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MAIL BOXES ETC <MAIL> 3RD QTR JAN 31 NET

Shr 23 cts vs 18 cts Net 509,144 vs 277,834 Revs 2,258,341 vs 1,328,634 Avg shrs 2,177,553 vs 1,564,605 Nine mths Shr 55 cts vs 42 cts Net 1,150,633 vs 649,914 Revs 6,169,168 vs 3,178,115 Reuter 

MUNSINGWEAR INC <MUN> 4TH QTR JAN 3 LOSS

Shr loss 32 cts vs loss seven cts Net loss 1,566,000 vs loss 292,000 Revs 39.4 mln vs 34.7 mln Year Shr profit 79 cts vs profit 74 cts Net profit 3,651,000 vs profit 3,020,000 Revs 147.9 mln vs 114.2 mln Avg shrs 4,639,000 vs 4,059,000 Note: Per shr adjusted for 3-for-2 stock split July 1986 and 2-for-1 split May 1985. Reuter 

FED DATA SUGGEST STABLE U.S. MONETARY POLICY

Latest Federal Reserve data suggest that the central bank voted to maintain the existing degree of pressure on banking reserves at its regular policy-making meeting two weeks ago, money market economists said. "The numbers were a little disappointing, but I think we can take Mr Volcker at his word when he said that nothing had changed," said Bob Bannon of Security Pacific National Bank. Fed Chairman Paul Volcker told a Congressional committee last Thursday that the Fed's policy "has been unchanged up to today." Although Volcker's statement last Thursday allayed most fears that the Fed had marginally tightened its grip on reserves to help an ailing dollar, many economists still wanted confirmation of a steady policy in today's data, which covered the two-week bank statement period ended yesterday. This need for additional reassurance was made all the more acute by the Fed's decision yesterday to drain reserves from the banking system by arranging overnight matched sale-purchase agreements for the first time since April of last year, economists added. Today's data showed that the draining action was for a fairly large 3.9 billion dlrs, economists said. "The one thing that caught my eye were the relatively sizeable matched sales on Wednesday," said Dana Johnson of First National Bank of Chicago. "But there was a clearly justified need for them. There was nothing ominous." "The Fed couldn't have waited until the start of the new statement period today. If it had, it would have missed its (reserve) projections," added Security Pacific's Bannon. A Fed spokesman told reporters that there were no large single-day net miss in reserve projections in the latest week. Economists similarly shrugged off slightly higher-than- expected adjusted bank borrowings from the Fed's discount window, which averaged 310 mln dlrs a day in the latest week, compared with many economists' forecasts of about 200 mln. For the two-week bank statement period as a whole, the daily borrowing average more than doubled to 381 mln dlrs from 160 in the prior period. "There were wire problems at two large banks on Tuesday and Wednesday, so I am not too bothered about the borrowings," said Scott Winningham of J.S. Winningham and Co. The Wednesday average rose to 946 mln dlrs from 148 mln a week earlier. Lending further support to the stable policy view was a relatively steady federal funds rate of about six pct in the latest week and persistently high levels of excess reserves in the banking system, economists said. "For the time being, the Fed is following a neutral path, with fed funds at about six to 6-1/8 pct," said Darwin Beck of First Boston Corp. "I expect it to continue in that vein." "Excess reserves fell but they are still over a billion dlrs," added First Chicago's Johnson. Banks' excess reserves averaged 1.03 billion dlrs a day in the latest statement period, down from 1.50 billion in the previous one. After the Fed declined to assign a 1987 target growth range to the wayward M-1 money supply measure last week, little attention was paid to a steeper-than-anticipated 2.1 billion dlr jump in the week ended February 16. Looking ahead, economists said the Fed will have to tread a fine line between the dollar's progress in the international currency markets and the development of the domestic economy. "The market has perhaps exaggerated the dollar's effect on Fed policy," said First Chicago's Johnson. "Of course, it will take the dollar into account in future policy decisions but if the economy is weak, it won't pull back from easing." Reuter 

FEDERAL INDUSTRIES LAUNCHES EUROBOND ISSUE

<Federal Industries Ltd> said it launched a 40 mln Canadian dlr Eurobond issue for five years, bearing a coupon of 9-1/4 pct. Issue price is 100-5/8. Lead manager is Union Bank of Switzerland. Proceeds will be used to reduce short-term debt. Reuter 

NYSE TO STUDY REGULATION OF SECURITY INDUSTRY

The New York Stock Exchange said it will begin a review of regulation in the securities industry to determine what changes may be needed to maintain the integrity of the market and protect investors in coming years. The Exchange said the study is needed because of the rapid changes taking place in the securities industry. Among the factors it cited were the increase in trading volume, the proliferation of new trading instruments and the rise of computerized trading techniques. The Exchange did not mention, however, the insider trading scandal that has caught several top Wall Street executives. The NYSE said its study will be chaired by Richard R. Shinn, executive vice chairman of the Exchange and former chairman and chief executive officer of <Metropolitan Life Insurance Co.> Other members of the study committee include Charles F. Barbar, former chairman of Arsarco Inc <AR>, Roger Birk, chairman emeritus of Merrill Lynch and Co <MER> and Irwin Guttag, chairman of the NYSE special surveillance committee. The committee's report should be completed by the end of the year, the Exchange said. Reuter 

KOREAN AIR ORDERS MCDONNELL DOUGLAS <MD> MD-11S

McDonnell Douglas Corp said Korean Air signed formal orders for four MD-11 jets with options to buy four more. The company said if the options are exercised, the purchase will total about one billion dlrs. McDonnell Douglas said on December 30 that Korean Air was among the initial 12 customers that placed orders and options for 92 aircraft valued at about nine billion dlrs. Delivery of the first MD-11 is scheduled for the summer of 1990. Korean Airlines currently operates four McDonnell Douglas DC-10 jets. In 1985, it ordered six MD-82s valued at about 150 mln dlrs. Four of these are in service and two will be delivered this year. Reuter 

DELTA ROCKET BLASTS OFF FROM CAPE CANAVERAL

An unmanned Delta rocket carrying a 57 mln dlr hurricane-tracking satellite blasted off here today in NASA's first successful launch of the year. The 116-foot (35.4-meter) Delta -- a reliable workhorse of the U.S. rocket fleet -- lifted off at 1805 EST from Cape Canaveral Air Force Station in a crucial test of the space agency's ability to recover from the Challenger disaster and a string of other failures. The launch came after two delays in two days. The first postponement was caused by fuel leak and the second by high-speed crosswinds that NASA officials say could have torn the rocket apart during fiery ascent. Reuter 

JAPAN TO TRY TO OPEN MARKET TO U.S. CAR PARTS

Japan has pledged to try to increase its purchase of U.S. car parts and also to exchange data to monitor the purchases, the Commerce Department said. U.S. negotiators opened talks last August with Japanese officials to try to force open the Japanese market to American-made parts in an effort to redress an estimated five billion dlr deficit in car parts trade. Japan had agreed to try to increase purchases of U.S.-made parts by Japanese car makers and to begin long term contracts for parts purchases, a Commerce department official said. He added that the agreement also said Japan agreed to try to devise a way to collect purchasing information in order to monitor progress in stepping up Japanese orders. The Commerce Department said in a statement last year that "statistics support the perception in the United States that American auto parts suppliers are not welcome in the inner circles of Japan's auto companies and their traditional suppliers." It estimated that while Japan's car firms sold almost five billion dlrs worth of parts in the United States in 1985, U.S. firms sold only one per cent of Japan's 55 billion dlr market. reuter 

FRANCE FACES PRESSUE TO CHANGE POLICIES

France's right wing government is facing growing pressure to modify its economic policies after revising down its 1987 growth targets and revising up its inflation forecasts for this year. Moving reluctantly into line with most private sector forecasts the government yesterday raised its 1987 inflation estimate a half percentage point to 2.5 per cent and cut its economic growth estimate to between two and 2.8 per cent from a 2.8 per cent target written into the annual budget last september. Finance Minister Edouard Balladur said the revised figures would not push the government off its chosen mix of price deregulation, budget-cutting rigour and pay restraint. But Trade Union leaders served immediate notice they would push to protect the purchasing power of their members, raising the spectre of a vicious spiral of wage and price rises. And bank economists contacted by Reuters said they believed Prime Minister Jacques Chirac could be forced by slow growth and rising unemployment to reflate the economy later this year, perhaps in the autumn, to boost his prospects in Presidential elections due by April 1988. "The outlook is more worrying than it was a few weeks ago," said Societe Generale economist Alain Marais. "We have the impression it may be difficult to get even two per cent growth this year." "The big question is whether the government's policy of wage moderation will be maintained," he added. The government has set public sector wage rises at aboout 1.7 per cent this year, with a three per cent ceiling for rises justified by increased productivity. But the head of the socialist CFDT union federation, Edmond Maire, meeting with Chirac today, renewed union demands already rejected by the government for indexation clauses to be built into future pay contracts to safeguard workers against higher prices. Calling the government's policies "unbalanced and unjust," he also demanded investment incentives to boost employment. He announced after his meeting that Chirac had told him the government would spend two billion francs on a series of measures to boost employment and training Andre Bergeron, a widely respected leader of the moderate Force Ouvriere labour group, put similar demands to Chirac earlier in the week while the Communist-led CGT, the largest of France's unions, declared the defence of its members earnings its top priority. But with unemployment nearing 11 per cent last month, and still rising, government supporters and some economic analysts said they were confident Chirac could resist union pay demands. "Salary indexation was ended by the previous Socialist government and I dont think this administration is going to reverse that," commented Michel Develle, economist at recently-privatised Banque Paribas. Damaging transport and electricity strikes over Christmas and the New Year, partly blamed by the government for higher inflation, had undermined the unions power and popularity, he said. Develle said Paribas expected inflation to rise even more than the governments revised forecast, perhaps to 2.6 or 2.7 per cent this year against last years 2.1 per cent. "But that would still be an exceptional achievement considering that for the first time since the Second World War all french prices have been freed," he commented. Finance Ministry officials said that the governments abolition of price and rent controls last year was responsible for nearly a quarter of a 0.9 per cent surge in January living costs. But they claimed it was a once-off phenomenon that should have no knock-on impact on the rest of the year. Both Marais and Develle said they agreed with that, so long as the government kept wages under control. Prices could rise 1.5 per cent in the first three months of 1987 and two per cent in the first half year, fractionally more than forecast this week by the National Statistics Institute, INSEE, Marais said. But the second half year should be better, he added. Ironically, one side effect of higher inflation could be to help the government achieve its aim of cutting the state budget deficit, several analysts said. So long as public sector wages are held down, higher Value Added Tax receipts resulting from rising prices should offset a loss in revenues that otherwise would result from slower than expected growth, they said. Reuter 

GTI CORP <GTI> 4TH QTR OPER NET

Oper shr profit six cts vs loss two cts Oper net profit 225,000 vs loss 91,000 Revs 4,814,000 vs 3,339,000 Year Oper shr profit 12 cts vs loss two cts Oper net profit 415,000 vs loss 73,000 Revs 16.4 mln vs 16.9 mln Note: data does not include from discontinued operations, 4th qtr 1986 gain of 632,000 dlrs, or 19 cts per shr; 4th qtr 1985 loss of 250,000 dlrs, or seven cts per shr; 1986 year loss of 4,054,000 dlrs, or 1.17 dlrs per shr; and 1985 year loss of 606,000 dlrs, or 17 cts per shr. Reuter 

HOUSTON OIL <HO> RESERVES STUDY COMPLETED

Houston Oil Trust said that independent petroleum engineers completed an annual study that estimates the trust's future net revenues from total proved reserves at 88 mln dlrs and its discounted present value of the reserves at 64 mln dlrs. Based on the estimate, the trust said there may be no money available for cash distributions to unitholders for the remainder of the year. It said the estimates reflect a decrease of about 44 pct in net reserve revenues and 39 pct in discounted present value compared with the study made in 1985. Reuter 

FAMOUS RESTAURANTS INC <FAMS> 4TH QTR LOSS

Shr loss 2.07 dlrs vs loss eight cts Net loss 11,445,000 vs loss 501,000 Revs 14.5 mln vs 11.0 mln Year Shr loss 1.91 dlrs vs profit four cts Net loss 12,427,000 vs profit 211,000 Revs 60.8 mln vs 51.5 mln Note: includes non-recurring charges of 12,131,000 dlrs in the 4th qtr and 12,500,000 dlrs in the year for reserve for underperforming restaurants. Reuter 

JAPAN CONSUMER PRICES FALL 0.4 PCT IN JANUARY

Japan's unadjusted consumer price index (base 1985) fell 0.4 pct to 99.7 in January from the previous month, the government's Management and Coodination Agency said. The fall compares with a decline of 0.2 pct in December. The January index compared with a year earlier was down 1.1 pct, the first drop larger than 1.0 pct since it fell 1.3 pct in September 1958. Food costs rose in January from December but prices fell for clothing, footwear and utilities, causing the overall decline for the month. Housing, medical and educations costs increased in January compared with a year earlier but the cost of utilities, gasoline and vegetables fell. The unadjusted consumer price index for the Tokyo area (base 1985) was down 0.1 pct in mid-February from a month earlier at 100.2, reflecting lower prices for food, clothing and footwear. Compared with a year earlier, the index was down 0.7 pct due to lower vegetable, fuel oil and utility costs. REUTER 

AVERY <AVY> SETS TWO FOR ONE STOCK SPLIT

Avery said its board authorizerd a two for one stock split, an increased in the quarterly dividend and plans to offer four mln shares of common stock. The company said the stock split is effective March 16 with a distribution of one additional share to each shareholder of record March 9. It said the quarterly cash dividend of 10.5 cts per share on the split shares, a 10.5 pct increase from the 19 cts per share before the split. Avery said it will register with the Securities and Exchange Commission shrortly to offer four mln additional common shares. It will use the proceeds to repay debt, finance recent acquisitions and for other corporate purposes. Reuter 

MICROSOFT CORP <MSFT> HALTS MS-DOS IMPORTS

Microsoft Corp said it obtained a federal court order to seize a shipment of over 15,000 unauthorized copies of its MS-DOS operating system labeled "Falcon MS-DOS". Federal marshals made the seizure in San Francisco on Feb 17. Microsoft said the U.S. District Court for the Northern District of California also granted it a temporary restraning order against Wetex International, Quadrant Corp and other persons, prohibiting copyright infringement by reproducing Microsoft software. Reuter 

JAPAN MARCH BOND COUPON SEEN UNCHANGED AT FIVE PCT

The Finance Ministry has proposed informally to its bond underwriting syndicate that the coupon on the January 10-year government bond remain unchanged from February at five pct, underwriting sources said. They said the ministry wants a 0.50 yen raise in issue price from February to 99.50 to yield a record low 5.075 pct. The 5.151 pct February bond issue yield was itself a record low. The proposed issue volume is 475 billion yen against the 600 billion in February. The underwriting syndicate is likely to accept the proposed terms immediately, the sources said. REUTER 

U.S. LAUNCHES WEATHER SATELLITE

An unmanned Delta rocket carrying a 57 mln dlr weather observation satellite blasted off here today in the first U.S. Space launch of the year. The 116-foot rocket lifted off at 1805 local time (2305 GMT) and placed in orbit a 1,850 pound Geostationary Operational Environmental Satellite (GOES) to replace an identical one that was destroyed last May when a Delta rocket exploded after liftoff. Weather forecasters have had only a single satellite to cover the entire U.S. Since another GOES failed in orbit in August 1984. "We'll have both our weather eyes open again," said Thomas Pyke, a spokesman for the National Oceanic and Atmospheric Administration, which owns and operates the satellite. The smooth launching came after two delays in as many days. The first was caused by a fuel leak and the second by powerful crosswinds. The Delta was the first of six rockets scheduled for launch by the National Aeronautics and Space Administration this year. The launch marked the third straight success for the space program which was battered by a series of failures in 1986, including the loss of the Challenger shuttle. REUTER 

ITALIAN COALITION MEETS AS GOVERNMENT CRISIS LOOMS

Leaders of Italy's five coalition parties have agreed to meet today to try to settle their differences which are mainly between Prime Minister Bettino Craxi's Socialist Party and the majority Christian Democrats. Sources close to Deputy Prime Minister Arnaldo Forlani said Craxi told him he would announce his resignation next week, allowing negotiations on a new government leader. The conservative Christian Democrats demanded the meeting after Craxi said a pact agreed during a government crisis last August, under which he was to hand over the prime minister's job next month, was unlikely to be fulfilled. Political sources said the Christian Democrats are likely to leave the coalition, which also includes Republicans, Social Democrats and Liberals, unless they get the prime minister's job. They said Craxi's plans to resign show he has decided to stick to the pact but talks on a leader, a government program and sharing of ministries will not be easy. They said there is dissent among the partners and that Forlani has been trying to mediate to avoid a crisis. They said the five are likely to begin talks tomorrow on whether formation of a new government is feasible or early elections are inevitable. Elections are not due until 1988. REUTER 

N.Z. CENTRAL BANK SEES SLOWER MONEY, CREDIT GROWTH

Monetary and credit growth rates in New Zealand are not expected to continue at current levels following the Reserve Bank's move to tighten liquidity late last year, Reserve Bank Governor Spencer Russell said. The monetary and credit growth figures for the December quarter were probably artifically inflated by unusually high growth in inter-institutional lending activity on the short term money market, Russell said in a statement. The bank moved to tighten liquidity when the initial signs of the recent expansion became apparent in September and October last year, Russell said. Broadly defined M-3 figures released today showed growth of 17.8 pct in the year ended December compared with 13.1 pct in the year ended September. Annual growth of private sector credit in calendar 1986 was 30.7 pct compared with 16.5 pct in the September year. "Available evidence suggests that corporate customers, including non-bank financial institutions, have been exploiting differences between interest rates on overdrafts with trading banks and rates in the call market," Russell said. REUTER 

AVERAGE YEN CD RATES FALL IN LATEST WEEK

Average interest rates on yen certificates of deposit, CD, fell to 4.27 pct in the week ended February 25 from 4.32 pct the previous week, the Bank of Japan said. New rates (previous in brackets), were - Average CD rates all banks 4.27 pct (4.32) Money Market Certificate, MMC, ceiling rates for the week starting from March 2 3.52 pct (3.57) Average CD rates of city, trust and long-term banks Less than 60 days 4.33 pct (4.32) 60-90 days 4.13 pct (4.37) Average CD rates of city, trust and long-term banks 90-120 days 4.35 pct (4.30) 120-150 days 4.38 pct (4.29) 150-180 days unquoted (unquoted) 180-270 days 3.67 pct (unquoted) Over 270 days 4.01 pct (unquoted) Average yen bankers' acceptance rates of city, trust and long-term banks 30 to less than 60 days unquoted (4.13) 60-90 days unquoted (unquoted) 90-120 days unquoted (unquoted) REUTER 

BRITAIN'S ALLIANCE OPPOSITION WINS BY-ELECTION

Britain's centrist Liberal-Social Democratic Alliance won a surprise victory in a parliamentary by-election in the London borough of Greenwich, a seat held by the main opposition Labour party for the past 50 years. Rosie Barnes, a Social Democratic member of the Alliance, won with 18,287 votes, or 53 pct, and a majority of 6,611 seats over her nearest rival, Labour candidate Deirdre Wood. The Conservatives came third with 3,852 votes. The result is expected to play a key role in determining when Prime Minister Margaret Thatcher, leader of the ruling Conservatives, might call a general election. REUTER 

ECONOMIC SPOTLIGHT - JAPAN EYEING FOREIGN STOCKS

Japanese life insurers, trust banks and corporations, largely responsible for vitalising the U.S. Bond market in recent years, are now eyeing stockmarkets in the U.S., Britain, France and Hong Kong, fund managers said. After concentrating on U.S. Treasury bonds for years, Japanese institutions now see a risk in relying too much on similar types of investments, they said. Japan's net buying in overseas stockmarkets this year may double or triple to 15-20 billion dlrs from seven billion in 1986, Shigeki Matsumoto of Nikko Securities Co Ltd, said. Matsumoto, who manages Nikko's investment research and strategy, said there is evidence Japanese investors began poking around in foreign stockmarkets around July last year, but few made firm commitments until December when net purchases suddenly grew to 1.5 billion dlrs from around 500 mln in each of the previous five months. Net buying in 1985 totalled only 995 mln dlrs, he added. This sudden penchent for overseas stocks is likely to draw the widest smiles from Wall Street because about 70 to 80 pct of funds will be invested in the U.S. Markets, Matsumoto said. "The trend has been to head toward the U.S. Market, first because of its size and next because it has been successful over the last couple of years," said Eugene Atkinson, managing director of Goldman Sachs International Corp. Wall Street's massive turnover offers good liquidity, enabling institutions to easily move large volumes of money in and out of shares with the minimum of risk, he added. However, few see holdings in U.S. Treasuries dwindling. They will remain a Japanese mainstay, fund managers said. Institutions, particularly life insurance companies which concentrate on income rather than capital gains to cover payouts to policy holders, are unlikely to sell their U.S. Treasuries, but will put in less money, said Shinichi Kobuse, manager of Yamaichi Securities Co Ltd's international fixed income activities. There has been some selling of U.S. Bonds by short-term investors, but the selling is unlikely to amount to a significant chunk of Japanese bond holdings because the liquidity of the U.S. Bond market remains attractive, he added. Kobuse said investment managers are bullish on the U.S. Equity markets despite predictions by economists the U.S. Economy will remain sluggish over the next couple of months. Interest in Wall Street has been spurred by recent reports of significant growth in earnings by major U.S. Corporations, he added. Yutaka Hashimoto general manager of Nippon Life Insurance Co told an economic conference that insurance companies, which are responsible for 26 pct of Japanese funds in foreign securities, hold a lopsided proportion of U.S. Treasuries and intend to diversify into other instruments and currencies. Insurance companies have put the dominant portion of their funds into the U.S., But will now invest in Britain, West Germany, France and other countries, Hashimoto said. Lower interest rates worldwide make the returns on stocks relatively high in comparison with bonds and in light of the strength in the yen, the growth in stock values is expected to offset currency risks, he added. One trust bank official said his bank aims for a 10 pct annual return on overseas investments but the recent decline in U.S. 30-year bond yields has caused a rethink in pension fund investment stategies. The bank is looking more at U.S. Equities and European bonds, he said. Japanese investments in British equities have already turned active and the pace is likely to increase, said Andrew Sheaf, general manager of international equity activities at County Securities Japan. "Last week was the busiest week we had," he said. Investments are being spurred by the growth in profits of British companies and the recent deregulation of government controlled firms, fund managers said. Deregulation in France is also attracting Japanese interest, but stock investments there will be inhibited by worries about the French franc, they said. Investments in Hong Kong will be mostly short-term and speculative due to uncertainty about the colony's long-term political stability, they added. Japanese investors are cautious about West Germany, particularly as German firms, like their Japanese counterparts, are concerned about the recent dollar fall. Australia also poses some risks due to currency values, they added. REUTER 

TAIWAN OFFSHORE BANKING ASSETS RISE IN JANUARY

The combined assets of Taiwan's offshore banking units (obu) rose to 6.28 billion U.S. Dlrs at end- January from 6.21 billion in December and 6.34 billion in January 1986, the central bank said. A bank official told Reuters the increase came mainly from increased local obu borrowings from their Asian counterparts. He said the assets, held by 15 foreign and local banks, were mainly in U.S. Dollars with the remainder in certificates of deposit and bonds. About 90 pct of the assets came from Asia and the rest from North America and Europe, he added. REUTER 

JAPAN EXPECTED TO CUT BASE RATE FOR STATE BODIES

Japan is expected to cut the base lending rate for state financial institutions to 5.5 pct from 6.2 as part of the recent pact by major industrial nations in Paris, Finance Ministry sources said. They said the cut is based on a revision of the Trust Fund Bureau Law, which should be approved by parliament on March 3, abolishing the 6.05 pct minimum interest rate on deposits with the bureau. The bureau channels funds to government financial institutions for public works and other official uses, they said. The base lending rate for state bodies such as the Japan Development Bank, People's Finance Corp and the finance corporations of local public enterprises usually moves in tandem with long-term prime rates, the sources said. However, it was impossible for them to follow the last cut, to 5.8 pct from 6.2 pct on January 28, because the Trust Fund Bureau rate was legally set at 6.05 pct. The ministry will abolish the minimum rate and introduce a market-related one to resolve the problem and stimulate the domestic economy, they said. On Tuesday, the ministry allowed long-term bankers to cut their prime to a record low of 5.5 pct, effective February 28. The move suggested it had reached agreement with depositors using the bureau, the postal savings system of the Posts and Telecommunications Ministry and the Japan welfare annuity of the Ministry of Health and Welfare, the sources said. These ministries are trying to determine which market rates should be considered when setting the bureau's deposit rate, the ministry sources said. Coupon rates on new 10-year government bonds, minus 0.1 percentage points, is the likeliest choice, they added. REUTER 

JAPAN HOUSE BUDGET TALKS TO REOPEN NEXT WEEK

Japan's ruling and opposition parties agreed to reopen talks on the budget for the fiscal year ending March 31 1988 when the Lower House Budget Committee meets next Tuesday, a parliamentary official said. He said officials of the ruling Liberal Democratic Party and the opposition parties agreed at a meeting of the committee's board of directors. Strong opposition objection to government tax reform proposals including a controversial sales tax has delayed deliberation by the Lower House Budget Committee. REUTER 

AUSTRALIA'S KEATING CHANGES ECONOMIC FORECASTS

Domestic demand is now expected to make no contribution to Australian economic growth in fiscal 1986/87, ending June 30, while net exports will account for all of the overall increase, Treasurer Paul Keating said here. However, he did not say in his speech to the Economic Planning Advisory Council (EPAC) if the forecast 2.25 pct rise in gross domestic product (gdp) had been revised. But Keating said domestic demand could fall slightly this financial year and net export growth will provide the total source of gdp growth. The August budget had forecast domestic demand would contribute 0.75 percentage points to non-farm gdp growth of 2.5 pct while net exports would account for 1.75 points. Keating said the overall impact of the changed economic parameters is welcome as it appears to have contributed to a slightly more rapid correction in the current account deficit than first anticipated. "The government initially forecast a current account deficit for 1986/87 of 14.75 billion -- our present expectation is that the result will be somewhat lower, around 14 billion," he said. Partial indicators released since the last meeting of EPAC in December indicate that the 1986/87 budget strategy is broadly on track, Keating said. "They indicate that domestic demand has been a little more sluggish than was expected at budget time," he said. "On the other hand, net exports seem to be expanding by more than expected at budget time, and this is underpinning growth in domestic production and employment." Keating said it now seems likely that the 1986/87 inflation rate will exceed the budget forecast of eight pct. "Nevertheless, there is likely to be a marked slowing in inflation over coming quarters as depreciation and budgetary effects wane," he said. Keating said the government expects economic growth to pick up moderately in 1987/88 due to a further significant rise in net exports and a very moderate but positive contribution from private domestic demand. He said domestic demand growth will be due to a strengthening in real household disposable income. The moderate rise in economic growth next financial year should be sufficient to sustain employment growth at a level broadly equivalent to that of the current fiscal year. "The current account deficit will continue to show improvement in 1987/88," Keating said. "As the impact of the exchange rate depreciations of recent years recede further, and given continued effective wage restraint, inflation should moderate markedly in 1987/88," he said. REUTER 

THAI RICE EXPORTS RISE IN WEEK ENDED FEBRUARY 24

Thailand exported 84,960 tonnes of rice in the week ended February 24, up from 80,498 the previous week, the Commerce Ministry said. It said government and private exporters shipped 27,510 and 57,450 tonnes respectively. Private exporters concluded advance weekly sales for 79,448 tonnes against 79,014 the previous week. Thailand exported 689,038 tonnes of rice between the beginning of January and February 24, up from 556,874 tonnes during the same period last year. It has commitments to export another 658,999 tonnes this year. REUTER 

TOKYO GRAIN EXCHANGE TO RAISE MARGIN REQUIREMENTS

The Tokyo Grain Exchange said it will raise the margin requirement on the spot and nearby month for U.S. And Chinese soybeans and red beans, effective March 2. Spot April U.S. Soybean contracts will increase to 90,000 yen per 15 tonne lot from 70,000 now. Other months will stay unchanged at 70,000, except the new distant February requirement, which will be set at 70,000 from March 2. Chinese spot March will be set at 110,000 yen per 15 tonne lot from 90,000. The exchange said it raised spot March requirement to 130,000 yen on contracts outstanding at March 13. Chinese nearby April rises to 90,000 yen from 70,000. Other months will remain unchanged at 70,000 yen except new distant August, which will be set at 70,000 from March 2. The new margin for red bean spot March rises to 150,000 yen per 2.4 tonne lot from 120,000 and to 190,000 for outstanding contracts as of March 13. The nearby April requirement for red beans will rise to 100,000 yen from 60,000, effective March 2. The margin money for other red bean months will remain unchanged at 60,000 yen, except new distant August, for which the requirement will also be set at 60,000 from March 2. REUTER 

MANILA SAID TO OFFER DEBT BONDS TO BANKS

The Philippines will offer its commercial bank creditors an innovative pricing plan that will make debt payments through certificates of indebtedness as an alternative to cash, the authoritative Business Day newspaper said. Finance Secretary Jaime Ongpin told reporters yesterday the alternative proposal is designed to avoid an impasse when debt rescheduling talks reopen in New York on Tuesday. He did not give details but said, "It is a very useful alternative and in the end will permit the banks to say that they achieved their pricing target and will likewise permit the Philippines to say exactly the same thing." Quoting negotiation documents to be presented to the country"s 12-bank advisory committee, Business Day said the debt certificates will carry maturities of five or six years. It said the certificates will be classified as zero-coupon bonds or promissory notes with no interest but priced at a considerable discount from their redemption price. It said the debt bonds will entitle holder banks to a guaranteed return on both interest and principal since no payment of any kind is made until the bond matures. It said a bank can sell the bonds on the secondary bond market for either dlrs or pesos depending on its requirement. The documents said peso proceeds can be invested in selected industries under the Philippines" debt/equity program. Ongpin said Manila is sticking to its demand of a spread of 5/8 percentage points over London Interbank Offered Rates (LIBOR) for restructuring 3.6 billion dlrs of debt repayments. "(The proposal) will give the banks a choice of 5/8ths or the alternative," Ongpin said. "Our representatives have gone to Washington to the (International Monetary) Fund, the (World) Bank, the Fed (Federal Reserve Board) and the (U.S.) Treasury to brief them in advance on this alternative and it has generally been positively received." "We don"t believe that there is going to be a problem on the accounting side," Ongpin said. "We have run this alternative proposal to the accounting firms. Neither have the government regulators indicated that there will be a problem." REUTER 

POLL MAJORITY DISAPPROVE OF REAGAN PRESIDENCY

A majority of Americans disapprove of the way Ronald Reagan has handled the presidency and one-third believe he should resign, a new poll said. The poll conducted by Newsweek magazine said 53 pct of the respondents gave Reagan a negative performance rating, nearly double his disapproval rating before the Iran/Contra scandal. The magazine said, however, that Reagan remained personally popular. By better than a three-to-one ratio, a majority of those polled said they liked Reagan on a personal level. And Newsweek said 52 per cent of those questioned believed the administration"s accomplishments outweighed its failures. REUTER 

PRODUCER SPLIT HEATS UP COFFEE QUOTA TALKS

Talks on the possibility of reintroducing global coffee export quotas have been extended into today, with sparks flying yesterday when a dissident group of exporters was not included in a key negotiating forum. The special meeting of the International Coffee Organization (ICO) council was called to find a way to stop a prolonged slide in coffee prices. However, delegates said no solution to the question of how to implement quotas was yet in sight. World coffee export quotas -- the major device used to regulate coffee prices under the International Coffee Agreement -- were suspended a year ago when prices soared in reaction to a drought which cut Brazil"s output by nearly two thirds. Brazil is the world"s largest coffee producer and exporter. Producers and consumers now are facing off over the question of how quotas should be calculated under any future quota distribution scheme, delegates said. Tempers flared late Saturday when a minority group of eight producing countries was not represented in a contact group of five producer and five consumer delegates plus alternates which was set up to facilitate debate. The big producers "want to have the ball only in their court and it isn"t fair," minority producer spokesman Luis Escalante of Costa Rica said. The majority producer group has proposed resuming quotas April 1, using the previous ad hoc method of carving up quota shares, with a promise to try to negotiate basic quotas before September 30, delegates said. Their plan would perpetuate the status quo, allowing Brazil to retain almost all of its current 30 pct share of the export market, Colombia 17 pct, Ivory Coast seven pct and Indonesia six pct, with the rest divided among smaller exporters. But consuming countries and the dissident producer group have tabled separate proposals requiring quotas be determined by availability, using a formula incorporating exportable production and stocks statistics. Their proposals would give Brazil a smaller quota share and Colombia and Indonesia a larger share, and bring a new quota distribution scheme into effect now rather than later. Brazil has so far been unwilling to accept any proposal that would reduce its quota share, delegates said. Delegates would not speculate on prospects for agreement on a quota package. "Anything is possible at this phase," even adjournment of the meeting until March or April, one said. If the ICO does agree on quotas, the price of coffee on the supermarket shelf is not likely to change sinnificantly as a result, industry sources said. Retail coffee prices over the past year have remained about steady even though coffee market prices have tumbled, so an upswing probably will not be passed onto the consumer either, they said. REUTER 

ITALIAN TREASURY CUTS INTEREST ON CERTIFICATES

The Italian treasury said annual coupon rates payable March 1988 on two issues of long-term treasury certificates (CCTs) would be cut by about four percentage points compared with rates this March. Coupon rates on 10-year certificates maturing March 1995 will fall to 9.80 pct from 13.65 pct and rates on 10-year issues maturing in March 1996 would fall to 10.05 pct from 14.30 pct. The Treasury also cut by 0.60 point six-monthly coupons payable this September on six issues maturing between September 1988 and September 1991. The issues carry terms of between five and seven years and will have coupon rates of between 4.85 and 5.65 pct in September compared with 5.45 and 6.25 pct this March. REUTER 

BRITISH CONSERVATIVES AHEAD OF LABOUR IN NEW POLLS

Britain"s ruling Conservatives have enlarged their lead over the opposition Labour Party, according to results of two opinion polls released on Saturday. A Market & Opinion Research International (MORI) poll conducted for The Sunday Times showed the Conservatives with a six point lead, while a poll by Telephone Surveys Limited for The Sunday Express found them to be four points ahead. The Sunday Express poll is the first conducted since the Social Democratic Party scored an upset victory on Thursday in a parliamentary by-election in the former Labour stronghold of Greenwich, near London. The MORI poll, conducted in the six days leading up to the by-election, showed the Conservatives with 41 pct of the vote, Labour with 35 pct and the Alliance of Social Democrats and Liberals with 21 pct. The Sunday Express said its poll, conducted on Friday, found the Conservatives ahead with 35.6 pct of the vote, Labour with 31.9 pct and the Alliance with 31.4 pct. A Harris poll published in The Observer newspaper last Sunday gave the Conservatives only a two-point lead over Labour. In that survey, the Conservatives had the support of 39 pct of the voters, Labour 37 pct and the Alliance 23 pct. REUTER 

INDONESIAN AGRICULTURE GROWTH EXPECTED TO SLOW

Indonesia"s agriculture sector will grow by just 1.0 pct in calendar 1987, against an estimated 2.4 pct in 1986 as the production of some commodities stagnates or declines, the U.S. Embassy said in a report. Production of Indonesia"s staple food, rice, is forecast to fall to around 26.3 mln tonnes from an embassy estimate of 26.58 mln tonnes in 1986, according to the annual report on Indonesia"s agricultural performance. The government officially estimates 1986 rice production at 26.7 mln tonnes, with a forecast 27.3 mln tonnes output in 1987. The report says wheat imports are likely to fall to 1.5 mln tonnes in calendar 1987 from 1.69 mln tonnes in 1986 because of a drawdown on stocks. "Growth prospects for agriculture in 1987 do not look promising as rice production is forecast to decline and the production of sugarcane, rubber and copra show little or no gain," the report says. "The modest overall increase which is expected will be due to significant gains in production of corn soybeans, palm oil and palm kernels." Constraints to significant overall increases in agricultural output include a shortage of disease resistant seeds, limited fertile land, insect pests and a reluctance by farmers to shift from rice production to other crops, the report underlines. The fall in rice production is caused by an outbreak of pests known as "wereng" or brown plant hoppers in 1986 which largely offset gains in yields. The outbreak has forced the government to ban the use of 57 insecticides on rice because it was believed the wereng are now resistant to these varieties, and to use lower-yielding, more resistant rice types. The government is depending on increased production of export commodities such as coffee, tea, rubber, plywood and palm oil to offset revenue losses brought on by falling crude oil prices. Palm oil production is expected to increase by over 7.0 pct in 1987 to 1.45 mln tonnes from 1.35 mln, with exports rising to an estimated 720,000 tonnes from 695,000 tonnes in 1986, the report says. But while production of soybeans in 1987/88 (Oct-Sept) will rise to 1.075 mln tonnes from 980,000 in 1986/87, imports will also rise to supply a new soybean crushing plant. The report says that imports of wheat, soybeans, soybean meal and cotton are not likely to decline as a result of last September"s 31 pct devaluation of the rupiah because of a rise in domestic demand. The report said that Indonesia"s overall economic performance in calendar 1986 was about zero or even a slight negative growth rate, the lowest rate of growth since the mid-1960s. It compares with 1.9 pct growth in 1985 and 6.7 pct in 1984. The dramatic fall in oil prices last year was responsible for the slump. REUTER 

KUWAIT SAYS NO PLANS FOR EMERGENCY OPEC TALKS

Kuwait"s Oil Minister, in remarks published today, said there were no plans for an emergency OPEC meeting to review oil policies after recent weakness in world oil prices. Sheikh Ali al-Khalifa al-Sabah was quoted by the local daily al-Qabas as saying: "None of the OPEC members has asked for such a meeting." He denied Kuwait was pumping above its quota of 948,000 barrels of crude daily (bpd) set under self-imposed production limits of the 13-nation organisation. Traders and analysts in international oil markets estimate OPEC is producing up to one mln bpd above a ceiling of 15.8 mln bpd agreed in Geneva last December. They named Kuwait and the United Arab Emirates, along with the much smaller producer Ecuador, among those producing above quota. Kuwait, they said, was pumping 1.2 mln bpd. "This rumour is baseless. It is based on reports which said Kuwait has the ability to exceed its share. They suppose that because Kuwait has the ability, it will do so," the minister said. Sheikh Ali has said before that Kuwait had the ability to produce up to 4.0 mln bpd. "If we can sell more than our quota at official prices, while some countries are suffering difficulties marketing their share, it means we in Kuwait are unusually clever," he said. He was referring apparently to the Gulf state of qatar, which industry sources said was selling less than 180,000 bpd of its 285,000 bpd quota, because buyers were resisting official prices restored by OPEC last month pegged to a marker of 18 dlrs per barrel. Prices in New York last week dropped to their lowest levels this year and almost three dollars below a three-month high of 19 dollars a barrel. Sheikh Ali also delivered "a challenge to any international oil company that declared Kuwait sold below official prices." Because it was charging its official price, of 16.67 dlrs a barrel, it had lost custom, he said but did not elaborate. However, Kuwait had guaranteed markets for its oil because of its local and international refining facilities and its own distribution network abroad, he added. He reaffirmed that the planned meeting March 7 of OPEC"s differentials committee has been postponed until the start of April at the request of certain of the body"s members. Ecuador"s deputy energy minister Fernando Santos Alvite said last Wednesday his debt-burdened country wanted OPEC to assign a lower official price for its crude, and was to seek this at talks this month of opec"s pricing committee. Referring to pressure by oil companies on OPEC members, in apparent reference to difficulties faced by Qatar, he said: "We expected such pressure. It will continue through March and April." But he expected the situation would later improve. REUTER 

INDONESIA SEEN AT CROSSROADS OVER ECONOMIC CHANGE

Indonesia appears to be nearing a political crossroads over measures to deregulate its protected economy, the U.S. Embassy says in a new report. To counter falling oil revenues, the government has launched a series of measures over the past nine months to boost exports outside the oil sector and attract new investment. Indonesia, the only Asian member of OPEC and a leading primary commodity producer, has been severely hit by last year"s fall in world oil prices, which forced it to devalue its currency by 31 pct in September. But the U.S. Embassy report says President Suharto"s government appears to be divided over what direction to lead the economy. "(It) appears to be nearing a crossroads with regard to deregulation, both as it pertains to investments and imports," the report says. It primarily assesses Indonesia"s agricultural sector, but also reviews the country"s general economic performance. It says that while many government officials and advisers are recommending further relaxation, "there are equally strong pressures being exerted to halt all such moves." "This group strongly favours an import substitution economy," the report says. Indonesia"s economic changes have been welcomed by the World Bank and international bankers as steps in the right direction, though they say crucial areas of the economy like plastics and steel remain highly protected, and virtual monopolies. Three sets of measures have been announced since last May, which broadened areas for foreign investment, reduced trade restrictions and liberalised imports. The report says Indonesia"s economic growth in calendar 1986 was probably about zero, and the economy may even have contracted a bit. "This is the lowest rate of growth since the mid-1960s," the report notes. Indonesia, the largest country in South-East Asia with a population of 168 million, is facing general elections in April. But the report hold out little hope for swift improvement in the economic outlook. "For 1987 early indications point to a slightly positive growth rate not exceeding one pct. Economic activity continues to suffer due to the sharp fall in export earnings from the petroleum industry." "Growth in the non-oil sector is low because of weak domestic demand coupled with excessive plant capacity, real declines in construction and trade, and a reduced level of growth in agriculture," the report states. Bankers say continuation of present economic reforms is crucial for the government to get the international lending its needs. A new World Bank loan of 300 mln dlrs last month in balance of payments support was given partly to help the government maintain the momentum of reform, the Bank said. REUTER 

INDIAN BUDGET COMES IN FOR WIDE CRITICISM

Opposition politicians, businessmen and newspapers criticised India"s newly unveiled 1987/88 budget and large projected deficit of around 57 billion rupees. They said the budget failed to provide incentives for economic growth and merely tinkered with tax reform. But few politicians were prepared to criticise a sharp rise in defence expenditure in the Hindu-majority nation where playing on fear of aggression by Moslem Pakistan has proved a vote winner. The Indian Express, the country"s biggest selling paper, said: "The defence cow has never been holier." The Sunday Mail newspaper branded the budget "shamelessly political." It said in a front page commentary the "budget is bad for growth, bad for prices, bad for the stock market and neutral in respect of everything else." Businessmen polled by Reuters said the budget had done little for them. Gandhi announced small increases in poverty alleviation and education outlays but he ordered a hold-down on current expenditure in an attempt to rein in the budget deficit. He told ministries to curb spending and promised a review of money-losing public sector industries. Gandhi lowered import tariffs on some computer parts but otherwise did little to extended the economic liberalisation policy launched two years ago. Reaction in Bombay, India"s business capital, was generally unfavourable. Businessmen and economists said the budget had no proposals for closing the 1987/88 budget deficit. It also failed to boost industrial investment and productivity needed to lift real economic growth above the five pct a year envisaged by the 1985-90 development plan. Nalin Vissanji, President of the Indian Merchants Chambers of Commerce said the budget gave no incentives to the capital market and had not fulfilled a government pledge to remove surtax on corporate income. Shares on The Bombay Stock Exchange, India"s biggest, fell in a post-budget session yesterday but brokers welcomed Gandhi"s proposal to set up a regulatory board for the securities industry. The exchange was shaken last year by several scandals and trading was suspended several times. Brokers said trading volume may increase with the change in capital gains tax on stock sales. Stockholders can now sell shares after one year instead of three years without incurring capital gains tax. Stock Exchange President Ramdas Dalal said yesterday the fall in share prices after the budget came as profits were taken and he expected to the market to firm in days to come. REUTER 

CHINA TO BORROW 390 MLN DLRS

China will receive loans totalling 390 mln dlrs from Japan and the World Bank for investment in new highways and port facilities. The Japan Overseas Economic Co-operation Fund is to provide 260 mln dlrs towards China"s plans to improve its road network, the official New China News Agency reported. A 130 mln dlr World Bank loan will be used to build 12 new berths incorporating container handling systems at the northeast China port of Tianjin, the agency said. It gave no details of the repayment terms of the loans. REUTER 

MANILA SAID TO OFFER DEBT BONDS TO BANKS

The Philippines will offer its commercial bank creditors an innovative pricing plan that will make debt payments through certificates of indebtedness as an alternative to cash, the authoritative Business Day newspaper said. Finance Secretary Jaime Ongpin told reporters yesterday the alternative proposal is designed to avoid an impasse when debt rescheduling talks reopen in New York on Tuesday. He did not give details but said, "It is a very useful alternative and in the end will permit the banks to say that they achieved their pricing target and will likewise permit the Philippines to say exactly the same thing." Quoting negotiation documents to be presented to the country's 12-bank advisory committee, Business Day said the debt certificates will carry maturities of five or six years. It said the certificates will be classified as zero-coupon bonds or promissory notes with no interest but priced at a considerable discount from their redemption price. It said the debt bonds will entitle holder banks to a guaranteed return on both interest and principal since no payment of any kind is made until the bond matures. It said a bank can sell the bonds on the secondary bond market for either dlrs or pesos depending on its requirement. The documents said peso proceeds can be invested in selected industries under the Philippines' debt/equity program. Ongpin said Manila is sticking to its demand of a spread of 5/8 percentage points over London Interbank Offered Rates (LIBOR) for restructuring 3.6 billion dlrs of debt repayments. "(The proposal) will give the banks a choice of 5/8ths or the alternative," Ongpin said. "Our representatives have gone to Washington to the (International Monetary) Fund, the (World) Bank, the Fed (Federal Reserve Board) and the (U.S.) Treasury to brief them in advance on this alternative and it has generally been positively received." "We don't believe that there is going to be a problem on the accounting side," Ongpin said. "We have run this alternative proposal to the accounting firms. Neither have the government regulators indicated that there will be a problem." REUTER 

CHINESE WHEAT CROP THREATENED BY PESTS, DISEASE

China's wheat crop this year is seriously threatened by plant pests and diseases, the New China News Agency said. More than 5 mln hectares of wheat-producing land in North China could be affected because relatively warm and dry weather had allowed bacteria and insect eggs to survive the winter, the agency added. China"s Ministry of Agriculture, Animal Husbandry and Fisheries has called for measures including the timely supply of pesticides to farmers to combat the threat, it said. REUTER 

SAUDI RIYAL DEPOSIT RATES REMAIN FIRM

Saudi riyal interbank deposits were steady at yesterday's higher levels in a quiet market. Traders said they were reluctant to take out new positions amidst uncertainty over whether OPEC will succeed in halting the current decline in oil prices. Oil industry sources said yesterday several Gulf Arab producers had had difficulty selling oil at official OPEC prices but Kuwait has said there are no plans for an emergency meeting of the 13-member organisation. A traditional Sunday lull in trading due to the European weekend also contributed to the lack of market activity. Spot-next and one-week rates were put at 6-1/4, 5-3/4 pct after quotes ranging between seven, six yesterday. One, three, and six-month deposits were quoted unchanged at 6-5/8, 3/8, 7-1/8, 6-7/8 and 7-3/8, 1/8 pct respectively. The spot riyal was quietly firmer at 3.7495/98 to the dollar after quotes of 3.7500/03 yesterday. REUTER 

IRAN CLAIMS NEW VICTORIES NEAR BASRA

Iran said its forces had captured one of Iraq's strongest fortifications east of Basra on the Gulf War southern front in a major battle overnight. The Iranian National News Agency, received here, said Iranian forces smashed four Iraqi brigades, killed or wounded 1,500 Iraqi soldiers and destroyed 45 enemy tanks and personnel carriers. IRNA said the Iranian troops seized one of the strongest Iraqi fortifications and breached Iraqi defence lines southwest of Fish Lake, 10 kilometres (six miles) east of Iraq's second largest city of Basra. REUTER 

BANGLADESH MOVES AGAINST LOAN DEFAULTERS

Bangladesh police mounted a cross-country hunt for defaulters on bank loans, arresting four industrialists and issuing arrest warrants against 50 others for failure to repay overdue obligations. No names were given. Metropolitan police told reporters the four arrested, put under six month pre-trial detention, owed nearly 50.7 mln taka -- the equivalent of about 1.7 mln dlrs -- to Bangladesh Shilpa (Industrial) Bank. President Hossain Mohammad Ershad has said non-payers are crippling the industrial sector. But the Chamber of Commerce and industry said the crackdown would scare away entrepreneurs. REUTER 

IRAQ SAYS IT REPELS IRANIAN ATTACK

Iraq said its troops repelled an overnight attack by three divisions of Iranian Revolutionary Guards near Basra in southern Iraq. A military communique said the Iranians in a "perfidious" attack rushed forward positions last night and this morning. A military spokesman later said the Iraqi Third Army Corps, whose troops fought off the Iranians, had a new commander, revealing for the first time that the previous general had been replaced. He said Lieutenant General Dhiya'uldin Jamal, former commander of the Fifth Army Corps, also positioned in the Basra area, had replaced Major General Tala' Khalil al-Douri. REUTER 

QATAR UNVEILS BUDGET FOR FISCAL 1987/88

The Gulf oil state of Qatar, recovering slightly from last year's decline in world oil prices, announced its first budget since early 1985 and projected a deficit of 5.472 billion riyals. The deficit compared with a shortfall of 7.3 billion riyals in the last published budget for 1985/86. In a statement outlining the budget for the fiscal year 1987/88 beginning today, Finance and Petroleum Minister Sheikh Abdul-Aziz bin Khalifa al-Thani said the government expected to spend 12.217 billion riyals in the period. Projected expenditure in the 1985/86 budget had been 15.6 billion riyals. Sheikh Abdul-Aziz said government revenue would be about 6.745 billion riyals, down by about 30 pct on the 1985/86 projected revenue of 9.7 billion. The government failed to publish a 1986/87 budget due to uncertainty surrounding oil revenues. Sheikh Abdul-Aziz said that during that year the government decided to limit recurrent expenditure each month to one-twelfth of the previous fiscal year's allocations minus 15 pct. He urged heads of government departments and public institutions to help the government rationalise expenditure. He did not say how the 1987/88 budget shortfall would be covered. Sheikh Abdul-Aziz said plans to limit expenditure in 1986/87 had been taken in order to relieve the burden placed on the country's foreign reserves. He added in 1987/88 some 2.766 billion riyals had been allocated for major projects including housing and public buildings, social services, health, education, transport and communications, electricity and water, industry and agriculture. No figure was revealed for expenditure on defence and security. There was also no projection for oil revenue. Qatar, an OPEC member, has an output ceiling of 285,000 barrels per day. Sheikh Abdul-Aziz said: "Our expectations of positive signs regarding (oil) price trends, foremost among them OPEC's determination to shoulder its responsibilites and protect its wealth, have helped us make reasonable estimates for the coming year's revenue on the basis of our assigned quota." REUTER 

GULF BOND, STOCK MARKETS LAG BEHIND, GIB SAYS

Gulf money markets have grown reasonably well during the past decade, but bond and stock markets remain to a large extent fragmented and lag behind, <Gulf International Bank BSC> (GIB) said. The bank's economist Henry Azzam said in a review of Gulf capital markets that investors have to relinquish traditional investment vehicles such as real estate, foreign currency bank accounts and precious metals. "Greater financial sophistication is needed coupled with more diversified capital market instruments and a change in the disclosure requirements on company accounts," he said. The GIB study reviewed capital markets under three categories -- money markets, stock and bond markets. Azzam said Gulf states had been making greater use of short-term money market instruments and banks in the region had floated various euronotes and underwriting facilities. "Nevertheless, bond and stock markets remain, to a large extent, fragmented and lagging behind," he said. Most debt in the region is still raised by syndicated loans and bank facilities and very few companies had made use of stock or bond issues. Only Kuwait has an official stock exchange, while other Gulf nations have yet to establish exchanges. But with dwindling financial surpluses in the Gulf, governments are actively pursuing ways to develop capital markets and set up domestic stock exchanges, Azzam said. He said recession stemming from sliding oil prices had "clearly had a negative impact on the development of capital markets in the region." In addition, family firms are reluctant to go public, financial awareness among investors is still lacking and investment analysis and corporate reporting standards lack depth. A sharp fall in share prices in the early 1980s prompted investors to hold on to shares hoping for an eventual recovery. Azzam said the absence of proper commercial law in some Gulf countries and authorities' apparent reluctance to adopt financial innovations had also hampered capital markets. He called for clearly defined laws governing incorporation of joint stock companies and the flotation of debt instruments. Azzam said capital market instruments should be made available to all citizens and institutions of Gulf Cooperation Council (GCC) states -- Bahrain, Kuwait, Qatar, Oman, Saudi Arabia and the United Arab Emirates (UAE). Some moves had been taken in this direction, with Bahrain allowing GCC nationals to own up to 25 pct of locally incorporated companies. Azzam said Gulf money markets had received greater depth from the introduction of treasury bill offerings in Bahrain and the expansion of securities repurchase regulations in Saudi Arabia. But he added there is "no bond market to speak of" in Saudi Arabia, Qatar, Oman or the UAE, with the last Saudi riyal denominated bond issued in 1978. While Bahrain plans an official stock exchange and trading in Saudi Arabia has picked up, establishment of formal exchanges in Qatar, Oman and the UAE does not appear imminent, Azzam said. REUTER 

SAUDI ARABIA REITERATES COMMITMENT TO OPEC PACT

Saudi Arabian Oil Minister Hisham Nazer reiterated the kingdom's commitment to last December's OPEC accord to boost world oil prices and stabilise the market, the official Saudi Press Agency SPA said. Asked by the agency about the recent fall in free market oil prices, Nazer said Saudi Arabia "is fully adhering by the ... Accord and it will never sell its oil at prices below the pronounced prices under any circumstance." Nazer, quoted by SPA, said recent pressure on free market prices "may be because of the end of the (northern hemisphere) winter season and the glut in the market." Saudi Arabia was a main architect of the December accord, under which OPEC agreed to lower its total output ceiling by 7.25 pct to 15.8 mln barrels per day (bpd) and return to fixed prices of around 18 dlrs a barrel. The agreement followed a year of turmoil on oil markets, which saw prices slump briefly to under 10 dlrs a barrel in mid-1986 from about 30 dlrs in late 1985. Free market prices are currently just over 16 dlrs. Nazer was quoted by the SPA as saying Saudi Arabia's adherence to the accord was shown clearly in the oil market. He said contacts among members of OPEC showed they all wanted to stick to the accord. In Jamaica, OPEC President Rilwanu Lukman, who is also Nigerian Oil Minister, said the group planned to stick with the pricing agreement. "We are aware of the negative forces trying to manipulate the operations of the market, but we are satisfied that the fundamentals exist for stable market conditions," he said. Kuwait's Oil Minister, Sheikh Ali al-Khalifa al-Sabah, said in remarks published in the emirate's daily Al-Qabas there were no plans for an emergency OPEC meeting to review prices. Traders and analysts in international oil markets estimate OPEC is producing up to one mln bpd above the 15.8 mln ceiling. They named Kuwait and the United Arab Emirates, along with the much smaller producer Ecuador, among those producing above quota. Sheikh Ali denied that Kuwait was over-producing. REUTER 

COFFEE QUOTA TALKS CONTINUE, NO ACCORD SEEN LIKELY

The International Coffee Organization (ICO ) council talks on reintroducing export quotas continued with an extended session lasting late into Sunday night, but delegates said prospects for an accord between producers and consumers were diminishing by the minute. The special meeting, called to stop the prolonged slide in coffee prices, was likely to adjourn sometime tonight without agreement, delegates said. The council is expected to agree to reconvene either within the next six weeks or in September, they said. The talks foundered on Sunday afternoon when it became apparent consumers and producers could not compromise on the formula for calculating any future quota system, delegates said. Coffee export quotas were suspended a year ago when prices soared in response to a drought which cut Brazil's crop by nearly two-thirds. Brazil is the world's largest coffee producer and exporter. REUTER 

NEW ZEALAND CANCELS WEEKLY T-BILL TENDER

The Reserve Bank said it cancelled the regular weekly treasury bill tender scheduled for March 3. It said in a statement it forecasts a net cash withdrawal from the system over the settlement week. Cash flows to the government are expected to more than offset cash injections, it added. The bank said it expects to conduct open market operations during the week and after these, cash balances should fluctuate around 30 mln N.Z. Dlrs. REUTER 

SHARE TRADING IN CHEUNG KONG GROUP SUSPENDED

Trading in the shares of three of the Cheung Kong group of companies will be suspended for two days at the request of the companies, the Stock Exchange of Hong Kong said. The three are Cheung Kong (Holdings) Ltd <CKGH.HK>, Hongkong Electric Holdings Ltd <HKEH.HK> and Hutchison Whampoa Ltd <HWHH.HK>. They will announce their 1986 results later today, with market speculation of a major reorganisation within the group. Cheung Kong rose 75 cents to 45.25 dlrs on Friday, Hk Electric 60 to 16.00 and Hutchison 1.50 dlrs to 54.50. REUTER 

FEBRUARY U.S. PURCHASING MANAGER INDEX FALLS

The U.S. Economy continued to expand in February but at a slower pace than in January, which saw a spurt of activity, the National Association of Purchasing Management (NAPM) said in a report. The Association's composite survey index dropped to 51.9 pct in February from 55.8 pct in January, the NAPM said. It was the seventh consecutive month in which this leading indicator was over 50 pct. A reading above 50 pct generally indicates that the economy is in an expanding phase. One below 50 pct implies a declining economy. The NAPM report, based on a survey of purchasing managers at 250 U.S. Industrial companies, also found that the growth rate in new orders and production slowed in February. But production remained vigorous, with more than three times as many members reporting it better rather than worse. Vendor deliveries improved slightly last month, but members reported that steel supplies were tight as USX Corp gradually resumed production. The same number of members reported inventories were higher as reported them lower. The NAPM said that had not happened since August 1984. For a sixth straight month, more purchasers reported paying higher rather than lower prices, this time by a ratio of nine to one. Robert Bretz, chairman of the NAPM's business survey committee, said: "The economy continued to expand in February, but at a more subdued rate than in January. The slowing of new orders should not be significant enough to dampen prospects for a respectable first quarter." The composite index is a seasonally adjusted figure, based on five components of the NAPM business survey - new orders, production, vendor deliveries, inventories and employment. REUTER 

CANADA-EGYPT WHEAT NEGOTIATIONS TO CONTINUE

Canadian and Egyptian wheat negotiators failed to conclude an agreement on Canadian wheat exports to Egypt during talks last week, but the Canadian team will return to Cairo for further negotiations, Canadian embassy officials said. An embassy official declined to identify which issues remained to be resolved and when the talks would resume. In a five-year protocol signed in 1985, Cairo agreed to purchase 500,000 tonnes of Canadian wheat a year. REUTER 

INDONESIAN WHEAT IMPORTS EXPECTED TO FALL IN 1987

Indonesia's wheat imports are expected to fall to 1.5 mln tonnes in calendar 1987 from 1.69 mln in 1986, the U.S. Embassy's annual agriculture report said. It said the drop was expected, because there will be a drawdown on stocks built up near the end of 1986. It said wheat stocks at the end of 1986 were 390,000 tonnes, up from 223,000 at end-1985. It forecast end-1987 stocks at around 290,000 tonnes. The main suppliers in 1986 were Australia (44 pct), the U.S. (29 pct), Canada (12 pct), Argentina (8 pct) and Saudi Arabia (5 pct). REUTER 

SHULTZ LIKELY TO VISIT MOSCOW SOON

U.S. Secretary of State George Shultz is likely to visit Moscow soon for talks following new Soviet arms control proposals, U.S. Officials said. The officials told Reuters no decision had been reached on when the trip might take place, but it was likely to be within a month. Kremlin leader Mikhail Gorbachev proposed on Saturday that talks on medium range missiles be separated from other arms issues. Schultz is currently visiting Peking. REUTER 

ZAMBIA TO RETAIN CURRENCY AUCTION, SAYS KAUNDA

Zambia will retain its foreign-exchange auction system despite the suspension of weekly auctions since January 24, President Kenneth Kaunda said. "We have not run away from the auction. It hasn't been abolished at all," he told Reuters in an interview. He said the system would be reintroduced after current talks with the World Bank and the International Monetary Fund and, he hoped, would be backed by fresh foreign aid funds. Kaunda dismissed central bank statements the new auction system would be used to allocate foreign exchange to private bidders but not to fix the exchange rate. Kaunda said the auction system had faltered because of the government's shortage of foreign exchange to meet demand. It was suspended when the kwacha's rapid devaluation and strong fluctuations made economic planning almost impossible for the government and the private sector, he said. Weekly foreign-exchange auctions began in October 1985. The kwacha fell from 2.20 to the dollar to about 15 in 16 months. In January 1987 the government was more than two months in arrears in paying foreign currency to successful bidders, and the auction was suspended and replaced with a fixed exchange rate of nine kwacha to the dollar. REUTER 

POLISH BANKER PLEASED WITH WORLD BANK, IMF TALKS

Poland's talks in Washington with the World Bank and the International Monetary Fund (IMF) on the country's 33.5 billion dlr foreign debt were concrete, open and frank, a senior Polish banker was quoted as saying. Wladyslaw Baka, head of Poland's National Bank, told the official news agency PAP yesterday the talks were a step towards possible fresh credits or easier terms. "Much attention was given to the Polish delegation and the talks at both institutions involved displayed a lot of understanding for Poland's difficult economic position," PAP quoted Baka as saying. Baka said he stressed Poland would meet its financial obligations to the U.S., "but not in a short time, and not without major changes in the Polish economy as well as a cooperative stand on the part of its foreign economic partners." Since Poland rejoined the IMF last June, after a 36-year absence, IMF and World Bank teams have visited Warsaw on fact-finding missions on at least three occasions. A major report is expected to be issued in Washington soon. Poland has said it will not be able to meet interest repayments and debt principle falling due this year. REUTER 

RECORD N.Z. FUTURES VOLUMES TRADED IN FEBRUARY

The volume of contracts traded on the New Zealand Futures Exchange (NZFE) reached a record 25,559 contracts in February, the International Commodities Clearing House (ICCH) said. The previous high was 22,583 contracts in December 1986. The ICCH said the value of the contracts traded in February was 2.90 billion N.Z. Dlrs. The seven contracts currently traded on the NZFE are: five-year government bonds, the share price index, 90-day bank bills, 90-day prime commercial paper, the U.S. Dollar, crossbred wool, and wheat. REUTER 

INDONESIAN SUGAR OUTPUT SEEN SHORT OF TARGET

Indonesia's raw sugar output is likely to be 1.8 mln tonnes in calendar 1987, unchanged from 1986 and below the government's 1987 forecast of 2.5 mln, the U.S. Embassy said in its agricultural outlook for 1987. Indonesia bought 162,500 tonnes of raw sugar on world markets in late 1986, the report said. The embassy estimated Indonesia's calendar 1986 raw sugar production at 1.8 mln tonnes, against a government estimate of 1.99 mln. It said that Indonesia's move into sugar self-sufficiency in 1984 may have been short-lived. The report said, "The government continues to promote sugarcane production through its smallholder intensification program and a relatively high guaranteed price to sugarcane producers. "However, there are considerable indications that farmers are reluctant to plant cane because its economic return is not as good as that of other crops." REUTER 

NIPPON KOKAN STEEL AFFILIATES CONSIDERING MERGER

Toshin Steel Co Ltd <TOSS.T> and <Azuma Steel Co Ltd>, affiliates of Nippon Kokan KK <NKKT.T>, are considering a merger, company spokesmen said. Toshin Steel, owned 41.9 pct by Nippon Kokan, and Azuma Steel, owned 41.3 pct by Nippon Kokan, are expected to decide by the end of March, they said. Both firms have been struggling with losses caused by the recession in the steel industry and the yen's appreciation. Azuma Steel's current losses are estimated at 3.1 billion yen in the year ending March 31 against a 6.99 billion loss a year earlier, a spokesman said. The firm employs 1,100 workers Toshin Steel, with 1,700 workers, has given no forecast for the year ending March 31. But industry sources said they expected the company to show current losses of about five billion yen or more in 1986/87 compared with a 2.98 billion loss in 1985/86. REUTER 

Qantas Airways says will buy four Boeing 747-400's for one billion Australian

EGYPT TO HOST NINE-NATION AFRICAN TALKS THIS MONTH

Representatives of nine African countries will meet here on March 11 to discuss the African debt crisis, the Chad political situation and other issues, Egypt's Minister of State for Foreign Affairs, Boutros Boutros Ghali, said. He told reporters on his return from Ethiopia and Djibouti that the meeting and venue had been agreed by the Organisation of African Unity (OAU). He said Egypt, Zambia, Djibouti, Zaire, Uganda, Sierra Leone, Congo, Algeria and Mali would be represented. Foreign Ministry sources said Congo President Denis Sassou-Nguesso would chair the meeting. REUTER 

EC MINISTERS CONSIDER BIG AGRICULTURE PRICE CUTS

European Community (EC) agriculture ministers meet later today to consider a package of deep cuts in prices and subsidies after a week marked by strong protests by European farmers, Community officials said. The common target for the farmers' wrath is the EC's Brussels Commission, which for the fourth year running has called for radical changes in the price support system. EC Agriculture Commissioner Frans Andriessen says huge food surpluses, which have alienated international trade partners and pushed the Community to the edge of bankruptcy, demand such action. With Community warehouses stocked with some 16 mln tonnes of unwanted cereals, over one mln tonnes of butter and huge stocks of wine and olive oil, Andriessen says bluntly the days of open-ended price guarantees must end. EC agriculture ministers try to fix the guaranteed prices paid to Community farmers before an April 1 deadline for the new marketing year, an increasingly difficult task as EC members cut funds and demand greater budget discipline. Andriessen has proposed a freeze for most prices, coupled with reductions in other support mechanisms, which could lead to price cuts of as much as eight pct for some products. A producer's right to sell into EC warehouses at a fixed guaranteed price when he finds no real market outlet is to be scaled back so it applies only in exceptional cases. The latest proposals are designed to keep expenditure on agriculture virtually stable. EC farm policies now swallow two-thirds of an annual budget of about 36 billion European currency units (Ecu) and are mainly responsible for an expected shortfall this year of about five billion Ecus. The most contentious aspects of the package are a new oils and fats tax and a change in the "green" exchange rate system, which translates EC farm prices into national currencies. The tax, of up to 330 Ecus per tonne, would be levied on imported and domestically produced oilseeds, but could trigger a fresh trade dispute with the United States, which provides the EC with the bulk of its soybeans. It would increase the cost of margarines and low-fat products in an attempt to increase both olive oil and butter consumption. West Germany has flatly rejected green rate changes, which would cause a fall in prices for producers as countries with weak and strong currencies were brought more into line. REUTER 

QANTAS TO BUY FOUR 747-400'S FOR ONE BILLION DLRS

<Qantas Airways Ltd> has placed a firm order with Boeing Co <BA> for four 747-400 aircraft at a cost of 250 mln Australian dlrs each, chairman Jim Leslie said. The first is due for delivery in April 1989 with the others arriving in May, June and September of that year, he said in a statement. The 400 series is the latest model of the Boeing 747 family, he said. The purchase will take government-owned Qantas's 747 fleet to 28, he said. Leslie said Qantas is talking to three engine makers who are all offering engines for the Boeing 747-400 and it will announce a decision on engine purchases later this year. He said they are United Technologies Corp <UTX> unit <Pratt^M and Whitney>, General Electric Co <GE> and Britain's <Rolls-Royce^M Ltd>. He said the 747-400, which incorporates new technology such as extended wings with six-feet high winglets and enhanced electronics, should have its first flight next February. The 400 series has a designed range of 12,500 kms, 2,140 kms further than the current Qantas 747-300's, he said. The aircraft will be financed by foreign borrowings and foreign exchange earnings, and Qantas believes they will pay for themselves in four to five years, Leslie said. The 747-400 has a take-off weight of 870,000 pounds, up from 833,000 for the 300 series, and offers an eight pct fuel saving, he said. The higher range and payload means they will first be used on the route to Britain and Europe via Asia. They will also be used on non-stop flights between Sydney and Los Angeles. REUTER 

IEL SETS 100 MLN DLR NOTE/COMMERCIAL PAPER ISSUE

Australian investment group <Industrial Equity Ltd> (IEL) said it will raise 100 mln U.S. Dlrs by the issue of medium term notes and commercial paper in the U.S. Domestic market. IEL has mandated <Merrill Lynch Capital Markets> to arrange a letter of credit (LOC) facility in support of the notes and commercial paper, making this the first facility of its kind, the company said in a statement. The notes will be issued by its <IEL Finance Ltd> unit. Merrill Lynch will be the note and paper dealer and <Sumitomo Trust and Banking Co Ltd> will provide the LOC. The term of the LOC is five years with an evergreen feature which provides for annual reinstatement of the five-year term at the support banks' option, IEL said. The LOC will be underwritten by a group of banks which will receive a facility fee of 20 basis points plus a utilisation fee of 25 basis points, it added. REUTER 

AMERICAN EXPRESS STUDIES OPTIONS FOR SHEARSON

American Express Co <AXP>, rumoured to be considering a spinoff of part of <Shearson Lehman Brothers Inc>, said it is studying ways to improve Shearson's access to capital and help it meet stiffer international competition. In a joint statement, American Express and the brokerage unit said the actions under consideration are an integral part of American Express's worldwide financial services strategy. The statement also said American Express and Shearson have been having both internal and external discussions on the matter, but no final decision has been reached. American Express said in its statement it would not comment on the rumours circulating on Wall Street last week. Analysts said there was speculation that American Express would sell a stake of Shearson to a Japanese firm and also that 20 pct of the profitable brokerage would be sold to the public. Shearson contributed 316 mln dlrs of American Express's 1.25 billion dlrs net in 1986. American Express remained silent last Thursday and Friday as rumours drove its stock up a total of 5.50 dlrs in two days. It closed Friday at 74. REUTER 

INDONESIA UNLIKELY TO IMPORT PHILIPPINES COPRA

Indonesia is unlikely to import copra from the Philippines in 1987 after importing 30,000 tonnes in 1986, the U.S. Embassy's annual agriculture report said. The report said the 31 pct devaluation of the Indonesian rupiah, an increase in import duties on copra and increases in the price of Philippines copra have reduced the margin between prices in the two countries. Indonesia's copra production is forecast at 1.32 mln tonnes in calendar 1987, up from 1.30 mln tonnes in 1986. REUTER 

SRI LANKAN BANK OFFERS 250 MLN RUPEES T-BILLS

Sri Lanka's Central Bank offered 250 mln rupees worth of three-month treasury bills at its weekly tender closing on March 6, a Bank spokesman said. REUTER 

STRONG EARTHQUAKE HITS NEW ZEALAND

An earthquake measuring 6.5 on the Richter scale caused widespread damage in northern New Zealand and a civil defence emergency was declared in some areas, officials and seismologists said. There were no immediate reports of casualties. The quake jolted the Bay of Plenty and Waikato areas. The town of Whakatane was said by officials to be virtually isolated. A civil defence emergency was declared in Whakatane which has about 16,000 people. Officials said many roads and bridges in the area had been damaged. No deaths were reported but one man was admitted to hospital in serious condition after his car was buried in a mud slip. Seismologists said Whakatane was hit by three earthquakes, the strongest measuring 6.5 on the Richter scale. They were followed by a series of aftershocks. The quakes were felt across the Bay of Plenty and Waikato regions in the northeast of the North Island. Smaller tremors had been felt in the Bay of Plenty for more than a week. Police said many districts lost power supplies and telephone links. Energy Ministry officials ordered the release of water behind the Matahina hydro-electric dam, 32 kilometres above Whakatane on the Rangitaiki river. The quake cracked the roadway and concrete abutment along the top of Matahina, the largest earth dam in the North Island. REUTER 

PHILIPPINES HEADS CONFIDENTLY INTO DEBT TALKS

Philippine Finance Secretary Jaime Ongpin starts negotiations with the country's 12-bank advisory committee in New York tomorrow, buoyed by an economy on the mend and political stability one year after President Corazon Aquino took power, central bank officials said. The country now has foreign debt totalling 27.8 billion dlrs and faces debt repayments of 3.6 billion dlrs due between January 1987 and December 1992. Manila also hopes to tack on another 5.8 billion dlrs, rescheduled in a 1985 accord, to any new agreement, the officials said. Chile's 15-1/2 year rescheduling accord at one percentage point over London Interbank Offered Rates (LIBOR) and Venezuala's 21 billion dlr package at 7/8 point over LIBOR portend well for the Philippines, despite Brazil's repayment suspension last week, the officials said. Manila, which has not made any principal repayments since 1983, wants terms better than the 20-year repayments at 13/16 percentage point over LIBOR offered in October to Mexico in a 77 billion dlr rescue. Ongpin wants 5/8 point over the benchmark rate, which is currently hovering around 6-1/2 pct. The banks are said to be firm on the 1-1/8 points offered when the last round of negotiations collapsed on November 7. Ongpin said every 1/16 point over LIBOR meant an additional 5.1 mln dlrs in annual interest payments. One banker said banks were wary of repeating a Mexico-type accord, which some 70 small creditor banks are still refusing to endorse five months after it was signed. In Manila's case, about 40 pct of the 15 billion dlrs outstanding to commercial banks is owed to the 12 large banks on the advisory committee, while about 180 smaller banks have average exposures of 20 mln dlrs each. REUTER 

JAPAN FEBRUARY INTERIM TRADE SURPLUS JUMPS

Japan's customs-cleared trade surplus in the first 20 days of February jumped to 3.58 billion dlrs from 1.94 billion a year earlier, the Finance Ministry said. The February interim surplus was sharply up from a 965.04 mln dlr surplus in the same January period. FOB exports rose 14.6 pct from a year earlier in the first 20 days of February to 10.91 billion, while CIF imports fell 3.2 pct to 7.33 billion. The average dollar/yen rates were 152.32 for exports and 152.31 for imports against 196.61 for exports and 196.27 for imports a year earlier. REUTER 

NIPPON LIGHT METAL CONTINUES ALUMINIUM OUTPUT CUT

Nippon Light Metal Co Ltd <NLGT.T>, which has annual capacity of 63,000 tonnes, will continue primary aluminium production at a rate of 35,000 tonnes owing to low domestic and world prices and low water supplies at its hydroelectric power plant, a company official said. Nippon, which has no plans to restore output to the 48,000 tonnes a year at which it was working until late 1986, will become Japan's only smelter. <Ryoka Light Metal Industries Ltd> will stop smelting in April owing to high power costs and low prices, and <Mitsui Aluminium Co Ltd> has said it stopped smelting in February. REUTER 

SAUDI FEBRUARY CRUDE OUTPUT PUT AT 3.5 MLN BPD

Saudi crude oil output last month fell to an average of 3.5 mln barrels per day (bpd) from 3.8 mln bpd in January, Gulf oil sources said. They said exports from the Ras Tanurah and Ju'aymah terminals in the Gulf fell to an average 1.9 mln bpd last month from 2.2 mln in January because of lower liftings by some customers. But the drop was much smaller than expected after Gulf exports rallied in the fourth week of February to 2.5 mln bpd from 1.2 mln in the third week, the sources said. The production figures include neutral zone output but not sales from floating storage, which are generally considered part of a country's output for Opec purposes. Saudi Arabia has an Opec quota of 4.133 mln bpd under a production restraint scheme approved by the 13-nation group last December to back new official oil prices averaging 18 dlrs a barrel. The sources said the two-fold jump in exports last week appeared to be the result of buyers rushing to lift February entitlements before the month-end. Last week's high export levels appeared to show continued support for official Opec prices from Saudi Arabia's main crude customers, the four ex-partners of Aramco, the sources said. The four -- Exxon Corp <XON>, Mobil Corp <MOB>, Texaco Inc <TX> and Chevron Corp <CHV> -- signed a long-term agreement last month to buy Saudi crude for 17.52 dlrs a barrel. However the sources said the real test of Saudi Arabia's ability to sell crude at official prices in a weak market will come this month, when demand for petroleum products traditionally tapers off. Spot prices have fallen in recent weeks to more than one dlr below Opec levels. Saudi Arabian oil minister Hisham Nazer yesterday reiterated the kingdom's commitment to the December OPEC accord and said it would never sell below official prices. The sources said total Saudi refinery throughput fell slightly in February to an average 1.1 mln bpd from 1.2 mln in January because of cuts at the Yanbu and Jubail export refineries. They put crude oil exports through Yanbu at 100,000 bpd last month, compared to zero in January, while throughput at Bahrain's refinery and neutral zone production remained steady at around 200,000 bpd each. REUTER 

INDONESIAN PALM OIL OUTPUT EXPECTED TO RISE

Indonesia's palm oil output is expected to rise and exports to increase, the U.S. Embassy said in its annual report on Indonesia's agriculture sector. The Indonesian government said crude palm oil (CPO) output is expected to rise to 1.56 mln tonnes in 1987 and 2.11 mln in 1988, up from a projected 1.45 mln tonnes in 1986 and 1.26 mln in 1985. The 1986 projection of 1.45 mln tonnes is up from a provisional figure of 1.3 mln tonnes. A U.S. Embassy assessment puts 1987 output at 1.45 mln tonnes, against 1.35 mln in 1986 and 1.208 mln in 1985. "More realistic estimates indicate that 1988 production will be between 1.5 and 1.6 mln tonnes," the report said. The report said the abolition of the five pct CPO export tax, the devaluation of the rupiah in September 1986 and higher international palm oil prices should lead to a modest increase in exports this year. Exports are forecast to rise to 720,000 tonnes against 695,000 tonnes in 1986, the report added. REUTER 

INDONESIAN TEA, COCOA EXPORTS SEEN UP, COFFEE DOWN

Indonesia's exports of tea and cocoa will continue to rise in calendar 1987 but coffee exports are forecast to dip slightly in 1987/88 (April-March) as the government tries to improve quality, the U.S. Embassy said. The embassy's annual report on Indonesian agriculture forecast coffee output in 1986/87 would be 5.77 mln bags of 60 kilograms each. That is slightly less than the 5.8 mln bags produced in 1985/86. In 1987/88 coffee production is forecast to rise again to 5.8 mln bags, but exports to dip to 4.8 mln from around 5.0 mln in 1986/87. Exports in 1985/86 were 4.67 mln bags. The embassy report says coffee stocks will rise to 1.3 mln tonnes in 1987/88 from 1.15 mln in 1986/87. It bases this on a fall in exports as a result of the "probable" re-introduction of quotas by the International Coffee Organisation. Cocoa production and exports are forecast to rise steadily as the government develops cocoa plantations. Production of cocoa in Indonesia increased to 32,378 tonnes in calendar 1985 from 10,284 tonnes in 1980. It is projected by the government to rise to more than 50,000 tonnes by 1988. Production in 1986 is estimated by the embassy at 35,000 tonnes, as against 38,000 tonnes in 1987. The report forecasts cocoa exports to rise to 35,000 tonnes this year, from 33,000 tonnes in 1986 and 31,000 in 1985. The Netherlands is at present the biggest importer of Indonesian cocoa beans. The report forecasts that in calendar 1987, Indonesia's CTC (crushed, torn and curled) tea exports will increase significantly with the coming on stream of at least eight new CTC processing plants. Indonesia plans to diversify its tea products by producing more CTC tea, the main component of tea bags. Production of black and green teas is forecast in the embassy report to rise to 125,000 tonnes in calendar 1987 from 123,000 tonnes in 1986. Exports of these teas are likely to rise to 95,000 tonnes in 1987 from 85,000 in 1986 and around 90,000 in 1985. The embassy noted the ministry of trade tightened quality controls on tea in October 1986 in an effort to become more competititve in the world market. REUTER 

SINGAPORE EXCHANGE SEEKING NASDAQ/LONDON LINK

The Stock Exchange of Singapore (SES) plans to introduce electronic trading of shares listed on the National Association of Securities Dealers Automated Quotation System (NASDAQ) in the U.S. And on London's Stock Exchange Automated Quotation System, banking sources said. The SES is discussing the idea with the London and New York authorities. Gordon Macklin, president of the National Association of Securities Dealers in Washington, said he was very optimistic about an early agreement, possibly by the end of this month. Monetary Authority of Singapore (MAS) sources told Reuters they supported the proposed linking of computer trading systems on the three exchanges, and the banking sources said local financial support for the plan existed. Macklin said if an agreement were reached it would move the three exchanges towards 24-hour trading, with Singapore filling a gap when no trading takes place. A small group of selected stocks would be used at the start of three-centre trading to determine investor interest. The Singapore, London and New York authorities have agreed in principle on how the three exchanges would trade and transfer information among the different time zones, but some details still have to be worked out, a senior Singapore bank director said. Questions remain concerning investor willingness to deploy sufficient capital in Singapore to ensure adequate market liquidity and communication links to the other three centres. But if agreement is reached, Singapore will have a head start over the other Asian financial centres in Hong Kong, Toyko and Australia, he said. On February 18 the SES created the Stock Exchange of Singapore Dealing and Automated Quotation System (SESDAQ), modelled on NASDAQ. At present SESDAQ is trading the shares of only one company, the government-owned Singapore National Printers Ltd (SNP), but its turnover has been fairly active, and other small firms have said they plan to seek listings soon. Market sources expect the next few companies listed will also be government-owned entities, which would have no problem meeting the listing conditions. Approval for a listing of Trans-Island Bus Service Pte Ltd is expected soon, they said. SNP, previously wholly-owned by the government's Temasek Holdings (Pte) Ltd, issued seven mln 50-cent shares at one dlr each last month in a public offering oversubscribed 119 times. In SESDAQ trading, SNP shares have advanced from an initial 1.87 dlrs to a Friday close of 2.32 after a 2.80 high. So far more than 900,000 shares have traded. REUTER 

INDONESIA'S EXPORTS DROP IN CALENDAR 1986

The total value of Indonesia's exports fell in calendar 1986 to 15.995 billion dlrs from 18.762 billion in calendar 1985, according to the central bank's latest report. The value of crude oil exports fell to 7.431 billion dlrs in 1986 from 8.976 billion in 1985, while liquefied natural gas exports dropped to 2.795 billion dlrs from 3.802 billion in 1985. The value of Indonesia's non-oil exports also fell in calendar 1986, to 5.768 billion dlrs from 5.983 billion in 1985. REUTER 

GERMAN EUROBOND MARKET EXPECTS BREATHING SPACE

After an onslaught of new paper, fewer mark eurobonds issues are expected this week, bankers said. Most managers said they were planning a low issue volume for the Bundesbank's two-week bond calendar beginning today. "We want to have a week's pause," one manager said. Last week borrowings totalled 1.775 billion marks, including a 300 mln mark private placement for Deutsche Bank. Issues for all of February rose to nearly five billion marks, from 3.6 billion in January. The heavy volume also meant most borrowers except the very best addresses were having to accept higher coupons. "I think the D-mark market is still good, but only if you can give a good coupon," another manager said. But even some government borrowers were not getting the best reception for bonds which would have been taken up more readily under other conditions. Of the three mark eurobonds launched on Tuesday alone, bonds for Den Danske Bank and Iceland were trading outside fees on Friday, although prices had recovered from initial lows. Den Danske's 5-3/4 1992 bond was quoted at midday on Friday at 97.35/65 compared with its par price, and Iceland's 6-1/2 pct 1997 bond traded at 97.25/75 against a 100-1/4 issue price. A 300 mln mark 6-1/8 pct 1997 issue for Nippon Telegraph and Telephone was also depressed, but traded Friday within fees at 98.15, 98.50 from its par price. Some shorter maturities did better. In contrast to the 10-year NTT and Iceland issues, a five-year six pct bond for Hoogovens, traded at 98.40/75 from its 99-1/2 price, thanks mainly to its shorter maturity, dealers said. The large amount of paper brought to the market in the last two months has also led many syndicate managers to complain about the Bundesbank's present fixed calendar system, which they say is too inflexible. Currently all mark denominated eurobonds have to be registered with the Bundesbank in the week preceding the two-week issue period. A bank may decline to issue a bond on the requested day in the calendar, but then has to wait for the next calendar period to schedule the bond again. Some managers said they would prefer to abolish the system. The Bundesbank shortened the reporting period to two weeks from four weeks last July. But few expect the calendar to be completely abolished. "I don't think the Bundesbank would give that up," one banking analyst said. "I wouldn't have anything against getting rid of the system," the analyst said, adding banks were capable of regulating the volume of new issues themselves. The Bundesbank plays a passive role in setting the calendar without trying to regulate the issues, but it needs the registration to gauge the volume of mark bonds going through the euromarket, he said. For this reason, few managers here foresee the Bundesbank sacrificing its present calendar system. Bond activity in West German bond trading and syndication departments is also expected to be quieter than normal owing to the carnival holiday. Carnival will close banks in Duesseldorf all day on Monday. In Frankfurt, banks will close on Tuesday in the afternoon. REUTER 

JAPAN'S NTT FORECASTS PROFITS FALL IN 1987/88

<Nippon Telegraph and Telephone Corp> (NTT) expects its profits to fall to 328 billion yen in the year ending March 31, 1988 from a projected 348 billion this year, the company said. Total sales for the same period are expected to rise to 5,506 billion yen from a projected 5,328 billion this year, NTT said in a business operations plan submitted to the Post and Telecommunications Ministry. NTT said it plans to make capital investments of 1,770 billion yen in 1987/88, including 109 billion for research and development, as against a total of 1,600 billion this year. An NTT spokesman said increased competition from new entrants to the telecommunications field and the effect of a sales tax scheduled to be introduced next January, were the major factors behind the projected decrease in profits. The Japanese telecommunications industry was deregulated in 1985. REUTER 

SINO-U.S. VENTURE IN CHINA TO MAKE RINSING AGENTS

<Ecolab Co> of the United States signed a contract with North China Industrial Co to set up the first Sino-U.S. Joint venture in China to make rinsing agents, the New China News Agency said. It said total investment in the new venture, <Ecolab Chemical Industrial Co>, is 2.4 mln dlrs. It said the venture will be based in Shanghai and produce agents for use in hotels and industries. It gave no further details. REUTER 

CHINA SIGNS WORLD BANK LOAN FOR TIANJIN PORT

China has signed a 130 mln dlr loan agreement with the World Bank to partly finance 12 new berths with an annual capacity of 6.28 mln tonnes at the 20 mln tonne a year capacity Tianjin port, the New China News Agency said. China will provide 370 mln yuan for the project and a Chinese company won a bid against 12 other firms from seven countries to do the foundation work, it said. It said 11 of the new berths will be able to handle ships of more than 10,000 tonnes, three will handle containers and the expansion will enable the port to handle coke, non-metal mineral ores and mining equipment for the first time. REUTER 

THAI AIRWAYS INTERNATIONAL TO ALMOST DOUBLE FLEET

Thai Airways International plans to expand its fleet to 58 from 30 aircraft by 1995, company officials said. Thamnoon Wanglee, vice-president for finance, told a weekend marketing conference Thai would finance the expansion by borrowing, but he did not give details. He said the airline planned to reduce its yen borrowing to 36.4 pct of overall debt by September 1992. It is currently 64.3 pct of overall debt. He said dollar borrowing should rise to 56.2 pct of overall debt in the same period, compared to 15.7 pct now. Other company officials said the state-owned airline had no plans to go private. They said the airline is studying a government proposal for it to merge with Thai Airways Company, the state-owned domestic carrier. A report presented to the conference showed the airline expects passenger sales revenue to be 13 pct higher in 1987 than in 1986. This follows a 20 pct jump in passenger sales revenue in the past four months. Executive vice president Chatrachai Bunya-ananta said the current expansion of Bangkok airport would be completed this year. REUTER 

Japan February external reserves record 51.73 billion dlrs (January 51.46 billion)

JAPAN FEBRUARY RESERVES RECORD 51.73 BILLION DLRS

Japan's external reserves rose to a record 51.73 billion dlrs at the end of February from the previous record of 51.46 billion at end-January, the Finance Ministry said. End-February reserves last year were 27.58 billion dlrs. In January, the nation's foreign reserves showed the largest-ever monthly increase at 9.22 billion dlrs due to massive Bank of Japan dollar buying intervention during the month as the dollar fell briefly to an all-time low of 149.98 yen on January 19, foreign exchange dealers said. REUTER 

SIMEX TRADING VOLUME HITS RECORD IN FEBRUARY

Trading volume on the Singapore International Monetary Exchange (Simex) hit a record 122,819 contracts in February, surpassing the previous record of 116,767 in September last year, the exchange said in a statement. Volume in the Eurodollar contract hit a peak of 78,546 contracts against the previous record of 70,306, also set last September. Open interest in the Nikkei Stock Average contract passed 2,000 contracts for the first time, to hit a record high 2,697 on February 26. REUTER 

SHULTZ VISIT TO MOSCOW POSSIBLE, SAY SOVIETS

A senior Soviet official said a visit to Moscow by U.S. Secretary of State George Shultz for arms discussions was under consideration. Deputy Foreign Minister Alexander Bessmertnykh told a news conference such a visit would be part of continuing contacts between the two powers "in the framework of security questions." Earlier, U.S. Officials with Shultz in Peking said he was likely to go to Moscow soon following Kremlin leader Mikhail Gorbachev's weekend proposal for a separate agreement on withdrawing Soviet and American medium-range missiles from Europe. 

JAPAN DISTRIBUTOR MAY IMPORT MAZDA U.S.-MADE CARS

<Autorama Inc>, a distributor for Ford Motor Co <F> in Japan, is considering importing cars made by <Mazda Motor Manufacturing (USA) Corp>, (MMUC), a wholly owned U.S. Subsidiary of Mazda Motor Corp <MAZT.T>, an Autorama spokesman said. Mazda, owned 24 pct by Ford, is due to begin production of the 2,000-cc-engine cars at the Michigan plant in September at an annual rate of 240,000, of which between 60 and 70 pct will go to Ford and the rest to Mazda's own U.S. Sales network. REUTER 

IRAQ DEFERS PAYMENTS ON 500 MLN DLR EUROLOAN

Iraq has secured agreement to defer outstanding payments on a 500 mln dlr syndicated euroloan following five months of negotiations with creditor banks. Banking sources said the rescheduling is part of Iraq's continuing effort to defer payments of foreign debt as its economy comes under strain from the Gulf War and soft world oil prices. Iraq informed the 37 banks in the loan syndicate last September it could not meet the remaining four principal repayments totalling 285 mln dlrs, and missed the first of these for 71.25 mln due on September 29. The 500 mln dlr credit, under the lead management of Paris-based Union de Banques Arabes et Francaises (UBAF), has a five-year maturity and a margin of one percentage point over London Interbank Offered Rates (LIBOR). Banking sources said the agreement now worked out goes some way to meeting creditor bank demands that at least part of the first missing instalment of 71.25 mln dlrs be paid and not deferred. One quarter or 17.8 mln dlrs will be paid on signature of the accord, expected in late March, with the remainder in three more instalments to be made every six months. The remaining three principal instalments - originally due in March 1987, September 1987 and March 1988 - will each be deferred for two years from the due date, banking sources said. The margin for the loan remains unchanged and no penalty interest is being imposed, the sources added. Bank reaction to Iraq's rescheduling request has been one of resignation, with many bankers seeing little alternative for Baghdad's economic planners. Iraq is estimated to have foreign debt of about 50 billion dlrs, although about half is thought to be in the form of loans from its Gulf Arab allies, particularly Saudi Arabia and Kuwait. The 500 mln dlr credit is in the name of the state-owned Rafidain Bank. The only other major eurocredit, a 500 mln dlr deal under the agency of Gulf International Bank, was signed in October, 1985 and is still in a two year grace period. The bulk of Iraq's commercial debt - excluding loans by its allies in the Gulf War - is in the form of trade financing. But Rafidain bank stopped paying debt due on letters of credit last March and a series of negotiations with banks and western government export credit agencies has been underway. Some banks have agreed to a three-year deferrment of obligations due on letters of credit. REUTER 

TAIWAN CENTRAL BANK ISSUES CERTIFICATES OF DEPOSIT

The Central Bank issued 2.14 billion Taiwan dlrs of certificates of deposit (CD), bringing the total so far this year to 86.21 billion, a bank official told Reuters. The new CD have maturities of six months and one and two years and bear interest rates ranging from 3.9 pct to 5.15 pct. The issues are aimed at curbing the growth of M-1B money supply, which is the result of large foreign exchange reserves, the official said. REUTER 

ICO TALKS ON COFFEE QUOTAS TO RESUME AT NOON

Talks on coffee export quotas at the International Coffee Organization (ICO) special council session will resume at noon gmt today, following a last minute decision taken early this morning to extend the meeting 24 hours, ICO officials said. An 18 member contact group will meet at midday to examine new ideas, and the full council is to convene at 1900gmt, they said. The extension resulted from a last ditch effort by Colombia to salvage the talks, which by late yesterday looked perilously close to ending without agreement on quotas, delegates said. REUTER 

CAECL ISSUES 12 BILLION YEN EUROBOND

Caisse d'Aide a l'Equipement des Collectives Locales (CAECL) is issuing a 12 billion yen eurobond due March 31, 1994 paying 5-1/8 pct and priced at 102 pct, lead manager Mitsubishi Trust International Ltd said. The non-callable bond is available in denominations of one mln yen and will be listed in Luxembourg. The selling concession is 1-1/4 pct while management and underwriting combined pays 5/8 pct. The payment date is March 31. REUTER 

CHINESE BANKS TO ISSUE MORE BONDS, OFFICIAL SAYS

China's state and collective firms do not have enough cash to operate imported equipment, so banks will issue more bonds to raise funds, a Chinese bank official was quoted by the China Daily as saying. Xie was quoted as saying the present cash shortage means some state firms do not run at full capacity and are inefficient. The central government does not have enough money to meet their needs. The paper said, "Reliable sources disclosed that the country is running a budget deficit." It gave no figure. Xie said her bank sooner or later will have to punish the many firms that have failed to repay loans made to them over the past two years at high interest rates. The bank financed the loans by issuing two billion yuan of bonds, but she gave no other details. REUTER 

INDIAN SUGAR OUTPUT RISES IN FIRST FOUR MONTHS

India's sugar output to January 31 in the 1986/87 season (October/September) rose to 3.66 mln tonnes from 3.46 mln in the same 1985/86 period, the Indian Sugar Mills Association said. Total offtake in the first four months of the current year was 2.71 mln tonnes (including 241,000 tonnes imported) for domestic use and 4,000 tonnes for export, against 2.81 mln tonnes (including 993,000 imported) for domestic use and 3,000 tonnes for export in the corresponding period of 1985/86. Factory stocks at end-January were 3.05 mln tonnes (96,000 imported) against 3.13 mln (96,000 imported) a year earlier. REUTER 

INTERNATIONAL LEISURE NEGOIATING ON BOEING LEASE

<International Leisure Group Plc> said its <Air Europe> subsidiary was in advanced negotiations with manufacturers and banks for the lease of 10 <Boeing Co> and 13 <Rolls-Royce Ltd> engines. The deal would be for the lease, with purchase options, of five Boeing 757-200 planes and five 737-400s. The Rolls-Royce RB211-535E4 engines would be fitted to the Boeing 757s. Delivery would be in 1988 and 1989. REUTER 

JAPAN PLANS MORE FLEXIBLE CORPORATE BOND ISSUES

Japanese securities houses will issue new corporate bonds more quickly, accept issue requests throughout the month instead of at month-end and introduce a competitive underwriting method from April 1, to bring Japanese firms back to the Tokyo bond market, securities managers said. Domestic issues have slowed to a trickle as more and more companies turn to more flexible overseas markets for cash, but the proposed moves are expected to pave the way for a review of public bond issues, they said. "Relaxation of issue rules would be better applied not only to straight corporate bonds, but also convertible bonds and warrant bonds, to call back issuers effectively from overseas markets," a Nikko Securities house bond manager said. Securities houses will launch an issue about 10 days after a corporate declaration of intent instead of 25 days as now, the securities managers said. Underwriters are expected to abolish the lump-sum issuance system, in which all corporate bonds are issued at month-end, and accept issue requests during the month, they said. Securities houses also plan to introduce free competition among underwriters when negotiating with issuers over terms in order to better reflect the market, securities managers said. Market participants expect the new issue methods to be applied beginning in April, with the projected issue by <Nippon Telegraph and Telephone Corp>. The so-called proposal method abolishes the practice of taking lead-managership and enables more market-oriented decisions on terms, securities sources said. The four major Japanese securities houses now take turns underwriting corporate bonds. Setting issue terms using financial criteria prepared by securities houses and in reference to coupon rates on latest public bonds is now almost automatic, they said. The new moves are based on wide-ranging proposals made in late December by advisers to Finance Minister Kiichi Miyazawa. They were aimed at revitalising the domestic corporate bond market, securities house managers said. The finance ministry, commissioned banks and securities houses agreed in January to lower the eligibility ceiling for companies wanting to issue non-collateral straight and convertible bonds from March 1, securities managers said. The cut will more than double the number of corporations able to make non-collateral issues from around 70 for straight bonds and 180 for convertibles now, securities managers said. The Bond Market Committee of the Securities Exchange Council also recommended introduction of a shelf registration system, more use of corporate ratings systems and simplification of disclosure rules to help speed up the issuing process, securities sources said. It also called for a major review of the commissioned bank system, which increases the cost of issuing domestic bonds, and for deregulation of private placements, they said. Some of these proposals are likely to take some time to put into effect, the sources said. A shelf registration system would need a revision of Japanese commercial law, expected in 1988, the sources said. REUTER 

NEW DUTCH ADVANCES TOTAL 4.8 BILLION GUILDERS

The Dutch Central Bank said it has accepted bids totalling 4.8 billion guilders at tender for new seven-day special advances at 5.3 pct covering the period March 2 to 9 aimed at relieving money market tightness. Subscriptions to 300 mln guilders were met in full, amounts above 300 mln at 50 pct. The new facility replaces old five-day advances worth 8.0 billion guilders at the same rate. Dealers expect this week's money market shortage to be around 12 billion guilders. Reuter 

JAPAN BUYS SOME 95,000 TONNES SOYBEANS FROM CHINA

Japanese importers bought some 95,000 tonnes of Chinese soybeans late last month for May to September shipment, under the semi-annual trade accords, trade sources said. The FOB premium rose to 13.50 dlrs per tonne, up 2.50 dlrs from the premium for the November to April shipment, but down from 13.80 for the last May to September shipment. Flat prices for Chinese beans are based on futures prices in Chicago plus the FOB premium. Japanese purchases of Chinese soybeans, including spot buying, may have totalled 240,000 to 250,000 tonnes of the 1986 crop for November to April 1987 shipment, down from some 300,000 tonnes the previous year, the sources said. Domestic demand for edible-use soybeans is expected to remain stable at about 240,000 to 250,000 tonnes a year, the sources said. In recent years Japanese importers have overbought Chinese edible-use soybeans and sold the surplus to domestic crushers, but low 1986 U.S. Crop prices have discouraged the purchase of Chinese origin beans for crushing, they said. REUTER 

SHV SAYS IT MAKING TENDER OFFER FOR UP TO 33 MLN SHARES IN IC GAS

CHEUNG KONG (HOLDINGS) LTD <CKGH.HK> YEAR 1986

Shr 3.25 H.K. Dlrs vs 1.40 Final div 52 cents vs 38, making 75 cents vs 57 Net 1.28 billion dlrs vs 551.7 mln Note - Earnings excluded extraordinary gains of 983.6 mln dlrs vs 81.3 mln. Bonus issue one-for-four vs nil. Share split four-for-one. Dividend payable June 3, books close May 11-21. REUTER 

TRADING DELAYED ON SINGAPORE'S NEW BILL MARKET

The start of trading on the new Singapore Government Securities Market has been postponed until late March or early April because legislative amendments still need parliamentary approval, banking sources said. The new bill market, intended to establish a base for a wider capital market and to encourage private bond issues in Singapore, was supposed to be launched today. William K.K. Wong, managing director of Indosuez Asia (Singapore) Ltd, said there is no real obstacle to prevent the new market from taking off. Most dealers are optimistic it will provide more liquidity for operators to trade, he said. Lawrence Yeo, director of Citicorp Investment Bank (Singapore) Ltd, said the market's success depends on domestic participation. The five primary dealers and the three registered dealers will all be local companies. The primary dealers are <Commercial Discount Co Ltd>, <National Discount Co Ltd>, Oversea-Chinese Banking Corp Ltd <OCBM.SI>, <Overseas Union Bank Ltd> and United Overseas Bank Ltd <UOBM.SI>. They will underwrite the Monetary Authority of Singapore (MAS) auctions, maintain market liquidity and channel open-market operations, MAS said. <Citicorp Investment Bank (Singapore) Ltd>, <Indosuez Asia (Singapore) Ltd> and <Credit Suisse First Boston Asia Ltd> will be recognised as registered dealers. They will act as market makers but will not bid directly at auctions. MAS plans to launch trading by issuing taxable instruments grossing seven billion dlrs in the first year and a gross 38 billion dlrs of paper over the first five years. Non-competitive bids from primary dealers prepared to accept average yield will be allocated first, to a maximum 500,000 dlrs for notes and bonds and to an unlimited amount for treasury bills. The remaining amount will be awarded to competitive bidders from the lowest yield upwards. In the secondary market, the standard lot traded between dealers will be one mln dlrs worth of treasury bills and 500,000 dlrs worth of government notes and bonds. REUTER