ONWARDS and upwards went the Irish market over the past week, with no sign that the start of year bull run is yet coming to an end. Some of the steam may have gone out of international equity markets yesterday, but comparative valuations suggest that the Irish market may rise even more.
But the chances are that any gains by the Irish market will not be as dramatic as last year and Scottish Provident's Mr John Lawrie has already said that the pace of market growth may slow in the current year. Still, with the ISEQ already well above 2300, the market is not that far off levels some commentators had pencilled in for the half year stage.
Bond markets are roaring ahead on the back of interest rate cuts in Britain and France and in anticipation of a German rate cut in the short term.
As a result, financial stocks which are commonly valued on the basis of their yield differential against gilts were in strong demand. AIB, Bank of Ireland, Irish Permanent and Irish Life all rose to new highs or close to their previous highs with overseas investors, in particular, bidding the shares upwards.
AIB already has a 16 per cent stake in the Polish bank WBK and is likely to be a bidder for the 20 per cent of the bank being sold off the Polish government through a tender next week. It seems likely - that AIB may have to pay up to £50 million for the 20 per cent stake if it wishes to consolidate its position in WBK. AIB already has an option to buy the 24 per cent of WBK held by the European Bank for Reconstruction and Development.
Woodchester is also having a much better time this year, with the overhanging Credit Lyonnais 52 per cent stake not affecting share price. Investors seem content - at least for the moment - to accept Mr Craig McKinney's repeated statements that Credit Lyonnais is not a seller and that Woodchester is an integral part of, the French bank's European business.
Woodchester's expansion in Portugal and the move into Northern Ireland by 29.9 per cents associate Lookers are also positive developments for the group.
Industrials did little of note, but Smurfit and its American associate JS Corp did manage to hold their ground despite more downgradings of the US paper sector and some sharp falls in share prices. Even a 1.5 per cent fall in the US paper sector on Tuesday failed to dent JS Corp - this however is seen as more a reflection of the lack of liquidity in the shares than any belief that JS Corp should buck the trend.
Over 80 per cent of the shares are held by Smurfit and Morgan Stanley and such a small free float means that liquidity in the shares is low.
Elan continued its stunning progress on Wall Street, supported by Naprelan approval, upgradings by US brokers and a good set of third quarter results. At yesterday's price of 557, the shares are up 78 her cent in the past six months.
