| Leveraging the opportunity created by the downturn: Ghose |
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By: Pramit Ghose
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| Irish corporates have the ability to build their businesses in the current maelstrom and Bloxham’s equity research team is using the withdrawal of research coverage by global investment banks of Ireland as an opportunity says Pramit Ghose managing partner of Bloxham Stockbrokers, one of the oldest investment firms in the UK or Ireland. One of just two bond brokers in Ireland, Bloxhams wins this year’s FINANCE Survey in the resurgent bond sector. |
Global financial markets are highly volatile at present. Traditional investment patterns are breaking down and confidence among investors and corporates is weakening. These issues are global phenomena that are bearing down directly on Ireland, and its small open economy. Amid that turmoil, Irish companies and investors need to navigate with caution.
Bloxham Stockbrokers is one of the oldest investment firms in Ireland or the UK. From its roots as a retail stockbroker, the firm has broadened its reach into bonds, equities, corporate finance, asset management and wealth management. In each of these areas, we perceive significant opportunities to expand our business amid structural change in the Irish economy and its financial markets. | | Pramit Ghose |
The Irish equity market has endured sustained weakness over the last two years. From its high in January 2007, the ISEQ has declined by 76 per cent, led by financial and construction stocks. This trend replicates what has unfolded on global markets. A mixture of stressed credit markets and over inflated property values has created a sharp economic slowdown. Volatile commodity markets have compounded risk and exacerbated currency swings across global markets. These changes have created enormous challenges for Irish companies, and ones that will test their management skills and financial strength to the full.
Bloxham believes Irish based corporates have the ability to build their businesses in the current maelstrom. A combination of strong balance sheets, diversified earnings and experienced managers will help these companies survive and expand. The industrial sector, in particular, contains companies that are already leveraging the opportunity created by the economic slowdown. Ryanair is using its industry lowest costs to grow market shares across Europe by attracting price sensitive customers. Kerry Group and CRH, for example, have balance sheets and worldwide management teams capable of acquiring depressed assets and organically expanding amid the current environment. These type of companies, we believe, warrant the support of Irish stockbrokers.
Bloxham’s equity research team is using the withdrawal of research coverage by global investment banks of Ireland as an opportunity. We are now producing research on Irish companies that is distributed to investors at home and abroad, while we undertake comprehensive research on the Irish economy and its companies. Whereas a small independent broker might struggle for profile in a bull market, current conditions allow us to add value to corporates and investors alike.
Alongside our institutional equity research, sales and trading capabilities, we are also developing our bond business. With bond issuance across the western world set to expand sharply in the credit crisis, bond broking is undergoing something of a renaissance. Bloxham is one of just two Irish brokers operating in the bond market and we have positioned our bond research and sales teams to serve clients in Ireland and overseas.
Retail stockbroking has evolved into wealth management over recent years. We believe wealth preservation will emerge as the key theme during 2009 and we are positioning our advisory team to support that demand. In this context we expect strategies that focus on income generation through dividends to form a core part of equity portfolios in the foreseeable future. We also believe clients must have the option to take long and short positions in various asset classes in order to hedge their exposures. At Bloxham we have identified products and assets which provide such protection.
In asset management our flagship fund, the Bloxham High Yield Fund, has again outperformed the global stockmarkets, albeit in a down year. The fund focuses on conservative, financially-strong companies with relatively stable cashflows. Interestingly, despite the severe stockmarket fall this year, we have noticed a resumption of positive cashflow into the fund in recent weeks, with investors attracted by the 5 per cent dividend yield and high quality portfolio.
During the course of 2009 Bloxham is intent on further building its franchise in very challenging markets. With the support of its minority shareholder – FBD – Bloxham has the resources and human capital needed to provide research and advice to clients across the investment spectrum, from corporates and government agencies to retail clients. In previous investment cycles, it was those stockbrokers that are well capitalised with strong skillsets that grew fastest. Bloxham intends to follow a similar path as markets stabilise and recover over the next few years. |
Pramit Ghose is managing partner of Bloxham Stockbrokers.
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