EQUITIES STILL SHOWING VALUE DESPITE 25% PLUNGE - It was another bad day for Irish banks yesterday with Irish Life and Permanent closing 10% lower after being downgraded by ratings agency Standard & Poors. Bank of Ireland lost 6% of its value while Anglo Irish Bank closed 8.5% lower. It proved a glum end to the first half of the investment year. So far this year, the ISEQ has lost 25% of its value, wiping €23 billion off the value of Irish shares.
Eugene Kiernan, of AIB Investment Managers, says the story of Irish shares has been mirrored more or less around the world. In terms of winning sectors globally, the likes of resources and energy stocks are to the forefront. Irish energy stocks, despite their small size, Elan and some of the food companies have done much better than the financial and building stocks. Mr Kiernan admits that the situation is very difficult at the movement, whether someone is a pension trustee or someone is putting money into a fund on a regular basis. He points out that some of the recent falls on the ISEQ is due to what is going on on a global basis, but adds that the added kicker is companies' exposure to the economy, where there has been a downshift.
Mr Kiernan says it is important for people to realise that they need to take a medium to longer term view in terms of the values. He says he believes that there is value out there, but one can't rule out the 'savage' days like yesterday threw up.
Evelyn Ryder, of pension investment consultants Hewitt Associates, says she anticipates that the average managed pension fund will have fallen by 15% in the first six months of the year. June was the worst month for pension funds, January was 'not great' with a little bit of a recovery at the start of the second quarter. However, this was taken away with the poor performance of stocks last month. Ms Ryder advises that pension investment is for the long term and while a fall of 15% sounds bad, it comes on the back of four years of double digit returns. She says that five year returns are probably close to 5% a year.
The pension expert says the industry is seeing a lot of diversification in people's portfolios. Most of the large companies have diversified away from Ireland because the Irish stock exchange is concentrated on key sectors - financials and construction.
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MORNING BRIEFS - The online auction giant Ebay has got itself into trouble in France. A court in Paris has ordered to Ebay to pay damages of €40m to fashion house Louis Vuitton for allowing fake luxury goods to be sold on line and breaching the authorised distribution network for various luxury goods. Part of the ruling means Ebay must stop selling Christian Dior, Kenzo and Givenchy perfumes. Ebay says it is appealing.
*** On the currency markets, the euro is worth $1.5762 cents and 79.13 pence sterling.
