This Week In The Markets

The Footsie above 6,000, the Dow roaring away above 8,000 and the Irish market testing new highs with each successive day. It was another extraordinary week on the markets and there seems nothing on the horizon to bring this record-breaking bull market to an end. The ISEQ Index is now 600 points above the level which analysts had forecast for the end of 1998

Happy are those who bought into the market a week ago, even happier are those who bought into Bank of Ireland having more than doubled their money in the past year.

It's a long long way back to the bad old days of the First New Hampshire debacle, but Bank of Ireland's recovery over the past five years to a position where it is once again challenging AIB for the number one position in the market has been quite astonishing.

In simple terms, an investor could have bought Bank shares four years ago for around 250p - those same shares are currently trading in the market above £15.50. Enough said! The spur for the latest surge in the shares has been unprecedented demand from overseas investors, and 50p upward movements in the share price in one session - while not a regular occurrence - are no longer seen as remarkable.

Investor sentiment towards the two big banking stocks has regularly oscillated between AIB and Bank of Ireland, and it is unlikely that the current market preference for Bank of Ireland is causing any great concern at Bankcentre.

The rise in Bank of Ireland has become so pronounced - outperforming the ISEQ by 50 per cent since the beginning of the year - that a period of consolidation or profit-taking seems inevitable. The only thing preventing profit-taking at the moment is the fear of not being able to buy back into the stock.

Second-line financials have also benefited from the current preference for financial shares, but in the case of Irish Life, this week's results make the current share price even more unfathomable. Irish Life's embedded value profits may have risen sharply, but the performance of the domestic life assurance business was uninspiring, to say the least.

Irish Life has made it clear it wants to expand out of the crowded domestic life business - to become more crowded next week with the arrival of General Accident Life - and indicated that it would be interested in any bank disposals that come on the market. Given the banking background of incoming chief executive, Mr David Went, that acquisition preference is hardly surprising.

Smurfit is going through one of its better phases but is still finding it difficult to break a 210p-215p trading range. Reports of downgradings of some of Smurfit's US peer group did not help, while the market is cautious about reports of Smurfit being a front-runner for Igaras, a Brazilian forest products group which apparently carries a £330 million-plus price tag.

With the Ewart acquisition now virtually completed, Mr Phil Monahan took the opportunity to sell 11 million Dunloe House shares into the market for around £3 million, taking his stake from 13.5 per cent down to 10 per cent.