Market jitters rise over €3bn AIB shares sale

Global stock market selling and an apparent political misstep in the Dáil have raised market jitters over the proposed sale of Government-owned AIB, leading experts have said.

The sell-off of stock markets in Europe in recent sessions caused by the troubles facing Donald Trump’s White House had also reined in market hopes the sale of a 25% stake in AIB would realise much more than €3bn, according to sources.

Senior market sources said it would probably take further sharp falls into next week for the Government to abandon plans for an initial public offering of shares in the bank.

The Government said that plans for a sale would not be affected by a successful Labour motion in the Dáil which called for a delay in the sale of AIB shares. The motion was passed following an apparent mishap by the Government.

Declan Bourke, head of IG Ireland, a leading international online broker, said the confusion “from an international perspective” surrounding the Dáil vote was “embarrassing” for the Government as the owner of AIB.

And if the issue were to continue to overshadow preparations for an IPO it could ultimately affect the amount the Government would raise in the market for the shares, Mr Bourke said.

A Department of Finance spokesman reiterated the Government planned to announce an IPO, if market conditions were to allow, in the coming weeks. The departure of Michael Noonan as finance minister would not affect the plans, the spokesman said.

However, Chris Beauchamp, chief market analyst at IG in London, warned that stock markets could fall through next week.

“Once options expiry and the weekend is out of the way there is a high probability that the selling will resume,” he said. “Longer-term, this is still a dip, and one that will be bought in due course, but there seems to be an awful lot more downside to come. The bottom line is that faith in the Trump rally has been shaken, if not yet quite destroyed, and it is unlikely to return anytime soon.”

Speaking on the basis of confidentiality, a senior Irish market source said that the sell-off this week was “unhelpful” and getting any IPO away could be difficult of the global slide were to continue.

Alan McQuaid, chief economist at Merrion Capital, said a prolonged slide in world shares would raise questions about the AIB IPO.

“It’s all about timing. The longer it goes on, it does raise questions,” he said.

An index of Europe’s leading bank stock, the EuroStoxx 50, has fallen 4% in the past week. It is still up 30% from this time last year and up 10% since the start of the year. European stocks posted their biggest back-to-back drop since January as investors continued to retreat amid the turmoil surrounding Mr Trump.

The Stoxx Europe 600 Index dropped 0.5% at the close, pushing the two-day decline to 1.7%. Equities slid amid a report that Mr Trump’s campaign advisers may have had at least 18 previously undisclosed contacts with Russia. All but four industry groups declined.

The rally that followed Mr Trump’s election on bets of stronger US growth and increased fiscal spending is unravelling this week.

“Now investors are starting to rethink Trump ’s ability to deliver on his promises,” said William De Vijlder, chief economist at BNP Paribas, in Paris.

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