Continuing descent of the ISEQ index

Akrasia

The ISEQ was valued at about 10000 last may, and in less than a year it has fallen almost 40% to around 6200. In the last month there has been a rollercoaster series of rises and falls, but the trajectory has continued downwards.


the ISEQ has officially crashed and I don't see any hope for a rise in the near future.

Today the ISEQ is down more than 160 points, it might be up by a hundred points tomorrow, but one thing is clear, the value of the index is now being determined by gamblers risking other peoples money in the kind of share trading that can bring down banks and pension funds

Auditor #9

Also dollar down and oil up - the markets are waiting for a major check until they settle, whereever that will be.

We should take advantage of this situation like Denmark did in the seventies by focusing on alternative energy.

I wonder how the Green companies are doing on the ISEQ? I'd watch em.

905

There was a nice little article in today's Irish Times on the subject of renewable energy. It looks like very little's been done to promote wave power, or maybe that's just my reading of it.

I think we'd need a mini crisis to get the ball really rolling on this, not just leave it till a real crisis comes along by which time it'll be too late.

Nice to see familiar names by the way, fellow exiles.

Auditor #9

Hi 905
It'll definitely take something wicked to wake us up to see a looming energy crisis - might nip out and get the IT before the shops close for that. See? If p.ie wasn't down you wouldn't be buying papers to find that out...

Kingspan was over €20 a share a year ago - now it's just over €8 a share. I know the building energy has relaxed but it hasn't dissipated and will return in the near future. This one could be worth keeping an eye on.

http://www.ise.ie/app/equityDetails.asp?equity=573

Jonny Arson

sure the 'fundamentals' (whatever they are) of the Irish economy remain strong..... as Cowen and co. would make you like to think

i agree that this county may need a serious kick up the backside in order to get us thinking outside the box in terms of our future (and global) energy crisis which is coming, oil hit $106 a barrel today and all.

with the worrying state our economy is in at the moment and the proverbial burying.heads.in.sand actions of our politicians (on all sides of the Dail) on this topic they must be praying that the endless Bertie/Mahon tribunal lasts for another few years to distract from what they should be talking about

meathstevie

I know it's like kicking a man when he's down but where are a the smug little stockbroker boys gone. You couldn't burn them out of the media the last couple of years and now it looks like they've all gone on a retreat to the remotest of the Blasket Islands and left their mobiles on the kitchen sideboard in D4 before they left.

Do people not cop on to the fact that the average stock exchange trader is like a surfer who goes high and far on a good wave but goes nowhere without a wave to ride ?

In my humble opinion the turning point is going to be the US presidential election with followed by a resurging dollar early in 2009 that's going to be a main turning point. Can anyone see another of Baby Bush's oil scams brewing ? Egging on Colombia against Venezuela ?

Tricity Bendix

I find the fact that everyone here seems to be willing disaster on the Irish economy quite unnerving.

Leaving aside the thorny issue of energy supplies, the fall in stock prices can be attributed in part to active lobbying in London against investing in Ireland. Ireland, they argue, is coming down from an exceptional period of growth, is experiencing a large asset bubble, and is beginning to loose pace thanks to rising costs. All of which is very true. Yet if you look at the profit figures for the ISEQ companies, they don't seem to support the pessimism. Companies floated on the exchange are, to a point, still making money. Irish goods are still being bought. Irish people are still in jobs. These are the 'fundamentals' of the Irish economy.

Jonny Arson

b.ie polar wrote: »

I find the fact that everyone here seems to be willing disaster on the Irish economy quite unnerving.

where is everyone here willing disaster upon the Irish economy?

meathstevie

b.ie polar : you're absolutely right in saying that the Irish economy is fundamentally healthy and performing, all matters concerned , strongly. Unfortunately the link between the real economy on the street and the big betting shop called the stock exchange is long gone.

A lovely example is the .com bubble a couple of years ago. Companies that came out of nowhere, never made anything but losses and a pile of debt being valued at astronomical levels. Ok I agree some might have had the potential to become something or hit on some viable technology but the point I'm trying to make is that share values do not represent a realistic company valuation.

Look at for example the Irish banking shares. These institutions are still as fundamentally sound as they were a year ago. People are by and large still paying their mortgages, businesses are making good on their loan commitments and the banks themselves operate in a rational enough fashion so how do you justify their current share value ? The bad debts a couple of Americans have racked up in a jungle loans systems ? For sanity's sake, would Ireland go collectively bankcrupt if a couple of moneylenders kicked the bucket ? Well, it would if the proper banks would have been bankrolling them on a massive scale and that might just be what a couple of the big US banks might have been doing a bit too much and a bit too often and they'll have to take their medicine but that's about all it is. A couple of big businesses burnt themselves and will be sore for a while but fundamentally it's no disaster : it's a reality check and they come with a bit of a shock most of the time.

Tricity Bendix

meathstevie wrote: »

Unfortunately the link between the real economy on the street and the big betting shop called the stock exchange is long gone.

Er, I don't want to reference irritating and complex papers on securities markets or anything, but I'm not sure if I entirely agree with you there. This isn't the economics forum, so I won't get into it.

Essentially, you are very correct. My main worry at the moment is that the Fed seems to be very supportive of the banking industry. I may be old-fashioned, but if the banks can make a killing for a long time off of risky debt then it is only fair that they face the downside. The Fed of course has to look after the economy as a whole, but their current policy of discounting inflation is going to hurt the poorest most.

Thankfully, Europe has (thusfar) escaped a similar credit crunch.

Raintonite

Europe has not missed the credit crunch. The securisation of mortgages which free up capital for banks who can then relend the money to new mortgage applicants has been seriously undermined, and this is true of Irish banks as well. Hence, while monetary rates have fallen dramatically in the US or stayed steady in Europe, the cost of lending has risen. Cheap credit which fueled property speculation is at an end for the moment. This has, in turn, lead to realistic lending criteria returning to the credit market where loan to value and verification processes have been tightened to normal practice.

It is true that the Irish economy is more robust than it has ever been. More people will weather this financial crisis than previously has done so in the past. That is not to say that a significant proportion of Irish people are not in financial difficulty. I had hoped that the Christmas break would see the majority of layoffs in construction occur and then a steady business climate return for this sector. Every week, though, I hear of more layoffs. These layoffs, allied with some losses in the factory sector, have had knock on effects in retail and ancillary sectors. Hopefully the spring season will see a steadying of the ship but we are none to hopeful in the northwest.

What's sadly lacking in the Irish economy is realiable data on which to make financial decisions. Unlike Britain who have several reliable and mostly unbiased sources for credit and property information, we in Ireland have to rely on partial information or hearsay. I suppose you have to move in the right circles in order to gain credible information. For example, information on the foreclosure rate in Ireland is scant to say the least. So much so, it would appear that there are very few foreclosures. Yet, I know of several people who've been through the process and several more who have effectively lost their homes but still maintain the facade of home ownership by renting the porperties off the banks. I suppose there is a certain logic in curtailing relevant information for the consumer. By doing so, those who have interests in property speculation probably hope to get another bounce out of a dying cat.

All in all, the Irish economy appears to be in better shape than it has ever been. There are several major problems of which energy is probably the most pressing along with the rise in base material prices. We are, afterall, one of the most expensive countries in which to live.

Oh, and it is quite intersting that the ISEQ had started its precipitous decline before any other major market and was the biggest losing index in the world last year. The institutional investors, who make up the bulk of trading, had reliably predicted a fall off in Irish economic acivity as the economy was so reliant on construction. These institutional investors, who with their billions in cash, decided ownership of Irish companies was a losing proposition. While they do not live in the "real" economy as some would have to believe, their ability to spot econimic trends seem to have been quite correct. The ISEQ chart is a sorry looking beast.

meriwether

Leaving aside the thorny issue of energy supplies, the fall in stock prices can be attributed in part to active lobbying in London against investing in Ireland. Ireland, they argue, is coming down from an exceptional period of growth, is experiencing a large asset bubble, and is beginning to loose pace thanks to rising costs. All of which is very true. Yet if you look at the profit figures for the ISEQ companies, they don't seem to support the pessimism. Companies floated on the exchange are, to a point, still making money. Irish goods are still being bought. Irish people are still in jobs. These are the 'fundamentals' of the Irish economy.

The 'fundamentals' of the Irish company posted gloomy revenue figures 2 days ago.
VAT - down
Income tax- Down
CGT - Down

We are now looking at a large budget defecit for the end of the year.

Etc, etc

As for our 'undervalued bank stocks' Irish bvanks are owed 100bn by property developers.
Have you seen the value of property these days?
Even a 5% default would be disasterous for Irish banks.

partholon

905 wrote: »

There was a nice little article in today's Irish Times on the subject of renewable energy. It looks like very little's been done to promote wave power, or maybe that's just my reading of it.

I think we'd need a mini crisis to get the ball really rolling on this, not just leave it till a real crisis comes along by which time it'll be too late.

Nice to see familiar names by the way, fellow exiles.

there was fcuk all investment in renewables untill recently. the guys behind wavebob, the wave power generator company, were looking to sell the whole concept to denmark because they couldnt get the government to invest in it which is insane considering the potential there.

i agree that the ISEQ has basically been a glorified betting shop the last few years. as mentioned the banks are doing as well as theyve always done yet the share price would make you think place's like bank of ireland for instance has HALFED its worth. FFS its not open to half the problems other banks are in relation to the credit crunch and sub prime loans yet its taking the flak, ok there is issues but not enough to warrent that big a drop.


if ive learned anything about the stockmarket its that those involved can generally be described as stupid, fearfull and act with a herd mentality. keeping that in mind if ya can keep your head you can do well. so long as you think LONG term. muppets going in for a quick kill will be done.

by the way if anyones interested the exchange rates today in bureau de changes for the dollar is

buy : 1.5810

sell : 1.4972

its the lowest ive ever seen the dollar. i had a customer literally make $15s more on a transaction than they would have by waiting 24 hours buy the currency.

Akrasia

partholon wrote: »

there was fcuk all investment in renewables untill recently. the guys behind wavebob, the wave power generator company, were looking to sell the whole concept to denmark because they couldnt get the government to invest in it which is insane considering the potential there.

i agree that the ISEQ has basically been a glorified betting shop the last few years. as mentioned the banks are doing as well as theyve always done yet the share price would make you think place's like bank of ireland for instance has HALFED its worth. FFS its not open to half the problems other banks are in relation to the credit crunch and sub prime loans yet its taking the flak, ok there is issues but not enough to warrent that big a drop.


if ive learned anything about the stockmarket its that those involved can generally be described as stupid, fearfull and act with a herd mentality. keeping that in mind if ya can keep your head you can do well. so long as you think LONG term. muppets going in for a quick kill will be done.

by the way if anyones interested the exchange rates today in bureau de changes for the dollar is

buy : 1.5810

sell : 1.4972

its the lowest ive ever seen the dollar. i had a customer literally make $15s more on a transaction than they would have by waiting 24 hours buy the currency.

I don't know if the irish banks are undervalued now, or if they were hugely over valued during the property bubble.

They certainly milked it for every penny, but now they're left with 'assets' that could very quickly turn into liabilities. Their exposure to the Irish Commercial property market (never mind residential) is more than the entire value of all of their deposits. A few big defaults, writedowns and a run could make a bank insolvent very quickly.

Akrasia

The ISE is down another 70 points this morning. It might break the magic 6000 figure today or early next week. If that happens it will be a massive 40% collapse in value in less than a year.

The media report the ISE on a day by day basis 'the ISEQ is up by 1% or down by 1% today, and they often use words like 'the iseq staged a recovery today' to mask the severity of the situation.
The business news headlines very rarely inform the public that the value of Irish companies have fallen by 40% since the peak of the bubble.

partholon

yeah there is a fair bit of messing about in the media on this.

personally i think shares were massively overvalued and now thanks to the forty percent slump are either where they should be or maybe actuallly undervalued in certain cases

take what you said about the banks. i admit im open to some shock i never saw coming scuppering this but i reckon bank of ireland is undervalued. and im actually thinking of investing in it long term, ditto for CRH. I honestly dont see either of those two going anywhere in the long run and as a joe soap punter the divident off em is a good enough incentive . AIB and permanent tsb though scare the **** out of me. as you said theyre WELL exposed to a big developer defaulting on his loan which is looking more and more likely condsiderng the stories of developers renting out their stock to make the repayments and ive seen pleanty of business premesis lying idle for years so how the hell theyr meant to flog the new stock is beyond me.

i think the opertunety to do well is there but its definetly buyer beware territory.

Auditor #9

I think you're right about BOI being undervalued.

If they only give Ryanair the commission for using the Laser card ... :rolleyes:

The_Minister

Can I suggest that this be moved to the Economics forum?
This is more economics than politics (so far anyway)

Auditor #9

The_Minister wrote: »

Can I suggest that this be moved to the Economics forum?
This is more economics than politics (so far anyway)

Or you could politicise the thread and save the moderator some work.

gurramok

Its no coincidence it has plummeted during the first year of a housing crash at home.

Out of the top 10 Irish companies, most are either banks or construction related. Which ones are independent of the property market?(i can name Ryanair of the top of my head...struggling to name more big ones!)

It takes no einstein to figure out what will happen to these companies in a housing crash.

partholon

thats a very good point. was watching the top 50 earners on rte around the begining of the year and practically everyone in the top 20 was either a property developer, supplied the materials for property , or was in the hotel trade.

id say someone like CRH will be ok thanks to the massive contracts they have in china and america but the local guys like kingspan could be in trouble.

considering these guys are the main donators to politicians and frequent the FF tent at the galway races it makes you wonder what clout they'll bring to bear during a crash. could also explain the "everythings grand, stop talking down the economy" mentality that pervades certain sectors. these are the guys that spend money on advertising so i wouldnt be surprised if they put a bit of preasure on the media too. i.e shut up or ill pull my adverts. i was reading the freebie herald today and practically the whole paper was adds for property.

oscarBravo

Moved from Politics.

daveirl

This post has been deleted.

portomar

if this week finishes significantly up, we're lookig at a double bottom.

ps if you meet a single currency naysayer, ask him/her where the punt would be if the iseq was down 26% and economy was looking asit is now,

Akrasia

portomar wrote: »

if this week finishes significantly up, we're lookig at a double bottom.

ps if you meet a single currency naysayer, ask him/her where the punt would be if the iseq was down 26% and economy was looking asit is now,

There's no fear of the ISE finishing up this week.

Right now it's hovering at 75 points above the magic 6000 mark, down almost 200 points so far today.

As for the Euro vs punt. If we had retained our own currency, it is less likely that the Irish economy would have overheated so much in the first place. We would not have had such low interest rates over the last 8 years and the Irish punt would have been much stronger than the euro during the celtic tiger which would have dampened the economy.


Right now, we need low interest rates and a weak currency to stimulate the economy, but the euro is rising against all of our trading partners and the interest rates are not coming down any time soon (despite what the shills at IIB and the estate agents try to tell you)

portomar

Akrasia wrote: »

There's no fear of the ISE finishing up this week.

Right now it's hovering at 75 points above the magic 6000 mark, down almost 200 points so far today.

As for the Euro vs punt. If we had retained our own currency, it is less likely that the Irish economy would have overheated so much in the first place. We would not have had such low interest rates over the last 8 years and the Irish punt would have been much stronger than the euro during the celtic tiger which would have dampened the economy.


Right now, we need low interest rates and a weak currency to stimulate the economy, but the euro is rising against all of our trading partners and the interest rates are not coming down any time soon (despite what the shills at IIB and the estate agents try to tell you)

agreed on the interst rate front. incidentally, what real control would we have had in a world where we have pound and euro surrounding us? same control denmark does over its interest rates? in reality, we had a currency pegged to the pound for interest rate purposes and would continue to have same without EMU. we have simply ceeded control to frankfurt, with a say in our currency rather than a tiny currency we have, realistically no control over. p.s. do you think intel, dell, google, pfizer want to deal in a tiny european currency subject to the kind of ructions suffered by iceland a couple of years ago, or in the prevailing currency of the market they are in ireland to sell into?