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Thursday, 18th April 2024
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A gear shift is impending in the Irish economy. Change is on the way; change from the way things have been done, the ways we have been used to. The Government‚€ôs National Development Plan is near completion and ought to represent the change in gear. We have accelerated remarkably well, escaping from the muddy ruts of yesteryear and surpassing our own expectations about how fast we can actually travel without the wheels falling off. The shift from heady acceleration to a steady cruise in fifth gear, at sustainable speed, in relative safety, progressing past achievable milestones, is now needed. This is not about going on automatic pilot or cruise control, in what has been called a ‚€úculture of contentment‚€Ě. It is about sustaining the gains that have been made, making the economy work, and addressing problems in a way appropriate to the level of wealth that Ireland has proved it can generate. Among other things, the physical and financial infrastructure of the State must change substantially in the coming years.

Some of these changes are reflected in the articles in this month‚€ôs edition. Peter Brennan, who has spearheaded the IBEC/CIF campaign to have Public Private Partnerships (PPPs) adopted, reviews progress on PPPs (on page 8) in the light of the list of pilot PPP projects set out by the Minister for Finance on June 1st. He provides a useful list of the workload ahead for PPPs can be implemented and addresses with the argument about the cost of public versus private finance. While he says that the developments on the PPP front are positive, there is still some doubt as to the extent of financing opportunities that PPPs will represent. Project finance professionals are not quite holding their breaths. The sooner they are enabled to take a firm view, the better. In this context also, we take a look at the financing and other PPP aspects of the LUAS project as presented in the Arthur Andersen report on PPPs and LUAS on page 10.

The Minister for Finance has introduced new flexibility into the pensions regime for owner directors and personal pension plan holders. Alison Coffey of Norwich Union writes on page 16 that new products from fund managers are expected soon to cater for the new Approved Retirement Funds (ARFs) and Approved Minimum Retirement Funds (AMFSs) and she sets out some areas where these products might focus. A useful decision tree on the new options features in her piece. David Harney of Irish Life takes a shot at predicting the new types of products that the pensions changes will provoke. He predicts annuity products that will pay income based on the performance of equity-based assets as well as a much wider range of investment products for pension holders. However, he cautions that the new pensions flexibility also increases risks in retirement planning. Product providers, as well as pension investors, will watch to see how these products take off ‚€‘ as well as how the marketing people might deal with those sonorous new acronyms. On the broader front, the new pensions rules signal the process of change in the way pensions and financial security are regulated and incentivised by government.

Still on the subject of change in the way things are done, Eoin Fahy writes about intra-day trading of stocks, mainly drawing on the US experience, and noting that the phenomenon is yet to occur, or be possible, in Ireland. It is only a matter of time before the inevitable catching up with US trends happens in Ireland. Trading stocks from home on the Internet sounds like a long way off, when we are at the stage of a major public campaign to stimulate interest in Telecom shares. The technology will be applied to enable such trading before long.

The establishment of Merrion Capital by ex-NCB management was a big event Irish stockbroking and capital markets circles. We recall the main aspects of the event on page 2. With the initial media hype over, Merrion have it all to do now to make the impact they claim they can. It is entirely in keeping with the rapid development of stockbroking and asset management services ‚€‘ ‚€úwealthcare‚€Ě, as it is called ‚€‘ that new firms should be established. While each new firm may not have as dramatic a birth as that of Merrion, it will always be the case that established firms will lose key staff who wish to try out a venture for themselves. More competition and differentiation will be entirely welcome to the investing public.

Of continuing interest will be the piece by Ted Webb of IBI Corporate Finance in which he sets out options for IPOs in relation to Irish, UK, Continental European and American markets. It is noteworthy that 11 Irish companies are listed in NASDAQ while there are only five on the Irish Exchange‚€ôs Developing Companies Market and each of those are also dual listed on AIM in London. Listing on NASDAQ is further described by Charles Balfour of NASDAQ on page 33. For those interested in raising capital through corporate bond issues, Paul Gallen of Elan Corporation (page 20) describes the process one of the country‚€ôs leading plcs went through in getting a corporate bond rating.

David Gribben of Ulster Bank considers (on page 24) issues around the management of a company‚€ôs surplus capital through investments rather than deposits. He writes that in today‚€ôs growth environment, many companies are generating significant cash surpluses and should consider investing that cash in equity-based funds. This would represent a further change in the way things are done in financial management in Ireland.

Richard Pike also considers the implications of the new euro environment for technology, and looks forward to the next important technology agenda items for finance directors, when they have got the Y2k and euro conversion problems out of the way.

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