Good Afternoon
Well it is everyones favourite time of the week : Close of Business on Friday. Or should I just say close of markets…
What a week , The ISEQ the of the week was 8:00am on Monday and the low of the week 4.30 on Friday… On a graph the slope is a nice 45 degree downward sloping line. It tells the story a fall of over -11% , not much else you need to know , Wall street at the opening today took out the previous intra day low from last November and at 4.30pm is 80 points below that level.
We are in results season in Europe and almost without exception every company that reports is guiding lower and it is fascinating to see the European markets slowly now begin to realise that there will be no bounce in H2 2009. It is like going back in time. From an Irish perspective I think we all thought this time last year that as the market had been such a poor performer in 2007 that there might be a bounce at some stage in 2008 and the attrition that we experienced since then now looks like it is only really beginning in earnest in Europe.
The Financials are behaving like options still , the AIB trading statement gave no comfort to investors, the Political heat is rising to reveal the names of the Anglo Golden Circle of the 10 special ones.
Irish Life has all but collapsed as the news of Denis Casey resignation only became apparent late last Friday it took a while for the market to really get to grips with the news. Irish Life opened on Monday at a price of 1.85 and closed the week at 1.08 , market voting with its feet as Irish Life got downgraded by the ratings agencies as a result of the transactions with Anglo.
A week later and despite all the negative publicity , there has been no further fallout from Anglo. This is incredible to me. The investment proposition that Anglo told investors for years was about the effectiveness of the central credit committee and Willie McAteer and David Drum and Sean Fitzpatrick before him had all made a virtue of every loan being approved at this committee. It would appear that there may have been a certain amount of latitude though in whose loans were approved publicly and whose dot not if the only two people so far who have seen fit to resign have been the CEO and the FD.
This afternoon the Anglo annual report has just been published and will provide lots to dwell on…but no good news needless to say. Interesting to see how much the executives and Non executives paid themselves for shepherding the bank and shareholdrs interests into oblivion.
CRH fell sharply as both St.Gobain and Lafarge announced two individual rights issues today of 1.5bn each. I have to say that at a price of 15.23 , that CRH is a very improbable candidate to now announce a defensive and dilutive rights issue especially as the Enterprise value to capital employd ratio is now less than 0.9x . This should should put a floor under the shareprice of CRH … though the previous low may well be tested along the way.
Aer Lingus continued its slide , one wonders just at what discount to cash does this have to fall to before it finds a floor m United Drug continued its downward trajectory to close at 1.76 a whopping -30% fall on the week for a stock which had been considered relatively defensive.
Europe today too had a miserable day to complete a miserable week -3.3% today and a fall of almost -10% on the week. With the Dow jones falling almost -10% too.
The Bear market is alive and well….
Have a good weekend…if you can….
Liam
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Liam Boggan
Merrion Stockbrokers
www.merrion-capital.com
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