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FINANCIAL TIMES 


Europe -s Busi nes^ ; . N e^/jpad&r 


Balladur sets up 
review of probes 
into crime 

Edouard Balladur, French prime minister has 
started a review of the legal process for investiga- 
ting white-collar crime after a series of probes 
involving leading industrialists. Interviewed on 
FYench television, Mr Balladur expressed concern 
that the latest probes had been "no good for democ- 
racy, for the economy or Tor the companies them- 
selves’. 

Bahadur said he wanted to ensure the legal sys- 
tem was operating efficiently. He has asked repre- 
sentatives of industry, the trade union movement 
and the judiciary to conduct the review. 

Last week Jean- Louis Beffa. chairman of the 
Saint-Gobain glass group, was questioned over 
alleged illicit political funding and a Brussels court 
issued an warrant for the arrest of Dldier Pineau- 
Valendenne, head of Schneider engineering group. 

Single EU currency back on agenda: The 

end of recession in Europe has revived prospects of 
a unified European currency by the end of the 
decade, said European Union finance ministers, but 
only greater fiscal rigour will create the conditions 
for it. they warned. Page 16; Two-tier Europe 
debate refuelled. Page 2 

White House rejects Congress role on 
Haiti: The Clinton administration is determined to 
resist growing demands that any Invasion of Haiti 
be made contingent on the prior approval of Con- 
gress. Warren Christopher, secretary of state, said 
that Congress would certainly be “consulted" but it 
was vital that the president's "constitutional 
authority be preserved”. Page 5 

Setback for Japanese ruling coaBUom 

Japan’s ruling coalition of socialists and conserva- 
tives was humiliated in a by-election, the first mea- 
sure of its popularity since it took power in a parlia- 
mentary coup 10 weeks ago. Page 14 

Clinton IHcety to turn down Adams: The UK 

government is confident that Bill Clinton, US presi- 
dent, will refuse a request to meet Gerry Adame, 
Sinn F6m president, who is expected to visit the US 
later this month. Page 6 

Assad speech lifts Israeli hopes: Israel 
welcomed a weekend statement by Syria's president 
Hafez al-Assad, saying it was aimed at preparing 
the Syrian public for peace. At the same time there 
was growing optimism in Israel of an imminpnt 
breakthrough in stalled peace negotiations. Page 4 

UK buBcBng projects probe: The UK 

government will this week announce a wide-rang- 
ing inquiry into the procurement of construction 
work by government departments and agencies 
after a series of cost overruns and delays. Page 6 

Trade ministers firm on ratifying GattTrade 
ministers from the European Union. US, Japan and 
Canada expressed their determination to see the 
landmark Uruguay Round world trade pact ratified 
by the end of this year. Page 5 

Italy in push for top Brussels posts: Silvio 
Berlusconi, Italy's prime minister, today launches 
Italy's attempt to increase its standing in Brussels 
during a meeting with Jacques San ter, incoming 
European Commission president Page 2 

Savoy may deny Forte fun victory: The Savoy 
hotel group is expected to emerge from its board 
meeting tomorrow as an independent company. 

Hans to merge Savoy's hotels with Forte’s luxury 
establishments are likely to be delayed. Page 15 

Cochabamba Light and Power Company, 

Bolivian electricity distributor, will become the first 
latin Ame rican company for decades to trade its 
shares on the London stock e x ch an ge if plans to list 
the group go ahead. Page 15 

European Monetary System: In a week which 
saw renewed discussion of the prospect of a multi- 
tiered Europe, the order of currencies in t heEM S 
grid was unchanged. The spread between strongest 
and weakest currencies was similar, with the only 
discernible shift being a slight weakening of the 
Irish punt Currencies, Page 27 


EMS: Grid 


September 8, 1994 

• i 



O © 1% 

hart shows the member currencies of the 
nge rate mechanism measured against me 
rst currency in the system. Most of the curren- 
re permitted to fluctuate within 15 per cent of 
i centred rates against the other members of the 
inism. The exceptions are the D-Mark and the 
rr which mow in a 2.25 per cent band. 

nan regional polls: The Christian 
era tic Union and their Social Democrat rivals 
lecisive victories in regional elections m Sax- 
nd Brandenburg. Page 14 

Isb guerrilla head arrested: pin-sun 
as, head of the extreme leftist Turkish guer- 
iroup Dev Sol, has been arrested in France, 
ty is to seek his extradition. 

tea Tandy dies: Actress Jessica Tandy has 
aged 85. The London-born actress electrified 
re audiences in 1947 as the original Blanche du 
n A Streetcar Named Desire, but found her 
st fame at 80 with her Oscar-winning perfor- 
e in Driving Miss Daisy. 


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MONDAY SEPTEMBER 12 ,'* 994 |! 


Compaq chiefs attack on Intel may herald commercial warfare in the PC industry 

Computer giants face threat of rift 


By Alan Cane m Barcelona 

Relations between Compaq 
Computer and Intel Corporation, 
the two companies which have 
jointly dominated the world per- 
sonal computer business, were 
strained to breaking point at the 
weekend after a bitter dispute 
over commercial strategy burst 
into the open. 

Intel is the world's leading sup- 
plier of microprocessors, which 
are the heart of personal com- 
puter systems. Compaq is the 
leading manufacturer of personal 
computers, and as a result, is 
Intel's largest customer. 

Mr Eckhard Pfeiffer, Compaq's 
chief executive, accused Intel of 


pursuing strategies which were 
d amaging his company. 

He accused Intel of launching 
an advertising campaign promo- 
ting Intel at the expense of Com- 
paq; of not rewarding Compaq for 
being Intel’s largest customer, 
and for making computers in 
direct competition with Compaq. 

The dispute between the two 
companies, which have been 
close allies, has been simmering 
for months, industry experts say. 

The clash could open a new 
front in the "microprocessor 
wars” which are expected to 
determine the direction of the 
computer industry for the fore- 
seeable future. The dispute is not 
simply over the future technol- 


ogy used by personal computers 
hut also the conflicting mar ket- 
ing strategies employed by semi- 
conductor makers and computer 
producers to establish a brand 
reputation for their machin e. 

The dispute burst into public in 
dramatic fashion at the annual 
Etre conference, a two-day gath- 
ering attended by senior execu- 
tives of virtually every signifi- 
cant computer company. 

Mr Pfeiffer, obviously angry 
and upset, left no doubt that if 
Intel did not respond to his com- 
plaints, he would turn to other 
suppliers for Compaq micropro- 
cessors. Such a shift of allegiance 
would mark a sea change in the 
balance of power in the industry. 


It was the synergy between the 
two companies which allowed 
them to take market share from 
IBM, the former market leader. 
Compaq earned revenues of 
$7.1bn in 1993, while Intel's reve- 
nue was 58. 78b n that year. 

Compaq has three chief com- 
plaints. 

• The "Intel inside" advertising 
campaign was promoting the 
semiconductor company at the 
expense of Compaq's brand 
nam e, Mr Pfeiffer said. The cam- 
paign. which has been running 
for months and has cost Intel sev- 
eral millions of dollars, is 
designed to ensure that personal 
computer makers carry an "Intel 
inside" sticker on their products. 


Mr Pfeiffer believes the Com- 
paq brand name gives him a sig- 
nificant advantage in a market 
where competitive products are 
often s imil ar in price and perfor- 
mance and that the Intel sticker 
devalues that advantage. 

• Compaq believes it is not 
being rewarded by Intel for its 
position as the company's largest 
customer. Intel has been driving 
down the price of its flagship 
microprocessor, the Pentium, to 
defend and improve its market 
position. It already supplies the 
microprocessors found in 90 per 
cent of the 40m personal comput- 
ers manufactured annually. 

Compaq says it should be able 
to take advantage of its bulk buy- 


ing power to secure discounts 
that would enable it to command 
higher growth profit margins. 

• Compaq is angry that Intel 
continues to make its own per- 
sonal computers in competition 
with Compaq. 

Tbe row has delighted Intel's 
competitors, including the US 
companies AMD and Cyrix who 
have been trying, without much 
success, to break Intel's strangle- 
hold on the market. 

Mr Hans Geypr. Intel's general 
manager for Europe, replied that 
the company would not be 
deflected from its strategy set 
out by Mr Andrew Grove, the 
company's combative chief exec- 
utive. 


EU rebuffs US 
plan to lift ban 
on Bosnia arms 


By Lionel Bather in Usedom, 
Germany 

European Union foreign 
ministers have rejected lifting 
the arms embargo against the 
Bosnian Moslem-led government, 
calling it an "absolute last 
resort". 

The stage is thus set for a rift 
with the US over the war in the 
former Yugoslav republic. 

EU ministers, meeting at the 
weekend on the remote islan d of 
Usedom on Germany’s Baltic 
coast, said lifting the embargo 
would probably lead to a with- 
drawal or dramatic scaling down 
of the UN’s humanitarian and 
peacekeeping mission. 

Mr Klaus Kinkel. Goman for- 
eign minister, warned of “incal- 
culable consequences" should US 
president Bill Clinton press 
ahead with his plan to start lift- 
ing sanctions if the Bosnian 
Serbs failed to agree to the 
US-EU peace settlement by Octo- 
ber 15. 

The fragile cessation of hostili- 
ties and tbe risks of a wider win- 
ter war in Bosnia were. driven 
home early yesterday morning 
after Mr Hans Koschnik, the EU 
administrator in the ethnically 
divided town of Mostar, narrowly 
escaped assassination in a rocket- 
propelled grenade attack. 

News of tbe assault shocked 
EU ministers, who called on Pres- 
ident Franjo Tudjman to control 
renegade Croatian forces. Earlier 
they backed a strategy of "total 
isolation" of the Bosnian Serbs in 
the hope of forcing a peace settle- 
ment In the next few months. 


At the same time, ministers 
edged toward approval for 
rewarding Serbia for its month- 
long blockade of the Bosnian 
Serbs, starting with a suspension 
of sport and cultural sanctions 
and a reopening of Belgrade air- 
port to international Sights. 

However, Mr Kinkel empha- 
sised that the reward was contin- 
gent (m President Slobodan Mil- 
osevic's accepting a "credible 
international presence” to moni- 
tor the border with the Bosnian 
Serbs and ensuring that the bor- 
der was sealed to prevent weap- 
ons smuggling. 

Latest EU intelligence reports 
suggest that the threat of 
renewed fighting this winter is 
real. Officials at the foreign min- 
isters' meeting spoke of deterior- 
ating relations between Croats 
and Moslems, with the Bosnian 
Serbs preparing to strike against 
the Moslems if tbe arms embargo 
is lifted. 

British officials this weekend 
made clear that the US would 
bear the brunt of recriminations 
which were bound to follow a 
withdrawal of the UN peace- 


Alison Maitland In London adds: 
Mr John Major, the British prime 
minister, will today be briefed on 
the situation in Bosnia by Mr 
Malcolm Rifkind, defence secre- 
tary, and Field Marshal Sir 
Peter Inge, chid: of the defence 
staff. 

Officials said no decision had 
been made on whether British 
troops should be withdrawn. 

Britain has 3,300 troops in Bos- 
nia. 



Victory wave: Yuzuru Tsuarid, a 
former labour ministry bureaucrat, 
savours success in defeating the 
government nominee in a by-elec- 
tion for the Aictii seat in Japan’s 
upper house of parliament The 
win shoidd boost attempts by the 
10 opposition parties to merge into 
one. Report, Page 14 picture Ha** 


Japanese banks move back 
into Europe’s loan market 


By John Gapper, Nicholas 
Denton and David Wighton 

Japanese banks have started an 
aggressive push into the Euro- 
pean syndicated loan market, 
helping to push down banks’ 
margins on lending to large com- 
panies dose to tbe levels of the 
late 1980s, according to bankers. 

Smaller Japanese banks pulled 
back from lending at fine mar- 
gins to European companies after 
the 1988 Basle accord, which 
required banks to hold more capi- 
tal against loans. But they reen- 
tered th*> market this summer. 

"They are back in tbe market 
in a big way." said Mr Grant 
Johnson, a director at NatWest 
Markets. 

The renewed push by Japanese 
hanlm haa led to marg ina on syn- 
dicated loans - where several 
banks share a large loan to a 
company - has worried bankers 
because it has contributed to 
margins’ falling to half the level 
of a year ago. 

Bankers say that loans to 
“investment grade" companies 


must have margins of at least 0.8 
per cent above the cost of funds 
to cover fixed costs and mate a 
return on capital Such loans are 
now being made at margins of 
below 0.25 per cent 

Many European and us hanks 
are competing to lend to high 
credit quality companies because 
loan demand from other sectors 
of the economy is weak. Japanese 
banks have recovered from the 
worst effects of the recession in 
Japan. The recovery in the Tokyo 
stock market compared with the 
lows of two years ago and the 
strength of the yen has helped to 
shore up banks’ balance sheets. 

Aggressive competition for 
business, in which the Japanese 
banks played a central role, led 
many banks to make loans at 

uneconomic margins in the late 

1980s. One senior hanker warned: 
“We are seeing a replay of what 
happened in the 1980s. Banks are 
starting to shoot themselves in 
the foot" 

Although large Japanese banks 
such as Fuji and Sumitomo 
remained in the London market 


- the centre for European syndi- 
cated loans - many of the 130 
smaller banks authorised to lend 
overseas withdrew at the turn of 
the decade. 

But European banters say they 
believe that smaller hanks were 
given a signal by the Japanese 
Ministry of Finance after the 
financial year-sad in April that 
they could resume lending 
abroad. 

The treasurer of one company 
said it was hard a year ago to get 
banks to make five-year loans, 
but that had changed. “We had a 
Japanese bank in yesterday that 
said: 'We will do you seven or 10 
years, whatever yon want,’” he 

gfliri- 

The finance director of another 
FT-SE 100 company said that 
companies could now persuade 
banks to agree to “very weak" 
financial ratios to which compa- 
nies must adhere. 

Hard news on the sports pages. 
Page 4 

Trade ministers firm on ratify- 
ing Gatt, Page 5 


CONTENTS 


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^ Tuy y INIA pjriAL TIMra LIMITED 1994 NO 32,439 Week No 37 LOUDON ■ PARIS ■ FRANKFURT - NEW YORK ■ TOKYO 


Big Mac 
guide to 
buying 
power 

By Richard Donkin 

The economic research 
department of one of the world's 
leading banks has settled on the 
McDonald’s Big Mac hamburger 
as an international measure to 
quantify the purchasing power 
of wages. 

Union Bank of Switzerland has 
included a Big Mac scale in its 
new edition of Prices and Earn- 
ings around the Globe, a survey 
of international prices and 
wages. 

Hie UBS researchers say the 
best way to Illustrate the pur- 
chasing power of wages is to set 
them in relation to the prices of 
individual products. The most 
suitable measures they have 
found are a 1kg loaf of bread and 
a Big Mac. 

The UBS scale shows tbe worst 
place to be if you are penniless 
and in need of a hamburger is 
Lagos, the Nigerian capital. 
There it will take you more than 
II hoars of toil, almost two full 
work days, to earn enough to 
buy one, compared with 14 min- 
utes in Chicago at the other end 
of the scale. 

International price compari- 
sons and cost of living indicators 


Continued on Page 14 


This announcement appears as a matter of reconi only. 


September, 1994 



A.M.P. (U.K.) 
Public Limited Company 


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Standby Revolving Credit Facility 


Arranged and Underwritten by 

THE FUJI BANK,LIM1TED 

Co-Arrangers and Underwriters 

Bayerische Landesbank Girozentrale The Royal Bank of Scotland pic 

London Branch 

Senior Lead Managers 
The Fuji Bank. Limited 

Bayerische Landesbank Girozentrale The Royal Bonk of Scotland pic 

London Branch 


Chemical Bank 


Lead Managers 

Westpac Banking Corporation 

Adviser to the Borrower 

AMP Asset Management Pic 

Agent 

THE FUJI BANK,UMiTED 


Credit Suisse 




\ 


V 


FINANCIAL TIMES MONDAY SEPTEMBER 12 1994 


NEWS: EUROPE 


Italy in push for 
top Brussels posts 


By Andrew (fill in Milan and 
Robert Graham in Rome 

Mr Silvio Berlusconi, Italy's 
prime minister, will today 
launch Italy's attempt to 
increase its standing in Brus- 
sels during a meeting with Mr 
Jacques San ter. the incoming 
Commission president 

Mr Berlusconi will show Mr 
Santer a list of heavyweight 
non-partisan candidates for the 
two Italian seats on the new 
European Commission, which 
takes office in January. 

But he will also try to con- 
vince Mr Santer to accept a 
delay in the formal nomination 
of commissioners, in the hope 
that Italy can win one or Brus- 
sels' top economic portfolios 
for its candidates. 

The new I talian government 
is keen to boost Italy's stature 
in the European Onion to the 
same level as Britain. Germany 
and France, following decades 
in which it has lacked real 
influence. The recent proposals 
by Germany's Christian Demo- 
cratic Union for a hard core of 
EU countries, excluding Italy, 
have underlined the problem. 
Politicians and ordinary Ital- 
ians are angry that their coun- 
try, a founder member of the 
Union, might be consigned to 
“league division two”, as the 
Italian headlines put it last 
week. 

The list of potential Italian 
candidates for commissioner is 
headed by Professor Mario 
Monti, a distinguished econo- 
mist and head of Milan's pri- 
vate Bocconi University, Mr 
Renato Ruggiero, a former 
trade minister, and Mr Enrico 
Vinci, secretary general of the 
European Parliament 

The list is deliberately non- 
partisan, ending fears that 
nominees might be drawn from 
the right-wing National Alli- 
ance. Alliance ministers have 
already faced protests from 
their European counterparts at 
EU meetings, because of the 
party’s neo-fascist roots. 

But Italy wants some guar- 
antee that Prof Monti will 
receive an economics portfolio 
in Brussels. Such a guarantee 
is difficult to give because it 
will not be clear whether Den- 
mark intends to renominate 
Mr Henning Christophersen, 
the existing economics com- 



David Gardner reports on the EU’s great 
divide - interest rates, deficits and inflation 

The two-tier Europe 
debate is refuelled 


Candidate: Professor Mario Monti, a distinguished economist 



Also on list: Mr Renato Ruggiero, a former trade minis ter 


tmssioner, until after the forth- 
coming Danish elections. 

Mr Ruggiero's availability is 
also unclear, because he is still 
in the r unning for head of the 
World Trade Organisation, the 
planned successor to the Gen- 
eral Agreement on Tariffs 
and Trade. 

Even if Mr Christophersen 
does not remain at his post, 
other EU countries may object 
to an Italian overseeing the 
convergence of EU economies 
in the period up to European 
monetary union. Some EU 
members are not convinced of 


Italy's commitment to meeting 
the deficit and debt targets laid 
out in the Maastricht treaty. 

Prof Monti, a strong advo- 
cate of budget rigour, under- 
lined his claim to the job with 
an article in Saturday’s Cor- 
riere della Sera newspaper, in 
which he argued that the Ital- 
ian government could and 
should bring its budget deficit 
within the Maastricht limits. 

In a speech on Saturday, Mr 
Berlusconi repeated his prom- 
ise that a “rigorous and com- 
mitted" 1996 budget would be 
agreed later this month. 


Different levels of budget 
deficit, variations in currency 
volatility, and member states' 
widely varying inflation 
records are the three main 
causes behind differences in 
general rises in long-term 
interest rate. 

These are the main conclu- 
sions of a report to EU finance 
ministers on Saturday by the 
European Monetary Institute 
(EMI), the embryo of the Euro- 
pean Central Bank foreseen by 
the Maastricht programme for 
economic and monetary union 
(Emu) by the end of the 
century. 

According to Maastricht, 
Emu and a single currency win 
only come about if member 
state meet treaty rules on con- 
vergence of inflation and inter- 
est rates, budget deficits and 
government debt 

Mr Alexandre Lamfalussy, 
EMI president told finance 
ministers meeting at Lake 
Constance in southern Ger- 
many that the markets had 
established three «*)**"• tiers of 
countries in terms of the rise 
of long-term interest rates 
between January and August 
29 this year. 

The presentation, intended 
to underling the need to bear 
down on deficits and inflation, 
and to promote erehange rate 
stability and structural eco- 
nomic reform, will inevitably 
fuel the current debate about 
the EU dividing into a 
“hard-core" of committed and 
able integrationists, sur- 
rounded by outer circles of sec- 
ond and even third division 
countries. 

In Mr Lamfalussy's analysis, 
the recognised hard core - Ger- 
many, France and the Benelux 
countries -are all in tier one 
(where long-term rates have 
risen by less than 2 per cent) 
alongside the US and Japan. In 
tier two, where long-term rate 
have risen between 2 per cent 
and 3 per cent are the UK, Den- 
mark and Ireland. Taking up 
the rearguard, with rate 
increases of more than 3 per 
cent are Italy, Spain and Por- 
tugal. The three “correlations” 


■ :n '" 


wirss. 



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EU ministers lined up behind Mr Jean-Claude Pajre to stay on as 
secretary-general of the Organisation fur Economic Co-operation 
and Development writes Lionel Barber. 

But the US administration has already signalled teat it does 
not want Mr Paye, a Frenchman, to serve another term. It is 
standing by Mr Donald Johnston, a former Canadian minister- 
EU support for Mr Paye Is finked to a feeling that France has 
lost out in the recent nominations for top international Jobs - a 
fact underlined by tee impending de parture after 10 years of Mr 
Jacques Delors as president of the European Commission. 

Support for Mr Willy Claes, the Belgian foreign minister, as a 
candidate for the vacant post of secretary-general of the Nato 
alliance aimeared to strengthen over the weekend. 

But Mr Hans Van den Broek, the EU commissioner for external 
political affairs, is keeping his bat hi tee ring. Mr Douglas Hurd, 
UK foreign secretary, was approached last month, bat indicated 
that he wanted to remain in Ms present post 


establishing this order. Mr 
Lamfalussy suggested, were 
rates of inflati on between 1&4 
and 1993: the highest public 
deficits in 1994; and market 
perception of currency stabil- 
ity. 

Mr Henning Christophersen. 
the EU c ommissione r for eco- 
nomic affairs, said the “mar- 
kets have a memory like ele- 
phants" about the policy 
mistakes of the 1980s. “We are 


- with exports leading the 
recovery followed by revived 
investment, only then 
revived domestic demand. 
Some EU officials said that sev- 
eral member states, including 
the UK. were over-emphasising 
the “short-term" growth 
p.ngmft of domestic demands. 

One senior EU official 
argued that the three countries 
in the EMFs second tier -the 
UK. Denmark and Ireland 


‘We are all agreed that we would not 
repeat these mistakes in the light of 
the recovery’ in economic growth 


all agreed that we would not 
repeat these mistakes in the 
light of the recovery” in eco- 
nomic growth, he said. The 
European Commission last 
week revised average EU 
growth predictions for this 
year from 1.6 per cent of gross 
domestic product to 2 per cent, 
forecasting IK per cent growth 
next year. 

Mr Christophersen empha- 
sised that this depended partly 
on the strength of the dollar 
and on the need to prevent the 
fiscal relaxation and High wage 
settlements of the late 1980s. 
He and Mr Theo WaigeL the 
German finance minister who 
chaired the weekend meeting, 
also underlined the need to 
keep within a “virtuous circle" 


— were all plausible candidates 
to join the “hard-core” in 
entering Emu. But the British 
and Danes were paying an 
interest rate premium in terms 
of perceived currency stability, 
because of their opt-outs from 
Rmn in Hip Maastricht treaty. 

Ireland, another nffirial said 
suffered because of its high 
government debt, but mainly 
through “guilt by association” 
because of its close economic 
ties to the UK. 

Mr Kenneth Clarke, UK 
chancellor of the exchequer, 
insisted that “opt-outs did not 
feature in Mr Lamfalussy’s 
analysis", and that “our opt- 
out plays no part” in Britain's 
higher long-term interest rates. 


Russians prepare 
for go-ahead on 
trade with Iraq 


By John Thomhffl fri Moscow 

A consortium of Russian oil 
companies is developing plans 
to Invest in Iraq in anticipation 
of the possible lifting of United 
Nations trade sanctions. 

The Russian consortium, 
consisting of Lukoil, Mashi- 
noimport, and Zarubezhneft, 
has been talking to Iraqi offi- 
cials for several months about 
developing existing projects. 
Zarubezhneft, which handled 
overseas oil projects in the 
Soviet era. has had previous 
experience of working in Iraq. 

Mr Vagit Alekperov, Lukoil's 
president, has fleshed out 
plans in recent meetings with 
senior officials from the Iraqi 
oil ministry. Lukoil, one of the 
new generation of privatised 
Russian oil companies, plans to 
exploit the western Kama and 
northern Rumeila fields In 
northern Iraq. It is reportedly 
willing to negotiate initial 
investments of $800m (£5l6.1m) 
to Stirn but would need a total 
of S2.3bn for oil prospecting 
and equipment supplies. 

Lukoil said it would be possi- 
ble to finance most of the proj- 
ect through private Investment 
although, like all other Rus- 
sian energy companies, it has 
faced severe cash-flow prob- 
lems because of the build-up of 


Inter-enterprise debts. Lukoil 
has been trying to offset the 
problem by developing its 
activities outside Russia to 
Increase its hard-currency 

earning s 

Weekend reports from the 
Iraqi News Agency monitored 
In Nicosia said that Iraq and 
Russia had signed a Jiobn 
trade agreement to take effect 
after the the lifting of the four- 
year-old oil and economic 
embargo. 

The news agency said the 
agreement covered industry 
and ail projects, but did not 
elaborate. 

Iraq haa outstanding debts to 
Russia of more than SiObn. 
Moscow is continuing to press 
for a lifting of the international 
embargo on trade with Bagh- 
dad winch was Imposed after 
the Gulf war in 1991. 

Other foreign oil companies, 
including Elf Aquitaine and 
Total of Francs, have also been 
jostling to take advantage of 
any relaxation of the trade 
embargo with Iraq, according 
to Russian officials. 

Russian oil executives 
believe there are lucrative con- 
tracts to be won in Iraq, which 
is the the third biggest oil pro- 
ducer in the Gulf after Saudi 
Arabia and Iran 


EUROPEAN NEWS DIGEST 

Fiat weighs up 
Mexico venture 

Flat of Italy is planning to begin car assembly in Mexico and is 
negotiating a joint venture with Dina, the leading Mexican 
truck ««ii bus maker, with the aim of producing up to iQQ/100 
cars a year. Mexico is attracting a growing number of the 
world's lading car makers in the wake of last year’s North 
Ampriwm free Trade Agreement The Mexican car industry is 
dominated by Volkswagen of Germany and N issan of Japan 
along with the big three US producers, General Motors, Ford 
and Chrysler. 

Flat said it was planning to produce its Uno small car range 
for in the Mexican market and in some Central American 
an d Caribbean markets. Flat is already well esta bl i sh ed in 
South America, with car production In Brazil, Argentina and! 
Venezuela. It had a 24 per cent share of the Brazilian market 
last year a nd so per cent in Argentina. Fiat said it planned to 
supply components, such as engines and gearboxes, for the 
Mp-nran operation from its existing facilities In Scute Amer- 
ica. It insisted it had no plans to use a Mexican production 
base to reenter the US market, from which it withdrew the 
Fiat brand in 1983. Kevin Dane, London 

Warning on Greek economy 

Greece's socialist prime minister, Mr Andreas Papandreou, has 
warned that tire country’s economy is not expected to recover 
before 1996. He said his government would maintain tight 
austerity policies over the next 12 months. The opening of the 
Thessaloniki trade fair at the weekend, Mr Papandreou said 
inflation would be held at 11 per cent this year, dose to the 
government’s target of 105 per cent “Next year's budget is 
befog prepared in a spirit of austerity so that borrowing needs 
can be ftirther reduced, but it will be a difficult year that will 
decide the economy's future course,” he said. 

Public sector wage rises are to be held at 6 per cent next 
year, below the projected 8 per cent inflation rate. Growth in 
gross domestic product is forecast at 1.2 per cent, against 0-8 
per cent this year. Mr Papandreou’s remarks, coming a lew 
days before Greece’s economic convergence plan is submitted 
for approval by European Union finance ministers, appeared 
intended to reassure European Commission officials suspi- 
cious that Greece’s commitment to reducing fiscal imhAtoncgg 
may start to weaken. Kerin Hope. Athens 

Swiss plan for truckers 

The Swiss government will today announce its plan for pre- 
venting discrimination against European Union truckers driv- 
ing through the Alls. The idea is to set road usage tariffs so 
high that truckers put their vehicles on trains, and to set the 
train fores low enough that EU truckers will not be inclined to 
divert to already overcrowded Alpine road passes in Austria or 
France. According to a report in tee Scrantags Zeitung, a 
Zurich newspaper, existing charges for all trucks transiting 
the Alps would be raised by about SFr400 (£200) per trip 
starting in 1998. 

These measures became necessary after the Swiss decided in 
a referendum last February to ban international transit truck 
traffic from the Alps from 2002. The decision enraged govern- 
ments «nfl truckers in France, Germany, Italy and Austria 
because it applied only to through traffic. Truckers on foternal 
journeys in Switzerland or on trips to or from Switzerland 
could continue to drive through the Alps. The European 
Commission said It would not negotiate with Switzerland on 
any transport issues, including landing rights for Swissair, 
until measures were introduced to prevent disc rimina tion 
against EU truckers. Ian Rodger, Zurich 

Asylum-seekers agree to go 

An increasing number of people who have not been given 
asylum in Germany are reported to be leaving voluntarily so 
as not to forfeit future chances of becoming a German resi- 
dent Officials in the 16 German states said people refused 
asylum were leaving of their own accord instead of waiting for 
deportation. Until July last year the German constitution 
guaranteed an automatic right of asylum. But faced with an 
annual influx of 500.000 asylum-seekers, restrictions were 
introduced. Once deported, people are forbidden to re-enter 
Germany for at least 10 years and are not entitled to any social 
benefits. Others who leave freely can, in theory, return the 
next day and renew their implication for asylum. In the first 
eight months of tins year, 81,864 people applied for asylum, 
68.4 per emit fewer than in the same period the year before. 
Michael Lmdemarm, Bonn 

French agree China deals 

France and China have signed a series of commercial con- 
tracts worth a total of FFzlSJJbn (£L94hn) daring an official 
visit to Paris of Mr Jiang Zemin, the Chinese president Mr 
Zemin’s visit which involved meetings with both Mr Francois 
Mitterrand, the socialist French president, and Mr Edouard 
Bahadur, the centre-right prime minister, marked the culmina- 
tion of a year of intense diplomatic effort by the French to 
bring about a rapprochement with China after Beijing pro- 
tested at the French derision to sell jet fighters to Taiwan. 
Two of the largest contracts involve Elf Aquitaine, the 
recently privatised French oil group, which is the main inves- 
tor in a FFrllbn refinery construction project in Shanghai and 
has concluded a crude oil trading agreement with Stoochem, 
the Chinese concern responsible for importing and exporting 
chemicals. Alice Rawsthom, Paris 

Germans await lottery news 

About 40m lottery addicts In Germany - and thousands in 
neighbouring Austria, Switzerland and France - were anx- 
iously waiting to find out today whether any of them had won 
the country's lottery, whose jackpot has risen to DM42m 
(£rr.5ml. The numbers were drawn on televirion on Saturday 
ni gh t , bat the country won’t know until today whether one or 
more winners will claim the prize - or whether the jackpot will 
grow yet again. The jackpot has already risen to its highest 
level in the 40-year history of the lottery; it has kept rising- for 
u weeks because no-one marked all the winning numbers on 
their cards. The “lotto” frenzy has reached such proportions 
teat the finance ministry in Bonn had to issue a stat emen t tos t 
week following a TV satire that suggested Mr Theo Waigel, the 
fi n a nc e minister, was all set to bend the rules of tee game and 
use the jackpot to plug gaping holes in the budget Michael 
Lmdemarm, Bonn 



Slovenia poised to clinch 
debt deal with banks 


By Gavin Grey in Ljubljana 

Slovenia, tee richest of the six 
former Yugoslav republics, is 
poised to reach an agreement 
with its commercial bank cred- 
itors on the share it will 
assume of former Yugoslavia's 
external debt Three years 
after it declared independence, 
this Is tbe last leg of Slo- 
venia's struggle to disentangle 
Itself from Yugoslavia. 

Negotiators from Slovenia's 
Ministry of Finance and cen- 
tral bank in New York last 
week met a committee of cred- 
itor banks, chaired by Chemi- 
cal Bank. A deal is expected to 
be agreed in the next two 
weeks and announced at the 
World Bank meeting In Mad- 


rid. It must be ratified by Slo- 
venia's parliament and banks 
bolding tee debt 

Slovenia is already receiving 
funding from the World Bank 
and the European Bank for 
Reconstruction and Develop- 
ment but many western com- 
mercial banks are still reluc- 
tant to lend until the Issue is 
resolved. Yugoslavia’s last 
debt rescheduling agreement, 
in 1988, left the now defunct 
state with about $7bn (£4.5bn) 
of debt But a debtor-equity 
swap programme in 1989 and 
1990 reduced this to H-2bn of 
commercial bank debt and 
$300m of trade paper. 

Slovenia has already agreed 
to assume tbe part of the debt 
owed by Slovene banks and 


companies. The negotiations 
centre on about Slbn of iron- 
identified debt - for which tee 
borrower was the National 
Bank of Yugoslavia or another 
federal entity - and which 
cannot be traced to one (rf tbe 
six republics. 

Slovenia’s negotiators want 
tiie banks to allocate the non- 
Identifled debt using the for- 
mula tee World Bank employs 
when a country breaks up. 
Under this, Slovenia would 
assume just over 16 per cent of 
the iion-identified debt. The 
creditor committee has been 
pressing for a higher percent- 
age. because Slovenia and 
Croatia are tbe only two for- 
mer Yugoslav republics able to 
restart payments. 


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FINANCIAL TIMES 


MONDAY SEPTEMBER 12 1994 ★ 


NEWS: EUROPE 


Crimean 
president 
suspends 
parliament 

By Matthew Kamlnsld in Kiev 

Crimea's president, Mr Yuri 
Meshkov, yesterday added fuel 
to a ra gin g internal political 
fight by suspending parlia- 
ment and taking toll control 
over the autonomous republic. 

Mr Meshkov's step follows 
weeks of rising tensions on the 
separatist peninsula which 
came to a head last Wednes- 
day when the local parliament 
voted to strip the president of 
ids powers. 

For now, the internal power 
straggle in Crimea does not 
threaten Ukrainian-Bussian 
relations. It is primarily a 
domestic dispute over political 
style, policy and the pace of 
attempts to break with Kiev 
and reintegrate with Russia. 
But Crimea remains the sorest 
point in often tense relations 
between Kiev and Moscow. 

Speaking on Radio Crimea 
Mr Meshkov called parliament 
“corrupt" and “unworthy" and 
asserted control over local 
councils and the media. As In 
Russia last autumn, police sur- 
rounded the parliament build- 
ing, stopping MPs from enter- 
ing. Mr Meshkov promised 
new elections by December 
and a referendum on a new 
constitution by April 9. 

Ukrainian president Leonid 
Kuchma said yesterday the 
conflict “threatened security" 
in Ukraine. Mr Km»htna who 
won massive support from Cri- 
mean voters in Ukrainian 
presidential elections in July, 
met Mr Meshkov on Saturday, 
and Mr Meshkov's aides 
claimed their president had Mr 
Kuchma’s support 
An afternoon meeting 
between Mr Meshkov and par- 
liamentary representatives 
was unproductive, according 
to the news agency Interfax. 
The city council of Sevastopol, 
has publicly come out in sup- 
port of the ousted parliament 
Transferred from Russia to 
Ukraine in 1954, the predomi- 
nantly Russian region 
expressed its dissatisfaction 
with the disastrous economic 
policies of the Ukrainian gov- 
ernment by endorsing Mr 
Meshkov’s pro-Russian plat- 
form in Crimean presidential 
elections last January. 



Pope John Paul arriving at a mass attended by 500,000 people in the Croatian capital, Zagreb, yesterday. On his first visit to former 
Yugoslavia, the Pope urged Croatians to rise above feelings of revenge which are hindering a return to peace with the Serbs taw 


Swedish PM hopes 
for swing to right 



By Hugh Camegy hi 
Stockholm 

Mr Carl Bildt. 
'.Sweden’s 
reformist 
prime minis- 
ter, urgently 
needs voters to 
swing to the 
right if he is 
not to lose 
power to the 
tenacious 
Social Demo- 
cratic party 
in next Sun- 
day’s general 
election. 

The Social Democrats, under 
the leadership of former prime 
minister Ingvar Carlsson, are 
expected to perform strongly 
enough to form a government, 
probably seeking an unusual 
alliance with the Liberal 
party, a member of Mr Bildt’s 
minority right-centre coali- 
tion, to reach a majority. 

In the absence of any single 


SWEDISH 

ELECTIONS 

September 18 


party or Bildt-ied majority 
government, soch a coalition 
would almost certainly be wel- 
comed by the financial mar- 
kets as the best prospect for 
producing a credible fiscal pol- 
icy to attack Sweden’s big bud- 
get deficit and spiralling pub- 
lic debt. An opinion poll in 
yesterday's Svens ka Dagbladet 
newspaper offered Mr Bildt 
some hope, showing his gov- 
ernment gaining some ground 
over the past week. However, 
it still trailed the Social Demo- 
crats by 46.7 per cent to 41.1 
per cenL 

A good showing for tbe 
Social Democrats would repre- 
sent a significant rebound 
from the slump to 37.7 per 
cent 1991. The strongest trend 
in recent polls has been to the 
left, with the former commu- 
nists of the Left party and the 
Environment party gaining 
sharply following a Social 
Democratic commitment to cut 
some welfare spending. 

But Mr Carlsson and Mr 


Gdran Persson. the shadow 
finance minister, have made it 
dear they prefer co-operation 
on economic policy across the 
traditional political blocs 

- perhaps Including the Centre 
party as well as the Liberals 

- rather than relying on their 
erstwhile allies on the left for 
a parliamentary majority. 
This, they believe, would con- 
vince the markets the deficit 
can be tackled and bring an 
early fall in interest rates 
which, at around 11 per cent 
on five-year government 
bonds, have already begun to 
erode recovery from a deep 
three-year recession. 

Mr Bengt Wes ter berg, the 
leader of the Liberal party, has 
clearly signalled his willing- 
ness to work with the Social 
Democrats if the present coali- 
tion cannot form a new gov- 
ernment and the Social Demo- 
crats accept his party’s 
emphasis on creating favoura- 
ble conditions for private sec- 
tor companies. 


Albania clings to some repressive levers of state 

A series of recent political trials have questioned the country’s commitment to human rights, writes James Whittington 


T en years ago, Mr Sokol 
Bregu, was sentenced 
by an Al banian court to 
12 years in prison for spreading 
propaganda against the state. 
His crime was committed in an 
overheard conversation over 
coffee with friends when he 
suggested that, compared with 
other Western European coun- 
tries, Germany had the stron- 
gest economic potential. Mr 
Bregu spent seven years of his 
sentence in the notorious Spad 
jail where he was forced into 
hard labour in a chrome mine. 
He was frequently beaten, his 
family and friends were rarely 
allowed to visit and he was 
only released in 1991 following 
the liberalisation of the com- 
munist regime. 

Compared with 45 years 
under Enver Hoxha’s repres- 
sive Stalinist regime, Alba- 
nians are undoubtedly enjoy- 
ing more freedom now than 
ever before. Since their elec- 
tion in March 1992, President 
Sail Berisha and his Demo- 
cratic party-led coalition gov- 
ernment have made much 


progress in starting to rebuild 
the economic and social struc- 
tures of the country. Despite 
severe economic diffic ulties, 
the novelties of shopping in 
well-stocked stores, of taking 
home money earned through 
private enterprise, and of 
talking openly about the out- 
side world, have still not worn 
off 

Over the past few weeks, 
Albania has been closely 
watching a controversial trial 
of five men from the country’s 
ethnic Greek minority. They 
were sentenced last Wednes- 
day to between six and eight 
years in prison on charges of 
espionage and illegal posses- 
sion of arms. The men were 
leading members of Omonia, 
an Albanian political move- 
ment which campaig ns for the 
rights of the country’s ethnic 
minority. The case was widely 
seen as a warning to extrem- 
ists in the minority to drop 
their demands for limited 
autonomy in the south. 

It is just one of a series of 
political trials in Albania over 


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FINANCIAL TIMES 
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the past few years and its out- 
come has not only severely 
damaged already strained rela- 
tions with Greece, but also re- 
opened the debate about 
Albania’s commitment to 

hinwm and civil rights. 

The Omonia trial came 
under criticism for its proceed- 
ings and was described by 
many as a throwback to the 
communist era. It was con- 
ducted under an amended ver- 
sion of the old penal code 
drawn op by Hoxha’s regime. 


An unofficial report written for 
the International Helsinki Fed- 
eration of Homan Rights said 
that “much of the evidence 
against the de fendan ts seems 
circ umstant ial and vague". 

Diplomats in Tirana say that 
the problem lies with the coun- 
try's institutions which are 
remnants of the old regime and 
have yet to be modernised. 
Others say it is the continuing 
totalitarian attitude of the gov- 
ernment. many of whose mem- 
bers were closely associated 


with the co mmunis ts. “There 
is still a big gap between our 
(new) laws and the mentality 
of our institutions which is dif- 
ficult to change,” explains Mr 
Gramoz Pashko, an opposition 
MP who is probably the presi- 
dent's harshest critic. Dr 
Berisha. he says, “is not the 
most tolerant when it comes to 
political minorities." He cites 
the case of Mr Fatos Nano, the 
former prime minister and 
leader of the opposition Social- 
ist party who is now serving 


nine years on charges of cor- 
ruption. as an example. “I'm 
not convinced that Fatos was 
proved guilty, it was a form of 
vendetta," he says. 

Other former senior politi- 
cians have been sent to jail for 
alleged crimes against the 
state. The president has 
defended these measures as 
necessary to prevent a wave of 
revenge attacks. But strik- 
ingly, Albanians are not inter- 
ested in taking revenge on 
those responsible for the previ- 


ous era. Other criticisms focus 
on the slow pace of constitu- 
tional and legal reform. 

A new constitution and penal 
code will be essential in assess- 
ing the government's demo- 
cratic and human rights cre- 
dentials and also to Albania's 
application to join the Council 
of Europe. A decision on mem- 
bership has been postponed 
until 1996 because so much of 
the country's legislative frame- 
work is stffi lacking. 


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I 


Signs of progress on Golan Heights 

Assad’s speech lifts 
Israeli peace hopes 


By Julian Ozanne in Jerusalem 


Israel yesterday hailed a 
statement by Syrian President 
Hafez al-Assad. saying it was 
aimed at preparing the Syrian 
public for peace. At the same 
tune there was growing opti- 
mism in the Jewish state of an 
imminent breakthrough in 
stalled peace negotiations. 

In a speech to the newly 
elected Syrian parliament on 
Saturday Mr Assad said peace 
with Israel was a strategic 
option and he was willing to 
work towards peace and “meet 
the objective requirements that 
are agreed upon". 

Mr Itamar Rabinovich, chief 
Israeli negotiator with Syria, 
said: "It's first and foremost a 
speech preparing public opin- 
ion in Syria." 

Mr Shimon Peres, Israeli for- 
eign minister, said Mr Assad 
had “declared he has a strat- 
egy of peace. . . and there were 
more than hints that he under- 
stands that peace truly means 
peace, that is to say normalisa- 
tion of relations". 

Israeli officials say privately 
that significant progress has 
been made in US-brokered 
negotiations over the return of 
the occupied Golan Heights in 
return for full peace, and both 
governments have now entered 
a period of preparing their pub- 
tics for a deal. 

Mr Uri Savir. Foreign Minis- 
try director-general, said yes- 


terday that US secretary of 
state Warren Christopher 
would return to the region tins 
month or next and that US offi- 
cials were optimistic about a 
substantial breakthrough. 

However. Israeli optimism 
has yet to be matched in public 
in Damascus, and Mr Assad 
reiterated Syria’s uncondi- 
tional demand for a full Israeli 
withdrawal from the Heights - 
a demand unacceptable, so far, 
to Israel and the traditional 
stumbling block in talks. 

Last week Mr Yitzhak Rabin. 
Israeli prime minis ter, pres- 
ented for the first time a plan 
for a partial withdrawal from 
the Golan, backed by US mili- 
tary assistance, followed by a 
three-year trial period marked 
by normalisation, including 
setting up embassies. Mr Rabin 
said that only after the nor- 
malisation. period would Israel 
negotiate the line of its final 
withdrawal from the Heights. 

The move was immediately 
rejected by Syria as unaccept- 
able but Israeli officials say the 
Rabin plan was an opening 
gambit meant partly to test 
Israeli public opinion. They 
said that by comparing the 
deal to Israel's phased 26- 
month withdrawal from the 
Egyptian Sinai between 1980 
and 1982 Mr Rabin was also 
hinting tha t a similar deal With 
Damascus would c ulminat e in 
full withdrawal. 

Mr Rabin’s plan opened a 


Cairo talks strengthen 
Egypt’s women activists 


By Shahira Idriss and Mark 
Nicholson in Cairo 


As the International 
Conference on Population and 
Development haggles its way 
to a conclusion this week, at 
least one group of women is 
already expressing delight at 
having been “empowered" by 
the week-long gathering. 

These are the hundreds of 
women who dominate member- 
ship of the 450 Egyptian non- 
governmental organisations 
attending the conference. After 
years of battling for their 
causes disparately and under 
the tight control of the Minis- 
try of Social Affairs, tradition- 
ally suspicious of anything 
which could be construed as 
political organisations, they 
suddenly won the trust of the 
Egyptian government during 
preparations far the confer- 
ence. 

“It all started with Mr Maher 
Mahran [Egypt's population 
minister] recognising the 
importance of NGO participa- 
tion in the conference." says 
Mrs Sarah Loza, coordinator of 


the Egyptian NGOs gender 
equity committee. “Since 
Egypt was hosting the confer- 
ence, he knew it had to have a 
leading role." 

Mr Mahran, she says, 
suggested Egypt's NGOs estab- 
lish a 15-strong steering com- 
mittee (of whom 11 are women) 
to coordinate their approach 
to the conference. In a country 
where the areas of political 
participation - particularly for 
women - are heavily circum- 
scribed. the effect appears to 
have been galvanising. 
“Through the ICPD, the gov- 
ernment of Egypt recognised 
the NGOs for the first time as 
solid partners." says Mrs Loza. 
“It's a fantastic start It’s the 
first time Egyptian NGOs have 
come together to form a set of 
recommendations and have 
been given complete freedom 
to do so." 

National Societies, as NGOs 
are dubbed in Egypt, have 
operated under strict controls 
since the 1960s, when the gov- 
ernment of Carnal Abdul Nas- 
ser kept an iron hand on all 
social and political groups. 


The Nasserite Law 32, passed 
in 1964. not only restricted cre- 
ation of new organisations, but 
heavily constrained NGO activ- 
ities by allowing the Ministry 
of Social Affairs to repeal inter- 
nal decisions made by these 
organisations and giving the 
government powers to disband, 
them at will 

But preparations for the pop- 
ulation conference looks to 
have changed that 

The steering committee, for 
instance, has submitted recom- 
mendations to Mr Mahran for 
the revision of Law 32 and for 
a raft of changes to the legal 
status of women in Egypt, 
including easing restrictions 
on abortion and on the rights 
of Egyptian women married to 
foreigners to hand their nation- 
ality down to their children. 

Many among the NGOs say 
their new status arises from 
realisation in the government 
that empowering such groups 
could help create a bulwark 
against the creeping influence 
in other areas of civil society of 
Islamic groups, particularly 
the Moslem Brotherhood. 


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FINANCIAL TIMES MONDAY SEPTEMBER 12 1994 


NEWS: INTERNATIONAL 




fierce public debate in Israel 
between proponents and oppo- 
nents on territorial withdrawal 
from the Golan. On Saturday 
thousands of Jewish settlers on 
the Golan held a mass rally to 
kick off a campaign of uncom- 
promising but non-violent civil 
disobedience they say will be 
“the battle for the Golan". 

In Mr Rabin's governing 
Labour party eight parliamen- 
tarians have demanded that 
any territorial compromise 
secure a 76-vote majority in the 
126-member parliament. The 
dovish wing of the party has 
called for a reform of Labour's 
platform b; erasing clauses 
which support Israeli sover- 
eignty of the Golan. Mr Rabin 
has met both initiatives with 
stern warnings a gains t break- 
ing party discipline. 

Ultimately Mr Rabin hopes 
to deflate the public and party 
battle by not dismantling any 
Jewish settlements in the 
meantime and by putting any 
substantial withdrawal to a 
national referendum after elec- 
tions in 1996. 

A recent opinion poll con- 
ducted by Haifa University 
showed at least 64 per cent of 
Israelis support at least a par- 
tial withdrawal in exchange for 
full peace with Syria. The poll 
showed that 27 per cent sup- 
ported full withdrawal and 
that many people had become 
more favourable to territorial 
compromise over the past year. 



Telecoms fears 
rise as Indian 
official departs 


By Stefan Wagstyl 
In New Delhi 


An Israeli girl holds a sign reading “The people with the Golan" during a rally by thousands of 
Golan Heights settlers on Saturday, at which they protested at what they saw as a secret 
government plan to return the Heights to Syria. ap 


Companies hoping to invest in 
India's telecommunications 
market have reacted with 
shock to the sudden transfer or 
Mr Nagarajaa VittaL, the top 
dvil servant in the Telecom- 
munications Ministry and a 
strong advocate of economic 
liberalisation. 

They fear his departure last 
week from the ministry could 
delay the implementation of a 
telecommunications policy 
announced in May, in which 
the government promised to 
end the state's monopoly of 
basic telephone services and 
invite private enterprise, 
including foreign companies, 
to Invest up to Rs230bn 
(£4.75bn) in the industry. 

“Mr VittaTs departure is bad 
news." said a Delhi representa- 
tive of a US telecommunica- 
tions group with plans to 
invest in Indian telecommuni- 
cations services. "He wanted to 
make thing s happen quickly. 
Implementing the new policy is 
bound to take longer now." 

Mr Vittal, who was telecom- 
munications secretary and 
chairman of the government's 
telecommunications commis- 
sion. remains secretary in the 
Electronics Ministry, a post he 
held in tandem. He also 
remains India's candidate for 
an elected senior post at the 
International Telecommunica- 
tions Union in Geneva. Elec- 
tions for the job of the director 


of the bureau of telecommuni- 
cations development will take 
place next month at an ITU 
meeting in Japan. 

Government officials 
suggested that Mr VittaTs 
transfer would give him more 
time to lobby for the ITU post 
But few observers in Delhi 
believe this was the real rea- 
son for his job ch an ge. 

Mr Vittal was brought Into 
the Telecommunications Minis- 
try late last year at the behest 
of Mr Narasimha Rao, the 
prime minis ter, to lead a radi- 
cal overhaul of the industry. 
But he ran into tough opposi- 
tion from Mr Sukh Ram, the 
telecommunications minister, 
who sided with the ministry's 
bureaucrats, its trade union 
leaders and others who wished 
to slow reform. The conflicts 
between these two abrasive 
characters frequently surfaced, 
in the press - to Mr Narasfrnha 
Rao’s anger. 

Mr VittaTs departure could 
mpan the new telecommunica- 
tions policy will be less liberal 
in practice than in intent 
Among issues still to be settled, 
are the itiarimum shareholding 
foreign companies wDl be per- 
mitted to hold in an Indian 
telecommunications carrier, 
the commercial relationship 
between the new private cant 
ers and the state-run network, 
and regulatory matters. 

The ministry also has still to 
solve a long-standing muddle 
over the award iff licences for 
cellular telephone networks. 


World looks away as a sea vanishes 

Steve LeVine on the environmental catastrophe of the shrinking Aral Sea 

O n most s umm er nights west's leading expert on the Today it covers half its for- anaemia and most give birth in recent years at about 

three decades ago. a Aral. “Maybe some time 50 mer area, and has divided into prematurely.’' says Dr Andrew tonnes, 

barge would dock at a years from now there may be northern and southern seas. Vervihost, director of the But the Aral fishing indtu 


O n most summer nights 
three decades ago. a 
barge would dock at a 
tiny Uzbekistan fishing village, 
called “Tiger's Tail" by the 
locals because of the way the 
spit of land arose in the 
southern Aral Sea. A make- 
shift screen would go up 
aboard the vessel, and bored 
fishermen would take a seat 
under the stars to watch a 
nightly offering of Soviet and 
foreign films. 

Today, ships like the old film 
barge stand askew, rusting in a 
dry harbour. Mangled fishing 
nets lie half-buried in the sand 
while the fishermen weave car- 
pets, make bricks and tend 
livestock. The reason is simple; 
tire village, whose real name is 
Uchsay, is now 60 miles from 
Aral’s former southern shore. 

In a region of 3.7m people, 
Uchsay's 32 families are vic- 
tims of an environmental 
disaster, one that scientists 
now believe may not begin to 
abate until the middle of the 
next century" the slow disap- 
pearance of the world's fourth 
largest inland body of water. 

The scale of the disaster has 
become so acute, and the local 
and international response to 
it so meagre, that once-hopefui 
western scientists are now 
looking merely to treat a 
resulting regional health crisis. 
Meanwhile, the soil in impor- 
tant surrounding farm regions 
of Uzbekistan, Kazakhstan and 
Turkmenistan has become so 
saline that the vital local cot- 
ton harvest - whose rapid 
increase was a main factor in 
causing the problem - has 
itself been shrinking. 

“There's not enough water to 
stabilise the sea." says Profes- 
sor Philip Micklln of Western 
Michigan University, the 


west's leading expert on the 
AraL “Maybe some time 50 
years from now there may be 
enough water to bring it back. 
But I don't see them making 
the economic changes neces- 
sary in the next several 
decades to rehabilitate the 
sea." 

The Aral sea began shrink- 
ing In the early 1960s, when 
the Soviet Union irrigated a 
hugely expanded Uzbekistan's 
cotton crop by diverting the 
feeder Amu Darya and Syr 
Darya rivers from the Aral, 
whose length then measured 
about 220 miles. 

Uzbekistan did become the 
world’s tbird-largest cotton 
producer, growing 5m tonnes a 
year, but then local people 
began noticing the Aral's 
shores receding. 


Today it covers half its for- 
mer area, and has divided into 
northern and southern seas. 
By the end of the decade, 
according to forecasts, the sea 
will shrink to one-third its his- 
toric size and split again, creat- 
ing northern, eastern and west- 
ern bodies. 

“We still had the sea at the 
beginning of the 1970s - it was 
navy blue.” says Ms Marinika 
Babanazarova, director of a 
cultural museum in the 
Uzbekistan regional capital of 
Nukus. “Then it began disap- 
pearing, very quickly. We lost 
It before our very eyes.” 

The health consequences 
have been severe. Doctors say 
lung disease and tuberculosis 
are rife. 

“One hundred per cent of 
our pregnant women have 


anaemia and most give birth 
prematurely.” says Dr Andrew 
Vervihost, director of the 
mother and child unit at the 
Karakulpak Institute of Clini - 
cal Medicine, in Nukus. Infant 
mortality in Uzbekistan’s 
region of Karakulpakstan, bor- 
dering the Aral, has soared. 

The scrawny cotton fields in 
the Uzbekistan village of Qaxi- 
aMyakla illustrate the agricul- 
tural impact. “Twenty years 
ago, the cotton came up to here 
on me,” says Mr Arzamurat 
Arzanov, placing a hand even 
with the centre of his shirt 
Now the crop on Mr Aranov’s 
form rises only to his shins. 

Uzbekistan appears to have 
shifted more planting to other 
areas as Karakulpakstan’ s 
yield has plummeted, so its 
cotton harvest has been stable 


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in recent years at about 4m 
tonnes. 

But the Aral fishing industry 
- the former northern port of 
Araiskon on the Kazakhstan 
coastline mice accounted for 10 
per cent of the Soviet Union's 
entire catch - has been evis- 
cerated. 

International attention to the 
Aral began during the Gorba- 
chev era. but little organised 
assistance has come. Central 
Asia's governments, mean- 
while, have behaved as though 
they have written off the sea. 
hi March 1993, all committed 
themselves to depositing l per 
cent of their state budget into 
the “Aral bank", a fond they 
created to resolve the disaster, 
but western and local nfflriais 
say no money has yet gone 
info the account 

Environmentalists now are 
focusing on cleaning up the 
Amu Darya, which, though lit- 
tle of it now spills into the Aral 
Sea, still provides most 
regional drinking water. The 
idea is to stop current prac- 
tices in which raw sewage is 
dumped into its waters, along 
with tonnes of pesticides. 

Mr Khojamurat Khoshimov, 
whose father operated the for- 
mer film barge up and down 
the Aral coast, stands on a 
bluff overlooking the old fish- 
ing village of Uchsay. He says 
most of his neighbours have 
moved away. 

Though he does not expect 
the waters soon to return to 
Uchsay's shores, he will stay 
put “No <me wants to say his 
city is dying," he says. 

So, with few alternatives, Mr 
Khoshimov has gone into his 
father’s business, with one 
small adjustment - his mobile 
cinema plies local villages in a 
car. 


INTERNATIONAL PRESS REVIEW 


Hard news on the sports pages 


By WiBiam Dawkins 


Japanese weekend newspapers 
have an endearing fondness [or 
parish-pump news, as if there 
were an unwritten rale against 
startling exhausted salaryman 
readers during days off. 

As always on a Sunday, the 
Japan Times decorates its 
front page with a colour photo- 
graph of the flower of the 
week, yesterday a wild clema- 
tis. The Daily Yomiuri leads its 
columns with a mfld crisis in 
the prison service, caused by a 
shortage of prison library 
books written in Farsi, for the 
growing number of Iranian 
inmates. 

On the sports pages, the top 
story in both papers is the fail- 
ure of the latest attempt to 
solve the US professional base- 
ball strike, litis is a remark- 
able story to Japanese readers, 
few of whom would ever dream 
of going on strike, let alone 
over a game where honour is 
at stake. 

No labour troubles in Japa- 


nese baseball, where Ichiro 
Suzuki of the Orix Blue Wave 
made his 185th hit of the sea- 
son on Saturday, well on the 
way to beating the 44-year Jap- 
anese record of 191 hits in a 
season, established by the late 
Fumio Fujimara of the Han- 
shin Tigers. What is more, 
Fujimara had the benefit of a 
146-game season, 10 games 
more than allowed to Suzuki in 
today's Pacific League. 

Inside, the Japan Times’ 
main editorial turns its back 
on International affairs, despite 
the fact that this has been an 
interesting week, with a nasty 
row between China and 
Taiwan over whether Taiwan- 
ese President Lee Teng-hui 
should accept an Invitation to 
the Asian games in Hiroshima 
early next month. 

Instead, the Japan Times 
offers its collective wisdom on 
why the government should be 
nicer to the aged, no disrespect 
intended to the septuagenarian 
prime minister Tomiichi 
Murayama. 

The paper’s editor is moved 
by the latest annual age count 


from the Health and Welfare 
Ministry which shows that 
Japan has a record 5.593 cente- 
narians, an increase of 791 on 
last year. 

The grey wave is a big story 
in Japan. This is not just 
because the average lifespan is 
the longest in the world, at 76 
years for men and 82 for 
women. Japan's elderly are 
also its biggest national head- 
ache. The proportion of pen- 
sioners is rising faster than 
anywhere else in the world, 
with horrendous consequences 
for the government’s finances. 

Ihe Japan Times offers so 
solutions, but instead ticks off 
council workers in Saitama 
prefecture for disconnecting a 
79-year-old lady's aircondition- 
ing on the grounds that it was 
an expensive luxury for some- 
one on welfare assistance. 

Japan has had Its hottest 
summer for decades and even 
now the temperatures are still 
in the 30s, so it was no surprise 
that the poor old woman ended 
up in hospital, suffering from 
dehydration. 

The whole country will have 


a chance to draw the moral 
from this sad tale at leisure on 
Thursday, Respect for the 
Aged Day. one of Japan’s 14 
national holidays. 

Not that the rest of world 
has completely passed the 
weekend press by. Simply that 
the international stories tend 
to be treated with less interest 
- with the perennial exception 
of news about the US. the focal 
centre of Japan's view of the 
outside world. 

Nowhere in the press, for 
example, is it possible to find a 
word of advice on how Mr 
Murayama should wriggle out 
of the diplomatic embarrass- 
ment presented by Mr Lee’s 
possible attendance at the 

Asian garnpq 

Among the sports papers, 
CkumM Sport drily points out 
that the matter Is too political 
to be handled by the games 
organisers. DaSy Sport reports 
without comment a govern- 
ment official's remark that 
China, with which Japan has 
diplomatic relations, is more 
important than Taiwan, with 
which it has no formal ties. 


The Nikkei Weekly does offer 
the prime minis ter some 
advice, not on how to resolve 
the games dilemma but on how 
to minimise the damage, it 
counsels Mr Murayama to can- 
cel a planned official visit to 
China next month and stay at 
home. 

Another reason not go is 
that Mr Murayama risks 
offending the Taiwanese by 
being in BeQing on October JO, 
Taiwan's politically sensitive 
national day. 

Why Is it so bard for Japan 
to choose between China and 
Taiwan? It may be something 
to do with the growing number 


up in Taiwan, the latest 
reported last week being Fuji 
Bank. 

Having to maire hard choices 
also interferes with Tokyo’s 
policy of Keeping as many 
friends as possible in Asia. No 
wonder the Japanese press pre- 
fers to stay on the sidelines of 
the diplomatic fracas over the 
Asian games. Choosing the 
flower of the week Is far more 
civilised. 


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FINANCIAL TIMES 


MONDAY SEPTEMBER 12 1994 


NEWS: INTERNATIONAL 


al depa Trade ministers firm on ratifying Gatt 


vanisi 

Ar:’i 


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0 


ts pa? 


By Loiriae K*hoe In Los Angeles 

fiwn Bnwpean 
union, us, Japan and Canada raster- 
wy ^pressed their determination to 
see the landmark -Uruguay Round 
word trade pact ratified by the end of 
year at the conclusion of a 
quadrilateral* meeting of the 
world's leading economic powers in 
Los Angeles. 

Ihe talks, covering a broad range 
of trade issues, corne as implementa- 
tion of last year’s agreement signed 
oy over 100 countries under the ° n«- 
pices of the General Agreement on 
Tariffs and Trade faces a difficult 


passage in the ITS Congress and a 
jurisdictional dispute in the EU. 
Meanwhile Japan, Canada and many 
other member countries appear to be 
taking a “yon first” approach. 

The Quad is “sending a strong sig- 
nal to other members” that imple- 
mentation of the Gatt agreement is 
moving a trade otorfat , 

although it is stm uncertain whether 
the original January 1995 schedule 
can be met- 

The talks, hosted fay Mr Mickey 
Kantor, the US trade repre sentati ve, 
were attended by Sir Leon Brittan, 
ED external trade Mr 

Ryu taro Hastrtmoto, Japan’s trade 


minister, and Mr Boy MacLaren. Can- 
ada’s minister. 

Overshadowing the Quad agenda, 
however, was an escalating trade bat- 
tle between the US and Japan. TtoUS 
has threatened to impose sanctions 
unless agreement is reached on dis- 
putes over insurance, automotive 
parts and gov e r n ment procurement 
of telecommunications and medical 
equipment fay September 30. 

With the deadline looming, .Mr 
Vmtw mid Mr fohd Eooo, Japan’s .- 
foreign minister, agreed to meet 
again around September 23 in a last- 
ditch e ffort to avert sanctions. Talks 
in Wadiington and Los Angdes over 


the past few days had been “construc- 
tive” Mr Kantor said. “We obviously 
will continue to talk”. Hr Kono 
*?n*d the talks “substantial’’. 

Officials dose to the talks said it 
appears that some agreement may be 
dose on the dispute over insurance, 
but that the two sides remain sharply 
divided over US insistence that some 
means of measuring progre s s toward 
: opening Japan’s be 

in any agreement 

-• As the US and Japan continued 
bilateral talks, the “ fad fagmi l” Quad 
session got underway in Los Angeles 
on Saturday. While ratification of 
Gntt topped the agenda, the four min- 


isters also dismissed “unfinished 
business” remaining from the Uru- 
guay Sound. This in dudes reaching a 

multilateral a g r nim ra rf on fiwmrtfl j 

services, civil aviation and other 
issues that proved too c on t e ntions to 
resolve during the 1993 talks. 

The meeting also presented an 
opportunity for the US to save hce 
after an embarrassing rebuff of new 
i n i ti a t i v es , known as “Open Market 
2000”, in Naples in Ally when the 
four trade powers last met in the 
Group of Seven leading industrialised 
nations’ in Angdes, the 

US took a more cautions approach, 
accord in g to other participants. 


Clinton’s foes on scent of ‘fast-track’ 

Nancy Dunne and Guy de Jonquieres on threats to the power to negotiate trade pacts 

V irulent part is ans h i p -fa weakening in its resolve to agreed to drop labour and envi- iff revenue problem, by incor- On the other band, Senatm 

the US Congress, which seek renewal of President dm- ronznental issues as specific rectiy assessing congressional Dole Is displaying “the worst 

neariy killed DODUlAT* trim's **f»c t-trsuW niiftwiritv trt crrvolc tn Y10 crmohf in ft i fi i To O tin ffmant an/? hu fuHnP a drL fm nf rvarHcon maninnluHnn 


V irulent partisanship in 
the US Congress, which 
nearly killed popular 
crime legislation last month, 
and threatens proposed health 
insurance reform month, 
could claim another victim: the 
fast-track negotiating author- 
ity President Bill Clinton needs 
to secure new trade pacts with 
Latin America and Asia. 
f With just four weeks left 
before Congress . is due to 
recess for elections, time is 
running short for agreement 
mi many disputes surrounding 
the legislation needed to imple- 
ment the Uruguay Round 
world trade deal under the 
General Agreement on. Tariffs 
and Trade. 

Among the problems yet to 
be resolved is how to raise 
funds to compensate for 
reduced revenues due to tariff 
cuts agreed in' the round. 

Failure by Congress to 
approve legislation before it 
recesses would severely Jeop- 
ardise Galt members’ pledge in 
April to ratify the round in 
time to put it into effect and 
establish the new World Trade 
Organisation at the start of 
next year. 

Not only is it inconceivable 
that the timetable could be 
kept if foot-dragging by Con- 
gress prevented the US formal- 
ising its commitment to the 
round; delay in Washington 
could provide a pretext for 
other governments to defer 
parliamentary approval of the 
deal, raising the risk of indefi- 
nite slippage. - 
So for, fewer than 30 of the 
125 participants to the round 
h&ve' ratified Htt." Outlook for- 
actibn.by the EU is ticfttded by 
a jurisdictional dispute 
between the European Cato-’ 
mission' and the . Council, of * 
Ministers, white there are Atop ' 
uncertainties about fife '.time* 
table in Japan. * 
to the face of the mounting 
obstacles in Congress, the 
Office of the US Trade Repre- 
sentative is understood to be 


weakening in its resolve to 
seek renewal of President Clte- 
ton's “fast-track” authority to 
negotiate farther trade agree- 
ments. 

A request far such authority, 
which requires Congress to 
vote on legislation without 
amendment, was included to 
the Uruguay Round pafctige at 
a rime when ft «w w i «i non- 
controversial. 

Matters have been compli- 
cated by Senator Robert Dole, 
the Republican minority 
leader, who has made trusba- 
tion of the president's legisla- 
tive agenda his top priority, to 
a much publicised recent 
article to a newspaper to Ids 
home state of' kanM^ be 
argued for a postponement of 
the flett ip gteiflrirm wMio qne $ - 
turns of its costs aud its effects 
on US laws were assessed. 


M r Dole’s stance has 
been welcomed by 
the round’s- 1 oppo- 
nents on the left and right, 
who have argued for delay to 
the hope that with more thne 
they can mobilise enough 
opposition to kill iLAddtog to 
their glee, Mr Rush Iimbaugh, 
the right-wing chat show, cru- 
sader has come out against the 
WTO. 

The White House is said to 
be still reluctant to give up 
lighting for fast-track, which ft 
tfwwmg g ftai for. the president's 
credibility when he meets 
Asian leaders in Jakarta in 
November and Latin American 
leaders to Miami to December, j 
A decision could come soon, 
but observers of past decisions' 
by TresHeril- -Clinton's White 
Hohae are expecting a cave-in. 

- . The :-fast-track is m most 
titxffite to the Senate, which 
tofifid to toctote the necessary 
authorisation, ia its own ver- 
sion of implementing legisla- 
tion. \ r -• 

Trade ' officials then met 
Republican congressmen and 
got ft included to the House 
version, after they reluctantly 


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CONTRACTS & TENDERS 

^ ESS52S 

HENRIQUE LAGE KkHNERY 

POSTPONEMENT NOTICE . ... 
INTERNATIONAL CALL FOR BIDS 
REVAP-41/93 

Concerning to the call for bids referred afaovel which 
summary was published in this newspaper in June 3, 

1 994, PETROBRAS is Informing the postponement of - 
proposals hand over date to September 15, 1994 at 
9:30 AM. ~ • — ■ 


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agreed to drop labour and envi- 
ronmental issues as specific 
goals to be sought in fixture 
trade negotiations. 

Staff members of the Senate 
ftiwiwi -c ommit tee, «thi 
H ouse Ways and means com- 
mittee .are now working to 
resolve differences tn the two 
versions, so the legislation can 
be sent to the White House and 
retained to Capital Hill in time 
for final votes this year 

The wfaifatew * l a n is widely 
accus e d of fnrnhBng pamttagB of 
the Gatt legislation by not 
moving sooner to settle the tar- 


iff revenue problem, by incor- 
rectiy cong ressional 

amfinwnt and by taking a stri- 
dent position an the labour and 
environmental issues in the 
hope of flflriftfy h-i g the Demo- 
cratic left. * 

A former senior Bash admin- 
istration fffukl said RepUbft- 
>*aim and business lobbyists 
were alarmed by the “boasts” 
of Mr Mickey Kantor, the US 
trade representative, that all 
fixture trade deals would «a*ir 
to raise the gnuh r m nwital and 
labour standards of foreign 

I rwtHng pn ytiwf^ - 


On the other hand, Senator 
Dole is displaying “the w o rs t 

type Of partisan wianipnlnrimi 

of trade issues" which “will 
not serve him well,” he 
said. 

H, as expected, the Republi- 
cans gain seats to both houses 
in November, President CBxt - 
ton could have even mare diffi- 
culty pushing fast-track 
authority through Congress 
next year. That, to torn, would 
be a humiliating setback to US 
plana for hemispheric integra- 
tion and trade Initiatives to 
Asia. 



Dole: finstrating legislation 


White House 
rejects Congress 
role on Haiti 


By Jure* Martin in Washington 

The Clinton administration is 
determined to resist growing 
demands that any invasion of 
Haiti be made contingent on 
Ihe prior approval erf Congress. 

Mr Warren Christopher, the 
secretary of state, said in an 
interview yesterday that Con- 
gress would certainly be “con- 
sulted’' but that it was vital 
that the president’s “ constitu- 
tional authority be preserved.” 

He noted that neither Presi- 
dents Reagan or Bush had 
sought congressional backing 
before ordering US troops into 
Grenada to 1663 and Panama 
in 1969, operations which he 
compared in scale with any 
intervention in Haiti. 

Over the weekend, Mr Ross 
Perot, the 1992 independent 
presidential candidate, lent his 
voice to Republican criticisms 
that any invasion would be 
principally designed to boost 
President Bill Clinton’s sag- 
ging domestic popularity 
before the mid-tern congres- 
sional elections to November. 

In a personal attack excep- 
tional by even his own stan- 
dards, Mr Perot said that 


because Mr Clinton had 
avoided service in Vietnam to 
was obliged to “go to those 
people in Congress who under- 
stand what war is about.” 

IBs speech in Denver, the 
first in a cross-country tour 

designed to influence congres- 
sional elections, was conspicu- 
ous for its attacks cm Third 
World countries. He suggested 
that Haiti was a country whose 
people “like a dictator”. 

Mr Christopher dismissed 
these arguments as "pure balo- 
ney” and flatly rejected sugges- 
tions that any military action 
be delayed until after the 
November elections. 

He was confident that, if and 
when any action was taken, 
the president would receive 
plenty of political and public 
support once the case for inter- 
vention had been laid out. Key 
reasons for action were the 
dangers posed by the Haitian 
military regime to hemispheric 
stability, the need to end 
human rights violations in 
Haiti and the credibility of the 
United Nations, which has 
directed that all reasonable 
steps to taken to restore 
dexnocracy to the island. 



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6 


FINANCIAL TIMES MONDAY SEPTEMBER 12 1994 


NEWS: UK 



Rail dispute sparks risk-sharing move 


By Charles Bachelor, 

Transport Correspondent 

The cost of future rail strikes 
will be covered by an industry- 
wide risk-sharing scheme, the 
ofOce of the rail franchising 
director said yesterday. 

Such a scheme would spread 
the cost of “severe disruption", 
such as strikes, bridge or tun- 
nel collapses and acts of terror- 
ism, between the privatised 
rail operators. 


It would also help to reduce 
the threat to the privatisation 
of the railway posed by the 
continuing signalmen’s dispute 
which has disrupted the net- 
work for 13 weeks. 

However, a spokesman for 
the franchising director said 
there had “been no lessening of 
interest from the companies 
seeking to buy franchises” 
since the dispute started. 

The risk-sharing scheme at 
present under discussion 


would go further than many 
existing industry arrange- 
ments because it would indem- 
nify train operating companies 
against revenue losses and not 
just against the direct cost of 
an incident. 

“Strikes would be a risk that 
would be managed,” said the 
spokesman. 

The franchising director and 

the train operating companies 

have been in talks with the 
insurance industry to devise a 


method of covering cata- 
strophic losses. At present 
British Rail meets all but the 
largest losses from Its own 
resources. 

But a conventional insur- 
ance arrangement would be 

extremely expensive, insurance 

industry sources said. Insuring 
railway operations would be a 
new experience for British 
insurers, so premiums initially 
would be very high. Insurance 
costs could be the third-largest 


item of expenditure for the 
train operators after track 
access charges and salaries. A 
risk-sharing scheme, by con- 
trast, would be cheaper to 
operate. 

Kail industry officials believe 
the signal workers' strike is 
the “last gasp” of the old 
railway structure. Drivers 
and maintenance workers will 
in future be employed by 
individual companies so would 
not have the capacity to 


disrupt the entire network. 

In a separate development 
the department of transport 
and Rafttrack denied they had 
discussed a “doomsday plan” 
to sack the signalmen and shut 
large parts of the railway 
network if the dispute contin- 
ued. 

The next two-day stoppage is 
due to start at midnight 
although Rail track said it 
expects to open more than half 
of the network. 


Whitehall construction 
projects under probe 


By John Will man. 

Public Policy Editor 

The government will this week 
announce a wide-ranging 
inquiry' into the procurement 
of construction work by gov- 
ernment departments and 
agencies following a series of 
Whitehall building embarrass- 
ments. 

A small team of civil ser- 
vants in the Cabinet Office 
Efficiency Unit will investigate 
recent large public-sector 
building projects which have 
either cost much more than 
originally planned or been sub- 
ject to excessive delay. 

These include the £450m 


British Library building in 
north London, where the first 
phase has cost more than dou- 
ble the original estimate and is 
still incomplete 16 years after 
being given the go-ahead. 

Other public-sector projects 
which cost much more than 
originally planned include the 
Trident nuclear submarine 
base at Fas lane in Scotland, 
where overruns in construc- 
tion costs accounted for much 
of the 72 per cent overspend on 
the 10-year project 

The inquiry will be super- 
vised by Sir Peter Levene, the 
prime minister's efficiency 
adviser who completed a simi- 
lar study in July on the gov- 


ernment's use of external con- 
sultants. This recommended 
ffhang as in the use of consul- 
tants that are expected to save 
£l30m over three years. 

Sir Peter is currently chair- 
man and chief executive of 
Canary Wharf, the London 
docklands property develop- 
ment Despite subsequent diffi- 
culties in finding tenants, the 
construction of Canary Wharf 
was finis hed on time and 
within budget Sir Peter said. 

The inquiry follows the Lat- 
ham review Into contract and 
management practices in the 
construction industry. The 
review recommended radical 
changes to reduce costs. 




London lobbies over Adams 


By Roland Rudd in London 
and Tim Coone in Dublin 

The British government is 
confident that the US president 
will turn down a request to 
meet Mr Gerry Adams, presi- 
dent of Sinn Fein, who is 
expected to visit the US later 
this month. 

Sinn Fein confirmed yester- 
day that Mr Adams has applied 
for a visa to visit the US. The 
Irish government is understood 
to believe that a meeting 
between the Sinn Fdin leader 
and Mr Bill Clinton would 
move the peace process for- 
ward. 


However, Downing Street 
who is opposed to Mr Adams 
being granted a visa to visit 
the US, has lobbied hard 
against any mee ting with the 
US president which it believes 
would enrage unionists. It is 
confident that US State Depart- 
ment has accepted its advice. 

In Germany, EU foreign min- 
isters were briefed by Mr Doug- 
las Hurd, the British foreign 
secretary and Mr Dick Spring, 
the Irish foreign minister, on 
the peace process. 

Mr Hurd said the IRA would 
have to prove by “words and 
deeds” that its ceasefire was 
permanent 


Mr Spring said he believed 
the joint declaration signed in 
Dublin on Tuesday by Mr 
Reynolds, Mr Adams and Mr 
John Hume, leader of the 
mainly nationalist SDLP, 
proved that the Irish govern- 
ment's interpretation of the 
IRA ceasefire announcement 
was correct and that the cessa- 
tion was permanent 
• The government dismissed 
fears from right-wing Tories 
MPs and some Unionists that 
the foiled attempt by IRA pris- 
oners to shoot their way out of 
Whitemoor jail in Cambridge- 
shire would affect the peace 
process. 



Britain in brief 



Labour 
plans bank 
for business 

The opposition Labour party 
plans to create a business 
development bank for small 
and medium-sized enterprises 
and to introduce a law 
entitling companies to a 
temporary moratorium on 
debts to avoid bankruptcy. 

The proposals in a 
consultation paper, to be 
unveiled on Thursday, form 
the first substantive 
reco mmendati ons to emanate 
from the Industry Forum, a 
body set up in 1993 to promote 
ctotailed dialogue with the 
private sector during 
formulation of Labour party 
policy. 

The forum has so for 
recruited about 40 companies 
and individuals. 

In calling for a new 
emphasis on measures to help 
the small company sector. 
Labour says it intends to 
address the problem of 
long-term finance by 
es tablishing a new bank which 
will mobilise private finance 
far an Investment fund giving 
priority to small and 
medium-sized businesses. 

The bank, in which private 
sector partners wifi share 
ownership, will operate on a 
profit-making basis “at arms 
length” from government 


RuMmcUm 

Walker WingsaQ’s Zetyr 40 will be shown for the first time at the Southampton boat show next 
week. The 40ft trimaran, costing £105,000, is driven by vertical aircraft-style wings instead of sails 


Growth in small 
companies 

There has been a big structural 
shift in employment away from 
the large employer over the 
past decade, according to 
figures released by the 
Department of Employment 
published today. 

At the name thnfl there baa 
been a jump in the n umb er of 
people with the power to take 
on or shed staff. 

The statistics, compiled by 
Vista Communications, 
employment consultants, show 
the extent of the dedme 


of the large company. 

The report says that there 
are 300^)00 more businesses 
now employing 100 people or 
fewer than there were 10 years 
ago During the same 10 year 
period from 1981 to 1991 the 
number of companies 
employing more than 500 
people fell by 25 per cent 

Appeal over 
pensions ruling 

The National Association of 
Pension Funds has urged the 
government to allow 
employers more time to make 
up shortfalls In pension 
scheme cash when tougher 
fending rules take effect 

In a white paper issued In 
June the government proposed 
a minimum solvency standard 
which would require pension 
schemes to hold enough assets 
to pay the “cash equivalent” 
value of each member's 
benefits if the scheme were 
wound up immediately. 

It proposed that those 
schemes whose assets were 90 
per cent or more of the 
standard should have up to 
three years to make up the 
shortfall but that those which 
fell below that should have to 
make up the shortfall within 
three months. 


Rise in the use 
of cash 

The move towards a cashless 
society suffered a setback last 
year. The number of 
transactions settled in cash 
rose for the first time in at 
least seven years. 

A survey published 
yesterday by the Association 
for Payment Clearing Services 
for banks and building services 
showed that the number of 

Cash paymonta nf mnm than Cl 

rose by L6 per cent to l6dbn. . 

It was the first time in the 
seven years the survey has 
been running that the mimher 
of cadi transactions had risen. 
It remains the most popular 
method of settling bills and 
purchasing goods and services, 
accounting for 63 per cent of 
all transactions, compared 
with more than 70 per cent in 
the mid-1980s. 

Non-cash transactions also 
grew by 2 per cent last to 
8Jbn. But growth in the 1980s 
was more than 8 per cent a 
year, the association said. 



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Hong Kong International 
Airport (Kai Tak) 

Invitation to Tender: 

Duty-free Liquor & Tobacco Concession 

Hong Kong International Airport (Kai Tak), 
managed and operated by the Civil Aviation 
Department of the Hong Kong Government, is one 
of the busiest airports in the world. It hancfled over 
24 million international passengers in 1993, and 
ranks third (after London Heathrow and Frankfurt) 
in the world in terms of international passenger 
throughput 

The exclusive duty-free liquor and tobacco 
concession is located at the departures level of the 
International Passenger Terminal Building 
alongside the majority of the shops and 
restaurants. 

The present airport at Kai Tak will be replaced by a 
new airport at Chek Lap Kbk which is scheduled to 
be completed In July 1997. 

Organisations interested in tendering for this major 
concession should note the following: 

♦ Duration of Concession 

Upon expiry of the current contract at the end of 
August 1995, a new term will be awarded 
through open tender and cover the period 
September 1995 to June 1997; thereafter the 
concession may be extended on a month-to- 
month basis until the closure of Kai Tak. 

♦ Eligibility 

Tenderers must have proven resources, 
capability, experience and reputation in 
successfully operating an airport duty-free 
liquor and tobacco business. 

♦ Tender Documents 

Tender documents and further information can 
be obtained from the Airport General Manager 
at the Hong Kong International Airport, 
telephone: (852) 769 6296, fax (852) 764 9656. 

4 Tender Deposit 

Tenderers will be required to deposit the sum of 
HK$25 million with the Hong Kong Government 
as a pledge of the bona tides of their tender. 
The deposit shall be forfeited in the event of 
failure or refusal to implement an accepted 
tender. 

♦ Tender Closing Date 

12:00 noon, Friday, 9 December 1994 

♦ The Government does not bind itself to 
accepting the highest or any tender. 



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7 





FINANCIAL Tnvnrjg 


MONDAY-SEPTEMBER 12 1994 


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Alan Cane looks at how France's troubled Groupe Bull is being turned around as it prepares for privatisation 


A last-ditch survival mission 


G eneral Eisenhower. 

than supreme Allied 
“ttnaander, pondered 
me future of Europe in 
tala bare room near 
versauies. Today it is the board- 
room of Groupe Bull, the troubled 
French computer manufacturer 
and Jean-Marie Descaip entr i es! 
c hairm an and chief executive, does 

the pondering. 

There has been much to tbinir 
about since his appointment 10 
mon ths ago. Bull, state-owned and 
awash with red ink, is in crisis. Its 
move from a prestigious Paris 
address zn Rue de Malakoff, first to 
a tower block in the city’s financial 
district and then to sprawl erf 
tin-roofed sheds at Louveciennes, 
reflects its straitened circum- 
stances. 

In the early days of Nato, the 
Louveciennes complex was the 
supreme headquarters erf the Allied 
powers in Europe. It has been 
owned by Bull for years but has 
been unused until now. When the 
remaining headquarters staff have 
moved in, it will save about 
FFr500m (££Lm) a year. 

Every franc counts. Bull, which 
turned over FFr2ft25hn last year, 
has lost some FFrisbn in the past 
three years and has da ppmriad on 
continued gove rnment investment 
for survival. But the government's 
patience and that of the competition 
authorities in Brussels is tfrhan^h^ 
Bull will receive a final tranche of 
FFxSJbn this year to dear its debts. 
Descarpen tries, a c on troversial fig- 
ure noted for his colourful manage- 
ment theories and his tumround 
skills - though they are not infalli- 
ble - was appointed by Gdrard Lon- 
guet, industry minister, with a man- 
date to prepare the company for 
privatisation. 

At the time, the missio n seemed 
almost impossible. Bull was among 
the weakest of the traditional ML- 
Une computer makers, including 
IBM and Unisys. They were caught 
flat-footed by sudden changes in the 
computer market which promoted 
the growth of networked small com- 
puters at the expense of large 
machines. 

BuD. and the others found them- 
selves with declining mainframe 
sales, a cost structure out of line 
with potential revenues, and short 
. of skfll in the technologies -needed 
to compete in the new industry. 

The company’s situation was 
aggravated by two additional bur- 
dens. It had been France’s computer 
champion for years, making the 
search for new investors-paliticaRy 
sensitive. Moreover/ years of state 
ownership had inculcated a stultify- 
ing civil service mentality which 
Descarpen tries’ predecessors* the 
analytical Francis Lorebiz 'and tofe; 
bluff Bernard Pache, aeemed unaWe 
to counter. 

Descarpen tries seems, however, 
to have made remarkable progress 
in a short time. In the first half of 
the current year losses were more 
than halved, from FFrl.98m to 
FFrfaBm. Now he and bis senior 
managers are talking confidently of 
malting an operating profit for the 
year as a whole. By the middle of 





kV* 3 


J|jJV jf 





The flamboyant troubleshooter 


J ean-Marie Descarpentrles is an enfant terri- 
ble among French managers. Unusually 
flamboyant,, voluble and op in ion a ted. Ids 
reputation as a tmnrotmd specialist is laced 
with c ontroversy. . . 

His special talent is for provoking change in 
companies' in crisis; ma n ag i n g hi untroubled 
times Is not Ms forte. “Creative confusion’’ typi- 
cally describes Ms style. He is fond of boasting 
flm* he. has been fired from every job he has 
held with the exception of McKfosey ft Co, the 
management consultancy, where he worked 
between 196S and 1976. 

The companies with which he has been 
involved include the gtasanakers Saint Gobain 
of France and Glaverbel of Belgium. As chair- 


man and cMef exec u tive of Camaud, a leading 
French packaging group, he first restored the 
company to healtL then led the £780m acquisi- 
tion of the UK’s Metal Box Packaging in 1988. 

What Descarpeniries did for Caraand has been 
described as a textbook corporate turnround. It 
lost Eftl59m (£19Bm) on sales of FFx4.8bn in 
1981; by file time of the merger it was making 
FFr365m on sales of FR7.231 hl 

The merged company, one of Europe’s largest 
in the packaging business, proved less of a suc- 
cess as Descarpeniries found that Ms cerebral 
theories about managers who behave either as 
horsemen or monks drew little response from 
the pragmatic British. Tensions grew within the 
company, senior managers left and performance 


fell away. Finally, after two years of increasing 
tension he quit Critics say he underestimated 
how hard it would be to restructure Metal Box. 

Trained at the Ecole Polytechrrique, he was a 
paratrooper while in the army . Stories abound 
of the tactics he uses to shock people into 
action. While he may have mellowed, he shows 
no signs of slowing down. At 57, he works 
extraordinary hours. Meetings often last until 
10 or 11pm, mrpiiringd only parity by the fart 
that during the week he lives by himself, joining 
Ms wife at the weekends at their 17th-century 
farmhouse south of Paris. For tire average com- 
pany doctor, Groupe Bull might be the last big 
tnrnroimd, bnt Descarpentrles is already talking 
intrigningly about Ms next job. 


nwrt year, they say, the company 
wfllbe into net profit Privatisation 
is expected to start in November. 

it their predictions are correct. 
Buff will become much more attrao- 
tive as a potential partner far other 
companies. Brussels, furthermore, 
^wfll have to accept that the bflHons: 
of fTench francs poured into the 
company in the past few years have 
.been important to the company’s 

. - Geq^rSajefl; head of Bull 
k Europe r -say8 It is no mirage: “We 
are a. different rtnmpany from nx 
months ago. The culture has 
changed- Prpgress has become the 
wra." 

Cynics counter that it is not diffi- 
cult to transform the short-term 
financial results of a company in 
Bull's position: Staff numbers can 
be cut, unprofitable operations 
dosed or sold off. Such measures 


can ftranag in a company’s viability, 
however, making it difficult to 
return to growth. Critical skiffs are 
lost with people made redundant; 
same operations, although loes-mak- 
Jng at the may prove essentia l 
to i&ture strategy. i~- . - * 

Descarpeniries says he rejected 
t his t raditional approach in favour 
of what he describes as a “different" 
tumround technique, which puts 
what he calls “tension" an every 
part of the company by establishing 
b enchmark s against which p rogres s 
is measured 

Staff numbers continue to fall, 
nevertheless. There are about 29,000 
today compared with 33,000 when 
he arrived. Comparison with other 
companies suggests the workforce 
is still too large. 

Descarpentrles’ initial analysis 
told Mm he could expect a rapid 
turnround. Bis diagnosis was that 


Bull had solid business strengths, 
loyal customers and a history of 
sound strategic decisions. But 
operations, tin* managimnmt struc- 
ture and reporting systems were 
weak. He estimated that curing 
these faults would take 18 m«ntTia. 
In the opposite case, where a com- 
pany is sound operationally but has 
weak business fundamentals, turn- 
round takes twice as long, he 
argues. 

He was encouraged by data show- 
ing that the information technology 
business is growing strongly - 6 or 
7 per cent a year - offering 
rich opportunities in Europe, 
where computerisation has pro- 
ceeded more slowly than In the 
UR 

The task, then, was to restore 
Buff to profitability rapidly, and 
then find ways for it to grow at 
least as fast as the industry. This 


mrintifla broadening its equity base 

- NEC of Japan, IBM of the US and 
France Telecom already hold stakes 

— and finding more business part- 
ners for its product operations. Two 
more. Motorola and Tandem Com- 
putes of the US, were announced 
an Friday. 

Improving Bull’s operational 
capability called for a complete 
change of management and report- 
ing methods. Three weeks into the 
job, Descarpentrles set about 
choosing the top 10 managers in 
Buff (from a list of 25) to form a new 
executive team to run the company. 
He chose those whose track record 
and performance at interview iden- 
tified them as people who got things 
donft 

Many of the existing managers, 
he thought, placed cleverness above 
action: “A lot of the top people 
came to me without any figures. 


They knew a lot; their ideas were 
very conceptual I did not under- 
stand what they told me, but 1 am 
sure it was very clever. But they 

never told me: “My turnover is this, 
my profit marg in is that * ** 

Those who faffed to make the top 
ID either left the company or settled 
for lower positions. A key point was 
that Descarpentrles was choosing 
people, not fining positions. As he 
admits, at the time he did not know 
enough about the company to know 
what kind of structure was 
required. He reckoned, however, 
that if he put power In the h and s of 
the best people, the rest would fol- 
low. 

Descarpentrles next took his 
newly appointed executive board to 
the holiday town of St Main in the 
middle of winter for three days and 
nights of almost continuous talks. 
He asked them to choose the next 
100 top managers to staff the organ- 
isation. 

Only tn the last hour of the ses- 
sion, however, did he tell the 10 
what positions he wanted to 
take in the structure - the objective 
befog to get unbiased views of the 
abilities of the middle managers 
under discussion free from pre-emp- 
tive strikes on behalf of particular 
executives. 

Today. Bull is decentralised and 
streamlined. There are seven prod- 
uct/service divisions, four geo- 
graphic networks covering the 
globe and three corporate functions: 
or ganisatio n, business development 

and fimmpp 

Old Bull handa say the company 
used to be riranhmfad by the finance 
department. Today, conventional 
budgets have all but been scrapped 
and managers are measured only in 
ta rma of progress against the previ- 
ous month’s figures. 

Only 10 business criteria - reve- 
nue, headcount, profit marg in and 
so an - are used fra- monthly report- 
ing, replacing the thousands of 
business statistics which used to be 
collected. Descarpentrles says: “We 
have changed our financial culture 
completely. We measure only prog- 
ress and , at the end of each six- 
month period, we compare our- 
selves to the best in the field.” All 
of this was put in place between 
November 10 and 13 last year. 

There is strong pressure to reduce 
nan-salary costs: the move to Lou- 
veciennes is an example. In the first 
haw of this year, these costs foil by 
9108m (£70m), which Descarpentrles 
regards as a good start Salaries and 
benefits are similarly under pres- 
sure, with some salaries frozen. 
Revenues rose an encouraging 12 
per cent at the half-way stage, sug- 
gesting Descarpentrles is on the 
right track. 

The recent history of the com- 
puter industry has been full of false 
dawns, however, and it will take 
several sets of good results before 
the sceptics will be convinced that 
the chang e is permanent 

When asked if Bull’s recovery 
looks real, a senior manager for one 
of its European rivals shrugged bis 
shoulders. Perhaps, his gesture 
said, but hopes have been dashed 
before a nd thia is a fickle business. 


Volumes in learning - take it as read 


W hat happens to all those 
management hooks that 
get published in greater 
number each year? There must be a 
market for them, or publishers 
would not print so many. But who 
has the time (or the inclination) to 
sit down and read them? 

The answer seems to be, practi- 
cally nobody. Managers buy the 
bocks, only to leave them on their 
shelves for show-off value, or at 
best to dip into them briefly. The 
Management Training Partnership, 
a training consultancy, has done 
some research into the reading hab- 
its of the UK’s personnel directors, 
and found that three-qu arters of 
them buy at least four heavyweight 
management books a year, but only 
one in five of these volumes stands 
any chance of being read. 

The problem is partly the books 
themselves - which are too long 
flrcd too tedious - and pa rtly t hat 
manag ers have no opportunity to 
read volumes during the day and no 
desire to do so at night. 

While they may buy Charles 


Handy’s latest or Michael Ham- 
mer’s book on re-engineering, the 
only book that they have actually 
read right through -over the years is 
The Goal, written by the Israeli 
eccentric Eh Gddratt And the rea- 
son they have read that is that it is 
written as a pacy noveL 

The message to writers and pub- 
lishers is that if they want their 
books to be read, as well as sold, the 
style cannot be too downmarket, 
and toe arguments cannot be sum- 
marised too briefly nor in big 
enough letters. 

So far the lesson has not been 
learnt few books contain such state 
maries. The problem may be that S 
you condense the arguments in 
many management books too ruth- 
lessly, you would be left with sim- 
ple statements of the glaringly obvi- 
ous. 


What does the inside of your bath- 
room cabinet look like? Is the tooth- 
brush near the toothpaste, and are 
both located ffo ease of access? Are 


LUCY 

KELLAWAY 


your ties hung up with the colours 
ranging from dark to light for speed 
of selection? Is your breakfast rou- 
tine organised in such a way that 
you do not move Ti' flin tifH* 
to the table more than once? If not, 
you could be wasting valuable min- 
utes every day. 

These are antra* erf the handy tips 
contained in a new edition of How 
to Gain an Extra Hour Eoery Day. 
This is one volume that does not 

mffar from tiha general malaiap of 

management books:- ft has sold 
2JSm copies since it was published 
in 1955, and almost every page 
is a quick-to-read summary, con- 
taining few words of more than 


two syllables. 

People may read this sort of thing 
- but do they take any notice? R is 
all very well to be told to get up at 
5am, do several hours’ work before 
hr n fl frfa to move your toothbrush 
from its accustomed space, and to 
m qkp lists of priorities every day on 
a wallchart in your which 

win be so tidy it will have almost' 
nnrtiftng aisa in it. But tty living 
that way. It's easier to show willing 
by buying the book. 


Ray Josephs, the anther erf thfa finn 
weak, is 82 years old and stiff charg- 
ing round Europe armed with aide 


mtmoires and maps, and sending off 
letters with all the important bits 
highlighted in yellow pen. 

He is part of a tradition of elderly 
management writers who seem to 
keep going longer than people in 
almost any other Him of business. 
W- Edwards Denting, the father of 
them all and inventor of total qual- 
ity management, was 93 when he 
died last year. Peter Drucker is in 
Ms mid-80s and stiff going strong. 

At first sight it 1 b surprising that 
in an area so ftill of fads, gums can 
survive for half a century and more. 
Perhaps it proves th at it’s a cu shy 
life bring a guru. Alternatively, it 
shows that fashions change only on 
the surface; people will always want 
more time, to be better at motiva- 
ting employees, and to achieve 
greater efficiency. Anyone on to a 
good idea does well to stick to it 


I was taken aback toe other day to 
get a letter inviting me to recon- 
sider a donation I Had mwifa to the 
Rwanda Emergency Appeal Appar- 


ently the government hag decided 
that anyone who gives more than 
£50 with a credit card in response to 
a charity's plea on TV should be 
allowed to think better of it. 

There are many expenditures that 
it would be good to be given a 
chance to reconsider, but this hap- 
pens not to be one of them. What 
about that awful sofa, that expen- 
sive holiday, that ludicrous pair of 
shoes, that second-hand car with 
thft alarming rfawiring sound? And 
what about all those sluggish 
investments? 

Some shops give you your money 
back if you change your mind, but 
for most expenditures there is no 
way out As there is nothing to 
insure us from a burst of greed or 
vanity, why should we be given pro- 
tection from a shortlived burst erf 


Perhaps toe government feels 
that, the sight of starving rfifirirpn 
beamed Into our living rooms 
makes us sp end mor e than WE Oth- 
erwise would. But surely that is the 
whole point 



DESERT ISLAND 
MANAGER 

Leif Mills 

Leif Miffs, at 58 toe new 
president of Britain’s Trades 
Union Congress, is also general 
secre ta ry ts» Banking 

Tncnrnnro and Finance Uni 031. 

He Is toe first graduate from 
Baffiol College, Oxford, to reach 
the heights of the TUC and he is 
proud of that fact An official of 
the union since national service, 

he became general secretary in 

1972 and was elected to the TUC 
general council in 198ft 
Most union leaders have been 
kept off public bodies over the 
past 15 years but not Miffs. He 
sat on toe armed forces pay 
review frqm 1980 to 1987 and was 
on the Monopolies and Mergers 
Commission from 1982 to IBBL A 
member erf Investors in People 
UK and tha OOtmdlof the 
National Council for Vocational 
Qualifications, he is currently a 
trustee of the Civic Trust, 

Along with a phone and fax, 
what idece of office equipment 
would you need on the island? 

A word processor so I could 
write a new novel I have already 
written one that is unpublished 
about toe TUC Congress called A 
Week in the life of Smith, Broom 
and Jones. 

What would you take to remind 
yourself of early days in the 
union? 

I wrafldtake toe first copy ofour 
magazine - The Bank Cletk - - 
which I edited. 

WtowouM yon take with yoo 
berides.yodr family? 

; Sr Raifolph primes. I would 
like tohear about his polar 


What food would you Hke to 
"B&ltte.tf pa&wns with -* 


• Andfodrink? 

A couple of hogs heads, of 
'Bxakespaare Mew, a local' 

» Henley beer’ 

What would yon take to read? 
The Worst Jaurmv inTbe WarUl 
T®A£$hy .Chetsy-Qoma^itoft'- 

3ECHy.Qtocotcs expearaqnsifWBi 

.Antarctic, ft woukhifeeriteeCkfty 
antidote to toefceahrftte&a&t 
island; But Fm a great Bertie 
-Wooster fate so I would Hke to. 

. taketbeP.G. Wodahouse books. 

AfihnT 

Cared Reed's The Third Man 
wito Orson WeDes. I know every 
word qf the dialogue. I would 
also like to take The BSE starring 
SeanCoanery, which is about 
the ntifftery police. I was a 
second Hentrarant in the Royal 
. fcfltoarirPOHce when I was doing 
my ndtibhal service in Malaya. 

What would you most tore about 
desert Inland life? 

.jfymkfog ’t 0 ' toe wrwilfl 

be wonderful. 

. . 1 

What would yon most miss on 
tihedesert island? 

: The opportunity to row every 

• week with my friends in my 
.-local rowing club. 

One item to preserve your 
/sanity? - , 

-T would love to take a 
co m p ute rised chess-set to play 
against, ft would keep my mind 
active. 

. One item to ease the strain? 

; A pipe with plenty of Gold Block 
tobacco. I stiff find smoking a 
.'relaxation. 

Any regrets? 

That I just faffed to win an' • 
Orfurd rowing blue. 

Robert Taylor 


THE BOTTOM LINE 


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Newbreln information line 0633 413602 





**&--.* V.-r-s,.., 






UK trains running 

I — -V I British Rail 



plans to ran 
a number of 
services 
during the 
48-hour raB 
strike due to start at 
midnight tonight and end 
at midnight on 
Wednesday. 

The Gatwick Express 
wifl run half-hooriy 
sendees from London 
Victoria and London 
Bridge to Gatwick Airport 
and Brighton. Trains to 
Stansted Airport wlfl run 

fro m London Uusrpool 
Street. Travellers should 
check with British Rail or 
their local stations to find 
the times of trains. 


Underground auction 

Famous signs that have guided 
millions of passengers around 
the London Underground 
throughout the 20th century are 
to go under the hammer. 

Station name plates, exit and 
keep toft signs which have 
survived wars, royal weddings 
and coronations wfll be 
auctioned at London's Olympia 
on November 30. 

MemorabSa enthusiasts from 
as far as Japan and Australa 
are expected to be among the. 
bidders at what wiB be the 

largest sen-off of its kind. 


. Ferry port development 
A £7m expansion of the 
c on tine ntal ferry port at 
Port smo uth, Hampshire, n 
to be considered by 
planners next week. 

The dowota p mowt would. 
Increase the size of the port 
by nearly 0 acres and tbs 
annual capacity by 152,000 

■ i uiyxTZ vefHcns. . ... 

The cfty cotmcfl - whose 
poDcy and resources 
committee wfll cfiscuss the 
d ev el opme nt - says growth . 
of freight traffic through toe 
port has exceeded aft 
forecasts, with an increase 

of 22 per cent in the first 
half of this year. 


Airport shops 

Long opening hours -and the : 
presence of a “captive 
audience" are turning airport 
shops into real money sptnnafft. 
says a report pubfished last 
week 

The report. Airport Rets&ng fh 
tha UK, by the Corporate 
Intefllgertce Group predicts that 
IK airport shops are heading 
for sales of mere than 2600 m in 
1994 - a SO per cent Increase - 
on the 1990 figure cfespfte the 
recession. Sales by tha end of • 
the decade could be worth 
£ 1 bn a yew, boosted by sates 
at shops run by high-street 
names such as Boots, 

W JH. Smith and UHywtttes. 


W hile it may be a 
pain in the neck 
for business trav- 
ellers, for UK air- 
lines the signal workers’ strike 
on one or two days a week 
since mid-June has been a god- 
send. British Midland claims to 
have carried 27,000 extra pas- 
sengers in the past three 
months, compared with the 
same period last yean while 
British Airways is reporting an 
extra 9,000-10,000 passengers a 
week on its domestic routes - 
a 10 per cent increase on num- 
bers 12 months ago. 

No one yet knows how many 
of these newly won passengers 

will stay with the airlines once 
the strike is over. As British 
Midland's spokeswoman says: 
“So far. the figures suggest 
that they've mostly been trav- 
elling on strike days. There's 
no evidence - yet - that people 
are fundamentally changing 
their habits." 

What the airlines do know, 
however, is that it gives them 
a new group of customers to 
whom they can advertise their 
product. BA recognises that 
many business travellers' first 
experience of the airline will 
be on a domestic route. “It is.” 
according to the company, 
“our shop window. It’s where 
we sell BA." 

To this end, the airline has 
been introducing incentives, 
including a no-reservation 
shuttle service on the London- 
Glasgow and London-Manches- 
ter routes; automated ticket 
dispensers; and complimentary 
food and drink on all flights, 
no matter how brief. “You get 
a four-course meal and a drink 
on the London-Glasgow route. 
It's a masterpiece of timing, " 
proclaims BA. 


When the industrial action is over, some passengers 
may not return to UK trains, says Charles Jennings 


Striking a blow 
for the airlines 


Kamrack and ^ 
sigrtaUmg g&H \t w fikety thm-wk 
be a strike or\ Wednesday to*- 


VSSZ&- 


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Action stations: some travellers could forsake trains on long journeys even when the strike is over 


But British Midland's latest 
manoeuvre in the battle for 
business travellers Is perhaps 
more interesting. This week 
sees the introduction of the 
Diamond Pass: a season ticket 
entitling the holder to five 
return journeys to any of the 
airline's destinations within a 
period or three months from 
the date of issue. 


The price is £699: which 
means that, on some routes, a 
British Midland pass holder 
could save as much as £221 
over the equivalent five first- 
class rail tickes. 

"We’ve had this planned 
since the start of the year,” 
says British Midland. "It's not 
a response to the rail strike, 
and we’re not trying to capital- 


ise on it" It does, however, 
throw a new element into the 
business traveller’s equation of 
time, convenience and cost 
Even without British Mid- 
land's new initiative, ticket 
prices on some routes are 
already creeping towards par- 
ity. Although an Intercity 
first-class return from London 
to Manchester stands at £130, 


.. \ 


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BBSs 




Sue 


zy 


*w~ 


Air Macau to launch 

~ ] Air Macau 

rj w9 bunch in 
MW // the second. ■ 
igj? / half of 1999, 

y // vnthfowjeb 

f=i — and a staff of 

300, toCftaSng up to 40 
piots and 100 fBght 
attendants. . . 

"Our tost routes, during 
the first two years of 
operations, wIH obviously, 
be far south-east Asia, 
within a three and a half 
bowfllght radhns of 
Macau,* said Dearid Young, 
dwtilut gererd d e si gn a te 

of Air Macau. 


Flexible cabins 

USAir is introducing a new 
service cafiad Business Select . 
for toustoesa-dass travelers. ■ 

A flexfote akcraft cabin wifl 
anabte the atfne to maxknss 
revenue by converting . 
economy-ctasa seats foto 
Business Select seats between 
finite if necessary^ The ska of 
the premksrt-dass eabfo can be 
expanded from the standard 10 .. 
seats to as many as 46. 

- Business Seiect wi[ go on 
sate on November 1. It w* . 
initially be ottered pri 210 dally' 
ffights serving 16 ettfeson the 
east Coast of the US. 

USAir ateo announced that it 
wS expand the stzeof the 
ikst-ctase cabin on its fleet erf 
Boeing 737-300 tong-range 
aircraft from eight to .12 seats. 


Ukefy weather in the leading business centres 


Mon Too 




ttwg.Koog ® 28 29 » 


ftfflkftrrt 


•k' 


L Angeles 


23 # 26 $ 28 


Maxbrum temperatures hiOefakis. 

Mamwtfon suppfled by Mateo Con«* of ths NwhortarKta 


against £180 for an equivalent 
BA ticket, a first-class Inter- 
City return from London to 
Glasgow is £184, while on BA 
or British Midland, the equiva- 
lent is £224. For London to 
Newcastle, the figures are even 
closer - £180 for Intercity, £206 
for BA/British Midland. 

Throw in considerations 
such as rimp and convenience, 
and Intercity's' advantage 
shrinks farther. London to 
Manchester by train takes two 
and a half hours, plus half an 
hour, say, to get to the station: 
the plane takes SO minutes, 
plus, say, an hour and a half to 
reach Heathrow and check In. 
Glasgow, on the other hand, 
takes five and half hours by 
rail, compared with an hour 
and a quarter by air. 

This is where British Mid- 
land's strategy looks most 
effective. Leaving aside the 
logistical questions (such as 
whether you are going from 
city centre to city centre, or 
outskirts to outskirts), if you 
can save on price as well as 
time on the longer routes by 
going by air, the logic of train 
over plane evaporates. 

As BA puts lb “We’ve seen a 
steady growth in the number 
of business travellers flying 
over the last few years, and 
although we're not doing any 
special research to find out 
who's going to change from 
rail to air after the strike, the 
fact is that some people are 
bound to change for good." 

Luckily for Intercity, there 
are not enough airports to turn 
the UK into another United 
States, where businessmen fly 
everywhere. But with every 
day of strike action. Intercity 
must view the future with 
rather less certainty. 


I t was when the Belgian 
business man sitting next to 
me scribbled a farewell 
note to his wife that I began to 
take seriously the plight of 
British Midland flight BD147 as 
it circled Brussels airport 
We might now believe that 
modem air travel Is as routine 
as hopping on and off the bus. 
But when your aircraft’s cap- 
tain breaks the news there is a 
technical fault making the 
DC-9 "unsafe to land”, you 
can't jump off and catch the 
one behind. The incident 
which last week brought a 
dozen “B" movie scripts to life 
began with an a finounramen t 
that the landing had been 
aborted because of indications 
the landing gear was faulty. 
The crew would consult with 
engineers on the ground. 

Passengers eyed each other, 
but pressed on with reading 
the papers and punching their 
laptops as the flight atten- 
dants, smiling impressively, 
gathered together outride the 
flight deck door. 

Minutes ticked by. The air- 
craft, announced the na ptain in 
his finest "trust me” tones, 
would now have to fly over the 
airport so ground crew could 
take a look. Having done so, be 
again broke the nervous 
silence. There were, he said, 
visual indications that the 
landing gear was down and 
locked, but the instrumenta- 
tion still insisted otherwise. 

“I am afraid, ladies and gen- 
tlemen, that we will therefore 
have to prepare for an emer- 
gency landing. Rescue services 
have been alerted. Please listen 
carefiilly to the cabin crew 
who will instruct you in emer- 
gency landing procedures." 
Two passengers leapt to 


‘I am 
afraid it 
is unsafe 
to land’ 


Michael Cassell 
had to prepare 
for an emergency 


their feet. "Sit down. Now,” 
snapped the chief steward. 

Emergency landing proce- 
dures were read out quickly 
from a card, perhaps too rap- 
idly for already-racing minds 
to take in. "Loosen neckties, 
feet under seat, head on knees, 
hands on head." A stewardess 
asked, in an exquisitely inap- 
propriate way, whether we 
were “happy" with the instruc- 
tions; individual lessons were 
given to those who were not 
At no time was any langwaga 
other than En glish used. 

Emergency exits were 
pointed out and we were asked 
to locate the nearest to us. 
Would assigned exits not be 
more sensible in order to avoid 
chaotic, two-way traffic in the 
aisle, or is it unwise to be too 
prescriptive in the face of 
unpredictable events? 

The aircraft circled for the 
last time. I envied the cars and 
the cows below, oblivious to 
tiie drama above their heads. 
The utter inability to influence 
the outcome induced a bizarre 
calm. My brain was busy with 
banalities rather than the 


meaning of life. Who would 
walk Muffin? Who would write 
the articles for the survey on 
European Business Locations 
which had put me up here? 

At what seemed an extraor- 
dinarily slow speed, the air- 
craft dropped to the end of the 
runway as the instruction 
ramp- “Brace, brace, brace." I 
half-heartedly obeyed, resent- 
ing the potential indignity of 
being found with my head 
between my knees. 

The landing was, of course, 
perfect. Shrieks of "Yes!" and 
applause broke out. The air- 
craft stopped on a sixpence, 
surrounded by emergency 
vehicles; a foam cannon 
pointed at the window. 

A stewardess walked down 
the cabin and asked if every- 
one was all right. We were 
"safe", the captain said, but 
engineers were to insert pins 
in the undercarriage before we 
moved another inch. The run- 
way remained dosed. 

Our flight deck heroes 
thanked us for our calm; we 
thanked them for theirs. "That 
should be worth a thousand 
free Air Miles," someone told 
the chief steward. 

The incident was deeply dis- 
turbing, but the handling of 
potential calamity by a well-re- 
hearsed crew was professional 
and successful On the return 
trip. I studied the emergency 
procedures card for the first 
time in years, comforted by the 
thought that the incident was 
as rare as it was unwelcome. 

British Midland operates 
more than 52,000 flights a year 
and says it cannot recall the 
last such electrical malfunc- 
tion. It was, said a spokesman, 
a "once in a lifetime experience 
for passengers and crew”. 


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tobatrf service. Whatever name you want to give it Just givens a cd£ \ ' 1 


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FINANCIAL times 


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MONDAY SEPTEMBER 12 1994 



BA relaunches 
Club Europe 


By Pauf Betts 

British Airways will unveil 
today a £70m revamp of its 
Club Europe business-class 
services. 

It is the biggest investment 
BA has so Ear made in the 
European business travel 
market. It comes at a time 
when European business travel 
is recovering from recession 
and airlines are faring new 
c halleng es from the imminent 
Eurostar Channel tunnel rail 
services and from growing 
liberalisation in the European 
angle aviation market. 

In a study of the European 
travel market to coincide with 
the launch of the new BA Club 
Class services, DeAnne Julius. 
BA’s chief economist, notes 
that European air travel 
continued to increase 
appreciably even during the 
last three years of recession. 

Between 1989 arid 1992, the 
total number of passengers 
travelling for business reasons 


in Europe rose by 1&5 per cent. 
Julius forecasts growth of 4.4 
per cent in 1995 and 5.5 per 
cent In 1998 in European 
scheduled air traffic. 

These forecasts take into 
account what BA expects to be 
the likely effects of (he 
Channel tunnel “We expect it 
to divert a portion of current 
city-centre London to Paris 
traffic, but also to stimulate 
additional leisure travel 
between Britain the 
Continent,” she says. 

BA does not expect the 
Channel tunnel’s impact on 
total European air traffic to be 
large. But a number of other 
industry analysts disagree and 
say the start of Channel tunnel 
passenger raU services in 
November is likely to spark off 
a fierce fares war on air. rail 
and ferry traffic. 

BA's chief economist 
believes the European 
economy is on the threshold of 
an accelerating recovery, 
which win clearly have an 



.... n.* 

Aim is to have a greater participation in hits tike Four Weddings and a Funeral (above) 

BBC and Channel 4 
move to exploit rights 


By Raymond Snoddy 

Two British broadcasters, the 
BBC and Channel 4. are about 
to launch significant initiatives 
which emphasise the 
importance of the acquisition 
and exploitation of film and 
programme rights in the 
increasingly competitive 
broadcasting market 
Channel 4 will this evening 
launch its first video label and 
plans to release at least 24 
titles a year under its own 
name . The channel is also 
interested in a joint venture in 
cinema distribution in the UK, 
apart from keeping the UK 
video rights of future feature 
films it invests in under the 
Film on 4 banner. 

The aim is to have a greater 
participation in future in the 
exploitation of films such as 
the current international hit - 
Four Weddings and a Funeral 
The BBC, which has been 
given active encouragement by 
the government to develop an 
international commercial 
b usiness , is joining two private 
investors in a new television 
rights acquisition company 


called Delta. 

The BBC is expected to have 
a 20 per cent stake in the new 
venture which will be run by 
Ann Harris, at present the 
director of co-production in 
London of the Italian-owned 
RCS Films and Television. 

The other two backers of 
Delta are Gartmore, the UK 
Investment fund, and Media 
Ventures, which has stakes in 
Teletext ITV and UK Talk 
Radio, the new national 
commercial station launching 
next year. 

Cohn Leventha], head of 
C hannel 4 International and 
managing director of Channel 
4 Video, hopes that video sales 
will double Channel 4 
International’s turnover over 
the next three years. Last year 
the channel had revenues of 
£llm and profits of EAm on its 
sales operations. 

The video business win 
begin with the launch of five 
titles, retailing at £1299 each. 
They range from three 
Equinox programmes. Fly 
Navy, Spitfire and Space 
Shuttle Discovery to two 
comedy titles, The Most 


Unpleasant World of Perm & 
Teller and Totally Bill Hicks, a 
compilation of the Channel 4 
tribute and his last live 
performance in the UK 

For the Christmas market 
Channel 4 will launch a video 
of Brookside, its regular soap 
opera - nearly half of which 
wUl be new material. In every 
case the channel says it will be 
working closely with 
independent producers who 
provide most of its 
programmes. 

In the past Channel 4 has 
sold video rights on request to 
other companies but only 
about half a dozen titles were 
released. 

Leventhal says he is 
confident that the new venture 
“wUl be a welcome addition to 
the services we offer our 
viewers, while at the same 
time generating significant 
revenues for Channel 4." It will 
also t ake Mm into head-on 
competition with the BBC - 
usually after Disney the 
leading video “sell-through”, as 
opposed to rental label in the 
UK 


Why agents are ‘going global’ 

Richard Waters on the expected deal between American Express and Thomas Cook 


impact on business travel The 
UK is leading the nay, with 
recovery now also finally 
gathering momentum in the 
German and Italian markets. 
French prospects are also 
looking good, she adds. 

The Club Europe revamp 
also reflects the growing 
importance BA is now placing 
on the overall European 
market “The growing 
European air transport market 
is crucial to BA, with Europe 
as a whole, rather than the UK 
alone, now its home base." 
Julius emphasises. 

This shift bas seen BA 
increasing its European Sights 
by 22 per cent between 1991 
and 1993, as well as reinforcing 
its European presence by 
investing in new European 
airline subsidiaries, including 
TAT in France and Deutsche 
BA in Germany. 

BA's Club Europe was 
originally launched in 1988 as 
one of BA's first new branded 
services. 


. A- 


B usiness travel 
agents are getting 
fewer but bigger - 
a fact that will not 
have been missed 
by any company with a size- 
able travel budget. This trend 
towards bigger agencies with 
wider geographic reach (the 
agents like to call it “going 
global") is likely to be con- 
firmed today, with the expec- 
ted announcement that Ameri- 
can Express is buying large 
parts of the Thomas Cook 
travel agency business. 

Alongside the combined net- 
works of the US agency Carl- 
son and the French-based 
Wagonlit, which formed a busi- 
ness travel joint venture ear- 
lier this year, American 
Express will rank as one of two 
agencies with a claim to broad 
reach in both the US and 
Europe. 

None of this is likely to mak e 
much difference to the average 
travelling businessperson. It 
will be noted, however, In the 
travel departments of big com- 
panies around the world as a 
sign of the continuing reshap- 


ing of the business travel mar- 
ket. 

Perhaps erne question above 
lies be hind the latest deal: In 
future, why will big companies 
need travel agents at all? 

These intermediaries tradi- 
tionally have performed two 
functions: collecting and sort- 
ing information (about sched- 
ules, fares and the like) and 
using their size (where they 
have it) to negotiate better 
prices or obtain preferential 
treatme nt for their customers. 

Due largely to advances in 
information technology, both 
roles are under threat Com- 
puters make the job of sifting 
information much easier, as 
well as enabling companies to 
keep better track internally of 
the travel needs of their staff. 
This in turn has has made it 
easier for companies with big 
travel budgets to go straight to 
the airlines to negotiate their 
own volume discounts. 

IBM, for instance, says: “We 
negotiate rates directly with 
some of the major carriers, and 
the agents simply implement 
those [agreements. r Some of 


the biggest US companies - 
including General Motors. 
Merck and Black & Decker - 
want to take this one step fur- 
ther. Through a joint company 
called Business Travel Con- 
tractors, they are proposing to 
pool their buying power to 
force the airlines to give them 
better rates. As part of the 
deal, the airlines would not 
pay any agents’ commissions, 
and would stop issuing fre- 
quent flyer miles to these com- 
panies’ employees. 

I f agents have no role in 
negotiating prices, or 
even the choice of air- 
line, the commissions on 
ticket sales, which form 
the bulk of their income, will 
come under increasing threat. 
The combination of new low- 
cost airlines and a move by 
many companies to reduce 
their use of business-class bas 
brought down the average 
ticket price, with direct conse- 
quences on commissions (a 
standard agent's commission is 
around 10 per cent of the ticket 
price.) 


in this environment, it is not 
surprising to see some consoli- 
dation in the business travel 
agency business. Also, by- 
extending their network geo- 
graphically, the agencies hope 
to increase their value to their 
biggest customers by providing 
information and negotiating 
muscle in overseas markets. 

As in other service indus- 
tries that rely on multinational 
companies for tbeir income, 
the conventional wisdom now 
holds that big is better. “Either 
you need to be a global com- 
pany, or you need to be a very- 
good niche player," says Travis 
'Dinner, president of Carlson. 
“There isn’t a very good 
chance of survival in the mid- 
dle market.'* 

One reason, runs the argu- 
ment. is that big companies 
prefer to use fewer agents. 
“North America is leading the 
charge, followed closely by 
Europe, " says Tanner. 

Is consolidation among agen- 
cies good for the business cus- 
tomer? To the extent that 
being bigger brings down an 
agent's costs (by as much as 


30-40 per cent, says Tanner.) 
yes - though the disruption in 
sen-ice that often accompanies 
takeovers in se trice industries 
may counterbalance this. Also, 
the bigger agents should have 
more power to negotiate lower 
fares in international markets, 
though this is an argument 
that the agents admit has yet 
to be proven. 

Perhaps most significantly, 
though, scale will justify the 
investments in new technology 
that the biggest agents plan to 
make in the years ahead. Con- 
trol of information is the most 
significant factor that is likely 
to justify their continued exis- 
tence over the long term, since 
even the biggest companies 
nil! be able to rival the inter- 
mediaries in the international 
travel markets. 

Facing shrinking commis- 
sions from airlines, the agents 
are already trying to persuade 
big companies that they should 
pay fees for their services. 
Providing a service that 
justifies those fees is the chal- 
lenge for the rest of this 
decade. 


MEDIA FUTURES 


Electronics in the dock 

Kieran Cooke reports on Singapore’s courtroom of the future 


P erry Mason probably would 
not approve. Rumpole of the 
Bailey would hate it. 

Singapore recently 
unveiled its latest high tech- 
nology creation - the so called court of 
the future, dominated by computers 
and video conferencing, rather than 
files and sh uffling clerics. 

Singapore is trying to computerise 
most aspects of government business. 
Now its technicians from the state con- 
trolled National Computer Board (NCB) 
have moved into the court room. 

Though Singapore no longer has a 
jury system, its justice system still 
resembles the old colonial British 
model with judges taking endless notes 
In longhaniC lawyers shuffling moun- 
tainous files, assistants carrying 
weighty legal tomes. 

“The first thing we want to try and 
do is use technology to organise paper- 
work and procedures hi court," says 
Joseph Teo of the NCB. “Everything 
would be digitised, and fed on to the 
judge's computer. The court system 
would become paperless and there 
would be instantaneous transcription of 
proceedings." 

Teo is one of a handful of NCB techni- 
cians behind a scheme called Court 
Vision 2L billed as the most ambitious 
court computerisation, plan under way 
in Asia. 

“In time we want to try and move 
into virtual courts - which would allow 
people the freedom to transact court 
matters from offices and homes." says 
Teo. 

Though this sounds futuristic, similar 
experiments are already under way in 
the US, Canada and Australia. Teo and 
his technicians feel they have an advan- 
tage in ira p ipr flpnHnp such systems in 
Singapore. The island' state is small 
with a population of under 3m. 

Singapore has a high degree of com- 
puter literacy: about 30 per cent of 
households have computers. Ten years 
ago Singapore had only about a thou- 
sand computer professionals. Now it 
has 14,000. The NCB plans to have fibre 
optic cables connected to every home 
and office by early next century. 

Teo demonstrates how a robbery trial 
might take place in years to come. The 
prosecution would he able to present its 
case on a large television screeD 
through using a series of icons describ- 
ing how and when the robbery took 
place. The icons could be animated and 



there would be sound. And, for exam- 
ple. a witness could give his or her 
statement via a video conferencing link 
with Hong Kong. 

IBM and other companies have 
helped NCB come up with the equip- 
ment to make the court of the future 
work. A range of “litigation support 
software" is used to allow the judge - 
who need not necessarily be in court - 
to call up on his personal computer 
both evidkice and exhibits through a 
variety of multimedia tools. 

The court bas access to other com- 
puter aids: “SING" - Sentencing Infor- 
mation Guide System" - allows Instant 
storage and retrieval of documents in 


the form of text, video, image and voice. 

In a jury system, members could, 
while making their decision, have 
instant access to voice testimony, 
exhibits or specific areas of the prosecu- 
tion or defence cases presented. 

Lawyers and judges can also call up 
Lawnet, a database containing Singa- 
pore's laws. All past court decisions 
will also be available through the com- 
puter network. 

The system has several advantages: it 
would be likely to speed up court pro- 
ceedings dramatically. Juveniles would 
no longer have to go through the 
trauma of going to court - they could 
give evidence from their homes. Singa- 


pore is already implementing computer- 
based systems for hearing applications 
for bail, eliminating the time and 
money it takes to bring a prisoner to 
court. 

But there are also some serious reser- 
vations about the system. For one thing 
delivery of testimony via video is not 
now admissible in Singapore's courts. 

The NCB says that the Singapore 
Chief Justice and other figures in the 
judicial^ have been very supportive 
and it is hopeful that handicaps to the 
implementation of interactive courts 
can be overcome. 

T he system, however, asks a 
great deal of lawyers and 
judges. They would not only 
have to be experts on the 
law, they would have to 
become computer technicians as well. 
The clash between one of the world’s 
oldest professions and one of the most 
modern could be a painful one. 

The court of the future might speed 
up the legal system. But digital justice 
could make the judicial system seem 
very inhuman and distant It could also 
make going to court more expensive. 

In many countries the judiciary wor- 
ries that the person with the most 
expensive lawyer has too many advan- 
tages. In the court of the future a defen- 
dant might find he or she not only 
needs a good lawyer, but also that a 
good multimedia presenter could be a 
great asset. 

Singapore's aim is to have everyone 
plugged in to the information super- 
highway. The NCB says that Singapo- 
reans will increasingly use computer 
technology’ to carry out a wide range of 
chores, like shopping or b ankin g. They 
will then have more “discretionary 
time" to do other things. 

Singaporeans are having to accept 
computer technology in many areas of 
activity. In 1996 Singapore plans to 
introduce the world's first electronic 
road pricing system, with motorists 
being automatically charged, through 
an electronic card fixed to their 
vehicles, for driving on certain 
roads 

“People in Singapore are very tech- 
nology orientated." says Teo. "That is 
in our favour as we try to introduce 
multimedia into the courts. The 
changes are bound to bring problems. It 
is a question of taking one trench at a 
time." 


THE WEEK AHEAD 


DIVIDEND & INTEREST PAYMENTS 


■ TODAY 

Bmmer (HP) B.Bp 

Chevron SO. 4625 

Coda Grp. (Up 

Cons Mucftson R0.36 

Fu» Bk M. FK Pwp. Sb. Old. FRN 

SI 4O02.C8 

Honeywo* he. $024 

tnueresk l.B4p 

KawssNd Steel B% Bd 1997 Y6COOOO.O 
KuOOta FRN 1997 YSS562.0 
LSJy (Bf) S 0.625 

MBL Rrv (Curacao) B*>% GW Bd. 2006 

$8750000 

MoM SUSS 

Monsanto So.63 

MSM-i-Sp 

Nippon PaM B.1H Bd. 1997 YB10000.0 


Reuters i.9p 

Sabre I HL (No2) Ser-N Var. Rate Nte. 
1996 Y6234CL0 
DO. Ser.O YS7563-0 

Sapporo Breweries FRN 1997 YB00347.0 
Stanley Loteurrt 3_5p 
Sumitomo Heavy FRN 1998 YS656X0 
Total Bk Nadoriand FIlg/FWi. Rale GW 
Nta. 2004 523787.36 

■ TOMORROW 

Hydro-Quebec 12«% lit. 2015 ££575 
Temeco 80.40 

■ WHMBQAY 
SEP1EM BEH 14 
Adam & Harvey lip 
British Thornton 3Sp 


Brunner Inv. Tat 2.5p 

Chase Manhattan Rt» Rate Sb. Nte. 2009 

SI 34.17 

Cray Beets. ISp 

Goode Durant 18p 

Hong Kong & Shanghai Banking Prim. 

Cap. Und. FRN (Ser^j SB3.B8 

KHn Brewery Y5J) 

Ckjeendsid Treasury 5346 Nte. 1994 
YSSOOO-O 

Rugby Gtd. FRN Dec. 1997 113812 . 78 
Uny 3.796 Nts. 1998 Y82500.0 
Young & Co’s Brewery 9M% Db. 2018 
£4.76 

■ THURSDAY 
8EPTBIB&* 15 
Atlantic Richfield SI. 375 


BankAmerica SO. 40 
Brunswick S0.11 
Butough l.75p 
Carpetrighl 4Jp 

Christiania Barrie FRN 1994 $26033 

Coratoereal Barrie $0.1 5 

CSX 90.44 

DonaSOiZI 

Dover Gorp. $026 

Ednburgti trw. Tst 3.859b Cm. PI. 1.825p 
Eva Grp. Op 

Forte FFtN 1299 £146362 
Gartmore American 11949b Db. 2014 
E5£875 

Genua Fltg. Rats Sb. Cop. Db. 1998 
5221.69 

aacechurch Mortgage Bn. (Na2) Qass A 
Mtg. Befcd. FRN 2028 £1324.19 


Da Class B £1594.25 

Do. (Na3) Class A 

Mtg. Bckd, FRN 2029 £919.11 

Do. Personal Loan (Mai) Class A FRN 

1998 £77395 

Do. Mezzanine FRN 1998 017335 
Guaranteed Export Fin. 1096% Old. Bd. 
2001 £106350 

Hyundai Im. Merchant Bk FRN 1994 
*234.63 

MWtand Bk Hon-Cm. S PC 

SerAi $0355 

Do. S«-A2 S0.0887S 

MJUand tin. Fin. Services Gtd. FRN 1999 

S25&56 

M o rris o n (Wmj Supermarkets 5U9ii Rd. 
PI. 2.625p 

Newcastle Bldg. Scty. 12% 94 Perm ML 


Bra £83.125 
PWanzot S0.75 
PltoerS0.47 

Quebec {Province of) 1214% Ln. 2020 
C&t 25 

Royal Bank of Canada 
Rip. Rata Db. 2085 
5121.38 

St Moduwi Preps 0.5p 
Spinteb FRN Sep. 1999 5111.81 
Sweden (Kingdom of) 9*% tn. 2014 
£487.50 

Thomson Corp. $0,113 
Time Warner 50.09 
Trinova SO. 17 
TRW 5050 
Whirlpool $0305 
Yeoman tnv. TsL S5p 


■ FRIDAY 


16 

Anglo 8 Overseas Tsl i.75p 
Baring Tribune tnv. TsL 1.7p 
Beatrix Mines R0.50 
Border Television 2Jp 
ButfeisRI.40 
Creightons Naturally 5.5p 
Bandsrand RD.-MJ 
GnxnvlBl R(L2S 
IWP InL IR4.75P 

Leeds Permanent Bulk! Soc. FRN 1998 
£133.90 

LeoSe R0.30 

JJowte Bnk Ser.C Var. Rate Sb. Nte. 1990 
n 40.84 

Louisiana Land & Expto. SO 25 
M & G Recovery Inv. TsL OilSp 


Do. Geared Unite 0J35p 
Do. Package Units O.B5p 
Northern Foods 5.3p 
SL Helena Rl. 55 
Shanthnck D.43p 
Southvaal R2.15 
Spotpo Consulting i.6o 
StMoreeti Ro 75 ' 

SiiTutomo Chem. FRN 1997 
YS9416.0 

Trans-Natal Coal RO 57 
Treasury LL 1966 
E2.09 

Unteal R0.20 
Vaai Reals H7.20 
Western deep R2.75 
IVlnkefcnak Rl.30 
Whan tnv. 2.7p 


UK COMPANIES 





■ today 

COMPANY MEETINGS 
British Biotech. Merchant Taylors Haft 
30, Threadneedte Street, EG.. 1030 
BOARD MEETINGS: 

Finals: 

Castle Comma 
Darigaty 

Dowdng AMU* 

HI 

Kan»-S*op® Fo, 

P e rpnt i si 1 nn "**— " llw - 
Plot PatrolaiBn 
SaoHid AMmce 7 al 
I nterims: 

Amay 

Aspen Comma 
BtotroceM. 

Brtdsli Potythann 
CandoMrkML 
DswNret 
ESS 

Forth Port* 

Haonhcail 
Jupiter TytridsB 

Utterly 

Merchant* T«L 
Murray Ewo Inv. Tat. 


Pencil agon 

Interims: 

Select Appohtfmerts 

Barton 

Sharp* & Fisher 

Baynes 

Singer A Frtedtonder 

Btogdan bids. 

Thafland M. Fd. 

Bloomsbury PubHsHng 

UK Safety 

Caratfan 

Oaf iwmt Gar monte 

■ TOMORROW 

Clyde Patrolman 

COMPANY MEETINGS: 

Co-OpeFtidva Bank 

Bratxwr Index, New Lodge, Drift Rood. 

CraateCsra 

Windsor. Berta, 430 

Croddords 

Cray EtoettM The Brewery, CNswd 

Cusslna Property 

Street EC.. 1130 

DRSDate ft Research 

Beetatm House. 17. Bnwieads Road, 

Delta 

Raigste, Suncy, 12.00 

ESC 

Qbba Maw, The Grange, Grange Road. 
NrWey. Southampton, 230 

Cyeoare Produota 

FBDHMgs. 

Matthew Ctnric, Clock House. London 

FWay (James) 

Road, Ctoadford, 9JX) 

Fbwns 

MM-SMH, Ludgate House, 245, 

Ftamlng Overseas Imt TaL 

EHacfcfriara Rood. S.E.. 3.00 

Klngltsher 

WbrWngton, 199-205, Old Maryiebone 

Lspax 

Road. N.W., 11.00 

Mgyborn 

BOARD MEETINGS: 

North Atlantic SmaBar Co's 1 

FtodK 

Owen & Robinson 

Conrad RttblM 

PftO 

Doowsdc ft General 

Pariutaan Letem 

Gartmore Beodand In*. Tst 

Tailor Woodrow 

Ushor (Frank) 

Trtotty krt. 


lltd. Friendly 

Wsbnowghs 

Wyevate Qardan Centres 
■ WEDNESDAY SEPTEMBER 14 

COMPANY MEETINGS: 

AIM Grjl, New Ccmaught Rooms, Great 
Quean Street. W.C, 12.00 
Adam ft H a rve y , 15-16. Bonhfil Street. 
E.C., 1030 

Courts, 1604. Hear Street. ECw 11.00 
Dwfloy JsnJdna, 2A, Southwark Bridge 
Offiea VBaga. Thnde Street. S.E. 10-30 
BOARD MEETINGS: 

Pj pjfip 

BZW Com. Inv. Tat. 

F ft C High Ina. Tst. 

Uncat 

WypJpa 

Interims : 

Angara 

Arlan 

Aasoc. British Port* 

Btenhebn Grp. 

Cafad 

Cater 

DevTo lnl. 

EngBsh China Ctaya 
Era 


Kteortald 

Makwrort Smdar Cote bn. TsL 
Lambert Hmaih 


London Formatting 
Mddtaasc HU0S. 


Prudential 

Roshal 

Hoxbare 

Rugby Estates 

Savoy Hotel - 

Stat-Pfcte 

Try 

Vartan 

Wooddiester bw. TsL 

■ THURSDAY SE PT EMB ER 15 
COMPANY MEETINGS; 

Border Tatovteton, Television Centra, 
Cartels. 12.00 

FMi Teams. Gateshead. 1030 
Gibbon lyonB. 22. Coleman Helds. N., 
12-00 

Hratewood Foods, Assembly Rooms. 
Derby. 12.00 

London InL Box. G r oavenor Home 
Hotel Park Lane. W., 930 
MH FUrnitm, Ctiarwrsd Accountants 


Hail. Moorpate Place. EC.. 11-00 
MfTIE, Stable Block, Barley Wood. 
Wrnipton. Avon, 12.00 
Mays, Watermens Han. 16. Sl 
M ary-nt-HO. EG-, 1300 
Prior, Crusader House. 14. Pan Mall, 
S.W., 10.00 

Tlphook. RAC Oufa, 89, Pal Malt, S.W.. 
1030 

Untpelm, Trinity Centra, Cambridge 
Science Park, Cambridge, 1030 
Wbitrust, 2l. Cofiaga HU. E.C.. 12.00 
YUM, 24. Bruton Street. EC.. 1230 
BOARD MEETINGS: 

Fhutei 

Cats 

East German in*. Tel 

bid. Contra! Services 

Logics 

Prtnmtena 

Srilar 

Interims. 

APV 

AppSed Dwtribtitton 
Bartews 
Beauford 
Booker 

■* -m-L. 

nnun iwonon 

Comp. Fin. Sokfllom 


Courtauids TnxtSes 
Crean (James) 

Pollute 
Jackson Grp. 

Lewis (John) 

KwfeRt 
Legal A General 
Mrror Grp. 

SOU 

SwaUowfleid 
Wd. Btacirits 

Warrant* 0 Value Inv. Tst. 

Whatman 
Wood (Arthur) 

■ FRIDAY SEPTEMBER 18 
COMPANY MEETINGS: 

Andrews Sykes. 373-379. Dudley Road, 
Wolverhampton, 230 
Hampson I rids, Copthwne Hotel. Many 
H*. Brteriey HB, W. MkUonde. 12.00 
Radtent Metal Finishing, 09, Fairfield 
Road. Bow, E.. 1030 
Ransom (Wm), 104. Bancroft. Hitchn. 
Hens.. 3.00 

Taunton Cltter. County Hotel. East Street, 
Taunton, 1030 

Tomkins, Four Seasons Hotel. Hamiton 
Place. Park Lane. W.. 1130 


Tops Estates, 77. South Audey Sireer, 
w.. ii.oa 

Unit Gtfh, WJtermena Hal. J& Sl 
M nry-m-Hil. E.C.. 12.00 
BOARD MEETINGS: 

Finals: 

SaUey (Cffl 
Expteura tfldgs. 
i mentis: 

Aran Energy 
BnmtcSffe Aggregates 
Elys (Wi m bl e don) 

Find Earth 

Hamby 

Keller 

MacaBan-GlanRvet 

Midland Indepen de nt Nowspapors 

Next 

CHS tot Inspection 

Cwwany meeongs ore annual gemMl 
meetings unless otherwise stared 
Please note: Reports and accounts are 
no> narmaBy avaBable untl appro umaiefy 
six wsaks otter the board moating to 
approve Vie preunmary remits. 




The head who saw off Patten 


As schools return for a new academic year, Joan Clanchy tells John 
Authers that, while she regards league tables as ‘good clean fun', she 
drew the line at controversial English tests for 14-year-olds 


CA 


1 


Conde accuses 
establishment 


The maverick financier, who 




J oan Clanchy, headmis- 
tress of the North Lon- 
don Collegiate School, 
has had fame thrust 
upon her in the past 
two years. She can lay 
the blame at the the feet of the 
government and its spasm Of 
education reforms. 

Until two years ago, she and 
her school almost seemed to be 
going out of fashion. A tall 
Oxford-educated Scot, she took 
over as head of North London 
nfae years ago having previ- 
ously been head of St George's 
School, Edinburgh - another 
traditional girls’ schooL 
A keen academic historian, 
Clanchy was then best known 
only as one of the most impos- 
ing figures in a girls’ school 
movement increasingly threat- 
ened by the decision of some 
boys' schools to go mixed, and 
as a pragmatic educational tra- 
ditionalist. 

With this reputation in 
mind, ministers appointed her 
to the National Curriculum 
Council, the quango which 
administered the new curricu- 
lum it was imposing in all the 
state schools of England and 
Wales. 

Now, Clanchy starts a new 
school year as head of a school 
still bathing in positive public- 
ity, thanks to its mighty show- 
ing in exam result league 
tables; it was top of the FTs 
table for girls’ schools last year 
and this. Meanwhile, the new 
education secretary, Gillian 
Shephard, has introduced a 
radically reformed package of 
tests following a revolt by the 
teaching profession in which 
Clanchy was seen to take a 
leading part It accounted for 
the political head of Shep- 
hard’s predecessor, John Pat- 
ten. 

Ironically. Clanchy disap- 
proves of the league tables 
which have showed her school 
to perform prodigiously. Like 
most teachers, her first con- 
cern is for individual pupils, 
and she is alarmed by the dis- 
traught reactions from girls 
who managed “only” a B in 
their GCSE exams ~ league 
tables now reveal that 8L5 per 
cent of the GCSEs taken at 
North London Collegiate last 



term resulted in A-grades. 

Unlike many independent 
school headmistresses, she has 
experience of the state sector, 
having started her teaching 
career at a comprehensive, and 
is quick to admit that North 
London is very privileged. 

Set in beautiful buddings on 
the edge of an Edgware park, 
the school is heavily over-sub- 
scribed, and she therefore has 
the luxury of being able to 
select pupils, interviewing par- 
ents as well as their daughters. 

She also treats the welter of 
positive publicity for girls’ 
schools which the tables have 
triggered with amusement: 
“League tables.” she says, “are 
good, clean fun, but they don’t 
necessarily show that girls’ 
schools are particularly won- 
derful. What they might show 
is that 16-year-old girls work a 
lot harder than boys." 

The truly interesting phe- 
nomenon, for her, is girls’ pre- 
vious under-performance, not 
their more recent improve- 
ment She points out that girls 
now out-perform boys by a 
wide margin at GCSE at both 
single-sex and mixed schools, a 


disparity which is widening 
every year. 

She believes this is a social 
circumstance: “Girls, particu- 
larly those of middle-ranking 
academic ability, now believe 
that they have a real chance of 
entering a career with their 
academic qualifications, and so 
they are working for them.” 

And she attributes this to 
girls’ “constant lack of confi- 
dence”. 

On this reading, the case for 
single-sex education does not 
rest on league tables. Instead: 
“The big argument far single- 
sex education is that you don’t 
have to conform to gender 
stereotypes. That’s not just in 
science and maths but in 
behaviour generally.’’ 

North London Collegiate con- 
forms to enough stereotypes to 
show that it has not lost touch 
with its traditions. Chris wear 
uniform until the sixth form, 
when most of them choose to 
dress smartly in any case. 
Many play hockey. Standards 
of disciphne seem Mg h enough 
to satisfy any parent, and the 
girls treat teachers - particu- 
larly Clanchy herself, just 


turned 55 a dominant fig- 
ure standing around six feet 
tall - with obvious respect 

But it has shed enough ste- 
reotypes to move with the 
times. The student body is 
almost as ethnically mirari as 
its neighbours in the state sec- 
tor. partly thanks to the gov- 
ernment’s assisted places 
scheme for children from low- 
income families. 

Cooking has been dropped in 
favour of craft, design and 
technology. Girls are offered 
the rimm* to run their own 
companies as part of the 
Young Enterprise scheme - 
"selling each other junk” as 
Clanchy cheerfully describes it 
- and this year’s most popular 
A-levd subject was maths. 

Most North London Colle- 
giate girls seem boisterously 
self-confident, and obviously 
expect to take on a challenging 
career when they graduate. 
Thus the school’s role under 
Clanchy is, if any thing , to chal- 
lenge stereotypes. 

One of these is that maths 
and sciences are a male pre- 
serve, and Clanchy points out 
“It used to be that Latin and 



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Greek were the ultimate mea- 
sure of cleverness. Now that 
women do much better than 
men at those subjects, all the 
attention has stifled to the sri- 
ences." 

Views like this explain why 
Clanchy is a popular figure 
among other girls’ school head- 
mistresses - in great part due 
to her opposition to the Intro- 
duction of national curriculum 
tests for 14-year -oWs. 

In March last year she fired 
off one of bee first shots: “The 
more we learn about the tests 
the more insensitive, bureau-, 
e ra tip and absurd they seem. 
My school, like an the others 
at the top of the league table, 
will not be doing them.” 

To niakfi her point dearer, 
she then resigned from the 
National Curriculum Council. 
This decision, she later told a 
sympathetic audience at the 
Girls’ Schools Association, had 
only been taken after several 
late nights agonising in her 
kitchen. 

In her resignation letter, she 
told Patten: “The dominant 
aim has become a curriculum 
designed for tests, and the 
result is a model of Ftn gHsh 
teaching which is barren and 
anti-intellectual. It Is almost as 
if there is a determination on 
the part of the council to pick a 
fight with Bn glfch teachers." 

It was as if, she said, "the 
Highway Code had been nar- 
rowed down to instructions on 
the threei»int turn”. 

Until then, Patten had 
assumed that objections to 
testing were restricted to a 
handful of ideologically moti- 
vated teachers’ union activists. 

Heedless of COanchy's warn- 
ing, he chose to battle on, 
believing he could beat the 
teachers in the battle for pub- 
lic opinion. He was wrong. 

She treated this with icy dis- 
dain. Like many in the educa- 
tional profession she felt he 
should have been relieved of 
his post at least a year earlier 
than he was, and referred to 
him as “the Great Unshuffled” 
- a nickname that was to 
become very popular in the 
teaching profession. Shephard 
would do well to pay her more 
heed. 


Hans de Gier 
to get Asian 
experience 

In the past couple of years. 


become a power in London 
investment hanking and 
solidified its position in the US 
with a couple of eye catching 
acquMtions, writes Ian 


Now Hans de Gier, one of the 
SBC directors who has been in 
tin thick of these 
developments, is off to 
Singapore to assess how the 
bank can build up its relatively 
small business in the fast 
growing Tar East 

Is he being sidelined in 
favour of his long-time partner, 
Marcel Ospel, at the top of 
SBCTs international business? 
Not at alL Promotion comes 
with the job - to deputy group 
chief executive, a uniquely 
elevated position for a 
non-Swiss (de Gier is Dutch) in 
a big Swiss bank. "We feel Asia 
is the most exciting part of the • 
world, and we have to build a 
meaningful presence there, so 
we need a commitment at 
senior level," says de Gier. 

But it does not sound as if 
the bank will be making the 
kinds of brash move there that 
it has in London and the US. "I 
know Asia very superficially. 
My job will be to listen 
carefully,” de Gier says. 

In fact, he has already made 
waves in the region, poaching 
most of the equity research 
staff from WJ. Carr in Tokyo 
and Hong Kong in 1986 for 
SBC. "We want to strengthen 
our product base and 
distribution and build a quality 
investment batik,” he says. 

de Gier, 49, who joined SBC 
in 1980 along with two other 
Orion Bank colleagues, is less 
forthcoming about the career 
im plications of the move. “I am 
exdted about Asia per se. I am 
not taking it for internal career 
reasons.” But he makes clear 
that be does not expect to stay 
forever in the Par East 


dismissed by the Bank of 

Spain last December as 
riwjffnan of BanCO ESp&fiOl de 
CWdito, alleges in a book to be 

launched today that he was 
the victim of an establishment 
plot writes Turn Burns. 

Those who lost a lot of 
money in Conde’s funner 
institution, Spain’s fourth 
largest bank, including US 
hackers of a JJf. Morgan fund 

which invested $175m just 

over a year ago in a Banesto 
rights issue, might want to 
know how it was that Bank of 

Spain inspectors discovered a 
$3J5bn over-valuation of the 
bank’s $61bn assets. 

But El Sistema, which was 
written at Conte's ranch in 
southern Spain and aboard Us 
yacht in the Mediterranean, is 
about dark politics - not 
shadowy auditing. 

Son of a customs official and 
adever lawyer tamed 
businessman, Conde was a 
rank outsider to banking in 
1087 when he and a friend sold 
their pharmaceuticals 

company AntUdoticos for 
1481m, and then used their 
proceeds to buy themselves on 
to the Banesto board. 

On becoming chairman 
weeks later, Conde, aged just 
39, fought off a hostile 
takeover attempt and. 
proceeded to enlarge the bank 


Berlusconi, plans a 
countrywide lecture tour m 
which he will argue that 
Spain's sistenta. needs a 
shake-oat similar to the one 

Italy has undergone. 

Conde’s self-evident 
ambitions a re unlik ely to 
impress high court 
magistrates who are currently 
sifting evidence on bis 


Kidder shrugs 
off the axe 


conducting. In the process, a 
wholesale reorganisation of its 
widespread industrial assets. 

Conde (below) claims he fell 
foul not just of the network of. 
traditional families wbo had 
run Banesto for generations, 
but of Spain’s sistema, the 
establishment, which he found 
forking In the Bank of Spain, 
in the finance ministry and hi 
the influential El Pals 
new s paper group. “I found out 
how real power works in 
Spain and that is what I want 
to explain,” says Conde. 



While the rest of Wall Street 
waits for the axe to fell at 
Kidder Peabody, the troubled 
investment bank has been 
busy making senior 
appoint ments which suggest it 
is exploring ways to make the 
business grow, rather than 
shrink, writes Richard Waters. 

Last week, the General 
Electric subsidiary said it had 
created a new worldwide 
business development job for 
Michael Madden. The move 
effectively puts the Long-time 
investment hanker in line to 
take over as Kidder's number 
two next year, when GE hopes 

to draw back from the direct 
control it currently exerts. 

Madden, 45, was head of 
Kidder’s investment banking 
for three years until 1988, 
when he left - apparently, over 
a leadership tussle - for 

Brothers. He rejoined 
Kidder last year, ami has now 
been given the rather 
grandiose title of head of 
global origination - making 
. him respomdble for drumming 
up business for the hank fr om 
companies looking to raise 
money in the capital markets. 

At the sanm tbne, Kidder 
said it had appointed Norman 
Uu as managing director in. 
charge of business 
development. Iiu comes across 
from GE Capital, and part of 
his job will be to find ways of 
creating new business between 
his former employer and. 
Kidder. In the past, the two . 
financial firms have had a 
stand-off relationship. 

Despite these moves, though, 
rival banks continue to expect 
significant cost-cutting at - 
Kidder. The revelation earlier 
this year that 

previously-reported profits of 
S350m. woe fictitious - a feet 
that Kf drier has blamed on 
former bond trader Joseph Jett 
- has highlighted the hank's . 
disproportionately large coat 
base and overdependence on 
one area: mortgagehacked 
bonds. 






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FOR THE SAKE OF THE CHILDREN 

WE GAVE THEM A NURSERY. 




Lite 

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cluigP' ' 




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FINANCIAL TIMES 




f 


MONDAY SEPTEMBER 12 1994 


1! 


A R T S 



LONDON 

COLISEUM 

The 1994/5 season 
-opens tonight with 
a new production 
of Puccini's 
Toscs*. Rasafind 
Plowright Qefl) 
returns to the 
London Coliseum 
for the title-rote 
and tfta conductor 
is Alexander 
• Gibson. Whatever 
else he may do. 
the producer Keith 
Warner Is unfficely 
to set this Tosca” 
in fascist Italy, like 
its predecessor. 



WARSAW . 

The Waraaw Autumn ' 

contemporary naafofastivai, 
opening on-Thureday, offers 

tributes to three recently 
deceased RtSshcomposers- 
WitoU Lutgefawskf deft}, Andrzej 
Panufnflcand Roman Hauberatodc--. 
RsmatL Panted in 1866, the 
festival has emerged from the 

. wcfeaftude* of the past' decade with 
renewed vigocr end a brooder 
international outlook. Bright Sheng 
and Magnus Unt&erg are smongthfe 
year’s foreign com posers, 'and the' 
line-up of performora Indudea Anne- 

SopWa Mutter. 

LYON 

The prastigloua Dance Biennale starts tomorrow With the theme of 
“Mama Africa". The Dance Theatre of Hartem/The AMn Afley 
Gompafiy, and other danca troupes will be on view Jn a two week - 



LYRIC THEATRE, LONDON 

Nefl Bartlett, know for his theatrical use 
of camp, launches his now regime as 
artistic (Srectar of the Lyric Theatre. 
H&rnmwsmtth with a new staging erf The 
Picture of Dorian Gray. The cast includes 
Benedick Bates (left), son of Alan Bates. 


GENEVA 

Hugues Gars final season as director oi 
, the Grand Theatre opens tonight with a 
new production of Mozart's ldomeneo H , 
staged by Christopher Aldan and 
conducted by Armin Jordan. Gait's 
enlightened pofldea have enhanced 
Geneva's operatic reputation over the 
past 14 years. He now faces a much 
bigger chaBenge as he prepares to move 
to tha Paris Opera . where the Chung 
affair has given him a taste of battle® to 
come. 



MADRID 

The Fundado ta Caixa marks tha 50th anniversary of the deaths of 
Kandinsky and Mondrian with an exhblUon at its Sala de 
Exposicionea. opening an Friday. Emitted Two roads towards 
abstraction", the show alms to tHuatrate the parallels and 
differences in the stylistic evolution of two pioneers of modem art. 
It indudes loans from public and private collections around the 
world, and will move to Barcelona in November. 


Literature 
turns over 
an old leaf 

Jackie Wullschlager looks at 
changing attitudes to the novel 




I t is a sensational shortlist: a 
bestseller about love and hyp- 
notism, a blockbuster about 
battles and brides in Ruri- 
tania, and a pornographic 
shocker about teenage sea and baby 
murder so explicit that only an 
obscure Newcastle publisher would 
risk printing it Out are the emi- 
nences gris of Victorian letters - 
novels by Thomas Hardy and Mrs 
Humphry Ward, who advised Glad- 
stone and Roosevelt, didn’t make 
the grade. 

This week the shortlist for the 
hypothetical 1894 Booker Prize will 
be announced by six judges, includ- 
ing biographer Victoria Glendin- 
ning and broadcaster Melvyn Bragg. 
They have avoided dull and worthy 
classics and chosen six books which 
stirred the fin de siecle world and 
remain compelling today: George du 
Marnier's Trilby, Anthony Hope's 
The Prisoner of Zenda, George 
Moore’s Esther Waters, Kipling’s 
Jungle Book, George Gissing’s In 
the Year of Jubilee and RL Steven- 
son's The Ebb Tide. The winner will 
be revealed on October 15 (four days 


after the 1994 Booker Prize cere- 
mony) at the Cheltenham Festival 
of Literature. 

like today's Booker Prize, it is a 
publishing gimmick; Everyman, 
which is backing the spoof award, is 
a significant publisher of classic 
Victorian novels. But the retrospec- 
tive Booker is also a fascinating 
exercise in historical reconstruc- 
tion. It raises questions about how 
the relationship between literature 
and society has changed in the past 
100 years. 

First, the similarities. A good 
yam is a good yam. Of the 1894 
books, Trilby is the tale of a 
tone-deaf model who sings like an 
angel when mesmerised by the sin- 
ister hypnotist Svengali, then 
croaks like a crow when he dies 
during one of her concerts. The 
Prisoner of Zenda tells of an 
Englishman impersonating the 
King of Ruritania ami rescuing him 
from demons. On the 1994 list 
Romesh Guneskera’s Reef is about a 
Sri Lankan servant boy and his 
mysterious master, while Jill Paten 
Walsh's Knowledge of Angels re-en- 


acts the wolf-child legend. AH the 
books on both lists are gripping sto- 
ries. 

The lists share key themes. Both, 
for instance, have books about colo- 
nial exploitation - Stevenson's The 
Ebb Tide and Abdulrazak Gumah's 
Paradise , which is set in the First 
World War in German East Africa. 
Both provoke in similar ways. 

The controversial books of 1894 
were Trilby, with its louche vie boh- 
eme milieu, and Esther Waters, in 
which a 17-year-old girl is seduced, 
impregnated andoffered the services 
of a professional baby killer for a 
fiver. It is now seen as Moore's best 
work, but in 1894 it had problems 
finding a publisher and the power- 
fill circulating libraries refused to 
take it 

A century on, the relationship 


between fictioo and sexual morality 
remains vexed. Last week, a Times 
critic complained about the inclu- 
sion of Alan HoUmgjhursfs candid 
novel of homosexual love. The Fold- 
ing Star, on the Booker list, because 
it offended Judaeo-Christian ethics. 

But even if Hollingfaurst wins the 
Booker, his novel will not become 
the succes de scandale of Esther 
Waters and Trilby, which became 
the bestselling novel of the 19th 
century. For the great difference 
between then and now is that in 
1894 a Booker Prize was not needed 
to sell fiction. 

Today, we accept the gap between 
literary writing, such as Hollin- 
ghursfs, and popular bestsellers by 
writers like Jeffrey Archer and Bar- 
bara Cart Land. This is the gap the 
Booker tries to bridge by giving 


high-level publicity to works which 
would not normally reach a mage 
audience. The trick works - last 
year’s winner, Roddy Doyle's Paddy 
Clarke Ba Ha Ha sold 380.000 hard- 
back copies. Before the short-list 
was announced it sold 10,600. 

The Victorians, in contrast, were 
lovers of contemporary fiction. Nov- 
els accounted for 20 per cent of pub- 
lished books, and no distinction was 
made between high and low art In 
the mid 19th century, Dickens made 
£12,000 for Little Dorrit, the equiva- 
lent of nearly £400,000 today. 
Between 1881 and 1894, when the 
population of the UK was half that 
of today and the literate population 
smaller still, Mrs Henry Wood's 
East Lynne sold 400,000 copies. All 
the 1894 Booker writers were popu- 
lar names; they were also serious, 
skinf ul writers whose books can be 
reread with pleasure 100 years later. 

Why was fiction so much closer to 
the public heart in 1894? Social, cul- 
tural and psychological reasons 
play a part Socially, the 1890s read- 
ing public was a vastly more 
homogenous group than today, a 
small number of middle class 
authors wrote for a middle class 
audience at a time when to be liter- 
ate was to belong to an elite. The 
idea of a two-tier, up and down-mar- 
ket fiction was irrelevant Cultur- 
ally, these writers and readers were 
certain of their place in the main- 
stream, and the novel was their 
political and intellectual forum. 

Today we no longer share the Vic- 
torian confidence in the novel as a 
key genre of our age. Modernism 
and the overturning of the tradi- 
tional form by Joyce and Woolf 
weakened 20th-century belief in the 
novel and encouraged the diver- 
gence between highbrow and low- 
brow. The dominance of film and 
television has made novels a more 
marginal form and perhaps they no 
longer attract the most creative tal- 
ents. George du Maurier originally 
offered the outline of Trilby to 
Henry James, who he thought 
would write a better noveL Today 
du Maurier would have sold it to 
Hollywood or the BBC. 

The fantasy element of fiction, in 
which we identify with characters 
as if we know them, was answered 
in the 19th century by the novel; in 


. «>» - -“X. 

the 20th century we have TV soaps. 
Just as the tabloid newspapers fea- 
ture characters from EastEnders, so 
when Dickens' The Old Curiosity 
Shop was running as a serial there 
was widespread press speculation 
on whether Little Nell would die, 
and readers wrote in begging for 
her to be saved. Sentimentality, 
accessibility, topicality - what char- 
acterises today's soaps were clear 
features of the novel in 1894. Both 
in the Year of Jubilee and Esther 
Waters, for example, centre on the 
burning 1890s debate about mar- 
riage. feminism and the “New 
Woman", yet both are also tearjer- 
kers which everyone enjoyed. 

The 1894 books are compelling 
because they prefigure our own 
times and yet are set bade from 
them. Trilby is a tale of hypnotism 
and the unconscious a decade away 
from Freud; The Ebb Tide paved the 
way for Conrad's Heart of Darkness 
and the first questioning of colonial 
oppression. 

It is unlikely that the 1994 Booker 
choices will speak as eloquently of 
new trends today. Whereas the 1894 
titles had contemporary settings, 
many of the 1994 books are histori- 
cal (such as Paradise) or are driven 
by nostalgia (such as Beside the 
Ocean of Time). Which book will 
win on October 15? Stevenson will 
get the sympathy vote because he 
died in 1894 in Samoa, the setting of 
The Ebb Tide. Jungle Book will get 
the retrospective vote, because it is 
the best-known today and has fash- 
ionable mythic overtones in the lost 
paradise of Mowgli’s jungle; its posi- 
tion on the list may also rescue it 
from schmaltzy Disney associations 
and confirm it as a serious novel 
about a young man’s self-discovery. 

My vote goes to Trilby. Soft-focus, 
ideologically shaky - in its anti-Se- 
mitic portrait of Svengali - and 
sometimes sloppy, it is a story of 
demonic possession and haunts the 
imaginatio n lik e a fairy tal a long 
after better-written works have 
faded from memory. Like Rebecca, 
the popular novel by du Maurier’s 
granddaughter, it is a natural 
equivalent or what the current 
Booker Prize seeks to create: a com- 
bination of the classic and the 
bestseller. 


The Proms 

Terfel rules 
on the 
last night 

The Proms are an 
equal-opportunities employer. In a 
splendid break with tradition, the 
solo singer invited to deliver the 
classic anthem for the Last Night of 
this hundredth Prom year was not a 
woman, but a man. And not just 
any male opera singer, but the mar- 
vellous Bryn Terfel. Music is not 
the main point of the Last Night, 
and the excited Prom audience had 
been loud with coughs and popping 
balloons through the opening Bach 
and Vaughan Wil liams items - but 
from the moment Terfel began his 
first solo in Walton's Belshazzar's 
Feast he commanded hushed atten- 
tion from the entire Albert Hail. His 
diction alone is compelling; and 
then there is the vibrant firmness o£ 
his bass-baritone voice, even finer 
when singing quietly than in full 
volume; plus the fact that you never 
see, or hear, him breathe. All this 
had the Pro turners in thrall; Terfel 
tamed the beast 

For Rule. Britannia!, he returned 
in Welsh rugby fan uniform. Within 
this mighty young lion, there is an 
impish boy; just as within his rhe- 
torical sternness there is a contem- 
plative lyricist, and within his 
life-giving openness there is a 
brooding darkness. All these con- 
trasts make him fascinating. 

The conductor, Andrew Davis, 
handled this loaded occasion - 
including his speech - with a per- 
fect blend of concentration, 
humour, and panache. There is a 
sense of conspiracy for these events 
that makes the standing Pro miners, 
with their chanted messages, part 
of a special community with the 
BBC Symphony Orchestra, the BBC 
Singers, and the BBC Symphony 
Chorus. That everyone playing the 
music well matters not quite so 
much as the way everyone joins in 
the unison ritual sways and 
bounces. Still, I must record that 
two other soloists deservedly won 
the Pro miners' cheers and respect; 
Evelyn Glennie, the ebullient solo- 
ist in Paul Cres ton’s Concertino for 
Marimba, and Michael Davis (the 
BBCSO's leader) whose solo violin 
led the famous Meditation from 
Massenet's Thais. 

Flags of all nations were waved; 
and “Care For the World" T-shirts 
were worn as well as boaters, hel- 
mets. and Union Jack bowlers. This 
year’s chutzpah prize must go to 
the group who waved - during 
“Rule Brita n n ia ", can you believe? - 
a banner reading “Schleswig-Hol- 
stein Musik Festival". But the musi- 
cality prize goes to the standee who 
held a heart-shaped balloon aloft 
during the Thais Meditation. Dur- 
ing the final phrase, exactly as the 
solo violin took another ascent into 
the empyrean, he let his balloon 
rise another yard towards the dome 
above. 

Alastair Macaulay 



1 1 Interna t/onal] | 

Ari 

rs 

GlJI 

DE 



■ BERLIN 

OPERA/DANCE 

Komische Oper The main event this 
week is the premiere on Fri of a new 
production of Berthold 
Goldschmidt's Dor gewaltige 
Hahmei. staged by Harry Kupfer and 
conducted by Yakov Kreizberg 
(repeated Sep 18, Oct 7, 14. Nov 
13). Repertory also includes 
Ccppefla, Le nozze di Figaro and 
Les Contes d'Hoffmann (229 2555) 
Deutsche Oper Christa Ludwig bids 
farewell to the Berlin stage tomorrow 
with a song recital accompanied by 
Charles Spencer. Artbert Reimann's 
1992 Kafka opera Das Schloss can 
be seen on Thurs and Sun, and Julia 
Varady stars in Un balk) in maschera 
on Sat (341 0249) 

Staatsoper unter den Linden 
Rudolf Nureyev’s production of 
Glazunov's ballet Raymonds can be 
seen on Sep 17, 22. 23, 27 and 29. 
A new production of Rossini's 
Taneredl opens on Sep 25 (200 
4762/2035 4494) 

Hebbel-Theater The Staatsoper 
presents Rorian Leopold 
Gassmann's L'opera seria tomorrow, 


Fri and Sun, In a production from 
the Schwetzlngen Festival 
conducted by Ren6 Jacobs and 
staged by Jean-Louis Martinoty. The 
cast Is headed by Renato Capecchi, 
Robert Gambill, Jeffrey Francis and 
Janet Williams (200 4762/2035 4494) 
CONCERTS 

PhRhamiorae Tonight Vladimir 
Ashkenazy conducts Berlin Radio 
Symphony Orchestra in works by 
Barthold Goldschmidt and Mahler. 
Tonight (Kam merm usiksaal): Ftadu 
Lupu piano recitaL Wed, Thurs: 

Pierre Boulez conducts Berlin 
Philharmonic Orchestra in Webern 
and Debussy. Fri: Heinz Holliger 
conducts Ensemble Modem in 
Holiiger’s Scardaneffl cycle. Sat 
Michael Gieten conducts South West 
German Radio Orchestra and Berlin 
Radio Chorus in Beethoven's Ninth 
Symphony. Sun afternoon: Anatoi 
Ugorski piano recital. Next Mon: 
Maurizio Pollini (2548 8132} 
Schausplettiaus Tomorrow: Michael 
Schoenwandt conducts Berlin 
Symphony Orchestra In works by 
Webern, Schubert/LEszt and Berlioz. 
Wed, Thurs: Fabio Lutsi conducts 
Berlin St&atskapefle in a Mahler 
programme, with tenor soloist Peter 
Schreier. Sat, Sun, next Mon: 
Emmanuel Krlvine conducts Berlin 
Symphony Orchestra in Brahms aid 
Musorgsky/Ravel, with piano soloist 
Gerhard Oppitz (2090 2186) 


■ NEW YORK 

THEATRE 

• Philadelphia, Here ! Cornel: the 
first Broadway staging since 1966 of 
Brian Friers drama about the rocky 
relationship between lather and son 
in rural Ireland. MUo O’Shea is the 
father, and two actors play the son 


about to head for America: Robert 
Sean Leonard is Gareth In private, 
and Jim True is Gareth in public. 
Directed by Joe Dowling. Just 
opened (Roundabout, 1530 
Broadway at 45th St, 869 8400) 

• Angels in America: Tony 
Kush Mar's two-part epic conjures a 
vision of America at the edge of 
disaster. Part one is Millenium 
Approaches, part two Perestroika, 
played on separate evenings. The 
cast Includes F. Murray Abraham 
(Walter Kerr, 219 West 48th St, 239 
6200) 

• Three Tall Women: a moving, 
poetic play by Edward Albee, 
dominated by the huge, heroic 
performance of Myra Carter. She, 
Jordan Baker and the droll and 
delightful Marian Seldes represent 
three generations of women trying to 
sort out their pasts (Promenade, 
2162 Broadway at 76th St 239 
6200) 

• An inspector Cahs: Stephen 
Dakiry's stunning re-Merpretation of 
J.B. Priestley’s psychological thriller, 
in a production first staged at the 
National Theatre in London. Winner 
of four 1994 Tony awards (Royals, 
242 West 45th St. 239 6200) 

• Carousel: Nicholas Hytner's 
bold, beautiful production launches 
Rodgers and HammerstaJn towards 
the 21st century (Vivian Beaumont, 
Lincoln Center, 239 6200} 

• Kiss of the Spider Woman: pop 
star and ex-Miss America Vanessa 
Williams has taken over Chita 
Rivera’s starring role In the 
long-running Kander and Ebb 
musical directed by Harold Prince 
(Broadhurst 235 West 44th St, 239 
6200) 

• Tommy. The Who’s angry 
rock-opera about alienation and 


rebel lion has been adapted by one 
of its original creators, Pete 
Townshend. and treated to a slick, 
cinematic staging by Dee McAnuff 
(St James. 246 West 44th St, 239 
6200) 

• Guys and Dolls: a top-notch 
revival of the 1950 musical about 
the gangsters, gamblers and 
good-time girls around Times 
Square (Matin Beck, 302 West 45th 
St, 239 6200) 

• Stomp: a loud, aggressive and 
energetic show in which a troupe of 
performers dance, dap and 
generally bang on everything In 
sight Far more engaging than you 
might expect (Orpheum, 126 Second 
Avenue, 307 4100) 

• Blood Brothers: Willy Russell's 
musical about twins who, separated 
at birth, eventually meet and fall in 
love with the same girl. The show 
has been running on Broadway for 
18 months, but the recent addition 
of singer Carole King has provided a 
little heat to the box office (Music 
Box, 239 West 45th St 239 6200) 

• Crazy for You: Gershwin's tunes 
and Susan Stroman's choreography 
are the central pleasures of this light 
and frothy musical, now in its third 
year on Broadway (Shubert, 225 
West 44th St 239 6200) 
OPERA/DANCE 

State Theater New York City 
Opera's autumn season has just 
opened with a new production of 
Borocfln's Prince Igor, with a 
Russian cast conducted by Guido 
Ajmone-Marsan and choreographed 
by Damian Woeteef of New York 
City Ballet. Repertory also Includes 
Carmen, Madama Butterfly. Tosca, 
Delibes' LakmO. This week’s 
performances are daily except 
tonight and Wed (870 5570) 


Metropofitan Opera The opening 
night gala on Sep 26 features 
PlackJo Domingo in Puccini's II 
Tabarro and Luciano Pavarotti in 
Leoncavallo's I Pagliacd, conducted 
by Janies Levine. Teresa Stratas 
and Juan Pons sing in both operas. 
The first new production Is 
Shostakovich's Lady Macbeth of 
Mtsensk, opening Nov 10 (362 6000} 
CONCERTS 

Avery Fisher Hall The New York 
Philharmonic starts Its 1994-5 
season on Sep 21. The orchestra’s 
music director, Kurt Masur, 
conducts the first three weeks of 
concerts (875 5030) 

Carnegie Han The Academy of St 
Martin in the Fields, with mezzo 
Cedlia BartoH. opens the new 
season on Sep 29 (247 7800) 


■ PARIS 

OPERA 

• The start of the 1994-5 season 
at the Bastille wUI go ahead as 
planned next Mon with the premiere 
of a new production of Simon 
Boccanegra, conducted by 
Myung-Whun Chung and staged by 
Nicolas Brieger, with Vladimir 
Chernov in the title role. Under last 
week's agreement ending Chung's 
dispute with the Op&ra, this will be 
his final production as musk: 
director. There will be 10 
performances of Simon Boccanegra, 
running tin Oct 14. Bob Wilson’s 
version of Madama Butterfly is 
revived on Sep 29 (4473 1300). 

• The new Fting production at the 
Ch&etet continues with Siegfried on 
Oct 14 and Gfitterdflmmerung on 
Oct 16. There will be two complete 
Ring cycles between Oct 31 

and Nov 13 (4028 2840) 


DANCE 

• One of France's leading young 
choreographers, Philippe Decouffe. 
is in residence with his troupe at 
Thddtre de la Ville for the next two 
weeks (4274 2277) 

• The Paris Op6ra Ballet's 1994-5 
season takes place mainly at the 
Op6ra Bastille. It opens on Oct 25 
with the traditional Grand D6fiJ6, 
followed by Balanchine's Lb Palais 
de cristal (Symphony in C) to Bizet, 
The Four Temperaments to 
Hindemith and Jerome Robbins' 
Glass Pieces to Glass (12 
performances till Nov 17). The 
season also includes a young 
dancers programme, Nureyev's 
production of Swan Lake, a triple bill 
including works by Balanchine and 
Martha Graham, John Neumeier’s 
Magnificat and a Nifmska-Nljinsky 
programme (4742 5371) 

CONCERTS 

Semyon Bychkov conducts the 
Orchestra de Paris in the Opening 
concerts of the season at Salle 
Pieyei on Wed and Thurs. The 
orchestra spends the rest of the 
month on tour In Austria (4561 0630) 

FESTIVAL D’AUTOMNE 
This year's highlights include Peter 
Stein's Moscow staging of the 
Orestete (Oct 9-15), a Bob Wilson 
adaptation of Dostoyevsky (Oct 
11-23), Robert Lepage's Seven 
Streams of the River Ota (Nov 
18-26), and The Merchant of Venice 
directed by Peter Sellars (Dec 6-17). 
The dance programme includes the 
Trisha Brown Dance Company (Nov 
3-12), and there ts a special focus 
on the music of Gydrgy Kurtag 
(Festival d'Automne 8 Paris, 156 rue 
de RivoU, 75001 Paris. Tel 4296 
1227 Fax 4015 9288} 


ARTS GUIDE 

Monday: Berlin, New York and 
Paris. 

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

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

Friday: Exhibitions Guide. 

European Cable and 
Satellite Business TV 

(Central European Time) 

MONDAY TO FRIDAY 
NBC/Super Channel: FT Busi- 
ness Today 1330; FT Business 
Tonight 1730, 2230 

MONDAY 

NBC/Super Channel: FT 
Reports 1230. 

TUESDAY 

Eiaonews: 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; 











English culture not 
yet vindicated 



The role of late 

r .\V Victorian En- 
glish culture in 
the re i a ti ve 
decline of the 
British econ- 
omy continues 
to excite schol- 
arly contro- 
versy. It was in the years 
around the turn of the century 
that key features of the 
English upper-middle class 
assumed their familiar mould: 
education for an imperial role 
in spartan boarding schools, 
which emphasised classics and 
neglected science: the aspira- 
tion of business leaders to the 
lifestyle of country gentlemen; 
preoccupation with distant 
overseas investment rather 
than domestic business; the 
exaggerated differentiation of 
male and female roles: and the 
suppression of feeling in the 
famous stiff upper lip. 

Analysis of English relative 
economic decline in these 
terms received a new' lease of 
life in a book by the American 
historian. Martin Wiener, in 
English Culture and the Decline 
of the Industrial Spirit, 
1S50-19S0 (published in 1981 
and republished by Penguin). 
His thesis about how crippling 
the dislike for the capitalist 
ethos was to economic develop- 
ment is not. of course, novel. 
The economist Alfred Marshall 
observed in 1903: “By the 1860s 
and lS70s. many of the sons of 
manufacturers were content to 
follow mechanically the lead 
given by their fathers. They 
worked shorter hours; and 
they exerted themselves less to 
obtain new practical ideas." 

What distinguished Wiener 
was the verve of Ids writing 
and its wealth of detail. An 
aspect on which he shed new 
light was the English rural 
affectation. Between the wars 
not only the Conservative 
leader, Stanley Baldwin, but 
also the Labour leader, Ram- 
say MacDonald, made great 
play of being countrymen at 
heart. The historian J.H. 
Plumb remarked: “The dream 
of an Elysian England of patri- 
archs. well-fed peasants, con- 
tented, if illiterate craftsmen, 
and compassionate, profit-shar- 
ing landlords has haunted 
English radicalism.” I have 


myself been bold that the coun- 
tryside was only real when the 
majority of the population 
were involved in country pur- 
suits - making me think, not 
very guiltily, of pleasant after- 
noons spent sipping P imms In 
the west country, or drinking 
GlOhwein looking at the Alps. 

A counter-attack was 
launched by an Australian his- 
torian. W.D. Rubinstein, in 
Capitalism. Culture and Decline 
in Britain, 1750-1990 (Rou- 
t ledge. 1993)- Rubinstein’s 
argument is that there is noth- 
ing that needs explaining in 
Britain's economic record and 
that the cultural attitudes 
highlighted by Wiener were 
□ot a source of weakness. 

H e does seize on a 
genuine fault in 
Wiener's identifica- 
tion of economic 
development with industry. 
The latter always accounted 
for less than SO per cent of 
British employment, as I guess 
it would of other industrial 
countries such as the US and 
Germany'; and it was a mistake 
to emphasise complaints about 
the decline of manufacturing, 
which is worldwide. But if 
“business” is substituted for 
“industry” in Wiener’s book, 90 
per cent of his argument 
remains unaffected. 

Rubinstein maintains : 

• that British living stan- 
dards have risen remarkably in 
the past few decades, even 
while commentators have 
bemoaned British economic 
performance, and that owner- 
ship of specified consumer 
durables compares quite 
favourably with, for example, 
the US or France; 

• only a small proportion of 
pupils at the great public 
schools came from a business 
background in the 19th cen- 
tury, and among these there 
was no drift to other careers; 

• English culture was no 
more anti -business than Conti- 
nental or even American cul- 
ture. He can call in aid the 
entrenched anti-capitalism of 
postwar German novelists and 
the automatic Marxism of the 
French intellectual elite until a 
decade or two ago - although 
it is rather less convincing to 
bring in American writers 


from Twain to Henry James; 

• more tangibly, that concen- 
tration on financial and over- 
seas activities was a rational 
and successful allocation of tal- 
ent and capital in the late 19th 
and early 30th centuries. 

Despite the rave notices of 
reviewers, who only examine 
one book at a time, Rubinstein 
is not ultimately convincing. 
Of course the British, like most 
other western peoples, “never 
had it so good” in the postwar 
decades. But the best available 
indices of consumption per 
head show that most European 
countries have overtaken 
Britain; and the gap is 
increased if account is taken of 
longer British working hours. 
But the gap has stopped widen- 
ing since the advent of the 1979 
Thatcher government 

Rubinstein's own researches 
on public schools are inconclu- 
sive. The business classes 
entered these schools In much 
greater numbers in the 20th 
century and were present even 
in the 19th in lesser public 
schools, for which there are no 
data. The point is not that 
these schools triggered a drift 
out of business, but the some- 
what distant managerial style 
which their products assumed 
- people who affected to talk 
like Harold Macmillan and saw 
foreign exchange as a matter 
for “Jews and Armenians". 

The cultural comparisons 
encourage a wallow among 
favourite authors. But in my 
subjective view, Rubinstein 
does not in the end score. Of 
course German scholars 
excelled at classics as well as 
chemistry. But they were also 
better at both. 

The point about relative 
returns in British industry 
compared with financial activi- 
ties or overseas investment 
seems more tangible, but only 
seems. Even if these domestic 
returns appeared low, they 
were not given by ineluctable 
natural forces but reflected the 
quality of entrepreneurship 
and professional skills which 
were applied to them. 

The historical controversy Is 
now itself history. But let us 
not romanticise the pseudo- 
aristocratic culture which was 
not all that nice to those that 
got on the wrong side of it. 


T hree years ago, Aus- 
trade, Australia's 
main trade promotion 
organisation, had 18 
offices in Asia. Today, it has 
30. 

The increase speaks volumes 
for the effort Australian politi- 
cians and industrial represen- 
tatives are putting into 
expanding links with the 
region. Last week alone, a dele- 
gation of SO landed in Beijing 
to promote wool products; in 
Tokyo, Mr Paul Keating, Aus- 
tralian prime minister, lauded 
the benefits of an Asian free 
trade area to his Japanese 
counterpart; while back home, 
a drive to boost exports of ser- 
vices was launched. 

Australia’s attempts to build 
economic links with Asia are 
usually traced to the early 
1970s, and were in part a 
response to the decision by 
Britain, Australia's traditional 
trading partner, to throw its 
lot in with Europe. But these 
efforts have accelerated in 
recent years - and, in broad 
terms, are producing results. 

As politicians enthusiasti- 
cally note, more than 60 per 
cent of Australia's exports of 
goods now go to Asia, com- 
pared with 26 per cent in 1960. 
By contrast exports to western 
Europe (including the UK) 
accounted for only 13 per cent 
of last year's total, against 46 
per cent three decades ago. 

The annual rate at which 
rtiig Asian business is expand- 
ing is also impressive, 
although export growth has 
eiar-iwripH from the double-digit 
percentage increases of the late 
1980s. Australia's total trade 
with Asia advanced by almost 
12 per cent last year, to nearly 
AJSTbn <£32bn). Exports were 
up by about 9 per cent, mean- 
ing that an additional A£L3bn 
worth of goods were sold. 
Imports rose by 14 per cent 
But the need to do even bet 
ter ts paramount. For years, 
Australia has had a structural 
problem with its current 
account, running deficits 
then partially funding these 
with foreign capital inflows. In 
the 1970s, the trend was for the 
current account deficit to rep- 
resent an increasing propor- 
tion of gross domestic product 
From 1982 onwards, the posi- 
tion stabilised at 4 to 5 per cent 
of GDP, but did not improve. 
By the end of 1993, net foreign 
debt stood at about 43 per cent 
of GDP. 

The current concern is that a 
strong upturn in the domestic 
economy will spell problems 
for Australia's trade balance. 
In the upswing of a business 
cycle, Australia's imports tend 
to rise faster than exports, 
partly because of the need for 


Total bilateral trade 
1998 - ASbn 



: «1. Japan ... .. 

27 JO 

. - ■ 

1&25 

3 New Zealand 


4 UK 

TiSfc; 

... « .kKom . 


:"-3; -Ci*W 


"'T--*TaJWtn 

; &0A -V; 


Merchandise trade balance 
ASbn 

10 




» • .Singapore ... -4S, ... 

r * 7 v . . 77 >**** *-«**•*• 1 * %■#»* •#'**#*. • * ■* — 

Gantfany ■ : 4 S 5 : . . - 


Hongkong jM 



■ v- • Tv! ! :-‘i t ~ ■ yi "? . ■ ' * 

rtr . . 4 Jg.« ■ *-• *6 •* r *- T **■*- - 


te n qanr^wgng' . 

JBBSXBSSS&k'i 

poducttOtwcitoJaariMi'. . .'-'-.-i.-'.-:-'-.- 
fc. . .. v i- -. i ' 1 - ■ ' 


To catch an Asian tiger 


foreign-made plant and equip- 
ment, so worsening the current 
account deficit. The combina- 
tion of rising imports and a 
failing dollar contributes to 
higher inflation. In response, 
interest rates have to be raised. 
In short: boom and bust. 

A substantially improved 
export performance would help 
remedy the situation. As Mr 
Benue Fraser, governor of the 
Reserve Rank of Australia, has 
put it 'The best way for Aus- 
tralia to grow faster and escape 
the external constraints of 
large current account deficits 
and rising foreign debt is 
through increased exports.” 
Asia, with its high-growth 
economies and relative proxim- 
ity, is the obvious target 

If the argument for pursuing 
Asian trade is compelling, real- 
ising this objective is compli- 
cated for several reasons. 

First, Australia has tradi- 
tionally acted as Asia’s “farm 
and quarry". Raw materials 
and unprocessed agricultural 
produce - primary products - 
accounted for 55 per cent of 
total Australian exports to 
Asia last year. The biggest cat- 
egories were coal, gold, iron 
ore, aluminium, beef, wool, 
crude oil and natural gas. 

Continuing to rely on these 
exports means being hostage to 
volatile price cycles, while 
growth in demand is relatively 
slow. Moreover, the vicissi- 
tudes of nature can intervene: 
at present there are concerns 
about the trade implications of 
a severe drought in key east- 
coast agricultural areas. 

So the focus of the govern- 
ment’s export drive falls on 
"elaborately transformed man- 
ufactures” or ETMs - a trade 
department category which 
covers "products with unique 
features which permit their 
irientifiraHrm as differentiated 


Nikki Tait asks whether 
Australia has found the right 
strategy to exploit new markets 


products on world markets” 
(that is, gkim milk powder does 
not count, while branded 
Macadamia nut ch o colates do.) 

ETM exports have been 
growing more quickly than 
exports overall, and now 
account for about 14 per cent 
of total sales to Asia. But trade 
officials admit It can be diffi- 
cult to m ake inroads: “I think 
we. and everyone else, find 
{the Japanese market) quite 
hard work,” says Mr Ralph 
Evans, head of Austrade. 

Second, the mix of export 
destinations looks slightly less 

*1 think we, and 
everyone else, 
find the Japanese 
market quite 
hard work' 

healthy when examined in 
detail. Japan dominates the 
picture, accounting for 25 per 
cent of Australia's total 
exports, and about 40 per cent 
of those going to Asia. 

Here, the main exports are 
beef, coal and iron ore. Orders 
and prices for the latter two 
have been adversely affected 
by the Japanese recession and 
its effect on the steel and 
power industries. 

Sales to the China/Hong 
Kong region, however, are 
more encouraging. They rose 
by more than one-fifth in 1993, 
and the balance of ETMs to 
primary products is signifi- 
cantly better. Mr Evans, says 
this is one of the most impor- 


tant areas for exporters in the 
next few years, along with 
Indonesia, Australia’s nearest 
neighbour. 

A third problem for the 
export drive into Asia is the 
level of trade barriers in the 
region and Australia’s limited 
clout in combating them, given 
its small domestic market and 
different cultural history. 

The six countries of the 
Association of South. East 
Asian Nations, which now 
have a regional free trade 
agreement aimed at lowering 
barriers to intra-Asian trade, 
are themselves forging links 
with bigger economies to their 
north, such as China. It is not 
clear what advantage, if any. 
they would see in admitting 
Australia to their ranks. At a 
transport conference in Darwin 
last week, a Malaysian trade 
consultant made the point 
bluntly: “Many people In Asia 
will need to be convinced that 
it in is their interests that Aus- 
tralia becomes part of Asia.” 

Australia has responded 
partly by lobbying within the 
Asia-Pacific Economic 
Co-operation forum, a loose 
grouping of some Australasian, 
Asian and North and South 
American countries. Much play 
was made in Australia of an 
internally generated Apec 
report for leaders of member 
states, which called for com- 
plete trade liberalisation in the 
region by the year 2020. 

But for some companies 
seeking to export to the region, 
this - and the latest Gatt 
agreement - are all-too distant 
promises. “There’s a lot of talk. 


and I know the Australian gov- 
ernment is putting on a lot of 
pressure, but these countries 
are not moving [on trade barri- 
ers 1,” says Mr Peter Horeaens, 
director of Asian operations at 
Kellogg Australia, the US- 
based cereal manufacturer. 
Tariffs on cereal-based prod- 
ucts, for example, range up to 
60 per cent in Thailand and 
more than 100 per cent In 
Pakistan, he says. 

Fourth. Australia's ability to 
aid would-be exporters is more 
limited than that of some com- 
petitors chasing the same busi- 
ness in Asia - a function of the 
country’s size. "Compared to 
Group of Seven nations, we - 
don't have such deep pockets 
when it comes to export credit 
guarantee financing and the 
like ” says Mr Evans of Aus- 
trade. 

Finally, and perhaps most 
controversially, there is a price 
to be paid for putting trade and 
Asian relations so high on the 
agenda. Australia is by no 
means the only country negoti- 
ating the culture clash 
between western values and 
those of Aslan countries. But if 
this is a tough problem for a 
large country with well-defined 
beliefs like the US. It Is every 
bit as problematic for a coun- 
try with a small economy 
which is still trying to estab- 
lish its own national identity. 
Trade talks with Indonesian 
representatives invariably 
incite demonstrations over the 
East Timor situation, for exam- 
ple; ministerial visits to China 
rekindle human rights con- 
cerns; and so on. 

Asian trade is a path which 
Australia has little option but 
to tread - and it is doing so 
with impressive determination. 
But steering a route round the 
potholes will remain a substan- 
ttal task. 



LETTERS TO THE EDITOR 


Number One Southwark Brii 

Fax 071 873 5938. Letters transmitted should be dearly typed 


e, London SE1 9HL 

not hand written. Please set fax for finest resolution 


Inheritance 
of Irish 
regiment 

From Mr R Malachi 
Oloughtin. 

Sir, Bruce Clark (“Security 
issue fraught with danger”, 
September 5), did not paint the 
frill picture in describing the 
role and history of the Royal 
Irish Regiment 

The regiment was formed, 
out of “Options for Change" by 
an amalgamation of the Royal 
Irish Rangers and the Ulster 
Defence Regiment the former 
being a conventional line 
infantry regiment, the latter 
being deployed In Northern 
Ireland. 

It has long been a tradition 
of the Royal Irish Rangers, 
inherited from their predeces- 
sors, the Irish Regiments, to 
recruit from both Northern 
Ireland and the republic with 
no religious discrimination, as 
can be seen from the number 
of Catholic commanding offi- 
cers they have had: this atti- 
tude Is already spreading 
within the whole recently con- 
stituted regiment. 

There is now a service battal- 
ion which takes its place in the 
line as a regular army unit, 
currently deployed in the east- 
ern Mediterranean, and six 
home battalions in Northern 
Ireland. 

I feel that, by trying to sim- 
plify matters, Clark might 
have unwittingly traduced one 
ev ample of real integration. 

R Maladri OXooghHn. 

17 Springdale, 

Waltingfard, 

Oxfordshire, 

0X10 0HQ 


East /west factor key 
to German economy 


Prom Dr Holger Schmiedmg. 

Sir, It is reassuring to read 
that the FT has became more 
upbeat on Germany’s economic 
prospects (“German facelift”, 
September 9). Nonetheless, 
your notion of growth through 
exports may need a qualifica- 
tion. While it is true that west 
German exports were indeed 
up nicely in the first half of 

1994, imports had grown even 
faster. Net exports made no 
contribution at all to the west 
German recovery this year. 
Instead, the only significant 
forces lifting west German real 
gross domestic product above 
its end-1993 level have been 
housing construction and 
stock-building. Had housing 
construction remained flat in 
the first quarter, GDP in the 
period would have fallen by 0.2 
per cent instead of rising (L5 
per cent; had companies not 
piled up inventories in the sec- 
ond quarter, real GDP would 
have gone down 0.1 per cent 
instead of surging 1 per cent 

Housing construction and 
stock-building are transitory. 
Apart from unusually good 
weather, the house-building 
frenzy is fuelled by the expiry 
of a tax break at the end of this 
year; companies will not want 
to pile up inventories for ever. 
These two forces of growth 
should thus moderate a lot in 

1995. 

There is one little under- 
stood aspect of west German 
exports and growth. For the 
national accounts statistics, 
west German exports include 
trade with east Germany. In 


the early 1990s, west Germany 
enjoyed a big growth push 
when, after German monetary 
union at a ludicrous conver- 
sion rate, west German suppli- 
ers wiped east German produc- 
ers off the east German 
marlfpt in coming years, this 
process will be reversed. 

The heavily subsidised 
investments in east Germany 
are finally paying off. The new 
east German producers have 
started to (re-) gain the home 
market and establish a foot- 
hold in the west West German 
net exports to east Germany 
could start to fall soon. While 
the surge in such exports pro- 
vided a strong second wind to 
the west German upswing in 
the early 1990s, their imminent 
fall should ensure that the 
west German upswing will be 
more modest than one may 
have expected by just looking 
at earlier upswings. 

Although private consump- 
tion should soon recover from 
its l per cent stomp in the sec- 
ond quarter and machinery 
investment should edge up 
nicely, there is thus no risk 
that the upswing may get close 
to overheating territory any 
time in the foreseeable future. 
A modest non-tnflationary 
upswing, which helps to do 
away with the big public sector 
deficit, should be the best pos- 
sible news for markets and the 
Bundesbank. 

Holger Schmieding, 
senior economist 
Merrill Lynch Bank. 
FrankfurtlMam, 

Germany 


Not defending a high-cost Logitech operation 


From Mr Giacomo Marini 

Sir. Ian Rodger, in his article 
about Logitech, "Almost 
caught in a mouse trap" 
(August 22), states: “With the 
factories in Taiwan and Ireland 
running well and a new China 
venture in the works, the high- 
cost California factory could be 
shut down. Marini who was 
responsible for US operations, 
resigned in protest, but profit- 
ability was restored . . 

From the tone and the con- 
text of tiie sentence, it may 
appear that 1 was defending a 
high-cost and unprofitable 
operation, thus damaging the 
best interest of Logitech. 

In 1992. I was executive 


vice-president and chief operat- 
ing officer and my responsibili- 
ties included all Logitech facto- 
ries worldwide, including 
Taiwan. Ireland. China and 
California. Eac h of them had a 
vice-president or general man- 
ager reporting, directly or indi- 
rectly, to me. 

I had no more vested interest 
In the California plant than in 
any of the other plants. The 
manufacturing strategy at the 
time called for different roles 
for the plants. The California 
plant was used primarily for 
new product introductions, 
being close to the main de si gn 
centre. I had managed the tran- 
sition of products to lower cost 


plants in a systematic and 
orderly way. As the pressure 
on costs was increasing, 1 had 
a very specific plan of acceler- 
ating the transfer of products 
to lower-cost plants. 

The California factory was 
not shut down in 1992 and it Is 
still in operation today. It con- 
tinued to operate with about 
the same number of employees 
after I left and until the first 
quarter of 1994. Only recently 
has the headcount been 
reduced. 

Giacomo Marini. 

1035m Trinity Drive, 

Menlo Park 
California 94025, 

US 


Virus test 
decision 
should be 
explained 

Prom Dr Harold W D Hughes. 

Sir, Your editorial “Open sci- 
ence” (September 8) was 
exactly on target This society, 
which has worked for more 
than 26 years to preserve 
Britain's native butterflies, 
moths and their habitats, was 
very concerned indeed to learn 
of tests of a genetically engi- 
neered virus near Oxford. 

The virus was known to be 
lethal to a large proportion of 
the UK butterfly and moth spe- 
cies on which it had been pre- 
viously tested in the labora- 
tory, although the commercial 
aim of the new field tests, we 
understand, is to develop 
sprays to combat insect attack 
on crops in. mainly, developing 
countries. The test site was 
Just 100m from Wytham Wood, 
one of the richest sites for lepi- 
doptera in the whole of the UK, 
in clu ding now-rare species. 

We raised fo rma) objections 
when we first heard about 
these tests, which are only 
notified to the public by adver- 
tisements in local newspapers. 
We were therefore concerned 
to hear that, on the advice of 
the ACRE Co mmittee , the sec- 
retary of state for the environ- 
ment. John Gummer, had 
authorised the teats. In the fol- 
lowing weeks we have made 
vigorous efforts to find ant 
from him the h a si s of the tri- 
als, what consideration, the 
ACRE Committee gave to our 
and others' objections, and 
what practical steps were 
insisted upon to guard against 
escape of the virus and where 
the responsibility lies for moni- 
toring these precautions. 

We have received two letters 
which really do not go any way 
to answer our questions, it is 
nigh time, as you say. that the 
deliberations and bases of deci- 
sion of such, committees wwe 
In the public domain. We are 
forced to be suspicious that the 
committee gave inadequate 
consideration to the risks and 
the objections; if thin is not the 
case, why is there so much 
obfuscation of their processes 
of decision. 

Harold W D Hughes, 
chairman, 

Butterfly Conservation. 

IS Wingfield Road, 
Ringston-upon-lhamcs, Surrey 




- 


i 



J 



FINANCIAL TI MES 


MONDAY SEPTEMBER 12 1994 


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FINANCIAL times 

Number Ooc Southwark Bridge, London SEl 9HL 
TeL* 071-873 3000 Telex; 922186 Fax: 071-407 5700 

Monday September 12 1994 

Germans on a 
slippery slope 




4 . 

,U i :* • 

V; - - »•»”* 

t -V 


e yfay 18 ft that the richest country 
m Europe has suddenly faiipn vlc- 
thn to lottery fever? The odds 
gainst winning are 140m to one. 
Yet the Germans have become 
obsessed to the point of frenzy 
with their lottery. Enthusiasm has 
risen m tandem with the prize 
money, which multiplies in 
successive week that the 
fells to attract a winner. So conta- 
gious is the disease that border 
crossing points have reportedly 
been jammed, as Austrian and 
Dutch hopefuls have flooded in to 
join the domestic punters. 

This behaviour seems at odds 
with the common perception of 
the Germans. Such hard-wo rking 
folk sho u ld surely hewn on an 
intellectually imriwwandipg form, 
of money making which is distin- 
guished by a near-total divorce 
between effort and reward. And 
while the phenomenon will cheer 
the organisers of the forthcoming 
British national lottery, it «m 
only give a headache to *cari« mt«« 
theorists who seek to rationalise 
the behaviour of gamblers. 

The fund-raising side of lottery 
economics poses few explanatory 
problems. There is a dear correla- 
tion between lottery a ct ivi t y and 
government deficits. In the days 
when church hostility to the pay- 
ment of interest was reflected in 
tough laws against usury, lot- 
teries, like tontines and aminttiAs 
constituted a politically correct 
form of state funding. 

The museums of the Vatican 
were financed by lotteries. Benja- 
min. Franklin paid for canons for 
the city of Philadelphia in the 
same fashion. London owed its 
17th-century water supply and its 
i 18th-century bridge at Westmin- 
ster to lotteries. Sydney Opera 
House could not have been built 
without them. 

Oddly uncreative 
While governments co ntinue to 
run lotteries, companies (and the 
wider share-ownership movement) 
have become oddly uncre a tive hi . 
their use. If Ladbroke's dividend 
were payable by way of lottery, its 
cost of capital might be seduced; 
and the woikmgriass customers, 
of its betting shops who have.no. 
trouble grasping the mathMftatfcs* 
of four-horse accumulators might 
take mare readily totheshare- 
owning democracy. 

The difficulty comes m the., 


British Goal 


The lengthy and painful saga of 
British Coal enters its closing 
chapter on Wednesday, when bid- 
den make their traders to buy the 
state-owned company. All that 
remains is for the government to 
ensure it gets the highest possible 
value for the taxpayer - and for 
observers to bewail the might- 
have-beens. What would have hap- 
pened If Arthur Scargill had not 
been the leader of the National 
Union of Afmeworkers, or if coal 
had been privatised earlier, or if 
the structure of the electricity pri- 
vatisation had not encouraged the 
“dash for gas"? Truly, this has 
been a tragedy of errors. 

For the purposes of the sale, 
British Coal has been divided into 
five regions, and bidders can put 
in for as many as they wish. The 
government will then choose the 
winning bids, with a view to com- 
pleting the privatisation by the 
end of the year. In assessing those 
bids the government has set itself 
two objectives. The first is to max- 
imise the return to the taxpayer. 
The second is to preserve the larg- 
est economically viable coal indus- 
try in the long term. . 

The first aim is both sensible 
anrt laudable: taxpayers deserve 
the greatest possible recompense 
for the billions of pounds they 
have poured into British Coal over 
the years. There is also no justifi- 
cation for underpricing privatisa- 
tions in' the way that many have ; 
been underpriced in the past 
The second aim needs to be 
examined more closely. If this 
statement is merely a long-winded 
way of saying the coal indus- 
try must stand on its own two 
feet, that is acceptable. But if it 
means that the government is pre- 
pared to accept lower bids in 
return for commitments by pur- 
chasers not to dose pits, it should 
be rejected. 

Soften the blow 
Even at this late stage, the gov- 
ernment may wish to. soften the 
blow of- coal rationalisation, tot 
the terms of the sale shouldnot be 
bent to give coal that extra chance 
of survival. That temptation has - 
i been yielded to too often in the 
past Subsides, if any, should be- 
explicit,, not . hidden inside a 
m anipulated bidding ptOCfiSS. 

a is true that the economics of 
mteteg seem somewhat special, in 
that investors have the choice of 
“raping” mines or investing in 


them over ihe long tram. And it 
may be-th& slower bidder would 
put hr a- buSjtaflSS plan that prom- 
ises to preserve mines - and Jobs 
- for a' longer period. But accept- 
ing such a Ud would just be a 
concaaleftjdb subsidy. And how 
could such bidders be held to this 
commitment if the market turned 
against them, without distorting 
the business still further? There 
have been suggestions that 
detailed terms could be written 
into licences, but that would 
surely be unrealistic. 

Competitive bidding 

There is only one criterion to be 
applied: the highest bid wins. 
Thus -win the greatest value be 
extracted , bran the nation’s coed. 
The sole requirement is to ensure 
that the bidding is sufficiently 
competitive. The government may 
also need to set reserve prices, to j 
avoid underbidding. 

By the same taken, the govern- 
ment shfwiid have no hesitation in 
selling all five regions to the same 
bidder if that were to yield the 
best return. There would be no 
serious loss of competition: domes- 
tic coal’s str on gest competitors 
are natural gas and imported coal 
There may even be a case for 
keeping the coal industry in raw 
piece, to enable ft better to can.-, 
front these competitors. 

Although the -assets being 
offered fra Bale atetomere shadow 
of the business that British Coal 
race was. they do have the mak- 
ings of a durable, if small, indus- 
try. The cutbacks^ the last two 
years have greati&reduced costs, 
but there is enough scope for fhr- 
thfir savings. Meanwhile.-, the pros- 
pects fra the PK coal market hate 
become dearer now that the share 
Of coal in power generation has 
Mien to more sustainable levels. 
If anything; -the major.djafirage 
facing coal's sew ^owners 


that canfom&pio- iheTcoU^&y^s 

muditlghte^atinesi^iraic.pp&K. 
tton : 

’opraatfons'-alwass .dtodtet.-. W -R • 


behavioural side. Lotteries have 
historically appealed to the poor, 
who spend a disproportionate 
share of their mborae on g«nMi«g 
despite the long odds against 
them. This has prompted accusa- 
tions of fecklessness. A witness 
- before a British select onmiw»u*» 
on gambling at the turn of the 
century declared: Tf the betting 
craze goes unchecked, the sober 
youth of Germany will the 
reins of the commercial world.” 
Oh ho. 

Murderous instincts 

Prohibitions an gambling have 
often been justified in the n»mg of 
protecting the poor. France’s revo- 
lutionary gov e r n ment put a stop ' 
to the Loterie Boyale in 1793 
because it was seen as exploit- 
ative. Yet it was revived when it 
emerged that the people were asm- 
ply punting elsewhere. The . 
instinct becomes stronger when 
times are hard: the 1330$ saw a 
tremendous gambling upsurge. 
Freud speculated that men were 
unconsciously bent on losing 
money to compensate for the guilt 
they felt over their murderous 
instincts towards their tethers. 
Surveys established, more plausi- 
bly, that Catholics gambled more 
than Protestants. 

The most convincing explana- 
tion for this haphazardly reward- 
ing working-class behaviour is 
that it constitutes psychological 
-insurance. For people whose 
opportunities for advancement 
appear blocked, the lottery offers 
hope, as well as fantasy and 
escape. But where does that leave 
the Germans? They are rich, as 
well as being predominantly Prot- 
estant The unemployment rate in 
the west is lower than in Britain, 
France or Italy; and while the east 
is dearly different, the frenzy is a 
pan-German phenomenon. More- 
over, recent research has estab- 
lished that a surprisingly high 
proportion of lottery users in Ger- 
many are not dowhet-heel work- 
ers, at risk of losing thrar jobs and 
in need of hope, but dytl serv an ts. 
This, it seems, is their idea of liv- 
ing dangerously. 

. Clearly, we. need a new behav-, 
found theory, which the US cam- ^ 
‘ puses’ ar^ wefi "-equipped 'to prt£’ T 
tod®: .As fra Germany, the' 
'question is whether economic 
recovery win bring the country's 
jSober.^ptohto“* toearth.,- 


W hOe delegates in 
Cairo wrangle over 
ways to deal with 
the world popula- 
tion explosion, 
another international conference, 
no less crucial to the future of the 
planet, is being prepared in Geneva: 
on extending the nuclear non-prolif- 
eration treaty. 

The success or failure of such 
conferences depends in large mea- 
sure on work done beforehand. 
Today’s meeting of the preparatory 
committee for the NPT conf er ence 
should begin to “discuss seriously 
the agenda and content”, according 
to a report just published by a 
j group of specialised arras control 
think-tanks*. This moang the bar- 
gaming positions of the wtaip pais 
ties, nuclear and non-nuclear, 
should fra the first thtia be dearly 

staked ouL 

The conference, to be field in New 
York next spring, is prescribed by 
the NPT itself: it has to decide 
whether the treaty should “con- 
tinue in force indefinitely. -or shall 
be for an adihtirmaj flrai 

period or periods’*. The treaty, 
signed in 1968. (fivides the world 
into nuclear- weapon and zum-nnde- 
ar-weapon states, the framer befog 
' tlxyt which hM a Tyry-Togy 

device before 1367. By that defini- 
tion there were five nuclear-weapon 
states - the US, Soviet Union, UK, 
France and China - and the NPT 
aim was to freeze them at that num- 
ber. Many nonnuclear states would 
have hired to abolish n wdeaT weap- 
ons altogether, but had to c ontent 
themselv es with a pipa g e fo “pu rfl i e 
- negotiations in good faith an effec- 
tive measures relating to «wa«atinn 
of the unclear arms race at an early 
- <fah> and to nuclear disarmament, 
and on. a treaty an general and com- 
plete dfamnflmimt under Strict arid 

effective toteraaHnrwi control”.' 

' One thing the si gnatori es could 
not agree on was how long the 
treaty should remain in force. The 
nuclear powers wanted an indefi- 
nite treaty, while some of the non- 
nuclear wanted to troop a. 
option open for themselves in case 
the treaty failed. So they laft the 
matter to be decided at next year’s 
conference, fraM when treaty 
will have been in force for 25 years. 

The Hodfl nn on wtoniWng the 
treaty must be taken by a majority 
of the parties, which on the latest 
count means at least 83 states. Mos t 
gov ernm ents would prefer a deci- 
sion taken by consensus, which 
would carry greater political 
weight. But few would want the 
treaty to lapse just because one or 
two states (such as Iraq or North 
Korea) refused to go along. So west- 
ern go ve rnm ents are keeping open 
the option of a vote, to ensure that 
the conference reaches a decision. 

Many governments, fnrfnrfing 
four of tixe five official nuclear pow- 
ers, Nato, Japan and nearly all 
European states, favour indefinite, 
unconditional extension. China is 
thnnght to favour ind efini te exten- 
sion 09 . certaiij oonditipiis. Only 
Iran, so jar, ' has com e out dearly 
a geiim L am indefinite gdurndwi- but' 
it is not alone among third-world 
states in thinking that extension for 
-fixed periods would keep the 
nu cl e ar powers under greater pres- 
sure to move towards disarmament. 
How exactly this would work is not 
dear, but it could mean the present 
exercise being repeated at regular 
intervals, perhaps every 2S yean. 

Amendm ent of the treaty, every- 
one agrees, would be impossible, 
because the procedure is too com- 
plex. Nor is there any chance of it 
befog scrapped and replaced by a 
new treaty - for instance, one with 

and more htnrtm g oUl^E* 

turns on the nuclear powers - 
before next spring, or any time 
soon. The existing treaty now has 
184 signatories. No new one could 
quickly gain anything like such 
wide support. 

Many mmepedalists behave that 
the NPT has failed, or was useful 
only in cold war conditions; that 
prdifsratirai in the real world is 
rampant; and that extending the 
treaty amounts to little more than . 
“s huttin g the stable after the horse 
has bolted”. But such views are not 
shared by experts such as John 
Simpson, head of foe non-prolifera- 
tion programme at Southampton 


The EMB’s 
knees 

■ If a sense of befog Untreated in 
thefr former incaraation&is a recipe 
for success, Pehr “PG" 
Q y fle nhammar mH Hmnt jihy 
Budfoff should make areal go tf 
their dehghtfaHy audacious 
ambitions to help build a new 
investment bank. 

ButfloH, an old Mend erf PC’s, 
who sat with him on the advisory 
board of tile EBRD, must be rafiier 
temp ted to show up his f armer 
masters at Credit Suisse. ra ghtean 
mouths ago they invited the 
Euromarkets supremo on to the 
board ho. Zurich to concentrate an 
“strategy”, a position which Rndinff 
quit in February. 

Meanwhile Gyfl e n hamma r,: . 
undeterred by tile raspberry with 
which his fellow Swedes greeted iris 


Terms still to 
be decided 

Edward Mortimer on the issues that will 
determine whether the nuclear 
non-proliferation treaty is extended 


autfitwhich te tetojgiBfr. 

- ffies of Francols-Xayier 
former Framchfeumce’hifa ^^^pa 



Un i v ersit y. He points out that the 
world of 20 or more nuclear powers 
which seemed imminent in the 
1960s is still far off; and that in 
several respects the sttoation has 
lately improved. 

Until 1990, he says, six countries 
which had not signed the NPT were 
“threshold” or "suspect” states, 
assumed either to have a nuclear 
weapon or to be actively developing 
one. That list has now shr unk to 
three: South Africa has scrapped its 
nodaar prog ramme and joined the 
NPT as a non-nuclear weapon state; 
while Argentina -and Brazil have 
signed bilateral non-proliferation 
agreements and joined the regional 
TTatelolco treaty, which makes all 
Latin America and the Caribbean a 
nuclear weapon-free zone. And 
Algeria, potentially a seventh “sus- 
pect”, has promised to" join the NPT 
and accepted a safeguard agreement 
for tta unclear reactor. 

That leaves India, Pakistan and 
Israel. The fodia-Pakistan relation- 
ship remains tense, and tins may be 
the region where the danger of 
nndear war is greatest But from a 
proliferation point of view the two 
states form a stable sub-system, 
wife no other date in the region 
aspiring to emulate them. Israel’s 
de facto nndear status is more dan- 
gerous to the NPT regime, because 
of the asymmetry between it and 
the Arab states. Many Arabs ate 
th is as a reason for not ratifying the 
convention harming chemical weap- 
ons; and they may refuse to support 
NPT extension unless the US 
presses Israel to denuclearise. 

Meanwhile the dissolution of the 
Soviet Union has confronted the 
NPT with a new problem: the divi- 
sion of one nuclear-weapon state 
into several, ah ol whkh could have 
claimed to inherit that status. An 
international consensus was swiftly 


reached that only Russia should be 
allowed to do so. 

All tactical nuclear weapons have 
been transferred to Russia from 
other ex-Soviet republics, as have 
strategic weapons from Belarus and 
Kazakhs tan, which have joined the 
NPT as non-nuclear weapon states. 
Ukraine has agreed in principle to 
do the same, but has not yet done 
so. For the thna being, strategic 
weapons remain, cm its territory, but 
they are being shipped out and. in 
any case, Ukraine could not target 
or fire them without Russian 
co-operation. Ukraine has also 
agreed to an audit of all nuclear 

The nndear powers, 
especially the western 
ones, are^stiH prone ; 
to assume that the 
NPTs benefits are 
self-evident 


materials on its territory by the 
International Atomic Energy 
Agency (IAEA), the body charged 
under the treaty with verifying non- 
nuclear states* compliance. 

Proliferation within the former 
Soviet Union is now overshadowed 
by anxiety over the smuggling of 
plutonium *nd other m^tear mate- 
rials from there to would-be proli- 
ferators elsewhere, as exposed by 
the recent interception of Russian 
plutonium shipments in Germany. 

Meanwhile, France and China - 
the two acknowledged nuclear pow- 
ers which rejected the NPT in the 
1960s - have acceded to it Even 
Israel, India and Pakistan, which 
have not signed, pay the treaty a 
back-handed compliment by not 
declaring themselves nndear pow- 


Observer 


most tetna r hitrl ar— > 

challenged confronting Tlfltteh 
go v ern men ts fra more than: ^gen- 
eration. This privatisation must be 
the end of & From how on, coal 
should be just another In d u s t ry. 


-however the LendcnWest End^ 
creature is eventually styled, is 
. <Qntemplatmg a mar ket Hint fa far 
from saturated. It will & course 
attract the envy of erstwhile 


colleagues strung up in the 
bureaucracy of established 
investment banks. 

So if Rudloff can be as toug h with 
his cronies as he was with fafi CSFB 
staff, he and PG could just be back 
on the road. 


Hard pawn 

■ Pawnbroking thrives in the . 
Niggardly Nineties, it would seem. 
So qffttaals from the world's largest 
chain of pawnbrokers Cash America 
Investments, which Is quoted on the 
New York Stock Exchange (code 
PWN), swung in to Sweden recently 
to exploit the devastation caused by 
the country’s banking crisis two 
years ago. 

The financiers, who hail from 
Fort Worth, Texas, and who in 1932 
scooped up Britain’s Harvey it 
Thompson, found a whole new class 
of Swedes deeply distrustful of the 
banks after recent calamities. 

Before you could sing Pop goes the 
Weasel, they w®* offering $2 Jm for 
Svensk Panib^amng, the country’s 
premier chain of 10 shops. The 
purchase takes the global empire to 
326 outlets. 

Olle Fjordgren, chief executive of 
rise lfiS-yearold Swedish, business, 
reckons pawnshops now command 2 
per cent of total lending to private 
individuals in bis country. He ’■ 
c&ims to have squeezed a 56 per 
cent share of a market worth 
$XiS0m and growing at 12 per cent 
per annum. 

To prove that those in hock no 



Tm not on patrol - I’m 
a warartisti 

longer feel the need to frequent 
dingy back-street premises, 
pfordgren's outfit, which draws the 
line at pawning fine art, now has a 
shop on Birger Jarlsgatan, one of 
Stockholm’s snazziest streets in the 
heart of the financial district 


Nugatory 

■ Ever wondered what happened to 
afl those sociohnguists that 
academic establishments seemed to 
be -cloning by the dozen daring the 
1970s? Wdl, same have found 
gainful employment 
It was to Semiotic Solutions, for 
tegfannp that British Telecom 


ers (though last month Nawaz 
Sharif, former prime minister of 
Pakistan, embarrassed bis succes- 
sor by stating publicly that Pakis- 
tan does have a nuclear weapon). 
The NPT has made non-prolifera- 
tion a universally respected norm. 

Kit is It respected in word only? 
The scope of Iraq’s weapons pro- 
gramme, revealed after the Gulf 
war in 1991, shook many people's 
confidence. Iraq was the first of a 
new category of NPT “renegades”: a 
long-standing signatory of the 
treaty, it. bad allowed the IAEA to 
monftor its use of imported nuclear 
fueL Yet neither the IAEA nor any 
national - Intelligence service 
detected its clandestine weapons 
programme. This discovery 
prompted nuclear suppliers to 
tfchten their export restrictions, 
and fo insist on much more intru- 
sive IAEA inspections - though so 
far they have not endowed the 
IAEA with resources to match. 

The IAEA can monitor compli- 
ance, but only the UN Security 
Council, on whose order Iraq has 
now been disarmed, has the power 
and authority to enforce compli- 
ance: a itistinrHnn hig hli g hted by 
the next “renegade”. North Korea. 
Here the IAEA did its job well, in 
that North Korea could only con- 
ceal what it was doing by refusing 
co-operation with IAEA inspectors. 
But the UN’s ability or willingness 
to do anything about it is more 
doubtful. 

Perhaps the fear of UN sanctions 
helped change the late Kim li- 
sting's attitude in June, when he 
suddenly agreed to "freeze" nuclear 
activity during new high-level talks 
with US officials. But It is not yet 
dear how far this presages a real 
change in North Korean behaviour. 
And it is far from clear that sanc- 
tions would have worked, or even 


turned for some hrfp during Its 

campaign fo persuade the mate of 

the species to dally longer on the 
telephone. 

Now the self-same experts in the 
maaning of signs flTwi symbols have 
been asked to judge how Kentucky 
fried Chicken and McDo n ald’s will 
go down in India, 

McDonald's, the boffins 
concl u ded, will be the “friendly 
alien tapping into the outer directed 
culture and self, appealing to the 
emergent younger generation 
cohorts, and being a badge or 
marker of Hfestyle”. 

Kentucky Cried Chicken, a trifle 
more prosaically , will “penetrate 
tiie home »wd family with new, 
more efficient ways of doing 
traditional things”. 

Which apparently translates into 
the prediction that rhirfrgn nuggets 
will outsell cheeseburgers on the 
streets of Bombay. 


Musings 

■ Scores o! readers have been 
impressing Observer with their 
erudition in response to the 
flhaiteng p of naming the Three 
&aces - Aglaia, Euphrosyne and 
Thalia. 

The latter is also the Muse of 
comedy, so she at least should 
derive some amusement from the 
shenanigans connected with the 
Canova piece. 

His request for the £64 garden 
version of the statue 
notwithstanding. Jeff Wagfand of 


have been applied. China, which is 
North Korea’s main trading part* 
ner, might well have vetoed, or sim- 
ply Ignored, them. 

Iraq was disarmed alter military 
defeat. Theoretically, military 
action could be taken against North 
Korea, bnt it would be extremely 
risky. Probably, if North Korea 
remained recalcitrant, the world 
would have to settle for isolating it 
as far as possible, while trying to 
block any further proliferation jrom 
it to other potential renegades, such 
as Iran. 

Iran’s case further illustrates the 
difficulty of seeking to prevent pro- 
liferation purely by restricting sup- 
ply. Iran fulfils all its NPT obliga- 
tions and yet, because nuclear 
suppliers are suspicious of its Inten- 
tions, does not get the free access to 
peaceful nuclear energy it is enti- 
tled to under the treaty. This 
strengthens many third-world 
states’ belief that the nuclear pow- 
ers have not fulfilled their side of 
the bargain. 


M ost non-nuclear 
states did not sign 
the treaty as a 
favour to the 
nuclear powers, 
but to enhance their own security. 
The treaty's main function is to 
reduce demand for nuclear weap- 
ons. by relieving each non-nuclear 
state of the fear that its potential 
adversaries will get them first But 
tills will not stave off proliferation 
indefinitely, nniww nuclear powers 
do more to improve the security of 
non-nuclear ones - or so at least 
the latter argue. There are three 
kinria of thtwg they can do: 

• “Positive assurances”: pledges to 
come to the aid of non-nuclear 
states if nuclear weapons are used 
or threatened against them. In 1968 
tiie UK, US and Soviet Union gave 
such a pledge in a United Nations 
Security Council resolution. But 
such broad pledges are not very 
credible. 

• “Negative security assurances”: 
promises that they themselves will 
not use or threaten nuclear weap- 
ons against non-nuclear states. 
These were only available in 
heavily qualified form during the 
cold war. because both sides 
reserved the right to use nuclear 
weapons in certain circumstances 
against each other’s allies. But they 
may now be willing to go further. 
Last week Iran and 10 other states 
tabled a proposal for a protocol on 
security assurances to be added to 
the NPT. 

• Progress towards general 
nuclear disarmament, as promised 
in the treaty. Many non-nuclear 
states have derided to judge the 
nuclear powers’ good faith by their 
willingness to negotiate a world- 
wide ban on nuclear tests. 

The last conference to review 
implementation of the NPT, in 1990, 
broke up without agreement 
because the US and UK refused to 
commit themselves to such a ban. 
Since then, there has been spectacu- 
lar progress towards iBMnMmf»nt 
in the form of reductions in the US 
and Russian nuclear arsenals; 
France and China have adhered to 
tiie NPT; and the CUnton admims- 
tratkm, followed by a reluctant UK, 
has come out for a comprehensive 
test ban. Negotiatianran thfebegan 
in January, but progress has-been 
slow, mainly because the UK, 
France and China are dragging 
their feet A draft text was agreed 
last week; two months later than 
most delegates had hoped, and fur- 
ther talk* are to be held at the end 
of the year. But the prospect of 
agreeing a test ban treaty by next 
April, when the NPT conference 
meets, is now thought remote. 

The nuclear powers, especially 
the western ones, are still prone to 
assume that the NPTs benefits are 
self-evident They have perhaps not 
taken the full measure of third- 
world states’ impatience with the 
post-cold war world order, and the 
need to convince them that general 
disarmament is a genuine, if still a 
distant goal 

*A Comprehensive Test Ban : Disap- 
pointing Progress, Acronym Booklet 
No £ available from BASIC. Car- 
rara House, 20 Embankment Place, 
London WC2N6NN 


who was drawn as the winner, 
receives instead a small libation. 


Graces score 

■ A reader has an alternative 
theory, though, as to why John 
Paul Getty H should have rushed so 
willingly to the damsels' side. 

Was anglophile cricketing 
enthusiast who promised to fork 
out £lm to keep the work in the UK, 
fondly reminded of that other troika 
of Graces, William Gilbert, and his 
brothers, Edward Mills and George 
Frederick? 

While the exploits of WG, the 
19th century's greatest cricketer, 
are well known, his elder brother 
Edward preceded him as England’s 
best batsman. Moreover, in 1880, 
all three Graces assembled at 
The Oval to face Australia in 
what was the first test played In 
England 

Sadly , there is no evidence that 
the family possessed any special 
literary or artistic bank WG was 
well ahead of his time in employing 
the services of a ghost witter to 
help compile his history of the 
sport 


Below the line 

■ Into Observer’s fat file of injuries 


goes the description of a company*! 
recent acquisition as “accretive to 
1995 earnings”. 


Vi'" 



14 



FINANCIAL TIMES 

Monday September 12 1994 


EU ministers call for increased fiscal rigour 

End of recession revives 
single currency hopes 


By David Gardner 
In Undau, Germany 


The end of recession has revived 
the prospect of a European single 
currency by the end of the cen- 
tury, but only greater fiscal rig- 
our will deliver the conditions for 
it, European Union finance min- 
isters warned at the weekend. 

Meeting informally at Undau 
in southern Germany, the minis- 
ters also signalled that political 
considerations could loosen the 
criteria which the Maastricht 
treaty sets for convergence 
towards economic and monetary 
union. 

It looks increasingly likely that 
file rules on deficit and debt lev- 
els will be applied flexibly to 
Ireland, whose government debt 
is well over the 60 per cent of 
gross domestic product recom- 
mended in the treaty. This could 
pave the way for the inclusion of 
other heavily indebted states 
such as Belgium. 

The weekend meeting prepared 


for the first use of so-called 
“excessive deficit” proceedings 
when finance minis ters next 
meet in Brussels on September 
19. Under this process, the Euro- 
pean Commission will recom- 
mend budget deficit targets for 
1995 and 1996 for the 10 states 
(excluding Luxembourg and 
Ireland) that are above the bud- 
get deficit target of 3 per cent of 
GDP set for EMU. 

Germany perceptibly softened 
its opposition to flexibility for 
Ireland. Mr Theo Waigel, finance 
minister, underlined that Dublin 
was well within the deficit crite- 
ria and had made "considerable 
progress” in cutting its debt ratio 
from 116 per cent to 90 per cent 

Mr WaigeL in German press 
interviews on Saturday and in 
his press release for the meeting, 
had said that "we did not write 
the debt quota [of 60 per cent] 
into the treaty as a joke” and 
that "special treatment” would 
undermine public and market 
confidence in a single currency. 


Yet after the meeting, Mr Wai- 
gel sought to defuse the Irish 
issue, saying merely that "we 
must TnalcA sure right from the 
beginning that the criteria are 
clear-cut”. 

Mr Hans Tietmayer, Bundes- 
bank president, said the 3 per 
cent deficit target "is the upper 
limit- (t should not be tnVgn as a 
yardstick to aim at”. 

Only Mr Edmond Alphand&ry, 
the French minister, stood up for 
rigidity. He said "if you choose a 
loose Interpret a t io n, then we have 
to explain very clearly why we 
are doing this " 

The ministers agreed in princi- 
ple to publish the Commission’s 
recommendations on excessive 
deficits after their meeting in 
Luxembourg on October 10. This 
could help clear the fog over 
Ireland, but could also risk mar- 
ket instability for countries like 
such as Belgium and Italy which 
are widest of the EMU targets. 


By-election 
setback for 
Japanese 
ruling 
coalition 


By Wliam Dawkins bt Tokyo 


Three tiers of country. Page 2 


German parties retain power 
in eastern state election tests 


By Judy Dempsey in Berlin 


Hie Christian Democratic Union 
and their Social Democrat rivals 
yesterday won decisive victories 
in two regional elections in Ger- 
many. which have been seen as 
an early test of the parties' stand- 
ing before the federal elections 
next month. 

The CDU prime minister of the 
eastern German state of Saxony. 
Mr Kurt Biedenkopf, and the 
Social Democratic prime minister 
of Brandenburg, Mr Manfred 
Stolpe, were returned to power 
with absolute majorities, accord- 
ing to exit polls, conducted by 
ARD state television and by later 
computer predictions. 

The main gainer in the elec- 
tions was the Party of Demo- 
cratic Socialism (PD S), the suc- 
cessor to the former east German 
communist party. It increased its 
share of the vote, becoming the 
third largest party in both states. 

The Free Democrats, the junior 


partner in Chancellor Kohl’s gov- 
erning CDU coalition, and the 
Btindnis 90/Green party failed to 
get tile 5 per Cent minimum 
required to enter either of the 
two parliaments. 

The interpretation of the vote 
was complicated by a low turn 
out. Two hours before polls 
closed, only 45 per cent of voters 
in Saxony had voted. In Branden- 
burg, an hour before polls closed. 
4&8 per cent bad voted. 

In Saxony, the only state where 
the CDU has an absolute major- 
ity, Mr Biedenkopf, a former for- 
mer general secretary of the 
CDU, was returned with. 57.7 per 
cent of the vote, three percentage 
points higher than the 1990 state 
elections. 

Mr Biedenkopf said in a televi- 
sion interview; “I am very happy. 
But I want to use my second 
term in office to speak on behalf 
of all Saxons.” 

The SPD foiled to make inroads 
in Saxony, winning only 17 per 


cent of the vote, 2 points less 
than in 1990. The FDP*s share of 
the vote was cut from 6.6 per cent 
to IB per cant and fire Bfindnis 
90/Greens’s vote fell from 5.6 per 
cent to 44 per cent, leaving both 
parties OUtside parliament The 
PDS vote rose from 10.2 per cent 
in 1990 to more than ie per cent 

In Brandenburg, the only east- 
ern German state with an SPD- 
led coalition government the 
party's share of the vote rose 
from 3&2 per cent in 1990 to 53-5 
per cent although the strong 
showing may reflect the special 
factors in eastern German poli- 
tics rather than national trends. 

Thej CDITs share of the votq 
collapsed from 29.4 per cent in 
1990 to less than 20 per cent The 
FDP vote fell from 6.6 per cent in 
1990 to 2.3 per cent, and the 
Bfindnis 90/Greens vote also 
dropped from 9.3 per cent to 
under 23 per cent By contrast 
the PDS vote rose freon 13.4 per 
cent to 183 per cent 


Big Mac reveals purchasing power 


Continued from Page 1 


are becoming increasingly valu- 
able to executives negotiating 
pay packages for overseas post- 
ings. The UBS survey uses a uni- 
form basket of goods so that 
clear comparisons can be made. 

The survey shows that while 
the top earnings are in Switzer- 
land, the most expensive apart- 
ments are in Hong Kong and the 
dearest clothes In Tokyo. House- 
hold appliances are cheapest in 
the US. 

North America also has the 


least expensive motoring, while 
public transport in Europe is 
very costly. 

A shampoo and set at a wom- 
en’s hairdresser costs between 
$40 and $65 in Oslo. The best 
places for a cheap hairdo - less 
than $7 - are Taipei, Caracas, 
Budapest, Nairobi, Prague and 
Bombay. 

The biggest gross earners are 
the Swiss, the Danes and the Jap- 
anese, followed by the Germans, 
Luxembourg and the US. London 
is midway in the earnings league 
behind Milan and Paris, with 


Nairobi, Lagos and Bombay at 
foe foot of file table. 

People in the Far East tend to 
work the longest hours, while 
the least hours are worked by 
those in Madrid. 

Of the 53 cities in file compari- 
son, Tokyo is the most expen- 
sive, with Lagos in second place, 
followed by Oslo and Zurich. 

Copies of the report can be 
ordered free while stocks last from 
the Onion Bank of Switzerland, 
Economic Information Centre 
(GEICH), Postbox 8021 Zurich, 
Switzerland. 


Japan's ruling coalition of 
socialists and conservatives was 
humiliated in a by-election yes- 
terday, the first measure of its 
popularity since it seized power 
in a parliamentary coop 10 weeks 
ago. 

The defeat in Aichi, the heart- 
land of the car industry, gives a 
boost to attempts by the 10 par- 
ties in opposition to merge into a 
single party, able to rival the Lib- 
eral Democratic party for parha- 
mentary rimit 

Voters had condemned the 
coalition of the LDP with its 
long-time enemy, the Social Dem- 
ocratic party, as "an act of 
betrayal" and now wanted a pro 
gresstve new party, said Mr Tsu- 
tomu Hata, the former prime 
minister. The LDP combined 
with the SDP to muster enough 
votes to oust Mr Kata’s five-party 
wMiwinii government in June, so 
ending the LDP’s first spell in 
opposition for 38 years. 

The outcome of yesterday's poll 
poses no immediate threat to the 
government, since the Aichi seat 
- in the upper house, the less 
powerful of the two parliamen- 
tary chambers - was already in 
opposition hands. It does not 
affect the political situation, said 
Mr Tomiichi Murayama, the 
socialist prime minister. 

The vote increases the stature 
of former prime minister Mr 
Toshiki Kalita, who led the oppo- 
sition campaign in Aichi, his 
home prefecture, and is widely 
seen as a candida te to lead the 
new party. 

The government nominee, a 
former United Nations official Mr 
Jiro Mazuno, was beaten by 
nearly 384,000 votes by the oppo- 
sition candidate, former labour 
ministry bureaucrat Mr Yirniru 
Tsuzuki, who attracted Just over 
925.000 votes. Mr Mizum » said the 
result was his fault and pres not a 
judgment against the govern- 
ment. 

Three changes of government 
in the past year made for a low 
turnout Only 43 per cent of the 
electorate voted, below the 47 per 
cent of the previous upper house 
election two years ago, but 
slightly ahead of the gloomiest 
newspaper predictions. The seat 
became vacant after the incum- 
bent was convicted of lying about 
his academic qualifications In 
electoral publicity. 

The thirdplaced candidate, Bis 
Makiko Suehiro, a television talk- 
show hostess, said her adver- 
saries were indistinguishable 
pawns in a Tokyo power game. 
Mr Hata Is reported to have pro- 
vided evidence of this by confus- j 
ing candidates’ names and mis- 
takenly urging voters to elect the 
government nominee. 

The government did no better, i 
Ms Makiko Tanaka, director-gen- 1 
eral of the science and technol- 
ogy agency, called the govern- 
ment’s candidate Mr Shimizu, 
Instead of Mr MIzuno, aria rally. 


FT WEATHER GUIDE 


Europe today 


A large, complex low pressure system will 
bring unsettled conditions to most of 
western Europe. Scandinavia will have a 
cool and cloudy day. with rain along the 
Norwegian coast and showers over 
Finland and the Baltic states. Fresh 
northeriies win bring cold air, cloud and 
showers Into Scotland and Ireland. The 
Low Countries, Germany and much of 
France wffl have rain or drizzle. Scattered 
thunder showers will develop over the 
Alps. It will slay mainly sunny and warm 
from eastern Spain to Italy and south-east 
Europe, inland, the sun wiB push 
temperatures into the 30s. A frontal 
disturbance over eastern Europe win 
produce soma showers in Poland and 
west Russia. 




I J/ 


n >• . ' -v. 


K*- L 
15.) 


Five-day forecast 

It win remain unsettled over western 
Europe. On Wednesday another 
deepening depression will bring plenty of 
ram to France and north Spain. Showers 
wffi persist over the UK and the Low 
Countries. Scandinavia win remain cold. A 
surge of cod, unstable air wilt reach the 
western Mediterranean, bringing heavy 
thunder showers and falling temperatures. 



TODAY'S TEMPERATURES 


Situation a 72 GMT. Tamporsturae madmen for day. Forecasts by Metaa ConstA of me Me/OmbnO s 



Maximum 


sun 

27 

Caracas 

fc* 

32 

Fare 


Celsius 

Belfast 

shower 

IS 

Cardiff 

shower 

16 

Frankfurt 

AbuDheU 

sun 

40 

Belgrade 

fafr 

31 

Casablanca 

fair 

25 

Geneva 

Accra 

shower 

28 

Berlin 

ram 

20 

Chicago 

fair 

30 

GfcrsUar 

Algiers 

sun 

33 

Bermuda 

shower 

30 

Cologne 

rain 

20 

Ossgow 

Amsterdam 

nrin 

17 

Bogota 

cloudy 

19 

Dakar 

shower 

30 

Hamoura 

Athens 

sun 

32 

Bombay 

rain 

29 

Daflas 

Ur 

33 

Helsinki 

Atlanta 

sun 

30 

Brussels 

min 

18 

DeW 

fair 

35 

Hang Kong 

EL Aim 

fair 

23 

Budapest 

Ur 

27 

Dubai 

sun 

39 

Honolulu 

a ham 

cloudy 

17 

CJiagen 

cloudy 

15 

Dubfin 

sbowar 

IS 

Ijpaihi 

Bangkok 

thund 

34 

Cairo 

sun 

34 

Dubrovnik 

Sul 

28 

Jakarta 

Barcttatt 

fair 

28 

Cope Town 

Mr 

IS 

CHfaihiinnti 

«Htwjrgn 

shower 

16 

Jeraay 


Your frequent flyer program; 
Lufthansa Miles &' More. 


Lufthansa 


Karachi 
Kuwait 
L. Angelas 
LasPtfnas 

Lima 

Gabon 

London 

LiK-bourg 

Lyon 

Madeira 


ansi 

cfrzd 

26 

22 

Muftld 

Majorca 

cloudy 

sun 

28 

30 

Rangoon 

Reytyavtk 

thund 

fair 

29 

9 

show 

23 

Malta 

sun 

30 

Rto 

cloudy 

24 

tair 

29 


shower 

18 

Roma 

SUI 

29 

shower 

16 

Mona 

thund 

30 

S.Frsco 

fair 

21 

shower 

16 

Melbourne 

cloudy 

16 

Seatf 

fair 

24 

shower 

rain 

13 

29 

Mexico City 
Marti 

shower 

thund 

22 

32 

oiocwxxm 

fair 

fair 

32 

17 

far 

32 

MDan 

tab 

25 

Strasbourg 

dr-r-H 

23 

sui 

29 

Montreal 

cloudy 

20 

Sydney 

Tangier 

SUI 

24 

tab 

32 

Moscow 

shower 

15 

fafr 

25 

fair 

18 

Munich 

cloudy 

25 

TrfAmfe 

sun 

34 

ft* 

31 

Nairobi 

Mr 

24 

Tokyo 

thund 

31 

sun 

44 

Naples 

SUI 

29 

Toronto 

rata 

21 

Mr 

23 

Nassau 

ahowar 

32 

Vancouver 

fafr 

16 

fair 

27 

Now York 

sun 

25 

Venice 

Mr 

26 

cloudy 

19 

Nee 

sun 

26 

Vienna 

Mr 

27 

non 

23 

Mcosla 

SUI 

37 

Warsaw 

shower 

20 

shower 

16 

Osto 

cloudy 

16 

Iflfnatifn nl i r> 

waanmoTon 

sun 

27 

drzzl 

19 

Paris 

rain 

20 

WeBkigton 

cloudy 

8 

cfooCy 

24 

Perth 

fair 

22 

Winnipeg 

fab- 

19 

cloudy 

26 

Prague 

ha 

25 

Zurich 

shower 

21 



THE LEX COLUMN 


Launching Lufthansa 


A great deal is riding on the 
Lu fthansa share sale, which frtefcs off 
with the pricing of its rights issue 
today. This is not because the issue is 
particularly large. Investors will be 
offered about DMlbn in stock as a 
result of file government not taking 
up its rights. The importance is rather 
that i Luft hansa is seen as a trial ran 
for the much larger Deutsche Telekom 
float scheduled for 1986. The Luft- 
hansa iss ue will be the first time the 
German government has sold stock 
through a book-building process. As 
such, it gives investment banks the 
chance to prove their technical prow- 
ess and so position themselves for the 
multi-mfilion-dollar foes anticipated 
from the Telekom float 

The enthusiasm of the banks, of 
course, carries dangers for investors. 
There is such a large cast of hanks 
involved that shareholders will be 
hard-pressed to find an independent 
voice to advise them on valuation. 
Bankers wishing to curry favour with 
Bonn cannot be expected to put out 
sell notes in advance of the offer. So 
there is a risk that the stock price 
could become inflated during the book 
building period. 

But if instead the shares nrmtinna to 
retreat from their mid-summer peak, 
ijTfthanga will start to look attractive 
again. Over the past two years, the 
aiViinw made a break with its pub- 
lic-sector past Cost-cutting and the 
recovery In aviation traffic are rapidly 
fcnmrng losses into profits. Lufthansa 
is still less efficient than British Air- 
ways and ELM. But it looks well- 
placed to compete in Europe’s increas- 
ingly dere gulated aviation ma rk e t . 


L ufthansa c o m pa red 


Share prices (jrabeaecQ 

240 r : — ~ 



. . 1993 

Source FT Gaptta' 


aries between telecoms and media sec- 
tors are also a worldwide phenome- 
non. Indeed, Europe has seen some 
activity in all these sectors. The UK’s 
independent television system has 
been consolidated. Tentative steps are 
Mng tak e n to rationalise the Euro- 
pean defence industry. And European 
pharmaceuticals groups have been 
prominent in buying US drugs compa- 
nies. though few have themselves 
been targets. 

But European M&A activity lags US 
deal-making for two main reasons. 
First, political sensitivities make 
cross-border restructuring hard in 
industries such as defence and tele- 
coms. Second, with European recovery 
still sluggish, many managers are 
reluctant to splash out on big deals. 
Memories of recession will undoubt- 
edly fade and M&A activity pick up. 
But bumper conditions are unlikely to 
return for some time. 


reforms, they were poor. In 1991 Bayer 
achieved, margins of &9 per emit. In 
spite of the recovery this year, profit- 
ability remains lamentable. Zeneca’s 
margins flurfag the first half crept up 
from m per cent to 13.7 per cent tt is 
not tha t the business is Intrinsically 
unprofitable. US groups such as Uni- 
royal and Monsanto have achieved 
marg ins as high as 33 per cent. 

The European, industry must follow 
the mrampip of the American industry, 
by cutting costs, rationalising or tak- 
ing the difficult decision to leave the " 
business altogether. Unlike the US, 
where just four large manufacturers 
remain, in Europe only Sobering and 
Hoechst have merged, leaving CIba, 
Sandoz, KMne-Poulenc, Zeneca, Bayer 
and BASF battling for market share. 
The present situation is unsustaina- 
ble, and benefits neither companies 
nor their shareholders. 


Mobile satellites 


European M&A 

European mergers and acquisition 
specialists must be green with envy as 
they contemplate the bumper year 
being enjoyed by their US counter- 
parts. Though the level of European 
M&A a ctivit y has picked up, it does 
sot compare with the flow of mulfi-bil- 
Hon-dollar deals on the other sid e of 
the Atlantic. There three sectors in 
particular are being convulsed by 
restructuring: pharmaceuticals, 
defen ce and mpdia/MPfimna 

On the surface, conditions look ripe 
for a similar burst of activity in 
Europe. like the Clinton administra- 
tion, Europe n governments are try- 
ing to keep the lid on healthcare bins 
and cut defence spending. So it makes 
sense for drugs and defence groups to 
merge and reduce capacity. The tech- 
nological forces reshaping the bound- 


Agrochemicals 

The dust has at last settled on the 
European agrochemicals Industry, fol- 
lowing 1992’s Common Agricultural 
Policy reforms. These scythed up to 20 
per cent off the European market 
Results from agrochemicals companies 
Airin g the first six winnttm indicate 
the Tnarfap* should s tabilis e thin year, 
but the outlook for European agro- 
chemicals groups remains bleak. This 
year, everything that could go right 
for the industry has done so, yet the 
world agrochemicals market is fore- 
cast to expand by only 3 per cent 
Over the next five years, annual 
growth is expected to be limited to no 
more than 2 per cent 

Such poor prospects would not be so 
serious if European agrochemicals 
groups were capable of generating rea- 
sonable returns. Even before the 


A game ot chicken is being played 
out in the so far non-existent market 
for pocket satellite phones. Inmarsat's 
decision to raise $lbn in equity for its 
mobile satellite affiliat e has sharply 
increased the game's stakes. The 
industrial might now converging on 
the market is formidable. Inmarsat 
itself is owned by 75 telecom opera- 
tors. Three rival consortia Include cor- 
porate giants such as Motorola, Lock- 
heed, Sony, Loral, Alcatel-Alsthom, 
Vodafone and France TQfecam as well 
as Mr Bin Gates and Mr Craig McCaw, 
America’s best-known high-technology 
entrepreneurs. 

pocket satellite phones will be a 
niche market, providing services for 
globe-trotting businessmen and those 
parts of the world without ordinary 
cellular networks. That could still be a 
lucrative market But it is doubtful 
that four groups investing $10bn-$20bn 
in total can all be profitable. Soma will 
back down or mage. The first test will 
be whether they are prepared to put in 
hard rash. 

Motorola’s Iridium has already 
raised $800m, though some of this 
involves commitments to provide ser- 
vices rather than cash. Loral’s Global- 
star has pulled In a more modest 
$275m. Inmarsat's $lbn finanring is 
the most ambitious. But perhaps it has 
the easiest task, in that it is raising 
the money from a closed group of 
mainly state-owned monopolies. 
Inmar sat's plans wOl only look com- 
mercial to outsiders if its few private- 
sector investors such as BT think the 
project worth bankrolling. 


This aaooancnatm offcan at a mner of retard tmlj. 


ScpteaitriW 



£8,200,000 

Management Buy-Out/Buy-ln 


Led, structured and arranged by 

NatWest Ventures 


Equity provided by 


NatWest Ventures 


Senior debt and working capital arranged by 

NatWest Markets, Acquisition Finance 


Advisers to management 

KPMG Peat Marwick 
Edge & Ellison 





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week 


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EUROPE'S LEADING DEBT 
COLLECTION COMPAMY 



justitia 




FINANCIAL TIMES 


COMPANIES & MARKETS 



©THE FINANCIAL TIMES LIMITED 1994 


phone David Rn£eraun im 0952 293262 

Telferd. 


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MARKETS 


Bolivian stock set for London listing 


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(GLOBAL INVESTOR 

Month by month, the hum of economic recovery is 
spreading through the industrialised world. 
Strikingly, in most countries the recovery has been 
driven not by consumption, but by industrial 
production. Even more encouraging is the fact that 
the dramatic upswing In activity seems to be largely 
trade-related. Page 18 - 


HARTMWOLP 

ECONOMIC EYE 
In 1991 more than 30 per cent of 
ail births In the UK were outside 
marriage, some six times as many 
as In 1981. Patterns OF marriage 
and cMd-reering have been 
revolution teed within a generation. 
Martin Wotf argues that economics 
helps explain why. Page 18 

BONDS: 

As European Union finance, ministers held cosy 
chats on economic and monetary union near Lake 
Constance last weekend, the markets were hoping 
that they had not forgotten the lessons they had 
learnt over the past few years. Page 20 

EQUITIES: 

A fairly steady outlook for US equities became less 
certain as last week drew to dose, while In the UK, 
the consensus is that the London market has 
further to advance this year, even if base rates are 
almost certain to rise. Page 19 

EMERGING MARKETS: 

A severe liquidity shortage caused by a spate of 
rights issues from quoted companies wishing to 
boost capital has left the Czech Republic's stock 
market drifting sideways, and turnover has fallen 
sharply from peak levels of seven months ago. 
Page 19 

CURRENCIES: 

The dollar will again be the focus of attention this 
week after its foil last Friday. Few observers expect 
this to reverse unH US interest rates are seen to 
have reached * plateau. Page 19 

COMMODITIES: 

Metals markets are tfksty to be quieter than usual 
this week because many aluminium traders have 
made their wey to Paris for the annual Metal 
Bulletin ahinfiniuni conference which opens tills 
morning.- Page 18 •.'"■■■■ ■"■■■■ 


further 3&2§.per.cettt mCSga, ti^^wiaiitoajry-. 
hotels 

UK COMPANIES: '' ' ’ •/.* ^ ’ ' 

America! Express IS/expeofod to^too<KK»tqd^ r 
that it has acquired the international bpsteera tiayel 
operations and US travel agencies qf.TWpojasQobk 
for about $375m. TLG, the hokting coroparfy forithe 
Thom Lighting group, to planning tiM^me to 
market later this autumn through a ptedngaod J 
pubflc offer likely to vriue the former Thom EMI - -• - 
subsidiary at more than £225fn .(634am). f»aga 18. 


STATISTICS 


Base lending ratas _27 London recent issues 27 

Company meetings —9 London ehareearvtoa .27-29 

DMdend payments _9 Managed fanda 23-Z7 

FFA Worid incBcaa ..18 MoneyWfcnts ...37 

FT Guide to currencies — 17 New M bond Jaauas - — ,20 
Foreign mctwnges 27 WoiW irtookTi«Wtaa*..2Z 


By rachanl Lepper hi London 

A Bolivian electricity distributor will 
become the first Latin American company 
far decades to trade its shares on the Lon- 
don stock exchange if plans to list the 
. group go ahead in November. 

The Cochabamba Ugbt and Power Com- 
pany could even be the first listing since 
the Antofagasta Chile and Bolivian Rail- 
way was registered, towards the end oT the 
last century, according to Mr Peter Earl, a 
consultant with Maidstone Private Capital 
Group. 

Fieldstone, an ftwwg fawgnt bank which 
specialises in the . energy sector. Is plan- 
ning Cochabamba’s tigHog s In La Par and 


London, as wefl as a^^otfer for sale”, with 
the overall : exercise part of the recent 
restructuring of the 'country's electricity 
industry. 

Fieldstane, which Valyas the co mpany at 
about 933m, is giving priority to Bolivian 
investors and says the London listing will 
be secondary. It Is hoping that interna- 
tional investors will buy at least some of 
the 70 per cent state, being sold by the 

Bolivian Wfttinnali«wl energy fdwwpaTiy 

“Until now, there has been, no posribUity 
of baying Bolivian stocks so there is con- 
siderable pent-up dwmand withlflrgn s iwim 
already deposited for this purpose in New 
York and London," said Mr EaxL 

“•There iww hpwq rangirierahin interest 


expressed by overseas investors particu- 
larly those from overseas markets,” he 

Earlier this year investor confidence in 
Latin America was dented by turmoil on 

intwynaHpnal markets a nd ai g n q of politi- 
cal instability, especially in Mexico, a 
favourite Latin destination for foreign cap- 
ital in recent years. 

Sin/y the summer, however, interest ban 
picked up and a number of new issues are 
tn the pipeline. Although issuance Is 
expected to fall hum last year’s record of 
gfibn. Latin American companies raised 
more than $3tm hi international equity 
offerings In the first seven months of the 
year, according to figures produced by 


Interna tio nal Financing Review, a special- 
ist publication. 

Competition for the mandates among 
investment banks is said to be intense, 
with fees farced down as a result 
Mr Earl says that the recent restructur- 
ing of the Bolivian electricity industry has 
fallowed the UK model 
Describing the company as a "Latin 
American Manweb”, he says its operating 
profits rose 62 per cent and revenues 21 

per cesrt in 1993. 

The Caracas-based Andean Development 
Corporation, a regional development body, 
is underwriting the issue alongside Field- 
stone. 

International Equities, Page 19 


Method of Lufthansa issue clears way for Deutsche Telekom, write Andrew Fisher and Antonia Sharpe 

A test-flight towards 
prize on the horizon 


L ufthansa, the German 
national airline, lias 
st r ive n hard over the past 
two years to cut costs, shed 
labour, st reamline operations and 
move out of the red. It Is against 
this background of a return to 
profitability that international 
investors are being wooed by 
banks to take up the shares 
offered in the airline's DMlbn 
($656m) privatisation issue. - 
Bat while the consortium of 
hanks, led by Dresttaer of Ger- 
many, are confident that Luft- 
hansa’s recovery story is a con- 
vincing one — the shar es have 
doubled, over file past year to 
more than DM200 - the implica- 
tions of the issue go well beyond 
its likely acceptance by inve st o rs. 
They concern future privatisa- 
tion itturipg, German companies' 
attitudes to mew methods of pro- 
moting, investor interest and the 
way in which big German banks 
are being forced to relax same of 


inks have often com- 
erhafiaaal standards, the 


te/find on September 29, is rela- 
tively SHIAH. Thus at first sight, 
tbef SCate of international atten- 
tion focused on the imminent 

■ sd^vf the German government's 
shares in the airline may seem 
overdone. After all, the airline is 
.already partly, privatised - the 
government’s stake is 5L4 per 
cent with other state bodies bold- 
ing a further 5JS per cent - so 
investors can readily buy shares 
in the market 

Not all investors are persuaded 
that Lufthansa is as attractive as 
the: tvmks say. The shares’ spar- 
kling- performance has raised 

■ worries In some Timute of buying 


at the top of file market “ft win 
require a revision of earnings 
estimates to get Investors inter- 
ested," said Mr John Legat, 
senior portfolio manager at GT 
' Man ag ement in the UK. 

So why has the Bonn govern- 
ment placed so much importance 
cm involving international inves- 
tors in this transaction? And why 
are so many banks 028 in all) 
keen to.-participate in promoting 
and miRng the issue? One reason 
is that there Is a much bigger 
prize holering temptingly over 
the horizon - the partial privati- 
sation of Deutsche T elekom, the 
state German tdecommunica- 

By matching 
demand and supply 
m ttie shares, 
bankers hope to 
v : *jvpid volatility ^ 

tioSs^cdfiMin. The sfeeaf ftps • 
issue could exceed DMtflhm 
If the Lufthansa Issue Is a suc- 
cess, it will bode well for fire 
Telekom offering which will have 
to be organised on a much larger 
scale. For th e first time in a Ger- 
man privatisation, the bookbuild- 
ing method is befog used. Inves- 
tors’ bids are collected for the 
shares, thus helping to establish 
the most appropriate selling 
price. By matching demand and 
supply in the shares on offer, 
bankers hope to avoid excessive 
volatility wfam tx8dm^ sturts im 
the secondary market 
Through bookbuilding, the 
banks aim to favour potential 
long-term investors over those 
ISkdy to sell early. It is a trans- 


parent method which has already 
been used in Germany to varying 
degrees for issues such as Wella, 
the farfr care company, Daimler- 
Benz, the motors and aerospace 
group, Dresdner Rank arid Bnde- 
rus, the engineering group. The 
DMGOOm sale of 25 per cent of the 
shares fn Hanover Re, tire Ger- 
man reinsurance company, will 
be the next' German issue in 
which bookbuilding will be used. 

But other German companies - 
new more comfortable with the 
idea of having non-German 
shareholders - are also intrigued 
by this method of selecting high- 
quality investors, especially for 
issues with a foreign appeaL 
There has been a very positive 
echo from German corporations,” 
said one Frankfort banker 
involved in the Lufthansa deni, 
“German firms used to offer a 20 
per emit discount {when raising 
capital]. H they can get close to 
the market price of the shares, 
they can Talse more cash^. 

In the stupe issue carried out 
abroad fty-presdner Bank this 
April, which. .raised DMLlbn, 
bankers estimate bookbuilding 
meant a near 15 per cent gain 
ova- what would otherwise have 
been obtained. “Ton can separate 
the wheat from. the chaff," said 
one. Because file amphqris is 
placed : on- the quality of tire 
investors and shares are not sim- 
ply allotted according to a bank’s 
status or ifote with fta issuing 
c ompany , issuers clearly benefit 

For the big German banks, this 
is quite a change. In the past,, 
new share issues sometimes 
failed because banks were wimble 
to place the shares they had been 
allocated (based an their under- 
writing quota) In firm bands. 
This meant shares were sold tn 





VSS&gSX 


the market, depressing the price 
after the issue. Bookbuilding is 
designed to avoid this; the lead 
bank funnels shares to those con- 
sortium banks who can call- on 
the best long-term investors. 

The tradi tional German meth- 
ods have outlived their time,” 
said a German banker. “German 
companies have got to be much 
more capital market-aware and 
take account of shareholders’ 
wishes. This is what bookbuild- 
ing is all about” 

But much depends on the way 
it is carried out Some bankers 
are critical of the “ring-fencing” 
approach, tn which twnim - apart 


from Dresdner and Deutsche 
Bank as lead manager and co- 
lead manager - are restricted to 
fixed geographical areas in plac- 
ing, the Ijfthansa shares. Other 
German banks are irritated at 
bring held to their home base. 

“Thane should be no regional 
limitations with Deutsche Tele- 
kom,” Bald one banker. Also, 
some bankers dislike the fact 
that no global co-ordinator has 
yet been appointed for the Tele- 
kom issue, expected in 1996. Now 
that German hawks are nhariiMng 
their conservatism and have 
embraced bookbuilding, they are 
keen to see the job done properly. 


Savoy 
may deny 
Forte full 
victory 

By Michael Skapinkar, Lsteura 
Industries Correspondent 


The Savoy hotel group Is 
expected to emerge from Its 
board meeting tomorrow as an 
independent company. Plans to 
merge Savoy’s hotels with 
Forte’s luxury establishments 
are Ukriy to be shelved for the 
time being. The board hopes 
Instead to appoint a new chair- 
man and wmti»g h»g director, who 
will be charged with improving 
Savoy’s profits as a stand-alone 
company. 

This outcome will not give 
Forte the complete victory It has 
sought. Mr Rocco Forte, the 
group’s chairman, wanted a 
majority stake fat a company 
which combined the Savoy group 
with Forte’s top hotels. Forte Is, 
however, expected to be given 
greater participation In the man- 
agement of Savoy. 

Savoy die-hards still hope that 
a white knight might offer to 
buy the stakes of one or mare 
sufon Savoy shareholding trusts, 
thereby p»*wwg Forte even fur- 
ther away from outright control 

Their in tere st has been raised 
by a planned meeting today 
between Sir Anthony Take, 
Savoy’s chairman, and Mr Jay 
Pritxker, the Chicago financier 
whose family owns the Hyatt 
hotels group. Mr Prltzker was 
unavailable for comment. 

Savoy directors hope to 
announce on Tuesday that Mr 
Ramon Pajares, general manag er 
of London’s Four Seasons hotel, 
win replace Mr Giles Shepard, 
the Savoy manag in g director, 
who is expected to resign today 
or tomorrow. 

Sir Ewen Fergusson, chairman 
of Contis, the private hank, and 
former British ambassador to 
France and South Africa, is the 
leading candidate to succeed Sir 
Antho ny, who w ishes to retire. 

Hue directors’ endorsement of 
Mr Ewen and Mr Pqjares would 
represent a truce in the 13-year- 
old fend between Savoy loyalists 
and Forte. 

A takeover battle which lasted 
for much of the 1980s resulted in 
Forte owning 68 per cent of the 
shares bat only 42 per cent of the 
vote. 

There has been a recognition 
by both sides that the Savoy 
hotels - which include the 
Savoy, Oaridge's and the Con- 
naught - have perforated poorly 
under Mr Shepard. Last year, the 
group made pre-tax profits of 
only £725,000 (ll.lm) on turn- 
over of £8&Sm. 


This week: Company hews 


WESTERN UNION 

Buy-out teams 
could push bids 
past $1bn mark 

The final round of bidding in the 
auction of Western Union thia Friday 
could well elicit an offer of more than 
$lbn for the world’s biggest non-bank . 
money-transfer company - more t h an 
twice the first bid made three months 
ago. . 

Three biddera remain in the ring: 
First Financial Management, a data 
processing company. First Data, a . 
credit card processing company spun 
off by American Express two years ago, 
and Forstmann little, a leveraged 
. buy-out firm. 

Western Union, which h a ndle d l8J5m 
payment transactions last year, was put 
up for auction by a US bankruptcy 
judge in June. The company, though 
not itself in bankruptcy, is ow ned by 
- New Valley, which has been operating 

under Chapter 11 of the tJS bankruptcy 
code since March. 

New Jersey-based Western Union 
remains the best-known name in the US 


miring of the last century, ft operates 
through 24,000 agants. &000 of whom 

are outride the US. The company relies 

to a huge orient on customers .who do _ 

not have bank accounts. 


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Ftastmanzi little - though mrijkeJSist 
financial, it bas said tt will not assume 
the company’s unfunded pension ^ 
Habfltty, put at 6268m. First Data,; ~ 


of 'con tention by refusing to raise its . 


offhe pension liability). 

Friday’s second-round of bids may 
not yield the winner and the final 
outcome may not be known unfit the 
mil of the month. 




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KINGFISHER 

StoresMow price plan 
fails .satisfy doubters 


tomorrow ajrffingflshar, the UK 
retailing grotgu from £82m to Shout 
£93m (614*n), is not expected to lift the 
gfoom eunofopdang the stock in theCBy 
of London., 

The shares have. fallen JBroma hi^, of- 
TJSp last Decodbar to 50fo on Friday. 

The resoltswin inchidea foH - 
contribufiimTSlfr ihe first thne-from 
Darty.th^ft^^’dectric^fetafier 
whose acquMtidin was coauKaeted two 
months befafotbe end of the first half 
test year .Stripping ottt the increase 
from Darty, the tnrimtying resnit is 


III i '►,! «Ti (7T»*: ,1. . 


coria, r aMm fr offiK ^ tedmology such 
asetoSrefofrpotet-ofsale systems to 
chsans first 


OTHER COMPANIES 

Air France to reveal 
buyer for hotel chain 

Air France will today end weeks of 
uncertainty by announcirej' the identity 
of the new owner cf Mgridien, its 
luxury hotel ckato- Mfer id i Bi n is bring 
courted by competing bids from 
France's Accra: and the UK’s Forte. 

Ak France says it will sell MS&rtdien to 
the highest bidder width means Forte 
could win as it has MifFFi'LSbn ($33Qm) 
against Accor's FETLfibn. 

However, the Frravch group has lobbied 
hard behind the scenes trying to swing 
the deal through its political toftnence 

and rninnwrnfail rlnnt gfi ww rf Air 

Fiance's partners. 

■ Nestlfc Ih e food and be veregBS giant 
maintamed sales atSFE27l2tai (82Q.60bnl 
in the first half in spite of the very 
strong Swiss franc, winning renewed 
investor support First-half results for 
the perioff whkh are to be announced 
cm Thursday, are also'axpected to show 
little or no growth, unless the group 
takes in all or part ofthe gam an its 
recent FFrtghn sale of aaset s-to 
L’Ortal. 

■ PftO: A good half for the cruise 

industry is expeefedfo bave hdped the 

UE.shfopfng; constznction and property 
group Rft pretax prafite to between 
£UXkn (H55m) and £H36m, against 

CW’lm Analysts antii5|iaft> a rfn yMgnil 


■ Lasmo: Bfo oD explorer is eapected 
to a n nnnnca IntHi^aflUnigip; of £20m. 


Cnmfiwitfiiw'ta imtaw 


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Wednesday, against net profits last year 
offffiOm. . • 

■ Prudential Corpor at ion: The UK’s 
largest fife insurance company reports 



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Analysts' forecast s for p re-ta x pro fits 
range from £243m ($3Thn) to £283m, 

rymrpar pd Brjtjj t/t MOm land - timo 

■ United BlsciritK The UK biscuits and 
sna<As mann Ea c t u rer is Hkeiy to rqiort 
on Thmsdayiinmim pretax profits of 
about £75m (6U6J2S), compared with 
£7(L8m a year earKer before a £82.7m 
gain on disposals. An inouese in 

the dividend is unlikely. Redder, 
fts US subsidiary, will show some 
progress. 

■ Next The UK fashion retailer is 
expected tm Friday to provide evidence 
c# its recovray, with interim pre-tax 
profits up from £23m (636m) to about 
cam. 


American Bens . 


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Cook (Thonrn^ : 


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FINANCIAL TIMES MONDAY SEPTEMBER 12 1994 


COMPANIES AND FINANCE 


Amexco to pay $375m 
for Thos Cook units 


Lucas 

completes 

strategic 


Former Thom EMI offshoot likely to be valued at more than £225m 


TLG planning autumn debut 


By Paul Taylor 


review 


By Michael Skapinker, Leisure 
Industries Correspondent 


American Express is expected 
to announce today that it has 
acquired the international 
business travel operations and 
US travel agencies of Thomas 
Cook for about 3375m 
(£34 1.9m). 

The deal will confirm Ameri- 
can Express as one of the 
world's two big business travel 
groups, alongside Carlson of 
the US and Wagonlit of France, 
who agreed to combine their 
business travel operations last 
March. 

The sale of its business 
travel operation will allow 
Thomas Cook to concentrate 
on its three remaining activi- 
ties: leisure travel agencies 
outside the US. foreign 
exchange and traveller’s 
cheques. 

The purchase of the US 
travel agencies business is a 
separate transaction. 

The US business is owned by 
Mr David Paresky, who oper- 


ates under a franchise agree- 
ment with Thomas Cook. 
Thomas Cook was prevented 
by US banking laws from oper- 
ating the business itself, 
because it is owned by West 
deutsche Landesbank. 

The expected 3375m pur- 
chase price represents tire pay- 
ment to both Thomas Cook 
and Mr Paresky. It is not 
known how it is divided 
between the two transactions. 

Thomas Cook is thought to 
have decided that it did not 
have the resources to compete 
in the international business 
travel market 

Purchasing airline tickets 
and booking hotel rooms for 
corporate customers will 
require an increased invest- 
ment in computer technology 
over the next few years. 

Unlike American Express, 
Thomas Cook does not have a 
charge or credit card to offer 
business travellers. 

The ability to provide clients 
with a plastic card to use on 
their trips has become an 


increasingly Important part of 
the business travel service. 
Carlson and Wagonlit have 
said that they hope to negoti- 
ate an agreement with a card 
Issuer. 

Thomas Cook said last 
month that it wanted to 
increase its involvement in the 
traveller’s cheque business 
when it acquired Interpayment 
Services, the world's largest 
issuer of Visa traveller’s 
cheques, from Barclays Bank. 

The acquisition, for an undis- 
closed consideration, raised 
Thomas Cook’s share of the 
$54bn world-wide traveller’s 
cheque market from 17 to 30 
per cent This put it in second 
place behind American 
Express, which has 44 per cent 

Thomas Cook is also thought 
to have had discussions about 
buying the traveller’s cheque 
operations of Citicorp. Citicorp, 
the only other issuer of travel- 
ler’s cheques of any size, has 12 
per cent of the market 
Why agents are going 
global. Page 11 


By Tim Burt 


Institutions cool on UK equities 


By Norma Cohen, 
Investments Correspondent 


UK institutional investors are 
losing some of their enthusi- 
asm for British equities, as 
well as those from Japan, 
according to the las test Smith 
New Court/Gallup survey of 
fimri managers. 

The survey, conducted 
among 91 institutions in early 
September, found that only 15 
per cent of respondents 
planned to increase their expo- 
sure to UK equities, down from 
a six-month high of 20 per cent 
in July. Only 21 per cent of 
respondents planned to 
increase their Japanese equi- 
ties investment down from 43 
per cent in July. 

The investor demand for 
property investment appears to 
be tapering off as well, with 
only 1 per cent of respondents 
saying they wish to increase 
their holdings, down from 14 
per cent the six-month peak, 
in May. 

On the overall UK economic 
front, nearly two thirds of 


respondents say they expect 
conditions to “get a little bet- 
ter” over the next 12 months, 
with another 20 per cent pre- 
dicting they will remain 
unchanged. On the inflation 
front. 77 per cent see inflation 
rising more rapidly in the next 
12 months. 

On continental Europe, 
respondents have increased 
their forecasts for German 
interest rates, saying they 
expect the Bundesbank’s key 
rate for repurchase agreements 
to rise to 5-1 per cent in one 
year’s time from its current 
level of 4J35 per cent 

In the light of that forecast 


not surprisingly, just over half 
of all respondents said they 
favoured French equities over 
German equities. 

France ranked as the Conti- 
nental market in which inves- 
tors most wanted to increase 
their exposure, while Germany 
was the market in which inves- 
tors most wished to decrease 
their exposure. 

• UK pension fund manag ers 
believe Asia Pacific and South 
America offer the most attrac- 
tive investment areas over the 
next decade, according to a 
survey by Record Treasury 
Management, the currency 
hedg in g spe cialis ts. 


Lucas Industries yesterday 
said Mr George Simpson, its 
new chief executive, bad com- 
pleted a five-month strategic 
review aimed at refocusing the 
aerospace and automotive 
components manufacturer. 

The company, however, 
played down weekend reports 
that the plans would lead Inev- 
itably to plant closures, redun- 
dancies and the disposal of 
non-core businesses. 

Under the proposals, the 
group will focus on six prod- 
ucts areas - aerospace, elec- 
tronics, brakes, diesel systems, 
electrical systems and automo- 
tive aftermarket - but the 
board has yet to decide on the 
form of any restructuring. 

Mr Simpson, the former 
Rover Group chairman, first 
outlined his vision last month 
at a meeting of senior manag- 
ers, at which he voiced con- 
cern at Lucas’s ‘inadequate” 
financial performance and 
stressed the need for better 
customer relations. 

He told them that to achieve 
long-term growth the group 
had to concentrate on added- 
valne products such as aero- 
space equipment and electron- 
ics rather than low cost com- 
ponents. 

The group’s frill year results 
are due on October 10. 


TLG, the holding company for 
the Thom Lighting group, is 
planning to come to market 
later this autumn through a 
placing and public offer likely 
to value the former Thom EMI 
subsidiary at more than £22Srn. 

The notation of TLG, 
Europe’s second largest sup- 
plier of professional lighting 
equipment and systems after 
Philips of the Netherlands, will 
be one of the biggest in a busy 
autumn new issue calendar for 
the Stock E x cha n ge. 

In August last year, TLG was 
the subject of a £17L5m man- 
agement buy-out led by Mr 
Hamish Bryce, TLG’s executive 
chairman , and backed by 
Invest corp. the Bahrain-based 
inter nati onal investment bank. 
Thom EMI retained a 12 per 
cent stake In the business 
while the management team 
took a 3 per cent holding, 
which could rise to about 13 
per cent subject to the exercise 
of stock options. 

Thom Lighting’s origins go 
back to 1928 when Sir Jules 
Thom founded the Electric 
Lamp Services Company in 
Tiondon. The lamp bulb manu- 
facturing business was finally 
sold to General Electric In 1991 
leaving TLG - renamed to 
avoid copflisfan with its former 
parent - as a dedicated fittings 
manufacturer. 

TLG is expected to raise 
between £70tn and £80m of new 
money through the flotation 
which wfQ initially be mainly 


New emerging markets 
trust being launched 


By Terry Byland 


Instem advances in first half 


Instem raised pre-tax profits 
from £410,000 to £505,000 in the 
six months to June 30. alth- 
ough the electronics and infor- 
mation services group has con- 
tinued to experience underly- 
ing pressure on margins. 

Turnover was lower at 
£8.Q4m (£9 .5m) reflecting the 


nature of the USM company’s 
project business, although 
order intake in both systems 
and electronics manufacturing 
businesses had increased. 

Earnings per share rose from 
6p to 7.4p and the interim divi- 
dend has been stepped up to 
1.4p (L3p). 


In an important expansion of 
investment opportunities in 
the move into global emerging 
markets. Society Generate 
Strauss Turnbull is launching 
an investment trust aimed at 
expected capital growth in 
information infrastructure in 
emerging economies in Asia, 
Europe and Latin America. 

- BZW Investment Manage- 
ment will manage the fund, to 
be named The Infostructure 
Trust, which is initially 
aimed at a minimum total 
investment of about £40m 
although this figure is likely to 
become very much greater. 


Golden Hope 


Golden Hope Plantations Berhad 

( Incorporated in Malaysia) 


Notice of Annual General Meeting 


NOTICE IS HEREBY GIVEN that the Eighteenth Annual General Meeting of the 
Company will be held at the Pacific Ballroom, Pan Pacific Hotel, Jalan Putra. 50746 
Kuala Lumpur, Malaysia, on Wednesday, 28th September, 1994, at 1 130 a.m. for the 
following purposes: - 

I. To receive and adopt the Report of the Directors, die Audited Accounts for the fifteen 
(15) month period ended 30th June. 1994, and the Report of the Auditors thereon. 

(Ordinary Resolution 1 ) 

2- To declare a final dividend for die fifteen (15) month period ended 30th June. 1994. 

( Ordinary Resolution 2) 

3. To approve the Directors’ fees for the fifteen (15) month period ended 30th June, 1994. 

(Ordinary Resolution 3) 

4. To reelect Encik Zain Azahari bin Zainal Abidin as Director. (Ordinary Resolution 4) 

5. To re-elect Dr Ng Chong Kin as Director. (Ordinary Resolution 5) 

6. To consider and. if thought fit, pass die following resolution as a resolution pursuant to 
Section 129(6) of the Companies Act, 1965: 

“That pursuant to Section 1 29(6) of the Companies Act. 1965, Tun Ismail bin Mohamed 
Ali be rc-appointed Director of the Company to hold office until die conclusion of die 
next Annual General Meeting.” (Ordinary Resolution 6) 

7. To consider and, if thought fit, pass the following resolution as a resolution pursuant to 
Section 129(6) of the Companies Act. 1965: 

“That pursuant to Section 129(6) of the Companies Act, 1965, Encik Howe Yoon 
Chong be re-appointed Director of the Company to bold office until the conclusion of 
the next Annual General Meeting.” ( Ordinary Resolution 7) 

S. To re-appoint Messrs. Ernst & Young as the Company’s auditors and to authorise die 
D ir ectors to fix their remuneration. (Ordinary Resolution 8) 

9. To transact any other ordinary business of the Company of which due notice has been 
received. 


By order of the Board 
Noriln blnte Abdul Samad 
Secretary 
Notes: 


Kuala Lumpur 
12* September, 1994 


li) A member of the Company entitled to attend and vote at the above meeting may appoint one or 
mare proxies but not exceeding two, to attend and voce in his stead. Where a member appoints two 
proxies, the appointment shall be invalid unless be specifies die proportion of his holdings to be 
represented by each proxy. A proxy need not be a member of die Company but must attend die 
meeting in pe r s on to vote. Ifhe is not a member, be must be an advocate, an approved co m p an y 
auditor or a person approved by the Registrar of Companies in a particular case [Section !49(lXb) 
of the Companies Act, 1965], The instrument appointing a proxy must be deposited at the 
Company’s registered office, 13th Floor, Mom PNB, No. 201 -A, Jalan Tun Razak. 50400 Koala 
Lumpur, not less than 48 horn before die time for holding the meeting or any adjournment fcereaf. 
(iil If the dividend Is approved at the Annual Genas! Meeting, it is intended that the warrants be 
payable on 24th October, 1994, v stnreboldeis registered in the books of the Company at the dose 
of business on 29th September. 1994. 


Invitation of proposals to 
develop, establish and 
operate "Trunk Radio 
Service" in private sector 


Government of Pakistan Telecommunication Corporation are 
gearing up for the speety Implementation of policy of maximum 
Private Sector part i c ip ation, which aims at Production of efficient 
and modem telecommunication services in the country. One of the 
latest tachnotogiee in the field consists of Trunked Radio System, 
which Is now opened lor Private Sector. 


Appfications are invited from reputable firms having eapefafflty and 
experience to develop and establish Trunked Radio System even 
using public switched telephone network wHh a capability to 
provide the service for use in Pakistan. The following 
docmentaftletafe should be provided with the appfications: 


J Feasibility study comprising system 
configuration and system design. 


System performance gurantee based on 
international standards 


Proposed system of integration with Pak 
Telecom Network and possibility of integration 
with other private network in operation. - 


Proposal with the formats for the calculation of 
yearly based royally payable to the 
Government of Pakistan, in addition to the 
payment of normal charges payable to Pak 
Telecom and Pakistan Wireless Board (PWB) 
for allocation of frequency spot and other Inter 
connections. 


Detailed specifications of the system proposed 
to be installed. 


Full details of maintenance service facilities, 
support services, quality assurance and 
maintenance philosophy. 


Proposal of manpower deployment and 
investments plan covering both foreign and 
local component 


o Specific agreement of local production/delation 
programme will any manufacturer of 
international repute. 


If a proposal is found commercially and technlcafy suitable by 
the competent authority, the selected firm(s) may be granted a 
licence tor a period of fifteen years. 


Applications with requisite informalion/documents should reach 
the undersigned by October 2. 1994. 


Muhammad Rashid 
JointSecretary-ll 

Ministry at Communications, Government of Pakfatan, 
BJock-D. Pak Secretariat, Islamabad 44000, Pakistan 
Tel: (92-51) 823738. Fax (92-61) 825454. 


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used to reduce TLG’s £10Qm 
net debt Investcorp and Thom 
EMI are expected to retain 
most of their shares following 
the flotation. 

The group, headquartered in 
Spennymoor, County Durham 
where it also has a state of the 
art manufacturing facility, has 
operations in 23 countries, 
fni-hiritng manufacturing facili- 
ties in eight, and has more 
than 4,000 employees world- 
wide. Among the large projects 
undertaken by TLG are light- 
ing the Tower cf London and 
the Sydney Opera House. 

It is the market leader for 
commercial industrial, public 
awt industrial light fMttp gg in 
the UK, where it has about a 23 
per emit market share, and the 
Nordic region and has strong 
positions in the French and 
German markets. It is also a 
market leader In Australasia 
and has a strong base in the 
fast growing Chinese and 
south east Asian markets. 

Despite the recession, which 
has affected all the group’s 
main markets including the 
£2.8bfl European market, 
TLG’s profitability has grown 
rapidly in recent years helped 
by cost reductions, the intro- 
duction of modem manage- 
ment and production tech- 
niques and sharply improved 
productivity. 

The company’s Spennymoor 
factory, which employs 1.050, 
has won. a raft of awards and 
was recently named best fac- 
tory in the north-east in a com- 
petition run by the Cornfield 




Hamish Bryce: group Is poised 
for strong organic grow t h 


School of Management and the 
Department of Trade of Indus- 
try. 

Over the past three years, 
the workforce has been cut by 
22 per cent, three factories 
have been closed and a 24-hour 
European distribution hub has 
been established in Brussels. 
As a result, turnover per head 
has risen by 30 per cent and 
profit per head by 135 per cent. 

Meanwhile, tight financial 
management means that work- 
ing capital has been reduced 
while investment In new prod- 
uct development has been 
stepped up and product portfo- 


lio has been updated. As a 
result, sales of new products 
launched since 1992 are expec- 
ted to account for about 40 per 
cent of UK sales this year. 

Overall operating profits 
have increased by 85 per cent 
2Tom £llm in the year to-- 
March 31 1992 to £204m in foe 
latest period (to March 31 1994) 
on fiat turnover of £824m, 
reflecting the recession and 
intense competition. 

As TLG’s main markets, 
including continental Europe, 
begin toshow. signs erf recov- 
ery, Mr Bryce says the group is 
poised for strong organic 
growth which could in soma 
markets, for example in Gcbn 
many, be augmented by actfak’ 
sitiens, though he insists there 
Is nothing planned at present 

At the time of the manage- 
ment. buy-out TLG had been . 
expected to come to market by 
about 1996. Mr Bryce,, who 
joined Thorn Lighting in .1986 
anri h»« overseen the transform 
mation of the business, says 
the . accelerated . timetable 
reflects the success of the 
group in boosting its financial 
performance, and the favoura- 
ble market conditions. 

"We believe now Is an appro-, 
priate time to obtain a listing 
of TLG’s shares. 71m flotation 
will reduce the group’s indebt- • 
edness and enhance growth 
prospects," Mr Bryce said. . . 

The issue is sponsored by 
Klelnwbrt Benson and thefohit ‘ 
stockbrokers to the Issue are 
Cazenove and Klein wurt Ben- 
son Securities. 


CROSS BORDER MSA DEALS 


B1DDB1/MVESTOR 


TARGET 


SECTOR 


COMNOT 


Axb (France) 


VkrtoJre Belgium (Belgium) Insurance 


Axa contimlng. 
expansion 


depending on the response to 
the offer. 

The fund will hold shares,, 
mostly in companies quoted cm 
emerging stock markets and, 
which operate across the full 
range of the mfnmwitinn indus- 
try, including advertising, pub- 
lishing and telecommunica- 
tions, newspapers, and 
education, as well as electronic 
software and hardware. 

The issue, in the form of an 
institutional placing and public 
offering of ordinary shares 
with wa r ra nts attached, will be 
sterling dominated and listed 
in London. 

Trading in the shares is 
expected to start In November. 


CanatSan 88 Qw» 
(Canada) 


Unit of Texaco (US) 


Oil & Gas 


Taxaoo raj s eta 
Canadian bid •" 


Axa (France) 


Wing On Lite Assurance Insurance 
(HKJ 


Wing sidling 

He 


Bedays (Ma l ayate) 


Taiga Forest Products Rarest products 

panada) 


Plana for 60% 
stake 


Morriaon-PIM Holdings Inks 
(Netherlands) 


Comptanrantoy 
purchase - - 


Mactariane Grot*> (UK) VIAddow Custom Packaging Packaging 
(Ireland) 


Buy from cash 
pile 


Independent Newspapers Jomalgeste (Portugal) 

P retend) 


Publishing 


Taking a 6.6% 


Dow Jonas (UQ/Ftaxtech European Business News Broadcasting 
(UK) (JV) 


70/30 split 


Voticswagen (GenrnnyV Joint Venture 
Bcher Qooderetti (India) 


Motor vehicles 


■ftoductkm & 
marketing plena 


S inga pore Aerospace - Joint Venture 
(SngaporeyVTN (Indonesia) 


Aircraft 

maintenance 


m ai nte na nce move- 


Founded by James Man in London in 1785, 
ED&F Man is an international trading group 
engaged in agricultural products and financial 
services. ED&F Man operates in 55 countries 
around the world and employs over 3,000 people. 



aJ 



ED&F MAN GROUP 


Placing and Public Offer 


Share registration line 


To reserve a prospectus and application form, 
please call the following number: 


071 490 5200 


r*i» ad*«ti*cmpnl. Mhidi h*i been prepare! ami imihnI bi K l»& K Mon liroap plr, baa born appmtcii bf 
J. lienn Schroder Wagg Hi fio. (.imbed, a munlnr nt ihc* Srcariilr* .mil Kufam Authority, Jar the purpdwt 
of section 57 of the Financial Sonicn Ad I9SK. ha utter or laviuiion lu anprtre wcurtUa In KO &K Mm Unup pic 
h being mark- now. An* such oiler or InnIMInn will be mode in n protpccte* to bn jiublbhcd in doe mine and arty 
nieh snpisilion winild be mode soldr on the basis of Informal Inn contained In swh a prtupoduv Potential 
invniera are recommended to consult a linanci.ll adviser pnnr Id upplm*; lor net mairnka in KDiK Man Group pie 
and should rote ttai the volllU of ihns ond iiunimr fnwn ih.w ihiim mar Lril apauai the Inuculur's inlFTCSL 


I \ati7m^d7 


5250,000,000 
Floating rase notes 1995 

Notice is hereby given thar the 
notes mill bear interest at 
$£375% per annum from 
8 September 1994 to 8 
December 1994. Interest 
payable an 8 December 1994 ' 
uOI amount to 9138.06 per 
910,000 note and Si J8Q£8 
per 9100.000 note. 

Nationwide Betiding Society 

Agent: Morgan Guaranty 
Trust Company 

JPMorgan 


SCONTINVEST FUND 
MANAGEMENT COMPANY S A. 


18 Boulevard Royal. L-2449 Luxembourg 

NOTICE 


tuc &xms rf reboots rfscowiNviOT fund management company 

SA. h as decided to open the compazmieuB SCONTWVEST FOND - JAPAN 
EQUITY and SCONTINVEST FOND - FRENCH BQOTY fcr sobsnteian ai of 
Sqxenfcer 19, 19Q4. . • 

Hm initial suhscripwxt period stall be front September 19. 1994 toxfl September 30, 
1994 and tee ia tdal price per unk shall be respectively YEN MUM - for On 
SCONITNVEST KIND - JAPAN BOOTY and FRF 2X000 - ftr SCWnNVKST 
FUND - FRENCH EQUITY, He efiecuve payment mat be daoeoa OctoberA 1994 
a? the burst . 


Upd«d nreperem &ad Mauagcsxax Rcgnlitkn an svailabis attbe ngfeend tffice 
of the Ma nagmei fl Company. 


Tbe Board &f Directors 

Zatxembmz, Asgeat 24, 1994 


lni>ii> r * 


Rapid riV 
for l'" ril 
desccwi* 111 * 









17 


FINANCIAL TIMES MONDAY SEPTEMBER 12 1994 


COMPANIES AND FINANCE 


Inmarsat to form global network 


By Andrew Adonis 

Inmarsat, ^ London-based 
international mobile satelfite 
co mm u nic ations organisation, 
will this week launch an affili- 
ate company to build a global 
personal mobile satellite tele- 
. communications sy s t e m 

Tbs company, one of several 
ventures seeking to oonstnu* a 
personal mobile sa tellite net- 
work, aims to raise $Um in 
equity from Inmarsat's 75 
members by the end of the 
year to fund the first stage of 
development and construction. 

The network is intended to 
be operational by 2000. It wifi 
require 12 intermediate-orbit 
satel lites, terrestrial tr acking 
stations, and commercial part- 
nerships with manufacturers 
and service providers. 

The total cost is esttmated at 


(2.Sbn. In addition to the (ibn 
of initial equity, the new com- 
pany will be seeking a further 
$40Gzn -fiom strategic partners 
among satellite and handset 
manufacturers. No public flota- 
tion Is planned. 

Mr Olof Londberg, Inmar- 
sat’s dnectorereneraL said the 
project was "bold and ambi- 
tious”, aiming to service a “sig- 
nificant niche" o pening np in 
the mobile communications 
market , ^ 

Customers for the new net- 
work would include interna- 
tional business travellers and 
local operators warding to sup- 
■ ply telecoms services to areas 
without adequate infrastruc- 
ture. 

The inost advanced of Inmar- 
sat’s rivals are Iridium and 
Crlobalstar, both of which claim 
to have raised significant 


investment sums. Iridium’s 
$3.4bn project was conceived 
by Motorola, the US-based elec- 
tronics group; the (L8hn CHbb- 
alstar project is being devel- 
oped by Loral, the US defence 
group, ffwfl Qualcomm. 

Although the design, of their 
networks - including the level 
at which the satellites orbit - 
varies, the three operators are 
aiming to provide similar ser- 
vices. With development at an 
early stage, analysts are cau- 
tious as to the prospects of all 
three operators surviving until 
launch. 

Inmarsat uses five opera- 
tional satellites to provide ser- 
vices to 40400 customers, most 
of them in. ite specialist mari- 
time and aeronautical markets. 
It views personal mobile com- 
munications as a critical 
growth market 


Iridium win be based on a 
constellation of 86. small “Leo" 
satellites. 

Handsets for all the net- 
works will be dual-mode, 
allowing calls to be made on 
local cellular networks where 
available. 

A year ago, Motorola raised 
(800m from an International 
consortium, Including Ray- 
theon. Lockheed a«d Sorint of 
the US, Bell. Canada and 18 
Japanese companies including 
Sony and. Mitsubishi as a first 
stage towards financing Irid- 
ium. . , 

More recently, a group of 
Indian .- financial institutions 
agreed to invest (32m in Irid- 
ium, and Comsat, the US satel- 
lite operator, is understood to 
be dismissing investing (70m to 
acquire a stake in the project 
See Lex 


Rapid rise 
for Ford 
descendant 

The possibility that a member 
of the Ford family will tm» day 
take over the top job again at 
) the US motor vehicle wianufars . 
turer increased last week with 
the elevation of a great-grand- 
son of founder Hairy Ford to a 
senior position in the com- 
pany, writes our financial 
staff. • 

William Clay Ford H, 37, was 
named as the next head of the 
company's important fmanca 
committee. , 

He will take, over the job 
from his father, »isn named 
William Clay Ford, on January 
1 next year. • • • • 

William Clay Ford H was 
also named a member of the 
company's organisation review 
and nominating committee. 

His appointment was seat as 
a sign of a rapid rise within the 
company, potentially setting 
the stage for William Clay 
junior to become the first Ford 
family member to run the- US’s 
second-biggest manufacturer of 
vehicles since Henry Ford H, a 
grandson of the founder, 
stepped down in 1979. 

The company’s finance com- 
mittee has been chaired by 
members of the JFoiti family 
since Henry Faril H took on the 
job in 1979. 

The role passed to -his 
brother, William Gay senior, 
after his deathin 1987. 


Globex rival faces further delay 


By Laurie Morse in Chicago 

The launch of fhe Chicago 
Board of Trade’s Answer to 
Globex, an afterdiours com- 
pute tr ading system known as 
Project A, has been delayed 
again. The system Is now 
expected to make its debut the 
third week in September. 

The CBoT, which to home to 
the actively traded US Trea- 
sury band futures and options 
markets, pulled; the plug on 

filnher, the plortranlr futures 

trading network owned by 
Reuters and operated jointly 
by -the Chicago Mercantile 
Exchange li fatif, last May. 


fflrnca fhgn, it has aTnwmcp^ 

ambitious plans to link its own 
Project \A system with other 
after-hours computers In Lon- 
don and AngfraHa. 

However, the exchange has 
had difficulty getting the prod- 
uct launched on its own turf. 
Originally scheduled to open 
trading on August l. Project A 
was delayed at the request of 
some CBoT members, who 
wanted a complete system 
audit . 

Delditte & Touche, the inter- 
national accountancy firm, 
gave the system a clear report 
in tee August Now. the CBoT 
is waiting far its regulator, the 


Commodity Futures Trading 
Commission to review the 
auditor's report and give its 
approval for the Project A 
launch. ! 

The exchange already meets 
much of the demand for its 
products nnferidft the US time 
zone with its evening open-out- 
cry trading session, which last 

■month had tiimnwi- of 229,510 

contracts. 

When Project A is launched 
it will Initially open far only 
two hours In' the' afternoon, 
bridging the gap between the 
close of the CBoT’s afternoon 
session and the opening of its 
evening aaftrinm 


Profits ahead at Pacific Dunlop 


By Nfldd Tail in Sydney' 

Pacific Dunlop, the 
Melbourne-based - industrial 
conglomerate, has reparted-a 
16.8 per cent rise in profits 1 
after tax and - aftnnrma? flmw 
to AOOSAin (USJ228m) far the 
year to June. 

The result was scored on 
sales up by. 9 per cent, to 
A|747bn, and included a pre- 
tax abnormal item of A$4B8m, 
down from At&53m previous- 
ly. 

Kaniing H per share, before 
abnormal items, were up by 
13.6 per cent to 2EL4 cents. The 
final dividend is 11A cantyi a 
share against 11 cents, mak i ng 


. a total for the year of 2&5 cents 
compared with 2L5 cents. 

All five main industr ial divi- 
sions - ranging from automo- 
tive products to healthcare - 
showed advances bid the larg- 
est group, building and con- 
struction, only saw a marginal 
increase in operating profits, 
from A(148m to A(149m. 
Pacific Dunlop mid the results 
were “creditable in very com- 
petitive markets”. 

On a geographical basi£, 
Australia accounted for 
A$333m of operating profits, 
compared with A$330m, end 
southeast Asia and New Zea- 
land chipped in hugely 
nmhang M . ftnrn the previous 


year’s A$94m. A bigger 
advance came in the US, con- 
tributing A|133m against 
A|103m, and Europe, with 
A$25m a gainst Aflfim. 

0 Shell Australia is to go 
ahead with the flotation of Us 
gold and o ther mineral assets 
as a separate company. A pro- 
spectus is to be lodged by the 
and of thin month. It expects to 
raise AggXfcn from the float. 

The new unit will take in a 
30 per cent interest in the 
Boddington gold minn in West- 
ern Australia, full ownership 
of the Union Reefs gold mine 
and the Sunrise Dam gold proj- 
ect. and 40 per cent of the Cen- 
tral Desert joint venture. . 


Texaco bid 
to buy rest 
of Canadian 
unit fails 


By Richard Waters 
In New York 

Texaco has failed to buy out 
the minority shareholders in 
its Cana d i an subsidiary, Tex- 
aco Canada Petroleum. 

The US energy group’s offer 
far the 22 per raw* of the com- 
pany It did not already own 
was rejected by 84 per cent of 
the minority shareholders In a 
vote on Friday. 

It needed more thaw 50 per 
cent of holders to accept the 
(1.40 a share offer to succeed. 
Texaco’s failure followed a dis- 
pute over the flawiHai* compa- 
ny’s value. 

Canadian 88 Energy, an 
independent company holding 
9 A per emit of the shares, had 
offered to hoy Texaco’s shares 
in its subsidiary for (L65 a 
share. But Texaco maintahmii 
its offer was fair and was 
based on the advice of two 
independent financial advis- 
ers. 

The rejection is a setback for 
Texaco ahead of its expected 
move to ex pand its Canadian 
operations. The US company 
once had one of the biggest oil 
and gas businesses in Canada, 
but sold tiie bulk far (Sbn at 
the end of the 1980s. 

The atte m pt to boy out the 
minority shareholders was 
seen as a tidying-np exercise 
ahead of renewed growth. 


South African 
fruit merger 

Two of South Africa’s biggest 
fruit expor te rs, Unifroco and 
Outspan, are to merge their 
European' operations into a 
new company called Capespan, 
writes Mark Suzman in Johan- 
nesburg. - 

Last year the combined 
export sales of the two compa- 
nies exceeded R2-5bn ($S54m). 

The two will have an equal 
share of Capespan, which will 
be based in the UK. Their sub- 
sidiary offices throughout 
Europe wfll be merged and put 
under Capespan’s control. 

The new company plans to 
operate a combined marketing 
season of 50 weeks, compared 
with Unifroco’s 85 weeks and 
Ontspan’s 25 weeks. 


FT GUIDE TO WORLD CURRENCIES 


Tte taM Mow fltm B* towt mW* 


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n*B*of feirlwy a*T«nci« or Friday, SoptOTber 9, 199* . h soma cam tf» rate h nonM. Mark* ram are tea average erf buying mi sating rate* accept 

Whftra They are ahown tp qftv wv d re . *n eoro* ceeee mart* neea hwm been cafcuWad from tfiooa of foreign cunenclee to vrtfch thoy ■* fad. . 


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ITT to launch L400bn 
offer for Ciga next week 


By Andrew H9 fn Milan 

ITT, the US conglomerate 
which owns the Sheraton hotel 
chain, will launch its L400bn 
($2S4m) bid far a further 35.25 
per cent of Clga, the Italian 
luxury hotels group, on Sep- 
tember 19. 

The terms of the bid, which 
will be made through ITTs 
Sheraton International subsid- 
iary, were outlined an Satur- 
day. 

If successful, the Ll.102 a 
share offer will double ITTs 
stake in Ciga to 7(L5 per cent 
Certain ffaifan fund managers, 
however, have already indi- 
cated that they would prefer to 
remain minority shareholders. 
Ciga shares dosed on Friday 
night at Ll.076. 

Consob, the Italian stock 
exchange watchdog, first 
announced that ITT would 
have to bid at the end of July. 
Since then the US company 


has bought farther Ciga shares 
on the market at below LUOO. 

In the full-page prospectus, 
published at the weekend, ITT 
said its management plans 
would be "better defined in the 
coming months”. However, it 
said it wanted to "explore the 
potential synergies between 
Ciga Hotels and ITT Sheraton. 

"ITT Sheraton can offer Ciga 
Hotels the benefit of a global 
marketing and distribution 
network, which Ciga did not 
have previously. Furthermore, 
ITT Sheraton can integrate 
Ciga Into the financial and 
operating systems already used 
by the ITT group.” 

Ciga was controlled by the 
Aga Khan’s holding company, 
Fimpar, until a rescue righto 
issue earlier this year, pre- 
pared by Mediobanca, the 
Milan-based merchant bank, on 
behalf of the debt-encumbered 
group’s creditor banks. 

ITT was unable to acquire 


Ciga via that issue, as origi- 
nally planned, and has had to 
accumulate shares on the mar- 
ket 

The ITT bid, which will close 
on October 7, could end more 
than a year of uncertainty 
about the future of Ciga. which 
was courted last year by Forte 
of the UK and Host Marriott of 
the US. Sheraton International 
to advised by Euromobiliare 
and Milla. 

Meanwhile, the Aga Khan to 
due to decide this week how 
much be can afford to pay to 
bail out Fimpar, which 
urgently requires new capital 

Reports at the weekend 
suggested he was ready to 
underwrite an increase in capi- 
tal to the tune of L24.5bn, but 
that he would not pay the 
entire sum at once. Fimpar bas 
postponed today’s extraordi- 
nary shareholder meeting, due 
to consider the group’s future, 
until September 19. 


Merloni earnings jump 51% 


By Andrew MB 

Pre-tax profits at Merloni 
Elettrodomestici, the Italian 
manufacturer of domestic 
appliances, increased by 51 per 
cent in the first half of 1994, 
helped by increased sales out- 
side Italy. 

Merloni, quoted on the Milan 
stock exchange but majority- 
owned by tiie Merloni family, 
announced on Friday that prof- 
its rose to L2L6bn ((13.7m) in 
the first half of this year, com- 
pared with LK3bn last time. 

The company, which trades 


under the Ariston, Indesit and 
Scholtes brands, recorded con- 
solidated sales of L905bn, 
against L726bn, an Increase of 
24 per cent 

With the consolidation of the 
company’s production units in 
Turkey and Portugal some 72 
per cent of sales - or L657bn 
compared with L495bn a year 
earlier - are now made outside 
Italy, although exports were 
virtually the same as in toe 
equivalent period. Excluding 
the Portuguese and Turkish 
factories. Merloni’s total turn- 
over rose by 16 per cent 


On Friday, Merloni shares 
rose to L5,45Q, compared with 
an opening price of L5.405. 

Merloni is the only large Ital- 
ian white goods producer still 
In Italian hands, but it faces 
stiff competition from larger 
rivals such as Zanussi. owned 
by Electrolux of Sweden, 
which also achieves about 70 
per cent of Us sales overseas. 

In July, Zanussi announced 
that its operating profits had 
increased by 51.3 per cent to 
L257bn in 1993, on sales of 
L3,022bn, of which L2,079bn 
came from abroad. 


Banesto sells stake in zinc group 


By Tom Bums in Madrid 

Corporacidn Banesto, the 
Spanish industrial holding 
company, has sold 23 per cent 
of Asturiana de Zinc (Azsa), 
Europe’s largest zinc producer, 
for Ptal0.6bn ((82.6m) to a 
group of International inves- 
tors for Ptal.500 a share, reduc- 
ing its stake to just over 50 per 
cent 

The sale represents the third 
large disinvestment in less 
than two months by La Corpor- 


acidn. whose parent Banco 
Espafiol de Crddito Banesto, 
was acquired this year by 
Banco Santander in a (2bn 
takeover, 

AB Asesores, a Madrid 
investment bank, Germany’s 
Deutsche Rank and Robert 
Fleming of the UK managed 
the Azsa disposal. 

Banesto said La Corporacidn 
policy was to dispose of its 
assets gradually as price oppor- 
tunities arose. "We are over- 
hauling thp manag e men t of all 


the companies controlled by 
the holding .company and we 
are not conducting a fire sale 
for any of the companies.” 

The mining company, 
exposed both to the cyclical 
price of zinc and to the dollar- 
peseta exchange rate, reduced 
its losses by 47 per cent to 
Pta2bn in the first half of this 
year and to forecast to post 
1994 losses of Pta4.4bn. against 
losses of Pta8-3bn last year. 
Analysts expect the company 
to break even next year. 


This announcement appears as a matter of record only 



PTT 


Turk Telekomunikasyon A.§. 
U.S. $ 165,000,000 
Medium Term Credit Facility 


Citibank International PLC 


has acted as the arranger of this facility 


July, 1994 


CITIBANK 


rh 


Internationale 
Nederlanden Bank N.V 

US$200,000,000 
Subordinated collared 

floating rate Notes 
due 2002 

Notice is hemby given that 
for the Merest period 12 
September 1994 to 13 March 
1995 the notes wil l cany an 
interest rale of 5. 1875% per 
annum, interest payable on 
13 March 1995 will amount to 
USS26236perUSS10.DOC 
note and USS6J5&42 per 
US$250,000 note. 

Agent Morgan Guaranty 
Trust Company 

JPMorgan 


intrum ffe justitia 

(Registered in Coragao No. 41415) 

Notice to Shareholders 

The Managing Board of INTRUM JUSTITIA N.V„ a company 
incorporated and existing under the laws of the Netherlands Antilles, 
of which the registered office is located ar Chumsceirokade 3, 
Willemstad. Cnrafao, Netherlands Antilles, wishes to announce that 
it has been decided with the approval of the Supervisory Board 
to distribute an interim dividend for the .1994 financial yew of 1.1 pence 
per ordinary share. 

As of November 4. 1994 the interim dividend on ordinary shares will be 
payable at the following addresses: 

Paying Agents 

Kredietbank SA. Lraembourgeobe Hambros Bank Limited 

43 Boulevard Royal 41 Tower Hill 

L-2955 Luxembourg London EC3N 4 HA 

Luxembourg United Kingdom 

Bearer Shareholders are asked to submit Coupon No. 13 to the paying 
agents for collection of the dividend. 

Furthermore shareholders are hereby informed that the Semi-Annual 
Report on the Group's activities and results during the first six months 
of the 1994 financial year will be available at the registered office of 
die Company, the paying agents as mentioned above and ar lames 
Capel & Co. Limited, Thames Exchange, 10 Queen Street Place, 
London EC4R 1BL, United Kingdom. 

September 12. 1994. 






FINANCIAL TIMES 


MONDAY SEPTEMBER 12 1994 


IS 




ingAi)bank 

Sti’fri u?«tk: i?3*t ■ oi ?b;<hu 


FINANCIAL TIMES 


MARKETS 


THIS WEEK 


Best Emerging 
Markets Bank 


INGAiBANK 

Ul „TI «SM«W1H\ s* •» l"*" 1 *'! 


Month by month, the 
satisfying hum of economic 
recovery is spreading through 
the industrialised world. The 
euphonious tone was first 
heard two years ago in 
the US and has moved slowly 
through the English speaking- 
world. 

In the first half of this 
year it has, quite suddenly, 
resounded through continental 
Europe, and its faint echo can 
even be recognised in Japan. 
Over the summer, economists’ 
forecasts have been trying 
unsuccessfully to keep up with 
the published output figures. 
At the beginning of the year, 
most were forecasting G7 
growth of a niggardly 1.5 per 
cent for 1894. At the last count 
the consensus was close to 3 
per cent. 

Strikingly, in most countries 
the recovery has been driven 
not by consumption, but by 
industrial production. Factory 
output in the G7 countries 
grew at an annualised rate of 
6.3 per cent in the first six 
months of the year. In western 
Germany it is growing at an 
annual rate of 10 per cent. 
France is not far behind. 
Admittedly much of that extra 
output has not left the ware- 
house yet, as stocks have risen 
sharply, but the turn-round is 
still remarkable. 

Even more encouraging is 
the fact that the dramatic 


Signs 

upswing in activity seems to 
be largely trade-related. Esti- 
mates vary, but the net 
increase in world trade this 
year could be as high as S per 
cent, the best figure since the 
late 1980s. That bodes well for 
a sustainable, widespread 
recovery. 

What does ail this mean for 
the global Investor, especially 
one with a nervous eye on the 
equity markets? The central 
question is whether the higher 
corporate earnings which the 
quickening recovery will 
undoubtedly bring will be out- 
weighed by the rising interest 
rates that will just as inevita- 
bly follow. The key lies in 
inflation. 

Two years of strong growth 
in the US are clearly bringing 
capacity problems. By any con- 
ventional estimate the US has 
either closed, or is near to clos- 
ing, its output gap - the differ- 
ence between trend and actual 
rates of growth. Capacity util- 
isation is high, and last week a 
leading Federal Reserve Board 
member mused publicly that 
the unemployment level was 


Global Investor / Gerard Baker in Tokyo 


point to start of a benign phase 


Improving prospects for growth 

Real GOP (annuel 96 change} 



US Japan Germany France tody UK 
Source OECD Eoonomta Outtook . Juna 1TO4 


close to its “natural rate," 
below which there is only 
accelerating inflation. Last Fri- 
day's producer price figures 
confirmed many analysts' 
worst fears. 

Other countries are less 
advanced in the cycle, but 
even in Germany there are 
worrying signs of early capac- 
ity constraints. So there can be 
little doubt that nearly all of 


the leading economies have 
reached the bottom of their 
interest rate cycles. But that 
does not necessarily spell the 
end for equities. What most 
affects stock markets is 
long-term interest rates, and 
there is good reason to believe 
that they may not rise much 
further for some Hmp to come. 

The collapse in bond prices 
in the first six months of the 


Total return hi local currency to 8/0/94 


- 

us 

Jarwn 

Vi CbSDQe DV 

Otnaenr 

•r parted 
Ranee 

It* 

UK 

Cash 

Week 

0.09 

004 

0.09 

010 

016 

0.09 

Month 

048 

0.18 

042 

045 

069 

043 

Year 

2.56 

Z56 

5.94 

6.08 

3.38 

5J>6 

Bonds 3-a yew 
Week 

-0,18 

048 

-018 

■012 

-044- 

008 

Month 

are 

0-39 

■ -058 

-0.82 

-2J32 

050 

Year 

-1.74 

144 

2jBB 

063 


1.16 

Bonds 7-io year 

Week -CL57 

090 

-055' • 

-0.47 

-1.17 

-028 

Month 

066 

1 -24 

-1.70 

-2J31 . 

-3.96 

050 

Year 

-006 

1.04 

-1.86 

-4389 

-6.15 

-2.77 

EquHfaM 

Week 

0.0 

■ -3.7 

-1.0 

-2.1 

-02 

. -1.1 

Month 

3.4 

-4.6 

-03 

-43 

-4 2. 

05 

Year 

03 

-4.9 

14A 

-05 

13.0 

9.1 


Saunas Cash & Band* - latmm Btotfna. BjufOn-eNatMItecSscurtfes. 

H» FT-Achrarteft Wortd hfcn an feMy ovnad by The Ftandte TVraa Utrftod.. ■ 
&*»nan Sachs (Co,ind NetWeet Sucoriues Ura&xl. 


year has given the yield curve 
an unusual gradient. In Europe 
and Japan the ratio of 10-year 
bond yields to 3-month money 
market rates is now well above 
historical averages - in 
Japan's case the bond yield is 
unprecedentedly high at twice 
the short interest rate. This 
will not last 

Bond prices fell and yields 
rose for two main reasons - 


investors were expecting 
higher infla tion and were dis- 
counting higher short-term 
rates. The rise in short 
rates (at least in the early 
stage of this recovery) is thus 
already mostly discounted. 
And the inflationary fears are 
likely to he eased further 
as confidence grows that cen- 
tral banks will respond to 
Signs Of Inflata'nn- 


The US experience is instruc- 
tive. This year's increases In 
short-term rates have not been 
followed by a rise in bond 
yields. In fact, after last 
month’s increase, long rates 
actually fell slightly, tipping 
the yield curve back further 
towards a more normal gradi- 
ent 

Of course as short rates rise 
much further, long bond yields 
are also likely to drift upwards 
again, but not immediately, 
and not at the same pace, as 
the yield curve starts to flat- 
ten. So Interest rates have bot- 
tomed out, but the rise in short 
rates should be slow, the rise 
in longer rates, much of which 
has already occurred, should 
be even slower. 

That leaves earnings growth. 
Is there any reason to doubt 
that it will not fully 
reflect the recovery? Some 
have argued that companies 
will have difficulty in passing 
on price increases since con- 
sumption remains subdued, 
though how this squares with 
fears about inflation will have 
to remain a mystery. 


Much more likely is a strong 
cyclical recovery in earnings - 
continuing in the US. acceler- 
ating in the UK and starting in 
the rest of Europe and Japan. 
And that recovery should have 
some way to go. 

Evidence suggests that a 
profits recovery lives on well 
past a turn in the interest rate 
cycle. New research by the UK 
stockbrokers. James Capel 
shows that in Europe stock 
markets have risen strongly 
following the trough In interest 
rates in all cycles since 1975. 
The analy sis shows that aver- 
age earnings were 14.6 per cent 
higher two years after rates 
bad bottomed out 

In short the likelihood is that 
we are now entering that 
benign phase of the markets' 
cycle where interest rates rise 
along with equities, driven by 
the rapid growth in profits 
associated with recovery. 

The really good news is 
that faster-flowing trade 
should help eves. more. And 
this time an unusual synchron- 
icity of global economic perfor- 
mance may make the perfor- 
mance even stronger than 
usual Of course it will also 
probably make the fall that 
much greater in the next phase 
of the cycle, when interest 
rates are still rising, but mar- 
kets fall. But those demons 
should be put away for another 
day. 




Metals set for a quiet week 


Metals markets are likely to be 
quieter than usual this week 
because many aluminium trad- 
ers have made their way to 
Paris for the annual Metal Bul- 
letin aluminium conference 
which opens this morning. 

Meanwhile, many copper 
traders have descended on 
New York to attend the annual 
Metals Week copper confer- 
ence. followed tomorrow even- 
ing by the Copper Club dinner. 

Aluminium traders will not 
give all their attention to the 
distinguished speakers in Paris 
until they have seen today’s 


statistics from the Interna- 
tional Primary Aluminium 
Institute, giving stock figures 
for the end of July. These are 
expected to provide more evi- 
dence that the unprecedented 
international trade agreement 
encouraging al uminium pro- 
ducers to cut output, is having 
an increasing impact on the 
huge surplus that depressed 
prices for so long. 

Between February, when del- 
egates from six big aluminium 
producing areas signed a 
"memorandum of understand- 
ing” about production cuts. 


and the end of June, producer 
stocks fell by 141.000 tonnes, or 
6.6 per cent 

London Metal Exchange 
stocks have also fallen - by 
104,000 tonnes in July, the big- 
gest single monthly fell since 
the exchange launched its alu- 
minium contract 

If IPAI stocks also are shown 
to have fallen in July, it win be 
only the second time in four 
years that both 1PA1 and LME 
stocks fell in tandem. 

Mr Nick Moore, analyst at 
Ord Mtanett, suggested: “The 
memorandum of understand- 


ing clearly is working. But the 
industry still has a big task 
ahead.” Stocks were still equiv- 
alent to 16 weeks of consump- 
tion and they needed to be 614 
weeks before producers could 
relax. So another 2.8m tonnes 
- or 40 per cent - had to be cut 
from combined IPAI and LME 
stocks of 48m tonnes. 

Also this week, Dalgety, the 
agricultural merchant, on 
Thursday gives its annual har- 
vest review, while on Friday 
the Opec quota compliance 
committee meets to discuss 
August oil production figures. 


/public PETROLEUM CORPORATION'S 
OF GREECE S.A. 


INVITATION 

With the object of appointing advisers and global 
co-ordinators for the global offering of the group’s 
shares, PPC invites all Interested parties to submit 
their respective particulars to the company's head 
office at 357-359 Mesogion Ave., 152 31 Halandri, 
^ Athens. Greece, up to Thursday, 29th Sept 1994. ^ 


Carrefour^f^ 


FIRST SIX MONTHS OF 1994 


tin FT DiillluiHl 

Fint tuU 

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1 TO 

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GiMip 4taic. jpprotiinawh ihtiaiw gnmh me a in fW). 


A Prime Sms 

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EUROPEAN COAL AND 
STEEL COMMUNITY 
ECU 15,000,000 
8% BONDS 1996 
SEMI PRIVATE PLACEMENT 
Pursuant to the Terms and 
Conditions of the Bonds, notice 
is hereby given to the 
Bondholders that the 
November? 1994 repayment 
instalment of ECU 3,000,000 
has been made by purchase 
on the market. 

Amount outstanding: 

ECU 6,000,000 

THE PRMOPAL PAYMG AGENT 
SOGENAL 

SOOETE GENERALE 
PARIS GROUP 
15 AVENUE EMLE REUTER 
LUXEMBOURG 


Ml 


CL i 


I CREDIT LYONNAIS 

I US$100,000,000 
| Floating rate notes 2003 

The notes will bear interest at 
5.0625% per annum for the 
period 12 September 1994 to 
10 March 1995. Interest payable 
on 10 March 1995 uillt amount 
to USS125.86 per USSS.000 note 
and USSZ517.I9 per 

ussmooo. 

Agent: Morgan Guaranty 
Trust Company 

JPMorgan 


Standard % Chartered 

Standard Chartered PLC 

US$400,000,000 Undated Primary 
Capital Floating Rate Notes 

In accordance with the provisions of the Notes, 
notice is hereby given that for the Interest 
Determination period from 12th September 1994 
to 12th October 1994 the Notes will carry Interest 
at the rate of 5.4375 per cent per annum. 

Interest accrued to 12th October 1994 and 
payable on 12th January 1995 will amount to 
US$45.31 per US$10,000 Note and USS453.13 
per USS1 00,000 Note. 

West Merchant Bank Limited 
Agent Bank 


DOMtJS MORTGAGE FINANCE NO 1 pic 
£100,000,000 

Mortgage Backed Floating Rate Notes 
due 2014 

In accordance with the conditions of the Notes, notice is hereby 
given, that for the three month period S September 1994 to 
3 December 1994 the Notes will cany a rate of interest of 6.85 
per cent per annum with a coupon amount of SM58.49. 

Chemical 

As Agent Bank 


^uowaovranse^BtaaS 

TW HMOffOU nMBSRECftUTMENT 
PAaet from as lime as too * vjlt. 


Looking for a Career Change' 


unman aenu punk csnmct 
Pwup Warner on 
Tar *44 71 873 33S1 
FAK +4* 71 873 3084 
a* ir wnmw to tm u munaut 
flwn, Hto iun Br Abm u b mu w. 
.. Nhk» One Sommkuk BNrw, 



Sovereign (Forex) Lid. 

34hr Foreign Exchange 
Margin fading FodBfy 
Competitive Price* 
holy Fax Service 
TtL 071 -431 9188 
Fax: 071-931 77 M 

43a bdughM PoIm. Rood 
Umdoa SWTW ORE 


Economic Eye / Martin Wolf 

Marital 

economics 

The rise of birth outside marriage 

Live births outside marriage aaa pensantage of afl births in England & Wales 
35 

30 

25 

20 

15 

10' 

5 

O 

1871 «7» 1881 1888 1892 

Scucec SocM Trends 



In 1991 there 

WT &L divorce in the 
uMMA UK for every 
two marriages, 
twice the rate 
in 1971. More 
m than 30 per 
Jl cent of all 
births were outside marriage 
in 1992, six times as many as 
in 196L More than a half of 
those births were registered 
, by the mother alone or by cou- 
ples living apart (see chart). 
Finally, lone-parent families 
were a fifth of all families 
with dependent children in 
1992, up from a mere 4.5 per 
cent 30 years before. 

Patterns of marriage and 
child-rearing have been revo- 
lutionised to just one genera- 
tion. Why has this happened? 
Economics can help provide 
answers, for marriage is an 
economic institution: a part- 
nership to rear children. 

The characteristics of child- 
rearing make this partnership 
necessary. Directly or indi- 
rectly, child-rearing is the 
greatest expense most adults 
bear; an upbringing that 
equips children for success 
takes at least 20 years: and a 
parent can hardly look after 
children full-time, while earn- 
ing an adequate living. Sole- 
parents need someone to look 
after their children, if they 
work, or resources from some- 
where else, if they do not 
work. They can manage the 
first, unaided, only if their 
eaming power Is substantially 
greater than the cost of child- 
care. That would make them 
exceptional, by definition. 
Sole parents can enjoy the sec- 
ond, unaided, only if they are 
wealthy, which would make 
them still more exceptional 
The main problem faced by 
single-parent households is, it 
is argued, that they are poor. 
While true, this misses the 
point. That is precisely why 
people have found it neces- 
sary to combine their 
resources, including their 
time, in order to bring up 
their children. 

Marriage regulates this part- 
nership- Its essential feature is 
enduring commitment. This 
matters because a parent who 


forgoes future earning oppor- 
tunities for the sake of chil- 
dren is taking a large risk. 
Marriage is worthwhile to the 
extent that it binds future 
behaviour. The easier divorce 
becomes, the less reason to 
many. So one reason for a 
more than three-fold increase 
in the proportion of children 
bom outside wedlock is that it 
is “Just a piece of paper”. 

Marriage may no longer 
embody an enduring commit- 
ment. But having children 
does. To understand the impli- 
cations, forget gender neutral- 
ity, since the tastes of the two 
sexes evidently diverge. One 
has a greater preference for 
having and looking after chil- 
dren. The other has a greater 
preference for partners who 
are young. These differences 
may be the product of condi- 
tioning, or they may be biolog- 
ical It does not matter for this 
analysis, provided they exist. 

Set these differences against 
the nature and costs of child- 
rearing. the fact that children 
are consumption rather than 
investment goods and the dis- 
appearance of the binding ele- 


ment in marriage. What are 
the Implications? First, 
women are bound to end up as 
the caring parents, because 
men will exploit them: in 1991, 
94 per cent of lone-parent fam- 
ilies with dependent children 
were headed by women. Sec- 
ond, men who gain little plea- 
sure from their children will 
see little benefit to themselves 
in bearing the costs, particu- 
larly if doing so reduces their 
attraction to other women. 
Third, women will limit the 
size of their families to what 
they find enjoyable. 

Perhaps the most important 
implication, however, is that 
the choice of mate matters 
more to women than to men, 
because they end up with the 
irreversible commitment the 
one to their children. Men 
may propose, but women dis- 
pose. The least they will want 
is someone able and (ostensi- 
bly) willing to provide the 
resources needed for rearing 
their children. 

Unfortunately, the propor- 
tion of such men is in decline. 
The labour force participation 
rate for men aged 15 to 64 


shrank from 93 per cent to 83 
per cent between 1973 and 
1993- There has also been a big 
increase in the inequality of 
male earnings. In the late 
1980s the ratio of the earnings 
of men in the top 10 per cent 
of earners to that of those in 
the bottom 10 per cent was 3.4 
to one. In the late 1970s it had 
been only 2.4 to one. -Women 
are competing for a reduced 
pool of useful husbands. The 
unsurprising result is polyg- 
yny (multiple matings by 
men), mostly serial 
. The female search for men 
with significant earning 
potential matches the male 
yearning for younger part- 
ners. For the past 20 years the 
rate of marriage by widowers 
and divorced men (as a pro- 
portion of widowers and 
divorced men) has exceeded 
that for bachelors, while the 
reverse has been true for 
women: the remarriage rate 
for widows and divorced 
women is less than half the 
marriage rate for spinsters. 
These differences are sexist 
and ageist: the positive gap 
between male and female re- 
marriage rates appears to the 
30 to 34 age group and 
increases rapidly thereafter. 
So successful older men find 
new partners; their former 
spouses, unless divorced 
young, become single-parents; 
second families compete for 
limited resources with first 
ones; and less successful men 
enjoy little chance of mar- 
riage. 

It is possible then to explain 
the increase in the choice of 
sole-parenthood by women i 
from poorer classes. It is also . 
possible to explain the rise of 1 
serial polygyny. But most 
women can still not bring up 
their children unaided and 
most men cannot - and, even 
If they can, do not wish to - 
support more than one family, 
unaided. There has to be 
another actor. That actor Is 
the welfare state. The hated 
Child Support Agency was an 
attempt by the government to 
re- privatise costs that had 
been socialised. Why this has 
been tried and why it is fail- 
tog will be the subject of a 
second column. 


FT- ACTUARIES WORLD INDICES 


Jointly compfed by The Financial Times UtL, Goldman, Sxhs & 

NATtONAi- AND 

FRIDAY SEPTEMBER 9 1994 


Go. Rid NatWast Securities Lid. In eanMwtion wttn the institute of Actuates and tha Faculty of Actuates 


REGIONAL MARKETS 
Figures tn poentheMH 
*ow number of Bnes 
of stock 


US Wchg Pound 
Doter since Starting Yen 
Index 31/12/33 India index 


Ijo op Local 96 Gross 
DM Gurnancychg htvn D*v. 
Index Index 31/12/83 YMd 



175.11 


n 19688 






-—255^3 

Finland p4) 

181.70 

Franw^TJ 

172/43 

isa.4o 


416.42 






_ ^159.51 


-582.14 



Nethartand'pb — 

217.03 

New Zealand fl4) 

75JS 

,.——204.87 






141.39 


-224.70 



United Kinpdom ptMl 
USA 617 . — 

19699 

i«res 

EUROPE (7181 

NordtattlSJ 

17353 

22034 

Pudftc Baste (74^ 

Biro-Pacific p 468) 

171.66 

187.51 

Europe Ex. LK (61 

Pacific Ex. Jason (878) » 

15654 

27234 


Wortd Ex. So! Af. (2ias) 
World Ex. Japan (168^ . 

177^7 

190.12 

The Wortd Indm (2i64) . 

178JM 


THURSDAY SEPTEMBER 8 1984 

US Pound Local 

Doter Staring Yen CM Currency 

Index Index. Index Index Index 


4.9 167.40 

7.6 190.14 

73 167.77 

-0.5 128.11 

3.4 24488 
47.5 173.70 

-2.0 16443 

74 143.78 
-14L9 


OQUJW INDEX 

Year 

52 week 52 week ago 
High Low (appreaj 


l«-9 203,45 

15.7 7087 

224 152.49 

-1.6 55051 

-3-8 21 (HUH 
8,0 207.46 


11.0 

14.1 


72 re 
185.85 


-1.4 34MS 
18.1 


14 136.17 

14.4 21441 

4.7 1KL22 

-3.0 19083 

04 18247 


109,68 

12440 

110.12 

84.74 

1B043 

114.01 

106.19 

9447 

261.29 

13344 

4940 

100.09 

36S48 

1441.33 

mis 

4748 

12845 

227.40 

19441 

S8.72 

14089 

105.16 

12448 

11843 


14046 

158.44 

14048 

10848 

204.89 

145.85 

13622 

12047 

33341 

17060 

6342 

12747 

466 86 
1842,12 
17348 
8040 
16443 
29051 
24842 
11344 
18012 
13446 
15083 
15348 


15640 
15959 
137.46 
13341 
21142 
19073 
14240 
12057 
413.12 
18541 
93.17 
100.08 
S7117 
8551.43 
17147 
6641 
16842 
2SOJJ5 
305.73 
1 37/48 
251.45 
13064 
18043 
19098 


-4.4 

-44 

-54 

24 

-72 

27.4 

-124 

-4.8 

-144 

5.7 
84 
94 

-6.B 

54 

-O0 

2.7 
24 
-02 
22.1 
-64 

34 

-9.4 

-7.4 

04 


341 

140 

442 

241 

1.40 

073 

3.06 

1.71 

247 

345 

147 
0.77 
149 
140 
344 
341 
1.75 

148 
249 

4.19 

149 
142 
347 
244 


17847 

18543 

17420 

13545 

25440 

177.62 

173.31 

U742 

4164a 

213.73 
8066 

166.79 
57748 

2279.88 

218.74 
7548 

205.76 

363.80 
311.73 
14140 
22343 
166.99 
20068 
19248 


169/47 

18745 

187.15 

13041 

244.12 

170.37 
19844 
141.89 

3900 * 

305.02 

7749 

15242 

554.04 

2186,74 

20741 

7021 

197.37 
34847 
29942 
136.73 

214.13 
16018 
19246 
185.1 T 


11141 

123.11 

109/49 

85.42 

169.91 

111.60 

108.89 

9244 

281.38 

12L29 

50.68 

99.77 

36241 

143247 

138.19 

47.30 

12948 

22059 

18547 

8841 

14026 

10442 

126.08 

12145 


142.94 

15842 

140.98 

10949 

20540 

143.70 

14022 

11948 

336.57 

17242 

6547 

128.47 
46740 

184437 

17546 

6091 

166.47 
294.34 
25020 

114.48 
18061 
135.10 
16245 
158.13 


03 

16027 

100.13 

139.42 

164.71 

-60 

3.00 

174.13 

103 

210JM 

1362S 

17063 

21067 

4.3 

1A1 

21658 

17^ 

16073 

10081 

13645 

11143 

5.5 

1418 

189j60 

107 

164.10 

107.71 

137.00 

128.74 

02 

150 

17138 

06 

17926 

117.65 

15031 

16744 

07 

2L82 

188.44 

8.1 

149.83 

9022 

12S48 

133.73 

-05 

04 3 

156.06 

-4.8 

26083 

17120 

21072 

242.47 

-02 

067 

273.01 

103 

16S.78 

10082 

139.02 

132.64 

0.7 • 

1J1 

173.10 

7£ 

168.43 

11036 

14124 

14077 

15 

8J» 

17068 

65 

10956 

111.2S 

142.18 

148 .SB 

03 

024 

177 M$ 

1J3 

161.7S 

11920 

152.40 

ieas3 

-03 

2M 

1B122 


157.86 

158,47 

137.78 

134.78 
213.13 
16848 
144.99 
11848 
412,69 
13749 

9548 

93.77 

866.90 

8470.72 

172.05 

66.07 

101.11 

251.39 

307.78 
138.76 
252.43 
13*48 
102.46 
19248 


199.13 

18840 

177.04 
14541 

275.79 
161.70 
18547 
15040 
50640 
21640 

97.78 

17010 

52143 

2847.08 

218.10 

7740 

211.74 

37842 

31444 

156.79 
23145 
17056 
214.96 

196.04 


13024 

1844* 

14342 

12054 

22394 

10448 

15944 

12449 

282.08 

18144 

57.88 

12444 

392.03 

16l5.11 

16025 

5022 

105.52 

28541 

17649 

128.88 

17543 

135.70 

181.11 

170.05 


14242 
175.12 
15057 
12441 
23246 
11145 
16849 
12841 
301.45 
16942 
7536 
158.05 
49340 
1766.74 
185.77 
81.40 
16848 
28847 
18073 
14097 
10053 
'137 SB 
19145 
186.64 


16743 

209.05 

162.68 

164.4Q 

191.71 

149.70 

29148 

188.13 

18048 

17061 

183.43 


100.41 

13743 

10646 

10748 

11943 

98.08 

17144 

10942 

110.05 

111,75 

12015 


14068 

176.83 

13741 

13846 

16346 

12026 

22048 

140.12 

14248 

14340 

154.71 


15003 

21149 

1114 

129.02 

188.96 

134.61 

242.71 

13244 

147.42 

15032 

182.17 


06 17036 111J 


08 


17058 ' 
222.03 
ITS. 88 
17014 
19073 
16012 
29021 
17085 
17080 
18003 
10020 


15348 

173.19 

134.79 

14348 

175.87 

134.87 
20013 
14588 
13096 
15884 
174J* 


160.13 

18049 

163.11 

16180 

18347 

138.70 

20442 

18130 

16063 

16849 

17013 


Court#*. IW Financial Hm UMM, Qokftnm. 8 boIb A Co. and 
Bum w*hhe One 0t. 1900 - 10CC FtmancE Dm 31, 10B7 - 118037 (US ! 
Then asm me prtw ttdoohn. A mart m> to ma pAdahad n tee 
Amour CaUoso. only nitennea *B* Br» to bo IncwdetL MoWtt 


— *z* 71 - ^1.42 liaae i44^^'" 1MJtn 


H»J37(U8 9 Irate*. BQJW lft)OTiani*ntf ana BAP* mxMfli Manta; PradO. 19B8 ■ iani6sn« a hw,—. _ 

jh art n ftoftattai^' niraa 1W(K} H non m u ** * Bran mmwtf Sacurttea eM Gcfctoan. Sacra wS: teSfiSSfm ~ taa3a 


I 









r “N f; 




ik 


Ak '* 


.- ;.' :y * 


FIN ANCIAX. TIMES 


NEW YORK 


Outlook less 
certain after 
inflation scare 

After being caught off guard by 
Friday's inflation scare, investors may 
have to rethink their strategies this 
morning in anticipation of tomorrow's 
reading on consumer prices. 

A fairly steady outlook for equities 
became less certain as last week drew 
to close. Although, most analysts had 
expected an upturn in the August 
producer price index, Wall Street was 
approaching the announcement with 
what proved to be a false sense of 
c on fi d en c e. Stocks were ex pe cted to 
weather any bad news with wrfitfmai 


MONDAY SEPTEMBER 12 1994 


In the event, share prices tumbled on 
news of a 0 A per cent jump in the PFI, a 
figure which for exceeded forecasts of 
an 0.4 per cent increase. While Friday's 
33 point decline in the Dow Jones 
Industrial Average hardly qualifies as a 
disaster, it was enough to give pause to 
those who had been expecting the 
market to enjoy a robust autumn. . 

If this 'week brings evidence that 
i nfla tion has been spilling over into the 
consumer sector, the sell-off in stocks 
may accelerate, but if tomorrow's figure 
comes in at about 0.4 per i****', as 
analysts had predicted before Friday's 
FFI reading, then there is a good 
chance that share prices will . 

Economists were busy this weekend' 
reconsidering their earlier estimates. 

Ur Sung Sohn, chief economist at 
Norwest in Minneapolis, stfll believes 
the CPI is likely to show a more modest 
increase than the PPL The former, he 
points out. is more sensitive to wage 
pressures, which have remained quite 
modest By contrast, the cost of raw 
materials, which heavily influence 


Frank Me Guriy 


po# Jonea'fnrfTiiMaf ifi nw pw gw 


3890 




producer prices, has risen sharply in 

"It is still quite posable for stocks to 
do well if inflation is contained at the 
producer level," says Mr Thomas 
McManus, stock strategist at Morgan 
Stanley in New York, in spite of the 

likelihood that foe slide in bonds wfll' 

drag an for some time. - - 

_ Mr McManus's view is based on 

inqwiriny fh» mnr fcwf 

has entered a phase in which eamhags, 
not interest rates, exert the strangest 
Tnftofmjry on investor senthnent- 
ludeed, Friday's decline by stocks was 
moderate when compared with the big 
losses suffered by the Treasury market 
“Companies are really starting to 
show investors that they have 
capitalised on a weak dollar and all the 
restructuring that has been done over 
the past couple of years," he says. 

Thai may prove to be a mixed - 

blessing. Some observers believe Wall 
Street has again grown complacent m 
the expectation of robust corporate 
pro fi t s in the second half of the year. 

. "The market could well he building 
itself up for a big disappointment,’’ says 
Mr McManus, who advises caution. His 
recommendation is to concentrate an 
stocks which are directly benefiting 

f mm riflin g forttmtrfail p rtroc «tiy» fa tfl ■ 

chemicals, papers nrafad* 


EQUITY MARKETS: This Week 


LONDON 


Analysts still 
see further 
rise this year 

In a stock market suddenly under 
attack on its two most sensitive fronts 
- interest rate prospects and company 
trading statements - analysts’ nerves 
appear to be holding up well 
The consensus Is still that the market 
has further to advance this year, even if 
base rates are almost certain to rise and 
the corporate reporting season has 
. shown it can deliver disappointments 
as wel l as d elights. 

. The BTR shocker has been a 
fttmindftr that general manufacturing 
earnings have not yet regained ' 
pre-recession highs and that these 
sectors had, in any event, a great deal 
of ground to recover. 

AsKleinwort Benson points out, and 
BTR admitted, the slurp drop in global 
inflation rates bears testimony to "a 
I stiffing pricing environment”. At the 
I same time, costs acre threatened by 
! rising raw material prices and po&ets 
of skill shortage. 

Meanwhile, the absence of dramas 
following the monthly meeting between 

the rhan crflrtr nf tht> prchtfqn«r and Hip 
gnvemi Oi* nf the TtanV frt Rn ghmd ban 

left the outiook for base rates 
unchanged. "UK rates [are] Skdy to 
rise by November” says Goldman 
Sachs flatly - but thm that any 
equity weakness presents a buying 
opportunity. 

A similar view is taken by 
Charterhouse TUney, where Richard 
Jeffrey believes higher base rates would 
be positive for equities by steadying the 
gilt-edged market "At this stage of the 
recovery, a tightening is not to be 
feared,” he says. 

Charterhouse believes company 


Terry By land 


FT-8B* Alt-Share Max 


1.B20 - >V— 



OTHER MARKETS 


RESULTS 

August saw the start of the 
European first-half results 
season, covering all the main 
markets and touching each 
sector. 

Mr Jerry Evans at Kleinwart 
Benson says that some early 
trends are becoming dear- Of 
the 171 larger corporate , 
results, profit growth averaged 
around 40 per rent But than 
the initial figures.’ sector 
trends were hard to discern: 

However, a large proportion 
of results came from the 
cyclical markets and a 
comparison of capital goods 
figures suggested that results . 
ffom the an gwwwrhw , metals, " 
motors and chemicals sectors' 


had been good exceeded 
already high expectations. 

- The banks’ results were 

iBwpjirfwHng mml tB mainly 

due to bond losses, while in the 
building sector the more 
competitive environment was 
to Marne. 

Pharmaceuticals, on the 
other band, were di spro v in g 

ftm Iimtb, w ith mm airing Sfl lfW 

growth. 

Overall, while results had 
been good, they had not been 
outstanding. 

Ibis suggested, says Mr 
Evans; that Europe's volatile 
equity markets woe not going 
to be able to break free, for at 
least the next month or so, 

from the pr pspnt infhwire of - 

bonds, which nervously awatt 
each economic statistic. - 


STOCKHOLM 

Sweden goes to the polls next 
.Sunday and tho wwriwt 4c 

likely to remain sensitive to 
the opinion polls during the 
coming week. 

UBS notes that a series of 
polls last week showed support 
for the Social Democrats, who 
had been expected to form a 
majority government, falling 
below the previous 60 per cent 
of the total votes. 

This begged the question of 
whether tire liberals, or Left 
and Greens, would be required 
rto support the incoming 
government. - 

The market, meanwhile, is 
hoping for the Liberals, who 
are seen as a moderating 
influence. 


ZURICH 

The market has been steadier 
during the past fortnight, after 
its the weakness during the 
summer, with the better than 
expected half-year statements 
from Bnnlw and UBS providing 
the inspiration for the change 
of heart 

The better mood faces 
another test an Thursday, 
when half-year profits figures 
are due from Nestle, which last 
week announced the 
acquisition of Wazncke 
Kskrem fr om Unilever as its 
first step into the German ice 
cream market - 

Half-year figures may also be 
on thB way this week from 
Zurich Insurance and from 
Swissair. 1 * 


MILAN 

The market remains plagued 
by politica l devdo miiBiits 
Crucial this week could be a 
planned meeting between the 
prime ministex, Mr Silvio 
Berlusconi, and the trade 
unions which have threatened 
to strike over planned cute in 
government spending on 
p ensions . 

The market would like to see 
Mr Berlusconi take a firm line, 
and then win the backing of 
his cabinet colleagues over the 
Issue. 


TOKYO 

Japan Telecom’s listing last 
week has left many investors 
wary of next month's Japan 


International offerings 

Bolivian utility prepares 
to erect a milestone 


1,580 


... * • m te whar - HM » v 

Soueek FT <****• • - • 

profits have "significantly" more to 
; benefit from economic recovery. Smith 
New Court takes this a stage further by 
insisting the cyclical sectors, 
construction, chemicals, wn gii w g fr i g 
and b unding materials nnrnpanfcy, have 
been abandoned too soon by investors 
fearful recovery may slacken. 

“Our View is that the 
upswing will be more prolonged than is 
generally anticipated and that cycbcals 
are a long way from peaking out,” the 
firm says. It believes 
under-performance by the cychcals, 
largely reflecting interest rate worries, 
overlooks an uptrend in share price 
relatives of European cyclical stocks. 

Smith endorses the view of many in 
London that rate rises are unlikely to 
reverse these trends. Its argument 
would also question the knee-jerk rush 
back towards the defensive sectors - 

utilities, food wiao n fnfttiiHwg and 
healthcare - seen cm Friday afternoon. 
Earnings estimates in those sectors are 
still on a downturn, and 
“outperfonnance . . . is probably a 
selling opp o rt unit y". 

None cf this will protect tlw stock 
market against further shocks in the 
near term, either in the shape of more 
in tere s t nt s ft walBilag <tfat1 stie s fro m 
the US or discomforting trading reports 
from British companies. 


The Cochabamba Light and 
Power Company (ELFEC) 
could be a surprising addition 
to the Tf»qdqw Stock Exchange 
in November if plans to list the 
Bolivian electricity company's 
shares go ahead as planned. 

The utility, valued at about 
333m, is the first from Latin 
America to seek a London list- 
ing in "living memory,” 
according to the stock 
exchange. More importantly it 
underlines a significant wider 
trend. 

After a Ml earlier this year 
Tjttin American companies — 
in sectors as diverse as tele- 
communications, retailing and 
electricity - are again raising 
capital from International 
investors. 

And increasingly, t he invest- 
ment banks co-ordinating the 
issues are Looking beyond 
Mexico, Chile and Argentina - 
their favourite economies in 
recent years - for potential 
candidates 

As recently as 1990 it was 
virtually impossible for Latin 
American rewnpamire to raise 
international equity finance. 
Interest first took off with the 
privatisation of Mexico’s tele- 
communication cofhpany, Tet 
mex. in 1991 and last year 
flwrf Argentina, enntiw 
economy undergoing radical 
liberal reforms, dominated the 
continent’s new international 
issues, accounting for over 80 


Tobacco flotation, writes Emiko 
Terazono. Although the listing 
is still six weeks away, 

rinmesHn mgtttntinng are 

expected to start hedging their 
positions by selling futures 
which is Hkely to prompt 
arbitrage unwinding, 
depressing cash share prices. 

Meanwhile, profltrtaking by 
hanks and corporations, 
wanting to boost profits ahead 
of the interi m hook dosing at 
the and of the m onth, is Hkely 
to continue. 

Analysts say banks are 
especially reliant on profits 
fr o m their stock holdings this 
time round since the recent fall 
in the bond market has 
const ratojcd ttigm from 
realising profits on bond 
portfolios. - 


per oent of the $6bn in intern* 
tional equity capital raised. 

This year successive rises in 
US interest rates stemmed the 
flow. The interest of US mutual 
funds, which fuelled growth in 
1993, dropped aft. A series of 
developments, including the 
assassination of presidential 
candidate Mr Luis Donaldo 
Colosfo, reminded investors of 
the political risks. 

Since July, however, interest 
has steadily returned. The gov- 
erning party's success in last 
month's Mexican elections 
helped buoy sentiment. 

Governments in countries 
such as Peru have introduced 
liberal reforms with some suc- 
cess. Above all there are hopes 
that stabilisation can be 
achieved in Brazil following 
the fall In faffatlo ri after the 
introduction in July of the 
Real currency plan. The plan's 
architect and former finance 
minister, Sir Fernando Hen- 
rique Cardoso, is widely tipped 
to win next month’s presiden- 
tial election. 

Reflecting the new confi- 
dence. a string of new compa- 
nies has come to the market In 
recent weeks. By the end of 
July, Latin American compa- 
nies had raised a total of $3bn 
from international investors. 
At 47, the number of issues 
compared with 52 for the whole 
of last year. Brazilian issues 
such as Usiminas, the steel 


HONQ KONG 

Last Friday’s US inflation 
figures, which were released 
after the local market had 
closed, will be at the ce n tre of 
attention today in the colony, 
where the Hong Kong dollar is 
pegged to itse US counterpart 
and interest rate movements 
are closely shadowed, writes 
Louise Lucas. 

Brokers had been looking for 
the market to surge following 
last week’s break through the 
10,000 level, buoyed by a return 
of liquidity. 

Both Japanese and Ame rican 
money poured into the market 
last week, partially oiled by 
the perceived improvement in 
US-China relations after the 
visit to Beijing by the US 


group, are among the country’s 
first to come to the market for 
more than two years. 

Several Mexican issues are 
said to be In the pipeline. A 
number of Peruvian Issues, of 
which Banco Wiese, the coun- 
try’s second largest bank, is 
one of the first, are also on the 
cards. 

Bankers say many more 
smaller companies are seeking 
international equity. The limit 
above which Chilean compa- 
nies were allowed to seek inter- 
national capital was this year 
reduced from S50m to $25m. 

"You are adding markets 
and broadening them within 
certain countries,” says a New 
York investment banker, who 
has been involved in several 
issues. 

Cochabamba is described as 
a "Latin American Manweb ” 
by Mr Peter Earl of Fieldstone 
of Private Capital Corporation, 
the investment bank helping 
co-ordinate the listing and 
offer for sale. He says the issue 
will be (toe of the first to be 
listed in La Pax. It follows the 
successful US capital-raising 
exercise last year for the Boliv- 
ian Electric Energy Company. 

A telling sign of the pace of 
activity is the competition 
among investment bankers for 
the mandates. Fees have faBd 
sharply, especially In Brazil. 

Richard Lapper 


commerce secretary , Mr Ron 
Brown. 

Corporate issues will return 
to the fore towards the end of 
the week, when the Jardine 
group kicks off its interim 
results. 

Jardine International Motors 
reports on Wednesday, Dairy 
Fmm on Thursday, and 
Mandarin Oriental and 
Hongkong Land on Friday. 

Market participants will be 
interested to see tf the four 
elect to follow the parent, 
Jardine Mafhesan, and Jardine 
Strategic Holdings, and delist 
from the Hong Kong stock 
exchange in favour of the 
Singapore exchange at the 
beginning of next year. 

Compiled by Michael Morgan 


EMERGING MARKETS: This Week 


The Emerging Investor / Vincent Boland in 


Philippines 



Market seeks liquidity to join party 


In. a country with a seemingly 
unending flow of good eco- 
nomic news, capped In July by 
an upgrading of its investment 
rating by Standard & Poor’s, 
the Czech Republic's stock 
market has been noticeably 
unable to join the party. 

A severe liquidity shortage, 
caused by a spate of rights 
issues from quoted companies 
wishing to boost capital, has 
left -the market drifting side- 
ways. Turnover has fallen 
sharply from levels seen semi 
months ago when - the market 
peaked, driven by strong 
domestic and foreign interest 
"Liquidity should improve 
after the shares in the second 
wave [of voucher privatisation] 
are released," says Mr Pavel 
SobiSek, head of capital, mar- 
kets research at ZSvnostenskS. 
Banka in Prague. 

Some 860 companies are 
being sold in the second wave, 
which is due to be completed 
before the end of the year. 

In the first wave, launched 

Ten best port 


Commercial Bank of Korea 
Tiridye 6 Banka* (C) 

HM S amp o e ma 
D aewo o Securities 
Bank Bali 
Bank of Seoi 
Lucky Securities 
Magnum Corporation 
Madeco 

United Tractors 


to 1992 when the Country was 
part of federal Czechoslovakia, 
185 investment privatisation 
funds (IPFs) received about 72 
per cent of the vouchers from 
individuals. There are 3® IPFs 
involved in the" second wave, 
with 64 per cent of the vouch- 
ers. ' 

Mr SobiSek believes that the 
combination al mo re IFFb , a 
greater number of individuals 
who did not entrust their 
voucher points to the IPFs. and 
the smaller number of compa- 
nies is Hkaly to lead to widely 
dispersed shareholdings. 
"Some o? the funds taking part 
are too small to be tang term 
investors, and they will be 
forced to trade," he says.' 

Turnover currently averages 
between $10m and $15m per 
trading session, compared to 
up to g40m when the market 
peaked on February L Share 
prices have collapsed, too. The 
wlftely quoted BN-Wood index 
of the top 30 shares Is trading 
between 2,050 and 2J50, a long 


SJCorea 

Ttrtoay 

Indonesia 

SJCorea 

Indonesia 

SJCorea 

S. Korea 

Malaysia 

CMa 

Indonesia 


105579 

02091 

4.9555 

34.9847 

2.7072 

08332 

21.8854 

2.5425 

04090 

2JS96 


way from its peak of 0805, 
though about 10 per cent above 
its low point of 1,836 on June 7. 

Analysts agree that the 
favourable economic climate in 
the Czech Republic provides a 
sound basis fra - the market to 
move ahead. Gross domestic 
product is expected to rise by 2 
per cent this year, reversing 
four-years of declines. 

Unemployment, at 3.2 per 
cent in July, remains remark- 
ably Ipw. The rapid growth of 
the services sector in the past 
three years has created thou- 
sands of jobs to offset losses in 
traditional industries. Indus- 
trial output in June grew by 
per cent, and construction 
activity expanded 6.7 per cart 
in the first half of the year. 

Worries over a rise in infla- 
tion, however, have been 
fuelled by a Mg rise in capital 
inflows. Last month the Czech 
National Bank revised its esti- 
mate of net ‘ inflows to 
KcslOObn (93.4bn) from 
KcsSOtm and raised the mini- 
mum reserve requirements of 
Czech banks from 9 to 12 per 
wnt to dampen its inflationary 
impact 

The CNR estimates that offi- 
cial reserves will reach $8hn 
(£5J9m) by the end of the year, 
but it is confident that It can 
meet its year-end inflation, tar- 
get of 10 per cent. Official 
reserves stood at a preliminary 
S5.4bn in July. 

Against tiiis background, 
a nalys t s say that the upgrad- 
ing of the country's investment 
rating hy Standard & Poor’s 


Hfe4«ood304r*i«c 

.4,000 


AObo — jr-t- 
ihooV — - 


from BBB to BBB+ in mid-July 
has increased the attractions of 
investing in the Prague stock 
market to foreign investors. 

There is already evidence 
that they are slowly returning. 
Mr Alexander Angefl, director 
of rales and trading at stock- 
brokers Wood & Co, says the . 
market has seen "the first 
gi gnB of German tiwrthrtiwwi 
interest” in the last three 
months, much of it focused on 
the Czech Power Company 
(C52), lie biggest and most liq- 
uid stock an the market 

Mr Angell says there fa also 
growing interest from sp ecial 
1st investment funds and from 
"some i nves to rs who may not 
be able to find the Czech 
Republic on thp map”, such as 
dedi c ated traders, mainly US- 
based, in closed-end invest- 
ment funds, which are Vohmri 
a sharp rise in the share prices 


CURRENCIES 


of some of the quoted IPFs. 

Trading in IPF shares 
accounted for up to 40 per cent 
of market turnover over the 
past three months, and dealers 
ray about $40m was ploughed 
into the funds by outside inves- 
tors in that period. 

The interest Is mainly in 
those IPFs - such as Harvard 
Dividend and Growth Funds, 
IPF Greditanstalt, and the IPFs 
run by Ceska Spofitelna and 
KamerCnl Banka, the two big- 
gest Czech banks - seen as 
having quality portfolios and 
good nranagpmftwt, and which 
trade at substantial discounts 
to net asset value. 

Dealers say that the IPFs 
offer the best means of getting 
wide exposure to the Czech 
economy, and that more selec- 
tive buying will have to await 
the ending of the privatisation, 
programme. 

Meanwhile, the Prague stock 
market is set to move to daily 
trading from September 19 in 
an attem p t to increase turn- 
over and attract more business 
from the RM-System, a rival 
endiang e which has a nation- 
. wide network of branches and 
affiliated brokerage houses. 

The PSE currently trades an 
Mondays, Tuesdays and Thurs- 
days, while the RM-S offers 
continuous trading. The RM-S, 
a privately owned company, 
was setup to capitalise on the 
voucher privatisation pro- 
gramme, and has been the 
ma fn forum used by thousands 
of small shareholders to trade 
in shares. 


Philip Cawith 


Dollar stays focus of market attention 


The dollar will again be the 
focus of attention this week 
after its fall last Friday in the 
wake of worse than expected 
August PPI figures. . . 

A host of releases this week 
will provide the market with a 
dearer view on the state of the 
US economy, and hence the 
likely outiook for US interest 
rates and the dollar. 

' The dollar has been in a 
down trend ever since Pehn* 
ary, and few observers expect 
this to reverse until US inter- 
est rates are seen to have 
reached a plateau. . 

The prospect of rates rising 


puts a dampener on asset 
prices, and. foreign investors 
are likely to remain wary of 
buying US assets so long as the 
prosprot of rising interest rates 
looms. 

The market thought US rates 
were on hold after the Fed' 
lifted the discount rate to 4 per 
cent on August 16. But the PPI 
figures suggest they may have 
to. rfgg sooner than previously 
thought. The CPJ tomorrow; 

' and the' retail sales figures fax 
Wednesday, wifi be the key;' 


Progress dnrU&Japah . trade 
folks will affect the dollar, 


as the September 30 deadlfne 
fer tile implementation of trade 
sanctions draws closer. _ 
Upward pressure on the 
yen. could be eased if, 'on 
Friday, the Japanese cabinet -: 
authorises tax reforms wfcjdr 
should stimulate consump- 
tion, possibly curbing 
Japan's largb current account 
surplus. 

- Markets will also keeping 
an eye on developments in 
Germany. On the political 
-front, tiie focus will- be the 
run-up to the October elec- 
tions. A victory fin Chancellor 
Kohl is firmly discounted, and 


this is adding lustre to the 

D -Mark 

On the economic front, the 
focus is the Bundesbank coun- 
cil meeting on Thursday: 
Council members have 
stressed that rates could 
fall farther, but analysts are 
not expecting changes this 
week. 

Bubbling on the back burner 
will be the debate on a multi- 
tiered Europe, which re-sur- 
faced last week. It has the 
potatttal to bolster the curren- 
cies of /core European coun- 
tries, at tte expense of those 
wife -fiscal problems. 


rfffnipf f ; f : u . ” • 






- 7 — 

SoavKtXBncttm?- 5v. ; 


The Philippine Stock Exchange 
said that it was keeping a dose 
watch on dormant stocks to 
ensure they were not being 
used by companies wanting to 
list assets without meeting 
listing requirements. 

Early last week the PSE 
suspended trading in 10 of at 
least 20 inactive firms being 
closely watched, and ordered 
them to explain rises of up to 
50 per cent in their share 
prices in case they had failed 

to disclose “material facts” 
that could have fuelled 
speculation. The suspension of 
three of the stocks was lifted 
last Tuesday. 

Exchange officials said that 
they were concerned that small 
stocks might became takeover 
targets for new groups wanting 
to get round listing 
requirements. Most small 
board issues are mining and tril 
stocks. 

■ Hong Kong 

Luoyang Glass said on 
Wednesday that comments 
made fay Mr Guo Xiaohuan, its 

phafrman and manag in g 

director, cm the projected 
performance and profits for the 
second half of 1994 should not 
be relied upon. China’s largest 
sheet glass maker said that the 
information had not' been 
reviewed by its financial 
advisers or auditors. 

The Hong Kong stock 
exchange discourages company 
officials from making results 


ii 

News round-up 


forecasts which have not been 
reviewed by independent 
financial specialists. 
Nevertheless Luoyang’s shares, 
which dosed 4 cents lower at 
HKS3.89 on Tuesday, surged 17 
cents, or 4 A per cent, to 
HKJ4.06 on Wednesday. 

■ Washington 

Klghwan International 

Consultants* produced the 1994 
edition of its Emerging Bond 
and Money Market Guide, 
promising to send on expanded 
pages on Thailand and Korea. 
Contact 6215 32nd Place, 

NW Washington, DC 20015; 

Tel (202) 686-4200; 

Fax ( 202 ) 686464& 

■ North Africa 

The British Framlington 
Maghreb Fund has launched a 
$30J5m investment vehicle for 
foreign investors in Morocco 
and Tunisia which, the group 
said, had been largely 
inaccessible until recently. 

The growth rates in Morocco 
and Tunisia are estimated at 8 


and 5 per cent this year. The 
fund will be listed in Dublin. 

■ Mexico 

Foreign investment in Mexican 
equities rose to f55.4bn at the 
end of August, an increase of 
&5 per cent from the and of 
July. The Mexican stock 
exchange (BMV) said that 
foreign participation in the 
Mexican market, including 
money market instruments, 
rose to $80.7bn, 8.3 per coot up 
on the previous month. 

■ Hungary 

Investor-MKB Befektetesi 
Atapkezelo Eft, the Hunga ri a n 
fund manager, plans to launch 
a closed-end bonus share fund 
with minimum capital of 
Ft200m via a public issue. 
Investment notes with a 
FtlO.OOO face value wfll be 
issued at par, and the maturity 
of the fund trill be five years. 

• Emerging markets coverage 
appears daily on the World 
Stock Markets page 


Baring Securities emerging markets indices 


Week on week movement 
Actual Percent 


Month on month movement 
Actual Percent 


World (288) 

Latin America 
Argentina (20) 
BrezS (22) 

Chile (12) 

Mexico ( 26 ) 
Paru{10) 

LHhn America (98) 
ELrope 
Greece (120 
Portugal (16) 
Ttrkey (20) 

Europe (49) 

Aata 

Indonesia (22) 
Korea (23) 

Malaysia (23) 
Pakistan flO) 
Phfifippines (11) 
Thailand (24) 
Taiwan (30) 

Asia (143) 


Year to c 
Actual 


+0.63 

+103,07 

+51-21 

-5.1B 

+175A8 

+29.00 


movanwit 

Percent 


162J2 

151.11 

251.37 

111.32 

289.28 

289.68 

17R05 

.-23092 


M Maas b S Mnt, Jnay m 19B2.1D0- Som Bartap SkuHIm 


Emerging routes: 




V.i-:; ll 


AIR CANADA 
a huh *r mu am 









financial times 


MONDAY SEPTEMBER 


12 1994 



Long-term US bond yields open 
this week within a whisker of 
their highest level since the US 
interest rate cycle turned, and 
it will take some encouraging 
consumer price figures on 
Tuesday to prevent them 
bre aking hi gh er stilL 

Hie unexpectedly strong rise 
in core producer prices In 
August pushed the yield on the 
long bond up by 14 basis point 
on Friday. 

At 7.7 per cent, the yield 
ended the week just two basis 
points short of its July peak. 

The yield on two-year 
Treasury notes, meanwhile, 
climbed to a new high of 6.32 
per cent as the market - 
anticipated an acceleration in 
the Federal Reserve Board's 
programme for tightening 
interest rates. 

The chances of the Fed 
delaying until the November 15 
meeting of its policy-making 
committee seemed to recede. 

Whether bonds lose further 
ground this week will depend 
largely on the August 
consumer price index. 


US 


Benchmark yield cuve (%)* 

9094 — Month apo <= 



Al yi rids era irvkK conwnSon 

Source: Monfl Lynch 

The general view is that 
higher petrol prices will push 
the index up by 0.4 per cent, 
the biggest monthly jump 
since early 1933. 

Excluding food and energy, 
the index is expected to show a 
rise of 0.3 per cent compared 
with July. 

Among other figures for 
August due this week, the 
bond market will have an eye 
on retail sales, due on 
Wednesday, and industrial 
production, on Friday. 


This week could prove to be 
highly volatile for gilts, as the 
markets prepare for a spate of 
crucial UK data and digest the 
knock-on effects of last week's 
turbulence on the US bond 
markets. 

The key domestic figures 
will be the retail prices index 
and average earnings data an 
Wednesday. Most analysts 
expect these to boost gilts by 
confirming that UK 
Inflationary pressures remain 
relatively low. 

"I think the average earning s 
data will show that there has 
been a change in psychology,” 
says Mr Nigel Richardson of 
Yamal chi In terns tionaL 

He argues that the low 
Inflation outlook Is making 
gilts Increasingly attractive to 
UK institutional investors and 
that they are likely to 
outperform US and German 
bond markets in the coming 
weeks. 

Nevertheless, as Mr 
Jonathon Loynes, of Midland 
Global Markets, points out, UK 
gilts could still be depressed by 


UK 

Benchmark yWd curve (96]” 
8/B04 — Morthago <=. . 



‘Alyfetts ere mafcat contention 
Smcs; Menll Lynch 

in ternational band market 
turbulence, particularly from 
the US, which is exerting more 
of an influence on {pits than 
Germany. 

A higher than expected US 
producer prices Index last 
Friday revived concern about 
US rnfiatirm temporarily 
knocked up to 1% points off 
long-dated gilts. 

Some analysts warn tha t this 
could be repeated if Tuesday's 
US consumer prices index is 
also high 


As Germans ponder for whom 
to vote in the October general 
election at a time of 
accelerating economic 
recovery, the bond market is 
faced with a different question. 

Do German short-term 
interest rates have further to 
fall - however little - or is the 
downward trend now over? 

It is not an easy one to 
answer, especially in light of 
renewed US interest rate rise 
fears caused by last Friday's 
wholesale price data. 

Nor is it likely that this 
Thursday’s Bundesbank 
council meeting will provide 
any insights. The latest 
German economic data has 
reinforced the views of those 
who expect no more cuts In the 
fliaftnimt- pTiri Lombard rates. 
Germany's recovery, they 
argue, needs no further help 
from interest rates. 

Bundesbank directors were 
at pains to dampen speculation 
in the bond maritat , thrown off 
course at the start of last week 
by lYiwmprrt *; suggestin g Tin 

more cuts were in the offing. 


Germany 

Benchmark yfeti cune (96T ' 
SW94 — . Month ago =• 



In the confusion, 10 -year 
Bund yields approached 7.5 per 
cent S.G. Warburg said they 
could soon exceed 7.75 per cent 
but then tall off to 7.5 per cent 
as funding pressures ease and 
political certainty returns. 

Those seeing further rate 
cuts on the horizon point to 
faiHng money supply growth 

and inflation , hopes of 
moderate wage rises, and a 
lower government deficit but 
their optimism could be daa>ipd 
by events in the US. 


Increasing bearishness on the 
Tokyo stock market supported 
government bond prices last 
week, artd the yield on the 
10 -year benchmark bond fell 21 
basis points to close the week 
at 4.495 per cent 

Traders were also 

encouraged by c ommen ts from 
the Rank of Japan following 
the release of the Tankan - the 
quarterly survey of business 
sentiment ~ and statements by 
the Economic Planning Agency 
<nn pha<ri«ring the fragile nature 
of the recovery. 

Although concern over 
profit-taking and over-supply 
persists, traders expect the 

continued weakness of the 

stock market and low inflation 
data to prompt bond buying by 
institutional investors. 

Another likely support for 
bonds is the currency. Worries 
in the US over rising inflation 
is likely to prompt selling of 
the dollar, In turn lifting the 
yen. 

A high yen, which leads to 
lower corporate profits and 
lower import inflation, is likely 


Japan 

Benchmark yWd 0«ve W 
8WW — Monthapo <=> 



to give the bond market a brief 
boost However, traders say 
fluctuations in the futures 
mar ket do not provide 
evidence of a rally in the near 
term. 

“A move above Y109 would 
be required before the chart 
would look bullish, and such a 
move over the next week may 
not be forthcoming, given that 
there could still be some 
selling ahead of half-end took 
closings.” says Barclays da 
Zoete Wedd in Tokyo. 


Capital & Credit / Antonia Sharpe and Martin Brice 


10 year benchmark bond yields 


European integration back on the agenda 


As European Union finance 
ministers held cosy fireside 
chats on economic and mone- 
tary union near Lake Con- 
stance last weekend, the mar- 
kets were fervently hoping 
that they had not forgotten the 
lessons they had learnt over 
the past few years. 

With many countries in the 
EU now enjoying economic 
recovery, it was inevitable that 
the push for European integra- 
tion would once again become 
an important issue on the 
political agenda. 

But despite Emu's low pro- 
file during the past two years, 
the subject re mains a conten- 
tious one, as last week's speech 
Mr John Major, by the UK 
prime minister, condemning 
the notion of a two-speed 
Europe, so clearly illustrated. 

As far as European bond 
investors are concerned, their 
main worry is that French and 
German politicians will resume 
their quest for Emu and a sin- 
gle currency without adequate 
consideration of the economic 
fundamentals. 

“Economic union and politi- 
cal union have to move 
together. Whenever the politi- 


cians moved too fast there was 
turbulence in the exchange 
rate mechanism and in the 
hnnri markets,” flairi Ms Wendy 
Niffikeer, senior economist at 
Q3J International “If the mar- 
kets do not believe that Emu is 
sustainable then it will break 
down." 

Recent proposals by Ger- 
many’s ruling Christian Demo- 
crat party calling for the cre- 
ation of a “hard core" of five 
nations - France, Germany, 
Belg i u m , the Netherlands and 
Luxembourg - have set alarm 

haTI« ringing. 

Analysts fear markets could 
be in far renewed volatility if 
the issue of a two-speed Europe 
takes centre stage. 

Mr Glenn Davies, economist 
at Credit Lyonnais in London, 
said: "I have my doubts about 
whether this factor is having 
much impact yet, but any 
country that looked like it was 
going to be left out [of the 
Inner core] would suffer." 

Mr Ken Wattret. interna- 
tional economist at Midland 
Global Markets, agreed. “If we 
do get an inner core, then a 
higher risk premium will be 
attached to Italy, Spain and 


some of the Scandinavian 
countries which are likely to 
be left out." be said. 

If some countries were to go 
forward without the others it 
would inevitably lead to yield 
spreads widening between the 
high-deficit countries and the 
inner core. 

Although the UK has ruled 
itself out of Emu for now, 
because of sterling’s suspen- 
sion from the ERM. its prog- 
ress on mflaHnn and reducing 
its budget deficit would allow 
it to qualify for an inner core, 
analysts say. 

As a result, some believe UK 
bond yields would not suffer if 
the UK decided to remain out- 
side Emu, either due to a lack 
of domestic political support or 
because of the government's 
desire to hold on to a floating 
exchange rate. 

-If the UK did not join in, 
this would not imply that gflt 
yields would have to go as high 
as Italy’s or Spain’s," said Mr 
David Miles, senior UK econo- 
mist at Merrill Lynch. He 
noted that by 1996, the UK’s 
budget deficit would be well 
below 3 per cent of gross 
domestic product, one of the 


guidelines set down as a quali- 
fication for entry in fo Emu. 

Yields on Danish bonds 
could also be protected against 
any widening. Although Den- 
mark has an opt-out from the 
third pfrflgg of Emu, it has said 
it would meet the Maastricht 
convergence criteria by 1997, 
even if it (fid not join the hard 
core. 

As a result, Danish bonds 
would continue to be judged on 
fundamentals, said Mr John 
Hall, European economist at 
Swiss Bank Corporation. 

By contrast Belgium's high 
budget deficit has cast doubts 
over its eligibility to be part of 
an inner core. IBJ estimates its 
budget deficit is likely to run 
at 5.8 per cent of GDP this 
year. However, the new gov- 
ernment has presented further 
savings. 

The most obvious casualties 
would be the high-yielding 
bond markets of Italy and 
Spain, which would suffer if 
investors believed their prog- 
ress towards economic conver- 
gence were insufficient. 

"The question for Italy is fis- 
cal policy. We feel Spain is 
doing well and will continue to 


do welL But I don’t think the 
risk-reward is attractive in 
Italy" said Mr HalL 

Meanwhile, some investors 
have been quick to look for 
opportunities created by Emu’s 
renewed publicity. Mr Hall said 
Ecu-denominated bonds would 
benefit from any form of Emu. 
since the Ecu's status as the 
EITs single currency would 
increase in importance. 

-With Ecu bonds trading at 
105 basis points over Germany 
and 50 over France, that has to 
be good news for Ecu bond- 
holders,” he said. 

Before the CDlTs proposals 
for an inner core were 
announced, the yield on the 10- 
year Ecu bond was 16 basis 
points over its theoretical 
counterpart that had nar- 
rowed slightly to 14 basis 
points towards the end of last 
week. 

After a difficult year so far, 
investors are hardly relishing 
the th mig ht of yet annthpr fac- 
tor which could destabilise 
bond markets. But with Ger- 
many and France likely to be 
banging the drum ever louder 
for a two-speed Europe, the 
Issue is unlikely to go away. 


Per cent 




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V*** * ■ 

- - - 




FINANCIAL TIMES 


CRED 



N G S 


international 

A unique quarterly source of reference, 
from Financial Times Newsletters, essential 
to aO players in the international credit 
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intermediaries alike. 

For a FREE sample booklet contact 

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FINANCIAL 1 1MIS 
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0.93 

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0.93 

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894 
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999 
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2874 

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3234 
2808 
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997 
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<j o* noon a 

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rfpodpncai 



CONFERENCES 




__ MW TO WaUCKS 

DOERtUTWALOnMCAliaie nsD, ®!E? L .!Sf52f ,<H * T 
aKUNEIlKb 


toMMUrartil 

Sa n aa 6nrap 


Three-dav International Conference 

TRENDS IN RUSSIA 

Economy, Politics, Laws 

in 

Vienna, Austria 
October 20-22, 1994 

With the main focus on: 

• Russian- Western investment projects 

• Inner workings of Russia's politics 

* Latest tendencies in Russian legislation 
and law-enforcement 

* Construction, b ankin g, insurance and 
defense industries in modern Russia 

Featuring many prominent Russian speakers 
For more information, please contact: 
Transcontinental Finance Group GmbH 
Tel. +43-1/534-39620, +43-1/534-39621 
Fax +43-1/534-39777 


AFMEMCO Inlet 


CONSULTANTS FOR THE 
PAST 25 YEARS 

TO THE WORLD'S OIL AND 
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taplmmsad to announce 
As first 

EXECUTIVE SEMINAR 

OH 

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to M hold from 24-28 Odobw 1994 
al Trend Donauzentrwn HoM, 
Vienna, Austria 


Fur father hfanuriou contort' .16 Sam Uajra, 
Proxrtm Coordbtrur.Afarma hamsjaasai Ltd. 

3 G XreMnsm Stm PO Bet 730^ Onset 
Cypn* let *357 S J487JJ/72J, fat *357 5 J48X7 


O Executives 
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find this Seminar 
an opportunity to 
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who will present 
the dynamics of 
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In todays changing 
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guest speakei 
whose expert!) 
In the Oil, Pstn 
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I tv lir.m-.'l un Ihv MatVv'.uv,; I'vu.c 


The Conferences and Exhibitions 
section appears every Monday. 

To advertise in this section, 
please contact Nadine Howarth. 

Tel: 071 873 3503 
Fax: 071 873 3098 


International / Graham Bowley 


Ireland finds progress difficult 

YMd sprea ds 


Given Ireland’s recent 
impressive economic 
performance - high growth, 
coupled with low inflation and 
a healthy government budget 
deficit - the outlook for the 
country's government bond 
market should be bright. 
However, until a better tone 
returns to other world 
government bond markets, 
progress for the Irish market 
will be difficult 

Irish gilts have not been 
spared the dramatic fall in 
prices that has afflicted most 
of the world's government 
bond markets in 1994. Since 
their trough in February of 
this year, the yield on Irish 
gilts has risen by about 2.5 
percentage points to 8.7 per 
cent 

The yield spread against 
Germany widened from 0.5 to 
L7 percentage points between 
January and June, although it 
has since narrowed to about 
1.2 percentage points as Irish 
gilts, in line with their 
British counterparts, have 
outperformed the rest of 
Europe. 

Yet the concerns that 
weighed down other markets, 
fear of rising inflation and 
higher interest rates and 
worries about a flood of 
new bonds to fund large 
government budget deficits, in 
the main part do not apply to 
Ireland. 

High unemployment strong 
productivity gains, and an 
incomes policy aimed at 
restricting wage growth has 


10 yo^ borxia 



-rass a* 

Sourca Dauauiunu . 


kept the annual inflation rate 
at around 3 per cent with little 
risk of it moving higher. Cuts 
in public spending, tax 
increases and economic growth 
have helped the government 
reduce its annual budget 
deficit to a sustainable Z3 per 
cent and make inroads into 
the stock of national debt, 
although at 88 per cent of GDP 
this is still one of flip highest 
in Europe. 

With about I£50m to I£10Qm 
of net gflt sales remaining for 
the rest of this year out of a 
total of about I£L6bn, the Irish 
gilt market has few supply 
worries. 

The only credible concern for 
the Irish government bond 
market is that of rising 
Short-term official interest 
rates. The Irish monetary cycle 
is closely linked to that of 
the UK and if the British 
authorities raise interest rates. 


the Irish central bank will find 
it difficult not to follow suit 

“The best we can hope for is 
that interest rates remain 
static for the rest of 1994," said 
Mr Alan McQuaid, economist 
at Goodbody Stockbrokers in 
Dublin. “Our view is that the 
UK will raise rates before the 
end of the year. There may be 
some lag. but the strong fink 
between the punt and the 
pound means that Ireland will 
have to follow 

That long-standing link 
between the Irish currency and 
sterling was temporarily 
broken when Ireland joined the 
ERM in 1987 and the punt 
became effectively pegged to 
the D-Mark. 

-Ireland successfully adopted 
a monetary policy independent 
of the UK and Irish gilts traded 
off bunds [German government 
bonds]," said Mr Alan 
Sutherland, investment man- 
ager at Standard Life in 
Edinburgh. “With the break-up 
of the ERM in 1992, however, 
Ireland reverted to being a UK 
satellite, with Irish gilts 
tracking UK gilts.” 

Ireland's entry into the ERM 
also c hanged the make-up of 
the Irish gilt market, a large 
proportion of which, about 25 
to 30 per cent, has traditionally 
been held by overseas 
investors. 

While the punt tracked the 
D-Mark, long-term German 
Investors were attracted into 
the Irish market, hnMfaig about 
3) to 25 per cent of government 
bonds. With the demise of the 


ERM. however, they left, to be 
replaced largely by UK and US 
investors, which along with 
continental European investors 
each hold about 10 per cant of 
the Irish gilt market 

Ireland received a boost last 
month when Moody’s, the 
credit rating agency, upgraded 
the country's foreign debt 
rating to Aa2- The Irish 
authorities are also attempting 
to improve the attractiveness 
to foreign investors of the Irish 
government bond market 

As well gs launching a new 
10 -year futures contract to be 
listed on the Irish Futures and 
Options Exchange, they hope 
to improve liquidity by an 
overhaul of government bond 
trading, replacing the current 
order-driven system with a 
market-making system similar 
to that used In the UK 

The IRA ceasefire may aim 
improve sentiment and focus 
the attention of international 
investors on Ireland's 
favourable economic 
fhndamentals. 

However, any support these 
developments may provide will 
only become apparent in the 
long run. 

“They are all positive 
factors, but in the short 
run a lot will depend on 
what happens in other bond 
markets, in particular in the 
UK gilt market," said one bond 
analyst. "There's no getting 
away from the fact that what 
happens in Ireland will 
continue to be dictated by 
what happens in the UK.” 


NEW INTERNATIONAL BOND ISSUES 


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1 . 


IXNANCIa *- TIMES MONDAY SEPTEMBER 12 1994 


CONFERENCES & EXHIBITIONS 


SEPTEMBER 18-20 
' Business Process 

Re-sntfneerfng (bprj 
C onBBBlOB Wdb* of seminars for ottaagera 
dnrgBd with designing and implementing 
8PR initiative*. Presented by l™t^g U5 
practitioner *nd BPR author. Proven 'hov- 
to-do-if unptcmcntttioc guide iihaimed 
with can sttufiet and workshops. Course 
. book also xvaflaMc. Over SO a pnkriw 
fat ib* ptfatn ft pdiHc seams have already 
attentat Repealed November 21-22. 
Conner: Bichard Pants, Vertical Sysicrm 
tuacede In) 

Tet +44-455-250366 (24 boon) 

Pat +44-455-890621 

LONDON A REA 

SEPTEMBER 19-22 
Ffre 94 

The national cccftTcnraft erhiNrim^ for 
the whole fire protection pro tea* ion. 
featuring a wide range at the fire 
aatay equipment aaf services. 

Contact; Jane Malcohn-Coc 
FM1 International PnbHcatioea Ltd. 

Tet (0737) 7686 1L Pajc (0737) 761685 

BOURNEMOUTH 

SEPTEMBER 21 ft 22 
FT ftotafflng Towards 2000 

The meeting win csamfac die med fen the 
retail industry to «piwt the r^ wm lri^ 
that new market* and new tnducriogks am 
offering as well as the fundamental 
bmjpeaa challenges of n urmki nj jmt m 
and corooOrag coots. 

Enquiries; Rnaodal Tfanea 

Tet 081 673 9000 Fax: 081 673 1335 

LONDON 

SEPTEMBER 22 

Latin American Hnanctai and 

Business Brisling 

Economists, academics and basinets 
- leaders from six Latin Amentum countries 
outline the financial .and business 
opportunities far the region, 

Brazil. Ar gentina Uwia, Pen, CMtei and 
Ven ez ue la. Sponsors: lEA/Adw. 

Cose £280 + VAT 

Contact: Melanie Jones at Conference 
Profile 

Tel: 071 236 *938 Pax: 071 236 1888 

LONDON 

SEPTEMBER 22 
Supplyina Sm Dsmand: KMpbie 
yotv customer tea changing world 

One day Strategic planning Society dk 
ESRC Conference 

We Hve hr a wodd of consnmer choice. The 
old marketing concept of supply and 
demand need* updating. Marketing strategy 
must sdtnowlcdg: sorirHyrmondc drengts 
sad demographic trends in order to. 

* maiDtam competitive advantage. 

Contact: Jo Mtdnee, .. 

The Strategic Pfennig Society 
Tet 071-636 7737 

LONDON 


SEPTEMBER 28 

The Third Ago of Financial 
Services 

Tim oppomuntios In the S0t market*. 

A joint conference organ land by Age 
Concent rnghnd nlTfa Henky Centre, 
designed to help those companies 
interested hi mattering goods sad semen* 
to trie 50+ age prep. 

Cost: 335 + VAT - 

Ctmacc Am Raman * He Beaky Crime 
Ttt 071 353 9961 

LONDON 

SEPTBIBER29 
Ernst & Young 
Transfer Pricing Conference 
Impl ications for multinational* of 1994 
OECD Repeal and Hnal US Rcgideicxc. 
Prime fllUglpba VAT 
Qxaacc'TfaiaJJnenptxt.BDmAYomg 
Teh 071 931 2295 Fee 071 3425862 

LONDON 

SEPTEMBER 29 
South Africa ’ 

A CStyfortnn r o n fa rt , a c e featuring Chris 
Stab, Sir Evelyn de Rottachfld, Brnhrrfi 
Bradley, Robert Guy. Saril Heaow. Gary 
Unde, M J Lovett, Lada van der Post. 
Sponsors: South Africa Foundation, 
BOthldS&dl/ ^ m te he HcW Htf^ d 

Chance, Cbopeas A Lybrand. 

Information front Chyfnrim: 

Tel: 0225 466744 Pax: 0225 442903 

LONDON 

SEPTEMBER 29/30 
Telecommunications BSfing 
Systeme *94 

Infra mat lu e far Competitive Advantage 
Royal Lancaster Hotel, London, W2 
29tfa/30th September 1994 
Worldwide Forum forBUlisg Systems 


OCTOBERS 

htemtfomlE hirinewe OuSook 
Wold bsfaeaa leaders and noted economic 
analysts will help yon plan strategy and 
taetica for 199S. offering insights into 
i" 1 *!"* ff oonfidons in the United 
States, Europe and Ana, with special 
emptesfe on shifts underway In Chfaa. 
Coetaec The Conference Board Enrope in 


Tel: 322/67534X6 Free 322/S75U3.95 
^ _ _ U3NDON 

OCTOBERS 

PubBc Procurement of Inauance, 
Banking A FtaencW Service* 

The directives, ngaluiou and the 
practice; how to claim' damages for 
unfairly awarded tenders; view tram the 
public sector; view from an insaranoe 
hrokm; view from private sector; how to 
pm together Ac wtadng bid. CFD 4 hums. 

pw«iM HuK Vl ^ 

Conors: Solon Housmnaa, IBC 
Tet 071 637 4383 ftx: 071 631 3214 

LONDON 

OCTOBER S-7 


Ibdayk leadfag companies view chaqgs as 
an opponualty and an r.tvairiri pan of 
doing business. Experienced business 
executives riUcspbis » fa»f r companies* 
best practices Is using key tools for 
Ttir— g* Tg r * ,w y 

(i ai»v« T The r un t wMi Boeid hi 
Brussels 

Ttt323X7SMjaSVHc322#7SJD33S 

LONDON 

OCTOBER 11 

Measuring the value of LT. 


SEPTEMBER 22 
CBlAswuMPwielon e CoiYwenoe 
Cbuftrenc^ m Bsndstian with RElfimn M 
Mercy Ltd. Con h Wns cOtnpaByjtmtdtm 
policies and Gouemmcit strategies far fight ' 
of legislative eshnges. Keynote speaker, 
William Hague, Minimer of State Car 
Social Security. 

Contact Sandra A] died - - . 

TU: 071 379 7400 Am Vn-497^646 

' ' -LONDON 


Last year asended by over 200 people 
Tel: (071) 2748725 for derails 

LONDON 

OCTOBER 3 -NOVEMBER 21 
' FT City Course 
This course is designed to provide 
participants with an Overview of all the 
■ mHi ip of the Chy if lVmitna paying 
particular atn m ri m to the banking ■wit 

Siiiy riWM WmiirM T in— 

Tel: 081-673 9000‘Fte 081 673 1335 

LONDON 

OCTOBERS 

Stratagtaator Handtag Pmgnancy 
ftMatomfty Laeve Inttie WorkpMce 

Every company’ qnst review its 
QnplOfBflDf 8^ its lo 

i w twml t y ' fwwi equal op pg | 9t i i| M iM Thk 
■o onfatn es offers practical advice' on dm 
iMM j«iiKni gf Him> changes lo oked at 
from the personnel professionals 

pmpccuVQ. ... 

Further details from International 
B nfraw —I Confctcnoes Lid. 

Tet 061445 8623 

LONDON 


OCTOBER 3-5 .. 

LAFFERTVS 
in parraroonw noofui • 
M an a gement Convention 

Foot- (S atinet bet related ooafietunoea - a 
MUST for anycoe in ihe affiaeat maricet - 
an area which offers enormous profit 
appwtaafty te pcovideu of financial ad 
profesaional servteemGIqbal Wealth 
Briefing. Private Banking, Investment 
'Management A Dealing. Personal 

^ WwkiMia Klaiyj^ . 

r^nlafl ^ Pitiy i 

LAPTOTY CQMBBSNCES, DtibHn 
^495^1)6718022 
Rncf4353&) 671 3594 . 

^ ' . LONDON 


SEPTEMBER 26 
Employee* and HaaMty^ . 

CBI Conference consider^ the Ukely 
impact on a wide range, pf 'business 
activities and employment practices - 
resnltiag from Government proposals tor /v ^_ n _ a 
chants to the law on ifisrinEty. OC T^eH 4a5 • . 

Contacc Nkola Martin. CBI CKmEnranca xl llfiai.nallonal Inlr U lll C t iW O 
Tlefc 071 3797400 Fric 071 497 3646 -Finance:. ' 

LONDON IMM O p ws tl T tsate<Bai) p««ijBe» aw 
*** *° Pl*f mi Important role in major 


Ufa confimtt dbcanei bow to mcsAib 
value gf LT. projects and prioritise LT. 
investment successfully. It presents 
guidance from leading academics and 
mwIwiw, as wnP a from the 

f fpirLtp i^ gf "wjnr ■ h y}ftgn, fa bodl 
the private and pabtie sector. 

r | »m. ' l ' Ip m ipyu iiv 

Tet 081 543 6565 Roc 081 5449020 

LONDON 

OCTOBER 11 1994 

TBe Wntarlnduniry- Looking 

Forward tom the Parioefle Review 

A CM seminar assessing (be rcgnlatsiy 
framework for die next tea yean ”4 die 
Imped of the new price Imnts for the water 
t sxnjwn lM shsiehoidezs "“t "fifUiw 
la Byntt will give lbs keynote address. 
Speakers from companies, customer 
graups.thed9udfteNRA C0at£299 + 
-VAT. 

Cmtacc Ldgb SyJcee. OH 

Tet 071 ©5 8823 Fax: 071 8958825 

LONDON 

OCTOBER 11/12 
Practical Deaflhg course 
* Foreign exchange 
Traming in spec and forward forex denfing 
for trainee^ uniof dealers ««< Corporate 
Treasury per so mi d. Highly puticfpativc 
indw&ng W1NDEAL (PC based dealing 
simulation) Training effectod by 
podSosm with many years* apeiieoce. 
£480+ VAT. . 

Lywood David Imrraatioaal Ltd. - . 

Tab 0959 S6582QfQS56 323184 
Fnc 0959 565821 

LONDON 

OCTOBER 12 -MAY 20 

rranra amvom fot moRv 

Over 10 1-day nnodali this co mae corns 
interpretation of financial statement*, 
investment appraisal, working capital, 
management accounting and business 
analysis. Delegates r eceive a copy of the 
Certified Diploma Open Leaning 
Programme - a comp rchsnsivs 2,000 page 
guide to finance and ac counting liar the 


Contact: Yoel Gordon, ACCA 
Teb 071 396 5722 (24 hoots) 
ta 071 396 5790 


SEPTEMBER 27 
Mgtiwaya to Manufacturing 

CBI Conference, fa association with BT, 
brings together leading exponents to 
ihhibi^ devofapmettis fa nftiuBtioo and 
comm uni cation systems and. their 
important role in company strategic, 
pfenning. 

* ftwBMY O wgin a IQnpaby 
C81 Coherences 

7bb 071 3797400 JRam 071 4973644 

LONDON 

SEPTEMBER 26(27 
European Equities 
Investment Management 

Queen Elizabeth II 
Conference Came. London. 

Major International conference on pan 
European investment strategy featuring 
'roalysit of the gnxnfc of the totfeudoosl sod 
investor be» fa Europe and indu&ng 16 
- eounuyibectorworitsbops. 

Cbotocc Aftm Hgsr, Dow Jews' TBetme 
T± 071 832 9532 Ae 071 353 2791 • 

LONDON 

SEPTEJIBER 27 

User Protection In System 

Procurement 

A one day briefing from SCC» Legal 
■ Group on rights und rcsponsibQities in 
software procurement. Practical and 
directly relevant to Legal Advisors and 
Company and IT Mana g e ment- £250.00 + 
VAT. Fax for farther information or 
pro v i si o n al booiting m Mane Dwyer, NCC 
on 061 236 8049 or Ibb 061 228 6333 

LONDON 

SEPTEMBER 27-28 
Empowering FtaxBtia 
Work Teams 

implemented lkfllfolly, the operational 
team adds real value to dm work of each 
worker performance. A fim-dass line up 
of practitioners relate their experiences. 
Cootteb Sarah WOtfams or Rachel Thomas 
IBCTcchmcti Serried 
Ttt 071 6374383 Fkr: 071 631 3214 

SOLIHULL 

SEPTEMBER 27-29 ' . . 

PPUAShow 

Tbs UK’s premier Show for processing and 
packaging machinery. Over 200 
uandholdcn representing 500 iat cmati o ft al 
machine manufacturers. Eqeipment to 
proesK and pack good, phaanaosotieshk 
cosmetics, chemicals, beverage*. 


in&astneture schemes woddwide; TMs 
two-day event wDl axaeiinf. the bUtion 
dollar business opportunities for 
coonsoore sod suppBen m tbe fadmtry. 
&«]■)«+ + ^»w8«IT timif 
Tet 083-673 9000 Far 081 673 1335 
LONDON 

OCTOBBI* 

Managing a growing business ■ 

If not managed e ff ect iv el y , growth can 
lead to difficulties ini such areas as 
rateflow fo r arastiii g. prided policy, amat 
management, appropriate financial 
structure and systems, and tax planning 
This one-day cooferonot, in association 
with TSB Gommerdai Raancet «31 help 
entrepreneurs ex amin e some of the 
t echriiqnrii fa m u agin g these hey areas as 
their business grows. 

Director Conferences 071730 0022 

LONDON 

OCTOKR4 
Pensions Mow 

A one-day co nf erenc e covering Pensions 
Equality; SERFS - breaking the Unk; 
proposed mis Imam solvency mpih ci iiftu t s; 
the p ro posed, newngnbuniy regime end 
c o mpen satio n scheme; the extra burdens 
these will add; befog s. pension scheme. 

Trustee: phm the, viewpoint of m scheme 


Contact: The Conference Manager, Geo 

p hMisKju g f irf 

Thb (071) 538 5386 Pkc (071) 538 8623 
• LONDON 

OCTOBER ML 

Auditing the DMfingroam 

( Un d tewandng ifaltewayfa K ti o rt 
. Tkifafag designed apea^esSy for fatemsl 
andbtxs and bank faspsetoa dmrged wkh 
ejramhriog tbs ' activities of their 
fosritmtons* Tfomiiy deelfag eperatioo - 
ash naefcas and derivative piabctt. £480 
+ vat. ; „ ’ • 

Lywood Pnvld fa ie m e tit m ri Ltd. 

T* 0959 565828 / 0956 323184 
'Foe 0959 565821 \:” 

lw.UONWJH. 


LONDON 

OCT0SER13 

OpporiunHIss In Gsnnsny for 
Real Estate 

An inside view a all ntpeat of propoty- 
lehnnd tavestments in Get aw ay - Topics 
include Developments. Conveyndflg. 
Legal. Financial, Environmental A 
Commercial tones. B rp c rhmc B of Rxogn 
GoBtimaom. Gannas A British uprakcra 
fadnde DTI, TkmhaaAastalt, Aidntects, 

ZNTERFORUM Tet +44 (0) 71 386 9322 
Fas: +44(0) 71 381 8914 

LONDON 

OCTOBER 13 

U nt fa tntent fa ig Property Vakwaon 
anti Accounting 

Dfffimnr vafaes of a property; m ethods of 
.va lu i n g different property types; rounm 
property accounting issues; sale A 
ta s ta d; lending bunker's and properly 
valuer's views; special issues ftw property 
companies; RICS Working Parry 
(Madtacn Report) CPD 4 hoots. CTE 7J5 
points. Poc omfutati oc avaDsble 13a 
Hbko Hoamn 1BC 
Teb 071 637 4383 fine 071 631 3214 

U»BK» 

OCTOBER 13 

Chbm Investment, Patent A 
Trade Mark Conference . 
H eM w Mm Jua ie wutk of lixtn a ia lPiupetiy 
Pnogimmne for China finsntx d by the fiC 
Topics foctade B c o n om ic Ooop eiido n A 
Hade Halations between Ohs A Europe, 
Putts A "Dede Matt Protection, fo*«*««t 
Pr o pei ty Law EaforemsenL High Level' 
Chinese'ddegstioo Foreign Hade ' 
Ministry, Hade Mark Oi g n nkatk a ts. EPO, 
UEEurot (Mice A fadostry Beproseantive. 
INTERFORUM Tbfc 444 (IQ 71 386 9322 
Fax: 444 (0)71 381 8914 
■ ■ LONDON 


OCTOBER 17 A 18 
FTWorMMobfieCcnimunk a tionB 
This two-day confomcc will bring 
togrtber key speskats to share their views 
on the growth of mobile mnmmii i rw i niw . 
the various tedraofosfas befog adopted and 
now operator stategms. 

B u y "**' n «»+i ti«« 
m 081-673 9000 Kax: 081 6731335 

~ LONDON 

OCTOBER 17-18 
Empfoyos & Union Participation 
lorCbsnge .• 

A twoday UE fadnsny ronfernece 
Tom Bnrifaos, GMB, and Tom. Sawyer. 
Unison are jut two of the speakers 

moreensebil^fl p rimw Aip SgpBBMaaMl lU S I—U l 

miitaWj — — j j TiriiT n id cuqOojecs 1 ‘or 
more effective woikfag. Many companies 
will be rep r e sen ted by management and 

finfanf fhurlnj lt« miw pluHhrm. 

rvnfopc pv ftd Thomas or Sarah WiDfams 

1BC Technical Services 

TOb 071 637 <383. fta: 071 631 3214 

LANGHAM-HILTON 

OCTOBER 18 A 19 19M 

Incrosnlng Buskims by Tofaphono 

.. October 19 - Ontgofag Qdl 
iv«h»j with faecmfag enquiries or pro- 
active salat call, delegates foxxu bow to 
iwTimiae dw potential of every olL 
£195 4 VAT per day, folly iaclulve. 
Book both day* together for same delegate 
for £50 reduction -£340 4 VAX 
Contact: STRUCTURED TRAINING 
0926337621 

MANCHESTER 

OCTOBER 18-19 

Managsmont Buyouts - 

Ths Way Forward 

A rapiisitkw s Monthly 's JOth A&nrroraaiy 

Confere nce provides a fix irm for tfiscnsskm 

■mi hritamation sharing. Topics 

tbe ■ tt— for fotnre laiyuu t a; w mmi fi n g 

the Irani*'* 1 ”" trends fa ■nwiter 

living with your investments; vendor 

■f t h w +^ myf many more; 

A n yi hi iinM M u iT tl lj . 

Tab 0171 823 8740 Fax: 0171 1581 4331 

LONDON 

OCTOBER 18*19 
Introduction toFonrfgn 
tec ch uga and Monty Mfk a ta 

Highly participative training course 
covering traditional FX and Money 
m i rfcere (Surfing A Eurocurrencies). For 
Corporate tress cry personnel, trainee 
denims, treasury m»rfcM4t>g executives, 
ffMwhi controbeea, and other 

£480+VAT •• 

lywood David Interoatioosl Lad. 

Tfet 0959 565820 / 0956 323184 
Fnc 0959 565821 

LONDON 

OCTOBER 18/19 

Practical Documentary Credtta ' 

Trade finance training fot financial 
inatimtions ■"»* expon/tmport company 
personnel. Freaantaoons. practical 
exarciees and on Doc Qedos. 

dfa nepro dm ■«< the UCP 500 ■ 

m I — rtf all 

lanes. £480f VAT. 

Lywuod David fanmaiiorol LxL 
Xeb 0959 5658206)956 323184 
Pxc 0959 565821 

' LONDON 

OCTOBER 19 

SntaS Duvk i m nor— r 

SkBWnWki 

Featuring ■ structured programme of 
speakers and advisors drawn from the 
politics! — Mi Kupt— KCtOCS* 
tfaifl Tftl^ BlfaOBld CQ^fillCQCt dyf EQ ofajf 
practiol advice and gskknce far all areas 
of small business. Speakers include; 
Michael Hoffman, John Redwood, an 
advisory panel from the Midl a nd Bank, 
lOce Swatwell and Lord Arehet 
Cbntatt Alan Clmwdy QBE 
Thb 0276 452010 Roc 0276451602 
FRIMLEY GREEK, SURREY 

OCTOBSnS 
Practical BPR- 
hnptanwntation Issum 

2nd A nnual Gouftreacc of the BPR Study 
Group (200* membera) 

New (never discl o sed before), recently 
succ e s sfu l Case studies presented with 
interactive sessions from senior 
management and practitioners. Lively 
dbewiaos nsd A 1 *!— » f>y i fr— fpefafag 
.ipoikoia ttoa dtib nk IntcmitlorLij, 
Nstienride Buafing Society. AMnee and 
l e fae s r ec Capital Home Loans. FkUmde 
and move. 

Qxdaet: Stave Ibwere, Hmson Amocisies 
Thfc +44 <0)941 120118 
Rbc 444 (0) 608 663829 
LONDON 


OCTOBER 26*27 

How to Grow Your Busk— 8 itafeig 

Marital no — r e h - 

Ubnnados ft bccDmxii£ jp 

cbe ruzmfag qt a the ose 

of urhnnlngy. This two day stniis s i wD] 
show you how to get tbe best our of 
researeh and tbs real reasons for using fa 
Further details from International 
Pr of cm ioaai Co efa caeca Ltd. 

Teb 061 445 8623 

LONDON 

OCTOBER 28-27 
BPR 94: R— ngtoear (ito, 
Proc—i UanagMiMnt and 
Pr ion— ImpravwTwnt 

Eumpt. ^ leading a a t mui und aMhlHm 
devoted to cx ul na fa g how to apply b uritwas 
re-eagineerug nrategles to achieve 
quantum leaps in corptgatr p erform a n ce. 
Designed to mcer the needs of your whole 
re-engineering team, from executive 
sponsor to those involved fa planning and 
implementing projects. 

Contact: Burinsss tewitt y ^ 

Tet 081 543 6565 Pin CS1 5449020 

LONDON 

OCTOBER 27 

Inta mati oital Tax Confaranca - 
Managing Global Expansion 

Conference on the tax issues facing 

MtiW—t irmmlm tfi 4— > jjphsl seme. 

Price £20000 plus VAT 

Oomace Micbdle Beard, Erast A Yorog 

Teb 071 931 2297 ta 071 242 5862 

LONDON 
(PLEASE NOTETHE VENUE IS 
LONDON AND NOT BOURNEMOUTH 
ASFRKVK >U8LVSTAXn) 

OCTOBER 28 

Succ—aful Banking fiacovary 
& Banking i M g ati o n Tactic* 

Winding np vf»t bankrupting customers; 

possession * "+n — ^ unt iw rin g 

mongages; winning an order 14; the 

Inu l w ir !■+ suit tw nft CtiSfidentisUgb 

exceptions, bssk as knowing l e UpfctX sad 
ttg+is ud Attics 
of agsat bank. CPD ij hours, 
n nwii—wliw mMiU U 0. 

CcDtscc Linda McKsy.lBC 
D± 071 637 4383 Fax: 071 631 3214 
LONDON 

OCTOBER 30- NOVEMBER™ 
LMngwWiTaohnoioBy 
Road Tranaport A Rpad 
Transport Engineering 
An important opportunity fot all 
proftaricaelx in volved In design, operation 
aad nrefateiance of can, trucks and Fee's 
to assess existing challenges sad 
developm en t s . TMs twin track contonce 
with 30 ia s uMrinMl spesfcsra wfll provide 
Sn * H T ,riiH nlii, ft— m|p|ic mmA 
[WHfal tWl A (ridni — H »i | 

Crwtrmrf f ww ^ t 


NOVEMBER 9 

(Sobol Convention on RttaH 
Financial Services 

3: 6 PaiaBel Conferences 


- laaaraoce 

• Noo-Bnk Banks 

- Retail FfaandaLScndcre fa the MtdOc 
East 

> Cnas-Border Opportunities in Iberia 
Coataec Moms (Mi Lrifiaty OmAreoaa 
Teb 4353 1 6718022 Bac 4353 1 6713594 
LONDON 

NOVEMBERS 

Praaantatianafor Professionals 
by Professionals 

At tbe Metmsid Theatre, a acmfasr on 
creating effective presentation*. Finn 
presentation .techniques and use at 
tangwge. to AV ih .tign . sfidc p ro d u c tion , 
cto Rtnrinrmn ea. s ttmrt -up cotnctflans and 
actors demonstrate how to make lasting 
impression*. Instructional, utterly 
eqjoyable - a must for all pres enters . 
Keynote speaker; Alan Dfobo. Chartered 
Institute of Marketing. 

Cbntaec E WSBams, Eaee^re Presenotions 
Tel: 071 837 8199 FUc 071 8378190 

LONDON 

NOVEMBER 9 ft 10 
A Practical Guide to US 
RaExpoit Controls 1994 

Essential Information on munitions 
controls, compliance procedures. 
preUftratiOBS «+rrm «K ’"i w irri data. US 
policy fa the poet COCOM world and 
recent developments. Crucial for UK or 
European baaed subsidiaries of US 
companies and those which reexport US- 
origfo goods. Docnmcfltatite avsilsbie 1 00. 
Ctadaa: Linda McKsy.lBC 
Tab 071 6374383 Rtc 071 631 3234 

LONDON 

NOVEMBER 10 

Global Co n vention on RataB 

Hnanctai Services 

4: 6 Parallel Conference s 


- Direct Financial Services 

- UK Rnada! Services 

- Personal Fmrocial Ffanofag 

- Oom-BotderOpponmxies fa Ranee 

. Rerall Financial Services in Emmgtag 
Markets 

rv— r»- I tnmw Pram Irifaly f n+unM 

Thb 43531 6718022 Rk 43931 6713994 

LONDON 

NOVEMBER 11 

Global Convention on Retafl 

Hnanctai Servtoae 

Day 5: 7 Parefiei Conferences 

• Cross-Boeder Opporomides fa 

^»n|wi Baa n ^a l .Cwofefii 
mffral A n—tam Bmiyg 

- Germany 

• Nonfic Europe 

- B eae fox 


Teb (071) 630 11X1 Fi 


6306677 

LONDON 


OCTOBER 31 

Enaurlng Tbe Only Valid Ctabna 
Are Mat- Using PbHcyWortfing rod the 
Law to Protect Insurance Co ap m y Pimd* 
tradin g UK lawyers give you the tools to 
assess fitidy and properiy whether cUms 
are covered by the insurance policy 
wording. CPD 65 hoars. D ocuramtts tiou 
svaitaUellO: 

Contact: Linda McKay. IBC 

Teb 071 637 4383 Fkr: 071 631 3214 

LONDON 

NOVBUBER2ft3 
OM Poftution - Claims, Liability 
ft Env ir onmental Concerns . 

Future of TOVALOP and CRIST AL; 
Draraldnn Report; chaOenges of OPA *90; 
certificates of financial responsibility; 
prevention of poUnrfon, work of MPCU 
and LTOPF; latest statistics on claims; 
e conren l c Ion and suvirotunemal damage. 
Doc nmenta tion available 180. 

Cornice Helen Houseman, IBC 
Tet 071 637 4383 fta: 071 631 3214 

LONDON 

NOVEMBERS 

The 1st Annual fl avin * of IT Law 

This prestigious one day confe re nce win 
hive the leading speakers, cover tbe 
Critical I ss ues , the camriri developments, 
law, litigation, regulation sad policy. It 
will have a practical approach for 
p mraitin u e n by praetitiooata. 

Further details from International 
F tofew i mi s l Oxiftire ac em Lid. 

Tet 061 445 8623 

LONDON 


- FhuMiffRftl 5<u| v igw fa Tw< ffl 

• WiiHUM P»aw ry » | 

Oai fa ft MfKTTW fVmt T aflo l v ConfrlEMtl 

Ibb 4353 1 6718022 ftc43S 1 6713594 

LONDON 

NOVQfBER14 
AnnuM Company Report 

1992 and 1993 confstencea SOLD OUT. 
Off balance sheet finance; capital and 
financial insouniests; acquisitions nod 
nyitgsra; drikned tax; assodami and jasat 
ventures; relayed parties; UTTF, Review 
Panel, rash Haw. revafcnsion defl d a and 
company law; Cadbury. CPE 16 points, 
CPD 3 bouza. Doc umen t ati on xvailride 90. 

B4m BnnM iiq IW 

Tet 071 637 4383 Fkx: 071 631 3214 

LONDON 

NOVEMBER 14 

flrvi jllwnno Vm 6*1 itro lain 

txesssnes Hi strcogH: 


fa asroemtfan with SDG, dm best med of 
tbe 250 amfarences and c o c r i es held by 
IBC Technical Services each yea*. 
Restricted to senior management with 
significant responsibility for strategic 
direction of their c o iupMk a. Limned id 20 
places. 

ft w iw* PmHigBHiiit 

IBC Technical Services 

Ttt 071-637 4383 Fax: 071-631 3214 

CHEWTON GLEN 

NOVQIBEH15 
US GAAP/SEC Reporting 
fa s i aucii t h i u with Cbopcss and Lybmad. 
US GAAP overview; US v UK GAAP; 
recent US GAAP pronouncements and 
current developments; SEC reporting 
requirements; SEC hot topics; practical 
Case Study. Limited numbers for 


Contact Heka Houseman, IBC 
Teb 071 6374383 Fkx: 071 631 3214 
LONDON 


NOVEMBER 16-18 
The Wachovia 
Parana! Banfcar Prognun 

International! y-sodamied role model for 
effective banking practice which 
differentiates the bank from its 
competitors. Presentation* from senior 
Wachovia executives share the bank's 
worid- famous strategy of relationship 
banking. ZVj day seminar, Adanta, USA 
Cbmact ABB PBanoo. 

LafBetty Tnfafog , London 
Ttk (444-71) 782 0590 ftc (+44-71)7820596 
LONDON 

NOVEMBER 17 
Exploiting UK Innovation 
The Rnfitg Marketing and t ip— ct-g gf 
Newideus 

This Two Day Conference, organised in 
f Pfini w PWtitt Office ^fa dfi 

workshops « which delegates can receive 
guidance for fixture best practice in their 
speeffln fields. Ideal Comm for ianovatexs 

tD BlkttfflttCtt. 

Contact Luanda MUdJeroo. 

IBC Tariaaeri Services 

Teb 071-637 4383 Fax: 071-631 32)4 

LONDON 

NOVEMBER 18 
Naw Tachniquaa for 
Ventura Capital 

Key topics Include Reinvestment Relief; 
t-Mujwif Partnerships fa Venture Capital; 
Tax Efficient Manegement Buyouts; 
Innovative and np to the minute Capital 
Gams Iks Planning ideas: Tho Enteipriro 
I nv es t m e n t Scheme and; Raising money 
fix Private Equity Funds. 

Coosa: Vicki Goffin, IBC Legal Studies 
rod Services Limbed. 

Tel: 071 6374383 Far D71 631 3214 

LONDON 

NOVEMBER 22 
ConUnuoua Improvwnant 
through KAIZEN 

This two day conference condoned by 
Masaaki imnl and Peter Wfeats founders 
of the Kafceea faetitnto of Europe mdades 
an optional third day vfadt to two sites 
where Kaizen principles are being 
implemented. An insight for senior 
management fa all fadotrire. 

Ounce Jessica Robcnaon, 

IBC Technical Services 

Teb 071-6374383 Fas 071-631 3214 

LONDON 

NOVEMBER 24 
Managomont Buyouts - 
Tha Corporate Restructuring 
Tool of me 908 

Essential for the MBO team ibis 
ronference will cover MBO practicalities; 
the coeporate advtam role; structuring the 
deal; debt and buyout; Employees - 
transferring and motivating 
liiakisiro dmg the law; doing the deal and; 

Itrr mipK i -MOT W far iMmy il 

Contact: lull* Dopbeide, IBC Legal 
&mfies and Sctvicas Limited. 

Teb 071 637 4383 Fkx: 071 631 3214 

LONDON 

NOVEMBER 24 

tanal - TJads ft Imratatnent In 

an Emerging Market 

tiuriniiti imi conference fa association with 
Israeli Briray. Spe n krta Irh'lihfr Director 
General, Minis t ry of Ambassador 

of Israel & representatives from Israel ft 
UK. Topics wvtrA P'|un.tmy Economy, 
Business Development, Opportunities 
through ' Frivstisation, Financing. 

ft TbdhDQlogy. 

INTERFORUM Teb 444 (D) 71 386 9322 
Fkx: 444 (0) 71 381 8914 

LONDON 

NOVEMBER 28 - DECEMBER 2 
KAIZEN WORKSHOP 

A* featured om FT Management Page 
<m 4 JansatT. Five days' intensive hands- 
on experience for senior managers in 
wothH iratffi g productivity improvement 
techniques, fa a real factory. Free video 
sad copy of FT mtlcfc also available. 
Cteracc Sarah Bisby, 

Karen Institute of Europe 

Teb 071 713 0407 Fkx: 071 713 0 403 

VENUE TO BE AD VISED 

NOVEMBER 2*29 
Strategies for Buying & Selling 
Corapantaa 

Tlio put year has witnessed an increase in 
MAA activity, anpsmllod since the mid- 
80's. The conference will cover the 
strategic, legal, tax and accounting Issues 

ttar need d be oaaridered when baying or 

s ellin g x pnfoic and/or private company. 
Contact: Acgnisitinm Monthly - 
Tdc 0171 823 8740 Fax: 0171 581 4331 

LONDON 


OCTOBER 13 ft14 


OpporhaiMaa In Ruaataand 08 

Speakers from FSU win include Mr 
Vyattfara.PSalderacf Gstprem; hfrYktin. 
Here! of die Frusideatial Analytical Centre; 
Mr Oechensov. Deputy Prime of 

Wfanta s and Mr B u g dHiaM l ni v from 
StkhalltBicrocflcgiz. 

Gxxacb The Royal -4 
AfEtiu ' 

TO: 071 957 5700 Bn 2»fta: 071 3212045 

LONDON 


OCTOBER 8 

BRAZIL 9S: OpportwIBaa 
In an Envfronnwrit of 

Economic S ta b fltaa B o n 

The GAZETA BERgANTn. Seminar, . Jfrft 14 OCTOBER 1994 
ahned to sna^yso Bin prospects of fttefilaa Th&Maftagomont of ProdUcf 
economy, -followiag'thcr stabUizatioiT ■ jggfefr# ft Quality 

sa: ^ s * fti 7 * ^ 

Brazdias Amhassadm^ fratrafag agb-lcvel - TOpooal^rfeveryoK Craxxxnndfate 


OCTOBER 20 
Pre-Budgat Economic 
Proa p o cte and Policy 

Sixth Annual International Stale of the 
Economy Conference with speakers 
nm h nfin g Sfc Alan Waters. Tim Qmg d on , 
Andrew Seotxnce. Roger Bootle. Patrick 
Mmford. Geoffrey Wood, Otmar bring, 
Jerry Jordan and Neil Maddnnoa. 
SaonurrlEA. 

Cos: £3 60+ VAT 

Contact: Melanie Jones at Conference 
Profile 

Teb 071 2364938 Pax: 071 236 1889 

LONDON 

OCTOBBR20 

Using the Yuiow Book in a Wkfer 
Ctafeta-Beto 1993 >M 0 rt a0 OLD our 
Massing fasadBr deafing rales, disclosure 
of pdcc tensirive iefb i matkm; what about 
FSA and other Acts? Dealing with' tbe 
LSE; Listing Particulars Directive;, 
understanding financial documents 
required. CFD 6 bouts. CPE 75 points. 
Po roi i mi s ti o ti avxflabJe 10q 
Cmnacc HetetHouseroro, IBC 
14*0716374383 Fax: 071 631 3214 . 

LONDON 

OCTOBER 24 

Uncta ratam flng Darfe U wua ft . 

Ratatod ftnaneW Instrumenta 

What are they? How nr manage *dr use, 
mnafrriw the h wf ' iW . ni i »i n i;» » the 
trem them in the aceounis, bear the . 
dnraimi ii uti oo, stay within the law, be tax 
efficient. CPD 4 horns. CPE 75 points. - 

■D a nii iiwwtn, avaihUe 1 4ft 

Coriacc Hden Hoosean, IBC 
Teb 071637 4383 Fax: 071 631 3214 

LONDON 

:!2SH26 OCTOBER 1984 
BuccMid SMflng *94 . • 

ICC, Birmingham 

is the only imkpcrrieit t Conference and 


NOVEMBER 4 

Ol SplB Roaponm - A Lstaon 

bi Mtobntaing Chaos and Costa Tramfo mring corporate p crlor m a n ce by 
A participative workshop rnn by the m e — risR Mn msnq g ing die driven of fixate 


NOVEMBER 18-16 
Busina— Perf ormance 
UmsuramsnL' 


various parties Involved fa casnaldes 
resulting in a oil qpilL Afternoon role pby 
based on ■ case history prepared by 
Murray Fcxatao ft Araocfatts. 

Contact: Helen Honsemaa, IBC 
TVb 071 6374383 ftx: 071 631 3214 

LONDON 

NOVEMBER 7 

Gfotari Convsntkm on RstsR 
Financial Hmjcoi 
Day 1: 13th International Retan 
Banking Conference 

Tbaue 'StrategCra liar 2061*. 

Snbjects: Banting, insurance, investment 
management and consumer financial 
services. Morning session: ’Global 
Regional or National Markets?' 
Afternoon session: * Bank Positioning 
Strategies for 200 1' 

Contact: Moon Coori, Laffetty 

Xtit +353 16718022 ft*: 43531 
6713594 

LONDON 

NOVEMBERS 

Global Convention on Rntnfl 
FlnandW Services 
Day 2: 6 ParaOel Conferences 

- Curia 2000 

- -AtBoatiRcaodalSemces 


profitability. This two-day conference 
explores the relevance and practStihiy of 
devdoptog now 'coiporsle dashboetris*. 
which »» i i Ht noo-fiaaociai ind i cator s, such 
as customer at infection, quality and 


TO: 081-543 6565 Pax: 


- Tec hno lo g y 

- Re foil Financial Services for Low 


Gmacc Motma Cota LaSoty 


, Bxhfltition for foe Sales aad Mattering 

gpoaxen . T ha evm^wO i b* foUffecd ^7 pcodactlw of goods. Dris temtear wia T>ffiniiiiiiiiil The Coherence pregnmne 
cocktails m a l d nitiqai of tha opening °L _ provide oppomuirics to hear dear and offea unbeatable value whh pnsematioel 
confectiOtMIjr F«o (tally temlnar on HBSeanitKsLM. panoicri explanations hyUadfcgeufaftt.^ frdiof ideaa, concepts and hard won 

CB Mark regulations. Contact.'- Ms Qeydo da SUvn, BB Farther details from Inrcrnxtiotiri erjiWfLiy N et wor king op p ot t nnlti es 

ftrddtatacaoatlMe&ife Sole* Secant-Ltd ’ ^ Pteforefonri Coafaeneei Ud. ; ‘ ' ^boid. Ckfl ba frr ■ faudmre on 0600 

Thfc081-68i 8226 ftxrOSlAgl 1641 TO: 071 216 4200 ftr 071 2164206 ! . Tet 061 4458623 \ .... l . 

NEC. BIRMINGHAM LONDON LONDON -1. ' y, BIRMINGHAM 


Tet 4353 1 6718022 Fax: +3531 
■6713594 

LONDON 

NOVEMBER BB 
- DMflUcGmrtfBTs World Cm 
and Trucks conferanoag 

bring together DRTs Urest nthotitativc 
forectsm with key outside Speakers to 
a t fchww tbe fames of the c un eat eyrie in 
the automotive bfestry tad to anticipate 
dm critics] questions to bo bead fa ths nma 
five yearn. 

GonokC Curiae Redeemer 
. Teb 0181 543 6212 Bnc 0181 545 6248 
i LONDON 


1-5449020 

LONDON 

NOVEMBER 15-16 

Slr it sylM for HflMnwivwnn 

L—t tora hJp 

fVntlinn ttt^ r^mu wjiBitfii^ Qg h^| h 

psy-og activities; cresting partnerships; 
strengthening trust; motivating ud 
enhancing team performance. There are 
the fasces addressed fa this interactive 
briefing designed to train executives at 

MjfcPi* Blld IfiifMId ren mnu g f mi t il fsvofe tO 

operate effectively in empowered 

organisations. Contaec Rnchri Thomas cr 

Sarah Williams 

IBC Technical Serricea 

TO: 071 637 4383 Fkx: 071 631 3214 

ASHDOWN PARK 

NOVQfBERIfi 

1994 R8al Law Forum 

sponsored by RETAIL WEEK 

Regulatory framework; Sunday trading; 
employee* and opening hours; Eur o p e an 
angel, regulation in practice; pro mo t ing 
and protecting brands; whal chxnges am 
aeededf CFD 6 horns. Documents cion 
avxflsbJe 120. 

CotBact Unds McKay, IBC 

Ikb 071 637 4383 Fan 871 631 3214 

LONDON 

NOVEMBER 16 «17 
Carsor Dsvstopmsnl to FWtsr 

f Wi.MUr n 

fodowed by Woikdnp 
Introducing Solf Devsiopmsnt 
to Oigaripattom 

Major Interactive conference providing 


NOVEMBER 28 -30 1994 
*HOWTO BTECT7VELY ENTER 
THE CHttlESE MARKETS’ 

Two-day seminar at the Siao-British 
Business and Trade Fair. 

* T W4tng 

* Ipwaiiufjii djvlrOllUIttt 

■ Development of Chtaese eoooomy 
Other t opics fadnde technological links, 
finance, foe textile Industry and speeches 
by British Aerospace and PflUngtoo 
Coadacr Yo-Xisn Jin 

TO: 00*4 532 302768 ftc 00*4 532 307863 
HARROGATE 


SEPTEMBER 23 
Transfer Pricing: a new 
consensus for tho future? 

Hug aemiaar foeuaes on two recent oitreri 
transfer pricing developments, it the new 
dtafl OECD GwdeUnea 0u Transfer fUdng 
and the final US TOnrier hiring repfedOHa 
Contact DBFD bnwustinari Tax Academy, 
Ml Anselkn School 

TeL- 431-204*267726 Fkx: +31 20 6209392 

AMSTERDAM 

SEPTEMBER 27-39 
DA/DSM Europe 94 
Competition in combhranun with open 
aeeesa win foree ntiluics tofaouduoe mure 
advanced uchnolagin such as: 
nVDA/DSMSCADA/AMffM/C3SMMR At 
Ibis conference h exhibition the latest 
devdopmenH wfll be rhtnsatd and shown by 
the major companies and utilities. Hgh level 

Contact: FendWcU CAE 

Tel: +31-30450,963 Fax431-3045tt928 
PARIS 

OCTOBER 1IV11 

Ths Prlvsho Banking ChsOsnge: 

Survival or Success 

Designed for senior bankets responsible 

for private diem business and chaired by 

Rumdl Taylor, author of Private Banking 

Renaissance, this international conference 

considers ways to meet client service 

requirements while maintaining 

profitability. 

Fiuyrififi| * 

The Event Orgwiitarinn Company 
Teh +M 71 2288034 Fax: 444 71 924 ITO 
LUXEMBOURG 

OCTOBER 18-20 
Opportunities for Trads ft 
Invsstmsnt In ths Btacfc Sss 
States, Turicsy ft Csntral Asia 
Conference ft Business Forum with 
optional Workshop on Economic Aid 
Lcgfelidaa/Pliiiaciiif. tndhdduil hin#ria| p 
with delegstioas from Alhwfa. Azmaue. 
Azerbaijan, Bulgaria, Georgia, 
Kaakhatan, Kyrgyzstan, Romania. Russia. 

TmV m ^ wfc c l-w TtVf i^n Ihtn H a m 

INTERFORUM Tet +44 (0) 71 386 9322 
ftx: +44 (0)71 381 8914 

ISTANBUL 

OCTOBER 19 & 20 
Dealing with Rights 

Intellectual Property Rights must be 
properiy dealt with If they sic m confer 
hoped for benefits upon their rightful 
owns. An intensive pond of intetiecmal 
property managers and lawyers examine 
the problems owe era face in handling 
rights and in portfolio mangemem. 

ftiilhw+wfl, tmm 

International Professional Conf eren ces 
Ltd. Tet 061 455 8623 

FRANKFURT 

OCTOBER 1*20 
Plata English Campaign's 
3rd International CbnfeRaoes 
Washington DC 

Telephone 0663 744409 EordctaUi 

WASHINGTON 

OCTOBER 25 ft 28 
EC Business Rsgulafion 

Everyone concerned with international 
besmea transactions mnit be aware ctf foe 
EG iumhim Regulation »mt h increasing 
inflnenct on the way we transact businem. 
TM* oonbreiice roll provide an bright sod 
a summary of current regulations and 
practice, also fanue EU polity. 

Further details from International 
Professional Conference* Lad 
Tat 061 445 8623 

BRUSSELS 

OCTOBER 26 ft 27 
FT India's Economic 
Renaissance 

TWt high-level FT conference win provide 
a unique opportunity to review the 
g ove rnmen t Hbcraliratipn programme and 
assess future p ro sp ects for busmess aad 
investment 

Enquiries: Financial Times 
Tel: 081 673 9000 
ft* 0B1 673 1335 

DELHI 

NOVEMBER 8-9 
European Union Aid for 
Development C on fe r en ces 

Business Opponatities In EC wimuj aid 
projects to the value of 5 billion ECU 
annually outlined, including 
FHARE/JOPP, TAOS, MED, A/LA. and 
ACP. Networking with EU and new 
member state companies. Procurement 
opportunities for man ufacturers / 
suppliers. 200 page EUROAID GUIDE on 
EU kid programme* included. 

Contact: Sod&£ CKMnle de 


Pd v c J oppctnnat SA 
Tet +322 5124 


EXHIBITIONS 


SEPTEMBER 12-18 
GCC ft Britain W Exhibition 
Over 350 of the Golf States most 
suceemftil business wfll all be under one 
roof, ail ready to talk business at Olympia 
2. HUM am - 6JX) pm. Daily. 

Foe tkdxtsffafocnamon coma; AnMdtfa 
Ctarebet of Coeuxtte. 6 Bdgnve Square, 
London SW1XSPH 
TetOTl 2354363 ftx: 071 2456688 

LONDON 

OCTOBER 7-9 
Enterprise Business ft 
Computing Show 1994 
Tbe UKh only national extib&ion for small- 
mrafiim business. Bnerprise tepujeu t a ths 
fom for (be femes growing sector in the 
UK- SMEa. Hie edAkfao is spoosared by 
PntcUcRt and has over 150 companies 
represented from industries including 
computing, finance, mining, banking, 
franchising, commercial property, causing 
transportation and telecommunications. 

Advance tideere 081 982 6000. 
GouackJaSmRAc^EaeipwEdfoiifoaLjd 
Tet (0932) 859960829920 
Ffex: (0932)855741 

LONDON 


5124636 Fkx: +322 512 4653 

BRUSSELS 

NOVEMBER 24 ft 25 
Profit without Pain 
How far can I copy or emulate my rivals 
prodacts before I step across tbe line of 
legality? Why is apparent copying 
wi desp rea d sad tofatared in some ind u s tri es 
but not others? Leafing law prac ti ces will 
givolbeir opinions on these matters. 
Farther details from International 
Profendocal Conferences Ltd 
TeL- 061 445 8623 

AMSTERDAM 

5-6 DECEMBER 1984 
COMPETITIVE INTELLIGENCE 
Seminar for managers who want to learn 
how Competitive Intelligence supports 
both operations! effectiveness and strategic 
positioning. Topics fadnde turns and role 
of intelligence fat firms, collection 
methods, analytical techniques, 
organisation, and counter-intelligence. 
Principal lectsraxs are former profenksal 

Contact Business Researdr Group 
TeL- 022 929 1900 Fkc CE2 7880824 
GENEVA 


INTERNATIONAL 


SEPTEMBER 14 ft 15 
IMHJ/EEAhtelectuaf Property 
and C o mpanion Law Symposium 

This major event will review recent 
_ devstoptnentt fa InteOectMtl property rights 
l e nding edge input tor those c on ce rn ad update on competition law. A high 

quality panel of tpeabos wife 


with careen Issue* and people 
development. Speakers: leading 
academics, consultants add hands-on 

nfriiiTiites 

TeL- 071 T367790ftc071 336 7815 

LONDON 


expertise in their field of lsw have bean 
btoagta together for dni synqxnfan. 
Further details from International 
Pro festi oosICo ufcre nccaLld. 

TeL 061 445 8623 

STOCKHOLM 


MAY 15-20, 1995 

ACHEMAStA'95 

Ibis leading International Exhibition* 
Congress in the Asian Pacific region on 
Chemical Engineering, Pollution Control 
Technology, aad Biotechnology fa being 
held foe foM tune in Bdjfag, PR Cbma. 
For farther information contact: Sabine 
Wehen, DECEEMa e.V^ Frankfort am 
Main, Germany. 

TeL (++49 69} 7564-238; 
fta (++49 69) 7564-298 
CHINA 


TO ADVERTISE IN THIS SECTiON PLEASE CALL NADINE HOWARTH ON 071-873 3503 









Il 



2-2 „ 

0.* _. 

3.8 _ 

H -» HocHf 1.023 
1 -° — tfctm 380.00 


1.030 -44 

1.138 -34 



I INDICES 


feneni poni/7>) rorzaea 2((Mi.(a noiaaa 2)47048 IK 


« (Wruraan TO 
ai umncii i w> 


emu momxixiwi 
U adBdMrCTUSl) 


20706 2069 1 21084 234060 K 
10373 11065 1089.7 1138.10 3/2 


«ES 7 <3170 42043 48048 2/2 

1150.79 I 1 C .17 114028 122229 1/2 


14 SJ 99 1*5965 148240 1 H 2 JGE 8/2 


Bowsh 312.32! 535114 52JCT.0 tel 9836840 1/9 


Mens Uttt*1975) 
Ctfro(»ae4 IWSS 
PnrtWP§§ [Aft, 83) 

am 

FU Gen pi-liSOJ 

Draft 

CapaWHcnSSyiTO 


< 0 SM 4 813 T 41 406445 413 IJi 1 V 9 

•32910 * 35 *TO <03907 4 KOSO 23)3 

207099 209451 2073.15 218248 1/3 

JS 471 <8714 4817.7 4871.10 8/9 

35543 35742 357.0 <15-79 M 


1967,40 27* 
60440 95 


89847 22* 
101148 6* 


328848 2W 
386940 34* 
106117 20/7 


*o Gowaeani'gp) ima ms iwu muo « 

Awn 

S8F 290 CJVlMa 1X249 1338-71 132137 188624 W 
C*C <0[3in2*n 194843 1983.40 196421 Z35543 2/2 

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owporrasw nans 217237 21B3K 5zn.ii iw 

6 w 

KOTSauiUJ 84151 MlJffl e<624 11KB0 18ft 
Noqg Kang 

tag Sh«31.7 M 10145 (E 101S098 1016547 1SD149 4/1 

Ma 

B5E Seas (19791 K) 455066 453033 4588.10 3U8 

witi i H ia 

J**tJ CinunOStta 53236 53244 53245 81248 5T1 

MM 

SB) OwraNfttfP IWLID 193844 191098 2082.18 31ft 

W» 

Ebnca Ccmm naf (1973 66253 665 16 65039 817.17 105 

K3Gtwa>sn/W) 10724 10704 1004* 131U0 109 

■Man 

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Taw tfft.ESI 150660 F582J1 I66&0B 171233 109 

±d Sector fdft-BSl 23114! 231640 31299 2542BS 6/7 


14BUB 4/7 
1888.18 4/7 

75741 27* 
21 MOO 27/6 
198842 SUB 

00617 25ft 


44872 127 


SRL8E 10/1 
94440 1QT1 

7738634 4ft 
20622 4ft 
144847 4/1 
167133 4ft 







-10 2.500 1,900 _ _ 

KS = = 

-1 033 7H7 *m — . 

+101,3001,110 _ 

-4 700 426 09 — 

z 1 ^ S3 z z 

+7 73* era i.i _ 


II 5 

1.120 812 Z 

"|§ 
8 = 


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+4 1,120 
+1 848 
■•40 
-10 
+10 
+10 
*1 

+20 
+2 
-20 
+20 


\-r^A 


311 = = 


+101,140 872 — 
+90 3*70 2.700 _ 
-d 623 26! _ 
+20 2X10 1,370 _ 


, IX 

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— . 

1 T* 

_ 

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, 

1 3.0 


1 3 3. 

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•-•■'.V'.u-. 


US INDICES 


S«P 

1994 

Shea mimfcftjn 

7 

Bgb law 

Ugh U» 


PC 9 MM 079 
MM 
CBST«nGen(EnIS3) 
C8S Ai Shi (End TO 


Cap. <0 (1/7/TO 

Itanray 

0* SEfWSOl/BS 


Mama cam (2A/851 

PwtuM 

BTA |1877) 

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SS «-ffl»e(2W7* 
8Mb Mbi 
JSEG(*lfS*/m 
J5EIU (2879/78) 
SMb Kara 
ftraaCmpenVl/ffir 

M»W SE (30712*5! 


2782.16 273892 


4425 4422 

2780 2785 


2159.48 2163.75 


110833 111443 


2987 £3 304032 


29423 2941.5 


574.72 57736 


■QUO 31ft 
29460 31ft 


40630 21* 
257 JO 21* 


24780 S340 
66390 BB780 


99144 972-68 


305.18 29827 


KS400 7* 
875700 15* 


174000 14B 
544800 19ft 


3874J1 390848 


Trrnww 1971.86 1B1W8 

UBaM 179J7 183.17 

DJ tad. Day's Ntfi 3902X6 (382608 ) 
Daft Mgh 3905.43 pari.lfi ) Low me 
S W d M and Poors 
COnpMtS t 403.18 473.14 

MtaBtdlf 552.06 557.43 


WISE tano. 25838 2B0JB2 

TOn UU Vs 454.54 *5551 

WSEM&np . 76173 79900 


388825 387836 3BBL3S 387808 

(31ft) m (SI/1/94) 

97-98 16861 9843 109.77 

121 ft) (13*1 (10ft 093) 

1617.02 198239 154602 186229 

(2ft) (am 02/94) 

192.77 22709 17871 25849 

3ft) (24/6) 01/8/93) 

Low 364400 (397246 J (Thowwta**) 
!838 (388302 j (Acuta*! 


47896 48200 

(B2) 

E540B 56009 

<m 

4811 4804 

(14/8) 

259.78 387 Jt 

03 

45832 487.09 

W 

794*8 963.93 


Is this your own 
copy of the 
Financial Times? 


Or do you rely on seeing someone else*? Every 
day the FT reports on the topics that matter to people 
doing business every day, in and from Europe. 

We cover the latest European, U.S. and inter- 
national news, and analyse the implications from a 
European perspective. In fact you'll find far more than 
finance in the FT. 

No surprise then, that the Financial Times is 
read by more top business executives in Europe than any 
other publication* 

Make sure you’re one of them by getting your 
own copy of the newspaper delivered daily to your office. 


-Souicc E8RS IW3 


FT 


Ntnw&lGan H/2/37) 1*4030 1«&» 1441.1 18090 91 fl 133470 Vt 


am KM 81/1258! 
SBC GebM fl/4/871 
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Bangk* SET (30/4/75) 

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WORLD 

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BW Top-100 (2G/B5Q 

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Bangs BnB»/7/i/aa 


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93820 944.13 


1282.71 14Z3J4 3V1 
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888.10 ran 


6695J3 7D40L52 2918 


1S0889 152850 153241 175373 4ft 


Dow Jmea kftt Mw. VWd 

S 4 P hid. dav. yWd 
SAP Ind. P/E redo 


Sop 2 Aug 20 Aug 19 Your ago 

2*3 2.84 2.73 2*0 

S«p 7 Aug 31 Aug 24 Ysar ago 

2J7 233 2*7 2X6 

2093 21-11 2073 27*8 


SUBSCRIBE NOW AND GET THE FIRST 12 ISSUES FREE. 

To:CUttan Dan, Flnftnctal Times 1 Europe) GmbH. Nibelimgtiiplatz 3, 60318 Frajik/un/Maiii Germany 
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w “ teCTibe Fmoodal Tkoes. am) enjoy my Tirtl \2 iaues ftw. | wiU allow up 10 21 days 
before deUvoy of my fiisccpy. Please enter ffly subwipdon for 12 months ai (be fblknring raw*, ^ 


345159 343002 


ms- 6360 837 J MUD 09 


137003 1380.01 
120480 1Z15l23 
M 347 JH 
1B81S 18502 


1371.13 1560.10 31ft 
121034 1311*1 2/2 
347.72 303.19 
1B421 168.10 99 


mn 21 * 

1MSJ6 21* 
28028 21/3 
141JG 21M 


■ atAHUAHP AMD POORS 900 Q8HDC WmW8 SSOO faWBlndW 

Opan Sett price Changa Mgh Low Eat voL Open M. 
S*p 490*0 487*5 -4*5 489.70 46S.7S 42.834 121J578 

Dec 475*0 470,15 -5.10 473.75 487*8 81.781 130015 

Mar 474.00 47130 -5.10 474*0 471.10 78 4*99 

Opai totaraM Sgum are tar pwKu* day. 


■ new YOWC ACTIVE STOCKS ■ TllAPWa ACTIVITY 

Friday Socks r*w Qttiga • W**» W*on) 


A8*rt* OES 3200 Fnnce * FFR 2*40 Nedwrtnndj DFL 873 
Bdgmm BFR I3S00 Germany DM 730 Noway NOlf iwi 

Donuift DKK3200 Italy LtraoOllWO focmpl &SC«*00 

Finlaod FMK 2*00 Luxembourg LFR 13*00 Spam m 63*oo 

For wj(»OT(»oia in Turkey, Cyprm. GnsMe. Malta, (rtcaa: cexiiki +J2 2 51 J 23 16. 

□ Bin I — | Charge my American Expresi/Dinen Chib/ 

me I — I Euiwart/Vija Aewwu. Expiry Da* 


Sweden 

Swkzerlarvi 


5EK 3*20 
SFR7I0 


■ cac-40 stock ihpbx putums (matif) 

Open SettPriea Change Hign Low Est vot Open rnL 
Sep 1993.0 1951.0 -38* 20020 19520 28.845 38*57 

Oct 2003* 1960* -39* 2009* 1984* - 3*05 

Dec 2(22.0 1980.0 -39.0 2027.0 1987.0 3*5 13*05 

Open (ntamr ague* tar prMout day. 


Hanson 7*87*00 18H 

AJ1 NnBiam 3,4)9*00 J 

Amer Ban** 3,174*00 24» 


Socks nw oonga • Ittm (/Mil) 
traded price as day Sep 9 Sap 0 Sap 7 

7J87J00 IBM -K Yttrft 3E 29SJ24 204*15 290*00 
imm 7 .k Arm* R7W 10*68 18454 


KLSE an««tt» 118166 1181.17 1163.15 131448 5ft 928*3 4/4 

"SttSep J T aMmWflmedfYee 6951*6: Korea Camp &94?Ja Baas Muw otMIndBM we 100 nanBtflimJa XU Onantayawf 
Mrong - BCtt Awna TiaMt. MUD. >©( Om.. MB Our, 98P250, CflGM. Eun Too-ioa (SKI Ovwtat 1VWW0 Comp-Wocnb A 

oM 11W - <a ijpft J8E OaU - C55.7. JSE SB hflumta - 264 J; NYSE M CwtaTwi - JO «w Sttaidufl <nd Ppw% - 18 8§ 

MoriCM. ♦ Toranw « d»1 (w UwwIIMIb. I EtSDAX aflw-fwurs indM Sm 9 - 2165J6 -22.K 


T«WB 3X«4.7M m -% WSE 

9BMAM 2957,700 24H to*a Traded U 2*64 2*72 

tomat 2*70*00 23* — Han U 1*18 1.022 

UL CO 2*54*00 16* +W FMa U BOB 1.1 D* 

Gm Mofcra 8773*00 31 Mr — Unchanged M 740 748 

USNr 2*78*00 SH -H Haw KlflftS M 82 32 

PIHp Morris 8485*00 GSS -H Union (u) 27 28 

■ factaang bautt. t induaMd, pha LMWes. dhwneial wxl TOtaepanMa n . 
w ana tarn — an wwy> o » iht ht^wat and lowed prtaa reached drrtrp Dm itay By Mrfi 
lomi taandw ny 7staua<) igpom m* Nsh««r and kw«* vaiuas rtw me nxte im naadwl 
la lamim d wft± f Om/KX on odfeM leodeiMtan. 


t coneoen, * CataMwid k ISXJO qmt. 
4 Tta dj m. Max ihmtktal dWi tapr 
dock wtwreas die acaiai dt/a Ngh* and 
datag om day. (nia flgina In imiMa w 


1 L 1 — J 

•Cunmry in Hl&hlhrr or* muted Suturrmiian P„ c „ m ^ 

rHm " " rt "" w ^ m " M m " rr » ""I 

□ I Wik fcliMfari nMtata iBtaawstiMesndMBmdhidnc^^ ^rnaafar 
teaxaCiyaaOnedufliciuc. 

— 


Cmmm*i — — - 

Atabetanwhtdl r wnukl Hb ay RmcmI Tim dedveml: 


:k ?; ►PULSE 


Pulse. Keeping an eye out for the 8E3 markets, fancy a free trial? 



Hutchison 

Telecom 



Mr<drr<fifm/nitnr>!lm>y 


Financial Times. Europe's Business itow-papnr. 



































































































































































































































































































































































***li** 


‘V*„ 



FINANCIAL TIMES MONDAY SEPTEl^JEK 1 2 1 994 


27 


CURRENCIES AND MONEY 


MONEY MARKET FUNDS 


POUND SPOT FORWARD AGAINST THE POUND 


DOLLAR SPOT FORWARD AGAINST THE DOLLAR ■ 


Sep 0 


Ctoatno Change 
mlO-point on day 


BWbffer 

Wad 


Oq^Hd 
high ' low 


On month Three nw nlha 
few %PA Rata MPA 


r i 


'V 


«r Bar* of 

MPA Eng, Indax 


Owing 

n*HxHni 


Change 
on day 


BttVMfar 

spread 


Ih/i raid 

high tow 


One month Him month* 
Raw MPA Raw MPA 


Om yoar XP Morgan 
Rate MPA Max 


:•« 

- if 

■i Hi 


Austria 

EMgkm 

Damwk 

r—r i i 

rtnlNna 

France 
Germany 
Graeco - 


6,1392. -03 
2.3885 da 


8.1717 

23646 


-- -iw'+Tykps- 

« ‘ • ! 'V" 




Italy 

Luxembourg 

WadiariU i 

Norway 

Portugal 

Spain 




' _T. J 


• S 


OfnUtKUnU 

UK 

Ecu 

SORT ; 


® US! U5S 1 229 - 394 1183M 118225 118268 03 16* IS 0,4 - 

£9 "9^’ ®57 - 836 463680 402230 402562 OO 492432 0.1 401332 03 

~9^ S7 S °3 - 637 94252 04500 04608 -1.1 14888.-1* 05437 -09 

FMI 7.7570 -00483 488 - 683 7.6270 7.7460 - - 

ffl « ^2?“ 898 ' 082 aa * 39 8-W* 0187 -05 

<“S -0^137 901 - 926 04081 23877 £8814 00 

*** «S - 558 380310 363300 - - 

^ -l—S " a * na 121 - 1W 1-0148 1-0081 1.0131 -04 _ 

-£j “ 818. 245538 2435.19 244084 -03 245074 -04 258054 -07 

_0 ^1 237-929 48.6690 483230 4&2S82 OO 402432 0.1 48.1332 03 

-0.0158 783-837 2.7016 16785 2*816 -0.1 2*795 OJ 2*52 1.1 

-0.0556 155 - 240 10*028 10*077 10*193 0.1 10*225 -0.1 10*288 -Ol 

‘1S1 894- 173 *46*41 *40537 240766 -05 240845 -OO - - 

.. AS, "‘i®? 2 852 * 285 200.102 190841 199*04 -2.7 200*44 -06 203*34 -02 

SH ‘HfS -00811 148 - 823 11*808 11.7048 11.7482 -2* 11*022 -2.7 12*482 -2* 

2*149 1*923- 1*831 1* 1*887 1* 1*683 1.8 


' 1.0143 -0* 1*194 -0.7 


(SFk) 1*948 -0*169 938 - 886 

(Q - - 

- 1*560 -0*064 552 - 568 

- 0944859 


1*631 1*545 ' .1*567 -07 1*576 -05 1*573 -Ol 


115* 

1109 

1106 

64* 

1W* 

125* 

104.1 

74* 

-118* 

121 * 

86 * 

801 

74* 

123* 

78* 


Europe 

Austria 

Beftfun 

Danmark 

Finland 

Ranee 

Germany 

Greece 

Ireland 

lUy 

Luxembourg 

Netherlands 

Norway 

Portugal 

Spato 

Sweden 

Swfaarimd 

UK 

On 


ffeh) 

(BA) 

(DO) 

ffH* 

m 

m 

m 

m 

u 

P-R) 

n 

m 

Pte) 

C8KU 

©ft) 

n 


10*686 
31.7610 
0*878 
00018 
02832 
1*418 
234.850 
1*313 
1571*5 
31.7810 
1.7290 
07880 
137*60 
1! 

7J 
1J 
1; 
1*348 


-01005 
-0301 
-0*595 
-00495 
' - 0*5 
-00143 
- 2 * 
+00071 
-8L85 
-0301 
-0*1 S3 
-00689 
- 1 * 
-1.096 
-00792 
-0*168 
+00054 
+00105 


600- 550 
470 - 750 
950-016 
075-057 
817 - 847 
415-423 
700 - 000 
306 - 320 
155 - 235 
470 - 760 
280 - 300 
820 - 840 
300 - 400 
250-450 
666 - 830 
868 - 888 
805-513 
343-353 


109930 

32.1560 

8.1761 

8.0728 

6*600 

1*623 

237.600 

1*350 

1691*0 

32.1550 

1.7615 

150*00 

129700 

7.6973 

1*060 

1*514 

1*360 


10*500 

317360 

5*850 

4*938 

5*760 

1*401 

234.700 

1*306 

1570.19 

31.7380 

1.7275 

67785 

167.070 

128*60 

7*646 

1*845 

1*403 

1*201 


i? Argentina 


Canada 


1*616 1*386 
1*577-1*470 
2.1252 2.1113 
5*843 5*501 
1*614 1*403 


2.123 


1*807 


2*637 2*860 2*621 


**4 to***, „ 

■+Tii 


J 
*1 
I *- 

4 


l 

. :h 


i 


(Paw9 1*504 +0.0058 '489 - 308 

(TO 1*493 -0*099 474-012 

2.1230 +0*081 226 -'245 

Mrwfco (Now Peso) 5*785 +0*268 733-837 
USA (X) 1*609 +0*054 505 - 613 

PadHa/Mddto EoatMtdce 
AustraBa (AS) 2.0622 40*009 809-834 

Hong Kong (HK3) 11*842 +0*422.807-877 

Me (W 48.6660 +0.1729 382 - 720 48*770 46*270 t - 

jtapm- 153*51 +0*33 872 - 029 154*80 16X130 153*41 

Malaysia _ CMS) 3*848 +0*124 631 - 867 3*668 3*409 . 1’ - 

Now Zealand (NZS) 2*667 +0*12 649 - 684 2*685 2*480 2*708 

PMppIneB (Peao) 4X7888 +0.1434 438 - 319 41*322 403370 

SBUf Arabia (Sfl) 5*163 +0*208 144-182 5*188 6.7769 

Stogapore (SS) 23221 +0*048 211 -231 9X^tn 2*079 

S Africa (Com.) (R) 6*177 +0*147 151 - 203 - 5*223 X4815 

S Africa (Flo) (R) 6*946 +0*138 773 - 119 7.0200 6*400 

South Korea (Wort) 1241*7 *3*9 067 - 166 1241.80 1232*8 

Taiwan (TS) 40.8301 +X1547 189 - 433 4X6446 4X3661 - - 

Thaiand (Bt) 38.7182 +0*974 927 - 437 36.7480 38*090 

TSOfli 
bull 


03 

2.1216 

04 

2.1125 

05 

8X4 

a* 

1*405 

04 

1*388 

0* 

62* 

ao 

2*839 

-02 

: 2.1017 

-as 

_ 

04 

11*792 

02 

11*882 

a* 

- 

2A 

152*00 

3*' 

148.101 

' 3.7 

18X6 

-1 * 

2*704 

-1* 

2*007- 

-1* 

_ 


DHTWeefar Sap 6 BOM* apMOds htee Pound Spot Mb «ho« raSy the km taeacH m Forwent mr we not * 
1 Hnrths by ermnt kam DM tearin g Mu retail— d by the Bank of rnrfenrt Bare ■uuen IMS - tnom+ nay Md 
lDt * r s P ot MM— dotted taw THi WMinamefla CLOSwa 8POT RATCXaotne.wtuna are landed by M FT. 


SORT 

_ 

1*8028 

' - 

- 

Amabn 

ArganUna 

Paa°I 

0*997 

+0*002 

090 -007 

Breefl 

(TO 

0*700 

-XOOB6 

690 - 710 

Canada 

ec» 

1*603 

+0*004 

600 - 685 

Msdco MawPMCl 

a«»5 

+0*05 

010-060 

USA 

n 

. 


- 

PacWcWfcWa 

Australia 

i-BaatMMop 

IAS 1*420 

-0*009 

421 -430 

Hong Kong 

(HK3) 

77273 

+0*001 

270 - 275 

lndta 

(Re) 

37*725 

+0*012 

700 - 750 

Japan.' . 

CO 

«*B60 

-XI 36 

400 - 900 

Malayate 

(ME 

2*685 

-XOOI 

660 - 670 

Now .Zealand 

WZS) 

1*680 

+0*02 

543 - 560 

PhBppinaa 

(P~0 

26*000 

■ 

500 - 500 

Soucfl Arabia 

(SR) 

3.7503 

+0*001 

600 - 505 

Stegapon 

m 

1*873 

-X0Q22 

970 - 973 

S Africa (Com) 

<n 

3*678 

-0*03 

570 - 585 

S Africa (Fkg 

n 

4*100 

-0*07 

000 - 200 

South Kona 

(Won) 

000350 

-07 

300 - 400 

Taiwan 

CTO 

28.1976 

+0*078 

960 - 995 

Thailand 

(TO 

24*650 

-0*25 

560 - 750 


0*997 0*098 
0*700 0*820 
1*715 1*890 
8*060 9.4010 


1*430 

7.7277 

31*750 

99*400 

2*600 

1.6558 

264600 

3.7605 

1*005 

3*696 

4*200 

801.100 

28*020 

24*990 


1*406 

7.7270 

31*700 

99.1000 

2*596 

1*834 

26.1500 

3.7600 

1*968 

3*680 

4*000 

80X300 

28.1980 

34*560 


10*925 

0* 

10*523 

00 

10.7775 

XT 

104,4 

31.7B85 

-0* 

31*01 

-05 

31.936 

-OB 

10X0 

8.1043 

-1* 

8.1228 

-1* 

12041 

-1.7 

104* 

3*016 

xo 

3.0081 

-06 

5*066 

-1* 

717 

6*859 

-0* 

6*017 

-OB 

5*547 

05 

106.4 

1*421 

-02 

1*421 

-Ol 

1*308 

03 

1072 

235.15 

-1* 

236*1 

-1.6 

238.875 

-1* 

68.1 

1*307 

Xfl 

1*278 

0* 

1*093 

1* 

— 

1570* 

-3* 

1596*5 

-18 

1643*5 

-4* 

75* 

31.78a6 

-0* 

31.801 

-05 

91*38 

-OS 

10X0 

1.7201 

-XT 

1.7203 

-0.1 

1.7238 

0* 

IDS* 

6.787 

-07 

6.8065 

-1* 

6*78 

-1.4 

9X2 

158.1 

-5.7 

159*8 

-5.9 

165*75 

-52 

95J5 

126*55 

-2* 

129*05 

-10 

13225 

-10 

80* 

7*706 

-2* 

7*173 

-11 

7*318 

-16 

79* 

1*853 

0* 

12835 

0* 

12735 

1* 

107.7 

1*507 

02 

1*496 

X4 

1*366 

08 

67* 

1*389 

0* 

1*321 

0* 

12238 

Xfl 

- 

1*600 

-OS 

1*72 

-06 

1.3878 

-1* 

811 

3*045 

-04 

3.4013 

-03 

3*137 

-0* 

- 

- 

- 

- 

- 

- 

- 

8X7 

1*429 

-02 

1*436 

-03 

1*516 

-0* 

6X0 

7.727 

0* 

7.7270 

XO 

7.7427 

-02 

_ 

31.4575 

-3-3 

31.6025 

-2* 

- 

- 

- 

89*75 

2* 

98*15 

2.6 

96.435 

10 

148.6 

2*473 

4* 

2*36 

12 

2*105 

-2.1 

- 

1*56 

-07 

1.6578 

-07 

1*611 

-05 

- 

3.751 B 

-04 

17557 

-08 

17742 

-06 


1.4050 

1.1 

1.404 

09 

1*805 

a? 

- 

3*733 

-02 

16018 

-4* 

16813 

-14 


4*437 

-0* 

4*025 

-02 

. . 

to 

_ 

003*5 

-4* 

806*6 

-12 

826*5 

-11 

_ 

20*178 ‘ 

-Xfl 

2X2578 

-Xfl 

- 

- 

_ 

23.0375 

-3* 

26.166 

-3* 

25.87 

-17 

- 


dneOrwoManeireM 

M—etabodrihband 


T80H MU lor Sep X BdWtar Spreadi to te 
but — ImpBgd by «unwn tatatoat maa. UK 


report** a 
a ECU me 


my tw — I tore decimal plaoaa . Fcnred nan — not dbacay quoted to n 
quoted ki US anancy. JP. Morgen nominal tndcaa 3ap 8 8— a re— ge IBBOaiOO 


CROSS RATES AND DERIVATIVES 


at EXCHANGE CROSS RATES 

Stop® HR OKr 


FPr 


DM 


NKr 


Pta 


8Kr 


SPr 


Ecu 


Belgium 


(Pft) 100 
(DKi) 52*8 
(FFr) 6X11 
(DM) 20*0 
VE9 48*7 


19*6 

10 

11*4 

9*45 


16*4 

8*83 

10 

3.427 


4*55 
2*28 
2*18 
. 1 


8*96 2*83 


2*65 

1*70 

1*86 

X423 

. 5 .- 


4948 **44 

2577 2*36 

2974 3*72 

1019 L.121 

2408 2*49 


21*4 

11.11 

12*3 

4296 

1X39 


'■ • 

■ r 4 

fe» 

2*21 

0*88 

(£338 

0*96 

0*42 

ioa ' 

XI 10 

0431 

1X01 

v • 1 

Nmhmandt 

(F? 18*7 

1527 

1068 

0*92 

0*77 

909.0 - 

1 

3*20 

01*1 

r 1 f 

■ < 

Norway 

(NKi) 46*6 

8*08 

7.705 

1275 

0*63 

2310. 

2*51. 

10 

2922 

■' > 4 

» p 

Portugal 

PB») 2X18 

3*75 

1356 

0980 

0415 

BOB* 

1*90 

4*07 

10X 

\ 

!' i 

Spain . 

(Plat 24.75 

4762 

4117 

1202 

0*00 

1228 

.1*47 

5281 

122* 

a 

Bwadaa 

CSKr) 4102 

8*80 

1901 

2*40 

MR 

2070 

2238 

1068 

2012 

V | 

Sarttnriand 

(SFL) 2470 

4743 

4100 

1.199 

0*08 

1221 

1245 

5271 

1214 

UK 

(£) 4025 

0*67 

1103 

2*91 

1*12 

2437 

1681 

1051 

244* 

4 ‘ * 

Canada - 

(CTO 2320 

4465 

1850 

1.126 

0477 

1148 

1263 

4*51 

114* 

^ , 

US 

TO 01.75 

1097 

5282 

1*42 

0862 

1671 

1.720 

177B 

157* 

’ i 

J«P»> 

(Y) 32*0 

XI 45 

5*24 

1*64 

0858 

1583 r 

1J42 

arwo 

1815 

i 

Ecu 

3921 

7*29 

1523 

1*04 

0*08 

1040’ 

2.13& 

8*68 

1043 


495* H 404.1 
258* 2104 

297* 242* 

102* 83*3 

241.1 196* 

8J68 
74*3 
189* 
81*6 
10X 
WX8 
89.80 
189*- 
33.74 
128* 
129* 
158* 


23*0 4*49 2*30 4*11 3.149 312* 2*60 


FIXED INTEREST RATES 


MONEY RATES 

fertanba r t Over One Three 
night month rathe 


Star 


One bomb, 
year War. 


Dta. Repo 


DanMi Kroner. Fmncb Franc, fenwotofi Kroner, aid &mdUi Kronor par lD; BWgim f^Wia Yen. Escudo. Lba aid Pun pa m 


1139 

1108 

1*57 

1245 

1*40 

1617 

1*28 

Belgium 

4% 

Stt 

5% 

5% 

64 

7*0 

460 

14*0 

1434 

1221 

1501 

1*B3 

1ST* 

1*33 

week ooo 

4% 

SVh 

64 

6% 

54 

7.40 

450 

4902 

0*34 

X418 

0*88 

0*49 

6437 

0*25 

France 

54 

5i 

5M 

59 

6% 

8*0 

_ 

11*8 

1*70 

0*68 

2*06 

1*33 

1511 

1241 

week ago 

54 

64 

5% 

59 

6tt 

8*0 


0.481 

0*62 

ao«i 

XG67 

0064 

6*15 

0*52 

Germany 

4*0 

495 

4*6 

110 

145 

100 

480 

4*72 

X744 

0*73 

0.792 

0570 

67*0 

0468 

weak ago 

490 

406 

486 

8*2 

6*3 

100 

4*0 

11.16 

1*07 

XSSI 

9mo 

1*78 

146* 

1.105 

Mred 

*i 

5% 

64 

54 

7% 

_ 


4*03 

0*17 

X410 

0*70 

0*36 

6107 

0515 

week ago 

49 

6» 

64 

64 

7M 

_ 

_ 

1869 

1*02 

0*03 

1*67 

X770 

77*4 

0*31 

Italy 

BMr 

8% 

63 

04 

10% 

_ 

7*0 

10 

1.701 

0863 

1*11 

1*23 

131* 

1*72 

weak ago 

8Mr 

8M 

8M 

SI 

104 

- 

7*0 

5*78 

• 1 

0*02. 

1*85 

X778 

77.18 

nwn 

. NnttvMlMkli 

4*4 

4*7 

6*2 

US 

5*9 

_ 

525 

11.72 

1*94 

1 

1123 

1*51 

153* 

1256 

week ago 

464 

407 

4*9 

111 

5*2 

_ 

825 

1620 

0*39 

0.471 

1 

0731 

72.48 

0*92 

SwNxeriand 

3% 

4 

44 

4M 

4% 

1625 

150 

7*66 

1298 

0*45 

1*60 

1 

9923 

0*10 

week ego . 

3« 

4 

44 

454 

49 

X628 

3*0 

7*15 

1296 

0660 

1*79 

1*08 

ioa 

0*16 

US 

49 

4% 

49 

5% 

5* 

- 

400 

0*31 

1*88 

X7S6 

1.690 

1235 

122* 

1 

week ago 

4* 

4% 

49 

8% 

» 

- 

400 








Japan 

2% 

2tt 

2M 

24 

29 

- 

1.75 








week ago 

2% 

2tt 

2M 

24 

29 

- 

1.75 


are 

are 

4*6 

4*6 

not 

8*8 

8.45 

8*8 


■ D-NUMC NTUMM (MM J DM 125*00 per DM 




I UK INTEREST RATES 





E.S UBOR FT Lore 
Mretreuk Ffadng 

don 

4% 

8 

9* 

51 

_ 




Open 

Sen price 

Change 

- High 

Low. 

‘ EaLvoi 

Open bit 






week ago 

- 

4% 

5 

5ft 

59 

- 

- 

- 

Sep 

0*421 

0*501 

+00071 

0*517 

0*402 

44*82 

92*08 

LONDON HONEY RATES 





UB Dolor CDs 

- 

4*5 

483 

112 

167 

- 

- 

- 

Dae 

06420 

0.6501 

+00071 

X6517 

0*402. 

11166 

34.631 

Sap 9 Over- 7 days 

One 

Three 

Six 

One 

week ago 

- 

4.85 

4*0 

107 

6*8 

- 

- 

- 

Mar 

0*445 

0.6509 

+00072 

0*616 

0*448 

235 

2*76 

LayTH nOUCV 

month 

* months 

months 

year 

SDR (Joked Da 

- 

3M 

31 

3M 

4 

- 

- 

- 


(AJM) SR 126*00 per SR 




Sap 

07684 

07800 

+00123 

0.7825 

07662 

19280 

33*07 


“ " 'J,T 

Dec 

(£7685 

0.7820 

+00127 

0.7850 

07878 

4,716 

12*83 


' 

Mar 

07790 

07849 

+00128 

07866 

07700 

16 

119 


»— 1 ' +*-*•+ I 


■ JAPAW— W wnwai 9MM) Yen 12* pwVon 100 


+tete-»i 


Opan 

Sen price 

Charge 

Huh- 

Low 

EsLvd 

Open M. 


Sep 

1.0060 

1*084 

+00028 1.0100 

1*046 

20*05 

55*60 


Dec 

1.0128 

1*161 

+00027 

1*186 

1*108 : 

1034; 

11245 

"• * 

Mar 

* 

1*221 

+0*029 

1*230 

1*225,. 

110 

1*64 : 


Interbank Sterling 

.5>z 

-4 

4»-4« 


5* -5ft 

5%-6% 

eU-eH 

Storing CDs 

- 


- 


sa-s* 

«3-5ft 

Btt-Bft 

Tteaeuy BHs 

- 


- 

4^-4« 

5% - 5ft 



Bank BBs 

-a- 


- 

4%-4H 

5% - 5ft 

sa-5ft 

• 

Locte authority daps. 

s* - 

43 

5i-4fl 

4tt -4H 

5%-5% 

5»-6H 

6H-8U 

Dtacount Maricat daps 

4% - 

3% 

4%-4% 



- 


UK daartng bank boaa 

lending rate*% per cant five February X 1904 





Up to 1 

1-6 

3-6 

64) 

9-12 




monte 

m n|h 

moron 

montee 

months 

montes 

Cane of Tax dep. (2100*00) 


Itz 

• 4 

3% 

3% 

31, 


mi 


ECU Uohad Be add — 1 mUt Sfl; 3 rnrhc s* S maw: ei i yaw; m. t UBOft Mwbw* IMng 
m — oflarad ratal to SKkn ryntad to ha martot by lour rWweraa banta at 1 lam m 
y. The banka am: Ban—s Tare. Bank of Tokyo, Be— red rtotond Wrrenk w at. 
i are tfmn to the domredc Money R—i. USSCOeandSOR Lfeead Dapoabe 

EURO CURRENCY INTEREST RATES 

Sep 9 Short 7 days One Time Sh 


CM- 


nodes 


momha raonthe 


One 

yere 


-* * +► * *4! 




Sep 

Dec. 


FUTUHB8PMM) £82*00 pgr, g ‘j f _ ■ 

15430 - 1*624 ^ +84^6 — 1^46 1*404^'- ' i 0*53 . *3,404 
1*420 1*606 +0*070. 1*618 1*390 ~ 4*22 7.788 
1*380 1*488 +0*070 .1*494, 1*380 1 .183 


Cww^Ttodbvr«dwEiaiU>aOi»llgeK.*epiutow«hi*— ntocrehlgjc. 

Am. Mndw M of dtacou* Cowapa BCOD toed 1— Sdg. topwr Ftoen oe. Mh ip (hy Aug *1 . - 
1994. Agree d«— topedod Sep 28. rex to Oct 25.1994. Set— 1 8 ■ eJBpa, np— near— to 
parfod Jity 30, IBM m Aug 31. 1094, Set— IY Alt A079pa Mw— Hei— Sere Me 0>2pc tom 
Sep 1,1804 

BANK Of ^MGIJU^ TflEASURY BEJ. TENDER^ 


Sep 9 *Sep 2 


Sep 9 S«p 2 


■ W*P MJWA61 C7>Q PT 10W>t31*fiQ (capta'perpoupd)- 


V *" 

Strike 

Price 

Sep 

-CALLS 
Oct . 

- / »ito 

Sap 

— PUTS — 
Oct - 

- Mov - 


1*50 

10*5 

10*1 

S^e 

- ‘ 

. , 

■ nm 


1*75 

7*5 

7*6 

' 7.63 

— 

* • 

. (£12 


1*00 

111 

5*3 

147 

. .. 

..'.ioa 

(£41 


1-52S 

163 

no - 

’ 168 

f m. 

0.46 ■ 

1*0 


1*50 

061 

1*1 . 

2*3 

.0*6 

- *.fao 

1*8 

* 

1*78 


0*7. 

■ 1.12 

"'122 

■ ’2*0 ■ . 

140 


Bfeea iftr 
Total of nptanAnm 
Tobt Mooted 
MO. accepted Did 
Motment at mh. Tmet 


SSODm 

C290Bm 

EMOm 

£98730 

ion 


tsoom 

£1901re 

£500m 

£95880 

40% 


Tap BccapU nde 5*940% 5*747% 

Are. rate el dkenat 5*940% 53588% 

A— aga yMd 511595% 5.4314%. 

ORs W nert tmder -.£SOOm £S00m 

Mh. accept. Md 152 d* 


Belgian Franc 
DonUi torn 
D-uaric 
Dutch Gulder 
Ranch Franc 
Pnrtupuaia Gao. 
8panhh P aaata 
SMtog 
SMaaftmc 
Can. Dolar 
USDotar 
Baton Ura 
Yen 

AatariSStoB 
abort Iren 


4H 

-4fl 

5- 

4^ 

5% 

- 5 

Sft 

-5ft 

5ft- 

6% 

8,'a 

-eft 

5% 

-5% 

5% 

-5% 

5% 

-54, 

8ft 

-8ft 

7ft- 

7ft 

7fi 

-7ft 

4H 

-4H 

4,1 

-4H 

5- 

4ft 

5- 

4ft 

Sft 

-6 

5ft 

-Sft 

5 - 

•4Jfc 

5- 

4% 

5- 

4ft 

5 - 

4 ft 

5ft- 

5 ft 

Sft 

-5ft 

5% 

-5% 

5% 

-5% 

5ft 

-Bft 

5ft 

-5 h 

5ft- 

Sft 

8% 

-8% 

12% 

-11% 


-0% 

10% 

-10% 

lift 

-ioH 

lift- 

10 ft 

lift 

- 11 

V. 

-7% 

7ft 

-7% 

7}J 

-7ft 

8- 

7ti 

8ft- 

Sft 

9- 

81 

•4% 

-44, 

4,1 

-4fl 

.5- 

4!! 

Bti 

-5U 

8ft- 

64, 

84, 

=■ 8fJ 

34, 

-3 h 

3% 

-3% 

4ft 

-3,1 

4ft 

■4,V 

4ft- 

4ft 

4% 

-4ft 

5% 

■ 4|| 

5% 

-5ft 

5ft 

-Sft 

5% 

-5ft 

eft- 

8% 

7% 

-7ft 

4% 

-4% 

4,1 

” 4ft 

6- 

4ft 

8- 

4ft 

5ft- 

5ft 

5H 

-5ft 

9- 

7% 

8% 

-6 

aft 

-Bft 

812 

- 8fi 

9ft- 

9ft 

10ft 

-10ft 

2ft 

-2*1 

2ft 

-2% 

2ft 

-2ft, 

2f2 ■ 

■2ft 

2ft- 

2ft 

24, 

-2ft 

34 

-3% 

3^ 

-3% 

4ft 

■4ft 

4ft 

■4ft 

5ft- 

Sft 

5ti 

-5ft 


rebre — cal lor Ore IM DoBer and Yerv other* Mo Hoys' aodee. 
■909ITH ■UWOPOMJW QMM) Sim poWe of 100% 


FT OUBNE to WORLD CURRBKieB 

The FT Quids to Vtorid Cmrendna 
tobie .can bo found on the Oomparitae 
* Rare# page to today's ertdoa 


kW- , Pre—reday%wi^C— tump— a*e3.Ptw.rew^opre H.CMe.«VA»PWi +43*0 


■ Porend la Near Yet* 


fe 1 

eppol 
1 att 

3 nth 

1>r 


1*550 

1J5Z7 

1*515 

1*412 


1*445 

1*443 

1*412 

1*321 



Open 

Sett price 

Change 

«gh 

Low 

Eat woi 

Opan M. 

Sep 

04.97 

94*3 

-004 

94*8 

94*2 

54*34 

351850 

Dee 

94*3 

94*6 

-008 

94*5 

04*4 

98JS89 

510*80 

Mar 

04*0 

93*0 

-an 

94*2 

03*7 

64*27 

387*72 


QXB4) tlm par 100M 


UK GILTS PRICES 


Wk% Aae* 
Notre PifeaC *h Ere 


Sep 

0142 

96*8 

-004 

9142 

9137 

4*09 

loss 

Dec 

94*1 

0483 

-0*8 

04*2 

04B2 

1721 

11*21 

Mar 

94*3 

9442 

-008 

04*3 

94*0 

446 

4*98 


top 


Wet Ob’ 
ai tot 


mt% Amt 
Notre Price G Be 


iret Oly 

to Ire 


w%% Acad mraol Iret 


Notre Plica £ *t- tm 


doe 


S 2 Al Opan tatoreat flga. — to pmtaus day 


Tr—flpciM+5 
IfetlMS 


II 

iibU 
M 
103/. 

Trees T24ipct995» — isss 

14KI9H 100 

l5tacT990tt* 1124 

Mi 1344* mat* — i< 


Bcb3pctos1fieo-0B. 

itwwcir- 


1*00 

2*60 

214 

2*00 

040 

770 

1.150 

am 




nopeiaoB— TWfl 

tore QreTpcTO7tt- — BAW 

to»l31«*1007tt__. 1114 

Eiih 10>2pc 1987 10GB 

TrereUrpciaam Wifi 

Erdi15pc 1697 1134 

9*peUM to*i| 

tore n^c watt — WFW 

toat04rpc19B3-9Stt- ®v’r 

14pc 19SB-1 11R 

tore TBfecWg 123Gto 

ExAllpG 1988 111% 

tore Sizpc IWBtt <03% 


■+1 
-.1 
-.T 1909 
-A 2*00 
-* 1*80 
-* 3*90 
-* 5550 

-* 990 

J 3*9 
-* 7*50 
-3 1*00 
-A 970 
-A UE 
-a 9*09 
-* 1*00 


Myl7M»17. 
JM5JMS 
Hyitoi 
J021*|Z1 
NrUUMfi 
Ja22Jy22 
MfSNeS 
“ tots 
13*15 
FM 


*■' '■•■RndtoiStoa: M»-4_ 
*■225 0— bn met* a»4^ 
“3™ tore Mu* 2004# — 

H3S4 OreWHn*2W8 : 

4.4+296 feM 12*»C ZOOM. 


71H 

tow 

B04 

iow 

11« 


r 

MfTSI 


FM1A021 
.Ml Ml 
*070(27 
JalOJfiB 
1*308830 
NylNrl 
My22IM22 
M30SB30 
MH20W20 
JW15JY76 


ttoetonn—to— - 

ExhlZlipClBOe U3&M 

tots lofapciaoo — 


toreOpciMtt »«■ H2S ESSSS 

Cbnrentan f OT+pc 1999- 1«P, -.4 1^» to®*® 
Treat Rig Me 198a 98B* al !»*««• 


Treat Rig Rtoiau 

Opc M OI fft 

Treat Upe 3000- 
lOpctooi - 

7DC7001 


Me 2001 A. 

Mope 


-lipcOTa„ 

apcaasstt- 

itocSoos. 


3*60 NHBSaM 
1*58 uyra tots 
5*oo mo Mia 
. 1*98 MyZZNrtH 

XI 2*00 BWJeSeDt 
-* 3*58 M3to3 
-* 3,171 Jh144rl4 
-J 4*08 FaCBAUH 
-1,1 3*50 H|d MO 
-1.1 2*00 HtSIM 
-1* 6*27 fti/Ma 


104B -1* 6*27 A&AUZ7 
. 946 -1* 7*00 JSIODalO 

io«ud -1* 2*03 wasaa 

tore liispo 200J-4 — 111** -3 1*20 MidSalO 
• Tap 1 — ±t 1b»4nw 10 imn wdrtante on apptotooa 


15*1305 7«iic20(»tt 91JW 

28*1309 apc2002-fttt_ B31ud 

J-ilSS %are114tpe2BB-7 — ' 114U 

Tha«Biepe2007tt «W 

18* 1302' ’ 

18.71253 BreiapeaBOBtt 101BM 

287 1341 
21*1290 
1381273 
24* - 

2531331 

13*1300 K,w??flna hum 

SU,«H T1f«toca*» 

Tl—ewpc2010 79% 

9*1347 C0BrGpcbl2O11 # 102% 

tore fipcanw low 

Treat 5%po2008-t2tt_ 73BM 
Tr— Bpc20i3tt— 94M 
7*pe20nM8tt »1B 

tore SAipc 201 7tt IOTA 

! 21 .e** — t»a 

<Z* leu . 

47 

154 1242 
3* - 

2B71244 
7*1290 undated 

2071290 Dooato4pc >-*+• 45A 

ao* -WwU— 3%nctt™= — ■ 40% 
mill— toredTapaW-tot-t— S7%to 

4* _ Tree* 3po ‘98 ret : 34%af 

2*iS8i 0BBeeb2%pc .23%to 

13*1200 toaa.2%pc 28%n 


-* 543 

-1* 3412 
-1* 3250 
-1.7 4*42 
-1* 3200 
-U> 3*00 
-U 2*00 

-1* 3.150 
-1* 5*97 
-1* 1*00 
-1.4 5*21 


-1* 3100 
-I* 4,780 
-1.4 4*73 
-1* 3150 
- 1 * 1*00 
-1* 4*50 
-1* BOO 
-T* 3950 
-* 1*00 


JB14JT14 
Ap2SOc2G 
Ny29N*26 
AP180M8 
VfiUMl 
MS 349 
ApS0c5 
Ja22J»22 
JalfiJyl# 
M2BSto8 

Apuona 


M28S02B 

Jai2Jyi2 
MM 
IHOSalO 
M2738Z7 
Ja2BJy2B 
F82SM2S 
Jatzoan 1 


7*1274 
21*1248 Eto"®?. 


Ji 


IBStlto -* 


19*4990 4%pc'0Btt (135J9 ™U 

143TW Z’**' 01 


10*1313 

21* - 


_ -iS 

++JMTK OTjpolB 17>4 -* 

H.412K> 4%p C D4Hi (135*) 109% -7 1*00 Ap21 0 e21 21* - 

““ 208*09 (BSL5) 1B7A “ 


1*00 MIS sue 
900 Ktnocn 

1*00 M343IM 10*1319 
1*60 MjflOlMO 13*1317 


BANK RETURN 

BANKING DEPARTMENT 


Wednesday 
September 7, 1994 


increase or 
decrease for week 


2* - , 
1*1334 


2%poW (734 151% -1* 1*50 NjfZONffl) 

1391205 2%pcni (744 157 -1* 1*60 FSZ3M23 

391330 2%pc18. (984 129% -1* 2*00^164119 

2%pc19 (to*) 137 fi -1* 3700 MX JOB 20*1321 

2%PC’20_; (834T3T%d -1* 2*00 AplOOClO 


1*50 JIlOJylB 13*1X14 
” 13*1319 
1371319 
1171320 


Capital 

Pubic dapoeke 


22*1301 

9*1343 


Reeorvo and other accounts 


14*63*00 . 
1,143*05,061 
1,629.709*78 
4,729,474*36 


+1*3X001*70 

+414*23*01 

-2,404,110*06 


9191322 
10*1323 
139 - 


-I* 339 FblAal 

+1* • 1*09 - JeT Del 

-il 119 A9I OO 

0* 58 MSOcS 

-2* 279 SJaipliOc 

-17 475 Apt Del. 

mid-pr+caa — — am to 


2%pc7<tt (977) 109% -1* 2,100 Jtn7Jyl7 

4%pc-30tt (135.1) 1004 -1* 1*00 JelOAOB 

W Hgutea In parand—M shew RPI bee* tor todaatog (to 8 
months prior to tooutd and hare been edtuered to mttoci rebeeing 
of RPi to 100 In Jenuwy 1987. Oorwentoa torfor X945. RR to 
December 1993: 141* end to July 19S4; 144*. 

19*1339 
18* - 
18*1245 
30*1701 
4*1380 

^ - CMhOT Pb»d Interest 

X5 3hbee Dei 11% 2DiO— . n«l -17 
A.,™ Asha 0eM0%pe 2000— 108% -1* 

BTwnn>3j«2017 t!9% -1* 

kabad Cap 8%pc 10 94% -3* 

opcCapwn — ___ 100% -* 

13peW-2 - 107 -1* 

Hydro OndteclSpc 2011- 14QH -1* 

LaB*fS%oc200B — _ 128% -U) 

27*1230 litoped 3^200 ttrad 38% -1* 

XMKBl lOfdpe'XM : 32 -15 

MeadmlKi1%pc200r. 113% -1.1 
aflu0iaw ItotmapcT 87% -1* 


Government eecutUea 
Advance end other accounts 
Promise, equipment end other 1 
Noted 
Coin 


7*17*41.974 -1*09*85*36 

1*28*43*17 +-17*40209 

6*46*20628 -1*24,767*42 

434783*12 -1*00.447 

7.840*38 -462*31 

173*91 -4*24 


1.12 - 


-1465 

8*83 1428 . 


1S1324 —ride Anali3%pc 2021. W% -O 

1*12» <%ELaiM_ 126% -1* 

26*1X15 IHttK Stabs 19%pc!D0B- JOB -J 


50 JMA*4 
100 1*34 8s24 3D3 - 

45 Hyl5Nr15 4-831937 
305 AplOcI 
725 JOOJfto 
315 AplOCl 
40 HyBI Mr60 27.10 - 

40 AplSto 38331+9 
G IJtfpJNk 983 - 

29 UeJeSeDe 983 - 

;-6 Ap250c25 38332)6 

25 MlSel 
- 90 JW0430 
SO 

50 M18IT 


ISSUE DEPARTMENT 

7*17*41*74 

-1*09*89*35 

UebMae 

Notre In ckofcriton 

18*42*59*64 

-389*47*60 

Noire ki Banking Department 

7*40*38 

-452*31 


11250*00*00 

-361000*00 

Aaeots 

Other Government ascuWee 

11,630.701,101 

+1230.757,897 

Other 8ecuWea 

6*10*96*10 

-2*80^67*97 


16*60*00*00 


-360*00*00 


8833591 
1833485 
788 - 

983 - 


LONDON RECENT ISSUES: EQUITIES 

taeue Amt MkL Close 

priof peid . cep 1004 price Net Otv. Gre P/E 

p up (gmj Ugh. Low Stock p +7- Jv. cov. ytd net 


E Auction bayts. Ml E^tMdaid. Cteateg 

STOCK INDICES . • j ' 

Sap 9 Sre 3 - Sep 7 Sep 9 Sep 5 Wnh trw -HMi low 

er^+00 : 3133* 31900 32019 33R4 3241J5 30BU 2676* 382X3 8888 FT-6E Bar— ck TOO 

FT« MU 750 3730* 3781* 877X1 3782L4 37887 41628 3363.4 4183* 137X4 FT-SE SMto 200 

FT^Hd^anX 3739* 3769.4 37847 3788* 3794* 4UU 3382.4 " 4M0J 13783 FT Ortbnty 

FT^ASSO 1589* 1907* .1913* 161X5 1684.1 17RU 1461* T7IM 694* FT 8M SMrtbs 

FT^SnwICta) 1304*8 1»7*5 1310*5 1911*8 HUH *099*8 1777*1 2099*0 1383.7B FT toed Merer 

p+!S S53 - n> 1970*9 1672981678*4 197821 1878*4 290072 1732*0 290072 138179 FT Geld Mm 
FT^aSSm 1678*9 159807 1908*8 1607*8 1B2X7B 1784.11 1446*6 U9111 81*2 


panto. Week* eerttore e ge .cheogre —^atoto a on a Friday to Frktoy be—. 


5ep 9 Sep 8 6ep 7 Sap 8 >g 6 


— It 

an 


lew lew 


1370*3 1380*1 1371 .13 1371 *3 138X1 1 040.19 130348 1840.19 900+5 
1418*0 1431.14 1429*3 1427*7 44&12 1907.18 1342*5 1807.10 938*2 . 
. 2428* 2954* Z47B7 20** 2$>2* 2713* 22555 2712* 48* 

90*4 91*5 91*9 *1*8 9USB 107*4 90*4 127*9 48.18 

108.19 108*0 107*0 10628 19802 1X3*7 107*3 13U7 5X83 

2109*0 2192*9 220873 2188*02163*3 2397* 1762*2 2397*0 022.16 

* 2758 Z70* 273* 269* ' 267.1 277* 185* 7347 43* 


base lending rates 


/ 


Adam 8 Company 8*6 
ABod That BonK ...,—6*5 

AB Bank - 5*6 

•HanryAnabacher. — , 5*8 

Bank ctf Banda 5*5 

Banco BM»VtaioayaL-6*5 

BankotOyprU* 5*8 

Bonk of Mend — ^..-5*8 

Bark of Mr -MS 

Bator ol Scotland -52S 

Qarctoys Bonk — 5*8 

BrKBkOfMMBaat..- 525 
•6waia*tay&OJUdM5 
CL6ato(Noderiand..»&S5 

CNbenkNA 

CNdaadtoe Bark MS 

Tto0tmparaBv n Bw*.5*S 

• CotoM&Ce—., 5*5 

GredKLyonneia S. SS 

Cyprus Poptoor Brett -5*5 


Duncan Lewrie 6*5 

Beglar Bank Lfrniad — 8*5 

Financial & Gan Bonk— 6 

■Robdrt naming & Go. 5*5 

Ghobanfc.. — MS 

•OWnrneeNtahon — -8*5 
WmBatocAS Zurich. 6*5 

dHantoce Banks. 8*5 

HaritoUa&GanhwBk6*5 

•WSamuaL .— MS 

C. Hoarn&Co 6*6 

Hongkong & Shanghai. 5*3 
Julan Hodge Bonk — 8*6 
•Ifrcpou Jcoaph&Bcrw 8*5 
Uvda Bank ......... — MS 

Meghraj Berk Lid MG 

'MdendBank 5*5 

*MourtBarMno 8 J 

NaJWoetrtorator -525 

•HgaBrathara -6*5 


■nced to rj h a O ua rart aa 
Oomatotoi UmtaM to no 

I -i, n, - tondantl ■■ 

unoRraunopooa eb 

abwMpgkigeiullorv 0 8 
nqriBkorSmdBnd-.S2S 
•Soflh & WMnan.Beee . .8*5 

T8B... 5*5 

toUntBdBktoKIwal . 626- 
Urt^DuetBrtcPfc^MB 
We tto mTnM^.. — 5*5 

WhfereMyljuaw E3S 

YotkaNreBrete. 5*5 

• Membera of London. 
InvoahtHHit .Banking 




7b« Mute Leaden la spread betting • Flmadalt 

teodam Bad m icmur appdoutou (bmoaB-ppItoaTMl 

Accattna an naraaity opaeal tok' 

S— arir op+o+itoa ptioat 3ajp. W,9p.a>. 1 


• - 

FP. 

19* 

80 

79 BaHa G Shn WHa 

79 

- 

- 

- 

- 

-100 

FA. 

18* 

102 

09 Deacon biv T*t 

9B -2 

re 

- 

- 

— 

- 

EP. 

1*0 

48 

42 DO. Wwisnn 

42 -3 

- 

- 

- 

- 

' — 

FP. 

1*0 

1ft 

1 Canfl Foods Wrt* 

1% 

re 

- 

’ — 

- 

' - 

FP. 

81.1 

9+ 

89 9JVESC0 Jpn Dtac 

69 -1 

- 

- 

- 

- 

- 

FP. 

129 

GO 

42 Da Warranto 

47 -1 

re 

- 

- 

- 

. i 

FP. 

— 

77 

63 JF R Japan Wrta 

63 -1 

- 

- 

- 

- 

re 

F.P. 

24* 

56ft 

38 {Magnum Power 

88ft +2ft 

- 

- 

-• 

- 

. 23 

FP. 

10* 

31 

29 Owe 

20 

re 

- 

- 

- 

' - 

FP. 

xso 

17 

Sft Pentlw Wrte. 

17 

- 

— 

- 

- 

re 

FP. 

0*5 

40 

27 PefrocaWc 

27 -1 

- 

- 

- 

- 

- 

FP. 

3*7 

44 

34 Suter Wrta 9004 

34 -5 

- 

- 

re 

- 

100 

FP. 

3*1 

105 

07 TH Eura Gih Pig 

105 

re 

- 

- 

re 

- 

FP. 

2*2 

35 

29 Tops Esta Wrta 

29 

- 

- 

- 

“ 


FT GOLD MINES INDEX 


. '**i 

Sap ataea Sap HU Cap 

8 31/ttW 8 r Up . 


RIGHTS O F F ERS 

toaua Amount Latest 
' 'price : paid Ftonun. 1994 

. p up date HQh Low Stock 


Ctoabig +or- 

priea 

P 


360 

--32. 


Ml 

M 


21710 

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The FT canhslpyou reach adddonal business raadarah Franca Our 
-Ink with the French bu»ln«M neuapf^wr, Lee Echos, gives you a unique 
recruitment adveiiWng opportunity to capftaflaa on the FTa European 
/•aderahip raid to ftjrftwr target the French buahwss woridRjr fnfonnaSon 
on rates and further dadaflo p toaxo tatephona: 

PfiOp Wrtglvy on +44 71 B73 33B1 


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Commodities on the move - 
Time to speculate? 

Call Philip O’Neill 

1H: 071-329 3333 or Fax 071-329 3919 


(INVESTORS - TRADERS - CORPORATE TREASURERS 
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I i|> I h , \ I \i 1 1 \\( .1 


CMXBNCY MANA08MKKT 

Corporation rtc 
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Hants S023 SZH F.ir 0424 77406? 








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29 













































































30 


FINANCIAL TIMES MONDAY SEPTEMBER 1994 


4 pm dose September *7 


NEW YORK STOCK EXCHANGE COMPOSITE PRICES 


WS* 

Htgb LmBtoU 
1 I A AAR 

16$ 13$ AL L3D9 A 
75% 57*3 AMP 

T2h sr*, Ain 
5 3 $hb 
50$ 38*s ASA 
31^3 25% AOTttL 

w% ii$/wompi 
!3$ i7%ABuma 
15$ 11$A£0tnceta 
31 22$ ACE Ltd 
12% 9$ ACM Get tap 10911.1 
10 ‘a 7U«UG*0BP« astro 

10*5 ?%A01&nSp» 09611S 
13 8% ACM&lSer 1 09 12J 
11 % 6*3 ACM Manx 1 1» 120 

9*4 Encuvncdi a?: ao 

15% 8% AcmeQr 
9$ 6% Acme Bed 


m h a* 

Dir * £ lOQi 


ana 
Cbn Pew. 
Law dm aaaa 


MBA 

040 30 Z! 810 131a 13$ 13*2 +$ 

018 1 1 36 168 15% 15% 15% -4a 

168 2.3 35 1781 73 71 4 71% -1% 

101 4143 58$ 57% 57% -t 

13 134 4 3% 3% +$ 

200 39 31 867 51% 51% 51% ♦% 

078 25 17 9304 30% 29% 3% -1 

UX 25 10 122 14% 14% 14% -% 

052 23 43 22% 23% 22% 

27 68 14% 14% 14% 

0.44 15 30 114 24% 24 24% 

205 ID 9% 9% -% 

7% 07% 7% -$ 

?% <y% 7% 

8% <ffl% 8% +$ 

9 87 a 9 

8 $ « 8 ■$ 


106 

47! 

331 

157 

55 


044 17 14 i33 12% 11% 

7 34 9% «h 8% 

060 12 13 30 27% 27% 27% 

036 3 3 3 1028 10% 10% 10% 

112 Ml 14% 14% 14% 

84 17% 17% 17% 

58 57% 57% 57% 

300 IDS 13 2479 38 27% 27% 

016 30 B K S% 5% 5% 

010 06120 129 18% 17% 18 

1.47 26 12 12 567a 56% 58% 

278 5 7 7 3435 48% 848% 48% 

0.46 10 IS 1092 35 34% 35 

(LOS 41 15 1130 21% 21% 21% 

1 146 2% 2 2% 

099 21 28 1844 48 47% 47% 

0 JO 1 0 17 BBS 29% 38% 39 

43 505 34% 34% 24% 

1.84 11.2 12 73 18% 16% 16% 

1MI1 28% 77% 28% 

_ . 030 12 25 558 1?» 4 17 17% 

21% 1 6$ Atony tats 035 1.9 31 5B 19% 18% 1B% -% 

17% n%pltnMx 0 20 1.4 4940 14% 14% 14% +.08 

0.28 1 0 15 7t 23% 22% 23 -% 

028 1.3 16 74 22% 21% 21% -% 

044 U 23 2132 29% 2B% 28% -% 

030 1.2 70 4108 36% 25% 28 

1.00 1.8 44 327 64% 83% 83% 


28% 23 Aconu x 

13% 5% ASM 
15% 11% Atom 
16% 16% Adams Eg* 048 2.7 0 

64 46% Ad Woe* 300 S3 
31% 16*4 AfirWc 
6$ SAfttaGro 

20 ISAfwhc 
59% 49$ Aegon ADR 
65% 48% Md. 

36% 25% ABAC 
35% 10$ Adman 
4 1% Atettirne 
50% 3a%A4ftC 
39$ 36% AlfBne Ftl 
2B% 19*4 Alffn he 
16% 14% Alto* 

39% C I $ Air I'd) 

13 % 13 % ALata to 


»$ 19$ ADCnB 
22% 17% AiCdtrA 
20-j 25% *asn 

3% 19% AlaiAl 
85% 49% Alcoa 
30% 23% Ataftawi 
22% 14 AKsAI x 

2*7, i7 Magnum 
26% 20'a AflhMtP 
21% 13% Altai Obi 
29 20 Atonal 

4% ] ATwi 

27% 17% ABncoCao 
10% SAJtneeO 
27% 21% AMkttbx 
40% 33% Ak&g 
29% 24 AIM Cip k 

7 4% AAKEJo 
3«% 21% Akmn 
64% 64% A«a 
30% 20% AO CD A 
11% 7%Ain&Mncji 
6% Am Press 
5% ArrtBfld 


0.70 7J 5 397 23% 
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164 76 11 5844 21% 

016 0.7 18 4013 ll22% 

0 44 1.6 17 B91 27% 

1 

1 84 77 22 

013 16 
090 3 3 14 
067 1 9 7 3079 37 35$ 38 -1% 


12 1 % 


28% 28% 

341? 
21 21 
21 21% 
27 37 
1% 1% 


108 21% 21% 21% 
37 10% 10 10 

4 24 24 24 


OB8 02 19 1383 28% 27$ 27% 
25 642 8% 6% 6% 


30 


9 % 

8 % 

3$ 

52% 

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a 

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7 


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82% 83 

ZZ% 22 % 

7% 7% 

7% 7% 
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11 1622 
T.60 19129 2753 
42 2788 
098 12.4 535 

OX 34 2b 17 
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20 AiPCSUnd* 052 23 15 508 23% 22% 22% 

44 AmttHs 060 1 £ 50 2707 49% 48% 48% -1% 

. 6% Am Adi R > 024 27 59 8% «% 8% 

31 20% Am Band OTO 04 3325124 24% 23% 24% +% 

37% 29$ An&ed 200 S3 10 4190 34% 34% 34% •% 

35% TB%tai&aMi 080 17 13 9 22 21% 21% -$ 

8 6% An) Cap Ak 065 8 7 276 7% 7% 7% -% 

20% 17% Am Cm Bd» 154 8.7 31 64 I7%017% 17% -$ 

23% 19$ Are Cap CV 108 54 0 7 20% 30% 20% 

1.85 19 55 4371 98% 96% 96% 

240 80 15 187B 30% 29% 29$ -% 

090 10 1318709 30% 29% 30% +% 

1.18 4.0 25 2379 29*4 28% 29% -% 

233 6*2 6$ 6% 

127 23% 23 " 


97 42% AroCran 
37% 27% AmHPtr 
33% 25% Ante* 

30% 247, AniGM 
9% 6 Am CM hi 0.77110 


27% 22 Am (8m Pr 230 99 8 127 23% 23 23% 

30% l6$AniHenige* 068 15 11 33 19 18% 16% 

65% 55% Andhnra 292 541 12 3330 5B% 58% 53% 

2% 2% AmHoUi 075206 9 3 2% 2% 2% 

98% 01% AmM x 048 0 5 15 7801 91 90 90% 


11% 7Am0pplWi 1X0129 
30 23% Antfrwa 028 13 
34 19 Am Pmsm 0 40 10 

8% 7% Am Had Es 044 18 
27% 71 AoiSW 048 20 

22% 18 Am warn 1.25 6.6 

32% 26% Am «ar 
43% 36*4 Amrttn 

U% 34 

16% 11%/tort* 

81% 50% Ammo 
9% 6% Anpcant 
4% 3% Am? he 
34% 29% AmsMtl x 
4% 2% Anaconrp 


333 S 7% 7% 

Z70 27 26% 2B% 

9 627 25% 24% 25% 

5 360 7% 7% 7% 

7 2038 24% 34% 24% 

4 18% 18% 18% 

1 08 19 12 98 27% 27% 27% 

1 JBZ 4.7 14 4538 41% 40% 40% 

126 3.4 6 16 37% 37% 3 

024 15156 50 15% 1S% 15% 

220 17 16 4093 59% 58% 58% 

010 U 8 102 8 7% 7% 

0.12 29103 145 4% 4 4% 

1.40 44 10 365 32% 32 32% 

10 242 3 Z7 a 2% 

58% 42% Aradatot 030 06 70 2502 50% 48% 43% +% 

33*8 23% AflOha 30 2430 31% 30$ 30% -1 

29% 24% Aroma* 09* 15 24 9! Z7% 27% 27% + • 

55%4?4Anft*li 1.60 10 24 5294 53% 52% 53% 4 b 

26% 25% ANR PpaFf 267106 3 7S%C5% 25% 

34 19% Aianan 16 120 24% 23% 23% -% 

18% 14% Anthony h x 0-U 28 16 16 16% 16% 18% -% 

35% 30 Aon CD 128 17 3 27* 34% 34% 34% -% 

29% 22% ApadK Op 028 1.1 38 1618 27 26% 26% -% 

10% 9%ApaMunF 0.74 01 253 9% 09 9% 

21$1*$«H 36 332 21% 21% 21% -% 

7% 4A«*IWao 1 « 4% 4% 4% -% 

22% 16% AppIfV/A 012 05 38 780 uS4 22% 23% +1 

26 21% AreWn 010 0 4 18 3811 25% 25% 25% -% 

50% 43$ Aire Oval 250 5 0 22 483 50% 50 SO 

51% 45$ Armco4 5P 4.50 17 7 46% 48% 46% 

6% 4% Amen 3 451 6*2 6% 6% -% 

29 73Aimcfl21P 110 94) 4 23% 23% 23% 

57% 43% ArmsAV 128 25 38 1580 48% 47% 48% +% 

45% 13% Arrow Boc 15 284 39% 38% 38% -1% 

7% 4% Am Op 2 15 5% 5% 5% -% 

33% 23% Aran hd — — — — — — 

31% 21%Asarco 
31% 22% Ainu CM 
44% 33% AsiKM 
25% 16% AsaPacF 
3% 1$ Asm tow 
37 28 %A»MOh 
57% «% ATST 
33%^B% AU BUI 2 
33% 31 % AOna Hk 
9% 5% ANaSoa 
21% 16% Ann® Epr 
112*3 93% A*B1 
70 4% ABAS 


128 28 38 1580 48% 47 

15 284 39% 

2 15 5% 

176 11 13 725 25% 24% 24% 

040 U 96 1083 30% 30% 38*2 

040 14 12 12 30% 30% 30% 

1.00 28 13 1070 36% 36 36% 

027 1.4 320 19% 18% 18% 

028102 7 80 2% 2% 2% 

0.12 014 20 110 31% 30% 30% 
142 15 7960 54% 53% 53$ 

280 1.1 3258% 255% 258% 

208 64 13 259 32 01% 31 

028 44 6 4 5% 5% 

154 ftl 9 443 17% 16 

540 52182 1923107 

1 225 


4)% ia%AlDK»£no» 048 5J 7 32 16' 
12% 8% AmstBAOB -044 U 10 619 8 
24% 1 7% Ai«ai 
12% 5% Aictrh Fd 
55% 47% AuDAD 
20% 13% AitRKP 
19 7% Artofl 
45 30% fcnrt • 

62 '3 43*] Avtrt’i 
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* S 5*J AM 


0.16 07 2B 350 23% 22% 

010 1.0 S90 9% 9% 

060 1.1 24 1187 54 53 r 

0.44 28 11 23 157, 1 

0.04 04 4 924 10*4 9 

060 14 19 1103 J7 38 

200 13 17 3779 — " 

9 S 

23 345 



3S% 31 % ZO . . 

9% 6% BET ADR 
5% J K.*mrO 1 
1? : lfA, Baker F« 
22 % irEatoH 
27% 21% BAKrrBc* 
m% :«%p.iPCfl* 
13% 5% EPAIJ 

25% 20% EJtv,E 1 


34 33% 33% +1ft 

8 % 6 % 8 % 

4% 4% 4% 

17 18% 18% 


23 ai-'a One Oof 
25% 20 -'1 BeroBa v 
11% >% BancpCflilH 
7-4% 37Ctrytmsn 
la I BancTfl.t 
62% J1 % Bone® 
d*% :-3 %bw>ati 
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28% 22**3 L+itm 
49 % AS-'a 
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SP% J7 8ar*am S 
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f J% 63% BnkTsI 

38-4 ■ 

33% 22% Bare iCfll 
38 29% BarnuOp 
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12 % S'jftMMI 
5J'b 31% BoiocTl * 

25% Sl*,8i»3cr* 

.■5% 23%ftn-StGX 

22% I Jl, Be Tr 1838 
23%’ 15 r j 6var jpns 
50% *> % BfOiSSTA 


-B- 

266 7 9225 138S 
021 31 27 5 

»3) 44 7 53 

040 14 164 

048 14 44 1896 19% 19% 19% 

0 40 1 8 21 98 22% 22% 22% 

Lleo 13 25 788 26% 28% 28% 
005 05 14 135 10% B% 10 

13 2631 7% 7% 7% 

1 52 7 0 11 1255 Zl% 21% 21% 


124 37 II 8129 33% 33 33% 

l.M 4 7 8 133 24% 23% 24% 
072 71 4 23 10% 10% 10% 


| 

| 

020 1 0 30 35 20% 20% 20% +.20 


69% 


10% io‘a 

104 JJ 7 307 32% 31$ 31% 

37 J07 1% ffl 1% 

170 U 10 141 55% S4% 55 

160 13 I0 8J25 49 48% 48% 

516 65 2 85 65 85 

088 33 II 5858 26% 26% 26% 

304 66 2 45% 45% 45% 

1.10 15 5 3215 32% 31% 31% 

175 6 8 72 47% 47% 47% 

6 00 7.4 IIOQ 81 81 81 

lea 51 5 5671 71% 

UQ 29109 166 38% 

0.60 23 71 1466 26 

1« 17 S3 W 37% 

164 3.5 11 1629 4«% 

005 04115' 3333 11% 

098 IS 14 4340 38% 

1.05 13 42 7073 28% 27% 27* 

1.40 S3 15 67 !5% 25 25% 

172 B 2 42 21 - 

060 35 4 2552 17% 

2.83 U 44 40 

72 '2 272j E*rmp 064 lo 22 10 31% 

J2% 73 Bceyrun m 040 il 26 779 31% 

44% MIjBccmO* 074 1,7 15 1355 44% 




TKKMOUKV TIUTWOiaS RM UR 



Telephone Answering Machine 
Automatic Paper Cutter 
60 Locations Automatic Dial 




Baraonics 


hm 

Mp matt 

7% SBadffr 
5B% 49MM 
lft% 14% Win 
63% 53MEti 
55 43% Btkl A 
25*2 20% BmiU 
88 58*2 
44 34%BalHf> 
36% 27% BeadtaA 
1% % BenjudB 

19% 13% Betfr 
1BKfll510DBaW 
10% SBanrn* 
37% lSSsatBar 
28% 28% Salh fill 
S% 51*2 BatMvnPI 
24% 16% BRtSt 
53% 42% BaQ L 


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31 


FINANCIAL TIMES 


MONDAY SEPTEMBER 12 1994 + 


NYSE COMPOSITE PRICES 


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TawPhADR 026 30 1581 30 29% 29% •% 

Ihraa Com 7313058 33* 32% 3311 +& 
TJM 022 20 1025 IB* 1919% -% 
Team Mad 41147 5* 5% 5* rt 
Tokyo Mar OH 33 25 81% 80% 60% 
TomBnwm HilOB 12% 11* 12% +% 
TdppeCo 028350 682 7 6* 7 

TPIEnla 3 977 7% 6* 7 +% 

Tianraw n 8 ia 12 12 

Trapwttx U0 11 127 39% 39 89 -* 

Titan ■ Z 5 2% 2% 2% 

Iftobte 741535014% 13% 14% rt 

TTOaKoBkCxLIO 11 87 Z% 20* Z% rt 
Thus Lab 020 12 1057 7% 7 7%-% 

TytfdAx 008187 1192 24% 24* 24% -ft 


- u - 

USffhcr OH 18 9342 44% 43% 44% -ft 

Unfed) 2 861 5% ft 5% 

UCataOB 100 14 X 17 18* 17 

U6TM 200 12 62 52* 52% 52% -% 

Untwist 040 8 177 9% 0% 9% rt 

MOO 012 Z 2 29% 26% 26% -% 

Udaln 1 JO 28 483 48* 47* 48% -ft 

USBancpx ICO 101Z6 27 26% 26* rt 

UGEwgy ZB to 4 3* * rt 

UST Cop 1.12 9 410 13 12* 12* +% 

Uta Med IS 532 0% 9 9% rt 

UtOTata 12 43 82* 51% 52% to 

UUx 11 0 3* 3% 3% 


- V - 

Vibrant 030 X Z 18% 15% 15* rt 

VngrdCul 103 558 27* 37 27 -% 

Varfona 23 861 Z 20% Z 

Vfcar 37 5H 24% 33% 24 rt 

VtarpRa 10 638 18% 15* 16% to 

VlealdUc 232476 19 17* 18% -* 

UteTadl 7717754 12% 12% 12% -ft 

Volro B 017 3 185 18* 18% 18* 


-w- 

WaoerEn OiO 19 811 25% 24% M* rt 
ntedi 801041 S 4* 4H 
WashMutSfl 072 71805 Z% Z% Z% rt 
IMAFadSLOH 9 582 Z* Z% Z% rt 
waamAx 022 b too 23% 23 23* ♦% 
MusauPMOH 16 140 20 25% 25* rt 

WMO 2M 16 34 42% 41% 41* +% 
A 5 146 3% rt 3ft to 

WhatOne 072 12 620 Z% Z«g Z% 
HMPUD 102309 13% 12* 13 to 
WtepStA 1 979 13* 13% 13* -% 

WM&dWA 10 70 3% 3% 3% 
Wkntta 098 24 987 51 49* 50% -* 

WnsSnura 99 2372 44* 43 43% -1% 
VMtenLxUB 14 41 16* 1ft* 10 
IWrgi 040 27 3166 Z* 21 21 ft -ft 
WPPBnxp 003 23 286 3* 3|J 3fl 
y^ntartkiOAII 1 170 8% ft* rt 


-X-Y-Z- 

XKnx Z 6388 49* 45* 48% -1% 

Xrxni Corp 2 375 3% 3 3% 

yefew OHM 254 20 19* IS* 

VtafcRsda 1M 324 4* 4% 4% rt 

anuod) 1.12 9 ioi 40% to to 







V 


FINANCIAL TIMES MONDAY SEPTEMBER 12 1994 


FT GUIDE TO THE WEEK 





MONDAY . 


TUESDAY 


WEDNESDAY 




Quebec provincial election BIS gains board members 


Polish debt reduction 


§$]& 


Em 




S i Opinion polls 

; put the separat- 

i ^lArv.vJ 1st Parti Quebe- 
. . r ' co is well ahead 

«5»x*j of the ruling Lib- 
mm erdparjr 

although the 

current Quebec premier Daniel John- 
son is more popular than FQ leader 
Jacques Parizeau. If the PQ wins, it has 
promised to call a referendum on inde- 
pendence from Canada for the French- 
speaking territory within a year of tak- 
ing office. 


Peacekeeping: Nato's first 
peacekeeping exercises on former War- 
saw Pact soil start outside Poznan in 
western Poland as part of the Partner- 
ship for Peace programme. For four 
days, 920 troops from 13 countries 
including the US. Lith uani a, the UK, 
Romania, Italy and the Ukraine will 
practise peacekeeping operations at a 
cost of aofan zlotys (USS9O0.Q0Q). Russia, 
a PfP member, declined to take part. 


Alan Greenspan, chairman of the US 
Federal Reserve, joins the board of the 
Basle-based Bank for International Set- 
tlements. William McDonough, presi- 
dent of the Federal Reserve Bank of 
New York, also takes up a board posi- 
tion. As a founding member, the US has 
been entitled to two board seats since 
1930 but has never taken them. 

Gordon Thiessen, Canadian central 
hank governor, and Va nish! Mi CEO, 
governor of the Bank of Japan, also 
become BIS board members today. The 
BIS hopes the moves, which bring to 11 
the number of countries represented on 
the board, will strengthen international 
monetary cooperation. 


Poland is due to sign a 49.5 per cent 
commercial debt reduction deal in War- 
saw with the London Club Steering 
Group, representing about 450 credi- 
tors. The agreement, reducing USSl4bn 
worth of debt, comes after almost a 
year of talks and anil far the first time 
since 1981, regularise Poland's financ ial 
relations with all its western creditors. 


Abiola trial: The treason trial of 
Moshood Abiola is scheduled to resume 
in the high court in the Nigerian capi- 
tal Abuja. Abiola is charged with 
declaring hims elf president in June, a 
year after his unofficial victory in the 
election which the army annulled. The 
trial was halted in mid-August when 
the previous judge withdrew, saying 
Abiola lacked confidence in his ability 
to conduct a fair hearing. However, the 
defence is asking for the trial to be 
adjourned on medical grounds. 


Japan and the UN: Boutros 
Boutros-Ghali, UN secretary-general, on 
a four-day visit to Japan, meets prime 
minister Tomiichi Murayama. They 
will discuss Japan’s cautious moves 
towards a permanent seat on the UN 
Security ConnciL Cabinet ministers 
will also meet separately to discuss the 
question. 


OECD leadership: The vexed 
question of who should lead the 25 
nation Organisation for Economic 
Cooperation and Development is due 
for consideration by ambassadors of 
member states to the OECD. The 
chances of a consensus are unclear. 
Over the weekend, EU ministers rallied 
behind Jean-Claude Faye, the present 
incumbent, who is seeking a new term 
from the end of this month But the US 
has stepped up its opposition to Paye. 
The Clinton administration has been 
supporting Donald Johnston, a Cana- 
dian politician, with support from other 
non-European countries. 


Savoy ahoy; The UK luxury hotel 
group, which includes Claridge's and 
the Connaught, as well as the Savoy 
ltsell may have its future ownership 
decided at today's board meeting. Last 
week, the departure was predicted of 
Giles Shepard, Savoy managing direc- 
tor, who has bitterly resisted the 
advances of Britain's Forte group 
which has been stalking it for 13 years. 
Hie Savoy group announces its interim 
results on Wednesday. 


Lloyd’s of London is due to decide 
details of its strategy to collect several 
hundred minion pounds in debt f rom 
loss-making Names, tho individuals 
whose assets traditionally support the 
insurance market. Lloyd's authorities 
said last month they were poised to 
hire commercial debt collectors. 



From mid-day on Tuesday, Cuba wffl use force ff necessary to stop the illegal departure of refugees to the US 




THURSDAY 


FRIDAY 


WEEKEND 


The European Parliament begins a 
two-day plenary session. 


Ukraine’s parliament meets Hurd visits Japan 


Swedes go to the polls 


Non-proliferation: Delegates from 
more than 160 governments meet in 
Geneva (to Sep 16) to prepare for a con- 
ference next year to decide whether to 
extend tbe 1970 nuclear non-prolifera- 
tion treaty and for bow long. 


North Korea: US assistant secretary 
of state Robert Gallucci arrives in 
Japan for talks on North Korea's 
nuclear programme. He travels on to 
South Korea on Wednesday. 

Meanwhile, talks continue in Berlin 
between senior US and North Korean 
officials (until Sep 14). The US diplo- 
mats had intended to propose providing 
North Korea with light-water reactors 
and other technical assistance as an 
incentive for North Korea to start nego- 
tiating the reduction of its nuclear 
weapon capacity. 



British Coal privatisation: Bidders 
for mining assets must submit tenders 
by 5pm today. The five regions are aanh 
likely to attract a least three bids. Some 
of seven recently closed stand-alone 
pits wQl also attract interest 


Douglas Hurd, UK foreign secretary, 
visi ts Thailand at the start of an Asian 
tour. 


US economy: The main data for 
August are released this week, starting 
with the consumer price index today, 
with retail sales on Wednesday, and 
industrial production on Friday. Fol- 
lowing last week's above-forecast 
increase in producer prices, inflation 
fears have increased and with them the 
prospect of a near-term rate rise. 
Today's price index is expected to rise 
by more than last month's 0.3 per cent 


UK economy: The retail price index 
and average earnings data will be scru- 
tinised for signs on whether the down- 
ward trend in UK inflat ion will con- 
tinue into the au tumn The annual rate 
of RPI is expected to have fallen further 
in August, hi g hli ghting the low infla- 
tionary pressures in the UK economy. 


Ukraine's parliament opens Its autumn 
session with economic reform at the 
top of the agenda. Over the past month. 
President Leonid Kuchma has worked 
behind the scenes to push Ukraine to 
meet conditions for international assis- 
tance. The efforts to cut the deficit, lib- 
eralise prices and reform the currency 
face tough opposition in a parliament 
domina ted by anti-reformers. If Mr 
Kuchma wants reform, he must court, 
or push out, the conservative prime 
minister and parliamentary chairman, 
who make up the governing troika. 


Douglas Hurd, the UK foreign 
secretary, arrives in Japan for a three- 
day visit He will meet prime minister 
Tomiichi Murayama, foreign minister 
Yohei Kono, and a cross-section of 
senior officials and businessmen to talk 
about international, regional and bilat- 
eral i« n«. including trade and politi- 
cal relations. 


Saleroom: The costume that Charlie 
Chaplin wore In his 1940 mm satire on 
the rise of Hitler, The Great Dictator, is 
on offer, complete with swastika arm- 
bands. at Sotheby's. It is expected to 
sell for about £30,000. 


English counties: The Local 
Government Commission gives its 
recommendations for future council 
structure in Gloucestershire - the final 
county to be covered. The commission 
now starts public consultation, with 
final recommendations for all of shire 
England due by the year-end. 


FT Surveys: The Philippines and 
Dutch Finance and Investment 


Washington DC mayoralty: The 

Democratic party holds the primary 
ballot for the position of mayor in the 
US capital. As the District of Columbia 
Is idly Democratic, the outcome will 
probably determine the victor in 
November’s ballot 
Favourite to win the nomination is 
Washington’s former mayor Marion 
Barry, who lost the job after 12 years in 
power when he was caught smoking 
crack cocaine in a city hotel In 1990. 


Key questions: The second World 
Piano Competition begins in London (to 
Sep 27). It is open to pianists of all 
nationalities under the age of 29. 


Douglas Hurd, Britain's foreign 
secretary, arrives in Hong Kong. His 
visit comes at a rime when Sino-British 
co-operation aver the colony appears to 
have worsened. Hopes that Beijing 
would soon approve airport financing 
and an extension of Hong Kong's con- 
tainer port have all but evaporated. 


Germany’s Bflndnis 90/Green Party 
starts a two-day meeting in Munich, 
one week before Bavaria’s state elec- 
tions and less than a month bom the 
federal elections. The Greens, which 
merged with Bundnis 90 last year, got 
3.8 per cent of tbe vote in the 1990 fed- 
eral elections. 


Sweden’s Social Democratic Party, 
architect of the country's ubiquitous 
welfare state, expects to return to gov- 
ernment in Sunday's general election 
after three years in opposition to a 
reformist right-centre coalition led by 
the energetic prime minister Carl Biidt 
Opinion polls over tbe past two weeks 
suggest the party will foil short of a 
majority, raising the question of where 
its leader Ingvar Carlsson wifi look for 
support in tackling Sweden's budget 
deficit and 14 per cent unemployment. 



Saleroom: A recording of John 
Lennon playing with his first band. The 
Quarry Men, at a church social in 
Liverpool in 1957 is expected to sell for 
more than £100,000 at Sotheby’s. It is 
the star lot in a pop memorabilia sale 
which also includes Paul McCartney's 
manuscript lyrics of “When Pm Sixty 
Four” which could make £38,000. An 
original Beatles bass drumskinis 
expected to fetch up to £40,000. 


Scot FM, a radio station for central 
Scotland comes on air. It will be the 
fifth regional station to be launched in 
the UK within a fortnight The new sta- 
tions should boost commercial radio’s 
47.4 per cent share of total listening. 


Hong Kong goes to the polls on 
Saturday in its first fully democratic 
election in 150 years of British rule. 
Voters will be choosing from 757 candi- 
dates to fill 346 seats in 18 district 
boards. These are the least powerful of 
the colony's three tiers of government 


FT Survey: Northern Ireland. 


Holidays: Switzerland (Zdrich only). 


FT Survey: Sfio Paolo. 


Holidays: Israel (Eve of Yom Kipp or). 


Holidays: Israel (Yom Kippur), Japan 
(Respect-for-theaged Day). 


UK economy: With the UK public 
sector's borrowing requirement now 
expected to come below the Treasury’s 
forecast of £36bn in 1994-1995, the 
release of the monthly PSBR figure on 
Friday will be watched in the markets 
for indications that the government’s 
borrowing requirements are foiling fur- 
ther. Although July's PSBR of £l.lbn 
was sharply lower than the City expec- 
tations. August’s PSBR is expected to 
rise to £2.1hn. 


The Lateral Democrats, Britain’s 
second opposition party, open their con- 
ference at Brighton on Sunday (to Sep 
22). Appearances by both the head of 
the employers’ organisation, the CBl; 
and the general secretary of the trade 
union movement will underline its 
intention to remain distinctive. So 
should debates on a top tax rate of 60 
per cent for those earning more than 
£100,000 a year, and a proposal to abol- 
ish the monarchy after the present 
Queen's reign. 


Holidays; Mexico (Independence Day). 


Compiled by Patrick Stiles 
and km Boldsworth. 

Fax, : (+44) (0)71 873 3194. 






ECONOMIC DIARY 




Other economic news 


Statistics to be released this week 


Monday: A spate of UK 
economic data will Focus mar- 
ket attention on the strength of 
the British recover)' this week. 

With the markets now won- 
dering how long the low-infla- 
tion background can continue, 
producer price data released 
today will be scrutinised for 
any sign that manufacturers 
have succeeded in passing 
recent input price rises on to 
their customers. 

Tuesday: Last week's Ger- 
man GDP data has again 
focused attention on the unex- 
pectedly strong pick-up in the 
German economy. 

July retail sales data due 
early this week are expected to 
show that consumers remain 
relatively cautious, however, 
with remil sales forecast to 
show a year-on-year fall of 0.5 
per cent. 

Wednesday: UK unemploy- 
ment data are expected to 
show a continued fall in unem- 
ployment levels. 

Thursday: Meanwhile. UK 
retail sales figures are expec- 
ted to indicate a drop in tbe 
level of activity, amid growing 
market suspicions that the 
recent growth in consumer 
spending may now be begin- 
ning to tail off. as April's tax 
rises begin to bite into house- 
hold budgets. 


Economic 

Statistic 


Economic 

'"““TOC 


Previous 

Actual 


Aug CPI - Preflmlnary' 

Aug CPI - PrafinSneiy*’ 

Aug PPI Input* 

Aug PPt Input** 

BX-Food, QrfnK & Toba cco- 

Aug CPI 

ecu -Food & Energy 


Sept 15 ftance- 


Am Current Account SA FFRB. 


coord . UK 


National Service 






Q2 Current Account 


-«314lbn 


Aug Real Earnings 
AugWPI* 

Aug WP1" 

Aug Retail Sates 


Friday US 
Sapt 18 US 
US 


Aug Retell Sates** , ' 

Aug CPI - AH Item* - 

Aug CPI - AB Hama" 
ex Food & Enaig/* 

Aug Lead ktdlcatafB* {was adp 

Aug Industrial Production 

AugCapecfty UtBaation 

Sep Micttflan Sentiment - PneBm 
Aug Bar* Credit 


At Erdman Lewis we do things differently. 


Jut industrial Production SJLft 


ax- Auto Sales 


Sept 15 


Aug Trade Bal. Oust Clear. Basis 
Aug HR* 

Aug RPI" ~ 

ex-Mengage Interest Payments" 
Aug Unemployment Rate 
Jul Average Earnings 
Jul Unit Wages 3 Monthly" 

Initial Dams w/e Sept IQ 
Slate Benefits w/e Sept 3 


Jul Shipments SAJt 
Aug PSBR - 


2,596.000 


Jul Business Inventories 


M2 w/e Sept 5 
Aug Monthly M2 


Dcafr tg the week... 

. Japat 

Japan 
Germany 
, Germany 

- Germany " 

Germ any . 

Qenreny 

Sweden 


Aug Tokyo Dept Store Sates 
JU RalaH Sates - Wear*. — 
Jtf Retail Sales - PanGermarfy 
AugWPI* 

Aug FPP ' . "T~. 

Aug ppr : - 

Jot Industrial Production" " 

•Aug Unemployment Rate 


Determined to bulk) bridges not barriers, 
we developed a national network of local 
offices. A genuine network. Eacti with its 
awn identity yet working as an integral 
part of the whole. Offering the some 
range of services, the same expertise, the 
same understanding of the local market. 
And providing continuity and stability 
through the same local contacts. Whatever 
your needs, now and in the future, we 
make it our business to anticipate the 
changes in yours. 


Local Heroes 


.■man* on month, **y»r co year 


ACROSS 

1 Leave unbalanced sort of 
store? 

10 Paper, as ordered, comes out 
IT) 

11 Pul on a hill, ouo might pur- 
chase a paper flag i7i 

12 Individual going to doctor Is 
an idler (5i 

13 HP terms available here in 
Devon? I5t 

15 Characteristics of butler as il 
is churned <101 

16 One of twins hooked in ihc 
sauna? i i) 

18 Entertainer In sorial 
announced i-l) 

20 Like a Philistine (one in it 
strict order!? <10) 

22 Church leaders repairing 
manses far bishop, possibly 
(8) 

24 Man behind a cross-saw? (5> 

26 Spear taking age* as I throw? 
CD 

27 To scintillate, concentrate 
after midnight (7i 

28 French composer's’ unfinished 
second, works all right <12» 


DOWN 

2 Former pilot crashed In stunt 

(7) 

3 Don using acid came unstuck 

( 8 ) 

4 Exclamation of disapproval 
shut out (4) 

5 Former seed Is a home wine- 
maker (10) 

6 Having harmonised puts 
strain on note (51 

7 Understatement in T.S. Eliot 
play (7) 

8 One who keeps our issue in 
order? (13) 

9 Bond supporting her, for 
example, in declaration (13» 

14 Embarrassments when 
French stars appear? <10) 

17 Lawbreaker needing double 
Dutch ? (8) 

19 Crumples as credit relaxes (7) 
21 Rogue in a tornado over Can- 
ada? (7) 

23 Left out or paltry display (5> 

25 A grand entrance where the 
Tat Mahal stands H) 


MONDAY PRIZE CROSSWORD 

No.8,556 Set by DINMUTZ 


A prize of a Pe Ilian New Classic 390 fountain pen for the first correct 
solution opened and five runner-up prizes of £35 Pelikan vouchers wfll be 
awarded. Solutions by Thursday September 22, marked Monday Crossword 
&556 on the envelope, to the Financial Times. 1 Southwark Bridge. London 
SRI SHL. Solution on Monday September 26. 





London. Brnnirghom. Edinbwgh. Gbsgcwand Leeds 


Winners &544 


Solution 8,544 


F.WJ. Teale, Harborne. Bir- 
mingham 

Mrs D. Clay. Blythe Bridge, 
Stoke-on-Trent 

P. and S. Coleman, Berk- 
hamatai, Herts 
G-F- J tiller, Epsom. Surrey 
J.M. Mackie, Cobbetts Hill, 


Surrey 
GJD. Pickei 


ring, Brussels, Bel- 


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JOTTER PAD 












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FINANCIAL TIMES SURVEY 


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■ •■ 


THE PHILIPPINES 


Monday September 12 1994 


A s the “sick man of Asia” 
for. much of the past 
decade, thg P hili pp ines 
missed the investment 
flows that helped to transform the 
region, where tt enjoys a strategic 
geographic position, into the 
world's economic growth leader. 

. But the patient, having been 
wheeled out of intensive care, is 
now leaving the recuperation ward, 
and is ready to join in the dynamic 
regional economic development. 

The Philippines is “in the most 
. advantageous position, for at least a 
generation, to finally realise its true 
economic potential,'* said Ur 
Howard Handy, senior resident rep- 
resentative in M anila of the Interna- 
tional Monetary Fund (IMF), m a 
recent talk with locally based busi- 
nessmen. 

He said the outlook for the coun- . 
try remained “highly encouraging” 
following the launch of “a home- 
grown [economic] programme, weQ 
crafted by a competent and commit 
ted administration.” 

This programme ahrw to lift the 
Philippines' economic growth rats 
from Z3 per cent in 1993 to about 6 
per cent by 1937 - closer to the 
levels achieved by its south-east 
Aslan neighbours. It also seeks an 
inflation rate of 4 per cent by lfl97, 
to assist the country’s competitive- 
ness with a stable exchange rate. 

The economic programme was 
granted IMF support in June, with a 
three-year credit worth $684m. This 
in turn triggered a rescheduling 
package from the country's Parts 
Club official creditors, covering 
debts falling dn» until the' end of 
1996; and new official development 
assistance commitments worth 
$2Abn each for 1994 and 1995 by the 
World Bank-led consultative group 
of aid donors. 

By the end of these assistance, 
programmes, the Philippine econ- 
omy Hhnnifl already be fafrrnp off, 
officials Led by Mr Roberto de 
Ocampo, the finance secretary, fore- 
cast 

After struggling with power 
shortages in 1992 and 1993, inves- 
tors are becoming more aggressive,, 
in an environment made more open 
and liberalised by the government’s 
reform initiatives. The labour sec- 
tor, too, has stabilised, with. fewer ■ 
strikes in the past couple cf years. 

The economy grew in Ihe^ first' . d^emokrafikong Pflipmo (Struggie of 
quarter of this year by £8per carit/y tedleinocratur Fffipmo). 
the best performance for a threev yjate the affiapce ~wak ostrosflrfy 

month period since 1980* anif early . intended to achieve a common 
estimates point to seqmd-^uartea^ticket for the 1995. el fi ctions for con 
pTp an g j mi of more 5 perAcenfchyetyirf@^sionaL and Ideal-government 



has encouraged Investment in the 
Philippines. 

This month, he takes his pro- 
gramme to Europe, with stops in 
Belgium, Prance, Spain, Germany 
and Italy, where be win mice again 
dettves- the messages “The Philip- 
pines is back in business in the 

heart of the world's fastest-growing 


B usin e ss towerafo 1 he:Malartl commer cia l dhtrtet of ManBa 


Patrick MagateH Looaro 


Gaining on the neighbours 

The government has devised a programme which it hopes will produce economic 
growth closer to that of other south-east Asia countries, writes Jose Galang 


last year. This has. led to expect* 
tSons that the 4 l 5 per cent target for 
the whole of 1994 wDfbe exceeded. 

The government of Mr Fidel 
Ramos, thedgar-chranphig former 
army, general who won the 1992 
presidential elections with just 23 
per cent 1 of the vote, continues to 
consolidate its hold on power by 
widening a “rainbow coalition’' 

. with members of Congress. . In. late 
'August' Mr Rdmos’s ruling. 
Lakas^fational Union of Christian 
Democrats (Lahas-NUCD) party 
forged 1 an alliance with the 
opposition Laban ng 


officials, it also enhanced the 
a rtmhuw t r w tlnn^ ptutnww of getting 
legislative sup port for its wide-rang- 
ing reform measures. 

“Through coalition-building and 
consensus politics, " said Mr Jose de 
Venecia, speaker of the House of 
Representatives and secretary- 
general of Lakas-NUCD, “the Philip- 
pines will be achieving its own eco- 
nomic miracle." The mirarle, how- 
ever, would be “erf a slightly slower 
pace [compared with other Asian 
growth rates], since we are trying to 
achieve results without a fictator- 
sfop and without recourse to arms.” 

Tbe Ffllpioos’ sad experience with 
the strong-man rale of the late 
Ferdinand Marcos, who was ousted 
in 1986 and died in exile in Hawaii 
three years later, has been a signifi- 
cant foettff -behind the strongprefer- . 


eaace for democracy. 

Mr Ramtyt has achieved, the politi- 
cal stability on which economic 
gains axe being erected. So far, his 
reform initiatives have largely with- 
stood the resistance from sectors 
moat hurt by the changes. His tax 
reform programme received encour- 
agement in August, with a favoura- 
ble Supreme Court ruling an the 
new, expanded value-added tax law, 
paving the way for its xnuchdelayed 
Implementation. The VAT law had 
been opposed by various sectors, 
which feared that it would lead to 
increased faffatinn. 

Another achievement of the 
Ramos government has been the 
restoration of a normal electricity 
supply, to ftg iTiafn i«dand of Luzon, 
frv-hidh> g>- ByfmpnWffi Manila. Dur- 
ing 1992. arsd 1993, Jndnstrial. activity. v 


had been handicapped by power- 
cuts that often lasted between 10 
aTiri 12 hou rs a day. 

With the granting erf emergency 
powers by Congress, in 1993, Mr 
Ramos facilitated the entry of pri- 
vate groups into power projects that 
were exempted from the usual cum- 
bersome procedures for government 
undertakings, hr less than a year, 
the supply shortage was overcome 
- even if local power rates are now 
the second-highest in Asia, because 
most of the available capacity 
comes from off-fuelled stations. 

The president has also cemented 
relations with the country's neigh- 
bours in Asia, by visiting all of 
them during his first year, along 
with a trip last November to the US, 
the Philippines’ old colonial mas- 
Jtgr,Qn afiiottb&e visits, Mr Ramos 


Mr Ramos approaches the future 
with confidence. He recently 
launched a programme of “three 
modernisations". In Us stateof-the- 
nafion address In June, the presi- 
dent listed these as: increasing the 
economy's productivity and compet- 
itiveness; making “people empower- 
ment" work, in place of political 
patronage; and social reform, to 
modernise the Filipino family and 
the »i nrinnai community. 

He said there would be more 
attention to small and medium- 
sized industries as the “building 
blocks of economic democracy”. 
There would also bean orientation 
towards exports, augmented by the 
country's accession to the Uruguay 
Round of the General Agreement on 
Tariffs and Trade. 

Further reforms in government 
would include a reorganisation and 
streamlining of the bureaucracy. 
“We are not getting the full worth 
of every peso we spend on each 
government agency," he said. 

As part of its social-reform 
agenda, the government wfll chan- 
nel more money basic educa- 
tion, health care «r»ri land reform 
Its proposed budget for 1995 allo- 
cates 224 per emit of expenditure to 
social services - the second-largest 
item after business-related and 
infrastructural spending, which 
receives 434 per cent. 

These policies have not failed to 
gam favourable reaction even from 
some of tiie country' s leading oppo- 
sition politicians. Mr Juan Ponce 
Rnri l e. a ftvrmpr member of the Mar- 
cos cabinet and currently a member 
of the House of Representatives, 
s aid recently: T think one should 
not be blind to the fact that the 
administration has got this country 
out of the doldrums, and we are 
now s tabilising and moving for- 
ward." 

Other observers familiar with the 
Philippines, however, say that after 
the recent gains, the next question 
will be: “how long before the next 
self-inflicted setback?" Dramatic 
gains have also been recorded in 
past attempts to put the govern- 
ment and the economy in order. In 
1988, economic growth was 


Tourism 
treads a 
rough path 

■ UntB recently the pofiOca) 
efrnara was instable. The country 
stU gets more than Hs fak share 
of natural disast er s . And the 
paucity of Infrastructure is more 
annoyfog than exhBarutfng. 

Ye*, despite ttwse dlfflcvttJss, trie 
number of visitors does appear to 
be rising slowly. See Page 8 of 
this sunny. 

ALSO 

Tke economy, property lea* Z 

Poetics: democracy the healer 3 

church mfltant 3 


nmne e r nranw more sane 
took ragnoouro snow UuDrost 
Stuck market he Petron test 

— - — -■»- «■ * * x 

rlFMWJDOViz Maraa now luxi 

En elwi— at loggers underfire 
infrastructure: the BOT remedy 
tndusbtt estates: Subic bade 



approaching double digits, but 
attempted coups d'etat towards the 
end of 1989 scared investors away. 

In the early months of the Ramos 
government, a series of kidnaps, 
mainly of ethnic Chinese and for- 
eign nationals, also deterred foreign 
Investors. That problem has been 
contained, particularly by Mr 
Ramos's placing Mr Joseph Estrada, 
his vice-president, in charge of the 
presidential anti-crime commission. 

Same economists warn that the 
current deficits in the country's 
trade account, if not reduced, could 
precipitate another crisis in Its 
external transactions, leading to 
another “boconondhost" cycle like 
those that defeated previous 
attempts at sustained economic 
growth. 

So for, however, economic manag- 
ers say *ha* healthy capital flows 
have made up for these trade gaps. 
The World Batik, in a report in 
June, noted that the government’s 
initiatives had created opportuni- 
ties for foreign investors. Other 
reforms in the legislative pipeline, it 
added, would “further gnbawrp effi- 
cient private sector development”. 


Stivitf 


ONAl 


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THE LEADING EDGE IN THE S HEUPFESES 

• One of the first iriteniatiai^ banks to establish operations 

In the Pb^Mies starting in 1974 



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One of ttje JMfiliro^esieadjne stockbrokers with 


rese^ch^and dealing services . 


• The JF PhUippuie-kifidiBiG JBtitictied -1989; a <aosedended l- Ty> : 

US$75ltii^nlnvestment fund ’ 

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HONG KONG -TOKYO - SEOUL BqpftG • -MANILA • BANGKOK - lOtALA LUMPUR 

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AYALA IN REAL ESTATE 
Believing That 

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I s 


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incorporating various land uses. Ayala land transformed 
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I! 


FINANCIAL TIMES MONDAY SEPTEMBER 12 1994 


* 

THE PHILIPPINES 2 



Going up: shoppers hi a new mafl hi north Manila pmk Mae*** lugm 


The economy: Jose Galang analyses the growing optimism 


Property points the way 


The current scramble far a 
large property development 
project in the Philippine capital 
indicates the level of confidence 
in the country's economy. 

Some of the leading local 
business groups have teamed 
up with foreign companies to 
bolster their bids for the proj- 
ect, a 214-hectare parcel of land 
in a military camp. Fort Boni- 
facio, which is being converted 
into a co mme r cial and trading 
centre for metropolitan Manila. 

At a price which some 
describe as stiff, the winning 
group will need to put up at 
least ILSbn pesos for a 55 per 
cent share of the undertaking, 
in partnership with the govern- 
ment No fewer than 25 local 
firms and several respected 
names in the real estate busi- 
ness in Hong Kong, Singapore, 
Thailand and Japan have 
formed alliances to bid. 

Over the past couple of years, 
investors have taken note of 
the economic liberalisation ini* 
Natives being pursued by die 
Ramos government, which 
have resulted in a more level 
playing field and competitive 
costs of doing business. 

"The country feels a surge 
towards [economic] recovery. 


fully supported by such factors 
as low interest rates, single- 
digit inflation, a stable foreign 
exchange rate, rising Invest- 
ments in housing and construc- 
tion, rising consumption, and 
the vigorous development of 
new growth centres outside the 
capital region,” according to Mr 
Jaime Zobel de Ayala, chair- 
man and president of Ayala 
Corporation, whose property 
development arm is among 
those bidding for the Fort Boni- 
facio project 

The significance of Mr Zobel 
de Ayala's comments lies in the 
fact that the conglomerate that 
he heads has been around for 
193 years - Longer than any 
other Philippine business enter- 
prise. The Ayala group has 
seen it all - wars, rebellions, 
prosperity in the 1950s, the rise 
and fell of a dictatorship, the 
rebirth of democracy - and sur- 
vived. That it continues to seek 
avenues for expansion illus- 
trates the prevalent sentiment 
in the local business commu- 
nity. 

Economic growth this year is 
targeted by the government at 
4.5 per cent, although the 
record in the first half indicates 
that this could be exceeded. By 


the end of the current me ritum- 
term economic programme, 
which in June got the backing 
of the IMF, the growth rate 
should be closer to those of the 
high-growth economies in the 
region. 

The recent end to the elec- 
tricity shortage, which in 
1992-93 impeded economic 
recovery, should allow the 
industrial sector to become the 
engine oF growth. Agriculture, 
which employs 45 per cent of 
the labour force, is also expec- 
ted to recover from first-quarter 
stagnation caused by last year’s 
typhoon damage. 

Official policies will continue 
to be biased towards deregu- 
lation and liberalisation, 
according to Mr Roberto de 
Ocampo, the finance secretary. 
The shift towards more out- 
ward-looking policies “has put 
our economy on a path towards 
rapid growth," he said in a 
recent interview. 

Mr de Ocampo acknowledged 
that this year's target rate 
remained modest compared 
with those of other south-east 
Asian economies. However, 
Philippine growth “is in feet a 
little more dramatic'', given 
that it comes from a lower 


base. Philippine GNP Increase 
in 1993 was 24 per cent, from a 
plateau in 1992 and 199L 
The finance secretary cited 
other factors that now make 
the Philippine economy more 
attractive: the large pool of 
Englfch-spealdng, highly skilled 
workers, and a culture that has 
a close affinity and familiar ity 
with western business prac- 
tices; as well as the country’s 
strategic location at the gate- 
way of the Asia-Pacific region. 


I n July, Mr de Ocampo led a 
Philippine team of economic 
managers to the meetings 
with, the Paris Chib of official 
creditors and the consultative 
group of donor nations and 
institutions, at which new eco- 
nomic concessions were 
granted to the country. Partici- 
pants in these meetings were 
largely optimistic about Philip- 
pine prospects. 

The Ramos government’s 
reform initiatives started 
barely two months after it bad 
assumed office, by widening 
the relaxation of foreign 
exchange controls on current 
transactions, started by the pre- 
vious administration. In 


KEY FACTS 


Area 300,000 sq km 

Population 65.7 million 

Head of state President Fidel Ramos 

Currency Peso 

Average exchange rate 1993 $1=27.12 pesos 

Sept 5, 1994: $1«*P26J34S2 pesos; £1-40.7043 


THE ECONOMY 

1082 - 

1883 

Total GDP (S fan). . 

52.8 

53.7 

Real GDP growth (%) 

COMPONENTS OF GDP (%): 

+0.7 

+2.0 

Private Consumption.. 

75.6 

76.7 

Total Investment— 

?? 9 

244 

Government Consumption 

9.7 

8.7 

Exports — _ 

29.2 

31.6 

imports 

-33.4 

-39.4 

ANNUAL % INCREASE 

Inflation (% pa) 

8.9 

74 

Wholesale prices (% pa) 

44 

-1.1 

Share price index (%)* 

9.1 

154.4 

AT YEAR END: 

Reserves minus gold (Sm) 

4,403 

4,676 

Discount rate [% pa) 

7.6 

64 

Treasury bRI rate (% pa) 

Govt finances as % of GDP f 

144 

154 

Revenue — 

17.9 

17.7 

Expenditure 

19.7 

184 

Deficit 

1.2 

1.4 

Total external debt (Sbn) 

32.6 

rta. 

TRADE: 

Current account balance (Sm) 

-999 

-3,289 

Exports ($m)_ 

9,824 

11,375 

Imports (Sm) 

14419 

17.597 

Trade balance (Sm) 

-4,695 

-6.222 

MAIN TRADING 

PARTNERS (%) 4 

Exports 

Imports 

US — 

40.0 

18.7 

Japan. — ... 

19.7 

23.7 

Germany 

6.4 

4.3 

UK .... 

3.7 

2.4 

rc 

17.9 

124 


* Annual % Increase in Manila composite at December 31. 
t Government finances exclude grants received and other 
lending. 

A Main trading partners % share by value in 1992. 

Source: IMF, World Bank, Datastraam, BU. 


August 1992, the government 
allowed the free flow of foreign 
exchange and gold, and 
removed the requirement for 
exporters to remit foreign 
exchange revenues to be sold 

only to Manila hanks 

These have since been 
relaxed further, by raising to 
S3m the nmimum amounts 

that Philippine residents may 
buy from local hanks tor invest- 
ment abroad. If secured from 
sources other than banks, a res- 
ident may take out any. amount 
of foreign exchange. .... 

Also lifted were restrictions 
on the flow of funds into and 
out of the local capital markets, 
which helped bolster the level 
of foreign participation in the 
stock exchanges. 


In July 1993, a new central 
monetary authority, the 
Bangko Sentral ng Pilipinas 
(Central Bank of the Philip- 
pines) was established after the 
old central bank had ceased to 
be effective in its tasks of stabi- 
lising inflation and the 
exchange rate, owing to heavy 
losses incurred from mlsman- 
agement during the Marcos 
administration. 

Mr Gabriel Singson, the 
Bangko Sentral governor, listed 
the following as the monetary 
agency’s principal accomplish- 
ments in its first yean 
■ Inflation has been reduced to 
74 per cent in 1993 from 8.9 per 
cent in 1992. It rose above 10 
per cent briefly in early 1994, 
but slowed to about 94 per cent 



by mid-year. It is targeted to cent of annual exports in 1993, 
fell further to 84 per cent by compared with a crippling 90 
end-1994. per amt at the height of the 

■ The overall balance of pay- focal foreign exchange crisis in 

men to has consistently 1983435. Most of the country’s 
reflected a surplus, which at foreign exchange obligations, 
the end of the 1994 first quarter are now to bilateral creditors 
was $6l6m. (39-4 per cent) and multilateral 

■ International reserves have sources (224 per cent), with 
risen steadily. At the end of only about 13.7 per cent owed 
July, they- were estimated at to commercial banks and other 
$7.74bn, equivalent to nearly financial institutions. 

four months' Imports. The biggest obstacle to eco- 

■ The exchange rate has been nomic recovery, the chronic 

largely stable, with fluctuations budget deficit, is also being 
noted during an escalation in tackled more decisively, accord- 
debates on whether the local Ing to the fiscal managers. In 
currency should be devalued, the first seven months of this 
By July, the peso was actually year, the government recorded 
6 per cent Higher against the a surplus of 7.4bn pesos; and it 
US dollar. projects - that this can be sus- 

■ Interest rates declined, with tained until the year-end. If 
the closely watched 91-day that materialises, it wifi be the 
Treasury bill rate falling below first budget surplus in over two 
10 per cent in early August for decades. It will also bolster the 
the first time in many years. A budget proposal for 1995, now 
reduction in the reserves being scrutinised in Congress, 
requirement cm bank deposits, which projects a surplus of 
from 20 per cent to 17 per cent 154bn pesos. 

on August 15, resulted in a However, overall public sec- 
drop in bank intermediation tor spending, covering both the 
costs that pulled down lending national government and the 
rates. state-owned corporations, is 

Above all, through a variety still expected to show a deficit 
of debt-reduction measures pur- in 1995, this is forecast to level 
sued ova the past five years, off at 1 per cent of GNP, from 
the country’s debt service bur- an estimated JL2 per cent this 
den had gone down to 194 per year. 


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'•%■■ Politics: Mr Ramos is gaining confidence in his use of power, says Jose Galang 


Democracy heals divisions 


Amid bickering between 
diverse political groups, Mr 
Eidel Ramos, who won the 
presidential election in May 
1992 111 a held of seven candi- 
dates, has mustered broad sup- 
port for a reform-oriented eco- 
nomic programme. 

^He has pursued a reformist . 
agenda under a dembcracy 
an. exception among tfw ^ 
AMau “economic tigers” bred 
odder authoritarian forms of 


lower insurgent activity in 
2993. 

As nfrmg fh of thp com- 
imxmgts declines, doe partly to 
the improving economic cccodi- 

tiansjathome andthe growing 
irrevelance of communism 
abroad. conflicts rack the ded- 

wiatoH forces of Sw» ' phfHjyjna 
rebels'. In fhi« situation, the 
government has. been able to 
drhwe tap i-mrtTnirfriirf leaders/ 

Kving in exile in the Nethar- 


Talks between the govern- 
ment and the Moslem groups, 
late last year in -faiwTfn, hare 
Jed to an agreement to con- 
tinue the dialogue, even 
though violations of the truce 
have occurred occasionally in 
recent months. 

Meanwhile, the ultra-right 
rebels, after the attempted 
coup d*6tat in late 1889/ have 
broken up. reportedly into at 
least four groups. Some of the 


jMr Ramos .declared soon 
aftsf taking office * W r . after 
the country's traumatic experi- 
ence with authoritarian rule 
. (under former president Ferd- 
inand Marcos), his administra- 
tibn. would try to duplicate the 
neighbouring countries’ suc- 
cess stories. blit with a demo- 
cratic government that would 
attempt to reconcile the often 
unwieldy -political culture with 
an oligarchical economy. 

That the economy has grown 
substantially since he took 
over indicates that his strategy 
is on course. However, the 
wide gap between rich and 
poor, a raucous compilation of 
politicians often guided by 
material rather than ideologi- 
cal aims, and widespread' cor- 
ruption in the bureaucracy 
remain formidable obstacles to 
the Samos gover n ment’s pro- 
gramme. 

These problems have been 
fodder for the local communist 
insurgaicy and its right-wing 
counterpart; though, with a 
programme that appears to 
have succeeded in dividing rad- 
icals and moderates within the 
rebel movements, the govern- 
ment has been able to slow 

tlwrir iwumMitimi 

Since the passage of a law 
early in the Ramos term, 
which legalised the Commu- 
nist Party of the Philippines 
(CPP),. its size has dwindled 
owing to attrition and the 
reduced attraction of joining 
the movement From more 
than 25,600 armed regulars in - 
1986, the communist ranks had 
shrunk to some 7,500-8,000 by 
1993. The number of v iolen t 
incidents involving the. CPFs 
armed unit the New People's 
Army, had also, stumped foam 
about 3,600 in 1989 to about 
L500 in .1993: With the creep-. . 
ticm of one area In northern 
Mjwdnnan all regidns In 'the 
country registered sharply 


landSi.fo the negotiating fable. ‘ leaders, have been recruited to 
•• Hifa i fatriftn ~hae ^ angiaM tiie political parties, with a few 


to weaker conunnolst fronts in 
the labour sector. Left-wing 
mDftants were able to. Instigate 
strikes with impunity nearly a 
decade ago, but their appeal 
has largely 
worn off. Last 
year, the num- 
ber of strikes 
was down to 
121 from 182 in 
1991, with the 
number of 
workers 
involved down 
by by 2Q/W0 to 
35,000. 

The - peace 
negotiations 
are expected to 
continue - the nrwAMRamoi 


.continue - the IVnuM irtRanog *nota parted 
decline in the democracy, but R works for us* 
communist 

ranks. Mi li ta r y officers believe uiant* as “c 
that the omartafprt movement ment” an 
can only be enable npw of 11m- protection.” 
ited terrorist actions in urban . Mr Ramos, 
centres, though these can have butes most 
jarring effects an the business nomic devel 
sector.. brnkfing.” . 

. Moslem secessionist groups The task 
in the southern island of Min- internal seci 
- danao have also, been partici- fight* agains 
paring in peace dhdogues with be turned c 
the government A ceasefire pine Natloj 
expeded soon, to be supervised though thi 

hy the Qf garnignHfvn nf fehmift delayed by 

Cahta reaCe through Tmtmwaaj levels, indie 
could set the scene for a gov- sen sitiv ity, 
eminent hfittnii im to end the Thereceuf 
20-year conflict. . Mr Ramos’s 

The two : main Moslem the Lakas-I 
g roups, thedfor o -N ationa l rjh . Christian E 
eration Front and the More NTJCD). witl 
Islamic Liberation Front, are sition party, 
gaM ta hBTO n cnmMwri aniwd ratikong Pfl 
following^ . over 18,300. A the Demoa 
third group, foie extremi st Aba • intended n 
rSayyaf.bas become more idea- each group’j 
tiffed with kidnap and extra-- elections fo 
turn activities; however, and a though it 
government offensive on its * .exploited by 
mafri camp in July was istration tt 
l^eved to have severely crip approval fr 
pled-'ife ' strength. under its reft 


even fielded as candidates in 
foe 1992. elections for Congress 
seats. None won any of the 
national positions, but a few 
were elected at local-govern- 
ment level. 
_ More of the for- 
mer military 
rebels are 
being groomed 
for the 1995 
elections. 

As these 
favourable 
developments 
ease the 
demands on 
the military, 
the armed 
forces have 
: Viet a perfect begun to take 

t works for us* on such eso- 

teric assign- 
ments as “community develop 
ment” and "environment 
protection." These, accenting to 
Mr Ramos, “possess the attri- 
butes most conducive to eco- 
nomic development anil nation 
building.’' 

The task of. maintaining 
internal security, including the 
fight* against insurgency,* is to 
be turned over to the Fhlfip 
pine National Police (PNP), 
though this move Is being 
delayed by debates at various 
levels, indicating its political 

sensitivity. . 

The recent affiance forged by 
Mr Ramos’s ruling coalition, 
the Lakas-NationaL Union of 
Christian Democrats (Lakas- 
NTJCD), with the largest oppo- 
sition party, Tahan Ti g T hwnnlr- 
ratikong Pffipino (Struggle .of 
the Democratic Filipino), is 
intended mainly - to bolster 
each group’s bid fin the 1895 - 
elections for Congress seats; 
though it could also be 
exploited by tfa Ramos admin- 
istration to secure speedy 
approval fra- priority bills 
under its reform agenda, before 


the election eawqmi gn starts in 
earnest early nest year. 

fo the Senate, many of the 
g ov ern ment’s legislative initia- 
tives have had . a rough .time. 
The national budget has in 
recent years been put through 
the wringer, after .speedy pas- 
sage through the Souse of Rep 
resentarives. 

In December/.' when Mr 
Ramos learned aifout drastic 
reorientation of certain financ- 
ing programmes, he hntiatted 
discussions oar a shift in the 
present 'presidential system of 
gov e r nm ent, with a bicameral 
legislature, into a unicameral 
body, The initiative died after 
wide public disappro v al of the 
plan, which was seen as a ploy 
to return to authoritarian rule. 

Since then, he has resorted 
to frequent direct dialogues 
with members of the two 
chambers to get his priority 
h ill* moving. The excruciat- 
ingly long process on the 
Expanded Value-added Tax 
proposal is an example of how 
that type of partnership could 
be made to work. 

Sceptics fear that the Laban - 
Lakas alliance could deepen 
the wedge already separating 
various fiurHpn* 1 In 

many parts of the country. 
And with local tend- 

ing to be more emotional, some 
analysts are worried that the 
1995 elections could be accom- 
panied by violence. 

Nevertheless; Mr Ramos 
appears to have gained more 
confidence in his use of politi- 
cal power, unlike his predeces- 
sor's awkward , hold on the 
reins. He has been able to 
prove that democracy can actu- 
ally avoid constitutional grid- 
lode and pursue reforms, some 
of which require politically 
unpleasant policies. His pri- 
mary concern now is to craft 
"a level of political will and 
national capacity” to spur his 
nation towards sustained eco- 
nomic growth. 

"Our democracy is far from 
perfect,” Mr Ramos has 
acknowledged, "but it works 
wdTenUugh for us to be able to 
move it away from the politics 
cl pafrbnage, guns, goons and 



The church InHtated a protest rafly in M anna, attended by hundreds of thousands of sympathisers 


Population growth has divided government and church . 


Compromising for Cairo 


r 

If he can achie ve that, the 
Philippines could become a 
new model for modernisation 
in a region off strongmen and 
garrison states. 


This summer’s flare-up in relations 
between the government and the Philippine 

Pftman fiaHinHi* ri lTITVfr W&S bound to fmp- 

pen eventually. 

In a desire to show that overall economic 
growth Is actually toachfog the lives of its 
6&5m people, the government has sought 
to slow tiie population growth rate. 

At the rate of expansion that was run- 
ning at SL&&4 per cent when the Ramos 
administration took over, population 
growth was an obvious priority, tt set ont 
to reduce the figure to less than 2 per «**it 
by the end its six-year term. 

High population growth has been iden- 
tified as one reason why the Philippines 
has remained a laggard in a region off rapid 
economic region. Since 1980, for instance, 
the economy has recorded a net growth of 
only about L5 per cent, while the rest off its 
n ei ghb our s live in prospe ri ty. About half off 
the Pfaffipphie population is wthwH to 
live in poverty. The government hopes to 
cot that to 30 per cod by 1998. 

In its medium-term plan, it has declared 
a family- planning programme as a key 
component of its “health, nutriti on, and 
family planning services”. Herein lies the 
heart of the conflict 

In contrast to the laid-back response of 
Us predece s sor, Mr Fidel Ramos has pur- 
sued an aggressive population progra mm e 
that promotes the use off contraceptives. 
This has escalated over foe Ia£t few 
wwfHit, with gnv wmn ent commercials mi 
wHn «iwi television advocating the use off 
condoms, pills and other contraceptive 
devices. The campaign was recently wid- 
ened to include sex education among 
sdmoltiiQdien. 

Mr Ramos, the nrifippines’ first Protes- 


tant president in a predominantly (85 per 
cent) Catholic country, was apparently 
gaining some headway, since latest official 
e s timate showed that population g r ow t h 
in the first half of 1994 was about 2.1 per 
cent TUs, government estimates show, has 
led to an increase in percaptta output in 
the first halL for the first time since 1990. 

In late July, Cardinal Jaime Sin, Arch- 
bishop off Manila, issued a “letter to par- 
ents”, in which be accused the g ove rnm ent 
of a “destr u ct i ve" policy on population, 
including the promotion of abortion and 
tiie use of pornographic materials for sex 
education among riiiirirwi. 

The outburst was triggered by the gov- 
ernment's apparent support, church leaders 
said, for a document presented at this 
month’s United Nations conference on pop- 
ulation and development, in Cairo. . 

However, the govenmuut exp resse d sur- 
prise. Health nffirtat* said ft had not been 
promoting abortion or “sexual propa- 
ganda”, but b*wi been “providing natur al 
and artificial methods, but we rest tiie dem- 
skm on the woman, her reproductive rights 
mH hw dunces.’* 

Cardinal Sin asked the government to 
send to tiie Cairo conference delegates 
“with sane minds”, and to oppose moves to 
introduce abortion. While other church 
leaders have singled out the US as being 
hrfitnd moves to push abortion at the con- 
ference, the cardinal said: “Global forces... 
are poised to bombard our children . . . with 
reading materials and films contenting all 
sorts of pornographic, perverse and poison- 
ous sexual propaganda as part of their ’edu- 
cation’." 

The church followed up its harangue 
with a protest rally that drew hundreds of 


thousands (local press estimates put the 
size of the crowd at 1 million) to lambast 
the population programme and the govern- 
ment’s stand over the Cairo conference. 

Mr Juan Flavler, health secretary, has 
remained calm during the raging debate. 
He has also dropped tiie “pnvcholce" slo- 
gan in promo ti ng the various methods of 
fondly planning. He said he agreed with 
church leaders that “it was not the proper 
phrase to use cm such as sensitive Issue”. 

The debate has recently been joined by 
tiie Protestant United Church of Christ of 
the Philippines, where Mr Ramos attends 
Sunday services. It said that “women 
should have the power of choice” in such 
cases as rape or possible complicated deliv- 
eries. 

Another local denomination, the Iglesia 
Ffliphia fodependtente (Philippine Indepen- 
dent Church), has accused the Catholic 
leaders of “cBcfatorial” methods in promo- 
ting their objections to artificial family 
planning. “Supposed to be a defender of 
freedom, the dmrch does not allow its 
members to practise freedom,” complaine d 
Bishop Javier Gfl Montemayor, a former 

Catholic, who heads the independent 

-■ ■- 

entuen. 

Where tiie conflict will end remains 
unclear. But tiie MaKfausians in tiie Ramos 
government face their greatest dialiwip 
yet The CathoUc leaders and the govern- 
ment subsequently bad two meetings, 
winch reached agreement on a common 
jjfamJ apiirot abortion at the Cairo confer- 
ence- They also agreed to tackle the PhiHp- 
pine population issue itself after the UN 
gathering. 

Jose Galang 










THE PHILIPPINES 4 


FINANCIAL TIMES MONDAY SEPTEMBER 12 1994 





-W-V Jnr * 








^•-VA-.iufr r^r( * Tf* 





The Bangko Sentral ng P ffi pw taa has recorded a strong rise in foreign investments 


Jose Galang reviews a more stable finance and banking sector 

New rules bring benefits 


Liberalisation of the Philippine 
financial sector - including the law 
introduced in May 1994. allowing the 
entry of more foreign banks Into the 
country - bas encouraged innovation 
and enhanced competitiveness of the 
local banking system. 

“The move is part of this overall 
drive towards globalisation, which our 
local banks have consistently wel- 
comed, because we have envisioned 
that the Philippines' economic future 
depends on being part of the interna- 
tional business community,'’ says Mr 
Rafael Buenaventura, president of the 
Bankers Association of the Philippines 
(BAP), which groups the country’s pri- 
vate commercial banks. 

However. local banks, during the dis- 
cussions on the banking liberalisation 
measure, have persistently called for a 
level playing-field, which includes the 
application of uniform rules on capital- 
isation and performance standards for 
both the existing b anks and newcom- 
ers. 

The local hanks have also called for 
reciprocity in the grant of benefits to 
the foreign banks. Pushed by Mr Buen- 
aventura. the proposed reciprocity is 
intended to provide a bar gaining tool 
for the Philippine banking sector’s own 
efforts to penetrate foreign markets, 
particularly when the economy shall 
have grown enough that local compa- 
nies will start expanding overseas. 

Not that the Philippine banks are 
uncompetitive. Since the first tentative 
signals from government to liberalise 
the economy at the start of this decade. 


they have been initiating their own 
moves to shape up. These have resulted 
in more stable institutions, compared 
with those in the early 1980s which 
easily wobbled when the economy ran 
into difficulty. 

Proof of this, says Mr Gabriel Sing- 
son, governor of the Bangko Sentral ng 
Pilipinas, the central monetary author- 
ity, is the banking system's ability to 
withstand severe crises, such as the 
recent scam in the trade of government 
securities in the secondary market that 
also involved a few commercial banks. 
The central bank had to make emer- 
gency financial assistance to these 
banks which were hit by runs on depos- 
its. 

The damage, it turned out, was lim- 
ited to the few banks and investment 
companies that got entangled in the 
scam. Owing to strict rules previously 
instituted by the monetary authority 
for banks involved in such types of 
transactions, the system emerged from 
that episode with only minor bruises. 
Even the banks that required emer- 
gency loans have started repaying 
Bangko Sentral. 

The Philippine financial sector is 
actually composed of a grand total of 
9,937 institutions, although commercial 
banks, numbering 33 with a nationwide 
network of 2,580 brandies, dominate. 

The commercial banks, at the end of 
1993, had total resources of 864bn pesos 
($38m), or 65 per cent of the total assets 
of the entire financial system. The com- 
mercial hanks also accounted for 87 per 
cent of total deposits of 639bn pesos. 


which remain the largest sources of 
cash for the banking sector. 

There are four foreign hanks operat- 
ing full-service branches in the Philip- 
pines. These are Bank of America, Citi- 
bank, Hongkong and Shang hai Ranking 
Corporation, and Standard Chartered 
Bank. They were already doing busi- 
ness in the country when the General 
Ranking Act, which closed the industry 
to foreign groups, was adopted in 1948, 
and so were allowed to remain. 


Local banks have called for 
reciprocity m the grant of 

benefits to the foreign banks 

Also operating in the Philippines are 
17 offshore banking units (OBUs), 
which in 1993 had total assets of 
$1.57bn. including lendings of 8568m. 
The OBUs" business volume has been 
declining over the past few years. 

Since the removal of all controls on 
foreign exchange current transactions 
in 1992 and on the opening of new 
branches in 1993, the domestic commer- 
cial banks have actively skewed their 
services and products to catch the 
expected gains from the liberalised 
environment Technology advance- 
ments also heightened the competitive 
atmosphere. 

These factors, according to Mr Buen- 
aventura, "have combined to generate a 
marketing revolution that is pushing 
traditional banking into oblivion. Com- 
petition - already very keen - contin- 


ues to intensity.’’ 

Current features of the local banking 
system which, according to Mr Buen- 
aventura, have “fortified their armada 
of innovative products and services”, 
include: 

■ The local banks operate a widely dis- 
persed network of automated teller 
mnrTdwpg (ATMs) that now totals 1,500 
stations nationwide. Some of the ATM 
cards are linked internationally, 
enabling the Philippine depositors to 
access their peso and dollar accounts at 
home and abroad. 

■ Banks have also developed new ser- 
vices to to catch some of the huge 
remittances of Filipino overseas con- 
tract workers, which now amount to an 
estimated 2.4bn pesos annually, com- 
pared with 6Q0m pesos five years ago. 
Philippine banks have either opened 
remittance centres abroad or estab- 
lished links with correspondent banks. 

■ In the battle for savings deposits, the 
banks have devised new accounts that 
offer yields of up to 10 and 1 2JS percent 
on certain tniwimnm amounts - way 
above the 4-6 per cent interest rates on 
ordinary savings accounts. 

At least 28 foreign hanks have applied 
for the 10 slots allowed for wholly for- 
eign-owned operations under the bank- 
ing liberalisation law. However, those 
who fail to make the cut may still come 
in as co-owners, of up to 60 per cent, of 
existing domestic banks. 

The im plementing mies drafted by 
the Rang kn S entr al for the banks’ entry 
were, by end-August, being scrutinised 
by Congress. The rules are expected to 
be formalised and the foreign banks 
that will come in should be known 
before the end of 1994. 

A concern in the hanking system is 
the high cost erf intermediation. Owing 
to high reserves requirements on bank 
deposits, a gross receipts tax on bank 
lendings, and mandatory allocation of 
portions of their tending s for agricul- 
tural and agrarian reform programmes 
of the government, the hanks find it 
necessary to pass on the added costs to 
their clients. 

The high yields on treasury bills, as 
the government continues to tap the 
local capital markets to finance its bud- 
get Shortfalls, also push commercial 
lending rates up. 

Until August 15, when Bangko Sen- 
tral reduced the required reserves from 
20 per cent to 17 per cent of deposit 
levels, domestic interest rates hovered 
between 17 and 21 per cent While these 
rates have attracted foreign portfolio 
investments in sizeable amounts (which 
have propped up the peso), they have 
also limited access by local users of 
capitaL 

The August 15 reduction in the 
reserves level has already pulled down 
treasury bill rates. leading commercial 
hanks have also cut their prime lending 
rates to around 13 per cent, from about 
15 per cent previously. No further sub- 
stantial declines are expected, however, 
as monetary a uthorities continue to be 
concerned about possible infiationary 
effects of such a move. 


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The pace of trade and investment is increasing 

Asian neighbours 
display interest 


Even daring the darkest days 
of the genera] slowdown in the 
P hilippine nmnnBiy in the mid- 
1980s, visitors to the country 
could not help noticing the 
brisk business at restaurants 
and shopping centres. Con- 
sumer sp ending had remained 
buoyant, adHuung h the official 
gross national product was 
contracting. 

Economists attribute this to 
the extensive “underground 
economy” that had sup po rt ed 
millions of Filipinos daring 
times of a dv e rs ity, and to the 
ever-rising remittances from 
overseas workers who had 
sought jots in North America, 
the Middle East and other 
Asian countries for lack of 
opportunities at home. 

ft has been these remittances 
that have consistently made op 
for the slow domestic economy 
over the past few years. In 
1993, for instance, while GDP 
increased by only L7 pm* cent, 
a 27.5 per cent rise in the 
income from abroad pushed up 
tiie overall GNP expansion to 
23 per cent 

This was still evident from 
the economy’s first-quarter 
.record. While GDP rose by 33 
per cent, income from abroad 
expanded by 44.7 per cent, 
which boosted the period’s 
overall ©IP growth to 43 per 
cent from the year before. 

The point of all this is that 
the Philippine economy can 
rely on an underlying strength 
that could see it through diffi- 
cult times. The improving mac- 
roeconomic fundamentals, as 
such, can only mean that inves- 
tors may expect big gains as 
the economic growth gathers 
momentum. 

With, the 23 per cent GNP 
growth in 1993 came a 93 per 
cent increase in revenues and 
22 pa- cent leap in profits of 
the country’s 5,000 largest cor- 
porations. The declining trend 
in the overall cost of doing 
business (slower inflation, 
tower interest rates and stable 
exchange rate), therefore, 
should the Philippines an 
attractive area for investment. 

In the first half of 1994, the 
number of business plans regis- 
tered for ince nt ive s with the 
Board of Investments (BOD 
readied 327 - an Increase of 32 
per cent over last year. These 
projects were estimated to 
require total costs of 23931m 
pesos <$9bn>, higher fay 449 per 
cent than last year, of which 
over SOJibn pesos wlS be in the 
form of direct equity from the 
investors. 

in terms of actual foreign 
investments brought into the 
country, the Bangka Sentral ng 
Pilipinas, the country’s central 
monetary authority, registered 
a total at 8556mm in the first 
three months of 1994 - a giant 
leap over the 9188m in the 
same period last year, mainly 
due to a 9502m remittance 
made by the Snwti Arabian (hi 
Co for its newly acquired 40 
per cent holdings in Petrou, the 
country's leading ofi company. 
This, along with the steady 
stream of foreign investment 
missions visiting the country, 
has led Mr Rlzafino Navarre, 
the trade and industry secre- 
tary, to believe that the Philip- 
pines has now been “promoted 
to the shortest of attractive 
investment rites* in Aria. 

More significant, according 
to Mr Herman Montenegro, 
president of the Philippine 
Chamber of Commerce and 
Industry, has been the big 
increase in the amounts rein- 
vested by foreign companies 
already ope ra ti n g tn the coun- 
try. Behind this trend are gov- 
ernment efforts towards the 
fiberalisafian and globalisation 
of the ec o no m y, be said. Imple- 
mentation of the Foreign 
Investments Act (FIA) of 1991 
allowed up to 100 per cent for- 
eign ownership in any export 
enterprise and in a range of 
activities for the domestic mar- 
ket 

A provision in the FIA, 
which limits foreign ownership 
In certain industries. Is due to 
expire in October, winch will 


further open up the economy to 
foreign capitaL Among these 
areas are: life and non-life 
insurance, travel agencies, 
tourist lodging houses, and 
convention and conference 
organising. 

The only areas that will 
remain closed are those listed 
in the constitution and in spe- 
cific laws. They include the 
media, services involving 
licensed professionals, small- 
scale mining , marine-resources 
utilisation (except in deepsea 
fishing), retail trade, rice and 
corn production and trade, co- 
operatives, and private security 
agencies. 


In recent months, big 
Japanese groups have 
signified their intention to 
move into the Philippines 


While the increase in the 
amounts coming from Aslan 
countries has set the pace for 
overall growth in foreign 
investments in recent years, 
the US and Japan remain the 
largest foreign investor groups 
in the Philippines. 

Investments from Japan are 
expected to grow significantly,, 
given that it remains the Phi- 
lippines’ largest source of offi- 
cial development assistance. 
For this year, for instance, of 
the $23bn pledged by the coun- 
try's traditional aid donors, 
Japan accounted for $13bn. 

The department of trade and 
industry has noted the change 
in Japanese investors* percep- 
tions of the Philippine invest 
meat climate. During the Japa- 
nese investment flows into 
Aria in the 1980s, the Philip- 
pines was at the bottom of the 
list, owing to political uncer- 
tainties in the country at the 
time. 

In recent months, big Japa- 
nese groups have signified 
their Intention to move into the 
Philippines. Among the compa- 
nies that have proposed major 
investments are Hitachi, which 
is planning to put up a 9300m 


INDEX OF FT SURVEYS 

January 1992 - December 1993 


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 
f^ade payable to Financial Times to: 

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disk-drive plant, and Matsush- 
ita, which is patting In an addi- 
tional 550m pesos Into its 
appliance manufacturing oper- 
ation in the Philippines. 

Investors from the US have 
also started to change their 
view of the Philippines since 
the cooling of relations follow- 
ing the 1992 departure of 
American military forces. In 
the first six months of this 
year, US investments registered 
with the BOI amounted to 
2.77fan pesos, the second-largest 
after 7.58bn pesos by Hong 
Kong investors, and a sharp 
increase from 463m pesos In 
tiie period last year. 

Mr John Negro ponte, US 
ambassador to Manila, has 
noted that US companies have 
been staying away from the 
Philippines owing to "outdated 
perceptions” about the political 
and economic climate in the 
country. 

“There have been a lot of 
opport un ities developed fin the 
Philippines] for American busi- 
nesses in recent years,” Mr 
Negroponte said. Foremost 
among these opportunities, he 
added, were in infrastructure. 
Including eneigy, telecommuni- 
cations, roads, ports and air- 
ports. 

Qne US company that had 
recently chosen the Philippines 
as the site for new investment 
is Quaker Oats, with a 150m 
pesos manufacturing project 
The decision to locate in the 
Philippines was reached after a 
survey of available facilities 
and incentives in the region. 

Mr Phil Marineau, Quaker 
Oats president said during a 
visit in July that the Philip- 
pines had been considered as 
“one of [the company’s] lead 
investment areas in Aria” and 
that “further investments in 
the Philippines can be expected 
in the near future.” 

If the country continues to 
gain the confidence of investors 
in this manner, it may ftfr * up 
with the rapid-growth econo- 
mies of Asia sooner than expec- 
ted. 

Jose Galang 





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American International Group, Inc., Dept. A, 70. Pine Street, New York, NY 10270. 







FINANCIAL TIMES MONDAY SEPTEMBER 12 1994 


THE PHILIPPINES 6 


Nikki Tait on the stock exchange’s latest challenge 


Tested to the limit 


Officials at the Philippine 
Stock Exchange did not try to 
conceal their nervousness over 
the impending market debut of 
Petron, the country's largest 
oil refining and marketing 
company. 

The shares started trading 
last Wednesday. The lObn 
pesos (US$3S0m) initial public 
offering, involving 20 per cent 
of the group's equity, had 
prompted unprecedented 
demand from private investors, 
with a record number of indi- 
viduals getting share allot- 
ments. 

Going into the Petron 
launch. Mr Eduardo de Los 
Angeles, president of the PSE. 
warned that trading facilities 
would be tested to their limit 
He was correct; and heavy 
trading in the Petron stock 
drew attention away from 
other blue-chips, leaving the 
market lower overall. 

The price rose 136 per cent 
on the first day, above the offer 
price of 9 pesos, to 21.25: and 
continued up to 22 pesos on the 
second day of trading. 

Up to that point, the PSE 
could handle around 20,000 
trades a day. Mr de Los 
Angeles reckoned that around 
600,000 individuals would end 
up with entitlements to Petron 
shares, and that perhaps 10 per 
cent would seek to trade on. or 
shortly after the launch. The 
PSE was forced to upgrade 
systems to handle the volume. 

The Petron experience says 
much about the Philippines' 
stock market which promises 
much but only partially deliv- 
ers. Yet the extent to which 
the share market has already 
developed should not be under- 
estimated. A few years ago, 
trading was split between two 
exchanges - the old-estab- 
lished Manila stock exchange, 
which began life in 1927, and 
the upstart Makati stock 
exchange, based in Manila’s 
main business district and 
formed in 1965. Rivalry 
between the exchanges meant 
that turnover was low on both 
and, with different trading 
floors, there was plenty of 
scope for rather dubious arbi- 
trage between the two mar- 
kets. 

This, coupled with the 
nation’s political turmoil, was 
enough to deter foreigners 
horn using either. Much of the 


trading in larger Filipino 
stocks - like Philippine 
Long-Distance Telephone 
(PLDT) or San Miguel the 
brewery group - took place on 
overseas exchanges, such as 
New York's Nasdaq or the 
American Stock Exchange. 

It took a heavy political pres- 
sure to unify the two 
exchanges. But In 1992, agree- 
ment on a single structure was 
reached, and in March 1994 the 
two separate licences for the 
Manila and Makati Exchanges 
were withdrawn. 

In part, the unification prob- 
lem has been technical. The 

Indices 


and grant funding is due to 
come from the US Agency for 
International Development. 
The aim is to have the new 
system up and running by mid- 
1995. 

Regulation Is another prob- 
lem. The PSE plans to bolster 
its own surveillance systems 
this autumn. Advice, it says, is 
coming from the New York 
Stock Exchange. Already, In a 
market which tends to be 
driven by rumour, there are 
regulations which allow the 
PSE to halt trading in any 
stock which rises by more than 
50 per cent in a day, or falls by 


Rebased 



1990 91 82 83 84 

aourott? OM M ueam 


two exchanges had installed 
different computer systems, 
and there was difficulty in 
Interfacing them, so that 
orders could be sent from one 
to another and a common price 
for all stocks established. 

Mr de Los Angeles admits 
that, even now, the communi- 
cation links do occasionally 
break down, with the result 
that different prices can still 
emerge. However, he says that 
PLDT has promised to install a 
fibre-optical cable, if possible 
before the end of the year, 
which should solve this prob- 
lem. 

Even so, the stock market's 
infrastructure difficulties will 
not be at an end. The clearing 
system, and brokers' back-of- 
fice administration facilities, 
are woefully inadequate. They 
were hard-pressed to cope with 
the boom in business which 
occured in the last quarter of 
1993, and events like the 
Petron offering will renew the 
pressure. Plans to install a 
new, computerised clearing 
system have already been laid. 


40 per cent in the same time 
period - powers which it has 
been exercising recently, to the 
surprise of some observers. 

However, while supervision 
is the responsibility of the PSE, 
prosecution of offenders falls 
to Securities Exchange Com- 
mission (SEC), and this 
remains one the least respected 
of Filipino regulators. 

These caveats notwithstand- 
ing, there are clear signs that 
the Philippine stock market Is 
growing up. Privatisations 
have widened the range of 
stocks available. The sudden 
surge in share prices in late 
1993, which caused the Philip- 
pines to become the region’s 
best-performing exchange last 
year, also encouraged a num- 
ber of local companies, often 
family-owned, to float in pur- 
suit of new capital 

Although the market's 
retreat earlier this year caused 
a few prospective issuers to 
back off, few observers think 
this will be a permanent 
retreat "It's probably more of 
a postponment," says Mr 


George Uy-Tioco, president of 
Philippine Asia Equity Securi- 
ties. “Why sell at nine or 10 
times earnings, when you may 
get 15 times if you wait ?” 

Indeed, the SEC calculates 
that the 13 initial public offer- 
ings which were launched last 
year, raising 15.8bn pesos, were 
easily topped by the 17 issues 
which occured during the first 
six months of 1994. These, it 
says, raised 19.1m pesos, or 
120.9 per cent of last year's 
amount That moreover, was 
before Petron. 

Perhaps the biggest question- 
mark is whether international 
interest in Filipino stocks will 
persist If political or electoral 
pressures mean that Ramos 
regime is obliged to adopt a 
"holding pattern” on the eco- 
nomic front and western coun- 
tries pull out of recession, 
causing their own stock mar- 
kets to rise. 

It has been calculated that 
around US$2 bn of International 
fund-management money may 
have poured Into the Philip- 
pines in past 18 months. But 
local brokers are aware that 
this could quickly be attracted 
by higher or safer returns else- 
where. 

One factor which may have 
some bearing on the strength 
of overseas interest is the issue 
of "A” and “B” shares. In an 
effort to retain local control of 
key assets, the Philippines 
constitution requires that at 
least 60 per cent of certain 
companies, especially in the 
natural resources area, be held 
by Filipinos. In the past 
companies satisfied this 
restriction by dividing their 
ordinary share capital into “A” 
shares, to be held exclusively 
by Filipinos, anri “B” shares, 
open to both Filipinos and 
foreigners. 

The problem has been that 
“B" shares have tended to see 
more demand, relative to the 
tighter supply, and have traded 
at higher prices. Ms Rosario 
Lopez, chairman of the SEC, is 
emphatic that her organisation 
would like to see this distinc- 
tion disappear. It is not approv- 
ing any new issues which 
incorporate this two-class 
share structure, she says. 

According to Ms Lopffi, com- 
panies can still meet their con- 
stitutional obligations by moni- 
toring their share registers, 
and barring foreign buying 
when the 40 per cent level Is 
about to be breached. However, 
Mr de Los Angeles is not so 
confident. “It’s very difficult to 
monitor," he warns, “and only 
possible with the right equip- 
ment”. 


The privatisation programme is almost complete, writes Jose Galang ^ 

Manila Hotel awaits a partner 


The Philippine government 
will soon be winding down its 
privatisation programme. 
Since its start in 1987, sales of 
118.5bn pesos ($4.5bn), have 
been generated, including 
nearly 35bn pesos from foreign 
investors. 

The biggest of these was the 
recent sale oF 60 per cent of 
Petron Corporation, the 
nation’s leading oil company. 
Saudi Arabian Oil Company 
(Aramco) acquired 40 per cent 
for 14.71m pesos in a public 
bidding, while 20 per cent 
raised 6-8bu pesos via a public 
offer of stocks. 

Eighty-two other govern- 
ment corporations and 314 
varying assets have been dis- 
posed of, according to latest 
records. In 1986, the govern- 
ment slated for privatisation 
130 corporations, out of 301 in 
its roster, along with 419 
assets (mostly “non -perform- 
ing”) transferred by govern- 
ment financial institutions - 
Development Bank of the Phi- 
lippines (DBP) and Philippine 
National Bank (PNB) - to the 
national government 

According to current plans, 
sales of assets worth 78bn 
pesos over 1994-96 will com- 
plete the privatisation pro- 
gramme. Of this, 45bn pesos is 
targeted to be earned this 
year, including the Petron 
sell-off. 

Two other big items expec- 
ted to go on the auction block 
this year are the state's 51 per 
cent holdings in National Steel 
Corporation, at an asking 
price of 7.5bn pesos, and a bloc 
of shares In Manila Electric 
Company (Meralco), the power 
utility, estimated to be worth 
14bn pesos. 

The government is relying 
on proceeds from its privatisa- 
tion programme to help fin its 
fiscal gap, while new measures 
are being pursued “to generate 
more permanent sources of tax 
collections." This year, imple- 
mentation of the law expand- 
ing the value-added tax system 
was delayed by a suit filed 
with the Supreme Court by its 
opponents. Intended to raise 
additional collections of 8bn 
pesos this year, the VAT law 
was originally scheduled to be 
implemented on July 1. The 
Supreme Court issued a 
favourable ruling in late 
August, which paved the way 



Jewd In the programme: Manila Hotel wm.dwwhiww' 


for its implementation by 
October 1. 

For 1995, government sales 
of smaller holdings in PNB, 
Meralco and Philippine Air- 
lines (PAL) are targeted to 
yield I2bn pesos. PAL, the 
flagnarrier, was offered in a 
bidding in January 1992 at 
which a local consortium of 


giant corporation into smaller 
units that wifi divide its gener- 
ation and transmission 
operations. The smaller units 
should also be within reach of 
the prospective bidders. 

Last year, Napocor reported 
total revenues of 4l.79bn 
pesos, making it the second- 
largest Philippine corporation 


The government is relying on proceeds from 
privatisation to help fill its fiscal gap, while 
new tax measures are also being pursued 


major business groups won a 
67 per cent interest for some 
9.6bn pesos. 

Another big-ticket item, 
National Power Corporation 
(Napocor), which currently 
owns the bulk of electricity- 
generating capacity in the 
country, is being planned also 
for privatisation, although 
various details still need to be 
sorted out 

Principally, schemes are 
being studied to break up the 


In terms of sales, and total 
assets of 245bn pesos. 

A jewel in the privatisation 
programme, the Manila Hotel 
is also being offered for sale 
by the state-employees pension 
fund which owns it, the Gov- 
ernment Service Insurance 
System (GS1S). A public bid- 
ding next month will offer 
20-30 per cent of the 510-room 
hotel for a minimum, price of 
280m pesos. Thereafter, 
another 20 per cent will.be 


offered to GSIS members and 
hotel employees, and 3*15 per 
cent will be made available In 
a stock public offering. 

The winner in the bidding 
will become Manila Hotel’s 
“strategic partner", and be 
expected to provide marketing 
and management expertise 
and financial support for the 
institution, which has been 
experiencing declining reve- 
nues. Company officials 
blamed this on the prolifera- 
tion of new hotels in Manila, 
and to its lack of a viable 
international marketing net- 
work. 

This was the same strategy 
followed by Philippine 
National Oil Company, the 
state energy group, when H 
launched the privatisation of 
Petron. After getting a strate- 
gic partner through a public 
bidding, the company went on 
to make a public offering of 
shares. 

Petron ’s new partner, Saudi 
Aramco, has promised to 
assist in the oil company's 
expansion plans, and to 
develop it as an exporter of 
refined petroleum products in A. 
the region. Saudi Aramco is 
the world's largest producer 
and exporter of crude oil 

Petron, as a government cor- 
poration, has often been - 
slowed down by cumbersome 
government procedures on 
purchases, hirings, and even 
the opening of new retail pub- 
lets. As a majority private 
company, it may now be able 
to pursue initiatives without 
having to go through public 
biddings or long government 
audits. 

However, Petron 's privatisa- 
tion Is also in preparation for 
the eventual deregulation of 
the local oil industry. Domes- 
tic prices of petroleum prod- 
ucts are still fixed by the gov- 
ernment, although it has set 
up a fund on which the oil 
companies may draw when 
prevailing price ceilings result 
in losses for them. 

The government has com- 
mitted itself to the privatisa- 
tion programme as port of Its 
key structural reforms. 
According to officials, the pro- 
gramme not only results in 
additional revenues for the 
state, it also enhances the role 
of the private sector as the 
engine of economic growth. 



Only 

1 

Philippine port, 
Manila International 
Container Terminal, 
runs on the most 
stringent international 
standards. 


Because of 

f 

Company that 
works to make 
it happen. 

Driven by 

l 

corporate dictum 
to give efficient, 
excellent sendee. 


ICTSL 

World-Class Excellence, 
Nothing Less. 



International 
Container Terminal 
Service*, Inc. 


JCTST A d m in'inj iinn 
Manila Imcmnional Container Terminal 
MICT Sowh Attea Road, North Hobor 
Uuufat, FUEppmcs 
lUu (U2) 21US1 «o«l 
Fnc (432) 2480004 




A. SORIANO CORPORATION 

A PIONEER IN INVESTMENT AND MANAGEMENT 

7TH Floor, Pacific Star Building 
Sen. Gil J. Puyat Avenue Comer Makati Avenue 
Makati, Metro Manila 
Tel. No. 819-02-51 to 80 

MANAGED COMPANIES 

Atlas Consolidated Mining and Development Corporation 
Atlas Fertilizer Corporation 
Phelps Dodge Philippines, Inc. 

SUBSIDIARIES 

A. Soriano Aviation, Inc. 

Ansoor Consolidated Corporation 
Anscor Insurance Brokers, Inc. 

Anscor Land Management and Development Corporation 
Anscor Travel Corporation 
Provident Insurance Corporation 
Soriamont Steamship Agencies, Inc. 

AFFILIATES 

AB Capital and Investment Corporation 
AB Finance & Leasing Corporation 
Aboitiz Air Transport Corporation 
ACMDC Ventures Incorporated 
AFC Agribusiness Corporation 
AFC Prawn Corporation 
Anscor Hagedom Securities, Inc. 

Asian Bank Corporation 
International Container Terminal Services, Inc. 

Kagitingan Printing Press, Inc. 

KSA Realty Corporation 
Mindanao Container Corporation 
Monarch Insurance Corporation 
Seven Seas Resorts and Leisure, Inc. 

Stock Transfer Services, Inc. 

Ten Knots Philippines, Inc. 




fj 


4 




vu 



FINANCIAL.TIMES 


MONDAY SEPTEMBER 12 1994 


ih 


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THE PHILIPPINES 7 



% m m inadequacies that could 
ftreate n^the Philippines* economic 
growth, pe counfay has a poor record 

in construction and maint enance 
hugely because insufficient money 
«as available following the economic 
slowdown in the 1980s. 

■ Evm foreign toms, made available 
from traditional official creditors; 
could not be mobilised, for lack of 
(axmterpart. local fends. Although 
there have been some impt* lu mwih 
. meatfly, things are for from ideal 
..rOte sv g&ly at electricity, after the 
ftenetic activity to put up new gener- 
ating plants daring the past two' 
years, now slightly exceeds demand 
The new. capacity, however, rr*»**t* 
mainly of oft-fnefied power gbHmw 
that incur high costs. There is a 
strong need to bufld up new hagefoa! 
capacity to lower these costs and 
make the investment climat e more 
attractive. 

Telecommunications, although 
improving fast, still need to be 
upgraded. Telephone density in the 
country is stm L4 units per 100 inhab- 
itants, among the lowest in the region. 
V Main roads in metropolitan 
are .often clogged, stretching travel 
times for commuters and oommoual 
deliveries. For example, the 15-kflb- 
metre drive to Makati, the business 
and financial centre, from the out- 
skirts of the metropolis tabes between 


dose Galang describes a model remedy for infrastructural ills 

Contractors to the rescue 


. 00 and SO minutes. 

These problems are beyond the 
financial capahzhty, car even the - com- 
petence, of the government However, 
the solution could come from a 
scheme, i ntroduced three years ago. 
that involved the participation of the 
private sector -fax the construction of 
power plants. . . 

During tlm frequent disruptions to 
. the electricity supply in 199248 (when 
working capacity could meet only up 
to 60 per cent of demand, so that 
rationing was necessary), the govern-, 
meat invited privatesectar groups to 
put up within' short periods hew 
-power. stations under bufitteperate- 


been established - enough to cope 
with current demand Other projects 
under way, forhuffug - base-load facili- 
ties, bring total capacities contracted 
to' private groups to some 6J500MW, 
involving costs of at least $5bn. 

The awvB r of the programme has 
encouraged the government to widen 
its approach. Under the Philippine 
Infrastructure Privatisation Pro- 
gramme CPipp). the BOT system now 
applies to other areas: highways, 
ports, airports, canals, dams, water, 
supply, irrigation, telecommunica- 
tions, transport reclamation, xndus- 


Under tins concept private compa- 
nies are contracted to construct the 
finalities at their own expense: oper ate 
than after conruptetion for an agreed 
period, giving them an opportunity to 
recover their investment and. also 

malra a -profit; »wd than hand Owner- 
ship over to flxe g o v e rn m ent at . the 
end of the period. 

Through BOT, 14 fast-track power 
plants with a combined capacity of 
nearly i£60 megawatts have so for 


bofldmgs, tourism, slaughterhouses, 
warehouses, waste ma nage ment, 
information technology ng i w u/Tra and 
database in fr a stru c tu re, education 

and Tiaaffli ftndlftfae ly wamgp d r ai n - 
age and d rudging 

The Pipp, believed to be the first 
progra mm e of its kind in the world, 
has mada Philippines a model for 
BOT undertakings in Asia. It now 
offers various financial incentives for 
projects that »nM costs of over Un 
pesos ($3fen), with reasonable rates of 
return on investments. 


Among the biggest power projects is 

the 770MW Pagbilao piantj in Quezon 

province, southeast of Manila. Hope- 
well Holdings, of Hong yung , is under- 
taking the project through a BOT 
arrangement with National Power 
Corporation. It is likely to cost $973m, 
of which $235m will enny from equity 
. contributions. Apart from Hopewell's 
equity of $205m, contributions were 
? also " made by thp International 
> Finance Corporation, the investment 
arm of the World Wnnir the nftmmnn. 
- wealth Development Corporation, the 
UK’s overseas development finance 
instit utio n; and Asian Development 
Bank: 

To fanUo thp tetecannannlcatioua 
gap. meanwhile, the Philippine gov- 
ernment has introduced what it 
believes to be another world first ft 
divided the country into II service 
areas, tmA assigned thaa> to telecom- 
munications operators that were given 
specific per fo rmance targets. The pro- 
gramme atm* to increase the tele- 
phone density m about 6.7 units per 
100 inhabitants by the end of 
decade. 

Philippine T^in g Distance Telephone 


(PLDT) has been the dnmtnant tele- 
communications company in the 
country, accounting for S3 per cart of 
all telephones. However, it also has a 
huge backlog of applications, and 
receives many complaints of poor ser- 
vice and hue breakdowns. 

Tbe opening np of the sector started 
with the government's grant last year 
cf licences for the operation of cellular 

T nphfle tel ephone systems, With which 
PLDT was ordered to interconnect It 
also introduced the service-areas con- 
cept, to hasten the installation of new 
land Ifogfl 

To make the service areas attrac- 
tive, each was allotted a potentially 
profitable core in an urban centre - 
but also certain, depressed areas, 
untouched by economic progress 
because of poor communications- The 
programme re quir e s that 3001)00 land 
Wn/xi he built in area within the 
next five years. The operators were 
given two years to demonstrate prog- 
ress, or face cancellation of their 
grants. 

The huge costs of these projects 
have encouraged contractors to link 
up with foreign companies, either as 
inv est o rs or suppliers of equipment 
Consequently mnw* of the big 
in world telecommunications are 
involved in the Philippine p rogramme 

Meanwhile, PLDT is trying to elimi- 
nate its backlog. By 1986, it aims to 
have installed lm new lines in its 
franchise areas. 


T 


he notices stencilled in green 
paint on the lamp-posts in one 
Man i la suburb could belong to 
; any western city. “Keep GreenMDs 
dean and green," they read. 

The difference is that the adjacent 
rind consists of eight lanes of cars, 
buses, jeepneys (elongated Jeeps con- 
verted into mini-bases) and jugger- 
nauts - all caught in total gridlock 
and bddiing exhaust fames into the 
sultry heat 

Such situations are as much the 
norm as the exception in -Manila, 
where it can take an hour to move 
between neighbouring suburbs. The 
sight of drivers and pedestrians wean- 
ing nose-andmoofh m««h, or simply 
wrapping their faces with a scarf, is 
common. 

Air pollution, and associated respi- 
ratory problems, are just one of the 
country's intractable envir onmen tal 
problems. . Like many developing 
countries, the Philippines is torn 
between the desire to posh ahead 
industrial and eommerdul expansion, 
and the demands of its population for 
the most boric, of acceptable frying 
conditions. In the PhUippines’ case, 
these dances are made no easier fay 
the history , of public corruption; 
rapid population growth, which gets 
no discouragement from the domi- 
nant Catholic church; and past envi- 
ronmental neglect 

The fragility of the Pirittppines* ' 
core infrastructure adds a further 


Need progress damage the environment? asks Nikki Tait 

Foresters come under fire 


“Hie approach is not so confronta- 
tional now. . . It’s better that we are 
talking to them," comments Bene 
Hnr m nmriftifi, at tof Haxibon Founda- 
tion for the conservation of natural 


twist Many RUpinos c hee r ed when, 
on environmental . and safety 
grounds, the previous Corazon 
Aquino regime decided to mothball a 
nearly-completed nuclear power sta- 
tion. built by ' Westinghouse Electric 
at a cost of over film on the Bataan 
penisula. 

The dedrimt, in 1S86, was taken 
shor tly after the Chernobyl nuclear 
disaster, -twA parity justified in ttk 
context. “What happened in the 
Ukntfaie certainly did not help the 
cause of those who wanted to operate 
[tiie plant], . . Wa want our own peo- 
ple to be spared this tragedy," com- 
mented' one presidential aide. 

Neverthritts, a few years later, tills, 
decision was befog died as one of the 
key reasons for the .power crisis 
wfaidi sufitased the country. Today, 
debate continues to rage over a num- 
ber of proposed power ^Lant rites. 

On the urban front, Manila has 
some of the wont slums to Aria; and 
one environmental group has esti- 
mated that the seaJevri to the city's 
bay area has risen by about a metre 
over the past 40 years, due to the 
dumping of garbage and anting of 


the Pasig river. 

But the needs are no less acute to 
rural areas, where the incomes of 
about 70 per cent of families falls 
briow foe (low) poverty line. 

Ifnrji of thft inte rna tio na l < qvrfHg frt 

fcgg focused OS writw»n«p«nwn t of 
tiie Philippines’ forestry resource. 
This is a complex tale of exces s ive 
logging by both domestic and foreign 
interests, with efforts at curtailment 

imdwwinijil ty pnHHql iw i u j iHnn. 

The loggers' practices, in turn, have 
led to river sOtathm and landslides, 
and tins co mp o un ded the impact of 
natural disasters. 

Indirectly, environmentalists 
glutei, di» migmwnflpw^ Bi of the log- 
ging industry has contributed to 
thousands of human deaths. One 
activist puts tiie cost of sDtatian for 
avertogging at 4 per cent of gross 
domestic product, over a 20-year 
period. Efforts at long-term remedial 
action have had patchy results. 

But even the logging problem can- 
not really be isolated. Population 
pressure has been encouraging 
migration out of the lowlands up 
the bills, especially in Mindanao. 


However, many of these migrants 
tend to pursue unsustainable cultiva- 
tion techniques, with the result that 
their “slash and burn" approach cam- 
pounds the loggers’ earlier damage. 

In this generally gloomy picture, 
there are some grounds for optimism. 
For a start, the Philippines does have 
a fairly active environmental move- 
ment, although many participants 
acknowledge that this is still splin- 
tered, and that ideological differences 
between the various non-governmen- 
tal organisations (NGOs) tend to pre- 
vent cohesive action. 

Nevertheless, its voice is heard, and 
there is some pressure on govern- 
ment authorities to note of its 
de mands . The Philippines, for exam- 
ple, was a signatory to the Bio Decla- 
ration, which came out of the Earth 
Summit to Bio de Janeiro, promoting 
sustainable development A Philip- 
pines Council for Sustainable Devel- 
opment was set up, its members a 
m ixture of government agencies - 
including tiie Deportment of Environ- 
ment and Natural Besoures - and 
r epresenta tives of the principal NGOs 
operating in tbs envfa immwn tei fWii, 


But no one pretends that this is 
more than a start “Frankly, every- 
one looks at the environment as an 
add-on job,” says Maximo Kalaw, 
president of the Philippines Green 
Forum. “It’s a question of readdress- 
ing the issues of economic develop- 
ment - we need to look at a new 
economic order." 

In the meantime, as if internal 
problems were not enough, it is debat- 
able whether the west is helping. 
Greenpeace, the international envi- 
ronmental il p mlft aHwH, mite fts first 
foray into FQipfaio environmental pol- 
itics earlier this year, when it alleged 
the* hazardous waste was flowing 
from industrialised countries into the 
Asian nation - despite a law which 
bans waste imports. Computer waste 
from Australia and waste plastics, 
from tire Etas of Germany the 
US, woe among the breaches, it said. 

Another co n trove rsy has been trig- 
gered by the w ithdrawa l of the US 
military from Subic Naval Base. 
Local environmentalists argue that 
toxic and hazardous waste was left 
behind, or inadequately stored. The 
US claims that standards were 
e n forced, and that it is cooperating 
fatty in Hi» provision of lufm mufiAti. 


■■■JrWT 




mi a-”' 





Exhaust fumes are a feet of Hfe in Mania 


PKriak Mapalafal Lumo 


— * 
4 


$>te <&T$tcn! 



&0 


(V? 


^cuph' 



Die Ersten. The First. Thot’s PETROCHEMICALS CORPORATION 
OF ASIA-PACIFIC or PETROCORP. A $1 30-million project of many 
firsts. Big firsts. 

• The first polypropylene plant in the Philippines. 

• The first big project of industrial cooperation between Germany 
and the Philippines in a long while. 

• The first sizeable joint venture investment of BASF in the Philippines. 

To be installed and commissioned by another German company, 
UHDE GmbH. Financed by Kreditanstalt Fur Wiederaufbau, 
a bank wholly owned by the German government. 


PETROCHEMICALS 
CORPORATION 
OF ASIA PACIFIC 


PETROCORP dramatizes the continued warming up of 
relations and economic cooperation between Germany and 
the Philippines. Its successful operationswill open the door 
to more German investments m the Philippines, more joint 
ventures, an enhanced Phifippine-German cooperation-for the 
mutual benefit of bath nations. 




VIII 


FINANCIAL TIMES MONDAY SEPTEMBER 12 1994 


THE PHILIPPINES 8 


Industrial estates are reflecting economic revival 

More anchor at Subic 


The economic recovery of the 
past two years has stirred 
activity in various parts of the 
country, particularly in the 
industrial estates being put up 
to capture investment flows. 

The most notable is the 
Subic Special Economic and 
Freeport Zone, which is rising 
from the former US naval base 
along Subic Bay on the west- 
ern fringe of the main Island 
of Luzon. 

Store its conversion into an 
industrial estate in November 
1992, the Subic zone has 
signed up 73 companies to set 
up a range of Industrial and 
commercial operations within 
the 6,000-hectare facility. Of 
these, 44 have actually started 
operations. 

The Subic estate sits 
between a deep natural bar- 
hour opening np to the South 
China Sea and a mountain 
range. These features. Indus- 
trial planners say, make the 
facility an ideal anchorage. 

Having been a jump-off 
point for American military 
operations in the region, the 
zone has an airport, shipping 
berths and a well-maintained 
road network, along with fol- 
ly-operating utilities (power 
station, telecommunications, 
water and sewerage systems) 
and structures that can 
qnickly be converted Into 
warehouses, residential build- 
ings and offices. 

All these make the area 
Ideal for Investors in a hurry. 
Its location also makes it suit- 
able for ventures aiming at the 
Aslan market 

Subic's twin military base, 
Clark Reid, located to Its east 
in the central Luzon province 
of Pampanga, has also seen 
Increased Interest in recent 
months. Thirty-five companies 
have formalised deals with the 
Clark Development Corpora- 
tion to set up shop in the zone. 

Clark is initially developing 
a core area of 4,440ha, of 
which l,620ha have been 
roped off to become an avia- 
tion centre and another 
l,020ha for industry. The proj- 
ect will be expanded by 
another 23, 600 ha to accommo- 
date light and medium Indus- 
trial and agroindustrial ven- 
tures. 

The aviation complex will 
include an international air- 
port. to he developed from the 


facility left behind the US air 
force that withdrew from the 
area just before the June 1991 
eruption of nearby Mount Pin- 
atnbo. 

Like Subic, the Clark indus- 
trial estate offers locaters 
immediate infrastructure facil- 
ities, including a power plant, 
telecommunications and a 
water system. 

Incentives await locators in 
Subic and Clark. There Is 
exemption from taxes and 
duties on all imports of capital 
goods, machinery, raw materi- 
als and finished goods; exemp- 
tion from local and national 
taxes except for a final 5 per 
cent corporate tax on gross 
income; and tax holidays of 
four to six years. 

A highway to link the two 
industrial zones with metro- 
politan Manila is near comple- 
tion, and will reduce travel 
time within the area. 

Closer to metropolitan 

Incentives await those who 
locate in Subic and Clark, 
including concessions on 
taxes and duties 

Manila are the privately-run 
industrial parks that have 
sprouted in the Calabarzon 
area, which groups the five 
provinces surrounding the 
national capital - Cavite, 
Laguna, Batangas, Rizal and 
Quezon. In 1990, the govern- 
ment designated regional 
industrial centres (RICs) in 
each of the 12 regional group- 
ings outside metropolitan 
Manila, leading to the Calabar- 
zon concept. 

The Calabarzon project aims 
to create a business corridor 
south and east of the national 
capital, to capture the city’s 
overspill population without 
causing additional poverty and 
other social problems. 

The corridor has a combined 
land area of nearly 16,230 
square kilometres, or 5.4 per 
rent of the whole Philippine 
land area, and a population of 
6.35 m. It is already accommo- 
dates a range of manufactur- 
ing operations set np by big 
US, Japanese, South Korean 
and European groups. 

The area also has an indus- 
trial base composed of oil refi- 
neries; manufacturing 


operations in industrial gases, 
non-alcoholic beverages, paper 
products, flour and feeds, 
metal products and other con- 
sumer goods; shipbuilding; 
food processing; and power 
generation. 

Among the first industrial 
estates that are now offered to 
investors are: Dasmarinas 
Industrial Estate, Gateway 
Bnsiness Park, GMA Indus- 
trial Estate, Cavite Industrial 
City, Laguna International 
Industrial Park, Laguna Tech- 
nopark. Light Industry and 
Science Park of the Philip- 
pines, along with the govern- 
ment-run Cavite Export Pro- 
cessing Zone. 

Farther out of the capital, 
tiie government bas identified 
the following growth centres: 

■ The CagayanrIIlgan corri- 
dor, in northern Mindanao, 
which is being developed as a 
heavy industrial centre, and a 
major agro-industrial and 
trade centre in view of its 
access to hydro-power sources 
and industrial base. 

■ The north-west Luzon quad- 
rangle, said to be a potential 
financial centre and tonrist 
haven, given its proximity to 
Taiwan. Hong Kong, Korea 
and Japan. 

■ The Cotabato-Davao-Zam- 
boanga crescent, which is 
being promoted as an agribusi- 
ness centre to become a major 
exporter of fresh and pro- 
cessed food and other prod- 
ucts. 

■ The Panay-Negros pole, in 
the central Philippines, now 
being developed for light and 
medinm manufacturing activi- 
ties specialising in furniture, 
jewellery, toys, handicrafts, 
kitchen and hardware. 

■ The Leyte-Samar zone, also 
in the central Philippines, 
which is being considered as 
another heavy industry centre, 
because of its access to geo- 
thermal and hydro-power 
sources. 

■ The west-central Luzon zone 
and baselands, which may be 
tapped to specialise in ship 
and aircraft manufacturing 
and repair, warehousing and 
transshipment defence indus- 
tries. and other light-to-me- 
dhun industries. 

Jose Galang 


Nikki Tait describes the tourism industry’s struggle to overcome a number of obstacles 

The business visitor fares best 


Tourism in the Philippines 
might be described as optimism 
in the face of adversity. 

Superficially, there is every 
reason for visitors to be 
deterred. Until the Iate-lSBOs, 
the political climate was unsta- 
ble. Continuing "internal secu- 
rity” problems - from the 
activities of Muslim separatists 
in the southern island of Min- 
danao, to random street crime 
- attract enough international 
attention to give the Philip- 
pines a serious image problem. 
Countries like the UK or Aus- 
tralia still provide consular 
advice notices to travellers, 
despite requests from Filipino 
government officials to have 
these warnings lifted. 

The country also encounters 
more than its fair share of nat- 
ural disasters. Parts of the 
northern Luzon region, for 
example, were badly affected 
by the 1991 earthquake, in 
which over 2,000 people died. 

Even in Manila’s grander 
hotels, visitors win find that 
the standard fire noting carry 
a separate, equally prominent, 
warning about aa rfhgnaVaw “if 
unable to go down the stairs, 
go up to the roof," reads one 
soothing, if unhelpful, message. 

The country averages over a 
dozen typhoons in a good year, 
some of which have caused 
major damage in potential 
tourist centres in the Visayas. 

If these factors fail to deter 
the more intrepid traveller, 
there is the paucity of infra- 
structure, which is more 
annoying that exhilarating. In 
the early-1990s, power-cuts 
were a feature of everyday life. 
Telephone emwmmriratlmifi am 
still be erratic, and a trip 
around Metro Manila the coun- 
try's major urban centre, 
means nnp long traffic-jam. 

Yet, despite all of these 
obstacles, the Philippines is 
plainly aware of the benefits 
which a flourishing tourist 
trade «m bring, and is kppn to 
play up its limited gams. In 
1993, L4m visitors arrived in 
the country, a 19 per cent 
improvement on the previous 
year. The percentage gain in 
1992 was of the same order. 

According to Mr Vicente 
Carlos, secretary at the depart- 
ment of tourism (DoT), the 
country now seeks to attract 
around L66m visitors in 1994, 
and 2m in 1995. He takes com- 



Ptafei sattng for aomg wat srsp ot t at Papitan, on Ifindanao stand 


fort from the fact that the most 
recent monthly figures - for 
May - showed that around 
100,000 people arrived, a record 
number for what is tradition- 
ally a lean month. 

But while these statistics 
may provide grounds for 
encouragement, they should 
also be kept in perspective. For 
a start, the Philippines is mov- 


“ green card” counts as an 
"overseas worker”, and only 
Filipinos who have taken up 
US riHamship shnnlri fall fa t p 
the North American visitor cat- 
egory. But no one believes that 
these niceties are scrupulously 
observed. 

Nevertheless, as Mr Vicente 
stresses, 1993’s 1.4m figure does 
better anything the Philippines 


Visitor arrivals by country of residence 


Country 

1993 

% of total 

1992 

% Of total 

Asean 

68,103 

4.96 

55,508 

4.81 

East Asa 

558.806 

40.73 

464,108 

40.25 

South Asia (India 

8,962 

0.65 

7.876 

0.68 

North America 

305,696 

22L28 

250,424 

21.72 

Austrailfl/NZ 

65,783 

4.79 

55,440 

4.81 

Europe 

162394 

11.87 

136,669 

11.85 

Middle East 

12,862 

0.94 

14£75 

1.24 

Others 

63,315 

4.61 

58,888 

5.11 

O’seas Filipinos 

125,676 

9.16 

109,764 

9.52 

TOTAL 

1.372.097 

- 

1,152,852 

- 


ing off an exceptionally low 
base. Other centres in the Asia- 
Pacific region, for example, 
notch up many times these 
numbers. Hong Kong, tiny in 
comparison, attracts around 
10m visitors a year. 

Moreover, it is not entirely 
clear how many of the 1.4m 
arrivals In 1993 were "expatri- 
ate” Filipinos returning to see 
their families Just under one- 
fifth of visitors emanate from 
the US. According to the DoT 
in Manila, anyone holding a US 


has achieved in the past More- 
over, he claims that departmen- 
tal statistics show that visitors 
average a fairly lengthy nine- 
day stay, and spend quite 
highly during that time. This, 
he says, makes tourism the sec- 
ond largest earner of foreign 
exchange for the Philippines - 
after remittances from overseas 
workers. The industry accounts 
for about 5 per cent of gross 
domestic product 
Clearly, the relatively stable 
political climate has been one 


major faH-nr in improving the 
sector’s fortunes. Basic infra- 
structure improvements, like 
the more secure electricity sup- 
ply. are another. 

A third, and less self-evident 
reason for the upturn may be 
the fact that tourists can now 
skirt Manila, and take direct 
international flights into pro- 
vincial cities like Cebu. Apart 
from a sleazy sex industry and 
an intriguing golf-course built 
over the moat of the old walled 
town. M anila has little to offer 
the overseas visitor who is 
there for reasons other than 
business. Its international ter- 
minal. while functional, is dis- 
couragingly dilapidated; the 
domestic terminal is accepted 
as a national disgrace. 

Business travellers are better 
served: the Makati district, the 
city’s main financial and com- 
mercial centre, has recently 
added a number of new luxury 
hotels, while the old-estab- 
lished Peninsular is undergoing 
renovation. 

Asked what the Philippines 
can capitalise on as it pursues 
the tourism road, Mr Vicente 
points to the country's beaches, 
the opportunities for activities 
like scuba-diving, the fact that 
English is widely-spoken, and 
its people's well-deserved repu- 
tation for friendliness and con- 
viviality. The primary aim, he 
says, is to attract some the 


Vonsntca Gartutr 

intra-Asia tourist trade - nota- 
bly from Taiwan and Japan - 
with European travellers poten- 
tial extra. Already visitors from 
East Asia (as opposed to the 
Asean countries) account for 
about 40 per cent of total visi- 
tors. 

There is some evidence that 
the commercial sector is heed- 
ing the message, and putting 
its money behind the official 
policy. A number of big Asian 
property group or conglomer- 
ates - including the Philip- 
pines’ Ayala Land Corporation 
and Malaysia’s Kuok group - 
have either been developing 
resort sites in the area or have 
plans to do so. The Manila 
Hotel an impressive complex 
overlooking the bay and used 
by General Elsenhower as his 
headquarters during the war, 
may also go up for privatisa- 
tion, and interest is reported 
already to be pronounced. 

But, despite all the fine 
words, the tourist authorities 
have a thin promotional bud- 
get, and know they are compet- 
ing against heavy-spending 
neighbours. To date, the most 
visable product of their efforts 
has been the hosting of the 
Miss Universe contest earlier 
this year. A promotional show 
in Paris is promised for the 
autumn, to coincide with Presi- 
dent Ramos' visit to the French 
capital. 


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half of 1994. Net profit, 
nee sector rose by 132 
to ECU 127.1 million J 


Net equity 


figures parent comj 


Prospects 

The results achfo 
1 July 1994 will t 
hand. In tiie see 
charges in cdj a 
portioning o jjp 
results frjf lg 


gffipgroup's interest in Assubel-Leven on 
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I'Erfiiledacqman 53 


ArchJmedesiaan 10 
■ 9584 BA Utrecht 
The Netherlands 
TeL: 31.(0)30.573398 
Fax: 31 .{0)30-522394 


FINANCIAL TIMES SURVEY 


DUTCH FINANCE AND INVESTMENT 

Monday September 12 1994 . 


1 


:* 


S3x : years after the launch of a 

~* J ~ r anging^ programme to 
Amsterdam's status as a 
" 1 centre, the Dutch cap- 
decided to wind un its 
cam p aign of reforms, initia- 
ttwfitjand promotional activi- 

jmoye, far from si pnff y- 
*■’ is : dear conflrma- 
Amsterdam has 
! &8 aim bolstering 
its goading in. the face off coar 
certmicampetitum from, huger 

-campaign, whfch began, 
as rcfafnt initiative of promi- 
cent bankers in 1988, was not 
intended that Amsterdam 
should rival the stature of firsts 
tier European centres such as 
London or Frankfort Instead, 
the goal was to confirm 
Amsterdam's place in % sec- 
ond tier and to prevent its slide 

tntn third-tier gt gtnq 

The centrepiece of the cam- 
paign - a radical overhaul of 
the trading system at the 
Amsterdam Stock Exchange, 
with a separation of the whole- 
sale and retail segments of the 
market - is due to talcs * pia/*» 
on September 30. 

Earlier mfleatoneg in the 
campaign, which was formally 
ended in May, included the 
abolition of exchange duty, 
reforms of the gove rnment 
bond market, arai the introduc- 
tion of a fixed sevenday settle- 
ment system. 

Another successful element 
in the promotion of Amster- 
dam was persuading foreign 
banks, particularly in the Far 
East, to choose the Nether- 
lands as a base for eipanrffng 
into the European market 

plaro 

There have also been disap- 
pointments along the way. 
Amsterdam’s hopes of attract- 
ing a prestigious multilateral 
financial institution, such as 
the European Bank for Recon- 
struction and Development or 
the nascent European Central 
Bank, were both dashed. 

Another of the campaign's 
original 23 aim* - the develop- 
ment of Amsterdam as a centre, 
for the trading of EdJ-danohd- 
nated financial instruments — 
also failed to materialise. Early 
on, it hfi canw rionr that mBflwr 

Dutch companies nor the 
Dutch state would be. issuing 


Ptana for m new lootc the ^tofrdacn Stocfc Exch ange and the European Opflons Exchange wW be rebufcSng their tracing Ho*** to 1 


Action plan lifts Amsterdam’s status 


enough ECU pap» in the short 
tom to create the right condi- 
tions for a flourishing market 

au gment 

- “A lot has happened here,” 
says Jan Stefohanser. a former 
deputy-director of the 'Butch 
central: bank who rah the 
"Ams terdaih J Inandal Centre” 
campaign. ^The. action plan, 
with all its:limftatioBS, has 
achieved good*_thmgs for the 
Dofch ffaagcial community. 
Withoutit,'flie sittUdfon would 
have been d^dOTable,’’,' - 

Hbwevo;* Mr Steihhausar 
and . other . jhembere . of .the 
financial ccBHmunrty area ware 
that-tite reforms and changes 
arenc*,Tn tfifemse^rea, an, xron- 
clad: guarantee -tlmt^Amster-- 
tfam win continue to compete 
effectively. 

- To achieve that; the tag insti- 
tutions In Amsterdam - essen- 
tially the Usage Dutch banin» — 
must seize the new freedom for 


The centrepiece of the Dutch capital’s programme of financial reforms 
is an overhaul of the stock exchange’s trading system this month. 
Ronald van de Krol, author of this survey, discusses achievements 


equity market-making and 
make it happen. 

Prices must be extremely 
competitive, and mazkst liquid- 
ity must b» more than ample 
if buyers and seQerc of Dutch 
shares and -bonds are to be per- 
suaded to-do their hwginami in 
Amsterdam rather than Lon- 
don. . 

Almost exactly a year ago, 
ABN Amro, the Netherlands's 
largest hank and biggest tingle 
participant on capital 

markets, caused a brief flutter 
of anxiety when it announced 
plans to move the . co-ordina- 
tion of world-wide equity sales, 
trading and research to Lon- 
don. 

Louis de Bidvre, member of 


the management board and 
head of investment banking 
and global clients, said the 
bank had since managed to 
allay fears that it was with- 
drawing support from the 
Amsterdam market Tt is not 
at all our intention to dose 
down in the Netherlands and 
to operate solely from London. 
We are a Dutch bank, and we 
will do our best to keep the 
Amsterdam bourse strong for 
the shares that are traded here 
and to keep the market com- 
petitive.” 

Tikp other Dutch hank* gear- 
ing up for the September 90 
reforms, ABN Amro believes 
the nharigpg can help win bark 
part of the equity business that 


now takes place in London, 
mirr ori ng Amsterdam’s earlier 
success in recapturing the Ini- 
tiative in government bond 
trading: *T think that you will 
see the same effect (in shares 
as in bonds) ” Mr de Bi&vre 
said. 

However, there are obvious 
limits to Amsterdam's ambi- 
tions. It may be able to ward 
off London’s encroachments, 
but it cannot supplant the UK 
capital’s role as the place 
where international financial 
flows come together in Europe. 
For ABN Amro and other 
European hank*, but perhaps 
for other Dutch ffnanrial insti- 
tutions hi future, T /iniln^ ]g an 
obvious place, from which to 


coordinate a worldwide equity 
business. “If we want to com- 
pete with our peer group, we, 
too. must be in London,” he 
said. 

Although the reforms that 
are about to take place at the 
stock exchange are impressive 
enoug h, they are at least sev- 
eral years overdue. In feet, it 
had been obvious since the 
1980s that the bourse, which 
claims to be tire world’s oldest 
with a history stretching back 
to the 17th century, was being 
hamstrung by the limited 
resources of its stock jobbers, 
or “hoekmen”. 

Though required by bourse 
rules to be involved in virtu- 
ally every transaction that 


took place between two parties, 
the hoekmen were simply too 
poorly-capitalised and too 
small to act as middle men in 

the gate and pur chase of cVinr oo 

and bonds. 

The result was excessive 
costs and dwindling liquidity, 
two factors that helped drive 
trading in Dutch bonds and 
shares to London. 

Significantly, alarm bells 
began to ring in Amsterdam 
only after an “outsider 1 , the 
McKinsey consultancy firm, 
prepared a report showing the 
extent to which trading had 
seeped across the English 
Channel. 

This, in turn, helped concen- 
trate the minds of all partici- 
pants in Amsterdam, leading - 
to the painful but necessary 
decision to sacrifice a large 
number of the traditional 
“hoekman” and to convert the 
remaining firms into “market 


specialists". 

Change is always difficult In 
a “co-operative" of member 
firms such as the Amsterdam 
Stock Exchange. 

With stock brokers, banks 
and old-styled jobbers possess- 
ing equal power within the 
stock exchange. It is not sur- 
prising, perhaps, that consen- 
sus on the need to change was 
so long in coming. 

To remain well-prepared for 
the future, the bourse and its 
members will also need to 
apply their minds to building 
new kinds of businesses to 
generate income for the 
financial community as a 
whole. They will also need to 
find new investors, especially 
among the Dutch public, who 
so far have not been big buyers 
of shares. 

Finally, Amsterdam still 
needs to increase the number 
of listed companies from the 
varied ranks of the Nether- 
lands’s family-owned or 
privately-held corporations. 

The Juno flotation or 
Koninklijke PTT Nederland, 
the Dutch telecommunications 
and postal company, was the 
largest initial public offering in 
the history of the Amsterdam 
bourse. 

The government's first 
tranche raised nearly Fl6Abu 
($3.9bn) and attracted the 
attention of 188300 private 
investors. 

Nevertheless, the flow of 
new companies to the bourse 
has slowed to a trickle in 
recent years, and so fer the 
KPN flotation has not 
produced the hoped-for 
bandwagon effect Indeed, the 
recent flotation of Ballast 
Nedam, the Dutch construction 
group previously owned by 
British Aerospace, simply 
marked the return of a 
company that had once bad a 
listing. 

New blood is essential to 
Amsterdam. It will be getting 
an injection of sorts in January 
when foreign banks and 
brokers, mainly of Anglo- 
Saxon origin, begin to trade 
remotely on Amsterdam's new 
system from their offices on 
tiie other side of the GhanneL 

But if it is to lead rather 
than follow, Amsterdam will 
have to rely in the end on 
home-grown energy and talent. 


enttinf 

tfltO a 

& 


Fortis achieved go 
million. The pre-ta 
that of the banking 


JS 115 

4^5 

3.94 

P 2-1993 

30-06-1394 

31-12-1993 

f 2,122 

73J2 

75.43 


EUROPE’S LONGEST-ESTABLISHED STOCK EXCHANGE 

Proudly Announces 
EUROPE’S NEWEST TRADING SYSTEM 


On Friday September 30th, 1994, trading on Europe’s 
senior stock market will undergo a revolutionary 
change. 

Partly through the introduction of new and 
advanced technology. 

. But more fundamentally through a new distinction 
between wholesale and retail trading defined by the 
size ofbargains; a system introduced for Government 
Bonds In 1993, which has already proved its 
value. 


create a whole new environment in the Dutch market. 

It will make trading fester and more effective for 
institutions trading in laxge amounts of stock - as well 

as improving the pricing, transparency, settiemeniand 
regulatory standards demanded by today's investors. 
And it will underline our determination to be foe 
international exchange of choice for all Dutch 
equities. 


For full details, please send the coupon for a copy 

AMSTERDAM ° fourIatestnewsleaer 

. The new arrangement forms pan of oT/'kOI/’ CYfMJ AklOF And prepare for tomorrow's revolution 
Heading SystemArasterdam, which will OiUUlA LAuliANut today. 


TO. rustic ULtnora Osbictmeht. the ajbrzoam stock exchange, ro sox rotas, jooo gd ahsttedan, tie nethesianim. 
please nw « a copt or vwm ww«rnn dboink wnmuirs new trading systems 


* 


I , - 


. ’* ;• 



•*« .. 





II 


FINANCIAL TIMES MONDAY SEPTEMBER. 12 1994 


DUTCH FINANCE AND INVESTMENT 2 




ill Clinton's celebrated 
i reminder that “It's the 
economy, stupid” has 
little relevance to the Nether- 
lands's new prime minister 
Wim Kok, who has inherited 
an economy that seems poised 
for a return to healthy eco- 
nomic growth. But if he had to 
choose a slogan to capture his 
priorities. Mr Kok might well 
have selected Tt’s jobs. jobs, 
jobs". 

The latest Dutch coalition 
government, inaugurated on 
August 29, has started Its four- 
year term with good prospects 
of economic buoyancy but also 
with continuing signs that the 
country's long-standing unem- 
ployment problem is not going 
bo go away easily. 

The Organisation for Eco- 
nomic Cooperation and Devel- 
opment. in a report on the 
Dutch economy in June, 
argued that the Netherlands’s 
unemployment problem is a 
structural one that cann ot be 
overcome by economic growth 
alone. Its recipe for success is 
reducing rigidities in the 
labour market, decentralising 
wage-setting and, crucially, 
making the dole less attractive 
by widening the present nar- 
row gap between welfare bene- 
fits and low-level wages. 

“In a nutshell, the goal 
should be to reduce labour 
costs, redress the incentive bal- 
ance between working and not 
working, and improve labour 



Wim Kok: job creation b the government's main task 


force skills and competencies, 
in all cases especially at the 
lower end of the market.” it 
wrote. 

Mr Kok's government has 
clearly targeted job creation as 
its main task, and it is plan- 
ning to pursue this goal 
through a mixture of fiscal 
measures and specific pro- 
grammes aimed at the 


long-term unemployed. It 
remains to be seen, however, 
whether Mr Kok will really 
manage to address what the 
OECD describes as the Achilles 
heel of the Dutch economy. 

“The biggest worry confront- 
ing the Netherlands is the 
shortage of jobs," Mr Kok 
wrote in his government pro- 
gramme. which has received 


Wim Kok has inherited an economy that seems poised for growth 

Priority is jobs, jobs, jobs 


the backing of his own Labour 
party, the right-wing liberals 
and the left-of-centre D66 
party. "Too many people 
remain, counted or uncounted, 
in the waiting room of the 
labour market; are unfit for 
work; or find themselves out- 
side the labour process in mid- 
dle age." 

On its own, the quicker pace 
of economic growth is expected 
to help create 230.000 Jobs dur- 
ing the cabinet's lifetime. But 
this will not be enough to deal 
with the 300,000 people proj- 
ected to enter the job market 
in this period. 

For this reason, the new 
three-party coalition govern- 
ment will be actively pursuing 
programmes to stimulate jobs, 
particularly at the very lower 
end of the labour market. Tbls 
will be done, in part, by reduc- 
ing faytx and wiai premiums, 
thereby making employees less 
expensive for employers. 
“Gross labour costs most come 
down, especially for lower-paid 
labour,” Mr Kok said. 

At the same time, some busi- 
ness sectors may be exempted 
from the minimum wage laws 
to help generate more entry- 


Real GDP growth 

Annual M increase 



level jobs for job seekers. In 
another move, some 40.000 jobs 
for people on the dole will be 
created by the state in public 
duties suich as home-help for 
the elderly, child care, and 
public safety and security. 

What Mr Kok will emphati- 
cally not do is lower unemploy- 
ment benefits to encourage the 
unemployed to seek or accept 
work. This option - frequently 
proposed by those like the 
OECD who argue that the 
country's generous welfare 
provisions make it unattrac- 


tive for dole recipients to take 
low-paid jobs - would be unac- 
ceptable to the rank and file of 
the Labour party. It is in this 
area of labour policy that the 
biggest doubts arise about the 
new government’s ability to 
stimulate people to forego the 
security of state benefits and 
seek work. 

According to the Nether- 
lands’s own narrow definition 
of unemployment, only about 7 
per cent of the potential labour 
force is out of work. But the 
OECD's broader definition - 


which takes in all people of 
working age receiving disabil- 
ity and other types of social 
security benefits, as well as 
people enrolled in special job 
creation programmes - puts 
unemployment at just above 25 
per cent 

The unemployment problem 
notwithstanding, the Nether- 
lands is estimated to be on 
track for economic growth of 
2.0 per cent to 235 per cent in 
1995, up from a projected 1.5 
per cent this year arid just 0.3 
per cent in 1993. 

The buoyant growth pre- 
dicted for next year confirms 
that the Dutch economy is out 
of danger of slipping into the 
same recession that plagued its 
big European trading partners, 
especially Germany, in the 
early 1990s. 

Thanks to the Dutch guil- 
der's close links to the German 
mark, inflation is expected to 
be relatively tinder control at 
2.5 per cent this year, falling to 
SL25 per cent next year. 

"The economic prospects fac- 
ing the new cabinet are good,” 
MeesPterson, the Dutch invest- 
ment bank said in a report. 
“The economy is just begin- 


ning to revive, inflation is on 
the way down, and employers' & 
organisations and the trade 
unions have signed a national 
deal paving the way for wage 
restraint" 

Though the economy may 
look rosy, the new govern- 
ment, and especially the new 
finance minister, Gerrit Zalm, 
a member of the pro-market 
Liberals, face serious difficul- 
ties in the area of public 
finances. 

After several years cf steady, 
albeit small, declines, in the 
financing deficit, the shortfall 
in 1995 and 1986 15 expected to 
be static at 3.3 per cent of gross 
domestic product, before fall- 
ing to 3.1 per cent in 1997 and 
2.9 per cent in 1998. 

At this 1998 level, the Dutch 
financing deficit will fall just 
within the 3 per cent norm 
established for European mon- 
etary union at the end of the 
1990s. But die absolute level of 
public debt will remain high, 
causing long-term worries for 
the government. 

Given the still precarious 
nature of the national debt the 
new government will obviously 
be hoping that the predicted 
acceleration of economic 
growth win not only material- 
ise, but that it will be even 
higher than projected. If so. tax 
revenues will also come in 
above budget, creating room 
for a renewed assault on public 
debt 


Number of options traded on the EOE 


Turnover of EOE options contracts 



1993 

1992 


1993 

% 

1982 

% 

Stock options 

40 

42 

Stock options 

8.035,741 

64.0 

6.808.646 


Index options 

4 

5 

Bond options 

436.199 

3.5 

270,442 

2JS 

Bond options 

6 

5 

Dutch index options 

3.106.437 

24.7 

2^45,704 

27.6 

Future options (OOF) 

1 

1 

Eurotop Index options 

2.647 

0.0 

11X554 

ai 

CtxTency options 

2 

2 

MMI/XMI Leaps Index options 

6,809 

0.1 

21,569 

0.2 

Precious Metal options 

1 

1 

Currency options 

672,632 

5.4 

543,312 

5.1 

Special products (warrants) 

7 

1 

Precious metal options 

284,040 

2.3 

72,815 

0.7 

Total 

63 

57 

All options 

12£44£05 

100.0 

10,673,042 

100D 



Soma: COE 





Sent* EOE 


"V? ,r. HC"; >7 'r'yS * : : * " " "aj 

Jkn. 


The European Options Exchange plans to introduce a unique new trading method 

The EOE will be humming in 1996 


Amsterdam's European 
Options Exchange (EOE) is 
planning to become the first 
options exchange in the world 
to combine the traditional 
“open outcry" of human voices 
with the subdued hum of com- 
puter-screen trading. 

The unique new trading, due 
to be launched in early to mid- 
1998, marks a new phase In 
the EOE’s 18-year -history. 

When it was established in 
1978 as the first options 
exchange outside the OS, the 
EOE adopted the open outcry 
system that prevailed on the 
Chicago Board of Trade 
(CBOT) exchange in tbe US. 
The electronic exchanges of 
tbe late 1980s bad not yet been 
bora, and the “pit” seemed the 
logical place to bring together 
supply and demand. 

In keeping with the wide- 


spread use of electronic trad- 
ing, the EOE wants to move 
with the times yet also retain 
its trading floor. 

“What we're effectively 
going to be doing is building 
an electronic exchange along- 
side our existing exchange, 
and then coupling the two 
together, " Joost Kuiper. the 
EOE's general director, said. 
“It'll be an important event in 
tbe existence of our exchange. 

As the first options 
exchange in Europe - hence 
the ambitious name - (he EOE 
had originally hoped to 
become Europe's sole centre 
for tbe trading of options. But 
other countries, from the UK 
to Germany and from France 
to Switzerland, eventually 
built their own national 
exchanges. 

Most of the recent newcom- 


European Options Exchange 

Tutwvw, number at contracts traded fOQQs) 

VS Options Mi Figures mmm 

12 



1883 84 

Soum: OCCO 


ns have introduced frilly elec- 
tronic trading systems, 
eschewing the trading floor. 

However, EOE believes there 
Is still room for open outcry in 
Amsterdam because of the 
“atypical" character of the 
exchange: the EOE is over- 
whelmingly a retail exchange, 
with 70 per cent of turnover 
generated by private investors 
rather than the institutional 
investor who sets the tone on 
institutions such as Germany's 
Deutsche Terminborse (DTB) 
or the London International 
Financial Futures Exchange 
(Liffe). 

“The market for the larger 
retail order is at heart a talk 
market’,” Mr Kuiper raid. 

The proposed new trading 
system, called Switch, will 
allow the EOE to use open out- 
cry in some areas and elec- 
tronic trading In others. 

Details are still being 
worked out, but small retail 
orders below some sort of 
limit, such as 10 or 20 con- 
tracts, will be executed elec- 
tronically through automatic 

matching 

This is expected to be far 
more efficient and cost-effec- 
tive than the present system of 
writing order slips and match- 
ing supply and demand 
through open outcry. 

However, larger retail 
orders and smaller wholesale 
orders for institutional inves- 
tors will remain the preserve 
of the trading floor. 



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Big Institutional orders - so 
far an underdeveloped market 
segment at the EOE - will 
probably also be handled elec- 
tronically. 

This computer-based trading 
is probably best snlted to 
handle the growing trend to 
more tailor-made, less 
standardised contracts for 
bigger investors. 

The Switch system will be 
flexible, enabling the EOE to 
determine for each class of 
options contracts which 
system is more suitable - open 
outcry on the floor or 
electronic trading by screen. 
For traders on the floor, the 
two types of trading will be 
brought together by hand-held 
computer terminals. 

Besides building its 
ambitious new trading system 


over the next two years, the 
EOE will also be concentrating 
on attracting more insti- 
tutional investors to the 
exchang e. 

Unlike the DTB, which was 
established with the full 
co-operation of the big 
German banks, the EOE’s 
birth in the late 1970s was not 
wholeheartedly welcomed by 
the Dutch financial esta- 
blishment The exchange was 
considered too risky for the 
cautions Dutch, and an early 
demise was predicted. 

The EOE’s success in the 
face of widespread scepticism 
was due to the efforts of many 
small brokers and traders and 
of the publicity campaign 
waged by its first director, 
Tjerk Westerterp- His unusual 
step of sponsoring a Dutch 



Options e x cha nge : about to uter a now phase 


iKSWdrUwr 


soccer team and linking the 
EOE's name to classical music 
competitions brought a wealth 
of publicity and a crowd of 
retail investors to the 
exchange. 

This retail bias is reflected 
not only in the 70:30 ratio 
between retail and insti- 
tutional turnover but also in 
tbe relatively low share of 
index options in the EOE’s 
total turnover. 

“My targets are 50:50 for 
retail and institutional, and 
index options must grow, too.” 


Mr Kuiper said. 

Index options, typically a 
product for institutional 
investors, accounted for 
roughly 25 per cent of contract 
turnover in 1993, against 
nearly 65 per cent for stock 
options, a type of option that 
generally attracts private 
investors. 

By 1996. the EOE hopes to 
have raised index options to 
nearly 40 per cent of the totaL 

One way the EOE has found 
to woo institutional investors 
is to offer them a single 


account at the clearing level 
regardless of the number of 
different brokers used. 

Another recent concession to 
bigger investors was a sharp 
cut in brokers' exchange fees 
on the EOE's futures 
subsidiary, the Financiele 
Termijnmarkt Amsterdam 
(FTA), on June L The cuts, 
designed to be passed on to 
investors, are meant to boost 
liquidity and volume. 

Tbe EOE has also introduced 
“flex options” on Dntch state 
bonds, allowing the Investor to 
tailor tbe expiry date and 
exercise price to his precise 
requirements. “Flex has been 
very important for us, and 
we'll certainly be offering 
more flex options,” Hr Kuiper 
said. 

And, finally, the EOE hopes 
to deepen the liquidity of its 
market by helping to create 
better-capitalised market- 
makers able to handle the 
bigger deals that institutional 
investors are expected to bring 
to the exchange. 

To this end, Mr Kuiper is 
trying to pnt together a 
“liquidity fund” through 
which institutional funds can 
be injected into smaller, 
promising market-makers. The 
total money involved will not 
be large, but the ultimate 
effect can be important for the 
exchange. 

“Investing FI lm in a 
smaller market-maker can 
really put the firm on the road 
to bigger things,” he said. 


T he Amsterdam Stock 
Exchange is poised to 
embark on the most radi- 
cal shake-up in its near 400- 
year history. 

On September 30. the bourse 
will be split into retail and 
wholesale segments. For the 
first time, screen trading will 
be introduced Into the profes- 
sional sector of the market, in 
an attempt to compete with 
London’s screen-based SEAQ 
International, which has cap- 
tured large swathes of trading 
in Dutch equities 
At a later stage, probably 
around January 1, foreign 
banks and stockbrokers will be 
allowed to trade on the 
Amsterdam exchange from 
their bases overseas. This. too. 
is a direct challenge to Lon- 
don's success in attracting 
Dutch business across the 
En glish C hann el. 

The reforms, the culmination 
of years of piecemeal changes, 
will mean the demise of the 
traditional “hoekman", or 
stock jobber, who acts as an 
intermediary in Dutch share 
tr ading 

The bourse's chairman, 
Baron Boudewjjn van Ittersum. 
is in no doubt about the 
far-reaching nature of the 
impending changes. "There 
has never been as big a change 
to our trading system as the 
ones we are about to make. 
Until now, the principles of the 
‘hoekman’ system have not, as 
far as I'm aware, undergone 
any fundamental changes since 
the 17th century," he said. 

However, the writing has 
been on the wall for the hoek- 
man since at least the mid- 
1980s, when larger partici- 
pants. Dutch banks and Dutch 
pension funds, began to com- 
plain that the jobbers' small 
s tee and limited capitalisation 
was impeding trading and 
reducing liquidity. 

In 1986. a first step was taken 
to end the hoekman Anns' 
monopoly by allowing market 
players to do large group 
trades without the help of a 
hoekman. 

Starting later this month, 
the bourse’s two dozen hoek- 
man firms will be whittled 
down to no more than five to 
10 companies. In their new 
guise, they will act as market 
specialists, roughly along the 
lines of their counterparts in 
New York. The new-style hoek- 


Am s terd a m Stock Ex change 


Tcftaft bond tunmsr (Guide* bn) 
800 


Tcftat share turnover (Guitar bn) 

-250 


20 O 


-ISO 



-100 



ieet 
Source: OECD 


Baron BoudewQn van Ittersum: the 
changes wB be far-r oodti ng 


Stock exchange reforms mark end of the ‘hoekman 1 

Poised for a shake-up 


man will operate exclusively in 
the retail market but will also 
serve as a point of contact 
between the retail and whole- 
sale ends of the bourse. 

Although Amsterdam is 
injecting screen trading into 
its overall trading system, it 
has consciously stopped short 
of abolishing the trading floor 
altogether, as London did in its 
Big Bang in the late 1980s. 
"The decision to retain the phi- 
losophy of the central market 
is a good one." Mr van Itter- 
sum said, citing debate in Lon- 
don about the wisdom of the 
UK capital's alternative - 
adhere to a quote-driven, mar- 
ket-making system. London is 
starting to look at continental 
practice at a time when many 
continental bourses are mak- 
ing some of the concessions to 
professional investors and 
trades that lay at the heart of 
Big Bang. 

But he stressed that Amster- 
dam's continued attachment to 
the floor will have to be borne 
out by future events and by 
continued advantages in terms 
of cost, of swift and transpar- 
ent price formation, and of a 
“feeling for the market" fos- 
tered by direct daily, physical 
contact “The floor itself is not 
a dogma, it must be a question 
of efficiency." he said. 

Not surprisingly, some hoek- 
man companies opposed the 
changes that heralded their 
transformation into specialists, 
and they called for a longer 
transition period. The reforms. 


first scheduled to take place in 
the 1994 first half, will now go 
ahead on September 30. Mr van 
Ittersum said. 

Foreign-based traders will 
probably not be admitted until 
three months later. This is 
partly because the Amsterdam 
bourse's members have not yet 
decided whether foreigners will 
be required to take out ordi- 
nary membership or a cheaper 
form of extraordinary member- 
ship. 

“We also want to give our 
members three months of trad- 
ing under the new system 
before opening it up to for- 
eigner traders." Mr van Itter- 
sum said. 

A similar three-month gap 
was observed in the launch 
last year of the Amsterdam 
Treasury Market (ATM), the 
Dutch capital's screen-based 
trading system for Dutch gov- 
ernment bonds which has 
attracted 15 foreign partici- 
pants, mostly based in London. 
“I expect many of these 15 to 
be interested in the new equity 
market, too,” Mr van Ittersum 
said. “In the end I think we’ll 
have the 10 to 21 leading for- 
eign houses as participants." 

One prospective foreign par- 
ticipant is CS First Boston, 
which recently announced it 
was closing its trading and 
backroom operations in 
Amsterdam and transferring 
staff to London. The stock 
exchange is hoping to keep CS 
First Boston involved in Dutch 
bourse trading, despite its vir- 


tual departure from Amster- 
dam. 

Amsterdam believes that for- 
eign involvement could take 
off quickly after January. “If 
the three biggest players in 
London say “Yes. you’re better 
off in Amsterdam’, then I think 
interest could develop very 
swiftly." 

Mr van Ittersum said the 
best test of Amsterdam’s suc- 
cess in competing with London 


will be the spreads between bid 
and offer prices on the bourse’s 
Asset (Amsterdam Stock 
Exchange Trading System) 
screens. If these are as narrow 
or narrower than those on 
SEAQ's screen, Amsterdam 
will have reached its stated 
goal of being the international 
price leader for Dutch equities. 

Another test, though perhaps 
more difficult to judge because 
of the lack of transparency in 
international turnover figures, 
win be the amount of equity 
turnover that Clows back to 
Amsterdam from London. 

At its lowest point in 1992. 
some 60 per cent of Dutch 
equity trading took place in 
Amsterdam, according to a 
milestone report by McKinsey, 
the consultants, which galvan- 
ised the Dutch financial com- 
munity into action and helped 
clear the way for October's 
reforms. 

“McKinsey said that at this 
rate we might fall below 50 per 
cent in three years’ time. Your 
goal must be to serve as the 
price leader for your own equi- 
ties, and to be leader you must 
have at least a majority of the 
volume," he said. 

“I want us to try to get back 
in any case to a ratio of 7525, 
preferably 8020. That is our 
goal." 


youLFT 




; .. : ■ » 






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FINANCIAL TIMES MONDAY SEPTEMBER 12 1994 


DUTCH FINANCE AND INVESTMENT 3 


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Stock exchange floor: amril fiweators lukewarm 


Sell-off fails to excite public 

Man in the street 
is a reluctant 
shareholder 


The-tanall Dutch shareholder - 
the proverbial “man in . the 
street” - was consciously tar- 
geted, in June when the govern-, 
matt sold off its first tranche 
of shares in KrmTnkifi kn pit 
N ederland (KPN), the coun- 
try's telecommunications and 
postal company. 

Far the first, time in a Dutch 
notation, private investors 
were offered a discount to the' 
price paid by institutional 
investors. The inducement was 
considered essential because 
Dutch households, unlike their 
counterparts in the UK or even 
France, have never mustered 
much enthusiasm for buying 
shares 

The 5 per cent discount, lim- 
ited to the first 75 shares, 
attracted considerable atten- 
tion but did not, in the end, 
result in the participation of 
up to 500,000 small investor s , 
as forecast at one point by the 
Dutch government ■ 

Instead, some 188^500 private 
investors took part, of whom 
31,000 were KPN employees. 

Wim Dik, KPN’s chairman, 
said recently, "Of coarse, the 


some other comings .but on 
balance, private ,4hare owner- 
ship is 

able in the Netbe§tods, “The 

Overall ritnatinn nTl that 

different from other countries,” 
he said. “The number of active 
investors is smaller, bat their 
combined holdings in shares 
are not at all that steal!.* ' 
There, are atgj^T^greater 
public interest tn .^are fovesb 
ments. Since 1990, arrestment 
funds, or mutual fends, . have 
become a popular investment 
vehicle for Dutch households, 
mid most of the leading Dutch 
banks now offer such funds, as 
do such' traditional partici- 
pants as the Rotterdam-based 
Robeco investment group. 

Nevertheless, the relative 
reticence of small Dutch inves- 
tors to buy times is mimned 
. by file relatively limited own- 
ership of shares among the 
Net&eriands's'fcig and powerful 
■pension funds. Although the 
country's pension fonds are 

- gradually stepping up their 
^equity purchasesV -shares 

- account, for -less' than so per 
cent of the average fund’s 

issue was three times oversnbv tevetied assets, ^ which tend to 
scribed, but expectatfons. that' 'be heavily wtighted towards 
the KPN share would nmnedt' bonds, particularly Dutch guv- 


ately became a 
"people’s share' 

■ were pot real- 
ised." - - 

The .chair- 
man of the 
St ft c k 
exchange, 

Baron Boudew- 
ijn van Itter- 
sum, also 
acknowledged 
that the num- 
ber of. new 
investors was 
relatively low, 
but added that 
the publicity 
may have the 
long-term effect 
of persuading 
people to consider share pur- 
chases another time "Until 
recently, share ownership was 
seen as something for the 
happy few. After the KPN 
Issue, it can be seen as an 
activity for the entire popula- 
tion,” he said. 

Explanations for the lower- 
than-expected level of enthusi- 
asm abound. They range from 
the mundane - the public's 
Irritation • with saturation 
advertising for the shares - to 
the essential conservatism of 
the Dutch, their p refe r en c e for 
collective savings through pen- 
sion schemes and impediments 
created by the country's tax 
structure • 

The answer may be more 
simple. Wllco Jiskoot. senior 
executive vice-president at 
ABN Amro, the Dutch bank 
which lead-managed the global 
shar p offering, said: "The fore- 
most factor was the general cli- 
mate on the bourse itself.” In 
the weeks leading up to the 
issue, the Amsterdam Stock 
Exchange had softened and 
was wall down on the peeks it 
hat! reached earlier in the year. 

Mr Jiskoot also noted that, 
in contrast to some other Euro- 
pean privatisations which have 
been done at almost “give- 
away” prices, the KPN issue 
was fairly priced, reflecting the 
government's goal of getting 
optimum value for its shares. 

In contrast to disappoint- 
ment about private share- 
holder participation expressed 
by the government, mid KPN, 
ABN Amro said the final result 
was roughly in Ene with its 
own expectations and its inter- 
nal analysis of the Nether- 
lands's pool of private share- 
holders. 

Mr Jiskoot raid a distinction 
must be drawn between real 
newcomers to the business of 
investing in shares and the 
roughly 200,000 Dutch private 
investors who have regular 
experience of actively selling 
and buying shares. 

Although definitive, com- 
bined figures are not ■available 
from the various Dutch ban k s, 
that belonged to the flotation 
syndicate, ABN Amro esti- 
mates feat 20,000 to 36,000 new 
share investors were attracted 
to the KPN issue. 

Mr Jiskoot agrees individual 
Dutch households are still 'less 
likely to buy shares than in 



WRco JMcoot: raaoit of KPtt - 
issue in Bna wtth expectations 3 > 


y 


•grament bonds 
and, to a lesser 
extent, real 

- estate. -In other 
countries, -par- 
ticularly in the 

. US or. : . the UK, 
It Is not uncom- 
mon for shares 
to make up half 
of total assets. 
Again, part 

- of the axplana- 
-. tron lies in 
A innate Dutch 
“caution and 
^conservatism. 
■Another factor 
is that unlike 
US or UK fund 
managers, 

Dutch pension funds are not 
'mw-m^ny confronted with quar- 
terly measurements of their 
investment performances. This 
may' avoid the tendency 
towards “short-tennism” that 
is sometimes attributed' to 1 for- 
eign institutional- investors, 
but it may also mean that 
Dutch funds are less motivated 
to boost their results by invest- 
ing more heavily in shares; 

A frequently-cited explana- 
tion for Batch attitudes to 
investing in Shares is the coun- 
try’s tax system. 

Han Kleitarp, the former 
chairman of merchant, bank 
MeesPierson, the teg civil ser- 
vant pension fund, has 
emerged as a determined critic 
of the double-taxation of dis- 
tributed profits in the Nether - 
lands through, first, corptaate 
tax and then tax -an dividends. 

Mr Kleiterp, who in May 
became oh airm an of Algemseh 
Burgefflk Pensioenfonds (ABF), 
the Dutch civil servants’ pen- 
sion fond which ranks as one 
of the world’s largest, argues 
that the low level of distrib- 
uted profits acts as a disincen- 
tive for private investors to 
hold shares. 

In an analyst released ear- 
lier this year, he showed that 
the top 29 listed companies, 
excluding Royal Dutch/Shell, 
paid out only 29 per cent of net 
profits in cash dividends in 
1990-92. This compares with 
more than 60 per cent in the 
US, more than 50 per cent in 
the UK and around 40 percent 

in Germany. 

The tax system ‘makes it 
attractive for Dutch companies 
to offer shareholders “an 
optional dividend in the form 
of new shares. But Mr Kleiterp 
noted .that this effectively 
allowed companies to do a pub- 
lic share offering without the 
necessity of publishing a pro- , 
spectus or undergoing the dis- 
cipline of market reaction to a 
share expansion. 

. -Criticism of the tax system is 
shared by the University of 
Amsterdam's Foundation for 
Economic Research, which, in a " 
series of reports has blamed 
the fiscal treatment of distrib- 
uted profits for the feet that 
the Amsterdam bourse has tra- 
ditionally faced lower 
pri co - oam ings ratios than fel- 
low exchanges such as Frank- 
fort, Zurich. London and Paris. 

t • : •' ' 


‘Bancassurance 1 has intensified competition between financial institutions 

Powerful trio dominate banking 


Despite the continuin g influx 
of foreign banks into the 
Netherlands, the cou ntr y' s 
financial system is stffl domi- 
nated by a powerful trio of 
domestic 

llie three big banking insti- 
tutions . - ABN Amro, 1NG 
Bank and Rabobank - control 
a eomhmed 80 to 90 per cent of 
crada! market segments, mdi 
as mortgages and savings 
accounts. This makes it diffi- 
cult for foreign , banks to 
achieve a n y thin g other than 
niche status in retail 

banking. In spite of the 
Netherlands’s reputation as 
one of ft* mud open banking 
m a r k ets in Europe. 

The concentration of bank- 
ing power has been strength- 
ened by the spate of mergers 
since 1989 that has whiffled 
down the number of important 
domestic participants from 
five to three. 

But the oligopolistic nature 
of banking in the Netherlands 
does hot mean that Dutch 
banks have been, freed, from 
worrying about encroach- 
ments on their territo r y . On 
the contrary the three are 
increasingly treading on «» d i 
other's turf. This, plus the 
id wn t of “bancassurance" — 
fee binning of strict divisions 
between banking and insur- 
ance- means that competition 


between the three remains 
spirited. . 

lathe fight to win over ens- 
to pension pbm and 
other types of insurance prod- 
ucts, fee banks face compete 
tion from Dutch insurers such 
as Aegon and also from Fortis, 
the Dutch-Belgian financial 
group, which . like ING and 
Bahohimk, has ednsdoosly set 
out to cross-sell products 
through its insurance and 

I m wT rl ny (t kt r ff m Hfm riunim lg. 


equity trading and c or p orat e 
lending. 

Nevertheless the old days of 
seemin gly exclusive preserves 
are gone^ creating heightened 
competition at borne but also 
partly abroad. 

Unta the mid to late 1970s. 
the only bank' with a large 
international presence was 
ABN Bank, which later 
merged wife Amro to aga t e 
ABN Amro. Since then, how- 
ever, Rabobank and ING Bank 


Competition is rife in traditional lending 
activities and in capital markets 


AH in all, the baffle Hues have 
changed dramatically since 
the 1970s and 1980s when the 
banks each had a pres erve of 
their own. Rabobank, a co-op- 
erative, was the farmers’ 
bank; fee forer unners of ABN 
Amro were seen as catering to 
Ug co mp a ni es; and ING 1 ! pre- 
decessor NMB Bank* was asso- 
ciated with the medium-sized 
bnsinesp community* 

TO an extent the three big 
hmtai do retain specialities in 
the domestic market Rabo- 
bank Is the leader in home 
mortgages, ING (through its 
Postbank subsidiary) is a 
leader in money transfers, and 
ABN a mm is dominant in 


have pursued international 
expansion, with ING in partic- 
ular establishing a re putat ion 
In emerging markets NanVing, 
starting with its pioneering 
role in the trading of less 
developed co untry (LDC) debt 
in Latin America alter the 
j n te nm Uonal defat crisis. 

AD three are now expanding 
overseas, with ABN Amro and 
ING targeting many of the 
same emerging markets in 
eastern Europe and sonth-east 
Asia. In the summer, for 
example, both applied to open 
offices in Mexico to take 
advantage of new business 
oppo rtunitie s expected to be 
opened up by the North Ameri- 


can Free Trade Agreement. 

Rabobank, traditionally fee 
bank that cetera to the Nether- 
lands's extensive and rich 
agricultural sector, is increas- 
ingly focusing its interna- 
tional aspirations on the area 
of trade and commodity 
finance, a field which ING 
Bank selected long ago as one 
of the five components of its 

jntwnnttnmil wx pmif fqn. 

At home, Rabobank’s domi- 
nance of the agricultural and 
barticnltnral market is bring 
challenged by ABN Amro, 
which recog ni ses the export- 
driven potential of the coon- 
try’s formers and greenhouse 
owners. 

Competition is rife not only 
in traditional lending activi- 
ties but also in areas such as 
capital markets, where all 
three are trying to find new 
sources of canntession 

Half-year results published 
by the three banks at the end 
of August show the impor- 
tance they attach to this grow- 
ing pool of income. In each 
case, gr o w t h of commission 
income outstrips interest 
income, due in part to the tact 
that ABN Amro, ING and 
Rabobank were all Involved In 
the underwriting syndicate for 
the flotation of KPN, the 

HnWi Mn- niimi m A n Hn n« unH 

postal group, in June. 



ING araup HQ: doing watt in emerging markets banking 


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TV 


FINANCIAL TIMES MONDAY SEPTEMBER 12 1994 


★ 

DUTCH FINANCE AND INVESTMENT 4 


Profile: NETHERLANDS FOREIGN INVESTMENT AGENCY 

Investor net spreads to China 


T he agency charged with the job of 
attracting foreign investors to the 
Netherlands may soon be setting its 
sights on Hong Kong and China. 

As part of the continual fine-tuning of 
its international geographical presence, 
the Netherlands Foreign Investment 
Agency (WIA) is considering hiring a 
local adviser in Hang Kong to start scout- 
ing out potential investors in the region. 

The Hong Kong project, if launched, 
would be undertaken in conjunction with 
the Netherlands's two “main ports", the 
port of Rotterdam and Schiphol Airport 
Jochem Hanse, the NFlA's new director, 
said in an interview that the Hong Kong 
move would be undertaken cautiously as a 
long-term attempt to persuade local com- 
panies to use the Netherlands as a gate- 
way into Europe. 

“In the first instance, we're thinking of 
distribution facilities, because there's no 
chance at all for the moment that pro- 
duction facilities from, say, mainland 
China would be transferred to the Nether- 
lands," he said. 

Chinese entrepreneurs "will need distri- 
bution offices, sites and centres in Europe 
in the coming years, and this is a role that 
could be filled by Rotterdam, Schiphol and. 
their hinterlands." he said. 

The Netherlands, with its pivotal role in 
European transport and distribution, 
relies heavily on its geographical location 
and its sophisticated transport infrastruc- 



Jochem Hanse: “we try to sell our couitry on 
the basis of to asse t s" Lyaa^avuov 


ture to attract foreign companies. 

Other key selling points for foreign 
investors are the education levels and for- 
eign-language proficiency of the country’s 
workforce and its proximity to important 
clients and suppliers. 

Some SO per cent of foreign companies in 
the Netherlands are located in the corridor 
that connects Schiphol and Rotterdam, the 


world’s largest port, to principal European 
markets such as Germany's Ruhr indus- 
trial area. 

Unlike some countries, particularly in 
southern Europe, the Netherlands does 
not make aggressive use of incentives, tax 
breaks and subsidies In the battle to win 
over investors. Government grants are 
limited to the north and south of the coun- 
try and to an eastern district where the 
decline of the textile industry has caused 
high unemployment. 

“Hie subsidy battle in Europe can be 
fierce," Mr Hanse said. “We try to sell our 
country on the basis of its assets.” 

The NFIA's traditional focus on three 
“sales” elements - infrastructure, work- 
force and proximity to market - will be 
preserved by Mr Hanse. formerly the 
NFIA's deputy director, who was promoted 
to the agency's top job in July. 

Eq ually , Mr Hanse wnphadaw that the 
potential move into Hong Kong does not 
herald any weakening of NFIA's promot- 
ional campaigns in its traditional markets 
for inward foreign investment Apart from 
some annual fluctuations, the US gener- 


ally accounts for half of all investment in 
“greenfield” sites, Japan for about one 
quarter, and Europe for the rest The UK 
tends to account for half of European 
inward investment into the Netherlands. 

In terms of TJ$ and Japanese investment 
in particular, the Netherlands has scored 
wen in recent years. The country, which, 
accounts for just 7 per emit of Europe’s 
combined gross domestic product, is esti- 
mated to have captured about 20 per cent 
of all US and Japanese inward investment. 

NFIA, with a budget of Fl20m and a 
worldwide staff of 70, has four offices in 
North America, an office in London, and 
an office each in Japan, Korea and 
Taiwan. It also has a network of local 
advisers in countries such as Switzerland. 
Sweden and Italy. 

The agency, which is part of the minis- 
try of omnnwir. affair s, manages to attract 
a number of new investors every year 
who, on average, expect to pump a com- 
bined F12bn ($L2bn) of investment into 
the country and to create some 2£00 jobs. 
There are more than 5,000 subsidiaries of 
foreign companies in the Netherlands, 


accounting for about one tenth of the 
country’s annual investment in fixed 
assets- Recent successes by the NFIA 
include the decision by Eastman Chemical 
Co of the US to base its European head- 
quarters in The Hague and to make Rot- 
terdam the site of its future European pro- 
duction facility. 

The Netherlands has also managed to 
win over a number of foreign automotive 
suppliers, forUnding the US brake-system 
manufacturer Kelsey-Hayes which 
aTiiiniTWffPri last year that it would build a 
factory In the southern Dutch town of 
Heerlen, near the Belgian and German 
borders. 

The biggest coup of all was achieved in 
the early 1980s, when Fuji Photo Film 
started up its ro lling investments in what 
ultimately proved to be three new facto- 
ries in Tilburg. The Tilburg site is thought 
to be the largest foreign investment by a 
Japanese company outside the automotive 
industry. 

These successes do not mean NFIA’s job 
is always an easy one. Competition 
between European countries is stiff, and it 


shows no sign of abating. « 

Mr Hanse says NFIA’s aim is not to give * 
««ai date investors “the usual blah-blah 
routine” but to help them In their deci- 
sion-making process. 

“An American or Japanese investor will 
come to this country with all sorts of ques- 
tions like does be need a work permit, 
where are the industrial sites and what 
jnnH of tax deal can he put together. And 
he won't just be looking here, he’ll also be 
visiting Britain, Belgium and Germany, 
among other places.” 

‘Hie Netherlands can offer high labour 
productivity, but wages are not as low as 
in Ireland and Britain, though they are 
roughly on a par with Belgium and lower 
than those in Germany, Mr Hanse says. 
This tends to mean that labour-intensive 
projects with % low-level of initial invest- 
ment will tend to look elsewhere. But the 
Netherlands does do well in heavier 
investment higher-skilled areas like chem- 
icals and bio-tecbnology- 

More recently, it has attracted a number 
of US and other computer companies that 
use the Netherlands as a distribution, 
light-assembly and quick-repair base. 

The sophisticated distribution centres 
make it possible for companies to offer 
one-day computer repair in large parts of 
Europe. They also underline why the 
Netherlands is emphasising “value-added 
logistics” in the Europe-wide competition 
for outside investors. 


Apart from KPN, there are few big privatisations left in the Netherlands 

$4bn sell-off was historic peak 



The sale of tha state's remaining 20 par cent stake in Fokter Itss been agreed in principle 


The Netherlands' privatisation programme 
reached a historic peak in early June 
when the government sold a 30 per cent 
stake in Koninklijke PTT Nederland 
(KPN), the country’s telecommunications 
and postal company, to investors for 
F16Abn(|3Abn). 

A second tranche of KPN shares, repre- 
senting a holding of at least 20 per cent 
but probably significantly more, is due to 
take place before the end of 1997. At the 
present share price for KPN, this would 
raise a minimum of F14.6bn for the gov- 
ernment, and mark another important 
milestone for privatisation in the Nether- 
lands. 

However, apart from the rich pickings 
offered by KPN. there are few big privati- 
sations left in the Netherlands, a country 
which never went in for the large-scale 
nationalisations that have left European 
counterparts such as France and Italy 
with holdings ranging from banks and 
insurers to computer companies. 

So far, the new government that was 
sworn in late last month has given no sign 
that it intends to step np the pace of 
privatisations. 

Unlike some other countries, privatisa- 
tion is normally a politically neutral con- 
cept in the Netherlands. The Dutch state 
has not made long-term, concerted efforts 
to create a "people's capitalism" along the 


lines of that which Margaret Thatcher pur- 
sued when she was prime minis ter of the 
UK. At the same time, privatisation is not 
a party-political issue. 

This was underlined by the KPN trans- 
action, which took place a month after an 
inconclusive general election had left the 
country in a political vacuum with a care- 
taker government However, because all 
four main political parties had given foil 
support to the flotation ahead of the elec- 
tion. the sell-off went ahead as planned 
and as scheduled. 

The lack of political opposition to priva- 
tisation In the Netherlands means that 
most of the rest of the state’s corporate 
holdings could be sold off without too 
much difficulty. 

In Dutch, “privatisation” has a double 
meaning tha t ran be ran fiising to foreign- 
ers. As in the Anglo-Saxon sense of the 
word, it can mean the sale of government 
shares to outside investors, generally by 
means of a bourse flotation. But it can also 
mean the process by which a government 
entity or organisation is turned into a pub- 
lic limited company and allowed to act 
like a private, commercial enterprise. All 
the shares remain government-owned, but 
the organisation is considered to be part of 
the private sector. 

This was done at KPN in 1389, as a 
prelude to this year's bourse flotation. But 


the same process has taken place at 
smaller or ganisations, such as the State 
Mint, which mints government coins and 
medals. Its “privatisation” took place on 
January L “For the time being, all shares 
will remain in government hands,” the 
finanrp minis try sg jfl “But it cannot be 
ruled out that the mint may be sold if 
there is an attractive offer from a serious 
company.” 

The Dutch state's holdings are a mixture 
of minority stakes in publicly-quoted com- 
panies, such as steel group Hoogovens, 
chemicals group DSM and the national 
carrier KLM Royal Dutch Airlines, as well 
as 100 per cent ownership of organisations 
such as Dutch Rail and the Government 
Printing Office. 

Many of the stakes, such as the govern- 
ment’s minority holding in Fokker, the 
aircraft manufacturer, are the results of 
rescues or capital injections. The Dutch 
state tends to see these holdings as tempo- 
rary and when circumstances permit will 
reduce its stakes. In the case of KLM, the 
government’s stake has fallen from as 
high as 78 per cent in the rmd-1970s to 
around 38.2 per cent today. 

Shares owned in companies that already 
have a share listing are easier for the 
Dutch state to selL One of most obvious 
candidates in this category is DSM, in 
which the government still has a 31 per 


cent stake following the public sale of the 
rest of its shares in two tranches of 
around 34 per cart each In January and 
September 1969. 

TT nH>p the situation surrounding kt.m, 
where there is perhaps a strategic value in 
owning shares because of the political 
nature of international aviation agree- 
ments, there is no r eason for the Dutch 
state to hold on to its DSM shares. 

However, no date has been given far the 
sell-off. “We have a written commitment 
from the state that it will first consult 
with us,” said Ad Timmermans, the com- 
pany's finance director, last month. 

The company ha s said it would prefer 
the next, and presumably last, tranche of 
the state’s shares not to be sold through a 


public offering, as in the previous two 
tranches, to avoid the need for time-con- 
suming road shows to potential investors. 

The DSM sale is likely, but not guaran- 
teed, to take place later in the 1990s. One 
definite sale, which has already been 
agreed in principle, is the d i ve stm ent of 
the state's remaining 20 per cent .stake in 
Fokker, the Dutch a ir cr af t maker. Deut- 
sche Aerospace, part of Germany’s 
Daimler-Benz group, bought a 51 per cent 
stake in Fokker in 1993 through the pur- 
chase of new shares and shares owned by 
the Dutch government. The contract stipu- 
lated that the government would sell its 
remaining stake to DASA in 1996. 

Apart from DSM and Fokker, there are 
few immediate privatisation candidates. 


but there are other possibilities if the gov- 
ernment needs to raise money to reduce 
the large and growing public debt The 
remaining choices, however, have the 
potential to create controversy. 

For example, the Dutch railway system, 
sometimes mentioned as a long-term pri- 
vatisation candidate, is stQl loss-making. 
Any sale of the company which would 
herald a rise in passenger fares could be 
expected to be controversial. 

Equally, any move to sell off part of the 
state’s majority bolding in Amsterdam’s 
Schiphol Airport would put the govern- 
ment in a delicate position because of the 
continuing debate between proponents 
and opponents over the airport's ambi- 
tious ex pansi on plans. 


One call/coupon, and all the information 
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advisor who speaks your language, 
and am also discuss the field of 
foreign investment. 

This service for your company is 
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without obligation. And of course 
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dentiality in our dealings with you. 


rlaflds — 
fbreigQjnvestment 
icy- 


MINISTRY Of ECONOMIC AFFAIRS 


The Netherlander. 

The weekly newspaper on the 
Dutch economy - in English. 


When Dutch investments are your business you need objective, up-to-date 
and authoritative information. 

It’s available by subscribing to ’The Netherlander’, the business weekly 
published by Het Financieele Dagblad. 

’The Netherlander’ delivers comprehensive coverage of the Dutch economy, 
in English, 52 times a year. 

It brings you the same high-quality local intelligence that Dutch business 
people receive from Het Financieele Dagblad, Holland’s daily financial 
newspaper. 

So before you invest in the Netherlands, invest in a subscription to ’The 
Netherlander'. 


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