You think things are bad where you were. Well, then, take a look at Ireland. Irish punters are really taking it on the chin. Stocks are down 75% from their peak in February 2007. This makes 2008 the worst year for Irish equities since 1793, according to a report from Bloxham Stockbrokers. Ireland is at the extreme end of this bear market.
And Ireland is suffering for good reason: a massive property bubble and crash, huge debt loads and a bloated financial sector. Nevertheless, the losses do beg the question whether the worst is behind us.
Bloxham sees five pre-conditions for a rise in equities in Ireland
- A stabilisation in the bloated financial sector (and this likely means mergers, further recapitalisation and liquidation of some firms)
- A thaw in credit markets
- A reduction in market volatility (which Bloxham claims is at its highest level in 80 years)
- A stabilisation of commodity prices
- A reduction of corporate credit spreads
These are certainly major obstacles to overcome. But one really needs to look to the underlying causes of asset deflation and market volatility to know when a rebound is in the offing. The problem is high debt loads, inflated asset prices and an over-sized financial sector. When these conditions are righted globally, not just in Ireland, we may return to more favorable market conditions.
Source
2008 is worst year for Irish equities since 1793 – Irish Independent