Just wondering does anybody have any opinions on what effect a property bubble burst would have on the Irish Stock Exchange? What would the likely senario be?
Panic selling on huge volume. A lot of private investors will be panicked to sell out and the big boys will mop up the bargains. Similar anatomy to most crashes.
Companies which have a huge exposue to the irish market will be effected most (such as banks) whereas international ones (Ryanair, CRH) should be able to ride out the storm IMO
Could it also be possible that there might be alot of cash diected towards Irish equties from investors no longer willing to invest in property, not to mention the ones who will sell up and have cash to spare. Am I talking rubbish here??
As warren buffet said once "when the tide goes out we find out who has been swimming naked'
i think alot of the shares on the ISEQ are foreign owned and they will be the first out if they sense trouble. Irish people seem to be mostly invested in property itself not in shares. I cannot see people jumping from one supposedly safe investment back into equities, they will be looking for something more secure than property not less.
Suggest you avoid this particular worry by diversifying out of the ISEQ into funds based on other countries or regions. Get a diversified European fund(s), which will probably contain some ISEQ exposure, and maybe invest further into usa or asia.
The ISEQ, or in particular the ISEQ 20 ETF is overexposed to just a few stocks, mainly financials.