A Monthly Stock Exchange Index for Ireland, 1864-1930

50 Pages Posted: 3 Oct 2013

See all articles by Richard S. Grossman

Richard S. Grossman

Wesleyan University - Economics Department; Institute for Quantitative Social Sciences - Harvard University; Centre for Economic Policy Research

Ronan C. Lyons

Trinity College Dublin; Spatial Economics Research Centre, LSE

Kevin O'Rourke

University of Oxford

Madalina Ursu

London School of Economics & Political Science (LSE) - Department of Economics

Date Written: October 3, 2013

Abstract

Information on the performance of equities during the latter part of the globalized long nineteenth century is scarce, particularly for smaller European economies such as Ireland. Using a dataset of over 35,000 price-year observations from the Investor’s Monthly Manual, this paper constructs new monthly Irish stock market price indices for the period 1864-1930, encompassing periods of significant economic and political turmoil in Irish history. In addition to a total market index covering all 118 equity securities issued by 94 companies, sector-specific indices are presented for railways, financial services companies, and miscellaneous industrial and retail companies. Weighted by market capitalization, nominal equity prices were largely static in the 1860s, before increasing by almost 60% in nominal terms between 1870 and 1878. Between 1878 and 1879, equity prices fell by one sixth in the space of a year, after which there was a secular rise in equity prices for two decades, with equity prices in 1899 twice what they had been in 1864. Between the turn of the century and the outbreak of the Great War, though, prices fell by 25%, a pattern that stands in stark contrast to returns on the London exchange, which were greater during 1894-1913 than during the preceding two decades. The period from 1914 until 1929 saw a number of boom-bust cycles, concurrent with war and other political events affecting Ireland, including its independence movement. Railway equities, which had trebled between the mid-1860s and the turn of the century, fell sharply during the 1910s and 1920s. In contrast, financial equity prices – which were just 20% higher in 1920 than in 1864 – rose strongly during the 1920s. Overall, the average annual gain in equity prices over the period was just 0.9%, well below levels associated with an equity premium puzzle.

Keywords: Irish stock exchange, Investor’s Monthly Manual, long-run stock returns, 19th Century, 20th Century, Ireland

JEL Classification: E3, G12, N23, N24

Suggested Citation

Grossman, Richard S. and Lyons, Ronan C. and O'Rourke, Kevin and Ursu, Madalina, A Monthly Stock Exchange Index for Ireland, 1864-1930 (October 3, 2013). Available at SSRN: https://ssrn.com/abstract=2335303 or http://dx.doi.org/10.2139/ssrn.2335303

Richard S. Grossman

Wesleyan University - Economics Department ( email )

Middletown, CT 06459
United States
(860) 685-2356 (Phone)
(860) 685-2781 (Fax)

HOME PAGE: http://rgrossman.web.wesleyan.edu

Institute for Quantitative Social Sciences - Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Centre for Economic Policy Research ( email )

London
United Kingdom

Ronan C. Lyons (Contact Author)

Trinity College Dublin ( email )

Dublin 2
Ireland

Spatial Economics Research Centre, LSE ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

Kevin O'Rourke

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Madalina Ursu

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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