Free State Stock Exchange worst in Western World 2007
It’s downhill all the way in a dismal year 30 December 2007 By David Clerkin Sunday Business Post As one of the worst-performing stock exchanges in the western world, with investors ruing share price freefalls of up to 90 per cent, it was a year to forget for the battered Iseq. For most investors in Irish stocks, the best that can be said about 2007 is that it’s over. Unlike 2006,when the Dublin market tanked by 25 per cent in the second quarter before rewarding those who held their nerve with spectacular gains over the remainder of the year, this year had nothing but punishment for shareholders who clung on to their investments, hoping for a recovery that never materialised. It was one of the Iseq’s worst years on record, as the Irish market stood out among its worldwide peers for all the wrong reasons. A 26 per cent fall since January masked the full extent of the bad news, as a strong performance in the first two months of the year brought the Iseq to an all-time high of 10,000 in February, before crashing by as much as 37 per cent by the time the horror show was in full swing last month. Despite a limited bounce in the final few weeks of trading, the Iseq will finish the year over 30 per cent off its peak - making Dublin the worst-performing stock exchange in western Europe by a country mile this year and one of the main challengers for the unwanted crown of worst-performing exchange in the world. By contrast, New York’s Dow Jones added 8 per cent, London’s FTSE 100 was 4 per cent ahead, Paris’s CAC broke even and the Frankfurt DAX had a stellar 22 per cent gain. Even Japan’s Nikkei, which has been so unloved in recent years, will limit its fall to 11 per cent. With only a handful of exceptions, however, Dublin-quoted stocks did little other than dive during 2007.The exchange was the victim of what had made it such a success in recent years - being over-reliant on banking and construction stocks, which make up in the region of 60 per cent of the Iseq. When these sectors were in vogue - as they were for years until this one - Dublin raced away, leaving bigger and more diversified markets floundering in its wake. But, what goes around comes around. This year was the time to dump banks across the globe, as the sub-prime crisis kicked in and investors needed reasons to be convinced that holding bank stocks would not cost them money. Irish banks, however, faced even greater pressure than most, as investors also fretted about their exposure to property lending at a time when the Irish housing market went into reverse. Just as overseas fund managers in Europe, North America and Asia had been quick to buy into Irish stocks after years of uninterrupted share price rises and a favourable economic back drop that had been the envy of the developed world, many rushed to offload their exposure to Ireland as the first signs of a decade-long party coming to an end made their appearance. The main banks and the country’s biggest publicly-quoted construction companies saw their share prices halved from their peaks during the year, before ending 2007 in the foothills of what investors pray will be an upward curve. Bank of Ireland and Irish Life and Permanent - seen as the two lenders most reliant on the mortgage market - saw their share prices fall 40 per cent during 2007, while AIB and Anglo will end the year some 30 per cent off the levels at which they started it. On the construction side, cement giant CRH began the year with a rip-roaring surge that made it Ireland’s biggest plc by market capitalisation. But a subsequent 45 per cent slide from its all-time high in June meant it would see out 2007 some 25 per cent off its opening price. Its market value tanked from €21 billion to €13 billion in the space of six months, allowing AIB to nip in just as the year ended to reclaim its spot at the top of the plc table. CRH was not alone among construction stocks to feel the pinch. Building materials group Kingspan saw its eye-popping run come to an end, as it share price tanked 55 per cent from its all-time high last May. A downbeat trading statement in December saw it finish the year almost 50 per cent below its opening price. The news was little better at builders merchant and DIY group Grafton, which, after years in the limelight as one of the Irish darlings of overseas investors, crashed to earth with a 60 per cent slide. But the casualties were not confined to the obvious targets in banking and construction. C&C’s share price imploded after a strategy of concentrating on cider, and disposing of its other drinks and snacks businesses backfired spectacularly. The company will end 2007 worth 70 per cent less than its market value at the start of the year, as stepped-up competition from heavier hitters threatened to wipe out the inroads it had made in the British market. Other Irish plcs whose share prices jumped off a cliff included Waterford Wedgwood, which fell almost 80 per cent during the year, after it announced yet more emergency fundraising and additional restructuring. The luxury goods group displayed just how acute its cash problems had become when it admitted it had, at one point, run out of cash to keep its production lines going and was forced to scale back production until the proceeds of a fundraising round came through. Drug company Amarin eclipsed Waterford’s fall with a 90 per cent collapse in its share price, that was driven by a reversal in the fortunes of one of its core drug projects. Other notable fallers included house builders McInerney and Abbey, whose share prices halved; bathroom ware specialist Qualceram Shires, which tumbled almost 60 per cent; media group UTV, which fell almost 50 per cent; and property management group Veris, which suffered a 50 per cent fall. But there were some Irish plcs that gave investors plenty to cheer about. Bookmaker Paddy Power was one of the Iseq’s top performers, with a gain of almost 60 per cent. Tullow Oil almost doubled in value after several successes in its African exploration projects, while investors in food groups Kerry and Glanbia were in the black as their companies made the most of improved sentiment towards the sector. It wasn’t all bad news. But it wasn’t far off it.
It’s downhill all the way in a dismal year 30 December 2007 By David Clerkin Sunday Business Post As one of the worst-performing stock exchanges in the western world, with investors ruing share price freefalls of up to 90 per cent, it was a year to forget for the battered Iseq. For most investors in Irish stocks, the best that can be said about 2007 is that it’s over. Unlike 2006,when the Dublin market tanked by 25 per cent in the second quarter before rewarding those who held their nerve with spectacular gains over the remainder of the year, this year had nothing but punishment for shareholders who clung on to their investments, hoping for a recovery that never materialised. It was one of the Iseq’s worst years on record, as the Irish market stood out among its worldwide peers for all the wrong reasons. A 26 per cent fall since January masked the full extent of the bad news, as a strong performance in the first two months of the year brought the Iseq to an all-time high of 10,000 in February, before crashing by as much as 37 per cent by the time the horror show was in full swing last month. Despite a limited bounce in the final few weeks of trading, the Iseq will finish the year over 30 per cent off its peak - making Dublin the worst-performing stock exchange in western Europe by a country mile this year and one of the main challengers for the unwanted crown of worst-performing exchange in the world. By contrast, New York’s Dow Jones added 8 per cent, London’s FTSE 100 was 4 per cent ahead, Paris’s CAC broke even and the Frankfurt DAX had a stellar 22 per cent gain. Even Japan’s Nikkei, which has been so unloved in recent years, will limit its fall to 11 per cent. With only a handful of exceptions, however, Dublin-quoted stocks did little other than dive during 2007.The exchange was the victim of what had made it such a success in recent years - being over-reliant on banking and construction stocks, which make up in the region of 60 per cent of the Iseq. When these sectors were in vogue - as they were for years until this one - Dublin raced away, leaving bigger and more diversified markets floundering in its wake. But, what goes around comes around. This year was the time to dump banks across the globe, as the sub-prime crisis kicked in and investors needed reasons to be convinced that holding bank stocks would not cost them money. Irish banks, however, faced even greater pressure than most, as investors also fretted about their exposure to property lending at a time when the Irish housing market went into reverse. Just as overseas fund managers in Europe, North America and Asia had been quick to buy into Irish stocks after years of uninterrupted share price rises and a favourable economic back drop that had been the envy of the developed world, many rushed to offload their exposure to Ireland as the first signs of a decade-long party coming to an end made their appearance. The main banks and the country’s biggest publicly-quoted construction companies saw their share prices halved from their peaks during the year, before ending 2007 in the foothills of what investors pray will be an upward curve. Bank of Ireland and Irish Life and Permanent - seen as the two lenders most reliant on the mortgage market - saw their share prices fall 40 per cent during 2007, while AIB and Anglo will end the year some 30 per cent off the levels at which they started it. On the construction side, cement giant CRH began the year with a rip-roaring surge that made it Ireland’s biggest plc by market capitalisation. But a subsequent 45 per cent slide from its all-time high in June meant it would see out 2007 some 25 per cent off its opening price. Its market value tanked from €21 billion to €13 billion in the space of six months, allowing AIB to nip in just as the year ended to reclaim its spot at the top of the plc table. CRH was not alone among construction stocks to feel the pinch. Building materials group Kingspan saw its eye-popping run come to an end, as it share price tanked 55 per cent from its all-time high last May. A downbeat trading statement in December saw it finish the year almost 50 per cent below its opening price. The news was little better at builders merchant and DIY group Grafton, which, after years in the limelight as one of the Irish darlings of overseas investors, crashed to earth with a 60 per cent slide. But the casualties were not confined to the obvious targets in banking and construction. C&C’s share price imploded after a strategy of concentrating on cider, and disposing of its other drinks and snacks businesses backfired spectacularly. The company will end 2007 worth 70 per cent less than its market value at the start of the year, as stepped-up competition from heavier hitters threatened to wipe out the inroads it had made in the British market. Other Irish plcs whose share prices jumped off a cliff included Waterford Wedgwood, which fell almost 80 per cent during the year, after it announced yet more emergency fundraising and additional restructuring. The luxury goods group displayed just how acute its cash problems had become when it admitted it had, at one point, run out of cash to keep its production lines going and was forced to scale back production until the proceeds of a fundraising round came through. Drug company Amarin eclipsed Waterford’s fall with a 90 per cent collapse in its share price, that was driven by a reversal in the fortunes of one of its core drug projects. Other notable fallers included house builders McInerney and Abbey, whose share prices halved; bathroom ware specialist Qualceram Shires, which tumbled almost 60 per cent; media group UTV, which fell almost 50 per cent; and property management group Veris, which suffered a 50 per cent fall. But there were some Irish plcs that gave investors plenty to cheer about. Bookmaker Paddy Power was one of the Iseq’s top performers, with a gain of almost 60 per cent. Tullow Oil almost doubled in value after several successes in its African exploration projects, while investors in food groups Kerry and Glanbia were in the black as their companies made the most of improved sentiment towards the sector. It wasn’t all bad news. But it wasn’t far off it.