Ireland Bank Shares Halted—But Huge ETF Activity
Bob Pisani is off; this post was written by CNBC producer Robert Hum.
Ireland’s central bank just announced results of the latest stress tests on its banks. It indicated that four of the country’s largest banks could require up to 24 billion Euros of additional capital, including 13.3 billion Euros for Allied Irish Banks and 5.2 billion Euros for Bank of Ireland.
But investors haven’t truly had an opportunity to trade the banks ahead or on this announcement. The stress tests results were released after Ireland’s stock market had closed.
Meanwhile, prior to today’s open, the Irish Stock Exchange halted trading in shares of both Allied Irish Banks and Bank of Ireland. Subsequently, the NYSE halted shares of both banks’ ADRs (AIB and IRE ) prior to the market’s open here in the U.S. Shares of both banks have not yet resumed trading on the NYSE.
However, thanks to the magic of ETFs, there still is a way to trade Ireland right now…and get a little exposure to the two Irish banks.
The iShares MSCI Ireland Capped Investable Market Index Fund is the only ETF in the market that tracks Irish stocks. It holds mostly Dublin-listed securities (not the U.S.-listed ADRs) of Ireland-based companies, including shares of the Bank of Ireland and Allied Irish Banks. It is, however, a very small ETF ($6 billion in assets) that typically trades on relatively-thin volume.
But take a look at what’s happened over past couple of days. The ETF is down just fractionally today, but it got a substantial shot of volume right as the stress test results were being released. Nearly 15,000 shares have changed hands since the results were made public about an hour ago at 11:30am ET. Is that significant? Certainly. At the beginning of this week, the ETF’s average daily volume was just 2,000 shares!
Yesterday’s activity was even more significant. The ETF fell 3 percent, likely on concerns ahead of the stress test announcement. Also look at the ETF’s volume yesterday…over 200,000 shares were traded!!! That’s extraordinary – more than 100 times normal volume.
Bottom line, it’s yet another example of how ETFs have opened to door for investors to trade without interruption even when trading in certain individual securities has been halted.
One word of caution….also know what you’re investing in when buying ETFs. A quick check of the ETF’s holdings show that the top 3 holdings of the EIRL ETF make up nearly 45% of the fund’s portfolio. (None of the 3 is an Irish bank.)
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