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Markets News Thursday: 5% increase in Irish high net worth individuals to 19,000 in 2010?; Startup funding for Limerick's Crescent Diagnostics
By Finfacts Team
Jun 23, 2011 - 8:44 AM

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Wealth Report: The world’s high net worth individuals (HNWIs - - defined as those having investable assets of US$1m or more, excluding primary residence, collectibles, consumables, and consumer durables) expanded in population and wealth in 2010 surpassing 2007 pre-crisis levels in nearly every region, according to the 15th annual World Wealth Report, released Wednesday by Merrill Lynch Global Wealth Management and Capgemini.

Global HNWI population and wealth growth reached more stable levels in 2010, with the population of HNWIs increasing 8.3% to 10.9m and HNWI financial wealth growing 9.7% to reach US$42.7trn (compared with 17.1% and 18.9% respectively in 2009). The global population of Ultra-HNWIs (defined as those having investable assets of US$30m or more, excluding primary residence, collectibles, consumables, and consumer durables) grew by 10.2% in 2010 and its wealth by 11.5%.

“The past few years have seen great fluctuations in HNWI wealth and population,” said Bill O’Neill, chief investment officer at Merrill Lynch Wealth Management EMEA.
“In 2010, we saw growth rates slow down from the higher double-digit levels of 2009 when many markets were quickly returning from significant crisis-related losses.” 

The global HNWI population remained highly concentrated in the US, Japan and Germany, which together accounted for 53.0% of the world's HNWIs. The US is still home to the single largest HNW segment in the world, with its 3.1m HNWIs accounting for 28.6% of the global HNWI population.

“While over half of the global HNWI population still resides in the top three countries, the concentration of HNWIs is fragmenting very gradually over time,” said Jean Lassignardie, global head of Sales and Marketing, Capgemini Global Financial Services. “The concentration of HNWIs among these areas will continue to erode if the HNWI populations of emerging and developing markets continue to grow faster than those of developed markets.”
 

5% Increase in Irish HNWIs - Savings and Exports (?) are Irish Wealth Drivers

In Ireland the number of HWNIs increased by 5% to 19,000, which is slightly behind Europe’s overall growth rate of 6.3%.  According to the survey, the main drivers of wealth in Ireland are national savings (which increased to 35.5% of GDP in 2010 from 34.5% in 2009) and exports of goods and services which expanded by 7% in 2010.

Ireland’s merchandise exports have also been on a strong upward trend since the end of 2009, led mainly by medical and pharmaceutical exports.  Inhibitors of wealth in Ireland include house prices, which have decreased by 14.8% year on year in Q3 2010 as well as private consumption which contracted by 1.9% whereas government consumption decreased by 4% in 2010.

The reason why we have a question mark in the title is because medical and pharmaceutical exports from Ireland are mainly made by American-owned firms. So assuming that Irish millionaires were also minted in this sector in 2010 is a guess.

Startup Funding: Crescent Diagnostics Ltd, a developer of novel tests for predicting osteoporotic fracture risk, in particular broken hips, on Wednesday announced that it has raised €1.5m in Series A funding to support the development of BQT, a predictive test for the disease.

Crescent’s test, developed at the University of Limerick, will enable physicians to diagnose the risk of osteoporosis-related fracture both quickly and easily, using a small nail clipping.

The BQTanalyser uses Raman spectroscopy to examine the chemical bonds in the toenail.  Crescent’s research has shown that the structure and quantity of the chemical bonds in the human toenail is indicative of future hip fracture risk and is independent of bone mineral density (BMD), the standard test today.

When BQTtest development is complete, a physician will be able to send a nail clipping to a laboratory for analysis, with results made available to the patient within a matter of days.

More than 300,000 people in Ireland have osteoporosis and one in two women over 50 are at-risk of a fragility fracture which can cost up to €12,600 to treat. 

Ernie Poku, CEO of Crescent, commented: “There is a massive unmet need for more convenient, accurate and affordable bone fracture testing. The BQT test is a novel solution with the potential to significantly enhance osteoporosis diagnosis by measuring completely different risk factors to tests like DXA. This funding will allow us to complete additional clinical trials and bring BQTto market.”

Commenting on the announcement, Orla Rimmington, operations director, Kernel Capital said: "Kernel Capital through the Bank of Ireland Seed Fund are delighted to support innovative Irish companies like Crescent.  On average every 3 seconds someone in the world suffers a fracture as a result of osteoporosis, Crescent's technology developed at the University of Limerick has significant commercial potential in helping to identify patients at risk of bone fracture earlier and reduce associated health-care costs."

DCC: The Irish conglomerate said today that its subsidiary, DCC Environmental Britain, has purchased Oakwood Fuels, a UK waste oil and hazardous waste collection, processing and recycling business.

The agreed initial price is €10.8m while another €22.5m is payable based on Oakwood's profits in the three years to March 2014.

The Fed's Next Move: Jan Hatzius, Goldman chief economist:

Economic View: A lost decade for Irish house prices: Dermot O’Leary, Goodbody chief economist, comments  - - "With a further 1.2% fall in May, average residential property prices in Ireland are now back at levels seen at the beginning of 2001. In May, prices were down 12% yoy, the same as in April, with prices down by 41% from the peak on a national basis.

Regionally, we have been saying for some time that we expect the underperformance of the Dublin market relative to the rest of the country to reverse, due to the relatively better supply/demand dynamic in the capital. Although monthly figures are volatile, May’s data reveals that this may now be occurring. Residential property prices fell by 2.1% outside of Dublin, the biggest monthly decline since the crash began, while prices in Dublin actually rose.

The price decline in Dublin from the peak is 47%, while outside Dublin prices have fallen by 38%. Further declines will be needed to clear the housing stock in some parts of the country in particular.

The figures yesterday are no real surprise to anyone. House price trends continue to be influenced by credit constraints and a weak economy. Stabilisation will require an improvement in both of these variables.

Q1 GDP/GNP data for Ireland will be released later this morning. We expect a continuation of the two-track economy, with strong exports and weak domestic demand."

Irish GDP for Q1 published today: Conall Mac Coille, Davy chief economist, comments  -- "The Irish national accounts for the first quarter are published this morning. The Q4 national accounts painted a very confusing picture, with GDP falling by 1.6% on the quarter but GNP rising by 2.0%. The divergence between the two measures reflected a very sharp fall in net factor payments, comprising the difference between GDP and GNP, and reflected the profits of the multinational sector. Indeed, net factor payments fell to their lowest level in ten years in Q4. This fall is likely to be temporary; if net factor payments rebound in Q1, GDP could rise very sharply but with GNP remaining considerably weaker. In Q4, nominal GDP fell by 6.4% because of the decline in net factor payments, so a bounce back today could lead to commensurately strong growth in Q1.

That said, the potential for any bounce back in the first quarter is conditional on the dip in Q4 remaining in the GDP data in today's revised figures. The national accounts published today will include the yearly revisions to the entire GDP series. Davy analysis published this week showed that on average the annual growth rate of GDP, which was -0.7% in Q4, tends to be revised on average by 1.5 percentage points up or down. These revisions occur as the Central Statistics Office receives more complete information from companies operating in the Irish economy. So potentially we could have a very different picture of the trajectory of the Irish economy through 2010 when the revised data are published today. It is not implausible that the -0.7% annual growth rate of GDP could eventually be revised up to around 1.0% or down to close to 2.0%.

Elsewhere, the market is likely to focus attention on the strength of the global economy in the final month of the second quarter. The Chinese flash PMI published this morning fell in June to 50.1, its lowest level in 11 months. PMI data for the euro area published this morning are also expected to show a slowdown in June in both manufacturing and services. That said, if realised, the expectations for the Q2 euro area PMI data are probably consistent with euro area GDP growth of around 0.5%, slower than the 0.8% in Q1 but stronger than the 0.3% in Q4. So some momentum from the exceptionally strong first quarter has been carried into Q2. The question for markets is how weak Q3 is likely to be or whether the slowdown in recent months largely reflected temporary factors such as supply chain disruption following the earthquake and tsunami in Japan."

US Markets

In New York Wednesday, the Dow fell 80 points or 0.66% to 12,110.

The S&P500 slid  0.65% and the slipped 0.67%.

Asia Markets

The MSCI Asia Pacific Index fell 0.9% Thursday.

Japan's Nikkei 225 fell 0.34%; China's Shanghai Composite index rose 1.00%; Australia's S&P/ASX 200 dipped 0.71% and the Bombay Stock Exchange's Sensex index climbed 0.94% in Mumbai.

Asia benchmarks

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Irish residential property prices fall by 12.2% in year to May; Dublin apartments down 53% from early 2007
Eurozone new industrial orders index rose 0.7% in April; Irish orders were up 11.2% in month and 2% in 12-month period

In Europe, the Dow Jones Stoxx 600 has dipped 0.48% in early trading Thursday.

The ISEQ is down 0.32% in Dublin.

CRH has dipped 1.17% and Elan has gained 2.73%.


European Benchmarks

Irish Share Prices

Irish Stock Market Capitalisation by Company

Key Index Performance Statistics

Euribor Rates

AIB Daily Report

Bank of Ireland Daily Report

Currencies 

The euro is trading at $1.4303 and at £0.8912.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.

Commodities

The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.

The BDI closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009. The index averaged 59% lower in 2009 than a year earlier.

On Thursday, July 15, 2010, the index  fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points, Bloomberg report.

On Friday July16th, the BDI rose 20 points or 1.12% to 1,700 to break the 35-session losing streak.

On Wednesday this week, the BDI fell 3 points or 0.21%  to 1,406.

The Financial Times reported in January, that Australia’s flooding and fears of ship oversupply has pushed down a gauge of the cost of hiring ships to carry coal, iron ore and other dry bulk by nearly half since October to the lowest level since the aftermath of the financial crisis. The Baltic Dry index, the widely watched measure of dry bulk charter rates, fell to 1,453, nearly half the 2,784 peak reached on October 27, 2010.

Crude oil for July 2011 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $94.14 per barrel, down $1.27 from Wednesday's close. In London, Brent for July delivery is trading on the International Commodities Exchange at $113.11. The North Sea benchmark accounts for two-thirds of the global market.

The margin between the US benchmark WTI (West Texas Intermediate) used on the New York Mercantile Exchange and Brent is $19.

The US Energy department recently said that growing volumes of Canadian crude oil imported into the United States contributed to record-high storage levels at Cushing, Oklahoma of over 41m barrels at the end of March 2011 (86% of working capacity at Cushing), and a price discount for WTI compared with similar-quality world crudes such as Brent.  A discount for WTI is expected to persist until transportation bottlenecks impacting the movement of mid-continent crude oil to the Gulf coast are relieved. Consequently, the projected US refiner average acquisition cost of crude oil, which was about $2.70 per barrel below WTI in 2010,  is $1.60 per barrel above WTI in 2011 and $1.10 per barrel above WTI in 2012.

Gold spot price

The spot price of an oz of gold is trading in New York at $1,545.70 per oz, down $2.30 from Wednesday's close in New York.


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