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* Bourse to launch Energy Index *
The Cyprus Stock Exchange is taking advantage of the numbness in the market to revive interest in new share listings, primarily in the alternative NEA Emerging Market, that will propel its market cap from the current 8 bln euros to beyond 11.5 bln.
Already, the cancellation of the shares of the Cyprus Popular Bank (Laiki), with an estimated pre-Eurogroup value of about 180 mln euros, and the issue of new Bank of Cyprus shares resulting from the 3.7 bln euro recapitalisation after the bail-in by depositors, should raise the CSE’s market cap to 11.5 bln.
The BOCY market cap prior to the benchmark date of March 15 was 370 mln euros, a tenth of what the banking group is expected to become, following assurances by government and public officials that it will become stronger and a leading financial institution.
“I don’t think their market price once listed will be their nominal value. If the market will anticipate more future losses, as it will, it will price the stock at a price-to-book ratio of less than one,” cautioned a banking sector analyst.
But the subsequent selling pressure that is anticipated on the four different share categories of BOCY could lower the stock’s market price once again, as will the revision of portfolios of some investment funds that hold a significant number of Laiki shares.
However, CSE officials are adamant that the current crisis has created an opportunity, but one that will only materialise if the pro-business administration takes a political decision to boost the stock market, both as a source of funds for new ventures and to increase revenues from new listings, primarily from overseas.
In all, 13 companies have listed on the CSE’s NEA market, with two more bond issues for a combined market cap of 740 mln euros, and several more in the pipeline.
“We already have two energy-related listings – Cyprus Opportunity Energy and Epilektos Energy SA from Greece,” CSE Director General Nondas Metaxas told the Financial Mirror.
“One more company from an EU member state should complete its listing procedure very soon and my team and I are working to attract a few more from the energy sector. Once we do that and we have at least five energy stocks, the CSE will commence an Energy Index that will look forward to the future earnings from natural gas explorations in the Cyprus Exclusive Economic Zone,” he said.
“Then, our CSE Energy Index will become a benchmark for the industry and possibly attract more companies to list or partially list their shares here. After all, non-EU listings will have to comply with strict European regulations, but they will be rewarded with an EU passport to attract other investors to their ventures,” Metaxas said.
He added that the potential privatisation of public utilities into a government-owned holding company, similar to the Portuguese model, as suggested by President Nicos Anastasiades in a recent statement, should also be conducted through the stock exchange, that will add a sense of security and confidence to investors.
The primary public organisations dealing with telecoms (Cyta), power generation (EAC), the Ports Authority and the Post Office, are estimated to be worth about 2-4 bln euros.
CSE volume at pre-1993 levels
Trading on the CSE on Tuesday, the first day after a two-week suspension, plunged to levels unseen since 1993 when the Financial Mirror was first published.
Volume for the day dropped to 19,000 euros, pulling the CSE All Share Index down by 2.56% to 99.46 points. The average daily trade on the CSE in 1995 was about 250,000-260,000 euros.
Bank of Cyprus and Laiki shares have been suspended, with almost all CSE-listed companies issuing warnings related to their exposure to Laiki, either in shares or debt above 100,000 euros.
The biggest trade on the day was on Apollo Investment shares that totaled 13,000 euros, with the stock dropping about 20% to 10.5c. Hellenic Bank also saw its shares fall 19.7% (13.4c), followed by Louis (-17.65%, 1.4c), Interfund (-15.8%, 4.8c), Logicom (-10%, 25.2c) and Petrolina (-7.5%, 71c).
