Turk­ish in­vestors eye Cyprus stocks

Financial Mirror (Cyprus) - - FRONT PAGE -

In­vestors from Turkey have con­tacted the Cyprus Stock Ex­change ask­ing how they could buy shares or com­pa­nies listed on the Cypriot bourse, se­nior stock mar­ket of­fi­cials have said.

The re­quests were “a few” and ex­ploratory, a se­nior of­fi­cer said on the side­lines of a press brief­ing.

How­ever, CSE Di­rec­tor Non­das Me­taxas clar­i­fied that as Cyprus is now re­garded by the bench­mark­ing FTSE as an “Emerg­ing-plus” mar­ket, due to the re­duc­tion of its traded vol­ume, un­der­per­form­ing stocks “seem very at­trac­tive in­deed for for­eign in­vestors who could snap up com­pa­nies at a frac­tion of the mar­ket or net as­set value.

Me­taxas said that the sus­pen­sion of Bank of Cyprus and the wind­ing up of Laiki Pop­u­lar Bank slashed more than 75% of the CSE’s daily vol­ume prior to March 2013 when the Eurogroup of Eu­ro­zone fi­nance min­is­ters im­posed a bail-in of de­pos­i­tors’ sav­ings to re­cap­i­talise Bank of Cyprus and ab­sorb the de­funct Laiki Bank.

“Our daily vol­ume has

trick­led down to any­thing from 50,000 to 150,000 eu­ros,” he said.

That is why the CSE is look­ing to sim­plify its stock struc­ture with just two cat­e­gories – Main and Al­ter­na­tive – while it is also keen to at­tract mu­tual fund com­pa­nies, one of which has al­ready listed 16 funds.

Me­taxas said that the bourse is wait­ing for listed com­pa­nies to sub­mit their au­dited ac­counts for 2013 and have given them an ex­ten­sion be­yond the April 30 dead­line in or­der to com­ply.

“Our aim is to en­sure com­pa­nies re­main listed and re­sume trad­ing, al­beit in a spe­cial cat­e­gory, in or­der to en­sure the pro­tec­tion of mi­nor­ity share­hold­ers.”

He said that be­yond mu­tual funds, the CSE is con­tem­plat­ing the list­ing of for­eign ex­change in­stru­ments, as well as com­modi­ties, par­tic­u­larly farm­ing goods and fu­tures con­tracts.

“The is­land’s dis­cov­ery of nat­u­ral gas re­sources has made us plan ahead for a ded­i­cated En­ergy sec­tor, just as we did in the past with the Ship­ping sub-sec­tor, while the govern­ment’s com­mit­ment to pri­va­tise at least three pub­lic util­i­ties – telco Cyta, power gen­er­a­tor EAC and the Cyprus Ports Author­ity – also bodes well for the bourse as these would have to be fully or par­tially pri­va­tised and listed with an IPO on the CSE.”

Me­taxas added that the pri­vati­sa­tion of the CSE it­self is still far away on the govern­ment’s agenda, but well within the plan un­til 2018.

The CSE also un­der­took to act as a col­lect­ing agent and pro­cess­ing man­ager for the 6-year re­tail sav­ings bonds to be of­fered on a monthly ba­sis with a cap of 10 mln eu­ros per is­sue. “The first is­sue was a suc­cess with 7.5 mln eu­ros of­fered,” Me­taxas said.

The Min­istry of Fi­nance said that it hopes to at­tract about 100 mln eu­ros of in­vest­ments a year from among money that has es­caped the bank­ing sys­tem and in­vestors are cau­tious to re­turn as de­posits. That is why the govern­ment is of­fer­ing an aver­age 4% yield on the 6-year plan with an at­trac­tive 3% tax on in­ter­est, as op­posed to 30% tax charged on the in­ter­est of all bank de­posits.

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