Market report
C USTOS Another nail was driven into the coffin which is the gilt-edged market with the quarter point increase to 6+ per cent in American bank prime rates (borrowing rates for their best customers) announced on Monday evening. The decision, which represents a complete change-around in policy within the space of two months, was taken because the American view is that the present high level of interest rates is now here to stay for some time. It is often assumed in this country that British interest rates can only follow American rates—whereas if you read the American financial press, you will assume that London must move before New York. The truth is that both centres move roughly together, joined as they are by the eurodollar market.
The equity market continues to boil merrily away as takeover bid succeeds takeover bid. In the past week there have been three major announcements : Rank/De La Rue, Unilever/ Allied Breweries, Electrical and Musical In- dustries/A.B. Picture (which will please John Bull, who holds 250 shares of the latter).
This is EMI'S second shot at capturing A.B. Picture, one of whose major assets is its 50.1 per cent holding in Thames Television. Indeed, it is this investment which caused all the trouble when EMI made a bid earlier this year, which the Ira effectively sabotaged. What irritated the TTA was the thought that the elaborate selection procedures through which companies wanting licences have to pass every six years could be by-passed simply by buying up suc- cessful groups. EMI'S bid thus poses the problem afresh, the crucial difference being that this time Thames is actually operating whereas last time it had not started. So if EMI succeeds in its bid and the yrs objects, then the Authority will have to forbid Thames to use the ether and find another group to replace it— not easy.
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