|CRH is Ireland's biggest public company by market value - - CRH Chief Executive Liam O’Mahony rings The Opening Bell on April 4, 2006 at the New York Stock Exchange. CRH is the largest US building materials group. |
February 21, 2007, nine months ago today, the ISEQ index rose to an-all time high of 10,041 and the Financial sub-index rose to 18,098.
Bank of Ireland closed at €18.65; Anglo Irish closed at €16.64 and AIB closed unchanged at €23.95.
The general index is down 36% and the financials' sub-index has plunged 48% from the February highs.
Bank of Ireland is trading today at €9.24; Anglo Irish is at €8.74 and AIB is trading at €13.11.
The Irish market has not only underperformed the big economy markets which are still generally trading up but also most Emerging Markets.
The Nasdaq is up over 9% year-to-date, the Dow Jones over 4% and the S&P 500 at about 3%.
The Morgan Stanley Capital Index for Emerging Markets rose nearly 50% in the first 10 months of 2007 and has delivered very strong performance over three-year and five-year periods with annualised returns of 45% and 40% respectively, through October 2007.
The bearish sentiment towards Irish equities may be surprising because while the Irish economy has been over-dependent on construction, in the short-term, the economy is expected to continue growing albeit at a much lower level.
Irish shares outperformed other markets when the principal companies produced double-digit earnings growth for their mainly International stockholders.
Last June, we wrote about the trend in recent decades of the growth in overseas ownership of most stock markets. In Ireland, overseas investors own about 65% of AIB Bank and the outperformance of the Irish market in recent years will be matched by underperformance for the foreseeable future.
International investors will simply have more upside opportunities elsewhere, in particular in Emerging Markets.
The Irish stock market is small with 7 companies accounting for 73.5% of the market capitalisation.
On Nov 21,2007, CRH, the second biggest building materials supplier in the world, hold 15.8%; Banks - AIB, Bank of Ireland, Anglo Irish Bank and Irish Life & Permanent hold 15.1%, 12.1%, 8.5% and 4.3% respectively. Drugs firm Elan holds 9.1% and Ryanair, Europe's biggest low-fares airline has a 8.6% market cap share.
National benchmarks - Europe
Irish Share Prices