With the likelihood of a no-deal Brexit waning, the Irish market and the related ETF are strengthening as investors no longer fear an economic fallout with one of the country’s biggest trading partners.

The iShares MSCI Ireland ETF (NYSEArca: EIRL) has jumped 12.1% over the past three months as the United Kingdom hashes out its troubled divorce with the European Union.

Martin Beck, lead economist at Oxford, argued that the odds of Ireland facing a hard Brexit are dwindling.

“It will be a hit, in very specific sectors,” O’Halloran told CNBC, noting that over the last 12 to 18 months investors have shied away from Ireland due to the political uncertainty. “But most of those sectors are not listed on the stock market so it shouldn’t affect the stock market as much as it has.”

UK Ties That Bind

The U.K. is closely tied to Ireland both politically and economically. Ireland sends about 15% of its exports to the U.K., trailing only its exports to the United States. About 40% of Ireland’s food and drink exports go into the U.K. Furthermore, over half of other Irish exports pass through Britain on the way to Europe or other markets.

Consequently, Ireland, an E.U. member with no plans to break away, could face a number of trade barriers if a no-deal Brexit took effect. The country’s biggest exports to Britain include agricultural products.

“The no-deal Brexit will hit exports hard,″ Thomas Sgouralis, who follows Ireland’s economy for Moody’s Analytics, told CNBC.

However, investors should keep in mind that the Irish markets and economy are not really the same thing. O’Halloran pointed out that most of the market’s value is related to construction, banking and building products, which may not suffer as much from Brexit.

More specifically, EIRL’s underlying holdings include a 23% tilt toward CRH, which sells asphalt, cement and construction “aggregates” such as granite and limestone, followed by Kerry Group, a multinational food maker that makes most of its sales from the Americas.

For more information on the global markets, visit our global ETFs category.

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