IN recent years, Irish financial markets have been largely unaffected by political events, reckoning that, come what may, Government policy would continue on much the same track. And this week there was a limited reaction to events on the hustings, although analysts were divided on the extent to which some under performance in the bond market was due to General Election.
Overall, Irish bond prices ended slightly down on the week. Irish 10 year yields ended the week around 6.6 per cent and the gap over German bond yields widened by about 0.1 of a percentage point. Continental bond markets went ahead despite the nervousness caused by the French election.
Some market sources attributed the relative under performance in the Irish bond market to nervousness about a "policy hiatus" after the election, particularly if there is a hung Dail.
There may also be some nervousness among foreign investors about the value of the pound, as it is caught on the markets between the contrasting pulls of sterling and the deutschmark. However, these markets failed to upset the equity market, which again traded at new highs, boosted in no small part by the arrival of Ryanair. The company alone forms about 2 per cent of the ISEQ index, which closed after Ryanair's first formal day's trading on Thursday at an all time high.
Earlier in the week, on the grey market, Ryanair had hit the ground running. But by Wednesday, although the shares were well supported by US institutions, brokers were expressing scepticism at the company's price/earnings multiple in the mid20s, compared to other airlines, such as Delta, Lufthansa and British Airways, which trade on multiples of between eight and 17.
Such concerns do not appear to have dampened enthusiasm, however, and the shares rose steadily to close the week at 335p.
Another fillip to trading in Dublin came in the form of Elan, which surged in New York on Tuesday with the ISEQ being adjusted to take account of the movement on Wall Street.
By Thursday, however, the focus was on agribusiness, and in particular Greencore. The former state owned company announced that it expected its full year profits to fall for the first time since it was privatised in 1991. The main reasons for the reduced profits, the company said, were the eight week strike in the sugar plants, the IFA boycott of its fertilisers and adverse currency movements.
On the markets, however, most investors took the view that the company was set for solid growth, now that all of the negative factors were out of the way, and the company rose steadily though the week.
The market is also likely to welcome the move by the private property interests of Phil Monahan and Noel Smyth to reverse into publicly quoted Dunloe House. Trading in Dunloe was suspended early on Thursday, and there is speculation of a rights issue by the merged company.
The move by Guinness to buy United Beverages should mean a cash injection for both Crean and Fyffes as they sell their shares. Crean will gain £13 million, while Fyffes will receive £8.6 million, and shares in both companies moved higher during the week.
