Shares fall back after Central Bank warning

SHARE prices on the Cyprus Stock Exchange dropped by around four per cent yesterday with investors spooked by warnings that a rally this week had been pushed too far.

Floor traders said warnings attributed to Central Bank governor Afxentis Afxentiou “to a big extent” forced yesterday’s correction.

Afxentiou was quoted as telling yesterday’s Phileleftheros that a leap in prices that saw the general share index climb more than ten per cent in the space of two days “was not really justified”.

“It did influence the market but on the other hand everyone was saying that a slight correction was due,” a trader at a large Nicosia stockbroker said yesterday.

Though final figures were due to be released later in the day, stockbrokers said preliminary figures pointed to the market dropping by some four per cent, almost wiping out Thursday’s 5.2 per cent gain.

Yesterday’s shock may spark a new upwards correction, but at a slower pace than the mad dash of previous days, they said.

From January 1 and until Thursday, the market had advanced 37 per cent – recouping in the first six weeks of 1999 all the losses the official bourse had sustained since it replaced an unofficial over-the-counter market in March 1996.

In spite of the drop, it was difficult to find consensus among brokers on whether the rally was justified or pushed too far.

“For the first time we are seeing resources channelled into productive sectors of the economy and it was about time,” said one defensive trader. “This should be encouraged.”

Traders have said the rally was sparked by reports of Greek investors buying up bank shares, fuelled by news the Bank of Cyprus may secure a listing on the Athens stock exchange.

Others said it was pulled to the hilt by a small army of local investors getting carried away with the rare appearance of foreigners.

“They are buying without paying to sell the next day. With all respect to investors, this is getting out of hand – that is how people get their fingers burnt,” said Ioannis Athienitis of Severis and Athienitis Securities in Nicosia.

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