International investors are still running scared

FOR investors in the Irish equity market, 2007 was a dreadful year. Share prices fell heavily across the board as a wall of international selling reflected a total loss of international belief in the Irish economic story.

As markets fell on the back of the heavy international selling, domestic institutional investors were also forced to sell, thereby compounding difficulties for the market. Unfortunately, the carnage was spread widely across the market with just a few companies in food and oil bucking the trend.

So far in 2008 the story has been pretty similar, although the rate of decline is not as pronounced. Still, the market has shed another 10% of its value so far, with financial, housing stocks and airlines doing particularly badly — pretty well most of the market. For Irish pension funds this is bad news as they have higher weighting in the market here than its size would warrant.