Irish shares rose by a 17% average in 2012 and
the overall ISEQ index returned to mid-1997 levels.
The ISEQ index closed at 3,397 on Monday and rose
17% compared with the 2011 close of 2,902. The index rose 0.6% in 2011.
The overall ISEQ index closed at 3,377 on June
In current price terms, the market capitalisation
was at €85.5bn at end 2012 compared with €36bn in mid-1997.
CRH fell 0.39% in 2012; Elan dropped 26.98%; Aer Lingus
closed at + 74%; Bank of Ireland +39%; C&C +59%; Datalex +129%; FBD +60%; DCC
+36%; Glanbia +80%; Grafton +64%; ICON +0.61%; Kerry +42%; Kingspan +31%; Paddy
Power +40%; Ryanair +30%; Smurfit Kappa +93% and Independent News & Media
CRH and Elan together accounted for almost 30% of
the market capitalisation in Dublin at the end of 2012. CRH was at 22%. Their
primary listings are in London and New York respectively while their Irish
operations are not significant parts of their businesses.
On February 21, 2007, the ISEQ index rose to
an-all time high of 10,041 and the Financial sub-index rose to 18,098 (see
detail under Anglo chart below).
Two weeks before, Finfacts reported that HSBC,
the giant global bank,
had stunned markets by announcing multi-billion losses on subprime mortgages in
the United States.
Individual investors who had not cashed-in on the
February peak in bank shares, could be politely termed foolish. The pension fund
managers who had rode the bull market and continued to invest in bank shares
could be fairly termed idiots, or eejits in the more common Irish vernacular.
The Irish Examiner reported in February
2007: "Much of the growth seen and expected in the
Irish market is underpinned by the economic fundamentals.
This year and next the Irish economy will grow about 5%, compared to 1.5% last
year for the Eurozone and 2.2% for 2007.
For the past few years, stock market performance has been up over 20%, with 25%
growth in 2005.
Forecasts for this year are very good, with growth in the overall value of
the market expected to reach 20% or better."
Irish Bank closed at 22 euro cent on the Irish Stock Exchange, on
January 15, 2009 - - its last day of trading before becoming a
February 21, 2007, 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
year later, on February 21, 2008, AIB closed at €13.80, Anglo Irish
Bank finished at €8.84, while Irish Life & Permanent closed at
€10.20 and Bank of Ireland traded at €9.50.
In June 2007, one month after the general election and six weeks before the
onset of the international credit crunch, Finfacts reported that investors had
dumped Irish shares after Irish Life & Permanent said in a trading statement,
that its residential mortgage book would grow by 20% in 2007.
In July 2007, Chuck Prince, Citigroup CEO, had infamously dismissed fears
about an early end to the postmillennial debt frolics. “When the music stops,”
he told The Financial Times, “in terms of liquidity, things will get
complicated. But as long as the music is playing, you’ve got to get up and
dance. We’re still dancing.”
In the same month, Bertie Ahern, Irish taoiseach (prime minister), who had been
a hospital bookkeeper before entering politics, told a trade union conference
that he did not know how people who moaned about the economy did not "commit
"Sitting on the sidelines, cribbing and moaning is a lost opportunity. I don't
know how people who engage in that don't commit suicide because frankly the only
thing that motivates me is being able to actively change something," Ahern said.
Two weeks before, Finfacts said the slowdown in the Irish housing market which
would result in a fall in economic growth in 2008, would hit bank shares which
"have got investors addicted to impressive double-digit returns during a long
Ryanair's Michael O'Leary said: `We expect a big downturn in the next 12 months,
we just don't know what's going to cause it. We must be due one.''
Finfacts article, June 2007: High
foreign ownership of Irish shares will be bad news for stock market in 2008 when
housing output will plunge 28% compared with 2006 peak
The ISEQ slumped 66% in 2008.
Even as late as March 2010,
Jim Power, Friends First chief economist, had to warn about
the exposure of pension funds to equity markets.
Power said that in February of 2010, Irish
managed fund assets had a weighting of 73% in equities compared to 18% in fixed
“We are playing Russian roulette with the Nation’s pensions,” said Power.
“Unlike a lot of other European countries we have excessive exposure to equity
market volatility. A similar downturn to what happened in the last 18 months
would decimate existing Irish pensions and have severe and long lasting
consequences for the Irish State. This balance must be addressed immediately in
order to prevent the creation of a new section in Irish society – 'The Retiring
“There is an onus on pension scheme trustees to regularly review their
investment portfolio. In addition to the investment balance, trustees should
also review the fee structure of pension fund managers. In the majority of cases
these fees have not been adjusted to reflect the recession and in many instances
the fees are eroding all potential returns. The pensions industry needs to
address it customers concerns and be more transparent, more accountable and more
responsive to customer requirements,” he added.
Michael Wolfe, partner and head of pensions at William Fry, a Dublin law firm,
suggested that “if possible, trustees should insist on the introduction of
performance fees where pension fund managers’ fees are directly linked to the
Now, that is a radical proposal in Ireland and to
add sauce to it, wonder how more serious attention would be given to pensions if
ministers and senior civil servants also had personal skin in the game --
rather than the one-way bonanzas that they have created for themselves.
Global shares rallied in 2012 with the help of central banks
Check out our
, at a low annual charge of €25 - - if
you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to
support the service.