Paddy Power shares surge helps Iseq post gain in Covid-19 year

The Iseq weathered the uncertainty of Brexit to end the year 4% higher. File picture: iStock

Ireland's main stock exchange index weathered the extraordinarily punishing year of Covid-19 better than most of its eurozone peers, while strongly outperforming London's Ftse-100 which clocked its worst year since the 2008 financial crisis.

Used by international investors as proxies for the Irish economy, the two main Irish banks, AIB and Bank of Ireland, were again in the frontline of the second crisis facing Ireland in 10 years and registered huge losses.

However, Irish-based multinationals, including Paddy Power-owner Flutter, had an outstanding pandemic, boosted by online gambling and its expansion into the US, which helped to drive the Iseq index higher, amid the economic damage caused by Covid-19.

The Iseq also weathered the uncertainty of Brexit to end the year 4% higher, in line with the gains made by Frankfurt's Dax index but bettering the Cac-10 in Paris which shed 5% and the drop of 12.5% for Madrid's stock exchange, which reflected the scale of the Covid health crisis in Spain.      

Paying no dividends and facing multi-year losses, shares in AIB and Bank of Ireland slumped by 46% and 32%. AIB, which is 71% owned by the Government, ended the year worth €4.5bn, while Bank of Ireland, of which the Government owns 14%, was worth €3.5bn.

A minnow in stock market terms, shares in Permanent TSB also fell, down by 24% in the year, to value the lender at €386m.  

In contrast, Flutter tapped the global online betting boom during the lockdowns and benefited further from the deregulation of gambling in US. 

That helped send its shares soaring by 56% in the year to give the betting giant a stock market valuation of over €29.2bn, surpassing the valuations of CRH and Ryanair. 

CRH appears to have seen off an activist shareholder for the time being. 

Its shares during the year of the pandemic slipped slightly to value the international building materials giant at €26.7bn.

And despite the grounding of most of its fleet, Ryanair shares ended 11% higher at €18.3bn, as investors bet it will emerge from the crisis as one of the most financially sound airlines in Europe.

The Irish-owned food multinationals also fared relatively well: Kerry Group shares gained 7.5% in the year to increase its valuation to more than €20.9bn, while Glanbia rose 4% to €3bn.

Meanwhile, the Ftse-100 had its worst year since the 2008 financial crisis. 

“Although markets may have some short-term nerves, UK equity markets should appreciate strongly in 2021, along with equities globally, propelled by an ocean of zero percent central bank money and a post-Covid-19 economic recovery,” said Jeffrey Halley, a senior market analyst at Oanda.

The Ftse-100 has shed 14.3% in value this year, its worst performance since a 31% plunge in 2008 and underperforming its European peers by a wide margin, as pandemic-driven lockdowns battered the economy and led to mass layoffs.

The mid-cap Ftse-250 index, considered a barometer of Brexit sentiment, ended the year 6.4% lower. 

While a trade deal was sealed last week between the two sides, it didn’t cover services, said Russ Mould, investment director at AJ Bell. “So there’s still quite a lot of work to be done,” he said. 

• Additional reporting Reuters