BoI: Worst of credit crisis behind us

THE worst of the credit crisis may have been St Patrick’s Day with the near failure of Bear Stearns, according to Bank of Ireland.

The bank said Ireland’s stockmarket fell more and may take longer to recover but that we should not confuse local issues with what’s going on around the world’s capital markets.

Bank of Ireland said the Irish economy remains robust with high savings rates, ample cash and continued positive growth.

The bank said the market has a handle on the credit crisis — as indications point to easing in stress in the financial sector.

It said investors will have to adopt a more savvy multi-asset approach to make money.

Director with Bank of Ireland Private Banking, Kevin Quinn said: “It is no longer one in which ‘all boats will rise’. Rather it requires a very discerning and considered approach. The market will turn its attention to the inflationary pressures rather than the credit crunch.”

Mr Quinn said the first step for private investors has always been the hardest: “Individual investors are always the most cautious about getting back into markets after a period of turbulence such as we have seen.

“There is a risk Irish investors’ perspectives on what is happening in world markets may get further clouded by local news as the Irish stock and property markets had such a difficult period in recent months.

“Most, though not all, of these indicators point to an easing in the stress in markets that we have seen in recent months.”

Bank of Ireland Private Banking said equity markets may have hit the bottom of the cycle and investors should be alert to the potential for recovery.

It said a positive indicator of this was highlighted by the fact Private Banking’s Global Equity Fund has seen gains of nearly 10% since the low point in March.

Mr Quinn said: “No one foresaw the scale of the credit crunch-related losses at the outset and it has taken a considerable time for this to work through.

“However, signs are that the market is now looking beyond these issues and we may be seeing some solidity in the gains that markets have made since March.”

“While the credit crisis may not be over, we believe markets are looking past this and have priced in the bad news at this stage.

“Of course the real economic impacts are there to be seen but if history repeats itself, we will see equity markets price in recovery well before the economy shows firm evidence.”

Bank of Ireland said it has seen typical signals that markets are in a bottoming out phase — a financial failure, a drop in investor confidence and a testing of previous market lows.


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