A savage bear run on blue chip bank stocks Tuesday, November 14, sent the Cyprus Stock Exchange (CSE) tumbling by nearly eight percent, wiping out nearly $900 million in share values, said analysts.
It was the second straight day of stock value woes, resulting in a two-day index fall of nearly 15 percent.
"The only word to describe the situation is tragic," said CSE analyst Nearchos Nearchou.
The CSE all-share index fell 21 points to a year-low of 243.68 points with the session closing down 7.79 percent, from a record intraday nadir of 9.7 percent losses, on a volume of $38.25 million of trades.
The banking sector suffered losses of 11 percent. "There was a record drop as large lots of bank stocks were offloaded—only a late rally avoided greater damage," said Nearchou.
One of the largest falls in the CSE's four-year history followed Monday's investor panic sell-off which pushed the market down 6.45 percent.
With one in four playing the market, the crash in prices has hurt most Cypriot households and the government is under pressure to intervene and save them from bankruptcy.
The market has suffered 70 percent losses on share values across the board since the Nicosia exchange boomed last year to reach an all-share index record high of 850 points in late November 1999.
Tuesday's market capitalization fell to $10.1 billion from its 1999 record high of $22.5 billion.
A series of stock market laws has failed to restore investor confidence, and the boost from Bank of Cyprus's landmark flotation on the Athens Stock Exchange (ASE) last week was short-lived.
Despite a better-than-expected flotation as the first foreign firm to list in Greece, BoC closed below its ASE quotation Monday after coming under pressure along with the general banking sector.
"Uncertainty over bank stocks in Nicosia and Athens is taking both markets down," stockbroker Michael Efrem said Monday.
The CSE's boom-bust cycle has witnessed a once-packed trading floor now deserted by ordinary investors.
"The market still needs to find the right balance between buyers and sellers and it seems investors still think that prices are not attractive enough," said Nicosia broker Vassilis Spanos.— (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)