By Hamza Hendawi
SHARE PRICES fell sharply yesterday for the second consecutive day as investors sold heavily to shift into new issues expected to enter the market before the year’s end.
“I don’t think there is any reason to panic,” said Panicos Kaiserlides of Benchmark Securities Ltd. “I would say 80 to 85 per cent of the reason for the drop is that many are preparing to move to new stocks.”
At least four new titles are expected to start trading on the market before the end of the year, an eagerly awaited development in a market long starved on new issues.
The all-share index of the Cyprus Stock Exchange was down yesterday by 33.11 points, or 4.09 per cent, to close at 775.46 on a modest volume of £25.89 million. On Thursday, the index fell by 28.69 points, or 3.43 per cent.
Drops of this size are not uncommon in the market, which remains more than 750 per cent up on the year after the latest falls.
The exchange, whose 1999 performance places it at the forefront of emerging markets worldwide in terms of gains, reopened on Thursday after a three- closure ordered by market authorities to allow themselves time to install a new settlement system.
The shutdown, the fourth since late July, was also aimed at giving listed companies some leeway to update their registries and correct hundreds of erroneous share deeds issued during the boom months of the summer, when the market steadily scaled new highs amid unexpectedly record volumes.
The backlog created in the summer months is still besetting the tiny exchange. The market has been operating without 20 companies or more at any time since mid-November because they have been suspended by the exchange or voluntarily withdrew to tackle a backlog of backroom administrative work.
Brokers also attributed the drop in share prices yesterday and on Thursday to the confusion arising from a new settlement system, which is meant to be a stop-gap measure before a central depository and clearance system is put in place in 2000.
Hardest hit yesterday were shares of industrial and trading companies, whose sub-indices shed 6.27 per cent and 6.15 per cent respectively.
The banking blue chips, which account for nearly half of the market’s capitalisation, were also sharply down. Bank of Cyprus, the island’s largest, was down 59 cents to close at £11.19 pounds. Also down was the Popular Bank, ending the day 60.50 cents slimmer at £14.92 pounds.
Yesterday’s skid in share prices coincided with a decision by the House’s Finance Committee to put to a vote next Thursday a proposal to levy a one per cent tax on all sales of shares on the stock market.
Two members of the committee are also proposing a capital gains tax on stock market transactions that should be collected in isolation of income tax, but Finance Minister Takis Klerides, who was present at the committee’s meeting yesterday, said such a tax would be unfair and counter- proposed that it be integrated with income tax.
