Privatised firms thumb their nose at a windfall tax

MARKET REPORT

Windfall tax, what windfall tax? Judging by the performance of the privatised groups, the Labour Party's threat to hit the seemingly over-rich creations of the Tories has already been dismissed by the stock market.

Railtrack, the most astonishing success of them all, kept on its own express track, climbing 23p to 344p, another peak.

British Energy, ahead of today's results, added 2.5p to a 135.5p record and PowerGen was at one time 5.5p higher. ScottishPower ended 4.5p up at 339p.

With other privatisation shares under the windfall shadow also continuing to display remarkable resilience the market is, in the view of one leading stockbroker, dismissing what could be substantial tax demands if Labour comes to power. "The shares are good value even on a worst-case scenario," he said.

Takeover hopes are, of course, an influence. London Electricity fell only 6.5p to 658.5p on the disclosure talks with Entergy, the US group, had broken down. Other bidders are expected to appear for London and the other remaining English electricity distributors, Southern and Yorkshire, before next year's election. More corporate action is also deemed likely in the water sector.

As well as bid expectations the market is captivated by the generous dividend yields on offer, the prospect of steady profit increases and the rich assets often involved.

Railtrack's latest advance was fuelled by positive noises from NatWest Securities and determined buying by another securities house, thought to be Merrill Lynch, which left the market short of stock. NatWest lifted its profit expectations and drew attention to the vast amount of surplus land which could be sold.

The shares were shunted onto the market at 190p in their partly-paid form. On occasions the flotation looked perilously balanced.

PowerGen ended 1p firmer at 578.5p The shares lost some of their exuberance as the promised share buy-back failed to materialise. It should occur soon. National Power, which paid a 100p a share special dividend earlier this year, was the utility casualty, falling 18p to 435p. The shares have been firm lately and succumbed to profit-taking with some expressing disappointment with the profits and dividend.

The rest of the market remained transfixed by the Budget. More New York records were ignored, pointing to the decoupling which is becoming increasingly pronounced. Since the start of August Footsie has risen 228 points; the Dow Jones Average, as London closed, by nearly 900 points.

The latest Whitehall statistics tended to increase fears of higher interest rates and sterling's strength remained an unsteady influence. It was enough to lower Footsie 15.3 points to 3,962.8.

Sears was the day's talking point. A big options trade for expiry next month lifted the shares 3p to 93p with excited talk of a bid, probably from Kingfisher.

The market believes Sears is vulnerable to a strike. Its trading has been weak and a break-up bid could be rewarding.

WH Smith rallied 11.5p to 439.5p as a rumoured cautious trading statement failed to appear. The shares have performed poorly since peaking in the summer at 532p. The retail chain is being revamped by Bill Cockburn, who used to run the Post Office. Last month he disclosed a like-for-like sales increase of 4 per cent in the four months to the end of September.

Granada produced figures ahead of expectations but fell 10p to 882.5p. The decline was due to rumours, which the company denied, of a bid for Accor, the French hotel chain.

BSkyB was encouraged by Granada's intention to hold on to its 10.8 per cent shareholding. The satellite television station, which has been weak since hitting a 696.5p peak last month, improved 7.5p to 526p.

Prudential Corporation slipped 6p to 456p, seemingly unimpressed by what are said to be bullish London presentations by its US off-shoot, Jackson National Life.

Jarvis Porter, the packaging group, rose 12.5p to 230.5p on vague speculative interest. The shares have moved off a 186.5p low since last month.

Vodafone, the cellular telephone group, lost an 8.5p gain to end unchanged at 254p as two directors cashed in share options. Tuesday's better-than- expected Vodafone profits helped Filtronic Comtek, a maker of mobile phone parts, to dial a 35p gain to 262.5p.

Eurotunnel's shares eased a further 2p to 86p and P&O edged ahead 1p to 607.5p. The strong copper price added another 7p to RTZ at 942p.

Taking Stock

Scruttons' ambition to concentrate on engineering and shipping will lead to the flotation of its security business. The shares rose 5p to 320p, against 290p when last week Jacobs disclosed its bid intentions towards Ropner, a mini conglomerate which has 29 per cent of Scruttons.

Roxboro, the hard pressed electronic equipment group, surged 21p to 159p as TT Group, an aggressive conglomerate, said it had snapped up an 8.46 per cent interest. After two profit warnings in the past few months Roxboro must be vulnerable to a takeover strike. Two months ago the shares were 314.5p.

Exeter, a fund manager, placed at 92p, managed a 5.5p premium. Its debut coincided with a unit trust award from the Independent Financial Advisers Association.