Investments - Ireland - January 2005

Contents

Introduction

• Definitions
• Geographical, national and regional definitions
• Conversion factors
• Population
• BMRB Target Group Index sample sizes
• Lifestage definitions

Abbreviations

Executive Summary

Hard times summed up by fall in number of investors

Performance of markets and ultimately, returns for investors, form key role in demand

Economic and social climate is, on the whole, positive for investments

Alternative products feature prominently in RoI and NI

Banks and stockbrokers dominate the channels for buying and selling equities

Consumer data reinforce the stereotype of the investor

Investors are well prepared for a rainy day

Fresh blood needed for equities market

Market Drivers

Stock market performance

• Figure 1: FTSE 100, 1999-2004
• Figure 2: ISEQ, 1999-2004

Dividend increases could entice investors into ISEQ

Performance of economy

• Figure 3: Gross Domestic Product, percentage growth, RoI and NI, 2002-05

Inflation

• Figure 4: Inflation (based on consumer price indices), RoI and UK, 1998-2003

Interest rates

• Figure 5: Bank of England base rate, Jan 1992-Jan 2004

Household disposable income

• Figure 6: Household disposable income per capita, at current prices, RoI and NI, 1998-2003

Employment levels indicate were becoming richer and busier

• Figure 7: Employment rate, RoI, 1999-2004*
• Figure 8: Breakdown of employed persons, by working status, NI, Jan 1999-March 2004

Population figures

• Figure 9: Population trends, by age group, RoI, 1998-2008
• Figure 10: Population trends, by age group, NI, 1998-2008
• Shifts in socio-demographics play key role in investments market
• Figure 11: Breakdown of population, by social grade, RoI, 1998-2003
• Figure 12: Breakdown of population, by social grade, NI, 1998-2003

Savings accounts increase in popularity

Tax situation highlights the benefits of fund investment

Alternatives to traditional investment products

Pensions appear to be threat to popularity of equities, yet pension holders are more likely to invest in stocks and shares than non-pension holders

Additional channels for information and making investments

Negative publicity surrounding investments: mis-selling and the Eircom issue

Market Size and Trends

• Figure 13: Number of investors, RoI, 2000-03
• Figure 14: Number of investors, NI, 2000-03
• Figure 15: Equity turnover in the ISEQ, private equity raised and resident holdings in foreign portfolio, RoI, 2000-03
• Consumers investment in the ISEQ is picking up
• Figure 16: Total invested in the ISEQ by individuals, RoI, 1998-2003
• NI investors showing signs of reticence
• Figure 17: Composition of household financial assets, UK, 2000-03
• Figure 18: Total invested in equity by individuals, NI, 1998-2003

Product Segmentation: Investments and Alternative Products

• Figure 19: Ownership of various financial products, RoI, 2001-03
• Figure 20: Ownership of various financial products, NI, 2001-03

Company Profiles

• Abbey
• Alliance & Leicester
• AIB
• Anglo Irish Bank
• Bank of Ireland
• BCP Asset Management
• EBS
• Fexco Global Investments Limited
• HBOS
• IIB Bank
• Merrion Capital
• Northern Bank/National Irish Bank
• NCB
• Permanent TSB
• Rensburg Investment Management
• Sharewatch
• Standard Life
• Ulster Bank

Channels of Distribution

Buying stocks and shares

• Banks, followed by stockbrokers are most important channels
• Figure 21: Buying channels for stocks and shares/unit trusts, RoI, 2000 and 2003
• Buying channels for stocks and shares slightly more fragmented in NI
• Figure 22: Buying channels for stocks and shares, NI, 2000 and 2003
• Stockbrokers are most popular channel for selling in RoI
• Figure 23: Selling channels for stocks and shares/unit trusts, RoI, 2000-03
• NI consumers also prefer to sell stocks and shares via stockbrokers
• Figure 24: Selling channels for stocks and shares, NI, 2000 and 2003

The Consumer

• No surprises as higher affluence correlates with higher ownership of stocks, shares and unit trusts in RoI
• Figure 25: Ownership of stocks and shares/unit trusts, by gender, age, social grade, marital status and working status, RoI, 2000-03
• Results suggest that 35-54-year-olds have pursued alternative investment options
• AB consumers in NI are drawn into equity investment
• Figure 26: Ownership of stocks and shares, by gender, age, social grade, marital status and working status, NI, 2000-03
• Targeting the singles scene

Lifestage analysis

• Lifestage definitions
• A need exists for tailored investment products for different consumers
• Figure 27: Ownership of stocks and shares (and unit trusts in RoI), by lifestage, RoI and NI, 2003
• Opportunity to target Unconstrained Couples

Analysis by other financial products owned

• Investors leave nothing to chance
• Figure 28: Ownership of stocks and shares/unit trusts, by other financial products, RoI and NI, 2003

Duration of holding

• Lack of new investors in both RoI and NI
• Figure 29: When stocks/shares/unit trusts were first purchased, RoI, 2003
• Figure 30: When stocks/shares were first purchased, NI, 2003

Attitudes towards finance

• RoI investors are the money managers
• Figure 31: Agreement to financial statements, by all adults and by owners of stocks and shares/unit trusts, RoI, 2003
• A quarter of RoI investors view stocks and shares as a risky investment - a third seek the advice of a professional financial adviser
• Figure 32: Agreement to financial statements, by all adults and by owners of stocks and shares/unit trusts, RoI, 2003
• Investors in NI exhibit similar tendencies as RoI counterparts towards credit cards
• Figure 33: Agreement to financial statements, by all adults and by owners of stocks and shares, NI, 2003
• Relationship with bank is important to NI investors
• Figure 34: Agreement to financial statements, by all adults and by owners of stocks and shares, NI, 2003
• Investors favour the proactive approach to personal finance

Attitudes towards risk

Attitudes towards media

• Print and national radio are key channels for RoI investors
• Figure 35: Agreement to media statements, by all adults and by owners of stocks and shares/unit trusts, RoI, 2003
• Radio is more popular among NI investors
• Figure 36: Agreement to media statements, by all adults and by owners of stocks and shares, NI, 2003

The Future

Need for an investment culture - success of SSIAs shows that consumers are prepared to save for future rewards

Uptake in SSTs to continue if product knowledge increases

Tailored investment products along the same lines as current accounts and credit cards

SSIAs offer opportunity

Home country bias along with expected profits of ISEQ-listed companies could bring new investors into the ISEQ

Abolition of tax relief on ISAs will have different consequences for consumers

Forecast

• Investor numbers to reach over half a million in RoI
• Figure 37: Forecast number of investors, RoI, 2003-08
• 40% increase expected in the number of NI investors
• Figure 38: Forecast number of investors, NI, 2003-08

Appendix: Research Methodology