Irish shares surge on UK election news

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Donal O'Donovan

Irish shares have surged to a five year high with Bank of Ireland alone up almost 9pc, as investors pile into banks and builders making big bets that the threat of a messy Brexit is over.

The dramatic rise has added billions of euro to the valuations of Ireland’s most important companies, and will leave many investors sitting in big paper profits heading into year end.

UK Prime Minister Boris Johnson’s decisive win in the UK general election has turbo-charged European markets on Friday. With Ireland the most exposed economy after the UK itself to a Brexit crisis, the win

The ISEQ index of Irish shares has shot to a five year high and is now trading well above even pre-Brexit levels.

Bank of Ireland, AIB, Ryanair, housebuilder Cairn Homes, hotel operator Dalata and ferry operator ICG are among the biggest gainers in Dublin.

Bank of Ireland, Ryanair, Dalata and ICG all have big business interests in the UK, and stand to gain from the impact on their UK profits of the post election surge in sterling

In London a surge there including banks and utilities that had faced possible nationalisation under a Labour governments. With London still Europe’s most important stock market that helped carry European stock markets within striking distance of an all-time high on Friday.

While companies and finance houses are broadly against Brexit, investors see the Conservative win ending three years of deadlock at Westminster and clearing the way for an agreed and structured Brexit.

The UK-focused FTSE mid-cap index jumped 5pc to a record high. The Iseq index of Irish shares is up 3.3pc and the Iseq 20 index of the biggest Irish shares is up a massive 7.8pc.

The pound has continued its surge higher – up 2pc on Friday. The pound has rallied over 11pc against the euro since August and could gain further ground in the coming weeks, according to Lee Evans, head of FX Trading & Strategy at Bank of Ireland Markets & Treasury.

But he warned the current exuberance in the market may not last as the next phase of Brexit talks get under way.

“Currency markets will quickly turn their focus to the negotiation of a new EU/UK Free Trade Agreement which could limit Sterling strength in the New Year,” he said.