Telecom Eireann shares are now likely to retain much of the gains registered at the end of the first day's trading in the run-up to official trading next Wednesday. But stockbrokers have warned that any rush to sell the shares by private investors late next week could lead to the price falling below yesterday's Dublin closing level of €4.62 (£3.64). This was 19 per cent above the £3.07 flotation price which people will pay for the shares.
Telecom's debut on the Dublin, London and New York stock markets resulted in massive trading in the shares. Dealers estimated that over 100 million shares - 10 per cent of the shares sold by the Government - changed hands. Many of the large institutional investors went into the market aggressively to increase their shareholding in Telecom. Frantic early dealing in Dublin saw the shares soar almost 36 per cent to a high of €5.30 (£4.17), making Telecom briefly the most valuable stock on the Irish market.
But a general realisation set in that this sort of level was unsustainable, as it was then trading well ahead of the European telecoms sector, against which Telecom Eireann is compared.
In New York, where the bell to start the day's trading was rung by the Minister for Public Enterprise, Ms O'Rourke, the shares rose sharply and closed at a price equal to almost £3.74, which should support the shares in Europe this morning.
The Minister said there had been "a huge wave of enthusiasm" for the shares. "It's early days yet but we are satisfied. We will watch it as it goes," she told journalists.
The surge in early dealing led one Dublin broking firm, Dolmen Butler Briscoe, to recommend investors to sell the shares at €4.90 (£3.86) or higher. Dolmen said that at these prices, there is "little in the way of upside for the next five years" and that anything near €5.00 (£3.94) offers an excellent selling opportunity.
The vast bulk of yesterday's trading in Telecom involved institutional investors, but stockbrokers said there was some evidence of private investors in the market. Most private investors cannot sell their shares until they receive their share certificates next week, but some investors with long-standing relationships with their brokers were able to get into yesterday's conditional dealing in the shares.
One broker said the shares should stabilise around €4.60 (£3.62) for the next few days but that any flood of private investor selling next week could push them lower - possibly to €4.40 to €4.50 (£3.47 to £3.54). If that proves to be the case, private investors may have to settle for a gain of 13 to 15 per cent rather than the 19 per cent gain at yesterday's close.
Brokers said that Irish institutional investors, who own just 7.4 per cent of the shares, were active buyers yesterday, although there was also strong buying interest from the UK, Germany, the US and Scandinavian institutions.