AT the beginning of the week, few in the Dublin market thought they would be seeing it trading at all time highs by the end of the week. Isn't it amazing what a combination of the end of the quarter and a surprise decision by the Fed to hold interest rates steady will do for market sentiment?
After yesterday's sturdy performance in Dublin, the value of the Irish market is now not much short of £20 billion. While the start of the new quarter will probably see the level of activity wind down somewhat, dealers in Dublin see further gains for the market, and for the financials in particular.
Bank shares - which are usually compared on the basis of their dividend yields and the yield gap against bonds - always tend to thrive when bond prices are booming. That decision by the Fed to hold interest rates - a decision vindicated by the later durable goods figures - sent bond prices soaring and Irish bond prices followed the upward trend. As long as bond markets remain firm, demand for the financial stocks should also remain strong.
While the two main banks pushed ahead strongly, Irish Life also benefited from a series of bullish comments from brokers in the wake of the well received interim results. Merrill Lynch and Riada both told their clients to buy (why do analysts have to use terms like "accumulate" when a simple "buy" will do) while Irish Life was also the focus of some positive comment from British Sunday papers.
Woodchester also came in for some positive comment from company broker NCB, mainly because of its good first half performance but also because of renewed speculation on the sale of Credit Lyonnais's stake. Given that Credit Lyonnais has been dubbed "the bank that nobody wants to buy", the time may be near when Craig McKinney should be persuading his French overlords to sell, whatever he may have said in the past about Woodchester being a core element of the its business.
Certainly, if a decision is taken to sell the Woodchester stake, it will be at a price well above the current 190p. Recent purchases of asset finance companies in Britain have been in the order of 2.5 times book value putting a value of 250p a share on Woodchester - or £530 million in cash terms. That would give Credit Lyonnais £280 million for its 53 per cent stake.
And who would be the potential buyers? Craig McKinney and Dan O'Connor would undoubtedly favour another overseas parent and, indeed, Woodchester management has a 90 day right to try and find an alternative buyer at the same price as any other bid.
Certainly GE Capital has been mentioned in the past as a potential bidder. On the home front, a £530 million price tag might rule out all but the two big banks even though smaller banks like Irish Permanent, which have a substantial asset finance business, might like to add on Woodchester.
Elsewhere, the market liked Fyffes's disengagement from its loss making American operations, but the share still has a long way to go to regain its 122p high of three years ago.
