Cyprus Stock Exchange Flounders In The Wake Of Globalsoft Collapse

by Lorys Charalambous, Tax-News.com, Cyprus

20 July 2001

The Cyprus Stock Exchange (CSE) is suffering as the result of declining investor confidence, and a series of unfortunate incidents, it was revealed recently. At the beginning of the year, many analysts were hoping that 2001 would bring some much needed stability back to the beleagured exchange, and that good company results would leave some margin for a modest increase in overall values. However, this has not come to pass.

'We are seeing a freefall of the index,' said Sotiris Diakourtis, President of the Investors Association. 'We are also seeing a freefall in certain shares and they are taking the index with them.' The principal reason for the collapse is Globalsoft, once the darling of the Cyprus software community. Experts say that the policy of the company, which has recorded unprecedented losses recently, have affected the whole market because it is the third largest in Cyprus by market capitalisation, and has the weight and influence to affect overall investor confidence.

As a result, investors in Cyprus have been running for the doors, and there is little hope of a rebound unless they can be persuaded to stop panic selling. The index has lost 15.7% in the past month alone, and over 40% since the beginning of the year. Although the relationship between investors groups and the Cyprus Stock Exchange has never been exactly easy, recent events have deepened the rift. 'We believe immediate action is needed to change this climate,' said an angry Diakourtis. 'We call for the personal intervention of the Finance Minister and others in authority.'

Experts also believe that the CSE is being affected by overseas stock activity. As one trader told Reuters earlier this week: 'This is Cyprus. We don't ask questions.'

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