DAVY PREDICTS DOUBLE DIP RECESSION FOR EURO ZONE THIS YEAR - In a forecast for 2012, Davy Stockbrokers says it is likely that the euro area will experience a double-dip recession. Davy says the combination of weak domestic demand and slowing export growth paints a grim picture for the Irish economy this year. It expects Irish GDP growth to slow, and that companies will delay making investments because of uncertainty and weakening confidence following the intensification of the European debt crisis.
Barry Dixon, head of research at Davy, says that the poor economic trends of the second half of 2011 appear to be continuing into 2012. Consumers continue to remain retrenched and businesses are afraid to invest until they see some improvements in consumer sentiment, while austerity moves by governments around the world continue to hit capital spending projects. The global slowdown is set to further impact Ireland as it slows our relatively strong export growth.
On the markets, Mr Dixon says that equities will find it difficult to make real progress this year. He says potential investors should look to companies which have strong balance sheets and which will be able to grow despite the problems in the macro-economic environment. He says he would prefer US markets over European markets, as good economic data from the US implies a good recovery there. He also says he would favour Latin American markets over Asian Pacific stock exchanges. He adds that emerging markets will continue to make good progress, despite a moderation from last year's growth levels.
Among his top Irish stock picks for 2012 are Kerry, Glanbia and Paddy Power.
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MORNING BRIEFS - Building materials group CRH has said it spent about €400m in the second half of last year on 23 acquisition and investment initiatives, bringing the total 2011 development spend to €600m. The deals included companies in Belgium, Finland, China, Ukraine, France and the US.
*** Figures for 2010 just filed at the Companies Office say that pre-tax losses at the Shelbourne Hotel narrowed to just over €900,000 in 2010, compared to losses of €4.56m in 2009. The improved performance comes despite a €500,000 fall in revenues to €22.3m in the year. At the end of 2010, Shelbourne Hotel Holdings owed €286.3m to creditors, with €137m of that in bank loans. Property developers including Bernard McNamara, David Courtney and Bernard Doyle bought the Shelbourne for €140m in 2004 and spent millions refurbishing the hotel and its 265 rooms. After a property writedown in 2008, the directors valued the hotel at €90m.
*** Demand for Bentley cars has gone back up to pre-recession levels. The UK based car firm's figures show a 37% rise in sales in 2011. The firm sold 7,003 cars last year. The US continues to be Bentley's number one market with 2,021 cars sold in 2011, an increase of 32%. China took second spot with sales almost doubling to 1,839, surpassing the previous year's record and knocking the UK out of second spot.
*** On the currency markets the euro is trading at $1.3036 cents and 83.34 pence sterling.
