THEE FFII N A N CII ALL MII R O R T HIISS WEEEE K
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.