Sunday 25 September 2016

Irish among the biggest gainers as markets bet on UK to stay

Published 21/06/2016 | 02:30

Two activists with the EU flag and Union flag painted on their faces kiss each other in front of Berlin's Brandenburg Gate to voice their support for Britain staying in the European Union
Two activists with the EU flag and Union flag painted on their faces kiss each other in front of Berlin's Brandenburg Gate to voice their support for Britain staying in the European Union

Irish companies with big business interests were among the big gainers yesterday as markets soared on renewed speculation Britain will vote to remain in the European Union this Thursday.

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Global markets experienced a so-called relief rally, lifting currency markets and European shares, and sending so-called safe haven assets lower.

Opinion polls over the weekend appear to show the remain side ahead in the referendum campaign, bolstering markets that sold off last week after the leave side had edged ahead, leaving investors nursing hundreds of billions of euro of losses.

Sterling rose 2pc against the dollar yesterday, putting it on track for its biggest one-day gain for more than seven years, while the FTSE was up more than 3pc.

Gains in Ireland were even stronger, a reminder that the economy here is in the frontline for any fallout, if the UK does vote to go. The Iseq index surged 4.5pc yesterday.

That dramatic gain was driven by Irish businesses with big UK exposure, now seen as less at risk as the prospect of a vote to leave fades.

Shares in Bank of Ireland were up 4.149pc at 25.10 cent each in late trading. Half the banks loans are in the UK. Ryanair, a key winner from Europe's single aviation market, saw its stock up 5.304pc at €13.5, PaddyPower Betfair and ferry operator ICG were also among the names clocking big gains.

On the British markets banking and house building stocks were the big gainers.

The blue chip FTSE 100 index finished 3pc higher, the biggest one-day percentage gain since mid-February, at 6,204.00 points, after earlier rising to 6,236.53, the highest level since June 9.

The market reacted positively to two weekend opinion polls showing the campaign to keep Britain in the EU had regained its lead, while a third poll also showed momentum for a vote to stay in the EU.

Traders largely welcomed the swing, but warned of further volatility until votes are counted.

"Waves from the Brexit vote are buffeting the UK stock market, tossing it up and down as the opinion polls shift this way and that," Laith Khalaf, of Hargreaves Lansdown, said.

"Until the vote is over, we can expect more price swings, as markets struggle to price in a unique event that carries with it such a high degree of uncertainty."

With the final decision still in the balance, the French central bank warned that a leave vote could see French banks pull back from London.

In its half-yearly risk report yesterday, the Bank of France said the referendum will shape Britain's role in world trade and affairs.

"If Britain leaves the EU, French banks could redirect part of their operations to European counterparties," the Bank of France said.

"This effect could be boosted if the subsidiaries of third country banks in London (especially from the United States) move to other financial European centres," it added.

Though London's pre-eminence for clearing financial transactions is unlikely to collapse in the case of Brexit, clearing of euro-denominated deals could be repatriated to the Eurozone, the Bank of France said.

Dublin alongside Frankfurt, Luxembourg and Paris will push to attract as big a share as possible of the UK's financial industry if Britain votes 'out'. (Additional reporting Reuters)

Irish Independent

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