The Ides of Much are come.' 'Aye, Caesar, but not gone' it's the smith
n the Ides of March I went into the soothsaying business. Shares would bounce with relief, I said, if a war in the Gulf turned out to be swift
and successful. As sooths go, this one was easy to say — except that shares jumped the guns. They took the imminent war as their starting signal, and rushed forward. Soon enough they were charging across the financial desert and regaining positions from which they were routed in the early months of this year. Gung-ho commentators proclaimed that this marked the end of their three-year retreat, or if not the beginning of the end, at least the end of the beginning. Perhaps, but it seemed just as likely that the markets were running ahead of events. War, as Marshal Foch said, is one chose aleatoire — a chancy business — and will not always be swift and successful. As this week began, shares were falling back from their exposed positions. It was time for what the Army knows as a pause for regrouping. This can only be an expensive war, and the peace will be expensive, too. Wise in the ways of markets, the Governor of the Bank of England said this week that they had factored in a rapid end to the war: 'I hope they prove to be right, for more than purely economic reasons.' The Ides of March are come but, whatever the calendar may say, they are not gone.
Over the top
Wreaths continue to be laid at the Tomb of the Unknown Shareholder. At Corns, friendly fire from Washington — a steelseeking tariff — has pretty well wiped the existing shareholders out, and bondholders and bankers must expect to be drafted up into the front line. France Telecom is calling up another £10 billion, half of it conscripted from that shareholder of last resort, the French taxpayer, by way of the French government. Allianz, the German insurer which has the misfortune to own Dresdner Bank, needs another £2.7 billion of share capital to
bolster its reserves, and a billion bond issue as well. In this war of attrition, numbers count. One in eight of Dresdner's loans has a question-mark over it, and Allianz may — no one knows — have invested in other banks' dubious loans through its holdings of credit derivatives. There is a precedent for all of this. In the bear market of the 1970s, Commercial Union was the overstretched
insurer which had to raise money by issuing shares on such terms as it could get. The line held, the reinforcements sufficed and the markets turned but it was, like Waterloo, a close-run thing.
Handicapped out
The first rule of competition policy is simple. If you know too much about the business you want to be in, you will carry top weight in the handicap and may be out of the race. This rule has now been enforced in the Great Safeway Stakes, where all the other supermarket groups, or all to have expressed an interest in bidding, have found themselves packed off to the Competition Commission. The field has thus been left clear for Philip Green, the retailer of clothes and wholesaler of shops, unless some jobber in businesses chooses to give him a run for his money. Whether this rule is likely to produce the best results can be debated. When Express Newspapers came up for sale, the bidder who was thrown in at the weights was Richard Desmond, who was offering cash and, unlike any of the national newspaper groups, would have no trouble with the Commission. His publications were certainly different. The chairman of one group of newspapers sent his chauffeur into a newsagent's, to pick up some samples of Mr Desmond's top-shelf magazines. The chauffeur emerged, looking resolute: 'If you don't mind, sir, I'd rather you bought them yourself.'
Inflated demands
Your town hall is terribly under-resourced, as the girl in the excuses department would tell you if you could ever get through to her. So grit your teeth and pay your council tax bill, which is going up (on average) by something like 13 per cent. This makes it the most steeply rising price in the Retail Prices Index, and will help to keep inflation where it is now, at its highest for five years. Of course, your town hall does not have to compete with Hu He, the low-cost Chinese manufacturer who has done so much to keep other people's inflation rates down. Like the rest of the public sector, town halls do not manufacture anything: they provide services, on their own terms. I scarcely expect them to follow the private sector's example and relocate the excuses department to a call centre in Bangalore.
Empire's end
Imperial Chemical Industries used to be called the Great Company: the biggest and the most highly regarded, a world leader governing an empire from its riverside palace on Millbank. Then, a decade ago, ICI went through a divorce. Pharmaceuticals, the sharp end of the group, took the name of Zeneca and left home. The rest of ICI carried on and tried to transform itself by selling its old businesses and buying new ones. At the end of this process it was short of cash and had to raise /800 million of capital in something of a hurry. Those who subscribed for the new shares have lived to regret it. They have seen their dividend halved twice in successive years, and this week the shares fell by two-fifths: trouble at two of the new divisions, called Quest and National Starch. The palace on Millbank has gone, and it must now be time for the name to go, too. As the Texans would say, this imperial company is now all hat and no cattle. It might look forward to a modest future as Starch Reduced.
Samovar class
It is an ill war that blows nobody any good, and an unexpected winner is Aeroflot, Not until now most people's airline of choice, Aeroflot claims to be picking up business from western carriers whose customers fear that they may become targets. I suppose that, as a regular customer of Kuwait Air — dry flights, but the cheapest club class across the Atlantic — I may have to cast around. I am not sure that I look forward to samovar class and KGB-trained stewardesses, but an international banker assures me that I could do worse. On his bank's banned list is a Far Eastern airline whose captains are converted fighter pilots.
Previous page
