Buys BOC ahead of International Sophocleous
With Bank of Cyprus shares continuing to hit new record highs both in Cyprus and Greece, market attention is now expected to turn to the scheduled Board meeting of the Bank on September 15, when details of the forthcoming rights issue will be decided and made public.
The Bank has prepared the market since the start of the year by announcing that it will proceed with a rights issue, aiming to raise CYP 80-100 mln to boost its Tier 1 capital and finance its aggressive expansion plans abroad.
With the share price of the Bank having advanced 50% since the start of the year to a record CYP 2.23 level, analysts are sure that the issue will receive a warm welcome from the investing community, or at least those who can afford to participate in the issue.
For those who cannot afford to pay new money to buy BOC or any other shares, the forthcoming rights issue will again be favourable, since they will be able to sell their rights in the market and immediately receive their cash, which some describe it as a form of interim dividend.
People who believe in the future prospects of the Bank are likely to snap up the issue, with Bank officials privately saying that there is strong support from foreign fund managers, who will purchase their share of the rights, plus all unexercised rights that local investors may not be able to purchase due to their worsening financial situation.
BOC needs the Tier 1 capital to maintain its capital adequacy ratio above 12% and at the same time finance its expansion drive into Russia, the Balkans as well as additional branches in Greece to 150 from the 120 target.
International Sophocleous
The main reason however, why investors are snapping up the Bank’s shares in an aggressive way is because of speculation that when the International Sophocleous index makes its debut in October, it will include BOC along with Greece’s top 90-100 companies.
‘Everybody is buying ahead of the event, and I don’t think the recent rally has got anything to do with the rights issue,” said one trader, who expects the rally to continue until the actual announcement is made.
ASE visit
Some investors are hoping that an early indication of whether or not BOC will be included in the forthcoming super-league index may be announced on Friday, September 16 when the Chairman of the Athens Stock Exchange visits Cyprus.
As exclusively reported by the Financial Mirror last week, ASE Chairman Spyros Kapralos is due to sign a number of agreements with the CSE towards the establishment of a common trading platform, as well as discuss how Cypriot companies will be included in the ASE indices.
According to research made by the Financial Mirror, only six stocks in Cyprus meet the minimum EUR 100 mln market capitalisation criteria for entry into International Sophocleous. They are BOC, CPB, HB, LUI, VCW and VIP. However, the candidates also need to meet other qualifications such as minimum public float.
