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Why there won't be 
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Jailbird gangsters and 
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stability 


FINANCIAL TIMES 


-’s.; Business Newspaper 


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THURSDAY OCTOBER 13 1994 



Mitsubishi’s $2bn 
trust bank rescue 
breaks barriers 


Allies split over Iraqi threat 


Mitsubishi Bank, one of the world’s largest 
commercial hanks, announced a rescue takeover of 
the troubled Nippon Trust Bank in a a move 
towards the consolidation of a Japanese banking 
sector crippled by bad debts. Mitsubishi will 
become the first Japanese city bank, or commercial 
bank, to operate a full trust bank subsidiary. It 
it would buy Y200bn (S2.«bn) of new shares, giving 
it a SB.8 per cent stake in Nippon Trust from 
November 10. It is already the second largest share- 
holder, with 5 per cent. Page 19 

Hongkong Telecom In China deal: Hongkong 
Telecom has agreed in principle a $300tn investment 
to build networks in mainland China. The company 
will upgrade a cellular telephone network in Beijing 
and construct a lAOO-inile optical fibre cable system 
between the Chinese capital and Hong Kong: Page 
7; Beijing battens down for tricky time ahead. Page 
4; Canada plans for cable and telecoms freedom, 
Page 6 

Portillo backs British sovereignty 

British employment sec- 
retary Michael Portillo 
(left) established himself 
as the unchallenged 
leader of the Conserva- 
tive right as divisions 
over Europe at the top of 
the party were exposed 
again at Its conference In 
Bournemouth. Mr Por- 
tillo launched a fierce 
attack on interference 
from Brussels and a pas- 
sionate defence of British institutions and sover- 
eignty. saying: "Sometimes you have to tell Brus- 
sels when to stop". Page 18; Samuel Brittan, Page 
16; Observer. Page 17 

UK inflation level lowest for 27 years; The 

underlying rate of inflation in the UK fell to its low- 
est level fur at least 27 years in September. Unem- 
ployment also fell for the eighth consecutive month, 
bringing the numbers claiming benefit down to lev- 
els last seen in 1991- Page 18 and Lex 

Car sales rise In western Europe: West 
European new car sales rose by an estimated SB per 
cent in September to S6&200 from 836^00 a year pre- 
viously . according to the European Automobile 
Manufacturers Association. Page 2 

Prudential seeks stake m Thai Insurer: 

Prudential, the UK’s largest life insurance com- 
pany. is holding talks about its first significant 
acquisition in the Asian insurance markets, a 24.9 
l»er cent stake in Thai Sethakit Life Assurance. 

Page 19 

Tokyo hits Hoechst for extra taxes; Hoechst 
Japan, a unit of the German pharmaceuticals com- 
pany, paid the Tokyo regional tax bureau a total of 
Y-Uhn (S44m) in additional taxes for allegedly 
transferring income taxable in Japan to Germany. 
Page 4 

TWA mounts restructuring campaign: Trans 
World Airlines, US airline struggling to avert a 
financial crisis, started campaig n ing to win support 
for a sweeping financial restructuring that will 
nearly halve its debt Page 22 

Gardner Merchant 14% ahead: Gardner 
Merchant, largest contract caterer in Europe, 
reported interim profits 14 per emit up at 26.0m. The 
group was bought by its management from Forte 
for £4ffibn in 1992. Page 25 

Bulgaria faces elections: Bulgarian president 
Zlielu Zheiyev is expected to dissolve parliament 
and call general elections within the next two 
months after Mr Dimiter Ludzhev, leader of the 
small New Choice party, failed to get parliamentary 
support for a new government Bulgaria survey, 
Pages H-13 

Audi to expand In Hungary; Audi AG, 
executive car division ol Volkswagen of Germany, 

)■, planning to invest DM730m ($474m) over five 
ywirs in a new engine manufacturing plant in Hun- 
gary. Page 20 

Amec sells Engil shareholding: Engineering 
and construction group Amec sold its stake in 
Engil, the Portuguese construction group, for 
F.sl.Tbn t$17.1xn). The UK group joins other interna- 
tional constructors, including Bouygues of France, 
pulling out of joint ventures in Portugal. 

Page 20 

Ruffled feathers: A Swiss army plan to disband 
its 77-\ car-old carrier pigeon service to save 
SKr400.000 ($312,500) a year met with strong opposi- 
tion from a group which plans to seek a referen- 
dum. 


By David Buchan in Paris, 

Mark Nicholson in Baghdad 
and Stewart Daisy in Kuwait 

A rift opened between western 
allies yesterday over plans to 
contain the long-term military 
threat posed by Iraq, as thou- 
sands more US troops arrived to 
bolster Kuwait’s defences. 

Senior US officials seeking to 
win allied backing for a military 
exclusion zone in southern Iraq 
were strongly rebuffed by 
France. Russia and China are 
also believed to be unenthusias- 
tic about the US proposal. 

hi spite of Iraq’s claims that it 
had withdrawn afi its forces from 
the border area. Mr Warren 
Christopher, US secretary of 
state, said in Kuwait yesterday 
that remaining troops still posed 
**an unmistakable threat”. The 
US has refused to rule out a pre- 
emptive strike. 

Mr Alan Juppe. French foreign 


France attacks US proposal for military 
exclusion zone to protect Kuwaiti border 


minister, said his government 
was opposed to an exclusion 
zone, while Mr Francois Leotard, 
defence minister, argued that 
there was “no thing illegal in the 
movement of Iraqi forces inside 
Iraq". Iraq was not violating 
United Nations security council 
resolutions and Mr Ldotard 
believed the deployment of US 
forces “was not unconnected to 
domestic politics". 

However, he added: “We are 
demanding that Iraq recognise 
the international border with 
Kuwait," as laid down in UN res- 
olutions. France was striking a 
“delicate” balance between recog- 
nising that Iraq had made some 
efforts to conform with some UN 


Page 5 

■ Allies could impose new 
curbs on Iraq 

■ Russian envoys start 
Baghdad talks 


resolutions and being “intransi- 
gent” that Baghdad must in the 
end Ailfil all such resolutions, Mr 
Leotard claimed. 

US officials have not yet made 
public their proposals for a mili- 
tary exclusion zone, but it is 
thought likely to mirror the “no- 
fly” zone south of the 32nd par- 
allel beyond which Iraqi aircraft 
risk being attacked by allied 


forces. Mr John Deutch, US dep- 
uty defence secretary, said yes- 
terday: "There has to be an 
assurance that s»ri«fam Hussein 
will not be in a position to 
threaten an attack again so eas- 
ily in the future.” 

Mr Christopher arrived in 
Kuwait yesterday for talks with 
Mr Douglas Hurd. British foreign 
secretary, and the six-nation Gulf 
Co-operation Council After the 
meeting, Mr Christopher said 
they stood shoulder-to-shoulder 
against Iraqi aggression had 
agreed that the troop mobilisa- 
tion should continue. 

Almost 40,000 US troops are 
either in the Gulf or on their way 
there with another 155.000 on 


standby. Mr Christopher said the 
Gulf states had agreed to share 
the cost of the continuing deploy- 
ment Kuwait and Saudi Arabia, 
which paid out close to $100bn 
during the Gulf war in 1990-91. 
are again likely to be the main 
regional contributors. Their con- 
tributions will impose further 
st rains on budget deficits. 

Iraq remained adamant yester- 
day that it would not accept UN 
demands to recognise Kuwait 
until economic sanctions were 
eased. “We are besieged and the 
people are starving," said Mr 
Saddi Mebdi Saleh, parliamen- 
tary speaker and a prominent 
member of the government. 
“Recognise Kuwait? This is ask- 
ing the impossible,” he added. 

Meanwhile, two senior Russian 
envoys have arrived in Baghdad 
to try to defuse the crisis and 
may be followed today by Mr 
Andrei Kozyrev, Russia’s foreign 
minister. 


Yeltsin sacks 
acting finance 
chief Dubinin 


Kohl facerto face with the voters 


By John ThomMI hi Moscow 

President Boris Yeltsin yesterday 
sacked Mr Sergei Dubinin, Rus- 
sia’s acting finance minister, and 
demanded that parliament 
remove Mr Victor Gerashchenko, 
the central bank governor as he 
moved to defuse the political row 
over the collapse of the rouble, 
which has lost half of its dollar 
value in the past two months. 

Mr Yeltsin called the 21.5 per 
cent plunge in the rouble on 
Tuesday a “threat to national 
security" and set up a commis- 
sion, including the head of the 
federal counter-intelligence ser- 
vice, to investigate its 
“sabotage". 

However, a rebellious parlia- 
ment may not approve Mr 
Gerashchenko’s removal when it 
votes on October 2L Parliament 
will also hold a vote of confi- 
dence on the government on the 
same day, and yesterday rejected 
Mr Yeltsin’s veto on a law setting 
broad-based rules for passing 
next year's budget 

Mr Yegor Gaidar, former prime 
minister and leader of the Rus- 
sia’s Choice pro-refonn party, 
warned that conservative opposi- 
tion forces might try to manipu- 
late events to destabilise the 
political climate and seize power. 

Some senior economic policy 
officials believe that Tuesday’s 


currency auction was rigged with 
the collusion of conservative 
ministers to discredit the eco- 
nomic reform process. Mr Victor 
Chernomyrdin, the prime minis- 
ter. rushed back from his holiday 
in Sochi to discuss the economic 
crisis with his ministers. The 
rouble recovered ground yester- 
day, Climbing from 3.826 a gnirHrt 
the dollar to 3.738. 

Western economists in Moscow 
said the reform process had 
reached a critical juncture and 
suggested the government had to 
decide whether to tighten mone- 
tary policy and stop issuing 
cheap credits to industry and 
agriculture or revert to Soviet- 
style central economic manage- 
ment 

International financial institu- 
tions will view Mr Yeltsin’s 
choice to replace Mr Dubinin as 
finanre* mfoistpr as an important 
Indicator of the government’s 
continued commitment to 
reform. 

The strongly pro-reform Mr 
Boris Fyodorov, the former 
finance minister who quit the 
government earlier this year, is a 
candidate, receiving support in 
parliament yesterday. But Mr 
Fyodorov said in London that he 

Continued on Page 18 
Fyodorov’s view. Page 2 
Editorial Comment, Page 17 



Ex-Disney 
head joins 
Spielberg 
in new 
company 

By Alice Rawsfhom In London 


Three of the most powerful 
figures in Hollywood - Mr David 
Geffen, the billionaire music 
mogul, Mr Steven Spielberg, the 
Oscar-winning film director, and 
Mr Jeffrey Katzenberg, who 
recently resigned as head of Walt 
Disney's movie studio - are join- 
ing forces in a new entertain- 
ment company. 

The company, which will open 
early next year, aims to compete 
directly with the leading studios 
- including Disney - by produc- 
ing movies, animated films, tele- 
vision programmes, music and 
interactive entertainment 

Mr Spielberg, director of some 
of the most commercially sue- . 
cessfnl films ever made, includ- 
ing ET and Jurassic Park, said: 
“This is a chance to do some- 
thing that has not been done for 
59 years’ since the last major 
movie studio was formed. ” 

The three founders will own 
equal shares of the venthre and 
will provide the initial funding. 
However, there was speculation 
among industry observers that 
they might soon seek external 
finance. Mr Tim Wallace, enter- 
tainment industry analyst at 
S.G. Warburg Securities in. New 
York, said: "What will be really 
Interesting is whether they team 
up with any of the telecommuni- 
cation and computer companies 
that now want to buy into Holly- 
wood.” 

The news ends weeks of specu- 
lation about Mr Katzenberg 1 s 
fixture since he left Disney in 
August. Mr Katzenberg, 43, 
played a pivotal part In Disney’s 
success since the late 1980s, cul- 
minating in the release of The 
Hon Smg, its latest animated fait 
which has already grossed $270m 
in the US alone. 

Mr Katzenberg. dubbed the 
“Golden Retriever” for his nose 
for talent, quit after being 
passed over for the presidency, 
ffls partners are two of his clos- 
est, and wealthiest, friends. 

Mr Geffen, 51, made his first 
million by the age of 25 and has 
since become a billionaire by 
investing the S710m he made in 
1990 from selling his record com- 
pany's share of the MCA enter- 


Continued on Page 18 


German chancellor Helmut 
Kohl surrounded by voters in 
the town of Demmin in Meck- 
lenburg-Vorpommern ahead 
at Sunday's federal elections 
Tax promises, Page 2 nm* nauur 


Brussels approves package 
to restructure Groupe Bull 


to pack. How 


tanc I kave no time 
Jo I Lave to bring??” 


By Emma Tucker in Brussels and 
John Ridding in Paris 

The European Commission 
yesterday approved state aid 
totalling FFrll.lbn ($2.ibn) for 
Groupe Bull, clearing the way for 
a rescue package for France's 
lossmaking computer group and 
its eventual privatisation. 

Mr Karel Van Miert, the compe- 
tition commissioner, .said the 
decision complied with EU guide- 
lines on state aid for rescuing 
and restructuring companies, and 
that he was confident this would 
be a one-time, last-time payment 

The ruling will raise again the 
sensitive subject of state aid and 
the Commission’s commitment to 
stop market distortions. How- 
ever, the Bull case prompted less 
anger than a decision earlier this 
year to approve a capital injec- 
tion of FFr20bn for Air France, 
the state-owned airline. 

The Commission said that none 
of Brussels’ 17 commissioners 
bad opposed the payment “Sub- 
sidies can have a positive effect 
on employment and competitive- 
ness in Europe without damaging 
other business," the Commission 
said. 

Rival computer groups 


expressed resignation at the 
Commission’s ruling. “We have 
always said that are against state 
aid because we want a level 
playing field." said ICL, the UK 
computer group controlled by 
Fujitsu of Japan. But the com- 
pany had not lobbied strongly in 
this case. “We have npriprlnlnm 
our own restructuring and are 
much further down the road than 
Bull," a spokesman said. 

Pressure grows for tighter 
state aid rules — . — Page 2 


Mr Gerard Lcnguet, the French 
industry minister, welcomed the 
decision and said the government 
hoped to privatise Bull in coming 
months. 

"The green light from the Com- 
mission is an important step in 
Bull's recovery” he said. A ten- 
der would be launched over the 
next few weeks for financial and 
industrial groups- seeking to 
take shares in the computer com- 
pany. 

The company, along with its 
state shareholder, is already 
engaged in negotiations with 
potential partners. Bull yesterday 


declined to comment on possible 
investors, although industry 
observers believe NEC could 
Increase its 44 per cent stake in 
the French group. IBM, which 
holds 2.1 per cent of Bull's 
shares, has indicated it is 
reluctant to raise its invest- 
ment 

Mr Van Miert said he was satis- 
fied Bull passed five key tests on 
which he based his decision to 
allow the aid to be paid. These 
were that: the company must be 
restored to profitability within a 
“reasonable” time; measures 
most be taken to offset any 
adverse effects on competitors; 
the aid most be kept to the 
strict minimum needed; the 
restructuring plan must be imple- 
mented in full; and there must 
be detailed reports to monitor 
progress. 

According to Bull, the restruct- 
uring measures, which include 
job cuts, the reduction of its 
Paris sites and the reorganisation 
of the company into separate 
profit centres, have already 
yielded results. In the first half of 
the year, losses were reduced to 
FFr843m compared with 
FFrl.9Sbn for the first half of 
1993. 




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- .-my FINANCIAL TIMES LIMITED 1 994 No 32.496 Week No 41 


LONDON - PARIS • FRANKFURT - NEW YORK - TOKYO 


Kur&nmv.jtyml, !>rjLuM, <fri nljtiuirLm Wnumlrin 











FINANCIAL TIMES THURSDAY OCTOBER 13 1994 


NEWS: EUROPE 


Pressure grows on Brussels for tighter state aid rules 

In the wake of the Bull case, the European Commission faces criticism for being too soft on subsidies, reports Emma Tucker 

ments covering sectors such as textiles, 


T he European Commission's decision 
to allow the French government to 
pay Bull, the ailing French com- 
puter group, FFrlibn (£i.32bn) of state aid, 
will again put Brussels' record on ensur- 
ing fair competition under a critical spot- 
light 

It comes only three months after the 
commission allowed a vast capital injec- 
tion of FFrZQbn of state funds to the bank- 
rupt Air France and, while the Commis- 
sion argues that this latest case is 
different, this is bound to fuel criticism of 
Brussels' approach to state aids. 

Mr Karel Van Miert, the competition 
commissioner, has always argued - realis- 
tically - that decisions on state aid cannot 
be taken in a vacuum. He takes the view 
that political and social factors have to be 
considered, as well as the likelihood of 
returning an enterprise to viability, which 


be believes to be high in the case of Bull 

But there is concern among some in the 
commission, and certainly within industry 
that the commission is treading too softly, 
and that member states have become 
adept at getting their own way. 

Following the succession of high-profile 
airline cases over the summer - handled 
by the transport directorate and not Mr 
Van Miert's competition directorate - 
pressure Is growing for a change in the 
procedures for assessing state aids. 

"At the moment we have a very heavy 
a dminis trative system but with results 
that are not very convincing," said a com- 
mission official, industry is complaining 
about the lack of neutrality and transpar- 
ency. the length of procedures, and the 
distorting effects of sectoral agreements 
covering areas such as textiles, synthetic 
fibres and cars.” 


A paper produced last month by the 
commission's industry directorate identi- 
fied the need to tighten up procedures. 

"Since the removal of internal frontiers 
(within the European Union}, the risks of 
dominant positions and the distortions 
caused by state aid - which remain too 
great - are growing appreciably,” it said. 

Cme of the main problems identified in 
the paper was the need to make existing 
procedures more efficient and more trans- 
parent 

This theme was also taken up by the 
Confederation of British Industry in a 
pamphlet entitled Controlling State Aid. It 
argued that deadlines need to be set for 
the formal examination of state aid cases. 

"The five years that passed before action 
was taken and decisions were readied in 
the Ilva Italian steel case was quite unac- 
ceptable," it says. 


It also argued that recovery procedures 
for illegal aid needed to be tightened, cit- 
ing the case of a Belgian textiles company 
which, eight years after a state aid pay- 
ment had been found illegal by the Euro- 
pean court of justice, had still not paid 
back the money. 

On transparency, the CBI points out 
that at present it is difficult for interested 
third parties to contribute information or 
views at an early stage when the commis- 
sion is considering whether there is in 
principle a case to answer. 

The industry directorate says the same: 
"Third parties are not as involved in pro- 
cedures as they are. for example, in 
merger cases. There should be more con- 
sultation.” 

Mr Nick Forwood QC. who specialises in 
state aid cases says: “Procedurally. it is 
still very much in the hands of the com- 


missioners to decide what is in the inter 
ests of the community. The majority tend 
to perceive cases not in terms of competi- 
tion. but more in terms of specific inter- 
ests.” t . , 

The second problem is that regional 
exemptions and industry agreements 
allow some state aid to go unchallenged. 

"The instruction of state aid files is not 
neutral because you have a combination of 
sectoral and horizontal frameworks which 
lead to different treatments for different 
industries without any real justification,” 
said an official from the competition direc- 
torate. 

“It seems to me that big investments 
made in regions where the levels of sub- 
sidy allowed are very high, have probably 
resulted in distortions of competition,'’ 
said another official. 

Similarly distorting are industry agree- 


synthetic fibres and cars Introduced ongi- 
nally for economic or serious structural 
reasons. "These are the result of special 
situations," said a commission official 
"but they then seem to be kept for ever.” 

All these points are currently the sub- 
iect of discussion in the industry and com- 
petition directorates but it is unclear yet 
whether new proposals will be put to the 
commission. 

However, there Is no denying that gov- 
ernments are getting better at presenting 
their cases on state aid in a way that 
allows them to “get around" Brussels. 
With the rate of negative decisions on 
state aids last year only 1.05 per cent, 
there is scope for the commission to 
tighten procedures and close some of the 
loopholes. 


WEST EUROPEAN NEW CAR REGISTRATIONS 
January -September 1994 



Volume 

(Units) 

Volume 

Change^ 

Share ft) Share ft) 
Jan-Sepf 94 Jan-Sopf S3 

TOTAL MARKET 

9,252,000 

+5.0 

100.0 

iron 

MANUFACTURERS: 

Volkswagen group 

1,474,900 

*2.7 

1519 

169 

- Volkswagen 

953,600 

+0.4 

10.3 

10.8 

- Seat 

240,700 

+17.4 

2.6 

2.3 

- Audi 

235.1 DO 

-2.5 

2.5 

27 

- Skoda - 

45.400 

+ 10.B 

as 

0.5 

General Motors* 

1,196,000 

+3.7 

129 

121 

- OpdA/auxhaD 

1,141,900 

+322 

129 

126 

- Saab“ 

38.800 

+27.7 

0.4 

0.3 

PSA Peugeot Citroen 

1,180,800 

+114) 

129 

121 

- Peugeot 

710,300 

+9.7 

7.7 

79 

- Citroen 

470.500 

+13.0 

5.1 

4,7 

Font group# 

1.114,100 

+7.2 

129 

119 

- Ford 

1.104.300 

+7.2 

12.0 

11.7 

- Jaguar 

r.soo 

-10.4 

0.1 

0.1 

Renault 

1,000,700 

+7.9 

10.8 

105 

Fiat groups* 

979,400 

+3.7 

ias 

10.7 

- Fiat 

768,100 

+8.3 

8.3 

8.0 

- Lancia 

123.800 

-6.7 

1.3 

1.5 

- AHa Romeo 

77.600 

-15.9 

aa 

1.0 

BMW groin 

607,000 

+84) 

69 

6.4 

- Rover 

305.900 

+9.0 

3.3 

3 2 

- BMW 

301,100 

+4.8 

3.3 

39 

Mercedes-Benz 

335.500 

+29.3 

3.6 

2.9 

Nissan 

306.200 

-3.3 

39 

3.8 

Toyota 

244200 

-4.2 

2.6 

2.9 

Volvo 

155.200 

+20.0 

1.7 

1.5 

Mazda 

141.000 

-9.9 

19 

19 

Honda 

133.900 

+5.4 

1.4 

1.4 

Mitsubishi 

92,500 

—18.0 

1.0 

19 

Suzuki 

59.000 

-22-3 

0.6 

09 

Total Japanese 

1,028^300 

-7.2 

11.1 

126 

MARKETS: 

Germany 

2.462,400 

-a a 

26.6 

202 

United Kfaigdom 

1,588,300 

+9.5 

172 

16.5 

France 

1.434,200 

+14.4 

15.5 

142 

Italy 

1,271.400 

-7.5 

13.7 

159 

Spain 

682,800 

+21.0 

7.4 

6.4 


•VWhoUt 31 par cent and management carnal d SAada. 

Unctuous an imported Uem US and scrtJ in weMm Europa. 

“GM natch SO par can and manugamant control of Saib AufomoMn. 

** pnup ncbdte Lands. Alta Romeo, tmsxno. Farm! ana UasarmL 

Souc* : ACEA lEmpaan AiAtmaUto ManJoauran Anocb tun) aaOtm 1 Rgun an rgundad. 

W Europe car 
sales up 3.8% 
in September 


By Kevin Done, 

Motor Industry Correspondent 

West European new car sales 
rose by an estimated 3.8 per 
cent in September to 868.200 
from 838,200 a year ago, accord- 
ing to provisional figures from 
Acea, the European Automo- 
bile Manufacturers Associa- 
tion. released yesterday. 

The pace of the recovery has 
slowed in the past three 
months chiefly because of the 
weakness of the German new 
car market, where sales are 
estimated to have fallen last 
month by 4 per cent year-on- 
year to 248,400. 

In the first nine months new 
car sales in west Europe 
have risen by 5 per cent 
year-on-year to 9.25m, a modest 
recovers- following a decline of 
more than 15 per cent in 
1993. 

Sales have risen strongly in 
France. Spain and Scandina- 
via. but have declined in both 
Germany and Italy. New car 
sales in September declined In 
seven of 17 markets across 
west Europe compared with 
falls in five markets in the first 
nine months. 

Most significantly, a change 
in the system for reporting 
new car sales in Italy has 
revealed that previous Italian 
data had exaggerated the size 
of the domestic market by 
around 200.000 cars a year. 

The previous use of figures 
for wholesale deliveries to deal- 
ers rather than domestic regis- 


tration figures has distorted 
the size of the market by 
including the high, volume of 
cars being re-exported from 
Italy to neighbouring coun- 
tries. 

Car prices in Italy are among 
the lowest in Europe following 
the devaluation of the lira. 

The biggest impact of the 
new reporting system, which 
uses registration figures from 
the Italian Ministry of Trans- 
port, is on the Fiat group. 

The Italian carmaker, which 
controls around 45 per cent of 
the Italian market, has now 
been relegated to sixth place in 
the west European market 
behind Renault or France. 

At the end of the 1980s Fiat 
was challenging the Volkswa- 
gen group for leadership of the 
west European market, but the 
sharp decline in its fortunes 
along with the fall in the Ital- 
ian market mean it now has 
the smallest market share of 
any of the big six carmakers. 

According to the revised 
Acea figures its share slipped 
to only 10.8 per cent in the first 
nine months compared with 
the 10.8 per cent of Renault in 
fifth place and the 15 .9 per cent 
of the VW group, the leader of 
the west European market. 



Moscow’s star 
wanes along 
with the rouble 

John Lloyd measures reaction in 
Vladivostock to the currency's fall 


Fyodorov in London yesterday: “drifting mediocrity” from Yeltsin 


Trevor HunptvMM 


Economic reform from Yeltsin 
needs a miracle, says Fyodorov 


By Cfirystia Freeland 

Mr Boris Fyodorov, a former 
minister of finance and a 
long-standing critic of the pres- 
ent administration, yesterday 
said that “without some sort of 
miracle" President Boris Yelt- 
sin's government was unlikely 
to undertake comprehensive 
economic reforms. 

Some Russian ministers have 
suggested that this week’s dra- 
matic collapse of the rouble 
could be the prelude to a stabi- 
lisation programme, but Mr 
Fyodorov, a leading proponent 
of market reforms before he 
left the cabinet, disagreed. 

“I think with the current 
government all we can expect 
is a scenario of drifting medioc- 
rity," Mr Fyodorov said. “I 
doubt whether there will be 
real reforms, whether real sta- 
bilisation will begin." 

On these grounds, Mr Fyodo- 
rov, who has served as Russian 
representative to the World 
Bank, urged western countries 


and western financial institu- 
tions not to extend further 
credits to Russia. 

“Who needs the money?" Mr 
Fyodorov, one of Russia's most 
respected economists, asked. 
"We have more money in Rus- 
sia than in some western coun- 
tries." Arguing that Russia is 
hobbled by a lack of political 
will rather than of capital Mr 
Fyodorov said that- by giving 
financial assistance to Mr Yelt- 
sin's government the west was 
repeating the mistakes it made 
in its dealings with the Gorba- 
chev administration. 

"It Is like the late Gorbachev 
period, when everyone was 
throwing money at him to no 
purpose," Mr Fyodorov said. 
“You are supporting a person 
and forgetting the country." 

As a long-time backer of rad- 
ical market reforms, Mr Fyodo- 
rov has been a frequent critic 
of Mr Viktor Gerashchenko, 
central bank governor, whom 
President Boris Yeltsin sought 
to oust yesterday. But Mr Fyo- 


dorov dismissed Mr Yeltsin's 
move as “a search for scape- 
goats". 

“The problem is hot with 
Gerashchenko or with Dubinin 
[Mr Sergei Dubinin, the acting 
minister of finance, who was 
sacked yesterday]," Mr Fyodo- 
rov said. “The question is 
whether there will be a recon- 
sideration of the government’s 
policies. 

“I think Mr Gerashchenko is 
the best survivor, I don't 
believe he will be pushed out,” 
Mr Fyodorov said. 

While he is dubious about 
the chances the current gov- 
ernment will be converted to 
radical market reforms, he sus- 
pects members of the adminis- 
tration have learned the princi- 
ple of taking cars of oneself. 

Like other senior Russian 
politicians. Mr Fyodorov sus- 
pects significant insider trad- 
ing took place when the rouble 
collapsed on Tuesday. “Some 
people may have been trying to 
help the budget" he said. “But 


other people were trying to 
help themselves ... I think 
many people may be p lanning 
to leave the government soon." 

Mr Fyodorov also rejected 
the argument that the collapse 
in the rouble may help the 
economy by making Russian 
exports more competitive. 
“The rouble is undervalued 
now, and it was undervalued 
two weeks ago (before the 
recent collapse)," he said. "Its 
ridiculous when you have the 
GDP of a country the size of 
Russia that looks like the bal- 
ance sheet of Barclays or Nat- 
west." 

But, notwithstanding his pes- 
simistic outlook on Russian 
central government policy, Mr 
Fyodorov was confident that 
foreign investment would con- 
tinue to flow into Russian 
industries with export capac- 
ity. Foreign investors were 
interested primarily in natural 
resources and in infrastruc- 
ture, such as telecommunica- 
tions. 


The dollar was selling at 4,000 
roubles in Vladivostok's 
banks yesterday and it cost 
Rbs4^00 to buy. At one point 
it had a street price of 7.000. as 
rumours spread that Dialog 
Bank in Moscow had pushed 
the rate down to over 6,000. but 
there were few takers. 

Russia's Far Eastern port, 
semi-detached from a capital 
eight time zones away across 
the Siberian tundra, reacts 
more nervously even than 
Moscow to falls in the 
currency. Its surface glitter is 
buoyed by trade - over 80 per 
cent of the cars are 
secondhand Japanese imports 
and the dowdy shops offer a 
profusion of Japanese, South 
Korean, Australian and US 
goods. 

Mr Sergei Frank, vice 
president of the 160-vessel Far 
East Shipping Company - the 
star stock on Vladivostok's 
active little stock exchange - 
says: "It's good and bad. Good 
because we are paid largely in 
dollars and our costs are 
largely in roubles, so we have 
just had a 30 per cent cut in 
our cost structure. But bad 
because it will hit imports and 
thus our trade: and it means 
continuing instability. We bad 
forecast the rate of 
Rbs3.000-3.500 to the dollar by 
the end of the year, based on 
the ministry of the economy 
forecasts. We pay Rbs6bn a 
year in taxes for this for the 
politicians in Moscow not 
doing their job." 

Other comments reflected 
this ambiguous reaction. Mr 
Andrei Malyutin, deputy head 
of the stock exchange, said: 
“This will be good for the 
exchange, especially for 
foreign investors. It will mean 
stocks here are even cheaper." 
Mr Andrew Fox, a Briton 
whose Pacific Gemini company 
is the sole foreign company 


-- 



CHINA 


allowed to trade on 
Vladivostock's developing 
market, said: “A New York 
investor described the Russian 
market now as a ‘lolly grab'. 
This just Increases the size of 
the lolly grab." 

However, Mr Nikolai 
Pimenov, the first deputy 
governor of the region^ 
responsible for its economy - 
and thus for the economic 
well-being of the more than 
three million citizens - was 
more gloomy. “It’s just awfuL 
AU imports will cost 30 per 
cent more and our standard of 
living depends so much on 
imports because people don’t 
buy Russian goods. A 
secondhand Japanese car is a 
third the price of a Russian 
Lada and there's no 
comparison in quality. Besides 
this must mean a rise in 
inflation." 

The Far Eastern region has 
been flirting with thoughts of 
becoming an autonomous 
republic and. though serious 
opinion discounts the 
possibility, Moscow’s failure to 
hold the currency played into 
the grievances of a peripheral 
nation which is testing its 
commercial strength. 


German dentists bare their teeth in funding row 


By Michael Undwnann in Bonn 

Germany's dentists yesterday 
threatened to stop treating rou- 
tine cases in a row over fund- 
ing. 

The KZBV, an organisation 
which represents two-thirds of 
Germany's 70,000 dentists, said 
Its members would only handle 
emergencies because they had 
treated more patients than 
expected this year and would 
probably exceed their 
DMiQ.Sbn budget for 1994. 

So far only patients have 


been turned away but the news 
still made headlines in most 
newspapers, days before the 
Germans elect a new govern- 
ment 

However, whatever political 
capital the dentists were hop- 
ing to make may have mis- 
fired. 

Politicians of all persuasions 
lambasted them for insensitiv- 
ity. “The dentists seem to 
think that the last week before 
the election is a good point to 
try and blackmail politicians,” 
said Ms Annelies Klug, the 


health ministry spokeswoman. 
“It seems they have been 
rather mistaken." 

The dentists' threats are 
another in a long line of out- 
bursts from various medical 
lobbies beginning to feel the 
pinch of the German health 
reforms. 

The system has become 
world famous for its generos- 
ity. Everyone who is insured 
is, for instance, entitled to a 
spa trip, almost free of charge, 
once every three years. 

But the system also caters 


for more far-fetched wishes. 
There is even provision for 
women who find their chest 
size disturbs them. If they can 
produce a letter from a psy- 
chologist which provides evi- 
dence of psychological distress 
due to breast size then what- 
ever treatment is necessary 
can be charged to the Kranken- 
kassen, or health insurance 
funds. 

"People have ideas in this 
country about what they are 
entitled to which are simply 
too grandiose." said Dr Jdrgen 


Simonsmeier, a dentist at the 
Medeco clinic in Bonn. 
“They've simply been incor- 
rectly educated." 

Now, as the country pulls 
out of its worst post-war reces- 
sion there is a growing realisa- 
tion that health insurance on 
this scale can no longer be 
financed. 

The dental budget was one of 
the first symptoms of this new 
thi nk ing, introduced for the 
first time last year when it 
became clear that the system 
was heading for a DMIObn 


(£4bn) deficit, according to Ms 
Hug. 

However, many dentists 
warned yesterday they would 
be unable to work with bud- 
gets in the long run and that 
patients would simply have to 
pay for anything qd top of the 
most basic treatment. “The* 
all-or-nothing principle on 
which health insurance is 
based in this country is going 
to have to be reviewed." said 
Mr Christof Schumacher, the 
KZBV spokesman. 


Voters find their imaginations taxed by spending plans 


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By Quentin Peel In Bonn 

The benighted 
German tax- 
j payers have 
good reason to 
feel confused. 
Every party 
competing for 
their votes in 
the general 
v.;.«s7 election next 
Sunday is ada- 
mant that their 
welfare is of 
paramount 
importance. 
Yet the one 
certainty feeing every taxpayer 
is that next year their bills will 
rise. 

If the present government is 
reelected, they know they will 
have to pay a swingeing “soli- 
darity surcharge" of an extra 
7.5 per cent on income tax to 
finance the soaring costs of 
German unification and the 
resulting debt burden. They 
have already had to pay a 
sharp increase in oil taxes this 
year, and there will be another 
increase in insurance taxation. 


GERMAN 

ELECTIONS 

October 16 


property taxation and a new 
social security charge to pay 
for nursing care insurance 
from January. 

In the past four years, since 
the general election in 1990, 
Chancellor Helmut Kohl’s lib- 
eral-conservative coalition has 
raised the revenues from taxa- 
tion and social insurance by 
DM116bn t£47.5bn) to a record 

DWGObn. 

The exchequer has been hit 
not only by the costs of unifi- 
cation, with massive transfers 
from west to east of around 
DMl50bn a year to pay for 
unemployment benefit, pen- 
sions, subsidising local govern- 
ment. and a huge investment 
in new infrastructure. Its tax 
revenues have been simulta- 
neously squeezed by the sharp 
recession in the German econ- 
omy over the past two years. 
And it now faces an accumu- 
lated debt burden which is 
absorbing 24 per cent of avail- 
able tax revenues each year in 
interest payments alone. 

The resulting series of sharp 
tax rises is what Mr Oskar 
Lafbntaine, the finance-minis- 


ter-in-waiting of Germany's 
opposi tion Social Democratic 
party (SPD), describes as "the 
great tax lie". For Mr Kohl and 
bis Christian Democratic 
Union (CDU) had promised 
that German unification could 
be financed without any tax 
increases at all- 

Mr Lafontaine and his party 
leader, Mr Rudolf Scharping, 
have deliberately raised the 
issue of taxation to tbe top of 
the election agenda in an effort 
to persuade the voters that 
they will be more responsible 
with the public purse than Mr 
Kohl and his finance minister, 
Mr Theo WaigeL 

They describe their own 
plans modestly as “the biggest 
tax-cutting programme for nor- 
mal income-earners and fami- 
lies in the history of the fed- 
eral republic". 

Their aim is to shift the tax 
burden from the lower-paid to 
the wealthy, without any over- 
all increase in the tax take of 
the state. They would scrap the 
plans for a 7.5 per cent “soli- 
darity surcharge" and replace 
it with a 10 per cent charge on 



Finance minister Theo Waigel portrayed as Pmocchio with his 
campaign pledge of “No tax increases' 


the top one in five income- 
earners. 

They would raise monthly 
cash payments for each child 
in a family to DM250, Instead 
of the present system of tax 
allowances. And from 1996, 
they would raise the income 


Girfoon brJTonwcex 

tax threshold to a new “subsis- 
tence level" of DM13,000. 

For a .party traditionally 
associated with high taxation, 
and high welfare payments, it 
is a gamble. And the Indica- 
tions are that in spite of the 
government’s sorry record, it 


may not pay off. Both sides are 
adamant that the other's fig- 
ures do not add up. They are 
probably both right. 

For a start, Mr Lafontaine 
and his allies accuse Mr Waigel 
of cooking his budget books, 
with secret plans for further 
increases in value-added tax 
and oil tax in the pipeline. The 
government has promised to 
take further action next year 
to reduce taxation on the busi- 
ness sector, as part of its drive 
to make German industry 
more internationally competi- 
tive. But Mr Waigel refuses to 
say how he .will finance the 
new deal. He simply denies 
that he has any plans to 
increase VAT. 

“We fear that the facts are so 
.bleak, the government would 
rather say nothing until the 
election is over," says Mr Heri- 
bert Juchems, chief executive 
of the association of indepen- 
dent entrepreneurs. 

As for the opposition, Mr 
Waigel maintains that in repla- 
cing the solidarity surchaige 
alone, Mr Lafontaine will be 
creating a financing gap of 


DM7bn. If he is to produce the 
same revenue as the govern- 
ment's 7.5 per cent tax 
increase, he will have to levy 
his 10 per cent charge on all 
incomes over DM44,000 a year, 
the finance ministry main* 
tains. And that means hitting a 
large number of average 
income-earners, rather than 
simply the relatively .wealthy. 

The irony is that in seeking 
to be as precise as possible fa 
spelling out his tax plans, and 
by insisting that he will no* 
raise the government’s net bor- 
rowing requirement, Mr Lafon* 
table appears to have frigW- 
ened off as many voters as hfl 
has attracted. Both sides know 
that the pressures on the ptfa 1 
lie purse can only get worse fa 
the coming years. 

Social spending in particular 
is in urgent need of reform 
because of the growing num- i 
bers of old people and the 
young, in relation to the work- 
ing population. That will be 
the greatest challenge for the 
next German government. The 
taxpayer only knows it will 
cost more before it costs less. 







ns r fl ' 


> 


I 


EUROPE AN NEWS DIGEST 

Delors refuses 
to reveal plans 

Mr Jacques Delors, the outgoing European Commission 
president, said m an interview yesterday with the newspaper. 
Liberation, that he would make no decision on whether to run 
tor the French presidency until his Brussels mandate ended on 
January 6. 

This announcement came as an opinon poll for the first time 
put him level with the prime minister, Mr Edouard Balladur, 
in the crucial runoff vote for the presidency, while easily 
outdistancing the other Gaullist contender, Mr Jacques Chi- 
rac. The Socialist party is holding a full party congress next 
month and then a mini-convention in December specifically to 
discuss what sort of platform it would like a candidate to run 
on in May, However, few in the Socialist party would 
if Mr Delors were subsequently to bend that platform to suit 
himself. In the current presidential “phoney war" no main- 
stream contender wants to make his candidacy formal and 
thus open to attack from all. rivals. Mr Delors’ asset at the 
moment is the cast-iron pretext for silence that his Commis- 
sion presidency gives -him until January. David Buchan, Paris 

Russian defence budget $79bn 

Russian defence spending is much higher in real terms than 
previously estimated, according to new calculations released 
yesterday by the International Institute of Strategic Studies. 
The 1994-95 edition of The Military Balance, the London-based 
think-tank's authoritative annual survey of the ar me d forces 
and weapons throughout the world, asserts that "Russian 
defence budgets have been effectively static in real terms" 
since 2992, "with perhaps a small increase In 1994". This 
contradicts assessments of real decline in defence budgets 
based on the evidence of GDP decline in official statistics - 
estimates which have been "cautiously supported” by the 
International Monetary Fund. The institute has roughly dou- 
bled its previous estimates tor the 1992 and 1993 Russian 
defence budgets to $74.6bn (£47J2bn) and $76.6bn, from $39.7hn 
and $29.1bn respectively, by using a new measure of purchas- 
ing-power parity. For 1994, it gives a figure of $79.0bn. adding 
that "since the defence budget does not cover all military- 
related activities, this estimate represents the low end of a 
range of posable expenditures". But even this low estimate 
makes Russian military expenditure In real terms substan- 
tially higher than that of any country apart from the US", 
whose 1994 defence outlay is, however, more than three times 
as high ($280bn). Edward Mortimer, London 

Berlin-Moscow road-rail deal 

Work on upgrading road and rail links along a 1,800km corri- 
dor between Berlin and Moscow is to be co-ordinated by the 
European Commission and the tour governments involved 
under an agreement reached this week. Delegations from 
Germany, Poland, Belarus. Russia and the Commission have 
signed a memorandum of understanding intended to. ensure 
that European Union support is properly: targeted and to 
encourage private sector involvement. The proposal to 
improve roads and railways and build better border crossing 
points could cost between Ecu5.4bn (£4JJhn) and Ecu9bn and 
has already attracted considerable interest from banks, the 
Commission said. Priority projects in the scheme are road and 
rail links between the German border and Warsaw, the rail- 
way between Warsaw and t be Polish/Belarus border and the 
border crossing between Poland and Belarus, where the rail- 
way guage changes and long delays occur. Work has already 
begun on some parts of the corridor, bat some parts of the 
scheme will not be completed before 2010. Charles Batchelor. 
Transport Correspondent 

Brussels seeks to validate pact 

The European Commission has asked the Council of Ministers 
to give its approval to a three-year-old anti-trust agreement 
between the EU and the US government, after the European 
Court of Justice ruled it was void. The agreement, designed to 
promote co-operation between competition authorities in the 
US and the EU, was recently used to modify certain practices 
by the US computer group, Microsoft, after both parties agreed 
that these violated competition law. Originally concluded by 
the Commission, the court ruled in the summer that the 
agreement was void, as it should have been concluded by the 
Council of Ministers. France, backed by Spain and the Nether- 
lands, launched the court action, arguing that for an interna- 
tional agreement signed with another government it was not 
the Commission's place to represent the EU, but rather a 
matter for the member states. The European Court is also 
considering whether the Commission or member states have 
the power to negotiate in certain trade areas - such as 
transport, services, and intellectual property rights. The out- 
come of this case should allow EU ratification of the Uruguay 
Round trade treaty before the end of the year. Emma Tucker. 
Brussels 

European aeronautics accord 

Seven European aeronautics research establishments have 
signed an association agreement to strengthen Europe’s aero- 
nautical technology base, the European Commission 
announced. The agreement contains an action plan for either 
civil or military uses, aiming to develop and execute joint 
research programmes and technology acquisition projects, to 
rationalise resources by co-ordinating use and investment in 
major facilities for common European needs, and to exchange 
qualified personnel, it said. Mr Antonio Ruberti, research and 
development commissioner, said the establishments should 
now join in aeronautical research supported by EU technology 
grants. The seven are Centro Iiaiiano Ricerche Aerospaziali of 
Italy, Deutsche Forschungsanstalt for Luftund Ra umfahr t of 
Germany. Defence Research Agency of the UK, Flygtekm&ka 
Forsoksanstalten of Sweden, Institute National de Tecnica 
Aerospacial of Spain, Nationaal Luchten Ruimtevaartlaboralo- 
rium of the Netherlands, and Office National d ’Etudes et de 
Recherches A&rospatiales of France. AFX Brussels 

ECONOMIC WATCH 


Itajyjs^grpwth exceeds forecasts 


htiy real GDP growth 


nnual % chango 

3 - • 



94 


The Italian economy grew at 
2 J& per cent during the second 
quarter, confirming the 
strength of its broad-based 
recovery. The figures, pub- 
lished yesterday by Istat, the 
official statistics institute, 
compare with a first quarter 
GDP growth of only US per 
cent. The change of pace 
between the two quarters is 
the fastest in the EU, and sug- 
gests the macroeconomic pro- 
jections in the document 
accompanying the 1995 bud- 
get are understated. The doc- 
ument forecasts growth will 
reach 2.7 per cent next year 
and 2.8 per cent in 1997. It " 


1992 93 

urea DatsaJream . 

w counting on 3.5 per cent inflation this year and 2.5 per 
ot next vear, but tho trend of August and September prices 
ikes this look unrealistic. The accelerated growth ts_-attn- 
ted to the return of domestic demand. Since late last year 
p recovery has been exclusively export driven. Robert Gta- 

^conttaued weakness of French inflationary pressures 
» demonstrated yesterday by the annoimcement tlmt the 
nualised rate of inflation in September slipped to IB per 
SfcSuad with 1.7 per cent to August The figureswere 
SdTaO-3 per cent increase in consumer nMBSiJto 
r compared with a 0.4 per rent increase to the same month 
A veatThe French government is forecasting an inflation 
& ofabout 1.8 per cent by the end of this year and a rate of 
i cent in 1995. John Riddinff. Pons 


Serbs await ‘Slobo’ v ‘Rado’ contest 

Serbia’s President Milosevic is gambling on an early victory, write Bruce Clark and James Whittington 



H alf a century ago. the 
founder of modem 
Yugoslavia, Marshal 
Tito, astonished the world by 
breaking with Moscow and 
turning the apparatus of Sta- 
linist repression against his 
comrades who remained loyal 
to the Soviet dictator. Now Ser- 
bian President Slobodan Milos- 
evic, the most formidable poli- 
tician to emerge from the ruins 
of Tito’s state, is attempting a 
political conjuring trick that is 
equally audacious. 

Having built a large follow- 
ing, and an iron grip on the 
reins of government, by 
playing the nationalist card, 
Mr Milosevic has changed tack 
and is now staking his future 
on reconciliation with the 
other ex- Yugoslav republics 
and the world. 

The president, who once 
seemed to enjoy the role of 
international pariah, is now 
basking in the approval he 
won by accepting a partition 
plan for Bosnia and severing 
most links with his kinsmen 
there. Pro-Milosevic politicians 
and journalists who formerly 
trumpeted the slogan of a 
Greater Serbia have adjusted 
rapidly to the new dogma - it 
was never feasible to unite all 
Serbs to a single state. 

Professor Mibajlo Narkovic, 
an ideologue of the president's 
nationalist movement, now 


says it was "too optimistic" 
ever to suppose that the Serb 
minorities in the other Yugo- 
slav republics could assert the 
rights to self-determination. 

In the new atmosphere, few 
would be surprised if the presi- 
dent were to recognise the gov- 
ernment of Croatia - even, at 
the price of smTenderhig some 
of the Croat territories now 
under Serb control. 

The president’s transforma- 
tion has hfm on a colli- 
sion course with the Serbs' 
other political strongman: Mr 
Radovan Karadzic, the Bos- 
nian-Serb leader, who opposes 
the peace plan and has virtu- 
ally been abandoned - at least 
for now - by his erstwhile pro- 
tectors in Belgrade. 

The immediate cause of this 
rift is the plan, which would 
force the Bosnlan-Serbs to sur- 
render a third of the territory 
they control; but there is also 
personal antipathy between 
the two men. and rivalry for 
moral leadership of the Serbs. 

Mr Karadzic, who was por- 
trayed previously in Belgrade 
as the defender of an embattled 
community, has been frozen 
out by the city's officially- 
guided, pro-Milosevic merHa. 

One of Belgrade's toughest 
nationalist politicians, Mr 
Vojislav Shefhel, has been 
arrested, and there have been 
several compulsory retire- 


ments in the upper ranks of 
the army, where senior officers 
have close links with Boanian- 
Serb commanders. 

All these moves should shore 
up Mr Milosevic in his new 
role of conciliator. But he Is 

Still fairing a big gamMft 


If he succeeds, he could be 
held up as the man who guided 
the Serbs back into the Euro- 
pean mainstream. If he fan*, 
he could be branded as a cynic 
who sacrificed his fellow Serbs 
in Bosnia and Croatia. 

In Pale, the straggling village 


man Serb republic, there is bit- 
terness and disbelief at the 
community's apparent aban- 
donment by Belgrade. So for, 
there is a reluctance among 
Pale’s residents to blame Mr 
Milosevic personally. 

"The Americans were put- 
ting pressure on Milosevic and 
he could not continue the 
back-up,” says Mr S la vis ha 
Rakovic. one of the 250 govern- 
ment officials who rub shoul- 
ders with soldiers, peasants 
and form animals on the nar- 
row streets of Pale. 

Officially, the Bosnian Serbs 
are preparing a self-sufficiency 
plan which will enable them to 
fight without Belgrade’s help. 
But privately, they acknowl- 
edge this is impossible. “Let’s 
be honest, we can't survive 
without Serbia,” said one offi- 
cial in Pale. 

Since Mr Milosevic closed 
the border with Bosnia, the cri- 
sis in Bosnian-Serb territory 
has risen, and the shops look 
bare. There is only a handful of 
vehicles cm the road, and ironi- 
cally, people rely on Croat 
smugglers for fuel Yet so for, 
the plight of the Bosnian Serbs 
is not doing much damage to 
the standing of Mr Milosevic, 
because his control of the Bel- 
grade media helps keep this 
Issue out of the public eye. 

Mr Milosevic is also widely 


believed to be meddling in the 
politics of the Serb community 
in Croatia, hoping to remove 
obstacles to a reconciliation 
with Zagreb. 

One of the trump cards of Mr 
Karadzic is that he controls 
supply Unes between Belgrade 
and many Serb- controlled 
towns in Croatia. But he loses 
this advantage if Mr Milosevic 
makes peace with Zagreb. 

Critics of Mr Milosevic insist 
that he will pay a heavy price 
for abandoning his kinsmen in 
Bosnia and Croatia. “Milosevic 
does not have support for his 
new policy. ..most people are 
against the embargo on the 
Bosnian-SerbsT says Mr Vajis- 
rav Kostunica, a nationalist 
politician in Belgrade. He sees 
the church and the army as 
forces of resistance to the new 
policies of Mr Milosevic, whose 
power base is strongest in the 
police. 

Mr Kostunica warned that 
the army already had reason 
not to be satisfied, including 
the fact that the police had 
been treated better than them. 

He thinks Mr Milosevic is 
afraid to call an election. Yet 
ultimately, the president’s best 
hopes may lie in the deferen- 
tial attitude of many Serbian 
voters, who have succumbed to 
his propaganda before and may 
be persuaded that whatever 
“Slobo" says, goes. 




at 


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4 


FINANCIAL TIMES 


THURSDAY OCTOBER IB 1994 


★ 

NEWS; INTERNATIONAL 


Israeli kidnap 
puts peace 
in jeopardy 


By a Correspondent 
in Jerusalem 

The delicate process of 
IsraeU-Palestinian reconcilia- 
tion was feeing its gravest test 
last night, in a crisis over the 
kidnapping by Hamas extrem- 
ists Of an Israeli soldier. 

Israel's prime minister, Mr 
Yitzhak Rabin, made clear that 
he was holding Mr Yassir Ara- 
fat the PLO chairman, person- 
ally responsible for the fete of 
19-year-old Nachshon Waxman. 
The soldier was kidnapped 
close to Israel's Ben-Gurion air- 
port outside Tel Aviv on Sun- 
day. and is believed by Israel 
to be held in the Palestinian 
autonomous area of the Gaza 
Strip. 

The kidnappers, who 
announced on Tuesday they 
were holding Mr Waxman. 
have said they will kill him 
tomorrow unless Israel 
releases dozens of Palestinian 
prisoners, including the Hamas 
leader Sheikh Ahmad Yassin. 

The crisis marks a moment 
of truth in the Israel-Palestin- 
ian autonomy process, with 
Hamas clearly seeking to 
derail the peace accords, 
undermine Mr Arafet's author- 
ity in the occupied territories, 
and provoke greater opposition 


inside Israel to the moderate 
Rabin government. 

Adamantly opposed to any 
accommodation with Israel, 
Hamas already appears to have 
achieved at least some of its 
objectives. 

Israel has suspended its 
negotiations in Cairo with the 
PLO on the next stages of the 
autonomy process, and fuelled 
further discontent among 
Gaza's Palestinian labour force 
by clamping a closure order on 
the Strip that prevents workers 
going to their jobs in Israel 

Mr Rabin arid Mr Arafat are 
reportedly to be named as the 
joint recipients of this year's 
Nobel Peace Prize tomorrow, in 
recognition of their efforts to 
resolve the decades-old Israeli- 
Palestiman conflict- 

Mr Rabin spoke several 
times by telephone to Mr Ara- 
fat yesterday, noting that he 
considered the PLO’s leader's 
Palestinian self-governing 
authority in Gaza to be respon- 
sible for the safe return of the 
soldier, urging him to institute 
searches, and telling him that 
he regarded the crisis as a 
“true test" of Israeli-Palestin- 
ian relations. 

Israeli ministers indicated 
that, were the crisis to end in 
Mr Waxman's death, there 



could be serious consequences 
far the future of the autonomy 
process. “If the autonomous 
areas turn into a shelter for 
murders” said Mr Amnon Rub- 
instein, education minister, 
“Israel c ann ot be expected to 
expand those areas." 

Mr Arafat condemned the 
kidnapping and held a rare 
meeting with Hamas leaders. 
But several of his spokesmen 
issued statements denying that 
the soldier was being held in 
Gaza. 

Responsibility for Mr Wax- 
man's kidnapping has been 
claimed by the military wing of 
Hamas, which also took credit 
for a shooting spree in central 


Jerusalem on Sunday, during 
which two people were killed 
and more than a dozen injured 
before the gunmen were them- 
selves slain. 

Yesterday, the kidnappers 
released a video showing Mr 
Waxman, who holds dual US- 
Israeli citizenship and who was 
drafted into the army six 
months ago, pleading far his 
freedom. 

Looking dazed but con- 
trolled, the close-cropped, uni- 
fanned soldier urged the Rabin 
government to meet his cap- 
tors' demands. “1 ask you, do 
what you can. so that 1 can get 
out of here alive,” he said in 
low, emotionless tones. 


Publicly, Israeli officials 
have ruled out any capitula- 
tion to the kidnappers. But 
experience suggests that there 
might be some willingness to 
negotiate. 

Mr Nabil Sha'ath, head of 
the PLO delegation to the 
suspended autonomy talks in 
Cairo, said last night that ft 
was “unfair" of Israel to have 
broken off the negotiations, 
and Israel was playing into the 
hands of extremists. 

Israeli officials made clear 
that the talks, focusing on 
aspects of planned Palestinian 
elections had been postponed 
rather than called off 


Tokyo hits Hoechst for Y4.4bn extra tax 

German company is appealing against assessment of transfer price manipulation 


By Michtyo N aka mo to in Tokyo 

Hoechst Japan, a unit of the 
German pharmaceuticals com- 
pany, has paid the Tokyo 
regional tax bureau Y4.4bn 
($44m) in additional taxes for 
allegedly transferring income 
taxable in Japan to Germany, 
it was disclosed yesterday. 

The Japanese tax authorities 
charged Hoechst with the addi- 
tional taxes, claiming the com- 
pany had shifted Y6.4bn in tax- 
able income to Germany 
between 1990 and 1992. It did so 
by paying more than reason- 


able sums for raw materials 
the Japanese unit imported 
from its German parent, the 
tax authorities allege. 

Hoechst has denied the 
charge and countered that the 
Y4.4bn it has had to pay repre- 
sents double taxation, since its 
parent company has already 
paid tax on the same amount 
in Germany. 

“We do not believe this is 
fair treatment We do ... not 
accept the tax statement," 
Hoechst said yesterday. The 
company was not making any 
more profits than leading Japa- 


nese pharmaceutical compa- 
nies but its gross profit ratio 
was in line with the average. 

German and Japanese tax 
officials are discussing the 
issue after Hoechst initiated 
procedures as stipulated by an 
agreement the two countries 
have to avoid double taxation 
on profits made by companies 
operating in both countries. 
The German company was 
required to pay the extra taxes 
before it could appeal 

Hoechst 1 s additional tax bur- 
den in Japan was disclosed as 
tax authorities from the US, 


Canada, Australia and Japan 
gathered in Sydney to discuss 
the application of transfer 
price taxation. Under this, 
companies suspected of trans- 
ferring profits to the parent 
company through excessive 
payments for materials and 
royalties are subject to addi- 
tional taxes. 

The Japanese tax authorities 
have become increasingly 
aggressive in charging foreign 
companies with extra taxes. 
Ciba-Geigy, the Swiss pharma- 
ceuticals group, has been 
charged with an Y5.7bn in 


additional taxes, while Coca- 
Cola (Japan) this year suffered 
a Yl5bn tax penalty. 

The Japanese stance comes 
amid concern that tax revenue 
will fell short of the govern- 
ment target. Corporate taxes 
have been adversely affected 
by Japan's weak economy over 
the past few years. 

The Japan Research Insti- 
tute, a private think tank, for 
example, is forecasting a 
Yl.OOObn shortfall from the 
government’s target of 
Yl3.800bn in corporate tax rev- 
enue for this fiscal year. 


Beijing battens down 
for tricky time ahead 

Rumours are feeding anxiety, writes Tony Walker 


B eijing, in these mellow 
autumn days, conveys 
an impression of 
orderliness with the usual 
parade of visiting dignitaries 
sh uffling through the Great 
Hall of the People. 

Chinese leaders are 
conspicuously conducting 
business as normal, receiving 
visitors, holding meetings, 
embarking on overseas trips, 
exhorting the masses to 
greater endeavour, while 
steadfastly avoiding in public 
the issue of the day - the 
fallin g health of the senior 
leader, Deng Xiaoping. 

Beneath the apparent calm 
the mood in the capital and in 
other centres is skittish. 
Speculation is intense about 
the condition of Mr Deng, 
which Is said to have worsened 
considerably since mid-year. 

Among indications of the 
high degree of anxiety were 
the wild gyrations last week of 
the Shanghai stock exchange, 
where the index plummeted by 
40 per emit before recovering 
most of the lost ground on 
Friday, after the Foreign 
Ministry issued a statement to 
the effect the Chinese 
patriarch was in “good health". 

While this routine bulletin 
calmed the markets 
momentarily , it will not stop 
the endless rumours which 
clearly have become a factor in 
Chinese political life, 
complicating a smooth 
transition from one generation 
of leaders to the next 
Inevitably policy 
pronouncements, personnel 
changes and even the vaguest 
utterances by the leadership 
are being viewed through the 
prism of what they mean for 
the post-Deng era. A political 
transformation has been under 
way for some time, but it is 
accelerating as the moment for 
Mr Deng’s demise draws 
nearer. 

Thus, the recent fourth 
plenary session of the 14th 
Central Committee was 
notable not for any significant 
new initiatives, but for the 
impression given that the 
ruling party was seeking to 
batten down the hatches in 
preparation for what promises 
to be a difficult time ahead. 


Chinese jitters 



Dang Xiaoping 


The plenum resolution. 
Major Issues on Strengthe nin g 
Party Building, hardly 
smacked of self-confidence at 
an uncertain moment. The 
concerns expressed indicated 
deep misgivings about the 
state of the organisation and 
its 54m members. 

“The Party", the plenum 
document stated, “must be 
capable of re-organising, 
enhancing and upgrading itself 
under the new situation of 
reform and opening-up, and 
conscientiously study and 
solve the new contradictions 
that crop up during its 
self-building". 

While the resolution made 
the required references to 
ideology, these lacked 
conviction. The document also 
provided no sense that the 
party had decided the time was 
ripe to strike out in new 
political directions to cope 
with the momentous economic 
and social changes under way. 

Chinese leaders may be 
seeking to convey the 
impression that it is “business 
as usual" in Beijing by 
continuing to engage in a 
welter of high-profile 
diplomatic activity, but it 
seems the reform momentum 
is slowing for the time being, 
pending Mr Deng’s departure 
from the scene. 

Observers were surprised 
that the party plenum failed to 
address economic questions, 
suggesting this indicated 
divisions in the leadership on 
issues such as the pace of 


Shanghai A index 

— 0.000 



Sotrca: FT Graphite 


reform of faltering state 
enterprises. 

Worries about inflation, 
which has been running at 
about 30 per cent in the cities, 
are casting something of a pall 
over the reform effort. 

The strange “end of an era" 
mood in Beijing was 
exemplified last week with the 
convening of a four-day 
symposium marking the 
2^45 th anniversary of the birth 
of Confucius, the sage vilified 
during the Cultural Revolution 
of the 1960s and 1970s as the 
patron of a "slave-owning” 
aristocracy. 

Now, Confucius is being 
hailed by the Chinese media as 
an exemplar of the standards 
to which society should aspire. 
Even People's Daily, the party 
newspaper and leader in its 
day of the campaign to 
excoriate Confucius, joined the 
chorus. 

Commending Confucian 
values of filial piety and 
altruism, the paper warned 
that “money worship" was 
eroding the values of society, 
and morality had “lost its 
sacred meaning”. 

It is perhaps revealing of 
present uncertainties that as 
Mr Deng, veteran communist 
and father of a modernising 
state, shuffles from the stage, 
the Confucian legacy is being 
rehabilitated. 

These odd cross-currents 
seem set to continue for the 
time being. 


We Let Our Achievements 



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South African 
miracle stops 
at barracks 

Mark Suzman on the problems 
of uniting one-time military foes 


P resident Nelson Mand- 
ela is set to intervene in 
a dispute between the 
27,000 predominantly black, 
farmer guerrillas from the lib- 
eration movements and the 
white training officers of the 
South African National 
Defence Force charged with 
integrating them into the 
national army. 

Recently, many of the fanner 
members of the armed wings of 
the African National Congress 
and Pan Africanist Congress 
admitted to military training 
camps have gone absent with- 
out leave, citing dissatisfaction. 
with the integration process. 

In the past week nearly 7,000 
new recruits have refused to go 
back into training until their 
grievances, including more 
rapid processing of recruits, 
are met 

Mr Mandela has held talks 
with Mr Joe Modise, defence 
minister and former com- 
mander of the ANC's military 
wing, and General Georg Meir- 
ing. SANDF chief of staff, to 
discuss the problem and Is 
planning to broach it with 
army commanders today. 

The former South African 
Defence Force comprised high- 
ly-trained soldiers. By contrast 
Umkhonto we Sizwe (ME) and 
Apia, the ANC and PAC's guer- 
rilla armies, tended to be rela- 
tively unstructured. 

The most common com- 
plaints appear to be boredom, 
dislike of military discipline, 
and dissatisfaction with the 
process requiring them to 
undertake military, medical 
and educational tests to assess 
training and r ank. 

So far the dispute appears to 
be confined to the lower ranks; 
integration of officers is pro- 
ceeding without much diffi- 
culty. Lt-Gen Siphiwe Nyanda. 
farmer MK chief of staff, is 
sow SANDF chief of staff and 
has been heading meetings on 
the broader integration pro- 
cess. But when he tried to 
mediate directly on the issue, 
protesters attacked his car. 

Mr Modise’s deputy, Mr 
Ronnie Kasrils, also a farmer 
ME commander, admitted seri- 
ous problems, but warned a 


lack of discipline could not be 
tolerated. Mr Mandela defused 
a similar protest when he 
remonstrated with 500 protest- 
ers who had marched to the 
Union Buildings, headquarters 
of the administration in Pre- 
toria, to air their grievances. 

The problem is likely to be 
worsened by the need to incor- 
porate a further 10,000 soldiers 
from the former homeland 
defence forces, and several 
thousand members of a failed 
National Peace Keeping Force 
formed before April's first all- 
race election, into the SANDF. 

Because many of these have 
already done some formal 
South African army training, 
they are largely exempted Cram 
the assessment procedures, but 
will become part of the next 
stage of bridging programmes 
leading to full integration. 

Further problems are likely 
over jobs and salaries. The gov- 
ernment baa warned that tran- 
sitional defence funds will in 
future be diverted to recon- 
struction and development. 
The SANDFs goal is to cut the 
army’s size to 91.000 by 1998 
from Its prpsant larwwi 


CORRECTION 

Hinduja 

In an article on September 6. 
the Financial Times referred to 
Mr G.P Hinduja, Mr S.P Hin- 
duja and Mr PJP Hinduja as 
accused in the Bofors gun 
affair in India. Mr S.P Hinduja 
and Mr PJ> Hinduja are not 
accused in the First Informa- 
tion Report and no charges 
have been brought. 

The article also said that the 
Swiss Supreme Court had 
rejected a plea for secrecy 
about the family’s involvement 
in the scandaL In fact, the plea 
was against the granting of 
judicial assistance in the inves- 
tigation. The court did not con- 
sider any plea for secrecy nor 
any evidence that the family 
was involved in the scandaL 

The Financial Times regrets 
any embarrassment caused to 
the family by the original 
report 


NEWS IN BRIEF 


Taiwan SEC chief 
refuses to quit 

Mr Day Linin, chairman of Taiwan's securities and exchange 
commission, yesterday defended his handling of a stock market 
crisis and resisted calls to step down, Laura Tyson reports from 
Taipei. 

“There is no need for me to resign over this affair, or take 
responsibility,” Mr Day told the finance committee of the Legisla- 
tive Yuan, or parliament. “I have handled the matter completely 
correctly, and at this stage believe no one can handle it better." 

A string of share payment defaults amounting to T$7.6bn 
(£185m) sent stock prices down 14.7 per cent last week. 

Mr Day said he had acted in the best Interests of most inves- 
tors, and denied suggestions by opposition legislators that he had 
sought to give advantage to certain business groups. 

President Lee Teng-hui yesterday denounced speculative prac- 
tices in the stock market He told the party’s central standing 
committee the finance and justice ministries would cooperate to 
prosecute such activities, where appropriate. 

Share prices rebounded 6.03 per cent yesterday to 6495.78. 
encouraged by government moves to support the market 

Car bombs shake Algiers 

The local representative in Algiers of Daewoo, the South Korean 
industrial group, was yesterday killed as the city was shaken by 
explosions, two of them car bombs, David Buchan reports from 
Paris. 

The bombs, outside the justice ministry and Algiers university, 
came shortly before the trial of two alleged kidnappers is due to 
open before a special court. 

Earlier, the French ambassador to Algeria was summoned to 
the foreign ministry, which complained tha t, an interview given 
by Mr Francois Liotard. French defence minister, constituted 
interference in the country's internal affairs. 

The minister had been quoted in a Saudi daily newspaper as 
suggesting that, instead of suspending the 1992 election which the 
Algerian fundamentalists looked like winning, the authorities 
should taken the risk of bolding the poll But -Mr Afoin juppA 
France's foreign m i n ister, rejected the complaint when he told 
French MPs France could not stay out of the Algerian debate, 
"because our interests are at stake.” 

Seoul share purchases eased 

Foreigners res idi n g in South Korea will be exempt from curbs on 
foreign shareholdings in listed companies starting next January, 
John Burton reports from Seoul. 

An announcement yesterday by the finance ministry follows its 
decision to raise the foreign shareholding ceiling from 10 to 15 per 
cent next year. 

The measure is the latest indication of the government's appar- 
ent determination to open the stock market grad ually to foreign 
investment, until now severely restricted, 

Mr Park Jae-yoon, the new finance minister, said the band for 
permissible daily stock price movements would be eased next 
year, the deposit requirement for stock purchases would also be 
changed. 

Opposition arrest in Nigeria 

Military authorities have arrested a senior leader oF Nigeria’s 
main opposition group Nadeco after the police raided his Lagos 
mdeout, the group said yesterday, Reuter reports from Lagos. 
xt j" A ?° ^P a ^°^ un ’ Patriotic and energetic general secretary of 
Nadeco, has been arrested and taken to (an) unspecified location 
after his house and temporary reftige had been broken info and 
sacked.” Nadeco said. 

Nadeco Is an alliance of politicians, retired senior military 
officers and pro-democracy activists backing the detained politi- 
cian Moshood Abiola, undeclared winner of last year’s annulled 
presi den tial election. Chief Abiola is on trial for aOeged treason 
for declaring himself president in defiance of Nigeria's military 
rulers. 







FINANCIAL TIMES THURSDAY OCTOBER 13 1994 


NEWS: INTERNATIONAL 



Allies could M ? re are Russian envoys start Baghdad talks 

H0W They bring a Yeltsin-approved plan urging patience in waiting for sanctions to ease 

curbs on Iraq 


h' 


By Stewart Oalby and Robin 
Alton in Kuwait 

Kuwait’s allies are determined 
to force President Saddam Hus- 
sein to abandon his threaten- 
ing attitude towards Kuwait, 
they said yesterday. 

They were also "actively con- 
sidering wbat further mea- 
sures needed to be taken to 
ensure that Iraq never again 
disrupted world peace by mass- 
ing tens of thousands of troops^ 
close to Kuwait’s border". 

Mr Warren Christopher, US 
secretary of state, flanked by 
Mr Donbas. Hurd, British for- 
eign secretary. Prince Saud al- 
Faisal, Saudi Arabia's foreign 
minister, and Sheikh Fahim 
bin-Sultan alQasimi, secretary- 
:'general of the six-nation Gulf 
Co-operation Council (GCC), 
said the group had reached 
four main agreements: 

• Iraq's troops must abandon 
their threatening posture. 
Never again would Iraq be 
allowed to disturb the peace in 
the region and seek to intimi- 
date the UN. 

• “We have agreed to an equi- . 
table share of the costs” (of 
allied military deployment). 

• Each of the GCC countries 
had agreed to provide overfly- 
ing rights for aircraft of the 
allied forces. 

• The GCC had agreed to con- 
tribute units from its 
Peninsula Shield force to 


protect Kuwait, 

He emphasised there could 
be no lifting of UN sanctions 
against Iraq, but refused to be 
drawn on what further mea- 
sures were being considered to 
deter Iraqi threats. These mea- 
sures include the ftnfoirgTnwtfr 
on Iraq of a ground forces 
exclusion zone. 

Mr Christopher said the 
allies had expressed “great 
sympathy for the people of 
„ IxaxT but the responsibility for 
their condition lay with Mr 
Saddam. "The fads speak, for 
themselves,” he said. 

“Saddam Hussein has impov- 
erished his country and dish- 
onoured its military." The 
Iraqi leader should be in no 
doubt that if he continued a 
policy of intimidation “Iraq 
will be devastated". 

Mr Christopher said there 
were signs of some Iraqi troop 
withdrawals from the border 
area, but it was too soon to say 
the crisis was over. There was 
among the allies “a total lack 
of trust in what Saddam Hus- 
sein says". 

Mr Hurd said the UK was 
happy to support Kuwait 
“because we believe in stand- 
ing by our friends and because 
the UK retains a strong inter- 
est In the stability of this 
area”. Mr Hurd stressed a mili- 
tary exclusion zone was one of 
several options. "Nothing has 
been decided.” 



Poster of Saddam Hussein in Baghdad yesterday 

Doubt cast on 
exclusion zone 
in the south 

Advantages seen but feasibility 
questioned by IISS director 


By Edward Mortimer 

It would be “very difficult" to 
establish a military exclusion 
zone in southern Iraq analo- 
gous to that in the north, Mr 
John Chipman, director of the 
^International Institute of Stra- 
tegic Studies, said in London 
yesterday. 

However, such a awe would 
have definite advantages for 
those countries, notably the US 
and UK, which have commit- 
ted themselves to defend 
Kuwait and “will want to alle- 
viate the task of performing 
that role"!'”' 

Mr Chipman: speaking at the 
launch of hisInsQtnte’s fhnual 
"Military Balance" (a review of* 
armed forces and weapons 
around the world), said it 
would "require a lot of man- 
oeuvring in the next 24-48 
hours” to set up an exclusion 
zone, "if that proves to be the 
objective of the US administra- 
tion". , . . . .. 

Such a zone, in which the 
movement of troops and associ- 
ated equipment would be pro- 
hibited, would have three 
advantages, he suggested: 

• it would make it much 
more difficult for Iraq to create 
a threat on the IraqKuwait 

border. . ,, 

• it would make it difficult 
for President Saddam Hussein 
to p* 3 * his armed forces for the 
purpose of repressing the 
Shiites in southern Iraq. 

• By confining the 61ite 
Republican Guard to central 
Iraq and denying them access 
to both the north and the 
south, it might sow doubt in 
the minds of Iraq's military 
leaders about the capacity of 
their commandcr-in-chlef (Sad- 
dam Hussein) to control and 
defend Iraq* territory. 

But Mr Chipman also saw 


two problems with the scheme. 

“First, how will it affect the 
relationship with other perma- 
nent members of the Security 
Council, in particular Russia? 
Secondly, what are the politi- 
cal consequences in Iraq of 
pushing the Republican. Guard 
around in this way?” 

There might be disadvan- 
tages as well as advantages, he 
suggested, in continued uncer- 
tainty in both northern and 
southern Iraq. 

Mr Ahmed Hashim. a 
research associate at the insti- 
tute. added that if the zone 
were established, Iraqi dissi- 
dents based in Iran might 
move into it, and this “would 
result in a three-way partition 
of the country". 

Even if the Tehran govern- 
ment did not favour such a 
development, Pasdaran (revo- 
lutionary guard) units in 
southern ban might give weap- 
ons and advice to the Iraqi 
Shiite forces based In their 
area, who are loyal to the 
“Supreme Council for the 
Islamic Resistance in Iraq". 

Yesterday, the Supreme 
Council's London office 
claime d that the Iraqi regime 
“has- transported chemical and 

biological weapons” Into 
southern provinces where 
there have been signs of pop- 
ular unrest 

It also claimed to have 
reports from both central and 
southern Iraq that “the Iraqi 
people in general are begin- 
ning to show their rejection 
and criticism of the latest 
aggressive movements of 
troops towards the Kuwait bor- 
der". 

They were also starting to 
show their rejection and criti- 
cism of the effects of soaring 
prices and lowering living 
standards. 


going 

hungry 

A trade embargo and lack of 
government organisation are 

forcing increasing numbers of 
Iraqis to go hungry, top offi- 
cials from the United N ations 
World Food Programme (WFP) 
said yesterday. Reuter reports 
from 

“The monthly salary of an 
Iraqi civil servant is barely 
enough to buy 1kg of meat," 
Said Ms Moiia Bapnnmn , 
regional manager of the WFP 
in the Middle East "People are 
selling assets and land to 
make ends meet” 

The Rome-based WFP feeds 
1.3m Iraqis, making it the 
country's largest supplier of 
food, Ms Catherine Bertini, 
executive director, said. 

The number of people need- 
ing food aid would rise if the 
Iraqi government failed to 
improve distribution. “The 
Iraqi government gives out 
food to anyone who asks, 
instead of targeting the most 
vulner able g roups." 

The WFP was stockpiling 
food in Iraq ahead of what 
could be a hard winter. Food 
prices had increased 600 per 
cent in southern and central 
Iraq and 84 per cent in the 
north. Some 23 per cent of 
Iraqi children were suffering 
from malnutrition. 


By Marie Nicholson in Baghdad 

Two senior Russian diplomats 
began talks with Iraqi leaders 
apparently carrying a plan 
approved by Mr Boris Yeltsin. 
Russian president, aimed at 
defusing tensions on the Iraq- 
Kuwait border, -while telling 
Iraq it must be more patient in 
awaiting an easing or sanc- 
tions. 

Mr Igor Ivanov, first deputy 
foreign minister, and Mr Vik- 
tor JPosuvalyuk, director of the 
ministry’s Middle East depart- 
ment, arrived after- an over- 
night road journey from 
Amman early yesterday for 
what diplomats in Baghdad 
called a “hastily arranged and 
developing programme of 
meetings” with Iraqi officials. 

Russian officials would not 
comment on the envoys' pro- 
posals, or confirm whether the 
two men would travel on to 
Kuwait for further talks, as 
Moscow officials had suggested 
earlier this week. 

Diplomats said the two men 
were expected to discourage 
Iraq from taking what one 
called “absurd steps” in the 
attempt to press the UN Secu- 
rity Council into an early lift- 
ing of the four-year-old oil 
embargo. 

They said Iraq still hoped 
such moves could follow the 
Security Council’s approval of 



Iraqi armoured cars loaded aboard a train in the southern city of Basra 


the report by Mr Rolf Ekeus, 
UN special envoy, that 
long-term weapons monitoring 
systems were “provisionally 
operational” in Iraq and ready 
for a test period. 

Iraq believes it should be 
given a clear period for this 
test, after which sanctions 
would be lifted; diplomats raid 
Ba ghdad been insisting the 


Security Council set specific 
dates. 

The Russian envoys are 
expected to encourage Iraq to 
wait out a six-month test 
period for long-term monitor- 
ing, a period understood to be 
acceptable to most Security 
Council members as a fair test 
of Iraqi compliance. 

They are expected to tell the 


Iraqis Russia would reward 
such patience by arguing 
strongly after the six months 
for immediate moves to ease 
sanctions. 

Support for such a scheme 
from France and China, along 
with Russia, bad been gaining 
ground before President Sad- 
dam Hussein’s troop move- 
ments towards Kuwait pro- 


voked the present stand-off. 

Most UN diplomats believe 
Mr Saddam's actions have suc- 
ceeded only in reversing the 
diplomatic momentum Iraq 
bad been winning. 

There was no let-up in Iraq's 
verbal attacks on the UN or 
the US, with both officials and 
media continuing to lambast 
berth, for what Babel, the news- 
paper owned by Saddam’s son 
Uday, called a “rancorous 
scheme against Iraq”. 

General Amer Mohammed 
fiasfceed, director of Iraq’s mili- 
tary industrial commission, 
attacked Mr Ekeus’ report as 
“rife with ignorance of Iraq’s 
co-operation" with the UN. 

Al-Thawra, official paper of 
the ruling Ba’ath party, 
accused the west of “propagat- 
ing fuss." 

Diplomats said Iraq was con- 
tinuing to move its troops 
north of Basra yesterday, and 
that both the Chinese and Rus- 
sian military attaches in Iraq 
were yesterday in the south of 
the country to confirm the 
withdrawals. 

In Baghdad, few signs 
remained that the past days’ 
tensions had affected the city. 
Market traders said inflated 
prices for food and other basic 
goods had risen in the past few 
days, only to return to “nor- 
mal” inflationary levels yester- 
day. 


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CS) 



OUR WORLD REVOLVES AROUND YOU 










6 


financial times 




THURSDAY OCTOBER 


13 1994 


NEWS: THE AMERICAS 


Canada 
plans for 
cable and 
telecoms 
freedom 

By Bernard Simon In Toronto 


Canada is to clear the way for 

opes competition between tele- 

phone companies, cable-TV 
operators and other telecom- 
munications providers, under 
a new policy unveiled by the 
industry minister, Mr John 
Manley. 

The government has 
directed the Canadian Radio- 
Television and Telecommuni- 
cations Commission (CRTC), 
which regulates broadcasting 
and telecoms, to study the leg- 
islative changes required to 
bring down regulatory 
barriers. 

The CRTC Is expected to 
complete its report by the end 
of February. “We want real 
competition and oar vision is 
□ot restricted to established 
industries," Mr Manley said. 

“We Fully expect - and will 
actively encourage - a host of 
new entrants. We want com- 
peting carriers and other ser- 
vice providers to have full 
access, on equitable terms, to 
the facilities of telephone com- 
panies and cable companies, 
other than capacity used for 
broadcast signals." 

Although foreign investors 
are presently limited to minor- 
ity stakes in Canadian phone, 
cable and broadcasting compa- 
nies, several have already 
entered the market AT&T, for 
example, owns 20 per cent of 
Unite!, which pioneered com- 
petition in long-distance tele- 
phone services two years ago. 

Sprint the US long-distance 
company, has a 25 per cent 
interest in Call-Net Enter- 
prises of Toronto, another new 
entrant in the long-distance 
market 

The CRTC last month spelt 
oat plans to encourage compe- 
tition in local telephone ser- 
vices, which are presently 
dominated by monopolies in 
each of Canada's 10 provinces. 
The traditional cross-subsidy 
of local rates by long-distance 
revenues will be substantially 
reduced with the aim of 
attracting new entrants. 


US pays to make superhighway fair 



US commerce secretary Ron Brown announced grants of $24- 4m 


By Nancy Dunne 
in Washington 

The US Commerce Department 
yesterday took steps to ensure 
that the US information super- 
highway reaches schools, hos- 
pitals, libraries, government 
agencies and minority commu- 
nities which might otherwise 
be left out of the communica- 
tions revolution. 

Mr Ron Brown, the US com- 
merce secretary, announced 92 
grants worth £24.4 m for pro- 
grammes in 45 states this year. 
Matching funds from private 
and other public sources 
brings the total information 
spending dedicated to public 
institutions and under-served 
communities to $87. 6m. in 1995, 
the administration will hand 
out $64ro, a large increase but 
still well below demand. This 
year applicants raised SSODm in 
matching funds and requested 
$56Qm in grants. Only one ont 
of 10 bids was accepted. The 
department’s National Insti- 


tute of Standards and Technol- 
ogy runs a much larger grant 
programme to help industries 
research and develop critical 
new technology for the infor- 
mation superhighway. 

Commerce officials said that, 
while the private sector would 
develop the information infra- 
structure which US companies 
need to remain competitive, 
the government's role is to 
help under-served communi- 
ties. "These are public institu- 
tions which are integral to the 
fabric of this nation,” said Mr 
Larry Irvine, assistant com- 
merce secretary for communi- 
cations and informarinn 

In the atmosphere of cyni- 
cism among the US electorate, 
grant programmes like these 
are easily labelled “pork bar- 
rel" by anti-government con- 
servatives. Commerce officials 
insisted there were no politics 
involved in the awarding of 
only one grant to Texas - 
increasingly Republican terri- 
tory - and 10 to California, a 


key state for the president’s 
1996 re-election campaign. 

Many of the grants read like 
a roll-call of traditional Demo- 
crat constituencies in minority 
and low-income communities. 
This was deliberate, said 
department officials, to avoid 
creating “a society of informa- 
tion haves and have note". 

Harlem, the black commu- 
nity in New York City where 
Mr Brown grew up, received 
one of the larger grants - 
5450.000 - for a $1 Jm project to 
plug six schools into an envi- 
ronmental learning pro- 
gramme. A $156,000 grant will 
support a $300,000 plan for link- 
ing mare than 500 American 
Indian tribal governments and 
developing "telemedicine", 
child care, education, economic 
development and cultural pres- 
ervation programmes. 

A 3100,000 grant will go to a 
Korean Youth and Community 
Centre in Los Angeles to 
develop t raining for commu- 
nity workers. 


Alberta’s premier wields his axe 

Budget pain is being inflicted but nobody is crying out yet, writes Bernard Simon 


M r Ralph Klein is suc- 
ceeding where most 
politicians have 
failed. Determined to balance 
Alberta's budget within the 
next two years, the premier of 
the oil-rich Canadian province 
is chopping government pro- 
grammes left, right and centre. 

His government has closed 
thousands of hospital beds, 
eliminated almost two-thirds of 
the province's school boards, 
and turned to private enter- 
prise to run services as diverse 
as liquor stores, lawn-mowing 
and the issue of birth 
certificates. 

What is most remarkable, 
however, is that the deeper the 
cuts bite, the more popular Mr 
Klein becomes. According to 
an opinion poll published in 
late August, 61 per cent of 
Albertans approve of the Con- 
servative government's perfor- 
mance, up from 51 per cent 
four months earlier. 

Mr Klein, a forthright man 
who acknowledges putting his 
foot in his mouth at times, 
says the secret of his success is 
that "we're keeping promises". 
"People might not like what 


we're doing, but they all say at 
least: ‘You're keeping your 
promise','' he said. 

Mr Mike Percy, finance 
spokesman for the opposition 
Liberals, concedes that Mr 
Klein has struck the right 
chord: "It's the temper of the 
times here," Mr Percy says. 
"People won't believe you 
unless you say it hurts." 

Mr Klein, who was a Calgary 
TV reporter before entering 
politics, at first won voters* 
confidence by putting himself 
and other politicians at the 
front of the firing line. Soon 
after taking over as premier in 
December 1992, he abolished 
the provincial legislature's 
pension plan. Mr Klein says he 
has sacrificed almost C$60,000 
(£38,300) in accrued pension 
benefits himsalf. He ha» also 
given up his C$5,000 a year 
allowance for clothing and 
other expenses. Cabinet mem- 
bers took a 5 per cent pay cut. 

The pain now being inflicted 
on Albertans is largely the 
result of earlier governments’ 
misplaced optimism about the 
course of oU and natural gas 
prices. Alberta prospered when 


oil prices rose sharply In the 
late 1970s. By 1985, the prov- 
ince had accumulated a sur- 
plus of almost C$12bn. Oil roy- 
alties were squirrelled away in 
a Heritage Savings Fund, to be 
used for long-term infrastruc- 
ture investments. But the pre- 
vious government failed to 
trim its sails when oil and gas 
prices fell Resource revenues 
plummeted from almost C$5bn 
in the fiscal year to March 1986 
to less than C$2bn the follow- 
ing year, and then stagnated. 
At the s ame time government 
spending grew by an annual 
average of 5.1 per cent in the 
five years to 1992. 

T he budget surplus 
turned into a deficit, 
reaching C$3.8bn Last 
year. Alberta’s debt is expected 
to rise to C$32bn at the end of 
the current fiscal year, in 
effect mortgaging the Heritage 
Fund. Alberta has now lost its 
coveted triple-A credit rating. 

A carefully-timed govern- 
ment commission, comprised 
mainly of business leaders, laid 
the ground for the cuts early 
last year by warning that 


"many of the present systems 
were designed to serve the 
province during an era of 
abundance, and the current 
times of economic difficulty 
necessitate major changes". 

Mr Klein looks easily set to 
reach his target of a balanced 
budget by 1996/97. The govern- 
ment recently forecast the cur- 
rent fiscal year's shortfall at 
C$1.35bn, or C$205m lower 
than the 1994/95 budget esti- 
mate. Unexpectedly strong oil 
and gas revenues make up the 
bulk of tiie windfall But pro- 
gramme spending cuts, proj- 
ected at 20 per cent over four 
years, remain on target 

Mr Klein has promised to 
reach that target without rais- 
ing taxes. Alberta remains the 
only Canadian province with- 
out a retail sales tax. But the 
government has sharply 
boosted revenues from public 
user fees. For example, public 
funding of kindergartens has 
been cut from 100 per cent to 
58 percent 

The austerity drive has 
drawn loud protests from some 
groups, notably the elderly, 
who worry that healthcare 


standards are slipping, and 
trade unions. But they are a 
diffuse group. "He’s got a 
coherent strategy, and there's 
no coherent opposition," says 
Professor Alan Topper, a politi- 
cal scientist at the University 
of Alberta in Edmonton. 
Domestic and foreign investors 
however, are cheering. 
Moody's, the credit-rating 
agency, noted in a recent 
report that Alberta's deficit-re- 
duction plan is the most 
aggressive among Canada's 10 
provinces. 

The provincial treasurer 
recently brought together a 
high-level group of academics, 
public-service officials, busi- 
ness leadens and unionists to 
chart a course for fiscal policy 
once the balanced-budget tar- 
get has been achieved. 

A generous tax cut is a near- 
certainty before the next pro- 
vincial election in three or four 
years' time. “There will be 
something," Mr Klein says. But 
he insists that the government 
win be careful not to create the 
expectation that “we’re just 
going to start throwing money' 
at things again”. 


AMERICAS NEWS_D1GEST_ 

Aristide return 
on schedule 

Lieutenant-General Raoul CMras. the leader of Mtrtmffitary 
coup who relinquished power on Monday, was expected to 
leave the country yesterday just three days before the sched- 
uled return of exiled president Jean-Bertrand AnstUfe. 

United States military forces continued to guard the home of 
the ousted general as removal vans loaded with Gen Cedras s 
valuables headed towards aircraft awaiting bun .at the capital 
city’s airport. A US embassy spokesman said that only some 
“peripheral and marginal issues" about his departure had to 
be worked out, most notably to which country he would be 
taken to. Argentina, Panama and EH Salvador have been men- 
tioned as possible destinations. The spokesman also said that 
the chief coup strategist. General Pillipe Biamby, was likely to 
accompany Gen CWras into exile. Gen Cfedras’s expected 
departure follows the collapse of the government Jed by ae 
facto president Emile Jonassaint, who left the presidential 
palace on Tuesday. All of Mr Jonassaint's ministers also 
abandoned their offices, and US troops peacefully secured 15 
different government buildings. Inside the presidential palace. 
US security officers and Mr Aristide’s transition team began 
initial preparations to receive the legitimate president when 
he arrives on Saturday. Ted Bardacke, Port-au-Prmoi 

Nobel prizewinner list grows 

North American dominance of the 1994 Nobel prizes was 
underlin ed yesterday when two Americans and a C an ad ia n 


won the awards for physics and chemistry. The physics prize 
was shared by Mr Bertram Blockhouse of McMaster Univer- 
sity in Hamilton, Ontario, and the Mr Clifford Shull, of toe 
Massachusetts Institute of Technology, for their pioneering 
development of neutron scattering techniques. Their work, 
carried out 40 years ago, has paved the way for the develop- 
ment of new materials such as ceramic superconductors. The 
chemistry prize went to Mr George Olah, of toe University of 
Southern California, for his contributions to carbocation 
chemistry. "In ample terms Clifford Shull has helped answer 
the question of where atoms ‘are’ and Bertram Brockhouse the 
question of what atoms 'do'," said the Royal Swedish Academy 
of Sciences when making the SKtTm (£583,300) award. The 
science academy said the work of toe Hungarian-born Ameri- 
can. Mr George Olah, had been widely recognised among 
organic chemists and that his work on carbocations - posi- 
tively charged hydrocarbons - had won a prominent position 
in modem textbooks. Hydrocarbons are used to make gasoline, 
pharmaceuticals and plastics. Seven out of the eight Nobel 
prizewinners announced so for have been North American or 
North America based. Christopher Braum-Rumes, Stockholm 

World Bank conservation plea 

A senior US Treasury' official called on the World Bank yester- 
day to lend more money for energy conservation and less for 
energy production. Mr Larry Summers, treasury under-secre- 
tary for international affairs, said programmes that end the 
excessive use of energy are “strategies” that the bank must 
pursue. The bank has in recent years increased Us activities in 
the energy conservation field and has advised many countries 
on restructuring their energy sectors to reduce subsidies and 
introduce more efficient pricing. Mr Summers yesterday told 
the Overseas Development Council, a Washington-based 
research and pressure group on development issues, that the 
World Bank currently lends 20 times as much for energy 
production as it does for energy conservation. Mr Summers 
said subsidised energy prices led to waste and needless pollu- 
tion. George Graham, Washington 


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FINANCIAL TIMES THURSDAY OCTOBER 13 1994 


NEWS: WORLD TRADE 


Foreign operators calling Beijing’s number 

Cable & Wireless has breached China’s telecommunications markets. Simon Holberton reports 


L ord Young, chair man of 
Cable & Wireless of the 
UK and its principal 
operating subsidiary Hongkong 
Telecom, yesterday resembled 
a cat with a bowl of cream. 

As he parried questions 
about Hongkong Telecom's lat- 
est deals in China, Lord Young 
knew - but could not say - 
that he was announcing the 
end to China's post-war policy 
of prohibiting foreign partici- 
pation in the operation of 
domestic telecoms services. 

The Implications are wide- 
ranging, although analysts 
were careful to stress the pre- 
liminary nature of yesterday's 
announcement. The Chinese' 
government aims to increase 
its number of phgne Hues from 
about 30m - barely more th^n 
the UK at least nom by 
2000. That is equivalent to the 
construction of a telecoms net- 
work far larger than Japan’s In 
barely six years. 

Equipment suppliers fami li ar 
with China’s ministry of posts 
and telecommunications (MPT) 
have long believed it would not 
be possible to meet that objec- 
tive without investment and 
management input Cram west- 
ern network operators. Yester- 
day’s announcement appears 
to signal Beijing's recognition 
of the feet, opening the world’s 
largest telecoms growth mar- 


Hong (Cong Telecom? 
can* abroad 

To aft countries (Btfflon minutes) 

1.2 — 



SI 92 
Ym-»4MWi» 

ket to overseas operators. 

The regime for participation 
is likely to remain unclear for 
some time. C&W has still to 
negotiate the precise terms of 
its engagement in the two net- 
works operations unveiled yes- 
terday, and negotiations with 
other operators are still at an 
early stage. 

But many operators besides 
C&W have ambitions to enter 
China, and some already have 
a foot in the door. Nynex, one 
of the seven US Baby Bell 
regional operators, is acting as 
an adviser to UanTong Com- 
munications, a recently- 


launched state telecoms com- 
pany operating alongside the 
established MPT. AT&T, the 
largest US operator, is also 
exploring prospects. 

In all, Hongkong Telecom 
expects to invest between 
$250m and $350m over the next 
two to three years, and that 
could just be the beginning. 
For the past 15 years China’s 
domestic telecoms market has 
been the Holy Grail for Hong- 
kong Telecom. “We have been 
talking to China for years 
about projects," Lord Young 
said. “The first project - which 
will take three-quarters of 
planned expenditure - is a 
joint venture with Beijing's 
Telecommunications Authority 
to upgrade, develop and share 
the management of the Chi- 
nese capital's cellular tele- 
phone network. 

Currently the network sup- 
ports 60,000 users and 300,000 
pagers. In addition to upgrad- 
ing from analogue to digital 
technology. Hongkong Telecom 
plans to double its size of the 
network every year “for the 
next few years”. 

The second is participation 
in the construction and man- 
agement of a fibre-optic cable 
between Beijing and Hong 
Kong. It will undertake this 
venture with the ministry of 
posts and telecommunications . 


The UK’s Export Credits 
Guarantees Department 
CECGD) is backing £75m (5120) 
worth of British exports to 
China with a loan value of 
£61m. Four recent contracts 
range from 

telecommunications and 
engineering to food 
processing. 

Davy McKee (Stockton) won 
a contract for the supply of a 
direct reduction iron plant at 
Tianjin with a loan value of 
$22L5m and finance arranged 
by West Merchant Bank. This 
was the first ECGD dollar 
buyer credit to be arranged for 
the People's Construction 
Bank of China. The largest 
contract is for an optical fibre 
network project which wiD 
link cities in the provinces of 
Hunan and Hubei with 
Gbonqtng. The loan value is 
551m with ANZ Grindlays 
R ank as the lead h a o k. 

Huxuatt Engineering won a 


third contract to supply three 
chicken processing plants in 
Yantai, Penglai and Guzhen. 
The plants, with a loan value 
of £7.9m, are follow-on 
projects resulting from the 
success of two similar 
installations at Ronqcbeng 
and Qmgzhon last year. The 
loan was arranged by Samuel 
Montagu on behalf of Midland 
Bank, the lead bank, with the 
Overseas Development 
Administration providing a 
grant of £4 Jm. 

Midland Bank was also the 
lead bank and Samuel 
Montagu arranged the loan for 
the fourth contract for air 
preheaters for a power station 
at Gao Be! Dian in Beijing. 

The contract was won by 
Howden Sirocco. 

China has been one of 
ECGD’s top markets for many 
years and currently has the 
third highest exposure for all 
markets with £l-5bn insured. 


The cable will stretch some 
3,000km - passing 80 towns 
and cities along the way - and 
connect to the Guangzhon- 
Hong Kong fibre optic link. 
Capacity will be increased by 
80,000 hues. As with the Bei- 
jing cellular telephone deal, 
Hongkong Telecom expects to 
participate in the management 


of the facility and earn equity- 
type returns. 

C&W said it was important 
for Hongkong Telecom to do its 
first major deals with Beijing 
entities, signalling the Chinese 
government's blessing for the 
ventures. Hongkong Telecom 
has spent years cultivating 
relationships in Guangdong. 


Fujian and Shanghai. After its 
network in Hong Kong went 
digital last year it completed 
shipping - and Installing gratis 
- aU its analogue telephone 
switches to Guangdong. “It 
helped promote telephone traf- 
fic between Guangdong and 
Hong Kong; it was enlightened 
self-interest, " he said. 

In Shanghai, where Cable & 
Wireless on Monday held its 
first board meeting on the Chi- 
nese mainland, the local 
authorities welcomed their par- 
ticipation in the city's telecom- 
munications market. The local 
government is especially keen 
for the company to expand 
telecoms in the Pudong special 
economic zone. 

The Chinese move takes 
place against a backdrop of 
rapid liberalisation and privati- 
sation in the international tele- 
coms industry. Demand for 
capital and telecoms develop- 
ment expertise Is Intensifying 
across the developed world - 
particularly in Asia - as gov- 
ernments seek to modernise 
their telecoms networks as a 
key element in policies to pro- 
mote economic growth. 

“You could say it is the end 
of a very long road and the 
first step on a long march," 
said Lord Young. But as the 
Chinese say; the longest march 
starts with a single step. 


Norwegians plan German gas pipe investment 


By Karen Fosdi in Bremen 

Norwegian oil and natural gas 
producers State ii and Norsk Hydro 
yesterday announced they would 
invest in a natural gas pipeline in 
Germany. 

The agreement, signed with Ger- 
many’s Ruhrgas, the biggest German 
gas importer, and BEB, Germany's 
biggest producer of gas, establishes a 
new company* Netra. Netra will com- 
plete and operate a large-diameter 
pipeline requiring a total investment 
of more than DMlbn (5650m). 

The agreement comes just two 
weeks after completion of a competi- 


tive pipeline transmission system, 
jointly owned by Gasprom of Russia 
and WintershaU of Germany, and 
intensifies the battle between Norway 
and Russia over new European gas 
supplies. 

Netra will build a 290km pipeline 
between Etzel, near Wilhelmshaven in 
Germany, and Salzwedel on Ger- 
many’s former east-west border. The 
Etzel facility is supplied via Rmdan, 
Germany, from the natural gas fields 
in the Norwegian North Sea. 

It will link up with the gas pipeline 
from Salzwedel to Bernau. north of 
Berlin, being built by Ruhrgas and 
Verbtmdnete (VNG) and will be con- 


nected to the VNG pipeline network 
as well, allowing it to be used for 
Norwegian gas volumes contracted by 
VNG in 1993. 

Between 70 per cent and 75 per cent 
of the Netra pipeline has already been 
built by the German partners. The 
Norwegian partners wifi therefore be 
malting the greatest share of the 
remaining investment 

Under the terms of the deal. Stated 
and Norsk Hydro will jointly own 25 
per cent of Netra with an option to 
increase this to a third should the 
pipeline system be extended. 

The remaining Netra shares are 
equally distributed between the Ger- 


man partners in the venture. Dr Burk- 
hard Bergman, a Ruhrgas executive, 
yesterday said the Netra pipeline was 
“not a common carrier but it’s an 
investment for the shareholders," 
referring to the European Union's 
plans to open pipelines to third party 
users. 

The companies said their coopera- 
tion would increase natural gas sup- 
ply volumes from Norway to Ger- 
many and central Europe. Another 
aim of the venture is to cut unit costs 
of the pipeline which will be com- 
pleted in 1995. 

Netra believes the pipeline will be 
an important link in the growing 


European gas grid Integrating the gas 
industries of western, central and 
eastern Europe by a cross-border pipe- 
line network. The pipeline - with 
annual transport capacity of up to 
ISbn cubic metres - will have the 
potential to supply Germany and 
neighbouring countries with volumes 
of Norwegian gas greater than those 
already contracted. 

Existing contracts with Germany 
alone call for the anmtai volume of 
Norwegian gas imports to dimh from 
Ubn cubic metres at present to over 
30bn cubic metres in 2005, raising the 
share of Norwegian gas to 31 pear cent 
of German supplies, from 14 per cent 


US antidumping 
rules shown 
to be arbitrary 


By Nancy Dunne 
in Washington 

Mexico, a country with no 
indigenous television technol- 
ogy, now supplies 70 per cent 
of the television sets imported 
into the US market This is the 
result of the circumvention of 
US dumping duties on colour 
picture tubes produced in 
Japan. Korea, Singapore and 
Canada, according to Mr Timo- 
thy Regan, a spokesman for 
the Committee to Preserve 
American Colour Television 
(Compact). 

From all sides of the dozens 
of antidumping and counter- 
vailing cases brought each 
year to the US Commerce 
Department and the Interna- 
tional Trade Commission, 
there are stories of inconsis- 
tent findings, rulings easily cir- 
cumvented, inept administra- 
tion of decisions, and 
inadequate enforcement. 

Ecuador, last month found 
guilty by the US Commerce 
Department, of “dumping" 
roses in the US market, says 
the 50 per cent duty to be lev- 
ied will leave 10,000 Indian 
workers without jobs. 

In the case of Ecuador, that 
government said the US Com- 
merce Department was “arbi- 
trary and inconsistent” when it 
refused to let one of the defen- 
dants correct an error on a 
computer tape and did not fol- 
low its usual practices in deter- 
mining the dumping margin. 
Mr Edgar Teran-Teran, US 
ambassador, said the industry 
received no government subsi- 
dies. "It is inconceivable to 
Lhink of some kind of dumping 
from flower growers if they 
receive no support-" 

Coses like these form part of 
the record being scrutinised by 
the International Trade Com- 
mission as it seeks to complete 
one uf the broadest investiga- 


tions ever conducted on the 
effects of US antidumping and 
countervailing duties on the 
economy. The results of the 
study are due next June. 

At a recent ITC public hear- 
ing, commissioners heard from 
foreign suppliers, domestic pro- 
ducers, lawyers and academics, 
who said the “unfair trade 
laws" were themselves unfair. 

Mr Jon Jenson, president of 
the Precision Metalforming 
Association, said duties on for- 
eign steel products bad caused 
shortages of critical raw mate- 
rials not produced in the US. 
An effective mechanism had to 
be devised to permit import of 
products in short supply. 

Mr David Gridley, an official 
at the Torrington Company, a 
producer of antifriction bear- 
ings, said many domestic 
shortages result from US 
industry close-downs caused 
by dumping: “One manifesta- 
tion of harm to the domestic 
industry was the delivery and 
other problems that flowed 
from reduced capacity.” 

The Copper and Brass Fabri- 
cators Council said the US Cus- 
toms Service and the US Com- 
merce Department did not 
even know whether antidump- 
ing and countervailing duties 
had been assessed and col- 
lected: “Everyone assumes that 
the duties are being collected, 
but there is no trustworthy evi- 
dence to substantiate this 
claim or to ascertain the 
amounts of the duties.” 

The US antidumping laws 
were “a real world example of 
an existential system", said Mr 
Michael Finger, World Bank 
chief economist “In antidump- 
ing law, existence precedes 
essence. Essence is no more 
than a collection of accidents - 
dumping is whatever you can 
get the government to act 
against under the antidumping 
law." 


Taking the paper out of trade 

Frances Williams on the quest for more efficient commerce 


T he General Agreement 
on Tariffs and Trade 
recently put the global 
gains from the Uruguay Round 
trade liberalising accords at an 
eventual $500bn a year. Next 
week ministers, officials and 
industry executives from more 
than iso countries will meet in 
Columbus, Ohio, to discuss 
how to boost that sum by 
another $100bn 7 by cutting 
the costs of doing business 
abroad. 

The United Nations Interna- 
tional Symposium on Trade 
Efficiency is focusing on ways 
of making trading cheaper and 
easier, so enabling smaller 
companies and poorer nations 
to exploit the global market on 
more equal terms with estab- 
lished traders. 

According to the UN Confer- 
ence on Trade and Develop- 
ment, which is organising the 
five-day symposium, the costs 
of voluminous paperwork, 
complex formalities and associ- 
ated delays and errors amount 
to about 10 per cent of the final 
value of goods. 

A typical trade transaction 
may Involve 30 different par- 
ties, 60 original documents and 
360 document copies, all of 
which have to be checked, 
transmitted, re-entered into 
various information systems, 
processed and filed. 

For small companies, this 
can be daunting, even without 
the additional handicaps faced 
by many Third World export- 
ers such as poor infrastructure 
and cumbersome, sometimes 
corrupt, bureaucracies. 

However, transaction costs - 
totalling perhaps $400bn a year 
by the end of the decade - 
could be sliced by 25 per cent 
by streamlining procedures 
and extending use of paperless 
trading, Unctad argues. 

The symposium is expected 
to adopt recommendations for 
tackling problems encountered 
by exporters In the areas of 
transport, trade Information, 
telecommunications, business 
practices, and customs and 


the trade point network 


Cofambus, Ohio 
Unctad 

symposium on 
trade efficiency 


r 


•‘°J» a a 


Objectives 

■ Lower transaction costs 

■ Broaden partkapation 

■ Promote effective practices 

■ Expand the Intormatton 
superhighway 


0 .. 


Q 


9 htemoScoai 
trade points 


3 <3 ■ 

o a a 

■o* 


a 
3 • 
a 


0 

a.' 


S 


Growth in worid merchandise trade and output 
96 

10 — 


a — 
6 — 


4 — 

2 — 


■n- 

I □ Merchandhe tra 

J B Output 




PI Merchandhe trade 
I Output 


I960 81 B2S3«aS88878aS9B0naZ» 

Smxok Uocnd. Out 


finance, with special emphasis 
on the difficulties confronting 
smaller companies and devel- 
oping countries. 

One example is computerisa- 
tion to speed customs clear- 
ance, increase government rev- 
enues and reduce opportunities 
for corruption. Unctad's Auto- 
mated System for Customs 
Data (Asycuda), used by more 
than 60 developing countries, 
enabled Ghana and Mauritius, 
for example, to cut clearance 
times from a week to half a 
day. Sri Lanka boosted reve- 
nues by S25m or IQ per cent in 
the first three months of opera- 
tion, despite lower tariff rates. 

Though more than 100 coun- 
tries operate fully automated 
customs clearing systems, 
most trade transactions are 
still paper-based. Errors and 
delays in paperwork cost com- 
panies business and customers, 
Unctad says. 


“With the growing trend 
towards purchasing lust in 
time', delays increasingly 
imply lost business. If focal 
suppliers can produce and 
deliver inputs within a given 
deadline, remote suppliers 
must be able to do likewise or 
they will lose the market" 

The answer, Unctad believes, 
is paperless trading or elec- 
tronic date interchange (edi). 
However, to be effective all the 
participants in a trade deal - 
companies, customs, banks, 
insurers, transport agents and 
so on. - have to use iL 
Even in industrialised coun- 
tries, edi is used by fewer than 
75 per cent of companies. For 
exporters in developing conn 
tries, poor telecommunications 
may make edi impracticable. 

Similar problems apply to 
that other essential of success- 
fill tr ading - business informa- 
tion. This is increasingly avail- 


able in electronic form but 
many companies, especially in 
the Third World, could find 
themselves excluded from 
trade if they cannot adequately 
exploit the new technologies. 

“In a world where informa- 
tion has become the main stra- 
tegic factor of competitiveness, 
the border between trade win- 
ners and losers is often the one 
that separates the haves from 
the have-nots of technology," 
Unctad warns. 

To help prevent this gap 
emerging Unctad came up with 
the idea of a worldwide net- 
work of “trade points”. Since 
the first was set up to Febru- 
ary 1992 in Cartagena, Colom- 
bia, trade points have been set 
up or are planned in 60 coun- 
tries. By the end of next year 
100 should be operational 

Trade points bring together 
under one roof aU the services 
needed by exporters, such as 
government departments, cus- 
toms authorities, chambers of 
commerce, banks, insurers and 
freight forwarders. 

Through trade points compa- 
nies have the possibility of 
Tiffin g edi as well as gaining 
access to computerised infor- 
mation on markets, potential 
clients and investment part- 
ners, tariffs and trade rules 
worldwide. 

Next week's symposium will 
formally launch the Global 
Trade Point Network, an. elec- 
tronic network linking the 
trade points with each other 
and other international net- 
works, which Unctad hopes 
will become an important 
player in the field of trade 
information and electronic 
trading. 

Trade points already claim 
success in increasing the num- 
ber of companies involved in 
intomatinnal trade helping 
them trade more efficiently. Bis 
Rossana Trucco del Castillo, 
director of the Cartagena trade 
point, says to per cent of its 
users are small and medium- 
sized companies and half are 
new to international trade. 


WORLD TRADE DIGEST 

Hoechst plans 
China expansion 

Hoechst, the chemical group, yesterday announced plans to 
double its investments in China. Mr JQrgen Dormann, the 
chairman, said in Beijing that Hoechst would raise its capital 
spending there from $300m to S600m in the next two or three 
years, the aim being to export high-quality products from 
China to the world market “We are aiming to double our sales 
and the corresponding asset base in Aria to 20 per cent of the 
group total over the next five years,” he added. “China is a 
cornerstone in this strategy." Hoechst’s Asia-Pacific turnover 
in 1993 totalled DM2.7bn ($L74bn>. mostly in Japan. Its activi- 
ties In China include filter cigarette material, pharmaceuti- 
cals, agrochemicals and polyester fibres. 

Viag, the German energy, industrial and trading group is 
also planning to expand in Asia. It wants to double sales there 
from the present DM2bn (5 per cent of turnover) by 2000. Its 
Continental Can Europe division recently bought 25 per cent 
of Hong Kong-based Pacific Can Company, a drinks can maker 
which operates plants in China and is building a new one in 
Beijing. Andrew Fisher. Frankfurt 

Westinghouse Russian venture 

Westinghouse, the US engineering and manufacturing giant, 
plans a joint venture with Kharton, the former Soviet Union's 
defence group. The new company. Westron. will work in 
Ukraine’s large nuclear energy sector. The US Nunn- Lu gar 
defence conversion aid package is providing $5m for the ven- 
ture and Westinghouse will invest another S20m in technology 
and equipment Westron wDl update protection and control 
systems at Ukraine’s 14 nuclear reactors at five sites. In spite 
of international pressure to close its nuclear plants, Ukraine 
has committed itself to upgrade and maintain the nuclear 
stations. No decision was reached on Chernobyl, the site of the 
world's worst nuclear accident in 1986. Other companies inter- 
ested in Ukraine’s large nuclear and military-industrial com- 
plex include ABB Combustion Engineering, part of the Swiss- 
Swedish engineering concern. Orbital Systems of the US. has 
been approached by Kharton to find commercial use for SS-18 
carrier rockets. Matthew Kaminski, Kiev 

Japan set to reform rice law 

Japan's agricultural ministry yesterday submitted proposals to 
reform the country’s food control law, which governs rice 
production, distribution and retailing. The legislation will 
replace the food control law when Japan partially opens its 
rice market at the start of next year under provisions of the 
Uruguay Round of multilateral trade. Next year, the govern- 
ment will allow rice imports up to 4 per cent of the domestic 
rice market The figure will be gradually increased to 8 per 
cent by the year 2000. 

Under the proposed rules, any company or organisation will 
be allowed to buy rice from farmers and sell it on the open 
market just by notifying its plans to the government Cur- 
rently, a state licence is required to trade or sell rice. Consum- 
ers are unlikely to benefit fully from cheap imports, since the 
legislative proposal stipulates that profits from selling imports 
at around domestic prices are to be used for maintaining rice 
stock for emergency use. The new bill will be submitted to the 
cabinet for approval next week before being sent to parlia- 
ment Ermko Terazono, Tokyo 

Asian airlines cut fares 

Several airlines to Asia are following Singapore Airlines (SIA) 
and cutting first and business class fares on regional routes. 
At the weekend SIA announced it would reduce first and 
business class fares by between 10 and 20 per cent to 33 
destinations in Asia, the south-west Pacific and South Africa. 
Cathay Pacific. Thai Airways International and Qanlas have 
now announced similar reductions on flights out of Singapore. 
Malaysia Airlines and other regional carriers are also likely to 
announce fore reductions. 

SIA consistently one of the world's most profitable carriers, 
has been hit by growing competition from other airlines in the 
region and the steep appreciation of the Singapore dollar 
against other regional currencies. About 35 per cent of SLA’s 
revenues comes from sales of first and business class tickets. 
A spokesman for Qantas said that the Australian carrier had 
to follow SIA to making fore reductions in order to remain 
competitive, particularly on routes from Singapore to Austra- 
lia- Sevan Cooke, Kuala Lumpier 

Portugal sets sights on China 

Portugal could export more transport, electrical and telecom- 
munications equipment to China and could even receive an 
order to build ships for Beijing, Portuguese Trade and Tourism 
Minister. Mr Fernando Faria de Oliveira said yesterday. He 
added that there was potential for exports of railway carriages, 
electricity generating equipment, electrical and telecommuni- 
cations rabies and digital telephone exchanges. The minister 
also said China bad expressed interest in building a toy 
factory in Portugal to get round European Union import 
quotas on Chinese toys. Portugal runs a heavy trade deficit 
with China, to which it has traditionally exported modest 
quantities of tomato paste and wood pulp. Reuter, Lisbon 

Contracts 

Matsushita Electric Industrial will set up a venture with 
China Shenyang Storage Battery Factory to produce small 
sealed lead acid batteries in Shenyang, China. The venture, bo 
be formally established in November and capitalised at 
YL45bn ($14.5m). is to begin production from January 1997. 
The batteries are for use as small-sized and emergency power 
sources for cellular communication base stations or small 
switching systems. They will be supplied to China, south-east 
Asia and Pacific island countries. Reuter , Tokyo 

Japan's Ministry of International Trade and Industry has 
admitted five foreign concerns, including Westinghouse Elec- 
tric and Rolls-Royce, to one of its new energy research pre- 
lects. The YSQQba project aims to develop the efficient extrac- 
tion and use of hydrogen as an alternative energy source for 
future generations. Reuter, Tokyo 

■ Raytheon of the US has been awarded a HK$67m ($8.7m) 
contract to supply and install two ratter systems for Hong 
Kong's new airport Work will start later this month and will 
be completed in February 1996. Reuter, Hong Kong 

■ Italtet, the manufacturing subsidiary of Italy’s state-owned 
telecommunications group, has completed its second cellular 
phone project in Russia. The $4m contract includes the supply 
and installation of a digital cellular turn-key system, radio 
base station, control unit for base stations and a Linea UT 
switching centre. AP-DJ, Milan 

Intraconi, the Greek telecommunications and information 
company, yesterday signed a contract to modernise telephone 
communications at the Kremlin. The one-year turn-key project 
involves installation of an AXE-10 Digital Exchange. Intracom 
manufactures the AXE- 10 under licence from Ericsson of Swe- 
den. Foreign Staff, London 


Share a valuable 

insight into International Tax. Ours, 


sll Ernst&Young 

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financial times 


THURSDAY OCTOBER 13 1994 


S 


★ 


NEWS: UK 


Chancellor urged not to cut taxes in Budget 


Scottish 

business 



By Peter Norman, 

Economics Editor 

Mr Kenneth Clarke, the 
chancellor, will be able to cut 
public spending plans for the 
cooimg- 19S5-S6 financial year 
by £5bn without having to 
make real inroads into the gov- 
ernment's spending pro- 
gramme, the Independent Insti- 
tute for Fiscal Studies reported 
yesterday. 

In its "Green Budget”, pre- 
pared with Goldman Sachs, the 
US investment bank, the inde- 


pendent tax policy research 
group says the chancellor 
should stay firm and not cut 
taxes in next month's Budget. 

The study says the public 
sector borrowing requirement 
looked set to undershoot previ- 
ous forecasts. For this financial 
year to the end of March 1995. 
the institute and Goldman 
Sachs expect a PSBR of £32bn 
compared with the £36bn pre- 
dicted in the Treasury’s sum- 
mer forecast. They expect a 
1995-96 deficit of £24bn. 
although it could be as low as 


£21 bn, or 3 per cent of gross 
domestic product, if the gov- 
ernment maintains its existing 
spending plans in real terms in 
the run-up to the next general 
election. 

The report says lower-than- 
expected inflation means the 
chancellor can keep to his pre- 
vious plans for real, inflation- 
adjusted public spending while 
announcing a nominal £5bn 
cut in spending for next year. 
Without such a reduction in 
the existing £263bn public 
expenditure control total pol- 


icy would be loosened next 
year and taxes might have to 
rise In the medium term. 

The authors say improved 
public finances should not be 
used as an excuse to cut taxes 
because the drop in the PSBR 
will be entirely the result of 
higher than anticipated eco- 
nomic growth. “The tax 
increases announced last year 
remain essential to bring the 
public finan ces under control” 
they add. 

The green Budget so-called 
because it is modelled on a 


government consultative docu- 
ment. or green paper, suggests 
that Mr Clarke will choose nei- 
ther to tighten nor ease fiscal 
policy next month. With the 
next general election up to two 
and a half years away, dra- 
matic initiatives are not expec- 
ted. But the chancellor could 
still decide to change individ- 
ual tax and spending pro- 
grammes within the existing 
framework. 

Mr Andrew DQnot, institute 
director, suggested that the 
chancellor may act to reform 


family credit and the in-work 
benefit system to create more 
incentives for the low-paid to 
seek work. An eyecatching but 
cheap move would be to boost 
tax allowances for small com- 
panies. 

With inflation low. Mr 
Clarke might be tempted to 
freeze income tax allowances, 
saving some £750m. and use 
the proceeds to widen the 20 
per cent reduced rate income 
tax band to £4,000 from £3,000. 
Mr Dilnot said Mr Clarke 
might also seek to tidy up the 


tax treatment of savings. But 
the authors do not anticipate 
any radical change in the tax 
treatment of dividends. 

The authors expect further 
increases in interest rates. Mr 
David Walton. Goldman’s 
senior international economist, 
yesterday forecast UK bank 
base rates of 7 per cent by mid- 
1995 compared with 5.75 per 
cent at present 

Options for 1995: the Green 
Budget Institute of Fiscal 
Studies, 7 Ridgmaunt Street, 
London WOE 7AR £10. 


Unemployment down 
400,000 from peak 


m 


Jobless levels fall In every region 

September, seasonally adjusted 
Q Northern Ireland 
E] North 
B North-west 
□ VorKs & Humber 
J3 Wales 
Q West MkftwKfc 
Q Scotland 
Cl South-east 
Q East Midlands 
n South-west 
H Easttacjia 
Greater London 
UK 





13 


a^a 


□ 


a 


Manufacturers push up 
their ability to compete 


By Philip Coggan 

British manufacturers have 
become much more competi- 
tive over the past year, record- 
ing a substantial rise in pro- 
ductivity and a fall in unit 
labour costs. 

Figures from the Department 
of Employment published yes- 
terday, showed that manufac- 
turing output per head in the 
three mouths to August was 
5.3 per cent higher than in the 
same period of 1993. 

Over the same period, manu- 
facturing wages and salaries 
per unit of output fell by 0.8 
per cent. The fall occurred 
because output was growing 
faster than average earnings. 

Three-monthly figures 
smooth out volatile movements 
and slightly flatter the August 


performance. In August alone, 
output per head grew 4.9 per 
cent compared with the year 
before, while unit wage costs 
fell 0.3 per cent. Nevertheless, 
the Treasury welcomed the fig- 
ures as showing that British 
industry was improving its 
ability to compete. 

The underlying rate of 
growth of average earnings 
stayed at 3.75 per cent in the 
year to August. Apart from 
March and May. when it edged 
up to 4 per cent, the annual 
growth rate of average earn- 
ings has been steady at 3.75 per 
cent throughout 1994. 

Within the earnings figures, 
however, there was a small 
rise in the production and 
manufacturing sectors. In both 
sectors. July's underlying 
annual growth rate was 


revised upwards from 4 per 
cent to 4.25 per cent, a figure 
which was maintained in 
August. 

In the services sector, the 
annual rate of underlying earn- 
ings growth was unchanged at 
3.5 per cent in August 

The underlying monthly fig- 
ures for average earnings 
smooth out temporary factors 
such as industrial disputes. 
The seasonally adjusted 
annual earnings rate in August 
was 3.7 per cent down from 3.S 
per cent in July. 

Mr Michael Saunders, UK 
economist at Salomon 
Brothers, said: “Average earn- 
ings growth has remained 
below 4.5 per cent for 19 
months, the longest run of low 
earnings growth in the last 30 
years.” 


‘exaggerate’ fears 


By Philip Coggan, 

Economics Correspondent 

Unemployment fell in every 
UK region in September among 
both men and women, accord- 
ing to figures released by the 
Department of Employment 
yesterday. 

The number of people out of 
work and claiming benefit fell 
by 57.379 to 2.58m. or by 28.000 
to 2.57m ou a seasonally 
adjusted basis. Unemployment 
has now fallen by more than 

400.000 since its peak in Decem- 
ber 1992 and Is at its lowest 
level since December 1991. The 
unemployed now represent 9.1 
per cent of the workforce, 
down from 9.2 per cent in 
August. 

The Labour Force Survey, 
also published yesterday, indi- 
cated that the fall in the unem- 
ployment total is at last being 
accompanied by a rise in 
employment. The survey found 
that employment rose by 65.000 
between the spring and the 
summer and was 226.000 higher 
than in summer 1993. There 
was a bigger rise in male than 
in female employment and in 
full-time than in part-time 
work. 

However, the LFS results, 
based on interviews conducted 
with households, show a differ- 
ent result from the workforce 
In employment survey, which 
is compiled from employers 
and showed a 35.000 fall in 
employment in the second 
quarter of 1994. The LFS has 
consistently shown greater 
rises in employment than the 
other survey. 


Source: PeparttnOTt Ol Br^sloyment 

Claimant unemployment has 
now fallen for eight consecu- 
tive months, and by an average 
of 25.600 over the past six 
months, easing earlier fears 
that the rate of decline might 
be slowing. The Department of 
Employment said its estimate 
of the trend rate of decline was 

20,000 per month. 

However, unemployment is 
not falling as test on the Inter- 
national Labour Office figures 
as it is on the official defini- 
tion. Rather than measure 
claimants, the HO statistics 
record those who say they are 
available, or looking, for work. 
On the ILO measure, unem- 
ployment fell just 11.000 
between spring and summer. 

The Department of Employ- 
ment said the smaller fall in 
ILO unemployment might be 
because people who were previ- 


ously classed as economically 
inactive had become suffi- 
ciently encouraged by the 
improved economic situation 
to start looking for work. 

The number of vacancies at 
Jobcentres rose by 2,400 to 
165.900 in September, the 
highest level since August 
1990. However, this figure is 
well below the peak level of 

263.000 during the mid-1980s 
boom 

Employment in manufactur- 
ing rose by 9.000 in August, the 
second consecutive monthly 
increase. However, manufac- 
turing employment is still 

34.000 lower than in August 
1993. Overtime working in 
manufacturing increased 
slightly to 8.72m hours per 
week, while short-term work- 
ing also rose to 029m hours 
per week. 


Wage rise 
‘is faster 
than 

reported’ 

By David Goodhart, 

Labour Editor 

Real wages are rising much 
faster than employers or 
the government are acknowl- 
edging, according to an analy- 
sis of the latest pay and Infla- 
tion figures by Mr Chris 
Trinder of the Chartered Insti- 
tute of Public Finance and 
Accountancy. 

Mr Trinder said yesterday 
that real wage growth aver- 
aged 1.4 per cent In 1993-94 
but could be as high as 2.5 per 
cent in 1994-95. 

“When inflation rose from 
1.4 per cent in November 1993 
to 2.6 per cent in June 1994, 
earnings also increased from 3 
per cent to 3.75 per cent. 
Now, despite inflation falling 
by (U per cent in the third 
quarter of 1994, earnings 
remain flat and recent settle- 
ments. for example In the car 
industry, suggest that they 
will be higher in the 1994495 
pay round than in 1993-94.“ 
said Mr Trinder. 

Last week Rover Group 
announced a pay increase of 
about 10 per cent over two 
years for its 33,000 workers. 

Mr Trinder also claimed that 
public-sector pay is increasing 
in line with whole-economy 
earnings at 3.75 per emit “if 
the public-sector pay bill is 
frozen for 1994-95 but public- 
sector earnings are increasing 
by 3.75 per cent then more 
than 200,000 jobs will have to 
be shed,” he said. 


Markets 


By Peter Norman 

Mr Eddie George, the governor 
of the Bank of England, yester- 
day said he thought bond mar- 
kets were exaggerating the 
likely upwards movement in 
inflation in the industrial 
countries, including Britain. 

Mr George told the British- 
American Chamber of Com- 
merce that financial markets 
were also probably exaggerat- 
ing the likely pace and size of 
the increases in short-term 
interest, rates that might be 
needed to keep inflation down. 

As Mr George was speaking, 
Britain’s 10-year benchmark 
gilt-edged stock was yielding 


about 8.77 per cent and money 
markets were anticipating 
b ank base rates of nearly 6.5 
per cent in December against 
5.75 per cent yesterday. 
Although the governor said he 
had learned to be cautious 
before second-guessing finan- 
cial markets, his own guess 
was that the bond markets 
“were overdoing it a bir in 
their views of inflation. 

He listed several reasons for 
supposing that the effect on 
inflation of the economic 
expansion would be less than 
before. 

• There was a policy consen- 
sus on the importance of main- 
taining price stability. Efforts 


were being made to cut fiscal 
deficits while central banks 
were aware of the need to 
tighten monetary policy before 
inflation is seen in statistics. 

• Interest rates were high in 
real terms, while money and 
credit were growing slowly in 
the big economies. 

• There is - in Europe at 
least - a “huge overhang" of 
structural unemployment. One 
result was that upward pres- 
sure on labour costs is likely to 
be weaker than before. 

• Competition everywhere is 
intense. This was an important 
reason why inflation in several 
countries had been lower than 
expected. 


Early summer sales aid inflation figures 


By Gillian Tett, 

Economics Staff 

A shill in the timing of this 
year's summer sales, super- 
market price wars and a tell in 
the petrol price all helped to 
lower the annual rate of infla- 
tion last month. 

The Central Statistical Office 
yesterday said that the retail 
price index rose to 145.0 last 
month, with 100 representing 
the prices in 1987. 

Tills was 0.2 per cent higher 
than the previous month, and 
2.2 per cent higher than the 
same period last year. 

One reason for the lower 
inflation rate was that the cost 
of household goods, clothing 
and footwear rose by less in 
September than they did last 
year in the aftermath of the 
summer sales. 


This was mainly because the 
price rebound after the sales 
largely occurred in August this 
year, instead of in September 
as last year. This shift in the 
timing meant that the annual 
rate of inflation for these sec- 
tors looked high in August but 
slightly lower last month. 

Clothing and footwear 
prices, for example, grew 3 per 
cent in September, after rising 
2.2 per cent in August This 
brought the cost of footwear 
and clothes back to exactly the 
same level it was before the 
summer discounts, and the 
same level as last year. 

If the effect of the early price 
rebound is smoothed out by 
looking at a two-monthly basis, 
the figures show that the over- 
all price swing in clothing and 
footwear was exactly the same 
as in the previous year. 


Household goods rose by 0.5 
per cent In September, com- 
pared with the previous 
month, after a monthly rise of 
1.6 per cent in August These 
rises were slightly higher than 
the 2.1 per cent fall that 
occurred in the sales in June 
and July. 

They suggested that retailers 
remained wary of raising 
prices in face of strong con- 
sumer resistance, analysts 
said. Indeed, some suggested 
that retailers were likely to be 
particularly cautious about 
raising prices with the new 
stock this autumn after a fall 
in retail sales last month. 

Elsewhere in the index, food 
prices fell in September by 0.8 
per cent, compared with 
August with a 0.5 per cent rise 
in the year to September. 

The tell partly reflected con- 


tinued price wars in the super- 
markets, with non-seasonal 
food costs dropping by 0.4 per 
cent But it was also flattered 
by a normal drop in seasonal 
food prices as a result of the 
harvests in Britain. 

Motoring costs also fefi, run- 
ning 0.2 per cent below the 
level in August and 1.8 per 
cent above the same level last 
year. The key reason for this 
was a drop in the price of pet- 
rol. which bad risen in August 
partly as a result of the oil 
strike in Nigeria. The yearly 
trend was also flattered by the 
fact that petrol prices rose last 
September. 

Housing costs were 0.2 per 
cent higher in September than 
August, and 4 per cent higher 
than a year ago reflecting a 
continued rise in the average 
outstanding mortgage debt. 


RW: falling prices 

Food Annual % changes 

2 “-—■■■ — 



Motoring expenditure 

B - 



Pensions rise set 
to top price growth 


By GBIian Tett 

State pensions could be raised 
next year at a slightly higher 
level than the current rate of 
Inflation for pensioners' house- 
holds, official figures yesterday 
indicated. 

But family credit, income 
support and housing benefit 
are likely be raised by slightly 
Less than headline inflation. 

The government uses Sep- 
tember's inflation data each 
year to calculate the rate at 
which some benefits should be 
raised next April, but employs 
slightly different measure- 
ments of inflation for others. 
State pensions, along with 
other payments such as unem- 


ployment, maternity and sick- 
ness benefits, are raised 
according to the rate of annual 
growth in the all-items retail 
prices index. 

If the chancellor raises them 
in the November Budget 
according to September's rate 
of inflation, next year’s pen- 
sions should be raised by !L2 
per cent This compares with a 
level of inflation for pension- 
ers' households of 1.9 per cent 
in the third quarter. 

Rises in family credit, 
income support and housing 
benefit are usually related to a 
a different index known as 
ROSSI, excluding rent mort- 
gage and council tax, which 
was L8 per cent in September. 


‘feeling 

confident’ 

Scottish companies are 
confident about the prospects 
of recovery, but are finding 
progress slower than expected, 
according to a survey of the 
region's five main chambers of 

commerce. . 

It found confidence still ris- 
ing - although at a lower rote 
than previously - in manufac- 
turing, construction, wholesal- 
ing and tourism. Factories 
were continuing to find a 
strong increase in orders and 
sales'. - -- 

However: confidence was 
still falling in the retail sector 
as tax rises continued to have 
i an effect. 

The quarterly survey by the 
Fraser of Allander Institute, an 
economic research body at the 
University of Strathclyde, said 
results in the third quarter did 
not generally live up to expec- 
tations. with wholesaling the 
I only sector where performance 
outstripped expectations. 

City aims to woo 
Russian companies 

The Corporation of London 
will take advantage of the 
Queen’s state visit to Russia 
next week to promute the City 
as Europe’s leading financial 
centre and attract Russian 
companies to London. 

London has become a haven 
for Russia's new rich and an 
increasingly important centre 
for dealmaking involving Rus- 
sian companies. Last month 
the Corporation helped the 
Chartered Association of Rus- 
sian Commercial Banks to set 
up an office in London and has 
encouraged Polish and Geor- 
gian businesses to set up cen- 
tres in the City. 

The Corporation launched a 
trading initiative this summer 
in central and eastern Europe 
to promote the network of 
financial, legal and other facili- 
ties offered by the City. 

DTI moves to end 
pyramid groups 

The Department of Trade and 
Industry has moved to close 
down two more pyramid sell- 
ing companies. 

It has petitioned the High 
Court to wind up Powertag 
Programme and Headlogic. 

The DTI claims that Power- 
tag took over the membership 
of the Alchemy Foundation, a 
pyramid selling company 
wound up in July tins year, 
with 8,000 members. 

Investigators say Powertag 
continued “to enlist new mem- 
bers into money-making 
schemes which were incapable 
of making forecast returns to 
more than a small fraction of 
those who participated." 

The DTI also claims Headlo- 
gic took over certain assets for- 
merly owned by Quillpunch. a 
company linked to Alchemy. 

Tunnel go-ahead 

An Anglo-French safety com- 
mission yesterday gave the 
go-ahead for the start of inter- 
national train services through 
the Channel tunnel between 
London, Paris and Brussels. 
The Eurostar trains are expec- 
ted to start commercial ser- 
vices next month. 


4 

i 












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FINANCIAL TIMES THURSDAY OCTOBER 13 1994 


Scottish 

busing 

■‘feeling 

confidL 


NEWS: UK 


f i*> aiiiis t, U( 

Kussi.iit I'lllllp;- 


1 1 1 i * 

|M ^r.v 




Computer fraud shows sharp increase 


By Alan Cana 

Attacks on public-sector and 
private-sector computer 
systems by thieves, backers 
and virus writers have 
tn creased dramatically in the 
post three years, the Audit 
Commission said yesterday. 

The rise is a consequence of 
the spread of personal comput- 
ers and computer networks but 
also the result of management 
-negligence - managers are 
neglecting or refusing to put 
into practice measures which 


could contain or reduce com- 
puter fraud and hacking. 

The commission says the 
total value of losses caused by 
computer abuse has risen by 
183 per cent since the last sur- 
vey - the average financial 
loss per incident caused 
through fraud now stands at 
£28,170. 

The commission reports on 
the incidence of computer 
abuse every three years. Its lat- 
est study - involving returns 

from over 1,000 com panies - 
shows that the number of inci- 


dents of computer abuse 
reported has increased from 12 
per cent of organisations can- 
vassed in 1991 to 36 per cent 

At the same time, there lias 
been a 38. per cent increase in 
reported fraud and an eightfold 
increase In the use of Illicitly 
obtained software. 

The commission says: "No 
sector is immune’ from com- 
puter misuse and the opportu- 
nity for fraud and other forms 
of abuse presents a very real 
threat" 

Incidents reported to the 


commission range from an 
employee who gained access to 
her own and her husband's 
debt records and reduced them, 
to a nurse who hacked into a 
hospital's computer system 
and prescribed potentially 
lethal drugs for one patient 
and altered treatment records 
for others. 

The figures reported in the 
study will almost certainly 
understate the problem; organ- 
isations are notoriously shy of 
admitting incidents. 

The commission complains: 


"Computer abuse occurs 
because of a lack of basic con- 
trols rather than any particu- 
larly sophisticated manipula- 
tion of procedures." 

Management It found, was 
not imposing adequate con- 
trols. It found almost 25 per 
cent of organisations had no 
internal auditing procedures, 
60 per cent did not carry out 
security awareness training. SO 
per cent had no computer 
audit skills and more t han 80 
per cent did not practise risk 
analysis. 


There is a direct correlation 
between the incidence of fraud, 
the number of computers In 
use and the number of people 
who have access to the com- 
puters. 

Measures taken during the 
recession to improve produc- 
tivity may have made matters 
worse. The commission notes 
that as organisations use tech- 
nology to reduce layers of man- 
agement, they run the risk of 
removing controls and checks. 

Opportunity makes a thief. 
HMSO. £8.50. 


Estate agents pay price of boom years Ford to 

o r j r j offer free 

mobile 


Andre^ Taylor reports on the background to 
Nationwide’s sale of branches at three a penny 


Few ventures illustrate more 
starkly the excesses of the late 
1980s than the ill-fated pur- 
chases of estate agencies by 
banks, building societies and 
insurance companies. 

Mationwide, Britain’s second 
biggest building society, 
announced on Tuesday it was 
selling for just £1 a total of 304 
estate agency branches 
acquired since 1987 for £i20ra. 
Nationwide had made cumula- 
tive losses of £S0m at the 
branches taking the society’s 
total loss to £200m. 

Abbey National bank and 
Prudential Corporation made 
combined losses totalling more 
than £500m when they sold 
their estate agency businesses 
in 1993 and 1991. 

A. quarter of ITK. estate 
agency branches are estimated 
to have closed since 1988. 

Yet the logic of wedding the 
financial services revolution to 
taragtasi bfcsOTv raew&d 
faultless in the late 1980s when 
estate agencies were among 
Che busiest businesses ta the 
high street: bouse sales were 
running at more than 2m a 
year and house prices were ris- 
ing sharply. 

People who bought houses 
also needed mortgages and 
insurance, argued building 
societies and banks. What bet- 
ter way to market the growing 
range of financial services than 
to sell them all from the same 
shop? There was also a fear 
that if they did not buy estate 
agencies, other financial Insti- 
tutions would, cutting them off 
from potential mortgage sales 
outlets. 

The rush to buy agencies 
prompted a feeding frenzy. The 
price of businesses soared as 
institutions measured success 
by how many branches they 
had. Nationwide paid an aver- 
age of almost £400.000 for each 
of the 300 outlets it is now sell- 
ing at three a penny. 

In 1988 there were estimated 
to be 16,000 estate agency- 
branches owned by about 
11.000 companies. This is esti- 

Tory MP 
for Dudley 
West dies 

By David Owen 

The government was yesterday 
faced with the likely redaction 
of its Commons majority to 13 
after Mr John Blackburn, the 
Conservative MP for Dudley 
West, died of a heart attack 
aged 61. 

Mr Blackburn’s death in the 
early hours of yesterday morn- 
ing leaves the Conservatives 
facing a by-election In a mar- 
ginal Midlands constituency at 
a time when the party is 
trailing Labour In the polls. 

It reduces the government’s 
majority temporarily to 14, 
but Labour would be disap- 
pointed, not to make further 
inroads 1 by overturning the 
majority of.: 5,789. that Mr 
Blackburn trad te: the.. 1992 
general election. 1 '*■ - ■ 


Housings figures behind the losses 


Price Index (1983=>100) 
250 



Transactions tn England & Wales (m) 

2.0 

'S * 1.8 


. 1888 89 80 91 92 83 94 

Source: HBKax 


mated to have fallen to about 
12,000 offices owned by about 
6,500 companies. Half of all 
housing transactions are han- 
dled by about 25 national con- 
cerns mostly owned by finan- 
cial institutions. 

None of these appear to have 
tie wrccfo ot the 
bousing recession which saw 
tionsfe aatoa Ya fogtanfr anh 
Wales i aff from a peak of 2.ftn 
to 3988 to 1.3m to 3992 and 
which are only expected to 
reach 1.2m this year. 

. UK house prices have 
declined on average by 10 per 
cent since the third quarter of 
1989 according to Halifax. 
Britain's biggest building soci- 
ety and owner of 530 estate 
agency branches. 

The fall has been disastrous 
for agents who are paid only 
an completed sales and earn 
fees from commission based on 
a small percentage of tbs sale 
price, incomes became insuffi- 
cient to pay rents and rates on 
expensive high street proper- 
ties and to meet salaries. 

In a bid to curtail costs, 
smaller agencies reduced mail- 
ing shots and in some cases 
started to bill sellers for adver- 
tising. Some refused to market 
properties they felt were 
unrealistically .priced. Heavy 
pressure was put on sellers to 
reduce asking prices in a bid to 
make sales. 

Mr Harry Hill, managing 


1888 89 90 91 82 93 94 

Sowcoc WancfftownuB 

director of Hambro Country- 
wide, which is acquiring the 
Nationwide chain, says his 
company had been, successful 
because it concentrated on sell- 
ing bouses rather than finan- 
cial services. 

"In the past there was a 
Xem^atism Yrj hva&ftng soctak- 
ies to see a move into this busi- 
ness as an. opportunity tor 
more mortgage fending. Argu- 
ably fins has been an expen- 
sive mistake." 

Building societies which 
were generating a large slice of 
their loan portfolio from estate 
agencies may have found it 
more difficult to cut costs and 
close loss-making branches 
than smaller independents sell- 
ing a single product Nation- 
wide says it won £2.5bn - rep- 
resenting 12 . per cent of its 
mortgage business - over the 
counters of Its estate agencies 
In seven years. 

Mr Brian Davis, Nation- 
wide’s chief executive, says the 
disposal will allow it To con- 
centrate more effectively on 
our core financial services 
business.” Hambro will offer 
Nationwide mortgages under a 
marketing agreement 
Halifax, however, intends to 
retain its 530 estate agency 
branches which it says gener- 
ated a tenth of its mortgage 
business In the first half 
of this year even though 
the estate agency division 



phones 


LyOauandnrMser 

Expensive mistake: once an average of £400,000 per ontlet. 
Nationwide’s has now sold 304 estate agency branches for just £1 


itself made a £2m loss. 

“We are strongly committed 
to the estate agency business 
which will improve as house 
sales increase." said the soci- 
ety. 

The housing market, how- 
ever, remains sluggish. A walk 


down most high streets sug- 
gests there still may be too 
many agents chasing too few 
sales in an industry where the 
cost of entry for the smallest 
independent may be little more 
than the rent on a shop, a car 
and a good photocopier. 


Report fuels homes-for-votes row 


By John Authors 

Pressure on Westminster City 
Council will intensify today 
with allegations in a BBC tele- 
vision documentary that coun- 
cillors were misled over the 
contents of the consultants' 
report used to justify the coun- 
cil’s controversial housing pol- 
icy. 

Public hearings start next 
week into the district auditor’s 
provisional report that West- 
minster sold council houses 
between 1987 and 1989 in a 


deliberate attempt to bolster 
the Conservative vote in eight 
marginal electoral wards. 

In January. Mr John MagUl, 
the district auditor, described 
this as “ge r r ym andering **, and 
ruled provisionally that five 
councillors — intruding Dame 
Shirley Porter. Westminster’s 
former leader - and four offi- 
cers should be surcharged 
£21 .25m to repay the money 
wasted on the policy. 

However, the BBC documen- 
tary, First Sight, claims that 
the policy was part of a 


“long-term objective" to 
“socially engineer the city’s 
population”. It produces a 
council document from Sep- 
tember 1986 which says: "The 
sale of council properties offers 
little opportunity to socially 
engineer the population of 
Westminster. This should 
remain a long-term objective.” 

A Conservative councillor. 
Mr Anthony Prendergast, told 
the programme that council- 
lors were misled over the find- 
ings of a report which found 
that Westminster was losing 


population. He said: “I think 
they decided to re-lnterpret 
some of tbe conclusions to suit 
their own means . . . trying to 
obtain a population which is 
more Ukely to vote Conserva- 
tive than Labour." 

Yesterday, Mr Peter Bradley, 
a Labour councillor and one of 
the objectors to the policy who 
first called for the district audi- 
tor’s investigation, said: “I just 
think it's a sad reflection on 
the state of the Conservative 
party that it’s taken him this 
long- to speak his mind." 


Ford will add a new dimension 
to tbe fierce battle for new car 
sales by offering a free mobile 
telephone and connection to 
the Cellnet network with 
almost every new car and van 
sold from October 18, John 
Griffiths writes. 

The company, which is 
spending £4m to promote the 
venture, said it expects at 
least 100,000 buyers a year to 
take up tbe offer - about one 
in five of new Ford vehicle 
customers. 

Mr David Thomas. Ford of 
Britain’s marketing plans 
manager, acknowledged yes- 
today that the UK mobile tele- 
phone market was a “jungle” 
with offers of “free” handsets 
typically offset by very high 
line rental and call charges. 

However, Ford itself is an 
airtime provider and says that 
I tts foe rental and charges axe 
competitive with the rates 
charged for handsets that are 
sold typically for more than 
£175. 

White paper due 
on rural areas 

The government will publish a 
white paper on tbe future of 
rural areas by the middle of 
next year as a joint initiative , 
between Mr John Glimmer, 
environment secretary, and Mr 
William Waldegrave, agricnl- 1 
tore minister. 

The white paper will exam- I 
ine economic, social and envi- 
ronmental changes taking 
place in the countryside and 
discuss future needs. 

School opposition 
to tests ‘easing’ 

The NUT teaching union yes- 
terday said opposition to 
national cnnicnlnm tests in 
England and Wales among Its 
members was easing. 

This year the NUT was the 
only onion to boycott the 
teste, following a ban on them 
by all three main teachers' 
unions last year. 

It is canvassing its members 
after the announcement last 
month by Mrs Gillian Shep- 
hard, the education secretary, 
of a £3 Om package of conces- 
sions to ease teachers’ work- 
load. 

TSB strike off 

Selective strike action planned 
by TSB members of the Bifn 
finance union was called off 
yesterday after tbe union 
accepted an annual pay award 
of 2 per cent. 


NHS hospitals 
‘selling land to 
fund repairs’ 


By Andrew Taylor, 

Construction Correspondent 

More than a third of National 
Health Service trust hospitals 
expect to sell land or other 
assets to fund developments 
and repair programmes worth 
£1.27bn over the next two 
years, to a survey published 
today shows. 

The findings underline the 
importance being attached by 
developers and construction 
companies to the government's 
private-sector finance initia- 
tive, which expects a growing 
proportion of tbe country’s 
infrastructure to be funded 
from private sources. 

The recent revival in resi- 
dential and commercial prop- 
erty values has led to an 
increase in land sales and 
deals being offered by hospitals 
seeking funds to improve 
health facilities. 

The study of tbe construc- 
tion and property requirements 
of 178 trust hospitals by the 
Royal Institution of Chartered 
Surveyors shows that 34 per 
cent expect to use asset sales 
as their main source of funds 
for future developments. 

Another 23 per cent expect to 
use finance raised from banks, 
leasing arrangements or some 
other private-sector source to 
support investments. 

Royal Brompton National 
Heart & Lung Hospital Trust 
recently announced plans to 
give away land and buildings 


on its prestigious Chelsea site 
to private bidders willing to 
develop and run hospital ser- 
vices. The successful bidder 
will be given the opportunity 
to redevelop a redundant clini- 
cal building and nurses’ home. 
Construction groups submit- 
ting bids include George Wim- 
pey. Tarmac and Sir Robert 
McAIpine. 

Barratt, Britain's third- 
largest housebuilder, and Wat- 
ford-based Country Metropoli- 
tan Homes have announced a 
Joint HOOm development plan 
at Highlands Hospital at 
Enfield, north London, which 
is transferring to the nearby 
Chase Farm hospital. 

Mr Christopher Vickers, con- 
struction spokesman for the 
institution, said: “Growing 
pressure on trusts to self-fi- 
nance building and mainte- 
nance works means that they 
are having to develop new 
funding methods. Our research 
shows that this Is increasingly 
likely to be obtained through 
internally generated sources, 
such as sale of assets, rather 
than borrowing from b anks or 
cost-cutting exercises." 

Some 88 per cent of trust 
hospitals expected to carry out 
some form of new building 
work over the next two years 
with nearly two-thirds of trusts 
planning to spend more than 
£500,000. emphasising “the 
pent up demand for repair and 
maintenance work in the heath 
sector”. 


Airports face 
capacity crisis 


By Pate Betts, 

Aerospace Correspondent 

Heathrow and Gatwick will 
have to turn passengers away 
from the be ginning of the next 
century unless an additional 
runway is bralt to serve Lon- 
don’s two busiest airports, 
according to a study commis- 
sioned by the British Air 
Transport Association, the UK 
airline trade organisation. 

The report, which has not 
yet been published, warns that 
the proposed construction of a 
new £900m terminal at Heath- 
row and expansion at Luton 
and Stansted will not be 
sufficient to accommodate pas- 
senger demand in the London 
area after the turn of the 
century. 

The debate over the need for 
additional runway capacity in 
the south-east is dividing the 
UK aviation industry. BAA, 
the airports operator, and Brit- 
ish Airways argue that there is 
no urgent need for a new run- 
way, while other airlines are 
pressing for additional runway 
capacity in the Heatbrow-Gat- 
wick area. 

Both BAA and BA are anx- 
ious to avoid any controversy 
over a new runway undermin- 
ing the proposed development 
of Terminal Five at Heathrow, 
which wDl be at the centre of a 
long and fiercely contested 
public inquiry starting in May. 

BAA has argued that Heath- 
row requires additional termi- 
nal capacity but will not need 
additional runway capacity 
until about 2015. A fifth termi- 


nal at Heathrow would enable 
BA to concentrate operations 
at its main London hub. 

The report expresses concern 
that the campaign for the ter- 
minal risks delaying any gov- 
ernment decision on a new 
runway. It says arguments that 
the government need take no 
decision on a new runway 
until well into the next century 
are "dangerously miscon- 
ceived". 

The government is due to 
make a statement this year on 
the findings of a committee it 
set up to study runway capac- 
ity in the south-east 

“Our worst fear is that the 
government will take no deci- 
sion and will be persuaded that 
the system can cope without 
any change for the time 
befog,” said Mr David Hopkins, 
the trade organisation's chair- 
man and former head of Bri- 
tannia Airways. 

If the government were to 
sidestep the runway issue, it 
would delay any expansion 
programme by up to 20 years, 
he added. 

This would give an advan- 
tage to rival European air- 
ports. 

The study says Department 
of Transport figures show that 
capacity at Heathrow was 
between 96.8 per cent and 98.5 
per cent this summer and Gat- 
wick was between 95-2 per cent 
and 95.9 per cent 

Capacity is available at Stan- 
sted and Luton, but the study 
emphasises that airlines are 
mainly interested in serving 
Heathrow and Gatwick. 


Old ideas on benefits get dressed up in new clothes 

David Goo dh art on cynicism over a new allowance unveiled to the Tory faithful r, joSn^aCL £ a 


laioritv temporarily to 14, The Jobseeker’s Allowance, the new 
at Labour would be disap- benefit which will combine Unem- 
ilnted not to make further ployment Benefit and Income Sup- 
I roads ■ by overturning the port, was yesterday being paraded 
ajorfty of 5,789. that Mr around the Conservative party con- 
lackburn bad hi: the.. 1992 ference. But in toe Jobcmifresthere 
•neral election. f '*' - : fe confusion about what it will 

Such a result would mSRe it; mean, and a certain cynicism about 


even harder for the govern- 
ment to push controversial 
legislation, such as the 
planned Post Office privatisa- 
tion, through parliament. 

Mr Blackburn, a former 
policeman and one-time sales 
director of Solway Engineer- 
ing, was staunchly loyal to the 
party tine throughout his 15- 
year parliamentary career. 


-how much of the proposal is new. 

Mr Michael Portillo, employment 
secretary, and Mr Peter Lilley, social 
security secretary, both stressed yes- 
terday that the allowance is part of a 
tough new contract between the 
unemployed person and the state. 

Mr Portillo' told the Tory faithful: 
“We shall ask those seeking a job to 
makp a bargain with the taxpayer to 
commit themselves to follow a solid 


programme of action directed 
towards getting work. They must 
agree to apply for jobs, go to inter- 
views, attend courses, [and] get re- 
trained." 

This emphasis on the contract and 
on the feet that an unemployed per- 
son can turn down a job offer, or a 
training place only if be or she has 
very good reason is the closest 
Britain gets to the idea of working 
for benefit, or workfare. 

But Mrs Margaret Walker, man- 
ager of 12 Jobcentres In south-east 
London, points out that her officials 
can already, after 13 weeks, take 


away benefit from people who are 
turning down jobs or making insuffi- 
cient effort to find work. 

Taking away benefits happens rel- 
atively seldom. Mrs Walker says said 
that only just nine people in her 
area - which includes some of the 
highest levels of unemployment in 
Britain - have been refused benefit 
for turning down a job offer this 
year out of 53,000 unemployed. 

The number is small not because 
staff are “soft” - the figures are sim- 
ilar all over the country - but 
because of the relatively long proce- 
dures and the fact that few claim- 


ants will allow the process to get to 
the final stage. 

The idea of the contract between 
claimant and tbe state is a develop- 
ment of an existing idea. Mr Robin 
Smith of Greenwich Jobcentre in 
south-east London said: "We already 
have back-to-work plans that a 
claimant must sign, so we are a bit 
puzzled about what all the Fuss is 
about” 

These back-to-work plans are tai- 
lored by staff to each Individual 
claimant. They may, for example, 
require a claimant to visit a Job- 
centre twice a week and to make a 


certain number of job inquiries. 

The cynicism of Jobcentre staff 
towards the more political aspects of 
the allowance does not mean they 
are opposed to It Mrs Walker said: 
“It has been causing some anxiety 
because so few details have been 
released so far. That should end next 
month when a white paper is pub- 
lished, with a view to the new bene- 
fit being introduced in April 1996. 

Anything that brings the Benefits 
Agency closer to the Jobcentres - 
part of the Employment Service - is 
welcomed. Jobcentres are now 
responsible for Unemployment Bene- 


fit, which Is about £44 per week. 

Jobcentres also act as agents for 
tbe Benefits Agency in paying the 
most important benefit. Income Sup- 
port This is complex and governed 
by different rules to Unemployment 
Benefit, and claimants often have 
difficulties Jobcentre staff cannot 
solve. The new allowance will mean 
more Benefits Agency staff in Job- 
centres. 

Merging the benefits will be a 
relief to most claimants and staff. 
But it is a long-overdue technical 
reform, which cannot stand the 
weight of political rhetoric being 
placed upon it 

Conference reports. Page 12 






10 




★ FINANCIAL TIMES 

MANAGEMENT: MARKETING AND ADVERTISING 


THURSDAY OCTOBER 13 I9!M 


Muzak to the ears 


A stronauts listened to it in 
the Apollo lunar spacecraft 
and it was the last thing to 
be switched off in the 
American embassy as the US evacu- 
ation of Saigon reached its climax. 

Muzak, 60 years old this month, is 
to its critics inextricably linked to 
“elevator music" - where Manto- 
vani meets Liberace in achingly 
bland disharmony. 

Yet thnnlcq to Muzak's thousands 
of clients, who consider customised 
music more as a sales tool than 
noise pollutant, Muzak's product is 
far from being stuck between floors. 

Invented by Major General 
George Squier, a retired US army 
signals officer, Muzak began as a 
dance medley service, played down 
telephone lines to subscribers for 11 
cents a month. 

The notion of piped music was 
later seized on by the US’s newly-in- 
fluential industrial psychologists, 
who saw it as a cost-effective way to 
increase productivity in the work- 
place. 

As worker motivation appeared to 
improve with melody, so too did the 
enthusiasm of shoppers who 
appeared to linger longer and spend 
more. 

Following a series of successful 
Muzak experiments in big New 
York stores, a national phenomenon 
was under way. 

Now, Muzak's 12 channels - only 
one, the “ environmental music 
channel” could be described as ele- 
vator music, the rest being any- 
thing from contemporary jazz to the 
Rolling Stones - have spread to air- 
craft, hotel lobbies and restaurants. 


Virginia Matthews considers the 
arguments for background music 
everyone loves to hate 


as well as to the waiting rooms of 
doctors and dentists. 

Piped music has also spread to 
switchboards, which play the “hold 
music" that is designed to soothe 
irate callers, but which often raises, 
rather than reduces blood pressure 
levels. 

Curiously. Muzak has failed to 
thrive in Britain. For while its 
name is a by-word for those who 
dislike background music, the 
self-proclaimed “audio icon" and 


has invaded the UK is entirely the 
work of others. 

Be it “acid jazz" music played full 
pelt at fashion retailer French Con- 
nection, or Tommy Steele’s Little 
White Bull keeping the tiny punters 
amused at Mothercare, retailers 
instinctively know what appeals to 
their own target audiences. Or do 
they? 

Ritter, who hints that a signifi- 
cant UK franchise deal is imminent, 
argues: “Nothing comes (dose to the 


"Our research indicates that the majority of 
the customers who notice it feel that the 
music adds to the enjoyment of their 
shopping trip” 


“tunes mith" from Cleveland Ohio, 
has not bees in the UK since the 
early 1980s, when its last UK fran- 
chise ran out 

“We are used to being blamed for 
all background music," says Leslie 
Fitter, the company's director of 
marketing. 

“But as far as Britain goes, Muzak 
is blameless." 

While Muzak continues to supply 
tapes to more than 200 international 
franchisees, mostly broadcasters, 
who receive the soundtracks via a 
satellite link, the piped music that 


expertise of a company that has spe- 
cialised in business music for 60 
years. “It’s fine for a store manager 
to bring in his favourite CD. but no 
one should pretend that any real 
thought goes into it 

“Our service begins with a full 
consultation with a senior Muzak 
executive who finds out the demo- 
graphic profile of the company, its 
desired atmosphere and how it is 
currently perceived. 

“We then recommend a pro- 
gramme that both meets the firm's 
music needs and possibly includes a 


customised programme of market- 
ing messages for use inside the 
store or on the switchboard.” 

If and when a deal with Muzak is 
struck in the UK the full power of 
Muzak's service will be unleashed: 
everything from the bitline channel 
of today's top pop tracks, to the 
c lassical channe l, country and west- 
ern and oldies - a blend of 1960s 
and 1970s music that seems to go 
down so well with baby boomers. 

If piped music is genuinely 
unpopular with consumers, as its 
critics would have us believe, why 
do so many retailers continue to use 
it? 

Harrods, which uses both “hold 
music” and in-store piped music, 
says: “If music was a real irritant to 
our customers there is no way that 
we would play it After alL the idea 
is to open wallets and purses, not to 
get them slammed shut 

“We believe that what people 
actually object to is this fashion for 
elevator music or meaningless 
noise, the sort of thing we would 
never play in our elevators or any- 
where else for that matter. 

“What is appreciated is music 
that is appropriate to the depart- 
ment . . . anything that adds to the 
ambience, rather than distracting 
from it, is welcomed by our custom- 
ers." 

While Harrods plays it safe by 
having music-free zones on the 
ground and first floors and in the 
lift areas, Mothercare' s music is 
unmissable throughout the store. 

“Our research indicates that the 
majority of the customers who 
notice it feel that the music adds to 


I NO, PLEASE- PUT ME ON HOLD A BtT LOM50$/' 
JUST LO/E THE £&&& VERNON Of 
,G£££N£UrEV£5 PLAPEb OH A SymUESlSEEJ 



the enjoyment of their shopping 
trip,” says Mothercare. 

While 1990s industrial psycholo- 
gists are less mesmerised by the 
power of music than their 1930s 
counterparts, Muzak’s claims con- 
tinue. The latest research from 
Cleveland suggests that piped 
music increases the number of 
shoppers who make it to the cash 


till by 17 per cent. 

In another study, two-thirds of 
customers say that Muzak is prefer- 
able to silence, adding that cus- 
tomer service is “bound to be bet- 
ter" in piped music stores. 

But of the consumers who walk 
out of stores or hang up just as soon 
as Greensleeves starts up? Not a 
mention. 


Face to face with the interactive future 


T he techno-buffs may be talking excit- 
edly about the convergence of tech- 
nologies, interactivity, the informa- 
tion superhighway and so on. But for 
many, the concepts are absurdly futuristic 
and are to be feared. At the opposite 
extreme, some consumers are already 
bored even before the technology has 
become a reality. 

Consumer attitudes will clearly affect 
how new media develop, who users are and 
how mnch influence advertisers will be 
able to wield. Researchers at the London 
office of advertising agency Ogilvie and 
Mather decided, therefore, to explore 
through discussions with groups of con- 
sumers, what attitudes are forming. 

To begin with, the very nation of “con- 
vergence" between televisions and comput- 
ers appears to be distasteful to many. 
While the techno-buffs are striving to pull 
everything together, consumers are fight- 


Diane S umm ers finds consumer attitudes can affect the 
development of new media and the influence of advertisers 


hag to posh them apart. The group discus- 
sions highlighted the way in which the 
computer is seen as synonymous with 
work, while the TV equates with leisure. 
The last thing many people want is for the 
two to be confused - a fear particularly 
strong among “techno-literate" consumers. 

The research, which was conducted for 
O&M by the Haffam Hopper group, was 
unveiled yesterday. Four sets of group dis- 
cussions. each of three hoars duration, 
were held with British adults, while two, 
two-hour groups of 13 and 14-year-olds 
were also held. Researchers also talked to 
16 and 17-year-old “computer literate" 
young adults. All groups had access to, for 
example, CD-Rom, and were able to play 


games, explore a 3-D atlas and thumb 
through an interactive Argos shopping cat- 
alogue. 

The groups were also shown a futuristic 
film of a world where portable screens 
would he used to conduct a face-to-face 
meeting, go shopping, carry out an opera- 
tion and redesign a building. The technol- 
ogy which was presented through a soap 
opera-style story in the film, stiff appeared 
to leave room for traditional family values 
and meaningful personal relationships. 

Not surprisingly, some of the discussion 
group members found it difficult to project 
themselves into such scenes or the science 
fiction realms of, for example, virtual real- 
ity. Others were cynical about the differ- 


ences that woald be made to their lives. 

Beth Barry, O&M planning director, says 
this cynicism is born of experience: “Ten 
years ago we were told everybody was 
going to have hundreds of channels on 
their television and that video recorders 
were going to change our lives because 
we'd all be timeshifting." The reality is 
that only about 17 per cent of UK house- 
holds hare cable or satellite and video 
recorders are mostly used for watching pre- 
recorded films, she says. 

People's ability to reduce everything to a 
“so what" should never be under-esti- 
mated. says Barry. There were comments 
from the group such as: “So you can tap 
into your TV and order up a bottle of 


DettoL But, in the end, what you're left 
with is still a bottle of Dettol.” 

The technology might be perceived as 
mundane in certain respects, but the group 
discussio ns also unearthed the usual fears 
about “the machines taking over" - 
expressed by the adult technophobes. There 
were also fears about drowning in informa- 
tion, as well as losing high-quality British 
TV and the surprises it can offer. 

The positioning of converging technolo- 
gies are vitally important to advertisers - 
whether, for example, entertainment ser- 
vices. home shopping and banking are seen 
to be extensions of foe TV or foe computer. 

If consumer perceptions are that the 
information superhighway will be routed 
principally through the TV then the mass 
market is there to be tapped. However, if 
advertisers seek the more up-market audi- 
ences, there will be more benefit in empha- 
sising the technology's computer pedigree. 


Red 
card for 
rules on 
TV sport 

G overnment restrictions 
which prevent 
Wimbledon, the FA Cup 
and other big British sporting 
events being shown on a 
nay-per-view basis on UK 
television should be scrapped, a 
discussion paper argues today. 

In the current edition of 
Consumer Policy Review* Phibp 
Cullum. manager of policy 
research at the Association of 
Consumer Research, says the 
“listed events" roles introduced 
under the 1990 Broadcasting Act 
“work against the interests of 
consumers”. *1710}' do not. for 
example, require consultation 
with consumer groups on 
content of the list or grant 
consumers rights to see events 
on television. Instead they 
protect established broadcasters 
again st satellite and cable 
company competition. 

Cullum says that by handing 
exclusive rights to terrestrial 
broadcasters - instead of simply 
removing exclusivity from the 
reach of pay-per-view channels - 
foe rule could deprive viewers of 
innovative new services. 

He also argues that the system 
is anomalous - if Scotland 
played Englan d at football in the 
1996 European Championship 
fipai “the game might be shown 
on a pay-per-view basis, but if 
Lithuania meets Liechtenstein in 
the next World Cup finals the 
mat<-h could not be shown on a 
pay-per-view basis". 

At present satellite 
broadcasters like BSkyB. in 
which foe Financial Times' 
parent Pearson owns a stake, 
only offer subscription channels. 
The House of Commons Heritage 
Select Committee, however, has 
recommended the relevant 
section of the 1990 Act be 
extended to such channels. 
Cullum says it may be 
appropriate to regulate televised 
sport in other ways. He thinks 
BSkyB’s charges should be 
closely monitored by the Office 
of Fair Trading. 

* Published by the Consumer's 
Association. 

Tim Dickson 



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CONTRACTS & TENDERS 


ADVISORY CENTER 
FOR RUSSIAN OIL 
EQUIPMENT MANUFACTURERS 

Expressions of interest are invited from firms able to 
help the Russian Ministry of Fuel and Energy set up an 
autonomous center in Moscow (i) to help Russian oilfield 
equipment manufacturers compete for approximately 
$500 million of contracts under two World Bank-financed 
oil projects starting In November 1994 and (it) develop 
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equipment manufacturers and experience with World 
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This project has the support of the World Bank which will 
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information about this important assignment, please 
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LEGAL NOTICES 


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PEOPLE 


Pennington's flight 
path to Royal 


Royal Insurance has appointed 
a marketing specialist as man- 
aging director of The Insur- 
ance Service, its direct writing 
insurance arm. 

Sydney Pennington is a for- 
mer sales and marketing exec- 
utive of retail group Marks & 
Spencer and, more recently, 
former joint managing director 
of Richard Branson's Virgin 
Atlantic. 

Royal was one of the first 
composite insurers to follow 
the market leader Direct Line 
Insurance by setting up a 
direct insurance arm: but com- 
petition has increased as oth- 
ers have started to sell Insur- 


ance policies via the telephone 
and advertising. 

Royal Insurance is hoping 
Pennington, 49, will raise the 
profile of The Insurance Ser- 
vice. which started in 1988 and 
currently insures more than 
400,090 private motorists and 
households. 

The time is now right, says 
Pennington, “to go into the 
next stage which will be a 
more rapid period of growth". 
He expects the company to 
develop and expand sales of 
new products, particularly in 
house insurance, and also to 
try to increase the amount of 
business it conducts with each 


customer. 

With direct insurers break- 
ing down the traditional 
method of buying policies via 
brokers, Pennington's previous 
experience in building cus- 
tomer links will prove helpful; 
at Marks & Spencer he was 
involved in the development of 
the group's “neighbourhood" 
food stores; at Virgin he helped 
develop the group’s Mega- 
stores. 

One disadvantage Penning- 
ton faces is Hie Insurance Ser- 
vice’s relatively little known 
brand name. Last year Royal 
Insurance began a pilot project 
using the title Royal Insurance 
Direct For now. Royal Insur- 
ance appears content to run 
the two as separate operations; 
it believes that each may be 
able to target different client 
groups. 


New partners at 
Goldman Sachs 


Michael Sherwood, 29, one of 
the driving forces behind 
Goldman Sachs' rise up the 
Eurobond league tables, has 
been rewarded for returning to 
the fold by being made a part- 
ner of Goldman Sachs. 

Sherwood, who quit Gold- 
man at the start of the year 
only to rejoin the firm a 
month later, and Richard 
Sharp, son of the late Lord 
Sharp, the former chairman of 
Cable and Wireless, are two of 
the 11 new London-based gen- 
eral partners elected to the 
125-year-old partnership. 

Goldman is the largest pri- 
vate partnership remaining 
among foe major US invest- 
ment banking and brokerage 
firms. Its partners are reputed 
to earn a minimum of between 
$3m and $5m a year - hence 


competition for foe biennial 
ritual of elevation to foe part- 
nership is fierce. This year 
Goldman appointed 58 new 
general partners, more than 
ever before. 

Apart from Sherwood and 
Sharp, Goldman’s new Lon- 
don-based partners are: David 
Blood, Treasury, operations, 
technology and accounting; 
Z acbariah Cobrmik, Japanese 
equity link trading; Gary 
Cohn, metals trading; Michael 
Evans, equity capital markets; 
Scott Kapnick, corporate 
finance; Scott Mead, IBS com- 
munications and technology; 
Kipp Nelson, derivatives triple 
joint venture; Wiet Pot Euro 
share sales: Anthony Wil- 
liams, derivatives triple joint 
venture. 

(See Observer). 



Linus Cheung, 45, (left) who 
took over as chief executive of 
Cable and Wireless’s Hongkong 
Telecom business in March, is 
to join the main C&W board as 
an executive director on Janu- 
ary L Cheung, who was bom 
in Hong Kong, joined the Swire 
Group as a management 
trainee for Cathay Pacific Air- 
ways in 1971 and spent most of 
the next 18 years working for 
foe airline.. In May 1989 he was 
seconded to the Hong Kong 
Government’s “think tank" for 
two years. He rejoined Cathay 
Pacific in 1991 and had just 
been appointed deputy manag- 
ing director when he was head- 
hunted by Hongkong Telecom. 



Peter Hinchcliffe, 47. one of the 
founders of the Iceland frozen 
food chain, is stepping down as 
joint managing director, thus 
ending a 24-year partnership 
which started when he and 
Malcolm Walker. 48, Iceland's 
chairman and chief executive, 
opened their first shop in 
Oswestry. 

Hin c h cliffe (pictured in Ice- 
land’s warehouse at Shotton) 
and Walker were both deputy 
managers of Woolworih stores 
in North Wales: in their spare 
time they sold strawberries to 
passing motorists on the 
Horseshoe Pass. Is 1970 they 
went into business full time 
and have built up a chain of 
almost 700 stores in the UK 

Hinchcliffe says he wants to 
reduce his involvement in the 
company in order to pursue 
other business interests. He 
will retire as joint manag in g 
director and deputy chairman 
at the end of the year. He win 
remain a non-executive direc- 
tor and has been retained as a 
consultant for two years. 

He says he has no plans to 
reduce his shareholding of 
around 3 per cent in Iceland. 


Cawthra quits 
Miller Group 

David Cawthra is to step down 
as ceo of the Miller Group, the 
Edinburgh-based construction 
company, after three years in 
the post, and hand over to 
Keith Miller, a member of foe 
family wbich owns it. His 
departure was by mutual con- 
sent, the company says. 

Cawthra, 51, joined Miller 
Group from Balfour Beatty 
where be was ceo for three 
years having been with foe 
company since 1979. He was 
appointed by James Miller who 
stepped down as ceo but 
remained /^ h ai rman- 

At the time Cawthra said he 
wanted to make Miller bigger 
“both in size and in its worth 
to the shareholders”, and saw 
“big opportunities" for up and 
coming companies “which 
seem to have been hit less hard 
by recession than have the 
large ones”. But Miller was not 
immune to the economic down- 
turn and in 1993 lost £ll.9m 
including exceptional items. 

Yesterday he said it “had 
always been my expectation 
that a time would arise when it 
would be appropriate for Keith 
to take over and I fully agree 
that that time has now been 
reached". He has no new job to 
go to and will work, at Miller 
till the end of the year. . 

The company said both par- 
ties felt it was time for MUler 
to be led once again by a mem- 
ber of the family. Cawthra’s 
departure did not presage any 
nasty surprises in foe current 
year's results, it said. 

Keith Miller. 45, has been 
responsible for the group's 
mining activities in foe UK 
and US and yesterday learnt 
that Scotcoal. its joint venture 
with Ryan Mining, had been 
unsuccessful in its bid for the 
assets of British Coal in Scot- 
land. He is also md of Miller 
Developments which handles 
all the group's commercial 
property ventures and invest- 
ments. Educated at Heriot 
Watt and Glasgow universities, 
he has worked with Miller 
Group since 2976. 

Keith Miller is the younger 
son of the late John Miller, one 
of the three founding share- 
holders of the Group and a 
first cousin of James Miller. 

Graham Foster has been 
promoted to md of EVE 
GROUP; Gany Orpes, md of 
Eve Graham and Eve Arclive, 
has been appointed to foe main 
board, and Derek Haynes 
promoted to md of Eve 
Structures. 


■r. 


t 






FINANCIAL TIMES THURSDAY OCTOBER 1 3 1994 


11 


The privatisation programme 
has had only limited 
success so far Page 2 


FINANCIAL TIMES SURVEY 


BULGARIA 


Recent arrivals indicate 
improved prospects for the 
tourist industry Page 3 


Thursday October 13 1994 


Although Bulgaria is going through a painful period 
of transition, it has managed to renegotiate its 
foreign debt and remains a force for stability in a 
turbulent region, says Anthony Robinson 

Light at the end of 
the tunnel 


After five painful and 
confusing years of political- and 
economic readjustment, Bul- 
garia is heading for general 
elections > which are likely to 
bring- back into power politi- 
cians with their roots in the 
communist past. 

If so, this Balkan country of 
8 -5m people will be following a 
trend well established else- 
where in central Europe. In 
recent elections in countries 
such as Poland and Hungary, 
the political experience and 
party organisation of former 
communists have combined to 
defeat the inexperienced “dem- 
ocrats" who inherited the vac- 
uum of power and bankrupt 
economies left by the collapse 
of Soviet hegemony over the 
region. 

In some respects Bulgaria is 
ahead of the trend. The anti- 
communist Union of Demo- 
cratic Forces (UDF) which 


helped oust the c ommunis t 
regime and won the 1991 elec- 
tions, collapsed 11 months 
later after losing an unneces- 
sary no-confidence vote. 

The government which 
replaced it in December 1992, a 
non-party “government of tech- 
nocrats" headed by Lyuben 
Berov, a former university pro- 
fessor, was supported in parlia- 
ment by the votes of the Bul- 
garian Socialist Party (BSP), 
successor to the defunct com- 
munist party led for several 
decades by Todor Zhivkov. 

Many Bulgarians interpreted 
this as allowing the BSP to 
regain power behind the 
scenes, ensuring that institu- 
tional, economic and other 
reforms were either delayed or 
implemented in a way which 
benefited the communist era 
managers and power brokers 
who retained jobs throughout 
the state and local adminlstra- 



Bulgaria has preached moderation and practised good-neigh bourflness 
under Hs pro- western president, Zhefyu Zhaiev 


tion and largely controlled the 
economy. 

Given the totalitarian nature 
of former party-state regimes 
throughout the region, such a 
development is unsurprising. 
The old system specialised in 
coopting talent into its various 
sectors, leaving non-party peo- 
ple in subordinate or purely 
technical positions. 

Centuries of Turkish suzer- 
ainty and economic backward- 
ness in the Balkan region 
retarded the development of a 
substantial middle . class and 
modem institutions. This facil- 
itated the subsequent re-impo- 
sition of feudal-type commu- 
nist power relations under 
Soviet influence after the sec- 
ond world war. 

Seen from this historical per- 
spective. Bulgaria has per- 
formed somewhat better than 
any of its Balkan neighbours 
since the collapse of the Soviet 
system. 

In Yugoslavia, former Titoist 
communists turned themselves 
into rabid nationalists and vio- 
lently tore the country apart 
In Romania, Ion lliescu, a 
senior communist party nffirfai 
sidelined by the dictator 
Nicolae Ceausescu almost 20 
years earlier, seized power 
after the palace coup of Decem- 
ber 1989 and was able to legi- 
timise his grip at subsequent 
elections. 

What is more, in contrast to 
Greece’s nationalist Harm*; in 
Albania and its mounting of a 
wounding trade embargo on 
the former Yugoslav republic 
of Macedonia, Bulgaria has 
preached moderation and prac- 
tised good-neighbourliness 
under its pro- western presi- 
dent, Zhelyu Zhelev, a former 
professor and UDF leader. As a 
result, Bulgaria has r emaine d 
an island of good sense and 
stability In an otherwise turbu- 
lent region. 

Domestically, the much-ma- 
ligned Berov government also 
provided the necessary stabil- 
ity and continuity to conclude 
debt reduction negotiations 
with both the Paris Club of 
official lenders and the London 
Club of commercial bank credi- 
tors. 

Before resigning at the 
beginning of September this 
year the government also con- 
cluded a smaller debt swap and 
repayment deal with Russia, 
together with a new trade and 



The statue of Russian Tsar Alexander II, known as the ‘Tsar Liberator - for his role In freeing Bulgaria from Turkish rale, stfll surveys the Bulgarian perflamant and Alexander Nevstd 
cathedral in the heart of Sofia. Russia and Bulgaria »e moving closer again, but now the Bnfcs are mainly economic and the relationship is one between sovereign states rtot>mmx> 


investment a greement 

Under this agreement Bul- 
garia will become one of the 
main transit routes for future 
exports of oil and gas from the 
Caspian region to the Mediter- 
ranean and southern European 
markets. 

The prospects for an 
increased flow of trade and 
investment between Bulgaria 
and Russia and other former 
Soviet states - especially 
Ukraine and the central Asian 
states - are linked to the 
expected economic revival of 
former Comecon markets 
which five years ago accounted 
for more than 80 per cent of 
Bulgaria's trade. 

Now the proportion is 
between 35 and 40 per cent 
with more than half of Bulgar- 
ia's trade taking place with 
OECD countries. The aim is to. 
continue developing trade in 
both directions izr order to 
avoid the over-dependence 
seen in the past on the former 
Soviet market 

The combination of eco- 
nomic recovery in the German 
and other European Union 
markets and the prospect of 
growing trade on a new mar- 
ket-oriented basis with the 
middle east and former Com- 
econ states is laying the basis 
for an export-led economic 
recovery after five hard years 
of declining production and 
real incomes. 

For this to proceed, however, 
Bulgaria desperately needs 
more foreign and domestic 
investment with which to mod- 


Prospects for growth are improving, says Anthony Robinson 

Ports are evidence of recovery 


-If Bulgaria had a serious government 
committed to rapid privatisation the econ- 
omy would be in a much better state," is 
the standard reply to enquiries about the 
state of the Bulgarian economy. 

It is true up to a point. A weak govern- 
ment backed by former communists has 
been slow in embarking upon a transpar- 
ent process of privatising, downsizing or 
actually closing the biggest loss-makers 
among the several hundred large enter- 
prises which formed the backbone of Che 
former centralised economy. 

But although precious time has been 
lost it would be a mistake to .conclude 
that the Bulgarian 
economy has become 
a hopeless case. 

The hlgh^rate of 
clandcstitlfe'ftss&t'-difr 
posals through' "bid- 
den privatisation", a 
17 per cent unem- 
ployment rate, the 
steady rise in the 
number of self-em- 
ployed workers and 
new private compa- 
nies and a successful 
shift to new export 
markets in the west 
indicate that signifi- 
cant structural 
changes are taking 

Pl After four years of declining output and 
incomes, the economy has bottomed out 
and gross domestic product is expected to 
show no growth in 1994 and a modest 
increase in output and incomes next year, 
aided by rising demand from both Ger- 
many and the former Soviet market 
•The physical evidence for such a recov- 
en- can be seen on the bustling quays of 
Bulgaria's biggest Black Sea ports, Bui- 
gas and Varna. Forklift trucks load pi- 
lots of lead and zinc, bales of ch em ica l s 
and rolls of coiled steel on to ships des- 
tined for middle eastern and western mar- 
kets. Big investments are planned to 
increase container handling and refriger- 
ated warehouse facilities and raise vol- 
umes of oil and gas. 

Meanwhile, Bulgaria’s large merchant 
shipping fleet of more than 2m dwt, 
which five years ago mainly ser ved Bul- 
garian trade, is now 80 per cent hired out 


to foreign shippers, earning much needed 
hard currency for eventual fleet replace- 
ment Varna and other Black Sea ship- 
yards also report receiving more orders 
for new ships than they can handle with- 
out heavy new investment and better 
management methods- 
Refineries and petrochem ical plants, 
such as Neftocidm on the outskirts of Bur- 
gas which has been working at half capac- 
ity for much of the past three years, also 
report sharply higher export and domestic 
demand, and higher profits. At Neftochim, 
the country’s largest refinery and petro- 
chemical complex, a Lvl2m loss in 1992 


. •_ >V KAZAKHSTAN 



was converted into a profit of more than 
Lvlbn in the first eight months of this 
year on sales of Lv25bn, compared with 
sales of Lvl2.4bn in the whole of 1992, 
although inflation distorts the figures. 

On the negative side, cumula ti ve infla- 
tion over the first eight months pf tile 
year reached 65 per cart, about the level 
for the whole of 1993 and double the proj- 
ected level agreed with the International 
Monetary Fund, The combination of sharp 
Lev devaluation in March and. August/ 
Se ptemb er and the resulting push to infla- 
tion has cut average wages in dollar 
terms to about 575 per month, forcing 
many workers to take s econd j obs in the 
private sector to escape poverty. 

The private sector now accounts for 
between 25 and 30 per cent of economic 
activity, although SO per cent of industry 
Is still formally in state bands and priva- 
tisation remains slow. Si gnificant ly, rapid 


growth in the private sector, especially in 
tourism, retailing, financial and other ser- 
vices. is being matched by a patchy but 
noticeable recovery in parts of the state 
sector, such as steel, metals processing, 
shipbuilding, shipping and chemicals 
which have been hard pressed to survive 
since the collapse of Comecon markets. 

The prospects for growth have been 
greatly improved by the successful con- 
clusion of negotiations with Paris Club 
official creditors and the far more impor- 
tant London Club agreement at the end of 
June which reduced Bulgaria’s $8.16bn 
debt to a group of more than 300 western 
— — . commercial banks 

by about 47 per cent. 

The IMF, World 
Bank and other 
international finan- 
cial institutions have 
pledged nearly glbn 
to help finance the 
8716m up-front costs 
of the debt reduction 
and rescheduling 
agreements which 
will cost Bulgaria an 
estimated 8300m a 
year. 

Thus far the Lon- 
don dub agreement, 
which re-opens Bul- 
garia’s access to nor- 
mal commercial 
bank lending, has not led to the sharp rise 
in foreign investment and foreign bank 
interest which followed the earlier conclu- 
sion of Poland’s similar debt reduction 

accord. 

But foreign equity investment has risen 
from just over Sioom to more than S500m 
during the past two years and several 
small- to medium-sized investments are 
pending in the brewery, hotel and tour- 
ism, food processing and other sectors as 
the privatisation agency grinds through 
its paces. 

Heavy infrastructure Investment in tele- 
communications, roads, bridges, ports, 
pipelines and railway is also on the hori- 
zon' as Eu ropean and international lend- 
ing agencies gear up to raise Bulgaria’s 
profile as a key link in western Europe’s 
expected fastrimproving trade with the 
energy rich former Soviet states of central 
Asia and the middle east 


ernise its obsolete industries, 
improve the energy, transport 
and telec nmmiiniffafifmB infra- 
structure and complete the 
present structural shift 
towards a more modern ser- 
vice. food processing and light 
industry based economy. 

In the short run, the recent 
sharp devaluation of the Lev, 
the Bulgarian currency, has 
improved the price competi- 
tiveness of Bulgarian goods 
and services, albeit at the cost 
of increasing inflationary pres- 
sures and further depressing 
real incomes. 

Growth prospects have been 
aided by a sharp recovery in 
tourism, increasing transit 
traffic from Macedonia, higher 
foreign investment, and the 
first signs of recovery in the 
disorganised agricultural sec- 
tor. 

Overall, the economy is 
expected to show no growth or 


possibly a mar ginal rise in 
gross domestic product this 
year after five years of steep 
decline. 

While encouraging for the 
fiiture, the first signs of eco- 
nomic recovery are unlikely to 
provide much of a "feel good 
factor" for most Bulgarian vot- 
ers. Too often a free press and 
open political debate has led to 
a popular perception of perva- 
sive corruption, criminality 
and political incompetence. 

The promised mass privatisa- 
tion programme remains mined 
in technical detail while the 
unemployment, loss of social 
security and high inflation 
affecting many Bul garians con- 
trast with the high-spending 
lifestyles of the new rich. 

A growing number of private 
business people are working 
hard to build up legitimate 
companies, living modestly 
and re-investing {unfits. - 


However, with the Serbian 
border just 50km from Sofia, 
the capital’s refurbished shop- 
ping streets, new restaurants 
and casinos have become filled 
with large men whose swagger- 
ing walk and ostentatious 
wealth is assumed to come 
rather from smuggling, drug 
trafficking or money launder- 
ing than from honest toil and 
respectable entrepreneurial 
activity. 

All this bag brought tlw poli- 
tics of envy back to Bulgaria, 
reflected In the rising popular- 
ity of the BSP with its implied 
promise of a partial return to 
the security erf the old regime 
under a new generation of 
leaders more comfortable with 
market notions of economics 
and bourgeois concepts of 
legality. 

Opinion polls also reflect dis- 
ahisfonment with the fac tional 

rivalries wi thin the UDF which 


is heading for elections under 
the same leadership that foiled 
to retain power in 1992 and has 
lost many of Its more compe- 
tent and moderate leaders 
since. 

The men to watch are the 
Socialist Party's young genera- 
tion of politicians such as Zhan 
Videnov, the party’s 36-year-old 
leader, and especially those 
from the BSP’s social demo- 
cratic wing such as George 
Pirinsky, who are seeking to 
realign Bul garian politics and 
create a moderate, left of cen- 
tre grouping in the future par- 
liament 

Above all, the need is to 
strengthen the rule of law and 
provide a level playing ground 
for the development of legiti- 
mate, tax-paying private busi- 
ness and to encourage the 
development of a responsible 
middle class to underpin 
democracy. 


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CH-6300 Zug/Switzerland 

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Fax: +41-42-230860 
Tlx: 865233 (MULT CH) 

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FINANCIAL TIMES 


THURSDAY OCTOBER 13 l«W 


BULGARIA 2 


Privatisation has had limited success so far, says Anthony Robinson 

always at the expense of 


Plenty of hurdles remain 


Bulgaria's mass privatisation 
programme (MPP), based on 
the Czech model using vouch- 
ers and private investment 
funds, suffered a severe blow 
before it even got off the 
ground when the rival privati- 
sation agency took more than 
35 most promising state compa- 
nies in the MPP list for direct 
sale to foreign and domestic 
investors. 

Legislation to set up the 
MPP was approved just before 
the government resigned, but 
Dimiter Stefanov, the execu- 
tive director of the Centre for 
Mass Privatisation, admits that 
much technical work remains 
to be done before vouchers 
with a nominal value of 25,000 
“investment Leva" can be dis- 
tributed to those willing to pay 
LvSOO for privatisation cou- 
pons. Even then a big effort 
will be required to arouse pop- 
ular enthusiasm for the 
scheme. 

In the meantime Reneta Ind- 
jova, the tough-minded execu- 
tive director of the privatisa- 
tion agency, is forging ahead 
with privatisation by direct 
sale to investors, a method 
which has already privatised 
30 medium- to large-sized state- 
owned enterprises, of which 
the biggest and most recent is 
the S55m purchase by the Ger- 
man transport entrepreneur 
Willi Betz of a controlling 55 
per cent stake in Somat. 
Europe's biggest trucking com- 
pany. 

The Somat deal, like most 
other deals to date, promises 
substantial future investment 
and job guarantees. But thus 
far the benefit to the Bulgarian 
treasury from privatisation has 
been limited. “Net revenues 


from privatisation to date are 
probably no more than $20m. 
But some $1.5bn in enterprise 
debt has been written off as a 
result of privatisation while 
the prospects for penetrating 
new markets and attracting 
further greenfield investment 
have improved.' - says Ms Ind- 
jova. 

Meanwhile the agency is 
hoping that the recent foreign 
debt reduction agreements, 
with their provision for debt/ 
equity swaps, will stimulate 
the interest of foreign inves- 
tors in state-owned assets with 
potential for growth once old 
debts are cleared and new 
management methods and 
equipment are install ed. 

Ms Indjova is anxious to 


"Hidden privatisation” 
has alienated a large but 
unquantifable amount of 
the choicest state or 
municipally-owned 
assets 


speed up the process as much 
as possible, largely because the 
negative effect of delay is only 
too obvious. Given the slow- 
ness of formal privatisation, 
Bulgarian state and municipal 
enterprises have been sub- 
jected to a wave of “hidden pri- 
vatisation’' which has alien- 
ated a large but 
unquantifyable amount of the 
choicest state or municipally- 
owned assets. 

“It is impossible to calculate 
the loss accurately, but hidden 
privatisation reduces the net 
worth of enterprises and Is 
reflected in rising inter-enter- 
prise debt, the high level of 


debt to commercial banks and 
ultimately adds to the budget 
deficit, driving inflation and 
crowding out the private sec- 
tor." she says. 

Such “hidden privatisation" 
usually involves the formation 
of private companies to supply 
state enterprises with inputs at 
high prices and other compa- 
nies take their subsidised out- 
put for resale at market prices. 
In this way enterprises accu- 
mulate inter-company debts 
and losses while allowing a 
new class of millionaire “biz- 
nismen" to cream off economic 
rents. 

The process of nationalising 
losses and privatising profits is 
widespread throughout the for- 
mer Soviet bloc but has been 
most blatant in countries such 
as Bulgaria or Romania where 
the continuing Influence of for- 
mer communists, coupled with 
the weakness of the law and 
the inexperience of civil soci- 
ety has been most pronounced. 

In Bulgaria's case what is 
popularly perceived as the 
“ mafla -isation" of the economy 
has been further stimulated by 
the baleful side-effects of the 
UN embargo on trade with 
Serbia and the Greek embargo 
on trade with the former Yugo- 
slav republic of Macedonia. 

Small but powerful groups of 
Serbs. Macedonians and Bul- 
garians have made quick for- 
tunes by smuggling oil. weap- 
ons and a wide range of other 
commodities across the bor- 
ders by a variety of ingenious 
methods which mostly include 



Indjova: anxious to speed up the 
process as much as pogs&rie 


the bribing of police, customs 
and other officials at some 
stage. 

“The war in former Yugo- 
slavia has been a disaster for 
Bulgaria. I seriously doubt 
whether a country like the 
Czech republic would be so 
law-abiding if it had borders 
like ours,” says Alexander 
Bozhkov, the former head of 
Bulgaria’s privatisation agency 
who now runs a private consul- 
tancy firm specialising in 
assisting foreign investors. 

Perhaps the most pernicious 
result of the widespread suspi- 
cion in which the new business 
class is held is the confirma- 
tion of many of the old commu- 
nist propaganda images of 
rapacious capitalists grinding 
the faces of the poor and the 
“zero sum" notion that wealth 


another. 

Rising awareness of the dan- 
gers to future economic and 
social development of such 
widespread antipathy has 
spurred the more intelligent 
and genuinely entrepreneurial, 
rather than parasitic, members 
of the “new class" to try and 
change both the image and the 
reality of private business eth- 
ics and methods. 

This became clear last 
month when a split developed 
within the ranks of the G-13, a 
group of 13 leading private 
business groups, which has 
now been reduced to a rump G 
-9. 

Lyubomir Gibinsky, the 
prime mover behind Prime 
Investment Trust, a holding 
which controls 40 companies 
and is a major shareholder in 
TSBank one of the largest and 
fastest growing private banks, 
led the breakaway. 

“TSBank was a founder 
members of G-13 whose idea 
was to consolidate and 
strengthen national capital so 
that we could have a dialogue 
and proper partnership with 
foreign partners. But In prac- 
tice some of the members 
interpreted this as a way of 
dividing up the market and to 
express their dislike of foreign 
investors," says Mr Gibinsky. 

They also had a tendency to 
use “non-market methods” he 
added, a euphemism to explain 
the rash of car bombs, shoot- 
outs and beatings which have 
punctuated Sofia street life in 
recent months. "We decided to 
leave G-13 as our principles 
are free enterprise and fair 
competition, a North American 
not Latin American style of 
business," he said. 


Anthony Robinson looks at the political crisis 



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In October 1992 - when the 
anti-communist Union of Dem- 
ocratic Forces (TJDF) govern- 
ment headed by Philip Dimi- 
trov lost power and the 
country passed to the hands of 
a "government of technocrats” 
headed by Lyuben Berov - 
believers in a smooth transi- 
tion to democracy were dealt a 
sharp blow. Since then the Bul- 
garian politics has been essen- 
tially on hold. 

Mr Berov's government was 
supported by the parliamen- 
tary votes of the Bulgarian 
Socialist Party (BSP), the 
renamed home of the former 
communists, as well as the 
Movement for Rights and Free- 
doms (MRF) which is sup- 
ported by Bulgaria’s ethnic 
Turkish minority and, sporadi- 
cally, by the splinter groups 
which have hived off from the 
two rival mainstream groups, 
the BSP and the UDF over the 
past two years of political drift 
and disillusionment 

Mr Berov held on to power 
long enough to oversee the suc- 
cessful conclusion of debt 
reduction negotiations with 
the Paris and London clubs of 
creditors. But the 69-year-old 
former professor, who recov- 
ered well from a heart attack 
In March, felt increasingly iso- 
lated from an electorate frus- 
trated by lack of progress in 
building the institutions of a 


market economy and threat- 
ened by rising c riminali ty. He 
survived six no-confidence 
votes tabled by the UDF over 
the past 12 months and 
resigned at the start of Septem- 
ber. 

Zhelyu Zhelev, the president, 
immediately began negotia- 
tions with the two main politi- 



One to watch: George Pirmsky, of 
the BSP's social democratic wing 


Can You Do Fair and Efficient 
Business in Bulgaria? 




cal groupings, but they 
declined his offer to try and 
form a new government. 

Both parties have been call- 
ing for early elections, 
although a large number of 
individual deputies, doubting 
their chances of re-election and 
anxious to secure their pension 
and other privileges, privately 
express reluctance to go to the 
polls before the current parlia- 
mentary terms ends in October 
1995. Some BSP leaders are 
also reluctant to assume power 
and responsibility while many 
acute social, economic and 
political problems remain 
unsolved. 

But the BSP’s insistence that 
early elections are preferable 
to another interim government 
chosen by the president has 
more conviction than that of 
the UDF because opinion polls 
indicate that an early vote 
would hring the BSP back to 
power, albeit without the over- 
all majority needed to govern 
alone. This prospect is deeply 
distasteful to President Zhelev 


who began his political career 
as one of the leaders of the 
UDF but disagreed with the 
policies and tactics pursued by 
Mr Dimitrov and ended as a 
critic of both leading parties. 

In return the president, who 
now comes in second place 
behind the exiled King Simeon 
in public opinion polls, Is crit- 
icised for his “byzantlne” 
behind-the-scenes manoeuver- 
ings which in recent weeks 
included meetings with top 
military leaders to ensure their 
loyalty and impartiality in the 
tense months which lie ahead. 

The partial disintegration of 
the UDF. an umbrella organisa- 
tion which originated as a 
loose anti-communist coalition 
of nearly 20 groups and 
emerged as the largest political 
force in the 1991 elections, left 
the BSP as the largest single 
party in the present parlia- 
ment. The BSP has also suf- 
fered defections but still holds 
99 of the 240 seats in the 
Narodno Sobranie, the People's 
Assembly, against only 78 for 
the UDF. 

A further 19 seats are held 
by the ethnic Turk MRF with 
the remainder split between 
two smaller groups, New 
Choice, a handful of liberal 
conservatives headed by Dizni- 
ter Ludzhev and the Demo- 
cratic Alternative for the 
Republic (DAR.) a small centre- 
left party, plus about 20 inde- 
pendent, non-party MPs. 

The refusal of the two major 
parties to form a government 
in succession to Mr Berov 
obliged President Zhelev to 
make one final effort to comply 
with his constitutional duty by 
calling on Mr Ludzhev, the 
leader of "New Choice" to try 
his luck. The New Choice 
leader has been a close friend 
and ally of the president for 
the past 15 years. At the time 
of writing the outcome of his 
effort to form a government 
was not known, but the most 
likely conclusion to the crisis 
appeared to be new elections 
before Christmas, or possibly 
early in the new year. 


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FINANCIAL TIMES 

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Agriculture 


Reason for optimism 


Returning agriculture Into 
private bands has so Ear been 
more of a disruption than a 
stimulus to production, and 
has not yet led to the expected 
revival of a sector which has 
declined in relative importance 
but still accounts for about one 
fifth of gross domestic product 
and 20 per cent of employment 

The dismantling of state co- 
operatives by government-ap- 
pointed liquidation committees 
since 1991 initially brought 
chaos to much of the country- 
side. Farm output in 1992 fell 
by almost 15 per cent but now 
there has been a reaction to 
early excesses. 

“Cooperative is not a dirty 
word, no matter how our politi- 
cians speculate with it.” says 
Georgy Tanev, the outgoing 
minister of agriculture who 
has been in charge of this sec- 
tor for the past two years. 
"Bulgarians have been used to 
working ia co-operatives for 
decades. We cannot do without 
them, at least for another five 
years,” be adds. 

He claims it is not just peas- 
ants who support new-styJe co- 
operatives but many TJDF sup- 
porters also realise that they 
cannot survive without some 
form of rural cooperation. 


Potential 


spotted by 
foreigners 


Foreign companies have 
been quick to see the poten- 
tial in modernising Bulgar- 
ia's once flourishing food 
and agro-processing indus- 
tries. The privatisation pro- 
gramme began with the 
$20m trade sale of a maize 
products plant in Razgrad, 
north eastern Bulgaria to 
Amylmn, owned by CIP of 
Belgium, Archer Daniels 
Midland Co. of the US, and 
Tate & Lyle of the UK 

They were quickly fol- 
lowed by other multina- 
tional food-processing 
groups including Kraft 
Jacobs Suchard and Nestle, 
which acquired leading 
chocolate producers in 
Sofia, and Delta, a Greek 
food manufacturer, which 
invested in an ice cream 
factory in Varna on the 
Black Sea. 

Danone of France set np 
Danone-Serdika in Sofia for 
the manufacture of dairy 
products while the Dutch 
company Frisoso is 
reported to be interested in 
Bulgaria's largest diet and 
baby foods producer, Slan- 
cbo. Danish investors are 
investing in meat-process- 
tag and several Austrian 
companies plan investment 
in turkey farms and aspara- 
gus growing. 

Apart from private 
investment, western gov- 
ernmental aid and credits 
from the international ! 
institutions are also becom- 
ing available for the agri- 
cultural sector. The World 
Bank's first agricultural 
credit - a $50m loan to 
improve private sector 
access to medium and 
long-term credit - was 
negotiated by the ministry 
of agriculture earlier this 
year. It has not yet been 
ratified by parliament, 
however, because of politi- 
cal infights over the bank's 
requirement to phase out 
agricultural subsidies. 

“Agriculture is one of the 
sectors with the most 
potential,” says Andrew 
Kenflin gharri, an ec onomis t 
who has spent several years 
as director of Bulgarian 
International Business 
Association, representing 
foreign investors. 


Theodor Troev 


“The liquidation committees 
[set up to dismantle the co-op- 
eratives! almost managed to 
liquidate our agriculture, espe- 
cially stock-breeding.” Mr 
Tanev says. Some of the com- 
mittees lacked experience in 
agriculture and sold off the co- 
operatives' fodder before 
returning animals to individ- 
ual farmers. Animals were also 
returned before land was redis- 
tributed and peasants had the 


The Souhindol 
co-operative, set up in 
1909, demonstrates how 
such a venture can thrive 
in market conditions 


means to feed and breed them. 
As a result hundreds of thou- 
sands of pigs, sheep and cattle 
have been slaughtered over the 
past two years. 

The 2992 land law aimed at 
the restitution of land to those 
who owned it before 1946 when 
the co mmunis t regime forced 
collectivisation on farmers. 
But about 60 per cent of the 
new land owners now live in 
cities and towns and many are 
unable or unwilling to return 
to forming. Some work their 
newly returned plots of land 
only at weekends, using spades 
and wooden ploughs. Lack of 
money and the small size of 
holdings usually prevent them 
from using machines. 

According to Mr Tanev. the 
average size of the newly 
returned plots is just 1.6 hect- 
ares, too small for modem 
technology. “The new land 
owners have three options; to 
sell the land, lease it or form a 
co-operative with other own- 
ers.” he says. But no real land 
market exists yet and leasing 
the land has not become a 
widespread practice due to the 
lack of proper legislation. 

“What remains is to form 
new co-operatives," says Mr 
Tanev. He points out that co- 
operative farms in Bulgaria 
were not a co mmunis t inven- 
tion. Some have a century-long 
history. 

The Souhindol co-operative 
in central Bulgaria, set up in 
1909, is a good example of how 
such a venture can thrive 
under market conditions. 

Through restitution, its prop- 
erty has been returned to the 
former workers but the re- 


formed co-operative has devel- 
oped new meat processing 
works, bakeries. yirte>ards. 
and bought new animals. Rep- 
Natives of the Bulwu- 

American Enterprise Fond 
recently visited Souhindol and 
were surprised by its efficient 

° P |Sh°succe« stories indicate 
that the sector can recover. 
Another reason for optimism is 
the fact that the decline m 
stock-breeding has gradually 
led to higher meat purchase 
prices, giving fodder producers 
and animal breeders more 
incentives. 

powerful private groups, 
such as Prime Investment 
Trust, have started positioning 
themselves in the sector and 
executive director Ivo Ivanov 
says the group is preparing a 
programme for investment in 
fodder production, flour mills, 
sugar plants and meat process- 


Agriculture ministry experts 
believe that the 1994 decline in 
output will be smaller than in 
the previous three years but 
UDF spokesmen, along with 
some western experts, believe 
that substantial recovery of 
agriculture will only be possi- 
ble when people receive full 
legal title to their land. Only 
then will smaller plots be sold 
and consolidated into more via- 
ble farms. The free market, 
and not government attempts 
to reform the old co-operatives, 
should be the driving force, 
they add. It may take another 
year before Land restitution is 
completed. 

Early last year, government 
officials said the land reform 
plan would be completed by 
the end of 1993, but this month 
agriculture ministry sources 
revealed that only half the 
farmland had been returned 
with the full title by the end of 
September and only 60 per cent 
will be returned by the end of 
this year. 

Meanwhile privatisation of 
state owned agricultural enter- 
prises is now moving ahead 
slowly. The ministry of agricul- 
ture has opened privatisation 
procedures for 90 units, but 
deals have been completed for 
only 30 so for, including pig 
farms, poultry farms, mills, 
machine repair works, and 
fisheries. 


Theodor Troev 


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FINANCIAL TIMES THURSDAY OCTOBER. 13 1994 


BULGARIA 3 


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Theodor Troev finds that prospects for the tourist industry are picking up 

Western visitors lead the way 


Buchan 


The Russians are back 
enjoying their holidays in 
wine of the best resorts along 
Bulgaria's sandy Black Sea 
coast - not shepherded in large 
groups as they were under the 
communist regime, but stroU- 
tag around with the self-confi- 
dence of big spenders. 

“Now everybody wants to 
attract Russians." says Dotko 
Dotkov, general director of 
Grand Hotel Varna, Bulgaria’s 
only five-star hotel on the 
Black Sea, and the first to be 
privatised earlier this year. 

Ironically, it is often German 
tour companies that are bring- 


ing the Russians back. Big 
operators, such as TUI, have 
become aware of the reviving 
market in what was for 
decades the Riviera of the for- 
mer Eastern bloc and their 
branch offices in Russia - bet- 
ter organised than local com- 
petitors - have been more suc- 
cessful than most In selling 
Bulgarian holidays. 

But the recent increase in 
arrivals from the east not 
yet reversed a trend which 
began after the collapse of 
communism. Until then, Bul- 
garia had been forced into the 
lower end of the mass tourism 


market with cheap package 
holidays in block-tike hotels. 
More than 60 per cent 0! tour- 
ists then came from Eastern 
bloc countries. 

Since 1990, the number of 
Russian and east European vis- 
itors has dropped to less than 
15 per cent of the total while 
western markets have picked 
up. The number of travellers 
from western Europe grew by 
28 per cent last year when the 
overall number of visitors rose 
to 2.4m from 872,000 in 1992. 

Mist of these come from Ger- 
many (with a market share of 
more than 40 per cent) and 






Kessebur: one of the Stack Sea’s most popular tourist resorts 


/Mtoytettmn 


Slow progress on sell-offs 


The sale of Bulgaria’s most 
prestigious Black Sea hotel, 
the five-star Grand Hotel 
1 Varna, has been the biggest 
privatisation investment by a 
Bulgarian company to date. A 
49 per cent stake was sold 
earlier this year to Multi- 
group, one of Bulgaria’s most 
powerful private holding 
companies and Balkanbank, 
one of the country’s five big- 
gest mainly state-owned 
banks for Lev509m (about 
$10m at the time). 

Under the scheme adopted 
by the privatisation agency, 
employees were offered 20 
per cent of shares at a prefer- 
ential price and the remain- 
ing 31 per cent were floated. 

“Since privatisation we are 
targeting a higher spending 
segment of the market,” says 
Dotko Dotkov, the newly 
appointed general director. 
“As a private company, we 
can develop a proper invest- 
ment programme to upgrade 
several floors with special 
’business class’ rooms, and 
provide higher quality ser- 


vice and better promotion 
through western tour opera- 
tors." 

In spite of resistance from 
different groups, the privati- 
sation agency has announced 
the coining sale of other 
hotels including the Vrtosha 
Grand Hotel Sofia, and 
Rodina, as well as several 
hotels in winter and spa 
resorts and some of the coun- 
try’s biggest Black Sea 
resorts, such as Sunny Beach 
and Albesa, which are 
offered for sale mi bloc. 

Foreign groups such as 
Daewoo of South Korea, Delta 
France, Holiday Inn, Ramada, 
Radisson and Styles Hotels, 
as well as powerful Bulgarian 
financial and Industrial 
groups such as TSBank, Tron 
and Multigroup have shown 
interest while ITT Sheraton 
has applied to buy the Shera- 
ton Sofia Hotel Balkan which 
it has managed for the past 
few years. 

Years of recession and 
power struggles between the 
privatisation agency and 


local tourism officials mean 
sell-offs are not going 
smoothly. Managers of state- 
owned hotels and resorts rear 
they may lose their Jobs and 
claim privatisation will bene- 
fit foreign investors by sell- 
ing the most profitable hotels 
at give-away prices. But west- 
ern consultants emphasise 
the need for speedy privatisa- 
tion. At present the 3,000 pri- 
vate sector tonrlsm-related 
companies account for only 
10 per cent of total turnover. 

Meanwhile Balkan Bulgar- 
ian Airlines , the national car- 
rier, which transports most 
Bulgarian visitors with its 
fleet of 58 aircraft is also op 
for sale. The state will retain 
40 per cent and at least 51 pm* 
cent shares of the airline will 
be left in Bulgarian hands. 
The privatisation agency 
recently rejected an offer by 
Avicon, an Austin an-Swiss 
company, to provide know- 
how but no cash for a 49 per 
cent stake. 

Theodor Troev 


Britain (with a market share of 
more than 25 per cent) fol- 
lowed by Norway, Greece, the 
Netherlands, Sweden and Den- 
mark. 

No official figures are avail- 
able for this year but there is 
strong visual evidence of a 
sharp rise after a slow start 

The main state-owned tour 
operators, Balkan tourist whose 
name until 1990 was synony- 
mous with the country's travel 
industry, and Balkan Holidays, 
with subsidiaries in 17 coun- 
tries, have reported increased 
demand throughout the sea- 
son. Seaside and mountain 
resorts, which have started 
negotiating directly with for- 
eign partners, as well as most 
private operators, also report a 
steady flow of business. 

Tourism managers have 
started to pay more attention 
to the long-term image of the 
country and managed to pre- 
vent double-booking this sum- 
mer. Last year, Bulgaria 
received bad publicity when ., 
some customers of Balkan Hol- 
idays, the main agency for the 
UK, arrived on the Black Sea 
to find their rooms occupied by 
higher-paying German visitors. 


Untapped opportunities 
exist in spa treatment, 
motor touring and green 
tourism, as well as in 
conference travel 


Problems of this sort are not 
uncommon at a time when Bul- 
garia’s travel industry is trying 
to make the bold step from 
state ownership to free market 
and private initiative. The first 
steps led to chaos, largely due 
to the lack of a clear tourism 
policy and the power struggle 
between institutions such as 
the Committee of Tourism, the 
Privatisation Agency, and the 
still powerful managers of 
state-owned resorts and hotels. 

Western consultants who 
have looked into Bulgaria’s lei- 
sure industry identify draw- 
backs such as poor quality of 
service and infrastructure, 
some unsafe hotels and inhos- 
pitable airports. Only 6 per 
cent of the country's high class 
hotels were estimated to meet 
European s tandar ds. Substan- , 
tial investment will be needed 
to upgrade them and attract a 
more up-market clientele. 

But officials are optimistic 
about the long-term potential 
of the industry. The country is 
only just starting to promote 
its wealth of Thracian, Roman 
and Byzantine remains, monas- 


teries mountains. 

Apart from cheap summer 
seaside or winter skiing pack- 
ages, Bulgarian tour operators 
can also offer special interest 
tours, focusing cm traditional 
architecture, history, religion, 
arts, hunting and rural tour- 
ism. 

Picturesque little towns on 
the Black Sea such as Nesse- 
bur and Sozopol, built over 
ancient Thracian and Greek 
ports, now offer holidays in 
residents' houses matching 
Greek islands -style vacations. 
Untapped opportunities also 
exist in spa treatment, motor 
touring and green tourism, as 
well as In conference travel. 


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Theodor Troev looks at progress in the telecommunications sector 

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B ulgaria's responsibility 
for developing an elec- 
tronics industry under 
the former Comecon division of 
labour helps explain why the 
country ranks first in tele- 
phone density among the for- 
mer socialist countries, with 34 
lines per 100 population. But 
expansion from only 14 lines 
per 100 in 1980 was achieved 
through obsolete analogue 
equipment whose design dated 
back almost half a century. 

Bulgaria has now started 
modernising its national and 
international telecommunica- 
tions infrastructure with plans 
for a digital overlay network 
(Don). These plans include 
1,700km of optic fibre lines, 
microwave links, a new inter- 
national gateway. 11 
long-distance exchanges, local 
exchanges and the earth satel- 
lite station system Intelsat 
Almost 50 Udders tendered 
for the first six projects within 
the Don programme. Siemens 
of Germany was awarded con- 
tracts for a new international 
digital exchange as well as 
trunk and local digital 
exchanges in northern Bul- 


garia. Northern Telecom of 
Canada won a tender for an 
optical fibre line in western 
Bulgaria and Satellite Trans- 
missions Systems (STS) of the 
US was awarded the contract 
for the construction of an Intel- 
sat ground station. 

Sweden’s Ericsson Telefon 
was commissioned for the con- 
struction of trunk and local 
digital exchanges in southern 
Bulgaria while a contract for 
the installation of an optical 
fibre trunk line in the eastern 
part of the country was 
awarded to Alcatel Cable of 
France. A tender is expected 
shortly for the last project - 
the building of a digital micro- 
wave trunk network. 

According to Antony Slavin- 
ski - the Bulgarian Telecom- 
munications Company (BTC) 
vice-president of network plan- 
ning and implementation who 
Is in charge of the Don pro- 
gramme - much of the equip- 
ment from western suppliers ' 
has already arrived. By the end 
of this year work on some of 
the projects will be almost 
completed. When all elements 
of the network are completed. 


by 1996, it will service 150,000 
subscribers, mainly business 
users in larger cities. 

Providing high-quality busi- 
ness services is a priority. Prof- 
its from business subscribers 
will help generate more funds 
for the subsequent modernisa- 
tion of the residential network, 
which is expected to achieve 
European standards by the 
year 2008. 

About half of the $3 00m 
needed for the Don project has 
to be raised by BTC. The 
remainder is being provided by 
the European Investment Bank 
- Ecu70m (386.80m) - the 
World Bank - 330m - and the 
European Bank for Reconstruc- 
tion and Development - 
Ecru32m (339.88m). The loans 
have to be repaid in 15 to 20 
years with grace periods of five 
to six years. 

Modernisation will involve 
higher prices and the telecom- 
munications authorities have 
proposed regular increases in 
telephone charges. Since May 
1993, charges have also been 
affected by the rapid Lev 
depreciation and have risen by 
150 per cent 


BTC says It is vital that tar- 
iffs reflect costs as BTC owes 
foreign telecommunications 
administrations 325m, but few 
Bulgarian customers realise 
that high-quality telecommuni- 
cations is expensive and Euro- 
pean standards can only be 
attained by heavy investment 
financed by higher prices. 

Legislative delays remain a 
drag on progress. A draft law 
has been ready for two years 
but “by the time it is adopted 
by parliament, it will be out- 
dated and will have to be 
amended”, says Mr Slavinski. 

“In order to carry on 
restructuring the sector, we 
use the golden rule that what- 
ever is not forbidden by the 
law is allowed,” he adds. 

Meanwhile telecommunica- 
tions sub-sectors such as 
mobile, radio wave and cable 
links are being deregulated as 
national and regional licences 
are awarded to domestic com- 
panies or consortia including 
both Bulgarian and foreign 
companies. Each sub-sector is 
expected to have two operators 
in future - one private, and 
one controlled by the state. 


Investment is forthcoming 


Although Bulgaria has not 
revealed plans for privatisa- 
tion of the M ecommimicatio pg 
sector, foreign investment has 
been forthcoming both in ser- 
vices and manufacturing. 

Betkom, the first western 
telecommunications joint ven- 
ture in the country, was set up 
between the UK’s GPT, a sup- 
plier of intelligent pay phones, 
and Bulgaria’s committee of 
Posts and Telecommunica- 
tions. GPT, a partnership 
between two of the world’s 
leaders in telecoms - GEC of 
the UK and Siemens AG of 
Germany - bolds a 41.1 per 
cent stake in Betkom. 

According to John Murga- 
troid, Betkom manager, the 
growth of the joint venture 


since the initial equity invest- 
ment worth 3437,000 has been 
on a self-financing basis - prof- 
its are reinvested in expanding 
the network. The number of 
card phones installed is expec- 
ted to reach 1,000 by the end 
of the year, compared to just 
100 in 1991, Betkom’s first 
year of operation. 

Another significant develop- 
ment is Bulgaria’s first cellu- 
lar network which was 
launched earlier this year by a 
Bulgarian-British Joint ven- 
ture between Cable & Wireless 
(49 per cent), BTC (39 per cent) 
and state-owned company 
Radio Electronic Systems (12 
per cent). Known under its 
trade name, Mobttfon, the net- 
work provides direct mobile 


connections for Bulgaria’s 
largest cities with more than 
70 countries and has attracted 
more than -L5O0 subscribers. 

Moblltel. a recently estab- 
lished consortium including 
Semens, US West and the Bul- 
garian fi nancial group Tron is 
emerging as the main competi- 
tor to Mobflfon. 

The consortium has been 
licensed to build a GSM digital 
cellular wireless network and 
plans to cover 80 per cent of 


the country by 1998. Some of 
the components for the estab- 
lishment of the Moblltel net- 
work are expected to be pro- 
duced by Digicom, a joint 
venture between Siemens and 
Incoms Holding of Bulgaria 
for the production, installa- 
tion, and maintenance of 
switching and transmission 
systems. 

Theodor Troev 


wm 


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14 


FINANCIAL TIMES 


THURSDAY OCTOBER 13 1994 


★ 


TECHNOLOGY 


Louise Kehoe on attempts by 
IBM, Apple and Motorola 
to create a new standard for PCs 


Working 
on unity 



New era for MS 

treatment 

Daniel Green looks at two drugs 
which may slow down the disease 


Better 
than a 
boring 
bike 

E xercise machines are bard 
work and time-consuming'. 
They are also boring, 
which is why health dubs are 
turning to virtual reality. A US 
manufacturer bas designed an 
exercise bike that allows the 
rider to interact with a virtual 
reality world displayed cm the 
screen, using a colour monitor 
at eye level and t bomb-controls 
in the handlebars. 

The interactive, three- 
dimensional graphics give the 
exerciser tbe impression of 
steering along bike paths, going 
up hills and Mitering buildings. 
Tbe illusion Is limited, partly 
because the screen picture is a 
cartoon-like representation and 
partly because it uses a monitor, 
which covers 60 per cent of the 
users' Herd of vision. 

Head-mounted displays allow 
greater vision, bat if ased for 
more than 20 minutes they can 
make people feel dizzy. More- 
over, the designers considered 
that putting on a bead-mounted 
display that had recently been 
used by someone else taking vig- 
orous exercise was unappealing. 

The machine creates some 
illusions by. for instance, allow- 1 
ing the rider to lean left or right 
into turns and by changing the 
feel of the pedals, depending on 
; the terrain, rt also blows a 
stream of air across the face, 
which becomes stronger as the 
rider pedals faster. 

Tbe thumb-operated controls 
allow the rider to shift gears, 
brake, count miles and view 
progress on a map. The VHBike 
can he linked to several 
machines, so riders can exercise 
in groups or in competition. 

CyberGear of Cambridge, Mas- 
sachusetts, designed the soft- 
ware, which is stored on a com- 
pact disc. The suppliers intend 
to develop discs with other land- 
scapes. 

The bike, which was launched 
at a price of 58,000 (£5.330) in 
the US in June, will be available 
in the UK at the start of next 
year. The manufacturers are 
Tectrix Fitness Equipment of 
Irvine in California. 

Vanessa Houlder 


J ohn Sculley, former Apple 
chairman and chief executive, 
called it "the foundation for a 
renaissance of technical inno- 
vation that will impact the 
entire computer industry into the 
21st century”. 

“Together we announce the sec- 
ond decade of personal computing,'' 
added Jack Kuehier. then president 
of IBM. 

Tt was October. 1991. The execu- 
tives from International Business 
Machines, Apple Computer as well 
as Motorola's semiconductor group 
stood together on a San Francisco 
stage to announce a technology alli- 
ance many believed would create a 
formidable challenge to Intel and 
Microsoft, the PC industry duopoly. 

IBM and Apple said that they 
would collaborate on a broad range 
of efforts to create a new “unified 
standard” for the next generation of 
personal computers. Motorola 
would be the chip supplier to Apple 
and to any others which might 
adopt the new standard. 

Three years on, however, the vast 
majority of PCs are still based on 
the Intel-Microsoft combination of 
chips and software that IBM, Apple 
and Motorola aimed to overthrow. 
While the second decade of personal 
computing is well underway, IBM 
and Apple are still battling to 
defend their positions. The two 
companies that dominated the PC 
market in the 2980s now have a 
combined market share of only 
about 20 per cent . 

Although the alliance is deemed a 
success by its three members, IBM, 
Apple and Motorola have so far 
failed to create the “unified PC 
technology standard” that was to be 
the centerpiece of their collabora- 
tion, the platform upon which they 
would mount their attack on estab- 
lished PC industry standards. 

The technology partners got off to 
a strong start by delivering a family 
of microprocessor chips called Pow- 
erPC, based on IBM's Reduced 
Instruction Set Computing (RISC) 
technology and manufactured by 
IBM and Motorola. The chips are 
smaller, faster and cost less to pro- 
duce than Intel's latest Pentium 
microprocessors. 

Apple Computer steamed ahead of 
its alliance partners, launching a 
new range of “Power Macintosh” 
computers based on tbe first Pow- 
erPC chips in March. The new com- 
puters have helped Apple to recover 
from shrinking sales and profits. 

For Motorola, the alliance has 
provided the core microprocessor 
technology for a new generation of 
chips and salvaged its relationship 
with Apple - its only microproces- 
sor customer in the PC industry. 

Other computer manufacturers 
including Toshiba and Canon of 
Japan and Groupe Bull of France 
have announced plans to use Pow- 
erPC chips in future computer prod- 


ucts. Motorola is also renewing 
efforts in the computer market with 
a range of “PowerStack” computers 
based on the PowerPC chip, which 
the electronics company aims to sell 
through third .parties. 

For IBM, however, the returns on 
sharing its chip technology with 
Motorola and Apple have yet to be 
realised. The introduction of its 
range of "Power Personal" comput- 
ers was recently delayed, for the 
second time, until next year. 

“PowerPC technology has capabil- 
ities that don’t exist in the current 
[Intel] technology in terms of 


speed.” said Rick Thoman, IBM 
senior vice president and the new 
head of IBM’s PC business, shortly 
before postponing the introduction 
of the Power Personal PCs. “But 
there are obvious negatives ... be- 
cause it does not have an estab- 
lished base of application software.” 

IBM's delay reflects a fundamen- 
tal weakness in the aTHnncp strat- 
egy. Apple's “Power Macintosh" 
computers are not compatible with 
PowerPC computers designed by 
IBM and Motorola. 

Despite sharing co mm on micro- 
processor technology, the compa- 


nies' computers cannot run the 
same software. 

Withont software, a microproces- 
sor is like a new car engine without 
wheels. It may be an impressive 
feat of engineering, but it is of little 
practical use. 

“It all conies down to software, 
software, software," says David Wu, 
a PC industry analyst at SG War- 
burg . 

To attract third-party software 
developers who can create applica- 
tions prog ram s for PowerPC com- 
puters, the alliance partners must 
first establish hardware standards 
that promise large volumes of com- 
patible computers. 

"It used to be that if you built a 
better mousetrap - a faster micro- 
processor - then the applications 
would flood in. That is no longer 
true. They [software developers] are 
looking for volume,” says Tom 
West, senior vice-president of 
advanced development at Data Gen- 
eral 

The IBM, Apple, Motorola alliance 
was flawed from the start, he sug- 
gests. “There is so much ego, corpo- 
rate identity, and mythology tied up 
with their [microprocessor] chip 
agendas . . . Guys, you got it 
wrong." 

Analysts believe that only by 
aligning computer designs more 
closely can IBM and Apple achieve 
the critical mass needed, to attract a 
substantial portion of the software 
development investment that is 
made in the PC industry. 

IBM and Apple have been Joust- 
ing for several months on this issue, 
with Apple apparently resistant to 
changing the design of its Power 
Macintosh computers and IBM 
equally determined to make its 
PowerPC designs the industry stan- 
dard. (Motorola’s recently intro- 
duced PowerPC computers comply 
with IBM's design.) 

A breakthrough may be close. 
The companies have intensified 
their efforts to reach an agreement 
and Apple said this week that it is 
“op timis tic" about the outcome of 
nng ning taTim This has fuelled spec- 
ulation that IBM might cement its 
new pact with Apple with an equity 
investment 

A common hardware design is 
critical if IBM, Apple and Motorola 
are to fulfil the promise of their 
1991 alliance, enabling “Power” 
computers to run a wide range of 
applications prog rams - including 
those designed Ibr Apple's Macin- 
tosh. or IBM's new OS/2 Warp PC 
operating system. 

It could, however, take as long as 
two years for IBM, Apple and Moto- 
rola to alter their computer designs 
and complete operating system soft- 
ware development 

By then. Intel and Microsoft will 
surely throw new competitive chal- 
lenges in the path of the alliance 
partners. 


M ultiple sclerosis patients 
and a handful of small 
drag companies 
developing treatments for the 
disease may be about to enter a 
new era. 

Sufferers of MS - the second 
most common neurological 
disease among young adults - 
have week been able to take 
heart from the results of clinical 
trials on two new drugs revealed 
at the American Neurological 
Association meeting in San 
Francisco. 

Those results were good enough 
to make it likely that by 1996 
there will be several MS drugs on 
the market compared with Just 
one today. None is a cure for the 
condition, but all appear to slow 
sharply the disease's progress. 

For the suppliers, the results 
herald a period of tough 
competition. Tbe market will be 
worth Sl.Lbn (£930m) annually by 
1998, says stockbroker Lehman 

Brothers. The battle for that 
revenue will centre on the clinical 
trial results and the mesh of 
patents in the area. 

There are four main suppliers: 
Germany's Schering which sells 
Betaseron, Israel’s Teva with 
Copaxone, and Switzerland's Ares 
Serono/Biogen of the US, both 
with beta interferon. 

For the past year only 
Betaseron has been approved for 
the treatment of MS. It works by 
interfering with the immune 
system, thought to be at fault in 
MS. 

Betaseron is made by 
genetically engineered bacteria 
and is not quite identical to beta 
interferon produced naturally in 
the human body. 

Biogen and Ares Serono, on the 
other band, use genetically 
engineered mawitnal cells to make 

beta interferon that Is chemically 
identical to the human version. In 
principle, this should mean the 
drug works better in the human 
body with, perhaps, fewer side 
effects. 

The data published this week 
were tbe first large-scale trials, 
beta interferon and Copaxone. 

Tbe results of the Biogen trial, 
on 301 MS sufferers, were 
probably not as clear as the 


company would have liked. Direct 
comparisons with the results of 
earlier Betaseron trials are 
difficult because the drugs are not 
compared directly, only agamst 
placebos. 

Side effects - flu-like symptoms 
- seem to be fewer with beta 
interferon. But this could have 
been because patients In the 
Biogen trials were also given 
paracetamol (Tylenol) to depress 
their fevers. Furthermore the 
effectiveness of Biogen's drug was 
gauged by how fast patients' 
condition deteriorated - it slowed 
the progress of tbe disease by 
almost half. 

But Betaseron was tested by 
measuring the frequency of MS -1 
attacks. Here, however, there was 
little to choose between the two 
drugs. 

The US Food and Drug 
Administration and regulatory 
bodies elsewhere are likely to 
examine closely such data. 

Biogen, whose shares fell after 
the trials results were published, 
faces some tough questioning if it 
riaims superiority over 
Betaseron. 

The patents covering beta 
interferon also seem set to be 
fonght over. There is a cascade of 
licensing agreement starting at 
research institutions in Japan and 
California and involving Ares 
Serono sub-licencing one patent 
to Biogen while Schering tries to 
use beta interferon (not 
Betaseron) in another disease 
area, hepatitis. 

Standing aloof from this is 
Teva, the Israeli company, whose 
Copaxone appears to work In a 
different and ill-understood way. 
But it too achieved only modestly 
encouraging results, cutting the 
number of MS attacks but by less 
than that achieved by Betaseron. 
It may be iafer than Betaseron or 
beta interferon and could have a 
market for patients who have 
reacted badly to the other two. 

The message that emerged from 
San Francisco was that the 
principle of interferons helping 
MS sufferers is good and life for 
those who take the drugs may get 
a little easier. However, the drug 
companies face a bruising battle 
with each other to win sales. 



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put their thinking hats on and came up 
with an equally flexible copier. 


rest assured you won't be left with 
Tliere's a rather clever auditing a semi-redundant machine a couple 

of years down the line. 

me SF range of photocopiers. 
They'll really grow on you. 


individual account number. And a 
staplc/sorting device for professional 


As lime goes by and business document finishing. 


INTELLIGENT THINKING 


FOB fURIHEB INFORMATION. PLEASE CAlL (08001 IE29S8. QUOTING REFERENCE CFTA I . 





t 




FINANCIAL TIMES THURSDAY OCTOBER 13 1994 


k 


15 


ARTS 


% 


Cinema/Nigel Andrews 


Tottering totalitarianism 


I once saw a stage performance 
And Superman in 
which the cast was taking its 
final bow when a large piece 
of background scenery began 
foiling on them. “Look out!" yelled 
the audience. Just in time, the play- 
ers turned round and caught hold of 
the offending fiat 
A similar thing is now happening 
in Chinese cinema. Historical back- 
drops are getting larger and heavier 
- in films hke Farewell My Concu- 
bine, The Blue Kits and now 7h a n g 
Yimou’s To Live - and instead of 
enriching the characters from a dis- 
tance they bend to foil light on top 
of them. 

To Live takes place over 30odd 
years of Maoist history - 1940s to 
1971b - daring which a poverty- 
racked couple (Gong Li. Ge You) 
lose their children, their livelihood 
and most of their emotional bear- 
ings in L tbfc r bnsiaught of Great 
Leaps Fdtward and Cultural Revo- 
lutions. 

Having gambled away his house 
in the opening scene, our hero 
breaks with his wife, tafrg$ up pup- 
petry, gets swept up in the war 
between Communists and National- 
ists, then returns home to his 
spouse and deaf-mute daughter. 
Thereafter they surge more inti- 
mately across history’s stage, while 
the movie’s lessons in the evils of 
totalitarianism totter or topple over 
them like errant scenery. 

The finest passages, in a movie 
never less than epic in its ambition, 
are when they hold the backdrops 
off: when Than g allows the particu- 
lar to grapple effectively with the 
panoramic. It can be the shot of a 
sudden bayonet piercing' the white 
placidity of the puppeteer’s screen, 
announcing the break-out of war in 
1949. Or it can be the mordantly 
powerful scene of the daughter’s 
sqjoum in a maternity hospital 
Here the doctors have all 
been dismissed or jailed as 
“reactionary", so the trainee nurses 
must cope with the girl’s haemor- 
rhaging and hysteria. Finally a 
starving medico is dragged in - 
bis condemned man's placard still 
round his neck - and staffed with 
buns while the camera swivels 
tragically, comically between one 


mortal crisis and the other. 

This is the Zhang of Red Sorghum 
and Raise The Red Lantern: a direc- 
tor of dark wit and merciless com- 
passion, who knows that the absurd 
and the terrifying meet on the dark 
side of life’s curvature. But To Live 
would have been a stronger movie if 
it had allowed quirky human reac- 
tion to compete more often with 
historical agenda. In the end we feel 
as much stunned as the characters 
by the long inarch of Chinese poli- 
tics: though to underline that 
march’s grim continuity Thap g him- 
self. on the strength of 7b Live, is 

TO LIVE (12) 

Zhang Yimou 

GERONIMO (12) 

Walter HB1 

THE ADVENTURES OF 
PRISCILLA QUEEN OF THE 
DESERT (15) 

Stephan Elliott 

WAR OF THE BUTTONS 
(PG) 

Jon Roberts 

SPARROW (12) 

Franco Zeffirelli 

currently banned from making 
another film in fitting 

k 

Gerordmo’s tune span is more mod- 
est the last months of the Apache 
leader who for five years, with a 
few hundred braves, resisted cap- 
ture by a few thousand US soldiers. 

But Walter Hill is another film- 
maker fighting off the backcloth of 
history. Overwhelmed by the burn- 
ing rockscapes of Utah and the din 
of destiny, Jason Patric as cavalry 
officer Charles Gatewood, who 
secured Geronimo’s surrender, 
makes a thin, inhibited hero. And 
Wes Studi’s Indian, though chis- 
elled of feature and sonorous of 
voice, often seems part of the land- 
scape rather than the human world. 

The film has decided that it is 
filming Mythic Events, so it adopts 


a cathedral tone. The script by John 
Mllius and Larry Gross is literate, 
even Biblical. But we keep wishing 
the solemn Walter Hill (of The Long 
Riders) had been pushed aside more 
often by the kinetic Walter Hill (of 
Driver and Streets Of Fire), so the 
film could build on the hi ufo of tan- 
talising magic that break into the 
historical liturgy: the 

black-and-white flurries of dream- 
flashback that haunt Geranimo, or 
the hypnotic, fractured twangitogs 
of Ry Cooder’s music. 

In the cast Gene Hackman (cav- 
alry general) and Robert Duvall 
(veteran scout) steal the acting hon- 
ours. Duvall especially shows that 
grandeur grows from the particular 
that history can be more eloquent 
when reflected in the tiny tic of an 
eye or the hitch of a tired man’s lip 
than as an unwieldy cyclorama 
dwarfing or drowning the dramatis 
personae. 

k 

Terence Stamp, wigged, (rocked and 
lipsticked, takes his career in a 
whole new direction in the Austra- 
lian film The Adventures Of Pris- 
cilla, Queen Of The Desert. Resem- 
bling a boot-sale Marlene Dietrich, 
the one-time British heart-throb 
plays a drag queen joining up with ■ 
two others (Hugo Weaving, ex- 
Neighbours star Guy Pearce) on a 
tour through the Outbade, during 
which their bos breaks down. 

At nature’s mercy, what can they 
do but perform their numbers right 
there in the desert? So They punch 
out Abba to the Aborigines. They 
swap choice culture-shock epi- 
grams. And they befriend a small 
town impresario (Bill Hunter), who 
fails for La Stamp at the of 

his Oriental performer-girlfriend, 
whose speciality is shooting 
ping-pong balls from an intimate 
body part 

All this and eye-catching scenery 
too. Writer-director Stephan Elliott, 
who underwhelmed the Cannes 
Film Festival in 1993 with Frauds, 
made up this year by s tealing the 
entire event with PrisdUa. The film 
should ideally be seen late at night 
with a crowd of well-wined friends. 
But once seen, never forgotten: 
especially the sight of Pearce sport- 
ing a billowing silver “train’’ as he 


r pfrnps to “Sempre Libera” on the 
bus's moving roof while sitting 
inside a giant stiletto heel. I have 
never been to Australia, but I felt 
that 1 had after thin 
★ 

1 have hem to Ireland, but I never 
felt I was there in War Of The But- 
tons. Set in the present day, this 
tale of two villages and their chil- 
dren’s gang rivalry feels like a 1950s 
film- that era when Sco tland, Wales 
and Ireland, on the British screen, 
were fantasy lands of rural inno- 
cence dreamt up by jaded London. 

Here the writer and producer of 
Chariots Of Tire, Colin Welland and 
David Puttnam, not content with 
re-potting Yves Robert’s original 
1962 French comedy, also re-train it 
as a Inspirational fable of detente. 
After much running, jumping and 
fighting, the two fugitive gang lead- 
ers - we somehow know that good 
will sonorously triumph - end up 
saving each other’s skins on a 
mo untain free 

Meanwhile debut director John 
Roberts tries to haul into compe- 
tence his cast of handpicked teen- 
age unknowns. The best of these 
are the pintsized camp-followers, 
allowed their small ration of funny 
faces and throwaway comedy riffs. 
But the seniors are a dull lot: piped 
towards the uplifting finale by 
Rachel Portman’s sub-Chieftains 
music and never helpin g to clarify 
for us - nor do Puttnam, Welland 
and company - whether this fftm is 
intended as an exercise in rural 
charm or children’s comedy or uni- 
versal moral improvement 
★ 

But Franco Zeffirelli's Sparrow is 
by some way the week’s worst: 
another gilded tussle between tem- 
poral and spiritual love like his 
Brother Sun, Sister Moon. Aspiring 
nun Angela Bettis, an convent leave 
during a cholera epidemic, fans for 
passing hunk Jonathan Scaech. 
Soon 1850s Sicily is melting into 
gilded visual goo reminiscent of a 
margarine commercial. While the 
camera does its soft-focus trans- 
ports , guest stars Dennis Qtrilley, 
Valentina Cortese and Vanessa Red- 
grave try to extract some sensible 
dialogue - vain task - from the 
soft-headed script 



Pawns in the long march of Chinese politics: Gong Li and Ge Yon in “To Live’ 



Theatre: down-and-out in Brezhnev's Russia, and a ‘Binglish* version of Moliere 


Moscow Stations 


The Bourgeois Gentilhomme 


“BingUsh" (by analogy with “Bol- 


O n a suburban train from 
Moscow, Venichka Yero- 
feev is trying to get to 
petushKL He has con- 
sumed an heroic number of vodkas 
since early morning, which seems 
to be the best way of coping with 
down-and-out life in Brezhnev’s 
Russia. Already - as perhaps 
always - he is gently, beatifically 
bleary, and as tire stations go by he 
regales us with notes on ins jour- 
ney. anecdotes and reminiscences. 
Moscow is huge and bleak, and he 
has never actually managed to find 
the Kremlin there; in Petushki, 
however, jasmine scents the air and 
a lovely woman awaits him. As far 
as we can tell, he never quite gets 
there. 

Venedikt Yerofeev was an intel- 
lectual dropout whose short novel 
Moskva-Petushki was published in 
samizdat during the 1960s. In Step- 
hen Mulrine’s eloquent adaptation, 
it makes a rich, blackly funny 
monologue for Tom Courtenay (who 
did it first on Radio 3). The obvious 
comparison with Jeffrey Bernard is 
Onwell goes only a little way: 
though Moscow Stations is autobio- 
graphical too, Venichka has none of 
Bernard's cheerful malice, nor - 
overtly, anyhow - anything of Lou- 
is-Ferdinand Celine’s scathing fury 
at the ruined life around bh»- 
Instead, like a holy fool he 
observes the bizarre, ludicrous and 


pitiful thing s that go on around him 
kindly and dispassionately, from 
the safe depths of his alcoholic 
haze. The comedy is mordant, but it 
is not he who puts the bite into it 
Though the drift of the narrative is 
as uncertain as the direction of the 
tr ain, the images of moral and civic 
decay tell their own story. A closer 
model would be Diderot’s once-fo- 
mous Le Neveu de Rameau , in 
which another dissolute dissident 
floats through another collapsing 
social order. 

At the Garrick Theatre Tim Hate- 
ly*s stage furnishings are minimal 
(but crisply enhanced by lighting, 
sound and direction, respectively by 
Ian SommerviDe, John Irvine 
Ian Brown). For almost two hours 
Courtenay meanders and stumbles 
with rubber-legged grace on a long, 
sharply tilted ramp, bare but for a 
crude bench. Without actorly dis- 
plays, he conveys a whole, wryly 
baffled character and his milieu. In 
a vodka-sodden baritone that bolds 
up beautifully to the challenge. 

The Garrick is tolerably well 
suited to the show, though more 
intimate surroundings would be 
better. If you go, sit close: the 
wealth of pawky Courtenay touches 
that make it more than a staged 
radio monologue may be partly lost 
on the bads rows. 

David Murray 


J atinder Verma Mughal trans- 
position of MoHfere’s Tartuffe 
for the National Theatre in 
1990 drew universal plaudits. 
Now once more under the ban- 
ner of his own Tara Arts company, 
he has returned to the same fertile 
source. 

Venna’s adaptation of The Bour- 
geois Gentilhomme is set in the 
French colony of Pondicherry in 
the southern India of the late 17th 
century. The merchant Monsieur 
Joordain, ludicrously eager to ele- 
vate himself socially, here becomes 
successful fisherman Thirro Kaka 
Been, hopelessly trying to buy in 
bulk the frills and furbelows, airs 
and graces which wfD unlock to 
him the world of the Artmans, or 
French colonisers. In order to win 
his daughter’s hand after Kafca’s 
first snobbish rebuff, her suitor 
impersonates not the Great link 
but the Sun Kbg himself. 

Much play is made of Kaka 
Deen’s desire to transform himself 
from a crow (the literal mea ning of 
his name) into a peacock, and Vin- 
cent Ebrahdm makes a fine strut- 
ting idiot, attempting to buy know- 
ledge by the yard and discovering, 
in tile original play's most famous 
aphorism, that he has been speak- 
ing prose all his life and never real- 
ised it. 

Yet Verma’s version is more than 
mere prose. He uses the term 


lywood , the common coinage for 
the Bombay movie industry) to 
describe the flaring East-West lin- 
guistic cocktail which his charac- 
ters speak. The likes of Salman 
Rushdie and Vikram Seth have con- 
veyed the energy of this modern 
vernacular on the page, but hear- 
ing a classic French comedy ren- 
dered thus is another experience 
entirely. 

The 'unaccustomed ear is never 
allowed to attune folly, Verma is 
alert to the possibilities of “Bing- 
lish* for ridicule, as Kaka Deen 
foils time and again to master the 
forma] “received” speech of the 
nobles whose favour be craves, and 
lapses back into his altogether live- 
lier “natural” lexicon. 

T his cheery verbal syllabub 
re-enacts the central mes- 
sage which Tara's produc- 
tion elicits from the narra- 
tive: that energy, happiness and 
truth are found in hybridity rather 
than in trying to attain a phoney 
alien propriety. 

Kaka Deen is spoken of as 
would-be social “coconut” - brown 
on tiie outside, white on the inride 
- yet when the play reverts in the 
final moments to the modern frame 
in which Verma has mounted it 
the question, “Are you a coconut?” 
is met with a joyous affirmative 


“Aren’t we all?” 

The change and interaction of 
words and cultures Is to be 
embraced: at one point a character 
quotes the central teaching of 20th- 
century gum, Meher Baba; pauses; 
repeats it, and begins singing it 
...because that is what we now 
associate with the phrase “Don’t 
worry, be happy,” that is what it 
now means tons. 

None of which is to damn the 
production as “worthy”. The per- 
formance I saw managed (eventu- 
ally) to seduce even a resolutely 
Surrey-commuter-helt audience at 
the Mai tings, Farnham into going 
along with the larks. Molfere’s 
“comidie-baUet " is rendered with 
song (accompanied with an arsenal 
of percussion by Joji Hfrota). dance 
(choreographic consultant, Sho- 
bana Jeyasingh) and a kind of 
semi-improvised puppetry, which 
sees Kaka Deen exchanging flat- 
teries with an aristocratic mango 
wearing a tricorn. 

Verma’s primary atm is celebra- 
tion rather than profundity, and on 
that score The Bourgeois Gentil- 
homme succeeds comfortably, 
thank you. 

Ian Shuttleworth 


Touring; then Bridge Lane Theatre 
Battersea Oct 31 - Nov 19 (071 228 
8828) 


1 international | 

1 A . 1 

ARi 

rs 

GUB 

DE 


■ ATHENS 

Megaron Sun, Mon: Isaac Stem 
vioHn recital. Oct 23, 24: Kurt Masur 
conducts Leipzig Gewandheus 
Orchestra (01-728 2333/01-722 
5S11) 


■ BOLOGNA 

Teatro Communal© Sat, Sure 
Giuseppe Sinopofi conducts 
Orchestra and Chorus of the Twto> 

Communale in Beetho van’s Ninth 
Symphony. Mon: Vladimir Splvakov 
violin recital. The opera season 

begins on Nov 26 with a new 
production of Rossini's li turco in 
Italia ( 051 - 529999 ) 


ian Twins; a transfer 
of Ranjit Bolt’s new 
f Goldoni's 18th 
comedy, directed by 
inov (Barbican 


• The Sisters Rosensweig: 

Michael Btekemore directs Maureen 
Upman, Janet Suzman and Lynda 
Bellingham in Wendy Wasseratein’s 
hit Broadway oomedy about three 
American Jewish sisters who have a 
rnkWfte reunion in London (Old Vic 
071-928 7616) 

• The Seagull: Judl Dench heads 
a splendid cast in Pam Gems’ new 
version of the Chekhov play. In 
repertory with a new production of 
The Devil's Dtecipte, Shaw’s 1897 
satire on melodrama (National, 

Offvier 071-928 2252) 

• The Playboy of the Western 
World: J.M. Synge’s dark, cruel Irish 
comedy, in a brilliantly perceptive 
production directed try Lynne Parker 
(Almeida 071-359 4404) 

• The Winslow Boy- Peter 
Barkworth is ideally cast as the stiff 
upper-lipped father battling Whitehall 
to prove the Innocence of his son, 
who has been expelled from naval 
college. A well-made production of 
Terence Rattfgan's well-made 1946 
play (Globe 071-494 5065) 

• The Quern and I: Sue 
Townsend’s stage adaptation of her 
own best-siting novel in which the 
Royal Family are sent to live on a 
run-down housing estate. Max 
Stafford-Clarfc's Royal Court 
production transfers to the West 
Bid. Now previewing, opens on 
Mon (Vaudeville 071-836 9987) 

• 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 tadhriduaSy re as a complete 
package on certain Saturdays 
(Young Vic 071-928 6363) 

• The Children’s Hour Howard 


Davies directs the National Theatre’s 
new production of LURen Heilman’s 
1934 drama, about a vengeful 
schoolgirl who accuses her teachers 
of having a lesbian affair and sets in 
motion the collapse of their world. 
The cast is headed by Harriet Walter 
and Claire Higgins (National, 

Lyttelton 071-928 2252) 

• 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 
giri's doomed love for an aristocrat 
(The Island Theatre at the Royalty 
071-494 5090) 

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

OPERA/DANCE 

Covent Garden The Royal Opera's 
new Ring production opens tonight 
with Das Rheingotd and tomorrow 
with Die WalkQre, staged by Richard 
Jones and conducted by Bernard 
Haitink. The cast includes John 
Tomlinson, Ekkehard Wtaschlha. 
Robert Tear, Potrt Bming, Deborah 
Polaski, UUa Gustafson and Jane 
HenscheJ (next performances Oct 
20/22, 25/29). Turandot returns on 
Oct 24 with Gwyneth Jones In the 
title role, and t ha Royal Ballet 
presents Anthony DoweJTs new 
production of Steeping Beauty on 
NOV 4 (071-304 4000) 

Cofiseum English National Opera 
has new productions of Massenet’s 
Don Qufchotte (with Richard Van 
AD an and Alan Opie, next 
performances tonight. Sat and Mon) 


and Tosca (With Rosalind Plowright, 
next performances tomorrow and 
Tues). Nicholas Hytner’s production 
of Die Zauberfltte is revived next 
Thurs (071-836 3161) 

Sadler's WoBs Grupo Corpo, a 
company of 18 dancers from Brazil, 
is In residence till SaL Oct 18-29: 
American performance group Morrrix 
(071-278 8916) 

Queen Szabetti Hall Next Tues, 
Wed, Thurs: Lucinda ChHds Dance 
Company. Oct 22, 23: Stephen 
Petronio (071-928 8800) 

CONCERTS 

Barbican Tonight Michael Tifeon 
Thomas conducts London 
Symphony Orchestra In Mahler’s 
Fifth Symphony. Sat Pinches 
Zukarrnan directs English Chamber 
Orchestra in Bach, Mozart and 
Haydn. Mon and Wed (also Oct 22, 
24, 26): Andras Schiff and friends 
present rarely-heard chamber and 
choral music by Janacak and 
Schubert. Tues: Uihuan National 
Philharmonic Orchestra plays 
Stoellus, Shostakovich and 
Tchaikovsky. Oct 25: Solti conducts 
the LSO (071-638 8891) 

South Bank Centre Tonight 
Charles Mackerras conducts RPO in 
works by Mozart and Richard 
Strauss, with horn soloist Jeffrey 
Bryant Tonight (Q£H): Mrtsuko 
Uchfda piano recital. Tomorrow: • 
LecnanJ Siatkin conducts 
PhHtamonia Orchestra in works by 
Poulenc and Saint-Saens, with the 
Labeque Sisters. Sure Andrew Davis 
conducts BBC Symphony Orchestra 
and Chorus in Berfiaz’s Romeo et 
Juliette, with Jean Rigby, John-Mark 
Ainslay and Matthew Best Sun 
(QEH): Mark Elder conducts 
Orchestra of the Age of 


Enlightenment in concert 
performance of Weber's Euryanthe, 
with cast headed by Christine 
Brewer. Mon: Franz Welser-MBst 
conducts LPO in Schumann’s 
Scenes from Faust with cast 
Inducting Thomas Hampson and 
Margaret Price. Tues: Charles 
Mackerras conducts RPO In a 
Rudolf Kempe memorial concert 
featuring works by Mozart and 
Strauss. Wed: Alfred Brands! plays 
Beethoven piano sonatas (071-928 
8800) 


■ MILAN 

Teatro aBa Scala Tomorrow, Sat 
next Tues, Wed. Thurs: Rlccardo 
Mutt conducts Gilbert Deflo’s 
production of Monteverdi’s 
L’incoronazione di Poppea, with 
alternating casts including Anna 

Caterina Antonacd, Debora 
Beronesi, Luciano d’lntino. Nuccsa 
Fodle and William Matteuzzi. Sun: 
Vincenzo La Scola is tenor sokxst 
with l Virtuosi Italian!. Mon: Ruggero 
Raimondi song recital. Oct 27: 
Georg Solti conducts London 
Symphony Orchestra 

(02-7200 3744) 


■ PRAGUE 

Dvorak Han Tonight Jiri BetoWavok 
conducts Prague Symphony 
Orchestra in works by Beethoven, 
Shotsakovich end Mozart, with ceBo 
soloist Jiri Barta and soprano Bra 
Uibanova. Sun: Boris Krajrty piano 
retitaL More Wihan String Quartet 
Wed: Stamfe Quartet with vtofist 
Christian Schffler. plays Mozart, 
Smetana and Martinu. Next Thurs 


and Fri: Vaclav Neumann conducts 
tire Czech Philharmonic (02-2489 
3352) 


■ ROME 

The Orchestra delPAccademia 
Nazlonate di Santa Gedlla opens Its 
new season of subscription concerts 
on Sat with a Bach and Stravinsky 
programme conducted by Daniele 
Gatti (repeated Sun, Mon and Tues). 
Visiting soloists in the pre-Christmas 
period include Barbara Hendricks, 
Krystian Zi merman, Vladimir 
Spivakov and Cecffia Gasdia. The 
conductors' roster Includes 
Myung-Whun Chung, Georges 
Pr&ire, Christian Thielemann, 
Gennady Rozhdestvensky and Carlo 
Maria Glulini. All concerts take place 
at the Audita rio di Via della 
Concifiaztone (06-6880 1044) 


■ TURIN 

Teatro Regio The 1994-5 season 
opens on Sun afternoon with 
Donizetti’s L’eltsir d’amore, 
conducted by Fabrtzlo Maria 
CarminsU and staged by Vittorio 
Borretfi. The cast la headed by Maria 
Costanza Nocerttini/SRvia Gavarotti, 
Alfonso Antoniozzi/Matteo PeJrone 
and Claudio DI Segni. The season 
also includes Donizetti's La fUIe 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 Mrtridate and Puccini’s 
Gianni Schicchj and Tosca 
(011-8815 241/011-8815 209) 


ARTS GUIDE 

Monday: Berlin, New York and 
Paris. 

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

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

Friday: Exhibitions Guide. 

European Cable and 
Satellite Business TV 
(Central European Time) 
MONDAY TO FRIDAY 
NBG/Supsr Channels 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 Haws FT Reports 0430, 
1730: 



16 


★ 


FINANCIAL TIMES 


THURSDAY OCTOBER 13 » 


Cowboys in the 
wild, wild east 



After a year 
spearheading 
the Russian 
government's 
crackdown on 

organised 

BOOK crime. Inspec- 
m/nroi/ tor Vladimir 
KEVIMW Kalinichenko 
decided it was a Sisyphean 
struggle. 

“In this sort of environment, 
the people who were in official 
posts can still do whatever 
they want," a dejected Mr Kal- 
inichenko explained, after dis- 
covering yet another link 
between the gangsters be was 
meant to fight and the govern- 
ment officials he was meant to 


serve. 

Mr Kalinichenko is one of 
hundreds of Russians whose 
adventures in the new wild 
east convinced Stephen Han- 
delman that gangster-bureau- 
crats have become the ruling 
figures in the new Russia. A 
bitter assertion - made timely 
by allegations that government 
insiders may have profited 
from this week's crash of the 
rouble - this is the subject of 
Comrade Criminal, Handel- 
m ail's great, but depressing 
new book. 

Mr Handelman. who was 
Moscow bureau chief for Cana- 
da's Toronto Star for five 
years, contends that the prom- 
ise held out by the collapse of 
communism exists no more. 
Instead of capitalism. Russia 
has turned to “frenzied profi- 
teering": instead of fairly 
applied laws and contracts, 
Russia has corrupt officials 
and business deals enforced 
through the barrel of a gum 
and instead of democracy, Rus- 
sia's future will be one of 
authoritarian rule or cr iminal 
chaos. 

His book is based on travels 
through the arms bazaars of 
the embattled Chechen repub- 
lic in the Caucasus, the bust- 
ling ports of tiny Estonia - 
which, on the strength of metal 
smuggled In from Russia, 
became the world's sixth larg- 
est exporter of ferrous metal in 
2993 - and the large defence 
plants of the Urals. 

Gripping and lively, it is an 
account of mafia machinations 
and the generally fruitless 
efforts of honest cops and out- 
numbered democratic politi- 
cians to thwart them. 

The democrats' struggle is a 
fight against history, suggests 


COMRADE CRIMINAL 
- The Theft of the Second 
Russian Revolution 
By Stephen Handelman 

Michael Joseph. £16.99, 360 pjjtes 


Handelman. The Bolshevik 
revolution of 1917 established a 
state ruled by communist com- 
rades. who. faced with impossi- 
ble production targets, used 
corruption to grease the 
creaky wheels of central plan- 
ning. 

The shadow of this state, 
revealed in fascinating detail 
by Handelman. was a Vorovsky 
Mir. a criminal world, of gang- 
sters who provided Soviet citi- 
zens with the consumer goods 
their rulin g comrades consid- 
ered inessential. 

Handelman’s account of the 
cementing of an alliance 
between the comrades and the 
criminals adds up to one of the 
most comprehensive and con- 
vincing representations of 
what has happened in Russia 
since 1991. But the book 
describes a system, rather than 
a government. The author 
offers a compelling vision of 
how Russia is run, but the 
identities of these new rulers, 
and how they are making their 
money, are subjects be skirts 
around. 

Who is using Russia's thriv- 
ing stock market to take con- 
trol of the country? What is 
happening in the oil and gas 
fields of Siberia? And who is 
controlling Russia’s buoyant 
metals trade? 

It may be that no western 
reporter can penetrate the lab- 
yrinth of Russian capitalism 
and live to tell the tale. But 
Handelman's book is like a 
vivid account of the wild capi- 
talists of 19th century America 
that fails to mention the 
Rockefellers. 

This is a serious failing . The 
restriction of Handelman's 
account to shadowy, often 
unnamed figures on the mar- 
gins of Russia's criminalised 
political economy does nothing 
to prove many of his most pow- 
erful assertions. 

After rousing descriptions of 
the code of honour between 
Russia's gangsters, and the 
corruption of its apparatchiks, 
Mr Handelman reveals his 
hand, without support, in the 
third and concluding section of 
the book. 


The comrade criminal has 
become “the dominant political 
figure of Russia”, he charges. 
The second Russian revolution 
has already been “stolen*, he 
argues, and the comrade crimi- 
nals - “the former nomenkla- 
tura and their allies” - already 
dominate President Boris Yelt- 
sin's cabinet 

Handelman takes a shot at 
Mr Yuri Luzhkov, the litigious 
mayor of Moscow, who has 
been accused of corruption in 
the sale of the city’s real 
estate. Such charges against 
Mr Luzhkov have never been 
proved 

But the author only allu- 
sively and tentatively connects 
bis faceless comrade criminals 
with real men in Yeltsin’s 
cabinet, with specific provin- 
cial government leaders still in 
office or with Russia's 
leading industrialists and 
financiers. 

There are a few other, minor 
quibbles. Handelman's asser- 
tion that “Russia’s post-com- 
munist uncertainty has been 
duplicated in other countries of 
the former Soviet Union and 
eastern Europe" paints with 
too broad a brush. In Poland, 
the Czech Republic, Hungary. 
Slovenia and Estonia, many 
former communists have trans- 
formed themselves into capital- 
ists but. unlike their Russian 
comrades described by Handel- 
man. they are rapidly and will- 
ingly learning to play by the 
relatively genteel western 
rules of the game. 

Moreover, Handelman was 
rash to predict that “there are 
already signs of an exodus of 
western investors". On the 
contrary, this year more than 
$3bn of western investments 
have already gone into Russia. 

Growing investment does not 
disprove Handelman’s argu- 
ment about the basically 
deformed nature of Russia's 
new economy; in other emerg- 
ing markets, and sometimes at 
home, western businessmen 
have shown no overpowering 
aversion to working with 
crooks. But western investors' 
rapid acquisition of the skills 
necessary to deal with comrade 
capitalists renders improbable 
Handelman's concluding hope 
that alerted to the theft of the 
second Russian revolution, the 
west will somehow come to the 
rescue. 

Chrystia Freeland 


T he UK Budget for 
1995-96, to be pres- 
ented on November 
29, is unlikely to 
change the tax burden by more 
than is already planned as a 
result of previous budgets. It 
will be called a neutral one - 
quite wrongly as the tax bur- 
den is increasing and will con- 
tinue to do so. 

A bogus debate is however 
starting on whether the Con- 
servative government should 
prepare to cut taxes in the fol- 
lowing 1995 budget. These 
would take effect in 1996-97, 
the last financ ial year before 
an election must be held. 

But there is one thing to get 
straight at the outset In any 
sensible use of language, there 
will not be any fax cuts either 
in tins Budget or the the next 
one, whichever school of 
thought wins the debate. The 
only question is how large the 
tax increases are to be. 

The previous chancellor, 
Norman Lamont, announced in 
his budget of March 1993 stag- 
gered tax increases to take 
effect in later years as eco- 
nomic recovery got under way. 
This was what I called the 
Augustinian policy of making 
the government's finances 
chaste, but not yet The pres- 
ent chancellor, Kenneth 
Clarke, in his budget of 
November 1993 added to the 
tax increases in the pipeline. 
The increases imposed by the 
two 1993 budgets together will 
have raised the tax take by 
£15bn or more than 2 per cent 
of gross domestic product by 
the coming fiscal year. 1995-96. 
The aim was to reduce the 
Public Sector Borrowing 
Requirement from its post-re- 
cession peak of 7 per cent of 
GDP in 1993-94. 

This would involve, accord- 
ing to Treasury projections, 
taxes, excluding North Sea oil, 
rising from a low of 34% per 
cent of GDP In 1993-94 to more 
than 38 per cent by the late 
1990s. In actual cash, and 
assuming very moderate Infla- 
tion, we are talking about an 
eventual net addition to the 
tax burden of well in excess of 
£30bn - much larger than any 
conceivable tax cut'. 

Assuming the present gov- 
ernment remains in office at 
least until 1997 (the last year 
for holding an election), the 
net effect of 18 years of Conser- 
vative government will have 
been to raise the ratio of tax to 
GDP by 4 percentage points 
over the level it inherited from 
the Callaghan Labour govern- 
ment These trends were all in 
the official Budget documents 
and neither chancellor tried to 
hide them. But it took a cam- 
paign by Labour's Gordon 


Economic Viewpoint 

There ain’t gonna 
be no tax cuts 

By Samuel Britt an 


Taxation under the Tories 


Tax/GDP ratio 
Excluding North Sea o& 
41% 


FORECAST 


40% 



33% i i n 


J-U-UJLUJLI f.1,,1-1 


1975-80 
Source Nov 1933 Buoget Rsd Book 


95-95 


UK budget deficit 
As per cent of GDP 

" PSBR 
Public sector <= 

asse< acquisition 

Public sector — 
asset acquisition 
taxcJ. privatisation 
„ receipts, etc) 


FORECAST _ 


_ e% 



- 6% 


_ 4% 


r-T” _ s% 


■ 0 




J I L 


l-J- 1 


1 l i * — » l- 


X..L— L.-1- 


1979-80 60-81 82-83 84-85 88-87 68-89 90-81 82-83 94-95 86-97 
Earn* fS 


.-4% 


Brown to make the public real- 
ise what was in store. 

The institute for Fiscal 
Studies, in its Green Budget 
presented in collaboration with 
US investment bank Goldman 
Sachs, has a central estimate 
of the PSBR for 1995-96 
amounting to £21 bn. some £9bn 
less than the Treasury proj- 
ected in its Red Book of a year 
ago. The improvement is, how- 
ever, due to the effect of unex- 
pectedly rapid recovery on rev- 
enue and unexpectedly low 
inflation on spending. It is 
therefore no reason for relax- 
ing tax policy if one believes 
that that policy ought to be 
related to longer-run trends, 
and that cyclically induced 
fluctuations in government 
should be taken in their stride. 

But even if the influence of 
the business cycle were disre- 
garded and the whole improve- 
ment were to be crudely 
handed back to the taxpayer, 
the latter would still be paying 
in tax a steadily rising propor- 
tion of her income. The only 


question is thus whether to 
limit - but certainly not to 
reverse - the size of the tax 
increases already planned and 
announced, which the public 
accepts, however grudgingly, 
that it will have to pay. 

Suppose however that in the 
November 1995 budget Mr 

The only question 
is whether to limit 

- but not reverse 

- the tax increases 
already planned 

Clarke were to chance his arm 
by providing £5bn of what the 
headlines would wrongly call 
tax cuts’. What then? It does 
not take a prophet to say that 
these measures would largely 
take the form of widening the 
lower income-tax band and tak- 
ing one or two percentage 
points off tile basic rate. The 
net effect then of several bud- 
gets together will have been a 


tax increase combined with a 
structural change. The latter 
will have involved a reduction 
in tax privileges for home-buy- 
ers. married couples and the 
like, and somewhat higher 
indirect taxes especially on 
fUel. The proceeds would have 
been used partly to reduce the 
budget deficit and partly to 
finance a slight reduction in 
the mar gin?) income tax rate. 
The changes will, on balance, 
be an improvement but come 
as a side effect of raising 
rather than lowering taxes. 

The authors of the Green 
Book, however, far from 
favouring a reduction in the 
tax increases in the pipeline, 
lean on the contrary towards a 
further fiscal tightening. Their 
argument is that if real GDP 
growth averages near 3 per 
cent per annum - their central 
estimate - a risk-averse gov- 
ernment would start to worry 
about the build-up in external 
debt arising from balance of 
payments deficits. 

Their prescription is to 


hebten fiscal policy more than 
is really required to slow down 
domestic demand and offset 
this by a monetary policy “set 
to achieve an exchange rate 
consistent with some improve- 
ment in net exports" - code for 
further devaluation. My guess 
is that quite a few in the Trea- 
sun- would like the chuneeUor 
to take this approach if they 
thought they could Set away 
with it. but as a next best will 
settle for trying w sell it to a 
future Labour government. 

Yet on present evidence fis- 
cal tightening would be just as 
foolish as the cosmetic tax cuts 
advocated by the Tory right. 
The whole external deficit sce- 
nario is highly speculative and 
downgrades sterling’s highly- 
competitive present real 
exchange rate. More funda- 
mentally. a build-up in exter- 
nal debt, which emanates 
entirely from the private sec- 
tor, is a matter for the private 
sector and is self-reversing. 

The Green Book's own pro- 
jections show that public 
finances are moving in a sus- 
tainable direction and are most 
unlikelv to-be the source of an 
external deficit, Jn.. the second 
chart, projected public-sector 
deficits are compared with the 
creation of capital assets by 
the public sector. They show 
that the "golden rule” - which 
sal's that public-sector deficits 
should not exceed capital for- 
mation - is likely soon to be 
achieved. Another test of 
soundness - the stabilisation 
of the debt to GDP ratio - 


I ndeed the chart shows 
that public sector finances 
have been fairly sensibly 
run under a series of 
chancellors. When the UK was 
recovering from recession in 
the early 1980s. there was a 
budget deficit. In the boom of 
the later 19S0s the public 
finances went into surplus and 
the “golden rule" was more 
than observed. Further deficits 
were incurred in the recession 
of the early 1990s which are 
again giving way to much 
smaller deficits and perhaps 
even surpluses. 

Goldman Sachs nowadays 
loses no opportunity of 
denouncing the tax remissions 
of the late 1980s. Yet at the 
time the firm was adamant 
that the Budget surpluses of 
the period amounted to a tight- 
ening of policy even on a cycli- 
cally adjusted basis. Rough 
and ready attempts to set Bud- 
get objectives without being 
too much influenced by tempo- 
rary fluctuations are more 
likely to succeed than more 
refined cyclical adjustments 
possible only with hindsight. 


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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 fax for finest resolution 


A basis for 
Russian and 
Nato accord 

From Mr Andrew Boulton. 

Sir, I refer to your two 
articles, “Russia and west split 
on Europe's security” and 
"Baltics struggle to muster a 
credible defence" (October 10). 

Russia is rightly concerned 
about the stability and security 
of the southern members of the 
Commonwealth of Independent 
States and is sufficiently 
respectful of Nato to seek its 
endorsement before deploying 
Russian peacemaking troops. 

An exact parallel is Nato's 
concern for the stability and 
security of the countries imme- 
diately to Nato's east. . .the 
three Baltic States, the Vise- 
grad four, Romania and Bul- 
garia. 

There would now seem to be 
an opportunity for the Confer- 
ence on Security and Coopera- 
tion in Europe to reach a 
mutually acceptable and bene- 
ficial agreement - acknowledg- 
ing that Russia should assume 
the lead role and deploy peace- 
making troops within the CIS, 
and acknowledging that Nato 
can similarly deploy peace- 
keeping troops throughout 
those European countries 
above, to Nato's east, and up to 
the CIS borders. 

Andrew Boulton 
principal, 

Boulton Marketing 
Consultancy, 

Clarendon Road. 

Linlithgow, 

Lothian EB-jS BAN 


What duty? 

From Dr LG Brookes. 

Sr. In taking Ms Clare Spot- 
tiswoode to task about her 
understanding of her duties as 
director-general of Olgas, the 
gas industry regulator. Mr 
Andrew Warren - who repre- 
sents the interests of the indus- 
try that supplies energy effi- 
ciency hardware and services - 
fails to make it clear why she 
or anyone else should have a 
duty to further the Interests of 
the members of his industry 
(Letters, October 11). If their 
products are worth buying, the 
market should take care of 
their interests in the same way 
as it does for any other indus- 
try. If they are not. so be it 
L G Brookes, 

16 Ipswich Road, 

Bottmemotah BH4 9HZ 


Excellent basis for 
funding research 


From Prof Gordon Conway, 

Sir, Your editorial, "Univer- 
sity reform" (October 11). calls 
for research funding to be 
restricted to a designated 20 or 
so universities. But if such con- 
centration is to occur, it must 
be strictly on the basis of 
excellence. There is a belief in 
some quarters that high-qual- 
ity research can only be con- 
ducted in large institutions. 
Yet of the 20 top research uni- 
versities at the last research 
assessment exercise. 31 were of 
middle or small size (London 
School of Economics, Warwick, 


Lancaster, Sussex, York, Birk- 
beck, Durham, Exeter. Essex, 
East Anglia and Bath). 

These 11 have demonstrated 
that it is not necessary to be 
big to be excellent or Innova- 
tive. A high degree of focus, 
support for new fields, an 
interdisciplinary approach and 
the ability to be flexible and 
fast-moving can, individually 
or in combination, compensate 
for lack of sis®. 

Gordon Conway. 
vice-chancellor. 

University of Sussex, 

Brighton BN1 9RH 


Doubtful 

opinion 

From Dr J Toporoivski. 

Sir, As someone with a high 
regard for your newspaper. I 
am dismayed that you have 
advertised the opinion of cen- 
tral bankers, finance ministry 
officials and financial execu- 
tives who regard yours as the 
publication that most influ- 
ences them ("The FT influ- 
ence", October 10). 

I would not stake my reputa- 
tion on the mess created by 
these gentlemen. 

J Toporowski, 

South Bank University, 

103 Borough Road. 

London SEl 0AA 


Women use business centres too 


From Mrs S Y Rhys Jones. 

Sir, When Visa International 
set about finding out the 
important factors in choosing a 
hotel why did it restrict the 
question about business cen- 
tres to men? (Business Travel 
Survey, October 10). Was it 
because the researchers 
assumed that the women inter- 
viewed were merely accompa- 
nying the men and therefore 


interested only in factors such 
as hair-dryers and prompt 
laundry services? 

I have just returned from a 
business trip to Australia, dur- 
ing which I sent and received a 
large number of faxes, tele- 
phone message and packages 
courtesy of the business centre 
at my hoteL Of course I appre- 
ciated the hair-dryer and the 
iron too and it was a refreshing 


change to be supplied with 
additional clothes bangers 
capable of holding skirts, 
rather than trousers. 

What is more, nobody batted 
an eyelid when I signed the 
Visa credit slip rather than my 
six-foot five inch male partner. 
S Y Rhys Jones, 

Halley House, 

49 Burney Street. 

Greenwich. LondofigElO SEX 


Pervasive model for mo dem managers 


From Mr Tony Kippenberger. 

Sir, Tim Dickson's piece on 
Frederick Winslow Taylor 
(Management: Pioneers and 
Prophets, October 3) is inter- 
esting and valuable. 

Since so much of today's 
management theory is cur- 
rently being questioned, going 
back to its roots is an impor- 
tant contribution to the debate 
- unlike The Economist, which 
has started its series on man- 
agement theorists with Tom 
Peters. 

What Tim Dickson omits is 
that arguably Taylor 
"invented" functional manage- 
ment. This was an integral 
part of his scientific manage- 
ment approach which broke all 
activities down into separate, 
divisible (and therefore mea- 
surable) parts. Taylor's 
approach was no doubt valid 
for its time, particularly among 
the largely unskilled migrant 
workforce in the US of the late 
19th century, as was Henri 
Fayol's similarly dated exposi- 
tion of the “practice of man- 
agement" at a time when 


Prance _ faced considerable 
international competition (“Les 
MIse rabies"). 

In the intervening years, 
these two founding theories of 
management have been added 
to, amended and adjusted. 
Although they have also been 
increasingly challenged, it is 
undeniable that they remain 
pervasive models in most man- 
agers' mindsets. 

They lie at the core of what 
many believe to be the theory 
and science of management. As 
such they have taken on the 
semblance of certainties - so 
deeply embedded that they are 
not even questioned. 

Although their viability, as 
apparently unalterable truths, 
may have been gently eroded 
over time, they have nof been 
fundamentally challenged in 
such a way that requires com- 
plete re-evaluation. Instead, 
later work - and there has 
been much of it - has formed 
as an accretion around these 
original ideas, rather than sup- 
planting them. They therefore 
continue to lie buried under 


layers of newer, sometimes 
fresher thinking - relatively 
undisturbed. 

Much of the “buzz" in man- 
agement today - re-engineer- 
ing, empowerment, self-organ- 
ising teams, de-layered sod 
flatter management mid even 
the "fall" of strategic planning 
- is at risk of failure (for good 
or ill) if the prevalent mindsets 
inherited from the 19th cen- 
tury are not put up for ques- 
tioning. They brought us the 
concepts of "staff" and "line" 
and the need for discrete func- 
tions, notions about forecast- 
ing and planning, the need for 
conmand and control and the 
desirability of the stopwatch 
There is a sense of discordance 
with our world, 100 years 
later. 

The sooner this is debated j 
the better. 

Tony Kippenberger, 
director, 

The Centre for Strategic 
Business Studies, 

St Thomas House, 

St Thomas Street. 

Winchester $023 9HE 


FINANCIAL TIMES THURSDAY OCTOBER 13 1994 


FINANCIAL TIMES 

Number One Southwark Bridge, London SHI 9HL 
Tel: 071-873 3000 Telex: 922186 Fax: 071-407 5700 

Thursday October 13 1994 


Russia 

unravels 


For nine .months, Russia's 
economic .policy has been con- 
structed around a myth: that an. 
economy can be stabilised gradu- 
ally. The government feared the 
political consequences of a more 
radical approach. Instead, it has 
spent months trying to foster 
belief in a more user-friendly 
alternative. This week's fall in the 
rouble Is only the most recent evi- 
dence that the package is unsella- 
ble. The currency will fall further 
as long as its value is tied to the 
success of a bankrupt policy. 

The 21.5 per cent fall in the rou- 
ble Tuesday left President 
Boris Yeltsin looking for scape- 
goats. Mr Sergei Dubinin, the act- 
ing finance minister, has been 
sacked. Central bank chairma n Mr 
Viktor Gerashchenko may go with 
him. Part of the blame for the 
government’s lack of credibility 
lies with individuals. The tacit 
relaxation of monetary controls 
over the summer came as a result 
of individual ministers giving in 
to the constant pleas for assis- 
tance from agricultural and indus- 
trial producers. More broadly, evi- 
dence of state corruption 
continues to mount 

But changing the individual 
policymakers will do nothing if 
there is not a fundamental reform 
of economic policy to go with it 
There must be a stable macroecon- 
omic framework if Russia is to 
achieve sustainable long-term 
growth. Stability means winning 
the battle against inflation, and 
winning that battle means estab- 
lishing a strict set of monetary 
and fiscal guidelines to which 
ministers can credibly adhere. 


Few - whether inside or outside 
Russia - believe that the current 
approach can deliver this stability. 
Reducing Inflation, without the 
benefit of a nominal anehny for 
prices, such as a fira* fixnbange 
rate, has meant months of 
attempted monetary restraint, 
supported by necessarily high real 
Interest rates. 

High interest rates, in forcing 
more producers into bankruptcy, 
fuelled the very pressures for 
monetary stimulus which policy- 
makers were already in a weak 
position to resist. But high rates 
also cost the government dear, by 
raising the cost of servicing gov- 
ernment debt The longer they 
prevail, the more likely it is that 
the government will resort to fur- 
ther inflation in order to lower 
that burden. 

Thus, whether or not members 
of the government actively fuelled 
the fall of the rouble - as Presi- 
dent Yeltsin and others have 
suggested - it Is the logical conse- 
quence of anti-inflationary policies 
which lack both the will and the 
means to deliver. 

The west can do more than 
watch. Under the auspices of the 
IMF, there must be a clear offer of 
large-scale financial support for 
any government willing to maVq a 
decisive break with the incremen- 
tal, escapist approach of recent 
months. Support for a social 
safety net is vital, as is a fund to 
back the rouble, which would psy- 
chologically underpin a commit- 
ment to peg the exchange rate and 
make it folly convertible. But only 
a reformed government could 
make it worth defending. 


Defence mergers 


With the prospect of submarine 
maker VSEL being taken over by 
British Aerospace or GEC, the 
rationalisation of the UK defence 
industry is moving into its end 
game. GEC has already collected 
most of rival defence electronics 
supplier Ferranti: GEN has 
bought Westland; now BAe and 
GEC are seeking to secure their 
position in naval engineering. 

At first sight some of these 
mergers lack coherence. Yet 
because the UK has reduced its 
defence industry to one aircraft 
manufacturer, a dominant elec- 
tronics company, two large mak- 
ers of land vehicles and a few 
shipyards, companies have to find 
cost savings from merging the 
companies which are left. The log- 
ical conclusion of this process 
would leave the UK with two 
giants: GEC, whose prime exper- 
tise is In electronics systems, and 
BAe which makes its money from 
engineering and project manage- 
ment. The question now Is 
whether they themselves should 
merge or should seek affiances in 
a wider European context 

There is something to be said 
for a merger. GEC’s £2JBm cash 
mountain would provide BAe with 
the cast iron financial stability it 
has always lacked, while BAe's 
marketing flair could help GEC 
succeed in export markets. On the 
other hand, the ministry of 
defence may object to merger if 
the two companies have already 
digested the remainder of the 
defence industrial base. The two 
companies' cultures could also 
dash in a way which turned the 


dream merger into a nightmare. It 
is not hard to imagine GEC’s 
inflexibility combining with BAe's 
accident-prone nature to produce 
a disaster. 

The more attractive alternative, 
which both are already pursuing, 
is closer collaboration with conti- 
nental partners. BAe has been 
negotiating a missile alliance with 
Matra of France and an ordnance 
merger with GiaL GEC is pooling 
its sonar business with the French 
electronics company Thomson. 

Better still would be wholesale 
rationalisation of the European 
defence industry. Unfortunately 
this is being blocked by political 
objections. Britain, France and 
Germany in particular see their 
defence industries as vital secu- 
rity interests and status symbols. 

They should realise that the 
ideal of independent national 
defence industries is an illusion. 
Many key technologies come from 
US, Japanese or other EU coun- 
tries. Same equipment is so expen- 
sive that European countries can 
only afford it if it is pooled in 
Nato. Such collaboration would be 
so much easier if full cross-border 
mergers were permitted. 

European politicians should 
seize the opportunity to remove 
the barriers obstructing mergers 
while the defence industry is still 
strong enough to compete with 
other suppliers. H that happened, 
companies such as BAe and GEC 
could decide in a free market 
whether their fixture is as national 
monoliths or international special- 
ists with the scale to take on the 
best in the world. 


Exclude Saddam 


Chat President Saddam Hussein 
annot get away with invading 
Cuwait was conclusively demon- 
itrated in 1991. That he can be 
teterred from invading it. In spite 
a the certain consequences, is 
ess sure. He only 1ms to look as if 
le might be about to try, and 
housands of troops and aircraft 
ire rushed to the scene. This pro- 
redure is expensive and if 
epeated would be un d ignified . 

Mr Saddam fir well aware of 
hat In fact he is probably enjoy- 
og the commotion be has caused. 
Jven if it does not pay any dipto* 
natic dividend, such as a Russian- 
irokered deal involving an easing 
ir gradual lifting of sanctums, it 
hows that he still has the capac- 
ty to Induce something like panic 
n the international community, 
"hat may make him look stronger 
jod so reinforce his grip cm his 
>wn armed forces. 

The US and Kuwait are rightly 
coking for ways to make it more 
Sfficult for him to achieve this 
fleet. The no-fly zone south of the 
2nd parallel, imposed in August 
992. already helps, since it 
eprives his forces of air cover as 
oon as they are within 130 miles 
£ the Kuwaiti border. But clearly 
t is not enough. So they are (am- 
assing the idea of a total exchi- 
ion yw. in which the movement 
f troops and military equipment 
jould be banned on the ground as 
,■ ell as in the air. 

Such a rone has been imposed 
y the allies north of the 36th par- 
Uel since April 1991, and has 
ielped to preserve the Kurdish 
safe haven" in the north-east. If 


only the same had been done in 
the south in March 1991, Mr Sadr 
dam would surely not have been 
able to defeat the Shla rebellion in 
the south. At the time, the US 
declined ostentatiously to give any 
support to the rebels, although it 
had half a million men virtually 
within earshot of what was hap- 
pening. President Bush’s spokes- 
man, Mr Marlin F itz wate r, even 
stated publicly that the US had no 
objection to the use of helicopter 
gimships to suppress the revolt 

The only reason given publicly 
for this attitude at the time was 
an unconvincing, and in the cir- 
cumstances hardly appropriate, 
neutrality in Iraq’s internal 
affairs. The real reason was that 
the US feared a Shia success 
would mean that Into, or at any 
rate the southern half of it, would 
become a satellite of revolutionary 
Tran Washington hoped and 
believed the Iraqi army, having 
suppressed foe revolt and secured 
the integrity of foe country, would 
depose Mr Saddam and replace 
him with a more pliable regime. 

That strategy has manifestly 
failed. The US is now supporting 
an alternative leadership, the Iraqi 
National Congress, which has 
brought together Kurdish, Shia 
and some Sunni opponents of Ur 
Saddam. The right course now 
would be to declare southern Iraq 
a demilitarised zone, and encour- 
age the INC to establish its 
authority there. It is hard to 
believe Mr Saddam's regime could 
long survive in Baghdad once 
more fo*w half foe country was 
outside its control. 


British Coal: the big sell-off 

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M r Michael 
Heseltine’s relief 
was palpable yes- 
terday as he 
announced the pre- 
ferred bidders for British Coal, the 
state-owned mining company, and 
the industry moved mtn the final 
stages of privatisation. 

"We have received offers which 
can be measured in hundreds of 
millions of pounds," he told repre- 
sentatives at foe Conservative party 
conference in Bournemouth- "By 
next January nearly 30 British Coal 
pits will be in the private sector.” 

The trade and industry secre- 
tary's exultation was understand- 
able. It was almost two years to the 
day since a crisis erupted over pre- 
privatisation pit closures that many 
observers thought would end his 
political career. 

Mr Heseltine received the 
applause he expected from the party 
faithful, some of whom have been 
highly critical of foe government’s 
coal policy. But foe go v e rnm ent's 
problems with coal are not over yet. 

First, ministers and their advisers 
must complete the final negotia- 
tions with what Mr Heseltine called 
foe “likely successful bidders". 
These are RJB Mining, a quoted 
company whose bids have bear con- 
ditionally accepted for the three 
English regions and two closed pits, 
Thome in Yorkshire and KTHng tnn 
in Northumberland; Celtic Energy, 
a management buy-out for most of 
Wales; Mining (Scotland), a consor- 
tium, for the Scottish pits; an 
employee buy-out team for Tower 
pit in south Wales; and a consor- 
tium tnninding Coal Investments, 
another quoted for the Annesley 
Bentinck pit in Nottinghamshire. 

Nothing is signed yet A failure to 
reach final daak with the preferred 
ladders would be embarrassing for 
Mr Heseltine, who would then have 
to try to find an alternative buyer 
among other bidders. 

But foe real test for the govern- 
ment will be what happens to the 
industry after foe privatisation, 
which is expected to be completed 
on December 24. If more pits dose, 
blame is likely to be laid at the door 


Private bidders’ 
dash for coal 

Michael Heseltine may have made some shrewd 
choices in privatising the UK’s pits, says Michael Smith 


of the government even if the indus- 
try Is privately owned. Ministers 
wfll also face strong criticism if any 
of foe companies they have selected 
to run Britain’s pits ford themselves 
in financ ial difficulty. 

The government has taken a lot 
of trouble to ensure that such 
embarrassments are avoided. Roths- 
child, the government’s merchant 
bank adviser, said that while the 
preferred bidders in each region had 
made the highest bids, they had 
also satisfied it on “intangible 
issues", including their firiaru-iai 
viability and their long-term com- 
mitment to the industry. 

The outcome of foe tendering pro- 
cess has also given the Emr wmnmnt 
a result that is politically attra c tive . 
By choosing a management buy-out 
far the south Wales pits and a con- 
sortium in winch trade unions have 
a stake for Scotland, they have been 
able to give credence to the govern- 
ment’s desire to give employees a 
stake in the industry. 

The selection of locally based 
companies in Wales and Scotland 
will also avoid accusations in those 
countries of an Fn gHsb takeover. 

Ministers have frafcpn a risk in dis- 
appointing foe ambitions of the 
Union of Democratic Mineworkers, 
foe breakaway union, which was in 
a consortium bidding for the two 
central En glish regions. 

But foe choice of RJB for all three 
English regions could prove a 
shrewd move. If RJB succeeds in 
completing the negotiations, it will 
take on 15 of the 16 British Coal pits 
that are still open. The company 


reckons that when these are ad ded 
to foe opencast interests that it will 
wiy > take over and foe three phy it 
already leases from the govern- 
ment, It will control more than 80 
per cent of foe coal industry. 

The government’s willingness to 
concentrate so much power in one 
company hag fa>fri*n the industry by 
surprise. Even in his speech yester- 
day, Mr Heseltme was stressing the 
benefits of competition that have 
arisen from other privatisations. 

B ut giving all three 
regions to BJB allows 
ministers to argue that 
they are not driven by 
tree-market ?md 

that they have hsteoed to British 
Coal’s advice. British Coal has 
argued throughout the privatisation 
process that the industry should 
remain as one. 

“Privatising Wn gtich in pnp 
chunk is a good outcome for the 
industry," said one British Coal 
executive yesterday. “It will give 
the company strength through sw» t 
particularly in its discussions with 
the electricity generators for coal 
sains deals,” 

There was less rejoicing in the 
industry foot the government's 
choice had fallen on RJB. Some 
executives said they would have 
preferred to work for Mr Malcolm 
Edwards, farmer British Coal mar- 
keting director who now heads Coal 
Investments, or for Mr Bob Siddall, 
the opencast director who led a 
management buy-out haw 
Mr Richard Budge, foe entrepre- 


neur who heads RJB, is viewed as 
highly competent within British 
Coal, but there are fears that bis 
personality may be too forceful for 
the good of the industry. If he lives 
up to his image, he could face con- 
frontation with Mr Arthur Scargfll, 
president of the National Union of 
Mineworkers, who is resolutely 
opposed to the changes in work 
practices and culture RJB says it 
needs to make a success of the 
Bn gHsTi pits. 

“The negatives are probably more 
In people's minds than in reality 
but he is viewed as domineering 
and dictatorial." said one executive. 
“We will want to see evidence that 
he ww delegate." 

Mr Budge yesterday played down 
the potential for confrontation. 
“Some of our elating pits have 
NUM members and there are no 
problems there," be 

RJB’s other main task is to sort 
out the financp to fimd the 

ted. Since foe «gnp»ny was floated 
on the T.nnrinn Stock Exchange last 
year, the shares have outperformed 
foe market, but the company is still 
capitalised at less foan £S0m. 

Neither RJB nor foe government 
was prepared to discuss the size of 
its tenders yesterday, but the com- 
pany is believed to have paid at 
least £900m. With gearing of about 
70 per cent already, an issue of 
shares and more borrowing seems 
inevitable. 

Stockbrokers’ analysts said yes- 
terday they saw no problems with 
raising such sums. Samp said RJB’s 
share price would rise when foe 


shares returned to the market fol- 
lowing yesterday's suspension. 
Much, however, will depend on the 
detail of the financing which h as 
yet to be announced. 

Details of the successful Scottish 
and Welsh bids were similarly 
undisclosed. However, to win the 
Welsh bid. Celtic Energy beat off 
powerful competition, including a 
consortium grouping Powell Duf- 
fryn and Wimpey. “Both companies 
wanted foe Welsh region pretty 
badly to preserve their opencast 
interests there." said one analyst. 
“Celtic Energy must have put in a 
substantia] offer.” 

But perhaps the largest determi- 
nant of the companies' future suc- 
cess will be the market for their 
coal, over which they have only lim- 
ited control. The biggest problems 
are the potential growth of compet- 
ing fuels In the electricity market. 

The “dash for gas" that has forced 
foe closure of so many pits in foe 
past few years has spluttered back 
into life in the last few weeks. Two 
regional electricity companies. Mid- 
lands and Electricity, have 
announced their involvement in 
consortia to build gas-fired power 
stations which will eliminate foe 
need for 3m tonnes of coal a year. 
British Gas is negotiating on foe 
possibility of building a 1.200MW 
station near Bristol that could dis- 
place another 3m tonnes of coal. 

British Coal executives and some 
of foe tmsuccessftil bidders say they 
have been taken by surprise by the 
announcements. They also pointed 
out that the marketplace will be 
more crowded than expected 
because of the acceptance yesterday 
of bids to reopen some pits closed 
in foe last year by British 
CoaL 

Mr Budge was unconcerned. He 
had no plans for further behaving 
foe market would shrink only mar- 
ginally from its current capacity. 
“Don't forget that there are 17m 
tmrwpK of imports aT> d vie can dis- 
place most of them,” he said. 

The 8,000 or so deep-pit miners 
who remain in foe industry will be 
praying that Mr Budge and not the 
industry pessimists are right. 


Signs that united Germany is working 



PERSONAL 

View 


This year's German 
elections are the 
first true test of foe 
political aspirations 
of Tirrfjpd Germany. 
The euphoria that 
followed the fell of 
the Berlin Wall is 
long gone. So too 
are the transitional arrangements 
that allowed the two halves of the 
new Germany to vote as separate 
districts in the 1990 elections. 

In the four years since those elec- 
tions, I have been to east Germany 
several times. I have heard the sto- 
ries of colleagues dismissed from 
universities, “wound up”, as local 
usage has it I have heard of careers 
refined, people thrown out of their 
homes, and apparently flourishing 
state enterprises sold to west Ger- 
man companies which shut them 
down. 

In such soil, conspiracy theories 
grow. From such people, votes come 
for the Party erf Democratic Social- 
ism, the successor to East Ger- 
many's Communist party. 

What I should to say to my east 
German friends is that, in spite erf 


everything, unification works. 
Erfurt in September 1994 looks bet- 
ter than Erfurt in July 1993. People 
are better dressed. The shops are 
fuller. 

Five years after the Berlin Wall 
came down, polls show that foe 
majority of east Germans consider 
themselves winners as a result of 
the change. Unified Germany trans- 
fers each year about DMISObn 
(£Sfon) from west to east No won- 
der they feel good. 

Currency reform has also worked. 
I ta lked to one of the economists 
who advised the Bundesbank on the 
rate of exchange between the two 
German currencies an unification. 
Experts at the time decided that it 
should be one D-Mark for IS Ost- 
marks. Chancellor Helmut Kohl 
ignored them. He heard the foot- 
steps of 40,000 people leaving east 
Germany each week. When the 
crowd said, “if the D-Mark won’t 
come to us, well go to the D-Mark”, 
Kohl gave them the D-Mark. 

I asked the economist “Who was 
right, the Bundesbank or Kohl?" 

He hesitated and then said: 
“Kohl." There was no time to fiddle 


with exceptions and regulations, 
still less to guess the unintended 
consequences. 

Among foe beneficiaries erf cur- 
rency conversion, along with pen- 
sioners, were the organs of the east 
German state, whose huge, largely 
concealed cash balances suddenly 
turned into hard currency. By one 
erf those ironies that make history 

The majority of 
east Germans 
consider themselves 
winners as a result 
of the change 

such fan , Kohl became the benefac- 
tor of the PDS, foe party which 
might bring his chancello rship to 
an end if it succeeds in winning 
seats in the new Bundestag. 

I am here with a group of foreign 
academics, guests of the German 
Academic Exchange Service. I have 
had a chance to travel widely. 
What I see is not change, but conti- 
nuity. 


In the five years since foe Leipzig 
demonstrations of October 1988, the 
old Federal Republic of Germany 
has absorbed five new federal states 
relatively painlessly. The constitu- 
tional lawyer Hartmut JSckl points 
out that foe German Basic Law, its 
constitution provisionally adopted 
in 1949, has scarcely been altered by 
unification and the federal struc- 
ture not at alL 

Since 1949, Germany has had 
coalition governments at federal 
level and on most state levels. 
Coalitions move to the centre and 
move slowly, if at afl. German vot- 
ers like that Since 1949, no electoral 
swing has ever exceeded 5 per 
cent. 

If the liberal Free Democratic 
party fails to get 5 per cent of the 
vote in next Sunday's election, it 
will not enter the new Bundestag. 
Since that would amount to flhpngp 
of much more than S per cent, it is 
not going to happen. 

ft does not matter that the FDP 
felled to get 5 per cent in the last 
seven state elections. Enough Ger- 
man voters understand their politi- 
cal system to ignore state results. 


Yesterday foe Allensbach Institute 
announced that 57 per cent of those 
intending to give their second vote 
to foe FDP wfll have cast their first 
vote for Chancellor Kohl’s Christian 
Democratic Union. These German 
voters know what they want and 
how to get it 

The German state of 1994 is no 
longer provisional. The federal 
republic had 40 years of success 
before 1989. The last five years have 
brought more. 

Lady Thatcher and President 
Francois Mitterrand were wrong 
about a united Germany. It Is more, 
not less, stable than foe pre-existing 
states. The symbol of that stability 
is the massive bulk of Helmut Kohl, 
“Bismarck in a baggy sweater". 

Bismarck united the old Germany 
with the sword; Kohl with the vote. 
That’s the real difference between 
the old and the new Germany. 

Jonathan Steinberg 

The author is reader in Modem 
European Bistort/ at Trinity Had, 
Cambridge 


Observer 


Goldman 

wonder 

■ If all private partnerships suffer 
from envy, Goldman Sachs must 
have an acute case; the rank and 
file always feds the partners keep 
the goodies all to themselves. 

At Goldman, where 150 partners 
are reputed to have earned more 
than foe rest of the 9 4)00 staff last 
year, the problem has reached its 
most extreme form. 

Perhaps that explains why foe US 
investment bank has lust opened 
foe partnership door a little wider. 
The firm has etevated 58 staffers to 
the ranks of the fabulously wealthy, 
compared with 35 in the previous 
Mammal promotion. 

But for every new partner there 
will be dozens (rf ambitious types 
who wfll be bitterly disappointed 
that they were overlooked. 

ff Tift t matte a fl nlibrom partrw hy 
your mid-30s the chances are pretty 
slim you will make foe grade. Add 
in foe feet that an Increasing 
number of the privileged few are 
retiring early mid foe average age 
of retirement is now down to 47, it's 
easy to see why Goldman veterans 
who have been passed over for 
partnership could easily become 
demoralised. 

So far in 1994, Goldman’s profits 
are reckoned to be running at little 
more than a quarter of last year’s. 
Hence the gap between the earnings 
of the partners and the also-rans is 
not quite so startling as last year. 


However, the problem has not 
gone away. With roughly a third of 
Goldman’s partners now being new 
boys, it’s hard to believe they will 
want to change foe increasingly 
anachronistic payments system. 


Euro-muddle 

■ How timely. London’s Hackney 
council launches its contribution to 
the European debate today, with a 
report on “Whose Europe is it 
anyway?**- For further information, 
contact Louise Muddle. 


Clearing Kavan 

■ Jan Kavan can afford to smile 
again; he has been officially cleared 
by a Czech court of the charge of 
collaborating with the StB, 
communist Czechoslovakia's 
equivalent of foe KGB. 

In March 1991 a parliamentary 
commission said Kavan’s name had 
been fonnd in StB files. Kavan had 
hpan a famo us dissident, in d eed the 
opposition's main link with the 
west, while he lived in exile in 
London between 196989. The 
accusation was based on meetings 
he had in 1969-70 with an StB agent 
based in London’s Czechoslovak 
embass y. 

The ministiy of interior says it 
will appeal against foe latest 
judgement, though Kavan is 
confident there is no farther 
evidence. He is now standing 
unopposed for the chairmanship of 



‘I wonder if there’s a Nobel peace 
prize lu this for os’ 

the Czech Social Democratic Party 
foreign affairs committee - 

effectively making him shadow 

fo reign minister. 


Priceless 

■ Michael Portillo’s triumphal 
progress at the Tory party 
conference in Bournemouth tripped 
up yesterday. Sir George Ga r diner, 
chairman of the Thatcherite 
Conservative Way Forward group, 
unwittingly ruined the employment 
secretary's best line at a fringe 
meeting. Unknown to Sr George, 
Portillo was preparing to poke ftm 
at Labour's habit of charging for 


some of its policy documents. 

Bat Sir George threw in his path 
a banana skin, by launching a hard 
sell far a CWF booklet of the 
Portillo’s speeches - ’Clear Blue 
Water’ - and a snip at £435. 
“Michael Portillo is only too willing 
to autograph it for you." added 
Gardiner. 

Side-steppin g rapi dly, Portillo 

congratulated CWF for “having foe 
chutzpah" to assemble the booklet, 
saying; “It’s a real tribute to foe 
capitalist system.” As is Portillo. 


Browned off 

■ Vincent Tan, the prominent 

Waliiyagn/ihhiM a hncfn uggmnn , jg 

after Mjaom (f?3m) damages from 
a magazine called Malaysian 
Industry, which he accuses of 
writing a series of articles that 
sought to destroy his personal and 
commercial reputation. 

In Kuala Lumpur's high court. 
Tan this week claimed to be “the , 
brains” behind Berjaya, a group 
with textiles, leisure, media and 
assorted other industries. He 
ce rtainly is and cantroffing 
shareholder of Berjaya, which he 
says now has 200 companies and 
14300 employees. Tan says that the 
articles have caused alarm and 
despondency among fund managers. 
a-nri that some bad sold their 
Berjaya shares. 

“Yours humbly, Vincent Tan, is 
always in the forefront," said Tan. 
“Even if foe M$20m is awarded to 
me. ft cannot undo foe harm and 


the stress put on me," he added. “If 
I had a weak heart I would have 
died. But fortunately 1 am 42 years 
old. still young and strong.” 


On guard 


■ The Lord Mayor Sir Paul Newall, 
in Kuwait City yesterday during 
what was supposed to have been a 
routine Gulf trade tour, was at least 
well prepared. Britain may be 
mustering only a paltry collection 
of troops to send to foe Kuwaitis’ 
assistance, but foe Lord Mayor’s 
team should pass muster. Sir Paul 
did part of his national service with 
foe Royal Fusiliers in the Sudan. 
His swordbearer Colonel John 
Ansell was with the Trucial Oman 
Scouts in the 1960’s and was 
attached to the Kuwaiti armed 
forces in the early 1980s. Even foe 
third member of the party, the 
“chief commoner" John Holland, is 
an honorary colonel in a TA 
parachute battalion. On this 
occasion the extra baggage in a 
Lord Mayor’s overseas junket seems 
justifiable. 


Black belter 

■ You can tell much from a 
business card. Take that of 
Noudjalbaye Ngaryanan, formerly 
Chad’s chief of police. His card now 
reads “Minister of public health” 
and "president of the amateur 
karate league". Shape up or else, 
perhaps. 






IS 


PLUMB 
CENTER 

oooe- 



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Thursday October 13 1994 



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homes- properties- construction 
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Conference speech wins rightwing Tory support 

Portillo hits out against 
Brussels ‘interference’ 


By PhBJp Stephens and 
Kevin Brown in Bournemouth 

Mr Michael Portillo established 
himself yesterday as the unchal- 
lenged leader of the Conservative 
right in British politics as gov- 
ernment divisions over Europe 
were exposed again at the party's 
annual conference in Bourne- 
mouth on the south coast of 
England. 

In a confident and carefully 
calculated performance which 
won thunderous applause, the 
UK employment secretary 
launched a fierce attack on inter- 
ference from Brussels and a pas- 
sionate defence of British institu- 
tions and sovereignty. 

Anticipating an intense debate 
within the government ahead of 
the 1996 intergovernmental con- 
ference. Mr Portillo said bluntly: 
“Sometimes you have to tell 
Brussels when to stop.” 

His conference debut speech as 
a cabinet minister came as Mr 
Kenneth Clarke, the chancellor of 
the exchequer, prepared to tell 
representatives later today that 


the economic upturn would bring 
a strong revival in the govern- 
ment's political fortunes before 
the next general election, which 
is due by 1997 at the latest 

But Mr Clarke was expected to 
combine a firm promise of even- 
tual tax cuts with a warning that 
the government would first have 
to make further cuts in public 
spending programmes and bring 
down sharply the level of public 
borrowing. 

The fresh discord over Europe 
coincided with a by-election 
threat after the death of Mr John 
Blackburn. Conservative member 
of parliament for Dudley West in 
the English Midlands. A by- 
election defeat would reduce Mr 
John Major's majority to 13 seats. 

Mr Portillo insisted his com- 
ments on Europe were in line 
with government policy and was 
at pains to repudiate the view of 
Mr Norman Lamont, the former 
chancellor, that Britain might 
have to consider withdrawal 
from the European Union. 

He added that the cabinet was 
“absolutely united" on the need 


to reduce interference from Brus- 
sels in the everyday lives of Brit- 
ish citizens. 

But the Eurosceptic tone of the 
speech - Mr Portillo said the gov- 
ernment would “stop the rot" 
from Brussels - provoked a coun- 
terblast from Mr Michael 
Heselfine, the pro-European trade 
and industry secretary. 

Mr Heseltine said a central role 
was vital for Britain 's economic 
self-interest. He added: “Our 
choice is to influence what is 
happening - or let others set the 
rules. That is why the prime min- 
ister is right to talk of a Britain 
at the heart of Europe." 

In a clear indication of the 
growing irritation in Brussels at 
attacks on the EU by Tory right- 
wingers. Sir Leon Brittan. the 
European competition commis- 
sioner, warned that the UK could 
be damaged by sniping from the 
sidelines. 

Sir Leon said in Brussels that 
an "open and sensible Europe” 
was impossible “if we pander to 
lesser emotions and imply that 
our partners are not our friends". 


UK’s underlying inflation is 
at lowest level for 27 years 


By GUlian Tett, Philip Coggan 
and Peter Norman in London 

The underlying rate of infla tion 
in the UK fell to its lowest level 
for at least 27 years in Septem- 
ber. providing a boost to the Con- 
servative government, confer- 
ence. 

Unemployment also fell for the 
eighth consecutive successive 
month, bringing the numbers 
claiming benefit down to levels 
last seen in 1991. 

Unchanged average earnings 
growth in August was a further 
pointer to the increasingly 
healthy nature of the UK's eco- 
nomic recovery. This suggested 
that pay settlements are not yet 
threatening to boost inflation. 

The Treasury hailed the data 
as evidence that the country was 
now on course to achieve the 
unusual combination of steady 
growth with low inflation. 

Although some analysts sus- 
pect the current low rate of infla- 
tion may not be sustained in 
coming months, Mr Eddie 


George, the governor of the Bank 
of England, suggested financial 
markets were being too pessimis- 
tic about the future. 

The Central Statistical Office 
yesterday announced that the 
annual rate of retail price infla- 
tion. excluding mortgage interest 
payments, was 2.0 per cent in 
September. The CSO said this is 
the lowest jmnmrt rate for what 
the government considers 
“underlying" inflation since 1967. 

The headline inflation rate also 
fell The annual growth rate in 
the retail prices index, covering 
all items, was 22 per cent, In Sep- 
tember compared with S.4 per 
cent in August. Last month's low 
price rise is likely to prove partic- 
ularly significant for next 
month’s budget, since Septem- 
ber's index will form the basis for 
the rate at which state pensions 
and other benefits will rise. 

The data were also welcomed 
in the City of London, which had 
forecast a slightly higher rate of 
inflation in September, following 
a surprise rise in inflation in 


August Although inflation may 
rise later this year, reflecting tax 
increases and commodity price 
rises, yesterday’s figures suggest 
that the picture is benign. 

The overall figures were 
slightly flattered by volatile fac- 
tors such as a dip in petrol 
prices. But price growth in most 
retail categories remained low. 

Further data from the Depart- 
ment of Employment yesterday 
suggested that falling unemploy- 
ment is not yet resulting in pres- 
sure for higher wages. 

The numbers claiming unem- 
ployment benefit fell by a season- 
ally adjusted 28,000 in September 
to 2.57m. or 9.1 per cent of the 
workforce, its lowest level since 
December 1991. However the 
underlying annual rate of aver- 
age earnings growth was 
unchanged at 3.75 per cent in 
August 

Unemployment down 400,000, 
Page 8; Lex. Page 18; Bonds, 
Page 24; Currencies, Page 34; 
London Stocks, Page 29 


Yeltsin sacks Dubinin 


Continued from Page I 

would lay down strict policy con- 
ditions if asked to return, and 
would require the removal of sev- 
eral senior cabinet ministers. Mr 
Andrei Vavilov, deputy finance 
minister, has also been named as 
a possible replacement as well as 
other conservative politicians. 

Mr Gerashchenko, once 
labelled the “world's worst cen- 
tral banker" by the Harvard 


economist. Professor Jeffrey 
Sachs, has survived many 
attempts to oust him. 

Mr Jannik Lindbaek. executive 
vice-president of the Interna- 
tional Finance Corporation which 
acts as the investment arm of the 
World Bank, said yesterday that 
the currency crisis was unlikely 
to deter serious foreign investors. 
“In this sort of environment we 
must expect the currency mar- 
kets to be volatile he said. 


Spielberg 

Continued from Page l 

tainment group to Japan's Mat- 
sushita. 

His Geffen Films subsidiary 
will become part of Hie new ven- 
ture, as will Amblin Entertain- 
ment Mr Spielberg’s production 
company. Mr Spielberg, 47. will 
continue to direct for other com- 
panies but is expected to use the 
group as an outlet for bis fasci- 
nation with technology. 


C&Wis 
first into 
Chinese 
telecoms 
market 


By Simon Holberton 
in Hong Kong and 
Andrew Adonis In London 

China took the first significant 
step in opening its telecommuni- 
cations industry to foreign com- 
panies yesterday when Cable and 
Wireless of the UK announced 
agreement for a 8300m invest- 
ment to build networks. 

Lord Young, C&Ws chairman 
said Hongkong Telecom, in 
which it owns a majority stake, 
would work with Chinese part- 
ners to upgrade a cellular tele- 
phone network in Beijing. It 
would also construct a 3,000km 
optical fibre cable system to con- 
nect the city with Hong Kong. 

The deals, which Lord Young 
expects to be finalised in the new 
year, represent China’s first con- 
cession to a foreign company to 
play a role in operating telecoms 
networks. Hongkong Telecom’s 
partners will be China’s Ministry 
of Post and Telecommunications 
and Beijing’s telecommunications 
authority. 

The deals heightened interest 
in the Chines market among 
other western telecoms opera- 
tors. particularly US companies. 

Mr Andrew Harrington, tele- 
coms analyst at Salomon 
Brothers in Hong Kong, said the 
two ventures were a significant 
breakthrough in China's policy. 

“The Chinese authorities real- 
ise that they need foreign capital 
and expertise if they are to 
develop the country's telecommu- 
nications network," he said. 

Other analysts were unsure if 
Hongkong Telecom's proposed 
ventures would serve as a prece- 
dent for western operators or 
whether they reflected the com- 
pany’s special position in China. 
After Hong Kong reverts to Chi- 
nese sovereignty in 1997. Hong- 
kong Telecom will be a company 
incorporated on the Chinese 
mainland. China International 
Trust and Investment Corpora- 
tion, the Chinese government’s 
main investment arm. owns 17 
per cent of Hongkong Telecom. 

Beijing has. until now, main- 
tained a state monopoly in tele- 
coms services, although the mar- 
ket has been open to western 
equipment suppliers. The open- 
ing of the services to joint ven- 
tures with foreign operators is 
driven by China's plans to mod- 
ernise and expand its networks. 

Analysts believe a change in 
market conditions has made it 
more difficult for China to attract 
special credit facilities from 
equipment suppliers, necessitat- 
ing a faster than expected intro- 
duction of foreign participation. 

Investors who bought Hong- 
kong Telecom's stock in advance 
of the announcement, lifting the 
share price 5.5 per cent yesterday 
to HKS16.30. 


Foreign operators calling 
Beijing’s number. Page 7 
C&W priorities. Page 25 
See Lex 


FT WEATHER GUIDE 


Europe today 

A ridge of high pressure from the British Isles 
towards the Alps will continue to promote 
calm and fair conditions over the British fsfes, 
the Benelux. Germany, the Alps, Poland and 
the Balkans. There will be a lot of sun but 
frequent morning fog. France. Portugal and 
Spain will have sunny periods, but the 
Pyrenees, the Costa Dorada and the 
Balearics will have recurrent showers. Italy 
and Greece will be mostly sunny. North-west 
Turkey will be overcast with rain owing to a 
frontal system over Russia and the Black 
Sea Scandinavia and the Baltic states will be 
unsettled with gale force winds. Rain will be 
particularly heavy along the Norwegian coast 

Five-day forecast 

As high pressure over the continent weakens, 
cool air over Scandinavia and the Baltic 
stales will expand towards eastern Europe, 
causing falling temperatures. The stationary 
high pressure over the North Sea will 
continue to give misty and calm conditions 
over western and central Europe. The 
Mediterranean will be sunny and warm. 
Southern Spain and Portugal as well as 
southern Greece and Turkey will have 
occasional thundery showers. 


TODAY’S TEMPERATURES 



Situation at 12 GMT. Temperntums maximum for day. Forecasts by Meteo Consult of the Netherlands 



Maximum 

Baflng 

fair 

19 

Caracas 

tar 

32 

Faro 

fair 

25 

Madrid 

fair 

24 

Rangoon 

thund 

30 


Celsius 

Belfast 

fat 

15 

Cardiff 

hazy 

16 

Frankfurt 

sun 

17 

Majorca 

thund 

24 

Reykjavik 

rain 

8 

Abu Dhabi 

sun 

34 

Belgrade 

sun 

15 

Casablanca 

sun 

24 

Geneva 

hazy 

13 

Malta 

fair 

26 

RiO 

fat 

23 

Accra 

shower 

32 

Berlin 

fair 

15 

Chicago 

fair 

18 

Gibraltar 

fair 

23 

Manchester 

far 

16 

Rome 

sun 

23 

Algora 

cloudy 

25 

Bermuda 

shower 

27 

Cologne 

sun 

17 

Glasgow 

sun 

16 

Manila 

fair 

33 

S. Freco 

fair 

IB 

Amsterdam 

sun 

16 

Bogota 

shower 

20 

Dakar 

son 

29 

Hamburg 

tog 

15 

Melbourne 

cloudy 

17 

Seoul 

fat 

23 

Atfwns 

tar 

23 

8omboy 

fair 

33 

Dallas 

sun 

27 

Hefartkr 

shower 

8 

Mexico City 

dourty 

20 

Singapore 

cloudy 

32 

Atlanta 

min 

17 

Brussels 

sun 

16 

Demi 

fair 

33 

Hong Kong 

thund 

30 

Miam 

far 

30 

Stockholm 

fair 

11 

B. Aires 

fair 

16 

Budapest 

sun 

IB 

Dubai 

sun 

37 

Honolulu 

far 

32 

Milan 

hazy 

20 

Strasbourg 

mi 

18 

B.ham 

talr 

IB 

C.hagen 

fair 

15 

Dublin 

hazy 

16 

Istanbul 

shower 

19 

Montreal 

faff 

18 

Sydney 

fat 

22 

Bangkok 

thund 

32 

Cairo 

SU1 

3S 

Dubrovnik 

fair 

23 

Jakarta 

fair 

34 

Moscow 

rain 

1 

Tangier 

fat 

25 

Barcelona 

stewer 

22 

Cape Town 

fair 

22 

Edinburgh 

sun 

16 

Jersey 

fair 

19 

Munich 

3un 

16 

Tel Aviv 

sun 

34 


The airline for people who fly to work. 


Lufthansa 


Karachi 

Kuwait 

L Angeles 

Las Palmas 

Urns 

Listen 

London 

Lucbourg 

Lyon 

Madeira 


fair 

sun 

fair 

sun 

cloudy 

fair 

log 

Six? 

faff 

fair 


35 Nairobi 

36 Naples 
22 Nassau 
28 New York 
22 Nice 

26 Nicosia 
13 Oslo 
17 Paris 
21 Perth 
25 Prague 


cloudy 

SU1 

lair 

sun 

fair 

fair 

windy 

sun 

fair 

log 


28 Tokyo 
24 Toronto 
30 Vancouver 
19 Venice 
27 Vienna 
32 Warsaw 
14 Wasrtngton 
21 Wellington 
17 Winnipeg 
14 Zurich 


fair 

wn 

fair 

sun 

sun 

hazy 

sun 

shower 

sun 

hazy 


25 

16 

14 

20 

18 

12 

17 

14 

7 

17 


THE LEX COLUMN 


Submarines in BAe’s sights 


British Aerospace may be known for 
Its metal bashing siring tut the finan- 
cial engineering involved in yester- 
day’s agreed bid for VSEL was first 
class. Most importantly, the deal, in 
effect a rights issue, would broaden 
BAe’s narrow capital base. The addi- 
tional capital should bolster custom- 
ers' confidence that the group can 
handle large contracts without signifi- 
cant cash-flow problems. It should also 
help BAe make the scale of provisions 
against the troubled turboprop 
operations necessary for their even- 
tual disposal. VSEL's £284m i$448.7m) 
cash would be a bonus. 

In earnings terms, the tax benefits 
would be pa rt icularly str ikin g. BAe 
could offset VSEL's profits against its 
huge unused capital allowances, trad- 
ing losses and ACT. These should 
drive BAe’s tax rate down from 33 per 
cent to 25 per cent and make the 
acquisition earnings enhancing. 
Lastly, the additional consolidation 
would have the advantage of making a 
successful (SC bid for BAe less likely 
because of competition concerns. 

The financial conjuring does not 
invalidate the industrial logic, though 
its validity would take longer to prove. 
In the short term. BAe admits it would 
struggle to maintain VSEL's profits in 
spite of the remaining Trident work. 
In ffie longer term, the new grouping 
would need prove its worth by win- 
ning contracts such as the second 
batch of Trafalgar submarines. By 
linking the two groups, the chances of 
winning would be significantly 
enhanced. In spite of the financial and 
industrial logic of BAe’s offer, the deal 
could yet be undone by GEC’s offering 
a competing cash bid. If successful, 
that could leave BAe struggling to dis- 
pose of its turboprop business without 
a conventional rights issue. 

Cable & Wireless 

The prospects for the Chinese tele- 
communications market can, appropri- 
ately enough, be described in terms of 
telephone numbers: at least SlOObn to 
be spent between now and the end of 
the century and exponential growth in 
the number of telephone lines. In this 
context. Cable & Wireless’s announce- 
ment yesterday about a possible $300m 
investment in two Chinese projects is 
drop in the ocean - but an important 
one none the less. 

If the joint ventures come off. C&W 
stands to win a commanding position 
in the fledgling mobile telephones 
market in Beijing, and to capture the 
bulk of telephone traffic between 


FT-SE Index: 3100.5 (+27.5) 


Cable & Wireless 

Shae price relative to the 
FT-SE-A Afl-Share Index 
730 — ■ 



1992 
Souck FT GraphBs 

Hong Kong and the Chinese capital It 
will moreover be well positioned for 
further opening of the market - hence 
a Jub ilan t reaction from the UK and 
Hang Kong stock markets. 

However, the market reaction was 
driven more by sentiment than an 
assessment of what Hongkong Tele- 
com - C&Ws 575 par cent owned sub- 
sidiary - has so for achieved in its 
negotiations with China’s telecoms 
authorities. The details of the con- 
tracts have still to be worked out and 
CAW’S hopes of investing in China on 
the basis of profit-sharing may well be 
dashed. China has not definitively 
dropped its objections to foreign com- 
panies taking direct equity participa- 
tion in the sensitive telecoms sector. 

Still, the China connection is posi- 
tive for C&W, which generated nearly 
two-thirds of its operating profits from 
Hongkong Telecom last year. But 
investors are more likely to want to 
buy shares in the Hongkong company 
direct. Long-term questions about 
C&W*s future strategic orientation 
re main, especially now that Mercury 
is entering a low growth phase. 

UK economy 

Compared with the feverish antici- 
pation surrounding Mr Kenneth 
Clarke's first UK Budget last year, this 
year's exercise has attracted remark- 
ably little excitement so far. Perhaps 
that is because Mr Clarke has already 
been so emphatically dismissive of the 
prospect for tax cuts in the short run. 
Judging by the yesterday’s “green 
budget” from Goldman Sachs and the 
Institute for Fiscal Studies, he has lit- 
tle room for manoeuvre anyway. 
Though the public sector borrowing 


requirement is falling faster than 
expected, it is ell to do with the 
impact on spending of higher-than- 
expected growth and low inflation. 

Unlike last year, when the govern- 
ment had to deal with a surging defi- 
cit, there is no urgent need for a 
change in the overall fiscal stance. 
-While the pace of recovery remains 
uncertain there is little call for further 
tightening over and above what is 
already in the pipeline. Equally, pre- 
mature relaxation could spill over into 
a deterioration payments defi- 

cit. The UK’s unexp^jjedly strong 
trade performance this yeflP%as added 
powerfully to the impression that the 
recovery is sustainable. 

So if Mr Clarke does want to make a 
political splash with the Budget, it 
looks as though he will need to And a 
way of robbing Peter to pay Paul. An 
obvious possibility is freeing allow- 
ances to finance an increase in the 20 
per cent tax band. But Mr Clarke’s tax 
on insurance premiums last year also 
shows he enjoys springing surprises. 
The financial community seems to 
have fought off any serious attack on 
dividends but, given its unpopularity 
with the public at large, the financial 
sector should not rest entirely easy till 
after Budget day on November 29. 

UAP 

Union des Assurances de Paris’ first 
set of post-privatisation results were 
frankly unimpressive. The 22 per cent 
foil in net consolidated profits, trig- 
gered by provisions for its continuing 
property problems, has significantly 
reduced the group's chances of achiev- 
ing its promised 30 per cent profits 
increase for the foil year. 

Without earnings growth to support 
the shares, the market was left to 
worry about net asset value. But the 
collapse in bonds and equities, and 
continuing weakness of the property 
market, has made unrealised capital 
gaim plummet. The market's concerns 
were reflected by a 5 per cent slump in 
the share price. 

The Implications of UAFs share per- 
formance for the French privatisation 
programme, and particularly AGF's 
share sale, are serious. Investors who 
bought UAP at privatisation in May 
are nursing a 13 per cent loss. The fact 
that the shares have only slightly 
underperformed the CAC-40 index 
offers little comfort. If the losses begin 
to affect retail investor confidence, the 
French treasury will be faced with the 
prospect of offering AGF at an even 
bigger discount to the market. 



Over a thousand McDonnell Douglas F/A-18 Hornets put sting into the air defences of the United States, Canada, 
Australia, Spain and Kuwait - and more are now to come from the same nest 
That’s good news for Dowty Aerospace, Toronto. Already supplier of the E/F version Hornet’s nose landing gear in 
conjunction with Allied-Signal Aircraft Landing Systems. Dowty has now landed the contract for sole supply of this 
gear for the C/D version. With deliveries starting next year, tilings will really be buzzing in Ontario. 

Dowty is one of IT Group’s three specialised engineering businesses, the others being John Crane and Bandy. 
Each one is a technological and market leader in its field. Together, their specialist skills enable 
TI Group to get the critical answers right for its customers. Worldwide. 



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© 





WORLD LEADERSHIP IN SPECIALISED ENGINEERING 

For farther informanon about the TI Group, contact the Department of Public Affairs. TI Group pic, Lambourn Coirn. Abingdon. Own OXH IUH. England 



•'* 






‘K,i, k 



Lsse 


brother, 

typewriters 

WORD PROCESSORS 
PRINTERS 
COMPUTERS 
EAX 


FINANCIAL TIMES 


Companies In this Issue 


AHZ 

Aar Lingua 
Amec 

Anheuser-Busch 

Asareo 

Audi 

0EB 

BK Vision 
BNB Resources 
SZW 

Bankers Trust 
Bergesen 
B«^ya 
Botton 

Brandon Hire 
British Aerospace 
Buddfovicky Budvar 
Butgin (AF) 

Cable & Wireless 
Capital & Regional 
Chang Hwa Bank 
ODa 

Coles Myer 
Detortte and Touche 
Oerwent Valley 


23 

26 

20 

23 

23 

22 

7 

20 

25 

22 

19 

23 

25 

25 

25 

19 

23 

25 

25,1ft 7 
25 


Iceland 

Int Inv Tst Jersey 
tpeco . . 

Johnson Cleaners 
Kona 

Lahden Lasitehdas 
Lauteen HokSng 
Lloyds Chemists 
fcflM Hdkfings 
Matthew Clark 
MftSuWsfs Bank 
Nippon That Bank 
Norsk Hydro 
North West Water 
Northern Rock 
Owen & Robinson 
PBdngton 
Postipawkl 
Prudential 
REA Holdings 
Royal tasurance 
Ruhrgas 
Ryan Hotels 
SGS 

Ankara 


Fannie Mae 

22 

TWA 

Fine Decor 

25 

Technology 

First Comm’d Bank 

23 

Telecom ttafia 

Gardner Merchant 

26 

Teisystem 

Gaymer Group 

20 

Termeco 

GEC 

19 

Thai SethakSt Life 

Gibson Greetings 

19 

Time Products 

Goldman Sachs 

10 

UAP 

Group Lotus 

25 

UBS 

Hoechst 

47 

VSEL 

Houghton Europe 

25 Wau» Cfty of London 

Hua Non Bar* 

23 

Westing house 

IBM 

22 

Weyerhaeuser 

ICL 

25 WUney 


Market Stat i st ic * 


fttmual reports tonics 3ft3i 

Bendffiwk Gort bonds 38 

Bond Mures and options 28 

Bond prices and yteUs 28 

ComndMeS prices 28 

DMdends aroorncflti, UK 28 

EMS currency rates 34 

Btobondpricss 28 

Rnd Merest hfflcss 28 

F T-A World ideas Seek Page 
FT Goto Mims Into 28 

FTflSMA tod bond stc 28 

FT-SE Actuaries mftces 29 


Fdraipn odsanga 
QBspBoes 
Ude equity options 
London store sarvics 
UxiOod trad options 
Managed finds sereice 
Money rarksts 
Maw Ml bond issues 
Recent tares. UK 
Stott-tan tat rata 
IS Merest retire 
Worn Stuck Marita 


Chief price changes yesterday 


iwwnwrta) 

Km* 

UMsdoaSTM 750 + W 

Manoesmano 413 ♦ 10 

RtamM Bar 279 t 18 
ScMrSIB SS9 + 21 

rats 

MsdWrt «0 - » 

Use 487-10 

HBW YORK n 
KM* 

Arab «tt + 1 

m 72ft * W 

Mto 

mu 6» - 2 

m 4tm - v* 

MaWQHH 22 - 

W eystia u sar 41K - lf« 

Mmm 

New York price* at 1Z3ftsn. 
LOM0OM perm) 


985 t 52 

1U ♦ 9 

(83 + 14 

471 * 12 

510 + 25 

234 * » 

a * * 

730 « 10 

324 * 13 


BonkrTY 

M femmes 

BntBMKfl 

OH Bur 

towns 

LUflOWIA 

UCfeW*t*i| 

MiyoW 

Noftrea 

me 

town trees 


967 + 23 

77+9 


asm* 

2523 

* 

11.1 

EMNl as* 

787 

* 

30 

tau 

571 

+ 

21 

ire tnM 

rate 

38 S 

+ 

18 

Nan 

41 BJ 

— 

18 * 

SjMMVnta 

TOKYO (Yea) 
Mm 

3*5 


125 

taW&Choa 

65 D 

♦ 

44 

ITMNBta 

2820 

*■ 

TO 

mtoNOwm 

567 

+ 

18 

MbooaSta 

388 

♦ 

10 

mu* threat 
rats 

1810 

* 

50 

menu 

1820 


50 

SacukorA 

TO 

* 

36 

T 4 S 

218 

* 

9 

VSEL 

1310 

4 

82 

feAfaas 

217 

* 

12 » 

Mdta 

58 

♦ 

7 

WtndBfltoJ 

mi* 

82 

4 

11 

Gram* 

118 

- 

20 

fMn« 

3 J 5 


20 

WMMwOBfc 

589 

“ 

38 

fedMOOd 

40 

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6 

Tarimcwr 

183 

• 

6 


COMPANIES & MARKETS 


telia 


©THE FINANCIAL TIMES LIMITED 1994 


Thursday October 13 1994 


Your Swedish Telecom Partner 

UK Tel: 071 416 0308. UK Fax: 071 416 0305. 


brief 


Anheuser-Busch 

seeks Czech ruling 

Anheuser-Busch, has increased pre ssur e on the 
Czech, government to decide the future of Bndgfov- 
ldtf Budvar, the Czech Republic's most famous 
brewer in which the US group is tryin g to a 
minority stake. A dispute between the two brewers 
continues over the use of the Btttiweiser trademark. 
Page 23 

IBM gads into shapo 

Mr Louis Gerstner, who took over as nhaii-pwi^ an d 
chief executive of International Business Machine s 
18 months ago, claimed yesterday he had ^in^pe de d 
in making the lumbering giant of the computer 
industry more fleetfooted. Page 22 

Koira dips but expects gains over fufl year 

Hone, the Finnish lifts group which on Monday 
i agreed to buy. Montgomery Elevator of the US for 
$280m, saw underlying profits dip slightly in the 
first eight months. Page 20 

Nasdaq pricing row fuelled by study 

A new twist has been added to the debate about pri- 
cing oh die Nasdaq stock market Four mnnt-hc 
after a US academic study claimed that dealers on 
the Nasdaq colluded to keep spreads between buy 
and sell prices unnecessarily wide, a second study 
by the same university professors has given the 
debate new impetus. Page 22 

Audi to Invest | n Hungarian engine plant 

Audi, the executive car division of Volkswagen of 
Germany, is planning to invest DM73Qm (5474m) in 
a new engine manufacturing plant in Hungary over 
the next five years. Page 22 

TWA mounts restructuring campaign 

Trans World Airlines, the US airline struggling to 
avert a financial crisis, yesterday started wwnpaign. 
ing to win support for a sweeping financial restruct- 
uringthat will nearly halve its debt Page 22 

Argent ina returns to symBcated loans 

Argentina has tapped the syndicated loan market 
for the first time in more than io years by si g nin g 
an 18-month (500m credit with banks led by Credit 
Suisse and Chemical Bank. Page 24 

Lloyds Chemists up with higher sales 

Lloyds Chemists, the US’s second largest pharma- 
ceuticals retailer, lifted both profits and turnover 
by 1? per cent for the year to the end of June, 
helped by large sales gains. Page 26 

Gardner Merchant rises 14% 

Gardner Merchant, the largest contract caterer in 
Europe, yesterday reported an increase of almost 14 
per cent in interim profits. Page 25 

Lotus returns to the Mack with £2m 

Group Lotus, the UK sports car maker and engi- 
neering group taken over last year from General 
Motors by Bugatti International of Italy, yesterday 
announced its return to profitability. Page 25 


Japan’s $2bn bank rescue breaks barrier 


By Gerard Baker in Tokyo 

Mitsubishi Bank, one of the 
world's largest commercial 
banks, yesterday announced a 
rescue takeover of tbe troubled 
Nippon Trust Bank. Tbe deal is a 
move towards the rtfingnKdatinn 

of a Japanese banking sector 
crippled by bad debts. 

Mitsubishi will become the first 
Japanese city bank, or commer- 
cial bank, to operate a full-trust 
bank subsidiary. It Raid it would 
buy Y200bn ($2bn) of new shares, 
giving it a 68 A per cent stake in 


Nippon Trust from November 10. 
It is already the second largest 
shareholder, with 5 per cent 

Nippon Trust has been strug- 
gling under the weight of bad 
loans made during the boom 
years of the late 1980s, when 
property and other asset prices 
rose sharply. 

It acknowledged yesterday that 
non-performing loans, brought 
about by the subsequent decline 
of the properly market, were now 
far higher than the official figure 
of YlSQbn disclosed in May. 
Industry sources put the actual 


figure as high as YSOObn. 

Nippon Trust plans immedi- 
ately to write off Y200bn of those 
loans, producing a collapse in 
profits in the current fiscal year, 
according to its president, Mr 
Tomoaki ffirano. 

In tbe year to March 1995, it 
would record a net loss of 
Y168bs, the first post-tax loss in 
Japanese banking history, 
against a profit of Y1.7bn last 
year. "We have come to the con- 
clusion that asking for outside 
help is the only way we can sur- 
vive,” Mr Hirano said. With Mit- 


subishi's assistance, the trust 
bank plans a three-year recon- 
struction programme involving 
up to 25 per cent cuts In staff and 
other costs. 

The rescue was approved by 
the Ministry of Finance when it 
became clear that Nippon Trust’s 
net liabilities exceeded its capi- 
tal, according to ministry 
sources. Officials said the minis- 
try would allow Nippon Trust 
Bank to continue ftifl operations 
as a trust bank because of those 

"exceptional raTf- nmtlaw^ " 

Tbe ministry last year rhawgpd 


banking regulations to allow city 
banks to establish trust bank 
subsidiaries. But the new rules 
prevent city banks from operat- 
ing some of the most profitable 
aspects of trust banking business 
such as pension fund manage- 
ment Ifl ffn trusts. 

The decision is likely to create 
concern among banks that Mitsu- 
bishi has been handwi an unfair 
advantage. Most city banks are 
planning to establish trust banks 
next year. Unlike Mitsubishi, 
they will be severely constrained 
under the new rules. 


Trust banks are also under- 
stood to be unhappy, since Mitsu- 
bishi Bank can now be expected 
to eat into their core business. 
Mitsubishi’s share price rose by 
more than 3 per cent on the news 
of the merger. 

Mr Tsuneo Wakai, Mitsubishi's 
president, said it had agreed on 
the rescue after considering file 
need to maintain confidence in 
the financial system, as well as 
its long-term relationship with 
Nippon Trust and a desire to 
enter the trust hanking business. 
Background, Page 23 


Bernard Gray considers the battle for a British submarine maker in the context of a wider conflict 


BAe’s VSEL 
bid may face 
GEC counter 


Britain's General Electric 
Company is seriously considering 
making a cash offer for VSEL to 
counter an agreed all-share bid 
for tiie submarine maker 
launched by British Aerospace 
yesterday. GE C ha s asked Mor- 
gan Grenfell, VSEL’s adviser, for 
information made available to 
BAe during negotiations. GEC is 
entitled to do this under UK take- 
over rules if it is seriously consid- 
ering a cotmterbid. 

BAe’s £47S.5m ((756m) agreed 
hid values each VSEL share at 
approximately £12.60. BAe has 
offered 2.747 of Its own shares for 
each VSEL share, with a cash 
alternative offer of £1L40. 

BAe is interested in VSEL 
because it wishes to extend its 
interests in shipbuilding, apply- 
ing the project management 
skills it has developed in aircraft 
to other mil ita r y businesses. 

GEC already owns the Yarrow 
shipyard on the Clyde which 
makes most frigates for the Royal 
Navy. It wants to buy VSEL to 
Increase the amount of business 
It does as a project manager, 
rather than, acting as an electron- 
ics subcontractor to BAe. 

Both companies have their eye 
on the £2J5hn contract to build 
the next generation of five Trafal- 
gar class nuclear submarines, 
and the £500m contract for 
marine landing ships which 
would he built at VSEL in Bar- 
row in north-west England. They 
are the largest naval contracts 
likely to be placed until the £6bn 
new generation frigate comes on 
stream in 2002. 


. GEC would face competition 
diffiailtii»g from Britain’s Minis- 
try of Defence if it bid for VSEL 
because it would then own the 
two large warship yards left in 
the UK. The Royal Navy is 
thought to be particularly 
unhappy at the thought of one 
company owning both yards. 

Mr John Weston, chanman of 
BAe's defence subsidiary, said 
yeste rd ay that companies hi riding 
for naval work needed a warship 
manufacturing yard to he credi- 
ble with potential buyers, includ- 
ing tbe Ministry of Defence. BAe 
does not currently own a yard. 

Buying VSEL ha<; strong finan- 
cial attractions for BAe. VSEL’s 
large cash pile would cut BAe’s 
gearing to 10 per cent and 
increase BAe’s assets from 
£1.06bn to £1.33bn. Tax advan- 
tages mean that VSEL’s profits 
would also increase BAe's earn- 
ings substantially. GEC, how- 
ever. can offer cash. Including 
money in joint ventures, it has 
almost £3bn in cash. 

The number of UK defence con- 
tractors is shrinking rapidly, and 
the choices left to companies 
wishing to merge and cut then- 
costs are narrowing fast. 

Competition over any defence 
company up for grabs is likely to 
be fierce. BAe would apparently 
have liked to buy UK helicopter 
maker Westland when GKN bid 
earlier this year, had GKN not 
started with an almost unstoppa- 
ble shareholding. 

Now the attention has switched 
from air to sea systems. BAe 
wants to be the project manager 







Fortunes of war: British Aerospace's Dick Evans and GECs Lord Weinstock control the board as the UK defence industry shrinks 


which controls the key contracts 
in ships as well as aircraft. GEC, 
tired of its role as a supplier to 
BAe, is keen to expand Its naval 
presence and become a larger 
full-scale project manager in its 
own right 

But other small defence con- 
tractors are on their guard. There 
is a great deal of common ground 
between the mid-life refitting of 


nuclear submarines, which will 
soon be done exclusively at 
Devonport in Plymouth, and 
their original construction. It 
would make sense for whoever 
owns VSEL to own Devonport, 
which is due to be privatised over 
the Tiprt IB months 
Land systems - tanks and 
armoured personnel carriers - 
are also spread out among a wide 


range of companies and could 
well be rationalised too. 

Some deals may seem to create 
strange bedfellows. Yet in the 
absence of pan-European merg- 
ers, companies are having to find 
their savings where they can. 
Several of the large US deals, 
most notably Lockheed's merger 
with Martin Marietta, has also 
brought together companies 


which have little in common save 
their defence interests. 

Savings on central overheads 
and the ability to manage 
defence contracts and ministries 
skilfully are the strongest argu- 
ments in favour of the deals. The 
alternative of remaining indepen- 
dent is almost certainly worse. 
Editorial comment. Page 17; 

Lex, Page 18 


Bankers Trust retaliates in 
$20m derivatives loss case 


By Richard Waters 
in New York 

Bankers Trust yesterday hit out 
against a claim that it was 
responsible for losses of 320m suf- 
fered by a raiqfonwer a rising frcSH 
derivative instruments. 

In papers filed in the district 
court in Cincinnati, tbe US bank 
claimed that tt had folly briefed 
executives of the company, Gib- 
son Greetings, on the risks asso- 
ciated with the Instruments. 

Gibson, which lost $20m on 
interest rate swap contracts it 
bought from Bankers Trust, 
claimed in a suit filed last month 
that the bank had misled it about 
the risks. The bank said yester- 
day that Gibson had bought the 
derivatives with foil knowledge 
of how they would behave if the 
markets moved against the com- 
pany. 


Gibson rejected offers from 
Bankers Trust on 10 separate 
occasions to end tbe contracts, a 
move which would have limited 
the company's losses, the bank 
added. 

The case is being seen as a test 
of whether corporate treasurers 
nan riaim to have been unsus- 
pecting victims when complex 
financial instruments they buy 
turn sour. Procter & Gamble, 
which earlier this year lost S157ln ' 
on interest rate swaps it bought 
from Bankers Trust, has yet to 
file a suit but said last mouth tt 
was watching the Gibson case 
with interest 

In its defence. Bankers Trust 
said it had not acted as an 
adviser to Gibson, and the com- 
pany made its own decisions 
about tbe risks. 

The bank said it had been 
informed that Mr William Flah- 


erty, the company’s chief finan- 
cial officer, had consulted with 
Gibson’s board before entering 
the two swap contracts which the 
company was trying to repudiate. 

“Gibson knew that it was tak- 
ing a position as to tbe direction 
that interest rates might move 
and that fit] would suffer losses If 
its predictions were wrong," 
according to the court papers. 
The losses arose as US interest 
rates rose, rather than falling. 

• Gibson came under attack yes- 
terday from accountants Arthur 
Andersen, sacked as the compa- 
ny’s auditor last month. Ander- 
sen said there had been a “delib- 
erate attempt" by Cleo. a Gibson 
subsidiary, to inflate the compa- 
ny's pre-tax income by over-stat- 
ing tbe value of inventory. Tbe 
company was not immediately 
available for comment 
Derivatives column. Page 22 


44 





UK insurer may buy Thai stake 


By Norma Cohen, Investments 

Correspondent; in London 

Prudential, the OK’s largest life 
insurance company, is holding 
talks about its first significant 
acquisition in the Asian insur- 
ance market, a 24 A per cent stake 
In Thai Setbakit Life Assurance. 

TJS. Life Is the second smallest 
of the 12 Thai insurance compa- 
nies and has a market share of 
about 1 per cent Its market capi- 
talisation fa $58-46- Rules in Thai- 
land do not allow Prudential to 
acquire a stake of more than 25 
per emit tnT-S. life. 

Morgan Grenfell Thai Com- 
pany, financial adviser to TS 
Life, said existing shareholders 
have provisionally agreed to sell 
their shares at Bt65 (&L60) each 
and that the sale should be com- 


pleted in November this yearJf 
tbe deal fa completed. Prudential 
will provide TJS.life with techni- 
cal support, international exper- 
tise, new product development, 
computer systems, training, mar- 
keting and management skills. 

T.SLife said the Thai insur- 
ance market has experienced 
recent growth of ova 20 per cent 
a year. '‘With increasing pressure 
to liberalise the Thai insurance 
market, we believe T.S. Life is 
now well positioned to compete 
with new foreign entrants to the 
market and to expand as the mar- 
ket develops ■ it said. 

Prudential’s chief executive, 
Mr Mick Newmarch, has identi- 
fied Asia as one of the key 
growth areas for the company. 
Most of its expansion in the 
region to date has been through 


organic growth of long-standing 
operations in Australia, New Zea- 
land. Hong Kong and Singapore. 
Prudential has ateo begun partici- 
pating In the Malaysian insur- 
ance market 

Last year, Prudential opened 
an investment management 
office in Hong Kong to handle 
regional investment activities. It 
has also opened three represen- 
tative offices in China as the first 
step towards obtaining licences 
to sell insurance products there. 

According to the Prudential’s 
annual report, Asian activities 
are providing the some of the 
most rapid growth of all Its 
operations. New premium income 
from Hong Kong in 1993 rose 43 
per cent from the 1992 level, 
while that from Singapore rose 16 
per cent 


Dewe Rogerson 

Now you’re talking 

LEADERS IN FINANCIAL AND CORPORATE COMMUNICATION 

EUROPE: Anrhooy Carlisle or Christina Lefcut. Tel. - (H4l ’1 63K 
THE AMERICAS; Carol Ruih. Tel: “117 212 688 (*HO. ASIA; Kunlko Okiwaki. Tel: - 181 1 i 35-tf t«H I 


1 












20 


FINANCIAL TIMES THURSDAY OCTOBER 13 1994 


INTERNATIONAL COMPANIES AND FINANCE 


r. 


Ebner denies 
seeking control 
of Swiss bank 


By Ian Rodger 
in Zurich 

BK Vision, the largest 
shareholder in Union Bank of 
Switzerland, has denied UBS 
charges that it is trying to take 
control of the bank and close 
its large retail business. 

UBS has called an extraordi- 
nary shareholders' meeting- for 
November 22 to approve its 
plan to convert the bank's reg- 
istered shares into bearer 
shares, thereby eliminating 
their extra voting power. 

BK Vision, an investment 
company controlled by Mr 
Martin Gbner's BZ hanking 
group, holds more than is per 
cent of the registered shares. 

If the board motion suc- 
ceeded. the premium on the 
registered shares, now more 
than 20 per cent on the bearer 
shares, would disappear. This 
would result in large losses for 
registered shareholders. 

Mr Ebner said BK Vision 
could not gain control of the 
bank because of restrictions 
limiting individual registered 
shareholders to voting a maid- 
mum of 5 per cent of the voting 
capital He denied UBS charges 
that he was putting together a 
concert party of shareholders. 

However, he believed that a 
majority of UBS shareholders 
could soon be attracted to Bit's 


ideas for managing the bank. 

Last spring, BK won 40 per 
cent of the votes at the UBS 
annual meeting for its motion 
to reduce the number of direc- 
tors from 22 to a maximum of 
nine. Mr Ebner said most of 
the votes against him were 
proxies held by the board, pro- 
viding grounds for his opti- 
mism on future motions. 

He described charges that 
BK wanted UBS to abandon its 
retail banking business as 
“grossly overblown”. The bank 
needed a strong refinancing 
base in Switzerland for its 
investment banking business. 

BK's aim since its formation 
in late-1991 was to to make 
UBS more sensitive to share- 
holder interests, notably a 
higher return on equity. 

It was disappointed with the 
results to date and with the 
board's negative reaction to its 
suggestions. BK opposed the 
elimination of the registered 
shares and would demand that 
registered shareholders have 
the right to vote separately on 
the motion. UBS claims that a 
two-third majority of ail votes 
and a simple majority of the 
capital would suffice. 

Mr Ebner said there were 
several avenues of legal action 
open to BK if the UBS board's 
plan to eliminate the registered 
shares carried at the EGM. 


Postipankki sinks 
deeper into the red 


By Hugh Camegy fn Helsinki 

Postipankki. the state-owned 
Finnish banking group, yester- 
day reported sharply deeper 
losses in the first eight months 
compared with the same period 
last year as falling income 
from financial operations and 
rising costs eclipsed a promis- 
ing decline in credit losses. 

Operating losses mounted to 
FM463m ($85. 7m) compared 
with a loss of FM66m in the 
first eight months of 1993. Mr 
Seppo Lindblom, chief execu- 
tive, said the result was worse 
than expected and warned of 
further losses. 


Net income from financial 
operations tumbled by FM361m 
to FMl.42bn due to lower-than- 
anticipated returns from trea- 
sury operations. The bank said 
it was “not entirely successful” 
in predicting domestic and 
international market trends 
and had incurred heavy bond 
trading losses. These included 
a FM237m loss on Finnish gov- 
ernment bonds for which Posti- 
pankki is a market maker. 

Group expenses jumped to 
FM1.85bn from FMl.43bn 
mainly due to costs associated 
with Postipankki's takeover in 
1993 of a one-fourth share of 
the Savings Bank of Finland. 


Kone dips 
but expects 
gains over 
full year 

By Christopher Brown -Humes 
In Stockholm 

Kone, the Finnish lifts group 
which on Monday agreed to 
buy Montgomery Elevator of 
ffie US for 5280m, saw underly- 
ing profits dip slightly in the 
first eight months. However, it 
expected ftill-year figures to be 
higher than in 1993. 

Group income after financ- 
ing items amounted to 
FMl67m <$3lm). against 
FMl92m a year earlier. The 
1993 figure Included a FM21m 
currency exchange gain. 

Kone said comparisons with 
last year were distorted by a 
9 per cent strengthening in the 

F innish marklni flnii the Sale 

of a number of non-core 
operations. 

Sales in the latest period 
were FM4.8bn. just under last 
year's level allowing for 
divestments and currency fac- 
tors. 

Operating profits fell to 
FM205m from FM299m but the 
impact was offset by a sharp 
reduction in interest costs to 
FM53m from FMl45m. 

Mr Gerhard Wendt, presi- 
dent, said the important Euro- 
pean market remained slug- 
gish, as improving areas were 
balanced by those in recession. 

New elevator orders and 
maintenance contracts were 4 
per cent higher on an underly- 
ing basis at FM3.54bn. The 
group saw higher orders from 
the UK, Germany, Italy and 
Australia but there were 
declines iu Sweden, Finland, 
France and Belgium. The 
group expected new orders for 
the toll year to equal last 
year's FM5.7lbn. 

The group has tried to lift 
operations in Asia and build 
up the maintenance side of its 
business. At the end of August 
it had 363,000 units under 
maintenance. 

Kone has sold its cranes 
unit a wood unit, and Mac- 
Gregor-Navire, a supplier of 
shipboard handling equip- 
ment, since the end of Aoguk 
1993. 

These helped redace the 
Interest-bearing debt to 
FM400m at the end of August 
from more than FMlbn at the 
end of 1993 and strengthened 
the financial position. 


Telecom Italia fights ruling on Telsystem 


By Andrew HiB in Milan 

Telecom Italia, the Italian 
telecommunications operating 
company, is to appeal against a 
court ruling earlier this week, 
forcing the group to open its 
network to increased competi- 
tion. 

Telecom Italia said yesterday 
it favoured liberalisation of the 
sector, but only If properly co- 
ordinated. 

Milan's appeal court ruled on 
Monday that Telecom Italia 
had to provide leased lines for 
Telsystem, a small Italian com- 
pany seeking to sell telecoms 
services to businesses, in com- 
petition with the main Italian 
operator. 

Telsystem had argued that 
without such a provision, it 
risked going bankrupt because 
Telecom Italia had not leased 
sufficient lines to construct a 
“virtual” network for its cli- 
ents. 

The ruling is a temporary 
injunction, pending a decision 
on the case by Italy's anti-trust 
authority on the substance of 
the case. 

In theory, it is only a substi- 
tute for EU rules on the liberal- 
isation of telecom services, 
which were supposed to come 
Into force throughout the Com- 
munity at the end of 1990, but 
have yet to be enacted by Italy. 
However, according to Telsys- 
tem and its advisers it is a big 
step forward for those who 


want to see Telecom Italia's 
monopoly broken up. 

Ms Alessandro PerrazzeCi, of 
Brosio, Casati e Associate the 
lawyer representing Telsystem. 
said yesterday: “Of course, 
what we want is to win the 
anti-trust case. But the Impor- 
tance of this ruling is two-fold. 
The court is telling Sip [the 
domestic telephone monopoly] 
it can not go an with the 
monopoly on lines, but [the 
ruling] is also very important 
because It says you don’t only 
have to give leased lines now. 
you have to give them in the 
future." 

However. Mr Umberto SOves- 
tri, c hairman of Telecom Italia, 
said last night that under 
the current state of It alian 
law “there is no doubt that 
we have a legitimate monop- 
oly”. 

If upheld, the ruling could 
add to the pressure on Telecom 
Italia and its state-controlled 
parent company, Stet, which 
are already attempting to man- 
age a difficult programme of 
change. 

The fusion earlier this year 
of five telecoms operators, 
including Sip, to form Telecom 
Italia was part of this pro- 
gramme. 

The Italian authorities are 
now preparing for the sale of 
their outstanding shares in 
Stet, which should take place 
next year. 

At the same time, Telecom 


Italia is having to adapt swiftly 
to the 1998 deadline set by the 
Community for opening up 
ordinary telephone calls to 
competition. 

Between 1992 and 1998, Tele- 
com Italia is set to spend more 
than L50,000bn ($31bn) on 
investment, which includes 
mode rnising the Italian net- 
work for the coming multime- 
dia technology. 

At the same time, the group 
must continue to rebalance its 
tariffs to Ml in line with inter- 
national competition. Mr Sil- 
vestri estimates that domestic 
telephone charges in Italy will 
have to rise by 25 per cent 
while international charges - 
among the highest in Europe - 
may have to fall by about the 
came amount 

More urgently, Italy's state 
telecoms companies are search- 
ing for a partner, to give them- 
selves a place alongside other 
European competitors, such as 
France Telecom and British 
Telecom, many of which have 
struck defensive deals with 
global operators such as AT&T 
of the US. 

Mr Silvestri says the search 
for a global alliance is a prior- 
ity. and adds that Telecom 
Italia is negotiating with 
“three or four” companies. “We 
have to find a medium-sized 
operator - not large, because 
we don’t want to be choked,” 
he says. 

He is hoping the form of 



Umberto Sttvestri: *we have a legitimate monopoly* 


Stet’s privatisation will be 
decided soon, because uncer- 
tainty could delay the conclu- 
sion of such talks. 

Advisers to the sell-off 
should be named shortly, and 
the government will have to 
decide, with their assistance, 
whether and how to limit for- 
eign control of Stet. for exam- 
ple, by retaining a golden 
share, or forming an Italian- 
dominated hard core of inves- 
tors. 

Telecom Italia’s second prior- 
ity, according to its new chair- 
man. is to adapt a bureaucratic 
management to the forthcom- 
ing changes. 


“Our manag in g class is very 
high-calibre, but it’s a class 
which has managed a monop- 
oly for 60 years.” says Mr Sil- 
vestri. himself a long-serving 
executive in the state sector. 
“Between 1994 and 1998, we 
have to change the culture: a 
large company has to become a 
competitive company." 

In this respect, this week's 
decision by the Milan court of 
appeal could provide an incen- 
tive to accelerate those 
changes, even if the business 
represented by leased lines 
only represents an estimated s 
per cent of Telecom Italia's 
total domestic turnover. 


Amec stake in 
Portugal sold 

By Peter Wise In Lisbon 
and Andrew Taylor in London 

Amec, the engineering and construction 
group, has sold its stake in En g il , a 
Portuguese construction group, for 
Es2.7bn (S16m). The UK groop joins 
other international constructors, 
including Bouygues of France, in pull- 
ing out of joint ventures in Portugal. 

Amec recently sold its 20 per cent 
stake in French construction group Ser- 
ete for £ll-3m ($I7A5m) to the compa- 
ny’s management. The sales are part of 
a reassessment by the UK group of the 
suitability of its minority stakes in con- 
tinental European companies. 

Minority stakes in domestic and 
cross-border rivals are popular in coun- 
tries such as Germany. France and the 
Netherlands. However, they are gener- 
ally considered unattractive in the UK 
and Italy, where companies prefer to 
have majority control in subsidiary 
interests. 


Matthew Clark takes oyer 
Gaymer Group for $172m 


By Christopher Price in London 

Babycham, Olde English Cider and 
Concorde British wine, three of 
Britain’s best-known drinks brands, 
were yesterday sold as part of the 
£109m ($ 172.22m) takeover of Gaymer 
Group Europe by Matthew Clark. 

The move will give Clark, which 
boasts Warninks and Stones Ginger 
Wine among its own brands, a near 50 
per cent share of the domestic fortified 
wine market through the merger of its 
Old England products and Gaymer’s 
QC range. The company said it believed 
there would he uo referral to the Office 
of Fair Trading. 

The deal is to be funded through a 
rights issue, Clark’s third In 18 
months, in a move which wifi more 
than double its share base to 45£m 
shares. 

The 3-fornS issue at £5.00 a share will 
raise £64.4m in cash, most of which 


will be osed to pay off Gaymer’s 
£53 -5m of debts. Clark shares yesterday 
closed down 36p at 589p. 

The £55.6m balance of the purchase 
price will be paid through the issue of 
Clark shares to the venture capital 
investors, who represent around 94 per 
cent of the shares. 

Gaymer made pre-tax profits of 
£8.1m in the year to February 28 
against £8.6m the previous year. Turn- 
over rose from £135. 7m to £143. 3m. For 
the year to the end of July, Clark made 
profits of £10.3m on turnover of £l74m. 

Gaymer, which was subject to a 
£105m management buy-out two years 
ago, had been expected to float on the 
stock market later this year, and yes- 
terday's move took industry analysts 
tv surprise. 

Mr Michael Cotterill, chairman of 
both Taunton and Matthew Clark, yes- 
terday resigned from his post at Taun- 
ton, citing a conflict of interest. 


V 


SGS profits 
rise by 5.5% 

By lan Rodger 

Societe Generate de Surveillance (SGS). 
the world's largest inspection and test- 
ing group, said its pre-tax profits in the 
first eight months were up 5.5 per cent 
on a 3 per cent rise in fee income. 

Mrs Elisabeth Safina, chairman of the 
Geneva based group, said operating 
profits should continue to show “satis- 
factory growth" in the full year, 
although net income would rise to a 
lesser extent. No figures were given. 

In the first eight months, fee income 
was up 10.5 per cent, expressed in local 
currencies, of which 8 per cent came 
from internal growth. Fee income rose 
92 per cent in Europe and 18.4 per cent 
in North America. 

The operating margin was in line 
with the 9 per cent achieved in the 
whole of 1993. Net income rose in spite 
of lower financial revenues and a 
SFrIOm ($7.70m) provision for unreal- 
ised losses on securities. 


The Euromoney 
International Bond Congress 

27 & 28 October 1 994 -The Barbican London 

The Sponsors and Exhibitors of this the first Convention for International Bond Market professionals look forward 
to welcoming their clients to their hospitality suites and exhibition stands at the Barbican Exhibition Halls. 


Sponsors 


Ahorro Corporation 

The Alfred Berg Group 

Aubrey G. Lanscon 

Banco Comercial Portuges 

Banco Santander de Negocios 

Banco Santander de Negocios Portugal 

Banque Indosuez 

Banque Indosuez Belgique 

Barclays de Zoete Wedd 

Bayerische Vereinsbank AG 

Bear Steams International Limited 

Bloomberg LP 

Carnegie Kreditinstitut A/S 

Chase Investment Bank Limited 

Citibank 

Credit Agricole 

CS First Boston 

Deutsche Bank Group 

Donaldson, Lufkin & Jenrecte 

Enskilda Corporate 

Goldman Sachs International 

Goodbody Stockbrokers 

IBJ International pic 

ING Bank 

Kidder. Peabody Securities Company 
Macquarie Bank Limited 
Merrill Lynch 

Morgan Stanley Group Inc 


NatWesc Capital Markets 
NCB Group Limited 
Okobank Group 
Salomon Brothers International 
San Paolo Bank 
Scotia McLeod Inc. 

Society Generate 

Svenska Handelsbanken Markets 

Svenska Handelsbanken Hypotek 

Stadshypotek 

Swiss Bank Corporation 

Unibank Securities 

Union Bank of Finland 

UBS 

Wescpac Banking Corporation 
CBIC Wood Gundy 


Exhibitors 


Aubrey G. Lanscon 

Banque Indosuez 

Bloomberg LP 

BondCalc Corporation 

Capital Management Sciences 

Capital Markets Assurance Corp (CapMac) 

Cedel 

Chase Manhattan 
Chicago Board of Trade 
Citibank 

CNN Text/Reuters 1000 


Corporation of London 
Cumulus Systems Umited 
Datastream International 
Deutsche Bank Group 
Dominion Bond Racing Service Limited 
Deutsche Terminborse (DTB) 

Dow Jones Telerate Ltd 
Economist Intelligence Unit 
Euroclear 

Euromoney Publications pic 

- Euromoney Bondware & Loanware 

- Euromoney Financial i 

- Euromoney Global Research 

- Euromoney Training 
Extel Financial 

Financial Guaranty Insurance Co. (FGIC) 
Fitch Investors Service, Inc. 

Goldman Sachs International 
Hambro Clearing Umited 
IBJ International 

International Bond & Share Society 
International Securities Market Association 
Login S-A. 

London International Financial Futures & 
Options Exchange (UFFE) 

London Stock Exchange 
MBIA Assurance S-A. 

McCarthy, Crisanti & Maffei, Inc 

Merrill Lynch 

Microsoft 


MMS International 
Moody’s Investors Service 
Morgan Stanley Group Inc. 

NatWest Capital Markets 

Organisation for Economic Co-operation & 

Development (OECD) 

OMLX 

Oxford Anafycica 
Probus Publishing Co. 

Royal Trust Corporation of Canada 

Salomon Brothers International 

ScotiaMcLeod Inc 

Sicovam 

SimCorp 

Simmons & Simmons 
Standard & Poor's 

Scone & McCarthy Research Associates 
Sydney Futures Exchange 
Thomson Financial Services 

- IFR Publishing 

- IFR Securities Data 

- Thomson BankWatch 

- Thomson Electronics Settlements Group 

- Thomson Investment Software 
The Independent Economic Research 
Company (TIER) 

T radepoinc Financial Networks pic 
UBS 

Wilco International Umited 


To register for your complimentary access to the Exhibition Halls only 
at the International Bond Congress Exhibition, 
you MUST call (+44) (0)7 1 779 8999 before 26 October 1 994. 

The Congress 

In addition to the hospitality suites and exhibition, keynote presentations will be given by Mr Eddie George, 

Governor of the Bank of England, Mr Hans-Joerg Rudloff and Mr John Langton, CEO of the International Securities Market Association. 
A further 96 presentations will be made over the two days in eight parallel sessions covering:- 


Major Government Bond Markets 
Other Government Bond Markets 
Bond Market Sectors 


Portfolio Techniques 
OTC & Structured Products 
Bond Market Analytics 


Information Systems 
Economic Concepts 
Administration & Legal 


Futures & Options Exchanges 
Portfolio Performance Measurement 


Those wishing to attend the conference sessions of the Congress should call the above number for further information on availability and cost 



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22 


FINANCIAL T1M£5 THURSDAY 


OCTOBER 13 1^94 


INTERNATIONAL COMPANIES AND FINANCE 


Gerstner sees 
progress from 
IBM shake-up 


By Louise Kehoe 
hi San Francisco 

Mr Louis Gerstner. who took 
over as chairman and chief 
executive of International 
Business Machines 18 months 
ago. claimed yesterday he had 
succeeded in making the lum- 
bering giant of the computer 
industry more fleetfooted. 

“The elephant is dancing,’' 
Mr Gerstner said, “but it is not 
going to be in a Fred Astaire 
movie too soon". 

Answering questions at his 
first European press confer- 
ence since taking charge of the 
ailing US computer manufac- 
turer last year, Mr Gerstner 
said one of his main tasks was 
to speed up the responsiveness 
of the company. 

“I think we have made a lot 
of progress." he said, but added 
that “18 months is not a very 
long time and this process will 
take longer". 

Next week, CBM will report 
its third-quarter results and 
WaJl Street analysts are 
expecting the company to con- 
tinue its progress with earn- 
ings of around 90 cents a share, 
compared with an operating 
loss of 12 cents a share in last 
year's third quarter. 

The IBM chairman declined 
to comment on persistent spec- 
ulation that the company may 
take an equity stake in Apple 
Computer. But he confirmed 
that IBM has “ongoing discus- 
sions with Apple in the areas 
where we have very Important 
joint activities". These include 
joint development of PowerPC 
microprocessors and two soft- 
ware joint ventures. 

Mr Gerstner said IBM had a 
continued commitment "to be 
the basic foundry” of the com- 
puter industry, but too often it 
had developed new technology 
only to see competitors exploit 
it more quickly. “There have 
been many examples where 
other companies have 
exploited that technology fas- 
ter than mM." 

He said IBM expected to ship 



Louis Gerstner confirmed 
discussions with Apple 


personal computers based on 
the PowerPC microprocessor, 
jointly developed with Apple 
Computer and Motorola, in the 
first quarter of next year. 
Apple and Motorola are 
already selling PowerPCs. 

On the restructuring, the 
IBM chairman said progress in 
Europe towards meeting com- 
petitive cost levels was ahead 
of schedule and that the group 
as a whole was on target to 
reduce its worldwide workforce 
to 215,000 by year-end. 

Asked if he was satisfied 
with IBM’s share of the PC 
market, which has fallen to 
about 10 per cent from about 14 
per cent over the past year, he 
acknowledged that IBM had 
had some problems. 

He said that these included 
failing to accurately forecast 
demand for some products. In 
the US. orders for IBM’s new 
Aptiva PCs, introduced last 
month, were r unning far ahead 
of production plans. 

Mr Gerstner said IBM also 
faced product shortages in its 
latest data storage products 
and in mainfra me computers, 
where the company had been 
unable to keep up with cus- 
tomer demand. He said some 
IBM managers might have 
been too conservative in fore- 
casting demand. 


Weyerhaeuser’s profits 
disappoint Wall Street 


By Laurie Morse in Chicago 

Continuing strength in timber 
prices and rebounding pulp 
and packaging markets 
boosted Weyerhaeuser's third 
quarter earnings, but the prof- 
its jump fell short of Wall 
Street's expectations, pushing 
the company's stock price 
down Sift to 841% in early 
trading yesterday. 

Weyerhaeuser, the world's 
largest private owner of sale- 
able softwood timber, reported 
third-quarter earnings - before 
extraordinary charges - of 
S144m, or 71 cents a share, 
compared with income of §67 m, 
or 32 cents, a year earlier. 
Sales for the quarter were 
$2.6Sbn. up from §2.22bn. 

Analysts had expected Wey- 
erhaeuser to earn about 77 
cents a share in the quarter. 

For the year to date, Weyer- 
haeuser earnings total $399 .8 m, 
or $1.95, on sales of $7.6bn. 
compared with $477m, or KL33, 
on sales of S6.9bn for last 
year’s corresponding period. 

The company's pulp, paper 
and packaging arm saw operat- 


ing earnings jump to $63.5m in 
the quarter, from a mere $2.5m 
in 1983’s third quarter. Weyer- 
haeuser’s big forest product 
division's operating earnings 
rose to §246. im, from $165 .Sm. 

“The company continues to 
realise steady improvements in 
earnings as the momentum in 
the recovering pulp, paper, and 
packaging markets continues," 
Mr John Creighton, president, 
said. 

"At the same time, our tim- 
berlands and wood products 
performance remains strong in 
spite of increasing interest 
rates. While it appears that 
housing starts in the US have 
peaked, we are in the early 
stages of the economic recov- 
eries in Europe and Japan 
which bodes well for continued 
strengthening in our pulp and 
paper businesses." 

Weyerhaeuser is the second 
big US forest products com- 
pany to fall short of analysts' 
estimates this quarter. On 
Tuesday, International Paper's 
stock fell after it announced 
that third-quarter profits had 
jumped 47 per cent 


Tenneco to spend $73m 
in production upgrade 


By Laurie Morse 

Tenneco plans to spend S73m 
upgrading the linerboard 
capacity at Its Packing Corpo- 
ration of America division. 

The investment will boost 
PCA's linerboard output by 16 
per cent and give Tenneco a 
stronger hold in the rapidly 
rebounding containerboard 
market 

Linerboard is used to make 
corrugated boxes. 

The Investment in its pack- 
aging division is part of Ten- 
neco’s strategy to redeploy cap- 
ital into high-return growth 
opportunities in its packaging, 
automotive parts arid natural 
gas businesses. Last week, the 
company announced a $60m 
acquisition for its Tenneco Gas 
unit. 


Tenneco is in the process of 
spinning off its J. I. Case farm 
equipment subsidiary’. 

Analysts expect Tenneco to 
use the proceeds from Case's 
sale to make a Slbn acquisition 
in either packaging or vehicle 
parts during the next year. 

Mr Dana Mead, Tenneco 
chairman, has said that a sig- 
nificant European acquisition 
is in the works which could be 
completed by year-end. 

The linerboard project will 
add new equipment to an exist- 
ing linerboard machine at 
PCA’s mill in Counce, Tennes- 
see, already the largest of 
PCA's five linerboard produc- 
tion sites. The upgrade will 
add 120,000 tons of annual 
production to PCA's existing 
linerboard capacity of 2m 
tons. 



HongkongBank O 

The 1 tongkung jnd shjnjdui Bunking Corporation Limited 

(incorporated In Hong Kong with Bmited SabWty) 


U.S.$400,000,000 

PRIMARY CAPITAL UNDATED FLOATING RATE NOTES 

(THIRD SERIES) 

Notice te hereby given that the Rate d Interest hsta been fixed at 5.76% 
and that the internet payable on (ho relevant Interest Payment Date January 
13. 1995, in respect ol USSS.000 nominal of the Notes will be 
US$73.4? and in respect of ussioo.000 nominal or the Notes will be 
USS1.4S9.44. 

October 13, 199-3. London rifTID/IAIi'A 

By citibank. N.A., (issuer Santos). Agent Bank U i 


Study makes new claims of Nasdaq collusion 

Allegations that dealers conspired on prices give fresh impetus to legal action, says Patrick Harverson 


A new twist has been 
added to the debate 
about pricing on the 
Nasdaq stock market. Four 
months after a US academic 
study claimed that dealers on 
the Nasdaq colluded to keep 
spreads between buy and sell 
prices unnecessarily wide, a 
second study by the same uni- 
versity professors has given 
the debate new impetus. 

The National Association of 
Securities Dealers (NASD), 
which runs the screen-based 
Nasdaq market, vehemently 
rejected the claims in the first 
study - but this time it is ref- 
using to commenL 
Reticence is probably 
well-advised, because the issue 
is at the centre of a legal battle 
that could culminate in some 
of Wall Street’s biggest firms 
paying out millions of dollars 
to investors. 

When the first study on 
spreads was published In May 
by Mr William Christie of 
Vanderbilt University and Mr 
Paul Schultz of Ohio State Uni- 
versity, it prompted the filing 
of scores of class action law- 
suits against the Wall Street 
firms which act as dealers on 
Nasdaq. 

The lawsuits alleged that col- 
lusion between the dealing 
firms to keep spreads wide 
deprived investors of the best 
possible price on share trades 
and violated US anti-trust 
laws. 

Wide spreads are regarded as 
bad for investors because they 


deny them the opportunity to 
pay a little Less when buying a 
stock or receive a little more 
when s elling . For dealers, the 
wider the spread, the bigger 
the profit they make. 

The lawsuits relied heavily 
on the finding s of the Christle- 
Schultz study, but now lawyers 
have more ammunition to use 
against the Nasdaq dealers as 
the second study, by the same 
two authors plus another Ohio 
State finance professor, Mr Jef- 
frey Harris, claims to have 
found fresh evidence of collu- 
sion. 

While the first report said 
the dealers had been conspir- 
ing for years to keep spreads 
wide, the new study says deal- 
ers have since colluded to nar- 
row their spreads. 

According to the three pro- 
fessors, within days of the 
study's publication in May 
attacking dealers for the wide 
spreads, Nasdaq dealers nar- 
rowed the spreads they quoted 
on some of the market’s big- 
gest stocks, including such 
well-known companies as 
Microsoft. Intel and Apple 
Computer. 

More specifically, the profes- 
sors claim that whereas before 
the first study, dealers invari- 
ably quoted their buy and sell 
prices in even-eighths of a dol- 
lar - $%, $%, Stt. or a whole 
dollar - the day after newspa- 
pers reported the study’s criti- 
cal findings dealers began 
quoting prices in the long- 
neglected fractions of 



odd-eighths, such as S‘4 and 
$%, as well as even-eighths. 

For example, before the first 
study was released dealers 
would quote investors $50 V* if 
they wanted to buy a compa- 
ny's stock and $50K if they 
wanted to sell After the study 
was publicised dealers would 
quote $50% to buy and $50% to 
sell - a spread of only $14, com- 
pared with before. 

After the first study was 


reported on May 26, the change 
in spreads was sudden and dra- 
matic, says Mr Christie. 
“Starting from May 27. market- 
makers began using odd- 
eighths en masse. There was a 
complete switch.” 

And it was not just a case of 
a few firms using quotes of 
odd-eighths. For each stock 
they looked at says Mr Chris- 
tie, “there was a minimum of 
40 marketmakers, and some 


stocks had over 60”. These 
firms, he claims, bad not used 
odd-eighths in years. “Sud- 
denly, they all started using 
them." 

When asked what conclusion 
could be drawn from the deal* 
ers' actions, Mr Christte 
responds: “Cynically, you 
could say that it was good of 
Paul [Schultz] and 1 to remind 
them that they had these odd- 
eighths available." 

Alternatively, he says the 
fact that they all moved at 
once suggested the change had 
been coordinated. “Our evi- 
dence suggests spreads nar- 
rowed because an implicit 
agreement among marketmak- 
ers to maintain spreads of at 
least $V< was abandoned.” 

Although the professors 
imply that the dealers colluded 
to narrow spreads because of 
publicity surrounding the orig- 
inal study, they nevertheless 
welcome the resultant cost 
savings to investors. They cal- 
culated that after the shift to 
narrower quotes using odd- 
eighths, investors' transaction 
costs declined by 40 per cent to 
SO per cent. 

When Mr Christie and Mr 
Schultz published their first 
findings in May, the NASD 
said there was no evidence of 
collusion between dealers and 
argued that what investors lost 
through wider spreads, they 
gained in the guarantee of 
liquidity afforded by tbe multi- 
ple dealer system. 

If spreads were narrower, the 


T 


NASD said, dealers would find 
it harder to make a profit and 
some would be forced to aban- 
don making a rtark ®* ,n 
stocks. The subsequent reduc- 
tion hi liquidity would only 
harm investors. 

This argument, however, 
appears to have been under- 
mined by the second study, 
which found that after dealers 
started using odd-eighth quotes 
and effectively halved the size 
of spreads, the number of mar- 
ketmakers in each stock did 
not decline. 

he second study threat- 
ens to greatly embarrass 

the NASD greatly 

because for its findings strike 
at the heart of the very struc- 
ture of the Nasdaq system, 
which the NASD trumpets in 
television advertising os “the 
stock market for the next 100 
years”. Under the system, 
investors are meant to get the 
best price service because com- 
petition among multiple deal- 
ers for orders should keep 
spreads narrow. 

There is little doubt that the 
new study will be used by law- 
yers in the cases that have 
been filed against several Nas- 
daq dealers. 

Although it is still early in 
the legal process, lawyers 
involved in the class action 
suits estimate the damages 
that will be sought from deal- 
ers by disgruntled Investors 
could be as much as $100m for 
every trading year. 


Deloitte and 
Touche sued 
for $250m 

By Tony Jackson In New York 

The US management 
consulting arm of Deloitte and 
Touche, the world’s fifth big- 
gest accountancy firm. Is 
being sued for $250m. 

Figgie International, a 
struggling Ohio-based group, 
alleges that Deloitte failed in 
its promise to install a world 
class manufacturing pro- 
gramme for Hie company. 

While it is not uncommon 
for accountancy firms to be 
sued, it is very unusual in the 
case of management consul- 
tants. 

Figgie says that over a 
three-year period beginning in 
late 1990, Deloitte promised 
“to develop and transfer tech- 
nologies that would improve 
manufacturing throughput 
[and] decrease inventory lev- 
els". It claims to have paid 
Deloitte fees and expenses of 
over $22m, and to have been 
billed for a further $33m- 

In the event, Figgie moved 
from a net profit of $83m in 
1989 to a loss last year of 
$129m. Having breached finan- 
cial covenants, it was forced 
into a financial restructuring 
this summer. 

Figgie’s business ranges 
from electronic systems and 
materials handling equipment 
to insurance, sports goods and 
real estate. 

Figgie says “the consulting 
firm at various times misrep- 
resented to Figgie the progress 
and achievements of the world 
class manufacturing projects it 
designed and implemented”. 

It also claims Deloitte failed 
to staff the projects with 
professionally competent 
personnel. 


Engen in line 
for ITT chair 

By Richard Waters 
in New York 

Mr Travis Engen has been pnt 
firmly in line to take over the 
top job at ITT, tbe US manu- 
facturing, hotels and financial 
services group, when chair- 
man Mr Rand Araskog retires 

in two years. 

Mr Engen, 50, will take on 
responsibility for the group’s 
insurance subsidiary and Its 
communications and informa- 
tion services division in Janu- 
ary. With the three manufac- 
turing divisions he already 
runs, he will be in charge of 
businesses generating three- 
quarters of ITTs $22bn sales. 

Mr Engen takes on his new 
responsibilities from Mr Dale 
Comey. who is to retire at the 
age of 52. ITT said there was 
“nothing sinister" in Mr Com- 
ey's departure. He simply 
wanted to retire early. 


m<M)oo,ouo 
BHH International 
Finance PLC 

Cuunmioed Secured Klouiinjj 
Bate Notes duo 1000 
For tho period from October (I, WJ4 
w January II, LBOft Lha Notes vfll 
carry on interest rate of BW4 per 
annum with «i interest amount ol 
EU.DU0 per XUXMKM and oF n&JJlOBG 
pvrtt.U0O.0W Note. 

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wIU be January a. IU05. 

AnentBankr 

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BaNQUE Paribas 


TWA mounts restructuring campaign 


By Richard Tomkins 
hr New York 

Trans World Airlines, the US 
airline struggling to avert a 
financial crisis, yesterday 
started campaigning to win 
support for a sweeping finan- 
cial restructuring that will 
nearly halve its debt. 

Late on Tuesday, TWA 
announced a rescue plan under 
which creditors are being 
asked to swap $800m of the 
company's HAbn debt for new 
equity, taking their stake in 
the airline from 55 per cent to 
possibly 70 per cent. Employ- 
ees. who now own 45 per cent 
of the airline, would see their 
stake diluted to as little as 30 
per cent 

If the rescue plan succeeds, 
TWA believes It will be able to 
survive tbe lean winter months 
and return to profitability next 
year. 

If it foils, the airline will 


almost certainly have to file 
for some form of bankruptcy 
protection again. 

TWA. once one of the world's 
biggest and best-known air- 
lines, last went into bank- 
ruptcy protection in 1992, 
weighed down by debt from a 
leveraged buy-out 

It emerged from a chapter 11 
reorganisation in November 
last year, but has not made a 
profit since. 

Earlier this year, most of the 
airline’s senior executives were 
replaced. 

Since then, many unprofita- 
ble routes have been axed, the 
airline's Atlanta mini-hub has 
been closed, 3,000 jobs cuts 
have been announced, and the 
airline's labour unions have 
agreed to productivity 
increases worth $l30m-$l40m a 
year. 

Yesterday Mr Robert Peiser, 
chief financial officer, blamed 
TWA’s present financial diffi- 


culties on over-optimistic reve- 
nue assumptions by the previ- 
ous management. When the 
expected revenues failed to 
emerge, he said, the airline had 
found itself unable to cover its 
costs. 

The new management, Mr 
Peiser said, had changed strat- 
egy by concentrating on costs. 
“Our revenue forecast for next 
year is about flat with this 
year, and yet we see substan- 
tial profitability because of the 
cost savings we already have 
in place." 

TWA's problem is that all its 
credit facilities are drawn and 
it has insufficient cash to pay 
Its debts. If it is to stave off 
looming bankruptcy, it has to 
persuade its creditors to swap 
their debt for equity. 

Some analysts question 
whether creditors holding debt 
secured on the airline's assets 
would be prepared to take such 
a risk. 


But to address this difficulty. 
TWA is proposing to treat the 
various classes of debt-holders 
differently, asking those with 
the least secured debt to take 
the most equity. 

The proposal is backed with 
a threat, too. TWA says that if 
some creditors do not agree to 
the restructuring, it will file a 
pre-packaged bankruptcy plan 
- one reached with the prior 
consent of some creditors - 
which would be aimed at 
impairing the rights of those 
who held out against the 
restructuring. 

"It would be a tactical strike, 
a narrowly-focused option tar- 
geted at those people who did 
not co-operate,” Mr Peiser said. 

TWA would nevertheless 
need the support of at least 
two thirds of its creditors 
before it could file such a plan. 
Over the next few weeks, it 
will be campaigning hard in an 
attempt to secure it 

Fannie Mae 
14% ahead in 
third quarter 

By Richard Waters 

Federal National Mortgage 
Association (Fannie Mae) 
increased its after-tax earnings 
by 14 per cent in the three 
months to September, despite 
the sharp fall-off in mortgage 
refinancings in the US this 
year caused by higher interest 
rates. 

Net interest income of 
$727. 7m was up 10 per cent 
from a year before, reflecting a 
narrowing of the company's 
net interest margin from 140 
basis points (hundredths of a 
percentage point) to L25 basis 
points. 

Net earnings of $542.7m, or 
SI .98 a share, were in line with 
analysts' expectations, and up 
from $477^m, or SL74, a year 
before. 


UAP shares 
slide in wake 
of results 

By Ralph Atkins 

Shares in Union des 
Assurances de Paris, one of 
France's largest insurance 
group, fell sharply yesterday 
after it posted figures indicat- 
ing the impact of turbulent 
bond and equity markets on its 
assets had been worse than 
expected. 

UAP shares dropped FFr6.80 
to FFr 131.70 following publica- 
tion of results late on Tuesday 
showing consolidated profits 
down 22 per cent to FFr853m 
($161. 2m) in the first six 
months of the year. 

Mr Jacques Friedman, UAP 
chairman, predicted that final 
1994 results would show an 
improvement over 1993, “but 
not to the extent of the objec- 
tives we had set ourselves in 
very different conditions a few 
months ago”. 

The group revealed yester- 
day that the market value of 
its insurance companies’ 
investments was FFr625bn at 
the end of June, compared 
with FFr672bn at the end of 
last year. Unrealised capital 
gains fell to FFr45bn at the end 
of June from FFr81bn at the 
end of last year. Analysts attri- 
buted the drop largely to the 
performance of European 
bonds and equities. 

Though UAP believes that 
insurance market conditions 
are improving, it acknowl- 
edged that the deterioration of 
property as well as financial 
markets had a negative impact 
on its results. 

The group expects Banque 
Worms, the combined commer- 
cial, merchant and investment 
bank it controls, to break even 
in 1995 and make a profit the 
following year. The bank Is 
estimated to have cost UAP 
FFr6bn since 1991 but many of 
tbe banks worst property loans 
have been transfered to insur- 
ance divisions. 


Audi plans to invest DM730m 
in Hungarian engine plant 


By Virginia Marsh 
in Gyor, Hungary 

Audi, the executive car 
division of Volkswagen of Ger- 
many, is planning to invest 
DM73Gm ($474m) In a new 
engine manufacturing plant in 
Hungary over the next five 
years, it said yesterday. 

The initial investment will 
be DM320m and the plant will 
be Audi's first 100 per cent- 
owned manufacturing base 
outside Germany. It is one of 
the biggest post-communist 
foreign investments in Hun- 
gary and one of several In its 
nascent car manufacturing sec- 
tor which has attracted invest- 
ments from General Motors of 
the US and Suzuki of Japan. 

The plant, which opened yes- 


terday, will be the first to man- 
ufacture a new five-valve cylin- 
der engine developed by Audi 
for its new A4 model, the suc- 
cessor to the Audi 80, due to be 
unveiled in Munich today. 

In the first phase the plant, 
located in Gyor In western 
Hungary, will employ 250 peo- 
ple and produce up to 750 1.8 
litre engines a day. Production 
is scheduled to rise to 2,000 a 
day by 1997. A third phase 
would extend the scope of the 
local production and employ 
860 people, the company said. 

From 1996, the engine will be 
used for the Audi A6 and the 
planned A3 and may be used 
by Volkswagen and its SEAT 
and Skoda subsidiaries. 

The company said It aimed 
to source some components 


and parts locally within two 
years but ruled out full-car 
manufacturing in Hungary. 
The group had an option on a 
further 230,000 sq metres of 
land, as well as its existing 
250,000 sq metre site, it said. 

Future investment decisions 
would depend on demand for 
the new engine and on 
whether Hungary retained Its 
cost advantages, it said. The 
project will be exempt from 
profit tax for the first five 
years of operation. 

Audi chose the site in Gyor 
after looking at 180 locations in 
Europe. Hungary has lower 
production costs than eastern 
Germany and Austria while 
Hungarian labour costs in car 
manufacturing are about one- 
sixth those in Germany. 


Spotlight turns on new commodities fund 

Investors are becoming increasingly interested in the sector, writes Graham Bowley 


The launch last week by 
Barclays de Zoete Wedd of a 
commodities fund has thrown 
the spotlight on an asset class 
in which investors are showing 
increasing interest. 

The fund will purchase a 
range of financial instruments 
whose returns are linked to the 
value of underlying commodi- 
ties, offering investors a new 
route into a market tradition- 
ally difficult to access. 

Its aim is to outperform a 
benchmark of commodity 
prices - the Goldman Sachs 
Commodity Index - including 
energy, agricultural and live- 
stock products, and industrial 
materials and precious metals, 
weighted according to world 
production. 

Although it is the first to be 
listed in London, it is one of a 
number of recent initiatives 
offering investors exposure to 
commodity-based derivatives. 
Last month, for example, Japa- 
nese regulators licensed six 
firms to offer investment funds 
specialising in futures and 
options on commodities. 

EJD.& F. Man, the UK com- 
modity broker, which already 
has about $440m under man- 
agement allocated to commodi- 


ties, is set to launch a commod- 
ities ftmd this month. 

The range of individual 
derivative instruments on offer 
to these funds, and to investors 
in general, has also widened 
recently. 


DERIVATIVES 


“These tools allow investors 
to take financial positions in 
commodity markets, without 
the physical exposure. They 
can use commodities as part of 
their portfolio along with more 
traditional investments like 
bonds and equities,” said Ms 
Emma Conyers, an associate 
responsible for commodity 
investor marketing at Ji 5 . 
Morgan. 

Among products being mar- 
keted are: 

• Commodity linked notes, 
which have a maturity of any- 
thing between six months to 
two years or longer, offer the 
Investor either a principle or 
interest rate which is tied to 
the price of a commodity or 
basket of commodities. 

• Commodity-linked warrants 
allow investors to buy call or 
put options which are listed on 


an exchange. Options give the 
holder the right to sell (a put 
option) or buy (a call option) 
commodities in the future at a 
price determined at the outset. 
“A significant activity this 
year has been in commodity 
call option warrants which 
allow investors to participate 
in rising prices," said Mr Mar- 
tin FraenkeL manager of com- 
modity risk management at 
Chase Manhattan bank In 
London. 

• Another instrument - 
which is more common in the 
US than in Europe - is the 
limited partnership, in which 
the investor becomes a partner 
in the commodities fund and so 
benefits directly from the prof- 
its the fund makes. 

• Investors can also buy 
shares and bonds issued by the 
funds - the value of the share 
and the coupon offered on the 
bond vary in value with the 
profit the fund makes. 

With bond and equity mar- 
kets plummeting, commodities 
have come into their own as 
protection against rising infla- 
tion, as a play on economic 
growth, and, increasingly, as 
an alternative asset class in 
their own right 


Investors have become 
Increasingly interested in 
assets that have, on some bas- 
ket measures, risen in price by 
around 23 per cent this year 
alone. They are also attracted 
by the fact that prices of com- 
modities, such as oil and gas, 
zinc and copper, are inversely 
related to bonds and equities - 
commodity prices rise while 
bond and equity prices fall, 

“Over the last 10 years, com- 
modities have been a very dull 
asset,” said Mr Graeme Step- 
hens, corporate finance man- 
ager at E J). & F. Man in Swit- 
zerland. “But now there is a 
resurgence in commodity 
prices, driven by economic 
growth in both the developed 
and developing world, and a 
resurgence of interest in com- 
modities themseLves." 

But what happens when the 
world’s economic cycle moves 
on and commodity prices begin 
to foil again? 

Many prices have already 
risen to such an extent that 
that some people are question- 
ing how much further they 
have to rise. Will commodity 
derivatives and commodities 
funds then go out of fashion? 

“It works both ways,” said 


NY1FE Commodity 
Research Bureau Index 

i/i/ns * ioo 



Mr Stephens. “What we want 
to see is price movement up or 
down. We can exploit move- 
ment in either direction using 
derivatives.” 

“This commodities bun mar- 
ket is a little bit different from 
others," said Mr FraenkeL 
“This time the increased 
sophistication of derivative 
instruments has reduced the 
barriers to entry, and this 
greater ease of access means 
investors will maintain their 
exposure to commodities to 
keep the diversity of their port- 
folios." 







financial times Thursday October i 3 1994 


23 


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INTERNATIONAL COMPANIES AND FINANCE 


Japanese takeover brings new stresses 

Mitsubishi Bank will take advantage of its current monopoly, writes Gerard Baker 


T he implications of yes* 
terday's takeover of Nip- 
pon Trust Bank by Mit- 
subishi Bank go Isr beyond the 
narrow question of the viabil- 
ity of one small trust bank; it 
will produce new stresses in 
Japan's fragile and overcrow- 
ded banking sector. 

In rescuing the a fling hank 

Mitsubishi, already one of 
Japan's strongest financial 
institutions, but limited by law 
in its scape, becomes the first 
to be permitted to conduct the 
fall range of trust banking 
operations. Although Mitsubi- 
shi has paid a high price for its 
entrance into this lucrative' 
market, its competitors are 
concerned that the move gives 
it an unfair competitive advan- 
tage, and are likely to step up 
pressure on the regulators to 
open up the financia l markets 
farther. 

For years, the labyrinth of 
regulations in Japan's finan- 
cial sector firmly restricted the 
activities of the participants. 
City banks, large commercial 
lenders such as Mitsubishi, 
were allowed to conduct the 
mainstream business of whole- 
sale and retail borrowing and 
lending- Trust banks ran trust 
banking operations such as 
pension fund management; 
long-tom credit banks engaged 
in investment finance; and bro- 
kers were restricted to under- 
writing and trading securities. 

But in the past decade, under 
pressure at home and abroad 


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to deregulate, the ministry of 
finance has pursued a gradual 
policy of removing the parti- 
tion walls. All banks are now 
permitted to run hunted brok- 
ing businesses, brokers can 
operate banking-style deposit 
accounts, and last year the 
ministry allowed city banks to 
establish trust bank subsid- 
iaries. 

So far these measures have 
been cautious in. scope. Banks 
may conduct only limited secu- 
rities business, and the trust 
banks' deregulation does not 
allow city banks to conduct the 
most profitable aspect of their 
business, pension fund man- 
agement and loan trusts. These 
restrictions were designed to 
protect the easting companies' 
core business. 


But yesterday's move by Mit- 
subishi, sanctioned by the 
finance ministry, drives a 
coach and horses through the 
rules, enabling the bank to 
conduct the full range of trust 
business, and giving it a sub- 
stantial advantage both over 
rival city banks and the exist- 
ing trust banks. 

M itsubishi has paid a 
substantial price for 
what amounts to a 
trust banking licence. The 
Y200bn ($L98bn) injection of 
capital Is wed above the target 
company's market capitalisa- 
tion of YlOTbn. The return is 
just 50 per cent of the future 
p rofit s. 

Those profits are unlikely to 
amount to much in the next 


few years. Declared non-per- 
forming loans at the bank are 
around Yl30bn, but the true 
value of bad assets including 
restructured loans is closer to 
Y500bn (28 per cent of the total 
loan book), and substantial 
provisioning is therefore likely 
to weaken profitability further. 

Ms Alicia Ogawa, hanking 
analyst at Salomon Brothers in 
Tokyo, said Mitsubishi is calcu- 
lating that the longer term 
benefits of a trust bank opera- 
tion will outweigh the consid- 
erable cost of the takeover. “In 
the short-term, it is an expen- 
sive purchase, with Kttle pros- 
pect of any early significant 
return from Nippon Trust 
itself But Mitsubishi is count- 
ing on its being weU-posftkmed 
to compete in the fond man- 
agement market especially in 
the pensions area " 

The stock market appeared 
to share that view. Mitsubishi’s 
shares rose by nearly 3 per 
cent as investors anticipated 
the longer-term advantages. 

But the key to the bank’s 
success may depend on how 
long it has the field to itself. 
City banks ant * trust banks 
were both yesterday reported 
to be upset at the decision to 
approve the takeover. 

Trust banks had lobbied 
hard to prevent the Mg com- 
mercial banks from encroach- 
ing on their territory and the 
ministry's decision represents 
a significant blow to their mar- 
ket position. The deal is likely 


to place further strains on the 
relationship between the dty 
bank and Mitsubishi Trust and 
Banking Corporation, a sister 
bank in the giant Mitsubishi 
keiretsu, one of Japan’s largest 
corporate groupings. 

S ome analysts expected 
the finance ministry, 
under pressure from 
other banks, to hasten a wider 
deregulation of the banking 
sector. But nfuriais were ada- 
mant that the decision was a 
special response to a particular 
crisis at Nippon Trust They 
pointed to parallels with the 
takeover of Cosmo Securities, a 
medium-sized broker last year 
by Daiwa Bank. 

No other banks have subse- 
quently been permitted to 
operate the fall range of brok- 
ing activities, and the ministry 
has no plans to allow thwm 
But it win be the chronic fra- 
gility of the entire banking sec- 
tor that will ultimately decide 
the pace of further hberahsa- 
tion. Although Nippon Trust 
was clearly the weakest of the 
trust banks it was by no means 
alone in having a huge portfo- 
lio of bad debts. 

The likely solution lies in 
further consolidation of the 
industry. That will, in time, 
eliminate the demarcations of 
the finanmai markets faster 
than tha ministry plans. For 
the moment, though, Mitsubi- 
shi Is set to exploit its monop- 
oly privilege. 


Anheuser-Busch seeks decision on Czech brewer 


By Vincent Boland 
in Prague 

Anheuser-Busch has increased 
pressure on the Czech govern- 
ment to decide the future of 
Bud&jovick? Budvar, the Grech 
Republic’s most famous brewer 
in which the US group is try- 
ing to take a minority stake. 

In two related moves, 
Anheuser-Busch says It is sus- 
pending negotiations on buy- 
ing 34 per cent of Budvar, and 
is not renewing a moratorium 
on legal action in a dispute 
between the two companies on 
use of the Budweiser trade- 
mark. 

However, it also said it was 
no longer linking the purchase 
of the stake to a resolution of 


the trademark dispute, which 
is hampering Anheuser- 
Busch's plans to market its 
own Budweiser brand in 
important European markets 
such as Germany. 

Mr Jack. Purnell, Chairman 
and chief executive of 
Anheuser-Busch International, 
said he hoped tire separation of 
the investment from the trade- 
mark dispute would "advance 
progress on both issues”. It is 
expected that the dispute will 
be resolved before any invest 
mentis made. 

Anheuser-Busch said on 
Tuesday that discussions on 
the equity stake would be post- 
poned until the government 
decided how the Czech brewer 
should be privatised. Negotia- 


tions on making an investment 
began in 1990, and earlier this 
year it was named the sole for- 
eign negotiating partner in 
Budvar's privatisation. 

However, agreement 
between the government and 
Anheuser-Busch has never 
been in sight This is partly 
due to Czech sensitivities 
about one of its most famous 
brand names being swallowed 
by a large multinational, and 
partly to growing hostility 
within the country to foreign 
investment 

Anheuser-Busch said that in 
spite of being given exclusive 
negotiating access, the govern- 
ment "could sot reach a con- 
sensus to follow through on 
th« commitment” and that it 


had " concluded that the priva- 
tisation process is stalled indef- 
initely in the Czech govern- 
ment”. 

The agriculture ministry, 
which owns Budvar, declined 
to comment on Anheuser- 
Busch’s decision. However, it 
is understood that a decision 
on the brewer's future could be 
madp within a month _ 

While the government 
decides how Budvar should be 
privatised Anheaser-Busch and 
Budvar are to pursue negotia- 
tions on reaching a standalone 
trademark agreement 

Mr Jfri Bucek, general-direc- 
tor of Budvar, said the morato- 
rium on legal action, which 
expired on September 30, was 
no longer being accepted by 


many courts. “It must be 
flrimittpri that it is out of date," 
he sfliri- 

Budvar is keen to link with 
Anheuser-Busch to expand 
sales of its own Budweiser 
brand. Its main export markets 
are Germany and Austria, but 
it is seeking to expand into 
other European markets, par- 
ticularly the UK 

The company reported prof- 
its of Kcsl33m ($L8m) in the 
first half of this year. 

Anheuser-Busch said any 
new agreement reached 
“would not be as comprehen- 
sive as the one offered to Bud- 
var in combination with 
Anheuser-Busch ’s proposal for 
a minority investment in the 
brewery”. 


NEWS DIGEST 

Downward trend 
continues at Ciba 
as sales fall 2.4% 

Ciba, the Swiss chemicals and pharma- 
ceuticals group, reported a 2.4 per cent drop In 
sales in the third quarter to SFr5bn ($3J9hn) 
and softened its profit forecast for the full 
year, writes Ian Rodger In Zurich. 

Ciba blamed the strength of the Swiss franc 
for the downward trend, which was already 
apparent in the first half 
Tbe performance of the important health- 
care sector, which accounts for 38 per cent of 
group sales, continued to deteriorate in the 
face of pressures on healthcare costs. Its sales 
were down 9 per cent to SFtiLlbn in the third 
quarter while those of the pharmaceuticals 
division fell 8 per cent to SFrL47bn 
Sales in the industry sector, covering mainly 
chemical businesses, were flat at SFr2bn. This 
was a shgbt improvement over the previous 
two quarters, “due to a modest economic 
recovery". 

The agricultural sector also had flat sales of 
SFr847m, after a 2 per cent fell in the first hall 
For the nine months, group sales were down 
3 per cent to SFrlAfitm, but Ciba said that they 
were up 3 per cent expressed in local curren- 
cies. 

The group said it expected an “increased 
operating profit” in the fun year, which was a 
slightly less optimistic forecast than its state- 
ment in August that net income would be at 
least as high as 1993’s SFrL78bn. 

Lauritzen to float 
subsidiaries 

Lauritzen Holding plans stock exchange flo- 
tations over the next few years of Its wholly- 
owned subsidiaries, which include the J. Laur- 
itzen Shipping Company, the Danyard ship- 
building group and several manufacturing 
companies, writes Hilary Barnes in Copen- 
hagen. 

Lauritzen said yesterday that tbe flotations 
would be used to bring the holding company's 
stake in the subsidiaries down to 52 per cent 
Lauritzen reported a first-half loss (before 
minority shares) of DKrl98m ($32. 67m) this 
year, following a fall-year loss of DKrl7lm in 
1993. Lauritzen Shipping made a pre-tax loss of 
DKr240m in the first half following a loss last 
year of DKi393m. 

Both Lauritzen. Shipping and Danyard have 
been affected by the EtTs quota policy on 
South American bananas, which has caused a 
cut in orders for refrigerated cargo vessels. 

Bergesen sees rise 
in tanker market 

Bergesen, Norway's largest shipowner which, 
yesterday reported weaker-than-expected 
financial results for the first eight months, 
forecast an improved tanker market later this 
year, Renter reports from Oslo. 

"The situation is more conducive to a good 


MM Holdings 

Share price notatt/a to the 
Afl Ordtnariee Index 
100 1 



Saunas DBtomnfn 


autumn tflnfcflT marke t this year than it was 
last year. However, any improvement in the 
market would have a limited effect on tanker 
results in 1994,” Bergesen said. 

The company reported eight-month pre-tax 
ti m in g s of NEr92m compared with NKrl71m 
a year ago. 

MEM plans to sell 
its shares in Asarco 

MIM Holdings, the 
Australian metals pro- 
ducer, is continuing its 
divestment of non-core 
assets with the 
announcement that it 
plans to sell its 10.35m 
shares - a 24 A per cent 
stake - in Asarco, the 
US minin g company, 
writes Bruce Jacques 
In Sydney. MIM said 
Asarco was filing a 
universal shelf regis- 
tration statement cov- 
ering the issue of up to 
US$300m in equity and 
debt securities with the 
US Securities and Exchange Commission. MIM 
had requested that its Asarco stock be 

wirhidwi fjj this flHng 

Asarco shares have been trading recently at 
around US$33 on the New York Stock 
Exchange, valuing MHf*s stake at A$342m.. 
MIM said completion of Asarco’s registration' 
process would enable MIM to sell some or all 
of its stock. 

"It is proposed that the sale be by way of 
broad distribution in accordance with an exist- 
ing agreement between MIM and Asarco,” 
MIM said. “MIM is pursuing a strategy of con- 
centrating on core product businesses over 
which it has operational control” 

Taiwan banks ahead 

Taiwan’s Mg three state-run commercial banks 
have all reported higher pre-tax profits for the 
July-September quarter compared with a year 
ago, writes Our Financial Staff. 

At Hua Nan Bank, pre-tax profits rose to 
T$2.I2bn (US$80m) from T$1.38bn on turnover 
of T$l5.17bn, compared with T$l&53bn last 
time. First Commercial Bank turnover rose 
more modestly to T$15JS4bn from. T$l4.78bn_ 
but pre-tax profits leapt to T$2.0Ibn from 
T$L57bn. At Chang Ewa Bank, pre-tax profits 
advanced to T$L5Qbn from T$l-23bn a year 
ago. Revenues were not reported. 

ANZ cuts Coles stake 

The Australia and New Zealand Banking 
Group said its stake in Coles Myer, Australia's 
largest retailer, had been cut to below 1 per 
cent and that it was likely to sell the balance 
when market conditions were right. Renter 
reports from Melbourne. 

Mr David Craig, ANZ chief financial officer, 
said the bank now held less than than iam 
shares in Coles Myer after warrants over its 
stake were exercised. 


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October 1994 


This announcement appears as a matter of record only. 




Vi.. 



tv. 


rst 

ei-* 


Aker a.s 

Oslo, Norway 

US$ 250,000,000 

Multi-Currency Revolving Credit and Term Loan Facility 

Providers 

Banque Nationale de Paris Norge A/S 
Christiania Bank og Kreditkasse 
Commerzbank Aktiengesellschaft 
Den norske Bank AS 
Deutsche Bank Luxembourg S.A. 

The Fuji Bank, Limited 
Handelsbanken AS 
Royal Bank of Canada Group 
Skandinaviska Enskilda Banken 

Coordinator and Agent 


Deutsche Bank Luxembourg S.A. 



NOTICE OF DEFAULT 

— v - -*■- - a 

wnimw EHevuauonai 
finance United 
IB 1/4% embed Mas 
Dm 1932-1995 

Paraoart w tbe provisions of Sec- 
tion tO of the fadentur* dated is of 
October & 1990, among Cnrtmai In- 
tnnaiaonal Firanoe Limited, as Issuer 
{6u:'TasuB^Cadmon,CA.(CWpoa- 
<SonlndutiUMcnin)( >I Q)DiMn 

and certain sub s idiaries of Corimon 
(together with Gotimav the Guaran- 
tneni The Bank of New York, as 
Trustee and Principal Baying Agent 
(the "Tnoteerir Banque Internationale 
a Luxembourg, SA, a* Paying Agstfc 
«lB«ncpieBrav! fle iLat n pal;aaPay- 
ine Agent, relating to the Issuer's US. 
540,25UM0, 10 1/4% Guaranteed 
Notes Doe 1997-1995 (the*NoteS*I of 
which US. S«S7S,135 principal 
wnqont la c urr e ntly uuiataiidlug, no- 
tireilhenfyipifoiaffheouuimiEeof 
a default hi the pei&xwnce or abw- 
unoeofceitalnjtiipdelt ow n m l a «t 
fcrth in Sections 18 (i) (fyand 180) (a) 
of the Indenture, which require 
Caiman, on a consolidated bu^ to 
maintains 

tal Current Asset*' to *CanaoUchrted 
Total Current lirfaWW of not lets 
dan 12 to laoda "Labilities » Equity 
Katto'ofnot more than L2 to Lieipec- 
Uvrfy. At of June 30, 1991, CoriraooH 
ratio of Consolidated TOal Ctnnad 
Asserts to Gxuwlidated, Currant U- 
ahffitiss was 105 Id 1 and Cannon's 
UsMBttes to Equity Ratio waslAtol. 
Tbe Trustee hu reqoeetad Carman to 
confirm that the anandai croerant 
defcutts menti o ned hare not uraiil n- 
ued far mare thin 90 day& If either or 
both of the financial anmantdefauBs 
tea continued for more than 90 dsy\ 
an'EveotofDe&nlf'describedinCm- 
dltfon 10 pv) of the Term* and Corefi- 
toa of the Notts will be deemed to 
have canned, in wHch circumstance 
Condition 10 of Jntfi Items and COn- 
efitkrosii&xdtheTnatee, or holders of 
at lost 25% in aggregate principal 

immediately aue and payable. 

ItataksMMYMk 

as Trustee 

Detect October li 1994 


SHEARSON LEHMAN 
HUTTON HOLDINGS 

INC^Morpomed la tktauane) 
US$300,000,000 
Floating rate notes due 
October 1996 

Far the three months 13 October 
1994 to 13 Janaary 1995 the 
notes wQl carry an interest rate 
of 5.125% per annum and 
Interest payable on the relevant 
interest payment date 13 
January 1995 mttl amount to 
USSH6J1 par USS10.000 note. 

„ . *y 

Company 


JP Morgan 


First half 1994 


Net income up by 3.8 % 


The board of directors met on September 27 1994 
under the cha ir mansh i p of Mart Viaiot to examine tbe 
results jbr tbe first baifof 1994. Net income vm up by 
3J!% in comparison with the same period of the pre- 
vious year. E^nity and the international sobe7tcy ratio 
•were strengthened. 

Business 

In an unsettled financial environment, Group btei- 
rnssvxu somewhat conatated. 

On the private customer side, sustained loan demand 
and the bwld- up of saving as well as a growth in com- 
missions, especially on tbe part of fund management, 
benefited the domestic network. Corporate credit and 
deposit outstanding slumped 
In comparison to 1993, an exceptional year, capital 
market business mas on tbe whole less favorable in 
both France and tbe international network 
While condnumg thetr recovery, specialized financing 
subsidiaries remained sensitive to tbe difficult eoon- 
omic envuwuneuL 

Income 

After tbe strong growth (tt %) in the first half of last 
year, linked to capital market acaoities, net banking 
income was down 1.7%. Taking into account tbe 
22 % increase in operating expenses, gross operating 
income decreased by 9.6%. 


Net allocation to provisions remained high at 
FT 2,744 m, dropping 223% in comparison to the 
same period of last year. 

Capital gains realized during tbe first half of 1994 
from the sale of the Genemle office tow at Li Defense 
■was, as at tbe end of 1993, entirely appropriated to 
non-recurring provisions on certain costs, thereby 
correspondingly lightening those of future years. 
Overall, net income was FF 2,240 m, as compared 
with FF 2J58 m for the first half of 1993, an increase 
of 18%. 

Equity 

At June 30 1994, Group equity excluding undated sub- 
ordinated capital notes, was FF 43.4 bn as compared ■ 
with FF 41.9 bn a year earlier, an increase of 8.4 %. This 
growth (FF J.5 bn) was mainly attributable to capital 
increases (staff, dividends paid out in new shares) and 
to retained earnings after distribution of tbe 1993 
dividend. 

Group international solvency ratio was 933 % at June 
30 1994, easily satisfying the norm of 8%. Tier One 
funds amounted to 33.% of a total of FF 838 bn in 


N& revalued assets as at June 30 1994 equaled FF 680 
per share which is to be compared with a stock market 
price of FF 531 at October 7 1994. 



Let's combine our talentS. 


CREDIT LOCAL DE 
FRANCE 
USD IO&OOOjOOO,- 
FRN DUE 1997 
Noteholders are hereby 
informed that the rate 
applicable for the 
coupon N°9 has been 
set at 5,8 125®. 

The coupon N° 9 will be 
payable at the mice of 
USD 2938^ per 

USD 100.000,- Note on 
April 12th, 1995 representing 
182 days of interest, 
and covering the period 
from October 12th, 1994 to 
April 11th, 1995 inclusive. 

The Agent Bank and 
Principal Paying Agent 

IS cREPrruroNNAis 


INDE 



toariip-w*w 


U.S. $100,000,000 


© 


Takugin International (Asia) Limited 

t Incorporated In Hong Kong) 

Guaranteed Floating Rate Notes due 1997 
Guaranteed as to payment of principal and Interest by 
The Hokkaido Takushoku Bank, Limited 

(Incorporated In Japan) 

In accordance with the provisions of the Notes, notice is hereby 
given, that for the six month Interest Period from October 13, 1984 to 
April 13, 1995 the Notes will carry an Interest Rate of 6.125% 
per annum. The Interest amount payable on Hie relevant Interest 
payment data, April 13, 1995 witi be U.S. $309.65 tor each Note 
oft U.S. $10,000 denomination and U.S. $7,741.32 for each Note of 
U.S. S250.000 denomination. 


By: Tlw Chase Manhattan Bank, NLA. 
London, Agent Bank 

October 13, 1994 


CHASE 


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FINANCIAL TIMES 


THURSDAY OCTOBER 13 1994 


INTERNATIONAL CAPITAL MARKETS 


Aegon’s $ 600 m convertible meets strong demand 


By Richard Lapper and 
Graham Bowlay 

Blue-chip corporates were 
again prominent in the euro- 
markets yesterday with both 
J. Salisbury and Ford raising 
funds in the three-year dollar 
sector and Aegon, the Dutch 
insurance company, tapping 
the market for $G00m with one 
of the biggest European con- 
vertible issues of the year. 

J. Salisbury, the UK retailer, 
raised $150m to help fund its 
recent acquisition of Giant 

INTERNATIONAL 

BONDS 

Food, the US supermarket 
chain. The paper offered a cou- 
pon of 7.375 per cent and an 
initial yield spread of 39 basis 
over the equivalent US Trea- 
sury, although this widened 
marginally when the bonds 
were freed to trade. 

Two-thirds of the issue was 
placed by the end of trading, 
although J.P. Morgan, the lead 


manager, conceded that distri- 
bution was becoming more dif- 
ficult in the short end of the 
dollar sector following issues 
earlier this week by Smith- 
Kline Beecham and Toyota. 

Ford Credit Europe turned to 
the sterling sector for ElQOm 
with a three-year issue. The 
paper, sold to Investors at a 
reoffer price of 99.705, offered a 
coupon of 8% per cent and, at 
its reoffer price, a yield spread 
of 55 basis points above the 
equivalent gilt 

Lead managers HSBC Mar- 
kets said investors were show- 
ing interest in shorter-term 
sterling deals, following recent 
steepening of the yield curve. 

Morgan Stanley led the 10- 
year subordinated convertible 
bond for Aegon, which has 
expanded in the US in recent 
years. The bond carries a cou- 
pon of 4.75 per cent and has 
been used partially to refin- 
ance a S370m 10-year subordi- 
nated convertible bond issued 
in 1991. 

The Issue, one of Europe's 
biggest in a generally quiet 


year for convertibles, met 
strong demand from continen- 
tal Europe, according to syndi- 
cate managers. 

Elsewhere, Compagnie Gen- 
erate des Eaux, the French 
utilities group, raised FFrlbn 
with a five-year deal offering a 
coupon of 8 per cent. The deal 
was offered to investors at a re- 
offer price of 100.08. with a 
yield spread of 32 points over 
the equivalent French govern- 
ment bond. Prices fell slightly 
after the syndicate closed, end- 
ing down 2 basis points. 

Credit Local de France 
tapped the short end of the lire 
sector with a H50bn three-year 
bond with a coupon of 115 per 
cent Proceeds from the deal, 
led by Credito Ttaliano, were 
swapped into floating rate dol- 
lars. 

Two borrowers tapped the 
three-year area of the Cana- 
dian dollar sector. The Euro- 
pean Investment Bank 
launched a C$i50m offering of 
bonds, priced to yield 10 basis 
points over Canadian govern- 
ment bonds. The pricing 


NEW INTERNATIONAL BOND ISSUES 


Spfead Book runner 

bp 

(a) Lehman Brother* Wt 

- Morgan Stanley 4 Co. Inti. 
+3S0KK-07J JP Morgan Seoaftfes 

- Samira Inti. Pktanco 


Borrower m- % "bp 

US DOLLARS 

Gauny at Los AngetatfMl l-365bn (ap HO W W (a) Lehman Brother* WL 

Anon(b£ 600 4.75 100.00 Nov.2004 2J0 . Morgan Stanley S Co. In*. 

Salisbury 160 7.375 9S.7SR Nov.1 997 0225B +3S09K96-97) JP Morgan Securities 

Bank Ftekyat faidoneateflattt 76 (d) 100.00 Nw.199B 0-60 Samsa In*. Franco 

YEN 

CBcoirfe)* T5bn 4.00 100.00 Jan.1938 untflag Mqra Lynch ime ma Qonat 

srenuNQ ~ 

Fort Croat Europe 100 BJ2S flfl.70SR Nw.1997 CL2Cfl +S3ftKSM7) HSBC Meritta 

FRENCH FRANCS 

Gompagna QMnto 0— Bare 7bn 800 100.08R Nov.1999 8325H +32j8M96-9g C CF 

ITALIAN URE 

CrfcSt Local da France ISOfan 1150 101-31S Nov. 1997 1375 - Ctefltto ftateno 

CANADIAN DOLLARS ’ 

European Investment Bre* 150 0.00 9&5SR Nov.1997 Q.187SH +108 GoWmen Sachs international 

Rabobank Nadcrtand 100 B.1ES 99.794R Nov. 1997 0.1B7SR *lQfl ScodaMdeod 

SWISS FRANCS 

Extra Bark of Japan 200 5J50 10SL5Q Nov.1999 2.00 - UBS 

Bactridlri de France 150 5375 108375 Nov.1998 1.7S Croat Sulsae 

LUXEMBOURG FRANCS 

Oaartar-Benz fciti-Fhance 2bn 8125 10220 Pert2000 1.675 BK. 

Rnaf terms and narvcaSabta unfen stated The yfeed spread (lower relevant go w an men t bond) at launch b supplied by the (sad 
manager. MJnKated. fConvertbte. tHoating rate note. ((Semi-annual coupon. R: fixed re-offer price: fees as shown a the re-offer 
level a) Multi tranche global. 11 fixed and 4 zero coupon tranches. To be priced b) Conv price; RIM. BC i.72aJFW. find redemption 
price: 138.9%. Callable from 1/11/01. d Calobte and portable In Nov.97 or par. Putable if Issuer ceases to be fufiy owned subokfary of 
govt, cl) 6-rrah Lfcw +H0bp. j) Over Interpolated yield, si Short 1st coupon. 


N0V.1997 
Nov. 1897 


200 5.50 1Q2-50 Nov.1999 2.00 

150 5375 102J375 Nov.1998 1.7S 


Mcnfil Lynch international 

+S3ftKSM7) HSBC Mariwta 

+32gBt%-9g C CF 

- Crafltta Hateno 

+10ffl GoWmen Sachs international 
*100) ScodaMdeod 


spread tightened to around six 
basis points when the bonds 
were freed to trade, joint lead 
manager Goldman Sachs sa id. 


Rabobank Nederland Canadian government bonds, 
launched a CSlOOm offering of The spread narrowed slightly 
bands, also priced to yield a to nine basis points over in late 
spread of 10 basis points over trading. 


Gilts welcome RPI data and outperform Treasuries 


By Martin Brice in London and 
Frank McGurty in New York 

The UK government bond 
market yesterday welcomed 
statistics which revealed 
benign inflationary pressures 
in the economy by rising half a 
point, and outperforming US 
Treasuries. 

The retail price index rose 
2.2 per cent, which was less 
than the 2.4 per cent expected. 
Labour market figures were 
interpreted as being good for 
gilts. 

“Nobody could claim that 
these numbers are anything 
but very excellent. They have 
taken away all the negative 
feelings which last month's 
numbers had given gilts." said 
one dealer. 

“It feels like a change in sen- 


timent but it might be prema- 
ture to say that But with num- 
bers and interest rates as they 
are there is clearly a good case 
for the market to get itself on a 
firmer footing," he added. 

One securities house 
reported good demand for gilts 
from US buyers, and the 
spread of gilts over US Trea- 
sury bonds narrowed to around 
94 basis points, from around 
102 the day before. Some deal- 
ers said the Bank of England 
was taking advantage of the 
strong market to supply 
stock. 

Mr Simon Briscoe of 
S. G. Warburg said: “Every day 
this month there has been a 
trickle of investors moving 
round to the bullish view." 

He pointed out that the low- 
er- than-expected RPI figure 


and fell in total unemployment 
would save the government a 
total of £2bn a year in social 
security benefits. He said: 
“Funding is less of a pressure 
than jn other countries." 

GOVERNMENT 

BONDS 

The reaction of the gilt mar- 
ket was subdued, said Mr Chris 
Dillow of Nomura. “I think 
that is justified," he said. “It 
will be difficult to see RPI 
inflation staying this 
low." 

The December gilt future on 
Liffe lifted Zi a point on the 
day to 100£ in late trading. 
The yield spread over bunds 
narrowed to around 124 in late 
trading. 


E German government bonds 
were hardly changed yester- 
day, as investors stood on the 
sidelines ahead of today's 
meeting of the Bundesbank 
council and the elections on 
Sunday. 

Mr Karl Haellng at Deutsche 
Bank in Frankfurt said: “We 
have rallied for almost two 
days. The market Is a little 
overbought and needs a 
breather. It has been a consoli- 
dation day." 

The December bund future 
was around 89.51 in late trad- 
ing, up 0.04 of a point on the 
day. 

■ US Treasury bonds drifted 
lower yesterday morning as 
the market awaited a barrage 
of economic data to be released 
today and tomorrow. 


By midday, the benchmark 
30-year government bond was 
h lower at 95&, with the yield 
rising to 7.881 per cent On the 
short end, the two-year note 
was down & at 99g, to yield 
6.636 per cent 

After two sessions of sharp 
gains, bonds gave back some 
ground in lacklustre trading 
which in part reflected fresh 
weakness fay the dollar. 

However, the underlying 
tone was positive. Traders 
were generally of the opinion 
that the Federal Reserve would 
delay its next credit tightening 
until November, providing 
some room to manoeuvre going 
into the important economic 
data due out at the end of the 
week. 

Most economists were 
expecting the news to be 


Argentina returns 
to syndicated loan 
sector 10 years on 

_ - A WmmAIUA (ranU.it eoods 


benign. Forecasts centre on a 
slight 0.1 per cent gain In Sep- 
tember producer prices, and a 
0.4 per cent increase excluding 
the volatile energy and food 
sectors. 

Such readings would present 
no obstacle for the 
inflation-sensitive Treasury 
market 

News of inflation on the con- 
sumer level and crucial data 
on industrial production will 
follow on Friday. 

Yesterday, bonds crept a lit- 
tle closer to their starting 
marks after the release of the 
Atlanta Federal Reserve's 
monthly survey. The report 
was favourable for fixed-rate 
securities, showing a general 
slowdown In manufacturing 
activity and an easing of price 
pressures. 


By David Pining In Buenos 
Aires amt Richard Lapper 
in London 

Argentina has tapped the 
syndicated loan market for the 
first time in more than 10 
years by signing an 18-month 
5500m credit with banks led by 
Credit Suisse and Chemical 
Bank. 

The deal is being seen by the 
Argentine finance ministry as 
a vote of confidence in the 
three-year-old economic stabi- 
lisation plan which has com- 
bined rapid growth with Latin 
America's lowest Inflation 
rate. 

Mr Domingo C&vallo, finance 
minister, said conclusion of the 
deal made Argentina the first 
Latin American country to 
return to this segment of the 
international financial 
market 

The loan, signed in New 
York on Tuesday, will have an 
interest rate of 150 basis points 
above Libor and will cover rev- 
enue shortfalls prompted spe- 
cifically by delays in the priva- 
tisation of several gas 
distribution companies. Final 
documentation should be 
signed early next week. 

However, the deal comes 
against the background 
of recent economic Indicators 
that show a widening trade 
deficit, falls in tax collec- 
tion and the edging up of 
monthly inflation to 0.7 per 
cent. 

Provisional figures released 
last week showed the trade def- 
icit for August swelling to 
$620m, bringing the eight- 
month gap to a record $3.S4bn. 
Although exports are likely to 
rise by 20 per cent this year, 
imports have surged still fester 
and last month broke the $2bn 
barrier. 

Mr Cavallo says he is uncon- 


cerned because capital goods, 
imports of which have nsen 60 
per cent this year, account for 
the bulk of the increase Capt- 
tal goods would help to 
sharpen competitiveness, feed 
into higher exports and head 
off any balance of payments 
problems. 

The government lias reiter- 
ated its rejection of caffs from 
some business quarters for an 
export-boosting devaluation of 
the peso. This week. President 
Carlos Menem said: “There is 
no possibility of changing any 

part of the [economic] model, 
especially the exchange 
rate." 

Referring to Latin America’s 
past experience with devalua- 
tion and resulting inflationary 
pressures. Mr Menem said: 
“We have already watched that 
movie." 

Mr Cavallo also dismissed 
suggestions that spending pres- 
sures before next May's pres- 
idential election would lead to 
fiscal deficits for the first time 
since the launch of his eco- 
nomic reforms. “The accounts 
for the third quarter do not see 
the surplus of the first two 
quarters, but this had already 
been forecast," Budgets would 
be balanced this year and in 
1995, he said. 

Inflation too, up in Septem- 
ber because of seasonal factors 
and a recent one-off rise in 
transport fares would beat this 
year’s 4 per cent target, Mr 
Cavallo said. 

Other international banks 
participating in the deal ure 
Banco Santander, Dresdner 
Bank, Bank of Boston, UBS 
and INC. Local banks partici- 
pating are Banco Roberts, 
Banco Rio de la Plata. Banco 
Fiances Rio de la Plata, Banco 
de Credito Argentino. Banco 
General de Negocios and 
Banco de Qu Limes. 


■,,rillU’ r 

i,;i‘ 




ml :i.m 


WORLD BOND PRICES 


BENCHMARK GOVERNMENT BONDS 

Rad Day's Weak Mourn 

Coupon Data Prfca change Yield ago ago 


Australia 9.000 OSWW 

Belgium . 7.250 04/04 

Canada - 6.500 06AM 

Denmark 7.000 12AM 

Franca BTAN aOOO 05/98 
OAT 5.500 04AM 

Germany Trau 7.500 09/D4 

Italy 8.500 08AM 

Japan No 1 19 4.800 06/99 

Japan No 184 <100 12/03 

Netherlands 5.750 01/04 

Spam 8.000 05AM 

UK Gita 8.000 08/99 

6.750 17AM 
9.000 10/08 

US Tnremey * 7250 06AM 

7.500 U/24 

ECU French Govt) 6000 04AM 


6.500 08AM 
7.000 12AM 


7.500 09/tM 

8.600 08AM 


US Treaauy ' 


ECU French Govt) 8.000 04AM 

London doling, -New York mU-day 
t Gross Inducing wnhhcWng a* at l£S per c 
Prices: us. UK in "Knit, oaten in dedmte 

US INTEREST RATES 

Lunchtime 

One mortti 

Win rant 7L t«q month — 

Broker loan rate 6*z Tinea roott... 

falton® *K S» man 

Fed funds at Intervention.. - One year 


82.6100 -0 580 10.20 1020 1030 

92J260Q -0.090 8.45 8.61 8.67 

84.1000 -0.600 9.00 9.04 842 

875700 +0.070 844 g.10 9.21 

101.4200 -aoeo 7.43 7.66 tab 

83.0700 -0.090 ail 8 JO &10 

99-5900 - 758 7.80 7.61 

81.3300 +0.590 11.7ST 11.99 11.98 

102.5120 -0.100 <16 <02 3A0 

95.3590 -0.180 4.78 <69 4.64 

865000 *0.020 752 7.71 7.55 

82.1500 -0.050 11.09 11.31 11.47 

90-17 +11/32 <42 <73 864 

87-21 +1602 8L59 <92 889 

103-09 +20/32 859 888 845 

97-03 -14/32 748 7.76 7.42 

96-18 -19/32 749 7.95 749 

834100 -0480 880 879 867 

Ylekfa: local market sandonL 
cant payable by nmraMMntS) 

Source: MMS International 


Treasury BBs anti Bond Ylete 

Teoyt* 884 

4.88 Thrw year , 654 

5.10 Rvayear 734 

5J0 10-jeer ?£7 

598 30-ynar 738 


BOND FUTURES AND OPTIONS 
France 

■ NOTIONAL FRENCH BOND FUTURES (MAT1F) 


■ LONGTERM FRENCH BONO OPTIONS (MAT1F) 


Strike 

Pnce 

Nov 

~ CALLS - 
Dec 

Mar 

Nov 

— PUTS 
Dec 

110 

0 69 

- 

2.20 

OAO 

0.92 

111 

0.32 

1JO 

- 

0.78 

1.32 

112 

0.1 D 

a 73 

130 

. 

. 

113 


0 44 

0.07 

. 

. 

114 

- 

033 

0.42 

- 

- 


EM. vuL teak. Cans ZOOM Puw 11.12* Previous days open mt. Cats SUjra Pua 334.J4*. 

Germany 

■ NOTIONAL HERMAN BUND FUTURES [UFFET DM260.000 IQOtha at 100% 

Open Son price Change HJgf) Low Em, vd Open InL 
Dec 89.41 89.42 -0.05 8855 89.16 130624 155897 

Mar 68.80 88.62 -0.10 88.75 8840 464 3988 


BUND FUTURES OPTIONS tUFFE) DM250.000 points Cti lOOtt 


Sv*e 

Prfco 

Nov 

Doc 

CALLS — 
Jon 

Mar 

Nov 

Dec 

PUTS 

Jan 

Mar 

0900 

O.B7 

1.29 

1.08 

1.43 

0.45 

887 

1.46 

1.81 

S950 

0 59 

1.01 

0.86 

T.19 

0.67 

1.09 

1.74 

2.07 

9000 

0.37 

0.77 

0.47 

0.99 

0.95 

1.36 

2.05 

2.37 


E*. vvL tour. Cals 25777 Puis 1S710. Previous day's open mu Cals 271511 Puts 227079 


UK GILTS PRICES 


M NOTIONAL ITALIAN GOVT. BOND CBTP) FUTURES 

(LIFFE)* Ura 200m IQOtha of 100% 

Open Sett price Change High Lo» Ebl vat Open tnt 
Dec 9746 98.82 +042 9883 97.76 38659 59750 

Mar 97.75 9742 +0.58 97-75 97.75 100 2547 

■ ITALIAN GOVT. BOND (BTP) FUTURES OPTIONS (LIFFE) Ura200m lOOths of 100% 


Strike 

Price 

Dec 

• CALLS - ■ 

Mar 

Dec 

- PUTS 

Mar 

9800 

1.81 

2.60 

1.89 

828 

MOO 

1 -56 

238 

134 

856 

9960 

1 -32 

2.18 

230 

3.88 


Ejl VOL total, com 418 Pula 1845. Previous day's open tat, Crfo 1870* Pure 29187 


Spain 

■ NOTIONAL SPANISH BOND FUTURES (MEFF) Oct 11 

Open Sett price Change hfigh Low 
Dec 87.15 87.18 -807 8745 88.90 


EsL voL Open Int 
61,900 78448 



Open 

Sett price 

Change 

High 

Low 

Eat vol 

Open InL 

Strike 

Dec 

1KJ.88 

11894 

■Q.iO 

110.98 

110.62 

116,681 

131J39 

Price 

Mar 

110.04 

110.18 

-020 

110.1B 

109.98 

1.266 

7896 

101 

Jun 

109 28 

109.42 

-020 

10984 

109.28 

333 

438 

102 
103 
Btt. vol 


■ NOTIONAL UK GILT FUTURES (LIFFE)* ES0.000 32nda of 100% 

Open Sett price Change Hitfi Low EsL val Open ht 
Dec 100-18 101-11 +0-18 101-15 100-17 80065 92377 

Mar 100-14 +0-18 0 48 

■ LONO Qfl-T FUTURES OPTIONS (UFFB) ES0400 84tha of 100% 

Strike GALLS PUTS 


E& voL MS, CaBa KUO Pina 2083. Previous day's over hL. Cals 86877 Pub 40tS3 


Ecu 

■ ECU BOND FUTURES (MATTF) 

Open Sen price Change Ugh Low EsL voL Open Ira. 
Dec 8048 80.40 -814 8844 8820 1,135 7,849 


■ US TREASURY BOND FUTURES (C8T) SI 00.000 32nda of 100% 


Open 

Latest 

Change 

Ugh 

Low 

Eat voL 

Open bit 

98-24 

98-20 

-0-05 

99-25 

93-18 

47,125 

408582 

98-01 

97-31 

-0-04 

98-02 

97-28 

69 

20.387 

- 

97-15 

- 

- 

- 

1 

11,163 


Japan 

■ NOTIONAL LONG TERM JAPANESE GOVT. BONO FUTURES 
(LIFFE) VI 00m IQOtha of 100% 

Open Close Change high Low E*. val Open Im. 
Dec 10891 107.04 106.82 2602 0 

- UFFE certracta mom on APT. ah open irmreal rgo. sre to. previous any. 


. Yield. . 

notes W ted Pries £ 

St*rtc“ (Urns ip to Run Yens) 

Tress 9K 1 99<tT 697 5.44 lOQAid 

13K 1995 11.79 545 101L 

3W G» 1991M5 _ 385 5.74 »>;Sl 

10 l +pc 1995 9.98 E4J 1Q2H 

litas IZlipt IWSJJ — 1202 8.73 M»&fl 

Metises 1295 7.10 1D8>a 

15l«flcl996t± lies 7 381l7JJtt 

U3lU**pcl99Mt--. 12W 7 45 108 Ad 

CantnbnlOK lS% — ?57 75J1MHid 

Treas Cm 7« 1397 ££_ - 7.13 789 SB,’, 

TiUSUViPCiHi# 11.94 7.83 110)2 

EH* lflljcc I99i 196 7.65 105B 

TrrasgJiOClWft. ... affl 8.03 10113 

Ertfi I5cc 1997. - 1272 8l9117)i«l 

9iuc 337 828 fiWri 

Iiezs7LpL iHStt. 7.4? 825 S7i 

TrraetalSR-satt- 747 &26 95Ud 

11ac!9W-1 1149 8W 11613 

TTOS I5*j* Hitt 1253 135 123(3 

EilY 17k 1993 10 73 8 49 III* 

Trffla9*5?C IS39tt 9.18 645 lMft 


1994-. 

»g- man m* 


RMtDRfleenYHR 

Etth l2Upe 1999 

Treas lOtjCC 1999 

Tie* 6pe 1999# 

Carterton WLec 1999- 

TraSFRa Rtill 999 

trw9Kia»rt 

Treasure 2000 

10B.2001 

7K 200 1 tt 

Wocam 

frW .IYKK H T 

lftcans 

Treas 1 1 ijjc 2001-4 — 


1080 848 

978 835 
563 8.42 

9.61 8.60 

8.84 8.55 

10.94 175 

9.45 177 

7.B7 188 
928 880 
135 870 

Ml 877 
1024 694 


..... 103ii 
-Jli 107* 
— SB,’. 
1070 
IM 
*A 117,1 
121(3 

urn 
♦ii M26 
43 100% 
*,1 13U1 
♦A 114A 
110,’, 
*\i 131B 
♦li 114fl 
IMA 
102 

t-a 131 & 
ri3 140,1 
*H 125i) 
♦li 118 A 


12M 
+.; i2i a 
+U 101 (i 
*>s 121 H 
..... 100A 
116* 
I38fl 
+& 132 A 
*11 108A 
*ii 133A 
rii H3H 
*,i 127i, 
+.i 12S15 


FsrxSngJ’jfK iS89-*-_ 
W, CflnvBttmBiznelWM — 
'Sli* Tuaa 6\K ZOtMtt 

siaieaore 

!“? com 9 >2 DC 2005 


T>MS12'*JcW03-5 — 1Q3Q 


TIJ! 

IMS 

|(J3 ' IteH nlrpcMW-?-^. 

Sfiig Tieaa Blzpc 2007 tt 

IIOA 13*I0C 2004-8 

1M‘i Irpy 9pc 3008 (4 

IMA 

1160 

9 

1^0 Over Nftaan Years 

1Z2A Treas ape 2009 

1 10 5 rrea 8 1 «pc 2010 

10113 Conv Bpctn 2011 tt — 

rnSBflpc 20128 

TreaaSijpc 2008-i2fi;- 

Traai«|se2Dl3J$ 

7*pe 3012-15# 

Tress 8 Vpc 201 7# 

ms ErfhlZfK 2013-17 

105', 

S6H 
104 j 
99)3 

Undaw 

Console ape 

8*4 WUM3ijpctt 

1020 0*w3 l 2K‘61 Aft. 

927, Trees SpcTKM™ 

104*2 Cored* 2^ps. — 

109(3 Treas. 2'jpe — „ 


M Red Pries E ■ 


7-47 7?Ji 
aGSIQSLd 
B. 59 BPt 
a 58 99A 
867l05&d 
900 121A 
857 93(1 

68S 95 ■« 

9.01 115>2 
85® 9 OA 
900 128A 
a 59 103,1a) 


-19W-. 

ar- Wtfi Lew 

*ii 86* KH, 
+13 1 25 A 10111 
i0S>t MB 
♦U 99,1 97 

Wk 'X'l ioz** 

+i( 143,1 ITEMS 
+a U3U 90% 
+H 111% 91ii 
+J3 136A "3*t 
+il »1W *43 
•A 131ft 12415 
+13 i»U «H 


_.YWd_ _ 1994 _ 

tube p) PI Priest +ar- HWi Ure 


Mre-Uafeed (ti) 

3PC95 (87J1 288 4.16 199ft 

4SUK-96# — (13 8Q 284 360107,Vd 

24pC<11 (TILS 3.42 3A1 1554, 

thpcTU (788) 152 184 181*g 

ataeIMt* — (J3&B) IBS 3JBUa&t 

2peW m M 1£0 184 107)1 

(78S IBS 34® 152ft 

Sjpe'H (74 S 387 386 1S77. 

2>2IKT3— (894 189 386 129 ft 

3‘ipr '18 481 « 373 389 137\ 

JliPC-M (830| 175 3881318*1 

SijpcTMtt 497T) 174 3 87 109)1 

4lrfC30tt__ll35.il 178 191 108U 


857 95ft 
846 MS 
886 103U 
8 54 104A 
828 74ft 

8*9 aw. 
&48 92B 
8 47 102ft 
8.70 130ft 


-ii 115ft 

♦ft 88ft 
♦ft 1MU 
-)i 1C7S 
+U 93- t 
+fl H7JJ 
-JS 1K% 
+ii 1281s 
*ii 1M>* 


+ ! i ml 
♦H «13 
iV n 
♦A 441, 
TVs 
♦ft 37S 


._VHU_ - 1984.. 

w m MfeE + tir- Hgn Lw 


tet»Dav10U<K2009— 

8Tran uijpe 2012 

Ntand OpSiyc'IO 

9peCap 1096 

13PC97-2- 

Hydra Duedec lSpc20l 1 - 

Leeds I3l 2 pc 2006 

Uyspou 3iuN hied. 

LCC3PC20ML 

hoadKStgr1liipcZ»7„ 

Ifcttttr.Sllc'B' 

thrift Anfifa?iipc 2021. 

4Lpe 12024 

who Saw lagans 


833 11015 
9 47 117*4 

- 96>s 

- 1001s 

- Wh 
BA 141(3 

- 127 

- 3S4s 

32 

939 1(4 

■ 42 eih 
437 1311, 
434 1281s 

- 137«2 


+13 1381, 107ft 
*>l*s 142 115 

— llFj 8Fj 
+1# lOHz 991s 
. — 115 V 106 
+n I69« I37JJ 

+1 149V 123 

+V 44V 33V 

— 40*2 28V 

+1 138V 112 

+V 78 60>l 

♦1*8 150V 129V 
+1V 145V 123* 
+1 -159*2 I MV 


FT ♦ACTUARIES FIXED INTEREST INDICES 

Price indices Wed Oa/s Tue Accrued 

UK QBts Oct 12 change 96 Oct 11 interest 


— Low coupon yield Medium coupon yield — — High coupon yield — 

Oct 12 Oct 11 Yr. i«o Oct 12 Oct 11 Yr. 830 Oct 12 Oct 11 Yr. 090 


1 

Up to 5 years i24J 

119.78 

+041 

119.41 

1-50 

8.10 

5yra 

850 

859 

8 17 

867 

866 

844 

870 

6.60 

862 

2 

5-15 years (22) 

139.33 

+0.44 

13872 

1.81 

1039 

15 yrs 

851 

857 

899 

854 

871 

7.13 

867 

8.95 

7.34 

3 

Over 15 years (8) 

156.90 

+0.70 

154.81 

3.49 

9.81 

Myre 

847 

854 

7.11 

8.64 

8.71 

7.19 

873 

803 

7.35 

4 

Irredeemables (6) 

17868 

+0.94 

177.03 

3.91 

8.83 

Irred-T 

855 

864 

7.24 







5 

AO erodes (BOf 

T3&71 

+0.44 

T36.7Q 

103 

9.90 



















— 

^ Inflation 8%~ 


— 

-x Inflation 10% - 

— 



tndex-Bnked 

8 Up to 5 years (2) 

7 Over 5 years (IT) 

8 Al stocks (13) 

Debenturss and Loans 


+0.11 18524 

HL21 172.7Q 

+0^0 173.13 


5.07 Up to S yr* 
895 Over 5 yra 
4.04 


Oct 12 Oa 11 Yr. oflo 

888 <01 2.47 
886 3.88 81S 


Oct 12 Oct H Yr. ago 


2.64 2.93 1.58 
885 3.70 2.96 


5 year yield—— 15 year yield — - — 25 yew yMd — — 

Oct 12 Oct 11 Yr, ago Oct 12 Oct 11 Yr. ago Octl2 Oct 11 YT. ago 


9 DebS A Loans (77) 127.53 +0^4 12879 2.08 895 9.85 9.72 732 880 9.87 806 BOB 9.63 8.18 

Avarega posa recatmton yrelda are shown above. Coupon Band* Low; 0H-7%N; Mafflum: 8H-10»H; Mfltc HH aM Over. T Fta yWM. yM Year to dan. 

FT FIXED INTEREST INDICES GILT EDGED ACTIVITY INDICES 

Oct 12 Oct 11 Oct 10 Oct 7 Oct 6 Yr ago Wgtf Low Poll Oct 10 Oct 7 Oct 6 Oct 5 

Govt Secs. (UK) 91.34 9088 9888 9078 90.63 102.61 107.04 89.54 011 Edged bargains 98.0 912 79 8 789 75.5 

Fixed Interest 107.78 107.60 107.42 107.23 10702 12427 133.87 10850 5-day average 84.7 789 76.7 85.1 91.7 

• lor 1M4. Govcrnnunt Sacwntos high ane, conrpSancrc 12740 (W1/35L low 48.18 (30/7(9. Rxod Maran Ngh dnea corepladon: 13X87 (210/94) . low SOJ3 (3/1/73} . Basis 100: Qavwnrwn S+cunttos 15/10/ 
28 rod FhM kltereat 1828. SE actnniy r*fm rabosod 1974. 


FT/ISMA INTERNATIONAL BOND SERVICE 


UstBd ae B» West Wanataal bonds far which 9m b an adequate secondary mahet Lmat prices at TOO pm an October 12 

isaued BW Offer Chg. Yield Issued BU Offer Chfl. YMd 


♦ft ms 19731 
+*s 113ft 10BA 
♦ft 176V 1831* 
♦ft 173V 199ft 
♦V HSV 107V 
+*a 1B4JJ 165ft 
-V 168ft 149V 
+ft *7SV 154V 


88 DOLLAR STRAIGHTS 
Abbey Nad Treasury 8*2 03 _ 

Alwta Prorinos7V 96 

Austria 8*2 00 

Brt of Tokyo 6 V* 

BdjAim5l|03 

BFCE7V97 

atari Gas 0 21 

Croats 9 96 

Cheung Kang fin 5V 98 

Chim 6 > 2 « 

Caund Eumpe 8 96 

Credi Fdider 9*z 99 

OronHk5V96 

Esb Jroro Haftey sv 0 * - 

eracavaa 

fficavso 

BB7V96 

SB8V87 

Bee de France 9* 

Eun*na9V98 

Ex-tn Ba* Japan 8 02 

Expat Dov Corp 9*2 98 

FetteaNaBUat7A0(M_ 

FWavJ6V 97 

Ftnijri Expert 9*s 95 

find Mow CieA 6 V SB 

Gro Bee Cap4d 9V 96 

GMAC9V96 

MSK Japan fin ft 97 — 

tvsr Amer Ow ft 96 

MY6V23 

Japan Dm Be 8 V 01 

Kama Sec FW 10 96 

Korea Elec Power *V 03 — 

LTOBFUSSj 

Mnrehaa Bee 7V 02 

Nanny 7*4 97 

Ontario 7*j 03 

Oater Kcnbdbarti 8*2 01 — 

Petno-Canada 7V 98 

PotugdSVoa 

Quetnc Hydre 9V 98 

Quebec RgrB 98 — 

SarabuySV* 

SAS 10 SB 

SNCF 9*2 SB 

Span 6*2 89 


S’iPC'SO (83.01 176 3£Sl31tUI +ft 15281 128V 

CVpcWfl (97.7) 174 387 109(1 +A 129ft 106V 

4lrf«’tttt_ [135.D 178 191 I08U +ft 128(1 105V 

Pro^jecttvfl real ledarnphen rata on projected nflallon of (1) }0% 
and <2) 5«. (p) at paremham flrtow RPI (ton for 

Indereng fie 8 months prior to issue) and have been adjusted to 
redact /abasing at RPI to 100 bi February 1987. Conversion 
factor 1948 RPI tar February 188< 142.1 and (or SepterNxr 
1994: 1488 

Other Fixed Interest 


Sudan 5>2 95 

9*ttfeh Export 96 _ 
Tokyo Bee Power 6V 03 
T0I90 Manopoas 8*4 98 . 
Toyw Motor sV 96 

IHtod King*ni7V® — 

Watt 6s* BV 99 

Wald Bark 8V 97 


. 1000 aav 
. 1000 100 
_ 400 1(0 

_ KM KhV 
. 1000 8ft 
_ 150 101V 
. 1500 ft 
. 1000 KBV 
-. 500 8ft 

- 1000 8SV 
-100 1015, 
-300 10ft 
. 1000 9ft 

- 800 8ft 
-193 KE 

- 100 102 

- 250 101V 
. 1000 105V 
-200 10ft 

_ 100 103 

- 600 9ft 

-ISO 106 
. 1500 95V 

. 3000 9ft 

- 200 1(BV 
. 1530 9ft 

- 300 1II3V 

- 200 102*4 

- 200 10ft 
-200 10lV 
. 3500 7ft 
-500 101% 
_ 350 10ft 

. 1330 8ft 

_ 200 rnoi 
. 1000 esv 
. 1000 100V 

.3000 95 

- 200 102% 

- 200 10ft 

. 1000 84% 

- 150 105V 

-200 103V 
_ 150 (03V 

- 200 10ft 

-ISO 106V 
. 1500 85 

-200 102*3 - 
.2500 9ft 
-300 102 

. 1000 87V 

-200 102*3 
.1500 9ft 
.3000 9ft 
.1500 KQ ‘2 
. 1500 1037, 


DEUTSCHE MARK STTWGHTS 
AusraftW 2000 61 


Ctedt Fender 7 V 03 

Denman, ft 96 — 

Oetfa finrocs ft 03 

DeddnBkRiNgH — 

EC ft 00 

06 ft 00 

FMard 7*2 00 

Half 7V96 

UtSBadroWuMftOB. 

Narwayft 99 

Ontario ft 04 

Sprin 7V 03 

Sweden 8 97 


.2000 9ft 
.2000 97V 

.ism eov 

.2000 9ft 
.2900 98 

.1500 9ft 
.3000 9ft 
.5000 9ft 
.2230 8ft 
. 1500 87V 
.1500 8ft 
.4000 8ft 
.2500 IQft 


88*2 

10ft 

103V -V 
(02*, +*, 
8ft -V 
*OlV 

«v 

*03 

89V 

8ft 

102V 

10ft 

95V 

aft 

10ft 

102V 

IOIV 

105V -V 
10ft 

103V -V 
100 -v 
108V -V 
96V -V 
8ft -V 

103 

5ft 

Wft 

HBV -V 

iDiV 

101V 

7ft -V 
102V -V 
104V 

85*4 ft 
HMV 
8ft -V 
100V -V 
95V -V 
103V -V 
10ft ft 
8ft ft 
106*4 ft 
10ft ft 
«ft ft 
10ft ft 
108V 

95V ft 


10ft ft 
104 


81V ft 
aft ft 

97V 

90V ft 
99V «V 
aft ft 
95 

9ft ft 
100 ft 
9ft 
OPg 
8 ft 

aft ft 
1®V ft 


Unfed Kingdom 7V 87 

829 VoBawaoen M fin 7 03 — 

782 WoridSarfv0 15 

7 TT World Bar* 5V 03 

7.12 World Bank ft 00 

826 

7.19 SWISS FRANC SIRMOKTS 
atQ Asian Oa* Baa* 6 10 

878 Aosta 4V 00 

879 Coma Europe 4V 96 

807 Denmark 4 V 99 

899 B8BV0* 

784 Sac da France 7 V 06 

733 Finland 7V 99 

828 Hyuvtt Motor fin 8 V 67 

7.19 kxrod7V(» 

892 Kobe ft 01 

aas cwsioftm 

723 Quebec Hydro 6 08 

7Sj SNCF 7 04 _ 

890 Wald Ba* 5 03 

805 WWklBis*701 

788 

812 YEN STRAIGHTS 

7M Bdgkim599 

854 B8 6VQQ 

7.?T FMandft 96 

7.02 hterArnerO»7VOO 

7.31 Italy 3*2 0* 

782 Japro Dav Bk 5 99 - 

896 Jrosn Da* Bk sv 01 

818 NpponTW Tlfft 86 

7 97 Noway ft 97 

889 SNCF ft 00 

9J* Span ft 02 

751 Swdro4%98 

827 World Bar«< 5V 02 

7.18 

838 OTHER STRAIGHTS 

722 Genflnaree List 9V 99 LFr 

80S KB Da* Mutt* 8 V 03 Ur 
a37 Worid Banks 96 LFr 

am ABHAnuftCOH 

72i Eba* Ifed Geraereen 7 03 H 
733 NbBOPxnnx iftasCS — 

852 Bdl Croeda 10V 89 C$ 

756 Bifch Cbbitta ID B8 CS 

7.70 ffi 1ft 99 CS — 

7.11 Beds fens ft 96 £5 

854 Gen Bee Capffif 1098 CS _ 
887 hWktfiniOOl CS 

819 Nepal Tel T«M0V 99 CS — 

7.10 OfttanOBmCS 

744 Osarfa Hydro 1ft 98 CS 

727 Osier Konodbar* 10*« 99 CS 

728 Qabec Pmr ift 98 CS 

7.07 Begun ft 98 Ecu 

Couid Euros 9 01 Ecu 

CwJ*l4ww«998Eeu 

823 SB 10 97 Ecu — 

729 Feno dti Stef 10V 99 Ecu _ 

898 Italy ift CD Ecu 

spans 96 Bh 

7.70 United tOngdom ft 01 Ecu — 

7A1 ADC 10 99 AS 

JM CCnvnSkAraMb tftBSAS 

728 SB 7V 99 AS 

727 NSW Tnwjuy Zero 0 20 AS — 
812 R 8 1 Bar* 74| 03 AS 

82? SataaNStVSEAS 

803 9hAAG(MRn90QAS 

727 IMawrAuStida 12 SB AS — 
7.10 Western AuatHeaa 7V 98 AS. 


.5500 10ft 
. *000 9ft 
.2000 20V 
.3000 88V 
. 1290 KOV 


-100 Oft 
1000 9ft 

- 250 99 

1000 95V 

-300 10ft 
_ 100 107V 

- 300 107 

- 100 105V 

_ 100 107 

- 240 103 

- 400 8ft 

- 100 04*2 

-450 107V 
. 150 95 

- BOO 10ft 


. 79000 102 

100000 10ft 
.50000 10ft 
. 30000 Itft 
300000 9iV 
100000 102V 
120000 110 
.50000 10ft 
1SQ000 toft 
. 30000 109% 
125000 10ft 
150000 10ft 
250000 103 


— 1000 104V 

— 3000 100*4 

— *000 100 
-. 1000 953 

— 1500 93V 

— 500 T03V 
— ISO 10ft 
— 500 103V 

— 130 105*4 

— 275 m 

— 300 103 

— 400 101V 

— 200 10ft 

— 1500 92 

— 500 100V 

— 150 10ft 

— 200 104*2 
_ 1250 102V 
-1100 fOlV 

— 125 101V 
_ *105 *04*8 

— 500 10ft 

— 1000 KTft 
_ 1000 102 
_ 2760 102*2 

— 100 100V 
! - TOO lift 

— 350 947, 

-1000 9 

— 135 85V 

— 309 32 

— 150 91% 

— 150 1«V 
__ 100 94V 


100V ft 829 

94V ft 728 

20V ft 726 

8ft ft 7.72 

lift ft 849 


807 
ft 526 
507 
527 
ft 62* 
829 
860 
836 
ft 815 


522 
ft 628 
ft 879 
ft 801 


Abbey Nan Treaeuy SIDE. 

Afance U*» 11 V 97 £ 

Brelsti Land ft 23 C 

Oererartc ft 98 £ 

SB1097E 

Hdta 1ft 97 E 

Hanson 10V97 £ 

HSBC HddnQs 1129 02 E . 

UyfftMC 

Japan Dew Bk 7 00 C 

Land Secs ft 07 E 

Onsw 11 V 01 E - 

ftwsgen &V 03C 

3nem Item 11*2 BB £ — _ 
Tohyo Bsc Rmw 11 01 £ - 
Abbey National Q 96 NZJ __ 
1CNZ fin 9V 02 NTS — _ 
CMrUKd « 01 fVr — .. _ 
See de France 8V 22 FFr _ 
»KF9V97FRr 

FLOATMQ RATE NOTES 


4raf BM OBer Chg. Yldd 

_ 1000 9lV 91*2 ft 956 

— 100 106 10ft ft 852 


1000 9lV 
- 100 106 

- 150 87V 

- 800 93*2 

. 637 103V 

- 100 1037, 
-500 103V 

- 153 103 

.400 JOft 
-200 9lV 

- 200 97V 

_ 100 107*2 
-250 96V 
-150 MBV 

- 150 T07V 


. row eft 

.3000 9ft 
.4000 104V 


07V ft 

■*v ft 

103V ft 
io>V ft 

104 ft 

108*2 ft 

107 ft 

92V ft 
98V ft 

108 ft 
96*2 ft 

108V ft 


98 ft 
69 

98V ft 
10ft 


i(BV 

'ft 

455 

Abbey tea Treasury ft 93 

1000 




Begun i 97 CM 


113 

ft 

4j60 

BCE 4102 9ft . 

Brtanitia8109S £ 

Canada -V SB 

350 

9*V 


507 





««F.OMfi™ 










Dsnrrafcft ga 

1000 

110V 

103*2 

ft 

453 

407 

aescher Financo & 98 DM 
Ferro del So* 0.10 97 

1000 

420 


101*2 ft 421 

103 ft 483 


105V 

10lV 

101 

96V ft 
93V ft 
103% 

10SV ft 
103 V 

105V ft 
KB*2 
103*2 
103V 
105V 
92V 
*0BV 

105*4 ft 
105 
102V 
101 % 

102 

10**2 

10ft 

10ft 

102*4 

1«V 

101V ft 
lift ft 
95V ft 

aV 

8ft ft 
9?V ft 
82*4 ft 
106V ft 


Mend 098 . 

WyV98 

LKB Badro-Yvuat Fin ftQB _ 

Lloyds Bank Pop 3 810 

Mebysb A05 

New Zesfend ft 99 ___ 

Orttanp 0 99 

RerriaaflO . 

Saewa Generate 0 98 

Staaubaric Bain -005 98 dm 

Stitt BkUctaria 025 93 . 

Sweden 0 88 

SwdroftOl 

Unfed NngfcmftM 


CONVStTBLE BONOS 


G awrogTroa ft 05 

Chubb 8 98 ’ 

GcU KHgoate 00 — , 
Hanson 9*’ 08 £ 

Hanson Amerba 229 01 - 

Hong Kong Lrd 4 01 

Law Secsft osr 

Loamo 7V 05 £ ... 

MBui Batiiiv 03 

Mount tea Fin 6*2 97 

NafHWftflef J 

O9denfl02 

A»uo44Vo3 

SnmbroBsraftoem 

SunAkance 7V08E 

Tasso Capt* 3 OS £ “ 

Tecre latrumenB 2V 02 .. 
■ No nfennreon ovalaCH - 
* Ortiy one mtdM maHer ■ 


Cm*. 

Issued puce Bid Offer 

400 52*2 92*2 9* 

— 250 98 101% 102V 

65 10554 lift H27, 

5M £5875 104 10ft 

— «W) 73V /■* 

410 3105 79 80V 


— 500 25875 104 10ft 

— TOGO 73V 74 

— 410 3105 79 80V 

— 34 873 95V 9ft 

— 90 564 81V 63% 

-.200 23320 88 98 

-1» 1283 108*2 102 


»} 03 HM, Tift 

85 39077 W 66*2 

500 588097 88*2 B9*j 

300 3®M8 79*2 00*2 

155 35 9ft »ft 

300 251 1/3 114 

300 62’j BJV 9**2 

- pnwttus day's pw. 
suppseo a once 


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FINANCIAL TIMES THURSDAY OCTOBER 13 1994 


25 


H'ars 


on 




rr:i' 


Market conditions ‘not encouraging’ for catering group’s flotation 

Gardner Merchant rises 14 % 

Ru (WU ni i - 


COMPANY NEWS: UK 


By David BteckwreD 

Gardner Merchant, the largest 
contract caterer in Europe, yes- 
terday reported an Increase of 
almost 14 per cent in interim 


The group, bought by the 
management from Forte for 
£4Q2m at the end of 1892, made 
profits before interest and tax 
of £2S.9m (£23.7m) in the six 
months to July 3l on the back 
of a 9 per cent rise in turnover 
to £556m (£509m). 

Mr Garry Hawkes, chief 
executive, raid the group was 
under no pressure to float. 
"Our investors are happy with 
their returns, and clearly the 
current market conditions are 
not very encoura g in g ." 

Group debt stands at ftqgffrn 
alter a refinancing deal in the 
summer with the Royal Ranir 
of Scotland and five other 
banks. 

Growth during in the hal f 
year was all organic, with a 
net gain o! 175 contracts, com- 
pared with 163 previously. 

The group relies on the UK 
for more than half its business 



Trevor KumphrtM 

Gariy Hawkes: ‘Our investors are happy with their returns' 


and most of its profits. UK 
profits grew to £iafim (£i7.2m) 
on sales of £320m (£291m). 

Almost a third of new 
contracts in the UK. where 
margins unproved from 5.9 to 
&2 per cent, were in the public 
sector - an area the group has 


targeted for future growth both 
in the UK and overseas. 

In the rest of Europe profits 
edged ahead to £5-5m (£5 2m) 
on sales of £152m (2141m), held 
back by the recession in 
France. European margins 
eased to 3.6 per cent (3.7 per 


cent). Profits from the rest of 
the world, including the US. 
were £L5m (£L3m) on sales of 
£&3m (£77 2m). 

The current half will include 
for the first time the group's 
five acquisitions made this 
year for a total of £72L9m - the 
main one being the $100m 
(£63.2m) purchase of part of 
Morrison Restaurants' contract 
food division in the US, 

This doubled the size of the 
group's US business and made 
it fifth biggest in the US mar- 
ket. 

• Employees who use their 
staff restaurant are benefiting 
from a perk worth at least £300 
a year and in today's tough 
economic climate more 
employees than ever are eating 
company food, according to an 
employee catering survey con- 
ducted by the Industrial Soci- 
ety and Touche Ross Manage- 
ment Consultants. 

The average subsidy per user 
of company canteen facilities is 
£328.90 a year and more than 
50 per cent of employees are 
now using catering services, 
the survey found. 


Lewis resigns Technology chair 


By Alan Cane 

Mr Derek Lewis, chairman of 
Technology, is leaving the per- 
sonal computer distributorship 
at the end of the year after 
some 18 months of strife and 
unhappiness among staff and 
customers. 

Technology, which is owned 
by ICL and is one of the UK's 
largest pc distributors, is 
unlikely to make a profit for 
the year although it is 
currently trading in the black, 
according to Mr Ninian Eadie, 
in charge of iCL's volume 


products division. 

Mr Lewis denied that he was 
leaving in any mood of bitter- 
ness, however. He is moving to 
Schroder Ventures where be 
will take a rote in determining 
the group’s electronics and 
computers investment policy. 

Hie said yesterday that Tech- 
nology was now firmly estab- 
lished as part of the 1CL struc- 
ture and ready for its next 
expansion phase. “I think I 
have done my job and now it is 
time to move on." 

The new chairman will be 
Mr Ken Wallace, deputy chair 


man and logistics director. Ms 
Marie- Anne van Ingen, sales 
director, becomes managing 
director. 

ICL’s take over of Technol- 
ogy is 1892 was seen as a bold 
experiment for a former main- 
frame computer manufacturer 
in the low cost distribution of 
pcs. It failed to work as 
planned, however, because 
Technology proved unable to 
handle the volume of business 
on its own and earlier this year 
ICL put a new organisation. 
ICL Client-Server Systems, in 
place to supply pcs and mid- 


range machines to dealers and 
systems houses. 

Now Technology operates at 
arms-leng-th to ICL, 
distributing computers from a 
range of manufacturers: “It is 
very much back to basics” Mir 
Eadie said yesterday. 

Mr Lewis led the manage- 
ment buy-out of Technology 
and its subsequent sale to ICL. 
There was speculation in the 
industry yesterday that if ICL 
was prepared to sell Technol- 
ogy, Mr Lewis would be well 
placed with Schroder* to help 
with financial matters. 


Capital and Regional leaps to £1.24m 


Capital and Regional Properties reported 
sharply higher pre-tax profits for the six 
months to June 24, during which just 
under £S0m was spent on acquisitions. 

The USM-quoted property investment 
company raised the figure from £151.000 to 
£1.24ixi. This included a contribution of 
£281,000 from R Green Properties, covering 
the 11 weeks since its acquisition for 
£33.4m in April, when a £2S.3m rights 


issue was also completed. 

Net rental income came to £2 .95m 
(£S.38m). Other income added £807,000 
(£72,000) and the net interest charge 
declined to £L42m (£2.25m). 

The interim dividend Is raised to 0.6p 
(0.5p) on earnings per share of 2J5p flUp). 

Shareholders’ funds at June 24 stood at 
£76.8m, against £49. 6m at December 25 
1993. Net assets per share were 168.5p 


(L63Sp at the year end). 

Mr Martin Barter, chairman, said Cent- 
trepoint Properties Corporation, the for- 
mer subsidiary now quoted separately in 
the US, had performed in line with expec- 
tations. Capital and Regional owns 20 per 
cent of the common stock in Cen trepoint 

The company plans to move to the main 
market once the accounts for 1994 have 
been published. 


NW Water sells Malaysian stake 


North West Water is to swap a 
20 per cent stake in Malaysia's 
Indah Water Konsortimn [in' a 
holding in indah Water 
Operations, a separately 
formed operating company 
which has exclusive rights to 
maintain and operate the 
assets of IWK. 

The deal, which will leave 
North West with a 5 per cent 
holding in IWK, would 
enhance the overall strength of 
the group's position in Malay- 
sia. directors said. 

Under the terms of the trans- 
action North West has agreed 
to sell the 20 per cent stake to 
the Berjaya Group, one of its 
co-investors in IWK. 

Consideration is £7m, the par 


value of the holding plus £lm. 
In addition. North West has 
agreed to a “deeprooted alli- 
ance" with Berjaya, focusing 
on developing clean water 
opportunities in Malaysia and 
establishing a manufacturing/ 
distribution base. 

The two are also to create a 
jointly-owned company, based 
In Hong Kong, to exploit oppor- 
tunities in water and waste 
water in mainland China. 

Berjaya South Island, a listed 
company, has offered to pur - 
chase all the shares in IWK. 
That offer has been accepted 
by 80 per cent of the sharehold- 
ers, including North West 

In consideration for the dis- 
posal of its remaining 5 per 


cent stake in IWK, North West 
will take equivalent stock in 
BSouth, which will he renamed 
Prime Utilities. 

The BSouth proposals are 
subject to approvals by the 
Malaysian government and the 
Kuala Lumpur Stock 
Exchange, as well as share- 
holders. This process could 
take up to six months. 

IWK was six months ago 
awarded the contract by the 
government of Dr Mahathir 
Mohamad to upgrade and con- 
struct a nationwide sewerage 
system. 

Berjaya associated compa- 
nies, controlled by Malaysian 
Chinese entrepreneur Mr Vin- 
cent Tan, had a 35 pm- cent 


stake in Indah. North West had 
35 per cent and funds associ- 
ated with Malaysia’s army and 
police force had 20 per cent 
each. 

At the time opposition 
groups accused the govern- 
ment of favouritism towards 
Mr Tan and Berjaya. However, 
cri t icis m was somewhat molli- 
fied by the broad composition 
of the Indah consortium. 

Mr Bob Ferguson, North 
West’s finance director, said 
the restructuring was being 
undertaken because the Malay- 
sian government wished to see 
ownership of the recently pri- 
vatised water operations 
vested in local publicly traded 
companies. 


Lotus 
returns to 
the black 
with £2m 

Gy John Griffiths 

Group Lotus, the UK sports 
car maker and engineering 
group taken over last year 
from General Motors by 
Bngatti International of Italy, 
yesterday announced its 
return to profitability after an 
extended period of losses 
under GM ownership. 

The company, which cur- 
rently employs 950 people at 
its HetheL Norfolk, operations, 
is now on course to fond a new 
small sports car planned for 
1996 from its own resources 
after achieving a £12.3m turn- 
round to record an unaudited 
net profit of £2m, Mr Adrian 
Palmer, managing director, 
said last night. 

Bngatti bought Lotus from 
GM for a reputed £30m and 
said as recently as June that it 
intended to raise more than 
£100m to fond Bngatti and 
Lotos development through a 
flotation on the New York 
Stock Exchange. 

So far, this has not been pro- 
ceeded with and Mr Palmer 
said yesterday that Lotus 
would now need additional 
funding only for a larger 
sports model also being 
planned for the late 1990s. 

Lotus’s transition to profit 
from a £10-3m net loss in its 
financial year to August was 
based on turnover 22 per cent 
higher at £50Am. 

Sales of the Esprit, Its large 
sports car, rose 45 per cent 
from 246 units to 360, and 84 
Elan small sports cars were 
sold after the resumption of 
production earlier this year. 

While Lotos plans to build a 
similar number of Rgprtt a in 
the current year, it is sched- 
uled to bmld a total of 800 
Elans by mid-1995 as a limited 
production ran, after which it 
wiD be preparing to produce 
tiie new small sports car. This, 
too, is scheduled for output of 
800 units a year starting in 
early 1996. 

However the bulk of Lotus's 
turnover - about 60 per cent - 
came last year from engineer- 
ing consultancy work. This 
rose 7 per cent In value to 
£25. lm and £43m of new 
orders have been received in 
the past 12 months, said Mr 
Palmer. 


Fine Decor 
advances 
to £1.4m 

Fine Decor, a manufacturer of 
printed wallcoverings, 
increased pre-tax profits by 5 
per cent from £L33m to £L4m 
in the six months to July 31. 

Sales came to £l8.8m 
(£l9-2m), made up of £10.1m 
(£ ll.7m) from the UK and 
£8.B9m (£7. 48m) from overseas 
- mainly the US. 

The interim dividend is 
increased to SL7p (lp) on earn- 
ings per share of 73p (Alp). 

Mr Roger Reagan, chairman, 
said yesterday that the second 
half had started well and 


Notice of Prepayment 


Aktiebolaget Svens k Exportkredit 

(Swcdbh Export Credit Corpotaiton) 

FRF 600,000,000 
8 y* per cent. Bonds Due 1996 

NOTICE IS HEREBY GIVEN io rhe Bondholders that, in accorcbnce 
with the Terms .iral Crculiiums of the Bomb, rhe Issuer will prepay all of 
the iHitscuulins Ponds at KW-5 percent, of their principal amount on 14th 
November, l*SM (the "Prepayment Date”), together with imercs accrued 
to the IVeyttwoent Date. 

Payment ol principal and interest will be made on or after the Prepayment 
Rite :ti rhe KfcciltaJ office ofunyof the Raying Agents listed hcbwngplnst 
surrender ot the Bunds, together with all urnnurursd Coupons attached. 
The .k-c rued interest poy.ible upon presentation of each Bond will amount 
to FRF 5 5V. W per FRF I0.CW denwnin.irkm and FRF 5 ,395-83 per FRF 
WO.CW Juiuiuunnifc.nl. 

Paying Agents 
Bankeri Trust Company 
l Appuki Struct 
BoMdgutL- 
London EC2A 2HE 

Kvuk- InJiTrtK: Rdfckjiw SA. Bonque Indosuo! Luxembourg 
Place Sainie-Gndiile H IV, Albfe Scheffer 

l OCC Brussels Luxembourg 

Rant Corporawun Crfidic Commercial de France 

lAmchenvnnMdt 1 15-117, av. dt* Champ,-Ely**eS. 

CH -4002 Bade 75008 Paris 


□ Bankers Trust 
Company, London 
15th October. 1994 


Fiscal Agent 


U.s. $250,000,000 

National A usir a tia $£Bank 

ffnco^JonteawithlimUodii»i^^^SUi90fVhU^AuSMBa) 

Undated Subordinated Floating Rate Notes 

Mntim is hflrnbv oNon that far the six months Interest Period ftom 
£2^13 1994 wApril 13. 1995 ***** ***** 

nSnoT B 025 w o W annum. The Interest payable on the rrtevant 
om^itdate, April 13, 1995 wffl be U.S. 57.614.83 
tor Notes In denominations of 

U^.S350.Wa«JU-SS'0-0 00 - 

By: TheChaw Manhattan Bank. tLA. CHASE 

r London, AgomBwiR 

October i3. 1994 — 


Notice of Redemption 



Mortgage Funding 
Corporation No-4 PLC 

(IiKurpuraini in EngtinJ and 
Wain uiih Umicuil Lability under 
registered ramber 213M45) 

£100,000.000 Class AI 
Mortgage Backed 
Floating Rate Note* 

Due 2035 

NOTICE IS HEREBY GIVEN 
to the holders of the Class At 
Notes, rhar rhe Issuer has deter- 
mined in accordance with the 
Redemption provisions set our 
la rhe Terms and Conditions, 
the Class Al Notes in the 
amount of £5,100,000 will be 
redeemed an the next Interesr 
Payment Date 31»r October, 
1W4 (the "Redemption Date"). 
The Class Al Notes will be re- 
deemed on a pro ram basis and 
the Principal Payment per Class 
Al Note will be £6,100. The 
Principal Payment on each 
Class Al Note will.be nude in 
accon lance with the operating 
procedures of Eurodeur and 
Cede!. 


QBankcnTrau 


CompMTiLooiloii AtniBok 
Ihhlkutor.l** 


o*f 



Sovereign (Forest) Ud 

JMhr Foreign Exchange 


Competitive J 

Doily Fax Service 

tt: 071-931 9188 
Roe 071-931 7114 
JfeteUsglni Mom load 
tamfaiSWTWOK 


MAES Funding 
No. 1 PLC 



£200000000 
Mortgage Backed 
Floating Rate Notes due 2018 

Notice is hereby given that 
the Rate of Interest has been 
fixed at 6.2625% for the 
interest period 11th October, 
1994 to 11th January, 1995. 

The Interest amount payable 
on 11th January, 1995 wiD be 
£1,578.49 in respect of each 
£300,000 denomination. 


Agent Bank 
Uth October; 1994 


UP to15% 

off electricity 


021 423 3018 

Powerline 


Mta.TrptxoFnWFAcanT 


23,0*1 

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C&W signals priorities 
with China partnership 


By Andrew Adonis 

Yesterday’s breakthrough by 
Cable and Wireless Into China 
may mark a turning point in 
the strategy of the UK telecom- 
munications group. 

Although the precise terms 
of the $3 00m (£i90m) agree- 
ment to develop telecoms net- 
works in partnership with Chi- 
na’s ministry of posts and 
telecommunications remain to 
be finalised, C&W left no room 
fra: doubt that Asia would be 
its prime investment focus for 
the next decade. 

C&W has operations across 
the world, but Hongkong Tele- 
com - of which C&W owns 57 J5 
per cent - has long been the 
jewel in its crown. 

Last year Asia accounted for 
nearly half of the company's 
£4.7bn turnover, and Hong 
Kong alone for 64 per cent of 
its operating profit By con- 
trast in the highly competitive 
UK market, CAW’S turnover 
(through its Mercury subsid- 
iary) was three quarters that 
in Hong Kong, yet its operating 
profit was less than a third as 
great 

Mr James Ross. C&Ws chief 
executive, said: “When you ask 


what differentiates us from 
others you always come back 
to Asia; and now that we have 
this tangible evidence of the 
opportunities in China, it will 
clearly be a priority." 

The “first call" on resources 
“will tend to be Asia". 

The Chinese deal represents 
about two thirds of Hongkong 
Telecoms's total capital invest- 
ment last year. Spread over 
three years, it represents 
about a 25 per cent annual 
increase, and more could be in 
store. 

“The arrangement with the 
MPT [Chinese telecoms minis- 
try! is very fluid, and further 
opportunities could well be 
available, even at this stage,” 
said Mr Ross. 

Mr Andrew Harrington, 
Asian telecoms analyst with 
Salomon Brothers in Hong 
Kong, said the deal “strength- 
ens Hongkong Telecom’s pre- 
mier position, in China, and Is 
bound to make China C&W's 
most important new sphere of 
activity for the foreseeable 
future." 

However, C&W said yester- 
day it had no intention of with- 
drawing from other regions. 
Last week the Bouygues con- 


sortium, in which C&W has a 
20 per cent stake, won the 
licence to build France’s third 
mobile phone network, with 
plans to invest about FFrll.Tbn 
C£1.4bn) over 10 years. 

C&W is investing heavily in 
its mobile venture in the UK, 
and has a stake in a German 
mobile phone operator which 
may enter the fixed-wire sector 
as European telecoms are 
opened to further competition. 
C&W intends to expand in the 
Caribbean and US. 

Balancing commitments and 
opportunities is thus a critical 
challenge for C&W. It is not 
only a question of balance 
between regions but also within 
regions. “Even in Asia, we are 
not putting all our eggs into 
the Chinese basket,” Mr Ross 
stressed, pointing to C&W’s 
operations in Australia and its 
ambitions in Vietnam, Malay- 
sia, Singapore and Indonesia. 

Mr Ross believes the group 
could comfortably increase 
expenditure by between £500m 
and £lbn a year, given Us low 
gearing. But that could be 
swallowed up in China alone if 
the state monopoly dam has 
truly burst 

See World Trade and Lex 


Buoyant recruitment 
market boosts BNB 


BNB Resources, the 
recruitment, training and con- 
sumer communications group, 
yesterday announced sharply 
increased first half profits as it 
consolidated the recovery 
shown in 1993. 

Mr David Norman, chair- 
man, said that continuing 
increased demand across the 
group’s activities was behind 
the pre-tax line improving 
from. £344,000 to £L38m for the 
half year to June 30. Turnover 
rose 33 per cent to £42£m. 

The human resources 
recruitment side lifted its con- 
tribution to operating profits 
by 73 per emit to £3.07m. The 
senior management and profes- 
sional recruitment market dis- 
played a solid improvement in 
the UK, Mr Norman said, with 
Norman Broadbent’s revenue 
ahead 31 per cent In the US, 
Income at NBI rose 39 per cent 
helped by the Chicago office 


coining on stream. Mr Norman 
praised an “outstanding” per- 
formance from NBI Hong Kong 
with “business booming” at its 
new Bejjing office with reve- 
nue more than doubled. 

NB Selection, which speci- 
alises in management recruit- 
ment, has expanded from Its 
UK base on to the Continent 
with offices opening in Paris 
and Madrid. Revenue jumped 
63 per cent, outperforming a 
market showing volume 
growth of about 30 per cent 

Margins on the training side 
remained under pressure, with 
the seasonal operating deficit 
widening from £395,000 to 
£721,000. Market share had 
improved, however, and Mr 
Norman anticipated an 
advance on last year's overall 
profit of £497,000. 

Earnings per share emerged 
at 4.2p (Up); the interim divi- 
dend goes up to L77p (Up). 


NEWS DIGEST 


export growth was still strong. 
However, conditions in the UK 
decorative market remained 
difficult 

Bolton improves 

Bolton Group, which is 
involved in property invest- 
ment lifted pre-tax profits 
from £142,000 to £337,000 in the 
year to April 30. 

The result was achieved on 
tower turnover of £l.35m 
(£2.46m). Earnings per share 
came through at 2p (lp). 

The acquisition of United 
Real Estate in June had 
allowed the group to extend its 
portfolio so it was not solely 
dependent on the Goswell Road 
property, directors said. 

Brandon expands 

Brandon Hire, the Bristol- 
based hirer of power tools, 
catering equipment and mar , 
quees, has acquired Beech- 
wood, a supplier of tools for 
hire and sale. 

Consideration is £I.82m, of 
which £500,000 will be satisfied 
in shares, with the balance in 
rash The vendor has under- 
taken to retain the shares for a 
minimu m of 12 months. 

The Beechwood business, 
established in 1974, operates 
from seven depots in south 
Wales and one in Bristol It 
made profits before Interest, 
tax and directors’ remunera- 
tion of £166,000 on sales of 
£2.53m in the year to end- 
March. 

The valne of the assets being 
acquired is £632,000. 

REA ahead 67% 

REA Holdings, fixe plantation, 
merchanting and storage 
group, lifted profits by 67 per 
cent to £592,000 pre-tax fra: the 
first half of 1994. 

The increase from the com- 
parable £354,000 was achieved 
on turnover of £43m (£40 An). 

Merchanting contributed 
£467,000 (£342,000) to profits, 
reflecting increased business 
and improved margins. Despite 
continuing weak tea prices, the 
agriculture operations 
returned to the black with 
£83,000 (loss of £76,000). 

Earnings per share were -LSp 
(L2P>. 

Ipeco slips to £1.2m 

Ipeco Holdings, the maker of 
specialist products for the avia- 
tion and defence industries, 
reported a fall in pre-tax profits 
from £LJ57m to £L2im for the 
half year to June 25. 

Mr Christopher Johnson, 
chairman, said the results 
reflected conditions in the 
aerospace market. However, 


they represented progress from 
the low point reached last 
autumn. 

He also announced the 
award of a contract for the sup- 
ply of crew seats to the new 
737-700 range of airliners, 
which, he said, firmly 
cemented the 1 long-term rela- 
tionship with Boeing. 

Turnover slipped to £9.47m 
(£10.6m). The interim dividend 
is maintained at L3p, payable 
from lower earnings of 2£4p 
(3Bp) per share. 

Widney/SPC 

Widney, a maker of windows 
and water treatment, power 
transmission and electronic 
equipment, has made a 
deferred payment of £800,000 
cash for SPC International. 

The vendors of SPC, which 
refurbishes and sells point of 
sale systems a nd cash dispens- 
ers, agreed in July that pay- 
ment would be made in cash or 
new Widney ordinary shares, 
at Widney 1 s option, depending 
on SFC's profits. SPC reported 
£767,000 pre-tax for the year to 
June 30. 

Derwent debenture 

Derwent Valley Holdings, the 
property investment company, 
is to issue £35m of First Mort- 
gage Debenture Stock 2019. 
The proceeds will be used to 
refinance the company's other 
borrowings and extend their 
maturity profile. 

The coupon has been set at 
10.125 per cent with the issue 
price at £99.139 per cent This 
gives an effective yield to 
investors of 165 basis points 
over the gross redemption 
yield on 8.75 per cent Treasury 
Stock 2017. 

Houghton Europe 

Houghton Europe, the private- 
ly-owned US industrial fluids 
group based in Birmingham, is 
spending £i3m on the takeover 
of CMT, a subsidiary of BASF 
of Germany. 

This will lift Houghton’s 


Pilkington 
buys Finnish 
minority 

By David Wighton 

Pilkington is baying out 
minority shareholders in its 
Finnish float glass subsidiary, 
enabling it to complete the 
integration of its European 
□oat glass production lines. 

The UK glass group is pay- 
ing FM69.6m (£9nt) in shares 
for the remaining 29 per cent 
of Lahden Lasitehdas. The 
stake is currently owned by 
Finnish institutions. 

Pilkington took a 50 per cent 
stake in Lahden Lasitehdas in 
1978, which it increased to 71 
per cent in 1988 when the 
Finnish government sold a 33 
per cent holding for £6m. 

Pilkington is streamlining 
production between its nine 
European float plants in the 
UK, Germany, Sweden and 
Finland. All file others are 
wholly owned. 


share of the European indus- 
trial fluids market to about 10 
per cent, representing sales of 
£70m a year. 

Bolgin 77% ahead 

AF Bulgm, the electrical com- 
ponents manufacturer, 
reported a 77 per cent rire in 
interim pre-tax profits from 
£280,000 to £497,000. 

Turnover for the half year to 
July 31 was 15 per cent ahead, 
at £9.03m (£7.84 m). 

Mr Ranald Bulgm, c hairman, 
said that all parte of the group 
had performed well in what 
bad been the most profitable 
half year lor a number of 
years. 

Earnings per share were 
L26p (lp). 

Emap/Trans World 

Emap, the media concern, yes- 
terday announced it had 
received valid acceptances in 
respect of 27.4m shares, or 69.8 
par cent of the Trans World 
shares it did not already own. 

Together with the 11.6m 
shares held by Emap or its sub- 
sidiaries prior to the offer this 
represents 99.3 per cent of 
Trans World's issued share 
capitaL 

Sturge disposal 

Sturge, the Lloyd's underwrit- 
ing agency, expects to receive 
an initial consideration of 
£500,000 for the sale of its mem- 
bers' agencies business to a 
management buy-out. 

The sum will consist of 
£100,000 cash and £400,000 in 
preference shares in Falcon 
Agencies, the company taking 
over the business of RW Sturge 
and Donner, Sturge’s two 
members’ agencies. 

In addition RW Sturge and 
Donner will receive a deferred 
cash consideration dependant 
on future results of 
Falcon, subject to a limit of 
£5m . 

The deal requires approval 
by Sturge shareholders and 
Lloyd's. 


PUBLIC WORKS LOAN BOARD RATES 
effective October 11 


1 

Over 1 up to 2 

Over 2 up to 3 ..... 
Over 3 up 10 4^. 

Over 4 up to 5 

Over s up to 6 

Over 6 up to 7 

Over 7 iji to 8 .. — 
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Over 10 up to 15 - 
Over 15 up to 25 ... 
Over 25, 


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X, 


- __i.. 







FINANCIAL TIMES 


THURSDAY OCTOBER 


13 1994 


Largest gains achieved in pharmaceuticals and veterinary products 

Lloyds Chemists 17% ahead 


COMPANY NEWS? UK 


By David BiaekweU 

Lloyds Chemists, the UK’s 
second largest pharmaceuticals 
retailer, lifted both profits and 
turnover by 17 per cent for the 
year to the end of June, helped 
by large sales gains in the 
pharmaceuticals and veteri- 
nary divisions. 

Pre-tax profits rose from 
£49.7m to £58 .3m. while sales 
expanded from £802m to £94Qra. 
The latest profits included an 
exceptional gain of £2.8lm 
from disposals. 

Earnings per share rose from 
28.5p to 33.67p. The board is 
proposing to increase the final 
dividend from 5.25p to 6.8p, 
raising the total by 31 per cent 
to 9.5p (7.2 op). 

Mr Allen Lloyd, chairman, 
said the record results had 
been achieved in the fourth 
year of a recession character- 
ised by negligible inflation, 
fragile consumer confidence 
and a very competitive retail 
climate. 

“We have no declining mar- 
kets, all our divisions are prof- 
itable. and all are moving for- 
ward," he said. 

The shares rose by 16p to 
299p. 

Sales in the retail division, 
which includes the chains of 
more than 900 chemist shops 
and some 300 Holland & Bar- 
rett healthfood shops, were 5.5 
per cent ahead to £601m 
(£569m). Profits rose from 
£44. 9m to £49£m. 

The group said the health- 
care market was continuing to 
grow, with increasing NHS 
business and buoyant over the 





Lloyds Chemists 

Share price (pence) 

380 rr 






MmTsm 

Peter Lloyd, chief executive (left), with Michael Ward, finance 
director and Allen Lloyd: the group has no de dining markets 


counter sales. The group 
describes itself as the leading 
neighbourhood pharmacy 
chain, with most shops near 
doctors' surgeries. 

It has won the NHS contract 
to distribute 14.3m rubella vac- 
cinations in the government 
campaign to treat all child- 
ren between five and 16 years 
old. 

The pharmaceuticals divi- 
sion increased sales by 49 per 
cent from £l84m to £274m and 
lifted profits from £11.4m to 
£13m. The increases reflected 
acquisitions in Scotland, where 
it is now the leading distribu- 
tor, and in Northern Ireland, a 


new market for the group, as 
well as organic growth. 

Profits at the veterinary divi- 
sion rose from £2.08m to 
£3.54m on the back of a 32 per 
cent increase in turnover from 
£49 .2m to £65.1m. 

Mr Lloyd said the group 
would "do even better in 
future", adding that first quar- 
ter sales in the retail division 
were 8 per cent higher, while 
the pharmaceutical and veteri- 
nary divisions were 39 per cent 
and 47 per cent higher respec- 
tively. 

While he did not rule out fur- 
ther acquisitions completely, 
he said he would be happy for 


Oct 93 1894 Oct 

Source: FTGrcphito 

the group to grow organically. 

• COMMENT 

It is becoming increasingly dif- 
ficult to be a bear on these 
shares. Chemist shops are a 
low risk business as licence 
requirements make it difficult 
to open new branches. Hie pol- 
icy of issuing shares to mop up 
competitors, much criticised at 
the time, now looks like good 
strategy. The group has made 
no large acquisitions for a cou- 
ple of years, and has consis- 
tently delivered results in line 
with expectations. Gearing is 
31 per cent - by no means 
excessive - and interest cover 
is a healthy 14.6 times. A divi- 
dend of 11. 5p this year gives a 
prospective yield of 4.8 per 
cent while forecast profits of 
£52m leave the prospective 
multiple at about 9. AAH and 
UniChem - the companies 
most often held up for compari- 
son - are on multiples of 14.1 
and 15 respectively. 


Revamp costs hit Johnson Cleaners 


By Peggy HoUInger 

Johnson Group Cleaners, the largest dry 
cleaners in the US and the UK. yesterday 
warned that profits would he hit by a 
£2.4m charge to pay for a reorganisation of 
its British operations. 

The announcement follows the compa- 
ny’s warning in August that full year prof- 
its were expected to fall in 1994. Difficul- 
ties in both dry cleaning and textile 
rentals led analysts to rein in profits esti- 
mates at the time from £I8m to £17m. 

Mr Terr}' Greer, chairman, said yester- 
day's statement was not a profits warning. 
It was instead a positive step to enable the 
company to “improve a lot faster”, he said. 
“We are confident that all the steps we are 


taking will have a positive effect on trad- 
ing next year." 

The reorganisation would mean the loss 
of up to 100 jobs, including some senior 
managers. Johnson would also step up the 
closure of 50 marginal dry cleaning shops. 

The actions would result in savings of 
about £500,000 a year. Mr Greer said. 

From the beginning of next year, John- 
son's textile rentals and dry cleaning busi- 
nesses would be run as separate compa- 
nies. 

Managing directors have been appointed 
to both divisions and the textile rental 
business would trade under the name 
Apparelmaster UK. Johnson is the fourth 
largest garment rental operator in the 
UK. 


A specialised and focused management 
would allow the businesses to respond 
more quickly to pressures and opportuni- 
ties, said Mr Greer. "We would like to 
expand by acquisition again and this way 
we will be able to do so much more 
quickly." 

Mr Greer said trading in the dry 
ripamng business bad not improved since 
the waning in August On a brighter note, 
“steps have been taken recently to reduce 
the overhead costs of the lossmaking fran- 
chise dry cleaning business in the US,” he 
said, “ft is expected that this business will 
break even in 1995.” Analysts have esti- 
mated that the US franchise business had 
been losing about Sim (£600,000) a year. 

The shares closed up lp at 256p. 



lr 




A'iSi'.f.vA 


Baring 

Capital 

Investors 

TNE EUROPEAN PARTNERSHIP 

LONDON 

PARIS 

MILAN 

HAMBURG 



BARINGS 


This announcement appears as a matter of record only. 

ECU 450,000,000 

Baring Capital 
Partners 


A limited partnership formed to make equity 
investments in management buy-outs of large 
and medium-sized European businesses. 

The adviser to the partnership is 

Baring Capital Investors 

Since 1 987, Baring Capital Investors has led 
22 management buy-outs with a combined 
value of over ECU 2.7 billion. 

September 1994 


Baring Capital Investors is a member of IMRO 



Luxury 
sales help 
Time Prods 
to £4.7m 

By David Blackwell 

Time Products, the watch and 
jewellery distribution group, 
lifted both turnover and prof* 
Its, excluding exceptional 
items, by almost a quarter in 
the six mouths to July 31. 

Mr Marcus Margnlies, chair- 
man, said yesterday he was 
pleased with the results and 
confident ’about the future. 
“Rich people wDl always buy, 
but you have to have the 
things they want” 

In the pipeline was "the 
most complicated pocket 
watch ever made,” which 
would have 11 hands and 
movements on both sides and 
sell for more than £500,000. 

Pre-tax profits were £4. 09m, 
against £5. 33m last time, when 
profits on disposals totalled 
£Z.48rn. 

Total turnover rose from 
£29. 9m to £37-2m, including a 
£2. 05m contribution from the 
Swiss distribution of Aade- 
mars Piguet the Swiss watch- 
maker. Time, which already 
has the North American distri- 
bution rights, paid £2£m cash 
and assumed £2 Jim of debt to 
buy the Swiss rights last 
March. 

Mr Margnlies described sales 
of luxury watches, which can 
be priced at np to £500,000, as 
satisfactory, with Audemars 
Piguet sales in North America 
exceeding expectations. 

The group, which holds 
agencies for seven luxury 
watchmakers, including Blanc- 
pain and Vacheron Constan- 
tin, sold 10 pieces at more 

than £100,000 in the half . 

Last year the group acquired 
Judith Leiber, the American 
designer of luxury handbags 
and evening bags which retail 
at between Si ,200 and $4,000. 
It is planning to develop the 
brand, adding costume jewel- 
lery and other accessories. 

Luxury items made up 70 
per cent of operating profits, 
compared with 30 per cent 
from the volume operations. 
Including Sekonda watches. 

The cost of butfng the Swiss 
rights to Audemars Piguet and 
lower rates reduced interest 
income from £513,000 to 
£138,000 and left the group 
marginally geared. But profits 
are skewed to Christmas and 
the second half, and the group 
expects to be cash positive hy 
January. 

Earnings were 5.85p (6.67p). 
The interim dividend is raised 
by 0.25p to 3 J5p. 

Ryan Hotels 
rises 53% 

Ryan Hotels, the Dublin-based 
hotel operator, lifted pre-tax 
profits 53 per cent from 
I£526.000 to I£804,000 
(£795,000) in the six months to 
July 28. 

Turnover improved to 
I£12.2m (I£11.5m) generating 
flat trading profits of I£2m. 
Earnings per share worked 
through at 0.97p (0.55p) and 
the interim dividend Is held at 
0.5p. 

I Inti Inv Tst of 
I Jersey advances 

The International Investment 
Trust Company of Jersey had 
pre-tax profits of £560.000 for 
the six months to June 30, 
compared with £390,000. 

Investment activities con- 
tributed £150,000 (£216,000). 
while the share of profits of 
associated companies added 
£176,000 (£77,000), Surplus on 
sale of Investments was 
£273,000 (£131,000). 

Earnings per share came out 
at 8p, compared with 6.2p, and 
an interim dividend of 7.6p Is 
payable, up from 6.4p. 

Team Aer 
Lingus out of 
examinership 

By John MacManus 

Team Aer Lingus. the aircraft 
maintenance subsidiary of 
Ireland's national airline, haw 
come oat of examinership 
alter its trade onions accepted 
new work practices. 

An examiner, the Irish 
equivalent of an administra- 
tor, was appointed to Team 
Aer Lingus two weeks ago 
after its parent refused to 
advance it any more funds fol- 
lowing unions' rejection of 
proposals on more efficient 
work practices. The unions 
then reballoted members and 
the proposals were accepted, 
leading to renewed support 
from Aer Iingns for the sub- 
sidiary', which lost Teaarn on 
turnover of I£86m last year. 

Team Aer Lingus has started 
to re-employ some of the 1,138 
workers - out of IJHW - laid 
off since the industrial dispute 
began five months ago. It is 
not expected to return to 
profit for at least two years. I 


Cash piles can grow 
too big for comfort 

Peggy Hollinger doubts wisdom of share buy-backs 


E lectricity investors have 
pocketed more than 
£750m over the last 10 
months as the regional power 
companies have rushed to buy 
back their own shares. 

The bonanza comes to a tem- 
porary halt next week as the 
last of the 12 regional electric- 
ity companies enters its closed 
period in advance of interim 
results. This means that nei- 
ther the company nor its direc- 
tors may deal in shares until 
the results are made public. 

While only nine of the 12 
recs have actually bought 
shares from investors, all have 
received shareholders' 
approval to repurchase up to 
10 per cent, or more In the case - 
of one company: Eastern, 
which led the way with the 
first buy-back in January, has 
permission to repurchase up to 
1A9 per cent. 

The companies argue that 
the raft of share buy-backs has 
been prompted by a desire to 
return value to shareholders. 
With the simple act of buying 
shares for cancellation, the 
recs are able to improve their 
earnings. It has been estimated 
that if all the recs bought back 
10 per cent of their equity, the 
sector’s earnings could 
improve by about 6 per cent 
This is a low risk way of 
enhancing value, say the recs, 
and of using the rapidly grow- 
ing cash piles generated by the 
regulated businesses. 

In reality, however, the cash 
mountains are uncomfortable 
luxuries as the utilities face 
increasing political pressure to 
return value not just to share- 
holders, but also to customers. 

SG Warburg, the London 
broker, has estimated that the 
12 recs are on their way to 
building a net £2.7bn cash 
mountain by the end of the 
decade. 

Such pressures have also 
increased fears that the elec- 
tricity companies could 
become the targets of a one-off 
tax, either when the National 
Grid is spun off next year or at 
a change of government. 

“The regional electricity 
companies have been busily 


THI RECS* SHARE BlIY-BACKS 


Interim 

Results 

Shares 

bought 

W 

Price 

(Pi* 

Dec 12 

13.5 

662.90 

Dec 14 

15.3 

072.00 

Dec 6 

21 2 

725.00 

Dec 14 

4.1 

844.17 

Dec 8 

13.5 

786.41 

Dec 12 

12.4 

614.60 

Dec 1 

13-6 

429.68 

Dec 07 

7.1 

803.02 

Dec 15 

6.2 

769.00 


1984 

% 


Eastern 

London 

MWtends 

Manweb 

Norweto 

Northern 

Seaboard 

Swafac 

South Western 


C MOonoH, Scu*mn and YoriaHni Hmo rot axT&d tfW ® Souix ^ 3,3 wkrtjurv 


5.00 89.5 

7.00 1032 


10 . 00 . . 100.8 
5.30 : 58.4 


trying to find money to spend 
to get their balance sheets 
geared up to such a degree that 
it will prevent them being 
stuffed with debt by the gov- 
ernment." said one analyst. 

Meanwhile, shareholders 
were not likely to be satisfied 
with companies sitting on 
large cash piles at a time of 
low interest rates. Yet neither 
would they be happy with 
widespread diversification, 
given the poor track record 
that utilities have outside their 
core businesses. 

So the question was, how 
best to use the cash and return 
value to shareholders? 

P aying a special one-off 
dividend, or even a sub- 
stantially higher one, 
could present difficulties. “You 
have to be sensitive to the pub- 
lic and political issues,” said 
one industry executive. “If you 
paid a huge increase in divi- 
dend, what sort of reaction 
would that produce?” 

Repurchases also allow the 
recs to sidestep the increased 
dividend problem. Eastern set 
another trend by increasing its 
dividend 20 per cent after the 
first buy-back. Yet because 
there were fewer shares in 
issue, the total sum paid out 
was no greater than the previ- 
ous year. The other recs are 
expected to follow Eastern's 
suit 

However, not all the compa- 
nies agree that buying back 
shares now is the best way to 
enhance value for sharehold- 
ers. Three - East Midlands, 


Southern and Yorkshire - have 
chosen not to buy shares. At 
least two are waiting for the 
outcome of discussions on the 
future of the National Grid, the 
transmission company owned 
by the recs estimated to be 
worth at least £4bn. 

The maimer in which this Is 
spun off could have substantial 
financial implications for the 
recs, and for shareholders: for 
example, in the advance corpo- 
ration tax burden which the 
companies will have to cany 
in case of a distribution to 
shareholders. There is also the 
added fear that the companies 
could face a potential capital 
gains tax bill of more than 
£lbn on a Grid notation. Until : 
all the facts are known, these 
companies argue, it is impossi- 
ble to decide on the best way 
to return value to sharehold- 
ers. 

The abstainers would also 
argue that some share buy- 
backs give the greatest benefit 
to a select group of investors. 
If the buy-backs are conducted 
through an agent - as in the 
case of the two recs who 
bought 10 per cent - eligible 
sellers could claim tax credits. 
While all investors would bene- 
fit from Improved earnings, 
only a few could reclaim the 
credit, estimated at an average 
l5Gp a share. 

Such concerns do not mean 
that these abstainers rwill stay 
out of the market forever. Far 
from it. “We have the power to 
do it and it is just a matter of 
timing,” said one industry 
executive. 


Northern Rock establishes 
indemnity insurance offshoot 


By John Gapper, 

Banking Editor 

Northern Rock, the nth 
largest building society with 
assets of £7.2bn, yesterday 
announced that It had estab- 
lished its own “captive" com- 
pany to provide mortgage 
indemnity insurance. 

Northern Rock Is the latest 
society to take advantage of a 
relaxation of restrictions by 


the Building Societies Commis- 
sion last year. This allowed 
societies to own more than 15 
per cent of a non-life insurance 
company. 

Indemnity insurance pro- 
tects lenders against reposses- 
sion losses by making up the 
deficit if a property has to be 
sold for less than 75 per cent of 
its purchase price. This was 
c ommo n in the early 1990s. 

Northern Rock's move to 


'i 

provide indemnity insurance 
through a Guernsey-based 1 
company with initial author- 
ised capital of £S.5m comes 
after it switched indemnity 
insurance from Sun Alliance to 
Commercial Union last year. 

The investment manager for 
the captive insurance company 
will be Kleinwort Benson 
(Guernsey), and it will be regu- 
lated by the Guernsey Finan- 
cial Services Commission. 


Owen & Robinson expands via 
Pro Performance acquisition 


Owen & Robinson, the 
jewellery and sports footwear 
retailer, has agreed to acquire 
38 leasehold outlets from SSL 
Retail, a subsidiary of Sears, 
the speciality retail and home 
shopping group. 

Consideration will amount to 
a maximum of £1.06m cash, 
satisfied from existing 
resources. 

Wates sells property 

Wates City of London 
Properties has sold a lease on 
one of its prime City of London 
sites for £4.1m to Axa Equity 
and Law Investment Managers. 

The 12,000 sq ft building was 
developed by Wates 10 years 
ago. Nearly half of the tenant 
leases expire next year, 
although Wates said that the 
principal tenant had recently 
extended its stay to 2009. 


IN BRIEF 


CATTLE’S (Holdings) is selling 
Its five travel agencies, which 
trade as Travelplan, to Going 
Places, part of Airtours. The 
consideration is £150,000 cash. 
There will be an exceptional 
charge of about £120,000, due to 
reinstatement of goodwill, in 
the group's results for 1994. 
GRT BUS Group has received 
acceptances of the offers for 
SMT Omnibuses shares in 
respect of 354,000 SMT ordi- 
nary shares, representing 96.4 
per cent of those in issue, and 
216,000 preference shares, rep- 
resenting 100 per cent of those 
in issue. The offers have now 
been declared unconditional. 
SCOTTISH ASIAN Investment 
fully diluted net asset value 
rose 39 per cent, from 213p to 
295.6p per participating share 
over year to July 31. Value had 
further risen to 316.2p by Octo- 
ber 7. Attributable revenue for 
year amounted to £59,930 
(£92,485 loss). 


The outlets operate under 
the Pro Performance banner, 
and currently sell sports cloth- 
ing and equipment, as well as 
footwear. They will be inte- 
grated into Owen & Robinson’s 
existing Foothold operation, 
raising the chain to 53 outlets 
and extending its presence 
nation-wide. 

Mr Liam Strong, Sears chief 


executive, said the sale would 
reduce the group’s exposure to 
the sports footwear market 
“which continues to decline" 
and allow it to concentrate on 
its Olympus offshoot 
Sears will book a loss on dis- 
posal of some £5Am although 
this will be more than offset by 
the release of provisions no 
longer required. 


DIVIDENDS ANNOUNCED 


Currant 

payment 


Date of 
payment 


Correa - Total 
ponding for 
dividend year 


BNB Resources lnt 1.77 Nov 30 1.6 - 4.9 

Cap/Rsgtonsl § lnt 0.6T Nov 25 0.5 - 1.5 

F&w Decor f nt 2.7 Nov 25 1 - 4.7 

lnt IT Jersey 7.frf Oct 24 6.4 

Ipeeo Jut 1.3 Nov 24 1.3 - 3.6 

Lloyds Chemists fin 6.8 Dec 14 5.25 9.5 7.25 

Ryan Hotels fnt 0.54 Dec 15 0.5 - 1 

Time Products lnt 325 Jan B 3 . 9.5 

Dividends shown pence per share net except where otherwise stated. lOn 
Increased capital. §USM stock. 4Part paid from capital reserves, firish 
pence. 








t ■■ ■ .■ - 

iiilSl 


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companies read the FT* 

If you want to reach this important audience, and 
decision makers worldwide please call: 

Em8 S?J222S! haSen Kirsty Saundere hi London 

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28 


CTMAMriAT. TIlVTES 


THURSDAY OCTOBER 


1994 


COMMODITIES AND AGRICULTURE 



Magma to go ahead with 
Nevada gold/copper mine 


By Kenneth Gooding, 

Mining Correspondent 

Nevada is to have another 
copper-gold mine. Magma Cop- 
per. the Tucson-based group, 
yesterday gave the go-ahead 
for its USS300m .Robinson mine 
near Ely in the middle of the 
State. 

Robinson is scheduled to 
start up in January, 1996, and 
will produce 135m lb ( 61.252 
tonnes) a year of copper. 

110.000 troy ounces of gold and 

325.000 troy ounces of silver for 
16 years, said Mr Burgess Win- 
ter. Magma’s president. Life-of- 
mine cash operating costs 
would be 50 cents a pound 
($1,102 a tonnei but only 46 
cents i Si .014) in the early 
years. 

Only a week ago Magma, 
with a bid of about US$250m. 
won the closely-contested auc- 
tion for Tintaya. Peru’s second- 
largest copper mine, which 
was sold by the government as 


part of its privatisation pro- 
cess. 

Mr Winter said at a meeting 
is London with the Association 
of Mining Analysts that the 
combination of Tintaya and 
Robinson made achievable 
Magma’s target of producing 
750m lb of copper a year at a 
cost below 50 cents a pound by 
the end of 1996 and gave it a 
good base for its long-term 
Objective of producing lbn lb 
at below 50 cents by the year 
2000 . 

Robinson was until the late 
1970s mined by Kennecott. the 
US company now part of RTZ, 
but was closed down because 
of high costs and the need for 
substantial capital investment. 
Kennecott sold the entire area 
to Alta Gold, a “junior" com- 
pany. for $20m after a court 
dispute and Magma paid $58m 
to take it over gradually from 
Alta. 

Mr Winter said the mine 
needed a new tailings (waste) 


dam and concentrator plant. 
The three existing open pits 
had substantial reserves 
around them - 252m tonnes 
containing 2, lbn lb of recover- 
able copper and l.am ounces of 
gold - and there was consider- 
able potential to increase these 
reserves. 

Magma had hoped to bring 
Robinson into production in 
late 1994 but was delayed by an 
environmental impact state- 
ment by the Nevada Bureau of 
Land Management. The 
Bureau approved the operating 
plan on September 9 and the 
30-day appeal period expired 
this week. 

• The copper market might 
fece some years of oversupply 
before the end of the decade, 
warned Mr Juan Villarzu, pres- 
ident of Codelco. Chile’s state- 
owned group. He pointed out 
that Chile’s copper production 
was expected to nearly double 
from 2.2m tonnes to about 4m 
tonnes by the year 2000. 


FSU metal use seen staying low 


By Kenneth Gooding 

Metals consumption in the 
former Soviet Union may be 
nearing the limit of its dra- 
matic decline but it is not 
about to recovery rapidly, 
according to Mr David Hum- 
phreys. economist at the RTZ 
Corporation, the world's larg- 
est mining group. 

Meanwhile, metals produc- 
tion in the region almost cer- 
tainly had further to fall, 
"implying that the broadest 
part of the export bubble is 
now passed." 

In any case, said Mr Humph- 
ries at a conference organised 
by IBC Financial Focus, con- 
trary to public perception, the 
reform process in the former 
Soviet Union bad had a fairly 
limited impact on world mar- 
kets for the major base metals 
in physical terms - “although 
the effect on prices has admit- 
tedly been rather greater on 
account of the uncertainty 
associated with the FSU's 


export behaviour". The key 
exception - and a big one - 
was aluminium. 

Copper, lead and zinc con- 
sumption in the FSU had fallen 
by half since 1990 while alu- 
minium and nickel use was 
down by nearly 75 per cent. A 

London 

Metals m * 
Week 

revival of metals use was 
highly dependent on invest- 
ment but this was not forth- 
coming because of the outlook 
for demand, high interest 
rates, and lack of investor 
security, as well as “the imme- 
diate political requirement to 
protect consumers from depri- 
vation". But without invest- 
ment if was difficult to see how 
metal consumption could 
recover. 

Russia’s commodity export- 
ers had been generating sub- 
stantial foreign exchange earn- 


ings but this money was not 
being reinvested and in some 
cases not being returned to the 
economy at alL 

It was not a question of 
waiting for a cyclical swing to 
prompt a restart of idled indus- 
trial capacity because much of 
that which was idle was obso- 
lete or, in the case of military 
installations, irrelevant, and 
would never work again. 

On the other hand, most of 
the FSU’s metallurgical plant 
was serviceable even if it was 
neither efficient or environ- 
mentally friendly. But its 
mines were in extremely poor 
condition. So. “in the absence 
of substantial investment in 
the FSU's mines and metals 
sector - and soon - it Is by no 
means impossible that when 
the recovery does eventually 
begin to bite and metals con- 
sumption starts to grow again, 
there will be a period in which 
the area will become a net 
importer of certain major base 
metals”. 


US maize 
estimate 
increased 
again 

By Laurie Morse In Chicago 

The size of this year’s US 
prospective feedgrains harvest 
grew again yesterday, with the 
US Department of Agriculture 
now saying that the maize crop 
will be 9.6bn bushels, higher 
than trade estimates of 9.5bn, 
and 345m bushels more than 
the agency's own forecast a 
month ago. 

The government’s estimate 
for soyabean production also 
rose, to 2.45bn bushels, from 
last month’s 2.31m. The report 
normally would have prompted 
a steep plunge in grain prices 
at the Chicago Board of Trade. 
However, grain futures mar- 
kets were steady to slightly 
higher yesterday morning as 
traders concentrated instead 
on the USDA’s forecasts for 
much bigger export sales of 
grain. 

“The USDA finally has some 
breathing room.” said Mr. Joe 
Victor, a grain analyst with 
Allendale, Inc. “Last year we 
had prices up, but nnfhing to 
sell This year, we’ve got a big 
crop and the USDA is saying 
we're going to export more of 
it." 

The agency estimated yester- 
day that the US would sell 
1.625hn bushels of maize over- 
seas this crop year, and would 
export 740m bushels of soya- 
beans. 

On Monday, the USDA said 
that 44 per cent of the US soya- 
bean harvest had been com- 
pleted. and 27 per cent of the 
maize crop was in. Farmers 
said that despite ideal condi- 
tions, the large crop would 
take longer than usual to har- 
vest 


Investment plans dim paper hopes 

Capacity boosts may stall recovery, writes Christopher Brown-Humes 


Norsks Skog, the Norwegian papennaker, announced yesterday 
it would increase newsprint prices in the UK market by 15 per 
cent from the beginning of year, writes Deborah Har- 
greaves. The company which has a 10 per cent share of the 
British newsprint market, said the increase was the minimum it 
could ask for to cover sharply higher raw materials costs. 

Many newsprint mills are seeking to raise prices from the 
beg inning of October, which is likely to lead to increases in 
general of 7 to 8 per cent this year. But the market could be 
pushed higher when annual negotiations with newspaper pub- 
lishers open towards the end of the year, when mills will be 
looking to pass on costs which have doubled and even trebled 
thte year. 

Prices in continental Europe and North America are also set to 
increase as rebates are eliminated in. a more buoyant economic 
climate. Newsprint prices could rise by as much as 30 per cent in 
the US market 


T he disclosure last week 
that two of Sweden's big 
pulp and paper groups 
are planning significant new 
capacity Investments sent shiv- 
ers through a market that is 
just getting used to the idea 
that the good times are back. 

Stora. Europe's biggest pulp 
and paper company, said it was 
starting design work on a new 
290,000-tozmes-a-year board 
machine - an inves tme nt that 
would cost around SKr2.8bn 
(£240m). MoDo, meanwhile, is 
expected to confirm next 
month that it trill go ahead 
with the construction of a 
SKriUbn newsprint machine, 
with a capacity of 270,000 
tonnes, at its Braviken plant 
These are by some margin 
the biggest investments to be 
announced by Swedish forestry 
groups this year. But the news 
did not go down well with the 
market where memories of the 
severe downturn in the for- 
estry cycle between 1592 and 
1993 are still painfully fresh. 

“Last time It was not lack of 
demand that drove operating 
rates down - it was excess 
capacity," says Mr Mads 
Asprem- forestry analyst with 
Morgan Stanley in London. He 
says much of the optimism 
now surrounding the industry 
assumes there will only he lim- 
ited construction of new capac- 
ity. 

The reason for this optimism 
is simple: prices in virtually 
every pulp and paper segment 
are on the rise and in an indus- 
try characterised by strong 
cyclical patterns there is every 
indication that the market is 
firmly on the road up to its 
next peak two or three years 
hence. The price of northern 
bleached softwood kraft pulp, 
the industry staple, has 
already reached S700 a tonne, 
up 80 per cent from S390 at the 


end of last year. Prices for fine 
paper, of which pulp is the 
major constituent, have been 
increased five times in 1994. 
Now the trend is feeding fur- 
ther down to the chain to 
newsprint and magazine paper 
grades where rises of 10 and 20 
per cent have either been 
implemented or notified. 

The upturn has been 
demand-driven in Hn* with the 
recovering world economy. 
Increased volumes first 
boosted operating rates and are 
now lifting prices, hi Finland, 
the forestry industry is effec- 
tively running fiat out with an 
operating rate of 94 per cent, 
compared with 38 per cent last 
year. 

The recovery is at an early 
stage and prices are still below 
the levels readied at the last 
market peak in 1989-1990. 
“Paper and board prices fell by 
30 to 35 per cent between 1991 
and 1993." notes Mr Jarl Koh- 
ler, m anag in g director of the 
Finnish Forestry Industries 
Federation. 

The pulp price reached $840 
a tonne in 1989, and although 
most pundits believe that peak 
may well be scaled during the 
current upswing, they warn 


that progress is unlikely to be 
even. “There Is a serious 
chance of an inventory-driven 
correction in the second half of 
1995." says Mr Asprem. 

There is also a strong possi- 
bility that companies will be 
unable to get the price rises 
they are seeking in full. For 
example, analysts say news- 
print producers may be opti- 
mistic in hoping for a 20 per 
cent price Increase from the 
start of next year. Buyer resis- 
tance could limit the rise to 
between 10 and 15 per cent 
despite stronger demand and a 
surge in waste paper prices. 

Although Nordic forestry 
groups are back in profit, the 
turnaround has stemmed from 
cost-cutting, volume increases 
and currency factors. In the 
first half of this year, higher 
prices were only just starting 
to feed through to the bottom 
line. 

There will be a more pro- 
nounced impact in the second 
half, although much of the 
gain will be offset by the 
recent strengthening of both 
the Finnish and Swedish cur- 
rencies. With some segments - 
uncoated magazine paper, for 
example - prices are almost 


certainly going to be tower 
local currency terra* m IJW 
than they were i» 199* 

Stronger currencies are not 
the only worry for the Nordic 
producers. Their costs are 
going up - particularly for 
pulp wood, which has risen b j 
around 15 per cent since the 
market trough. There is also a 
widespread expectation that 
the 1995 wage round is going to 
be a difficult one as employees 
seek their share of the sector’s 
upturn. Finally, there is the 
dampening effect Qf nigh 
long-term interest rates. 

Mr Kohler notes that every i 
per cent interest rate increase 
costs the Finnish forestry 
industry FMBaton (SBftmi. every 
1 per cent rise in the markka 
FM400m, every l per cent rise 
Id wood costs FMISOni and 
every l per cent increase in 
salaries FMlOOm. He also 
points out that although Finn- 
ish pulp and paper companies 
will earn more than FMJbn 
this year,- income will be well 
short of the “normal” FMTbn 
level required to cover invest- 
ments, debt repayments. R & D 
costs etc. 

A spending spree in the late 
1980s and early 1990s left most 
of Finland’s big forestry groups 
heavily in debt and they hare 
been in no hurry to announce 
new investments this time 
round. Instead, the talk in the 
pmmtrv'B forestry industry has 


ers. 

Even so. the return to profit- 
ability and low short-term 
interest rates are fast reducing 
the debt burden and the 
strengthening markka is cut- 
ting the cost of servicing the 
foreign currency element of it. 
It may not be long before the 
Finns are tempted to follow the 
example of their neighbours by 
ordering new machinery. 


MARKET REPORT 

Oil futures fall for second day as fears of Gulf conflict recede 


OIL prices fell for the second 
consecutive day as chances of 
conflict on the Kuwait-Iraq 
border appeared to recede. 


traders at London's Interna- 
tional Petroleum Exchange 
said. 

At the London Metal 


Exchange COPPER prices 
turned higher in the afternoon, 
lifting other base metals. A 
firmer overnight trend in the 


New York market was cited as 
the main reason for copper's 
renewed strength. 

London COFFEE futures 


were mostly higher at the close 
after a session marked by vola- 
tile price swings. 

Compiled from Reuters 


P 


i & 

j • 4 ' 

■■■"* . i v 




-;j5 


* \ r : 



Commodities prices 


BASE METALS 

LONDON METAL EXCHANGE 

(Pnces from Amalgamated Metal Trading) 

■ ALUMINIUM. 99.7 PURITY t 5 per tonne) 



Cash 

3 inthy 

dose 

1«3tL5-r.S 

1656-7 

Previous 

1616.5-75 

16355-6.0 

Hlgh/tow 

1630 

1663/1642 

AM Official 

1630-30.S 

1649-9,5 

Kerb dose 


165B-9 

Open irn. 

251.739 


TofiK rJatfy turnover 

36.832 


■ ALUMINIUM ALLOY (5 per tonne) 


Close 

1660-70 

1680-90 

Previous 

1650-60 

1675-80 

High/te* 



AM Official 

1660-70 

1680-90 

ivoib close 


1680-90 

Open mi 

ZX.7 


Total doily turnover 

84 


■ LEAD (S per tonnei 



Close 

KW.5-5.5 

647-8 

Previous 

62S-6 

638.5-9.0 

HrqMoiv 


651/642 

AM Official 

631-2 

645-6 

frCrfc clow 


646-7 

Open ml 

42.445 


Toni daily turnover 

4.451 


■ NICKEL (S per tonne) 


Close 

6590-600 

6690-700 

P/CYWU5 

6475-85 

6580-90 

HmjIi toiv 

6570 

5710/6590 

AM Official 

6565-70 

6675-BO 

K'.-rb dose 


6705-15 

Open ml. 

73.90B 


Tctai daily turnover 

14.698 


■ TIN iS cvr lomcl 



OCM 

5235-35 

5410-20 

Firviais 

5290-300 

5370-60 

High, law 

5295 

5415/5380 

AM Official 

5290-5 

5385-6 

Ke»b c!ev> 


5410-20 

Cpcn mt 

tfl.OSI 


Total daily liimovflr 

3.764 


■ ZINC, special high grata is pci tonne) 

Close- 

1044 5-5 5 

1066-7 

Ptrvictr. 

1036-7 

1058-9 

Hr.-h.loW 


1069/1099 

AM CfficrJ 

1037-8 

1059.5-80 

h L'b cioso 


1068-9 

Open mt 

103.706 


Total daii, tumo.iv 

17.969 


■ COPPER, grado A IS per tontwl 


Ciov? 

2511-12 

0509-10 

Pn'.ious 

24S5-C. 

2485-8 

Krtsh lai» 

MWJJSb 

2516/2484 

AM Official 

2J ?8-8 5 

2497-6 

herb dojo 


2507 -0 

Open mt 

222.591 


Total daily turnover 

41.003 


■ LME AM Official E/S rato: 1.S813 

LME Closing US rato: 1.5794 


Soot-1 5515 3 mtns 1 53Cfi 6 minx t. 5575 9 ititns.1.5737 

■ HIGH GRADE COPPSI (COMEX) 


Dey» 


Open 

Qoso change 

ffigh ftm 

M Vet 

oct liero -fl.ro 

116.85 116.70 


Rot J1510 -045 

115.40 11540 


Dec tii-fl) -0.45 

• IS 65 11465 


Jan 1U35 -tjj5 

11490 11485 


Fch IIJS0 -0.05 

114 35 113 75 


Mar 113 40 *0X5 

n4.ro mro 


Total 


m n/a 


PRECIOUS METALS 

■ LONDON BULUON MARKET 

(Prices supplied fry N M RjffiscKld) 


Gold iTrov OZ.) 

S price 

£ equlv. 

Coys 

288.20-366.60 


Opening 

388.10-355 5 0 


Morrunq ft* 

•13820 

245.525 

Afternoon Iia 

387 90 

245273 

Day'* Hiqrt 

388 -iO-388.S7 


Ojv'3 Low 

387 00-30-40 


Preview Close 

388.00-388.50 


Loco Ldn Mean Gold LonrSng Ratos (Va liSS) 

1 mcnlh 

. .£ 6t 6 months . 

— . 4.84 

2 monuto . .... 

. ..4.66 12 months 

.. - 5 29 

3 months . . . 

4.81 


Silver Fir 

ffitroy OZ. US OS equv. 

Spot 

348.25 

550.75 

3 montrtg 

353.45 

558.00 

6 months 

3S9.00 

56855 

t vrjr 

372.00 

584.46 

Gold Coins 

S price 

£ equtv. 

Knioerrand 

391-394 

247-250 

Maple Leaf 

399.I0-K7160 

- 

New Sovereign 

91-94 

58-61 


Precious Metals continued 


■ BOLD COMEX QQO Troy oz.; S/trpy oz.) 



Sett 

Day's 



Open 



price 

change 

Nigh 

(aw 

M 

HA 

Oct 

388.0 

*0.4 

388.0 

3810 

158 

152 

Kov 

3891 

+0.4 

- 

• 

- 

- 

Doc 

3916 

*0.4 

391.1 

390.0106,658 84,321 

Ft* 

394.0 

*14 

3344 

3936 

20307 

2.168 

Apr 

397.5 

*0.4 

398.0 

3973 

7.194 

354 

Jan 

40UJ 

*14 

4016 

400.9 

10.351 

143 

Total 





HIA 

N/A 

■ PLATINUM NYMEX (50 Troy oi; S/troy oz.) 

Oct 

415.8 

*14 

4110 

4110 

236 

36 

JM 

4113 

-0J 

422-5 

4191 19300 

1480 

Apr 

423.1 

-13 

4254? 

4225 

3.150 

21 

M 

4216 

13 

4210 

4210 

518 

8 

Oct 

4293 

-0J 

- 

- 

335 

1 

Jan 

432J 

-03 

- 

- 

2 

- 

Total 





21541 

2348 


■ PALLADIUM NYMEX (100 Trey oz; S/lroy oz.) 


Oct 

151.10 

-025 

- 


21 

- 

Dec 

152.10 

-025 

15150 

151.90 

4.739 

532 

Mar 

153.10 

4L25 

154.00 

15176 

1.404 

a 

Jon 

Total 

154.20 

-025 


- 

168 

1316 

641 


■ SILVER COMEX nOO Troy oz.; Cant-iMry oz.) 


Oct 

547.4 

-12 

. 

. 



Nor 

549.1 

■13 





Dec 

551.5 

-1.5 

5530 

551.0 



Jan 

5541 

-13 

5573 

5550 



Her 

560.1 

-13 

561.0 

5610 



May 

5814 

-1.5 

5810 

5683 

- 


Total 





N/A 

N/A 

ENERGY 






■ CRUDE OB. 

NYMEX (42.000 US sans. S/barren 


Latest 

Day's 



Open 



price 

change 

Ugh 

Low 

tat 

1M 

NM 

WM 

-0.10 

17.85 

17.48 66324 49.722 

Dec 

17.71 

-038 

17.97 

17.® 

86.715 

45302 

Jan 

17.79 

-0.07 

1738 

1768 

51310 

11.753 

Ft* 

17.7® 

•0.05 

17.95 

17.70 

24.756 

2367 

Mar 

17.80 

■0.05 

17.93 

17.70 

23.4J3 

2.118 

Apr 

17.79 

-009 

17.91 

17.74 

15313 

1.981 

Total 




428,710121385 

■ CRUDE OIL IPE iS/txirren 





Latest 

Days 



Open 



prica 

dunge 


LM 

to 

Vd 

Nov 

1&2B 

-0.16 

1661 

1120 

59.781 

25319 

Dec 

1132 

•117 

1635 

1125 

61497 21048 

Jan 

1134 

■120 

16.64 

1133 23^61 

1805 

FA 

1835 

■0.17 

1663 

1135 

10.417 

515 

Mar 

1638 

■0.12 

1839 

1135 

1543 

270 

Apr 

16 58 

*0.08 

1638 

1658 

3.953 

200 

Total 




188361 

51330 


■ HEATING OIL NYMEX 142.000 US CIS sate.) 



Latest 

ore's 



Open 



price 

change 

High 

Low 

tat 

Vat 

NM 

4110 

-063 

49.15 

47.70 30,471 

14.407 

Dec 

49.00 

-174 

5115 

4830 

43.279 

11.763 

Jon 

4195 

-06® 

5135 

4935 

31.193 

4324 

ftp 

50.65 

-0.40 

51.(0 

5125 

16.02 

729 

Mar 

5060 

-0.34 

5035 

50 30 

11.272 

1.743 

Aar 

50.00 

•129 

50 30 

4965 

4396 

SOB 

Total 





185301 

35387 

■ GAS OIL IPE (SiWff 





Sett 

tor 1 * 



Open 



price 

change 

ffigh 

Lon 

In 

Vat 

NM 

151 SO 

•500 

155.00 

15050 

19365 

1033 

Dec 

153.05 

-4.55 

15175 152.75 32341 

1i238 

Jan 

155.00 

-430 

15850 

155 00 

22.978 

5.455 

Fen 

15125 

■425 

15930 15625 17J84 

i^n 

Mar 

158.25 

-4.00 

isare 

156.00 

8,35 

172 

Asr 

154.75 

-3.75 754.75 

154.75 

1224 

456 


Total 115*83 ujaa 


■ NATURAL OAS NTMEX (10000 rrvnBQi.: SftntnBtU.1 



Latest Day's 



Open 



[Bice change 

Ktfi 

Low 

M 

V* 

Nov 

1.881 *1019 

1705 

1.663 27.008 10351 

Dec 

1990 *0010 

2015 

1980 

28.440 

4.370 

Jan 

2.095 *0309 

2.115 

2130 

17.521 

1.668 

Fen 

205b *1014 

2066 

2045 14.487 

1.740 

Mu 

2015 *1019 

2020 

2000 

11.782 

1.182 

% 

1965 *0.014 

1.975 

1.955 

7.112 

493 

Total 



150383 23313 

m UNLEADED QASOUWE 




msec (42.00(1 US gats, cAJS gab! 




Latest Day's 



Open 



price change 

Wgh 

LOW 

Ini 

VW 

Nn 

47.80 *026 

4830 

47 45 

23.338 

16375 

Dec 

3&M *4126 

55*70 

55.10 

18,808 

1377 

Jan 

5430 -039 

54.90 

54.30 

10.660 

2525 

Ft* 

5425 -0.2*1 

54.50 

54.15 

5.188 

574 

Mar 

S4J0 -a34 

5435 

54.70 

Z4P1 

35 

Apr 

5150 *116 

5830 

5880 

4,292 

270 

Total 




71380 

21322 


GRAINS AND OIL SEEDS 


■ WHEAT LGE g per tome) 



Sett 

Day's 



Open 



prise change 


lew 

tat 

M 

Nw 

103.45 

-0.15 10330 

10100 

1140 

58 

Jan 

105.25 

-130 

105.55 1D4JJ0 

1162 

332 

Mar 

107.35 

-135 10770 107X30 

1.438 

82 

May 

10936 

-0.10 

109 40 

10900 

1.396 

99 

Jd 

111.20 

-145 

111.85 

111JSS 

264 

1 

Sep 

9SL25 

- 

- 

- 

IS 

- 

Total 





6337 

GS1 

■ WHEAT CBT S.OOObu min; cents/601 b bushel) 

Dec 

4oara 

-8/2 

4ia» 

407/0 47.151 

11,977 

Mar 

416/6 

-8/2 

42K5 

415/0 22211 

4.479 

Hay 

388/2 

-7/0 

397/4 

38M 

1273 

545 

jm 

353/4 

-4/2 

358/2 

3538) 

7,936 

1.275 

Sap 

358/4 

-2/0 

381AJ 

359/2 

195 

43 

Dee 

36&D 

■2/0 

3W> 

367/0 

133 

11 

Total 





80835 18^33 


■ MAIZE CBT (S.ooo bu n*i: cems/56ft> bushel) 


Dec 

215/0 

♦1/2 

210/0 

213/4129.715 18.595 

M» 

225/4 

♦Iffi 

228/2 

2248) 50049 

3.177 

May 

233/0 

*1/8 

233-5 

231 H 21.743 

1.146 

Jot 

238/4 

*1/8 

238/2 

238/4 24.799 

1.779 

*P 

243/2 

+1/4 

243/5 

242/0 1345 

64 

Dec 

248/6 

+1/2 

249/2 

247/2 1690 

996 


Total 238X38 23J84 

■ BARLEY ICE (C per tonne) 


Her 

1(3200 


7(71.75 

101.75 

4(2 

(0 

Jan 

104 50 

*0.50 

- 

- 

398 


Mar 

10050 

- 


- 

128 


Hey 

10050 

- 

- 

- 

46 


Sep 

8500 

- 

- 


2 


MOV 

9700 

- 

- 

- 

- 


Total 





984 

ID 

■ SOYABEANS CBT (5.000x1 trite cwfc/BCU busted 

NOV 

536/6 

*4/4 

538/2 

5 S/4 

73,816 20332 

Jan 

547/8 

*4/2 

548/4 

54(94 

27.822 

3,782 

tear 

557/4 

*4/4 

55B/0 

550/4 

17^91 

2.567 

Ifay 

565/2 

♦3/B 

566/4 

658/4 

1200 

1,453 

JM 

5720 

*44! 

573/4 

566/4 

14.799 

2 J01 

Aog 

574/4 

*4/2 

575/4 

57J/0 

579 

173 


TOM 141322 31,480 

■ SOYABEAN OR. CBT (60.000 teg esms/ft) 


Oct 

25J57 

*134 

2172 

2513 

6.158 

1232 

Dec 

Z4.18 

*123 

2428 

2192 

37X71 

9 849 

Jan 

23.69 

*021 

23.80 

2145 11.170 

1.879 

Mar 

23/41 

*0.16 

23X2 

2X20 

12,495 

1072 

•far 

2124 

*116 

2135 

23.10 

9,250 

1.418 

Jta 

23X7 

*115 

23.23 

2195 

6888 

1267 

Total 





88X07 20)203 

■ SOYABEAN MEAL CBT (100 tons: S4on) 


Od 

1625 

+1.1 

1831 

161 X 

3.160 

1X65 

Dec 

1629 

+12 

1617 

1614 

45.893 

8X10 

ton 

154.4 

+16 

15*3 

10X8 

11337 

1.440 

Mar 

167.4 

*1.5 

1573 

16X7 

12X77 

1.778 

May 

189.6 

+1.3 

170.7 

1692 

7,411 

718 

-tel 

1728 

*1.4 

17X8 

1718 

6.473 

1507 

Total 





93^70 11643 

■ POTATOES LCE l E/tonne) 




Nov 

150.0 





_ 

Mar 

105.0 

- 

- 

- 


. 

Apr 

2236 

+4.5 

226X 

yxif. 

1.Z75 

118 

tar 

2400 

. 


- 

- 


■iw 

107J 

- 

• 

- 

- 

- 

Total 





1,275 

118 

■ FREIGHT (BFFEXJ LCE (SlO/index pant] 


Oct 

1832 

+13 

1840 

1820 

535 

23 

An 

1800 

+12 

1830 

1790 

330 

102 

Dec 

1789 

+14 

1805 

1790 

164 

37 

ton 

1735 

-4 

1765 

1735 

U368 

B6 

Apr 

1700 

•19 

1740 

1700 

741 

93 

to( 

1450 

•45 

• 

. 

138 

- 

Tetri 

Close 

Prar 



•>JKO 

341 

BH 

1798 

1788 





Cotton 






LIVERPOOL- 

Spot 

and 

shipment sales 

amounted to 135 tomwo for the week ended 7 
October against 354 tonnes in the previous 

iveek. 

Subdued offtake OW not bring many 

operations. Support was forthcoming In certain 
soediist styles notably in American and CtS 

descnpifons 







SOFTS 


■ COCOA LCE (EAorma) 


Sett Crete Open 

price cftaogr Mg* Law tat vw 

Dec 838 -2 939 929 24X81 622 

Mar 970 -4 974 962 40.616 1J565 

May 982 -5 965 976 13X67 230 

Jet 995 -4 1000 990 6.086 132 

Sep 1008 -2 1008 1005 10X92 45 

Dec 1027 -1 1026 1026 1230 1 

Total 107X16 2,430 

■ COCOA CSCE (10 tonnes; S/tonnes) 

Dec 

1270 

+11 

1275 

1253 33X41 

2X81 

Mar 

1322 

+11 

1325 

1307 20,540 2.100 

May 

1350 

+11 

7350 

1335 

7.828 

334 

Jo) 

1379 

*9 

1373 

1373 

2,893 

118 

Sep 

1408 

+8 

1399 

1399 

1.235 

16 

Dec 

1434 

+6 

1431 

7431 

4X59 

35 

Total 





74X88 5X21 

■ COCOA ftCCO) (SORVIome) 



Oct 11 



Pries 


Ptoe. day 

o*r - 

— 


. 96727 


96487 

W COFFEE LCE (S/ton nej 




Nov 

3563 

+4 

3815 

3540 

9298 

1.172 

Jan 

3523 

-10 

3575 

3510 

13X53 

1X30 

Mar 

3453 

-6 

3490 

3430 

4226 

851 

ter 

3425 

-3 

3480 

3420 

2.729 

69 

Jul 

3405 

+17 

3450 

3395 

1506 

a 

Sep 

3385 

*6 

3445 

3405 

1X38 

86 

Total 





36X52 4X68 

■ COFFEE *C* CSCE (37.50013s; cents/Baai 


Dec 

190.90 

+6J0 

191 JO 

184 .IS 

1X487 7,487 

Mar 

195.40 

+6 70 

19X00 

189 00 1 0.912 

3.430 

May 

187.70 

♦180 

187 JO 

191X5 

4.101 

283 

Jd 

199 JX) 

*6X5 

19X80 

194.00 

1578 

126 

Sep 

199X0 

+5X5 

198 JO 

195.00 

796 

26 

Dec 

2D0.10 

+560 

199 00 

18550 

871 

77 

Tetri 





33X4511X29 

■ CORS PCC9 (US centa/pound) 



Oct 11 



Price 


Pre*. day 

Comp. <My 


178 37 


174.62 

IS Dry wage 



797X9 


199X7 

■ No? PnaMRJM RAW SUGAR LCE (certts/lbri 

Jan 

11X2 

. 

. 


80 


Mar 

12.54 

-0 04 

- 


- 


May 

1X64 

■0.14 

- 

- 

450 


Jri 

12-58 

+031 

- 


- 


Total 





340 


■ WHITE SUGAR LCE (S/tonne) 



Dec 

329X0 

+3X0 

JJ0X0 325.50 

3X10 

79 

Mai 

32X10 

+4X0 

32X50 

32450 

4482 

B7U 

May 

327. Bfl 

+170 32X00 

324.00 

1X14 

108 

Bag 

327 00 

+160 

327.60 

32350 

2X01 

166 

Oct 

311 JO 

+100 

- 

- 

271 

. 

Dm 

31 0.40 

+3X0 

- 

- 

4 

. 

Tata) 





18X82 1X23 

■ SUGAR *11' CSCE (llSXOOtw cema/lbs) 


Mar 

12X7 

+022 

12X8 

12X1 

8314333.470 

May 

12 44 

+OX3 

1245 

1227 17X94 3X20 

Jri 

12X5 

+021 

12.35 

12.18 

11X78 1387 

Oct 

12X8 

*0.18 

12.08 

11 98 

9565 

493 

Mar 

71.75 

*0.17 

11.75 

11X3 

1.424 

S3 

May 

11.75 

+0.17 

- 

- 

9 

- 

Total 




123X1839,783 

■ COTTON NYCE (5O000B*s; cerrts/te) 


Dec 

6X73 

*0.29 

68X4 

8X35 

28,786 8.141 

Mar 

70.40 

+021 

70X0 

70X0 

12X6? 1,908 


71.33 

+0X8 

71 JO 

71.15 

6559 

402 

Jd 

72.05 

+0X3 

72.40 

72.00 

3X6/ 

an 

Oct 

69.30 

+0.05 

6X30 

BS2S 

538 

25 

See 

68.78 

♦0X2 

6XS5 

68J0 

1X48 

324 

Total 





5125610X91 

■ ORANGE JUICE NYCE [15X00 Os; centsXbe) 

Bov 

8X35 

■130 

94.40 

90X0 

6X58 

X<2 

tor 

96^ 

■090 

98J0 

94.30 

6.77B 

.079 

Mar 

10X20 

■050 

01.75 

97X0 

4.895 

401 

May 

104.10 

■0.10 

(BJO 

01.00 

1.192 

94 

Jul 

10X30 

-xa 

08X0 

0X90 

625 

25 

Sep 

10X90 

•030 

0950 

0950 

37 

1 

Trial 




2X39012^48 

VOLUME DATA 






Open 

Interest 

and VOfcm 

data 

Shewn 

tor 


contracts haded on COMEX. NYMEX. CST. 


NYCE. CME. CSCE and PE Crude Ol are one 


day m a/rettis. 







INDICES 






■ REUTBZS (Baas; 



Oa 12 Oct 11 

month ago 

year age 

204XS 2D3M 

2112^1 

1583.6 

■ CRB Futures (Base: 1967=100) 




Oct 11 Oct 10 month "fl* »w ago 
227.88 22730 232.53 22027 


MEAT AND LIVESTOCK 


■ UVE CATTLE CMS jgMjflOhe; centaribe) 



Sett Day 1 * 

Open 



price dteege Wgft Low 

tat 

VW 

Oct 

68.025 +0X00 68X00 87.500 

7X67 

5.411 

Dec 

68X75 *0.300 69250 68 725 

ZE.9S 11J86 

fed 

67X25 . • 68.350 67X25 16X66 

3X82 

Apr 

68X75 -0.100 68.475 68.050 

11.128 

1X56 

Jri) 

64.750 -0X75 65X00 84 650 

3X51 

502 

Aag 

63X00 -0.150 64X00 61X00 

1X54 

133 

Trial 


67,120 27X7B 

■ UVE HOGS CME (40.00(Bb« cems/fas) 


Oct 

33.750 +0X25 34.750 33675 

1X70 

846 

Dec 

34.800 +0X50 31900 34.750 16.798 

1X69 

Fed 

31750 +0600 37.650 36750 

6,501 

876 

Apr 

37225 +1250 37X00 37.150 

3^16 

302 

JUO 

42X25 *0X50 41250 42X50 

1X05 

119 

A OB 

42.300 +0.175 42X75 42.060 

270 

17 

Total 


30X?4 

1940 


■ PORK BELLIES CME (AO.OQQtar conta/lbn) 


Feb 

38.150 -1X50 

40.700 3BX75 

8X42 

909 

Her 

38.125 -1X75 

40.700 38.050 

836 

38 

ltay 

40.450 -1X00 

42JXXI 40.350 

255 

17 

Jri 

41.150 -1.150 

42.500 40X50 

246 

6 

Aug 

40X00 -1500 

40500 30X00 

56 

1 

Triri 



8X37 

971 


LONDON TRADED OPTIONS 

Strike price S tonne — CaBs — — Puts — 
■ AL UMWUM 


PB.7«»6) LME 

Dec 

Mar 

Dec 

Mar 

1625 

68 

99 

35 

S3 

1050 - _ 

55 

08 

47 

71 

1075. 

43 

74 

60 

83 

■ COPPER 





(Grade A) LME 

Dee 

Mar 

Dec 

Mar 

2500 

80 

106 

69 

110 

2550 ... 

57 

65 

96 

138 

2600 _ . 

39 

67 

128 

163 

■ COFFEE LCE 

Nov 

Jen 

Nov 

Jon 

aeoo „ — 

66 

223 

103 

300 

3850 

48 

206 

135 

333 

3700 - 

35 

190 

J72 

367 

■ COCOA LCE 

Dec 

Mar 

Dec 

Mar 

925 

34 

84 

23 

38 

950 

23 

70 

37 

50 

8750 

14 

58 

53 

63 

■ BRENT CRUDE IPE 

Nov 

Dec 

Nov 

Doc 

1660 

1 

45 

4 

60 

1700 

3 

28 


92 

1750 __ 

1 

14 

- 

127 


LONDON SPOT MARKETS 

■ CRUDE OIL FOB (par barret/Nov) +or- 


Dubaf 

$15.19-5X41 

+1 M 

Brent Bland (dated) 

$10.13-6.15 

4X21 

Brent Blend (Nov) 

SI 6X1 -6X3: 

-OX5 

W.T.L (1pm est) 

SI 7.58-7. 60t 

-0X8 

■ OB. PRODUCTS NWE prompt datvwy OF (tonne) 

Premium Gasoline 

SI 72-175 

-1 

Gaa ChJ 

SI 54-155 

-5 

Heavy Fuel Oil 

$61-94 


Naphtha 

$1 67-1 66 


Jri 1W 

$174-175 

-3 

Diesel 

$157-158 

-5 

Frimfcur. Apuj. T*L Lemon (071) 3S9 8792 


■ OTHER 



Gold (per troy or)A 

$388.40 

*0.15 

Silver (pat troy oO* 

56150c 

+rxo 

Rattojn (per troy 05.1 

$417.10 

+2X0 

Palladium (per tray os.) 

$15240 

+2.15 

Capper (US prod.) 

121 . 0 c 

-1.0 

Lead (US prod.) 

39.1 Sc 


Tin (Kuala Lumpur) ' 

13.50c 

-0.03 

Tin (New Yorifl 

248.5c 

+1X 

Cattle five weljfiOt 

115.43p 

+0X4- 

Sheep ptve we^njr* 

90X5p 

-0.06* 

Pigs (tare weight) 

75.94p 

+05T 

Lon. dav sugar (raw) 

S302.1 


Lon. day su$y Me) 

S334.S 

-25 

Tate & Lyle export 

£303.0 

-4.0 

Barley (Eng. teed) 

Unq. 


Mel's (US No3 Yeflow) 

Sl32.0y 


Wheat (US Dark North) 

Urtq. 


Rubber [Nov)¥ 

9450p 

-0.75 

Rubber (Dec* 

94.00p 

-0.75 

Rubber (XL RSS Nol Jul) 

358.0 

+2 

Coconut CM (PhlD§ 

seo&ou 

+10 

Palm Ol (Malay-I§ 

$592.51 

+5 

Copra (PH0§ 

3394. Qu 

*2 

Soyabeans (US) 

CIS&Ov 


Conor OuHoofc/A’ index 

73.60c 


Woottops (64® Super) 

434p 



£ bo tome un«a ansnxtM scud. p percofcg. c canttAh. 
r itaggA/kg- m Mrimrian senaAg. y OcVDec. v NeWOflB. u 
Oet/Nov, t Now. f London PhyisaL § OF Ftawdam. 4 
Bulion riurkM rioee A Sheep /Lire wri Jrtt crfceA * 
Change on O Prices am lor prartws day. 


CROSSWORD 

No.8,5S3 Set by ALAUN 



ACROSS 

1 Spot, the dog, is inside safe (6) 

4 As [or the trials, objects for 
them (8) 

9 A second import (6) 

10 Summons into action every- 
body in the Scout movement 
(5,3) 

12 Question many a one in the 
thriller (8) 

13 Coloured disc on a chain (6; 

15 Give the Impression a number 
will get a tip (4) 

16 What to do with a cold is not 
to go out (7) 

20 With somebody else, I 
released the seals and other 
animals i7) 

21 Enterprise and energy that 
get one the sack (-1) 

25 Goes for what giraffes always 
go for (6) 

26 Opportunities for Grst-nigh- 
ters (8) 

28 Offering to take people to a 
party (8) 

29 Meaning it’s a trial (6) 

30 Ear piercing with a small 
spear (8) 

31 For eating, does it have to be 
podded and shelled? (6) 

DOWN 

1 Rather an unknown quantity, 
don't you agree? (81 

2 Calms down and makes It up 
( 8 ) 

3 Had contacted to smuggle the 
dog back (4^> 


5 Grow back (4) 

6 With time, somebow learn t< 
he forbearing (8) 

7 Pries up with metal objects (6 

8 More determined to get a dot 
( 6 ) 

11 As the actor wrong for th* 
role of the angler did? (7) 

14 The tonics hill drip out L 
turned upside down (7) 

17 Abandoned by the French 
very upset indeed (8) 

15 Attacked when working (6.2) 

29 That old one about the boa 

and the madman? fS) 

22 Dashing fellows, those lane 
ere! (6l 

23 He won’t let you flag (6) 

24 Before sunset, will come in tc 
clinch it (61 

27 Depressed, drink (4) 

Solution 8,582 


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.1 . 


FINANCIAL times 



Thursday October 13 1994 


■J i r 1 . , .1 ■. 


HORS 



:th* 

n-t; 



MARKET REPORT 


Further gains follow favourable inflation data 


FT-SE-A All-Share index 




By Torry Byland, 

UK Stock Market Editor 

Better statistics than expected on 
domestic inflation, backed up by 
favourable comments from the Gov- 
ernorof the Bank of England 

631115 *» UK stores 
yesterday. The confident tone of the 
market was set early by the strong 
nse overnight on Wall Street andby 
an agreed bid of £47S.5m from Brit- 
ish Aerospace for VSEL. the UK 
nuclear submarine manufacturer 
Boosted by further strength 'in 
stock index futures and government 
bonds, the FT-SE 100-store Index 
broke through 3.100 within the first 
hour of full trading. But the market 
although busy, spent the rest of the 
session jousting with this level 
closing a shade under the day’s best 
at 3,100.5 for a net gain of 27.5. 


The UK stock market has now 
risen for five successive trading ses- 
sions, showing a rise of nearly 5 per 
cent since the mid dl e of last week. 
The recovery since the beginning of 
the final quarter of the year has 
restiznolated confidence that UK 
equities can move towards the Foot- 
sie 3,500 area before the end of 
December. Excellent trading results 
this week from iwHing us compa- 
nies have highlighted the recovery 
in global economies. 

Some traders believed that the 
market was slowing down at last 
night's close, as Wall Street shaded 
off by 3 Dow points in early trading 
and global markets awaited the US 
producer price index, due today, 
and US industrial , production and 
utility capacity utilisation statistics, 
due on Friday. 

“I would expect some kind of con- 


solidation at these levels,” said Mr 
Ian Harnett at Strauss Turnbull. 
“The Footsie's close above 3,100 wiD 
be regarded as important’* 

The announcement of a further 
dip in both the headline and under* 
lying rates of domestic retail price 
inflation in September, together 
with a steady trend in average earn- 
ings, strengthened market hopes 
that base rates can be left 
unchanged for the rest of the year, 
thus easing one of the principal con- 
cerns felt by investors towards UK 
equities. 

Faith in the low inflati on outlook 
was further encouraged when Mr 
Eddie George, Governor of the Bank 
of England, was reported from the 
US as saying that markets were 
exaggerating the extent of expected 
Inflationary pressure. 

The market assumed that the 


British Aerospace bid for VSEL had 
been well cleared with all official 
parties before announcement, and 
could be safely regarded as a “done 
deal”. A sharp gain in GEC shares 
indicated the stock market’s belief 
that It was unlikely to contest the 
bid. However, the share price of 
VSEL, now effectively related to the 
BAe stock price, which was also 
strong yesterday, edged above the 
share exchange offer terms. 

The FT-SE Mid 250 Index 
advanced 28.4 to 3,535.3, keeping 
pace with the blue chip market and 
suggesting that interest in the sec- 
ond line issues might be returning. 
Non-Footsie business made up 
around 56 per cent of the day’s Seaq 
total of 732.4m shares, a welcome 
improvement from the 662.3m of the 
previous session. 

The strong advance in the Footsie 


index was again achieved without 
much contribution from the 
oil issues, which have so far refused 
to be over-excited by the develop- 
ments on the Kuwait border. Dollar 
stocks in general remained very 
firm, although the pace slackened 
when Wall Street opened the new 
session on the downside. Short term 
trends in London are expected to 
depend on the performance of the 
New York market over the next two 
sessions. 

The insurance sector continued to 
make progress and the banking and 
retail areas drew confidence from 
the calming of interest rate worries. 
The improved tone on Wall Street 
and in the UK and continental 
European securities markets was 
reflected in a gain in shares of 
Reuters, the global financial infor- 
mation group. 



Equity Shares Traded 

Turnover by (mllion). Exefcxinfl: 

Miwneriwi business and overawe turnover 
1.000 • 


Indices and ratios 

FT-SE 100 310£L5 427.5 

FT-SE Md 260 3535.3 +28.4 

FT-SE-A 350 1554.1 +13.4 

FT-SE-A AS-Share 1538.72 +1239 

FT-SE-A All-Share yield 3.81 (3.94) 

Best performing sectors 

1 Building Malls & March +3.1 

2 Life Assurance +1.B 

3 Bectronie & Elect Eq +1.8 

4 Telecommunications . — +1.5 

5 Engineering, Vehicles +1.5 



FT Ordinary Index 2382.0 +24.2 

FT-SE-A Non Rns pfo 18.94 f1&78) 

FT-SE 1 00 Fut Dec 3114.Q + 12.0 

10 yr Gilt yield 8.70 (8.78) 

Long gtit/equrty yld ratio: £23 (2_24) 

Worst performing sectors 

1 Tobacco -0.6 

.+ 0.0 

+ 0.1 


2 OB Exploration & Prod .. 

3 Printing. Paper & Pack.. 

4 Retailers, Pood 

5 Electricity 


,40.1 


..+ 0.1 


VSEL up 
on BAe 
bid move 

British Aerospace raced ahead 
following the announcement of 
the long awaited agreed bid for 
submarine maker VSEL, with 
analysts taking a favourable 
view of the trading, balance 
sheet and fiscal implications of 
the proposed takeover. 

The stock advanced through- 
out the day in heavy volume to 
close 12 higher at 47ip on a 
turnover of 12m shares. VSEL 


EQUITY FUTURES AND OPTIONS TRADING 


finished at 13l0p, up S5 on the 
day and 15 above the notional 
value of the share exchange 
portion of the offer. 

Analysts felt that the take- 
over was Defence Ministry 
driven. By yesterday after- 
noon, speculation on the possi- 
bility of a potential connter-bid 
had begun to flag, althoug h in 
some quarters GEC was still 
being promoted as the most 
likely potential rival to British 
Aerospace. 

If it goes ahead, the deal 
stands to widen BAe's defence 
capability and bolster lt9 
balance sheet VSEL brings 
in net cash of £288m plus tax 
benefits that allow profits 
to roar through to BAe effect- 


ively tax free in both 1995 and 
1996. 

Telecoms busy 

The telecoms area attracted 
the most concentrated activity 
in the market with turnover in 
the top three stocks, BT, Cable 
and Wireless and Vodafone, 
totalling 37m shares. 

There was also keen support 
for the two classes of Securicor 
stock and Security Services. 
Securicor/Security Services 
hold a 40 per cent stake in Cell- 
net the cellular phones group 
in which BT has a 60 per cent 
shareholding. 

Dealers said the sector had 
been boosted by recent specu- 


lation of a demerger of Cable 
and Wireless’s Mercury tele- 
communications business, 
which Includes its highly suc- 
cessful One-2-One digital cellu- 
lar phones business. 

Any demerger of Mercury is 
expected to attract strong 
demand in the stock market 
and could trigger a rerating of 
the other cellular companies. It 
was also said that BT might 
launch a preemptive strike to 
acquire the Securicor minority 
holding in Cellnet in the event 
of a Mercury demerger. 

C&W, also helped by the 
expansion of HK Telecom in 
China, rose 6 to 421p. while BT 
settled a penny higher at 
396Vlp. News of a joint venture 


Stock index futures moved 
ahead for the fifth day running 
but trading was at times 
unsure of direction and the 
market closed short of its best 

■ FT-SE TOO INDEX FUTURES (UFFE1 CBS par ful Index point (APT) 


levels, writes Jeffrey Brown. 

The FT-SE 100 December 
contract ended the day 12 
points higher at 3,114, having 
touched 3,127 in mld- 


Opert Sett pnee Change Mgh Low Est vtjl Open int. 

Dec 3097 0 3114.0 +1X0 3127.0 3095.0 15006 55577 

Mar 31380 + 12.0 0 

■ FT-SE WO 250 INDEX FUTURES (UFFE> CIO per titflndw port 

Dee 3555.0 3552.0 +7.0 3556.0 3540.0 51 4205 


■ FT-SE fcflD 2S0 INDEX FUTURES (OMUQ CIO par lull todtet point 
Dec - 3552.0 I - I 

An won interna (gitte are tar prawaua day. t Exact vefuma atom. 


■ FT-SE tOO INDEX OPTION QJFFEI T3096) CIO perfU Index port 

2800 2950 3000 3090 9100 3150 3200 32S0 

CPCPCPCPCPCPCPCP 
203*2 2 158** 3 110 7 S7>2 15b Mb 34 14 64 5 104b 1«l 153 

221 14 1 2 1811; 22 Ifllj 31lg M5* 2 45 68 S S3 34 I25>c 21 164 

24012 27b 200 38 185 52 ttlfc 60 Tfl2>2 90b 77*2 116 SB* 1441, 40 178 

2601* 3S>; 224b 52 IBS 65b 157 83b 127 HnijIfflfclXh * 156 61 IBS'? 

322 74 2S6>2lB6>2 198 145 MPjIBSJa 

c* aas: rat • • 

■ EURO STYLE FT-SE 100 INDEX OPTION (UFEEj CIO per Ml index point 


Oct 

Nw 

Dec 

Jan 

Junf 


Oct 

Nw 

he 

Star 

Juit 


Stas 207S 3025 

176*2 2h «0»2 4»j 66b 11 


3075 5123 

49*2 23*2 23*2 47*2 


3175 
9 82*a 


3235 
3 125*2 


3275 

1 174*2 


200*a 1® 1W* 25 123*238*2 81*3 55*2 66 78*2 42*2 106 26*2 140 16*j 176 
-- lidj 78 87*3 96*2 6* 124*2 43*2153*2 29 168*2 


144131> Z 
185*2 151 


97*2 162*2 
137 106 


217*2 30*2176*2 42 148 58 
268 60*2 SI 91 

307*2 81*2 • 243*2 113 

1.647 Ms 1,540 - UMotffng tote tore, 
t Long mted entty MMte 

■ EURO STYLE FT-SE MB? 250 INDEX OPTION fQMDQ CIO per fuU Index point 


3400 3450 3500 3SB0 3000 

Oct 152*8 60*2 124*4 90S W* 115*, 

Gffls 0 Puto Q SWfcmart prices an* rakaret ■» Wan ■ 4Ugn 


3700 3750 


afternoon. The cash market 
premium was 13.5 points with 
the fair value premium 
standing at around 15 points. 

Trading was fitful, moving In 
bursts in both directions. There 
was a bit less activity than on 
Tuesday but trading volume 
ran to 13,702 contracts, down 
from 14.793. 

Both locals and market 
makers were equally active, 
and traders said there were 
even occasional flashes of 
institutional business, although 
much of this was said to be 
the unwinding of short 
positions. 

The premium to the cash 
market fluctuated widely, 
moving out at times to 30 
points. Traders said some 
arbitrage business was 
undertaken, notably by 
NatWest Securities. 

Traded options were also 
active with volume rising to 
48.750 lots from 43,990 in the 
preceding session. FT-SE and 
Euro FT-SE volume accounted 
for 19,900 lots. 

HSBC were the busiest 
individual stock options with 
3,824 lots dealt British Gas 
traded 3.329 lots. Kingfisher 
and NatWest Bank were also 
active. 


TRADING VOLUME 


■ Major Stocks Yesterday 

VOL Ooelng Day's 
OOP* pnoa rtna 

ASOAQnurt 

MW» Nstorttt 
Attttt Rater 
AIM DoteCQt 
Angten Wafer 


A aw Bra. Fore 
BAAt 
BATtodit 
BCT 

ace 


BPS tote. 

gri, 

BTRt 

Biffc of Scoriontft 

sr T 

3to Gretat 


Boowt 
Bowswt 
teL Aaraapacat 
BMtt) Mraayef 
Britan Gref 

Brora Lana 

BreunSMalt 

Burst 

Barash Cretat 
Biraoo 

Coteirn+f 

CatoiySoiMtet U(0 


IAS 

325 

+3 

UOO 


+1 

LEOO 

411 

12 

164 

44 


888 

960 

+3 

836 

54S 

+4 

067 

316 

+1 

7800 

265 

+2 

2.400 

256 

-i 

1800 

517 

+12 

294 

272 

♦1 

1.100 

507 

+3 

6^U> 

446 

-2 

1800 

106*3 


1800 

36? 

+0 

1400 

507 

♦7 

aarm 

420*2 


1800 

320 

+6 

13800 

386*2 

+1 

UOO 

317 

+2*2 

1200 

an*2 

-1*2 

cam 

S63 

+1 

1800 
a 700 


a 

Sob 

419 

-i 

3.100 

225 

♦13 

1600 

46S 

*1 

12X100 

471 

♦12 

UDO 

382 

+10*2 

16X100 

302*2 


78c 

405 

+1 

MOO 

157*2 

-*2 

2S8 

105 


403 

2600 

13.000 

£ 

421 

1 


CMaanf 

Cate Comuw-t 


Conan. Uncnt 

Cooiuon 

CcuranAart 

DalBrcy 

Do La Baft 

Dbaxia 

Eastern Hast t 
East intend Eteet 


I Cure ( . 

. iQit 
EunteMUnsa 
F*a 


\ FT - SE Actuaries Share indices 



The UK Series 



Day's 

Yaar 

DM. 

Earn. 

P/E Xd ae\ Total 


Oct 12 

ctigoSt Oct 11 oa 10 oa 7 

*00 

yWcfit 

yUtt% 

ratio ytd Rattan 

FT-SE 100 

31005 

+09 3073.0 3032.3 2998.7 

3080.0 

4.06 

7.01 

1855 10759 1175.14 

FT-SE MM 250 

3535.3 

+08 3508.9 34818 34473 

34603 

354 

5.76 

2095 104.80 1318.51 

FT-SE MW 250 ex hiv Tlruete 

3530J> 

♦08 3501.7 3478.0 3441A 

3475J 

3.70 

6^3 

195010851 131350 

FT-SE-A 350 

1554.1 

+09 16407 1622-5 1605i> 

15400 

3.95 

6.72 

1754 52,08 1204.59 

FT-SE SmaflCap 

1791-14 

+05 1781.83 177339 1771JM 1783J8 

3J0 

4.BB 

25.49 4758 1392.14 

FT-SE SmaflCap tut Jrw Trusts 

1759.B2 

+05 175092 174088 174088 1773.9* 

351 

6.47 

2323 48.86 1371-73 

FT-SE-A ALL-SHARE 

1539.72 

+09 1528.73 1809.48 1494.19 152024 

351 

8.60 

1853 5056 121358 

■ FT-SE Actuaries Ail-Share 








Day* 

Year 

Ov. 

Earn 

P/E Xd rel Total 


Oct 12 chgatt Oct 11 Oa 10 Oct 7 

*00 

yMd% 

IjULHi 

rate ytd Return 


ForateltCd IT. 
Forttf 

Can. Acdteot 
Ganate Eteett 
Grot 

G^TMWd 

QnrmC&t 
On) Malt 


1620 

611 

xao 

)«« 

3.100 

700 

ISO 

500 

2.800 

MS 

rj»0 

3B3 

1.1C0 

1JV0 

uoo 

i.aoo 

MM 

755 

XBoa 

1.900 

rcoo 


•sc 

276 

Mb 

217 

see 

2*6 

452 

431 

WO 

W 

736 

706 

477 

36a 

390 

263 

1GB 

112 

133 

234 

9B1 


•11 

*3 

*4 

41 

*11 

*2 

* 

■* 

*a 

-* 

♦i 

♦ 1*2 

•a 

♦T 



10 MINERAL EXTRACTION {18) 
12 Extractive IndustrtwM) 

15 CM. Wegimod{3l 

16 CM Ewjte aiKa) * P WBL111 


20 GEN MANUFACTURERS(267) 
71 Botdmg ft Conatnictlan(33) 

X BuMnfl Malts 8 Merehst32) 
S3 ChomKatep31 

24 Oivnsifled lndustriats(16) 

25 Bectrortc 8 EXct Eo«W34) 
SC Enomecrtiqm) 

27 EmprWBftiHJ. VW»Cles<13| 

28 Prausna, P KfJts h. PcKgCffl 

29 Tfilto & Appero*CCB 


2747.05 

401021 

2897.87 

191109 

+0.4 273459 2713,11 288551 234850 
+05 400857 3975.76 393158 310150 
♦0.5 268359 265958 2633.88 231190 
191119 1915.02 1890.84 1917.00 

355 

350 

350 

2.17 

458 

5.11 

557 

2558 

2450 

2254 

81.48 

6852 

85.60 

1105.63 

110854 

110953 

110650 

1894.50 

+1.1 187358 186054 1642.70 1904.10 

4.02 

5.06 

2453 

8554 

987.82 

1088.89 

+15 1078.11 1033.78 101*55 1152.40 

3. 52 

3.09 

26.90 3450 

868-40 

184921 

+11 1811.76 179157 1783.72 1843.70 

3.99 

S.11 

2352 

8853 

876.71 

2342.55 

+05 232957 2317.95 230554 220750 

345 

441 

2353 7958 

103953 

1797.74 

+0.8 178185 1780.B4 17S130 196450 

6.09 

5.18 

2357 

BITS 

82458 

1933.71 

+1.8 1802.83 1889.12 1878.14 217040 

359 

652 

1858 8055 

94750 

1620-60 

+15 179854 179654 1772.48 1876.10 

3.13 

4.90 

2411 

4750 

104153 

2284.00 

+1.5 2291.03 222959 2168.07 188140 

4.42 

1A8 

80507 

7427 

1098A8 

2797,71 

+0.1 2796.81 2778.422783.18244750 

357 

555 

2154 

7354 

110149 

1634.73 

+1.0 1618.83 1607.84 159554 1915.60 

4.12 

859 

18.81 

48.49 

92411 


Kantaons CnaBaid 


BA 

tat t 

hwicapet 
Jtfvtm l l a nl ia y 
«B(|Sshart 

KttSa* 

L at fa ij art 

LandSaeuttaat 

Lapana 

Laoal & Ownrarf 

»» 
LASMO 
Lcndon Sact 

Loratio 

Locaa 

MB-Cf 

hn 


M a l a A Sancarf 


roc W 

MbW 0 K Bankf. 


30 CONSUMER GOOOSJ97) 273S27 

31 BiweneNlTJ 22D4A1 

32 Sprits. Wtows 4 CW«s(10l 2817.M 

33 Food Manutocli4orsp3) ZZ8a '!5 

M HwaiidW GoodsHSI ZXXM 

36 HcJIh Cored I 

37 pharmoccmiicotsll?) 22I 3, ?5 

33 TobaccoO) — 35*J3- 


+0.7 271659 2683^0 2669.19 2740^0 4J5 7J4 

+1 .1 2160.13 2154.17 2161 .36 2032^0 459 7SH 1536 81.10 987,52 

+0.7 2788.94 2769A6 2754JJ4 2604.10 3.86 868 1E70 101^3 34635 

+a6 2271^1 226a?2 224a75 2316JO 4^4 7.69 15.14 81^6 963.13 

+1.5 2324.73 2291S2 2285A1 2560.60 3S5 7.70 1SJ54 57d 842.62 

+1^ 1582.71 1583.43 1574JQ 109720 3.13 344 42M 4844 93846 

+1.0 298346 2942.61 2943.75 3125.40 447 7.11 1828 125.18 964.13 

-0.6 377549 369646 3698.92 387740 5.7B 9.1S 11.73 21747 65844 


Mortem Baa. 

MontemFooast 


P8 Ot 


40 SERVICES{220) 

41 OetnbuiarsOO) 

J2 LiWure & MoIttspSI 

43 Mod i4(30i 

44 R.-toAss. Food{1B) 

45 Rotates. Gmend|45) 

48 Support S+nncoS(41) 

49 Ti,maportl161 

E.1 nmw A BusmeaapL 


1909.60 +04 1891.83 187747 186246 1687.70 

26+7.42 +042640.60 2528.77 249848 2671.70 

2081 .1* +0.6 206441 204648 202442 1838.80 

2819.80 +14 2785.70 2770.45 2755.72 262640 

1711.74 +0.1 171047 168342 1634.19 1703.10 

164004 +14 1819.11 160448 1584.19 168400 

149346 +04 1485.17 147745 146744 1622.00 

2281.42 +1.62228452215.49217058228220 

imp 60 +04 124847 1238.93 124146 1202.60 


354 

658 

18.90 

5057 

93951 

348 

7.19 

1656 

8178 

88857 

358 

477 

2466 

5752 

102855 

148 

652 

2150 6658 

981.08 

3.78 

951 

1358 

51.78 

102445 

352 

852 

1174 

4355 

877.77 

182 

857 

1853 

3168 

90855 

572 

550 

20.70 

6958 

888.06 

3.74 

254 

7559 

2552 

107456 


BteteOent 

Pradarteff 

RMCt 

S3 

FtonkOtt-t 
Raddos. Coknanf 


Road Wit 

teaoatr 

Itoutaat 

aeteRoyest 

SSSSt 

6 Ncr.f 


*7 

jflU 

5200 561*2 +6 

853 329 *1 

1400 516 *12 

2J30D 417 *7 

1X00 5M «e 

3.700 196*2 *1 

1490 C05 *5 

2400 456 +1 

4400 735 *16 

5 325 -3 

1+flOB 22B*z *1** 

759 165 *1 

1*00 200*2 tZh 

521 171 +1 

19T 311 *3 

3700 314 -2 

3400 435 

30 5*1 

1^00 500 +7 

151 5*7 -6 

3.700 157 -1 

1,100 614 +2 

202 713 *12 

1400 4«2 46 

1400 350 42 

2400 56S 40 

1,400 153 -1 

246 677 -2 

3400 

1^00 1B6 

528 *31 

1400 137 

174 m 

4400 416*1 

546 721 

131 
178 
*87 
490 

2*7 46 

S57 *4 

744 -4 

209 -1*2 

TG3 -* 

016 46 

605 

157 42 

566 

316 46 

967 4 a 

082. 43*2 

254 -4 

414 40 

556 +11 

47B 40 

778 +1 


1,100 

*£00 

1,600 

3.71X3 

6E5 

KJ 

710 

159 


+S 

*2 

+1 

+1 

43 

41 

-a 

46 

-6*2 


l£00 

6300 

1£Q0 

2JXX3 

2*4 

1JO0 

1,100 

1JC0 

1J00 

1£00 

2.700 


60 ummES(38| 
Efcdridtwin 
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73 li+uraivcd ri 

74 AssuranoatM 
7li M+cIcint S-mkatB 
77 Ct nor fmancoW+l 
7y 


2435^5 +0.7 2418.48 2360S4 234326 2434.60 
. nay t pfl +0.1 2452J36 2447.75 242003 213080 
2004.83 +02 2001 M 188013 1828.60 2174.80 

208061 +1 J 205032 1992.14 1965.40 2206410 

167078 +02 1B71.76 1661 M 182011 1855.60 


452 

7.71 

15.76 

7342 

938.10 

3.73 

1002 

1141 

83.48 

102048 

6.98 

t 

* 66.79 

91657 

348 

754 

18.15 

5052 

88940 

5.18 

12.61 

854 

6956 

937.M 


S' 


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itwasa +C.B 1B49.7B 183047 181032 163091 OB8 034 18.94 53.68 1173.11 StoajhEKa 


217036 +0.8 215061 21 1091 2083J9 2284^0 

2637.68 +0.8 281083 276057 271004 2805S0 

128008 +1.0 1268.67 1227S6 120U9 1474J0 

241025 +1 .6 2374.53 230084 2283.75 2701^0 

3770.83 +1.0 2743.10 2682.91 259038 3118.70 

161017 +1.4 179038 1773.** 1788.61 180620 

1458.18 +02 1455S8 1457 M 1437.77 168020 


m wcati^wT TRUSTstiaa. 

FT-SE-A AU.-SHARES888J 


276*26 +08274053 2721^1 2705^1 2622.60 


1539.7? +08 1528.73 1508.49 1494.19 152824 


4.44 

9.03 

1185 6750 

B6S49 

455 

10X19 

1154 1144* 

852.71 

558 

9.19 

114* 6457 

H7833 

559 

7.71 

16.81 127.82 

936.W 

3.75 

1142 

9.77 87.78 

638.68 

346 

8.63 

1345 8351 

97645 

415 

452 

2951 4352 

83S59 

9 » 

145 

5157 83.41 

92953 

3.91 

8.G0 

13.03 8036 

121356 


SWilWHI 
SnaBi & Napteaf 


SoumamBaa-t 
Souti Wteaa Etaa. 
sraan mm waar 
South MM. Bae. 
iWttar , 
l Ctendt 


Ute-t TJ500 
1JOO 


SJOOO 4BB% *13^ 

3^*00 135 44*2 

1J00 413 10 

4,100 296 *1 

ZBOO 40* +2 

13* 1390 +35 

2300 5M +8 

1300 335 +4 

1J00 355 *6 

TJBOO 106 +1 

IB 1» -3 

1900 385 -2 

1.000 557 «4 

3.000 727 

1300 530 

651 233 

7ta 431 

1P0O 1*31} 

0500 43* 

391 

43* 

721 
78* 


IS 

.1 

+15 


■ Hourly movement* 

Open OOP 


1009 1 1M 1&00 1QOP 14J0 1000 1010 Htflh/day LoWdey 


FT-SK 100 
FT-Sfc Mtt CSO 
FT-SE-A 3S0 


3082.7 

3616.0 

1545.3 


3087.7 
351 JC 
1547.0 


30908 

3518.4 

1548.B 


30905 

3624.8 

1661.5 


30935 

3527.8 

15507 


30885 

35287 

16586 


30988 

35315 

1553.1 


30988 
3631 .6 
16508 


30986 

3533.4 

15682 


3100.7 307BS 

3535.3 36109 

1554.1 1543J 


Sun ACantet 

W 

71Graupf 
TS0T 
Tarmac 
Tate&Lyte 
Tavtor VVocAw* 
Taaaet 


morn Bat 
Tentarmf 




523 
• *0 
■ 
88 
770 

uoo 

1500 

*Jao 

4 JOO 

vw 

9tma 

673 

BOO 

3J00 

1JW 

1400 

1A00 


7T7 

SB7 

m 

200 


Open 


BlOO 


Bldg & Crevrai 
Phdini.itionlrrN 
V.'jtor 
Rv*v 


1027 9 
W58 7 
1876.5 
JB601 


7 7966.0 


1040 

11 XX) 

1100 

1340 

1440 

1640 

19.10 

Cl am 

nraafoua Clifnga 

1028.6 

H6&9 

18795 

2868.8 

10344 

2974.4 

1878.9 

287S.7 

10364 

29745 

18855 

28874 

1037.1 

2676.1 
16819 
28755 

1036.7 
29784 
10774 

2875.8 

18345 

29764 

18745 

287a8 

102&4 

29835 

18724 

2871.7 

1029.8 

28885 

18734 

28719 

1020.7 

29594 

issas 

2848.9 

+3.1 

+29.1 

+44 

+244 


ISSSt 

UWBrauot 
UBl NttnpapteS 
Vedtena t 
WteSBBISGrt 


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■e 

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r» •* 

380 +13b 
210 -1 

132 « 

*25 -a 

128 +1 

237 -2 

510 -** 

1005 *7 

212 -1 

+4*2 

•B 

*6 

-3 


28985 

7 *A*:.+iai cifrtinar+r an tt*> FT' Sanjca. Mtfchogu raa i r ange of etearonic and papar«aaad 
LcrxKP ^ r *r; Fto<jr Houaa, 13-17 Rwwrti SBM, Lonclon ECZA 4DL 

>i itwaa antexa wdai^Tte FT-6E 108 teFT-Bg Md 2S0 l FT.8E ACTttlaa 3S0 ano «te FT-S EAttttte Wttfay 

eSSw-*. United XtoBite. W tt RvttteOf Wted « M ff-aCAteteMAKtereWtete 


UKs ol BOOHiiam am bmObBIb tan The Flnanett Ttote* 



5s7W 8B*i 
6S8 334 

^2B0 1130 

7S1 300 

=S *« 

11X00 217 tia*j 

1 .TOC 633 *2 

81 08 4 

132 850 -1 

11B 810 +6 

98* 5*3 +* 

tJOO 33* 

Zm 183*2 
*200 ISO 
2JOO 74* 

333 BBS 

229 527 

4J0Q 813 
Bread on ndtop raUH tar a aataotei si mpa 
aaewDa dte WoikTi tea SEAO ayteara 
ytearttajr urtl <J0pcn. Traoa ot ana aMen or 
mere are mMH am. t Mem an l*T-6S 
loon' 


WaWiMtater 

WWnet 

MW tenia HMtt-t 

MMte Cerrepn 

Niter 

VKtetot 

ywutwaBact. 

YarUHra Water 

2aoacat 


in France with G ene rate des 
Eaux and Southwestern Bell 
helped to drive Vodafone 1 2*A 
ahead to 2i7p. Securicor ordi- 
nary rose IS to I463p, the “A" 
stock 36 to 936p and Security 
Services 35 to 780p. 

BAT easier 

Tobacco and insurance con- 
glomerate BAT Industries was 
one of the few weak spots as 
one house apparently discov- 
ered that the cost to the com- 
pany of this year’s Los Angeles 
earthquake was far greater 
than previously expected. 

UBS spoke to Farmers, the 
BAT subsidiary which is one of 
the largest insurance groups In 
the US, and established that 
claims resulting from the 
earthquake had rocketed to 
$L50bn from $120bm thus drain- 
ing the capital available for 
writing new business. 

The securities house has had 
the stock as a trading buy for 
the past couple of months. 
However, the latest news has 
prompted consideration of a 
return to its fundamentally 
bearish stance. There is also 
concern that BAT will have to 
carry out huge capital invest- 
ment in order to cope with the 
potential demand for cigarettes 
in newly opened markets such, 
as Eastern Europe. The worries 
were voiced at the UBS after- 
noon mpftting and the stock hit 
443p before rallying with the 
market to dose 2 off at 448p. 

Gas caution 

British Gas was the most 
heavily traded stock in the 


NEW HIGHS AND 
LOWS FOR 1994 

Nnimwm. 

BLOO MATIS A MCHT5 ff J Akirme. 
CHEMCALS (11 DMtan. DttTRBUTORS {*) 
REA. BXCTRMC a ELBCT SOUP p| Ukrebtehl 
NCte Cop. Pit. TfltepK. BOOUEMMa (Q 600 
Qn>« VSB. CDnartun, SCTRACTTVE MD9 (3) 
Bre d rad . Omar, Mttupayt' Cora. PJa. 
D1VSBTUEKT TRUSTS (2) IMVE8TMCM7 
COM4NHZB (1) MartUO Rad. LEISURE 8 
H0HL8 pt Dadd Lloyd. Juyl Hotel, LKDtA (1) 
Bra**. RKTMLM. OEMBtM. CO Fted Ear*. 
SUPPORT SOWS (I) Marpowar toe, 
T TL B COW PSCA-nONg fl) VoQteone. 
TRANSPOmr p) AM6M DtertxjOoa BRT Bite, 
Qo-Ahead. 

NSW LOWS (36). 

GS.TS PJ BANKS 0 ANZ. tepfeSo 8M0 
Ftomctel, BLOQ MATIS S MCHTS HI Capo. 
CMEMGALS ft) Ktttt. OOnSBtnORS fl) 
Outdo, ELBCTTMC A ELECT SOUP (S Coraol 
Wtere. nmttior. VteoLode. 
ENOOeRWO n MontoB. Meggta. Senior. 

0*0. VKW6LC8 a Mote WoM. U*Ct hdo, 
EXTRACTIVE HD8 fl) teiCMOOd. FOOD 
MtttUF (T) Corttnend Fraxte. HEALTH CARE 
(1) Btacwa. WVESnerr TRUSTS fp MBXA 
fl) Phone**. MBKHANT BMSC8 (1J Bartng* 
9pc SM Pit, OIL EXPLORATION S PROD fl) 
Copta* neooucw. OTHER RNSNCUL fl) 

Towry Lnr. OTHER 8ERVS S BUMS (I) Landu, 
PHTTM, PAPER A PACKO fl) Sorata. 
PROPSHTY |3) CL8, Conrad RHtte Skater 
QddmML Powra Core.. RETAana OSNBML 
01 Camara. Cou»y Create. Hying nu ira a . 
TEXTSXB « AFMRSL 0) Ho«S. PtetenH 

FT-SE 100 Index and the sec- 
ond most active stock option as 
a big two-way pull developed 
in the sharps They underper- 
formed the market, closing 
only a fraction higher at 302%p 
on volume of 15m; turnover In 
the traded options totalled the 
equivalent of a further 3.3m 
shares. 

Specialists said the market 
had begun to reappraise Brit- 
ish Gas’s recent statements on 
dividend strategy after a lunch 
held on Tuesday between Gas 
and a number of leading ana- 
lysts. The majority of analysts 
increased their dividend fore- 
casts for Gas following the trig 


strategy presentation held in 
London at the end of Septem- 
ber. A number of favourable 
regulatory decisions have 
enabled Gas to outperform the 
market by 13 per cent since 
June. 

Burmah Castrol jumped 16 
to 855p ahead of the trip by 
analysts to the group’s lubri- 
cants operations in Thailand 
and Vietnam at the end of the 
month. 

Barclays was restrained by 
news that KleLnwort Benson 
had taken the shares off its 
buy list, downgrading the 
stock to a hold. The stock price 
edged up only a penny to 563p. 
National Westminster dipped 
5V4 to 497p ahead of figures 
expected today from US subsidi- 
ary NatWest Bancorp. 

HSBC raced up 16 to 726p, 
with Swiss Bank Corporation 
said to have been an aggres- 
sive buyer of the stock. Insur- 
ance brokers made further 
rapid progress after broker buy 
notes and talk of potential bid 
moves, mills Corroon added 
4Vi at 165Vjp and Lloyd Thomp- 
son 15 at I76p. 

Drinks group Matthew Clark 
tumbled 36 to 589p after it 
announced a £109m acquisition 
of rival Gaymer Group, and a 
£64.6m rights issue to help 
ftmd the deaL However, mar- 
ket watchers welcomed the 
deaL 

A clutch of brokers’ recom- 
mendations supported Uni- 
lever. the shares closing 8 
ahead at 1130p. The prospect of 
increased competition in the 
snack foods business, together 
with unconfirmed rumours of a 
negative broker’s note, left 


shares in United Biscuits 3 
lighter at 309p. 

Storehouse improved 6 to 
208p, boosted by a profits 
upgrade and recommendation 
from UBS. The securities house 
raised its current year profits 
estimate by £5m to £90m and 
said: “Trading seems to have 
gathered pace at Storehouse in 
the last couple of months." 

High street retailer Lloyds 
Chemists forged ahead 16 to 
299p after posting a sparkling 
set of full-year figures which 
revealed an pa cent increase 
in profits to £5&3m, and a 31 
per cent rise in the dividend. 

The favourable sentiment in 
Lloyds Chemists spread to 
Boots, which climbed 13 to 
525p. UBS reiterated its buy 
recommendation on the stock, 
pointing to good prospects for 
the healthcare market 

Overnight selling in the US 
on Tuesday bit 1C1, whose 
shares closed 2 lower yesterday 
at 8L4p. 

Am er sham international 
surged a further 52 to 995p on 
consideration of the company's 
Japanese deal announced ear- 
lier in. the week. 

Aijo Wiggins Appleton, the 
paper maker, slipped 4 to 258p 
on disappointment that ft bad 
foiled to secure a portion of SD 
Warren, one of the dominant 
US players in the sector. War- 
ren was snapped up by Sappi, 
of South Africa, for $L6bn. 

MARKET REPORTERS: 

Steve Thompson, 

Peter John, Joel KIbazo, 

Jeffrey Brown. 

■ Other statistics, Pago 24 


LONDON EQUITIES 


LIFFE EQUITY OPTIONS 


OptDB 


RISES AND FALLS YESTERDAY 




„ 

cm 

_ 


PUB 


Optea 


Od 

Jan 


OB 

Jan 


XfedOwq 

540 

45 

_ 

_ 

1* 

_ 


(-581 ) 

589 

8 

— 

- 

15 

+ 

- 

Agio 

2M 

10* 

11 

28* 

4* 

15* 

19 

(-2® | 

280 

3 

10* 

17 

18 

27 

31 

AEDA 

ffl 

4 

7 

8* 

1* 

4 

S* 

rs2) 

70 

1 

3 

4* 

9 

10 

11* 

BAAkmyi 

360 

28 

36* 

47 

2 

12* 

18* 

r382 > 

390 

8 

20* 

31 

13 

27 

31* 

waatn* 

420 

19* 

32* 

43 

4 

18 

24 

T4S4 J 

480 

2* 

14* 

24 

29 

39 

46* 

Bans 

SOO 

29* 

40* 

52 

2 

11* 

20* 

rS25J 

550 

2* 

«*: 

28* 

28* 

40 

46 

BP 

420 

7* 

22* 

32* 

8 

19* 

28 

rco ) 

480 

1 

7 

16 

42 

46 

50* 

8dWSW 

ISO 

9* 

IS* 

22 

2 

7 

9* 

HE7 ) 

180 

1* 

6* 

13 

14* 

18 

28* 

Bn 

500 

42* 

61* 

57 

1* 

14 

18* 

rst7) 

550 

7 

19 : 

a* 

18 

39 

45 

CMIMi 

420 

12 

31* 

42* 

9 

2S 

31 

1*421 ) 

460 

2 

14* 

77 

41* 

50 

54* 

Coutodds 

420 

28 

45* 

SB 

1* 

11* 

15 

T4S1 | 

460 

8* 

21*: 

32* 

14 

29 

32* 

CUniu U*n 

543 

17* 

27* 

47 

5* 

17* 

30 

rss3j 

SB2 

1 

16 

24 

41* 

47 i 

BO* 

n 

aoo 

25 

52* 

87 

8 

28* 

45 

f614J 

850 

4 

27* 

4 J 

40 

54* 

73 

natfrear 

480 

44* 

88 

72 

1* 

8* 

17 

r«9) 

500 

13* 

30* 

47 

11 

24*1 

33* 

land Sear 

600 

18* 

31 48* 

4* 

18 : 

21* 

r«i3) 

650 

1* 

«*; 

m 

39* 

48 

SI 

Marta 6 S 

390 

31 

38*. 

48* 

1* 

6* 

11 

("418 ) 

420 

7* . 

2D* 30* 

8 

18* 

23 

tWHest 

460 

40* 

54 

83 

1* 

9* 

22 

r«7j 

500 

8. 

29* 

39 

12, 

25*. 

10* 

Sdreftnty 

390 

18* 

32 

44 

4 

16 

22 

r«a j 

420 

4 

16*27* 

20* 

33* 

35 

SMTML 

700 

31* 

50 

60 

2* 

is : 

24* 

r725 ) 

750 

3 

22 

32 

28 : 

38* 

51 

Sttr&aee 

200 

IT* 

17*22* 

2 

7 

(2* 

f208 J 

220 

2 

812* 

14* 

16* 

24 

Irtftfgar 

80 

7 

11 13* 

1* 

4* 

6 

fWl 

» 

2 

9 

ttt 

6* 

9* 

12 

Uotav 

1100 

41 

64 

84 

5 : 

25*43* 

(11291 

1150 

9 : 

IS* 

SB 

a 

51 68* 

Zsnea 

an 

22 

49 

61 

9; 

25* 

44 

r* 10 ) 

no 

3* 

26 38* 43* 

55 

72 

apnea 


Itoa 

Fat 1 

5L 

MW 

Fen Oar 

Grand UH 

390 : 

38*. 

(3* 

50 

4* 

14 ■ 

16* 

T416) 

420 

15 

28 

33 

is* : 

28* 

31 

Udtreka 

140 

21 28* 

29 

2 

4* 

7* 

ns«) 

160 

7* ■ 

14* 

IB 

9 

13 

17 

UUBtacuB 

300 

U 

28 

33 

6M 

11 19* 

f30B) 

330 

5 1 

!<* 

18 

28 

28 

38 

(Mai 


(toe 

■Bar i 

too 

Oac 

Mte 

■Mi 

Ffaons 

tio 

6 13* 

16 

T 

9* 

12 

nin 

120 

5 

1 

12 

14 

16 

18 

OpSon 


Mov 

Fad 1 

**T 

MOV 

Feb J 

m 


R h*. 


Fan* 


Srens 


— ett pun — 

No* PBb Iby Nov FM) Hlf 


220 15 18*21* 3* 8 11* 

240 4to 8* TZH 14 19* 22* 

154 8 - - 9 - - 

180 2 5* 8* 28* 38* 32 

180 19 22 28 4 8 12 

200 811*18* 15 18* 23 


(*229 | 
Lasmo 
H54 I 
Lucas tods 
(*195 ) 

p a o 
reor ) 


P87 ) 


HUB) 
RTZ 
C890 ) 


r«8» 

(told tree 

C 283 ) 

Tnco 

OS&\ 

Vbdttvw 

(■216) 


r 334 1 
Option 


GOO 24 
850 8 

180 13 
200 3 * 
300 23 * 
330 BK 
850 55 * 
900 23 * 
460 30 
500 10 * 
280 22 * 
300 12 
220 22 
240 8 

200 21 
217 10 
325 17 * 
354 4 * 


42 * 52 * 18 
IB* 30 53 
18 * 22 * 4 * 

7 * 13 16 * 

32 35 * 4 * 

15 * 18 * 10 
78 * 88 * 8 * 

49 80 * 28 * 

48 53 * 7 * 

24 * 33 29 
31 * 68 7 

21 * 27 * 18 * 

28 S 3 3 

t«a* ii 

28 * 32 * 3 * 
17 - 9 * 
__B-- 
-- 24 -- 
JM Apr Oct Jre Apr 


28 44 * 
SO* 74 
8 * 12 

21 23 * 
9 K 16 
24 32 * 

22 37 
44 CO* 

15 * 29 * 
35 * 52 * 
13 * 19 
22 * 29 
6 * 11 
18 20 
7 * 10 
16 * - 









3 

82 

Unaral Extraction „ 

85 

49 

General Mrewfacturers — 

— - 223 

56 

25 

48 

14 

42 

359 

09 

318 

9 

172 

226 

27 



UtStlas .... .. .. . . ^ ... 


Financials 

" ..." ■" 



Others 

_ 70 

10 

Totals 

1 X »9 

248 

1,298 


Brea bread on thoaa compete* Mod on Pm London Svra Swvko. 


TRADITIONAL OPTIONS 


Hret Daafinga 
Last Dealings 


October 10 Expby 

October 21 Seolenwnt 


January 12 
January 26 


Cels: Amkm, Arcon Intt, Magnum Power, Tadpole Tech. TuSow 06, VkfaoLogte. 
Puts; Lloyds Chemi st* . Puts & CeOe: M a gnum P owwr. 


LONDON RECENT ISSUES: EQUITIES 


BAA SOO 13 28 36 * 8 17 22 * 

(- 50 S ] 525 3 * 14 24 * 25 32 38 

Threas SOO 29 38 * 47 * 4 19 23 

f 51 B | 550 *M W* 25 34 48 51 

Option Dec Mer Jun Dec Mar Jon 


issue Amt Mkt 


Ogee 


Attey NM 

r<ioi 


("25 ) 


rsei » 

Bus CkcM 

r2»i 

BrtWi BM 

r«) 

Mans 

H 90 > 


390 35 42 *' 
420 IS 26 
25 3 4 

39 I 1* 
550 35 * 48 * 
BOO 13 25 
280 22 * 28 * 
30011 * 19 * 
300 12 * 20 
330 4 9 

ISO 19 * 23 * 
200 9 * 14 


47 7 * 
31 21 
5 2 * 
2 11 
88* 16 
32 * 46 
39 9 

28 * 19 * 
24 * 15 * 
12 37 * 
28 7 

» 17 * 


18*28* 
34 39 
3* 4 

11 * 11 * 
30 35* 
56* 64 
13 23* 
23* 34 
19 26* 
39* 45 
12 15 
23 26 


price paid 
p up 

cap 

(Em.) 

1994 

HO*' Low Stock 

puce 

P 

+/- 

Net 

dhr. 

Dhr. Gra 
cm. yld 

WE 

net 

§125 

FJ». 

17 X 2 

IX 

113 Corrgel 

113 


WN 4 J 0 

11 

4 A 

109 


FJ>. 

130 

1*2 

1 Conti Foods Wrts 

. 1 *« 


- 

- 

- 

- 

- 

FJ>. 

24 X 1 

08 

61 Emerging Mkte C 

62 


- 

- 

- 

- 

S 3 

FP. 

112 

E 8 

85 Emamfec 

67 


RN 0.71 

5 X 3 

1 J 

8 L 4 

115 

FJ*. 

315 

124 

116 Games Wertcotop 

124 


RN 4 J 6 

12 

4-6 

11.7 

- 

FJ». 

30 JO 

X 

00 Haratvos Sm Asian 

X 


- 

- 

- 

- 

- 

FJ>. 

190 

29 

29 Do Warrants 

29 


- 

- 

- 

- 

112 

FJ>. 

21 A 

120 

118 Independent Parte 

120 


LNA.O 

11 

42 

149 

180 

F.P. 

17.1 

195 

176 Mack* Int* 

178 

+1 

m&o 

2-2 

42 

79 

180 

FJ>. 

447.1 

181 

170 Man ED A F 

174 

♦1 

RNM 

16 

6 L 2 

BXS 

80 

FJ>. 

213 

as 

78 Rtfend 

82 


LN 3-5 

1.7 

5 X 3 

13 S 

- 

FJ». 

1118 

379 

360 Templeton E New 

365 

+4 

- 

- 

— 

- 

- 

FJ>. 

11.8 

212 

IX Do. Wrts. 2004 

191 


- 

- 

- 

- 

- 

F.P. 

26.3 

360 

340 Wtaftam water 

340 


- 

- 

- 

- 

- 

fP. 

■LB 1 

330 

325 Da NV 

325 


- 

- 

- 

- 


460 27 * 47 56 IB* 27 * 36 * 
no 9 28 87 * 40 49 * 59 * 
420 37 * 49 56 5 12 22 

460 11 * 28 * 33 23 30 43 


M.m 

r*7oi 

847 tote 

r«7i 


9 TR 300 23 33 37 4 * 9 15 

(-317 ) 330 6 18 * 21 IBM 24 31 

BATthare 390 16 * 23 * 30 7 17 20 * 

r 396 ] 42 D 4 * 10 * 16 * 28 * 38 * 39 

CedreyScb 420 37 * 47 * S 3 3 7 * 15 * 

T 4491 400 11 23 * 29 * 18 * 24 * 34 * 

EsamEte 700 65 72 * 87 * 13 25 * 85 * 
P 737 } 750 2 SK 44 * 61 * 34 48 * 58 * 

Wrote 420 43 S SB* 3 7 * 14 * 

(- 455 ) 46013 * Z 7 34 16 23 31 * 

GEC 260 21 * 28 * 32 * 3 7 * 10 

rSSS) 300 9 IS 21 1016 * 19 * 


Madova 

IX 15 * 20 * 

23 

4 * 

8 12 

ri 70 ) 

180 S* 10 * 

13 15 * 

18 24 

Utortn 

140 T 1 14 * 17 * 

6 * 10 * 12 * 

n«) 

160 3 * B* 

8 

20 23 * 24 * 

W 9 Parer 

460 41 * 54 88 * 

11 

17 25 * 

r«o) 

500 18 31 * 

42 26 * 

35 44 * 

sea Parer 

330 39 45 * 

53 

8 * 16 * 17 

1 * 356 ) 

360 2228 * 

37 

22 

X 31 

Sres 

100 9 * 12 

14 

4 

5 * 7 * 

n«) 

110 4 * 7 

8 * 

8 * 

11 13 * 

Forte 

220 2 ZM 2 B* 

32 

S 

8 * 13 

r»i 

240 10 * 16 * 21 * 

14 17 * 23 * 

Ttfmae 

IX 12 17 21 * 

8 11 * 15 

032 1 

140 7 * 1218 * 

14 17 * 21 

Ttoan aa 

100046 * 62 84 * 

29 

46 54 * 

noofl 

1050 23 39 

01 58 * 74 * 82 

82 - - 

- 


- re. 

TSB 

200 » 2932 * 

3 * 

6 11 

rvia i 

220 12 * 18 * 

21 

11 

17 2 D* 

Tofflkta 

200 20 * 28 31 * 

5 * 

9 12 

rziz J 

220 10 * 15 * 21 * U* 

19 22 * 


650 51 * 70 

88 

23 38 * 49 

(*872 | 

TOO 28 * «* 

80 48 * 61 * 74 * 

Opun 

DM J» for Od Jan Ap 

Geo 

55048 * 85 

78 

2 * 

15 26 * 

(•531 ) 

600 11 35 * 

48 

19 

36 50 

BBC 7 ?pS» 

700 38 * 94 * 77 * 

7 

28 48 

C 724 ] 

750 8 * 38 * 

52 

33 

54 77 

BMtora 

462 14 * - 

— 

7 

— — 

P* 68 > 

<75 6 * - 

- ■ 

13 * 

- - 

Option 

Koa Mi Hay Nov Fet> I 4 iy 

HoteHtayea 

iso 12 * 19 

23 

5 * 

9 * 1 <» 

nasi 

200 4 10 * 

U 17 * 21 * 25 * 



RIGHTS OFFERS 


Issue 

price 

P 

Amount 

paid 

up 

Latest 

Renun 

date 

1984 

Mgh Low 

Stock 

dosing 

price 

P 

♦on- 

IX 

Nl 

17710 

Bpm 

2 pm 

Jermyn few. 

2 pm 


500 

Ml 

18710 

S 2 pm 

24 pm 

Ractcot & Caiman 

46 pm 

♦11 

245 

Nl 

8711 

26 pm 

10 pm 

UraChem 

25 pm 

+6 

76 

NB 

14711 

Bpm 

3 pm 

Warid of Learner 

3 pm 



FINANCIAL TORES EQUITY INDICES 


i a 12 

Oa 11 

Ott 10 

Oct 7 

Oct 6 

Yr ago 

•Hrfi 

-Low 

23810 

23574 

23318 

2310 A 

2 X 8.1 

23332 

2713 X 8 

2240.6 

433 

437 

4.41 

4.45 

4 .X 

3 L 99 

4 JB 1 

3.43 

6.17 

653 

128 

843 

6.45 

4-63 

&S 1 

182 

18.66 

18.48 

18 X 32 

1753 

1759 

2721 

33.43 

1194 

18.18 

1101 

17 X 96 

1743 

17 S 8 

25 X 99 

30 L 80 

17 X 99 


Derea on c kw inp otter i 
Octobo 12, TcteJ cOTMOK 44®7 C tt* 2BJ09 
Pro 1R888 


OnL dv. ytekt 
Earn. yld. % tup 
P/E ratio net 
p/E ratio rtf 

Tor 1994 . CMtaery 9 tm beta sines compferflorc Hgn Z 713 £ 24094 ; low 484 2 W 10 
FT CMhray 9m todre bore da 1/7/35. 

Onflnary Share Hourly ehensee 

Open 8J0 10L00 11J70 1L00 13J» 14w00 13L00 IfluOO 

2363,8 2387 J 23685 2376.1 2373.9 2376.4 23769 2376,1 23795 23810 23 te 4 
Oct 12 Oct 11 Oot 10 Oct 7 Oct 6 Vr ago 

SgAQ oargan 27 , 66 a 23.970 22 J 321 20^74 20 . 4 P 6 29 J 395 

Equity turnover (£m)t - 1291 5 10220 1420.5 12019 1506.7 

Equity beigahst - 26,429 28 J 5 Q 9 24/503 24837 32 J 372 

Shares traded (m (ft - 543 L 3 44&7 4742 595-2 568.7 

TEAGfeitttog ntreraarhet buhwa and tea ernom. 


High Law 


FT GOLD MINES INDEX 


M % cbQ W Od 
11 on dnr 10 7 


Tear firm die 9 mek 
Wo yWd % Hgn foe 


• 4 h 

Goto Hob Mb ( 3 q 
■ KagtoaHtoArai 

2241-68 

-08 

224003 22418 187081 

1 XB 

2387^0 1782 X 12 

♦14 

-I 

Mricanq 

350185 

-15 

359839 3547.06 284881 

390 

382328 290445 

-8 

AusMmtn 

2804.65 

+08 

277687 273352 218288 

1.72 

301189 21 X 89 

•8 

itamteittva (ii) 

1785.14 

+ 0.1 

178255 178397 160 Z .77 

0.75 

203895 1488.11 


Hguraij^bMdun <na> (Uiter or cernp ante Bi te U8 P olw . Ba re Vtere: i»M9 mnapl 
FMdacaraor SoU IMe more; CWI2: 261 3 : dqrte dregra -03 pete; Year tgpr. zifce t Pertd. 

LttM Ittcae tree roretete tor are adabn. 


• appears in Ibc UKcfitioD cveiy Wednesday & Tbnrsday - : 
iad in the International. edft'on every Friday Tot foither - 
• ■ infwtnatkHJ please call: ■ ■ ■ . 


. Gureth Jam* oc +44 71 873 3779 ’ 
Andrew SkarrynsW 00 +4471 8734054 


l 







30 


FINANCIAL TIMES 


THURSDAY OCTOBER 13 l« 


LONDON SHARE SERVICE 


banks 


AflNAnjrafl □ 

«C«. 



ggfcWtfig.JJC 


CHEMICALS 


ELECTRONIC & ELECTRICAL EQPT - Cotit EXTRACTIVE INDUSTRIES 


a*Ko avu pia-. o n 

9 ^pcPf 


♦ « 

fttt 

■» 3 

4113d *Z 
253 4.7 

55 

738 4-11 


Pta-O £15)3 -£ £16,'. £14i 3,552 S3 X* HIP AhO 298 *4 *373 285 »J 

18 £28(4 W) £23V 43® 5.1 18 Bayer DM a CI45J1 **i3 £1MA E12WJ 5W 

JC 283 +5 *3» 248 1337 « M Bra» Jg 117a *1 W * 


199* MKt 
MA Ur CapFm 
£K>S £1W3 8,179 
mu 177 Xdfi 
523 38012 632 
314 233 IMS 

*70 50 W9J 

8 ia*a 628 HW 


Yld 

art PIE Nria Price 

54 & AGASKr. _□ E5V 

59 27.1 Ak»H □ D2u 

4 7 13.5 AnWCoWB— NCI 134 

50 9.7 AotterM M 780 

78 10 0 BASF DM. — 

08 4> B0C. 


+ or 1934 IH 
Hpi lew CBbn 

-Jo -oh £ 4 « eoao 
rJ, gu BBS UO 

*3 *130? US? 7053 
750 705 308 

*t 

■373 285 


W E 


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YM 
firia 
12.1 

33 ifli FonmTedi . 

22 215 FuJsoY JD 

32 162 SZ. JO 

7.4 - eHMft*r_-4t40 


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Baraw jtto 

tofcttKmr a 

OwsanDM o 

BfUflo Sam P 

flttBMRU JG 

63pcGt PI 

7pcCvP1 

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Sanaa Y ~ 

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758 - «0 

Total Y J3 I 

IoiDTgt40AY_.- 71 

wesmeAS 

Yasu* ra Bt. r _fC 51 

BREWERIES 

(totes 

Ascot HtttgS C 

Bass tNP 

SodtSngtm TtC 

Bunonwood N 

Entdoe.PotMA.itii 

Fasten, AS- 

Fi*r 3TA ■ 

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MansSeM N 

Mantai Ttwao- JG 

Mound tH 

Paramount.— MCJ 
Regent tors...- JtN 



247 172b 2374 

14lia lit 1120 

1491; lift 1175 

640 407 aiSS 

35,626 

1X971 
. . 1733 

-SO 60 1 1 68 

*90 73 451 

171 123 824 

1411 .2712 1549V 1152>? 40873 

74ftd *17 1133 600 13856 

ma +16 1113 660 6,178 

EBS* rfi 660 £19 7,318 

E16jj *A El MS £1514 40879 
668? *2314 1182 V 687? 11*1 
74713 *1614 an si* 8855 
485 +4 B20V 477 B.492 

497 -5*i 622 4ZT SJSSS 

CUi -V £33 £21*4 1058 
413 +6 528 377 1? 3MB 

£8*4 *A £Sii S3U 27M6 

£13,1, */> PSV Ell” 37,757 

272* *3 *359V 223 2819 

83 '4 108*2 82*« 838 

£12A +,', EI6H £11? 37840 

037? *30 11461? 625 11861 


13 165 BrtBsavtn HC 

103 - CaatoMgefeoS— -i 

ia* - CantatgiW) — JIO 
17 108 C4MB8 M 


- warantr.. 

- Crwtadds MD 

45 CrwS HO 

- Ooeflet .AN 


2S4aJ +1 
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17481 

55 

78 


361* 

143 


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firepan CcfcraWQ 

QUm Lyons 4ft 138 

... Hdson ANu IGftd 

42 10 5 HoociBtDU _□ £131 A 

SI J1.1 MroyCblrtdtlBC 213 
OJ 4* 814 

OS 15.2 hspee. to 213d 

07 ZSJ! KUw AtfO 148 

5.7 104 Jjponft WO Tm 


43 32 

6.7 « JWtdcn. 

18.7 


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18 18.7 Udeod Rit5B(_JC 

D7 510 Unmet Ms-tHU 


0.4 S3 SuttfiOe Speak _*»C E 

06 « WrDeStaep.^JJG 400 

4.6 IlS YlMUmtai YiP 183* 

07 500 YVdssnnatne ...ft* 785* 

OJ 614 YprtaMra fflO M7 

IS t Yu* Cano -HC 2tfd 

09 489 

DISTRIBUTORS 



Scott 6 Hew — JUG 
sia£a 


lined Brawrte.' 


Vara _ttHO 

U h iW ium i'JOiJC 

VYWtrrad PG 

vtK4.5Du#«...1Hn 

Yates Bros IP 

Y fluid A N 

IW. H 



1994 KM 
tow Cap£ra 
1<? BSD 
4BS 4,892 
250 304J 
IBS 389 
142 315 

46* 1902 
380 779 

}48V 479 

393 889-4 
452 23 L4 
124 199 

3125 1085 
674 7900 
19S 1484 
256 2754 
463 1102 
7*i 794 

203 384 

477 2480 
3 1tL2 
229 mi 
3241, KM 
494 2438 
493 mi 
140 644 
483 149 

43! 24J 


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38 159 HWMey AfN 

3.1 14S BogodA _N 

42 <6 Braonn ffO 

1J 209 ttttwnd *«□ 

09 Z7.1 BrBHtnJMS StH 

24 14.3 Brawn ATawsa llO 

24 159 Bundene ?TtC 

25 17.1 Gdfvw-— —AW 

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49 14 B Genii* MoAr — $3N 
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111 CWMDCI JO 

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159 ClAer 


111 — 

170 

<75 


119* *1 

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71 *1? 

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478 


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BUILDING & CONSTRUCTION 


Notts 

AAFWs O 

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Aden U 

AMEC IO 

fiijiictpr U 

Amey 

AndrawsSytuL 

Asntead 1 

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23 205 (toroipal Vernon -J& 

18 19.2 Denmans ji4>W 

49 186 Dftdome IfG 

Dimn Motors AW 

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£141? 1483 
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728 5983 
173 181.7 
148 U&2 
685 1908 
48 SI 
306 1719 
100 684 
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186 506.7 
31 110 

361 999 

193 469 
570 511 

380 1814 
258 2839 


1994 Ud 

tow CantH 
111 2aa 

;65 009 

2S3 204 
44 3JS 


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198 283 185 HI 

GO 58 1*1* 179 

500 -0*. 781 355‘, 12fl« 

288 383^ 2Wa 

1(8 -i 191 11* 202 

42 29 4 DrasBOy ' tMT l 142* 101 119 *19 

12 187 H^S^*kW3»~.£S81i« 1 +% £«*« rS 14 ^ 

82 - taJ cart Sem. 128* — 193 1» 51.1 

4J - Johnson SHIS 8 1«b - W ^ 

878 ZZ. 873 730 3012 

82 +8 165 33 543 

S3 _ 53 *5 178 

« 90 58 HI 

315* 320 250 5U 

82 -3 70 35 259 

286 SI HD 1304 

38 -1 45 11 ZU 

+41 464*2 320 9969 


- Johnson S HAS— .J 

42 167 Karanod VC 

- -- KerdowW |N 

W a.* KodoM 

&i 254 min 


.7 o, 7 U»fYrS07«7» ~.H 

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10 15.5 imytain P0wer-«a 

4.1 110 Hunter -smn.Vc 

- MVrnuf|ir 4^ - 

26 209 EiESbBrtY-..«* 484*; 


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4.0 20.8 YWNSesaeno 

8.5 - WBtftouo 

49 174 Wlstw. 

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1 i 4.a DIVERSIFIED INDUSTRIALS 


2X6 - 

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6-3 129 Bi*Aaraw^.^10 

18 14.7 7VpCvP1. □ 

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34 


FINANCIAL TIMES THURSDAY OCTOBER »- 


MARKETS REPORT 



UK interest rate prospects improve further 


The recent turnaround in UK 
interest rate expectations con- 
tinued yesterday on the back 
of good inflation figures and 
bullish comments from Mr 
Eddie George, governor of the 
Bank of England, writes Philip 
Gutmth. 

The December short sterling 
contract closed yesterday at 
93.55, 40 basis points higher 

than the beginning of last 
week, while the March con- 
tract was 55 basis points up at 
92.79. 

Elsewhere, the dollar slipped 
below YlOO again to finis h at 
Y99.885 from Y100.325. Against 
the D-Mark, it finished at 
DM1.5421 from DM1.5466. 

The Russian rouble staged a 
recovery on the exchanges, ris- 
ing by 5.1 per cent to Rs3,736, 
from Rs3,926, after plunging 33 
per cent from the start of the 
month. 

The Scandinavian currencies 
were weaker, with an opinion 
poll suggesting Swedish voters 
might reject membership of the 
European Union, dragging 
down the krona, taking the 


Finnish markka with it 

The D-Mark was generally 
firmer all round, while sterling 
lost some ground, with the 
trade weighted index closing at 
79 3 from 80.1. 

■ The catalyst for the 
improvement in short sterling 
was the data showing annual 
retail inflation in September at 
22 per cent, down from 2.4 per 
cent in August. Mr George 
iater cheered the market fur- 
ther when he said “it would be 
extraordinary if we had strong 
acceleration of inflation with 
such slow money growth (in 
the larger economies).” 

Sentiment remains bearish; 
the market is discounting 
three month money at 6.45 per 
cent by Christmas, compared 
to 5% per cent currently. The 
same point emerges from 

■ Pound In How York 


Oct 12 

— Latest — - 

— Prat, noea- 

EteU 

15810 

1.5795 

f mtti 

1.5805 

1.6791 

3 mte 

1.5801 

1.5705 

lyr 

145706 

1-5666 


looking at the options strike 
prices for the December con- 
tract, which shows most of the 
open interest contracts are 
found at 93.50, 93.75 and 94.00. 
This shows that most investors 
expect three month rates to be 
in the frfi. 5 per cent range at 
the end of the year. 

Most economists are less pes- 
simistic in their outlook than 
the market, with many holding 
by the view that there will be 
no further increase in interest 
rates tins year. This is based 
on the assumption that the 
economy has slowed quite 
sharply in the third quarter. 

Despite the market's linger- 
ing bearishness, the turn- 
around over the past ten days 
has been considerable. Ana- 
lysts attributed this large move 
to the fact that the market was 
correcting itself from a very 
oversold position. 

The speed and extent of the 
correction has been such, how- 
ever. that there are already 
concerns that the market 
might be approaching over- 
bought levels. 


Sterling 

Dae ■94 Future contract hid prt* 
93.6 


93.5 ~ 


83.4 ~ 



93-3 i 


33-2 V'/S/ 


93.1 


October 1904 

Source: FT Graphite 

The same is not necessarily 
so for sterling. Mr Jeremy 
Hawkins, chief economist In 
London at the Ranir of Amer- 
ica, comments: “In the longer 
term it has to be good for ster- 
ling if the UK emerges as a low 
inflati on economy." 

■ The dollar’s dip down to a 
low of Y99.65 was prompted by 


the receding prospect of the 
dollar receiving safe -haven 
support from conflict in the 
Gulf. 

Other factors contributing to 
its weakness were talk of dol- 
lar sales from Mr George 
Soros's Quantum fund, and 
possible selling interest from 
Kampo, the Japanese postal 
life insurance bureau. 

Comments from Mr Yas ushi 
Mieno. the Bank of Japan gov- 
ernor, that Japanese lending 
rates could be expected to rise, 
also helped the yen. 

A further threat to the dollar 
comes from Germany. The 
D-Mark has been fairly weak 
for the past month on Iters 
that Chancellor Kohl’s coali- 
tion might not be returned 
with a working majority. 
Should he win this weekend's 
election, however, the D-Mark 
is likely to benefit, and the dol- 
lar will suffer. 

On the other hand, some 
observers believe the dollar 
may benefit from Mr Clinton's 
decisive action in the Gulf. 
They reason that this could 


help the Democrats in next 
month's mid-term congressio- 
nal elections. 

If this helped thpm maintain 
control of the Senate, the possi- 
bility of a stalemate between 
the legislature and the execu- 
tive would be avoided. This, 
the argument goes, would 
make dollar assets, and hence 
the dollar, more attractive, 

■ The Bank of England pro- 
vided £1.124bn assistance, 
£474m at established rates, to 
UK money markets, compared 
to a £1.1 bn shortage. Overnight 
money traded between 5 and 
GY* per cent 

German call money was 
steady at 4^0/5 per cent ahead 
of today’s Bundesbank council 
meeting. No shift in official 
rates is expected. 

on 12 E S 

(tapty 170.M0 - 170374 107.670 • 107-770 
too 2771X0 - 2774X0 174100 - 1750X0 
foe* 0.4700 - 04714 02374 • Q29S2 

POOS! 386605 - 36732-2 32000 - 232300 
testa 489905 • 5374.05 310000 • 340000 
UAL SJ&f) • 5X035 16715 - 16733 


POUND SPOT FORWARD AGAINST THE POUND 


DOLLAR SPOT FORWARD AGAINST THE DOLLAR 


Oct 12 

Ooskifl 

mtd-potet 

Change 
on day 

SMbdCr 

spread 

Day'S frfid 
nigh tow 

One mentti 
Hate %PA 

Three monttra 
Rate tePA 

Craa year Bank of 

Ran MPA Eng. Index 

Oct 12 


Europe 

fSch) 

17.I5M 

-0.0688 

438 - 591 

17.2157 17.1425 

17.147 

03 

17.1352 

a4 

. 

. 

1162 

Europe 

Austria 

(Sc b) 


(BFi) 

50.1688 

-0212 

397 - 778 

50.3450 60.1150 

50.1788 

-0J5 

50.0898 

0.8 

49.8788 

06 

1162 

Belgium 

(BFd 

Danmark 

(DKr? 

95521 

-0,031 

478 - 566 

9.5724 9-S409 

95473 

0.6 

9.5661 

-0^ 

9 £956 

-03 

1162 

Denmarfc 

(OKI) 

Finland 

(FM) 

7 5336 

-OJJ121 

254 - 458 

7.5760 7-5250 

- 

- 

- 

- 

“ 

“ 

88.0 

FWand 

(FM) 


(FFr) 

83430 

-0.0213 

395 - 464 

8.3551 8.3387 

a .3425 

0.1 

8.3387 

02 

62812 

0.6 

1102 

France 

(FFr) 

Germany 

(DMj 

2.4373 

-0.0088 

304 - 382 

2.4438 2-43S4 

2.4386 

0.4 

2.4332 

0.7 

2.4062 

12 

122.4 

Germany 

P) 

Greece 

(Dr) 

3734220 

-1.251 

058 - 381 

37ZJ57 372.031 

• 

- 

- 

- 

- 

- 

- 

Greece 

(Urt 


(IQ 

1.0106 

-0.0013 

098 - 113 

1.0114 1.0098 

1.0104 

02 

1.01 

02 

1.0119 

-0.1 

105.4 

Ireland 

TO 

itiily 

(U 

247892 

-188 

538 - 846 

2485.34 2475l05 

2483-32 

-3.1 

2496.42 

-3.1 

2651.47 

-3.0 

74.9 

Italy 

0) 

Luxemtxxrg 

(LFr) 

50.1588 

-0.212 

397 - 778 

5033450 60.1150 

50.1788 

-03 

50.0838 

0.6 

49.8788 

0.6 

116.9 

Luxembourg 

(LB) 

Netherlands 

fR) 

2.7297 

-0.0033 

287 - 307 

2.7372 2.7286 

2-7287 

0-5 

2.7254 

06 

2.6862 

12 

121.0 

NeQMriands 

(B) 

Norway 

(NKr) 

10.6229 

-0.0293 

180 - 268 

10.8468 10.6084 

10.6223 

ai 

10.6258 

-0.1 

10.6265 

ao 

86.3 

Norway 

(NKr) 

Portugal 

(Es) 

249.158 

-0.688 

024 - 292 

249.481 24a014 

250.888 

-83 

254.068 

-7.9 

- 

- 

- 

Portugal 

lEs) 

Spain 

(Pla) 

202-382 

-0.453 

297 • 468 

202.805 202269 

202.752 

-23 

203.617 

-2.2 

206.387 

-2.0 

86.0 

Spain 

pm) 

Sweden 

(SKr) 

11.7077 

-aoi 

977 - 178 

11.74 07 11.6816 

11.7287 

-23 

11.7757 

-2-3 

11.9637 

-22 

752 

Swadan 

(SKr) 

Switzerland 

(SFr) 

2.0340 

-0.0025 

329 - 351 

2.0377 2.0323 

23312 

1.7 

2.0252 

1.7 

1.9688 

22 

122.4 

Swrceriand 

^F-1 

UK 

(Q 

- 

- 

. 

. 

- 

- 

- 

- 

- 

- 

79.9 

UK 


Ecu 


1.2772 

-aooJ2 

764 - 780 

12803 12760 

12769 

03 

1J2766 

02 

12748 

02 

- 

Ecu 

- 

SORT 

- 

0322090 

. 

. 

- 

- 

- 

- 

- 

- 

- 

- 

SDRf 

- 

Americas 

Argentina 

(Peso? 

13775 

-0-002 

770 • 779 

13787 13757 

* 





* 

_ 

Americas 

Argentina 

Peso) 

Brazil 

m 

143229 

+0.0039 

210 - 248 

12256 1.3209 

w 

- 

- 

- 

- 

• 

- 

BrazU 

(RD 

Canada 

(CS) 

21290 

+0.0053 

281 - 298 

2.1311 2.1233 

2.1282 

tL5 

2.1288 

0.4 

2.1239 

02 

87.8 

Canada 

(CS) 

Mexico (New Peso) 

5.4032 

+0.0031 

980 - 083 

S.4095 5.3980 

- 

- 

- 

- 

- 

- 

- 

Mtotaa (Now Paso) 

USA 

(S) 

1.5606 

-03009 

802 - 809 

t.5620 1.5789 

1.5802 

0.3 

1.5798 

02 

13696 

0.7 

622 

USA 

(S3 

PBcfflc/MMdhi East/ Africa 
Australia (AS) 2.1458 

-0.002 

444 - 468 

2.1492 2.1443 

2.1456 

QJJ 

2.1469 

-02 

2.(65 

-as 


PacMJc/MkWte East// 
Austrafc (AS) 


Closing Change Sfcl/oftor 
mid-point on day spread 


Day's mid 
Mflft low 


On* month Tim* months On* poor J-P Morgan 
Rats 96PA Rats %PA Rate MPA index 


CO 157.874 

(MS) 

(NZS) 


(Peso) 40.4822 -0.0243 371 - 372 404210 40.1355 


Hong Kong 
(ncfia 
Japan 
Malaysia 
Now Zealand 
PhUfcpines 
Satfi Arabia 
Singapore 

S Africa (Com.) (R) 

S Africa (Fin.) (Ft) 

South Korea (Won) 1294.05 

Taiwan fTS) 41.4180 

Thailand (Bt) 39-5691 


(HK5) 12-2137 -0-0089 102 - 172 12-2255 12.2033 12.2098 

(Rs) 49-5799 -0-0296 630-958 49.5230 40.5340 

-0.79 815 - 932 IS8.470 157.580 157.454 

4.0844 -0.0025 627 - 661 4.0726 4.0529 

2.6136 +0,0008 119- 152 2.6155 25099 


0.4 122067 02 122157 0.0 
02 156.448 3.6 151.514 4.0 


(HK5) 


186.8 


2.6175 -1.8 26253 -1.8 26478 -1-3 


(MS) 

(NZS) 


{SR) 

(SS) 


5-9294 -00052 273 - 315 

2-3435 -0.0029 422 - 448 

5.6509 +0.0061 484 - 533 

5.4092 -00434 919 - 264 


5-3347 5.9249 
2-3459 23420 
5.8552 5.6364 
6.4611 03789 


-321 369 - 440 1265.75 126226 
+0002 060 - 299 41.4531 412606 
-00499 445 - 938 39.8100 305440 


10.8515 

-0.037 

490 - 540 

10.8780 10.8465 

1Q.8515 

ao 

10.8513 

03 

107765 

07 

1043 

31.7360 

-0.115 

300 - 400 

31.8800 31.7000 

31.74 

-02 

31.765 

-04 

31.69 

OI 

1053 

62435 

-0.016 

420 - 450 

6.0605 

6.0408 

6048 

-09 

6.056 

-08 

6.1135 

-12 

1052 

4.7877 

-0.0048 

623 - 731 

4.7894 

4.7605 

4.7689 

-03 

4.7699 

-02 

4.7782 

-02 

823 

52785 

-0.0104 

775 • 795 

52870 

52739 

52801 

-0.4 

5279 

0.0 

52825 

-0.1 

1063 

13421 

-00046 

41B - 423 

1.6470 

13405 

13419 

02 

1.5404 

04 

13331 

06 

108.9 

236^00 

-0.66 

450 - 550 

235.900 235.460 

235.795 

-13 

236375 

-1.5 

238375 

-1.3 

66.9 

1^641 

+00012 

633 - 648 

1.5661 

1.S81B 

1364 

0.0 

13642 

ao 

13511 

08 

— 

1567.13 

-905 

650 - 775 

1573.00 1568 00 

1571.58 

-3.4 

1580.43 

-3.4 

162533 

-07 

75.1 

31.7350 

-0.115 

300 - 400 

31.8800 31.7000 

31.74 

-02 

31.755 

-04 

31.68 

Oi 

105.8 

1.7271 

-00048 

368 - 273 

1.7315 

1.7260 

1.7268 

02 

1.7254 

0.4 

1.7178 

03 

105.7 

6.7210 

-0.0145 

200 - 220 

6.7370 

6.7095 

6726 

-03 

6.743 

-13 

6.791 

-13 

983 

157.640 

-024 

590 - 690 

157200 157.580 

156215 

-61 

159.49 

-4.7 

18439 

-4.1 

95.0 

128.045 

-021 

020 - 070 

126.180 128200 

12831 

-2.5 

128.84 

-23 

131.475 

-2.7 

81.0 

7.4074 

-00018 

027 - 120 

7.4265 

72838 

7.4227 

-23 

7.4549 

-2.6 

7.6224 

-2.9 

81.0 

12889 

-aooos 

865 - 873 

12898 

12855 

12855 

1.4 

12821 

1.5 

12672 

13 

108.1 

1.5806 

-a 0009 

802 - 809 

1.5620 

13789 

13602 

03 

13796 

03 

13096 

07 

88.4 

12375 

+00033 

370 - 380 

12380 

12342 

12389 

06 

12362 

0.4 

12312 

05 

- 

146179 

- 

- 

- 

- 

- 

- 

* 

- 

■ 

" 

“ 

02881 

-00007 

980 - 981 

0.996) 

03979 

- 

- 

- 

. 

- 

- 

_ 

0.8370 

+0003 

380 - 380 

0.8380 

0.8360 

- 

• 

- 

- 

- 

" 

“ 

12470 

+0 0041 

467 - 473 

12477 

13442 

13472 

-Ol 

13464 

02 

1.3632 

-0.5 

84,7 

3.4185 

+0.004 

180 - 210 

3.42+0 

3.4160 

3.4195 

-0.4 

3.4213 

-03 

3.4287 

-03 

96.0 

Jrica 











12575 

-0.0005 

5 70 - 580 

12598 

1.3570 

1.3577 

-02 

13564 

-ao 

1J650 

-0.6 

88.7 

7.7275 

-0.001 

270 - 280 

7.7282 

7.7270 

7.7273 

ao 

7.728 

ao 

7.743 

-02 

- 

31.3688 

- 

650 - 725 

312725 3T.3650 

31.4538 

-32 

3)3988 

-29 

- 

- 

- 

99.B850 

-0.44 

700 - 000 

100320 99.6700 

99.645 

23 

99.046 

3.4 

9633 

3.4 

147.4 

£5715 

. 

710- 720 

237m 

25640 

25623 

42 

2.551 

32 

Z6245 

-21 

- 

1.6536 

+00015 

529 - 543 

1.6537 

1.6518 

1.6545 

-0.7 

1.6564 

-0.7 

1.8817 

-03 

- 

25.6000 

• 

000 - 000 

253000 25.40 CO 

- 

- 

- 

• 

- 

• 

« 

3.TO15 

-0.001 

510 - 520 

3.7520 

3.7510 

3.7528 

-04 

3.7589 

-0.6 

3.7755 

-03 

- 

1-4827 

-0.001 

822 - 832 

1.4842 

1.4822 

1.4614 

1.1 

L4795 

as 

1.4727 

fl.7 

- 

32753 

+0006 

745 - 760 

05770 

33680 

3.5908 

-52 

3.6191 

-A3 

3.8958 

-3A 

- 

4.0550 

-0.025 

450 - 650 

4.0870 

4.0350 

4.0887 

-10.0 

4.1475 

-9.1 

- 

■ 

- 

799.750 

-125 

700 - 600 

800300 799.100 

80275 

—4.5 

80625 

-33 

824.75 

-3.1 

- 

262048 

+0.017 

030 - 065 

262065 26.1775 

262248 

-03 

262648 

-03 

- 

* 

- 

25.0350 

-021 65 

250 - 450 

25.0460 25.0250 

25.1075 

-3.5 

25235 

-32 

25.715 

-2.7 

- 


fSOR rates lor Ocr 11. BWottof sprawls In Km Pound Spat table shew ortfy the tear three dadmaJ ptacae. forward was art not drectly gutted to O' 0 rasriret 
but are implied by current i nterna l on Staling index ratatotad to me Bank a! BMenl Bene avenge 1806 ■ 100. Bo, over and Mtd-ratta hi bom Me and 
me Outer Spot taUm derived bom THE WM/REUTB*3 CLOSING SPOT RATES. 3onw w»*a ore itudtd by too F.T. 


CROSS RATES AND DERIVATIVES 


Hong Kong 
lndi 
Japan 
Malaysia 

NewZatiand 
Phflppfnea 

Saudi Arabia (SR) 

Singapore (SS) 

S Africa (Com.) (R) 

S Africa (Fin.) (R) 

South Korea (Won) 

Taiwan (IS) 

ThaSand (Bt) 

1506 nMlorOcl 11. BkVdflw screeds In die OoBer Spot table snort arty Me hw tore* deems ftoce*. Fowart tans ore not efteesy Quoted to me msdm 
but ma treaded by current Interest rates. UK. Ireland & ECU ere quoted n US currency. J.P. Morgan non # eal WtJcm Oct 11. Base average 1990.100 


WORLD INTEREST RATgg 


MONEY RATES 

October 12 


Over Qna 
night monte 


three 


Six 

mtes 


Oin 
V * * 


Lomb- 

hitot 


Di» 

rate 


Repo 

rale 


Baighan 
weak ago 
Rene* 
week too 
Germany 
week ago 
Ireland 
week ago 

Italy 

week ago 


week ago 
Switzerland 
week ego 
US 

week ago 
Ja p an 

ago 


4ft 

43 

Si 

SS 

4ft 

43 

Si 

5ft 

BU 

Si 

S3 

S3 

31 

Si 

S3 

5ft 

430 

4.05 

520 

5.30 

4.95 

435 

5.18 

5.26 

48 

5Vi 

Si 

6i 

4ft 

5ft 

6i 

Si 

8W 

83 

SB 

9ft 

Bi 

4.84 

83 

438 

9 

621 

9ft 

6.36 

434 

4.08 

5.25 

S.40 

38 

33 

44 


3ft 

33 

414 

4U 

4ft 

5i 

si 

S3 

4ft 

Si 

Si 

53 

2» 

3 

2'/+ 

25 

2ft 

3 

2» 

24 


7.40 

7.40 

5.00 

5.00 

6.00 
6.00 


Si 

Bi 
M 
570 
5.63 
74 
7*4 
101k 
10* 

5-81 

5.86 

4’j e.625 
41+ OE5 
64 
6*4 
2% 

21k 


4.50 

450 


450 

4.50 


750 
7 50 
S 25 
5 ii 
350 
3.50 
400 
4.00 
1.75 
1.75 


0.75 

0.75 

4.85 

4» 

OSS 

0.25 

320 

8.20 


■ SUBQR FT London 
I nte r ba nk Firing 
week ago 
US DoRarCOa 
week ago 
SDR Linked Da 
weak ago 


5ft 

5ft 

5ft 

6ft 

* 

5ft 

5ft 

SJfc 

6ft 

- 

4.92 

531 

560 

6.16 


4.92 

6.31 

5.60 

6.16 


3ft 

34 

3H 

4 


3ft 

34 

3ft 

4 



SOR UNiod Dep«»*4s (Dv 


EURO CURRENCY INTEREST RATES 

Oct 12 Short 7 days One 

Mm notice mown menlta 


Six 

months 


Ono 

year 


Belgian Franc 
Danish Krona 
D-Mark 
Outeh Gukfer 
French Fnnc 
Portuguese 0 k. 
Spanish Peseta 


$4 * 5*j fill - W 
7 - 6J* 77* - 7*1 

5,4 - 5,1 Sft ■ 5H 
5ft - 5ft Sii • 5ii 
S5J - 5li 6ft - 84 
mb - 10ft 101* - 10ft 
aft - sft 9** ■ 9 

&A • B,v 7H - 7 

Swlse Ftenc 3ft -2ft 3«i-3j| Sft - 3*s 4 A - 4,1 fti • * 

C*. Oodw * 1, .4,4 5 - 5-4% 5iV - 6 • Sft 5 a 6ft 

SX ?-* ^:3 a-? 

Yen 2ft- 2ft 2&- 2ft 2A - 2ft 2,1-2% « ■ 2 7 =? ' 

Asian SStog 2-1% 2-1% 2% - 2% 3% - 3** 3j - 3)1 J M • J J 

Short term rates ore call tor me US Deter and Yen. otoe* two d**’ nan ce 
■ TKRBK SfOffTH PtPOft FUTVtOBI (UATIF) Paris Interbank offered rate 


Dec 

Mar 

Jun 

Sep 



-4ft 

4ft 

-4ft 

4ft 

-4ft 

5ft 

-sft 

A 

- 5*2 

s h 

.51, 

ih 

■SH 

fl*s 

-6*4 

4U 

-4ft 

4ft 

•4ft 

4ft 

-4ft 

5ft 

-5,‘, 

6 - 


5 - 

4h 

5- 

4\ 

5>< 

- 5*8 

Sh 

-fi 1 * 

6.V 

- sA 

V. 

-sft 

5*s 

- s»j 

9A 

• 9,! 


-9 

Oft 

-eft 

10H 

- 10 

7ft 

-7,! 

7h 

•7A 

7ft 

-7ft 

a - 


5% 

-5* 

5*1 

-5*2 

5ft 

-5>2 

5% 

- sU 

3ft 

-2* 

3*1 

-oh 

3* 

•A 

4ft 

-4ft 

4% 

•4& 

5 - 

411 

5- 

4% 

5ft 

-*A 

4ft 

-4ft 

B*t 

-4ft 

5*t 

, - 5 

5*| 

■ 5h 

9 - 

7h 

-8>« 

9*i 

-8ft 

87, 

-bH 

2ft 

- 2U 

2 A 

• zH 

2ft 

- ZH 

2ft 

- 2^ 

2- 

1 * 

2 - 


2-V 

-SH 

3H 

-3** 


• Open 

Sett price 

Change 

High 

LOW 

EM. vot 

Open ml. 

94.06 

94.07 

4X01 

94.08 

94.05 

13210 

50,315 

9331 

99.63 

, 

93.65 

9339 

9,046 

36.697 

9321 

8323 

-0-01 

9326 

93.19 

6.319 

23901 

92.88 

8220 

+0.01 

92.91 

92.85 

2268 

20.193 


MOUTH KUBOPOUJW (UFFQ* Sim potato j IQgH 


Open Sett price Change High 


Low 


Dec 

94.04 

9493 

•004 

84.04 

94.04 

Mar 


9396 

-0.04 



Am 


9324 

-005 



Sep 


8393 

-0.06 




EM. vol Open inL 
COO 2338 


0 1458 

0 300 

0 62 

■ THREE MONTH EUHOMAHK PUTUWtt (UFF8‘ DM 1m points Ot 100% 



Open 

Sort price 

Change 

rtgh 

Low 

E M. vpl 

Open tot 

Dec 

94.68 

94.70 

. 

94.71 

94.67 

23J04 

180881 

Mar 

9422 

3496 

+002 

9437 

94 30 

23515 

1752 JO 


8397 

93.99 

. 

94.02 

93.93 

25232 

103773 

Sep 

83.61 

83.65 

+091 

83.66 

9357 

15700 

77228 

■ THU 

MONTH 

■UROURA INT JUTE FUTURES (UFFE) LI 000m points of 100% 


Open 

Seu price 

Change 

High 

Low 

Gst. wol 

Open ML 

Dee 

90.43 

9063 

+0.17 

0047 

9043 

7277 

33333 

Mar 

83.73 

6991 

+017 

8992 

89.73 

2145 

17401 


8928 

89.35 

+0.17 

8995 

8921 

2039 

15012 

Sep 

88.78 

B897 

+0.17 

88.98 

88.78 

857 

15591 

■ TWm MONTH BIRO SWW* fflANC FUTWR8S (UFFQ SFrim poteB oMOOW 


Open 

Sea price 

Change 

High 

Low 

Eat vot 

Open tot. 

DSC 

9597 

95.68 

-aoi 

85.73 

95.67 

4302 

24734 

Mar 

95.32 

9595 

+002 

9S.37 

9529 

3830 

14447 


94.85 

8494 

-002 

94.99 

9494 

148 

7088 

Sep 

94.83 

94.63 

•0.02 

94.65 

94.63 

158 

1130 

■ THRU 

MONTH ECU FUTURES (UFFE) Eculm points pi 100% 



Open 

Sett price 

Change 

High 

Low 

E«. vd 

Open inL 

Dec 

93.67 

83.74 

*0.06 

83.75 

93.66 

1253 

7917 

Mar 

93.17 

8324 

+006 

9328 

93.18 

1305 

5701 


82.64 

92.73 

+0.07 

92.75 

9263 

758 

3397 

Sep 

82.18 

8226 

+0.07 

9227 

92.18 

348 

1178 


LBTE futures bated on APT 


EXCHANGE CROSS RATES 

Oct 12 BFr OKr 

DM 

(£ 

L 

R 

NKr 

Fa 

Pu 

SKr 

SFr 

£ 

CS 

5 

r 

Ecu 

Btighm 

(BFr) 

100 

iaos 

1084 

4-859 

2014 

4937 

5.442 

21.18 

496.7 

403.4 

2323 

4.050 

1.994 

4245 

2153 

314.7 

2546 

Denmark 

(DKr) 

52.50 

ID 

8.734 

2351 

1.057 

2592 

2857 

11.12 

2608 

2112 

1225 

2.129 

1.047 

2229 

1255 

IBS-2 

1337 

France 

(FFr) 

6Q11 

11.45 

10 

2.921 

12)1 

2968 

3271 

1273 

298.0 

2423 

14.02 

2438 

1.199 

2552 

1.895 

189.1 

1.531 

Germany 

(DM) 

20.58 

3.920 

3.423 

1 

0.414 

1016 

1.120 

4258 

1022 

63.01 

4201 

0835 

0.410 

0874 

0849 

64.75 

0524 

inland 

TO 

4065 

9.457 

8.260 

2.4J3 

J 

245* 

2702 

10.S1 

2406 

2003 

11.58 

2014 

a 990 

2-108 

1-565 

1582 

1-284 

tody 

W 

2.025 

0.388 

0337 

0098 

0-041 

100. 

0.110 

0429 

1006 

8.170 

0473 

0082 

0040 

0006 

0084 

6373 

0052 


TO 

18.38 

3.500 

3.057 

assa 

0370 

9073 

1 

3.882 

9128 

74.13 

4287 

0745 

0368 

0.780 

0579 

57.82 

0.468 

Norway 

(NKD 

4722 

8.994 

7.856 

2295 

0951 

2331 

2.570 

10 

234.6. 

1905 

11.02 

1.816 

0S42 

2206 

1.489 

148.6 

1.202 

Portugal 

<6s) 

20.13 

3.835 

3449 

0978 

0405 

994.0 

1.090 

4283 

100 

8121 

4.697 

08 17 

0401 

0355 

0.835 

6335 

0513 

Spain 

(Ptaj 

24.79 

4.722 

4.124 

1205 

0499 

1224 

1249 

5.2S0 

123.1 

100. 

5.783 

1.005 

0494 

1-052 

0.782 

78.00 

0631 

Sweden 

(SKr) 

42.86 

8.164 

7.131 

2083 

0863 

2116 

2232 

9.077 

2123 

1728 

10 

1.738 

0-855 

1.820 

1.351 

134J? 

1.091 

Switzerland 

(SFr) 

24.66 

4.698 

4.102 

1.198 

0.497 

1217 

1242 

5221 

1225 

99.46 

6.752 

1 

0492 

1.047 

6.777 

77.58 

0528 

UK 

(9 

50.15 

9.552 

6343 

2437 

1.010 

247B 

2729 

10.62 

249.1 

2022 

11.70 

2334 

1 

2129 

1-581 

157.8 

1277 

Canada 

(CS) 

23.56 

4.487 

3.919 

1.145 

0474 

1163 

1282 

4.968 

117.0 

9502 

5.496 

0956 

0470 

1 

0743 

74.12 

0600 

US 

W 

31.72 

6.042 

5277 

1.541 

0639 

1566 

1.726 

0.717 

1672 

128.0 

7.400 

1287 

0-333 

1347 

1 

99.81 

0308 

Japan 

CO 

31.78 

8.053 

S2S7 

1.544 

0640 

1669 

1.729 

6.730 

1572 

1282 

7.414 

1289 

0.634 

1.349 

1.002 

100 

0.809 

Ecu 


3927 

7.480 

6333 

1.908 

0781 

183S 

2.137 

0318 

195.1 

158-4 

9.182 

1.583 

0783 

1.867 

1-238 

123.0 

1 


Oaten Kroner, French Franc, Norwegian Kroner, and S e mite Kronor pw 1ft Belgian Franc. Yen. Escudo. Lira aid Peseta per 100. 


■ D-MARK FUTURES QMM) DM 125.000 per DM 


■ JAPANESE YEN nmmnOMKQ Yen 12^5 per Yen 100 



Open 

Lnea 

Change 

rtgh 

Low 

EsL voi 

Open tot 


Open 

Latest 

Change 

HQh 

Law 

Eat vot 

Open InL 

Dec 

06475 

0.6407 

+00014 

0.9493 

0.6489 

26.139 

75,810 

Dec 

1.0034 

1.0070 

*0.0043 

15086 

1.0021 

15.833 

59.H5 

Mar 

06499 

0.6498 

+0.0018 

0.6500 

OB498 

173 

3.907 

Mar 

1.0120 

1.0153 

+00050 

1.0160 

1.0120 

1266 

4519 

Jun 


0.6493 

_ 

- 

- 

14 

810 

Jun 

• 

1.0198 

* 

- 

- 

23 

494 

■ SWISS FRANC FUTURES QMM) SFr 125.000 per SFr 



m STraLma FUTURES f MM) ££0500 per E 




Dec 

0,7701 

0.7791 

♦0.0018 

0.7798 

07770 

20.458 

34.406 

Dec 

15766 

15804 

+00018 

1.5812 

1.5768 

10.676 

41.417 

Mar 

0.7820 

0.7820 

+00016 

0.7820 

0.7817 

37 

941 

Mar 

15790 

15790 

♦05022 

15790 

15790 

32 

371 

Jun 

- 

07838 

- 

- 

- 

3 

83 

Jun 

- 

15740 

- 

15740 

- 

1 

8 


UK INTEREST RATES 


LONDON MONEY RATES 

Oct 12 Over- 7 days 

night notice 


One 

month 


Three 

months 


Six 

months 


One 

year 


mtwbanh Storing - 5 S% - 5,1 5ft - 5,1 5)| - SU 6% - 6,1 7\t - 7 

SMrtng COs - 5,1 - 6% 5)| - 5« 6,1 - tiL 7& - 7% 

Trenuiy Bits - 5*4 - S\ 5% - SJJ 

Bank BAs - - 5J1-5 1 * 5ji-5B 6,1-6,! 

Local authority deta. 5** - 5% 5*4 - 5*8 5,1 - 5<i 61-5% - 6ft 7} t - 6)} 

Docount Market de pa 8 1 * - 5 J * 5% - 5*« 


UK do anno bar* base lending rate 5% per cent from Sept e mber 12. 1994 
Up to 1 1-3 3-6 6-9 

months 


9-12 

months 


3% 


3*2 


Certs cl Tax dtp. (CKXL000) 1*2 4 3% 

Certs at Tor Oep. Mids.Tioa.OOQ is ltjae. OspoaMs sIMiMn tor ash kot 
Are, tender rate oi deecunt 6 aftSOpc. ECOO fbwd rate Sag. Export finance. Make up «try Sep 30. 
'M* Agreed rare for partod Oc; 20. 1994 to Nor 26, 19M. S U rem sa 116 M 7.05pc. fW nrenc o me tor 
period Smp 1. 1 894 to Sep 30. 1994. Scnenws (VS V S.73S0& Fmsnce House Bare Row Ope tram Oct 
1. l»4 

N THREE MONTH STBRUHO nHURBS (LiFFE) £500.000 pobibs of 100% 



Open 

Sett price 

Change 

High 

LOW 

Esl vot 

Open tot 

Dec 

93.43 

93.55 

+0,10 

9358 

9042 

47829 

155797 

Mar 

92.83 

92.79 

+0.13 

92.83 

92.62 

48991 

72882 

Jite 

91.88 

92.17 

+0.16 

92.22 

81.98 

15658 

51999 

Sep 

91.53 

91.72 

+0.18 

91.76 

9152 

8332 

49835 


Trader 1 on APT. Al Open ntaratt Bg* are tor ormxxa dor. 


U SHORT STBRUHO OPTIONS (LIFFE) CSOOJBO paints Oi 100% 
















j£r£^K|| 















EsL vcL m COM 3M1S Put* 10031. Prewouj day's open inL, Cats 314827 Putt 185335 


EMS EUROPEAN CURRENCY UNIT RATES 

Oct 12 6cu cert Rate Change % W- from % spread ON. 

against Ecu on day 


rates 


con. rate 


weakest ted. 



2.19072 

2.14684 

-000131 

-027 

5.58 

Belgium 

40^123 

39.4493 

-00241 

-1.90 

5.17 

Ireland 

0508626 

0794178 

+0001785 

-1.79 

5.06 

Germany 

154864 

1.91691 

-0.00112 

-158 

454 

France 

653883 

8.66069 

♦050807 

053 

254 

Denmark 

7.43879 

751140 

-0.00223 

1.00 

2.15 

Portugal 

192554 

195.917 

+0510 

159 

156 

Spate 

1S4J250 

159.152 

+0.129 

3.18 

050 

NON ERM MEMB81S 





Greece 

264513 

292.675 

-0.138 

1065 

-6.75 

Italy 

179019 

1948.58 

-429 

8.72 

-5.10 

UK 

0788743 

0785992 

+0.002652 

-0.10 

328 


14. 

12 

-3 

-7 

-11 

-22 


Ear central rates wbr Ore European Ctmdmkn. Currencm «re In deecendng nMre strengdu 
P ercentag e mey i ere toe Eat « paatdve ctonge denotes a wssfc currency. Ouergsnce shasre ttre 
reno bMween rere spreads; me percentage deference between the acsxri mute* end Ecu centrd retee 
Mr a curency, mo me mrufcnwn penretled percent a ge detedan or ere swreney 1 * mwker mo (rem Jtt 
Ecu central rets. 

(1770193} SwCng end tretan Lira e u epended tram ERM Adjuadnent c a laX w wd by tee RneroU Tknes. 


N PHR-ADrajHlA 3E C/S OPTIONS £31 ,250 (cants per pound) 


Strike 

Price 

Oct 

“ CALLS - 
NOV 

Dec 

Oct 

— PUTS — 
Nov 

Dec 

1500 

7.99 

7.93 

759 

. 

aoi 

013 

1525 

5.54 

555 

554 

. 

005 

OAi 

1560 

3.04 

3.36 

3.91 

- 


095 

1576 

0.77 

147 

240 

0.12 

1.08 

1.88 

1500 

- 

0.03 

152 

153 

252 

342 

1525 

- 

015 

.0.65 

455 

4.43 

552 


Prewoue tey'a vou. Cam 19^04 Puts 7,413 . Prev. day's open InL. CaBs 412A1 Puts 337347 


N THREE MONTH EUROtXMXAR QMM) Sim points at 100% 


BASE LENDING RATES 


% 

Adxn & Company S.7S 

Afiod Trust Bank .5.75 

<WBS* 575 

•Henry AnabachW -5.7b 

asrArrfainxte — 5.75 

Banco Btoao Vizcaya.. 5.75 

Sank erf Cyprus 5.75 

Banket trotted 5.75 

BankoKrato 5.73 

BankafScotlend -576 

Bardaya Bank 5.75 

SmBkcdMUEasl...- 5.75 
•Brawn Sh^toyS Co Lsd &75 
CL Bank Nederland ... 5.75 

Cittw* NA - 5-75 

OydesdaieBank 5.75 

T7» Co-opermve Bank. 5.75 

CcuKa&Co S.75 

Cnxtt Lyonnais 5.75 

Cyprus Popular Bank -.5-75 


Oiican Lame — 5.75 

Exeter Bank LfrMod — 6.75 
Brora# .1 Gen Sunk „ 8.5 

•Robert Boning & Co _. 5.73 

Girobank - S.?5 

•GUnnOSSMSIWi S.75 

Net* Bank AS3 ZUriCfi. 5 75 

•HambrosBank 5.75 

HcrSaMe 8 Gen Hw Bk. 5.76 

MWSamuBl -..5.75 

C. Hoars 8 Co -5.75 

Haigksrg& Shanghai. S.75 
JiAan Hodge Bank 5.75 
•Leopold JcoetTi & Sons 5.75 
(JoyittSa* 575 

Megtv4 Bonk lid — s.75 

MdondBarA 5.75 

*Mou«Benheig 6 

NanvestntiScT 5.75 

•ReaBraihera 5.75 


'ftpfrurghaGuaranow 
Corpciwn United is ru 
tonga- raKTHiteod as 
a twridng tatitufen. 9 
Royal BkcrScraland- 5.75 
•smm & WNrnn Secs . 5.75 

res 5.73 

•UnBedek or Kuwait.- 5.7s 
Unity Trust Bank P(c.._6i75 

WastanTrua — b.75 

Wtxtefrwev Lakfaw — 5.75 
Yodtshfca Bar* -S.7S 

• Members ot London 
investment Banking 
Assodanan 

* In atfcikniefrdkn 



Open 

Latest 

Change 

MOh 

Low 

E3L vd 

Open ktt. 

0« 

84.06 

94.03 

-0.03 

84.06 

94.02 

103,434 

401,608 

Mar 

93.68 

9166 

■042 

9348 

8164 

116.627 

388 482 

Jin 

9137 

93.25 

-0.02 

9127 

9123 

56,126 

297513 

■ US TREASURY BILL FUTURES 0MM) Sim ptf 100% 



Dec 

94.85 

94.64 

-0.02 

94.66 

94.63 

4.401 

19592 

Mar 

> 

94.21 

. 

- 

84.21 

713 

9543 

Jun 

93.81 

93.82 

-0.06 

9352 

9351 

139 

2,007 


AH Open Kerest Ppi ore tor mrtow day 
N EUROMARK OPTIONS (UFFB DM 1m pofrltaof 100% 


Smks 

Pi toe 

oa 

Nov 

CALLS - 
Dec 

Mat 

oct 

Nov 

PUTS 

Dee 

Msr 

9450 

051 

023 

026 

ai? 

aoi 

0.03 

006 

0.31 

9475 

0.02 

0.06 

aio 

0.09 

ao7 

0.11 

0.15 

048 

esoa 

OOI 

0.01 

053 

0.04 

0.31 

051 

0.33 

0.68 

Ett. ML total Cote 13440 Puts Z815 Previous day's open bu Calls 

181128 PUB 174062 



■ WWOSBIgS FRANC OPTION* [LIFFgSFrlm points Oi 100% 


Strike 

Price 

Dec 

- CALLS - 

Mar 

Ate 

Dec 

PUTS - 

Mb r 

Jun 

9500 

0-23 

aie 

013 

054 

031 

088 

9675 

0.07 

059 

006 

aia 

0.49 

087 

9000 

002 

0.06 

003 

053 

070 

1.09 

Ev. vot. 

wra, c* a pus a 

fteriausde/e 

open ta. Cale 1870 Putt SIS 



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Correction N(^Oe- GuBbert first-half Bnanoal bighe^hfa 
The advertisement which appeared yesterday contained 1 errors 
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figure for 31(12(93 is 209,615 (not 209,815. }. 


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I H Fax l 

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Country .j 


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financial times 


Thursday 


OCTOBER 13 1994 



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— H'cDot 


FINLAND (Oct 1 2 / Wo) 


Cutter 

EflJnA 

Enm R 

NbMr 

KOP 

Kam 

Ital 

Kyram 

MOM 


awuaP 

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102 

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117 

147 

144 

220 

217 

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-30 60 45 XD 

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+4 247 
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FRANCE (Oct 12 /fix) 


AGF 21020 


sss 




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413 +104*820 380 U 

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627 -3 780 814 - 


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08* -* TO* 653 — — 

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ABA A 
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538 

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8.000 ....6,1005400 0.7 — 

732 +10 1402 685 32 — 
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UHus 335 -15 478 331 14 

OF 848 -2 977 7B0 2.7 — 

Eau*Gn 49X50 -140 74048220 3J — 
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387.70 -SM 43536140 64 — 

33*40 -6.50 392208.10 54 — 
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... 830 635 14 — 

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2^60 -50 2.7S41470 02 ... 

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(Tony* 35940 -20 8*3355X9 34 — 

Kstssa 41 A50 -1940*9390 308 24 

knetaf 571 +21 sao 495 24 — 

mnFr 443 -5 718 422 59 — 

780 -0 1.079 852 82 — 

51 -40 119 31 54 — 


9 Coram 3400 
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1^ SOUTH AFSDCA (Oct 12 / Rand) 

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10 -10 1X95 820 44 — 

2730 _ 29 1730 XI — 

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220 -15 2S5 115 24 _ 

231 +40*3018250 1.7 _ 

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124 +30 140 102 1.0 — 

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t125 — 1425 72S 49 — 

33 _ 88 2X50 3.0 

3525 -25 42 30 49 — 

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FragM 8030 +30 80 3375 64 — 

Bancor 14JU +30 14.05 y_SM 14 — 
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407 +7 480 360 14 

02 — 144 83 22 

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85 -AO 122 8250 33 

100 — 126 7B 83 

138 +1 159 106 64 

139 +1 ITS 105 54 


(Oct 12/Fre.) 


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550 +44 888 470 — — 

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350 +7 400 288 — _ Ratal 

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031 +21 713 431 — _ Ryepl 

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XI® +10X500X050 04 _ Emdt ... 

+2D0 11«0 0480 „ Sanaa x*50 -50 XOBO Xlio 09 __ 

1450 +30 197D 1J10 08 — SaMO 1420 ♦50X15014*0 — _- 



2400 

BOO RapKY 

100 Rates* 

200 Rotmnn 

55000 RnoOB 
«4 87 RondSt 

38% 1931 a Renat 
15% W310DO r 
11% 14860 I 

24% 847728 
” 1275®0 

224795 . __ 
22919 RoyOsfc 


. +5 1548 1240 443X5 ■ TOKYO - IMOST ACTIW STOCKS: Wadnasdoy, October 12. 19&4 

i®i +41 1 . 1 B 044 84 _ — 

398 -42 S43 3J6 SJ 104 
44S +48 5.48 42& 5J 1X1 
“ “ -0% 2QJ0 1340 XB _ 



to PNN m aa ipml m ta 
■emaaliMBai 
■a tor ISM, mot WSHII 8 

* DaMrataapmadmlfii 

r b ilgM*. el E* NL 


FT FHg ANNUAL RB»ORT3 SaiWICg 

aneynammllte yaatua 

nmx m am m am Man m m wanm 
maaaim o> ta ini 7» san. ■ atom an eniton 
IK M +4* to 77B am IT ta +** n 7» K2. 
Nam p| to Mto oa aa dm mtag dw. Mpa n 


— 1X30 7J0 22 — 

+44 3.70 34S 44 _ 

__ -45 540 420 12 __ 

740 +44 948 840 74 „ 

1.15 — 142 DJB 09 — 

047 — 048 04S 59 — 

a -.12 842 347 54209 

— 142 120 XI _ 

+44 190. 048 XS 14 

— 395 294 24 — 

_ +.10 X85 24» 4.1 — 

i4o __ 197 asa 54 „ 

„ 2-18 - 240 XlS 74104 

X27NI *48 340 X12 74 — 

T.19 -44 1J8 1.10 24 X2 

127 — 1JB 124X7 — 

X10 +42 248 2 84 64 

145 -46 242 1.12 24 — 

140 — XBZ 143 — — 

„ .... _ 1144 +4*1140 are 29 4X5 

S +15 74* 00 — _ Kktoai 340 -v07 440 XEO 84 _ 

+100 4J20 2400 09 82.1 Lade 1640a] -4018441540 44 31.1 

41? +5 538 410 _ UonN .258 _ 390 298 54 _ 



Stocks 

ChMdrts 

Change 


Stocks 

Closing 

Change 


Traded 

Mon 

on day 


Traded 

Prion 

on day 

NKK 

8.4m 

290 

+3 

Mitsubishi Chum 

5J2m 

567 

+18 

Mppon Start 

8 . 0 m 

369 

+10 

Kawasaki Start 

5.0m 

446 

+5 

Stmttofno MU bid 

7.0m 

346 

+5 

Mitsubishi Hvy 


791 

+6 

Mitsubishi Bac _ 

6.6m 

734 

+6 

Tosoh . _ 

. 4JJm 

417 

♦21 

Old Bee 

5.8m 

800 

"3 

Sanyo Bee — 

43m 

590 

+9 


+3 779.803 12 


2J9M -42 339 X33 14 804 


X520 +403240X410 — — MaynM 725 -.101044 747 44 712 

.. c.. . - 421 243 44 - 


-4 582 390 1.1 — Mrflkir X10 ... , _ 

483 +9 BID 440 14 — NAB 1040 +4*1348 047 421X0 

877 +11 1420 .705 __ ftaeres 846 -.00 740 825 12 _ 

4.«n +140 4450 3230 — — Maa wcp X25 -OZ 1040 7J2 04 JJ 

1480 — 1J7D14&0 _ — SIM 349 — BJB 340 34 _ 

818 +1 858 447 _ — Hmdltoa 293 -J» X79 140 X5 — 

1410 +3012401230 — — NBHPaa X8B — 4.13 345 32244 

811 —.704.518 _ — PacOun 340*1 +43 842 340 6J — 

1.75 +43 X16 148 — — 

X10 _ 243 123 — — 


BOB +23 809 SIB _ __ 

548 -2 670 430 — _ Sauritn 

Kg, +30 2^ ?. 4M S3SS 

taaipn 680 +10 floe *25 — — 

KM 1,180 —14101,140 — — 

KtaHvy 478 +8 600 338 — — 

KawKin 307 +13 *12 271 „ — 

KataU 448 +6 451 303 — — 


,5£ *I2 1 £E,2£ — — 5*^ xneo +*022791280 — __ m 324 m - aax 220 * 213 s 

------ ’■*» ’-2Bg — — Sra^h 843 +3 1.DOO 883 PtoPBC 324 -,10 4JB X48 XI — 

ESS T -£? ~ S S 2 '1£ 1 ‘&£ — — Sn » nB 300 +9 809 413 — __ Pkm 546 +42 9.25 380 14 _ 

Kantao 354 +2 420 330 — _ Sppems 026 +8 1400 870 — PnaEM X79 +JH 440 XB3 24 _ 

04 — Socotn 8280 -3072806450 02 — OBEta 493MI -43 6JM 494 54 — 

5.740 —34*0 5400 — — OCTHa 145*1 -JOT 1.74 1.1 5 BJ __ 

4.130 +50 4250 3470 _ — Unman 5 -via B2S 428 02 — 

1400 _ 14201480 02 _ RnBaim E12 +JH O «J _ _ 

1250 +2014901460 — _ Samoa 4 -v05 442 348 64 04 


1480 +20 1410 1260 „ _ SnatlHw 308 -J71 7.10 SOS 50 — 

_ . BBS +a* 1,180 BSB _ _ Bonfian 1140 -04 1X10 X10 44 _ 

SafcHM 1,150 — 1980 1.130 12 — 88C*P X94 _ 340 XB6 54 _ 


[indices 1 

1 US INDICES I 

on ob oct 1994 oa oa a* not 

12 « 10 ttj|» Low 12 11 16 Htfi Lot 

Dm* Janes Oct Oct Oct 1994 SkmampMiii 

11 ID 7 Hgt Lot H* Lot 


Gmta (2Bn2r77) 


m CkdmtoWl/USQ 
WiMngnnran 


Qetlrwhnoartaw 
inoefl nMzrusnn 


BB20H/W1) 

M 

I P»*l253) 



Metm lflrto^(1B7S) 
OonpMMf ( 1 S 79 
RtokMoK tNlfiO) 

CtXa 

PbAGen (317I28Q 
Menrak 

Copet*ngmSE07i/ECS 

HataMxswm 


sof EnoLisflu 
ck *apn/isOT 


FK AMHMSI.’CSa 

C ww iaBNWMI 

owponafipj 



raumsaaT-iaan 

Mag Kora 
MRS SnB3lTfi4t 

8 SC S888I1979) 

tahaaaato 

Jatoata 0 po(U’®8TO 

OW 

6W0mr*a«® 

Banca Comm lafl (1973 
HBGnollVI-'M 


60 2000490 

« 2547098 18/2 

1739690 2QW 

OT2B 

rests 

20038 

105X8 

19680 2MUD 3/2 
10519 11 36.16 3 n 

U6799 27ft 
90400 5ft 

395.43 

106533 

3M05 

10GXM 

39498 480L86 SB 
1DBXOO 122X35 1R 

39021 6/10 
101128 6ft 

136598 

138520 

1351J4 154X65 BC 

133X39 7/10 

« 

492800 

503210 5811000 13ft 

989X99 3 f\ 

M 406139 
M 431539 
M 20883* 

ft) 428X80 19/9 
(C) 480X80 23/3 

n 21088 in 

829X88 20/4 
3BSX90 24ft 
186MB 2&ft 

W 

53883 

53203 838X90 1V10 

8901 20 4/4 

3*5.** 

3*417 

3*150 41X39 7H 

33X11 7/10 

16933 

18637 

183XT 197X00 4/2 

homo an 

128032 

1918.14 

127X50 

191802 

1«7£1 158820 aa 
TB9BJ2 239X93 » 2 

imm sno 
183172 600 

7*1-72 

220.* 

707757 

77202 

220420 

207106 

76327 96X27 16ft 
2T75fl 248X59 23 
2024.79 2Z7I.11 W5 

74KM sno 
2 T 1 SJ 0 ano 

198039 7/10 

85730 

06122 

86207 119*28 1Y1 

80X67 25ft 

8532.35 

836232 

924X40 tzanj* *n 

888X44 4ft 

440188 442125 

441095 4587109 27/S 

34SC0B an 

511.42 

51239 

5ii08 non si 

44X72 727 

1852J5 

1836.13 

1821.83 208XW 2tf1 

189X14 1/7 

63368 

1D3&0 

63503 

103X0 

640.06 817.17 IDS 
10070 131800 IDS 

89X35 10n 

844X0 lVI 


PC (tor 197$ 

GSSlUMfeaEnl S3) 
CSS Al Sla fnd S3) 


14 Z66S4B 282129 2BBU7 fiffl 


4314 

2712 


43X0 

2722 


4Z7J 

2682 


CUD 3VI 
31/1 


Cap. flonwBB 


205820 202875 188X83 943844 30 


OttSEMtaUW 106124 104*32 104140 121X10 2812 


196729 2£» 


4DK30 2M 
25720 21A 


18C51 11/7 


88081 2UB 


bkne Bouts 
Transport 


DJ tori 

cavnhigh 


p^i m 

9BLD1 9522 9521 105L61 9621 

(zup pnn psnom) 

149091 146298 1444.78 188228 143X50 1 

TO (Wp) 

18122 17927 17892 22721 17525 

to <m (mum 

386848 (1843.19 ) Law 381846 (078048 ) (TtMOtatoei*) 
(382545 J Low 38J142 (379793 ) (ActiMN 


{J1/1/94 (2/7132) 

10X77 SW 

onwrp 
1222 
&2W (MM2) 

1040 

(WS2) 


Utafla Omp (Z/t/tS) 

297046 

294X95 

2972.11 

338837 VI 

280723 90 

Coraptato f 46579 

45X04 455.10 

48230 

*Mtt? 

4B60 

440 

PKtrato 









TO 

m 

TOH 

rraaa 

BTA (1977) 

287X4 

286X4 

23W7 

322880 18/2 

2612X0 20ft 

hi il 1 IntaM 

mniNiST 

553X2 ; 

54470 53X55 

58X88 

510X5 

56X83 

3X2 

apw 









flSfl 

VW 

(UftTO 

ftlftftB) 

SBSM-SfmPm 

57X63 

574J7 

58534 

841X1 4/1 

52X29 4/4 

Rnctf 

4X00 

4268 4133 

4U4 

4L38 

4X40 

864 

Sooto* fltotes 









(Mfl 

m 

TOM® 

(1/10/74) 

JSE GOT (28)5779 

228X09 

P3BBO 

« 

263460 7ft 

174X00 14ft 

N1SE tanp. 

25X38 : 

25X14 2S1J3 

267.71 

30.14 

287 JI 

4X0 

J5E txL (28/978) 

82X73^ 

52410 

n 

6187X0 15ft 

544X00 WI 




TO 

TO 

P2®4) 

0*42) 

sum Kona 




* 


Am IH VN 

457.78 455X9 455.12 

4B7XB 

422X7 

487X8 

2X31 

Kqreren4fi44nfttr 

108986 

107X86 

106X6 

1089X8 1210 

68X37 2 H 




TO 

(2M) 

TOTO 

enm 

Sprtn 






msorecDv 

78557 ; 

?58X1 748X6 

88323 

69379 

803JS 

54X7 

itoMSEpan2S5) 

« 

29575 

29462 

33X31 31/1 

28067 SW! 




(18/3) 

TON 

(iBOftfl 

pi norm 

Mbnankfin (UZSTl 

142520 

141100 

189220 

180190 31/1 

133470 6ft 

■ RATIOS 















Ocr 7 

Sep 30 

Sep 23 Year ego 

Stabs Bk tad pi/iasq 

120125 

1204J5 

119X07 

1423X4 31/1 

1157X7 18/7 

Dow Jones (nd. Dtw. Yield 

2.78 

2.76 

2J6 

2X4 

SBC Gannt (1/4/87) 

91485 

91X10 

91X79 

108329 31/1 

SE0JD7 5/10 



Oct S 

Sap £6 

Sep 21 Yeer ego 

TMeaa 






S X P bid. Dhf. yirtd 

2X3 

4X9 

i41 

2X1 

ms/mavaoMBr 

646528 

812471 

(4 7191.13 300 

5194X3 18/3 

S X P Ind. P/E ratio 

20X3 

20.78 

2064 27X2 

ItaM 






■ tnc/UBMWB ABB POOR! BOO MMD 

c nnuns S50D ttmes kidn 

BMBtOk SET OQM/TQ 

147090 

144426 

142X12 

175313 4 n 

H9X5B 4/4 

Open Latest 

Oen 

Htah 

Law 

Esl vol OpsnlnL 

TMtagi 






Dec *37X0 407X6 

-0X5 487X0 

466X0 

107,475 

214X44 

btatU WWbD ISM) -2flB47A 

264642 

2813X528883X9 13/1 

1298X79 24/3 

Mar 

- 470X5 

. 

_ 


1,1712 

8X41 

raxD 






Jot 

- 474X0 

- 

- 

- 

3 

2X74 

us capu kinn/ntc 

6804* 

law* 

61X9 

814X0 2fl 

591X0 4/4 

Opan Mtasal fern era far provtous day. 





aniMoaa 













Bntrack lOOPBftOflQ 133183 

133X45 

1317.39 

154X19 31/1 

129X48 SAO 

■ IH YORK ACTM STOCKS ■ TTtADMQ ACTIVITY 


em Tsp-iin mvfm 

1181.18 

117X13 

116496 

1311X1 an 

1136X9 sno 








JCapeDigra (31/12/88) 

M 

301.13 

32X08 

39X19 5 n 

29028 21/3 

Totsdqr 

Stocks Qua 

Changa • Atom (Moo) 



Bamga Bmtfm/Ba 

18561 

164X1 

182X1 

19U9 209 

14196 21/4 


traded price 

an diy 


On ii on ia 

Oct 7 


I (MATF) 


wm 225 na»*a 
MU* 30Q (1710*3 

Tapto(4n.«ft 

ftatAnmiMnfiS) 


anW2’B821.«8 
3X22 29026 
160060 15832* 
225421 222X70 


« 1155X81 13ft 

n siui im 

H 171233 13ft 
8} 2A42C W 


1736X74 4/1 
ana*) 4/1 
144X97 4/1 
US29 4 n 

4/4 



Opan 

SwtPrtc# Change 

rfah 

Low 

Esl vol Open H. 

Oct 

1917j0 

19323) 

+5,0 

1832.0 

1812-0 

18X35 

28X51 

Nm 

1925.0 

19400 

+5.0 

1982.0 

1925 J) 

101 

754 

Deo 

1834X 

1948X 

*BJ0 

1948X 

19800 

349 

26X64 


Nat Mad Em 


Fort l 


Open Ea u aat tfrna tor pntaua day. 


Amor Ued 
PapaCo 
Compaq On 


Ku*cmu4««) ,iaa 1imi * imxsn 0inii 

KLaa*«U4»*n»i uu taaFi lOBUB. Btaa nioaa o»m toOcta an 100 a«atoE Amnia Ai OMtotoy 

“ 34 Oe 9 ■ Taiuan W** y*»d KBQto. tSBFSBO. CAO* 0 , EwoTbp-loa &S) {J arat Torn no Comum aiatox 

■nd fctatoa - MO: Am” jsb 20 manta - S04A NV8E A4 Common - 80 and Sumtonl and Poor% - IX S 

llgnliaa' 4 Torawa fc) Poeaft M iw*— — . 


Cm Mans 


7218200 

3417200 

5210700 

4281200 

M852U) 

4.128400 

327X700 

1841400 

348X700 

321&400 


im 

29W 

14ft 

29V, 

54 

24ft 

34M 

34ft 

34ft 

47ft 


-ft 

+1ft 

-ft 

♦Ift 

+1M 

+ 1 « 

42M 

+M 

-ft 

+1ft 


Ntw 1MSE 
Amn 


355.528 21X112 27X582 
14683 6,100 14005 

34057* m632 24M» 


NYSE 

taaaTn M 

Am 

Fill 

Unetungad 
Mm Hgfts 
Mnr Lom 


9MII 

1545 

E83 

652 

« 

87 


2617 

1,408 

717 

092 

a 

73 


2632 

1+ZOB 

834 

690 

26 

164 


f Omotoi * Cafculetad at I960 6MT. • B e ta ano benda. t WumriK ptoa UBtotoa. Hrunetol m Trac^or ta BcrL 
♦ Tin DJ tad. toctai ta»M (W* Ntfm md buy mr tta wnapn or On righato and town prime reached dutog toa (toy by eaeh 
anxk; ananaa Bn aam nqift irigta md ln« (wpplad by TiWiim* neitotort fln MetaM ■■! ksem «Mwa flni llw todaa Ina laactnd 
00*8 toe Bay, (T1a> Ugona in BMaam mb paten a^riq. f aujia 19 OtScM raritoi Bakin. 


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36 


#fea> 


FINANCIAL TIMES 


THURSDAY OCTOBER 13 1994 



KM 

Mg* taw Hr* 

17% 12% AAR 
Trti 13% A L Laos A 
78% 57% AMP 
72% 48% AMR 
6 3tAftt 
»%3S%ASA 
31% 25% KM1. a 
15% ntAottm 
23% 77% ABM hD x 
>6 1 1 % AcpDacefl 
31 22% ACE Lid . . ... 
12*2 9%A»GWtex I OS 11.4 
10% 7ACNG«tolx 0.B0114 
10% 7 ACM ShSD l 096132 

12 8%ACUQKSef 109 119 
11% 7% ACM MBA i 1 08 13.9 
9% gKNWngai 0.72 8.7 
15% B% AanaCW 044 32 16 
9% 6% Acme Baa 7 

28% 23ACORU 0.60 32 13 

5%A B3H 036 3 6 


m. n tb 

Oh * E to* 


lam owe 
0.40 16 21 115 12% 12% 12% 

0 18 1.1 38 47 16% 16% 16% 

108 32 27 2206 77% 76% 77 

89 2308 51% 50% 5ft 

13 92 3% 3% 3% 

300 19 34 646 51% 50% 51% 

078 24 18 4459 31% 31% 31% 

050 15 tO 20 14% 14% 

052 28 85 20% 20% 20% 

SO 49 15% 16% 15% 

044 14 30 257 24% 23% 24% 

261 0% d9ls 9% 


7% H7 
250 7% 7% 

52Z 8% 88% 

777 7% 7% 

263 B% 8% 

28 13% 13% 13% 
35 0 8% 8% 

11 27% 27% 

SS 10% 


7 

7% 

ft 

8% 


27% 


. . 10 

17 11% Aran 12S 125 16% 16% 16% 

18% 16% Adams filjlf a 48 18 0 48 (7% 17% 17% 

64 46% Ad IDoro 300 5.B 1008 52% 50% 51% 

100 126 1035805 24% K% 8ft 
016 11 8 22 5% 5% 5% 

OlO 06715 142 17% 17% 17% 

1 J7 25 12 28 5B 7 a 58% 5B% 

276 59 7 7S3 48 47% 47% 


31% 1«%*Mis 
8% SAAeaGfQ 
TO ISAdWhC 
59% 49% Aegon ADR 
65% 44% feted. 

36% 25% Alhc 
22% 16% AJtruren 
4 i%A8ecnkic 
SO% jft AkM 
39 7 a 22% ABbna Fft 
28% 19% AkfpBlK 
17 14% fetese 
23% 21% AkTcii 
18% 17% Atoka fe 
21% 16% AlteryW 
17% 13% Aemrl 
25% 19% AfcCuB 
225 iftAICulwA 
30'S 2S% Aimn 
27% 19% AlcnAJ 
65% 43% AJcoSt 
30% 23% AtenBrorm 
22% MAM* 

24% 17 A0e#i LUC 

2fA 2 19% A togP 
22% 13% ARen Con 
28 ZOAtagan 
4% it AT 01 
77% 17% AAnco Cop 
19% SAIhceQx 
77% 21% AW ten 
40% 33%AKS0 
11% 9%Afcno 
29% 24ABHCrp 
7% 4% AltUEtB 
3S 21% Afcimw 
87% 6*V Alcoa 
30% 19 Ata Cp A 

11% T AntGmhc 1 0 9913.5 
8% 6% AmPrech 025 31 
5% AtrorCC 
ZOAmcasiinl 


048 1.4 14 1050 33% 32% 33*j 


S% 

25% 


S2% 41 AiraDKx 

9% 8V Am AdjHx 


31 20% An BettA 
37% SS%Am6ma 


083 4.4 1* 2092 20 19 ; _ 

1 43 2% 2 2% 

096 31 25 988 46% 46 48% 

030 1.2 14 1170 24% 23% 24 

48 429 27% 27% Z77 s 
184 1 1.7 12 17 151$ 15% 15% 

6968 29*4 28% 28% 
020 1 3 22 429 15% 14% 15 

035 2.1 29 64 167 a 16% 18% 
020 14 524 14% 14% U% 

028 12 IE 299 24% 23% 23% 
028 12 17 504u22% 22% 22% 
044 1 S 23 14Z7 29% 28% 28% 
030 11 73 6822 427% 28% 27% 
1 00 T 7 42 933 60% 5St 59% 
0.70 1£ 4 709 26% 28% 26% 
OLIO 05116 8? 20 19% Jft 

0.48 13 19 736 20% 20% 20% 
1.64 78 II 2259 21% 207 a 21 

0.16 08 17 276 20% 20% 201 
0 44 1 7 16 2K 26% 26 

1 3* t U 

1.64 ao n 131 20% 20% 20% 

Q IS I.S 57 0% 5% 9% 

090 39 14 S3 23% 23% 23% 

067 1.9 7 3285 35 34% 34% 

0.84 91 15 9% 9% 9% 

0 88 14 IB 1716 26% S% 25% 

28 6980 u7% 7% 7% 

12 1383 31 30% 31 

1.60 1.9495 3769 84% 83% 84% 

36 2024 19% 19% 19% 

369 7% <(7 7% 

95 8 7% 8 

008 1 0 >3 3709 7% 7% 7% 

0 52 23 15 64 22% 22% 22% 

000 10 49 1050 48% 47% 48% 
ll 24 27 38 8% B% 8% 

0.10 04 3510723 26% 25% 26% 
36 35% 35% 


16 26% *% 
2 ofc 20 % TC 


-% 


300 5.7 10 1683 _ 

25% 18% Am Bus Prd 080 35 14 45 22% 22% 22% 

6 6% An Co® fnc > 0 65 9L1 165 7% 7 7% 

20% 16% Am Can Bd 1.54 85 30 42 17% 17% 17% 

23% 15% Am CAD CV 1(8 U 0 18 19% 19 19% 

99% 42% AmCwn 185 19 57 8® u99% 99% 99% 

240 7.6 IB 1006 31% 31% 31% 
090 30 1310432 30% 30% 30% 
1.18 4 3 23 1845 26% 26% 28% 
153 6 05% 8% 

7 505 21% 21% 21% 


>5% 4m CAD CV 
. 42% AmCvzn 
37% 27% AmBPw 
33% 35% AmExpr • 

30% 24% AmGem 
9% 5% Am CM hi 077131 
27% 21% AraUDiPr 230107 


0's 

66% 55%AmHoma 
2% 2% Am HoteS 
96% 81% AmM 


71% /AmOpoIKt 1.00 13? 
30 23t Atrt’rem OB8 23 
34 iBAmPnsa 040 7.5 
7% Am Red a 0.44 5.6 
21 AreSJcr 048 1 8 
IB Am War 5* 1.25 6.8 
28 Am War 
43% 36% Amttch 
43% 32Ameranhc 
17% 11% Anoteh 
61% 50% Amoco 


292 4 B 12 4550 61% 60% 61 

075 28 6 9 4 2% 2% Jt 


046 0.5 15 2B81 90% 88% 


8% 

27% 

22 % 

32% 


159 7% 7% 7% 

628 26% 26% 26% 

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210 13% 18% 18% 

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1.92 5l0 13 3298 38% 38% 38% 

128 17 5 86 34% 34% 34% 

024 13178 1583 D18% 17% 1ft 

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9% 6% AmuwfTU < 010 1.4 5 115 7 6% 7 

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1.40 46 S 817 30% 30% 30% 

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10% 8% Ace* MOT ft 071 7.B 172 9% 9 9% 

24 14% APH 40 2388 23% 22% 23% 

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58% 42% Anxtata 
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29% 24% Anpefca 
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45% 33% Amur Sec 
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38% 31% BCE 
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TECHNOLOGY THAT WORKS FOR LIFE 


Samsung Notebook PC 



S0486SX/25 MHz 
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inter Kev Moose 


QQT 


BKTBOMCS 


1994 

m lamBaek 
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63%52HM»x 
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1% VBavHB 
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41% 19 BestBuy 
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1.72 4 3 12 
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0.40 4.1 33 


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74% 54% flrAir 
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79^ 55% BP 
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27% IBBStte 
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4% 3% BBT 
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28% 12% Burl Cod 
68% 47% Burn 
49% 36% Bum Res: 
10% T5% Bunhsm pc 


W. H _ 

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Ea*CP 2 X 3% 3% 3% -ft 

EMEffild 2 100 1ft 01 1ft 

BOTH 032 a 2817 18% 17% 18% 4% 

Eggtati 282 ei* 7? 7% 7? 

BteoB 1 804 1ft gift 1% +A 

BecnSd 15 3288 16? 14? 15% -% 

Baetttfl 0X8 48 Zl« 49% 48% 40% 4% 


Botvts ansa a% 21% 21% -1% 

Entente 17 16 S? 5% 5? +% 
Bote 340 10% 9% ID J, 

Bigyvwu 47 5 13% 13% 13% +% 

Emdrte OB 23 2 2 2 

Bum he 4 180 3 2% 3 +% 

EquUKS 01018 374 4% 4% 4% •£ 
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Eteyto X 1581 21% 21% Z1% 

10 83 8 B 8 -% 

15 a 20% 20% 20% +% 

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B El B 


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22% i7%mmntod oa ix ib ig zo% io? 

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77% BITOH 100 27 21 nft 73% 72% 73% 


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214 SX 33 3737 38% 

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32 158 19% 

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AMEX COMPOSITE PRICES 


4 pa dose October 12 


Steck 


W 


Hv. E ion Mgh iMCtaHOtog 
AOrlbgn 5Z5 23 16% 16% 15% 
AOnhc 2 ire * x *- 
Alpha bid 4 214 

AmhrPk 1.04 13 3 _ , 

AmlfcCoA 0641U5 185 23% 23? 3 
AradaH 005 32im 8? 8% 8! 

Am Erpl 2 200 1.% 1ft 

Ampat-AmA 44 5GB ‘ 

ASHIRU 072 21 177 

Adratech a in 

AW 8 441 

A&KCUB o ai 

MUIomA B 43 


KUT Ocean 055 0 4 

BcWgerHe 0.73 20 3 .... 

BMAmTA 6X4 36 790 UB% 


071 


Bury RE 
BATsdr 
Beam B 

arts Man >040 1 *8 
Bto-Rod A 74 

AM* 057 46 

31 

OX 7 
1X4231 



54 ^ 


Bern 

BraecaiA 


Gapop 

Cwtonx 

Can Mac 

CWrtWA 

CMtom 

CMRChn 

C8BPB* 

0*1 MA 

CoOMo 

Compulrai: 


658 26% 25% 28 

H 43% 42% 42% 
11 3% 3ft 3% 



OM 40 M3 15% 15% 15% 

001 72 5% 5% 5% 

OXOlffl 158 17% 17% 17% 

1 ZB i ? S 


W Sto 

Stock Oh. E UOe Iflgb ImCtaa Ctag 

CmaJRlA 5 9 9% 9 9%*% 

CraraATA -0X4570 322 17% 15% 17% 4% 
Crow C A 040 40 X TB% 18 ~ 

CmrnCB 040 14 14 16% »% 

Cubto 09 85 a 
18 81 



Oupln 


Eastn Os 
Eton Say 
tan En A 

Eduslto 
Ben 



3 13% 13% 1^» 
0X7454 4872 13% If ' 


046 13 


030 



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W>tod» 

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121188 


®*a5S« 


0X4 11 
4X010 


mCRytekOXO 15 
RteU 
EorattU 

mquen? 


8 31% 31% »% 
3 76% a% 76*4 
7 12% 12% 12% 


056 75 5 30% 30^ 30% 


a 782 49% . . 
3 ZlDO 3% IQ% 


3% 


3 

1 

3 


Goran 
On HA 


GoWMd 

Braennan 

GuHCd* 


080 5 134 18% 15? 18% -*% 
001 15 838 23% 23% 23% -% 
oro P 2» 17^ 18*^ 17% +% 

M in 8% b% 6% . 

034 13 746 4% 4 4ft +% 


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tea 

HnanfmA 

hUranGp 

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tm 


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KJnvkCp 

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btoergi 
later Ind 
LwPnara 
Lurwchc 
Lynch Cp 


Oh E IDOs Ugh Lew Close Ctng 

1 rtOO ift 1ft 1ft 

015 45 2100 10% 10% 10% 

10 248 7%. 7% 7% 

012 29 85 12 11% 111 

3 CW 3ft 3% : 

74 15* 14? 14% 14 . 

OXB 19 573 19% 19% 19% 

4 454 5? 5% 5? 

21 12 14% 14 

19 2K l£& 16*5 18% -*J 

67 150 8% 8% 8% -% 


MMb A 
Mem Co 
MMX 
A 



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HT7WI 

NACenn 


IWR 


3 102 31 
(M4 29 187 
0X0 38 30 
ID 
13 a 
81 460 


0563175288 22? 22 22% 

0X0 15 87010% 10% 10% 

115 19 5? 5*4 5% 

293 40* B 5% S? 


a 


0244503809 38% 35 

0 a« ID 1270 16 >5 


Stock Uv. e lOOe Bob Law Oat* Bag 

pwm axa 17 27 in io io -% 

PMHPme 1X4 B 2 17% 17% 17% 

PM LD OM IS B48 57% 57 57*2 *% 

nmayA 0X0 19 145 38% 38 36% +% 

WyGem 01229509 S 22% zZS 
PMC 094 17 81 14? M% 14? +* 4 

PrasttnA 010 0 45 1% 1ft 1ft -% 


4 35% 35% 35% 
A 17% 17 17 

5rQ? 4? 



0X048 21 8% 5 
0X6 88 1251 46? 45 
711072 15? 15 

19 mk 


m 10 100 12% 

HI 40 ft 

jx an 11 ns 19% is? is? 

LB OM 3 12 14% 14% 14% 

K 18 682 28*4 24% 25% 4% 

idk OS2 1) 3B3 18% 17? 18% +% 
ButeaCp 040 82741 15*2 14*2 15 4% 
Btriaxih 08013 51 23% 23 23% 

BWto Bw 052 16 199 33% 33 33% -*2 
BUMF 08014 132 27 28% 28% +% 

BftVlNrx 08013 28 24% 24% 24% 
tote 1X0121741 56% 58% 58ft +% 
Fh 1.» 9 894 28? 28% 28? +% 
c 21 169 0 8% 8B +ft 

Cos 042 32 27 14% 14% 14% 
my 13 201 14% 13% 14 +% 

BwWeyWR 044 13 238 38 35% 36 +% 

BHASrp 012 19 GO 12? 11% 12? *1% 
nm 102 146 5% 4? 5% Vi 
BgB aw 16 37 11% 11% 11% +% 
BtateyW an 15 104 13% 13% 13% +% 
Bfegw 5118940 50% 47% 48 -2 

BUM 21 T8B1 12*4 11? 12 -% 

BtedtUg 1X1 11 59 31% 31 31% *% 
BMC Soft" 1311588 45 42% 43% -1% 

Batems 1JB 102039 31% 30% 31% +% 
Bob Era* 029 181251 20% 19? 20 
BaatolB 15 B 30% 30 30 +% 
Bormd 14 5860 13 12 12% -% 

Botooafik O0B 5 587 34% 32% 34*1% 

Boston Tc 655221 14% 14% 14% 4% 
BndgWAx 0X0 IB 4 48% 47 47 
Branco 024 29 157 IS 12% 12% •% 
toanoS 028 203375 9% 9% 9% +ft 
BSBBncp 008 B 99 23 27% 58% +1% 

BTSdpng 048 5 300 2? 2% Z? -t% 
BDHtt 23 1115 15% 15% 15% -% 

8uBd»J 20 348 11%d1T% lift -ft 

Bur 8nm 44 844 m3 12% 13 +% 

OR 68 115 U37 35% 36% 
BUBSrtNg 040 8 35 31% 31 31% 


- c - 

CTae 245 575 25% 24% 24% 4% 

Cabal Mod 7 in 5? 5% 5% 

CadSCUtt* ICXB 16 58 28% 28% 28% *% 
CachnnComOXO 21 95 17% 17% 17% 
CBanCp 52E3SS9 11 10% 10% 

CUgme 2X5 51058 9% 8% 9 

Cal Idem 284831 u29 X 28% +% 
l 1 13 2» 2% 2% -ft 

3 835 2ft 1H 1,H 4% 
Canon fat 0X3124 74 B9% 89% 89% 4% 
1 4 907 d7% 6% 8% -% 

CarttnCm OS 22 6 27% 28? 2B? +% 

I 060 22 46 25 24% 24% -% 

OOB 2B1MS 13% 13% 13% +ft 
5 123 7 6% 6? 

20 594ir13% 13 13 4% 

r 8 1598 17% 1649 17 

I 1.12 10 881 30% 29% 29% -1% 

r 22 200 11 10% 11 -% 

r 9 40 5% 4? 5% 

1 OSO 7 TZ1 20% 20% 20% 

009102870 7? 7% 7% -% 

I 18 32 12B 

war 15 ‘ 4 4% 


- F - 

Grp 10 4 4% 4% 4% 

FarCp 024 31 5 B 6 8 -% 

FMtnto 0X4 881874043% 41% 43% +1% 
fflPU 172437 28% 27% 28% 
WIM 1X4 15 373 51% 51% 51% +% 

RRyOR 14 285 5 4? *ft 

Rate A 024 02152 8% d7? 8 

FBenel 34 2089 24% 23% 24% +% 

FMAa OM B 427 31% 31% 31% +% 

FSIBcOMa 1X0 12 58B 27% 27 27% -% 

FtoCaok axo is 02 22% 21% 22% +% 

MGectr 1X4 10 27B 28% 2B 28 

Pst Tam 1XB 10 288 44% 44*4 44% -% 

FotlMtt] 038 7 110 9% 9% B% -% 

056 7 509 24% 23? 24ft -ft 

1X4 B 25 32% 32 32 

55 186 rX% 8% 9% +% 
27 1258 22% 21% 21% -% 
18 759 0% 8% B% *% 
0X9 154810 5? 5% 5? ■*% 
080581 542 6 5% 5}| -r-ft 

1X8 10 50 32 32 32 

11 in 11% 11% 11% -|J| 
38 394 3% d2? 3% +% 
1X4 12 511 30% 29% 30% +ft 
DAO 8 953 18% 15% 15? -% 
1.18 11 51 28 27% 28 +% 

OS 21 559 32% ST 32% +1% 
0X8 ID 33 19% 18% 18ft 4ft 
024 251728U2D*] 19% 20% +1% 
14 251 3ft 2% 3ft -ft 


Ftefler 

ftaUM 

Ffcanr 

How lot 

FoodLAx 

HodLBx 

Foramat 

Fcracbner 

Fasts A 

FrtoRa 

fWFW 

FtoHnwl 

Mar IB 

FuttnFh 

Fteax 

HtouMDR 


QBApp 

GSTCSenr 

Bate 

Garnet Rs 

GehICD 

(SaMBtad 

Gterte 

GUBtaFti 


-G- 

7 3 3% 

1187 22 745 15% 
0 81 3% 
9 222 
018148 20 
0A0 22XUU 
18 S 
3 4513 


iJp 

ft 

Vg 


3% 3% 

15 15% 

3 3 

3% d3% 3% 4% 
5? 5% 5? 
u21 2T 21 4? 
4? 4% 4? 

0% 8? 9% -% 


GeptoxCp 4X0 39 2583 23% 22% 23% 4% 


ftrutac 

Gamm 

Gama 

GUdhgri. 

GBortA 

GMBtan 

GoodBiyt 


2222732 UB% 6% Bft +ft 
60 827 33% 32% 32? -% 
040 19 14S3 15% 14% 14% -% 
012127433 17 10% 16% 4% 


- K- 

KStea an 12 Z70 24 23% 23*4 •% 

toman Cp 044 S 2S2 9? 9% B% +% 

toldOU 3 738 6% 8 6%+% 

! MV& 072 29 331 27% 27% 27% 4% 

KaoWky £11 10 17 BBS 
»0M 084 13 58 24*2 24% 24% 

KMnar 22 n 10j J , 10% 10ft 4ft 

KLA&Btr 830255 *8% 47 47ft -1ft 

Knowledge 2 227 3? 3% 3fi -% 

i W*A 0 BIO ii ft ft 

KomaghE 2482819 27fi 26% 27% kh. 
KudckaS 10 3(1 10*4 15% 15% -% 


-L- 

I Ltowe 002 23 W 18% 1B% 18% 

Ladd Fun Q.12 3< 825 B dS% 5? 

Lnlhril 45 3652 41% 39% 40% -1% 

UncaatBT 048 14 «12 33% 33 33% -% 

Lance he 0X8 18 179 1B% 16 18% -% 

Landsakfiph 93 1684 18% 17% 17? -% 
Lanopdes 11 170 8% 0 8 -% 

laamcpe 28 608 4% 4*] 4% -% 

lances 14 3509 17? 18? 17% -% 

iFf 048 19 47 28*] 25% 25% -% 

LOOS 321TTS31 22% 22% 22% +% 

LDICp aiB 2 7 5% 5% &% -% 

Lectors 22 385 18 17% 18 4% 

LngoS Cp 185474 X 27% 29% +1% 

| Lite Tech 0X017 2 18% 18% 18% +% 

28 21 4% 4% 4% -% 

OXB 12 204 13% 13 13% +-% 

Unto 1171297137*4 138138% +■% 

LbCOhT 052 IB 762 16% 16% 16.71 +.48 
13 25 30% 29% 30 

LhewTee OM 383116 47 44% 46% +% 

UquSm 040 IT 13 34% 33% 34% +1 
Laevefl Sp IU6 28 315 23? 23*2 23% -% 
Una Star 9 400 8% 8% 6% 

L«usO 313814 37% 35% 35% J 4 

LTXCp 3 569 4% 4% 4% -% 

LVMI 07B 4 9 32? 32% 32? 4% 


- M « 

tea cm an ntww 24% 24% 24% -% 
US Cert 21 lie 25% 24% 24% -% 
*tocl« 060 42 44 13? 13% 13% 
MarftoaGE 1X8 14 13 33ft 33 SS. 1 * V* 
UignPlK 162832 35% 34% MH +ft 
■tote top 006 13 1007 20% 20% 20% -% 

tel Box 16 681 10% 10 10% +% 

iQl 25 516 11 10% 11 4% 

I tertnaDr 11 948 «% 4% 4% +% 

Martel CP 9 20 41% 40% 40% -% 

tenjueat 2 14 1% 1% 1% 

MantadB 17 2 8% 8% 8% 

MwflStnkA 044 12 50 11% 11% 11% 4% 

08011 633 20% 19? 20% 4% 

9 237 7% 7% 7% -% 

MtoknM 48 2326 82% 80% 02% 41% 

tetter Cp 01287 5 4% 4% -% 

McGndrR 04412 S3 15? 15% 16% 

McCundc 048 16 2362 20% 20 20 -% 

Matter he 018 IB 36 13% 12% 12% 

tefchaS 048 14 63 24% 24 24 

Matenhe 0X4 23 171 10% 10% 10% - 

Mentor Cp O1B 50 72 17 18% 16? +% 

Mantra OM 25 3023 11% 11% 11% -ft 

MareartLB 080 n 186 71% 21% 21% 
MorewyB 000 7 210 28 Z7% 28 +% 
1X8 104204 27? 27% 27% +% 
9 995 10% 9% 9% -% 
Ma0atoAxO12 19 40 19% 19% 10% 
MSCo 40 732 38% 37% 38 -% 

UHiaaiF 0X0 20 840 12% 12% 12% -% 
McblUB 200346 957 78% 75% 7B% +% 
terowi 11 589 4% 3% 4ft +fj 
Mtoeapa 91549 13% 12% 12% -% 

Ncmom 71596 8% 7% 8 

Mctvte 10 17« 5% 5% 5% -% 
terpofla 2 60S 7% 7 7% 4ft 

Mfcsfl 1617334 56% 55% 55*4 +ft 

MdMM 24 8 28 27? 28 

MManlfc 052 11 3403 27? 27% 27X0 4X5 
Hdwtoata 050 22 30 27026% Z? 
tew H 052 17 263 24*4 23% 23? 4% 
ten 580 24% 24 24 -% 

tench 20 688 15% 14% 15 

MoteTal 53 2854 21? 20% 21% 4% 
Modem Oa 0X019 9 7*j 7? 7% +% 

tetonM 052 20 200 2B% Z7*« 27% -% 
Meter 0X4 1996 40% 39% 39*2 

M*« he 004 32 2688 42% 41% 42% +2 
Moecom 0X4 14 270 7% 7% 7% 
ItehwP 030 22 14 30% 30 30% -% 

UTSSys 050 10 29 24% 24 24% 

Wmad 131481 30 29% 2P% -% 

teagm 4 00 10% 9% 10% 4% 


M Sh 

Steak Ota. e iflOi ngb law lw tteg 
IhteChmiOffi 71 25 17? 17? 17? 4% 

duel Food 020 10 302 22 21% 21% +% 

Ot**m BS15790 15% 14% 14% ii 

OiteMto 23 IBM 16*4 16 18% 

MG &* 29 898 44 43% 43% -% 


flatbow 


ReUeA 


-ft 

-A 

-% 

-ft 

-*e 

*% 

-% 

4% 

-% 

4% 


- R- 

121292 13% 12% 13% 

3 329 4% 4% 4*2 

1 606 3% 3% 3% 

71 84 21% Oil 20H 
16 253 17% 18? 17% 
a £171 24 23% 23% 

2 010 3% 3 3% 

6 384 u£68 3% 3% 

10 894 D12 11% 11% 

037 151530 44% 44% 44% 
he 0 417 5*2 4? 5% 
RtosrFst 0X0 10 205 33% 33% 33% 

X MO 18 940 55% 54% 54? 

012 13 21 8% 6% 6% 

X 040 4 453 18% 16% 18% 

044 3 332b 16? 1B% 16% 

OXB 11 433 14*4 14% 14% V. 
RotUMM 33 1272 28% 28 26% +-? 

0168 » 1047 19% 18% 19% +% 
RPMtnc 056 22 26851119% 19% 19*4 -ft 
RSFtn 0X0 13 2 22% 22% 22% 

Ryan Fm(y moa 6% s? 5? -% 


-S- 

SfifaePJt 1X6 7 5265 5l}j 50 50*2 +% 

Sandenen 0X0 14 34 19*4 19* 4 19% 

ScMmbgiA 030 21 676 28% 26 28% -% 

SdUddL 125977 45 42% 44% +? 

SOSyttm 171538 21% 21% £1% 

Sctos 8 2506 7% 8? 7% +% 

SatexCp 052 10 250 22% 21? 22% +% 
Score BrU 8 840 4% 4% 4% 

Seafidd 13 42 92 35% 35 35 

Spate 1139424 28 24jJ 25% 

SB Cp 016 2S 351 19% 19% 19? 

5etoefcB 020 B 10 2U 2% 2% -% 

SetoOhs 1.12 15 n K 25% 26 +? 

821635 17% 17 17% +ft 
26 1053 4 31J 315 

14 X1D0 9% 9% 9% -? 
17 10 4J3 4JJ 4U 
022 16 5 17? 17? 17% 

0X4 20 1756 26% 27% 27% -ft 
2 388 5ft Vi V« -ft 
33 347 20% 19% 20% 

B 21 6% 8% 8% 

19 878 22? 21% 21% -? 
4 35 3% 3% 3% +% 
033 152689 34% 34 34 

11 1333 9*4 7% B% 

OXB 56 15 11? 11% 11% -% 
476401 u 16% IS? 18% +% 

040 16 in 12% 12% 12i} eft 

351248 25% 25 25% -% 

3315B8S 13% 12% 12? +% 

113(7 4% 4% 4% +% 

056 16 15B 23 22% 22% % 

OXB 10 828 18% IB? 10% 

020 372723 18 17% 17? e-% 

St JudoMd 040 142793 34% 34% 34% +% 

St Pane 030 9 527 20 19? 19% 

1 100 2 1? 1? -% 

507339 34% 32% 32% -1}} 

OSD 15 927 37 38% 37 +% 

SUIflcro 141998 21? 30? 21ft +ft 

SHRagfc 068 13 50 19% IM4 19% 

Steal Tec 0X8 16 283 15 14% 15 4% 

SUdyUSA 020 34 498 9? 9 9% 

SUN 148 10 21% 20% 20% -% 

Stnmttl 1.10 14 70 23 22% 22% 

Stuffiy 101877 5% 5 5% eft 

Strytar 0X8 282906 35% 34 35 4% 

StAanD 20 162 13% 13% 13? 

tomtoomoB 08018 3 24 24 24 

Strand Be 084131602 21% 2121ft 


SbquoUl 

SmTech 

Senftaet 

Snreneon 

Stalled 

SHLSyetm 

ShDMOd 

snmurP 

Mena On 
StenaTec 
StgtnM 
SJgmaDes 

sea*/BB 

SHcnVOp 

Sknpcon 

tonOMd 

SnepptoBv 

SoftmraP 

Santa 

MM 

SptegdA 


StcyH 


-ft 

-% 

-% 


0X0 15 * 14 14 14 -? 

12 14 5? 5% 5? -% 
IS 312 12% 12 12% eft 

GotAUftapjOflO 19 207 22 21? 21? -% 

fiadcosys 325 1B7 3? 3% 3*4 +% 
town 020 70 53 22 21% 21% 

toeanAP 034 ID 46 17% 17% 17? 


Bmwebni 0 797 % ? ? 

towmana 1 4854 3 2? 2S 

QraJHk 625 BT 13 12% 12% 

SnCorp 13 740 17% 18% 17% +1% 

BWJYSvg 8 889 9? 9% 9% 4% 


-1 

-% 

-% 


RantegA 

Hartwnd 

teparfih 

MBOOGn 

Heefficar 


TMPNAx 02)18 86 
TowoCnty 61478 
Trtton 1 119 

Tu&caMex 7 471 
TamrtoA 0X7 73 133 
TunrBfl 0X7201 202 


1! 

jI’I 


12 12? 4?. 
3? 4% eft 
3 5% 

83 84 

52 52? 


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38 

WORLD STOCK MARKETS 


* FINANCIAL TIMES Thursday October 13 1994 p 


AMERICA 


EUROPE 


US stocks ease on a 
bout of profit-taking 


Wall Street 


A three-session rally by US 
stocks stalled yesterday morn- 
ing ahead of the barrage of cru- 
cial economic data due today 
and tomorrow, writes Frank 
McGurty in New York. 

By 1 pm, the Dow Jones 
Industrial Average was down 
4.37 at 3,872.46, while the more 
broadly-based Standard & 
Poor's 500 was off 0.36 at 
465.43. 

On the NYSE, declining 
issues led advances by a flve- 
to-four margin by early after- 
noon in moderate volume of 
158m shares. 

Other indices were slightly 
ahead, with the Nasdaq com- 
posite up 0.48 at 766.05 and the 
American SE composite adding 
a scant 0.25 to 458.01. 

In the absence of fresh eco- 
nomic news and a light flow of 
corporate results, stacks 
opened weaker. Profit-takers 
were taking advantage of share 
prices inflated by the 101-point 
advance by the Dow industri- 
als since last Thursday's close. 

The moderate downturn also 
reflected a slight setback in the 
bond market, where prices 
were drifting lower in lacklus- 
tre activity. Investors in both 
markets were keen to see 
today's data in September pro- 
ducer prices and tomorrow’s 
news on consumer price infla- 
tion and industrial production. 

Caution prevailed, though 
the outlook was generally 
favourable. None of the data 
was expected to be particularly 
troublesome and there was a 
growing consensus that the 
Federal Reserve would hold off 
on any further moves to lift 
interest rates until next 
month. 

Amid such underlying opti- 


mism, stocks retraced their 
steps as the morning prog- 
ressed and were hovering just 
below their opening values as 
the afternoon began. 

There were fewer earnings 
reports on offer than in the 
previous session, when the 
strength of the results had 
given the market a strong push 
forward. But yesterday several 
companies gave Wall Street 
good indications about what 
was to come. 

Goodyear Tire, riding high 
on the strong demand for US 
cars, said it expected to report 
improved quarterly earnings. 
But its estimate failed to 
impress investors. The stock 
dipped Sti to $34%. 

Farah. an apparel maker, 
fared even worse after forecast- 
ing earnings of 15 to 25 cents a 
share in the three months to 
November 4, against 42 cents a 
year earlier. The stock plunged 
$2, or 19 per cent to $8% on the 
announcement in heavy vol- 
ume. 

Among the companies actu- 
ally reporting, Weyerhauser 
became the second paper and 
pulp supplier after Interna- 
tional Paper to post disappoint- 
ing results. The stock dropped 
$1% to $41%. while IP receded a 
further to $76 

Shares in CBS lost about 4 
per cent of their value after the 
media group revealed a decline 
in net income and revenue. 
The issue was down S14 at 
$325. 

In the technology group. 
International Business 
Machines stood out after a 
quiet outing the previous ses- 
sion, when many of its compet- 
itors had appreciated in value. 
Big Blue jumped $1% to $72% 
on reports that it might begin 
making acquisitions again and 
favourable comments by Mr 


Golds help S Africa to recoup losses 


Johannesburg recovered part of Tuesday's hefty 
losses as the market found support from firmer 
world equities and a mild bullion price recov- 
ery. However, dealers said that sentiment 
remained nervous as the gold price was uncon- 
vincing and the financial rand continued to 
pressure rand prices of shares. The overall 
index advanced 34 to 5,583, golds put on 17 at 
2,282 and industrials moved ahead 16 to 6^261. 


Lehman Brothers has added South African 
equities, particularly gold miners, to its model 
portfolio with a 2 per cent weight, taking funds 
from France and Switzerland. 

In yesterday's trading, De Beers added Rl.75 
at R99.75, Anglos rose R4 to R231 and Gencor 
picked up 50 cents to R14.30 after Tuesday's 
sharp losses. SAB moved ahead Rl.75 to R85.75 
and Sasol firmed 10 cents to R35.75. 


EMERGING MARKETS: IFC WEEKLY INVESTABLE PRICE INDICES 


Market 

No. of 
stocks 

Oct 7 
1994 

Dollar terms 
% Change 
over week 

% Change 
on Dec *93 

Local currency terms 

Oct 7 % Change % Change 
1994 over week 00 000*93 

Latin America 

(208) 

740.36 

~ 4.9 

+13.8 




Argentina 

(25) 

91S.1B 

-4.3 

-7.7 

562,178.21 

-4.5 

-73 

Brazil 

{57) 

412.27 

-6.4 

+77.2 

1399.671.333 

-93 

+1,1 7&9 

Chile 

(25) 

781.01 

+2.8 

+41.5 

1396.08 

+33 

+36.0 

Colombia’ 

(ID 

871.74 

-2.0 

+35.2 

1392-28 

-23 

+39.4 

Mexico 

(67) 

945.86 

-3.8 

-6.0 

1,394.20 

-3.0 

+33 

Pear’ 

(111 

162.26 

-2.4 

+50.7 

25054 

-243 

+573 

Venezuela’ 

(12) 

559.69 

+0.9 

-5.4 

2,185.81 

+0.9 

+533 

Asia 

(557) 

276.85 

-0.5 

-4.9 




China* 

(18) 

101.44 

-3.9 

-32.0 

10934 

-3.9 

-33.4 

South Korea* 

(156) 

150.07 

+0.9 

+27.0 

157.56 

+0.9 

+25.5 

Philippines 

(19) 

306.02 

+2 J5 

-10.1 

378.46 

+3.4 

-14.8 

Taiwan, China* 

(90) 

152.40 

-7.3 

+12.7 

149.67 

-7.4 

+11.9 

India" 

(76) 

137.73 

+1.2 

+18.2 

153.48 

+2.0 

+19-2 

Indonesia” 

(37) 

112.25 

+5.1 

-10.0 

132.46 

+5,0 

-7.0 

Malaysia 

(104) 

306.92 

-0.9 

-9.5 

290.47 

-03 

-13.8 

Pakistan” 

(15) 

423.92 

+2.7 

+93 

589.48 

+23 

+11.6 

Sr Lanka" 

(5) 

204.32 

-1.0 

+15.3 

218.47 

•1.1 

+14.4 

Thailand 

(55) 

427.16 

-1.7 

-10.6 

424.53 

-1.3 

-12.1 

Euro /Mid East 

(125) 

119.91 

+1.8 

-293 




Greece 

(25) 

229.76 

+3-9 

+0.9 

366.05 

+33 

■4.8 

Hungary" 

(5) 

178.65 

+m 

+7.2 

231.61 

+13 

♦14.7 

Jenson 

(131 

153.49 

- 2.4 

-7.3 

225.54 

-0.1 

-53 

Poland' 

(12) 

616.22 

+6.7 

-24.7 

896.70 

+7.8 

-183 

Portugal 

(25) 

123.17 

-0.3 

+83 

133.18 

-0.8 

-33 

Turkey” 

140) 

118.25 

+1.3 

-44.4 

1,912.83 

+23 

+31.5 

Zimbabwe" 

(5) 

263.40 

-0.5 

+303 

323.35 

-0.1 

♦51.4 

Composite 

(591) 

361.53 

-2.6 

+1.6 





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Portugal has been attracting interest from brokers, some of whom rate it as a buy 
above both Greece and Turkey, writes John Pitt 

So far this year the Portuguese equity market has gained 8 per cent in dollar terms, 
compared with a loss of 44 per cent in Turkey and a 1 per cent rise in Greece, and has 
been the best performer in the Europe /Middle East sub-index. 

Lehman Brothers argues that Portugal is attractive because, politically, it is relatively 
stable and has tbe expectation for higher real growth than either Greece or Turkey. 
Merrill Lynch expects the market to move in line with the European average over the 
next 12 months, with the momentum coming from the likelihood of growth in the 
economy, which could appreciate faster than the rest of the Continent. 


Activity muted as investors await data 


Louis Gerstner, its chair man. 

On tbe Nasdaq, computer-re- 
lated issues were mixed. Apple, 
often mentioned as a possible 
strategic partner with IBM, 
gained Si to $40%. But Well- 
fleet Communications shed 
$1% to $22 and Intel was down 
$1% at $40%. 

Canada 

Toronto was strengthening in 
active midday trading, but 
investors remained tentative 
ahead of today's US September 
producer prices and tomor- 
row's consumer prices. 

The TSE 300 index climbed 
36.59 to A34L98 at noon in vol- 
ume of 32.0m shares. 

Of Toronto’s 14 sub-indices, 
only real estate and construc- 
tion failed to move higher by 
midday. The real estate group 
was off 5.81 at 2^85.22, led by 
Cambridge Shopping Centres 
which fell CSV* to C$13% in 
light volume. 

Mexico 

Shares rose sharply in early 
trading, helped by strong 
demand for Mexican ADRs on 
Wall Street. The IPC index 
gained 43.91 or L7 per cent to 
2,709.50 in the first hour of 
trading, unaffected by the rise 
in primary interest rates on 
Treasury bills at the central 
bank's weekly auction. 

Telmex ADRs were up $% to 
$62% in New York while in 
domestic trading its L shares 
rose 1.90 per cent 

Leading gainers were Dina L 
shares, up 5.1 per cent and the 
financial group. Bancomer C 
shares, which added 3.4 per 
cent. ICA shares rose 2.8 per 
cent, while Cemex BCP shares 
gained 33 per cent and its CPO 
shares rose 23 per cent 


Activity remained muted 
yesterday on the' Continent 
ahead of the release of US data 
later this week, writes Our 
Markets Staff. 

In its latest European strat- 
egy report JP Morgan says 
there Is little sign of short-term 
relief for the region's equity 
markets because of the uncer- 
tainty surrounding a further 
rise in US interest rates. How- 
ever. the broker says, the medi- 
um-term outlook for the core 
countries of France and Ger- 
many is positive, because of 
"robust growth and low infla- 
tion'’. 

By contrast, Spain and Italy, 
while likely to experience even 
stronger growth, might be 
affected by higher inflation 
and higher short-term interest 
rates, leading to an under- 
weight recomm endation. 

FRANKFURT rose during 
official hours but then fell 
back slightly in late trading, 
but the day was marked by a 
general lack of interest ahead 
of this weekend's elections. 
The Dax index put on 631 to 
2,077.57, then fell to 2,069.98 
later. 

Schering added DM21 to 
DM959, adding to Tuesday's 
gain which followed news of 
the presentation of a rival mul- 
tiple sclerosis drug. 

ASIA PACIFIC 


Elsewhere BASF put on 
DM3.1 to DM313 and Bayer 
DM5.1 to DM356. 

Financials were pulled in 
both directions: Deutsche Bank 
fell DM23 to DM7123, Dresd- 
ner Bank DMl to DM389, while 
A Ilian?, rose DM14 to DM2#i7 
and Commerzbank DM2 to 
DM320. 

PARIS featured individual 
stories as the CAC-40 index 
drifted in a listless fashion, 
ending down a marginal 035 at 
1,918.14. Turnover was FFr3bn. 

UAP was among the worst 
performers, off 5 per cent at 
FFr13850, after reporting a fall 
in first-half profit to FFr853m, 
below most analysts' expecta- 
tions. 

Carrefour went in the oppo- 
site direction, rising FFr46 to 
FFr2,184, denying reports that 
it might make a bid for a UK 
supermarket group. Sanofi 
picked up a further FFrlLlO to 
FFr25230 after announcing the 
sale of part of its bio-activities 
division on Tuesday. 

ZURICH was lower in quiet 
conditions, with trading domi- 
nated by professionals. The 
SMI index closed 73 down at 
2,562.7. 

Ciba registered shares eased 
SFr4 to SFr716. The company’s 
anno uncement of a 3 per cent 
decline in nine-month sales 


I FT-SEActuane 

s Sr are l?;d;r.es 




J 

Oct 12 

Hourty ctengas 

Open 

11.00 

1130 

1250 

THE EUROPEAN SERIES 
1X00 14.00 15.00 CWW 

FT-SE Brandt 100 
FT-SE EwD&ad. 200 

133420 

138X24 

1337.00 

139424 

1334.78 

1391.48 

1334.33 

139237 

133543 

139433 

133531 

138X32 

1333.13 

139084 

133X53 

1393.70 



Oct 11 

Oct 10 

1 0*1 7 

Oct & 

Oct 5 


FT-SE EawacK 100 1330.45 1317.39 1287.* 

FT-SE Eunbadk 200 138450 1370.44 1344.02 1346.42 13»-» 

bm naa pwiwoj: war 100 • 133792; zoo . ia» 10 iswmr- too - ixo u 200 - u»* t rm 1 


proved in line with expecta- 
tions. although the negative 
impact of the strong Swiss 
franc was slightly worse than 
expected. Roche, reporting 
third-quarter figures on Mon- 
day, saw its certificates finish 
flat at SFrS380. 

UBS shares showed little 
reaction to comments by Mr 

Mar tin Ebner, chairman of BZ 

Bank, that he was not trying to 
gain control. The UBS bearers 
picked up SFr2 to SFrl.240, and 
the registered stock was 
unchanged at SFr3Q0. However, 
Mr Ebner's BK Vision fell 
SFr40 to SFrUOO. 

Brown Boveri bearers contin- 
ued their comeback, picking up 
another SFrll to SFrl.iil in 
heavy trade, after their period 
in the doldrums. Other cycli- 
cal were also higher, Fischer 
adding SFrlO to SFrl.555, and 
Sulzer rising SFr6 to SFr881. 

Second-line insurers saw 


continued demand, with Ber- 
ner rising SFr90 to SFrl.490 on 
continued speculation that 
Allianz, which holds a 30 per 
cent stake, might be planning 
to expand its share, Baloise 
added SFT45 to SFr2,845, but 
Elvia eased SF120 to SFr3.600. 

AMSTERDAM was unable to 
maintain the gains of the pre- 
vious two days and the AEX 
index was left trailing 131 at 
402.30. 

VNU, which denied reports 
that its television interests 
would be affected by new com- 
petition in the sector, dipped 
FI 330 to FI 17630. Fokker, the 
aircraft manufacturer, slipped 
20 cents to FI 15.10 after reports 
that Cityline, a division of 
Lufthansa of Germany, might 
replace the F-50s in its fleet. 

MILAN made an early 
attempt to rally, but the 
momentum was soon lost as 
technical, month-end dead- 


lines. and simmering political 
worries once again made their 
presence felt The Comit Ms 
finished 2.85 ahead at b39.6S. 

Some blue chips managed to 
hold on to gains. Benetton, still 
recovering from last week s 
sharp losses, rose L59 to 
L19.935, and Cir was LSI ahead 
at L1.85S. 

Demand was also noted for 
the Fiat motor components 
maker. Magnet! MarelU, ahead 
of its merger with GilardinL 
Magneti gained L44 to 1*1,292. 

Falls were seen, however, 
among the telecommunications 
companies, with Stet losing 
L4Q to L4.479 and Telecom 
Italia giving Up L64 to IA.143. 

STOCKHOLM featured a fur- 
ther strong gain in Ericsson, 
the B shares rising SKr!50 to 
SKr417.50. after good results 
from Motorola in the US. How- 
ever, most investors were 
awaiting the country's infla- 
tion data due out today. 

The Affarsvarlden general 
index rose 1030 to 1.425.20. 

HELSINKI was stronger on 
expectations that Sunday's ref- 
erendum will result in a yes 
vote for EU membership. The 
HEX index was up 35.32 at 
1399-04. 

Written and edited by John Pttt 
and Michael Morgan 


Nikkei rises 1.4% to end above 20,000 level 


Tokyo 


Buying by arbitrageurs and 
overseas investors lifted prices, 
and the Nikkei 225 average 
gained for the third consecu- 
tive day. rising above the 
20.000 level for the first time in 
a month, writes Emiko Tera- 
zono m Tokyo. 

The index advanced 26836, 
or 1.4 per cent, to 20,089.72 
after a day's low of 19346.77 
and high of 20.11532. Arbitrage 
buying and purchases of blue 
chip shares by foreigners 
countered selling by financial 
institutions and investment 
trusts. 

Volume totalled 280m shares, 
against 199.3m. The Topix 
index of all first section stocks 
rose 16.76, or LX per cent, to 
1,600.60 and the Nikkei 300 
added 236, or 1 per cent, at 
29332. Advances led declines 
by 812 to 183, with 159 issues 
unchanged. But in London the 
ISE/Nikkei 50 index dipped 130 
to 1319.96. 

“Improving economics, the 
currency movement and the 
approach of the final leg of the 
Japan Tobacco fiasco is 
encouraging investors," said 
Mr Tom Hill, strategist at 
S.G. Warburg. 

He added that although 
around 70 per cent of prospec- 
tive buyers in Japan Tobacco 
were expected to have given up 
their purchase rights, this 
reflected the inadequacy of the 
new issues system and not the 
stock market's current level 

Traders also said fears of 
over-supply from the JT listing 
had been alleviated by reports 
that the Ministry of Finance 
would refrain from offering 
unsold shares from the second 
round of subscriptions on the 
market at the time of the stock 
listing. 

Japan Telecom, the telecom- 
munications operator, rose 
Y100.000 to Y339m. while DDI 
moved up Y45.000 to Y933.000. 
recovering the Y900.000 mark 
for the first time in a month. 

Mitsubishi Bank, which will 
be taking a majority stake in 
Nippon Trust Bank, a finan- 
cially troubled trust bank, 
climbed Y70 to Y2.620. 

Overseas investors bought 
chemical and steel shares. 
NKK, the most active issue of 
the day. firmed Y3 to Y290, 


indices 


Jflintfy comofJed by Thu fircindal 7imes Ltd.. Goldman. Sachs fi Co. and NafWsst Securities Lot m conjunction with the Inst/tutB of Actuaries arm the Ftacufty o t Actuaries 
NATIONAL AND 

TUESDAY OCTOBER 11 1994 


REGIONAL MARKETS 


MONDAY OCTOBER 10 1994 ‘ 


-DOLLAR MDEX- 


Rquras m parentheson 

US 

□ay's 

Pound 



Local 

Local 

Gross 

US 

Pound 



Local 




show numbor ot lines 

Dollar 

Chango 

Sterling 

Yen 

DM 

Currency 

1+ chg 

Dtv. 

Dollar 

Sierfing 

Yen 

DM Currency 52 week 52 week 


of SUXA 

Index 

■H> 

Index 

Index 

index 

Index 

on day 

Yield 

Index 

Index 

Index 

index 

Index 

High 

Low 

(approx) 

Australia (691 

16824 

0.5 

157.72 

106.70 

135.28 

151.96 

0.8 

3.65 

167.35 

156.51 

106.45 

134.88 

150.70 

mis 

14956 

15X53 

Austno *161 

.... . IK-23 

0.3 

170 82 

115.58 

140.52 

146431 

0.1 

1.10 

181.67 

169.90 

115.58 

146J3P 

14653 

198.83 

187.46 

180.72 

Belgium |3*1 ... 

164.27 

1.0 

154. DO 

104,10 

132.06 

139.03 

0.9 

42? 

162.59 

152.00 

103.42 

131.02 

127.83 

177 M 

14S.33 

153.15 

C.-maoa H03) 

.137 68 

0.7 

129.07 

87.31 

110.70 

133.08 

0.5 

iBI 

136.67 

127.01 

8053 

110.13 

13353 

146.31 

12054 

124.77 

Dcnntari. l33>. 

. 747.81 

0.8 

232.30 

157 15 

199.25 

20423 

0^ 

1.45 

245.e5 

229.92 

15638 

iea.ii 

202.71 

275 73 

33057 

236.78 

Pinund C+J 

...... 173 77 

1.6 

168.52 

114.00 

144.55 

180.06 

1.0 

0.78 

176.86 

105.40 

11250 

142J1 

176.93 

16258 

116.B6 

11951 

Ponce (i0h 

167.85 

1.1 

157.35 

106.45 

134.96 

139.Z6 

1.0 

3.12 

165.99 

15SJ3 

10558 

133.76 

13757 

18557 

15954 

171.01 

Germany i58i .... 

. ... 141.48 

2.3 

132.63 

89.73 

113.76 

113.76 

2.1 

1.81 

138.32 

120.36 

87.99 

111.46 

111.46 

150.40 

128.37 

136.06 

Honn Kong i56) «... 

382.56 

1.1 

358.63 

242.61 

307 £1 

379.59 

1.1 

3^1 

378.32 

353.82 

24066 

304.87 

375.38 

506JS6 

325.73 

325.73 

Ireland !’■*) 

... - 205.27 

1.6 

192.43 

130.17 

165.05 

185.05 

1.7 

3.46 

202.13 

189.03 

128.57 

182.88 

18159 

21650 

171.40 

173.53 

Italy ,591 . . 

.. .. ra.15 

-0.9 

73.26 

49.56 

62^4 

91.99 

-l.Q 

l.fcE 

78.90 

73.79 

50.13 

63.5B 

9259 

07.78 

57.80 

7159 

Japan (468) 

158 51 

07 

148.59 

10052 

127.45 

10152 

0.4 

0.76 

157.44 

147J24 

J00.1S 

12327 

100,15 

170.10 

124 a 4 

155.11 

fAaUWia 

556.81 

1.8 

521.79 

352.99 

447.56 

SSI .25 

1.9 

1.S2 

546.91 

511.48 

347.89 

440.72 

54180 

621.63 

430.71 

460.92 

Mauco (18) 

. .. 2176.74 

-1.2 

2040 55 

1300.42 

175022 

0126.29 

-1.1 

1J0 

2203.17 

2060.43 

1401.42 

1775^7 

8220.14 

2647.08 

1686.79 

1606.79 

Netnerund (13| 

212 66 

1.4 

139.35 

134.86 

170.99 

166.09 

12 

3.44 

209.64 

196.06 

133.35 

168.94 

166.05 

218.19 

187.01 

192.09 

Hex Zealand (Ut 

-.71.60 

1.9 

67.12 

45.41 

57.57 

82.81 

2.0 

3.87 

70.23 

65.68 

44,67 

56^9 

01,60 

77.69 

5952 

6258 

Norway (? j) 

. ... 19728 

0.8 

184.04 

125.11 

15B. 62 

180.36 

0.6 

1.83 

196.07 

1B3J6 

124.72 

157.99 

179 ns 

211.74 

16552 

181.01 

Singapore (44) 

.... 01 

22 

361.86 

244.30 

310.38 

263^3 

22 

1.60 

377.54 

353.09 

240.16 

304 24 

25858 

393.12 

294.66 

313.01 

South Alnco l59) 

.. —316.51 

0.0 

296.71 

200.72 

254.49 

282J5 

-1.5 

2.27 

313.82 

283.46 

199.62 

252.80 

28850 

31651 

202.72 

214.60 

Spain <38> 

..... 138.68 

0.6 

130.00 

87.94 

11150 

134.74 

OS 

4.11 

137.92 

128.99 

87.73 

111.14 

134.14 

155.79 

12856 

14158 

SacCoo (36) — 

,....224.42 

1.8 

210.39 

142.32 

180.45 

246.16 

2.Q 

1.63 

220.42 

200.14 

14021 

177.62 

241^5 

23155 

17553 

199.43 

Sniceriand i47). . 

-164.40 

0.3 

154.12 

104.26 

132.19 

131.35 

08 

1.85 

163.90 

153 28 

10426 

132JM 

130.45 

17856 

14354 

145.84 

United wngacm <?04l .... 

197 .53 

10 

185.17 

125.27 

158.83 

185.77 

1.3 

4.11 

195.50 

182.83 

124.38 

1S734 

182 53 

£1456 

181.11 

192.97 

USAwiSi... 

190 08 

1.5 

178.19 

120.54 

152.04 

19008 

1.5 

2.85 

137 32 

175.18 

119.16 

15055 

187.32 

19654 

17B55 

16859 

EUROPE t7D9l ... 

17002 

1.1 

159.38 

107.82 

136.70 

150.00 

1.1 

3.09 

16820 

157.31 

106.90 

13554 

148.40 

17656 

154.79 

16255 

NffttSc (1161 

...217.75 

i.S 

204.13 

13809 

17508 

203.90 

1.8 

1.45 

214.57 

200.67 

136J0 

172.90 

200.67 

222- IB 

173.19 

188.60 

Pacific Basin (747) 

— _ 168.02 

08 

157.51 

10856 

13510 

111^4 

0.5 

109 

166.74 

155.34 

106,06 

13457 

110.65 

170.86 

134.79 

16150 

Euro- Pacific (1456) 

168.74 

0.9 

158.19 

107.01 

135.68 

126.85 

08 

1.94 

167.24 

15640 

106.38 

134.76 

12556 

175.U 

14358 

161.69 

North America ,6 161 

160.83 

1.4 

175.14 

118.48 

15053 

18630 

14 

2B4 

184.17 

172 24 

117.15 

148.41 

18357 

192.73 

17557 

18456 

Europe E>. UK 1505) 

151.63 

1.1 

142.14 

96.16 

121.92 

129.45 

1.1 


149.98 

14026 

95.40 

12056 

12fl.11 

158.12 

13534 

143.18 

Pacific Ex. Japan (27Pi.. 

200.34 

1.3 

243.96 

105.03 

209X6 

232.05 

1.4 

2.80 

257X0 

240.35 

163.48 

207.10 

228.91 

29651 

220.63 

220.63 

World Eu LIS (1636) - 

...—170.67 

0.9 

160.00 

106.24 

137.23 

130.52 

0.7 

1.95 

169.21 

1S0JM 

107.53 

13655 

129.60 

176.85 

14658 

18153 

World E*. UK (19J7) 

174.01 

1.1 

163.12 

lions 

139.91 

145.23 

on 

208 

172.14 

160.96 

109.50 

13S.71 

14357 

17859 

16656 

167,46 

World Ex. So. Al.(20»|. 

..—175.19 

1.1 

104.22 

111.10 

140.86 

147^t0 

1.0 

22? 

173J1 

102.08 

110.24 

139.85 

146.40 

160.03 

168.54 

16950 

World Ex. Japan (1683)-. 

. .187.41 

IS 

175.6B 

11885 

15069 

17751 

\2 

2.90 

165.10 

173.10 

117.74 

149.16 

175 06 

19850 

178.34 

179/40 

The WMd index (315IJ . . 

... 176.08 

1.1 

185.07 

111.67 

141.58 

148.88 

i.o 

22J 

174J0 

16232 

110.81 

14058 

147.43 

18050 

15855 

169.70 


while Mitsubishi Chemical 
gained Yl8 at Y567. 

In Osaka, the OSE average 
rose 171.15 to 22386.19 in vol- 
ume of 173m shares. 

Roundup 

Strength overnight on Wall 
Street helped many of the 
region’s markets to advance. 

TAIPEI ended sharply higher 
on hopes that the government 
would take action to prevent a 
further fall in the market, 
which has been rocked by 
default payments over the past 
week. The weighted index ral- 
lied 371.07, or 6 per cent, to 
6,495.78 in TS8736bn turnover. 

HuaJon was the most active 
issue and rose by the daily per- 
mitted 7 per cent limit to 
T51930, but Taiwan Tea. a sub- 
sidiary. fell T8230 to TS63. 

HONG KONG finished 1.8 per 


cent up but off the day's highs 
following a late surge in after- 
noon trade on buying of China- 
related stocks and Hong Kong 
Telecom on expectations that 
the group would announce a 
China venture along with 
Cable and Wireless later in the 
day. 

The Hang Seng index added 
170.03 at 933235 after an intra- 
day peak of 9349.22. Hongkong 
Telecom put on 85 cents, or 53 
per cent, at HK$16.25. The 
H-share index of Chinese 
stocks listed in Hong Kong 
rose 6135, or 4.7 per cent, to 
1,380.80. 

In the opposite direction. 
Ming Pao, publisher of one of 
Hong Kong's best read 
upmarket newspapers, fell 55 
per cent after a two-day sus- 
pension prompted by revela- 
tions that Mr Yu Pun-hoi, the 
chairman, had a criminal 


record. The stock lost 30 cents 
at HK$530, after HK$5. 

SEOUL finished at a second 
consecutive record high as 
blue chips rebounded strongly, 
overcoming selective profit- 
taking. The composite index 
rose 11.00 to 1,089.66. respond- 
ing to comments by the 
finance minister that rules for 
foreigners' stock investment 
would be eased from next year. 

SINGAPORE extended Tues- 
day's rebound as investors 
were cheered by Wall Street's 
sharp rise and receding fears of 
a Gulf war. The Straits Times 
Industrial index moved for- 
ward 23.08 to 236831. KUALA 
LUMPUR continued to rally on 
technical buying, fuelled by 
the overnight Wall Street 
surge, and the composite index 
improved 8.71 to 1,137.00. 

However, volume was lim- 
ited, with investors cautiously 


awaiting the outcome of the 
ruling United Malays National 
Organisation (UMNO) supreme 
council meeting late in the day 
where the recent clash 
between the prime minister 
and an UMNO youth leader 
was expected to be discussed. 

MANILA was supported by a 
late round of bargain hunting 
on expectations of strong cor- 
porate earnings in the third 
quarter. The composite index 
gained 23.51 at 2,970.46. 

SYDNEY drifted lower, show- 
ing little response to the over- 
night Wall Street rise. The All 
Ordinaries index eased l.Q to 
2.002,6 in turnover of A$408.7m. 

WELUNGTON was led 
higher by Telecom, up 12 cents 
at NZ$5.35, and leading for- 
estry stocks which were helped 
by a strong US lumber futures 
market. The NZSE-40 capital 
index rose 31 to 2,05630. 


Gapyrqm, ttw PtvxvM Umw Gdflman. Sadis jnd Cfl. and NoWtea Sscurtto Umned. 1M7 

Ltt&s wort unmrUJflMa fcr ttw ednon. 





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