| In a sell-off year Merrion mounts major challenge |
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| The twenty first Finance Stockbroking Survey shows an advance by Merrion Stockbrokers to challenge the dominance of the other three major stockbroking firms, with Davy just about retaining its overall dominance in terms of number of categories won in the Finance Stockbroking Survey 2007. However, with sixteen overall categories won, Davys had to rely on victories in the bond categories to retain its overall category wins against Merrion’s thirteen. |
Excluding bonds, Merrion emerged as No 1, winning 13 categories in equities, for overall firm or individual analyst ratings, against eleven for Davys. Goodbodys followed with five firsts, and NCB scored three.
The market increasingly turned sour in 2007, with the ISEQ’s performance amongst the worst in the world. This reflected the dominance in the Irish index of sectors that were hardest hit in the credit crisis, financials and construction, resulting in a market which, in the words of one survey respondent was ‘tough to broke’.
There was quite a high level of staff turnover in the industry, especially in the early part of the year, and this is reflected in a change in patterns in the individual analyst ratings.
Merrion were credited by a number of respondents as offering a more bearish stance in the market, and this appears to have been rewarded with an advance in the firm’s ratings. In general, many analysts were seen by fund managers as being reluctant to make sell recommendations in spite of the falling market. Also evident is a rise in popularity amongst firms outside the big four, notably Collins Stewart, Bloxham, ABN AMRO, and Citi Smith Barney. These firms offer particular strength in international equity research, reflecting a growing international diversification of Irish institutional funds and pensions.
Davys, traditionally the strongest performer in the Finance Survey again shows resilience, particularly in overall company rankings. Reflecting, perhaps, a degree of disillusionment with research and the bearish Irish market, institutional investors polled saw the most important performance criterion as being ‘Day to Day Sales Service’, a category Davy wins. The most important service last year - research - was won this year by Merrion, taking the award from Davy who won it last year. Davy also came first for Best Equity Sales Service, and Best Sales Execution, while Merrion again won the category Best for Objectivity of Equity Research, which the firm has won since the award was introduced to the survey. Reflecting also a more practical orientation respondents rated back office service somewhat more important this year, a category also won by Davy.
A total of 464 institutions were polled, involving 1,213 individuals. It was carried out on a web based questionnaire in October-November 2007. 142 institutions voted, representing a response rate of 30.6 per cent amongst the global universe of instutions. The most significant Irish based fund managers participated, with votes cast from institutions representing over 97.8 per cent of funds under management in Ireland. |
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| Article appeared in the December 2007 issue.
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