Irish institutional investors are continuing to switch their funds out of Irish stocks and into eurozone companies, a factor which is continuing to depress the value of shares quoted in Dublin.

Research by Hibernian Investment Managers and Merrion Capital this week also shows very little appetite among European investors for the Irish market and both suggest financial stocks are still vulnerable to sell-offs despite good fundamentals.

Hibernian states that, while the new economy sectors remain under pressure, Ireland could do reasonably well given the weighting of traditional sectors in the index.

"We believe that technology, media and telecom stocks will reassert themselves at some point and, given the ongoing uncertainty for financial stocks regarding the impact of the Internet on their underlying business, the recent pace of the gains in ISEQ, which has seen the index rise over 26 per cent in the last five months, are unlikely to be maintained in the longer term."

Meanwhile, Merrion Capital notes that euro-zone equity holdings are still concentrated in three companies, AIB, Bank of Ireland and Irish Life and Permanent. And while these stocks remain on attractive ratings and offer the best plays on the Irish economy to investors, Merrion suggests that these stocks remain highly vulnerable to future selling by domestic institutions.