Portfolio investment has fallen since the Mexico crisis but bank lending and direct investment are both growing

Portfolio investment has fallen since the Mexico crisis, but bank lending and direct investment are both growing strongly.However, as the charts show, the private investment is heavily concentrated in the richest developing countries. Flows to sub-Saharan Africa are down and it now receives almost none. Both South America and Asia have enjoyed increases, but these are concentrated on the handful of economies that are growing rapidly anyway. More than three-quarters of all private investment by OECD countries in the developing world goes to a dozen “upper middle income” countries.The report’s conclusion is that there needs to be more official aid, but focused on creating the underlying conditions for private investment: “Aid, in short, must now be used with a deliberate mission to help countries break out of aid-dependency.” The message is that increasing private capital flows to the few are no substitute for official aid flows to the many.It is hard to see any hope of aid budgets being increased, however.

The UK was one of those leading the way in cutting official aid. It amounted to $3.2bn (pounds 2bn) in 1995, a fall of 6.5 per cent in real terms. Britain has been overtaken for the first time by the Netherlands in the amount of development aid it provides. UK aid was sixth lowest as a share of GDP, well below the OECD average at only 0.28 per cent, although the think- tank conceded that the British programme was “businesslike”.The US was the fourth-biggest donor in absolute terms, but bottom of the league for aid relative to GDP at only 0.1 per cent, following a 28 per cent real-terms reduction in 1995.Only four countries met the UN target of giving the equivalent of 0.7 per cent of their GDP in aid to developing countries. Analysts say a Granada swoop on Yorkshire would free United News & Media, holder of the Anglia and Meridian licences, to pounce on HTV. Shares in Yorkshire ended 55p higher at 1152.5p, valuing the broadcaster at pounds 637m.Other ITV franchise holders shrugged off recent fears about the impact of digital television with Scottish TV up 13.5p at 616p and HTV 5p firmer at 335p Expect HTV to move higher this morning.

The US investment bank believes Shell’s valuation is stretched relative to the sector and expects the share to weaken as the crude price declines.Yorkshire Tynes-Tees topped the list of FTSE 250 movers as speculation grew that Granada, owner of the North-west franchise, was about to make its long-awaited move on the television group and trigger one last shake of the ITV kaleidoscope.Granada is said to have cleared the decks for the acquisition after selling its Welcome Break motorway service stations for pounds 476m and pocketing another pounds 90m from property group Chelsfield for its Westbury hotels in London and New York. Merrill Lynch reckons SmithKline Beecham deserves to trade on a similar multiple to its US peers, implying a price in excess of 1000p.Good results from Swedish pharmaceuticals group Astra added to positive sentiment in the sector, with Zeneca advancing 25p to 1801p and Glaxo 25p ahead at 913.5p.Also firm was BAT Industries, 17.5p better at 545.5p on renewed hopes that the US tobacco industry will agree a settlement with various groups bringing lawsuits against it.The froth came off Scottish & Newcastle after the Department of Trade and Industry gave tenants with Inntrepreneur, owned by Grand Metropolitan and Foster’s, the choice to buy their beer supplies from other brewers. Analysts also believe the shares have been oversold since Reed warned before Christmas that currency factors could hit profits in 1997.Rumours that Reuters, up 11p at 666.5p, might be sniffing around Reed were dismissed as old hat.For once the FTSE 100 index ignored a weak opening in New York by building on earlier gains to close at a record high of 4357.4, up 25.1 on the day. News of the death of Chinese leader Deng Xiaoping came after the market closed, though Wall Street’s initial reaction was calm.SmithKline Beecham led the way, surging 46.5p to an all-time peak of 941p on further consideration of a strong set of 1996 figures from the drugs giant on Tuesday. Hopes that a sale is imminent, and at a reasonable price, helped elevate Reed’s shares 45p to 1147.5p. When an auction attracted bids of just pounds 70m-pounds 80m, compared to an initial asking price of pounds 250m, the business was withdrawn from the market.But at the end of last year John Holloran, who led a buy-out of British Printing Corporation from the late Robert Maxwell, was appointed to fatten up consumer books ahead of a sale by early 1998.Reed recently sold some of the best-known names in book publishing, including Secker & Warburg and Heinemann, to Random House for about pounds 20m – the equivalent of the division’s turnover.Using a similar ratio Reed hopes the rest of the consumer books business, which includes reference, illustrated and children’s books, will fetch around pounds 150m.