Irish corporates may have kicked up a fuss, but it came as no great surprise that the Minister for Finance, Mr McCreevy, ignored their entreaties to reverse or at least ameliorate the Budget provisions on the treatment of tax credits on dividends.
Given that the Budget was broadly seen as equity-friendly, with corporation tax and capital gains tax slashed, there was really little sympathy for the corporates. Certainly, the response in the market suggests that investors have shown little concern about the tax credits issue, with the ISEQ being driven to another new high, before profit-taking and the latest Asian flu brought the index back down below the 4,000 level.
The IAIM and the IAPF have strongly criticised the new treatment of tax credits, and the IAPF has said that it will cost members of pension schemes around £25 million.
But with shareholders now going to get a lower return on their investment in shares, in terms of a lower gross dividend yield, corporates will probably come under pressure to compensate for the reduction and eventual abolition of tax credits.
More share buybacks seems to be the most obvious mechanism.
Allied Irish Banks found itself in the position where it had to redeem $180 million (£124 million) worth preference shares, mainly held by American retail investors, as a result of the Budget provision.
The terms meant that AIB would have had to compensate the holders of the shares for their reduced tax credit.
Other than that, it was another good week for Irish share prices, although some of the gloss was taken off the performance in the second half of the week as international markets felt the heat from yet another collapse in the Korean stock market and currency.
Given that many think that the IMF rescue package will be insufficient to support the Korean financial system, the negative response in European and North American stock markets was modest.
Banks and other financials continued to benefit from huge demand for their shares as a result of the corporation tax changes and virtually every financial stock hit a new high before easing back on the latest Far East slump.
The latest inflation figures might suggest that inflation is returning as a negative factor, but there is absolutely no sign that the economic boom is running out of steam. If anything, the expected fall in interest rates, in the first quarter of 1998, will fuel demand for banking stocks.
Two takeover bids in the space of a week is something of a record for the Irish market - even if the approach for ILP is still some way short of the real thing. ILP has performed dismally since it floated 18 months ago, and it will cause little hardship to the market, if the packaging group is swallowed up by somebody.
Likewise, a successful takeover by Dunloe House for Ewart will cause little heartache for the market, although Noel Smyth will probably have to increase his 67p sterling a share offer if his bid to unite Ewart and Dunloe into a cross-border property company is to succeed.
If Ewart does depart the stock market, it is being replaced by another Northern Ireland company, BCO Technologies, which makes its debut on the DCM and AIM next week.
