted should be clearly typed and not hand written. Please set fox for finest resolution 


Deserving 

shelter 

project 

Mr Michael Jackamcm. 

Sir. I read with interest the 
article by Andrew Taylor high- 
lighting the problems of 
obtaining empty premises as 
temporary winter shelter for 
the homeless (“Shelter Is 
sought for winter homeless", 
September 28). Allied Domecq 
(formerly Allied-Lyons) was 
very glad to have been able to 
provide some accommodation 
for this scheme over the past 
couple of years. Indeed, we 
very much regret that we are 
unable to do so again in 1994. 

I recognise that many com- 
panies may have misgivings 
about lending their premises 
for such a project However. I 
ran assure them that the shel- 
ter at our premises was 
extremely well organised and 
any problems in making the 
building habitable were minim- 
ised with help from Crash 
(Construction Industry Relief 
& Assistance lor the Single , 
Homeless). 

I would urge the leaders oE 1 
business in London to trawl | 
their organisations to find suit- 1 
able premises that can be ' 
offered for this deserving 
scheme. If anyone wishes to 
learn more about our experi- 
ence, I would be delighted to 
hear from them. 

Michael Jackaman. 
chairman. Allied Domecq, 

24 Portland Place, 

London WIN 4BB 


Japan talks and does nothing 


Prom Mr Thomas Fkmnigan. 

Sir, I disagree with your edi- 
torial, “Back from the brink" 
(October 3) - in the wake of 
yet another agreement that 
purports to open Japan’s mar- 
kets - where you urge Japan 
to “table this weekend’s con- 
cessions to the Gatt”. You also 
tell Japan to “demand that fhp 
US seek to resolve any future 
bilateral trade differences 
through negotiation in the 
World Trade Organisation”. 


The US has hauled Japan 
before the General Agreement 
on Tariffs and Trade three 
times in the last six years, and 
won each time. Japan has sim- 
ply ignored the rulings, and 
pursued a ruthlessly protec- 
tionist trade policy, bolstered 
by the cheers of many English 
publications, including your 
newspaper. It is curious that 
you should constantly side 
with Japan and urge the US to 
seek a remedy that has proved 


to be worthless. 

Japan has “opened” its mar- 
ket dozens of times, but it still 
keeps the foreigners out. and 
laughs all the way to the bank. 
Japan's strategy Is to keep the 
US talking and talking until it 
is so deeply in debt that it does 
not matter what the US says 
about trade. 

Thomas Flannigan, 

Three First National Plaza, 
Suite 3950, 

Chicago Illinois 60022, US 


No escape from nominee accounts 


From MrADLeuaggL 

Sir, When the third tranche 
of British Telecom shares was 
offered to the public, priority 
was given to those investing 
through a Share Shop. 

Those who purchased BT3 in 
this way (perhaps to augment 
their holdings in BT1 and BT2), 
found themselves locked into a 
separate nominee share 
account from which there is no 
escape. To sell shares acquired 


in this way would involve loss 
of the share bonus. 

The Share Shops offered Pep 
facilities for BT3 shares with- 
out initial charges, but even 

the maximum n irm hpr possible 

allocated to an individual 
hardly made the exercise 
worthwhile in view of subse- 
quent charges. 

The new offer of the remain- 
ing electricity generators' 
shares is through Share Shops 


only. Hence, existing holders of 
National Power and PowerGen. 
shares (as well as new inves- 
tors) will find themselves lum- 
bered with holdings in two 
unwanted nominee share 
accounts from which, again, 
there will be no escape. 

David Levaggi, 

4 Grosvenor Street, 

Bury. 

Lancs, 

BL9 9BJ 


Surprising view from land of the back extension 


From Mr Richard Wentworth. 

Sir. Colin Amery warns us 
against architectural competi- 
tions ("The tyranny of the 
few,” September 23). Seen from 
afar (an aircraft over Switzer- 
land, as it happened) I could 
only smile that his cautionary 
lines come from a country 
where a “new” building Is still 


a supermarket parading as an 
oast house, usually close to a 
(genuinely) new motorway. 

Two of the projects he warns 
against the reorganisation of 
the South Bank and the rede- 
sign of a disused power station 
for a new Tate Gallery, are in 
the E ng lish tradition of conver- 
sion and adjustment In a cul- 


Share options debate confuses separate issues 


From Mr David Tuch. 

Sir, There is a clanger in the 
current debate on executive 
share options of confusing 
three separate but distinct 
issues. 

First there is the “value” of 
the option at the time it is 
granted. In theory this should 
be a measure which reflects 
how much a third party would 
be willing to pay for the 
option. Mo$t valuation models 
rely on making certain 
assumptions about the com- 
pany which, arguably, means 
at best they produce a theoreti- 
cal value, there being no mar- 
ket in executive options. 

Second, there is the benefit 
which the executive obtains if 
and when he exercises his 
option. “Headline” figures 
often overlook the feet that the 


executive will only benefit if 
shareholders also benefit The 
raison d’etre of options is to 
enable the holder to benefit 
from an increase in share price 
without having, initially, to 
purchase shares. Provided the 
executive is granted an option 
over an “appropriate" value or 
shares, then the real question 
is what performance target 
should be attained before the 
option can be exercised. Our 
survey of quoted companies, 
results of which will be pub- 
lished shortly, will provide 
insight into this area. The size 
of the gain should simply 
reflect how successful the exec- 
utives are in creating value for 
shareholders. 

The third issue is the cost to 
the company and the share- 
holders. This Is where the real 


confusion starts. If the option 
is never exercised, there will 
be no cost. Similarly, to 
a s s ume the cost is the gain on 
exercise assumes that the 
marketplace accurately adjusts 
the price of shares to reflect 
the dilution. It also ignores any 
possibility that the very grant- 
ing of the option might 
increase a company’s value. 

The debate should be 
whether options are the most 
appropriate method of offering 
an incentive to executives to 
increase shareholder value. 
The increasing use of 
restricted share schemes sug- 
gests that options are not the 
only solution. 

David Tuch, 

tax partner. Peat Marwick, 

8 Salisbury Square, 

London EC4Y SEE 


ture devoted to back exten- 
sions and knocking through I 
imagined Amery would have 
admired the inherent modesty 
of these two projects. Instead, 
he seems afraid of their possi- 
ble modernity. Oh England! 
Richard Wentworth, 
Helmstedterstrasse 27, 

10717 Berlin, Germany 

Other side of 
the link 

From Dr if £ ft Robinson. 

Sir, I note (“Universities plan 
business links", September 30) 
that the universities are to 
appoint chief executives to 
help build links between 
higher education and the pri- 
vate sector. 

As someone who has w orkefl 
in industrial Rid), I suggest 
that in addition to the longer- 
term links associated with the 
sponsoring of MSc and Pbp 
students, they also promote 
ways of allowing companies 
access to university knowledge 
and facilities on a shorter- 
term, more flexible basis. 

M E R Robinson. 

26 Fairfield Close, 

Grove. Wantage. 

Oxfordshire OX12 QNQ 


r ! - 

tn 1 * 


tiiscon 


! : ilo 

- -I i 'v 


FINANCIAL, TIMES THURSDAY OCTOBER 6 1994 


19 











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1 ’ 


’liil'.ltl 

L 


FINANCIAL TIMES 

Number One Southwark Bridge, London SE1 9HL 
Tel: 071-873 3000 Telex: 922186 Fax: 071-407 5700 

Thursday October 6 1994 


Brussels’ foot 
on the brake 


In proposing to renew the block 
exemption of motor industry dis- 
tribution practices from EU com- 
petition law, the European Com- 
mission says it aims to halanra 
the interests of all Involved. But 
that balance remains tilted far too 
heavily in favour of producers, at 
the expense of the interests of con- 
sumers and economic efficiency. 

Furthermore, the Commission's 
approach raises disquieting ques- 
tions about Its attitude to the sin- 
gle market. 

Yesterday's decision preserves 
the central principles of the exist- 
ing exemption. Manufacturers will 
continue to be able to choose 
which dealers they supply and to 
limit them to se lling only one 
brand at one location, while per- 
mitting dealers exclusive fran- 
chises within designated territo- 
ries. Most of the amendments 
proposed amount to tinkering, not 
fundamental reform. 

Some merely fo rmalise practices 
already common, notably in the 
UK They include the right of deal- 
ers to stock competing brands at 
separate outlets and to advertise 
outside their franchise territories. 

Other changes seek to tackle some 
of the more pernicious abuses of 
the existing regime. For instance, 

Brussels aims to loosen manufac- 
turers’ monopoly over spare parts 
and to reduce obstacles to cross- 
border car purchases, repeatedly 
blamed by consumers' organisa- 
tions for creating gaping differ- 
ences in car prices across the ED. 

However, many of these obstacles 
are already supposed to be illegal 
Brussels’ failure to correct them 
in the past inspires little confi- 
dence that the new rules will be 
enforced any more vigorously. 

Radical approach 

A much more radical approach 
was needed. The commission 
should have started by question- 
ing the scope of the exemption. It 
was originally granted on the 
grounds that cars are complex 
products which require big invest- 
ments in after-sales service facili- 
ties. Yet it also extends to new 
vehicle sales. No convincing eco- 
nomic case has been made for 
freatiiigrthe“two “businesses as" ' 
one. Doing so impedes efficiency 
by encouraging cross-subsidies 
between them. 

Equally, continuing restrictions 
on multi-brand dealerships deter 
innovation in retailing and deny 

Berlusconi 
on the brink 


car-buyers the convenience of 
comparing a wide range of com' 
peting models in one showroom. 
Abolishing these curbs need nei- 
ther affect manufacturers’ power 
to discipline wayward dealers, nor 
lead to unhealthy concentration of 
distribution, provided competition 
policy were applied effectively. 

Probably the proposal's biggest 
weakness, however, is that it 
relies too much on vaguely- 
worded prohibitions of abuses by 
manufacturers. It would have 
been far more effective to have 
spelt out clearly specific rights to 
which consumers were entitled. 
Nowhere is this more so than in 
the freedom to take advantage of 
price differentials by shopping 
across borders. 

Price convergence 
Price convergence Is one ctf the 
crucial tests of a unified market 
Car manufacturers have long pro- 
tested that it has not been 
achieved because of currency fluc- 
tuations and differences in 
national taxes and costs. But their 
argument is perverse. Only when 
producers are compelled by strong 
cross-border competition to treat 
Europe as one market will there 
be effective pressure to abolish 
regulatory and fiscal obstacles. 
That is the central purpose of the 
EU single market programme. 

The C ommissio n’s timid reme- 
dies to the obvious flaws in the 
block exemption suggest that it is 
reluctant to subject Europe's big- 
gest manufacturing sector to thw 
logic of the single market Its hesi- 
tation is not altogether surprising. 
For Brussels is itself engaged in 
the business of using the exemp- 
tion to manage trade In cars 
within the EU. 

The exemption provides the 
commission with a convenient 
backdoor way to limit free trade in 
Japanese cars between individual 
EU countales. Brussels defends 
these import controls as a neces- 
sary evil, insis ting that they were 
the price for getting governments 
to agree to open the EU market 
fully to competition by 1999. 

But the Commission has also 
paid a heavy price by colluding in 
Such practices. By doing so, it 
rails into doubt the sincerity of its 
commitment to free competition 
in the car industry and dimmish as 
its authority to enforce single 
market rules on recalcitrant EU 
member states. 


The end of the beginning, or the 
beginning of the end? Just a week 
after the Italian government 
issued a signal of hope by agree- 
ing tough action on pensions and 
health reform in the 1995 budget, 
new and darker clouds are 
starting to gather around the fig- 
ure of Mr Silvio Berlusconi 

Yesterday's row between the 
Italian prime minister and Mr 
Francesco Saverio BorrellL a 
senior Milan anti-corruption mag- 
istrate, brings to a head five 
months of simmering discord 
between Mr Berlusconi’s govern- 
ment and an independent-minded 
judiciary. It exposes anew some of 
the contradictions in Italy's 
attempts to produce judicial solu- 
tions to deeply-entrenched prob- 
lems of corruption. 

On a wider level, the clash 
raises fresh doubts about the cred- 
ibility of the country's efforts to 
establish a stronger and less 
self-serving' political system. 
Against the background of rising 
anxiety on international fin ancial 
markets about Italy's public debt 
mountain, the prime minister’s 
hold on power appears increas- 
ingly uncer tain even though his 
election triumph was as recent as 
last March. And there is no sign of 
a successor better qualified to 
deliver the stability Italy requires. 

Mr Berlusconi took office with a 
strong mandate to improve the 
standards of Italian leadersh ip a s 
a means of putting the country’s 
political and economic structures 
on to a sounder footing. Although 
his objectives may have been wor- 
thy, his execution so far has been 
poor. He has failed to bring about 
the most elementary, and argu- 
ably the most important, precondi- 
tion for accomplishing his goal: 
clearing up the conflicts of inter- 
est inherent in his position as 
head of the Fininvest media 
group. 

Extraordinary criticism 

In his interview with the Cor- 
riere della Sera newspaper yester- 
day. Mr Borrelli dropped a broad 
hint that one trail being followed 
by corruption investigators may 
lead to Mr Berlusconi's own door. 
The Milan prosecutor said an 
investigation into alleged, irregu- 
larities at a pay TV company in 
which Fininvest is a shareholder 
risked reaching "high levels in 
financial and political circles”. 


Mr Borrelli's extraordinary criti- 
cism both of Mr Berlusconi and 
Mr Alfredo Biondi, the justice 
minister, may have been ill- 
judged. The episode will add 
mo mentum to growing complaints 
in Rome of the politicisation of the 
judiciary. However, when Fin- 
invest is the subject of at least 
seven lines of judicial inquiry, the 
prime minister cannot pretend 
that strong language from 
the magistrates comes as a sur- 
prise. 

Unpredictable outcomes 

The forcefulness of the interven- 
tion from Milan leaves Mr Berlus- 
coni with two broad avenues for 
action, both of them unpalatable, 
and with unpredictable outcomes. 
The first would be to raise the 
stakes still further in the battle 
with the magistrates, a conse- 
quence that would certainly stem 
from realisation of yesterday’s 
government threat to take legal 
action against Mr BorrellL 

Given the passions already 
aroused by more than two years of 
corruption scandals, turning Mr 
Borrelli into a martyr would not 
only heighten the danger of a 
break-up of Mr Berlusconi’s coali- 
tion. It could also deliver a fatal 
blow to the chances of bringing to 
a just and even-handed conclusion 
the many judicial corruption 
inquiries dogging a large number 
of senior Italian corporate and 
public figures. 

The second option would be for 
Mr Berlusconi at last to take con- 
vincing steps to clarify the ques- 
tions surrounding his stewardship 
of Fininvest He could offer inves- 
tigating magistrates frill help in 
clearing his name from any suspi- 
cions of impropriety, and at the 
same tim e adopt decisive mea- 
sures to separate his activities in 
government from those of his 
media company. 

Last weekend's move by presi- 
dent Oscar Luigi Scalfaro to fore- 
stall the government’s attempt to 
increase fees paid by the Rai state 
broadcasting group reinforced the 
widespread impression that the 
government’s decisions are not 
always impartiaL Mr Berlusconi 

must now act to show that he 

places the interests of his country 

above those of his business. 
Unless he assuages these doubts, 
Italy's political and financial 
uncertainties will grow. 



GERMAN 
ELECTIONS 
October IS 


“This time,” says 
the general election 
poster for Ger- 
many’s liberal Free 
Democratic party, 
"everything is at 
stake." That could 
be painfully true for 
the FDP, the centre 
party of German 
politics and king- 
maker in almost 
every coalition since 
1949. In the general 
election on October 
16, the party is in 
danger of being 
voted out of the Bundestag, the 
lower house of Germany's federal 
parliament, for the first time ■rinra 
the foundation of the federal repub- 
lic 45 years ago. 

Yet the message of the poster 
means much more. This is the first 
election in an integrated, united 
Germany, with all the parties com- 
peting for votes in east and west 
under the same rules. 

The last election in 1990. immedi- 
ately after unification, was carried 
out under special rules to ensure 
that the newly-enfranchised east- 
erners were adequately represented 
in the German parliament And in 
the euphoria of the moment many 
voters, especially in the east 
endorsed the "unity chancellor” - 
Mr Helmut Kohl 
The results of the 1994 election 
will show not just how the players 
have changed, but how the playing 
field has been transformed by the 
advent of 17m new inhabitants 
emerging from 40 years of commu- 
nist dictatorship. 

With just 10 days to go before the 
poll, the result is too close to rail. 
The Bundestag will still be domi- 
nated by Mr Kohl’s Christian Demo- 
cratic Union (CDU) and its great 
rivals, the Social Democratic Party 
(SPD). But nobody knows which 
other parties will scrape in along- 
side tiigm. Yet the make-up of the 
next German government will be 
dicta ted by the small parties - the 
FDP. the Greens, and the Party of 
Democratic Socialism, the reformed 
east German communists. 

The Greens, who failed to gain 
the minimum 5 per cent of the vote 
cast needed to get into the Bundes- 
tag in 1990, are expecting to win 
sufficient votes to get back this 
time. However, they are unlikely to 
win enough support to form a 
majority with the SPD, their natu- 
ral partners. The SPD will need a 
third partner to unseat Mr KohL 
That could be the FDP. But the 
Free Democrats have failed to gain 
5 per cent of the votes in six consec- 
utive state elections in the past 12 
months, and in last June's Euro- 
pean poll. 

The other unknown is what hap- 
pens to the Party of Democratic 
Socialism (PDS). If they get into the 
Bundestag, they could deny a par- 


Gennany's small parties hold the Kohl government's future 
in their hands, say Judy Dempsey and Quentin Peel 

Still much too 
close to call 

Germany's electoral battlefield: how they will vote 

"'•sr *7 V j 1 ■' .ty *’ r < . 


_ ■ r w , > - ■«- 


Germany (%) 
50- 


West Germany (%) 

SO 


East Germany (%) 

40 - 


40 







o' — L 


Jan 1904 

' Sotrca: FAZ/AMnabach VwUtoteopWon pods 

lxameniary majority to Mr Kohl and 
his ruling coali tion 
At the PDS headquarters in east 
Berlin - in the former institute of 
Marxism-Leninism - the mood is 
supremely confident. Mr Gregor 
GysL the one-time defence lawyer 
for mi c t dissidents who 

now leads the party in the Bundes- 
tag, is convinced the party can win 
three constituencies outright In 
Berlin. Under German election 
rules, that is enough to get the 
party into parliament with anything 
up to 80 seats, even if it fails to win 
5 per cent of the popular vote. 

"We have managed to speak out 
for the interests of the east Ger- 
mans Who Still feel alienated an d 
who still feel they have a separate 
identify,” says Mr GysL 
East Germany’s economy remains 
sluggish and unemployment is high. 
But recent studies by the Martin 
Luther University in Halle and the 
Infratest Burke Berlin, a polling 
organisation, with Die Zeit weekly 
newspaper show that the majority 
of east Germans are now far more 
optimistic about their daily lives 
and economic prospects than they 
were last year. 



The studies also show that more 
than 50 per cent of those polled hold 
little regard for the PDS's policies. . 
Moreover, the PDS has not proj- 
ected itself as the party of the 
unemployed. According to Deutsch- 
land Archiv, a journal specialising 
in the unification process, "the 
unemployed and the under-educated 
have only average representation" 
in the PDS. 

Despite these trends, the former 
communists have so far managed to 
retain about one-fifth of the vote in 
recent state elections. 

One reason for the PDS's electoral 
survival is that east Germans vote 
for personalities, not policies. "This 
is where the PDS has a real advan- 
tage,” said Mr Wulf Oehme, man- 
ager of the FDFs Berlin office. 

"The candidates are known 
locally. They have not come from 
the west They have the benefit of 
understanding what unification 
means to the east Germans. They 
belong," he explained. 

Another reason is that the hard 
core of the FDS voters - former 
civil servants, white collar workers, 
graduates, academics and pension- 
ers - still hanker after some 


vague form of social equality. 

"If a majority of eastern Germans 
view equality as more important 
than freedom, it may be due to the 
fact that they already enjoy free- 
dom and still miss equality," 
according to Ms Use Spittmann, edi- 
tor of Deutschland Archiv. 

Mr Gysi agrees: "Unification is a 
psychological process as much as a 
political one," he says. 

“Unlike the political establish- 
ment which keeps preaching to the 
east Germans that the past 40 years 
were a waste of time, we say that 
not everything of the former system 
was bad. that they still have a 
voice, and that the state must play 
a role. We are that voice." 

The mood in the FDP, in west 
Germany as in the east is more 
gloomy. This is the party of the 
German Mittelstemd the shopkeep- 
ers and professional classes. In the 
west those supporters seem to be 
deserting the party. In the east 
they still don’t really exist 

One accusation by its opponents 
is that the party has lost its identity 
in the struggle to remain in power, 
first with the SPD from 1969 to 1982, 
latterly with the CDU. Mr Gerhard 


Schrbder, the SPD premier of Lower 
Saxony, says it is guilt)’ of "merci- 
less opportunism”. 

Count Otto Lambsdorff. the last 
FDP leader who stepped down in 
1993, admits at least part of the 
charge. “If be means that we want 
to be in the government, and to do 
so we must be opportunistic. I 
would agree. 

"We don’t want to be in opposi- 
tion. Tbat would be stupid," he 
says. "But we must not abandon 
our liberal principles.” 

Yet the party's liberalism has 
been squeezed. Many of its liberal 
policies have been stolen by its big- 
ger rivals. Free-market liberalism, 
including greater deregulation and 
progressive privatisation, is now a 
central plank of Mr Kohl's govern- 
ment policy. As for the party's com- 
mitment to civil liberties, that has 
been stolen by the SPD. 

A t the some time, the FDP 
has been unable to 
maintain a clear profile 
for the voters. Count 
Lambsdorff believes this 
is a result of the size of the present 
conservative-liberal coalition major- 
ity. thanks to Mr Kohl's landslide 
win in 1990. 

"We must not give up on our lib- 
eral principles, but we may have 
run that risk in the past four 
years,” he says. “1 hear the com- 
plaints at our election meetings, 
that we allowed a health reform bill 
to be passed which seriously limits 
the activities of the self-employed, 
our natural constituency." 

The FDP also agreed to the intro- 
duction of n publicly -financed insur- 
ance scheme to care for the old and 
handicapped that has hit small 
businesses hard. "I have consider- 
able understanding for that 
charge," Count Lambsdorff says. 

The survival of the FDP now 
looks to depend on the long-stand- 
ing tradition or German voters giv- 
ing their second votes - for party 
lists as opposed to individual candi- 
dates - to the liberals. There are 
two factors that make that less 
likely to happen. 

One is that voters in the east 
have never known that tradition. 
Having shown little understanding 
of liberal-market economics, they 
may not be inclined to adopt it. 

The other is that after a row of 
defeats, voters may start to ques- 
tion whether there is any point in 
keeping the FDP in parliament. 

According to the latest opinion 
poll, based on the second-vote pref- 
erences of electors, the FDP will 
make the 5 per cent threshold. So 
will the PDS. The present coalition 
would then be barely 1 per cent in 
front of the combined forces of the 
left-wing opposition. 

It is well within the potential 
mar gin of error of the polls. But it 
is certainly much too close for Mr 
Kohl's comfort 


Lady who felled the feelgood factor 


Have you met 
Naomi - the lady 
chiefly responsible 
for the joylessness 
of the British recov- 
ery? She is the Non- 
Acceptance Of Mini- 


mal Inflation, and 



VIEW 


she is currently rid- 
ing high. No UK British politician, 
businessman or hanker can afford 
to ignore her. 

Naomi is the problem of transi- 
tion from life with inflation to life 
without it Three lots of people 
embody her those who dislike the 
i de a that inflation is da ad, those 
who do not believe that its death 
will last, and those who cannot 
believe they have killed it Together 
they are smothering the feelgood 
factor the government so desires. 

The first group fondly remembers 
the m grAdiAnbt of inflationar y hap- 
piness. The 10 per cent pay rises 
that were a sham but sounded good 
down at the pub. The misleadingly 
generous interest on deposit 
accounts. The mortgage debt that 
was always covered by the rise in 
house prices, even though part of it 
was blown In local showrooms. The 


hanks that liked 
to say Yes, and 
whose endow- 
ments of interest- 
free deposits 
minted them prof- 
its when interest 
rates were at cri- 
sis levels. 

These nostalgic 
Naomis will moan 
more loudly as 
the joyless recov- 
ery continues. 

With the job mar- 
ket improving, 
their ingrained 
conviction that a 

pay offer of less than 5 per cent is a 
slap in the face will be restored - 
the nurses are leading the way. The 
failure of the great housing escala- 
tor to roll will be missed more and 
more by would-be trader-uppers and 
all who profit from their riAaiing s- 
This group shares an unstated 
instinct - that low inflation blocks 
social mobility, favours the haves 
and is basically reactionary. 

The disbelievers note the political 
power of the first group. Interna- 
tional investors have shifted the 


Naomi: rkfing Wgfe 

UKgawnimflatlWHdamarfc: bonds yto4dcav»(%) 

10 



l^il 


■ 

< 27 September 1994 | 




Source: BtoomtMQ 


IS 


90 


30 


British yield curve, as shown, to 
reflect their disbelief that the fash- 
ion for non-infiationary government 
will last Look at the way expected 
Inflation, which dominates 
long-term interest rates, has jumped 
this year. Businessmen still seek 
returns of 18 per cent on new facto- 
ries: they have not adjusted to non- 
infiationary times, so their invest- 
ment is stingy. Would-be house-sell- 
ers sit tight: whether trapped by 
“negative equity” or not, they can- 
not believe their rightful gains 


will not come. 

These faithless 
Naomis eye west- 
ern Europe’s per- 
sistent unemploy- 
ment and public 
debt, and know 
the old world is 
going through a 
wrenching pro- 
cess of disillu- 
sionment about 
what labour 
rights its employ- 
ers can afford and 
what social bene- 
fits its govern- 
ments can afford. 
They know it is easier to disguise 
both problems with inflation and 
devaluation than to face up to them 
explicitly. They know Britain's 
household debt-to- income ratio, the 
highest in Europe at more than 100 
per cent, begs for inflationary relief. 
Recovery or no recovery, they are 
damn sure the soft option will pre- 
vail. 

Cue the entry of Naomi Clarke, 
Naomi George and Naomi Pennant- 
Rea. These killjoys - chancellor, 
and Bank of England governor and 


his deputy - are determined to nip 
inflation in the bud even if it takes 
a microscope to find it. They are 
closing the bar before the party has 
even started. Well-meaning Naomis 
they, but they complete the dismal 
picture. The pleasures of inflation 
have gone. The pleasures of non- 
inflation have not yet come. And 
the monetary pain of moving from 
one to the other is not yet over. 

Will three-headed Naomi drive 
Britain back into its bad old ways? 
The bond markets say Yes. But I 
say No, precisely because of the 
shrillness with which the markets 
are speaking. Today's free, world- 
wide capital movements have 
silently removed the inflationary 
option from any individual govern- 
ment; they sack the offending bond 
market at the first sign of tempta- 
tion. Naomi will finally expire - 
perhaps after bringing down the 
government that raised her. 

Nicholas Colchester 


The author is editorial director of the 
Economist Intelligence Unit 


Observer 


Stumbling on 
the stubble 

■ Oh no - yet more adverts of 
perfectly contoured male clones, all 
with skin smoother than a baby’s 
bottom. 

Yes, it’s another new razor from 
CSDette, inventor of the original 
twin-bladed disposable razor. 
Remember that? The one which 
boasted: "The first Made shaves you 
dose, the second blade shaves you 
closer stifl." Most people wondered: 
if the first blade was so good, why 
have the second? 

What the media really wanted to 
see when the new Gillette 
SensorExcel was displayed in the 
US this week was Ron Rossi. 
Gillette's north America president 
sporting a mite of lavatory paper 
stuck to a nastily nicked chin. 

No fthanra- Instead hacks were 
served up marketing hype, such as 
the new razor's robber microfins, 
which stretch the skin and make it 
stand to attention for the cutting. 
Yawn. SensorExcel costs IS per cent 
more than any other throwaway 
plastic razor. 

For that, we expect aftershave 
lotion chucked in too. 


Sun stroke 

■ Not normally given to 
metaphorical flourishes, Chris 
Patten excelled himself yesterday, 
hi a lengthy policy speech, the 


governor of Hong Kong opined that 
its final 1,000 days under British 
rule were not at all the same thing 
as the last 1,000 days of Hong Kong 
per se. Patten concluded: "The sun 
sets, and the sun rises.” 

What exactly did he mean? Some 
imag ined the metaphor might have 
wider application - sunset UK, etc, 
etc - but Patten hastily scotched 
that idea, though he stru ggl ed to 
find AvamplAR of sunrise UK 

Inspiration eventually dawned, 
albeit from an unlikely source. Tm 
sure that those who are meeting in 
- er - Blackpool this week [where 
the Labour party has been staging 
its annual hand-wringing binge] 
would not like to think of setting 
suns." 

Patten finally had to admit the 
metaphor didn't work. Piquant, 
isn’t it, that he will be leaving his 
office at midnight? 


Norwich school 

■ What’s wrong with Norwich? It's 
some months since Mike Sandland, 
56, Norwich Union's chief 
investment manager for the past 
eight years, let it be known that he 
was taking early retirement after 33 
years on the investment treadmill. 
He 1ms now quit and his job is yet 
to be filled. 

Admittedly, Norwich Union has 
had its ups and downs, but the job 
of managing £38bn must be one ctf 
the plums in the UK f und 
management business. An added 
bonus is that it took Sandland just 



image’ 

seven minutes to get to work, and 
that was on a bad day. In the US 
any number of fond manag ers 
would exchange the daily grind of 
commuting into Wall Street for life 
in a pleasant place like Norwich. By 
contrast, there still seems to be a 
school or thought In England that 
serious fund managers work in the 
City of London and not the 
provinces. Perhaps Norwich Union 
will have to recruit a Scot after all 


Very small beer 

■ Don't talk about the US federal 
debt crisis - it’s enough to drive 
you to drink. 


No sooner said than done. 
Presidential Bottlers has launched a 
new beer called Biliary, a 
terrifically subtle combination of 
the two Clin tons' first names. For 
every case sold, 25 cents goes to the 
federal Bureau of Public Debt 
Sales of Biliary have already 
reduced the debt by $15,000 so far, a 
mere drop in the bucket, sure, but 
Washington is grateful for every 
drop or aid. President Clinton 
personally accepted one cheque on 
behalf of the bureau All we need 
now is Bentsen Bourbon. 


Down to earth 

■ No shortage of readers willing to 
point out the obvious error in 
yesterday’s FT interview with 
Templeton’s Mark Mobhis, one of 
the world’s hottest fund managers. 
Mobius, a big picture merchant, 
said that he had been lured to 
Russia because of its achievements, 
such as putting people on the moon. 

As every schoolboy knows, it was 
the Americans who put men on the 
moon (12 at last count) and the 
Russians had to make do with a 
robot called Lunokhod. 

Mobius quickly corrected himself, 
but the comment has prompted 
stinging comments from envious 
rivals. 

Alastair Begg, Kleinwort 
Benson’s chief investment manager, 
shot off a letter to the FT saying 
that if someone as skilled as 
Mobius is being carried away by 
such Russian hype, the "time has 


come to sell short". 

“They would say that, wouldn’t 
they?" says Mobius, too polite to 
mention that such cynical views are 
not going to help Kleinwort 
Benson's own efforts to sell shares 
in Gazprom. Russia's largest gas 
producer, to overseas investors. 


Mum’s the word 

■ Close-knit family, the Kennedys, 
even when divorcing. Joan Kennedy 
has just postponed - until after 
elections on November 8 - a court 
action aimed at reopening her 1982 
divorce settlement with Senator 
Edward Kennedy. 

She hasn't said why, and nor will 
her lawyer, Monroe Inker, say If the 
two have met recently. “I have been 
sworn to silence by my client,” say’s 
Inker. 

Can it be that Kennedy, who has 
been a Democrat senator for 32 
years, is facing an unusually tough 
fight from Republican Mitt Romney, 
a venture capitalist and son of 
former Michigan governor, George 
Romney? 


Solitary 

■ Observer was fortunate enough 
to be able to eavesdrop on the 
meeting this week between Nelson 
Mandela and Bill Clinton. Some 
astonishing stuff, not least 
Mandela's quip: “In my country, 
first we go to jail and then we 
become president.” 


-• v-f ? 



Tel: (07IJ-828-166I Fax: (071 >-828-9076 





WORLDWIDE EXPERTISE AND RESOURCES 


FINANCIAL TIMES 

Thursday October 6 1994 


brother 

TYPEWRITERS • WORD PROCESSORS 
PRINTERS • COMPUTERS - FAX 


Consortium seeks a stake in south Wales i Seoul lifts 

Mitsubishi joins bid for ^ on 

British Coal pit assets investment 


bid for 
assets 


By Michael Smith 

Mitsubishi, the Japanese 
conglomerate, has joined the bid- 
ding to take over British Coal 
mining assets when the state 
company is privatised this year. 

Its participation in a bid for the 
south Wales region is a boost for 
the privatisation, which has 
largely failed to attract the 
involvement of overseas compa- 
nies in spite of worldwide mar- 
keting. 

Mitsubishi is only the second 
foreign company to be a con- 
firmed bidder for any of the five 
regions on offer. The other is 
Alcan Aluminium of Canada, 
which is bidding for British 
Coal’s north-east England region 
in partnership with Ryan Group 
of the UK. 

Mitsubishi has formed a bid- 
ding consortium with Taylor 
Woodrow, the UK construction 
company, and Kier Mining, a 
Scottish coal company. 

Taylor Woodrow confirmed the 


joint venture yesterday, although 
Mitsubishi was unable to com- 
ment Mitsubishi, Taylor Wood- 
row and Keir are thought to have 
roughly equal stakes in the ven- 
ture. 

Mitsubishi has wide industrial 
interests including coal. It is 
involved in Australian minin g 
through its Mitsubishi Develop- 
ment subsidiary and in UK coal 
trading through Mitsubishi Cor- 
poration Coal Sales. 

Taylor Woodrow has been 
involved in UK mining since the 
1940s and has opencast interests 
in south Wales and Northumber- 
land in nor ther n England. 

The combination of the two 
companies, together with the 
much smaller Kier Mining, pres- 
ents a powerful bidding partner- 
ship for British Coal's most popu- 
lar region in the privatisation. 

The confirmation of the bid 
means that at least eight compa- 
nies or consortia are bidding for 
the nine opencast sites in south 
Wales, whereas the central 


England regions - where virtu- 
ally all of the deep mines are 
based - are thought to have 
attracted just three or four seri- 
ous bidders each. 

Wales is attractive because of 
the relative abundance of high- 
quality coal near the surface. 
British Coal produces about 2.4m 
tonnes a year from the region, all 
of it from opencast sites. The 
region's last deep mine. Tower, 
was closed this year and is being 
offered for sale separately as a 
mothballed pit 

Although south Wales has 
smaller coal sa l e contracts than 
other regions, National Power, 
the electricity generator, is keen 
to secure long-term deals from 
the post-privatisation owner to 
supply its Aberthaw power sta- 
tion. 

It has already signed a 10-year 
deal with Ryan Group for 1.5m 
tonnes of coal a year from south 
Wales. The deal is conditional on 
Ryan's winning the bid for the 
region. 


German jobs figures provide 
pre-election boost for Kohl 


By Christopher Parkes 
in Frankfurt 

Mr Helmut Kohl's hopes of a 
fourth term as German chancel- 
lor were given a timely fillip yes- 
terday by improving unemploy- 
ment figures and a favourable 
opinion polL 

The last labour market data to 
be issued before the federal elec- 
tion on October 16 shows that the 
seasonally adjusted jobless total 
in western Germany fell by 5,000 
last month. Although the 
improvement was enhanced by 
work creation and education 
schemes, the fall exceeded most 
expectations. 

There was also an unadjusted 
drop of 64,000 in unemployment 
in the east, and favourable pro- 
ducer price figures, which were 
unchanged in July from June, 
and up only 0.3 per cent year-on- 
year. 

The unadjusted jobless figure 
for the whole country - most 


commonly cited by the media 
and politicians - fell more than 
140,000. taking the total below 
3.5m for the first time this year. 

Mr Bernhard Jagoda, president 
of the Federal Labour Office, said 
the data were more favourable 

than usual at this time of year, 
when companies typically hired 
extra staff after the s umm er ML 

Hie number of vacancies regis- 
tered in the west rose 16 per cent 
during the month, Mr Jagoda 
said, adding that the low point in 
the eastern labour market was 
“well behind us”. 

At IS per cent compared with 
8J2 per cent in August, the jobless 
rate in the west was the lowest of 
the year so far, although still 
above the annual average of 7.4 
per cent in 1993. 

The eastern rate, down to 13.8 
per cent in September from 14.7 
per cent, was also considered 
likely to bolster support for Mr 
Kohl's Christian Democrats in 
the region. 


Signs of improved backing for 
the CDU in the five new states 
emerged yesterday in a poll from 
the Aflensbach Institute showing 
nationwide support for the r uling 
coalition steady at 49.3 per cent 
Although the shar e of the vote 
going to the liberal Free Demo- 
crats. junior government part- 
ners. was down slightly on the 
institute's previous survey, it 
was still sufficient at 8.2 per cent 
to help the coalition to an abso- 
lute parliamentary majority. 

Meanwhile, the Social Demo- 
crats advanced their share to 35.1 
per cent from 34.7 per cent, while 
the Greens, possible coalition 
partners, slipped from 9.2 per 
cent to 8 per cent 
The party of Democratic Social- 
ism, the successor to the east 
German communists, has contin- 
ued to gain ground. It scored 4J5 
per cent compared with 3.6 per 
cent in the previous poll 

Still too dose to call. Page 19 


By John Burton in Seoul 

South Korea will raise its ceiling 
on foreign stock investments 
from 10 to 12 per cent an Decem- 
ber 1 and increase the limit to 15 
per cent next year, Mr Park Jae- 
yoon, the new finance minister, 
said yesterday. 

It Is the first increase in the 
foreign shareholding ceiling 
since the Seoul bourse was 
opened to foreign investors in 
January 1992. They have pushed 
for a higher limit, as the share- 
holding quota has long been 
filled for the country's most 
attractive stocks. 

The Seoul bourse still remains 
one of the most difficult in Asia 
for foreign investors to enter. 
They control 8.6 per cent of mar- 
ket capitalisation with a total of 
S9.2bn in net investments at the 
end of August. Leading invest- 
ments come from the US with 
$2.8bn, the UK with $2.45bn and 
New Zealand with 6417m. 

At present levels, the two per- 
centage point increase will allow 
an extra inflow of from 

overseas into the market. 

The 8 per cent foreign share- 
holding limit on Pohang Iron 
and Steel (Posco) and Korea Elec- 
tric Power (Kepco), the two larg- 
est state-controlled companies, 
win be raised to 10 per cent next 
year. Posco and Kepco are also 
scheduled to become the first 
Korean companies to be listed on 
the New York Stock Exchange 
later this month. 

Hie finance ministry has 
resisted a rise in the ceiling 
because of worries that the capi- 
tal inflow would increase infla- 
tionary pressures. In addition. 
Korean companies feared that a 
new influx of foreign capital 
would cause an appreciation of 
tiie Korean won, and reduce the 
competitiveness of their exports. 

But the ministry finally bowed 
to growing International pres- 
sure to increase the limit, as the 
government is preparing to join 
the Organisation for Economic 
Co-operation and Development 
in 1996. 

The Korean general share 
index has surged to record highs 
in recent weeks as domestic 
investors bought blue-cbip 
stocks in anticipation that the 
foreign shareholding ceiling 
would be raised and further 
increase stock prices. 


Reed Elsevier expands in US I Russian debt compromise 


Continued from Page 1 

predicted that the deal - 
financed from cash reserves and 
$lbn of dollar borrowings - 
would be earnings enhancing 
“from the outset" and would lift 
North American sales by more 
than 50 per cent 

Growing demand for MDC's 
operations is expected to lift 
turnover to 6612m (5551m) next 
year and analysts expected it to 
contribute profits or about $75m. 

Shares in the group, however, 
fell in London and Amsterdam 


after Standard & Poor’s placed 
Reed Elsevier ratings on its neg- 
ative “Credit Watch” list and 
Moody's put Its long-term debt 
ratings on review for possible 
downgrade. 

Reed International, the UK 
publisher which merged with the 
Dutch group last year, ended 
down lip at 744p, while Elsevier 
shed 59 cents to close at F116.10. 

Some city analysts blamed the 
negative market reaction on con- 
cern at the group's £1.2bn bor- 
rowings - equivalent to gearing 
of 90 per cent. 


Continued from Page 1 

behind it the financial conse- 
quences of the collapse of the for- 
mer Soviet Union”, the debts of 
which it assumed when the 
union broke up. 

The deal was some consolation 
to the Russian government after 
a testing week during which it 
was rebuffed over an attempt to 
increase its IMF borrowing facili- 
ties, and an effort to postpone 
other debt repayments. 

It is likely to have talks with 
IMF officials later this month on 


its request for larger facilities. 
This could be followed by sepa- 
rate talks with the Paris club of 
government creditors over some 
$42bn of debt. 

However, Russia received 
warnings from the Group of 
Seven leading industrialised 
nations last weekend that it 
should control domestic inflation, 
and creditor governments want it 
to reach an IMF deal before re- 
scheduling debt 

Bank creditors include Deut- 
sche Bank, Credit Lyonnais and 
Industrial Bank of Japan. 



FT WEATHER 


Europe today 

Much ol continental Europe will be 
influenced by a strong high pressure area 
over Germany. As a result, the Low 
Countries, Germany, the Alps, France and 
Poland will have sunny periods with patches 
of mist or low cloud. An active low pressure 
area south of Iceland will send a series of 
fronts with showers into the extreme north- 
west of the British Isles. Northern Europe will 
have plenty of doud and outbreaks of rain. 
Western Norway will be especially wet. 
Persistent low pressure will cover southern 
Spain and parts of the Mediterranean. As a 
result, southern Greece, Italy and Spain will 
have thunderstorms, some of which could be 
heavy. 

Five-day forecast 

Strong high pressure over central Europe will 
slowly move into eastern Europe and north- 
west Russia. Central and western Europe win 
remain settled. Northern Europe win haW an 
active low pressure area but calmer 
conditions will arrive over the weekend aid 
the beginning of next week. The 
Mediterranean will remain unstable with 
heavy rain or thunderstorms, especially over 
Spain. 

TODAY'S TEMPERATURES 


1000 


■1010 / 

AlOSO 14 } ^ j 


yL L • 


r '^5/ ■*: '• ' • " 1 

ioao 'HIGH-' "J #13 1^1 '• ’ 

« w - * , tri. 




ffiV.' 10 







{ 22 


/ 10 m:' 




Warm fro n t ** Cold front 


Wind ip mod In KPH 



Maxi mu 11 

Bdfng 

fab- 

22 

Caracas 


Celsius 

Belfast 

cloudy 

14 

Canfiff 

Abu Dhabi 

sun 

35 

Belgrade 

shower 

10 

Casablanca 

Accra 

fair 

30 

Berlin 

fair 

10 

Chicago 

Algiers 

Shower 

25 

Bermuda 

shower 

28 

Cologne 

Amsterdam 

fair 

14 

Bogota 

fair 

19 

Dakar 

Athens 

fair 

27 

Bombay 

rain 

32 

Odfas 

Atlanta 

fair 

27 

Brussels 

fair 

13 

Delhi 

EL Aires 

fair 

20 

Riirtnfwrt 

Shower 

9 

Dubai 

BJiam 

cloudy 

IS 

C-hagen 

shower 

11 

Duran 

Bangkok 

fair 

34 

Cairo 

fair 

31 

Dubrovnik 

Barcelona 

shower 

21 

Cape Town 

sun 

22 

Edinburgh 


Constant improvement of our service. 
That's our commitment. 


Lufthansa 


Sttjatknei 12 GMT. Temp&zoires maximum for day. forecasts by Mena Consul: of trie Netherlands 

Caracas fair 31 Faro shower 25 Madrid shower 23 Rangoon 

Cancfiff cloudy 15 Frankfurt talr 13 Majorca far 23 Reykjavik 

Casablanca fair 22 Geneva sun 15 Malta shower 26 Rio 

Chicago fair 22 Gibraltar showor 20 Manchester cloudy 14 Roma 

Cologne far 12 Glasgow rain 14 Mania fair 32 S. Frsco 

Dakar fair 31 Hambug fair 11 Melbourne rain 15 Seoul 

Ddfas sun 30 Helsinki tar 8 Mexico City fair 19 Singapore 

Delhi talr 35 Hong Kong cloudy 29 Mlaril fair 30 Stockholm 

Dubai sun 35 HanaMu fair 31 Mfan fair ig Straabotro 

Dutan cloudy 15 Istanbul shower 22 Montreal fair 17 Sydney 

Dubrovnik shower 20 Jakarta fair 32 Moscow shower 9 Tangier 

Edinburgh cfoudy 1 J Jersey lair 12 Munich fair 6 Tel Aviv 

Karachi 3in 35 Nairobi fair 28 Tokyo 

Kuwait sun 38 Naples fair 22 Toronto 

L Angeles (air 23 Nassau shower 31 Vancouver 

Las Palmas fair 26 New York sun 22 Venice 

Lima cloudy 21 Nice sun 21 Vienna 

Lisbon ahawor 26 Nicosia sun 35 Warsaw 

London fair 16 Oslo Mr 12 Washingtor 

Luitbourg fair 12 Paris fair 16 Weflngwn 

Lyon sun 16 Path fair 18 Winnipeg 

Madeira shower 24 Prague fair 7 Zurich 


THE LEX COLUMN 


Electronic Elsevier 


Reed Elsevier’s S1.5bn purchase of 
electronic publisher Mead Data Cen- 
tral should have benefits in the short, 
medium and long terms. The immedi- 
ate enhancement to earnings per 
share comes from the tax relief that 
Reed will enjoy in the US on the amor- 
tisation of $l.27bn of goodwill - a 
wheeze Reed also employed when it 
bought Official Airline Guides last 
year. The tax relief reduces the his- 
toric price-earnings multiple from 36 
to 20. If MDC maintains the strong 
growth in profits shown so far this 
year, the 1994 multiple will be only 17. 

The medium-term benefit should 
come from boosting margins. With a 
paper company as a parent, MDC's 
operating margins have been stuck in 
the 12-15 per cent range. Reed argues 
that it should be possible to push mar- 
gins to nearer its 20 per cent norm for 
professional publishing; costs ran be 
cut, higher-value products can be 
developed and MDC’s services can be 
marketed more vigorously, notably 
outside the US. There is, of course, a 
risk that margins could be depressed 
through price competition. The most 
vulnerable part of MDC is Nexis, its 
business information arm, which is 
essentially an electronic warehouse 
for other companies’ information. But 
the Lexis legal information arm - the 
largest and most profitable part of 
MDC - looks better protected as most 
of its data is proprietary. 

The long-term bet is that MDC's 
electronic culture can be transferred 
to the rest of the Reed empire. Plans 
are so for rather woolly. But it seems 
likely that scientists and doctors, who 
currently take Reed’s information in 
hard copy, will eventually want access 
at touch of a button. MDC could prove 
the group’s ticket to the multimedia 
superhighway. 

Bank of Scotland 

After this week's turmoil in the mer- 
chant banking sector. Bank of Scot- 
land's results throw into sharp relief 
the question of what constitutes qual- 
ity earning s from h anking . While the 
merchant hanks were wrestling with 
the collapse of returns from securities 
trading, Rank of Scotland hag been 
making good profits out of old-fash- 
ioned lending. Provisions, which were 
never as high as those of other banks, 
are coming down; interest income is 
rising; and first-half pre-tax return on 
capital is 34 per cent Yet there must 
be doubts about how long the bank 
can keep up its act. 

After all, there will not be another 


Bank of Scotland 

Share price relative to the 
FT-SE-A Banks Index 
140 


130 — A 


120 1 


1909 90 91 92 93 94 

Source: FT Graphite 

special dividend from 31 Margins on 
mortgage lending will be compressed 
by higher base rates and the decline in 
non-performing loans will slow. The 
chances of Bank of Scotland being 
able to compensate for this with 
strong growth in its loan book are 
slim, which is why its focus on raising 
its capital ratio through retained earn- 
ings looks a little perverse. 

A more valid point is that even well- 
managed lending institutions are not 
immune from the cycle, so a degree of 
dividend-smoothing makes sense. 
Bank of Scotland is unlikely to sustain 
its present return - the slippage of 
profits from credit cards is a particu- 
larly ominous sign of increasing com- 
petition. But quality of earnings will 
be enhanced if the bank resists the 
temptation to follow the herd in mak- 
ing loans at foolish prices. Having 
managed prudent balance sheet 
growth in the recession, the bank 
should be applauded if It fails to be 
carried away by the recovery. 

Storehouse 

Retailers' share prices have fallen 
back sharply in the past few weeks, 
primarily in response to higher UK 
interest rates. But the outlook is not 
wholly dismal, especially for those 
companies still with scope for restruct- 
uring. Next and Sears have both 
recently reported strong interim prof- 
its growth. Yesterday Storehouse gave 
a highly positive trading statement 

Storehouse detailed plans for 
increases in selling space at Bhs. 
hinted at large benefits to be extracted 
from the reengineering of the supply 
chain, and signalled a sharp increase 
in capital expenditure. It also said that 


cnir* growth would reach an annual 
rate of 7 per cent for the first half, up 
from 5 per cent in the first quarter. 
Even if the sales growth was to some 
extent triggered by aggressive adver- 
tising. the City was impressed and tho 
shares rose against the market. 

There is much to be impressed 
about Storehouse’s strategy looks cor- , 
reel; its concentration on Bhs and 
Mothercare leaves the group well- 
focused. The earnings recovery is in I 
full swing. Operating margins at Bhs 
seem set to rise from 3.5 per cent in 
1993 to around 10 per cent next year. 
There is also scope for rolling-out the 
revamped Bbs formuta further. The 
danger is that management may tail 
into the retailing trap of over-zealous 
expansion. The shares are rated in line 
with the retail sector, if Marks & Spen- 
cer is excluded. That is high enough 
till it becomes clear whether Store- 
house ran sustain its success. 

US healthcare 

Forget the Clintons. US healthcare 
reform is forging on without them. 
The latest consolidation was yester- 
day's merger between Columbia/HCA 
Healthcare and Health Trust, the coun- 
try's two biggest hospital groups. The 
deal creates a S15bn company with 311 
hospitals and 170,000 employees. That 
makes it the 12th largest employer in 
the US - not bad for a company which 
in 1992 generated sales or just SlJbn 
and controlled only 23 hospitals. 

Columbia's strategy is simple. It 
purchases several hospitals in a spe- 
cific region and improves profitability 
by ratio nalising them. At its most bru- 
tal the group strips a hospital of all 
equipment, knocks it down and then 
sells the real estate. Cost savings are 
also achie ved by using greater pur- 
chasing power - it annually buys 
$15bn of hospital supplies - to drive 
down prices. 

Doubts remain whether Columbia 
can continue to implement its strategy 
successfully. The easiest cost-cutting 
has been completed and tbe biggest 
hospital groups have been snapped up. 
The company argues it can maintain 
momentum by branching into other 
fields such as nursing homes. Even if 
Columbia stumbles, the pressure on 
hospital suppliers is unlikely to let up. 
Other groups such as National Medi- 
cal in California and Epic in Texas are 
replicating its strategy. Given the 
prospects for hospital supply compa- 
nies' pricing and volumes, their 
shares' 17 per cent underperform ance 
since January 1993 is no surprise. 



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★ 



FINANCIAL TIMES 

COMPANIES & MA RKE TS 

©the financial times limited i9M Thursday October 6 1994 




IN BRIEF 


Molson to sell 
beer in China 

Molson, the Canadian brewing, retailing and special 
c h e mi ca ls group, is entering the Chinese beer mar- 
ket with direct exports from its Canadian breweries. 
Molson Breweries, the brewing unit owned 40 per 
cent by Molson, 40 per cent by Poster's of Australia 
and 20 per cent by Miller of the US, will start by 
exporting Molson “Ice" beer. Page 29 

US group set to buy F.G. Wilson 

F.G. Wilson ( En gineering), Europe’s largest manu- 
facturer of diesel generator sets, confirmed it had 
reached a preliminary agreement to be acquired by 
St Louis-based Emerson Electric. The company, one 
of Northern Ireland's biggest private sector employ- 
ers, would not disclose a price for the takeover, but 
it is believed that Emerson will pay between 
$237.00m and S3 16m. Page 31 

Bayer plans global generic drugs chain 

Bayer, the German drugs and chemicals company, 
is planning to set up a chain of businesses around 
the world to sell generic drugs. Bayer is creating a 
joint venture with US generics specialist Sc he in, 
the first large deal with Schein since Bayer paid 
$310m for a 28.3 per cent stake in March. Page 25 

Sleep rise in profits for Quoco 

Guoco Group, the Hong Kong-based financial ser- 
vices and garment company controlled by the 
Malaysian Quek family, yesterday reported a sharp 
rise in net profits, to HK$1 JStia (USS168.4m) from 
HK$5 73.8m for the year to June 30. The group made 
reaped HK$309m from investment and property 
sales, which were taken above the line. Earnin gs 
did not include transfers to inner reserves. Page 27 

Rabobank to buy Australian bank 

Rabobank, the Netherlands-based cooperative 
banking group which specialises in the food and 
agribusiness sector, is to buy the P rimar y Industry 
Bank of Australia [orAflOZm (US$75.5m). PJBA's 
assets at the end of March were A$l.B3bn. Its main 
focus recently has been the provision of rural mort- 
gage loans. Page 27 

Orkla annotmces Improved earnings 

Orkla, the Norwegian group with interests ranging 
from branded consumer goods to chemical process- 
ing, announced an improvement in eight-month 
pre-tax profits and the acquisition of the fine chemi- 
cals activities of EniChem of Italy for an undis- 
closed amount. Page 28 

A vesta Sheffield to expand US presence 

Avesta Sheffield is planning to expand its presence 
in the US market through the SKr200m ($27. 4m) 
purchase of Eastern Stainless Corp from Armco, 
one of the leading US steel groups. The Angio-Swed- 
ish stainless steel producer says the purchase of the 
84 per cent stake comes at a time of rising US 
demand and increasing prices. Page 28 

Demand fuels profits for Hewden Stuart . 

Hewden Stuart, the UK’s biggest independent plant 
hire group, said increased demand and improved 
prices helped it to increase pre-tax profits by 77 per 
cent to $25 .59m in the six months to July 3L Sir 
Matthew Goodwin, chairman, said trading was con- 
tinuing at a high-level and he expected the pre-tax 
profits in the second half would be "substantially 
ahead” of the $15.80m achieved last time. Page 29 


Companies In this Issue 


Airtours 

30 

Andrews Sykes 

31 

Arcadian 

31 

Avesta Sheffield 

22 

Ad an 

31 

BP 

30 

BZW Endowment 

30 

Bank of Scotland 

22. 20 

Bayer 

2S 

Borden 

25 

Bouygues 

24 

British Aerospace 

18 

British Thornton 

31 

Carolco Pictures 

22 

Carr's Milling Inds 

30 

Columbia/HCA Health' 

21 

Commercial Union 

30 

Computer People 

31 

Emerson Electric 

31 

Enwgls 

16 

Eurocopter 

18 

European Fire 

31 

GEC 

18 

General Provisions 

30 

Glencore 

22 

Grampian Holdings 

30 

Greenacre 

31 

Guoco 

27 

HealthTrust 

21 

Henderson Land 

27 

Hungarian Inv Trust 

30 

IBM 

25 

Johnston Press 

31 

Kears 

30 


Late Escapes 

30 

Lend Lease 

25 

Marubeni 

27 

McDonald's 

12 

McDooneU Douglas 

18 

Mead Corporation 

1.21 

Mead Data Central 

21 

Mobil 

2S 

Molson 

25 

Navan Resources 

so 

Nlssho Iwai 

27 

Novo 

31 

Orida 

22 

PI BA 

27 

Parknde Inti 

30 

Prestwick 

30 

Rabobank 

27 

Reed Elsevier 

1,20.21 

Renault 

25 

Saga Petroleum 

25 

Sims Food 

30 

Storehouse 

30. 20 

Sumitomo Corp 

27 

SOdetektra 

22 

Tech nip 

22 

Telefonica 

21 

Teletonfca (Tisa) 

21 

Thyssen Stahl 

25 

Trafficmaster 

31 

Unibank 

25 

Unjpart 

31 

VNG 

31 

Walker Green bank 

30 

Westland 

18 

Wilson (FG) 

31 


Market Statistics 


^Annual reports service 
Benchmark tort bonds 
Bond futures and options 
Bond prices and yields 
Gotwnodffles prices 
Dmdends announced. W 
EMS currency rates 
Eurobond prices 
Ftaad Interest indices 
FT-A World Indices 
FT Gold Mines Index 
FTflSMA inti bond sre 

FT-SE Actuaries indices 


34,35 

Foreign exchange 

40 

28 

Sits prices 

28 

28 

LBfe entity options 

44 

28 

London share service 

34,35 

32 

London tradl options 

44 

28 

Managed funds service 

36-40 

40 

Money markets 

40 

28 

New mtl bond Issues 

28 

CO 

44 

Recent issues. UK 

44 

44 

Short-term hit rates 

AO 

28 

US Interest rates 

28 

33 

Worid Stock Marten 

41 


Chief price changes yesterday 


FRANKFURT (D«l) 


AG M Verk 

4&5 

- 

M 

Add 

730 

- 

45 

GotonUPr 

810 

— 

35 

Leifidt 

670 

- 

30 

Vela 

498.5 

- 

13.3 

Wrla 

380 

- 

22 

HEW YORK (S) 

Fofls 

COErpOar 

1 

52fc 


1* 

Quonbia HCA 

40W 

- 

Wi 

Dow Own ea 

lit 

— 

2 

M Paper 

7SM 

- 

2h 

Motorola 

48 

— 

2 

IWohn 

51** 

- 

m 

PAMSRTri 

Mb 

Accor 

595 

_ 

17 


Now York prices at 1230pm. 
LONDON (Pence) 


Conor W) 

540 

+ 

30 

G east 

202 

+ 

8 

KodttoU 

64 

+ 

B 

MAI 

228 

4- 

7 

Scthradara 

Mb 

1310 

4 

25 

8m* ot Scodand 

196 

- 

10 

BtaHHUn 

245 

- 

20 

BrVsh Human 

51 

- 

W 

OPS 

262 

- 

8 

BnKRpfefl HUgs 

117 

- 

12 

Ratal MaKBon 

66 

- 

8 

IQ 

787 

- 

28 


HC 

831 

- 

20 

Bongialn 

2801 

- 

161 

Danone 

07 

- 

26 

EuraJrmce 

1700 

- 

137 

Legranfl 

TOKYO {Yen} 
Btn 

6800 


250 

Central Fh 

479 

+ 

14 

FuBSpm 

500 

♦ 

18 

ffcnsfmPap 

650 

♦ 

32 

Mental 

FaOs 

7W 

+ 

21 

Tafcaofca 8 

585 

- 

19 

Verabri 

831 

- 

29 


Liajds ChemUi 

292 

- 

10 

Nun8n Paaendc 

177 

- 

s 

fin mo 

23 

- 

3 

noryal Doutun 

Z77 

- 

9 

Sandman final 

163 

- 

B 

Sabc 

504 

- 

20 

Serum tods 

232 

- 

11 

Swertcapevn 

207 

- 

8 

Tata & Lyle 

419 

- 

21 

Telegraph 

310 

- 

13 

UPf an* 

153 

- 

S 

Waste laoprmt 

514 

- 

19 


Columbia/HCA to acquire HealthTrust 


By Richard Waters 
New York 

Columbia/HCA Healthcare, the 
biggest hospital group in the US, 
is to acquire HealthTrust, owner 
of the country's second-largest 
hospital c hain, in an all-stock 
deal valued yesterday at about 
$3bn. It Is the third multi-billion 
dollar hospital takeover by 
Col umb ia in 18 months. It trans- 
forms Columbia from a small 
company with 20 facilities to one 
with $15bn in turnover and 311 


hospitals. 

The transaction represents the 
first big takeover in the US 
healthcare industry since last 
month's failure of the Clinton 
healthcare reform legislation, 
and points to the consolidation of 
the Industry regardl e ss of politi- 
cal considerations. 

Both companies said a need to 
reduce costs and improve ser- 
vices for the managed care organ- 
isations was behind the deal 
“This will give us even a greater 
opportunity to make sure we are 


affordable,” said Mr Richard 
Scott, the former financier and 
Columbia/HCA chief executive 
who masterminded the compa- 
ny’s recent deals. 

HealthTrust's chairman Mr 
Clayton McWhorter, will become 
chairman of Columbia/HCA, 
while Mr Thomas Frist will step 
down as chairman to become a 
vice-chairman. 

Although Columbia/HCA 
would account for more than a 
quarter of the hospitals owned by 
for-profit companies, as opposed 


to not-for-profit organisations, 
after the deal the company 
claimed the takeover would not 
harm hospital competition. For- 
profit companies accounted for 14 
per cent of all hospitals in the 
US. Mr Scott said. 

Adding HealthTrust's 116 hos- 
pitals to the 195 owned by Colum- 
bia/HCA would lead to little over- 
lap, since the smaller company 
operated facilities mainly in rural 
areas, the companies said. Its net- 
work is intended in part as a 
feeder system for Colum- 


bia/HC.Vs network in urban 
areas. The only area where the 
merger was likely to prompt anti- 
trust concerns was in SaltLake 
City. Mr Scott said. 

The two companies said the 
merger would produce annual 
savings of S!25m. Much of this 
would come from combining pur- 
chasing operations, giving total 
purchases of S2.5bn of medical 
equipment and supplies a year 
and adding to their ability to 
negotiate lower prices. Further 
savings would come from elimi- 


nating duplication of functions. 

The deal is unlikely to mark an 
end to Columbia/HCA's expan- 
sion. although there remain few 
healthcare companies as big as 
HealthTrust for it to buy. 

Fears that yesterday's all-stock 
deal would dilute the company's 
earnings per share, wiped 5 per 
cent off Columbia/HCA's share 
price in early trading yesterday, 
pushing it S2'± lower to 540V 
Shares in HealthTrust jumped 
Stfi. to S33?i. 

Lex, Page 20 


Tim Burt explains why Reed Elsevier’s purchase of Mead Data Central marks a move away from print 

North America proves the right 
connection for an on-line future 


R eed Elsevier, the Anglo- 
Dutch information and 
publishing group, will 
today celebrate its listing on the 
New York Stock Exchange by 
announcing that North America 
has become its most important 
market. 

Its arrival on Wall Street has 
coincided neatly with news that 
Reed Elsevier has agreed to pay 
$1.5bn for Mead Data Central - 
the distributor of on-line legal 
and business information - in a 
deal likely to contribute J612m of 
sales and profits of about $75m 
next year. 

The move followed six months 
of talks with Mead Corporation, 
the US paper and forest products 
group which announced plans in 
May to sell MDC, whose on-line 
publishing operations include 
Lexis and Nexis. 

Despite the protracted negotia- 
tions, Reed Elsevier only found 
out at the weekend that it had 
beaten rival bids by Times Mir- 
ror, the US media group, and 


Thomson of Canada when Salo- 
mon Brothers, its US adviser, 
telephoned its executives at the 
Grand Canyon, where they were 
taking a break from meetings 
with US investors. 

“We heard we that were the 
prefered bidder as we watched 
the sun go down," said Mr Nigel 
Stapleton, finance director. "We 
were expecting to be outbid, but 
we obviously made a knock-out 
offer." 

For Mr Pierre Vinken, the 
group's Dutch co-chairman, the 
acquisition marks an important 
step in a strategy first launched 
15 years ago, when Elsevier - 
which merged in 1993 with Reed 
International of the UK - tar- 
geted North America as the 
world’s most lucrative publishing 
market. The group’s sales in 
North America rose 24 per cent 
to £1.04bn ($L64bn) last year - 37 
per cent of the group total - 
while operating profits grew to 
£194m. 

While predicting MDC woulc 


boost those figures next year, Mr 
Vinken admitted the group 
would be unable to make a simi- 
lar sized acquisition in the near 
fiiture. He hinted, however, that 
it was considering smaller deals 
to expand its presence in the 
region. Its attention is focusing 
on parts of 7-iff Communications, 
the world's largest publisher of 
computer magazines. 

“We are researching 2iff as if 
we had not acquired Mead. If 
there are parts of the b usiness to 
go for, we have the capacity to 
buy them", he added. 


The group also outlined plans 
to increase spending on its elec- 
tronic publishing businesses by 
£10m a year to £30m. Mr Vinken 
said the increased investment 
would probably be matched by a 
slowdown in resources devoted 
consumer publishing, its lower 
margin magazine, books and 
newspaper business. Imminent 
disposals are unlikely, but expan- 
sion of regional newspapers and 
mngagiTifts such as Woman's Own 
and TV Times has also been 
ruled out. 

Reed Elsevier's investment] 


Reed 

1993 turnover 
by BognWnt 

Sds«10o& 

marital 

Professional 


Pro forma tnctuda* 
Mead Data Gentral 
£&34bn 





■ '.-i * ' \ H, i 




plans have centred instead on 
three higher margin publishing 
businesses: scientific and medi- 
cal. business and professional. Of 
those, MDC will be integrated 
into the professional sector. 

Its maiden contribution next 
year will signal a shift from the 
group's dependence on hard copy 
publishing to increasing use of 
on-line information. Electronic 
publishing is expected to grow 
from 10 per cent of turnover to 


more than 20 per cent next year, 
and Mr Vinken has ambitions to 
expand it further. He hopes 
MDC's technology can be adapted 
to offer Reed Elsevier's scientific 
journals and enhance its exten- 
sive medical database. "We have 
acquired a massive electronic 
warehouse and the possibilities 
are enormous. Overnight, we 
have turned into a state-of-the-art 
electronic publisher.” 

Lex, Page 20 


Hands-on executives: this one’s for you 


Electronic publishing is in 
turmoil. Yesterday’s deal is just 
one indicator of a wave of 
change sweeping through the 
sector promising new growth 
opportunities. Another is the 
emergence of Apple and Micro- 
soft as potential competitors to 
established players such as Com- 
puServe and America On line. 

The market Is not homoge- 
neous. Companies like Mead, 
Dialog and Dow-Jones News 
retrieval of the US and FT Pro- 
file and Reuters of the UK are 
serving essentially the profes- 
sional market, providing data to 
experienced information manag- 
ers. On the other hand, compa- 


nies like CompuServe, owned by 
H&R Block, America On Line 
and Prodigy, a joint venture 
between IBM and Sears, are 
chiefly, bnt not exclusively, 
aimed at consumers. Information 
is a commodity to be bought and 
sold, however, and the data pro- 
vided through one service may 
have originated on another. 

There is a further distinction 
between companies like Mead 
and Dialog, which operate on a 
“dial-up" basis, and companies 
like Renters or Telekurs where 
information Is transmitted and 
updated continuously. 

All on-line data suppliers have 
their eyes on a new target mar- 


ket: the “executive end-user”. 
They are racing to make it easier 
and cheaper for executives to 
carry out their own searches for 
information. Some, for example, 
are building in “Windows”, the 
graphical interface popularised 
by Microsoft. Prices are being 
pegged to a flat monthly foe. 

In earlier years, on-line ser- 
vices of the kind provided by 
Mead or Dialog were aimed at 
information professionals. Exec- 
utives did not carry out their 
own searches hut requested 
information from librarians 
trained to use complex methods 
of data retrieval. It was expen- 
sive; at up to £120 ($190) an hour 


for some services, too costly to 
allow the inexperienced to roam 
aimlessly through the databases. 

A result was that the market, 
although potentially vast, grew 
much more slowly than antici- 
pated and in the past few years 
has been showing signs of satu- 
ration. Profitability has been a 
problem for some suppliers. 

Now the technologies which 
are making multimedia possible 
are giving on-line database ser- 
vices new life. The secret seems 
to lie in providing on-line ser- 
vices to appeal to executives at 
home and in the office. 

Alan Cane 


Spain clears way for foreign 
stakes in Telefonica unit 


By Tom Bums hi Madrid 

Mr Jose Borrell, Spain's 
Transport and Telecommunica- 
tions minis ter, said yesterday 
there were no obstacles to foreign 
companies taking equity stakes 
in Telefonica's profitable interna- 
tional subsidiary. He also indi- 
cated that the government might 
sell some of its equity to new 
partners. 

However, the subsidiary, Tele- 
fonica Interna clonal /Tisa) would 
rather issue equity in order to 
finan ce its continued expansion 
in Latin America where it is the 
dominant foreign operator. 

Tisa said it was in discussions 
with GTE, the US operator which 
has licences in Latin America, 
and that the two companies were 
conducting due diligence investi- 
gations into their respective busi- 
nesses in the continent 

An agreement with GTE to 


jointly develop the fast growing 
Latin American market could be 
“weeks or months away”, Tisa 
said. “Ideally there should be an 
agreement before the end of the 
year". The negotiations have 
been slowed by the varying forms 
of equity holdings, management 
agreements and consortium 
arrangements that both compa- 
nies have in Latin America. 

“We are looking for the comple- 
mentary nature of the businesses 
and there are a lot of complexi- 
ties to iron out,” Tisa said. 

In the midst of the negotiations 
Tisa is conducting a review of its 
Latin American operations with 
a view to gaining economies of 
scale and to access superhighway 
information technology. It is try- 
ing to shape its different units, 
which include basic telephony, 
cellular, cable TV, data transmis- 
sion and yellow page licences, 
into a more cohesive mould. 


Tisa, which has stakes in 20 
Latin American companies and 
has a market capitalisation of 
between $6bn-$7bn, raised first 
half profits this year by 80 per 
cent to $88. 9m. ft is investing 
about $600m a year in Latin 
America and plans to bid for tele- 
communications privatisations in 
Bolivia and Nicaragua. 

Mr Borrell said “there was no 
problem" over an alliance 
between lisa and a foreign opera- 
tor and said a sale of government 
equity in the company was a pos- 
sibility. The Spanish government 
holds a 23.8 per cent stake in Tisa 
directly, while Telefonica, which 
is 32 per cent owned by the gov- 
ernment, owns the rest of Tisa 
equity. 

Tisa is discussing partnership 
alliances with AT&T, the US 
long-distance operator, but it said 
these were at a more preliminary 
stage. 


Purdey goes out with a bang 


By David Wlghton in London 

James Purdey & Sons, Britain’s 
most famous sporting g imma ker, 
is giving up its independence 
nearly 200 years after Janies Pur- 
dey set up shop In London’s Pic- 
cadilly. The company yesterday 
announced that it was being sold 
for an undisclosed sum to Vert- 
dome, the luxury goods group 
which owns T hmhill and Cartier. 

The deal, which sees Purdey’s 
ultimate ownership transferring 
to a Swiss holding company, mir- 
rors the sale of Purdey’s leading 
rival Holland & Holland to 
Chanel for £11 m <?17m) in 1989. 
Vend&me and Purdey would pro- 
vide no further details of the 
deal, which, because of its size, 
was not the subject of an official 
announcement. 


But the companies stressed 
that Purdey would “continue its 
activities entirely unchanged" 
u nd pr the chairmanship of the 
Hon Richard Beaumont 

Founded in 1818, Purdey has 
always aimed at the top end of 
the market with its best double- 
gun then costing about £55. 
Today the price would be closer 
to £40,000. Even so, there are 100 
customers on an 18-month 
waiting list 

Purdey has had a somewhat 
chequered financial history, suf- 
fering particularly from difficul- 
ties in extracting prompt pay- 
ment from its upper-class 
customers. In the founder's 
day, the firm occasionally waited 
10 years between the sale and 
final payment Based in Mayfair, 
the company now makes guns. 


rifles and cartridges, sells a range 
of shooting accessories and runs 
a shooting school 
Vendfime was formed in 
August last year by combining 
the luxury goods interests of 
Richemont, the Swiss holding 
company based on the South 
African Rupert family’s stake in 
cigarette group Rothmans. 

In addition to Dunhill and Car- 
tier, VendOme owns watch mak- 
ers Piaget and Baume Merrier, 
Montblanc pens and Chios, the 
fashion and perfume house. More 
recently it has bought Karl 
Lagerfeld's women's fashion busi- 
ness and the UK traditional msn- 
swear company Hackett 
Vendftme, which is 70 per cent 
owned, by Richemont, made a 
pre-tax profit of £lS6m in the 
year to March, down 5 per cent 


This announcement appeal* as a maner of record only 

Management Start-up 

TECH-BOARD LTD 

£35,149,000 

Led by: 

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Funds arranged by: 

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Persis Investments Limited G R Heffeman & Associates Limited 
Clients of Rothschild Ventures Ltd Tinicura Incorporated 

Banking provided by: 

N M Rothschild & Sons Limited 
Hemy Ansbacher & Co. Limited 
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Advisers to the management: 

KPMG Corporate Finance 
Steggles Palmer 

Advisers to the institutions: Advisers to the banks: 

Lovell White Durrani Travers Smith Braithwaite 



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FINANCIAL TIMES THURSDAY OCTOBER 6 1M4 


INTERNATIONAL COMPANIES AND FINANCE 


Avesta Sheffield to acquire 
assets of Armco business 


By Christopher Brown- Humes 
in Stockholm 

Avesta Sheffield is planning to 
e?r>and its presence in the US 
market through the purchase 
of the assets of Eastern Stain- 
less from Armco, one of the 
leading US steel groups. 

The Anglo-Swedish stainless 
steel producer said the deal 
came at a time of rising US 
demand and increasing prices. 
It comes just three weeks after 
British Steel increased its 
stake in Avesta Sheffield to 
49.9 per cent from 40 per cent 

Buying Eastern will increase 
A vesta's US stainless plate 


sales to SKr900m ($i20.3m) 
from SKr500m a year, while 
lifting its plate capacity there 
to 60,000 tonnes a year from 
35,000 tonnes. The company 
operates a stainless plate plant 
in New Castle, Indiana, and 
has a welded tube factory in 
Wildwood, Florida. 

Eastern turns over §65m a 
year but has made heavy 
losses for several years. Avesta 
plans to restructure the opera- 
tion to return it to profit by 
1996. It pointed to potential 
synergies with its New Castle 
unit 

The acquisition includes a 
plate plant, a mothballed 


melting shop, and an anneal- 
ing and pickling line. Avesta 
said it had no immediate plans 
to reactivate the melting shop. 
The parties hope to finalise the 
deal by the end of the year. 

North America is Avesta’ s 
third biggest market, after the 
UR and the Nordic region, and 
accounts for 25 per cent of 
group sales. 

Mr Adri De Bidder, strategic 
planning officer, said it would 

be easier to increase volumes 
in the US than in the intensely 
competitive European market. 
“US per -capita consumption of 
stainless is significantly lower 
than in Europe,” be said. 


Orkla rises in first eight months 


By Karen Fossli 
in Oslo 

Orkla, the Norwegian group 
with interests ranging from 
branded consumer goods to 
chemical processing, yesterday 
announced an improvement in 
eight-month pre-tax profits and 
the acquisition of the fine 
chemicals activities of Eni- 
Chem of Italy for an undis- 
closed amount. 

Group pre-tax profits rose to 
NKr977m (S138m) from 
NKr907m, or which NKr274m 
was derived from the invest- 
ment division, against 
NKr2Q2m in the same period 
last year. 

Group sales advanced to 
NKrl3.66bn from NKrll.28bn 


as operating profit increased to 
NKr918m from NKr852m, 
helped mainly by good prog- 
ress in Orkla's chemicals busi- 
ness which lifted operating 
profit 62 per cent to NKr203m. 

Orkla's industrial activities, 
in which chemicals Is grouped, 
1'tfted operating profit to 
NKrS97m from NKr835m. 
Branded consumer goods, part 
of Orkla’s industrial activities, 
saw operating profit little 
changed at NKr657m against 
NKr659m for the eight-month 
period last year. 

Orkla said the acquisition by 
Borregaard - a unit within the 
group - of EniChem's diphenol 
activities, comprised the pro- 
duction and processing of fine 
chemicals for the pharmaceuti- 


cals and food industries and 
the production of agricultural 
and photographic chemicals. 
The deal is expected to be com- 
pleted in November. 

It includes technology and 
two production plants in Italy, 
a 55 per cent interest in a plant 
under construction in China 
and the repurchase of Eni- 
Chem's 50 per cent stake in the 
joint venture company Euro- 
Vanillin in Norway. 

The new fine chemicals 
activities are to be grouped 
into a new business area to be 
called Borregaard Synthesis. 

Orkla said following the 
acquisition. Borregaard would 
have 2,000 employees and 
annual sales in 1995 of about 
NKr3-5bn. 


Technip outlines planned flotation 


By John Ridding 
in Paris 

Technip. the French engin- 
eering group, yesterday 
announced details of its forth- 
coming Dotation which values 
the company at between 
FFr3.3bn and FFr4.4bn (S7l0m- 
S830m). 

The company, which is con- 
trolled by a group of energy 
and oil groups, including Elf 
Aquitaine. Total. Gaz de 
France and the state petroleum 
institute, said the flotation 
would involve a public offer of 
about 40 per cent of its shares. 
The price per share, to be set 


on October 20, will be between 
FFr235 and FFr265. 

The principal investors will 
all reduce their stakes but will 
still hold about 48 per cent of 
the shares in Technip and wfll 
be bound by a six-year share- 
holders agreement. 

Mr Pierre Vaillaud, Technip 
chairman, said the flotation 
would facilitate the interna- 
tional expansion of the group, 
which specialises in engineer- 
ing in the energy sector. For 
the principal Investors, it pro- 
vides a valuable source of 
funds. Elf Aquitaine, the oil 
group which is seeking to 
reduce its indebtedness, is 


expected to recoup about 
FFrlbn from the operation. 

Technip said the pre-place- 
ment period for the offer, 
which began yesterday, would 
continue until October 19. The 
public offer for shares is due to 
last between October 21 and 
October 26. 

The company anno unced a 
steady improvement in results 
for the first half of the year, 
increasing net profits to 
FFrl79.2m from FFrl54.7m on 
sales of FFr-LSbn. Mr Vaillaud 
predicted an increase in net 
profits for the full year of 
between 7 per cent and 8 per 
cent. 


Carolco 
Pictures 
on brink of 
collapse 

By Patrick Harverson 

in New York 

Carolco Pictures, the 
independent Hollywood film 
studio which has teetered on 
the brink of financial collapse 
for several years in spite of 
producing box-office hits such 
as Cliffhanger and Terminator 
S. warned yesterday that its 
immediate survival was in 
doubt because of severe liquid- 
ity problems. 

The debt-laden stodio, which 
agreed earlier this year to 
merge with Live Entertain- 
ment, the video and music 
retailer. In an effort to stave 
off insolvency, said it had been 
forced to nse its current cash 
balances to fund the continued 
production of two films - 
Showgirls and Cut-Throat 
Island. Carolco said problems 
In casting and production for 
the two films would delay the 
availability of production 
loans needed to complete the 
films unto later in the fourth 
quarter. 

In an attempt to solve the 
short-term financial crisis and 
continue with the production 
of at least one of the films, 
Carolco said it was negotiating 
to transfer its rights to 
Showgirls to Metro-Goldwyn- 
Mayer, another troubled Holly- 
wood studio. MGM last year 
was part of a group of inves- 
tors which pumped 8112.5m 
into Carolco to keep it afloat 

Carolco said it bad negoti- 
ated an agreement with RCS 
Video Services International, ! 
an Italian company which is 
due to buy Carolco debt in 
December. This would allow 
the Hollywood studio to bor- 
row against the anticipated 
proceeds of the sale of that 
debt and secured prepayments 
of various funds from Pioneer 
of Japan and Le Studio Canal 
of France related to the licen- 
sing and sale of Carolco films. 

The studio said the proceeds 
from these agreements should 
total about 920 m, which would 
allow it to continue with the 
production of Cut-Throat 
Island. However, if the agree- 
ments - which are subject to 
the approval of the various 
companies’ boards - break 
down, Carolco said it may not 
be able to continue operating. 


Investors warm to Siidelektra 

The group is one of the top-performing Swiss stocks, writes Ian Rodger 


I t took Swiss investors a 
while to get to like SQd- 
elektra, the industrial hold- 
ing company controlled by 
Glencore International, for- 
merly Marc Rich & Co. 

But in the past nine months, 
they have made the company 
one of Switzerland’s best per- 
forming stocks. Sfidelektra 
shares, which were split two- 
for-one on Monday, have 
soared to SFr895 from SFr370 
at the end of last year. 

The main attraction, apart 
from a sharp improvement in 
recent earnings, is the poten- 
tial for synergy between Glen- 
core and SQdelektra. 

Glencore is primarily a com- 
modity trader, but since 1935 it 
has invested more in the pro- 
duction of the raw materials 
and commodities it sells. Now 
it has decided that any further 
industrial assets it takes on 
will be put into Sfidelektra. 

Mr Willy Strothotte, chair- 
man of both companies, says 
the ownership of commodity 
production can be an advan- 
tage to a trader. “It elevates 
you to a different level of 
co-operation with your trade 
partners,” he says. 

He cites the example of stain- 
less steelmakers, who need a 
reliable supply of ferrochrome. 


They are more likely to estab- 
lish a long-term contractual 
relationship with a trader that 
has some captive capacity, he 
argues. 

For Sfidelektra. which has 
just taken ova- a South Afri- 
can chrome mine and ferro- 
chrome smelter from Glencore, 
being associated with one of 
the world’s best commodity 
marketers should yield consid- 
erable benefits. 

For one thing , it enables the 
mine and plant managers to 
concentrate solely on produc- 
tion. Glencore traders assure 
the supply of raw materials 
they need and the sales of the 
output. And, since Glencore 
looks for long-term sales con- 
tracts. Sfidelektra should be a 
less volatile performer than 
other producers. “We try for a 
steady return rather than to 
pick the top of the cycle,” Mr 
Strothotte says. 

Finally. Glencore 's world- 
wide market presence and 
industrial intelligence helps 
SQdelektra to spot potential 
acquisitions. 

All this is a long way from 
Sfidelektra ’s beginnings in 1926 
when it was set up by Swiss 
investors to finance infrastruc- 
ture projects in South America. 

After the second world war. 


electric power projects in Peru 
and Argentina in which it was 
involved were nationalised, 
converting the company 
perforce into an investment 
fluid. 

Marc Rich bought a 53 per 
cent stake from Union Bank of 
Switzerland in 1990. saying it 
would turn Sfidelektra into an 
industrial holding company. 
Investors were either unim- 
pressed or took little notice, 
because the shares scarcely 
reacted. Nor did they move 
after the company announced 
its first large industrial invest- 
ment - a 35 per cent stake in 
the Santa Cruz petroleum and 
natural gas project in Argen- 
tina for 527m in December 
1991. 


A year later, Marc Rich 
revealed that the prop- 
erty was producing 
5.000 barrels of oil and 30m 
cubic feet of gas a day from 50 
wells. SQdelektra had recov- 
ered over a fifth of its invest- 
ment, he said, and potential 
reserves were much larger 
than initially anticipated. 

Still the shares remained in 
the doldrums. In fairness, net 
income in the y ear to 30 April 
1993 at SFrl7.4m <$13.5m) was 
not much higher than the 


SFrl4.3m recorded two years 
earlier. The balance sheet had 

doubled to SFrl87.9m. but 

much of that was due to the 
publication of consolidated fig- 
ures and the realisation or cap- 
ital gains, as well as the Santa 
Cruz cash flow. 

Then in November last year, 
the group forecast it would 
report a marked increase in 
profits in the year to April 
1994. By the time it revealed in 
early June that its 1993-94 net 
income was over SFrSSm, a 65 
per cent advance, the shares 
were trading at SFrl.320. 

It launched a two-for-one 
rights issue at SFYi.000 to raise 
SFrl50m to finance the pur- 
chase of two industrial proper- 
ties developed by Glencore. 
One. Chromecorp Technology, 
operates a South African 
chrome smelter and the other, 
Forestal del Sur in Chile, pro- 
duces wood chips. 

Mr Strothotte says Sfidelek- 
tra will only invest in produc- 
ing commodities that Glencore 
trades, and that the scale of its 
production will be well within 
Glencore’s trading volumes. 

He points out that Sfidelek- 
tra is debt-free, has SlOOrn in 
liquid funds in its war chest 
and further authorised capital 
of SFrlTOm. 


Bank of Scotland improves 81% midway 


By John Gapper, 

Banking Editor 

Bank of Scotland yesterday 
said it intended to continue 
building up capital in order to 
back future lending growth as 
it disclosed an 81 per cent rise 
in interim pre-tax profits to 
£1 17.6m ($1 85.5m) from 

£213-2m- 

The bank achieved a 6 per 
cent ratio of core capital to 
risk-weighted assets - an 
international benchmark, 
although the 1938 Basle Accord 
minimum is 4 per cent - by 
doubling earnings per share to 
10.9p Cram 5.4p. 

However, on the London 
Stock Exchange its shares fell 
by lOp to close at 196p on 
disappointment with a 13.9 per 
cent rise In the interim 
dividend to 2.l3p from 
L87p. 

Mr Bruce Pattullo, the 
bank's governor, said it needed 


to retain earning s to be able to 
grow. 

There was “clearly room to 
think" about the full-year 
dividend given the level of 
cover, five times earnings for 
the half year, but “the market 
knows that we need retentions 
to finance growth, and we are 
not going to do anything 
daft”. 

Unlike the big four English 
clearing banks. Bank of 
Scotland managed to increase 
lending by 4 per cent from the 
year-end to £23.6btL 

Most of the rise came in 
England, where the bank has 
increased its market share. 

Net interest income rose by 
13 per cent to £424.7m from 
£376. 4m, including a £l0.9m 
dividend from the flotation of 
the venture capital group 31 
The net interest margin 
widened to 2.71 per cent from 
2J>8 per cent. 

Although margins on loans 


to large companies fell because 
of the re-emergence of 
competition among banks, the 
squeeze was offset by improved 
margins on wholesale deposits, 
and maintenance of mortgage 
margins. 

The ratio of costs to income 
fell to 47.9 per cent from 48.9 
per cent in spite of a 9 per cent 
rise in costs to £295.6m from 
£27lm. 

This included a £12.6m 
provision for payments to staff 
under a profit-sharing scheme. 
Specific bad-debt provisions 
fell to £109 J3m from £157.9m. 
and there was a further 
general provision of £8.8m, 
compared with £16.5m. The 
bank said economic recovery 
should benefit provisions in 
the second half. 

Non-interest income rose by 
S per cent to £198. 3m, including 
a £11. 9m rise to £31.9m in 
branch-based commissions in 
the clear ing h ank. Mr PattllHo 


said growing competition 
would limit the scope for 
further rises. 

Continuing difficulties at 
Forthright Finance, its finance 
house, led to a fall in pre-tax 
profits at its Bank of Wales 
subsidiary to £0.3m from 
£0.4m. but the NWS Bank 
finance house increased profits 
to 48.3m from 37.6m. 

Bank of Scotland is still 
considering trying to acquire a 
building society, which could 
provide cheaper retail funding. 
But Mr Pattullo said it had no 
need to find an outlet Tor 
excess capital, as did some 
banks. 

Annualised pre-tax return on 
equity rose to 34.4 per cent 
from 19.2 per cent, and 
annualised return on assets 
rose to 1.4 per cent from 0.8 per 
cent. 

The tier 1 capital ratio rose 
to 6 per cent from 5.8 per cent. 
Lex, Page 20 


September 1994 


Thla notice appears as a matter of record only, ft does not constitute an o8er 
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itmmpvnaed in for rlfpnbln id Kona uni 1 Inwrd Iwtuhn i 

HANSOL PAPER CO., LTD 

UAS37.500/W0 Routing Ro»9 Note doe 1997 

widl Wanwfe » HibtfibA Mr N o rtrie ti ftfl Stow of Ilia Hanoi Popar Go, iM 

Wb, Homo) Paper Co., Ltd., Seoul, Korea [the "Company'), ora hereby pleated 
to notify the holders of the Company's Warrants mot me Company mode an 
adjustment to the subscription prico of Hanoi Paper's warrants issued an May 
26. 1994 from KRW 36,«00 to KRW 33/51 1 according to Ctase 3 of the 
Imtrunwil to be dated 26 May, 1994. The terms and conditions of the Han sol 
Paper’s rights offering and bonus issue which were resahed at the Board of 
Directors’ Meeting of the Company held on July 20, 1 994. were finally fixed as 
(blows: 


Re: Rights Offering 

1. Type of Shares 

2. Number of New Shares 

3. Issue Price 

4. Record Date 

5. Subscription Period 

6. Payment Date 
Re: Bonus Issues 

1. Type of Shares 

2. Number of New Shares 


Shares of common slodc in the registered 
Form 

1 ,800,000 shares 

Korerei Won 25.400 

September 3, 199 4 

October 4, 1994 October 5, 1994 

Oeobw 12, 1994 

Shares of common stock ond non -voting 
preferred stock in registered form 
433,956 shares of common stock and 
38,204 shores of non-voting preferred 
stock 

KRW 5,000 per shore 
September 3, 1 994 
From SeptenJser 3. 1 994 
October 4. 1994 


3. Issue Price : KRW 5,000 per shore 

4. Record Date : September 3, 1 994 

5. Dividend Accrued : From September 3. 1 994 

6 Listing Date : October 4. 1 994 

The Company’s Warrant- Holder should contact the Principal Paying Agent at 
Citibank NA London for further information 


October 6 1994 


MEDIOBANCA 

B t K l’ A LSI L'RI.UI rn f I M.t N/l.t XIU S r v 
KFAD OFFIl'F. VIA FILORR SMMATICI In MIL4N ITAl.'i 
PAID- I/P SHAKE CAPITAL LIT 47b BJlll''.Y Rt-SLKV L'S LIT .« I.<l * BILLION 

Notice of Extraordinary and Ordinary General Meeting 

Notice is hereby given that an Extraordinary ,ind V. Ordinary fiene- 
ral Meeting of Mediobanca will be held at the Cunipjiiv'* Head 
Office in Via Filndrammacici to. Milan. Italy, at to.oo j.iii. on 
28 th October 11194 in the first instance. and any adjournment the- 
reto at the uiuc time ami place on ayth October 11x14. to tr.irit.icc 
the fi'lkiwini; business: 

£\lri>>rdiiur\ Uu-.uii.-is 

ii /V.-jv-jl (m.shlyiiig i/i r F.tfr.iiinAi#.uy Clriut.ll MiYinif t, *iliiti.ni iiihjuur ioJj ■ h- 
iimiiv itir RuiPV 'liji r ijpitjl with rii'ftl. r.i Is mint. I uiul.i the libit |vu;r.i|'li 
.Inuh -V/i •'/ rf"" li.ih.m Civil l7i sir. /.'.I 

j; /r.-ni Ij: ft MtiiM hi I it frt hlh.il I 1 )- i- nun; >.v H 1 U 1 .H Iirr -luri • mih 
warrant, |llir “ II Jiiilnri'l; 

hi /hwt hi. .ifli llirtti hi up it- hi ejfo hillt.n hf i-.runf up re 1.1 iiuIIi.hi tittlh.t inn- 
•liiit.v V rrvrivJh" Iwljni el the 1 1 jmiiir- ,,/vn r*iT.i,uif /hr It jm.ii.i-. 

■uni h' Jinnnf Ailit/t 4 el ill, Haul.'- trti.fr. .-/ i.iIi.iii i,i tuh elfttl 
-■i /Vi*j-.«ii|s ti< iji r the nunhri Pttr.wr. h- ;i J 11 J le annul Ir/nlr 1 1 el tit, flaiif- 
HrJnfri ■;! Isvimimii hi onlr r/lrrt. 

L'nim.irs tfii'iiii" 

11 Tin- t.,.niHI-_h*> ihr yr.11 ntJrd teth Jnur 1M4. the Dirnl.-n' fold Sldi.u.v ( I »,f 

Pefs-n. .ihJ ten ‘lutuvi, thriteu 

.•I Fir. turn et Pm. ten. . 1 /.• j- iM'ivuiv It.mi the prafsi^d 1.1 . 011,1 ul 1 <(../. u ,H liar 
Ranh .1ni.li . .if 1 ivii.mi.hi. 

,1) F.huitu el the Suiuteif Audit . m and Jeiiiinuijlwu .«/' ilr.-ir .niiiii.il i.-mi.Hi rjfiiii-. 
Uniicr Artis h X of' MoIioKiiisj’s Ameh-. ul' Awsisuin.ii. diardioIJiT* sslm luss- -1' 
Is-au rise Jas-v prior iu aXili October urn Irafyvd that -liars' .it ills- I'miipjiis . 1 1i-j>l 
Oilier or at ans 11 ran eh Office of llaiuv Oimuieixiali Italian.!. Ilaiis i sli ftnnlJ. 
Credit I. Iralutiu nr at Monts- T ir.ili S p A. |in iIk- rax slurs' in.in.igsd b\ 11) -lull 
be entitled isi atteiisl the iinvnng sin piwuuiKai .if an 4slnn- -i"ii nshei 

|i fi ihe It uni i-f I nrs-n.irs 
ills Mjiugme I 'ires 1 nr 


Minister justifies the selection of Bouygues 


By John Ridding 
fn Paris 

A consortium ted by Bouygues 
was selected as the winning 
candidate for France's third 
mobile telephones network 
because the construction group 
had been most persistent in 
seeking to enter the market, 
Mr G€rard Longue t, minister 
for industry, post and telecom- 
munications, said yesterday. 

Mr Longuet said Alcatel Als- 
thom, the closest rival in the 
contest, was disadvantaged by 
it being an important supplier 


to France Telecom, which oper- 
ates one of the existing mobile 
telecommunications networks. 
“Being already the biggest sup- 
plier it could not become the 
biggest competitor,'' he said. 

His comments were part of 
an attempt to justify the pro- 
cess on which the derision was 
reached. Unlike in some other 
countries, the licence award 
was not based on cash offers 
but on the presentation of busi- 
ness plans, including technical, 
commercial and investment 
proposals. 

Mr Longuet said the report 


by the managing director of 
the post and telecoms author- 
ity, which evaluated the bids 
from Bouygues, Alcatel and 
Lyonnaise des Rnnr, the utili- 
ties group which was the third 
contender, would be published 
soon. 

The selection process was 
sensitive because of the media 
and political influence of the 
three competitors. 

Some observers claimed that 
Bouygues’ position as control- 
ling shareholder in TF1, the 
national television network, 
had given it an advantage with 


presidential elections due by 
mid-1995. “It is a far from negli- 
gible asset in a pre-election 
period,*' said Liberation, the 
daily newspaper. 

The rival groups, however, 
also wield influence. Alcatel 
owns two of France's leading 
weekly news magazines, Le 
Point and L’Express. while Mr 
Jerome Monod, chairman of 
Lyonnaise des Eaux. is a for- 
mer aide to Mr Jacques Chirac, 
leader of the Gaullist RPR 
party, a nd a rival of Mr 
Edouard Balladur. the prime 
minister, for the conservative 


candidac y in the presidential 
elections. . 

The sensitivity of the deci- 
sion prompted delays in 
anno uncing the winner and a 
demand for more information 
by Mr Balladur. Bouygues yes- 
terday denied it had made any 
changes to its proposals. 

Alcatel said yesterday it 
respected the decision and 
planned to use its resources for 
similar developments outside 
of France. Lyonnaise des Eaux 
said it would also continue 
with its development in the 
telecommunications sector. 



Gerard Longuet closest rival 
for licence was disadvantaged 


Sleeping French market receives a wake-up call 

The government is hoping that a third force will trigger stronger competition, writes John Ridding 


B ouygues, the French 
construction group best 
known for public works 
and motorways, is taking a 
gamble on mobile telephones. 
The French government, in 
turn, is taking a gamble on 
Bouygues. 

After two unsuccessful 
attempts to enter the French 
market, the company was on 
Tuesday declared the victor in 
a fierce contest for the third 
mobile telecoms licence. 

The strength of the competi- 
tion - which pitted Bouygues 
against two other French 
industrial giants, Alcatel AIs- 
thom and Lyonnaise des Eaux 
- reflected the importance of 
the stakes. All three rivals saw 
the potential for a new lucra- 
tive market, while Bouygues 
regarded the licence as a cen- 
tral plank in its strategy of 
diversifying away from cyclical 
construction and property mar - 
kets into media and telecom- 
munications. 

At the Ministry of Industry, 
Post and Telecommunications, 
the stakes are equally high. 
The new licence is regarded as 
a vital stimulus for France's 
lagging mobile telephones ser- 
vices and a means of narrow- 
ing the gap with its European 
neighbours. “It is a wake-up 
call for the sector.'* says one 
telecoms analyst in Paris. 

For the objectives of Bouy- 
gues and the government to be 
satisfied, they must catchup. 

At the end of last month, 
France counted 730,000 sub- 
scribers to mobile phone net- 
works. less than half of the 
number in Italy and less than 
one-third of the 2.7m in the 


Forecast development of French mobile phone market 


Number of connections (mil Uon) 


== Crtadln 1 . 




• Ultracom 

Lyonnaise des Eaux led group 


6 



1994 95 96 97 96 99 2000 01 02 03 04 05 06 07 06 09 

Soiree: Government report on thud moble Sconce "DiffBenee reflects assumpbore on connections and svaSAtty of frequencto 


UK But the French market 
has been showing a rapid 
growth rate. 

France Telecom which, along 
with G&teralfi des Eaux. oper- 
ates the existing mobile net- 
works. says it is winning 
between 1,500 and 1.800 sub- 
scribers a day, partly because 
of a cut in tariffs in June. The 
monthly subscription rate, for 
example, was reduced sharply, 
from FFr250 to FFr190. 

In spite of this growth the 
penetration of mobile services 
remains well below the Euro- 
pean average and is particu- 
larly low among the general 
public. “So far it has been the 
business community which 
have accounted for virtually 
all of the demand,” says a min- 
istry official 


Part of the explanation lies 
in the lack of competition. Mr 
Didier Pouillot, an analyst at 
Idate, the communications 
research institute, said the 
French market had, until 
recently, resembled a duopoly. 

Another analyst adds: 
“There was little competition 
on prices, and SFR [the tele- 
coms subsidiary of G6n6rale 
des Eaux] has been slow to 
develop its infrastructure." 

By introducing a third force, 
the government hopes to trig- 
ger stronger competition. 
Moreover, by selecting the DCS 
1800 standard for the network, 
officials believe the new opera- 
tor will be well positioned to 
lure the wider market. DCS 
1800 is a digital standard which 
is a variant of the GSM system 


SUBSCRIBERS (August 1994) 

Analog Digital 


France 

Germany 

UK 

Italy 

mu pen neneatj 


438,000 

749,247 

2,527.687 

1.751.913 


used by the existing French 
operators and by most interna- 
tional groups. 

I ndustry observers and 
French officials claim 
DCS 1800 is well suited to 
consumers and urban areas 
because the terminals are ligh- 
ter than other systems and it 
can operate from a network of 
small odhihr stations. 

Like other standards, how- 
ever. the new network does not 
come cheap. According to its 
offer submission, Bouygues 
plans to invest about FFrll.7bn 
f£L2bn) over the next 10 years, 
although the burden will be 
shared with its consortium 
partners. These comprise Cable 
& Wireless of the UK US West. 
JC Decaux, the French prop- 


erty group, Banque Nationale 
de Paris and Paribas. 

Most observers believe the 
high development costs should 
be more than matched by the 
potential returns. “Naturally 
tire start-up costs will be high, 
and competition is likely to 
have become more intense by 
the time services are launched 
in 1996 or 1997 ” says one tele- 
coms industry analyst. “But 
this is a strong growth 
market’' 

Just how strong is hard to 
predict In its bid, Bouygues 
forecasts the number of mobile 
subscribers in France will rise 
to 1.5m at the end of next year 
and to 6.6m in the year 2000. 
By then it expects to hold 1S.6 
per cent of the market and 
receive annual revenues of 
FFr4.72bn. 

Mr Philippe Montagner. 
chairman of Bouygues Tele- 
com. said yesterday the project 
should break even at an oper- 
ating level in about three 
years. The group’s capital will 
be reinforced by a FFrlbn 
rights issue, which was 
announced yesterday. 

The projections are sup- 
ported by several consider- 
ations. In particular, the 
licence grants exclusive rights 
for the standard to the five big- 
gest cities lor the next four 


286.930 724.930 

1.452.452' 2 .201.699 $ 

193.000' 2,720.687 

30.000 1,781,913 

UM UMfMr 


years and a 15-year national 
mandate. “I can't see that it 
will be too hard to make a rea- 
sonable return," says one ana- 
lyst, as investors pushed Bouy- 
gues shares up by FFrt to 
FFr587. 

For Bouygues. the longer- 
term returns should help offset 
the cyclical nature of its tradi- 
tional construction activities. 
Last year, losses in its property 
activities prompted a foil in net 
profits, to FFr469m from 
FFr685m - justifying, says the 
group, its search for more star 
ble, higher margin businesses. 

The move into mobile tele- 
communications is not the first 
step. The company has a con- 
trolling 34 per cent stake in 
TFl. the national television 
network, finances films and 
operates a radio messaging net- 
work. But the award of the 
licence marks a watershed. 
“Bouygues is now firmly in the 
ranks of a diversified conglom- 
erate, for better or for worse," 
says one construction industry 
analyst 

Most believe it is for the bet- 
ter. Although the cost of the 
project is expected to depress 
earnings growth from 1995, 
Bouygues should benefit from 
the non-cyclicai nature of the 
business and its relatively high 
margins. 


This advertisement has been approved by Internationale Nederlanden (UK.) Capital Limited, 

a member of SFA. 



ING Jit) BANK 


is pleased to announce 
the opening of 


ING (U.K.) CAPITAL LIMITED 

An SFA Registered Company 

Specialising in 

Emerging Markets Brokerage 
and 

Corporate Finance Advisory Services 


ING^BANK 


ING J^) CAPITAL 


London. October 4. 1994 


For more information, please contact Peter Geraghn at 071-865-6835. 


S.p.A. 


In conformance with Article 6 of Consob 
Regulation approved with the resolution 
no. 8 195 of 30 June 1994, notice is hereby given 
that the semi-annual report of the Company as of 
30 June 1994, containing the consolidated data 
of the Group, has been deposited with the head- 
quarters of the Company and the headquarters of 
the Consiglio di Borsa (Council of the Bourse) 
and is available for review upon request. 

ISTITUTO MOBELIARE ITALIANO 

Registered Office: Viale dell’ Arte, 25 Rome. Italy 
Paid-in Capital LT 3.000 billion 
Enrolled at the Tribunal of Rome no. 10945/91 
Admitted to the Official List of Banks 
and List of Banking Groups 


CONTRACTS & 




Invitation to Tender 

Essct based Engineering Design 
Company seeks Companies 10 
quote for Hie assembly of a >tae 
goods' product, including tbe 
manufacture of machined and 
fabricated components. 

Initial order will be placed by 
3 lot Odobet 1V94 for 100 units. 
Please fax company profile and 
contact names to David Engerran 
by 12 noon Monday. 10th October 
1994. 

Alpha Thames 
Engineering Ltd 
Fax; 01708 251273 


LEGAL HOTICE 






Alt Advortfaoivwd booktogn ore 
accepted bUjJocS to our current Terms 
and GandBtona, coptea Of whMb are 
ovaflabteby writing to: 
ThoAdvenfsemont PraducOon 
Director 

TTw Rnandol TUnos, 

Ona Southwark Bridge. 

London SET 
Tcf:*44 71 B73 3ZZ3 

Fac+44 71 ff73 306a 


Notice to Alt Balders of 

BanestolsaBflcssLU. 

ECU 80, 000,600 
9.5% Mandatory 
GanwrtfMeDebentnrBs 
Doe 1996 

(The “Defcaatnres”) 


i I'/.K 


The Trustee ha received a nonce 
from Banco Espanol De Credito. S.A. 
('Banesto”). the parent company of 
Baneslo Issuances Ltd. (die ’TsouerT 
pertaining to certain rights made avail- 
able to certain hoUawradinydm 
(the "Shares’) xA Banesfo. As record 
owner of the Shares which are held for 
your benefioaUnwsvst pursuant to an 
Indenture Dated June 1941 (the*ln- 
•frnhrre”) among the Issuer, Banes to 
and The Bank of New York, os Trustee 
(the Trustee"), theTrmtee will require 
your instructions with respect to the 
rights so made available. 

Banesto's notice oonta ins an c4ier to 
pertinent Shareholder; to purchase one 
new share of Banesio for every two 
Shares held as of September 30. 19H at 
400 pesetas per new share. The offer 
commence OcwberT, 1W4 and evplres 
on October IS. M. 

E*h ECU iXW) Debenture repre- 
sents a beneficial interest in approxi- 

nunety 23.93 Shares held In yuur favor 1 
and would entitle ywi to purchase ap- 1 
pnnjmaMy 14 niW shares. A copy of 
the notice is a vail able at thebefow-men- 
fiofusJ offices of the Trustee in New 
York and London. 

1( you wish In eserdse yo u r nghaio 
purchase new shares you may do so by 
wnltfti request in the form avalbUtat 
Ihe offices of the Trustee at 101 today 
SreeOIstRoor West New Yotk. New 
Yuri HB&iarib London Branch at 4h 

frrvdey Street, London, W(X 6 AA and 

FMymenl ol required funds to the Trust- 
ee no bter than October 10, 1994. You 
may also contact the Trustee by tek- 
phuneorteleopyas folluwy New^ York 


7284. iriccirpy 44-7I-&-TOS. 

Tbe Bank of few Yak J 

a Trustee 

Dated. CViL'h.rh, 19S4 7 


GENCOR LIMITED 

flncorponBd in itt Republic of Saab Africa) 
ntegUntto) ■HHbcrOlfllJJMU) 

Formerly General Mlniag IMon Corporator! lamed 
1 -Cckw'- or ”&c company") 

NOTICE TO HOLDERS 
OF SHARE WARRANTS TO BEARER 

Notice is hereby given that a general meeting of shareholders of the 
company will be held in die boardroom, ground floor. Union Corporation 
Building. 74-78 Marshall Sum. Johannesburg on 21 October 1994 a I (NX) 
or immediately after the conclusion of the company's annual general 
meeting (whichever is the later) for die purpose of considering and, if 
deemed fir. passing, with or without modification, the following ordinary 
resolutions: 

ORDINARY RESOLUTION NUMBER I 

"Resolved drat The Gencar Share Incentive Scheme tabled at the meeting 
and signed bythe chairman for the purposes of identification be and is 
hereby approved for adoption by the company". 

ORDINARY RESOLUTION NUMBER 2 

"Resolved that, subject to the passing of ordinary resolution number I to be 
proposed at the meeting convened to consider this resolution, any director 
of die company be and is hereby authorised to sign all such documents and 
do all such things as may be necessary for and incidental to the 
implementation of the said ordinary resolution number 1". 

ORDINARY RESOLUTION NUMBER 3 

"Resolved that, subject to the passing of ordinary resolution number 2 to be 
proposed a the meeting convened 10 consider this resolution, a total of 
43 803 427 unissued ordinary shares of four cents each in the capital of the 
company (being 48 164 400 shares which are available for the purpose of 
the Gencor Share Incentive Scheme less 4 360 973 shares which have been 
issued in terms of the Gencor Limited Share Purchase Scheme) be and are 
hereby placed under the control of the directors of the company who arc 
specifically authorised in terms of section 221(2) of the Companies Act 
1973, as amended, to sell or gram options to acquire, or options to enter inn 
agreements to acquire, all or part of such shares 10 die Gencor Share 
Incentive Trust and/or its nominee/s or eligible applicants in accordance 
with the terms and conditions of the Gencor Share Incentive Scheme, and 
to allot and issue all or any of such shares pursuant thereto". 

A member entitled to attend and vole at the general meeting many appoint 
one or more praties (who need not be members of the company) to anrwL 
speak and vote in place of that member ai the general meeting. For such 
(»rpase&, a form of proxy is attached to the circular. 

Attention is drawn to the fact that, in order for it 10 be effective, a completed 
° f po*y mn»t reach be transfer secretaries of the company in Sou* 
Africa or in the United Kingdom (at the respective addresses set out In the 
circular to which this notice is attached and of which it Conns part) at least 
48 hours (Saturdays. Sundays and public holidays excluded) before Ihe time 
appointed for the holding of Ihe general meeting, being before 09:30 on 
Wednesday, 19 October 1994, 

The holder of share warrant to bearer, who wishes to or be 

repre sented ai the meeting, may obtain information regarding the 
formalities to be complied with on application to Gencor (U.K.) Limited. 

Copies of a Circular 10 Shareholders incorporating a notice of general 
meeting are available from:- 

- Gencor (UK) Limited. 30 By Place, London EC1N 6UA 

- Swiss Bank Corporation, 1 Aeschen vorstndt, 4002 Basle 

- Credit Suisse, Paradeplatz 8, iPostfsdi 590) 8021 Zorich 

‘ ^ * wit2criaml > Balmhofstrasse 45. PO Box 645 

Ld-ov 2K Zurich 

■ “* E"****®” de Tana. 34 Rne des 

Madjurtas, 75008 Paris 

Holders of Shore Wananis to Bearer wishing 10 receive n voting certificate 
(withlonn of proxy attached) must deposit their share warrants with one of 
the above mentioned offices nn« less than five dear days before the said meeting 

per pro GENCOR (U.K.) LIMITED 

.. London Secretaries 

ti October 1994 M Taylor 


Argus Fundamentals 

Understand what is driving oil prices' 

_ aii ■ — Petroleum Argus 

CALL for 3. t~RE“TRIAL 


CITY ! 
INDEX 


to this Monthly publication 


^ C O OOjk 

I*. Marta Lcadn, m ijmul baling . hlMKwl and Spun* 1 
hiucJuic and in bcuusi jftilKaliui fiam call 071 2 D M * 7 
Acohnaa me wmalj) opened wthm 72 hour*. 

Zvk our mMiVtljlr |hmhi Hi m lu Jp m on Tekiml pBff 605 











FINANCIAL TIMES THURSDAY OCTOBER 6 1 994 ★ 


25 


* 

INTERNATIONAL COMPANIES AND FINANCE 


'P 


Molson confirms 
plan to export 
beer to China 


By Robert Gibbons in Montreal 

Molson, the Canadian brewing, 
retailing arid speciality chemi- 
cals group, confirmed it was 
entering the Chinese beer mar- 
ket with direct exports from its 
Canadian breweries. 

Molson Breweries, the brew- 
ing unit owned 40 per cent by 
Molson, 40 per cent by Poster's 
of Australia and 20 per cent by 
Miller of the US, win start by 
exporting Molson “Ice” beer, a 
premium brand already selling 
successfully throughout North 
America, the UK and Aus- 
tralia. 

The distributor will be Amer- 
ican Beverage. 

Mr Marshall Cohen, Molson 
chairman, said: The move cre- 
ates a beachhead for us in the 
world's second-biggest beer 
market, now growing at 20 per 
cent a year. We will be well 
positioned to take up farther 
opportunities." 

Molson did not confirm spec- 
ulation that it would partici- 
pate in a joint venture 
announced last June by Fos- 
ter’s and Wheelock of Hong 
Kong to build breweries In 
China. 

John Labatt, Molson's Cana- 
dian rival, has also been exam- 


ining the Chinese beer market 
The group recently bought part 
of a Mexicali brewer for 
C$72Dm (US$537.3m). 

The Chinese market has 
proved extremely attractive to 
foreign brewery companies. 
China boasts some 800, mostly 
tiny, breweries, but there are 
no identifiable national brands 
with the possible exception of 
Tsingtao. which has just' 2.5 
per cent of the market. 

Since 1984 C hin a hag jumped 
from seventh place to second 
behind the US as a beer pro- 
ducer with output in 1993 of 
1225m tonnes. The number of 
breweries in that time hag dou- 
bled. 

• Mr John Smith. General 
Motors president, yesterday 
announced the creation of a 
new post to oversee the compa- 
ny's operations in C hina , AP 
reports from Paris. 

Mr Rudolph Schlais wifi be 
based in Beijing as president 
of GM China Operations, co- 
ordinating vehicle and compo- 
nent businesses. Mr Smith 
said. 

"It's a huge, developing mar- 
ket and we've got to bring 
more resources into it,” Mr 
Smith told journalists at the 
Paris Motor Show. 


Moody’s 
upgrades 
Unibank’s 
debt rating 

By Hflary Barnes 
In Copenhagen 

The senior bug-term debt of 
Unibank, Denmark's second 
largest commercial bank, has 
been upgraded by Moody’s, the 
US Credit rating agency, to A1 
from A2. 

Unibank suffered three 
years of substantial losses 

from 1990 to 1992 but returned 

to a net profit of DKr885m 

($145. 69m) in 1993. 

In the first half of this year 
it made DKr207m after loss 
provisions had been cut to 
DKr950m from DKrl.54bn a 
year earlier. 

The first-half performance 
was marred, however, by 
unrealised losses on the bond 
and share portfolio of 
DKrS33m- 

Moody's noted an improve- 
ment over the past few years 
in asset quality, earnings and 
capital, as well as progress in 
reducing what the agency 
described as the bank's “his- 
torically high expense base”. 

Unibank's recovery began 
when a new chief executive, 
Mr Thorleif Krarop, was 
brought in 1992 and immedi- 
ately implemented a new 
rotmd of cost-cntting mea- 
sures. 


Bayer plans worldwide generic drugs chain 


By Daniel Green 

Bayer, the German drugs and 
chemicals company, is plan- 
ning to set up a chain of busi- 
nesses around the world to sell 
unbranded, generic drugs. 
Generics is one of the fastest 
growing segments of the phar- 
maceuticals business. 

Bayer is creating a Joint ven- 
ture with US generics special- 
ist Schein. This is the first 
large deal with Schein since 
Bayer paid $310m for a 2&3 per 
cent stake in March. 

Mr David Ebsworth, head of 


Bayer's worldwide business 
operations, said file joint ven- 
ture would “be the basus of a 
global generics business". 

He said that the six months 
since the stake was taken had 
showed there was a need for 
“dedicated manpower” to take 
Schein from its US base to 
other countries. 

Initially, 10 to 15 people 
would be employed by the joint 
venture including specialists 
in the launch and marketing of 
drugs and in finding new prod- 
ucts. 

Schein already has a portfo- 


lio of more than 400 products, 
and is especially strong in cen- 
tral nervous system and heart 
drugs. 

Mr Ebswarth said the com- 
pany would make a priority of 
finding new antibiotics to man- 
ufacture and sell 

The acquisition of the Schein 
stake marked Bayer's entry 
into generics. The deal 
includes provision for the 
stake to be raised to 51 per 
cent “over the medium term”, 
said Mr Bbsworth. 

An increasing number of pre- 
scription drug companies is 


seeing generics as a business 
with potential for rapid 
growth. Many drugs patented 
in the 1970s are losing patent 
protection, opening up the 
market to companies such as 
Schein. 

At the same time, govern- 
ments are encouraging more 
generics manufacturers in the 
hope that increased competi- 
tion will hold back prices. 

Many other prescription 
drug companies have made a 
move into generics. Last 
month. BASF, Bayer's German 
rival, diversified its pharma- 


ceuticals division Knoll into 
generics for the German mar- 
ket. The move was part of a 
strategy developed after Knoll 
had reported Its first loss, and 
it is now looking for foreign 
partners. 

Last year. Hoechst. the third 
of the big three German chemi- 
cals companies, paid $545m for 
a 51 per cent stake in Copley 
Pharmaceuticals, another US 
company, and in May this 
year. Bristol Myers Squibb 
bought 25 per cent of Azu- 
pharma, a German generics 
manufacturer. 


Borden warns of losses in 
third quarter after charge 


Thyssen Stahl to split units 
in attempt to boost results 


By Richard Tomkins In New York 

Borden, the troubled US food group 
that last month agreed to a S2bn take- 
over by Kohlberg Kravis Roberts, the 
Wall Street investment firm, yesterday 
warned that it expected to report 
onquantified net losses for the third 
quarter alter taking pre-tax charges of 
between $i50m and $200m_ 

Borden's warning came as other par- 
ties continued to explore the pos sibilit y 
of launching an offer to rival KKR's 
agreed bid. Japonica Partners, a Rhode 
Island investment firm headed by Mr 
Paul Kazarian, said it was preparing a 
higher-value proposal for Borden share- 
holders and urged the company to halt 
further asset liquidations. 

About $95m of the quarter's charges 


arose because proceeds from the dis- 
posal of discontinued operations were 
less than expected, Borden said. 

Another 550m was attributable to 
"transaction fees and other expenses.” 
mos tly th e fees Borden has agreed to 
pay KKR in connection with the take- 
over. 

Borden said the third-quarter results 
would also include charges for the 
write-down of certain assets, although 
these would be offset by the reversal of 
an unused portion of the restructuring 
charges taken by the company last 
year. 

Some of that planned restructuring 
woul d not take place following the deal 
with KKR , Borden said. 

In last year’s third quarter, the com- 
pany reported net losses of 89.4m. 


By Michael Lindemaxm in Bonn 

Thyssen S tahl . Germany's biggest 
steelmaker, yesterday said it was split- 
ting its long products and wire divi- 
sions into smaller companies. It said 
the aim was to improve their reaction 
to market forces and start making prof- 
its again. 

The decision follows similar moves by 
Krupp Hoesch, Germany's second big- 
gest steel producer, which has hived off 
several divisions into independent sub- 
sidiaries, some of which will become 
joint ventures with Thyssen. 

Both steelmakers argue that the mar- 
ket behaves differently for many steel 
products and that separate manage- 
ment is required if these areas are to 
recover from recent heavy losses. 


The companies emerging from these 
changes will also not be subject to Mon- 
tanmubestimmung. a form of workers' 
co-determination in the German coal 
and steel industry which has made it 
more difficult for loss-making steel 
companies to make workers redundant. 

Thyssen and Krupp Hoesch have said 
they will begin to reap the benefits of 
restructuring in their steel divisions 
this year but both still expect losses. 

Three new companies dealing in long 
products will be created with sales or 
about DM1 5bn i$9?0m). around 15 per 
cent of Thyssen Stahl's 1993 turnover. 
EWK Edelstahl is the largest of the 
three with around 2,600 employees. 

The wire division, Thyssen Draht, 
with a turnover of around DM300m. will 
also be split into three companies. 




Saga to buy North 
Sea stake from Esso 


By Karen Fossil in Oslo 

Saga Petroleum, Norway’s 
largest independent oil com- 
pany, is to buy a 50 per cent 
stake in the undeveloped. 
80m-barrel Norwegian North 
Sea Fenris oil field from Esso 
Exploration and Production 
Norway. 

Statoil, the Norwegian state 
oil company, is the field's oper- 
ator and holds the remaining 
50 per cent stake. This gives it 
pre-emptive purchase rights 
until the end of this month 
to acquire the 50 per cent 
shareholding sought by Saga. 
The terms of the deal were not 
disclosed. 

Analysts in Oslo say Statoil 
is unlikely to exercise these 
rights, because it would want 
to spread the estimated 
NKr3bn ($620m) costs to 


develop the field. No other Nor- 
wegian oil field is wholly- 
owned by one company, they 
also noted. 

Fenris is in the southern 
part of the North Sea in 85m of 
water. A development plan for 
the field may be lodged with 
petroleum authorities in 1995 
and. if approved, production 
could commence by the sum- 
mer of 1996. 

Several development 
schemes are being considered, 
but because the field is not 
close to existing infrastructure, 
the development would have to 
include oil processing and off' 
loading facilities. 

The deal between Saga and 
Esso will also have to be 
approved by the oil and indus- 
try ministry, but this is not 
expected until Statoil declares 
its intention. 


Lend Lease joins IBM in 
Australian IT venture 


By Nikki Taft 
in Sydney 

Lend Lease, the Australian 
financial services group, is 
linking with International 
Business Machines of the US to 
sell information technology 
services to Australia's business 
community. 

They will offer services rang- 
ing from management of desk- 
top systems to business recov- 
ery services. 

The two companies estimate 
the current IT services market 
in Australia is worth about 
A$2bn (US$1.4bn; a year. 

They aim to capture at least 
a 30 per cent share within the 
next five years. 


The services will be mar- 
keted through a new joint ven- 
ture company, Integrated 
Systems Solutions Corporation, 
which will be 65 per cent 
owned by IBM Australia and 35 
per cent by Lend Lease. 

No financial details of the 
partners' investments were 
revealed. 

However, the new organisa- 
tion will be a substantial busi- 
ness. employing some 1,300 
people. 

About 750 staff will come 
from IBM, and the balance 
from Lend Lease. 

Under the terms of the agree- 
ment, both Lend Lease and 
IBM will source their own IT 
requirements from ISSC. 


France takes first step 
in Renault share sale 


Ely John Ridding In Paris 

The French government has 
taken the first step in the par- 
tial privatisation of Renault, 
saying it was launching the 
process to determine a group of 
stable shareholders in the 
motor vehicle group. 

The economy ministry said 
that from today . potential 
investors in the core share- 
holding group, who will hold a 
combined 5 per cent of Ren- 
ault's shares, would be able to 
place their offers. The offer 
period will last for two weeks. 

Investors in the so-called 
group of shareholding partners 
will each have to buy a mini- 
mum Of 2.4m shares, about 
1 per cent of the company’s 
capital. 


They will have to hold all 
the shares for three months 
and 80 per cent for the follow- 
ing 21 months. The sale of the 
80 per cent of the shares will, 
however, he possible within 
the group of core shareholders. 

Core shareholders are expec- 
ted to include Renault’s indus- 
trial partners, such as Elf 
Aquitaine, the oil group, and 
Lagard&re Group, the electron- 
ics and communications con- 
cern. The share sale wi ll ta ke 
place after a FFr2 bn ($377m) 
capital increase. 

Overall the French govern- 
ment plans to reduce its hold- 
ing in Renault from 80 per cent 
to just above 50 per cent The 
majority of the issue is to go to 
individuals and employees of 
the automobile group. 


Mobil to restructure operations 


Mobil Oil is to restructure its 
downstream operations. Reuter 
reports from Fairfax. The US 
oil group said it would restruc- 
ture the operations around 
three areas - the Americas, 
Europe and Africa; and the 
Pacific Rim - in addition to its 
existing Middle East area, ^ 

The operations comprise its 
marketing, manufacturing, and 
supply and trading activities, 
as well as its Middle East and 
Ma rine Transportation unit. 

Mobil said the new structure. 

which will be introduced on 
December l, would further 


strengthen its integrated down- 
stream organisation. 

in are Mr Robert McCool, 
executive vice-president, US, 
will become executive 
vice-president, Americas. 

Mobil's Latin American 
downstream activities will be 
added to Mr McCool’s current 
responsibilities. 

Mr William Walsh, president 
Mobil Europe, will become 
vice-president, Europe and 
Africa. 

Mr Harold Cramer, presi- 
dent, Mobil South, will become 
vice-president Pacific Rim. 


The Euromarket 
Professionals 



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DM 1,250,000,000 
Floating Rate Notes of 1994/2002 


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Bank of China 

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MAGYAR NEMZETI BANK 

National Bank of Hungary 

DM 500,000,000 

DM 300,000,000 

DM 1,000,000.000 

6L50 % Profit-Sharing Certificates of 1994/2009 

77«% Deutsche Mark Bearer Bonds of 1994/1999 

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DM 100.000,000 
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DM 5,000,000 (Par Value) Non-Voting Preference Shares 
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* FINA NCIAL TIMES THURSDAY OCTOBER 6 1994 


27 


INTERNATIONAL companies and capital markets 


Rabobank to pay 
A$102m for rural 
bank in Australia 


By Nikki Tait in Sydney 

Rabobank, the large 
Netherlands-based co-operative 
banking group which speci- 
alises in the food and agri- 
business sector, is to buy the 
Primary Industry Bank of Aus- 
tralia for A$i02m (US$755m). 

PEA, which is being sold by 
the state-owned Bank of West- 
ern Australia (BankWest) as a 
prelude to privatisation next 
year, is a significant lender to 
the country’s rural sector. Its 
assets at the end of March 
were A$l.83bn, and its main 
focus recently has been the 
provision of rural mortgage 
loans. It has operations in Aus- 
tralia and New Zealand. 

In spite of the difficulties 
experienced b; farmers in the 
1990s, PEA has been consis- 
tently profitable, with after-tax 
operating profit in the year 
ended September 1993 amount- 
ing to A$ll.4m. In the six 
months to the end of March it 
made A39.22&L 

Yesterday, Rabobank said 
the acquisition formed part 
of its strategy of building 
up operations in the Asian 
region. 

The Dutch organisation. 


whose 1993 assets stood at 
about F1253bn (Sl45.4bn), has 
offices in Singapore, Hong 
Kong and Indonesia, and 
aspects to add a presence in 
Thailand and Malaysia. It 
plans to open an office in 
Shanghai in a few weeks. 

Rabobank said it had “a spe- 
cial interest in Australia”. It 
sees the country as a low-cost 
agricultural producer and a 
potential beneficiary of the 
Uruguay Round in the Gatt 
trade negotiations, which will 
generally lower trade restric- 
tions. 

B ankWest. which bought 
PEA in 1987 when it was a 
much smaller organisation, 
said the proceeds from the sale 
would be used to bolster its 
capital position ahead of priva- 
tisation. It said it “made strate- 
gic sense tor PEA to be owned 
by a specialist agricultural 
bank with the capacity to sus- 
tain the levels of wholesale 
funding required for future 
growth". 

• Standard & Poor's, the US- 
based rating agency, immedi- 
ately lifted its credit rating for 
PEA’s long-term debt to AA+ 
from A, and the short-term rat- 
ing to Al+ from AL 


Academics open wounds 
of MG Corp’s oil crisis 

The oddest- risk management little more esoteric. The oil Honkins University, am 


Japanese 
groups incur 
tax penalty 

By Gerard Baker in Tokyo 

Three Japanese trading 
companies have been ordered 
to pay penalty taxes totalling 
Y2.3bn ($23m) for failure to 
declare their incomes properly 
for the last three years. 

The Osaka Regional Taxa- 
tion Bureau said Marubeni 
Corporation, Nissho Iwai Cor- 
poration and Sumitomo Corpo- 
ration between them misrepre- 
sented corporate expenditures 
of Y4.9bn. 

The companies reported that 
sum to the bureau as commis- 
sions for hiring business con- 
sultants related to transactions 
with oil-producing countries. 
The bureau noted, however, 
that the figures were not 
related to individual deals, and 
concluded that the companies 
fabricated the commissions to 
lower their total incomes and 
evade paying corporate taxes. 
The commissions were not 
regarded as costs, but as social 
expenses or payments for 
unknown purposes. 

Marubeni failed to declare 
Y2.1hn, Nissho Iwai Yl.6bn and 
Sumitomo Y1.2bn. Penalty 
taxes of Y980m, Y770m and 
Y590m were imposed. 


Sharp rise 
in profits 
at Guoco 

By Louise Lucas In Hong Kong 

Gnoco Group, the Hong 
Kong-based financial services 
and garment company con- 
trolled by the Malaysian Quek 
family, yesterday reported a 
sharp rise in net profits, to 
HK$1.3bn (US$168. 4m) from 
HK$573.8m for the year to 
June 30. 

The group made HK$309m 
from investment and property 
sales, which were taken above 
the line. Earnings did not 
include transfers to inner 
reserves, although this prac- 
tice - now widespread among 
the colony's banks - is being 
phased out 

Earnings per share rose to 
HK33.43 from HK&L64. A final 
dividend of 45 cents is recom- 
mended. This, taken with the 
interim dividend, marled a 23 
per cent increase on the previ- 
ous year's payout 
The result was boosted by 
Dao Heng Bank, the group’s 
main operating subsidiary 
which was spun off in a sepa- 
rate listing last December. The 
group, which has 90 branches 
in Hong Kong, saw net profits 
snrge to HK|lbn from 
HK$400-8m. 


The oddest- risk management 
episode of the past year has 
become a little odder. When 
German metals and engineer- 
ing group Metallgesellschaft 
nearly succumbed to a liquid- 
ity crisis last December, it 
blamed the problems on the 
activities of Us DS subsidiary, 
MG Corp, in the oil derivatives 
markets. A supposed hedging 
strategy bad blown up spectac- 
ularly, leading to losses of 
more than glbn. 

The MG story refuses to rest 
in peace. In recent days, a revi- 
sionist view of the saga has 
been gaining currency. Were 
MG Corp’s risk managers in 
fact right all along? And was it 
a panic by the group’s board - 
along with the New York Mer- 
cantile Exchange (Nymex} and 
US regulators, not to mention 
a possible conspiracy by the 
German group’s bankers - that 
prompted the losses? 

These questions have been 
raised by US academics and 
fnelled by -speculation that 
Deutsche Bank, Metallgesell- 
schaffs lead banker, used the 
oil trading episode as an 
excuse to exert more direct 
influence over the group. 

MG’s problems arose from its 
use of derivatives - mostly 
futures - to hedge long-term 
fixed-price contracts to supply 
oil products, mainly to small 
Independent petrol stations 
around the US. The aim was to 
protect MG from a rise in the 
oil price. 

The problems started last 
autumn as the oil price 
plunged. A lower oil price 
might well add to MG's profits 
over the long term - with oil 
products sold at a higher, fixed 
rate - but in the short term, it 
faced two difficulties. One was 
that the futures contracts were 
‘tolling in value, so MG had to 
put up additional maigln pay- 
ments with Nymex. With 
futures positions equivalent to 
about 160m barrels of oil, these 
figures were not small: every 
$1 fan in the price of a barrel of 
oil translated into $l60m .of 
extra margin. 

The second problem was a 


little more esoteric. The oil 
yield curve - the relationship 
between short-term and 
long-term oil prices - moved 
against the company. Tradi- 
tionally, short-term oil prices 
had been above longer-term 
ones, a situation known in the 
market as a “contango". But 
the curve Hipped in 1992, with 
short-term prices sliding lower. 
This exposed MG to losses 
every time it rolled over its 
Mures contracts. 

DERIVATIVES 

The near-term contracts it 
sold were worth less than the 
longer contracts it replaced 
them with. Meanwhile, at the 
long-term end of the oU curve, 
prices hardly moved, so the 
short-term losses were not 
being matched by profits on 
the underlying supply con- 
tracts. 

The size of MG’s market 
position and the steepness of 
the ofi price slide eventually 
precipitated a disaster. MG’s 
bankers had to agree to an 
emergency line of credit, and 
the Metahgesellschaft manage- 
ment was sacked. Deutsche 
Bank sent Ms Nancy Kropp, an 
experienced fire-fighter it had 
used in such situations before, 
to sort out the mess. Her 
response was to liquidate 
many of MG's positions. 

This is where the revision- 
ism comes in. Should Ms 
Kropp have kept rolling the 
futures positions forward? 
Eventually, surely, the losses 
would be made up by corre- 
sponding profits on the oil sup- 
ply contracts (or futures prices 
would bounce back, as they 
have done this year). Ms 
Kropp’s approach served to 
turn paper losses into real 
ones. 

This argument was mur- 
mured by a number of deriva- 
tives experts at the time. Now, 
it has gained wider circulation 
in academia. It is floated in a 
paper in one journal. The Inter- 
national Economy, written tor 
Mr Steven Hanke, professor of 
applied economics at John 


Hopkins University, and Mr 
Christopher Culp, a doctoral 
candidate at the University of 
Chicago. The views are expan- 
ded on in a longer, unpub- 
lished paper by Mr Culp and 
Mr Merton Miller who, among 
other things, is a Nobel Laure- 
ate and director of the Chicago 
Mercantile Exchange. 

According to an early draft 
of the Culp/Miller paper, MG's 
“problem was not with its 
derivatives group, but more 
likely with its supervisory 
board and supporting banks, 
who may not have understood 
the hedging strategy and 
forced the premature liquida- 
tion of [MG's] hedge positions". 
Ms Kropp’s team "might not 
have fully understood the 
nature Of the Ori ginal bodg in g 
strategy - not because of inad- 
equate training and expertise, 
but simply because the strat- 
egy was complex”. 

Comments like these have 
drawn strong criticism in the 
“real world" of trading rooms, 
derivatives exchanges and reg- 
ulators. "Naive is a really good 
word [to describe the academ- 
ic's criticisms],” says one out- 
sider who was involved in sort- 
ing out the MG mess. And an 
oil derivatives expert who has 
followed the case closely at 
another trading house says of 
Ms Kropp’s approach: "She did 
a good job." 

“People should only put on 
positions which they can afford 
to margin - the cost of funds is 
a real consideration,” one per- 
son close to the MG problems 
says. 

Mr Miller has recently 
received a visit in Chicago 
from two Metallgesellschaft 
representatives, aiming to 
“persuade" him to reconsider 
his views. A heavy-handed bid 
by the German group to stall 
wider debate on the subject, 
perhaps? The saga is certain to 
run on: a revised version of Mr 
Miller’s paper with Mr Culp is 
due to be published shortly, 
and will no doubt be pored 
over for signs of recantation. 

Richard Waters 


Surge at HK property developer 


By Lotrfse Lucas 

Henderson Land Development 
Company, one of Hong Kong’s 
largest property developers, 
yesterday reported a 51 per 
cent advance in net profits, to 
HK$6.04bn (US$782.4m) for the 
year to June SO, up from 
HK$4bn the previous year and 
comfortably ahead of market 
expectations. 

Directors are marking the 
results with a cash bonus of 
HK$1 a share, on top of a pro- 
posed HK$1.20 dividend. This 
wifi bring the total for the year 
to HK$L60. an increase of 45 


per cent over the previous 
year's payout 

Earnings per share rose in 
line with total earnings, to 
HK$3.73 from HKS2£1. 

The Henderson Investment 
subsidiary reported a 16 per 
cent increase in net profits, to 
HK$1.13bn from HK$977m, 
with earnings per share 
improving 9 per cent to 47 
cents from 43 cents. 

Shareholders are to receive a 
final dividend of 20 cents for a 
total of 29 cents, an increase 
of 16 per cent on the previous 
year. There will also be a war- 
rant bonus Issue of one war- 


rant for every 10 shares held. 

Mr Lee Shau-kee, chairman, 
said credit-tightening measures 
in China had triggered a tem- 
porary slowdown in the local 
residential property market 
early in the financial year. 

The subsequent recovery 
was tempered in March by 
news of Hong Kong govern- 
ment measures to curb hnmq 
prices. Mr Lee said these 
moves, twinned with a further 
tightening on lending from the 
banks, had sent home prices 
tumbling by between 15 per 
cent and 20 per emit and damp- 
ened turnover. 



CHINA MERCHANTS CHINA DIRECT INVESTMENTS LIMITED 

i ill l >iif! Knits tall i hnnlsril fiahllUvl 

ANNOUNCEMENT OF INTERIM RESULTS 
FOR THE SIX MONTHS ENDED 30TH JUNE, 1994 

FINANCIAL RESULTS 

11k- IVwkI ts*‘ llin.vb'ts v- lu anniwiXk’ ilcu llw unauxlilvxl v\«i-*tlUMk-vl w-ulfc* »4 llw CnMf'jm 

liir (fii.' m\ mi wilts ciukil .tillijuiv. I*W 1 unv :i*. I< ill* ivw 

I Si 
1 1 


linets rcik'iiui- 
Imvn-si ininux- 

C.iiiin on Nile nl link'll init-suiii'iil' 

Itaiilk-iiil inuqttc 


I’nil'u lik-lna- t:irjriu:i 
Taxation > Xntc 2) 

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tLiniinjj- |xt ■Juiv 1 / 

Net uv *1 1 jlttc |X-r -Jure /At A* U 


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1 HI (fill A|»ll. I’Wf .nut mill «i mihki iLk.nl lur-nto-s mi I 'III lull . I*M| 

— So lion): kiHii; ]ui 4<s ki\ Ilin IV. ii |vi « uk-,1 ,I\ ilk-re jiv no l.ix.ilik- i-.iiiniij;- lor ilk- |H n hI 

Vi tkfimil Uxjlii.il Iln I kin jhiii nlx-xl r- llk-n.' jii' no Mpulii-.HM Imiiiit: ihlliix-iUx-* iimni! Ik1«i\ n |tu<la. . 1 , 
loMjKifcxI lor l.ivitkut anil | «i» >tit«. .is si.mil in iln- Jiiliih liI si.iit-iiH.-itS- 

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tuxhturx share-. m uni- ihimlii tils- 1 vni »l 

Vi lip 1 ix- nilix diluiol i-.ui]ii:c> |>xr -ii.ir,- is shown as iln- IM-Iira- ol ilk- -ulia njm.'ii ri^lii- .iii.ulii.sl u. iln 

Murrains ,11 issue «lunit£ ilk- ixirxl wi'tikl ru* Iuk- J iIiIuiiiik xilis.1 

1 'Ilk- • atoiUliini «l rui jwl x.ilui- |vr sJliiv is IvihxI on (In- iki ,n«i > jlin- >4 l w>- ini I.Vi .mil -IS _* 1 . 1 1 » • t 
■ axlircux slun-s in issik- Js .11 .fifli lurn- l*< , >i 

DIVIDENDS 

Till- ll uni of Dircxiors Joes not rvkiHilinvml tlx* pavntk-tii ut a ilnnk-iul fm tin- |k-iu«I i-ruli-xi >tt!i 
June. 109 1 . 

REVIEW 

Eor rite uis nu mills cnxlcxl .VHh Jurtk-. IWi. iltc unautliiuxl xmi-i'liiLiix-xl ik-I .ism-i 1 . 1 I 01 ' ol tlu.- ianii|uitv 
incTk-asckl to I'SSl.uJ 1 per nltatx.- limn I 'vs 1 1 )|»» jx-r shark- .ls hi ,41m Drunilvi. ton.l 
As at .VUlt Juno. mi. tlx- Coitiivnx lias is ■ntninlt'0 uppn ■simau.lx' IN»C million .nut I'ssj i iiiitlum 
rk-spotliik-K in unlisicxl pn>n-kis ami lisioxl sharks. alin^kthk-r ropa-sk-iiilii^ .ipitrosini.itk-ly »V-., ui ilu.- 
[«M:il mi .usskts ol tin- Company. ImliSk-d Iihx-miik'iU-s uk-rk- spn-ail .11111 iii>h util x-si.nc < liii.iitxi.il 

.sk.-rvia.-s filT.i). iiunulaciuriiig i iiansponaiion ( I J“-> and iitlrasinkiuik* i '“.■l sk-xiots 
ilx- Duvitors koniiiHik- to lx* I'puimsiix- aixuil j>nmih in China. Iln- r.ili- ol k-s|Miisi(ni 11 ] Chiix-sk* 
economy xvill sraliilisc .Ls tlx- pni-nuiik-ni six-ps up ils ollon to muirol inllamm mul tiiri* {•ink-miix-nt 
spktxlinj;. Gnikiinvuily. ijiv Chiix-si.- »iik-n\«w.*nt is is or km j; to ptosiiU: a Iviuir in.vx.-siiin.-iu 
wivimnnx-ni liy anx-ndinn n.-jiiilaiuMis and piWkx-s Tlx- IJirinors du.-n.-lon.- n-nuin konlidxiir rh.tr ihk- 
Cx>mp:iny will pn'llt fn>m such nuli-asors 

By < Vxls-r of the B«iaid 
Elizabeth Ka-Yce Kan 

SiVMtlip 

llnng Kon)>. Mh Sk-jHk-nilx-r. 1 1 J*> t 




k/'dfer< *a 






India continues- to bo b star among 
omorglng marlcets. Tits continuing 
process or HDorailsation. ana the 
govommont's commitment to further 
reform promises to hoop India at the 
centre ot attention for investois. both 
corporate end IntfvfduaL 
The Financial Tbnea puna to pubMi a 
survey on India on October 24th. it wH 
bo dsMxitad ot the that FT Coirfmnce 
on hwaang In kida. 10 be held In DeH. 
Mwilslng In lha suvey wU put jou In 
touch with those with an Interest In 
In v estmen t In Indfa. 

For more ti formation on flddUond t4n Hkfl 
aid detato of advertfsMg oppmaMea 
■ mdln b l a In this survey, pieasa contacc- 
to laadOK Ml Rodrteoa 
Tel: (44) 7187a 33S8 
Fax: (44) 71 873 3595 
qriMnfaaa PalA Modi 
Tet (*t) 22/204 M 90 
Fax: (31) 22 287 87 18 

FT Surveys 


EXTECAPITAL LIMITED 

US$ 100,000,000 PERPETUAL SUBORDINATED INCREASING 
MARGIN FLOATING RATE NOTES 
In accordance with the provisions of the Notes, notice is hereby 
given as follows: 

x Interest period: October 5. 1994toAprB5, 1995 
x Interest payment date: April 5 . 1995 
x Interest rale: &27% per annum (inducing the margin) 
x Coupon amount: US$ 31.698.33 per note ot US$ 1 ,000,000 

Agent Bank. 

BANQUE INTERNATIONALE 
A LUXEMBOURG 


MIDLAND INTERNATIONAL CIRCUIT FUND 
Societd d'Investlssement k Capitol Variable 

The Interim Dividend lor lhc following clixxci of foe above Fund ba been (Jarbucd by 
the Dirccion and ii detailed below: 

CLASS Dividend Denature 

UK Fixed Infant . 

Muttcunvacy Bend 

UK SxcrCrtg Liquidity 


caojd 

roaws 

£0038 

ussoom 


US Dollar Liquidity 

Regutoed Sharcbolden at the d«c bosincu on 30. September 1994 win receive the 
above paymoita io £ or USS (u requested) on or alter 1 5. November 1994 


Thh nedoe it avurd in 


r lawnudorel ftadt E^wage of dw lAuaod Kingilam awd Ae Kcpufelicof Irdaad UwJwdlihc 

-London Sndt Ead m ^iT- Irdog not auunouc naoflbror Wnmon n anypeoao anUaAr farorpaiduic •ayiiwRL bw hrem nk io dw 

London Smdi Exdm^r fcr dw whole of die onfinuy dure apiol afSaUulc pic. wUch b la tawe or hie be M puoBw wihe phdag wd Imrracdhrb 
otto, w be odmkml m the OlSeuI Uv. Ii i* opc<«*d dux a dm l n li w to rfw Ofical U* wM becowe wd dnr dofiaRi ® Ac aedimy data w3 

r oo Tuodry 18 Ocoobtr I»t 


and \Cil« nmliT Ac C o m pool n 1841 » 1867 wbh ksj ttird 

‘ PLACING AND INTERMEDIARIES OFFER 

W 

BARCLAYS de ZOETE WEDD LIMITED 

of 24,1 17,244 otdia«7*li»rta of 25p each « U35p pa xhare, p«y«hfc fn &H on appHcutioo ofwUda 18^87^3 oafinary 
dura att bang placed mbyect to focall to aatftfjr valid appUcadoBS nadmr the inenaedtaifas offer 

’ . Own - capital immediately following Adounun 

Andwracd „ bmed «d fally pad 

Number Amount Number Amount 

60,000,000 £15^)00.000 ordSnaiy dures of25pe«di 40.195.407 £104)48,852 

n[ll , Trhfrn ^i T B»^ar7^W«ddU l n«edrBZWnfarMa9dno€dio«iydotnwbeploadwidicto»oofCaou»re8tCaOf 

^|Sn?^u.»HMry dma fienramrinxliocr *bl of thott*i0brel>cmphcri«A|tq»imflmau»rfr4n> fe rio m ly 


... fnr d,, Ut-t— »- A final m nTrrlrr Tr. rfirnl n fr *T ,<MU ' 

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^^LuwTSd Pto»"A^>r Uwdud, MM, chalm . l-ti n rorinn fans. -V horn 

1 "** ranvna limn, -rttada. refadng ^ to Scrvkurpfc) m* beaba^d during^ aomd bminc* boon Hl uywetkdqr 
afepred) up o# »od iadading 19 Oowu 1994 faun: 


Banityi dc Zoe« Wxld Limited 
Ebbgtnc House 
2 Stan Lane 
London EC4R JTS 


Ctzcnove Sc Ca 
12TokcnhoaKTaid 
London EC2R7AN 


Serrinlrpk 
19/21 mc Lane Euc 

BramhaD 

OloWkSK? 2 BE 


> Office. London Stock Exchange 


Bardoyi de Zocre Wfcdd Limited 
90 Fountain Street 

Mu duller M2 2A5 

red duriognremd b««- b««oo 6 «d 7 Oacbc X99A fi» a«ecil«. only fiom dw Company fomow 
Tower. Capd Cant tnnancc. offBwxhaloinew Liae. loreioa . 

n Ucbooct iw 

THE INTERMEDIARIES OFF£R CLOSES AT 12 NOON ON WEDNESDAY 12 OCTOBER 1994 
THE INrawtu,AK1 ^ RSuCH LATER TIME AS BZW MAY DEQPE3 


/" JAPAN AIRLINES N 
COMPANY, LTD. 

tlmifpmnafd . itfc l im i trd h*MH\ fa fufuwl 

¥10,000,000,000 
Floating Rate Notes due 
April 1998 
For the period 
5th October 1994 to 
5th January 1995 
In accordance with the Terms 
and Condhiona of the Notes, 
nodes Is hereby given that the 
rate of interest has been fixed 
at 2.626 per cent, per a n n um 
and chat the interest payable 
on the relative payment date 
being 6th January 1996 wfll 
be V670.833 per VI 00,000,009 
Note. 

Tbs Cadnatria] Bank of 
japan. Limited 
pjwwinw Brandi} 


CtottenhamAQoucaster 

EJutagSodaty 

KCT 150.000.000 
Floating Rale Notes due 1995 

In accurdunci.- uiih <tw pniNM. ul lhc 
Null'.. rUKkv hx-ix-ln O' on tlt.it ibu 
Raie of Inii-n-y lur iW three irnnlli 
pxrkkl x-Ddinc 5lll J.nlunn . IW? 
hex-n fixcil in ti.l-Ji-J?-., per annum Ihx" 
iniunrM mx-rume 1 m Midi ihrcv nHmih 
Ik-rmU uill hu I t I - I.4stift5 pci 
1 1 r n«U*l) Bx-JTX I Nilix-. nil 5th 
Juuuurx. IV<5. jpunM inCM.-iilJIHin nl 
l'ivi|kqi V I.- 

1 niita Bank rfSwUrtrtund 

IrediM IW-mch Ap.-m ILinL ’3/ 

3rd Umber. 1994 



ECUnitumple 
aach — hut Wact 
Hsigrava 
London SWiXSHL 
Tbfc*ri 2*60088 
Roc *71238 099 


PUTURE5 A OPTIONS BROKERS 




J ROUND 
TRIP 

EXECUTION ONLY 


xncy or Bond Fax - FREE 2 week trial 

Oily gold ond silver faxes c . k Anne Whitby 
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This survey ofTors you an Moat opportunity to convoy your 

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FT Surveys 



All these Bonds hairing been sold, this announce- 
ment appears as a matter of record only. 


International 
fml mm Finance Inc. 

Wilmington, State of Delaware, United States of America 

DM 1,000,000,000 
7 % % Bonds of 1994/2004 

unconditionally and irrevocably guaranteed by 

Kreditanstalt 

m mm fur Wiederaufbau 

Frankfurt am Main, Federal Republic of Germany 


WESTDEUTSCHE LANDESBANK 
GIROZENTRALE 


J.P. MORGAN GMBH 


COMMERZBANK 

AKT1ENGESELLSCHAFT 


CS FIRST BOSTON EFFECTENBANK 
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DG BANK 

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CAISSE DES DEPOTS 
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CREDIT COMMERCIAL DE FRANCE DEUTSCHE GIROZENTRALE INDUSTRIEBANK VON JAPAN 

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SALOMON BROTHERS AG SCHWEIZER1SCHE BAN KGESELLSCHAFT 

(DEUTSCHLAND) AG 













INTERNATIONAL CAPITAL MARKETS 


Treasuries retreat continues in wake of order data 


By Frank McGurty in New York 
and Conner MJckMmann 
In London 


The US Treasury market 
back-pedalled again yesterday 
morning after fresh evidence 
that the Federal Reserve has 
not curbed economic growth. 

By midday, the benchmark 
30-year government bond was 
down A at 95, with the yield 
rising to 7.932 per cent On the 
short end, the two-year note 
was down A at 99%. to yield 
6.687 per cent 

In early activity, bonds 
showed little movement as 
traders awaited the govern- 
ment's figures on August fac- 
tory orders. 

The news, which was 
released at 10am, was decid- 
edly unfavourable. The Com- 


merce Department announced 
a 4.4 per cent gain, after a 2.0 
per cent drop the previous 
month. Economists were 
expecting a smaller increase of 
about 3.5 per cent 

Prices plunged cm the data, 
led by the inflation-sensitive 
long tend. Traders were partic- 
ularly disturbed by a surpris- 
ing IS per cent jump in orders 
of non-durable goods, an area 
of slow growth in recent 
months. 

It was another in a series of 
reports indicating that the Fed 
had not done enough to slow 
the economy. The data seemed 
to assure the central bank 
would Increase short-term 
interest rates for the sixth time 
in the currant cycle of tighten- 
ings. 

Against this backdrop, the 


fresh Hpniinas in bonds put the 
market in a precarious posi- 
tion. With Friday’s critical 
employment report fast 
approaching, the yield on the 
long bond was hovering just 
under the 8.00 per cent level, 
an Important psychological 


were speculating that the big 
jump in payrolls could moti- 
vate the Fed to lift rates imme- 
diately. 


GOVERNMENT 

BONDS 


barrier which might contain 
any fall in bond prices on 
stronger-than-expected jobs 
data. 

The consensus of analysts 
was that non-farm payrolls had 
grown by about 250,000 work- 
ers last month. But in view of 
the string of negative surprises 
in recent weeks, traders are 
braced for the worst. Many 


■ European government bonds 
opened on a weaker note after 
US bonds had fallen overnight 
and tumbled further in the 
afternoon when Treasuries slid 
to new lows on stronger than 
expected economic data. 

The eruption of renewed 
political turmoil in Italy, pre- 
election jitters in Germany and 
sharp declines in many equity 
markets further depressed 
bands. 


■ Italian bonds nosedived on 
fears that an investigation Into 
imp of the Italian prime minis- 
ter's television holdings may 
implicate Silvio Berlusconi 


himself. In late trading the 
December BTP future on liffe 
stood at 97.48, down L54 point, 
after hitting a low of 9650. 

Bond market participants 
now worry that the flare-up of 
political tensions will compli- 
cate the passage of the 1995 
budget in parliament by the 
end of the year. “Given that 
the budget was already not 
received very enthusiastically 
by the market, this worsens 
the prospects said Mr Jos6 
Luis Alzola, an economist at 
Salomon Brothers. 

Although he said that yester- 
day’s sell-off could be followed 
by a technical correction, he 
added,-*! am sceptical that the 
spread over bunds can 
approach, let alone breach, 400 
basis p oi nt s .” The gap widened 
to 452 basis points yesterday. 


E UK gilts remained surpris- 
ingly calm in the face of tum- 
bling markets, outperforming 
most of their European coun- 
terparts and shrugging off a 
sharp fed! in the FT-SE 100 
index. 

The December long gilt 
futures contract in Lifie eased 
by X to S9&, and the 10 -year 
yield gap over German bunds 
narrowed to 133 basis 
points. 

According to Mr Ian 
Shepherdson, UK economist at 
Midland Global Markets, gilts 
have “perked up” since the 
recent base rate rise, helped in 
large part by the strength of 
sterling. 


Survey highlights 
underwriting role 
of Japanese banks 


By Gerard Baker In Tokyo 


■ German bunds shed about % 
point in sympathy with the 
drop in US Treasuries. 


VSNL deal awaits 
government approval 


World Bank global well received 


By Graham Bowtay 


By Martin Brice 


The long-awaited international 
equity offering from VSNL, the 
Indian international telecom- 
munications monopoly, is to be 
delayed pending government 
approval, bankers said yester- 
day. 

The delay is likely to be 
some weeks while an Indian 
cabinet committee considers 
the pricing of the deal, which 
is led by Kleinwort Benson, 
Jardlne Fleming and Salomon 
Brothers. 

This delay follows an earlier 
postponement in May, when 
market conditions changed 
just before the issue was 
launched, and the minimum 
price of Rs 1,400 a share was 
seen as too expensive. 

The deal was revived last 
week following the successful 
issue by Pakistan Telecom 
which attracted $9 00m from 
international investors. Follow- 
ing its handling of that deal, 
Jardine Fleming was added to 


the mandate for VSNL, which 
is 85-per cent owned by the 
Indian government 

Bankers believe there is cur- 
rently good demand at the 
lower price of between RsULOO 
and Rs 1,200, which would raise 
about $65Qm, but the govern- 
ment needs to tap that demand 
before market conditions 
change. 

The BSE 30-share index, 
which closed at 4.406 last 
Wednesday, had fallen to 
around 4,350 yesterday. 

The delay may hi g hli g ht the 
decision-making processes of 
the government widely held to 
blame for the first postpone- 
ment. But one banker, not 
linked to the deal said the gov- 
ernment had made other diffi- 
cult financial decisions. He 
said: “The decision-making 
process which corporate finan- 
ciers and bankers demand runs 
into hours and minutes. But it 
can take a week or two to get 
through the necessary pro- 
cesses.” 


The World Bank's DM2bn 
global offering enjoyed a gener- 
ally warm reception yesterday 
in spite of difficult market con- 
ditions in Europe and the US. 


INTERNATIONAL 

BONDS 


Lead managers Deutsche 
Bank and Morgan Stanley said 
the deal had been oversub- 
scribed, and syndicate manag- 
ers reported significant 
demand from a wide spe ctru m 
of quality investors including 
central banks and blue chip cli- 
ents across the world. 

The offering of five-year 
bonds was launched on Tues- 
day and was priced yesterday 
at a coupon of 755 per cent 
and a reoffer price of 99.432. 

Traders said that many 
investors were attracted by 
what they considered a gener- 
ous spread of 15 basis points 
over German government 
bonds. 


“There was a lot of switch 
trade with investors moving 
out along the yield curve from 
the existing D-Mark bonds in 
the three- to four-year area, 
which are trading tight to 
bunds,” said one syndicate 
official 

The success of the offering 
was also related to the 
strength of the D-Mark, dealers 
said. 

“Some investors have taken 
a bullish stance on the cur- 


rency and feel confident about 
holding D-Marks,” one dealer 
said. 

Elsewhere in the eurobond 
market, dealers reported that 
US hedge funds had sold a sig- 
nificant amnont of long-dated 
bands over the last few days as 
they switched to shorter-dated 
securities. 

Abbey National has filed a 
shelf registration with the 
Securities and Exchange 
Commission in the US which 


will allow it to issue up 
to $3bn of medium- term notes. 
• Mr Fernando Cossio, the 
Bolivian fiuanrp minister, said 
that Bolivia to return 

to the capital markets In 1995 
with a medium-term bond 
which would probably be for 
SI 00m, Reuter reports from 
Madrid. He said that Bolivia 
might also seek a credit rating 
next year to improve Bolivian 
companies' access to interna- 
tional debt markets. 


Newly-established subsidiaries 
of Japanese commercial banks 
underwrote 6.8 per cent of 
domestic straight bonds issued 
in the half-year to September, 
according to a survey pub- 
lished yesterday. 

The repeat, by Thomson Cor- 
poration, tiie US financial news 
service, showed the companies 
concluded 123 deals, worth 
Ylll.6bn. for underwriting 
such bonds in the period. The 
companies took a 4.7 per cent 
share in the underwriting of all 
corporate bonds, with 395 deals 
worth Y178.7bn. 

The report gives the first 
clear picture of the bond 
underwriting market since it 
was liberalised last year. Previ- 
ously, under rules that strictly 
separated securities and bank- 
ing operations, hanks were not 
permitted to engage in main- 


stream securities business. 
Last year, however, rule 
changes allowed banks to set 
up subsidiaries which may 
underwrite bonds, but which 
are barred from the main area 
of securities business - equity 
trading. 

Existing brokers have 
expressed concern at the 
potential erosion of their busi- 
ness by the banks, but the fig- 
ures published yesterday* sug- 
gest that so far the 
encroachment by the seven 
new bank subsidiaries has 
been limited. However, next 
rpnnth, six of Japan's Largest 
commercial h an ks will launch 
their own units and the bro- 
kers' share is certain to fall 
more dramatically. 

In the six months to the end 
of September. IBJ Securities 
led the way among the new- » 
comers with 99 contracts worth 
Y83.3bn. 


Matsushita sets terms 
for Y200bn issues 


By Emflco Terazono In Tokyo 


NEW INTERNATIONAL BOND ISSUES 


Amount 

Coupon 

Prtoa 

Maturity 

Faaa 

Spiaad Book runner 

Borrow 

m. 

% 



% 

Up 

US DOLLARS 

CrAdtt Load da Franco 

200 

725 

99.875R 

Nov. 1997 

0.187SR 

+17(61534-97) Boar Stearns/ BJ ML 

FNfippine National Bankf 

185 

C9 

93.60R 

OCL1B87 

0.50R 

• Crttoank/Salomoo Bnnhara 

Finnish Export CrecBt* 

100 

zero 

87.23R 

NOV.1896 

uKfiad. 

- Dahm Europa/ LTCB ML 

MB Bank, San Paolo Branch 

50 

1025# 

99.70R 

OCL1897 

89.70R 

+340(61415-97) WG Bank 

SWISS FRANCS 







Johnson ft Johnson Now Jersey 150 

5-375 

5.75 

10 320 
101.85 

Nov. 1997 
Nov.1998 

1J50 

1.75 

Man* Lynch CtotLkrikta. 

LUXEMBOURG FRANCS 
GommORtank ML Lux. 

Zbri 

8825 

1Q2J&5 

Nov^OOd 

2.00 

Krexfieitank 


European Investment Banks 


Banco Central Htopano 


Hrad terms end nan-eatable urfen stated The yield spread (over relevant government band) at lamch is puppBad by the hied 
manager. *umstea jfkraiinfl rate note, ft fixed re-offer price; lees are shown at the re-offer level, a) 3-mth Libor +I60pp. b) 3-mth 
Libor +0Obp, max 13%. Short lot co up on 


Matsushita Electric Industrial, 
Japan’s largest consumer elec- 
tronics group, yesterday set 
the coupon rates and conver- 
sion prices for its two domestic 
convertible bond issues total- 
ling Y200bn scheduled to be 
launched next week. 

Concerns of over-supply due 
to the company's large lot Issu- 
ance has weighed on the Tokyo 
stock market during the past 
few weeks, but Matsushita offi- 
cials said it needed the funds 
to invest in its or panriing mul- 
timedia business and overseas 
operations. 

With investors already wor- 


ried that Japan Tobacco's 
Y900bn flotation scheduled for 
October 27 may drain liquidity 
from the stock market, Matsus- 
hita’s Y 200 bn issuance could 
have adverse effects on the 
already weak stock market 
Matsushita said it would 
issue eight-year and 10 -year 
unsecured convertible bonds in 
lots of YlOObn. with coupon 
rates of 1.3 per cent and 1.4 per 
cent respectively. The conver- 
sion price for both issues has 
been set at Y1.620. The eight- 
year issue will be convertible 
from November l to March 28 
2002 , with the 10 -year issue 
being convertible from the 
same date to March 30 2004. 


WORLD BOND PRICES 


BENCHMARK GOVERNMENT BONDS 

Red Dev's Week Month 

Coupon Dots Price change YMd ago ego 


Italy 

■ NOTIONAL ITALIAN QCVT. BOND (BIT) FUTURES 
(UFFE)- Lire 200m lOOthS of 100% 


FT-ACTU ARIES FIXED INTEREST INDICES 


Pnce Indices 
UKGfite 


Day's Tuo 
Iwnoft % Oct * 


Accrued xd ed|. 
Interest ytd 


— Low coupon yield— - Median coupon yMd- —tflgh coupon yield — 
Oct 5 Oct 4 Yr. ego Oct 5 Oct 4 Vr. ago Oct 5 Oct 4 Yr. ago 


Australia 
Belgium 
Canada * 
Denmark 
France 


9.000 08/04 

7.250 04/04 


0.500 0&O4 

7.000 T2AJ4 


Germany Tree 
Italy 

Japan Nt 


BTAN 8.000 05/90 
OAT 5.500 04/D4 


920000 

91.3000 

83L8500 

86.0500 

101.0000 

815700 


+0-580 10420 1030 9-51 

-0200 8.61 046 8.68 

-a 860 9-04 &S7 ASS 

-0-600 9.10 8B5 9.16 

-0260 7.86 7-43 7.38 

-0530 850 8.05 &02 


Open Sen price Change Ugh Low Esl vd Open M. 
BO0O 9751 -1.71 96.70 9850 6Z597 84951 

86.85 96.66 -1.71 9656 86-75 19 1235 


1 Up to 5 years (24) 11951 4004 11957 


■ ITALIAN GOVT. BONO $2T19 FUTURES OPTIONS (UFFEJ Ure200m lOOtha at 100% 


2 5-16 years (22} 

3 Over IS years (8J 

4 ir mdewnabtoa (6} 

5 Alsteda (60) 


13075 -017 13098 

15258 -030 153.14 

174.77 -012 174J8 

134.80 -012 134.96 


659 5 yra 
1029 16 yra 
Ml 20 yra 
653 IrrecLt 
952 


078 078 652 086 654 047 8.03 903 087 

075 071 7.01 090 088 7.15 9.12 9.08 757 

858 A 65 7.14 8M 856 721 S58 A9S 7*9 

6.74 073 758 


Netherlands 
Spain 
UK Gits 


US Treasury' 


ECU (French Govt) 6.000 
London Uoang. "New York mkJ-day 


Pnot US. UK In 32nda. often hi deettrat 

US INTEREST RATES 


09/04 

97.9700 

-OA0O 

7.80 

7.52 

752 





0BTO4 

BO. 1700 

-CLB30 115 Bt 

11J8 

12.17 

Price 

Dec M«- 

Dec 

Mar 

08/99 

103.1090 

-0210 

4.02 

3.83 

OSS 

12/03 

962370 

-0590 

4.69 

4.49 

407 

97D0 

2.11 2-82 

1.80 

SL2S 

01/04 

B73400 

-0360 

7.71 

7.45 

7.49 

9750 

1.84 2.89 

003 

353 

05/04 

81.0600 

-0-470 

11-31 

1097 

11J8 

B600 

159 2.47 

Z2S 

081 

08/99 

69-11 

-1/32 

8.73 

8.62 

046 

Eat VOL total. CHS 9077 Pirn 3*13. Pravtous dey*i open to. Cite 18004 Pub 22185 

11/04 

85-22 

-7/32 

092 

082 

008 





loro 

101-03 

-7/32 

8.86 

0.78 

8.69 





08/04 

96-17 

-21/32 

7.76 

7.58 

7^9 





11/24 

94-06 

-32/32 

7^5 

700 

757 





(MAM 

823900 

-0410 

079 

058 

061 

Spain 

■ NOTIONAL 




126 per 

cere pwsfete 

by nemos! 

Yttktos local market ■IsnoaU. 
dental 

SPANISH BOND PUTURES (MBT) 




Inflation 5% — 

Oct S Oct 4 Ylr. 


MMtan 10% ~ 

Oct 5 Oct 4 Yh 


6 Up to 5 years (2) 

7 Over 5 years (11) 

8 Al stocks (13) 


-055 10453 

-016 17254 

-015 173.01 


6.07 Up to 5 yra 4.11 4.08 253 

355 Over 5 yra 359 358 3.14 

4.04 


3.00 257 1.74 
070 399 257 


Debentures raid Loam 


5 year yield — 

Oct 5 Oct 4 Yr. 


- — IB year ytetd — — —25 year yield— — 
Oct 8 Oct 4 Yr. ago Oct 5 Oct 4 Yr.apo 


9 Dobs & Loans (781 12325 -013 12341 151 859 950 389 7J2 9.82 951 858 375 373 854 

Avenue flmsn re d e mp t i on yields we them move. Coupon Banos: lew; 0M-7W4; Moduoe 0%-iOmfc Hpc 11K and aw. t Rat yWd ytd Veer to due. 


Sauce: 4043 Intmrmkmal 


Open Sett price Change High Low Eat- vol Open bit. 
8655 6396 -045 8312 85.75 33*55 73475 


FT FIXED INTEREST INDICES 

Oct 5 Oct 4 Oct 3 Sap 30 Sep 29 Yr ago 


GILT EDGED ACTIVITY INDICES 

Oct 4 Ooi3 Sap 30 8^29 


ftknema 

Brake loan rats 

Fed. finds 

Fedtan* at Move* 


Oos mood . 

7 4i Tv*) mah . 

6*2 Hew month 

44» Sa new* _ 

In. - Ore yew — 


Treasury S»s and Bora) Ytetts 

452 TWo year _ 

_ . *59 TtKMJWr. 

108 Rre year 

651 10 -ynr 

304 SO^rer 


Oort Sec*. (UK) 9018 9022 SOM 9084 8030 10254 10754 8354 OR Edged target* 630 802 1225 111.7 137.9 

Raced Interest 10396 10653 107.17 10754 1075S 12347 13357 10350 0-dey average 1044 1114 1135 1144 1104 

- tor IBB*. Government ffwaaMw «*re ra i ptei lo n: 1ZM0 R/Y/35). law 49.19 p/i/TSL Read kmreWldflh Wire cenptedon: 13157 gt/l/M). low 8033 tWTS ■ Beeki 100: Govemnara Seortlei lyiot 

20 aid Rxed Maeet 1828. SE activity Meet raDared 1074- 


BOND FUTURES AND OPTIONS 


■ NOTIONAL UK Qff-T FUTURES [UFFE}* £50,000 30nda of 10096 

Open Sett price Change High Low Eat. vd Open InL 
Dec 98-28 9901 -0-08 99-12 88-26 54350 99048 

Mar 96-13 -5-08 0 0 


FT/tSMA INTERNATIONAL BOND SERVICE 


France 

■ NOTIONAL. FRENCH BOND FUTURES (MATIF) 



Open 

Sea price 

Change 

High 

Low 

Esl vol 

Open «l 

Strike 

Price 

Dec 

109.92 

109.66 

-062 

11000 

109.60 

156.6% 

131^20 

Mar 

109.20 

108.92 

-0^0 

10900 

106.86 

1^28 

7^91 

99 

Jiai 

108.46 

108.18 

-0.60 

108.48 

102.48 

2 

354 

100 

101 


■ LONG GILT FUTURES ORTONS (UFP9 650500 84thaoM 00% 
Strike CALLS PUTB 


a fie Me* Uamatani tjonta fcr touch mere b wi adequate aoccndoy marttaL LaMtprioaa at 7» pm on October S 

leered Hd Offer Cbg. YMd loaned Hi Offer Chg. YMd 


laaead Hd Offer Chg. YMd 


.1000 99% 1004 ->4 789 WcridBwk015 _ 

.400 1IE* 103 ft 753 HMdBa*5%03 


E*L vol rare. Cere 2120 Piaa 3247. PraUous cay* open Ire. CM* 6680* Ml STUBS 


_100 101 % 102 ft 731 Wald Bank (A 00 . 

. 1000 82% 82% ft 829 


■ LONGTERM FRENCH BOND OPTIONS (MATIF) 


Strike 

— — 

- CALLS — 

— — — 

- 

— PUTS — 

— 

Price 

Nov 

Dec 

Mar 

Nov 

Dec 

Mar 

110 

0.78 

1.28 

- 

1.12 

1.60 

- 

111 

0.40 

0.84 

- 

1SB 

2.18 

- 

112 

020 

OS? 

- 

- 

2.80 

- 

113 

oca 

0.30 

- 

- 

- 

- 

114 

002 

0.17 

- 

- 

4.39 

- 


Ecu 

H ECU BOND FUTURES (MATIF) 

Open Sett price Change Ugh Low Eat voL Open Irt. 
Dec 79J34 7324 -058 7956 7318 1503 8567 


. ISO 101 101*2 ft 7Z SWISS FRANC SnWGHTS 

WOO 9% 10% ft 888 Aren Dot Bar* 6 10 

ran 102% 103*1 ft 651 Austria ft® 

. 500 88 % 8012 -4* 804 Gound Bmpe 4% 98 

1000 8 ft 6 ft ft 316 DenretcftBB 

.100 10ft HE 7J0B EBftOi 


Esl ml ratal. Cato 3/538 Pins 3S0» . Previous dey-e open fe, Cree 22 *AB« Pus 309.183. 


Germany 

■ NOTIONAL GERMAN BUMP FUTURES (UFFET DM2S0.00Q IQOths oH00% 

Open Sett price Change High Lew Eat vd Open inL 
Doe 8325 67-90 -0.44 8325 87.85 127324 154645 

M» 87.30 8752 -343 87.38 8750 395 1847 


■ US TREASURY BOND FUTURES (CgQ SI 00500 32ndaoM 00% 


Open Latest Change High Low Eat. voL Open M. 

98-11 9308 -04)3 98-12 96-06 232,160 393006 

97-20 97-1 B -0-03 97-22 97-17 668 23172 

97-01 T5 10017 


113 DOLLAR SniABHTS Unted Ktapfcft 7% S7 _ 

Abbey Nad Tramuy ft 03 1000 8ft 89 ft 838 ftfcnragen M Rn 7 OS . 

WHBRnhnftn 1000 Oft 10ft ft 789 Wold Be* 015 

Au&faftOO 400 10ft 109 ft 753 YtattB**5%03 

BaAcfTohycft SB 100 10ft 102 ft 731 WoUBarttftOO 

Bdgtnftoa 1000 8ft 8ft ft 629 

BFCEftOT 150 101 10ft ft 7a SWISS FRANC SIWUa 

Bn»h Gas 021 1500 ft 1ft ft 899 Aren D» Be* 6 10 

Gam* 6 96 ran toft 10ft ft 651 AsttaftOO _____ 

ChomoKorgRnft 98 500 8ft 8ft ft 894 Cored Bnps ft 98 _ 

Chnaft 04 1000 8ft 8ft ft 318 DenrakftBB 

Cored Bnpe 8 98 100 10ft 1® 758 EBftOd 

QwftRmfcrftH 300 10ft 10ft ft 7T1 Bee da Earn ft 08 _ 

D*nrne*ft98 10£» 8ft flft ft 757 FkAnd 7\ SB 

EM ihpai Rateay ft 04 900 8ft 8ft ft 888 HyrecU Mate Rn ft 97 

ECSCft 96 193 102 raft ft 720 bebndftOO 

EEcftaa ioo raft raft tjji io*eftoi_ 

SB A 90 250 101*4 10ft 884 OMsto ft 03 

B BftB7 MOO IDS raft ft 758 OuBtecH>th>5CB 

Bee de Franca 9 98 200 104 10ft ft 701 6NCF70# 

BanSmaft 88 100 103 10ft ft 883 wredBartc503. 

BMnBadtJfipoiBOS 500 9ft 9ft ft 312 Watt Bert 7 01 

Expert Dev Cop ft 96 150 10 ft 10 ft ft 757 

Faded Ned Mat 1M 04 1500 98 9ft ft 318 YBI STHAKBflS 

FWendft 97 3000 9ft Oft 732 Mgkra589 

Fhtth Bport ft 96 200 10ft 103 358 FMftrai 


.5500 raft raft 


. 1000 9ft 9ft ft 311 


.2000 1 ft 20 
.9000 8 ft 8 ft 


,1250 10ft 10ft ft 368 


>100 Oft 10ft ft 302 

, 1000 9ft 9ft ft 529 

- 250 9ft 9ft 439 

.1000 9ft 9ft 330 


_30Q 10ft 10ft ft 7J1 Bee da frame ft 06 . 

WOO 8ft 85% ft 757 fUM 74(80 


.800 10ft 10ft ft 854 


TJJI Kobe ft 01 _ 
394 OMaloft 03. 


. TOO 10ft 10ft 330 

.300 10ft tOft ft 372 

. 100 105 -1 856 

. 100 107 10712 31E 


.240 Idft 10ft ft 387 


.MOO IQS raft ft 758 OubacH|dR>5O0 . 

- 200 104 104*2 ft 751 6NCF70# 


.400 9ft MO 026 

, WD 8ft 8ft £79 

,460 10ft «ft ft &08 

. 160 9ft 9ft ft 5JD 

.600 10ft 10ft ft 375 


Attny NB Daauy 8 03 E - 

Atenci Lake 11% 97 E 

MhUndft 23E 

Dermaritft 9BE 

QB 1097 E 

Hdhx10%97£ 

Hawn 10% BTC 

HSBC HoUnp IIjBB 02 C . 

l^lftME 

Jw»i Der 9c 7 00 £ 

Lend Sees ft D7 C 

Orasrioll%Ol E 

RoewgreftOSE 

Smn Hart 11 % 99 e — 
Tokyo Bee Power It 01 E - 
ABbay NafcndO 96 NZS — 

TOC Hn ft 02 N2S 

CMt Locale 01 ffir 

Boc do Fnm ft 22 FFr„ 
SNCFft 97FR 


. WOO 88% 
.ioo raft 

- 190 8ft 
-800 92% 
-837 102% 

- 100 103% 
-500 102% 
_ 153 107% 
-400 104% 

- 200 90% 

-200 9ft 

- WO 106% 

-250 94% 

- 150 107% 

- 150 W6% 
-WO 83% 

- 75 95% 

. 7000 88 

XttJ 961 
.4000 104 


90*4 -% 8J9 

106% ft 398 

88% ft 1067 

BZ% ft 312 


lUft ft 877 


107% ft 1023 


91 ft 9ffl 
98% ft HUB 


Oft ft 980 


84% ft 953 

9S% ft HUE 

88% ft 830 

97% ft 905 


HXMTHQ RATE NOTES 


■ BUND FUTURES OPTIONS (UFFE) DM250.000 pdma of 100H 


Strike 

Price 

Nov 

Dec 

MLLS — 
Jan 

Mar 

Nov 

Dec 

PUTS 

Jan 

Mar 

8750 

0.97 

1 J 8 

1 J 1 

15S 

0J5T 

0.96 

1.49 

1.63 

8800 

0.70 

1.10 

0.96 

151 

080 

1-20 

1.74 

SOS 

8850 

0.47 

0.66 

Q.76 

1.09 

1.07 

1.48 

2.04 

207 


EW. vol mul. owe MMU Pin laesa. Pmta* dey-e Open «- CdS 216067 Puts 204384 


Japan 

■ NOTIONAL LONG IBM JAPANESE GOVT. BONO FUTURES 

(UFFE} YIQOm lOOtha ot 100 % 

Open Ctesa Change Wgh Low Eat. vol Open InL 
Doc 10759 107 j44 10756 2188 0 

Mar 106.55 10655 10655 20 0 

‘ UFFE concracti traded an APT. AH Open Mbmi fes. n Ire preutaus day. 


UK GILTS PRICES 


_ibid_ — ibm _ 

ht Red PriBErnr- H» low 


_ Yield— • — 1994 — _YWd- -1994- 

M Red Price £ tor- Ugh tew Mbs fi) P) Prtci£ ♦nr- Htfi law 


Sretr* (Lhn np to R«i Yews) 


Trees Sbc 1994$* 

lTpciflflS 

EttS 3fc Gas 1880-95 ._ 
1(M«K1995_ 


rf»12%pc1996tt 1305 


UK 1996 1198 

1S%oc 19968 1373 

E«dl laUpc 1B96U 112G 

Ccrwenisa10(Kl898^- 955 
TrcasCov7#c 1997i$__ 751 

liras 13>*pC 199724 12.DI 

&st> 10'rfc 1997 HUB 

TieasStiK 1B97S— — 367 

Esdl1%K 1997 1252 

9%PC <998 348 

Treasr%pet«8ft 754 

Trass Btex 199&-98t*_ 7.15 

14pe 1098-1 12.12 


Treasi5iM»mt 1285 


Eitri l?pc 1833 

TrBXSfMC 199fltt_ 


348 100H 
384 lOlfl 
3B2 98BU 
870 102% 
7.14 llEii 
751 1071i 
7.09111*1! 
750 108,1, 

309 10% 
319 97J, 
321 110,’. 
325 104% 
343 1007, 
3S8 117al 
388 raw, 
852 

364 84ita 
390 11311 
373 122% 
388 110% 
862 102 ,% 


— IMH 
-i to?* 

98 & 

10733 

-A 113% 


-A 

■i 121*1 

-A 1I7B 
■A 11M 

-.’i 100 % 

-J. 121 {J 
-i Wi 
no* 
— 131 H 
-A 11441 
*U 106* 
-iV I® 
131* 

*ii 125(1 
1184 


Rn to RAM Yeats 

Endi 13%pc1W9 

Twos 10 %pc 1989 __ 

Ties 8 k 1999 tt 

Comasm ia%pci 9 M- 
TraasHtgim i9S9.™ 

ConvaocHUMtJ 

T«M 13*2000 

lOK aw 

warn# 

9LK3W2 

SpeSKBtt 

IQpe2D03_. 

Treat 11 %pe 2001-4 — 


1053 394 

950 380 
371 374 

8.73 3S3 


884 387 

1156 0.05 

957 9.06 

7J7 393 

341 311 

850 389 

9.47 307 
1058 SOS 


— 1284 
-4 1214 

raiu 
-4 1 iHH 

— 1004 

*& 1184 
ir’. 13® 
-4 1224 
ft 1084 
-A 123ft 
ft 113U 
-& 1274 
129U 


Fredtisa%K 1999-4— 
100H COmoraone%pc2«M— 
lOjB Tran 6 %pc 2004R 

o^aoos 

JSS Cow9%K2005 

^ Tran 12 %og 2003-5 — 

mS 

iQe* epezwH-ft** 

I03A Treat ll%pc 2003-7 — 

96% Tread 6 %Be 2007# 

1104 13%PC 2004-S 

10 ft Trees 9pc 2008)4: 

100 ,'. 

nos 

UCS 

*% 

53U _ _ .. 

||U9 (MTnBNBnlU 

laS Haas Ope 2009 

110 ,\ Traac81/4pc2010 

1 ( 71 (| Com Ope Ln 2011 # — 
Tires speanztt — — 
TteBE%pc 2008-12#- 

Trew Sp: 201 J** 

7%pe20!2-1Stt 

Trees 8 %f£ £ 0 ! 7£ 

1UQ Ett»12pt 2013-17 

<M 

HU 

104U 

99S 

116M 

oa*fc4« 

esa wot to* 3%pc# 

1KB Com3%pcvlAR._ 

82% Treat 3pe IK All 

104% Consoh 2%pc 

i«a Trees. S%* 


TM 71 
952 1034*1 
391 ass 
390 974 

3991038* 

950 119% 
890 BIB 
8 » 934 

951 11%) 

389 97 

950 126% 
366101401 


— 08* 
1254 
ft 105% 
ft 97H 
ft 125% 
-4 «« 
-A 117U 
-4 m% 
-4 1364 
-A 1194 
-A isii 
-A 124(1 


359 384 934 
750 388 794 

38* 379 101S 
382 378 102 

758 351 723 

858 373 B3B 

353 372 80(1 
871 370 1001a 

959 3M 127H 


-A 11S4 
-A 984 
-ii 126(3 
-4 127% 
ft 93% 
-A 1173 
-3 114% 
-3 128% 

-a is 9 % 


2KW— P75J ZX 423 198(1 -A 2B3% 187JJ 

ftPCVW (1333) 257 3JBI0B(W ft 1134 ins* 

2%pc'01_ 47E5I 142 383 165% 17B% 183% 

2%PCV3_ (7B3| 353 388 1814 ft 173% 1694 

VMeTHtt (133Q 353 3M108.U -4 118% 107% 

2pcVB_ (035) 351 35! 1874 -4 18*11 IBB* 

2%pcV9 <734 368 367 ISlfi -% 168,'. 148% 

2%pe‘lt (7*5) US 357 168% ft 175% 164% 

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FINANCIAL TIMES THURSDAY OCTOBER 6 1994 


29 





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Minor! 



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COMPANY NEWS: UK 


Increased demand and improved prices behind 78% advance 

Hewden Stuart surges to £16m 



Sir Matthew Goodwin (left) and Sandy Findlay; expect profits in 
second half to he 'substantially ahead' of last time's £10m 


By Antfrew Botger 

Hewden Stuart, the UK’s 
biggest independent plant hire 
group, said increased demand 
and improved prices had 
helped it to increase pre-tax 
profits by 78 per cent from 
£9.1m to £l6.2m in the six 
months to July 3L 

Sir Matthew Goodwin, chair- 
man, said trading was continu- 
ing at a high level and he 
expected that pre-tax profits in 
the second half would he “sub- 
stantiaHy ahead" of the £lOm 
achieved last time. 

Analysts upgraded their full- 
year forecasts from £27m to 
about 

Turnover rose by 40 per cent 
to £128m (£91.7m). The group 
said recovery from recession 
had increased the plant hire 
division's contribution by 39 
per cent to £8L6m, while the 
merchandising division's input 
rose 40 per cent to £46.4m. 

The crane hire division saw 
less buoyant conditions than 
elsewhere, bat moved from 
losses to an operating profit of 
£ 200 , 000 . 

Sir Matthew said trading was 
slow in Scotland, but became 
stronger further south. The 
group had kept open all but 
one of the 41 depots acquired 


By Peter Pearse 

Austin Reed, the clothing 
group, doubled pre-tax profits 
from a restated £930,000 to 
£l.84m in the 28 weeks to 
August 13 on the back of main- 
tained income from licensing 
and more than trebled profits 
from the retail operations. 

Turnover grew 12 per cent to 
£34.5m (£30. 7m). Mr Chris 
Thomson, finance director, 
said the results had beaten 
marry expectations, adding that 
the current strategy - in place 
for 18 months - had borne fruit 
for the past three seasons. 

He said that the heavily 


By Richard Woffle 

Coats Viyella, the UK’s largest 
clothing and textiles company, 
yesterday acquired Corah, the 
Leicester-based producer of 
underwear and knitted fabrics, 
for a consideration believed to 
be about £25m cash. 

Coats has been negotiating 
since May to buy Corah from 
the receiver to Charterhall, 
Corah's holding company. 
Charterhall went into receiver- 
ship in 1990 after its Australian 
owner, Westmax, went into liq- 
uidation. 

The acquisition, which will 
be finalised following the prep- 


last year when it paid grim for 
the HIreplant assets of BET. 

In spite of the sharp increase 
in turnover, the total number 
of employees increased only 
marginally, from 3,650 to 3,786. 

Capital expenditure in the 
first half exceeded £34m, bring- 
ing to £X00m investment in the 
past 18 months. Mr Sandy 


product range was targeting 
customers better and had 
broadened the customer base. 
That, combined with the use of 
different retail formats for dif- 
ferent locations and clientele, 
was helping the group lose its 
sli ghtly outmoded image. 

A force behind the retail 
advance - to £523,000 (£140,000) 
on turnover of £26.1m (£23.6m) 
- was the shop format called 
Austin Reed Sportsman, which 
sells leisurewear. In the spring 
a women’s leisurewear line 
was launched. 

The group has 50 outlets, 
though some - such as 
those in three of Heathrow 
airport’s terminals - are as 


aration of completed accounts, 
comes after Coats identified 
clothing as one of its key 
growth sectors at the 
announcement of its interim 
results last month. 

Corah, which supplies Maries 
and Spencer, expects pre-tax 
profits to be at least £3Bm .on 
turnover of about £63m for the 
year to October 2. Net assets 
are roughly £5m, after writing 
off debts. 

The company will join Coats' 
clothing division, which at the 
interim stage reported reduced 
operating profits of £3 .3m 
(£5.2m) after closing a uniform 
factory in South Wales. 


Findlay, chief executive, said 
investment of not less than 
£Z5m was expected in the sec- 
ond half and about £60m next 
year. 

The investment came out of 
cashflow of £35m. The group 
said that by the summer cash- 
flow was running at more than 
£L5m per week. 


small as 300 to 400 sq ft 
Profits from manufacturing 
for other retailers rose to 
£486,000 (£258,000) on turnover 
ahead from £5.66m to £7.0fim. 
Mr Thomson said that sales in 
Switzerland, Italy and Ger- 
many lost during the recession 
were now being regained. 

Borrowings were cut to 
£6.4m (£10.4in) and are expec- 
ted to be down to £3m by the 
year-end. Interest charges were 
halved at £306,000 (£601,000). 
Capital expenditure on store 
reftirbishment will total £4m 
for the year, against E2_sm_ 
Earning s were 35p (2p) per 
share and the interim dividend 
is held at 2p. 


Infostructure 
launch postponed 

By Bethan Hutton 

BZW and Socifitd G6n6rale 
Strauss Turnbull are post- 
poning the launch of an 
investment trust because of 
the poor market for new 
Issues. 

The Infostructure Trust, 
which would invest mostly in 
companies quoted on emerging 
stock markets and operate 
across the information indus- 
try, was to have been launched 
with a public offer for sub- 
scription opening in the last 
week of October. 

The offer is now likely 
to take place in the new 
year. 


The chairman said- “The rate 
of our cashflow is such that we 
will be able to continue to fund 
our programme from the group 
resources, thus ensuring that 
our policy of avoiding dilution 
of shareholders’ interests by 
rights issues is maintained" 
Earnings increased by SI per 
cent to d94P (3p). The interim 
dividend was 0.825p (0.75p). 

• COMMENT 

Sir Matthew was understanda- 
bly jubilant over these results, 
which he described as “quite 
superb" and promised analysts 
“you ain't seen anything yet." 
The strong recovery in profit- 
ability vindicates the group’s 
decision last summer to step 
up its investment in new plant. 
The performance is all the 
more impressive considering 
that there are still areas of 
weakness - such as crane tow- 
ers and site accommodation. 
The shares were unchanged 
yesterday at 146 ‘/ip - a consid- 
erable achievement on a day 
the market plunged Forecast 
full-year profits of £32m put 
the shares on a prospective 
multiple or 15. The 8 per cent 
premium to the market does 
not look excessive for a group 
with this sort of track record 
and prospects. 


Hogg pays £13m 
for Inchcape 
operations 

By Andrew BoJger 

Hogg Robinson, the travel, 
transport and financial ser- 
vices group, has paid £13m for 
the whole of the UK and 50 per 
cent of the Hong Kong-based 
financial services operations of 
Bain Hogg Group, the insur- 
ance broking arm of Inchcape. 

Inchcape bought the Hogg 
Group, an insurance broker, 
for £176.6m in April and 
merged it with its own insur- 
ance broking subsidiary, Bain 
Clarkson, renaming the 
enlarged company Bain Hogg. 

The Bain Hogg activities 
being acquired are almost iden- 
tical to those of Hogg Robinson 
Financial Services: employee 
benefits, pensions advice and 
financial counselling. 

Last year the UK businesses 
marin pretax profits of £1.2m 
an sales of £17m, while the 
Hong Kong business made a 
negligible trading loss in its 
start-up year. Net assets of the 
businesses are £500,000. 


Beverley’s 
reverse 
takeover 
by FEC 
collapses 

By Simon Davies 

The proposed reverse takeover 
of Beverley Group by Hong 
Kong-based Far East 
Consortium has collapsed, 
after FEC terminated a 
provisional agreement to swap 
a Chinese boiler 
manufacturing subsidiary for 
a majority shareholding. 

Beverley gave no 
explanation for the move, 
which follows more than three 
months or negotiations. 

The deal would have 
provided Beverley with Its sole 
source of earnings. 

FEC Is controlled by the 
family of Mr Deacon Chin, 
who built up a conglomerate 
around a network of cinemas 
and property developments, 
but became entangled in a 
series of legal battles. 

In 1993, he had 14 charges of 
false accounting dropped 
against him, after he was 
found unfit for trial due to 
senile dementia. Shareholders 
still voted for him to retain his 
post as chairman. 

In September that year, die 
Hong Kong Stock Exchange 
expressed “major concerns" 
over a property sale to Far 
East Hotels, a FEC group 
company. The deal would have 
netted a HK$506m (£41m) 
profit for Mr Chin’s son Derek 
in less than a year, but the 
sale was withdrawn. 

And last December, Hong 
Kong’s Commercial Crime 
Bureau raided the FEC group 
offices, in connection with a 
government investigation into 
the 1990 buy-out of Alan 
Bond's Bond Corporation 
International Ltd. No charges 
have been brought 
Beverley’s purchase of 
Pegasus, which owns 51 per 
cent of a Guangzhou (Canton) 
boiler man uf act ur er, was to 
have provided access to a high 
growth market, and a positive 
cash flow. 

Beverley’s 1993 accounts 
were qualified, as its auditors 
were “unable to provide 
confirmation that it will have 
sufficient facilities to cover 
future working capital”. 

Its shares will remain 

suspended, and the company is 
looking at alternative means 
of raising finance. 


1 DIVIDENDS ANNOUNCED 1 




Cones - 

Total 

Total 


Current 

Date of 

ponding 

for 

last 


payment 

payment 

dividend 

year 

year 

Austin Reed Int 

2 


2 

- 

5.5 

Bank of Scoliand rrt 

2.13 

Dec 19 

1.87 

- 

5dl5 

Finalist . ... Bn 

1^ 

Nov 11 

- 

- 

- 

Grampian Holds Int 

1.7 

Nov 24 

1.7 

- 

5^ 

Hewden-Stuart int 

0.825 

Dec 12 

0.75 

- 

2.9 

Novo Group fin 

0.1 

Dec 1 

1 

0.2 

1^ 

Prestwick — fln 

rd) 

- 

nil 

nil 

0^ 

Walker Greenbank — Int 

1.3 

Dec 6 

1.2 

“ 

3J 


Dividends shown penes per share net except where otherwise stated. tOn 
increased capital. §USM stock. 


Austin Reed doubles to £1.84m 


researched “revitalising” of the 

Coats buys Charterhall 
offshoot from receiver 


Servisair achieves target 
£54.3m value in float 


By Simon Davies 

Servisair, the independent 
aircraft and passenger han- 
dling company, has announced 
that despite current market 
indigestion for new issues its 
flotation was fully underwrit- 
ten at its target price, valuing 
the company at £54Jm, 

The company’s parent. Secu- 
rum, is selling 60 per cent of its 
stake. 

Servisair is offering a further 
7.4m new shares, making a 
total offer of 24.12m shares 
priced at 135p. 

The company is forecast to 
make profits of £42m before 
exceptional items, putting the 
shares on a price-earnings 
ratio of 14.7, which is roughly 
the stock market average. 

It is offering 6.03m of the 
shares to intermediaries. This 


portion of the offer should get 
a boost from the news yester- 
day that Servisair has won a 
10-year baggage-handling con- 
tract at Glasgow airport, the 
UK's fourth largest. 

Servisair already operates 
passenger and cargo handling 
services at Glasgow, which 
should contribute about £5m to 
this year’s revenues. The bag- 
gage-handling contract should 
add at least 10 per cent to that 
figure. The company has also 
secured 10-year contracts for 
its other operations in Glas- 
gow. 

Servisair will pay a notional 
dividend or 3.5p for 1994. repre- 
senting a notional gross divi- 
dend yield of 3J> per cent. 

The oiler to intermediaries 
closes on October 12 and trad- 
ing Is scheduled to start on 
October IS. 


• COMMENT 

Servisair has done well to 
achieve a high price in an 
unfavourable market, but does 
not appear to have left much 
for the stags. It offers the 
advantages of a long manage- 
ment track record, a decade of 
profits growth, and a relatively 
dependable source of earnings. 
It also has a strong argument 
for new business. Airlines in 
the UK and Europe are 
starting to contract out lower 
margin, non-core activities 
such as passenger and aircraft 
handling. The old monopolies 
are being broken, as at Glas- 
gow, providing a convincing 
medium-term picture. As most 
of the short-term attractions 
are well accounted for in 
the offer price, it must be 
classed as a stock for the 
patient. 


Biocompatibles for market 
with £80m valuation 


By David Blackwell 

Biocompatibles International, a 
research company that has 
developed a new type of con- 
tact lens, is planning to float 
later this month as its products 
begin to go on sale. 

The company, which is 
expected to have a market 
value of about £80m, is seeking 
up to £40m through the issue 
of new shares. Of the total. 
£25m will be placed firm, with 
the balance available to meet 
retail demand through inter- 
mediaries. 

The pathfinder prospectus, 
published yesterday, shows 
that tho wimpany had accumu- 
lated losses of £9 .77m at the 
end of June. It warns that 
investment in the company 
involves a higher than normal 
degree of risk. 

Mr Alistair Taylor, chief 
executive, stresses that the 


company is not a biotechnol- 
ogy operation, but a maker of 
medical devices. It has £7m of 
cash, which would last for a 
couple of years if It continued 
at its present pace. 

But it expects to spend £25m 
next year as it moves its con- 
tact lenses into the French, 
Ge rman, and US markets and 
increases the pace of develop- 
ment of other devices. 

The existing shareholders, 
intending Johnson & Johnson 
with 8 per cent, Biotechnology 
Investments, Cygnus Ventures 
and 3i, will retain their shares 
for at least a year. 

Biocompatibles was estab- 
lished in 1984 to develop prod- 
ucts using phosphorylcboline, 
or PC, a substance present in 
red blood cells and the primary 
natural material responsible 
for biocompatibility. 

PC was identified by Profes- 
sor Dennis Chapman, of the 


Royal Free Hospital School of 
Medicine in London, who holds 
4 per cent of the equity. 

The PC-based soft contact 
lens, to be known as Prodear, 
is aimed at people who want to 
use contact lenses, but have 
found them uncomfortable. 
The company says the lenses 
resist dehydration and cut the 
risk of bacterial infection. 

Mr Taylor expects the com- 
pany to be generating cash in 
1998, mostly from the sale of 
contact lenses, which begins 
commercially this month. 

The company has a licensing 
and cooperation agreement on 
eye care with NOF Corporation 
of Japan. Last month it 
acquired Lombart Lenses, a 
contact lens maker in the US. 
which accounts for half of the 
world market 

Sponsor to the issue is Rob- 
ert Fleming and the broker is 
Smith New Court 


Churchill China hopes to 
raise £15m in flotation 


By David BlackweQ 

Churchill China, the third Staffordshire- based 
china company to float this year, is expecting 
1994 profits to exceed the record level of 199L 

The pathfinder prospectus yesterday forecast 
pre-tax profits, before bonuses to directors, of 
£3.6m for the year to December 31. This would 
be ahead of last year’s £2 3m. struck on turnover 
of £36m, and 1991’s £333m on sales of £31.5m. 

The company, which celebrates its bicente- 
nary next year, is owned by the Roper family. It 
is arming to raise £15m via a placing. 

About two-thirds of the money wifi go to the 
three Roper brothers on the board, their fami- 
lies and family trusts, while £5m will be used as 
part of an investment programme to improve 
capacity and quality. “In the next five years 


investment in the company will be double the 
investment we undertook in the previous five 
years,” said Mr Stephen Roper, chief executive. 

The Roper family, which has run the company 
since 1922, will own about 55 per cent of the 
company after the placing. 

In addition to providing funds for investment, 
the group, which operates tableware, hotel ware 
and fine china divisions, expects the expanded 
shareholder base to provide a market for exist- 
ing shareholders and opportunities for employ- 
ees to invest 

Mr Rqper described 1991 as an exceptional 
year, with exports to continental Europe partic- 
ularly strong. Recession in Germany and Spain 
knocked profits back in 1992, but the upturn in 
business seen in 1993 had continued this year. 

Hoare Govett is both sponsor and broker. 



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War 

ended 

28 FeOruwy 
1994 

OPERATING PROFIT BEFORE PROVISIONS 

£321.401 

£283im 

£568.8m 

PROFIT BEFORE TAXATION 

£2112m 

£ 117.6m 

£268.7m 

TOTAL CAPflAL RESOURCES 

£2, 534m 

£2, 250m 

£2,460m 

TOTAL ASSETS 

£31,951 m 

£29, 392m 

£30, 748m 

EARNINGS PER ORDINARY STOCK UNIT 

m9p 

5.4p 

12_Zp 

DIVIDEND PER ORDINARY STOCK UNIT 

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FINANCIAL 

REGULATION 

REPORT 


jjjj 


Financul Regulation Report 

is ■ monthly service from the Financial 
Times. Ii provHks suboenben with up-u- 
datc and thorough information on worldwide 
regulatory devefopmenu and their 
im|)ltcaiioR& for the financial services industry. 

Written by professional experts, 

FT- financial Rcgubtlkxi Report: 

• describes and lumman /anew 
regulations and legislation: 

• explains authociliMively but 
intelligibly the meaning and 
purpose of new regulations, 
putting them in their 
international context: 

• comments on the implications 
for the markets concerned - 
whether short - or medium-term 
credit, long-term debt, equities 
or derivatives. The vital question 
of the competitive position of 
market players is regularly 
addressed. 

With increasing market stresses and the 
accelerating pace of regulatory change it is 
simply not safe policy to be underraformed. 

To receive a FREE 
sample copy contact: 

Sitni Baosal, 

Fmancnl Times Newsletters. 
Marketing Department. Third Floor. 

Number One Sourhwark Bridge . 
IxHtdon SEI 9HL. England. 

Td: 1+44 71)873 3795 
Fw: (+44 71) 873 3935 

ISr WMmwoi pia pnxUe «IB k kAI St n 


FT Borincm BnerprUo. Ltd. 

| Regarded Office: Number One Soutmaii Bridge. 
LttubM SEI QliL, Edglood. 

Rcgiacml No. 080890. 

VAT Rcgbtmioo Na GB Z78 537 I 21. 


This adve rt tsament is issued n compliance with the requirements of The International Stock Exchange of the 
United Kingdom and the Repubfic ol Ireland Limited (the “London Slock Exchange"). It does not constitute an 
Invitation to the pubBc to subscribe tor, or purchase, any securities In ivory a Sime ISIS Trust pic. Application 
has been made to the London Stock Exchange for all of the warrants of the Company ("Warrants") now being 
issued to be admitted to the Official List. It Is expected that admission of the Warrants will become effective, and 
that dealings in the Warrants wffl commence, on 6 October 1994. 


IVORY & SIME ISIS TRUST PLC 

( Incorporated In ScoOand under the Companies Act 1985. registered number >40888 1 


Issue of 

931,604 Warrants 
to 


planholders under the 1 
Ivory & Sime ISIS Trust pic Monthly Savings Plan 


Each Warrant confers the right to subscribe for one ordinary share of 50p in Ivory & Sime ISIS Trust ptc on 
31 October 2000 at I07.5p. subject to ad|ustment In certain cacumstances. 


ivory 4 Sime ISIS Trust pic is a Isted investment trust which alms to provide above average C3pitaJ growth tram 
a portfolio of high quality UK equities. 

The Warrants are issued pursuant to a warrant issue agreement between Ivory & Sime Investment 
Management pic and Ivory & Sime ISIS Trust pic dated 10 May 1993 (the ■’Warranl Issue Agreement") and 
constituted by a warrant instrument executed by Ivory & Sime ISIS Trust pic on 10 May 1993 (Ihe "Warrant 
Instrument"). 

Copies of the Warrant Issue Agreement and the Warrant Instrument, together with copies of the audited annual 
report and accounts of Ivory & Sime ISIS Trust pto tor Ihe financial period ended 31 December 1993. wd be 
avaSabte tor Inspection during normal business hours on any weekday (Saturdays and public holidays 
excepted) unto 20 October 1994 at 


ivoiy &' Sime pic 
One Charlotte Square 
Edinburgh EH2 4DZ 


Ivory X Sime pic 
One Angel Court 
14lh Floor 
Throgmorton Street 
London EC2R7KJ 


6 October 1994 


Leveraged 

Capita! 

Holdings 



Weekly net asset 
value 

*» 03.10.M 
US$60.84 

Listed on the 
Anwteftkim 
Stock Exchange 


Informal tun: 

MretFmten Capital hbnagmau 
RulJn 55. 10UKK Anmenbm. 
Td. * 1 1-20-52 1 1410. 



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JUPITER TYNDALL GLOBAL FUND, SICAV 

R egis t er ed Office! Lax em btwg, O^seCwtlw 
RXL Luxembourg B 34 J93 

DIVIDEND NOTICE 

The Directors resolved on 27 September 1994 to pay a dividend of 2 peace per share 
to shareholders of the High Yield Portfolio oo record on 30 September 1994 with an 
ex-dividend date of 3 October 1994 and a payment date of 7 October 1994. 

By order of the Board 


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Storehouse upbeat and 
plans BHS expansion 


By Nall Buckley 


Storehouse 


Storehouse is stepping up the 
expansion of its BHS clothing 
chain , including extending its 
franchise network in Spain, 
Greece and the Middle East. 

The news came as the retail 
group, which also includes the 
Mothercare and Blazer chains, 
said sales were r unning 7 per 
cent ahead of last year, and it 
expected interim profits from 
retail operations to be “com- 
fortably ahead" of last year. 

Storehouse was upbeat on 
prospects for trading and 
growth. Its shares rose lp to 
198p. 

It said that while sales for 
the first quarter to July were 5 
per cent ahead of last year, the 
increase for the first half was 
expected to be 7 per cent, 
thanks partly to a strong back 
to school period. 

Gross margins were being 
maintained, in spite of 


Snare price relative to the 
FT-SE-A Retailors, General Index 

102 - - 



Source: FT Graphite 


increased mark-downs to clear 
excess stocks of children’s 
clothing at Mothercare. 

Cost increases were better 
than budget, although the 
group said refurbishment of 
Mothercare stores would lead 
to higher operating costs and 
depreciation charges. 


BHS is accelerating its 
expansion programme and will 
increase selling space by 5 per 
cent this year, and 8 per cent 
next year. Capital spending 
will increase from £46m to 
£80m. 

It is opening three stores 
during the autumn in Roch- 
dale. Telford and Stirling, and 
extending other stores. Six 
openings are scheduled for 
next year. The group plans six 
openings in each of tbs follow- 
ing two years. 

Some 13 BHS franchises will 
open this aut um n in Spain 
Greece, Portugal and the Mid- 
dle East, where they wQl add 
to existing operations in Saudi 
Arabia, Kuwait, Bahrain, 
Oman and Abu Dhabi 

Refurbishment of the 
Mothercare chain is continu- 
ing, with 42 stores, represent- 
ing a quarter of trading space, 
now completed. 

See Lex 


Prestwick on recovery path 


By James Buxton 


Prestwick Holdings, the 
Scottish printed circuit board 
maker, returned to profit at the 
operating level in the year to 
August 1 as measures to revive 
It after heavy losses following 
ill-judged acquisitions took 
effect. Its pre-tax loss was also 
sharply reduced. 

Operating profit on continu- 
ing operations was £815,000 
compared with a restated defi- 
cit of £875.000. Losses on dis- 
continued operations fell to 
£141,000 from £950,000. 

At the pre-tax level losses 
were cut to £ 1.25m (£3.97m) 
after exceptional reorganisa- 


tion costs Of £493,000 (£478,000). 
Turnover on continuing 
operations inched ahead to 
£32. 9m, against £32.4m. and the 
interest charge was reduced to 
£562,000 (£652.000). Losses per 
share emerged at 7.11p (2Q.34p). 

Mr Archie Coulson, a com- 
pany rescue specialist who 
became executive chairman at 
the request of institutional 
shareholders in January, said 
the company had achieved the 
forecasts made in August when 
it launched a £4.5m rights 
issue. 

Prestwick also sold Electro- 
connect, Its electronic design 
subsidiary, to management for 
£1.65m. 


The company has no distrib- 
utable reserves and is thus 
unable to pay dividends. It 
intends to apply to the High 
Court to eliminate the deficit 
on its distributable reserves 
and resume dividend payments 
when it is prudent to do so. 

Mr Coulson said the refinan- 
cing had given the company 
the flexibility to choose 
between raising profit margins 
or going for volume growth. 

It had to increase productiv- 
ity, improve its processes and 
invest to improve the quality 
of its capital equipment Parts 
of its business were doing well 
but others were not performing 
satisfactorily. 


Airtours acquires Late Escapes 


By Michael Skapinfcer, Leisure 
Industries Correspondent 


Airtours. the travel group, has acquired Late 
Escapes, a travel agency, for up to £6-4m. 

Late Escapes sells tour operators’ holidays 
close to the date of departure. It advertises on 
Teletext and sells by telephone. It has adminis- 
trative offices in Newcastle, Darlington and 
Sunderland and in 1993 made pre-tax profits of 


£896,472. It will operate as a division of Going 
Places. Airtours' travel retail chain. 

Consideration will be in cash and unsecured 
loan notes. The initial payment will be £2.4m 
with a further sum of up to £4m profit related. 

Mr David Crossland, Airtours chairman, said- 
“This acquisition provides us with a position in 
a rapidly developing sector of the holiday distri- 
bution market which is complementary to that 
occupied by Going Places." 


This announcement appears as a matter of record only. 


£ 245 , 000,000 


Revolving Credit Facility 


Arranged by 


Samuel Montagu & Co. Limited 


Funds Provided bv 


FINANCIAL TIMES THURSDAY OCTOBER 6 .9,4 


COMPANY NEWS: UK 


£ 543,000 
Dutch buy 
for Walker 
Greenbank 


By Richard Waffle 


u Mirror Group” 


== Midland Bank pic 


Lloyds Bank Pic = 


— 5 Credit Lyonnais 


NatWest Markets 


Societe Generate 


Bankers Trust Company = 


The Toronto-Dominion Bank 


ABN AMRO Bank N. V. 


Bank of Montreal 


The Bank of Nova Scotia 


Hambros Bank Limited 


The Royal Bank of Scotland pic 


Agent 

Lloyds Bank Pic 



Samuel Montagu 


September 1994 


Member HSBC O Group 


Cost benefits from restructuring have not yet made an impact 

Grampian forced to lower sights 


By Simon Davies 


Walker Greenbank. the 
wallcoverings and fabrics 
group, entered a new phase of 
international expansion with 
the acquisition of a Dutch dis- 
tributor. announced yesterday 
alongside its interim results. 

The £543,000 purchase of 
Topwand forms part of Walker 
Greenbank’s strategy to boost 
overseas sales from 28 to 70 
per cent of overall turnover 
within the next five years. 

In the six months to July 31 
pre-tax p r o fi ts were up 23 per 
cent from £3JJ5m to £4. 14m. 
Group turnover rose 22 per 
cent from £29.9m to £3&im, 
partly thanks to a £2. 05m con- 
tribution from two companies, 
Hartley and Afia, acquired last 
year. 

Mr Charles Wightman, chief 
executive, promised another 
acquisition to strengthen the 
group's European distribution 
network by the end of this 
year. 

Walker Greenbank expects 
to double Topwand’s pre-tax 
profits of £98,000 last year by 
expanding its saiesfbrce to dis- 
tribute more consumer prod- 
ucts in the Netherlands. 

Interest costs fell from 
£181,000 to £39,000 and gear- 
ing was cut from 10 per cent to 
7 per cent 

This year the group expects 
to offset a 5 per cent increase 
in raw material prices by 
higher plant utilisation and 
increased productivity. Sales 
price increases next year are 
anticipated at 3 per cent 

Turnover in the non-core 
area of healthcare rose to 
£l-23m (£908.000). The group 
is planning to double the size 
of Its healthcare business , 
which produces bath lifts for 
the disabled, before disposal. 

The healthcare company. 
Hampshire Medical, survived 
the group's reorganisation 
after attempts to build Walker 
Greenbank into an industrial 
conglomerate in the 1980s. 

In 1991, Mr Wightman 
helped fight off a boardroom 
takeover by Anbin. a Jersey- 
based investment company. 

Earnings per share 
improved to 235p (2.44p) and 
the interim dividend is 
increased to 1.3p (1.2p). 


Grampian Holdings, the 
Scottish, mini-conglomerate, 
disappointed analysts yester- 
day by failing to deliver any 
meaningful fruits from last 
year’s intensive restructuring. 

Pre-tax profits rose 75 per 
cent to £3 .59m (£2.05m) for the 
half-year to July l; however, 
the 1993 figures were depressed 
by a £1.22m exceptional loss 
from reorganisation costs. The 
shares fell 12p to U7p, as ana- 
lysts' forecasts were cut by 
around wm 

Mr Bill Hughes, chairman 
and chief executive, admitted 
that G rampian over-estimated 
the speed with which cost ben- 
efits would come through from 


the consolidation of its phar- 
maceuticals business into one 
core manufacturing centre. 

Mr Hughes said: “Overall, we 
expect cost savings of £500.000 
for the full year.” Grampian 
estimates the division could 
achieve £l-2Sm of savings per 
year by 1995. 

The UK pharmaceuticals 
division experienced a 7 per 
r»»nt fall in pales , with margins 
falling because of fierce compe- 
tition in the supply of inten- 
sive farming products. How- 
ever, overseas markets, 
particularly Germany and New 
Zealand, strengthened. The 
division's profits fell from 
£3~29m to £3.04m. Sporting 
goods reduced losses from 
£273,000 to £183.000 but the 


company has yet to bene fit 
from royalty income from a 
new licensing agreement at 
Patrick International. 

Transport performed well, 
benefiting from moves into 
higher-margin logistics 
operations. Profits grew from 
£JL.32m to £1.55m. Retail 
operations now comprise a 25 
per cent stake in Edinburgh 
Woollen Mill, which contrib- 
uted a £181.000 loss against a 
£475,000 divisional loss in 1993. 

Group turnover from con- 
tinuing operations fell from 
£58.6m to £563m- Net debt fell 
by around £3m to £38m. Mr 
Hughes expects year-end gear- 
ing of 60 per cent (74 per cent), 
reflected in lower interest costs 
of £138m (£l39m). 


BP sees continuing pressure on margins 


By Robert Corzlne in Spain 


British Petroleum yesterday warned that 
refining margins were likely to remain 
under pressure for the rest of the year, in 
spite of a return to economic growth in 
much of Europe. 

Mr Rolf Stombeig, chief executive of BP 
Oil Europe, said that European refining 
margins were “the lowest in five years." 


The marg in in the first half of 1994 fell to 
$2.03 a barrel, against $2.48 in 1933- 

Mr Stomberg told journalists visiting the 
company's Spanish refinery that the gap 
between European supply and demand for 
refined products, such as petrol, would 
“narrow a bit next year." 

But he was not optimistic about a big 
improvement, because growth in refinery 
capacity in Europe continued to outstrip 


demand. In addition low international 
freight rates had allowed refiners through- 
out the world to ship products to Europe. 

BP bad been able to offset deteriorating 
margins by improved earnings from mar- 
keting activities, Mr Stomberg said. 

Cost cutting and improvements to BP'S 
five European refineries resulted in fixed 
cost savings of $100m (£63 -2m) in the first 
half L with further improvements likely. 


NEWS DIGEST 


Carr’s 


Sims completes buy 


Milling 
sells bakery 


Carr's Milling Industries has 
sold the business plus some 
assets of Robertsons (Bakers) 
to Robertsons, a joint venture 
it has set up with Hears Group, 
for £L3m cash. 

The move is aimed at 
reducing Carr’s losses while 
protecting Robertsons' position 
as one of the biggest 
customers of Carr's Flour 
Mills. 

Robertsons reported a pre- 
tax loss of £406330 on turnover 
of £15.6m for the year ended 
August 28 1993. 

Hears, a 50 per cent associate 
of G reencore Group, produces, 
markets and distributes bakery 
produce. In the year to Septem- 
ber 25 1993 it had pre-tax prof- 
its of £2.03m on turnover of 
£39.3m. 


Sims Food Group has bought 
the outstanding 40 per cent of 
shares in General Provisions, 
the supplier of sliced and 
packed bacon, for £2 53m. The 
acquisition has been financed 
by the issue of 334m new Sims 
shares at 5p each. 

Sims acquired 60 per cent of 
the share capital of General 
Provisions in January 1992 for 
£137m in rash. General Provi- 
sions' pre-tax profits for the 
year ended March 1994 were 
£584.000 on turnover of £13.Sm. 


with a value of some £l03m 
and was about 60 per cent 
through its purchase pro- 
gramme, the directors said. 

For the period from Septem- 
ber 17 1993 to July 31 1994 
there was a net deficit of 
£l.2m, or losses per share of 
5.99P- 

At September 30 net asset 
value was 100.8p. 


the market in February, is buy- 
ing a 2.6 acre greenfield site 
near Leeds for a 35,000 sq ft 
factory due to be completed in 
1995. 

The cost, including the land, 
design and building, will be 
about £i.7m. 


BZW Endowment 


BZW Endowment Fund, the 
trust which invests in second- 
hand with-profits endowment 
policies, had a net asset value 
per share of 983p at July 31. 

The company, which came to 
the market in October 1993, 
said policies had been bought 
on better terms than had been 
envisaged at the trust's launch. 

The fund held 856 policies 


Navan Resources 

Navan Resources, the Dublin- 
based natural resources pro- 
ducer. announced that "strong 
progress’* had been made in 
the 1994 first half, with pre-tax 
profits advancing by 85 per 
cent from U297.000 to I£549,000 
(£543,009) tor the period. 

Turnover grew from I£3.1m 
to I£3.7Sm and earnings came 
out at 0.57p (0.07p) per share. 


CU rights result 

Commercial Union's recent 
£322m rights issue has been 
taken up in respect of 633m 
new ordinary shares, equiva- 
lent to 90.84 per cent 
The remaining shares have 
been sold at a premium. 


Parkside factory 

Parkside International, the 
flexible packaging and plastic 
labels maker which came to 


Hungarian Inv Tst 

Hungarian Investment Trust 
ended the six months to 
August 31 with net asset value 
at $9537, against $94.97 at the 
same stage of 1993 and $108.88 
at February 28 1994. 

Net revenue in the first half 
fell from $968,000 to $891,000 
(£561,614). Earnings per share 
came to 89 cents (97 cents). 



CREDIT LOCAL DE 
FRANCE FRF 300000000,- 
Reverse Floater Bonds 
Due 2003 


Bondholders are hereby 
informed that the rale for the 
third period of interest has 
been set at 438879 %, 
and is payable as from 
April 3rd, 1995. 

The interest for tbe coupon 
N°3 is for the period from 
October 3rd!. 1994 to 
April 2nd, 1995 and the price 
for the coupon N°3 
is FRF 438,88 
for tbe FRF 10.000 Notes 
and FRF 4.388,79 for tbe 
FRF 100.000 Notes. 


SODISCO-HOWDEN GROUP INC. 
(formally Unigesco Inc.) 

Variation of the Offer made to 
Purchase all Outstanding Debentures 


NOTICE IS HEREBY GIVEN that Sodiseo-Howden Group Inc. 
("Sodiaco-HowdeiO (formally Unigesco Inc.) has extended from October 
5 , 1994 to November 7 . 1994 the Termination Date of its offer dated August 
30, 1094 (the “OfTer”) made to purchase all of the 7£5K - JKt Convertible 
Series A Debentures nf the 735 H -9^- HJ.TJCr Non Convertible Series 
AA Debentures, of the 7J259 - MMf Convertible Series B Debentures and 
of the 7.2Kb - MW - IL73 < 1 Non Convertible Series RB Debentures 
f collectively, the “Debentures"). 


Hie other terms and conditions of the Offer are not amended. 


The Fiscal Agent 


Under the terras of the Offer, any Debenture which has been deposited in 
acceptance of the Offer may be withdrawn on or before IDhOO. local time, 
on November?, 1994 in accordance with the procedure set out in the Offer. 


This Notice is given to the holders of Debentures pursuant to Sections 4 
and 10 of the Offer. 


Any question or request for information should be addressed to Sodisco- 
Howdcn, to General Trust of Canada or to any of its agents. 



LUL II WVJ 
lIUMtOf 


Sovereign (Forex) Ltd. 

24hr Forei g n Exchange 

Margin tra di ng FuJty 
Co m p af i trra Prion 
MjrhxSann 
Tel: 071-931 9188 
foe 071-931 71 U 


u.,. 15 % 

off electricity 


v.-v ret nr>g Sco "'. =*;•? 

021 423 3018 


Powerline 



BuildingSociety 


Floating Rate Subordinated Notes due 2005 

Notice is hereby given that for the six months interest 
period from October 3, 1994 to April 3. 1995 (182 days) the 
Notes will carry an interest rate of 6.925%. The interest 
payable on the relevant interest payment date April 3, 
1995 will be £3,453.01 per £100,000 denomination. 

The Industrial Bank of Japan, 

limited, London TVS JV 


Notice of Event of Default 

Banca Crenri, SJL 
8375% Rotes One 1995 


Punftwu to the provisions of Con- 
ditlans? and 11 of the Terms and Con- 
ditions of the S.775% Notes due 1995 
(the -Notes’) issued by Bara* Cremi, 

SA (the "fasoer*), notice is heteby giv- 
en of the occurrence, on about Septem- 
be- 6, 1994, of an "Event of Default* 
described in sutoaragraph (v9 of Con- 

ditkm 9 of such Terms and Conditions. 
According to on announcement made 



New Zealand 


USS 1,000,000,000 Floating Rate Notes due 1999 


(n accordance with the Terms and Conditions of the Notes, notice 
b hereby given that lor the Interest Period bom October 6. 1994 
to January & 1 995 the Notes w* canyan interest Rare of 5.44531 % 
per annum. 

The Coupon Amount payable on Vie relevant Interest Payment 

Date. January 6. 1995 wll be USS 139.16 per 

USS 1 0.000 principal amount of j?» Reference 

Note and USS 1391-58 per 4genr 

USS 1 00.000 principal [PlttU KretBetbank 

amount of Note. ft -t. v.; j Luxembourg 


S r the Ministry of Finance and Public 

tedh of fctooco on September 6, 1994, 
the Ministry has instituted h manaeeri- 
at nuewenuon by the NatkxiaiBankinE 
Commission CNBC”) of Mexico of aS 
o4 the endues Forming a part of d* 
Crani-Union financial Group, nrtud- 
ing the Issuer. According to S*? Minis- 
try's announcement a ’managerial in- 
tcrvoitlon* involves the substitution of 
easting management of the entities by 

I * «he 

nt t*_ Mien acton appears toeonsiltiite 


Notice of Event of Default 

Banca Cremi, SJL 
9% Holes torn 1995 


Pursuant to the provisions of Con- 
ditions 9 and 1 1 of the Terms and Con- 
ditions of the 9% Notes due 1996 (the 
’Notes’) issued by Banca Cremi 5A 
(the ’lssuer'i notice is hereby given of 
the occurrence, on about September 6. 
19H “>f an'Evmt of Defaulr described 


Pee ail your tarammeut and occupational 

requirements in South Africa or further ■ Ai i nie 

information on this emerging market tiAUhlC 


Db&CU Watt/Riebard WeOer 


Tel: 071 493 7050 
Fac 071 499 6279 


an assumption by the government of 
Mexurr or m authority thereof of the 
warn™ and operations of the Bank 

Ssfiaswiftss 

CaidUons of dir Nolo. Pursuant to 
to forter provistotis of CondiHon 9. 
the Holdets o f Nag ofjt teat 33 1/3% 
"? a 68 re » ne prtnapaJ amount of tfe 

Snssasrass 

Kftsassse-- 

ff, 

Dated: October is, 1994 YORK, 


»ch Tenrw and Conditions. According 
to an an n ou n cement made by the Min- 
isbiy of Finance and Ptibbe Credit of 
Mexico on September 6, 1994, the Min- 
istry has instituted a managerial Inter- 
vention by the Natk*ul Bantang Co®- 
misswn (“NBC*) of Modcoof all of the 
entitles forming a port of the Creati- 
Unkxt financial Group, including dr 
Issuer. According » the Ministry's an- 
nouncement. a "managerial kitenwi- 
don" involves the sutoUtunonpff*^' 

inginjnigeiwntofthemiltiesbytawd- 

ly em p o w ered ap poin te es of maN*- 
Such action appears to constitute 1 * 

assumption tynwgQvoroinemofMra- 

ico or an authority thereof of the buaf- 
nesd and operations of the Bank tthnjj 
the meaning of subparagraph W)j « 
Condition 9 of the Terms and Condi- 
Sore of the Note. Pursuant® 
dierpiOTbioraofCondition9,theHold- 

emtrf Notes of at kast33 1/3* biaggtfr 
gate principal amount of the Notes «w* 
standing may. by written notice ««* 
hsuerand tta undersigned fiscal AGP™ 


declare the principal of all the » 

be due and payable 


be due and payable. 

The Baft of Hew Ywk 

as fiscal rignrf 
Dated- October A19M 


Wil- 


li " " 


The dividend is maintained 
at I-7p against an increase in 
earnings per share from 2.14p 
to 3.68p. 


• COMMENT 

For a long time Grampian's 
full earnings recovery has been 
somewhere over the rainbow, 
and the market appears to be 
running out of patience. Man- 
agement is now maintaining a 
cautious note and analysts are 
forecasting profits of £9m to 
£93m against prior forecasts of 
£lim. This leaves the shares 
on 3 p/e of 12.4. with all the 
hopes of recovery to come. 
Grampian operates something 
of a ragbag of small businesses 
with little strategic logic, but 
the current price offers value. 


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FINANCIAL TIMES THURSDAY OCTOBER 6 1994 


r s *ghts FG Wilson set for 


t . P ■ * . 


* Co **Ni- Nt 


• • .. 


111 : 


r gins 



* { ‘Uhis result 


liiv fa 


takeover by US group 


By Andrew Baxter 

FG Wilson (Engineering), 
Europe’s largest manufacturer 
of diesel generator sets, con- 
firmed yesterday it had 
reached a preliminary agree- 
ment to be acquired by St 
Louis-based Emerson Electric. 

The privately owned Lame- 
based company, one of North- 
ern Ireland's biggest private 
sector employers, would not 
disclose a price for the take- 
over. But it is believed t-hat 
Emerson will pay between 

£150m and £200m. 

The takeover, if it goes 
ahead, would be one of the 
biggest investments by a for- 
eign company in Northern 
Ireland. It comes in the wake 
of the IRA’s ceasefire 


announcement at the end of 
August, which has raised the 
confidence of overseas inves- 
tors in the province. 

Mr Tom Wilson, managing 
director of FG Wilson, said 
talks were at a preliminary 
stage, but directors believed a 
partnership with Emerson 
would lead to considerable ben- 
efits for the company and its 

employees. 

FG Wilson already deals 
with several Emerson divisions 
in switchgear, electronic con- 
trols and generators. Mr Wil- 
son said an alliance would 
enable the Ulster company to 
broaden its penetration of 
international markets through 
Emerson's worldwide distribu- 
tion networks. 

Directors also believed the 


Finelist advances to £2.45m 


By Pater Pearsa 

Finelist, the car parts 
distributor, beat its flotation 
forecast with a leap in pre-tax 
profits from filJOIm to £2.45m 
in the year to June 30. 

The shares firmed lp to 146p 
yesterday, against a I30p flota- 
tion price in February. 

Mr Chris Swan, chairman 
and chief executive, said the 
pre-tax figure was £150.000 
ahead of forecast 

Turnover was up 50 per cent 
to £24. lm (£16. 1m) and operat- 
ing margins rose from 7-5 to 
10.6 per cent Mr Swan ascribed 
this advance to volume 
growth, price increases, reduc- 
tions in branch costs and over- 
heads, and some benefit from 


acquisitions. The group added 
nine more sites, with four 
opening since the float. 

Since the period-end. Fine- 
list, which trades principally 
under the Autela name, has 
bought Edmunds Walker arid 
its Walter Moss/Berite subsid- 
iary for up to £20m, funded in 
part by a l-for-2 rights issue at 
120p to raise £12m_ 

EW. which has been loss- 
making, brings with it 88 sites 
and sales of £64m. WMB. which 
is to be Integrated into the 
Autela chain, brings 10 sites 
and sales of £4m. 

Mr Swan said that, like Fine- 
list which left the own-label 
parts market two years ago. 
EW sold only branded parts. It 
is strong in commercial vehicle 


and engine parts. The com- 
bined group now has 177 out- 
lets, of which 23 are franchises. 
Mr Swan said he wanted the 
group to have about 250 outlets 
within the next three years. 

In the present year trading 
in the original group was in 
line with budget the company 
said, while the first six weeks 
from EW was well ahead. 

Interest payable fell to 
£98.000 (£19t000). At the end of 
August the group had net 
assets of £15 -5m, a £l0m term 
loan (to help pay for EW). and 
cash of £5 .5m. This gives gear- 
ing of about 32 per cent 

Earnings jumped to &2p (3p) 
per share and the proposed sin- 
gle final dividend is L5p, as 
forecast 


Unipart expands to £13.3m 


By John Griffiths ' 

Rapidly - expanding motor component 
manufacturing activities helped Unipart the 
motor parts and accessories group once owned 
by Rover Group, achieve an increase in first half 
pre-tax profits from £11 An to £133m. 

Mr John Neill the chief executive, reported 
file figures to July 2 from turnover 14 per cent 
higher at £40 lm (£353m). 

The figures were accompanied by the disclo- 
sure that a recently-formed joint venture with 
Air TntomaHnnal Group of Australia to produce 


vehicle r - winriitirming systems has started its 
first development work, for General Motors' 
Opel car malting subsidiary. 

Unipart DCM, the group’s parts distribution 
division, has also just won the contract to take 
over all parts distribution in France for luxury 
car maker Jaguar. 

Mr Neill added that he did not expect this 
year’s second half “to be any worse" than the 
first 

There were “mixed signals” about demand, so 
Unipart would continue to focus on reducing 
costs. 


COMPANY NEWS: UK 


partnership would lead to 
expansion of FG Wilson’s pro- 
duction facilities and to further 
job opportunities at its Larne 
site. The company employs 
about 1,000 people. 

FG Wilson had sales of 
£165m in the year to August 
Profit figures were not avail- 
able, but in 1992-93 it made 

about £!Sm. 

The company was formed in 
1968, and exports some 80 to 90 
per cent of its sales, mainly to 
continental Europe, Austral- 
asia and the Middle East A 
link-up with Emerson could 
help sales in North and South 
America. 

Emerson makes a broad 
range of electrical and elec- 
tronic products and had sales 
of $8.2bn (£5J2bn) last year. 


British 
Thornton 
shares take 
32% tumble 

By Heather Davidson 

Shares in British Thornton 
Holdings, the packaging and 
specialist furniture group, 
tumbled 24p to 5lp, a 32 per 
cent drop, following a warning 
that pre-tax profits for the six 
months to October 31 were 
likely to be “significantly 
below market expectations". 

Analysts said the company 
was not on track to achieve 
i the estimated £2.6m year-end 
figure. For the first half of 
1993-94 pre-tax profits were 

£1.15m, with £2. 11m for the 
year to April 30. 

Volumes in the video games 
industry, particularly in the 
UK, had not recovered as 
expected, said Mr Brian North, 
chairman. The group’s subsid- 
iaries, Masterform and Master- 
pack, which mairo packaging 
and display materials, relied 
heavily on the industry. 

Mr North said video games 
sales were weighted towards 
the pre-Christmas shopping 
season and so it was difficult 
to predict the extent of any 
recovery in the second half. 

However, the company 
“remained confident" of the 
market's long-term potential. 
It was seeking to develop 
closer links with Sega with a 
view to producing packaging 
and displays for a broader 
range of its products. 

The group is committed to 
expanding its non-Sega busi- 
ness and has won some new 
accounts, including Polygram. 


Decline 
to £1.3m 
at Novo 

The poor performance of its 
film entertainment services 
division and a loss on the dis- 
posal of its French associate 
were behind a reduction in pre- 
tax profits from £l.8lm to 
£1.29m at Novo Group in the 
year ended March 31. 

Sales rose 19 per cent to 
£17.1m (£l4An). 

The group is involved in liti- 
gation concerning Walport 


Trafficmaster in high street link 


By Simon Davies 

Trafficmaster yesterday 
announced that it had reached 
an agreement with high street 
retailers which would result 
in its traffic monitoring system 
being sold through more than 
500 outlets by early next 
year 

When it gained a listing in 
March, the company had sold 
about 2,100 units through 
direct marketing, but it expects 
substantia] growth through 
access to retail networks, 
mainly electronics and 
phone stores. 

Trafficmaster also reported 
that interim pre-tax losses had 
risen from £468.000 to £541,000 
on turnover up 61 per cent to 


£571.000. This reflected 
increased investment in infra- 
structure. 

Trafficmaster will have com- 
pleted coverage of the 912 
miles of motorways detailed in 
its listing particulars, by 
December 7, when it will 
launch its national network. 

It will also hare install ed 
sensors covering 406 miles of 
trunk roads by the end of the 
year. 

Mr David Martell, chief exec- 
utive. said the company was 
focusing on building up infra- 
structure. rather than 
short-term profits. 

It had spent £1.5m on devel- 
oping its network since the flo- 
tation. which raised £7. 17m. 
and yesterday It opened its 


Murray raises offer 
for Andrews Sykes 


Mr Jacques Murray has 
increased his offer for Andrews 
Sykes, the industrial services 
group of which he is c hairman , 
valuing the company at 
£10. 7m. against £S-24m previ- 
ously. 

European Fire Protection 
Holdings, the private Nether- 
lands-based company owned by 
Mr Murray, has increased its 
offer for the ordinary shares 
from 50p to 65p and from 12p 
to I5.6p for the preference 
shares- 

The move follows European 
Fire’s latest purchase in the 
market of a 5.5 per cent stake 
at 65p a share, talcing its total 
holding, including those acting 
in concert, to 47.65 per emit. 

In addition, acceptances 


International, which was 
acquired from BET, concerning 
certain alleged licensing and 
copyright irregularities. 

Lower operating profits of 
£1.85m (£2.3lm) reflected a 
£241,000 charge related to the 
litigation. In addition, a loss of 
£182400 was incurred on the 
French disposal. 

A reduced final dividend of 
O.lp (lp) is recommended, mak- 
ing 0.2p (14p) for the year. 
Earnings per share fell to 1.74p 
(382p). 

The group is also raising 
£l£m net as working capital 
via a l-for-6 fully underwritten 
rights issue of 7.75m ordinary 
shar es at 26p «irh. 


have been received in respect 
of 39442 shares, or 0.28 per 
cent 

European Fire also holds 883 
per cent of the preference 
shares. 

The shares were unchanged 
yesterday at 67p. 

The bid is the culmination of 
Mr Murray’s taking control of 
Andrews Sykes, which began 
in May when he and four of bis 
supporters won control of the 
board at an extraordinary gen- 
eral meeting. In July be 
replaced Mr David Hubbard as 
chairman. 

Andrews Sykes is in the mid- 
dle of a reorganisation to refo- 
cus on its core activities of 
pumping, heating, air condi- 
tioning awri hire businesses. 


NEWS DIGEST 


Azlan acquisition 

Azlan Group, the distributor of 
advanced computer network- 
ing products, has acquired the 
distribution division of Asonic 
Computer Equipment for up to 
DM4-7m (£1.9m), of which 
DML6m has been paid on com- 
pletion with the balance to be 
paid over the next two years. 

Johnston Press 

Johnston Press is planning a 
3-for-l scrip issue and also 
intends to reduce its share pre- 
mium account by £5.88m. 
which will be transferred to a 
special reserve. The number of 


Trafficmaster 

Share price (pence) 
220 | 


160 I 


Source. FT Graphite 

National Traffic Data Centre. 

It is also negotiating with car 
manufacturers over usage of 


Trafficmaster in an on-board 
system for new ears. Mr Mar- 
tell reckons that such a system 
will be introduced by at least 
two manufacturers by the end 
of 1996. 

At the end of June, cash and 
short-term deposits were £7m, 
which Mr Mantel! said would 
be sufficient to fund its invest- 
ment programme. 

The share price dosed down 
lp at 180p. But it has 
been one of the best perform- 
ing flotations of the year, 
rising from an issue price of 
130p. 

The company is not paying a 
dividend, as (lagged at the time 
of flotation. 

Losses per share fell from 
3.6p to 2.9p. 


Computer People to 
buy VNG for £7m 


Computer People Group is 
proposing to acquire VNG 
Group, the computing services 
and consultancy company. The 
offer, which values VNG at 
£7m, is being made on the 
basis of 1.025 shares for 
each VNG share, or a cash 
alternative of 186.5P per 
share. 

To fund the acquisition. 
Computer People has 
announced a placing and open 
offer of 3.07m new ordinary 
shares at 182p each, to raise 
£5m net of expenses. Up to 
£1.8m will be used to fund the 
cash consideration and £3.2m 
to refinance VNG’s debt 
arrangements. 

The move follows the acqui- 
sition of Span last July for 


ordinary shares in issue will 
increase by 100.03m to 133.38m 
after the scrip. 

Greenacre expands 

Greenacre, the nursing homes 
operator, has acquired The 
Argyles Nursing Home. Berk- 
shire, for £1.95m cash. 

The acquisition brings the 
total number of homes under 
operation and development by 
Greenacre to 13 and the num- 
ber of beds to 680. 

The Argyles showed adjusted 
profits before depreciation, 
finance charges and tax of 
£352,000 in the year to January 
31 1994. 


£5 .5m when £5.8m was raised 
through a placing and open 
offer. 

Irrevocable undertakings to 
accept in respect or 91.9 per 
cent of VNG's shares have 
been received. 

The placing has been under- 
written by NatXVcst Securities. 
The open offer is on a l-for-6 
basis. 

VNG. founded in 1979, 
reported operating losses in 
1993 but returned to profit in 
the first balf of 1994. The 
group comprises contracting 
arms in the UK and Europe, a 
UK-based training division, 
which had an interim turnover 
of £395,000, and a UK consult- 
ing business, which had an 
Interim turnover of £593,000. 


Arcadian at £0.12m 

Arcadian International, the 
hotel operator and leisure 
developer, announced pre-tax 
profits of £116,000 for the six 
months to June 30. For the pre- 
vious eight months there were 
losses of £471,000. 

The results are the first since 
November's substantial capital 
increase and acquisition or the 
Clipper and Hidden hotels. 

Turnover amounted to 
£5.58m (£1.28m) with just 
£197.000 from continuing 
operations. Earnings came out 
at O.lp (L2p losses). The direc- 
tors intend to recommend a 
dividend for the full year. 


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COGEMA 


. •• x .* 


main activities encompass 


aH aspects • • 1 

* . i . . '' \ \ •/,* 

’ •* # ✓**•*.• «**•%• .» 

of .the mtclearWl cyder ' 


uranium mining 


uranium fluorinadoo. 


enrichment. 


First half 1994 
net income on the rise 


(In m&ons of French francs) 

Salas revenue 

Sales out ot France 

Income from operations ^ _ 

Income of fully Integrated companies, 
before tax and extraordinary Items 

Net Income ( net of minority interests) 

Funds generated by operations 

Capital expenditure In tangible assets 
Workforce at end of period 


l half 1993 
12.297 
4,331 
574 

550 

3*2 

3,777 

3,324 

16.616 


24,170 

9,035 

1,242 

1,126 

699 

6.703 

7,400 

16.892 


Rising sales revenue 

Consolidated gales revenue for die group in the first half of 1994 shows a total increase 
of 8.8% compared to the same period in 1993. which predated the acquisition of 
Total's uranium assets. At a comparable consolidated group structure from ooe period 
to the next, die increase would have been 5.9%, primarily as the result of the increased 
volumes of spent fuel reprocessed. Variations in the consolidated group structure are 
related to mining operations and to engineering and industrial services. Operations in 
the front end of the fuel cycle continued to be affected by adverse market conditions. 
Qnt^c oat of France grew by 8.1% and accounted for 35% of sales revenue. 


Safas revenue by sector 

(in mUBons of French francs ) 

Mining 

Enrichment/uranium chemistry 

Fuel 

Reprocessing ; 

Enginaering/services (and miscellaneous) 
Total 


WhaM 1994 
1,638 
3,700 
812 
6,652 
573 
1M75 


1,598 

3,616 

770 

5,916 

393 

12,297 




A 

-sjob 




m 


ox. 


— ^ 


fuel, Income moving up 

. ' ••• foretne from operations for the half year, which were affected when noo-recurring 

.- V .* * .• * 1 provisions (inked to the shut-down of the GCR series were taken into account in 

It fuel ^processmg January 1994 * Jower than m 1993. On the otto- hand, net income is noticeably 

' . -'.V V hi gher due to an improvement in the income of financial operations, above meo- 

. - . k- >' .'-7. y don jon rhangre in the consolidated group structure, with an impact of 54 million 

ana recycimg ; : •> francs 00 the first half of 1994. and to extraordinary items. Barring unforeseen cir- 

• cumstances, and following the recently licensed scart-up of the UP2-800 reprocessing 

. • X ' plant, the general trends observed in the first half should continue during the second 

r half which will be impacted by non-reenning charges related to the preparation of the 

' V ;• J start-up of Melox Mox fuel fabricator) plant. An increase in net income over the 1993 

Serials, and nuclear .. . “■ figyje is an objective for the tun year. 

^ Source and use of funds 

engineering. . At cJose to 4J biliioo francs, funds generated from group operations were 

14% higher than in the first half of 1993. Conversely, capital expenses, including 
: _/ • ;.-••* . 3.1 billion francs in tangible assets, while still very high at 33 billion francs, are 

y beginning to decline with the completion of UP2-800 plant construction; the figure 

' -y for the similar period in 1993 reached 3.65 billion francs. 

The nuclear fuel cycle group 

2. rue ftwJ-Douoer - 6P 4 - 78141 ViZyViSocovblcy Cedes - France 


spent fuei.Veproc^ang 
. and recycling of. • / 


materials, a**? midear 


engineering. 


“You know, it’s really not that far to the US. yield curve. 
Why, it’s just across the pond * 


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phone 44-71-929-1)021. cxl. 71 10, 
fax 44-71-929-0558. 






9«6-8ZB-(U0) :xiy 1991-BZB-(U0J '-PL I I t ' * a3 l M ai H mi JOWlSOJd ajJJH SUI0DS Maui. 


FINANCIAL TIMES THURSDAY OCTOBER b 1994 


European Court 
rejects German 
banana complaint 


By Deborah Hargreaves 

The European Court of Justice 
yesterday rejected a complaint 
about the European Union's 
banana Import regime after 
Germany claimed the rules dis- 
criminated against its tradi- 
tional Latin American suppli- 
ers. 

Germany, which is the larg- 
est EU importer of bananas, 
complained to the court about 
the privileged access to the 
market enjoyed by former 
Flench and British colonies in 
so-called AGP - Africa, Carib- 
bean and Pacific - countries. It 
claimed this discriminated 
against cheaper imports from 
Latin American suppliers. 

The court said Germany's 
reasoning was not sufficient 
“to justify nullifying the mar- 
ket regime”. It followed advice 
from the advocate-general 
given in June last year. 

New rules imposed by the 
European Commission last 
year restrict Latin American 
banana shipments to a tariff- 
free quota of 2.1m tonnes a 
year. A deal with Latin Ameri- 
can countries was brokered by 


MARKET REPORT 


Metals rally peters out 


A burst of speculative buying 
and short-covering that lifted 
all London Metal Exchange 
contracts at midday yesterday 
v anish ed in the afternoon and 
prices drifted back. 

COPPER'S renewed strength, 
which saw the three months 
price top $2,530 a tonne a t one 
stage, helped ALUMINIUM 
reach its medium term target 
of $1,650 a tonne before being 
hit by the inevitable bout of 
profit-taking. This saw last 
business at $1,640, unchanged 
from Tuesday. 

Investment funds were 
reported to be active again in 
the ZINC market, still consid- 
ered a laggard compared with 
the impressive rises seen in 


some other metals this year. At 
the close of the afternoon ring 
three months zinc stood at 
$1,063.50 a tonne, up $6 on the 
day and $34 oa the week so far. 

London COCOA futures 
plunged late in the day follow- 
ing the New York market, 
which fell to a new 5-month 
low at midday. 

The GOLD market returned 
to its bullish track after fund 
buying emerged in New York. 
The London price found sup- 
port at $392 a troy ounce and 
closed at $382.70, up 30 cents. 
“There Is feeling that the 
recent sell-off. . . was really 
just consolidation and profit- 
taking ." one trader said. 
Compiled from Reuters 


COMMODITIES AND AGRICULTURE 

S Africa opens doors to foreign explorers 


the commission after they com- 
plained to the General Agree- 
ment on Tariffs and Trade 
about ACP countries enjoying 
favourable access to the EU 
market 

Germany has already filed 
an additional court case about 
that deal with Latin American 
countries, claiming the com- 
mission had no authority to 
negotiate it The court is expec- 
ted to hear the case in about a 
year. 

Meanwhile, the commission's 
management committee, which 
supervises the banana regime, 
put off a decision yesterday 
about aid for the Windward 
Islands, where banana crops 
have been devastated by tropi- 
cal storms. 

Geest the food company, has 
called on the commission to 
allow It to import bananas 
from other sources under the 
ACP quota allocated to the 
Windward Islands to ensure 
that the island group does not 
lose market share perma- 
nently. The commission said it 1 
was still gathering information 
and could reach a decision in j 
the next couple of weeks. ! 


By David Lasceflea, 

Resources Editor 

South Africa yesterday threw 
open Its offshore acreage for 
international ail and gas explo- 
ration. 

In a move aimed at bringing 
the country back Into the 
mainstream of the world 
energy markets. Pretoria solic- 
ited bids for licences to explore 
virtually all the country's 
coastal areas, divided into 18 
blocks. 

Mr Pik Botha, the former for- 
eign minister, who is now min- 
ister of mines and energy, told 
a launch seminar attended by 
oil and gas companies in Lon- 
don that his government “sees 
this licensing round as a major 


step forward in exploring our 
offshore potential. 

“We cannot guarantee that 
you mil discover gas or oil or 
both,” he said. “But we are set- 
ting in motion an intensive - 
and extensive - process of 
exploration never undertaken 
before". 

Bids for licences have to be 
submitted by April next year, 
and Mr Botha said he hoped to 
have the allocation process 
complete by November 1995. 
Exploration programmes will 
have to be for a minimum of 
three years and a maximum of 
seven. 

International oil companies 
were active in South Africa 
until the early 1970s when 
most of them withdrew for 


political reasons. Since then, 
there has only been a small 
amount of exploration, mainly 
by Soekor, the state oil com- 
pany. 

South Africa produces a 
third of its liquid hydrocarbons 
artificially from coal, and 
imports certain amounts of oil, 
mainly from bran. 

Mr Botha said yesterday that 
the tariff protection given to 
the local oil and gas industry 
would continue because of its 
important contribution in sav- 
ing foreign exchange. But he 
said South Africa was keen to 
widen its trade relations with 
en ergy-pro during nations, and 
deals were pending with vari- 
ous OPEC countries which he 
declined to name. 


So for, 19 companies - 17 of 
them from abroad ~ had asked 
for information packs about 
the blocks on offer. 

Mr Botha said he was “very 
encouraged’' by the attendance 
at yesterday’s seminar, which 
included many of the world's 
major oil companies. 

Asked whether South Africa 
was more secure than other 
new energy markets that are 
opening up, such as Central 
Asia, Mr Botha said: “As 
secure, if not better” because 
of the well-developed state of 
South Africa's mining technol- 
ogy and infrastructure. 

“I can assure you,” he added, 
"that the rules are not only 
reasonable but will also be 
stable." 


Zambia to advance 
sale of copper miner 


;fc 


ate 


Zambia's mines minister Paul 
Kapinga said yesterday that 
the government would bring 
forward the proposed privatisa- 
tion of Zambia Consolidated 
Copper Mines, reports Reuters 
from Lusaka. He said this 
would end speculation on 
whether the major mining 
company would be sold or not, 

"We are bringing forward 
the sale of ZCCM from the last 
tranche to other earlier 
tranches so that it could be 
sold much earlier than previ- 
ously arranged,” the minister 
told reporters. But he did not 
say how soon. 

According to the Zambia Pri- 
vatisation Agency, no time- 


table had yet been sot under 
the tranche sales prapanme 
for the privatisation of ZCCM, 

which is 60-3 per cent govern- 
ment owned, and several other 

strategic enterprises. 

Mr Kapinga said the govern- 
ment favoured privatising 
ZCCM as a single entity rather 
than unbundling it into live 
separate ones as recommended 
bv foreign consultants. 

‘Deputy mines minister Mr 
Mathias Mphande said last 
month he favoured unbundling 
because potential shareholders 
could find it difficult to raise 
the estimated USSJbn needed 
for rehabilitation and new pro- 
jects in the next three years. 


Pipeline project to push Algeria up European gas league 

Work on a 1,845km supply link to the Iberian peninsular has begun on time, writes Francis Ghiles 


T he building of the 
Maghreb Europe Pipe- 
line (GME) has started 
on tirrip- 

In spite of the violence that 
affects much of Algeria and the 
uncertainty surrounding the 
country's political future, work 
hag started on the three main 
sections of the GME, which by 
mid-1996 will deliver Algerian 
gas to Morocco, Spain and Por- 
tugal 

The 1,845km pipeline is being 
built in three main sections. 
The 530km Algeria section is 
being laid by Bechtel a US 
company. The delivery of sev- 
eral hundred kilometres of 
pipes and pipe-laying activity 
is due to start later this 
autumn. 

The 540km Moroccan section, 
which is being laid by EMPL, a 
subsidiary of the leading Span- 
ish gas utility, Enegas, has had 
over half its materials deliv- 
ered and construction is to 
commence before Christmas. 

Italy's Saipem has begun 
work on the submarine section 
and is due to complete the 
work by the middle of next 
year. Saipem was responsible 
for laying, between 1980 and 
1983, the TransMed pipeline, 
which runs between Tunisia 
and Italy, the deepest subma- 


s ConSob 

: Huo lva Jta 

^--Vftabat ' 

Casablanca MOROCCO 


.fc.cC a&t&srijz-a* . 

T j. at? tf**? * ;r •»*:] 

•Ivam uic. Lv bw. mm «: 

ax' 


' ■' ' rye ? - y t ."SjSsJSjSSSVSr*?:! 

W9 ** rs S 


GME pipeline! 


rine pipeline in the world. 

The overall cost of the proj- 
ect is estimated at $2i)tm and it 
is backed by major western 
export credit organisations 
such as the US flrtmhank, Ger- 
many's Hermes. France’s 
Coface and the European 
Investment Bank. 

When completed in mid-1996, 
the GME will add some 7.2bn 
cubic metres to the annual 
pipeline export capacity of Son- 
attach, Algeria's state oil and 
gas company, taking it to 
31j2bcm. 

This will be quickly expan- 
ded. Annual sales of 8.5bcm 


ALGERIA 


Hassri-R'Mte oil field 


will be made to Spain and Por- 
tugal Morocco is also a cus- 
tomer and will take its gas as a 
transit fee, as Tunisia has been 
doing for the past 11 years 
with gas passing through the 
TransMed pipeline. 

Algeria has already con- 
tracted to sell a total of 
XL5bcm of gas annually, by the 
year 2000. to customers 
through the TransMed and 
GME lines. Sonatrach’s current 
liquefied natural gas commit- 
ments are for 25.1bcm. For the 
first time in Algeria's history, 
sales of piped exports are set to 
overtake exports of LNG. 


Ironically, the build up of the 
Spanish market to take the 
projected pipeline volume will 
probably require use of Alger- 
ia’s refurbished LNG plants, 
bat only for a short period. 

Algeria's LNG export capac- 
ity will reach a peak of about 
30bcm just as the GME takes 
away the bulk of its Spanish 
market By the time the GME 
volumes to Spain reach their 
contractual plateau in the year 
2000, Algeria will face its first 
LNG competition in the Span- 
ish market as Ena gas begins to 
take delivery of Nigerian sup- 
plies in 1999. The steady expan- 
sion expected in the Spanish 
market will continue to require 
the same level of Algerian LNG 
exports but Algeria will have 
to look elsewhere for extra 
sales. 

S onatrach has, to date, 
restricted itself to 60bcm 
of exports. This means 
that any increase above this 
level, using the capacity that 
will clearly be there, must 
come from gas discoveries of 
Sonatrach's new international 
oil company partners. 

British Petroleum is close to 
an agreement to develop large 
reserves in the hitherto unex- 
ploited south-west of the coun- 


try. If finalised, the &5bn proj- 
ect to develop fields around In 
Salah will involve BP con- 
structing over 500km of pipe- 
line and marketing the gas in 
Europe In partnership with 
Sonatrach. Other companies, 
notably Agip of Italy are confi- 
dent that they will quickly fol- 
low once the pattern is set by 
the first deal. 

But the “GME’S biggest 
achievement", according to Mr 
James Ball director of the Gas 
Matters consultancy, is 
. . not so much the 
co-operation it has brought 
about between countries on the 
northern and southern shores 
of the Mediterranean, but the 
co-operation it has brought 
between Spain and Portugal". 

Indeed as recently as 1989, 
Portugal considered gas transit 
across Spain politically unac- 
ceptable. But by 2000 Portugal 
will be importing 2.5bcm of 
piped gas through the GME, a 
little over one quarter of the 
total throughput 

Spanish demand, meanwhile, 
is projected to rise to 12bcm a 
year by the turn of the cen- 
tury, a 71 per cent increase 
from the present consumption 
level, the largest demand com- 
ing from power generation and 
industrial co-generation. 


Despite this massive increase 
in Spanish offtake of Algerian 
gas, Italy will remain by far 
Sonatrach's most Important 
customer. 

Italy’s power generator, Enel 
Is scheduled to begin taking 
delivery of its 4bcm annual 
contract in 1996, augmenting 
the 19.5bcm the gas utility 
SNAM already takes through 
the TransMed pipeline. In addi- 
tion, SNAM recently concluded 
a long-term purchase agree- 
ment for l.Sbcm of Algerian 
LNG, its first ever such con- 
tract from Algeria, which will 
be delivered to the recently 
refurbished Panagaglia termi- 
nal at La Spezia. 

In August, Sonatrach deliv- 
ered the first cargo of Algerian 
gas to the world’s newest LNG 
customer nation, Turkey. 

Algeria has become the dom- 
inant supplier of gas to those 
countries in southern Europe 
where its use is growing fast- 
est Today, Algeria's share of 
the European gas market 
ranks third, with 19 per cent of 
the total after the CIS, with 36 
per cent ami the Netherlands 
with 26 per cent As Dutch pro- 
duction declines from the turn 
of the century, Algeria could 
well become Europe's second 
largest outside supplier of gas. 


ding 


COMMODITIES PRICES 


BASE METALS 

LONDON METAL EXCHANGE 

(Prices from Amalgamated MetaJ Trading) 
a ALUimuuu. 90.7 PURITY ^pvtanne) 


Precious Metals continued 


GRAINS AND OIL SEEDS 


SOFTS 



Cash 

3 mttn 

doss 

162SL6-&5 

1645-6 

Pre+toua 

1S18-7 

1840-1 

h6gh/1ow 

1629 

1650/1639 

AM Official 

1629-30 

T 848-8. 5 

Kerb ckna 


1640-1 

Open W. 

260.763 


Total daly Hanover 

B1.BT5 


■ ALUMINIUM ALLOY ($ par torme) 


Close 

18SO-5 

1670-4 

Previous 

1642-7 

1662-5 

Hgh/low 

1663 

1670/1666 

AM Offldri 

1680-3 

1675-80 

Kerb dose 


1070-3 

Open Im. 

3.052 


Tote dtey turnover 

297 


■ LEAD ($ per tonne) 



Close 

6285-9.5 

643-1 

Previous 

628-9 

642-2.5 

High/low 


848/841 

AM Offldri 

632-X5 

645-55 

Kflfto dost? 


841-2 

Open Ial 

41,148 


Total da9y turnover 

13,888 


SI NICKEL ($ per (onrte 


Ckwe 

8455-85 

8580-5 

Previous 

6300-10 

6403*10 

Hightav 


6580/8420 

AM Official 

6335-400 

8485-9Q 

Kerb dose 


6545-65 

Open lift. 

68.421 


Total daty turnover 

10,456 


■ TM (S per tonne) 



a mo 

5380-90 

6485-70 

Previous 

5345-55 

5430-5 

MflWlOw 

5365/5300 

5470/5430 

AM Offidri 

5355-60 

5440-50 

Kflrt) dose 


5446-50 

Open tat 

15.838 


Total drily turnover 

5.787 


■ ZINC, apodal Nsh grade ($ per tonne) 

Cfcrae 

KW-1 

1083+4 

Previous 

103a&-L5 

1057-8 

hflgh/knv 

1039 

106871068 

AM Offlcte 

1038-9 

1062-2.5 

Kerb ckma 


106O-1 

Open int 

98,634 


Total daUy turnover 

24^88 


■ COPPER grade A (S per tonne) 


0096 

2528-30 

2629-30 

Previous 

2507-8 

2614-S 

High/tow 

2518/2514 

2531/2603 

AM Offldri 

2517-8 

2S15-8 

Kerb dose 


2522-3 

Open Im. 

224.391 


Total drily turnover 

108,806 


a LME AM OffldW £S rater JJ5063 

LME doeing US rate: 1-6870 



a GOLD OOMBC ftOO Tray ou Sftroy ca.) 


■ WHEAT LCE C£ per tonne! 




m COCOA LCE (Ertorme) 


■ Lf 


Srit 

pta 

Day* 

donga 

HWi 

0P« 
loo/ M 

«0L 


San 

price 

o*r» 

change Mgh 

Low 

Opm 

M 

W 


Sail 
pta i 

Day 1 * 

change 

Ugh 

QOK 

low tat Vri 


Ocl 


-0.4 

39X6 

39X0 254 

135 

NOV 

10X10 

+005 105ft5 

lOSftO 

X199 

114 

DK 

943 

-27 

967 

838 28.415 3j070 

Oct 

Nov 

393ft 

-0.4 

- 

- 

- 

Jon 

107.60 

+020 107.65 

107.40 

Ift40 

8 

Mar 

978 

•23 

999 

970 37ft87 5370 

0k 

Ok 

385-2 

■05 

397ft 

394ft 11,528 31272 

Mar 

109.55 

+025 10955 

10950 

1,437 

27 

MW 

988 

-27 

1011 

885 13.043 550 

Mr 

Fell 

me 

-Oft 

400ft 

398ft 19.854 

134 

•«*» 

111ft5 

-aiO 11150 

111ft5 

1396 

40 

JK 

1001 

■28 

1025 

1000 5314 345 

Apr 


40X1 

-05 

404ft 

402ft 7,158 

530 

M 

11185 

+020 113-65 

11X60 

253 

9 

Sop 

1018 

-25 

1038 

1013 9.742 281 

Jim 

JOD 

Total 

405ft 

■04 

407ft 

403.0 10ft2S 564 
IBSftM 33ft72 

llov 

Trial 

9825 

" ' 

• 

35 

7330 

IM 

DK 

Total 

ima 

-21 

1059 

1035 8ft68 108 
104,70610338 

Ang 

Totri 


PLATINUM NYMEX (50 Troy oz.; Vtrgy ozj 


WHEAT GST p.OOObu min: canta/Wto buahe I) 


COCOA CSCE (10 tonnes S/tomes) 


MEAT AND LIVESTOCK 


Safi Bay's OpM 

pta dump* Ugh Unr M Viol 

Oct 67.700 -0250 66600 67550 13.903 7,413 

0k 68525 -0.175 69050 66300 23*02 6172 

ft* 67525 4575 66100 67.425 14447 1.855 

A pr 66150 -0525 66050 68.050 6860 1,063 

Am 65.000 -0550 BS.7SQ 64450 2,525 259 

Abb 84.700 4425 56300 66879 1.166 64 

TUN 87557 16629 

■ LIVE HOGS CME (40,000lt» 1 - cents/tre) 


Oct 

42X4 

+43 

423ft 

4200 

537 

411 

Dk 

407/4 

-1/2 

413* 

408* 48.629 1X183 

DK 

1283 

-43 

1308 

12B0 39250 9,483 

Oct 

34250 -0550 31250 34200 

4ft22 

2ft19 

•ten 

428ft 

+3ft 

430ft 

423ft 18,492 

1315 

Mar 

418/2 

■1* 

422* 

414/4 20.6*9 

4373 

Mar 

1318 

-41 

1358 

1314 1X127 3.081 

On 

31350 -0600 36.050 35.300 14ft50 

2ft45 


4301 

+iS 

431ft 

428ft 

2388 

27 

May 

391/4 

-4* 

397* 

38B/4 

2382 

303 

May 

1347 

■42 

1387 

1346 

8575 363 

Fafc 

37.375 +0.150 37.450 37JE3 

5,702 

1X79 

Jri 

433ft 

+15 

43X0 

43X0 

681 

- 

joi 

357/2 

- 1/ * 

359/2 

355* 

8.199 

1,733 

Jri 

1390 

-30 

1409 

1377 

2ftB9 203 

Apr 

36550 +0.075 37.150 36ft00 

1107 

567 

Oct 

438ft 

*3ft 

- 

- 

345 

11 

3«P 

3EQ/2 

-1* 

382* 

360* 

146 

90 

Sep 

1408 

-41 

1406 

1406 

1303 5 

Jm 

4X400 - 4X400 4X150 

1.463 

119 

Total 





2X623 

2364 

Ok 

368* 

-2/4 

371/4 

368* 

82 

2 

DK 

1428 

■41 

1471 

1445 

4.964 10 

Aug 

4X100 +0.125 4X100 41.750 

226 

19 

■ PALLADIUM NYMEX (100 Troy oz.; Vtroy ax) 

Totri 





78383 1X382 

Trial 





7X64413,129 

Totri 


3X281 

7,799 


OK 155.10 +1.43 15600 16450 5573 401 

Mr (56(0 *1.45 15650 15625 tJST 34 

Jon 15720 +1A5 - 152 

Tote 85« 435 

■ fMLVBR COMSX (1QQ Hoy 02.; Cantsrtroy ozj 

Oct 5607 *15 - - 3 4 

Ho* 562.7 *15 

DK 5662 *12 5735 6635 96531 14936 

JK 5675 *15 - 44 1 

Mar 5735 *15 582.0 5725 11516 478 

Hqr 580.3 +15 5835 5825 4509 173 

Total 125519 15508 


ENERGY 

■ emtoe O*. NYMEX (42.000 U3 gas. SrtXttreq 


MAIZE CBT (5500 bu trin; canta/58b burtwl) ■ COCOA (tCCO) fSOffsAonra) 

* Z17W *02 318* 216« 134,708 18522 Oct 4 Pita 

■ 277/4 +0/2 228/6 228/4 49,153 6547 Driy 9995S 

If 235/4 +0/2 236/6 234/4 19574 2J13 

I SAW +OT 241/4 2®* 20546 1578 ■ COFFEE LCE (Vtonnrt 

d 245/4 +1/2 245/4 244/0 1548 378 

K 249* *0/2 260/4 248* 7569 B02 *» 3907 -17 3966 3 

Art gffjw 27546 J* 3870 -7 3SB 3 

BARLEYLCE(£ per tome) E 2E *2 25 I 


■ PORK BELLIES CME (405000*; canta/lbe) 


LatMt Day's 

pneo cnan i* iv 

1747 -an 18.13 
1612 -0.08 1621 
1620 -0.06 1622 
1622 -a04 1622 
1622 -004 1622 

1624 -0.01 1624 


im ki w 

1759 84,084 4Q.163 
1603 79553 26295 
1612 52.153 17568 
1611 23,570 3579 
1616 22535 5519 
1623 15233 1553 
424564100.77H 


103.45 

-020 

103-30 

1D3L5D 

448 

10 

105.86 

-025 

105-75 

100.75 

390 

22 

107.75 


- 

- 

125 

- 

109ft5 


- 

- 

46 

- 

94.00 

- 

• 

- 

2 

- 

95.80 

- 

- 

- 

• 

- 





1,009 

32 

ABEANS car (5,OOODu ten; conteSOta buahefl 

534/2 

-1/B 

538* 

534* 75.610 33.674 

645 n 

•1/2 

54BM 

545* 23ft44 

3ftl5 

555/4 

-1* 

669* 

05* 13545 

1.784 

564* 

-1/4 

588/4 

583/4 

7,057 

1,109 

572* 

-on 

578* 

571* 13ft97 

1ft81 

574/8 

-i* 

678/4 

574/4 

388 

35 


Spot 1-58(3 3 mOrcl .56 15 6 reSwl J57S0 9 n*a:1.SG92 

■ HIGH CRAPE COPPER [COM EX) 

Day* Open 



O0H 

cringe 

Wgfl 

taw 

tat 

Vri 

OCI 

11&10 

+0.80 

11580 

118.10 

X210 

451 

Hm 

11850 

+OftO 

117.00 

116.90 

917 

44 

Dk 

115ft0 

+0.55 

11060 

IlSftO 

3X775 

8909 

Jw 

115ft0 

+055 

non 

11060 

598 

68 

Fob 

n+.aa 

+055 

- 

- 

440 

4 

Mr 

Total 

Il4ft0 

+055 

114ft0 

11X80 

6207 813 

55,077 10ft13 


PRECIOUS METALS 

a LONDON BULLION MARKET 

(Prices supptod by N M Ftattechld) 

GoW {Tray OZ.) S price E equfv. 

CkXU 392.60-33250 

Opening 391.80-38250 

Morning flx 392.15 247.257 

Afternoon fe( 383.70 248.00 

Day’s high 39440-394.80 

Day's Low 39150-39150 

Previous cfosa 38250-392.80 
Loco Ldn Moan Gold Lending Rotes (Vs USS) 

1 nxwft 458 B nWfflha *53 

2 months —4.04 12 months S5B 

3 months ..... -4.78 


■ CRUDE OIL IPE (S/baneQ 


Latest Hay's 


Opm 



pta dtangs 

Mgfr 

Low U 

VW 

Nov 

1X78 -aw 

1654 

1X72 59.182 

19.476 

Dk 

16.89 -am 

1X91 

1X80 4X018 

9ft83 

Jm 

iaas -ao7 

1854 

1X84 30988 

5.108 

Feb 

1 X 88 -arc 

1X93 

1X86 8,103 

700 

Us 

1X88 *0.03 

1X89 

1X83 7.368 


Ar 

ISftS +0.02 

1X88 

1X85 1,789 

15 

Total 



166288 3QA18 

■ HEATING OIL NY1EX (4X000 US gril: c/US gaBsJ 


Latest Dayte 


op* 



price ctnogo 

Mgft 

Low Iri 

Vri 

NM 

4X75 

5075 

4X45 38ftlfl 

9998 

DM 

5X75 

5199 

6040 43,173 

0.160 

JW 

61.69 

51.75 

51.40 31.987 

2ft73 

Fed 

5X15 -Oft5 

53.46 

5200 16957 

1982 

Mr 

51ft5 -XI 5 

SX10 

6190 12729 

300 

Ayr 

51.40 

SlftS 

51.40 4.481 

294 

Totri 



175,429 20938 

■ GAS (XL IPE (S/tannri 




Soil Hay's 


0pm 



pta tango 

Won 

LOW W 

HU 

Oct 

15X75 -X7S 

15390 

15280 27,098 

5951 

Hov 

155ftQ -1.00 15880 

15490 2X277 

5288 

DK 

157.23 -1ft5 

15880 

157.00 21.740 

2942 

JM 

15980 -IftO 

158.75 

15X50 15.445 

481 

Fob 

15X00 -IftO 

169. JO 

15X50 3.632 

588 

mr 

isofto -a 75 

1W.25 

15X75 5950 

129 

Total 



109,188 14963 

■ NATURAL GAS NVMEX (10,000 nnnB&L: S/ranfita.) 


Latest Day's 


Opa 



pta tango 

Mgh 

Low M 

Vri 

NO* 

I.7J5 +0.023 

1.730 

lft85 2X846 

X296 

Dk 

X005 +0.011 

2-013 

1990 29,163 

1,733 

Jan 

2 ft 80 *an» 

urea 

2070 17,100 

945 

Fob 

£010 +0L009 

2010 

1995 7*717 

SO 

■w 

1555 +0809 

1.9/0 

1958 11259 

545 

Apr 

1510 +0804 

1915 

1915 8982 

539 

Total 



HI, 194 18991 

■ UNLEADED GASOLINE 
HYUEX (42ftoo US grita: c/US g 

afcl 



Maj 564* -1/4 588/4 563/4 7557 1,109 

Jut 572/0 -0* 576* 571* 13597 1581 

Aug 574/6 -1* 578/4 574/4 388 35 

Total 1381477 32577 

U SOYABEAN Oft. C8T (EO.OOCXbtr canta/ttj 

Oct 2L40 +8.15 2450 2421 9430 3550 

0k 23.62 *610 2354 Z3J8 36839 18543 

Jaa 2352 +610 2352 2350 9572 3553 

Mar 2358 +056 23.45 2123 16451 3,035 

May 2322 +002 ZL35 23.15 7507 2580 

Jtd 23.10 +658 2322 ZJM 5 , 405 732 

Total 84569 36431 

■ SOYABEAN MEAL CBT (100 tons; S/ton) 

OCI 1815 -64 1625 1805 4582 3587 

DK 162.7 -05 1845 1625 44588 7538 

Jan 1844 -03 1855 1844 14537 1.921 

Mr 1872 -OB 1685 1872 1252? I.MB 

May 1895 -08 171.4 1695 6592 S91 

Jot 173.7 -63 1745 1735 5580 313 

Total 90142 MyM7 

■ POTATOES LCE (S/tonne) 


2285 2235 1529 139 


OoM Wn 
1683 1677 


EDserRa 

jo/troy az> 

US eta equiv. 

Sot 

Sp«t 

352.85 

659.05 

DK 

3 motUha 

357ifi 

56720 

Jn 

8 menms 

353.70 

57495 

fab 

1 year 

37795 

693A0 

MV 

Gold Coin* 

$ price 

E equhr. 

8pr 

Krugerrand 

384-387 

349-252 

Total 

Maple Leal 

403.45-406.00 

- 


New Sovereign 

92-85 

6M1 



Latest Day*a Opan 

price change Mgh lorn tat IM 

4695 -Oat 465S 4959 57,691 12578 

6S50 +051 6550 3153 15526 5527 

5450 +605 54.60 5455 1005 1580 

5440 +610 54.90 5380 4J34 1.075 

5550 - * 1.732 314 

5950 -639 9950 5850 3575 385 

OUte 26897 


Cotton 

Spat and ship merit safes In Liverpool 
amounted to 354 tonnes for the week ended 
September 30. against 237 tonnes tn the previ- 
ous waste n a no w a d purchasing In many ape- 
dafert stylos attracted much attention. East 
African, American, toraaS and Syrian growths 
mewed off freely. 


3907 

-17 

3988 

3985 

9938 1,983 

3870 

-7 

3825 

3870 1X788 1,823 

37B5 

+8 

-•BPQ 

3783 

7731 

728 

3785 

+25 

3770 

3740 

2,483 

80 

3735 

+80 

3740 

3720 

1ft53 

IB 

3723 

+7B 

3720 

37IQ 

23 

15 


Total 96538 4/447 

■ COFFEE t? CSCE p7 JOQibs; centaflbs) 

DK 21555 +650 218.75 21070 20542 6,728 

Mar 219.45 +690 22610 215.00 9539 1526 

Stay 22130 +145 22ZO0 217.10 3427 395 

M 22245 +045 221J5 22045 1,256 61 

Sap 22180 +1-00 22X50 22X50 564 22 

Dec 22X90 +685 - • 7W 14 

38^97 9,174 


Ok 22X90 +685 - • 789 

Total 38^97 9,1; 

■ COFFEE PCO) (US cenc/pound) 

Ocl 4 Prica Prev. day 

Camp. (tally 19X82 19663 

15 day average 20X23 20151 

■ Mo7 PHEWUM RAW SOOAH LCE (centa/Iba) 

Jan 11.82 .... 

Mar 1248 - - - 90 

May 1X79 .... 

Trial SQ 

■ WHITE SUOAB LCE (Storme) 

DK 32840 +640 33040 32600 1791 S 


32840 +640 33040 32600 1791 525 

32940 +650 33040 32650 7 ,870 782 

32610 +670 32940 32600 1.410 3 48 

32840 +630 32840 3Z6D0 1478 288 

31100 +650 31140 31140 401 10 

31140 +650 4 


Ocl 31100 +650 31140 31140 401 10 

DOC 31140 +650 4 

Trial 14783! 1431 

■ SUGAR If CSCE (11241001 by centa/Iba) 

Mar 1X45 +603 1X48 1X25 100432 4435 

May 1X48 +042 1X53 1X31 17443 712 


■ FREIGHT (BIFFEX) LCE (SiOflndeK paint) 


0d 

Oct 

17B5 

+47 

1788 

1780 

618 

30 

DK 

NOS 

1770 

+47 

1770 

1730 

384 

71 

Mar 

DK 

1755 

+45 

1755 

1730 

15 

50 

May 

Jk 

1698 

+31 

1688 

1875 

819 

175 

Jri 


1690 

+37 

1690 

1680 

488 

183 

Oct 

Jri 

1500 

+37 

1475 

1475 

108 

2 

Total 

Totri 





2ft47 

491 

■ Ol 


Mar 1X45 +043 1X48 1X2S 100432 4435 
May 1X48 +042 1XS3 1X31 17443 712 

Jri 1X38 +043 1X42 1X22 11407 344 

net ixi4 +044 im im am in 

■Mr 11,78 +641 11.78 1145 US7 57 

May 11.78 +641 - - 8 - 

real 139484 3419 

■ COTTON NYCE pgOOOIba: cemariba) 

Oet 8675 +048 6740 6690 222 Z7 

DK 6748 +041 6744 6636 27446 7428 

Mar 6673 +048 6680 6617 11.141 1,788 

May 6843 *0.40 7045 6SA0 6450 1441 

Jot 7688 +643 7690 7140 4,112 513 

Oct 6676 +616 6680 6690 538 SS 

Total 5143011/623 

■ ORANGE JUICE NYCE (l6,0Q0lta; csnta/fca) 


Bav 

91 JH 

-Qft5 

8220 

9060 

9ft4E 

«S 

Jn 

84.70 

-QJ0 

9X75 

9+05 

X3S7 

718 

Msr 

9840 

•1.10 

9X25 

97J0 

4ft87 

327 

■toy 

101.75 

-X80 

10225 

101 JO 

1,117 

117 

Jri 

10X25 

-M0 1OU0 104.25 

618 

50 

Sip 

10X05 

• 

10X06 107 JO 

198 

l 

Trial 





2X500 2,288 


VOLUME DATA 

Open interest and Volume data shown far 
contra c ts traded on GO&fEX. NYMEX. CAT, 
NYCE. CME end CSCE are one day In arrears. 


INDICES 

■ REUTERS {Basse 18/9/31-100} 

Oct 5 Oct 4 month » 

3088.9 20834 208X2 

■ CRB Futures (Bsa« 19S7-HX3 


month ago ysarago 
208X2 1676.6 


month ago year ego 

23123 217.15 


36500 -0.775 31400 36000 6138 1.488 

38425 -1725 31175 36200 806 190 

31550 4.750 4X600 31425 231 15 

41350 -IflSO 40550 40250 234 18 

31300 -1650 31400 31000 48 5 

1*B 1,728 


LONDON TRADED OPTIONS 

Strike pries S tonne — Cofls Puts — 

■ ALUMMUM 

(08.7%) LME Nov Feb Nov Fob 

1800 S3 BB 21 61 

1626 38 62 92 62 

1850 27 70 45 75 

■ COPPER 

(Grade A) LME Nov FA No* Fob 

2500 84 108 45 93 

2550 40 86 71 120 

2600 24 M 104 150 

■ COFFEE lce Nov Jan Nov Jon 

3600 319 400 12 130 

3*360 276 380 19 149 

3700 235 339 28 1B9 

■ COCOA LCE On Mar Dk Mar 

975 22 TO 54 86 

1000 16 58 72 BO 

1050 7 42 114 113 

■ BREW CRUDE IPE Nw Dec Nov Dec 

1660 48 78 19 42 

1700 18 58 44 71 

1760 7 38 81 106 

LONDON SPOT MARKETS 

a CRUDE OH- FOB (per tasmal/NonQ *or- 

DuBol SI 6.63-5-681 -0.19 

Brant Stand (dated) *1145-147 -021 

Brent Stand (Nov) S16.74-fl.7Bt -021 

W.T.I. (1pm est) SI 7.96-7.8 71 4X245 

■ 01 PRODUCTS NWE prompt daffwwy OF (tonne) 

Premium Gaso&ne SI 70-173 -i,o 

Gaa 08 *156-156 -0.6 

Heavy Fud OH $8012 +1 J 

Naphtha SI 82-1 63 +1JJ 

J* hte SI 80-181 .1.0 

Oteaei S157-15B -1.0 

mnteun Argus TaL un don f071) 3S9 8792 

■ OTHER 

Gold (per tray ottf $39X70 *OJQ 

Stver (per trey az)f 5615c +4.0 

Pbtfcxun (per (ray oz.) S480.00 +1.75 

PeBacflun (per troy end $15X75 +125 

Copper (US prod.) 122 j3c +1.0 

Lead (US prod.) 3126c +150 

Tin (Kites Lunqu) 1164c -007 

Tin (New York) 2516c +10 

Cam (Jf™ waighot 114,Q6p +0.14- 

Sheep five we/sWftA flQ.JIp +X51 1 

PlOa flwe Wright) 75J37p +125' 

Lon. day sugar (raw) 4307.60 -X20 

Lon. day sugar (wta) S33S.Q0 -2JS0 

Tate 1 Lyta export E3CHOO ^.00 

Bartay (Eng. feed) Unq. 

Mai» (US No3 Yellow) $1310 

Wheat (US DarH North) Unq. 

»«>*■ (Noy)f 94.00p +1.00 

Rubber (Oec)f 91S0p +1.00 

Rubber (KLRSSNolJuO 345 An +lfi 

Coeanut 0« (PhlM S6110u -no 

Palm Ol (Melgy.)§ 

Oopre (P«0§ $397, 0u -9.0 

Soyabeans (US) £l34.0v 

Cotton OWJoak'A 1 index 7130c ^L10 

WCtetops (84c Super) 4S3p 

5 p P enoefl| g- ° ew*»/«x 


■tatea p paice/kQ. o ewn/b. 

(Vtiiissiru 

♦ Shew OUm vidQhc 
} Pnc«i fta for piortoin tfe^L 


CROSSWORD 

No. 8,577 Set by GRIFFIN 



ACROSS 

1 Last night wanted hot cereal 
three times! (6) 

4 Meticulous accountant turned 
clergyman (8) 

9 Approve of maid moving 
about (6) 

10 Hearing foreign car turned it 
back on (8) 

12 Joint many drink in front of 
(4) 

IS Snooker ball we strike cen- 
trally (5) 

14 Go by fool parking in front (4) 

17 Absurd poseur prepared to 
take notice (12) 

20 Boards trains once attacked 
by Indians (12) 

23 Iris Is lost on arriving at dub 
(4) 

24 Bound to beat Elizabeth (5) 

25 Giggles if told some riddle (4) 

28 Heard you entered Bath on a 
new motorway (8) 

29 Where a vice takes first place 
( 6 ) 

30 Dropped cold cure following 
public introduction (8) 

31 Game getting tangled in nets 
(8) 

DOWN 

1 Wing patterns when Dying (8) 

2 Getting on grade higher went 
berserk (B) 

3 Short ball missed where 31 is 
Played (4) 

5 Frustrated cashier behaved 
(13) 


6 At last you can return to 
group (4) 

7 Man I'm allowing Inside is a 
brute (6) 

8 He got an eagle, by the way 
( 6 ) 

11 One making a ttvtng shooting 
people? (12) 

15 Kicks a former hotel 
employee (5) 

16 Left Lfly standing painting on 
wall (5) 

18 MC to honour aviator (8) 

19 Receptacles for discarded cof- 
fin nails (8) 

21 Sign protecting a shrew (6) 

22 A stout container? (6) 

26 Border on a bath back (4) 

27 Correct time, the French way 

(4) 

Solution 8,576 


QSQD0B QQflOIIHBE 
S a Q H H Q E 
BUQQQO OnQQOBBH 

□ QBDJSniaB 
□EHIHEH30EI QDQBE0 
D B EJ Q E H 0 
Q0OQ [nuaaamnQOQ 

Q 0 □ 0 q a 
□aaaHQQiiflB shed 

□ h a 0 □ □ q 
□ naninio □□□qeedd 
aaaaataoD 
□□asaaan □□goes 

□ □ □ a h □ o 
□aaoBiicjo QuaQDB 



w... 






v Hllc e 

>r “liner 


LONDON STOCK EXCHANGE 


:s Whiles 




a a 
a a 


I. *s,“ 


MARKET REPORT 


US rate fears prompt heavy setback in shares 

D>. Tsm -I 


FT-SE-A All-Share Index 


By Terry Byfand, 

UK Stock Market Editor 

London had no choice but to follow 
the general setback across global 
stock markets yesterday afternoon 
as the latest US economic data 
prompted fears of a sharp rise in 
rates by the Federal Reserve, per- 
haps tomorrow when the September 
payroll numbers are due. 

Trading volumes were fairly mod- 
est in London, but share prices 
went almost into freafaH when Wall 
Street opened 40 Dow points off and 
yields on Federal bonds moved 
towards 8 per cent following news 
that growth in US factory orders 
and finis hed goods shipments had 
accelerated in August 

The FT-SE 100-share Index 
extended its fall by 25 points within 
an hour to touch the day's low of 


2,550.2. A modest rally set in as 
Wall Street halved its early loss. 
The final reading put the FT-SE 100 
at 2.S56.3 for a drop on the session 
of 45.5 points. The Footsie now 
stands at its lowest level since early 
July and is barely BO points above 
its low for the year. 

Market confidence had been at a 
low ebb from the opening, as trad- 
ers digested the implications of 
Wall Street's heavy ail overnight 
Also discouraging was a prediction 
from James Capel, London's largest 
institutional stockbroker, that the 
FT-SE 100 Index would close the 
year at 2,840. Many City analysts 
are still forecasting a Footsie 
year-end close in the 3,400 to 3,600 
range. 

Conviction that US interest rates 
are about to be raised by a full 
percentage point bore heavily on 


London because rates in the UK are 
perceived to be the most vulnerable 
to pressures hum across the Atlan- 
tic. However, there were hopes that 
determined action by the Federal 
Reserve might succeed in settling 
global bond markets down, a devel- 
opment regarded as the necessary 
basis for any genuine recovery in 
equities. British government bonds 
fared better than equities yesterday, 
giving some cause for comfort in 
what was essentially a badly 
unnerved stock market. 

With the December contract on 
the FT-SE 100 Index playing its 
usual leading role, losses in equities 
were concentrated on the blue chip 
stocks. The FT-SE Mid 250 Index, 
which takes in a broad range of 
Footsie and non-Footsie shares, fin- 
ished 26.1 points down at 3,429.1 
Business in the non-Footsie equities 


made up around 57 per cent of the 
day's Seaq total, once again indicat- 
ing reduced private investor inter- 
est 

The speed of the market’s down- 
turn in mid-afternoon virtually put 
an end to serious business by the 
big investment institutions and, 
even after some courageous bargain 
hunting towards the close, overall 
busines volume was not particu- 
larly impressive. The day's Seaq 
total of 515.8m shares compared 
with 531.6m on Tuesday, when 
retail, or customer, business, worth 
£1.01bn, remained around accept- 
able levels from the view point of 
market profitability. 

No sector of the market escaped 
from the overall setback. The US- 
influenced blue chips suffered for 
their association with Wall Street, 
although turnover in these stocks 


did not suggest significant selling 
pressure. Reed Elsevier was a weak 
spot after debt ratings were ques- 
tioned in the wake of a £955m deal 
in the US. 

Interest rate-related stocks, 
including the leading store groups, 
turned easier but losses were fairly 
small in spite of fears that domestic 
base rates could soon be under 
upward pressure if rates rise in the 
US. There were further losses in the 
financials sector, where the woes of 
the UK stock and bond markets 
have already hit profits at the mer- 
chant banks, which are heavy play- 
ers in these arenas and also hold 
portfolios which were being deval- 
ued rapidly yesterday afternoon. 

Traders said that the London 
market had clearly lost all confi- 
dence ahead of Friday's announce- 
ment of the US payroll data. 



Equity Shares Traded 

Turnover by volume {mflUonl. EwAnHnsr 
fcitri-moiiiei buameas and overseas turnover 
1.000 - 



Aug Sep 

Scum FT OflcatM 1994 

■ Key Indicators 
Indices and ratios 

FT-SE 100 2956.3 

FT-SE MW 250 3429.2 

FT-SE-A 350 1487.7 

FT-SE-A An-Share 1477.82 
FT-SE-A AD-Share yield 4.07 

Beat performing sectors 


Oct 

0 .wiMBiHnBjmwniwini 

Aug Sap 

Oct 


1994 


■45.5 

FT Ordinary index 2T86.9 

-38.9 

-26.1 

FT-SE-A Non Fins p/e i8.i7 

(18.431 

■20.2 

FT-SE lOOFut Doc 0974.0 

-45.0 

-19.62 

10 yr Gilt yield 5.99 

18.96) 

(4.02) 

Long gllL'eetuity yld ratio: 2.21 

(2.23) 


Worst performing sectors 


... +0.9 


-25 

... +0.1 

2 Pharmaceuticals 

-2.2 

.... -0.2 

3 Diversified Indta 

-2.2 

.... -0.3 

4 Media 

-2.1 

.... -0.5 

5 Chemicals 

-2.0 


ICI hit 
by US 
selling 


A two-way pull appeared to be 
developing in ICI shares yes- 
terday as word went round the 
mark et that one US house was 
trying to steal a march on its 
rivals and call the top of the 
chemicals sector. 

Relatively high turnover of 
4m shares and a drop of 28 to 
787p yesterday was attributed 
to heavy US selling, and some 
dealers said one house had 


taken the stock off its buy list 
as part of a macroeconomic 
rerating. Morgan Stanley was 
cited, although the investment 
hank denied any change of 
stance. 

Shares In the UK’s sector 
leader had reflected the boom 
in commodity prices and ICI 
stock touched an all-time hi gh 
of 868p in early August Since 
then it has falle n with the mar- 
ket but many analysts have 
lifted profits forecasts for the 
company ahead of third-quar- 
ter figures due on October 27. 

Goldman Sachs, for example, 
believes that the stock will 
outperform by 10 per cent until 
the new year. The house chem- 
icals team cites double-digit 


growth in key commodities 
such as ethylene throughout 
September. 

Reed lower 

Anglo-Dutch publishing 
group Reed Elsevier was unfor- 
tunate in the tuning of its 
announcement that it had 
made a £955m acquisition in 
the US and the fall in the share 
price masked a mixed but gen- 
erally favourable reception. 

Analysts said the company 
had had to pay a hefty price for 
the on-line legal information 
service it bought from Mead 
Corp but the cost would be off- 
set by sizeable tax savings. 

Ms Chris Munro of Hoare 


EQUITY FUTURES AND OPTIONS TRADING 


Stock index futures fell steeply 
in heavy volume, applying 
dear downward pressure to 
the cash market throughout 
the day, writes Jeffrey Brown. 

■ FT-SE too INDEX FUTURES (UFFE) £25 

Open Son price Change 
Dec 2968.0 2974.0 -46.0 

Mar 301&5 2998.0 -4&5 

■ FT-SE MID 250 INDEX FUTURES (LIFFg 

Dec 3445.0 3430.0 -49.0 


The FT-SE 100 December 
contract pushed down to 
2,955 at one stage but 
managed to climb back to 
2,974 at the official 4:10 dose, 

par fuH mam point (APT) 

High Low Est vd Open bn. 

2994.0 2956.0 17815 537S2 

30105 2989.0 30 2175 

i CIO per Ml index port 

3445.0 3430.0 25 4043 


■ FT-SEMP 260 INDEX FUTURES (OMDOeiOperlulirKto point 

Dec - 3430.0 .... o 

MI open interest flguej ore lor pwtoue day. T Exact vefejme shown. 

■ FT-SE 100 aiDEX OPTION (UFFE] f~2959) CIO per fu8 Index point 

2800 2860 2900 2850 3000 3050 3100 3150 

CPCPCPCPCPCPC -PCP 
Oct 170*2 9 128 14 802 24 58 42*2 Sl>2 69 18% 104 7 143*2 3 183 

Nov 188 25 157*2 36 121 49*2 90 68 >b 82*2 92*2 41 h 122*2 ZSfc 159 18 200 

Pec 214 39 178 S3 143*2 09 114 90*2 87*j 114 85*2143*2 48*2 175*2 33 212 

Jan 235*2 52 IBS 85*2 188 82*2 137 103 109 125*2 87*2 154% 88 184*2 52 221 

Juflf 294 S4 232*2 121 175 163*2 130*2 219 

C*a JJ19 Put* 15*46 

■ EURO STYLE FT-SE 100 INDEX OPTION (UFFE) CIO per Index point 

2775 2825 2815 2825 2976 3026 3075 3125 

Oct 193*2 7*2 148*2 12 108 19*2 70 33 *1 54 22 85 18*2 123 4*2 1S7 

Nov 213*2 19 173 28 135*2 33 103*2 57*2 78 79 52*2 106 34*2 138 21*2 174*2 

Dec 229 32*2 181 43*2158*2 58*2 125 76*2 97*2 98*2 75 125*2 54*2 154*2 39 188 

uer 239*2 71*2 178*2105*2 124 150*2 82*2 208 

Junf 281*2 93*2 220 128 187 171 121 221 

Cteto 4531 PUs 3JJJ3 ■ llMatytig Mu ratio. Pranknc m brand on Mfcmnt prises, 
t Long danl expiry montB. 

■ EURO STYLE FT-SE MD 250 INDEX OPTION (OMLX) E10 per ftjfl index point 


3400 3450 3600 3550 3600 3680 

Oct 153 72*2 125 94 1001,118* 

Cab 0 PtM 0 Statement pikas snfl Him, are Mon* 4J0pm. 


8700 3780 


a decline on the day of 45 
points. 

At this level the premium to 
the cash market was 17.7 
points, with the fair value 
premium standing at 15 points. 

December trading volume 
rose sharply to 16,598 lots, 
from 10,383 in the previous 
session. 

There was genuine selling 
pressure from the outset but 
the real downwards drive came 
once Wall Street had opened 
at 2:30pm London time. 

From then on the premium 
to cash equities narrowed 
dramatically, squeezing down 
at times to within two points. 
Traders said US selling had 
been substantial. 

Equally, there was obvious 
support at 2,955, in spite of 
the complete absence of 
institutional business. The tone 
on Wall Street is providing the 
main lead at the moment 

Turnover in traded options 
also moved up sharply, rising 
to 46,199 lots, almost double 
the previous day's total. FT-SE 
and Euro FT-SE volume 
accounted for more than 
31 ,000 contracts. 

National Westminster was 
the most actively traded stock 
option with 1,331 lots dealt 


| FT - SE Actuaries Share Indices 

The UK Series | 

Day’a 

Oct 5 chaett Oct 4 

Year Dtv. Earn. P/E Xd ad|. Total 

Oct 3 Sap 30 noo ylekm ytod% ratio ytd .Hatum 


FT-SE 100 2850 

FT-SE Mid 2S0 3429 

FT-SE MM 250 ex Inv Trusts 3433 

FT-SE-A 330 1487 

FT-SE SmaOCap *778.6 

FT-SE SmaOCap ex lev Trusts 1750.2 

FT-SE-A ALL-SHARE 1477, E 

■ FT-SE Actuaries All-Share 


-1.5 3001.6 2963.6 30263 
-08 34653 3449.6 34943 
-0.7 3448.1 344*3 34802 
-13 1507.9 15002 1521.4 
-03 179539 180235 181430 
-03 176534 177437 1785.64 
-1.3 1497.44 149083 151037 


Do/a 

Oct 5 chgt>% Oct 4 Oct 3 Sop 30 


31003 438 738 

34713 334 539 

3478.8 331 049 

16483 4.13 734 

177931 332 434 

177134 332 5.49 

1533.47 437 639 

Year DM. Earn 
goo yjcldjt yjjMjl 


348 5.18 

330 528 

3.65 532 

2-19 t 
4.15 525 

3.87 538 

439 5.15 

439 452 

526 534 

4.04 8.77 

322 5.05 

435 2.79 

3.11 5.44 

426 831 

430 7.69 

4.43 833 

438 7.11 

433 7.84 

430 8.01 

321 3.43 

432 734 

620 933 

335 6. BO 

3.82 7.48 

3.48 434 

238 537 

331 939 

333 637 

239 064 

330 538 

3.76 235 

4.62 824 

337 1039 

627 X 
4.35 329 

533 1347 

4.04 631 

4.89 9.66 

4.48 1064 

5.78 1011 
5.67 8.49 

4.02 12.78 
4.08 833 

421 4-39 

228 230 

4.07 069 


1635 105.74 111937 
2010 103.70 127833 
1839 10738 1273.45 
1634 51.33 115233 
2539 4538 1381.06 
23.18 4737 1382.98 
1727 5007 1164.44 

WE Xd aq. Total 
ratio ytd Rattan 

24.40 81.42 106238 
23.44 9824 1073.02 
2138 85.80 100232 
t 3833 108838 
2335 8339 83635 
2434 3232 799.18 
23.70 61.63 851.70 
27.75 7925 1005.47 
22.49 82.46 89626 
17.59 5730 91087 
23.43 4835 100040 
49.03 7339 1067.71 
2130 7324 1085.07 
17.74 4049 89127 
1623 10526 91330 
15.13 61.10 96522 
16.10 10035 910.19 

1434 78.18 943.20 

1435 5731 B123B 

4092 46.47 912.78 
15.78 125.15 93236 
1033 217.0 7 797.98. 


10 BflNERAL EXTRACTIONflQ 2641.10 -12 268827 264230 285047 230430 040 5.18 2440 81.42 106238 

12 Extractive MustrteeM) 388*96 -1.4 394428 391 5.7B 396635 3157.00 330 528 23.44 9824 1073.02 

15 09 InteoratedP) 2582.12 -1.0 2607.67 2578.71 2S81. 84 2324.30 335 532 2138 85.00 100232 

16 Ofl EjcotoraxIon & ProcKII) 189437 -0.5 190434 189833 191130 1823.90 2J9 £ * ff-W J5g£3g. 

20 QEN MANUFACTUHEHSpBT) 183531 -13 1B803B 18S938 1880.79 192930 4.15 535 2335 6339 83635 

21 BUMfeW £. Carratiuctlon{33) 101734 -06 1024.06 1027.70 103822 117080 3.87 538 2434 3233 790.18 

„ Biddru Mato A M«cftst32) 1803.45 -08 181820 181232 182832 1871.80 439 5.15 23.70 61.83 851.70 

7K OwrU«ast231 2280.12 -2.0 231042 231037 2341 39 2204.BO 4.09 432 27.75 7925 1005.47 

W Dh-^fled^uslnate(1ffl 174230 -22 178132 1758.7B 178530 21X1430 526 S34 2249 8Z46 89628 

25 Etectrartc A Becl EqUp<34) 1B62.49 -09 187938 187638 190138 2222.00 4.04 6.77 17.59 5730 91037 

26 &omeertiw(71) 170304 -1.1 178222 1793.83 1818.14 169430 322 5.05 23.43 4835 1008 40 

inobwertna VWiWee(12) 220132 +0.1 2108.98 228331 2305.35 1871.90 435 2.78 49.03 7339 1067.71 

^ SK^erTwrapa) 2754.75 -14 279230 279079 2816.14 247120 3.1 T 5.44 2130 7324 1085.07 

M TaSte A A^arNgQl *57737 -02 1580.98 1577 .88 1587.71 191830 426 831 17.74 4049 89137 

on CONSUMER GOODSHn 264523 -1.7 289067 2872.04 270220 2700.40 430 7.69 1623 10526 91338 

2132.30 -05 214329 2137.42 215043 2064.60 4.43 833 15.13 61.10 96522 

32 sSraWnM A CktarahO) 2731.19 -13 2780.74 276022 279006 2721.30 438 7.11 1018 10035 919.10 

S 224223 -1.4 2274.31 228132 2277.65 2291.30 433 7.84 1434 78.18 043.20 

S LSwWGoototiar 227536 -03 2288.85 2304.57 232238 2808^0 4.00 831 1435 5731 51239 

^ 156048 -09 1683.39 158334 1698.45 172630 321 3.43 4092 48.47 912.78 

W tamrcrewtotaflS?) 2914.92 -22 298056 294637 2976.43 310010 432 734 16.78 125.18 93236 

349926 -2.0 3569.56 356837 3 661.84 3938.70 620 933 1033 217.07 797.98 

40 SEHVfCESCraoi 1846.11 -13 1875.44 1873.14 1890.75 1901.10 335 6.80 1825 4822 900.80 

i? 2450.30 -1.0 2475.91 2470.91 251131 2706.10 182 7.48 1532 6823 B4733 

V, 201080 -1.7 2046.07 2034.71 204S35 194330 3.48 434 2381 53.89 99224 

270307 -2.1 2768.15 2797.99 2909.20 252330 230 537 2037 68.90 942.43 

S 109726 -131722.471709.16 172333173920 331 939 13.17 61.68 1010.17 

«K^Gto*ntf451 1578.12 -1.8 1803.05 1589.09 161333 1686.00 333 837 18.05 3831 842.12 

1455.18 -0.B 146725 145837 1476.78 165120 239 8.04 17.78 3231 884.76 

^ J 2155.54 -13 2185.00 2178.62 2224.19 230530 330 638 10.73 5928 848.48 

” 134534 -0.5 1251.89 1254.07 125723 1247.70 376 235 74.99 2532 ,107002. 

« 227933 -08 2298.04 2283.11 2341.17 240630 4.62 824 14.77 73.42 876.19 

“ 2368.95 -05 2379.13 232637 2424.44 2075.90 337 1039 11.48 B3.46 98432 

S 191133 -2.5195933 1982.70 1977.48 218230 627 X * 68.79 87338 

189731 -0.5 190728 19023B 1929.94 2203.10 4.35 329 14.69 5022 80930 

66 Tttowmmurtca^ ,sLn -06 1 768.00 1784.98 1854.76 1894,00 5.53 1347 839 6935 877.68 

„o un w-ONANCtAL Stsaa 159 9 -44 -13 162120 1814.47 163438 164074 .._^ _ ^ _ 10J 7^JiaL« 

„ — .AfcieiALSrtM 2064.Tr -1.1 2087.71 2075.13 2118.82 2380.50 4.SB 9.66 12.13 8838 82044 

7 ° 269133 -1.6 2733.42 271821 275839 2810.60 4.48 1004 1076 114.94 80837 

71 BanKSOCO -1.T 118239 1162.10 120130 150120 5.78 mil 1131 5420 80084 

” as&» - 0.7 2271.71 223934 2292.46 £75820 5.67 8.40 1427 12732 87331 

74 Lite AtourawjOJ ^.9 256232 261727 2817.33 312fl.BC 4.02 18.78 9.12 87.78 78035 

76 Merchant Banto® 177737 -03 178230 1770.59 1800.60 1811.70 438 833 1331 83.18 963.15 

77 ^JSST^ JISm —03 144BJ26 1443.44 146728 163830 421 4.39 28.80 42.03 .82081.. 

2899.56 2J8 2JM 5HJ6 53J1 U7.87. 

S3 pr-S^A ALL-SHAREtfW 147732 -1.31497.44 149083151097153337 437 839 1727 50.07 1104.44 

■ Houriv movements 

O part 930 1000 1130 1230 1330 1430 IBM 1B.1Q HlgH/duy Ltiw/ttey 

29742 29804 297B.8 2973.9 29734 29803 29504 29808 28502 

FT-SE 100 »743 29734 29742 3445.! 34KL8 3440.8 34333 34293 34483 3428.1 

SSs 55Sl 1496.3 *4083 14053 14853 14807 1488.9 1498.6 1485.1 

Time ol FT-SE 1O0 Ob/ 8 *OB2m» I®* 3.i6o« , i. FT-SE 100 1894 High: 36M3{ S/S j 297S.B P4/R. 

■ ft-SE Actuaries 350 Industry baskets 

■ ^ B 30 1030 1130 laoo 1330 1430 1630 18.10 Ctam Pi**** Change 

— “-TZ TIT 969.7 9M.7 659.7 M83 957,6 957.6 9612 -33 

BUgACnstrcn 9H-0 2933.6 23333 29223 2924.6 2901.9 28972 £8893 2954.7 -65.4 

PtwmiKeUtkto 2915.4 29».2 176 63 1765.9 17853 1752.8 1752.7 17S23 17823 -10.1 

Water 17M-4 17«.2 ^ 27233 2724.4 27873 -423 


1623 105.26 
15.13 61.10 
18.10 10035 

1434 78.18 

1435 5731 
4092 48.47 

16.76 125.1B 
1033 217.07 
1825 4822 
1532 6823 
23.81 53.89 
2037 68.90 
13.17 61.68 
18.05 3831 
17.78 3231 
19.73 5928 
74.99 2532 

14.77 73.42 
11.48 83.46 

* 88.79 
14,69 5022 
BJ9 8935 


12.13 8839 820.44 
1076 114.B4 80837 
1131 5430 80234 
1437 12732 87331 
9.12 87.78 78035 
1331 83.18 963.15 
28. BO 42.03 822.81 

5056 5331 907.87 
1737 5007 1104.44 


Adoituul Woimanun Q" «*ecwwo and papa-taed 

^ RN8T ’SI «* to, FT-9E Aaume, M* 


bviw Irttomatontl SWc^ wWi tf— AaaqyMa and Itia Faeul» Ot Acniiaiag undBraxamdati MC o« BTtxjndnjlM 

Anna Tkn« Lbnoad IBM. M rlona maaned. 


Govett argued that the group 
had gained access to a market 
that was growing by 9 per cent 
a year. But one analyst com- 
mented: ‘'The deal poses as 
many strategic questions as it 
answers and they will need to 
do a lot of work to make it all 
add up." The stock closed 15 
off at 740p. 

Bank disappoints 

Headline profits from Bank 
of Scotland were some £3m 
above the market's best expec- 
tations. but there was an ele- 
ment of disappointment with 
the 14 per cent dividend 
increase, which compared with 
some estimates that had 


■ Major Stocks Yesterday 

Bong Day's 

OOOs prtp» eftsnna 


Jft 

ASDAGroiOt 
Abbsy rtafonatf 
AbsnHshBr 
AHadOomecqt 
Angbi Water 
Argos 

ftwoc. WIL rOCOBT 

Assoc. BrtL tats 

BAAf 

BAT Ms.t 

BET 

BICC 

Ef 

BPBMs. 


Bract 

BhjsChdat 

Booker 

Boost 

Boorateit 

Bft Awospacat 

Bratah AlnMnnt 

Brin* Gust 

Braun Land 

Brio* Snort 

Bund 

BurnnSi Cmralt 
Bunon 

CbUs 4 Wo»t 


Com Viye4n 
Comm. LMorif 

Cootaon 

Counamost 


1MQ 317b 
B2S 


3500 

383 

123 

45 

1to» 

557 

679 

518 

438 

300 

tfOO 

287*2 

1900 

283 

236 

472 

BOO 

200 

1.900 

4W 

1^00 

417 

ft900 

98*2 

ia» 

350 

487 

680 

<JOO 

402>z 

2JOO 

314*2 

11.000 

364 

7.100 

300*7 

4.100 

196 

3JBD0 

551 

90 0 

515*2 

4.000 

284 

435 

416 

1.900 

602 

566 

456 

605 

439 

5400 

354*2 

7.100 

280 


4,700 

154*2 

3A» 

186 


848 

9500 

59*7 

ftfiOT 

382 

320 

489 

634 

283 

1AOO 

817 


ranged up to 20 per cent-plus. 

The dividend disappoint- 
ment, plus the general slide in 
the stock market, saw BofS 
shares underperform the 
FT-SE 100 Index and drop 10. 
or 4.8 per cent to 196p. The 
FT-SE 100 fell 13 per cent 
The telecoms leaders were 
among the market's most resil- 
ient stocks, with NatWest 
Securities’ “add" recommenda- 
tion for BT. based on the 
stock's defensive qualities and 
dividend potential, helping the 
shares close marginally higher 
on the session at 284p. 

Vodafone also attracted keen 
support after the strong sub- 
scriber numbers for the third 
quarter, which triggered wide- 
spread profits upgrades in the 
market. BZW was said to have 
been a big supporter of the 
shares yesterday. 

Cable and Wireless was a 
lone poor performer, slipping 7 
to 382p in spite of news that 
Bouygues Telecom, in which 
C&W has a 20 per cent stake, 
has been granted a licence to 
set up France's third mobile 
telephones network. 

Strauss Turnbull, the stock- 
broker, issued 8m American- 
style call warrants on the 
group and accompanied the 
issue with a strong recommen- 
dation on the underlying stock, 
which it said was "seriously 
undervalued". 

Retailing group Storehouse 
hardened 2 to I99p as brokers 
upgraded profits expectations 
following an upbeat statement 
on current trading to analysts 
and institutions. 

Storehouse said sales for its 
first half were likely to be near 


NEW HIGHS AND 
LOWS FOR 1994 

MEW WOM&m. 

EXTRACTIVE INDS (1) Coal ftiva.. INVESTMENT 
TRUSTS (1> LEISURE « MOTELS p) VrTwm 
Cm. ve/OJ. MEDIA PJ Bsnw RETAILERS. 
QENERAL PI Avnn Recti. SPIRITS, WINES * 
CIDERS P) MacaSan-Gtirtwa. TRANSPORT p) 
Oo-AMaO- 
NEW LOWS (29SL 

CULTS (5) BANKS (3) BREWERIES p) Fuller 
ST A. BULDUM & CN5IDN (13) AMEC d£p 
Pit. Barron. BaOttOV. B«8 lHl Bryant 
Counoy-Uoa. Crrar Ncnol. 4 HJl UzAtuna 
CAL taoenmnn. tana. Toy Homes, WesSuil, 
WAran Bowden. Wimney (CL BLDO MAILS A 
MCHTSpI) Anften. Cape, HmUtL Haywti 
Wms, Do PrL Meyer Inn, Poryope. Rubettra. 
SWF. SprtriO Ram, Trton. CHEMCALS (3) Bntlsfi 
V<ta. GourwAcn. Mittaor imL. Lapertn. Manners, 
DISTRIBUTORS (13) Covers RED INDLS pO) 
ELECTRJCfTV CQ Scot. Hyfto. Soot Power. 
ELECTRIC A ELECT EQUP (B) BICC Cap Fm. 
ICtaw Sd*. 20». CR3 cam Domang 3 M. 
Forward. Johnson. Sontwn. BMINEEmNO (IS) 
ENO. VEHICLES p| Moser Wetid. EXTRACTIVE 
MBS (4) POOD MAMJF (3) Boa Wauanon, 
UWeme. HEALTH CARE CD AAK Ou*tv Cara 
Hanoi Schott. HOUSEHOLD QOOOS p) 

Vynen. INSURANCE P0| DIVESTMENT 
TRUSTS p7) INVESTMENT COMPANIES (5) 
LEISURE ft HOTELS (7) Bn Doney. ItastMna 
Hi-Tee, KunUi BSpc Pit.. LadbroLe, Prem. 

Thom EMI. UPS ASSURANCE (3) Lncofei Nad, 
Traraoaan0c. MEDM ft) Baieaur maax. 

Co p y i l g te PromoUons. Phonetnk, Panmouttil 
Suidwtoid. Siertog Pubt, Teiegraon. 
MERCHANT BANKS ft Bsrtrgi Bpc 2nd PH. Do 
BVpO PrL Stiger & Fhodtarder. Wtntnm. OB. 
EXPLORATION A PROD (3) Command. Coplex. 
OMnl Natural OC_ HTEORATED (1| EaoiOn, 
OTHER RHANCML (10) OTHER SERVS A 
BUSNSp, Pnate-Ma. PUtioum. wane 
MngntL, PHARMACEUTICALS (Z) FHora. 
Gtarnabn. PRTNO. PAPER & PACKS (8) 
D emnae a . Bonnora. Bnt Tlnrnon. Detyn. 
Ferguson UHL Ferry PleLMig. RPC. Si hWB. 
PROPERTY m RETAILERS, FOOD P) Brahe 
tav ta^ntt RETAILERS. GENERAL (17) 
SUPPORT SBWS n B8M, Btad. S Edgtigton. 
Mama, Mtaye, StaBcNey. Sw-Pha. 
mfCOUMUMCATIONS cq Cato) a WMeai. 
Do 7 pc Cnv. 2003. TEXTB2S & APPAREL (9} 
Bechnan W- DM* H«M. PeadcUL 
TRANSPORT P) CSX. Dawsovoup. 
AMERICANS P9J. 

7 per cent ahead of last year 
and gross margins across the 
group were being maintained. 

BZW was among brokers 
that upgraded, lifting its cur- 


rent year forecast by £4m to 
£S0zn, and the following year's 
figure by the same amount to 
£96m. However, Mr Tony 
Shim at the investment bank 
remained cautious. He said: 
“The statement was reasonably 
encouraging but the shares are 
fairly rated given the excess 
capacity coming on stream 
over the next few years." 

Worries over the outcome of 
the price war among food 
retailers continued to over- 
hang Kwik Save. The shares 
lost a further 7 at 53Sp. 

There was no shortage of 
institutional buyers for the 
rump of stock not taken up in 
Commercial Union's £322m 
rights offer. The issue was 91 
per cent taken up and the 
remainder, some 6.4m shares, 
were easily placed in the mar- 
ket by Cazenove. CU’s joint 
broker along with Hoare 
Govett, at 490p apiece. CU set- 
tled 3 higher at 497p. 

Other insurers fell away 
with the market. General Acci- 
dent receding 5 to 531p, Royal 
Insurance 9 to 275p and Sun 
Alliance 7 to 3Q9p. 

Merchant hanks, severely 
mauled over the past two 
weeks after a series of profit 
warnings, staged a tentative 
rally but looked vulnerable at 
the close. S.G. Warbnrg fin- 
ished only 3 up at 5S3p, while 
Schroders was 25 better at 
1310p and Kleinwort Benson 
edged forward 3 to 436p. 

Securities house UBS was 
said to have downgraded 
Allied Domecq. The shares fell 
9 to 557p. Bass eased '/> to 
515Vip as talk returned that it 
was to buy the Harvester chain 


of public houses from Forte, 
which closed 3 lower at 223p 

There was also speculation 
that Scottish & Newcastle was 
to buy Courage from Austra- 
lian group Foster's. S&N soft- 
ened 2 to 479p. 

Among food manufacturers, 
Tate & Lyle tumbled 18 to 422p 
in trade or 1.6m, as the market 
reacted to Tuesday’s ■'reduce" 
advice from NatWVst Securi- 
ties. A note from the broker 
reflected ou the near-term out- 
look for the company after the 
US government announced last 
week the establishment of 
sugar marketing allotments. 

Fresh produce group Geest 
bucked the poor market trend 
to finish 8 ahead at 202p on the 
news that the European Court 
of Justice had rejected a chal- 
lenge to the European Union's 
banana import regulations. 
The challenge initiated by Ger- 
many could have led to stiffer 
competition for Geest. 

British Airways dipped 2 to 
354'^p on 3-3m shares traded 
following a better than expec- 
ted 7.3 per cent increase for 
passenger traffic volume in 
September. 

Metals group A. Cohen 
jumped 30 to 540p ahead of fig- 
ures due tomorrow. 

Expectations of good news at 
today's annual meeting was 
unable to prevent Ellis & Ever- 
ard, the chemicals distributor, 
shedding 3 to 25Bp. 

MARKET REPORTERS: 

Steve Thompson, 

Peter John, Joel Klbazo, 
Jeffrey Brown. 

■ Other statistics. Page 28 


2.100 202*2 
1,300 407 

1.100 23S 

2.100 429 


LONDON EQUITIES 


Eastern Beat 
East MkJaiti Bed. 

Eng Crina Cteys 
Entaprisa 04f 
EurouwMl Uritt 
FK3 
Ftoons 

S CoL LT. 

FteteT 

flea Acoctenit 

ssiF* 

Qymwti 
Oranadat 
Grand Mott 


222 431 

356 920 

357 177 

-7 

-a 

I UFFE EQUITY OPTIONS 


SHE 

637 713 

209 447 

-G 

— Crete pus — 

— cans 

— Pita — 


Gumwf 
HSBC (75p statf 
Huranaraon 
Honorrt 

Harmons CmtfWd 
Hays 


343 104Jj 

1.700 107 -4 

342 133>2 -3 

a /MO 223 -3 

800 531 -5 

1800 283 -2*2 

3.000 M7*a -1B*» 

87 321 -1*2 

3.700 491 ”17 

1^00 388 -7 

BS2 681 -n 

2200 181 

1.700 305 -fl 

2JOO 44» -84 

I /WO 689 -13 

180 318 +1 


Haraont 8,400 aw 1 ? -7*j 

Harmons CmsIWd 491 103 

Hays 01 zoo -1 

HWlW 304 1 72 -Z 

M 301 288 -2 

ICIt , 4JXJ0 787 -28 

mchcapot 701 «10 -8 

Johnson Matewy 97 331 -5 

KtiOflahort 13X30 4B3 

IMlSwe 214 330 -7 

Utitmhat 1JJOO 131 -3 

Land Sacurtaat 2.100 ear -t 

Lento 48 630 -5 

Lsgd & QraarNt 256 437 -3 

Lloyds Aboey 340 3M -1 

Lloyd) Bor*t 2200 Ml -4 

LASMO afOD 149 -1 

London Beot 1J00 987 *7 

Lonrtw 


MEPCt 

MR 

Manweb 

Maria 8 Soencorf 

MdandaBaa. 
Monbon (V*n.l 
WC 

NrnWaM Bankf 
National Pouerf 
Next 

North Wear Watarf 

Mcrtwm Boo. 

NorihBm Faodst 

Notweb 

tamwnt 

POOf 

PiUneton 

FMIait 

Piudamtalf 

S3 

RaricOmt 
RacLkI ACotiruinf 
RMfandt^ 
RMtiMLt 


ScotB* £ Naw.t 

Sea. tadro-Eto. 
Scottah tarart 
Sunt 

SuM«4ch 


1J00 987 *7 

1,700 133*2 *1 

5-000 183 4 

MX» 429 -« 

263 IS&a -1*2 

70S -0 

393 -7 

713 +1 

124 -5 

178 

472 -8 

451 -2 

238 —4 

517 -6 

7S5 *10 

201 
7SS 

582 -18 

598 -10 

184 -2 

518 -4 

294 -2 

010 -ID 

865 -13 

230 -2 

383 -11 

629 -3 

. 470 -5 

740 -16 

215 -2 

442 -10 

171 -7 

389 -4 

275 -B 

401 -6*2 

1310 *25 

479 -2 

306 -13 

325 -II 

102 -*i 

141 -a 


Bsasst 2^00 102 -*a 

SuMwtch 4J»0 141 -a 

SMfcoud 1.200 399 

Severn Trantf 551 514 -7 

SM Tranapcrtt 2JOO 60* -ID 

Shtot 1.700 504 -20 

Stir*?! Eats 1.900 224 -3 

aoflniwjtj 312 427 -7 

Sditth A Naglwt SB7 136*7 -2 

SnM D uu Uin irt 2.700 419 -10 

6raH D rac ham Utaf 833 382 -8>; 

Smotae Ml 883 415 *2 

Southern Bent 738 728 rfi 

South WNM B*tt 100 771 +1 


Scuti Wan Water 237 N» -2 

Stun Weat Baa. ijMO 738 *4 

SauOwnWaur 56« 540 *7 

&andaid Chsldt SfiOO 251 -3 

Storehouse 3,000 IBB *1 

Em AOaricat 781 300 -7 

TSN 12X1 211 *3 

■nara^t 2-000 343 -4 

TSet 1W 217 

Tannoo 1.100 125 

TeteiLde 1^00 419 -21 

Taylor Vmdrow 307 117 

Taaeet 2,000 233 -3 

TlKma woarf 1,000 480 -6 

Thom £141+ SflOO 970 -10 

TomWnat 910 2*7 -4 

TiaMgar House i JOT BO -2 

Unlgate 555 320 -7 

LMarart , WOO 11 » -18 

IftHMJ Bacult*t 1^00 303 -5 

UKL Naaapapan B» j 

VodalcneT 4.700 190 -I 

JSSSW^ 1S» - -il 

watdi mam 648 eis -10 

WamlHUr 67 377 -1 

WhOnWdf 879 521 -S*J 

vTOams HHgg-t 1A00 332 -0 

WBs Corroon 1.100 144 -6 

VWnpey 441 1M +1 

W Mm layt B30 753 -13 

YoriaMra Boa. 839 705*2 -4*1 

VorhaNra Water 245 495 tl 

Zananaf 1,100 799 -11 

Based on tratang wkana hra MtecdBR ol maM 
aearttes dealt through th« SEAQ system 
ywntdsy uni sjopm. Trades of ona ndton or 

more ars rcxnded dewn. t Incflcaats an FT-SE 

lOOMaxcensdiim 


OpBon Oct ton Apr pg Jan Apr 

MedOmcq 540 24H - - 5 - - 

rSST ) 509 3V4 - - 35» - - 

Aigyl 280 13 21 H 28 5 15H1BM 

(-260 ) 280 4 12 1B» 10» 26 30 

ASDA 80 6 • W IB 4 5 

(-03 ) 70 1 1H t IK 10 11 

Brit Airways 330 2# S7W 2h 11 IS 
C3S4 ) 360 8H 20 30H 13K 24 26H 

MO DteaA 420 12 2B» 35 11 23 29H 

P421 1 460 2 11 10W 41 49H 55 

Boq& 500 14 2B» 39 9K 23 30 

(*502 1 550 Itt Btt 19 50H 5719 8114 

BP 390 19 29H 38 4it 13 1BH 

(*403 ) 420 M 1«S 24H 21 29» 34h 

MMSM 180 BW14W19W » t 11 
1*164) 180 11* 6 9to 17 20 22 

Bass 500 24 35» 4114 6 22H 28 

(*516 | 550 314 1214 19 39 55h Ed 

Ctt&ttl 300 29 41 50 3K 11 1814 

(-382 ) 390 91* 29 3514 14 27 33 

coonateda 420 T7I4 » 40 BTBM23H 
T426I 460 3 121*2214 34 43*4 47*4 

Damn (Men 493 17*4 3214 38 8 18** 31 

f-490 ) 543 21* 12 IB 4914 52 64*4 

IQ 750 46*4 68*4 81 V» 4 17 33 

(T87 ) 800 1 3 38 6314 23 37 57*4 

Klnglbher 460 301* 48 B8H 5 14M 22*4 

f 483 ) 500 3 2214 371* 2314 33*4 42 

Land Sueur 600 17 31 46 7 18 23 

(*809 ) 650 2 I1H2Z** 43 5014 53*4 

Malta & S 390 12 22V* 32 614 16 20 

(*393 I 420 2*4 9)4 1814 29 34 37 

NnWat 460 2014 38*4 48 7 17*4 291* 

[-471 I 500 4*4 17*4 27 32 4014 53 

Sahstury 390 19 32 44 6 19 2414 

T401 ) 420 9 1814 27» 23*4 35H 37 

ShalTians. B30 50 64h 73 1i* 9 16*4 

rees ) too ii so 4»v» mn 25** 37t» 

Stonsfwoe 160 211* 2S>» 2854 1*4 4 7*4 

(*1» ) 200 61* 12 18*4 BH 12 1B14 

Trafalgar 80 4 7*4 9*4 3*s 8*4 9 

(-80 1 90 1H 4 6*4 12 13 14*4 

(Mm 1100 25 51*4 68V* 15 39 S3 

(-1109) 1150 8 281* 014 50)4 65*4 82*4 

Zeneca 800 19 45 57*4 16 31ta 48 

("800 ) 850 3» 2214 34 53 62 77*4 

Option Mow FM May tor FM May 

band MM 390 22 31 38 10)4 22 25 

[*338 ) 420 B 16W 24)4 26 33*4 42*4 

Ladbrofce 140 19 23 26*4 3 B fll* 

("151 ) 1M B 12 15*4 13 1814 21 

UU Biscuit* 300 12ft* 2114 2514 13 17 26fa 

f3in > 330 3*4 11 14 36*4 36 48*4 

Optar pec Mar iw Dec Mar ton 

Ram 100 12 I4» 17 414 6* 8*4 

(107 ) 120 314 B 8 17 19 21 

Option tow Feb Hay Nw Feb May 

Bit Aero 420 341* S114 5814 14 21 30 

(■439 ) 460 14 31 38*4 34)4 4114 52 

BAT mu 390 38W 4914 6S 5 11 19)4 

P4191 420 17 31 36*4 16 23» 34 

BID 300 1314 24 29 10 15 21 

f302 ) 330 314 11 IS 31 33*4 40)4 

Bit Taman 360 1BH2ZW 30 9 18 20)4 
(*364 ] 390 6% 10*4 17 29 37*43914 

CatSuy Sdi 420 2914 4014 48 5*4 12 19*4 
f439 ) 460 7*4 19 25 27 311*40*4 

Euansec 700 60 7714 93 12*4 25 35 

1*741 ) 750 30 49 6514 33)4 48)4 57*4 

Gutman 420 38 48V4 S4K 5 914 16** 

(-MB ) 460 12 24 31 21*4 26*9 35*4 

B6C 290 14 18 24 714 13 ISM 

(*283 1 300 5 9 UK 20 24W 27 


Hanson 
(-225 ) 
Lanin 

n«81 

Lucas IreS 
C182) 

P 8 0 
rS98 | 
PHngkm 
C784 ) 
Prudential 

(■293) 

FTTZ 
CSSS 1 
Remand 

(-477 | 

Hoyai Insce 
(■27* ) 
Tesco 
(-233 ) 
Vodaftna 
riB8i 
WUsns 
C333 ) 
Opnm 

BAA 
P463 1 

Thames Wlr 

(*480 ) 
OpHon 
Abbey Hail 
r383 ) 
Arwoad 
(-26 ) 


tor Feb May tor Feb Hay 

220 1ZV4 1B14 1914 5)4 1114 13 

240 4 7 11 18 23 25 

134 IB - - 3 - - 

154 7 - - 12 - - 

180 814 IS 18)4 11» 14 1714 

200 3*4 7H 1114 26 28 30)4 

550 SB14 73 82 4 12 24 

600 24*4 42 B2 21)1 30*4 46 
1B0 12 12 21 Bit 11*4 13 
220 SM 7 12 19 23*4 25*1 

280 22 31 33 4** 9 15*4 

300 014 19*4 22 14 18 28 

850 41 62*4 74 17*4 31 48 

800 1614 37 4914 4BH 58 74*4 
460 25 38*4 4714 12)4 20*4 34 
500 B*4 2* 281* 38 43*4 59 

260 231* 32*4 3714 7 12 17 

280 12 21V4 27 15H 22 27 

220 18 341* 30 4)t 9 13 

2*0 814 13V) 19 1*14 ISM 23 

153 14 ISM - 6 10 - 

200 B 11M 16 ISM 20 22V: 

325 18 - - 7 - - 

354 5 - - 241* - - 

Oct ton Apr Oct ton Apr 

*50 20*4 30 39 4 13 16*4 

475 614 IBM 2B IB 1 * X XD 

460 27 X 46 5H 18** 21 

500 1 5% 12 7214 80** 81 

Ok Mar ton Dee Mar ton 


RISES AND FALLS YESTERDAY 


British Finds 

Ottter Ftxad Interest — 

Mbwal Extraction ... 

Qonenil Manufacturers 

Consumer Goods 

Servfcaa 

UtSttws 

Financials 

Investment Trusts 

Others 

Totals 1 

Data baaed on than ccra p anlra bad on the London Steve Sendee. 


TRADITIONAL OPTIONS 

FI ret Dealings September 26 Expity 

Last Dealngs October 7 Settlement 


Bteaa 

Falla 

Same 

ID 

52 

8 

0 

0 

15 

14 

110 

72 

47 

290 

303 

15 

76 

96 

23 

239 

235 

11 

22 

12 

32 

176 

158 

14 

316 

135 

7 

173 

73 

1.354 

24 

1056 


December 29 
January 13 


CaBs: Arcon Inti, BAT, Oraca Has, Royal Ins, Tidow OIL Puts: Arran Inti. BAT, 
Ovoca Ran. Tuflow Oft. Puts & CaBs: HSBC. 


LONDON RECENT ISSUES: EQUITIES 


1*5501 

Blur Onto 

C2B3 1 
firttrii Gas 

(*2*a ) 

Ghana 
H77) 

HHsdotn 160 17 2114 24 4*t 8 11k 

(171 ) 180 6** 11 14 15 17*4 23 

Unto 130 111* 14*4 18 6 8k 1TM 

(*133 1 140 6*4 9*4 13 12 14W 17 

NaS Rnw 420 42 #1*4 6014 8 16 23 

(-450 ) 460 18 30 39h 27*4 33<* 42 

Scot Power 300 38*4 4414 51 6k 12 15 

(-326 ) 330 21 27*4 35 19 S5k 29 

seats 100 7M 8*4 « 5*4 7 9 

n02 I 110 3*4 5fc 7 13* 13** 15k 

Forts 220 13 19 24*4 11 15 19<* 

{*223 I 24) 5 1014 1514 24'n 27** 32 

Tarmac 1 20 14 20*4 23 6k 9 12*4 
n») 130 8*4 IS 18 12 1454 17*4 

Thom Bl 950 58 71 82 22 39*4 47’4 

(-970 ) 1000 28 48*4 65 46k S5V4 73 

TSB 200 25 2B 31 4 B*t lH* 

(T)7 ) 220 1014 K 1944 12 18 21)4 

Toctahs 200 25 294* 35 4M 8 10k 

r*17 ) 220 13 18 Ztti 12M 17 19*4 

WMctxna BOO 72 91 WO 13*4 28 35 

{■640 ) 650 39 61 72 33*4 47k S8*4 

Opttm Oct Jaa Apr Oct Apr 

Gb» 550 30*4 51*4 631* 7k 22 34 k 

(-570 ) 600 BM 27 3844 35k 49 62 

H9C 7$ dB 6M 3314 5914 72 11** 29 48*4 

[*670 1 700 0*4 35 4714 38*4 58 77 

Reusts 438 1514 - - 8“ - - 

(-443 I (SO 9 - -SOU - - 

OpUai ton Fab May No* Feb May 

IWfrftifn 160 1 714 23 26 3 614 10 

nrt) 160 7 12 1614 121; 16 2014 

' Undartytng sectity price. Premlun u shown ere 
batted on doaing om pneae 
October 5 Total eemom 44413 cm *7^ai 
Put* 77 .092 


360 38 45 
390 17M 27k 
25 3 4 

30 lh 2V* 
550 291* 41 
500 1014 20*4 
280 191* 2814 
300 10 17 

280 IBM 23*4 
300 7V* 14H 
160 24MZ7M 
180 IWi 16 


« 7 16 21 

31V. 19k 31** 38 
814 21* 3k 4 
JVl 6 7 7S 

49 22k 34 41 
28 55** 56M 71 M 
33** 12 16 25k 
24M 24 27 37 

37*4 10 16 21 
IBM 24 26k 32k 
32 4k 8*4 11k 
Z1M 13 tTVi 21 


Issue 

pnCO 

p 

Amt 

paid 

up 

MW. 

cap 

(Em) 

1994 

Hteh Lew Stock 

Ctose 

price 

p 

tj- 

Not 

drv. 

Div. 

cov. 

Gr» 

yld 

P/E 

not 

§125 

F.P. 

17.7 

130 

116 Compel 

116 


WN4.0 

5.1 

43 

115 

- 

FP. 

130 

1*2 

1 ConCl Foods Wits 

1*4 


- 

- 

- 

- 

- 

Fi>. 

260 

66 

61 Emerging Mkts C 

65 


- 

- 

- 

- 

63 

F.P. 

12.4 

68 

65 Ennemu 

66 


HN0.ri 

5.3 

1.3 

05 

112 

FJ». 

S1A 

120 

118 Independent Pena 

120 


LN4.0 

il 


14J 

180 

F.P. 

17£ 

195 

180 MncUe InU 

183 

-3 

RN6.0 

2.2 

4.1 


60 

F.P. 

23.3 

85 

76 RytBnd 

82 

-3 

LN3-5 

1.7 

S3 

13 5 

- 

FP. 

3.62 

44 

27 Sdter Wrts 8W0J 

31 


- 

- 

- 

- 

- 

F.P. 

112.6 

379 

364 Temptobjn E New 

3W 

-* 

- 

- 

- 

- 

- 

F.P. 

113 

212 

191 Da. Wits. 2004 

191 

-4 

- 

- 

- 

- 

- 

F.P. 

28.3 

360 

340 Wtatem Water 

340 


- 

- 

- 

- 

- 

F.P. 

4.B1 

330 

325 Do. NV 

325 


- 

- 

- 

- 


RIGHTS OFFERS 


issue 

price 

p 

Amount 

(aid 

up 

Latest 

Rerun. 

date 

1994 

Ftioh Low 

Stock 

Closing 

price 

p 

♦Of- 

160 

Ni 

17/10 

9pm 

2pm 

Jennyn few. 

3pm 


500 

m 

18/10 

52 pm 

24 pm 

Reck Hi & Caiman 

25pm 

-1 

245 

Nl 

0/11 

24pm 

10pm 

Urtchem 

10pm 

n 

75 

Nl 

14/11 

6pm 

3pm 

wend of Leather 

3prr 

-1 


FINANCIAL TIMES EQUITY INDICES 


Ones. (to. yield Ol 4.42 4.43 4.38 4.43 3.97 4 J1 3 4j 

Earn. ytd. % fun &51 6J9 6.40 6J3 6.39 4.67 BJS1 3.62 

P/E ratio net 17.18 17.49 17.48 17.67 17.49 2737 33^3 16.94 

P/E ratio nl 17^1 17.53 17.50 17.70 1752 2525 30J90 1T.09 

•Fat 1994. oronoty Store index afeiee cxsupJ awn: nigh 27136 215194, lew 424 2649.40 
FT OrtAnary Shore ndeo Bose data 1/7435 

Ordinary Shore hourly changes 

Open 8.00 1000 1150 1250 IftOO 1-LOO I5to0 16J0 High Low 
2203.9 2302.4 2304.6 2307.7 2304.7 2296.0 2Z9&S 2263 0 2290.5 2306.0 2202 6 


*cl 5 

Oct 4 

Oct 3 

Sep 30 Sop 29 

Vr ago 

Ugh 

-Low 

2286.9 

2325.8 

2320.3 

3350.1 

2323.8 

2355.4 

27110 

2240.6 

4^1 

4.42 

4.43 

4.38 

4.43 

3.97 

4J1 

34J 

BJ1 

6J9 

6.40 

6.33 

6.39 

4.67 

tL51 

3.82 

17.18 

17.49 

17.46 

17.67 

17.49 

2TJ3? 

33.43 

16.94 

17^1 

17^3 

17.50 

17.70 

1752 

2525 

30J90 

17.03 



Ocl 5 

Oct 4 

Oa 3 

Sep 30 

Sep 29 

Yr ago 

SEAQ bargains 

21255 

22.079 

23501 

23504 

23JJ36 

32.315 

Equity turnover (Emit 

- 

10662 

1138.9 

11234 

1442.6 

1581 .9 

Equrty txupdnsT 

- 

25,427 

25436 

26.768 

27,001 

36£54 

Shares traded (ml)t 

- 

414,4 

48U 

480.4 

529.4 

621.4 

TExcMOlno fertrarmartal budnsaa and oversees turnover. 





FT GOLD MINES INDEX 


Wateh Water 
Waanx Water 


woa ro Hogs .t 

tab Corroon 


Oct Xchg Oct Sop Toar 6rasa dhr 5Z week 

4 today 3 30 ago ytad % Wgb Lrer 

2266.14 -15 229350 232426 170152 150 2387^) 170152 


Africa (in 3553.40 0.0 3553.60 356952 2298.73 385 362356 2296-73 

Audrslada (7) 286936 -1.8 292153 2926.39 196455 1.69 301386 1B5S.7B 

Nonti America (11) 178554 -23 1827.71 186753 149228 0.75 2(0965 146811 

Capyrteht The Fhanctti TTmeo Urrtead 1994, 

Rguea In bmekau taew numtar ef ennpraiax Bum US DaBara. Ban Uakae: lOOQOO 3ih2«L 
Pradacaacor Gold IAmb Mac Oct & 282.1 ; day 1 * change -6.7 pom Ytw ago- 182.4 T ParoaL 


APPOINTMENTS ADVERTISING 

appears in the UK edition every Wednesday & Thursday 
Bind in the International edition every Friday For further 
information please call: 

Gftrttb Jones eo +44 71873 3779 

Andrew Skarzynstd 00 +4471 873 4054 





iB£SSu5ftlas§S33ij§2S?B88§sS.ri 












































































































































































































































































































































































































































































































There seems little prospect that the in key attractic 
per cent WDAs will be raised in the near flows fovota 


40 


FINANCIAL TIMES 


CURRENCIES AND MONEY 


THURSDA Y OCTOBER 6 W 

MONEY MARKETjUjjre 


MARKETS REPORT 


Political worries hit lira 


Renewed tensions in Italy 
between the government and 
magistrates investigating cor- 
ruption yesterday prompted a 
sharp Call in the lira, writes 
Philip Gawiih. 

Fears that Investigations 
were reaching ever higher into 
government, possibly to the 
point where prime minister Mr 
Silvio Berlusconi might be 
implicated, saw the lira fall to 
a London close of L.1,016, from 
U.008. 

Elsewhere on the foreign 
exchanges, the dollar was 
again weaker. Stronger than 
expected factory order figures 
caused bond prices to fall, and 
the dollar feU in tandem. The 
dollar finished at D Ml .5426 and 
Y99.47, from DM1.5519 and 
Y 99.69 respectively. 

The Russian rouble contin- 
ued its recent fall, closing in 
Moscow at Rbs2,808 to the dol- 
lar from Rbs2,668. The Russian 
currency started the year 
around Rbsl.250 to the dollar. 

Sterling was firmer on the 
day. with the trade weighted 
index finishing at 80.2 from 80. 

B With renewed political insta- 
bility in Italy, some observers 
believe the lira will test the 
low for the year of LI. 030 .50 
against the D-Mark. 

Mr Stephen Yorke, analyst at 
Chase Manhattan in London, 
commented: “I think the gov- 
ernment is encircled. The mag- 
istrates seem on the verge of 
implicating very senior mem- 
bers of government. If that 
were to happen, the lira would, 
at the very least, re-test the 
lows for the year." 

"If it looks like Mr Berlus- 
coni will be investigated (by 
the magistrates), then 1 think 
we will be in for free fall," said 
Mr Yorke. 

Elsewhere in Europe the 
Swiss franc and D-Mark were 
both generally firmer as the 
weakness in the lira spread to 
the French franc and other 
currencies. The Franc closed at 
FFr3.418. from FFr3.415, 
against the D-Mark. 

B The catalyst for the rouble's 
recent weakness was the cen- 
tral bank's decision, on 22 Sep- 
tember, to stop intervening to 
support the currency. Over the 
two to three months prior to 
this, according to Mr Sergei 
Alexashenko, the deputy 
finance minister, the central 


Against the D-MarK (Ura per DM) 

940 


1,000 


1/120 - 


Apr 1994 
Sourer. Detastream 

■ P ound hi Km York 


DO 9 

— Latest — 

-Piw. doss- 

£ spot 

1X855 

1X815 

1 rats 

1.5650 

1X609 

3inh 

1XM1 

1X600 

Iff 

1X699 

1X657 


bank had spent more than 
S2bn defending the rouble. 

The main reason for the cur- 
rency’s weakness would appear 
to be the high rate of inflation. 
Consumer price inflation in the 
year to August was 267.9 per 
cent 

However, some bankers 
argue that the rouble's recent 
fall merely reflects the central 
bank trying to drive the rate 
lower, in order that it can sell 
hard currency to help pay the 
government's debts. 

Mr Jonathan Hoffman, inter- 
national economist at CS First 
Boston in London, said the rou- 
ble, after a period of relative 
stability, was merely catching 
up for recent inflation losses. 
He added, however, that 
despite recent weakness, the 
rouble’s real value was proba- 
bly about 10 per cent higher 
than at the start of the year. 

B The weakness of the dollar 
came against the backdrop of 
market fears that the Fed was 
not being sufficiently aggres- 
sive in combatting inflation. 
This view was encouraged by 
the higher than expected fac- 
tory orders figures. 

Comments in Jeddah from 
Mr Lloyd Bentsen, the US trea- 
sury secretary, that the funda- 
mentals supporting the dollar 
were the best in 20 years, and 
that the US did not use the 
dollar as a trade tool, were 
ignored by the market 

Mr George Magnus, interna- 
tional economist at SG War- 


burg. argues that even a 50 
basis point rise in US rates 
"would constitute fir e-fight- 
ing.. .and at best could be 
expected to hold the dollar in 
its current range for a while 
longer." 

“A significant dollar recov- 
ery will only be seen once con- 
fidence in the Federal Reserve 
has returned, sufficient to 
spark an inflow of long-term 
capital into US asset markets," 
said Mr Magnus. 

“The inability of either 
equity or bond markets to 
make headway during 1994 
does not provide us with much 
confidence on this score, and 
the combination of higher 
inflation, higher rates and 
slower growth in the next few 
months hard ly seems the rec- 
ipe for a change in trend over 
the winter." 

T aking a slightly different 
view is Mr David Munro, chief 
US economist at High Fre- 
quency Economics in New 
York. He says the special fea- 
ture of the current US eco- 
nomic recovery, is ongoing 
restructuring, and competitive 
resistance to higher finished 
goods prices. 

“This is why a merely frac- 
tional acceleration of inflation 
is due. That will give the Fed a 
rationale to moderate its boost 
to short rates” said Mr Munro. 

B In the weekly repo tender, 
the Bundesbank allocated 
DM74JZbn in 14-day securities 
repurchase agreements, at a 
fixed interest rate of 4£5 per 
cent - the 11th consecutive 
pact at this level This consti- 
tuted a net addition of 
DM4 .9bn to the market Call 
money rates eased slightly to 
4£5/4£5 per cent 

In the UK, the Bank of 
England provided £385m assis- 
tance to UK money markets, 
compared with a shortage of 
£600m. Overnight money 
traded between 5% and 7 per 
cent The Bank also said it 
would today provide £l.359bn 
to the market by way of repo 
and secured loan facilities 

■ otow cunnrocnn 

Oct 5 E S 

Hmpy 171550 - 171JB2 108.090 - 108.190 
In 275X00 - 275850 174840 - 175000 
ft** 04717 - 04731 02972 - 02880 

PDfeM 388384 - 388354 232104 - 232404 
Russia 438120 - 4387.10 Z7E040 - 277040 
(JAE 54224 - 54341 34715 - 34735 


. POUND SPOT FORWARD AGAINST THE FOUND 


i - 390 17X044 17.2033 

■ - 031 605060 502330 

- 009 9-6110 05725 

- 303 7.6400 7-5TS0 

I - 717 04012 03478 

- 493 &*543 2.4428 

' - 880 374-053 372.515 
I - 118 1X133 1X086 

1-856 2486.05 2463.70 
< - 031 SO .6060 502830 

• 434 27515 27370 

i - 811 10.7010 106433 

- 206 260360 249245 

- 229 203X91 202X87 

- 363 11.7399 11X507 

- 306 2.0348 2X280 

- 819 1X830 1X779 


M (Ml MB 


Oct 6 

Closing 

mid-point 

Europe 



Austria 

(Sen) 

17X323 

Belgium 

{BFn 

503865 

Denmark 

(DKr) 

9X978 

Finland 

(FM) 

7X112 

ftanw 

(Rif 

8X880 

Germany 

(DM) 

2.4488 

Greece 

(Di) 

373.504 

Ireland 

CD 

1.0113 

Italy 

(U 

2487.38 

Luxembourg 

(LFl) 

50X865 

Nathftttnda 

P) 

17426 

Norway 

(NKlf 

10X778 

Portugal 

m 

249X29 

Spam 

(Pm) 

203.134 

Sweden 

ISKd 

11.7270 

Switzerland 

(SR) 

2.03B4 

UK 

n 

- 

Ecu 


1X812 

SORT 

Americas 

" 

0X25911 

Argentina 

Pom) 

1X844 

Brad 

(«) 

1X453 

Canada 

(CS) 

2.1397 

Mexico (New Peso) 

6.4137 

USA 

(a 

1.5874 

PacMc/Mddto Ent/AMca 

AustiaSa 

(A® 

zuas 

Hang Kang 

(HWS) 

12^665 

India 

Pa) 

49.7912 

Japan 

(V) 

157X94 

Malaysia 

(MS 

4.0708 

New Zeeland 

(NCS 

2.6311 

PhflppfrieB 

(P»SO) 

40.6382 

Saudi Arabia 

(SR) 

5X559 

Singapore 

fSfl 

2X395 

5 Africa (Com.] 

1 p? 

5.8724 

S Africa (FK) 

F) 

64988 

South Korea 

(Won) 

1268.85 

Taiwan 

(TS 

41X370 

Thailand 

(B9 

39X838 


One month Three incwma 
Rats wa Rata %PA 

On# iw Bar* of 

Ran KPA Eng. tndox 

17.ZZ8 

ax 

17J1H1 

04 



115.0 

50.4085 

-ax 

503215 

OX 

49X915 

OX 

118.7 

9X971 

ai 

9-6066 

-0A 

9.8107 

-0.1 

116.7 

- 

. 



. 

. 

87X 

8L3882 

ox 

3-3524 

03 

8X913 

as 

110.4 

2.4475 

ox 

2.444 

08 

2.41 13 

IX 

128X 

1X112 

a.i 

1X114 

-0.1 

1.0138 

-02 

105-5 

2433X8 

-2.9 

2505.68 

-3X1 

2550.38 

-2.8 

74.8 

SG406S 

-OX 

60.3215 

OX 

49X916 

ax 

116.7 

2.7415 

OX 

2.7377 

07 

2.7019 

IX 

1208 

10.6773 

ai 

106808 

-a.i 

106818 

ox 

88.1 

251X59 

-8.3 

254X39 

-7.9 

- 

. 

- 

203^74 

-2X 

204.159 

-2.0 

206/494 

-1.7 

85.8 

11.748 

-IX 

11.7935 

-2X 

12-007 

-04 

76.7 

Z02B7 

IX 

2.0205 

1.8 

1X779 

2-5 

123.1 

- 

_ 

_ 

. 

- 

- 

802 

1X81 

ai 

72809 

ai 

1X752 

05 

- 


tSDRmi to Oca + ad/otto ipraads hum Pound Sp. 
but an hrptad by cum* nm ism Stwtog Widen ct 
tfw Mm Spot bum dartwd tram THE WhVHSUIBIS 


- 647 14848 1.5785 

- 463 1.3473 1X378 

- 404 2.1414 2.1257 

- 185 5.4191 5X924 

• 876 1X880 1X795 

1 - 474 3 . 1475 21382 

- 688 122705 12X069 

- 030 49X080 49X530 

- 950 160190 157X10 

- 722 4X740 4.0520 

- 337 2X348 2.8172 

- 219 407230 403865 

- S72 5X577 5X257 

- 406 2X423 2X353 

- 757 5.8773 5.6428 

• 155 6.7175 06494 

- 945 126SX7 1263X2 

• 475 41X500 41X197 

- 059 39.7080 39X030 
pci note show octfy tha km ttn 
ntatoied by Bto Bank of Biets 
9 CLOSING SPOT RATES. See 


2.1388 

0.6 

2.1386 

06 

2-1252 

07 

87.7 

1X868 

OX 

1X858 

04 

1X714 

1.0 

B2.1 

2.1483 

OO 

ZU77 

■4X2 

01859 

-09 


12X626 

04 

12X815 

02 

12.2685 

oa 

- 

157.454 

ax 

150409 

3.8 

160X74 

4.4 

187X 

Z635 

-1.8 

2X428 

-1.8 

2.665 

-IX 

- 


dKfcnri placM. Fioratl nan me n« draeSy quoted to to mart* 
. Dm umge IMS - 1DOBU. Oflgr and Wi| i Mm to bobi Ml and 
MtaN an randad by to F.T. 


DOLLAR SPOT FORWARD AGAINST THE COLLAR 


Closing Change Bldftitfer Day's mid One month Tinea months One year J.P Morgan 
mid-point on day spread Wflh low Rate %PA Rata MPA Rate MPA Index 


Europe 

Austria (3eh) 10X560 -0.0825 535 - 585 106940 108535 10X58 

Belgium (BFr) 31.7425 -01725 370- 480 31X450 31.7370 31.7425 

Denmark (DKr) 6.0484 -00281 454 - 474 6.0948 0.0454 

Finland <FW) 4.7949 -00096 899 - 599 4X169 4.7891 

France (FFr) 5X717 -O.Q27 702 - 732 5X971 5X702 

Germany (D) 1X426 -0.0033 423 - 428 1X462 1X423 

Greece (Dr) 235.300 -1.1 100 - 500 235.770 235.100 

Mend 0£J 1X687 *0X089 691 - 702 1X710 1X637 

Italy 04 1567.00 +2X 650 - 750 1574X0 155BX0 

Luxembourg {LFrJ 31.7425 -0.1723 370 - 480 31X450 31.7370 

Netherlands (R) 1.7278 -0.0102 275 - 280 1.7360 1.7275 


0.0 10X558 OX 10.781 0.7 
00 31.7525 -0.1 31.8125 -02 


(DKr) 

6.0484 

-0X281 

454 - 474 

6.0648 

8X464 

6X491 

-OX 

00579 

-OX 

8.1184 

-12 

105.1 

PM) 

4.7949 

-00086 

899 - 599 

4X169 

4.7891 

4.7954 

-ai 

4.7974 

-02 

4.8144 

-04 

81.9 

(FFr) 

5X717 

-OQC7 

702 - 732 

5X971 

5X702 

02735 

-04 

52733 

-0.1 

52787 

-0.1 

106X 

cm 

1X428 

-0.0093 

423 - 428 

1X482 

1X423 

1X4Z7 

-0.1 

1X412 

0.4 

1X346 

OX 

1008 


-IX 236.175 
OX 1X682 
-3.4 1579.6 

0.0 31.7525 
OX 1.7264 


-IX 238.676 -1.4 
0.4 1X495 IX 

-3X 1623X -3.6 

-0.1 31X125 -OX 
0.3 1.7195 OX 


Norway 

(NKD 

6.7268 

-00342 

258 - 278 

6.7582 

6.7258 

6.733 

-1.1 

6.7513 

-IX 

6X058 

-12 

962 

Portugal 

(Ea) 

157.450 

-0.65 

300 - 600 

157.77D 157X00 

158.155 

-5.4 

t59.4 

-5.0 

163.7 

-4.0 

35.0 

Spain 

(Pta) 

127.970 

-0X35 

930 - 010 

123X50 127X30 

128235 

-2-5 

128.745 

-2-4 

131.42 

-2.7 

80.8 

Sweden 

ISKr) 

7X878 

-0X11 

830 - 925 

7.4158 

7X662 

7.4021 

-ax 

7.4333 

-25 

7X043 

-2.9 

812 

Switzerland 

(SFr) 

12785 

-0X11 

780 - 790 

12862 

12780 

12773 

12 

12741 

1.4 

12588 

1.5 

108.1 

UK 

a 

1X874 

+0X089 

871 - fl76 

ixaao 

1X735 

1.5868 

0.5 

1X858 

0.4 

1X714 

IX 

B&4 

Ecu 


12390 

+0X059 

385 - 395 

12395 

123S5 

12384 

06 

12378 

OX 

12323 

OX 

- 

SDRt 

- 

1.46294 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

Americas 

Argentina 

(Paso) 

0.9982 

. 

981 - 982 

OS963 

09981 

. 



_ 




Brazil 

IRQ 

0.8475 

-0.0015 

470 - 480 

08480 

0.3470 

ra 

- 

- 

- 

- 

- 

- 

Canada 

(CS) 

1X480 

+0.0037 

477 - 482 

1X500 

1.3452 

1X482 

-0.1 

1X473 

02 

1X525 

-OX 

84X 

Mexico (Now Peso) 

3.4105 

+0.004 

080- 130 

3X150 

3.4080 

3.4115 

-04 

3.4133 

-ox 

3.4207 

-03 

re 

USA 

(5) 

. 

. 

■ 

- 

- 

- 

- 

- 

- 

- 

- 

95X 

Pectffe/MJdcDb Eaat/Mrtea 
Austnsa (AS) 1X622 

-OOmi 

517 - S26 

1X535 

1X514 

1X525 

-02 

1X532 

-ox 

1.3605 

-0.6 

807 

Hong Kong 

(HKS) 

7.7277 

+0X001 

274 - 279 

7.7279 

7.7260 

7.7274 

OX 

7.7283 

0.0 

7.7432 

-02 

- 


India (Fto) 31X675 -0X038 650 - 700 31.3700 31X650 

Jspar CO 99.4700 -0X2 500 - 900 99.7300 99X000 

Malaysia (MS) 2.5645 -0X001 640 - 650 2X655 2X640 

New Zealand (NZS) 1X576 -0.0004 582 - 589 1.6589 1.6SC2 

(Peso) 25X000 -0X5 500 - 500 25.7500 2SXS00 

saut# Arabia {SB) 37521 *0X005 518-523 37523 3.7515 

Singapore (SS) 1-4738 -0.0068 733 - 743 1.4805 1X732 

S Africa (Cora) (R) 3X735 40.0017 720 - 750 3.5796 3X633 

S Africa (Raj (R) 4X200 - 100 - 300 4X300 4X000 

South Korea (Won) 790X50 -IX 100 - 600 600.700 799.100 

Taiwai (TS) 26.1675 -0X025 650 - 700 26.1700 26.1540 

Thafland (Bt) 25X000 -0X2 900-100 25.0150 24.9900 

1SOR uue tor Oct 4. EMMto spreads to to Dotor Spot ctoi show onty to tout ton 
bur me Insrflad byewmm tntorast rare*. UK, Inland S ECU on quotad n US aarancy- 


31.4525 -3X 31.5975 -3.9 

£23.23 2.9 98.63 3.4 95-355 35 

2X553 4X 2X44 3X 2X175 -2.1 

1.6586 -0.7 1.6604 -0.7 1.6657 -<LS 

3.7534 -04 3.7575 -0.6 3.7761 -OX 

1X725 1.1 1.4706 OX 1.4638 0.7 

3X89 -6X 3.8173 -4.9 3.694 -3.4 

4X537 -9.6 4X125 -8X 

80235 -45 805X5 -3X 824X5 -3.1 

26.1875 -0.9 26X275 -0.9 

25.0725 -35 25 X -3X 25.68 -2.7 

a dccaml places. Famnt nan ore nor dractly Ouetod to V 
AP. Morgan narnmol into Ocr 4. Ban amaga 1890-100 


CROSS RATES AND DERIVATIVES 


EXCHANGE CROSS RATES 


Oct 5 

BFr 

DKr 

FFr 

DM 

E 

L 

R 

NKr 

Eb 

Pta 

SKr 

SFr 

£ 

CS 

S 

Y 

Ecu 

Belgium 

(BFr) 

100 

19.05 

16X1 

4.856 

2X07 

4936 

5.443 

21.18 

496.0 

403.1 

2328 

4.027 

1.985 

4246 

3.150 

3132 

2543 

Denmark 

(DKr) 

52X0 

10 

8.719 

2.551 

1.053 

2591 

2.857 

11.12 

2804 

21 IX 

1221 

2114 

1X42 

2229 

1.654 

164.4 

1X35 

Ranee 

(FRO 

6021 

11-47 

10 

2X25 

1208 

2972 

3277 

1275 

2906 

24 27 

14.01 

2425 

1.195 

2X56 

1.897 

188X 

1X3J 

Germany 

(DM) 

2058 

3.920 

3.41 8 

1 

0.413 

1016 

1.120 

4X50 

1021 

8297 

4.788 

0X29 

0.408 

0874 

0848 

64.48 

0523 

Ireland 

(E) 

49X3 

9.493 

8277 

2.421 

1 

2460 

2712 

10X5 

2472 

2002 

11X9 

2007 

0989 

2110 

1X70 

150.1 

1267 

Italy 

(U 

2.028 

0X88 

0X36 

0X98 

0041 

100 

0.110 

0429 

10.05 

0166 

0471 

0082 

0X40 

0.088 

0.064 

6345 

0X52 

Netherlands 

(FT) 

1037 

3X00 

3.052 

0X83 

0369 

907.0 

1 

8X91 

91.14 

74.07 

4274 

0740 

0365 

0780 

0X79 

57X5 

0.407 

Norway 

(NKr) 

4722 

8X94 

7X43 

2294 

0.948 

2331 

2.570 

10 

2342 

1802 

10.98 

1X02 

0X37 

2005 

1.487 

147.9 

1201 

Portugal 

(Ea) 

2016 

3.840 

3X49 

0980 

0405 

9952 

1X97 

4270 

100 

81-27 

4.690 

0X12 

0400 

0X56 

0X35 

63.15 

0513 

Spain 

(Pta) 

24X1 

4. 725 

4.120 

120S 

0498 

1225 

1X50 

5254 

123.0 

100. 

5.771 

0X99 

0492 

1.053 

0781 

77.70 

0.631 

Sweden 

(SKi) 

42.99 

8.180 

7.140 

2X89 

0883 

2122 

2X40 

0.104 

2132 

1732 

10 

1.731 

0863 

1X25 

1X54 

134.6 

1.093 

Switzerland 

(SFr) 

24.83 

4.730 

4.124 

1207 

0488 

1226 

1X51 

5259 

1232 

1001 

5.776 

1 

0493 

1X54 

0782 

77.77 

0631 

UK 

(0 

50X8 

9.S07 

8X68 

2.448 

1X11 

2487 

2742 

10.67 

2409 

203.1 

11.72 

2X29 

1 

2139 

1X87 

157X 

12JB1 

Canada 

(CS1 

23X5 

4.4X7 

3.912 

1.144 

0.473 

1163 

1282 

4X88 

11G.B 

94X5 

5.479 

0949 

0468 

1 

0742 

73.77 

0X99 

US 

P) 

31.75 

6.047 

5273 

1X43 

0637 

1567 

1.728 

0723 

157X 

1200 

7X85 

1279 

0630 

1X48 

1 

99.43 

0807 

Japan 

(VJ 

31.93 

6.082 

5X03 

1.551 

0X41 

1576 

1.738 

6.762 

158.4 

1207 

7427 

1286 

0.634 

1X56 

1.006 

100. 

0812 

Ecu 


39.33 

7.492 

6X32 

1.811 

0789 

1941 

2141 

8X29 

185.1 

1505 

0149 

1.584 

0781 

1.670 

1239 

1232 

1 


□ontoi kronor. French Franc, Norwegian Kroner. and Swedsh Kronor par 10: Belgian Franc. Yen. Escudo, Ura i 
■ D-MARK FUTURES (AtM) DM 125,000 par DM ■ JA 


1 0MM) Yen 1X5 per Yen 1 00 



Open 

Latest 

Change 

High 

Low 

ESL vol 

Open m 


Open 

Latest 

Change 

High 

Law 

EsL vol 

Open im. 

Dee 

08466 

06484 

+0.0015 

0.6484 

0.6461 

22,053 

74X79 

Dec 

1.010a 

1.0114 

+00012 

1.0132 

1.0090 

16X21 

49X10 

Mar 

06487 

0.6491 

+0.0010 

06491 

0.6487 

77 

4,000 

Mar 

1X195 

1X196 

+00010 

1X186 

1X180 

69 

2778 

Jun 

■ 

0.6409 

■ 

■ 

■ 

41 

593 

Jut 

■ 

1.0285 

- 

■ 

■ 

1 

440 

■ SWISS FRANC FUTURBS (MM) SFr 125X00 per SFr 



■ STKRLBM FUTURES (IMM) £62,500 per £ 




D« 

0.7804 

0.7B33 

+0.0032 

07834 

07798 

14X98 

33.477 

Dec 

1.5796 

1X652 

+0.0056 

1.5870 

1X780 

6.765 

33239 

Mar 

0.7S63 

0.7000 

+0.0032 

07863 

07858 

33 

730 

Mar 

1X820 

1X824 

+0.0052 

1X830 

1.5810 

100 

333 

Jun 

- 

0.7860 

- 

- 

- 

4 

63 

Jun 

- 

1X770 

- 

1.5790 

- 

1 

B 


EMS EUROPEAN CURRENCY UNIT RATES 


Netherlands 2.19672 2.14S21 -0X0172 -2-16 5.43 

Mend 0X08628 Q791S36 -0001142 -2.06 5X2 14 

Belgium 40X123 39.4«J3 -0X193 -1.82 5.06 13 

Ganmmy 1.94964 1X1885 -000177 -1X8 4X0 

Ranee 6.53883 8X5654 +0000 1 ' 0X7 2X7 -2 

Denmark 7.43679 7X1690 +000083 1.08 2X5 -7 

Portugal 192X54 195.813 +0X38 1.53 1.59 -10 

Spain 154X50 159.102 +0X83 3.15 0.00 -22 

NON ERM MB4BB1S 

Greece 284X13 292X45 -0X72 10.60 -8.74 

fttoy 1793.19 1949.42 +1359 8.71 -5.12 

UK 0786749 0783551 -0.000886 -0.41 3X7 

Ecu uantnl rales set by to Euopewi Cemntaton. Curendas an to daseandng raiaim sbengdv 
Penxmaga chmgaa are tor Ecu; a posttra change denoMs a rak currency. Ofregonea shows to 
r^to between iwoepreeda to puj am tot e U l t lwence between to actmb motto and Ecu cento raw 
lor a cuneney, and the maxtoain penretto percentage daei al lon of to cwreney's mertwt nda horn Its 
Ecu central rtfa. 

(17/W5E) Swtag and Itton Lira suNMnded from Bto. Abutment catatotsd by to RnsnoW Ttoiw. 
■ PHILADELPHIA SC c/S OPTIONS £31X50 (cenb per pound) 


Stnke 

Price 

Oct 

- CALLS - 
NOV 

Dec 

Oct 

— PUTS — 
Nov 

Dec 

1X00 

6X2 

6.47 

6X3 

- 

act 

015 

1X25 

8.08 

6.10 

6X8 

- 

0.07 

0.43 

1X50 

3X1 

3X2 

4.43 

- 

036 

OK 

1X75 

1.47 

216 

2X2 

DM 

2X4 

1.81 

1X00 

02B 

0X8 

1.68 

1X7 

4.14 

3.05 

1.625 

- 

0X4 

0.90 

3.74 

8X4 

4.74 


uSb.f£b£TU(it EREST RATES 


MONEY RATES 


■ TWCC MOWTH EUHOMARK RJTIWES (UFFE)* DMIm pqbits Ofl00% 


October 5 

Over 

night 

One 

month 

Three 

nilhs 

Six 

milts 

One 

year 

Lomb. 

hUOr. 

Dte. 

rale 

Repo 

rate 

Belgium 

4% 

5 

5* 

Sft 

64 

7.40 

4.50 

_ 

week ago 

4'* 

5 

sa 

53 

64 

7.40 

4.50 

- 

France 

Si 

Si 

sa 

5» 

Bi 

5.00 

- 

6.75 

week ago 

5’.i 

Si 

5ft 

5ft 

6ft 

5.00 

- 

6-75 

Germany 

4.95 

4.95 

5.1a 

5X5 

5.63 

6.00 

4.50 

4.65 

week ago 

483 

405 

6.03 

5X3 

S.63 

6.00 

4.50 

4.B5 

Ireland 

AV, 

Sft 

ea 

ea 

7ft 

_ 

- 

655 

week ago 

4H 

5 Vi 

sa 

ea 

7ft 

- 

- 

6.25 

Raft 

Ai 

8ft 

9 

9ft 

10ft 

- 

7X0 

a .20 

week ago 

a; 

Sft 

8ft 

s 

9Q 

- 

7X0 

6^5 

Netherlands 

4X4 

5X3 

5X5 

5.40 

5X8 


5X5 

- 

weak ago 

4.84 

5X3 

5.12 

5.33 

S.7J 

re 

5X5 

- 

Switzerland 

3’i 

4 

4ft 

4ft 

4ft 

6.625 

3X0 

. 

week ago 

35» 

4 

3C 

44 

4(1 

6.625 

3X0 

- 

US 

4T» 

5 

Si 

Sfl 

6'- 

re 

4.00 

- 

week ago 

4L 

5 

sa 

5ft 

6ft 

_ 

4X0 

re 

Japan 

2'. 

2ft 

2+1 

2& 

2ft 

- 

1.75 

- 

week ago 

2* 

2ft 

2ft 

24 

2ft 

re 

1.75 

re 

■ £ LIBOR FT London 








tmartMTik Fixing 

- 

5ft 

5ft 

Sft 

6ft 

_ 

- 

- 

week ago 

- 

Sft 

5ft 

53 

ea 

- 

- 

- 

US Do«ar CDs 

- 

4.88 

5.31 

5X0 

016 

- 

- 

- 

week ago 

- 

4X8 

5.05 

5X7 

5.93 

_ 

- 

_ 

SDR Linked Da 

- 

Sft 

3S 

Sft 

4 

- 

- 

- 

week ago 

- 

3ft 

aa 

3L 

4 

- 

- 

- 



Open 

Sett price 

Change 

Ugh 

LOW 

Eat. ml 

Open jnt 

Dec 

94.61 

94X1 

-O.Q2 

94.63 

94X0 

22990 

104044 

Mar 

94.19 

94X0 

-0X1 

94.21 

94.17 

24902 

172855 

Jut 

93.78 

83.78 

-0.03 

93.79 

93.74 

14289 

108587 

Sep 

93.39 

93XB 

-004 

93^.1 

93X5 

8607 

737B1 


1 MOWTH HBOUPA UiTJlATB PUTUBES (UFFE) LIOOQm poMa Ct 1Q0W 



Open 

Sett price 

Change 

high 

Low 

Eat vet 

Open int 

Dec 

90X0 

90X9 

-0.30 

90X0 

90X5 

11411 

33266 

Mar 

89.77 

89.59 

-0X1 

39.79 

69.55 

5848 

16052 

Jun 

69X2 

89.04 

-033 

89X3 

89.00 

1293 

15253 

Sep 

88X0 

B8.65 

-034 

88X2 

88.85 

440 

15206 


I MOWTH EURO SWISS FRANC BiTWM (UFFE) SFrlm points at 100W 



Open 

Sett price 

Change 

High 

Low 

Est vol 

Open Int 

Dec 

95X9 

96X9 

-0.03 

95X0 

95.57 

8791 

23207 

Mar 

85X0 

9SXO 

-0.03 

95X1 

95.18 

1320 

12096 

Jun 

94X3 

94.85 

-0.02 

94.85 

94X3 

284 

7008 

Sep 

94.S6 

94X5 

-0.03 

94.66 

94X4 

00 

996 

■ THREE MONTH ECU FUTURES fUFFE) Ecu 1m points of 100% 



Open 

Sen price 

Change 

Hlgn 

Low 

Eat vol 

Open inL 

Dec 

93X6 

03X4 

-006 

93X6 

9049 

1511 

8145 

Mar 

92.98 

92.95 

-008 

92.99 

92X2 

1099 

54H 

Jun 

92.47 

92.42 

-0.08 

92^47 

92.40 

550 

2987 

Sep 

92.05 

02X3 

■0.07 

82X6 

92-00 

32 

1080 


Pravttia day's «oL. Cofls 4317 Pun 7XS9 . Pre». day's open tot, Cato OSOXto Putt 31BA87 


UK INTEREST RATES 


LONDON MONEY RATES 

Ocl 5 Over- 7 days One Three Stx One 

night notice month months months year 

(marten* Staling 7 - Si, S% - Sh 5ft • 5& - 5^ 6% - 8l 2 7\ - 7,i 

Stating CDs - - 5la - 5,1 SB • 5% 63a - 6*z 74-74 

Tnaasuy BOs - - 5% - 5\i 5l» - 5% 

Baft BBs ■ - 5A - 5& 5V 6* B* ■ 6li 

Locd authority deps. 5& ■ 4)J Sft ■ 5ft 6ft - 6ft fltl - S& - tPa 7ft - 7ft 

Discount Market daps 6 - 5^ 5, 7 « - Sft 

UK deartig bank base lending rata 5k per cent from September 12. 1994 

Up to 1 1-3 S-fl 6-9 9-12 

menBi month „w,iU 4 months months 

Certs ot Tax Pep. ££100,000) 1 > g 4 3% 3h 

Cots d Tax dap. under 21 IXUXX> hi l tjpe. Oapoars wtdwtown tor cosh 1|pc. 

Aw. lender of dwcount U710pc. 6CGO fend rate Sdp. Expert Finance, (toe up day Sea 30. 
'984. Agreed raw tor psnod Oct 26. ISM to Nov 25. 1994. Schemes I & Di 7.05pc- Retomca rate tor 
patodSepl. 1094 to 3ep 30. 1094. Schemes IV a V s.respc. Ftaance Home Ban Rale dpc ton Oct 


■ TMBEE MOUTH STCTLMQ FUTUMS (UFFE) £500X00 points of 10096 


ECU Linked hi mid retac | m»r 511; 3 IWt 5V 6 mJK 8H; 1 year gw. $ UBQR totertxrh tong 
raw era oOwed raioo lor Siam auoied to to nuaHel by tour retuience mfte si item each worvmg 
day. The banks om Bankers Trust. Bn or Tokyo. Barclays and Notarial W oe t mtosier. 

MU rates ore datum tor tho domestic Money Roms, US S CO» aid SOU Linked Depoeh* (Pi). 

EURO CURRENCY INTEREST RATES 

Oct 6 Short 7 days One Three Stx One 

term notice month months months year 


; tooaes traded on APT 


■ THREE MOUTH EURODOLLAR (MM) Sim points of 100% 



Open 

Sett price 

Change 

High 

Low 

Eat vol 

Open Int 

Dec 

93.17 

93.18 

-002 

93X1 

93.16 

17310 

165380 

Mar 

92.25 

92X5 

-0.03 

92X1 

92X3 

13978 

85188 

Jun 

91.60 

01X9 

-0.05 

91X5 

91X9 

8384 

52587 

Sep 

91.17 

91.14 

-006 

91.19 

91.13 

3072 

51997 

Traded on apt. Al Open mareai Be*. 

me to prevtoui day. 






Open 

Latest 

Change 

High 

LOW 

Eat vol 

Open mt 

Dec 

93X4 

93.95 

- 

93X6 

93X4 

132X96 

492X78 

Mar 

93.58 

93X9 


93X0 

93X8 

134X98 

398X53 

Jun 

93.17 

93.15 

-0.01 

93.17 

93.14 

71.734 

301,130 


■ SHORT STERLING 0PT1OH3 (UFFE) £500.000 points of 100% 


Belgian Franc 4fi 

Danish Krona 5% 

D-MarV. 5ft 

Dutch GuWsr 5,V 

French Franc 5^ 

Portuguese Esc. 9ft 

Spanish Peseta 7 1 ] 

Sterling 5 7 a 

Swiss Franc 4% 

Can. Dollar 4)j 

US Dollar 4i; 

Raban Lira 9 

Yen 2U 

Asum SSmg ^ 


■ 4|f 43 - 4U 5 - 

• ^8 5% - Sis 8ft 

- 4‘J 5-4% 5 - 

-413 5ft- 4U 5ft 

- Si. 5ft - 5ft 5ft 

- 8ft Oft - 9ft 913 

-7ft 74 -7ft 7H 

- 5Ss 5i| - 5*, 5ft 

- 3* 4lg . 3 % 4 - 

■Ah 4%-4» 5ft 

-411 4U-4H 6ft 

. 7*2 a>2 - 8>B 8ft 

- 2ft 2ft - 2ft 2ft 

- h 2ft - 24 3ft 


Short mm hubs aro cal tor the US Oodor and Yen, 


4ft 5ft - 5ft 5H 
- Sft 6ft - 8li 7ft 
4ft Sft - 5ft 5ft 
4ii 5ft - 6il Sft 
Sft sft - Sft 8 - 
9H 10ft - IDft 10ft 
7ft 7U - 713 8ft 
Sft 6,‘a-SS 6ft 
aft 4ft - 4ft 4ft 

4i3 ft'. - sft sa 
<11 5ft - Sft Sft 
aft 9 - aft 9ft 
3& 2ft 

3.’. 3{J - 3ft 4 - 

atari (wq •stays* n oocB. 


- 5H 6ft - Sft 
-7ft Th -7ft 

- 5ft S!Z - Sft 

- 5ft 5% - 5ft 
Sft 6ft - 8ft 

- 10ft 10ft - 10ft 

- Bft 9ft • 9 

•6ft 7ft -7ft 

-4ft 4ft - 4ft 

■ 513 eft ■ eft 

- Sft 8ft - 8ft 
-9ft 10ft - 10ft 

- 2ft 2S-2S 

3ft 4ft - 4ft 


■ US TmASURV ULL FUTURES (tNM) Sim per 100% 


Strike 

Price 

Dec 

- CALLS - 
Mar 

Jun 

Dec 

— PUTS - 
Mar 

Jun 

9300 

0X7 

012 

0.14 

019 

0.B7 

1X6 

9025 

0X1 

007 

010 

0X8 

1.07 

1.76 

9350 

0.10 

0.03 

0.07 

0.42 

1X8 

1X8 


Dec 

94X3 

94X6 

+0.01 

94X6 

94X2 

2X44 

21X87 

Mar 

94.13 

94.15 

+0,01 

94.15 

94.13 

857 

9X07 

Jun 

- 

93.74 

- 

83.74 

- 

147 

2.319 


Ear. voL total, CnOs leoro Puss 0070. Prevtoue day's open Itl, Crto 29*1177 n*. 191133 


Al Open htBS^ figs, ora tor prmtous d*y 
■ EUHOMAHK OPTIONS (LBTQ DMIm pofcH3oM00% 


BASE LENDING RATES 


Strata 

Price 

Oct 

Nov 

CALLS - 

Dec 

Mar 

Oct 

NOV 

PUTS 

Dec 

Mar 

9450 

013 

016 

019 

013 

0.02 

0X5 

0X8 

0.43 

9475 

0.01 

004 

0X7 

ooe 

015 

O10 

0X1 

0X1 

9500 

0 

aoi 

0X3 

0X3 

0X9 

0.40 

0.42 

0X3 


■ THREE MONTH FWOR WTURES (MATTF) Parte Interbank ottered rate 


Eol m. total Cato eoca Puts «7i. Pievtaa dafi open Into Cato 170001 Ruts 187361 
■ EURO SWISS FHAHC OPTfOWB OJFFg] 3fr 1m pohiB Of 100% 



Open 

Sett price 

Change 

Ugh 

Low 

Est ws 

Open W- 

Strike 


- CALLS - 



- PUTS - 


Dec 

94.03 

93.97 

-0X8 

94.03 

90% 

21.776 

48.706 

Price 

Dec 

Mar 

Jui 

Dec 

Mar 

Jui 

Mar 

93.53 

83.47 

-0.10 

905S 

93.46 

15X59 

34,968 

9560 

016 

012 

006 

006 

042 

0.73 

Jun 

93.16 

93X7 

-0.10 

93.15 

93.05 

7X45 

24.782 

9S76 

0.04 

007 

0.04 

0X0 

062 

0X4 

Sep 

92.79 

92-75 

-0.09 

92.81 

92.73 

1.740 

19,966 

9600 

0.02 

004 

0.01 

0.43 

064 

1.10 


i MOWTH EURODOLLAR (UFFE)' Sim points of 100% 


Eat. WL total CoM 0 PUS 0. Preetaua Owfi open ml. Cato 1870 Putt BIS 



Open 

Sett price 

Change 

High 

Low 

BsL vd 

Open tra. 

Dec 

93X5 

03.92 

-005 

93X5 

83.96 

173 

2153 

Mar 

93X0 

93.65 

-0X4 

93X0 

93X9 

273 

143S 

•ha t 


9012 

-0.06 



0 

300 

Sep 


92.81 

-0.07 



0 

52 


Mam&Canroany . — 5.75 

AMd Trust Bank -XX5 

ABBar* 5.75 

•HoHyAnstsEher 576 

Bank of Banda 5.75 

Banco SBao Vbeaya-. 5.75 

Bank of Cyprus 575 

Bar* of Ireland -3.75 

Barkonrafia 5.75 

BenkcfScodand _£L7S 

BGrttaysBa* 5.75 

BrtBkof MdEaa.. u 525 
•Brown SttpteyL Co Ltd X75 
CLBar*Nad«fand... 5-7S 

Ctttw*NA X.75 

Oydeodab Sank >SJ6 

The CocMnShe Bar*. 5.75 

Courts & Co -.-.—5.75 

CretSLyomals 5.75 
Cyprus Popular Barn _5.73 


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Habto Bar* AG Zurich .676 

to lr*re» Bar* -6.76 

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C. Moira 6 Co.. 6.75 

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Heghraj Bank LW S.7S 

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"5 FINANCIAL TIMES THURSDAY OCTOBER 6 1994 ★ 


WORLD STOCK MARKETS 


EUROPE 

AUSTRIA (0c! 5 /Set# 

AlltMr 1X20 -60 2200 1.750 ZB 

WrtUSJ 890 -351.770 BM 03 

CnuTf 002 -3 034 687 1 7 

EAGcn 2XB0 -30 4,290 2JK0 0 J 

EVH 1370 -51.7131,1* “j 

lima 1.180 -10 1J87 1350 0* 

Ma»r4l BOB — 744 058 

ObMv SB 7 *1 1.0K7 845 li 

ftrtZm 837 -7 1 JJ» 895 2? 

KXM 401 -s 488 400 U 

SkmO 165 -5 ZS5 iTifi 

88 Toe 1,072 -81,100 074 _! 

VaPMq 335 -« 408 32B l2 

W*®r* CSS +1 731 548 2.4 

W4* 404 — eao So i J 

Wkmbo 3.625 +394.340 3.411 ij 

BaM*wjaBffiouBS(Ocis/ffsj 

ACfcans 4.130 -70 4/450 3,705 IB 

Ataari 7.500 -10 8X90 7J00 aa 

4.CT0 -25 5X00 4,000 t! 
4JHS -10<S0O3JBO 4X 
BMnU 16.700 —200 1SJ90 lfiJJSO 2.7 
BGDLR 22£7S -2262806021748 2M 

BrtsfU B MJBOO -5M 42B7B Mar, wS 
Barra 2> oa -a 02 . 0 so 2 .TQa tj 
B*n 21X50 -1 JE0 2LS00 20 l3S0 10 

csncn 11 J 179 - 12 s luos moo so 
CMS 2J20 -08 27002190 38 
QUMb 5X80 -20 6X00 5X20 M 

Ctetf IBS -5 215 104 33 
CoSyl 7.070 -ao a.BOO 6.100 1 7 
WW 1X02 -tt 1X50 1.196 2X 
3-S2 — g-is? S ' ,ia 7-9 

2BBO 3.7S1 2.670 4 8 

2500 -30 2XTO 2J80 _ 

3X30 -80 45M Sftnn «n 

jg# 3 .750 -160 4^0^13 
GHGO 1300 -48 1JB0 1.208 28 

Grata! 7.550 -150B.180 7.4B0 6.1 
BJMO -aiOOTS.SM 18 
4XD 0 -105X50 4.1BO 2J 

tomoW 28S0 -40 3.085 2760 &2 

Krawk 6JXW -100 8^00 5^10 2A 
KbnMF B.1M -80 7 JHO SJffiJ 10 
«BW e.ooa __ 8,400 £000 4 j 
141X301.4® 0L8 
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129 HUTS 9.388 29 
110 2688 2828 52 
-12 ses 438 27 
4.S86 -235 6200 4X00 JJ) 

4J350 -170 5J»0 4JW 4 £ 

Soc&iB 2100 -35 2636 2025 5-3 

SSnflW 2100 -525362100 5J 

SottM 12800 —325 13X00 tiaco 5.0 
Sakrac 1 J2n +6 1975 1,482 68 
asM» 14X25 -7E 17X50 11750 4.7 

Trenr 9.400 -170 moo 9 x 20 +_g 

23.100 -960 26.10022200 25 

2X83 -35 2930 2448 43 


WM 378. 70 

■fflx fiPT 

LVMH szi 

39210 
12200 

1 JM 8 

Leona ej® 


475 

. "=Bno 217.10 
HOUtW 11700 
' NavMjd 8 * 

‘ S'** 1204HJ 
SB" 195 
Portal 317J0 

■ PWUR 318.10 

■ Ptstmy 144X0 
1 PThUk si 

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Ptora'a 976 

RMBl 5T7 
ftwwC 211X0 

RuS* "Sg 

SBJC 713 
Sann 2880 
BIB 

HUM 1.475 
“Wf 37240 
SflOSA 520 
Srtmo 378.10 ■ 
Sknra 420 
SWo R 2073 
SocGm 535 
SamiwA 2020 
EaM 290X0 
SukeO 240 

Snml 208 

TaOtn 2700 
TTvnCSF 13200 
Tot* 307 

IMP 130X0 
UFSLec 360 
Unite 444X0 
Un&nFr 410 
JJJg 264X0 
Vane pgj 

Wnm a 232 


> -5-30 570 37Q 35 

! ™ SOT ST 

I -6 902 881 21 

1-119049130 377 14 

-440 157 JO HJ2M __ 
j -661,3951,0*5 1X3 
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I -11 3865021050 _ 

> —14 024 483 3.5 

I -BJBO 274 207.10 IX 

I -1X013630 87X0 S.1 

1 +1 1,348 888 8.7 

> -340 1BL90 115 63 

i +3 &o iw __ 

I -9.70 52531600 5.7 
1-1080 53531510 73 
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—5X0 371 285.40 7.7 
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— 1.150 805 1 J 
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-8 600 472 24 
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-S TOO 382 74 

-22 2470 1,790 _ 

— 702 523 4X 
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-5 404 333 4 3 
-6X0 850420.10 5JS 
-9X0 800 403 &0 
-SCO 307 2Z1 34 
-7X0 336 240 12 
-1 365 2Z7.10 4X 


Mcnoer 8.000 
Manana 1.408 
PsnLm 19X60 
PUtm 9.810 
2.700 


DSWU«(0d5/Xs} 




MVA 630 

BMbn IBS 

Can* 260 

Co±*i sjao 

D1S12A109XOO 
OnBra 188 

DrnDak 312 

EMH 150 

SUB 414 

Garord 560 

SS8 184 

Jytfafl 380 

Lrtme 990 

MOWS 285 

KMrdB 635 

ItHlDB 440*1 • 

SophlA 510 

SopMB 500 

Sunrfe 4te 

TetOan 323 

TopOan 57S 

UltdnA 228 


780 585 2.4 

— 201 184 2.7 

-10 333 250 IX 
-70 7X00 5X00 09 

— numnusa ox 

-3 228175X0 _ 
-14 427 307 ax 
—3 203X5 150 5J 
-8 615 385 2J» 
-10 843 445 2.1 
-2 278 181 IX 
-IS 426 330 2X 
-10 1X50 950 04 
-11 385 252 3X 

-19783X1 468 0.7 

12.72 737 440 1.1 
-3 B15 SOS OX 
-14 676 425 OX 
-6 456 321 IX 
-53S833 300 __ 
+51X72 510 1.7 
-3 28720796 4.4 


HHMD(pd5/MkB) 


-1 15410250 TJ 

+1 178 121 IX 

-9 105 80 _ 

-.10 49.90 35X0 IX 
+2 233 141 2X 
+.101740 8X1 — 
_ 80 45 IX 

-4 TIB 506 20 
_ 150 100 DX 

-3 247 141 2X 
-3 2S0 141 ZX 
_ 258 200 OX 
-5 2B0 ISO OX 
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+1 104 58 IX 

_ 102 64.10 IX 
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-1 120 84X0 10 

+6 244 175 IX 
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% FRANCE (0Ct 5 / FlO.) 


211 JO -1X0 3S8S&10 — — 
595 -17 788 580 4X _ 

714 -4 8V4 559 2X _ 

401X0-1940 913 451 «X 
235 -2.10 330 217 14.7 — 
-20 718 570 4X _ 
41X0 -6X0284X0 227 IX _ 
481X0-1440 083448.10 3.1 
2.901 -181 3750 2.787 32 _ 
5B7 ♦» 7S7 681 2X _ 

-IB 1,480 1.033 4X — 
-32 1.165 794 4.7 _ 
I7S -6K5BX015e«HU» __ 
17340 +1.70 71331 SKI „ 
2,078 -14 1200 1.711 3X _ 


~ 6EMIAW(0ct5/Dm.J 

- AS 141 -2X8iafL30 140 IS. 

~ SL 

- 52?" 0 1 - 030 -5014481X50 1.4 

- A»n 2X10 -as 2X11 1188 [LB 

- Atan a 604X0 -laxo OKLSO 675 11 

- 730 -45 1.101 700 _ 

- AoHaPI 645 — 3J11X2E 815 IX 

“ *** 2flt - 50 27B 2.7 

- gap"* 498 -1X0 510 435 IX 

- &*»» 353X0 -2X0 485 348 2X 

- Bayer 337.C0 -7X0 4WW 331X0 3X 

- SjwH mbs- —4 62836850 3B 

- “*» 747X0 +1X0 020 839 1.7 

- 5SE? 404 - S0 875403X0 3J2 

_ ffmtor 960-1BXO 1 , 10 a B15 IX 

- 283 -23«X> 236 IX 

- ®74 -1 528 37d 3.9 

jMa *40 -3 051 750 IX 

CoOOn 1X15 -25 1X30 1,140 OX 

Q*nP BIO -as 1X30 810 1.4 
Cmrank 305X0 -2X0 3003258 3X 
ConM 228.70 -7X0 298 225 1.7 

- ffl-y. 3«3 -14 800 383 OX 

- S?** 7M -6 DO* GB9 1.1 
_ D»*a 454X0-10X0 568 443 IX 

- KJS5 21850 -2-50 2» V3 210 __ 

_ s? ch0k -3X0 88750 059.50 2X 

_ DM*** 132 -4X0 188 131 3B 

- iS -13 607 470 2X 

_ DiBWK 300 -5 337 200 U 

_ “S*" 1 3«» —6X0 456X0 346 3.6 

GEHE 507 -IB 810 485 1 4 

- Gnanm 252 —3 307 252 ID 

553, 130 -S 730 500 7 J) 

tSSS 0 21 0 — 245 190 3.1 

~ ItoUZni 1JEO _ 1X80 1.141 IB 
“* »*aP 588 -3 BB1 5E2 IX 

- Hifcr 322 -13 440 322 3.1 

- HoctBl 030 — 1 1X99 857 IX 

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13X0 +;“i5® izm 4J34X ■ TOKYO - MOST ACTIVE STOCKS, Wednesday. October 5. 1894 


"ten +8 902 

488 -2 483 

1.100 +20 1X70 

535 -B 559 

B04 -71X40 

2 . 4 B 0 i nnn 

*410 +20 1,710 

290 +1 372 


20 1X70 815 -„ 
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-71.040 795 — — 
— 3JXJO 2.4® 1.0 _ 


0.90 —.02 1.16 0X4 9.1 _ 

3.43 -X2 5X3 S25 5.0 (63 
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3 ... 3X0 Z55 3J _ 

3.03 +X3 3J0 2.60 ZX ... 
8 -.13 1230 7 XO Z2 


Nippon Steal 

Kawasaki Steel 

Nissan Motor 


— COBiWflk 738«tf 
1.0 — dinar 1.11 


-.40 5X0 4X0 IX _ TosftftH .... 


-.82 9X3 830 BJ 
... 1X2 0.70 OX 


Htachl 


Stocks 

Closing 

Change 

Tradod 

Prices 

on day 

6 . 1 m 

385 

+■1 

5.1m 

443 

+4 

3.8m 

808 

-2 

3.7m 

732 

-3 

3.4m 

968 

-3 


Stocks Cloaing Change 


Nomura Sees 

Sumitomo MtJ 

Matsushita 

NKK 

Mitsubishi Else 


-oded 

Prices 

on day 

2.6m 

1990 

+10 

2.6m 

339 

+1 

2.4m 

1580 

+10 

2Jm 

289 

+0 

2 . 1 m 

705 

+4 


950 -131X30 526 OX — Nomuis 1X90 

0® -61X70 723 _ _ Nrfete 748 

1X70 —1,140 972 _ _ OdOtw 704 

402 -2 457 292 _ _ OteOte 914 

601 +7 565 340 — — OKumGm 835 

729 +18 758 622 _ — Otp® 1X60 

806 +11 910 770 IX _ Onron I^IQ 


_ IX* 1X30 — 
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-2 688 47B _ _ Renraei 

— 2,120 1X10 __ — Rta* 

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-12 970 705 21 
-10 MI 606 21 
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+11 963 8* IX 


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10 JOT -1*13.40010200 __ _ Sarftyo 2J20 


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Kntteto 1X40 —24821 

Ksaitffi® 354 +3 420 

Kao** 785 — a® 


•MO 2110 OJ _ Pmcon 
I.150IX10 _ _ Panwc 


2X20 +30 2X70 l.B* _ — Ptortn 


354 +3 420 338 — _ Sjjdoto 

TBS — 0® 516 09 — Seram 

539 -1 570 430 — — SsoaEn 

25® +* 2X70 2*00 — — Sated 

MS +1 BEB «35 _ - SUnoT 

1.170 +20 1X10 1.140 — — SteylF 

484 +1 5® 338 — — Sslyu 

3* +3 412 Z71 — SafcCnm 

443 +4 451 383 — — SahHra 


930 -4 1X00 865 — — Ptafc* 

575 +fi 5® 415 — — 

925 +11 IX® 070 _ 

6,710 +1O7J20O6XM OJ _ 

5X60 +108X40 5.6® — — QCTRl 

4X10 -50 4 J® 3X70 — 

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9* - 101 . 1 ® 956 — — BonQw 

1.150 _ 1.490 1.1® 1.6 SBltfp 


1X8 -.04 215 1X6 — 

_ Parmeo 2X4 +.02 243 1X3 — — 

3.32 +01 ua £® 45 110 

4.10 -35 4X5 249 53 — 

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173 -33 4X0 263 27 ... 

5X6 -.05 6X8 490*5 .... 

1.40 +.B1 1.7* 1.15 24 .... 

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_ SonOm 11X2 — 1210 8.10 42 — 

_ Sthc-p 292 -.07 1® 2X5 — ... 


Any time any place 
any share... 


Instant access to up-to-the-minute share prices from 
anywhere in the world 


Whether you're doing business in Berlin or hatching deals in Hong 
Kong, FT Cityline International can link you with all the UK stock 
market information you need: 


INDICES 


US INDICES 


Oct Od Oct 

5 4 3 


Oa Oct Od 

5 4 3 


Genoa! (2&12/77) 


(U) 20315X8 20507X9 Z5470J0 1&2 17758X0 KW FCWN197I9 


oo Z&IUB 2688X1 2861.17 8/2 1967X3 20/4 


M OmroteRI/l/Sq 1979X 19S8X 20303 234080 3/2 

JIMA.1 105U 1071X 113010 M 

SMdMaViaW) 39078 39063 3905E 46088 3/3 

TaMMoCyUMl 10*015 1051X4 105BX6 122226 1C 


19S7J0 Z7A 

904X0 56 

39078 5/10 
1011X8 Bfl 


[ZS Tmnftnfdd S3) 4103 «7 2 427X 454X0 3W 

CBS Al at (Ent 83) 2B3J 2683 2682 29490 31/1 

Mw Ztetend 

Cm 40 fl/7/88) 2035X1 2057X0 2D77X3 2(33X4 3/2 

^^h«2/1/B3) 104049 104674 104025 1211.10 28/2 


*6X0 ?1« 
257X0 21* 

TM5X1 11/7 

9BQX1 21* 


Baa>(in*T) 

Broza 

Bowspa gs/1383) 

C enxt e 

Itotes tlrt9+{1975) 
OenpulB^ 0975) 
PortMoS (4fl*3) 

CMa 

FGA Ban pi/II/SJ) 


133833 138737 1363X4 U42X6 312 133833 5/10 

(U) S3K1X « 55110X0 13® 3000X0 3H 


Mato COT? (2/1/95) 297331 2953.61 291 5X 330837 4/1 


(0 2905* 2881J 32ZGX0 18® 291280 20* 


(u) 4029X3 414130 CHUB IBB 

(U) 427430 4344.70 490X90 23fl 

M 203213 2065X5 21 62X9 IS 


3290X6 20M 
3O&90 24* 
180948 28* 


“saipVIMW M SI 923 51 BIX 519230 4h0 3901X0 4« 

5SinSBW«» 3*1-10 34942 347X3 41539 M 341.18 MO 


5 S Jfr -- 1 


'. •• ■ ; * 4 : ’ 


IGC Gerate(2BnZ«0| 1809X 1001.0 IBEX 1972X0 4® 

» jsD tnnaw 1238 X 0 12 x 2 x 3 1251 x 2 isowo 2 e 

CM! 40(31712187) 1863JT 1878.12 1852X3 2*193 2/2 


1801.10 3/1 

1238X8 5/10 
1852X3 3/10 


SSSSAXSS 

DUX {30/1387)1 1968J7I 1994X5 B 2271.11 IS* 


742X4 5/10 
211930 5/ID 
196972 SnO 


SB A8-S*pan(2M/79 504 JS 081.78 572X3 641X1 4/1 

SnA Aftfca 

JSE Gdd (28AV79) 2388X4/ 24000 34Z4X ZS34X0 7* 

JSEMLCS®/78| BZ7O0V 93000 6305X 8)57® 15* 

BanlEi Kate 

KBBdamfiW/Bdr 1057X4 1(164X4 B 10B4B4 4/10 

MOUSE 00/1205) 290X7 29572 294X9 35231 31/1 

B wad ai 

AKosvadnBen p/2/37) 138420 1406.40 14O2J0 180390 31/1 

SeteBkU (31/12/58) 1171X8 llEftSO 119043 142134 31/1 

SBC Gated fl/4/97) 88807 901X5 89410 103129 31/1 


174900 74/2 
544800 ian 


1157X7 18/7 
88007 5/10 


WNdBlfT^MSfier B944JB 717992 718175 7191.13 30/9 


Dow Jeeee 

Oct 

Od 

Sep 

IBS* 



4 

3 

30 

«• 

Low 

Wgti 

Low 

Mamets 

3901.13 

3846X9 

39*3.19 

3979X8 

3593X5 

3978X6 

41X2 





(31/1/ 

(4/4) 

(31/1/94 

(2/7/33 

Ham Bands 

9673 

96961- 

96J1 

105X1 

98.43 

10877 

54X9 





(21/1) 

(13*) 

(18/1 MX 

fl/10/81) 

TrEBspon 

1459.22 

1488X0 

T491XB 

1882X9 

1*59X2 

1BGZ29 

12X2 





era 

14/10) 

CW.W) 

B/7«a 

Pimm 

178X8 

19089 

181.45 

227 JB 

175X5 

ZB48 

10X0 





Ohl 

(20/91 

(31/&T93) 

(814/321 

DJ W. Da/a htah 3873J7 B872.70 ) Low 370235 B8CB21 ) OlworetjcteA) 


Da/a high 3858X3 (3851X3 ) Low 3794 JO (3828X3 J (Acute*) 



Standout and 

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Comports t 

454X9 

461.74 

462X9 

48ZJ0 

*38X2 

498* 

4.40 





p/a 

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CAW) 

(1/6/33 

mootiusV 

539.12 

5*7.77 

5*8.18 


510X5 

569X3 

362 





ns®> 

(21/4) 

P5W94) 

(21/S®3 

Rovdal 

4216 

42X3) 

43. IS 

48X1 

41X9 

4846 

8X4 





PM) 

(4/4) 

(28*931 

p/10/7® 

NYSE Comp. 

251J6 

254X4 

sstns 

287X1 

2*3.14 

267.71 

4.48 





era 

(4/41 

(2/2/941 

125/4/43 

/tea nt va 

453X1 

450*6 

45BX1 

487X9 

42267 

487X9 

29X1 





era 

cm 

C/2/941 

B/12/73 

HASOU Onp 

747 31 

760X8 

764X9 

nmtte 

€83.79 

803X3 

54X7 





nara 


(18/3/94) 

(31/10/73 

■ RATIOS 










Sflp 30 

Sop 23 

Sop 16 Year ago 

Dow Janas kid Diw. Yield 2.78 

2.76 

2.69 

2.85 



Sep 28 

Sop 21 

Sep 14 Year ago 

S 8 P bid. D«. y*5« 

2.30 

2.41 

137 

2X1 

S 4 P Ind WE redo 

20.78 

20.04 

20X1 

27.52 


i real time share prices 
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in the UK for years. And now it is available from anywhere in the 
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SmWsi/iMO) araa eeiss asais nous ib/i ma as BroHa*BErc30«/75) 1492 x 0 isooxs waass iTsm 4/1 


■ STANDARD AMD POORS 500 IMX FUTURES $500 times ndex 


FINANCIAL TIMES 


SjSw/r* 4 ! s9UB 993412 *92-* B2nwv ' 


138844 4* 
3484X0 51 


Ttetef 

ttrtaul Capstan TS689 


26783X2 27065.1 283716 2888390 13P 1290070 24/3 



Open 

Latest 

Change 

Wgh 

Law 

EstvaL Opon int 

Dec 

455X5 

454X5 

-CL20 

455.75 

454.10 

98.710 

214.783 

Mar 

- 

45020 

. 

- 

• 

1.533 

7.678 

J® 

- 

462X0 

- 


- 

387 

2X78 



MS CapHH (1/1/7C9 61 6iT 8193 622X 644*2/9 

CBOSSWWtrt 

Bnma ioopano«o izaejs 1312x7 1303x2 u49io 31/1 

Ekio Top-100 p6Wt) 1136.48 1157.121 1153.10 1311X1 2/2 

XEpcDVR (3VT2/88) M 338X7 33432 30919 Sh 

BatastasuT/A/EQ 18828 188X5 1SBJ6 1B1J9 2H9 

■ CAC-4Q otock name witwes pwnF) 


-08948 5/IQ 
7139(8 5/10 
29028 21/3 
141JS 21/4 


oZe— noxte 435005 436914 433948 4S97199 27® 3*54X0 WORD 

BSESeb&OTT® 439UUO MS CapH W (1/1/713* E19£r 8193 622X 644*2/9 581* 4A 

kj jnTnuiinnmm BW* 5Q0J2 4B7X0 612X9 5 fl 44B» Off CBOSSVHOEB 

/urn QureOUVBBa SOW «“*■ a|tBBji loopBnMD , ,31237 1301x2 M4919 31/1 129948 S10 

Mand . +«»« -HVi 1*4.14 1/7 EtmTop-UJO p6»9? 113948 1157.12T 1153.10 131IXI 32 713948 5/10 

SED 0ren8|4/1/8Q 1HJ04B 1818X2 182435 2082.16 » XoMOm QVTaa# M 339X7 33432 38919 S/1 29028 21/3 

ten* iWI BrtiQlEaBB WW 18822 182X5 18936 1B139 209 141« 2U4 

Bara Conn H P973 641X4 MM W74 njjj 10» g}* w a CAfi^O XTOCK INDEX FUTURES (UAT1F) 

idAratedM/iDfl irt40D 1Q6&0 IOdIjO 131BJB kW vnw — — — " 

t* &swal (4/l®fl 1[WUJ Open Sett Price Changa Ugh Low EsL voL Open (nt. 

J * P “_ « itWBGI 19ffiO(J3 21SZX1 IM T730974 4/1 Oct 18600 1841 J) -4S.0 1888.0 1838J) 23.700 29X33 

22S255S M22 4/1 (W 18700 T849.0 -45X 18700 16500 214 *72 

iSS 1^ lS5 171133 13* D* 18705 18505 18805 1857.0 1X21 28X09 

JSsSSKlrt/W SS 222922 223911 2SCXG fiff 1973XS 4fl opan HOT* 8(M« far d«. 

HXE OompjM/BQ 1133.72 112M8 10 S4J3. B» wahtes of M Mbaes m 100 Mecte Auateda Al OrtBnnv f ConraUra. • Ctalft AB® M if * GMT- 

- Sat oa 1 - Ttewwi W* u2?£teL CAC40 Eton Top-109 BGQ CWiM: Tonwo CompMMtee iA f n» DJ indL Mv ta««fcal ta/a hiff 

-TuSS, z SftAute^TtelteJ. Baza H» l Gwv “ M Cothw, - 50 nd Steteted BM Poo's - 19 69 «Wq vnttenra ms amte item nps and 

SSJja &m*****.r —42.18 dotepOw^mtelHAeraeittecteteP 

MMn* ♦ Tonwa W Cto»t M unran™"' ♦ 



Open 

Sett Price Change 

Ugh 

Low 

EsL voL Open M. 

Od 

18600 

1841-0 

-46.0 

1868.0 

18300 

23.700 

28X33 

New 

1870.0 

1849.0 

-45J) 

18700 

18500 

214 

472 

Dec 

187&5 

1858.5 

-45X 

18806 

1B57.0 

1X21 

26X09 


p. i(|um Bnra tetera of el nm nw in oxrapc ausm ne wray t wiwm wcwwn + 

1 1 ■ Ttewwi WteflDW 1 W* uatan-sre* 0AC4O Eun Top-109 BGO CWiM: Tom* CompMMtee iA f H» DJ Iml. Mn tanMlEte te/s him 

iw-- , s52«fL‘iSSiSSf dotep.ted^ntelHpAraetOTctereOT 

4 Teranta. fct Qnm- m * 1 — " 


Open teemsi flgures are to previous day. 


■ NEW YORK ACTIVE STOCKS 

Tuesday Slocks Dose Cttngr 
traded pries on day 
lAna 5X33X00 m -1H 

Merck 4.867.300 3614 -M 

Mskltf 4.609200 21H -IV 

ftrt Motcr 3,893.700 27V -V 

Tfltelonos 3587.700 BOH -IS 

WBMIaR 3.383,300 22V -fi 

ttnon Met 3X71X00 2Sh +2V 

Ur Hero 3227.400 25 -IK 

Amer Express 3,196.700 SOM +V 

Gen Moun 3.106200 45V >1M 

* Eeeiudng Hndt- 3 IndusnoJ, glut LRte/aa, , 


■ TKADWQ ACTTVTTY 

• IMune ImUtan) 

Oct 4 Od 3 Ssp 30 
New Yak SE 325.517 289112 291.902 
An»i 16.799 27X26 39450 


INTERNATIONAL 


-IM 

tans Traded 

2X84 

2X52 

-H 

RMS 

551 

331 

+2V 

Fata 

1.715 

1341 

■m 

Undinged 

568 

680 

+v 

New HJ0B 

35 

40 

•m 

NSW Lows 

127 

77 


Complete details below and send to: FT Cityline International, 
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ws toopBed by Tclatan} iwnuiu ins Nghaat 
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u wm toner vteun sw dw ndra not raadtod 


Name: , 


Address: 



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'j'.ss ir vo'jt pcckeL veu ve ai'.vays get Spmete ro I 
FANCY A FREE TRIAL? CALL 0300 L32S2S. Ex'..' t3" NO 





FIN ANCIAL. TIMES 


THURSDAY OCTOBER 6 1*94 


4 pm dose October 5 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


s 


173* 123* AM 
17% 12*ALL*sA 
79% 57% AMP 

x% so* am 
s ahm 

56% 38% ASA 
31% HS%AU»L 
is 3 * n% AHiupr 
Z3% 173* ABM tad 
15% ft* Acpncata 

31 

12 % 

a 


TO. IV 

Hr X E H» V ll* Qu* 

(US 3L 21 02 123* 12% 12% 

0.18 1.1 37 161 IS* 16 IB 

1 L8 22 28 2ffB 75% 73% 73 

B51B638 48%(M8% 4 a* 
13 SB 3% 3% 3% 

200 19 33 513 52 51% E1% 

07B 2L 16 0353 M* 30% 30* 

050 15 10 242 14 14% 

052 25 B3 20% 20 20% 

Stiff 1(15* 15% >5* 
0.44 IL 30 117 24% 24 24% 

347 9% d9* 3% 

71 7% 7% 




7% 

7% 


B% 

12 % 

9% 


MX Iff 

9* ACM M tax 1.09 11 J 
7ACMe*0ppx 080115 

. ?%«MG»tSk>< IBB 135 294 7% tf7j 

12 B*ACM BnSBJi 159120 487 B% 08* 

11* 8% ACM Manx 1.08111 I2S 8% «% 

9% BtfMUngdi 0.7! B.7 273 9% 8% 

16% 6% Ac wG» 044 35 16 114 13% 12% 

9% B%AcmoBeet 7 65 9% ft 

38% 23 Aconb 050 Z2 13 3E7 Z7% 27% 27% 

13% 5% Man 036 35 2 375 10% 9% 10 

17 11% Acuaon 1271313 16% 16% 16% 

1B% 16* Adanaa Eqx 04B 25 0 69 17% 17 17% 

64 46* Ad Woo 300 55 3E2 53% 52% 53% 

' 100115 1023550 25% 24% 25% 

OIS 11 8 125 5% <C 5% 

010 06114 11 17% 17 17% 

1.47 25 12 56 57 55% 58% 

176 &0 7 2119 46% 46 48% 


31% 16% AWHc 
8% 5MW4&P 
20 IBAdwhcx 
59% 49% ABOOn ADH 
65% 44% AM. 
36% 25% Mac 
£2% 16% Adrenal 

4 1% Alton me 
50% 38% UrPrCx 
38% 23 AWna Fit 

28% 19% Akpes he 
17 14% 


29% 21% AirTcfi 

18% 13% Alaska AX 

21% 16% Atony la 
17% 13% Atari 
25% 19% ADCuG 
22% 17% AiClIW A 
30% 2S%AUsi 
27% 19% AIcnAl 
65% 49% Alcoa 
30% 23% Ato&tNMI 
22% 14AknAI 
24% 17 ASaflB Lod 

2B% 19% AAagP 
22% 13* Man Con 
28 XABeroan 
4% fiAHon 
27% 17% AUKS Can 
10% 9A2W8QX 
27% 71% Ala AMi 
40% 33% AM9p 
11% B%ABmer 
29% 24 Aid Clp 
7 4 %a*msk 
35 21% Akansi 
87% 64% Akm 
30% 19% Aba Qi A 


048 1.4 14 949 33% 32% 32% 

058 45 14 3040 20% 19% 19% 

1 7 2% 2% 2% 

0 96 22 24 1540 45% 44% 44% 

(L3Q 15 13 1576 23* (02% 22% 

46 349 »$ 26% 26% 

154115 12 37 15% 15% 15% 

13889 27% 25% 27% 
CL20 15 22 3820 15% 14% 15 

035 11 29 112 17% 17 17 

050 15 7S3 14% 14% 14% 

22 % 22 22 % 


2 


026 15 15 157 



11% 7 AtaGoutacx 096117 571 

8% 6% An ftadf 025 04 25 12 

8% 6% AnnxGd 
S% XAreeasttad 
52% 44AnxXSte 
9% 8% Am Ap) Ri 
31 20% Am Bamefc 
37% 29% AmBmd 

25% 18% An Bos 1%) 050 17 13 
8 8* An Cap be OB5 9.1 
20% 16* Am Cap Bd 
23% 19% Am Cap CV 
99% 42% AmCjWI 
37% 27% AmBPwi 
33% 25% AmEqrx 
30% 24% AmGanl 

9% 5$ Am Got! tax 077115 2S5 

27% 21% Am M9l ft 130105 8 225 
20% 1B%AmHarlga> 058 17 11 131 
65% 55% AmHoflw 2.92 5.0 12 3772 
2% Am Haste 075 275 9 30 


028 15 15 5 nja 20$ 21 


044 15 23 2021 26% 28% 

030 15 66 2914 25% 25% 

1.00 1.7 41 1659 60% 58% 58% 

070 2.6 4 925 26% =% 

010 05116 514 19% 19 

048 2.3 19 367 21 20% 

154 85 10 754 20 019% 

016 08 16 491 20 1 

044 15 15 SOS 29% 24' 

1 3 % 

1.84 01 31 269 20% 2D 

018 15 121 B% 9% 

090 4.0 13 7 22% 22% 

067 25 7 5727 34 33% 

084 9.0 14 9% 69% 9% 

058 14 18 1530 28% 25% 25% 

25 511 6% 6% B% 

11 1367 30% 29% 28% 

150 15129 5BS8 B4% 82% 82% 

35 SS62 19% 019 19% 

7% 

008 1.1 13 1678 7% 

052 25 15 35 22% 

060 13 47 2621 46% 

024 17 44 8% 

010 04 3311028 25% 

250 57 10 2227 35% 

10 21 % 21 % 21 % 

181 7% 7% 7% 

1.54 9.1 29 102 17% 17 17 

1.08 5.7 0 131 18% 018% 18% 

1.95 15 57 3030 99% 99% 99% 

140 75 16 1421 31 30% 30$ 

090 10 13221 Bt 30% 29% 3a 

1.18 4.4 23 2417 27 28% 26% 


07 7 

7% 7 % 
7% 7% 
22 % 22 % 
45% 45% 
dS% 8% 
347, 25 

IS 35 


6 % 6 6 % 
22 021 % 22 
18 17% 17% 
59 5B 58% 
2 % 2 % 2 % 


81% Antra 048 05 154787 88% 87% 87% 


11% 7Ara Opplnex 150 118 
30 23% AnPram x 058 14 
34 19 Am PrasS 040 1.7 9 828 
8% 7% Am Real Es 044 5.8 5 304 
27% 21 AmSorx 048 15 7 1858 

22% IBAm W>r5% 1-25 07 
32% aAmVMr 
43% 36% Arartti* 

43% 32 Amarai he 
17% 11% Anatek 
81% 60 7 , Amoco 
9% 6% AmpcaPHt 
4% 3%Amn>hcx 
34% 29%Amsw6i 
4% 2% Anacanv 
58% 42% AradBta 
33% 23% Analog 
29% 24% Anoaflca 
55% 47% Anflseti 
34 19% Mian 
18% i«*Anil»nybi 
35% XAooCp 


224 7% 7% 7% 

805 28% 25% 28% 

... 25 34% 2S 

120 18% 18% 18% 

1.08 4.1 11 367 26% 28% 28% 
152 5J0 13 4888 39 38% 38% 

158 40 5 378 32% 032 32% 
024 1.4171 420 17% 16% 17% 
Iff 3L IS 4433 58% 57% 57% 
010 1.3 6 18 7% 7% 7% 
012 Z8106 287 4% 4% 4% 

1.40 4.8 9 664 30% 30% 30% 


24 14% APH 
7% AAppUIttg 
24% 15% AppIPwA 
26 1 4 21% ArctiDn 
51 43% AicoQiaml 
51% 45$ %mO> 4.5P 
8% 4% Aimco 


45% 33% AmwBec 
7% 4% ArtaGtp 
33% 23* Altai kid 
34% 2l%Asxco 
31% 22% ASM COO 
44* 33%A*08 
25% 16% Asia Pic F 


38% 36%AMaGaa 
9% 5% AflnaSoa 
21% 16% AflRKEfly 
112% 9Z*ABMi 
10 4%i 


58% 47% AiAMa 
20% 13% Auemcoa 
19 7'; AHjA 
45 30% Asm 
62$ 48% AwrtV 
14% 10% ArftaCap 
7% 5% Ajar 


18% 18% 
31% 32 

24% 24% 
9 9 

20 % 21 % 
4% 4% 


10 785 3 2% _ 

030 07 85 2388 48% 45 40% 

30 1867 31% 30* 31% 
094 IS 24 357 27% 28% 27 

140 12 23 2315 51 50% 50% 

21 1413 31% 30 30% 

044 16 17 84 17 

158 45 7 981 32% 

29% 22% Apart* Dp X 02B 1.1 35 1484 24% 

10% B*Ap«MraiF 073 01 Iff 9% 

38 624 21$ 

1 42 4% .. 

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OX 27 17 2152 
Off 21 17 380 
Iff 55 10 85 
058 22 6 1794 
83 40 
022 1.3 9 174 
6 563 
122 20 
61833 
052 26 Miiae 
0.12 1.8 655 

156 27 15 5499 

047 75 zlO 
Iff 75 14 13 

77 49 
149 27 13 740 
1.12 5fl 12 53 

048 141501003 

058 45 11 09 

KM 23 ZlOO 
ax 26 213713 
012 06 11 208 
740 75 2 

Off 15 X 885 
Off 29259 7 

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28 32 
1.10403 0 M 
062 21 34 11X 
028345 0 33 
1.14 18 13 519 
2 30 

Off 45 14 1985 
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268 LI 13 8617 


12% 12 12% 
15% 15% 15* 
41% 4D% 41 

22 * 021* 21 % 
28* 26 26% 
52 50% 50% 
51% SO 50% 
46* 045% 48 

29 23% 28% 
20% 20% 20% 
22 % 22 % 22 % 
17* 17% 17% 

7 6* 7 

18% 18% 16% 

8 7% 7% 

7% 7% 7% 
2 % 1 * 2 
19% 18% IB* 

7% d7% 7% 
58% 57% 58% 
6% 6% 6% 
16% 18* 18*2 
11 % 11 * 11 % 
47 440% 40% 
22 % 22 % 22 % 
25* 25% 2S% 
13* 13% 13* 
«S0 450 450 
29% 2B% 29 

20% 19* 20% 
96 096 96 

13% 13* 13% 
10% 9% 10% 
22*lCZ% 227b 
22 21% 21% 
2% 2% 2% 
29% 28* 29 

3 sjg 
10* 10% 10* 
11% 10* 11% 
11 * 11 % 11 % 
11 % 11 11 
15 d15 15 

58* 58% 58% 


4* 2% FAI hair 
16% 13%FTDeartxi 
18% 11%FaixlOiot 
M* 35% FreUd 3.x 

8 6* Fanned 
21* lO*Ftntitac 

8 8% Fays Drug 

82* 40% Fed Eta Lr 
58% 44%FMPB2875 
29* 20% Fad HOy 
8* 4* FWh 
80% 58* FadEw 
37% 32FedMgl 
90% 75% FaMM 

32 20%F(d>Bdi 
21* 17 Fader* Sg 
25% 18% FedDnxst 
35* 21% FanoCarp 
34% 22* ROCK 
13% 8%FMk 
33% 2T*FkoadWt 

FtatAmBx 
1 Pam 
.FHtBmdi 
iFatcnACPB 
FMOiACPC 
_ 92FsCHmpC 
55jz 41%FilDnlB 
4S% 40% Fsffld 
37% 32*FMFd21 
iB% 11% nan 
62 51 % Fferat Fn H 
65 62% Fstet 
20 % iz%Fanag 
23% 16%FnPMF 
46 39% Fit (War 
53* 51%FlstUn 
10% 6% Fauci * 
40% 32% FkstVbvx 
35% ff Fkstraco 
41% 31% FbeiF 
27% 18% FKWEnx 
30 22* HnrtBc 

zo% iBFizwm 
56% 40*Ftxxx 
62* 45* FMC Of 
7% 4% FMC Bd 
48 <1% Foote CM 
17* 11%FasHQ 
35 26% Ford 
10* 8* Fm 
45% 32* FoitWb 
16% 11% FouBiver 
39* 27% FPL 
14% 9* France Grox 

9 7*FrtrtdPrx 
51 33% FranMRix 

42* 31% FredMeyer 
6* 4% PMnOA 
s* 4Fm«i8 
21% 16% FreMqM 
27* 20%RMdlA 
26 21* Fhnfinx 

33 23 RUxxn 

7912 60 FflAm&i 

16* 13* R4ub Guv 


56% 50CATX3JX 
44% M%GA1X 

57% 47% cacti 

14* 7% 6RCM 
35% 25% DIE 
19% l5%S1EF1ff 
12% id* GabeH Eg 
38% ZHtOwri 
18 11%GrtMbL* 
4% t%GehHsta 
59 47% Gann 
49%3a%Gaptnc 

38* 25%Q:DH 
11* 11 GraaMII 
20% lEijGarani - 
16% ii*Gaap 
22% i9*GnAku 
57% MGenDyn 
55 4SQacfiBGX 
8* 4% Gen Hast 
15% 9%GtnHBo*a 
62% 40%GnHH* 
85% 45GH1M9 
38* 27*GBMK 
«0% 3T*G«ttH 
31% 23% SHPU 
125*101% Gem 
38 3Q*GonSB* 
52* 41% GanertatA 
5% 2%Genesco 
2i% 13% Gam SO 
7* 4* Brand kc 




- F- 

007 24 42 30 3 

1.12 01 106 13% m; 

012 08 2B 43 15* 

Off 04 Z100U3S* 38* 

040 07 24 6 7* 7 

537 1028 11 mO% 

Off 3D 14 «1 I* 6% 
Iff 2JJ 12 6020 52 50% 

288 01 « 57% 55% 

Iff 70 34 760 2D%dI9% 
048 04 85 60S 5% 04* 
X 3142 60 05712 

048 22 19 1820 22% d21% 
240 Li 1014700 78% 075% 
Iff 33 BO 3142 31* 29% 
042 23 15 184 18 17% 

17 6144 22% 21% 
054 22 13 195 24% 34* 
21 61 28% 29% 

Off 21 48 12* 12 

018 07 15 1222 23 22% 

Iff SJ 9 703 34 033* 

1.18 14 14 2239 34* 33% 

032 Iff 13 160 33% 33* 
ODD 7S ZlOO 80 80 

250 7.1 47 48%d48% 

850 7.1 Ziff 02 0B2 
200 45 512321 43% 42% 
Iff 4.1 81199 41* 040% 
215 85 45 32% <02 

Off 03 429 16* 18* 

0.10 02 27 590 58* 57* 
3ff 28 11 3958 80% 78% 
Off 15 X 2121 ICO* 20% 
OK 35 339 21% 21% 

Iff 4.4 fl 2852 41% 41* 

4.18 00 10 52* 52* 

040 05 0 381 7* 7 

Iff 14 10 500 38* 37* 
Iff 45 9 488 30 29% 

Iff 09 13 0657 38 35 

058 £5 17 1996 23% 22% 
Iff il 23 692 Z3% 23% 
048 15 18 165 37% 36* 
Iff 75 12 2006 28% 27% 
060 47 16 116 17 16% 

052 1.1 23 9190 40 47% 

53 1233 81* 59% 
005 1.1 6 a 4* H4% 
Iff 26 20 36 46% 46% 

024 1.6 13 865 14* 14* 
090 23 122SBB5 27% 26% 
Off OS 10 9* 9* 

D74 22 X 988 34 32* 

Off 20 17 15 14 13* 

1.88 55 13 17X 32 31% 

Off 04 784 9* 09% 

060 L3 95 7% 7% 
032 09 15 2804 37% 36* 
13 534 33* 32% 
DJJ5 1.1 7 4% 4% 

Off V 8 18 4* 4% 

Iff 05 42 1857 19% 19 

080 25221 848 24% 24% 
OX 21 7 213 24% 24 

9 1339 26 25% 

068 09 6 17 77% 77% 
Off 06 ASS 14% 13* 


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1.70 127 2 

004 2.7 5 54 
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048 15 siinu 
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030 15 7 299 
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1.44 00 92482* 
038 07 1 243 
032 14 13 6X 
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0.46 15 24 7ZH 
Off 22 221548 
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132 15 13 1471 
090 26 231224 
1031139 

1 824 
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51% 51% 
39* 38% 
GO 49% 
13% 13% 
30 029% 
16% 16% 
11 10 * 
32 31% 
13% 13% 
!* 1* 
47% 040% 
32* 31* 
29 5»* 
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19% IB* 
11 * 11 % 
20 % 20 * 
44 43% 
47% 40% 
4* 04% 
13% 12% 
57% 55% 

45%I - 

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1994 

HR* Lraa Stock 
39%33%GanoPt 
42 21% GnpB ED 
X 66% Grow 
104 91 * Bgbm 
18% 13* Garter So 
12% 10% GarnranyR) 
12% 6%GerOB 
16* iO%GeoyPe» 
V4% 9% Gran Grp 
1D% 7* lun 
X 57% Bb 
21% 15* Bra x 
16* 10% GtencnCO 
7% 5%BMGorx 
0% 7% GfetoMoc 
4* 3% BMHk 
3* 6* GWatVIO 
46 37% EWMRl 
40% 39Gdr» 

51* 47*Goo*cLS 
49% 31% Gdiwr 
12* 7% Gdtsarafc 
46% 38*BBC8«fl 
89* 56* GmgrW 
30 Z3*GU0 
27% 19* SWST 
17% 12% 6ratEEu 
82 46% Gl LaMS Cx 
50 MGrnmimx 
21* 15% awm 
31% 23%GrenMtP 
34* Zi* Green Tree 
17% IZQMnra&u 
19% 14 Grew 

12* 9% Sfawflj 5pn 
40% 19 GrTrfcAOfl 

16% 9Bon&tmn 
24* 10* EdBorOM 


TO W 
Dk % E IDO) 

1.13 13 15 2238 
38 1874 
Iff 21 UBS 6224 
7J2 03 3 

032 21 Z7 80 
016 15 503 

81188 
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Off 26 5 47 
Iff U 38 2438 
057 45 12 6030 

Off 26 47 7 

044 75 S4S 
Off 9.1 200 

MJ 3050 
Off LO 364 
030 08 62331 
220 55148 744 
ISO 7.1 Iff 
Off 24 10 7843 


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34% 34% 

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11 10 % 
6 % 0 % 
11 % 11 % 

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15% 15% 

s% 03% 

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4% 4* 
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38% 38% 


15 

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2.12 05 11 SB 
Off 1.0 7 4637 
Off 21 15 1» . _ 

028 15 17 541 15% 

013 15 1288 10* 

4446 35% 34 

032 25 21 43 12% 12% 
Off 28 14 97 21* 21% 


- H - 


19* 13% H&O Hem 096 55 68 

X* IBHXTaiAQR 051 01 6 1881 
18% 13* IfflE Prop) x 1.12 75 23 33 

3% 2 Hadron 1 188 

35% Z7* Hafin 150 35 17 2701 
5* 2*tUM»a 1 40 

10 6%HtockFabx 032 4.7 25 163 
17* 14%H"eocktac 128 85 18 9 

24* 19*treoCKJoni Iff 07 3 34 
14 10 Kaorsaarao 044 4 2 10 IS 

17% 13 Handy Mm 020 12 ff 735 

23* 23* Kama OSD 21 16 446 
26% 19% Hansakxn 038 15 17 386 
Ah £ Hasan Wt 6G5T 

22% 17^s Karerai ADR 094 02 1618954 
39* 30% HsxGn 0G4 15 18 1521 
24% 20% rtartand off 45 12 98 

29* 21%ttrafciDa» 016 06 544113 
35 24>2 Karmen M 016 05 21 218 
28* 18* Harrtg Off 1 6 37 202S 
52% 41% ferns 154 2.6 T5 1193 
46% 38* Harsco 1.40 24 12 362 
53% 42%Kan&fStmx 250 01 50 257 
7* 5% Kaftmx 080115 26 379 
18% 15* Haiteras 158 08 24 

M* 29* M*aBa« 232 75 13 91 

16% um&flet 



152 95 12 2071 
3Z% 27% Hearti Ca Iff 6.7 17 408 
7% 4* MB) Crape Off 15 21 234 

39% 23% (teaman zb zizb 

37* 25* Hdisautsa 18 2357 

15 9% HaeaM Off 04 Z7 2638 
36% 23% HeBoMy 024 09 25 2807 
38% 30% Heinz Iff 45 16 2308 
36% 22% HefcneCUr 024 07 20 143 
30% 24% HakraP 050 1.7 » 5D9 

121* 98% Males 224 22 X 1023 

53* 41*(ftsfiey 150 29 13 500 
93% 71*HeaPac 150 1.4 17 8258 

S 2% Hucal Dp Off 08 0 239 
4% MS*? 10 3 

S 7% MbamaA Off 27 12 2090 
5*HghlDCX 060109 159 

7 5*Warimc0x 063107 235 

9* 7* M TO Inc 087122 122 

S% 7%MTOPtex 087109 82 

13% 11* HBrogSH 048 35 20 X 
43* 26% HSantxai 057 15 16 421 
24 17% Him 10 395 

74 49% HttmH Iff 21 U 1788 
110* 73 Wtetllx 095 15 51 118 

46% 29% HmaDeo 0.16 04 41 7573 
is* 9* Home Snap 58 ES7 

24* 17%HdkMI Off 15 S2 61X 
1* 1 HomptxMtg 006 55 0 17 

37)4 27* Handdi Affix 024 07 76 98 
36* 30* Mywel 058 29 13 1157 
28% 22% MNm£d Off 15 81523 
28% 18% Kraai M 31 589 

23* 18% Horner Off 25 16 81 
16% 12% tasnam O0E 0 4 371483 
13% 8%HsUar 028 28 24 8484 
3% 1* hotel taw 7 227 

53 38* HouffUnil 056 20 18 384 
8% 1% Hone Fab 048245 0 151 
39% 28* KiMIx iff 00 13 1930 
27* 28*H)MIDpx 238 00 4 

13* 10* Hanoi ai0 15 ff 20 
25* 11*MxtetaFdix OS 05 X 510 
19* MHudyCap 034 22 89 707 
32% l7MghesSff Off 1 2 14 242 
23* IS* Humana 1455 67.4 38 8S76 
18% 15*Htrt «*C 058 22 17 7 

11* 4*Hixtangaan 122 « S 379 
10* 8*lfypalaax 096115 527 


18* 15 
24% 23^ 

23* Z3 

18 017^ 

34% 33% 33% 
ff% 20* 20* 
26% 25% 2b* 
33* 32* 33* 
15% 24% 24* 
48* 47* 48 

<1% 41* 41% 
42* 42 * 42% 
5% 05 5% 

15% 15* 15% 
31* 30% 31 

14*013* 14* 
30* 29% 29* 
7* 6* B* 
37 3S% 3S% 
38% 35% 35% 
13 12% 12% 
27* 28* 27 

36% 35% 36* 
33* 32% 32* 
28* 28% 28% 
101* 100101*. 

3* 
7* 

s 

17* 7* 
7* 8 

12 % 12 % 
29% 30* 
22 * 22 % 22 * 
57% 56 57% 

96% 96% ** 

20* 19% 19* 
ni 1* 1* 

34>; 34% 34* ■ 
33* 33% 33* 
23%d22% 22% 
27% 28 27% ■ 

22 * 22 * ni 

15% 15% 15% 
10* 9* 10 

3 2* Z* 
42% 41* 42 

2 1 $ 2 
35% 34% 35% 
28* 20* 28* 
11 * 11 % 11 % 
22 * 21 % 21 * 
15* 15% 15% 
17% d17 17* 
22 % 21 % 21 % 
IS 15* 16 

5% 5* 5* 
8% d&* 8* 



+* 

+% 


s 


S 22% BP lie 

8 ICH PTaru 
ST* 21* PUB 
11% 8% FTPnjpty 
5 ZlffKa 
30% 21%S»X)Pwr 
43 33* UB Cnp 
29 W* H*W4.42 X 
49* 41* BPra758 x 
28 231 R458X 
29 23*BPr>«X 

S 46BML24X 
29% BnoteOi 
47% 39BPWtRPA( 
52 46* ffWAflPBx 
22% 1B*Bnr 
54* 44 0 

49% 30% MCFera 
12* E%braiDd 
18% 15% HA lores 
31% 21%ta00 
97* ffb«M758 
30% lOmdbQrth 
23% 18% tad Bterpy 
21* 11% hdoaFOnd 
15* lO%taSreca 
41% 32%tag(tad 
42 29% kddSl 
B% 7* hstrSyst 
33* 18%htSMpn 
49% 42% hteraaFn 
9% 3%taUU 
3% AkMotfe 
32% X hear Rag 
a* 16% uraxapx 
3% l*Hteke 
71% 51% BM 
22% 13%taffmB 
44% 35%BtFFx 
19% 15% MMritx 
89% aa%xdPap 
34% Z7* tatpill 
11* 7* (mossUhn 

30% 21 htatPai 

8% 4%HTAH 
34 17% MGunir 
23 13 H Red 

3* ZIntTecnn 
54% 42%kinica 
24% 19% kwsiGBE 
33% 28% taco Eat 
11% 6% trail hue 
12* 8% Bate Find 
35% 22% U Carp 
104% X% ITT 


45% 37%JRIwrPF 
40 37* JftareL 
14* 7%taqxxEn 
20* 10*JantteEng 
14* BJokamGr 
3 % Jareaamy 

14* 9%Japnc 
as* 43% Jens’ 

103 95* JrsyfVJB 
01% *4* tad 
52% MJaanU 
13% 8% Jotetaa 
X 15* Jastenata 


Off 08 19 3001 
12 598 
288 11 J 4 125 
Off 07 12 355 
10 21 
Iff OO 10 
X 

221 L8 
3-78 04 
204 03 
210 09 
4.12 ai 
Off 29 13 071 
LOO 7.8 0 

L50 70 Tiff 
000 42 21 412 
1.77 L5 13 3845 
108 28299 1835 
OM 50 3 209 
102 OB 01 
0.40 1.4221 51X 
708 08 8 

106 GO IX 
106 50 14 6X 
005 04 187 

12 711 
074 21 22 24X 
060 10 48 3957 
025 32 24 

Off 00 17 5 

Iff 4.1 0 1233 


Off 27 4 X 
Iff 08 90 

1 183 
IOO 14 22I5B 

19 902 
10B 20 25 718 
Off 4* 23 581 
108 22 3310430 
Off IO 18 1494 
012 IO 4Z100 
208 05 13 91 

0 597 
012 08 21 6512 
84 2004 
10 006 
24 BE 
1.X 07 10 Iff 
212 70 14 1462 
007 07 207 

007 09 473 

05 1712 
108 24 11 3930 



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21 * 21 > 
44*d4l4 
5 4% 

23^4 23§ 

16% 015* 

2 * 2 
69* B7% 

14 13* 

41% 40* 

10% 10* 10% 
77* 75% 77* 

22 * 21 % 22 
6% 6* 6% 
19% 18% 19% 
19* 18% 19% 
3% 3* 3% 

48% 47% 48 

20* 13% 19* 
29* 28% 29* 
10 9% 10 

32% 32% 32^8 
81% 80% B1* 


- J - 



32* 21% KLMHDUi 
28* 21%D)Enogy 
68 58 Hand 40 

28% 23% KanebP Pf 
9% 8%KrawbSv 
4* 2%tateiSen 

23% l6%6anCyP 

X UKanCjSW 
52% 33*KaraasSln 
10% «KMlra 
1108 OQKailMx 
23* 13*KautmanBBr 
23* 20* Kartan 
10 B*iOBaiAutx 
58% 47% 

27 19* 

11% BXengiUuIni 

64%35%Kanta 

' 7*itempern 
TKanwIQy 
.. . il Kemper Moa 
13* 11 KentaS* 
ff* 2!fe«M 
& 19% Karr G 1.7 
51 40KterUe 
17% iQKflystnCnn 
2D* 18%XB|(taH 
08 51% AJnbO 

2% i*UnnkraEh 

44* 33% KnOMkt 
21* 14% Kmart 
61 40KnHddx 
19% B* RnoosRKp 
0% 6* Katenagen 


- K- 

052 20 31 1088 
098 LB 15 356 
4.51) 70 HO 
220 92 10 85 

Off 11.4 zlM 
5 1388 
1JS2 72 12 326 
Iff 50 4 

030 09 15 1343 
0.10 IO 13 182 
Off 25 7 a 
0.30 21 14 2747 

0. 40 1.8 48 

072 OO 85 
Iff 25 192927 
Off 27 9 868 
007 8.4 84 

092 15498 1739 
Off 11.1 167 

Off 9J2 118 

Off 7.7 171 

Off 7.1 46 

Off 232X1110 

1. X 04 *100 

Iff 3L3 28 1288 

116 10 
074 37 17 224 
IX 21 17 BBSS 
Off U 8 82 
13 1364 
Off LO 189307 
148 LO 18 1902 
010 05 a 153 
006 1.1 44 112 



Ota 


UM to H Si Oran 

mTuraaeck Eli « E «#* »+ U» *•» 

27% 18* Korea Fd Off 00056 IOX 26* X% 26% 

26* 10%Kragar 18 1B77 Zfl% 25% 28 

29% 24* HU Buy Iff OO 1Z 293 27% 26* 27% 

19% l4*KuhkniCo 060 4.1 50 32 14% 14% 14% 

153% 104 Kyocera CP 088 06 63 5 143142*142* 

20% 15Kyrartitex Off 25 12 


61 20* 


10% 5%tAGssr 

41 33%LQ8EBix 

a sax 


27% 18* Lran End 
13% 10% Ureter k« 
19* 14% Uareoal 
38% 31*Lao Entrap 
25% 18* Lags Item 
49* 33% LaOBFI 
18% 14*LBtexaR 
25% 14% Umnra Dp 
4% 2*UraterFM 
2% l%Ubar»ta 
11% B* Italy AS 
29* Z3* LtaT? I?) 
81* <7* Uly 
22% 18% LknU 
44% 38* UncnN x 

20% 16 linen MFd 

X 57 LongL PE 
74% 28*UBX1 
28* 19% UzCB 
5* 4% LLBERtyx 
X* 58% LockM 
45* 35 LDCdta Cb 

T02% 84* loew* 

33* 25*Logk»i 
9% 4% LnmreFM3> 
24% 15* L#U 
39% 31% LnpeOr 
Z3% 16%UxtaHiF 
42% 33*Lart 

32 2810*126 

45% 35* UxdS. 

48 29% LOUIS’ 

40* 2S% Lons 
21% 14 UV 

8% 3* LTVWU 
38% 29 Lurad 

24% 21% Liters Cate 
39% 28 % LuketB Inc 
30% ff%UeeaOka) 
35% Zt>% Lydaf be 
32* 2D%LyoaoelP 


-L - 

5 1210 
218 OB 14 397 
33 9597 
0.10 03 M 955 
Off 24 14 43 

122 L8 « ff 
Off 1.5198 2141 
59 23 
Off !JJ 9 529 
040 Lllff 230 
056 20 17 34 

084 25 18 274 

044 21 8 81 

Off 1J 16 2028 
Off 14 3136 

0. 10 07 6 1817 

0 348 
0 C 
Iff 105 845 

Off 24 12 101 
250 42 34 7959 
Off 20 1817186 
Iff 40 8 865 
096 00 ZI 
LOO 07 2 

9 894 

045 1.B 15 1350 

084121 35 44 

228 24 10 12B3 
Off 20 21 92 

Iff 1.1 9 412 
032 1.1 11 Z2 

0 890 

1. X 108 7 2122 

1.12 03 14 128 
052 10 24 487 
Off IL 13 1094 
210 105 6 

Iff 23102 387 
Off 10 13 2983 
018 05 21 4205 

38 8089 
91 

Off 3 j 0 23 2872 
Off 19 18 3M 
Iff LI 42 262 

046 1.4 24 88 

73 IX 
Off 3.1477 4158 



19* - _ 
7% I 7* 
19% 19% 19% 
12% 12% 12% 
18% 18* 18* 
34% M 34* 
20* X% 20* 
34% 34 34% 

l*% HI 4* 14% 
15 14* 14* 

Sjp ** 2% 
1 $ 1 % 1 % 
9% d9% 9* 
28% 28% 28% 
58% 57% 50% 
19% 18* 18% 
38*105% 35* 
16% dlB 18 
57% 57% 57% 
38% 35% 39% 
23% 22* X* 
5% 5* 5% 

68 66% 67* 
42% 42 42 

SB 07% 87* 
29* 29% 29% 
5 4% 5 

18% 16 16* 
34* 33% 34* 
18 17% 17% 
39 37* 39 

30 X X 
44* 44 44 

32% 31* 31* 
39 M% 38* 
’ 10 * 
5 


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X 19* 

5% 4 


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22% 22% 22% 
33 32 32% 

33 32% 32% 

34 33 33* 

30 28* 28% 


-* 

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3 

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3 

+% 

A 

+1 

1 

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M 


9% 4* ha Can 
85% 52% MBULhc 
40* 33%UCH 
7* 4% MDCMdsa 

32% 25% MDU Rea 

9% 8% MF5 Diarte 074 08 
7% 5* HR Got Mr Off 02 


18% 13% Aka Prop* 
39% 22% MGM Gram 
20% 13% ktaefifi 
18% 12* MatmaC 

18% iz%kta»* 
X* 17% MataydiF 
38* 28% MrcXr 
32% 24IMK 
29% 23% UanraC 
28% 16$ Manpower 
5% 

10 % 

25* 22*UmBeH 
84% 54* llaoco 
28% 15%MnNrax 
5* 4 Mm3 

23% 15% Mara N 
32% 24% tarn 
88% 7H MadMcLx 
29* 20%ttnbal 
51 40* MtaMar 
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AMEX COMPOSITE PRICES 


4 pm dose October 5 


stock 


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Mr. E 1001 
AdvUagn 529 272 
Attn he 2 1M 

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Duzce toirnm, EM*. dazfanteP. Gebze- lstanbul - KDZ ‘ Ere S li - Konya ' K ‘ Mara * 

Qanakkale, Denizi , ^ Mannaris, Manlsa, Mersin, Ordu, Samsum, Soke and Trabzon. 

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14 912 12% 12 12 

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22294S6 18% 17% 18% 

32 318 14% 131* 13% -1% 
8 10 3 2% 3 

024 1183831 59% 57% 58% -% 
0 157 2% 1% 2% 

040 27 2769 16% 15% 15% -% 
20 205 9 9% 9 

024 17 18 13 13 13 

2 5625 6% d7% BA 

3 566 4% 4 4 

61013 14% 13% 14% 

257342 15 13% 14% 

14 197 16% 16% 16% 

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23 28% 28% -% 

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62 7 25 24% 

11 340 14% 13% 
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080 16 114 25% 25% 
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McdctoeS 048 14 458 
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Manor Cp 016 55 359 
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MeroanLB OX 11 1304 
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Meridian IX <0 4770 
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105 On 35 1060 

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Hcrocnra 

Hcrgrato 

Mkipolis 

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MUM U 

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MSerK 052 17 734 
ifflScm 4748 

Mtontocti ZD 220 

MaMeTel 49 8437 

Modem Co 020 IB =39 
Madina Uf 052 1 9 439 
Moiexz 004 617 

Motozlnez OMX 652 
Mrecom 004 14 863 
MremeeP 0X22 5 

MTSSys 058 10 30 
Mftmed 133139 

Mycogen 5 179 


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57% 55% 56% 1 

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14 408 33% 
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26 276 31% 
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. •«..«. occiua niue prospect th#t the 20 key attraction 
per cent-WDAs will be raised in the near Hows involved. 


i 



“3 


S.I 





FINANCIAL TIMES 



AMERICA 


EUROPE 


Data block prospect 
of any Dow rebound 


Bourses suffer again from domino effect 


Wall Street 


US stocks extended their losses 
yesterday morning after more 
troublesome economic data 
blocked any attempt to 
rebound from Tuesday's heavy 
losses, writes Frank McGurty 
in New York. 

By I pm, the Dow Jones 
Industrial Average was 48.76 
lower at 3,75437, as key cycli- 
cal stocks wilted under the 
threat of an immin ent increase 
in interest rates. The more 
broadly based Standard & 
Poor's 500 was also down 
sharply, retreating 4. 64 to 
449.73. 

On the Big Board, dec lining 
issues swamped advances by a 
six-to-one margin in brisk 
activity. Volume reached 230m 
shares by early afternoon. 

But the downturn was not 
restricted to the NYSE. The 
Nasdaq composite was down 
8.94 at 738.36, while the Ameri- 
can SE composite was set back 
4.11 to 449.70. 

The likelihood of a sixth 
increase in short-term interest 
rates this year continued to 
take its toll of share prices. 
After the release of yesterday's 
economic data, the Federal 
Reserve seemed more likely 
than before to tighten mone- 
tary policy, perhaps as early as 
Friday. 

The Commerce Department 
said that orders of factory 
goods had jumped 4.4 per cent, 
confounding analysts who had 
predicted a 3.5 per cent 
increase after July's 2.0 per 
cent decline. It was the latest 
in the series of unfavourable 


surprises which suggested that 
the economy was expanding 
too fast 

Bonds plunged on the news, 
as fixed-rate investors acted 
upon their anxieties over the 
unsettling outlook on inflation. 
By the early afternoon, the 
yield on the benchmark 30-year 
government bond was just 
below 8.00 per cent, an impor- 
tant psychological barrier. 

The data on factory orders 
exacerbated the tensions felt 
within the financial markets in 


Columbia HCA 



International Paper shed $2‘/i 
to $75% and Caterpillar, the 
heavy equipment manufac- 
turer, gave hack $1% to $52'A. 

Takeover speculation resur- 
faced in pharmaceuticals with 
talk of Hoechst, the German 
group, seeking to acquire 
Marion Merrell Dow. Dow 
Chemical, which owns 72 per 
cent of MMD, dropped $2 to 
$72. 

The completion of another 
takeover in the healthcare field 
was given a mixed reception by 
investors. Columbia HCA lost 
$2% to $40% after agreeing to 
acquire HealthTrust, a Nash- 
ville-based hospital group, for 
$3.68bn in newly issued stock. 
HealthTrust appreciated $1% 
on the news. 


Canada 


Mar 1994 

Source: FT Graphite 


Oct 


recent sessions as investors 
awaited the release of Friday’s 
employment data. Many were 
speculating that the Fed would 
put up rates Immediately if the 
report came in stronger than 
expected. 

The prospect of another 
move to curb growth depressed 
those stocks whose fortunes 
are closely linked to the eco- 
nomic cycle. 

Alcoa, the aluminium sup- 
plier, dropped $1% to $82%. 


Toronto was buffeted at mid- 
day by an interest rate-ins pired 
downdraft which left the TSE 
300 composite index 40.42 lower 
at 4,227.55 in turnover of 
C$666 .2m. The industrial prod- 
ucts sector was the big loser, 
dropping 1.9 per cent, while 
consumer products fell 1.6 per 
cent as the volatile Cott Corp 
weakened C$l% to C$15% in 
busy dealings. 


The domino effect wreaked 
more havoc yesterday, as 
higher than expected US fac- 
tory orders hit Treasuries, the 
Dow. European bond markets 
and equities, writes Our Mar- 
kets Staff. 

Equity valuations were not 
sufficiently cheap in Europe to 
make up for lack of impetus 
from America, said Mr Andrew 
Bell, director of European 
strategy at Barclays de Zoete 
Wedd. “On the way up," he 
said, “interest rate-driven mar- 
kets took prices to the point 
where we were looking at 1996 
earnings at the end of 1993." 

If bond yields rose further, 
he added, equities in Europe 
might have to become visibly 
undervalued to bring in the 
buyers. Mr Bell was not. how- 
ever, looking for any repeat of 
October 1967. “There is more 
risk of a 5 per cent crumble 
than a 30 per cent crash," he 
maintained. 

FRANKFURT'S Dax index 
fell 26.23 to a new 1994 closing 
low of 1,968.72 on the session. 
After an intraday low of 
1,930-55. it lost 42.8 or 2.1 per 
cent to 1,946.49 in the post 
bourse. Turnover rose from. 
DM6bn to DMT^bn. 

Dealers reported domestic 
and US selling and Mr Glen 
Liddy at Klein wort Benson 


said that stocks which had 
been favoured to a degree in 
recent weeks were punished 
yesterday. In chemicals, Bayer 
and Hoechst fell DM21 to 
DM331 and DM13.10 to 
DM309.50: in utilities. RWE by 
DM16.50 to DM42SJ50, and Veba 

by DM22J50 to DM487. 

Among second liners, Asko 
dropped a further DM45 to 
DM730 on the session following 
Tuesday’s loss of DMS5 on a 
DB Research downgrade. 

PARIS, too, established a 
new 1994 low as the CAC 40 
index declined 42.40 or 2J5 per 
cent to 1,833.72 in turnover of 
FFrS.Tbn. Financials were 
weak, with Credit Local down 
FFr17.30 at FFr377.50, and Suez 
by FFr10 at FFr240. 

Bouygues. the sole riser for 
much of the day, ended FFr9 
higher at FFr587. One of the 
construction company’s con- 
sortiums was awarded the 
potentially lucrative licence to 
run France’s third mobile tele- 
phone system; and another got 
the contract for the St Denis 
stadium in north Paris which 
will be the mam venue for the 
1998 soccer World Cup. 

Bouygues beat groups led by 
Alcatel Alsthom, which fell 
another FFr19.40 to FFr461 .60. 
and Lyonnaise des Eaux, 
which dropped FFr14 to 


IfT-SE Ac 

ttianes Share Indices 



Oct 5 

Open 

11.00 

■me EUROPEAN SERIES 
11.30 1200 IXOO 7&O0 15.W Cose 


1302.07 

129269 

129640 1298.51 129SJ5 

1296.68 

129001 1286.48 

FT-SE Einfeaefc 200 

1E1.B6 

134185 

1340.18 1348.41 134628 

1346.73 

1340,06 133556 



Oct 4 

00 3 Sep 39 

Sep 29 

Sep 28 

Ff-SE Bronx* 100 


131297 

1309.02 131033 

133053 

1346.01 

FT-SE Eurocrat* 200 


138001 

1357.65 135189 

1375.17 

138874 


Bm in® pwiMoe Hgubr i» - oik.** a» - tsszra infer 100 - raeao/ jw ■ i JKffl t nru 


FFr475; Lyonnaise, at least, 
h.-id the consolation of forming 
part of the winning sports sta- 
dium consortium. 

AMSTERDAM fell 2.1 per 
cent and Elsevier came under 
pressure on ratings warnings 
after its takeover of Mead Data 
Central for £l.5bn. 

The AEX index dropped 8-36 
to 390.13. Elsevier fell 60 cents 
to FZ 16.10 following its 10-for- 
one share split, after Stan- 
dard & Poor’s placed Reed 
Elsevier ratings on Credi- 
tWatch negative and Moody's 
put its long-term debt ratings 
on review for a possible down- 
grade. 

A FI 5.90 foil to FI 178.60 in 
VNU was attributed to worries 
that its television affiliate RTL 
may lose star performers. 

Chemicals and internationals 
were under pressure, with 
Akzo Nobel down FI 4.80 at 
FL 197.30, DSM F14J30 lower at 


FI 139.60 and Royal Dutch 
Petroleum falling FI 3.60 to 

FI 185. 

MILAN saw one of its worst 
fears come true as the govern- 
ment unexpectly found itself 
pitched into renewed battle 
with the country's anti-corrup- 
tion magistrates. 

The Comit index fell 16.04 or 
2.4 per cent to 641.94, on a day 
which saw allegations that the 
prime minister could become 
involved in a formal graft 
investigation, the justice min- 
ister offer his resignation and a 
government spokesman call for 
a criminal suit against the 
country’s chief prosecutor. 

Among the blue chip stocks. 
Fiat fell L126 or 1 £ per cent to 
L6£51 and Stet lost L214 or 4.5 
per cent at L4,492. A further 
Ll.037 or 5.1 per cent fall to 
L19.257 in Benetton was attri- 
buted to renewed rumours that 
the company might launch a 


capital increase. 

ZURICH'S interest rate wor- 
ries came to the fore and the 
SMI index dropped 41.1 or 1.7 
per cent to 2,480.4. 

Attention continued to focus 
on UBS following last Friday's 
share restructuring announce- 
ment The bearers foil another 
SFrlO to SFrl.181 and the regis- 
tered shares were SEW lower 
at SFr285. 

The weaker dollar weighed 
on industrials, leaving Brown 
Boveri and Sulzer down SFr28 
at SFrl.062 and SFrl3 at SFr802 
respectively. 

Profit-taking eroded some of 
Swiss Re’s recent sharp gains 
on the sale of its direct invest- 
ment activities, the shares foil- 
ing SFrG to SFrtSS. 

Drug stocks followed the 
lower trend, with Ciba declin- 
ing SFrl2 to SFr718 and Roche 
certificates giving up SFrl05 to 
SFr5,620. 

MADRID ended off its worst, 
with the general index down 
5.65 or 1.9 per cent at £ 
closing low of 290.07, after 
286.97, in turnover of 
Pta35.8bn. Rough treatment 
was meted out to selected 
banks, utilities and construc- 
tion stocks. 


Written and edited by Wiliam 
Cochrane and Michael Morgan 


ASIA PACIFIC 


Mexico 


Mexican share prices fell 
sharply following a rise in pri- 
mary rates on longer term 
Treasury bills, or Cetes. 

The IPC index of 37 leading 
shares declined 62.75 or 2J3 per 
cent to 2,60727, dropping below 
the short-term support level of 
2.650. 


Tokyo picks up as Hong Kong falls 2.2% 


Tokyo 


Bullion worries pressure South Africa 


Johannesburg was tinder pressure from the 
sharp losses on Wall Street and gold price 
weakness, leaving the overall index 38 lower at 
5,616. Industrials declined 31 to 6,270 and golds 
receded 34 to 2.366. 

Spot prices were less sensitive to the negative 
sentiment than futures, however, where near 
term index futures posted steep falls amid 
concern that gold’s expected break above $400 
an ounce would not materialise. 


South Africa’s split country ratings from S&P 
and Moody's did little to spur investment 
although analysts expected that the country’s 
forthcoming inclusion in emerging market indi- 
ces could prompt renewed interest 
De Beers slipped Ri to R101 and Anglos fell 
R1.50 to R236.50. Mmorco lost Rl at R110. 
Barlows retraced some of its recent steady 
gains, giving up Rl to R30. SAB eased 50 cents 
to R33.50 and Sasol was off 25 cents at R35.75. 


EMERGING MARKETS: IFC WEEKLY INVESTABLE PRICE INDICES 


Market 

No. of 
stocks 

Sept 30 
1994 

Dollar terms 
% Change 
over week 

% Change 
on Dec *93 

Local currency terms 

Sept 30 % Change % Change 
1994 over week on Dec '93 

Latin America 

(209) 

778.85 

-1.4 

+19.7 




Argentina 

(25) 

959.54 

-02 

-3.5 

588,799.85 

•02 

-3.5 

Brazil 

(57) 

450.11 

+1.1 

+93.4 

1,438,337.523 

+0.7 

+1,315.4 

Ctiila 

(25) 

760.08 

■13.2 

+37.7 

1355.72 

+2.8 

+31.7 

Colombia 1 

(11) 

889.23 

-1.6 

+37.9 

1.32339 

-1.8 

+42.7 

Mexico 

(6S) 

983.05 

-3.7 

-23 

1,437.57 

■3.7 

+8.5 

Peru’ 

(11) 

186.77 

+2.9 

+54.4 

256.96 

+2.9 

+81.8 

Venezuela 3 

(12) 

554.54 

-2J9 

-8.3 

2.167.16 

-2.9 

+52J5 

Asia 

(557) 

278.22 

-2.7 

-4.4 




China* 

CIS) 

105.53 

-1.7 

-29.3 

113.75 

-1.7 

-30.7 

South Korea 0 

(156) 

148.79 

+1.1 

+25.9 

156^3 

+0.8 

+24.5 

Philippines 

(18) 

298.50 

-4.3 

-12.3 

365.84 

-4.0 

-17.8 

Taiwan. China 8 

(90) 

164.39 

+3.1 

+21.6 

161.69 

+3.0 

+20.9 

India' 

(76) 

136.07 

-32 

+16.8 

150.48 

-3.2 

+16.8 

Indonesia 8 

(37) 

106.84 

-3.0 

-14.3 

126.14 

-3.6 

-11-4 

Malaysia 

(105) 

309.63 

-3.9 

-8.7 

29232 

-3.7 

-13.1 

Pakistan* 

CIS) 

412.60 

+1.4 

+6.4 

572.99 

+1.4 

+8.5 

Sri Lanka® 

(5) 

206.45 

-0.9 

+18.5 

220.81 

-1.4 

+15.6 

Thailand 

(55) 

434.64 

-0.8 

-9.0 

430.24 

-0.9 

-11.0 

Euro/Mld East 

(125) 

117.81 

+1.6 

-30.4 




Greece 

(25) 

221.13 

-0.7 

-2.0 

354.48 

-0.3 

-7.8 

Hungary" 

(5) 

178.41 

-1.4 

+5.9 

228.96 

-15 

+13.4 

Jordan 

(13) 

157.27 

+3.1 

-5.0 

225.83 

+32 

-5-7 

Poland 0 

f12) 

566.74 

+0.7 

-30.7 

831.54 

+12 

-24.7 

Portugal 

(25) 

123.53 

-0.3 

+8.6 

13458 

-0.1 

-2.8 

Tiakay 13 

(40) 

116.74 

+3.9 

-45.1 

1.866.92 

+3.8 

+28.3 

Zimbabwe** 

(5) 

264.68 

+0.3 

+31.0 

323.72 

+0.2 

+51.5 

Composite 

(891) 

371.12 

-1.8 

+43 





inarm an cakuimad •> and wit and wveMy changes an percentage maaament tarn ffw previous Mar. Bus dm; Dec *968-100 except mm noted 

-me* an piM> 1 iw>; OOac at jsaft Rum s rasa f«*c 31 rare ay*n 3 isret KUan 1 ts 9;.- a mz (stsap as »s» (MUv 1 mi; m? 

Dec 3! JjfcC (IIBac 31 19Kt pgjDac 31 7933; OJfAug * IMSt fMUUV r 1333. 


Taiwan shares plunged 3.3 
i leading 


after reports that a securities brokerage 
player, Mr Oung Da-ming, had bounced a T$200m 


t cent 

controlled by a leading stocl 
cheque, writes Laura Tyson. 

Panic selling set in as investors feared a chain reaction in the market fuelled by a 
likely tightening of credit terms by underground financiers. Stock market speculators 
often finance their share purchases through margin loans from informal lenders. 

An official from the brokerage, Hong Fu Securities, confirmed the report but said that 
the problem would be resolved shortly. 

Mr Oung is the de facto head of the Hualou Group, one of Taiwan's 10 biggest industrial 
conglomerates, and a member of the country’s Legislative Yuan, or parliament. 

The benchmark weighted index, which hit a four-year high of 7,183.75 on Mon- 


day. closed 235.33 down at 6,944.59. Shares in Hualou. the group’s flagship textile 
manufacturer, and Chia Hsin Livestock, a company controlled by the group, dropped 


by the daily limit of 7 per cent 


Buying by public funds and 
arbitrageurs lifted prices dur- 
ing the afternoon session and 
the Nikkei 225 average gained 
09 per cent, writes Emiko Tern- 
zono in Tokyo. 

The index ended 182.94 
higher at 19,751.55. Investors 
were initially discouraged by 
Tuesday's sharp decline on 
Wall Street and the market 
saw a low of 19,487.70 briefly 
after the opening. However, a 
rise in futures prompted active 
arbitrage buying, while a 
rebound in Japan Telecom pro- 
vided further support and the 
Nikkei rose to a high of 
19,752^5 just before the close. 

Volume remained below 
200m shares for the third con- 
secutive session, at 197m 
against 161m. Traders now 
expect most investors to 
remain absent ahead of the 
October 27 listing of Japan 
Tobacco. 

The Topix index of all first 
section stocks gained 9.26 at 
1,582.05, while the Nikkei 300 
put on 2JJ9 at 289.89. In spite of 
the rise in the indices, losers 
led gainers by 491 to 478, with 
212 issues unchanged. In Lon- 
don the ISE/Nikkei 50 index 
was up 0.72 at 1,300.27. 

Japan Telecom was ahead 
Y340.000 at Y4,l4m after hitting 
a record low of Y3.73m in the 
morning. Some dealers had 
feared initially that investors 
looking to purchase Japan 
Tobacco stock would sell high- 
priced former state-owned com- 
panies’ shares to raise funds. 
But NTT recovered Y15.000 to 
Y877.000 after a three-day fall, 
and East Japan Railway 
improved Y8.000 to Y483.000. 

Nippon Shinpan, a consumer 
credit company sold on Tues- 
day on fears of financial prob- 
lems at its subsidiaries, 
rebounded Y27 to Y7S5. The 
company denied rumours that 
its finance affiliates were 
suffering from mounting bad 
loans. 

Paper and pulp issues were 
stronger on hopes of Improving 
demand. Honshu Paper rose 
Y32 to Y650 and New Qji Paper 
added Y20 at YI,Q20. 

High-technology stocks were 
mixed. Sony declined Y30 to 
Y5,770. bnt NEC rose Y30 to 
YL220 and Matsushita Electric 


Industrial firmed Y10 to Yl.580. 

In Osaka, the OSE average 
put on 6.30 at 21,969.28 in vol- 
ume of 9.6m shares. Buying by 
public funds supported the 
index. 


Roundup 


There was a conventional 
response in the region to Wall 
Street's overnight losses, but 
several markets moved higher. 

HONG KONG was rocked by 
the US sell-off, the Hang Seng 
index losing 205.76 or 22 per 
cent at 9.298.36 as October 
Hang Seng futures broke down 
in the last 15 minutes of trad- 
ing. Turnover expanded from 
HKS3.19bn to HK$3.60bn. 

Property shares again led the 
market down, with Henderson 
Land dropping HKS1.90 to 
HKS46.40 ahead of its results. 
Sun Hung Kai fell HKSL25 to 


HK$55.50 and Hysan Develop- 
ment HK$L25 to HE$2020. 

The mainland Chinese com- 
panies’ H-share index fell 41.45 
or 3 per cent to 1,326.07. How- 
ever, SHANGHAI’S A share 
index shed 11.1 per cent on 
plans to ban same-day settle- 
ment, closing 90J.1 off at 723.37. 

SYDNEY blamed programme 
selling as the All Ordinaries 
index dipped 18.3 to 1,979.6. 
Turnover increased from 
A$364.7m to A$439m. 

News Corp recovered 4 cents 
to A$8.10, dealers saying the 
media group had been oversold 
since announcing, last Friday, 
its intention to issue limited 
voting preference shares. 

SEOUL lost ground after 
three days of rises, the compos- 
ite index closing 7.35 down at 
1,057.24- The Finance Ministry 
announcement that it would 
raise the limit for foreign 


shareholdings on the market to 
12 per cent from the current 10 
per cent by December l failed 
to boost prices. 

WELLINGTON'S NZSE 40 
Index shed 1 per cent for the 
second consecutive day. ending 
22.49 lower at 2,035,01. Turn- 
over picked up through the ses- 
sion and finished at NZ$42m. 

MANILA drew comfort from 
lower domestic inflation fig- 
ures which helped the market 
to overcome a soft start The 
composite index gained 19.7 at 
2,973.31, but volume fell to 
Ubn shares from 3_2bn. 

Megaworld Properties and 
Holdings led gainers, closing 8 
per cent up at 13.50 pesos on 
news of its link with another 
group to develop a 215-hectare 
property in Cavite. 

KUALA LUMPUR rebounded 
on institutional bargain hunt- 
ing and the composite index 


rose 8.06 to 1,133.72. ELI Hold- 
ings led activity, adding 40 
cents at M$6.00 on new projects 
totalling M$4Kbn. 

KARACHI ended higher on 
demand for synthetics and 
selective blue chips on expecta- 
tions of good annual results 
and increased dividends. 

The KSE 100-share index 
dosed 13.91 higher at 2.324.67. 

SINGAPORE'S Straits Times 
Industrial index, up 10.27 at 
2^8083. rose for the sixth con- 
secutive session after a late 
revival of interest in property 
shares. In the property sector, 
CDL rallied 20 cents to S$&35 
and DBS 4 cents to S$A94. 

JAKARTA firmed as local 
investors, net sellers in the 
run-up to Tuesday’s launch of 
Indosat, the telecoms group, 
returned to the secondary mar- 
ket. The market index picked 
up 24)1 to 503.64. 


| FT-ACTU ARIES WORLD INDICES 












,1 

Jointly compiled by The Financial Times Ltd, Goldman, Sachs & Co. and Natwesf Securities Ltd. In conjunction with the institute of Actuaries aid the Faculty of Actuaries 

NATIONAL AND 




























Figures in purenrheaes 

US 

□ay's 

Pound 


.. 

Local 

Local 

Gross 

US 

Pound 



Local 




show number o t Ines 

Dollar 

Change 

Staring 

Yen 

DM 

Currency 

% chg 

Dw. 

DoBar 

Stating 

Yen 

DM Currency 52 week 52 week 


of stock 

Indeji 

H 

Index 

Index 

Index 

hidex 

on day 

Yield 

Max 

Index 

Index 

Index 

Index 

fflflh 

Lew 

(approx) 

Australia (60) 

... 168.06 

-1.9 

157.84 

105.90 

135-59 

151^5 

-1.6 

367 

17192 

16087 

106.04 

138.63 

153.89 

189.15 

14457 

14497 

Austria (16)— 

... 131.16 

-05 

17015 

114.16 

146.16 

146.06 

-0.9 

1.10 

16208 

171.06 

11499 

147.41 

147.35 

19899 

167 48 

17090 

Belgium (37) ........ 

... 163.92 

05 

153.96 

103.30 

132-38 

129.02 

0.1 

427 

163.18 

153.31 

10296 

13212 

12898 

177.04 

147.45 

147.45 

Canada (1031 

135.48 

-1.7 

1272 4 

85.37 

109-31 

131.88 

-1.8 

055 

T 37.80 

129.40 

86.95 

111.57 

13496 

145.31 

12054 

12197 

Denmark 1331 - 

__ 347.39 

-04 

232.92 

156 27 

200.08 

204.89 

-0.0 

1.45 

349.00 

233.94 

157.11 

20198 

20696 

275.79 

229.79 

229.79 

Finland (24).. 

— IK?. 38 

1.1 

17159 

114.93 

147.15 

163-86 

OJ 

0.77 

18031 

169.40 

113.77 

14598 

183.32 

18238 

11192 

11192 

France (101) 

....164.73 

ia 

154.72 

103.80 

132.91 

136.92 

141 

3.16 

16269 

15285 

10265 

131.72 

13696 

18597 

15994 

16999 

Germany (68). 

„ 136.66 

-06 

12035 

86.11 

110-25 

110.25 

-0.9 

157 

137.46 

129.14 

86.73 

11198 

11198 

15040 

12037 

12052 

Hong Kong (56) 

....391.43 

0.1 

367.64 

248.66 

315.82 

386.34 

0.1 

3.13 

390.95 

367 30 

246.6a 

31693 

38795 

50696 

307.63 

307.63 

Ireland (141 

202.05 

0.0 

189.77 

127.33 

163.02 

182.41 

-0.1 

351 

20206 

18984 

127.50 

1 63. BD 

18256 

216.00 

171.04 

171.04 

Italy (59) 

— 81.59 

0.1 

76.63 

51.41 

65.83 

95 J3 

0.0 

1.62 

81.53 

7080 

51.44 

06.01 

65.32 

97.78 

57.88 

7396 

Japan 1+631 

...166.09 

-03 

148.48 

99.62 

127.55 

99.62 

-05 

077 

158.61 

14981 

10098 

128.41 

100.08 

170.10 

124 54 

153.40 

Maiaystj (97) ........... 

....566.40 

0.1 

524.47 

351.88 

4«)64 

S51.54 

Ol 

152 

557.72 

52299 

36101 

451.66 

55191 

621.63 

418.19 

418.19 

Mexico (18) 

.. 2231.90 

-2J 

209023 

1406.43 

1800.72 

8312.68 

-2.0 

1.23 

2234. BO 

2146.41 

144192 

1648.65 

648190 

2647.08 

1664.06 

1664.06 

Nertwrtand fid 

.. .208.71 

0.4 

196.03 

131-52 

168.40 

165.56 

0.1 

3.49 

207.92 

19555 

131.20 

168.34 

165J6 

218.19 

187.01 

187.19 

New Zealand |1J) 

72^3 

-OB 

67.84 

45.52 

5&28 

63.59 

-09 

3.B2 

7285 

68.44 

45.97 

5898 

04.17 

77.59 

5922 

53.79 

Norway (23) 

.. 198.27 

1.7 

186^2 

12444 

159.96 

18195 

12 

1.82 

194.89 

18110 

122.97 

157.78 

179.87 

211.74 

186.52 

173.32 

Singapore (44) 

...388.56 

19 

364.94 

244.65 

31.150 

265.11 

1.7 

1.59 

361.40 

35034 

24066 

308.80 

26074 

308.56 

294.68 

301.04 

South Africa (59) 

,__314.16 

08 

295.07 

197.97 

253.47 

289 77 

-0.4 

221 

311.84 

29297 

106.76 

252/47 

291.03 

31494 

202.72 

204.10 

5pain 06) 

... 136.02 

06 

129,63 

86.97 

111^5 

1 34.38 

0.4 

4.13 

137.13 

126.64 

8693 

H1.03 

13392 

155.79 

126.88 

137.07 

Sweden (361 

222.85 

12 

20931 

140/43 

176£1 

244.09 

0.0 

154 

220.14 

206.83 

138.91 

17894 

544.05 

23195 

175.83 

190.33 

Swttwrtaid (an 

.161.28 

IS 

151.48 

101.63 

130.12 

128.93 

1.1 

158 

166.91 

14030 

10097 

125.66 

12795 

17896 

141.38 

141.38 

United Kingdom (204) 

_ 1S2J7 

0.6 

160.96 

12141 

155.45 

160.96 

OJ 

420 

191.57 

17998 

12088 

155.10 

17998 

214.98 

181.11 

188.93 

USA (SI 4) 

...185.78 

-1.4 

174.48 

117.07 

149.89 

185 78 

-1.4 

2.93 

18850 

177.10 

11894 

152.62 

18890 

196.04 

170.06 

18050 

EUROPE (709) 

167.05 

0.6 

156.S0 

105^7 

134.76 

147.70 

QA 

3.14 

168.13 

15698 

10492 

13490 

14793 

178.58 

154.79 


Nonfle (116|. 

._217J9 

09 

20437 

137.12 

175.56 

20399 

0.0 

1.45 

21558 

20264 

13009 

17492 

204.08 

222.18 

173.19 


Pacific Basin (747) ... — 

... 167.91 

-03 

157.71 

105JS1 

135.48 

110.55 

-04 

1.09 

16245 

15826 

10699 

136.38 

111.01 

176.99 

134.79 

15048 

Euro-Pacific (1456) 

...16743 

at 

15735 

70S.5I 

135.08 

125.53 

-Ol 

1.96 

16754 

15792 

10599 

135,48 

12597 

176.14 

143.88 

158.33 

North America (El 7) 

...182.66 

-1.5 

171.56 

116.10 

147.36 

162.04 

-1.5 

291 

18555 

174.14 

11695 

15006 

184.74 

192.73 

17597 

164J8 

Europe Ex UK (505) 

_ 149.64 

0.6 

14054 

94 JO 

120.73 

127.94 

02 

251 

148.82 

139.02 

9390 

120.48 

12799 

158.12 

135.94 


Pacific Ex. Japan (279) 

..-3B2B2 

-0.2 

246.85 

185.62 

212.05 

233.97 

-0.2 

277 

263.43 

247.55 

16625 

21393 

234.47 

29621 

208.35 


WOrld Ex. US (1636) 

169^8 

ao 

159.03 

106.74 

136.06 

129.30 

-02 

1.97 

169.40 

156.18 

ioe.es 

137.15 

129.54 

178.86 

145.58 


World Ex. UK (19461 

- 171.98 

-0.6 

16132 

108J7 

138.75 

143.32 

-0.8 

210 

173.07 

18280 

10991 

140.12 

144.41 

178.69 



World Ek.8o.AJ. (2091) ... 

....172.91 

-05 

162.40 

108.96 

13051 

145.72 

-0.6 

230 

17384 

16333 

109-69 

140.75 

146.BS 

180.03 



World E*. Japan (1682) .... 

,_164JC 

-0.8 

173,00 

116.07 

148.61 

174.M 

-0.7 

295 

16031 

174.10 

11692 

150.03 

17599 

19020 

17034 

17093 

The world index pi5(»..._ 

_ 173.81 

-05 

16335 

109.53 

14023 

146.78 

-0.6 

230 

174.72 

164.15 

11094 

141.48 

147.71 

181X80 

15085 

167^1 

2*rV«. Tl» Fdttrtdal Tam 

UrntMl, Qoaman. Sacra ana Ce. ana naWatt Seeurmu Umtao. 1987 













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