Independent reports that the ISEQ is on course for one of the biggest rises of
any benchmark index in western Europe, according to calculations by the newspaper.
The total return, which includes capital gains and dividends, has risen more
than 23pc in the past 12 months as stocks such as Glanbia and Smurfit Kappa
reach new heights and international investors return to the market.
The benchmark index has soared while indices in many other indebted European
countries have struggled. Portugal's PSI-20 index has risen just 2.7pc in the
past 12 months while Spain's IBEX index is down 4.7pc. Italy's main index has
gained just 5.8pc.
The ISEQ was one of the first indices to collapse in the wake of the
international crisis because our banks made up such a large part of the value.
Now it is rebounding quicker than most as value investors such as Wilbur Ross,
who holds a 9.7pc stake in Bank of Ireland, believe Ireland is over the worst of
Stock markets in many parts of the world have rebounded in 2012 as central banks
flooded the world with cheap credit.
"Close to the end of the year, markets seem to know only one direction – further
upwards," Roger Peeters, chief executive officer at Close Brothers in Frankfurt,
"The technical situation is improving with some encouraging economic figures. It
does not look like this trend will stop in the short term."
Eurozone banks benefited disproportionately from a rally that began in July
after European Central Bank President Mario Draghi pledged to defend the euro,
later unveiling a plan for the ECB to buy the bonds of indebted eurozone states.
German stocks jumped to their highest levels in almost five years last night,
bringing gains over the past 12 months to a whopping 31pc.
The only country in western Europe to post bigger gains was Greece where the ASE
While the ISEQ is still some distance from Greece or Germany's performance, it
has done far better than most other European countries.
The Paris-based CAC is up 18pc while Belgium's Bel-20 is 20pc higher. Holland's
exchange has risen 16pc.
Britain's blue-chip FTSE 100 has underperformed most other exchanges over the
past 12 months, rising just 9.5pc. Many analysts expect the FTSE 100 to reverse
a year of underperformance and outpace European peers in early 2013 if its
heavyweight mining sector receives an anticipated boost from Chinese growth.
The MSCI world equity index has gained over 11pc so far this year helped by big
gains in Asian shares outside Japan which have reached 16-month highs.
In Ireland, the best-performing stocks have been exploration company Providence
Resources (up 165pc), paper maker Smurfit Kappa (up 122pc), travel software
company Datalex (up 121pc), dairy company Glanbia (up 78pc), clinical trials
company ICON (72p), insurer FBD (60pc) and Aer Lingus (60pc).
While a swing of 23pc is large by international standards, the ISEQ is more
prone to swings than most other exchanges. The benchmark index advanced 0.6pc
last year and fell 3pc the previous year.
In 2009, in the midst of our economic collapse, it posted a 27pc gain as bank
stocks recovered from record lows.
In 2008, the same index plunged 66pc as investors fled. In 2007, it slid 27pc.
The Irish Independent also reports that Ireland could
be facing a modern gold rush after a low-profile exploration company reported it
had found gold worth "millions" in the south-east.
In a statement to the London Stock Exchange, IMC Exploration said it had found
an exceptional level of gold deposits after drilling.
The company said drilling had found 11.38 troy ounces of gold per tonne of
earth. That is more than 300 times the size of the reported finds in Clontibret,
"These results are one of the highest-recorded gold grades ever found in Ireland
and the company is rapidly progressing with ongoing drilling," the company said.
Company managing director Dr Glenn Millar said the results were "exceptional" at
11oz per tonne.
"This confirms the outstanding exploration potential of the area and highlights
the materiality of this asset. IMC Exploration continues to be fired up and
expects more success with their exploration in this area as our on-going
drilling programme continues," he added.
The company is made of industry veterans including Hugh Gibney, who helped set
up the Tara Mines in the 1960s and was a founder of Oliver Prospecting, which
has since morphed into the billion dollar oil company, Dragon Oil.
Separately, the company recently announced positive results confirming the
potential for zinc in Co Wicklow.
The find has raised fears that Ireland could lose its natural resources without
receiving a true value for them but company director Neil Ring said the nation
would be a huge beneficiary through investment and employment.
"It takes companies like IMC to put a lot of money into the drilling programme
and obviously the Government cannot go around drilling for gold everywhere," he
The Irish Times reports that
Greek prime minister Antonis Samaras has pledged his country will stay in the
eurozone despite the fact that it will suffer more in the process than any
European country has endured in peacetime.
Speaking to a group of foreign journalists at the
prime minister’s office in Athens ahead of today’s release of EU-IMF bailout
funds for Greece, Mr Samaras said his Government had demonstrated the
credibility necessary to put an end to speculation that it might leave the euro.
He said Greece had gone through thick and thin
over the past few years but insisted that his three-party coalition had now
“Our decision was to stay in Europe and to stay
in the euro zone, and to prove to the whole world we can do it.”
He said Greece had to abide by the deal it had
signed up to with its EU partners and to deliver the promised savings and
reforms. Already 72 of the pledged reforms had been implemented in law.
“Credibility is very important. That is why
people help us. We could not have engaged in anything different and stayed on
the European course,” he said.
The prime minister said his New Democracy Party
was pro-European and could not have done anything else, but he added that the
measures required to stay in the euro zone like cuts in pensions and pay were
painful and difficult for the Greek people.
Mr Samaras said that as well as spending
adjustments structural reform of the tax system and the entire system of
governance were necessary and would be implemented.
“From the end of 2009 to the end of 2013, we are
going to lose a quarter of gross domestic product (GDP).
“That has never happened in peacetime in any
Mr Samaras said that as difficult as the measures
being taken by his government were, Greece would not only have to stick with
what it was doing but to do it fast.
He added that the release of today’s huge tranche
of EU-IMF funds marked a new day for his country.
He said the funds would be spent in four ways.
The first would involve the recapitalisation of
the country’s banks, while the second would enable the government to pay out
over €9 billion it owed to Greek people and businesses. “This will help in terms
of justice, psychology and liquidity,” he said.
Mr Samaras said the third important aspect of the
transfers was that it would enable Greece to draw down EU structural funds,
while the fourth would be to put an end to drachmaphobia.
‘ Held us hostage’
“This is something that has held us hostage for a
long time. Will Greece stay in the euro or go? This story is finished and that
will have a spillover effect on the economy and psychology.”
Mr Samaras said there would be opportunities for
Greece in tourism and agriculture exports, and that would required both foreign
and Greek investment.
“In the past there was a lot of red tape. Today
we want to offer the red carpet treatment for investors. This is a pro-business
The prime minister said the trauma of what had
happened in Greece had been very great, but it was important to protect social
“Without it democracy doesn’t work and the
economy doesn’t work.”
Mr Samaras praised his country’s EU partners and
singled out Taoiseach Enda Kenny, whom he described as “a very impressive man”.
The leader of the second party in the Greek
coalition government, Evangelos Venizelos of Pasok, delivered a similar message
, saying the three-party coalition would last and would deliver on its
However, he accepted that the social situation
was very difficult, with the official rate of unemployment at 23 per cent and
youth unemployment at over 50 per cent.
He described the government’s commitment to a
savings package of €14.5 billion over this year and next as the last wave of
very difficult fiscal measures, and he pointed out that since the beginning of
the crisis the total taken out of the economy had been €65 billion.
He described this as a “conservative neo-liberal
approach”, but said Greece had not choice but to accept it.
Mr Venizelos said there was now a financial and
fiscal European cold war, with a small group of powerful countries imposing
their solutions on weaker countries.
The Irish Times also reports
that thousands of farmer shareholders will get a windfall worth an average of
€15,000 to €20,000 after Glanbia cleared the last of three hurdles to reforming
its company structure yesterday.
More than 83 per cent of Glanbia co-op members
voted in favour of a deal to reduce the co-op’s shareholding in Glanbia plc to
41 per cent.
Yesterday’s vote was the third and final vote in
a complex deal to form a new joint venture between the plc and Glanbia co-op
which will be known as Glanbia Ingredients Ireland. The new venture will be the
largest dairy processing business in the country.
Under co-op rules, the deal had to be passed by
75 per cent of eligible members at two special general meetings. The first,
which saw the vote carried with an 82 per cent majority, took place two weeks
ago; yesterday’s vote confirmed that.
Some 4,522 farmers cast their votes in Gowran
Park, Kilkenny, yesterday, slightly less than the 4,649 who made the earlier
Yesterday’s vote means that members will get a
windfall as part of the share spin-out and sale. They will receive 7 per cent of
the issued share capital of the plc and can then sell or keep the shares. That
shareholding is worth about €157 million and farmers will receive, on average,
between €15,000 and €20,000 worth of shares.
A further 3 per cent shareholding, worth about
€67 million, will be used to help fund the ingredients business and clear debts
in the co-op.
The ballot was conducted independently by the
Irish Co-operative Organisation Society.
Glanbia co-op chairman Liam Herlihy said the vote
concluded “an historic and transformative process” for the society and its
members. “It’s been an incredible day in the history of the organisation, in the
history of farmers and in the history of Glanbia,” he said.
Glanbia plc managing director John Moloney said
the vote was a great opportunity for the society. “I think it’s a great day for
the shareholders and it’s a significant reward for the team in the plc to see
value going back into farm families and homes down through the south-east of
Yesterday’s meeting also approved a motion to
allow the threshold for key ballots to drop from the current 75 per cent to 66
per cent. Any future reduction in the co-op’s shareholding in Glanbia plc below
38 per cent will now require a two-thirds majority of co-op members in a single
The Irish Examiner reports
that Ireland’s 12.5% corporate tax rate is coming under unprecedented pressure
from the UK, US and the EU.
It might be better for the Government to
voluntarily close some of the loopholes that make it attractive for
multinationals to locate here rather than be implicated in a wider clampdown on
Starbucks is the latest big multinational to be lacerated before the House of
Commons Public Accounts Committee for the non- payment of corporate tax in the
UK. It follows the likes of Google, Amazon and other big brands that have faced
the wrath of MPs over their minimal UK tax liabilities.
No evidence of wrongdoing has been uncovered in any of these hearings, but the
Public Accounts Committee has put the issue of corporate tax high up the public
Most OECD countries, and in particular Ireland, are introducing austerity
policies. The public mood is very much moving against big companies avoiding
their fair share of tax. But what is a fair amount of tax is highly subjective.
Multinationals say that by using all legally available means to reduce their
final tax bill, the company’s shareholders are the main beneficiaries.
Large swathes of the international media have depicted Ireland as a tax haven.
If a political consensus forms at G8 level that involves legislating against tax
havens, then Ireland could be in the firing line.
The Government says Ireland does not share any characteristics with a tax haven.
It has a comparatively low corporate tax rate but it is transparent and fully
compliant with all existing international tax treaties and legislation.
University of Limerick economics lecturer Stephen Kinsella argues that the Irish
tax regime might be following the letter of the law but that does not mean it
follows the spirit of the law. "Ireland is tax avoidance compliant."
A complex tax structure known as the ‘double Irish’, which enables
multinationals reduce their effective tax rate to below 5%, is often cited as
evidence that Ireland is an important cog in a global network of jurisdictions
that facilitate tax minimisation.
JP Morgan chief executive Jamie Dimon once said capital goes wherever it wants
to go, but stays where it is best looked after.
In other words, if the Irish Government starts unilaterally changing the
corporate tax framework, then that could presage an exodus of multinationals
from the country.
"If the Government changed the corporate tax system and suddenly a multinational
was paying 9% instead of 5%, then that would bring in billions every year for
the Exchequer," said Mr Kinsella. "But it would take a brave minister for
finance to do that. It would depend on what is happening elsewhere."
Certainly maintaining a low corporate tax rate has been a priority for
successive governments. It is seen as attractive in attracting foreign direct
In the US presidential election, the Republican candidate Mitt Romney described
Ireland as a tax haven. Raising the Irish corporate tax rate plays well among
the electorates of most EU states. In his pre-budget submission last week, the
UK chancellor of the exchequer George Osborne criticised Ireland for its tax
If the Government wants to maintain the headline 12.5%, then it might need to
tighten up on loopholes. Otherwise, an internationally co-ordinated movement
could threaten Irish tax sovereignty.
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