INVESTOR: For the majority of global stock markets the eventual outcome for 2001 will mean most broad stock market indices will have produced two consecutive years of negative returns.

Despite all the hype and expectation that surrounded the advent of the new millennium, share prices have so far failed miserably to live up to expectations. In contrast, the Irish equity market has performed extraordinarily well on a relative basis over the past two years, delivering a healthy 14 per cent in 2000 and managing just a modest decline in 2001.

However, the disparity in returns across and within industry sectors over this period has been enormous. The prime reason for this volatility was the asset price bubble created in the technology, media and telecom (TMT) sectors and its subsequent bursting.

The star performers amongst the top 10 companies in the Irish market last year were Anglo-Irish Bank, Smurfit and Ryanair. With the benefit of hindsight, Anglo Irish was perfectly positioned to benefit from the booming Irish economy. Over the past five years its share price has risen by more than 350 per cent, which compares with rises of 140 per cent and 190 per cent for AIB and Bank of Ireland respectively. The strong performance from Smurfit in 2001 will come as a surprise to many, given the weak conditions that plague the global paper industry.

However, this positive performance from Smurfit this year does little to improve its dismal five-year record. The current share price is still only about 15 per cent above the level of five years ago.

Ryanair produced the third-best large company return and its share price has now appreciated by 450 per cent over the past three years. Over this period Ryanair has almost single-handedly created and grown the low-cost air-travel sector in Europe and it must rank as one of the top corporate success stories in Europe in recent years.

Outside of the largest 10 companies there were some notable returns from First Active, Glanbia and the Grafton Group. The star turn must go to Glanbia, with a share price rise of approximately 130 per cent this year. The management finally turned the business around in 2001 but it was Kerry's surprise bid for Golden Vale that generated investor interest and led to the sharp re-rating of the shares.

First Active also sharpened its focus during the year and its share price recovered strongly, as mortgage demand remained high.

As for the laggards, 2001 produced some real horror stories. There were no major fallers amongst the top 10 companies and, in fact, it was the two pharmaceutical companies, Elan Corporation and Galen Holdings, that produced negative returns of around 10 per cent. Bank of Ireland and Irish Life & Permanent also produced negative returns of a similar magnitude. However, all these companies have still delivered very good returns to their shareholders over the past three to five years.

The really big share price falls occurred in the technology sector, although big falls were not confined to technology. Some of the recently quoted companies spawned by the Celtic Tiger also suffered precipitous falls. Recruitment company Marlborough (-85 per cent) and estate agency Sherry FitzGerald (-55 per cent) are two such companies.

Nevertheless, the prizes for the really big destroyers of shareholder value would have to go to several companies in the tech sector. At its current share price of less than 20p sterling, Baltimore's rise and fall has been startling. The share price declined sharply in 2000, yet it still fell a further 95 per cent during 2001. At this stage investors are clearly sceptical as to the company's survival.

Two other notable casualties of the technology fallout during 2001 were Trintech and Horizon Technology, both of which declined more than 85 per cent. Some established companies also suffered from the bursting of the TMT bubble.

The only significant Irish publicly quoted company to suffer was Independent News & Media and its share price fell by 30 per cent during the year.

There were also some big share price falls in the long neglected exploration sector. Arcon, Ivernia West and Navan Mining all nose-dived by well over 60 per cent as investors fled out of all speculative investments.

Given the current difficult economic background investors will probably tread cautiously in the opening months of 2002.