Cyprus’s stock exchange may resume limited trading on April 2 after closing for more than two weeks as the country faced a banking crisis and ejection from the euro, Chief Executive Officer Nondas Metaxas said.
“We have formed at the exchange so-called crisis committees and they are meeting continuously,” Metaxas said in an interview in Nicosia yesterday. “There are three or four committees meeting now, making different scenarios which we will be studying Tuesday morning, when we might get more information to see which stocks will be traded. We may resume trading on a number of stocks but this is not something which we can say with 100 percent certainty.”
Metaxas said the bourse had initially planned to allow transactions on March 28, when the country’s banks opened for the first time in almost two weeks. The bourse decided to remain shut due to uncertainty surrounding new capital controls, which include a 300-euro ($385) daily limit on bank withdrawals and restrictions on transfers to accounts outside the country.
After more than a week of wrangling between officials in Nicosia and Brussels, Cyprus reached a 10 billion-euro bailout agreement in the early hours of March 25. As part of the deal, President Nicos Anastasiades agreed to shutter Cyprus Popular Bank Pcl, largely wiping out deposits above the insured limit of 100,000 euros. Depositors in Bank of Cyprus Pcl stand to lose as much as 40 percent of their uninsured savings. The country’s parliament rejected an earlier deal that imposed losses on all depositors.
The Cyprus General Market Index (CYSMMAPA) declined 11 percent this year through March 15, the last day on which trading took place, according to data compiled by Bloomberg. The gauge has slumped 98 percent from its October 2007 high, compared with a 23 percent drop in the Stoxx Europe 60 Index (SXXP) in the same period.
Bank of Cyprus and Cyprus Popular Bank, the nation’s biggest banks, account for 59 percent of the index’s weighting, data compiled by Bloomberg show. Both companies are also listed in Athens. Hellenic Bank Pcl (HB), the third-largest lender, makes up another 15 percent of the Cypriot gauge.
“You can see that what happens with these two banks is more or less a shock for the exchange,” Metaxas said. “Nevertheless, for the past few months we have seen a decline in the overall trading of these stocks and we have prepared a strategic plan whereby we are diversifying by designing and implementing new products. We hope that by diversifying our products, by diversifying our listing, by diversifying our market we will be able to survive this situation.”
In addition to steering the market’s dependence away from financial stocks, Metaxas said the exchange is in talks with Hellenic Exchanges SA, operator of the Athens Stock Exchange (EXAE), to increase “synergies.” He didn’t rule out a merger of the two companies.
“We have a very close strategic cooperation with the Athens Stock Exchange,” he said. “We are discussing a number of measures which we could take together to increase trading in both markets. We have some specific thoughts on the table but we are waiting to see when the dust settles. Everything is possible in the relation to the Athens Stock Exchange, but it’s very, very early to say anything at this stage.”
Metaxas said he’s also in talks with other European bourses, though he declined to give details.
“Other exchanges have shown a lot of interest,” he said. “I can’t say because we have signed non-disclosure agreements, but I can say we are discussing with many exchanges in Europe which have approached us and they want to explore certain opportunities.”