MAJOR Northern Irish companies are likely to be included in the Dublin Stock Exchange's ISEQ index for the first time from late this year.
The move will mean that index tracking fund managers will be obliged to buy the stock to keep in line with the index.
Sources close to the Stock Exchange have indicated that the move is likely to go ahead in the autumn. "Fund managers need a few months to get their systems in order and to ensure they are not forced to pay uncompetitive prices for the stock," the source said.
Nevertheless, the move is likely to enhance the share price of the selected Northern companies. However, fund managers are said to be worried that a deflection of some of their monies North of the Border may lead to a reduction in the share prices of some southern companies.
The council of the Irish Stock Exchange has asked the Irish Association of Investment Managers for its views on the inclusion of the Northern companies.
Ms Ann Fitzgerald, secretary general of the association, said the move would be mostly welcomed by her members. However, they would need at least six months. "I can't see it happening before January," she said.
She added that there are problems with competition law. "How would you keep Guinness and Grand Metropolitan out?" she asked.
The inclusion of the two big brewers would distort the index and would not be workable, she added.
However, the move is likely to go some way to addressing the liquidity problems in the Irish market, where too much money is chasing too few stocks.
Liquidity is held back because the top 10 companies account for almost 70 per cent of the ISEQ. By comparison, in the FTSE 100, the top three companies account for less than 14 per cent of the index, according to Ms Fitzgerald. In addition many sectors of the economy, such as the high tech dominated by the multinationals, are not open for investment.
The companies which are likely to be included are Powerscreen, the latest Northern arrival in Dublin Northern Ireland Electricity, Boxmore, Ewart, UTV, Lamont, Mackies and Hampden.
Mr Tom Healy, general manager of the Stock Exchange declined to comment.
