SSIAs, the ISEQ and timing the markets

I wonder if the introduction of the SSIA has increased the level of demand for Irish shares? (Of course, not all investors will stick with Irish equities, but many will.)

If it has, this elevated demand could be anticipated to have an effect over the next 4-5 years, when SSIAs end. One would expect this demand to increase prices. Similarly, if investors decide to encash their investments at the end of 5 years (as lots of contributors to the board have mentioned doing as a way to tackle their mortgage), then you might anticipate that prices would decrease.

How much impact do you think SSIAs will have on the Irish equity market?

tedd

SSIAs & ISEQ

Little or none would be my guess.

A far bigger issue is the probable reduction in Irish equity holdings by Irish managers.

Post Elan the trustees of the big pension funds and their advisers are re-visiting this question.The average Irish equity weighting at c.18% (World Index 0.2%) would seem to have quite a lot of room to fall.

While many of the Irish shares look attractively valued , large scale selling by local institutions would need to be balanced by overseas buying.With the litany of banana skins which have been a feature of recent months the market has credibility problem.

Hi Tedd

I agree with Monksfield. The volume of SSIA money going into Irish Equities is probably not sufficient to have any significant impact on Irish equity prices.

What's likely to be more significant for worldwide equity markets is the forthcoming rash of retiremnets of 'baby boomers' and the consequent impact on cash flow in the US and elsewhere.

On a similar (?) theme, I imagine the only thing that's stopping most Irish fund managers from dramatically reducing their exposure to the Irish market is their inability to do so without driving the market down against themselves. As somebody asked at a seminar a few years ago, why are there no fund managers in Donegal? (Think about it.)

So where does that leave us? Sorry, my crystal ball is in for its 10,000 mile service.

Regards
Homer

IMHO, SSIA's will seriously hamper general economic demand over the next five years. A lot of car dealers, auctioneers, restaurant operators and tourism interest are going to feel the pinch as money that was being spent on discretionary and/or leisure pursuits are committed to the bank, rather than the consumer's pocket, every month.

That effect would hardly do the ISEQ much good.