By Hamza Hendawi
SHARE PRICES rose sharply yesterday on the back of heavy activity in insurance stocks. The official all-share index leapt 1.31 per cent to close at 95.54, the highest close in at least 13 months.
The value of trade stood at £5.44 million, taking to £16.74 million the worth of shares changing hands since the start of the week.
The market’s surge began on Monday when the Popular Bank announced a £47 million takeover bid for 100 per cent of Nicos Shacolas’ insurance business. The all-share index rose by 3.7 per cent on Monday and gains were consolidated the following day when it closed marginally higher.
“I think the market will remain hot for the next couple of days,” said Koullis Panayiotou of leading brokerage CLR Stockbrokers Ltd. “People are selling the Shacolas insurance stocks and placing them elsewhere and that is why we have such a high volume,” he told the Cyprus Mail.
The Popular Bank’s takeover, agreed after weeks of secret talks, is the biggest in the island’s corporate history. When completed, it will give the bank, Cyprus’ second biggest financial institution, more than a 30 per cent share of the local market.
All three of Shacolas’ insurance titles – Paneuropean and daughter companies Interamerican and Philiki – ended yesterday’s trade in positive territory closing at £1.50, £1.26 and £1.26 respectively.
The Popular’s offer for Paneuropean is £1.55 and £1.30 for the other two, but investors, according to traders, are now offloading holdings in the three titles at prices slightly lower than the Popular Bank’s offer as a means of quickly getting cash in their hands.
After completing a 100 per cent takeover, the three insurance titles would be delisted and the companies amalgamated in the bank’s insurance arms, Laiki Insurance and Cyprialife.
The activity in the three titles has sparked interest in other insurance stocks and fuelled a rally by Shacolas’ commercial shares Woolworth and CTC, which, according to traders, will be attractive following the financial windfall resulting from the insurance sell-off.
“People are in love with Nicos Shacolas now,” said Stavros Agrotis of CISCO, the Bank of Cyprus’ brokerage and investment banking arm.
Shacolas’s stocks suffered, Agrotis explained, when negotiations between him and Interamerican Group (Greece) over the sale of the three insurance titles dragged on without a successful conclusion in sight, leading many investors to abandon hope of a deal.
Many took positions in the three titles at a fairly high level when a deal appeared imminent, but had their fingers badly burnt when the stocks slumped as the prospects of a deal diminished.
In a separate development, the Cyprus Stock Exchange announced that it had agreed with Financial Times International to introduce a new selective index, tracking the performance of selective shares.
The index, to be called FTSE\CySE is expected to make its debut in March and is partly designed to help attract foreign investors who have so far stayed away from the local bourse.
