Irish Stock Market Plummeting

The above link only shows the performance in absolute terms and % terms of the different ISEQ indices.

Nothing to do with rebalancing of the ETF.
 
The point is the financial index has done a lot worse than the general index over the last year. Therefore financial stocks make up less of the overall index than they did a year ago.
Taken to extreme if the financial index fell to zero, financials would have a zero weighting in the overall index.
This is one of the characteristics of index funds/trackers. Outperforming sectors/stocks gain increasing weightings in the index while the weighting of underperforming sectors falls.
 
tyoung said:
This is one of the characteristics of index funds/trackers. Outperforming sectors/stocks gain increasing weightings in the index while the weighting of underperforming sectors falls.
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But it is historic performance that is being tracked...in other words the weighting to financial is now lower because financial has had a crap month BUT when financials started collapsing their weight would have been high so an ETF would have been badly hit by the decline of financials.
 
Hi Joe

One broker says he would not be buying bank shares.
Two brokers say that they would.

It seems to me to be news reporting and not advice.

They give further information:
Irish banks don't punt much with their finances.
AIB reported buying some distressed loans recently at good prices.


Brendan
 
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It is interesting to note that the business media are playing down the slump in the iseq but it is the opposite with other commentators even brendan o connor who is more likely to be commenting on trivia.
 
Well the iseq has been falling pretty steadily since summer now at 7,500. however it was at this level at the beginning of 2006 at the height of the property boom therefore i think it has some way to go yet, maybe 6000 or 6500 will see resistance and buyers attracted back into the market
 
ISEQ is down another 3% today. What is rather amazing about this slide which is now near 30% from year highs is that all other stock markets - including Eurostoxx as well as the Dow and FTSE - have lost single digit %s.

Why is the ISEQ being hammered so disproportionately? Construction and banking seem particularly badly affected but are we to believe that AIB have same / greater exposure to the American mortgage mkt and subprime woes as the big American banks?

It seems that the market is discounting a full blown recession here in Ireland, where apart from froth in the property mkt - currently unwinding - the economic basics are still v.positive. While in the States the market has been merrily shuttling back and forth between all time highs of 13-14,000 DOW eventhough all indicators look terrible except GDP growth - dollar collapsing, huge deficits, property bubble bursting.

Final comment: the DOW is clearly due a major correction. If and when that comes, will the ISEQ keep on tanking downwards?

Woe is me, Stan
 
stanbowles said:
Why is the ISEQ being hammered so disproportionately? Construction and banking seem particularly badly affected but are we to believe that AIB have same / greater exposure to the American mortgage mkt and subprime woes as the big American banks?
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First of all the ISEQ is very heavily biased towards banking and construction compared to other larger broader-based indices.

Secondly, it has had an amazing run, going up much higher and faster than the main global indices. So, I guess it had farther to fall.

Even after the 30% fall this summer and autumn, the 5 year performance of the ISEQ is up 70%, compared to 60% for the FTSE 100 for the same period.
 
thanks gonk, this is interesting information ... but I'm not sure that it really answers the question as to why the ISEQ is so out of line and uncorrelated with other stock markets ...

... it is easier to adduce reasons for the mark up of Irish shares in recent years - increased profitability - than to point out what explains a 30% fall in recent months when other markets apparently more exposed to risk have fallen marginally if at all. P/Es of most of the top Irish companies remained comparatively undemanding even as shares went up in recent years. Now they are according to Davys in their daily market report at 'historical' lows (yep, I guess, they would say that). Following is excerpt from http://www.rte.ie/business/2007/morningrep/download/1108davy.pdf

"As a result, the forward P/E on the market has fallen to 8.7x. That is the lowest on record since we began calculating Irish market P/Es in the mid-1980s. The discount relative to the E300 has widened out to 32%, having traded at parity as recently as last March.
All of the top four stocks (the three banks and CRH) are trading on historically low P/Es. And the P/E on Bank of Ireland, at 6.3x, is now significantly lower than the prospective yield of 6.9%. The 'rump' of ALBK now trades on a P/E of not much more than 4.5x."

Buy, buy, buy, bye, bye. Stan.​
 
yoganmahew

Please reacquaint yourself with the Posting Guidelines.

Do not discuss the valuation of individual shares. TYoung's use of a company to illustrate a point is ok.

Discussing financial shares generally is ok.

BrendanAdministrator
 
stanbowles said:
... it is easier to adduce reasons for the mark up of Irish shares in recent years - increased profitability - than to point out what explains a 30% fall in recent months when other markets apparently more exposed to risk have fallen marginally if at all.
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Well, here's one possible explanation from this morning's Irish Times:

'Financial stocks have lost more than a third of their value so far this year - and are now more than 40% per shy of the peak they hit last February. As usual the banks were the main contributors to the declines, with one dealer saying that international investors simply had no desire to put their money into anything vaguely on the periphery - and that's just where Ireland is considered to be. "It's seen as okay to lose money on Citigroup, but not on the likes of Anglo [Irish Bank]," he said.'
 
Folks

This is an important topic. Please stick to the Posting Guidelines.

We do not discuss the valuation of individual shares.

This has become even more critical since the introduction of the Markets Abuse Directive which led to Phoenix Magazine being fined for their coverage:

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[FONT=Verdana,Bold]
[FONT=Verdana,Bold]
Market Abuse (Directive 2003/6/EC) Regulations 2005
(‘the Market Abuse Regulations’)

Settlement Agreement
between the Financial Regulator and
Penfield Enterprises Ltd and Mr John Mulcahy (‘the publisher’)

[/FONT]
The Financial Regulator has concluded a Settlement Agreement with effect from 30 October 2007 with Penfield Enterprises Ltd t/a The Phoenix magazine and the publisher in relation to breaches which occurred of the disclosure requirements in relation to recommendations with respect to financial instruments included in Regulations 18 and 21 of the Market Abuse Regulations.

The matter has been settled on the basis that the breaches are admitted, a fine of €5,000 has been imposed and new measures are to be introduced by the company to support compliance with the Market Abuse Regulations in the future.
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​
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Brendan
 
yoganmahew said:
yoganmahew

Please reacquaint yourself with the Posting Guidelines.

Do not discuss the valuation of individual shares. TYoung's use of a company to illustrate a point is ok.

Discussing financial shares generally is ok.

BrendanAdministrator
Click to expand...
Hi Brendan, I was replying to stanbowles quote of a Davy report saying the big 4 in Ireland represent good value and his "buy, buy, buy" recommendation.

Whether or not these shares are good value is a matter of opinion.

What I was trying to do was to counter the obscenely upbeat notes from Irish analysts that are at odds with the views of many international commentators.

Maybe I can rephrase my point as looking at current p/e ratios in a rapidly changing global economy with specific sectoral risks in housing, construction and the financing of both is not a reliable method of projecting forward p/e ratios.
 
That's fine.

It can be difficult to have such a discussion without talking about individual shares, but it's an important Posting Guideline.

Brendan
 
35% fall in about 9 months while most other markets are flat to up. Even for the volatile Irish market this is extraordinary.
 
tyoung said:
35% fall in about 9 months while most other markets are flat to up. Even for the volatile Irish market this is extraordinary.
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I agree. Wouldn't surprise me if there was significant shorting of the index and certain shares in it by hedge funds.
 
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