Notes

Others, of course - maybe even the same people - were nursing nasty losses and looking enviously at the continuing ascent of share markets on Wall Street and in London. We have, incidentally, even heard mutterings on Wall Street of concern over possible temperamental behaviour by computers if the Dow Jones index goes as high as 10,000. Would they be able to cope with the extra digit? Maybe they need not worry just yet.

Although mega-mergers tend to keep the market hopping, more people are getting nervous about US values again. Philip Wolstencroft, strategist with broker Merrill Lynch, for instance, notes US indicators have been deteriorating, suggesting Wall Street may be about to suffer a ''correction''.

He has a ''neutral'' view on the UK market, which does not suggest a particularly firm floor, although Merrill's year-end target for the FTSE-100 remains at 6000. Of course, if Wall Street suffers a fall of any size and duration all markets will follow it down.

For the emerging ones, you need to keep a particularly watchful eye on Japan, as well as Wall Street and interest rate trends internationally. Unless Japan can put a bit more zip into its economy, the rest of Asia will find it much more difficult to pick itself up.

Not a greatly tempting picture perhaps, but for shareholders in investment trusts specialising in the emergent areas there is another factor at work.

The vultures are gathering. The whole investment trust world has been hearing the beating of wings for some time, but it is only recently their presence has been noted in the emerging markets sector.

The vultures are, of course, attracted by the discount. If you can buy, say, #1 worth of shares for around 80p, it would be surprising if someone sooner or later did not dip a beak in.

Credit Lyonnais Securities, which keeps a watch on such things, recently noted new names had begun to appear on the share registers of emerging markets trusts.

It is perhaps a little unfair to dub as ''vultures'' investors who seek action to eliminate or at least sharply reduce the discounts on investment trusts, and they do not like the term. But it has to be admitted that pressure from new shareholders, aided by other longer standing holders pleased to grab the chance of getting better value put on their holdings, has been creating profitable activity in trusts with a more general scope.

With little so far done by the trusts themselves to shrink the big discounts between the value of their investments and their share prices, the cynics might suspect the managers were ''hoping in vain for another bounce in Asia to revive investor sentiment before shareholders turn aggressive''. The firm's assessment of the situation, however, is ''the fund managers have run out of time. Shareholder patience is wearing thin.''

Action within three months is predicted and there is already one so-called vulture fund on the stocks waiting to be launched.

The broker sums up: ''The emerging markets sub-sector is heading inexorably and inextricably towards value realisation, be it pro-active or forced.'' And it believes: ''Once one trust has been 'dealt with' the discounts of other vulnerable trusts will narrow in expectation of further activity.''

With a range of trusts still on discounts of 20% or more, it is not, it feels, too late to take a stake. ''For the fleet of foot there is still time to build up exposure in this sector before rationalisation.''

In particular, it urges holders of emerging markets unit trusts, which are always dealt in at asset values, to ''switch into an investment trust equivalent where any gains look set to be enhanced by discount narrowing''.

Investors willing to put their money into such areas are advised to take their pick from a list of 25 trusts, seven of them labelled ''emerging'', 11 operating in the Far East excluding Japan sector, six in Latin America, and one in emerging Europe. All have sizeable discounts so could look tempting to the vultures.