Archive for the ‘Investment Advice’ Category

Lights Camera Action……

August 7, 2014

film image

If like me you always had an interest in film but never quite made the cut in acting class, there is still an opportunity for you to get involved. Section 481 TCA 1997 film relief allows individuals to get tax relief for an investment in a qualifying film or television series. This investment relies on the successful completion of the film/television project.

Successful shows which have availed of this scheme include Penny Dreadful, Mattie, Tashi & The Widower to name but a few.

Film Relief is available, generally for high income individuals, who invest up to a maximum of €50,000. Individual investors can invest amounts exceeding €50,000, but only €50,000 relief is allowed in one tax year. Any amounts exceeding €50,000 can be carried forward to the proceeding tax years. Therefore it is generally recommended investing a maximum of €50,000 in any one year.

To get the tax benefit from film relief an investor would typically raise the €50,000 investment slot by part equity / part loan agreement. Based on the credit application being approved, the investor issues a cheque for €17,500 and the remaining €32,500 is financed by a loan, which is applied for through the film production company. The individual then subscribes to shares of €50,000 and Revenue will issue a Film 3 certificate to confirm the investors’ investment.

The investor then makes a claim to the Revenue Commissioners and receives tax relief of 41%, assuming they have enough income at the higher rate. Based on a €50,000 investment, the investor should receive a refund of €20,500 from Revenue.

PAYE investors should see this refund on their payslips before the end of the year in which they invest. Self-assessed investors will have to wait until they file their tax return before seeing their return.

The overall return for an investor will be €3,000 if they invest €50,000 in the scheme.

If you are interested in investing in film relief, please contact us on 021-4641400 or email

Blog by Laura Simpson, Trainee Accountant, Quintas


The advantages of EII for saving tax and raising finance.

November 8, 2012

To try and assist with the flow of investment funds, in last year’s budget the Government replaced the old Business Expansion Scheme (BES) with the Employment and Investment Incentive (EII). The main changes between BES and EII are

 1.       The investment term is reduced from 5 years to 3 years

2.       The scheme is now open to the majority of companies (some exceptions apply) as opposed to BES which was restricted to qualifying trades such as manufacturing and internationally traded service companies

3.       The amount that a company can raise under the scheme has been increased from €2m to €10m, subject to a maximum of €2.5m in any 12 month period

4.       Eligible investors may avail of tax relief up to 41%, with 30% in the year of subscription and a further 11% at the end of the holding period, subject to conditions been achieved in relation to an increase in employment levels in the company or funds been spent on research and development.

 Qualifying companies can raise EII money directly from Investors or seek money from an EII Fund. The Quintas Wealth Management (QWM) BES/EII fund was established in 2008 and over the last few years we have invested c. €7m in 12 companies. These companies are located around the country and in different sectors i.e. medical services, medical devices, broadband/connectivity, renewable energy etc.

 The principal advantages of a Fund investing directly in a qualifying EII company is that your money is spread across a number of companies in different sectors, with the companies vetted and monitored by experienced personnel. Generally we would review 15/20 proposals before choosing to invest in 4 companies. The Fund aims to invest in companies with the following criteria:

 1.       Capable and experienced management team

2.       Past the initial start up loss making phase

3.       At commercial volumes of production

4.       Seeking funds to expand or take over another business

5.       Not carrying too much debt.

 We have now launched the 2012 Quintas Wealth Management EII Fund.

If you would like to discuss the Fund in further detail or to receive a prospectus please contact Jim McCarthy or Kenny Kane at 021 4641480 (email or We are also interested in hearing from companies who meet our criteria and are interested in trying to secure EII funds.

The Importance of Succession Planning and having an exit strategy

August 9, 2012

Planning for succession is critical and even more so in the current economic climate, given the changes already introduced and the further changes likely to be introduced by the Government in an effort to increase the tax take from Capital Acquision Tax (i.e. gift inheritance tax).

Increase in Capital Acquisition Tax (CAT)

CAT has been an easy target for the Government to increase taxes. In the past 4 years, the CAT has increased by 50% from 20% to 30%, while at the same time the Parent Child tax free threshold has decreased by over 50% from €521,208 to €250,000. These changes have significantly lowered the entry level for CAT and therefore the incentive to maximise reliefs is more prevalent.

In addition to these changes, there have been clear indications that the benefit of the favourable reliefs such as CGT Retirement Relief, CAT Business Relief and CAT Agricultural Relief are likely to be reduced. These changes have begun in Finance Act 2012, with a limit of €3m being introduced from 1 January 2014 for transfers to children where the parent is 66 or over.

Reduced Stamp Duty & Low Asset Values

The reduction in stamp duty to 1% for residential and 2% for commercial property together with the low asset values may make it an opportune time to transfer certain assets to the next generation.

Creative Thinking

Firstly, consideration should be given to ensure that you are maximising the reliefs available. This can be as simple as ensuring you maximise CAT thresholds and the annual small gift exemption by including grandchildren and son/daughter in laws. It is imperative that you ensure that the conditions for very favourable CAT Business and CAT Agricultural Relief’s are satisfied, given that they provide for a 90% reduction in value.

Quite often a levie that a client may not apply can be applied with careful planning.

Case Study

In one recent case, by getting a full understanding of the clients’ position we were able to significantly reduce the CAT liability. A father wished to gift his son €750,000 and as his CAT threshold had already been utilised, the potential liability was €225,000. The son had no immediate requirement for the funds and both the father and son had concerns over the current banking crisis.

An alternative was for the father to acquire a farm and subsequently gift the farm to the son.  They identified a farm for €675,000. Where the father acquires the farm and gifts the farm to his son, he should qualify for CAT agricultural relief with careful planning. The CAT liability on the transfer of the farm should be €20,250 (€675,000 – 90% = €67,500 @ 30%). It will be necessary for the son to retain ownership of the farm for 6 years to avoid a clawback of the CAT agricultural relief.

As the son had two children, it is also possible for the father to gift his grandchildren €33,500 each tax free.

While there will be addition stamp duty and legal costs, the €200,000+ CAT saving should make the transaction attractive for the son.

Problems & Pitfalls

While passing assets during their lifetime, parents will often have concerns and the following questions arise

–          How will my financial security be protected

–          What will happen if there is a falling out with my son/daughter or they act irrationally

–          What will happen in the event of marital breakdown

–          What will happen if my child has financial difficulties in the future

–          What will happen if my child dies prematurely

There are no easy answers to these questions, but with careful planning and appropriate legal documents, in most cases certain protection mechanisms can be provided for.


Now may be an opportune time to consider transferring certain assets to the next generation, given that it is likely that there will be further negative changes in the area of CAT, specifically in the area of the favourable CAT agricultural relief and CAT business relief. The low asset values and reduced stamp duty rates should also help minimise the tax liabilities.

Succession Planning is often a daunting prospect for parents, however by making preparations at an early stage, potential problems can be avoided and tax liabilities significantly reduced.


Sean McSweeney

Sean is Tax Director at Quintas.

The views expressed in this article  are not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Irish Property Market – Turn the Crisis into your Opportunity

August 2, 2012

In this article we review the dramatic changes in the Irish Commercial Property Market (ICPM) – (shops, offices, industrial units, hotels, development land) over the last 5 years and the opportunities arising therein.

The ICPM collapsed between 2007 and 2011 with values falling from between 50% (select offices) and 95% + (development land).  In 2007, total turnover in the ICPM was c. €2.5bn with this reducing by c.99% to c. €25m in 2011. The 2011 figure excludes the Google and Penny’s transactions with NAMA.

There are a number of reasons behind the dramatic fall in the ICPM including:

  1. Lack of domestic and international confidence
  2. Reluctance to buy in a falling market
  3. Illiquid banking market
  4. Debate on upward only rent reviews (UORR).

Properties are essentially sold on a multiple of rents. An annual rent agreed in Celtic Tiger years is likely to be significantly higher than current market values for comparable properties. If you buy a property on 10 times Celtic Tiger rent and the rent falls owing to the abolition of UORR, then this would have a significant impact on the value of your property. UORR clauses are prohibited in leases taken out after February 2010, but are in place in most leases before then.  The current government were threatening to implement retrospective changes to the UORR clause in leases prior to February 2010.

In his December 2011 budget the Minister for Finance made 3 significant changes to try and reinvigorate the ICPM.  They were:

  1. Stamp duty reduced from a max of 6% to 2%
  2. Introduced capital gains tax relief on properties purchased before the end of 2013 and held for 7 years.
  3. He indicated that the government would not be proceeding with legislation to abolish UORR clauses.  He said “it has not proved possible to develop a targeted scheme to tackle this issue that would not be vulnerable to legal challenge”.

Since these changes there has been significant movement in the Dublin property market with 8/10 large sales having been completed to foreign buyers including Grand Canal Hotel & Gas Work (Alliance) complex of 210 apartments.

Interestingly the latter transaction was completed by one of the parties who invested in Bank of Ireland last year & who have indicated they intend to spend €500m on Irish property over next 18 months. Foreign buyers have not been active in the Irish Market for nearly 10 years.

At present another factor affecting the ICPM is the excessive savings culture that has been built up over the last few years in response to the various crises.  This culture has been strengthened by the premium interest rates on offer in the main banks.  It is estimated that Irish personal savings currently amount to c. €90bn.  I note from media reports over the last few months that the banks have started to reduce the premium rates on offer.  As confidence in our economy improves and saving rates reduce towards the ECB rate of 1% it is likely that investors will start to look for other investments and once again consider property for a portion of their investment portfolios.

We believe that the c.60% fall from peak values coupled with the changes in the budget and renewed foreign interest, signal the beginning of the recovery in the ICPM. Over the last 6 months, here in Quintas we have reviewed a variety of property transactions from partly finished residential blocks, to hotels, to offices and have evaluated each in terms of risk and potential returns.

We have recently launched an investment opportunity for pension clients (click her for a detailed brochure ), where we are purchasing a tenanted bank branch at a purchase price of 40% of its peak price & with 19.5 years left on the lease.

If you would like further details or indeed discuss any of the points raised in this article please contact me on

by Kenny Kane

Kenny is a Director at Quintas Wealth Management

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision

Quintas Quarterly Economic Review (Summer 2012)

July 26, 2012

The prospect of a Euro break up has again become a concern for people over recent weeks. In Spain, after receiving a bank bailout, their cost of borrowing reached 7%, the territory where it becomes unsustainable to borrow.

In different Eurozone countries there are different dynamics at play. Spain is currently in the spotlight over the weakness in its banking system, while in Italy the main concern is over its massive debt pile of almost €2 Trillion. The uncertainty over the outcome of the Greek election and whether or not there would be an exit from the euro and any knock on consequences has put the future of the Euro back in the spotlight.

In the event of a breakup many people are asking what would happen their existing Euros. While it is important to emphasise that there is no definitive answer, research suggests that the jurisdiction under which your investments or deposits are issued would be the determining factor in deciding what new currency your money would be redenominated in.

For example, if you had a deposit account with an Irish Bank in the event of a Euro break up, as your deposit is issued under Irish law your money would be redenominated in the new Irish pound. This would likely result in a significant fall in the value of your wealth.

To protect against this risk, the most obvious things to do are buy a foreign currency or government bonds belonging to safe haven countries. In terms of buying foreign currency such as Sterling, Swiss Francs or Dollars, investors need to understand that they are automatically assuming exchange rate risk. Currencies can be among the most volatile of asset classes. Additionally when buying a foreign currency, investors need to be comfortable with the financial strength of the bank where their new currency is held. Many investors will hold an amount of currency up to the government guarantee limit and choose banks covered by foreign deposit schemes. In terms of buying government bonds most investors will buy these through a stockbroker, with German bonds being seen as the safest in the Eurozone.

In the event of a Euro breakup because German Government Bonds are issued under German Law they would likely be redenominated in the new German Currency, which would likely be stronger than any new Irish pound. Buying government bonds will incur stockbroker costs and when inflation is taken into account over the investment term, investors will likely make a loss given current low yields. Despite the possibility of Germany picking up more of the tab for peripheral nations debt, yields (returns) have reached historic lows due to capital flight from other eurozone countries. Investors should also be comfortable with who provides custody of their investment in terms of the stockbroker they use.

For Ireland there is little we can do while this uncertainty continues which seems to change on a daily basis. With a new socialist president in France this should act somewhat as a counter to German calls for fiscal consolidation. The recent announcement of a €130 billion growth package agreed among the four largest Eurozone economies may finally reflect an acknowledgement from Germany that a growth agenda is also required

by James McCarthy,

James is an Investment Analyst in Quintas Wealth Management

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision

Are you concerned about not being able to meet your mortgage repayments?

July 11, 2012

If you are, the Central Bank of Ireland’s Code of Conduct on Mortgage Arrears (“the Code”) sets out clearly a range of rules which your mortgage lender must follow when dealing with you. This Code came into effect on the 1st January 2011 and is applicable to anyone who is in arrears on their mortgage payments on their sole or main property. The Code is a reflection of the fact that Mortgage Arrears and the Handling of Mortgage Arrears is an ongoing top priority for the Central Bank of Ireland (“CBI”). Mortgages through a Credit Union are not covered by the Code.

Your lender must have procedures in place to deal with your situation and find an appropriate solution for your circumstances under the Mortgage Arrears Resolution Process (“MARP”). MARP is the process for dealing with customers in or at risk of mortgage arrears and each mortgage lender must have an information booklet that sets out its MARP which must be available on its website.

Essentially MARP is a 5 step process:

Step One        Contact your mortgage lender immediately

Step Two        Complete a Standard Financial Statement

Step Three     Assessment of your financial situation

Step Four       Seeking a resolution

Step Five        Appealing a decision

Step One        Contact your mortgage lender immediately

If you are behind with your mortgage repayments or feel you may shortly experience difficulties meeting your mortgage repayments your first step should be to contact your lender as soon as possible to discuss the situation. Discussing your mortgage repayment problems as early as possible will help in reaching a solution. Any delay in contacting your lender may result in your mortgage arrears situation becoming worse than it would have been otherwise. Your branch must have at least one specially trained person with specific responsibility for dealing with your situation who will conduct your meeting in private. Your lender must treat your case sympathetically. You have the right to nominate a third party to discuss the situation with your lender on your behalf such as MABS so long as you give your permission in writing.


How your lender must communicate with you.

If your mortgage is in arrears for 31 days, your lender must write to you of your mortgage account status within 3 business days. The letter must include the following:

  • State the date that the mortgage fell into arrears, the amount of arrears in euros and the total amount of full or partial payments missed;
  • Confirm that it is treating your case as a MARP case;
  • Highlight the importance of you cooperating with your lender during the MARP process and notify you that, if co-operation stops, the protections of the MARP no longer apply and that the lender may start legal proceedings for repossession;
  • Include a statement that fees, charges and penalty interest in relation to the arrears will apply where you do not co-operate with your lender.

It is important to note that apart from communications that your lender must give you there are limits on the number of communications your lender can make with you. The CBI is cognisant of the fact that unexpected and excessive contact from your lender can be stressful and the Code requires that such contact be proportionate and not excessive. Therefore the CBI limits the number of times your lender can contact you to 3 times in any calendar month, unless you have given prior informed consent to your lender contacting you. This includes contacts by phone, e mail, text, and letter or by calling to your home and includes missed calls or where messages are left for you.


Stage Two      Complete a Standard Financial Statement (“SFS”)

Your lender will request you to complete a Standard Financial Statement (SFS) on your current income, expenses and liabilities prior to making its decision on whether to offer you an alternative repayment arrangement. The function of this document is to gather all your financial information to assist the lender assess your financial situation. It is important that you cooperate with all requests for documentation as if you do not, you could be classified as not cooperating and a 12 month waiting period (moratorium) for commencing legal action for repossession of the property will no longer apply to you. (Please refer below to paragraph on repossession).

Stage Three     Assessment of your financial situation

Your completed SFS will be assessed by the Arrears Support Unit (ASU) who will determine whether or not to offer you an alternative repayment arrangement. Lenders will usually consider your personal circumstances, your personal debt, information you provided in the SFS, your ability to make repayments, your previous repayment history and other relevant information.

Step Four       Seeking a resolution

After assessing your situation, your lender will determine whether your mortgage should be re-scheduled and what alternative repayment arrangement is appropriate. Where you are offered an alternative repayment arrangement your lender must give you a clear explanation of the proposed arrangement and any implications for you.


Alternative repayment arrangements that your lender may consider include:

  1. Interest-only arrangement for a set period of time – the balance of the outstanding capital amount would remain unchanged for the interest-only period.
  2. Extending the mortgage term – your monthly repayments will be lower, however, you will be subject to more interest as the mortgage will be payable over a longer period of time.
  3. Capitalising the arrears and interest – you are experiencing difficulties in paying off the arrears, the lender may agree to collect them over the balance of the mortgage term.
  4. Voluntary scheme your lender has signed up to if, for example, your lender has signed up to a Deferred Interest Scheme, your lender may consider allowing you to defer paying up to 34% of the interest on your mortgage for a period of time. However, you must pay what you can afford and there is no additional interest charged on this unpaid interest during the set period.

It is important to note that interest will accrue on any arrears you owe but your lender cannot charge you additional interest just because you are in arrears.

In practice most lenders agree an alternative arrangement if you cooperate with them. However, your lender is not obliged to offer you such alternative repayment arrangements. If your lender refuses to offer you such an arrangement, the reasons for refusing to do so must be given to you in writing together with your right to appeal to the lenders Appeal Board and your lender must discuss other options with you including, for example:

  • Voluntary Surrender – this would mean that you agree with your lender that they can take full legal ownership of the property. However, you will remain liable for any amounts that you owe to your lender and which they do not recover from the sale of the property.
  • Trading Down – this would mean selling your property and buying a cheaper one which would result in more affordable monthly mortgage repayments. You need to be sure that that you have sufficient funds from the sale to buy another property, after paying off the current mortgage and taking into account stamp duty, solicitor’s fees, auctioneers fees etc.
  • Voluntary Sale – this means that you will only receive monies in excess to the amount owed to your lender as your lender is entitled to recover the mortgage balance and legitimate charges from the sale.

If, for example, your mortgage is €300,000 and your house is sold for €250,000, you will still owe your lender €50,000.


Where an alternative repayment arrangement has not been put in place, or if you do not pay some or all of three mortgage payments, your lender must notify you in writing of the following:

  • Potential for legal proceedings for repossession of the property together with an estimate of the costs to you of such proceedings;
  • Importance of taking independent advice;
  • Regardless of how the property is reposed and disposed of, that you will remain liable for the outstanding debt, including accrued interest, charges, legals and other related costs, where applicable.

Remember, if you do not enter the arrangement offered and if you do appeal your lender’s decision, the time taken by your lender’s Appeals Board to consider your appeal is not included in the 12-month waiting period. However, if you decide not to appeal the 12-month waiting period on the lender taking legal action against you no longer applies.

Step Five        Appealing a decision

Your lender will have an internal Appeals Board where you can appeal on any of the following grounds:

  • Your lenders’ decision on your case; and/or
  • How your lender treated you under the MARP process; and/or
  • Whether you feel your lender has not complied with any of the requirements under the Code.

You will have 20 business days following the lender’s decision to submit an appeal to your lender’s Appeals Board.  If you are unhappy with the outcome of the appeal you can make a complaint to the Financial Services Ombudsman, however, you must exhaust your lenders complaints process first.



Lenders can repossess homes after exhausting every way possible to solve the problem. Repossessions are not altogether common, for example, there are around 800,000 mortgages in Ireland and in 2010 only 300 homes were repossessed by court order. Your lender cannot apply to the courts to commence legal action for repossession of your property until every reasonable effort has been made to agree an alternative arrangement with you. Where you are co-operating with your lender, the lender must wait at least 12 months from the date you are classified by your lender as being under MARP (i.e. day 31 from when arrears first arose), before applying to the courts to start legal action for repossession.


Important points to be aware of

  1. Cooperate with your lender in relation to your mortgage arrears as if you do not you are not protected by the 12 month waiting period under MARP before your lender can commence legal action for repossession of your primary residence.
  2. Your lender cannot contact you more than 3 times per month in relation to your mortgage payments unless you have given your lender prior permission.
  3. If you agree an alternative repayment arrangement with your lender and continue to meet that alternative arrangement, your lender cannot start legal proceedings against you and your lender cannot impose any charges on your mortgage account relating to your arrears.
  4. Your lender cannot move you from an existing tracker mortgage to another mortgage type as part of an alternative arrangement offered to you or just because you are in arrears.
  5. Your lender can only consider repossession after they have considered carefully every other way of solving your problem and have made every reasonable effort to agree an alternative repayment arrangement with you.
  6. If your property is repossessed and the proceeds of the sale do not redeem the mortgage in full, you will remain liable for any outstanding debt, including any accrued interest, charges, legal, selling and other related costs if this is the case.
  7. Your credit rating may be affected if you have an overdue balance on your mortgage account or if your home has been repossessed.

Useful contacts:



Joan Bourke

Joan is Legal and Compliance Officer at Quintas Wealth Management


The views expressed in this article  are not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.


EU Summit – Will Ireland finally get to unlock its bank debt?

July 5, 2012

At last Friday’s summit the European Union made its strongest statement to date on its level of commitment and tools it would employ to provide support for ailing Sovereign states (i.e. individual countries) and undercapitalised banks.

After months of procrastination the move exceeded market expectations.  It set out provisions for the direct recapitalisation of the banking sector in the clearest signal yet that Europe will provide support for the ailing European banking system directly without leaving the entire burden onto the Sovereign.  This is important as it represents the first steps disentangling the finances of banks from the countries that they are domiciled in.

It also highlights the realisation that the European banking system is indeed just that – a European wide system that crosses borders and acknowledges that when events such as the current crisis occurs it is simply not reconcilable to the Union’s founding principles to allow Sovereign states to pick up the bill for a European wide system failure.  Improved and centralised regulation of the banking system will now follow and this should lead to improved integration of Central Banks and a clearer definition of the balances and checks needed to avoid future crisis.

The inclusion in the official statement that the Irish bank programme was to be “examined” was a genuine surprise and represented an unconditional positive for Ireland.  The statement delivered a clear signal of intent that they were to examine how to “improve” on an already “well-performing” Irish adjustment program.  This is a significant movement from the previous intransigence of Europe on any concept of burden sharing and as the details are worked out it will lead to a reduction of the Sovereign (and taxpayer) burden.  It effectively means that the government could now reopen negotiations on the levels of debt held by the Irish banking system.  This could lead to a significant reduction in the debt burden and interest payments.

The catalyst for this move was not some sudden benevolence on the part of Europe. Rather it was the spectre of Spanish banks failing and the gradual understanding that tying Sovereign and Bank debt together within a monetary union was simply unworkable and medium to long term it was un-financeable.  Whatever the cause it represents a watershed for Ireland. The overwhelming burden of bank debt on the public finances (and the public psyche) has been a millstone around this country’s effort to readjust and eventually extract itself from an economic recession.  Any move that helps lift that burden is a positive.

One of the key benefits apart from the immediate savings for the state will be the potential to return to access market funding.  Markets shunned many European Sovereigns such as Ireland and Spain, not only out of concern on their banking debt but also out of concern that in the event of a European bailout the seniority (i.e. who gets paid first in the case of a default) of money provided by Europe would mean that private investors who lend to these countries were effectively taking the risk that they would not get paid as Europe would have first call on monies owed.  The move by officials last week included provision to relegate the seniority of European loans.  This was a small part of the statement but in time could be a key move to allow Ireland and other distressed Sovereign states to return to markets.

The devil of course will be in the detail and let’s hope our negotiation team can work out the best deal for Ireland.  With on-going issues in Spain and Italy and the clearest statement of intent yet from European leaders they will be in the strongest position since the crisis first broke in 2008


David O’Shea

David is Investment Director at Quintas Wealth Management

This article was featured in our recent – Quintas Quarterly Newsletter – Summer 2012

The views expressed in this article  are not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Quintas Quarterly Economic Review (Spring 2012)

April 19, 2012

Rising equity markets in January 2012 has been a relief for many investors after a volatile 2011, with markets in both developed and developing nations rising. The S&P500, the bellwether of the US economy finished up almost 3% so far, while emerging markets after seeing big sell off’s in 2011, increased by 10%.

Relief over broad Eurozone adoption of new fiscal rules and fresh hopes for a deal on Greece’s debt restructuring along with increased liquidity from the ECB were good news for markets. In the US, with the Federal Reserve announcing rates will be on hold until 2014. Accommodative monetary policy and political progress has market participants in a more optimistic mood at the moment.

With Ireland committed to its bailout programme we need to continue growing our way out of our troubles. Unemployment has for now stabilised around the 14% mark (helped with emigration). The recent visit of the Chinese vice-president and the follow on visit by Enda Kenny to China towards the end of March are significant for Ireland. Besides benefiting from cultural and tourism links, China is aiming to move to a path of more sustainable growth rather than just high growth, by concentrating more on domestic demand rather than exports. This should help counties such as Ireland by creating a bigger export market for our products and is perfect timing for leaders to visit both countries.

Unemployment Graph
While the cost of doing business in Ireland has reduced, we still need to work on our competiveness. With much emphasis on wage reductions other costs which could be focused on are high rents, insurance or childcare costs. Unfortunately many of our problems stem from the excesses during the boom years and government policy today is built around reacting to those previous decisions.

Global Competitiveness Index

Country/Economy Rank Country/Economy Rank
Switzerland 1 Austria 19
Singapore 2 Australia 20
Sweden 3 Malaysia 21
Finland 4 Israel 22
United States 5 Luxembourg 23
Germany 6 Korea, Rep. 24
Netherlands 7 New Zealand 25
Denmark 8 China 26
Japan 9 United Arab Emirates 27
United Kingdom 10 Brunei Darussalam 28
Hong Kong SAR 11 Ireland 29
Canada 12 Iceland 30
Taiwan, China 13 Chile 31
Qatar 14 Oman 32
Belgium 15 Estonia 33
Norway 16 Kuwait 34
Saudi Arabia 17 Puerto Rico 35
France 18 Spain 36

 Source: Global Competitiveness Index, 2011

by James McCarthy,

James is an Investment Analyst in Quintas Wealth Management

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Is there an endgame for the Euro??

January 26, 2012

Save the Euro?

Uncertainty over the future of Europe and the Euro has reached a dangerous phase.  Risk in Europe has become skewed due to lack of clear leadership and compounded by significant deleveraging in the private and public sector.  A strong policy response has been required for over 6 months now and as this necessary response continues to be put off markets have increased risk premium attached to practically all asset classes. 

Countries, corporates and individuals are being forced to accelerate deleveraging of their balance sheets.  Non-core assets are specifically suffering from extreme risk aversion.  Markets like nothing more than certainty and at the moment uncertainty abounds.  For banks (and the functioning of the financial system) this is leading to a damaging spiral of an accelerated sell off in assets in the midst of weak buying.  That private balance sheets need to be deleveraged is not in questions but in order to have any orderly market adjustment there needs to be strong buyers. 

The ECB has committed to supporting the financial system through increased lending.  But with both the banking and private sector deleveraging the appetite to circulate this influx of cash is significantly diminished.  The real issue lies on the balance sheet of the government sector which is now being forced to contract.  The recent agreement to finance the banking sector was augmented with a fiscal austerity plan that will weaken and contain government spending.  This will lead to the 3 sectors of economies (private, corporate and government) all embarking on deleveraging and contraction at exactly the same time.  This is not a recipe for recovery.

We expect the next 3 months to be the most crucial ever for the Euro zone and the entire future of the European project.  We also remain wary of the knock on effects around the world. 

Legal aspects of a Euro Breakup:

While the breakup (full or partial) of the Euro is not a done deal by any means we are encouraging investors to consider the fact that the probability of this outcome has increased and they should at least partially insure their portfolios against such an event.  While there is not a definitive answer to what happens in such an event, our research highlights the fact that it may come down to whether domestic (Irish) or international law applies to the individual assets in your portfolio.   As such investors should consider what law governs their assets.

by David O’Shea

David is Investment Director in Quintas Wealth Management

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.

Quintas Quarterly Economic Review (Winter 2011)

January 12, 2012

James McCarthy Investment Analyst

As the Eurozone continues to suffer from euro-breakup fears, this is having an impact on economic growth at home. With Ireland being an open economy, any slowdown in our export markets will reduce our growth rates, likely leading to more cuts.

Ireland has made promising strides forward in increasing our competitiveness. Despite this we still need to get our day to day spending down. In terms of austerity that is required, it would be sensible to begin significantly reducing large public sector pensions (and then go onto the next level), particularly since the government is effectively bankrupt. One example would be politicians. Former Justice Minister, Dermot Ahern, 55 walked away with €180,000 up-front and a pension of €128,000 every year, reduced to about €70,000 after tax (pay cheque of almost €6,000 per month) for the rest of his life. If we assume 25 years receiving this payment, this would translate into almost €2,000,000 net. This is for one person. That’s the equivalent of earning a gross salary of €30,000 each year for 67 years of labour.

Regardless of whether this could be touched or not, it is probably more worthwhile to ask how such excesses could ever have arisen. This could be changed for future retirees. A cut to €25,000 a year could be appropriate with exceptions made for job performance. While that would represent a massive decrease, it would still continue to be a very generous pension. If you combine this with other savings they may have from their high incomes while working, it is within their means to have a financially secure retirement.

When the government talks about protecting vulnerable social groups yet refuses to drastically reduce these absurd pensions it makes you question their leadership and judgment, and it remains frustrating to see that this will likely never change. With such excesses granted in just one area by successive governments, regardless of job performance, the chart below is not surprising.

Source: NTMA

Irish Debt

by James McCarthy,

James is an Investment Analyst in Quintas Wealth Management

The views expressed in this article  is not reflective of the views or opinions held by Quintas. The material contained herein includes facts, opinions and recommendations which we neither guarantee the accuracy, completeness or timeliness of, nor do we endorse.  We do not accept any liability for any act, or decision not to act, use, misuse or distribution resulting from use of this material”.