Are Irish stockbrokers and market participants miserable at the prospect of taking a break? Did St Patrick invest in some early version of Eircom and place a curse on the market? Why, in other words, does the Irish stock market behave so oddly before holidays?

Among the changes that economic and monetary union has brought to the financial world, there is one that has received little attention, but that may yet have significant effects for Irish equities. Among the features being harmonised are the times and dates on which equities can be traded. The effect on Irish stocks and stockholders is that it is increasingly possible to trade on public holidays and bank holidays.

One potentially interesting effect on stock markets arises from the little-known but highly significant "holiday" effect. This refers to the historical fact that share prices seem to exhibit consistent patterns around holidays, with high returns on days prior to holidays. A holiday in this context includes both public holidays and exchange closing days.

It is well-known that, in many respects, the stock markets of the world take their lead from the US, British and Japanese markets. However, one of the key findings of researchers is that holiday effects appear to be driven primarily by local conditions. They seem not to be reflections of US, Japanese or British market movements.

This is perhaps not surprising given the fact that, with the exception of Christmas and New Year, public holidays worldwide are varied in when they occur. Indeed, there is evidence that it is the existence of a holiday, whether the exchange is closed or not, that is associated with the rise in stock prices.

Another key finding is that, while the day after a holiday is associated with a decline in stock prices, this is almost never enough to offset the rise that occurred in the day preceding the holiday. Thus, over the holiday period, a net rise in stock prices is the norm.

Up to now there has been no investigation of the holiday issue in the Irish context. However, I have discovered that, in regard to holidays and stock prices, as in so many other areas, the Irish situation is different. The difference has implications.

I examined the ISEQ index, its industrial and financial sectoral indices, as well as a number of other indices, over the 1988 to 1998 period. The results are extremely interesting.

First, the majority of the indices examined show a rise in stock prices on the day before a holiday. However, the return on days before uniquely Irish holidays, those days when the Irish market was closed but the British and US markets were open, are very different.

Indeed, the ISEQ and its sectoral components show falls in stock prices on the days before these unique Irish holidays and also show falling prices on the days after unique Irish holidays. International evidence is overwhelmingly that stock prices rise on the day before a holiday.

I am aware of only one country, Brazil, for which falling stock prices before a holiday has been found. Why this characteristic, rather than sunshine or a genius for soccer, is the one we share with Brazil is unclear.

The implication is that with harmonisation to common European holidays of those days on which the stock exchange is closed, we might expect to see a rise overall in the Irish market average annual return and a fall in the average annual return of other EMU markets.

This will occur as there will soon be few or no "unique" national holidays on which the markets are closed. For example, October 29th is a public holiday, but the Irish stock market is open for business. We now know that for the Irish market, these unique Irish holidays seem to be associated with declines in stock price. If there are fewer days on which these declines can occur, so much the better for investors.

For our EMU partners the pattern is reversed. The evidence indicates that all other equity markets benefit from holidays in general and unique national holidays in particular. With the loss of these national holidays, there is less opportunity for stocks to rise.

Brian Lucey is lecturer in finance at Trinity College.