Market Musings 11/11/11
Markets are going better on optimism around regime change in Greece and Italy, but I suspect this positive sentiment is a little premature given how often we’ve been let down by Europe’s political class. We’ve also seen some political pressure applied to the Irish financial sector, which is a case of “Robbing Peter to pay Pól”. Finally, the Irish blogging sector has a great new entrant, more of which anon.
(Disclaimer: I am a shareholder in AIB plc) 99.9% State-owned AIB announced that it has u-turned on its previous decision not to pass on the recent ECB rate cut after being leaned on by the government. The bank’s previous stance had been categorised as Scrooge-like behaviour, but in reality, as economist Ronan Lyons says, it represents “a win for mostly pre-2004 borrowers at the expense of taxpayers“. By holding back AIB’s ability to return to profitability and rebuild its capital, this exposes taxpayers to the risk of having to inject even more money into the bank down the road.
(Disclaimer: I am a shareholder in Bank of Ireland plc) Elsewhere, Bank of Ireland released a solid trading statement earlier today. One broker note I saw states: “it reads like it’s steadying the ship”, which I think is a reasonable summation. I was pleased with the improvement in the LDR (from 164% in June to 153% at end-October) and the stabilising NIM. Of course, the big unknowns are what happens if the eurozone crisis deepens and/or the Irish government gets even more ‘hands on’ with the financial sector, so let’s not count our chickens just yet!
Staying with corporate newsflow, Carr’s Milling released full-year results earlier today that confirmed a buoyant agri-sector in the UK, which has positive read-through for Irish listed Origin Enterprises.
(Disclaimer: I am a shareholder in Total Produce) Finally, I was delighted to learn earlier today that there are now three Irish blogs focused on equities. In addition to mine and John McElligott’s ‘Value Stock Inquisition‘, you can now follow Wexboy’s value investing blog. He has a great post on Total Produce, which I’m a big fan of, that’s really worth a read. Be sure to bookmark his site.