Cyprus Stock Exchange Reaches New Low

by Lorys Charalambous, Tax-News.com, Cyprus

25 June 2002

While the Cyprus House of Representatives continues with bad-tempered discussion of the 250-page report on the stock exchange debacle two years ago issued by its Committees on Finance and Control, the Exchange itself sank last week to a new low.

The report, which accused just about everyone involved of responsibility for the fiasco which saw a market bubble come to a crashing end after suspensions of trading and collapse of the settlement infrastructure, has stirred up a maelstrom of politically-motivated accusations and counter accusations. Allegations of fraud are the most popular, but they stand little chance of being put to the test.

One result that may emerge from the chaos is insider-trading legislation, since Parliament has to be seen to be taking some sort of action, although it is even less likely to result in successful prosecutions in Cyprus's closely-knit financial community than in more transparent societies such as the UK and the US.

Says the Cyprus Weekly: 'In Cyprus, everyone participates in "insider trading" and no one understands what is wrong in doing that. For proof, just look how shares in the banks move before the publication of interim and final results.'

'It can be predicted,' says the newspaper, 'that only a few cases will come to court and a conviction would require a miracle. That is if one can find a judge that did not trade in shares and does not have a relationship with the people who will be brought to court.

At its peak, in 2000, the Cyprus Stock Exchange index reached nearly 700 - last week it touched 96, although on higher volume of just over £1m. Volumes in June have barely averaged £0.5m, as against levels nearly ten times higher in 2000. Analysts said however that last week's better volume was due to an upsurge in bearish sentiment rather than any upturn in price expectations.

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