Business World

Tuesday 21 November 2017

ISEQ suffers as global markets continue to plunge

MARKETS

John Mulligan

John Mulligan

A BRUTAL Friday left markets limping into the weekend, severely bruised and nursing continuing concerns over the likelihood that the global economy is back on track.

Investors were spooked by data from China that showed its trade surplus was significantly less than expected in May, stoking fear that export growth there is slowing.

The ISEQ Overall Index ended the week firmly in the red, sinking 1.32pc, or 38.75 points to 2,895.03. There was no corporate newsflow to speak of and the decline was driven by wider malaise.

Fallers yesterday included Bank of Ireland, which continued its downward trajectory, shedding 11.8pc, or 1.6 cent, to 11.9 cent and valuing the group at just €631m. The Irish Independent reported yesterday that the bank's subordinated bondholders could be prepared to replace the State in providing the "backstop" for the bank's €2.2bn share sale, if they are allowed to buy discounted bank shares.

A group holding $1bn (€611m) of the bonds has formed a committee seeking to renegotiate an offer from the bank to swap bonds for bank shares or cash. The group has hinted that it doesn't object to having a debt-for-equity swap, but wanted better terms, including a bigger role in recapitalising the bank.

ISEQ heavyweight CRH sank 3.16pc, or 46 cent, to €14.08, while packaging group Smurfit Kappa yielded 4.1pc, or 34 cent, to close at €7.97. Mining firm Kenmare Resources dropped 7.1pc to 50 cent.

There were few gainers of note, with IL&P adding almost 8pc to 7 cent. Insulation maker Kingpsan rose 2.55pc, or 18 cent, to €7.25.

National benchmark indices declined in all of the 18 western European markets yesterday. Germany's DAX fell 1.3pc, while France's CAC-40 retreated 1.9pc. The UK's FTSE-100 dropped 1.6pc.

Stocks briefly pared losses during morning trading as the Bundesbank raised its forecasts for German growth, saying Europe's largest economy has entered a broad and prolonged upswing. Total declined 1.7pc to €38 and BP dropped 1.8pc percent to £4.42. Crude tumbled the most in four weeks in New York after 'al-Hayat' newspaper reported that Saudi Arabia would raise oil production to 10 million barrels a day next month.

Hermes sank 4.8pc to €182.70. A spokesman for LVMH said the world's largest maker of luxury goods does not intend to bid for Hermes, in which it holds a 20.2pc stake.

Irish Independent

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