Pension funds hit as shares lose €2bn value

PENSION funds took a fourth hit in a month yesterday as a further €2 billion was wiped off the value of Irish shares.

Over 16 billion euro, or 20%, has been wiped off the Irish Stock market since the start of the year, with the 50 billion in public and private pension funds hardest hit.

Finance Minister Charlie McCreevy faces a grilling next week on the management of the National Pension Reserve Fund the body he set up to invest 4.6 billion proceeds of the sale of Eircom along with a sum of 1% of Gross National Product to pay for State and public pensions.

The minister faces a number of tough questions at the publication of the annual report of the National Treasury Management Agency, which administers the NPRF.

Loss of confidence in corporate America and fears about recovery in the US has resulted in the continuing bloodbath across all markets.

In London, the FTSE 100 hit a five-and-a-half-year low when prices nosedived by over Stg£50 billion. At close of business, the FTSE had tumbled 5.4% falling below 4,000, a level it has not seen since December 1996.

The Dow Jones index in New York almost reached the low levels after the September 11 terror attacks. However, a late rally left if down just 0.5% for the day at close of business last night, despite being down 3.75% when trading closed in Dublin hours earlier.

The index has lost almost a fifth of its value since May. President Bush has been trying to restore market confidence, but his warnings of jailing corporate cheats are falling on deaf ears.

To many in the US, it is a case of “poacher turned gamekeeper and the ordinary US investor is not buying the Bush line”, Ulster Investment Bank senior economist Niall Dunne.

Scandals such as Enron and WorldCom have undermined investor faith in the US economy. Mr Bush’s vice-president, Dick Cheney, is being sued by shareholders in his oil company where he is alleged to have overstated profits and sales for a number of years when chairman and chief executive. Investors are also increasingly suspicious that corporate America is a cosy cartel. They also suspect their president got off lightly when he was accused of insider trading when he sold $850,000 worth of shares in Harken, a company which he previously owned.