Business Week: Brussels fallout, housing and the technological revolution

A tumultuous week geopolitically also left its mark on the world economy. At least 31 people were killed and about 300 were injured on Tuesday when multiple bombs went off in Brussels. Equity markets were shaken in the immediate aftermath, although they recovered ground later.

“Geopolitical risk, including acts of terrorism which directly affect trade or movement, remains a significant risk factor to monitor,” said Lorne Baring, managing director of B Capital Wealth Management in Geneva.

“In a period where there is suboptimal growth both in Europe and globally, combined with equity valuations that are no longer cheap, there exists an environment which is susceptible to shocks that can act as a trigger for falls in asset prices.”

Travel stocks tumbled after the attacks, prompting a second day of declines in European shares. Markets fell and travel companies, including Ireland’s Ryanair, were hardest hit – although most pared back their losses. European stock markets also bounced back on Wednesday, helped by a handful of more positive signals on the health of the world’s major economies.

Some Asian markets fell earlier in subdued trading as investors pulled back on positions ahead of the long Easter weekend, opting for caution. Next week, focus will turn to the US and new GDP figures, which will be the late indicator on the health of the world's biggest economy. There were birthday celebrations for Twitter this week as it celebrated 10 years of micro-messaging. Since the first tweet was sent on March 21st, 2006, the social network has gathered about 332 million monthly users, with 500 million tweets sent every day and 200 billion sent a year.

There was less cause for celebration for another social network as Mark Zuckerberg, the founder of Facebook, came under fire for appearing a little too eager to make friends with the Chinese government, which has banned Facebook for its 668 million web users.

The Chinese government has been defensive on the subject of its air pollution problem which has seen white masks become a staple of everyday life for the people there. Zuckerberg posted pictures of himself jogging in Tiananmen Square without a mask on despite “hazardous” pollution readings.

This was the latest attempt to win the affections of the Communist Party leadership after he publicised his efforts to learn Mandarin, read speeches by President Xi Jinping and asked the Chinese leader to come up with a name for his daughter. In the corporate world, the news was largely positive. Actavo, the Denis O'Brien-owned engineering services company previously known as Siteserv, says it is on course to break €500 million in sales this year as it sets its sights on an expansion into the US to help fuel growth.

It is buying out Atlantic Engineering Services (AES), which specialises in designing high-speed fibre broadband networks.

Elsewhere, profits before tax at Dublin and London-listed financial services group IFG soared by 86 per cent to £8.6 million, largely driven by the group’s retirement wealth platform James Hay, while travel software firm Datalex also produced strong figures.

Internationally, Accenture raised its full-year net revenue forecast well above analysts’ expectations and reported better-than-expected quarterly revenue and profit.

The positive outlook is due to strong growth in its consulting business, especially in North America. It was not all good news, however, with Sports Direct shares tanking after founder Mike Ashley warned on the outlook for profits and Next shares also taking a pounding after the retailer said 2016 would be “ challenging”.

The technological revolution is continuing as Apple unveiled a smaller, cheaper iPhone aimed at new buyers, especially in emerging markets and China, as the company looks to reverse a decline in worldwide sales of its most important product.

The iPhone SE, which has a 4in screen, represents Apple’s second bid for the crowded mid-tier market after an unsuccessful foray three years ago.

Meanwhile, Three Ireland reversed a decision to introduce charges for 4G data. The State’s second-largest mobile operator, with approximately two million subscribers, has instead offered free 4G access “for life” across all its price plans.

The news comes as the company introduced a new 4G Plus service, which it said would provide speeds of up to 225 megabits a second. The service is currently only available in parts of Dublin but is to be rolled out across the country by the end of April.

The homelessness and housing crisis rumbled on as calls for a minister for housing were repeated and the Central Bank was forced to defend its contentious home loan caps. It said commercial banks and mortgage brokers were unable on their own to uphold "prudent" credit standards.

The bank admitted the loan caps would neither add to nor relieve the shortage of new homes, but added that they would contribute to a shift in housing demand and supply towards rental accommodation.

If obtaining a mortgage in the Republic proves too difficult, however, new European rules introduced in the Republic this week will eventually make it easier to shop elsewhere. Under the European mortgage credit directive, new EU-wide responsible lending practices have been introduced.

However, obtaining a mortgage for those living in the Republic but working in Northern Ireland may become more difficult, while getting a cheaper mortgage in another EU state remains unlikely despite the introduction of the pan-European rules.

Meanwhile, debate on what to do continues. The volume of housing delivered in 2017 and 2018 will be determined by “policy decisions made within the first 100 days of the new government”, according to lobby group Property Industry Ireland (PII), which submitted a policy paper to the Government.

In it, they called for the appointment of a cabinet-level minister for housing, infrastructure and planning, a reduction in the VAT rate to 9 per cent for the lifetime of the next government and speedier planning decisions.

Some builders are getting on with it. Cairn Homes announced details of a capital raising plan which will net the company €168.9 million, subject to shareholder approval next month.

Some 6 per cent of the Project Clear loans acquired by the company from Ulster Bank in December have not yet been transferred over because the consent of the underlying borrower has not been given.

Cairn paid €378 million to acquire loans with a face value of €1.7 billion from Ulster Bank on December 6th.