Irish pension funds have lost €9 billion in value since the end of June as investors have fled stock markets, according to Mercer investment consultants.
The Dublin market lost a further 3.8 per cent yesterday, falling to a two-and-a-half year low. The Iseq has now lost 19 per cent in November alone and the market is worth just two-thirds of the peak it hit last February.
Mercer warns that the market turmoil could inflict significant pain on company pension plans, many of which are only recovering from the bursting of the dotcom bubble in 2001.
Consultant Noel Collins said last night the average Irish pension fund was now worth 5 per cent less than at the turn of the year and noted that the poor performance would be "very unwelcome news . . . particularly for companies beginning to think about preparing year-end accounts, who face the possibility of falling asset values and rising liability values causing a sharp drop in pension funding levels".
He described the decline in the Irish market as "alarming". A total of €8 billion has been wiped off the value of Irish shares this week alone as investors steer clear of anything to do with finance or construction amid concerns about the global economy. This brings to more than €40 billion the losses on Irish shares since their peak last February.
"Ireland is just loveless at the moment," said one Dublin trader, who described yesterday's decimation as a "bloodbath". "There is just nothing positive out there."
The Iseq index is down more than 30 per cent so far this year, compared to a decline of just 2.4 per cent in the Britain's FTSE 100.
The market was not helped yesterday by a surge in oil prices early in the day. US Nymex crude again advanced on the $100 level in morning trade. It hit a record $99.29, before retreating sharply as stockpiles rose at a key US storage hub. Nymex settled down 74 US cents on the day at $97.29, while London Brent crude gave up 65 cents to settle at $94.84.
A fall in the dollar to a new low against the euro and the Swiss franc after the Federal Reserve's move to cut forecasts for the US economy also hurt sentiment.
The Irish Stock Exchange released figures yesterday showing that more than €180 billion worth of shares have been traded on the exchange so far this year. This compares with €129 billion in the whole of last year.
Deirdre Somers, the exchange's chief executive, said she was confident that the fundamentals of the economy remain strong and as a result was upbeat about Dublin-listed companies. - (Additional reporting, Reuters)
