Liams Last Post : Thanks Giving ... not for equity investors as Dubai scares the markets...

Good Afternoon ,

 

Thanks Giving Day was one of those days when the risks that we all try to forget about come back to haunt us….. The Dubai World scare managed to unnerve markets across Europe and with the USA closed , volumes were thinner than usual so the volatility got amplified

 

The markets were awaiting the start of trading of the Lloyds Nil Paids tomorrow and this huge rights issue certainly did not help sentiment today.  The worries about who has exposure to Dubai is also one of those issues which has unnerved the financials sector. It is not certain how or what the ultimate outcome for Dubai will be and hopefully it is just a standstill agreement while they re negotiate terms etc rather than a default but nerves were frayed and the sell off into the close today highlights the fragility of sentiment.

 

Dubai has $59bn of debt and it may be forced to hold a fire sale of real estate investments worldwide to help realise cash to pay down its debts. Dubai holds significant investments in UK property so this could put pressure on the Commercial property market in the UK.

 

The LSE problem also contributed to the nervous environment.. Markets closed approximately -3.5% on average across the board , this time however Ireland was only down -2.5%.

 

In Ireland there was some significant volatility today , AIB was down -10% at one stage , though it closed down -7.6% , Smurfit was also down at one stage by about -9% but closed – 3.26% , Grafton headed closer to the Eur 3.00 level and closed at 3.09 -5.3% .  Aer Lingus is within 10% of its absolute lows experienced during August , the bones of he plan are known , we await its execution but in terms of an opportunity to take another look , it is very interesting again.  On the large caps or certainly larger cap stocks in Ireland , CRH which had been really looking better over the past few weeks has dipped below eur17.00 , just at the point where it looked like this was bottoming out.  I was banging the table about this a few percent higher … I see no reason t not bang the table a bit harder right now…

 

We hosted a Roadshow with FBD in London yesterday , it went well ,.and the analyst who had liked the stock came back even more confident having had the privilege of hearing the management present 6 times and to question them about issues between meetings. Big Free Cash Flow Yield on this one….

Total Produce fell -5% , this is a range trading stock , this is an interesting levels again.

Some interesting Irish Economic statistics….never timely unfortunately but worthwhile contemplating nonetheless. Exports rose in September after falling in July and August, according to fresh preliminary figures from the Central Statistics Office . Seasonally adjusted exports rose by 11 per cent during September to €7.2 billion, while imports fell by 2 per cent to €3.4 billion. On an unadjusted basis, the value of exports was unchanged from a year earlier, while the value of imports was down 26 per cent. The trade surplus was up 43 per cent to €4 billion. In the first eight months of the year the value of exports stood at €57 billion, unchanged year on year. Imports decreased 23 % from €39 million to €30 million.

Exports rising is a positive sign , says something about increasing competitiveness and maybe something about better world demand though our exports to Germany and Britain were down. Exports to Germany fell -20% and Britain down –15% but exports to the USA were up by +13%. In terms of the detail , Ireland imports and Exports of Computer equipment were down sharply in Both directions , and Exports of metal Ores was also down sharply. It will come as no surprise to know that Car imports were down -78% as was consumption of Petrol.   

At least no need to worry about the Wall Street close tonight.

 

Have a good evening

 

Liam

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

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