Cyprus stock market woos Chinese listings

PUBLISHED : Wednesday, 16 October, 2013, 12:00am
UPDATED : Wednesday, 16 October, 2013, 3:05am

Shattered by an international bailout that stripped it of 80 per cent of its turnover, Cyprus' stock exchange is aiming to be a magnet for Chinese firms seeking a foothold in Europe.

Chief executive Nondas Metaxas said the exchange had listing interest from half a dozen companies with Chinese backers, drawn by the relative ease of rules and tax breaks.

He also said the bourse was pursuing the idea of introducing a commodities market, trading local goods in bulk, such as the island's famed halloumi cheese, and potentially its newly found natural gas reserves.

"We lost our most active shares, Bank of Cyprus and Popular Bank, but we have not stood idle," Metaxas said, referring to the two Cypriot banks caught up in the crisis.

The euro-zone state came close to financial collapse in March after a fumbled attempt at economic rescue forced major lender Popular Bank to shut while deposits were seized at Bank of Cyprus. It now has a €10 billion (HK$105 billion) economic adjustment plan from the International Monetary Fund and the European Union.

The bourse's lesser-regulated Emerging Market, modelled on the AIM market for smaller companies in London, has 16 firms listed with a capitalisation of €702 million, including one with Chinese investors.

Metaxas said bourse authorities had given preliminary approval for a second Chinese listing and the listing application of a third would be discussed at a board meeting this month. "We have five more in the queue," he said.

Popular Bank, known as Laiki, was shut down and Bank of Cyprus was suspended from trading during the crisis.

The two banks combined represented 80 per cent of trading on the small exchange, which now has a market capitalisation of €7.5 billion from 103 listings and bond issues on its main market.

Chinese firms were attracted by a lack of red tape, ease of access to key officials, Cyprus' euro-zone membership and the absence of a capital gains tax on share transfers, Metaxas said.