By Hamza Hendawi
SHARE prices marched to their eighth consecutive all-time high yesterday, closing up 3.28 per cent at 370.12 points amid heavy trading in bank shares.
The eight-session rally has once again proved the market’s resilience and its exceptional ability to ride out crises.
The latest crisis fell on Monday, when investors’ mood blackened after brokers staged an impromptu strike in solidarity with three brokerages suspended by the Cyprus Stock Exchange authorities for failing to meet deadlines set for by the bourse for processing transactions.
As a result of the brokers’ action, volume on Monday was an anaemic £2.1 million, the lowest seen in the bourse since December.
But the market miraculously bounced back on Tuesday with a volume of £38.76 million, thanks to a decision by brokers to resume work under an interim agreement with the Stock Exchange brokered by Finance Minister Takis Clerides.
Yesterday’s volume slightly surpassed Tuesday’s, registering £38.80 million, with five of the market’s seven sub-indices finishing the day up.
The gap between the Stock Market and the brokers, however, remains wide. The bourse’s authorities are determined to reduce the time allowed for processing transactions to 20 days effective today and have plans for further reductions, possibly to just 10 days. The brokers, meanwhile, are refusing to budge and accuse the Cyprus Stock Exchange of threatening behaviour.
The 50-plus brokers have gained a great deal of leverage in recent months and the Cyprus Stock Exchange may now have to think twice before it takes them on. Their strength lies largely in the market’s own rally, which has seen shares appreciate by about 300 per cent so far this year.
The gains have placed the tiny bourse at the forefront of emerging markets the world over, thus enhancing the brokers’ profile as powerful individuals, earning them substantial amounts of money in commissions and bonuses. The market’s impressive performance has triggered a demand for shares that is bordering on the obsessive, with brokers cast as the central players.
Yesterday’s gains took to 24.78 per cent the appreciation made by shares since Monday August 16, the first day of trade after a week-long closure ordered by the Cyprus Stock Exchange under pressure from brokerages and at the behest of the finance minister to clear a backlog of transactions.
Brokers are now reported to be demanding a three-session week, rather than the present five, as a stopgap to clear overdue transactions and until the market’s Central Depository and Clearance System is in place.
In yesterday’s trade, the manufacturing sector was sharply down by 8.87 per cent, with the island’s two cement makers Vasiliko and Cyprus Cement shedding 38.50 cents and 26.50 cents to close at £62.29 and £1.83 respectively.
Trading companies, a sector that has been without Nicos Shacolas’ Woolworth this week, were also down by 1.35 per cent after their strong Tuesday gains.
Orphanides Supermarkets, which has been slowly but consistently gaining in recent weeks, was down by 7.50 cents to close at £2.05, while Shacolas’ CTC was down by the same margin to close at £3.62.
Earlier this week, Orphanides — a chain with superstores in Larnaca, Limassol and one due to open in Nicosia in late October — announced a £1.2- million deal for the acquisition of Omega Supermarket in Paralimini. The purchase gives Orphanides a foothold in one of the busiest tourist areas. The store opens for business under the Orphanides name on September 20, according to a company statement. The deal will be put to a vote in a shareholders’ meeting scheduled for next month.
Popular Bank, meanwhile shot up by 71 cents to close at £10.43, more than £3 above its pre two-for-one split earlier in the summer. Trade in the share attracted £ 10.08 million, or 26.1 per cent of the total volume.
Hellenic Bank, a share that was widely perceived as a dead beat only a few months ago, made another spectacular one-day gain to close at £14.90, up £1.37 on Tuesday’s close. Nearly 200,000 of the share, worth £2.86 million, changed hands, accounting for 7.4 per cent of trade. Hellenic is scheduled for a four-for-one share split next month.
