Donie's Ireland daily news BLOG Wednesday

Property still the main measure of wealth for Irish people

 

Survey finds low levels of investment In business or financial products, Despite the slump of the last five years, wealthy Irish people continue to hold over half their assets in property, a new report shows.

The latest issue of Wealth Insights, published by British bank Barclays, shows that Irish high-net-worth individuals hold 55 per cent of their wealth in property and just 2 per cent of it is invested in enterprise or business. Of the rest, they keep 18 per cent in cash, 16 per cent in financial investments and 7 per cent in assets such as collectables.

Focus on bricks
Pat McCormack, head of wealth and investment management at Barclays Bank Ireland, pointed out the emphasis on property has left them with a lower proportion of their assets in other investments than their peers.

“The 16 per cent of wealth held in financial investments in Ireland is half the European average of 32 per cent and significantly lower than the US average, where high-net-worth individuals hold 61 per cent of their wealth in these types of investments,” he said.

He argued there is a case for Irish people to shift the emphasis of their investments as market conditions improve.

The report also indicates the recession has hit wealthy people here harder than their European counterparts.

About two out of three respondents to Barclays’ survey said they had less wealth than at the start of the downturn. That was more than twice the average in Europe.

Almost one-in-five Irish people said their wealth had halved during the recession, compared to just 3 per cent in Europe. However, 70 per cent of Irish surveyed said their wealth had still increased in their lifetimes.

Most Irish people do not follow the trend of giving wealth to family, friends and charities while still alive. Over one-third plan to pass on 100 per cent of their wealth as an inheritance. Mr McCormack said in the developed world people who have made money tend to wait to pass it on, preferring to see the “next generation carve out their own path”. In emerging markets, wealthy people tend to pass on some of it to family and friends.

Irish Cabinet plan to sell State assets like Coillte harvesting rights will not now be sold 

     

SIMON COVENEY SAID THE FOCUS WILL NOW BE ON RESTRUCTURING COILLTE

The Cabinet has announced it will not go ahead with the sale of Coillte harvesting rights as part of its plan to sell State assets.

Minister for Agriculture Simon Coveney said the Government believes now is “not the appropriate time to proceed with the sale”.

He said that the focus will now be on restructuring Coillte and evaluating how a merger with Bord na Móna might take place.

Mr Coveney said the decision came after extensive analysis of the financial implications of the sale as well as consideration of the possible impact on the timber industry, public access to recreational land and environmental and social impacts.

Minister for Public Expenditure and Reform Brendan Howlin this afternoon told an Oireachtas Committee that it is not appropriate to sell the harvesting rights of Coillte.

He said that the significant number of vacancies on the Coillte board would be filled by people with relevant experience who can drive a merger with Bord na Móna forward.

Our Airlines increase altitude in the face of an economic downturn

  

‘AIRLINES HAVE A HISTORY OF SHOOTING THEMSELVES IN THE FOOT WHEN THE INDUSTRY IS DOING WELL’

You would never guess there’s an economic downturn afflicting Europe at present given the expansion plans being hatched by the continent’s biggest budget airlines,Ryanair and EasyJet.

At an EGM in Dublin yesterday, Ryanair was given the green light by shareholders to acquire 175 Boeing 737-800 aircraft between 2014 and 2018.

This will take Ryanair’s fleet from 305 currently to about 400 by 2019. Ryanair said this would give it the capacity to exploit growth opportunities across Europe and take its passenger numbers from 79 million a year currently to 100 million-plus. The Irish airline declared it was in discussions with about 200 airports about new routes.

EasyJet, meanwhile, announced a deal to buy 135 aircraft from Airbus during the second day of the Paris Air Show, the industry’s flagship trade event. It also has an option to purchase an additional 100 A320neo jets – 85 will replace ageing models, with the remainder used to fulfil EasyJet’s ambition to grow seat capacity by 3 to 5 per cent a year.

Michael O’Leary might laugh in the face of recession but EasyJet founder and major shareholder Stelios Haji-Ioannou is decidedly more circumspect.

“Yet another huge capital expenditure deal with the same supplier at ‘secret’ prices . . . naturally it raises more questions than answers,” he said of the order.

Stelios said he would await the full shareholder circular, “which must include the actual price to be paid for each aircraft and the incremental profit each of these aircraft will actually deliver” before giving his verdict on the plan.

He’ll be lucky. Airlines are notoriously secretive about the sums they pay for their aircraft. The list prices they cite are meaningless. Ryanair is believed to have negotiated a discount of up to 50 per cent from Boeing on its order while analysts put EasyJet’s at 30 to 40 per cent.

Stelios has previously been at loggerheads with EasyJet management over the use of capital, preferring it to pay dividends rather than grow capacity at a time of economic malaise and high oil prices.

You might wonder why Stelios is creating such a fuss given that EasyJet’s share price has risen by 145 per cent in the past 12 months. Ryanair’s has soared by more than 70 per cent. Even Aer Lingus, whose focus is purely the island of Ireland, is up 70 per cent, although it still remains 27 per cent below its €2.20 price at the time of its IPO in 2006.

The three airlines have also paid dividends during the downturn. Capacity cuts, rising average fares and benign oil prices have all helped to support airline share prices in the past year.

WILL THIS RUN LAST?

Airlines have a history of shooting themselves in the foot when the industry is doing well by putting too much capacity into the market and selling fares too cheaply. They are also vulnerable to major external shocks.

It’s worth noting that for all its statements to the contrary in recent years, Aer Lingus is preparing to spend €140 million to help plug a deficit in staff pension schemes. That’s shareholders’ funds.

Earlier this month at the Ernst & Young World Entrepreneur of the Year awards in Monte Carlo, Stelios told the audience that the days of true low-cost travel were probably over due to rising oil prices, and increasing taxes and regulation.

These costs would inevitably have to be passed on to consumers, he said, which in turn would put the brakes on the fast growth that budget carriers have traditionally enjoyed.

Chasing growth through knock-down fares against the backdrop of sluggish economic growth in Europe just doesn’t make sense anymore, Stelios argued.

Analysts at UBS were upbeat yesterday about EasyJet’s aircraft order, retaining its buy rating on the stock. However, there’s an interesting disclaimer in the 10-page note: “Trading airlines stocks may be hazardous to your wealth,” it starts. “Over the long term, a diversified portfolio of airline stocks has reliably under-performed broader market averages.”

Co Galway turf cutting stand-off in progress in conservation area

  

A ban on cutting turf is in place in 53 bogs, 13 of which are in Co Galway

A group of people have gathered at a roadway leading to a bog designated as a Special Area of Conservation in Co Galway tonight.They are concerned that machinery used to cut turf may be seized.

Ardgraigue bog near Killimor is one of 53 bogs where a ban on turf cutting is in place.

Earlier today, turf was cut on banks belonging to more than 50 local people. The process began at 5am and was completed by early afternoon.

A total of four machines were used. It is the first time turf has been cut on the bog this year.

Gardaí say they are maintaining a presence in the area and monitoring the situation.

There have been no incidents at the scene and no arrests have been made.Local Fine Gael Councillor Jimmy McClearn has been trying to mediate between the protesters and Gardai, to bring the situation to a conclusion. He describes the mood as “friendly but determined”.

Cllr McClearn estimated that in the region of 70 locals had gathered near the bog.

Under the terms of the European Habitats Directive, a number of raised bogs have been declared as Special Areas of Conservation and a turf-cutting ban on these bogs was introduced in 2011.

Compensation is available for those who abide by the ban. There are 13 bogs involved in Co Galway.

Three men rescued as fishing boat sinks in Co Donegal

  

The Sligo-based helicopter took the men to Letterkenny General Hospital

Three fishermen have been rescued off north Donegal after their boat sank.

The men, all in their 30s and from Inishowen, were in a 25ft (7.6m) timber boat which began to take in water at lunchtime.

The Lough Swilly RNLI crew was alerted to the sinking boat at 1.30pm on Wednesday.

A local fisherman responded to the emergency and picked the men out of the water off Dunaff.

It is believed the trio had been in the water for up to an hour. They were wearing lifejackets.

Joe Joyce, spokesman for Lough Swilly lifeboat, said the fishing boat had gone down by the time his crew got to the scene.

“Even though it’s the summer, water temperature is about 12C-13C (53.6F-55.4F). You wouldn’t last much more than an hour,” he said.

The three men were taken to Leenan Pier on northern end of Inishowen where they were given oxygen on the shore.

The Sligo-based helicopter took the men to Letterkenny General Hospital.

The men’s conditions are not life-threatening.

Performance clapping reveals applause is a social contagion

   

The quality of a performance does not drive the amount of applause an audience gives, a study suggests.

Instead scientists have found that clapping is contagious, and the length of an ovation is influenced by how other members of the crowd behave.

They say it takes a few people to start clapping for applause to spread through a group, and then just one or two individuals to stop for it to die out.

The Swedish study is published in the Journal of the Royal Society Interface.

Lead author Dr Richard Mann, from the University of Uppsala, said: “You can get quite different lengths of applause – even if you have the same quality of performance. This is purely coming form the dynamics of the people in the crowd.”

Chain reaction

The research was carried out by studying video footage of groups of undergraduates as they watched a presentation.

The scientists found that it took just one or two people to put their hands together for a ripple of applause to spread through the crowd.

These claps sparked a chain reaction, where, spurred on by the noise, other audience members joined in.

“The pressure comes from the volume of clapping in the room rather than what your neighbour sitting next to you is doing,” explained Dr Mann.

But the performance that had been witnessed – no matter how brilliant – had little effect on the duration of the noisy acclaim.

In fact, the researchers found the duration of applause varied greatly.

Dr Mann told BBC News: “In one case an audience might clap on average 10 times per person. Another time they might clap three times as long.

“And all that comes from is that you have this social pressure to start (clapping), but once you’ve started there’s an equally strong social pressure not to stop, until someone initiates that stopping.”

The scientists believe that clapping is a form of “social contagion”, which reveals how how ideas and actions gain and lose momentum.

Studying this, they say, could shed light on other areas, such as how trends come in and go out of fashion or how ideas spread on the internet.

Dr Mann said: “Here we tested whether you are more driven by the total number of people in the room or the people sitting next to you.

“And the equivalent on Facebook or Twitter would be whether you are more likely to join in a trend if you see lots of people in the wider world mentioning it or if just your closer friends mention it.”