It really has been a dreadful half-year for the Irish stock market, with the ISEQ Index down almost 6 per cent on its end-1998 level and down more than 12 per cent on the all-time high notched up on April 21st. Ah, those heady days of spring when things like collapsed bank mergers, eurostoxx indices and a slump in pharmaceutical shares did not concern the market.

It's difficult to see how the Irish market is going to revitalise itself from here, and even the arrival of Telecom Eireann in two weeks is unlikely to have any impact other than fuelling demand for a stock which will trade on a rating way ahead of the rest of the market. Telecom will be a mini-market itself, and will undoubtedly boost stockbrokers' coffers through lots of commission, but it alone will not give the overall Irish market a whole lot of impetus.

There are, of course, lots of reasons for the Irish market's dreadful performance, many of them self-inflicted by some of the biggest companies. But the main reason is the sell-off of even the larger stocks by Irish fund managers keen to diversify their holdings into the euro zone.

It hasn't just been the small/midcap stocks that have suffered from this asset reallocation, frontline stocks have also suffered.

Add in the dreadful reaction in the market to Bank of Ireland's abortive merger with Alliance & Leicester, AIB's ejection from the Eurostoxx-50 index, the slump in Elan's share price on fears that its ziconotide painkilling drug may not get FDA approval this year, and three stocks making up 45 per cent of the ISEQ Index had bad tales to tell.

Indeed, of the leaders, few fared at all well in the first half although CRH, Smurfit - albeit from a low base - Ryanair and Independent performed well while Kerry at least broke even in terms of share price appreciation.

At some stage, the pall of gloom over Bank of Ireland shares after the A&L debacle will lift and the market will recognise that the shares are one of the purest plays in the Irish economy although it might take longer for AIB to get over its ejection from one of the key European stock indices.

It was a great bonus for AIB to be included in the Eurostoxx 50, but its ejection from the index for reasons that are difficult to fathom is a decided short-term negative for the shares.

Whether or not the ziconotide drug gets its FDA approval this year, Elan does seem substantially undervalued and it's hard to square its current rating in the market with the price Abbott paid for Elan's smaller rival, Alza. Based on consensus forecasts, Alza is being bought on almost 36 times 1996 earnings and applying this multiple to Elan implies a takeout price of $43 a share if Elan does become the focus for a bid. That compares to the price in the market of just over $28.