Financial Mirror (Cyprus) - - FRONT PAGE -

Cyprus was get­ting closer to join the ERM2, pre­cur­sor to adopt­ing the euro, while Ste­lios was back in town to pro­mote new ven­tures and for­eign in­vestors were snap­ping up eq­ui­ties on the CSE, the Fi­nan­cial Mir­ror re­ported in is­sue 590, on Oc­to­ber 13, 2004.

The Coun­cil of Min­is­ters is ex­pected to meet in the next 15 days to de­cide whether Cyprus is ready to make a for­mal ap­pli­ca­tion to join ERM2 (the Ex­change Rate Mech­a­nism), the first ma­jor step re­quired to adopt the euro. Coun­tries must re­main within the ERM for at least two years be­fore adopt­ing the sin­gle cur­rency and must meet the other four strin­gent “Maas­tricht cri­te­ria” which cover bud­get deficit, pub­lic debt man­age­ment, in­ter­est rates and in­fla­tion. Cyprus’ large bud­get deficit, which hit more than 6% of GDP in 2003, was the main rea­son why it was not among the first three new mem­ber states which joined ERM2 in June, namely, Slove­nia, Es­to­nia and Lithua­nia.

EasyGroup founder Ste­lios Haji-Ioan­nou, in Cyprus last week to in­au­gu­rate the first out­let of his easyCar fran­chise in Li­mas­sol, plans to re­turn with other easy fran­chises, such as easy­Money, spe­cial­is­ing in credit cards business, and easy4­men, a joint ven­ture with Boots spe­cial­is­ing in men’s toi­letries.

For­eign in­vestors have been spot­ted buy­ing up bar­gains on the CSE, at a time when con­fi­dence is at an all-time low and the CSE All-Share In­dex is scrap­ing fresh lows. Greek in­vestors, led by the Pro­ton Group, who had pre­vi­ously ac­cu­mu­lated a 4.9% stake in In­ter­fund, is now be­lieved to have pur­chased a 3% stake in Cytrustees. Deme­tra In­vest­ments has also been the tar­get of for­eign in­vestors, with Deutsche Bank tak­ing a 0.88% stake, while Eureko Group is re­sum­ing talks for a con­trol­ling stake in Univer­sal Life.

Both EU and non-EU com­pa­nies can now buy an en­tire Cypriot bank, ho­tel, in­surance company, farm or tourist agency with­out any re­stric­tions and with­out hav­ing to invest a min­i­mum amount, fol­low­ing the full lifting of in­ward in­vest­ment re­stric­tions on Oc­to­ber 1. How­ever, bro­kers do not ex­pect the big three banks to fall into for­eign hands just yet.

Prices of homes fell by 1.9% in Septem­ber, ac­cord­ing to the Buy­Sell Home Price In­dex, bring­ing the in­dex to 108.89. The av­er­age sell­ing price of a house is now CP 84,834. After ris­ing for two years, the monthly fall could be at­trib­ut­able to the 1% hike in in­ter­ests in April. But the Cen­tral Bank Gov­er­nor said the rapid in­crease in prop­erty prices at about 15% so far this year, is not sus­tain­able and urged buy­ers to be cau­tious.

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