The Cyprus Stock Exchange (CSE) has been in dire straits for some time now, reaching its lowest ebb in the summer when stockbrokers were subjected to bomb attacks and small investors attempted to storm the CSE to protest against plummeting share prices. Many are facing financial ruin due to the devastating drop in the market.
Key government and stock exchange figures have been meeting over the past couple of months to try and thrash out ways to shore up the ailing CSE, and yesterday the Ministry of Finance announced that it would promote a series of measures aimed at supporting the exchange, improving its operation and supervision mechanisms and offering tax incentives to investors.
The Minister of Finance Takis Clerides is reported to have told yesterday's meeting of stockbrokers, investors, CSE Council and Commission officials that a budget earmarked for the Exchange Commission had already been approved and would open the way for new recruitment that would ensure smoother running of operations.
Mr Clerides also put forward a series of measures to be considered, which include new tax incentives aimed at promoting long-term investment by major shareholders of listed companies, changes in the time schedule of new listings that will help reduce the impact of fresh capital raising on the liquidity of the market, and the invitation of Greek market experts to Cyprus to investigate and propose measures that will help eliminate distortions on the stock market.
Mr Clerides did state, however, that investing capital from the Social Insurance Fund on the CSE was out of the question for the time being.
In return, stockbrokers offered assurances that they would start investing in select stocks in order to prevent a further deterioration of the market and a repeat of recent panic selling.
The chairman of the investors’ association (PASEHA), Alkis Argyrides, said the association called for the immediate enactment of legislation regarding private placements, the suspension of new listings and the establishment of measures obliging investment companies to either pour the capital collected from investors onto the stock market or return it to their shareholders. PASEHA also recommends that issue managers should bear the responsibility of determining IPO prices and ensuring these are not excessive.
What is clear is that the Finance Ministry has not given up on the CSE. The meeting yesterday was an indication of the government's support of the CSE and all its institutions. The overwhelming consensus is that the government is keen to restore investors’ trust in the stock market and prevent the CSE plunging back into the sort of crisis it has undergone in the last few months.
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