PRESS DIGEST - Financial Times - Dec 22

Financial Times

SAUDI ARABIA AIMS TO TAKE LEAD IN SOVEREIGN WEALTH FUND STAKES

Saudi Arabia is planning to establish a sovereign wealth fund set to dominate other government-owned investment funds in the Middle East and Asia. Riyadh's oil wealth had previously been shared between the kingdom's central bank, the Saudi Arabian Monetary Authority and the coffers of the ruling royal family. The planned fund is expected to become the largest in the world, dwarfing Abu Dhabi's 900 billion dollar (454 billion pound) state fund.

PRICE CUTS PROP UP SALES IN THE SHOPS

Figures from the Office of National Statistics have shown that retail sales volumes rose by more than expected in November, with annual growth standing at 4.4 percent. The figures also revealed a surge in online shopping, suggesting that high street retailers could be suffering from internet competition. However, the rise in volumes was largely driven by discounting by retailers, with the value of sales during the month standing 1.3 percent lower than during the same period last year. Meanwhile, a GfK/NOP consumer confidence survey has found that morale is at its lowest point since 1995, and that consumers are more likely to be deferring large purchases than at any point since 1991.

LENDERS FAILING TO PASS ON RATE CUT TO BORROWERS

Research by the financial comparison Web site Moneyfacts.co.uk has revealed that only half of all mortgage lenders have indicated that they will cut interest rates following this month's quarter-point reduction in the base rate. The research shows that while some of the biggest lenders, such as such as Halifax and Nationwide, were quick to pass on the reduction to borrowers, a large number of smaller lenders have so far failed to follow suit. Lenders have also continued to tighten their lending criteria.

AIRPORT STRIKES VOTE HEIGHTENS DELAY FEARS

Thousands of air passengers could be stranded next month after Unite, Britain's largest labour union, voted to stage a series of strikes over pension rights for airport workers. Unite announced two 24-hour strikes by BAA workers on January 7 and 14, with a further two-day stoppage on January 17 and 18. The strikes may lead to massively disrupted services at Heathrow, Gatwick, Stansted, Glasgow, Southampton, Edinburgh and Aberdeen airports. The stoppages will further damage the reputation of BAA, which has suffered some of the worst records for delays amongst leading European airports.

NIS IN 593 MILLION POUND TAKEOVER

Northgate Information Solutions NIS.L has agreed to a 593 million pound takeover from the US private equity firm KKR. The 95 pence per share offer for the human resources software group represented a 40 percent premium to the company's prevailing share price. The deal provided relief to the UK technology sector, which suffered falls in November over concerns about weak discretionary technology spending among financial services firms. The shares closed up 28.25 pence at 92 pence.

MORGAN CRUCIBLE EXPANDS IN US

Shares in Morgan Crucible (MGCR.L), which have almost halved in value since the start of November, rebounded 12 pence to 201 pence after the group announced the acquisition of two US technical ceramics manufacturers for 147 million dollars. Mark Robertshaw, chief executive of Morgan Crucible, said the acquisition of Certech and Carpenter Advanced Technology was consistent with the company's strategy of focusing on higher growth, higher margins and less economically sensitive markets.

C&C MOVES TO LIFT SENTIMENT

Vocational learning group Carter & Carter CART.L has announced "significant progress" in the implementation of a restructuring proposal which would ensure its financial stability. Rodney Westhead, acting chief executive, said the company's positive update would "reassure" the Learning and Skills council that it was "heading in the right direction". The company's shares have lost more than 90 percent of their value since the death of its founder and chief executive, Philip Carter, in a helicopter crash in May.

ABERDEEN BUYS GERMAN FUND