Irish Stock Exchange Reviews 2007 Performance

by Jason Gorringe, Tax-News.com, London

05 February 2008

While the value of equities traded on the Irish Stock Exchange (ISE) grew strongly during 2007 compared to 2006, the main ISEQ Index could not escape the turbulence which struck global equity markets in the second half of the year, as the consequences of the US sub-prime mortgage crisis played out, the exchange announced in its performance review of 2007.

According to the ISE, the value of equities traded on the exchange totalled EUR199 billion in 2007 – a rise of 54% on the 2006 figure. Average daily turnover for 2007 at EUR784 million was also substantially higher than in 2006 when turnover averaged EUR511 million. However, following three years in which the ISEQ outperformed many world benchmark indices, 2007 saw it decline by 26%, despite a strong start to the year which saw the index reach its lifetime high of 10,041 on 21st February. Concern about the outlook for the Irish economy and Irish companies was also a factor in the volatility in share prices on the ISE.

The ISE explained that a number of factors drove the increase in trading volumes. These included the attractiveness of the Exchange’s electronic trading platform both technically and on price, its ability to continue to gather order flows from new sources, and the increased market volatility during the year. The actual number of transactions in equities being undertaken on the market during 2007 increased to over 1.7 million transactions. This represented a 92% increase compared to the previous year (901,000).

Companies admitted to trading during 2007 raised more than EUR6.6 billion on the market during the year, a 79% increase on 2006. Ten new companies were admitted to trading on the Exchange in 2007. There was one addition to the Main Market, Smurfit Kappa Group plc, which raised EUR4.1 billion, and nine companies joined the Irish Enterprise Exchange (IEX). These IEX entrants covered a variety of industry sectors, including pharmaceuticals, technology, food, software and investment, and included two Northern Ireland companies. The new IEX companies raised EUR689 million in aggregate on IEX. There were 30 companies on the IEX market at the year end.

In 2007, 984 new debt issuers listed on the Exchange, and it remains dominant in this area among European exchanges. The flow of new issues slowed in quarter four, with 166 debt issues in that quarter. This slacker performance reflected the uncertainties in global financial markets. Despite this there was a 27% increase in the amount of new debt tranches listed in 2007. The total number of tranches listed on the Irish Stock Exchange, from both new and existing programmes, has increased by 47% when compared to 2006. Notable issuers in quarter four included AIB Mortgage Bank, Bayerische Hypo-und Vereinsbank Aktiengesellschaft, GP Investments Limited, Schering-Plough Corporation, Banco Prosper S.A. and Suntrust Bank.

Investment fund listings saw a robust end to 2007, with 154 new funds/sub-funds listing in the fourth quarter. The Exchange continues to be the global leader in the listing of investment funds, with 10,200 such securities listed as of the end of December 2007. The year overall was a positive year for the Exchanges’s investment funds business, with the number of new funds and sub-funds listing up 11% on 2006 (including umbrella funds, the increase is 20%).

Three new firms became members of the ISE in 2007. ING Bank joined as a primary dealer in Government bonds in April and UBS Limited and UBS AG as equity and clearing members respectively in November. The current number of ISE Member firms is 32.

In November 2007, the Exchange launched a new pricing structure, providing significant cost savings and incentives for firms trading in securities admitted to trading on the ISE. This, in the last two months of 2007, encouraged further trading volume growth on the Exchange’s electronic trading platform, ISE Xetra. The new pricing structure is a key element of the ISE’s strategic response to the Markets in Financial Instruments Directive (MiFID).

Commenting on the Exchange’s performance, Deirdre Somers, CEO, stated that: “Even with the difficult market conditions of recent months, 2007 has been a successful year for the ISE and we will continue to work with both domestic and international players in providing innovative market solutions in a time of significant flux in the markets.”

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