A Dublin stockbrokers has described yesterday’s Gateway-driven slump in Irish share prices as "more overdone Paddy bashing" by foreign investors sceptical about Ireland’s economy.
A wave of panic selling wiped nearly €1.5 billion off the value of Irish shares yesterday in the aftermath of Gateway’s decision to pull out of Ireland and Britain with the loss of 900 Irish jobs.
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But Mr Stuart Draper of Dolmen Butler Briscoe said yesterday’s mini-crash was a knee-jerk reaction similar to that which followed the foot-and-mouth crisis earlier this year.
Dealers said overseas investors with Irish holdings took Gateway’s closure as a sign that Ireland’s economic success story was coming to an end. Leading banks - seen as the pillars of the Irish economy - fell sharply on the Irish Stock Exchange yesterday.
Bank of Ireland lost 6.6 per cent of its market value, and AIB shed 4 per cent.
Mr Draper said, when put in perspective, the 900 layoffs represent less than 1 per cent of total Irish employment in foreign companies. He said total Irish job creation last year was 76,600.
"Also, more than half of total foreign direct investment last year was investment in the IFSC and not the IT sector, with non-IFSC foreign direct investment making up only around 7.5 per cent of last year’s GDP," Mr Draper said.
Mr Draper pointed out equity markets tend to over-react to corporate surprises both on the upside and the downside but that Irish bank stocks remain fundamentally strong and should recover from yesterday’s battering.