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MARKETS & DATA – Flight into quality.

UK STOCKMARKET The market remains volatile, but there are signs that some buyers have been attracted to UK equities after recent falls. The latest Merrill Lynch survey of UK institutions shows them to be, on balance, positive on the market for the first time since March and takeovers of TLG, David Brown and Rubicon demonstrate corporate buying interest in smaller industrial stocks. OVERSEAS EQUITIES The concerns which have triggered the recent weakness in developed markets have been felt even more keenly in emerging markets. The MSCI index for Latin America fell by 35% in US dollar terms in August alone. Investors have been quick to perceive similarities between economic conditions in the region and those which contributed to the Asian and Russian crises. INTEREST RATES The view that US interest rates will not be raised in response to domestic inflationary pressures was boosted by a hint from Alan Greenspan that the Federal Reserve may have reversed its “bias to tighten” monetary policy. Indeed, there has been increasing speculation that the deflationary impact of slowing global economic growth will result in a cut in US rates before the end of the year. In the spotlight – or caught in the headlights Increase in number of press articles mentioning “Clinton”, October 1997 to September 1998: 147% Number of press articles mentioning “impeachment”, Q4 1997: 190 Ditto, Q3 1998: 3,905 SICK BUSINESS SYNDROME Percentage of employers that use sickness records when selecting employees for redundancy: 21% Percentage of employers that use sickness criteria in recruitment: 27% Percentage of employers that have introduced “attendance bonuses”: 16% Cost to British business of absenteeism: £11bn SOURCES: Industrial Relations Services/Sedgwick Noble Lowndes (0171 354 6742); CBI (0171 395 8071) Life after politics? Number of UK directorships currently held by former prime ministers: 1* Number of UK companies with Michael Portillo on the board: 0 Ditto with Denis Thatcher: 1 Number of directorships held by Richard Branson: 107 SOURCE: Companies House (* Baroness Thatcher remains a director of the Margaret Thatcher Foundation) KEEPING THE OPTIONS OPEN – OR CLOSED Percentage of company chairmen who are in favour of paying non-executive directors in shares or share options: 48% Percentage of company chairmen who are opposed to paying non-executive directors in shares or share options: 47% Percentage of non-executive directors who are currently paid in shares or share options: 4% SOURCE: Egon Zehnder International (0171) 493 3882 CORPORATE COST OF LIVING Number of cities in the world where first class corporate hotel rooms are more expensive than Moscow: 1 Fall in real price of Moscow luxury hotel room, Q2 1997 to Q2 1998: 18% Difference in cost of rooms between Bombay and Boston: 0% SOURCE: American Express European Corporate Travel Index RECESSION WATCH 3i UK Enterprise Barometer Index (measuring confidence in the economy) Q1 1998: minus-6 Ditto Q2 1998: minus-124 Lowest ever level (Q1 1991): minus-170 TIMEWATCH Number of bank holidays until the launch of the euro: 0 Number of bank holidays until the new millennium: 5 EXCHANGE RATES Deutschemark weakness during the second half of August, reflecting initial concerns about how Russia’s economic collapse would affect continental Europe, was more than reversed by early September. Sterling weakened, driven by the possibility that as in the US, rate cuts in the UK may come sooner than had been expected. Market data supplied by Britannia Investment Managers. Tel. (0141) 248 2000. Expressions of opinion contained within this document are subject to change. Britannia Investment Managers Limited is regulated in the conduct of investment business by IMRO.

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