The Irish stock market plunged by more than 4 per cent to its lowest level in six months as fears of economic recession on a global scale gripped world markets and nervous traders and investors dumped stocks and fled to the safety of bonds. Nearly £2 billion was wiped off the value of the Irish stock market as the ISEQ index closed at 4509.76 as concerns over the crisis in Russia continued to mount. Russia's central bank suspended all foreign currency trade on the main exchange for the second successive day in the hope of preventing an all-out rout of the rouble which has lost nearly 60 per cent of its value since Moscow announced its devaluation 11 days ago. Meanwhile, the Kremlin dismissed rumours swirling in world financial markets that President Boris Yeltsin had resigned. It was the second day in a row that financial markets were gripped by talk the Kremlin leader had stepped down.
Markets around the globe fell sharply on foot of the political and economic uncertainty in Russia allied to concern about Asia and Latin America. The Dow lost more than 100 points shortly after it opened yesterday while some eastern European markets fell by more than 10 per cent. Western European markets also took a battering, ending up with losses of 36 per cent.
Dealers said Irish stocks had little exposure to any of the troubled regions but this had failed to reassure many investors who were instead moving funds to the safety of government bonds. Volumes were light with little liquidity in the market as bid interest dried up.
"It's like catching a falling knife deciding when to get back in to the market - if you get the timing wrong you get cut. Investors here will wait for overseas markets to calm down and then you might see some buyers emerge," one trader said.
AIB, which has a stake in Polish bank WBK, dropped 66p to £10.25 while Bank of Ireland shed 75p to £11.60. Irish Life, which is involved in a joint venture in Hungary, lost 28p to 575p and Irish Permanent fell 30p to 800p. Among industrial stocks, CRH gave up 36p to 784p in a late sterling deal while Smurfit was down 12p at 143p. Both companies have operations in Latin America, but they are small as a proportion of total business. IWP, which has a distribution company in Poland, also dropped 25p to 300p.
Independent Newspapers closed 20p lower at 290p after announcing a fall in interim profits to £34.2 million from £39 million. The losses were attributed to falling exchange rates in Australia and New Zealand in particular and a near doubling in interest charges.
Kingspan failed to buck the general downward trend despite reporting a 38 per cent rise in pre-tax profit from £13.07 million to £18.0 million in the first half. The share price closed 10p lower at 225p.
Irish technology stocks quoted on New York's Nasdaq also took a drubbing yesterday with CBT down by more than 9 per cent, Iona off 8 per cent and Esat more than 7 per cent lower by the time the Dublin market closed.
