NCB Stockbrokers has forecast that the Irish stock market will rise by 15 per cent next year, with the ISEQ index of shares finishing 1999 at 5,400 compared to NCB's end-1998 target level of 4,700.

"For 1999 and beyond, the sustainability of Irish economic growth provides a strong earnings backdrop and proposals to reduce the rate of corporation tax to 12.5 per cent will provide an automatic boost to earnings for many ISEQ companies," the stockbroker says.

Internationally, NCB expects 1999 to be "a moderate year" for overseas equity markets with both US and continental European markets delivering returns in the low double digits.

In the home market, NCB is optimistic about the outlook for the leading Irish stocks. It believes that Irish financial stocks will continue to have significant appeal for investors who want exposure to the fast-growing financial services market in Ireland and recommends AIB, Bank of Ireland and Irish Life. It also favours Elan, which it expects to continue to produce 25 per cent trend earnings growth, and Greencore, which is attractive given its low rating in a European context.

Among second liners, NCB recommends DCC, Irish Continental Group, IAWS, Kingspan and Green Property.

The broker believes that the impact on larger stocks of the restructuring by Irish fund managers of their portfolios to take account of the euro has been overplayed. However, while the share prices of smaller stocks should recover after this year's poor performance, previous ratings relative to the larger stocks may not be fully regained and any outperformance will be modest, NCB says.