By Hamza Hendawi
WITH MANY investors shut out and policemen assigned to protect brokers on the floor, the Cyprus Stock Exchange reopened for business yesterday after a four-week closure, keeping alive hopes for a spectacular 1999 with a modest drop of 1.27 per cent.
The dip in the exchange’s all-share index defied wide expectations that the market was heading for a plunge on reopening. It slipped 5.3 points to close at 414.95 on a relatively low turnover of £6.8 million.
The bourse’s four-week closure was forced by a mountain of unprocessed paperwork resulting from the boom months of the summer when thousands of first-time investors descended on the market and an automated trading system introduced in May sent volume through the roof.
The prospect of parallel listing on the Athens Stock Exchange by some Cyprus-based banks and companies, together with consistently good results by blue-chip companies, further contributed to gains of more than 360 per cent on the year.
Many investors were unable to trade yesterday because they had no deeds for their shares, a fact which has given rise to fears over the safety of brokers from investors angered by the delays in receiving share certificates.
Armed policemen were posted outside the bourse’s building in central Nicosia yesterday, while several plainclothes policemen were seen moving around the floor. There was also a higher than usual number of security guards on the floor.
“We have had a lot of threats. We have officially asked for police protection,” stockbrokers association chairman Louis Klappas said yesterday.
The one-hour trading session, however, ended without an incident. “We did well today considering that we closed for four weeks,” said exchange Chairman Dinos Papadopoulos after the end of the session. “The index remained steady and the investors kept their cool,” he told reporters on the trading floor.
Asked whether the stock market is likely to be closed again over the backlog problem, Papadopoulos replied: “We shall do our best that this does not happen again.”
The four-week closure was the third since July, something that has undermined the reputation of the market among local investors and, according to Commerce Minister Nicos Rolandis, has driven foreign investors away.
The first of the three closures lasted two days in late July and was followed by a one-week shutdown in August.
Papadopoulos said the problems arising from the administrative chaos has affected thousands of investors, but predicted that the problem would be ironed out in a week or two. Three of the 21 brokerages accredited with the Cyprus Stock Exchange were not allowed to trade yesterday, banished from the floor by the bourse for failing to meet deadlines on clearing transactions or providing proof that problem deals were being sorted out.
Yesterday’s session was restricted to investors with share certificates in their possession. Hundreds, perhaps thousands, who did not were kept out — victims of the administrative chaos that has engulfed the market since July.
It was their absence that kept volume down to £6.8 million, a modest sum when a little more than a month ago — August 30 to be precise — volume hit a record £117.48 million.
New trading rules for investors to pay upfront and present their share certificates before any transaction were likely to trim turnovers and liquidity in coming sessions, according to traders.
Only 700 transactions took place yesterday, according to Papadopoulos, down from an average of up to 4,000 during the market’s heyday in August and July.
Traders, meanwhile, were generally pleased with how things went.
“Today’s performance reflected the confidence in the market,” said Yiannos Andronikou of Suphire Stockbrokers Ltd, who light- heartedly admitted to being a little rusty in trading after a whole month away from the floor. “I was expecting things to be much worse.”
Harris Savvides of Laiki Investments shared Andronikou’s assessment of yesterday’s trade, but said he expected prices to continue going down as part of a “not-too-severe” correction movement.
