Budget impact with shares

ranger4

With the very negitive budget due this afternoon could it have a very negitive effect with share prices in general.

Baird

Cant see it having much of an impact to be honest.
The banks are priced almost to go bust at this stage.
A worsening economic situation will probably not have much of an effect.
A more important thing to look at is the continued advances seen in the bond markets.
Banks are making money hand over fist for the past 2 weeks as a result which hasnt
been pointed out by any analysts.
If this continues the bond market will help lead the equity markets out of this giant
hole we seem to be in at the moment.

ranger4

Baird wrote: »

Cant see it having much of an impact to be honest.
The banks are priced almost to go bust at this stage.
A worsening economic situation will probably not have much of an effect.
A more important thing to look at is the continued advances seen in the bond markets.
Banks are making money hand over fist for the past 2 weeks as a result which hasnt
been pointed out by any analysts.
If this continues the bond market will help lead the equity markets out of this giant
hole we seem to be in at the moment.

Only a matter of time before the government follows the uk and buys stock in banks forcing investors to pull out of irish bank stock.

Baird

ranger4 wrote: »

Only a matter of time before the government follows the uk and buys stock in banks forcing investors to pull out of irish bank stock.

Why?
The banks dont need it at the minute, the shareholders and the gov dont want it.
What reason would there be to do it?
The banks dont need to have a tier 1 at 11.5 as those idiots at davys said this
morning to get money, they have a gov guarantee that superceeds that.

Baird

2% increase in cgt.
bastards

ranger4

Baird wrote: »

2% increase in cgt.
bastards

Have they left the 1% stamp duty alone.:(

daveirl

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Baird

daveirl wrote: »

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Which countrys would they be Dave?
Uk and the US who's banks have huge capital markets and sub prime exposure?
Fortis and Hypo realestate are in the exact same position.

Our banks are undercapitalised hence they couldn't rally yesterday when the Dow had its biggest rally in history.

AIB who have minimal bad debt charges and huge deposit base are not
undercapitalised in comparison to Anglo yet they are both down 80% YOY.
That tells you its not a capital issue.

The market is pricing them for partial nationalisation, if you disagree go on a buying spree, the shares are a steal buy your reckoning. How can you say the shareholders don't want it, they are running for the door at the moment.

The market is pricing them for nationalisation but for what reason?
They have repeatedly said they do not see anywhere near the problems that
brokers are saying, hell AIB even raised its div recently.
Completely illogical and irrational markets we are dealing with.
Fear and panic have put Irish banks where they are not impairment and
capital issues.
To your point about a market spree if i had the money i would have the lot of
it in AIB at these levels. The risk reward is huge.

daveirl

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Baird

daveirl wrote: »

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I never mentioned US exposure dave.
I said sub prime exposure and the main problem with a lot of banks is
not the direct sub prime exposure its the complex financial instruments
based on crap assets which have plummeted in value.
The instrument values have fallen a multiple of what the underlying assets
have fallen which has crippled banks.
This is the reason Lehmans failed, RBS was nationalised, Northern Rock went to the wall etc
Its not so much a direct impact of the sub prime assets, its the pyramid
of instruments that banks built to keep reselling these assets at higher
and higher leverages. When the underlying asset falls the instruments value
falls a lot more.
How you can compare the CDO exposure of US banks in the same breath
as bad debt charges for Irish banks is beyond me.
Land values can never be written down to zero, worst crash in history
wrote down land values from peak at 40%.
We are already well past 20% in this country, yet cdo's etc can and are
being written down by 90% and greater of their original values.
Thats what the credit crisis is about.

And the market punished AIB for that hubris. The only decent move any of them made was when BOI admitted that maybe just maybe something was wrong when they cut their div.

The banks readily admit they need a government guarantee to survive, I don't see why seeing nationalisation as a next step is so out there.

What on earth are you talking about hubris?
They are well capitalised, their shareholders deserve a div if it can be
afforded why not pay it?
How on earth a bank who knows it is well capitalised and who pays what its
shareholders deserve can be called arrogant is beyond me
Institutional shareholders are more concerned with the div than fluxuations
in a share price, it would be an extremely negative move to cut your div and
your share price should suffer as a result. Instead the opposite happened with AIB

Final point the banks admitted they needed a gov guarantee to raise money
in the credit markets however they have never said they need capital.
They are two completely different issues.
Thats why nationalisation as a next step is so out there.
For AIB to hit a core tier 1 of 8 and be the best capitalised bank in Europe
all it would need to do would be sell M&T (even at a 50% discount) and
withhold the div for 1 year.
But why should they? What benefit would there be to hitting the magic 8?
Would it help in the bond or money markets ? The answer is no.
The reason is they have a gov guarantee so even if their core tier 1 were
to hit 3.5 like postbank they will still be on a level playing field as the best
capitalised banks in Europe. It doesnt matter though as there is no money
in those markets so why pander to the whims of analysts who two weeks
ago decided that a min of 6 should now be 8.

People who claim Irish banks need rights issues or nationalistion do not
understand a) how banks balance sheets operate b) how banks raise debt c)
the bond markets.
If they did they would see how irrational AIB hitting 2.82 actually is.

daveirl

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