Additional Irish Market commentary.................
DUBLIN, Dec 5 (Reuters) - The Irish stock market has powered to its
highest levels ever this week and analysts on Friday said there was more
to come.
Ireland is a relatively small country but its shares have been
attracting sizeable chunks of money from abroad. On Thursday alone,
following a market-friendly budget, the main stock index surged more
than three percent.
And while the speed of the market's ascent -- a spectacular 45 percent
rise in leading shares so far this year -- may slow slightly, analysts
said there was no sign of a downturn.
''International investors are very much taken by the Irish economy
story,'' said Robbie Kelleher, head of research at Davy Stockbrokers.
The country's growth rate is nudging up towards double-digit levels at a
time when much of Europe is struggling for two to three percent, and
inflation remains negligible.
On Thursday, the ISEQ index of leading shares rose more than three
percent to finish at 3952.13, having earlier touched a high of 3955.34.
By 1210 GMT it had eased back to 3946.86.
It has risen 45 percent from 2725.63 at the start of 1997. By contrast,
the Dow Jones industrial average has climbed to 8050.16 from 6461.73 at
the beginning of the year, a rise of 25 percent. The DJIA is more than
200 points below its record highs set in August.
Thursday's Irish share surge, led by the banking sector, took the market
past levels it had reached just before international market turmoil in
late October led to a correction.
''All of yesterday's action was driven by international investors,''
Kelleher said.
Irish Finance Minister Charlie McCreevy on Wednesday delivered a budget
with some 500 million Irish pounds in tax give-aways. Significantly for
the stock market, he cut the standard corporation tax to 32 percent from
36 percent and repeated a pledge to ultimately lower it to 12.5 percent.
Philip Molloy, senior equity analyst at Riada Stockbrokers, said the
market was pleased with the budget to start with but it did not take off
until major foreign investors stepped in. ''The guys from the U.S. came
in and there were just big buy orders.''
Molloy said Riada had a year-end target of 4100 for ISEQ index, and it
was going for 4400 by midyear in 1998.
''Certainly we would not be expecting such significant growth next
year,'' he said. ''It can't keep going at that rate.''
Slower share price growth, maybe. But real threats to the Irish stock
market?
Analysts see little to worry about unless the international picture
darkens.
Kelleher said domestically the market looked rosy. The market's
technical position was excellent, Irish companies were cash-rich and
pension funds were flush thanks to the economy's strong growth.
He said Davy's latest 12-month outlook for the market, conducted in
October, predicted the ISEQ would reach 4725.
''We're in the process of having a look at that. I suspect we'll up
it,'' he said.
John Conroy, head of equities at NCB, said the budget made the country's
already strong economy look even better from an equity market
perspective.
''The taxation changes will lead to a guaranteed level of earnings
growth for many of the companies,'' he said.
''Our favourites would be stocks with domestic exposure,'' he said,
specifically noting the services area. Major banks such as AIB (quote
from Yahoo! UK & Ireland: ALBK.L) and Bank of Ireland (quote from Yahoo!
UK & Ireland: BKIR.L), as well as smaller construction stocks were among
his picks. |
