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Dublin market down over 1% as count resumes

Shares on the Dublin market were lower this morning after Sinn Féin secured the highest percentage of the first preference vote in the weekend election. 

The ISEQ index was down just over 1.1% in early trade.

The banks were weaker with AIB losing 4.9%, while Bank of Ireland dropped 4.8% and Permanent TSB lost 1.7% in the first hour of trade.

Shares in housebuilder Glenveagh Properties sank 6.7%, while shares in property firm I-RES REIT were down 5.2%, Hibernia REIT lost 2.4% and Cairn Homes dropped 4.8%.

The surge in electoral support for Sinn Féin has seen the party secure 29 of the 78 seats filled so far, followed by Fianna Fáil on 16 and Fine Gael with 14 seats. 

The Green Party has 5 seats so far, Solidarity/People before profit has 2, Labour has one and independents have eight. 

Leaders of the main parties have been marking out their positions, ahead of possible talks on government formation.  

Sinn Féin leader Mary Lou McDonald has said that voters clearly want her party to be in government. 

Speaking on RTÉ’s Morning Ireland, KBC Bank Ireland’s chief economist Austin Hughes said the election result may weigh on sentiment in the short-term, though perhaps not by as much as it would in previous years.

“In general markets, businesses, consumers don’t like uncertainty but in recent years uncertainty’s become a central feature of the global landscape,” he said. “Whether you’re talking about political uncertainty across Europe that seen the rise of very radical parties and promises, or closer to home uncertainty around Brexit, by and large markets, businesses and consumers have tended to weather that problem.”

He said uncertainty was now seen as “part of the new normal”, with people tending to get on with whatever they were doing.

He said financial markets are likely to take a wait-and-see approach on Irish-linked investments, with the nature of the next government key to what will ultimately happen to stocks and bonds.

“They’ll wait to see what the scale and shape of fiscal policy will be like,” Mr Hughes said.

In recent months both the European Central Bank and the International Monetary Fund have called for some loosening of fiscal policies, which means a new government may have the flexibility to increase spending in certain areas.

Mr Hughes said that this could ultimately benefit Ireland’s image in the eyes of international markets.

“If they actually can make progress and deal in a fundamental way with problems like housing and health that impinge on the economy and broader Irish society that would be something that markets, consumers and businesses would be delighted about,” he said.

The risk, however, was that multiple parties compromise around a budget policy that gives everybody something small – but does not do enough to tackle the major issues in any meaningful way.

“We actually have quite an opportunity now because of the way the world economy is to address some of these issues with a coherent and consistent fiscal policy, so it’s really a case of whether the parties can be adult enough to actually focus on the measures rather than on their support base,” he said.

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