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Stock market big predicts pension investment boon

February 16, 2011

By Staff Reporter

By Andrew Bushe

DUBLIN — Even modest movements by Euroland pensions funds to rebalance currency could result in a "veritable wall of cash" hitting the equity markets in the next few years, the head of the Irish Stock Exchange has predicted.

Tom Healy, ISEQ chief executive, described the pensions market in Europe as "highly skewed" at the moment.

"UK pensions assets are double the combined German, French and Italian total," he said. "On top of this, German and French pensions funds have a very low exposure to equities compared with UK funds.

"However, it is likely that Germany and France will move strongly toward providing for their future pensions needs by investing heavily in Eurozone equity markets in coming years."

He said that while it had been widely predicted that cross-border equity investment would focus on the large companies only, he believes second-line stocks will benefit as well.

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"It seems unrealistic that fund managers will direct an increasing tide of cash into the equity markets without experiencing pressure to seek value for money in good medium-sized companies," Healy said.

"Bearing in mind that investors from other Eurozone countries currently have very limited holdings in Irish companies, this has to represent an opportunity for the Irish market and Irish quoted companies.

"It is not credible that the rebalancing in investment in stocks in the Eurozone and the increased investment by the pension funds can all be concentrated in about the top 500 companies."

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