A stampede to exit out of emerging markets by hedge funds took a heavy toll on the share price of Bank of Cyprus trading in Greece, forcing the shares 10% lower on Tuesday and for the first time in a year below the price prevailing on the CSE.
BOC shares, which had closed well bid on Friday at EUR 7.04 came under selling pressure as trading resumed on Tuesday as hedge funds, rushing out of emerging markets like Russia, Turkey, Saudi Arabia and Greece also placed the BOC shares on their sell list.
Bank of Cyprus shares trading in Greece eventually settled 9.94% lower on Tuesday at EUR 6.34 or CYP 3.64 on heavy volume amounting to 4.78 mln shares for a value of EUR 31.07 mln or CYP 17.8 mln.
Stock markets from Istanbul to Tokyo fell on Tuesday on a number of factors. The major stock indices like New York, Tokyo, London, Paris and Frankfurt fell as US Treasury yields shot to record highs on expectations that interest rates in the US, Europe and Japan will increase, thus cutting into corporate profits.
Emerging markets also fell as Russian government officials described the rally in Moscow shares as leading to the creation of a bubble, encouraging many hedge funds and foreign fund managers to head for the exit. The selling soon spread to all markets, with Moscow and Istanbul declining more than 4%, while Athens fell 2.72% to 3919 points.
A number of analysts were surprised at the heavy selling pressure on BOC, which fell the most among the Greek banks on Tuesday, but they were also encouraged by the high volume on the stock indicating that there were buyers at all levels.
The Bank of Cyprus share price was also pressured lower on the CSE on Tuesday, but not to the extent of the decline in Greece. The BOC shares closed 3.03% lower at CYP 3.84 on CYP 1.5 mln volume, but on Wednesday are expected to open sharply lower, close to the ASE close of CYP 3.64.
The major chart support line on BOC is seen at CYP 3.45 or EUR 6.00, which is a combination of two support lines and a previous low according to a technical analysis made by the Financial Mirror. The BOC shares need to recapture the CYP 3.85-3.95 levels to reverse the short term trend to positive again, while a break above the previous all-time high of 4.08 is required to reinstate the up-momentum.
CSE CORRECTS
The pull back in the share price of BOC forced the CSE GENX to close 2.12% lower at 2488.24 points, even though a number of stocks managed to close in positive territory.
At least 55 titles closed higher, 41 lower and 82 were either unchanged or saw no trades according to AGFN, the CSE data provider. Total volume on the CSE on Tuesday amounted to CYP 5.16 mln on 3381 trades.
Laiki Bank shares fell in tandem with the decline on BOC, ending the Tuesday session 1.04% lower at CYP 2.85 on CYP 873.000 volume, while Hellenic Bank shares bucked the declining trend, ending 1.04% higher at 97 cent on CYP 465.000 volume.
SFS Group Public Co., buoyed by improving profits as volume recovers on the CSE, closed at a new record close of 11.9 cent, up 0.85% on the day. Other stocks that closed higher included Louis Public Co. at 29 cent, Demetra Investments at 34.2 cent and CLR Investment at 6.4 cent.
