Bank of Ireland Stocks Surge

Published: November 19th 2010
in Economics » World

Bank of Ireland

The pattern


This may seem like an opportunity. We all know that the European economy is sick, even very sick. The weak countries in the union are known as the PIIGS – Portugal, Ireland, Italy, Greece and Spain.


When Greece went into deep and serious troubles the shares in the Greek stock markets slipped to the abyss and the value of Greek governments bonds suffered as well.


Then the European Union and the IMF came for help. The EU cannot afford to have one of its countries go bankrupt, so eventually the EU found the money to assist Greece. The bonds and the stock market surged and everybody was happy and relieved.


Now take the word "Greece" and replace it with the word "Ireland" in the above paragraphs and you will get the same story with many economic similarities.


Who is next?


Until Europe does not deal seriously with its core economic problems, it is just a question of time until another European country faces bankruptcy. The other weak countries are Portugal, Italy, Spain, or it can even be a different country.


What if all of a sudden Hungary will say that its economy is facing difficulties?


The government bonds will fall and right after them the stock markets will fall as well. Many will say: Hey, don't buy anything in those countries, it's too risky.


True, it is risky. But until now whenever a risk became true the EU opened its pockets and fled the troubled state with money. Many people became rich overnight.


Bank of Ireland as an example


Be surprised, the symbol IRE is traded in NYSE and it means: "The Governor and Company of the Bank of Ireland.” This huge Irish bank’s shares are traded in New York. On Wednesday, before the Irish announcement of accepting help from the EU and the IMF, the closure in New-York was $2.16 per share.


By the end of Thursday’s trading day the closure was $2.88 per share, an up-side of 33 per cent.


Don't be that enthusiastic. As I said in many articles it's always about timing. When looking at the ranges the IRE shares were traded during the last 52 weeks, we see that the low $2.15 and high was $10.77. The question is when you bought it and when you sold it – again greed and fear.


Where to look


Focus on PIIGS, follow the news and be updated about market performances, yield on long term bonds, and of course macro data such as government deficit, unemployment rate, industrial production, exchange rates of the Euro etc.


If you think that there's a country at high risk and that the low markets are an opportunity, then it is time to invest, assuming the EU and the IMF will help again.


However, the reality may be completely different and the continent may not be able to face another monetary crisis. It is your money, your decision and your risk. Always think of what can go wrong.




Investing in troubled economies as in Europe can be an opportunity but also a great risk. Government bonds, local bank bonds should be on your focus.


This article does not recommend any investment in the capital market.

Related articles: (Bank of Ireland, European Union)
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