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MITSUBISHI ELECTRIC TO SUPPLY PROCESSORS TO UNISYS | Mitsubishi Electric Corp <MIET.T> said it
is nearing an agreement with Unisys Corp <UIS> of the U.S. To
supply central processing units for a medium-sized Unisys
mainframe computer planned to succeed the System 80.
A Mitsubishi Electric official declined to say how many
processors would be involved, but said there are no plans to
market the new Unisys computer in Japan.
REUTER
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CANON, INTEL AGREE ON MICROCHIP TIE-UP | Canon Inc <CANN.T> and Intel Corp <INTC>
of the U.S. Agreed to the joint development, production and
import of very large scale integrated circuits, a Canon
spokesman said.
He told Reuters Intel will make the chips and Canon will
import them for use in for use in photocopiers, printers and
facsimiles to be made and sold in Japan. Canon, which last week
made a similar pact with National Semiconductor Corp <NSM>,
plans to raise its ratio of microchip imports this year to 28
pct from 24 pct last year to take advantage of the yen's rise
and help quell mounting trade friction, he said.
REUTER
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HUNGARY RAISES PRICES IN EFFORT TO CURB DEFICIT | Hungary has announced sharp price
increases for a range of food and consumer products as part of
its efforts to curb a soaring budget deficit.
The official MTI news agency said the government decided
consumer price subsidies had to be cut to reduce state
spending. From today the price of meat will rise by an average
18 pct and that of beer and spirits by 10 pct, MTI said.
MTI said consumer goods will also become more expensive,
with the price of refrigerators rising some five pct. It also
announced a number of measures to ease hardship, including
higher pensions and family allowances.
Statistics indicate the budget deficit tripled in 1986 to
47 billion forints. Central banker Janos Fekete has said the
Finance Ministry is trying to cut the 1987 shortfall to between
30 and 35 billion from a planned 43.8 billion.
A major tax reform, including the introduction of a
Western-style valued added tax, is planned for January 1988 in
an effort to cure problems in state spending.
But diplomats said the latest announcement shows the
authorities were forced to act quickly to keep this year's
deficit under control.
The measures are also aimed at cooling an overheated
economy, and could help dampen Hungarians' appetite for
imported Western goods which consume increasingly expensive
hard currency, the diplomats said.
The diplomats also said, however, that they did not expect
the kind of social unrest that followed sharp price rises in
other East Bloc states, notably Poland.
REUTER
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TOKYO STOCKMARKET INDEX PLUNGES 427.48 TO 22,789.11 AT 1343 LOCAL TIME - BROKERS
| |
TOKYO STOCKS PLUNGE IN MIDDAY TRADE | Tokyo's stockmarket index plunged sharply
at the start of afternoon trade as investors took profits from
last week's four straight record closes, brokers said.
The market index fell 427.48 points to 22,789.11 only 13
minutes after afternoon trading began at 13:30 local time.
Brokers said concern over weekend announcements of mounting
trade tension with Europe and the U.S. Sparked the heavy
selloff.
The average had risen 630.48 points in the last four
trading sessions of last week.
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BANK OF JAPAN ACTIVELY BUYING DOLLARS AT AROUND 142.20 YEN IN TOKYO - DEALERS
| |
CHINA WANTS TO BUY 5,000 TONNES PAKISTANI COTTON | China is negotiating with Pakistan to
buy 5,000 tonnes of cotton this year, after importing the same
amount last year under a barter agreement, Chinese consulate
sources said.
Chinese ambassador Tian Ding told a meeting of Pakistani
industrialists on Thursday that China intended to increase
imports from Pakistan to reduce a trade imbalance.
Pakistani officials estimate the country's cotton output
from the current crop at a record 7.6 mln bales (375 pounds
each). Last year's output totalled 7.2 mln bales and domestic
consumption was just below three mln bales, they said.
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AUSTRALIAN GOVERNMENT MUST CUT SPENDING, ANZ SAYS | The government must announce harsh cuts
in spending in its May 14 economic statement if it is to give
an adequate response to Australia's economic problems, the ANZ
Banking Group Ltd <ANZA.S> said.
Cuts of two billion dlrs would be insufficient against the
backdrop of a 12 billion dlr government deficit and a 14
billion dlr current account deficit, it said in its monthly
Business Indicators publication.
"For the past two years, the government has struggled with
an economic reality that demands measures beyond those which it
sees as politically practicable," it said.
The political climate meant there would be a continued
over-reliance on monetary policy to hold the exchange rate and
maintain confidence in economic management, ANZ said.
"The cost of this approach is that the much-needed revival
of business investment will be further postponed," it said.
The economy was now on a modest growth upswing boosted by
export and import-replacement industries which had created a
false suggestion that the worst adjustments to the balance of
payments crisis were past. "Unfortunately, successful adjustment
to Australia's deep-seated economic problems remains a
long-term process," it said.
In its economic forecasts, ANZ said it expected moderate
overall economic growth with gross domestic product (GDP)
rising 2.7 pct this year and 2.4 pct in 1988.
The current account deficit would narrow to five pct of GDP
this year and 4.3 pct in 1988 and net foreign debt would grow
strongly from 81 billion at the end of 1986 to 97.2 billion at
end-1987 and 110.3 billion a year later.
Inflation would fall to 8.5 pct in 1987 and 7.5 pct in 1988
from 8.9 pct in 1986 and further falls in real wages were
expected, ANZ said.
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BELL RESOURCES TO ISSUE WARRANTS ON BHP GOLD MINES | Bell Resources Ltd <BLLA.S> said it will
raise about 50.8 mln dlrs by issuing 135.6 mln warrants at 37.5
cents each, entitling the holder to take up shares in BHP Gold
Mines Ltd <BHPG.ME> at 1.60 dlrs each on or before December 15,
1987.
The non-renounceable entitlement will be on the basis of
one-for-three to holders of Bell Resources fully-paid shares
and convertible preference shares registered on May 6, the
company said in a statement. Other ratios will be one-for-five
for partly paid Series A shares, one-for-eight for partly-paid
Series B and C shares and one-for-10 for 1987 options.
Bell said the security is similar in concept to the
warrants on the shares of BHP Gold Mine's parent company, The
Broken Hill Pty Co Ltd <BRKN.ME> (BHP), launched by Bell about
one year ago.
BHP is currently floating BHP Gold Mines, the vehicle for
its gold interests in Australia and other countries.
The Bell Group Ltd will not take up its entitlement to the
BHP Gold Mines warrants, but the family companies of its
chairman Robert Holmes a Court will, Bell said.
The warrants will be listed and stockbroker McCaughan Dyson
and Co Ltd is underwriting the issue.
REUTER
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ELECTROLYTIC REFINING LOWERS COPPER PRICE | The Electrolytic Refining and
Smelting Co of Australia Pty Ltd said it lowered its ex-works
Port Kembla Refinery Copper Price by 20 dlrs to 2,160 dlrs a
tonne, effective today.
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JAPAN CENTRAL BANK ACTIVELY BUYS DOLLARS IN TOKYO | The Bank of Japan actively bought dollars
here in early afternoon trade at around 142.20 yen, dealers
said.
The central bank had placed buy orders at that level and
prevented the dollar from falling when it came under heavy
selling pressure from investment trusts and trading houses,
they said.
However, the intervention failed to boost the U.S. Currency
significantly from the 142.20 yen level, they added.
The dollar was trading around its midday rate of 142.30
yen. It had opened here at 141.85 yen.
REUTER
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TEXACO SEES BUSINESS LITTLE HIT BY BANKRUPTCY MOVE | Texaco Inc <TX> said its decision to
file for protection under Chapter 11 of the U.S. Bankruptcy
code will not affect the majority of its businesses.
It said its subsidiaries, which account for 96 pct of its
32.6 billion dlrs in revenues and 79 pct of its net property,
plant and equipment, were free of the action.
Only parent holding company, Texaco Inc, and operating
subsidiaries, Texaco Capital Inc and Texaco Capital N.V, are
affected, it said.
But the company said it was likely to suspend its 75 cents
per share quarterly common stock dividend and halt repayments
on debts of some 6.8 billion dlrs.
Texaco said it filed for Chaper 11 because suppliers were
demanding cash payments and banks were withholding loans as a
result of a legal dispute with Pennzoil Co <PZL>.
Texaco is fighting a Texas law requiring it to post a bond
of more than 10 billion dlrs before it can appeal a 1985
judgment that ruled it illegally interfered with Pennzoil's
1984 acquisition of Getty Petroleum Corp <GTY>. The bond almost
matches the damages awarded against Texaco.
Should Texaco fail to place the bond, Pennzoil could begin
to attach its assets to secure the judgment.
Last Monday, the Supreme Court overturned a decision to cut
Texaco's bond to one billion dlrs, and sent the issue back to
the Texas courts.
Analysts said the bankruptcy filing effectively froze all
Texaco's obligations while it continued to appeal the merits of
the Pennzoil lawsuit.
"Attempts last week to win a compromise on both the bond
issue and the larger dispute failed," James Kinnear, Texaco's
president and chief executive officer, told reporters.
Kinnear said Pennzoil's disclosure in court papers on
Friday that it wanted to extend the bond issue hearing until
the end of April, pushed Texaco further towards Chapter 11.
Pennzoil had asked Texaco to post a 5.6 billion dlr cash
bond and to reduce its dividend to not more than 50 pct of
earnings. Pennzoil also wanted assurances that Texaco would not
sell any assets, Kinnear said.
Texaco offered to put up one billion dlrs in a letter of
credit and agreed not to let the value of its assets fall under
11.1 billion dlrs, he added.
Joseph Jamail, a Houston attorney for Pennzoil, said the
company had made its latest settlement offer to Texaco on
Saturday and was taken by surprise when Texaco filed for
bankruptcy.
He declined to reveal the amount of the proposal, citing a
confidentiality agreement between the two companies. "Texaco
told us they would get back to us but instead they chose to go
to bankruptcy court," Jamail said.
Attorneys for Pennzoil said they believed the company would
prevail in court appeals, adding that Texaco's assets were
ample ultimately to pay the Pennzoil judgment in full.
REUTER
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U.S. AUTO UNION WILL FIGHT TO STOP JOB/WAGE CUTS | The United Auto Workers union (UAW)
vowed to fight wage and job cuts in a round of labour talks
starting in July that cover nearly 500,000 workers at General
Motors Corp <GM> and Ford Motor Co <F>.
"The UAW doesn't go around picking fights, but we don't run
away from them when they're forced on us ... We want peace, but
peace comes at a price," union president Owen Bieber said.
"And if it's war, the UAW will be ready for it," he said, in
an address to 3,000 union leaders at the start of a four-day
special convention.
He said the Detroit carmakers had turned their backs on
America by the increasing use of imports that cost U.S. Jobs.
He said the union was ready to strike for "job and income
guarantees," bans on shifting production to foreign and other
non-union sources, and increases in pay and profit-sharing.
GM, under pressure from declining sales and profits, has
said this year's talks will be difficult because it wants to
limit wage rises and shed parts-manufacturing operations
considered uncompetitive.
Contracts at both companies expire at midnight on September
14.
REUTER
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N.Z. PLANS EIGHT 250 MLN DLR 1987/88 BOND TENDERS | Finance Minister Roger Douglas said
eight bond tenders of 250 mln dlrs each are planned for the
year ending March 1988.
Douglas said in a statement the June quarter borrowing
program will not include a May tender, but a 250 mln dlr tender
will be held on June 11.
Overfunding in 1986/87 has removed the need for a May
tender, he said.
Preliminary estimates put net public sector injections for
1987/88 year at 2.1 billion dlrs.
The fiscal deficit for 1987/88 is forecast at 2.2 billion
dlrs compared with a forecast of 2.45 billion for 1986/87 and
1.87 billion a year earlier.
However, Douglas said the 1987/88 estimate is subject to
uncertainties over the results of pre-budget spending reviews
and tax forecasts and over the effect the program of
"corporatising" certain government departments will have on
liquidity.
Douglas said whatever the outcome of these influences the
net public sector injections will continue to be fully funded
on a fiscal year basis.
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PATON REPORTS U.S. GREEN COFFEE ROASTINGS HIGHER | U.S. roastings of green coffee in the
week ended April 4 were about 275,000 (60-kilo) bags, including
that used for soluble production, compared with 215,000 bags in
the corresponding week of last year and about 320,000 bags in
the week ended March 28, George Gordon Paton and Co Inc
reported.
It said cumulative roastings for calendar 1987 now total
4,440,000 bags, compared with 4,540,000 bags by this time last
year.
Reuter
|
AUSTRALIAN STOCKS CLOSE AT RECORD LEVELS | Australian share markets closed at
record levels for the seventh consecutive session as strong
overseas interest in gold stocks pushed the market higher,
brokers said.
They said heavy trading in gold stocks in London on Friday
night provided the impetus for the local market.
At the close of trading the all ordinaries index was 11.6
points higher above Friday's previous record close at 1,799.0,
while the gold index had risen 176.8 points or 5.2 pct to a
record 3,562.1.
The all resources index added 23.9 points to 1,164.3 but
the all industrials index dropped 4.8 points to 2,631.9.
National turnover was a high 228 mln shares worth 525 mln
dlrs with rises outnumbering falls by four to three.
Western Mining continued its run, jumping 1.04 dlrs to a
record 10.30. Poseidon gained 3.00 to 16.00, Sons of Gwalia 90
cents to 16.50 and Kidston 50 to 9.00.
Placer Pacific rose 25 cents to 3.95 dlrs, Elders Resources
17 to 3.20, CRA 36 to 8.70 and MIM 19 to 3.35.
Market turnover was boosted substantially by the inclusion
of about 180 mln dlrs in Australian Consolidated Minerals
shares, understood to represent the sale of Western Mining's
holding, brokers said. ACM shares finished 30 cents down at
8.40 dlrs.
Resources leader BHP closed 15 down at 11.40 in quiet
trading while Bell Resources rose eight to 5.70. Elders IXL
lost 10 to 4.75.
With most investors concentrating on mining stocks,
industrial stocks took a back seat.
TNT dropped 10 cents to 4.75 dlrs and News Corp recovered
to be steady at 23.00 after being down most of the day. ANZ
Bank dropped 10 to 5.60 and National four to 5.46.
In the oil and gas sector Santos dropped 26 to 5.00 and
Bridge eight to 1.40, but Genoa gained 25 to 3.05.
June share price index futures staged a late rally and
finished 24.0 points higher at 1,824.0.
REUTER
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WESTERN MINING SELLS ACM STAKE | Western Mining Corp Holdings Ltd
<WMNG.S> (WMC) said it sold its entire holding of 22.13 mln
shares in the gold mining company <Australian Consolidated
Minerals Ltd> (ACM).
WMC gave no details, but stockbrokers said the sale was
made at eight dlrs a share on Friday to a number of U.S.,
European and Australian investors through WMC's usual brokers.
The company purchased the 19.9 pct parcel in early March
from Amax Inc <AMX.N> at 6.32 dlrs a share ahead of a
one-for-three bonus issue when Amax sold its entire 47 pct
stake in ACM to a number of local companies.
REUTER
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YUGOSLAV ECONOMY WORSENED IN 1986, BANK DATA SHOWS | National Bank economic data for 1986
shows that Yugoslavia's trade deficit grew, the inflation rate
rose, wages were sharply higher, the money supply expanded and
the value of the dinar fell.
The trade deficit for 1986 was 2.012 billion dlrs, 25.7 pct
higher than in 1985. The trend continued in the first three
months of this year as exports dropped by 17.8 pct, in hard
currency terms, to 2.124 billion dlrs.
Yugoslavia this year started quoting trade figures in
dinars based on current exchange rates, instead of dollars
based on a fixed exchange rate of 264.53 dinars per dollar.
Yugoslavia's balance of payments surplus with the
convertible currency area fell to 245 mln dlrs in 1986 from 344
mln in 1985. The National Bank said the drop was due to a
deterioration in trade. Exports to the convertible currency
area rose 11.6 pct from 1985, while imports rose 17.8 pct.
Retail prices rose an average of 88.1 pct in 1986 while
industrial producer prices rose by 70.6 pct, the bank's data
showed. The cost of living rose by 89.1 pct.
Personal incomes rose by 109 pct in 1986.
Prime Minister Branko Mikulic warned in February that wages
were too high given the level of productivity.
Mikulic introduced a law cutting wages to the level of the
last quarter of 1986 and tying future rises to productivity.
Bank statistics show the overall 1986 rise in M-1 money
supply was 109.1 pct with a year-end position of 3,895.9
billion dinars. Yugoslavs have 9.8 billion dlrs worth of
foreign currency savings in the country and 20 billion dlrs
abroad, mostly owned by workers employed in western Europe.
The dinar fell by 73.1 pct against a basket of hard
currencies in 1986. The highest depreciation was against the
Swiss franc, 85.3 pct, and the lowest against the U.S. Dollar,
46.2 pct.
REUTER
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ANZ BANK SETS ONE-FOR-TWO BONUS ISSUE | Australia and New Zealand Banking
Group Ltd <ANZA.S> said it will make a one-for-two bonus issue
from its asset revaluation reserve to shareholders registered
June 2.
The proposed bonus and an increase in authorised capital to
one billion one-dlr par shares from 600 mln will be put to
shareholders for approval at an extraordinary general meeting
on May 26, the ANZ said in a statement.
The issue will absorb about 230 mln dlrs of the 260.9 mln
standing in the asset revaluation reserve, it said.
The bank said that by lowering the dividend rate it expects
to maintain the value of dividend payout on the enlarged
capital at about the level of its last full year ended
September 30. The group paid 31 cents a share and 133.1 mln
dlrs in all for that year.
Shareholders will also be asked to approve changes in the
bank's articles of association to allow it to offer shares in
lieu of the interim dividend at a discount of five pct to the
market price.
The group is the latest to announce a tax-free bonus issue
ahead of dividend imputation, effective July 1.
REUTER
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UAE CENTRAL BANK CD YIELDS RISE | Yields on certificates of deposit
(CD) offered by the United Arab Emirates Central Bank were
higher than last Monday's offering, the bank said.
The one-month CD rose 1/4 point to 6-3/8 pct, while the
two, three and six-month maturities rose 5/16 point each to
6-7/16, 6-1/2 and 6-5/8 pct respectively.
REUTER
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CHINESE HOTEL RAISES 21 MLN DLR LOAN | A tourist hotel in Suzhou, Jiangsu
province, is raising a 21 mln U.S. Dlr loan to cover its
construction cost, lead manager <DnC Ltd> said.
The loan for the Suzhou Aster Hotel will mature in 10 years
and is guaranteed by the provincial investment arm <Jiangsu
International Trust and Investment Corp>. The terms were not
revealed. The loan, to be signed by the end of the month, will
be provided by a number of banks on a club basis.
The hotel is being developed on a contractual joint venture
basis between an unnamed Hong Kong Chinese investor and Suzhou
municipal entities.
REUTER
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CHINA SULPHUR-IRON MINE STARTS PRODUCTION | China's largest sulphur-iron mine has
started trial production at Yunfu in the southern province of
Guangdong, the China Daily said.
It said the mine has an annual output capacity of three mln
tonnes of sulphur-iron ore, which can be used without
processing because of its high quality.
REUTER
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CHINA, CHILE TO BUILD COPPER TUBE PLANT IN CHINA | China's state-owned Beijing Non-Ferrous
Metals Industrial Corp and <Wrought Copper Ltd> of Chile signed
a contract to jointly build a copper tube plant on the
outskirts of Peking, the China Daily said.
The Beijing-Santiago Copper Tube Co involves an investment
of 9.93 mln dlrs and will, on completion, have a production
capacity of 5,000 tonnes of copper tubes a year, it said.
It said Chile will supply copper at preferential rates to
the venture, whose equipment comes from <Wednesbury Tube Co> of
U.K.
The agreement calls for joint Sino-Chilean management of
the venture for 15 years, the paper said.
It said the venture is the first economic cooperation
project between China and Chile, but gave no more details.
China is a major copper importer. Customs figures show it
imported 171,118 tonnes of copper and alloy in calendar 1986,
down from 355,652 tonnes in 1985.
REUTER
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SAS UNIT, SKANSKA IN CHINA HOTEL JOINT VENTURE | The <Scandinavian Airlines System>'s
SAS International Hotels unit and Skanska AB <SKBS.ST> of
Sweden are raising a 37 mln U.S. Dlr loan for their joint
venture hotel in China, loan lead manager DnC Ltd said.
It said the loan will finance part of the cost of the 46
mln dlr SAS Grand Hotel Beijing in the Chinese capital. The
three other lead managers are DnC's parent company Den norske
Creditbank, Scandinavian Far East Ltd and its parent
Skandinaviska Enskilda Banken.
Terms of the loan are being finalised and syndication is
expected to begin in about one month, DnC Ltd said.
The recipient of the loan will be SAS Grand Hotel Beijing
Joint Venture Co Ltd, which is owned 50 pct by the China
International Exhibition Centre and 50 pct by the two Swedish
firms.
Skanska will be responsible for the construction and SAS
International Hotels for the management of the hotel, which is
part of the International Exhibition Centre complex.
Construction of the 400-room hotel will start after the
loan is signed. It is due to be opened in late 1989.
REUTER
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SINGAPORE EXTERNAL TRADE GAINS 8.8 PCT IN QUARTER | Singapore's external trade grew 8.8
pct in first quarter 1987, against a 12.4 pct decline in the
same period last year and two pct growth in the previous
quarter, the Trade Development Board said.
It said exports over the period rose by 8.7 pct to 12.38
billion dlrs and imports by 8.9 pct to 14.64 billion for a
trade deficit of 2.26 billion, against a 2.06 billion deficit
in the same 1986 period and 1.78 billion deficit previously.
The growth was attributed to the strength of non-oil trade,
especially computers and computer parts, electronic components
and garments, it said.
REUTER
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MALAYSIA'S 1986 MANUFACTURING EXPORTS RISE 24 PCT | Malaysia's manufacturing exports
rose by 24.5 pct to 15.1 billion ringgit in 1986, chairman of
the Export Promotion Council Ahmad Sarji Abdul Hamind said.
The improved export performance was led by electrical and
electronic products, textiles, footwear, clothing, processed
food, timber, chemical and rubber products, he told a news
conference.
However, total gross exports for the year declined by 5.6
pct to 35.9 billion ringgit from 38 billion in 1985 due to a
fall in major commodity exports and weak prices, he said.
REUTER
|
SLIGHT DROP IN PHILIPPINE TREASURY BILL RATES | Rates for five billion pesos worth of
Philippine Treasury bills eased slightly at Friday's auction,
with tenders totaling 13.94 billion, the Central Bank said.
It said 1.3 billion pesos of 91-day bills averaged 11.249
pct, down from 11.743 pct the previous week, 1.6 billion of
182-day bills averaged 12.473 pct against 12.847 pct, and 2.1
billion of 364-day bills averaged 14.029 pct against 14.233.
The bank said there would be no auction this week because
of the Easter holiday.
It also said T-bills and three-year T-note auctions totaled
61.1 billion pesos in the first quarter of 1987.
REUTER
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GERMAN CAPITAL MARKET LIBERALIZATION STALLS | West Germany's capital market
liberalization program has stalled and bankers are worried it
may take years for further reforms to be completed.
Liberalization got underway in May 1985 when foreign banks
received Bundesbank permission to lead-manage mark eurobonds.
Further moves included introduction of mark-denominated
certificates of deposit last year. But other changes, including
revisions in the domestic options market and introduction of
futures contracts, need lengthy statutory changes and this may
take years, bankers and dealers say.
Deutsche Bank AG co-chairman F. Wilhelm Christians called
last week for an enlargement of current capital market
instruments to include instruments already standard abroad.
He said these are needed especially when prices fall,
citing declines in West German share prices in the first two
months of this year when stock indices fell about 20 pct.
Others are more blunt. Securities dealers say the lack of
viable hedging instruments for shares and bonds makes trading
in domestic markets too risky.
"We need a stock index futures contract, and a futures
contract for recent government bonds," one dealer said.
West Germany now has options contracts on about five pct of
shares and bonds traded on exchanges here, covering only about
30 pct of the average traded volume, stock market sources said.
Options can only be written on the original 14 bonds
selected when bond options were introduced last April. The most
recent bond on the list was issued in 1985.
There are no futures exchanges in West Germany. German
banks may participate in futures exchanges through branches
abroad but these are at least outwardly subject to stringent
West German rules requiring that every contract be secured on a
one-by-one basis with a separate hedge, to prevent speculation.
Another problem is a lack of liquidity in the existing
markets, owing to lack of private investor participation.
Private individuals and corporations do not engage in
options trading now due to West Germany's civil and exchange
laws, which define losses made in futures and options business
as gambling losses, which investors need not pay back.
Options business has been hurt by lack of liquidity from
pension funds, which currently are forbidden to invest in these
instruments. But they are to be allowed to enter the business
soon as the European Community begins to harmonize rules
governing funds.
Manfred Laux, general secretary of the West German mutual
funds association in Frankfurt, said harmonized rules are to be
adopted by October 1, 1989 at the latest.
The push to adopt new instruments has not been great in the
past, owing to wide-spread belief they are speculative, which
gives them a bad name in West Germany. But pressure for their
introduction here is growing.
The start-up of a Swiss futures exchange has some bankers
considering if a similar exchange would be useful in West
Germany. They say that without innovations, some business could
drift to London, which the Bundesbank vehemently opposes.
An official at the London International Financial Futures
Exchange (LIFFE) said the exchange currently has no plans to
introduce more mark-denominated contracts beyond the existing
mark-dollar contract. But he said the exchange is studying the
feasibility of other contracts, including one for three-month
mark interest rates and possibly a government bond contract.
A Bundesbank capital markets expert said the Bundesbank has
no objections to hedging through futures but any liberalization
in that sector is still in the early planning stages after
earlier talks ended two years ago.
Considerations about the futures business have been drawn
out because of the large number of participants involved in
talks. They include parliament, the Bundesbank, the Federal
Banking Supervisory Board, eight West German stock exchanges
and their governing states, and the four West German banking
associations.
Beyond options and futures, other changes being suggested
include replacing the federal government's current bond
consortium with an auction procedure similar to one being
considered in the U.K. And already in practice in the U.S.
This would upset the existing market order providing German
and foreign banks in the consortium with fixed quotas but it
would eliminate the misallocations some bankers say presently
arise within the fixed consortium quota system.
In addition, some bankers would like the method of bond
trading on the West German stock exchange changed to a system
of continuous price-setting from the current system in which
every bond price is fixed once a day.
This would make trading more transparent if it reduced the
proportion of off-floor interbank bond trading, now some 90 pct
of the volume of bond transactions here, the bankers say.
REUTER
|
MALAYSIAN TREASURY BILL RISES AT LATEST TENDER | The central bank, Bank Negara,
said yields on the 91-day Malaysian treasury bills rate rose
slightly to 2.032 pct at this week's tender from 2.020 pct last
week.
Accepted bids ranged between 1.951 and 2.060 pct compared
with 1.874 and 2.048 pct previously. Applications totalled 440
mln ringgit for the 100 mln of bills on offer.
The bank said it will offer 100 mln ringgit of 91-day bills
and 150 mln of 182-days at a tender closing on April 20.
REUTER
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OFFER FOR DOME MAY SHORT-CIRCUIT ITS DEBT TALKS | A 3.22 billion dlr offer for Dome
Petroleum Ltd <DMP.MO> by TransCanada Pipelines Ltd <TRP.TO>
may short-circuit Dome's restructuring plan and open the door
for more takeover bids, oil analysts said.
Dome is trying to get approval for a plan to refinance debt
of more than 4.5 billion dlrs by July 1, 1987, when an interim
debt plan that allowed the Canadian oil and gas firm to defer
substantial payments to creditors will expire.
Analysts said TransCanada's bid signals Dome's debtholders
that an alternative exists to Dome's debt plan.
Dome announced its plan to 56 major creditors as well as
public noteholders in March after several months of delicate
negotiations.
TransCanada's proposal "amounts to a quasi debt
restructuring," oil analyst Doug Gowland of Brown Baldwin Nisker
Ltd said from Toronto.
Calgary-based Dome's restructuring plan would allow
creditors to convert debt to common shares under a formula yet
to be negotiated. Payments on remaining debt would be linked to
cash flow generated by assets pledged against the debt.
"The weakness of the whole debt-refinancing proposal is that
even with approval of creditors, there is no assurance that
Dome will in fact be able to repay all of its debt obligations,"
said Wilf Gobert, an oil analyst for Peters and Co Ltd in
Calgary.
TransCanada's announcement came as a surprise since Dome
was waiting for responses from creditors on its proposed
refinancing packages, Gobert said.
The TransCanada proposal could open the bidding for Dome
since other potential buyers were probably waiting for lenders
to agree to a restructuring, he added.
"I would think that the debtholders would want to entertain
any and all offers (for Dome)," Gobert said.
Dome spokesman David Annesley said in New York that
TransCanada's announcement could be seen as an attempt to fix
the bidding price for Dome and an effort to preclude other
possible buyers from making an offer. "By drawing attention to
us in our discussions, it means that others may be a little
reluctant to come forward," he said.
Dome does not consider TransCanada's proposal a formal
offer because the pipeline utility's announcement breached a
confidential agreement between the two companies, he said.
Dome responded to the statement by suspending discussions
with TransCanada in order to pursue talks with other
unidentified parties. However, Dome said its management and
financial advisers would evaluate all proposals, including
TransCanada's.
Gowland said TransCanada's offer is probably a fair price
for the company's 36.1 mln acres of oil and gas land holdings.
However, he said not enough financial details are known
about Dome's debt restructuring to compare the value of
TransCanada's proposed offer.
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CHINA AND PORTUGAL SIGN MACAO DEAL | Prime Ministers Zhao Ziyang of China and
Anibal Cavaco Silva of Portugal signed an agreement to end more
than four centuries of Portuguese rule over the territory of
Macao and return it to Chinese control in 1999.
Macao will become a special administrative region on
December 20, 1999, retaining a high degree of autonomy except
in foreign affairs and defence. Its capitalist system is to
remain intact for 50 years under an arrangement similar to the
one that will return Hong Kong to China from Britain in 1997.
China hopes to win back the Nationalist-ruled island of
Taiwan under the same "one country, two systems" formula.
"The successful settlement of the question of Macao has
proven and will continue to prove that the concept of 'one
country, two systems' is realistic and therefore definitely
viable," Zhao said.
Macao's population of 300,000 includes more than 40,000
Portuguese passport holders.
Peking has said Chinese nationals in this category will be
able to use their Portuguese passports after 1999 but will not
be entitled to Portuguese consular protection in Macao or
elsewhere in China.
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TEXACO <TX> EUROBONDS UNQUOTED AT MARKET OPENING | Eurobonds for Texaco Inc subsidiaries
were unquoted this morning as traders assessed the implications
of the company's shock weekend decision to file for bankruptcy
under Chapter 11 of U.S. Bankruptcy laws, eurobond dealers
said.
The decision to file for bankruptcy follows a court
decision that it had to post an 11 billion dlr bond to continue
its court battles with Pennzoil Co <PZL>.
One head trader at a U.S. Securities house said, "I don't
want to be obstructive, but there genuinely is no market in
Texaco bonds at the moment. Everyone is stunned by the decision
(to file for bankruptcy) and can't really believe it."
One dealer noted that Texaco subsidiaries have outstanding
eurobonds totalling over three billion dlrs out of total
borrowings of some 6.8 billion dlrs.
He added that many of the fixed interest eurobonds - dollar
straights - had been trading "basis only" for some time prior to
this weekend's news. This means traders could quote a two way
price for the bonds but would not be bound to trade them. Any
trades would be negotiated.
He said that recently there appeared to have been some
speculative buying of the bonds from the U.S. But that European
investors had been overall sellers.
Dealers noted that under the Chapter 11 filing noteholders
will receive no interest payments.
Texaco also has eurobonds outstanding which are convertible
into Texaco Inc common stock - known as convertibles. Trading
did not open in these issues either. One convertible dealer
said, "We're waiting to see the result of today's court hearing."
Texaco is applying today in the Texas courts for relief from
having to post the court bond.
Texaco shares were being indicated by over the counter
share dealers here at around 26 to 28 dlrs compared with
Friday's close in New York of 31-7/8 dlrs.
Pennzoil shares were indicated at 85 to 87 dlrs compared
with Friday's New York finish of 92-1/4 dlrs.
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U.K. MONEY MARKET DEFICIT FORECAST AT 400 MLN STG | The Bank of England said it forecast a
shortage of around 400 mln stg in the money market today.
Among the main factors affecting liquidity, bills maturing
in official hands and the take-up of treasury bills will drain
some 1.085 billion stg.
Partly offsetting these outflows, a fall in note
circulation will add some 340 mln stg, exchequer transactions
around 300 mln and bankers' balances above target about 50 mln.
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BANGLADESH COST OF LIVING INDEX FALLS IN JANUARY | Bangladesh's cost of living index fell
1.09 pct in January to 479, after a 1.6 pct decline to 484.28
in December (1973-74 base 100), the Bureau of Statistics said.
The cost of living index fell 0.14 pct to 434.49 in January
1986.
In the year to January, inflation ran at 10.24 pct after an
11.3 pct rate a month earlier and 9.72 pct a year earlier.
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DEUTSCHE BANK FINANCE UNIT HAS AUSTRALIAN DLR BOND | Deutsche Bank Finance NV Curacao is
issuing a 100 mln Australian dlr eurobond due May 14, 1990
paying 14-1/8 pct and priced at 101-1/4 pct, lead manager
Deutsche Bank Capital Markets Ltd said.
The bond, guaranteed by parent Deutsche Bank AG, is
available in denominations of 1,000 and 10,000 dlrs and will be
listed in Luxembourg.
Fees total 1-1/2 pct, comprising one pct selling concession
and 1/2 pct management and underwriting combined.
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ROTHMANS DENIES SHARE SALE SPECULATION | <Rothmans Holdings (Tobacco) Ltd> said
in a sttement there was "no foundation" to press speculation that
it would sell its stake in Rothmans International Plc <ROT.L>
to Philip Morris Inc <MO.N>, or that it would buy Morris'
stake.
In the 1986 report, Rothmans International said RHT, which
is controlled by <Rupert Foundation SA>, owned 18.25 mln
ordinary and 64.37 mln B ordinary shares, or 99.9 pct and 26.1
pct respectively.
Morris owns 79.8 mln B ordinary shares, or 32.4 pct.
Rothmans B shares, which firmed on the speculation to close at
273p from 241p on Friday, eased to 245.5p at 0838 GMT.
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NAKASONE'S PARTY SUFFERS SETBACKS IN LOCAL POLLS | Japanese Prime Minister Yasuhiro
Nakasone's unpopular plan to introduce a sales tax caused an
electoral setback for his ruling Liberal Democratic Party (LDP)
in Sunday's local elections, political analysts said.
The LDP retained its 11 prefectural governorships, but
failed to restore a governorship in Fukuoka it had placed much
importance on winning. In the prefectural assembly elections to
fill 2,670 seats, the LDP has so far lost 92 of its previously
held 1,487 seats to the socialists and communists.
Full election results should be available later today.
Discussing the election results with reporters, Nakasone
said, "I wouldn't say the proposed five pct sales tax had no
effect at all, but there were other factors, such as a low
turnout and unusually cold weather."
The Home Affairs Ministry said the average turnout for the
13 gubernatorial elections was a record low 59.78 pct while the
prefectural assembly polls drew an average of 66.66 pct, also a
record low.
Noboru Goto, president of the Japan Chamber of Commerce and
Industry and a longtime friend of Nakasone, told reporters the
impact of the sales tax on the LDP's setback was obvious.
"The government should take action (on the sales tax) in
regard to the people's wishes," Goto said.
Nakasone and other LDP leaders have already hinted at a
delay in the implementation of the tax, which had been
scheduled for next January, and a possible cut in the rate.
"The most important thing now is to get parliamentary
approval of the budget as soon as possible to arrest a rapid
appreciation of the yen," Nakasone said. "We must implement
measures to prop up the economy."
Opposition parties said the elections were a referendum on
the tax and they will continue to demand its retraction.
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UBS UNIT ISSUES 15 BILLION YEN EUROBOND | Union Bank of Switzerland NV is issuing
a 15 billion yen eurobond due June 1, 1992 paying 4-3/8 pct and
priced at 101-3/8 pct, lead manager Union Bank of Switzerland
(Securities) Ltd said.
The issue has a call option and put option after four years
at par and is guaranteed by Union Bank of Switzerland. The
selling concession is one pct while management and underwriting
combined pays 5/8 pct.
The issue is available in denominations of one mln yen and
will be listed in Luxembourg. The payment date is June 1.
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TRADE ISSUES STRAINING EC'S PATIENCE WITH JAPAN | Member states of the European
Community are starting to run out of patience with Japan which
they believe has repeatedly promised major initiatives to open
its market to imports, but as often made only minor moves.
Diplomatic sources here said several recent actions by EC
countries bear witness to a new disillusionment with the
willingness, or at least the ability, of the Japanese
government to reduce its massive trade surplus with the EC.
However, they said an all-out trade war may be far off, as
EC states know they would suffer almost as much as Japan.
Senior EC diplomats gave a generally favourable reaction to
an EC executive commission proposal under which the EC could
raise tariffs on a range of Japanese products if the U.S.
Carries out a threat to make a similar move on April 17.
The EC tariffs, which would involve renouncing obligations
entered into with the world trade body GATT, would be designed
to stop a diversion of exports to the EC market from that of
the U.S.
The diplomats were meeting as Tokyo announced that the EC's
trade deficit with Japan reached a record 2.13 billion dlrs in
March, up from 1.94 billion in February.
In 1986, Japanese exports to the EC totalled 30.67 billion
dlrs, up 4.5 pct from 1985, while EC exports to Japan fell one
pct to 12.43 billion dlrs.
In Paris, trade minister Michel Noir said France has
decided to give Japan a taste of its own medicine.
Burgeoning imports of microwave ovens and of frozen
Coquilles St Jacques will be restricted by a strict application
of French quality standards -- something EC states say often
happens to their own exports entering Japan.
Britain has threatened to withdraw the licences of Japanese
banks and insurance companies to operate in the City of London,
because the British Cable and Wireless company lost out in
competition for a Japanese telecommucations contract.
However, British officials in London have said that the
government may have gone too far in implying that it would take
immediate drastic action unless the contract was reopened.
By contrast, West Germany, with the EC's most successful
economy, has never threatened Tokyo with sanctions, preferring
to rely on firm diplomacy and encouragement of its own
industries to surmount obstacles to export to Japan.
The EC Commission itself has switched its tactics in recent
years, substituting general calls for action by Japan to open
its market with specific demands for moves in key areas.
At present, it is, for instance, pressuring Japan to end
allegedly discriminatory taxation of imported wines and
spirits, to ensure EC companies have a chance to win contracts
for the building of a new international airport, and to
simplify certification and safety checks on imported cars.
EC officials say these tactics yield some benefits, but
often the Japanese announce modifications of their non-tariff
barriers which open the door to imports by only a token amount.
They stress, however, that any action must be taken by the
EC as a whole to stop beggar-my-neighbour action.
One of the problems Britain could face if it were to
withdraw licences for Japanese banks would be that the bankers
would be welcomed with open arms in Frankfurt or Amsterdam,
they point out.
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MORGAN CRUCIBLE SAYS PROSPECTS ARE ENCOURAGING | Morgan Crucible Co Plc <MGCR.L> said the
prospects for 1987 were encouraging, with orders and sales
significantly up on last year in all divisions.
It said there were good opportunities for growth in both
existing and recently acquired businesses as well as for growth
by acquisition in related areas.
It earlier announced a 6.1 mln stg rise in pre-tax profit
to 24.8 mln stg for the year to December 28. Turnover rose to
242.1 mln from 211.5 mln.
Most of its companies performed well despite a slowdown in
the U.S., U.K. And Australian economies in the first half.
Currency fluctuations reduced pretax profit by around one
mln stg, it noted.
Morgan said although profits in the electronics sector
improved to 1.0 mln stg from 100,000 stg previously, results
were nonetheless disappointing.
Sales were lower than expected, due mainly to delayed
defence orders and cancellations. However, it said it had taken
the necessary remedial action, obtained new business and was
now proceeding with the delivery of major delayed orders.
Morgan shares firmed two pence to 318p at 0905 GMT from
316p at Friday's close.
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MORGAN CRUCIBLE PRETAX PROFIT RISES 6.1 MLN STG | Year to December 28, 1986
Shr 20.1p vs 17.6p
Div 5.0p vs 4.6p making 9.2p vs 8.5p
Turnover 242.1 mln stg vs 211.5 mln
Pretax profit 24.8 mln vs 18.7 mln
Tax 6.7 mln vs 5.8 mln
Operating profit 28.3 mln vs 21.3 mln
Investment income 1.0 mln vs 0.7 mln
Net finance charges 4.5 mln vs 3.3 mln
Company full name is Morgan Crucible Co Plc <MGCR.L>
Minorities and provisions for preference dividends 0.7 mln
vs 1.2 mln
Extraordinary debit - 0.9 mln vs 1.3 mln credit
Operating profit includes -
Carbon 8.3 mln vs 7.0 mln
Technical ceramics 7.0 mln vs 5.6 mln
Thermal ceramics 7.6 mln vs 4.6 mln
Speciality chemicals 4.4 mln vs 4.0 mln
Electronics 1.0 mln vs 0.1 mln
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SWEDISH INDUSTRIAL PRODUCTION RISES SHARPLY | Swedish industrial production rose
2.6 pct in February, after a 1.8 pct fall in January, showing a
4.4 pct rise over February 1986 and reaching its highest level
ever, the Central Bureau of Statistics said.
The rise reflected recovery in almost all sectors after an
exceptionally cold spell in January, the Bureau said, adding
that the highest rises were seen in the forest, chemical and
metal industries.
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KENYA DEVALUES SHILLING BY 0.6 PCT AGAINST SDR | Kenya devalued the shilling by 0.6 pct
against the special drawing right (SDR) in response to the
decline of the dollar last last week, bankers said.
The Central Bank of Kenya set the shilling at 20.7449 to
the SDR compared with the 20.6226 rate in force since the last
devaluation on March 31.
The Kenyan shilling has lost 5.6 pct of its value against
the SDR this year in a series of devaluations designed to keep
the value of the dollar above 16 shillings.
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AWB CHAIRMAN URGES FARMERS NOT TO CUT PLANTINGS | Australia could lose valuable wheat
markets through lack of availability if plantings for the
coming 1987/88 season are significantly reduced, Australian
Wheat Board (AWB) chairman Clinton Condon said.
"If predictions of a 30 pct decrease in plantings prove
true, Australia may not be able to supply wheat to some of its
valuable markets," he said in a statement.
Condon did not say who had made the predictions, but an AWB
spokesman said there was a general industry feeling that
farmers, hard hit by low prices and rising costs, could cut
back plantings sharply. Wheat sowing normally begins in May.
However, Condon said he did not believe plantings would be
cut by as much as 30 pct although he realised many farmers were
facing enormous financial pressures.
He said the AWB expects the area sown to be about 10.7 mln
hectares, down from 11.3 mln in 1986/87 when the crop was about
16 mln tonnes. Final crop estimates for 1986/87 and planting
intentions for 1987/88 are not yet available.
If the AWB is unable, because of a short-term cut in
plantings, to meet the needs of the markets it has developed
with much time and effort, it may have great difficulty selling
wheat to those markets in the future, Condon said.
"Markets which rely on a steady supply of Australian wheat
understand a decrease in production due to drought but they
will have difficulty understanding a deliberate decision to
decrease production," Condon said.
"If Australia wants wheat to continue as a major export
income earner, governments and government authorities will need
to closely examine ways of contributing to the continuing
viability of the wheat industry," he added.
Australia's leading wheat markets include China, Egypt,
Iran, Iraq, the Soviet Union and Japan.
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WILLIAMS DETAILS ACCEPTANCES OF NORCROS OFFER | <Williams Holdings Plc> said that it had
received acceptances for its offer for Norcros Plc <NCRO.L>
from the holders of 233,448 Norcros ordinary shares, or 0.18
pct, and 180,240 preference shares, or 8.19 pct.
Before the 568 mln stg contested bid was launched last
month, Williams held 850,000 ordinary shares, or 0.67 pct and
since then it had acquired options to buy a further 1.99 mln or
1.58 pct.
The offer has been extended to April 15. Norcros shares
eased 26p to 410p on the announcement while Williams fell to
767p from 785p.
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DUTCH FEED COMPOUNDER STARTS CASE AGAINST EC LEVY | A major animal feed producer, Cehave
NV Veghel (CHV), has begun legal proceedings against the
application of the European Community grain co-responsibility
levy, with the full backing of the Dutch animal grain and feed
trade association, Het Comite, association chief executive
Peter Pex told Reuters.
Oral proceedings were held in the Hague on Friday and the
court said it would give its verdict within six weeks. "However,
that is the normal wording and we expect the Hague court to
refer questions on the interpretation and application of the
levy to the European Court of Justice in Luxembourg," Pex added.
Het Comite claims the way the levy is applied does not take
account of currency cross-rates of exchange and can mean a
compounder in one country being asked to pay a higher levy in
its own national currency than it received down the chain from
the original producer of the grain.
"We would like the Business Administration Court in the
Hague to ask the Luxembourg Court of Justice not only whether
the Dutch Grain Commodity Board, the levy collection agency,
has interpreted the levy regulations correctly, but also
whether the regulations themselves may contravene European law,"
Pex said.
"It is only with great regret that we have taken this route,
but we have had no political help, and therefore have no option
even though it could take years," Pex added.
Het Comite asked CHV to act as a test case against the
grain levy because the bill the company received from the
commodity board included grain from a wide variety of origins
and was therefore considered to be the best general basis for a
legal challenge to the levy, Pex noted.
Het Comite's actions will run in tandem with questions on
the levy already posed to the Luxembourg Court in a case
brought by the Association of European Animal Feed
Manufacturers, FEFAC.
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CHINA RAISES GRAIN PURCHASE PRICES | China has raised the state purchase
prices of corn, rice, cottonseed and shelled peanuts from April
1 to encourage farmers to grow them, the official China
Commercial Daily said.
The paper said the price paid for corn from 14 northern
provinces, cities and regions has increased by one yuan per 50
kg. A foreign agricultural expert said the rise will take the
price to 17 fen per jin (0.5 kg) from 16 fen.
The paper said the price for long-grained rice from 10
southern provinces and cities was raised by 1.5 yuan per 50 kg.
The paper said the price for round-grained rice from 11
provinces, regions and cities in central, east and northwest
China has been increased by 1.75 yuan per 50 kg. It gave no
more price details.
It said local authorities must inform farmers of the price
increases before farmers begin planting, to encourage
production of grains and oilseeds.
Chinese officials have said farmers are unwilling to grow
grain because they can earn more from other crops.
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WEST GERMAN COCOA GRINDINGS WITHIN EXPECTATIONS | West German first quarter cocoa
grindings, which rose 2.9 pct from the same 1986 quarter, were
within expectations, trade sources said.
They described the results, announced Saturday, as normal
and unspectacular, considering that the grind in the fourth
quarter was rather high and some was carried over into the
first quarter.
Grindings rose to 55,190 tonnes from 53,643 in the first
1986 quarter. A spokesman for the Confectionery Industry
Association said that West German grindings are expected to
stay relatively high in comparison to other West European
countries.
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ST.GOBAIN UNIT ISSUES ECU BOND WITH GOLD WARRANTS | St.Gobain Netherlands, guaranteed by Cie
de St.Gobain, is issuing a 75 mln ECU bond with gold warrants
attached, due May 6, 1992 carrying a 4-1/2 pct coupon and
priced at par, lead manager Salomon Brothers International Ltd
said.
Fees comprise 1-1/4 pct selling concession with 5/8 pct for
management and underwriting combined. Listing is in Luxembourg.
Each 1,000 ECU bond carries one gold warrant exercisable
from May 6, 1987 until May 6, 1990 entitling the holder to
purchase one ounce at an exercise price of 490 dlrs.
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COMMONWEALTH BANK CUTS AUSTRALIA PRIME TO 17.5 PCT | The Commonwealth Bank of Australia said
it will lower its prime lending rate to 17.5 pct from 18.25,
effective April 15.
The bank's new rate will be the lowest of Australia's
current prime rates. They now range from 17.75 pct to 18.5
after a recent series of reductions since late March following
an easier trend in short term money market rates.
Two of the three other major trading banks now have prime
rates of 18 pct and one of 18.25.
The Commonwealth's move reverses an increase from 17.5 pct
in early February.
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BOND SAYS HE IS AIMING FOR GLOBAL MEDIA GROUP | Bond Corp Holdings Ltd <BONA.S> plans to
use its 1.05 billion dlr acquisition of Kerry Packer's
television and radio holdings as the springboard to a global
media group, chairman Alan Bond said.
Bond Corp's broadcasting float, <Bond Media Ltd>, was
geared for international expansion as a company specialising in
the electronic media, he told a news conference here after a
presentation on the new company to shareholders and analysts.
"It's intended that we will be a global media company in the
fullness of time," Bond said.
Bond Media will bring together Bond's existing broadcasting
interests and those recently acquired from Packer's
<Consolidated Press Holdings Ltd>.
Bond Corp shareholders are being offered 50 pct of the new
company at 1.55 dlrs a share on a three-for-four basis.
A presentation by underwriters A C Goode and Co Ltd and
Rivkin James Capel Ltd forecast Bond Media's net profit at 41
mln dlrs in 1987/88 ending June 30, rising to 72 mln in
1989/90.
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HEPWORTH SELLS U.S. UNIT TO GLOBE MACHINE | Hepworth Ceramic Holdings Plc <HEPC.L>
said it had agreed to sell its <Western Plastics Corp> unit to
<Globe Machine Manufacturing Co> for 16.25 mln dlrs cash.
Western, which makes polystyrene foam and container
products, has net assets of 19.3 mln dlrs and reported a 1986
pre-tax profit of 0.9 mln.
The proceeds of the sale would be used to reduce borrowings
and develop activities in the U.K.
Hepworth shares eased 0.5p on the announcement to 227.5p.
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U.S. LAWMAKERS URGE JAPAN TO OPEN FINANCIAL MARKET | U.S. Legislators called on Japan to open
its financial markets to more foreign participation and boost
its efforts to head off growing U.S. Protectionism, a Foreign
Ministry spokesman said.
"We have come to seek the opening of Japan's financial and
banking markets," Jake Garn, ranking Republican on the Senate
Banking Committee, told Prime Minister Yasuhiro Nakasone.
"Japan's financial and banking market is very large and
increasingly sophisticated, but there is not yet true
reciprocity between Japan and the United States in this market,"
the ministry official quoted Garn as saying.
Nakasone replied that some problems exist over providing
more seats on the Tokyo Stock Exchange for foreign firms, one
of the main steps urged by the U.S. Delegation.
"But I promise to make Tokyo's markets as open as those of
New York," he told Garn and three other legislators.
In separate talks with Finance Minister Kiichi Miyazawa,
the U.S. Group also urged Japan to give U.S. Financial
institutions a bigger role in the underwriting of long-term
Japanese government bonds, a Finance Ministry spokesman said.
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EURO-MEDIUM TERM NOTES POISED FOR GROWTH | Euro-medium term notes, a recent
phenomenon in the international capital markets, are hardly
attracting a flood of issuers but investment bankers are doing
their best to breath life into the market.
Medium term notes (MTNs) have met with staggering success
in the U.S. Market where total outstandings have grown to
around 50 billion dlrs since 1983, the year they took hold as a
new financing vehicle to bridge the gap between commercial
paper and longer term bonds. Convinced they are here to stay,
investment bankers are attempting to adapt MTNs for the
euromarket.
Ralph Bunche, a vice president of Morgan Stanley
International, predicted at a recent Euromoney conference on
MTNs here that they will become the predominant instrument for
raising funds in the late 1980's and 1990's. "It (the MTN
market) will even surpass the bond market," he said.
Other bankers took exception with the degree to which MTNs
will grow. But they generally agreed that these instruments
provide the borrower with greater flexibility and lower costs
than a traditional bond.
The trick is in convincing European borrowers it is worth
arranging a program and, having accomplished that, to persaude
European investors -- whose preferences differ from their U.S.
Counterparts -- to buy the securities.
Discussions with bankers proved one thing. No one is
exactly sure how to proceed with structuring and marketing
these issues.
To date only 13 Euro-MTN programs have been announced but
only a few have been activated, such as those for a unit of
PepsiCo Inc and another for AB Electrolux.
Several firms have devised different structures for
Euro-MTNs and defend their structures adamantly.
The PepsiCo notes, for example, are sold on a continuously
offered basis. This involves a small amount of new notes with
similar maturities constantly on offer at current market rates.
The Electrolux program uses multi-tranche tap notes devised
by Merrill Lynch. Under this structure, an initial tranche of a
minimum 50 mln dlrs has a fixed rate of interest and maturity.
The borrower then issues additional notes in this category up
to a pre-determined maximum.
Those who defend the continuously offered method, such as
Wendy Dietze, a Salomon Brothers Inc vice president, point to
the flexibility they offer in interest rate and maturity.
Furthermore, she believes this structure offers the
European investor greater confidence in market liquidity -- a
major concern for these buyers.
Merrill Lynch Europe Ltd's Kevin Regan defends the
medium-tranche tap notes concept saying it offers comparable
liquidity. But he also said that this structure may not be the
right option for all borrowers.
Peter Mortimer, a partner in the law firm Milbank, Tweed,
Hadley and McCloy, noted that legal requirements could well
determine which structure is chosen.
He noted that the tap system allows a more clearly defined
"lock-up" period as each tranche has a specific maturity. In the
case of notes issued by U.S. Borrowers, the "lock-up" period is
the 90 days after the completion of a series during which time
a security cannot be sold back to the U.S. Or to U.S.
Investors.
However, he said that the Securities and Exchange
Commission is reviewing its current regulations on the
ownership of foreign securities by U.S. Citizens and that some
softening in the rules could come in the not too distant
future.
For their part borrowers say they feel a bit like guinea
pigs.
Petter Skouen, executive vice president of the Nordic
Investment Bank (NIB), noted that a few weeks ago NIB would
have said it was disappointed with its Euro-MTN program, but
that the success of a recent issue changed their minds.
He conceded that in retrospect it would have been wiser to
establish separate programs for the euromarket and the U.S.
Domestic market, rather than try to extend the U.S. Issue
globally. Under NIB's 200 mln dlr program, 100 mln has been
sold in the U.S. And 25 mln in Europe.
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BOND CORP TO ACQUIRE 80 PCT OF MERLIN PETE | Bond Corp Holdings Ltd <BONA.S> said it
has agreed to acquire an 80 pct stake in <Merlin International
Petroleum Corp> from <Crowley Maritime Corp> for 90.8 mln U.S.
Dlrs.
Of this total, 7.8 mln dlrs is due on exchange of contracts
on April 30 and 69 mln on July 7, subject to any regulatory
approvals being obtained, Bond said in a statement.
The balance of 14 mln dlrs will be paid as required by
Merlin for its exploration and production commitments, it said.
Bond said Merlin has a 6.25 pct working interest plus a 2.5
pct reversionary interest in the Papua New Guinea permit,
PPL-17, the site of the Iagifu oil discovery.
Merlin also has a 12.5 pct stake in the adjacent Papuan
Basin permit, PPL-18, which contains the Juha gas and
condensate discovery.
In addition to Papua New Guinea, Merlin has petroleum
exploration and production interests in the U.S., Bond added.
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KYUSHU ELECTRIC TO ISSUE 20 BILLION YEN BOND | Kyushu Electric Power Co Inc will issue a
seven-year 20 billion Euroyen bond on April 22, a company
spokesman said.
The straight bond, to be priced at 101.625, will carry a
4.75 pct coupon to yield 4.445 pct.
Lead manager is Nomura International Inc.
Issue cost including fees will be 4.8 pct, or 0.9
percentage point below the March issue rates for Japanese
electric power company bonds. These are normally between the
rates on 10-year government bonds and private corporate bonds.
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MATSUSHITA TO LAUNCH PORTABLE COPIER | Matsushita Electric Industrial Co Ltd
<MC.T> said it would launch the world's smallest and lightest
personal-use plain paper copier (PPC) on the domestic market in
early June.
It said the 69,800 yen copier is 367 mm by 407 mm by 120
mm, weighs six kilos, and can copy pictures from television and
VCR's with an optional adaptor. The company plans to produce
2,000 sets a month and will eventually export them, it said
without providing further details.
Total Japanese PPC output rose 12 pct to 560,000 units in
1986 and is projected to rise to 610,000 this year, it said.
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INSTITUTES DIVIDED ON OUTLOOK FOR GERMAN ECONOMY | The five leading West German economic
research institutes have failed to agree about how strongly the
domestic economy will expand this year but revised down
forecasts contained in a report published six months ago.
The three research groups of Kiel, Hamburg and Essen
predicted in the institutes' joint spring report that gross
national product (GNP) would rise by two pct in 1987, compared
with 2.4 pct in 1986. The five institutes had jointly forecast
three pct 1987 growth in October last year.
Taking a dissenting view, the DIW institute of West Berlin
and Munich's Ifo institute predicted only one pct 1987 growth.
The joint report said that the estimates of economic
development made by the DIW and Ifo were "markedly less
favourable" than those of the other three.
The DIW and Ifo forecast the economy would pick up after a
slow start to the year. "In the second half of 1987 there will,
however, only be a weak upward movement," they said.
The two institutes said external economic factors which
were currently damaging exports and pushing up imports would
dominate the economic environment throughout the year. They saw
exports falling by a real 2-1/2 pct in 1987 and predicted no
marked improvement in the course of the year.
The other three institutes, however, wrote: "The decline in
demand and production (seen) in the winter months does not
indicate the beginning of a cyclical downswing."
They said the sharp rise of the mark had led to corporate
uncertainty and companies had not carried out investment plans.
But they expected that many investments had not been cancelled
but only put off. "It can be presumed that the braking actions
(on the economy) will diminish markedly this year."
They added: "The domestic prerequisites for a continuation
of the economic uptrend are still favourable."
These three institutes said diminishing external burdens
combined with favourable domestic conditions meant an upturn in
demand and production could be expected by the spring.
However, this projection was clouded by risks including the
further development of the mark against the dollar.
Contrary to the DIW and Ifo, the three institutes said that
while exports would continue to be the weak point of the
economy in 1987, "there is good reason to believe that exports
will soon bottom out and that a slight rise will emerge during
the course of the year." They predicted an overall 0.5 pct fall
in exports in 1987, the same as in 1986.
The three more positive institutes saw private consumption
rising by four pct in 1987, compared with 4.2 pct in 1986,
while DIW and Ifo predicted a three pct increase.
They saw the climate for equipment investment improving but
predicted only a rise of four pct in 1987 against 4.6 pct in
1986. Ifo and DIW saw these investments rising by only two pct.
All the institutes predicted only a slight decline in
unemployment. The Kiel, Hamburg and Essen institutes said the
jobless total would average 2.17 mln in 1987 compared with 2.23
mln in 1986 and predicted a rise in the number of people in
work of about 200,000.
These three institutes said new jobs would be created
mainly in the private services sector and also by the state in
the context of job creation measures. The construction industry
was likely to engage new workers for the first time since 1980
but they predicted either no rise in employment in the
manufactured goods industry or only a slight expansion.
The DIW and Ifo said rises in employment would occur only
in the tertiary sector, while "the number employed in the
manufacturing industry will decline."
The DIW and Ifo said unemployment would only decline to
2.20 mln in 1987 from 2.23 mln in 1986.
They saw the current account surplus falling in 1987 to 58
billion marks from 78 billion in 1986. The other three saw a
current account surplus in 1987 of at least 60 billion marks
and predicted that the trade surplus would fall to only around
100 billion marks from 112 billion in 1986.
The institutes agreed that consumer prices would start to
rise in 1987, after they declined in 1986, and all five
predicted an average increase over the year of 0.5 pct.
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BLUE ARROW TO BUY U.S. RICHARDS COMPANIES | <Blue Arrow Plc> said it had agreed
terms to acquire a group of U.S. Companies collectively known
as the <Richards Companies>, which specialise in executive
recruitment and management consultancy on personnel matters.
The total consideration will be 29 mln U.S. Dlrs of which
50 pct will be payable in cash and 50 pct by the issue of 1.36
mln new ordinary shares in Blue Arrow.
The Richard Companies made a pre-tax profit of 3.6 mln dlrs
in the year to end-1986, on turnover of 7.1 mln dlrs with net
tangible assets at the end of 1986 of 3.4 mln dlrs.
Blue Arrow shares were trading 9p lower at 670 this
morning.
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VICTORIA STATE BANK ISSUES 50 MLN AUS DLR EUROBOND | The State Bank of Victoria is raising
50 mln Australian dlrs through a three-year bullet eurobond at
14-1/2 pct and priced at 101-3/8, lead and sole manager
Commerzbank AG said.
The bond is due on May 15, 1990 and interest is paid on
that date annually. Payment date is also May 15.
Denominations are 1,000 and 10,000 dlrs and listing is in
London.
Fees total 1-1/2 pct, with a half-point for management and
underwriting and one point for selling.
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SAUDI RIYAL DEPOSITS SURGE ON U.S. RATE RISE | Saudi riyal interbank deposit rates
surged across the board as banks tried to build long positions
in anticipation of a further rise in U.S. Interest rates,
dealers said.
They said traders expected riyal deposits to follow the
recent strong rise in eurodollar rates sparked by fears of a
tighter U.S. Monetary policy to halt the dollar's slide.
"There was a wave of panic buying early in the morning as
people tried to cover gaps and build long riyal positions," said
one dealer. As a result, riyal deposits were strongly bid and
traders scrambled for any available offers.
One-way trade focused mainly on the fixed periods but short
dates also rose, dealers said. Spot-next and one-week deposits
climbed to 6-5/8, 1/8 pct from 6-3/8, six on Sunday.
One-month deposits rose to 6-1/2, 3/8 pct from 6-1/4, six
and three-month deposits climbed to 6-3/4, 5/8 pct from 6-9/16,
7/16. Six-month deposits also firmed to 7-1/8, seven pct from
7-1/16, 6-7/8 on Sunday.
The spot riyal was steady at 3.7500/03 to the dollar after
quotes of 3.7498/7503 yesterday.
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LONDON GOLD MORNING FIX HIGHEST SINCE OCTOBER | Gold bullion continued to move higher
supported by good general buying and was fixed this morning at
436.50 dlrs, 268.368 stg, an ounce, up from Friday's close of
432.00/50, dealers said.
The setting was the highest since October 8 as gold built
on Friday's gains, which had been based on the weakness of the
dollar and fears of a trade war between the United States and
Japan.
It opened slightly firmer at 433.50/434.00 and moved up
steadily during the morning supported by commission house and
trade buying, dealers said.
Dealers said there was resistance around 440.00 but with
sentiment still firm some traders believe the rally may even
take gold as high as 500 dlrs.
Platinum was fixed this morning at 583.50 dlrs an ounce, up
from Friday's close of 578.50/580.50, and also the highest
setting since October.
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BORG-WARNER AGREES TO BUYOUT BY MERRILL LYNCH FIRM | Borg-Warner <BOR> Corp, facing an
unwanted offer from GAF Corp <GAF>, agreed to a 4.23 billion
dlr buyout offer from a company to be formed by <Merrill Lynch
Capital Partners Inc>.
Borg-Warner and Merrill said yesterday they entered a
definitive merger agreement, under which a subsidiary of the
new company, <AV Holdings Corp>, will begin a 48.50 dlr per
share cash tender offer today for 77.6 mln shares or 89 pct of
Borg-Warner common stock.
The offer will be followed by a merger in which each
remaining share will be converted into 19.75 dlrs cash and
54.25 dlrs principal amount of AV Holdings junior subordinated
discount debentures.
As a result of the merger, Borg-Warner will become a wholly
owned subsidiary of AV Holdings. A Borg-Warner spokeswoman said
members of management do not plan to participate in the
transaction, but they will retain their positions with the
company.
A spokesman for GAF was unavailable for comment. GAF holds
19.9 pct of Borg-Warner's shares.
GAF had said it would offer 46 dlrs per share.
Borg-Warner's spokeswoman said the company still plans to
sell its financial services unit, which includes Wells Fargo
security guards, and the Chilton Corp, a credit rating service.
Borg-Warner has been the focus of takeover speculation for
about a year. Corporate raider Irwin Jacobs last year proposed
a takeover of the firm and until recently held 10 pct of the
stock. Following the GAF offer, analysts had calculated breakup
values for the company in the low 50 dlrs per share range and
speculated an offer would have to be sweetened.
In its statement, Borg-Warner said its board endorsed the
Merrill offer and it recommended that shareholders tender their
shares. The board received opinions on the offer from its
advisors, First Boston Corp and Goldman, Sachs and Co.
James Burke, president of Merrill Lynch Capital Partners,
said, "We are very pleased to have entered into this transaction
with Borg-Warner. We are looking forward to working with the
employees of Borg-Warner and to Borg-Warner maintaining its
strong presence in the Chicago community."
Merrill Lynch will be the dealer-manager for the offer,
which expires at midnight EDT May 8 (0400 GMT, May 9), subject
to conditions, including the completion of necessary financing
arrangements.
The offer is also subject to a minimum 44.25 mln shares, or
51 pct of the outstanding shares, being tendered.
Merrill Lynch and certain affiliates have committed to
provide 200 mln dlrs in AV Holdings equity and 870 mln in
subordinated financing and forward underwriting commitments.
Merrill Lynch said that following discussions with
commercial banks it is confident it can obtain the rest of the
financing required to complete the transaction.
The junior subordinated discount debentures to be issued in
the merger will carry a 13 pct coupon and will begin paying
cash interest after five years.
The debentures will be redeemable at the company's option
for the first six years at 105 pct, during the seventh year at
102.5 pct and after that at 100 pct of the principal amount.
The junior subordinated discount debentures have a maturity
of 20 years and are entitled to a sinking fund commencing in
the 16th year designed to retire 60 pct of the issue before
maturity.
Borg-Warner will also redeem all of its outstanding 4.50
dlrs cumulative preferred stock, series A, for 100 dlrs per
share. Holders who wish to participate in the offer must first
convert their preferred stock into Borg-Warner common stock.
The board of Borg-Warner has also taken steps to redeem its
poison pill or share purchase rights for five cents per right,
effective immediately.
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U.K. MARCH PRODUCER PRICES RISE 0.3 PCT | The price index for sales of
manufactured goods in the U.K. Rose a provisional, unadjusted
0.3 pct in March after an identical rise in February,
Department of Trade and Industry figures show.
The index for materials and fuel purchased by manufacturing
industry fell a provisional and unadjusted 1.1 pct after a 1.7
pct fall in February.
The Department said the year-on-year rise in producer
prices in March was a provisional 3.7 pct, compared with a
provisional 4.2 pct increase in the year to end-February.
The index for output prices, non-seasonally adjusted, was
put at a provisional 149.7 in March after 149.3 in February.
The index for input prices, also not seasonally adjusted,
was set at 128.2 in March after February's 129.6.
The 1.1 pct fall in input prices between February and March
was mainly due to a seasonal fall in industrial electricity
costs and lower scheduled prices for petroleum products, the
Department said.
The Department said these falls were only partly offset by
a rise in prices of home-produced food manufacturing materials.
The seasonally adjusted index for input prices showed a 0.2
pct rise between February and March.
Year-on-year, the input price index was down 0.7 pct in
March after a 2.8 pct drop in February.
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SRI LANKA ORDERS BUDGET CUTS AS DEFENCE COSTS RISE | Sri Lanka's cabinet has ordered a 12
pct cut in budget spending by ministries this year to offset
the rising cost of the fight against Tamil guerrillas, Finance
Ministry officials said.
A senior economist at the Ministry, who declined to be
named, told Reuters the cuts would not apply to defence-related
Ministries and those involved in health and education.
Defence expenditure, projected at 10 billion rupees this
year, is now forecast at 12 billion and is expected to exceed
this by the year-end.
The economist said the cuts were part of a government plan
to reduce spending to satisfy the International Monetary Fund
(IMF) which has promised to lend Sri Lanka 6.5 billion rupees
to help its balance of payments.
The IMF has said previously Sri Lanaka must reduce its
budget and balance of payments deficits to satisfy loan
conditions.
He said World Bank and IMF teams were expected here next
month. "If approved the loan would be available only after
November and would be part of the 1988 budget," he said.
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STATOIL SEEKS SHARE IN THAI GAS FIELD | Norway's state oil company
Den Norske Stats Oljeselskap A/S (Statoil) <STAT.OL>, has told
Thai authorities it is interested in taking a 30 pct share in a
big offshore Thailand gas field, Statoil said.
The field, in the southern sector of the Gulf of Thailand,
is currently operated by U.S. Oil company Texas Pacific Oil Co
Inc, a unit of Canada's Seagram Co Ltd <VO.N>. Thailand's state
oil company <Petroleum Authority Thailand> (PTT) also holds a
major stake in the field.
PTT wants to develop the field and has asked Statoil to
consider co-development if the field's licence is renewed.
PTT, according to Statoil, is currently negotiating with
Texas Pacific to buy back the Dallas-based oil company's
holdings in the field.
"PTT must first sort out its problems with Texas Pacific.
When this is done, we have said we are interested in taking
over a 30 pct share in the field," Statoil spokesman Willy Olsen
told Reuters.
Statoil, hired by PTT to carry out an independent appraisal
of the field's reserves and propose a development plan, has
estimated the field could be commercially developed at a cost
of some 700 mln crowns.
Industry sources said Texas Pacific has submitted lower
reserve estimates for the field than Statoil and shown little
interest in its development. Statoil refused to disclose its
upgraded reserve estimate for the field.
The field's reserves could be sold domestically through
Thailand's gas distribution network or by converting the gas to
electricity, the sources said.
Sources would not say which field Statoil is considering.
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TREASURY CORP OF NSW ISSUES AUSTRALIAN DLR BOND | The New South Wales Treasury Corporation
is issuing a 100 mln Australian dlr eurobond due May 27, 1992
paying 14-1/4 pct and priced at 101-7/8 pct, lead manager
County Natwest Capital Markets said.
The non-callable bond is guaranteed by the crown-in-right
of New South Wales. The selling concession is 1-3/8 pct while
management and underwriting combined pays 5/8 pct.
The issue is available in denominations of 1,000 and 10,000
Australian dlrs and will be listed in Luxembourg. The payment
date is May 27.
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ELECTION RESULT MAY DELAY JAPAN ECONOMIC STIMULUS | The ruling Liberal Democratic Party's
(LDP) setback in Sunday's nationwide local elections may force
the government to water down its controversial proposal for a
five pct sales tax and undermine its commitment to stimulating
the economy, private economists said.
The LDP's failure to win seats in some crucial local
constituencies will weaken the government's ability to push
through its tax plan, and without a compromise tax proposal the
budget for fiscal 1987/88 ending March 31 is unlikely to be
passed soon, they said.
Without the budget, the government would also be
hard-pressed to come up with an effective package to stimulate
the economy as pledged at Group of Seven meetings in Paris in
late February and in Washington last week, they said.
Opposition protests against the sales tax have stalled
parliamentary debate on the budget for weeks and forced the
government to enact a stop-gap 1987/88 budget that began early
this month.
"The LDP's election setback will have an enormous impact on
the already faltering economy," said Johsen Takahashi, chief
economist at Mitsubishi Research Institute.
Takahashi said that behind the LDP's poor showing was
public discontent with the government's high-handed push for
tax reform and its lack of effective policies to cope with
economic woes caused by the yen's appreciation.
"This explains why the LDP failed to regain governorships in
the most hotly contested constituencies of Fukuoka and
Hokkaido, where the shipbuilding and steel industries are
suffering heavily from the yen's extended rise," he said.
Takahashi said the government should delay introduction of
the sales tax for one or two years beyond its original starting
date of January 1988 and implement tax cuts now.
Sumitomo Bank Ltd chief economist Masahiko Koido also said
he favours watering down the proposed sales tax while
suggesting the government boost public works spending by
modifying its tight fiscal policies.
"The local election results were a signal the economy now
needs government action to take clear-cut fiscal measures," he
said, adding that such moves would help the world economy as
well as Japan's.
For the last five years or so, the government has stuck to
a tight fiscal policy in a bid to halt the issue of deficit
financing bonds by fiscal 1990/91, economists said.
If the LDP election setback leads to a scaled down sales
tax proposal, the government would have to find other revenue
sources to help finance the planned tax cuts and a package of
measures to stimulate the economy, the economists said.
Koido said the government could raise additional revenue by
selling shares in public corporations such as Nippon Telegraph
and Telephone Corp. But it should issue additional bonds to
ensure a more stable source of funds, he said.
"It may run counter to its avowed policy of balancing the
budget, but it can do so on a short-term basis," he said.
Takahashi of Mitsubishi Research also agreed with the need
for the government to float more bonds to raise funds needed
for economic expansion.
He said additional government borrowing would place no
burden on the capital market because it has amassed huge excess
funds and government bond prices have risen to record levels
lately.
"The market is just waiting for more new government bond
issues," he said.
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SOME JAPAN OIL FIRMS MAY STOP TRADING WITH TEXACO | Japanese oil traders and refiners are
considering whether to suspend further business with Texaco Inc
<TX>, which yesterday filed for protection under Chapter 11 of
the U.S. Bankruptcy code, industry sources told Reuters.
Texaco, the third biggest U.S. Oil company, said it filed
to protect itself from creditors while it fights a legal battle
with Pennzoil Co <PZL> over the purchase of Getty Petroleum
Corp <GTY> in 1984.
Many Japanese trading houses decided to stop dealing with
Texaco several months ago as rumours it was about to file for
bankruptcy spread through the market, the sources said.
"We haven't dealt with them for six months," said one
Japanese trader.
Some Japanese trading houses with offices in the U.S. May
ask for letters of credit if they decide to continue trading
with Texaco, oil sources said.
They said Texaco, which said its bankrupcty protection
measure will not affect the majority of its businesses, may
find industry reaction stronger than anticipated.
"Texaco tried to buy substantial volumes of gasoline on the
U.S. Gulf on Friday but no one offered to them," one trading
house source said.
One U.S. Major is reviewing its relationship with Texaco,
and an international oil trading company, while continuing
limited transactions with Texaco, will send its lawyers to meet
with the company tonight in New York, oil sources said.
But one Japanese oil company, which holds several joint
venture oil exploration interests with Texaco, said business
would continue as usual pending the outcome of the dispute, a
company spokesman said.
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CREDIT COMMERCIAL DE FRANCE SPLITS SHARES | French commercial bank Credit Commercial
de France has split each of its shares into four to increase
the number of shares on offer when it is privatised at the end
of this month, a company official said.
He told Reuters a general assembly had passed a proposal
splitting 10.33 mln shares of 100 francs nominal into around
41.32 mln shares of 25 francs nominal.
Market sources have put the total value of CCF's selloff at
between four and five billion francs. The bank said the share
sale price was likely to be announced on April 24, before the
launch of a public flotation offer on April 27.
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WEST GERMAN INSTITUTES CALL FOR EARLY TAX CUTS | The five leading West German economic
research institutes said the government should do more to
stimulate economic growth and called for early introduction of
tax cuts planned for 1990.
In their joint spring report the institutes were divided
about 1987 growth forecasts, with three predicting two pct
expansion and the other two only one pct growth. Gross national
product grew 2.4 pct last year.
But the report said all the institutes believed that "more
must be done to produce dynamic growth so that more additional
jobs can be created."
The institutes said any step which improved basic economic
conditions should be taken as quickly as possible. "From this
point of view, the tax reform planned for 1990 should be
brought forward."
The government plans gross tax reductions of 44 billion
marks as part of the major tax reform. The net tax relief from
the tax reform will amount to 25 billion marks.
However, the institutes criticised the government, not only
for the timing of the reform, but also because the question of
its financing had been left open.
The government has not specified how the remaining 19
billion marks of the tax reduction package will be paid for,
though it has said it wants to cut state subsidies.
The institutes said this lack of clarity from Bonn had
caused uncertainty among companies and households as to what
exactly they would receive from the tax reform and urged a
quick decision from the government.
They also said the government should reduce tax
preferences, which would simplify the fiscal system, urged a
restriction of state spending and called for no increase in
value-added tax.
The institutes also criticised Bonn for increasing
subsidies at a time further reductions had been pledged.
They referred specifically to a doubling of special
writedowns for small and medium sized companies announced in a
package of tax adjustments planned for 1988 and described this
as an increase in subsidies.
The institutes said total subsidies, including tax
preferences, had reached 80 billion marks in 1985 and risen
further since then. Given the scope of these subsidies, it
should be possible "despite ... Major political difficulties" to
finance the tax reform by cutting state handouts.
The institutes said that if the government raised value
added tax or other indirect taxes a large portion of the
positive effects resulting from lower taxes would be lost.
The report also noted that the government was progressing
only slowly with its plans to privatise state companies and
said more deregulation was needed. The government had to aim
for more competition, it said.
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Glaxo pre-tax profit 376 mln stg vs 260 mln in six months to end-December
| |
HILLSDOWN BUYS BEDDING COMPANIES FOR 23 MLN DLRS | Hillsdown Holdings Plc <HLDN.L> said its
Christie-Tyler Ltd unit would buy the European bedding making
interests of Simmons Co U.S.A., Owned by Gulf and Western
Industries Inc USA <GW>, for 23 mln dlrs.
The acquisitions include <Sleepeeze Ltd> in the U.K.,
<Compagnie Continentale Simmons SA> in France and <Compagnia
Italiana Simmons SpA> in Italy.
In 1986 the three businesses made pre-tax profit of around
2.5 mln stg on sales of 39 mln stg. Net assets being acquired
come to around nine mln stg.
Hillsdown shares were unchanged at 266p.
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EC COULD DECIDE ON JAPAN TRADE MOVES IN LATE MAY | The European Community (EC) has
effectively given Japan six weeks to take moves to open its
market to imports before it decides on possible tough
retaliatory trade measures, EC diplomats said.
They said EC foreign ministers will meet on May 25 and 26
to review the state of trade relations between the two sides.
The EC executive commission was asked by representatives of
member states on Friday to propose a renunciation of some EC
pledges to the world trade body, GATT, unless there are
"adequate and early measures to open the Japanese market."
Such a renunciation would be the first step to imposing
stiff increases in duties, or quantitative limits, on Japanese
exports.
The diplomats said it was unlikely that the issue would be
discussed in detail at the next meeting of EC foreign ministers
on April 27 and 28 in Luxembourg as time was needed to prepare
proposals for possible retaliatory action.
They said the commission has powers to take some limited
action before getting ministerial approval to prevent Japanese
exports of electrical, photographic and other goods being
diverted to Europe in the wake of possible U.S. Tariff moves.
In May, the ministers are also likely to discuss how to
prevent Japan from getting an extra trading advantage as a
result of Spain and Portugal joining the bloc, which obliges
them gradually to reduce tariffs on many industrial goods.
Meanwhile, Japan's trade surplus with the Community has
grown steadily, registering a record 2.13 billion dlrs in
March.
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GLAXO PROFITS UP SHARPLY, DIVIDEND RAISED | Six months to end-December
Shr 32.6p vs 22.3p
Div 5.0p vs 4.0p
Pre-tax profit 376 mln stg vs 260 mln
Turnover 883 mln vs 686 mln
Tax 133 mln vs 94 mln
Note - company full name is Glaxo Holdings Plc <GLXO.L>.
Trading profit 338 mln vs 233 mln
Share of profits of associates 14 mln vs seven mln
Investment income less interest payable 24 mln vs 20 mln
Profit after tax 243 mln vs 166 mln
Minority interests two mln vs one mln
Extraordianry credit eight mln vs nil
Turnover includes -
Continuing activities 875 mln vs 647 mln
Discontinued activities eight mln vs 39 mln
U.K. 111 mln vs 91 mln
Europe 299 mln vs 218 mln
North America 334 mln vs 229 mln
Central and South America 21 mln vs 20 mln
Africa and Middle East 29 mln vs 23 mln
South East Asia and Far East 57 mln vs 47 mln
Australasia 24 mln vs 19 mln
Anti-peptic ulcerants 414 mln vs 285 mln
Systemic antibiotics 112 mln vs 82 mln
Respiratory system 183 mln vs 141 mln
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TAKEOVER BATTLE FOR DOME PETROLEUM BEGINS | A takeover battle began today for
debt-burdened Dome Petroleum Ltd <DMP.MO> as TransCanada
PipeLines Ltd <TRP.TO> announced a 4.3 billion dlr offer and
Dome said it is continuing talks with other possible buyers.
Companies mentioned in market speculation as potential
buyers for Dome include Imperial Oil Ltd <IMO.A> which is 70
pct owned by Exxon Corp <XON.N>, <PanCanadian Petroleum Ltd>
which is 87 pct owned by the conglomerate Canadian Pacific Ltd
<CP.N> and British Petroleum Co Plc <BP.L>.
Along with the TransCanada offer, Dome has had another
proposal from "a substantial company" and discussions with a
third company which could lead to an offer, Dome said in a
statement.
The statement confirmed Dome received TransCanada's bid,
but did not identify the companies involved in talks.
TransCanada, Canada's largest natural gas pipeline
operator, said it is offering Dome a package of cash, common
and preferred shares, and shares in a new subsidiary which
would own and operate Dome's assets. TransCanada said the offer
is to Dome management, not to shareholders.
Dome has massive oil and gas landholdings in Canada,
totalling 36.1 mln acres of which 7.4 mln have been developed.
It also has tax credits worth about 2.5 billion dlrs.
Dome's statement said the TransCanada announcement "violated
the terms and spirit of a confidentiality agreement entered
into with prospective purchasers" and was apparently timed to
prevent Dome from considering other proposals.
It said the TransCanada bid "seems to require favourable and
substantial taxation concessions from the federal and
provincial governments." But Dome added that its management and
financial advisers will evaluate all proposals.
TransCanada chief financial officer H. Neil Nichols said he
was surprised at the vehemence of Dome's statement and denied
that TransCanada was trying to usurp other bids. "I find (Dome's
statement) very bothersome. Once the board made the decision to
authorise the proposal, it had a legal obligation to announce
it," he said. Nichols said he did not know the identity of the
other bidders, or the terms of other offers.
Dome common shares closed at 1.13 dlrs on Friday on the
Toronto Stock Exchange. The preferred class A stock closed at
5.00 dlrs. Common stock traded as high as 25.00 dlrs in 1981.
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BANK OF JAPAN TO SELL 800 BILLION YEN IN BILLS | The Bank of Japan will sell 800 billion
yen in deficit financing bills today through 51-day repurchase
agreements maturing June 3 to help absorb a projected money
market surplus, money traders said.
The operation will raise the outstanding supply of the
bills to a record 4,800 billion yen.
The yield on the bills for sale to banks and securities
houses from money houses will be 3.8999 pct compared with the
two-month commercial bill discount rate today of 3.8750 pct and
the two-month certificate of deposit rate of 4.13/00 pct.
The traders estimated the surplus today at about 1,800
billion yen.
They said it is mainly due to 1,300 billion yen of
government tax allocations to local governments and public
entities and to excessive banking system cash holdings due to
continuous large central bank dollar purchases.
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ITALIAN BANKS TO SIGN ACCORD WITH SOVIET BANKS | Italian state-owned bank Banca
Commerciale Italiana, BCI, said it and Mediocredito Centrale
will sign a joint venture pact with Soviet central bank Gosbank
and Vneshtorgbank, the foreign trade financial institution.
A BCI spokesman told Reuters the agreement involves the
banks providing financial services and taking equity stakes in
joint Soviet-Italian industrial ventures.
Under the agreement, the Italian banks will have a 50 pct
interest in a new firm to be formed by the four institutions.
The accord is expected to be signed today or tomorrow at a
Venice conference on East West trade, the spokesman said.
The spokesman said the joint venture company will operate
primarily in the corporate finance sector. Additional details
about the firm's activities were not available, he said.
BCI is Italy's second largest bank, while Mediocredito
provides medium-term export financing.
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LME CLARIFIES NEW ALUMINIUM CONTRACT DETAILS | The London Metal Exchange (LME) has
issued a note clarifying details on its new high grade
aluminium contract, in response to questions from members
following the announcement of the contract, due to start June
1.
All deliverable shapes of aluminium under the high grade
primary aluminium contract (minimum 99.7 pct purity) will also
be deliverable against the standard primary aluminium contract
(min 99.5 pct), the LME said.
Sows will not constitute good delivery against the standard
contract until September 1, and 99.5 pct purity sows are not
good delivery and cannot be placed on LME warrant.
The dollar quotation for the high grade contract will be in
multiples of one U.S. Dollar but carries may be made at 50
cents for even tonnages only.
Singapore, which is the first port warehouse outside Europe
to be used as an LME delivery point, will be used for high
grade metal only and the rent imposed by owners Steinweg will
be 1.05 U.S. Dlr a tonne per week, the LME said.
The LME Board, in response to representation from the
trade, agreed to annul from LME contracts the minimum weight
requirements of 450 kilos for T-bars and 250 kilos for sows,
effective for high grade on June 1 and for standard on July 24.
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YIELD ON 91-DAY SAMA DEPOSITS RISES | The yield on 91-day bankers security
deposit accounts issued this week by the Saudi Arabian Monetary
Agency (SAMA) rose to 6.43896 pct from 6.21563 a week ago,
bankers said.
SAMA lowered the offer price on the 500 mln riyal issue to
98.39844 from 98.45313 last Monday. Like-dated interbank
deposits were quoted today at 6-3/4, 5/8 pct.
SAMA offers a total of 1.9 billion riyals in 30, 91 and
180-day accounts to banks in the Kingdom each week.
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NAKASONE'S PARTY SUFFERS SETBACKS IN LOCAL POLLS | Japanese Prime Minister Yasuhiro
Nakasone's unpopular plan to introduce a sales tax caused an
electoral setback for his ruling Liberal Democratic Party (LDP)
in Sunday's local elections, political analysts said.
The LDP retained its 11 prefectural governorships, but
failed to restore a governorship in Fukuoka it had placed much
importance on winning. In the prefectural assembly elections to
fill 2,670 seats, the LDP has so far lost 92 of its previously
held 1,487 seats to the socialists and communists.
Full election results should be available later today.
Discussing the election results with reporters, Nakasone
said, "I wouldn't say the proposed five pct sales tax had no
effect at all, but there were other factors, such as a low
turnout and unusually cold weather."
The Home Affairs Ministry said the average turnout for the
13 gubernatorial elections was a record low 59.78 pct while the
prefectural assembly polls drew an average of 66.66 pct, also a
record low.
Noboru Goto, president of the Japan Chamber of Commerce and
Industry and a longtime friend of Nakasone, told reporters the
impact of the sales tax on the LDP's setback was obvious.
"The government should take action (on the sales tax) in
regard to the people's wishes," Goto said.
Nakasone and other LDP leaders have already hinted at a
delay in the implementation of the tax, which had been
scheduled for next January, and a possible cut in the rate.
"The most important thing now is to get parliamentary
approval of the budget as soon as possible to arrest a rapid
appreciation of the yen," Nakasone said. "We must implement
measures to prop up the economy."
Opposition parties said the elections were a referendum on
the tax and they will continue to demand its retraction.
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JAPAN DENIES REPORT IT MAY END CHIP PACT WITH U.S. | A Ministry of International Trade and
Industry (MITI) official denied a local news agency report that
Japan will end its seven-month-old semiconductor agreement with
the U.S. If Washington imposes tariffs on 300 mln dlrs worth of
Japanese electronic goods from April 17.
Kyodo News Agency reported a high-ranking MITI official as
saying Japan would end the chip pact if the U.S. Implements the
punitive tariffs.
Nothing new has been decided, the official said. As MITI
said on Saturday, Japan would only pursue its rights under the
General Agreement on Tariffs and Trade (GATT), he added.
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TEXACO <TX> EUROBONDS UNQUOTED AT MARKET OPENING | Eurobonds for Texaco Inc subsidiaries
were unquoted this morning as traders assessed the implications
of the company's shock weekend decision to file for bankruptcy
under Chapter 11 of U.S. Bankruptcy laws, eurobond dealers
said.
The decision to file for bankruptcy follows a court
decision that it had to post an 11 billion dlr bond to continue
its court battles with Pennzoil Co <PZL>.
One head trader at a U.S. Securities house said, "I don't
want to be obstructive, but there genuinely is no market in
Texaco bonds at the moment. Everyone is stunned by the decision
(to file for bankruptcy) and can't really believe it."
One dealer noted that Texaco subsidiaries have outstanding
eurobonds totalling over three billion dlrs out of total
borrowings of some 6.8 billion dlrs.
He added that many of the fixed interest eurobonds - dollar
straights - had been trading "basis only" for some time prior to
this weekend's news. This means traders could quote a two way
price for the bonds but would not be bound to trade them. Any
trades would be negotiated.
He said that recently there appeared to have been some
speculative buying of the bonds from the U.S. But that European
investors had been overall sellers.
Dealers noted that under the Chapter 11 filing noteholders
will receive no interest payments.
Texaco also has eurobonds outstanding which are convertible
into Texaco Inc common stock - known as convertibles. Trading
did not open in these issues either. One convertible dealer
said, "We're waiting to see the result of today's court hearing."
Texaco is applying today in the Texas courts for relief from
having to post the court bond.
Texaco shares were being indicated by over the counter
share dealers here at around 26 to 28 dlrs compared with
Friday's close in New York of 31-7/8 dlrs.
Pennzoil shares were indicated at 85 to 87 dlrs compared
with Friday's New York finish of 92-1/4 dlrs.
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U.S. LAWMAKERS URGE JAPAN TO OPEN FINANCIAL MARKET | U.S. Legislators called on Japan to open
its financial markets to more foreign participation and boost
its efforts to head off growing U.S. Protectionism, a Foreign
Ministry spokesman said.
"We have come to seek the opening of Japan's financial and
banking markets," Jake Garn, ranking Republican on the Senate
Banking Committee, told Prime Minister Yasuhiro Nakasone.
"Japan's financial and banking market is very large and
increasingly sophisticated, but there is not yet true
reciprocity between Japan and the United States in this market,"
the ministry official quoted Garn as saying.
Nakasone replied that some problems exist over providing
more seats on the Tokyo Stock Exchange for foreign firms, one
of the main steps urged by the U.S. Delegation.
"But I promise to make Tokyo's markets as open as those of
New York," he told Garn and three other legislators.
In separate talks with Finance Minister Kiichi Miyazawa,
the U.S. Group also urged Japan to give U.S. Financial
institutions a bigger role in the underwriting of long-term
Japanese government bonds, a Finance Ministry spokesman said.
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NORTH YEMEN BOUGHT WHITE SUGAR AT TENDER - TRADE | North Yemen at its weekend tender bought
white sugar from a French operator acting on behalf of a Swiss
house at 214.70 dlrs a tonne c and f, traders said.
The amount bought was not immediately available, although
the country had sought 30,000 tonnes of June arrival whites,
they said.
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JAPAN DENIES REPORT IT MAY END CHIP PACT WITH U.S. | A Ministry of International Trade and
Industry (MITI) official denied a local news agency report that
Japan will end its seven-month-old semiconductor agreement with
the U.S. If Washington imposes tariffs on 300 mln dlrs worth of
Japanese electronic goods from April 17.
Kyodo News Agency reported a high-ranking MITI official as
saying Japan would end the chip pact if the U.S. Implements the
punitive tariffs.
Nothing new has been decided, the official said. As MITI
said on Saturday, Japan would only pursue its rights under the
General Agreement on Tariffs and Trade (GATT), he added.
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JAPAN WARNS U.S. IT MAY RETALIATE IN TRADE ROW | Japan warned the United States it may
take retaliatory measures if the U.S. imposes its planned trade
sanctions on April 17, a senior government official said at the
weekend.
Shinji Fukukawa, Vice Minister of the International Trade
and Industry Ministry, said in a statement that Japan would
consider measures under the General Agreement on Tariffs and
Trade and other actions if the United States imposes 100 pct
tariffs on some Japanese exports as planned next week.
However, Fukukawa said Japan was ready to continue trade
talks with the United States despite its failure to convince
America to call off the threatened tariffs during two days of
emergency talks which ended in Washington on Friday.
In March President Reagan announced the sanctions in
retaliation for what he called Japan's failure to honor a July
1986 pact to stop dumping computer microchips in markets
outside the U.S. and to open its home market to U.S. goods.
Fukukawa said the U.S. had not listened to Japan's
explanation of its efforts to live up the pact. He saod the U.S
had not given detailed reasons of why it planned tariffs.
Reuter
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U.K. MONEY MARKET GIVEN 75 MLN STG ASSISTANCE | The Bank of England said it had provided
the money market with 75 mln stg help in the morning session.
This compares with the Bank's estimate that the system would
face a shortage of around 400 mln stg today.
The central bank bought bank bills outright comprising two
mln stg in band two at 9-13/16 pct, 15 mln stg in band three at
9-3/4 pct and 58 mln stg in band three at 9-11/16 pct.
REUTER
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JAPAN CENTRAL BANK ACTIVELY BUYS DOLLARS IN TOKYO | The Bank of Japan actively bought dollars
here in early afternoon trade at around 142.20 yen, dealers
said.
The central bank had placed buy orders at that level and
prevented the dollar from falling when it came under heavy
selling pressure from investment trusts and trading houses,
they said.
However, the intervention failed to boost the U.S. Currency
significantly from the 142.20 yen level, they added.
The dollar was trading around its midday rate of 142.30
yen. It had opened here at 141.85 yen.
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CURRENCY MOVES MAY BE HURTING WORLD TRADE | Japanese trade figures are seriously
challenging the entrenched view of policy makers of the Group
of Seven industrialised nations that relative currency rates
are the key to smoothing world trade problems.
Senior Japanese, U.S. And European officials in Tokyo say
they are at a loss to fully explain the data, for if currencies
are the key they ask, why then are are U.S. Exports to Japan
shrinking?
What if manipulating currencies and driving the dollar down
made world trade problems worse rather than solving them,
fulfilling Federal Reserve chairman Paul Volcker's forecast of
world trade recession?
U.S.-Japan trade has declined even after a 40 pct dollar
fall against the yen since the September 1985 Group of Five
pact in New York.
The lower dollar ought to have made U.S. Exports 40 pct
more competitive in Japan. The officials, most of them
economists, can offer no objective reason why they are not.
Worse, how are European Community sales to Japan rising
rapidly when the European Currency Unit has until now declined
only 11 pct against the yen.?
Last week's G-7 meeting in Washington has been widely
interpreted as a sign from the policy makers that the dollar
must go lower. So worst of all, what if Volcker is correct?
At a loss to give an objective explanation, officials can
only offer explanations which tend to be highly subjective.
"I don't know and I don't think anyone knows," said Hugh
Richardson, acting head of the EC delegation in Tokyo.
"What I do know is that Community exporters are making a
hell of an effort in this market. If you make an effort, there
is money to be made in Japan," he added.
But U.S. Officials and businessmen are convinced low U.S.
Exports to Japan are Japan's fault. They cite restrictive trade
practices, protected Japanese trade sectors, such as
agriculture, and non-tariff barriers, such as unreasonable
checking and customs procedures for car imports.
Publicly, Japanese officials remain conciliatory in the
face of what they see as U.S. Aggression. In private, they
blame U.S. Industry for being uncompetitive.
"We see it that way, but we don't like to seem arrogant,"
said a senior official, who declined to be named. "We like to
refrain from accusing them of not making enough effort."
Industrialists such as Eishiro Saito, chairman of the
Keidanren business group, and Sony Corp chairman Akio Morita
repeatedly accuse foreign firms of not making enough effort to
understand Japan's markets, and some foreigners agree. "The real
issue is the inability of major sectors of American and
European industry to compete not only internationally but even
in their home markets," Peter Huggler, President of Interallianz
Bank Zurich, told a recent conference in Switzerland.
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TURKEY TO APPLY FOR EC MEMBERSHIP | Turkey is to apply tomorrow for European
Community membership, Foreign Ministry officials said.
They told Reuters that Minister of State Ali Bozer would
lodge the application in Brussels with Belgian Foreign Minister
Leo Tindemans.
Turkey would be the 13th member of the group, of which
Belgium is current president.
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GERMAN METALWORKERS' WAGE TALKS BEGIN WEDNESDAY | Negotiations scheduled between the
metalworkers' IG Metall union and employers to resolve an
impasse over a new contract will start on Wednesday, the union
said in a statement.
IG Metall is demanding a 35-hour week, with a parallel
increase in wages of five pct. Employers Gesamtmetall have
offered a half-hour shortening in the current working week, to
38 hours, and an initial rise of 2.8 pct.
IG Metall, under newly-elected leader Franz Steinkuehler,
proposed the talks on Thursday, after regional negotiations in
the northern part of the state of Baden-Wuerttemberg collapsed.
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SAUDI ARABIA SEEKING RBD PALM OLEIN | Saudi Arabia is in the market for 4,000
tonnes of refined bleached deodorised palm olein for June 1/10
shipment, traders said.
REUTER
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METAL BULLETIN ZINC PRODUCER PRICE | The London based trade journal "METAL
BULLETIN'S" average producer price of good ordinary brand zinc
for week ended April 10 is 790.00 dlrs per tonne.
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U.K. PRODUCER PRICES SEEN MOVED BY TECHNICALITIES | U.K. Producer price data for March were
roughly as expected after taking into account technical factors
which affected the year-on-year outcome, economic analysts
said.
The figures showed a 0.3 pct provisional, non-seasonally
adjusted rise in output prices in March, unchanged from
February and close to the average for the last six months.
The year-on-year rise was put at 3.7 pct, down from 4.2 pct
in February.
But Chris Tinker, economist at brokerage house Phillips and
Drew, said the drop in the year-on-year rate mainly reflected a
rise in excise duties which affected the index in March last
year.
He cautioned that it was dangerous to read too much into
the monthly figure, adding that a rise of only 0.2 pct in April
would take the year-on-year rise back above 4.2 pct.
Analysts also noted that a drop in manufacturers' input
prices was almost entirely due to anticipated seasonal factors
such as a fall in industrial electricity costs.
Duncan Squire of Lloyds Merchant Bank said the figures were
slightly disappointing in that the strengthening of sterling
had not yet reduced input prices as much as expected.
Both he and Tinker said this factor should help keep input
costs down over the next few months, although Tinker added that
last year's fall in oil prices is now about to drop out of the
year-on-year comparisons and is likely to lead to a return to
rises in the index rather than falls.
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BANGEMANN REJECTS CALL FOR EARLY TAX CUTS | West German Economics Minister Martin
Bangemann indirectly rejected a call from the country's leading
economic research institutes for early introduction of a major
tax reform involving gross tax cuts of 44 billion marks.
In a statement reacting to the five institutes' joint
spring report, Bangemann said that as far as the call for
bringing forward the 1990 tax reform was concerned --
"The government points out that the positive effects for
growth of its policy of consolidation (cutting the budget
deficit) must not be allowed to be endangered."
Bangemann also recalled that the scope of tax cuts planned
for 1988 had already been increased.
Three institutes predicted two pct economic growth in 1987,
with exports falling by 0.5 pct. The other two saw only one pct
growth and said exports would fall 2.5 pct.
Bangemann said "The government, agreeing with the majority,
sees no reason for the extraordinarily pessimistic estimate for
exports expressed by the minority."
He said there was reason to believe that export demand
would start to rise in the course of the year, partly because
of a further increase in world trade.
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ITALIAN GDP ROSE 2.4 PCT IN 1986 FOURTH QUARTER | Italy's Gross Domestic Product, calculated
at 1980 prices, rose 2.4 pct in the fourth quarter of 1986,
compared with the same period in 1985, National Statistics
Institute ISTAT said.
ISTAT said in a statement that GDP growth in fourth quarter
1986 was zero compared with the preceding quarter. Italy's
budget ministry said last month that 1986 GDP rose 2.7 pct in
real terms from 1985.
Imports in the fourth quarter totalled 26,361 billion lire,
down 1.4 pct from the 1985 fourth quarter and down 6.6 pct from
the third 1986 quarter, ISTAT said.
Istat said exports totaled 23,190 billion lire in the
fourth quarter, down 4.1 pct from the comparable 1985 quarter
and down 6.7 pct from the third quarter in 1986.
Fixed investments were 23,438 billion lire in the fourth
quarter, down 0.7 pct from the preceding quarter and up 1.1 pct
from the comparable 1985 quarter.
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FURTHER WEAKNESS SEEN IN TOKYO STOCKS IN NEAR TERM | Tokyo share prices are expected to weaken
further for about a week, following a sharp drop which at one
time today saw the Nikkei Dow index down 571.01 points in
mid-afternoon trading, brokers said.
They said uncertainty caused by disputes between Japan and
its main trading partners will continue to deter investors from
equities.
The market index, which closed the day 297.05 points down
at 22,919.54, will probably end the present downturn at around
22,300 points, brokers predicted.
"This is just a short-term correction and the market will
probably end up at about 22,300 in about a week's time," said a
broker at Nomura Securities Co.
He said that today's late recovery from afternoon lows
showed that investors were still hunting bargains in
anticipation of an upturn.
Brokers reiterated expectations of an imminent cut in
Japan's 2.5 pct discount rate, a factor seen to be diverting
money from bank accounts into stocks and boosting the market.
Securities company, bank and insurance issues, likely to
benefit from a rate cut, were bought in late trading.
The Nomura broker said he expects the rate cut in May or
June, after Prime Minister Yasuhiro Nakasone's scheduled visit
to Washington on April 29. Nakasone is expected to seek an end
to Japanese-U.S. Trade disputes which are hurting investor
confidence.
"Until we see some concerted effort by the Japanese to halt
the yen's rise against the dollar and settle trade disputes,
the market will stay low," said head of equities at Jardine
Fleming Securities Co, Mario Malt.
Malt said current talks between the countries were
inflammatory and damaged stockmarket optimism.
Brokers also said that Japan's ruling Liberal Democratic
Party has to show it still rules, after Sunday's nationwide
local elections showed dwindling support.
"It raises doubts on whether the LDP can push through the
reforms it planned for this year," said one broker.
Top policy priorities this year are deregulation of
financial activities, stimulation of domestic demand to boost
imports and removal of agricultural subsidies.
If these policies are abandoned or scaled down, stockmarket
investors will have few reasons to buy stocks, brokers said.
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TWO UTAH FINANCIAL INSTITUTIONS FAIL | Two Utah financial institutions, the
Bank of Iron County and Summit Savings and Loan Association,
have failed, official spokesmen said.
The board of directors of the Federal Deposit Insurance
Corporation (FDIC) has approved the assumption of the deposit
liabilities of Bank of Iron County, Parowan, Utah, by Dixie
State Bank, St George, Utah, an FDIC spokesman said.
The bank, which had total assets of 20.1 mln dlrs, was the
first bank in Utah to fail this year and the 59th nationwide.
Its three offices will reopen today as branches of Dixie
State Bank and its depositors will automatically become
depositors of the assuming bank.
Dixie State Bank will assume about 19.9 mln dlrs in 6,300
deposit accounts and will purchase all of the failed bank's
assets at a discount of 3.575 mln dlrs.
The Federal Home Loan Bank Board closed Summit Savings and
Loan Association, Park City, Utah, and directed the Federal
Savings and Loan Insurance Corporation (FSLIC) to transfer an
estimated 116.9 mln dlrs in insured deposits to United Savings
and Loan Association, Ogden, Utah, an FSLIC spokesman said.
Summit, a 120.8 mln dlr institution, was insolvent, the
spokesman said. The bank board appointed the FSLIC as
conservator for the association on April 14, 1986.
Summit has since operated as part of the bank board's
Management Consignment Program. United Savings has 205 mln dlrs
in assets and nine offices in Utah, and one in Idaho.
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G-7 SEEMS WORRIED MARKETS IGNORE COORDINATION | Top officials of leading industrial
nations appear deeply worried that financial markets have
ignored their efforts to coordinate policies, which they
believe they strengthened in talks last week.
Monetary sources said officials were exasperated that the
markets, which drove the dollar rapidly lower and severely
disrupted bond and stock markets too, did not take heed of the
policy commitments of the Group of Seven -- the United States,
Japan, West Germany, France, Britain, Italy and Canada.
Treasury Secretary James Baker went out of his way to
reassure markets of his commitment to a stable dollar with a
statement, and French Finance Minister Edouard Balladur
underscored that by saying: "I don't believe at all that the
Americans want a weaker dollar."
West German Finance Minister Gerhard Stoltenberg said the
dollar's latest rapid descent "involves the risk -- now already
a tangible threat -- of a new strong surge of inflation,
leading to a renewed rise in interest rates."
But there were signs too, that while policymakers feared
the market uproar, they seemed to accept there was little they
could do until the economic picture changed, and currencies
settled into a stable pattern as a result.
Nor did there seem to be any enthusiasm at last week's
semi-annual meetings of the IMF and the World Bank for higher
U.S. Interest rates as the best way to curb the dollar's rapid
descent. That distaste stems in part from fears of recession.
Outgoing Deputy Treasury Secretary Richard Darman told
television interviewers he did not think a policy of driving
the dollar down would solve the U.S. trade deficit.
"It would slow growth in Germany and Japan which would
adversely affect our trade balance and ultimately it would
drive interest rates up here which would throw us, if not
(into) recession, into slower growth," he said.
Asked if higher U.S. Interest rates would stabilize the
dollar, Balladur said: "When a currency is maintained
artificially high, by artificially high interest rates, it is
not healthy."
And resorting to higher interest rates could lead to
recession, he said.
Acknowledging the dollar's latest slide was now a fact of
life, Balladur said, "there may be adjustments of course in one
or other currencies, this is not a fixed rate system."
But Federal Reserve Board chairman Paul Volcker said he
might rein in credit if the dollar's slide deepens.
U.S. Monetary sources also said Washington wanted it
understood by markets the seven's commitments were genuine.
"The United States and the six major industrial countries
are fully committed to implementing our undertakings in these
agreements," Baker told the meetings.
Darman said Baker had been misinterpreted by markets which
wrongly believed earlier remarks suggested he wanted a further
decline in the dollar. Baker, Darman said, was committed to
stabilizing currencies at current levels.
Last week's statement from the seven reaffirmed a February
22 agreement in Paris in which the Reagan administration agreed
to reach a budget deficit compromise with Congress and to fight
protectionism.
West Germany and Japan, meanwhile, agreed to stimulate
domestic demand and lead a global upturn.
Ministers believed the Paris pact was bolstered by Japan's
promise of a 35 billion dlr supplementary budget.
The sources said they believed Baker saw it as a major
action. But the seven seem to accept their commitment to stable
currencies applied to today's exchange rates and not those at
the time of the Paris agreement, when the dollar stood higher.
The Paris accord said, "currencies (are) within ranges
broadly consistent with underlying economic fundamentals, given
the policy commitments summarized in this statement."
Now they accept the dollar's lower level, especially
against the yen, as hard reality that is nonetheless consistent
with the agreement. "The ministers and governors reaffirmed the
view that around current levels their currencies are within
ranges broadly consistent with fundamentals," last week's
statement read.
Monetary sources said policymakers understood markets were
focusing on instability created by the gap between the U.S.
Trade deficit and the surpluses of West Germany and Japan
rather than prospective policy changes. European monetary
sources said Bonn was still unconvinced that Washington meant
business with its commitment to cut the budget deficit.
Reuter
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