Good climate for patient investor

Those Irish investors who adhered to the old stock market adage "sell in May and go away" return to a market that offers much better value than that available three months ago.

Analysts and fund managers believe that the Irish market, which has lost more than 7 per cent over the last two days, now offers very good value for the long-term investor, although conditions are still too turbulent to suit those who want to make "a quick buck".

"Fundamentally, Ireland is in very good nick. The earnings story here is still very good," said Mr Gerry Mangan, director of Irish equities at Friends First. He believes there is "terrific value" in certain Irish equities and cites a stock like CRH, with little exposure to any of the world's financially troubled regions. Having traded as high as £11.25 earlier this year, CRH briefly dipped to £7 this morning, its lowest level to date this year.

The interim reporting season, which gets into full swing next week with results from a host of leading Irish blue-chips, including CRH and Kerry, should confirm the positive earnings outlook for certain industrial shares in particular.

Already, there is evidence of some bargain-hunting by institutional investors in the Irish market but analysts believe that calm is unlikely to return to Irish equities until things settle down globally.

"The Irish market does not operate in a vacuum," said Mr Frank O'Brien, investment director for Irish equities, at Irish Life Investment Managers (ILIM). He believes that the response of Wall Street and the US economy to the current crisis will be key factors in the weeks ahead. In particular, the behaviour of US mutual funds, a major driver of Wall Street's rally, will be a key indicator.

Another crucial issue for stock markets worldwide is the western response to the crisis in Russia, Irish analysts said. Although there has been little sign of any co-ordinated action to date, many believe that a package of some sort will have to be organised to help the Russians and restore calm to world markets.

Meantime, the Irish market, along with other worldwide markets, could be in for a few more difficult weeks. Exacerbating the downward trend in the Irish market this week has been the retreat of international investors - especially US fund managers who were heavy buyers of the Irish market in the early part of the year - to their own markets, analysts said.

"International flows into Irish equities are being reduced and there are no natural buyers as Irish institutions are already significant holders of Irish equities," said Mr David Lowe, equity strategist at Goodbody Stockbrokers.

Until the nerves of international investor are calmed and they can be tempted back into the market, Irish shares are likely to face some tough times.