On the subject of interest rates, AIB Investment Managers has predicted that European rates will settle at around 3.3 per cent - at least for 1999. After that there may be some upward pressure but the general interest-rate environment is expected to remain at historically low levels. AIBIM has just announced the creation of a new Eurozone Equity Fund for group pension schemes which will be available from January 1st. The fund will hold assets in EMU member-states and will continue to invest directly in the Irish market. Around 50 per cent of assets currently held in pension funds are invested in the Irish market. With the introduction of the euro this will probably decline to between 20 and 30 per cent.

This does not raise any concerns for Irish investors holding predominantly Irish stock portfolios. AIBIM suggests overseas investors will take a greater interest in the Irish market post EMU. The leading shares will be in demand but interest in second-line stocks is also expected to pick up, according to AIBIM.