The Irish Stock exchange is very small, but it may still provide investment opportunities for interested investors...
Anyone interested in buying stocks has heard of the Dow Jones index, and probably also the NASDAQ, the NIKKEI and the FTSE. However, just because these are the best known exchanges doesn't mean that there is no money to be made elsewhere.
The Irish Stock Exchange uses an index called the ISEQ. It is very small, with only about 80 quoted companies. Like any other exchange, prices change daily and money can be made or lost very quickly. The exchange only became computerised in mid- 2000. Online trading should be available from 2001.
Front-line stocks
The biggest names on the Irish exchange include the two main Banks (Allied Irish Banks and Bank of Ireland), a large building materials company (Cement Roadstone Holdings), a telecommunications company (Eircom, who had a state monopoly until a few years ago), and a paper and packaging company (Smurfit). These companies are not small, even by international standards. Smurfit is probably the biggest paper company in the world since it became a major shareholder in the Stone Corporation, and both of the big banks have international holdings (Allied Irish own the First Maryland bank as well as a number of Polish banks).
Exploration stocks
There are a number of small exploration companies listed on the exchange. These include Tullow Oil, Providence, Dana Petroleum, Tuskar and Kenmare. Like any other exchange, these stocks can rise very sharply if there is even a hint of a large find. Recent speculation about Providence Oil sent the stock price from 35 pence to 60 pence for 10 units, a rise of about 70 %. Recent finds off the West coast provide further evidence of the potential for exploration companies in Ireland.
Technology stocks
Ireland is the silicon valley of Europe. Many of the major world players have their European bases in Ireland. Some of the local companies have made it big on the world stage, including Trintech and Baltimore, which are listed on the Nasdaq. Iona, Riverdeep and Horizon Technology are all listed on the Irish exchange.
Other Stocks
The other main stocks are pharmaceutical (Viridian and United Drug) and Food companies (Glanbia, Greencore, Golden Vale and of course Kerry, which may be the largest food company in the World).
Why the ISEQ?
Well, the ISEQ has been doing pretty badly in the first 6 months of 2000. Many of the large companies are way below their highest values. In July 2000 the two main banks are at about 60 % of their best 1998 values. At 1.94 Euros, Smurfit is floundering at about 65% of its value just 5 months ago. At 2.73 Euros Eircom is currently also 40 % off its best price of about 4.85 Euros. There are simple explanations for this. Ireland is very dependant on world trends. At present may telecoms stocks are much lower than their price earlier in the year. The banks are suffering since the advent of the Euro, despite the fact that they have international holdings and appear to be sound if you look at the standard measurements of investments and costs. Smurfit is heavily dependant on world paper prices and inventories and has suffered recently because of high inventories. However, it is a cyclical problem, and there is money to be made if you can evaluate the cycle. Recently one of the main Irish stockbrokers gave a positive recommendation for Smurfit.
In 1999 many international investors came to the conclusion that the Irish economy was overheating and that it would be wise to pull out before a crash came. Some 12 months later, the Irish economy is still growing at an astonishing rate. There are certainly problems, including lack of labour and relatively high inflation, but the economy is still surging ahead, and the latest indications are that this trend will continue for many years to come. There is always a risk with buying stocks and the same is true of the ISEQ. Given the current low price of several major stocks, however, there may be an opportunity to buy in several sectors at an attractive price.
If you want to keep track of Irish prices, you can look at the websites of several organisations including NCB stockbrokers and Goodbody stockbrokers. Business news can also be found in the major newspapers, such as the Irish Times (www.ireland.com) the Irish Examiner (www.examiner.ie) and the Sunday Business Post. Statistics for a wide range of areas can be found at the Central Statistics Office. After that, the analysis is up to you.
