View more on these topics

Ireland – can the Celtic tiger roar again?

A stable property market and sound employment figures are helping Ireland to leave the rest of peripheral Europe behind

stars

Signs of a continued recovery in Ireland may be creating some opportunities in equity markets but as peripheral Europe suffers fragile political setbacks and Europe struggles to return to growth, will the Celtic tiger roar again?

The most recent April GDP figures as part of the IMF World Economic Outlook forecasts Irish GDP at 1.1 per cent for 2013, up from 0.9 per cent in 2012. This is expected to rise to  2.2 per cent in 2014.

A number of fund managers have been closely monitoring signs of improvement in Ireland’s macroeconomic landscape, which is subsequently leading to global and competitive opportunities amongst Irish stocks.

Henderson Global Investors fund manager John Bennett manages the £1.39bn Henderson European Selected Opportunities fund, which has a 0.9 per cent exposure to Ireland.

He says: “Ireland’s prospects are looking brighter. The country’s current account has returned to surplus and Ireland has begun a gradual return to the capital markets, enabling it to move towards an exit from its EU/IMF bailout.”

Bennett has recently bought a small position in Bank of Ireland, based on Ireland’s “improving trade situation and competitiveness”, as well as businesses with “diversified markets” including beverage company C&C.

JP Morgan Asset Management European fund manager John Baker manages the £85.7m JP Morgan Europe Dynamic ex-UK fund, which currently has an 8.1 per cent exposure to Ireland. 

He attributes Ireland’s strengths in exports as a main driver for its sustained growth, despite a slowing in the sector in the latter half of 2012 “in line with weak global demand.”

Baker also looks to effects filtering down from the property and employment markets that are helping to improve the overall macro picture in Ireland.

He points to mortgage transactions in January and February combined, which are up 5 per cent from the previous year, along with “stabilisation” in residential property prices.

According to Baker, a 23 per cent reduction in unit labour costs relative to the rest of the euro over the 2009 to 2012 period has also improved Ireland’s competitiveness.

Baker currently holds Smurfitt Kappa, a world leader in paper packaging and international dairy food company Glanbia.

Similar to Bennett, Baker has made a recent move to buy Bank of Ireland. Baker says the bank’s underlying fundamentals proved attractive as Q4 earnings beat analyst’s predictions.

GDP

He adds that given the bank’s recovery profile, it has a “fairly attractive entry point” with a net asset value of 0.9 per cent.

Baker goes on to argue that Ireland could be set to leave the rest of peripheral Europe behind. He says: “Undoubtedly Ireland is ahead of Portugal and Greece. Spain and Italy are slightly different because they are so large.

“It is still within that category of the troubled economies of Europe but it has the highest probability of leaving that group quite soon.”

As growth in Ireland looks set to remain above 1 per cent during 2013, according to the IMF April GDP figures, by comparison Italy’s GDP is forecast to be -1.5 per cent and Spain’s  -1.6 per cent during 2013. This also compares to -0.3 per cent GDP growth for the eurozone as whole.

Investment Quorum chief executive Lee Robertson sees a slight distinction between Ireland’s recovery and the instability witnessed in the rest of the peripheral European economies.

He says: “We are actually vaguely interested in Ireland and have been for a while. They have really put their shoulder to the wheel and made great in-roads. It has managed to rejoin the investable fraternity.

“However we are not so sure about the rest of peripheral Europe yet and are choosing to sit on the sidelines, there are still just far too many uncertainties and risks.”

PSigma chief investment officer Thomas Becket says: “Ireland has undoubtedly been the poster child for European austerity measures and reforms that the core countries are pushing on the periphery.

“However, despite the fact that Ireland has returned to the bond markets, certain factors in terms of its long-term financial position still leave them in a relatively precarious position. They still have incredibly high debt to GDP at a government level, and there seems to be issues to be unwound in both the financials and the property sector.

”Ireland, as with all economies, is also at the behest of long-term global growth which at the moment is still quite questionable.”

Recommended

E&Y: Providers to launch long-term care annuities ‘in months’

Providers will continue to shun the pre-funded care insurance market but could launch new “immediate needs” annuity products within months after the Government confirmed it will introduce a cost cap. Earlier this year the Government set out plans to introduce a £72,000 cap on long-term care costs from 2016. The means test threshold above which […]

3

Help-to-Buy could spark 30% surge in house prices

The Government’s Help-to-Buy scheme risks pushing up house prices by nearly 30 per cent over the next three years, according to a group of economists. Macroeconomic consultancy Fathom Consulting says the scheme is “reckless” and offers incentives to lenders to issue mortgages to people who “should not” be offered credit. The consultancy estimates house price […]

9 October thumbnail

Johnson Fleming set to host webinar on auditing auto-enrolment schemes

With 23 auto-enrolment compliance notices issued by the Pensions Regulator, and an evolving legislative landscape meaning previously compliant schemes may now be in breach of regulation, now is the time to think about auditing your auto-enrolment scheme. Johnson Fleming is hosting a webinar on 9 October at 11:00 on how to audit your scheme to ensure compliance, avoid breaches and fines and overcome data issues.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com