Channel Islands set to run own stock market

Stock Market Week

THE CHANNEL Islands, already renowned for their undemanding tax regime, is set to offer its millionaire inhabitants their own Stock Exchange.

Its ambition is to become Europe's premier offshore market, "the centre of choice for the listing of investment funds, debt instruments and the shares of companies."

It will be the first home-grown market since the London Stock Exchange absorbed the portfolio of provincial markets some 30 years ago.

Run by Tamara Menteshvili (ex-Merrill Lynch) and based in Guernsey, the CHSE had hoped to witness its first deal next month. But "technical problems" have put back the opening a month or so.

Perhaps with an eye on the difficulties which have tormented London's controversial order book, the CHSE has opted wisely for market-makers and quote-driven trading.

With its tax advantages, the new market should be able to carve out a significant niche even in the increasingly international world of investment. It could also score a significant plus from its existence outside the bureaucratic embrace of the European Union.

The development of Euroland seems set to create at least one cross-border market. London has already linked with Frankfurt and the fledgling creation may eventually embrace other European markets. Such a body would give the Americans a run for their money.

The new alliance could, however, face a powerful rival, probably led by Paris.

But giant markets are only part of the unfolding European investment scene. Easdaq, a sort of European version of the US Nasdaq, is starting to flex its muscles after a slow start, and Euro.NM, specialising in hi- tech shares, is growing at a rapid pace.

CISE, it would appear, has already gathered considerable local backing with existing Channel Island stockbrokers (currently trading largely through London) expressing support. The new market expects to attract local firms, some of which are already traded in London. Dual listings are likely.

It also hopes to offer a market to companies from other lands and has already experienced considerable interest from the US.

The Channel Islands have a huge investment industry, with a multitude of offshore attractions. Its residents also represent a not insignificant slice of London's private client business.

Naturally the local investment industry will be offered incentives. For example accountants, fund managers and lawyers can become CISE members and able to list their own funds. The cost savings could be considerable.

Investor safeguards will be vital and Ms Menteshvili is, of course, aware that the fledgling CISE will be closely monitored to see if the necessary measures are in place. She has no intention of presiding over a maverick market, and the CISE will seek international recognition, particularly from regulatory bodies in the UK and the US.

Back at the ranch, a handful of Footsie constituents dominate this week's profits programme.

Orange, the mobile phone group, is expected to once again dial a loss - an interim figure of around pounds 50m, down from pounds 74m. The company, like others in the world of communications, has yet to make a profit.

No such problem at BSkyB, the satellite broadcaster. Even so, profits are likely to be lower, reflecting higher programme costs. A year's out- turn of pounds 280m against pounds 300m is on the cards. The signalled digital expenditure could lead to a pegged dividend - 6p a share,

BOC, British Oxygen as was, is another due to suffer a profits decline. Its third quarter figures are estimated to be around pounds 270m compared with pounds 325.4m.

British Airways, however, should manage a pounds 10m first quarter climb to pounds 100m. The figures could be overshadowed by huge orders for new aircraft, with Boeing and Airbus hoping to emerge victorious. In the past BA has favoured Boeing; this time there is talk of political pressure for Airbus to get at least some of the spoils.

Two newly-created giants are on the schedule. Nycomed Amersham, the health group, will offer maiden interims - say, pounds 110m - and insurance group CGU (Commercial Union plus General Accident) will maintain the pattern of lower insurance profits with a 44 per cent interim fall to pounds 275m.

Takeover favourites BICC, Sedgwick and Smith & Nephew also feature. BICC, with cable and construction interests, is unlikely to improve its position if an unwanted bidder did appear - interim profits will be down pounds 7m to pounds 48m. Insurance broker Sedgwick is in the same boat with figures of pounds 59m (pounds 66.5m).

And Smith & Nephew, the health care group, will also be unable to shore up its defences as half-year results are likely to emerge at pounds 71m against pounds 81.1m.

Inchcape, the international trader which has suffered acutely from the gyrations in Far Eastern fortunes, will also be in retreat with interim profits some pounds 20m down at pounds 58m.

Still, the half-time figures should be accompanied by further break-up developments, with the group likely to disclose the disposal of its Russian bottling business. Other sales and flotations are scheduled

Asia was presenting problems to Inchcape long before the crisis erupted last year. The shares of this relic of empire were more than 600p four years ago. In the early 1990's the company was a Footsie constituent. With its shares at 176p, its capitalisation is now pounds 925m.