Friday 31 October 2014

ISE trading soars on back of massive quantitative easing

Published 18/04/2013 | 05:00

786,000

The number of trades in the quarter to end-March

TRADING on the Irish Stock Exchange rocketed in the first three months of this year, as the Dublin market reaped the benefits of loose monetary policy around the world.

According to statistics released by the exchange, trading levels on the bourse jumped 24pc year on year to around 786,000 trades in the three months to the end of March.

That was more than 40pc more than the number of trades executed in the last three months of 2012.

The benchmark ISEQ Overall Index has rebounded strongly in 2013, and is up 16.5pc on the year so far. That rate of return has been one of the best in the developed world.

Massive quantitative easing by central banks around the world has created huge amounts of new money in the economy. Much of that cash is being pushed into equity markets, helping push up valuations despite doubts about the underlying health of the global economy. In the US, the S&P 500 Index touched a record high earlier this month, even as unemployment remains above 7.6pc.

NCB chief economist Philip O'Sullivan said that while central banks' actions had played a role in the higher prices, he also noted the unique characteristics of the Dublin market.

"In the wider scheme of things, the ISEQ is a relatively small market and, with the weighting of some major stocks, they can have a disproportionate effect on the market overall.

"Having said that though a number of firms exposed only to Ireland, such as Bank of Ireland, AIB and CPL Recruitment have performed exceptionally well so far this year and they are seen as a bet on Ireland as a whole," he added.

Volumes on the Irish market have rocketed in recent weeks, with more than 7 billion shares trading hands so far this year. That is almost equivalent to the total volume of the previous nine months.

The ISEQ's first quarter return was its best since 1998, while the ISEQ20 index of the top 20 companies on the market gained 17.2pc in the period.

Equity turnover jumped 44.4pc to €14.3bn, reflecting the higher valuations on the Irish market this year. The market capitalisation of ISEQ quoted companies climbed a fifth to €105bn.

Gains

The bond market saw similar gains throughout the quarter, bolstered by the Government's efforts to return to the international markets after nearly three years away.

The National Treasury Management Agency raised €9.2bn in the first 12 weeks of the year, helping increased the market capitalisation of the Irish government market to €101.1bn.

The debt markets, which makes up most of the Irish market's business but is much lower profile than the equity market, continued to post healthy returns.

Irish Independent

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