Investors saw more than €3.2 billion wiped off the value of Irish shares yesterday as ongoing concerns about the state of the housing market and general negative sentiment around the world weighed on investors. Claire Shoesmithreports.
The slide, which saw the Iseq index of Irish shares fall 2.8 per cent, brings Irish stock market losses to over €7 billion so far this week. The Iseq index of Irish shares fell 2.8 per cent yesterday, wiping €3.26 billion off its value in just one day. So far this week, the index is down more than 500 points at levels not seen since last December. It closed yesterday at 8,447.20, 10 per cent below where it started the year and well off the 10,000 level it hit briefly back in February.
Dublin wasn't alone on a day when global investor sentiment turned sour: in a reversal of recent trends, the Iseq outperformed its British counterpart as the FTSE 100 tumbled 3.2 per cent, its biggest one-day percentage drop since March 2003.
The banking sectors were worst hit both in Dublin and London, with mining stocks also taking a hammering in the UK and construction stocks suffering particularly badly in Ireland.
At home, Bank of Ireland was one of the worst performers, falling almost 4 per cent, to end the day at €13.57. So far this week, the stock is down almost 10 per cent, a slide that has wiped more than €1.3 billion of the company's market capitalisation.
The other financials were also badly hit, with AIB dropping 3.4 per cent and Irish Life & Permanent, which has most exposure to the Irish housing market, falling 3.8 per cent.
Sentiment wasn't improved by news from the Central Bank that it expects economic growth to slow over the next 18 months, with an accompanying easing in employment growth and inflationary pressures.
Elsewhere in Europe, things weren't any better, with European shares suffering their biggest daily drop in five months. Dealers attributed the declines to a worsening environment for financing takeovers and worries about US housing that have together sparked a global aversion to risk.
The pan-European Eurofirst 300 index closed 2.8 per cent lower at its lowest close since April 2nd, while Frankfurt's DAX lost 2.4 per cent and the CAC 40 in Paris fell 2.8 per cent.
"What you are now seeing is crunch point reached at which credit markets start to take notice," said Max King, global investment strategist at Investec Asset Management. - (Additional reporting, Reuters)
