Irish investors are spared the worst of stock carnage
Published 24/09/2011 | 05:00
Investors in Irish stocks were among the least impacted by this week's carnage on the equity markets, with several Irish shares up strongly on the year.
While the main German and French indexes plunged by between 6.7 and 7.2pc respectively this week, the ISEQ was down by 3.7pc, insulated by the low weighting the Irish banks now have in this index.
Based on year to date numbers, Ireland's leading stocks have had contrasting fortunes. While the most valuable stock, CRH, has almost a third of its value, Paddy Power and Glanbia are both up almost 25pc.
Big losers so far this year have been Smurfit Kappa (down 38pc), Aer Lingus (down 42pc), Bank of Ireland (down 80pc) and DCC (down 24pc).
The volumes of trading have been low in recent weeks, with larger institutions avoiding so-called peripheral markets.
Much of the volume has been driven by retail investors, although many of them have become very risk averse.
Stockbrokers told the Irish Independent that many retail investors had left the stock market and were buying safe-haven assets, including gold and short-dated German bonds.
The ISEQ, however, is down 16.6pc for the year, whereas the safer indexes have been in the US where declines have been below 10pc.
The Irish stocks are now paying out a similar dividend to US-listed stocks, but this has not attracted much additional interest to the Irish stock exchange.
For example, this week investors were only prepared to pay 69pc of what Irish companies are actually worth in terms of their assets.
But investors in the US were prepared to pay 186pc for the actual balance sheet value of US assets.
The ISEQ now has a collective value of €35bn, hugely down on its boom year peaks, when the banks artificially inflated the value of listed Irish companies.