By George Psyllides
FINANCE Minister Takis Klerides yesterday said he would urge institutional investors to support the stock market (CSE) thus improving investor confidence, which has hit an all time low in recent days because of a plummeting share price index.
Speaking after presiding a meeting of all the parties involved in the stock market, Klerides said the main issue discussed had been restoring investor confidence in the stock market, and announced several measures aimed at boosting market buoyancy.
Those measures include the introduction of a “more representative” calculation of the all share index, and efforts to boost transaction transparency by allowing investors access to company information to avoid misleading rumours.
The share index is currently calculated on the last transaction. The new method will take into consideration the last 15 minutes of transactions rather than just the closing price.
The minister also said market legislation should be accelerated, and to that end he said he would soon be meeting the Chairman of the House Finance Committee Markos Kyprianou.
Klerides urged institutional investors to support the market and announced that insurance companies had been granted permission to increase their investment ceiling in shares by 30 to 40 per cent.
The meeting also looked at ways of further monitoring and regulating investment advisers.
Regulations are pending in the House, but Klerides said closer scrutiny of advisers was needed.
He added that the Social security fund could be investing in the market soon, but only for the good of its members and not for the purpose of raising share prices.
Turning to the island’s economy, he said results for the first six months of 2000 were “much better than expected”.
Unemployment is on the decline and inflation for the first seven months of this year was 4.4 per cent — 3.4 per cent year-on-year. Inflation in 1999 was 1.7 per cent.
Klerides was optimistic that these figures, along with the good results of large companies listed on the CSE, would bring new optimism to the market and improve investor confidence.
The Vice Chairman of the Brokers’ Association, Stavros Agrotis, said the measures announced by the minister were a positive development.
“It is a very positive development because the minister is asking institutional investors to operate according to the role such investors have in worldwide markets.”
Institutional investors intervene at critical times, not because it is their job to do so, but because they can buy up shares at attractive prices, he added.
