By Jean Christou
THE STOCK market hit a three-year low yesterday as bank shares plunged to new depths under heavy selling pressure.
The all-share index fell 1.39 per cent, falling through to the wrong side of the 80-point mark to close at 79.3 points, while the FTSE/CySE blue chips index went under 300 points, less than one-third its original value, for the first time ever after a drop of 2.08 per cent. In November 1999 the index stood at a record 800 points and the FTSE, when it kicked off two years ago opened at 1,000 points.
Bank of Cyprus (BOC) was the main victim of yesterday’s bloodbath, shedding three cents to end at £1.06 while Laiki fell under the £1 barrier to close two cents down at 99 cents. Hellenic lost one cent to £0.66. Volume for the day ended at £677,000, 63 per cent of which was generated from trading in FTSE blue chips.
According to the analyst on the xak.com website “the market is so fragile that a single investor could create havoc”.
“Shares of Lady BOC continue to be expelled from tonnes of portfolios with wrath and determination, as the large cap has been the focus of attention and the cause of the latest market meltdown,” he said.
According to the analyst, BOC, being the most liquid stock together with the other banks, is probably one of the most widely held positions.
“It is also the largest stock in terms of capitalisation, so any price movements in the latter affect both indices dramatically. With such low volumes, if investor X decided to offload 100,000 shares of BOC, the latter would cause a dramatic drop. Because of the weight that the BOC maintains in the market, the drop in the bank’s value is immediately reflected on both indices,” he said.
“Given that the banks usually drive the market, it is safe to assume that a sudden drop in the BOC would serve as a trigger for sell-out across the board. This domino effect in itself creates further fear and uncertainty, as fragile investors do not have the stamina or patience to go through further losses. Bottom line, the market is so flimsy and weak that almost anything can cause it to crush.”
