Market report: Amvescap steps into the limelight to end the year on a high

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The Independent Online
Amvescap, the least known Footsie constituent, was one blue chip to end 1997 at a peak. Ignoring the kerfuffle in the final 10 minutes of trading the shares rose 16p to 523p, a far cry from the 207.5p seen in January.

The investment group, with a pounds 3bn capitalisation, emerged from the shrouds of obscurity last month when, to the surprise of many, it made its way into the exclusive Footsie index, covering the nation's top 100 companies.

Despite its elevation it is unknown to many investors. Perhaps that is not surprising as it derives around 90 per cent of its income from the US and is based in Atlanta. It has adopted a low profile here.

The group was formed when Invesco, a British investment operation, acquired AIM Management, a US group. The two became Amvescap in March.

As usual in the shortened New Year's Eve session trading was thin; volume was 216.5 million shares. In early trading Footsie was up 50 points and stood 33.3 higher at midday. Ten minutes later, when the stock market closed, the calculation showed a mere 1.5 gain. It was then adjusted to a 3.2 plus after the Stock Exchange had examined the final ten minutes of trading to root out rogue trades.

Humiliatingly, no less than 11 shares were adjusted; most of the changes went into double figures with General Accident (40p) the only price cut. Halifax was lifted by 28p and Sun Life & Provincial by 30p.

The many changes, which are bound to lead to charges of price rigging, call into question the accuracy of Footsie calculations since the order- driven system was introduced in October.

In effect, the Stock Exchange, in arriving at the restated prices, ignored the last order-book trade, even appearing to pay some attention to the final trades registered under the old, quote-driven system.

The last order-book trade in GA was at 1,095p for 938 shares. It was completely out of line with other deals. Almost at the same time two trades involving 6,354 shares went through at 1,055p. The restated price was 1,055p.

Halifax was hit by two late trades at 736p and 743p, although it had been trading at above 760p; the adjusted price was put at 764p.

Surprisingly, the Stock Exchange does not regard any of the deals which forced the recalculations as suspicious. And it does not intend to conduct any investigation. The sharp Footsie slump in the final ten minutes trading was, it is claimed, due to basket trades and the Stock Exchange is happy that nothing untoward occurred.

Close attention was paid to New Year's Eve's closing prices because it is the valuation day for many funds. With so many prices regarded as inaccurate there could be a case for daily adjustments. Funds using quarterly valuations will no doubt be clamouring for price checks at the end of each quarter.

The order-driven farce has cast a shadow over a record year. Domestic and international equity turnover rose by 36 per cent and 67 per cent respectively.

The adjusted Footsie close of 5,135.5 compares with a 5,330.8 peak reached in October. In December Footsie rose more than 300.

Royal Bank of Scotland, one of the unadjusted shares, led Footsie shares yesterday with a 29p gain to 773p.

Bass, the brewer, rose 11.5p to 944.5p, helped by talk it could sell its Coral betting shops chain to Ladbroke. Last month Bass agreed to sell its bingo clubs chain and its tenanted pubs.

Retailers scored some gains as the sales continued to pull in customers. Kingfisher put on 15p at 848p.

As the Stock Exchange suffered order-driven discomfort its tiny rival, Tradepoint, had the misfortune to encounter old-fashioned market pressure, falling 10p to 51.5p, a low. When order-driven trading appeared and Tradepoint was enjoying the benefits of a cash injection the shares touched 148.5p.

The latest demerger, splitting the car dealership from Culver saw the resultant Wyndham Motor Group trade at 113.5p with Culver, now concentrating on financial services, at 35.5p, an effective 7.75p gain.

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