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MARKETS & DATA – Some more of the same (we hope).

UK stockmarket[QQ] Forecasts of accelerating output and subdued inflation form a favourable background for the market – very different from last year’s recession fears. However, recent average earnings data has been too strong for the markets to be confident that interest rates have peaked. A period of consolidation would not be surprising after the rally that started in mid-October, but corporate activity is providing short-term support. Overseas equities The performance of Wall Street remains key to the short-term outlook for other world markets. Given the very demanding level of US equity valuations, a lot may hinge on whether corporate profits, particularly in the technology sector, prove immune to any slowdown in the economy and sustain the current high level of growth. Interest rates Bond markets have once again begun to fret about the possibility of further interest rate rises, particularly in the US, where last quarter’s revival in equities may continue to support further consumption growth. Although inflation still appears to be under control, the Federal Reserve may indeed raise rates further if the US economic boom does not cool of its own accord in the early part of 2000. Exchange rates The most consistent story of 1999 was the euro’s decline relative to the dollar – it fell over 15% in total. Some elements, including low inflation and the current account position in Euroland, point to an eventual reversal of this trend. Most telling, however, would be a closing of the gap in economic performance if European recovery gathers pace and the US slows. SURVEYOR: YOU GETS WHAT YOU PAYS FOR Getting the right people in (and out) Value of the executive search market in the Americas – $3.5bn-$4bn Proportion of this attributed to the US- 90% Value of Canadian headhunting market – (US)$68m Average time taken to fill “professional” vacancies (UK) – 14 weeks Estimated cost of replacing a manager (UK) – £5,000 Proportion of UK workforce who would like to go freelance – 40% Source: The Economist Intelligence Unit; The Institute of Personnel Development; First Direct Boom: rapid expansion or explosion? 3i’s European barometer of European business confidence, May 1999 – 12 Ditto, November 1999 – 51 3i’s UK confidence barometer, November 1998 – minus-133 Ditto, November 1999 – 38 ROCE recorded by UK companies, Q1 1999 (best ever) – 14.18% Predicted increase in number of business failures, 2000 – 18.18% Source: 3i; Experian; University of Leeds Business School Captains of industry Annual remuneration of Roy Keane, Manchester Utd FC captain – £2,704,000 Ditto, Martin Edwards, Man Utd chief executive – £662,000 Ditto, David Gill, Man Utd FD – £321,000 Remuneration of highest paid director of a UK company with a turnover below £500m – £2,160,344 Turnover of Manchester Utd FC – £87.9m Source: Top Pay Monitor; PwC Corporate Register “Call centre dissent may lead to ’70s-style strikes”* Value of the European call-centre outsourcing market, 1999 – $7bn Ditto, 2003 – $15bn Proportion of call centre calls answered within 30 seconds – 20% Proportion of public who dislike using modern call centres – 63% Source: *Hay Management Consultants; Datamonitor; Cincom Systems Hotel Booking Agents Association “disappointed” by new year Proportion of companies not planning special millennium activities – 83% Proportion of small companies confident they’ll avoid Y2K problems – 63% Total US government spend on bug – $100bn Total UK government spend on bug – £434m Total New York city spend on bug – $300m Total US armed forces spend on bug – $3.8bn Total Russian armed forces spend on Y2K bug – $4m Source: HBAA; HP:ICM; Grant Thornton; CNet Outline for on-line to get in line Proportion of UK public who hate supermarket shopping – 63% Ditto who said they won’t do any shopping at Christmas on the Internet – 89% Global on-line consumer spending in December 1999 – £400m Value of European on-line gambling market, 1999 – $55m Ditto, 2004 – $5.5bn Proportion of blue chips’ marketing budgets spent on publicising on-line activities – 2% Source: Druid Systems; NOP; TrustMarque; Datamonitor; KPMG Market data supplied by Britannia Asset Management Ltd. Tel. (0141) 248 2000. Expressions of opinion contained within this document are subject to change. Britannia Asset Management Ltd is the holding company of Britannia Investment Managers Ltd (Regulated by IMRO). Yield curves: Bloomberg; others: Primark Datastream.

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