City File: Iraq and Bosnia spur defence shares

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WITH what the military call hi-tech, low-intensity wars erupting in Iraq and Bosnia, there is a renewed interest in defence stocks.

Pick of the bunch is Alvis, the former United Scientific Holdings. On the surface it looks merely a struggling recovery stock, at 23p, slogging away with reduced orders after a pounds 5m write-off last year led to a pounds 1m loss.

But while London is cynical, Singapore is bullish about Alvis's 51-per-cent-owned subsidiary, Avimo. This makes optics for the night sights that are proving crucial in modern warfare. Indeed, the local market values Alvis's stake in its subsidiary at pounds 46m, three times the parent's total market capitalisation. Soon even bearish London will have to sit up and take notice.