July goes out with a big bang

FAR FROM being the quiet start of the holiday season, the last week of July has produced plenty to keep the suits of the Square Mile muttering purposefully over their glasses of Chablis. The cancellation of the new headquarters for LIFFE was no surprise. Brian Williamson has made his first serious gesture as the new executive chairman by acknowledging that electronic trading means a bigger trading floor is no longer needed. The boys from Essex will doubtless regret that their 15-minute walk across the city is still necessary, but it was inevitable and at least it shows that Mr Williamson means business.

Then there was the decision by UBS not to put the Phillips & Drew fund management business up for sale. Putting together the various parts of these two Swiss banks was bound to throw up problems, but at least some form of compromise has been reached. Phillips & Drew have had a tough time recently and would undoubtedly have rather seen real independence instead of the token autonomy offered. It is a move in the right direction though, and few could be surprised that an aspiring global player does not wish to divest itself of important assets under management.

And if you are not yet convinced that the economy is on a downward slope, look at the house repossession figures published this week. A 10 per cent rise over the previous six months shows that all is not wel. Estate agents have already warned us that "Dun Moving" is returning as the most popular appellation for Britain's housing industry, but the sudden reversal of the improving trendwas none the less a shock.

Yet some profit statements have been better than we might have expected. Abbey National, one of the largest players in the mortgage market, came up with a profit rise of more than a fifth, plus a pledge that costs would be kept in check for the future. It was enough to perk up other bank shares.

The big news of the week was that BT has at long last found its global partner. So impressed were markets that the shares were swiftly marked up and fund managers' desks resounded to the thud of buy notes on this telecoms giant. It seems a good deal for BT. AT&T will be shovelling in the bulk of the assets and revenue but keeping just 50 per cent of the equity. The regulators may have a thing or two to say, but there must be mighty sighs of relief going around British Telecom's headquarters.

Sighs of relief will not be much in evidence at Volkswagen though. In what promises to be the management story of the decade, Germany's car giant thought they had bought Rolls-Royce but found they had acquired an out of date factory and little else. The name will go to BMW who clearly have the last laugh in this particular auction. My moles tell me that even now case studies are being drafted for business schools to show how not to conduct a cross-border acquisition.

The one thing we didn't get during the week was a steer on what is likely to happen to the market. Having given back a little ground, shares seem to have stabilised and are looking for some convincing news to push them in one direction or the other. Such indicators as we have seen suggest that the push should be downwards, but sellers seldom emerge and the weight- of-money theory still seems to hold good. With so much going on, it is probably enough simply to assimilate the information doing the rounds and hope we will get a better indication of what might happen before too long.

Brian Tora is Chairman of the Greig Middleton Investment Strategy Committee

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