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Cyprus Mail: Press Review in English, 00-01-12

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From: The Cyprus Mail at <>

Wednesday, January 12, 2000

Black Monday on the market

THE NOSEDIVE in share prices was the main story, with several papers describing the day during which the share index fell by 9.4 per cent as 'black Monday'. Most focused on the losses suffered by small investors.

Politis, under the headline, 'The slaughter of the lambs', reported: 'The tumbling of share prices continued with small investors who had jumped on the stock exchange bandwagon after October suffering the losses. They bought at high prices and are now seeing their capital, which they secured through loans and mortgages, diminish day by day.' There were 14 limit-downs (after which trading of a share is suspended), while the Capital Markets Commission had called on investors to report all those who were urging them to sell their shares. Some believe that the fall in prices was related to a Anasty game' being played at the expense of small investors.

Simerini described the mini-crash as a 'dive of desperation'. It wrote: 'Panic-stricken investors saw their dreams shattered on the screens of the Stock Exchange.' Stock market circles predicted that the downward trend would continue and that the share index would stabilise at around 500 points. They claimed that this was the result of the negative climate created by the imposition of taxation on stock market profits. Two factors would facilitate the recovery of the market, claimed the paper - first, if the Central Bank lifted its restrictions on the granting of loans for investments in shares; second, if the government announced measures to support the stock exchange. However, the Central Bank governor had ruled out the lifting of restrictions on loans.

Alithia said the price free-fall had put investors in a quandary as they were in a Avery bad psychological state'. Nobody could say when the fall in prices would end, although stockbrokers had suggested that there would be no recovery unless the index fell to 500 points or less. This was inevitable, after the 'irrational' soaring of prices last year. The paper also reported that certain brokers had received death threats from criminal elements who played the market and considered the brokers responsible for the fall in prices. There was also an undeclared war among stockbrokers who have been accusing each other for the fall in prices.

Phileleftheros reported that the German foreign ministry planned to undertake an initiative regarding Cyprus' EU accession course. Germany believes that such an initiative would help the proximity talks as well as the accession drive. Rauf Denktash would be invited to Berlin for talks. German officials hope to persuade him to adopt a more conciliatory approach at the talks and to explain to him the benefits of EU accession. Nicosia believed that Germany's initiative was 'encouraging although it was concerned about certain ideas being discussed'. Nicosia feared that this would open the way for direct contact between the EU and the Turkish Cypriots.

Haravghi criticised the finance minister, Takis Klerides for his 'insistence on the easy, one-sided solution for raising state revenue through new taxes'. It said that Klerides, worried by the expressed intention of opposition parties to reject the proposed increase in VAT, was beginning a round of consultations with the parties. Klerides would speak to the House about the state of the Cyprus economy on Thursday and would threaten to cut back expenditure on development projects if the House did not approve his proposed tax increases. Machi said that an article about a Cyprus settlement, written by Giorgos Pantayias, an advisor of Greek Prime Minister Costas Simitis, had provoked a storm of protests from all the island's parties. In his article, Pantayias indirectly implied that a confederal solution of the Cyprus problem should not be ruled out.

© Copyright Cyprus Mail 2000

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