Irish shares are expected to forge ahead in 1998 as investors focus on domestic factors, particularly the booming economy which is expected to grow by as much as 8 per cent again this year.

Irish brokers are forecasting increases of up to 20 per cent in the market next year with earnings expected to show growth of 16 to 18 per cent. The woes of the Asian tiger economies are expected to have little direct impact on Irish shares which have little or no exposure to the region.

In broader terms, brokers say the impact of the crisis will be to reduce GNP growth in the west by around 0.5 per cent in 1998. But given the relatively robust growth outlook in 1998, this means that further negative impacts on financial markets should be modest, they say.

A more crucial issue for European stock markets, including Irish equities, is the prospects for US shares because of their influence on global markets. Analysts say the major risk to global equities centres on a contraction of price/earnings multiples in the US.

Many believe that US earnings growth may slow relative to the 19921997 period, reflecting the general maturity of the current US economic cycle and more limited scope for productivity improvements. While the Asian crisis has reduced the risk of rising US inflation, growth in the overseas component of US earnings may be constrained by weak demand in Asia and by general dollar strength.