Liams Last Post: Construction sector on fire is the story of the day

 

Good Afternoon ,

 

Construction squeeze is the story of the day. The Sector continues to be on fire and it looks like you cant get any cheap CRH anymore… The recently announced US highway awards have ignited the market and the question of funding seems to have gone on the back burner as far as the market is concerned. There is a strongly held view that this sector has bottomed now after a very difficult period and that it has pricing power and that volumes will recover from here. The huge positive sentiment shif in the market has not been matched by analyst exuberance as there is thus far no sign of analyst upgrades let alone upgrades which would begin to shift the perceptions of valuations. CRH closed today +3.4% at eur17.00. It may be strategically challenged and expensive but it is on the move and so hard to fight the tape here. Dare I suggest that I still prefer Grafton ? Well you know my views here.  Lafarge was +4% after its results aand the sector in general was sharply higher in Europe though the US stocks gave back some of their performance overnight.

 

Bank of Ireland issued a trading update this afternoon which contained little that caught the market by surprise as profitability cuts and higher funding costs had long been factored into investor perceptions. Bank of Ireland though did re-iterate that loan losses peaked in 2009 (excluding loan losses crystalised by loan transfers to NAMA) and that Customer deposits have remained stable since November.

 

AIB announced that the tender by Santander for BZWBK had received approval.

Middle East unrest and Oil and commodity prices failed to dent sentiment today.

Have a good weekend

Liam

 

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Liam Boggan

　

Merrion Stockbrokers

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