INSOLVENCIES SET TO INCREASE AS THE YEAR GOES ON - More insolvencies were recorded in the first six months of this year than in all of 2008. Figures out today from Insolvency Journal.ie show that almost 800 companies went out of business between January and June, or four companies a day. Export-led companies are coping better than expected, while construction has been the hardest hit.
Tom Kavanagh, from insolvency practice Kavanagh Fennell, says the numbers of receivers appointed in the first six months of the year amounted to 118. This compares with 43 the same time last year. He says that banks are moving into 'recovery mode' and want to get back some of their investments. He points out that the figures do not include personal asset receiverships. Mr Kavanagh predicts that the numbers of companies going under will continue to increase over the coming months and says that corporate insolvencies could reach as high as 1,800 by the end of the year. He also says that there will be a time lag of up to two years before companies get to see the benefits of the end of the recession.
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IRISH BANKS FALL ON ECONOMIC UNCERTAINTY - Irish bank shares fell to their lowest level in over a year yesterday as it emerged the €440 billion European Stabilisation Fund could face a two-week delay because of opposition from Slovakia. The fund is designed to help countries with problems borrowing money on international markets. Spain, Greece, Ireland and Portugal were set to be the main beneficiaries. As a result, Irish banks suffered. AIB shares dropped over 8% to 80 cent and are now 50% lower than a year ago. Bank of Ireland shares fell by 6.5% to 61 cent, and are almost 40% below the level they were are a year ago. Irish Life and Permanent shares fell nearly 8% to €1.40, a 15 month low. The markets were also hit by fears that the global economy will be slower to recover after figures on US jobs, home sales and factory data disappointed. Together with the figures from China showing growth is slowing, puts the double dip recession fears back into the market.
Eoin Fahy, of KBC Asset Management, says that yesterday's falls on stock markets was a combination of a number of things. But he says that the European Stabilisation Fund is designed never to be used as it is an insurance policy. He says the delay is quite trivial. He adds that while the Chinese data is unwelcome, the downward trends are relatively small. He says the markets are being battered by uncertainty - banking liquidity problems, economic growth fears and the sovereign debt concerns from the likes of Greece and Spain. Mr Fahy predicts a summer of volatility and says that when volumes are low on exchanges - as happens during the summer months - any piece of economic data can have a dramatic effect on shares.
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MORNING BRIEFS - British Airways boss Willie Walsh has called on the Irish government to scrap the ten euro travel tax and said BA won't open any new routes to Ireland because of high airport charges and weak domestic conditions. Speaking at Trinity College, he described the tax as 'crazy' and 'counterproductive' for business and tourism.
*** On the currency markets this morning the euro is trading at $1.2490 cents and 82.36 pence sterling.
