UK businesses have overtaken their US competitors for the first time as the world's biggest foreign investors, according to the latest survey of international takeover activity by KPMG Corporate Finance.

Representing data compiled world-wide from more than 5,000 cross-border mergers, acquisitions and strategic investments announced during 1998, the survey shows that, after a subdued third quarter, world-wide cross-border deals increased sharply in the final three months - and that British companies are leading the rush to invest abroad.

For the first time since KPMG's survey began eight years ago, UK companies are the world's biggest buyers of foreign businesses - a position traditionally occupied by the US. Last year, they struck international deals with a total value of $127.72 billion, compared with $32.62 billion in 1997.

The 1998 figure is more than twice the previous UK record and topped the $124.76 billion of deals unveiled by US companies.

According to the study, British companies now account for nearly a quarter of the world's total cross-border deals.

The buying sprees abroad was led last year by BP's $61 billion merger with Amoco.

Tony Sharp, partner with KPMG Corporate Finance in Leeds, said: "British companies have not only recovered their nerve after the turmoil in financial markets earlier last year - they are now blazing a deal-making trail around the world. The US market is still their number one target, despite the allure of an increasingly-integrated Europe. UK companies now account for half of all foreign acquisitions in the US."

Investors 'ignorant'

The overwhelming majority of private investors have no idea how the stock market works, according to a survey.

Fidelity Investments found that 88 per cent of callers to Fidelity's sales department claimed to be "knowledgeable" about investing.

But when asked, only six per cent knew that the main reason for stock market rises is because companies have grown their earnings over time.

The survey showed that while 55 per cent of investors said they know which types of investments are right for them, less than half (41 per cent) shop around to evaluate alternatives and 13 per cent rely on instinct when buying products.

In contrast 80 per cent of respondents said they shop around when buying a car or holiday.

Ann Davis, executive director of Fidelity, said: "Good investment decisions are made by understanding the basics of investing, spending time weighing up the different options and considering individual goals and objectives.

"These survey results highlight the need to help investors focus on these issues, particularly in the last Pep season."

Many investors failed to understand how they can minimise risk when investing in stock market products.

Beware of euro fraud

A warning has gone out to owner-managers to be careful of unqualified advisers dispensing guidance on the euro and what it means for their businesses.

The Association of Chartered Accountants (ACCA), which represents more than 200,000 finance professionals world-wide, is urging directors of small businesses to be wary of consultants seeking to offer advice on the euro, which was introduced on January 1.

Jonathan Beckerlegge, ACCA's spokesman for Yorkshire, said: "Many small businesses are still unfamiliar with the full ramifications of the euro."

He believes the advent of the euro may present an opportunity for fraudsters. "Under the guise of remodelling financial systems to account for the euro, they may have access to new bank accounts and payment systems," he said.

"Without proper safeguards, a criminal could easily establish systems to siphon off cash. As a matter of good practice, it is always wise to check the credentials of business advisers before they are engaged."

Living above York shops

Retailers and other businesses in York are invited to a special City of York Council and York Housing Association open day next week.

They have been urged to view eight flats at 42-38 Micklegate on Monday in the city centre in the hope of recruiting them to the "ground-breaking" Homes Over Shops scheme.

The purpose-built, one-bedroom rented flats have been developed and will be managed by York Housing Association with the help of a £68,000 conversation grant from City of York Council's Community Services Department.

The building's owners, Bradford Securities Ltd, has put up the remaining £200,000 cost of the conversion scheme.

Anyone interested in attending should contact Paul Stamp, City of York Council Housing Development manager, on 01904 554153 or Jenny Brierley on 01904 636061.

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.