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FINANCIAL TIMES 


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WEDNESDAY OCTOBER 19 1994 




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I’tIvTs I Dow to buy core of east German chemical sector 


Sales of Tagamet 
in US fall 76% as 
patent expires 

US sales of Tagamet, once Smith Klme Beecham’s 
best-selling drug, collapsed by 76 per cent in the 
third quarter to £31m <$47m) folio wing the expiry in 
May of patent protection for the UK pharmaceuti- 
cals company’s ulcer remedy. Tagamet's weakness 
was partly counterbalanced by the company's port- 
folio of new drags, sales of which rose 83 per cent to 
£226m over the same period last year. Pre-tax prof- 
its were 2 per cent down, at £285m, although, last 
year’s third quarter included an exceptional £I4m 
gain. Page 17; lies. Page 16 

Russia appoints acting 
chief of central bank 

Tatyana Paramonova, 44, was appointed acting 
chairman of the Russian central bank in succession 
to Victor Gerashchenko, who resigned last week. 

Ms Paramonova is one of the youngest of the hank's 
deputy chairmen and the only woman in its senior 
management: Page 2 

Carmakers accuse EU over research plan 

European carmakers 
accused the European 
Commission and EU gov- 
ernments of failing to 
meet financial and strate- 
gic planning obligations 
under an eight-year, 
EcuSOOm (SLlhn) collabo- 
rative research pro- 
gramme aifflwi at halv- 
ing the ED'S 50,000 road 
deaths a year by 2010. 
Peugeot chairman Jac- 
ques Calvet (above) and Elat managing director 
Giorgio Garnzzo said the goal was under threat and 
technology developed by Europe's vehicle and com- 
ponent manufacturers could be overtaken by the 
Japanese and North American motor industries. 
Page 16 

GE 13% ahead despite banking losses: 

General Electric, the diversified US conglomerate, 
shrugged off losses at its Kidder Peabody invest- 
ment banking subsidiary with a 13 per cent rise in 
third-quarter net earnings to $L368bn. 

Page 17 

IBM sat to sad (IK plant: International 
Business Machines, the world's largest computer 
maker, is planning to sell all or part of its profitable 
manufacturing operation at Havant in the south of 
England. Page 16 — 

China's inflation rate reaches 27.4%: 

China's annual inflat ion rate rose to 27.4 per cent to 
September, putting more pressure on the central 
government which fears social unrest The figure 
was up nearly two. percentage points on August the 
State Statistical Bureau said. Page 16 

Estonia's bow door located: A Finnish search 
vessel found the bow door of the ferry Estonia, 
which sank in the Baltic Sea with the loss of more 
than 900 lives. The 55- tonne door was about a mile 
from the wreck. 

Rover plans 1,450 now lobs: UK carmaker • 
Rover is to create 1,460 jobs at its British plants in 
response to strongly rising sales, particularly to 


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. plan. Page T; Dying romance of the open road, 

Page H-I&tJ&g&ir: 

Thomson-CSF profits fall: Thomson-CSF, 
French state-controlled defence electronics com- 
pany, revealed the bottom line cost of its one-fifth 
stake in troubled state bank Credit Lyonnais when 
it reported first-half net profits down to FFrSlm 
($5.86to) from FFr455m a year earlier. 

Seven die In Texas floods: Seven people died 
in dash floods as 20 inches of rain fell in 36 hours to 
parts of Texas. More than 10.000 people were evacu- 
ated. 

Kohl pressed on spending outs: Germany’s 
re-elected government came under pressure from 
industry and the Bundesbank to stick to plans tor 
spending cuts and take strong action to reform the 
costly social welfare system. Page 3 

Securities firms’ profits hit: Merrill Lynch 
and Bear Steams reported sharply lower profits for 
the latest quarter, providing further evidence of 
how the deterioration to Wall Street trading and 
underwriting conditions has hit securities firms' 
earnings. Page 20 

Staton and Saga prepare energy wnte« 

Statoil and Saga Petroleum, two of Norway’s big- 
gest oil and gas companies, will today announce an 
asset swap programme which win clear the way tor 
a NKr«bn ($5.6bn) joint development plan for gas 
fields to the Norwegian Sea. Page 18 


■ STOCK MMKET O gMC CS 

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FFr 5.1465 (5.1622) 

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Tokyo does Y 9U6 


By Judy Dempsey to Berlin 

Dow Chemical of the US intends to take 
control of the core of the former East 
German cha r pifta t ind u stry in a deal 
which will bring DM2.9bn ($L87bn) of 
investment from the Treuhand, Ger- 
many's privatisation agency. 

Treuhand said that Dow has 

signed a letter of intent The company 
said tbe deal would be agreed by the end 
of the year. 

Through its subsidiary Dow Deutsch- 
land. Dow intends to buy majority 
stakes in the steam cracker at Sdch- 


sische Olefmwerke in Bohlen, the elec- 
trochemical units and derivative 
operations at Buna, and the intermedi- 
ate chemical operations at Leuna. 

Tbe three units formed the basis of 
the old East Germany’s chemical indus- 
try before unification. Since then, the 
Treuhand been plann in g to hive off 
the entire industry to private investors. 

It has been engaged to a big restruct- 
uring programme aimed at attracting 
investors to install a new steam cracker 
facility and ofl refinery to the region. 

The Treuhand has been providing gen- 
erous fi nan trial investment incentives 


for the Leuna/Buna/B5hlen chemical 
sector, in which B8J500 people had been 
employed before 1990. This figure has 
fallen sharply to 12,300 through closures, 
redundancies and early retirement 
schemes. 

The Treuhand will invest DM2.9 bn to 
modernise the polyolefin complex at 
Buna and to buDd a pipeline from the 
east German northern port of Rostock. 
This line will ship gas sold by Gazprom, 
the Russian state-owned utilities com- 
pany. to Buna. 

Treuhand officials said that, under tbe 
terms of the letter of intent, majority 


control of the Buna complex's equity 
would pass to Dow over a period of time. 
The Treuhand would retain a 49 per cent 
stake for several years. Dow would 
eventually acquire 76 per cent 
of Buna’s equity, with Gazprom taking 
the rest 

Buna is this year expected to have' a 
turnover of DMSOOm and losses of about 
DM300m. However, Treuhand officials 
said Buna could move into the black to 
four years and the investments 
would be completed by the end of the 
decade. 

Dow's entry into the east German 


chemical sector is part of its longer-term 
strategy of expanding to Germany and 
in eastern Europe. “We are looking at 
Europe as a whole. We ore looking for 
opportunities. These exist particularly in 
this part or Europe, ” a Dow official said. 
Dow's turnover to Europe totalled $4-3bn 
last year. 

Dow already has a plastic foam insula- 
tion manufacturing plant in Balaton. 
Hungary. After buying into a joint ven- 
ture with Nitrokemia and Chemolimpex. 
two state-owned Hungarian companies 
in 1991. it acquired a 100 per cent stake 
to 1992. 


Compromise insider candidate selected 

Bank of Italy wins 
battle over naming 
of director-general 


By Robert Graham in Rome 

The Berlusconi government 
backed down yesterday in its 
long-running dispute with the 
Bank of Italy over the nomina- 
tion of a new director-general - 
deputy to the governor - from 
within tbe bank. 

The central bank has fought 
with the right-wing coalition to 
ensure that an insider replaced 
Mr Lamberto Dint who left the 
bank's second highest job to 
become treasury minister in 
May. 

The government bad sought to 
bring to an outsider, arguing the 
bank needed new .blood. This was 
seen both within the bank- and 
outside as an attempt by the 
executive to exert greater control 
over the bank, especially regard- 
ing interest rates policy. 

Yesterday the bank's governing 
council named as a replacement 
Mr Vincenzo Desario, the junior 
of the two deputy directors who 
form part of the four-man execu- 
tive directorate of the Bank of 
Italy. 

Mr Desario, 61, is a compromise 
candidate chosen over Mr Tom- 
maso Padoa Schioppa, the senior 
deputy director, technically file 
first to ltoe for the job but vetoed 
by the government as being too 
close to the former Ciampi 





Ir t. 



Vincenzo Desario: chosen to 
replace Lamberto Dini 

administration. The bank 
stressed its appreciation yester- 
day of Mr Padoa Schioppa. 

The Desario appointment has 
to be approved by President 
Oscar Luigi ScaHaro and the cab- 
inet Bank officials yesterday 
pointed out that an appointment 
proposed by the governing coun- 
cil, composed of chairmen of the 
bank's regional offices, had never 
been turned down. 

Market analysts expressed 
relief that the row had been 


Murdoch hopes BSkyB float 
will net $Ibn for News Corp 


By Emtta Tagaza tn Adelaide 
and Raymond Snoddy m London 

Mr Rupert Murdoch, chairman of 
News Corporation, said yesterday 
he hoped that a flotation of Brit- 
ish Sky Broadcasting within the 
next few weeks could lead to an 
early cash injection of $lbn 
(£625m) into News Corp. 

The remark at the company's 
ann ual meeting in Adelaide 
suggested that Mr Murdoch 
tViinha the flotation could value 
the satellite broadcaster at $10bn 
or £&25bn - the highest figure so 
for suggested publicly. Most ana- 
lysts expected the sell-off to value 
the company at £4bn-£5bn. News 
Corp at present owns 50 per cent 
of BSkyB. 

In remarks made from notes 
rather than a prepared text, Mr 
Murdoch said: “If one is to 
believe the expectations of the 
analy sts and the valuations that 
have been put on the proposed 
reduction from 50 per cent to 40 
per cent of our shareholding, it 
will see a strengthening (that is 
frinttag goi on a lot of issues and 
if forecasts are correct) of the 
News Corporation balance sheet 
by the injection of another 
US$lbn in cash.” 

A pathfinder document prepar- 
ing the way for the flotation is 
expected next month, with mid- 
December the likely date for the 
flotation of BSkyB, tn which 
Pearson, owner of the Fi n a nc i al 
Times, has a 17.5 per cent stake. 



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Rupert Murdoch: hoping for a 
sale by January at the latest 

Mr Murdoch said he very much 
hoped, markets permitting, that 
tbe sale could take place within 
the next few weeks or by Janu- 
ary 1995 at the latest Analysts 
believe that if a December dead- 
line is missed tbe next realistic 
date would be March. 

The News Corp chairman con- 
ceded that most of his estab- 
lished businesses, although 
extremely active, had not 
increased profits in tbe post 12 
months. The big growth had 
come from investments in two 
partnership companies - BSkyB, 
which recorded a 170 per cent 
rise in operating profits to tbe 
year to end June, and Ansett air- 


CONTENTS 


lines of Australia. Tbe two asso- 
ciated companies contributed a 
combined A$394m to boost News 
Corp’s 1993-94 net profit to 
AS1.2bn (*883m). 

Mr Murdoch also spelled out 
bow he sees the development of 
the organisation - vertical inte- 
gration “from top to bottom ” in 
the media business. Every day 
News Corp was putting television 
signals frrtp about one third of all 
television homes in the world. 
The plan was to increase that to 
two thirds of all television 
homes. 

He added that the company 
intended “to expand and double 
and then redouble our production 
of electronically filmed entertain- 
ment". As part of the plan, the 
company was establishing a 
A$2Qm film production centre in 
Sydney, which would produce at 
least three international feature 
movies a year. 

Shareholders were also given 
new details about News Interna- 
tional's newspaper price-cutting 
wars to the UK. Mr Murdoch, 
who admitted that at one stage 
selling The Sun at 20p had cost 
the company Elm a week, said 
the price of the paper, now 22p, 
would gradually rise. 

"We expect to hold the major- 
ity of oar [circulation] gain as we 
go back tip in price slowly.” 

Mr Murdoch also said that he 
w as to no hurry to issue new 
limited-voting preference shares 
in News Corp. 


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resolved to a way that ensured 
Mr Antonio Fazio’s authority as 
governor. They said the indepen- 
dence of the central bank was 
especially important while the 
government was pressing for an 
early lowering of interest rates, 
which may not be justified by the 
1995 budget 

If the government climbs down 
as expected and accepts Mr Desa- 
no, it still leaves unresolved the 
issue ctf Ms successor. The gov- 
erning council yesterday avoided 
discussion of filling the fourth 
place on the directorate. 

The government is considered 
unlikely to take this defeat easily 
and yesterday Mr Antonio Par- 
lato, junior minister at tbe trea- 
sury for the neo-Fascist MSI/Na- 
tional Alliance, said legislation to 
change the bank’s statutes would 
shortly be placed before parlia- 
ment 

The opposition welcomed the 
outcome. The former communist 
Party of the Democratic Left 
(PDS) said: "The government has 
been unable to impose its line, 
while the Bank of Italy to the 
midst of hundreds of difficulties 
has managed to defend its auton- 
omy and mark a point in its 
favour." 

Personality dashes mark bank 
post battle, Page 2 







North Korean first vice-foreign minister Kang Sbk Ju talks to the media in Geneva yesterday ap 

N Korea-US deal eases fears 

Breakthrough will end suspicions of bomb development 


By John Staton in Seoul and 
Ranees WDBams in Geneva 

International fears over North 
Korea’s suspected nuclear weap- 
ons programme abated yesterday 
to the wake of a deal that will 
open toe country to inspections 
and improve ties with the US. 

The agreement is a sign that 
Mr Kim Jong-fl, tbe new North 
Korean leader, is prepared to 
broaden his country's interna- 
tional contacts. 

It also raised hopes that he 
win accelerate the opening of tbe 
country to foreign investment 


Mr Han Sung/foo. the South 
Korean foreign minister, said the 
agreement "goes a long way” to 
removing a potential North Kor- 
ean nuclear threat A US State 
Department spokesman said: 
“What we've got is an agreement 
that made a very dangerous 
place to the world at a very dan- 
gerous moment a lot safer." 

Mr Robert Gallucci, head of 
the US delegation in tbe tortuous 
negotiation, announced a break- 
through to talks with North Kor- 
ean officials to Geneva at mid- 
night on Monday. Chief 
negotiators made clear that 


although the agreement had to 
be approved by their govern- 
ments, they were confident it 
would be signed cm Friday as 
scheduled. 

Mr Kang Sok-ju, North Korea’s 
first deputy foreign minister and 
head of the delegation to the 
Geneva talks, said the planned 
replacement of North Korea's 
existing graphite-moderated 
nuclear reactor programme with 
light-water reactor technology 
would “completely eliminate and 
dispel" suspicions about Pyong- 

Contmned cm Page 16 




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« T»>- FINANCIAL TIMES HMTTEP 1994 No 38.501 Week No 42 


LONDON - PARIS - FRANKFURT - NEW YORK - TOKYO 







FINANCIAL TIMES WEDNESDAY OCTOBER 19 1994 



NEWS: EUROPE 


Spanish financier held on fraud charges 


By Tom Bums in Madrid 

Mr Javier de la Rosa, one of Spain's 
richest and best known businessmen, 
was yesterday detained pending for- 
mal charges in Barcelona, prompting 
speculation that his arrest on charges 
of fraud conld prompt an Italian -style 
political fallout. 

Earlier Mr de la Rosa, who was at 
the centre of major deals during the 
booming late 1980s in Spain, had 
defiantly threatened those seeking 
his downfall. “Everyone had better be 
prepared to take their share of 


responsibility,” he told a radio inter- 
viewer. “Those who have put this 
process in motion haven't a cine 
what the consequences conld be.” 

Meanwhile in Madrid, Mr Mario 
Conde, removed as chairman of Ban- 
esto. the big domestic retail bank, by 
the Bank of Spain at the end of last 
year, was questioned yesterday by 
the chief investigative judge dealing 
with fiscal offences over alleged 
bribes paid by the bank in order to 
obtain tax breaks. 

Mr Conde faces several investiga- 
tions following the move by the Bank 


of Spain, which believed he had 
brought Banesto dose to collapse, 

Mr de la Rosa is accused of misap- 
propriation of public funds in connec- 
tion with credits, guaranteed by 
Catalonia’s Generalitat government 
that were granted to his loss-making 
holding company Gran Tibidabo. 

He is best known for spearheading 
large investments in Spain by the 
Kuwait Investment Office and is 
being separately sued by the office 
over losses that forced the Spanish 
companies it controlled into receiver- 
ship two years ago. 


His arrest has already prompted 
opposition calls for the resignation of 
senior members of the Generalitat 
which had recently blocked an inves- 
tigation by Catalonia's regional par- 
liament into Mr de la Sosa's affairs. 

The development is very embar- 
rassing for Mr Jordi Pujol, the Cata- 
lan nationalist leader and Generalitat 
president, who has consistently 
backed Mr de la Rosa. The political 
consequences could extend also to 
Mr Felipe Gonzdlez’s government 
in Madrid which depends on the 
support of Mr Pujol and the 


Catalan nationalists to stay in power. 

Mr GonzAlra yesterday distanced 
himself from the events, saying he 
did not Intend to “lose any sleep” 
over Mr de la Rosa’s arrest. Referring 
to the fortunes that were made in 
Spain in the late 1980s, the prime 
minister said the times of a "specula- 
tive” economy were over. 

Conservative opposition leader Mr 
Josd Marih A mnr said that Mr Gonz- 
alez, in power since 1982, had "sown 
the seeds of corruption" and that the 
prime minister would he forced to 
“reap the harvest". 


Personality clashes mark Italian bank battle 

Robert Graham in Rome charts the course of a bitter five-month 
wrangle that has inflicted deep wounds on both sides 


T he conflict between Mr 
Silvio Berlusconi’s gov- 
ernment and the Bank 
of Italy over nominating a new 
director-general for the central 
bank has left only losers. The 
dispute was resolved yesterday 
with the naming of Mr Vin- 
cenzo Desario, the junior of the 
two deputy directors, to take 
over the second most impor- 
tant post in the Bank of Italy. 
But the wounds run so deep on 
both sides they may not heal 
within the life of the current 
administration. 

The five-month long wrangle 
over the appointment - with 
the issue of the bank's auton- 
omy at stake - has also dam- 
aged Italy's credibility in the 
financial markets. When a 
European government falls out 
with the central bank over the 
composition of the latter's key 
directorate, it looks as though 
serious differences of economic 
and monetary policy are at 
issue. 

These differences do exist In 
an economy experiencing a 
strong recovery and with a 
huge public debt, the Berlus- 
coni government wants inter- 


est rates to fall; the Bank of 
Italy is concerned to protect 
the currency and hold down 
inflation. The government was 
critical of a decision by Mr 
Antonio Fazio, the governor, to 
raise the discount rate in mid- 
August by half a percentage 
point, and was furious he 
observed his governor’s char- 
ter to the letter, infor ming of 
the move only when it was 
decided. 

However, conflicts of person- 
ality have played a big role in 
this case as Mr Fazio has 
fought to preserve the bank's 
autonomy with the choice of 
an internal candidate. 

The seeds of disagreement 
were sown in April 1933 when 
Mr Carlo Azeglio Ciampi 
agreed to leave the governor- 
ship of the bank to become 
prime minister. Having been 
governor since 1979, he had 
clear ideas about the succes- 
sion, choosing Mr Fazio, then 
the senior of the two deputy 
directors. Mr Lamberto Dini, 


director-general and the natu- 
ral hierarchical choice, was 
overlooked. 

No explanation was ever 
given for ignoring Mr Dini, 
who was a better known inter- 
national central banker. But 
within the bank and among 
Italy's banking community, it 
was no secret that Mr Ciampi 
and Mr Dini had an awkward 
relationship. Mr Dini was con- 
sidered too close to the old 
Christian Democrat party, 
including former premier Giu- 
Uo Andreotti, whose contact 
with Mr Ciampi was frosty at 
best 

The governor and the three 
other members of the Bank's 
executive directorate are 
appointed by the body's gov- 
erning council (composed of 
the bank's regional office 
chairman). They are then con- 
firmed by the head of state in 
consultation with the govern- 
ment which formalises the 
appointments. Mr Fazio was 
appointed rapidly because of 


Mr Ciampi's unique position as 
a former governor and because 
of his and Mr Fazio’s close 
understanding with President 
Oscar Luigi Scalfaro. 

The situation was more com- 
plex when Mr Dini became 
treasury minister in May. He 
was anxious to have a say in 
his successor and he was now 
in an equal if not more power- 
ful role than the man promoted 
over him a year previously. 

M r Berlusconi, the pre- 
mier. and his minis- 
ters could have won 
sympathy if the appointment 
had been placed in the context 
of a much-needed debate on 
introducing blood to an institu- 
tion that had become too com- 
placent and inward-looking. 
Unfortunately, there was no 
debate, only sniping conducted 
in the spirit of a vendetta. 

This immediately took the 
form of a veto on Mr Tommaso 
Padoa Schioppa. technically 
the next in line as senior depu- 


ty-director and a highly 
respected central hanker, who 
had played an important part 
in pre-Maastricht work on 
monetary union. However, he 
was seen as one of the “Ciampi 
boys” - closely linked to the 
former governor and premier - 
and whose crime in the eyes of 
the new government was to 
have identified too much with 
the left 

The government advanced 
several outside candidates - 
Mr Rainer Masera, head of ImL 
the state-run financial institu- 
tion being privatised, Mr Mario 
Draghi, the brilliant director- 
general of the Treasury, and 
latterly Mr Paolo Savona, a 
banker and former industry 
minister in the Ciampi govern- 
ment. But Mr Fazio insisted 
the appointment come from 
within the bank. 

As early as July, the gover- 
nor suggested Mr Desario. pro- 
moted by Mr Fazio in 1993 to 
become the fourth member of 
the directorate, as a compro- 


mise candidate. But the stand- 
off has lasted until now, aggra- 
vated by individual members 
of the right-wing coalition con- 
ducting a smear campaign 
against the Bank of Italy. 

The government climb-down 
is partly the result of pressure 
from leading members of Con- 
fmdustria, the industrialists' 
confederation, who have 
argued the dispute was damag- 
ing Italy's international credi- 
bility. Equally, Mr Berlusconi 
may well have recognised the 
conflict is an unnecessary 
diversion from securing safe 
passage for the 199S budget 

Those who know the affair 
well say Mr Desario, whose 
career at the Bank of Italy has 
been in banking supervision, is 
not of the same calibre as the 
other candidates. They say the 
Desario promotion gives Mr 
Fazio a tight grip on monetary 
policy. But the price may well 
be that the government pays 
less attention to the Bank of 
Italy's counsels, and turns 
mare to Confindustzia and the 
Treasury. The same battle 
could also repeat itself over a 
replacement to Mr Desario. 


Balladur tries 
to restore 
cabinet calm 


By John Bidding hi Paris 

Mr Edouard Balladur, the 
French prime minis ter, yester- 
day sought to defhse factional 
disputes within his govern- 
ment which threaten the 
ffhaurps of the right in next 
spring's presidential elections. 

The divisions in the centre- 
right coalition have been 
fuelled by the undeclared con- 
test between Mr Balladur and 
Mr Jacques Chirac, leader of 
the Gaullist RPR party, for the 
conservative candidacy in the 
presidential polls. 

Mr Balladur met Mr Alain 
Juppe, foreign minister, and 
Mr Charles Pasqua, interior 
minister, yesterday to urge the 
maintenance of government 
unity. Last week, the two min- 
isters clashed when Mr Juppe, 
a strong supporter of Mr Chi- 
rac, rejected Mr Pasqua’s pro- 
posal for primary elections to 
select a single conservative 
candidate for the presidential 
elections. 

Mr Pasqua responded by sug- 
gesting that Mr Juppd should 
leave the government, claim- 
ing that the foreign minister’s 
membership of a support com- 
mittee for Mr Chirac was 
incompatible with his position 
in the cabinet. Mr Franco is 
L6otard. defence minister and 
a Balladur supporter, has also 
been at odds with Mr Juppe 
following the defence minis- 
ter's remarks that US policy 
towards Iraq was motivated by 
domestic political consider- 
ations. 

After meeting the prime min- 


ister, Mr Jupp6 said he was 
“staggered by the deterioration 
of the political climate", but 
denied having breached cabi- 
net solidarity. 

Mr Balladur to seeking to 
delay campaigning for next 
year's presidential poll until 
January, partly because of his 
own interest in silencing Chi- 
rac supporters. He has also 
written to Mr Chirac and Mr 
Val£ry Giscard d'Estalng, 
leader of the UDF, junior part- 
ner in the RPR-UDF coalition, 
railing for a meeting to discuss 
a political c e a se fi r e. 

The increasingly public dis- 
putes between cabinet mem- 
bers has further unsettled a 
government shaken by two res- 
ignations in the past three 
mouths. Mr Alain Carlgnon, 

’ rations minister, and 
Mr Gerard Longue t, industry 
minister, stepped down follow- 
ing corruption allegations. 

The various setbacks have 
highlighted the potential 
threat to the right from Mr 
Jacques Delors. the European 
Commission president and a 
possible Socialist presidential 
candidate. Mr Delors has said 
he will not make a decision on 
his candidacy until the begin- 
ning of next year, but he has 
closed the gap with Mr Balla- 
dur in recent opinion polls. 

An IFOP poll published yes- 
terday showed that Mr Delors 
had gained five percentage 
points to close within four 
points of Mr Balladur in a sur- 
vey of voting intentions for the 
second and decisive round of 
the presidential elections. 


Central bank warns on outlook 
for inflation next year 

Sweden set for 
big rise in 
budget deficit 


By Hugh Camegy 
in Stockholm 

The fragile state of Sweden’s 
economy was underscored yes- 
terday when the government 
announced a much bigger than 
expected budget deficit, threat- 
ening growth prospects. The 
central bank also warned that 
price rise expectations in 1995 
exceeded its target ceiling of 3 
per cent inflation. 

The finance ministry said 
the budget deficit in the cur- 
rent 1994-95 fiscal year would 
be SKr201bn ($27.5bn), well 
above the SKrI50bn previously 
forecast and likely to be 
around last year's record 
equivalent of 13 per cent of 
gross national product. The 
ministry blamed increased bor- 
rowing costs, saying the rise in 
interest rates since the spring 
would add SKrlObn to the defi- 
cit. 

Mr Goran Persson. the new 
Social Democratic finance min- 
ister. said more cuts in public 
spending were now probable in 


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January's budget beyond those 
already being implemented and 
the fiscal measures he was due 
to introduce early next month. 
Next month's package would 
reflect his plan, outlined dur- 
ing the campaign for last 
month's general election, for 
spending cuts and tax 
increases to strengthen the 
budget by SKrflbn over four 
years. 

Mr Persson acknowledged 
the threat which the crisis in 
the public finances now poses 
to Sweden's slow recover; 
from three years of recession. 
He said a new round of spend- 
ing cuts in January would 
have a negative effect on 
growth. Already, earlier fore- 
casts of 3 per cent GNP 
growth in 1995 have been 
downgraded to 2 per cent or 
less. 

"Growth will be affected if 
we put in place a heavy 
squeeze — to correct the state 
finances. But I am worried 
about pressing down consump- 
tion too low. We need an eco- 
nomic upturn, n Mr Persson 
said. 

To add to his difficulties, the 
Riksbank said yesterday that 
inflationary pressure in the 
economy was on the rise 
because of increasing producer 
prices - prompted by the 
heavy fall in the value of the 
krona last year - and histori- 
cally high levels of capacity 
utilisation in industry. 

The bank said inflation 
expectations next year in 
industry and the financial sec- 
tor exceeded the upper limit of 
the Rlksbank's “price stability 
target” of 3 per cent. The same 
appeared to be true in the 
labour market, it added. 

The bank issued an implicit 
warning that short-term inter- 
est rates - which it raised at 
the end of the summer - might 
have to rise again to check 
inflation unless the govern- 
ment restored market confi- 
dence in the public finances. 
That in turn would also 
squeeze growth and push up 
the budget deficit further. 



Queen Elizabeth, on the first full day of an historic visit to Russia, tours Moscow’s Red Square 
yesterday with the city's mayor, Mr Yuri Luzhkov om* 


Brittan in struggle over E 


Estonia’s 
missing 
bow door 
located 

By Hugh Camegy 

The missing bow section of the 
ferry Estonia, which sank in 
the Baltic Sea last month with 
the loss of 900 lives, was found 
yesterday lying in 76m of 
water about 2km west of the 
wrecked ship. 

The joint Estonian-Fmnish- 
Swedish investigation team Is 
anxious to inspect the visor- 
like outer bow door, which 
caused the Estonia to capsize 
and founder when it was torn 
off in a storm off the south 
west coast of Finland during 
an overnight voyage from Tal- 
linn to Stockholm. 

Evidence from video camera 
inspections of the wreck has 
shown that all three locks 
designed to hold the 55-tonne 
bow section in place had bro- 
ken. Investigators believe the 
bow section smashed against 
the hull and inner vehicle deck 
door before it broke away, 
allowing water to enter the 
vehicle deck, causing the ship 
to sink. 

They believe it took only 15 
or 20 minutes before the 
Estonia, jointly operated by 
Estonian and Swedish ship- 
ping companies, rolled on its 
side and began to sink. 

The bow section will now be 
surveyed with video cameras 
in an effort to find further evi- 
dence of why the locks failed. 
The inquiry team will also 
hope to salvage the bow sec- 
tion so they can investigate 
whether metal fatigue was to 
blame. The Swedish govern- 
ment is considering salvaging 
the main wreck, but experts 
say such a complex and costly 
operation conld not be done 
until the spring. 

So far there has been no def- 
inite evidence of human error 
causing the bow doors to EriL 
Surviving crew members have 
told investigators the inner 
bow door, which should have 
proved watertight, had been 
closed. But they said they 
could not judge whether the 
ship had been sailing too fast 
for the conditions, as some 
witnesses have suggested. 

The International Maritime 
Organisation wants a complete 
review of the design of roll-on 
roll-off ferries. 


By Lionel Barber In Brussels 

Sir Leon Brittan, chief EU 
trade negotiator, is fighting an 
uphill battle to keep control of 
relations with central and east- 
ern Europe in the new Euro- 
pean Commission, Brussels 
diplomats said yesterday. 

With a French-led campaign 
to cut Sir Leon down to size 
apparently making headway, 
the senior British commis- 
sioner is pinning hopes of pres- 
erving his bureaucratic empire 
on Chancellor Helmut Kohl of 
Germany. 

Sir Leon's camp welcomed 
Mr Kohl's election victory this 
week, on the grounds that the 
German leader will prefer a 
free-trader committed to early 


enlargement of the EU to the 
emerging democracies of cen- 
tral Europe. The British hope 
he will pass on the message to 
Mr Jacques Santer, who takes 
over as Commission president 
next January from Mr Jacques 
Delors. 

But UK officials remain wor- 
ried that Mr Kohl may tip sup- 
port to France, whose senior 
incoming commissioner - Mrs 
Edith Cresson. a former 
French premier - is said to 
have expressed interest in the 
eastern European dossier 
(which also includes Russia 
and the former Soviet repub- 
lics). 

Handling relations with cen- 
tral and eastern Europe is 
rated as the plum job In the 


new five-year Commission 
headed by Mr Santer. One of 
its chief tasks will be to lay the 
groundwork for the entry of 
Poland, the Czech republic and 
Hungary, and possibly Slo- 
vakia and Slovenia, into the 
EU around the turn of the cen- 
tury - a daunting c hall enge 
but also one with a guaranteed 
high political profile. 

Sir Leon’s credentials rest 
mainly on his role in the suc- 
cessful conclusion of the Uru- 
guay Round of global trade lib- 
eralisation and his successful 
lobbying for more generous EU 
market access for central and 
east European exporters. 

But Mr San tor's problem is 
that he does not have enough 
good jobs to share around in 


Moscow names 
acting chief 
for central bank 


By John Lloyd in Moscow 

President Boris Yeltsin 
yesterday named Ms Tatyana 
Paramo nova as acting chair- 
man of tiie Russian central 
bank in succession to Mr Vic- 
tor Gerashchenko. She is one 
of the youngest of the bank's 
deputy chairmen and the only 
woman in its senior manage- 
ment 

Ms Paramonova, 44, joined 
the bank’s top echelons only 
two years ago when Mr 
Gerashchenko was appointed 
head of the bank six months 
after relinquishing his post as 
head of the Soviet State Bank 
at the end of 1991. 

She was described yesterday 
by Mr Andrei Illarionov, a 
prominent reform economist 
as "Mr Gerashchenko's right 
hand, but tougher on inflation 
than he was". 

A senior western financial 
official in Moscow welcomed 
the appointment saying that 
Mrs Paramonova had earned a 
high reputation for her tough 
line on credits and on the fight 
against inflation. 

However.fche general view is 
that her relative youth, her sex 
and her brief time in the 
bank’s ruling council mean 
that she is a temporary 
appo in tment while the struggle 


continues over who takes the 
job on a permanent basis. 

The state duma, or lower 
house of parliament, yesterday 
decided to postpone a debate 
on Mr Gerashchenko’s resigna- 
tion - a debate demanded by 
those deputies who insist that 
only the duma has the right to 
accept a resignation and to 
confirm appointment of a new 
chairman. Ms Paramonova's 
appointment, since it is a tem- 
porary one, does not require to 
go before the duma. 

Though the appointment fills 
the vacancy left by Mr Gerash- 
chenko and stills the fears of 
Moscow’s bankers, it leaves the 
main Russian financial institu- 
tions in the hands of young, 
inexperienced and temporary 
figures. 

Last week, Mr Andrei Vavi- 
lov was appointed acting 
finance minister in place of the 
sacked Mr Sergei Dubuinin - 
himself "acting” - and his sta- 
tus was further compromised 
by briefings from presidential 
spokesmen to the effect that he 
was a “temporary” acting min- 
ister. 

Her appointment comes on 
the eye of talks today between 
Russian officials and a 
top-level team from the Inter- 
national Monetary Fund on a 
standby loan of S4bn. 


Europe portfolio 


the next Commission, which 
will expend from 17 to 21 com- 
missioners, ass uming Sweden 
and Norway join Austria and 
Finland in supporting member- 
ship in refe rend urns next 
month. 

Mr Santer will attempt to 
reach agreement among his 
new colleagues on a share-out 
of portfolios at a mflflting in 
Luxembourg at the end of the 
month. 

Already, the session is being 
billed as a test of his grip on 
his new colleagues and his 
clout with member states. 

Responsibility for the exter- 
nal relations portfolio is cur- 
rently shared between three 
Commissioners: Sir Leon, Mr 
Hans van den Broek, the for- 


mer Dutch foreign minister 
who handles political affair s, 
and Mr Manuel Marin, the 
long-serving senior Spanish 
commissioner, who is responsi- 
ble for development aid. Latin 
America and most of the Medi- 
terranean. 

The carve-up is dogged by 
inefficiencies, overlap and per- 
sonal rivalry. 

Mr Marin is understood to 
have won control of Latin 
America and expanding 
responsibility in the Mediterra- 
nean, In exchange for yielding 
the dossier relating to the 
Lomd convention, the trade 
arrangement with 60 African, 
Caribbean and poorer Pacific 
countries, mainly former Euro- 
pean colonies. 



THAT'S WHAT YOU GET WHEN YOU ADD UP ALL THE ROOM IN OUR NEW NETWORK OF 14 CLUB EUROPE DEPARTURE LOUNGES. IT’S SUM SPACE. British Airways 


The worlds favourite airline 


\ 









FINANCIAL. TIMES WEDNESDAY OCTOBER 19 1994 


NEWS: EUROPE 



'» calm 


w names 

chief 
tral 




P 


EUROPEAN NEWS DIGEST 


French groups 
give pledge on 
illegal pay-offs 

fVanoe’s main public works companies - with the exception of 
one of the largest, Bouygues - have foresworn li ving illegal 
payments to win contracts or orders, in an attempt to restore 
Public confidence in their sector. At the initiative of their 
trade association, the companies, which include subsidiaries of 
Lyonnaise des Bans, Compagnie Gtoftrale des Eaux and the 
Schneider engineering group, have signed a pledge that they 
will obey the law on corporate contributions to political par- 
ties and candidates. 

Bouyg ues, which happens to have figured less in recent 
corruption allegations, yesterday questioned the need for such 
a pledge with its implication of possible past wrong-doing: 
Meanwhile . Al catel CFF yesterday described as “absurd” a 
reported estimate by an, investigating magistrate that the 
telecommunications company had in fact overcharged France 


TOieoam for equipment by up to FFr2bn, way in excess of the 
FFr62. 6m which Alcatel recently paid the telephone utility m 
an agreed settlement David Buchan, Paris 

Dutch insider trading move 

Mr Joep van den Nieuwenhuyzen, chairman of the Dutch 
engineering group Begemann. said yesterday that he was 
stepping down temporarily while he pursued an appeal against 
his conviction for insider trading. Mr van den fQeuwenhuyzen, 
the first person in the Netherlands to be found guilty of 
insider trading, said he was vacating the top job in favaur of 
Mr Andre Deleye. On Monday, Mr van den Nieuwenhuyzen 
was sentenced to six months in jail, with three months 
suspended, and fined FI 100,000 (£36.900) for insider trading in 
the shares of HCS, a now bankrupt computer company. He is 
free pending his appeal. 

In 1991. Mr van den Nieuwenhuyzen, one of HCS’s main 
shareholders, sold 4.1m shares in the company the morning 
after be attended a meeting with bankers and other big share- 
holders to discuss a rescue plan. He had acknowledged “share 
orchestration” bed denied insider trading. His appeal to the 
supreme court could take a year or a longer. Mr van den 
Nieuwenhuyzen 's conviction on Monday reversed his 
acquittal by a lower court in April Ronald van de Erol 
Amsterdam 

Macedonian polls confusion 

The muddle over results In the first round of Macedonia's 
p residential and parliamentary ele ctions, still unresolved more 
than 48 hours after the polls dosed, is creating confusion 
among voters and increasing anger in opposition political 
parties. The electoral commission, headed by a constitutional 
court judge, which supervised Sunday's presidential and par- 
liamentary vote, yesterday cited “ techni cal difficulties” for not 
being able to announce results from as many as 83 out of 120 
constituencies in the former Yugoslav republic. 

According to unofficial returns. President Kiro Gligorov, 
seeking re-election through a direct vote, held a rranffmaTufrng 




h- ' 


lead over his nationalist challenger, Mr Zjubisha Georgievsld, 
while the governing Alliance for Macedonia claimed its candi- 
dates were ahead in more than half the constituencies. But the 
prolonged delay in producing official results is likely to reduce 
support for the Alliance at the run-off poll on October 30. Both 
the main opposition Internal Macedonian Revolutionary 
Organisation, the hardline nationalist party,' and the free-mar- 
ket nationalist Democratic party set up last year have com- 
plained of ballot box fraud and are threatening to boycott the 
second round of the elections. Kerin Hope, Athens 

Eko Stahl may get less cash 

Germany's Treuband privatisation agency and the economics 
ministry may be forced to reduce by DM250m <£l03m) the 
planned DMi.2hn rescue package for Eko Stahl eastern Ger- 
many's steel min, European Commission officials stud yester- 
day. But any redaction of subsidies could throw into jeopardy 
the sale of the plant to CockmU-Sambre, the Belgian steel 
producer, which has agreed in principle to buy for DM30ra a 60 
per cent stake in Eko Stahl It also intends to invest DM440m 
in modernising the steel mill’s existing blast furnace and 
building a new hot-rolling mill Cockerill yesterday said “it 
would not take Eko Stahl at any price", adding that the 
agreement to buy a stake in the mill was linked to the large 
rescue package. “It is up to the Treuband to negotiate with the 
European Commission," it said. If Cockerill is not prepared to 
renegotiate the rescue package, the Treuband might allow it 
to buy the remaining 40 per cent stake for a token DM1 in 
order to make up for any reduction in the rescue package. 
Judy Dempsey, Berlin 

Turkish privatisation advance 

Mrs Tansu Oilier, Turkish prime minister, has convinced her 
cabinet's biggest opponent of privatisation to hack a draft 
framework law on state asset sales, significantly increasing 
the rfyiTuyfi that parliament will enact it Mr Mumtaz Soysal, 
foreign minister, a member of her coalition government’s 
junior partner, the Social Democratic party, signed the draft 
law on Monday night after obstructing privatisation for 
months. He demanded that Mrs Qifier adopt a political liberal- 
isation package before backing privatisation. E a r lie r this year 
he won a constitutional court appeal against her plan to 
impose privatisation by decree. The government still hopes to 
raise $Ibn this year from privatisation and a further $9bn- 
$L2bn next year. The state telephone and electricity utilities as 
weU as five banks, the national airline, manufacturing and oil 
refining businesses are to be sold. State companies lost $5.6bn 
last year. Privatisation is a key feature of a wider World 
Ban if ■CTi p pnrterf public sector reform programme aimed at 
tackling the main causes of the government's big budget 
deficits and Turkey’s high inflation. John Barham, Ankara 

ECONOMIC WATCH 


Anrad % Change, MSA 
20 



Italian industrial output surges 

• - • . Italian industrial production 

Halge industrial production during the normally 

static month of August, rising 
16 per cent on the same 
period in 1993. However, the 
August figures are not consid- 
ered truly comparative 
because of the adoption of 
more staggered holiday clo- 
sures by factories during the 
summer holidays this year. 
The rise in industrial produc- 
tion lifted the increase in the 
first eight months to 3.7 per 
cant over the same period last 
year, according to Istat, the 
national statistics institute. 
The most spectacular 
increase has been the 145 per 
cent jump in car production over 1993. reversing the dadme 
that set in three years ago. Other sectors growing fast are 
electrical goods (up 41 per cent), shoe manufacture (up 36 par 
cent) and plastics (up 34 per cant). Robert Orahaj^ Ram 

■ Poland's industrial output (unadjusted) rose 8J 

September and was 16.7 per cent higher than m September 
1993, the central statistical office said. . 

■ Switzerland recorded a trade surplus 

in September after a revised deficit of SFr288-7m in August, 
the federal customs office said. 

■ Finnish industry’s producer pnee mdex rose CL2 per cent 
"onth-on-month in September arid the yearon-year use was 
2.1 per cent. Statistics Finland said. 


1894' 


Scwe# Pnwwwn 


Kohl pressed on plans for spending cuts 


By Andrew Fisher fa FrimMurt 

Germany's newly re-elected 
government came strun g 
pressure yesterday from indus- 
try and the Bundesbank to 
stick to its plans for spending 
cuts and take strong action to 
reform the costly social welfare 
system. 

“The burden, of the welfare 
state will crush us if we fail to 
act,” qaifl Mr Tri vu * Murmaxm, 
president of the German 
Employers' Federation. The 
steadily growing system of 


social benefits could no longer 
be financed in Its present form 
- “our main deman d to the 
government parliament is, 
therefore, to restructure the 
welfare state." 

Mr Murmann said Ger- 
many’s competitiveness had to 
be improved by reducing social 
security costs. He said total 
social expenditure - on sick- 
ness and accident insurance, 
pensions, unemployment and 
welfare benefits - was 
DMl,060bn {£434. 4hn,i in 1993. 
50 per cent more than Ger- 


many’s capital investment In 
1970, they had been roughly 
equal at some DMl70bn. 

His proposals included a 
reduction in Initial sickness 
pay and review of the pension 
system. Social insurance 
should be for the needy and 
people should be more pre- 
pared to make their own provi- 
sion. rather than relying on the 
state. 

Mr Hans Tietmeyer, presi- 
dent of the Bundesbank, 
warned the government 
against relying on the acceler- 


ating upturn in the economy to 
solve the country’s long-term 
problems. “The structural cri- 
sis of the German economy 
will take time to overcome. It 
will not be solved by the eco- 
nomic recovery." 

Mr Tietmeyer did not men- 
tion the election result hat it 
was dear both he and Mr Mur- 
tnftim were anxious that the 
narrowness of the govern- 
ments majority might deter it 
from tough measures. The Free 
Democrats, the junior coalition 
party, won fewer seats in the 


Bundestag, the lower house of 
parliament while the opposi- 
tion Social Democrats lifted 
their majority in the Bundes- 
rat, the upper house, which 
can delay legislation. 

One of Mr Tietmeyer's main 
concerns is that too much fed- 
eral borrowing could push up 
interest rates on the bond mar- 
ket. He warned against a 
“crowding out” situation - in 
which heavy demand for funds 
pushes up rates - at a time of 
incipient economic recovery. 

Too much of the govern- 


ment's efforts to curt) the bud- 
get deficit had concentrated on 
raising taxes and welfare con- 
tributions, be said. More effort 
should be devoted to cuts in 
spending. 

A further salvo towards 
Bonn was fired by Mr Edzard 
Reuter, chairman of Daimler- 
Benz, Germany's largest indus- 
trial company. He said the gov- 
ernment should find the cour- 
age to tell people of the need to 
tackle “a pile of unpopular 
tasks”, including plans to 
reduce spending. 


Greens set to help shape the German agenda 


T he Greens are back - and not 
just by the akin of their teeth 
but, with 49 seats, as the third 
strangest party In Germany’s federal 

pa rliamen t 

That gives the left-wing environ- 
mentalists the right to appoint one of 
the parliament’s four deputy speakers 
and gives them access to other com- 
mittees which shape the parliamen- 


Michael Lindemann charts the radicals’ return to parliament 


They celebrated longer than any- 
body else on Sunday night but were 
yesterday holed up in a hotel outside 
Bonn reviewing their strategy for the 
next four years, sure they will be able 
to build on their success. 

“I think you’ll see us winning the 
sort of support that we got in the 
European elections next time round.” 
said Ms Anne Nilges, the party 
spokeswoman, referring to the result 


in June when the party won 10.1 per 
cent of the vote- 

FOur years ago the Greens scored 
just 3.8 per cent They lost voters to 
the Social Democratic party which 
had shifted leftwards and they lost 
their 44 seats in the Bundestag; the 
lower house of parliament 

Other parties have meanwhile 
taken up many of the environmental 
policies mooted by the Greens, but 
the party says it will remain on the 
enviro nmental offensive and turn 
environmental concerns that stretch 
across German society into more 
votes at the next election. 

The Greens will work together with 
the SPD, with whom they had hoped 
to form a so-called red-green coalition 


government, bat have few fears of 
having the ground stolen from 
beneath them. “The SPD Is much 
more likely to move to the right as it 
tries to become the ruling party,” Ms 
Nilges said. 

Mr Joschka Fischer, the former 
environment mini star in the state of 
Hesse who hopes to become one of the 
two leaders of the parliamentary 
party, set the tone for the new party 
when he faced the cameras on Sunday 
night after the election. 

He first saw action in the Bundes- 
tag 10 years ago when be was send- 
ffly dressed and wore trainers. Ten 
years ago to the day he was expelled 
from parliament for rowdy behaviour 
and on leaving called the acting 


speaker of the Bundestag an “arse- 
hole". 

Mr Fischer now wears a tie, but it is 
still poorly knotted and his top button 
is still undone. 

The party now faces competition of 
a different sort The party of Demo- 
cratic Socialism, the renamed east 
German communist party, has no 
impressive environmental credentials 
but it has proved that it can steal 
radical votes from the Greens. 

Four years ago just 0.3 per cent of 
west German voters backed the PDS. 
This time 0A per cent plumped for the 
PDS in the west many of them one- 
time Green voters who were disap- 
pointed that the Greens were ready to 
tone down their revolutionary agenda 


to form a coalition with the SPD. 

The Greens appear to have made 
decisive inroads into the support of 
the Free Democratic party, the small 
liberal coalition partner of Chancellor 
Helmut Kohl’s Christian Democratic 
Union. 

The Greens also won seats in the 
state parliament in the Saarland, the 
small south-western state, and were 
able to bolster their presence in coun- 
cils across North Rhine-Westphalia. 
Germany’s most populous state, 
where their share of the vote jumped 
from 7.3 per cent to 10.2 per cent 

The Greens’ biggest problem 
remains eastern Germany where it 
picked up just 5 per cent of the vote. 
It has been unable to get its environ- 
mental message across to people who. 
leading Greens admit, have more 
everyday concerns. 


Im arriving tonight and I have tio lime 
to pack. Howmucli dol have to bring?” 


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Some companies say they’re 
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f / 


BfcA ... » 



FINANCIAL TIMES WEDNESDAY OCTOBER 19 1094 „ 


NEWS: INTERNATIONAL 


NTT in 
row over 
use of 
network 

By Mfctuyo Nafcamoto in Tokyo 

A private Japanese 
telecommunications carrier 
has asked the country’s regu- 
latory authorities to intervene 
in what has become an un usu- 
ally public row with NTT. the 
former public utility, over use 
of its local network. 

Japan Telecom, the coun- 
try's third largest 
long-distance carrier, yester- 
day asked the minister of 
posts and telecommunications 
to order NIT to make its local 
network available for 
high-speed data services Japan 
Telecom is seeking to offer. 

The appeal, which high- 
lights the Increasingly compet- 
itive market environment in 
Japan, conld strengthen the 
argument for breaking up NTT 
(last week listed on the Lon- 
don Stock Exchange) into sep- 
arate long-distance and local 
operations. 

NTT has been accused by 
critics of using its local net- 
work monopoly to impede 
competition in the 
long-distance network. Japan 
Telecom said it had been in 
talks with NTT for two years 
in an attempt to link its 
long-distance network with 
NTT's local network, to pro- 
vide frame relay services let- 
ting users cut the cost of send- 
ing data down phone lines. 

As a long-distance carrier, 
Japan Telecom must use the 
local network dominated by 
NTT to provide snch services. 
While talks between the two 
companies failed to bear fruit 
for Japan Telecom, NTT 
applied in July this year to 
offer frame relay services of 
its own. NTT, which on priva- 
tisation was allowed to retain 
both long-distance and local 
networks, faces a decision 
next year on whether It shonld 
be broken up or allowed to 
operate intact 
If the minister decides to 
order NTT to make its local 
network available to competi- 
tors, it will be the first time 
the authorities will have done 
so. NTT has two weeks to 
bring its case to the authori- 
ties. NTT said it was ready to 
continue talks. 


US and Israel oppose $lbn funding because of Tehran’s alleged terrorist links 


Japan under pressure on Iranian dam 


By William Dawkins in Tokyo 

Japan has come under 
pressure from the US and 
Israel to stop funding a Slim 
(£620m) hydroelectric dam in 
Iran, because of claims that the 
Iranian government has terror- 
ist links. 

Japan's Foreign Ministry has 
been urged to decide against 
disbursing an overdue second 
$460m tranche of a soft loan for 
the dam, over the Karun rives', 
south of Tehran. It is the latest 
of four hydroelectric plants, an 
important part of efforts to 
update an Inadequate power 
supply. Lhe success of which is 
crucial to economic reforms. 

Criticism of Japan's support 
for Iran risks embarrassing the 
Tokyo government, the world’s 
largest aid donor, less than a 
month after its application for 
permanent membership of the 
United Nations Security Coun- 
cil. Japan has based its UN 
application on its credentials 


as a supporter of humanitarian 
causes across the world. 

Diplomatic pressure to stop 
helping Iran has built up in 
recent weeks because the For- 
eign Ministry is nearing a deci- 


don, yet to start The Japanese 
government's approval tor the 
Karun project last year marked 
a controversial end, against US 
opposition, to a 17-year suspen- 
sion of Japanese aid to Iran. 


Japan’s Foreign Ministry hinted that 
official loans would be withdrawn if it 
found conclusive evidence that Tehran 
supported terrorism, built nuclear 
weapons or expanded its military 


sion on the loan. The second 
tranche was due to have been 
paid in May, but has been 
delayed while the ministry 
studied its allies’ evidence of 
Iran’s terrorist links. 

The first tranche, worth 
J364m and paid in May 1993, 
was for engineering and con- 
sultancy costs, while the sec- 
ond is to pay for machinery. A 
final tranche is for construc- 


This is among several subjects 
on which Japan has started 
recently to sketch out a foreign 
policy line independent of 
Washington. 

Last year’s U-turn in Tokyo’s 
Iranian policy, influenced by 
Mr Kunlhiko Saito, the foreign 
ministry's bureaucratic chief 
and a former ambassador to 
Iran, is intended to support 
moderate elements in the Teh- 


ran government This will help 
political stability in the Gulf 
region, on which Japan 
depends for more than half its 
oil supplies, argue the minis- 
try's Middle East experts. Iran 
alone provides a mere 8.4 per 
cent of Japanese oiL 

Critics of Japan's support for 
Iran, including some sections 
in tiie ministry itself, argue 
that it produces the opposite 
effect to that intended. They 
maintain that President All 
Akbar Hashemi Rafoanjani, 
Iran's pragmatic president, is 
aware of and unalarmed by 
CIA reports showing Iranian 
backing for the Hizbollah 
bomb attacks in Buenos Aires 
and London in July and claims 
by Mossad, Israeli intelligence, 
that aid to Iran is being 
diverted to Hamas, the extrem- 
ist Islamic group. 

Moreover, UK intelligence 
reports earlier this year dem- 
onstrated links between Teh- 
ran and the Irish Republican 


Army, so arousing British con- 
cern over the possible diver- 
sion of Japanese aid, 

Japan's Foreign Ministry is, 
however, sensitive to these 
allegations. It has at least once 
since restarting aid to Iran 
hinted that official loans would 
be withdrawn if it found con- 
elusive evidence that Tehran 
supported terrorism, built 
nuclear weapons or expanded 
its military. Officials do not 
deny that the Iranian govern- 
ment’s pragmatists and 
extreme religious groups are 
close to each other. 

Against that, a ministry offi- 
cial points to encouragingly 
moderate recent statements 
from Tehran that It will not 
obstruct the Middle East peace 
process and that it has shifted 
its support for North over 
South Korea to neutrality 
between the two. 

Whether or not to proceed 
with the loan remains under 
study, the official said. 


Israel may now seek Golan lease-back 


By Julian Ozanne in Jerusalem 

Israel said yesterday its peace 
treaty with Jordan, involving 
exchange of land and lease- 
back deals, was a preferable 
model for peace with Syria to 
its 1979 accord with Egypt, 
whereby Israel returned all 
occupied territory. 

In the Lsrael-Jordan peace 
treaty, initialled in Amman on 
Monday, Israel agreed to 
return to Jordan more than 300 
square kilometres of occupied 
territory and to lease back and 
trade small parcels of other 
land to safeguard Israeli form- 
ers working on areas claimed 
by Jordan. 

King Hussein agreed to 
accept 30sq km of Israeli land 
in return for Jordanian terri- 
tory being farmed by Israelis 
and to lease back at feast a 
further 700 acres for 25 years 
with an option to renew. 

Mr Shimon Peres, Israeli for- 
eign minister, yesterday indi- 
cated that his government 
hoped this might set a prece- 
dent for peace talks with Syria 
over return of the Israeli-occu- 
pied Golan Heights, home to 
14,000 Jewish settlers and 




Jordanian prime minister Abdul-Salam al-Majali announcing the 
details of next week's treaty signing in Amman touts. 


many businesses. Mr Hafez al- 
Assad, the Syrian president, 
however, firmly ruled out such 
a possibility yesterday and crit- 
icised the Israeli-Jordanian 
agreement, saying Israel got 


peace, land and public contacts 
without giving anything away. 
President Assad, holding sur- 
prise talks with President 
Hosni Mubarak of Egypt, said 
Syria would never follow Jor- 


dan’s example and rent part of 
its territory to Israelis. 

Damascus also warned that 
only peace with Lebanon and 
Syria would bring stability to 
the Middle East- 

More criticism against the 
Israeli-Jordanian agreement 
came yesterday from Palestin- 
ian radical groups based in 
Damascus. The Palestine Liber- 
ation Organisation also 
attacked the treaty's provision 
for a special role for Jordan as 
the guardian of Islamic holy 
sites in Arab East Jerusalem, 
saying it was a "flagrant viola- 
tion" the PLO-Israeli agree- 
ments and an attempt to legi- 
timise occupation of the holy 
city. 

The statement confirmed 
mounting PLO-Jordanian ten- 
sion over the rival claims to 
Arab East Jerusalem. 

In Israel, however, the treaty 
was received with near eupho- 
ria, especially by the business 
community. Israeli newspapers 
lauded the prime minister, Mr 
Yitzhak Rabin, as a great man 
and even ultra-right wing par- 
ties were full of praise for the 
agreement, which appeared to 
involve no significant Israeli 


sacrifices. Mr Dan Proper, head 
of the Israeli Manufacturers’ 
Association, said the move 
marked a "big swing forward" 
tor Israel in trade with the 
world, access to foreign invest- 
ment and participation in large 
infrastructure projects. 

Tourism officials forecast 
large gains to both economies, 
with at least 1,000 tourists a 
day crossing between Israel 
and Jordan. 

Arkia, a small airline com- 
pany, announced it would start 
two flights a day between 
Amman and Tel Aviv and 
another company plans to offer 
a helicopter and limousine ser- 
vice for businessmen within 
days of next Wednesday's 

si gning 

Plans were also unveiled yes- 
terday for an Israeli-Jordanian 
joint venture to construct a 
giant tourism project in the 
. Arava desert, with investors 
from Hong Kong, US, Singa- 
pore and financing from the 
World Bank. The first stage of 
the project, worth $i50m 
(£95m), will be presented at the 
Casablanca Middle East eco- 
nomic conference which opens 
on October 31. 


INTERNATIONAL NEWS DIGEST 


Nigerian finance 
minister sacked 

Nigeria's military government yesterday sacked the finance 
minister. Mr Kalu Idika Kalu, architect of the country s 
suspended economic liberalisation policy and leader of a lobby 
for deregulation. Mr Kalu’s sacking was reported in the gov- 
ernment-owned Daily Times newspaper. There was no official 
and no reason given. No replacement has been 
named. His dismissal may be part of a reshuffle m which the 
ruler. General Sani Abacha. has fired senior military officers. 
In 1986. Mr Kalu negotiated with the World Bank and intro- 
duced stringent reforms, opening the way for new loans and 
debt rescheduling. He was a lone voice for free market policies 
in a civilian cabinet at first dominated by supporters of gov- 
ernment regulation of the economy. He then became sidelined 
by the increased role of the military since Gen Abacha seized 
power last November. In January Mr Kalu had to present a 
1994 budget that contradicted his own policy prescriptions and 
e nded Nigeria's eight-year experiment with structural adjust- 
ment. AP, Logos 

Camdessus pursues campaign 

Mr Michel Camdessus, ma n a g in g director of the International 
Monetary Fund, is pursuing a "quiet diplomacy" strategy in 
seeking to overcome Group of Seven opposition to his plan for 
the flind to provide more financial aid to developing countries, 
he said yesterday. In a briefing at the end of a four-day visit to 
Manila, Mr Camdessus said he remained "confident" that 
negotiations on the proposed assistance scheme “will come to 
a successful conclusion”. He had proposed the IMF create 
SDRSObn (£S3bn), that could be tapped for developing econo- 
mies encountering serious external payments problems. The 
Camdessus proposal was rejected by the Group of Seven indus- 
trial nations at the IMF-World Bank meetings in Madrid early 
this month. Jose Golang, Manila 

Japanese securities tax move 

Mr Masayoshi Takemura, the Japanese finance minister, said 
yesterday he believes a proposed revision of the country’s 
securities trading tax should be considered as part of an 
overall review of the securities tax system. Speaking in the 
Japanese parliament, Mr Takemura said a review would also 
cover a proposed increase in capital gains tax. But he said that 
a full review of the tax was unlikely before 1996. Alone among 
the leading international capital markets, Japan currently 
imposes a 0-3 per cent tax on all securities transactions. But in 
the last year, as equity trading has remained sluggish and 
foreign companies have de-listed from the Tokyo Stock 
Exchange, ahum has been expressed about the damage done 
by the tax to Japan's market Gerard Baker. Tokyo 

China courts foreign insurers 

China has signalled that it wants to speed the entry of foreign 
companies into the country’s rapidly-growing insurance mar- 
ket Speedier consideration of applications for joint ventures 
Involving foreign insurance companies is been actively sought 
by the People's Bank of C hina, which regulates the insurance 
industry. Mr Di Weiping, deputy director of the bank's interna- 
tional department told a conference in Hong Kong that, 
despite growing rapidly, China's insurance industry “cannot 
meet the needs of the country's economic development”. For 
international insurance groups, the Chinese market offers 
potentially vast opportunities: between 1992 and 1993 income 
from premiums in China increased by more than 40 per cent 
But only a handful of foreign insurance companies have made 
in-roads into the Chinese market Ralph Atkins, Condon 


inil 









ly FINANCIAL TIMES WEDNESDAY OCTOBER 19 1994 


NEWS: INTERNATIONAL 


China and US to 
boost military ties 


By Tony Waiter hi Beijing 

Beijing and Washington have 
agreed to increase the fre- 
quency of their military con- 
saltations In a further sign of 
improving relations. 

The move follows President 
Bill Clinton's decision earlier 
this year to sever the Hnir 
between human, rights issues 
and renewal of China's Most 
Favoured Nation trading sta- 
tus. Mr William Perry, US 
defence secretary, said in Bei- 
jing that the two sides would 
enhance their military contacts 
in a series of regular high-level 
briefings which would begin 
next month. 

The US would lead the way 
in providing the Chinese with 
the briefings, he added. ‘Dia- 
logue is in the security inter- 
ests of both countries," Mr 
Perry told reporters after meet- 
ing China's prime minister, Mr 
Li Peng. 

Washington has been press- 
ing the Chinese military to 
become less secretive. "We 
pointed out that transparency 
can reduce the concern of Chi- 
na’s neighbours that its mod- 
ernisation programme could 
provide a threat,'* Mr Perry 
declared. 

“I was very clear that we 
were not loo king for secrets. 
Ifs strategy, budget and broad 
planning where we are looking 
for an exchange," Mr Perry 
said. 

The US had also offered the 
Chinese data from computer 
simulations of Its nuclear tests. 
The purpose had been to per- 
suade the Chinese to stop car- 
rying oat tests. China drew 
protests from western govern- 
ments on October 7 Then it 
detonated a nuclear device at 
its Lop Nor test site. 

Beijing has refused to join a 
Washington-sponsored morato- 
rium on testing, but says it is 
committed to a comprehensive 
test ban when this comes into 
effect in 1996. Mr Perry made it 
clear his visit to China was 
aimed at Improving day-today 
contacts, to offset fears of a 
deterioration in Sino-US rela- 
tions, strained over such issues 
as human rights and anus pro- 
liferation. 

“We are putting into place 
<me dimension of the overall 



US defence secretary Wiffiam Perry speaking beneath a symbol 
of the People’s liberation Army in Beijing yesterday 

policy of President Clinton’s 
programme of broad construc- 
tive engagement with China,'’ 

Mr Ferry said. 

Earlier, the US official had 
warned in a lecture to People’s 
Liberation Army officers of the 
dangers of an arms race in 
Asia arising from a prolifera- 
tion of nuclear weapons. Mr 
Perry called on China to exer- 
cise restraint In the transfer of 
nuclear technology. The US 
has long suspected that Beijing 
has been assisting Pakistan 


develop a nuclear capability. 
"We are on the brink of a 
nuclear weapons race on the 
subcontinent, where relations 
between India and Pakistan 
have been tense far years," Mr 
Perry said. "As in Korea, 
China has a huge stake in this 
Issue, since it involves nations 1 ! 
on its border. With so much at 
stake, it is essential that coun- 
tries with influence in South 
Asia try to stop the potential 
arms race before It gathers 
momentum.’' 


Armscor 
begins 
policy of 
openness 

South Africa's state arms 
company, Armscor, under offi- 
cial scrutiny for a Middle East 
aims sales fiasco, said yester- 
day it would publish details of 
arms purchases for the first 
time, Reuter reports from 
Pretoria. 

Armscor issued a written 
monthly bulletin of defence 
products sought by the South 
African military and listed the 
companies awarded contracts. 
“This is giving transparency 
to a critical aspect of the 
acquisition programme, " said 
Mr Andre Buys, Arms car’s 
planning division chief. 

Companies Approved to bid 
for defence contracts will also 
be able to have access to an 
electronic bulletin board 
updated dally with informa- 
tion on defence purchase 
requirements. The bulletin 
“will list all the major product 
and service requirements of 
the National Defence Force for 
which possible contract oppor- 
tunities exist at both main and 
subcontract level". 

Armscor’s chief executive, 
Mr Tielman de Waal, said the 
bulletins were also available 
to foreign defence contractors. 

The stale-owned corporation 
said the lifting of interna- 
tional arms sanctions against 
post-apartheid South Africa 
tde possible the new open- 
ness. Armscor’s previous 
activities had been shrouded 
in secrecy to protect its often 
clandestine acquisition of for- 
eign defence equipment. 

The activities of Armscor, 
which licenses arms sales, 
came under fire this month 
when the sale of rifles and 
quantities of ammunition to a 
shadowy Lebanese arms mer- 
chant turned sour. 

The justice minister, Mr Dul- 
lah Omar, appointed a three- 
man commission to investigate 
South African arms sales. 

Asked if Armscor proposed 
the same sort of openness in 
weapons sales as it announced 
for its purchases, Mr Boys said 
South Africa was considering 
contributing to the UN regis- 
ter of world arms sales. “The 
whole question of arms control 
is being investigated." 


A pact shaped in distrust 

John Burton on the US-North Korea nuclear accord 


W hen the US and 
North Korea sign 
their nuclear agree- 
ment on Friday, it wlH set in 
motion a train of events that 
could last almost a decade 
before the dispute is com- 
pletely settled. 

The goal is to remove suspi- 
cions about North Korea's 
nuclear programme while 
breaking Pyongyang's diplo- 
matic isolation and providing 
it with much-needed economic 
aid in the form of new nuclear 
reactors and other energy sup- 
plies. 

The accord consists of 
phased steps designed to pro- 
vide each side with leverage to 
make sure that the other 
adheres to its promises. This 
reflects the deep mutual dis- 
trust which exists between the 
US and North Korea and which 
prevented an agreement bring 
reached earlier. 

Mr Han Sung-joo, the South 
Korean foreign minister, yes- 
terday described the agreement 
as a combination of steps in an 
“incremental process”. 

The elements of the deal, 
details of which will be 
announced on Friday, include 
North Korea abandoning its 
nuclear programme and 
accepting full international 
inspections of its nuclear facili- 
ties in return for improved ties 
with the US and economic aid. 
Pyongyang also promises to 
resume negotiations with. 
South Korea on the implemen- 
tation of their 1991 non-nuclear 
pact 

Many pitfalls he along the 
way, with parts of the caretafly 
calibrated timetable remaining 
unclear . 

The first steps are likely in 
the next mouth or two. They 
include North Korea returning 
to the nuclear Non-Prolifera- 
tion Treaty and accepting ad 
hoc and regular inspections at 
its Yongbyon nuclear complex 
from the International Atomic 
Energy Agency. North Korea 
threatened to withdraw from 
the NPT in March 1993 and 
later “suspended" its treaty 
obligations, which provoked its 
confrontation with the US and 
South Korea. 

At the same time, North 
Korea will freeze its pro- 
gramme. This Includes sus- 
pending the operation of its 


Teh years of tft-for-tat and hard bargaining 



1885 North Korea ayw Non-ProM«aafc« but refuses to sign 

safeguards pact to alow International Atomic Energy Aqoncy QA£A) taspaetian. 
1891 North, under mnuiftig prMsus. says If wfB allow inspection aa soon as US 
boons removmg nuclear weapons front South Koran; South dodgraa thorn are no 
nuclear weapons on Us sol; hw Koran agree to ban nuclear weapons and hold 
tofts m onamt oomptanca. 

isaa North safeguards apeeraent; IAEA says after vWt to Yongbyon ’ 

complex that North la moving ahead with progcaitvns met ooufcl produce 
weepon&^sda phponknt 

1983, J an M a y Tafts between two Korns on mutual Inspections cnOapMt North 
says ft wit pufl out Of NPT: (AEAmtes North has violated nuclear accords; UN 
Saeuity Cound caPa on Nonhle open ettn US and North ajne to talk. 

1993, Juna-ttov North agrees to suspend withdrawal tnm NPT and to renew, 
talks with IAEA; inspector* report that access, to two rite* Bill restricted; North 
saya ft wfll not yield and is prepared to suffer sanctions or even war. 

1884, Jut-May After further tafia with us, North aotaas to inspection of seven 
declared sAsk South says North hampering inspector! at Yongbyon and North, 
saying co n fr o nt ati on couM lead to war. wafti out of meeting wfth South: US 
decide* to deploy Patriot Fringes in South; North tovtaa inspectors to Yongbyon 
but refects taking of samples. 

1 994* Jone-Oc* US says it aril seek UN sanction* and Mnda tamer President 
Jimmy Carter to negotiate with North's President Mm 1-etng; US egress to talka 
with North m Geneva after Carter receives assurances ftwn North; Kftn (See but 
North soon egress to ccrttnue tafia with US; tato am dHflcuft. but, after many 
weeks, aparenertl* reached. s««*nviw 

from the NPT and lies at the 
core of the dispute. North 
Korea may only allow the spe- 
cial inspections once equip- 
ment for new and safer light- 
water reactors is delivered 
over the next several years, 
bat before they are completely 
built 

North Korea has agreed to 
resume negotiations with 
South Korea on their 1991 de- 
nuclearisation treaty. How- 
ever, South Korea Is demand- 
ing inspections that are more 
intrusive than those to be con- 
ducted by the IAEA, and pros- 
pects for those talks remain 
uncertain. 

Disagreements over South 
Korea’s demand for spot or 
challenge inspections of sus- 
pected nuclear facilities in the 
North led to the breakdown of 
the talks in 1992. 

In return for the North Kor- 
ean concessions, the OS has 
offered several promises. They 
include a guarantee to provide 


5 MW graphite reactor and halt- 
ing construction of two larger 
5QMW and 200 MW reactors, 
which can produce consider- 
able amounts of weapo os-grade 
plutonium. It will also close its 
suspected nuclear reprocessing 
centre. All these facilities are 
later to be dismantled. 

North Korea will place in dry 
storage spent fuel that it with- 
drew from its 5MW reactor last 
spring. The fuel, which could 
produce enough plutonium for 
four or five nuclear bombs, will 
later be transferred to a third 
country for reprocessing. 

But Pyongyang will only 
accept at a later stage special 
inspections by the IAEA to 
determine if it had. reprocessed 
plutonium for one or two 
nuclear bombs in 1989. The 
IAEA wants to examine two 
undeclared nuclear waste 
dumps to answer this question. 

The special inspection 
demand triggered North 
Korea’s threatened withdrawal 


North Korea with two l.OOOMW 
Ught-water reactors and alter- 
native energy supplies while 
they are being constructed dur- 
ing the next decade. This 
would help solve North Korea’s 
chronic energy shortage, which 
has been one of the main 
reasons for its declining econ- 
omy. 

The Ught-water reactors are 
dependent on Imported 
enriched uranium for fuel, 
making it easier for the US and 
other countries to maintain 
control over the future North 
Korean nuclear programme. 
They also produce plutonium 
less suitable for the manufac- 
turing of atomic weapons. The 
current graphite reactors use 
uranium mined In North 
Korea. 

The light-water reactors will 
be supplied by on international 
consortium, probably led by 
the US. But the reactors are 
expected to be built by South 
Korean companies using a 
Westinghouse design. Seoul 
will also provide the bulk of 
the financing for the $4tm proj- 
ect although contributions are 
also expected from Japan and 
other countries, according to 
Mr Han. 

In the meantime. North 
Korea will start receiving 
heavy fuel oil fuel supplies 
from on international consor- 
tium to replace energy lost 
from the shutdown of the 
graphite reactors. 

The US has also promised to 
improve ties with North Korea 
by establishing liaison offices. 
It is also expected to ease its 
trade embargo against North 
Korea and possibly offer a 
pledge not to launch a nuclear 
attack against North Korea, a 
guarantee Pyongyang has long 
sought 

However, the pace of US- 
North Korean negotiations 
may be determined by progress 
in the inter-Korean talks, 
although Mr Han said there 
were “not one-to-one precondi- 
tional constraints” between the 
two. 

South Korean has Insisted on 
Unking the resumption of 
inter-Korean talks with the US- 
North Korean accord out of 
concern that Pyongyang is try- 
ing to drive a wedge between 
Seoul and Washington on the 
nuclear issue. 



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v 




safe-"-'-- 


FINANCIAL TIMES 


WEDNESDAY OCTOBER 19 1994 ff 


NEWS: THE AMERICAS 


Where politics is a commercial break 


By Jurek Martin In San Diego 



US MIS-TERM 
ELECTIONS 

November 8 


By most 
counts, Ms 
Kathleen 
Brown, the 
Democratic 
candidate for 
governor of 
California, 
“won” her tele- 
vised debate 
with Mr Pete 
Wilson, the 
Republican 
incumbent, 
last Friday 


night. For once, she seemed 
confident, he came over as 
ungracious and she probably 
scored among women voters by 
effectively rebutting his 
charges that she did not care 
about the victims of violent 
crime with the disclosure that 
her daughter had been raped 
and her son mugged. 

if candidate debates were all 
there were to winning elec- 
tions, Ms Brown might have 
reason to believe she was at 
last on her way to reducing the 
13-point lead Mr Wilson has 
accumulated among likely vot- 
ers in the latest Los Angeles 
Times poll. Even the fact that 
he agreed to only one debate 
and ensured it was broadcast 
only in Friday evening “drive- 
time" were acceptable condi- 
tions given Ms Brown's need to 
energise her supporters. 

But across the country, and 
especially in big mass media 



Feinstein, left, accused of being a career politician, and Wilson, right, whose budget record is blatantly distorted 


states such as California, polit- 
ical campaigns prefer to leave 
as little as possible on the air 
waves to chance. Instead they 
buy the time and plug their 
own messages, secure in the 
calculation that six out of 10 
Americans, and no fewer than 
nine out of lo Californians, to 
whom television is a particular 
addiction, will be paying some 
attention. 

Virtually all of them have 
only one intent - to tear down 
the opposition. For a week Cal- 
ifornia has enjoyed an unre- 
lenting diet, from breakfast to 
the small hours, through soap 
operas and Monday night foot- 
ball, of lies, damn lies and 
highly suspect statistics. 

Unedifying it may be, and 
costly it certainly is, but it can 
pay quick, if not necessarily 


ultimate, dividends. Republi- 
can Congressman Michael Buf- 
fington has already forked out 
a record Sl2m-plus to under- 
mine California Senator 
Dianna Feinstein and will 
probably double that by elec- 
tion day on November 8. 

That brought him from 
obscurity to near parity, 
though his surge now seems to 
have been stemmed and Ms 
Feinstein holds a seven-point 
lead. But this has been less the 
result of her vicious counter- 
attacks than niiHnwal and local 
media attention on his record 
and the New Age associations 
of his wife, the former Arianna 
Stasslnopoulos. considered odd 
even by Californian standards. 

The basic Buffington mes- 
sage is, according to an espe- 
cially ubiquitous commercial. 


“Feinstein - a career politi c ia n 
who will say or do anything to 
stay In office.” She is also 
“slimy” (a quote from a local 
newspaper) and given to bro- 
kering “sweetheart deals" in 
Congress that favour her 
unnamed “supporters”. 

Even when the Republican's 
commercials are notionally 
positive - one concludes 
dreamily “Michael Huffington, 
US Senate. Finally a reason to 
believe" - the voice-overs dis- 
close nothing tha t be actually 
believes in, except no new 
taxes. 

ids Feinstein, who has a seri- 
ous record to run on in the 
Senate and as mayor of San 
Francisco, does not confine 
herself to the high road. One of 
her commercials, quoting an 
old story in the Wall Street 


Journal, charges that Mr Buf- 
fington's company “repeatedly 
sold illegal shock batons to for- 
eign dictators” (Singapore, as 
It turns out, which may 
restrict any Asian travel plans 
she has in mind). It does not 
try to explain the relevance of 
this to the voters of modem 
California. 

Her latest refined commer- 
cial pitch is to depict Mr Hof- 
fwgton as “the Texas million- 
aire California can't trust". 
This slogan, together with 
graphics featuring lots of dol- 
lars, manages to embrace his 
wealth, the charge that he 
delayed establishing legal resi- 
dence in California for tax pur- 
poses, and even a congressio- 
nal record of alleged big 
spending. 

Mr Wilson and Ms Brown 


have been little better. On capi- 
tal punishment he tars her 
indiscriminately with. guQt by 
familial association by recall- 
ing that her father and 
brother, both previous gover- 
nors, apposed the death pen- 
alty. 

Her commercials quite bla- 
tantly distort his budget bat- 
tles of two years ago in the 
depths of the recession, replete 
with a black and white mug- 
shot of the governor that 
might have been taken from an 
FBI "most wanted" list 

One reason for Mr Wilson's 
lead is his support for, and her 
opposition to, Proposition. 187, 
the “save our state" referen- 
dum on the November 6 ballot 
that would deny a wide range 
of state-provided social ser- 
vices to illegal immigrants. 

It is a serious issue, involv- 
ing federal and state responsi- 
bilities, worthy of serious con- 
sideration and both actually 
agree that even if it passes, as 
the polls say it will easily, it 
will end up eventually in the 
US Supreme Court 

Writing in the San Diego 
Union-Tribune this week, Mr 
Robert Laurence suspects that 
all these smear campaigns are 
basically intended to turn the 
larger public off politics, with 
only the fervent minorities 
bothering to vote. "And that" 
be concludes sadly, “tells you 
what the candidates them- 
selves really think of the 
American democratic process." 



British Excellence and Quality 

AN OCCASIONAL SERIES 



The only privately owned 5 red star hotel in Britain. 


Visitors often call Chewton Glen their ’Country Ritz’ - which sums it up nicely. 
Winner of every imaginable accolade, this legendaiy hotel is the perfect place 
for a relaxing holiday, a healthy break, or a base from which to explore 
southern England - The New Forest, Stonehenge, Salisbury and Winchester 
Cathedrals, Exbury Gardens, and much more. And with possibly the best 
appointed meeting room in the country, it is easy to combine business with 
pleasure. 

For those who do not wish to budge from the comforts and genial 
surroundings of the hotel, the Health Club with its magnificent indoor pool, and 
numerous health and beauty treatments, offers the last word in pampering and 
relaxation; the 9 hole par 3 golf course and indoor tennis courts provide 
energetic alternatives. 

Chewton Glen's internationally acclaimed restaurant is the jewel in the 
crown. Pierre Chevillard’s dishes delight the palates of countless gourmets and 
his reputation for exciting and creative cuisine is well deserved. The wine cellar 
and wine list were recently voted Best in Europe by the Association of French 
Food and Wine journalists. 

Seeing is believing, and words alone cannot do justice to all that is Chewton 
Glen. A visit to this unique and beautiful hotel is a rich experience. 


' - r-Ti -’V. J-.'r 7 




,-J 


tr-- 




K 


ESr* 




The Committee, which was established in 1992, aims to focus attention on British excellence, 
style, craftsmanship, innovation and service. These are qualities which all its members share 
and for which British products and services are renowned around the world. 


For further information, please contact; 

The Director, The Walpole Committee, 40 Charles Street, London W1X 7PB, England. Tfel: +44 71 495 3219 Fax; +44 71 495 3220 




Foreign groups 
‘should get’ US 
research funds 


By Nancy Dunne 
In Washington 


US subsidiaries of foreign 
mmpqntes should be made eli- 
gible for millions of dollars of 
US government research and 
development funds if they can 
prove their work is beneficial 
to the US technology base, a 
congressional report suggests. 

The report, multinationals 
and the US technology base, 
released yesterday by the office 
of technology assessment, said 
“a national benefits test" could 
be applied equally to both for- 
eign and domestic companies, 
consistent with the principle of 
national treatment which 
underlies the world trading 
system. 

With the report, the OTA 
enters an debate over whether 
subsidiaries of foreign compa- 
nies, which contribute to the 
US economy by employing 
American workers, ought to 
benefit from government fund- 
ing and trade promotion activi- 
ties. 

The OTA suggested several 
criteria for the participation of 
foreign companies in US tech- 
nology projects, including: 

• Measuring a subsidiary's 
research and development 
presence in the US. perhaps as 
a percentage of sales. 

• Requiring specific techno- 
logical and financial contribu- 
tions for the project. 

• Requiring a company to 
conduct all the project's R&D 
(or a negotiated percentage) in 
the US. 

• Agreeing not to license the 
technology abroad, but to 
export products resulting from 
the R&D. 

The European-American 
chamber of commerce, which 
has been p ushing a multilat- 
eral investment pact among 


the industrialised countries, 
announced its support for the 
proposal. "It would be even 
more useful for such a test to 
be formulated jointly with our 
European partners, yielding a 
test that would apply equally 
to European and US companies 
on either side of the Atlantic, 
said Mr William Berry, presi- 
dent of the group. 

The chamber attacked 
another suggestion in the 
report that the US also con- 
sider “a two-tiered policy 
regime" which would treat for- 
eign -owned companies the 
camp as US companies on the 
condition that home govern- 
ments offer comparable treat- 
ment and market access. 

"Conditional national treat- 
ment is a dangerous precedent 
because the conditional can be 
completely unrelated and arbi- 
trary," said Mr Berry. The 
report said “reciprocity" 
requirements could "increase 
fp^gi nns in international rela- 
tions, leading to a variety of 
retaliatory actions." 

The Organisation of Interna- 
tional Investment (Ofii). which 
represents foreign companies 
that invest in the US. said the 
US gained from foreign tech- 
nology development when it 
allowed foreign-owned compa- 
nies to participate in US gov- 
ernment-funded technology 
projects. 

“If foreign-owned US compa- 
nies are held hostage to the 
trade and investment practices 
of their home countries, the US 
would be building a wall 
around itself,” said Ms Nancy 
McLernon, of Ofii. 
Multinationals and the US 
Technology Base ; available 
firm Superintendent of Docu- 
ments, P.a Boer 371954, Pitts- 
burg. Pa. 15250-7974; Tel: 202 
224-8995, fax : 202 513 2250; $14. 


Washington seeks 
tougher line on 


mergers overseas 


By George Graham 
in Washington 


US anti-trust enforcement 
agencies have Issued new 
international guidelines assert- 
ing their right to act against a 
broad range of anti-competitive 
mergers or corporate behav- 
iour overseas. 

The guidelines, were issued 
jointly by the Department of 
Justice and the Federal Trade 
Commission for a 60day com- 
ment period and replace rules 
issaed in 1988, under President 
Ronald Reagan, which shielded 
most foreign companies and 
joint ventures between US and 
foreign companies from US 
anti-trust enforcement, unless 
they affected US consumers. 

In the draft, the Clinton 
administration confirms a nyw- 
policy reversal under which 
action may be taken against 
foreign anti-competitive behav- 
iour that offsets US exporters 
as well as consumers. 

The Justice Department ear- 
lier this year launched its first 
case under the new policy 
against Pilkington, the UK 
glass company, and anti-trust 
lawyers say the department is 
investigating allegations of 
pressure applied to buyers by 
the Japanese plate glass indus- 
try. 

This investigation could bol- 
ster the US trade representa- 
tive's efforts to get Japan to 
open up its glass market, but 
could also provoke an interna- 
tional battle over the extension 
of US jurisdiction beyond its 
borders. 

The guidelines also "take a 
broader view of anti-trust juris- 
diction involving imports than 
the 1988 guidelines", the Jus- 
tice Department said. 

Reflecting a 1993 Supreme 


Court decision in a case 
between Hartford Fire lnsur : 
ancf and California, the guide- 
lines say that the US may act 
against a foreign cartel that 
colludes to raise prices, if the 
cartel members make substan- 
tial sales to the US. 

US efforts to assert its anti- 
trust jurisdiction overseas 
caused considerable friction in 
the 1970s. Countries such as 
Canada, France and the UK 
even passed laws -prohibiting 
companies from supplying doc- 
uments to th&US in retaliation 
for US action against a ura- 
nium cartel. 

The guidelines say that there 
may be less conflict between 
US and foreign anti-trust inter- 
ests as "more countries adopt 
anti-trust or competition laws 
that are compatible with those 
of the US". 

In pursuing a foreign cartel, 
they say, the Justice Depart- 
ment and the FTC "would ordi- 
narily notify the anti-trust 
authority in the cartel’s home 
country." 

"If that authority were in a 
better position to address the 
competitive problem, and were 
prepared to take effective 
action to address the adverse 
effects on US commerce, the 
agencies would consider work- 
ing co-operatively with the for 
elgn authority or staying their 
own remedy pending enforce- 
ment efforts by the foreign 
country," according to the 
guidelines. 

The guidelines say the Jus- 
tice Department and FTC will 
follow the principle of comity, 
under which countries respect 
one another's legal acts, but 
Insist that the administration's 
determination on the applica- 
tion or comity cannot be chal- 
lenged in the courts.- 


Brazil GDP 
grows 4.1% 


Brazil’s gross domestic 
prodnet grew 4.1 per cent last 
year, slightly below initial 
forecasts, the government’s 
statistics institute IBGB 
announced yesterday, reports 
Angus Foster in Sao Paulo. 
Taking into a recount popula- 
tion growth, per capita income 
rose 2.6 per cent. 

Most growth came from 
manufacturing, recovering 
from two years of recession. 
Output of consumer durables 
increased nearly as per cent 
and capital goods 10 per cent 
Agricultural output fell *_2 per 
cent. Inflation reached 2,081 
per cent This year it is expec- 
ted to be much lower after 
launch of a new cunrency, the 
Real. 


Driving rains 
hit Houston 


Intense rains of up to 
inches an hoar shut <3 
much of Houston yestercU 
the death toll reached sev* 
flash flooding across st 
extern Texas, Reuter rej 
from Houston. 

The whole region was 


a flood warning after up 
inches of rain inundated 


of the area over 36 hours, 
uig rains lasted throng 
night with weather forec 
saying there was no rel 
view from a Gulf of M 
moisture system stalled 
the area. Many major i 
were impassable becau 
stretches of high water. 
Oil refineries remained o] 
Houston's vast refininj 
petrochemical complex. 



\ 





Mt^s 


1 •»; . 



y ^ANCIAL TIMES WEDNESDAY OCTOBER 19 1994 


NEWS: WORLD TRADE 


ngton seel 
t line oe 
rs overse 


US duties 
‘broke 
fair trade 
rules’ 

By Frances Wflflams In Geneva 

The US last year breached 
international fair trade rules in 
tevytag anti-subsidy duties on 
imports of hot-rolled lead and 
bismuth carbon steel from 
France. Germany and Britain, 
a General Agreement on Tar- 
iffs and Trade panel 1 
decided. 

Though the amo unt of trade 
involved is smal l - about $19m 
a year - the judgment corrobo- 
rates repeated allegations by 
Washington's trading partners 
that US anti-subsidy (and anti- 
dumping) rules are unfairly 
biased against imports. It also 
suggests that the US could be 
found in breach of Gait rules 
in a second panel case, this 
time involving countervailing 
duties imposed cm carbon steel 
ilataolled products from six 
European Union states. 

The Gatt panels arise from a 
wave of anti-damping and 
countervailing duty suits 
brought by US steel producers 
in 1992 following the expiry of 
voluntary export restraint 
arrangements. Though most of 
the To-odd suits were later dis- 
missed by the US Inte rnational 
Trade Commission, some defin- 
itive duties were imposed. 

The first panel report, which 
went to Washington and Brus- 
sels last Friday, broadly 
upholds the EU complaint that 
US methods of calculating 
countervailing duties artifi- 
cially inflate the level of 
alleged steel subsidies. How- 
ever, the panel did not accept 
every aspect of the EU case. 

The report says the US com- 
merce department failed to 
give the steel exporters 
involved sufficient opportunity 
to present evidence. It was also 
wrong to treat debt forgiveness 
by private hanire as a subsidy 
mid to assume subsidies to a 
state-owned company were 
“passed through'* on privatisa- 
tion. 

The panel nevertheless ruled 
that the US was entitled to 
average subsidies over a 15- 
year period and to include a 
risk premium in the discount 
rate it applied to calculate the 
benefit of certain subsidies. 


Daewoo unveils big expansion plan 


By Kevto Done, Motor Industry 
Correspondent in Birmingham 

The Daewoo group. South 
Korea’s third largest car 
maker, Is planning to Quadru- 
ple its worldwide production 
capacity to around 2m cars a 
year by 2000, Mr Woo-Choong 
Kim, Daewoo c hairman, said 
yesterday. 

Daewoo would produce 
around 500,000 cars this year, 
and was planning to raise out- 
put to 700.000 in 1S65. 

The group has embarked on 
a five-year, $5bn investment 
programme from 1995 to 1999, 
said Mr Kim, which would 
raise capacity in South Korea 
to around Lm cars a year with 
a further im mils of capacity 
being created overseas, most 
importantly in Romania, frnflin 
China and Uzbekistan. 

The Daewoo expansion is 
cme of the most ambitious pro- 
jects launched by any of the 


world's leading car makers in 
recent years, as it seeks to 
break into the ranks of the 
world's top ten vehicle manu- 
facturers. 


Mr Kim said that the group 
had completed this month the 
acquisition of a 51 per cent 
stake in Automobile Craiova, 
the small Romanian carmaker, 
formerly known as OHrit 

“We think we are going to 
produce about 100,000 cars a 
year in Romania starting at 
the end of 1996,” said Mr Kim. 

Daewoo could begin with the 
local assembly in Romania of 
kits supplied from Korea, hut it 
planned to start production in 
1996 of a new small car cur- 
rently under development as 
the group’s first world car. 


This would be a L3 and LS 
litre supermini, the size of the 
Ford Fiesta or Renault Clio. 
Daewoo also planned produc- 
tion erf this car in India, and 
nwina as well as in Hap*™ 
and in Korea. 

“We are going to produce 
angipw; and transmissions in 
Romania," Mr Kim said. Total 
Investment planned for the 
project was around 6500m, be 
said, and cars would, also be 
exported to other east Euro- 
pean markets- 

Production would begin in 
Uzbekistan next year with 
plans to raise output to 200,000 
a year by 2000. Daewoo was 
investing 6800m in this project 
in a 60/50 joint venture with 
the Uzbekistan government, 
said Mr Kim, 

The group was planning pro- 
duction of its Cielo small fam- 
ily car as well as the Tico 
range of cars s"d light 
commercial vehicles with s ales 


in the markets of central Asia 
and Russia. 

In India Daewoo had just 
purchased a 51 per cent stake 
in DCM Toyota, an ailing truck 
maker, which it planned to 
transform into a car maker 
with a capacity for 200.000 cars 
a year by the end of the 
decade. 

it planned a investment of 
around $50Gm in India. Produc- 
tion of the Daewoo Cielo (to be 
called the Nexia in the UK, 
where it goes on sale next 
year) would be followed later 
by the introduction of the 
group’s new world, car. 

Mr Kim said that Daewoo 
had received preliminary 
approval from the Chinese gov- 
ernment year to ggtaUteh 
co-operative projects with the 
First Automotive Works for 
the manufacturing of both 
components and a passenger 
car which would be a joint 
development project with 


China with production possibly 
beginning in 1937. 

Investment in the China 
project could total S2bn, shared 
equally by Daewoo and its Chi- 
nese partner. Daewoo launched 
Us cars in Europe for the first 
time at the Birmingham motor 
show yesterday with sates in 
the UK planned to begin in 
1995. it has scheduled a launch 
in the North American market 
in 1996. 

Mr Elm said th a t the group’s 
main growth would come in 
the developing markets of 
Asia, east Europe and possibly 
Latin America, rather than in 
west Europe and the US, how- 
ever. 

“The newly created markets 
we are going into are growing 
much faster than the Tnf*ui 
world markets. We cannot sell 
more than 100,000 cars to west 
Europe. We are not dependent 
on west Europe.” 


French urge UK to join 
transport aircraft project 


By David Buchan in Paris 

France yesterday urged the 
British gover n ment to join the 
European project to build a 
new military transport aircraft 
Mr Henri Conze, procure- 
ment chief at the French 
defence ministry, said UK par- 
ticipation was “fundamental" 
to the project because the Brit- 
ish might buy 60 of the 
planned 300 aircraft. Also, Brit- 
ish involvement would help 
ensure that the Airbus consor- 
tium. would carry out the proj- 
ect, he said. 

Last month. Airbus 
announced plans to establish a 
new military equipment sub- 
sidiary to manage the develop- 
ment and production of the 
Future Large Aircraft (FLA), 
Europe’s proposed military 
transport plane. The separate 
military subsidiary would 
include the Italian aerospace 
company, Alenia. as well as 
tile four Airbus partners. Deut- 
sche Aerospace, Aerospatiale, 
British Aerospace and Casa, of 
Spain. 

The move was designed to 
strengthen the FLA group and 
to help market the aircraft to 



BaUadnr: wQl urge Major to 
hack European venture 

potential customers - includ- 
ing the UK’s Royal Air Force. 

British Aerospace has been 
lobbying hard to persuade the 
UK defence ministry not to bqy 
any more Lockheed transport 
planes from the US but to join 
the FLA project endorsed by 
France, Germany and some 
other European governments. 

Mr Conze predicted that Air- 
bus could build the FLA 35 per 
cent more cheaply than the 
traditional cumbersome forms 


of international collaboration. 
"But how can we achieve this 
if BAe is not in the pro- 
gramme, or if BAe is in, but 
the UK government is not in?” 
he asked during yesterday’s 
opening of Euronaval, the bien- 
nial maritime equipment exhi- 
bition which France has 
opened for the first time to 
other Europeans. 

At next month's Franco-Brit- 
ish summit, which is likely to 
be dominated by defence 

fcs fl BH , fhpi French p r*im» mirrtB - 
ter, Mr Edouard BaUadnr, is 
expected to press Mr John 
Major, his UK opposite num- 
ber, to go with the FLA rather 
than Lockheed. France is also 
hoping that Mr Michael 
Heseltine. the president of the 
board of trade, will show the 
same support for the European 
option as he did in the West- 
land affair in the mid-1980s. 

• CMN, the French ship- 
builder which recently foiled to 
reach agreement to take over 
the bankrupt Swan. Hunter 
yard in Newcastle, yesterday 
announced a marketing agree- 
ment with BAe Dynamics to 
put the latter’s missiles on 
CMbTs range of missile boats. 


Peugeot finds a 
PAL in India 


By John Rkkfing in Parts 

Peugeot is to sign a joint 
venture agreement today with 
Premier Automobile Ltd (PAL) 
to establish a manufacturing 
operation in India for the 
French motor group. 

The project has ambitious 
objectives to produce 60,000 
vehicles a year by 1986 and to 
capture 10 per cent of the 
Indian car market by 2000. The 
investment over the next four 
years is expected to total 
FFrL2bn ($220m). 

Peugeot said the project, one 
of a series of investment plans 
in India by international 
vehicle groups, reflected the 
strong growth potential of the 
marke t. He said the Indian car 
market was growing by about 
15 per cent a year and shnolri 
reach about 270,000 cars in 
1994. By 2000 sales were expec- 
ted to reach 500,000 cars. 

Under the agreement, the 
joint venture, dubbed PAL 
Peugeot vrili be controlled by 
the French and Indian part- 
ners. They will both hold about 
28 per cent of the shares, with 
the balance held by institu- 
tional investors and the public 


through a share issue on the 
Bombay stock exchange. 

The joint venture will pro- 
duce the five door version of 
the Peugeot 309, a medium- 
sized vehicle. The cars will be 
manufactured at PAL’s Kalyan 
plant, 50km north erf Bombay. 
The first 309s are expected to 
leave the production line next 
year, with volumes steadily 
increasing over the following 
three years. The joint venture 
agreement includes the re- tool- 
ing modernisatio n of the 
Kalyan plant, which currently 
produces the NE118, a small 
car which uses Nissan gn gnraR. 
lit the first year of the project, 
Pengeot estimates that 
between 5,000 and 6,000 309s 
will be buflt, with a local con- 
tent ratio of about 15 per cent 
The proportion will rise to 
about 80 per cent by 1996. 

The 309 will be a rival to the 
small cars produced by Maruti, 
the dominant player in the 
Indian car market, which has 
partnerships with Japanese 
manufacturers. Competition is 
expected to intensify as other 
international groups, including 
Fiord and General Motors, start 
production in India. 


WORLD TRADE NEWS DIGEST 


Thais in Manila 
airport project 

I talian -Thai Development, Thailand's largest construction 
company, confirmed yesterday it had signed a memorandum 
of unders tanding with the Philippines government for a $3hn 
pnqect to turn the former US Clark airbase north of Manila 
into an international airport. The project would be a “build- 
operate- transfer” scheme to convert the airbase into a passen- 
ger and cargo airport with an aircraft maintenance centre by 
the end of 1997; to develop a “mass transit" railway system 
from Clark to Makati, the Metro Manila business district, and 
on southwards to the industrial zone south-east of the capital; 
and to expand and improve road links to Clark. 

It is not clear, however, how the plan to redevelop Clark will 
fit in with a similar and further advanced project for nearby 
Subic Bay, the former US naval base, which also has a big 
airport. Victor Mallet. Bangkok. 

Caterpillar in China sales drive 

Caterpillar, the US manufacturer of earthmoring and mining 
equipment, expects its sales in China to increase to $500m a 
year by 2000. Mr Donald Sites, the company's chairman, who 
is in China to sign two joint venture agreements to produce 
hydraulic excavators and diesel engines, said Caterpillar sales 
in China last year were between $50m and 3100m. 

Caterpillar is investing $30m in the ventures with the 
Suzhou Construction Machinery Group and Shanghai Diesel 
Engine. The company is also planning to establish a holding 
company to oversee its China business. Mr Fites said China’s 
drive to improve its infrastructure, including roads and ports, 
provided great opportunities. Tony Walker, Beijing 

GM to buy Japanese steel 

Kawasaki Steel has signed a contract with General Motors to 
supply hot and cold-rolled steel sheet for vehicle body parts 
and components. The contract represents a shift in CM’S "buy 
American" policy, which the Japanese steelmaker believes has 
prevented it from receiving orders from GM for 20 years. Ford 
terminated purchases from Kawasaki In 1991 in a “buy Ameri- 
can" policy, while Chrysler stopped buying from the Japanese 
company after Japanese steelmakers were hit by antidumping 
charges in 1992. Recent price increases by IIS steel companies 
may have been a factor behind GM*s policy shift, Kawasaki 
said. lUchtyo Nakamoto, Tokyo 

Vietnam seeks foreign tenders 

Vietnam is asking foreign companies to tender for two hydro 
electricity plants. Ham Thuan and Da ML which wifi require 
investment of $&5m. Mr Tran Tuan Anh, director general of 
Vietnam's state planning committee, said a feasibility study 
for the plants has been completed with help from the Japanese 
government The plants wfil be built on tributaries of the 
Dong Nai River, 150km northeast of Ho Chi Mlnh City. Man- 
uela Saragosa, Jakarta 

Toshiba to sell Indian VCRs 

India’s electronics industry has won its biggest export order, 
to supply 100,000 video cassette recorders worth about 330m to 
Toshiba, the Japanese electronics combine. The VCRs will be 
made fry Video con, a leading Indian consumer electronics 
group, and will be sold worldwide under the Toshiba brand. 
Toshiba said it might increase its purchases to 300,000 
machines a year and might also buy colour televisions from 
Videocan. The VCRs use Toshiba technology. Stefan Wagstyl 
New Delhi 


.1 


hit I**' 



ft>r two years in succession. Standard Chartered has been 
vuted Best Bank in Asia in the Euromoney Awards. 

This double achievement reflects not only the quality of 
service we deliver, but also the exteat of our network in the 

region- more than 250 
offices in 28 countries. 


100 years. 



Beat Bat* Ini 


In established areas of strength, such as treasury, 
trade finance and corporate and investment banking, we 
continue to develop new capabilities and pioneer new 

opportunities. 

for example, in China, where our involvement goes 
bad over 135 yean; w? now have more offices than any 
other foreign bank. As a result, we are ideally placed to 
make financial connections between China, the rest of 


■Asia and indeed the world — in areas from trade finance, 
to correspondent banking, to the raising of new equity 
investment. 

And now our network also extends into the developing 
economies of Vietnam and Cambodia, helping you to cre- 
ate new asmections and find new opportunities for trade. 

hi a region where competition is fierce and corporate 
customers are demanding, it is not enough merely to 


operate an international network. It is a question of 
international networking — octivdy co-ordinating offices 
and services to provide real benefits in responsiveness, 
innovation and efficiency. 

Having been voted Best Bank in Asia, Standard 
Chartered am finrly claim to deliver. 

Standard % Chartered 


INTERNATIONAL NET WORKING 



• — r 





WEDNESDAY OCTOBER .9.994 « 


NEWS: UK 




Carmaker creates 1,450 jobs as demand surges 


Premier 
sets out 


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By Kevin Done, Motor Industry 
Correspondent in Birmingham 

Rover, the leading UR carmaker, is 
creating 1,450 jobs at its British 
plants in response to strongly rising 
sales, particularly in export markets. 

About 1,000 of the jobs will be at 
the main Rover plant at Loogbridge, 
Birmingham, in vehicle assembly 
and engine production. 

A further 300 workers will be 
recruited at the Land Rover plant at 
Solihull, near Birmingham, to sup- 
port rising production of the new 
Range Rover luxury four-wheel-drive 
vehicle, while 150 jobs will be added 
at the body and pressings plant at 
Swindon in south-west England. The 


recruitment halts the long decline in 
the size of the workforce of Rover 
(formerly British Leyland), which 
has fallen from 41,700 in 1990 to 

33.000 last year. The workforce has 
been cut by nearly two-thirds from 

96.000 in 1984. 

Rover, taken over by BMW of Ger- 
many in January, said recruitment 
of the workers would take place dur- 
ing the next six months. The work- 
force worldwide was being increased 
to about 35,500 to meet increases in 
production and future model pro- 
grammes, which formed part of the 
group's £l.5bn, five-year investment 
plans. 

Next year Rover will replace its 
current 200/400 range and launch a 


new range of MG sports care. The 
company has added 1,300 jobs at its 
Land Rover Solihull plant in the 
past 18 months to support rising pro- 
duction of Its Discovery four-wheel- 
drive sports/utility vehicle. 

Mr John Towers. Rover group 
chief executive, said output for the 
foil year was expected to rise to 
about 492,000 from 430,200 in 1993 
and 404,900 in 1992, Production was 
forecast to rise well above 500,000 in 
1995. 

Rover retail sales in the first nine 
months worldwide rose by 9 per cent 
to 371,805 from 341,075 in the corre- 
sponding nine months last year with 
sales in continental Europe up by 30 
per cent, in Japan by 26.6 per cent 


and in North America by 127 per 
cent 

Rover sales increased by only 3.2 
per cent in the UK market, but Mr 
Towers said the group was willing to 
accept a fall in its UK market share, 
as long as this was more than offset 
by rising expats In order to reduce 
its current heavy domestic reliance. 

“We want to be less dependent on 
the cyclical UK market Being less 
dependent on UK market share 
means that we can market our cars, 
as we want to. 1 would be happy 
with a lower market share in the 
UK, so that sales and marketing can 
be in line with the positioning of the 
Rover brand rather than responding 
to business pressures” 


Rover’s share in the UK fell to 12.4 
per cent in the first nine months this 
year from 13.2 per cent in the corre- 
sponding period a year ago. 

*T would be happy with 9-10 per 
cent, but we have to build up the 
export markets to balance this,” said 
Mr Towers. 

• Ford and Vauxball, the UK off- 
shoot of General Motors of the US, 
forecast yesterday that sales of new 
cars in the UK would total about 
1.92m in the whole of 1994, an 
increase of nearly 8 per cent from 
1.78m last year. 

The rate of growth has slowed sig- 
nificantly in the last four months, 
however - with particular weakness 
in sales to private buyers - forcing 


carmakers to lower their forecasts 
for the year. 

But the leading UK dealer organi- 
sation attacked the carmakers for 
overpricing cars. Mr Alan Pulham, 
director of the National Franchised 
Dealers Association, said that 
“prices of new cars could he cut by 
as much as £2,000 if manufacturers 

abandoned two-tier pricing and 
stopped adding expensive specifica- 
tion items purely to influence corpo- 
rate buyers. 

Prices could be reduced by 10 per 
cent or about £1,000 on an average 
saloon car if manufa cturers stopped 
giving fleet buyers excessive dis- 
counts at the expense of the private 
buyer, said Mr Pulham. 


Tories attacked 
by Labour MPs 
over ‘corruption’ 


By James Blitz 

The government was yesterday 
forced on to the defensive over 
allegations of “sleaze" inside 
the Conservative party as 
opposition MPs pressed home 
claims that leading Tories were 
guilty of corruption. 

In the first prune minister’s 
question time in the House of 
Commons since the summer 
recess, Mr John Major, the 
prime minister, issued a 
staunch defence of his prede- 
cessor, Baroness Thatcher. 
There have been suggestions 
that her son had received £ 12 m 
in commissions from a 1980s 
arms deal. 

The prime minister said 
Lady Thatcher had “acted with 
complete propriety throughout 
her long and distinguished 
period as prime minister of 
this country”. 

He also called on Labour 
MPs to provide firm evidence 
of any impropriety by bis pre- 
decessor. rather than “ped- 
dling” speculative remarks. 

However, amid claims that 
Mr Mark Thatcher had been 
heavily involved in the A1 
Yamamah arms deal between 
the UK and Saudi Arabia. 
Labour MPs continued to cadi 
for further investigation. 

Mr Tam DalyeU. Labour MP 
for Linlithgow, claimed in the 
Commons that Sir Ciive Whit- 


more, the former permanent 
under-secretary (a senior grade 
in the civil service) at the Min- 
istry of Defence, had told Lady 
Thatcher of his disquiet over 
the involvement of her son in 
the amis negotiations. 

Mr Nicholas Soames, minis- 
ter responsible for the armed 
forces, firmly rejected the 
claim, saying; “Sir Clive Whit- 
more has already denied the 1 
veracity of that story.” 

Labour MPS were also hop- 
ing that the Commons public 
accounts committee, the most 
prestigious of the all-party 
select committees, would 
launch an investigation at a 
private meeting today into Mr 
Thatcher's involvement 

Yesterday, replying to a call 
from Mr Paul Tyler, a Liberal 
Democrat MP, for an assurance 
“that your administration is 
now a sleaze-free zone,” Mr 
Major insisted: “1 am as con- 
cerned as any member in this 
House or any person in this 
country that we should have 
the highest standards in public 
life.” 

Mr Major later insisted that 
a report into allegations of 
insider share dealing against 
Lord Archer, the former con- 
servative party vice- chairman, 
should not be published. 

Mr Major said there was no 
legal provision for such a 
move. 


Famous team will support campaign by companies to win business outside Britain 


Football diplomacy wins high score 


By Chris Tighe in Newcastle 

Football diplomacy in the 
cause of economic regeneration 
is the new weapon of Newcas- 
tle United Football Club, the 
Premiership leaders. 

Sir John HaQ, United chair- 
man and a champion of his 
native north-east, has derided 
to turn his team’s success into 
a platform for local companies 
seeking new business overseas. 

When Newcastle play Bilbao 
in Spain in a fortnight, 20 busi- 
nessmen from north-east 
En gland will be at the game, 
cheering on the Magpies before 
meetings the next day aimed at 
building on the team's expec- 
ted victory. 

Football diplomacy has 
already scored a success for Sir 
John, who recently invited 
executives from Samsung, the 
South Korean group then seek- 
ing a new European site, to St 
James Park where they saw 
Newcastle beat Royal Antwerp 
5-2. 

This week Samsung 
announced its new £450m elec- 
tronics complex was to he 
located at Wynyard Park, 
Cleveland, on land owned by 
Sir John’s family business 
Cameron Hall Developments. 

If, as Sir J o hn and manager 
Kerin Keegan intend. United's 
winning streak continues into 
future legs of the Uefa cup, 
more business people will 
accompany the team on its 
European trips, with the prom- 
ise of support at marketing 



Robert Lee of Newcastle United on the attack against Antwerp In the first round of the Uefa cup Photograph : Chris Cole 


functions from Sir John, Kevin 
Keegan and the players to rein- 
force the image of success. 

Sir John said: “We take our 
money from the business com- 
munity and we want to put 
something back. I said, how 
can we help the regeneration 
of the area?” The 20 business 
people for the Bilbao trip will 
have to pay travel costs of 
about £400 ($632) each. They 
are being sought by Mr Ron 
Seymour, trade miss ions man- 


ager for the Northern Develop- 
ment Company, the economic 
regeneration body for north 
east England and Cumbria. 

Those going along need not 
be United supporters. “Busi- 
ness is business" says Mr Sey- 
mour. who operates from the 
NDC's Middlesbrough office. 

• Mr Michael Heseltine, trade 
and industry secretary, 
insisted yesterday that the gov- 
ernment is co mmi tted to the 
regional aid policy which this 


week helped win the Samsung 
investment for the UK. 

Mr Heseltine said the idea 
that the system of regional 
selective assistance grants, 
under which the Samsung 
investment has been offered 
£58m, would be abandoned was 
"trivia". 

He said: “There are no ques- 
tion marks over the pro- 
gr amme " Asked ou BBC Radio 
4 yesterday if he could guaran- 
tee that grants for next year 


would not be less than the cur- 
rent year, he said: 

“These programmes I am deal- 
ing with are spread over sev- 
eral years and my department 
is actively negotiating across 
the world in order to continue 
this inward investment into 
Britain.” 

RSA grants are made to 
encourage job-creating invest- 
ments in areas of Britain need- 
ing economic regeneration. In 
1993-94 £341m was spent. 


stance on 
IRA arms 

By PWlfo Stephen® *n London 
and John Murray Brown to 
Belfast 

Mr John Major, the UK prime 
minister, yesterday signalled 
that a readiness by the IRA to 
hand over its Semtex explosive 
and detonators will be of the 
first tests applied by his gov- 
eminent to the long-term 
intentions of the republican 
movement. 

As Conservative ministers . 
prepared for a meeting which 
is expected to pave the way for 
a positive but limited response 
to the cessation of violence, Mr 
Major told MPs that the issue 
of the IRA’s armaments would 
be “crucial" to the process. 

But, answering questions in 
the House of Commons, he £ 
appeared to suggest that, ini- 
tially at least, the government 
was prepared to differentiate 
between guns and explosives. 

He said: “The question of 
armaments and especially 
Semtex and detonators, per- 
haps more than guns, are cru- 
cial issues that will have to be 
dealt with.” 

Downing Street officials 
rejected any suggestion that be 
was signalling that the IRA 
might be able to keep its guns. 
But senior unionist politicians 
in Northern Ireland have 
raised the possibility that the 
surrender of (RA weapons 
might be phased, with explo- 
sives and heavy weapons sur- 
rendered first. The argument is 
that explosives could be used 
only in an offensive capacity. 

Sir James Kilfedder, the 
Ulster Popular Unionist MP, 
told Mr Major yesterday that 
until the terrorists handed 
over their guns and Semtex 
there was a danger that they 
would be used for breakaway 
paramilitary groups. 

The unionists estimate that 
the IRA still has about two 
tonnes of Semtex as well as 
more than 1,000 high-velocity 
rifles. 

Mr Major and senior cabinet 
ministers are expected to agree - 
as early as tomorrow to • 
respond formally to the IRA 
ceasefire by announcing that it 
is now. the government’s 
“working assumption” that the 
violence has ended for good. 




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NEWS: UK 


Investors urged 

to pick London 

An attempt to attr act more manufacturing Investment bo 
Lo ™ 1 was launched by Mr lira Eggar, industry and energy 
“mister in a move that marks the first concerted attempt to 
reverse the decline of the capital as a manufacturing centre. 

"The Greater London manufacturing workforce has dropped 
from more than 800,000 in the early 1970s to 300.000. This is 
Just li par cent of the areas’s total workforce, compared with a 
nationwide figure of 20 per cent Mr Eggar’s initiative also 
amffito ensure existing manufacturers get the best deal from 
central and local government It comes a day after Samsung, 
the Korean industrial group, au nmuifleri plans to build a 

MSten manufacturing plant in the north-east of England, evert- 
tuaDy creating 3,000 jobs. 

He said this showed how development agencies, local 
authorities and Training and Enterprise Councils (TECs) else- 
where in the UK were working effectively with government to 
attract new manufacturers. “Other regions of the UK are old 
hands at this." he told the parliamentary manufacturing 
Industry group. 

Mr Eggar said London could not escape some of the blame 
for undervaluing its manufacturing sector. “The false stereo- 
type of the London, businessman with his pinstriped suit and 
bowler hat has been equally misleadingly replaced by the 
image of a young man with red braces wfaaater- daaler tog in 
front of an ex c hang e room computer screen." he saw An 
a nti-ma nufacturing culture had been perpetuated. Andrew 
Baxter 

Underwriters are criticised 
in Feltrhn Names 9 court case 

Underwriters of three Feltrtm syndicates at the Lloyd's insur- 
ance market ran their businesses tike imprudent gamblers, 
tiie High Court in London was told yesterday. The syndicates' 
total exposures to risk were not prop erly wiimhiwi and 
inadequate reinsurance was purchased, Mr Jeremy Cooke 
said. He was appearing on behalf of more than 1,600 Feltrtm 
Names. 

The Names are suing the under w r i ters for w fHpmw smA 
are seeking to recover losses of some £525m. The losses were 
sustained between 1987 and 1989 by syndicates 540, 542 and 
847, which specialised in catastrophe insurance and were 
involved in the reinsurance “spiral". The syndicates suffered 
massive losses after disasters such as the fierce 1987 storms 
in E n gland and the Piper Alpha ofl platform explosion. 

The case is the second Ingest ever brought before the UK 
courts both in terms of the damages cianwnf ami the number 
of plaintiffs involved. Only tbe Goode Walker case, hi which 
more than 3,000 Names successfully sued their agents was 
larger. 

Mr Cooke said that the gap between the total exposures of 
the syndicates and the levels of re-insurance purchased was 
too large for any prudent business. Nobody running a busi- 
ness prudently would operate on the basis that if certain 
events took place the business would be destroyed, be said. 
This amounted to simply gambling on whether those events 
would happen, he went on. John Mason 

Lawyers condemn French 
forecast about royal divorce 

Lawyers for the Prince and Princess of Wales issued a Joint 
statement saying there was no truth in rumours that a divorce 
had been agreed. The royal couples' solicitors said they 
wanted to make dear that "there is no-truth in reports winch 
state that it has been agreed that a divorce should take place 
or that ther e have been discussions about a financial settle- 
ment between the parties." 

The French magazine Void alleged that the couple would 
divorce in March, with the princess receiving a settlement of 
tlSm. The ma gaime claimed to have p ublishe d extracts from a 
book by Andrew Morton, author of the 1992 bestseller entitled 
Diana, Her True Story. The new book is due to be published in 
the UK next month. 

Mr Morton’s publisher, ftfichael O'Mara Books, said the 
article in Void contained elements from the new hook. But it 
also contained "substantial distortions and falsehoods, espe- 
cially with, regard to the question of divorce and the legal 
settlement for the prince and princess." PA News 

Small businesses criticise 
service received from banks 

Small businesses believe UK banks provide worse value for 
money now than four years ago, says a survey from the 
Forum of Private Business. The findings, produced by the 
University of Nottingham on the basis of some 5,500 
responses to questionnaires, found that small businesses see 
tra nsaction charges as the greatest constraint imposed on 
their activities by their relationships with banks. 

It also highlights as significant restrictions on small busi- 
nesses the interest rates charged and the fear of having 
overdraft facilities withdrawn. This is the fourth survey of 
small-business opinion commissioned by the forum, and 
shows that the sector is increasingly gloomy About the value 
for money provided since 1990 by each of seven UK high 
street identified in the poD. Barclays is now seen as 
giving tbe worst value for money and Royal Bank of Scotland 
is semi as giving the best. Alison Smith 

London-Brussels rail fare to 
be undercut by ferry line 

RMT-Oostende Lines, the Belgian cross-channel operator of 
four terries and two jetfoils, said it would cut pric e* on it s 
Ramsg ate-Ostend route In order to challenge the Eurostar 
nasseneer train link from London to Brussels through the 

m , 0M«1an Onstanila T ino^ commer- 


dal director, said the Eurostar seivice could hire away nearly 
half the passengers who use the ferry or jetfiriL The Belgian, 
company's promotional prices wffl start tomorrow and are due 
to end on January 8 next year, but might be extended. Reuter 

Gas complaints increase 

The Gas Consumers Council reports! that comptatots jhjwt 
Rrittsh emt a company that used to be a nationalised utility, 
to tlm ifrst nine months of tiifa year 
afterfeDine 14 per cent to 1998. Prime ana s of co ncern are 
mSlems with service and repair worts, Jaspa^ 

5iSs and arguments over contract conditions of Ttagg 
Star Service Scheme where complaints have risen by 33 per 

“Sk Phil Hamer, the council's field director, said ttejw 
gaSLrtion of British Gas into new 

toStdatton was affecting service leveK^Ton^ntonc^ 
S^onfideuce before competitors enter the market," be 
^r*the new business Write must T^ctqa«*ly to reverse 
this worrying trend." Mr Bob Frazer, director of operations at 
Ktted that there “a small temporary 
SiSc insome service standards while changes are being 
imHi^enteX^But he said the company was committed to 
than at any time in the past 

David LasceUes 

Slow recovery in construction 
sector is again maintained 

£ in construction activity is generally being 

the threwnonth period 
h, nubhchmistoK and housing-association orders, 

by 14 per cent. Simon London 


Market for mobile calls will become most competitive in Europe 

Phones network to double 


By Andrew Adonis 

Mercury One-aOue, the mobile 
phone network operator, is to 
invest £230m on doubling the 
size of its network over the 
next 2% years. 

The investment, which con- 
tinues One-2-One's slow expan- 
sion. will give the UK’s main 
population centres four cellu- 
lar phone networks by early 
1997, making Britain the most 
competitive mobile phone mar- 
ket in Europe. 

With more than five mobile 
phone subscribers per 100 peo- 
ple, tiie UK has bigger cellular 
usage per head than any Euro- 
pean country outside Scandina- 


via. Sweden has more than 12 
subscribers per 100. 

One-2-One now covers only 
the southeast and west Mid- 
lands Of Rn gianri - about 30 
per cent of the UK population 
The networks of Vodafone and 
Cellnet, the two largest opera- 
tors, have national coverage. 
Orange, the newest network, 
covers about 65 per cent of the 
population, and plans to 
extend to TO per cent soon. 

With 140,000 mobile phone 
subscribers, One-2-One is small 
compared with Vodafone and 
Cellnet, which have about lAm 
and 1.2m subscribers respec- 
tively. However, the company 
claimed to be gaining a thir d of 


aU sales within its coverage 
area. Orange, which launched 
its network in April, refused to 
disclose subscriber numbers, 
prompting speculation among 
analysts that It is gaining cus- 
tomers at a slower rate than 
One-2-Gne despite its wider 
geographical coverage. 

Mr Richard Goswell, Qne-2- 
One's managing director, said 
the company did not intend to 
cut tariff^ or handset prices to 
attract subscribers. “We do not 
see any need for a juice war." 

Vodafone and Cellnet are 
also keen to avoid serious price 
competition, but have cut the 
prices of their digital handsets 
sharply over the past month to 


less than £100 ($156) tor tbe 


One-2-One's cheapest hand- 
sets sell far £200. Mr Goswell 
said the company would not 
in rrfrfl«a> subsidies for handsets 
to reduce the price. “I don’t 
believe in giving handsets 
away; It sends tbe wrong mes- 
sage about their value," he 
explained. 

Cellnet, a joint venture 
between British Telecommuni- 
cations and Secoricor. made 
the largest advance of any 
operator in the summer quar- 
ter. with 133,000 net new sub- 
scribers compared with 123JWQ 
for Vodafone, which remains 
the biggest operator. 


Warning on dairy investment 


By Alison Mafttand 

The sharp rise in milk prices 
that will accompany de- 
regulation of the market next 
month could drive dairy indus- 
try investment out of Britain, 
Northern Foods, one of the 
country’s largest dairy groups, 
said yesterday. 

“The processing industry 
will be leaner, fitter and more 
focused," said Mr Neil David- 
son, group executive responsi- 
ble fin; mtifc buying. “It may 


also be somewhere else.” Mr 
Davidson told a dairy industry 
conference in London organ- 
ised by Agra Europe, tiie busi- 
ness information company, 
that domestic and foreign 
investment in new technology 
and capacity had been thrown 
into doubt by deregulation. 

This was because of the 
"major" price rises being intro- 
duced fay Milfc Marque, the 
independent tenners’ co-opera- 
tive that will succeed tbe Milk 
Ma r k eting Board, and because 


of possible challenges to Milk 
Marque by the competition 
authorities. 

The Dairy Trade Federation, 
which represents milk proces- 
sors. is considering a formal 
complaint to the European 
Commission and the UK's 
Office of Fair Trading, claim- 
ing that MOk Marque’s selling 
system is an abuse of its 
monopoly position. Milk 
Marque controls at least 65 per 
cent of supplies in England 
and Wales. 


Mr Davidson said this made 
it the largest milk selling 
organisation in Europe, nearly 
twice the size of Besnier in 
France or Nestle across 
Europe. 

He also criticised the govern- 
ment, saying its original plan 
to improve UK dairy competi- 
tiveness in Europe "has been 
diluted to the achievement of a 
crude political objective of 
abolishing the Mflk Marketing 
Board while protecting the 
farmer vote.” 


Welsh project to 
be investigated 


By Roland Adburaham 
in Cardiff 

A Tesco superstore, being buOt 
on the edge of Aberdare in the 
south Wales valleys, has called 
into question the way in which 
the Welsh Development 
Agency has run joint ventures. 

Chant Thornton, the accoun- 
tancy firm, hag been commis- 
sioned by the WDA's new man - 
agement and the National 
Audit Office to investigate the 
circumstances behind the 
development, the result of a 
joint venture by the agency. 
Cynon Valley borough council 
and Mid Glamorgan county 
council. 

The Inquiry report, due to be 
published in the next few 
weeks, is expected to make 
serious criticisms of the way in 
which the WDA used its pow- 
ers to recommend changes in 
the management of joint ven- 
tures. 

The development was 
intended to be an important 
part of the regeneration 
of Aberdare. When the Tesco 
store opens in March it will 
employ 250 people in an area of 
high unemployment 

Among the issues is why the 
WDA paid £440,000 in 1992 
for a site which had been 
bought by a South Glamorgan 
company, Offerdemo, only 


Grants from the government 
provide 46 per cent of the 
£161m ($254.4m) budget of the 
Welsh Development Agency, 
an organisation which is to be 
summed down after a series of 
abrupt resignations in recent 
years. The accounting 
practices of the agency, which 
has offices In north America 
and south-east Asia, were 
strongly criticised by a 
committee of MPs in June. 

hours previously for £160.000. 
The process by which the 
Tesco bid was successful also 
raised protests. 

The Co-operative Retail Soci- 
ety. which was a bidder, 
threatened to sue. Last week it 
said: “We are unable to com- 
ment for legal reasons.” 

Tbe Grant Thornton report 
is expected to say that there 
was no personal involvement 
in the deal by Mr David 
Malpas. managing director of 
Tesco and a member of the 
WDA board, and Dr Gwyn 
Jones, then WDA chairman 
and subsequently a Tesco 
director. 

The WDA has has set up a 
group to ensure greater trans- 
parency and consultation In 
joint ventures and more 
involvement by the private 
sector. 


Last year in Europe over two million 
business people made their first business 
decision a good one. They checked into 
an ITT Sheraton. In fact, Europe’s business 
community as a whole recently voted 
ITT Sheraton as the best hotel chain for 
business travel.* 

For over twenty-five years, ITT Sheraton 
has attended to the needs of the business 
traveller in Europe. Now, wherever 
you turn in Europe, ITT Sheraton is there: 
Austria, Belgium, Bulgaria, Croatia, Cyprus, 

- Denmark, France, Germany, 

Italy, Luxembourg, Portugal, 

Sweden, Switzerland, Turkey and the 
United Kingdom. 

32 HOTELS IN 

SIXTEEN EUROPEAN COUNTRIES 

Of course, just being there is not enough. 

Once yon arrive in any of these cities, 
the high standard of Sheraton service takes 
over. After twenty-five years of serving 
business people in Europe we know 
what yon need, and if it's not already 
there well get it for yon. 

For more information on ITT Sheraton in 
Europe, please call: 

UBL 0800 353535, Germany 0130-353535, 
Italy 1678-35035 , Sweden 030-795335, 
Belgium 078-113535 or the toll-free 
reservations member in your country. 

* Business Traveller Magazine, 1994 






) 


Hi ill ll Sheraton 


OUR WDCUI REVDIVES AfflUND YOU 



/ 
















10 


FINANCIAL TIMES 


WEDNESDAY OCTOBER 19 I® 94 


BUSINESS AND THE ENVIRONMENT 


i 


Old newspapers and card have suddenly 
become a scarce and expensive commodity 


Recyclers on a 


paper chase 



Backing 
for food 


process 


Bernard Simon on implications for US waste recovery 




Frances 
Williams on 
irradiation 


T wo of North America's big* 
gest newsprint producers, 
Vancouver-based Fletcher 
Challenge Canada and Jeff- 
erson Smurfit of St Louis, Missouri, 
broke with tradition In August 
when they announced their third 
price hike of the year. 

In addition to the usual 
across-the-board increase (in fact, a 
cut in discounts), the two compa- 
nies said they would slap a $27.50 
(£17-50) per tonne surcharge on all 
newsprint made from recycled 
paper. The move reflects a dramatic 
turn round in the North American 
market for used newspapers, statio- 
nery and cardboard boxes. From 
being a cheap and readily available 
alternative to wood pulp (the natu- 
ral raw material used in paper- 
making), waste paper has suddenly 
become a scarce and expensive com- 
modity. 

The price of old newspapers 
(ONP) has almost quadrupled from 
a low of about $30 per tonne a year 
ago to $1 10/tonne. Old corrugated 
cardboard (OCC) prices shot up 
from $45 to S210 per tonne earlier 
this year, but have since eased to 
about $804120, depending on region. 

The paper shortage comes just as 
North American forest-products 
companies are in the middle of mas- 
sive investments in paper de- inking 
and recycling facilities. 


According to the American Forest 
and Paper Association in Washing- 
ton DC, 56 recycling projects are 
currently on the drawing board in 
the US. The industry is expected to 
spend about $10bn on new recycling 
capacity over the rest of the decade. 

By 1996, the US paper and paper- 
board industry is expected to rely 
on recovered paper for 35 per cent 
of its fibre supply, against 42 per 
cent from primary wood pulp. (The 
rest comes from residues, such as 
sawmill waste.) 

The present shortages reinforce 
fears that de-inking and recycling 
plants could struggle to acquire suf- 
ficient quantity and quality of old 
paper. “We need to collect more, 
especially in the office-waste side," 
says Jon Ashley, manager of fibre 
procurement at International Paper, 
the world’s biggest paper producer. 

Mark Rosebo rough, general man- 
ager of Newstech Recycling, a 
waste-paper processing company in 
Vancouver, notes that “we’re com- 
peting against virgin pulp. There’s a 
choice to be made.” 

Publishers’ enthusiasm for an 
ever-higher recycled content in 
newspapers and magazines could 
wane if used-paper costs keep clim- 
bing. Some US state laws exempt 
publishers from recycled-content 
targets if the price of newsprint 
made from recycled material rises 


above that made from virgin fibre. 

Fletcher and Jefferson Smurfit 
abandoned their plan for a two-tier 
price structure alter other produc- 
ers failed to follow their lead. Some 
feared resistance from publishers, 
whose newsprint costs have already 
jumped by about 15 per cent this 
year. Others, protected by long-term 
contracts, have yet to feel the full 
impact of the jump in recycled 
paper costs. But Mark Gibson, 
Fletcher’s vice-president for paper 
marketing, predicts that the sur- 
charge “remains a very real possi- 
bility in the future”. 

According to Gibson, Fletcher 
now pays more for de-inhed, recy- 
cled pulp than for virgin fibre: 
“Most people assume that because 
it’s old newspapers, it must be 
cheap, but they're wrong." 

The used-paper shortage partly 
reflects rising domestic and foreign 
demand as overall business activity 
picks up. US waste-paper exports, 
mostly to the far east, rose by about 
34 per cent in the first six months of 
this year. Soaring wood-pulp prices, 
which have jumped from $390 to 
$700 a tonne in the past year, have 
encouraged papermabers to turn to 
used paper as a raw material 

But the shortage has been exacer- 
bated by the rising threshold 
imposed by US and Canadian 
authorities on the minimum recy- 


1 - 5 * 


.-.-v 




Higher prices: ‘Most people assume that because frs old newspapers, it must be cheap, but they’re wrong’ 


cled content of packaging, newspa- 
pers and other paper products. 

The Clinton administration 
decreed last year that all paper 
ordered by the US federal govern- 
ment must have a recycled content 
of at least 20 per cent. In California, 
the rule is that oc&qnarter of state 
purchases must have a minimum 40 
per cent recycled content. 

North American recycling targets 
are well below those in some Euro- 
pean countries, especially Germany. 
But US and Canadian paper mills 
also have to fight harder to lay 
their hands on suitable used paper. 

One sore point is the sizeable 
quantities of waste paper being 
directed to energy-from-waste 
plants. According to some esti- 
mates. as much as 10 per cent of 
paper that might normally go to 
landfills or recycling plants is being 
channelled into energy production. 

The terms of bond issues floated 
to finance energy-from-waste plants 


frequently require municipalities to 
control the flow of combustible 
materials. Municipalities are also 
eager to collect recyclable materials 
to help raise money for their waste- 
management services. 

“Any time you interfere with the 
free flow of our fibre source, you're 
going to be creating some prob- 
lems." says Virgil Horton, vice-pres- 
ident of the AFPA's paper group. 

The paper companies want free- 
market forces rather than munici- 
pal ordinances to decide what hap- 
pens to used paper. A growing num- 
ber of producers have moved into 
waste-paper collection as a means of 
securing their raw material sup- 
plies. Some industry experts are 
confident that the shortage of old 
paper will subside. “Recovery rates 
are still nowhere near what is 
attainable," says an executive at 
one Canadian company. 

Paper companies have become 
increasingly active in recycling pro- 


T he market for waste paper in Europe 
has turned around in recent months, 
making it worthwhile for many 
countries to recycle material for the first 
tune in years. 

Some grades of waste paper and board 
were even priced negatively at the begin- 
ning of the year - the authorities would 
pay processors to take tt away - but have 
shot np in value as shortages have 
appeared across the continent 
“Although it looks like a vast increase in 
waste paper prices, we are actually just 
getting back to the level we saw in 1989 
before we were hit by the recession.” says 
Geoffrey Jones, national secretary at the 
British Waste Paper Association. 

A waste paper index of UK prices, which 
sets 1990 as 100, has shat up from 59 at the 


rom recycled material rises aumorraes on me minimu m recy- to nuance energy-from-waste plants increasingly active in recy cl 

From negative to positive 

Prices in Europe have recovered sharply, says Deborah Hargreaves 

beginning of tile Year to 122 In August as uean turner mills ns a mensnrp nt tight k-ptc and mnrMitmHnv nn rimwlmiina nvn. 


grammes. International Paper, for 
instance, was involved in a milk- 
carton recycling drive in Los 
Angeles. The AFPA has set up task 
forces to try to ease bottlenecks in 
supply. 

Papermakers are also encouraged 
by a rapid consolidation of the 
North American waste industry. 
Big waste services operators, such 
as Waste Management, Browning- 
Ferris and Laidlaw, have the 
resources to Improve collection and 
invest in extra recycling capacity. 

Even if waste-paper prices stay 
high, recycling fans can take heart 
that prices of virgin fibre are 
unlikely to drop much in coming 
years. The North American forest 
industry's concern about waste- 
paper prices is matched by fears 
that stricter rules to protect old for- 
ests in British Columbia and rare 
species In the north-west US, are 
also making trees a scarce and 
expensive commodity. 


beginning of the year to 122 in August as 
consumption has increased by 8 per cent 
Prices in continental Europe have risen 
even foster with increases for many grades 
of between 70 per cent and 100 per cent 
“We have gone from huge surpluses to 
huge shortages,” said Geny West, sales 
director of Severnside Waste Paper in Car- 
diff, which is part of the St Regis group. 
Although shortages have eased slightly 
in the past couple of months, West points 
to the low levels of stock carried by Euro- 


pean paper mills as a measure of tight 
supplies. He reckons that stocks in the UK 
were generally at 80,000 tonnes in mid-Sep- 
tember compared with the usual 150,000 
tonnes. 

Waste paper prices are to a large extent 
following the dramatic increases in the vir- 
gin pulp market At the same time, demand 
from Asian importers has sucked waste 
paper out of Europe. 

German waste collectors are also not 
exporting so modi to other European mar- 


kets and concentrating on developing pro- 
cessing capacity at home. 

“In the past couple of years, German 
recycling laws bad encouraged the collec- 
tion of large amounts of old paper and the 
country had little capacity to handle it," 
says Benedict South worth, campaigner at 
Friends of the Earth. “So it was virtually 
given away on the European market forc- 
ing down prices,” he adds. 

The rise in the waste paper market is 
leading to a hike in newsprint prices as 


mills seek to recoup raw materials costs. 

October increases are expected to push 
the UK market between 7 per cent and 8 
per cent higher. West expects the price 
rises to prompt higher recycling rates in 
many European countries. For example, 
recovery rates in Italy and Spain were very 
low as processors found it cheaper to buy 
German material. 

In the UK a new newsprint min in Ayles- 
ford, Kent, will be opened next year with 
expected demand for an additional 400,000 
tonnes of old newspapers a year. Britain 
consumes 12m tonnes of paper and board 
products a year. Bat it collects only 3.5m 
tonnes of material for recycling. “Even 
with a conservative recovery rate of 50 per 
cent, we aught to be recycling 6m tonnes a 
year, so there is a lot to go at,” says West 


T he World Health Organisa- 
tion has given strong 
backing to the controver- 
sial technique of food irradia- 
tion. 

It concludes in a study* that 
there is no evidence of any extra 
health risk associated with the 
nrocess and the health benefits 
could be substantial “As long as 
requirements for good manufac- 
turing practice are implemented, 
food irradiation is safe and effec- 
tive," the study says. 

Food irradiation involves bom- 
barding products such as spices, 
meat, poultry and potatoes with 
ionising rays or electrons. This 
destroys insects and bacteria, 
fly in g the food safer to eat and 
delaying spoilage. 

The WHO effectively scotches 
most consumer concerns about 
eating “irradiated” food. Food 
irradiation does not increase the 
incidence of toxic radiolytic 
chemical substances. It does not 
generate “measurable” addi- 
tional radioactivity, and it is not 
capable of producing mutant 
bacteria or viruses. 

Nor does food irradiation 
destroy nutrients more than any 
other processing. Compared with 
the loss of nutrients through 
cooking the loss through food 
irradiation “is really minimal", 
says Gerald Moy of the WHO’s 
Food Safety Unit 
Food irradiation holds the 
prom ise of big health gains, the 
WHO believes. In developing 
countries, up to 70 per cent of 
diarrhoeal diseases, which cause 
about a quarter of all deaths, are 
thought to be food transmitted. 1 
In the US, there are between , 
24m and 82m cases of food-borne l 
disease every year, with some 
10,000 deaths. An outbreak last 
year of Alness caused by under- 
cooked hamburgers killed four 
children and put nearly 200 peo- 
ple in hospital 

* Safety and nutritional adequacy 
of irradiated food. Distribution 
and Sales Service, WHO, Geneva, 
ISBN 92 4 156162 9, 


pinner 

i urpq 










■** 



**•* 



il»t«n seel 
r line on 
■s < i verse 


% fin ANCIAL TIMES WEDNESDAY OCTOBER 19 1994 


11 


> 


r.*i 


p.jVlUU* 

L \i'p" 


MANAGEMENT 


lohn Wlllman starts a series on public services with a success story at Camden benefits office 

Reaping the benefits 


a The customer comes 
first" is a philoso- 
# # Pby that most ser- 

rtce organisations 

JsL JsL JL to - But mak- 

§ $ 3 $ tag it a reality in 
■**“ ■***■ •*** public services is a 
Public a entices task that has de- 
mana BW B wt feated many manag- 
7 era, particularly in 

inner cities where the welfare state 
picks up some of society's most 
m tractable problems. 

Yet Camden, the north London 
borough with an indifferent reputa- 
tion tor its services and more than 
its fair share of social deprivation, 
boasts the best-run local authority 
benefits office in the country. 

The Audit Commission, the local 
government watchdog, last year 
cited the council’s benefits office as 
a model of good practice in a study 
which found that only a third of 
councils administered benefits welL 
m This week it received a further 
T accolade in the form of a charter' 
mark, one of the government's 
awards for good public service. 

Camden includes some of the 


most prosperous north London dis- 
tricts. including Hampstead and 
Bloomsbury. But much of the rest 
of the borough is run-down, inner- 
city estates, with almost half of all 
households relying on benefits to 
pay their rent or council tax. Last 
year, the office dealt with more 
than 56,000 claims and paid out 
almost £120m In benefits. 

“If Camden with all its inner-city 
problems can deliver good quality 
standards, one must ask why other 
councils can V says the Audit Com- 
mission's Doug Edmonds. 

Much of the credit tor the bor- 
ough’s outstanding performance 
goes to Bridget Cumiskey. Cam- 
den’s chief benefits officer, A for- 
mer bank cashier, she confesses to a 
“passion for service”. 

"People coming in here already 
have problems," says Cumiskey. 
“They are unemployed, they’re pen- 
sioners dependent on benefits, they 
are families living on low pay. It's 
not our job to make those problems 
worse. We can be the difference 
between misery and helping people 
to feel good about themselves and 


beginning to solve their problems." 

Camden's mission statement Is to 
pay the correct amount of benefit, 
on time, and with courtesy and 
respect. They are principles the 
office organises to achieve. 

Applicants are seen within 15 
minutes of arriving. They are inter- 
viewed in privacy and escorted back 
to the exit - normally within 30 
minutes of arrival. Most benefit 
payments are processed in 14 days, 
with the remaining 5 per cent com- 
pleted in a further five days. 

Success in meeting these targets 
means Camden has no need tor the 
large waiting rooms that axe typical 
of many inner-city benefits offices. 
Not does it need security glass to 
protect its staff. The reception 
rarely has more than a dozen people 
waiting, and all Interviews are con- 
ducted face to face around a table. 

“If you treat people with respect 
and in a pleasant manner, there is 
no need to put up barriers," says 
Cumiskey. “If you keep customers 
waiting for two or three hours, it's 
cot surprising that they get angry. 

“I just won’t tolerate backlogs. 


My job descriptions are flexible, and 
I can transfer staff very quickly 
between teams to deal with prob- 
lems. Sometimes well use Saturday 
working to clear backlogs, but we 
also try to avoid burning staff out 
through institutionalised overtime." 

All this has been achieved for 
costs lower than those at mrnifc r 
councils offering a far worse ser- 
vice. "We save money by getting 
things right first time," says Cumis- 
key. "If you have delays and back- 
logs of work, people get desperate 
and telephone, write letters or come 
in. Staff dealing with such inquiries 
are not doing the job of paying the 
benefits.” 

Camden also takes care to make 
sure that money isn’t paid out to 
people wbo shouldn't get it The 
borough is ranked third in the 
country on fraud detection, saving 
more than g?m last year. 

Until recently, there was little 
incentive for councils to tackle 
fraud - most of the cost of housing 
benefit is paid for by the govern- 
ment. But Cumiskey successfully 
helped lobby the Treasury to let 


local authorities keep a share of 
savings from fraud detection. Cam- 
den’s share last year was to 
£260,000. 

There is no profound secret 
behind Camden’s success, according 
to one observer. Cumiskey sets the 
staff clear targets and makes sure 
they are met. Rather than adminis- 
tering benefit in the traditional 
local authority way. she manages 
the office, he says. 

Same of that can be put down to 
training. During her 2? years with 
Camden, Cumiskey has been on sev- 
eral management courses. But she 
is clearly a born manager, who 
instinctively knows how to get the 
best out of people. 

Her own explanation is rather 
more modest. She reckons that 
much of what she does reflects 
what she saw during the 1970s as 
chairman of the local branch of 
Nalgo. the local government union: 
“I dealt with managers throughout 
the council, and learnt very quickly 
how not to manage. It gave me the 
confidence that I knew as much as 
they did about management" 



lyAvnAi I 

“We save money by getting things right first time," says Camden’s Cumiskey 


B ritish women employees whose 
babies were due on or after 16 
October are entitled to new legal 
rights and benefits during their 
maternity leave from work. 

All women now have a statutory right to 
at least 14 weeks' leave regardless of 
length of service or hours of work. 

The new maternity rights also guarantee 
protection against dismissal and the ri gh t 
to alternative work or suspension with toll 
pay if continuing in the job is hannflil to 

health 

The changes are intended to bring UK 
law into line with the European Union 
directive on the health and safety erf 
pregnant women agreed two years ago. 

How much leave is a woman entitled to? 
Maternity leave entitlements for full-time 
women staff, who have at least two years' 
continuous service with their employer, 
and part-time women with five years' 
service, who work fewer than 16 hours a 
week hut more than eight, have not 
changed. Everybody else gets 14 weeks. 

How much maternity pay is a woman 
entitled to ? 

Women who have worked for the same 
employer at least 26 weeks prior to the 12 
weeks before the baby’s expected delivery 
date and earn at least £57 a week or more 
on average qualify for up to a maximum of 
18 weeks’ pay. 

The pay entitlement tor the first six 
weeks is 90 per cent of the woman’s 
average earnings and SS2JS0 tor up to a .. 
further 12 weeks. Women wbo qualify tor 
only 14 weeks’ maternity leave (full-time 


Who gets what from the 
maternity provisions 

New rights for women on leave bring the UK into line with 
European law. Robert Taylor looks at the changes 


employees who have not worked in 
continuous employment for two years and 
part-time employees who have not 
completed five years' continuous service) 
and therefore return to work on or before 
the end of the 14th week do not receive the 
last tour weeks of SMP. 

Are there some companies who already 
provide longer leave? 

One in four employers already provide 
more than the statutory minimum. Some 
allow periods of up to 52 weeks’ leave. 
These include Abbey National, British 
Gas, the civil service and the national 
health service. 

Do some employers pay more than the 
statutory figure? 

A growing number of companies also 
pay more than the statutory maternity 
pay. Marks and Spencer, Rover car group, 
Amersham International and FTP Bulmer 
pay 100 per cent of previous earnings for 
the first six weeks of maternity leave. 


How much will this cost employers? 

The cost to employers of the new 
maturity rights has been set at £65m a 
year, 0.03 per cent of the total national 
wage bill, or £230 per expectant mother 
receiving maternity benefits. Employers 
are being reimbursed by the state for up to 
92 per emit of the cost of maternity leave 
pay from 4 September. Small companies - 
those who pay £20,000 or less a year in 
gross national insurance contributions - 
are fully reimbursed. 

What happens to the other provisions in 
a woman's contract? 

All women on maternity leave continue 
to benefit from all the terms and 
conditions of th eir contract (including 
holiday entitlement, pension rights and 
company car) except tor their normal pay. 

Are women protected from unfair 
dismissal? 

The new legislation's guarantee of 
protection against dismissal means that 


all women on maternity leave who are 
subsequently dismissed must be given 
written reasons. There are no set limits on 
the damages an industrial tribunal «m 
award if a pregnant woman is unfairly 
dismissed. 

How will the new health and safety 
regulations affect employers and 
employees? 

Health and safety rights have been 
introduced to protect pregnant women, 
women who have recently given birth or 
are breast feeding. An employer is now 
required to carry out a risk assessment of 
working conditions and take whatever 
preventable action is reasonable. The law 
also states that where a risk to a woman’s 
health is suspected and no alternative 
work Is available, an employer must 
suspend the employee on toll pay. The 
regulations are being revised at present by 
the Health and Safety Executive. 

If suitable alternative work is available 


but not offered or a woman is suspended 
without toll pay, she can gain access to an 
Industrial tribunal. 

How can women claim their new rights? 

To aid employers’ planning of 
employment needs pregnant women have 
to follow a procedure to claim any of the 
new maternity rights. If the procedure is 
not adhered to they will lose entitlements. 

A woman must give at least 21 days’ 
notice to the employer of the date when 
she intends to start her period of leave 
(the notice need only be in writing if the 
employer insists). Maternity leave can 
begin 11 weeks before the expected week 
of childbirth. To receive SMP, 21 days’ 
notice before beginning leave is required. 
A copy of the maternity certificate (MAT 
Bl) must also be sent to the employer. 

What steps does a woman employee 
take to return to work? 

The employer may ask for confirmation 
of intention to return to work eleven 
weeks after the start of the maternity 
leave. A reply in writing must be given 
within 14 days. At least 21 days’ before 
intention to return to work the employer 
should be informed of the exact date of 
return. An extension beyond the 29 weeks’ 
leave is allowed if a woman is iff She 
must inform the employer of illness and 
supply a medical certificate. Employers 
can also delay return by four weeks, but 
must give reasons. 

What are the main problems with the 
new rights? 

All women axe entitled to 14 weeks' 
maternity leave and only some women are 


entitled to 18 weeks’ statutory maternity 
pay. The Department of Employment 
calculated that bringing the two Into Une 
would add £50m to annual business costs. 

If a woman is absent side before her 
planned maternity leave begins, but this is 
a pregnancy-related illness and occurs on 
or after the sixth week before the expected 
week of confinement maternity leave is 
automatically triggered. Some believe this 
is confusing, too arbitrary and punitive. 

Can a woman have her old job when 
coming back to work? 

A woman is entitled to return to the 
same job she had before she went on 
maternity leave on no less favourable 
terms and conditions of employment 
However, she may request to work on a 
part-time rather than toll-time basis. 

Who is not covered by the new 
regulations? 

An estimated !12Sm women or 20 per 
cent of the female labour force who earn 
less than £57 a week foil to quality for 
statutory maternity pay. Any woman who 
has not be in continuous sendee with the 
same employer for 26 weeks will not 
quality. 

How does UK maternity leave provision 
compare with the rest of western Europe? 

British women receive the lowest level 
of maternity pay in the EU with only up to 
14 per cent having their statutory 
entitlement topped up by employers. In 
Denmark women receive 22 weeks on full 
pay during their maternity leave while in 
Germany women receive full pay for 14 
weeks and Italy tor 17 weeks. 


PEOPLE 


Senior planner joins 
Housing Corporation 


Pam Alexander, 40, below, who 
has worked in the Department 
of the Environment since 1975, 
has been put in charge oi man- 
aging the Housing Corpora- 
tion’s £1.5bn development pro- 
gramme. She will take up her 
new post in January 1995. 

Alexander, who has headed 
the DoE's Housing Associa- 
tions division since January 



1992, has been appointed dep- 
uty chier executive 
(operations). 

She replaces Greg Lomax 
who left in August to be chief 
executive or Thamesmead, a 
former GLC estate in south 
east London, which was Mid to 
a private company in 1986- 


At the DoE Alexander has 
been responsible for planning 
and monitoring the Housing 
Corporation’s programme of 
capital and revenue grants, as 
well as advising ministars on 
policies affecting housing asso- 
ciations and the corporation. 

In her new job she will be 
responsible for overseeing the 
work erf the new housing man- 
agement and research division 
and supervising the regional 
offices, as well as managing 
the corporation's advanced 
development programme. 

The Housing Corporation 
channels government money 
into building around 60,000 
homes a year for those in hous- 
ing need. 

Geoff Mitchell, 48, the Hous- 
ing Corporation’s director of 
operations, is. taking early 
retirement in April 1995, after 
21 years at the corporation. His 
department is being merged 
with Derek King’s programme 
division. King will head up the 
combined . unit which will be 
renamed the investment divi- 
sion. 

■ Donald Main, former finance 
director of Forte who retires at 
the mid of the year, has joined 
the management board of the 
North British Housing Associa- 
tion, the UK’s largest housing 
association. 

He will be standing down 
from his post as an indepen- 
dent director of Funding for 
Homes, an investment vehicle 
for housing associations, of 
which North British is a mem- 
ber. 

He hopes to use his financial 
expertise to help North Br itish 
attract more investment from 
the private sector to offset the 
decline in government funding. 


Fresh finance function 
at Argyll group 


Supermarket group Argyll, 
owner of the Safeway chain, 
has held bad: from appoi ntin g 
a group finance director to 
replace Colin Smith, promoted 
to group chief executive earlier 
this year, but is appointing a 
niiiflf financial officer. 

He is Simon Laffin. 35. previ- 
ously group financial control- 
ler. who has been taking joint 
responsibility for financial 
affairs with Colin Smith since 
the latter’s elevation. 

"Although Simon has not 
taken on the job title of group 
finance director, he has effec- 
tively assumed most of the 
duties formerly undertaken by 
Colin Smith," says Aigyff 

T iffin is also taking over as 
finance director of Safeway 


Stores - now the dominant 
part of the group, since the 
recent sale of Argyll's Lo-Cost 
discount ffhain — in place of 
Nairn Glen, who moves to 
become director of financial 
control of Safeway. Argyll is 
currently carrying out a strate- 
gic review of all its businesses, 
which may result In some fur- 
ther changes in management 
responsibilities. 

Analysts believe Laffin is 
being groomed for the title of 
group FD and a seat on the 
board in due course. 

He joined Argyll as financial 
controller in 1990, after holding 
senior financial positions with 
Mars. He is an associate of the 
Institute of Chartered Manage- 
ment Accountants. 


Commercial Union, the large 
UK genera] insurance com- 
pany, is breaking with past 
practice and appointing a 
finance director. Peter Foster, 
48, will be responsible for 
group finance, corporate plan- 
ning and tax. 

The decision underlines the 
trend within the financial sec- 
tor towards appointing board 
directors with specific respon- 
sibilities for the finance side of 
operations. 

Finance had been the 
responsibility erf Ttmy Wyand, 
executive director, who .was 
also in charge of CU invest- 
ments. Wyand is now expected 
to spend an increasing portion 
of hte time in Paris, overseeing 
the integration into the group 
of French Insurer Groupe Vic- 
toire, which CU acquired this 
summer. 

Foster was general manager, 
finance, at CU. He joined the 
eompany in 1963. 


Salomon Brothers boosts energy sector 
coverage by board appointment 

. iL:i:br fn. Hi, *nam Mnr 


Salomon Brothers has boosted 
its presence in theenergy^ 
tor by poaching 
burn from Lehman Brokers, 
where he has *»en h eadof 
European Energy and Natural 
Resources since 19S9- . 

As fln indication of the 

importance attached by 
aoi to this expansion i m the 
energy sector, Salomon I to 
created a scat on the board ror 

*«*"£*& 

went banking u» London, 


responsibility for the 

sector in Europe, toe Middle 
East, Africa and the turner 
Soviet Union. . • „ . 

The firm said yesterday that 
it also plans to take on 
another analyst for toe sector 
before the end of the year- 

Cockburn will be a senior 
member of Salomon Brothers’ 
global energy' and ch e micals 
grodp, which provides cspttal- 
ralsing and advisory services 
to clients in Asia and Latin 
America as well as Europe and 


North America. 

A graduate of St John's Col- 
lege, Cambridge, he began his 
career in 1978 as a lawyer at 
Slaughter & May, before join- 
ing Schroders in 1984* where 
he was responsible for energy 
financing: 

■ Sanlo Blanth, formerly gen- 
eral manager of mtamatifmfll 
operations for BANCO DO 
BRASIL, becomes managing 
director and chief executive of 
BB Securities, London. 


Swiss Bank 
executive to 
SIB 

The Securities and 
Investments Board has 
appointed on a two-year sec- 
ondment Tim Shepheard-Wel- 
wyn. most recently chief oper- 
ating officer of Swiss Bank 
Corporation’s Hong Kong busi- 
ness, to a newly created post of 
adviser on international 

affair s 

She p heard-Welwyn, formerly 
a Bank of England boffin, was 
recruited to SBC in 1987 by 
Andrew Large, former head of 
SBC! in London and now chair- 
man of the SIB. The SEB says it 
approached several investment 
hanks seeking a candidate, and 
that only SBC was interested. 

Hte duties will include coor- 
dinating the SIB’s relation- 
ships with other securities reg- 
ulators. 

He will also be considering 
the ticklish issue of devising a 
regulatory structure for Lon- 
don which allows it to keep its 
pole position at a time of 
increasing internationalisation 
of secu ritie s markets. 

SBC has recently attracted 
hostility from London's invest- 
ment banking community for 
suggesting that it is time to 
change some of the clubby 
rules on underwriting and 
trading securities, arguing that 
London risks its international 
standing if it fails to do so. 

But Shepheard-Welwyn says 
he has no Intention of using 
his position to advance SBCs 
interests. 



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12 


FINANCIAL TIMES WEDNESDAY OCTOBER 


19 1994 






INFORMATION FROM THE BANK OF ENGLAND 


A » 

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ISSUE OF £2,500,000,000 


8% TREASURY STOCK 2000 

INTEREST PAYABLE HALF-YEARLY ON 7 JUNE AND 7 DECEMBER 
FOR AUCTION ON A BID PRICE BASIS ON 26 OCTOBER 1994 


PAYABLE IN FULL WITH APPLICATION 


•v * •' 

“ V 77ils Stock will, on issue, be an investment falling within Part 1 1 of the First 
r . ' - <■", Schedule to the Trustee Investments Act I96t. Application has been made to the 
'? London Stock Exchange for the Stock to be admitted to the Official List on 27 
October 1994. 

v . 1. THE GOVERNOR AND COMPANY OF THE BANK OF ENGLAND 

invite bids for the above Stock. 

2. The principal of and interest on the Stock will be a charge on the National 
•?i.^ Loans Fund, with recourse to the Consolidated Fund of die United Kingdom. 

?• ?*' 3 - ^ ^ toc * c w * iI ^ re P aid at par on 7 December 2000. 

4. The Stock will be registered at the Bank of England or at the Bank of Ireland, 
v f y' i3* Belfast, and will be transferable, in muitiples of one penny, by instrument in 
,;' s v4 writing in accordance with the Stock Transfer Act 1963. Stock registered at the 
V.yv ; Bank of England held for the account of members of the Central Gilts Office 
(CGO) Service will also be transferable, in multiples of one penny, by exempt 
transfer in accordance with the Stock Transfer Act 1982 and the relevant 
subordinate legislation. Transfers will be free of stamp duty. 
iV'i^*j$5 5 * Lite rest Wfll be payable half-yearly on 7 June and 7 December. Income tax 
will be deducted from payments of more than £S per annum. Interest warrants 
* will be transmitted by posL Interest will accrue from Thursday, 27 October 1994 
the first interest payment will be made on 7 June 1995 at the rate of £4.8877 
£100 nominal of Stock. 

6. The Stock may be held on the National Savings Stock Register. 

7. The Stock and the interest payable thereon will be exempt from all United 
Kingdom taxation, present or future, so long as it is shown that the Stock is in 

Wit l'f -- beneficial ownership of persons who are neither domiciled nor ordinarily 

resident in the United Kingdom of Great Britain and Northern Ireland. 

““8. Further, the interest payable on the Stock will be exempt from United 
Kingdom income tax, present or future, so long as it is shown that die Stock is 
in the beneficial ownership of persons who are not ordinarily resident in the 
United kingdom of Great Britain and Northern Ireland. 

9. For the purposes of the preceding paragraphs, persons are not ordinarily 
resident in the United Kingdom if they are regarded as not ordinarily resident for 
die purposes of United Kingdom income tax. 

10. Applications for exemption from United Kingdom income tax should be 
made in such form as may be required by die Commissioners of Inland Revenue. 
The appropriate forms may be obtained from the Inspector ofForeign Dividends, 
Inland Revenue, Lynwood Road, Thames Ditton, Surrey, KT7 0DP. 

1 1. These exemptions will not entitle a person to claim repayment of tax 
k deducted from interest unless the claim to such repayment is made within the 

time limit provided for such claims under income tax law; under the provisions 
“ ~ ” of the Taxes Management Act 1970, Section 43 (1), no such claim will be outside 
t L* s l “ ne limit if it is made within six years from the date on which the interest 
££33 is payable. In addition, these exemptions will not apply so as to exclude the 
* nleresl fr® 01 “y computation for taxation purposes of the profits of any trade or 
business carried on in die United Kingdom. Moreover, the allowance of the 
exemptions is subject to the provisions of any law, present or future, of the United 
Erected to preventing avoidance of taxation by perrons domiciled, 
resident or ordinarily resident in the United Kingdom, and, in particular, the 
' ‘ r ;■ interest will not be exempt from income tax where, under any such provision, it 

:.■££ i- falls to be treated for the purpose of the Income Tax Acts as income of any person 
. " : l resident or ordinarily resident in the United Kingdom. 

. ' .i Method of Application 

••/• r ; 12. Bids may be made on either a competitive or a non-competitive basis, as set 
- ’ . * out below, and must be submitted on the application form published with the 

. prospectus. Each application form must comprise either one competitive bid or 
one non-competitive bid. Gilt-edged market makers may make competitive bids 
' by telephone to the Bank of England not later than 10.00 am on Wednesday, 26 
‘ October 1994. 

,13. Application forms must be sent to the Bank of England, New Issues, PO 
Box 444, Gloucester, GLI INP to arrive not later than 10.00 AM ON 
. . .. WEDNESDAY, 26 OCTOBER 1994; or lodged by hand at the Central Gilts 

* Office, Bank of England, Bank Buildings, 19 Old Jewry, London not later than 
10.00 AM ON WEDNESDAY, 26 OCTOBER 1994: or lodged by hand at any 

. of the Branches or Agencies of the Bank of England not later than 330 PM ON 

* TUESDAY, 25 OCTOBER 1994. Bids will not be revocable between 10.00 
= am on Wednesday, 26 October 1994 and 10.00 am on Monday. 31 October 1994. 
.14. COMPETITIVE BIDS 

- : (i) Each competitive bid must be for one amount and at one price expressed as 
a multiple of l/32nd off] and must be for a minimum of £500,000 nominal 
of Stock and for a multiple of Stock as follows:- 

Amount of Stock applied for Multiple 


£500,000-£1 ,000,000 £100,000 

£1,000,000 or greater £1 ,000,000 

(ii) Unless the applicant is a member of the CGO Service, a separate cheque 
representing PAYMENT IN FULL AT THE PRICE BID must 
.' >! accompany each competitive bid. Cheques must be drawn on a branch or 

r office, situated within the Town Clearing area, of a settlement member of 
•- ■ CHAPS and Town Clearing Company Limited. 

' ' (iii) The Bank of England reserves the right to reject any competitive bid or pan 
of any competitive bid. Competitive bids will be ranked in descending order 
of price and Stock will be sold to applicants whose competitive bids are at 
or above the lowest price at which the Bank of England decides that any 
competitive bid should be accepted (the lowest accepted price). 
APPLICANTS WHOSE COMPETITIVE BIDS ARE ACCEPTED 
WILL PURCHASE STOCK AT THE PRICES WHICH THEY BID. 
competitive bids which are accepted and which are made at prices above 
the lowest accepted price will be satisfied in foil; competitive bids which 
are accepted and which are made at the lowest accepted price may be 
satisfied in foil or in pan only. 

, 15. NON-COMPETITIVE BIDS 

(i) A non-competitive bid must be for not less than £1,000 nominal and not 
more than £500,000 nominal of Stock, and must be fora multiple of £1.000 
; ; nominal of Stock. 

v (ii) Only one non-competitive bid may be subrained for the benefit of any one 
person, and each non-competitive application form may comprise only one 
non-competitive bid. Multiple applications or suspected multiple 
y \ applications ore liable to be rejected. 


With a competitive bid 
With a non-competitive bid 


Price bid 

£100 per £100 nominal of Stock 


(iii) Unless the applicant is a member of the CGO Service, a separate cheque 
representing PAYMENT AT THE RATE OF £100 FOR EVERY £100 
NOMINAL OF STOCK APPLIED FOR must accompany each 
□on-competitive bid; cheques must be drawn on a bank in, and be payable 
in, the United Kingdom, the Channel Islands or the Isle of Man. 

(iv) The Bank of England reserves the right to reject any non-competitive bid. 
Non-competitive bids which are accepted wfll be acce pted i n full AT A 
PRICE (the non-competitive sale price) EQUAL TO THE AVER AGE 
OF THE PRICES AT WHICH COMPETITIVE BIDS HAVE BEEN 
ACCEPTED, the average being weighted by referen ce to the amount 
accepted at each price and ROUNDED DOWN TO THE NEAREST 
MULTIPLE OF 1/32ND OF £1. 

(v) If the non-competitive sale price is less than £100 per £100 nominal of 
Stock, the balanite of the amount paid will be refunded by cheque despatched 
by post at the risk of the applicant 

(vi) If the non-competitive sale price is greater than £100 per £100 nominal of 
Stock, applicants whose non-competitive bids are accepted may be required 
to make a further payment equal to the non-competitive sale price less £100 
for every £100 no minal of Stock allocated to them. An applicant from 
whom a further payment is required will be notified by letter by the Bank 
of England of the amount of Stock allocated to him and of the further 
payment due, but such notification will confer no right on the applicant to 
transfer the amount of Stock so allocated. The despatch of allotment letters 
to applicants from whom a further payment is required will be delayed until 
such further payment has been made. 

16. The Bank of England may sell less than the full amount of the Stock on offer 
at the auction. 

17. The Stock will be initially issued at a price such that it will not be a deep 
discount security for the purposes of Schedule 4 to the Income and Corporation 
Taxes Act 1988. Further issues of the Stock may be at a deep discount (broadly, 
a discount exceeding Yflb per annum) and in certain circumstances this could 
result in all of the Stock being treated thereafter as a deep discount security. 
However, it Is the intention of Her Majesty’s Treasury that further issues of the 
Stock will be conducted so as to prevent any of such Stock being treated as a 
deep discount security far United Kingdom tax purposes. Provided the Stock is 
neither a deep discount security, nor treated as a deep discount security, any 
discount to the nominal value at which the Stock is issued will not represent 
taxable income for the purposes of the relevant provisions. 

18. Letters of allotment in respect of the Stock sold, being the only form in 
which the Stock (other than amounts held-in the CGO Service for the account of 
members) may be transferred prior to registration, will be despatched by post at 
the risk of the applicant, but the despatch of any letter of allotment, and tiro refund 
of any excess amount paid, may at the discretion of the Bank of England be 
withheld until the applicant’s cheque has been paid. In the event of such 
withholding, the applicant mil be notified by letter by the Bank of England of 
the acceptance of his application and of the amount of Stock allocated to him, 
subject in each case to the payment of his cheque, but such notification will confer 
no right on the applicant to transfer the Stock so allocated. 

19. No sale will be made of a less amount than £1,000 nominal of Stock. If an 
application is satisfied in part only, tbe excess amount paid will, when refunded, 
be remitted by cheque despatched by post at die risk of the applicant; if an 
application is rejected foe amount paid on application will be returned likewise. 
Non-payment on presentation of a cheque in respect of any Stock sold will render 
such Stock liable to forfeiture. Interest at a rate equal to the London Inter-Bank 
Offered Rate for seven day deposits in sterling ("LIBOR") plus 1% per annum 
may, however, be charged on the amount payable in respect of any Stock for 
which payment is accepted after the due date. Such rate will be determined by 
the Bank of England by reference to market quotations, on the due date for such 
payment, for LIBOR obtained from such source or sources as tbe Bank of 
England shall consider appropriate. 

20. Letters of allotment may be split into denominations of multiples of £ 1 00 
on written request to the Bank of England, New Issues, Southgate House, 
Southgate Street, Gloucester, GLI 1UW received not later than 10 November 
1994. Such requests must be signed and must be accompanied by the letters of 
allotment. Letters of allotment, accompanied by a completed registration form, 
may be lodged for registration forthwith and in any case must be lodged for 
registration not later than 14 November 1994; in the case of Stock held for the 
account of members of foe CGO Service registration of Stock will be effected 
under separate arrangements. 

21. Subject to the provisions governing membership of foe CGO Service, a 
member of that Service may, by completing Section C of the application form, 
request that any Stock sold to him be credited direct to his account in the CGO 
on Thursday, 27 October 1994 by means of a member-to-member delivery from 
an account in the name of foe Governor and Company of the Bank of England, 
Number 2 Account Failure to accept such delivery by the deadline for 
member-to-member deliveries under the rules of the CGO Service on 27 October 
1994 shall for tbe purposes of this prospectus constitute default in due payment 
of foe amount payable in respect of the relevant Stock. A member of the CGO 
Service may also, subject to the provisions governing membership of that 
Service, surrender a letter of allotment to the CGO for cancellation and for the 
Stock comprised therein to be credited to the member’s account. The member 
who is shown by foe accounts of foe CGO as being entitled to any Stock shall, 
to the exclusion of all persons previously entitled to such Stock and any person 
claiming any entitlement thereto, both be treated as entitled to such Stock as if 
that member were the holder of a letter of allotment and be liable for the payment 
of any amount due in respect of such Stock. 

22. Application forms and copies of this prospectus may be obtained by post 
from the Bank of England, New Issues, Southgate House, Southgate Street, 
Gloucester, GLI 1UW; at foe Central Gilts Office, Bank of England, 1 Bank 
Buildings, Princes Street, London, EC2R 8EU or at any of the Branches or 
Agencies of the Bank of England; at die Bank of Ireland, Moyne Buildings. 1st 
Floor, 20 Callender Street. Belfast, BT1 5BN; or at any office of the London 
Stock Exchange. 

Government Statement 

Attention is drawn to the statement issued by Her Majesty’s Treasury on 29 May 
1985 which explained that, in the interest of the orderly conduct of fiscal policy, 
neither Her Majesty’s Government nor the Bank of England or their respective 
servants or agents undertake to disclose tax changes decided on but not yet 
announced, even where they may specifically affect the terms on which, or the 


conditions under which, this Stock is issued or sold by or on behalf of the 
Government or the Bank; that no responsibility can therefore be accepted f° r ^y 
o miss ion to make such disclosure; and thar sucb omission shall neither render 
any transaction liable to be set aside nor give rise to any claim for compensation. 


BANK OF ENGLAND 
LONDON 


18 October 1994 




TO THE GOVERNOR AND COMPANY OF THE BANK OF ENGLAND 

I/We apply in accordance with the terras of the prospectus For competitive and 
non-competitive bids date d 18 October 1994 as follows:- 

mil FOR COMPETITIVE BIDS ONLY 

fa far Stock to be purchased at the price bid) | 

Nominal amount of 8%Treasnry ” 

Stock 2000 applied for: p 

Amount of Stock implied for Multiple X. 

£500,000-£l,000jo0 £100,000 - 1 

£1,000,000 or greater £1,000,000 

£ 32nds 

Price bid per £100 no minal of Stock, 
being a multiple of l/32nd of £1: 

Sum enclosed (a), being the amount required | 
for payment IN FULL AT THE PRICE BID for C 
every £100 NOMINAL of Stock applied for: ~ 

Mil FOR NON-COMPETITIVE BIDS ONLY 

“ (ie for Stock to be purchased or the non-competitive sale price as 
defined in the prospectus) 

Nominal amount of 8 %Tneasaiy p 

Stock 2000 applied for. being a multiple jt 

of £1,000, with a minimum or £1,000 and a ■ -- 1 

maximum of £500,000 nominal of Stock: •- — 

Sum enclosed (a), being £100 (b) for every £100 £ 

NOMINAL of Stock applied fon 

mg FOR CGO MEMBERS ONLY ~~ " 

CGO PARTICIPANT NUMBER -Tel No 

Name of contact.. 

jflgl THIS SECTION TO BE COMPLETED BY ALL APPLICANTS 
[/We request that any letter of allotment in respect of Stock sold to 
me/us be sent by post at my/our risk to me/us at the address shown below. 

IN THE CASE OF a NON-COMPETITIVE APPLICATION, I/we 
warrant that to my/oor knowledge this is the only non-competitive application 
made for my/our benefit (or for the benefit of the persons on whose behalf I 
ara/we are applying). 

IN THE CASEOF AN AP PLICA TION BY A MEMBER OF THE CGO 
SERVICE WHO HAS COMPLETED SECTION C, we request that any Stock 
allocated to us be credited direct to oar account at the CGO. We hereby 
irrevocably undertake to accept such Stock by member-to-member delivery 
through the CGO Service from foe Governor and Company of the Bank of 
England, Number 2 Account (Participant number 5183) by foe deadline for 
such deliveries on 27 October 1994, and we agree that the consideration to be 
input in respect of such delivery shall be foe amount payable by us on the sale 
of such Stock in accordance with the terras of foe prospectus. 


SIGNATURE® 

of, or on behalf of, applicant 


MR/MRS 

MISS/MS 

FULL POSTAL 
ADDRESS 


TOWN 


I FORENAME® IN FULL I SURNAME 


I COUNTY 


| POSTCODE" 


NATIONAL SAVINGS STOCK REGISTER: if you wish foe Stock I — I 
to be registered on foe NATIONAL SAVINGS STOCK REGISTER 
(for which there is a limit of up to £25,000 nominal of Stock) please 
tick this box. 

(a) A separate cheoue must accompany each application. Cheques should 
be made payable to "Bank of England" and crossed "Newlssues" In 
respect of competitive bids, cheques must be drawn on a branch or office, 

To ^ n Clearing area, of a settlement member of 
CHAPS and Town Clearing Company Limited. In respect of 
non-corapetmve bids, cheques must be drawn on a bank in, and be 
payable m, the United Kingdom, foe Channel Islands or the Isle of Man. 

(b) The procedure for any refund, or further amount payable, is set out in the 
prospectus. 

APPLICATION FORMS MUST BE SENT TO THE BANK OF ENGLAND 
NEW ISSUES, PO BOX 444, GLOUCESTER, GLI 1NPTO ARRIVENOT 
LATER THAN 10.00 AM ON WEDNESDAY, 26 OCTOBER 1994- OR 
LODGED BY HAND AT THE CENTRAL GILTS OFFICE BANK OF 
ENGLAND. BANK BUILDINGS, 19 OLD JEWRY. LONDON NOT 
LATER THAN 10.00 AM ON WEDNESDAY, 26 OCTOBER 1994- OR 
LODGED BY HAND AT ANY OF THE BRANCHES OR AGENCIES OF 
THE BANK OF ENGLAND NOT LATER THAN 330 PM ON TUESDAY 
I 25 OC TOBER 1994. _ 




Pink 


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FINANCIAL TIMES WEDNESDAY OCTOBER 19 1994 


13 


ARTS 


Television/ Christopher Dunkley 

News on a heartstring 


It may be asked “How is this so 



‘Children's Hospital' on BBC1: medicine as the subject of ‘infotainment’ rather than investigative journalism 


follow-up to check the alter effects extend work on nerve gases begun 
of thwa» experiments, the of' in Nazi concentration camps? Per- 
haps we would approve, but how 


T he move towards soft- 
centred "human inter- 
est” joarnaHsm on tele- 
vision is unmistakable 
and yet the fear, 
expressed in this column as anx- 
iously as anywhere, that such mate- 
rial would drive out tough, investi- 
gative journalism, especially on 
ITV. has, so far, proved empty. 
Indeed, if there is any ground left 
far such qualms it would seem to 
exist at the BBC more than ITV. 
True, the realisation th at you could 
exploit “sexy" stories (which do not 
have to have anything to do with 
sex. the word being used in televi- 
sion to mean a cross between 
appealing and trendy) to attract big 
audiences in peak time at costs well 
below those for popular drama or 
other entertainment, happened to 
coincide in Britain with the demoli- 
tion and reconstruction of ITV. The 
need for the new companies to 
make huge sums of money to pay 
far the government’s dreadful fran- 
chise auction and Treasury levy in 
addition to dividends, and at the 
same time satisfy the demanda of 
the Independent Television Com- 
mission not to banish all current 
affairs to the periphery, led to the 
prompt import of “infotainment” 
models from the US. But the BBC 
was not slow to follow suit: in fact 
it could be argued that today the 
BBC sets the pace. 

Consider the schedules for tomor- 
row evening. At 8.00 BBCl begins 
another batch of CMdren's Hospi- 
tal, a series which typifies the fash- 
ionable approach, bei ng c oncerned 
with individual heartstring-tuggmg 
stories. Medicine is a - if not the - 
major catchment area far infotain- 
ment, and children, like animals, 
are a better bet than adults, being 
more helpless, more appealing, and 


less likely to die. At 8.30 ITV 
screens Blues And Twos, one of sev- 
eral series which literally chase 
ambulances, in the hope that the 
cameras will come across a really 
nasty accident At 10.00 we are 
promised that Inside Story on BBCl 
will “lift the lid off cosmetic sur- 
gery". And at U-G5 Channel 4 offers 
Prostitute in which, we are told, we 
can meet Monique, mother of seven, 
who took up prostitution when her 
lover got into debt, and Agnes who 
treats the business as an office job. 
There can surely be no argument 
that there is far more material of 
this sort on British television today 
than there used to be, nor any deny- 
ing that it represents a shift 
towards the tabloid. 

H owever, on Monday 
last week, at 8.30. 
bang in the t*” 1 ^** of 
peak time, ITV pro- 
vided a classic World 
hi Action report an a 80-year experi- 
ment in Britain to inject 2,000 slow- 
growing children with a hormone 
extracted from pituitary glands col- 
lected from bodies in hospital mor- 
tuaries. If it sounds like the plot 
from a Hammer movie, the outcome 
was not so very different though 
the children did grow faster, they 
then began to die of Creutzfeldt-Ja- 
kob Disorder, the human version of 
"Mad Cow Disease". Perhaps this 
story 1ms already been widely publi- 
cised in the medical press or even 
in co nsum er magazines or newspa- 
pers, but I had certainly not come 
across it WIA investigated the way 
in which the pituitaries were col- 
lected, often by mortuary atten- 
dants who were paid 12Kp a gland, 
keeping the parts in a cupboard or 
on a window ledge until they bad 
enough to send off. 


very different from those other "soft 
centred* medical series?" Tim 
answer is that although WIA did 
interview Individual sufferers, the 
programme's chief concern was to 
reveal the classically British man- 
ner in which the whole business 
has been kept under wraps. One 
patient said they had been “treated 
like morons" with doctors and civil 
servants being evasive and telling 
those affected as little as possible. 
Another said, with admirable mod- 
eration. “I the whole thing 

has been very shabbily handled". It 
was an appalling story, and yet 
hea rtening to find television using 
its weight and influence in a classic 
piece of Journalistic investigation. 

The next day brought an edition 
of Network First, again on ITV, this 
time at 10.40 (surely not so terribly 
late for anyone really interested) 
called “The Secrets Of Porton 
Down" which produced even more 
important revelations. The pro- 
gramme Showed how Hflimn that 
Britain gave up "offensive” 
research to stick to the “defensive” 
type in the 1950s are, at best, disin- 
genuous. It also showed how ser- 
vicemen have, over many years, 
been lured to the centre for chemi- 
cal and biological warfare research 
at Portal Down as guinea pigs. The 
word "lured” may seem loaded if 
you have not seen the commercial, 
shown on this programme, which 
was used to induce men to volun- 
teer, a commercial which made Por- 
tan Down look, quite literally, like a 
holiday camp with the special 
attraction of topless women. The 
programme showed how at least 
one man died (his inquest was kept 
secret) and - via personal witness - 
how others have suffered. Asked 
why there had been no systematic 


Porton Down said there was no evi- 
dence of any need for such 
work... but how could there be 
without any follow up? 

Programmes of this sort send ten- 
drils of fear curling around your 
heart as yon realise how frighten- 
ingly easy it is for even democratic 
governments to mislead their elec- 
tors, or simply to lie by omission. 
How many of us realised that our 
governments used our money at the 
Nancekuke biological phtmim) 
warfare centre in Cornwall to 


can we decide unless we know what 
is going on? And is the job of reTirng 
us not more important than keeping 
us up to date on French prostitutes? 

Thursday brought yet another 
revealing programme, iinre on 
Channel 4 where Critical Eye pres- 
ented “Quick War, Slow Death”. 
Here was yet another mrample of 
the passion among British authori- 
ties far keeping the citizen in the 
dark, wheeling out the Official 
Secrets Act at every o pp o r tu nity. 


ensuring that victims of a single 
problem cannot make common 
cause, and withholding fundamen- 
tal human rights by denying the 
British a freedom of information 
act This programme l eft you in no 
doubt, first, that a number of those 
involved in the Gulf War now suffer 
stone form of long term illness (the 
Americans admitted it long ago) 
second, that British military 
and government authorities wzQ go 
to startling and embarrassing 
lengths to avoid any admission of 
involvement 

Three programmes in one week 


may not be hugely significant but 
they do seem to give the lie to my 
previous suggestions that the 
disappearance of such series as This 
Week and First Tuesday could mean 
a new ITV with no Journalistic 
teeth. On the contrary, however 
unhealthy the relationship between 
government and franchise winners, 
ITV currently looks like much the 
most fierce champion in British 
television of the public right to 
know. And that, surely, makes up 
for an awful lot of ambulance 
chasing and cooing over little 



Holding the show together: Dave Gflmonr 


Theatre/Ian Shuttleworth 

Resurrections 

he possesses a marvellous ear for 



Pink 

Floyd 

P ink Floyd are the best of 
pop - and the worst Cur- 
rently filling Bari's Court 
for an unprecedented 14 
nights, they are a mass of contradic- 
tions. 

The songs evoke a druggy dream- 
world of hippie indolence a genera- 
tion old, yet are programmed with a 
computerised precision that Captain 
Kirk would admire: The lyrics are 
often heavy with revolutionary fer- 
vour yet the band, or rather the 
three that survive, enjoy all the 
privileges of the ultra rich. The 
music encourages you to dose your 
eyes and trip, yet everyone at the 
concert is tense and alert for tire 
next mind blowing explosion of 
techno-trickery. 

The Floyd long ago realised that 
their music was irredeemably 
archaic and that to survive they 
must become showmen. Lack in g 
personalities, they sold their souls 
to the backroom boys; you leave the 
concert singing the special effects- 
rather than the tracks from the new 
album. The Division BeR 
As you wait for the band to 
appear you are titillated with bird 
song and a tolling tocsin; then 
comes the dry ice and the brilliant 
blinding spotlights and green red 
and yeUow laser beams. It is like 
being bombarded with innocuous 
friendly fire. 

To help keep you awake daring 
the many songs that meander into 
banality, a giant tambourine-shaped 
screen offers helpful images of 
spliff-toting beatniks, Cambridge 
colleges, and Dying bedsteads, 
which just fail to make sense but 
are very decorative. 

When the music lapses into espe- 


cially monotonous doodling you 
know the Floyd have a cracker up 
their sleeves. Look out for the 
model aircraft screeching across the 
Arena to explode near the stage; 
and there go the flares, pumping 
fire into the air again mid again 
while the Floyd’s motifs, giant 
polystyrene pigs, poke their heads 
above the stage, eyes piercing the 
audience. 

Occasionally the adrenalin shot 
cpwiew from the from “The 

Wall”, in which the three ululating 
girt backing singers break into bru- 
tal cockney, a nd an abusively sneer- 
ing “Hey Teacher” breaks out in 
lights at the front of the stage. It all 
comes right near the end, too, 
when, against images of world lead- 
ers sburriim and eliding , grinning 
and fibbing and generally making 
fools of themselves. Pink Floyd play 
their 20-year-old classic, "Dark side 
of the moon”. 

What holds the show together is 


Dave Gflmour. the guitarist, who 
stands centre stage and bravely des- 
patches guitar jidtai back through 
the dpradPR like Rick Wright on 
keyboards and Nick Mason on 
drums GOmour has a dOppleganger, 
a shadowy fellow musician who dis- 
creetly earns his fee, and pumps out 
the sound to pomp mark ten. 
Despite the millions invested in the 
hardware at least the Floyd are pro- 
fessional enough to turn up. 

The Floyd’s success drives the 
critics mad: there most be some- 
thing wrong when fans fawn on 5Q 
year olds pumping out music 
unchanged since 1970- What is 
wrong is current pop. It is a safe bet 
that in a century’s time audiences 
will sit in respectfiul approval at 
recreations of Pink Floyd concerts. 
There are very few other bands 
assured of such prospective immor- 
tality. 

Antony Thomcroft 


P re-publicity for Resurrec- 
tions has marketed its 
author *BlyI Bandele- 
Thomas astutely, as a num 
who gave up the lucrative job of 
running an illegal gambling opera- 
tion in Nigeria at the age of 16 to 
go to university and become a 
writer. It was an art-conquered-aR 
story tailor-made for the broad- 
sheets, the perfect hype. However, 
cynicism of this kind is dashed on 
encountering his work. Bandele- 
Thomas is an astounding story 
taler. In both senses of the phrase. 

He is a taler of astounding sto- 
ries. The world of Resurrections Is 
an an exaggerated vision of con- 
temporary Nigeria, in which a drug 
baron (who clothes himself in 
euphemism, indsttng that he is an 
enterprising businessman who has 
spotted a gap in the market for 
“commodities") can use both sonar 
contacts in the corrupt military 
government and simple bribery to 
sue for Ms acquittal on a capital 
charge. Negotiations between his 
counsel and the Judge are con- 


W o rried that a visit to 
that new production at 
Covent Garden might 
turn out to be a nasty 
post-modern surprise? Just a short 
tube ride away on Monday one 
could see opera being performed as 
It used to be, most appropriately in 
London’s museum quarter at South 
Kensington. 

For a single night the Romanian 
National Opera was in town. With 
three operas in hand, the company 
is at present touring Britain on 
what is an ambitious itinerary 
given the costs involved in t akin g 
an orchestra, chorus and soloists 
overseas. Audiences are said to 
have been disappointing in some 
venues but there were no worries m 
London: a well-filled Royal Albert 
Hail greeted their rare staged per- 
formance in Britain of Verdi's 
Nabucco. 

There have only been a few 


ducted in a haw* of poetic drcmnlo- 
cution, where the very writing desk 
is alive, resting on the head of 
mute menial. One of the characters 
describes the story he himself 
Inhabits as “kafka on speed”, 
which isn’t too far from the truth. 

Here, too, the dead routinely 
return to the Hying to offer advice, 
smooth their journey into the next 
world or even to re-write history. 
These ghosts cany no air of the 
extraordinary about them, but are 
simply an integral part of the fab- 
ric of things. Bandele-Thomas has 
fashioned a potent West African 
count er part to the creations of the 
Latin-American realists. 

He is also an astounding teller of 
stories. The Impulse to weave tales 
seems stronger than the desire to 


attempts to resurrect a “period” 
Verdi staging in the west, but in 
Romania they have no need to try. 
From contemporary reports it is 
safe to say that Ndbucco in Verdi's 
day would have looked more like 
thfa dusty offering than a fashion- 
ably updated production, set In the 
present-day Middle East against a 
background of armoured tanks and 
oil wells, where the characters 
become power-mad dictators and 
hooded terrorists. 

There Is nothing like a bit of 
cheap spectacle. Colour-coordinated 
costumes (ruby red for bloodthirsty 
soldiers, green for homesick: prison- 
ers) ensure that every crowd scene 
will be a gaudy feast for the eye. 
Final tableaux are a speciality: sofo- 


indhridiial phrases, and an enviably 
fertile imagination through which 
his narratives twine, but as the 
play progresses from one episode to 
the next there is often a palpable 
dunk as bis dramatic locomotive 
crosses the points. 

So compulsive is this urge that 
on the conclusion of the mate story 
he cannot resist the temptation to 
keep tire tale going; he tacks on an 
even more fantastic coda in which 
his characters return in different 
guises. Yet the mark of a trim stor- 
yteller is that the listeners want 
above all to know what happens 
next, or how it happens. 

In Yvonne Brewster’s direction it 
happens with startling visual opu- 
lence. The judges throne is periodi- 
cally flown up to hover above the 


ists and chorus are happy to stand 
stock-still singing away for hours, 
but in the closing minutes of each 
act everybody wflj make a dash to 
take up their positions. Some danc- 
ing helps, too. Few generals are as 
fortunate as this Nabucco, who 
arrived with an army of comely 
dancing girls, each dad in little 
more than a body stocking and a 
strategically-placed big red tassel 
Altogether, it was a bit of a hoot, 
but in the Royal Albert Hall it trill 
at least have come across as a visu- 
ally bright production. The Roma- 
nian chorus and orchestra are an an 
average level with small equivalent 
companies in western Europe and 
the performance seemed well 
enough prepared, though the con- 


rest of the action; chilling, vulture- 
headed, stilt -walking figures stalk 
the proceedings when toe smell of 
death hangs in toe air; more ridicu- 
lously, a ghost arrives on the stage 
on a bicycle. 

Ben Thomas as Bubba BB has all 
the implausible dignity of a Chari- 
tan Heston; his underling Santana 
- the storyteller within the play - 
is. In Colin McFarlane’s perfor- 
mance, a beguiling mixture of Inar- 
ticulate deference toward BB and 
confident tabulation toward the 
audience. A less fantastic show 
would be stolen by Don Warring- 
ton’s Judge Bassy, the worm who 
finally turns. 

Bandele-Thomas’s Two Horsemen 
transfers from the Gate to the Bush 
next month, and his Bad Boys is to 
be screened by the BBC; stories 
keep spilling from him, and judg- 
ing by Resurrections o ut po urin gs 
from Ms weD-spring are both fla- 
voursome and refreshing-. 


At the Cochrane Theatre until the 
November 29 (071 242 7040) 


ductar Cornel Traflescu might have 
brought more intensity to the high 
points of the drama. 

For export, Romania's main hope 
is likely to be its singers. This cast 
included a moving Zaccaria in Pom- 
pel Harasteann and a tenor with 
some inelegant heft far Iamaele in 
Mlhai Munteanu. Nicolae Urda- 
reanu (the one with the big putty 
nose) had enough voice for 
Nabucco, but proved shaky on style 
and intonation when required to 
sing a lyrical line. Melania Ghioalda 
sounded confident about tackling 
Abigaille, although she lacked vocal 
daws in this tigress of a role. Most 
impressive was the mezzo of Ecater- 
ina Tutu: the role of Fenesna did not 
give her much to sing, but we shall 
no doubt hear mare of her in the 
future. 


Tour concludes in Canterbury, 
October 18-22 


ensure that their fabric is smooth: 

Opera/Hichard Fairman 

A Romanian ‘Nabucco 



ONN 

Tonight. Sun, next Tues: 
n Mercuric conducts JDrgen 
a new production of La 
a, with cast headed by IVIarisa 
Michael Rees Davis and 

as Mohr. Fri: It guarany, opera 
th century Brazffian composer 
fo Cartes Gomes. Set Les 
s d’Hoffmarm (0228-773667) 


orts Tonight, 
tee Gulflon conducts 
onal Bordeaux 
ano concertos by 
int-Saens and 
with Cecfle Ousset 


onight, Fit LortzJng’S 
cz. Tomorrow, Sun: 
ppirta. Sat Peer Gynt 
d by Jochen Ulrieh 
DO) 

Niight, tomorrow. Fit 
s King Lear, directed 


by GQnter Kramer (0221-221 840Q) 
PMharmo n i e Tomorrow: clarinettist 
Giora Feldman mid ensemble. Mon: 
Irish Folk Festival. Tues: Haydn’s 
The Creation (0221-2801) 


■ DRESDEN 

Semperoper Tonight Friedomann 
Layer conducts Dresden 
StaatskapeHe In works by Schubert, 
Mozart and Sch raker. Tomorrow: 
Ariadne auf Naxos. Frfc Die 
Zauberflfita. Sat Stephan Thoss’ 
production of Prokofiev’s ballet 
Romeo and Juflet. Sun morning, 
Mon and Toes evenings: Giuseppe 
Sinopofl conducts Dresden 
Staatskapefle In Bruckner’s Eighth 
Symphony- Sun everting: La travtata 
(0851-484 2323) 


■ FRANKFURT 

Oper The second cycle erf the 
Frankfurt Operate Ring cycle began 

last night with Das Rhatngoid, and 
continues with Die WaJkOre tonight, 
Siegfried on Frl and 
Gatterdfimmerung on Sun. A third 
and final cycle beflfoB next Tues. 
Sytvahi Cambrellng conducts a 
staging by Herbert Wernicke, and 
the cast Vs headed by Harold 
Stamm, Janis Martin and WDfiam 
Cochran (D69-2360&1) 

Alte Oper Riccardo Muti conducts 
the Orchestra and Chorus of U 
Scafa Milan in Vertflte Requiem on 
Sat, with soloists Michele Grider, 
Uiciana d’lntfoo, Vincenzo la Scoia 
and Roberto Scandhmi. On Sun, 
Muti conducts Haydn's Symphony 
No 48 and Rossini’s Stabat Mater. 
Shirley Bassey gives a concert on 
Mon (069-134 0400) 
jahrtumderthaile Hoechst A 


touring production of the the 
English-language musical Hair can 
be seen on Mon. Anatoi Ugorski is 
piano soloist with the Lausanne 
Chamber Orchestra n®d Tues 
(069-360 1240) 


■ GOTHENBURG 

tCnnserthuaet Tonight Neeme JOrvl 
conducts Gothenburg Symphony 
Orchestra bi works by Sfoefius and 
Tamberg, with trumpet soloist Hakan 
Hardenberger. Tomorrow: Jtirvi 
conducts Stenhammar, Sibelius, 
Tubin and AlWen, with vtofin soloist 
Maxim Vengerov. The orchestra 
takes these pr og ra mmes on tour 
over the next two weeks to Vienna, 
Paris, Glasgow and London 
(031-167000) 

Operan Tomorrow, Sun: BbmdahTs 
1959 opera Anlara. Frfc first night of 
Robert North's new staging of 
Prokofiev’s baflet Romeo and Juliet 

These are foe first productions in the 
new opera house, which opened at 
the beginning of the month 
(031-131300) 


■ HAMBURG 

Staatsoper Tonight, Sat Roberto 
Abbado conducts Andreas HomokTs 
new production of Rigoletto, with 
cast headed by Frartz Grundheber, 
Mario Gterdari and Heflen Kwon. 
Tomorrow: Henze's baflet Undine, 
choreographed by John Neumefer. 
Fri, Sum Gosi fan tutte. Tues: 
Hamburg BaUet Aids gate 
(MO-351721) 

Musftftafle Sun morning. Monoid 
Tues evenings: Gerd Albrecht 
conducts Hamburg State 
Phflharmonic Orchestra In works by 
Brahms and Ravel, with piano 


soloist Andrei Gavrilov (040-354414) 


m LEIPZIG 

Gewandhaus Tomorrow, Frfc Kurt 
Masur conducts Gewandhaus 
Orchestra in works by Beethoven, 
Turrin and Mahler, with trumpet 
soloist Phflip Smith. Sun: Justus 
Frantz conducts MidcBa German 
Radio .Chamber Philharmonic in 
Haydn and Mendelssohn. Sun 
(Weiner Saeri): Gerhard Oppitz piano 
recital. Mon: Horst FSrster conducts 
Leipzig Academic Orchestra in 
Vrvakfl, Mozart and Haydn, with 
vocal and instrumental soloists 
(0341-713 2280) 


m LYON 

Opdra Tonight, Sat Kent Nagano 
conducts Louis Erto'e new 
production of Berlioz’s La 
Damnation de Faust, with Susan 
Graham, Thomas Moser and Jos6 
van Dam (repeated Oct 30, Nov 2, 5, 
8). Oct 31: Itzhak Periman vfofln 
recital (tel 7200 4545 tax 7200 4546) 


■ MUNICH 

Gastalg Tonight Bryan Ferry. 
Tomorrow: Enoch zu Guttenberg 
conducts Munich Bach CoDegtum in 
choral works by Bach aid Mozart 
Frfc Yevgeny Svetfanov conducts 
Russian State Symphony Orchestra 
in Tchaikovsky and Skryabin, wtth 
piano soloist Andrei Gavrilov. Mon: 
Justus Frantz conducts Middle 
German Radio Chamber 
PMharmonie In Haydn. Mozart and 
Mendetesohn. Tues Fab» Litisl 
conducts Munich Racfio Orchestra in 
concert performance of Giordano’s 


Fedora, starring Agnes BaKsa 
(088-4809 8614) 

HaHkutessaal dor Resktenz 
Tomorrow: Munich Chamber 
Orchestra plays works by Frank 
Martin, Hummel, Schnittke and 
Strauss, with viola sototet Kim 
Kashkashian. Mon: Valery 
Afanassiev piano recital 
(089-299901) 

Staatsoper Tomorrow: Lucia dl 
Lammermoor with Edita Gruberova 
and Dermis O’Neffl. Fri, next Thurar. 
Nabucco with Renato Bruson and 
Julia Varady. Sat Ashton's ballet La 
file mat gardGe. Sun, next Wed: 
Dvorak’s Dimitri], with Kenneth 
Garrison and Uvte Aghova. Tues: 
American ballet programme. Oct 31: 
first rtight of new production of Don 
Giovanni, conducted by Colin Davis 
and staged by Nicholas Hytner 
(089-221316) 


■ NICE 

Op6ra A new production of Vercfite I 
due Foscart, conducted by John 
Mauceri and staged by Pier Luigi 
Pizzi, opens on Oct 28 fix* four 
performances with a cast headed by 
Paolo Coni and Neliy MMcdu (9380 
5983) 


■ OSLO 

Konserthus Tomorrow, Frfc Jirf 
Betohlavak conducts Oslo 
Philharmonic Orchestra in works by 
Dvorak. Martinu and Beethoven 
(2283 3200) 


■ STOCKHOLM 


Royal Opera Tonight, Fri, Tubs: La 
boheme. Tomorrow, Mon: Alda. Sat 
Ingver Udholmte Strindberg opera A 
Dream Play. Oct 28: first right of 
Yevgeny Poliakov's new production 
of Minkua' baflet Don Quixote 
(tickets 08-248240 information 

08-203515) 

Konserthuset Tonight Nicholas 
Cleobury conducts Stockhobn Wind 
Symphony Orchestra and 
Ptiilharmonte Chorus in works by 
Copland, Tippett, Ives and Bruckner 
(tickets 08-102110 information 
08-212520) 


■ STRASBOURG 

Palais de la Musfque Tonight 
Pascal Verrot conducts Strasbourg 
Philharmonic Orchestra in works by 
Weber, Beethoven and Ravel (8852 
1845) 

Theatre Municipal Tomorrow, Sat, 
next Mon: Friedrich Haider conducts 
Dieter Dorn’s new production of 
Salome, with cast headed tv 
Cynthia Makris and Philippe 
Roufllon. Next Tues: Nathalie 
Shitzmarat sings Schumann Lieder 
(8875 4823) 


■ STUTTGART 

Staatstheator Tomorrow: Achlm 
Prayer's production of Der 
FraischOtz. Frn Rolf Riehm's new 
opera Das Schweigen der Sirenen. 
Sat, next Tues, Fri and Sat John 
Crankote ballet Onegin. Sun, next 
Wed: revival of Johannes Schaafs 
production of Lady Macbeth of 

Mtsensk, starring Kathryn Hamas, 

Next Mon, Thus: MontevenSte 
UTfese (0711-221795) 


ARTS GUIDE 

Monday: Berlin, New York and 
Parts. 

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

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

Friday Exhibitions Guide. 

European Cable and 
Satellite Business TV 
(Central European Tune) 
MONDAY TO FRIDAY 
NBC/Snw Channel: FT Busi- 
ness Today 1330; FT Business 
Tonight 1730, 2230 

MONDAY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

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

WEDNESDAY 

NBC/Super Channel: FT 
Reports 1230 

FRIDAY 

NBC/Super Channel: FT 
Reports 1230 

Sky News FT Reports 0230, 
2030 

SUNDAY 

NBC/Super Channel: FT 
Reports 2230 

Sky News: FT Reports 0430. 
1730; 





financial times 


WEDNESDAY OCTOBER 19 1994 


14 




Edward Mortimer 


t Tbe Kuwait cri- 
sis has already 
faded from the 
headlines. In 
retrospect the 
crisis appears 
rather phoney. 
Almost cer- 
tainly, Mr Sad- 
dam Hussein had no intention 
of attacking Kuwait this time. 

Yet the crisis was also real, 
because in this game “almost” 
is not good enough. A lot of 
people, alter all. were almost 
certain he would not do it in 
1990. As a result, the US put 
out confusing messages, which 
be misread as signs of weak- 
ness or indifference. 

This time, if one judges fay 
the Iraqi media. Mr Saddam 
had identified Mr Bill Clinton 
as “the hesitant president” on 
the basis of events in Somalia, 
Korea and Haiti. Well, Mr Sad- 
dam is not alone in that. Prob- 
ably his objective was merely 
to stage a crisis, to which a 
“diplomatic solution", perhaps 
involving ex-president Jimmy 
Carter, would have to be 
found. But had Mr Clinton not 
sent troops to Kuwait, Mr Sad- 
dam could well have taken it 
as a sign that the US had no 
stomach for a second Gulf war, 
and forged ahead. 

Now both sides are claiming 
victory. The US is apparently 
satisfied with the passage of 
yet another United Nations 
Security Council resolution, 
requiring Iraq not to deploy its 
troops in positions that enable 
it to threaten Kuwait and 
warning of “serious conse- 
quences" if it does. Mr Warren 
Christopher. US secretary of 
state, believes this gives the 
US “all the necessary authority 
to act” against Mr Saddam if 
he threatens Kuwait again. But 
this interpretation is contested 
by France and Russia. In Bagh- 
dad, official spokesmen and 
even some western diplomats 
believe the crisis has strength- 
ened Iraq's position, by push- 
ing the lifting of sanctions 
higher up the international 
agenda and bringing Russia 
back into the argument on 
Iraq's side. 

Certainly the crisis revealed 
the existence of a broad coali- 
tion of business, diplomatic 
and humanitarian lobbies in 
favour of easing or lifting sanc- 
tions. These lobbies point out 
that Mr Saddam's removal 
(unlike that of General Raoul 
Cedras in Haiti) has never 
been called for by any UN reso- 
lution: and they argue that 
Iraq's compliance with the res- . . 
olutions that have been passed 


The 

phoney 

war 

A more active 
strategy to get 
rid of Saddam 
Hussein is 
essential 

should be rewarded. This 
would supposedly relieve the 
needless suffering of the Iraqi 
people, while allowing western 
companies to win lucrative 
contracts and making it possi- 
ble to build Iraq back into the 
regional security order, as a 
bulwark against the alleged 
Iranian threat 
Yet in reality none of those 
objectives is likely to be real- 
ised while Mr Saddam remains 
in power. His lack of concern 
for the suffering of ordinary 
Iraqi people is amply attested. 
Food and medical supplies are 
not covered by the sanctions. 

The US will not 
agree to lift 
sanctions so long 
as Saddam 
remains in power 

and Mr Saddam evidently has 
money he could spend on them 
if he so chose. More money 
could be raised for that pur- 
pose by selling oil under the 
terms of Security Council reso- 
lution 706, which specifically 
provides for it If he is allowed 
to sell on and spend the money 
as he likes, we can be sure he 
will have other priorities. 

As for regional security, it is 
inconceivable that western or 
regional powers will again 
make the mistake of building 
up Mr Saddam as a bulwark 
against Iran. Even business 
opportunities would be limited 
by a continued arms embargo, 
by memories of what happened 
to foreigners in Iraq during the 
1990 Kuwait crisis, and by gen- 
eral uncertainty about the sta- 
bility of a regime so blatantly 
lacking any popular base, espe- 
cially in the southern oil-prod- 
ucing region. 

In any case, it is now clearer 


than ever that the US will not 
agree to lift sanctions so long 
as Mr Saddam remains in 
power. Yet at the same time 
there is no guarantee that 
sanctions will remove him; and 
if they do he will not go qui- 
etly. Even Gen Cedras agreed 
to step down only when US 
troops were already on the way 
to force him out Before that 
he had done all he could to 
prove that sanctions were hurt- 
ing the innocent Haitian 
masses more than they were 
hurting him. 

Mr Saddam is doing the 
same, and he has other tricks 
up his sleeve. The feint against 
Kuwait was one. The next 
could well be a new move 
against the Kurds in the north, 
starting perhaps with the area 
south of the 36th parallel 
which is not covered by the 
“no fly zone", and hoping that 
Turkey would refuse to author- 
ise retaliation by western air- 
craft based on its soil. 

The three-year-old US strat- 
egy of waiting for sanctions to 
work and reacting to Mr Sad- 
dam’s provocations as and 
when they happen is not good 
enough. A more active strategy 
to get rid of him is essential, 
and should include some or all 
of the following elements: 

• expanding the no-fly zone to 
cover all of Iraq, and excluding 
all armour and heavy artillery 
from both north and south; 

• encouraging the opposition 
Iraqi National Congress to set 
up a provisional government in 
the exclusion zones, with 
finannial and militar y support 
from Saudi Arabia and Kuwait; 

• stating explicitly that sanc- 
tions will be lifted only if Iraq 
accepts Security Council reso- 
lution 688 (which correctly 
identifies Mr Saddam's internal 
repression as a threat to inter- 
national peace and security 
and rails on him to stop it) and 
if UN human rights monitors 
are allowed throughout the 
country as recommended by 
the UN special rapporteur; 

• lifting sanctions on areas 
controlled by the provisional 
government as soon as it 
accepts these conditions; 

• setting op an international 
war crimes tribunal on the 
lines of that for Yugoslavia, 
and indicting Mr Saddam, 

Such a programme would 
remove the ambiguity about 
the purpose and target of sanc- 
tions, and would make it dear, 
notably to the Iraqi armed 
forces, that the country can be 
saved from anarchy only by 
hastening Mr Saddam's down- 
fall, not by delaying it 


Glorious, stirring sight' The 
poetry of motion! The real way 
to travel! The only way to 
travel! Here today - in next 
week tomorrow! Villages 
skipped, towns and cities 
jumped - always somebody 
else's horizon! 0 bliss! 0 poop ■ 
poop! 0 my l 0 my! 

F ew have been so 
stirred by the romance 
of the open road as Mr 
Toad, the irrepressible 
hero of Kenneth Grahame's 
children's classic. The Wind in 
the Widows, on his first sight 
of a motor car. But 90 years on 
from Mr Toad's fictional adven- 
tures, this Elysian view of the 
car has dimmed as growing 
numbers of motorists take to 
the road. 

Official forecasts suggest 
that the number of cars on 
Britain's roads could double by 
2025. While the car remains a 
potent symbol of freedom, its 
economic and environmental 
costs are being weighed more 
carefully by the government 
This represents something of 
a change for the Conservative 
government In 1979, Mrs Mar- 
garet Thatcher, then the new- 
ly-elected prime minister, 
urged that nothing should 
come in the way of “the great 
car economy". 

Last week. Dr Brian Mawhm- 
ney, the new UK transport sec- 
retary. struck a different note 
in his address to the Tory 
party conference. He caught 
the headlines with a strong 
environmental attack on 
vehicle pollution, announcing 
tougher exhaust standards and 
roadside tests designed to take 
the worst polluting vehicles off 
the road. “1 aim to get rid of 
these belching monsters once 
and for all,” he told delegates. 

Signs that the environmental 
arguments are beginning to 
count for more in UK transport 
policy have become apparent 
since the Rio Earth Summit in 
1992 when the UK committed 
itself to producing a detailed 
enviro nmen tal strategy. 

A recent environment 
department discussion paper, 
Improving Air Quality, identi- 
fied the car as the number one 
source of pollution. 

“In some areas of the UK, 
even where there is no signifi- 
cant industrial activity, high 
levels of air pollution can 
occur," the discussion paper 
stated. “In these areas, largely 
due to motor vehicle emis- 
sions. World Health Organisa- 
tion guidelines [on pollution 
levels] are often exceeded." 

The department concluded 
that the growing evidence of 
links between poor air quality 
and serious medical conditions 
such as asthma, the incidence 


Charles Batchelor on the UK government s > 
disenchantment with the ‘great car economy 

Dying romance of 
the open road 



of which is increasing particu- 
larly among children, 
demanded careful attention. 

Further support for the envi- 
ronmental arguments against 
the internal combustion engine 
is expected to come next week 
when the Royal Commission 
on Environmental Pollution, 
announces the finding s of a 
study into the environmental 
impact of Britain's traffic. 

The 300-page report, the 
result of nearly two years’ 
work by a 16-strong team of 
scientists and environmental 
experts, will make some 100 
recommendations on how to 
deal with transport problems. 

There will be a strong 
emphasis in the report on tax 
measures to curb car use, with 
a doubling of the price of pet- 
rol over the next 10 years sin- 
gled out as one desirable aim. 
The government is already 
committed to increasing fuel 
duty 17 at least 5 per cent a 
year and is expected to raise it 
by considerably more in the 
November Budget The aim of 
the report, according to Sir 
John' Houghton, commission 


chairman, “is not to clobber 
the car but to give much more 
serious consideration to envi- 
ronmental factors". 

Air pollution is not the only 
environmental influence at 
work on transport policy. The 
visual impact of roads in 
ancient towns and the country- 
side gobbled up by tarmac 
have prompted a rethink. 

I ncreasing environmental 
pressures were explicitly 
acknowledged last March 
when the government 
dropped or froze a third of the 
road schemes planned for the 
next 10 years after a review of 
the £23bn roads programme. 

And pressure to reduce the 
roads programme further is 
likely to grow when the gov- 
ernment publishes a new 
study, by the Standing Advi- 
sory Committee on Trunk 
Road Assessment, a govern- 
ment advisory body. This is 
believed to conclude that new 
roads generate extra traffic 
and fuel the cycle of road use 
and congestion. 

Dr Mawhinney is under 


strong pressure to publish the 
study as soon as possible, so its 
findings can be taken into 
account in public inquiries into 
proposed road schemes. 

This new environmental 
emphasis in transport policy 
reflects the broadening coali- 
tion against road-building. 
When the groups ranged 
against the government’s roads 
programme comprised environ- 
mental organisations such as 
Greenpeace and Friends of the 
Earth, they were dismissed as 
“single issue" lobbyists. 

But increasingly, more estab- 
lishment groups such as the 
Council for the Protection of 
Rural En gland and the Royal 
Institution of Chartered Sur- 
veyors have raised their voice 
against an unbridled expansion 
of road transport 

And Tory backbench MPs 
with constituencies threatened 
by new road-building have 
added their voices to the cause. 
As many as 35 Conservative 
MPs hold marginal seats that 
would be affected by proposed 
trunk road schemes, according 
to Friends of the Earth. 


Financial pressures, too. are 
coming to bear on the road 
programme as the government 
seeks cuts in expenditure to 
reduce the public sector bor- 
rowing requirement. 

One consequence of this 
tighter financial regime is a 
rethink of the way roads are 
financed. With the exception of 
a small number of bridges and 
tunnels which charge tolls, 
driving on Britain’s roads has 
been free at the point of use. 

By introducing tolls on 
motorways, the government 
would raise funds to improve 
the network and make drivers 
reconsider the attractions of 
public transport. The govern- 
ment is assessing proposals for 
a system of electronic tolls and 
is also looking at “congestion 
charging" - making motorists 
pay for driving in towns. 

But it will be some years 
before tolling can produce a 
new source of income for 
roads. As an interim measure 
the government is attempting 
to bring private-sector exper- 
tise into the management of 
roads with contracts which 
require companies to build and 
manage roads in return for 
payments - shadow tolls - 
based on traffic volumes. 

Environmental groups 
remain suspicious of the gov- 
ernment's intentions. "We 
don't see any sense of urgency 
about questions such as traffic 
growth,” said Ms Lynn Slo- 
man. assistant director of 
Transport 2000, which lobbies 
for public transport. 

As for Dr Mawhinney’s stir- 
ring speech at last week's 
party conference, anti-road lob- 
byists point out that the road- 
side clampdown on polluters 
will last just two months and 
involves no new money. 

Dr Mawhinney says that 
there is no unanimity about 
what constitutes an environ- 
mental transport policy. 

For instance, many people in 
towns and villages bisected by 
a busy road want a by-pass but 
this worries environmental 
campaigners concerned at the 
loss of open countryside. And 
forcing motorists to pay the 
full cost of transport pollution 
and accidents - estimated at 
between £10bn and £20bn a 
year - would severely damage 
the economy by putting up 
transport costs. It would also 
disadvantage country dwellers 
who are more likely to vote 
conservative than those who 
live in cities. 

Dr Mawhinney says his role 
is to balance the conflicting 
voices. But it Is clear that, for 
a wily of environmental and 
finan cial reasons, the balance 
will be differently struck in the 
future. 


LETTERS TO THE EDITOR 


Number One Southwark Bridge, London SE1 9HL 

Fax 071 873 5938, Letters transmitted should be dearly typed and not hand written. Please set fax for finest resolution 



Nothing's more uncertain. 



Nothing's more reliable. 


FOR PEOPLE WHO MAKE DECISIONS EVERY DAY. ACCESS TO PRECISE AND COMPREHENSIVE 

INFORMATION OH INTERNATIONAL ECONOMY AND MARKETS IS VIIAL. THEY NEED THE 


MOST RELIABLE SOURCE OF INFORMATION AVAILABLE. IN FRANCE, THEY READ 


Ies Echos, France’s leading business newspaper. Nothing's more reliable. 


Coal contracts too short term 


Nationwide 
sale shows 
lessons to 
be learnt 

From Mr Trevor Harvey . 

Sir, Andrew Taylor’s article 
("Estate agents pay price of 
boom years” October 13) gave 
members of the Nationwide 
Building Society useful infor- 
mation about why their estate 
agents' offices, bought at an 
average price of £400,000, were 
sold at a price of three for a 
pound and why, as a result of 
the directors’ judgment, their 
accumulated funds are now 
£200m lower than they might 
otherwise have been. 

White Nationwide’s members 
are now informed, their power 
base is too diffuse for the direc- 
tors to be held accountable in 
any effective sense. As a result 
of directors’ decisions, Nation- 
wide’s balance sheet is argu- 
ably at least £200m weaker 
than it might otherwise have 
been. How are Nationwide’s 
directors to be held account- 
able? The traditional reply of 
the proponents of the status 
quo is to point to the power of 
members to remove the retir- 
ing directors at the next 
annual general meeting. 

The reality of life is that 97.5 
per cent of Nationwide's mem- 
bers chose at the last AGM to 
act like pure consumers rather 
than members of a mutual 
organisation. They neither 
voted in the election of direc- 
tor? nor attended the AGM. 
Directors of building societies 
generally operate in an 
accountability vacuum and it 
is not really their fault. If 
member? have given up on 
mutuality as an effective form 
of corporate governance, that 
needs to be recognised. 

Selling for a pound what has 
cost £200m of somebody else's 
money to acquire is not very 
clever. What is even less clever 
is that the somebody else in ! 
question will not be bothered ! 
to do anything about it The 
Treasury's review of current 
building society legislation, 
particularly in relation to the 
accountability of boards to 
members, will need to recog- 
nise the world as it really is if 
corporate governance within 
societies is to change and 
become effective. 

Trevor Harvey, 

42 Freemans Close, 

Stoke Pages, Bucks SL2 4ER 


From Mr Peter Vincent 
Sir. Michael Smith (“Private 
bidders’ dash for coal”, October 
13) rightly points out how criti- 
cal the future market for coal 
will be to the success of the 
p re fer red bidders. 

By its very nature, coalmin- 
ing needs long-term invest- 
ment if it is to thrive. But 
investors expect a degree of 
certainty and, looking ahead, 
we see precious little of it 
RJB Mining is effectively set 
to take over the remaining 


From Mr CD Collins. 

Sir, I read with, interest that 
certain leading company acqui- 
sition teams believe they “can 
do everything a merchant hank 
can do” ("No Adviser the magi- 
cian's rival", October 11). Han- 
son has small teams in Lon- 
don. New York and now Hong 
Kong and we also believe in 
doing as much work as possi- 


From Mr Robert T Street. 

Sir. I was interested to read 
the article, “Muzak to the ears" 
(October 13). Personally, I will 
always walk out of any shop, 
restaurant or hotel which uses 
so-called background music. I 
would also get off any aircraft 
doing the same thing, if it were 
possible without doing myself 
serious damage. 

The whole point is that one 
has no control over this form 
of pollution. One cannot alter 
it, suppress it or, best of all, 
get rid of it entirely, except by 
going elsewhere. 

Whatever Muzak or its Brit- 
ish equivalent is labelled, it is 
noise - and noise which one 


From Ms Carmel Fitzgerald. 

Sir, As usual you exaggerate 
the excellence of French Prime 
Minister Edouard Bahadur. He 
does not, as you would have us 
believe, say that he will 
“answer for those locked up” 
in the Plantu cartoon which 
accompanied your article, 
“Corruption rocks French ship 
of state” (October 17). 


English coal fields, and with 
them the bulk of contracts to 
supply power generators. But 
what wifi happen when these 
five-year contracts expire in 
1998? In our view, 10 or 18-year 
contracts are needed and 
unless these can be negotiated 
it is difficult to see there being 
any incentive for RJB Mining 
to put in the long-term invest- 
ment the industry needs. 

Without the certainty of 
such contracts, we tear there 
may be a temptation to focus 


company’s founders were prob- 
ably as knowledgeable on this 
subject as any in-house team, 
but never felt they could do 
without their “City advisers". 

You acknowledge that banks 
must be used for flotations and 
takeovers, but there is another 
vital dimension - the genera- 
tion of ideas. The City has an 
array of talent and specialisa- 
tion which no in-house team 


cannot switch off is not only 
an Irritant, but likely to cause 
increased blood pressure, ner- 
vous exhaustion or worse in 
susceptible people. 

To the misguided manage- 
ments of Mothercare, Harrods 
and other proponents of this 
insidious form of pollution, I 
would ask - do people visit 
their stores to hear music? No, 
they go there to view and per- 
haps buy. Why therefore dis- 
tract them? 

Robert T Street, 

109 Oak Tree Road. 

RnaphUL, 

Woking. 

Surrey. 

GU21 2SB 


The unfortunate Mr Balladur 
actually says “Right. Ill call a 
register to see who's In the 
clink or otherwise indisposed” 
Not even the FT’S Man of the 
Year answers for the corrup- 
tion of his cabinet adjutants 
Carmel Fitzgerald, 

16 rue Charles Bemont. 

78290 Croissy-s-Seine, 

France 


cm immediate high value pro- 
duction at the expense of 
assets which need longer-term 
investment in order to be real- 
ised. This may be profitable in 
the short term, but is it really 
the best way of meeting the 
country's future energy needs? 
Peter Vincent, chairman, 
minerals market panel. 

Royal Institution of Chartered 
Surveyors, 

12 Great George Street, 
Parliament Square, 

London SWlP 3AD 


could hope to match. Help 
from banks is particularly rele- 
vant for expansion in unfamil- 
iar geographical areas. As they 
are not charities, banks are not 0 
going to come up with ideas 
unless they are going to pro- 
duce business. 

C D Co llins . 

director, corporate development 
Hanson. 

1 Grosuenor Place, London SW1 


Basis of book 
market share 

From Mr Bill McGrath. 

Sir, I am writing in response 
to Michael Goldman's com- - 
meats (Letters. October 17)' 
regarding Dillons’ market 
share. The information I ; 
quoted related to six of the 
leading specialist bookselling 
chains (which are closely com* 
parable with Dillons). Informa- 
tion on sales from these chains 
is consolidated by an indepen- 
dent company, Book Market- 
ing, and reported to each chain 
an a weekly basis. 

The latest information from 
Book Marketing shows Dillons 1 
share of these chains has 
increased to 42.1 per cent. Book 
Marketing estimates that these 
chains constitute roughly 30 
per cent of the overall retail 
book market - ie, excluding 
book clubs and institutional 
sales. The overall retail book 
market, on the same basis, is < 
estimated at roughly £1.3bn, 
which is consistent with Dil- 
lons holding about 12 per cent 
of the retail book market -. 

Bill McGrath, 
chief executive. 

Pantos. 

Berwick House, 

Livery Street, 

Birmingham B3 2PB 


City advisers add vital dimension 


ble ourselves. However, our 

Muzak - an irritating 
and noisy distraction 


Balladur not answering for others 










FINANCIAL TIMES WEDNESDAY OCTOBER 19 1994 


15 


FINANCIAL TIMES 

Number One Southwark Bridge, London SE1 9HL 
Tek 071-873 3000 Telex; 922186 Fax: 071-407 5700 

Wednesday October 19 1994 


Controlling 
state aids 


The European Commission's 
powers to police government sub- 
sidies to industry are unique 
among the world's competition 
authorities. However, Brussels 
seems increasingly to be wielding 
a rubber stamp, not a truncheon. 
Last week, it waved through a 
FFrlLlhn state bail-out of Bull, 
France’s nationalised computer 
maker, soon after blessing a 
FFrtfflm rescue of Air France. 

Approval of these hand-outs is 
only the most visible s ig n of falter- 
ing enforcement EU state aids 
have grown sharply since 1990, 
because of recession and subsidies 
by the German government to 
eastern LSnder. But thong h the 
i I Commission has stepped up moni- 
toring; it turned down last year 
barely 1 per cent of cases notified. 

State aids are defensible if 
applied on a nornfiscrimtoatory 
basis for socially beneficial objec- 
tives, such as research and devel- 
opment But when used to prop up 
lame ducks, support national 
champions or induce inward 
investments, they threaten serious 
economic damage. They shelter 
recipients from market disciplines, 
retard industrial adjustment 
penalise efficient producers- In 
short, they are disguised trade 
barriers which threaten to frag- 
ment the single market 
The biggest flaw in existing EH 
controls is that they are too <4101 
to political manipulation. Uphold- 
ing competition is not always the 
first priority of all commisstaners 
involved in state aids decisions, 
above all when it nfftmdhig 
the governments which appoint 
them. Such conflicts of interest 
could be avoided by hiving off 
derisions to an independent Euro- 
pean cartel office. Germany 
favours that solution, but opposi- 
tion from other governments 
makes it unlikely to be adopted. 


Steps can still be taken to 
strengthen enforcement. Making 
Commission proceedings more 
transparent would increase pres- 
sures cm governments to feH into 
line. Brussels’s criteria also need 
to be rationalised. Separate guide- 
lines for excess-capacity indus- 
tries, such as steel and cars, make 
for inconsistency, and are also 
sometimes overridden by compet- 
ing regional policy goals. 

Still more anomalous is the 
treaty requirement that aids to 
state and private companies be 
judged on the same basis. Hot 
only does state ownership make it 
nearly Impossible to know 
whether aid is being granted on 
commercial terms; by implicitly 
guaranteeing companies against 
bankruptcy, it Ttndennm e s compe- 
tition. Brussels should have the 
right to Insist on privatisation as a 
condition tor approving aid. 

Yet state aids policy wifi remain 
an imperfect discipline, requiring 
bureaucrats to second-guess deci- 
sions by private Investors and 
managers. The wisest policy Is to 
minimise the need for interven- 
tion by strengthening the market. 
It is no coincidence that many 
European industries where state 
aids are common, such as airlines, 
steel, cars and textiles, are pro- 
tected from international competi- 
tion. Closed mariwbi maxnniso the 
distortionary impact of subsidies; 
trade barriers only perpetuate 
governments' belief that funds 

poured into wimpawiM 

can continue to earn a return. 

True, removing trade protection 
might temporarily increase the 
t pi w ifl w to subsidise. In the lon- 
ger term, however, the sustained 
pressure of competition would do 
more to spur industrial rationalis- 


ation - and to make apparent the 
true costs of subsidies - than any 
amount of policing by Brussels. 


Without charge 


Compared with Germany or other 
countries in central Europe, let 
alone those of the third world, the 
UK does not have a refugee prob- 
lem. The number of asylum appli- 
cations peaked in 1991 at 44^800. 
falling to 2&370 last year. Yet the 
British Home Office finds it neces- 
sary to hold a growing number of 
applicants - currently about 600 - 
in detention. 

In a report published this week, 
and based on SO cases selected at 
random, Amnesty International 
found an average of nearly five 
months’ detention before release 
or expulsion- More than half those 
studied were detained for over 
tour months. Also, more than half 
spent at least part of their deten- 
tion in a criminal prison, in viola- 
tion of international standards. 

A separate study by the Medical 
Foundation for the Care of Vic- 
tims of Torture deals with 47 
detained asylrnn seekers examined 
by doctors from the foundation 
since January 1993. AH claimed to 
have suffered torture in their own 
countries; all were found to be 
credible. 

The most disturbing aspect of 
the system is that detainees are 
held without charge, hx the great 
majority of cases the initial deci- 
sion to detain is made by an immi- 
gration officer with only minimal 
training in asylum Issues and no 
specialist knowledge of the politi- 
cal situation in countries from 
which refugees coma Yet there is 
no requirement, as there is for 


people accused of crimes, that the 
detainee be brought before a court 
or independent review body 
within a fixed period of time. 

The government says that 
detainees are told the reasons far 
detention. Yet many immigration 
officers seem to be unaware of Oils 
obligation. In any event no writ- 
ten statement of reasons is given. 
Some detainees (but not all) are 
eligible for bail. This, however, 
requires two persons willing to act 
as sureties by pledging a substan- 
tial sum of money. Even then, 
there is no presumption in favour 
of bail (as there is in criminal 
cases), and Home Office lawyers 
usually oppose it 

The ostensible reason for sub- 
jecting a small proportion of asy- 
lum seekers to this treatment is 
the fear that they would otherwise 
abscond. Yet seldom if ever is any 
reason given why some are more 
likely to do this than others, hi 22 
of the cases followed by Amnesty 
the person was eventually 
released before his/her case was 
resolved. Not one of these subse- 
quently absconded. 

No other EU country detains 
asylum seekers for such long peri- 
ods, or without judicial process. 
As wefi as being expensive for the 
British taxpayer, the practice is 
contrary to international human 
rights law. The government 
should act promptly to ensure that 
asylum seekers, not accused of 
any crime, have at least the same 
rights as people who are. 


N Korea on trust 


assessment of North Korea's 
aar agreement with the US 
» be tentative while Che flue 
remains shrouded in obscu- 
Yet foe outside world should 
out by willing the accord to 

would be easy to dismiss the 
ment on the grounds that it 
a poor predecent to reward a 
try - with aid and recogni- 
- after ft so wflfaHy flouted 
nuclear Non-Proliferation 
ty. It could still be years 
e North Korea is obliged to 
1 the foil extent of its n ucle ar 
ons development Meanwhile 
gyang could still perfect the 
ifectme of bombs. In short, it 

s in no way a reliable recxpl- 
t sensitive western tech nriV 

■h arguments will doubtless 
ii to hawkish politicians, 
■ iflily in the US. But they 
also consider the alterna- 
No agreement of any sort 
I be posable without some 
in North Korea's good faith, 
sre axe certainly risks in the 
at approach. It is far from 
whether North Korea wifi in 
ice agree to reopen bilateral 
with South Korea on cfanu- 
sation, or that tt Trifiagree 
jt inspection of its facili ties , 
t Korea will have a long wait 
; it can feel secure. Yet these 
are small compared with 
of allowing the status quo to 
sue. There would be little 
ial support for a policy of 


confrontation, so economic sanc- 
tions would never stick. 

The agreement has merit in giv- 
ing the west leverage over Pyong- 
yang. Concessions are to be 
phased in as a reward tor good 
behaviour, with the establishment 
of a US liaison office in the North 
Korean capital - and the de facto 
recognition which that implies - 
earning late in the process. 

Meanwhile, North Korea will 
beco m e Increasingly dependent on 
the west, needb^r tel imports dur- 
ing the switch to the new light- 
water technology and access to 
imports of enriched uranium 
thereafter. That should encourage 
it to open up its economy. Simi- 
larly, the fact that Smith Kore a Is 

to supply the nuclear eq uipm ent, 

and probably a large chunk of the 
fmnnpfl as well, will give it influ- 
ence in the North at a sensitive 
time of economic and political 
transition, it Is in everybody’s 
interest that that transition 
should be orderly. 

By agreeing to the use of South 
Korean/OS technology rather than 
that supplied by Russia and Ger- 
many, North Korea has made 3 
considerable concession. This is 
perhaps the strongest indication 
of its desire to conclude an agree- 
mea t that sticks. If so, tt Is also a 
sign that Mr Kim Jong-il, who 
sfwns formally about to take over 
North Korea's leadership, is seek- 
ing kind of rapproc hement . 
It would be foolish now to drive 
his country back into isolation. 


A s the bullet train from 
Osaka rounds its final 
curve into Tokyo’s cen- 
tral station, a 60-foot- 
high neon map glows 
above the tracks, displaying the 
world’s latest trading news: from 
New York, London and Tokyo. 

There could be so dearer icon of 
Tokyo’s self-image as one of the 
three great financial capitals. But 
as a picture of reality, t be map is 
beginning to look dated. 

In the 1980s, few would have ques- 
tioned Tokyo's membership erf the 
exclusive troika. Financial institu- 
tions flocked to the city, drawn by a 
vast pool of investment capital and 
the liberalisation of its markets. 

Four years ago, the bobble econ- 
omy collapsed, raiding the period of 
spiralling asset prices in the fate 
1980s. But even then, the city 
remained a leading capital centre. 

However, the long malaise that 
has gripped Tokyo’s financial mar- 
kets in the 1990s has finally laid 
bare its uncompetitrv- 

eness. And in the past year there 
has been a financial exodus from 
Japan’s markets that has left Tokyo 
weQ behind its two older global 
competitors and threatens its posi- 
tion as the fearfmg market in Asia. 

The most tangible evidence of 
this is In the stock market. Last 
month, British Gas became the lat- 
est company to announce that it 
would delist from the Tokyo Stock 
Exchange. In the past three years, 
foreign companies have been sign- 
ing off at the rate of one a month. 
In 199L, 127 foreign companies were 
listed in Tokyo. The departure of 
British Gas bag reduced the total to 
93 - and many of those left are 
considering joining the queue for 
the exit. 

Most companies blame high costs. 
The price of a Tokyo listing Is three 
to four tjfflps that in other loading 
markets, at YlSm to Y20m (£95,000 
to £137 JOG) a year. As the volume of 
trading has declined, scores of for- 
eign companies have come to 
regard that cost as unsopportable. 

Worse fen' Tokyo, Japanese inves- 
tors and companies have discovered 
the attractions of other markets. 
The number of foreign purchases of 
Japanese shares in Tokyo has dwin- 
dled since 1992, while the value of 
Japanese shares traded in T- ondon 
has more than doubled. Even inves- 
tors in Tokyo are choosing to buy 
and sell Japanese shares in London. 
Last year, for example, London 
accounted for nearly one-third of all 
the share trading in Matsushita, the 
electronics manufacturer. 

But the loss of equity trading to 
London pales beside what many 
bankers and brokers in Tokyo 
regard as the main threat to its 
status: the shift from Japan to the 
o ther tug financial capitals in Aria. 
While turnover on the Tokyo Stock 
Exchange baa fallen by more than 
25 per cart in three years, trading 


Regional rivals 
hot on its heels 

High fees and regulation are taking their toll on 
Tokyo's financial market, says Gerard Baker 


has increased fivefold in Singapore 
an d quadrupled in Hong Kong. 

To buy abates in Tokyo, investors 
have to pay fees up to eight times 
higher than In the world's other 

leafi n g financial centres. Japan still 

imposes a 03 per cent levy on all 
share transactions, and brokerage 
commissions are for higher. 

In addition, Japan’s regulatory 
environment has proved restrictive 
to some areas, proscribing some 
activities and attaching mountains 
of paperwork to others. 

Companies hoping to list have to 
satisfy excessively tight capital and 
legal requirements and pass an 
endurance test of time-consuming 
procedures. 

Trading in derivatives, complex 
instruments whose value is based in 
part on that of an underlying finan- 
cial market, is primitive. Much of it 
is proscribed by arcane anti-gam- 
bling legislation. 

And bond issu an c e fa le gall y and 
financially restricted. For years, the 
euromarkets have been more attrac- 
tive for raising funds through bond* 
denominated in yen. Moreover, 
there fa an almost total absence of a 
secondary bond market, where 
bonds be traded. 

In contrast, Singapore and Hong 
Kang have built on their reputation 
for liberal regulatory frameworks, 
lower costs, less red tape, and a 
welcome for business. 

In. derivatives, Japan has been left 
standing by Simex, the Singapore 
futures exchange. This applies even 
in derivatives based on Japanese 
markets, such as fixtures contracts 
for the Nikkei 225, the principal 
Japanese stock market index. 

Since 1991, the trading volume of 
Nikkei 225 futures contracts on the 
Osaka Stock Exchange, Japan’s 
main fixtures market, has riflr-Hnwri 
from L75m contracts a month to 
440,000. In the Bame period, the 
Simex Nikkei 225 futures market, 
where trading costs are cheaper 
than in Osaka, has grown from 

60,000 trades a month to 405,000. 
Simex is expected to overtake 
Osaka in volume later this year. 

Expanding Asian companies 
looking to raise funds have also 
sfamtied Japan’s markets. In the 
past year, at least 10 GMnesp busi- 
nesses have chosen to make their 
home at the Hong Kong Stock 


Japan’s financial markets: under pressure 
Traded value on stock exchanges Corporate bond issuance 


index 


Sbn (monthly averages) 



Jan-Vtaue 


Nikkei 229 

Contracts traded per month (mlHora) 

2jj 


Jsn-Aug 

Foreigners buying Japanese stocks 
Sbn (monthly averages) 

250— — - 



91 82 83 04 

. JmHUiq 

Sauna: Nonna tiicwittM, Tcfcyo Stock Bcohang* 

Exchange rather than in Tokyo, 
despite the bed efforts of the Japa- 
nese to lure them. And corporate 
bond feffiwiTiflg in jftpan by compa- 
nies to Asia has grown by just 25 
per cent in the past three years, 
against a growth rate of several 

thnnaanri per rent in Ffnng XTrmg 

Tokyo’s failure to attract this 
business has led many foreign 
investment banks to cut their staff 
in Tokyo in the past year - in some 
cases to move them to Hong Kong 
and Singapore. Mr Peter Brutsche, 
vice-president of UBS Japan, the 
Tokyo arm of Union Bank of Swit- 
zerland, says urgent action is 


needed: Time fa now crudaL The 
Japanese administration needs to 
act fast to stop the haemorrhage 
that plagues the financial indus- 
try." 

Such sentiments have at last 
began to unnerve the authorities. In 
the past few months, the Ministry 
of Finance’s regulators have been 
alerted to the dangers, not only by 
domestic and foreign investors, bid 
also by some bureaucrats In the 
Bank of Japan and the Mini s try of 
International Trade and Industry, 
who recognise the threat to Japan’s 
international status. 

As a result, some changes have 


been approved and derivatives trad- 
ing will become slightly easier lata 1 
this year, although it wCU remain 
heavily circumscribed. And yester- 
day the Tokyo Stock Exchange 
announced a relaxation of some list- 
ing requirements for foreign compa- 
nies. 

These reforms, however, are lim- 
ited ami are proceeding at a pain- 
fully slow pace. The toot-dragsing is 
not simply an innate conservatism. 
It represents a desire by the finance 
ministry to protect the interests of 
individual sectors, such as banks 
and brokers - but It has the effect 
of stifling Tokyo’s markets. 

Nevertheless, senior bureaucrats 
at the finance ministry argue there 
fa little solid evidence that Tokyo’s 
position is under serious threat. 
They concede it has lost ground to 
south-east Asian competitors, but 
point out that the strong growth of 
the southeast Aslan region to the 
past few years has inevitably led to 
some shift to business. 

P erhaps most importantly, 
the scale of Japan’s 
savings and current 
account surpluses means 
that the country is 
assured of a vast financial market 
In 1993, Japan had the world's sec- 
ond largest government braid mar- 
ket and the second biggest stock 
market capitalisation. It is the 
world's largest capital importer and 
the biggest net capital exporter. 

A finance ministry official argues 
this means there is no cause for 
alarm: “We will continue to monitor 
the developments in Asian and 
otter markets, and if we need to 
act, then we will, but not by damag- 
ing the protection of the Investor." 

This sangfroid is not shared by 
many of Tokyo’s financial commu- 
nity. In increasingly complex and 
international capital markets, the 
size of the domestic economy does 
not ensure the country's attractive- 
ness as a financial centre - funds 
could simply move offshore. Frank- 
furt is the financial heart of an 
economy twice as large as any in 
Europe, yet it lags well behind Lon- 
don to significance. 

“Tokyo fa In real danger of being 
left behind in the frantic race in 
Asia," says Mr Fumikage Nishi, of 
Nomura Securities. “The only 
advantage it has fa scale. But that 
will be insufficient, because without 
real deregulation, financial innova- 
tion to other Asian centres will rap- 
idly outpace that in Japan.” 

A senior executive at an Ameri- 
can investment hank goes further: 
“In the end it is not a question of 
kudos or status. It fa about whether 
you have an open ffoanriai 
that distributes capital effectively. 

“If Japan does not have that kind 
of market - and it does not have it 
now - financial companies will go 
the same way as manufacturers: 
abroad." 


US healthcare: the issue that won’t die 



When Senator 
George Mitchell 
announced last 
month that he was 
ending his drive to 
pass a healthcare 

pZZZZZTr m tough 
Congress, he invited 
ZJ&2L . — the Ame ri can elec- 
torate to “Who kiflpri health - 
care?" He hoped that voters in next 
montit's midterm elections would 
punish the assassins, including 
Republicans and other congressmen 
who have acted on behalf of the 
health industry interest groups 
operating on Capitol BSD. 

However, the senator should look 
at the other end of Pennsylvania 
Avenue for an answer to bis ques- 
tion. The two people most responsi- 
ble for the failure of the bfil are 
President Bfll on and his wife, Hi- 
lary. As a {Residential c a nd id ate , 
Clinton rode a tide of voter frustra- 
tion with the US healthcare system, 
winning widespread support for 
ftmdamental change. Once to the 
White House, however, he had to 
make two fundamental choices on 
the route to reform. 

First, should the priority be a 


swift dash to universal health cov- 
erage or measures to control costs? 
Second, should he pot forward a 
detailed blueprint of his own or set 
out some baric principles and chal- 
lenge Congress to fin in the details? 

In drawing up legislative plans 
for universal coverage, the Clintons 
chose the first option to both cases. 
The complexity of the resulting pro- 
posals scuppered prospects for radi- 
cal reform to 1994 by raising the 
opposition of too many interest 
groups. Yet, despite this setback, 
healthcare reform will return to the 
political agenda with the new Con- 
gress next year. Healthcare is too 
important an issue to disappear. 

Empl oy ee health insurance oasts 
remain a problem for business. 
Same erf the largest employers have 
made progress in reducing their 
medical expenses, but they are far 
from satisfied. Many smaller compa- 
nies have yet to see substantial ben- 
efits from at t emp ts to drive down 
healthcare costs. 

Local, state and federal govern- 
ments must also give priority to 
bringing medical costs under con- 
trol. They are responsible for more 
than. 40 per cent of US health expen- 


diture through Medicaid and Medi- 
care, two publicly funded schemes, 
and their own employees’ health 
benefits. 

Cost containment means giving 
farther incentives to business to 
insure employees through health 
maintenance organisations that 
have proved successful in holding 
down costs. The health insurance 

The two people most 
responsible for the 
failure of the bill are 
President Clinton and 
his wife, Hillary 

market will attempt to reduce 
administration costs through fur- 
ther mergers and alliances. Medical 
litigation should also come under 
deep scrutiny from legislators. 
There are few congressmen who do 
not accept that too great a burden 
fa pat on doctors by law suits. 
White toe legalistic culture of the 
US is likely to make reform diffi- 
cult, it needs to be tackled. 

Savings to treatment costs would 


help keep the cost of health insur- 
ance down and allow more employ- 
ers to offer coverage to staff and 
reduce the number who opt out of 
their employer’s medical scheme on 
grounds of cost. 

This incremental approach wifi, 
however, be insufficient for the lib- 
eral wing of Congress, which han- 
kers after much wider coverage. 
The failure of the Clinton plan has 
probably taken universal coverage 
off the national agenda for the next 
few years (although some states 
may attempt to pursue it). An alter 
native may be to extend Medicaid 
benefits to selected groups, such as 
pregnant women and children. 

Many of these proposals have 
already been tabled to the present 
Congress by the bipartisan “Main- 
stream Group” in the Senate and to 
the Cooper/G randy proposal, which 
achieved cross-party support to the 
House of Representatives. Had 
these groups been given a free hand 
and two years to work on them, 
healthcare reform legislation might 
already have been gi gn«L 

They could not deliver largely 
because the healthcare debate bad 
to wait nine months while the Chn- 


ton administration produced Its 
1,300-page draft plan. The plan 
proved so complex and divisive that 
another nine months elapsed before 
serious negotiations on a politically 
practical draft could begin, to the 
next Congress, representatives of 
both parties should be able to pur- 
sue such an agenda without the 
heavy hand of the White House. 

The irony is that the White House 
has won on healthcare. It Is now too 
big an issue to go away and the new 
Congress wfll have to take it on 
next year. Reforms based on incen- 
tives to contain the cost erf treat- 
ment and limited steps to increase 
coverage may disappoint those who 
supported the Clintons’ more ambi- 
tions healthcare plans. But they 
could be the chief achievement of 
the president’s first term - even if 
he will get little credit for them to 
the 1996 presidential contest 

Tim Haines 


The author is American Studies 
research officer at Nuffield College, 
Oxford 


OBSERVER 


Passing the 
Lloyds chair 

■ Sir David Walker is not the first 
ecr-Bahkcf England director to seek 

Ms fortune in the City and wlD 
almost certainly not be tho last 
Yet Ms decision to step davm as a 
deputy chairman of Upyds Bank, 
when he was widely thought to be 
the chainnan-in-waittog, is 


True, as chairman of Morgan 
Stanley's European operations Sir 
David is likely to earn several tunes 
the £223,000 that the Ch(rirmim of 
Lloyds Bank got last year. At 54, he 
is still young enough to he able to 
make some serious money after a 
long career of public service. Even 
so he to turning down the dance of 
leading Britain’s most soccessfal 
High Street bank into the next 
century, in order to be tha 
European figurehead of a Wall 
Street broker. 

Whether or not Sir David sensed 
that the chairmanship of Lloyds 
was no longer to his grasp, his 


question of who is going to lead 
Lloyds after 1996 when Sir Brian 
Pitman. Lloyds’ chief executive, 
retires. 

By then. Sir Robin fobs, the 
chairman, wifi be over 70 and 
though he might soldier on for 
another year. Lloyds Bank needs to 
find a new chief executive and 
chairman. 

One possibility is for Sir Brian 


Pitman , 62, to take the chair. This 
would be a tom up for the books 
since Uoyds has never given the 
chairman's job to one of its own 
own managers before. 

But Sir Brian has transformed the 
group and parallels could he drawn 
with Sir Edward Holden, who 

firm pH MMIand Bank into tfra 

biggest bank to the world at the 
turn of the century, and was 
rewarded with the Midland chair 
which he held until he died. 

Alternatively if Lloyds wanted to 
signal its intention of betog a real 
retailer erf financial services, it 
could do worse than give the 
chairman's job to a bine chip 
retailer like Marks & Spencer 
chairman Sir Richard Greenbury, a 
ratent recruit to the board. 

Hard to know which would be the 
more surprising choice. 


At the Kohl face 

■ The vast amount at newsprint 
devoted to the German elections to 

thp TEngfigh lang uage press spaing to 
have generated more heal than 
light. 

No one for instance seems to be 
able to work out whether Hernlnt 
Kohl’s re-election la good or bad 
news for John Major’s European 
policy. 

The European editor of The 
Times, George Brock, writing on 
the Op Ed page, has Kohl pushing 
“European unification as hard as be 
can”, the leads on the next page 
has the chancellor beginning to 



‘We’re looking for people with 
small fingers and low pay 
expectations’ 

"champion the decentralisation of 
power away from the Commission”. 

At least the ubiquitous Josef 
Jaffa, editorial page editor of the 
SQddeutSChe Bribing, who managed 
chunky pieces yesterday to both 
The Independent and The 
International Herald Tribune, is 
saying pretty well exactly the same 
thing to both organs. 


Loose Heron 

■ Memo to Michael HeseMne, 
president of the board of trade. Best 
keep an eye on Michael Heron, 
chairman of Britain's Post Office. 


As an ex-Unilever marketing man 
he has competed with the best and 
has been given the job of exposing 
the Post Office to the winds of 
competition by taking it into the 
private sector. 

So what was he doing seemingly 
rubbishing market forces to a 
speech to the 25th anniversary 
dinner erf the renamed Institute for 
Employment Studies? 

Heron conchidBd that there was 
not much difference between the 
market and the law of the jungle or 
the behaviour of baboons. It cannot 
solve most of the fundamental 
problems facing society. 

That sort of stuff might be music 
to the ears erf a bunch of soft 
personnel managers but it fa not 
going to Impress Her Majesty’s 
Treasury. 

Perhaps you need to be a bit more 
generous with the proposed share 
options for Heron and his chains. 


Now you see it 

■ At &39 yesterday morning 
Charles Hochman, who retired as 

chief executive of media-buying 
Aegis group on October 15, found 
himself the happy benefiefary of 

500,000 share options. 

The happiness was short-lived. By 
1422 the options had vanished, 
cancelled after Aagis was 
bombarded by City types saying 
that share options, after afi. were 
meant to motivate manag ement , 
not cushion pensioners. "It's an 
highly eccentric” said a (Sty expert 


on corporate governance. 

What was to the mind of Aegis' 
remuneration committee, which 
decides such matters? Hie 
committee is composed of Frank 
Law, the (non-executive) chairman; 
John Vogelsteto of Warburg Pincus, 
a major shareholder; and Sir Kit 
M c M ah o n, a nonexecutive director. 

By way of elucidation. Law said 

yesterday that Hochman’s options 
“ware automatically triggered by 
(Hochman’s) service contract dating 
from 1992,” adding that the 
afternoon cancellation had 
Hochman’s "fall agreement". 

Funnily enough. Aegis’s latest 
annual report states that to 
February this year Law was given 

500,000 shares - as was his wife, 
who is not a director nor even an 
employee of the company. 

Aegis has been through difficult 
times recently. But then, no-one has 
ever got involved with it 
anticipating a quiet Hfe. 


Wind tunnel vision 

■ New Zealand researchers are 
trying to increase the digestive 
efficiency of sheep and cows, to 
order to stop them belching. 

A dimate change-conference has 
been told that animak release 
massive amounts of methane into 
the atmosphere, a major cause of 
the socalled greenhouse warming 

Who’s going to tackle the hot air 
released by think tanks, politicians, 
spokesmen, media types, hiwies. . . 








0 


16 


mk Shepherd 

™ ™ Design & Build 


Frederick House, Fytfonj Rood. York YOl 4EA. 
Telephone 0904 632401. Fax:0904610256- 


FINANCIAL TIMES 

Wednesday October 19 1994 



.Making . 

A W*RLO Of 
/DffFERENCH 




Manufacturers want common standards on new technology 

Brussels censured on car targets 


By John Griffiths in Paris 


Leading European carmakers 
yesterday accused the European 
Commission and EU govern- 
ments of failing to meet finan cial 
and strategic planning obliga- 
tions aimed at halving 50,000 
road deaths a year by 2010. 

Mr Jacques C-alvet, Peugeot 
chairman, and Mr Giorgio Gar- 
uzzo, managing director of Flat 
and president of the European 
Automobile Manufacturers Asso- 
ciation, warned that unless Brus- 
sels and the 12 EU member states 
made better progress in creating 
common standards and electronic 
languages for such things as 
roadside beacons transmitting 
information to receivers in 
vehicles this goal would be 
threatened In addition, technol- 


ogy developed by Europe's 
vehicle and component manufac- 
turers would be overtaken by the 
Japanese and North American 
motor industries. 

Industry leaders said that a 30 
per cent improvement in trans- 
port efficiency, measured by traf- 
fic Hows, was also under threat 
At stake are tens of billions of 
Ecus, which business loses every 
year through delays, wasted man- 
hours and other costs, they main- 
tained 

The warnings came at a Paris 
conference and exhibition at 
which 9Q cars and commercial 
vehicles fitted with the technol- 
ogy developed under the eight- 
year, EcuSOOm ($l.lbn) ‘‘Prometh- 
eus” collaborative research pro- 
gramme, which started in 1986, 
were being demonstrated 

The cars could' 


• illuminate long distances in 
the dark with infra-red and ultra- 
violet headlights: 

• automatically avoid collision 
with radar; 

• cruise “intelligently” by auto- 
matically keeping pace with 
vehicles in front; 

• stay within white lines, 
thanks to computer image pro- 
cessing; 

• know exactly where they were 
on the Paris road network via 
satellite, and 

• summon emergency services 
to the exact location of a break- 
down or accident with or without 
the driver biking any action. 

Other technology on show, 
however - such as sophisticated 
route guidance, traffic manage- 
ment and logistics systems - 
depends on a harmonised “intelli- 
gent” transport infrastructure. 


Mr Calvet and Mr Garuzzo 
sharply criticised “budgeting 
problems” in Brussels and 
national governments, which 
have led to the 20 vehicle and 
component makers within Pro- 
metheus funding 70 per cent of 
the research programme. 

The remainder is funded from 
Brussels and by national govern- 
ments. It was “quite unaccept- 
able” that some industry part- 
ners within the project “should 
be penalised because some coun- 
tries do not support common 
financial commitments", Mr Gar- 
uzzo raid. 

There was also resentment 
over a lack of direction within 
Brussels over research pro- 
grammes such as Prometheus, 
which is part of the Union's 
“Drive” transport research pro- 
gramme. 


North Korea 
nuclear deal 
eases fears 

Continued from Page 1 

yang's alleged development of 
nuclear weapons. 

The agreement is linked to the 
gradual improvement of bilat- 
eral relations between Washing- 
ton and Pyongyang, which Mr 
Sang said, would “make a signif- 
icant contribution to greater 
peace and security in Asia and 
the rest of the world”. 

The deal apparently provides 
for a delay in inspections by the 
International Atomic Energy 
Agency to determine whether 
North Korea has reprocessed plu- 
tonium for nuclear weapons. 
South Korean officials had 
expressed concern that such a 
delay would give Pyongyang 
more time to produce a bomb 
from plutonium it is suspected of 
having reprocessed five years 
ago. 

There were also doubts in 
Seoul about providing North 
Korea with international aid 
that could revive its troubled 
economy when it appears to be 
heading towards collapse. 

But officials yesterday 
acknowledged that they had lit- 
tle choice but to accept the 
accord concluded by the US, 
South Korea’s main military and 
economic ally. 


Chinese inflation hits 27% 
as fears of social unrest grow 


By Tony Walker in Beijing 

China's annual inflation rate rose 
to 27.4 per cent in September, 
putting more pressure on the 
central government which tears 
social unrest. 

The government has already 
Introduced price controls in an 
effort to break the inflationary 
cycle. The September figure was 
up nearly two percentage points 
on August, according to figures 
released yesterday by the State 
Statistical Bureau. 

The gloomy economic news 
underscores the difficulties faced 
by the government, which admits 
that it has entered a “crucial” 
phase in its efforts to curb Infla- 
tion. The authorities need to 
maintain high levels of economic 
growth or risk worsening unem- 
ployment and possible social 
unrest 

The bad September result 
seems certain to add to pressures 
on the leadership to stiffen reme- 
dial action taken last month to 
restrain price increases. The lat- 
est figures showed a further nar- 
rowing of the gap between the 
national cost of living increase 
and that in the 35 biggest cities. 

Until recently, urban inflation 
had been rising tester than the 
national average. This suggests 


China: Inflation 

Annual 96 change In CPI 
28 — 



1993 94 

Source State Statistical Bureau 

price curbs have been more effec- 
tive in the cities than In provin- 
cial towns and rural areas. Urban 
cost of living was up by 27.5 per 
cent in September, compared 
with the same month last year. 

Western economists in Beijing 
view the inflat ion figures as an 
o mino us r emin der to the authori- 
ties of their difficulties in curbing 
infla tion “Whichever way you 
look at it, this is bad news for 
China,” one said. “This shows 
inflationary pressures in the 
economy are still quite strong.” 

Mr Qiu Xiaohua, spokesman 
for the Statistical Bureau, blamed 
the continuing inflationary spiral 
on food price increases due to 
drought in northern China and 
flooding in the south. He also 


said that the effects of adminis- 
trative price rises for grain and 
other commodities were still 
being felt. The state purchase 
price for grain has risen by about 
50 per cent in the past year. 

Mr Qiu warned that C hina had 
entered a “crucial” phase in the 
last quarter of the year, with 
pressures increasing on the gov- 
ernment to redouble its efforts to 
bring price rises under control. 
He urged that money supply 
growth be restrained, increases 
in capital spending be curbed and 
strenuous efforts be made to 
increase agricultural production. 

Mr Qiu revealed that the M2 
measure of money supply showed 
a rise of 34 per cent for the nine 
months compared with the same 
period last year. This compares 
with the government target of 24 
per cent M2 growth for the year. 

A western economist described 
as “worrisome” indications of the 
difficulty in restr ainin g money 
supply growth. He saw little pros- 
pect of an easing of pressures on 
the government to provide subsi- 
dies to prop-up loss-making state 
enterprises- 

Some 445 per cent of China's 
11.000 large and medium-sized 
enterprises were in the red in the 
first nine months, according to 
the Statistical Bureau spokesman 


IBM to sell off UK manufacturing plant 


By Alan Cane in London 

International Business Machines, 
the world's largest computer 
maker, is within weeks of agree- 
ing the sale of all or part of one 
of its best known European man- 
ufacturing operations. 

The site, at Havant in the 
south of England, principally 
manufactures disk drives for per- 
sonal computers and is the sole 
source of some important IBM 
systems. 

It employs some 1500 people 
and turns over more than £500m 


(3790m) a year. It Is profitable, 
although separate figures are not 
published. 

The planned disposal follows 
the sale of a majority stake in the 
company’s printer operations at 
Jarfalla, Sweden, to a Swedish 
venture capital company earlier 
this year. It also follows the open- 
ing of part of its Montpellier, 
France, manufacturing facilities 
for lease by other companies. 

These are unprecedented 
moves for the company 
which has traditionally 
owned and controlled Its 


manufacturing capacity. 

The sites at Havant, Jarfalla. 
Montpellier and Valencia in 
Spain were identified last year as 
"surplus to requirements” as part 
of the computer giant's strategy 
to return to profitability. IBM has 
been reducing staff numbers and 
manufacturing capacity as it 
comes to terms with the econom- 
ics of a computer industry domi- 
nated by personal computers 
which yield low profit margins 
compared with mainframe com- 
puters, its traditional strength. 

Havant has been operating as 


an “independent business units” 
- run by local management with 
the option to seek manufacturing 
contracts from outside custom- 
ers. 

The staff were told this week 
that several potential new own- 
ers had been identified and that 
the parent company expected to 
make a final decision in the near 
future. 

IBM yesterday said a small 
number of potential buyers bad 
been invited to view the plant's 
operations and examine the 
books. 


FT WEATHER GUIDE 


Europe today 

A frontal zone associated with a vigorous low 
pressure system over the Atlantic win cause 
rain in Ireland, south-west England and 
Portugal. During the afternoon, the rain will 
spread across England, Scotland, western 
France and Spain. Most of Portugal and 
Ireland will have broken cloud and a few 
showers. The North Sea area will have a near 
gale force wind from the south-east Another 
tow pressure system over the Mediterranean 
will trigger numerous heavy showers, some 
with thunder, which will affect south-east 
France and parts of Italy and Greece. Northern 
and central Europe will remain dry and partly 
cloudy. Northern Scandinavia and the Baltic 
states will have isolated snow showers. 

Five- day forecast 

A high pressure system with dry and rather 
sunny conditions over much of Europe will 
move slowly east. As a result, low pressure 
with windy and unsettled conditions will 
spread eastwards into the continent 
Temperatures wifi fend to rise, ending the spell 
of sub-zero temperatures during the night. 
Scandinavia will also be milder. A ridge of high 
pressure will bring sun to Spain with 
temperatures near 21 C. 


TODAY’S TEMPERATURES 



Situation a r 7 2 GMT. Temperatures maximum tor day. Forecasts by Meteo Consult of the Netherlands 



Maximum 

Bering 

1* 

16 

Caracas 

fair 

31 

Faro 


Celsius 

Ballast 

min 

12 

Car&n 

nun 

12 

Frankfurt 

Abu Dhabi 

sun 

36 

Belgrade 

sun 

12 

Casablanca 

shawer 

22 

Geneva 

Accra 

thund 

30 

Berlin 

sun 

9 

Chicago 

feur 

21 

Gibraltar 

Algiers 

shower 

23 

Bermuda 

lair 

26 

Cologne 

fair 

14 

Glasgow 

Amsterdam 

lair 

13 

Bogota 

shower 

19 

Dakar 

fair 

30 

Hamburg 

Alhens 

doudy 

21 

Bombay 

fair 

34 

Dales 

cloudy 

27 

Helsinki 

Atlanta 

doudy 

24 

Brussels 

fair 

14 

Delhi 

sun 

31 

Hong Kong 

8. Aires 

fair 

20 

Budapest 

sun 

10 

Dubai 

sun 

35 

Honolulu 

B.fiam 

rain 

12 

C.hagan 

far 

7 

Dublin 

rain 

12 

Istanbul 

Bangkok 

shower 

35 

Cairo 

aui 

30 

Dubrovnik 

fair 

20 

Jakarta 

Barcelona 

shower 

20 

Cape Town 

sun 

19 

Edinburgh 

shower 

It 

Jersey 


No other airline flies to more cities in 
Eastern Europe. 


^ Lufthansa 


Karachi 

Kuwait 

L Angeles 

Las Palmas 

Lima 

Lisbon 

London 

Lutbourg 

Lyon 

Madeira 


fair 

fair 

fair 

shower 

rain 

fair 

sun 

cloudy 

cloudy 

fair 

shower 

shower 

sun 

bar 

sun 

fair 

doudy 

shower 

shower 

faii- 

falr 

fair 


11 

9 

2 


22 Madrid 

13 Majorca 
IQ Malta 

21 Manchester 
Mania 
Melbourne 
Mexico City 

2-1 Miami 

31 M3an 

18 Montreal 

32 Moscow 

14 Munich 

35 Nairobi 

36 Naples 
26 Nassau 
26 New York 

22 Nice 

19 Nicosia 

15 Oslo 
15 Paris 
IQ Perth 
24 Prague 


shower 

thund 

thund 

rain 

shower 

lair 

fair 

fair 

fair 

rein 

fair 

sun 

shower 

shower 

fair 

doudy 

shower 

fair 

sun 

shower 

fair 

sun 


16 Rangoon 

31 Reykjavik 
24 Rio 

12 Rome 

32 S-Frsco 

17 Seoul 

23 Singapore 
29 Stockholm 
15 Strasboug 

11 Sydney 
2 Tangier 

12 Tel Aviv 
27 Tokyo 
22 Toronto 
29 Vancouver 

18 Venice 

19 Vienna 

27 Warsaw 

5 Washington 
19 Wellington 

28 Winnipeg 
9 Zurich 


fair 32 
rain 9 

doudy 29 

shower 22 

fair 
fair 

shower 

Run 6 

fair 16 
doudy 22 


19 

19 

32 


shower 

shower 

shower 

ran 

doudy 

sun 

SU1 

sun 

cloudy 

raki 

doudy 


fair 16 


THE LEX COLUMN 

Invisible benefits 


Three drugs companies have 
collectively forked out $13bn on 
so-called pharmacy benefit managers 
over the past 15 months. All three 
posted results yesterday. Eli Tally was 
understandably silent about its PCS 
acquisition because the purchase is 
yet to be completed. More curious was 
that neither Merck nor SmUhKltne 
Beecham provided anything to 
enlighten shareholders whether their 
money had been wisely spent. Such 
information would have been appro- 
priate because the two rationales 
given at the time of the deals are 
increasingly doubtful: that the drugs 
groups would gain market share by 
pushing their drugs through the dis- 
tributors; and that the distributors’ 
patient data would allow them to 
assess medicines’ cost-effectiveness. 

With hindsight it is clear there are 
less expensive ways of accessing such 
patient data. Indeed, health mainte- 
nance organisations hold far more 
complete treatment information than 
distributors and are quite willing to 
share it for relatively small consider- 
ations. Meanwhile, the market share 
argument is threatened by the Federal 
Trade Commission's concern that 
prescribing policies which exclude 
other groups' drugs could be anti-com- 
petitive. Perhaps the companies' 
silence was motivated by embarrass- 
ment. The 1.5 percentage point 
increase in market share that Merck is 
estimated to have achieved after its 
Medco acquisition seems scant reward 
for a $6.6bn investment. The drugs 
industry's diversification into distribu- 
tion looks an expensive mistake. 

Intel 

Intel is impressive and aggressive. 
The group's lock on the global micro- 
processor market allowed it to boost 
sales in the third quarter by 28 per 
cent compared with the previous year. 
Operating margins have slipped but 
they were still a mouth-watering 34 
per cent. Moreover, the decline is 
partly due to Intel's diversification 
into lower-margin products such as 
video-conferencing kit and partly 
because margins on 486 chips, which 
account for the bulk of its production, 
have shrunk. As production of the 
more advanced Pentium processors is 
increased, margin erosion should bait 

Fat margins are, of course, a tempta- 
tion to rivals. It is in fending off the 
competition that Intel has displayed 
its aggression. Not only has it pursued 
Advanced Micro Devices mercilessly 
for alleged patent infringements, it 


FT-SE Index: 3085.3 (-34.9) 


Intel 

Share priori rotative to ttw 
Dow Jones Industrial Average 



50 1 1 

1990 91 

Sourwc FT Graphite 


92 


93 


94 


has embarked on a high-profile cam- 
paign to accelerate the industry's 
move from 486 to Pentium chips. In 
that way. it aims to keep ahead of its 
rivals. The company's “Intel inside” 
campaign has already resulted in a 
public spat with Compaq, which does 
not wish to accelerate the change to 
Pentium-based personal computers 
while its warehouses are full of 486 
models. The risk is that Intel will 
become so unpopular that customers 
desert it But the evidence so far is 
that, much as they may want to, they 
do not have the option. 

Gilts 

After a good run, the gilts market 
was looking for an excuse to consoli- 
date yesterday. The public sector bor- 
rowing requirement figures held no 
horrors and the announcement that 
this month's gilts auction will be 
£25bn hardly came as a shock, given 
that the Bank of England is giving 
November a miss. Yet the morning’s 
sharp correction could not be 
explained entirely by renewed dollar 
weakness and profit-taking in German 
bunds. 

Instead the finger was pointed at the 
Confederation of British Industry’s 
September retail sales survey and the 
much stronger than expected figures 
for volume growth. Even analysts 
sceptical about the CBI survey’s accu- 
racy were tempted to push up their 
forecasts for today’s official numbers, 
some dramatically so, and those 
looking for a reason to sen gilts could 
claim they detected the whiff of 
returning infla tion. 

But the cries of wolf are increas- 
ingly falling on deaf ears and prices 


ended well off their lows. Even retail 
sales have picked up as the CBI fig- 
ures imply, the anecdotal evidence 
suggests the volume growth has not 
made it any easier for retailers to push 
up their prices. Many City economists 
have now come round to the Bank of 
England's more relaxed view on infla- 
tion. Yet despite the recent rally, 
yields are still telling the old story and 
gilts promise much if the governor is 
right. 

Japanese cars 

Production figures release d by 
Toyota and Nissan yesterday suggest 
that the Japanese automotive sector is 
still mired in deep structural and 
cyclical difficulties. Nissan reported 
that domestic production in Septem- 
ber fell compared with the previous 
year - the 27th successive monthly 
decline. Toyota, the stronger of the 
two companies, managed a modest 1 
per cent increase in exports, while Nis- 
san's exports dropped by 5 per cent 

The domestic Japanese market is 
suffering from prolonged contraction: 
vehicle output is set to be 10.6m this 
year, compared with a peak of 13.6m 
in 1990. Abroad, the appreciation of 
the yen has hit Japanese manufactur- 
ers hard, forcing up the price of Japa- 
nese cars. In Europe, for example, Jap- 
anese car sales are set to fall 7 per 
cent this year despite a predicted 6 per 
cent growth in the market overall. In 
the US local manufacturers are bene- 
fiting most from the upturn. 

Japanese manufacturers have 
responded to the pressure by shifting 
production out of Japan to lower cost 
manufacturing locations. Honda's 
announcement this week that it plans 
to double its capacity hi Thailand is 
the latest example of this. In time, this 
strategy should restore the Japanese 
industry’s competitive position. But 
investors will find better recovery sto- 
ries among America's and Europe's 
motor companies. 

Rolling contracts 

Mr Tom Buffett’s five-year rolling 
contract at Automated Security Hold- 
ings provides a good test for the whole 
“roller" concept This is a case of man- 
ifest failure: ASH’S share price has 
underperformed the market by 77 per 
cent since the start of 1990. Defenders 
of rollers say they do not necessarily 
reward failure as boards can insist on 1 
a reduced pay-off if performance is 
poor. ASH now has the chance to 
show whether that is so. 



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17 




FINANCIAL TIMES 

COMPANIES & MARKETS 

©THE FINANCIAL TIMES LIMITED 1994 Wednesday October 19 1994 


Overseas Moving 
byMichaelGerson 

081-44613001 



IN BRIEF 


Philip Morris 
recovery continues 

Philip Morris, the US food and tobacco group, 
continued its bounce- back from last year’s 
depressed figures with a 27 per cent stage in net 
profits to $L2bn in its third quarter. Page 21 

Staton and Saga prepare energy vent ure 

Two of Norway’s biggest oil and gas companies will 
today announce details of an asset swap programme 
which will dear the way lor a NXi40bn ($5.6bn) 
joint development plan for gas fields in the Norwe- 
gian Sea. Page is 

Nordic forestry industry bounces back 

. Repola and Kymmcne, two of Finland's big four for- 
. estry groups, yesterday reported large swings back 
. to profit in the first eight months of the year after 
. ' losses in the same period last year. The recovery 
followed sharply reduced financial charges. Page 18 

Lower yields take tlwir toll on JC1 

The gold division of South African mtofag house 
Johannesburg Consolidated Investments, which is 
due to be spun, off to black investors early next 
year, has reported a sharp drop in profits for the 
September quarter. Page 21 

. Sprint soars with cellular profits 

. Sprint, the third largest US long -distance tei ffi b o pn 
. company, claimed an “outstanding” third quarter 
. with net income up 29 per cent to $23Qm, or 66 cents 

per share. Page 21 

- US chugs companies advance 

Merck and Eli Lilly, the US pharmaceuticals compa- 
nies, each reported underlying double-digit sales 
growth for the three months to the endof Septem- 
• ber, in spite of pressure on drug prices in the US 
t and around the world. Page 21 

Sappi doubles Income 

. Sappi, the South African pulp and paper company 
‘ which last week acquired UShased SD. Warren, 

■ has announced modi improved results for the first 
' ' six months to August, more than doubling attribut- 
' able income to R144Jha ($40-5m) from BftLSm. 

Page 22 


TP! expands pe trochem ic al complex 

Thai Petrochemical Industry proposes to invest 
Bt40bn ($L6bn) ova- the nest few years in expand- 
ing its petrochemical complex in Bayong, south of 
- Bangkok. Page 22 

English China In chemicals buy 

En g lis h China. Clays, the minerals and chemicals 
group, is making a $45.4m acquisition the first since 
its decision earlier this year to demerge Camas, its 
construction materials arm, and expand the special- 
ity chemicals division. Page 24 

Stoma bream fbr banana exporters 

Caribbean banana exporters remain concerned 
about possible attacks on their preferential access 
to the lucrative EU market Page 26 


Companies In this Issue 



r ' 



, ffect both v 


APV 

17 

Airbus 

7 

Man Nobel 

25 

Apple Computer 

20 

Arcon inti Resources 

25 

AmuGor 

5 

Attwoods 

25 

Automated Security 

IS 

BSkyS 

1 

BancOne 

21 

Barr & Wallace 

25 

Bear Steams 

20 

Bedford (WUSam) 

24 

Berry Bfacb & Nobte 

24 

Boot (Henry) 

24 

Bouygues 

21 

Bawater 

24 

Castle MiH 

24 

Catapitar 

7 

Chase Manhattan 

21 

Chemical Banking 

21 

China Resources 

22 

Coming 

20 

Daewoo 

7 

Daknaru 

21 

Den rtorske Bank 

18 

Dow Chemical 

1 

EZE Products 

2* 

Electricity Gen ting 

22 

EH Lily 

21 

Emap 

24 

Engfah China Clays 

24 

Enso-Gutzatt 

18 

EuroDisney 

22 

Far Eastern TextBe 

22 

Farfin 

18 

nttmnic Comtek 

24 

FtaatMuy Smaflar 

24 

GM 

7 

Gale 

18 

General Sectric 

17 

Giordano 

22 

Groups GAN 

18 


IBM 


Kymmane 
Laporie 
Lippo Land 
Lloyds Bank 
London & Sbathtiytie 
Lucas Inds 
Matsuatfcaya 


OlAG 


PhlGp Morris 
Premier Hoaltfi 
RautaruukH 
Repola 
SKF 

Saga Petroteun 
Sappi 
Scaitronfc 
Skflaw 

SmHhKEne Beecham 


TVB 

Taiwan Cement 
Takashimaya 
Taylor Woodrow 
Templeton Latin 
Thai PetrochemfcaJ 
Toshiba 

Town Centre Secs 


24 
16 

2d 16 
7 

18,17 

18 

25 
22 
17 
24 
24 
21 
21 
20 

17 
24 
22 
24 

7 

21 

24 

16 

18 

24 
18 
22 

25 
28 

17 
21 
24 

18 
20 
24 
20 
22 
21 
24 

24 
22 

7 

25 
20 
18 
21 
24 


Haricot Statistics 


*Aimnl reports service 
Bancttmark Govt bonds 
Bond futures and options 
Bond prices and yfefcte 
Gomraodfttes prices 

Dividends announced. UK 
EMS currency rate 
Eurobond prices 
fined interes* todtaa . 23 

FT-fl WorW tafia Back Wto 
■" FT Gold Mines Index 27 

FTrtSMA Inti bond sw » 

ft-SE /Irtariee indtes Z7 


28-29 

23 

23 

23 

25 

25 

32 

23 


Foreign exchange 
Sto prices 
Uffe equity options 
London share sanfca 
Loodon trad opens 
Managed funds sendee 
Uonay ruericstB 
New YUfc share Mnfca 
New tad tend taues 
Recant isons. UK 
Short-term W rates 
US interest rates 
World Stock Markets 


27 

30-31 

32 

3435 

23 

27 

32 

23 


Chief price changes yesterday 



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Cm C— 4715 — 1U 

Essex 711 - is 

BsorenSac 306 - 14 

Rsdotedn 51B - 16 

TOKYO {Y«4 


taure IM 52 + IB 

JvMea 555 + 19 

Hod SUM 2780+120 
IMakuQI 754 + 25 


LONDON (wooe) 


pHl 1 


IP 5 


Am Hut* 

Anton 
Aipnc 330 

OMsWGreup 130 
Smteuse 2ifi 

lownCereresa 13 


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Sam Ow 

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Main M 553 - 13 


BrtNWspsce 484-1* 
Bdee 310 - 1(5 

Kadebdi 60-7 

PSODeJd 615-23 
Patman To* ft 421-48 
Sktmr 200 - 17 

MUn 20SH - 6% 

Waste UaipasS - 18 

VfewrtW 1« - 5 


Citicorp powers to record profit 


By Richard Waters In New York 

Citicorp vaulted to the top of the 
profitability league of big US 
commercial banks yesterday with 
record quarterly prefits. 

The results were powered by 
strong advances in all parts of 
Citicorp’s business, with none of 
the nasty surprises which have 
hampered the group's earnings in 

recent years. 

“It has been a long time since 
we have had all the cylinders 
working together,” said Mr Tam 
Jones, Citicorp's most senior 
financial officer. The return an 
capital jumped to 22 per cent 


compared with 16 per cent a year 
before. 

The group’s results were Bat- 
tered by a lower effective tax 
rate, which at 34 per cent, down 
from 37 per cent, added around 
8100m to after-tax eanrings. How- 
ever even without this, Citicorp’s 
profits beat most forecasts, lifting 
Its shares Sl% at $44 during the 
morning. 

While most other US commer- 
cial hanks face the prospect of 
slow growth in domestic mar- 
kets, Citicorp has benefitted from 
its huge presence overseas, par- 
ticularly in consumer hawking 

One result was that the bank’s 


net interest margin - the average 
return it makes on its assets - 
rose during the latest period, at a 
time when other US hanks are 
seeing margins fall. The net 
interest margin reached <L37 per 
cent in the third quarter, up from 
3J97 per cent in the same period a 
year before. 

Overall Citicorp said after-tax 
income jumped to 9894m, or fL67 
a share, from $528sn, or 97 cents a 
share, the year before. 

Two factors underpinning this 
performance were a rebound in 
trading revenues after a dismal 
first half of the year and a sharp 
fad in its loan loss provisions. 


Trading income reached $287m, 
more than tbe $230m of the first 
two quarters combined. The pro- 
vision for bad debts fell from 
3625m a year ago to 3436m. 

“This is the point of tbe credit 
cycle where we are at the low 
end fin terms of provisions!,’’ 
said Mr Jones. He added that tbe 
bank remained wary about 
growth in its loans business. 
Commercial lending was only 2 
per cent higher than a year 
before, while consumer loans 
were up 8 per cent 

Mr Carl Reichardt, chairman of 
Wells Fargo, the West Coast bank 
which also reported earnings yes- 


terday, echoed this caution. 
While loon quality was continu- 
ing to improve, Wells Fargo was 
“closely monitoring . . . under- 
writing standards in view of the 
highly competitive market for 
new loan volume,” he said. Net 
earning at Wells Fargo jumped 
32 per cent 

Qwm i w ) Bp w h , Cha se Manhat- 
tan and Wells Fargo all exceeded 
market expectations with third- 
quarter figures announced yes- 
terday. 

Both Chemical and Chase beat 
earnings per share forecasts by 
more than 15 per cent 
US bank results. Page 21 


New drugs enable SmithKline Beecham to increase trading profits in third quarter 


Tagamet’s US sales fall 
76% after end of patent 

Total sales were 8 per cent from volume gains. .Trading 
higher at £L59bn (£L5lbn), from 
£L46bn, with trading profit up a 


By Daniel Green In London 

US sales of Tagamet, once 
SmithKline Beecham’s best-sell- 
ing drug, collapsed by 76 per cent 
in the third quarter to $47m after 
tbe expiry in May of patent pro- 
tection fbr the ulcer remedy. 

Mr Jan Leschly, chief executive 
of the Auglo-US drugs group, 

admitted yafi tor day Hint rim fall 

was “dramatic” but said it "was 
not totally unexpected”. He said 
sales declines after recent patent 
expiries at other drugs compa- 
nies had been comparable. 

Third-quarter figures showed 
that Tagamet’s weakness was 
partly offeet by new drugs, sales 
of which rose 83 per cent at con- 
stant exchange rates from $187m 
to $341 ul 


ahnilar amount at 4201m, a garnat 
£277m. Pre-tax profits were 2 per 
cent down from caim to £285m. 
The 1993 quarter included an 
exceptional y i* w gate 

Earnings per share were 4 per 
cent higher at 1X9 cents helped 
by a sharp fall in the estimated 
fully ear tax charge, from 30.7 per 
cent to 27,9 per cent, partly as a 
result of tax breaks arising from 
the $2J3bn acquisition of US dis- 
tributor Diversified Pharmaceuti- 
cal Services. The quarterly divi- 
dend is 3p per London-quoted A 
share and 30.16 cents per New 
York-quoted equity unit ADR. 

Tbe 3 per cent rise in revenues 
pharmaceuticals came entirely 


profit Ml 2 per cent as a result of 
the lower contribution from 
Tagamet SmithKline’ s biggest 
seller, tbe antibiotic Augmantta, 
saw sales rise 7 per cent to 
£180m. The fastest growth came 
from the new anti-depressant Ser 
oxat, called Paxil in the US. 
whose sales more than doubled 
to £S7m. 

Animal health sales rose 10 per 
cent thanks to anti-infective 
treatments. Consumer health- 
care, which tor-hiftes non-medical 
products such as the soft drinks 
Ribena and Lucoaade, had a 9 per 
cent increase in sales. Sales in 
the clinical laboratories division 
rose 5 per cent 

Lex, Page 16; Merck/Eli Lilly, 
Page 21 


Big pain 



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Top UK banker will 
join Morgan Stanley 


APV ousts chief executive 


By John Gappar hi London 

Sir David Walker, deputy 
chairman of Britain’s Lloyds 
Bank and widely expected to 
become Its next chairman, Is to 
join the US investment bank 
Morgan Stanley as its executive 
chairman in Europe. His decision 
means that Lloyds must select 
both a new chairman and a new 
thief executive within 2% years 
The move could allow Sir 
Brian Pitman, chief executive, to 
sncceed Sr Robin fobs as chair- 
man. However, it would be the 
first time a Lloyds’ chief execu- 
tive has become chairman, the 
post traditionally being filled 


from outside. Sr David. 54, is a 
former director of tbe Bank of 
England and chairman of 
Britain's Securities and Invest- 
ments Board. He said be was 
attracted by the idea of a 
“wholly executive and more than 
full-time job” when approached 
by Morgan Stanley. 

Mr Richard Fisher, chairman 
of Morgan Stanley, said Sir 
David, who will be a member of 
the bank's New York board of 
directors, would bring both “a 
wealth of experience” and 
“extensive relationships with 
key figures”. 

Observer, Page 15; 

Interview, Page 25 


By Andrew Baxter in London 

Mr Clive Strowger has been 
ousted as chief executive of APV, 
the str agglin g UK-based food pro- 
cessing equipment specialist 
which last month halved its 
interim dividend and warned it 
was facing increasing pressure 
on profit margins. 

His departure, announced yes- 
terday, follows strong pressure 
from institutional investors 
which convinced Sir Peter Care- 
let, APV’s chairman, and non-ex- 
ecutive directors that they 
needed to take action. 

Tfae move intensified (Sty of 
London concerns about the direc- 
tion of the company, a perennial 
target of takeover rumours. 
APV’s whams, w hich h flfl faflgn 


30 per cent to 83p after the 
results on September 15, slipped 
l%p yesterday to TZVip, close to 
their 1994 low of 70%p. 

APV said Mr Strowger would 
leave tbe company with immedi- 
ate effect Dr Neil French, 
finance director, would assume 
the additional role of chief execu- 
tive until a successor is 
appointed. Later the company 
said: “The half-year results were 
not as good as we had hoped, and 
came as a bit of a shock. There 
was a feeling that we needed 
someone to take tbe company for- 
ward at greater speed and with 
greater vigour than had been 
shown." 

Mr Strowger, a former finance 
director at Grand Metropolitan 
and chief executive of Mount- 


leigb, joined APV in June 1992. 
He played a big part in the 
restructuring and redirection of 
the company that became neces- 
sary because of recession, 
increasing competition and prob- 
lems digesting acquisitions by 
former chief executive Mr Fred 
Smith, who left in 1989. 

Mr Strowger appears to be car- 
rying the can for last month's 
interim statement Pre-tax profits 
rose from £4.4m (57m) to £5J8m, 
but the interim dividend was cut 
from 2p a share to Ip. 

More seriously, institutions 
and analysts were worried by an 
unspecified charge that is due to 
be taken in the second half for 
further restructuring. Estimates 
for the charge range from £10m 
to £40m. 


GE makes 
13% gains 
despite 
Kidder loss 

By Tony Jackson In Now York 

General Electric, the diversified 
US conglomerate, shrugged off 
losses at its Kidder Peabody 
investment banking subsidiary 
with a 13 per cent rise in third 
quarter net earnings to $l.37ba. 

GE Capital Services, the finan- 
cial services division which 
includes Kidder, raised its net 
earnings 7 per cent to 5526m, 
despite Kidder’s net operating 
loss of g85m. 

GE said seven of its 12 divi- 
sions had produced double-digit 
rises in operating profit: the 
NBC broadcasting network, plas- 
tics, motors, appliances, power 
systems, lighting and informa- 
tion services. 

Only one division, aircraft 
engines, failed to produce sales 
growth in the quarter. The divi- 
sion, which has been hit in the 
past two years by a downturn in 
civil and military orders, also 
suffered a fell In operating 
profit 

GE announced on Monday that 
it would take a fourth quarter 
charge of about $500m on the 
sale of parts of Kidder Peabody 
to rival broking firm Paine- 
Webber. 

Mr Jack Welch, GE nhaipmm, 
said yesterday, ”11118 transaction 
and the record level of perfor- 
mance demonstrated this year by 
our other businesses, position us 
well for the future". 

GE’s involvement with Kidder, 
which has cost It around 5l-5bn, 
has dented Mr Welch's otherwise 
high reputation. Further poten- 
tial embarrassment comes next 
week with the opening of a court 
case in Columbus, Ohio, charg- 
ing GE and the South African 
group De Beers with collusion 
over the price of artificial dia- 
monds. 

Discussions on the future of 
NBC were continuing with vari- 
ous parties, the company said. 

However, it reiterated that it 
was looking for ways of 
strengthening the business 
rather than selling it outright 
Suitors for all or part of NBC 
have been rumoured to include 
Time Warner, Walt Disney, 
Turner Broadcasting and ITT. 

GE said: "We think NBC is 
very well positioned for future 
growth. If there were ways of 
helping that along, we’d look at 
it” Making no change was also 
an option, the company said. 

Group sales were op 9 per cent 
at Jie^bn, operating mar- 
gins rose from 11.6 per cent to 
12.8 per cent Operating casb 
flow in the quarter remained 
steady at $2.6bn. 


Barry Riley 

The declining rewards 
for accepting equity risk 


It has become 
accepted that 
equities should 
provide a rate of 
return substan- 
tially higher than 
cm less risky alter- 
natives such as 
bonds or short- 
term money market instruments. 
Indeed, such an excess return is 
h i nit into pension fund costings 
find into many retail investment 
products. But is the equity risk 
premium fading away? The very 
long-run picture for the UK is set 
oat each, year in the Barclays de 
Zoete Wedd Equity-Gilt Study 
which covers a period going back 
to 1919. This year's edition 
showed that the excess return on 
UK equities compared with three- 
month Treasury Bills was 6.7 per 
rant armnafis ad over this 75-year 
period. Roughly similar results 
are obtained in the US. 

During the 1960s equities con- 
tinued to deliver in this prolific 
way, only mare so. The average 
equity return during the decade 
was 33.3 per cent a year, against 
12.1 per cent on Treasury Bills. 

British pension, funds not surpris- 
ingly ended the decade with large 
surplases- 

So for in the 1890s, however, 
equities have disappointed. The 
annual excess return compared 
with cagh has been only L6 per 
cent Another BZW publication, 
the Global Market Digest shows 
that this pattern has been 
repeated in many countries, with 
the ffrapss annual return since 
the beginning of 1290 being only 
3.3 per cent in the US and actu- 
ally negative in Germany, France 
and Japan. For still strongly posi- 
tive results you have to go to 
Hong Kong and other Asian 
countries. 


Of course, a ran of a few bad 
years does sot prove anything. 
The decade of the 1970s was also 
a bad period for excess returns, 
but that was a period of very 
high inflation and commodity 
price shocks. There is no such 
ready explanation for tbe trend 
of tbe 1990s. 

Bat tbe evidence is beginning 
to mount up. The persistence of 
such a high equity risk premium 
has in any case been something 
of a puzzle. Although individual 
equities are volatile, institutional 
Investors can diversify, and so 
long as they have reasonable 
time-horizons they may view 

So far this year 
equities in many 
countries have 
been less volatile 
than bonds 

equity portfolios as being only 
moderately risky. They certainly 
do not require a premium of 6 per 
cent or more. 

So far tilis year, after all, equi- 
ties in many countries have 
turned out to be much less vola- 
tile than bonds - supposedly the 
safer investment Long gilts, for 
instance, are down about IS per 
cent whereas the All-Share Index 
is off by only 9 per cent Wall 
Street has displayed minimal vol- 
atility for tiie past two years. 

The key may be in the histori- 
cal composition of tbe long-run 
excess return to equities. Much of 
ft has come, in the past 10 years 
or so, from an upward adjust- 
ment to the valuation basis. 
Investors are ready to accept a 


lower equity risk premium on a 
forward-looking basis, but the 
process of adjustment paradoxi- 
cally generates temporarily 
higher returns. Eventually, 
though, the revaluation process 
ends and future returns settle at 
a much lower level: perhaps 2990 
marked a turning-point here 

The theory gains some cre- 
dence from the roughly coinci- 
dent shift of equity money 
towards eme r ging markets. The 
timing has owed much, of course, 
to political developments, but 
there has apparently been a 
search for a more attrac ti ve risk/ 
return combination than that 
which can currently be found in 
mature western markets. 

For instance, cross-border 
investors channelled ?61bn into 
emerging markets in 1993 and, 
according to Baring Securities, at 
the end of the year they held 
emerging marine* equities worth 
S200bn against just $2bn in 1986. 
Even in less buoy ant conditions, 
another S40-$50bn of new money 
Is likely to be transferred this 
year. 

It is true that levels of underly- 
ing profit "have recovered 
strongly is the US and the UK, 
and are in process of doing so to 
continental Europe. Labour is 
competing only weakly against 
capital for its share of the eco- 
nomic cake. Dividends are grow 1 
tag quite rapidly. 

But tbe return to equity inves- 
tors to a secondary market 
depends crucially on tins tettiai 
valuation basis as well as on 
company profitability. Share 
prices have moved to an histori- 
cally high ratio to the bock val- 
ues of underlying assets. It is 
hard, however, for investors to 
look forwards and backwards at 
the same time. 




THE LINK BETWEEN THE PAST 
AND THE FUTURE 



The sign of excellence 






financial times 


WEDNESDAY OCTOBER 19 1994 f 


IS 


INTERNATIONAL COMPANIES AND FINANCE 


GAN drops 
to FFr840m 
deficit 
at midway 

Gy Andrew Jade 
in Paris 


Finnish groups’ results confirm recovery in Nordic forestry industry 

Repola, Kymmene return to black 


By Hugh Camegy 
in Stockholm 

Repola and Kymmene, two of 
Finland's big four forestry 
groups, yesterday reported 
large swings back to profit in 
the first eight months of the 
year after losses in the same 
period last year. The recovery 
followed sharply reduced finan- 
cial charges. 

Both reported high capacity 
utilisation - 94 per cent in the 
case of Kymmene's paper mills 
- and said demand in Europe 
for Forestry products and paper 
was likely to remain strong. 

The results were in line with 
resurgent profitability in the 
Nordic forestry industry this 


year. They covered a period 
during which Repola and Kym- 
mene came close to agreeing a 
merger between Kymmene and 
United Paper Mills, the for- 
estry group and main compo- 
nent of Repola. Talks broke 
down in June. 

Kymmene has denied reports 
that merger contacts had been 
renewed. 

Repola reported pre-tax prof- 
its in the first eight months of 
FMl.l7bn C$2 15m). a turnround 
from a restated loss of FMllSm 
in the sam e period last year. 
Repola and Kymmene restated 
1993 figures to conform with 
EU accounting principles. 

Turnover rose to FMl8.36bn 
from FMl7.77bn and operating 


profit grew to FM2.11bn from 
FM1.67bn. Financial expenses 
fen by FM782m. 

Operating profits at UPM 
rose to FMlBbn from FML48bn 
on turnover up at FMi2£6bn 
from FMU.74bn. Repola said 
the increase in turnover was 
due to marked growth in its 
paper and mechanical wood 
processing businesses. 

Repola’s engineering divi- 
sion, Rauma , saw sales 
increase to FM5.18bn from 
FM5.03bn. But operating prof- 
its doubled to FM247ro from 
FM124m. 

At Kymmene, there was a 
swing to a FM545m profit in 
the first eight months from a 
FMS37m (restated) lass. Sales 


rose to FMl2.11bn from 
FM10.98bn, due mainly to 
higher sales of fine papers, 
panels and sawn timber. Value 
of sales fell FM700m as the 
markka appreciated. Operating 
profit rose to FML32bn from 
FM944bn. Net financial charges 
tumbled to FM846m from 
FMl^bn. 

Kymmene said it expected 
earnings in the last four 
months of the year to be at the 
same levels as in the first eight 
months. 

It also expects an overall 
improvement in earnings for 
the full year of FMlbn. Last 
year, Kymmene reported a loss 
after financial Items of 
FM25fim. 


Enso-Gutzeit buys stake in Veitsiluoto 


By Christopher Brown-Hum es 
in Helsinki 

Enso-Gutzeit said last night 
that it was strengthening its 
operations in the Finnish pulp 
and paper sector by buying a 
35 per cent stake in Veitsilu- 
oto. a state-owned Forestry 
company, for FMl^bn ($324m). 

The move, wbicb continues 
the government's privatisation 
programme, will make Enso 
one of Europe's leading produc- 
ers of fine papers and news- 
print. 

The government retains a 
majority stake in Veitsiluoto 
but has given Enso an option 


to buy the holding if it decides 
to sell. 

Mr Matti Vuoria. secretary- 
general of Finland's Ministry 
of Trade and Industry, said 
Enso had defeated a rival bid 
from Metsd-Serla, one of its 
domestic rivals, because it had 
made “a clearly better offer”. 

Enso will pay FMlbn directly 
to the state and use 
the remaining FM500m to 
strengthen Veitsiluoto’s 
equity. The government holds 
33.7 per cent of the capital and 
52.1 per cent of the votes in 
Enso. 

The sale is politically sensi- 
tive because Veitsiluoto's oper- 


ating units are based in the 
north of Finland and are 
important for local employ- 
ment Enso has undertaken to 
study the feasibility of making 
a big investment at Oulu, 
where Veitsiluoto has recently 
co mmiss ioned a new fine-paper 
machine. 

Veitsiluoto made a FMl50m 
loss after financial items in 
1993 on turnover of FM<L82bn. 

Enso yesterday reported a 
FM872m profit after financial 
items tor the first eight 
months, compared with a 
FM186m profit in the same 1993 
period. Sales advanced to 
FM11.3bn from FMlO-2bn. 


Mr Jukka Hann&ia. chief 
executive, said the improving 
trend would continue In the 
final four months, giving the 
group a “much better" full- 
year profit than last year's 
FM406m. “Prices for paper- 
board and for standard and 
speciality newsprint will be 
raised during the final four 
months." he said. 

The gp*oup announced 
FM650m in new investments. 
The biggest project, worth 
FM400m. involves the construc- 
tion of a chfimitbermomechani- 
cal pulp plant and process 
water treatment plant at Ima- 
tra. 


Groupe GAN, the state- 
controlled French insurance 
group, yesterday reported 
losses of more than FFr840m 
($l58.79m) for the six months 
to Jtme 30. 

This compares with profits 
of FFr37 2m at the same time 
last year. 

Group revenues rose to 
FFr63 bn, against FFr62. 3bn 
last time, and the balance 
sheet total stood at FFr738 ^bn 
up from FFr704.4bn. 

The deficit had been 
expected by analysts following 
similar losses at other 
insurers. 

They were the first results 
to be presented by Mr Jean- 
Jacques Bono and, who was 
appointed head of the 
company at the end of June by 
the government, in succession 
to Mr Francois HeUbronner. 

Mr Bonnaud said the losses 
reflected a number of excep- 
tional factors, including a 
deterioration in casualty 
insurance, a reduction in real- 
ised gains, a series of provi- 
sions and a restructuring of its 
Union Industrielle de CrMlt 
subsidiary. 

UIC saw its losses deepen to 
FFr925m from FFr30m in the 
first half of last year as part of 
the re st ruc tu r in g, which was 
agreed earlier this month. The 
group is ring-fencing 
FFrl&dbn in its property port- 
folio. 

Domestic life assurance prof- 
its remained almost 
unchanged at FFr344m. com- 
pared with FFr355m. However, 
its Incendie Accidents division 
reported a sharp increase in 
losses to FFr736m from 
FFr403m- 

Gronp C1C continued to 
grow, reporting profits 
of FFr328m against 
FFr257m. 

Mr Bonnaud said that he 
was confident the situation 
would improve in the second 
half. 

He also said that bis 
objective was to prepare GAN 
for privatisation “with the 
shortest possible delay", even 
if the losses reported 
yesterday held back such a 
move. 


DnB plans to set up 
life insurance group 


By Karen Fossil 

Den norske Bank. Norway's 
largest commercial bank, yes- 
terday announced plans for a 
life insurance company to 
become operational in 1995. 

Norwegian commercial 
banks were given the green 
light ip.' the Storting (parlia- 
ment) in the spring of 1992 to 
establish insurance companies 
providing they are granted a 
concession from the finance 
ministry. 

DnB said it hoped to submit 
an application for such a con- 
cession within the next week. 


The bank also disclosed that 
it would cancel a co-operation 
agreement made in 1993 with 
Vital, the Norwegian life insur- 
ance group, in which DnB sells 
life insurance products 
through its bank distribution 
network. 

DnB said it intended to sell 
life insurance products to com- 
panies and private individuals 
and the new company would 
be one of Norway's most 
cost-effective - enabling it to 
offer competitive products. 

The bank declined to reveal 
the size of the life insurance 
company. 


ASH chief may scoop 
£1.67m compensation 


By Paul Taylor In London 

Mr Tom Buffett could receive 
compensation totalling £L67m 
(32.63m) after his surprise deci- 
sion to step down as chairman 
and chief executive of Auto- 
mated Security (Holdings). 

Mr Buffett built ASH into a 
large electronic security 
systems group through a series 
of acquisitions in the 1980s. 
Pre-tax profits peaked at 
£45.1m on turnover of £173 .2m 
in 1992 but the group’s finan- 
cial performance has been 
erratic. The shares closed 5p 
lower at 83p yesterday. 


Lord Lane of HorselL deputy 
chairman, will succeed Mr Buf- 
fett Lord Lane confirmed that 
Mr Buffett, whose remunera- 
tion totalled £334,000 in the 
year to November 30, was on a 
five-year rolling contract 

ASH also announced pre-tax 
profits for the three months to 
August 3 of £2-59m, from 
£903,000 a year earlier. 

Turnover from continuing 
operations increased by 10.1 
per cent to £40.4m. producing 
earnings a share of l-3p com- 
pared with a previous loss of 
0.3p. 

Lex, Page 16 


Statoil and Saga prepare 
NKr40bn energy venture 


By Karen Fossil in Oslo 

Two of Norway^ biggest oil 
and gas companies will today 
announce details of an asset 
swap programme which will 
clear the way for a NKr40bn 
(S5.6bnj joint development plan 
for gas fields in the Norwegian 
Sea. 

Statoil the Norwegian state 
oil company, and Saga Petro- 
leum. Norway’s largest inde- 
pendent oil company, will 
swap operational control of oil 
and gas fields in the North Sea 
and in fi eld s off mid-Norway. 
There may be a swap of share- 
holdings between the compa- 
nies. 

The government is also 
expected to disclose details of a 
deal in which the state will sell 
a large shareholding to Saga in 
either or both the Smoerbukk 
South and Smoerbukk gas and 
condensate fields in the Norwe- 
gian Sea. 

The NKr40bn co-ordinated 
development of these fields has 
long been stalled by doubts 
about the fields’ economic via- 
bility and by differences of 
opinion over oil companies' 
investment priorities. The 
restructuring of the oQ and gas 
assets and their co-ordinated 
development will allow the 
companies to share investment 
objectives. 



'ftorwegiatf '■ 

(v Saa-.r ” \ 

U ..... v ^ ■ ; 

LvC -. T; NORWAY \ 

\^\ en *lr r OSLO ; 

i • ;.»Stav3nger/v ' 

£*.-■ JT. .r.swEDOW 

ll Fenris Ftetd ( 8 *‘| - .. ] 


The developments will pro- 
vide much-needed orders for 
Norway’s oil supply industry 
whose order books have 
sh rank due to a fall in invest- 
ment activity by oil companies 
a nd in which restructuring will 
force the loss of thousands of 
jobs. 

The economically depressed 
mid-Norway region near Kris- 
ti ansund also stands to benefit 
greatly from their develop- 
ment 

Statoil is understood to have 
agreed to exchange its opera- 


tion in the North Sea of its 80m 
barrel Fenris oil field for 
Saga’s operation of the lQObn 
cubic metre Midsard gas field. 

In August. Saga acquired a 
50 per cent stake in Fenris 
from Esso Norge. Financial 
details were not disclosed. Stat- 
oil holds a 20 per cent stake in 
the field while the state owns a 
30 per cent direct financial 
interest 

In the Midgord field, which 
comprises two licences and is 
situated in Haltenbanken off 
mid-Norway. Statoil will 
assume Saga's operation in 
exhange for its Fenris opera- 
tion. Statoil holds a 51 per cent 
stake in each of the Midgard 
licences. The state directly 
holds 31.4 per cent Saga Petro- 
leum 9.S per cent. 

The Smoerbukk field, where 
the state is understood to have 
agreed to sell all or part of Its 
31.4 per cent shareholding to 
Saga, is operated by Statoil 
with a 29.6 per cent sharehold- 
ing. Smoerbukk c o nt a i ns 95bn 
cubic metres of gas and 37m 
cubic metres of condensate. 

The Smoerbukk South field 
contains 20bn cubic metres of 
gag emj an estimated 150m bar- 
rels of oil The Midgard field 
was discovered in 1981 while 
Smoerbukk was discovered in 
1984 and Smoerbukk South in 
1985. 


* 


Rautaruukki in profit 
for first eight months 


By Hugh Camegy 

Rautaruukki the Finnish, steel 
group, yesterday reported a 
return to profit in the first 
eight months of the year, post- 
ing a pre-tax surplus of 
FM361m ($78m) after a 
(restated) loss in the same 
period last year of FM143m. 

The group, the Nordic 
region's second largest steel 
producer, said the increase in 
demand and prices in Scandin- 
avia and elsewhere in Europe 
that fuelled the turnround 
were expected to continue for 
the rest of the year, yielding a 
further improvement in profit- 
ability. 

Group sales rose to FM4.86bn 
from FM4.57bn. Rautaruukki 
said steel prices rose faster 


than the cost of inputs, with 
prices rising especially sharply 
for hot and cold-rolled prod- 
ucts. 

Operating profit jumped 35 
per cent to FM624m from 
FM463m and would have been 
greater but for a FM60m loss 
run up by the group’s engi- 
neering division. 

However, net interest costs 
fell to FM309m from FM364m 
and there was a FM46m 
extraordinary surplus, com- 
pared with an extraordinary 
charge of FM77m last time, due 
to changes in inventory values. 

Rautaruukki raised FM792m 
earlier this year in a global 
share offering that led to a 
drop in the Finnish state's 
shareholding in the group to 
68.7 per cent from 81 J. per cent. 


Gaic shares up 
9% as market 
sees Ferfln bid 

By Andrew HD1 in Mian 

Shares in Gaic, the Italian 
finance company, rose by 
nearly 9 per cent yesterday, fol- 
lowing comments on Monday 
by the chairman of Ferruzzi 
Finanziaria (Ferfin). the finan- 
cial holding company which 
controls a large stake in Gaic. 

Mr Guido Rossi was reported 
to have said that Ferfin was 
“examining the problem" of 
Gaic. which in turn owns 
about 30 per cent of Foudiaria, 
the quoted Italian insurer. 

Gaic has been at the centre 
of speculation for months, and * 
the markets yesterday inter- 
preted Mr Rossi’s comment as 
a hint that Ferfin was set to 
mount abid for the 20 per cent 
of Gaic freely traded. 


r 


... ; ;• - - i>r- ••g'-g/tf--- A T’f •*-*-■* in 


Highlights August 31, 1994 
Centris Multipersada Pratama 
achieved impressive results 


Centris Multipersada Pratama posted impressive results with 
annualized revenues going up by 34.6% over the FY1993 figure 
(excluding expansion). Following a cost reduction program, the 
company managed to increase operating and net profit by 83.2% & 
52.5%, respectively. 

Key Figures 


(in Rp billion) 

August 1994 
(8 months) 

FY1993 
(12 months) 

% change 
YoY 

Total Revenues 

24.5 

27.3 

+34.6 

Operating Profit 

11.6 

9.5 

+83.2 

Net Profit 

6.2 

6.1 

+52.5 

Total Equity 

44.8 

36.7 

+22.1 

Total Assets 

67.3 

58.6 

+14.9 

EPS(Rp) 

260.7 

171.0 

+525 

Current Ratio(%) 

122.2 

87.0 

+18.6 

Net Gearing (%) 

27.0 

26.6 

+1.5 


Key Points 

• Indonesia's largest taxi company 

• Nationwide operation, targeted at fast-growing middle class and mobile 
urban population 

• Strong cash flow and low gearing 

• A continuing fleet expansion wilt boost earnings substantially in the next 
five years 

The company will continue its supremacy as a leading taxi company by 
expanding its fleet and widening its coverage into other fast growing cities of 
Indonesia. 


PT Centris Multipersada Pratama 
Jakarta, Indonesia 
(62-21)7260828 


\ 






i 

I 


M 


1 


m 




-V ■. . 




October 10, 1994 


Introducing the JR Morgan Commodity Index 

For today’s investors, commodities 
make sense. Now there’s a commodity 
index that makes sense, too. 


For institutional investors, the case for commodities 
is clear. Enhance your returns as economic growth 
and inflation lift raw materials prices. Diversify 
your portfolio as higher interest rates depress slock 
and bond returns. 

But using the wrong commodity index can cloud 
your view. Many of today’s indices apply simplistic 
weightings that don’t reflect typical investment 
objectives. Sti/1 others are loaded with soft com- 
modities that expose you to haphazard liquidity 
and weather risks that can undermine your inflation 
hedging strategy. 

That's why it makes sense to follow the new stan- 
dard in commodities investing — the J.R Morgan 
Commodity Index (JPMCD. The JPMCI is a total 
return index that gives you exposure to a highly 
liquid selection of energy, base and precious 
metals. And it’s designed specifically with invest- 
ment objectives in mind. That means positive 
correlations with inflation and economic growth. 
Negative correlations with stock and bond indices. 
The result: an investment that not only helps diver- 
sify your portfolio, but offers favorable risk/retum 
characteristics in its own right. 

To learn more about how the JPMCI can improve 
your investment performance, contact: 

New York: Blythe Masters (2121 648-0924 
London: Emma Conyers (44 71) 779-2034 
Tokyo: Ken Yamaguchi (81 3) 5573-1983 
Singapore: Tony West (65) 326-9890 


JPMorgan 


Solid returns 

(Dae 1983 -100) 


SSP 500 Total Returns 


JPMo^an Global Bond Hide. 


»e»l Doc S3 JuniH 

Based on historical data, JPMCI returns track 
favorably with returns on slocks and bonds. From 
a relative value perspective, commodities ore 
considered inexpensive today. 


Strategic diversification 

Expected Heun 


Stocfcs. bonds, and JPMC3 


Stocks ard bond* only 


VrtaWtjr 


The JPMCI significantly enhance >..ur ri*h/rrl..m 
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portfolio. 


U*. M>^n - dim MUiy |«| |_i r u 

® j f- JWi Sri *-*•« 


- ' ■ -M - H ~~ il ~ ' ' ■ I E g 

g 


i 




















> ^WANCUJL times 


WEDNESDAY OCTOBER 19 1994 




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To t yo Tore „ 10 2 „, ch 



FINANCIAL TIMES 


WEDNESDAY OCTOBER l« I'M 


INTERNATIONAL COMPANIES AND FINANCE 


Poor conditions 
hit Wall Street 
securities firms 


Sun returns to its shining performance of 1980s 

Positive trends have helped the US computer company to report record earnings, writes Louise Kehoe 

W e have hit a home and database servers did very Sun Microsystems After breaking bumness he says , ^ r J?S ll S£ ,S !5 opportunity^ do well there.' 

run!" boasts Mr welL . ^ growth records in the 1380s. its move from mainfr^nes to up £ nQther positive trend f( 

Scott McNealy, "Our technical workstations Share price ($) performance dimmed as cheaper, more fle^ie g * is the growth of global ne 


By Patrick Harverson 
in New York 


Merrill Lynch and Bear 
Steams yesterday provided fur- 
ther evidence of how the dete- 
rioration in trading and under- 
writing conditions on Wall 
Street has hit securities firms' 
earnings. 

Both companies announced 
sharply lower profits for the 
latest quarter. 

At Merrill, the securities 
Industry leader, net income 
during its third quarter tum- 
bled 36 per cent to 5232m, or 
SI. 10 a share, while net reve- 
nues dropped 13 per cent to 
$2.3bn. 

As in previous quarters, the 
biggest decline at Merrill was 
recorded in investment bank- 
ing revenues, which fell 46 per 
cent to $245m. 

Higher interest rates have 
led to a dramatic downturn in 
the underwriting business, 
with the rising cost of credit 
deterring domestic and inter- 
national companies from rais- 
ing capital on the US debt and 
equity markets. 

The firm's trading business 
has also suffered, with reve- 
nues from principal transac- 
tions falling 13 per cent to 
$654m. 

Surprisingly, however, Mer- 
rill said its earnings from trad- 
ing fixed-income securities 
were about the same as a year 
ago, which indicates that the 
firm is surviving the slump in 
worldwide bond markets better 
than most. 

Brokerage commission reve- 
nues held up reasonably well, 
slipping 3 per cent to $674m in 


the quarter, but the flattening 
of the yield curve prompted a 
19 per cent decline in net inter- 
est profit to $2llra. 

On a more positive note. 
Merrill’s asset management 
and portfolio service fees 
climbed 9 per cent to $431m, as 
client assets under fee-based 
management rose 8 per cent to 
$167bn by the end of Septem- 
ber. 

With much of its employees' 
compensation tied to perfor- 
mance. the decline in Merrill's 
overall earnings at least led to 
lower expenses during the 
quarter. Non-interest expenses 
fell 4 per cent to SlJlbn, with 
the compensation and benefits 
category dropping 9 per cent to 
SlJZbn. 

The earn ings picture at Bear 
Stearns was bleaker, primarily 
because the firm lacks Merrill's 
more diversified revenue base. 

Net income during its fiscal 
first quarter fell to just £35 .5m. 
or 25 cents a share, from 
$104.3m a year ago. Although 
revenues from commissions, 
interest and dividends rose 
during the period, those gains 
could not offset big declines 
elsewhere. 

Investment banking reve- 
nues fell by more than half in 
the quarter, to $58 .4m from 
$ll9m a year ago. Commission 
revenues, however, climbed 12 
per cent to $120.3m, while 
interest and dividends pro- 
duced revenues of $447 .5m. up 
sharply from $247m a year ago. 

There was a nrirari reaction 
from the stock market. Shares 
in Merrill Lynch climbed $% to 
$34% in early trading, but Bear 
Stearns fell $% to $19%. 


W e have hit a home 
run!" boasts Mr 
Scott McNealy, 
chairman and chief executive 
of Sun Microsystems, after the 
computer workstation manu- 
facturer surprised Wall Street 
with record first-quarter sales 
and earnings. 

Net income more than dou- 
bled to $38.4m. or 40 cents a 
share, from $16,601, or 16 cents, 
in the same period last year. 
Analysts bad been projecting 
earnings of about 26 cents a 
share. Revenues for the quar- 
ter were $l.273bn, up nearly 33 
per cent from $960 .5m. 

Sun's shar e price rose $1% at 
$32% In mid-session yesterday. 

"All of our business units 
met or exceeded our plans." 
says Mr McNealy. 

“Our desktop computer unit 
growth was phenomenal. Unit 
sales more than doubled. Our 
high-end server, storage arrays 


and database servers did very 
well 

"Our technical workstations 
and graphics workstations did 
very weft . . . You don’t achieve 
these kind of numbers because 
one product line or one geo- 
graphic area did well. You 
have to hit the lot." 

First-quarter shipments of 
workstations and servers 
jumped nearly 50 per cent from 
a year ago to 74,000 systems in 
the quarter, the company said. 

Shipments would have been 
higher but for a shortage of 
D-Ram (dynamic random 
access memory) chips during 
the quarter, says Mr McNealy. 

"Our backlog is still higher 

than we would like." 

With memory chip shortages 
easing. Sun expects to reduce 
its order backlog in the current 
quarter. 

Orders booked during the 
first quarter were $lJ27bo, up 


Share price (S) 
34 **■ 



Apr 4994 

Sotiw.FfCtotipHW 


33 per cent from $942. Un a year 
earlier. 

For Sun, the first-quarter 
results represent a return to 
the shining performance of pre- 
vious years. 


Alter breaking business 
growth records in the 1980s, its 
performance dimmed as 
growth in the market for com- 
puter workstations slowed and 
competitors, offering more 
powerful workstations, bit into 
Sun’s market 

Sun still holds a command- 
ing in the $10bn workstat- 
ion market for powerful desk- 
top computers used by 
engineers, designers and finan- 
cial analysts. 

The company, however, is 
increasingly turning to the 
broader market for "enter- 
prise’' computing based on net- 
works of desktop computers 
and servers. "We want to be 
known as the world’s best sup- 
plier of network computing 
products," says Mr McNealy. 

The trend towards computer 
networking - on a local, com- 
pany and global scale - pres- 
ents big opportunities for Sun. 


he says, as many businesses 
move from mainframes to 
cheaper, more flexible net- 
works of smaller machines. 

At the same time, depart- 
ments and branch offices are 
“upsizing" PC networks by 
priding powerful “servers". Sun 
is the ‘‘rightsizing'’ computer 
supplier, says Mr McNealy. 

Sun’s Solaris software, a ver- 
sion of Unix, is gaining 
momentum in the networking 
market after a rocky start 

SunSoft, the company’s sys- 
tem software unit, distributed 
82,000 Solaris licences during 
the first quarter, the company 
said. A version of Solaris 
designed to run on Intel-based 
servers is now “up and run- 
niug”, says Mr McNealy. "Nov- 
ell, the leading network soft- 
ware supplier, is vulnerable to 
competition, he adds. 

“NoveU is a soft underbelly 
and everybody is going after 


their market We see a real 
opportunity to do well there 

Another positive trend for 
Sun is the growth of global net- 
working. “The Internet is 
growing like crazy and 56 per 
cent of the servers on the 
Internet are from Sun. As the 
Internet grows, we grow," says 
Mr McNealy. 

He is more cautious, how- 
ever, about consumer use of 
high-speed networks. “A lot of 
money will be lost on the infor- 
mation highway over the next 
few years. We’d just rather not 
lose (money) there.” 

Sun is also moving to 
upgrade the performance of its 
workstations with a new 
microprocessor chip, called 
UltraSpare. First samples Of 
the new chip have just arrived. 
"You will see faster workstat- 
ions and servers based on 
UltraSpare in about a year." 
says Mr McNealy. 


Corning jumps I TVB wins go-ahead on satellite I Intel posts record 

24% to $132m t f . ■ 

By Louise Lucas in Hong Kong market and broadcasting granted an uplink and down- TfYl* t - Al 4 fTl 

Corning, the diversified PS encrypted signals which are link Licence allowing it to bring X l/I XV'JL JIM 

maimfnohirAi-. nnshfld nn net Television Broadcasts (TVR1. a decoded bv local cable opera- signals directly to satellite. It O 


Corning, the diversified PS 
manufacturer, pushed up net 
earnings by 24 per cent in the 
third quarter, on a comparable 
basis, to Si32J3m, or 62 cents a 
share, writes Our New York 
Staff. 

Earnings were hit, however, 
by a net $55.4m charge related 
to the cost of three acquisi- 
tions in life sciences. 

Sales in the quarter were up 
20 per cent to $1.4bn, half the 
rise being due to the acquisi- 
tions. Net income from associ- 
ates rase 35 per cent to $42.4m, 
mainl y because of loss elimi- 
nation after the sale last year 
of Vitro Corning, a Mexican 
venture. 


Television Broadcasts (TVB). a 
Hong Kong broadcaster, is 
poised to compete with Star 
TV, News Corporation’s Asian 
satellite television arm, follow- 
ing government approval 
enabling the domestic com- 
pany to establish a pan-Asian 
satellite service. 

The colony's broadcasting 
authority gave the local station 
permission to broadcast region- 
ally, but not in Cantonese, the 
dialect of Hong Kong and 
southern China. 

TVB has no Immediate 
plans, however, to capitalise on 
its new freedom. It will instead 
concentrate on the Taiwan 


market and broadcasting 
encrypted signals which are 
decoded by local cable opera- 
tors. 

Mr Alfred Ng, assistant gen- 
eral manager and company 
secretary, said: "We believe 
our current strategy of selling 
decoders to cable head-ends, 
allowing them to distribute our 
signals, Is correct.” 

It is a policy which appears 
to have paid off: TVB is among 
the colony's most profitable 
media companies, last year 
turning in a 42 per cent jump 
in net earnings to HXS5 19.6m 
(US$67.3m). 

Securing permission to 
broadcast regionally paves the 
way for TVB’s main aim: to be 


granted an uplink and down- 
link licence allowing it to bring 
signals directly to satellite. It 
currently employs Hongkong 
Telecom to carry signals and 
beam them up. 

Obtaining the licence - 
under consideration by the 
government - will give TVB 
greater flexibility to provide its 
own transmission facilities and 
full scope to compete head-on 
with Star TV. 

Media analysts agreed the 
go-ahead was a small victory 
for TVB but marked a bigger 
step for Hong Kong, which will 
be regarded as a viable base for 
satellite TV companies that 
might have gone to 
Singapore. 




Afl oompantao mentioned lie incorporated In Die Republe ot Sown Aide*. 

AS Aranda) figures tar the quarter ana prog rax s te a Bguree lor the current year to data ara uratxktad. 
Rata of oxchanga on OQ September 1904: HIM = £0. 18. £1.00 * R5, TO. 


Development mas given ara the actual tamping mauls. No ofiowancea have been made tor adjustments 
necessary In ihe valuation oftha carrmpomfing ore reserves. 


Mining companies’ reports - Quarter ended 30 September 1994 

Cmmi 


Sharqtaidant requiring coplea of these reports regUariy each quarter shodd write to the Secretaries. 
Angtovaal Trustees Limited, 5th How, 33 Davies Street London, W1Y 1FN 


HSfcfeR) 

Mfcm CM! 


Loral ne Gold Mines, Ltd - continued 


Quarter F in an ci al year 


Hag. NO.OV33B2MM 

[siued capital: lia 000 000 shame ol 10 cents each 


Operating rooutts 
Gold 

OremVed t 

Gold recovered hq 

Yield ._ grt 

Revenue _ FVt rutted 

Costs— RA milled 

Profit , Rrt mined 

Revenue R/kg 

Costs — R/kg 

Prom ...TVkg 

Revenue ROflO 

Coots R000 

Pratt - R00Q 


Low-grade gold plant 

Ore rated ...I 

Geld recovered . log 

Yield - - .... gn 

Rovonue Rrt mlltoa 

Costs Rrt miles 

Pratt- Rrt meted 

Revenue . . . - FWg 

Cows R/kg 

Prott R/kg 

fiovonuo ROOD 

Costa ROOD 

Profit ROW 


Uranium oxide 


Puip ueaicd 

0«rfo produced . 
YWd . . 


Financial results 


Wort me proM - geld mating .. 
IImsI tom uhl Ol urjnun 
onto and sulphuric add . .. 

Non mining income . .... . 


Interest pod. stores Mtuctmorrt 
and cmjjtayoo oennco tonetts. 
Proll Mforo taxation and Store's 
sIuid el proto _ . . 

Tauten and Stale's share 

ol profit ... 

Prole after laulion and Slate s 
snjio W profit .. .. 


Caprui cipcrutturo .. 
Appropriation for Wan 

repJvmenis 

Onndands 


Dev el opment 

Adtrsnewl m 

Sam pong resufts on Vool Roof 
Somoiod m 

Channel _ cm 

Ovuvkh vatuo - goto grt 

cm grt 

- ura/iwmoride.figft 
. . ... ., cmfcgrt 


Quarter 

Quarter 

Financial yoor 

ended 

ended 

ended 

30 Sept 

30Jun 

30 June 

1994 

1994 

1904 

7BSO00 

787 000 

3138000 

6242 

6550 

27975 

«JQ 

8,5 

8.9 

34A60 

376.99 

386.38 

Z77J5 

277,98 

261.37 

87.05 

99^1 

105,01 

43 337 

44 145 

41098 

34 905 

32 550 

29318 

8432 

11595 

It 790 

270 500 

288 153 

1 149 705 

217 875 

213 208 

820 178 

52 634 

75 945 

320 527 

474 QOO 

471000 

1913 000 

586 

685 

2 851 

1.24 

1.41 

1.49 

54 03 

64.31 

62.62 


SB .33 

24JJ4 

29.09 

37.72 

3828 

43 683 

45 548 

42018 

20 187 

18 838 

16331 

23 528 

28 710 

25885 

25 804 

30 288 

119 785 

11818 

12 526 

48 55S 

13 786 

17 762 

73 230 

784 309 

768 000 

3 124 000 

75 105 

78 645 

324 481 

0.10 

0.10 

0.10 

ROOO 

ROOO 

ROOO 

66 420 

03 707 

402 757 

(2 1461 

(2 8521 

13 3081 

5964 

6815 

33632 

70238 

97 870 

433 081 

ill 

827 

3 706 

70 125 

37240 

429375 

38 013 

58 862 

212 238 

42 M2 

40 331 

217079 

5 709 

17317 

46 938 

_ 

_ 

228 

— 

95 200 

179 209 

S 703 

HJ1I7 

226 364 

7 525 

7 1* 

28 957 

1 474 

1 286 

8028 

59 

58 

50 

22.6 

22.9 

31.4 

1329 

1335 

1 575 

0.55 

0.48 

0.64 

32 28 

28.12 

92.07 


Rag. N0.01OI44MM 

Issued capital: BO 333 560 shares ol 2* cents each 


Operating results 

Oro retted 1 

Gold recovered- — — kg 

Yield gfl 

Revenue Rrtmttad 

Costs — —Rrt muted 

ProRt — Rrt limited 

Revenue R/kg 

Coma R/hg 

Pratt FWtg 

Revenue R000 

Costa ROOO 

Pratt . - R000 

Financial results 

Working profit -gokjminteg 

(Loos) from sale ol by-products — 
Non-mining kwoms — 


Prospecting enpemStura . 

Stores roafisatton odlustmant ._ 


Profit batons taxation . 

Taxation 


Profit ahor taxation 


C^jtW expenditure 

DrvkJonto ... 


Development 
Advanced . 


Sampkng resuks; 

Sarpted m 

Channel width .cm 

Chennai value git 

— — ougrt 


Quarter 

Oiortor 

HnancWjww 

ended 

ended 

ended 

30 Sept 

30 June 

30 J taw 

1994 

1994 

1994 

98 805 

92577 

370 965 

885 

887 

3480 

9.1 

9.6 

9.4 

390.48 

417,48 

389.40 

301.81 

318*5 

288*4 

97.65 

100*3 

100*8 

43 685 

49 573 

41 510 

33014 

33060 

30 758 

10681 

10493 

10752 

38670 

38 649 

144 454 

20 217 

20 343 

107 030 

9453 

9307 

37415 

ROOO 

ROOO 

ROOO 

9463 

9 307 

37415 

(2381 

(10511 

«3J4) 

248 

586 

1298 

0463 

8842 

38370 

1 072 

1509 

3 598 

- 

284 

284 

8301 

7 040 

32 499 

8157 

1698 

10 288 

6234 

5351 

22231 




3081 

4 081 

11432 

— 

8007 

12087 

3081 

11 588 

23 519 

1 952 

1972 

8003 

1 109 

1 100 

4085 

234 

244 

240 

6.5 

8* 

6* 

1 500 

1588 

l 703 


HramcW results 

Working (toss) - gold rntnmg 

Prod from sales of cryrao ......... 

Norwmng income — — 


ftrieiesl paid, stores ad/usunenl 
and appropriation tor 
renabAeUon costs 


{Lotoftrofttetere taxation 

Taxation .. — 


[LoasyproB altar taxation 


Capital expencktus — 

Appropriation lor loan 
repayments 


Financial 

The financial results include Pie results d hedging transactions. 


Development 

Advanced m 4 650 4 007 19 204 

Sampfing restate: 

Kknbariey reefs 

Sampled m 132 96 406 

Chanrw) irfdtii an 1 07 134 / Iff 

Charnel value grt 7* 72 7 St 

cm. gfl 784 971 850 

Basal reef 

Sampled m 256 330 1346 

Channel mUti am 7 9 9 

Channel value grt 399.7 178* 193.6 

on. grt 2 583 1 596 1 802 

Eldorado reefs 

Sampled m 316 478 1 880 

Channel width cm 132 f 18 130 

Charnel value gft 10.1 155 10,2 

...criLgfl 1 329 1 835 1 3(6 

Total- an reete 

Sampled m 704 1 094 3 704 

Charms! iwWi.. cm 62 68 84 

Channel value grt 20,6 245 185 

— cm. gfl I 683 1 645 1 430 

Ora reserves 

The total ore reserve el 30 September 1094. based on a gold pnoe of R47 700 per 
Mtogrem, Is estimated as Mows: 

Nmbai-tay Basal Eldorado Total aid 


Hedging transactions 

As a) 30 September 1904. Pie Company had add tiie Mowing perfons o/ to future gold 
production 

Average 

forward price 

Year ending Kg of gold add perkgaow 

30 June 1995 828 R43 112 

Year ending 

30 Juno 1996 S48 R4S629 

TWo wontire endin g 

3* August 1996 50 RS463I 


Tormage 

StopngwUh an 

Value grt 

cm gfl 


54 200 1 442 200 
128 90 

8,1 10.4 

1 042 039 


395 700 1892100 
130 97 

85 10.0 

1 140 873 


Not Included m me Eldorado Reefs are massive crebodfes estimated to contan a total 
cl 340 300 tons a an average grade ol 4,7 grt. 

Ore reserves have been abated to reflect Ore block (actors (or #ie Inchtdual mats, so 
09 to more accurately reflect mo cwrtent d the ore resenres fbesod on post hhtory). 

1310 total eurisce dump matarial aveAgbta b 7 603 000 tons, ot which 3 7B2 000 tons an 
be treated at an average grade of 05 grt. 


Final dvroend No. 68 of 8 cents per share, declared to Upy IP94. was paid te Jltiy 18B4. 


Operations 

The treatment ol surface dump marorbi continued during the quarter. The reported 
429 0TO tens ore mOodkictodea an estimated 150 OQOtonsof surface dump material 
at an approdmau grade of 0.75 grt . 


Capital expenditure 

Outstanding commit menu at 30 September 1994 are estimated at Ri 286 000 
ftOJiaie H04.-H7 1600 00). 


Financial 

Thu tmancul results tncteto me results ol lodging transactions 


For and on behalf of the board 


Financial 

The financial results include the resiits of hedgng transactions. 

Indudod in taxation Is an omoixd of RI 80 000 In respect of Iha 5 par cent tranartron levy. 

to igm» of ti» Compands articles of asaoettbon, tiw Hretkaaf borrowing powers are 
Dm led to R35 000000. At 30 September 1994 borrmwngs lolailod R3 195000 
(1993: R3 731 OOO). of which long-term borrowings amounted to R2 923 000 
<1003: R3 484 000) and short -term to R?72 000(1 99% R247 000). 


Hedging transactions 

As at 30 September 1994. mo Company lud sold Wc Mtawaig portion of its future gold 
production. 

Average 
forward price 

Ton months ending Kg ol gold sold per kg sold 


JJ Gddenhuys 


Oman. RAO. «***, lOumwl JJ Guktormuys. BE. Hovov 0 US. Hgn LEO. Ore S MstM. 
OJ nwtxrva Tv Spnter. jEwUMw* 


AamtwdteBMr 8 j . firami 


19 October igs4 


Hedging transactions 

As at 30 September 1994 the Company had add Ihotetemng portions trirta future gold 
production: 

Average 
forward pries 

W ar ending Kg of gukf awfd perkgaoid 


Kg ol gold sold 


LeiyftiC Mite?. IlftaJ 


30 September 1905 
Two month* ending 
X Novombor 1995 


Dividend ' 

Final dividend No 77 gfSSconls per share, declared m May 1994, was pad m July 1994 


FVg No. 0WJ1WQ8 

Issued capital: 16366 9W shares of Hl.OOwdi 


Cxp&ri expenditure 

Ouisurxing comnwrnonts Jl 30 September 1994 ara intimated ai Ft? 1^0000 
(30 Juno 1994- R7 7S5 0001. 


Rkraiiclaf yaw 


For and an boh all of the boa id 


B.E.HW5W 
RAD Wfean 


Qnwm* BE HerswOUS. Has LED. iQtumunJ. BE Bvmraxn Hn U-O.JJ CoUamum. 
N a*nE UontULCU SrxS»r. RAO Wlwor, 


A8»mattartt3or%-PJ Eustace. BJ FumKn.G4.ftoCbWUV.JE vtn Mart. S-H WHam 


19 October 1994 




anoou 

ended 

enood 



30 Sept 

30 June 

30 Sept 



1994 

1994 

1994 

Operating mufts 





Ore rrdled 

_ I 

429 000 

432 000 

1 779000 

GcW racovaied .. u 

kg 

1561 

1438 

6968 

Yktid 

grt 

3* 

3* 

3.4 

Revenue .. 

Rrt rated 

162*8 

143.64 

144,76 

Costa 

Rrt mood 

183.01 

150*0 

145*5 

(LOSS) - 

Rrtmflod 

(0*5) 

16*8) 

(0*0) 

Rsvenuo 

— R/feg 

44 648 

43 211 

43020 

Costs 

- Rfl« 

44600 

45126 

43196 

|Uss| 

Rflcg 

(152) 

(1 815) 

(178) 

Revenue „ _ 

....ROOO 

60 095 

62051 

257520 

Costs _ 

-...ROOO 

69 933 

64801 

258585 

(Loss) 

....ROOO 

(238) 

(2 750) 

(1 065) 


- , - - . 

-' r - 


Ti-r 


In addHicn to the above forvraid sales eormrimenta. tto Company has enured ton a 
seitos of geld option Iranstxtnns. Those t ransaetiens ensure a mxunwm avenge price 
Of R40 703 par Utogram In raspoci of BS3 Mto^ante of gold during Ihe Rnanca) year 
erNCng 30 September 1 995. In tire event that the actuof rand apaf price of gold exceeds 
the Above irtirwnum osounM price, the Company wil bonott to the ovunt of HI par com 
of sudiarrcoati lor Ifito nmauni of gold. Thoabovo transactions are ResMe in natura and 
may be adjusted to the Company' a advantage in response to changes In iha gold pries . 


Capital expenditure 

Outstanding commimeiits at 30 September 1994 are estimated al R279 000 
(30 June 1994: R224 000). 


Per and on bohati ol mo board 

RAD.Wfcon 
j j. Getaermuys 


OhMM RAD. wreon (OuhtreB p j. Enrtaes. J4 Coktanhuyt. be. Hwvw DM Han U.D. 

BJ LamreanareaMwi^OJ.lWreiarelCRiiWtenw 


Mrauw revtaXT B4 ILxreM. CM. Mceoiy. T.V Sereaor 


10 October 1994 






By Louise Kehoe 
in San Francisco 


Intel, the world's largest 
semiconductor manuf actur er, 
reported record sales and earn- 
ings for the third quarter, with 
revenues up sharply as sales of 
its high-performance Pentium 

microprocessors, used in the 
latest personal computers, 
doubled. 

Revenues for the quarter 
were $2.86bn, up from $2L24bn a 
year ago. Net income rose 14 
per cent to $6S9m, or $1.52 a 
share, against $534m, or $1.33, 
for the same quarter last year. 

"The PC industry is rapidly 
moving to a new performance 
standard, based on Pentium 
microprocessors," said Mr 
Andrew Grove, president and 
chief executive. "The PC indus- 
try is moulting, shedding its 
past in a way that hasn't hap- 
pened for a decade. Just one 
year ago, the standard was a 
PC featuring an Intel 486 
microprocessor. Today, a PC at 
the same price point has a Pen- 
tium processor.” 

Intel said it expected to meet 
its goal of increasing Pentium 
sales to 25 per cent of its 
fourth-quarter microprocessor 
unit sales. 

A second goal was to ship 
6m-7m Pentium chips this 


year. The company said it 
expected to be within a few 
weeks of meeting this goal by 
the end of the year. 

Although Intel dominates 
the market for microprocessors 
used in PCs, with about 90 per 
cent of the world market, there 
are strong competitors. 

Advanced Micro Devices is 
expected this week to 
announce a new chip called the 
“K86", which it says win be 
compatible with Intel's Pen- 
tium, but faster. IBM, Nexgen 
and Cyrix are also offering 
their own versions of Intel- 
compatible microprocessors. 

The threat of a new PC stan- 
dard that could undermine 
Intel's domination of the mar- 
ket appears, however, to be 
receding. Efforts by IBM. Moto- 
rola and Apple to establish 
their jointly-developed 
“PowerPC” microprocessor as 
an alternative standard for PCs 
have so for had little impact, 
largely because there is limited 
software available for PCs built 
with the new microprocessor. 

Intel’s nine-month revenues 
were $S.29bn, up 30 per cent 
from $6.39bm Net income was 
$l.92bn, up 13 per cent from 
$l.7bn for the first three quar- 
ters of 1993. Earnings per share 
grew to $4.37 from $3.86. 

See Lex 


Strong sales help 
lift Apple results 


By Louise Kehoe 


Apple Computer has turned in 
record fourth-quarter reve- 
nues, boosted by strong sales 
of multimedia personal com- 
puters and its new Power Mac- 
intosh models. Earnings picked 
up significantly as costs 
declined. 

Revenues totalled $2.4bn, a 
16 per cent increase over last 
year’s fourth quarter, and the 
highest quarterly figure in 
Apple's history. Net income tor 
the three months was $114,701, 
or 95 cents a share, compared 
with $2.7m, or 2 cents, a year 


Apple said quarterly unit 
shipments exceeded lm com- 
puters for only the second time 
in its history. 

Mr Michael Spindler, presi- 
dent and chief executive offi- 
cer, attributed the increase to 
strong demand for multimedia 
versions of its Macintosh com- 
puters, notebook computers 
and its new Power Macintosh 
desktop computers. 

Strong demand has led to a 
shortage of some of these prod- 
ucts, Apple said. 

During the quarter the com- 
pany shipped more than 
350,000 Power Macintosh per- 
sonal computers and upgrades, 
bringing the total to more than 


600,000 units since the products 
were introduced in March. 

The company has set a goal 
of shipping lm Power Macin- 
tosh personal computers and 
upgrades in the first 12 
months. 

Apple said its earnings 
improvement was the result of 
strong revenue growth com- 
bined with higher gross mar- 
gins and lower operating 
expenses. Gross margins 
improved to 27.2 per cent of net 
sales, compared with 25.7 per 
cent in the fourth quarter of 
1993. 

Operating expenses declined 
to 19.6 per cent of sales, from 
25.4 per cent, and represented 
one of the lowest operating 
expense ratios in Apple’s his- 
tory. 

For the full year revenues 
were $9.19bn. a 15 per cent 
increase over fiscal 1993, while 
net income jumped to $3l0^m. 
or $2.61. against $86.6m, or 73 
cents. 

Included in the company's 
results for fiscal 1993 was a 
pre-tax charge of $320 5m for 
restructuring and other 
expenses. 

Fiscal 1994 results include a 
pre-tax gain of $l26J9m related 
to a reduction in the compa- 
ny’s estimates of restructuring 
costs. 


Securities business 
holds back Travelers 


By Richard Waters 
in New York 


Travelers, the broad-based US 
financial services group, was 
held back by difficult condi- 
tions In the financial markets 
in the three months to the end 
of September. 

The company reported a 
marginal advance in earn- 
ings per share to 97 cents, up 
from 96 cents a year 
before. 

Profit growth was dampened 
by a foil in operating earnings 
at Smith Barney, the group's 
securities business. 

Smith Barney reported earn- 
ings of S72.9m, down from 
8118.8m, even though the 
year-ago period included 
only a two-month contribution 
from Shearson, the retail bro- 


ker Travelers bought from 
American Express. 

Mr Sanford Weill chairman 
and chief executive, said the 
stability of the group's con- 
sumer lending and life assur- 
ance businesses had enabled it 
to withstand the difficult con- 
ditions in the brokerage busi- 
ness. 

Earnings from consumer 
finance rose 10 per cent to 
856m, while operating profits 
from life assurance were 13 per 
rent higher, at 550m. 

Overall, Travelers reported 
net income for the period of 
8331m. compared with $342m 
the year before. 

In the 1993 period, the group, 
then known as Primerica, had 
yet to buy out the whole of 
the Travelers insurance 
company. 


pliil'l’ ■' 


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FINANCIAL TIMES WEDNESDAY OCTOBER 19 1994 


21 


INTERNATIONAL COMPANIES AND FINANCE 


’.i ; »: 


1 '‘His 


n 




I 


Hill's f 


* recof 
or ten 


Philip Morris recovery 
continues with 27% rise 


By Richard Tomkins ■ 
to Nw# York 

Philip Morris, the US food and 
tobacco group, continued its 
bounce-back from last year’s 
depressed figures with a 27 per 
cent surge in net profits to 
£L2bn in its third quarter. 

In April last year Philip Mor- 
ris cut the price of Marlboro 
cigarettes and its other pre- 
mium brands in the US to win 
back market share from low- 
cost rivals. This led to a series 
of adverse quarterly earning s 
comparisons which only beg an 
to abate in the second quarter 
of this year. 

The biggest single compo- 
nent of the profits growth 
reported yesterday was the 
recovery in Philip Morris's 
domestic tobacco operations. 
Operating income from this 


division shot up by 40 per cent 
to {883m because volumes rose 
in response to the company’s 
increased market share. 

The company also saw profit 
increases in its other food and 
tobacco divisions. Interna- 
tional tobacco increased oper- 
ating income by 13 per cent to 
{dOOm, international food was 
up 12 per cent at $269m, North 
American food up 6 per cent at 
5618m, and Miller Brewing up 
IS per cent at SZllm. 

Overall, group revenues rose 
by 19 per cent to $2.7bn. Earn- 
ings per share advanced 28 per 
cent to $1.42, a touch above the 
$1.40 expected by analysts, but 
in early trading the shares 
eased back $% to $81% in a 
falling market. 

Philip Morris said it sold 
201bn cigarettes world-wide 
during the quarter, up 16 per 


cent from the comparable 
quarter’s figure. 

Outside the US, file volume 
of cigarettes sold rose by 
19 per cent to 144 bn, with 
growth in most markets except 
Turkey, where sales were 
affected by poor economic con- 
ditions. 

In the US. Philip Morris said 
profits from tobacco had been 
boosted by the fact that a 
greater portion of the volume 
mj y came from premium 
brands. It quoted figures sug- 
gesting that Marlboro’s market 
share had risen to a record 29.1 
per cent in August. 7 percent- 
age points higher than the 
period just before last year's 
price cuts. 

Mr William Murray, chair- 
man, said he was confident the 
company would lie able to sus- 
tain its strong momentum. 


US drugs companies advance 


By Richard Waters 
in New York 

Merck and Eli Lilly , the US 
pharmaceuticals companies, 
each reported underlying 
double-digit sales growth for 
the three mnnt.hu to the e nd of 
September, in spite of pressure 
on drug prices in the US and 
around the world. 

At Merck, sales of human 
and animal health products 
grew by 11 per cent This was 
in spite of the effect of lower 
prices, mainly in non-US mar- 
kets, which shaved two per- 
centage points off sales 
growth. 

As with Lilly, foreign 
exchange differences added 
one percentage point to sales 
growth in the period. 

Merck’s overall sales of 
&8bu were up from $2.5bn a 


year ago, doe to its acquisition 
of Medco Containment Ser- 
vices, the pharmacy benefit 
management company, at the 
end of last year. 

Medea's lower profit margins 
mean that net income from a 
year ago was up only U per 
cent, at $785m, while earnings 
per share were flat at 62 
cents. 

Merck did not provide a 
detailed break-down of sales of 
Its various drugs, but said 
the advance had been led 
by a range of its newer prod- 
ucts. 

Eli Lilly, meanwhile, 
reported a 25 per cent jump in 
pharmaceutical compared 
with a year before, primarily 
due to the success erf Prozac, 
its market-leading anti-depres- 
sant 

The high sales of Prozac 


were based in part on a 
build-up in inventories by 
wholesalers before a price rise, 
Lilly said. 

The company is currently 
locked in discussions with US 
regulators over its own 
piannoH acquisition of a phar- 
macy benefit management 
company, PCS. 

Overall sales growth in the 
US came in spite of pressure 
on prices from managed-card 
organisations and higher 
rebates manufacturers are 
being forced to pass on to Med- 
icaid, the government-run 
healthcare scheme for the 
poor, Lilly said. 

Net income reached $318m 
on sales of $L82bn, co mpare d 
with $284.4m on sales of 
SUiSbn a year before. Earnings 
per share were $L10, up from 
*LOO. 


Sprint soars 
29% in term 
as cellular 
side surges 

By Tony Jackson in New Yoric 

Sprint, the third largest US 
long-distance telephone com- 
pany, claimed an "outstand- 
ing* third quarter with net 
income np 29 per cent to 
$230m, or 65 cents a share. 

The fastest growth came in 
cellular operations, where 
operating profits were almost 
tripled at $32m. This was 
almost 30 per cent more than 
the division made in the whole 
of 1993, Sprint said. 

Profits from long-distance 
calls were np 31 per cent at 
$165m, with intense competi- 
tion in fiie co nsum er market 
offset by growth In business 
services. The long-distance 
division had made record sales 
and operating profits for nine 
quarters in a row. Sprint said. 

hi local cafis. sales rose 7 
per cent to $1.11 bn, with the 
number of local access lines 
installed np nearly 5 per cent 
However, op e rat i ng profit was 
ahead only l per cent as a 
result of lower call charges. 
“In the fourth quarter, we will 
continue to adjust prices to 
positron ourselves more com- 


petitively in the market- 
place,” Sprint said. 

The number of Sprint’s cel- 
lular customers grew 84 per 
cent year -on-year to 862,000. 
This was the eighth successive 
quarter in which numbers had 
grown by more than 50 per 
cent, Sprint said. 

Group sales rose 13 per cent 
In the quarter to $3J23bn. 
Interest payable fell 14 per 
cent to $99m, and operating 
cash flow was $837m. 

Sprint said it was confident 
its planned $l4ttm capital 
investment programme could 
be carried oat without 
recourse to external finance. 


US banks battle to maintain pace 


T he headline on a recent 
report from Paine- 
Webber banking analyst 
Mr Lawrence Cohn said it all: 
“This is about as good as it 
gets." 

With bad-debt charges lower 
than at any time for years and 
lending margins still only 
slightly below their cyclical 
peaks, US commercial banks' 
profits are surging. But the 
concern for share prices in the 
sector is that it is difficult to 
see how the momentum can be 
maintained. 

Each of the three biggest 
New York-based banks - Citi- 
corp. Chemical and Chase Man- 
hattan - comfortably exceeded 
market expectations with 
third-quarter earnings reported 
yesterday. 

While Citicorp's 22 per emit 
return on capital in the period 
made it the star of the pack, 
both Chemical and Chase beat 
earnings per share forecasts by 
more than 15 per cent 
Among other banks report- 
ing yesterday, net earnings at 
Wells Fargo jumped 32 per cent 
on a sharply lower provisions 
for bad debts, while BancOne’s 
earnings fell due to its sensitiv- 
ity to rising US interest rates. 

Chemical's revenues were 
unchanged from a year before, 
at $2.i6bn. while operating 
costs were 4.5 per cent higher 
(excluding a one-off charge in 
the 1993 quarter). However. 


US BANKS - THIRD-QUARTER RESULTS 



Net income 

1894 1983 

1994 

EPS 

1993 

Citicorp 

894 

528 

1.67 

0-97 

ChemlcaP 

439 

502 

1.60 

1.84 

Chase Manhattan 

305 

267 

1.49 

1-25 

Wells Fargo 

217 

1G5 

3.88 

2.74 

BancOne 

283 

296 

Q.68 

0.73 

Mefont 

78 

139 

0.64 

1.25 


and innganniml sharp*. ftMan i eit Ong i n ww /ah 
*OUU bten and pmrtrqa par $ttara tISt kl dm 


/wood » s a kt orer Enyfux net inaxrm 


to 

U«P«M 


profits were buoyed by a fall in 
the loan-loss provision to 
$100m in the current quarter 
from S2B8m a year ago. 

The banks net interest mar- 
gin, meanwhile, fell by five 
basis points (hundredths of a 
percentage point) to 3.68 per 
cent. The decline was was held 
in by a shift in the mix. 
of loans freon a year earlier: US 
commercial lending fell to 
$30.2tm from. $34.7bn, while 
consumer lending, where mar- 
gins are generally higher, rose 
to $265bD from $24bn. 

Net income was lower than a 
year before, when profits had 
been boosted by a tax credit 
Leaving aside this factor, after 
tax income rose 24 per cent 
over the year-ago quarter. 

Chase Manhattan also bene- 
fited from a lower loan-loss 
provision, which fell from 
$225m in the 1993 period to 
$100m. Total revenues 
remained steady at $1.64bn. 


while operating costs rose 4 
per cent 

The net interest margin, 
meanwhile, slipped 18 basis 
points from a year ago, to 351 
per cent Mr Wiliam Maletz, 
head of investor relations, said 
the decline reflected the 
growth of lower-yielding, liquid 
trading account assets held by 
the bank. The pressure on mar- 
gins in part reflects growing 
competition in the credit card 
and residential mortgage busi- 
nesses. 

Chase said it expected mar- 
gins on these products to 
increase next year, as it 
launches new credit card prod- 
ucts to compete with the grow- 
ing array of non-bank co- 
branded cards in the US mar- 
ket and as the residential mort- 
gage business recovers from 
this year’s low level of refinan- 
cing activity. 

While total loans remained 
steady with a year before, con- 


sumer lending increased by 
SMbn to $37.4bu, commercial 
lending fell $l£bn to $205bn 
and the bank's real estate port- 
folio fell $l.7bn to $l.2bn. 

Wells Fargo’s earnings were 
supported by a $36m gain from 
changes made to its portfolio of 
premises. Otherwise, total rev- 
enues were largely unchanged 
Loan-loss provision fell to 
$50m, from 5120m in the third 
quarter of 1993. 

While loans grew 4 per cent, 
the net interest margin fell 12 
basis points, to 553 per cent. 

BancOne, meanwhile, saw 
after-tax earnings fall by 14 per 
cent, in part the result of the 
interest-rate management pol- 
icy it adopted before the turn 
in US rates this year. 

The bank had already 
reported a 513m loss from the 
sale of $2bn of US government 
bonds during the quarter. Mr 
John McCoy, chairman, said 
yesterday: "We remain com- 
mitted to reduce Jour] exposure 
to rising interest rates." 

The earlier interest-rate pol- 
icy was part of the reason 
behind the foil in the bank's 
net interest margin, from 6.11 a 
year ago to 5J7 per cent in the 
latest period. The bank blamed 
this falL In the margin on 
higher interest rates and 
"increased competition in loan 
pricing”. 

Richard Waters 


Bouygues ahead 18% midway at FFr94m 


By David Buchan in Paris 

Bouygues, the French 
construction, property and 
media group, yesterday 
reported an 18 per cent rise in 
first-half net consolidated 
profit to FFr94m ($17.76 m), up 
from FFr79m in the same 
period of 1993. 

The group said that results 
at the dominant construction 


division, in terms of turnover, 
foiled to reflect file general eco- 
nomic improvement in France, 
while in Africa it bad had to 
contend with last January's 50 
per cent devaluation of the 
CFA franc. The weak market 
in real estate led to a 
rippiinp in revenue from prop- 
erty. 

Consolidated turnover rose 
to FFr33.6bn in the first half 


from the FFr29.3 bn achieved in 
January-June of last year. 
However, this increase was due 
tO accounting chang es which 
allow Bouygues to consolidate 
in its figures turnover from 
TFi, the leading French televi- 
sion station in which Bouygues 
raised its stake to a controlling 
34 per cent at the start of this 
year. 

The group predicted turn- 


over of around FFr69bn for 
the full year, up from 
FFr61 .2bn last year but again 
entirely accounted for by the 
newly-included activities of 
TFL 

Earlier this month the con- 
sortium of which It Is a mem- 
ber won from the French gov- 
ernment the right to develop a 
third mobile phone network in 
France. 





• 4 * * 


iiK* 


Poorer yields take toll 
on JCI gold division 


Mexico gives 
approval to 
finance groups 

By Damian ftaser 
in Mexico Cfty 

Mexico he« given preliminary 
approval to almost all the 
International banks, broker- 
ages and insurance companies 
that applied earlier this year to 
open up subsidiaries. 

The finance ministry 
announced on Monday night 
that 18 of 20 banks seeking 
authorisation will be given 
licences, 16 of 17 brokerages, 
and 12 of 13 Insurance compa- 
nies. No decisions were 
announced for applications for 
factory companies, exchange 
houses, non-bank banks, and 
investment funds. Approval for 
one leasing company was 
given, although 12 originally 
applied. 

The government expected 
the new institutions to invest 
about $L2bn after final author- 
isation. The finance ministry 
said foreign, banks' capital will 
initially account for 6.25 per 
cent of domestic banking capi- 
tal. against the 8 per cent limit 
set for 1994 under the North 
American Free Trade Agree- 
ment Brokerages will take up 
the mawmnm io per cent limit, 
with individual capital 
requests of applicants scaled 
back. 

Under the trade agreement, 
limits on foreign capital in the 
banking and brokerage sector 
are gradually increased until 
finally scrapped at the end of 
the decade. Non-US and Cana- 
dian banks applied for licences 
from their North American 
subsidiaries. 

The two institutions that 
were either denied or dropped 
their request were the Interna- 
tional Rank of Commerce and 
Morgan Stanley (which 
received a licence to open a 
brokerage). 

With some institutions - 
such as Citibank. J.P. Morgan. 
(T hpmfefll bank - making appli- 
cations for banks and broker- 
ages, the total number of for- 
eign institutions that are to 
receive authorisations reached 
40. „ , 

With file exception of Citi- 
bank, the banks that received 
preliminary authorisation are 
expected to concentrate on cor- 
porate lending, leaving the 
retail market to Mexican coun- 
terparts. 


By Marie Suzman 
in Johannesburg 

The gold division of South 
African mfamg house Johan- 
nesburg Consolidated Invest- 
ments, which Is due to be spun 
off to black investors early 
next year, has reported a sharp 
drop In profits far the Septem- 
ber quarter. 

Although ore production 
rose 5 per cent to 2.7m tonnes 
from &55m tonnes in June, a 
lower average yield meant 
overall gold revenue increased 
by only 3.5 per cent to RS573m 
($157 -6m) from R539-lm. 

Group profits fell 36.6 per 
cent to B98m from R154m. as 
all fiie group’s mines reported 
poorer after-tax profits. 

However, this was blamed 
largely on accounting chang es 
to the previous quarter's 
results, most notably the 
restatement of figures to 
reflect a successful insurance 
claim, at Western Areas. 

As a result. Western Areas 
showed the most dramatic foil 
in after-tax profit, of 5L7 per 
cent to R36.5m from B75.48m. 
Bandfontetn was down 2L8 per 


By EmOGO Torazono 

In Tokyo 

Slow demand for luxury goods 
hurt interim sales at Japanese 
department stores, in spite of 
last summer's rise in consumer 
confidence due to a cut in 
fncome tax and hot weather. 

Takashimaya posted a 3.8 
PCX gent de cline in unCQBSO H- 
dated sales to Y342bn C$04bn) 
for the first six months to 
August because of sluggish 
consumer and corporate 
demand. 

Pre-tax profits jumped 2.5 
times to Y976m due to a Y6bn 
cut in costs although after-tax 
profits fell 31-3 per cent to 
YL32bn. 

For the frill year to February, 
the company expects pre-tax 
profits to rise 203 pm- cent to 
Y3£bn on a 29 per cent decline 
in sales to YTO3tm, 

Daimaru said parent sales 
for the first half fell 2.4 per 


cent to B602m from R769m. 

Struggling HJ Joel fell 37.7 
per cent, with after-tax profits 
down to R1.41m from KL37m. 
in spite of a shift to a seven- 
day working week. 

However, Mr Kennedy Max- 
well, gold division cha irman, 
said the results were satisfac- 
tory In the prevailing climate. 
He was optimistic that the gold 
price would remain in its cur- 
rent trading range of $3703400, 
which would benefit the grocq>. 
• Randgold and Exploration, 
the troubled mining group sub- 
ject to a management takeover 
by a consortium led by British 
merchant bank S.G. Warburg 
in August, has continued its 
downward slide, as two of its 
four mines reported a loss for 
the September quarter. 

Overall, the group's net 
attributable profit dropped 
sharply to just R4.3m from 
R30.8m the previous quarter. 
This was in spite of an 
improved gold price. 

Only Harmony, which 
reported profits after capital 
expenditure of 18183m, up from 
R7.5m in June, showed 
improvement 


cent to Y2S1.4bn while pretax 
profits dropped 20.7 per cent to 
Yi.ibn. After-tax profits rose 
3.4 per cent to Y527m. 

Sales erf women’s wear rose 
24» per cent, but sluggish furni- 
ture and consumer electronics 
sales hurt revenue growth. The 
company cut costs by YLgbn. 

Pre-tax profits for the fan 
year are forecast to foil 4.6 per 
cent to Y45bn on a L2 per 
cent decline in sales to 
Y53&6bm 

Matsoxakaya said non- 
consolidated pre-tax profits for 
the first six months to August 
dropped 4&8 per cent to Y7Ilm. 
Sales declined 6.7 per cent to 
Y2149bn due to lower spending 
per customer. 

After-tax profits fell 25 per 
cent to Y574m. For the full 
year to next February, it 
expects sales to fall 45 per cent 
to Y437bn and a 2 per cent 
decline in pre-tax profits to 
YZ2bn. 


Japanese stores hit as 
luxury goods sales slow 


THE AETNA INTERNATIONAL UMBRELLA FUND 

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FINANCIAL TIMES WEDNESDAY O CTOBER 19 

INTERNATIONAL COMPANIES AND FINANCE 



Experience gives ambitious TPI an edge 

Thai Petrochemical’s expansion is seen as a shrewd move, reports Victor Mallet 


A nyone criticising Thai 
Petrochemical Industry 
for being over ambi- 
tious with plans, announced 
this month, to expand in chem- 
icals. risks receiving a sharp 
reminder from the company, or 
from repentant stockbrokers, 
about TPrs experience in the 
cement industry. 

When TPI Polene (TPIPL), 
the listed TPI subsidiary, broke 
into the cement oligopoly 
dominated by Siam Cement 
two years ago there was much 
talk of oversupply and bad 
timing . 

“Now they are seen to be 
shrewd,'' admits one Bangkok 
broker. Demand for cement 
has been strong and TPIPL has 
turned in handsome profits. A 
second cement plant is set to 
double the company's capacity 
to 5m tonnes a year. 

“It’s been a success for us,” 
says Mr Prachai Leophaira- 
tana. the TPI chief executive 
whose ethnic Chinese family 
controls the group. “We have 
10 per cent of the cement mar- 
ket. Next year it will be 15 per 
cent and in three years, 20 per 
cent” 

TPI's latest proposal is to 
invest Bt40bn ($l.6bn) during 
the next few years in expand- 
ing its petrochemical complex 
in Bayong. south of Bangkok. 
The company is already the 
country's biggest producer of 
the plastics used in a range of 
consumer and industrial prod- 
ucts from bottles to car 
parts. 


Planned investments include 
an oil refinery - Thailand's 
sixth, with initial capacity of 
60,000 barrels a day, rising 
eventually to 300,000 b/d - an 
olefins plant to supply raw 
materials for TPI’s down- 
stream plastic production, and 
several other projects designed 
to make TPI the country's 
first integrated petrochemical 
producer. TPI even intends 
to open its own petrol 
stations. 

Projects already under way 
include a doubling of low den- 
sity polyethylene (LDPE) pro- 
duction to 150.000 tonnes a 
year, and a 108MW power sta- 
tion that will provide 40MW of 
electricity to the petrochemi- 
cals complex and sell the sur- 
plus to the Thai grid. Mr Pra- 
chai says both are due on 
stream at the end of the 
year. 

To help f inan ce further 
expansion, the Leophairatana. 
family plans to float TPI on the 
Stock Exchange of Thailand 
later this year. They expect to 
raise about S450m by selling 12 
per cent of the company, which 
they say has an annual turn- 
over of about Slbru 

T he TPI group says it was 
hit by low world plastic 
prices and barely made 
a profit last year, but it antici- 
pates a firmer market for its 
products - one-third of which 
are exported - in the next few 
years. 

“The timing of TPI's expan- 


TPIPoiene 



Shareholders' equity 

) 


1*90 91 

8wc« TPTPeSan* 

sion is particularly beneficial 
as it coincides with the begin- 
ning- of the cyclical upturn in 
world plastic prices," Mr Pra- 
chai said recently. 

Much will depend on 
whether TPI can bring its new 
capacity into operation quick 
enough to take advantage of 
the upturn. 

The planned olefins plant for 
ethylene and propylene feed- 
stock will be crucial. At pres- 
ent TPI buys one-fifth of its 
requirements locally, but has 
to import the rest and pay 
heavily for transport to Thai- 
land by refrigerated tanker - 



which is a substantial propor- 
tion of the total cost 

“If we set up by ourselves we 
should save at least $150 a 
tonne," says Mr Prachai. 

The transport cost of crude 
oil for the planned refinery, 
which would in turn feed the 
olefins plant, would be rela- 
tively modest. The olefins 
plant would produce 300,000- 
500,000 tonnes a year of ethyl- 
ene and 160,000-250,000 tonnes 
of propylene. 

Stockbrokers are bullish 
about TPIPL, which controls 
the cement and LDPE inter- 
ests, and admire the proven 


determination of Mr Prachai to 
bring his schemes to 
fruition. 

They say the flotation of the 
TPI parent Is likely to be 
boosted by local enthusiasm 
for oil and oil-related stocks - 
a new sector on the Thai stock 
exchange following recent par- 
tial privatisations of several 
state companies, including ole- 
fins producer National Petro- 
chemical (NPQ. 

B ut it is doubtful that TPI 
and other Thai petro- 
chemicals producers 
could survive global competi- 
tion without the tariff protec- 
tion they enjoy in the Thai 

home market. 

Mr Prachai is critical 
of the way tariffs in the Associ- 
ation of South East Aslan 
Nations are to be reduced 
under the Asian Free Trade 
Area. He favours protection for 
Thailand for the time 
being: 

“If you want the country to 
flourish, you have to protect 
it" he says. But he is hostile 
towards Indonesian, Malaysian 
and Singaporean attempts to 
promote their own petrochemi- 
cal industries. 

Mr George Morgan, of stock- 
brokers HG Asia in Bangkok, 
believes that TPI's expansion 
“does reflect the need of Thai- 
land to move into higher 
value-added industries; but the 
disadvantage is that they don't 

have oil or a large amo unt of 


China group cuts Giordano stake 


By Simon Hcriberton 
in Hong Kong 

China Resources, one of 
China's leading trading 
companies in Hong Kong. has 
sold virtually all its stake in 
Giordano, the Hong Kong 
retailer controlled by Mr 
Jimmy Lai who recently 
offended Beijing by publishing 
a passionate denunciation of 
the Chinese Communist party. 

The move by China 
Resources - which has reduced 
its 10.13 per cent interest in 
Giordano to 0.35 per cent - was 
seen as further evidence of the 
disfavour in which Giordano is 
held in Beijing. 

The transaction took place at 
HKS4.70 a share, and the stock 


was placed with European and 
Asian institutions. 

Mr Lai, who also publishes 
the highly successful Next 
magazine in the colony, 
accused the Communist party 
in August of having ruined 
Chinese culture. 

He also launched a personal 
attack on Mr Li Peng, the 
Chinese prime minis ter, in part 
claiming that his behaviour on 
a visit to Germany, where he 
dodged human rights activists, 
had humiliated the Chinese 
people. 

Soon after the publication of 
the article, China's ministry erf 
foreign economic trade and 
co-operation (Moftec) withdrew 
permission for Giordano to run 
a store in Beijing’s Wangfqjing 


Street This was immediately 
followed by Mr Lai's 
resignation from the 
chairmanship of Giordano in 
an attempt to protect his 
company from further 

Higr-riminaHrm 

China Resources, which is 
owned by Moftec, was a 
foundation shareholder of 
Giordano when it was listed in 
1991. Along with the sale of its 
stake in the company, Mr 
Wang Xin Wen. its 
representative on the board, 
resigned. 

Giordano bounced back in 
the first six months of this 
year posting profits of 
HK485.3m (US$1 lm), up more 
than 58 per cent on the 
previous corresponding period. 


IPO poised to value Thai 
generator at up to Bt8bn 


By Victor Mallet in Bangkok 

Shares of Electricity 
Generating (Egco). which is 
set to become Thailand’s first 
partly-privatised electricity 
company, will be priced at 
between Btl7 and Bt20 for the 
initial public offering, valuing 
the company at between 
Bt6.8bn (1 2 73m) and Bt8bn, 
the underwriters said yester- 
day. 

Egco, a subsidiary of the 
state-owned Electricity Gener- 
ating Authority of Thailand 
(Egat), is buying a 1,200 MW 
Egat power station in Bayong, 
south-east of Bangkok; the 
plant accounts for 10 per cent 


of Thailand's generating 
capacity. 

After Egco shares are listed, 
the company has an option to 
buy the new 824MW Khanom 
power station in southern 
Thailand by 1995, and is 
expected to compete against 
private-sector rivals for inde- 
pendent power producer pro- 
jects that will sell electricity 
to Egat 

Egco’s final IPO price will be 
set after a book-building road-, 
show this month, the under- 
writers said, and the shares 
will be sold from November 
7-9. Egco bas already raised 
Btl4-75bn in loans to pay for 
most of the Bayong station. 


NEWS DIGEST 

Sappi doubles 
income to R145m 
for six months 

Sappi, the South African pulp and paper com- 
pany which last week acquired US-based 
SJ). Warren, has announced much improved 
results for the first six months to August, 
more than doubling attributable income to 
R144Bm ($40-5m) from R64Jm, writes Mark 
Snmian in Johannesburg. 

Turnover rose 14 per cent to R3.1bn, up from 
R2.7Sbn on toe back of greatly improved trad- 
ing conditions in the pulp and paper industry. 
Operating income rose 105 per cent to R207m 
from RlOlm. 

The company’s balance sheet remains 
strong, with gearing only m a rginal l y up at 44 
per cent from 41 per cent However, this pic- 
ture will change from next year when the 
debt-laden S3. Warren deal is included. 

Sappi announced that it would change its 
flnanHai year-end from February to September 
from next year. 

EuroDisney to launch 
advertising offensive 

EuroDisney, toe France-based European theme 
park, is la unching a substantial advertising 
offensive, writes Andrew Jade in Paris. 

It is to spend three times as much over the 
next 12 months as it did in the last year on 
television advertising in its most important 
markets, including France and the UK, as well 
as boosting coverage in Germany and the Low 
Countries. It will also increase spending cm 
radio and In newspapers. 

Mr Philippe Bourguignon. chairman, said 
the company had decided to stop responding 
piecemeal to attacks on it in the run-up to a 
major financial restructuring. 

He also confirmed that - in a delay to the 
original plans - EuroDisney would be holding 
back work on its second park, next to the 
gristing one, until after it has met its target to 
become profitable in 1996. 

• Parc AsWrrix, the Paris-based theme park 
competitor to EuroDisney, reported a one-third 
increase in the number of visitors during its 
1994 season to L55m. 

The park, which is not quoted hut backed by 
companies including Barclays Bank and Com- 
pagnie G6n£rale des Eaux. said li had broken 
into profits this year for the first time with 
FFrl5m following heavy start-up costs since 
opening in 1989. 

OIAG sells 26% 
holding in VAE 

OIAG. the Austrian state industrial holding 
company, is selling its remaining 26 per cent 
holding in VAE, toe high-technology railway 
switch (points) maker that came to the Vienna 
market two years ago, writes Ian Rodger in 
Zurich. 

The price of the 364,000 shares will be set on 
November 11 by Bank Austria Investment 


Taiwan Cement 

Sham price (1$) 

70 



40 * — 


30 


i hinniiT- ,i ‘ i ‘ id 

..a «4 

Sowar Datastream 


Rank, lead manager of the issue. 

VAE^dtoaHt expected ^ net mcometo 
rise 15 oer cent to more than SchllOm (SI ten) 
to filllSr 1S94. and it intended to maintain 
its 32 per cent dividend. Turnover would fall 4 
per cent to SchlJbn. 

Taiwan Cement 
tumbles to TS2.4bn 

Taiwan Cement, the 
country's biggest 
cement manufacturer, 
has reported pre-tax 
profits of T$2.37bn 
(US$90.6m) for the first 
nine months of the 
year, down sharply 
from T$3.36bn a year 
earlier, writes Laura 
Tyson in Taipei. The 
company, controlled by 
the Koo family, said 
the retreat was due 
mainly to a T$700m- 
T$800m shares sale in 
1993. Turnover also fell, to T$13.44bn from. 
T$15.04hn, in part due to a slowdown in public 
and private construction. 

Imports of Japanese cement at “unreason- 
ably low" prices had pushed domestic prices 
down 5 per cent since the beginning of the 
year, the company said. About 90 per cent of 
Taiwan's cement imports come from Japan. 

Legislation which would raise duties on 
imported cement through a recalculation of 
commodity taxes is pending In Taiwan's legis- 
lature. IT the measure is passed, locally-pro- 
duced cement will become more competitive. 

Far Eastern Textile 
sharply higher 

Rising prices for synthetic fibres and share 
sales sent profits sharply higher at Far East- 
ern Textile, Taiwan's largest textile manufac- 
turer, /jmHrip the first nine months of the year, 
writes Laura Tyson. 

The company reported pre-tax profits of 
T$1.949bn (US$75m) for the year to September 
30, against T$608m during the same period in 
1993. Turnover surged to T$17.757bn from 
T$14.834bn. The company said income was 
boosted by T$700m in sales of shares in other 
companies and higher prices for Far Eastern's 
products. Prices for man-made fibres had 
climbed 20 per cent in the last year. 

Lippo Land dips 

Lippo Land Development, the property devel- 
opment arm of Indonesia's Lippo Group, said 
net income in the 12 months to June 30 1994 
fell to Rp2l5bn (S9m) from Rp2&2bn a year 
earlier, writes Manuela Saragosa in Jakarta. 

Revenues for the year totalled Rp44.1bn com- 
pared with Rp41.5bn in fiscal 1993. Sales of 
apartment units contributed Rp53.4bn to total 
revenues while rentals of office space 
increased 7 per cent to Rp9Bbn from Rp9.2 a 
year earlier. Operating income fell 35 per cent 
to Rpl6-8bn. 



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35 YEARS OF HISTORICAL PRICES FOR 
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SO YEARS OF FUNDAMENTAL INFORMATION 
ON OVER UnOOhACOmEX 
Similar in ihc information (bund ia ibe CRB 
Gxmnodity Year Book, the ’bribin' of (he 

funnel imhniiy. In addition 10 
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pnrr uptime* >a KR-QoMe. Knlgbl -Ridder'i 
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diicvC. Mno row datstarc- 
INFORMATION: Bimilcr Vakil 
KR House, TRFTm Sued, London ECJY IHY 
let- *44 <01 ’I tfCdOW 


THE HSBC CHINA 
FUND LIMITED 

Unaudited NAV per 
share as at i4th 
October, 1994 
US$1.84 


Upto15% 

off electricity 

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805 

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I860 

114J3 

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0330 

16J0 

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0400 

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11J03 

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1893 

23.46 

1000 

28.75 

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33.42 

1933 

23.49 

1100 

27.44 

1893 

23 M 

1130 

3355 

1888 

2342 

1200 

38J8 

1899 

2399 

1230 

36.08 

1897 

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37.19 

1893 

2849 

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21417 

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21415 

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1780 

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1800 

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2806 

2800 

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1900 

72 sn 

1843 

1896 

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65.15 

1834 

2808 

2000 

34.23 


3813 

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25.12 

3239 

3813 

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23.99 

32-58 

3812 

2130 

21.40 

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22.68 

2200 

19.19 

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2245 

2230 

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22.95 

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Pm uk on oiaawu 


•NM-aoDim 


NOTICE OF MEETING OF HOLDERS OF 7% 
CONVERTIBLE SUBORDINATED DEBENTURES DUE 1999 
OF RIEDEL ENVIRONMENTAL TECHNOLOGIES, 

INC. TO BE HELD ON November 9, 1994 

PL£ASE TAKE NOTICE that a meeting of the holders (the "Holders”) of 
7* Convertible Subordinated Debentures due 1999 (the “Debentures’) of 
Riedel Environmental Technologies, Inc. (the “Company") will be held at 
the offices of Chemical Bank, 450 West 33rd Street, 15th Floor, New York, 
NewYork. on Novembers, L994 at 10.00 era, Eastern Standard Time. 
Terras used in tbe Terras and Conditions of the Debentures have the same 
messing in this notice. 

The purpose of this meeting Is to obtain the consort of the Holdera to a 
waiver of the requirements of Section 6(a) of the Terras and Ccadfooas to 
allow the Company to sell all the outstanding shares of Riedel 
Environmental Services, foe ("RES") to C-anonie Environmental Services 
Corp. (“Canoole"). The sale involves substantially all of the assets of the 
Company. Section 6(a) imposes restrictions on the Company’s ability to 
sell an or su b sta n ti a l l y all Us assets. 

Any such waiver of Section 6(a) win be conclusive and binding on all 
Holders, whether ornot they have given their consent or were present at 
the meeting of the Holders, and on all holders of coupons whether or not 
notation of such amendments is made on the Debentures. 

Chemical Bank as the Fiscal Agent under the Debentures is entitled to 
make such reasonable regulations for the meeting of Holders that it 
deems advisable in addition to those set forth in the Terms and 
Conditions- The Fiscal Agent bas established the following regulations for 
the purpose of determining who shall be entitled to vote at such meeting 
or any adjournment thereof 

1. Tbe holding of Registered Debentures dial] be proved by the registry 
books maintained in accordance with that certain Fiscal Agency 
Agreement dated as of October 11, 1989 by and between the Company 
and Chemical Bank or by a ce r tificat e or certificates of the Fiscal Agent in 
its capacity as the Company’s agent for the maintenance of such bools. 

2. The holding of Bearer Debentures may be proved by the production of 
the Bearer Debentures at the meeting. In addition, bo Were of voting cer- 
tificates and proxies named In a block voting instruction with respect co 
Bearer Debentures may voce at the meeting. 

3. Acconnthokiera of Euroclear and Cede! to whom Debentures are cred- 
ited in the relevant clearing system should notify the relevant clearing sys- 
tem to Inform the Fiscal Agent no later than 48 hours before the sched- 
uled time for tbe meeting of the number of votes to be cast for and against 
tbe resolution. 

4 If a Debennnriiolder wishes the Fiscal Agent to qipoinc a proiQ' to vote 

on his behalf at the meeting, he must deposit his Debentures with 
Chemical Bank (London) no later than 48 hours before the scheduled 
time of the meeting, specifying whether the voters) attributable to such 
Debentures should be cast for or against the waiver. Chemical Bank 
(London) will then issue a block voting instruction to a proxy of Its 
choice. Instructing such proxy to cast such voters) In the specified man- 
ner. 

5. Written Instruments appointing proxies, regular on their face, are pre- 
sumed valid and genuine. 

Copies of the proxy statement mailed to shareholder of the Company 
containing information regarding the proposed sale by the Company of aD 
of the outstanding shares of stock of RES to Canoole. reasons for such 
sale, terms of the proposed sale and other information regarding the 
Company m^y be obtained from William Cox, Vice President and Genera] 
Counsel of the Company at 4611 North Channel Avenue, Portland, Oregon 
97217: Phone (503) 286-5666; facsimile (503) 283-2602. 

Dated 19 October 1994. 


U.S. $100,000,000 

Lonrho Finance Public Limited Company 

{<ncimoaiMri>iMiwaDU « E>^e*iaano wata ■twgspwuKw inter*) 

Boating Rate Notes due 1997 

Unconditionally and Irrevocably guaranteed by 

Lonrho Public Limited Company 

.■iVawjn&*<r’*nitaaB*yatBulanct*aH&ftwViT&atiiOBfUTitMariaJOCa 

Notice ta hereby given that forth© three months Interest period from 
October 19. 1994 to January 19. 1995 the Notes will carry an interest 
fate of 6.6125% per annum. The interest payable on the relevant 
interest payment date, January 19. 1995 w ill be U.S. S 174.10 
and U.S. S1.740.87 respectively for Nates in denominations of 
- U.S. $10,000 and U.S. $100,000. 


By: The Chase Manhattan Bank, NJL 
London, Agent Bank 

October 19, 1994 


CHASE 


GBP 10,000,000 

YORKSHIRE 

BUILDING 

SOCIETY 

floating Rate 
Subordinated Notes 
due 1999 

Interest Rate 6.64063% p. a. 
Interest Period 

October 13b i, 1994 
January 13th. 1995 

Interest Amount due on 
January 13th, 1995 per 

GBP 100.000 GBP 1, 67180 

BANQUE GfiNtRALE 
du Luxembourg 


Agent Bank 


Wells Fargo & Company 
US$100,000,000 
Floating rate subordinated 
notes due July 1997 
The notes will bear Interest at 
5.8125% per annum for the 
Interest period 19 October 1994 
to 19 Jamary 1995. 

Interest payable on 19 January 
1995 will amount to USS 148.54 
per USS 10.000 note and 
USS74Z 71 per USSSQ.000 note. 
Agent Morgan Guaranty 
Trust Company 

JPMorgan 


Bank of Greece 

■ lurw.i>«lwJU4r<n*,HA« *M>I 

ECU 200,000,000 
Floating Bore No tea Due 1997 

In accordance with the provisions of 
tbe Notes, notice is hereby given 
that the Rate or Interest for the 
three month period ending 18th 
January. 1995, has been fixed at 
6.8125% per annum. Tbe interest 
accruing for such three month 
‘ will be ECU 174.10 per 


;cu 10JOOO and ECU 1,740.97 per 
ECU 100.000 Bearer Note, on 18 rb 
January. 1995. against presentation 
of Coupon No. 11. 

Union Bank or Switzerland 
London Branch Agent Bank 
MEh October, 1994 


O Rf 



Sovereign (Forex) Ud. 

24hr Foreign Exchange 
Mtagei fating Fodfey 
CompeflwMcm 
Do3y Fax Service 
W; 071-931 91M 
fox: 071-931 7114 
43b Meta Bred 

leaden SW1W Ot£ 


LEGAL 

NOTICES 


Ih the matter of 
Mdsoom Middle East Hoidlag 
Md 

Management Umttnl sad la the matter ol 
tbe Cyprus Companies Law Cap 113 
Notice it h ereb y given that tbe aedHoa at 
the above-named company which is being 
voluntarily wound op are repaired on oi 
before (be I9li day of November 1 904 cc 
Mod in (bar fall m i nes , their addresses , 

fall pwticulan of ft wi r dffr rp 01 

Hahnt a<|H the and JkUrSSCS of tbril 

solicitors (If any) to the undersigned Mi 
Costas L Mavrocordatoa, ACA of Jnlir 
House. 3 Tbennistodes Dervis Street, PC 
Boat 1612. Nicosia. Cypus, the GqoUan oi 
the aaid company, and if so reqnired bj 
notice to writing bom the said tiqi iitbiw, 

come ia and prove dear said debts or daine 

at saefa a rime m) place as shall bespodfin: 
in sodi notice, or in defimft thereof they wil 
be excluded from the benefit of ae) 
distribution made before snch debts an 
proved. 

Dated this 19th day of October 1994. 
Owns L Mav ro co n U tos 
Liquidator 


Is tbe i 

Cypres Compute! Law Cap IU 
Notice is hereby given Aar the u e d ha i t of tb 
abovc-mewd company which is beinj 
vobneasly wooad op ate required on orbeCBb 
rim tSeh day of November (994 to mad in (bd 
fan names, their otUieau and d es e ripthms , fd 
pvrtkafaa of tbdr defaa or dmas Md tbe name 
ad aMium of tteb wdirimn (if any) to tb 
undersigned Mr Costas L Usvraennlatas, AC/ 
of Jnlb Basse. 3 Themtsodes Dcrris Sons. P < 
Bax 1612, Memo, Qprns. tbe Ihpddsar of lb 
said co mpan y, ud Uw required by notice b 
writing bora tbe sod tiqttidswr, to come is ma 
p*o»e their add debts Or class a acb time am 
place *3 shall be qiedfled b sect notice, a b 
dcdaali thereof they wfli be esata d ed from tb 
beosfir of wy dttn&uooa mads tretoec end 
debts arc proved. 

Duedtbb 1 9th day of October 1994 

L 


ivlton* «.OI.n C OJEPAYIES 

Siiianuiry of i qxirts: iju^rlcr ittdcil Scptsni Jh_t l!Hl4 


Randfau£e 3 n Estates 

i av nm EromiOcMSMWBOonvwv Uft w i Nin a iiOUisaM 
Rnmdm meow OMQ2SMia 



Quarter ended 


30.09.94 

30.06.94 

Ore maed -tons (000) 

1 893 

1 826 

Yield - grams per ion 

World ngccsl 

335 

4.14 

-pcrionmlled 

Rl 24,55 

R124.72 

- per Uogram produoad 

R31 575 

R30116 


ROOT 

ROOT 

Nei proM before tax 

101 870 

12S574 

Net preBt after tax 

Dividends 

60187 

78 944 

Capttaf axpendkure 

18 315 

24 454 


Western Areas 

wasaw araaOMaimsanOonwnmnwfl 
nsgmtssen msmwSMSSamae 



Quarter ended 


30.0944 

30.06.94 

Ore mitad - eons (000) 

615 


Yield -grama per ten 

WOridng com 

7,10 

7.09 

-per ion mSted 

R228^8 


- per Uogtam produced 

R32156 

TOO 853 


R000 

ROOT 

Not proA before tax 

85 802 


Net prow after rax 

Dividends 

38 478 

75 461 

Capital expenditure 

The previous quarter's results have been 
eAusted to reflect the sectement of the 

SV2 rock wmdar Insuranoe debit. 

10330 

14 577 


In the matter of O^ra New 
Town Hoofing Project Limited 
and 

In the matter of the 
Cyprus C e nt patti e s Law Cap 113 
Notice b hereby ghvn that tbe crodkon o 
(he above-named company which » beinj 
voluntarily wound up are reqnired on <r 
before (be 19th day of November 1994 rr 
seal In (bar fan names, their addresses aw 
dcKripriotn. full porienka of tbdr debts at 
ind (be md undresses of thri 
solid tors (if any) (o the undersigned M 
Cosura L Mavrocordatos, ACA of Jnlii 
House, 3 Themistocles Dervis Street, P C 
Bax 1612. Nicosia. Cyprus, tbe llqnhfawr a 
tbe said company, and if so required bj 
notice in writing Item the said liquidator, u 
come ■ and prove thsir said debts or dalni: 
a tm± time and pba ns shall be spodlkd li 
such notice, or indsfanll thereof (bey will b( 
exdoded from the bcosfit of eny dotribntior 
made before mdi debts are proved. 

Dated tttia 19tb day of October 1994 
Cobus L MivrocordOo* 

Liquidator 


BL J. dod 

H J JeWOoMMOrvOnronrLmwir 
Rvflbnwoniwme, Ml«M| 


Ore mated -tons 1000) 
Yield - grams pnr ton 
Working cost 
-pnr ion mated 
- per hSogram produced 

Profit from gold 

Capnaf e xpen ditu re 


Quarter andod 
3008.94 3O.06B4 


R22348 

R40S78 


14142 


RZ22.ES 

R40363 

ROOT 


1 002 
11 926 


81,8 .waudnad. Quarterly repons have been mated to Ute 
jraraJoharmeaburg 

Umksd, SSlJaman Place, London SW1A 1NP, iuxwv 


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FIN ANCIAJL TIMES WEDNESDAY OCTOBER 1 9 1994 


23 


INTERNATIONAL CAPITAL MARKETS 


Treasuries fall as focus returns to inflation fears 


By Patrick Harvereon 
In New York and Conner 
Mddehnam in London 

US Treasury prices weakened 
at the long end of the maturity 
range yesterday morning ?n 
the wake of M gfrnr ofl prices 
and bearish comments from a 
Federal Reserve governor. 

By midday, the benchmark 
30-year government bond was 
down & at 96, yielding 7.842 per 
cent. Prices were also slightly 
weaker at the short en d, with 
the two-year note off & at 99g. 
to yield R587 per cent. 

In the absence of hash eco- 
nomic statistics, the market’s 
attention was focused on infla- 
tion. fears and US monetary 
policy. Prices finned slightly in 
early trading on rumours that 
the Fed's vice-chairman had 
told a Japanese newspaper 


there would he no more tight* 
enings of US policy this year. 
The rumours, however, proved 
unfounded, and prices retreat- 
ed later, after Ms Susan 
Phillips, a Fed said that the US 

GOVERNMENT 
BONDS 

economy was growing at a 
“surprising” pace. 

This was bearish for the 
bond market, which remains 
fearful the Fed will raise inter- 
est rates again soon to rest rai n 
economic growth. Investor con* 
cams about another rate rise 
have also been exacerbated by 
the recent weakness in the dol- 
lar, which remained in a sickly 
condition yesterday morning. 

Another factor depressing 
bonds was the price of oil. 


which climbed for the second 
consecutive day yesterday 
amid what appeared to be a 
wider, general trend toward 
firmer commodity prices. 

■ European government bonds 
eased on profit-taking after 
Monday's rally, and some trad- 
ers said the markets were set 

for a period of conso l idati on . 

In Germany, which led Mem- 
day's gains, the 10-year sector 
weakened by around V, point 
The December bond futures 
contract on Liffe was quoted at 
around 90.75 in late trading, 
down 0.29 paint on the day. 

Having rallied substantially 
before Sunday's elections, and 
t hfln continuing their gains on 
Monday, bunds ran oat of 
steam yesterday in the absence 
of news or capital flows. 
“Bunds have had a very good 


run and are in for a period of 
consolidation or even a slight 
correction," said a trader in 
London. 

However, dealers said bunds 
were underpinned by technical 
factors in the futures market, 
where many see 90.50 as strong 
support. Moreover, dealers 
hope that money supply data, 
expected in the next few days 
or early next week, may show 
a further deceleration in MS 
growth, lifting hopes of 
another easing in monetary 
policy. 

■ French bonds again did 
worse than their German coun- 
terparts, as investors contin- 
ued switching out of France 
into Germany, traders said. 

The French market remains 
dogged by political uncertainty 
ahead of nwrt year's presiden- 


tial elections. The yield spread 

on French 10-year bonds over 

bunds widened by another two 
basis points to 70 basis points. 

■ UK gilts followed the rest of 
Europe, with the December 
long gflt future ending down 8 
at 102. 

The Bank of England 
announced the t** rmg of up** 
Wednesday's gilt auction for 
£JL5bn of a new 8 per cent gilt 
due 2000. The terms were 
largely In line with market 
expectations, although some 
dealers said they had antici- 
pated a slightly higher coupon. 

Although sentiment not 
turned negative, some observ- 
ers expect the market to con- 
solidate in the near future, “hi 
Hip run-up to the auction the 
market may under a bit 
of downward pressure," said 


Mr Simon Briscoe, OK econo- 
mist at S.G- Warburg Securi- 
ties . 

■ Shrugging aB weakness in 
most markets, Swedish govern- 
ment bonds posted fanaU gamft 
an a hawkish inflation report 
by the Riksbank. They were 
also encouraged by comments 
from t he new finanrw minister, 
Mr Goran Persson indicating 
that, in addition to the 
SKrfilbn savings plan 
announced before the elec- 
tions, ffa* government aftnffd to 
undertake further tight- 
ening in January through fur- 
ther spending cuts. 

Dealers also welcomed the 
make-up of the central bank’s 
new policy board, w hich was 
seen likely to urge the govern- 
ment to maintain its course of 
fiscal Hefofgwfag 


’ -iiui dips 


liffe In talks 
on link-up 
with Simex 

liffe is exploring the potential 
for co-operation with the Sing- 
apore International Monetary 
Exchange, as part of its strat- 
egy of seeking links with 
exchanges outside the Euro- 
pean time zone, writes Richard 
Lapper. 

The discussions with Simex 
concern non-Japanese prod- 
nets, with an initial focus on 
the enromarfc contract 

Stoat, the third largest cen- 
tre for dollar /D-Mark business 
in the world and the largest in 
Asia, already uses the final 
settlement price of the Liffe 
euramark contract to settle its 
own euromark contract 

Liffe Is also in talks with the 
Tokyo International Financial 
Futures Exchange fnffe) on an 
arrangement to distribute a 
euroyen contract. It already 
has a separate arrangement 
with the Tokyo Stock 
Exchange for the Japanese 
gov er nment bond contract. 


Steady demand for Austrian bank’s offering 


By Graham Bovutey 

The eurobond market saw a 
large number of new issues 
yesterday in a variety of cur- 
rencies, with Osterreichische 
Kontroilbank’s $40Qan offering 
of five-year bonds the main 
attraction. 


INTERNATIONAL 

BONDS 


The fixed-rate bonds, which 
mark the Austrian bank’s first 
foray into the dollar sector 
since September 1993, were 
priced to yield 17 basis points 
Over US gnp wnmtmfc bonds 

Syndicate managers said the 
pricing was quite tight com- 
pared with similar eurobonds 
already in the market, such as 
the World Bank’s five-year 
global baud, trading at 11 basis 
points over, and Japan Devel- 
opment Bank’s eurobond, 
which is trading at 22 over. 

Nevertheless, they found 
steady demand from retail 


investors in Switzerland and 
the UK, and good moHlTiilntnal 
support, lead manager Gold- 
man Sachs said. 

One syndicate manager said: 
“The deal afawid have come 
around 20 basis points over, 
but nevertheless it will go 
welL" 

A noth er offic ia l “They 
chose the right part of the 
yield curve to many retail and 
fagtitntionaT dprnani?, although 
not aQ the bonds will be sold at 
17 over." 

The bonds are due to be 
freed to trade this morning, 
after bring haM in syndicate 
overnight for the opening of 
the Japanese market 

The return of cautious opti- 
mism to government bond 
markets following tire German 
elections, and a shortage of US 
economic statistics this week 
has boosted new eurobond 
issuance in recent days, syndi- 
cate nffirfafe said. 

“There has been a lot of 
ac tivity in the last couple of 
days an the h a c k of the elec- 


NEW INTERNATIONAL BOND ISSUES 


Amount 

Coupon 

Price 

Maturijr 

Fees 

Spread 

Book nearer 

Bcfwnr 

US DOLLARS 

m. 

% 



% 

bp 


OKB« 

400 

7J5Q 

99.7530 

Nov. 1999 

0L25R 

+1717HW'99) Goldman Sacha International 

Banco d Napoflejxto Branctijt 

100 

M 

99^0R 

Nov. 1998 

O20R 

• 

Setomsn Bredtara tod. 

Moecow Nanxtoy Ftoencofctt 

75 

fcl) 

9050 

00.1989 

2.35 

> 

Meat Merchant Bank 

Banco Oradaaco 

60 

amss 

10000R 

Nm.iesr 

0.75R 

+273(4 

UBS 

YSI 

Swedah Export Cradt^ 

10bn 

lei) 

80J0 

Nov.1997 

undtoci 

* 

Yamafchl Intl^MOpa) 

D-MARKS 

Nsdonat Bark c4 HLs^gtoy 

500 

8.75 

101 M 

Ncm^OOI 

2 as. 


Dajtotoctre tendaatoate 

ITALIAN URE 

Bunspean ImaaAnant Bankffl 

200 bn 

10.15 

90555 

JO.1098 

1J7S 

. 

BOCariptaUP MrgrvSJ^oto 

AUSTRALIAN DOLLARS 

Nm Sav Wriee Traaauy Oap. 

100 

1060 

10145 

Oae2004 

2.1 2Ss 

. 

Hrenbrea Bark 

SWISS FRANCS 

Vwtxnd. & Tajemkraft. 

250 

5.75 

10250 

tkNjooo 

225 


von Emst/CredK StdeaoAJBS 

City ot Vienna 

160 

1375 

10025 

Nov. 1998 

1.75 

- 

GotbMJatan Emst/Menfl 

find terms and non-crtriib idtoae stated. Hie yield spread (over relevant government bond) at loaich to suppBed by the toad 
manager. Jftoattog mte note. tSemtanneat coupon. Ft fixed re-offer prioa: has are shown at the re-offar tovei a) Long 1 st cotpon. b) 
3+Wh Uber -tOOCtp. 4 CaBaNa 8 ptdtobto on cation datoe from OCL97 at par. Share owneraMp dsltoit ctouaa. cl) 3-ndh Ltoor +1 %. 
d) Over (ntacpotalad yietd. at CaBafals on 1711/85 at par. aU 3.10% to 1711 AS and 3.70% thereafter. Long Iasi ooupon. 11 Fwrtbta vrttti 

L1800bn. Ptos 132 days accrued. 









tions in Germany," said one 
salesman. “We are also 
approaching the year-end and 
many lead managers are bid- 
ding to move up the league 
table.” 

Late in the session. Abbey 


National First Capital BV 
launched a $50Qm offering of 
10-year yankee bonds priced at 
62.5 basis points over US gov- 
ernment bonds. 

In the lira sector, the 
European Investment Bank 


launched a L2O0bn o ffering' of 
four-year bonds, with a coupon 
of 10.15 per cent, fungible with 
the L400bn offering of bonds 
launched last week. Sources 
said the proceeds were 
swapped into floating-rate lire. 


Bank launches 
Baltic hedge fund 


By Norma Cohen, 

Investments Correspondent 

Banks in the Baltic states of 
Estonia. Latvia and Lithuania 
are seeking dollar-denominated 
assets through a new invest- 
ment fund which will buy local 
bank Treasury bills and certifi- 
cates of deposit 

The Baltic Cash Fund, an off- 
shore hedge fond registered in 
the Cayman islands, has been 
launched by Latvia’s Interna- 
tional Bank of Riga and its 
wholly-owned fund manage- 
ment subsidiary. Baltic Asset 
Management (BAML). The two 
British directors of BAML are 
directors of Quantec. a UK- 
based consulting firm specialis- 
ing in active quantitative fund 
management applications. 

The fund, which has applied 
for listing on the Irish stock 
exchange, hopes to raise $40m 
from large institutional inves- 
tors with minimum invest- 


ments of $100,000 each. 

It will invest primarily in 
short-dated bank papa: with an 
average maturity of 60 days 
from Latvia and Lithuania, 
and in commercial paper from 
Estonia. Fund managers said 
rates on these instruments can 
be as high as 25 per cent for US 
dollar-denominated bank CDs; 
government Treasury bills, in 
local currency, can earn more 
than 20 per cent. 

“These rates reflect the 
shortage of the hard currency 
required by the hanks for lend- 
ing to local enterprises as the 
Baltic economies continue to 
develop rapidly," said Mr Aigar 
Sevels, cliief executive officer 
of BAML. He said Baltic entre- 
preneurs needed hard currency 
for trade with neighbouring 
countries such as Russia, 
where the soft rouble fell by 
more than 30 per cent in the 
first U days of October. 


Cedel sets up on-line 
securities order system 


By Norma Cohen 

Cedel, the international 
clearing and settlement organi- 
sation. is to set up a subsid- 
iary, called Liberty, to run an 
electronic on-line order routing 
service for European investors 
seeking access to the North 
American markets. 

Investors will be able to buy 
and sell securities on all the 
lpading North American equi- 
ties exchang es , as well as on 
the Chicago Board of Trade 
and the Chicago Mercantile 
Exchange. 

The product, InterTrade 
Direct, is designed to be com- 
patible with most broking 
work stations and Internal 
systems. 


Liberty intends to extend the 
system to allow European 
investors access to Latin Amer- 
ican and Pacific markets by 
the first quarter of 1995. and 
plans an extension allowing US 
investors similar access to 
European markets. 

Investors choosing the sys- 
tem will pay no fees, although 
broker-dealers who receive the 
orders will pay fees to the sys- 
tem. These broker-dealers may 
then pass some of the costs on 
to investors in the form of com- 
missions. 

Investors with access to 
screen-based information-pro- 
viders can research prices of 
North American equities and 
electronically send buy and 
sell orders to US brokers. 


WORLD BOND PRICES 


*9 Mil'll 

«i fwrcvfw 





jiS- 7* 


is 


t ■ 




S ■ 



BENCHMARK GOVBtfAffiNT BONDS 

Rid Day’s 

Coupon Date Prica changa 

Yield 

Week 

ago 

Month 

ago 

AoMa 

9000 

08/04 

92.7300 

-0470 

1018 

1010 

10.10 

Belgium 

7 250 

04434 

835300 

-aoso 

855 

854 

853 

Canada * 

8500 

08/04 

845500 

+O1D0 

952 

850 

954 

Oenmrefc 

TJOQO 

12AM 

805000 

-aiso 

8.70 

855 

- 922 

Franco BTAN 

8-000 

06/88 

102.0000 

+0190 

733 

758 

756 

OAT 

1500 

04AM 

83.7100 

+OD 60 

351 

010 

821 

GomtanyTreu 

7500 

08AM 

7005000 

-0110 

755 

758 

7.71 

Italy 

1500 

08AM 

825300 

+0500 11521 

1157 

1151 

Japtoi No 110 

4500 

06/99 

1025060 

-0510 

4.09 

4.14 

851 

Japan No 184 

4.100 

12/03 

965080 

-0250 

4.74 

4J5 

456 

Netherlands 

7^50 

10AM 

985400 

-0280 

754 

752 

7.84 

Spain 

(LQQQ 

05AM 

824000 

-0640 

1155 

1158 

1157 

IK ana 

9000 

0040 

90-20 

-032 

&40 

851 

853 


6.750 

11AM 

80-04 

-032 

852 

858 

952 


9.000 

ions 

103-30 

-13/32 

asi 

857 

097 

US Traaauy' 

73EO 

08AM 

97-14 

-1/32 

752 

751 

752 


7500 

17/M 

95-30 

-1/32 

756 

753 

T50 

ECU (French oom) 

0500 

04AM 

84.4700 

-0120 

&43 

859 

851 


London ttreng. Ttow rort; 
t tere fncuftq rir Mdtas mi tes par amt peyatoa by renmrifarito 
Ww* UB. UK h Shah. OOMU in metari 

US I N T E R ES T RATES 


ImMm 


MJmfetttamaiAin- 


Tmnfy B*8 and Bond YWfls 

On mb CM Tttmr 

Mona 185 teaayrer. 

teaereeato SX4 

&9B ifrjar 

(taayw ~ 


ta 

UB 

738 

7.® 

7JS 


BOND FUTURES AND OPTIONS 
France 

■ MOmOWAL FRENCH BOND FUTURES (MATT) 



Opan 

Sattprica 

Changa 

High 

Low 

EaL vot 

Open InL 

DCC 

11152 

111.78 

-012 

11154 

11150 

142506 

129504 

Mar 

111.04 

11152 

•012 

111.14 

71058 

2513 

0406 

JM) 

11028 

11028 

-012 

11028 

11008 

13 

861 

■ LONG TQM FRENCH BOND OPTIONS (MATE 1 ) 




sate 

PHCO 

Nor 

CALLS 

Dec 

Mar - 

Nov 

pure — 

Dec 

Mar 


110 

111 

11® 

113 

114 


138 

1.10 

0.47 

aia 

002 


239 

ISO 

1.05 

aeo 

asi 


2J06 


080 


an 

025 

aw 

1.34 


OKS 
081 
1. 28 
1J9Q 


2J» 

£56 


EsL w>L tom Q*i 26.117 pm 20824 . Tfr a teuB day** opan re. C—» a»X7+ PiAa 332463. 


Germany 

■ NOTIONAL GERMAN BUMP FUTURES DM2SOOOO IQOtfta of 10016 

Opart Sattprica Changa High Lon EA Vd Open Int. 
Dec go. 90 9082 -022 31.10 9U6B 140480 175355 

War 0006 


8004 


-0-20 


9006 


ease 


810 


4139 


mimwnuReso»niOHsaa^OMmqropow»«*ioow 


Nov 

□ac 

CALLS — 
Jan 

Mar 

NW 

Dec 

053 

121 

153 

159 

031 

059 

036 

094 

032 

1.16 

054 

1.12 

019 

071 

065 

058 

087 

159 


PUTS 


Price 
0060 
0100 
0150 

Eat woL Ml CM* 


UK GILTS PRICES 


0*1 

1.48 

1.78 

an 


1.85 

2.12 

042 


FlfcaC- 


-1W4- 
r- 9* U» 


Italy 

■ NOTIONAL ITALIAN GOVT. BOND (FTP) FUTURES 
flJ Urn 20te 100B» cf WOW 


Open Sett price Change Hfeh . Lem EaL vd Open W. 
Dec 90 30 99.78 +0.15 ■ 10U10 9015 36800 60393 

Mar earn ease + 0.13 99.10 ease 898 zm 

m ITALIAN QOVT. BOND (BTf^ FUTURES OPTIONS [UFFQ Llra200fli lOOtta at 1D0W 


Strike 


CALLS 


PUTS 


Prioa 

Dec 

Mar 

Oms 

Mar 

9950 

157 

246 

128 

257 

10000 

151 

223 

153 

325 

10050 

1.17 

253 

159 

3j55 


&L lot*, 0(> 1473 Ptt» 1702. Pwrioui day's opan ht, CSAi 22501 Pub 27430 


Spain 

■ NOTIONAL 8PAMSH BOND FUTURSl (ME7F) 


Doc 


Opai Sottprtco Change 
8006 87.80 -056 


™sn 

8023 


Lorn 

8731 


Est voL Open JnL 
87,324 75^85 


UK 

■ MOTIONAL U1C GOT FUTURES flJFFEy £80,000 32nda Of 1Q0N 

Open Sattprica Change Ugh Low Ebl wf Open inL 
Deo 102-06 ICG-00 -0-13 102-08 101-19 53489 93194 

Mar 101-08 -0-13 0 46 


■ LONG OUT FUTURES OPTIONS (UFFE) CSQjOOO 64tfi> of 100% 


Stlfca 

Prim 

102 

103 

104 


Dec 

1-20 

0-54 

o-aa 


CALLS 


Me 

2-10 

1-45 

■wn 


Dec 

1-20 

1- 5* 

2- 32 


pure 


304 

3- 39 

4- 15 


Ek- vo L awl. Cab 100B0 Puts star, ft adow dqra open tt, C* 73898 puto 41019 


■ ECU BOND HfTUEES (MATY) 


Dec 


US 


Open Sett pica Change 
8136 81^0 -0.12 


High 

8132 


Low 
81 3A 


Ebl voL Open tnt 
IjBIB 7.106 


■ US TBEASUBV BOND runmeBtCFT) 3100000 32nd»cMOOX 


Dae 

Mar 

Jui 


Opan 

99-14 


99-18 

0925 

9900 


Changa 

+906 

+0-03 


9921 

98-31 


Low 

9911 

96-23 


EaL voL Opan InL 
21 0772 405 

738 27^52 

2 11093 


iFiynr 

■ NOTIONAL LONG TSUI JAPANESE QOVT. 
(LFFB VlOOm IQOtfMof 10 0% 


BOIB7 RTTURB 


Open dose Changa Hfcfi Low EaL vol Opan ML 
Dec 10723 10728 107.16 1190 0 

Mar 10946 10052 10948 60 0 

* trr£ car a ta cai I ri on APT. Al Opw Mans Bom. am for pb»*xm CM'. 


r*_ — IBM— 

te tttt+a- nw 1 on 


m 


M aWo»g +■»- a» 18B te 


SR 5 


aAalM 

827 
1120 


Tnsaflpc 

(SlESs OB7 

Hoc ISM — W 

BaB«i IS 

nawOwTwi^— 
Thaal^cpelW# — 

Tm*iiH«i*i 

Dttfl 15pe 1007 — 

UKeejsiBiflBfrtetr- 

I4PC19S9I— 

Tn«Sl5'»c«8 

EAD lac I888_ 

Tr**94pCl99Btt 


7.1C 

112* 

MB 

831 

12.7* 

ASI 

747 

7JB 

1128 

125* 

ian 

9.16 


smioo&at 

MC lOlfi 
657 as va 
942 lOffi 
xntHHlri 
7,05 108A 
72111100 
757 TCM 
75810ftal 
724 9B.V 
7M 11® 
727 IBSU 
909 lOlfi 
B20U7SM 
&27 104 

335 97 

928 8g|9 
948 HM 
933 »23% 
943112^21 
941 103S 


HUB 

WJ& 

— aa% 

- 107B 

= ?a 

TOtt 

117J! 

-4 112& 

-i MOV 

-A 121b 
-is 114* 
-* 1W4 

-v ina 

-A H4B 
-is 1«* 
-* KB 
WA 
1409 
125M 
110* 


-A 


BwlaWtenJtea 

fc* 1 *!* 6 — ’ 

ria»iny*i® 

TicoiSpcigPtt-rr.- 

(WaaaOnlOVpciSW- 

n “^?55i 9W ”' 

QwfWcanow 

TRW I3pc 2000 — — 

705*2001- — 

7PCZW1#— 

svpoaxB- 

lOpc* 

TrtSil 


11U0 95Z 11® 

9.77 WWW 
M2 938 90% 

359 95510^ 

332 381 IK 

1083 858 11% 

9,41 967 MPj 

753 

322 3£B I05*i 

933 863 96A 

327 

1020 90S 11® 



wan— 

100* 0amatti9>tfc3»«— 

Mia TraaeVpcSDiNft 

,25 b'ukmis 

CMS 9 v pc 3DS ; 

IteatgapeTOK^. 

t!S gSSSm 

S teal TlJipc 2083^ — 
teal Ofepc 2007 . 

13*2J*a»4-6 

104V tewapeare# 

100* 

1183 

KJ2H 

9P. 

lira SMrNMflWn 

U22 TmmSpcJOOB 

11W teasBUfcczno 

leiu CnrWcuaoiiff — 
Tnas9pc2DT2ft 

tewshpc2a»-istt- 
nwte»ta(t — — 

7tyc20t3-1tt* — 

tea* »\l>e 2017ft 

111S Brtlte 2013-17— 
105i 

m 

IMS 

MB 


438 741 T«* 
aw uoiostt* 
747 951 SO 

U U HU 
ajB asoioavai 
1026 M3121V6 
822 950 04V 

827 857 96V 

1912 90S 116* 

9SS &S2 Wfi 
1049 MS 12% 
aar an kds 


4VPC Writ —{1354 MB 



298 206 200V 1>® 

M91EB* “* 10W 

338 165V — 17« 183V 


TO5» IWk 


Kft 107V 
“ 1BA 


&38 

948 

BSB 

-B 

nsa 

769 

135 

SIB 

-B 

966 

881 

148 

l«i5 

-a 

T2S1J 

868 

145 

io*8 

-a 

127% 

729 

<20 

74tt 


art 

923 

940 

XA 

-a 

117S 

&2B 

838 

933 

-v 

114% • 

844 

137 

103% 

-fl 

U8% 

119 

861 

131% 


199% 


231 

XQ 33911 
244 936(8 _ 

262 930 168V , 

437 9607$Z3U “* lOS 14 . 

ISO 931 158V 175V W4V 

482 231 130* ~V (46*a 120V 

4 268 134 198* -4 1574 1 34*1 

- -J, 552§ 12SV 

_ -‘a 1Z9A 10SV 

4*ri*'3Bft — (BS.H 172 M6WW l*S 

PyO Mi e ulh a mel ladampdoO nta on profciwl WtetlCTHtf fO 10% 
and ft 5W. ft Fftna M n ww aheaa a show RH tna lor 
indwMg a» a monoa prior a> nw| and haw Daan aeftstad to 
redact re peat a cf Rn to 100 to FVtouary iOb?. Convwaian 
factor 9849 S>J tor FVLnmy lOOto 142.1 and far Septamber 
1904.-1499 


ZVpeVO {B4U WO IBS 132V 

ihBO’MU <97J) IBS 932 110,% 


MS 
77U 

10® Other nwd bvtMWat 

100V 
71V 
92 

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WnlCriiB>aE'TO — 

Bpcte199B 

ltocVT-2 


IMlKr. 


-4 127* 
-44 129B 


WlanUjorft 

102U CW3VPCB1JBL 

GOV teaaape'sai 
104% 

1093 teai.2%pe. 


948 

987 

900 

Ml 

943 

9«3 


- 47* 

- «U 

- 58V 

- 35% 


*A 5BV 
-*t 54B 
+V 71 
*V «*l 
-A 36% 
♦S 37V 


.... IriBIMSlaSriBl— . 

ircspevorit — 

Wn I toa di e d a r 11 %gc 2007. 

®! IritritteW 

W IhriritotfiSVscW. 
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4VpcL20Z«. 

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118 

953 

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— 138% 

107A 

170 

829 

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HZ 

116 

197 

— 

99 

+% 118% 

«% 

19E 

— 

100% 

4% 103% 

99% 

1127 

— 

109% 

+% 115% 

IDE 

1051 

974 

MSI 


“g 

1859 

— 

127% 

148 

— 

37 

— 44% 

33% 

923 

— 

32% 

— 40% 

2B% 

1054 

059 

114% 

— 136V 

ltt 

441 

132 

' BB 

71 

66% 


42Z 

132 

150% 

129% 

- 

440 

187 

145V 

123% 

1151 


ras% 

— 1»% 

134% 


• Tip-MK*. W 


terltoe to nun «" 


^Eetfen. C tonto »d t* NMenL Ctoring ntepdaN an ri pounda. 


FT-ACTUARIES 

Prioa 

UK 0818 


nXED INTEREST INDICES 

Tun Day's Mon Accrued 
Od 18 Change % Oct 17 


xtf ad 


— Low cotton yMd— MniBniu coupon ytold— — Mgh coupon yield — 
Od 16 Od 17 Yr. ago Od 18 Od 17 Yr. ago Od 18 Oca 17 Yr. ago 


1 Up to 5 years (2^ 

2 5-15 yam £22) 

8 Over IS yon (8) 

4 rirad e amabtos ffi) 

5 Al stocks (8t9 


11924 

-0.12 

11038 

096 

053 6 ym 

048 

8.40 

659 

923 

045 

624 

857 

650 

6-50 

13077 

~0A2 

14028 

158 

1056 I5yre 

841 

825 

829 

055 

848 

7.13 

8.78 

8.70 

725 

15751 

-053 

15851 

258 

951 20 y re 

826 

B21 

7.12 

825 

848 

7.18 

855 

828 

727 

182.10 

4007 

18128 

4.15 

853 kred.t 

850 

840 

726 







13086 

-035 

13745 

158 

1025 















Inflation 5% 

— 

toflaflan 10% 

— 



Od 18 Oct IT Yr. ago 


« Up lo 6 yaws (2) 

7 Over 5 years fll} 

8 Al stock* (13 

Patoant ur s a and Lwna 


18554 

-051 

16555 

021 

657 

Up to 5yro 

352 351 

232 

251 

228 

1.45 

173.81 

-055 

17359 

055 

428 

Over 5 yre 

383 352 

X13 

353 

352 

2 55 

17451 

-054 

17459 

050 

441 

5 year yield — 



— 16 yore yMd — 



- 25 yev ytold 


Oa 18 Od 17 Yr. ago Oct 16 Od 17 Yr. apo Oct 16 Per 17 Yr. ago 


9 Debs 9 Loans (77) 


128L67 


-085 12041 226 996 9.79 9l51 7.75 958 048 896 

ctsem. Cwtoon Bands lm 0to-7VSfa UmBsr 9N-10KN; Hoto 11 M and ewar. t frit pdU. yto Year tn dris. 


048 040 8.19 


CELT EDGED ACTIVITY INDICES 

Od 17 Od 14 Od 13 


FT FIXED INT E RES T INDICES 

Oct IB Od17 Oct 14 Oct 13 Oct 12 Yr ago High- 

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24 


FINANCIAL TIMES 


WEDNESDAY OCTOBER 19 1994 „ 


COMPANY NEWS; UK 


English China makes 
$45.4m chemicals buy 


By Tim Burt 

English China Clays, the 
minerals and chemicals group, 
is making its first acquisition 
since its decision earlier this 
year to demerge Camas, Its 
construction materials arm. 
and expand the speciality 
chemicals division 

In the first stage of a SiOOm 
(£63m) acquisition strategy, the 
group said it was paying 
$-15. 4m for EZE Products, the 
US supplier of speciality chem- 
icals to the paper and surface- 
treatment industries. 

The deal will strengthen 
ECCs presence in the North 
American chemicals industry, 
where it established a foothold 
last year with the £202m acqui- 
sition of Calgon, the former 
Merck subsidiary. 

Mr Andrew Teare, chief exec- 
utive. predicted the group 
would also make a similar 
sized purchase in continental 
Europe, although a deal was 
not imminent 

"We're pleased to get a 
decent size acquisition under 
our belts, and we will now 
focus the business on produc- 
tion for the paper industry." he 
said. 

City analysts, however, said 
the move looked expensive 
given that EZE's net assets 
were valued at $7.4m, a sixth of 



Andrew Teare: European deal 
planned but not imminent 

the purchase price, at the end 
of last year. 

“On a pro forma basis, it 
would have made a negligible 
profit contribution.'’ said one 
analyst. "Chemicals will 
remain only a small part of 
ECC, and I think it will be 1996 
before we see a sizeable profits 
increase from speciality chemi- 
cals." 

EZE last year made profits of 
$l.2m. before tax and interest, 
on turnover of $33.7m. In the 
same period, Calgon contrib- 
uted £7-2m to ECC’s £105.2m 
operating profits. 

Mr Teare, however, said the 


business would not only 
improve ECC’s exposure to the 
fast-growing paper chemicals 
market but would give it an 
important presence on the 
west coast and in the southern 
US. 

The company would also 
achieve annual cost savings of 
$3.1m following its integration 
into Calgon, he added. 

Although Calgon’s paper 
operations will be relocated 
from Pittsburgh to EZE's man- 
ufacturing base in South Caro- 
lina, the new subsidiary was 
warned that up to 20 per cent 
of its 235 staff would be made 
redundant 

The acquisition is being 
funded from cash resources, 
and is expected to push net 
borrowings up to £l90m for 
gearing of about 35 per cent 

It Is expected to use further 
borrowing to finance Its next 
chemicals acquisition, but 
gearing should remain modest 
while ECC continues to sell its 
land bank, which is worth up 
to £70m at present market 

prices. 

Analysts applauded the 
industrial logic behind the 
diversification into speciality 
chemicals, but predicted it 
could be earnings dilutive in 
the short-term. 

The shares closed down 2p at 
365p. 


T&N sells German engine 
seals subsidiary to SKF 


By Tim Burt 

T&N, the automotive 
components and engineering 
group, yesterday said it was 
selling Goetze EJ as to mere - its 
German engine seals subsid- 
iary - to SKF, the world's lead- 
ing manufacturer of roller 
bearings. 

The Swedish group is under- 
stood to be paying more than 
£20m for the Cologne-based 
business, which T&N inherited 
last year following its DM250m 
(£l02m) acquisition of Goetze, 
the German piston ring pro- 
ducer. 

Mr Colin Hope, T&N chair- 
man, said: “The activities of 


Goetze Elastomere do not fit in 
with the rest of the group's 
product range and we believe 
that the company and its 
employees will benefit from 
being part of a group with a 
larger worldwide presence in 
thin particular market." 

SKF plans to integrate the 
business into its core seals and 
bearings division, complement- 
ing existing operations in 
North America and Italy. 

“We’ve been looking for an 
opportunity in Germany for 
some time, and this will 
improve our position in the 
European automotive market," 
said Mr Lars Maim er of SKF. 

T&N had indicated earlier 


that the deal could signal the 
start of a series of non-core dis- 
posals aimed at reducing the 
group’s £362. 6m net borrow- 
ings, equivalent to gearing of 
60 per cent 

By helping to reduce gear- 
ing, such disposals are likely to 
give the UK group additional 
borrowing capacity should it 
decide to buy a majority stake 
in Kolbenschmidt, a German 
motor components manufac- 
turer. Last month, T&N 
acquired options on a 52 2 per 
cent stake in the piston and 
bearings company, which 
could greatly strengthen its 
position in the German mar- 
ket 


Henry Boot advances by 10% 
despite pressure on margins 


8y Richard Waffle 

Herny Boot the construction 
and property group, increased 
pre-tax profits by 10 per cent at 
the interim stage despite pres- 
sure on margins in building 
and civil engineering. 

The Sheffield-based company 
reported pre-tax profits of 
£2.57m (£L35m) on turnover up 
11 per cent from £64.6m to 
£72. Lm for the six months to 
June 30. 

However, it warned that 
overcapacity in the market 
would continue to depress pre- 
tax margins - down slightly to 
3.57 per cent (3.63 per cent) - 
as increased house sales were 
not accompanied by price rises. 

"There is still a lot of compe- 


tition for too little work," said 
Mr Jamie Boot, managing 
director. “We are overcoming 
that to a large degree by being 
fairly selective in the type of 
work we tender for. tendering 
for building work rather than 
civil engineering." 

The company’s outlook on 
construction activities 
improved after winning a £26m 
contract at Connah's Quay 
power station, near Chester, 
from GEC-Alsthom. 

Housing sales increased in 
the early part of the year, but 
have slowed since May. The 
company said the housing mar- 
ket was still coming to terms 
with the interest rate rise in 
September, although demand 
had recovered this month. 


The overall performance was 
helped by property investment 
and development activities, 
which enjoyed a high level of 
enquiries from institutions for 
ongoing developments. 

Earnings per share climbed 8 
per cent to 6.8p (6Jp). The 
interim dividend is l-85p (1.7p). 


Paterson 
Zochonis 
shares fall 
on warning 

By David Blackwell 

Shares In Paterson Zochonis 
fell 5lp to 438p yesterday after 
the detergent and soap manu- 
facturer warned that profits 
for the current half year 
woald be hurt by problems in 
Nigeria. 

The statement accompanied 
results for the year to the end 
of May showing pre-tax profits 
up from £25-3m to £28.1m, 
while sales increased from 
£233.4 m to £26&6m. 

Operating profits at the 
group, 65 per cent held by the 
Zochonis family, the directors 
and related interests, were 
ahead from £ll^m to £15. 4m. 
The share of profits from asso- 
ciated companies - mainly in 
Nigeria - increased from 
£3. 16m to £4.73m. 

Nigeria accounts for about 
30 per cent of sales. Mr Alan 
Whittaker, finance director, 
said that the group’s 
operations there were suffer- 
ing from a lack of foreign 
exchange in the banking sys- 
tem, hitting their ability to 
import sufficient raw materi- 
als. 

Factory throughput would 
have to be reduced. Mr Whit- 
taker said, and exports of 
chemicals from the UK to 
Nigeria would also fall 

He hoped to see some 
improvement after the Niger- 
ian budget at the beginning of 
next year. 

The second most important 
contributor to the group Is 
Cussons in the UK, which 
accounted for sales of about 
£65m. Mr Whittaker said Cus- 
sons, owner of the Imperial 
Leather brand, had improved 
its share of the liquid soap 
market from 5 to 20 per cent, 
and had slightly increased its 
market share for conventional 
soap to 23-24 per cent 

The Polish detergents opera- 
tion, acquired in Starch last 
year, exceeded expectations 
and contributed £25m to turn- 
over. 

Profits were ahead in Aus- 
tralia and Thailand, and the 
Indonesian operations looked 
like moving into the black this 
year. 

Profits in Greece recovered 
from low olive oil prices and a 
decision on a second factory 
was expected soon. 

The pre-tax line was struck 
after investment income of 
£13J)m (£16.4m) and payment 
of £5 -87m (£5. 73m) in Interest 
The balance sheet shows 
investments of £167m. 

Mr Whittaker said further 
acquisitions were possible, but 
they were likely to be modest 
purchases in areas where mar- 
kets were expanding, such as 
eastern Europe. 

Earnings per share emerged 
at 36.6p (32.01p). A final divi- 
dend of U.4p is proposed, tak- 
ing the total for the year to 
13.85P (I2.6p). 


Lucas closes brake foundry 


Lucas Industries, the 
automotive and aerospace com- 
ponents manufacturer, said 
yesterday that Eurofonderie, 
its braking foundry, is to cease 
operations in Gembloux, Bel- 
gium. 

The cost of the move, which 
forms part of the restructuring 


of the group's braking busi- 
nesses, will be covered by past 
provisions. 

The foundry currently 
employs 255 people. Lucas said 
the operation was of "insuffi- 
cient scale to compete effec- 
tively against the world class 
foundries". 


NEWS IN BRIEF 


FRIENDLY HOTELS has 
signed an agreement with 
Choice Hotels International, 
whereby all 27 hotels operated 
by Friendly in the UK, France 
and Denmark will become 
Choice franchisees for 10 years. 
In addition. Friendly has been 
granted a 10-year management 
agreement by Choice for the 
125-bedroom Comfort Inn in 
Cromwell Road, London. 

IAWS GROUP has bought 
Yorkshire-based Malton Fertil- 
isers. 

JERMYN INVESTMENT Com- 
pany’s underwritten rights 
issue been accepted in respect 
of 2.4m shares (30.01 per cent). 
MEDIA TECHNOLOGY Corpo- 
ration’s offer for Faxcast 
Broadcast has been accepted in 
respect of 70.6m shares (58.69 
per cent) taking the total 


THE OPORTO GROWTH FUND LIMITED 

ANNUAL GENERAL MEETING AND AUDITED AN NUAL REPORT 

NOTICE IS HEREBY GIVEN that the 19*44 Annual General Meeting of the Company will be held at Chase 
House, Grenville Street, Sl Helier, Jersey, Cl on 9th November 1994 at 2.30pm for the following purposes: - 

1. To receive (he Company's accounts for (he year ended 30ih June 1994 

2. To re-appoint the Auditors. 

3. To authorise the Directors to fix the remuneration of the Auditors. 

4. To discuss any other business of an Annual General Meeting. 

Voting arrangements for iDR-Hdldtirs 

IDR-Mdcrs who wish to vote must follow the procedure explained hereunder. 

IDR-holdcrs must deliver the IDR’s to the Depositary at the latest on 2nd November, 1994 at the address given 
below (attention Securities Department - telephone 322 508 8215- telex 21752 MOKBK Sj. instruct the 
Depositary as hi the manner in which votes be cast, and indicate to whom the (DR's should be returned after the 
meeting, 
or 

iuslnuri EunX'lear or CEDEL to Mock the number of shares for which they want to vote and co vote on their 
behalf. 

IDR-holders who wish to vote are also requested to transfer to Morgan Guaranty Trust Company of New York. 
New York for account 670-01-422 of Morgan Guaranty Trust Company of New York. Brussels, a fee of US S3 - 
per IDR in respect of which a vote is t-ast. 

Dcpositary: Morgan Guaranty Trust Company of New York. Avenue des Arts, 35 Kunstlaan, Bruxelles, 1040 
Brussels. 

Copies of (he audited Report to Shareholders reporting on the Fund's performance for the year coded 30th June 
1994 will be available from 10th November 1994 on request. 

Persons interested in receiving copies should contact: 

Lehman Brothers Investment Management (Jersey) Limited, Chase House, Grenvitle Street, St Ilelier. Jersey, 
Channel Islands, 
or 

The Royal Bank of Scotland PLC. Registrars Department. PO Box 348, Regents House, Islington High Street, 
London N1 8 XL. 


shares it controls to I06.2m 
(8827 per cent). 

MINHET, Dublin-based min- 
eral explorer, made pre-tax 
profits for six months to June 
30 of (£62,322 (£61.800), against 
I£ 129,364. 

PAS COE’S GROUP has sold its 
wholly-owned subsidiary, Ken- 
worthy Garden Products, for 
£330,000 cash. The disposal is 
in tine with its strategy to con- 
centrate on the development of 
its core branded pet foods. 
SAFELAND has transferred a 
retail property in Castle 
Square, Weoly Castle, Birming- 
ham, to its subsidiary, Safe- 
land Investments. The book 
value after transfer is £940,000 
and total rental income is 
£92,825 a year. 

SOUTHNEWS’ wholly-owned 
subsidiary, KennyhiU, has 
acquired a further 50 per cent 
in Eastern Eye Publications for 
£270,000. increasing its holding 
to 60 per cent. Eastern Eye 
publishes a weekly paid-for 
newspaper targeted at young 
Asians which sells mainly in 
the London, Bir mingham and 
Manchester areas. 


Valuation of cellular components group well below expectations 

Filtronic Comtek priced at 105p 


By Paul Taylor 

Shares in Filtronic Comtek, a 
manufacturer of components 
for the cellular mobile telecom- 
munications industry, were 
priced yesterday at 105p each. 

This values the group at 
£44.1m. well below expecta- 
tions which had ranged as high 
as £60m. 

The company is placing 
233m shares - 57 per cent per 
cent of the enlarged equity - 
with institutional investors. 

The notation price is under- 
stood to have been marked 
down “to a more realistic” 
level after discussions with 
potential investors and in the 
light of market conditions. 

In recent weeks several new 
issues - including Independent 
British Healthcare, Martin 


Retail Group and Seaperfect - 
have been postponed while a 
handful of other recently listed 
companies are trading well 
below their offer prices. 

Mr Tim I .ina cre, a director of 
corporate finance at Panmure 
Gordon, the underwriter, spon- 
sor and broker to the Filtronic 
Comtek issue, acknowledged 
that the price was "at the bot- 
tom of the range” of forecasts. 

He pointed out, however, 
that under a share option 
scheme covering five directors 
and other key employees, exer- 
cisable over the next six years, 
a further 6.85m shares could be 
issued lifting the group's mar- 
ket capitalisation, based on the 
flotation price, to £51.3m. 

Mr Unacre admitted that the 
new issue market had been "a 
bit sticky" in the wake of the 


share price collapse of some 
recent new issues such as 
Aerostructures Hamble. How- 
ever, he said there had been 
good demand from institutions 
for Filtronic Comtek shares, 
“which had been priced sensi- 
bly”. 

Under the placing 9.5m 
shares are being sold by exist- 
ing shareholders including Pro- 
fessor David Rhodes, the Leeds 
University academic who 
formed the original Filtronic 
company in 1977. Filtronic 
Comtek was demerged from 
filtronic at the end of June. 

Prof Rhodes, the executive 
chairman, is raising £1.4m 
through the placing but will 
retain an 1L5 per cent interest 
in the expanded capitaL 

The remaining 14.3m shares 
in the placing are being issued 


by the company to raise £13.8m 

net of expenses. 

Prof Rhodes said the net pro- 
ceeds “will be used to fund the 
expansion, including Invest- 
ment in new facilities, capital 
equipment and research and 
development, as well as reduc- 
ing borrowings and providing 
funds for working capital." 

Sales in the company, which 
manufacturers high technology 
products for use in cellular 
telephone base stations, have 
grown from 21.23m in 1992 to 
£10.2ra in the year to May 

3 i- . , 

Over the same period pre-tax 
profits have increased tenfold 
to £1.1 lm. equivalent to folly 
diluted earnings per share of 
239p- 

The shares are due to start 
trading on Monday. 


Stakis hotels improve in last quarter 


By James Buxton 

Stakis. the hotels and casinos 
group, yesterday reported an 
encouraging performance in Its 
hotel operations and some 
improvement in its casinos in 
the last quarter of its financial 
year. 

The company was issuing 
its first quarterly trading 
statement and will not produce 
its results for the year to 
October 2 until January 10 
1995. 

In the hotels division there 
was a 1 percentage point rise 
in occupancy in the quarter to 


77 3 per cent, whereas to the 
year there was a 12 points rise 
to 69.7 per cent. 

Stakis pushed up its average 
room rate by £1-57 in the quar- 
ter to £41.61 and by £L89 in the 
year to £41.63. 

The average number of 
rooms available Increased from 
3,758 in the third quarter of 
1993 to 4,201 to the third 
quarter of 1994, which reflects 
the acquisition or four 
hotels. 

However, Stakis said none of 
the newly purchased hotels 
had made a big impact on the 
result for the year. Two of 


them, the Arundel Hotel In 
West Susses and the Bath 
Hotel, Avon, were only 
acquired to the summer. 

The Norwich Hotel Norfolk, 
acquired in April, made a 
broadly neutral contribution 
and the Coburg Hotel in Lon- 
don, acquired to March, suf- 
fered from low margin tour 
business which had been 
accepted before the hotel 
changed hands. 

In casinos, attendances rose 
by 7 per cent over last year as 
a whole, but were up only 0.6 
per cent in the quarter. Aver- 
age spend per head on casino 


chips rose by 8.1 per cent to 
£134 in the quarter and by 68 
per cent cumulatively to 
£126. 

Cash drop - the total 
amount spent on. chips - was 
up 8.8 per cent to the quarter 
and I3.S per cent in the year, 
mainly reflecting the addition 
of three new casinos in the 
Midlands. 

However, the gaming margin 
(the percentage of bets which 
the casino retains) fell by 0.8 
percentage points to 17.3 per 
cent in the quarter, though it 
was 0.2 percentage points 
higher in the year as a whole. 


Emap expands magazine distribution 


By Raymond Snoddy 

Emap. the publishing and exhibitions 
group, is expanding its presence in the 
magazine distribution market to the UK 
through a joint venture with Hachette Dis- 
tribution Services. 

Hachette is forming a 5060 joint venture 
with Frontline, a consortium in which 
Emap is the majority shareholder. The 
other Frontline shareholders are the BBC 
and Haymarket 


Frontline, founded by Emap, is devoted 
to the distribution and trade marketing of 
magazines produced by its three owners 
and that will continue. 

The new distribution company, called 
Seymour, will be aimed at “thin] party 
business" - distributing magazines for 
other organisations under contract 
Emap already has close links with Hach- 
ette. They publish jointly three former 
Murdoch titles, Elle, Elle Decoration and 
Sky. 


NEWS DIGEST 


The existing Seymour company has 4 
per cent of the magazine distribution mar- 
ket in the UK by retail value, compared 
with Frontline's 19 per cent. 

Seymour already distributes magazines 
such as Time International, The Spectator, 
National Geographic and Investors Chroni- 
cle. 

Mr Geoff Stott, Frontline's chief execu- 
tive, will also become chairman of Sey- 
mour and Mr Lloyd Wiggles worth becomes 
managing director of Frontline. 


Bowater in 
talks with 
Nampak 

Bowater. the packaging and 
printing group, is in discus- 
sions with Nampak, South 
Africa's largest packaging 
group, which might lead to the 
merging of their UK blow 
moulded plastic container busi- 
nesses. 

Bo water’s Polysystems busi- 
ness could be merged with that 
of BlowMocan, a UK-based 
company owned by Nampak, to 
return for equity to BlowMo- 
can- The businesses have a 
combined turnover of about 
£26rru 

Castle Mill losses 

Castle Mill International the 
wholesale distributor of cloth- 
ing, saw pre-tax losses increase 
from £256,000 to £322,900 in the 
first half of 1994. Turnover was 
virtually unchanged at £L04m. 
The company said the result 
reflected the seasonal nature of 
turnover to Fashion Accesso- 
ries International and continu- 
ing pressure on margins from 
retailers who are reluctant to 
raise prices in highly competi- 
tive markets. 

Losses per share were L.5Sp 
(1-84P). 

Finsbury Smaller 

Finsbury Smaller Companies 
Trust, managed by Finsbury 
Asset Management, plans to 
raise up to £l5m before 
expenses through an issue of C 
ordinary shares. 

A placing of up to 10m C 
shares and an offer for sub- 
scription of a further 5m C 
shares at lOOp each will be 
made. Existing shareholders 


have priority over up to 10 per 
cent of the offer for subscrip- 
tion. 

The C shares will be convert- 
ible into ordinary shares at the 
earlier of March 31 1995 or 
when 80 per cent of the aggre- 
gate assets attributable to the 
C ordinary shares have been 
invested in smaller compan- 
ies. 

Sponsor to the issue is SG 
Warburg. 

Taylor Woodrow 

Taylor Woodrow, the construc- 
tion group, has continued its 
expansion in Florida with the 
817m (£llm) purchase of a 313- 
acre development site in 
Naples on the Gull coast 

The site has planning 
approval for 799 homes and a 
golf course. There are plans to 
complete the infrastructure 
and landscaping within the 
next few months and to 
develop a country club. 

The building of homes, with 
prices between $150,000 and 
$350,000, should begin early 
next year. 

The move follows the $20m 
purchase last month of 653 
acres to Palm Beach County 
in a joint venture with Kenco 
Communities, a US developer. 

Taylor Woodrow is at pres- 
ent involved in six other devel- 
opments in Florida. 

Premier Health 

Because of an expected short- 
foil at its US offshoot. Nursing 
Management Services, second 
half operating profits of Pre- 
mier Health Group were likely 
to be lower than the first half, 
the health services group 
warned. 

The winding down of a large 
contract in Atlanta had con- 
tributed to the shortfall. The 
company said the recent sign- 
ing of new contracts should 


help to alleviate this though 
the full benefit of these con- 
tracts would only be felt in 
1995. 

Templeton Latin 

Templeton Latin America 
Investment Trust had a folly 
diluted net asset value of 96.3p 
per share at June 30. a frac- 
tional decline on the initial 
value of 96.5p on May 3, the 
date of the trust’s market list- 
ing. 

Net revenue for the period 
from March 4 - the date of 
incorporation - to end-June 
was £12,000 for earnings of 
0.03p per share. 

Whitchurch listing 

Whitchurch Group, the meat 
processing and distribution 
company, has applied for 
admission to the Official List. 
Permission is expected to be 
granted today with first deal- 
ings tomorrow. 

In February, Shore Capital 
placed 2.73m shares and raised 
£L28m for the company. The 
shares currently trade under 
Rule 4JS at 54%p, giving the 
group a market capitalisation 
of £7 .28m. 

HK Trust assets up 

The Hong Kong Investment 
Trust lifted net asset value per 
ordinary share by 8 per cent - 
from 60.6p to 65.64p - during 
the 12 months to June 30. 

The Tyndall-managed trust 
reported net revenue of 
£387.740 (£401,077) for earning s 
of L94p (2.01p) per share. The 
proposed final is l.lp for a total 
of L85p (L75p). 

Berry Birch lower 

Berry. Birch & Noble, the 
USM-quoted financial adviser, 
reported pre-tax profits down 


from £460,000 to £380,000 in the 
half year to July 31. 

Turnover advanced from 
£3 59m to £4.05m but increased 
operating costs resulted in 
lower profits. The company 
said action had been taken to 
cut costs, the full benefit 
of which would be seen in 
1995. 

Earnings per shore were 4.4p 
(5.3p) and the interim dividend 
is cut from 2.2p to l.Sp. 

The shares fell 9p yesterday 
to 95p. 

Wm Bedford warns 

William Bedford, the USM- 
traded antique dealer and 
restorer, staged a profits recov- ■ 
eiy as sales almost doubled in 
the six months to June 30. 

On turnover of £1.24m 
(£651.556), the pre-tax line con- 
firmed the recovery shown in 
the second half of the preced- 
ing year with profits of £96,706 
against losses of £10598. 

Earnings per share were 15p 
(losses of 02 p). 

However, Mr John Bedford, 
chairman, warned that mar- 
gins remained “under consider 
able pressure" and sounded a 
warning on current trading. 

"The recovery in sales [in 
the first half] has not so for 
been maintained in the second $ 
half. Sales in July were signifi- 
cantly below those of last year, 
while August and September 
have been exceptionally quiet.” 

Ldn & Strathclyde 

London & Strathclyde Trust 
raised net asset value by 8p to 
266.8p per share over the year 
to August 31. 

After-tax revenue increased 
from £816,000 to £881,000 in the j 
12 months and earnings per 
share came to 6.03p (5.58p). The 
proposed final dividend is held. | 
at 4.25p for a same-again total 
of 5.75p. i 


INTERNATIONAL DEPOSITARY RECEIPTS 
REPRESENTING SHARES PAR VALUE S2J0 COMMON STOCK 
J-P. MORGAN & CO. INCORPORATED 

Ac»b distribution of S CLtiS per Depositary share wDI be payable on or after the 21st 
October 1994, upon presentation of Coupon No. 98 att- 

fttagart Guaranty Tma Company of New York 
35 Arenac Des Arts 
104(1 Brussels 
Belgium 

Banqoe lounauoetlc 3 Lnembourg 
2 Boulevard Royal 
L-2953. Luxembourg 

At the designated me less applicable cues. 

Tb is distributed is in respect of the regular quarterly dividend payable on ibe common 
shares P.V.S 150 J.P. Morgan & Co. Incorporated on 1 4th October 1994 


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FINANCIAL TIMES WEDNESDAY OCTOBER 19 ! 994 


COMPANY NEWS: UK AND IRELAND 


Barrs claim majority 
backing for campaign 


By Richard Wotffe 

Nicholas and Robert Barr, the 
brothers who are attempting to 
unseat their uncle, Mr Malcolm 
Ban*, as chairman of Barr & 
Wallace Arnold Trust, yester- 
day claimed that the holders of 
more than 50 per cent of the 
voting shares were backing 
their campaign. 

The brothers said they had 
majority support among ordi- 
nary shareholders for their 
attempts to take control of the 
board and change strategy at 
the motor distribution and lei- 
sure group. Mr Kerry Firth, a 
Barnsley-based businessman 
who owns 16 per cent of voting 
shares, is one of those who has 
pledged support 

Nicholas and Robert are the 
sons of Mr Stuart Barr, the 
managing director who died 
two years ago. They speak for 
nearly 30 per cent of the 
group's voting shares. 

However, the Barr & Wallace 
board launched a counter 
attack yesterday by proposing 
to enfranchise the company’s 
non-voting shares, owned 
mainly by institutions. Ironi- 


cally, enfranchisement has 
been one of the rebels' princi- 
pal proposals. 

The board said that a vote on 
enfranchisement would take 
place before an BGM called by 
the Barr brothers. The 
brothers demanded the EGM 
last week to unseat Ah* John 
Parker, chief executive, and Mr 
Brian Small, finance director. 

Malcolm Barr said: "Enfran- 
chisement is such an impor- 
tant issue in terms of increas- 
ing shareholder value and 
future progress of the group 
that it merits being voted on in 
its own right” 

The board is proposing a 
l-fbr-l scrip issue to ordinary 
shareholders to compensate 
them for the loss of voting con- 
trol. It also intends to maintain 
the final dividend on the 
enlarged share capital. 

A circular is to be sent to 
shareholders no later than 
October 28. with a meeting 
expected by mid-November. 

The Barr brothers plan to 
split the group’s motor and lei- 
sure divisions and reduce cen- 
tral overheads. 

"We felt tor some time that 


the two divisions did not have 
anything in common and 
gained no strategic benefit by 
being linked to each other.” 
said Nicholas Barr, who was 
development director of the 
Barr & Wallace motor division 
until his resignation in Sep- 
tember last year. 

"I got a lot of personal 
pent-up frustration by seeing 
the group spend money on 
hotels and not being able to 
develop the motor business. 

“We also believe there are 
potentially more effec ti ve ways 
to use the company's capital 
than buying property assets. 
The board has failed to find 
sensible niche markets to bolt 
on to the leisure activities.” 

The hoard counters the 
brothers’ arguments by point- 
ing to a 40 per cent rise in 
pre-tax profits in the six 
months to June. Pre-tax profits 
stood at £328,000 on turnover 
up 15 per cent to £124m. 

Mr Small and Mr Parker 
were appointed in May. Since 
then operations disposed of 
include Trust Leasing, sold to 
Robert Barr for £2. 15m in 
July. 


Sidlaw calls for £23.7m to 
fund two-year reorganisation 


By Peter Pease 

Sidlaw Group, the Scot- 
land-based packaging, oil ser- 
vices and textiles company, 
yesterday launched a £23 .7m 
rights Issue to fund a two-year 
reorganisation and capital 
expenditure programme for its 
packaging division. 

The issue was priced at I80p 
a share. The shares closed 
down 17p at 208p. 

At the same time, it 
announced that pre-tax profits 
for the year to September 30 
would be in line with expecta- 
tions at not less than £lA5m 
(£11. lm) and that earnings 
would be at least 20p (20.3p). 

It also said that, while the 
textiles division remained in 
the black - operating profits 
for the six months to March 31 
were £326,000 (£298,000) on 
turnover of £13.3m. (£UL3m) - 
the division was no longer cen- 
tral and would be sold. 

In July 1993, the group 
acquired the flexible packaging 
businesses of Courtaulds for 
£78m. funded in part by a £S3m 
rights issue at 275p. Mr Digby 


Sidlaw Group 

Share price {pence) 
360 



" MBS ■ 9*' • 

Souqb: FT OrapHta . 

Morrow, rhief executive, said 
that “more than half of the 
current expenditure needed for 
the division coaid not have 
been foreseen at the time of 
the acquisition”. 

Mr Morrow said the division, 
while "exceeding expecta- 
tions”, had "pressing require- 
ments”. Hie did not want to get 
to the position where custom- 
ers could be disappointed. 
Behind the cash call, he said, 
lay the need to provide a pan- 


European service, called Tran- 
flex, operated in partnership 
with the customer. 

This "partnering” involved 
standardisation of product 
quality across the plants in the 
UK. the Netherlands, France 
and Spain. At the same time 
the cost base needed to be 
reduced, said Mr Morrow, via 
reorganisation and upgrading 
of production facilities. 

While the rights is raising 
some £24m, the group win have 
access to a total of £36m, 
thanks to a £l2m additional 
borrowing capacity. Reorgani- 
sation wfll use up £15m; sup- 
port for customers - particu- 
larly a greenfield investment 
"for an existing blue chip cus- 
tomer's expansion” — will take 
£9m: about £5m will be 
invested in the French and 
Spanish plants; and dm 
will go on another production 
line in Bristol 

The initial effect of the 
rights issue win be to reduce 
gearing, which stood at 73 per 
cent at the half-way point. Mor- 
gan Grenfell are the underwrit- 
ers and Cazenove the brokers. 


Recovery in rental levels 
behind Town Centre advance 


By Christopher Price 

A recovery in rental levels 
helped Town Centre Securities, 
the Leeds-based property 
group, report a 9 per cent rise 
in annual profits to £8Blm. 

Mr Edward Ziff, c h ai r ma n , 
said the company had 
increased its purchases in the 
retail market to take advan- 
tage of the rise, although this 
had so far been limited to the 
top end of the market “The 
prime retail market is stronger 
than its ever been in terms of 
rental value and incentives to 
let are being withdrawn at a 
rate of knots.” he said. 

An internal property valua- 
tion showed values increased 


by 11 per cent and helped net 
asset value pa* share rise 20 
per cent to 150.63p (125.18p), 
and by 21 per cent to 14&96p 
(123.07p) on a diluted basis. 

The shares gained 5p to 122p 
yesterday. 

The freehold proportion of 
the group's Investments 
jumped from 66 to 96 per cent 
following the purchase of the 
freeholds on the Merrion Cen- 
tre in Leeds and a smaller site 
in Wakefield. West Yorkshire. 
These boosted the group’s 
investment expenditure from 
£10m to £15m for the year. 

Mr Ziff said that seconda r y 
retail sites were still not show- 
ing any sign* of rental growth. 
"Rent review activity is very 


tough in those areas,” he said. 

The pre-tax figure was 
slightly ahead of most fore- 
casts and prompted analysts to 
generally move their profit 
forecasts for 1994-95 ahead 
slightly. The average moved 
from about £8.5m to upwards 
of £9m, with a net asset value 
of about 170p. 

Gross reve nue for the year to 
June 30 rose 10 per cent to 
£20m (£l&2m). The tax charge 
declined from £2.4m to £L89m, 
leaving earnings per share 
ahead 19 per cent to 6.75p 
(5.65p). The dividend is 
increased from 3.4p to 3.8P. 
with a final of 2.6p. 

A l-for-4 scrip issue was also 
announced. 


Further 
defence 
likely from 
Attwoods 

By Peggy HoEnger 

Attwoods, the waste services 
company fighting a hostile 
£364m bid from Browning-Fer- 
ns Industries of the US, is 
expected to publish a second 
defence document towards the 
end of next week. 

Much could depend on tins 
document, with US investors 
expecting to take a firm view 
on the offer after its publica- 
tion- “At this stage, the ques- 
tion is will Attwoods be able 
to put enough arguments in 
the second document or give a 
profits forecast to keep inves- 
tors in the shares”, one share- 
holder said. 

The document is likely to 
include further details on 
prospects for 1995 and indica- 
tions on the value of 
Attwoods' assets and business. 

A third document, which 
could include its first quarter 
results, is also expected before 
November 11. This is the last < 
date for publication of new 
financial information and 
should reinforce earlier Indica- 
tions on 1995 profits. 

This could put BFI under 
increased pressure to raise its 
bid, following Attwoods' 
results last week which i 
showed improvements in core ' 
operations. Institutions are 
believed to want either an 
increase, or an equity alterna- 
tive. An equity option is 
unlikely, however, given the 
effect on BFTs earnings. 

BFI is offering 109p in cash 
and has received acceptance 
from Attwoods* 29.8 per cent 
shareholder, Laidlaw of Can- 
! ada. A further 25 per cent is 
held by two institutions in the 
US, Fidelity and Templeton 
Investments. Fidelity has 
recently reduced its stake 
from almost 14 per cent to less 
than 12 per cent 
Mr Ken Foreman, Attwoods* 
chief executive, is due to begin 
a round of presentations to the 
US today. He will argue the 
bid undervalues his company. 

It is already dear that insti- 
tutions accept BFTs argument 
that future growth will come 
through providing integrated 
waste services. 

Scantronic 
raises £2.8m 

Scantronic Holdings, the 
security components company, 
is raising a total of £&Am net 
in new equity and borrowings 
following agreement from its 
shareholders at an extraordi- 
nary meeting. 

About £l-2m is being raised 
through a placing and open 
offer of 16.1m new ordinary 
shares at lOp each while a far- 
ther £L6m will be provided by 
additional bank fa c i li ti es . The 
proceeds would provide suffi- 
cient working capital for the 
group's current needs, the 
directors said- 

They also announced that 
there would he pre-tax losses 
of abont £2.4m for the half 
year to September 30 after an 
exceptional £1.7m reflecting 
the costs of the revised bank 
facilities and recent reorgani- 
sation of the group’s 
operations. Profits last time 
were £l.4m restated. 

Losses per share are expec- 
ted at 7.71p (l.4p earnings). 

The directors do not expect 
to make any dividend pay- 
ments, Including preference 
dividends, for Hit*, year. 


Boardroom shake-up at Arcon 


By Kenneth Gooding, 

Mning Correspondent 

A boardroom row at Arcon 
International Resources, the 
Irish company in which Mr 
Tony O'Reilly, chairman of 
Heinz Foods, has a 23 per cent 
stake, has resulted in the resig- 
nation of Mr Richard Conroy 
as chnii*tii;m and chief execu- 
tive. 

Mr James Jones, director 
responsible for finance and Ms 
Maureen Jones, responsible for 
administration and manage- 
ment, have also given up their 
executive functions but, like 
Mr Conroy, who founded 
Arcon, are staying on the 
board. 


Arcon said that it had been 
informed by the three directors 
“of their declared inability to 
cany out their respective exec- 
utive functions as. in their 
opinion, the company bad »» '■*- 
laterally and wrongfiiHi «■ 
dialed their contracts.” 

Mr Conroy said last night 
that for the past 2*A years bis 
executive functions were grad- 
ually eroded "until it became a 
nonsense, hi practice we were 
not observing any serious exec- 
utive function.” He said he 
would consult his lawyers but 
"I don't wish to harm the com- 
pany I founded.” 

Mr Brendan Gilmore, who 
has been appointed chairman 
and chief executive, said he did 


not know why the directors 
had taken this action. "We 
refute totally any allegations of 
constructive dismissal” 

He said the one contentious 
issue between Arcon and Mr 
Conroy was the private com- 
pany he set up last year and 
whether it was to become an 
exploration company. If it was, 
there would have been a possi- 
ble conflict of interest. 

Mr Gilmore said Arcon was 
at an exciting and strenuous 
stage, and, mice the directors 
announced last week they had 
given up their executive roles, 
the gaps had to be filled imme- 
diately. Mr Tony O'Reilly Jnr 
has been appointed deputy 
chief executive, Mr Gilmore's 


previous role. 

Arcon is preparing to start a 
$S5m (£ 41m) lead-zinc mine at 
Galmoy in County Kilkenny, 
Ireland's first new base metals 
mine for 29 years. With his 
associates, Mr O'Reilly controls 
29.3 per cent of the company 
while Outokumpu, the state- 
owned Finnish resources 
group, owns 2L6 per cent Mr 
Conroy, with associates and 
family, owns about 5 per cent. 

Mr O'Reilly moved into 
Arcon, then called Conroy 
Petroleum, when it acquired 
his Atlantic Resources for 
£7.7m in 1992. Mr Conroy is 
also a professor at the Royal 
College of Surgeons in Dublin 
and an Irish Senator. 


Why Walker has changed horses 

John Gapper on the banker who is leaving Lloyds for Morgan Stanley 

S ir David Walker did not advisory board based In i 

look a disappointed man Canary Wharf offices, 

yesterday. Executive responsibility f 


S ir David Walker did not 
look a disappointed Trvaw 
yesterday. 

This was despite having 
apparently forsaken the oppor- 
tunity to chair Britain’s most 
successful hank, and a leading 
FT-SE 100 index company, for 
the sort of role at a US invest- 
ment bank that is usually 

mote ambassadorial than pow- 
erful 

Sir David’s decision to 
become executive chairman of 
Morgan Stanley in Europe 
rather than wait for the appar- 
ent certainty that he would 
succeed Sir Robin Ibbs at 
Lloyds Bank raises fresh ques- 
tions for Lloyds. 

The bank now has to find 
both a new chairman «nd chjpf 
executive - to replace Sir 
Brian Pitman - in the next two 
years. 

Yet it also appeared enig- 
matic for Sir David hnnsalf. 

Most European chairm en of 
US investment banks have 
been non-executives appointed 
to bring City contacts and act 
as figureheads, is that the role 
for someone who describes 
himself as being “reasonably 
creative” and having "huge 
energy”? 

Sir David's answer is an 
emphatic “yes” on two 
grounds. 

One is the nature of his role 
at Lloyds, where he thought 
his job would be “more 
executive than is the case” 
when he arrived m July 1992. It 
thm seemed that he was being 
groomed for a rapid elevation, 
with Sir Robin as a caretaker. 

But Sir Robin, a former exec- 
utive director of ICI and head 
of Lady Thatcher’s cabinet 
office “think tank” from 1980 
to 1982, now appears to be 
rather enjoying himself at 
Lloyds. He has frithretpri that 


he would prefer to hang on to 
the reins until the annual 
meeting after his 70th birth- 
day. 

The second reason is the 
nature of the role he is being 
offered at Morgan Stanley. At 
54, the former chairman of the 
Securities and Investments 
Board, the City regulator, says 
he could he non-executive 
chairman of a FT-SE 100 
company “in six or seven 
years’ time, if I want that” but 
has more active ambitions 
now. 

Sir David admits that the 
European chairman of a US 
investment bank is normally 
“an introducer or a public 
affairs chap” But his job will 
be as executive chairman of 
European operations. He will 




also be a member of the New 
York board of directors that 
runs Morgan Stanley through- 
out the world. 

Morgan Stanley needs such a 
role as a result of its rapid 
growth in the past two years. It 
generated $1.25bn (£79 0m) of 
revenues in Europe last year, 
and if its rate of expansion 
continues it could produce 
more revenue from Europe 
than the US by the turn of the 
century. 

The firm already employs Mr 
Francis Maude, the former UK 
cabinet minister as manag in g 
director of global privatisation 
work. 

Lord Richardson of Duntis- 
bourne, the former governor of 
the Bank of England, is also a 
member of the international 


advisory board based in its 
Canary Wharf offices. 

Executive responsibility for 
Europe is split between its 
joint chief executives. Mr Ste- 
ven Ward and Mr Stephen 
Waters. Mr Waters said yester- 
day that it would “probably 
become a triumvirate rather 
than a duet” once Sir David 
had worked his way in and 
understood the firm’s activi- 
ties. 

Mr Waters, who takes partic- 
ular responsibility for mergers 
and acquisitions work and 
equities, said the firm “obvi- 
ously wanted a senior figure 
who knew his way around the 
City”, and hoped to boost its 
presence in the domestic UK 
market to the level achieved in 
some continental European 
markets. 

Sir David argues that his 
role at Morgan Stanley will be 
one of “collaborating, helping, 
coaxing and contributing,” as 
well as helping to decide how 
the firm should allocate capital 
in Europe. Its rate of growth 
means that there are compet- 
ing claims among different 
country operations. 

He emphasises that as the 
only employee of the firm in 
London without functional 
responsibility, he will have a 
role in arbitrating between 
businesses. “One ol the chal- 
lenges is to ensure that people 
in business units do not 
become so entrenched that we 
miss synergies,” he says. 

Nonetheless, Sir David's 
move is likely to reduce his 
previous visibility as a senior 
City figure, given the roots of 
his new employer on Wall 
Street Morgan Stanley’s Euro- 
pean growth win have to live 
up to expectations to compen- 
sate for what he is sacrificing 
at Lloyds. 



!»• 

11 

I 

1 DIVIDENDS ANNOUNCED 1 

to ini 


Cones - Total Total 


gap with Perchem deal 


payment payment 


By Tan Burt 

Laporte, the speciality 
chemicals group, yesterday 
said it was discussing with 
Akzo Nobel the possible acqui- 
sition of the Dutch-based 
group’s Perchem business. 

The UK group wants to add 
Akzo Nobel’s small UK subsid- 
iary to fin a gap in its chemical 
production. Perchem manufac- 
tures so-called organodays - 
absorbent products with appli- 
cations ranging from adhesive- 
ness in paints and inks to liq- 
uid t^arifiratiftn 

“The purchase price will 
probably be in the low 


millions,’' Laporte said. 

Although the details have 
yet to be finalised, the com- 
pany yesterday received clear- 
ance from the department of 
trade and industry to pursue 
the deal. “Negotiations are 
therefore continuing with a 
view to a very early comple- 
tion,” the company added. 

Hie move follows the merger 
last year of Akzo of the Nether- 
lands with Nobel Industries, 
the Swedish chemicals group. 

Since then, the group has 
divested from some non-core 
areas and concentrated on 
Coatings, chemicals and phar- 
maceuticals. 


Barry Birch § .. .jnt 

Boot (Henry) - Jrrt 

Hong Kong Inv -flu 

Ldn A strthdyd* fin 

Paterson Zocti fin 

RSv & Merc Extra to 

SB Jnt 

Town Centre fti 


year year 

- 5.4 ~ 
&5 

1.85 1.75 

5.75 5.75 

13.85 12.8 
7.875 7JS7S 

- 10J9 

as a4 


Dividends shown pence per share net except where otherwise stated. §USM 
stock. jtTNrd quarterly malting 9p to dote. 


NEWS IN BRIEF 


CARD CLEAR, the credit card 
fraud prevention company, has 
acquired Its competitor Cardi- 
nal Data. Consideration was 
907,500 lp shares, being 3 Card 
Clear shares for 2 Cardinal 
Data shares, and an inter-com- 
pany loan of £109,000. 
JSEALTHCALL GROUP is pay- 


ing £127,500 cash for 51 per 
cent of Sheffield and Rother- 
ham Nursing, which provides 
nursing staff to industrial hos- 
pital, nursing home in South 
Yorkshire. And options exist 
whereby Healthcall could 
acquire the remaining shares 
for £1251500 in three years. 






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WEDNESDAY OCTOBER 


19 1994 


COMMODITIES AND AGRICULTURE 



Record western lead and 
zinc demand forecast 


By Kenneth Gooding, 

Mining Correspondent 

Demand for both lead and zinc 
in the western world will reach 
record levels this year and rue 
again In 1995, helping to bring 
the markets back into balance 
gradually next year. 

This optimistic message 
comes from the International 
Lead and Zinc Study Group, an 
intergovernmental organisa- 
tion with members from 30 
countries, which has been 
meeting in Vienna. 

It says demand for the two 
metals will continue to be 
driven by strong growth in the 
US and a recovery in Europe. 
Zinc demand in Europe next 
year is forecast to reach 2m 
tonnes, a level not seen since 
1991. But little change is expec- 
ted in Japan. 

However, the group said the 
outlook for lead was the more 
positive and added that it 
recognised “that the stocks of 
zinc in London Metal 
Exchange warehouses cur- 
rently exceed 1 . 2 m tonnes or 10 


weeks of consumption". Pro- 
duction from zinc mines is 
therefore expected to fall again 
this year - by 2 per cent to 
5.13m tonnes - after an 8 per 
cent drop in 1993. But zinc 
mine output is then expected 
to rebound, by 5 per cent, in 
1995 as production Is increased 
in Australia and Canada. 

Exports, notably from China 
where zinc output rose sub- 
stantially last year - by 209,000 
tonnes to 857,000 tonnes - will 
continue to plague western 
markets this year, according to 
the group, but are expected to 
be below the 380,000 tonnes 
seen in 1993. 

7.i nn consumption is forecast 
to rise by 4 per cent to 5.76m 
tonnes this year and by a fur- 
ther 3.6 per cent to 5.97m 
tonnes in 1995. Zinc metal pro- 
duction is expected to be up by 
1 per cent to 5 -38m tonnes and 
by another 1.5 per cent to 
5.45m tonnes in 1995. 

The group says former east- 
ern bloc countries are provid- 
ing accurate data on their lead 
and Tine industries. It forecasts 


zinc metal output in these 
countries will be about 1.61m 
tonnes this year and next, 
“depending on trends in the 
CIS", while consumption in 
both years will reach 960.000 
tonnes. 

Lead metal production in the 
former eastern bloc will be 
about 900,000 tonnes in. 1994 
and 1996, according to the 
group, while consumption will 
be 590,000 tonnes. In the west- 
ern countries, lead consump- 
tion this year is forecast to 
grow by 5 per cent to 4.72m 
tonnes. Lead metal output is 
expected to rise by 3 per cent 
to 4.55m tonnes, most of which 
will be recycled metaL But 
about 2m will come from 
mines. Next year consumption 
is forecast to rise by 2 per cent 
to &83m tonnes, while metal 
production is expected to go up 
by 2 per cent to 4.65m tonnes, 
including 2.03m tonnes from 
mines. 

Lead exports from eastern 
Europe are expected to remain 
“substantial’' this year but 
might decrease in 1995. 


MARKET REPORT 


Coffee still on roller-coaster 


By Alison Maitland 

Coffee futures trading 
continued its roller-coaster 
course in London and New 
York yesterday as nervous 
traders betrayed their uncer- 
tainty about which way the 
market is heading. 

Robusta futures in London 
surged by $272 to a day’s peak 
of $3,760 following strong gains 
in late trading in New York on 
Monday. But New York lost its 
nerve yesterday, leaving the 
January contract in London 
still up $177 on the day at 
$3,665 a tonne, but close to the 
day's low of $3,660. 

“It was purely speculative 
buying," said one trader. “The 
funds had gone short and they 
were forced to cover on the 
back of the potential problems 


COMMODITIES PRICES 


caused by the drought in Bra- 
zil." 

The London market initially 
fell sharply on Monday follow- 
ing reports of light rainfall in 
coffee-growing regions of Bra- 
zil. This was seen as relieving 
the drought which is expected 
to exacerbate next year's coffee 
shortfall caused by two severe 
frosts in June and July. How- 
ever, a report from an indepen- 
dent US weather forecaster 
saying the drought was worse 
than the last serious one in 
1985 helped to fuel the rebound 
in New York and London. 

“It’s a very, very nervous 
market," said the trader. 
“Nobody can put a firm figure 
on what the crop will be." 

In afternoon trading in New 
York, second position arabica 
futures were down 5.05 cents 


yesterday at 203 cents a pound. 
• On the London Metal 
Exchange copper prices recov- 
ered from Monday’s. foil and 
traders said there was still 
good support at $2,480 a tonne. 
Beater reports. 

Three-month copper went to 
$2,490 before easing back to 
close up $12 at $2,488.50. 

A further 23,000 tonnes foil 
in aluminium stocks helped lift 
the price but resistance held at 
$1,740 a tonne. Al uminium 
Closed up $16.75 at $1,732^5. 


UK WAREHOUSE STOCKS 

(As at Monday's dosM 
tomes 

A/umin/wn 

-29600 

to 2.166,700 

Alinfinhon sfloy 

unchgd 

at 25£C0 

Copoer 

+1.700 

ta 338,600 

Load 

*700 

£o3e8>*75 

Mcfaet 

+414 

to 147.186 

Zinc 

+4J?50 

to 1.239450 

Tin 

-185 

to 31/155 


EU urged 
to reduce 
sugar beet 
production 

By Alison Maitland 


The European Union should 
seize the opportunity of forth- 
coming reforms of the sugar 
regime to cut beet output and 
help competing cane producers 
in developing nations, accord- 
ing to a London-based develop- 
ment agency. 

The Catholic Institute for 
International Relations said in 


a report* on the regime that 
the millions of tonnes of subsi- 
dised sugar the EU exported 
each year depressed world 
prices and deprived producers 
in developing countries of bad- 
ly-needed foreign exchange. 

It urged the EU to phase out 
price support for beet produc- 
tion that exceeds domestic 
demand, compensating fann- 
ers for loss of revenue through 
other payments, for example 
linked to environmentally- 
friendly farming. The Euro- 
pean Commission is dne to 
unveil proposals for regime’s 
reform in the next few weeks. 

The charity said that the 
Uruguay Round trade deal 
driving tiie reforms would do 
little to raise world prices and 
help developing nations. A fall 
in EU sugar exports of about 
250,000 tonnes at most would 
be “a drop in the ocean” com- 
pared with its exports of 5.7m 
tonnes last year and would 
unlikely raise world prices by 
more than 0.5 per cent But 
cuts In EU support prices trig- 
gered by the Gatt requirement 
to reduce subsidised exports 
would have a disproportionate 
impact on former colonies 
which have preferential trade 
agreements with the EU under 
the Lomd convention. “For the 
high-cost ACP producers of the 
Caribbean, even a small price 
foil would have serious conse- 
quences,” it said. 

* Sugar: Europe's bittersweet 
polities. Available from CUR, 
Unit 3, Canonbitry Yard, 190a 
New North Road, London N1 
7BJ. 


US launches investigation of 
EU banana marketing regime 


By Nancy Dunne 
In Washington 

The US is the latest combatant 
to enter the EU banana wars, 
claiming discrimination 
against US bananas. 

“American banana market- 
ing companies should be able 
to compete on a fur basis in 
the European market just as 
European firms can here* says 
Mr Mickey Kantor, the US 
trade representative, who has 
launched an investigation of 
EU banana marketing prac- 
tices under Section 301 of US 
trade law. 

Kantor is also considering an 
investigation of the EU 
“Framework Agreement on 


Bananas" readied with Costa 
Rica. Colombia, Nicaragua and 
Venezuela. The framework 
accord was negotiated as a 
result of a complaint filed by 
the Latin American producers 
under the General Agreement 
on Tariffs a nd Trade. 

After a dispute -settlement 
panel ruled against the EU. the 
Community agreed to modify 
its banana import regime 
which gave special access to 
former colonies in the Carib- 
bean, Africa and the Pacific. It 
granted the four Latin Ameri- 
can countries specific quotas 
based on t h e ir past share of the 
market within an overall ced- 
ing Of 9.1m frnnnt»<: from Tatin 

America. 


K ayitnr «aid the framework 
permits the governments of 
Costa Rica, Colombia, Nicara- 
gua and Venezuela to impose 
“in a discriminatory manner, 
export quotas god licenses ou 
US banana marketing and dis- 
tribution com panies *’ In addi- 
tion. it does not address the 
import licensing provisions of 
the EU-wide banana regime, 
agreed in July 1993. 

Mr Kantor said he would not 
file a formal complaint against 
the framework until it is imple- 
mented. The regime is also 
under threat from Germany, 
which argues that it discrimi- 
nates against its traditional 
suppliers in Latin America. 
Bonn has taken two cases chal- 


C aribbean banana 
exporters are relieved 
at the European Court’s 
rejection of a German chal- 
lenge to the European Union’s 
controversial banana import 
regime, but they remain con- 
cerned about possible attacks 
on their preferential access to 
the lucrative EU market 
The fears are based on expec- 
ted challenges to the EU 
regime from some Latin Ameri- 
can producers; a better chance 
of success for these challenges 
under new rules at the World 
Trade Organisation which suc- 
ceeds the G ener al Agreement 
on Tariffs and Trade next year, 
and the position of influential 
countries, such as the US. 
which oppose the regulation of 
trade on which the Eli’s 
banana import regime is based. 

“The ruling by the European 
Court is a positive sign and has 
brought the Caribbean indus- 
try some relief.” says Mr Mar- 
shall Hall, chief executive of 
the Producers’ Group, which 
markets Jamaican fruit “But 
there is danger on the horizon 
with Latin American produc- 


ers, Germany the United 
States still trying to get the 
Gatt solution implemented." 

Mr Byron Blake, assistant 
secretary general of the Carib- 
bean Community (Caricom), a 
grouping of all Caribbean 
regional producers except Suri- 
nam, agrees that there are 
“some daggers still pointed at 
the heart of the Caribbean's 
banana sector". 

One of these is a German 
legal challenge to an agree- 
ment reached in March 
between the EU and several 
Latin American producers to 
allow tariff-free imports of 2 . 1 m 
tonnes a year of Latin fruit 

“The fact that the European 
Court has rejected the chal- 
lenge to the import regime 
would suggest that this other 
challenge to the EU-Latin 
American deal will be treated 
similarly," said Mr Blake. “But 
we would be well advised not 
to make any such assump- 
tions.” 

The EU’s banana import 
regime, which was imple- 
mented 15 months ago, 
imposes the quota for Latin 


American fruit Suppliers from 
the Caribbean, Africa and 
Pacific region have access to 
the remainder of the EU’s 
needs of about L5m tonnes per 
year, tariff-free. 

The industry’s administra- 
tors in the Windward Islands, 
the source of about two thirds 
of the bananas imported by 
Britain, say they are worried 
about a lobby mounted by US 
companies which farm 
bananas in Latin America to 
maintain tire US government’s 
challenge of the EU banana 
import regime. 

One St Lucian official said: 
“The lobby being mounted by 
these large, multinational fruit 
companies, which control the 
lion’s share of the world's 
banana trade, will strengthen 
the US resolve to attack our 
access to the EU market" 

Caribbean producers feel 
most threatened, however, by 
the planned changes In the 
way complaints about trade 
will be treated when the WTO 
is established. Following com- 
plaints by Latin American pro- 
ducers, Gatt panels twice ruled 


CROSSWORD 


BASE METALS 

LONDON METAL EXCHANGE 

(Prices from Amalgamated Metal Trading) 

■ ALUMINIUM, 89.7 PURITY IS per tome) 


Precious Metals continued 

GOLD COMEX (100 Troy az.. Vtroy oz.) 


GRAINS AND OIL SEEDS 

WHEAT LCE [£ per torna) 


SOFTS 

■ COCOA LCE (E/tomeJ 


MEAT AND LIVESTOCK 

■ UVE CATTLE am HftOOObr. oemaAbi) 


No.8,5S8 Set by DANTE 


Cash 3 mths 

Close 1713-14 1732-32.5 

Previous 1690-5-95 1715-6 

Hjgh/tow 1740/1725 

AM Official 1 7165-1 7J 17353-36.0 

Kerb dose 1728-9 

Open int 258^10 

Tow doly turnover 70,769 

■ ALUMINIUM ALLOY (S per tonne) 

Ctase 

1700-10 

1735-40 

Previous 

1885-95 

1715-20 

Hlgh/tow 


1740/1730 

AM Olfida 

1697-700 

1730-35 

Kerb dose 


1735-40 

Open Int. 

3.085 


Total daily turnover 

571 


■ LEAD (5 per tonne] 


Close 

8435-44.5 

656-56 

Previous 

640-1 

651-2 

High/low 

643.5 

650.5/850.5 

AM Officfal 

643.5-44.0 

654-5-55^5 

Kerb close 


656-6.6 

Open int- 

42.783 


Total datty turnover 

8,063 


M NICKEL ($ per tome} 


Close 

6580-90 

6685-95 

Previous 

6555-60 

6665-6 

H^h/tow 

6S60 

6710/6650 

AM Official 

6560-65 

6669-70 

Kerb dose 


6665-90 

Open int. 

75.745 


Total dWy turnover 

12J18 


M TIN (5 per tonne] 



Ck&o 

£390-400 

5475-80 

Previous 

5380-5 

5460-5 

H/gtUVmr 

5395 

5490/5465 

AM OffiCid 

5390-95 

5465-70 

Knrt) ctaaa 


5460-90 

Open mi 

15.478 


Total daBy turnover 

2.790 


M ZINC, epocU high grade (S per tome) 

Oooo 

1054-55 

1074-75 

Provioua 

1Q53.5-4.5 

10735-74.0 

t+gtilow 


1070/ 1067 

AM Official 

1050-51 

1070.5-71.0 

Kerb ck>so 


1073-4 

Open ml 

1Q7.465 


Total deny turnover 

21.400 


H COPPER, grade A ($ per tonne) 


Close 

2485.5-66.5 

2488-89 

Provioua 

2461-2 

2476-7 

HighiTow 

2478 

2494/2477 

AM Official 

2477-78 

2479.5-60.5 

Kerb dose 


2489-90 

Open ire. 

215.761 


Total daily turnover 

111,847 


■ LME AM Official E/S rate: 1.6140 

LME daring VS rate: 1.8140 


Spot! 6)30 3 Wirt 1.61 16 6 ms; 1.6089 Bmtta 1^053 

■ HIGH GRADE COPPER (COMEX) 

Days 


Open 

Oow dnogi 

i Mgft tow 

tit <w 

Od 117.15 +0.45 117r*0 116.40 

1,794 223 

He* 11320 +965 

11430 1119Q 

1391 6 

Dec 11460 +085 114.80 11320 39J85 7006 

An 11425 -aS5 

- V 

B67 23 

W) 11190 *1.15 

, . 

5W 7 

Mv 11345 +1.10 

11160 11120 

1033 521 

Total 


61,259 &412 



Sen 

Days 


Open 



Sett 

Days 



Open 



Sett 

Days 



Open 



Sad 

Day'S Open 



price 

cfaage 

Bgh 

tow M 

VoL 


price 

change 

MBh 

LOW 

tot 

Vd 


Price 

dwega 

Mgfc 

Lor 

tat 

Vol 


priee 

donga ffigb Low tot 

Vol 

Oct 

389.1 

-0.7 

. 

60 

29 

ND« 

104 £0 

. 

10460 

104X0 

1.732 

96 

Dec 

939 

. 

945 

934 

22,314 

8S4 

Od 

66.775 

-8700 67.475 68500 1506 

1,998 

Nov 

389.8 

-08 

- 

- 

- 

Jan 

10080 

- 

106S5 

10020 

1.950 

63 

War 

971 

-2 

973 

966 

42J71 

Z203 

Dec 

68.400 

-8350 68125 68350 29,406 

8234 

Dec 

391 J 

-08 

3929 

391.1 84.710 16,728 

Mar 

10960 

+005 

10980 

109)5 

1373 

89 

may 

982 

-1 

988 

977 

14^79 

65 

Mi 

67.475 

-0250 67925 67.400 18945 

1267 

FM) 

394J 

-07 

395.7 

334.5 19,825 

108 

Na» 

11080 

+005 

11060 

11035 

1,465 

39 

Jot 

996 

-4 

996 

DM 

8.192 

41 

Apr 

67/575 

-8125 68050 67900 11,594 

1.145 

Apr 

3892 

-07 

3997 

3395 9140 

16 

Jd 

1 124)0 

- 

• 

- 

200 

- 

sra 

1009 

-6 

1017 

1006 

10345 

1.158 

Jop 

64.525 

-8075 64.750 64.425 1070 

188 

JUB 

40U 

■0.6 

mo 

4095 10/22 

112 

Sep 

9050 


- 

- 

40 

- 

Dec 

1027 

-2 

1028 

1 028 

B&4 

5 

Ang 

63.775 

•8075 63950 63.750 !J62 

82 

Total 




180372 17,304 

Total 





7,120 

299 

Total 




1103S2 4,397 

Total 


68104 10999 

■ PLATINUM NYMEX (50 Troy Qt; SAray oc-1 

■ WHEAT C8T p.OOObu min; cents/BOfe bushel) 

■ COCOA CSCE (10 tonnes; S/torms) 


■ UVE HOGS CME WLOOOtbs; cents/bs) 


Od 

419.7 

. 

4205 

419L7 148 

11 

Dec 

394/6 

-3/2 

402/D 

392/0 45352 11306 

Dec 

1296 

+11 

1298 

1282 

14S46 8^33 

Od 

38250 

-8475 38700 28975 606 

SZ7 

Jan 

421J 

- 

422S 

421-0 10506 

1809 

Uar 

404/0 

-a/G 

412/0 

402/0 21399 

4395 

Ibr 

1345 

+12 

1347 

1331 

11337 2J31 

Dec 

31425 +8D2S 31775 31075 18051 

4946 

AW 

425.7 

- 

- 

- 3^59 

302 

■ay 

382/2 

+-8M 

388/0 

380/0 

3335 

630 

Btoy 

1371 

+12 

1360 

1365 

4fi2S 

540 

fab 

36.100 

- 38400 35.650 8857 

1937 

Jut 

430.1 

+03 

- 

- 661 

- 

M 

349/4 

-4/2 

35343 

348/4 

83S* 

1,107 

Jri 

1400 

+12 

1396 

1396 

1509 

85 

Apr 

38250 

-8025 38550 38100 3940 

537 

Oct 

4310 

+0.4 

- 

- 335 

- 

sep 

353/0 

■5/0 

354/0 

3510 

229 

21 

Sap 

1429 

+12 


- 

832 

3 

Jon 

41400 

-8025 41900 41975 19B4 

331 

Jan 

4390 

+04 

• 

2 

- 

Dec 

3C/D 

-4/D 

383/4 

361/4 

132 

3 

Dec 

14*5 

+2 

1445 

1445 

839 

17 

Aog 

41.450 

-8060 41500 41.150 300 

43 

Total 




28X11 

2.122 

Total 





80,152 17,782 

TeW 





3450211,123 

Total 


32902 

88W 

■ PALLADIUM NYMEX (1 00 Trey oz.; S/troy ozj 

■ MAIZE CBT (5.000 bn mire cents/Sflft buaheQ 

■ COCOA PCCO) (SDfl'sflDfinri 



■ PORK BELLIES CME f40.000tber centeAbri 

Deo 

156.05 

-040 

15075 

15560 4S62 

304 

Dec 

215/0 

-V* 

216/4 

214/6124,183 

19416 

Od 17 



Price 


nw. *r 

Mi 

38450 +0800 88100 37.400 8665 

1927 


War 1S7J05 -0.40 - - 1,525 15 

Jn» 156.15 -0.« 152 

ToW *239 319 

■ SILVER COMEX flOO Trey ca.; Cent e/trey az.) 


PRECIOUS METALS 

■ LONDON BULLION MARKET 
IPncea supplied by N M Rottechfltf) 

Gold (Troy oz.) S pnee C eqtiv. 

CtoSS 389.30-389.70 

Opening 390.20-390.60 

Morning 1U 390.00 242.071 

Atterrason fl* 389.75 241.406 

□ay’s ttgh 390.20-390.60 

Day's Low 369.30-389.70 

Piehous dose 339.00-S89.40 

Loco Ldn Mean Gold Lending Retaa (Vs USS) 

1 month . .4.58 6 montti 

2 months — —..4.63 12 mom 

3 months ,4.78 

S8w Fbc prtroy as. 

spot mas 

3 mourns 34055 

fl montw 348.15 

1 year 358-65 

Odd Coins S price 

Krugerrand 392-395 

Maple teal 400.10-402.6S 

New Sovereign 91-84 


Dd 534.7 -80 - 1 

Itov 5381 -59 

Dec 5382 -83 544.0 S385 61.476 14.499 

Jin 5486 -83 5470 5479 74 25 

Iter 6487 -83 5580 5485 14,674 1922 

may 5529 -83 5585 552.0 4929 128 

Total 113908 18133 

ENERGY 

■ CRUDE OIL NYMEX (42900 US gaits. S/baireD 


Uteri 

DaiTs 



Open 



Price 

change 

Ugh 

Lot* 

tc* 

Vri 

Nov 

1797 

♦831 

1799 

17.06 43395 32,114 

Dec 

1790 

+828 

1793 

1792 97923 

41.570 

Jan 

1793 

+822 

17.54 

17.40 56,062 11J08 

f* 

17-54 

+820 

17.54 

I7M 33J19 

3.433 

Iter 

1752 

+815 

1798 

17.49 22.720 

1.631 

Apr 

1795 

+0.1S 

1793 

17.50 

17.104 

2,171 

Total 




41S944 07908 

■ CRUDE OH. iPE(S/barref| 





1 jtftuf 

Bayt 



Open 



price 

Change 

Wgti 

law 

M 

Vol 

Dec 

16.18 

+028 

1828 

16.00 

77.702 

11953 

Jm 

1816 

+822 

1633 

1806 28127 T8386 

Mi 

1813 

+819 

1817 

1807 

18711 

2921 

Mar 

7812 

+0.16 

1812 

16.05 

8498 

1943 

Apr 

1615 

♦817 

1815 

1803 

8=44 

125 

May 

1809 

+808 

1699 

1809 

3.402 

42 

Total 




130,708 34954 

■ HEATING OR. NYMEX (4290Q US (pA&; C/IIS gafisj 


Latest 

Day* 



Open 



price 

change 

Hgh 

Lmv 

int 

Vri 

Nov 

4790 

+865 

4795 

4725 28037 

10.127 

Doc 

4860 

+065 

4875 

4805 

43918 

7,707 

Jan 

43.45 

+860 

4160 

4825 31,968 

3942 

Fen 

5800 

+0 50 

5800 

49 SO 

17.656 

724 

Mar 

5810 

+090 

S810 

4890 

11909 

010 

Apr 

49.78 

+860 

- 

- 

8657 

510 

Total 




188223 nap* 

■ QAS OIL PE (Stone) 





Sett 

Day^ 



Open 



price change 


tree 

tat 

vw 

Nov 

159.25 

+835 

15090 

14995 33,010 

5961 

Oec 

15190 

♦0.50 

152.75 

151.2b 

25.721 

2900 

Jan 

15390 

+825 

154.50 

15150 

18.431 

1907 

Fc& 

15800 


15590 

154.75 

8941 

552 

Mar 

15595 

*025 155.75 15550 

8731 

ses 

V 

15490 

+025 

154.75 

154.00 

2254 

158 

Trial 




101956 109^ 


225/E -174 228/8 22S/2 53.151 5l322 

May 233/6 -1/D 234/4 233/2 23.606 1.753 

Jri 235/0 -1/D 239* 238/2 Z7292 32M 

Sep 244/D -I/O 244/2 2<J/2 1.342 33 

Dec 24&D -0/2 2400 248/0 11,231 1 J1S 

TOW 242*17 31*86 

■ aABLETLCEg per lonfig) 




■ COFFEE LCE (SAonna) 


. 872.17 


960.48 


Mot 

10190 

-815 

10190 

101.75 

375 10 

Jan 

104.70 

+810 

- 

- 

413 

Mar 

10870 

-805 

- 

• 

130 

Bay 

10870 

♦820 

- 

- 

48 

Sep 

9800 

- 

- 

- 

2 

Do* 

9790 

- 

. 

. 

. . 

Trial 066 10 

M SOYABEANS CBT (SOOObu nth: cfirtteUXl (WSfM) 


Not 

S44/B 

+1/5 

545/4 

541/4 65,431 

28934 

Jon 

555/6 

+2/2 

556/2 

552/D 33970 

8625 

Mar 

56SO 

+2/2 

565/4 

561/4 

19,724 

2499 

May 

572* 

+2/2 

573/2 

5690 

9.057 

1/S96 

Jd 

560/D 

+2/4 

560/4 

576/2 15945 

1928 

Ang 

561/4 

+1/4 

581/4 

579/0 

786 

B4 

TotH 




151923 43918 

m SOYABEAN OIL CBT (80900/bs: oentsrib) 

Od 

2876 

♦821 

2876 

2842 

2907 

1917 

Dec 

2826 

♦831 

2828 

24.67 33982 

14963 

Jan 

2492 

+830 

2493 

24.16 12941 

3949 

Mar 

2494 

+829 

2495 

23.70 

13955 

2936 

MOT 

2172 

♦831 

2174 

23.42 10966 

1920 

Jut 

2394 

♦833 

2390 

S3 72 

6979 

1,484 

Total 





8S9S1 

2S95S 

■ SOYABEAN MEAL CST <100 torts; S'ton) 


Od 

1682 

+89 

1B84 

1639 

1,765 

1900 

Oec 

1649 

+81 

1649 

1617 44.405 

8996 

Jaa 

1686 

-81 

1659 

1683 17JB2 

2943 

Mar 

1685 

-82 

1686 

1683 

13967 

1967 

Bay 

171.6 


171.7 

1712 

7937 

912 

Jri 

1780 

-83 

1759 

1749 

6,651 

606 

TOW 





98366 

18711 

■ POTATOES LCE (E/tome) 




Not 

1580 

. 

. 



. 

Mar 

1080 

- 

- 


. 

- 

to 

2285 

+39 

2209 

2149 

1908 

175 

May 

240.0 

- 

- 

- 


- 

Jon 

1075 

- 

- 

- 

- 

- 

Total 





1906 

175 

■ mSGHT (BIFFEX) LCE (SIOAidex point) 


Od 

1875 

-14 

1885 

1875 

513 

10 

fen 

1850 

-38 

1885 

1850 

m 

32 

Dec 

1810 

-49 

1860 

1610 

189 

17 

Jen 

1730 

-X 

1762 

1730 

1,111 

27 

to 

1665 

-40 

1700 

1665 

874 

69 

Jri 

1490 

-40 

1500 

1490 

144 

5 

Trial 

Ouse 

Pm 



a.m 

160 

BH 

IMS 

1BZ7 






■w 3693 +155 3830 3093 7546 2.17Z 

J*n 3665 +177 3760 3060 13909 2®1 

M» 3583 +180 3675 3583 7,731 1,782 

M>T 3583 +2D0 3630 3563 2.749 68 

M 3550 +205 3800 3SS0 1,328 4 

Sep 3525 +22S - - 1.403 

Triri 34960 6,967 

■ COFFg XT CSCE (37 OEOtxx centa/Uw) 

Oec mao -&B5 202.75 193m 31.360 3£82 

mat 199170 4L35 207.00 1KJ0 21468 1806 

May 20EUO +025 207 JS 202JI0 7.819 238 

JM 203.10 +4X35 20475 20100 3,022 75 

Sep 203.75 +0.75 3X00 203m 1333 56 

Dae 204 jo - 1JJS - - 4J64 

TOM 74JISB 6*19 

■ COfFg (ICO) (US cenWpomm 


Ms 38.625 +0900 39.150 37.500 997 301 

May 39.600 +4L450 40300 38350 292 51 

JM 40500 +0.625 41.000 30900 276 27 

Asp 30900 +4X600 30830 30100 50 11 

Total 10289 2,217 


LONDON TRADED OPTIONS 

Strflce price S tonne — Cafe — — Puts — 


■ ALUMMUN 

P9L7*) LME 

1876 

1700 


1725 

■ COPPER 
(Grade A) LME 
2450 


2500. 


Oct 17 

Coop, rely — 
15 day range 


■ NATURAL GAS tfflBt [10000 twnBtm S/rnmfitti) 

Late* oafs Open 

price change High Low 1st M 
Bet 1865 +0012 1.880 1£45 22.102 11,005 

See UM5 +47005 1 .335 1.900 22,027 5,855 

JM 2.048 41004 2.075 ZD45 18.242 3.155 

Fefc 1020 -0.012 2.050 2.020 13291 ZJJ69 

Bar 1390 -0005 2.010 1385 11396 297 

Apr 1.955 -0.007 1.975 1355 7.096 498 

Total 148346 a £43 

■ UNLEADED GASOLINE 
NYMB (42.000 US 9*4 e/USgriiJ 


is — 5.29 


Latest 

price 

Baft 

cNanga 

wgn 

Lot 

flpwi 

Int 

Vri 

US cts eqJv. 

Not 

4145 

*037 

4960 

4845 

14576 

12,610 

541.35 

Dec 

57.10 

+153 

5745 

5690 21,460 

8.191 

54&B0 

Jan 

5855 

+031 

55.75 

5525 

12,181 

2.719 

55825 

Fen 

5495 

+OJ6 

5500 

54.65 

6991 

UI0 

573.45 

Mar 

5590 

*021 

5590 

55.00 

2.701 

91 

E equtv. 
244-247 

57-60 

to 

Trial 

5895 

+008 

5850 

5635 

4.725 

74234 

017 

26964 


Minor Metals 

European free market, from Metal &AeHn. S 
pee 5b In warehouse; unifies otherwise stared 
(last week’s In brackets, where dttnged). Anti- 
mony: 99.636. S per tonne. G. 900-6^30 (5,760- 
SJ70/. Bismuth: min aa 93%. tonne lota 3.65- 
4. 00. Cadmium: min 99.5%. 200.00-215.00 
cents a pound. Cobalt MB free market, 
99.8%, 27.00-27.90 l37.50-2B.50i: 93.3%. 
2fi.00-25.80 (26.60-28.75). Mercury: min. 
991993b. S per 76 lb Bask. 110-135 . Molybde- 
num: drammed molybdfc Oxide. 4.30-4.50 
(4.10-4.30). Selenium: min 99.594, 335-4.B5 
Tungsten ore: standard min. 6696. S per tonne 
tait (TOfcg) wo, erf. 45-55 Vanarfum: min. 
9895. erf, 1.35-1.50 Uranium Nuextib 
e xchange value, 7.00. 


Pries Pit*, tar 

1852S 17944 

190 £6 1922S 

■ No7 PREMKJM RAW SUGAR LCE (oena/tt») 

Aw 11-82 - - 90 

Mar 1187 -OJJ0 

May 1190 -008 - - 450 - 

JM 1187 -908 .... 

TWri 540 - 

■ WHITE SUGAR LCE (Vtonna) 

Dac 344J30 -050 34900 34950 3yUB 466 

Uar 33150 -1.10 34900 338JX) 93* 052 

May 337.70 -090 33900 337.20 1.780 363 

Aog 33SJ0 -1.10 33950 33SJM 1399 130 

Oct 31970 -120 318.00 31920 375 130 

Dee 31960 -1 20 4 

Total 16^73 2JJ71 

■ SUGAR *11’ CSCE tniflOOttg; centa/baj 

K« 12.72 -910 1279 12*8 91*9728,704 

May 1170 -909 1273 1287 20*01 6*50 

JM 1280 -9U 1268 1258 12307 1,750 

Oct 1234 -905 1237 1230 19820 1273 

Mr USB -904 1200 1198 1923 92 

■ay 1196-9M 9 - 

Total 13799235980 

■ COTTON NYCE (SO.QOOtos: centa/as) 

Dee 8992 +1.28 7910 6895 24982 3917 

Ms 7128 +933 7190 7065 12,483 1.181 

HW 72-33 +928 7250 71.70 8£09 96 

JM 73.05 +1.12 73J7& 7220 4,131 150 

0d 6975 +930 6995 6950 830 

Dec 6939 +940 0925 £9 SO 2JJBZ 40 

Tote 59307 5,303 

■ ORANGE JUICE NYCE (ISJlQOfcs; eenta/IW) 

HD* 1QSJ0 -935 10790 10130 5,129 1,595 

Jan 10980 -936 111.00 10955 8.429 4,173 

Mar 11200 -930 114.00 111.60 5,145 912 

May 11925 -935 11735 11535 1363 148 

JM 118AS -0.15 11975 11950 775 80 

Sep 121 3D +905 12230 12130 362 87 

Tata 23306 7310 



3660. 


M COCOA LCE 

926 

950 __ 

975 

■ BRENT CRUDE 1PE 

1600 

1950 

1700 __ 


Oec 

78 

64 

51 

Dec 

02 

66 

45 

NOv 

143 

S3 

47 

DSC 

34 

21 

13 

Nov 

1 

3 


M tr Dee Mar 

110 30 55 

07 40 66 

64 52 78 



Mar Dec 
119 50 

96 73 

75 103 

Jen Nov 
333 - 

SOP - 
283 4 

Mar Dec 
83 20 

68 32 

57 49 

Dec Nov 
66 1 
31 4 

17 


Mar 

91 

116 

146 

Jan 

216 

242 

268 

Mar 

37 

48 

61 

Dec 

34 

84 

101 


LONDON SPOT MARKETS 

■ CRUDE OIL FOB (per barral/Dec) +or 


VQUJME DATA 

Open interest and Volume data shown for 
contracts traded on COMEX. NYMEX, C8T, 
NYCE. CME. CSCE end IP6 Crude Oil are one 
day In arrears. 


INDICES 

■ RBJTB4S (Base 18/9/31^100) 


Oefia Oct 17 month age year ago 

2Q80A 2060.7 21194 1582.5 

; crb Futures (Base: 1967*100) 

Oct 17 Oct 14 month ego year ago 
229*8 22928 229.41 21946 


Duori 

8l4.94-6.01z 

+0965 

Brent Blend (dated) 

SI 8.15-6. 19 

+0420 

Brent Biend (Doc) 

S16.18-99CZ 

+0975 

W.TJ. (1pm eat) 

S1790-7.43Z 

+0905 

■ OU. PRODUCTS NWEprempt dWvery Of (tomri 

Premhra GasoAne 

SI 75-178 

+3 

Gas 01 

$160-151 

-2 

Heavy Fuel CS 

S91-S3 


Naphtha 

SI 71-172 

+2 

Jst fuel 

SI 72-174 


Oesri 

S1S-15A 




■ onet 



Gold (per troy 

$38990 

+OJQ 

Siver (pur trey oz)A 

538J50C 

-1.00 

PtaSnwn {per troy ozj 

S41H9S 

+2.00 

Palatum (per trey oz.) 

SI 54.75 

+125 

Copper (US pred) 

121.0c 


Load {US prod.) 

3ai5c 


Tn (Kuris Lumpur) 

13.68c 


Tin (New York) 

2535c 

+1D 

Cottle (live wriswt 

118.14P 

+1.63- 

Streep (Bve rea/ghlTfA 

sn^op 

+1-2T 

Pigs give weight) 

7fl.14p 

+047" 

Lon. day sugar (raw) 

$318.6 

+72 

Lon. day sugar (wte) 

S352J 

+4 JS 

Tale & Lyte export 

E310.0 

+4.Q 

Barley (Eng. toe d) 

Unq. 


Maize (US No3 Yellow) 

S1329y 


Wheat (US Dark North) 

E165.0U 


Rubber (Nov)¥ 

91J»p 

-1.00 

RiAber iDecjf 

90. SOp 

-120 

Rri3ber(KLHSSNoi JuQ 

3519 

-as 

Coconut Of (PhB)§ 

$8Z £5u 

+72 

Palm Ofl (Malay .)§ 

S63CUB 

+iao 

Copra (Phi0§ 

$406JJv 

+120 

Soyabeans (US) 

eisaov 

+12 

Colton Outkxjfc'A’ Index 

73.60c 

-020 

Wootops (84e Super) 

43Sp 

+2 


ACROSS 

1 Row results from wearing an 
underwtred bra (4-2) 

4 N.C.O. arranged battle course 
(8) 

9 Behold, two articles to dislike 
<5> 

10 Noise - of a dropped brick? 
( 8 ) 

12 Poor clot breaks the rules of 
etiquette (8) 

13 Hunger is sharp about morn- 
ing (6) 

16 Trotsky came back for the fes- 
tival (4) 

16 Alcoholic daze? (6,4) 

19 Law-breakers may be carried 
away by it (5.5) 

20 Not the gardener's favourite 
little number (4) 

23 A great number not related 
(6) 

25 Stop whan the standard is low 
(4,4) 

27 It can’t be shared with others 
( 8 ) 

28 Swindle uncovered in the 
courts (6) 

29 Mountaineer has an Inclina- 
tion to swallow a peg (8) 

30 Remained, having support (6) 

DOWN 

1 Today's most popular writer 
(7) 

2 Flattery works with neigh- 
bours, we hear (4,5) 

3 Open an eye? (6) 

5 Well-produced paintings? (4) 


6 But he's an odd sort to get 
tanned (8) 

7 I wander up to the New Zea- 
lander (5) 

8 Listener heads home in deter- 
mined mood (7) 

11 Garment finally put on by a 
painter (7) 

14 Sedately, the way Lydia did 
the twist (7) 

17 Chill wine with Anris of the 
turkey and cold game (3,6) 

18 Sort of key found in a cup- 
board (8) 

19 It’s deeply opposed to the 
devil (4.3) 

21 Gave a fellow the wrong date 
(7) 

22 Horrified at being cut by 
jagged gash (6) 

24 Kind of bulb to recommend 
about the middle of July (5) 

26 The chances of racing (4) 
Solution 8,587 


UCIHQQQOiaQQQDBG 
Q 
a 
Q 
□ 

Q 
Q 

a 


ANNUNNPNN L 

ILIVIEIRIAIOB 


HEIRISTeI 

mum 

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IhIrIiIhIkI 

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mE iRlMlYl 


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Fa p[eIr[d]a[r i 

EMaHmJB 

FR EMLlAiPM 

mBIOJK 

O l UlTlO R o r 

MB nHmBSmB 

[O EM UIK I AIS L 

NBMBnJH 

[1 a[dibio1d(t1 


C p«r term iBiass rtheratM sbmL p parcoftg. c C4»ta/B. 
r U M), m Uateystei renata- y OcKfec. v NoHOao. u 
Oc W ot. : Ow. I New. f Union Pltyrieri. 4 OF hn- 
dam. f Biflon doae. 4 ShMp yjM aaigm criooi. - 
Qmige on wwfc C Pttoea an tor pntoaa day. 


Of brnking ami fobbing the Pclikan's ftni. 

Set how suveily he pula j/our word onto bond- 

SfclUun i© 


JOTTER PAD 



lending the quota system to 
the European Court. Kantor 
called on Latin American S0£ 
ernments to work with .Uie US 
in seeking reform of the EU’s 
banana policy. But he threat- 
ened an investigation if any of 
the governments implements 
the framework pact "or takes 
alternative steps that appear to 
be unreasonable, unjustifiable 
and discriminatory against US 
companies". 

Section 301 allows US compa- 
nies - In this case Chiquita 
Brands International and the 
Hawaiian Banana Industry 
Association - to ask the US 
government’s help in gaining 
relief from “unfair trade prac- 
tices". 


A storm brewing in the Caribbean t 

Canute James on banana exporters 9 fears about EU market access 


ki&acK 

,iinig s 
*t or 


that the EU’s import regime 
■was unfair. However, neither 
ruling was adopted as they did 
not have the necessary consen- 
sus among members. Under 
the WTO, a similar ruling by a 
panel will be considered 
adopted unless there is consen- 
sus among members that it 
should not be. Guatemala, 
which did not agree to the new 
quotas for Latin producers, has 
already indicated that it will 
make an early complaint to the 
WTO. 

Caribbean banana exporters 
are aware that the new trade 
rules will force them to com- 
pete with other producers on 
the same terms. The necessity 
to cut production costs is 
accepted, but difficult to imple- 
ment. according to the indus- 
try’s administrators. Small pro- 
ducers on the islands cannot 
hope to eqjoy the economies of 
scale of the Latin American 
multinationals . 

“There will have to be a 
change in the relationship 
between producers, administra- 
tors and those who market the 
fruit," says Mr Blake. 


j.,.. 

"■■-J'lr,, V- Txii 




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t 

h, ■ a. 


is. 




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p 


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St*. Wi’ IVS I’M 



FINANCIAL TIMES 


WEDNESDAY OCTOBER 19 1994 


y*; t -j- 


‘-A i»«7v i • : 

•; • 

-- 

*.i« r,V--- _• - 

i«- >■ - 

y : 5?-* 

TV- T- 

:t Vs- 

■M* * J r • 

*•'*■*■ : ' 


■.i- ■ • - ■* 


CROSSWORD 


+ 




m * m * 


ii 

ii 

m 

ii 


% 


ii 






r 



warket report 


FT-SE 3,100 mark lost again in nervous selling 


FT-SE-A Afl-Sfnire faxtax 


1,950 


the Caribbeu 

*' 1 1 


By Terry Byland, 

UK Stock Market Edftoi* 

Renewed weakness in domestic 
bands, together with a general ner- 
vousness towards the US dollar, 
drove the UK stock market well 
below the 3,100 mark on the FT-SE 
100-ahare Index yesterday. Pears 
that the next rise in base rates 
Bright come sooner than expected 
was prompted by a report from 
members of the Confederation of 
British Industry of a very sharp rise 
in retail sales last month. This 
morning brings the official retail 
sales statistics for September. 

Trading volume remained poor 
and the closing picture was gloomy 
rather than threatening, with the 
pharmaceuticals sector depressed 
both by dollar sentiment and a fell 
in SmithKline Beecham following 


the third-quarter trading statemen t 

At the dose, the FT-SE 100 
showed a drop of 319 at 3,0855, a 
few points above the day's low. 
Equities were on the slide from the 
opening, but the lasses in the blue 
chips were extended sharply when 
reports from Japan - quickly 
denied - suggested that US mone- 
tary policy would hold steady rmtn 
the year-end, implying no further 
increase in key rates by the Federal 
Reserve. 

In spite of the denials of the 
Tokyo reports, global markets 
remained cautious towards near- 
term prospects for the US currency. 

The Dow Average, also reacting 
to trading results from leading 
names in the US banking and man- 
ufacturing industries, showed a Ml 
of 12 points when London dosed. 

The UK equity market started the 


day a shade easier and then quickly 
fell away as both gilt-edged stocks 
and stock index futures gave 
ground. The latest Public Sector 
Borrowing Requirement figures and 
then the announcement that next 
week's bond auction would be 
£L5bn of 2000 stock left gilts easier 
at the dose. 

The trading statement from 
SmithKline Beecham would have 
gone down well but tor the disclo- 
sure that sales of Tagamet, its high 
s elli ng anti-ulcer drug; bad fallen 
heavily after expiry of the US 
patent. 

Patent expiry is a background 

worry for all pharmaceutical manu- 
facturers and the implications of 
Tagamet's fortunes were not lost an 
Glaxo and other drug fines, which 
were already unhappy because of 
the worries over the dollar. Palls in 


these blue chip internationals affect 
the Footsie index Significantly. 

Activity in the big dollar-eanung 
stocks helped to boost the day’s 
Seaq volume total by nearly 15 per 
cent to 527.8m shares, but tbis was 
still a poor total by this year's daily 
averages. Traders confessed to an 
uninspiring session, with the stock 
market driven from the futures pits. 

Business In second line or non- 
Footsie stocks made up about 64 per 
cent of the day's total, a hi g he r pro- 
portion than seen recently. The 
FT-SE Mid 250 index finished 15.7 
off at 3JS82& 

Retail and consumer stocks chose 
to pay more heed to the market's 
fears of a base rate increase t h un to 
the CBTs indication that Septem- 
ber's retail sales had risen at the 
highest rate for nearly a year. Most 
of the big retailer stocks were down 


at the dose, albeit following modest 
turnover. 

The stock market’s mood of 
uncertainty was higbUghteti in the 
latest Economic and Monetary 
Review from Credit Lyonnais Secu- 
rities. The review predicted that the 
cyclical growth peak may have 
already passed, with consumer 
spending in particular likely to 
remain disappointing; Credit Lyon- 
nais sees the UK economy as likely 
to grow by only JL5 per cent nest 
year. 

But the firm remains confident 
that UK equities “now offer fair 
value 1 * and looks for 10 per cent 
upside by the end of the year, 
echoing many other forecasts from 
market analysts that the final 
quarter will see shares benefit 
from the increasing pace of eco- 
nomic recovery. 



Equity Sham Traded 

Tunmr by mkm fttA. gxduong. 
Intm-ntefcel bunnac* and cwtw turnover 
1,000 — 



buncos and ratios 


FT-SE 100 

FT-SE NW25Q 

FT-SE-A 350 

FT-SE-A AB-5hara 
FT-SE-A All-Shan) yield 

3085.3 

3532.3 
1547.9 

1534.40 

3.01 

-34^ 

-1S.7 

-15.1 

-14.05 

(3A7) 

FT Ordinary index 2373.9 

FT-SE-A Non Fins pfa 18.87 

FT-SE 1 00 Fut Dec 3100.0 

10 yr QBt yield 8.63 

Lor« gKMquity ytd ratio; 2 Jt\ 

■26.5 

119.05) 

-40.0 

(8.56) 

21 

Best performing (rectors 


Worst pertonetafl aectori 














+0J5 



5 Retailors, General 


-0.1 

5 Pharrraceuticato 

.5 


Setback 
in drugs 
sector 

Pharmaceuticals heavyweight 
Glaxo Holdings led the fall in 
dollar influenced stocks yester- 
day. The US currency's two- 
year low against sterling, com- 
bined with bearish sector- 
related date, saw Glaxo shares 
marked down 23 before rally- 
ing to close 1GK off at 508%p 
after 5.4m traded. 

The drop was accentuated by 
some slightly disappointing 


third-quarter figures from US 
leader Merck. Also, a sharp fell 
in US sales of SmithKline 
Beecham *s ulcer drug Taga- 
met, highlighted in the group's 
third-quarter figures, had 
prompted fears that Glaxo's 
headline ulcer product Eawtac 
could be facing stiff competi- 
tion as well However, it was 
pointed out that recent pre- 
scription data showed Zanta c 
sales holding up well in the 
US. 

SmithKline declined 6 to 
429p, while anticipation that 
Cadbury Schweppes might buy 
its Ribena and Lucozade arm 
saw Cadbury firm a penny to 
445p. Wellcome receded 9 to 
finish at B71p. 


Enterprise hints 

A generally weak oil sector, 
depressed by the recent slip- 
page in oil prices as the Iraq/ 
Kuwait border worries receded, 
was featured by a sudden bout 
of selling pressure in Enter- 
prise Oil after rumours that it 
was about to launch an £8O0m- 
plus all-paper bid for Ampolex, 
the Australian oil group. 

Enterprise said it never com- 
mented on market rumours 
but sources dose to Enterprise 
described the story as “without 
foundation". 

The stories swept the market 
in midsession. Enterprise 
shares opened around 385p but 
fell away to close a net 8 lower 


at 377p on unremarkable turn- 
over of 1.5m. Oil specialists 
said a bid seemed unlikely but 
would fulfil many of the objec- 
tives evident when Enterprise 
unsuccessfully bid for Lasxno 
earlier tbis year, citing 
Ampol’s strongly rising pro- 
duction profile and good 


EQUITY FUTURES AND OPTIONS TRADING 


Stock index futures moved 
tower on Improved turnover, 
but traders continued to 
describe the market as 
oscillating with little real idea 


of direction, writes Jeffrey 
Brown. 

The FT-SE 100 December 
contract fell to 3,090 in the last 
hour of trading but had dawed 


■ FT-SE 100 WDBt FUTURES (LJFFE) E2S pot M Intiax poW 


(APT) 


Open Soti price Change High Low Eat vof open UL 
Dec 3137 j0 31000 -400 31370 30900 14297 56314 

Mar 3123.0 -40.0 0 3766 

■ FT-SE BOP 2SOMIDEX FUTURES itJFFQ CIO per fJ Index point 


Dec 


36000 36600 -200 36600 35500 


20 


4224 


■ FT-SE MPZSO INDEX FUTURES tQMLXl CIO per M index point 
Dec 36500 

Al open intern* Agues are far previous day. f Exact vofems shown. 


■ FT-SE 100 MDBC OPTION flJFFgj C30B3} CIO per Mi Index point 

2900 2950 3000 3050 3100 3150 3200 325D 

CPCPCPCPCPCPCPCP 
Oct IB7 1 * 1 139 I 90 2 fi 7% 12^ 27 2 67 1 117 1 107 

lift 200 12 1« 19 f2B^29>2 91 4ft ® 66^ 4D 95 2ft 130 13 171 

Dec ZBh 2ft 10ft 3ft 13ft 52 120 7ft Oft 92 66 lift « 14ft 3ft 105 

Jen 248 39 M2 • S3 *79 0ft MO 8ft 1W 107 82 133 71 ISO 

Juit 30ft 76 2* 110 166 150 141 205 

Cm 3*6 Me 7,470 

■ EURO STYLE FT-BE 100 INDEX OPTION {UFTQ ElO par Ml W« polffl 

2925 2976 3025 3075 3125 3175 3225 3273 

Oct 192 1 lift ft 6ft ft 23 14 5 44 ft 90 1 13ft 1 197 

Nor 109 15 Wft 2ft 19ft 38 7ft Sftjft 90 3ft 110 19 140 10 107 

Dec 20ft 30 167 4ft 13ft 59 IBS 7ft 77 10Tb 5ft 129 30 15ft 23 19ft 

Ifcr 26ft 63 199 Oft 13ft 135'? 99 18ft 

J«t 29ft 8ft 23ft lift 176 15ft 120 205 

Cam 1,583 me 3J7B ' UMfaj*v Ms tew. ftaatow toM w bred on atMente prices. 

1 1wv tewi rartta. 

■ EURO STYLE FT-SE MID 250 MDEX OPTION (OMUQ £10 per ftiO index point 


3400 3450 3600 3050 3000 3850 

Qet 141 6ft 115 80 91 lift 

GA 0 ft* 0 swowwrt prices and nfamas oa Mm 


3700 


3780 


TT - SE Actuaries Share Indices 


OWe 

Oct 18 chgo% Oc* 17 Oct 14 Oct 13 


Year 

ago 


back to 3,100 at the 4.10pm 
official dose, down 40 on the 
day. At this level the premium 
to the cash market was 17 
points, with the fair value 
premium around 13 points. 

Trading volume was healthier 
than on Monday, increasing to 
13,429 contracts from 11,811 
in tha previous session. 

Although there ware 
occasional flashes of 
institutional activity, the quality 
of business remained low and 
the December contract seldom 
met with any reel weight of 
selling. 

Traders said the recent 
glimmer of Institutional Interest 
was encouraging. The current, 
final quarter of the year is 
traditionally an active one for 
Institutions, they said. "What 
this market beefy needs is a 
genuine improvement in the 
quality of business,’ one 
commented. 

Stock options business also 
improved, rising to 26,685 
contracts from Monday’s 
22,778. FT-SE and Biro FT-SE 
trading accounted for 18,136 
lots. Among individual options, 
Guinness was the most active 
at 1,322 Iota dealt, followed by 
J. Sainsbury (1,017 lots) and 
Glaxo (837). 


Dhr. Earn, 
ytofcm yWd% 


British Petroleum fell 7% to 
414p on 6.6m traded, while 
Shell Transport receded 8 to 
122p. Revived worries about 
British Gas’s dividend policy, 
which were thought to have 
been laid to rest at the compa- 
ny’s strategy meeting with 
analysts and institutions at the 
and of September, came back 
to haunt Gas shares, which 


TRADING VOLUME 


■ Major Stocks Yesterday 

ft* CJoainfl 

Opto BrinajMM! 


AaOASjwjpt 
BtibSf National 
AUlFWw 
Mad DnmoQt 


Aipos 


Amoc. Bfc F0od*f 

Atone. Ett. Porta 

BAAf 

BAT htfa. t 

BET 

Eacc 

BOCt 


g 


ikvto. 


Efcnk of Scotlandf 


Bk»< 

Boofcar 
Bootot 
Bowatet 
BrttMsaiparat 
BtfahMniMf 
BriaabOaat 
MWtLond 
Bntbth Btelff 
Bunf 

Eknnah (MnXt 

Bum 

CeUa&Wtnt 
CMbuy 3ehMppest 

Ctoadonf 
ttefem Commt-t 

CDataVfcafti . 

ComtvVMont 

Cmmm 

CawtMdaf 

SfSfW 

Dfaona 

BnMn Etext 
Eaat Mktond Beet. 


jCMa „ 
Enturpdn 0>t 
BnuMUto 

na 

Him 

Ratoon & Col. IT, 

RaWf 

On Atxkiasrrt; 

BtoOMLl 


R® 

ratio 


Xdacq. Total 
ytd FMum 


FT-SE IOO 

3065a 

-1.1 

31202 

3106.7 

3141.0 

31206 

4.08 

7 M 

1678 110135 1170,49 

FT-SE MW 250 

3532.3 

-a4 

3548.0 

3643.4 

35506 

34888 

864 

5.77 

20189 10800 131869 

FT-SE ted 250 w bw Trusto 

3528.1 

-04 

3541J 

3537.B 

36501 

34858 

3.70 

826 

1843 1ia79 1313.71 

FT-SE-A 350 

1647.0 

-1/0 

1563,0 

1557.4 

15703 

1580.7 

806 

875 

1707 5158 

120095 

FT-SE SnnKCap 

179704 

-02 1800.15 1796.13 1797.73 1792.11 

028 

4/92 

2549 48/09 

1587/M 

FT-SE SmaBCap ax tar Thaata 

1765.46 

-01 176756 176582 178455 177700 

840 

5A7 

2322 4953 

1376JW 

FT-SE-A ALL-SHARE 

1534.40 

-08 1546-45 1643,11 1556.64 154552 

3^1 

862 

17JB7 5205 

1210.79 

■ FT-SE Actuaries All-Share 





Year 

Dfcr. 

Earn 

P/E Xd ad). 

Total 



Day* 






191 32D 

2.100 Oft 
W 411 

2B2 47 

710 683 

133 537 

682 330 

2300 207 

1300 250 

*00 627 

831 27H 

400 503 

HJUOO 450 
1S00 10ft 
531 353 

83 681 

flMO *1« 
IMS 3M 
moo aaft 
4^00 311 

538 205 

1.100 584 

1.000 536 
1JBQ0 290 

128 4S0 

982 527 

847 464 

SS 

S 

MOO Iffilj 

4.100 183 

813 B51 

2JSOO Oft 
3J#» 418 

1JWO 446 
988 274 

758 844 

887 212 

316 644 

330 238 

213 464 

1,700 428 

373 882 

727 aa 
148 737 

am 704 
116 472 

ICO 385 
'.BOO 377 
1/400 220 

190 17ft 
1.800 115 

1.000 138 

427 234 

381 678 

4«» 2M 
MOO 58ft 
473 333 

1JKO SI 0 

azi 421 
86* B6 ft 
7. *00 103 


+1 

-2 

h5 

10 

10 

-9 

-6 

-4 

-6 

-0'S 


-ft 

-4 

-6 

-ft 

-7 


-11 

-14 


ICBC pap toatf 


Hanaont 
HpikemCretotakt 


l&awi 

fadieqpKt 


10 MINERAL EXTRACnONflBJ 
12 Extractive (ndusotesjq 
15 06. Int a g a iadp) 

76 CB Exatoration & Pwx«11) _ 

20 OEN MAmJFACTU«ERSt2B7) 

21 Bttodng & Coreuructk>n(33) 

22 BuMng Matts * Morchspq 

23 Chamicatep3» 

34 Dhwttofled tndusitriofaCI 0 ) 

25 Boctranfc & Beet Equip<34) 

28 Engtnoartngfn) 

27 Ehgirwoting. Vahtekss(12) 

28 Printing, Pap« & PtocgC2$ 

M Textflia A AOPawtgtB 

30 CONSUMER 0000607) 

31 Brew«to9<17) 

32 Spirits, Wines & CWarafTO) 

33 Food Manotacturera(23) 

34 Household GoodsflS) 

36 Health Cara(21) 

37 PharmactoiWnatetlg) 

38 Totoaccofl) _ — 


Qet 18 chgo% Oct 17 Od 14 Oct 13 ago yteM% yfeM% raflo ytd flaw 

271838 -13 275336 ZT47J37 2769L40 2408.00 3J0 5JM 25.10 81/46 1CB3J3 

397432 -UJ *01337 399QJ4 404352 3C3T JO 323 &.18 33.98 98JJ2 109885 

268SJ58 — 1/4 2707/47 270M3 ZT22JBQ 2390.40 3J3 5.63 22.10 85L60 1097J59 

188R43 -09 1904J0 1B87J2 1907J1 19SS.70 220 t t 3M» 1091.48 

1884^5 -1C 190374 1899.11 191993 188990 4/04 5/07 2321 6688 963/SI 

1057.48 -12 1071.57 1077/87 1081/21 1151.70 a 73 524 2S.18 36L80 833C8 

1833-36 -1.1 1869.42 1K1/90 1858.83 1850/00 4.01 5.13 23/59 0630 87a7A 

2357.47 -04 2367.05 2327.77 234934 2226.10 3-83 426 28-56 7BJ8 1046.16 

1790.74 -1.9 181SJ90 182A.41 1840/41 1968-30 5.11 5.15 23.15 82.75 92037 

189423 —1.6 102422 19B0.75 1949.77 212920 398 AOS 1799 60*5 92895 

1816.48 -091830801823.11 183M9 188690 3.13 491 24,05 43.78 104009 

227925 +08 2260.72 227298 2277.15 1882-00 430 14B 80J»t 9254 111497 

2781.04 -08 280298 279997 280024 2425,40 &09 5-38 21.71 7598 108013 

162838 -02 1631,77 1638/08 1S38JS5 190390 4,14 691 1894 48.06 82199 


KfagHtort 
NASH 
LwtooJiaf 
Land SeortMt 
Lsperts 

iMlOvatot 

BSP 

London Bast 

Lotto 

i iM_ 

MEPCf 

UR 


275872 

2202.88 


230849 

S42ZM 

182494 

3038.08 

377599 


-1.1 279028 277293 278099 280740 
-1.1 222828 221498 223837 204840 
-09 287790285291 2868952851^0 
-05 231791 230842 2311.07 238940 
+03 241818 24O0LS0 238899 202490 
-09 163893 1830.73 162804 1699.00 
-19 308199 307031 3069/45 32S810 
-3-1 38S4.7B 381793 3833.81 398850 . 


4.31 

728 

15.B8 107.70 

85573 

A30 

720 

1558 61.10 

888.74 

aoi 

881 

16JO 10123 

960.15 

421 

TJB2 

1527 6429 

97515 

a. 77 

720 

1526 8222 

87424 

3.10 

321 

4259 4824 

948.70 

424 

7C6 

1541 12518 

971.43 

8.76 

9/11 

11.79 21727 

801.13 


Itok* & Swnearf 
MMancfaBacL 
UofriKn (Wtl) 
»*0 

NaHVeot Badcf 
Nrifanto Fewcrt 
Nu 

NorOi WWt WMt 
Nonriam 0*ct 
Northern Raodat 


PAOt 


41 DtatrfbuknPQ 

42 Utoure * Howlapg 

43 Madapq 

44 Atfalera. FooddQ 

45 (Malien. General 
48 SwM Senrieaa(41) 

48 nampon(iq _ — 

51 Other Sendees 8 9uslnass<g_ 


1910.15 -09 191834 191390 192845 1801.10 

2534.30 -1.1 2562.90 2SS698 258033 288690 

208497 +0,1 208298 207840 208829 181830 

280822 -09 282874 28Z792 286795 255830 

1710.13 -09 1713/49 170198 178079 187190 

185834 -0.1 1S55.46 164494 165497 180190 

1503.1? -0/4 1509/83 1609-47 151096 163590 

224035 —1.4 227242 227S94 229599 2308/10 

1248.79 -03 126876125810 125019 122190 


60 umrnes(38} 

62 BectrteUyfl 7) 

64 Gee Dtotributlon{2) 

88 TaleetwimunIcdOoneW 
68 Waterfia 
SB NON-FaiANCUUJBi^L 

70 RNANCMLSCIM) 

71 BfnkaHO) 

73 ftttmnoaCI?) 

74 Ufa AssunnafG) 

75 Merchant BanMGl 
77 Otfiar ftwncW^ 

79 ProoertyWI 


-1.1 2425.70 241 1.10 245007 2484^0 
-19 345845 2432.15 247398 216070 
-19 183497 19839S 201193 216090 
-19 208390 2066.13 2090.10 230790 
^LS 198093 i ”4 « 1M893 197790 


ao MWEsmeJT mugrsfia^ 

89 FT-S6-A AU-SHARE£868| 

■ Hoorfy movements 

Open 090 

FT-SE 100 
FT-SE Md 250 
FT-SE-A 350 


239694 
242894 
188399 
206199 
188083 

.WM -191674^21667.74166192165497 

2185.96 
2827.56 
126197 
2365.76 
272393 
162199 
146041. 

278030 


-07 2188.13 217991 220698 2311.10 
-09 288196 284598 2882^6 2853.70 
-0.7 127088 1289L22 129498 146890 
+0.1 238490 M6WST 2432.10 277020 
Jin 274994 2755.70 57757.06 317S90 

-07 1634.70 1837.02 1636.44 162290 

-na 148035 1483.17 1 473981 ffl&ip 



1JV0 

2.400 

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174 

4.700 


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1900 

1900 

14 

410 

48 

788 

408 

387 

880 

1.000 

848 

4.100 

air 

2.100 

3900 

407 

002 

64 

2900 

87 

1900 

737 

*900 

08 

1900 

2T3 

227 

1900 

106 

273 

4.100 
721 
440 

1/U» 

86 

1.600 

214 

1900 

3900 

1900 

887 

338 

1.100 
3,100 

1900 

1900 


818 

481 

717 

388 

232 

188 

284 

173 

308 

820 

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087 

483 

586 

105 

BM 

717 

4*3 

330 

5M 

151 

874 

13* 

182 

428 

141 

784 

493 

7W 

135 

ITS 

an 

m 

242 

694 

747 

20« 

780 

aoe 

815 

188 

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311 


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1394 6331 
2917 *092 841.15 


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s+nf 11900 

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18822 1680.1 1 %tl ^ Z87D.9 2873.6 2866* 285M 2862.7 2887/1 -24.7 




WtowMto 

IMtoConcon 


mum MfemaMn on the FT-SE Actt 

^twamnofan^o 


1200 

117 

-3 

1200 

334 


338 

633 

-4 

034 

1003 

13 

BBS 

210 

-4 

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Uft 

-h 

1200 

M 


aa» 

119* 

-s 


307 

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H 

489 

+1 

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20ft 

-ft 

an 

89* 

-9 

BOB 

m 

-a 

WB 

844 

42 

72 

610 


137 

641 

-a 

1,100 

4000 

330 

-6 

150 

-6 

1200 

MS 

-4 

304 

764 

-0 

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802 

-7 

m 

520 


4200 

83* 

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VeriaMedeo. 

YOrMNwHUer 

2000007 

Baaed on Mng wotam far ■ Htocdn of odfaf 
eeoutoee (fatot m<xx)h no 9EW3 ejietam 
fMfantq' mtf UCtaa Ttodet to one rafcn or 
mom an lemied «*■>■ t Mtoto en FME 
itn index hmb»wi* 


relinquished 5% at 286p. 

APV active 

APT, the food processing 
equipment group which took 
the market's breath away Last 
month with a profits warning 
and a dividend cut, shed VA to 
72ftp on 3.1m turnover foDow- 
ing the resignation of Mr Clive 
Stronger, its chief executive. 

The shares, I38p earlier this 
year, are now just 1% above 
their 1994 low and on under' 
standable tenterhooks ahead of 
the completion of an internal 
operating report due to be sub- 
mitted to the management 
towards the end of next month. 

Household products group 
Paterson Zocboms tumbled 51 
to 438p as the group warned 
that future profits would be hit 
by problems in Nigeria. 

Focus on the latest CBI sur- 
vey of retail trades lay behind 
the moves of several stores 
stocks, with Boots, the chem- 
ists chain, turning around 
from being 5 up to show a net 
loss of 4 at 527p as it was 
reported that sales volume In 
the sector had fallen. But 
Lloyds Chemists was boosted 
by 8 to 321p as the company 
held presentations in London. 
At the other end of the scale, a 
boost in clothing and shoe 
sales lifted Sears 2 to I07%p. 

Bank shares attracted heavy 
interest throughout the ses- 
sion, with NatWest Securities 
promoting a buE story in the 
sector by upgrading its stance 
to outperform and recommend- 
ing the “lower rated domestic 
stocks” - National Westmin- 
ster, TSB and Bank of Scotland 


NEW HIGHS AND 
LOWS FOR 1994 

NEW MOHS (I7X 

WVER3BWD WIX9 fr] \*<B*CKXl BJOCIBNC 
t SUBCT BOUP ft) Ertc*KJn (LM.), 6NO, 
VEHICLES P) ArtfcM SMNUtom. EXTRACTIVE 
MBS |Q FOOD HANUF (1) CPL AraflW, 
nwamiENT COMPANIES flj Omni Otonte. 
LOStlHEA HOTO3P) PtvM LJOytL YCX LIFE 
ASSURANCE (i) 1/bORV Ufa AMoc. «# AMca. 
HEIM (1) VortofM Tyne-Ten IV. 
PHAAHACBIT1CALS D) Atom ft Bn> Bfatacfi 
PmWX PAPER fi PACKO (1) Sa pel. 
THAIWORT (riGRT Bn Sb^woncrt. SOUTH 
AFRICANS 0) KASOL 
NEW LOWS (741. 

BANKS (T) Utstofahk BULOMS fi CNSTRN (1) 
SB fi EA. BLDQ HATLS « UCKTS (Q Bardon. 
Dnen (J. ■ JLOo. A Hejnmri WKanvi TSorii 
CHBMMLS (l| Muteon ML DttnMNITOra 
n BtoKEtoy Uonr. Lex Semen, Pany. Rom, 
WVH1BMD HU (1) BTR Nrtte. ELECTfWC 
A BLBCT EQUP (1) JOfanor) Bectrtc. 
EMBWEBIMa m HwOtas. Mu Naotnxwa 
Teen, fteepect Kto. w —w a. EXTRACTIVE 
INBS m WEALTH CARE flj TepoN Ufe 
Sctoneeo. NOUNMX9 00008 CQ Ptoamn 
ZoetML Da A MV. ntSURANCE If) AAtetoan 
GUa amSIMBIr TRUSTS PI F»mr& Mac Ex 
too. Beoutor VMM. Spnwe toe, ■MBSTMOfr 
COWAMES 88 LBSURE A HOTELS (3) 
BnnteMe AgongHn. Pltorn LeSira. SfacWr 
(WhlJ. U« ASMJRANCB *1) Lfacofa NHL 
MBNA n Hocfttor tafin. Ptortwnoum fi 
SmtorimL MIMOO. UOWKANT BANKS H) 
Wtotfiat, OB. EXPLORATION fi POOD (6 
BtfMpeefi Nflrtb San Amts. Oceania. 
PWoncrtnC Ran OTHER FWANCIAL (I) Onry, 
Btrch s Noble. PHARMACEUTICALS (1) 
Qrvnptei. PHTHO, PAPER fi PACKS 80APL 
Bonxoae, Brt. Thanttm. Btam, OdfaMn Poe*. 
Lanan UMan. PVte, Ak». PROPERTY (R 
Chnartfakl. CfanMThnL Property Tiuk 
[PVH RETAILERS, POOD (1) Dairy Farm. 
RETAILBU, CBBUL C6 Cams, Rykv 
Ffanars, SUPPORT SERVS (V Auto’ied 9oc, 
Mwro 4. Mcoomto hSOh 1EXIUS fi APPAREL 
n CntM MB, PBridand. TRANSPOffTB 
Bxftmol Unlov Meynn McSdena. VtxL 
AMQBCANS (Q- 

- and shifting Abbey National 
from “reduce” to “hold". 

NatWest bank ratings are at 
their lowest levels since the 
mid-1980s, the operating envi- 
ronment is improving and 
there is increasing scope for 
value to be passed to share- 
holders through increased divi- 


dends or share buy-backs. 

TSB was the best performer 
of the group, moving up 2 to 
220p, while Bank of Scotland 
settled 3 off at 205p and Nat- 
West 6 lower at 5Qlp. 

Royal Bank of Scotland out- 
paced the rest of the banking 
sector and was one of the best 
performers in the FT-SE 100 
after buy recommendations 
from Credit Lyonnais Laing, 
the bank’s own broker, and 
UBS. B5BC rallied strongly 
after the bout of selling pres- 
sure induced by the recent 
weakness of the dollar. Dealers 
noted heavy switching from 
the Hong Kong-registered 
stock to the UK-registered 
stock, where the spread came 
in from around 22p to 5p, the 
narrowest margin for around 
six months. 

There were some hefty losses 
across the board in the “recs", 
with the market reacting to 
suggestions that a big switch 
programme, involving big 
blocks of most of the “recs”, 
was about to be activated, with 
one big institution looking to 
move large sums into gills. 

Property group Artesian 
Estates, part of the Business 
Expansion Scheme and intro- 
duced by broker Peel Hunt, 
closed at 71p in first day deal- 
ings. 

P&O, which has bad a strong 
run since the middle of last 
week, ran out of steam yester- 
day following a negative move 
by James Capel, which 
switched its stance from 
“hold" to “sell" and pushed the 
shares down 23 to Gl5p in 4.1m 
turnover. 

'The stock now looks to he 


subject to a significant 
two-way pull, with UBS and 
Panmure Gordon known to 
fovour P&O, which with debt 
gearing roughly double the 
Footsie average is looked upon 
as an interest rate-sensitive 
play. 

British Aerospace, up 28 on 
Monday on speculation that 
GEC was teeing up a takeover 
bid, retreated 14 to 484p in 
spite of the fact that the 
marketplace continued to place 
some store in the rumour. GEC 
slipped 6 to 289p. 

BAe has made an agreed all- 
share offer worth 1335p for sub- 
marines group VSEL, a deal 
that has flushed out GEC has a 
declared potential counter-bid- 
der. The feeling in the market 
is that GEC could comfortably 
leap-frog this situation and aim 
straight for BAe. VSEL eased 8 
to 1315p. 

Europe's largest aircraft and 
passenger handling group, Ser- 
visair, held its ground on the 
first day of share trading in 
London. Sixty per cent of the 
shares were floated at 135p 
apiece by Securum. the Swed- 
ish asset management group. 

The stock began trading at a 
3p premium and closed 
unchanged at i38p. 

Carlton Communications 
added 3 at 844p as Goldman 
Sachs published a note point- 
ing out the short term value in 
the stock. 

MARKET REPORTERS: 

Stove Thompson, 

Peter John, 

Jeffrey Brown. 

■ Other statistics, Pago 23 


LONDON EQUITIES 


I LIFFE 

EQUITY OPTIONS 





Option 

Oct Jm Apr Oct An Apr Option 

tor M May Nov RA Msy 


RISES AND FALLS YESTERDAY 


Wees 


Fate 


Serna 


AHDtosq 580 12 - - 8M - - 

r®3 ) 638 1 - - 47» - - 

Ann# am ibh im zz zw hh is 

ran) 280 2% 10H 17H 15H 26H S0V4 

ASM ao B 7 ■ 1 3)4 5 

(TO) 70 1 3 I 7M 9 It 

BritAkwm 360 21 32H 43 2 13H IBM 


1*377) 

390 

3 

17 

28 

15% 

29 

34 

SMBdsA 

420 

11 

27 

36% 

5 

10 

26% 

r*«j 

460 

1 

n 

ia 

34 

44 

50 

Boats 

500 

30 

40 

S3 

IH 

10% 

18 

CS27J 

550 

Z 

14H27H 

Z9M 

38 

43% 

BP 

390 

2714 

37 

4B 

1 

854 

14% 

(MIS) 

420 

4M 

ISM 

2B5i 

9M 

22 

28 

BtoSU 

160 

5 

12 

19 

3 

8ft 

lift 

n«!) 

130 

1 

5 

«M 

19H 

21 

23 

Bon 

500 

30 

4BH 

54 

1ft 

15ft 

19 

rs35> 

550 

4 

W 

27 

19% 

42% 

46 

MfalMe 

390 

20 

42 

S3M 

1» 

14 

21 

(“414 | 

420 

6 

2SH 

30 

11% 27ft 3454 

QwtBtoda 

420 

38H 

44M 

GSM 

1 

9 

1* 

f 454 1 

400 

4H 

21H3ZH 

lift 

as% 

31% 

Cana (Won 

543 

BM 

31 : 

38% 

B 

22 

34% 

(W) 

582 

1 

11M 

19% 

50ft 

5< 

68 

u 

600 

20K54K60K 

4 

23 

43 

rezo) 

K>0 

3 

26M 

44 

34ft 

50 

70 

Ktogfehar 

460 

38)4 

51H64V4 

1 

UM 

tea 

F48Z) 

500 

BM 

25M 

CM 

13 

26% 1 

36% 

Land Sacur 

600 

Z7M 

3ft 

49% 

2 

13. 

18% 

f®A| 

050 

IH 

M 

SS 

29 

41 ■ 

43ft 

Mates KS 

420 

7M 

2ZM 

32% 

5 

1654 

22 

C<22 ) 

460 

1 

Tft 

IB 

W' 

43ft 

47 

NeBftat 

460 

40 

53H 

82 

1 

9% : 

21% 

(“497) 

GOO 

7M 

2BM 

38 

1054 25% 

41 

Sataabny 

380 

13ft 

28 39ft 

Aft 

IBM 

23 

rasBj 

470 

2 

mh; 

SH 

25 

36 

39 

EMIto. 

nu 

26 

«ft 

Si 

2ft 

14 28H 

(721 ) 

750 

IH 

18 

28: 

3154: 

3854! 

53% 

Soratana 

200 

W 

23 27H 

1 

5 

8ft 

reis) 

220 

2H 

Tl 

IB 

7% 

14 ' 

ISM 

Tratater 

80 

8 

11 

13 

1% 

4% 

6 

ras 1 

W1 

IH 

5H 

8 

6M 

9ft lift 

UnBaMr 

1150 

IS 

47H 

03 

13 

38 64% 

ms* 

1200 

2 

2S 

as 54ft 69K MH 

2hnoea 

600 

37 

64 

74 

2M 20% 

34 

f832 J 

830 

SH 

MH 

47 

24 43ft 83% 

Option 


Her 

Fab 1 

tor 

Mr 

Fab I 

tor 

Brand MM 

420 

IB 

Z7H 3354 

13 25% 

29 

F421) 

400 

3H 

12 IBM 43M 52K 

54 

Laiarote 

140 

a 

25M2BM 

2 

4% 

/ft 

(MM) 

180 

B 

14 1754 

9 

11 17% 

UUBWeto 

300 

IB 

27 

31 

6M 11H 

21 

C306) 

330 

4 13H 16» 

27 29% 39% 

OpUcn 


Dae 

Iter ■ 

Jm 

Dec 1 

War . 

JUR 

Ran 

110 

BM 14M 17K 

a ion 

12 

(MIS) 

120 

6H IBM 13H 14M IBM 

18 

Option 


tea 

Ml 

Nr 1 

tor i 

Fea May 


(-232) 
Uano 
(15! ) 
Lucas Mi 

rise) 

P&O 
(■BH > 
PWnOfan 
n»i 


220 1814 2B 21 3 7H 1014 

240 B 9 13 12 16 21 
134 2DH - - 2 - - 

154 an - - 9 - - 

180 17 23)4 27 3 7 11 

200 8)4 1114 16)4 12)4 1 6hJ0» 

600 30 48 OS 12V4 24 38 
650 8 23H 3B 43 52 67 

180 1314 17 23 314 B 11% 
200 3H 7% 13 1514 20H 23 
300 » 7Th 31 5H 11 1BJ4 
330 4)4 13 TB23H27H 38 
850 43 m> 78 11 23 39)4 
900 IBM 41 51)4 3454 47 65 
460 25K42H 50 8)4 16)4 31 
500 7)4 23)4 10)4 32 38 55 
280 1«4 24)4 31 9)4 16H 23K 
300 fl 15H22H 23 28)4 35 
220 10H 2514 30 3 614 12 

2*0 7 1* 10 12 17 21V4 

200 13)4 19 25 5h 11M 14)4 
217 5 T1 - 15 2UVi - 

325 71--4H-- 
3M 514 - - 19 - - 

Oct JM Ay Od Jm Apr 
BM 500 9 22)4 34)4 6 It 23 

1*302 ) 525 2 12 221)4 27 33 37)4 

TlUMi Wlr 500 M37144BM 216*421)4 

("523 ) 550 2 14 2BV4 294 45 48 

Ogflan Doc Mar Jw Dec |fe* Jm 




54 

0 

13 

11 

Other Rxed Merest 

3 

Mineral Extraction _ - 

42 

70 

184 

84 

394 

95 

324 

11 

107 

310 

37 





115 

24 

127 

115 

57 







Others _ __ — 

27 

Totals 

309 

811 

1468 


DM* MM an fliow u a msn ha Mm on tN London Shan Santa. 


(-310 > 

m 

C87B ) 
flatexf 
(-474) 
Hoy* few* 
C282 1 

Tesfio 

r»4) 

Uxtofaw 

r2® > 


E*phy 

SatOament 


January 12 
January 26 


ream 

QpOM 


TRADITIONAL OPTIONS 

FkMDHlngs October 10 

Last peMnga October 21 

Cato: Aaaoc Brit Eng. Anglo Pacfflo. Atom Pat NHL Prnl, Shelton (Martin). Tiflow 
OB, WBBa Cooootl Put) & Cato: Avfva Pet, Wevwfay Mating, 


LONDON RECENT ISSUES: EQUITIES 


Abbot K9 

r«o> 

fl— *f ii 

/unssaa 

ra> 

am* 

r»2) 

Bha Cfato 

re«) 

MU Gas 
rzae ) 
Cttns 
(*203 J 


300 33 
420 IS 
25 414 
30 2 

550 3414 
COO 13 
280 21 
30010)4 
280 17)4 
300 7K 
200 16 
220 714 


42)4 4B 7)4 
25)43084 21 
514 614 1)4 
3 * 4)4 
48)4 SB 15)4 
204 34 45*4 
28)4304 0 
13 25)4 IBM 
25 SO 8 
1514 2D 10)4 
21» Z7 OH 
12H 18 22H 


17)4 23 
33 3(04 
2h 3 
5H 6 
20 36H 
56 651* 
13)4 2354 
24 MM 
13 18 
22)4 30 
10 1014 
28M31M 


Issue Amt 
priw pM 

P up 

MkL 

cap 

(EmJ 

1994 

Moh Law Stock 

Ckwe 

pitoe 

p 

■W- 

Net 

Ob. 

DM. Grs 
cov. yki 

FVE 

net 

- 

F/P. 

nw? 

eia 

4 APTA WMs. 

6 


„ 


a. 

_ 

- 

FP. 

9/56 

73 

63 Artesian Eats. 

71 


- 

_ 

- 

- 

§125 

FP. 

17.1 

130 

112 Compel 

112 

-1 

WN4J 

2.1 

45 

1ILB 


FP. 

iao 

1*2 

1 Coon Foods Wrta 

n* 


- 

- 


- 

ae 

FP. 

24.4 

68 

61 Emerging Mk» C 

61 


- 

- 

- 

— 

63 

FP. 

1Z2 

68 

65 Siuomto 

67 


BMJt 

S3 

1J3 

04 

115 

FP. 

39.1 

126 

116 Games Woriohop 

126 


ime 


4JS 

IIP 

- 

FP. 

2.48 

35 

30 Group Dv Cap Wta 

30 

-2 

a. 

m 


- 

- 

FP. 

305 

62 

60 Hambroa 6m Aalan 

61 

-1 


- 

. 

- 

- 

FP. 

2/90 

30 

28 Do Mtenmta 

20 

-1 

- 

- 

- 

- 

iao 

FP. 

17/4 

195 

176 MacUa fat) 

181 


RN6J3 

23 

<1 

7.4 

180 

FP. 

442.0 

181 

170 Man H) & F 

172 

-1 

was 

1.6 

0-2 

9i 

136 

FP. 

56j5 

138 

138 SenMr 

138 


9KLB 


a* 

22.4 

- 

FP. 

1138 

379 

360 Templeton E Now 

368 


- 




- 

FP. 

IIP 

212 

169 Oa Wris. 2004 

182 



- 

w 

_ 

- 

FP. 

2SJ 

360 

340 Wrexham Water 

340 


- 

- 

- 

• 

- 

FP. 

401 

330 

325 Do. W 

325 


- 

- 

- 

- 


Britton) 460 40K 57 604 14M 25 31 

r<83 } BOO 1* 36)4 44)4 34 45 5154 

MTfaft 420 38 *W 67)4 454 11 21 

r<49 ) 460 1144 24)4 34 IBM 2BM 41 H. 

BTR 300 MM Z7 3114 6 11 10 

r*») 330 4 12)4 17)4 24*425)4 35)4 

Britfeun 380 ISM 22 29 7H 17H 21 

("396 J m 3)4 9 16H27M 37 3954 

eaten Sea «o 31)44334 48 3» 8M 17 

r«44 ] 460 8 20H 26 23 2714 38 

Eaten Bk 700 82 71 67 12 2BH 3SH 

Cri7l 750 2343M 61 33 40 SOM 

Gvmw 460 13 26)4 3S 9 19 27)4 

f 460 1 an 3imi7V4 42H 45 S3 

GEC 0B1J1* 19 2034 511)4 14 

C2SB) 300 4 OTtlfiH 17 22 24)4 


P73) 

Lmbo 

fi34> 

MI near 
(■478) 
sot Power 

rwB) 

Sears 

nw) 

Forte 

rs») 


1B0 1BH 22 24 3H 6 TOM 
100 6 11 14 13 1SH 21M 

12) 10 21 M 24 3 6 7)4 

130 12 IB IBM 6 11 12 
460 32M 44 5BH 13 20b 30 
600 1314 MV4 3514 35 41V4 50M 


RIGHTS OFFERS 


nwj 

Them EM 

nooq 

158 

r219) 

Tankini 

nets J 


330 31 40 
360 IBM 25 
100 12 MH 
110 5M 6 
220 22 2S 
240 9 IBM 

120 MM IS 
130 $M 13H 
1000 « 0054 
1050 20)4 67 
200 26 20 
220 1214 W 


48 10 
34 24M 
IB 2 
rt B 
& 4H 
21 14H 
23 5K 
17M10H 
0B 25 
60 54 
a a 

21 BH 


ISM 22 
34 37H 
4H 6 
9 12 
BM 13M 
17 23M 
8 12 
13M 17 
41M 51 
71 76 
7H 10H 
17 IBM 


Issue 

price 

P 

Amount 

pak) 

14» 

Latest 

Ftonuit 

rtms 

1094 

Hgh Law 

Stock 

CSoalns 

prica 

p 

♦or- 

17 

NB 

2712 

2pm 

*2pm 

APTA Health 



118 

NU 

28711 

20pm 

13pm 

Catties 

13pm 

-Z 

Mp 

HI 

25711 

Vita 

'tom 

Draesn oa 



500 

Nl 

18710 

60pm 

24pm 

Roddtt & cotow 

60pm 


S330p 

N4 

20711 

59pm 

54pm 

Smuts (j) 


-6 

76 

m 

14/11 

5(ta 

3pm 

Worid ot Laatfwr 

3pm 



(■060 I 


200 23 28 33H 4M 1 11 
22O10»ia» 23 12M 17 20M 
650 48 GBM Bt 24 37 50 
700 24M44M 57 SI 54 6354 704 
Oct Jm Apr Od Ja Mr 
Sera 5so S0 M es TOM 1 13h ZB 

fS») 600 8 37 E6M 12M 33M40K 

RS615»te 700 25M 57% TIM SK29KS3M 
(717 J 750 4 SS 4» 37 57 81* 

Itotes AGO 15 - - 4M - - 

r«60 ) 482 7H - - 9» - > 

Qjaae Wto M> MayHw W My 

ra fa fkyt 160 IH 18 19 6 12 16 

P180) 200 34 7» 11 22 24M28M 


FINANCIAL TIMES EQUITY INDICES 



OC 18 

OC 17 

Oct 14 

OcT 13 

OC 12 

YF sop 

*Hl0h 

low 

Onflnacy Stare 

23735 

m* 

2391 2 

2412/2 

23925 

23508 

27435 

22406 

Oid. tef. yield 

453 

429 

452 

425 

453 

3.94 

451 

3-43 

Eom-sM- W Ul 

8.18 

6-12 

8/15 

&1D 

B.17 

AST 

&51 

352 

PTE ratio net 

18.84 

18.82 

18.71 

1858 

1855 

27-58 

33/43 

1854 

WE ratio n0 

18.17 

1855 

1854 

1859 

18-18 

C6-43 

30/80 

1759 

S » >00*- Qntoaty Store fariw teca comptoaee; Noli 271M Stem: tow 49.4 aaraM 
FT OnMvy Store Mas Mae daw 1/7/35. 


Ordnaiy Stnra houtr ehangaa 

opan ftoo ioloo iijo iaj» iaoo 14L 00 isao i&oo High 


Law 


■ UncMytaa wcuty pic*, tenfcm toiewi m 
baaed en cfaairtB ete prices. 

Ocafaa lB. leas emto StMtt Ctec lt«&» 
Puac 15301 


FT GOLD MINES INDEX 



Oct Hd« 
17 in Bay 

Oct QC Tan 

14 IS aga 

Gnat Ar 
ykU X 

92 waak 

IBgB Low 

Gan Man total <sq 

mm -nu 

222&O0 224230 ttfeUI 

1/92 

2367/49176X2 

■ totes totaicn 

Aim obi 

357158 i-f.1 

3633.13 353570 2B56L06 

SL85 

382328 230445 

AlllMllllIl PI 

288241 406 

286401 2791-21 223823 

1X7 

301189 2(61.17 

torfatototaCIl} 

1755.78 4CJ 

174434 177701 1812.40 

OJB 

203986 1468.11 


CcnffaK. Da FhancM Umae IMM 1B04. 

ngum* In bi te — aMw (— o I compete a . Bate us 0 — 0 — iMuuc IQCXUn suisw*. 
Pradaen— QoU Mlnw Inrinc Oa 1 ft 203 /i ; day's ctenea * 8.1 petm; Year apo: 2 HW 1 Panni 
Lnat pifcaa imb— far MM «tolM 


2401.0 2391a 2389.6 2383J 2381.7 2382.4 2382a 237&B 2371.1 2401 C 3370,6 
Oct 16 Oct 17 Qet 14 Oct 13 Qet 12 Yraoo 

SEAQ bragteto 2T.7S6 23*46 24*43 27*53 27*58 32*97 

Equity turnover (£m)t - 10765 1619.7 1682.7 1S85i 

^uky bamaftwt - 20871 20972 31^34 2*344 37.464 

Stons traded (mOT - 43BJ 5400 6302 605.4 HIM 

tf— fl wtto—t taafa— and a— tarewa. 


AU AdvwtisiifMut bookings are accepted aubfect to ourctirre 
Tonm and Conditions, copla« at wMch are svaBobte by writing 
Tha Advarthwnant P ro duct i on Mnactof 
TTieBrumcWnmas, 

One Southwaolc Bridge, London SE1 9HL 

Teft +4471 8733223 F 8 K +4471 8733064 


r •- 





FINANCIAL TIMES 


WEDNESDAY 


OCTOBER 


19 1994 P 


28 


BANKS 

Nou 

MfJtasoH □ 

AS AS 

AttnHafloral.-ttC 
Ailed WijfiK.-Stig 
AMtonSK — MK3 

test Y □ 

Banco BlVbPtL—O 
Banco Sant P&_— 
BumandE — *□ 
Bonk Scottnd ttfe 

ftPCPI 

ftocR. 


CHEMICALS 


LONDON SHARE SERVICE 


ELECTRONIC & ELECTRICAL EQPT - Cont EXTRACTIVE JNDUSTRmS 



HEALTH CARE - Cont 


wvestment trusts 


. ConL 


Pitt 

_ 

821*4 

-li 

173 


411 

Zi 

261 

-4 

58 



70ft 

-IB 

Elft 

ft 

BBA 


287 


2054 

-3 

lOftd 

— 

112*a4 



864 

-6*: 


1994 Wt 
ugh M Capon 

Si "8? pi 

H3 3804 5582 

3,4 "SiS 

.... Bjaiwas 

® & 3S 

•319 246 1J88 


TO 


SwS*KanY-t!S n\ 

OenEsneOM □ £296£ 

EsWaSroo — .3 Wi 
F niftaRn — JC n 

63pc0iW J3 

TPcQrPi t tt 

Fun Bank Y D IW» 

HSBCHK .1*0 TO* 

WKITSpSW-ta nw 

Ltaydl t*D SB* 

MRsuttsur n 

HtsTnSBkY □ 

UladTd&BkY.Xl 


-3 *47 1721a 2502 J2 1J.B 

- xsn &S im =BSC^ 

5 S*:Sfc=£ 


■EISA £83 ifu 
•so 60 111a 
— *90 73 491 

-JZ 171 123 tax 

-4*i 154ft 1152'j 31288 
4 1T33 6601U36 



YU 

ft's RE 
U t AGASKr 

S3 27.1 AtaoH =, 

4.7 118 MedGrfBUa— MO 

EijQ 16 Amber tod 
7 A 116 MSP DM 
OX * BK 
SjO 73 

5.1 95 flayer &” 

4.5 63 Brant. 


YU 

U ,15 AfMHR— ? 
2.1 - Andaman Res IE 

U 


no« 


- Courts**) -TO 

4.7 Dnxta 1*K 

- Detain-- , W 


iu test AS — -J 

KdWett t*C 

OwuneFFt. ^. 
W8hScatwJ.M*0 

SdanY — O 

SanmY— 

SCnAMCtarKl tNQ 
1 3/BpcPrt 

SwiteomaY — 
SatetwiwTslY- -O 

tsb mg 

UtalT □ 

ToyoTsiiBkY — □ 

WWincAS 

MsudaTstBkJ -JO 

BREWERIES 


944>. 

TIG 

472 

501 

EZft 

431 

Eai„ 

£12*1 

Z7M 


660 ltDI 
619 ' 

E15« 

6875 


•1 11U 
-10 660 
ft El«3 
-31* 1182E 

-55 on 

MO'a 

j nz . . 

EH mu uu 
+6 528 377*2 

£ oh Esiaww 

82*4 BS6 

n ans 

- 

062 586U M78 
260 194 3313 

8GB 442 108! 


Hi 

-i *3SBU 

B3b +U 108*2 
m3 n'l Oft 
912*2 -3 IMfc 

ms *2 291 

«2£ ft 
687 -21 1 2 
216 — 

B1U -5 


43 ill WJ3! _2? Ell 

43 ia« Hnpaaw — -^ a** ■® ,,n S 1 
5.1 11.1 HDKNOwrtcU-WO 210 — ■=" 

05 * P *3 

8 3»fc=ria 
Si ’ll 

is ill 

07 503 MjWga bj«U-I*0 

05 - PerawpSXr— -O 

18 14 Pore* jj" 

'oi 24.7 

(If, * wanteSterejB~JO 

4£ 114 WWngw.- WQ 

03 473 W ufca itortn 

a? 61.7 YOriaNn- 

15 4 YUUBiro ' 

(LSI 48.8 

DISTRIBUTORS 



«J» 17J3 

S3 305 te2r W ’ 

6.1 2U (Ml 

4.1 388 
ZB 1SJ 
43 153 
1A - 

24 21 B iitafataiY 

43 110 Ui*i 4aS 6 

15 1U pEy_T 

25 173 1ST n 

S2 BO 2 
ZD 353 


1804 J£- 

km Csfin 
165 HI 

12317 
7300 
117 2313 
119 SU 
£4714363 
126 51.1 

143*3 

335 s b .sbb=< 

17 tSS?JL=m5j« 


li 133 ast5Sir*s5 ^ — 


13 - AnoUPacte-** 0 

.... « * Anolwto- B ^z— 

BOO I A Six 
w* an uu* AssnS- 


17 ml gggklA 
u 206 

1.4 793 SSS***®” 



Price 
2'i *U 
835 -7 

2Md 

107 

104 


or 1994 MU 

- Won tow CapDn 


10*4 

619 

299 

190 

181 

80 


Notes 

Patfinotm. — TIC 

Bnrtonnand — N 

Bafctoc.P0[»A.'>tN 

FostenAS 

FiUhSTA — 

OtowMew _• 
oeenafe — 

SSSSte^g 

iwi(3 m 

ttinv -a 

Itosfi*:;; 3 

IfenanUmC-.lO 

Unund --t« 

Ponsnounl — WQ 

Rogenltona .«j 

Sait! J New — «W- 

WBttmooaoUOUC 

HHUread... — JO 
mil DuJer— ttQ 

VsccsBre A£3 

YDunflA Jj 

WV H 

BUILDING & CONSTRUCTION 


-1 bii 
+\ 884 

TBS 

3773 

-8U B24U 

240 

-1 314 

-3 MB 

T02l 

-1 274 

-7 *581 


306 

•421 

>17 

588 

100 

536 


-B 

-13 


IU 938 
485 4^70 
250 3011 

163 3&a 

142 3TJ 
40U 1770 
380 772» 

34»U 418 

399 B8M 

452 221.2 

124 110 

3125 MHJJ 
<74 7,470 
195 1494 
25G 27GJ 
463 Ittl 

r* 2 am 

209 384 

477 zjm 
3 102 

229 3K2 
324h 1419 
494 2 
493 3488 
148 644 
463 14JS 

453 347 


VM 

Gre 


♦ or 188* .Wt 
- Mgh tow CapEm 


PC AB Lae 





Hkf 

YU 

tow Ca£ra 

Grte 

34 

850 

— 

135 

561 

4.4 

148 

924 

35 

88 

nro 7 

16 

84 

1460 

95 

ISO 

464 

63 

47 

671 

- 

333 

1345 

15 

113 

BX9 

4.4 

26 

XE6 

25 

2E 

£36 

40 

114 

£15 

15 

1ft 

654 

62 

28 

106 

- 



43 144) AOWi&*tora>— Og 

41 13.7 MricmLftw » 

13 HE Ataandsra — --4f| 

28 Z.7 AdPtajan— ^ *1JS 

10 # AsaBtEnp — ip 

26 15.7 BSS 

24 ' “ 

3X 1_ 

3.1 14.6 

42 + 

1.7 aas . 

OD 2S.7 Brit 

24 143 Bwal 
2J isfl Bumdene 
24 17.4 can**-. 

2, | caekeL- 

26 * Ownttfc 

42 15l OanWI Ml. 

- □MloSUner.. 

50 153 CoaMDC) -JO 

20 i Oowto £M 

43 15.7 Pater, 7VU 

11 14.8 Dafl Pton »JjN 

13 ^ 

0 ,M 8S!te^ 

Beetnnmps— }«□ 

gKJS 

BmpeaBlMr-g 


SJ 30.1 


B K 

H ,2 i to^SuPiiaCc 

j-J * JKksWfm) — 

'■* r Kwfc-fit 

5-J ,.4 LexSenlce 

33 iH M -*— 

- I U Mkere ^icqPf 
20 44.1 “ 

4.0 28.8 

M 15J toUatall — Zj» 

10.0 - HBOMn Uer - -M 

m no pct^Z: *m 

,Z - Pane* — ^ 

2 p »™ lnwr — 1*G 

4 2 13.4 

- (U 

42 - 

1J» 14.6 
03 - 

15 20 2 

!3^Kfc=iH 

Wd 

05 - ^sS«e__ i 

42 ill Ttoe Proto — ‘ 

45 205 TfttHt 

49 205 Varoy 
6.4 


16 as Pruceae Syctl 

is Tf* Wt !S 

37 146 FtocaL^- _JO 

20 163 ftodanwc f+tO 

iSt 175 MUmTedi^fla 

“ “ SSiszrsSB 

Scottaft — So 

Sdioies —__¥♦« 
w SanmOM □ 

eSi «ar ,s - l is 

44 155 »£*=- — 

2.7 16.7 gyWjgi^^-jg} 



-aa soft m 2730 

„ *31 34 177 

91 66 154 

-1 68 74*a 945 

♦A enu £14 6.739 

015 £97ij 125 

359 293 8M 

344 2B3 211 

-1 140 70 858 

129 100 275 

*43U 17U 102 

H S3 1,19 

4U 258 

181 575 

187 6725 
33 954 

108 195 

15 350 

229 049 
19 636 

182 872 

-B B31B £244»i 14S37 

48 38 235 

-A £41(1 E32U 13588 

84 63 657 

104 41 435 

-S 422 £64 895 

18 11 151 

-U E3ZU £223) Vt* 

170 

91 -1 181 51 1B5 

31 Bud 318 181 1002 

217* -t 33H 133 275 

47BU -11 5WU 387U1E332 

231 *303 215 825 

256 2307 

9 TO 8*2 105 

28 +1 48 £5 349 

411 **83 39S 1085 

SB 186 56 1105 

M *200 60 185 


05 

05 


4 c5S«toiStoC$r? 2BSU -1BU 


BU 

3B 

361 

60 

133 

25 

311 

88 


02 25$ ^£5 
BJ 195 

y 

*5 245 sffiudtfBM 

im =5SSS«zif+ 

- (kmn*rt0«lR 

1.4 175 Dnni Mtotag AS— f 

25 19J Dt^S*lR 

49 135 DotaiOeepn — — 
25 163 BMP — 

M 165 SSa^P 
45 d> EaetenDans 
u I EaMHNGcMI 
4.1 - Bwwmci r 

25 215 EmpenvAS 

48 147 

I I FOca* kn_-_ 

. . ♦ FnesauDnR — - 

i ul 22X£?r4 



MK W 


h «**"■ Cft HE Haas Price - fctaft low CkpBn pr* PC J3g 316 *' 

2 oS ao - Siam- .mo ts« m i« 22SSii5'4« t74U -*2 

» S - -assSsl Z - T8 “ “ * "=* 

j-s'S's M . ’“.sfflSiisSE § - 

am u -“j«iEE s i 


25 185 SfldtiO* 
15 35.1 __ 
14 SIS TMom, 


Li 4 ATepnelUfcSda-^ 71 -6 166 

- “urdSS-jwg »a - 1 2° 

- - iMMabugE — W MB — Its 

35 - VMHsterircn5Q 357 H 


5£ li HOUSEHOLD GOODS 


* *4« w»d m 

^ BteSlB^ZSS 383*5 S -2 m 

- OOgtiniHte Jj 


6U __ 



2D3U 


-5U 81 U 5*i 
♦71.T2ZU sajj 


27 175 

1.0 3&2 (Vyyw a rf~I 

\i ou 

IS SS ssSSSSSSar- 

2-4 275 gSS^RS-Va 

“ “ GnnateiH a 

" ~ MtOntAS — V 

15 185 HmonyR — 

1.1 - itarataaifl 




2B5 
443 9025 
133 395 
225 2224 
3 232 

202 US4 
100 895 

395 151.4 

■545 *004. M4 
058 Sffi 70M 
50 759 
138 615 
18 165 
26 663 

60 951 

99 20 
108 334 

IE 155 
Vt 456 
15 224 

182 70 

266U 130J 

a £ s 

110 417 

238 675 

395 2588 
118 2L1 

35 828 
145 2885 
345 3206 
166 415 

162 375 


diwE 


- YBbobM- 

M DIVERSinED INDUSTRIALS 

♦or 1994 NU 

Nam 

Adweet — --¥40 

- Ambt FtmAF M — U 

15 M.6 A , 4yg* H4. - -.T 

1- 5 J45 AmwTrtja 1C 

\\ SS?fe=B 

15 Z8.6 WRs 1997 □ 

75 43.2 WS 1998 Q 

2- 0 285 BTRHyfciAS. _t 

25 - Bsriott— *WD 

- - EfcbvUl -JtfO 

45 t BrienqrtoHNZS.-J 
19 30.1 canun St kws-JC 

4.1 118 Ooriar ^rtmg 

1.0 - Cartoon ¥1*0 

41 17.8 CnanUUUE — J> 

- - «=.— iSg 

- — MffliOTO 

- Wtoiart*._ 

18 15.6 9*2PcCnr. 

34 15.7 HanbonsSI 
45 :i.4 Kmtn. 


138 
220 
21*2 
120 
73 
183 
MO 
ITS 

srad — TO 

31*2 ♦*! *404 

148 TIB 

77«l 81 

128 188 

32 *85 

15 — 35 

U ifod ZZ 2ffl 

” M + n 

312 — 

83 76 

18*2 III — tel 

iNQ IfiS — 171 

484d -14 884 

— 128 
182*2 —1*2 1721. 
91 - — 12S 

12 U — 1ft 

147 188 

BSd M 

W — = 

250 293 

MO. _ nss 

180 CT 

285 — 

187 — 

540 B» 

187 2B3 

272 310 

83 — 121 

»4 ~ *4 

£17 298 

145 IP 

80 W 

268 272 

390 — "442 

S JL 45 

^ n 3 

^ - Si 

13S *1« 

22 U ~ 

ii lai SiJ — —3* ~ s 

_ - QWMadkl8_-JO 338 -2 404 

s S isa^TiS ™ — 


- AUtBLaqr- 

45 16.8 AOasOonr N 

48 115 AteCapB® — O 

4.4 125 BM_ t*C 

13 167 Hancock HI HD 

119^ 

*' 1M BSSaOnte*.- 

I Bodyrate »t*C 

’li 21.1 

*1 Bridon 

75 105 

18 148 W — 

35 111 £5®S£=” iSn 

a \n £SK5z4§ 

a IStezzJg 

45 118 Caster -* 

95 - OandWf&HU Jt 

15 - Ownrina — tN 

- - ojttoBkMsra — ta» 

35 48 Crtton«__^ 



vu hnrntaWsstG— HO 

tow CBBEn er# WE 

119 215 38 405 *J J S 0,n4R 5 

« :iSSfe=3a 

H sje ftftlonGrtd AS_¥ 
138 W »R BRMAS -- 

g 2341 SSa- 

I KdtoR 

9.1 113 ' ■ 

5-2 175 M^~|itaUSZ_ 
15 745 !fcSSbi«AS-_¥ 

- " HtUsffiH 

- 7 M^olktobAS 

65 ¥ UknuE— 

25 117 uomoS- 
55 - MrtopoAS 


MB 
36 
2BU 
101 U 

13U - - 

894U +32U W&4 ^ 2m 
605*. t2B*2 

HI 
1214 
911 

MS 78 1665 
-2*, 510 30e» ? ffls* 

_ 175 118 585 

-2 M47U 321 1.113 
19 9U 182 

s E S "iS ’I 

M 82 27 188 

S* WU S3U 2OTJ5 

22 +1 2*^ IB MB 

MO 130 82 6815 

Z16U *2 2WU lOft 

36 -1 48 15 119 

os*, -h, emu fii'l 1568 

»*i ♦? 37** 

2D -U 22 
M»* + 1 ' 1 * “ 

88 — *4 61U 

■35 +274. 6^ 

E7U 

S37U 
88 
108 



1964 m 
tow 

223 

115 1015 
26 UO 
233 M45 
SB 117 
112 455 
160 187 
3 BUSS 

IE 52.1 
IS UO 
217 0.1 - 

188 113 756 17 


rSMkkps % 

iS 

yu SmDwnZZZ 

ers WE Ra nmgitf an— 

Z8 112 wpraris ■ -R S? 
M 447 FkS&Jh¥*C 

5 155 FvtU&Mi 




3 m 


08 415.6 13.6 
18 379 1 i3 
,8 2525 2*1 


g3 -WO* 

® 118 <M 32 

a OJ sseo -1.5 


19 317.0 10£ 
15 334.4 11.8 
,8 1319 '6 
05 1305 -15 


v*. 



28 


17 1U 72 

in ns t» 17 - Fa|WBd_*^ ^ 

308 3J3 1144 12 105 Far* W 6m^Jg , a 

TC 153 388 55 412 fur 5 Ca liaw» T"-' 

no 4ia 25 Isa JS'aKer'ifiS szai 
90 371 14 175 furf“^_rTn * 

115 IS 110 Fa aCqHrc&rtft-U 
£31 IBB 385 45 ,24 32 (OB 

s a !•!*$«§ us 

ti J Si 


- : n3SS°^r3« 

n 

“ " l KSs 5=470 

3 -|m 



120U -h 137 


13a 

64 10BJ 
105 4U 
23 7J71 
I0U 453 
8 128 
124 201 
3U 107 

e nw. cies i.iwj 
329 2B2 1805 

*3 282 
15 
13) 

390 
101 
121 


122 

BOS 


- Uamn3i«*3 ■— 

“ 7 - SSn-RBE-Z^ 

15 - 5pcLn Notes 

22 21.1 IK* WISH 

- _ M«MUklA3 J 

43 ,55 NornaatfiPwAS— V 
35 - NattwifeR — - 

£8 425 ffiWPr*o « — 9 

5| . Orton toAS 

15 602 SrgcQofcl^-- — 

4 n i JSSSSS5 5 = 

11 242 PanoMI A5 ▼ 

35 275 


Ml 
.. 175 

"*& Si 

3194. 1711 

t 4125 
■545 
9297 
158 
497 1018 

38 2S7 
33 18&2 
B16 £11*2 Z3S 
17 ft 114 
9U 7J0 
IE 2110 
,4U 470 

' £DM 

. 18M 
BBU 113 
17ft 852 
,18 1.738 
77 5311 
IT 172 
1« 8Z72 
IS 189 
ft 1EB 
E16i 3509 
5 255 

188 t'iil 

“7 £ 
» 810 
125 404 
128 215 

170 827 

291*4 22ft 2015 
T29U 90U 8435 
68 86.1 



lift 

12ft 

£867 

zn 

211 

945 

313 

219 

1335 

378 

194 

1074 

4B 

33 

215 

190 

113 

ma 

UB 

72 

1*5 

330 

214 

135 

180 

IS 

161 

H3 

122 

314 

IM 

97 

1015 

83 

44 

43X3 

US 

165 

IW 

18 

S3 

135 

1994 

tat 


u 148 m&uaiTttttJg 

40 si "ffiaS-iSB 
85 mo l’»“™ ,Biaw n 

48 115 "zr ** — ^ 

41 113 

- 475 
24 315 

- 11.7 


133 105U 


YU 

ate 

55 


55 

115 

74 


1.7 


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♦£Ss=iSE 

- oM — — ~-g 

T55 COmnlWon — *g 

- DeBanUonte SD 

155 Don & Gen _JI 187TM — - 

115 Fenetratll SO MS -2 

72 FMMiUteAaaWd 8W — 


1279 
885 
476 

135 1715 
55 225 

14 110 __ 

248 1S11 45 165 

110 86.1 25 175 ^&A5ZV 

155 115 5.1 10.1 SSSb 


Paaitoneten tn 


■JO 


4.1 135 Ctncattlc — • 

0.7 216 Co* (DM „ 

1* 305 Cooper 1*0 

10 i CraUne*. 

28 205 DnUBnxm 
45 154 Dkkk(jn_ 

03 M DabsnPHk — . 

34 125 uon** Hunter J 

M 21-6 0S 1*0 

J-® J3-1 Eale. JO 

17 275 



s. is Si 5?S*-“ lE 
Si H«Si=ffl 
-zi-tR 


272 875 
1B7 147 

403 4.16 
187 101.7 
240 80.1 
88 335 
271 435 
196 1245 
95 544 
70 1002 
ZOO 87 3 
384 1717 
20 124 
305 
217 
611 
7723 
2305 
915 
847 
145 


320 


60 

*a 

109 

34 

su 

37 

77 

91 

321 

33 

ia 

61 

80 

143 


M 155 pHfctfAS ¥ 

25 525 protousManteASJ 

05 - kb 

40 155 RT7 

3-4 U1 tetoMOd 

il 275 Bandex R 

1.1 - Rand Mow R * 

35 ill RandtanfnEUH 

26 123 Redaarum CS— 

59 155 RanteanR 

£5 285 Resolute Res AS 
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32 


WEDNESDAY OCTOBER^ 



CURRENCIES AND MONEY 



markets report 


Sterling firmer against both dollar and D-Mark 

aL.I CaJ drama* 4 


Tie D-Mark lost ground on the 
markets yesterday as the post- 
election rally in the currency 
faded, writes Philip Gatvith. 

The generalised weakness 
confirmed the view that the 
relative strength of the D-Mark 
against the dollar, over the 
past few days, was more a case 
of dollar weakness than 
D-Mark strength. 

The D-Mark finished in Lon- 
don at FFr3.431. from FFr3.434. 
It was also weaker against the 
lira, which closed at LI .020 
from LI .023. 

After touching an overnight 
low of DM1.4930. the dollar 
remained above DM1.S0 for 
most of the day. finishing at 
DM1.5003, from DM1.5036. It 
was barelv changed against the 
yen at Y97.685 from Y97.S5. 

Sterling had a good day, ris- 
ing against both the dollar and 
the D-Mark. It finished at 
$1.6154. from $1.6074, and at 
DM2.4235 from DM2.4168. 

■ The phenomenon of sterling 
simultaneously rising against 
both the D-Mark and the dollar 


has been fairly rare recently. 
Mr Chris Turner, currency 
strategist at BZW, says that 
during the spring, sterling 
moved down with the dollar 
about 90 per cent of the time. 

More recently, the two have 
moved in opposite directions 
around 25 per cent of the time. 
Despite yesterday’s move, he 
said there was not yet enough 
evidence to suggest that the 
link between the two curren- 
cies had been broken. 

On a trade weighted perfor- 
mance, sterling remains fairly 
weak. It finished at 80, com- 
pared to a high for the year of 
around 83 in February. Against 
the D-Mark, it also remains 
close to the lows for the year. 

Against the dollar, however, 
the picture Is brighter, with 
sterling near a two year high. 
Mr Rob Loewy. head of foreign 

■" Pound In M«w YortT” ~ 


Mia 
£spat 
i mtti 
3 mtti 

tr 


— UtMt — 
1.6110 
1.61 ai 
1.6099 
1.5389 


- Prw. dose- 
1.6105 
1.6097 
1.6093 
1-5996 


exchange at Midland Global 
Markets, reported “fairly 
strong institutional demand 
against both the dollar and file 
D-Mark." 

“It seems to be the case that 
a lot of UK corporates presold 
sterling on its rise above $1.55. 
Now there is an absence of 
supply and this has encour- 
aged buying." 

Mr Tbny Norfieid, UK trea- 
sury economist at Abn-Amro, 
noted that options volatility in 
sterling had risen more than in 
D-Mark since the beginning of 
the week. "This suggests there 
is more of a fear of sterling, 
rather than the D-Mark, rising 
sharply against the dollar." 

Relative short term interest 
rates provide some support for 
sterling strength. Three month 
money in the US is currently 
around 5.5 per cent, compared 
to 5.2 per cent in Germany and 
6 per cent in the UK. Con- 
sumer inflation, however, is 
around 2 per cent in the UK, 
compared to 3 per cent in the 
US and Germany, so sterling 
compares even more favours- 


Sterling 



1-54 


Sap -1994 
Source: Dvtastrwra 


Oct 


bly from the point of view of 
real Interest rates. 

■ The dollar was fairly sub- 
dued after Monday's weakness. 
“There is certainly not the 
same sense of panic about the 
dollar that we saw yesterday,” 
said Mr Loewy. although the 
currency did wobble at one 
point on rumours, later denied. 


that Fed vice-chairman Mr 
Alan Blinder had said US inter- 
est rates would not need to rise 
again this year. 

The flip-side of this was a 
more sober attitude towards 
the D-Mark. After the rash to 
buy D-Marks on Friday and 
Monday, there was some evi- 
dence yesterday that Investors 
had started to take profits. 

Mr Loewy said he did not 
think the market was expect- 
ing central hank intervention 
at current levels. The speed of 
a currency’s fell is normally as 
Important as the level to which 
it has fallen in determining 
central bank activity. 

The dollar had fallen nearly 
ten pfennigs in eleven days - 
to DM1.5 170 from DML6050 - 
when, in July, it was the sub- 
ject of co-ordinated central 
bank intervention. 

The US currency wiD face a 
renewed test today with the 
release of August trade figures. 
A larger than expected deficit 
will refocus market attention 
on the US's trade dispute with 
Japan. Recent figures from 


Japan show that its bilateral 
trade surplus with the US wid- 
ened in September to $5.8bn 
from $5.7bn. 

■ In the futures market short 
sterling paused for a breather 
after the recent rally which 
has seen shorter-dated con- 
tracts rally 60-70 basis points. 
Traders said the market was to 
a consolidation phase. 

Volumes were fairly low, 
with the December contract 
trading only 22,685 contracts to 
close at 9354 from 93.61. The 
December euromark contract 
closed unchanged at 9182. 

The Bank of England pro- 
vided UK money markets with 
£1.207bn of assistance after 
forecasting a £l2bn shortage. 
Overnight money traded 
between 3 and 6Vk per cent 

■ OTHER CURRENCIES ' 


0fl 18 C 

hoot 171 an • 17IAS3 

Mr» Z78ZJX - 273SXO 
0.4797 - 0.4807 
369512 - 37026.1 
4857.51 - 487366 
59215 - 59333 


KffmK 

iUnd 


UA£ 


S 

106.010 - 106.110 
774800 - 175090 
041970 - 02975 
£28800 - 229159 
300790 - 301790 
39735 - 3973S 


POUND SPOt-irOPy/A^D AGAINST T-iE POV-iD 


DOLLAR SPOT FORWARD AGA! NSJ TKc DOLLAR 


Oct 18 


dosing Change BkJ/Cffer 
mid-point on day 


Day’s MM 
high tow 


One month Thrao months One year Bank or 
Rate 96PA RMB 96PA Rate MPA Eng. Index 


Oct 18 


Closing Change 
mW-poim on day 


Bid/offer 


Day's mid 

Ugh tow 


One month Three months One year JP Morgan 
rtsun %PA Rate %PA Rate %PA index 


Europe 

Austria 

Belgium 

Denmark 

Finland 

France 

Germany 

Greece 

Ireland 

Holy 

Luxembourg 

Netherlands 

Norway 

Portugal 

Spain 

Sweden 

Switzerland 

UK 

Ecu 

SORT 

Americas 


Europe 


(Scti) 

17.0587 

40.0489 

604 - 660 

17.0888 18.8741 

17.0543 

0.3 

17.0425 

84 

- 

- 

115.5 

Austria 

(Seh) 

(BFrl 

49.6933 

40.1883 

712 - 1S3 

49-9670 49.6230 

488633 

0.7 

49.8083 

07 

49.4483 

0 2 

117.4 

Belgium 

IBFr) 

(DKr) 

9.4994 

+0.0216 

948 - 041 

9.5128 9.4579 

8.4948 

06 

9.5134 

-08 

93439 

-03 

117.4 

Denmark 

(DKr) 

(FM) 

7.4745 

+0.028 

645 - 844 

7.4950 7.4260 

- 

- 

- 

- 

- 

- 

885 

Finland 

(FM) 

(FFr) 

&3137 

+0.0162 

100 - 173 

B. 331 8 82764 

8.3141 

-0.1 

83086 

05 

82593 

87 

1103 

Franca 

(FFr) 

(DM) 

2.4235 

+0.0067 

225 - 245 

2.4285 2.4106 

£.4223 

0.6 

2.4192 

0.7 

£3806 

1.4 

126.9 

Germany 

IQ) 

(Drt 

371.333 

+1.387 

660 - 006 

372-344 369.701 

- 

- 

• 

- 

- 

- 

- 

QrMCt 

(DO 

{IQ 

1.0117 

-00004 

110 - 124 

1.0131 1.0092 

1.0115 

02 

1.0112 

0-2 

1.0129 

-0.1 

105.4 

Irstand 

(to 

HI 

2472.77 

+428 2 

135 - 419 

2476.12 2467-24 

2476.87 

-3 J) 

2490.57 

-as 

2545.07 

-23 

743 

ttnJy 

<U 

(LF0 

4343933 

-0.3317 

712 - 153 

49.9670 49.8230 

49.3633 

0.7 

49J083 

0.7 

483483 

on 

117.4 

Luxembourg 

(LF») 

{FT) 

2.7157 

+0.0074 

143 - 170 

2.7209 2-7001 

2.7143 

0.8 

2.7109 

0.7 

86802 

13 

1213 

Netherlands 

(HI 

(NKi) 

10.6555 

+0.0249 

SOS - 801 

10.5802 10.5087 

10-SS49 

0.1 

10^584 

-0.1 

10-5591 

0.0 

86.8 

Norway 

(NKrJ 

(Eg) 

248.158 

+0.577 

016 - 300 

248.617 246.949 

249.888 

-5.4 

258068 

-7.9 

- 

- 

- 

Portugal 

(EsJ 

(Pta) 

201.457 

+0.498 

326 - 587 

201.739 200.467 

201.797 

-2.0 

208682 

-10.4 

205347 

-1.9 

864 

Spam* 

(Pta) 

(SKrt 

11.6385 

+0.0148 

274 - 458 

11.6579 11.5403 

11.6575 

-2.2 

11.7045 

-2-3 

11.8025 

-23 

76.0 

Sweden 

(SKfl 

CSFrl 

£0(36 

+0.0003 

133 - 149 

2.0187 2.0077 

2 0106 

1£ 

2.0044 

1.8 

13673 

23 

123.5 

Switzerland 

(S Ft) 

(Q 


_ 

_ 

_ 

. 

_ 

- 

- 

- 

- 

803 

UK 

» 


1-2727 

+0.0027 

719 - 735 

1 .2744 1-2658 

1^727 

00 

1.2724 

0.1 

13687 

03 

- 

Ecu 

- 


10-5600 

-0.0225 

575 - 625 

105975 105485 

1006 

0.0 

100598 

0.0 

ia486 

a7 

104.7 

305860 

-0.05 

800 - 920 

309650 308640 

30.888 

CLO 

30081 

03 

30.836 

OO 

106.4 

5.8805 

-4X016 

790 - 820 

5.9013 

50785 

50849 

-0.9 

5094 

-0.9 

5.9505 

-10 

105.7 

4.6370 

-aoo7 

220 - 32Q 

4.6525 

4.6159 

40277 

-0O 

40243 

02 

40345 

-00 

63.1 

5.1465 

-0.0157 

455 - 475 

5.1665 

5.1430 

5.1488 

-oo 

5.148 

-ai 

5.1506 

-ai 

1070 

13003 

-4X0033 

000 • 006 

1.5058 

1^4987 

10003 

oo 

1.4889 

04 

1.4902 

ar 

107.7 

230.180 

-039 

130 - 230 

230730 230100 

230.475 

-1.5 

231055 

-IO 

233,255 

-io 

69.0 

13968 

+0-0065 

960 - 975 

1-5985 

10882 

10967 

00 

10989 

ao 

1.5838 

as 

- 

1520.76 

-7.15 

025 - 125 

153050 153000 

1535L3 

-3.8 

154325 

-30 

15H705 

-3.7 

75.1 

303860 

-005 

800 - 920 

30.9650 308840 

30086 

0.0 

30061 

0.3 

30038 

OO 

106.4 

1-6811 

-00039 

807 - 815 

1.8870 

10802 

10811 

OO 

10797 

OO 

1.6714 

as 

1060 

8.5343 

-0.0172 

330 - 35S 

65789 

6.5307 

85381 

-0.7 

6.5558 

-IO 

60093 

-i.i 

97.1 

153.520 

-041 

570 - 670 

164070 153.570 

1 54.2SS 

-5.3 

15502 

-4.9 

158.87 

-4.1 

850 

124.710 

-0315 

680 - 760 

125.010 124060 

124085 

-2.6 

125-445 

-2.4 

128.06 

-2.7 

BIO 

7.2035 

-O.Q27 

996 - 073 

7.2363 

7.1742 

72183 

-20 

7-351 

-20 

7.416 

-20 

810 

13485 

-0.0061 

450 - 470 

1.2520 

10460 

12453 

IO 

1-2419 

IO 

10268 

IO 

1080 

1-6164 

+0.006 

150 - 158 

10155 

1.6067 

1.8148 

0.6 

1.614 

0.4 

1.6036 

0.7 

870 

1.2693 

+4X0038 

688 - 698 

1.2702 

10658 

10686 

0.7 

1-2679 

OO 

1084 

OA 

- 


- 0.926123 


SORt 
Americas 


- 1.47374 


MIIWiNAKI 

Argentina 

(Peso) 

1.6152 

+0.009 

147 - 156 

1.0102 1.8065 

_ 

. 

_ 

. 

- 

- 

- 

Argentina 

(Peso! 

09999 

+03008 

998 - 999 

0.9999 

03978 

- 

- 

- 

frazil 

(BQ 

10687 

+0035 

647 - 686 

1.3721 1.3577 

- 

- 

- 

- 

- 

- 

- 

Brazil 

(«) 

0-8460 

+0.0175 

450 - 470 

0.8S00 

0.8410 

- 

- 

- 

Canada 

(CSJ 

21692 

+00108 

882 ■ 901 

2. 1883 2.7765 

2.1893 

OJS 

21873 

03 

2185 

0.1 

86.7 

Canada 

(CS 

13552 

-OJXOI 

549 - 554 

13554 

13529 

13551 

03 

1.3555 

Mexico (New Peso) 

5.5247 

+0.0323 

193 - 301 

5.5301 5.4989 

- 

- 

- 

- 

- 

- 

- 

Mexico (New Peso) 

34200 

+0.003 

175 - 225 

34230 

34175 

3.421 

-04 

3.4228 

USA 

(5) 

10154 

+0008 

150 - 158 

1.6165 1.6067 

1.8146 

0.6 

1.614 

0.4 

1.6036 

07 

81.1 

USA 

P) 

- 

- 

- 

- 

- 

- 

- 

- 

PacWc/MIddle East/Afriea 











r» -M+| i j*,, -j M« i d 

rfiCiTICrMlGun tajt/AinCB 








Australia 

(AS) 

21911 

+00063 

898 - 924 

2.1931 2.1804 

21911 

ao 

2.1924 

-02 

22105 

-0.8 

- 

Australia 

(AS) 

13584 

-03029 

559 - 569 

13596 

13559 

1.3S66 

-<L2 

13573 

Hong Kong 

(HKS) 

12.4827 

+0.0623 

788 - 866 

12.4907 124167 

124788 

04 

124777 

02 

124847 

0.0 

- 

Hong Kong 

(HKS) 

7.7273 

- 

268 - 278 

7.7278 

7.7268 

7.7271 

0.0 

7.7278 

India 

(Rsj 

50.6731 

+02545 

545 - 917 

50.7020 50.4060 

. 

- 

, 

. 

. 


_ 

India 

(Ra) 

31.3688 

+aooi3 

650 ■ 725 

313725 313650 

314538 

-33 

31.5988 

Japan 

(V) 

157.801 

+0.52 1 

705 - 835 

158.170 157 260 

157.371 

33 

156416 

33 

151.451 

4.0 

1383 

Japan 

09 

97.8850 

-0.165 

5 00 - 200 

983000 97.6500 

97465 

£7 

96315 

Malaysia 

IMS) 

4.1285 

+0.0214 

270 - 300 

4.1308 4.1075 

- 

- 

. 

- 

- 

- 

- 

Malaysia 

(MS) 

25557 

+03005 

554 - 560 

2S575 

23550 

2.5485 

43 

2.5352 

New Zealand 

INZS) 

2.6415 

+0.0106 

398 - 432 

2.6432 2£260 

26464 

-13 

26532 

-1.8 

26754 

-1.3 

- 

New Zealand 

(NZS) 

1.6352 

-03016 

345 - 359 

13359 

1.6327 

1.6361 

-0.7 

1.638 

Philippines 

fPaso) 

40.7889 

-0.0378 

980 - 797 

409360 40.6320 

. 

- 

- 

- 

- 

. 

- 

Philippines , 

(Peso) 

253600 

-ais 

000 - 000 

253000 253000 

- 

- 

- 

Saudi Arabia 

(SB) 

0.0593 

+00307 

574 - 612 

0.0629 6.0287 

. 

. 

. 

. 

. 

, 

_ 

Saurfi Arabia 

OH) 

3.7510 

+0.0003 

S07-512 

a 7512 

3.7506 

3.7523 

-04 

3.7564 

Singapore 

(S3) 

2.3771 

+00094 

757 - 785 

2-3785 23857 

- 

- 

. 

- 

- 

- 

- 

Singapore 

OS) 

14715 

-0.0015 

710-720 

14732 

14710 

14702 

1.1 

1.4683 

S Africa (Com.) 

<BJ 

&7000 

+0.0015 

861 - 038 

5.7281 5-6748 

- 

- 

. 

- 

- 

- 

- 

S Africa (Conti 

1 (FQ 

3.5285 

-0.0168 

270 - 300 

33480 

33365 

33W 

-S3 

33723 

S Africa lF=m.} 

P) 

6.4536 

-0.0755 

358 - 713 

63237 6.4-166 

- 

- 

- 

- 

- 

- 

- 

S Africa (FlnJ 

<H) 

29950 

-0.067 

850 - 050 

4.0600 

3.9850 

4.0267 

-10.1 

4.0875 

South Korea 

(Won) 

1289.97 

+3.69 

925 - 068 

1290.68 1283.51 

- 

- 

- 

- 

- 

- 

- 

South Korea 

(Won) 

790545 

-1.705 

300 - 790 

800.600 798300 

801345 

-43 

805.045 

Taiwan 

ITS) 

420039 

+0^299 

886 - 192 

422278 412509 

■ 

- 

. 

- 

■ 

- 

- 

Taiwan 

Crs) 

28.1260 

+03122 

230-290 

26.1290 28.1025 

28.146 

-0.9 

26.188 

Thailand 

m 

40.2639 

+0.1757 

458 - 019 

402990 40.0680 

- 

- 

- 

- 

- 

• 

- 

Thailand 

(BO 

24.9250 

-0.0155 

200-300 

24,9350 243200 

243975 

-33 

25.125 


1.3632 -0.6 
3.4302 -03 


00 


a* 

3 2 


0.9 


1.3847 -06 
7.7428 -02 

94.48 03 

2-6087 -2.1 
1.6433 -OS 

3.775 -OB 
1.4815 07 

3.649 -04 


25.605 -2.7 


B&3 

94£ 


85.0 


149.8 


tSDR rates tar Oct 17. BUIfaffar spreads In the Pound Spot tuple shew only Uw bit ttvee deomd places. Forwent rarer am not draaiy quoted to die mortar 
but rm knpMd by curant interest rawfl. Swung mdex alternated by the Bank <9 England. Base enrage 1885 - lOOBSrt. Offer and Ud-ratw h both mh and 
the Dote Spot tables derived tram THE WM/REUTERS CLOSING SPOT RATS. Some valuers are rounded by the F.T. 


CROSS RATES AND. DERIVATIVES 


tSDR roe lor Oct 17. OtVOffer spreads In the Dote Spot table show only the list three dedmrt puces, toward rates am not thracoy quoted » the market 
bur are ImpBed by curara imwmt rates. UK. Ireland A ECU ere quoted ki U3 currency. JJ>. Morgen nominal vstoas Oct 17. Base evaraoe 1WHM00 


WORLD INTER ESTRATES 


MONEY BATES 

October 18 Over 

night 



■ % LIBOR FT London 
Interbank Ffedng 
week ago 
US Ddar CDs 
week ago 
SDR Linked D> 
vrodt ago 

ECU Uhfeed da n#> rane: 1 irate 5W; 3 mow 


5 

54 

59 

sb 

5 

5% 

57s 

6H 

432 

531 

5.61 

6.08 

432 

5.31 

5.60 

fi.1' 

3H 

3& 

3% 

4 

3% 

34 

3*1 

4 


mv Mtaw ua new rawut r -«i — — — — . Adrikl d HEP 

ndte are offered asm tor Siom quoted to tw mart w ww*wutar. 

day. The berks ore: Batten Treat. Ba * « Taya LWw* Deports (Dr. 

Mid rasta ■» sheen lor me damesdc Money Retee. Us * d* onQ 


wnWng 


EURO CURRENCY INTEREST RATES 

One TTwee 
month months montfY1 . 


Oct IS 


Short 

term 


7 doys 
notice 


One 


Belgian Franc 
Danish Krone 
D-Maric 
Dutch Odder 
French Franc 
Portuguasa EsC- 
Soenlah Peseta 
Starting 
Swiss Franc 
Can. Dote 
US Dote 
natai lira 
ran 

Aten SSlng 


43 -4U 

6-5* 
41I-4U 
4* -4* 
s*-s* 
sft-sft 

7*2 - 7ft 
6 - 6 % 
3% -ah 

4%-4H 

B-7h 

24-21. 

1*-1* 


Short term now are cel tor the 

■ THB aaOKTH PMOR 


4» - 42 

0-5% 

41J - 4R 
ih -4ft 
sft -sft 
aft - a 
7*2 - 7ft 
5ft -5ft 
3ft -3ft 
4ft - 4J 

4a -<a 

8ft ■ 8ft 
2ft - 2fl 
1ft -1ft 

US Dote anc 

futures i 


412 

-48 

5*4 - 

5l a 

5*2 

B ■ 

sU 

(A- 

8>4 

8% 

48 

-4U 

5*3 

- 5 

SU 

48 

-4J2 

SA- 

5 it 

SA 

6> 7 « 

-5A 

55a - 

S*2 

SB 


-9fl 

lift 

■ 10 

m*» 

7»2 

-7H 

Th- 

73* 

8ft 

5A 

-5,1 

S12- 

sH 

eft 

312 

- 1,1 

aig 

- 4 

4ft 

6- 

4% 

5i’. - 

5A 

6 ■ 

5 - 

4\ 

S.*.' 

5,', 

5 12 

8/. 

■ 8A 

*\- 

Oh 


2A 

- 2,2 

3B- 

2]i 

2h 

2^8 

-2*4 

3A- 

3it 

35» 

Yen. 

atm* 

two eta*' noBco 


■ 8iV 
7h-7h 

5A - s>; 

sH-sa 

®»e - BA 
10ft - IQ 1 ! 
<-4 

7A-TA 
4S-4A 
eji-stf 
BA -«A 
10A - ioA 

4-3% 



Open 

Sen price 

Ctranse 

High 

LOW 

Eat vol 

Open mt 

Deo 

94.13 

84.18 

+0.02 

94.20 

94.12 

26,150 

52,851 

Mar 

EG. 73 

93.77 

+0.02 

93.80 

93.72 

16312 



8337 

93.42 

+0.02 

93-46 

93.36 

10.437 

22,602 

Sep 

9335 

83.07 

+031 

93.10 

83.02 

3,024 


m THUS MONTH EURODOLLAR fL/FFB" Sim paras of 100% 




Open 

Sen price 

Change 

High 

Low 

Eat vet 

Open M. 

Dec 

94.16 

94.12 

4X01 

94.15 

94.15 

25 

2558 

Mar 


93.72 

-031 



0 

1386 

Jon 


93.32 

-0.02 



0 


Sep 


9239 

-0.02 



0 


■ TKREH MONTH BUROBARK WTURBS 

(UFFE)" DMIm potnta « 100% 



Open 

Sett price 

Change 

Htgh 

Low 

Eat woi 

Open ht 

Dec 

9432 

94.82 

. 

94.65 

04.79 

31138 

157250 

Mar 

9436 

9436 

-033 

9439 

9433 

33731 

135454 

Jun 

9432 

9430 

-004 

9425 

94.17 

24229 

100192 

Sep 

9334 

9332 

-035 

93.59 

93.80 

11887 

80021 

■ THHUHONTH EURQURA 1 

INTJUTN FUTURES (UFFE) LI 000m poWa of 100H 


Open 

Sett price 

Change 

Kfigh 

Low 

Eat vol 

Open hL 

Dec 

90.58 

90.74 

+0.03 

00.77 

90.80 

6579 

31769 


8937 

90.05 

+004 

90.09 

89-96 

4201 

19989 

Jun 

89,45 

8933 

+034 

8939 

89.45 

1883 

14563 

Sep 

88.00 

89.15 

+033 

59.18 

89.08 

879 

15823 

■ THREE 

MONTH BUHO SWISS PltAMC FUTURES (UFFE) SFrlm pointa of 100% 


Open 

Sett price 

Change 

High 

LOW 

Estvol 

Open bit 

Dec 

95.74 

9SJ4 

-0.01 

95.76 

95.72 

3752 

20521 

Mar 

9530 

95.47 

-0,04 

95.50 

95-45 

1518 

16797 

An 

9538 

95.07 

-0.03 

95.08 

96.05 

394 

6170 

Sap 

94-75 

94.74 

-a 03 

94.77 

94.72 

MB 

1239 

■ THRBH 

MONTH ICtl FUTUncs (UFFQ Eculm points of 100% 



Open 

Sett price 

Change 

High 

LOW 

Eat vol 

Open M. 

Dec 

9335 

33.88 

-0.01 

93.88 

9333 

1015 

7391 

Mar 

93.40 

93.43 

-0-01 

93.46 

93.40 

1457 

6408 

Jun 

9230 

9233 

- 

82.98 

9230 

1378 

3430 

Sep 

92.47 

93.43 

+031 

9231 

82.47 

639 

1815 


* UFFE Anues traded on APT 


EXCHANGE CROSS RATES 

Oct 18 BFr DKr FFr 

DM 

t£ 

L 

FI 

NKr 

Ea 

Pta 

SKr 

Sfr 

E 

CS 

$ 

Y 

Ecu 

Belgium 

(BFr) 

100 

1004 

18.86 

4.657 

2026 

4955 

5-442 

21.15 

4874 

403.7 

23.31 

4A35 

2004 

4-388 

3237 

3103 

2£50 

Danmark 

[DKr) 

52.52 

10 

8.751 

2-551 

IMA 

2602 

2858 

11.11 

281-2 

2120 

1224 

2119 

1.053 

2304 

1.700 

1801 

1239 

Ffcsnce 

(FFr) 

80.01 

11.43 

10 

2915 

1218 

2974 

3-206 

1269 

296.4 

2423 

1299 

2422 

1203 

2633 

1.943 

1808 

1-530 

Germany 

(DM) 

20.59 

3.920 

3.431 

1 

0.417 

1020 

1.121 

4354 

1024 

83.12 

4.800 

0.631 

0413 

0.903 

0.667 

65.13 

0525 

Ireland 

(to 

4935 

9-396 

0223 

2.397 

1 

2445 

2665 

10.44 

245^4 

1992 

1150 

1291 

0989 

2185 

1.597 

1501 

1258 

Italy 

to 

2.018 

0.384 

0.336 

0.098 

0.041 

100. 

0110 

0427 

1004 

B.147 

0470 

0081 

0.040 

0089 

0065 

6383 

0-051 

Netherlands 

(Ft) 

18.38 

3.499 

3.082 

0,692 

0372 

9105 

1 

3.888 

91.38 

74.18 

4284 

0741 

0388 

0008 

0.585 

5012 

0489 

Norway 

(NKri 

47^9 

9.004 

7.880 

2297 

0.958 

2343 

2573 

10 

235-2 

1909 

11-02 

1-908 

0248 

2075 

1-531 

149.6 

1206 

Portugal 

(Ea) 

20.11 

3S29 

3.351 

0977 

0.407 

996.4 

1.094 

4252 

100. 

81.18 

4.688 

0611 

0.403 

0.882 

0651 

6360 

0513 

Spain 

(Pta) 

24.77 

4.716 

4.128 

1-203 

0502 

1227 

1.348 

5.238 

123^ 

100 

5.775 

1.000 

0487 

1.087 

0802 

78-35 

0632 

Sweden 

iSKri 

42.90 

8.1 68 

7.148 

2-083 

0.889 

2126 

2334 

9.071 

213.3 

1732 

10 

1.731 

0880 

1.882 

1.389 

135.7 

1294 

Switzerland 

(SFO 

24.78 

4.719 

4.130 

1204 

0-502 

1228 

1.349 

5-241 

123^ 

100JJ 

5.777 

1 

0497 

1.087 

0.802 

7039 

0632 

UK 

ro 

43^9 

9.499 

8.313 

2423 

1-011 

2472 

2.71 S 

10.55 

248.1 

201.4 

11-63 

2013 

1 

2188 

1.815 

1572 

1272 

Canada 

(CS) 

22.79 

4339 

3.798 

1.107 

0-402 

1129 

1240 

4-820 

113J 

9201 

5.313 

.0220 

0457 

1 

0.738 

7209 

0581 

US 

(SI 

30^9 

5^82 

5.147 

1-500 

0.626 

1531 

1.881 

6.533 

153£ 

124.7 

7201 

1248 

0619 

1.355 

1 

97.71 

0788 

Japan 

ro 

31 62 

8.020 

5.268 

1.535 

0641 

1367 

1.721 

6JJ86 

1575 

1Z7^ 

7.370 

1278 

0634 

1287 

1.023 

100. 

0806 

Ecu 


3922 

7.488 

6-535 

1-905 

0795 

1943 

2134 

8-294 

1852 

1503 

8.143 

1.583 

0788 

1.721 

1270 

124.1 

1 


Futures Ltd 


EQUITY AND INDEX OPTIONS 

COMPETITIVE LY PRICED EXECUTION SERVICE 
For further information please contact 
Philip O'Neill 

Tel: Or I 329 3333. Fax: 071 329 3919 


Dansn Kroner, French Franc, NorMegtsi Kroner, end Smash Kronor per ttk Belgian Franc, Yen, BecuOo, Urn and Assam per 100. 


■ D-MARK nmiRBS (IMM) DM 125.000 per DM 


■ JAPANESE YMH FUTURES (IMM) Yen 135 par Yen 100 



Open 

Latest 

Change 

High 

Low 

EaL vol 

Open In. 


Open 

Latest 

Change 

hfigh 

Low 

Eat vat 

Open W. 

Dec 

06670 

0.6665 

-0.0010 

0.6678 

0.6645 

43.161 

90280 

Dec 

1.0292 

1.0276 

-0.0022 

1.0296 

1.0230 

28J15 

57,090 

Mar 

0.G667 

0.6678 

-0.0000 

0.6680 

08882 

555 

4.189 

Mar 

1.0345 

1,0358 

-0.0021 

1.0381 

1,0330 

500 

6.170 

Ji*i 


0.6701 

“ 

" 

" 

2 

613 

Jun 

" 

1.0475 

- 

- 

- 

1 

494 

■ SWISS FRANC FUTURES (IMMt SFr 12S.OOO per SFr 



■ 8VEPUNQ FUTURES (IMM) BB2JS0Q par £ 




Dec 

08031 

OBCC6 

-0.0015 

0.8041 

08008 

28575 

41,170 

Dee 

1.6080 

1.6130 

+0.0046 

1.6152 

1.6054 

16.843 

43-880 

Mar 

0 8049 

0.6058 

-0 0009 

0.8063 

0.8046 

159 

1023 

Mar 

1.6110 

1.6130 

+0.0052 

1.6130 

1.6110 

149 

464 

Jun 


08103 

- 

- 

- 

4 

59 

Jun 

- 

1.6090 

- 

1.6090 

- 

1 

8 


LONDON MONEY RATES 


Oct 18 

Over- 7 days 

One 

Three 

Six 

One 

Netherlands 

2.19672 

2.14472 

+000197 

-037 

5.01 



ntgfit noflea 

mourn 

momfw 

months 

year 

Belgium 

402123 

33.3840 

+00343 

-2.06 

528 

16 

Irtfij&anlv Sswimg 
Sterling CD» 

Trejsrrti' P<fln 

Bant BJs 

Local rajthjnty deps. 
frsceuni Mariiot &*a$ 

84 - 3 sb - S>4 

5 1 * - 5*a 5'« - 5tj 
57 4 - 3-'4 55a ■ 5>a 

5ft - S*e 
5»i - 5*3 
Sh * Sft 
SJ3 - 5)i 
5ft - 5ft 

a - 5* s 
S5| - 
3*8 ■ 5U 
S\ ■ S{J 
5\-5h 

6h - 6*4 
6ft -6*a 

6ft - 6 
Oft - 6ft 

7*4-71, 

7ft - 6\l 

7 ft - 8|J 

Germany 

Ireland 

Franca 

Denmark 

Portugal 

Spain 

1.94964 

0208628 

6.53883 

7.43679 

1*L654 

154.250 

1.01396 
a 798641 
S.S6GS 
7.50007 
195 258 
159.053 

+0.00107 

-0001995 

+0.00138 

+aoai 

+aioi 

+0.028 

-1.83 

-124 

0.42 

085 

1.S6 

3.11 

6.04 

4.40 

2X8 

2X4 

1-53 

0.00 

8 

-4 

-6 

-10 

-22 

UK clearing Bank baso krxjing rile S ? * por cent (ram September 12, 1994 

9-12 

NON BtM MEMBERS 
Greece 264.513 

293.463 

+0.254 

1094 

-7.08 





3-6 

6-9 


179ai9 

1952.61 

-4.16 

8.89 

-530 

_ 


rrurrth 

month 

months 

iiHvdfa 

irwntfis 

UK 

0.706749 

0.789150 

-0.002319 

031 

2.30 

- 


Oils rtf Tax dep. (EMOO.OOOi I 1 ’ 4 34 3ft 3ft 

Cem of tor under ri 00.000 a i ftpe. Deports wrthdrawn lor cam 6 pc. 

undo > n* of -soccuM 54-i.ipc, ECOP fired rare SUg Export F hanre Mite UP day Sap 30. 
i;«9J Agreed r. ct> (or p«nxl Oc, 70. 1904 1o No* 2S. 1904. Sdwnes 9 & II 7.05pc Reference rraa (or 

ucnodsepi 1WJ to Sep 30. 1904. Sebomea IV & V STSSpc finance House Soso Rohr £pc tram Oct 
i. t#M 

■ THREE MONTH STERLtNO FUTURES (UFFE) £500.000 potato of II »» 



Open 

Sett price 

Change 

Ugh 

Low 

E3L vol 

Open M. 

Dec 

0X57 

93.54 

-007 

33.58 

93.51 

22719 

148156 

Mar 

92 .78 

92.75 

•0.08 

92.70 

92.72 

22846 

70034 

Jun 

9221 

92.18 

-0.08 

92.21 

92.16 

8766 

51181 

Sep 

01.78 

91.76 

-006 

91.79 

91.74 

5827 

50525 


Traded cn APT AI Open Inteml Cgs. am tor pmrious day. 


■ SHORT STBHLWC OPTIONS RJFFE] CSOOJXO prints ot 100% 


Stmo 

Pnce 

□oc 

- CALLS - 
Mar 

Jun 

Dec 

— PUTS - 
Mar 

Jun 

3350 

0.21 

0.08 

0.12 

0.17 

003 

1.44 

9375 

0.10 

0.04 

0.08 

0.31 

1.04 

1.65 

9400 

0.03 

0.01 

0.05 

049 

125 

187 


Eel. «J. total. rU) Pula J040 Prawaus day's own hi. Gals 332348 Puts 1 83152 


EMS EUROPEAN CURRENCY UNIT RATES 

Oct 18 Ecu cea Rato Change 96 W- finom % 

rates against Ecu on day 


can. rote v weakest 


Ofv. 

Ind. 


Bcucenrai rates set by me Euopeen Comirwsion. CLirenciss me in dsacereang mm atrengtti. 
Pwon oy ch angea are tor Ecu; aposmes ctwnge denotes ■ r resk cunancy. Oiia<gsnce a hre n Bie 
ratio between taro spreads: the percenrage iWeww Mansi the actual mstat sod Ecu carnal rates 
Ax a raiTisncy. ana Die nuunzn permute d pc t e nt ag e devfaifon or Hie curancy's rasttt rata hem He 
Ecu efrind rate. 

ll7.W9a Staffing and Ratal Ura suspended tram ERM. A^ustmortt calaisisd by Rw Ftosnd M Times. 


■ PtULADELPHtA SB C/S OPTIONS J3U2S0 (pants per pound) 


Strike 

Price 

Nov 

- CALLS - 
Dec 

Jan 

Nov 

— PUTS — 
DSC 

Jan 

1.550 

6.38 

8.66 

6-32 

0.03 

nAj 

068 

1575 

4.11 

4,65 

5.06 

020 

0.79 

1.25 

1J500 

225 

L99 

3.49 

077 

1^8 

2.13 

1j62S 

095 

1.79 

2.32 

1^7 

2.78 

3-32 

1SS0 

030 

0.97 

1.44 

3.78 

4.43 

4.91 

1JT75 

0.06 

047 

0.84 


8.42 

8.79 


Prevtaua day's mU Cdb tiaoao Puts 87,894 . PRW. day-5 Open ML. Ctes 411.700 Puts 353908 


l MONTH EURODOLLAR flhAQ Sim points of 10096 


RASE LENDING RATES 



% 



Acam 8 Company . 

.._ 5.75 

Duncan Larnte.. ....... 

,5.75 

ABod Trust Bank ... 

. . 575 

ErewrBar* Urrted „ 

6.76 

AJS63T* 

.... 5.75 

Fturcal a Gon Burt . . 

.. 6.5 

•Henry Anabochw .. 

. .575 

•Robert Ftemlng 6 Co .. 

.5.75 

Pankof &awta 

5.75 

Qrobank 

575 

Bancs B£xu Vccaya.^ 5.75 

•Gumnoas Mahon 

5.75 

Bonk of Cyprus. .. 

5.75 

Hat* Bar* AG Zuridi .5.75 

Bar* ef Ireland .. . 

... 5.75 

•Hambras Bank 

5.75 

Bank of Irafa 

. . 575 

HePtaBoSGenInvBt575 

Bar* of Scotland ... 

..-5.75 

•HriSonW. 

57G 

Barclays Bar* 

. .. 5.75 

CHoorefiOo - 

,575 


Bit Bk Cl MO East.. .. 575 
•BrOwnShproyiCoLtd 5.75 
CL Bank Nc&fiand ... 5 75 

atto*NA 5.75 

CiyaasdawBardt 5.75 

TT» Co-oporattro Sat*. 575 

CourtaSCo 575 

Credit Lywnnac 5.75 

Oxsus FtpUbr Bor* ,A7S 


Hongkong & ShanghaL 575 
Jufian Hodge Bank — 575 
•Leopold Juopn & Sons 575 

LfaydsBai* 575 

Meghtaj &a* Ud 5.78 

IMandBank 5.75 

* Motrl Banking 6 

MaWostmnsler - 5.75 

•flaa BnWws 57S 


* RaxDurghe Guarantee 
Corporation Urrumd is no 
fangsrauflwrtsedaa 

o banking Insttuiloii B 
Royal Bli d Scotland _ 5.75 
•Snflh & Wflteon Sues . 5.75 

TSS 5.75 

•UntsdESkorKuwal.- S.76 
UnByTnat Bank Pic. » 575 

WtostBrnTYust 5.75 

Whttaeay Laklaw ..._ 575 
YortartraBark 5.75 

* Members Oi London 
(nvaalmenl Banking 
Association 

* In admHatraoon 



Open 

I IWM, 

Change 

High 

Low 

EsL vol 

Open InL 

Dec 

94.12 

94.14 

+002 

94.15 

94.12 

H8A35 

448JS2S 

Mar 

93.73 

93.75 

+0.02 

83.77 

9573 

81^43 

401.758 

Jun 

93.34 

9536 

+0.03 

9537 

9334 

41333 

300^31 

■ IIS TMA8URY BBX HTTURE5 (IMM) Sim per 100M 



Dee 

94.70 

94.71 

+0.02 

34.73 

84.70 

1.563 

18^11 

Mar 

94^7 

*3.75 

+0^32 

34.28 

8427 

64Z 

9.153 

Jun 

93.68 

93.36 

+0.02 

93.88 

63.88 

5M2 

3,718 


an open iiiase s r flas . am lot eravtous day 
■ EUROMAHK OPTIONS (UFFE) DMIm points of 100% 


Strike 

Price 

Nov 

Dec 

CALLS — 
•lan 

Mar 

Nov 

Dee 

PUTS 

Jan 

Mar 

9475 

0.10 

0.14 

Oil 

0.14 

0.03 

507 

0.31 

534 

9500 

0.03 

004 

502 

500 

520 

022 

047 

061 

9525 

0 

0.01 

0.01 

502 

543 

0.44 

571 

0.72 

Esl voL ratal. Cans I37tw Puts 

7979. Previous 

day’s open tot. CMC 188194 (Hus 173744 



■ BUBO SWISS HRANC OPTWIiS (UFFEl 8Fr 1m pointtM 100% 












rrrmm 




I’f’rl 

l-yX'MMW 

1 






Jim 

057 

0.75 

096 


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Please return your donation tor 
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CONTRACTS & TENDERS 


ESTADO DO PARANA 

SECRETAfSA DA AGfVCUIJUJlA E DO ABASTECWENTO 
IffVR burtituto Agronom icc do ParseWi 

LIGHTING DETECTION AND LOCATION SYSTEM 
SIMEPAR TENDER N® 003/94 
CALL FOR BIDS 

The AGRONOMIC INSTITUTE OF PARANA - 1APAR will 
receive until 2.-00 p.m. on ihe 25 November 1994. at the Parana Slate 
Meteorological System - SIMEPAR at the Polytechnic Center o/ihe 
Federal University of Parana, JanSim das Americas. Curitiba - ParanS 
- Brazil, the Documentation Tor Eligibility and Technical and 
Commercial Proposals to manufacture the equipment for the 
Lightning Detection and Location System, the complete description 
of which is contained in the Technical Specification, the opportunity 
for which will begin in public session by the opening of the envelopes 
containing the Documents of Eligibility. 

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

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

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

Sistema MeteorolGgico do Parard - SIMEPAR 
Centro Politecnico da Univeraidade Federal do Parand 

Jardim das A mfiricas - Caixa Postal 3 1 8 

8000 1 -970, Curitiba - Parand - Brazil 
Tel/fcw: +55(41)366-2122 
A complete copy of the document for bidding, in Portuguese and in 
bc 5^'f incd by interested parlies on payment ora non 
returnable f« ofR$ 300.00 (three hundred Reais) up until 10 (ten) 
days before fee above established deadline for receiving proposals. 

rWS f ° r p r 8 * mcnu ’ ^suiting from (his current 
bidding, are available as part of the Parana State budget 

document for bidding is purchased, all Bidders shall 
present a letter containing tfieir complete mailing address (Bidder's 

Nu^nbe,r, Zip code * at >- Stale - Country, Tel and Fax 

CONQALQ SIGNORELLI DE FARIAS 
Director President 


GOVER NO do ESTADO DO PARANA 





\ 


















’r - 



FJ-NANClAJL TIMES WEDNESDAY OCTOBER 19 1994 


33 


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£1350 S»!» 
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10655 SIwiA 


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- ““ 1 vatft • Dartogi usararaga rt E» 

k a map ttan. a Ej ngrai ra E* 08 


FT FRS ANNUM. REPORTS S8WICE 
IwiaidWrtuiatnAMiiAaiAat 
uraraj ■luhrtil art } n— aaraaaeadi 

FDIrt Mno Oil 77D071Q kopra 2* hcraartertdkB 
■lAirti 1 * 1 » Mini 710 3SE1 » Qrtia Bra ntt* Ha 
IK. « +41 91 770 IT70 V Irt +44 «1 7» 3922. 

iMU*OKaiNaaa> 




■ TOKYO - MOST ACTIVE STOCKS: Tuesday. October IB. 1994 


— NnLBr 


Brftif} 
C3 Br 


Hrfa 

FtanS 

Mofr 

KkS*B 


6S0 
as* 
2X20 
1.114 
211 
543 
7 11 

70S 

3» 

3X00 

1,470 


-4 292 181 _ 
— 721 683 ID 

—1 m SET ID 
-75 £006 £173 1 A 
-2 1X40 1X15 ID 
-1 250 100 1.7 
-12 7*7 SCO £3 
-8 970 705 £1 

-« 9*2 am £1 

+1 42Z 331 _ 

+20 3X50 1X0C 17 
-30 1,780 1X80 £7 
-10 £032 £400 10 
-2 983 858 ID 



1X40 _£2101X7D - - 

430 +3 *57 ZS! 

53 +1B 565 348 _ — 

740 -8 7EB 522 _ — 

780 -4 tio mu - 

SJBO +60R.150 5X40 — — 

586 _ 744 430 _ _ 

1^ _ £070 1730 — — 

7W -15 884 528 — — 

1700 _ 1770 1.4® OD — 

339 -2 448 2M — — 

737 -1 77H WS 07 _ 

430 +3 501 3BB _ _ 

S +10 630 47B _ _ 

£120 1X10 _ „ 

» -8 *00 2» — _ 

810 -S 948 590 _ _ 

846 -6 715 431 _ _ 

1,150 _ 1X40 822 06 — 

£1® -80 £600 £060 OD — 

1M00 -200 13.400 0X80 — _ 

1230 -10 1^70 1X10 0.7 _ 

-151X50 K=> — _ 

+10 ID® 12® — — 

+10 £482 1,7® _ _ 

+11 420 339 — _ 

-3 82E 51B OJ _ 

+3 670 430 — _ 

_ £970 £*30 _ _ 

♦12 602 425 — . 

- 101 X 101 . 1*0 _ _ sramF 1 

_ SB BS Safoi j, 

-7 G2 271 SekOth 

+2 46* 303 . — _ SekHa* 1, 


1.18 
0D3 
£13 
140 
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£13 
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120 

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— IX® 1.050 ID — OVs m® 

_ 744 829 _ - 100 ski £78 

£900 £4 nX LraaJL* 16-32* 


£8fl 4D 
+X3 5D0 4XD 1.1 
-JJ* BDB £30 TJB 
- 1X2 0.78 0.4 



Stocks 

Closing 

Change 


Stocks 

Closing 

Change 


Traded 

Prices 

on (toy 


Traded 

Prices 

on day 

Kawasaki Klsen — 

5.5m 

409 

-7 

NKK _ . 

3.9m 

294 

+6 

Sumitomo MIS Mki 

fx3m 

980 

-15 

Toeoh 

3.5m 

428 

+8 

Sumitomo Mil Ind 

5.1m 

354 


buzu Motors 

3Jm 

528 

+16 

Kawasaki Steel 

5.0m 

447 

+2 

Nissan Motor 

32m 

625 

+7 

hSppon Steel . .. 

43m 

390 

+1 

Nippon Paper 

3.1m 

783 

+5 



+ 6X2 £97 5D20X 
— 1X2 1X0 2D 
-X3 1-*0 D-B8 2D OD 
-X5 £45 £44 2D ... 
-X7 3X6 230 4.1 _ 
_ 1.47 OXS GD _ 
-XI £80 £07 7D 10D 
-D5 3X0 £12 72 _ 
1.10 : 


1J 


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1>40 


t m 


t? ^ Six 

-10 £240 2^10 

— 582 »0 1.1 
+13 810 440 ID 

868 -12 ?X20 706 ... 
}320 — 1® 4,060 3X30 _ 

♦1 *858 447 Z 
-10 1D401X30 _ 
-10 704 515 
+10 £800 £110 OD 
♦ 10 £1® 1,010 _ 
+20 £370 1X50 _ 
-71X00 BBS _ 

— 609 416 _ 

+2 1X00 870 

-30 7X90 £350 OD 
-80 9X40 4X10 _ 
-® 4X30 3X70 — 

— 1X201X80 OX 
-201X80 1X60 _ 

... 1X10 IJBO .. 
+0 1,160 066 _ 
+10 1/4901.1* ID 


— Hon I 


zttsr 

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2D0 
£71 ra 
BD8 
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7 

£44 
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£42 

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£96 

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4DBN 
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z S£S, 


-02 1.78 

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2X5 2 7D 6D 

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-v05 340 £45 5.2 _ 
_ £39 £55 IX 87 X 
-70 >0X4 SD6 47 20D 
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_ 13X6 9D7 4D 120 
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— XB 6X8 3D0 3D .... 
+X2 279 1X0 £5 _ 
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+X1 5X2 3X0 SX _ 1 
-.08 £15 
- 2.0 
- 3.48 £80 4B 1£8 
._ 476 £48 £1 _ 

-XS £25 BXO OX 
-.02 * JO 2D3 £5 _ 
-04 BOB 430 5.7 _ 
-X2 1.74 1.18 87 _ 

-ra bxs 4XB as _ 

-X4 570 4X2 _ _ 
-ra 4X2 3X8 7X SX 
-ra 7.10 5X5 5X 
+JJ4 1210 MOO 
-ra £80 2X5 5.7 _ 


Any time any place 
any share... 


Instant access to up-to4h e-minute share prices from 
anywhere in the world 


Whether you’re doing business in Berlin or hatching deals in Hong 
Kong, FT Cityline International can link you with all the UK stock 
market information you need: 


INDICES 


US INDICES 


Oct 

18 


Od 

17 


Oct 

14 


on 

18 


Od 

17 


Oct 

U 


W 


Low 


General (231377) 


M OrtRsrtsflTUHO) 

AIMhhg(VI«9 


M 20188X9 2mO£L8r 25*7040 IfiC 

2003.4 20142 20080 29*9X0 S2 
10575 10825 105M 713810 SB 


ObB Ndknpon2A4) 3»D6 394S8 

Tr awl toeu&wn 106047 106496 106043 122225 1/2 


138257 1381JB W7186 T5CZX5 VI 
80 47844D 48338X 5511090 13* 


8020 (wait 

Btxd 

Boafc^n C9fl2/83) 


7725998 204 

PC 9*)i ISTS) 

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Z755D7 

277758 

288L17 tn 

1957X3 204 

HS7AS 27/6 
98480 SIS 

osimsrtCitfoa 
CBS Al Str put 83 

432J5 

27TD 

<3£4 

2735 

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2738 

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29458 3VT 

40038 2)18 
25790 21K 

50871 VIO 

Ha* Zartart 

C®. « 077/80 

2092X1 

3B&38 

2Q53XB 

20864 3/Z 

10405) 11/7 

10TL3B 06 

■mar 

0*> 5W07I/B9 

1072X0 

108153 

1083138 

1271.19 202 

9989) 2UB 

133089 7710 

UrtSasp (27U8S) 

3066X5 

30Sai* 

289083 

838037 «1 

207X3 S3 


BTA(I377) 


2092J 28319 28818 322880 IBrt 281290 20A 


IMtaMtoiflBTS 
COnvorttf {1975 
PonMU§§ (4/1/B5 

com 

F8A W P1/I2AQ 

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S8F 250 01712*0 
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00 VWIB 4188X0 42SA5B 189 
08 4327X0 <33240 480998 293 
00 207492 207272 2S829B 1/2 

08 967115 5571.6 567050 17710 

34895 3*8.19 34800 «15» SW 

1947,1 10815 19BIJ 187200 4 R 

1268.78 1274.44 128806 198520 20 
1898X0 1908.42 193102 23GS83 20 

tti *9BrfJ1rt2S8) 78158 7«MB ^ 

JSSSSSS- 

.383171380) 8»1* 8*a3B 1WU8 INI 

941857 9*65X4 955053 12201X8 471 
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rora-wan «■ S? 

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390120 4/4 

33£11 7710 

1801.10 W 

123803 5710 
183832 8710 

7420* 5710 
2TI£30 5710 
198059 7710 

80887 25/S 

08944 46 

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1994 

Sira camfelkc/ 


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392383 

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389395 

397038 

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B£3* 

90*5 

9847 

WSD1 

B91 

10977 

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Cl/1) 

f771« 

(1871083) 

n/i orai) 

Twsport 

1485.78 

148048 

1487X3 

VBJB 

1438X0 

188229 

12X2 





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PttKK) 

ynrs, 

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18198 

182.64 

182.1) 

227X8 

175« 

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fV1> BOB 

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WW21 

Day} Hrt> 3833X8 p81£48 ) Low 3801.79 0878X1 ) lACtura*) 


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468X6 

469.10 

487.77 

4BZ® 

4389? 

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4.40 





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fl/10/74) 


1 real time share prices 
►updated financial reports 


•daily unit trust prices 
• personal portfolio facility 


MMSEptfU/BE) 


mill 

DWetn 

23*00 7/9 

1MUD MS 

NYSECd®. 

26796 

25798 

257D3 

25771 

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110087 

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39097 5710 





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I (1/837) 1450L7D 14859 M54X 


JW 


9MH Bk U pwaa* 11802) 119850 120876 1« 834 31/1 
SBC Ganen* (WOT) SCB74 817X7 821.16 HBU9 31/1 


YMgUNFcj»MEr 67B53 87312 8587.77 719L.13 3019 


BnfrAmpoHmi isnxa mo i48oss trcus 

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tM* Q^Dn 1986) 258185 281X48 270082888898 1371 


ms caputt (wm saw ssaa bsu b**® ztb 


Bna8«1IX«VH>l9l9 133352 13430) t3SQ.1T 184019 3171 
Eun lop-1® pBWSq 1T7&S1 1188827 1181X5 131191 2/2 
XXtSXja (MVSSi 6$ S375D 33824 398118 G7) 
BeRngi EmtraJ7«rB2) 18771 18893 18083 WJI 256 

■ CAC-40 STOCK MDCX wn U B M (MATE) 


13300 677 


118797 1877 
' 57)0 


618083 IBS 
119058 *K 
72B8UO 246 
59190 4M 


sno 

113048 5710 
29028 2V3 
M1DB 21M 


m RATIOS 


Dow Jones Ind. Ov. Yield 

S & P rnd. Olv. yield 

s&Ptmp/E mao 

■ STANDARD AM) POORS 500 MDCX FUTURES SGOO times Index 


Oct 14 

Oct 7 

Sep 30 

Year ago 

£71 

£79 

2-7B 

2X1 

Oct 12 

Oct 5 

Sep 28 

Year ago 

2.37 

2-43 

239 

2X7 

2091 

2033 

20.78 

28.00 


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Dee 469.B5 46095 

Mar - 478.15 

Jui - 475X0 

Open knrtrro flowra are ter protoua tor. 


H&i Low Eot voL Open tnt 

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Complete details below and send to: FT Cityline International, 
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Name: 

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Postcode: Tel: 





34 


FINANCIAL TIMES 


DOMESDAY OCTOBER 


19 1994 


dose October 13 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


1994 



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When you Slav with us 

in ISTANBUL 

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with your complimentary copy of ihc 


FINANCIAL TIMES 

luaovc ; auliMEit wwuni 


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ft 

ft 

ft 

■♦ft 

ft 


Pyramid 

Quadrpleg 


7 7380 10% 9% 
10 4 055 8% 


sfi +i* 
B% 


SuemBTe 

Son £knt 

Suntlc 

sw»Tm 

Sybase toe 

Symantec 

Synteoy 

Synotam 

Synergan 

Syne* 

sympdes 


377813 38% X 35% 
13 170 5% 5 5ft 

17508X102% 31% 32% 


ft 

ft 

ft 

ft 

-1 

ft 

ft 

ft 

-4 

♦ft 

►1% 


45 373(144% 43% 44% +1% 
*9057 43% 4S% 43 ft 

42 1860 15% 15% 15% +% 
0A0 IS 62 19% 19% 19% +% 
90 85 4% 4% 4% -% 

1 1808 5% 5% 5% 

70 77 17 16% 17 +% 

WISlS 16% 15% 16 -% 

SyatmSdl 012 13 564 12 11% 11% ■% 

SyMnmtaj X 798 19% 18% 18% -% 

System* 36 XI 7% 7% 7% ft 


- T - 

T-CalSc 5 578 3% 2% 2% -% 

TJtnwPr 052X1564 32% 31% 32% ft 
TBCQj 132224 10 9% 9% ft 

TEA Cade 044 X 15 23% 23% 23% . -% 

TecMtota 11 810 19*2 is 18 ft 

Tonmseh OX 12 3 46% 47% 48% ft 

TeMac 8 7G2 17 14% 17 

TatooSys 11 306&U1B% 1*% 18% +1 
TattnA 18220770 24% 23% 23% 

Taw* 7 1370 5% 4% *% ft 

Tetefe X8071 50% 48% 48% ft 

Tenon Cp 001 81 538 IS 14*2 14% +% 

TenTec X ire B% 8% B% 

TMPtlAPR OIO XZ442 £7% 27% 27% ft 

TlfMQW 776884 39% 38% 30% ft 

TO X 5*2 5% 5*2 +% 

TJM 023 X IMS 18*2 17% 17% ft 
Totalled 5 019 6% 6% 6% 

Tokyo Her 034 34 12 58 57% » ft 

Turn Breen 63 2851 12% 12 (2 

ToppsCo* 0X300 2741 8 5% B tft 

TH Enter 3 106 6% 5% 5% ft 
liatalNild 2 12% 12% 12% 

Tiamrick IX 10 IX 37% 37 37% -% 

Trtore 19 70 2% 5% 2% 

Titatof 73 1H 14% 13% 13% -% 

TntesNBoC 1.10 10 SB SB 19% 19% ft 
Tseng Lab 020 11 Ml 7 6% 6ft 

TysfdA 0X181 Z9M 24% 23% 23% ft 


US Mix 

IM* 

UOUesGs 

USTet 

UnoadSt 

Urttog 

iwwn 

uSBancp 

USBwgy 

USTCup 

UtohMed 

Wider 

lit* 


Vahma 

talWCel 

Votane 

Vfcor 

WeeraRst 

Hefeodc 

VLB Tech 

WWB 


- u - 

084 166276 47% 46 46% -% 

2 633 5 6ft aft ft 

IX 13 25 18% 18 19*2 +% 

£00 12 64li53% 52% 52% -% 

040 B2516 10% 9% 10% +% 
OX 13 11 17% 17% 17% 

IX 26 SKS 47% 46% 47% ♦% 
IX 10Z13Z 25*4 24% 25 ft 

It 49 4% 4% 4% 

1.12 7 333 11% 10% 10% ft 
15 636 9% 9 9%+% 

12 6 52% 52 52% ♦% 

12 X 4% 4% 4% ft 


- V- 

OX X 5Z2 19*2 15% 16% +% 
IK 712 27% 27% 27ft -ft 
2522B6 23% 22 22% ft 

40 44S 26 »% 25% +% 

IQ 246 17% 1B% 16% 

25 1353 20% 19% 20% +% 
2713801 13% 11% 12ft *ft 
017 18 231 20% 19% 19% ft 


- w - 

Wanna 010 19 2G3 25*4 24% 25% 
Wanted* » 40 5^ 5ft 5% ft 

W*WtoS80J2 8 2859 19% 818 19 >1 
adSLOM 72342 19%m8% 18% -1% 
****** 022 10 275 2B% 25% 28ft +ft 
WauaaPMOy 151487 24% 23% 24% +1 

WW0« 240 16 53 42% 41% fl% -% 
Webtk 7 610 4% 3% 4% 

West Ota 072 10 1439 27% 27 27% -ft 
WBanBne 089 27 IB 32 31% 3iQ *ft 
WP* 11 430 13% 12% 13% ft 
1 32 14% 13% 14% 
ttWSeSA 9 IM 3% 3 3 

VBMto 090 231593 49 46 48% 

mm 753068 33% 31% 33% 
WMttnL 02615 32 18% 17% 17% 
Wtogt 0.40 29 29071123% 22?» 22% 
WPPGreuptUBSI 227 3*i 3ft 3ft 
Wynwn^Sna*) 1 21 9% 9 9% 


+% 

•% 

ft 

+% 

ft 

ft 

ft 

ft 


-X- Y-Z- 

»« ' M47S1 54% 33% 53* 

»»nQ«p 2 Sir 3% 3 3% 

tetew 92 922 19% 19% 19% 
KrtHach 94 840 3% 3% 3% 
aDMUWl IX B 31 36% 37% 38% 


ft 

♦% 

•% 



FINANCIAL TIMES 



AMERICA 


EUROPE 


Rise in oil 
prices drives 
Dow lower 


Wall Street 


Declines in government bond 
prices amid fresh concern 
about higher interest rates set 
the tone for a downbeat day on 
US stock markets, where share 
prices posted falls across the 
board in a subdued morning 
session, writes Patrick 
Hanvrson in New York. 

By 1 pm. the Dow Jones 
Industrial Average was down 
16.15 at 3.907.78. The more 
broadly based Standard & 
Poor's 500 was also lower at 
the halfway mark, down LSI! at 
467.14, while the American 
Stock Exchange composite was 
off 1.53 at 457.23 and the Nas- 
daq composite down 1.09 at 
764.69. Trading volume on the 

Philip Morris 

Share price relative to the 

Dow Jones Industrial Average index 

105 - 



80' 


1994 


Source: Dacwrean 

New York S£ amounted to 
152m shares by 1 pm. 

After putting together a 
string of impressive gains over 
the past six trading days, ana- 
lysts were expecting to see a 
pull-back in blue-chip stocks 
some time this week. It came 
yesterday morning as falling 
bond prices gave investors an 
excuse to sell or keep out of 
the market altogether. 

Bonds fell because of a rise 
in oil prices, which always rat- 
tles inflation-sensitive fixed-in- 
come investors, and because of 
a statement from Ms Susan 
Phillips, a Federal Reserve gov- 
ernor, that the US economy 
was "Surprisingly'’ strong. The 
comment suggested that the 
economy is still growing at a 
rate faster than the Fed expec- 
ted, and led the bond market to 
conclude that another interest 
rate increase to slow economic 
growth would be announced by 


Brazil improves 1% 


Shares in Sao Paulo were l per 
cent higher in midday trade as 
investors began to bargain 
hunt following recent sharp 
losses. 

The Bovespa index was up 
462 at 48J3Q6 by 1 pm in turn- 
over of RSI 73. 9m ($205.3m). 

In spite of the upturn, ana- 
lysts said foreign investors 
were still mainly absent. 

In the currency market the 
central bank bought dollars in 


an effort to bolster the real ftJS 
dollar exchange rate after the 
local currency continued to 
rise. 

Brokers said the bank bad 
intervened eight times over the 
last three sessions. 

Telebras preferred advanced 
1 per cent to RS42.40, Eletro- 
bras preferred declined 0.6 per 
cent to R$3I0 and the oil group 
Petrobras was 2.6 per cent 
higher at RS135.50. 


Strength in South Africa 


Johannesburg strengthened 
again yesterday as demand 
was reawakened. 

Dealers said the gold price, 
recent blue chip strength on 
Wall Street, the expectation of 
continued strong local com- 
pany earnings, and a limited 
supply of quality stock were 
all factors behind the gains, 
which were expected to be 
extended in the short term. 

But traders added that firm- 
ness in the financial rand had 
depressed some major shares. 


The overall index climbed 27 
to 5,682, industrials 65 to 6,468 
and golds 22 to 2,322. 

Sappi set another high for 
the year as it gained Rl at R6G 
on continued positive reaction 
to its acquisition of a 70 per 
cent stoke in SD Warren, and 
ahead of interim results. 

De Beers finished Ri.85 
down at RS9.75 on foreign sell- 
ing. Anglos reversed an initial 
rise to close a net 50 cents off 
at R238. Gencor collected 10 
cents at R14.35. 


cum/TE • j # 

Extended dollar weakness hits bonds, equities 


the Fed soon. 

The concerns were shared by 
stock market investors, who 
are equally troubled by the 
thought of another monetary 
policy tightening. There have 
been five rate increases 
already this year, and the mar- 
kets fear that further rises 
could undermine not just eco- 
nomic growth, but also corpo- 
rate earnings growth in the 
coming quarters. 

For now, however, compa- 
nies continue to post impres- 
sive quarterly earnings. Yester- 
day, amnng- stocks benefiting 
from better-than-expected prof- 
its were Merrill Lynch, up 
at $35%. Sun Microsystems, up 
$1% at $32; Citicorp, up £1 at 
$43%, and Apple Computer, up 
$1% at $41%. 

Philip Morris's earnings also 
exceeded analysts' expecta- 
tions, although not by much, 
and the 27 per cent rise in net 
income to $1.2bn Tailed to 
excite investors, who bid the 
company’s stock down $'/« to 
$6l*/« in busy trading. 

Another stock that fell in 
spite of a strong third quarter 
was Sprint, which dropped $% 
to $37% even though the 
long-distance telephone 
group’s earnings of 66 cents a 
share beat the consensus fore- 
cast of 63 cents a share. 

Polaroid fell $1% to $33% 
after announcing third quarter 
earnings of 62 cents a share, up 
from 52 cents a share a year 
ago but well below most Wall 
Street forecasts. 

Drug stocks weakened fol- 
lowing modestly disappointing 
results from Merck, which left 
its shares $% lower at $35%. 
Bristol-Myers Squibb were off 
$% at $58%, Warner-Lambert 
down $% at $78% and Pfizer $% 
lower at $71%. 

Canada 

Toronto was pulled lower at 
midday by profit-taking, with 
heavy losses in most sectors 
outpacing gains in gold and 
precious metals and financial 
services. 

The TSE 300 index fell 1437 
to 4312.03 at noon in low vol- 
ume of 16.9m shares. Of Toron- 
to's 14 sub-indices, 12 sectors 
fell in midday trade. Weak 
groups were led by communi- 
cations and media, followed by 
forest products. 


After Monday's weakness, 
when Mr Helmut Kohl's Ger- 
man election victory and the 
strength of the D-Mark helped 
to push the dollar to a two-year 
low, the US currency was 
looking shaky again yesterday, 
writes Our Markets Staff. 

European bond markets lost 
ground, some more than oth- 
ers: the effect on equities was 
similarly varied, but generally 
depressi ng. 

FRANKFURT weakened 
slightly in official floor trad- 
ing, the Dax index easing 612 
to 2.084.76. and took a more 
serious tumble in the post- 
bourse where the Ibis-indicated 
Dax closed 26,00 lower at 
2,069.58. Turnover fell from 
DMSJabn to DM63bn. 

Once again, the weakness of 
the dollar made its most seri- 
ous impact on the big cyclical 
exporters, and carmakers in 
particular as Volkswagen 
denied rumours that it had lost 
money in foreign exchange 
markets. By the end of the 
post-bourse, BMW was down 
DM19 over 24 hours. Daimler 
by DM15.20 and VW by 
DM16.70. to DM786. DM764.50 
and DM447 respectively. 

However, carmakers also 
took tbe lead in Germany's 
pre-election rally: before that, 
on October 7. these three were 
priced at DM745. DM730 and 

ASIA PACIFIC 


DM438: there were suggestions 
during the session that inves- 
tors were switching out of 
the sector, and into banks and 
utilities. 

The post-bourse blew more 
froth off some other stocks: 
Continental, the tyremaker. 
lost DM3.50 at DM225; the vul- 
nerable Metallgesellschaft 
DM&90 at DM159.10; Schermg, 
and its drug prospects, fell 
DM34 to DM964; Mannesmann, 
and its mobile telephones 
story, by DM16.50 to DM386; 
and, circling back to dollar-m- 
fluenced, cyclical recovery 
prospects. Deutsche Babcock 
by DM7 to DM230. 

PARIS drifted lower in a ses- 
sion that foiled to come alive. 
The CAC-40 index ended off 
7.52 at 1.89&C0, after moving in 
a narrow range between i£12 
and 1,892. 

The forthcoming Renault 
part-privatisation remained at 
the forefront of Investors’ 
minds, although the vehicle 
sector was yesterday pulled in 
different directions: Peugeot 
down FFr13 at FFr769 and 
Valeo up FFr3 at FFr283.10. 

Hoare Govett said recently 
that it had a preference for the 
carmakers over the equipment 
makers, and rated Valeo a sail, 
in spite of having upgraded 
1994 and 1995 earnings fore- 
casts for the company. “An 


FT-SE Actuaries Shaft 


Oct IS 
Homy (tenges 


Open 


THE EUROPEAN SERIES 

1100 11SD 12ffl 1100 1400 19J00 Oose 


FT-SE EunfflacK 100 
FT-SE Eunmcfc 200 


1335.81 1334.43 1335.10 133X21 1335.62 1337.18 133421 133152 
138109 1391-72 1391.66 138142 138151 1304.16 138192 1389.U 


Oct 17 


Oct 14 


Oct 13 


Oct 12 


0d 11 


FT-SE Erabach 100 134300 1350.17 1351.18 133183 133045 

FT-SE Eurotraek 200 140087 140465 U1Z2B 139170 138440 

BIN ID® CHIMB HWfeT 100 ■ UW71: 200 - rmx UMfthF 100 - 13034 2D0 - 138W> t hrtri 


acquisition [by Valeo] remains 
a distinct probability, possibly 
in the automotive electronics 
sector, where Valeo has no real 
experience: a development 
which would weigh on 
short-term profitability.” said 
the broker. 

MILAN was lower, with 
investors unnerved by news 
that the government was pre- 
pared to reopen budget negoti- 
ations over pensions cuts with 
the unions, and the Comit 
index lost 10.72 or L7 per cent 
to 626.66. 

Robert Fleming Securities 
commented that the Italian 
market had underperformed 
Europe by approximately 4 per 
cent, or 8.9 per cent in dollar 
terms, during the last quarter, 
eroding outperfonnance since 
the beginning of the year to 
14.5 per or 10-2 per cent in 
dollar terms. “Continued sales 
from foreign institutions have 
compounded the effect of the 


sales by domestic private 
investors, scared off by persis- 
tently rates awd the inher- 
ent instability of tbe govern- 
ment." Industrials led the 
market lower, with Elat L110 
or L7 per cent down at L6.200 
and Montedison losing L20 or 
1.6 per cent at Ll,2QL 

Pirelli Ml L33 or L5 per cent 
to L2.216 after exceptionally 
heavy trading was reported on 
Seaq International in London 
an Monday, with 57m sha r es, 
or almost 4 per cent of the 
company’s capital, changing 
hands. The London volume 
puzzled one analyst who noted 
that only 6.5m shares changed 
hands in MiTan on Monday. He 
added that there was no funda- 
mental reason for the stock’s 
weakness. 

A L61 or 8.6 per cent rise to 
L771 in Gaic was prompted by 
comments by the Femusd Fin- 
anziaria chairman Mr Guido 
Rossi that Femnsn was consid- 


ering a full bid. Ferruzzi fell 
L44toLl^22. 

ZURICH saw industrials 
marked lower because of the 
weak dollar before the malaise 
spread over to the banks and 
insurers. The SMI index gave 
up 33.1 or 1.3 per cent to 
2.542J. _ _ 

Roche certificates fell SFri55 
or 2.6 per cent to SFr5,68Q as 
Credit Suisse downgraded the 
stock and trimmed its earnings 
forecasts, following Monday's 
nipp -month sales figures. Gold- 
man Sachs, which bad already 
taken the certificates off its 
buy list, also reduced its 1991 
earnings forecast to reflect the 
pharmaceuticals group's 
restructuring costs. 

UBS slipped SFrl5 to 
SFrL275 ahead of today’s press 
conference at which, the board 
has said, it wants to answer 
various issues surrounding its 
battle for influence with BK 
Vision. 

AMSTERDAM was weaker, 
with the AEX index setting 
down 2.94 at 405.50. 

Nedlloyd, the transport 
group, was among the day’s 
steepest losers, off FI 2.90 at 
FI 55.00, as Goldman Sachs in 
London lowered its 1994 profits 
estimate by 30 per cent to 
FI 90m. 

Mr Pierre Stiennon, an ana- 
lyst at Goldman, commented 


that while the group had 
achieved savings in cutting its 
internal costs, its main exter- 
nal sectors - ocean shipping, 
European road transport and 
the Neddrill drilling subsidiary 
- were under pressure. 

However, Goldman was 
maintaining its hold recom- 
mendation ahead of the compa- 
ny’s third-quarter results due 
on November 30. 

MADRID'S domestic bond 
market reacted forcibly after a 
September budget deficit, and 
a December inflation forecast 
of 43 to 4.6 per cent; equities 
took in these, and the arrest in 
Barcelona of the financier Mr 
Javier de la Rosa, and the gen- 
eral index dropped 4.62 or L5 
per cent to 296.69. 

Mr Jerry Evans, European 
equity strategist at Klenwort 
Benson, noted that in addition 
to the macro influences, this 
was a market where banks and 
utilities, both vulnerable to 
fails in bond values, accounted $ 
for nearly three-quarters of the 
market's equity capitalisation. 
Ranks, utilities and construc- 
tion stocks were all weak yes- 
terday, with BCH down Pta75 
at Pta3,035, and Endesa off 
Ptai40 at Pta5,570. 

Written and edited by WHBam 
Cochrane, John Pitt and Michael 
Morgan 


Nikkei ahead as Seoul continues record-setting rally 


Tokyo 


Small-lot buying by dealers 
and overseas Investors sup- 
ported share prices and the 
Nikkei 225 average ended 
higher for the first time in 
three days, writes Enriko Tern- 
zono in Tokyo. 

The index was finally ahead 
34.11 at 19.992.40 after a day’s 
peak of 20,020.60 and low of 
19,946.99. Prices moved within 
a narrow range with most 
investors still cautious over 
the yen's fluctuations. 

Volume came to 255m 
shares, against 200m. Activity 
remained low due to the rise of 
the yen. The Topix index of all 
first section stocks was just 
0.19 firmer at 1,586.65 and the 
Nikkei 300 inched up 0.20 to 
290.09. Declines led advances 
by 496 to 449, with 206 issues 
unchanged. In London the ISE/ 
Nikkei 50 index put on 1.71 at 
L30L00. 

Traders said some individu- 
als moved to trade in the sec- 
ond section and in the over- 
the-counter market. Second 
section and OTC companies 
were expected to enjoy larger 
increases in earnings than 
large first section corporations. 
According to the Nihon Eeizai 
Shimbun newspaper, pre-tax 
profits for OTC companies are 
expected to rise 32 per cent in 
the current business year. 

Overseas investors traded In 
shipping companies. Some ana- 
lysts were bullish about an his- 
torically low level of world sur- 
plus shipping capacity - 2.2 
per cent of supply for last year. 
“We expect this to translate 
into significantly higher char- 
ter rates for most ship types," 
said Ms Kathy Matsui, a strate- 
gist at Goldman Sachs. Kawa- 
saki Kisen, the most active 
issue of tbe day, finished Y7 
down at Y409 after hitting the 
year’s high of Y422. 

Although higher gold prices 
helped mining and non-ferrous 
metal issues, profit-taking 
finally eroded the day's gains. 
Sumitomo Metal Mining was 
off Y15 at Y980 after touching a 
year’s high of Y1.010. 

The yen's strength prompted 
small-lot selling of high-tech- 
nology stocks by foreign inves- 
tors. Toshiba dipped Y10 to 
Y753, Matsushita Electric 


Industrial Y10 to Y 1,660 and 
Sony Y70 to Y5.880. 

Reports of lower than expec- 
ted profits depressed Honda 
Motor by Y40 to Y1.730. Isuzu 
Motors rose Y16 to Y528 on 
hopes of strong earnings, while 
other car makers were also 
firm, with Nissan Motor up Y7 
to Y825 and Toyota Motor gain- 
ing Y10 at Y2,Q70. 

In Osaka, the OSE average 
rose 16.47 to 22^26.31 in vol- 
o me of 26.7m shares. 

Roundup 

Sentiment in the region stayed 
mixed. Sri larika was closed 
for a holiday. 

SEOUL finished at another 
record high, but profit-taking 
eroded a sharp early rally that 
was prompted by the settle- 
ment of the US-North Korean 
talks. The composite index 
gained only 3.42 at 1,113.29 
after posting an intraday 
all-time peak of 1427.09. 

Construction and trading 
shares were among the day’s 
beneficiaries on hopes that 
they would be major gainers 
when relations with North 
Korea improve. The sub-index 
for the construction industry 
advanced 1342 or 113 per cent 
to 595.7L 

HONG KONG ended a slug- 
gish session lower as investor 
confidence continued to be 
eroded by the weakness of the 
dollar, na gg in g talk about the 
health of Deng Xiaoping, Chi- 
na’s leader, and tomorrow’s 
local land auction. 

The Hang Seng index slipped 
37.37 to 9,418 j 57 in preliminary 
turnover of a low HK$SL38bn. 

The China incorporated 
H-shares index fell 27.62 or 24 
per cent to L316.94, having lost 
almost 45 points on Monday. 

SINGAPORE eased, with 
retail sentiment dampened by 
talk of forced selling in Malay- 
sian stocks traded over the 
counter. The Straits Times 
Industrial index closed 3.59 
down at 2^83.98. 

Sentiment over Malaysian 
stocks was also weakened by 
Malaysia's finance minister Mr 
Anwar Ibrahim, who told 
Malaysians not to expect too 
much from the October 28 bud- 
get statement. 

KUALA LUMPUR again 
reversed an early firm trend to 


1 

IS wc 

►RLD 

INDICES 













Jointly compiled by The Financial Times Ltd. Goldman. Sachs & Co. and NatWeat Securttiea Lid. bi conjunction with the Institute of Actuates and the Faculty of Actuaries 

NATIONAL AND 































Figures m parentheses, 

us 

Day's 

Pound 



Local 

Local 

Grces 

US 

Point 



Local 



Year 

show number of Iine3 

Dollar 

Charge 

Swung 

Yen 

DM 

Currency 

% chg 

Dlv. 

Deter 

Staring 

Yen 

DM Currency 52 week 52 week 

ago 

of stock 

Index 

« 

Index 

Index 

Index 

Index 

on day 

Yfefcf 

Index 

Index 

Index 

Index 

Index 

Ugh 

Low 

(4ppnw) 

Austrata (681 

... ’68 99 

0.5 

155.88 

104.53 

132.10 

152.77 

0.5 

3-63 

168.19 

15867 

104-49 

13262 

152.05 

189.15 

149.36 

15404 

Ausim(!6) 

.. 107 4S 

1.6 

172.88 

115.04 

140.53 

146.48 

00 

1.10 

184.45 

171.71 

114.59 

145.77 

145.74 

18869 

167.46 

180-87 

Pet^tum (3D 

....172.12 

J.d 

158.75 

106.46 

13465 

131.31 

0.3 

4-20 

169.42 

157.71 

10560 

13189 

13088 

17764 

14963 

152.61 

CiMdJ <1031... _ .... 

137.01 

-03 

126.37 

64.75 

107.10 

134.46 

-0.1 

260 

137.48 

12768 

85.41 

108.64 

134.64 

14561 

12064 

129.16 

Otwatk 631 

_ 260.14 

2.6 

239.93 

160.90 

20X35 

206.52 

1.5 

1.42 

253.48 

235.96 

157.48 

20062 

20052 

275.79 

23027 

236.70 

Finland !?4» — 

....197.13 

2,1 

181.82 

121.93 

154.10 

191,72 

0.7 

0L73 

1W.9S 

17R 65 

119-89 

15261 

19042 

197.13 

1168 5 

12000 

France (1011 

. — 171.20 

-03 

157.30 

105.89 

13383 

138.63 

-1.2 

3.13 

17169 

159.83 

106.67 

135.68 

14061 

18567 

15964 

1G908 

Gomony i5Si — 

_ >47.05 

0.5 

135.32 

90.95 

11495 

114.95 

-0.6 

160 

146.Z6 

138.16 

90.87 

115.59 

11669 

15040 

12807 

13S04 

Hono Kong l&O .... 

383.8* 

-1.0 

354.02 

237.41 

300.05 

390.80 

-1.0 

3 S3 

387.78 

360.98 

34061 

306.45 

384.70 

506.56 

34128 

344.72 

Ireland 04}.... 

...213.65 

0.8 

197.06 

132.15 

107 03 

109.54 

02 

364 

211.74 

197.11 

13165 

18764 

189.18 

210.60 

17108 

17X40 

Italy (5*5) 

... 79.S0 

0.9 

73.32 

49.17 

62.15 

91.31 

0.1 

1.72 

7861 

7367 

4866 

raw 

9124 

07.78 

6708 

7088 

Japan (4691 - 

162.37 

-Ol 

149.76 

100.43 

128.93 

100.43 

-as 

0.76 

162-48 

15165 

100.85 

128.41 

10095 

17O10 

12464 

15303 

Malays*. 3(37).... 

.662.09 

-0.7 

51043 

347.67 

439.40 

553.15 

-0.4 

1.51 

56202 

534.04 

340.73 

444.88 

55563 

621.63 

430.71 

455140 

Mexico 1 >8).. 

. 2302.03 

0.6 

5123.19 

1423.85 

1799.49 

8600.30 

0.7 

1.19 

22H760 

2129-46 

1421.15 

1807,76 

854226 

284708 

189828 

177066 

Nclhcriand (19) 

..219.7S 

0.9 

202.68 

135.92 

171.78 

169.00 

-0.1 

3.42 

217.78 

202.74 

13560 

172.11 

10925 

219.75 

18701 

19429 

NPWZeJUnd {U>.... 

7394 

1,2 

68.20 

45.73 

57.80 

04.26 

as 

3.78 

72.04 

67.99 

4508 

57.72 

8X84 

7769 

5822 

54.18 

Norway (231... 

.. 21024 

07 

193.90 

130.04 

184.34 

186.95 

-05 

1.77 

208.81 

19468 

129.72 

105.01 

187.85 

211.74 

16562 

18X13 

Sln93{»fc (441 . 

..-396.92 

0.6 

388.09 

245.51 

310.28 

269.43 

043 

167 

384.76 

387.49 

24506 

31168 

268.60 

396.92 

294.68 

33X61 

South Atnc.nS3) . 

— 326.35 

1.4 

300.99 

201.85 

255.10 

289.74 

0.6 

2.21 

321.B3 

29960 

199.95 

254.34 

288.05 

32665 

203.72 

21701 

Spam {38) 

. . 144.99 

0.9 

13173 

69.63 

113.34 

137.33 

-0.2 

4.04 

143.73 

133.80 

8969 

11X58 

137.01 

155.79 

12808 

144.32 

Sweden |35» - 

-23056 

1.7 

220.03 

147.S6 

186.49 

255.35 

0.5 

1.57 

23457 

21867 

145.73 

18568 

25369 

23866 

17563 

205.93 

SwtcrLff’d id ..... 

...160. 9S 

0.4 

15583 

104.50 

132.07 

131.20 

-05 

1.85 

16862 

156.69 

104.57 

13X02 

13165 

17666 

14X64 

14604 

L'rwcM Kingdom CCW 

- 203.79 

1.3 

187.99 

126.06 

ISSJt 

1S7JB6 

0.4 

4.04 

Z01.19 

• 167.29 

124.88 

153.00 

18729 

214.96 

1ff1.11 

101.48 

USA (SIS) — 

...10t 39 

0.0 

17652 

118.38 

149.61 

191 39 

0.0 

2.84 

191.41 

178.19 

11862 

15167 

191.41 

19604 

178.95 

19166 

EUROPE FOT} 

— 175.67 

0.9 

162.02 

108.66 

137.32 

151.00 

-0.1 

3.06 

174.15 

162.11 

10019 

137.62 

151.70 

17868 

154.73 

16X13 

Norfle(Jifll 

—232.16 

1.9 

214.13 

143.30 

181.48 

311.78 

0.7 

1.40 

227 80 

21266 

14163 

18003 

21060 

232-16 

17X19 

19262 

Paotc Bonn (747)... 

.- 171.70 

-0.1 

158.56 

100-20 

13422 

111X7 

-as 

i-oe 

17165 

159.98 

106.76 

185.51 

111.80 

17666 

134.79 

16001 

Euro-PaeJ/te (1 4501 

...173.25 

0.3 

159.79 

107.16 

135.43 

127.42 

-03 

1.93 

17269 

160.76 

107.29 

136.48 

12762 

175.14 

14X88 

16124 

North America (SIS) 

.. .188.01 

0.0 

173.4T 

116 39 

14497 

tS7.4fi 

0.0 

2.82 

188.06 

1715.07 

If 6.84 

148.62 

18768 

182.73 

frasr 

187.70 

Europe Ex. UK i*OS) 

.. 156.81 

0.6 

144.63 

9039 

122.58 

130X9 

-a4 

2.47 

1S564 

14607 

9602 

12X16 

13088 

158.12 

13504 

14X13 

Pacriic Ex Japan (£79) 

~-asE.ss 

-02 

242.16 

162.40 

205.24 

233X6 

-0.3 

£.79 

263-00 

24463 

183.40 

207.85 

23422 

£9661 

229.66 

22808 

World Ex US i16£F1 . 

...175.18 

0-3 

101.57 

108.35 

136.94 

131-25 

-0.3 

164 

174.80 

18264 

10R47 

13768 

131.82 

170.63 

14568 

161.77 

World Ex UK (1947) 

... 177.17 

0.1 

163/41 

109.58 

138.40 

145.98 

-03 

266 

177.00 

164.77 

10960 

13968 

14662 

17869 

15506 

168.07 

World Ex So. At. (209?) 

...17867 

02 

164.70 

11045 

13939 

148.73 

-02 

2-3G 

17822 

1BS01 

11072 

14064 

14962 

18003 

15864 

170-47 

World Ex Japan (1683) 

...19068 

03 

175.87 

117.94 

143.06 

175.80 

-0.1 

2.88 

19006 

176.93 

118.08 

15020 

17869 

19520 

17864 

18164 

The World index (21 Si) 

- 17052 

02 

165.57 

111.03 

140.33 

149.77 

-0.2 

X28 

179.14 

168.76 

11169 

14167 

15005 

18080 

15805 

17088 


close lower, pressured by 
forced selling in the afternoon. 
The composite index lost 7.38 
at 1418.74. having touched an 
early high of 1,128.47, but 
trading was slow, volume of 
245m shares falling below Mon- 
day’s 307m. 

MANILA took its rally into a 
fifth day after San Miguel Corp 
reported a 40 per cent jump in 
its nine-month net The com- 
posite index ended 42£1 up at 
the day’s best of 3.09R96. 

Index heavyweights 
attracted foreign and local 
investors on the hope that they 
will follow San Miguel’s exam- 
ple. Volume expanded from 
2.43bn shares to 3.49bn, bat 
turnover was only slightly 
higher at 2.07bn pesos, against 
2.01bn pesos. 

SYDNEY faltered following 
the uneven session on Wall 


PhHpptawft . . 

ManBaSE Composite ' ' 



2.800 u • < 1 

ai« :i«m occ 

Source: FT BrqpWte 

Street the AD. Ordinaries index 
closing 10.7 lower at 2,003.4 in 
turnover of A$397.4xn. 

Resource issues fell by more 
than Industrials. News Corp 


finished a token 2 cents higher 
at A$8.40 as its chairman and 
chief executive Mr Rupert Mur- 
doch talked of 50 per cent prof- 
its growth over the next two to 
three years at its annual meet- 
ing In Adelaide. 

WELLINGTON lost its way 
and the NZSE-40 capital index 
closed at 2,052.41, down 11198. 
in turnover of N2$32.9m. Trad- 
ing in Telecom accounted for 
one-third of overall activity, 
tlm shares receding a cent to 
NZ$5.29 in NZ$lI-3m dealt 

TAIPEI buying centred 
mainly on foods, marines and 
steels, as the weighted index 
rose 24.30 to 6,755.53 in turn- 
over Of T$7Z£7bn. 

In foods. President Enter- 
prises and Weichuan Foods hit 
their daily 7 per cent limits at 
T$59.50 and T$36.40 respec- 
tively. Marines reflected 


improved prospects in coming 
months, with Yang Ming 
Marine and U-ming Marine 
both limit up at TS39.50 and 
T$37.50, and steels rose on 
product price rises, with Feng 
An Metal limit up at T$66.50. 

BOMBAY was lower in the 
absence of fresh buying sup- 
port after ignoring Monday’s 
deregulation of interest rates 
by India's central bank which 
many brokers said was favour- 
able to the industry. 

Computer problems pre- 
vented the calculation of the 
BSE 30 index, but brokers said 
that given the decline in prices 
the index would have shown a , 
25 to 30-point slide from Mon- - 
day's 4365.43. 

JAKARTA waited for yester- 
day’s listing of Indosat in the 
US, and the JKSE composite 
index eased 0.71 to 510.63. 


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GRAND DUCHY OF LUXEMBOURG 

Wednesday October 19 1994 


L uxembourg is a tiny, 
placid country, ostensi- 
bly content to drip with 
prosperity, exploiting its eco- 
nomic niche at the conjunction 
of Prance, Germany and Bel- 
gium, and punching above its 
weight as a founder-member of 
what is now the European 
Union. 

But suddenly it is under 
international gaze, after its 
prime minis ter, Mr Jacques 
San ter, was vaulted unexpect- 
edly th is summer into the pres- 
idency of the European Com- 
mission, to succeed the 
powerful Mr Jacques Delors in 
the new year. 

The Grand Pucby will need 
Tnfhiffnw* at the Euro-court. In 
1998, when the EU reviews its 
power-sharing and constitu- 
tional roles ahAfld Of planned 
integration of eastern Europe 
around the of the century, 
there win be pressure to down- 
grade the influence of smaller 
member states - not to men- 
tion mini-states such as Lux- 
embourg: 

And ahead of that, EU pres- 
sure is already rising to per- 
suade Luxembourg as a fast- 
growing financial centre to 
harmonise its low tax regime 
with its partners. Its powerful 
neighbours, led by Germany, 
resent the outflow of capital 
into the Grand Duchy, lured by 
its virtually zero withholding 
tax on foreigners and banking 
secrecy laws. 

**1 fear that the two issues 
will be linked, and that will be 
very difficult for us,” acknowl- 
edges Mr Francois Biltgan, a 
parliamentary leader of the 
Christian Democrats, who have 
governed in coalition with the 
Socialists since 1954. 

But more important than 
having Mr Santer in Brussels 
is the virtual certainty that he 
will be succeeded as Luxem- 
bourg’s prime minister by Mr 
Jean-Claude Juncker, a tough 
and intelligent politician who 
is widely respected on the 
Euro-circuit 

Mr Juncker, who at 39 win 
be the ET?s youngest premier, 
is presently Luxembourg’s 
finance and employment minis- 
ter. He has won a high reputa- 
tion among his peers by dint of 
intellectual ability, straightfor- 
ward argument, and a gift for 
building consensus within the. 


In 1996, when the EU reviews its constitutional rules, 
there will be pressure to downgrade the influence of 
smaller member states, writes David Gardner 

International gaze 
falls on mini-state 


sk'.i i'Ti-w&YiWr. :Cy 

l -■ . * . . . ■ 1 . >- T ✓ A , • v •_ - • , 

; / ■ . •• , - ^ r • •" - . . . 




quarrelsome Euro-club. 

Mr Delors himself tried hard 
to persuade Mr Juncker to jeon 
the Commission fi nd , according 
to same insiders, once thought 
of him as bis possible succes- 
sor. Chancellor Helmut Kohl of 
Germany, a fellow Christian 
Democrat, affectionately calls 
Mi Juncker "Junior”. 

As fina nce minister, a portfo- 
lio he may well retain as prime 
minister, Mr Juncker hag not 
shirked hard decisions. In 
recent years he has started 
reform of health insurance and 
last year completed an over- 
haul of taxation, reducing the 
burden on middle-income 
households and email to medi- 
um-sized companies, while 
keeping a tight grip on spend- 
ing. 

The ruling coalition has 
given Luxembourg an almost 
unbroken cycle erf growth in 
the past 10 years, as well as 
political stability. Its planners 
now foresee national output 
rising by 3 per cent and more 
to the end of the century. Lux- 
embourg is alone among its 
partners in meeting all the 
Maastricht treaty convergence 
criteria for economic and mon- 
etary union (Emu), notably 
through government debt at a 
mere 7.9 per cent of gross 
domestic product, and the bud- 
get in virtual equilibrium. At 
the same time, it manages to 
devote a high average of 10 per 
cent of public spending to capi- 
tal investment in telecommum- 
cations, transport and energy. 

Yet prudent stewardship of 
the public purse is but a small 
part of the explanation why 
Luxembourg has the highest 
per capita income in the EU. 
Dependent on the economic 
performance of its neighbours, 
it nonetheless consistently ont- 




Luxembourg is targeting high-tech, high vaduad-odded foreign companies, offering a generous tax regime and a skilled labour force 


f Ottfi ■ urtfcnftM 


performs them; growth rates 
never turned negative during 
the recent recession, and 
unemployment, high by local 
standards at 3 per cent, 
remains at about a quarter of 
the EU average. 

Luxembourgers have pros- 
pered by being abnormally fast 
to identify opportunities for 
their economy. This Is all the 
more remarkable given that 
the Grand Duchy has surren- 
dered many conventional tools 


of macroeconomic manage- 
ment Control of mrehang e rate 
and monetary policy is vested 
in its 72-year-old economic and 
monetary union with Belgium 
and, by virtue of its geographic 
position at west Europe’s 
heart its frontiers were open 
long before the advent of the 
Single Market 
In the mid-19th century, Lux- 
embourg was among the first 
to set up an advanced steel 
industry, the Initial origin of 


its wealth. "It is a akin they 
have historically: to see a 
niche and go for it” says Mr 
Rodney Williams of Flemings, 
one of the largest managers of 
the flood of investment funds 
located in Luxembourg. 

Through agility and inven- 
tiveness, the Grand Duchy has 
in more recent decades 
become: a pioneer of the Euro- 
bond market; a launch-pad for 
the cable and satellite TV busi- 
ness; a leading personal 
finance centre through custom- 
ised hanking services and tax- 
efficient saving through invest- 
ment funds. 

In the latter and other simi- 
lar cases, Luxembourg enacted 
the new Euro-legi slatio n on 
mutual funds (the USITS direc- 
tive) well ahead erf its competi- 
tors. The number of funds tri- 
pled between 1987 and the end 
of last year from 405 to 1,175, 
with the volume of investment 
rocketing from LFTL135bn to 
LFr9j967bn. 

"As a government, we intro- 
duce quickly and in advance." 
says Mr Juncker. But, he cau- 
tions. "as a small country we . 
don’t have the freedom to 


make mistakes. Every 10 years 
we have to invent something 
new, something which the oth- 
ers have not seen yet And if 
you back the wrong horse 
you're dead.” 

The finance centre, generat- 
ing 15 per cent of GDP directly 
and probably double that once 
ancillary services from lawyers 
to restaurants are added in, 
was definitely a good horse to 
back. 

Bankers and poBtidans are 
divided on whether the Ger- 
man-led drive to enforce a 
withholding tax, and possibly 
even to erode the finance cen- 
tre's other precious asset of 
banking secrecy, could seri- 
ously damage Luxembourg. 

"The withholding tax is the 
first wall of the fortress, but 
the timer wall is [banking] 
secrecy", says one leading 
banker. But the signs are that 
the government is bracing for 
eventual tax harmonisation. 
“We have to behave in a man- 
ner so that we are prepared to 
live without the withholding 
tax,” argues one senior minis- 
ter. More cautiously, Mr 
"Juncker argues that the 


finance centre is close to criti- 
cal mass and must learn to 
trade on its skills and experi- 
ence. "We are becoming richer 
and richer, but we are not 
more intelligent, we don’t work 
harder, and we are no better 
than the others. We have to 
explain this to our people.” 

Because of its partners’ per- 
ception that Luxembourg gets 
rich by exploiting loopholes, 
the government is wary of bet- 
ting too heavily on any one 
horse, and thinks ahead about 
diversification. For example, 
with an already dense network 
of small to medium-sized 
industry, Luxembourg is now 
targeting high-tech, high val- 
ued-added foreign companies, 
offering a generous tax regime 
along with its skilled, multilin- 
gual labour force. 

"We’re very vulnerable, and 
we've always needed more 
courage and imagination to 
defend our vital interests,” Mr 
Juncker says. 

He will also need courage 
and inventiveness to defend 
Luxembourg’s position in 1996. 
As the Grand Duchy's political 
establishment sees it, the prior- 


ities are: to preserve the EU 
balance between big and small 
states; ensure that Luxem- 
bourg retains its right to a 
commissioner when the EU 
expands further; avoid too 
overt a correlation between 
country size and population 
and voting power in the EU's 
Council of Ministers; and, 
above alL to avoid all this get- 
ting enmeshed with the wran- 
gle over withholding tax. 

None of this will be easy, but 
the very (act that the EU had 
to resort to Luxembourg and 
Mr Santer to resolve the Delors 
succession crisis - after the UK 
vetoed Belgian premier Jean- 
Luc Dehaene at the Corfu sum- 
mit In June - greatly strength- 
ens the Grand Duchy’s posi- 
tion. 

"It is a sign that small coun- 
tries make up an important 
part of the cement of the 
Union," says Mr Bfltgen. “Just 
his being there wins part of the 
argument for (Luxembourg] 
having a commissioner.” But 
altogether typically for a Lux- 
embourger, he quickly adds 
that “we have to look for com- 
promise solutions.” 


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FINANCIAL TIMES WEDNESDAY OCTOBER 19 1994 f 

CRAMP DUCHY OF LUXEMBOURG II 


W hen Jacques Santa- takes over 
as president of the European 
Commission in January, his 
successor as prime minister of Luxem- 
bourg win be Jean-Claude Juncker, a 
politician of calibre and intellect with 
firm ideas on Luxembourg and Europe, 
and on tbs Grand Duchy's place in die 
evolving Union. 

Mr Juncker, currently wearing the 
two hats of finance and employment 
minister, win bring a change of style 
and. aged 39, an infusion of energy to 
the job. More private, tougher, and less 
of a glad-hander than the emollient Mr 
Santer, his main challenges will be to 
consolidate and develop Luxembourg’s 
niche economy, and defend its unique 
position within the EU. 

The news that Mr Juncker would suc- 
ceed Mr Santer -still to be formally 
confirmed, as indeed is Mr Santer's 
endorsement by the European Parlia- 
ment in December - has been welcomed 
in Luxembourg- hi the June general 
elections, the young finance minis ter, 
who is also chairman of the Christian 
Social People's Party (CSV), the domi- 
nant partner in the Christian Democrat- 
Socialist coalition which has governed 
the Grand Duchy since 1384, out-polled 
all other candidates. This, moreover, 
was achieved in his native south, tradi- 
tionally a Socialist stronghold. 

He comes from the left of the CSV. 
and freely acknowledges that T could 
be a Socialist in the Luxembourg con- 
text” One of the seven children of a 
steelworker and trade union militant, 
Mr Juncker trained as a lawyer at 
Strasbourg university, although his 
tether bad expected him to be a priest 
He only practised law for five 
months, however, before bong hand- 
picked by Mr Pierre Werner, the then 
Luxembourg leader and pioneer of 
European monetary union, as secretary 
of the CSV parliamentary group, a sort 
of whip’s job formerly held by Mr San- 
ter. In 1982 he became a junior minis ter, 
joining the cabinet in 1984 aged 29. 

The one setback in this wmiiigiy 
effortless advance was a 1989 car crash 
which nearly km**! him , but in the 
judgment of one colleague, strength- 
ened his personality and (lightly worn) 


Political profile; Jean-Claude Juncker 

Firm ideas on the 
Duchy’s EU role 


religious faith. 

Politicians from across the spec t r u m, 
bankers and businessmen unfailingly 
allude to Mr Juncker's intelligence, 
integrity and broad mind, although 
some see him as “a bit arrogant", as 
one foreign banker put it Another lead- 
ing banker says Mr Juncker’s gift is 
“the ability to grasp very practical 
detail as well as conceptual problems.” 

This makes him rather like Jacques 
Delors, the outgoing European Commis- 
sion president to whom he was dose, 
and who two years ago tried to per- 
suade Mr Juncker to go to Brussels to a 
“super-commissioner” job in charge of 
economic and social policy. 

He has also shown himself capable of 
taking tough decisions, including recent 
reforms to Luxembourg's health insur- 
ance and tax systems, and his 1991 
attempt as rhpirman of the 12 finance 
ministers under the Luxembourg Euro- 
presidency, to cajole a compromise on 
the delicate question of indirect tax har- 
monisation. 

In the EU, where he sits in two coun- 
cils, he has a wealth of contacts and 
widespread respect Chancellor Helmut 
Kohl, a fellow Christian Democrat 
whose peer he will now be, refers to 
him affectionately as “Junior". He is 
forthright and sometimes heterodox. 

He is also a dose observer of develop- 
ments in partner states, especially in 
the Big Three of France, Germany and 
the UK and, according to colleagues, is 
not infrequently the forger of compro- 
mises between them. “There is no other 
way for Luxembourg but to have a good 
relationship with France and Germany 
and our other partners,” he says. 

In 1996, the EU win review the Maas- 
tricht treaty and its constitutional 


arrangements, looking to reform deci- 
sion-making and tighten intra-Union 
links before orpanding further into east 
and central Europe. The apparent 
anomaly of a mini-state such as Luxem- 
bourg having almost equal rights with 
big nations, with a veto and a commis- 
sioner in Brussels, will be open to 
debate, along with the feasibility of a 
“multi-speed” path to EU integration. 

Before then, pressure will grow on 
Luxembourg to impose a withholding 
tax on investment income. Powerful 
neighbours such as Germany believe 
the lade of such a tax for foreigners 
gives Luxembourg’s finance centre an 
unfair advantage, attracting walls of 
“their” money. 

T he fear is that opponents of the 
Grand Duchy's fiscal regime will 
link the withholding tax issue to 
Luxembourg's rights wi thin the Union. 

“One of the founding principles of 
post-war Europe,” Mr Juncker argues 
as a leader of one of the founding 
nations of the Euro-club, “is that we 
have the same rights ." He acknowl- 
edges, however, that as a small state, 
“we can’t make fall use of those rights. 
We could use the veto maybe once 
every 10 years; everyone knows that 
Britain, France and Germany will 
always have greater rights." 

But while relaxed about a dilution, of 
blocking powers, Mr Juncker is ada- 
mant that “we can’t accept a system in 
which L uxemb ourg didn't have a com- 
missioner” That danger has for the 
moment receded, with Mr Santer at the 
helm in Brussels, and his successor is 
more worried about the “multi-speed” 
Europe debate sparked off last month 
by the German Christian Democrats. 


He reasons that political union must 
be deepened in 1996. and that the opt- 
outs from Maastricht on monetary 
union (Emu) and social policy given to 
the UK have set a damaging multi- 
speed precedent He believes “our social 
ambition is too low in comparison to 
our other ambitions", for Emu and a 
common foreign and security policy 
(CFSP) and eventual common defence. 

HO does not want to see the existing 
26 TflAwih prg - agyimivng Austria, Swe- 
den, Finland and Norway join in Janu- 
ary-split up, with a so-called hard-core 
going ahead foster. Luxembourg, the 
only EU member now within the Maas- 
tricht debt, deficit and inflation criteria 
for Emu, would certainly be in the first 
wave towards a single currency. 

“It would be easier for seven or eight 
members to go on together as a 
hard-core” he says, “but not in the 
really hard [policy] fields, such as 
defence," Mr Juncker argues. Moreover, 
he does not want to see the UK, or the 
southern states, telling out of the Euro- 
convoy. A hard-core “would make it 
very d i f ficult to bring the British back 
to the centre of Europe,” he says, 
adding: “For all the differences we have 
with the UK, it is a part of Europe, and 
it brings a tfirppn-rinn to Europe which 
Ita not prepared to lose." 

On the tax issue, Mr Juncker says: 
“We are no longer in the blocking field, 
but in the proposing field.” Luxem- 
bourg has argued that a withholding 
tax harmonisation should extend to 
other OECD countries such as Switzer- 
land and Austria, in coder to prevent a 
capital outflow from the Union, But it is 
widely assumed that Luxembourg’s 
new prime minister will start preparing 
for the time when the finance centre 
will no longer have the tax advantage, 
through policies which exploit other 
skills and advantages. 

“J uncker is the m»ri to shake Luxem- 
bourgers out of their complacency,” 
judges a local journalist. Tire prime 
minister-in-waiting himself says: “We 
have to concentrate cm the objective 
advantages we can offer. It's not wise to 
concentrate on the tax difference.” 

David Gardner 


M r Jup Weber, the first 
Green that Luxem- 
bourg has sent to the 
European Parliament, is a man 
of ambition who would like to 
work himself out of a job, at 
least a political one, writes 
David Gardner. 

“I said 10 years ago that my 
dream was that in 10 years’ 
time we wouldn't be necessary 
any more. But the fact is that 
we are still very, very neces- 
sary,” Mr Weber says. 

Before he retires from the 
fray, he can envisage an even- 
tual stint as environment min- 
ister in one of the coalitions 
that habitually govern the 
Grand Duchy, none of winch 


Political profile: Jup Weber 

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have yet extended to ecolo- 
gists. 

Mr Weber, a genial 44-year- 
old forestry engineer, first won 
election to Luxembourg’s 
national assembly in 1984 as 
part of the first wave of ecolo- 
gists entering parliament 
across Europe, or at least the 
more prosperous and environ- 
mentally aware northern parts. 

It is not difficult to see why 
Luxembourg - the richest 
European Union country on a 
per capita basis and the only 
country in the Union where 
growth did not turn negative 
in the recent reces- 
sion - should fed it can afford 
a green conscience. 

But this is not to deny the 
achievement of Mr Weber as 
that conscience's main expres- 
sion. particularly in unifying 
the fissiparous Green constitu- 
ency in the Grand Duchy 
around his own pragmatic, or 
“Realo”, faction. 

The Greens, along with the 
Christian Democrats and 
Socialists - who have formed 
three successive government 
coalitions since 1984- and the 
Liberals, can now lay niaim to 
be mainstream players in Lux- 
embourg politics. Indeed, the 
Luxembourgeois Greens, poll- 
ing some 12 per in the 
Grand Duchy's national and 
European elections last June, 
got the best score of any envi- 
ronmental party in the Union. 

This reflects not only the 
comfort of prosperity, but 
acute ecological challenges tee- 
ing Luxembourg which, as a 
microdate at the junction of 
France, Germany and Belgium, 
has only a loose grip on envi- 
ronmental levers. 

Citizens fret about motor- 
ways and waste dumping, 
greenhouse gases and the ring 
of their neighbours’ nuclear 
power plants surrounding 
them. 

The already extensive motor- 
way system is being extended 
and widened, partly to ease the 
congestion caused by high per 
capita car ownership and the 
flood of foreigners who com- 
mute to work in Luxembourg 
- but also, it seems to many 
residents, for the benefit of 
through traffic and road 
freight which just uses Luxem- 
bourg as a motorway. 

There has been virulent local 
opposition to a new waste 
recycling plant planned for 
Mamer near the border with 
Belgium. Because of its tiny 
size, Luxembourg traditionally 
exported its waste to neigh- 
bours for recycling, but it is 
bowing to EU pressure for 
waste management close to 
source. 

Luxembourgers worry about 
emissions from their steel 
industry, the original source of 
their wealth, which even in 
much-slimmed-down form 
makes their country the high- 
est per capita producer of car- 
bon dioxide into the atmo- 
sphere in the EU. at more than 
four times the Union average. 

The link between Arbed. the 
large Luxembourg steel manu- 
facturer. and imported nuclear- 
generated electricity, is one of 
Mr Weber's particular bete 
noires. 

Arbed, as part of its restruct- 
uring, is converting to electric 
arc furnaces and will be buy- 


ing in electricity from Belgian 
and French nuclear plants, 
including Cattenom, just over 
the French border and 25km 
from where Mr Weber lives in 
Jungfinster. 

The Green leader sees this as 
long-term endorsement of the 
nuclear power option -with 
the difference that Luxem- 
bourg has no regulatory con- 
trol over the actual plants 
producing the electricity. 
Instead, he wants gas turbine 
plants built inside Luxem- 
bourg. 

“I can see being environment 
and energy minister in five to 
10 years time," he says confi- 
dently. “and going to Paris to 
ask them to close it [Cat- 
tenoml and being told, quite 
correctly, that Arbed depends 
on it” 

Another of Mr Weber’s prime 
targets has been the Grand 
Duchy's petrol prices, signifi- 
cantly below EU rates because 
of minimal excise taxes. 

He wants an end to the 
“scandalous gasoline tourism" 
this generates through drivers 
filling up in the Grand Duchy. 

In the Jane elections, the 
Greens called for immediate 
equalisation with neighbouring 


petrol prices, and then incre- 
mental tax rises thereafter. 
Opponents painted this as a 
price quadrupling, which “cost 
us two seats in the Luxem- 
bourg parliament," Mr Weber 

claims. 

Yet he believes that an 
important battle was won, 
because he is convinced that 
when Mr Jean-Claude Juncker, 
the current finance and labour 
minis ter, takes over as prime 
minister in December, eco- 
taxes on petrol and non-recy- 
dable packaging and contain- 
ers will gradually be intro- 
duced. 

“I’ve been preaching for 10 
years that we should have eco- 
taxes, and now they're going to 
do it," Mr Weber predicts confi- 
dently. 

Scaremongering did not pre- 
vent the Greens winning their 
coveted seat in the European 
Parliament, which Mr Weber 
regards as “a fantastic instru- 
ment for international net- 
working." 

He has long advised the 
Green group at Strasbourg on 
forestry conservation, and will 
now be working with the par- 
liament's environment, agricul- 
ture, and external economic 


relations committees. 

Mr Weber, trained as a 
forestry engineer at the 
Univererty of Vienna and with 
a background in Luxembourg’s 
own forestry administration, 
has combined politics with 
half-time work for his own 
consultancy, presently engaged 
in pilot forestry management 
projects in Siberia and Canada. 

Luxembourg law daftnaw an 
MP’s role as a half-time 
profession requiring an 
average 20 hours a week; "a 
very good system for avoiding 
addiction to politics,” Mr 
Weber smiles, and one he 
intends to continue as an MEP. 
Tm involved in a fascinating 
project in Siberia and Tm not 
going to give that up,” he says 
firmly. 

He has already given an 
earnest indication of his 
independence at Strasbourg, 
annoying his fellow 
Euro-Greens by being the only 
one of their number to vote in 
July for Mr Jacques Santer, the 
outgoing Luxembourg prime 
minister, as successor to Mr 
Jacques Delors presiding over 
the European Commission. 

“I had fierce problems," he 
recalls, “but I too was annoyed 
with their argument that a 
small country equals a weak 
president.” For a Luxembourg 
Green, small is beautiful, but 
-as the ecological challenges 
which the Grand Duchy faces 
demonstrate - it is also 
problematic. 



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-Y 


4 


V 



1 FINANCIAL TIMES WEDNESDAY OCTOBER 19 1994 


111 


* 

GRAND DUCHY OF LUXEMBOURG HI 




MEDIA ENTERPRISES 


Liberal attitude 


to broadcasting 


Ever since Mr Rupert 

Murdoch, the broadcasting and 

newspaper mogul, avoided UK 
regulations on media owner- 
ship by registering his Astra 
satellite in Luxembourg, the 
Grand Duchy has enjoyed a 
certain notoriety as a base for 
media enterprises. 

Through the television and 
radio broadcasts of Compagnie 
Luxemhourgeoise de Telediffu- 
sion (CLT) and the satellite 
dishes of Soriftte Europeen des 
Satellites (SES), Luxembourg 
is responsible for broadcasts to 
more than 50m Europeans. 

This is largely thanks to a 
very deliberate strategy 
adopted by the Luxembourg 
government to encourage the 
development of the media 
industry. As early as 1331 it 
decided to allow a private com- 
pany, Compagnie Lnxembour- 
geoise de Radioffusion (now 
CLT) to broadcast from its ter- 
ritory, rather than creating a 
public sector broadcaster for 
its tiny population. 

On the other hand, and in 
spite of the government's 
attempts to encourage the 
broadcasting industry, it would 
be wrong to exaggerate Luxem- 
bourg’s importance as a media 
base. 

But the media is an impor- 
tant sector of the Luxembourg 
economy. Perhaps the biggest 
attraction for incoming inves- 
tors has been the Grand 
Duchy’s traditionally liberal 
approach to broadcasting, in 
contrast to the highly regu- 
lated media industries common 
across the rest of the European 
Union. 

According to private opera- 
tars, key government ministers 
are available to answer ques- 
tions and resolve problems in 
person, all of which reduces 
bureaucracy and leads to 
speedy decision-making, often 
tailor-made to suit the needs of 
a specific prqject 
“Luxembourg is small 
enough to provide you with a 
very instant access to all of the 
decision makers in this coun- 
try,’* says Mr Yves Feltes. of 
SES. “In a new venture like 
SES, the support off the Grand 
Duchy has proved to be very 
valuable." 

Ms Karin Sdtintgeri of CLT 
adds: "It is very important to 
have the backing of govern- 
ments, especially when you 
consider that in many coun- 
tries the media is a political 
issue." 

Although it is small the 
Grand Duchy enjoys sovereign 
status which means that along 
with the rest of Europe, it has 
been granted an allocation of 
satellite frequencies. 

In 1983, the government 
granted a franchise to private 
investors to use the satellite 
frequencies allocated to Lux- 
embourg, which led to the 
establishment of one of the 
country's greatest successes, 
the Astra satellite project 
SES, the franchise holder, 
created Europe’s first private- 
ly-owned television satellite 
system. Today, according to 


government figures. 55m 
households all over Europe can 
receive a selection erf 50 televi- 
sion channels and an even 
gr eate r number of radio pro- 
grammes either directly to 
their homes with a satellite 
dish, or through cable systems. 

At the end of this month, 
SES hopes to launch its fourth 
dedicated television satellite. It 
Win be capable of tr ansmitting 
16 channels of television using 
analogue technology plus two 
transponders set aside for 
experimenting with 
television. There will also be 40 
transponders designed to pro- 
vide back-up if any of Astra's 
existing three satellites should 
fail. 

The liberal environment has 
bred another well-known Euro- 
pean successes. CLT is now 
involved in 10 television chan- 
nels and 13 radio stations 
across eight different European 
countries, mostly under the 
RTL logo. In addition, it has 
become involved in rights 
acquisitions, fflw productions, 
co-productions and other press 
activities. 

"We feel that being based in 
Luxembourg has been an asset 
for the European expansion of 
the group,” says Ms Scbintgen. 
"It is much easier to be Euro- 
pean when you are a Luxem- 
bourger. Luxembourg is some- 
how in between cultures. The 
key to success is to stay dose 
to your audiences and you can 
only do vhat if you understand 

thprn 

“From here you have a 
pretty good understanding erf 
what French culture means, 
and also of what the German 
culture means," she ad ds 
Meanwhile, the Luxembourg 
g o vern m ent is doing its best to 
encourage the industry 
to diversity. In particular, it 
has focused on production 
compani es 

Since 1988 it has offered spe- 
cial tax incentives for film- 
makers, a»Tn«ri p rincipally at 
producers of TV drama series. 

To begin with the strategy 
had only a mixed success. 
While more money than expec- 
ted was spent in the country 
by mainly small operators, few 
producers put down Toots. 
Many producers simply made 
their wims and then left, con- 
tributing nothing to the indus- 
try’s infrastructure. 

Since the early 1990s. the law 
has been changed to put a 
grea te r gmphaMdn on attracting 
indoor studio filming. 

“The government has tried 
to encourage investors not 
only to come to Luxembourg, 
but to invest in the infrastruc- 
ture too," says Mr Pierre 
Goerans, of the audiovisual 
department of the government 
This is gradually paying off." 

According to the govern- 
ment, the policy has had signif- 
icant spin-offs including the 
establishment of 23 production 
companies, three animation 
studios, four production and 
three post-production studios. 

Emma Tucker 


Exhibition and Conference Center 
Luxembourg-IGrchberg 



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Simon Gray reviews the political scene 

Santer departure ends log-jam 


T he impending elevation 
of Mr Jacques Santer 
from prime minister to 
the presidency of the Euro- 
pean Commission has given a 
much-needed injection of stim- 
ulation and vigour to a Lux- 
embourg political scene which 
in recent years has been not so 
much sleepy as comatose. 

It Is now just over 10 years 
since Mr Santer led his Chris- 
tian Social People’s Party 
(CSV) into coalition with the 
Luxembourg Socialist Work- 
ers’ Party (LSAP) of Mr Jac- 
ques Poos, the deputy premier 
and minister of foreign affairs. 

Through economic boom, 
downturn and recovery, 
through the European Single 
Act and the Maastricht treaty, 
and now through three gen- 
eral elections, the two leaders 
and their parties have been 
locked In a cosy embrace. 

So small was the impact of 
the latest election tn June that 
the new government formed in 
July comprised the same peo- 
ple - five men and one woman 
from each party -who had 
been members of the outgoing 
administration. The only 
changes were the redistribu- 
tion of a few portfolios and the 
promotion of a Socialist secre- 
tary of state to full minister. 

The election saw the CSV 
maintain its position as Lux- 
embourg’s biggest party -a 
position it has enjoyed since 
the second world war, with 21 
seats out of 60 . Hie MAP won 
17 seats and the centrist oppo- 
sition Democratic Party (DP) 
12, while an alliance of Green 
parties and the populist ADR 


group won five each. 

Apart from a brief period 
immediately after the war, 
Luxembourg governments 
have been formed by the CSV 
in coalition with the LSAP and 
the DP ou an alternating basis. 
The only exception was 
between 1974 and 1979 when a 
DP-LSAP government headed 
by Mr Gaston Thom, later a 
European Commission presi- 
dent, pushed the CSV into a 
rare period of opposition. 

Today, though, the habit of 
alternation seems to have bro- 
ken down. Not only is the 
present coalition now in its 
third five-year term -a record 
period - but its progress has 
been largely untroubled by 
squabbling between tbe two 
partners: previously a tradi- 
tion, especially for so-called 
“grand coalitions” between 
the socially conservative and 
economically moderate CSV 
and the left-leaning LSAP. 

Ten years of co-habitation 
has smoothed many of the 
ideological rough edges of the 
coalition, such as they exist 

The feet that both coalition 
partners have dose links with 
a wing of the trade union 
movement helps - Mr Jean 
Spautz, CSV interior minister, 
and Mr John Lahore, LSAP 
health minister, came into 
government from full-time 


union positions. But tbe politi- 
cal balance has been thrown 
into question since Mr Santer, 
57, emerged as a co m p rom ise 
candidate to bead the EU Com- 
mission after Britain’s veto of 
Mr Jean-Low Debaane, the Bel- 
gian premier. His departure 
for Brussels promises to spark 
a wholesale change across the 
political spectrum. 

Mr Sorter's successor, sub- 
ject to confirmation by a CSV 
party congress 
in 

will be 
Jean-Claude 
Juncker. 39, 
the finance 
minister, who 
is the second-youngest mem- 
ber of the government. 

The youngest minister is Mr 
Alex Bodry, 36, the LSAP 
defence minister, who Is him- 
self widely tipped as a future 
leader of his own party if, as 
many observers believe, Mr 
Poos, 59, soon decides to call a 
halt to hi* minigtprini career. 

And the opposition now bos 
a young face since the DP 
reacted to its third consecutive 
election set-back by replacing 
Mr Charles Goereos, its presi- 
dent, with the popular and 
photogenic mayor of Luxem- 
bourg City, Mrs Lydie-Wurth 
Polfer, 42, on November 22. 

This development reflects 


the popular vote in Jane, 
which seemed to indicate 
desire for a change. Mr Santer 
won fewer personal votes than 
Mr Juncker In the European 
Parliament poll throughout 
the country, and he also 
trailed Mrs Wnrth-Polfer in 
the central district vote for the 
national parliament. In the 
southern district, Mr Bodry 
came within a few hundred 


CSV ministerial ranks have a 
somewhat jaded look. Mr Ban- 
ter has been a member of the 
go vernm ent for 17 years, Mr 
Fernand Boden has been fam- 
ily minister and Jean Spautz 
has been interior minister for 
15 years, and Mr Marc Rsch- 
baefa has been education min- 
ister for 10- For all bis relative 
youth, Mr Juncker will shortly 
complete 12 years in office. 

That Is tiie kind of problem 
the DP can only dream of. The 
party, which combines a lib- 
eral social philosophy with 
free- market economics, long 
played the same kind of piv- 


otal role in government as 
Germany's Free Democrats. 

Since 1984, however, the 
party has found itself shut out 

of government by the grand 
coalition and - like the FDP 
- has struggled to offer a dis- 
cernible alternative to rivals 
which are Increasingly fight- 
ing over the centre ground. 

Mrs Wnrth-Polfer now has 
the job of articulating and 
communicating a distinctive 
character and message for the 
DP -no easy task, but a cru- 
cial one. Few observers believe 
the party could survive a 
fourth election defeat, at least 
hi Its present form. 

One factor which has made 
life difficult for the traditional 
opposition is the rise of single- 
issue politics. This first made 
an impact hi 1979 when the 
leader of the Enroles de Force, 
Luxembourgers conscripted 
into the German armed forces 
during the 194 £M4 occupation, 
was elected to parliament in a 
(successful) bid to win better 
social security treatment 

In 1989, a group calling 
itself tbe Five-Sixths Pensions 
Action Committee won four 
seats in the Chamber of Depu- 
ties on a platform consisting 
principally of a demand for 
the upgrading of private-sector 
pensions to match those of 
public employees, who on 


retirement receive five-sixths 
of their final salary. 

Despite efforts by the coali- 
tion to defuse the issue with 
new provisions for private-sec- 
tor pensions, the group 
returned to the election fray 
this year, now calling itself 
the ADR (Action Committee 
for Democracy and Pension 
Justice), and won a fifth seat 
in parliament. 

The Greens, too, have bene- 
fited from dissatisfaction with 
the traditional parties, build- 
ing up their parliamentary 
strength from two seats in 
1984 to five this year despite 
turbulent internal politics 
which split the movement in 
two separate parties for 10 
years. 

Environmental conscious- 
ness has grown strongly In 
Luxembourg over the past 
decade, and the party has ben- 
efited from controversial 
Issues such as the nuclear 
power station at Cattenom, 
just over the French border, 
which helped the Greens win a 
first-ever seat In the European 
Parliament this year. Tbe 
party, which is in the process 
of reuniting, has ambitious of 
entering the government in 
five years’ time. 

The rise of the Greens, along 
with the collapse or the com- 
munist system in eastern 
Europe, also spelled the effec- 
tive demise of Luxembourg’s 
Communist Party, which as 
recently as the early 1970s had 
five members of parliament 
but lost its last remaining seat 
in June. 


December, 
Mr 


New blood is needed. The 
CSV ministerial ranks 
appear somewhat jaded 


votes of his party leader. 

The CSV 

might just use 
the reshuffle 
entailed by 
Santer^ depar- 
ture to bring 


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IV 


FINANCIAL TIMES WEDNESDAY OCTOBER 19 !994 


GRAND DUCHY OF LUXEMBOURG IV 


Simon Gray reports on industry and the economy 

A grudging declaration of victory 


T his summer, Luxem- 
bourg’s Industry Federa- 
tion, Fedil, somewhat 
grudgingly declared victory in 
the battle against recession. 
Order books were filling and 
margins improving, the federa- 
tion conceded, although it cau- 
tioned that the recovery would 
not be fully evident until 1995. 

Why the reluctance? For 
Fedil, the downturn has been a 
useful stick with which to beat 
the government for what the 
industrialists see as its failure 
to tackle the structural prob- 
lems of the Luxembourg econ- 
omy, which they view as a 
threat to the country's 
long-term competitiveness. 

To drive home the point, the 
federation sent an elegantly- 
produced “memorandum" to 
the so MPs elected in the June 
12 general election, entitled 
The Economic, Social and Envi- 
ronmenlal Policy Stakes. 

The document called For a 
series of measures to assist 
economic development in gen- 
eral and industry in particular, 
including a reduction in the 
overall level of corporate taxa- 
tion, greater state assistance in 
cash and kind for the creation 
of new enterprises, the aboli- 
tion - or 3t least modification 
- of the automatic system of 


salary indexation, and greater 
flexibility in employment regu- 
lations. 

At the top of the hit-list of 
Fedil and other employers' 
groups is the cost-of-living 
indexation of salaries, which 
they say fuels inflation and 
keeps Luxembourg producers 
at a disadvantage vis a vis 
competitors abroad. 

“We must stimulate the 
spirit of enterprise and entre- 
preneurship,” says Mr Marc 
Assa, the federation's presi- 
dent. “The enterprise is the 
basis of a nation's prosperity 
and well-being, and we must 
not allow this reality out of our 
sight” 

For years, Fedil has been 
arguing that the author- 
ities take action. Luxembourg 
risks the displacement of its 
industrial activity to countries 
with lower costs. But the trend 
in industrial investment 
seems, if anything, to belie 
that 


Certainly, Sommer AUibert, 
the French industrial group of 
which Mr Assa is chief execu- 
tive, does not seem worried 
about Luxembourg’s future 
competitiveness. In September, 
the group inaugurated two 
new factories at Eselbom in 
northern Luxembourg to man- 


Steef producer Arbed is 
resurfacing after a big 
downturn 


ufacture vehicle components 
and floor coverings, an invest- 
ment totalling nearly two bil- 
lion francs. 

Mr Assa used the occasion to 
announce that Sommer had 
decided to invest a further bil- 
lion francs in the Grand Duchy 
for the development and intro- 
duction of new products geared 
to meeting tougher European 
environmental standards, as 
well as the creation of a 


research and development cen- 
tre. 

This decision, he noted, was 
due in part to the advanta- 
geous economic environment. 

Although no new large-scale, 
multi-billion-franc projects 
have been announced in Lux- 
embourg recently, several have 
come on line, such as Guard- 
ian’s automotive glass prod- 
ucts facility near Greven- 
macher in the east, or are 
being implemented, such as a 
toy factory for the US Rubber- 
maid group in Differdange and 
a wood products plant for Aus- 
trian company Kxonospan in 
Sanem. 

The jobs created by the 
American and Austrian invest- 
ments, in an area of southern 
Luxembourg which 20 years 
ago was almost entirely depen- 
dent on the steel industry, 
illustrates the success of the 
policy of industrial diversifica- 
tion pursued by successive 
Luxembourg governments. 


The policy, backed up by 
extensive construction of infra- 
structure and a package of tax 
incentives, has been aimed at 
small projects as well as large, 
and made the Grand Duchy an 
exporter of composite materi- 
als for Formula l cars and of 
Japanese mushrooms as well 
as of glass, al uminium foil and 
videotapes. 

Meanwhile, Luxembourg’s 
steel producer, Arbed. is resur- 
facing after a big downturn 
which brought group losses of 
LFr5.7bn last year. The group 
now says it hopes to be back in 
the black for 1991 

In the early 1970s. Arbed 
employed more than 27,000 
people in the Grand Duchy. By 
the end of 1996 this figure will 
be nearer 6,000. But the com- 
pany is in the middle of a 
LFrl8bn modernisation pro- 
gramme which involves the 
installa tion of electric arc fur- 
naces and continuous easting 
facilities at three Luxembourg 


sites and one in Thuringia, 
Germany. 

The group’s confidence was 
emphasised earlier this year by 
its decision to acquire a con- 
trolling interest in the strug- 
gling Bremen-based K16ckner 
Stahl through its Belgian sub- 
sidiary, Sidmar of Ghent. The 


The steady increase in 
employment has slowed 
in the past two years 


deal makes Arbed Europe's 
third-largest steelmaker after 
France's Usinor-Sacilor and 
British Steel 

Arbed’s steady shedding of 
manpower has been achieved 
without any significant 
increase in unemployment. 
The jobless total peaked in 
January at some -L800 and now 
seems to have stabilised at 
about 4.000, some 2.4 per cent 
of the workforce. That figure is 


double the average unemploy- 
ment figure as recently as 1990, 
but it must be set against an 
increase in total employment 
between 1990 and 1993 of some 

19.000 jobs. 

or the total 187.000 employ- 
ees in March 1993. more than 

47.000 were cross-border com- 
muters from Belgium, France 
and Germany. Together with 
resident non-Luxembourgers, 
foreigners have accounted for a 
majority of jobs since 1992 and 
last year they occupied nearly 
53 per cent of jobs. 

The steady increase in 
employment (or at least of for- 
eigners - the number of Lux- 
embourgers has been falling in 
absolute terms since 1991) has 
slowed in the past couple of 
years, reflecting an economic 
downturn which bottomed out 
at 0.3 per cent growth last 
year. 

Only in the first quarter of 
1993 did the economy actually 
contract - by 0.3 per cent 


The official forecasts of 
growth of 1.5 per cent this year 
and 2.6 per cent next are 
already being overtaken. Mr ■ 
Jean-CIaude Juncker, finance 
minister, presenting his draft 
1995 budget to parliament in 
September, said he was calcu- 
lating on growth of 2.9 per 
cent 

The downturn has left its 
scars, however. The number of 
bankruptcies has risen from 
100 in 1991 to 233 last year and 
125 in the first four months of 
this year. 

But there is at least one sec- 
tor where recovery is already 
being celebrated. Commercial 
property, which was the first 
to hit the doldrums, now seems 
well set to grow. According to 
property brokers Jones Lang 
W bottom the amount of empty 
office space fell by about 35 per 
cent last year ns demand 
picked up. 

Office blocks which stood 
empty for months are filling up 
as firms, particularly in the 
financial sector, take the 
plunge into new premises. New 
developments are under way in 
the Luxembourg City suburbs » 
of Kirchberg and Gosperich, 
and a business park near the 
city's airport is now full, prac- 
tically to the last square metre. 


The insurance sector is expecting growth, writes Simon Gray 

New era of opportunities 


L ast year was an excellent 
one throughout Luxem- 
bourg's insurance and 
reinsurance sector, the Grand 
Duchy’s Insurance Commis- 
sion was able to report in 
October in its animal survey of 
the market 

The completion of the single 
market in insurance- with the 
implementation of the Euro- 
pean Union’s third generation 
life and non-life directives, 
which took effect on July 1 
-now offers Luxembourg tbe 
opportunity to become a cen- 
tre for the cross-border life 
insurance industry, the 
authorities believe and hope. 

“The life business has devel- 
oped tremendously well over 
the .past couple of years.” says 
Mr Victor Rod, the Insurance 
Commissioner, who is admired 
by players in the cross-border 
market for his vision in creat- 
ing a hospitable legislative, 
regulatory and fiscal environ- 
ment for the sector. A decade 
ago he took similar steps to 
create a captive reinsurance 
industry in Luxembourg. 

Many industry players 
believe Mr Rod is onto another 
winner. At the last count, 
about 20 “dedicated” cross- 
border life insurers were sell- 
ing products on a pan-Euro- 


pean basis, along with seven 
domestic insurers also active 
on a cross-border basis. 

By contrast, the Dublin 
International Financial Ser- 
vices Centre, widely perceived 
to be Luxembourg’s main rival 
for pan-European bnsiness, 
had four companies, although 
both centres have more appli- 
cations in the pipeline. 

Even under the EC's Second 
Life (Services) Directive, a 
half-way house on the way to 
the single market which 
allowed companies to sell 


The new era will mean 
changes in the local 
Luxembourg market 


products cross-border to cus- 
tomers who asked for them, 
freedom of services (ie non-do- 
mestic) business made op 71 
per cent of all life premiums 
received by the industry in 
1993. 

The new era will also mean 
changes in tbe local Luxem- 
bourg market, which is domi- 
nated by two large domestic 
insurers and tbe subsidiaries 
or branches of Belgian, 
French, German and Swiss 
companies. Instead of the 


Commission setting prices and 
conditions for the industry, 
companies will be free to 
decide their own -perhaps to 
the benefit of the long-suffer- 
ing Luxembourg consumer. 

In fact, Luxembourg is one 
of the EU countries which 
have not yet passed the 
so-called third generation 
insurance directives into 
national legislation, in large 
part because of disruption 
caused by a general election in 
June and the subsequent for- 
mation of a government, fol- 
lowed by the country’s tradi- 
tional summer hiatus. The 
legislation is scheduled to go 
through parliament in Novem- 
ber. 

According to Mr Rod. Lux- 
embourg offers an “unbeatable 
combination” of advantages as 
a life insurance centre - the 
existence of the banks and 
investment funds, fund man- 
agement skills, a central loca- 
tion, the linguistic abilities of 
Lnxembonrgers and other resi- 


dents, strict confidentiality 
rules which match those 
applying to banks, and the 
lack of any premium or capital 
far. All those advantages are 
available elsewhere, he says, 
but not in one single place. 

All areas of the Luxembourg 
market - life and non-life, 
domestic and international, 
direct insurance and reinsur- 
ance - enjoyed growth in 1993, 
according to tbe Commission. 
At year-end the sector com- 
prised 73 companies, but four 
new life companies bave 
opened since then. 

Non-life premiums rose 18.12 
per cent to LFr24-4bn, while 
life business grew 40.4 per 
cent, to LFr20.4bn, of which 
LFrl4.6bn consisted of cross- 
border bnsiness. This gr o wt h 
compares with an increase of 
14LL3 per cent in life premium 
income in 1992, the first year 
in which pan-European busi- 
ness represented a substantial 
proportion of the totaL 

Two companies dominated 


cross-border business last year 
and will continue to do so in 
1994. PanEuroLife, established 
by France’s UAP group and 
the Banque Internationale k 
Luxembourg, had premium 
income of some LFrti.Sbn in 
1993 and expects to exceed 
LFrlObn this year. 

Lombard International 
Assurance, whose sharehold- 
ers include Standard Life. 
Europe’s largest mutual life 
assurance company, and Aber- 
deen Trust from Britain and 
Switzerland’s Inter Allianz 
Bank, notched up £81m 
(LFr-L25bn) last year, and Mr 
Andrew McKinna, marketing 
director, says the company is 
on course to meet its 1994 tar- 
get of £150m. 

Lombard's target is the 
so-called "grey panther” -the 
growing market of medium- 
rich Europeans which is also 
tbe focus of Luxembourg’s pri- 
vate banking sector. “Life 
insurance enjoys an advantage 
over banks and investment 


funds,” says Mr McKinna, 
“because it offers open tax 
benefits in our target mar- 
kets" - Germany, Britain, the 
Benelux countries, Sweden 
and increasingly France. 

Mr McKinna says Lombard 
would be happy to see more 
competition because it would 
demonstrate the maturity of 
the sector - and would help to 
attract new customers to all 
market players. It looks as 
though he won’t have too long 
to wait 

A new wave of companies is 
now making plans to enter the 
market, with British institu- 
tions to the fore. Scottish 
Equitable and CMI have pub- 
licly declared their intention 
to come to Luxembourg; Nor- 
wich Union and Scottish Provi- 
dent International bave made 
no secret of their interest 

There’s more to come, 
according to Mr James Ball, 
whose consultancy firm, JBI 
Associates, specialises in the 
insurance sector. “Since July 1 


there has been great interest 
from the United Kingdom 
which was not there before.” 
he says. “There’s hardly a 
company there which is not in 
the marketplace. But German 
companies are showing inter- 
est too." 

So are local ones. Le Foyer, 
Luxembourg’s largest domes- 
tic insurers, has already ven- 
tured into the cross-border 
market by selling products to 
Danish expatriates. A change 
in the law curtailed that busi- 
ness, but Francois Tesch, wan- 


Some 20 more 
applications are likely to 
be approved 


aging director, says the com- 
pany is seeking foreign part- 
ners and is devoting a third of 
its resources to foreign pro- 
jects. 

Somewhat overshadowed 
these days by the more glam- 
orous life bnsiness, Luxem- 
bourg continues to expand its 
role as a centre for captive 
reinsurance business, first 
welcomed in 1984 at the 
urging of Swedish companies 
which were forbidden by their 
national authorities to estab- 


lish captives in offshore juris- 
dictions such as Bermuda. 

The reinsurance sector num- 
bered 201 at the end of August 
thanks to a sudden burst of 
expansion, with 19 new 
licences being delivered since 
the beginning of this year. 
According to tbe Commission, 
some 20 more applications are 
likely to be approved in the 
coming months. 

The reinsurance sector, 
which until recently was domi- 
nated by Scandinavian, French 
and Belgian companies, col- 
lected premiums totalling 
LFr65.2bn in 1993 and at year- 
end had accumulated technical 
provisions totalling LFrl53bn 
(up 42 per cent in two years) 
under rules which allow 
reserves of up to 20 times pre- 
mium income to be sheltered 
from corporate taxation. 

Mr Rod believes that pros- 
pects for growth in the rein- 
surance sector are limited now 
because most of the multina- 
tional groups which meet Lux- 
embourg’s stringent criteria 
for the establishment of cap- | 
fives are already represented 
here. But a wave of Interest 
from German groups, with five 
new companies set to be estab- 
lished this year, may persuade 
him to revise his view. 



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* 














■r l 


i 


★ 

1 FINANCIAL TIMES SURVEY 1 

# NORTH AMERICAN BUSINESS LOCATIONS 


Wednesday October 19 1994 





The race is on to expand operations in a trading 
area which, thanks to Nafta, has 360m consumers, 
Martin Dickson examines the prospects 

Motor industry sets 
pace for investors 

employment in the tuition’s 
motor industry to rise from 



There is no more clearcut 
Illustration of the importance 
of North America as a business 
location for European and 
Asian corporations than a 
string of recent investments in 
the motor industry. 

Toyota, the largest Japanese 
V vehicle manufacturer, 
announced recently that it 
would be raising its vehicle 
production in the region by 
nearly 50 per cent over the 
next two years, taking its total 
output from 533,000 units to 
'79Q.OOQ a year. 

The increase will come from 
its e rf sting manufacturing 
plant in Kentucky, where it 
has already put in place the 
necessary extra production 
capacity; from New United 
Motor Manufacturing, its Calif- 
ornia-based joint venture with 
General Motors; and from 
Toyota Motor Manufacturing 

in Canaria . 

in July, Unmda J Japan’s third 
largest carmaker (and the first 
to establish a manufacturing 
presence in the US, in tiie early 
1980s), announced that it 
planned an 18 per cent increase 
in North American vehicle 
capacity over the next three 
years and a 50 per cent boost 
in engine -making capacity by 
1998. Again, the expansion win 
fake pla ce at its gristing facto- 
ries in Ohio and Ontario, Can- 
ada. 

The Japanese companies 
want to increase their US out- 
put partly because the rise in 
the value of the yen, relative to 
the dollar, has made it uneco- 
nomic to import many vehicles 
from Asia, and partly because 
Tokyo is under strong US pres- 
sure to reduce its trade unbal- 
ance with America. 


But they are hardly alone in 
their gi pmsinn plans: over the 
past two years two German 
luxury car manufacturers - 
BMW and Mercedes-Benz - 
have both announced plans to 
locate in the US, their first 
manufacturing plants outside 
Germany. BMW has built a fac- 
tory in South Carolina, which 
produced its first vehicles last 
month, while a Mercedes plant 
is going up in Alabama. 

Both have been lured by 
America’s relatively low labour 
costs (partly a function of dol- 
lar weakness), by the skills of 
its workforce, and by the com- 
petitive edge they hope they 
win gain from being direct par- 
ticipants in the world’s most 
cut-throat vehicle market, arid 
one of the most innovative, 
lake the Japanese, their new 
US production will be aimed 
both at domestic consumers 
a-nri at the export market. 

The increasing motor indus- 
try investment is being repli- 
cated in many other sectors, 
and for broadly similar rea- 
sons: no company seeking a 
global presence can ignore 
either the size or fiercely entre- 
preneurial character of the US 
market. 

For the OS remains by far 
the world's largest market 
speaking a single language, 
while this year’s implementa- 
tion of the North American 
Free Trade Agreement has cre- 
ated a trading area, also 
embracing Canada and Mexico, 
of more than 360m consumers. 
Nafta is starting to have a sig- 
nificant impact on location 
decisions. 

Chrysler Is building a new 
$30Qm vehicle assembly plant 
in Mexico, and analysts expect 


160,000 today to 210.000 by 1998. 

Foreign direct investment in 
the US grew remarkably in the 
1980s. This was partly through 
the start-up of greenfield 
plants, notably from Japanese 
car manufacturers, but much 
more so through the takeover 
of existing US companies. 
Direct foreign Investment grew 
from $83bn in 1980 to $403-7bn 
in 1990. 

In the late 1980s and early 
1990s the growth rate dropped 
sharply, due to recession and 
to alternative investment 
opportunities opened up by the 
economic integration of west- 
ern Europe, the collapse of the 
Soviet empire, an economic 
boom in several Pacific Rim 
nations and an improved eco- 
nomic ofanato in T-atrn Amer- 
ica. 

Foreign spending on acquir- 
ing or establishing US busi- 
nesses totalled $15.3bn in 1992, 
down roughly 45 per cent on 
the previous year and the 
fourth consecutive year of 
decline. It was the lowest total 
since the $8U9hn in 1983. 

However, over the past 18 
mnnftis there baa been a dis- 
tinct revival in US inward 
investment Expenditure in 
1993 bounced back to $26L2bn, 
while total foreign direct 
investment, at historic cost 
reached $4453bn. 

This year has seen a flurry of 
European takeovers or sizeable 
investments in US companies. 
Including a $5-3bn cash bid by 
Roche of Switzerland for drugs 
company Syntax and a 5Z3bn 
offer by SmTthKHnB Beecham 
for drug wholesaler Diversified 
Pharmaceutical Services. 


But where in North America 
should a foreign company 
locate its operations? For those 
acquiring or expanding a US 
presence through a takeover, 
there is little choice: you set up 
shop whore the acquired com- 
pany Its facilities. 

But those rampmipg estab- 
lishing a greenfield presence, 
or thinking of changing their 
existing North American loca- 
tions, face a complicated 
trade-off involving, among 
many factors: the type of busi- 
ness they axe engaged in; the 
markets they are seeking to 
serve; the type of labour force 
they need to attract; relative 
wage/real estate/utility and 
cost-of-living expenses; trans- 
port and other infrastructure 
requirements; and available 
government incentives. 

Despite this wide range of 
variables, some broad trends 
can be identified. 

One of the most significant is 
the growth of financial assis- 


tance packages over the past 
few years as US states and 
municipalities try to woo busi- 
nesses. Jim Schriner, of PHH 
Fantus Consulting, a leading 
business location advisory 
group, says: “The incentive 
market is very hot right now 
and will probably stay so for a 
couple of years.” 

The most startling incentive 
package Is that awarded by 
Alamaba to Mercedes: an ini- 
tial 5253m, with tax breaks 
over 25 years that could be 
worth an additional 5230m. 

More recently, the state of 
Iowa gave Ipsco, a Canadian 
steel group, a package of tax 
and other incentives worth 
573m over 20 years to clinch 
the location of a steel mill. And 
last month Connecticut gave 
soma 5120m of incentives over 
10 years to persuade Swiss 
Bank Corporation to move its 
US headquarters from Manhat- 
tan, New York, to the subur- 
ban city of Stamford. 


Despite tiie growth of incen- 
tives, m os t nompanins iwnririgr 
these towards the end of their 
site search, as one of several 
factors which can tip the bal- 
ance between one area and 
another. Relocation advisory 
groups argue that to focus on 
government concessions ahead 
of more fundamental business 
factors is to risk making 
short-term judgments which 
could prove costly in the long 
ran. 

More fundamental business 
location trends include a con- 
tinuing shift of businesses 
from city centres to surround- 
ing suburbs. 

Take, for example. Swiss 
Bank's recent riprisinn to move 
to Stamford, Connecticut, from 
New York city, and Master- 
card’s plan to move its head- 
quarters from Manhattan to 
New York state's nearby 
Westchester county. 

In New York, this trend 
partly reflects rising Manhafc . 


tan property rental prices as 
the city recovers from the 
severe recession of 1989-1893. 
■mat, in turn, underlines the 
fact that, despite the run of 
defections, cosmopolitan New 
York remains a crucial centre 
for the financial services Indus- 
try, international trade and 
media industries. 

That said, manufacturing 
and services industries that do 
not need to be in the relatively 
costly north-eastern US are 
continuing to switch to less 
expensive centres in the south, 
midwest and west 

And on the west coast there 
is a trend for businesses to 
relocate from California to fast- 
growing desert and Rocky 
Mountain states, notably Ari- 
zona, Nevada and Utah. Many 
are leaving the expensive, 
socially-troubled Los Angeles 
region. 

Nafta is also starting to 
influence location decisions. 
Richard Greene, of Erast & 


IN THIS SURVEY 

□ The strengths and weak- 
nesses of the US regions 

□ Mexico welcomes for- 
eigners with open arms 

Page 2 


□ Free trade has broad- 
ened the horizons of Cana- 
dian companies 

□ Selection consultants are 
unseen players for big stakes 

□ How to choose the ideal 
site 

Page 3 


D Making that Eft-Important 
decision requires detailed 
analysis of several issues 

□ Why BMW chose South 
Carofina as the site for its 
plant 

Page 4 


□ How Iowa won the battle 
tor a steel mill 

P Small-town values have 
the edge over the big cities 
Page 5 


Editorial production: Roy Terry 
Mbs antiarv DantO Bromby 


Young’s international corpo- 
rate real estate consulting ser- 
vice. says: “The biggest thing 
to have changed in the last 
couple of years is Nafta. We 
are seeing foreign companies - 
Canadian and Mexican as well 
as European and Asian - reex- 
amining where in America to 
do business. They are looking 
for the best place to access the 
entire North American mar- 
ket” 

Mr Schriner of PHH says 
that it has seen “very little 
work resulting from Nafta. 
Com panies that want to be in 
Mexico already have a pres- 
ence in Mexico.” 

But he adds that many com- 
panies are still organised on a 
country basis, rather than a 
regional haste, with three sepa- 
rate corporate staffs for the US, 
Canada and Mexico, and these 
will have to be cut eventually 
to one. “Companies have not 
dealt with this yet, but they 
wfll have to.” 





In Connecticut How Far Can 
A Hiah-lech Business Go? 



Rocket engines and space suits. Microsurgical 
instruments and robotics. These are just a few of the 
hundreds of high-tech innovations coming out of 
Connecticut today. Why do leading -edge enterprises 
base themselves here? To draw from a skilled work 
force that has mastered the most advanced production 
processes. To have ail the service suppliers they need 
within a two-hour drive. To capitalize on a gateway 
that puts more than one -third of the U.S. population 
and more than two- thirds of Canadas within 800 
kilometers. To get flexible 
financing and generous 
tax benefits from the State. 

To enjoy America's richest 
cultural life. And to make 
their homes where people 
of diverse backgrounds 
come together in a true 
spirit of community. This 
is why more than lOO 
national and international 
marketers have put their 
manufacturing and 
distribution centers here 
in the past ten years. For 
a closer look, fox the Connecticut Economic Resource 
Center, Inc.: U.S. (203) 571-7150. 

CONNECTICUT 

The Sate That Thinks Like A Business. 



Major markets within 800 kilometers. 

















Olympic city; Atlanta is the unofficial capital of the south-* 


Washington falters: Seattle-based Boeing has had to cut back on production 


G o west, young man - 
but make sure you stop 
at the Rocky Moun- 
tains. 

That might be useful mod- 
em-day advice to the adventur- 
ous and entrepreneurial, since 
for the past three years the six 
states down the spine of the 
Rockies, plus the nearby desert 
states of Arizona and Nevada, 
have been the fastest growing 
region of the US. measured by 
job creation. 

The nation's fastest growing 
city is the gambling centre of 
Las Vegas, Nevada, where 
employment Is expected to rise 
7 per cent this year. Utah is the 
fits test growing Rocky Moun- 
tain state, with 6 per cent job 
growth last year. 

Contrast that with Calif- 
ornia, once the golden destina- 
tion of Americans heading 
west to seek their fortunes: it 
has suffered four years of 
recession and this year seems 
likely to manage only marginal 
job growth as the economy 
shows signs of a painfully slow 
recovery. 

This tale of two regions 
underscores a fact of consider- 
able significance to companies 
deciding where in the US to set 
up shop. The nation is not so 
much a single economy but a 
collection of regional econo- 
mies, with their own distinct 
personalities, strengths and 
weaknesses, and differing eco- 
nomic cycles. 

Two broad national trends 
have been discernible In recent 
decades: strong growth in pop- 
ulation and national output in 
the hot, less crowded southern 
and western parts of the coun- 
try - the socalled Sunbelt - 
thanks partly to the invention 
of relatively cheap forms of air- 
conditioning. 

At the same time, population 
growth has slowed to a trickle 
in the traditional industrial 
heartland - the so-called Rust- 
belt - and this region has suf- 
fered a decline in manufactur- 
ing output, as companies have 
been lured by the cheaper pro- 
duction costs of the South and 
its hostility to organised 
labour. 

The north-eastern US - New 
England and New York state - 
have to some extent offset this 
decline in manufacturing with 
expansion of service industries. 
Boston, for example, is a 
powerhouse of the computer 
services, medical and teaching 
industries, while New York 
city remains the world’s fore- 
most financial services centre 
and an important location for 
the global trade and media 
businesses. 

The huge amount of intellec- 
tual capital located in the 
north-east and mid-Atlantic 
states will continue to give the 


Martin Dickson examines the strengths and weaknesses of US regional economies 


A place in the Sunbelt beckons 


region a strong comparative 
advantage in an era when 
brain power, rather than 
brawn, is the key to competi- 
tive advantage in the devel- 
oped world. It is no accident 
that in a survey last year by 
Fortune wa gazing of the "best 
US cities for knowledge work- 
ers”, New York emerged in sec- 
ond place and Boston third. 
Raleigb/Durham, in North Car- 
olina, topped the list 
That said, the north-east is 
only now recovering slowly 
from a severe economic down- 
turn between 1989 and 1993. 
which was brought on by the 
contraction of the securities 
industry, the bursting of a 
property bubble and the fed- 
eral government’s sharp cuts 
in defence spending, which hit 
the region disproportionately - 


just as the boom in 1980s 
defence spending helped give it 
an abnormal boost 
The region is expected to see 
only modest growth - of 
around 2.5 per cent - this year 
and next. Expansion will be 
restrained by continuing 
defence cuts, falling profits in 
the securities industry, and the 
restructuring of large local 
companies such as Eastman 
Kodak and T PM - 
Defence cuts and an over-in- 
flated property market have 
also been a principal factor in 
California's long recession, 
which began in 1990, and at 
last seems to be ending- The 
aerospace industry - long a 
mainstay of the economy - is 
continuing to cut jobs and 
some companies are moving 
operations to other states. 


weary of California’s high busi- 
ness costs and red tape. 

The Center for Continuing 
Study of the California Econ- 
omy, a research organisation 
which has long been bullish on 
the state’s prospects, insists 
that the state has strong 
long-term potential, based on 
foreign trade, high-technology, 
professional services, tourism 
and entertainment 

But it argues that the princi- 
pal threat to job and income 
growth is “the lack of a strat- 
egy to prioritise and fund criti- 
cal public investments, such as 
infrastructure and education”. 

Further up the west coast 
the state of Washington is also 
suffering a slowdown in 
growth as the recession in the 
civil aircraft industry forces 
Seattle-based Boeing to cut 


back on production. However, 
Washington, which enjoyed 
above average gro w t h in the 
early 19906. remains one of the 
more attractive US business 
locations, with Seattle often 
near the top of a locational 
league tables. 

The state has strong posi- 
tions in some of the world’s 
leading edge high-technology 
industries, strong ties with the 
booming Asian Pacific Rim 
countries, and great beauty. 

For now, however.tbe fastest 
growing regions of the US are 
in the south and/or centre of 
the country. 

The Rocky Mountains are 
expected to show growth of 
around 5 per cent this year, 
dipping perhaps to 4 per cent 
in 1995, thanks to an influx of 
manufacturers from other 


W ith its access to the 
US and Canadian 
markets guaranteed 
by membership of the North 
American Free Trade Agree- 
ment, Mexico expects to 
become a haven for foreign 
companies in search of a cheap 
labour force and a stable 
investor-friendly country with 
more than 85m people. 

In the first seven months 
since the treaty came into 
effect, there are already signs 
that Mexico’s ambitions are 
being fulfilled. Despite the tre- 
mendous political uncertainly 
before the August presidential 
election, direct foreign invest- 
ment rose by 32 per cent to 
reach 38.035bn compared with 
the same period last year. 

The largest share of the for- 
eign investment - 62 per cent 
- came fir am the US as in pre- 
vious years. But the passage of 
Nafta has not increased the US 
proportion of investment. 
High-profile non-US companies 
such as BMW, Honda, and Lab- 
bat, the Canadian brewery, 
have recently announced plans 
to invest in Mexico, raising 
slightly the share of non-US 
investment in the country this 
year. 

Under Nafta, Mexico, the US 
and Canada have agreed to 
remove almost all trade and 
non-trade barriers over 15 
years. With Mexican wages 
roughly one fifth of those in 
the US. economists expect 
many US and Canadian compa- 
nies to move their labour 
intensive operations south of 
the border - continuing a 


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Mexico: Damian Fraser assesses the prospects 


Foreigners welcomed 
with open arms 


trend towards economic inte- 
gration that began well before 
Nafta was proposed. 

Mexico further agreed to lib- 
eralise its foreign investment 
law in the Nafta negotiations. 
Under the new laws. Mexico’s 
financial sector is open to US 
and Canadian investment, red 



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tape on obtaining approval in 
other sectors is significantly 
reduced, and many restrictions 
on investing in border and 
coastal zones are lifted. Most 
of the concessions offered to 
the US and Canada have subse- 
quently been granted to other 
countries. 

The big three US car compa- 
nies were among the first to 
spot the advantages of invest- 
1 tog in Mexico and exporting 
parts or finished vehicles to 
the US and Latin America, and 
have plans to increase their 
investment in Mexico in com- 
ing years. They have now been 
joined by many German and 
Japanese auto manufacturers, 
who have recently announced 
their intention to make large 
new investments in the coun- 
try, in part so as to be able to 
meet higher local content 
rales prescribed under Nafta. 

A study commissioned by 
the Mexican Investment Board 
- the government-sponsored 
investment agency that is the 
first port of call for foreign 
companies moving to Mexico - 
reckons electronic, building 
materials, apparel and mining 
are the other sectors of most 
probable interest to interna- 
tional companies seeking to 
locate south of the border. The 
study concluded that Mexico's 
pro-business climate, quality 
of government, access to the 
US and its cheap work force, 
were among the m«rn factors 
attracting companies to the 
country. 

Mexico’s other principal 
attraction was the growing 
domestic market of 85m con- 
sumers- So far most companies 
seeking to sell to Mexicans, 
such as Labbat, the Canadian 
brewery. Bell Atlantic, the 
telephone company, Wal-Mart, 
the US retail chain, have 
entered the market with Mexi- 
can partners. But some, such 
as the 20 foreign hanks which 
have applied to open subsid- 
iaries, are going it alone. 

After snbdued economic 
growth for the past couple of 
years, the foreign investors 
looking at the internal econ- 
omy are hoping for a recovery 
next year. The government has 


forecast an expansion of about 
4 per emit, regarded as well 
within reach by most indepen- 
dent economists. Inflation, 
meanwhile, is expected by the 
government to fall to less than 
7 per cent this year, and to 4 
per cent next year. 

But despite the evident 
attractions of investing in 
Mexico, many foreign compa- 
nies have found out that doing 
business there is more expen- 
sive than might appear. Work- 
ers on average are considera- 
bly less productive than in the 
US, infrastructure is poor 
(especially in railways and 
ports), the cost of capita] is 
high, regulations governing 
ownership are unclear and law 
enforcement unpredictable. 
While the federal government 
is considered helpful to for- 
eigners, state governments, 
with some notable exceptions, 
are often bureaucratic, and 
prone to corruption. 

Nor does Mexico enter into 
bidding wars for companies 
seeking to receive benefits for 
locating in the country. Com- 
panies (foreign and domestic 
alike) receive modest federal 
tax breaks for new invest- 
ments, and for buying anti-pol- 
lution equipments. State gov- 
ernments can give land away 
or help train workers. But, 
generally, the government 
opposes giving discretionary 
benefits to foreign companies 
planning to invest in Mexico. 

Some of the obstacles to for- 
eign location in Mexico will be 
addressed by the incoming 
government of Ernesto Zedillo. 
His administration has 
pledged to boost spending on 
vocational training for work- 
ers, to commit to a significant 
expansion of the country's 
infrastructure, to lower inter- 
est rates by reducing inflation 
still further, and to enforce the 
law with respect to property 
rights and application of regu- 
lations. 

There is little doubting the 
Importance Mexico's govern- 
ment now attaches to foreign 
investment, and the open arms I 
with which it welcomes any I 
who are willing to set np | 
operations in the country. 1 




regions seeking lower operat- 
ing costs and professionals 
who have been freed by the fax 
and telephone modem to work 
wherever they choose. Many of 
these so-called “lone eagles" 
prefer to live amid the stun- 
ning physical beauty of the 
mountains and deserts. 

The Rocky Mountain expan- 
sion is admittedly from a very 
modest base - the region 
accounts for no more than 5 
per cent of US GDP - and the 
influx is pushin g up labour 
and housing costs. 

Texas, which suffered a 
severe dump in the mid-1980s 
when the price of oil tumbled, 
has since diversified away 
from the sector, into areas 
such as high-technology and 
environmental services, and 
the state is now growing a lit- 


tle above the national average. 

Cities such as Houston, Dal- 
las and Austin have become 
centres of high-technology 
excellence and the state will 
benefit greatly from its proxim- 
ity to Mexico as the North 
American Free Trade Agree- 
ment increases trans-border 
economic activity. 

The upper-midwest - an area 
which encompasses much of 
the traditional Rustbelt and 
ranges from Ohio in the east to 
Iowa in the west - is also 
thriving and has transformed 
itself over the past 20 years. 

At one time it appeared to 
epitomise the problems of 
American heavy manufactur- 
ing industry: its car, motor- 
hike. machine tool, steel and 
equipment manufacturers were 
all losing out to Asian rivals 
and the region looked to be in 
irreversible decline. 

The machine tool and motor- 
bike industries remain shad- 
ows of their former self, but 
the US motor and equipment 
industries have become much 
more competitive operations 
and the region has diversified 


into a wide range of leading 
edge industrial sectors and 
adopted a much more interna- 
tional outlook. 

The region neither soared 
during the 1930s with the 
flpfr»nr«> boom nor suffered so 
much as the east and west 
coasts in the defence/property 
downturn of the early 1990s, ^ 
and seems set to maintain 
solid, stable growth of 4 per 
cent or more this year and 3.5 
per cent next year. 

That rate of expansion could 
put it close to the south-east, 
which is growing faster than 
any region but the Rockies, 
thanks to population growth, 
company relocations, and 
greenfield factory construction, 
such as BMW’s plant in South 
Carolina and a Mercedes plant 
being built in Alabama. 

Atlanta, the unofficial 
regional capital, will get an 
additional boost from the 1996 
Olympics, to which it Is 
playing host Florida is suffer- 
ing from a sluggish tourist 
industry but is emerging as an 
increasingly important centre 
for Latin American trade. 


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Open-door policy: Mexico’s financial sector now welcomes US and Canadian investment 



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A high price to par- apart from frigid winters, Canada has several other drawbacks. Houses cost more in Toronto (abort) .. . 

Canada: Bernard Simon on the pros and cons of a move north of the 49th parallel 

Business looks southwards 


The climate for investment in 
Canada ’has improved mark- 
edly tn recent years. The irony 
is that many businesses, once 
established north of the 49th 
parallel, prefer to look south- 
ward to the US for new oppor- 
tunities. 

Much of the impetus has 
come from the 1989 US-Canada 
free trade pact and this year's 
North American Free Trade 
Agreement (Mafia), which also 

fnplnrioa Mfryfan , 

Free trade has broadened 
Canadian-based companies’ 
hnriTnrm At the gam* Horn the 
twin shocks of free trade and 
the 1990-92 recession have 
brought about a sharp 
improvement in productivity. 
Trade unions and government 
regulators have become more 
flexible as domestic industry 
has been exposed to stiffer for- 
eign competition. 

The economic upswing is 
now well under way, with real 
growth expected to reach 
around 4 per cent this year, 
one of the highest among 
OECD countries. This year's 
climb in interest rates could 
dampen growth slightly in 
1995, but economists forecast 
that output win expand by at 
least another 3 per emit 

Despite the growth in overall 
business activity, property 
prices and office rentals in 
most cities have yet to recover 


folly from foe recession. Infla- 
tion Is virtually non-existent, 
although it is likely to acceler- 
ate to about 3 per cent next 
year. 

Hie federal government and 
the 10 provinces - even the 
three governed by the inter- 
ventionist New Democratic 
Party - eagerly court foreign 
investors. 

Regulators are making life 
easier to business by gradu- 
ally lightening their touch cm 
such industries as telecommu- 
nications, power generation, 
transport and energy. Growing 
competition among tete pho* 1 * 
companies has cut foe cost of 
long-distance calls by as much 
as fiO per cent over the past 
seven years. 

The climate in Ontario, 
which generates some two- 
fifths of Canada's total eco- 
nomic activity, could brig hten 
farther after provincial elec- 
tions doe to be hrfH wrf year. 
Barring a dramatic reversal in 
its low popularity ratings, 
Ontario's present NDP govern- 
ment is likely to be replaced by 
a more badness-friendly Lib- 
eral or Conservative adminis- 
tratLcm. 

Owen Krassweller, interna- 
tional tax director in Ernst & 
Young’s Toronto office, adds 
that many overseas companies 
looking to a North American 
base feel more comfortable 


with the lifestyle f»nH business 
culture in Canada than hi the 
US. “Rightly or wrongly, Cana- 
dians are perceived as being 
more open, honest and easier 
to deal with than Americans." 
be says. 

Mr Krassweller says foe con- 
ventional wisdom that corpo- 
rate taxes are lower in the US 
than Canada is “probably a 
misconception”. He estimates 
that combined federal and 
state taxes in New York state 
are “not much different" north 
of the border. Furtbomore, US 
employers bear the foil brunt 
of the cost of health care to 
their employees, while the 
Canadian provinces fond their 
services from general tax reve- 
nues (Including in several 
cases, a payroll health tax). 

Even the threat of Quebec 
breaking away from the rest of 
the count ry is not necessarily a 
deterrent to setting up in Can- 
ada. "Regardless of foe politi- 
cal outcome, the people will 
stOl be there, and there will 
still be economic activity,” 
says Peter Jones, president of 
the Canadian subsidiary of 
Salomon Brothers, the US 
investment hank, which is in 
the process of expanding its 
Toronto-based operations. 

Salomon is by no means 
alone. Anecdotal evidence sug- 
gests that the brightening busi- 
ness climate has drawn a sub- 


Barbara Harrison examines the role of relocation advisers 

Unseen players for big stakes 


Site selection consultants are 
often the unseen players in the 
big stakes game of relocation. 
So, who are they? 

A few decades or so ago, rite 
selection was a relatively nar- 
row affair that included 
assessing real estate prices 
and foe pros and cons of vari- 
ous locations in terms of 
roads, electricity, local wage 
rates, airport access, and other 
critical factors. These assess- 
ments were often handled 
inside a company. 

But outside consultants 
wore increasingly brought In 
as the selection process 
became more competitive 
among US cities and states 
offering incentives to attract 
investors. Advisers, as outsid- 
ers, were considered more 
objective about the alterna- 
tives. 

Today, site consulting has 
mushroomed into a significant 
business. Although no public 
estimates exist on total fees 
earned or even the total 
amount of investment han- 
dled, site consultants say the 
bnriness is lucrative and point 

to the entry of the big six 
accountancy firms as evidence 
of fat fees. 

The two leading traditional 
firms specialising in site con- 
sultancy are Chicago-based 
PHH Pantos and New York- 
based Moran, Stahl & Boyer 
(tfS&B). The teg Six accoun- 
tancy firms have - more 
recently joined the fray, tn 

particular Deloitte & Touche, 
Andersen Consulting, Price 
Waterhouse, and Ernst- & 
v<«my- Several large engineer- 
ing firms, notably California- 

based Fluor Daniel which han- 
dled Mercedes' move to Ala- 
bama, flfcn offs- site consult- 
ing services- And there is a 
plethora of small shops, spe- 
cialising in particular areas. 

The levels of business 
among firms varies widely. 
The annual number of assign- 
ments for an industry leader 
such as Fantus, which handled 
BMW's move to South Caro- 
lina, is more than 100, almost 
all of which come from 
blue-chip companies, while a. 
ewirti shop might handle two 
or three deals a year. 


But Fantus and Moran, Stahl 
& Boyer have been fighting 
some increasing hot competi- 
tion in the past few years, 
especially from the big six. 
Ernst & Young only formally 
cons ti tu te d its site selection 
unit two years ago and it is 
already handling 20 to 30 
assignments a year, according 
to Barry Barovfck, director of 
corporate real estate consult- 
ing for Ernst & Young. 

. Deloitte & Touche decided it 
could build a separate practice 
around site selection about 
three years ago. With two top 
consultants poached from Fan- 
tus, Mar k Header and Philip 
Schneider, it has one of the 
stronger fully dedicated site 
selection teams at the big six. 


The strength of the big six 
entering this segment of con- 
sulting work is that they have 
a substantial client base as 
well as a depth of expertise in 
such areas as tax, manage- 
ment consulting and Teal 
estate that other relocation 
firms may not have. 

Similarly, e ngine e ri ng firms 
such as Fluor Daniel have 
wide experience in the actual 
implementation - the engi- 
neering and construction - of 
plant relocations, particularly 
for manufacturing. Fluor has 
been providing advic e on sit- 
ing since 1974. William Dor- 
sey, director of Plum's Siting 
and Consulting Services 
Group, located in Greenville, 
Sooth Carolina, explains: “We 


Choosing the 
ideal site 


The first step in site selection 
is corporate planning. Con- 
sultants emphatically say 
that a company's strategy for 
a relocation must be clear 
from the start In this, consul- 
tants can elicit some clarity 
by poring the right questions, 
such as “What are the prob- 
lems you think a move would 
solve?" 

The consottanfcs then begin 
to explore the needs that a 
company most have satisfied 
in any relocation. These can 
vary. If it is a distribution 

I centre, highways, airports, 

I telecommunications and 
proximity of markets win be 
at foe top the list 

If it is a manufacturing 
plant, the availability of 
labour, wages, power costs, 
proximity of suppliers and 
operational costs will be top 
concerns. 

r A variety of date bases are 
consulted to find a pool of 
locations that fit the client's 
needs. These are then whit- 
tled down after closer exami- 
nation and a refinement of 
demands. For example, a 


good consultant will know 
that an American high school 
diploma in New York city 
means little in the way of 
baric gfc~nig, while the same 
diploma in Minneapolis 
means the graduate can re ad , 
write and do sums. 

With a narrowed list, the 
consultants then often organ- 
ise field trips to foe compa- 
ny’s top executives to see the 
rites themselves. These often 
Im-HiHe piw witaHnns hy local 
business and government 
officials. Some cities and 
states have sophisticated 
business recruitment pro- 
grams and consultants 
should have the knowledge to 
know who can really deliver 
on their promises. 

Consultants can help sort 
out the incentives and deal 
sweeteners that various loca- 
turns offer. And. once the j 
choice is made, they will 1 
negotiate the deal and imple- ; 
meat it This can mean every- ' 
thing from helping relocated 
employees find housing to 
advice on job-hunting for 
spouses and schools. 


site about $2bn worth of 
investment a year and about a 
quarter of that Is European 
firms coming to the US.” 

Smaller consultants may 
provide a narrowe r range of 
services, but their business is 
built more directly on per- 
sonal relationships and trust. 
Wesley DeVoto, for example, 
operates as a “finder” for Brit- 
ish companies i n terested in US 
- and particularly south-east- 
ern US - investments. Mr 
DeVoto is more oriented to 
mergers and acquisitions by 
British companies wishing to 
have a US presence than green 
field site selection. Bui his 
Atlanta-based five-man strap is 
a successful niche participant. 

The upshot of the increasing 
competition is that Moran, 
Stahl & Boyer, acquired in 
1990 by financial services 
giant Prudential, and F antns, 
a division of the PHH (top, 
are undergoing a restructure 
to act more like the manage- 
ment consulting firms with 
which they are competing. 

Moran, Stahl & Boyer, which 
produces annual studies on 
favourite business cities for 
Fortune magazine, now is 
focused on location feasibility 
and selection, while the imple- 
mentation of the move, such 
as housing for employees, is 
carried out by its sister com- 
pany, Prudential Resource 
Management, according to I 
Charles Galloway, executive . 
vice-president of MS&B. I 

Fantus will now have three 
separate segments, one for pri- 
vate sector companies in 
North America and Europe, 
one for the public sector 
(advising on economic devel- 
opment for locations that want 
to attract investors) and an 
international unit that will 
focus on the Pacific Rim. 

The consultants all nonethe- 
less say that business is boom- 
ing. After foe lean and uncer- 
tain years at the start of the 
1990s, IB companies are once 
again making capital Invest- 
ments. And, they say, interna- 
tional business is pouring in 
as more companies seek to 
strategically position them- 
selves to compete in the North 
American market. 



. and in Vskouvot than in most cities In the US. Many household goods are also considerably more expensive 




stantial number of foreign 
companies to Canada - either 
to set up new businesses or to 
expand existing ones. 

However, with the notable 
exception of North American 
and Japanese carmakers, most 
of the investments have been 
in service sectors. 

The list of US retailers that 
have moved into Canada is 
long. Wal-Mart paid about 
C$300m earlier this year for 122 
stores owned by FW Wool- 
worth. Home Depot a big 
Atlant a ha r dw a re chain, has 
set up a joint venture with a 
subsidiary of Molsan, the 
diversified Canadian brewer. 

Looser regulation erf foe tele- 
communications industry has 
attracted several foreign tele- 
phone companies, notably US- 
based Sprint, MCI and AT&T. 
The latter owns 20 per cent of 
Unitei, which pioneered compe- 
tition in foe long-distance mar- 
ket against the consortium of 
jimv innai monopolies. 

On the other side of the bal- 
ance sheet, Canada also ha *? 
some definite liabilities — and . 
not only frigid winters. 

Personal taxes are substan- 
tially highflr hi Canaria than in 
the US. The top marginal tax 
rate is around 51-53 per cent in 
most provinces, except Alberta 
where it is 46 per cent 

House prices in Toronto and 
Vancouver are higher than in 


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UNnS) STATES 




most US cities. Mortgage pay- 
ments are not tax-deductible 
and many household goods - 
ranging from petrol to ciga- 
rettes - are considerably more 
expensive in Canada. 

Mr Jones says foar dif- 
ferences favour hiring people 
locally or buying a Canadian 
business*. "It’s expensive to 
transfer someone from a US 


location to a Canadian loca- 
tion.” He estimates that a US 
executive’s salary must be 
roughly doubled to maintain 
thp same after-tax income in 
Canada. 

Geography and demograph- 
ics are a daunting obstacle to 
any business planning to oper- 
ate in more than one region. 
With a total of only 2 Qiu inhab- 


itants, Canada - which Is 
sometimes described as a 
“clothes line of a country" - 
stretches across five-and-a-half 
time zones. The four Atlantic 
provinces are separated from 
the rest of the country by 
French-speaking Quebec. 

The provinces’ wide powers, 
which in some cases overlap 
with the federal gov e r n ment. 


Asm Qyt ^ 

can make life difficult for busi- 
ness. Different rules and stan- 
dards, including different tax 
regimes, apply in each prov- 
ince. 

Some progress has recently 
been made in bringing down 
non-tariff trade barriers 
between the provinces, such as 
procurement preferences and 
professional licensing require- 
ments. But they remain an irri- 
tant. 

Provincial government poli- 
cies can vary widely. At one 
extreme, Alberta’s Conserva- 
tive administration is closing 
hospitals and schools In pur- 
suit of Its target of a balanced 
budget by 1997. At the other, 
Ontario has expanded the 
rights of trade unions and 
tightened “employment 
equity” rules for the hiring of 
minority groups. 

Quebec’s agenda is likely to 
be dominated by the new gov- 
ernment’s drive to win the 
Independence referendum 
which it has promised to hold 
in 1995. 

With all these regional wrin- 
kles, it’s hardly surprising that 
many businesses, both domes- 
tic and foreign, prefer to 
expand into the US rather than 
tackle other parts of nanariq 
Free trade has made that strat- 
egy even more attractive. 



• Fortune ranks Philadelphia in the top ten “Best Cities for Knowledge Wbrkers.”' 

• Greater Philadelphia has more than 80 colleges and universities with 50,000 
graduates a yean 

• Philadelphia’s seven schools of medicine, 24 teaching hospitals, and numerous 
advanced research institutions support the growth in the region of many of the 
world's leading pharmaceutical and biotechnology companies. 

• Many of America's leading information and communication technology companies, 
including Bell Atlantic, Comcast, National Media, QVC, Shared Medical, Vishay, and 
Unisys, are headquartered in Greater Philadelphia. 

SAFER 

• The most recent FBI Crime Index ranks Greater Philadelphia as the safest of the 
12 largest U.S. metropolitan areas. 2 


Greater Philadelphia ranks third in overall livability out of 343 metropolitan areas 
i North America surveyed bv Places Rated Almanac 3 


• The Almanac is the “Guide to Finding the Best Places to Live in North America,” 
and compares areas for living costs, job outlook, housing, transportation, education, 
health care, crime, the arts, recreation, and climate. 

FIND OUT MORE ABOUT WHY PHILADELPHIA IS 
A GREAT PLACE TO LIVE, WORK AND PROSPER. 


Call or Write: 

I GREATER PHILADELPHIA FIRST 
I 1818 Market Street, Suite 3510 
l Philadelphia, Fk 19103 USA 
| Phone:(215)575-2200 

■ FAX: (215) 575-2222 


Comnanv 


■ 1 

Address 


1 

(5tv 

State ZiD 

1 

Phone ( ) 

. _ Faxf ) 

1 



1 


(l)tortMm Aba IS, 1003(3) FBI Crimt hri&per lOOJXOjnpuIatlm (Chicago mX rrmkei) (3) Hares Jiaud Almeatoe, rmtUftHidl Thin* im 


"““•S 







IV 


financial times 





WEDNESDAY OCTOBER 


19 19*4 


NORTH AMERICAN 


LOCATIONS 4 


Martin Dickson looks at the issues influencing the choice of location 

Decided advantages and drawbacks 


US cost of living 1994 


Prime office rental levels* 


New York 
' Los Angeles 
Washington 
Ptttsbwgh 

Maoneapafis/St Paul 
• Portland 
" ' Atlanta 

Standard C«y£ 
'Denver 
Austin 
Tampa 
Kansas City 
Phoenix 



saojcoj 



j- 
I : 

V-. 

•i . 

• t ' 


SO . *:tCfO '• ‘ 12© 


index .20' 

sauro. fta un ati m iwyM Scgnehs . _ _ ’ v ■■ ' 

The graph above Is based on a famSy of four with a £60,000 annual 
taicome, IMng in a 2,200 sq ft home with a mortg a ge. They own two 
cars and pay federal, state and local income taxes. The family has 
set aside a certain amount for investments and savings. Costing is 
based on representative o jwm un itfes surroumftng the core city in 
which famines earning SOOflOO annually are most Hcety to reside. 



US manufacturing wage rates 


(average hourly earnings, June 1994) 


Alabama $10.72 

Alaska $1 1 -90 

Arizona $10.92 

Arkansas $9.74 

California $12.50 

Colorado $12.39 

Connecticut $13.49 

Delaware $14.09 

District of Columbia $13.49 
Florida *8" 

Georgia SI 0^5 

Hawaii 312-27 

Idaho $11.75 

Illinois $12.28 

Indiana $13.49 

Iowa $12.46 

Kansas $12.09 

Kentucky $11.93 

Louisiana $13,06 

Maine $11.96 

Maryland $13.04 

Massachusetts $12.55 

Michigan $16.15 

Minnesota $12.51 

Mississippi $9.40 


Missouri 

Montana 

Nebraska 

Nevada 

New Hampshire 
New Jersey 
New Mexico 
New York 
North Carolina 
North Dakota 

Ohio 

Oklahoma 
Oregon 
Pennsylvania 
Rhode Island 

South Carolina 
South Dakota 
Tennessee 

Texas 

Utah 

Vermont 

Virginia 

Washington 

West Virginia 

Wisconsin 

Wyoming 


$11.49 
$12.39 
$10.96 
$11.49 
S1 1-57 
$13.26 
$9.96 
$12.13 
$ 10-20 
$10.26 
$14,45 
$11.53 
$1120 
$12.39 
$10.35 
$10.01 
$8.98 
$10.47 
$11.09 
$11.17 
$11.51 
$11.20 
$14.13 
$12.65 
$12.27 
$11.72 


■ There rates am not seasonally adjusted 


SDuKKftWAMaannev 


rate, quality of schools, cli- 


Deciding where to locate a 
business in North America 
presents a company with an 
extremely complex trade-off 
between factors ranging from 
real estate and labour costs to 
market proximity and the local 
quality of life. 

Much will depend on the 
type of business in which a 
company is engaged, and the 
markets it is serving. 

A steel mini-mill, for exam- 
ple. needs to be reasonably 
close to its markets, given the 
sheer bulk of its product, and 
also needs a secure supply of 
cheap electricity and scrap 
metal. Entertainment compa- 
nies will be drawn to the 
industry's greatest concentra- 
tions of talent - in Los Angeles 
and New York City. 

Tele-marketing companies 
can be located anywhere in the 
region, thanks to reliable com- 
munications systems, though 
they will tend towards areas 
where labour is cheap and the 
inhabitants do not have pro- 
nounced regional accents. 

Industry specific issues 
apart, the most important fac- 
tors in site location include the 
following: 

■ Real estate costs - includ- 
ing lease rates, construction 
costs and upfront rent conces- 
sions - constitute one of the 
most important relocation deci- 
sions. and as the chart shows, 
there are huge disparities 
between North American 
cities, with southern sunbelt 
and mid- western US states sub- 
stantially cheaper than the 
east and west coasts. 

The North American market 
as a whole is only slowly 


recovering from the severe 
property slump of 1990-1993 as 
the US economy expands. The 
US national average vacancy 
rate In the office sector 
remains not far below 2D per 
cent, with occupancy in pri- 
mary buildings improving at 
the expense of secondary 
space. The industrial market 
subject to less speculative 
activity in the 1980s, has less of 
an overhang, with the south- 
east, south-west and mid-west 
showing strongest demand. 

■ Labour costs, quality and 
availability. Wages rates vary 
widely across North America, 
(see table), with the eastern 
seaboard. California and. some 
mid-western states showing 
significantly higher labour 
costs than the southern sun- 
belt and mountain states. 

Mexico, in turn, hugely 
uncuts bqth the US and Can- 
ada. However, a recent survey 
of corporate real estate manag- 
ers by location consultants 
Ernst & Young* found that 
labour costs were only of mid- 
dling concern in site selection 
decisions, ranked well behind 
the availability of an educated 
workforce. This would appear 
to favour states and cities 
which can combine reasonable 
wage costs and a reputation for 
good education. A prime exam- 
ple is Utah, which has been 
enjoying one of the fastest 
rates of economic growth in 
the US over the past two years. 

■ Infrastructure. Access to 
principal highways is of crucial 
importance to most companies 
and some 46 per cent of partici- 
pants in the Ernst & Young 
study reckoned that the avail- 


ability of advanced energy and 
telecommunications systems 
was a very important location 
criterion. Access to a principal 
airport with convenient flights 
will also be important to many 
companies, particularly foreign 
businesses with executives 
constantly shuttling across the 
Atlantic and Pacific oceans. 

■ Tax and regulatory environ- 
ment. A favourable local gov- 
ernment attitude towards busi- 
ness and low property tax rates 
tend to be high on companies’ 
site selection factors. 

However, the Ernst & Young 


study found tax and start-up 
incentives - so often high- 
lighted in media reports of 
relocation decisions - were 
only named by 27 per cent of 
participants as constituting a 
very important location factor. 

This is perhaps not surpris- 
ing, since such concessions 
tend to be considered fairly 
late in the selection process, as 
a tiebreaker between sites on 
a company's short list But 
they can s tiu be an important 
factor in location decisions - 
particularly in the case of the 
largest prestige plants which 


• siawe Th* rnreutti GrespHwwrcti 

states are desperate to attract 
A very substantial factor in 
Mercedes' decision to locate its 
new plant in Alabama was the 
hefty package of incentives 
offered by the state. They 
totalled $253m and included 
517.4m to buy the plant site for 
Mercedes and develop it, 
$42-6m for building construc- 
tion and $30m for a training 
centre. Alabama is also paying 


30 ■ 40 SQ '6p 

Dollars per square -feet 

560m for training Mercedes 
workers and 577m for develop- 
ing the related infrastructure, 
such as roads and water lines. 

On top of all that Mercedes 
qualifies for tax breaks, related 
to its profits and head count 
which could total $9.2m a year 
for up to 25 years. 

■ Quality of Life. This broad 
category of factors ranges from, 
cost of living to the local crime 


mate, physical beauty of sur- 
roundings and access to recre- 
ational facilities. 

Cost of living, which again 
varies considerably from 
region to region (see chart), 
can be a significant factor in 
location decisions. A company 
situated in an area of particu- 
larly high firing costs, such as 
tiie greater New York area, can 
find it hard to get qualified per- 
sonnel to relocate to. the area, 
without paying higher wages 
than it need do elsewhere. 

However, the Ernst & Young 
survey found that other qual- 
ity of life characteristics - 
such as ctimatp and cultural 
facilities - ranked fairly low 
with location professionals. 

That said, quality of life 
issues can carry considerably 


more weight in two circum- 
stances. One is when profes- 
sional individuals are relocat- 
ing. Thanks to modern 
telecommunications systems, 
they can work from a wide 
variety of rural and semi-rural 
locations and a significant 
number of these so-called "lone 
eagles" are setting up in busi- 
ness in the Rocky Mountains, 
attracted by its scenic beauty. 

The second situation is when 
a company moves to a new 
location in large measure 
because the chief executive 
happens to like 1L 

* Contained in the Ernst & 
Young Almanac and Guide to 
US Business Cities, which gives 
profiles of 65 business centres. 
Published by John Wiley, price 
$16.95. 







Barbara Harrison discusses a car company’s move to South Carolina 

Southern comfort for BMW 


Alongside interstate highway 
85 in South Carolina stands a 
large billboard with the BMW 
logo on it and this statement: 
“Soon the world will know 
South Carolina craftsman- 
ship." 

The billboard seems a proud 
and defiant answer to Ml those 
who harbour doubts about 
why BMW chose to locate its 
first US car plant in the Amer- 
ican Deep South. 

Many non-southern 
Americans still regard the 
South as an unsophisticated 
backwater, whose people are 
under-educated and unskilled. 
Referring pejoratively to all 
southerners as “Babba", the 
sceptics snidely asked: “Can 
Bubba build BMWs?" 

The question held a special 
edge, since no European car 
company, much less one that 
built luxury cars, has ever suc- 
ceeded in manufacturing in 
the US. 

Yet, BMW is the 46th Ger- 
man company to invest in 
South Carolina's Spartanburg 
County, in the Piedmont of the 


Appalachian mountains. It is 
the 76th German firm to 
invest in South Carolina. 

“The capability of South 
Carolinians Is welt known in 
Germany." says BMW spokes- 
man Bobby Hitt 

But Mr Hitt, himself a 
native South Carolinian, 
acknowledges that the state’s 
stake in the plant's success is 
high. 

South Carolinians "have the 
success of the plant in their 
hearts and minds because they 
know it's a statement about 
our people", be said. 

This is so despite many 
other foreign investors in 
South Carolina, which ranks 
13 out of the 50 American 
states in total foreign invest- 
ment 


But the BMW plant has the 
highest profile of the lot, 
which includes Robert Bosch. 
Micheiin and other European 
high-end machining and high- 
technology manufacturing 
firms. 

BMW's primary reasons for 
choosing South Carolina were 
straightforward. Labour and 
overall operating costs were 
relatively cheap, suppliers 
were at the ready (including 
the 28 US companies that 
already served the company’s 
German plants), the labour 
force was available and of 
good quality, the US is the 
company’s second largest mar- 
ket and the state’s $i30m 
incentive programme was 
attractive. 

BMW is pleased with its 


move so far. The $400m plant, 
on which construction began 
in April 1993, opened its doors 
on schedule for the first work- 
ers in July. The 1.2m sq ft 
building rises in windowless 
pristine white from a 1,039- 
acre site, which still bears con- 
struction equipment and dirt 
mounds. 

Construction work continues 
on the 17,000 sq ft Zentrum, or 
visitors’ centre, which is the 
architectural centrepiece of 
the plant. In keeping with 
BMW's high profile, the Zen- 
trum will be used for a display 
of BMWs history and as a 
staging point for tours of the 
plant 

The plant which will be offi- 
cially inaugurated next 
month, b as all manufacturing 
operations under one roof and 
among its innovations is an 
assembly line that crosses 
itself, like an npside down 
small M e". 

The reasoning behind the 
design is almost purely to 
pump up the morale of the 
workforce. After a car com- 
pletes the U-shaped production 
portion of the line, it is turned 
and rolled down through the 
middle fin 1 final testing. This 
allows those who work at the 
start of the line to see the fin- 
ished product - and. of course, 
be on hand for any last-minute 
touching up. 

The plant's initial 520 woric- 
ers, including fewer than 30 
Germans, produced their first 
car on September 8. Although 
the plant was designed to 
make any model BMW, the 
first car was a 3181 

The plant will make the 318 
and the 325 models over the 
next year, and then start in 
August 1995 with the yet-to- 
be-on veiled roadster. Produc- 
tion is expected to rise to 290 
units a day in 1996 with a 


workforce of 1.200. By the end 
of the decade, the plant is 
expected to employ 2,000. 

While it is too soon to ren- 
der a judgment on whether 
Bubba can make BMWs, the 
company is satisfied with its 
workers so far. It has. how- 
ever, been extremely selective. 
When the job application dead- 
line was reached last Novem- 
ber. nearly 60,000 people had 
applied. 

The starting hourly wage is 
$12 and it rises to $16.20. This 
is modest by US auto industry 
standards, hut enviable by any 
South Carolina measure. 

The firm is giving prefer- 
ence to those who live in the 
area, but it is also seeking 
bright and ambitious people 
who see themselves making a 
career at BMW. 

The worker who drove the 
first car off the line, for exam- 
ple, is a former school teacher. 
One of the attractions of Sooth 
Carolina is its excellent tech- 


nical training colleges. 

But BMW is no doubt cau- 
tious about prounion people. 
Wh3e the company says it is 
not anti-onion. South Carolina 
is a right- to- work state and 
BMW at least harbours a bope 
that its plant wfQ stay oat of 
the grasp of the United Auto 
Workers’ Union. 

It is conce n tr a ting on creat- 
ing a culture of worker 
empowerment. People are 
trained to work in teams and 
be independent decision-mak- 
ers. 

To cut down on the attitude 
of “us and them”, there is no 
executive dining room, all 
employees including the presi- 
dent wear a simple while work 
jacket bearing the BMW logo, 
and there are no walls separat- 
ing the plant’s top brass from 
the floor workers. 

Whether inculcating the con- 
cept of worker empowerment 
wifi insulate that plant from 
unionism remains unclear. 
But were the plant to be 
organised by the UAW, It 
would be an aberration in 
South Carolina. 

Meanwhile, BMW’s invest- 
ment has brought a string of 
Its suppliers. Twelve suppliers 
have already relocated into tire 
area, bringing investment of 


more than 9114m and more 
than 1,000 additional jobs. 
Another dozen suppliers of the 
estimated final 70 for the plant 
are expected to relocate in the 
state. 

The added investment by 


suppliers not only makes oper- 
ating easier and cheaper for 
tiie company but provides yet 
more reasons (mostly in the 
shape of jobs) for BMW’s suc- 
cess to be in the hearts and 
minds of South Carolinians. 


TEXAS 

YOUR NAFTA CONNECTION TO NORTH AMERICA 



In Europe: 

State of Texas Office, Frankfurt, Germany 
Tel: 49 69 920 7390 Fax: 49 69 280872 

In North America: 

Texas Department of Commerce, Austin, Texas 
Tel: 512 320 9545 Fax: 512 320 9424 
TDD: 512 320 9698 Relay Texas Line: 800 735 2988 


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loosed Chicago &na offas M service, 
value-orientated Legal apertbe to die 
international business commnnity. 
Schuyler. Rocbe & Zwimer's capflfflitifs 
indude: 

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transactions 

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Tel: (312) 565-2400 • Fax: (312) 565-8300 


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Business 


INDEX OF FT SURVEYS 

July 1992 - July 1994 


This index has been compiled for researchers 
and libraries and those who require a sound 
briefing on national and International subjects. 

A useful cross index of all FT surveys published 
in the above period, listed in alphabetical 
order and subject 

To receive your copy, send a cheque for £3.00 
made payable to Financial Times to: 

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Nisnber One Southwark Bridge, 

London SE1 9HL 
Teb +44(0)171 873 3213 



ATLANTA 

MASSACHUSETTS 

QUEBEC 

FLORIDA 


1994 

NOVEMBER 1 
NOVEMBER 17 
NOVEMBER 21 
DECEMBER 9 


CONNECTICUT 
NEW JERSEY 
NORTH CAROLINA 


1995 

DTBA 
DTBA 
DTBA 

The Financial Timm Is read by more Senior Eurapam Executives 
responsible for site I ocatkxi/im plantation than any other Pan 
European Business Publication* 

For information on any of the above surveys, call Melanie Burton fa 

New York at 212 752 4600 or your uaual FT Representative 

’ 3 am - 1993 EBRS 

FT SURVEYS 













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* 


FINANCIAL TIMES WEDNESDAY OCTOBER. 19 1994 ★ 

NORTH AMERICAN BUSINESS LOCATIONS S 


Case Study: IPSCO 

How Iowa won the battle for a steel mill 



Fanning country; Iowa to p i t nu rty an agricultural state and is a leading producer of com and soya beans 


T he course of sfie location 
does not always run 
smoothly. When Ipsco, a 
Canadian steel company, was 
examining places to build a 
new US plant, one leading con- 
tender was a ate in Iowa on 
the banks of the Mississippi 
River. 

Then came the great Missis- 
sippi goods of 1903 and the site 
disappeared under 11 feet of 
water. 

Ipsco, based in Regina, Sas- 
katchewan, went cm to choose 
another Iowa site - again close 
to the Mississippi, but in a 
somewhat more elevated posi- 
tion - as the location for its 
new $360m mill, now under 
construction in the state's 
Muscatine County. 

The facility, due for comple- 
tion in April 1996, is one of the 
biggest development projects 
in Iowa. It is itogtgrw^ to pro- 
duce lm tonnes of hot robed 
steel annually from scrap 
metal and will create 300 jobs. 

But the project could easily 
have gone to another mid-west 
era state. Roger P hillips presi- 
dent of Ipsco, says that ini- 
tially Iowa did not figure 
pro m ine n tly in the company’s 
site search - even though 
Ipsco already had a steel pipe 
mill located in the state. 

Iowa, says Mr Phillips, was 
not a leading contender 


because the state's taxes on 
machinery and equipment dis- 
couraged investment by capital 
intensive industries. 

Iowa, however, put itself in 
the race by suggesting to Ipsco 
that it might be able to offer a 
break on the machinery and 
equipment tax. 

The tax issue apart the state 
met a lot of Ipsco's other site 
requirements; since steel is 
heavy, the company needed to 
be relatively dose to the mid- 


Iowa has started a big 
marketing push under 
the slogan “the smart 
state for business” 


western markets it wanted to 
serve. It needed reliable sup- 
plies of its basic raw material, 
scrap metal, and guarantees of 
long-term reasonable electric- 
ity prices. Other essentials 
included good rail and track 
transport HnTrn and p mrimWy 
to a river system. 


Its site list finally came 
down to a choice between 
three states; Iowa, Indiana and 
Kentucky. 

Indiana is America’s leading 
steel state, being home both to 
the large integrated mills 
around the town of Gary, and a 
revolutionary new mini-mill 
constructed by Nucor in the 
agricultural heart of the state. 
Kentucky has been particu- 
larly aggressive In trying to 
attract new manufacturing 
industry, including steel 
plants, 

From Iowa's point of view, 
winning the battle for Ipsco 
became one of the highest pri- 
orities in the state's industrial 
development strategy. 

Iowa is known primarily as 
an agricultural state and has 
long been one of the leading 
US producers of com and soya 
beans. It is also a significant 
manufacturer of farm equip- 
ment and consumer durable 
goods, being the borne state of 
white goods manufacturer 
Maytag. 


However, the state economy 
suffered badly in the 1980s. 
Successive recessions in the 
forming and durable goods sec- 
tors meant it suffered among 
the largest percentage drops in 
its employment base in the 
nation, losing 8.1 per cent of its 
workforce and 46 pa- cent of 
its population. 

The 1990s have seen a slow 
reversal of the population loss 
as agriculture has recovered 
and the state has sought to 
diversify its economic base. 

It has modified its tax struc- 
ture, put in place financial 
assistance and job training pro- 
grammes, invested gi50m in 
the construction of an informa- 
tion superhighway backbone, 
and started a big marketing 
push, including glossy adver- 
tisements in leading US busi- 
ness magazines under the slo- 
gan “the smart state for 
business". 

The slogan plays on Iowa's 
traditionally very good educa- 
tional system and its strong 
work ethic. (Mr Phillips says 


that the reputation of the 
school system was not a decid- 
ing factor for his company, 
“but it was icing cm the cake"). 

Among the sectors targeted 


by the state for development 
efforts are insurance and finan- 
cial services (Des Moines has 
become a significant insurance 
centre); agricultural products 


processing; and the metals 
industry, which is concen- 
trated in the eastern part of 
the states. 

Its emphasis on metals led 


state development authorities 
to go aggressively after the 
Ipsco project. 

The most important compo- 
. nent of the S75m package the 
state put together is the elimi- 
nation of the property tax on 
machinery and equipment for 
the project, which required 
special approval of the state 
legislature. The Iowa senate 
initially rejected the Incentive 
package, last February, but 
then passed the measure when 
Ipsco threatened to walk away. 

The package includes just 
$3m of upfront state financial 
assistance, about halT that 
which will go on road con- 
struction. The vast bulk of the 
aid is in various forms of tax 
credits, which are dependent 
on Ipsco making a very sub- 
stantial Investment in the 
state. Some $36m consists of 
exemption from the machinery 
and equipment tax, while 
$8. 5m comprises foregone state 
corporate tax. 

However, Iowa economists 
reckon that state and local tax 
receipts could receive a SUttm 
boost over 20 years, thanks to 
the project's impact on popula- 
tion and earnings growth, and 
that the public benefits of aid 
for the mill will easily outstrip 
the costs. 

Martin Dickson 


Martin Dickson examines why the Rocky Mountain states have become so popular 



it 


Where small-town values predominate 


Why are the Rocky Mountain 
states the fastest growing 
region of the US? What are the 
factors encouraging businesses 
to relocate to the area? 

The six states down the 
spine of the Rocky Mountains 
- Montana, MpHn , Utah, Wyo- 
ming. Colorado and New 
Mexico - together with neigh- 
bouring Arizona and Nevada, 
are expected to show growth 
of around 5.3 per cent this 
year and 4 per cent In 1995. 

The expansion is all the 
more impressive in that It is 
not due to booming oil or 
metal prices. The Roddes have 
traditionally been dependent 
on mining, oil, farming and 
forestry, and the region has a 
history of booms and busts 
tied to commodity cycles. 

Denver, Colorado, the 
Rockies’ main city, enjoyed 
strong growth in the late 
1979s, thanks to the global oil 
crisis, but the region largely 
missed out on the strong eco- •- 
nomic growth which charac- 
terised most other regions of 
the US during the 1980s. _ 

The current expansion is rel- 
atively broad-based, and 
includes a significant number 
of high technology companies. 
But while impressive, it needs 
to be put in perspective: the 
Rocky Mountains are one of 
the least significant economic 
regions of the US, and the base 


from winch the area is grow- 
ing is small relative to other 
parts of the nation. The gross 
regional product of the Rocky 
states was only $337bn in 
1998, compa r ed to well over 
f 1,00 0b n for the booming 
South Atlantic region, which 
has Atlanta as its main busi- 
ness centre. 

The region’s high overall 
growth rate also hides consid- 
erable differences in the vari- 
ous parts of what is an 
extraordinarily diverse area, 
ranging from the rolling 
wheat fields of eastern Mon- 
tana to the deserts of the 
south-west 

So while cities such as lias 
Vegas, Nevada, Salt Lake (Sty, 
Utah, and Boise, Idaho, are all 

booming, predominantly rural 
Wyoming, with no large cities 
and poor air transport ser- 
vices, is enjoying only modest 
growth. 

AU that said, rapid growth 
ia-tiie-RodMes^te significant, 
in that it points up business 
location factors which may 
become increasingly impor- 
tant 

Three reasons for the influx 
of companies and individual 
entrepreneurs stand out: the 
relatively low cost of doing 
business in the area; its pro- 
business dimate; and its open 
spaces and stunning scenery. 

So far, the Rocky Mountain 



Boom town: Laa Vagaa'a nw dwatapraertta meturia the EncaHbur 


states hare not used lavish tax 
incentives to attract business 
- because they have not 
needed, or been able to afford 
to do so. There are, inevitably, 
exceptions; last year Rio Ran- 
cho, New Mexico, gave a 
$ll4m tax incentive package 
to encourage Intel, the Calif- 
ornia-based semi-conductor 


manufacturer, into expanding 
its plant 

What the Rocky states do 
use to lure boriness are propa- 
ganda campaigns, aimed in 
large measure at Californian 
companies, which highlight 
the fact that the cost of doing 
business there is relatively 
cheap. 


Many of the campaigns are 
aimed at small companies - 
the kind creating most of the 
job growth in the US. 

Labour costs are wefi below 
the national average, and so 
are many other business 
expenses. Idaho, for example, 
reckons that a Californian 
company moving to the state 
can not only halve its pay lull, 
but it can cut fringe benefits 
around 50 per cent, the cost of 
workers’ compensation for 
injury by a similar amount, 
and utility costs by more than 
60 per cent Companies which 
have set up substantial 
operations in Boise include 
technology groups Hew- 
lett-Packard and Micron Tech- 
nology. 

Land prices are also far 
cheaper in the Rockies than in 
California, though the recent 
boom has begun to put signifi- 
cant upward pressure on 
house prices. 

The states have also adopted 
aggreasivdy probusiness poli- 
cies, for example by imposing 
moderate business taxes and 
cutting the red tape required 
to set up shop. One company 
which relocated last year to 
Rio Rancho, New Mexico, 
obtained a building permit in 
less than two weeks at a cost 
off just &200. It reckoned that 
the same exercise in southern 
California might have taken 



:X 



V-i.isii- 






Martin Dickson on new trends shaping site selection 

T omorrow’s locations 


In considering a business 
location, it is important io 
weigh up the fact that commu- 
nities are constantly changing, 
and so are the needs of indus- 
try. What looks like an excel- 
lent site today may seem a had 
choice 10 years down the road, 
and vice versa. 

So what do locational 
experts see as Important new 
trends shaping company site 
selection over the next decade 
or so? One of the most impor- 
tant Is that North American 
businesses will become 
increasingly reliant on welted- 
ucated employees - so-called 
knowledge workers - such as 
computer technicians, accoun- 
tants, and engineers, who can 
give their companies the criti- 
cal value added they need to 
compete against increasingly 
fierce global competition. 

Factory floor employees will 
nicn need to he better trained 
to perform their jobs well - for 
example, in keeping trade of 
the computers which run the 


production process. 

Companies which prosper 
are therefore likely to be 
attracted to areas winch can 
lure knowledge workers to live 
in them; which have good sec- 
ondary and higher education 
systems; and which are witting 
to offer generous aid in train- 
tag workers. 

Somewhat paradoxically, 
these criteria throw up as 
favourable centres an 
extremely broad range of com- 
munities - from some old east- 
ern cities to relatively new 
urban clusters in the desert 
south-west and rural communi- 
ties. 

For knowledge workers are 
attracted both to large urban 
centres of intellectual excel- 


lence and to the quality of life 
available in more rural sur- 
roundings, away from the 
crime, pollution and conges- 
tion of the metropolis. 

Some of the most favoured 
business locations in North 
America manage to combine 
intellectual excellence with a 
high, quality off file. 

Perhaps the most outstand- 
ing example is the Ral- 
eigh/Dnrham area of North 
Carolina, which has at its 
heart the 7.000-acre Research 
Triangle Park, a vast campus 
for high-technology whose red- 
dent companies include Du 
Pont, Glaxo and CEtarGeigy. 

It is broadly in the middle of 
a triangle between the region’s 
three big universities - Duke. 


University of North Carolina 
and Carolina State. The area is 
leafy, the efimate mild, the cost 
of living relatively low, and 
skiing mountains and the 
Atlantic ocean only a few 
hours' drive away. 

Some analysts see so-called 
"second tier” cities, somewhat 
akin to the Raleigh/Dnrham 
model, becoming increasingly 
attractive as locations. These 
are smaller centres, with lower 
business costs, which have 
modernised themselves over 
the past decade or more and 
offer up-to-date facilities, but a 
relaxed quality of life. To fare 
best, however, they need good 
transport links and a good uni- 
versity or two. 

Examples (all with popula- 


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tions of under lm) include 
Albany, the still rather sleepy 
capital of New York state; Bir- 
mingham, Alabama, a city 
which has transformed Itself 
from a dusty steel town into a 
centre of medical excellence; 
Austin, the capital of Texas, 
which baa become a significant 
computer Industry centre and 
is home to the main campus of 
the University of Texas; Salt 
Lake City, Utah, emerging as a 
significant high-technology 
centre; and Oklahoma City, 
Oklahoma, which has became 
a substantial back office and 
distribution centre a nd has an 
excellent vocational education 
system. 

However, some of America's 
largest cities are also expected 
to remain extremely attractive 
business locations - despite 
their relatively high costs - 
because of the sheer concentra- 
tion of knowledge workers 
found there. 

New York for example, will 
remain a crucial centre for 
finance, the media, the profes- 
sions and international trade. 

Other big cities which 
appear to have a particularly 
bright future include Boston, 
thanks to computers, medicine, 
finance and its universities; 
Chicago, with an extremely 
diverse industrial base and 
excellent universities; San 
Frandsco/San Jose, with Sili- 
con Valley retaining its pre-em- 
inent position as an informa- 
tion technology centre; and 
Houston, which has diversified 
from oil and gas into a broad 
range of high-technology and 
en gineering industries and is 
home to several excellent uni- 
versities. 

Atlanta, Georgia, the capital 
of the booming southeast, is 
also extremely well placed, as 
is Seattle, with its cluster of 
high-technology industries, 
beautiful setting and dose 
links irith Aria. 

Companies, however, should 
not rule out of their calcula- 
tions rust-belt cities which I 
have suffered in the past from 
a poor image. Take, for exam- | 
pie. Pittsburgh, Pennsylvania, 
which In the 1980s was a 
byword for industrial depres- 
sion as its surrounding steel 
rafils closed. It has diversified 
its economic base and the city 
centre, with its dramatic river- 
side setting, now has a thriv- 
ing, confident air. 



4 -v— UAHliUVW, IMA »»: 

Hard-working city: SaB Lake CJly is die home of Mormons, known for their strong family values 


18 months and cost $40,000. 

Another factor working in 
the Roddes' favour is the 
work; ethic, which remains 
high in this area, as in many 
parts of the US which have 
traditionally relied on farm- 


work ethic Is higher, so yon 
get more bang for your buck,” 
says an official at a company 
which moved from California 
to Boise three years ago. 

The state of Utah has bene- 
fited particularly strongly 
from this perception. Some 70 
per cent of Its population 
belongs to the Mormon 
church, based in Salt Lake 
City. Mormons are known for 
their strong family values and 
emphasis on hard work and 
education. 

Some companies also hope 
that the high quality of life in 
the Rockies will enable them 
to attract and keep weB-edn- 
cated employees. The moun- 
tains offer a wealth of outdoor 
leisure activities, ranging 


from skiing in the winter to 
trout fishing and horseback 
riding in the summer. The 
crime rate is generally low 
and traffic congestion mini- 
mal. Small-town values pre- 
dominate. 

Says Ms DeeDee Corradmi, 


decade ago, when I talked to 
businesses about moving to an 
area like this, they wanted to 
know what it meant for them 
financially. Today, Pm finding 
more and more asking: 
•What’s the quality of life? 
Will our employees and their 
families be happy living 
there?”' 

However, California is fight- 
ing bade against the lure of 
the Rockies - for example, by 
promising to cut its red tape - 
and the Rockies also have 
some significant drawbacks 
for companies looking for the 
right business location. 

The smaller cities and towns 
in the region have unimpres- 
sive air transport links with 
the rest of America. Continen- 


tal Airlines, for example, one 
of a small number of airlines 
serving Montana, has with- 
drawn completely from the 
state this year. 

Small-town virtues can also 
mean small-town dullness, and 
some companies could find it 
hard to get sophisticated 
employees to relocate to the 
region from America’s princi- 
pal cities. 

As for foreign companies, 
Asian ones are likely to prefer 
a West coast location (though 
Utah has attracted some Japa- 
nese investment) and Euro- 
pean ones may be put off by 
the significantly greater dis- 
tance from headquarters - 
both in distance and time zone 
- than the Atlantic seaboard. 

The present boom is also 
bringing new social problems 
to the region: many long-time 
Rocky Mountain residents 
resent the newcomers, and 
there have been confrontations 
In some Utah towns between 
straight-laced Mormons and 
racier Californian newcomers. 


mg. 

“Labour is cheaper and the ' mayor of Salt Lake City: “A 



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