€1.3bn tax take as stock exchange booms

GOVERNMENT coffers will get a €1.3 billion tax boost from the booming stock exchange in 2006 while stockbrokers look set to generate gross profits of up to €600m for the year.

Figures released by the Irish Stock Exchange yesterday show trading on the ISEQ rose 12% for the first nine months of the year to €94.3bn, amounting to €500m worth of share deals each working day.

If trading continues for the rest of the year at those levels then the 18 Irish stockbrokers trading on the exchange will share gross earnings of €600m or more in the current year, while the State will earn double that.

Institutional trading accounts for up to 80% of the deals done where charges would be significantly lower than the 1% on average charged to ordinary share buyers.

However Irish investors are big buyers of British and US stocks and the amounts earned form those transactions are not reflected in the above figures.

The ISEQ is one of two exchanges subject to government taxes at this stage. Deals in Ireland are taxed at 1% whereas in Britain the charge is just 0.5%.

Exchanges elsewhere in Europe have been free of taxes for some time.

Over the nine months the number of transactions on the exchange increased by 15% to the end of September compared to the same period last year highlighting the liquidity in the market.

The average number of transactions per day was 3,531 compared to 3,075 in the first three quarters of 2005.

At the end of the third quarter Aer Lingus plc’s market capitalisation stood at €1.3bn, (now €1.5bn following the Ryanair bid) while four new companies joined the Irish Enterprise Exchange (IEX) market, launched back in April, 2005. These include Amarin Corporation plc, Petroceltic International plc, Ardent Group plc and Petroneft Resources plc. Twenty two companies are traded on IEX.

Also in the third quarter €1.56bn was raised in new listings pushing up the total amount raised by companies this year to €2.71bn. This includes the €1.17bn issued by Aer Lingus plc in the pre-allotment phase prior to its entry to the official list on October 2.

Over the period debt listing has risen 25% over the corresponding period in 2005. Notable names listing for the first time on the Exchange include Prudential Financial Inc, EMTN Programme, Cesp Companhia Energetica De Sao Paulo, Mitchells and Butlers Finance and various Lehman Brothers programmes.

Over 4,200 funds and sub-funds are now listed on the Irish Stock Exchange which continues as the number one location globally for the listing of investment funds, according to the stock exchange statement.

The third quarter of 2006 produced continued growth in investment fund listings with a total of 106 new products listed.