World markets could soar by 20%, as Irish stocks fall 3%

WORLD stock markets could soar by 20% this year as figures show Irish stocks fell by 3% in 2010.

Chairman of Goldman Sachs Asset Management Jim O’Neill said the 15% to 20% rally in major stock markets will be led by the developed markets such as the US.

He also said he didn’t agree with warnings that China’s expanding economy is in imminent danger of imploding.

He believes America’s economy will bounce back in the coming months.

“I think the risk of a double-dip recession is receding dramatically. I think one of the big surprises for this year is the US. It looks to me as though it’s on its way back and it’s going to surprise people,” he said.

Mr O’Neill is best known for coining the acronym ‘Brics’ (which refers to the emerging economies of Brazil, Russia, India and China) 10 years ago.

The ISEQ index of shares fell 3% in 2010 to 2,885 while the financial sub-index tumbled 61% to 414 points.

In Britain the FTSE 100 has gained round 1200 points or 25% since July 2010.

The stock market capitalisation of public companies on the ISEQ at the end of 2010 was at €47.6bn compared with the end of 1997 level of €46.8bn.

The total market capitalisation at the end of 2009, was €44bn compared with €119bn at end 2006.

Eleven companies account for 80% of the capitalisation making up the ISEQ index with CRH at 27.3%, followed by Ryanair at 13.3%. In 2007 the four listed banking stocks still represented 44% of the market.

AIB will soon be delisted from the index and switch to the Enterprise Securities Market from January 26 next.

It was a very tough year for the two main banks. AIB opened the year at around €1.20 while Bank of Ireland was at €1.30.

However, yesterday AIB closed down almost 8% at 29 cent while Bank of Ireland was down 4% at 33c. Irish Life and Permanent was down 6% to 93c and CRH fell 1.2% to €14.39.

Overall Irish shares fell 0.15% yesterday to 2,865.

Across Europe yesterday stocks gained, sending the Stoxx Europe 600 Index higher for a fourth day, amid speculation accelerating economic growth will drive equities higher in 2011.

“Low valuations, a reallocation of funds back into equities and stronger real growth coupled with inflation will support equity prices,” Edmund Shing, an equity strategist at Barclays Plc in London said.