SHARE PRICES nosedived yesterday, as the all-share index dropped by 9.59 per cent, its biggest one-day fall this year.
The plunge capped three successive days of losses, with the index yesterday closing 43 points down on Wednesday’s close to end the day at 409.17. All seven sectors of the market ended the day down, although the volume of transactions was slightly higher than Wednesday at £59 million.
The falls were still not enough, however, to cancel out Monday’s meteoric 26.72 per cent rise in the market.
Bank shares were particularly badly hit yesterday, with the banking sector index falling 10.73 per cent. Bank of Cyprus shares — which on Monday set the market alight returning from a three-week lay-off to a 2-for-1 split — were yesterday down £1.08 to close at £8.88. The Hellenic Bank price, after a meteoric rise in the last few weeks, took a beating yesterday closing £1.47 down at £15 ahead of a 4-for-1 split later this year. The Popular Bank price dropped by £1.35 to close at £10.76.
The insurance sector fared even worse as the index recorded the biggest fall, 10.84 per cent. Universal Life, one of the high-flyers of the last few months plunged by a staggering £2.75, to finish at £11.90.
The collapse in prices came a day after the chairman of the Cyprus Stock Exchange, Dinos Papadopoulos, had warned that some stocks were grossly overvalued.
On Wednesday, Papadopoulos, in an apparent attempt to talk down a red hot market, warned investors to be cautious and listen to the advice of experts before investing in the stock market. This was a clear warning that the indiscriminate purchase of shares had driven up prices unjustifiably.
Rumours that brokerage firms were warning clients of an imminent crash and advising them to cash in on their holdings must also have contributed to yesterday’s plunge in prices.
But yesterday, stockbrokers seemed generally unconcerned by the drop.
“Since Monday, when the volume of trade reached over £100 million, it was bound to drop because prices were inflated,” one broker said, echoing what Papadopoulos had said on Wednesday.
But the broker added that he did not expect the slump to last, but rather that the market would reach equilibrium.
“As from Monday, I expect further share price increases for about a week and a half and then the market will be stagnant,” he said.
