ISEQ falls by nearly 4% as banks take hard hit

DUBLIN’S ISEQ index of shares fell by nearly 4% to, just over 2,703 points yesterday – with each of the banks taking significant tumbles – but the country’s three main financial stocks are being tipped for further gains mainly on the back of the proposed new National Asset Management Agency (NAMA) putting a more healthy gloss on them.

A new research note on the Irish financial stocks, from financial services giant JP Morgan Chase said that any favourable NAMA legislation outcome “is likely to drive another leg of share price appreciation for Irish banks”.

The recent recovery in Irish banking stocks has seen them go from being the worst performing financial stocks in Europe, earlier this year, to being the best in the second quarter of the year.

However, yesterday the banks had a less than favourable day. Bank of Ireland was down by 8c at €1.69 – a fall of 4.36% – Irish Life & Permanent (IL&P) shed nearly 3% – or 9c – to €2.95 and AIB was down by as much as 13% (26c) at €1.74.

Dublin’s fall – along with those of other European markets (London’s FTSE was down by 2.6% at 4,234 points; the CAC in Paris lost 3% to close at 3,123 points and Germany’s DAX market finished the day at 4,693 points – a similar 3% fall) – was on the back of renewed concern over the state of the global economy. The World Bank said that instead of the 1.7% fall in the world’s economy it predicted back in March, it reckons a record fall, this year, of 2.9% is more likely.

Other heavy fallers in Dublin, yesterday, included building materials giant CRH which shed nearly 6% and over €1 to fall to €16.94; DIY specialist, Grafton Group – which fell by over 7% (19c) to €2.42; Paddy Power, which lost 22c to close at €16.40 and Tullow Oil, which fell by 59c to €10.29.

Drug firm, Elan shed 11c, to close at €5.21, following news of another user of its Tysabri multiple sclerosis drug contracting rare brain disease PML. The possibility of Independent News & Media (INM) carrying out a “deeply discounted” rights issue to aid the repayment of its outstanding €200m bond, saw INM’s share price drop by over 21% (7c) yesterday to 26c.