Millions wiped off stocks after SF’s win
‘No certainty of a new government’
MILLIONS were wiped off the value of the Irish stock market yesterday in reaction to Sinn Féin’s electoral triumph.
Bank of Ireland and AIB were among the biggest fallers across Europe, sliding more than 7% at one point, as investors feared a negative impact from Sinn Féin’s policies, which include an end to tax breaks for banks.
‘Sinn Féin’s manifesto contained a range of more radical policies on banking and housing,’ said Davy Research analyst Conall MacCoille.
A significant difference in the manifestos of the three main parties reduces hopes among investors for a smooth formation of government.
Goodbody Stockbrokers chief economist Dermot O’Leary said: ‘There is no certainty that a government will be formed at the end of these discussions and another election cannot be ruled out in the coming months.’
Fianna Fáil finance spokesman Michael McGrath said last week that he would not make any changes to the treatment of deferred tax assets – a method in which Irish companies use historic losses to offset taxes on current profits.
The finance ministry said late last year that deferred tax assets were worth €2.2billion to Bank of Ireland, AIB and Permanent TSB, lenders bailed out by the State after they racked up big losses in the economic crash of more than a decade ago.
Meanwhile, real estate stocks such as Irish Residential Properties
(IRES.I) and Glenveagh Properties (GLV.I) also took a beating on Sinn Féin’s housing policies, which include abolishing the Help to Buy scheme and imposing a rent freeze.
The worst performer on the ISEQ was Permanent TSB, which is 75% State-owned, as its shares slumped by over 11%.
Bank of Ireland ended the day over 8% down and AIB slumped 5.4%.
There were also decreases for property companies, as Cairn Homes fell almost 9%, Glenveagh was down almost 11%, and Hibernia REIT slumped almost 7%.