THE STOCK market managed to reverse three straight sessions of decline yesterday, climbing 2.08 per cent,
but there tense undercurrents remained over allegations of fraud involving stock exchange transactions.
Bourse chairman Dinos Papadopoulos angrily denied claims — aired on state-run CyBC on Tuesday night — that the CSE had been turned down as a member of the European Stock Exchanges Association because of allegations of money laundering.
The Europeans were also perturbed at reports of "a mini crash" on the market, the unsourced CyBC report said.
Cyprus is a correspondent member of the European association and its application to become an associate member would be reviewed in May, Papadopoulos said.
The Eurobourses submitted a progress report in December, which praised the sound legal infrastructure in place for the stock exchange to operate, but did note problems with delays in settlements — the reason the market shut down for three weeks in September.
In no case did they make any reference to money laundering or fraud. Its only reference to the actual performance of the bourse was mention of the upswing in transactions last year, which was put down to the restrictions on capital flows in, but mainly out of the country.
"We really shot ourselves in the foot on this one," Papadopoulos said. "This (CyBC) allegation is wrong — for lack of a stronger word."
Brokers, who have been seething for days after disclosures that police are investigating allegations of fraud in some transactions, also grasped the opportunity to pour scorn on claims of laundering.
Deputies first made the allegations in parliament last Friday during a meeting on crime.
"This meeting should have been held behind closed doors since it was only speculation," brokers union chairman Chris Ellinas told reporters.
Ellinas said the information — which he said had been broadcast abroad — was used by people with "bad intentions to harm Cyprus and the Cyprus stock exchange."
It is not the first time that speculation has surfaced of the bourse acting as a washing machine for ill-gotten gains.
Brokers insist that their transactions are on a "know your client" basis. Ultimately though, everything goes through the banking system, which is supervised for suspect transactions by the Central Bank.
"We are no better or worse than the stock exchange in London, Athens or New York," said a bourse official. Ellinas also scoffed at reports police were investigating 13 legal violations in stock transactions in which brokerages were allegedly involved. "Our information is that these 13 cases also relate to investors and people posing as stockbrokers," he said.
While the speculation sent brokers and officials into a flap, investors moved in on the lows yesterday, snapping up shares across the board after three days of declines.
The market opened about one point lower than Tuesday, but rebounded very early into the session and steadily climbed to a close of 617.28, the intraday highest. Traded volume was light at £17.4 million on 3,474 trades.
"It was a bit on the thin side but buyers have started to come out after the opportunities created by selling
pressure over the past few days," said a trader.
Of 88 securities traded, 60 advanced, 19 declined and nine remained unchanged. Louis Cruise Lines was as usual the most actively traded stock with 683,888 shares changing hands, followed by Avacom Computer, which had about half that amount.
Agros Proodos company led decliners with a 14 per cent net loss, while Severis and Athienitis Financial Services, which announced a five-way split on Tuesday, topped climbers with a four per cent jump.
