Global Market Overview

1. Global Market Overview • The performance of individual stockmarket indices reflected the extent to which they are dominated by suppliers of networking equipment, and major telecommunications companies that are doing business in continental Europe. The first group was sold down brutally following Nortel Network’s posting sales 3Q00 sales growth of 42%, or at the lower end of expectations. The second group rallied strongly following the outcome of Italy’s auction of third-generation cellular licenses (i.e. at vastly lower than expected prices). • Given the general perception that the ECB will not intervene to defend the Euro, the new currency slipped to record lows of US$0.8249 and ¥88.99. • Bond markets were relatively tranquil. The main exception was Canada, where yields on 10-year government bonds rose by 14 basis points to 5.80% following Prime Minister Jean Chrétien’s calling of an early election. • USA/Canada • While the Nortel result produced great volatility among leading networking stocks, other sectors performed well. Whether in response to positive corporate earnings results or the slowing in GDP growth from 5.6% in 2Q00 to 2.7% in 3Q00, blue chips generally rallied. The Dow Jones Industrial Average and the S&P 500 composite rose by 3.6% and slipped by 1.2% respectively. • The Nasdaq composite and the Russell 2000 index fell by 1.6% and 5.9% respectively. • Nortel Network’s share price fell by around a quarter following its earnings announcement for 3Q00. Problems with the installation of optical equipment contributed to sales revenue that was below expectations. The slippage in Nortel was the main reason for the 11.1% drop in Canada’s TSE-300 composite over the week. • The Employment Cost Index rose by 0.9% in 3Q00, and 4.3% year-on-year. This was the smallest quarterly increase for a year. • Several of the major pharmaceutical groups, including Schering Plough, American Home Products, Merck, Pfizer, Bristol Myers Squibb and Eli Lilly, posted better-than-expected growth in net income for 3Q00 thanks to strong demand for major prescription drugs. • Surging demand for fibre optic cables, networking equipment and amplifiers enabled Corning and JDS Uniphase to deliver 3Q00 results that were well ahead of expectations. • Conoco, Exxon Mobil, Chevron, Texaco and virtually all other oil majors that reported earnings during the week posted strong gains thanks to higher prices for crude oil and/or improved refining margins. • AT&T said that it would spin off its wireless and cable businesses and retain the consumer long-distance and business services. AT&T will set up a tracking stock for the long-distance business. This strategy represents a reversal from AT&T’s previous policy of growth through acquisition. AT&T’s wireless business underpinned its 3Q00 earnings. • Rising sales in its data, web and international businesses enabled Worldcom, the second-largest long-distance company, to boost revenues by 13% in 3Q00. • Franklin Resources, the sixth-largest US mutual fund company in terms of assets under management, bought Fiduciary Trust Company International, which has a.u.m. of US$46bn, for US$825mn. • Cereal maker Kellogg bought Keebler Foods, the second-largest cookie company, for US$3.7bn in cash and the assumption of debt. • General Electric agreed to buy diversified industrial Honeywell International for US$48.4bn in stock and the assumption of debt. GE’s legendary CEO Jack Welsh agreed to postpone his retirement so that he could oversee the consolidation of Honeywell. • Strong growth in advertising across all media platforms, underpinned the 159% rise in operating profits for 3Q00 at media giant Viacom. • Compaq Computer warned that earnings in the current quarter could fall short of expectations as a result of hedging and unspecified “management actions” • The 3Q00 retail of online retailer Amazon rose by 79% to US$637.9mn. Excluding one-off items, the company’s loss narrowed from US$197.1mn to US$89.5mn. • Eastman Kodak said that it would restructure into one operation that serves consumers and one that serves commercial customers. Xerox said that it would reduce its annual costs by US$1bn, or 6% of the total, in 2001.

2. UK • Over the week as a whole, the UK stockmarket posted broad-based gains. Both BT and Vodafone rallied following Italy’s sale of five third-generation cellular licences at little above the minimum price level. The FTSE 100 rose by 1.4%. the FTSE All Share, 250 and Small Cap indices rose by 1.4%, 0.4% and 1.0% respectively. • Economic growth slowed slightly from 0.9% in 2Q00 to 0.7% in 3Q00. • Reuters confirmed that it would proceed with the IPO of electronic broker Instinet, in spite of the volatility of the stockmarket. • Carlton Communications exchanged its 20% stake in the Meridian TV franchise and £181mn in cash for the HTV franchise in the West of England owned by Granada Media. • The stock price of AstraZeneca slipped slightly after the pharmaceuticals group reduced its forecasts for sales growth this year. Net income for 3Q00 rose by 36% even though, thanks to softness in US demand for the company’s Losec ulcer treatment, sales revenue was flat. • Reed Elsevier and Thomson jointly acquired US textbook publisher Harcourt General for US$4.5bn and the assumption of US$1.2bn in debt. • The stock price of hand-held computer maker Psion fell by about one third after the company warned that profits would be well below analysts’ expectations. All of Psion’s divisions were hit by currency fluctuations and increases in computer prices. • Trinity Mirror said that it would buy Southnews, a publisher of regional newspapers, for £285mn. • Continental Europe • The weakness of Daimler Chrysler, in face of analysts’ concerns over the outlook for car sales in the USA, contributed to the DAX’s 5.3% fall. In spite of the weakness of Alcatel in the wake of Nortel’s result, the CAC-40 rose by 1.9% over the week. • The stock prices of Swedish Internet consultancies Framfab, Icon Medialab and Cell Network fell by around a fifth following profit warnings and Cell’s disappointing result. • Germany’s leading economics institutes revised down their estimates of economic growth for next year from 2.8% to 2.7%. They are looking for growth this year of 3%. • Preliminary figures indicated that inflation for Euroland slipped from2.8% in August to 2.6-2.7% in September. • Deutsche Bank agreed to buy the retail and commercial banking business of France’s Banque Worms. • Switzerland’s UBS reported that 3Q00 net income rose by a greater-than-expected 73% to SFr2.08bn. The asset management business benefited from net inflows. Spain’s BBV Argentaria reported that net income for the first nine months of 2000 rose, in line with expectations, by 27% to €1.57bn. • The stock price of Spanish media group Recoletos, which is capitalised at around €1.6bn, slipped slightly following its IPO on the Madrid stock exchange. • New products enabled pharmaceuticals groups Sanofi Synthélabo and Akzo Nobel to post strong growth in revenue for 3Q00. • Defence/ aerospace giant EADS said that, thanks to the weakness of the Euro and strong orders for Airbus planes, it should beat its earnings targets this year. • Strong sales outside Germany, and the weakness of the Euro, enabled Volkswagen to achieve a 14% rise in sales and a 49% lift in net income for 3Q00.

3. Japan • Semi-conductor stocks and suppliers of optical networking components were hit hard by Nortel’s result. The Nikkei 225, Topix 100 and TSE 2nd Section indices fell by 4.1%, 2.6% and 2.4% respectively. • Sakura Bank, Mitsui Marine & Fire and Mitsui Life agreed to form a strategic alliance within which to cross sell-products. Mitsui Marine & Fire is also forming an alliance with Sumitomo Marine & Fire and Nippon Life. • Prudential Life and AIG were appointed by the courts as sponsors (i.e. managers) of bankrupt life insurers Kyoei Life and Chiyoda Life. • Bankrupt retailer Sogo revealed plans to return to profitability by closing 9 of its 22 stores and laying off about one third of its 9,000 employees. • Strong growth in sales of cameras, video equipment, semi-conductors and colour TVs boosted the operating profit of consumer electronics giant Sony by 132% in 3Q00. Electronics group NEC said that, thanks to strong demand, it should post record operating profits this year. Toshiba said that demand for mobile phones, personal computers and LCD screens enabled it to return to profit in the six months to September. • Hitachi agreed to buy the computer services division of US accounting group Grant Thornton for US$175mn. • Asia Pacific ex Japan • Continuing concerns over falling prices of computer chips contributed to the volatility of Samsung Electronics and Hyundai Electronics, and the 5.6% drop in South Korea’s KOSPI. Thanks in part to support buying by funds linked with the government, Taiwan’s Weighted index rose by 3.7%. • The major banks and, thanks to its involvement with the Italian cellular license auction, Hutchison Whampoa, underpinned the Hong Kong stockmarket. The Hang Seng index slipped by 0.9% over the week. • The price of Pacific Century Cyber Works continued to slide, despite the commitment of Richard Li and two major banks of around US$1.6bn in new capital and loans through convertible bonds. • Advances by the major banks lifted Singapore’s Straits Times index by 1.9%. • In a reversal of policy, China’s Ministry of Information Industry said that telecommunications companies and cable TV companies are free to compete with each other. The Ministry accepts the inevitability that the two industries will converge. • Australian CPI inflation for 3Q00 came in at a lower-than-expected 3.7%. This indicates that companies are not passing on all the impact of the GST onto their customers. Employment cost growth, however, was running at a nine-year high of 5.9% in 3Q00: this announcement contributed to the fall in the A$ to a new low of US$0.5140. • The stock price of OneSteel, a spin-off from Australia’s BHP, slumped to A$0.99 in its first day of trading. OneSteel has a book value of A$2.64 per share. • Acer, the largest maker if personal computers in Taiwan, cut its sales and profit forecasts for 2000, blaming a global slow-down in demand. • Hyundai Engineering & Construction said that it would lay-off one third of its senior executives and sell its stakes in Hyundai Heavy Industries and Hyundai Oil Refining as a part of a major restructuring. • Strong sales across all of Samsung Electronics’ businesses enabled it to post a 146% rise in net income to a record Won1,700bn (US$1.5bn) in 3Q00. • The Singapore government said that it would sell four third-generation cellular licences. • The Malaysian government said that it would lift the 10% exit tax on investments by foreigners if those investments are retained for a year. The budget for 2001 envisages that spending will rise by 4.3% to M$60.7bn (US$16bn).

4. Other Emerging Markets • The Latin American markets advanced after several difficult weeks. Gains by TelMex contributed to the 4.4% rise in Mexico’s IPC index. Brazil’s Bovespa index and Argentina’s Merval index advanced by 1.1% and 2.7% respectively. • Concerns over the state of economy in Argentina, and that country’s ability to sell bonds, contributed to the fall in the Brazilian Real to 11 month lows. • In spite of tightening margins in its cellular and international businesses, TelMex posted a greater-than-expected 7.3% rise in net income in the 3Q00. An increase in the number of mobile subscribers, and larger international traffic, lifted revenue by 17.3%. • Sentiment towards Argentine bonds, the spreads on which have widened by over 200 basis points in the last three weeks, was soured further by the government’s announcement that it will meet the rest of this year’s payments by borrowing US$1bn from domestic banks. • The major South African gold companies said that they would not take advantage of the rise in the Rand price of gold to increase forward sales. • Hungarian energy company MOL tightened the disclosure regulations relating to shareholdings, making a hostile take-over more difficult. • The Czech National Bank increased its inflation forecasts for 2000 slightly to 4.1-4.5%, but left interest rates unchanged. • The Monetary Policy Committee of Poland’s central bank kept its key interest rates unchanged at 19-23% but warned that further tightening in fiscal policy is necessary. The EBRD appointed Poland’s central bank governor Hanna Gronkiewicz Waltz to be a Vice President with effect from the start of 2001. • Poland’s three cellular telephone operators threatened to boycott the country’s planned auction of third-generation licenses. • Russia’s State Duma approved the draft budget for 2001, which envisages revenue and spending or Rb1.49tn (US$39.8bn).

5. LONDON Baring Asset Management Limited (regulated by IMRO) 155 Bishopsgate, London EC2M 3XY, England Telephone +44(0)207-628-6000, Facsimile +44(0)207-214-1659 Telex 885888 BAMUK G E-mail: uk.sales@baring-asset.com europe.sales@baring-asset.com PARIS Baring Asset Management France 35 avenue Franklin Roosevelt, 75008 Paris, France Telephone +331-5393-6000 Facsimile +331-4289-4161 E-mail: france.sales@baring-asset.com HONG KONG Baring International Fund Managers Limited & Baring Asset Management (Asia) Limited 19th Floor, Edinburgh Tower, 15 Queen's Road Central, Hong Kong Telephone +852-2841-1411 Telex 60460 BIIHK HX Facsimile +852-2526-7129 E-mail:asia.sales@baring-asset.com BOSTON Baring Asset Management Inc High Street Tower, 125 High Street Suite 2700, Boston Massachusetts 02110-2723, USA Telephone +617-946-5200 Facsimile +617-439-6093 Registered with the SEC FRANKFURT Baring Asset Management AG Friedrichstraße 2-6, 60323 Frankfurt, Germany Telephone +49 69 7169 1888 Facsimile +49 69 7169 1899 E-mail: germany.sales@baring-asset.com All indices source: Datastream 23/10/00 - 27/10/00 in base currency. Other data from publicly available sources including print media and government releases. This document , provided as a service to professional investors/advisers, is issued by Baring Asset Management Limited which is regulated by IMRO/FSA in the United Kingdom and by investment advisor affiliates of Baring Asset Management Limited in other jurisdictions. In the United Kingdom it is distributed only to persons meeting IMRO's Ordinary Business Investor definition and must not be passed on to Private Customers in any territory. It is published for private reference purposes only and is neither an offer nor a solicitation to buy or sell any investment referred to herein. The issuer and any other company in the BAM Group may have acted upon or used research recommendations before they have been published. The contents of this document are based upon sources of information believed to be reliable but no guarantee, warranty or representation, expressed or implied, is given as to their accuracy or completeness. This document may include forward-looking statements which are based on our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. Baring Asset Management Limited and its affiliates/staff may own or have positions in any investment mentioned herein or any investment related thereto and from time to time add to or dispose of any such investment. Member of the Barings Marketing Group.