CSE shares gained 129% in 2006

…Fuelled by M&As, backed by fundamentals

 

Cyprus stocks ended 2006 on a bullish note wrapping up the year with total gains of 128.79%, fuelled by mergers and acquisitions as Greek investors seized the opportunity to absorb many companies listed on the Cyprus Stock Exchange.

The CSE GENX ended the year at 3900.39 points, lifting its total gains in the 12-month period to 128.79%. The FTSE/CySE 20 index ended 130.73% better at 1331.04 with the total market cap increasing to EUR 12.5 bln or CYP 7.2 bln compared to CYP 3.3 bln at the end of 2005 and CYP 2.10 bln end of 2004.

For sentimental investors who still refer to the old CSE index  which was scrapped beginning of 2006, this would have been at 251.90 according to Financial Mirror calculations. This compares to a 110.10 official close at the end of 2005, 72.55 points end of 2004, 80.58 points end of 2003 and 94.52 points end of 2002.

According to Financial Mirror calculations, the CSE GENX has gained 167% in the last five years, with most of the gains recorded in 2006.

 

M&A, euro adoption

The massive increase in profitability during 2006 and the return of many companies to paying dividends were some of the driving forces boosting the local exchange higher.

The main reason however, was intense buying interest from Greek investors snapping up Cyprus companies ahead of the adoption of the euro from 2008 and to take advantage of low prices still prevailing in Cyprus as well as the favourable tax regime.

The fact that the common trading platform with the ASE was launched in November 2006 played an insignificant role in 2006, but its smooth launch may lead to more M&A activity, this time involving equity swaps as opposed to all-cash bids, which was the norm in 2006.

 

Banks in the lead

Bank of Cyprus Pcl (BOCY), the most widely-held blue chip title with a total market cap of EUR 5.7 bln, ended 2006 at EUR 10.32 or CYP 5.97, for a total gain of 127%. During the last five years (2006/2002), the shares of Bank of Cyprus are up 342% according to Financial Mirror calculations.

Marfin Popular Bank Pcl (MPB), the second largest financial group of Cyprus with a market cap of EUR 2.6 bln ended 2006 at EUR 7.26 or CYP 4.20, for a total gain of 129%. During the last five years, the shares of Marfin Popular Bank (formerly Laiki Bank) are up 228%.

Hellenic Bank Pcl (HB), the third largest and traded stock on the CSE with a total market cap of EUR 798 mln ended 2006 at EUR 3.32 or CYP 1.92 for a total gain of 237%. During the last five years, the shares of Hellenic Bank are up 153%.

The three banking stocks make up EUR 9 bln of the EUR 10.4 bln market cap of the Main Market stocks, which in turn make up 83% of the total market cap of the CSE at EUR 12.5 bln. The Parallel Market titles make up EUR 328 mln in market cap, while the Alternative Market stocks make up EUR 1.3 bln of market cap. The Investment Companies make up EUR 456 mln.

 

European shares

European stocks ended the last session of 2006 slightly lower in thin volumes, as both economic and corporate news dried up, but they notched up an impressive 16% gain over the full year, fuelled by mergers and acquisitions.

The FTSEurofirst 300 of top European shares ended at 1,483.47 points, with the full-year rise in share prices less sharp than in 2005, when the index gained more than 22%.

Among major regional indexes, Germany‘s DAX was the biggest gainer during the year, putting on 22% at the close of 6596.92, while France‘s CAC 40 rose 17.5% at 5541.76 and Britain‘s FTSE 100 gained just under 11% closing at 6220.86 points.

The key event in 2006 was the Fed going on hold (in August), the end of the tightening phase, while the ECB hiked rates as European growth picked up.

The dollar fell 11% against the euro in 2006, compared to a 13% gain in 2005. All the top benchmarks slowed during the year, held back by rate increases from central banks and the strong euro.

But Spanish stocks ended with an annual gain of nearly 32% for the Ibex-35 blue chip index far outstripping a gain of 18.2% in 2005, fuelled by takeover fever in the energy sector. Milan’s S&P/MIB index of the top 40 shares ended up 16%. In Greece, the ASE General index ended at 4394.13 points, while the FTSE/ASE 20 was last at 2377.11 points.

 

Nikkei ends with 4th year of gains

The Nikkei average ended 2006 with a fourth straight year of growth, marking its longest bull run since 1989. Nippon Steel Corp. continued its recent surge, hitting its highest level in 16 years on expectations of industry consolidation. Exporters rose, helped by a weaker yen. The Nikkei 225 closed at 17225.83, up 6.9% in 2006.

The Hong Kong Hang Seng index finished at 19,964.72 after notching an all-time high of 20,049.03 points at the outset. The blue chip index gained 34.2% in 2006.

China was the best-performing major market, the Shenzhen A-share index delivering total returns of 101.7% last year for a dollar investor. The Russian market rose by 65.8%, the Brazilian market by 40.9% and the Indian market by 36.6%.

 

Dow ends higher

On Friday, the blue-chip Dow Jones industrial average closed at 12,463.15 — up 16.3% for the year. The Standard & Poor’s 500 Index ended at 1,418.30 — up 13.6% for 2006 and the Nasdaq Composite Index finished at 2,415.29, up 9.5% for 2006.