The huge gains followed the announcement by the Financial Regulator, late yesterday afternoon, that it would cooperate with the British authorities to rid the market of false rumours and unjustified share speculation in British and Irish shares.
Share values made one of their biggest gains of recent times rising by €3.4 billion and eroding much of the losses of the past week.
What clinched it for some brokers was the broad nature of the statement issued late yesterday evening. Con Horan, Prudential Director of the Financial Regulator said: “We are working closely with other regulators, including the UK’s Financial Services Authority (FSA) in relation to concerns about this type of activity. Market participants who take unfair advantage by spreading false rumours while trading on the basis of those rumours are in breach of market abuse regulations and we will actively pursue those who may be engaged in this”.
This means that stockbrokers in Dublin and London, Investment managers, hedge funds and private individuals will have their share dealings scrutinised if the Regulator suspects unfair trading.
If the share dealings can be traced to false rumours then those funds or individuals linked to the share deals can be severely punished.
David Drum, chief executive, Anglo Irish Bank, which has been dogged by unfounded allegations about its funding spoke for many last night, when he said: “I welcome this move which should remove much of the fear that has dogged the Irish stock market for many months”.
Stuart Draper of Dolmen Securities said the announcement “will restore confidence in the markets for ordinary investors who have seen their hard-earned savings undermined by rumour and innuendo for several months”.
It has been generally agreed that stockbrokers in Ireland and Britain as well as fund managers and the big hedge funds have all contributed to the speculation that has seen up to €40 billion wiped off Irish share values since mid-2007.
“They have all been at it” was how one investor summed it up when asked to comment on the action announced yesterday by the Financial Regulator.
Some major gains were recorded yesterday with all of the banks and other key stocks gaining ground. Most noteworthy was Anglo Irish Bank, up 13.77% and Bank of Ireland which gained 9.76% on the day.
Third Force shot ahead by over 21% while Elan Corporation rose 14.85% on the day.
On the downside, Independent News and Media which repots next week fell by nearly 5% while a number of oil stocks, including Dragon Oil, failed to gain from the share price surge and were well down on the day.