Irish exchange goes it alone

The Irish Stock Exchange based in Dublin starts life as an independent exchange today, formally ending its 200-year association with the London Stock Exchange.

The breakaway follows three years of negotiations and several missed deadlines. The decision to divorce is the result of a European Union directive, requiring all member countries to have their own statutory authority responsible for the stock market in place by the end of the year.

Fund managers investing in Ireland hope independence will allow ISEQ, the Irish Stock Exchange Index, to break away from the FT-SE all-share index and start to reflect the faster growth of the Irish economy.

Since 1988 it has grown consistently faster than the UK. Company profits have also outgrown their UK equivalents, but Irish stocks have not attracted a separate asset allocation from international investors and Irish institutions themselves have invested heavily in overseas shares following the abolition of investment restrictions in 1989.

As a result Irish share prices have moved closely in line with the FT all-share index, leaving them on little more than 10 times current earnings, compared with almost 15 times earnings in London.

Last week, however, the ISEQ index surged to an all-time high, anticipating an increased allocation of overseas funds into the newly independent market.

Tom Healy, chief executive of the Irish Stock Exchange, is keen not to play up the significance of the move. The Irish stock market will be regulated by the Irish central bank.

But both markets will follow the same rules and listing requirements.