Philip O'Sullivan's Market Musings

Financial analysis from Dublin, Ireland

Market Musings 28/03/11 – Closing Bell Edition

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A number of things have grabbed my attention since my earlier epistle.


For starters, the Irish banks provided me with a few things to chew over. Firstly, there was a big spike in the ECB’s marginal lending facility on Friday, and it appears that AIB is at least partly responsible for it. The must-follow Lorcan Roche Kelly has a good piece about this. Elsewhere, ahead of the results of the Irish banks’ stress tests due at 4.30pm on March 31, Reuters has a piece saying that “Ireland may now have enough capital for the banks“. This is broadly in line with consensus heading into Thursday afternoon’s announcement, but for me the big question is, will the market believe the results?


Yet another bricks and mortar music retailer is to close. They really are resembling an endangered species.


UK broker Liberum has a note out today saying that European airline valuations are starting to look attractive. It says that within the sector Lufthansa offers the best value, followed by Easyjet & Ryanair. Speaking of broker notes, I also got a copy of Bloxham’s Irish Equity Strategy piece issued late last week. They’ve identified 4 key themes to play on the ISEQ, namely: 1. Companies with a high level of operational gearing. Key picks here are ICG & Grafton. 2. Attractive dividend yields (Total Produce & CRH). 3. “Category Killers” (!): Ryanair & Paddy Power. 4. Low Irish Consumer Exposures (Origin & Smurfit Kappa Group). (Disclaimer: I am a shareholder in ICG, Total Produce, CRH, Ryanair and Smurfit Kappa Group)


I wrote a piece in the March edition of Business & Finance in which I warned of the impact that soaring commodity prices are having. This Bloomberg article suggests that at least one commodity is shortly expected to pull-back from its 140 year high. Speaking of bubbles, check out this New York Times piece about valuations in the technology sector.


Written by Philip O'Sullivan

March 28, 2011 at 4:13 pm

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