Listing companies awaiting privatisation may revitalise investor interest in CSE

The privatisation of state-owned companies has to go through the Cyprus Stock Exchange in order to make the process more transparent and increase investor interest, an economist and a CSE official said.

The exchange, which saw its average daily turnover fall 15 per cent to 307.849 euros last year compared to 267,476 euros the year before when it posted 2.6 million euros in after tax losses, saw its overall transaction volume increase to seven-digit figures after the relisting of the Bank of Cyprus share mid-December. Most of the more than 100 listed companies, saw their shares traded only on a limited number of occasions last year.

Economist Stavros Agrotis said that the exchange, given the restrictions imposed by the size of the economy, needs more “larger, stronger companies” to grow.

“There is hope that depending on the way privatisations will be carried out, some of the companies may be listed at the CSE,” Agrotis said on the phone today. He named the Cyprus Telecommunications Authority, the Cyprus Port Authority and the Electricity Authority of Cyprus.

The CSE official who spoke on condition of anonymity said that “it would be advisable to complete privatisations through the CSE as this would enhance transparency”.

The official declined to comment on whether recent increase in the transaction volume of the CSE following the Bank of Cyprus relisting is sufficient to safeguard its viability.

“What changed is that Bank of Cyprus is now relisted,” the official said. “This will contribute to an increase of the daily turnover but it is too early to come to conclusions with respect to how turnover will develop. Investor interest will depend on how companies and the economic fare, as well as developments in Greece”.

The Nicosia-based exchange is itself one of the state-owned companies awaiting privatisation.
“The CSE has to strengthen its role and attract new companies and products in order to increase its value,” the exchange official said. “It doesn’t currently have the value the privatisation could potentially bring in because of the market conditions as a result of the crisis”.

In the meantime, Cyprus, Agrotis added, has to overhaul its legal framework and make it more “flexible” and attract so companies from abroad which in turn would attract additional investor interest for listed companies.

The stabilisation of the economy this year and the economic growth rate of 0.4 per cent forecast by the finance ministry for 2015 alone, may hardly revitalise investor interest at the CSE, he said. On the other hand, a probable listing of the Bank of Cyprus share at the London Stock Exchange may do so as investors may discover that “they can buy the share there at a lower price,” he added.

According to the CSE website, a total of 12 companies issued positive profit warnings while five other companies said in December they expected worse earnings for 2014 compared to the previous year.

“I am not expecting miracles for 2015, although depending on the skills of the management of some companies, there could be pleasant surprises” Agrotis said.

By Stelios Orphanides


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