Market turmoil drags on pension funds

IRISH investors suffered a double whammy yesterday, with the ISEQ starting the week with a fresh decline and new figures showing recent dramatic falls in domestic pension fund values.

The latest data from Rubicon Investment Consulting shows that the turmoil on the international stock markets over the past month drove a dramatic decline in Irish managed pension funds, during August, with combined losses of 5.9%.

Over the past eight months, Irish pension funds have lost 8.4% in average value and 3.2% in the past five years. Irish Life Investment Managers was the worst performer last month (with a 7.8% loss), while Canada Life/Setanta Asset Management was the best performer, with a 3.6% loss.

After showing a promising start to this month, the ISEQ returned to turmoil yesterday, falling by nearly 3.5%, or 87 points, to 2,434 points, with individual gains few and far between.

The best-performing Irish stocks were healthcare services company Icon, Donegal Creameries and fruit distribution giant Fyffes, which gained on the back of a strong set of first-half figures. Elsewhere, there were hefty losses for Smurfit Kappa, Tullow Oil, Aryzta, Kerry Group, Glanbia, Paddy Power, FBD, Irish Continental, Elan, DCC, CRH, Kingspan and Ryanair.

European markets hit their lowest levels for over a fortnight as eurozone debt concerns continue. Some of the continent’s bigger banking stocks were also hit by legal moves in the US aimed at recouping money lost in the financial crisis and ongoing fears about their holdings of government debt.

While the US markets were closed for Labour Day celebrations, the main European bourses were open and suffered, for the most part. The DAX in Frankfurt showed the largest reversal, down by 5.3% to a two-year low of 5,246 points, woth one of its banking titans, Deutsche Bank, losing nearly 9%. The CAC-40 index in Paris was down by 4.7% at 3,000 points and the FTSE in London shed 3.6%, again led by the financials — including Royal Bank of Scotland), which tumbled in value by 12%.

However, the head of the European Commission, Jose Manuel Barroso, said that he does not anticipate the eurozone slipping back into recession, stating that both the EU and the single currency remain “strong and resilient”.

European Central Bank chief, Jean-Claude Trichet, meanwhile, said that pending legislation covering tighter monitoring of national budgets was an absolute imperative.