Yet another week of turmoil in the Far East provided an inauspicious backdrop for stock markets in Europe and North America. But by now, investors in the so-called "developed" stock markets have become accustomed to 10 per cent rises and falls in Far Eastern markets, and even South Korea's decision to look to the IMF for help failed to cause too many trembles.
Within the past month, stock markets as far removed as Hong Kong, Malaysia, Korea and Brazil have suffered near-meltdowns only to recover sharply when international investors took the view that the tiger economies were not yet heading for the sort of depression which could have a damaging effect on exports from the developed economies.
Nobody in the markets, however, is taking anything for granted and many of the recoveries in the emerging markets have all the characteristics of the "herd instinct" at work. Certainly not the time for the private investor to get into tracker bonds with a big Far East exposure!
On the Irish market, corporate news was thin on the ground. Bank of Ireland, however, made good progress after a series of broker upgrades following the bumper half-year figures, with all the forecasters now expecting full-year profits of well over £500 million. Bank shares are still a fraction off their all-time high but should make more progress before the end of the year.
Lyons dutifully increased its cash pile to more than £54 million without giving any indication as to what it will be used on. With majority shareholder Unilever apparently happy to see £54 million idling away in bank accounts or gilts, minority shareholders in the tea company can have little hope that this cash mountain will find its way into their hands in the form of a special dividend.
IWP produced a sound set of interims and plans for a major expansion into the US which could involve spending of up to $40 million (£27 million). With the interest bill covered more than eight times by operating profits, funding an acquisition of this scale is no problem. The DCM is finally beginning to attract some companies, but another Irish company is destined for Nasdaq with no plans for a listing on the DCM or the AIM in London. Pharmaceutical group Alltracel plans to raise $25 million on Nasdaq, following in the path of the likes of CBT, Iona and Ryanair.
There is no question that high-tech and biotech companies can float on much higher multiples on Nasdaq than they could ever expect in Dublin or London, but companies aspiring to Nasdaq should be aware that is not always a one-way bet. Companies going on Nasdaq attract "momentum investors" who tend to get in early and get out quickly once the share has risen from the flotation price.
It may have taken a long time to get established, but Irish and British institutions are becoming a little bit more aware of the prospects of the high-tech/biotech sector. Iona Technology has learnt very quickly the impact that momentum investors can have on its share price, and is expected to take a Dublin listing as well to make its shares more attractive to Irish investors.
