Avoiding Ireland

While some of Europe is emerging into bargain territory, investors should still approach Ireland with caution. Recently, Irish Prime Minister Brian Cowen said Allied Irish Banks AIB, the nation’s second biggest lender, may need more state support to meet new capital targets. The Irish bank may need to raise an additional $9.3 billion in capital by the end of the year. Ireland’s government controls an 18 percent stake in Allied Irish after injecting nearly 3.5 billion Euros into the bank last year as bad debts climbed. Ireland has already begun austerity plans and budget cuts in order to help with its debt load. However, the Irish economy shrank nearly 7 percent last year and remains in recession. Unemployment in the nation is still very high. Although, the easy money shorting Irish stocks has already been made, investor’s may still want to avoid the iShares MSCI Ireland ETF EIRL and The New Ireland Fund IRL for now. Investors may find Irish equities ‘on sale’ later down the round.