May 1 - 7, 2013

2 | NEWS | financialmirror.com

Moodys cuts Slovenia to junk

Slovenia abandoned an attempt to issue bonds and
Moodys cut its debt rating to junk on Tuesday, dealing a
blow to the countrys goal of healing its ailing state-owned
banks and avoid following Cyprus into the euro zones
emergency room.
The move raises the prospect the tiny Alpine state of 2
mln will have to ask its euro zone partners for a bailout as its
mostly state-controlled banks struggle under the weight of
bad loans worth around a fifth of the economy.
The downgrade followed weeks of criticism from
investors, EU officials and analysts that Prime Minister
Alenka Bratuseks government has been too slow revealing
details of a bank clean up and austerity measures they say are
required to shrink a budget deficit swollen by a double-dip
recession.
Earlier in the day, Ljubljana went to market and received

$6 bln in bids for 5- and 10-year dollar denominated bonds

with yield guidance of around 5 and 6.125%.
But the Finance Ministry scuppered the deal, citing a
looming ratings decision. Moodys then downgraded
Slovenias rating two notches to Ba1, from Baa2, taking it
into non-investment grade territory.
The Moodys downgrade is not a surprise and more
downgrades can be expected until reforms are enforced, said
Saso Stanovnik of investment firm Alta Invest.
Moodys left the rating with a negative outlook, citing its
troubled banking sector, deterioration in the governments
balance sheet and uncertain funding prospects.
The yield guidance of the abandoned bond offer was above
the 5.7% Slovenia paid to sell similar paper last year, a result
of increasing market pressure since the chaotic Cyprus
bailout.

The yield on Slovenias benchmark 10-year bond rose to

5.948% after the announcement, up by 0.078 percentage
points since Tuesday morning and well above 4.77% on
March 15, the day before the Cyprus bailout deal.

EU to protect savers from bank collapses

Depositors should be the very last to suffer losses when a
bank collapses, according to a proposal being discussed by
European Union countries, which would shield savers from
the kind of losses they face in Cyprus.
The idea comes as member countries finalise a new draft
law for the EU that could make losses for larger savers a permanent feature of future banking crises. EU officials, however, are nervous that such a regime will panic savers, prompting them to withdraw money.
In the paper, outlining the process of bailing in savers
and other steps to deal with troubled banks, officials in
Brussels said that it might be wise to put depositors behind
all bondholders when dividing losses from a bank collapse.

Small savers, with less than 100,000 euros, will, in any

event, be protected. But officials also raise the possibility of
allowing national exemptions from losses for big depositors
in their country if a bank fails.
By striking such a compromise, officials hope to rebuild
confidence after a botched attempt by the Eurogroup to
impose losses on depositors in Cyprus - initially also aimed
at small savers although this was later changed.
A more favourable treatment of big depositors in the new
EU law, charting how to deal with failing banks in a regime
that could start in 2015, is backed by the ECB and the IMF.
Ireland, which currently holds the rotating EU presidency,
is also pushing for such concessions ahead of a meeting of

EU finance ministers this month.

This would mean that they are not excluded from bail-in,
but other creditors would first absorb losses to their capacity
before eligible depositors are bailed-in, officials said in the
paper, dated April 29.
Before any such softening of provisions, however, EU
diplomats will need to convince Germany, which remains
sceptical about making such concessions.
Policymakers have sought to portray the losses suffered by
depositors at two of Cypruss banks as a one-off, but experts
believe it marks a change in approach in how Europe deals
with troubled banks, sparing taxpayers who have been on the
hook for previous bailouts.

Cash flow a huge challenge for UK small businesses

A new report has called into question the effectiveness of
the British governments drive to end a lending drought to
small businesses and unlock the economic growth that has
eluded the country since the financial crisis.
Nearly half of Britains SMEs are concerned about
managing their cash flow over the next year, a survey of 451
companies with a turnover of over 50,000 pounds showed.
In addition, 46% of those companies said they had
recently suffered at least one disruption to their cash flow,
mainly due to customers being late or unable to pay their
bills.
New regulations brought in after the financial crisis have
forced traditional lenders to cut risky financing and left
many small businesses short of funds.
The government, which sees a lack of credit to small
businesses as a major factor behind the countrys slow
recovery from the financial crisis, has tried to reverse that
situation with various schemes aimed at boosting lending.

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Last week it extended and expanded its flagship Funding

for Lending Scheme (FLS), which offers banks cheap credit
if they increase lending to households and businesses.
While the Santander survey showed an increasing
number of businesses are turning to alternative financing to
help deal with cash flow fluctuations, Marcelino Castrillo,
head of SME at Santander Corporate & Commercial, which

Spain urges ECB

to help small firms
Spains Prime Minister Mariano Rajoy has urged the
European Central Bank to take steps, including changing
its collateral rules, to improve funding conditions for small
firms.
Spain has tried to pressure the ECB recently to step in
and reduce the gap between the funding costs paid by
companies from the euro zone periphery and their
counterparts in Germany.

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commissioned the study said more should consider going

down this route.
The survey found a quarter of larger businesses, those
with annual revenues between 5 mln and 20 mln pounds,
said they had used or intended to use invoice finance in the
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But while a growing number of investors bet the ECB

will cut rates at its policy meeting ending on Thursday, it is
unclear if it is studying any measure to address the funding
situation.
Spain and Germany said on Monday they would act on
their own, with finance ministers from both countries
announcing a joint programme to spur investment in
Spanish firms, although they gave no details.
Rajoy said the sovereign bond purchase programme the
ECB announced last year
had helped big firms
regain access to financial
markets but more should
be done for smaller firms.
For SMEs, by changing
the collateral (rules) or by
promoting other kinds of
aid and operations
through the banks, such
as what has already been
done in some countries
with their central banks
and on which we can still
move forward, he said.

May 1 - 7, 2013

financialmirror.com | CYPRUS | 3

A new era or fatal MoU?

l

Bailout vote as divisive as ever

The 10 bln euro bailout agreement scraped through parliament in a razor-thin vote Tuesday, with Cyprus narrowly escaping default in the most trying 40 days of its recent history.
MPs from the ruling coalition of the Democratic Rally (DISY)
and the Democratic Party (DIKO) pipped the populist antibailout alliance of the communist Akel, socialist Edek and Green
parties, with 29 votes to 27, ensuring that the first two instalments from the EU-IMF bailout will be paid in May and June,
respectively, securing the smooth rollover of sovereign debt
maturing next month.
This means that the civil service wages and pensions, that
account for more than 60% of the state budget, will be paid,
albeit with some delay and after a dose of austerity. On the
other hand, President Nicos Anastasiades has announced a
series of measures that will attempt to combat record unemployment hovering at 25%, while extensive reforms in government should revive confidence in the economy that has
suffered due to the banking crisis and the acute shortage of

money supply in the private sector.

The bailout Memorandum of Understanding, already
approved by the paymaster German Bundestag, will probably see
some government services privatised, while reforms and cutbacks will continue to be implemented, bringing wages in the
public sector down to the levels of the private sector. The deal
also saw the resolution of once mighty Popular Laiki Bank that
has been absorbed by leading lender Bank of Cyprus, burdened
with a 9 bln euro bill inherited from the European Liquidity
Assistance mechanism.
In a small measure of comfort to the thousands of bond holders and depositors who will see at least 37.5% of their unsecured
savings wiped out in order to recapitalise Bank of Cyprus, the
inquiry into the banking crisis is well underway, with some testimony pointing to the purchase of Greek government bonds as
the core of the problem. An investigation by Reuters also suggested that more than 28,000 files relating to these transactions
between 2009 and 2011 have been wiped out of Bank of Cyprus

computers leaving little evidence of fraud or mismanagement.

Unfortunately the (bailout) is a one-way street for us. It will
avert disorderly default and gives, albeit with many hurdles,
some prospect of getting us out of the storm, said Averof
Neophytou, the newly-elected head of DISY.
Opposition parties argued that the bailout would keep Cyprus
in perpetual bondage to foreign lenders.
Communist AKEL, in government until it lost presidential
elections in February, said Cyprus should seek alternative forms
of funding, including possibly an exit from the euro currency.
However, it had no alternative to suggest, while former Foreign
Minister and staunch anti-bailout supporter Yiorgos Lillikas reiterated his call for Cyprus to sell future contracts of natural gas
finds.
US-based Noble Energy is expected to conduct a second
exploratory drill in its offshore gasfield next month, after which
it could take up to 6 months to determine the size of proven
deposits and what value they could have.

Euro exit a deadly risk, say economists

A Euro exit would pose deadly risks for Cyprus both financially and politically, a group of 23 economists and academics
said Tuesday, in a document outlining six reasons to avoid a
return to the Cyprus pound.
An exit from the euro entails a deadly risk both financially
and economically, the document said, as the government
agreed on an adjustment programme with its international
creditors containing austerity measures amounting to 7.1% of
its GDP and a haircut on uninsured deposits of over 100,000. An
exit from the euro area and the introduction of a national cur-

rency and a consequent devaluation would favour export-oriented economies and countries with industrial output, which is not
the case for Cyprus, a primarily import-oriented economy,
which imports practically all raw materials and especially energy.
Any devaluation would increase the cost of production, disproportionately resulting in the need for bigger reduction of
wages so that the economy would be more competitive, said
Marios Zahariades, deputy professor at the University of Cyprus.
The return to the Cyprus pound would entail a horrifying
reduction of household and small business savings.

Yiannis Tirkides warned that following the exit from the

Euro, Cyprus should link its currency with a stronger one,
which would necessitate stricter monetary policy, higher interest rates and austerity measures more strict than those stipulated in the bailout plan agreed with the Troika.
Tirkides said if Cyprus decided to part ways with the Euro
area and decided not to repay the ECBs Emergency Liquidity
Assistance of 9.2 bln euros to Popular Laiki Bank would create
problems in the relations of Cyprus with the European Central
Bank and the other Euro area member-states.

May 1 - 7, 2013

4 | CYPRUS | financialmirror.com

MTN chief gets aggressive with Cyta

l

Aims for 50% market share in a year

MTN Cyprus chief executive Philip van Dalsen believes that

the islands alternative telco, until recently co-owned by the
NK Shacolas Group, will be able to raise its market share from
34% to 50%.
And he hopes to achieve that target by hiring more people,
a welcome statement from any employer in times of crisis.
From a 34% market share, I really want to reach 50%, and
I know we can do this, just give me a year, he said.
We are a lean, mean company, with very young and
energetic staff, and a very aggressive sales team, he said,
adding that companies nowadays need to be transparent, to
interact with their customers.
There are risks, challenges and opportunities. There are
also concerns mainly about job security. Our policy is one of
no pay cuts, no dismissals. We would like to hire more.
Van Dalsen said that MTN Cyprus, now a wholly-owned
subsidiary of South Africas MTN Group, is in a better position
spending-wise because their products are 30% cheaper than
their rivals and are rolling out 3G high speed mobile telephony
everywhere. We have invested millions in our network
upgrade, he told a briefing of journalists.
Van Dalsen, trying to emulate the aggressive, anti-

DEFA, KRETYK
future under
review
All possibilities regarding the future of Natural
Gas Public Company (DEFA) and the State
Hydrocarbons Company (KRETYK) will be
examined within the framework of the overall
effort to modernize the state, said Energy,
Commerce and Industry Minister Giorgos
Lakotripis.
Answering questions on the future of the two
companies, Lakotripis, said together with
President Anastasiades, we discussed various
issues. We agreed that this issue will be discussed
in the context of the overall effort to modernise
the government, which the President announced
earlier.
Earlier Monday, the president presented a
package of measures for the modernisation of the
institutions and state, assuring the citizens of his
determination and that his government will meet
the expectations of the society for a new bold
start.
The measures include the introduction of rules
of good governance, combating corruption,
collusion and established bad practices by
promoting meritocracy, and reforming public
administration, with the active involvement of the
citizens and a a December 2013 deadline to
implement the action plan.
Regarding the merging of DEFA-KRETYK,
Lakotrypis said the Law Office of the Republic is
preparing a study, together with Norwegian
advisors on the overall institutional framework,
the responsibilities of both organizations and see
how these are similar with those of the ministry
so that they can fall into an ecosystem.
Regarding his imminent visit to Israel,
accompanying President Anastasiades, Lakotripis
said that he is in continued negotiations on the
strategy they will follow and this should be
finalised in the next couple of days.
Regarding plans for the construction of the
land-based natural gas liquefaction plant
terminal, the Energy Minister said the terminal is
the main centre of our energy strategy and we
are continuing towards that direction.

establishment marketing tactics of Virgins Richard Branson

and low-cost Easy Groups Stelios HajiIoannou, said that MTN
was introducing a recession-beating 50% discount on monthly
rental rates for 18 months.
Cyprus is the most modern and innovative market for us
within the MTN Group and we are looking to introduce new
services such as LTE, for which we are still in discussion with
government.
But that is also one of my frustrations. We are accused of
unfair competition in telesales. Cyta doesnt like it, even
though CytaHellas does the same from Greece. This is
childish, they cannot accept that they are not a monopoly any
more.
Van Dalsen said that number portability is still a problem.
From us to transfer to Cyta takes two days, they need ten
days. The regulator needs to step in as our complaint has been
on their desk for more than a year. It also takes Cyta 12 weeks
to connect our fibre clients, while they need just four days for
their clients.
MTNs Dutch CEO added that the government and state
agencies must also change their policies towards providers.
We cannot offer our services, only Cyta can. If this continues,

we will take measures, Brussels should look into it.

We are preparing for the bigger battle and very soon we
will come back with very good promotions, he said.

BOCY haircut at 37.5%

Bank of Cyprus enforced a conversion of 37.5% of uninsured deposits (over 100,000 euros) to shares as part of an
agreement between Cyprus with the Euro area and the IMF
over a 10 bln euro financial bailout.
Under the Central Bank of Cyprus decree, the 37.5% of
uninsured deposits will be converted into class A shares worth
1 euro each with full voting and dividend rights. The contribution of the depositors is described as Initial deposits contributing sum as a further 22.5% of uninsured deposits will
remain frozen until the finalisation of a more detailed and
updated independent valuation by the end of June.

Furthermore, 30% of uninsured deposits is also frozen

temporarily and is subject to a whole or partial conversion, at
the notification of the central bank.
The uninsured deposits in Bank of Cyprus were estimated
at 8.1 bln euros, excluding client/nominee and or trustee
accounts amounting to 0.7 bln, which will generate capital
worth of 3.1 bln euros. For the purposes of calculating the
recapitalisation of Bank of Cyprus, the central bank took into
account losses of 1.5 bln euros in its loan portfolio, under the
adverse scenario of a due diligence review carried out by US
investment consultancy firm, Pimco.

Global Digital Services lists shares on CSE

The Cyprus Stock Exchange (CSE) Council announced
that it has accepted the listing in the Emerging Companies
Market of 25 mln shares of Global Digital Services Plc at a
price of EUR0.01.
Eurivex Ltd, an EU investment firm regulated by Cyprus
Securities and Exchange Commission (CySEC) is acting as
the Nominated Advisor for the company and was responsible
for the smooth listing of the shares and the electronic delivery
of the share registry.

Global Digital Services Plc chose to list on the ECM/CSE in

order to enhance its value through acquisitions of already
existing e-commerce companies through mergers /
acquisitions and ownership of stake in companies related to ecommerce and the Internet.
The trading of the aforementioned securities commenced
on April 30 and the Cyprus Stock Exchange will undertake the
maintenance of the above Registry in the Central
Depository/Registry of the CSE.

Govt aims to make Cyprus Airways viable

The government aims to make troubled national carrier
Cyprus Airways a viable company, which can survive the
competition in the air transport sector, Communications and
Works Minister Tasos Mitsopoulos said in Larnaca.
He noted that measures to restructure the company were
already in the pipeline, such as the reduction of the fleet and
staff.
Mitsopoulos said the government has decided, through
changes, to support the company, adding that what we all
have to do - employees, management and the state - is to
make the changes that will address the longstanding
problems, which did not allow the company to become
competitive.
Asked about the companies that have shown an interest to
buy Cyprus Airways, Mitsopoulos said there were negotiations
with prospective investors, adding that there was also an effort
underway to find a strategic investor.
The Minister referred to talks with Middle East Airlines

(MEA) and other companies, including a group of investors

from China, and noted that some of the interested parties had
contacted Cyprus Airways directly.

May 1 - 7, 2013

financialmirror.com | CYPRUS | 5

Banks continue to
cut rates, ease terms
Bank of Cyprus announced it was cutting deposit and lending rates from May 1, while
it also said that it would extend the grace period for bank charges to 75 days to June 30.
Greek-owned Alpha Bank Cyprus also announced it was extending the period for rate-free
charges and possessions by 60 days to June 29.
Bank of Cyprus said that the Basic Interest Rates are reduced by 0,5% to 5.25,
effective from 1/5/2013. The rates for mortgage loans is reduced to 3,50% and for
business loans to 4,25%
The reductions affect all loans and current accounts linked to the basic interest rates
of the Bank of Cyprus and the former Popular Bank.
The bank also said it had initiated a temporary suspension of charges for 75 days,
from April 16 to June 30 for loan arrears, current account unauthorised excesses,
returned cheques and authorised temporary current account limit.
The announcement followed an agreement reached last week between the Central
Bank of Cyprus and all commercial banks on the gradual reduction of interest rates on
deposits from May 1. The move is also expected to lead to a gradual reduction of lending
rates.
The proposal provides that if the deposit rate offered by financial institutions exceeds
euribor plus 300 basis points, then the financial institution must maintain additional
specific equity.
Last week, Hellenic Bank said it was cutting the basic interest rate from 5,75% to
5,50%, business loans and business overdraft from 4,75% to 4,50%, housing loans from
4,40% to 4,15% and from 5,25% to 5,00% in the case of previous fixed loan rates.
The Cooperative banks also said they will reduce basic deposit and lending rates, while
Eurobank Cyprus said it was reducing its basic rates from 4,90% to 4,65%.

Bank of Cyprus finally gets

new board and chairman
Bank of Cyprus finally has a chairman and
board of directors ending more than a month
of uncertainty after the banks previous
administration was sacked over an excessive
exposure to the Greek market and an administrator was appointed to undertake a recapitalisation plan.
Former central bank executive Sophoclis
Michaelides has been appointed at BOCYs
new chairman.
None of the past board members have been
recalled and many directors have no previous
banking experience.
The bank needs about 10 bln euros after it
was forced to absorb Popular Laiki Bank as
part of a Eurogroup experiment that went
wrong and stopped liquidity from the

European Central Bank.

The process to select a new board followed
two weeks of hard bargaining and vetting
between the new government that inherited a
bankrupt state and sought a bailout that
included closing down the islands second
largest bank and grabbing just over a third of
large deposits.
The remaining members of the board are:
Constantinos Damtsas, Lenia Georgiadou,
Costas Hadjipapas from the trade union Etyk,
Philippos Mannaris, Lambros Papadopoulos,
Andreas Persianis, Andreas Poetis, former
Finance Ministry Director General Panicos
Pouros, Erol Riza, Savvas Savvides, banker
Takis Taoushanis, academic George
Theocharides and Michalis Zannetides.

Marfin Romania takes over

Bank of Cyprus subsidiary
Bank of Cyprus Public Co. Ltd. Sucursala
Romania, a subsidiary of the islands biggest
lender, will be taken over by Marfin Bank
(Romania) SA, whose parent company,
Cyprus Popular Bank, is being wound down
and its assets and operations transferred to
Bank of Cyprus.
Under the agreement, gross assets of 82
mln euros, deposits of 77 mln euros, as well
as all staff were transferred to Marfin Bank
Romania which resumed operations on
Friday after nearly a month.
The bank said the agencies and working
points of the Romanian subsidiary in a

number of locations are closed. All retail

customers and certain legal entities of these
agencies and working points will be served
by Marfin Bank Romania SA.
Marfin and the Bank of Cyprus branch
control less than 1.3% of assets in Romanias
banking system.
Thanks to a good cooperation we
eventually found a solution. Deposits are
protected and will be under Romanian
authority, Adrian Vasilescu, an adviser to
Governor Mugur Isarescu, said earlier in the
week, as efforts were underway to find a
buyer.

May 1 - 7, 2013

6 | OPINION | financialmirror.com

Time for Israel to regain its strategic role

EDITORIAL
President Nicos Anastasiades visit to Israel just
days after his own Defence Minister will be there to discuss regional energy security, could turn out to be a
landmark occasion, where traditional and regional
strategies could take a new turn for the better if host
Benyamin Netanyahu plays his cards right.
After the humiliating obligation to apologise to
Turkey over the Mavi Marmara incident, Israel should
rethink its former relationship with Ankara and
whether it needs to revisit the old days of military and
economic alliances. No matter what Turkish officials
say, they have revealed their true faces and the feelings
are no longer warm, as suggested by Premier
Erdogans rhetoric of support to the Palestinians and
Syrian rebels and stoking Lebanons sore note over its

southern maritime borders.

Turkey thrives on regional conflict and its expansionist ambitions as the only way to remain an asset to
its primary sponsors either side of the Atlantic. It has
also duped leaders in Washington, Moscow and London
into investing in expensive pipelines, supposedly to
carry cheap gas fuel from Baku, that are underutilised
and prone to terrorist attacks. Which is why some form
of dtente with the Kurds comes in handy.
But Israel now has an opportunity, thanks to its
recent natural gas finds, to become an ally of choice
and irreplaceable energy supplier to most western
European states, fed up with Russias antics to switch
the tap on and off based on the whims of leaders in the
Kremlin.
The Jewish state must overcome its fears of economic and energy isolation as in Cyprus it has a genuine
friend with honest neighbourly intentions. The people
and the government of Cyprus have no qualms with

Israel, just a sense of mistrust over the latters openarms relations of the past with Ankara. For Israel, the
natgas liquefaction plant at Vassiliko is a way out of its
dilemma over surplus gas exports, while the subsea
electricity cable project will ensure ample power supply,
regardless of the explosive situation in some neighbouring states. Patrolling friendly waters in the eastern
Mediterranean by the Israeli Navy also provides a sense
of safety to foreign investors in both EEZs, while strategic cooperation for the IAF to use the Paphos airfield
will allow Israel to extend its own security blanket to
beyond the confines of its own boundaries.
In the absence of all-out support from Israel,
Turkeys regional role will gradually diminish, giving
the Jewish state the chance to sit down and talk to all
its neighbours, possibly resolving some of the biggest
issues that have hindered its thirst for peace for the
past six decades. And Cyprus can help in that direction,
if it is asked to do so.

Emerging Companies Market (ECM)

and other CSE initiatives
The financial community is facing tough economic times
as a result of the crisis which has particularly affected the
banking sector, imposing the need for specific measures in
order to adjust to the new environment.
The Cyprus Stock Exchange (CSE) main strategy is to
constantly promote initiatives in order to upgrade its products and services that are offered to investors, companies and
market participants. It has therefore proceeded to offer a
series of new services and products in an even more effective,
competitive and productive way. The ultimate aim is to
implement the most significant new developments of the
more advanced markets, thus contributing to develop Cyprus
as a regional financial centre.
The CSE has a legal framework that is fully harmonised
with the relevant EU Directives and international practices,
offering all basic functions of securities trading (i.e. listing,
trading, clearing, settlement and registration central registry / depository operations). It has simple listing procedures, competitive pricing policy and is characterised by flexibility, quick response and effectiveness.
One of the most important projects that have been introduced in recent years is the ECM Market (Emerging
Companies Market), as a Multilateral Trading Facility (MTF).
This proved to be a success with 15 equity companies already
listed and a further two issuers listing their bonds. Also, 33
companies and organisations have been approved as
Nominated Advisors. The role of the NomAd is dedicated to
the listing process and is extended to the supervision of the
continuous obligations of the issuers.

FinancialMirror
Published every Wednesday by
Financial Mirror Ltd.
www.financialmirror.com
Tel. 22 678 666 Fax. 22 678 664
P.O. Box 16077, CY2085 Nicosia

Publisher/Managing Editor Masis der Parthogh

masis@financialmirror.com
Greek Section Editor
Angela Komodromou
angelak@financialmirror.com
Editorial submissions:
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ECM, with a market capitalisation of ?691.7 mln, is based

on a simplified listing requirement and continuous obligations regime, providing a number of additional important
benefits to companies such as:
- Easy access to a secondary market;
- Alternative method for securing financing, at competitive cost;
- Listing of newly established companies without prior
history with the submission of an adequate business plan;

By Nondas Cl. Metaxas

CEO, Cyprus Stock Exchange

- Providing new opportunities to innovative companies

dealing with renewable sources of energy, i.e. solar panel
manufacturers and operators, wind farms, hydrocarbon
exploration and upstream companies, e-commerce, Internetbased technologies, etc.

GDR, UCITS, ISIS

Last year, the CSE also introduced the regulatory framework concerning Depositary Receipts (GDRs). This development provides new opportunities for companies interested to
issue and list GDRs abroad, such as the low cost of listing,
trading and clearing, the dispersion of investment risk, the
increase in their liquidity, as well as an alternative means of
raising funds.
The CSE is at present focused on promoting the listing
and registration of all types of funds (UCITS, ISIS and all
other form of alternative investment funds). Recently (end of
2012), a modification in its legislation has been put into
effect, providing for the listing on the CSE of such funds.
The provision of the new instrument of Exchange Traded
Funds (ETFs) are also included in this amendment and as a
result, a relevant regulatory framework for the listing of ETFs
is at present under preparation and will be completed during
2013. Cyprus offers a favourable and competitive environment for attracting collective investment for schemes and an
attractive tax regime, thus it can become an important
regional funds jurisdiction.

COPYRIGHT

No part of the Financial Mirror

newspaper, the Greek-language X
& A, the daily XpressOIKONOMIKH electronic PDF edition or

The CSE has also been designated as the Official

Appointed Mechanism for the Storage of Regulated
Information in Cyprus, known as OAM. This new project was
launched in the last quarter of 2012. It operates with the use
of electronic / digital signatures. The CSE has also assumed
the role of a Local Registration Authority (LRA) of an authorised certification service provider (CSP). The CSE facilitates
the issue of qualified digital certificates and the delivery of
secure signature creation devices to any interested person.
This combination allows any holder to create advanced electronic signatures which is regarded a legal equivalent to
handwritten signatures.

NON-LISTED COMPANIES

Moreover, the CSE undertook the initiative to proceed to

a relevant modification to its legislation which allows it to
undertake and maintain the registries of nonlisted companies in its Central Registry / Depository. This new service
offers significant advantages to interested organisations/professionals, since the CSE, apart from being the electronic
keeper of their registries, offers a remarkable range of other
relevant services. In addition, the CSE has introduced the
service of undertaking electronic registries and of keeping the
registries of unit holders of funds. It also provides ISIN and
CFI codes to interested organisations.
The CSE has also been appointed as the Auctioneer of
Emission Allowances on behalf of the government (including
both industry and airlines allowances), and Auctioneer on the
European Energy Exchange (EEX), the platform that had
been appointed by the EU on a panEuropean basis, for handling the auctions of Emission Allowances in the primary
market. These auctions started successfully in the last quarter of 2012 and shortly new auctions will take place in relation to allowances for 2013.
The CSE will intensify its efforts to better serve the
investors and the market participants in an even more effective and productive way, in order for its securities market to
become even more dynamic and competitive, serving new
market needs more adequately.
The CSE, having received the messages of the times, is on
its way to assisting the economy by providing new opportunities to raise capital through the listing of companies from
the energy sector and from public services and companies
that will be privatised, as well as large project companies that
want to be listed, such as marinas and casinos.

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publishers. Any person or company

found in violation will be prosecuted
and financial damages will be sought
as this implies theft of the intellectual
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associates and contributing services
or agencies.

May 1 - 7, 2013

financialmirror.com | COMMENT | 7

Restarting the economy

by attracting investments
l

Cyprus maintains its comparative advantages

achieved through attracting foreign investment was widespread and it is in this direction the state, the business world but also
each of us should contribute in a positive spirit.
The delegates expressed the view that,
despite the serious blow to our economy,
Cyprus comparative advantages remain and
the international investment world is observing the significant opportunities that have
emerged as a result; especially in view of the structural measures that are
being taken, which could
make our country more
Chairman, Cyprus Investment
competitive, less bureauPromotion Agency (CIPA)
cratic and more hospitable
to foreign investments.
There is optimism that with precise and
centre, more effective, more competitive with
even more transparent procedures in regards calculated steps, Cyprus can enter a new era
of stability and growth. There are many
to investments and business activity.
The Cyprus Investment Promotion Agency opportunities for investment in various fields,
(CIPA) can play a leading role in this effort. such as shipping, tourism, large infrastrucCIPAs goal is to contribute to the economys ture projects, research and innovation, and of
swiftest possible return to positive growth course the energy sector, which can accelerrates, within the framework of a long-term ate economic growth.
The certainty is that we must move ahead
effort. Specifically, CIPA has set four basic
strategic pillars: the reversal of Cyprus nega- with the necessary infrastructural changes in
tive image abroad; the support and service of our public finances straight away, so we can
current foreign investors; the preparation of a create a more flexible and friendly state. The
comprehensive plan with specific proposals on Cypriot economy today needs serious foreign
various levels; and, the implementation of rel- investments more than ever and any future
evant schemes, with the aim of avoiding tem- actions must be centred on improving the
poral weaknesses such as bureaucratic dys- business environment and attracting foreign
investments.
functions.
CIPA, as a modern, flexible and well-netAmong the many encouraging messages
to come out of the Global Russia Business worked organisation, can contribute to
Meeting 2013 conference which was recent- Cyprus effort to create a favourable environly hosted by CIPA, was that Cyprus has safe- ment for foreign investments and has repeatguards in place to recover. The conviction edly stated its intention and will to work in
that restarting the economy could be this direction.

The recent adverse developments in the

Cypriot economy render foreign investments
and efforts to attract them an even more significant factor for the business environment,
economic growth and employment in Cyprus.
Within a difficult economic environment,
the Cypriot economy is being called to stand
up and showcase its advantages. Today, more
than ever, every possible effort needs to be
made to turn Cyprus into a strong business

By Christodoulos Angastiniotis

Leaders CEOs admire most

What makes a leader? What does it take to
lead a business in the context of a changing
economic landscape? What should businesses
expect of those leading them into the uncertainties of tomorrow?
As part of its 16th Annual Global CEO
Survey, PwC recently asked 1,400 CEOs from
around the world which leaders they most
admired, and what they most admired about
their actions.
Some clear types emerged: warriors,
(Napoleon; Alexander the Great) reformers
(Jack Welch), leaders though adversity
(Winston Churchill; Abraham Lincoln), leaders who caught the imagination of the masses
(Mahatma Gandhi; Nelson Mandela) and consensus builders like Bill Clinton.
Winston Churchill was the most popular
choice of all CEOs with Steve Jobs (an innovator) admired in the most number of countries
(37).
Twice-serving as British prime minister
(1940-45; 1951-55), Churchill has wide appeal
and popularity across Western Europe, coming top in France ahead of Charles de Gaulle
and beating Niccolo Machiavelli to the top spot
in Italy.
CEOs top ten leaders:
1. Winston Churchill
2. Steve Jobs
3. Mahatma Gandhi
4. Nelson Mandela
5. Jack Welch

6. Abraham Lincoln
7. Margaret Thatcher
8. Ronald Reagan
9. John F Kennedy
10. Bill Clinton/Napoleon Bonaparte
Some 60% of CEOs chose a post-war
politician or military leader. The other most
popular categories were business leaders,
historical leaders and contemporary leaders,
in that order. Smaller categories include
writers, artists, philosophers, sports people,
religious leaders and fictional characters. 1%
chose a colleague.
Fifteen women were named, of whom
Margaret Thatcher was the only one to make
the top ten. The next most-named women
were Angela Merkel, Ayn Rand, Mother
Teresa and Queen Elizabeth I. Women were
four times more likely to choose a female
leader than men.
Its clear that the role and expectations of
leaders are changing, not withstanding that,
CEOs continue to look back over history to
identity role models. The dynamic between
short-term targets, longer-term goals and
increased transparency ushered in by the
digital revolution is breeding a new generation of agile leaders, said Michael Rendell,
Global Head of PwCs Human Resource
Services.
To see the full results of the survey into
CEOs most admired leaders, go to
www.pwc.com/ceosurvey/leaders.

May 1 - 7, 2013

8 | COMMENT | financialmirror.com

Can hydrocarbon reserves save the Cyprus economy?

l

Using gas reserves to raise money is a rather foolish option

Following the Eurogroup conspiracy of March 15, the subsequent Troika-inspired bail out and the consequential collapse of Cypruss banking system, the question arises as to what
model, if any, could be applied to help restart the islands economy. With the huge loss of the countrys credibility in the international markets, the options are not that many. Tourism is
certainly one area of the economy which can be further developed but it is held back by higher costs associated with the
euro. Another sector is logistics and support services to companies engaged in Middle East related work. A third option is
hydrocarbons which is just emerging following the discovery of
significant gas deposits in an offshore section within Cypruss
Economic Exclusion Zone (EEZ).
The US oil company Noble Energy announced in late 2011
that it had found an estimated seven (7) trillion cubic feet of
gas or 200 bln cubic meters (BCM). That, of course, pales
against the reserves held by major producers but it is significant for a country like Cyprus which is currently totally
dependent on oil imports and whose total energy needs do
not exceed 70 bln cubic feet a year or 1.96 bcma of consumption. That leaves considerable margin for exports to Europe
and to the global markets.
A second exploratory drilling by Noble has been planned for
June this year in order to ascertain in greater detail the size and
characteristics of the deposit already discovered. The size of the
Aphrodite gas field is not insignificant and according to some
estimates it could meet German gas demand for three years.
And Cyprus certainly hopes that a lot more gas will be found.
Earlier this year it sold further exploration licenses to ENI, Total
and Kogas, all well known and well funded international companies, netting some 250 mln Euros from signature fees.
According to oil geologists, Cyprus offshore deposits may hold
as much as 60 trln cubic feet of gas or approx 1.7 trln cubic
meters, which is of the same order of magnitude as that of
Azerbaijan, which is favoured by EC energy planners in
Brussels as capable of providing an alternative supply source to
Russian dominated European gas supply.
With only Nobles discovery confirmed so far, it is too early
to substantiate the 60 trln cubic feet reserve estimate, according to energy consultants Wood Mackenzie. The present uncertainties are also reflected in the range of valuations for
Aphrodite. Cypruss state-owned oil-and-gas company, Kretyk,
reckons it could earn around $50 bln from its gas fields over the

next 25 years, assuming European gas prices remain at around

their current level. Others are more circumspect predicting
that earnings could range from 5 bln to 32 bln ($6.5 bln to
$41.4 bln) over 20 years, based on a range of prices and exploration success rates, as estimated by Morgan Stanley. Such
value uncertainties cast doubt on the gas reserves worth as,
say, collateral for any loan to Cyprus.
On the other hand, using the islands gas reserves to raise
money in the international markets is a rather foolish option

By Costis Stambolis
given the countrys perilous financial condition and the total
control of its economic and monetary policies by the Germanled Eurogroup. A gas linked international bond would only
strengthen the Troikas position and could sooner or later have
Cypruss gas reserves offered on a plate to the countrys creditors, said a banker who participated in the recent negotiations
for the IMF-EU 10 bln bailout.

COSTLY DRILLING

Looking at gas as a potential new resource capable of revitalising the economy, one has to realise that Cypriot gas production may not materialise until 2019, even on an optimistic
timetable. With most of the gas more than 1,500 meters, or
4,921 feet, below sea level, production could prove costly.
Building a gas pipeline to Greece is likely to be expensive and
logistically complex, so the Cyprus government is having as
priority the building of a liquefaction plant in order to produce
and export gas in LNG form, an investment estimated to reach
some $10.0 bln. Nor has Cyprus yet finalised a fiscal or regulatory regime for gas production.
But with global gas supplies becoming more ample,
Cypruss resource may have only marginal strategic benefit.
However, Cyprus is not alone in the gas game. According to
many analysts, Israel stands to be the main beneficiary of the
Eastern Mediterraneans newly found riches, mainly due to the
geographic distribution of recent discoveries which are bordering, through its own EEZ, with Cyprus. In
2009 and 2010, a pair of U.S.-Israeli consortia exploring the seabed near Haifa discovered the Tamar and Leviathan fields, which
collectively hold an estimated 26 trln cubic
feet (tcf) of natural gas. The timing of these
discoveries was opportune. Since the beginning of the Arab Spring, Israel has suffered
frequent supply interruptions and the eventual termination of its contract with Egypt,
which had previously provided 40% of the
gas Israel consumed, at below-market rates.
The Tamar and Leviathan fields, once fully
developed, could satisfy Israels electricity
needs for the next 30 years and even allow it
to become a net energy exporter. It is significant to note that since early April, gas from
the Tamar field has started flowing onshore
and is already providing for Israels power

supply needs.
Israels gas export options remain strong but priority is currently given by the government to covering domestic needs.
However, industry sources observe that some of Israels gas
exports could only be realised in partnership with Cyprus on
the grounds of geography and security. Indeed, a 5.0 mln ton
per year liquefaction plant to be built in the Vasilikos area could
serve a large part of Israels gas exports.

TURKEYS ROLE CHALLENGED

Meanwhile, Turkey has viewed the Israeli-Cypriot gas

bonanza with apprehension. Turkey, which invaded the northern part of Cyprus in 1974 to prevent a coup aimed at uniting
the island with Greece, doesnt recognise the Greek-Cypriot
government in Nicosia. Ankara maintains that unilateral
exploitation of natural resources is against TurkishCypriot
interests and continued United Nations efforts to reunify the
island. Ankara does not recognise either Cyprus border agreements with its neighbours and fears that Turkish Cypriots will
be excluded from Nicosias future gas profits in spite of assurances by the government of Cyprus that special provision has
been made for part of the proceeds to go to Turkish Cypriots.
Turkey also sees a possible gas export route through Cyprus
and Greece as a threat to its own ambitions as a transit country feeding Caspian and Central Asian gas to the European market. Ankara has thus protested the cooperation between Israel
and Cyprus and supported Lebanons position in boundary disputes with Israel.
Upping the ante, Turkey in September 2011 scheduled
major naval exercises to coincide with drilling by Greek Cypriot
contractors the USA company Noble Energy and sent its own
exploration vessels to disputed waters, threatening to drill on
behalf of Turkish Cypriots in the Aphrodite field - which lies
partly within Israels economic zone. At the time the US government send a stern warning to Turkey to keep away from
Cyprus EEZ and Noble Energys drilling activity, while both
Russia and the EU issued clearly worded statements supporting
Cypruss right to prospect and drill within its internationally
recognised sea boundaries. As a result of international pressure,
Turkey backed off but has since kept expressing its disagreement on every possible occasion.
In spite of Turkeys deep routed apprehension since being
the major energy player in the region does not obviously want
to see a competitive energy hub emerging in its southern flank
Cyprus is pressing ahead with its plans for the full development of its hydrocarbon resources protected by International
Law of the Sea provisions, which form part of EU legislation.
The Cypriot governments position is further strengthened by
the fact that already four major international companies
Noble, Total, ENI and Kogas have signed long term concession agreements and are actively engaged with exploration programmes which are likely to lead to substantial new oil and gas
discoveries. Finding and exploiting oil and gas in offshore
Cyprus is not just the concern of the government of Cyprus but
is now also a top priority and a major commitment for all the
above companies. In that sense, the utilisation of Cyprus
hydrocarbon deposits is expected to proceed at full speed and
will play a key role in restarting the islands economy and providing a solid base for economic growth and employment for
the years to come.
Costis Stambolis is a regular contributor
to the Financial Mirror, based in Athens

Polish gas sacks CEO over Gazprom deal

l Pipeline

issue already led to dismissal of treasury minister;

Fears Ukraine being sidelined by Russias plans

Polish gas monopoly PGNiG fired its chief executive after

she failed to stop a joint venture with Russias Gazprom from
opening the way for a new Russian pipeline cutting out
Polands ally Ukraine.
Prime Minister Donald Tusk had already dismissed his
treasury minister less than two weeks ago after learning from
media reports that the venture had signed a memorandum to
build a segment of the Yamal-Europe gas pipeline via Belarus
and then Poland.
PGNiG, in which Poland holds a 72% stake, said in a statement its supervisory board had lost confidence in the CEO,

Grazyna Piotrowska-Oliwa, one of only a handful of top female

executives at the biggest state companies.
Piotrowska-Oliwa said all her actions related to the memorandum on the new Russian pipeline were lawful and accordance with her responsibilities to shareholders. The board also
dismissed her deputy, Radoslaw Dudzinski.
After disputes with Kiev over gas prices that have led to
repeated winter-time disruptions of Russian pipeline gas
exports across Ukraine in recent years, Moscow has set out to
bypass the country with pipelines taking other routes to
European markets.

Poland sees itself as Ukraines strategic partner and is a

leading advocate of bringing it closer to Europe. It fears Russia
would be able to cut off gas supplies to Ukraine much quicker
with the alternative export routes.
Piotrowska-Oliwa was at the helm when Gazprom, Russias
pipeline gas export monopoly, agreed in November to reduce
prices on oil sold to PGNiG, which had been losing money on
every barrel it was importing from the east.
Mainly as a result of the deal, PGNiG shares surged 46%
during her tenure. The companys shares closed 1.9% lower on
Monday compared with a 0.4% rise of Warsaws main index.

May 1 - 7, 2013

May 1 - 7, 2013

10 | COMMENT | financialmirror.com

Two policy prescriptions for the global crisis

One thing that experts know, and that non-experts do not,
is that they know less than non-experts think they do. This
much was evident at the just-completed Spring Meetings of
the IMF and the World Bank Group three intense days of
talks that brought together finance ministers, central
bankers, and other policymakers.
Our economic expertise is limited in fundamental ways.
Consider monetary and fiscal policies. Despite decades of
careful data collection and mathematical and statistical
research, on many large questions we have little more than
rules of thumb. For example, we know that we should lower
interest rates and inject liquidity to fight stagnation, and that
we should raise policy rates and banks cash-reserve ratios to
stifle inflation. Sometimes we rely on our judgment in combining interest-rate action with open-market operations. But
the fact remains that our understanding of these policies
mechanics is rudimentary.
These rules of thumb work (at least tolerably so) as a
result of evolution. Over time, the wrong moves are penalized, and their users either learn by watching others or disappear. We get our monetary and fiscal policies right the
same way that birds build their nests right.
As with all behaviors shaped by evolution, when the environment changes, there is a risk that existing adaptations
become dysfunctional. This has been the fate of some of our
standard macroeconomic policies. The formation of the
eurozone and a half-century of relentless globalization have
altered the global economic landscape, rendering onceproven policies ineffective.
When Swedens Riksbank was founded in 1668, followed
by the Bank of England in 1694, the motivation was that a
single economy should have a single central bank. Over the
next three centuries, as the benefits of instituting a monopoly over money creation became more widely recognized, a
slew of central banks were established, one for each politically bounded economy.
What was not anticipated was that globalization would
erode these boundaries. As a result, we have returned to a
past from which we tried to escape a single economy, in
this case the world, with multiple money-creating authorities.
This is clearly maladaptive, and it explains why the massive injections of liquidity by advanced-country central banks
are failing to jump-start economies and create more jobs.
After all, in a globalized economy, much of this liquidity spills

across political boundaries, giving rise to inflationary pressures in distant lands and precipitating the risk of currency
wars, while unemployment at home remains dangerously
high, threatening to erode workers skills. The long-run damage could be devastating.
What was evident at the World Bank/IMF Spring Meetings
was that virtually all policymakers are distressed and no one
has a complete answer. Neither do I. But here are two simple
ideas that could help to mitigate the crisis.
First, in the absence of a single global central-banking
authority, a modicum of monetary-policy coordination

By Kaushik Basu
among major economies is required. We need a group of the
major economies call it G Major that announces monetary policies in a coordinated fashion.
To see why, consider the case of Japan. Japanese policymakers have good reason to try to promote some inflation
and even correct some of the yens secular appreciation over
the last six or seven years. But, in todays unilateral world,
other central banks would soon respond by injecting liquidity, prompting the Bank of Japan to act again. These actions
are usually justified as policies for boosting domestic
demand, but they end up fueling a surrogate, low-grade currency war.
If, however, the G Major economies issued quarterly
announcements of significant upcoming policy changes for
example, a small round of quantitative easing by country X,
a larger liquidity injection by countries Y and Z, and so on
markets would be reassured that a currency war was not
being fought. Exchange-rate movements would be minimal
and only as intended, and volatility would be contained,
because tit-for-tat injections would no longer occur and
speculation would wane. Moreover, liquidity injections would
be likely to have a greater impact on demand, because synchronization would reduce leakage across national boundaries.
The second recommendation pertains to the mechanics of
liquidity injection, much of which takes place nowadays in

Europe, Japan, and elsewhere through asset purchases. The

US Federal Reserve, for example, is currently purchasing
assets (many of them mortgage-backed) worth $85 billion
each month.
Liquidity injections and low interest rates have a microeconomic effect that has received little attention: they lower
the cost of capital vis--vis the cost of labor, which causes a
relative decline in demand for labor. This is very likely exacerbating the unemployment problem; it certainly is not mitigating it.
One solution is to channel part of the liquidity injections
toward countering this factor-cost asymmetry. Thus, for
every $100 of new liquidity, we could use $60 to purchase
assets and the remainder to give firms a marginal job-creation subsidy, which could be especially effective in
economies with flexible labor markets that enable short-term
hiring.
Even if the employment subsidy were offered only for, say,
one year, firms would be tempted to use more labor during
this time. And, because the current bout of high unemployment is self-reinforcing, once the equilibrium is broken for a
while, the economy could move to a higher-employment
equilibrium permanently, without the need for any further
government support.
This prescription has one problem. Asset purchases have
no balance-sheet effect, because assets replace money.
Subsidizing labor, by contrast, is a pure injection of liquidity.
However, for precisely that reason, an employment subsidy is
likely to be more effective in boosting demand, which implies
that a smaller injection of this kind is likely to boost demand
as much as a larger asset purchase would.
Among the few certainties in crafting economic policy is
the need to adapt to external change. Our challenge is like
that of Industrial Revolution-era moths, which adapted to
their new soot-laden environment by becoming darker (and
thus better able to hide from predators). In a globalized economy, national policymakers should not be left circling light
bulbs.
Kaushik Basu is Senior Vice President and Chief Economist
of the World Bank and Professor of Economics
at Cornell University.
Project Syndicate, 2013.
www.project-syndicate.org

Chinas New Path

The opaque nature of Chinas government makes it difficult
to see where Chinese economic policy is heading, and thus how
the Chinese economy will develop in the years ahead. But the
scale of Chinas economy and its role in global trade and financial markets compel us to try to understand the intentions of
Chinas new leadership.
A useful starting point is to examine the key appointments
that have been made since President Xi Jinping assumed office.
One surprise was the decision to retain Zhou Xiaochuan as
Governor of the Peoples Bank of China (PBOC). Zhou had
come to the end of his term and had reached an age at which
officials are supposed to retire. So the decision to keep him on
for at least the next two years represents a significant endorsement by the new Chinese leadership.
Zhou is an intelligent and internationally respected expert
on monetary policy and finance. As the head of the PBOC, he
has favored more market-based monetary policies and
increased internationalization of Chinas currency, the renminbi. He has also worked successfully to contain inflationary pressures. We can expect more of the same in the coming years.
The new finance minister, Lou Jiwei, comes to the ministry
from the China Investment Corporation, Chinas sovereign
wealth fund, where he dealt with global capital markets on a
daily basis. Lou, a trained economist who previously served in
the Ministry of Finance as a deputy minister, where he was a
voice for pro-market reforms, indicated his current approach to
tax and budget policy at a recent meeting in Beijing. He rejected what he described as the European style of very large government and high tax rates and the American style of lower tax
rates but large fiscal deficits, in favor of low budget deficits and
a tax system that would promote opportunities for individuals and private enterprises.
Xi and Premier Li Keqiang obviously knew what they were

getting when they appointed Lou. And, despite his age, they
promised that he would have a full five years as Finance
Minister, which would push his tenure past the normal retirement age.
Liu He is perhaps the least visible of the key economic
thinkers. Liu played an important role in shaping the recently
adopted 12th Five-Year Plan, with its emphasis on urbanization
and service-sector development as a means to increase personal incomes and the share of consumer spending in GDP. He has
recently been promoted to the post of Deputy Director of the

By Martin Feldstein
National Development and Reform Commission, the principal
body that advises the State Council on economic-development
strategy and macroeconomic policy.
Taken together, these appointments demonstrate the new
Chinese leaderships emphasis on pro-market reforms and a
shift from heavy industry to greater reliance on consumption
and services. That shift is likely to mean a slower rate of GDP
growth than the annual rate of nearly 10% that China achieved
during the last three decades. But a slowdown to 7% annual
growth would still double Chinas GDP over the next decade.
More consumption and less heavy industry will also reduce
Chinas demand for raw materials, dampening global commodity prices. Even more significant, shifting income from stateowned enterprises to middle-class workers and increasing consumer spending will reduce Chinas enormous saving rate.

Since a countrys current-account surplus is the difference

between its national saving and its national investment,
Chinas current-account surplus is likely to continue to shrink
in the coming years. That is consistent with the Five-Year
Plans goal of basing GDP growth more on domestic demand
and less on exports.
Since Chinas external surplus is already down to less than
2% of GDP, a decline in domestic saving could result in China
beginning to run a current-account deficit. In that case, China
would no longer be a net buyer of foreign bonds and other
assets. If China wanted to continue to invest in foreign businesses and natural resources, it would have to become a net
seller of bonds from its portfolio.
The new leadership will, of course, face serious obstacles as
it tries to shift policy in these market-friendly directions.
Chinas state-owned enterprises are powerful forces in the
economy, with substantial political influence; they will resist
the shift from heavy industry to services.
Likewise, the widespread and official recognition of corruption introduces a new source of uncertainty into national and
local politics. But Chinas new leaders have signaled where they
want the economy to go and have emphasized their determination to reduce corruption. Most important, they have put talented people in charge of the process. The rest of the world
should hope that they succeed.
Martin Feldstein, Professor of Economics at Harvard
University and President Emeritus of the National Bureau
of Economic Research, chaired President Ronald Reagans
Council of Economic Advisers from 1982 to 1984.
Project Syndicate, 2013.
www.project-syndicate.org

EBOMAIAIA OIKONOMIKH EHMEPIA

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financialmirror.com | INVESTMENT NEWS | 19

FXTM launches new ccy pairs and CFDs

ForexTime Ltd (FXTM), the new forex broker founded by
Andrey Dashin, has launched seven new currency pairs and
13 new CFD instruments for trading, giving traders, adding to
the list of forex, precious metals, commodities, shares and
indices. The new currency pairs include exotic pairs, crosses
with the Swiss Franc and crosses with the Australian Dollar, a
major commodity currency.
The new currency pairs include exotic currencies such as
the Turkish Lira, the Danish Krone, Norwegian Krone and
Swedish Krone. These currencies tend to make quicker and

larger movements than major currency pairs and it is this

volatility that makes these pairs popular with experienced
traders, said Olga Rybalkina, CEO of ForexTime.
ForexTimes CFD shares, commodity futures and
index fund future instruments now include AIG American International Group, AAPL - Apple Inc.,
AMZN- Amazon.com, EBAY- eBay Inc., FCXFreeport-McMoRan Copper & Gold Inc., FDXFedEx Corp., GOOG- Google Inc., HALHalliburton Company, GS- The Goldman Sachs

Barclays Libor court case delayed to 2014

The first UK court case linked to a complaint over the alleged rigging
of Libor interest rates has been delayed until next year to allow Barclays
the chance to hear if an appeals court dismisses part of the case.
Guardian Care Homes, a residential carehome operator based in
Wolverhampton, England, is suing Barclays for up to 70 mln pounds in
a claim that it was mis-sold interest rate hedging products that were
based on Libor.
The trial is seen as a test case for small British firms who believe they
were mis-sold such swaps and raises the prospect of other companies
linking future claims to interest rate rigging by banks.
Barclays has appealed a decision by Julian Flaux, the judge in the case
at Londons High Court, which allowed Guardian Care Homes to include
claims relating to Libor manipulation in its case against the bank.
Flaux said the start of the trial should be delayed until April 2014 so
that Barclays appeal can be heard.
The Guardian Care Homes case is the first to link a complaint over the
alleged mis-selling of products to the investigation into attempts to
manipulate Libor and other benchmark interest rates.
Barclays was the first bank to be fined for trying to game Libor, and
the court case is shining a light on those involved in its interest rate-setting process.

Group, Inc.
All of these currency pairs and CFDs are available for
trading via Standard MT4 accounts. Additionally, the
USD/TRY and EUR/TRY currency pairs are available
for trading with ForexTimes Shariah compliant
Amanah accounts.
FXTM (www.forextime.com) is registered as a
Cyprus Investment Firm and is licensed by the
Cyprus Securities and Exchange Commission
(CySEC).

RBS wants to issue CoCos to boost capital

State-backed Royal Bank of Scotland said it would ask
shareholders for approval to issue debt that converts into
equity if the bank hits trouble.
The bank said that in response to UK regulatory
requirements for banks to hold more capital and to allow
it to manage its capital in the optimal way it would seek
approval to issue loss-absorbing capital instruments in the
form of equity convertible notes (ECNs), also known as

CoCos.
CoCos are bonds that convert into new shares if an
event occurs, such as if a banks capital ratio fell below 7%.
RBS needs shareholder approval as issuing new shares
could dilute existing shareholders.
Other UK banks are also considering issuing CoCos and
Barclays shareholders gave approval for it to issue ECNs
last week.

UK charges two men with illegal forex

Britains Financial Conduct Authority (FCA) has
charged two men with taking on more than 5 mln pounds
from investors for unauthorised foreign exchange trading.
The FCA named the men as Alex Hope of Docklands,
London, and Raj Von Badlo of Bourne End,
Buckinghamshire.
The charges relate to ten offences and follow searches

at their homes in April and May last year. Both have been
bailed to attend City of London Magistrates Court, the FCA
said.
Hope hit the headlines in March last year for racking up
a drinks bill of more than 200,000 pounds at a Liverpool
nightclub, with one bottle of champagne costing 125,000
pounds.

May 1 - 7, 2013

20 | WORLD MARKETS | financialmirror.com

Can Italy exit its Machiavellian legacy?

By Oren Laurent
President, Banc De Binary

In the wake of the 500th anniversary of the work of

Machiavelli, you could be forgiven for wondering if anything in
Italian politics has changed. Machiavelli, for all his faults and
brutality, was rightly cynical about politicians tendencies to
delay tough decisions, and would likely have been unimpressed
by the political deadlock that has long held Italy back. The
country is yet another victim of the Eurozone recession and
has struggled to effectively manage its fiscal affairs. That is,
until now at least. Just this week, Prime Minister Enrico Letta
swore in a new coalition government, a line-up of political
personalities from left to right who have pledged to tackle the
countrys social economic problems head on. Can we finally
expect a change?
The new economy minister, Fabrizio Saccomanni, has
announced his plans to cut taxes and public spending, and to
lower borrowing costs. Speaking to the La Republica
newspaper, he explained that he wants to restructure the state
budget to support companies and low earners. He also intends
to cut unproductive public spending in order to create
resources needed to lower taxes, and would propose a pact
between banks, businesses and consumers in order to boost
lending and investments. His end goal is to restore investor
confidence and facilitate the reduction in Italys borrowing
costs.
His talk is ambitious. Yet we could hardly expect anything
different from a politician faced with a mountain of financial
challenges. Saccomanni was himself part of the negotiations
for the creation of the single European currency and helped
Italy to originally make the transition from the lira to the Euro.

He dismissed the recent talk that Italy would contribute to a

Eurozone break-up as merely exaggerated fears. He is obliged
to show confidence and present a strong front.
If he can pull this off, it will certainly be impressive.
Saccomanni is tasked with reviving the economy without
allowing public finances to take a turn for the worse, and with
building investor confidence from worryingly low levels.
Furthermore, his appointment comes within days of Moodys
keeping the countrys sovereign debt rating at Baa2. This
accounts for the countrys relatively low current cost of funding
but still indicates an overall negative outlook. Plus, recent data
from Italys national statistics institute reveals that during the
fourth quarter of 2012, the economy shrank 0.9 pc, and that
gross domestic product was down 2.8 pc over the year.
Let us hope that Saccomanni and Letta are prepared for

the battle they face. Italy should feel new hope from the
change of government, but as always after a tense election, it
remains to be seen whether words are more than simply
rhetoric. I think if anyone can revive Italys flailing economy,
the former deputy governor of Italys central bank may just be
the man for the job. But it wont be easy. Good luck to him.

www.bbinary.com

Dollar subdued as low inflation alters Fed calculus

The dollar hovered near its lowest level
in roughly two weeks against a basket of
currencies on Tuesday as declining bond
yields and slowing inflation put pressure
on the Federal Reserve for more action.
Undermining the dollar was a slide in
the two-year Treasury yield to a ninemonth trough of 0.21% as low readings on
inflation led some market players to bet on
more stimulus from major central banks.
The dollar index last traded at 82.189,
not far from a low of 82.035 touched on
Monday, its lowest level since April 17.
The Fed kicks off its two-day meeting
later in the day and markets are watching
to see if a sluggish economic recovery and
a slowdown in inflation could not only end
talk of tapering bond buying but actually

push the central bank into buying more.

Given the underlying inflation trends,
we believe attention should shift to the
potential for further accommodation,
which may involve increasing the monthly
pace of purchases, holding securities for

a string of soft data has changed the conversation.

Talk that (the Feds) QE might end this
year seems to be receding somewhat, due
to the recent weakness of economic data,
a trader for a Japanese bank told Reuters,

FOREX COMMENTARY & TECHNICAL ANALYSIS

longer or modifying the forward guidance, analysts at Barclays Capital wrote in

a note.
The Fed is currently buying $85 bln of
debt a month and the talk had been of
when it might start to scale back. However,

referring to the Feds bond-buying program.

The dollar edged up 0.2% to 97.94 yen.
The greenback had slipped to as low as
97.35 yen on Monday, its lowest level in

almost two weeks.

The euro slipped 0.1% to $1.3088, giving back a bit of the gains it made on
Monday, when the single currency rose
0.5% after Italy formed a government
and ended two months of political
uncertainty.
The euro, however still remains some
way off this months high near $1.3200,
and further gains may be limited ahead
of the ECB policy meeting on Thursday.
A majority of economists polled by
Reuters expect the ECB to cut interest
rates by 25 basis points to 0.5%. A separate
Reuters poll of money market dealers
showed that they were evenly split on
whether the ECB will cut rates on
Thursday.

Disclaimer: The commentary appearing on this page is for indication purposes only and Eurivex does not take any responsibility for investment action taken. Nothing in this report should be considered to constitute investment advice. It is not
intended, and should not be considered, as an offer, invitation, solicitation or recommendation to buy or sell any of the financial instruments described herein. Trading on leverage is very risky and may lead to losses.

May 1 - 7, 2013

financialmirror.com | MARKETS | 21

ECB may surprise by not easing

Marcuards Market update
by GaveKal Research
What are European investors hoping for? Or, to put the question
more forcefully (and give away our conclusion) what have they been
smoking? The European economy is going from bad to worse. While
economic and financial indicators from around the world have recently
been disappointing, the US news has suggested nothing worse than the
risk of another modest summer soft patch, while
China has been settling into structurally slower, but
still very impressive growth. By contrast, the news
from Europe, including Germany, has recently been
dire.
Yet European bond spreads are back to their levels
before the 2010 Greek crisis and European equities
have recently started to outperform, with the DAX
rebounding to its pre-Lehman highs and even Italy,
Spain and France now joining the party. The main
explanations for this surprising strength appear to be
the deal to form a new government in Italy, the panEuropean resistance to German-inspired fiscal austerity and the hope of an ECB easing, maybe as soon as
Thursday.
Our scepticism about Italian politics was explained
in a comment last week. While we did not guess the
name of the new Italian prime minister, events have
broadly confirmed our view that Italy is back under
Silvio Berlusconis effective control. The new PM,
Enrico Letta, is an even weaker figure than the other
candidates and more clearly under Berlusconis thumb (his uncle is
Berlusconis chief political fixer). That makes a new politico-financial
confrontation with Germany and the ECB likely by the end of the year.
Or maybe much sooner, since Berlusconis vow to reverse a hated troika-imposed property tax hike is gaining traction among the ragged remnant of the center-left party Letta nominally leads.
Some investors, however, now seem to treat tensions between
Germany on one side and Italy, Spain and France on the other as potentially good news, supporting the second reason for euro-optimism:
imminent reversal of fiscal austerity. While the political and intellectual
pendulum may indeed be swinging from austerity towards more
Keynesian deficit denial, we would urge extreme caution on this
score. New budget consolidation measures are indeed off the agenda,
apart from Cyprus, but tax hikes and spending cuts already legislated
will continue throughout this year in almost every country, with the
possible exception of Italy. Any overt easing of fiscal policy is inconceivable until well after the German election on September 22. So it is pure
wishful thinking to hope that economic activity or profits might enjoy
some kind of fiscal boost this year.
Which leaves the third possible cause of euro-optimism: expectations of a monetary easing by the ECB. This is the strongest reason
for hope, since it allows investors to treat bad economic news as good
news that will bring forward the inevitable ECB easing. But it is also the
most dangerous, since it could be dashed as soon as this week. Judging
by recent comments from key ECB policymakers, the markets are overestimating the chances of an early monetary easing. And even if the
ECB does announce a quarter-point rate cut on Thursday, this could
well be a case of buy on the rumour, sell on the news since the ECB
is very unlikely to hint at any plans for further unconventional easing
and seems to have no intention of following the aggressive monetary

www.marcuardheritage.com

expansionism of the Fed or the BoJ.

ECB hawks cite at least four specific reasons for resisting any significant easing. First and foremost, they believe that further rate cuts would
do nothing to stimulate activity in southern Europe because the monetary transmission mechanism in Spain and Italy is largely broken. But
secondly, they argue that the central bank has already done about as
much to repair this transmission mechanism as it can. The credit
crunch in Italy and Spain, they insist, is not due to lack of bank liquidity, which the ECB is able and willing to provide without limit. The problem is inadequate bank capital and the ECB cannot help with that.

Six major Vodafone investors said $100

bln was not enough for the British companys
45% stake in its U.S. joint venture with
Verizon and urged the latter to come up with
an offer of at least $120 bln, close to
Vodafones market cap of $146 bln. Should
the offer stand, the shareholders, with around
1.3 bln Vodafone shares between them, said
they would prefer the British group to push
for a full merger with Verizon instead.
The main concern among investors was
the fact that a sale of Verizon Wireless - the
best performing asset by far in the Vodafone
portfolio - would highlight the operators
exposure to its troubled European markets.
Vodafones share of Verizon Wireless represented around half of the British groups
adjusted operating profit in the six months to
the end of September 2012.
It also received a 2.4 bln pound dividend
from its Verizon Wireless stake, and said it
would pass on 1.5 bln pounds to its shareholders via a buyback. Among its core
European operations Vodafone operates in
crisis-hit and heavily regulated markets such
as Italy, Spain and Portugal, where revenues
have come under pressure because of economic turmoil and intense competition.

Thirdly, these officials maintain that where monetary transmission mechanisms are not broken, further rates cuts or ECB balance
sheet expansion would produce perverse results. In France, where the
ECB sees no credit crunch at present, they worry that loosening
monetary policy further will simply ease pressure on the government
to undertake structural reforms, repeating the mistake made in Italy
last year.
Meanwhile in Germany, interest rates are already negative and further cuts would cause more capital misallocation by inflating asset
prices. Ominously for European equity investors, the asset inflation
that really worries the ECBs hawkish faction is not in German housing, which they see as merely recovering after a decade of stagnation,
but in the German stock market, where price-earnings ratios are seen
as becoming overstretched, as in the Fed bubble on Wall Street.
Finally, the ECB hawks see no reason to ease monetary policy to
weaken the exchange rate. The main central banks of the world are
divided into two groups, they argue. On one side is the Fed, which
manages a continental economy with relatively little trade dependence and treats the dollar exchange-rate structure as a residual of its
domestic monetary policy. On the other side is the Bank of Japan,
which may not explicitly target the exchange rate, but certainly
regards it as a very important monetary indicator and a key input into
its economic forecasts. While the Swiss National Bank and the Bank
of England are clearly in the BoJ category, the ECB is in the same
category as the Fed. It manages a continental economy which is
largely self-sufficient and therefore treats the euro exchange-rate as
an output of monetary policy, not an input in policy deliberations.
Many politicians and economists disagree with these ECB arguments for doing nothingbut bullish investors in Europe would be
rash to ignore them or simply wish them away.

WORLD CURRENCIES PER US DOLLAR

CURRENCY

CODE

RATE

EUROPEAN
Belarussian Ruble
British Pound *
Bulgarian Lev
Czech Koruna
Danish Krone
Estonian Kroon
Euro *
Georgian Lari
Hungarian Forint
Latvian Lats
Lithuanian Litas
Maltese Pound *
Moldavan Leu
Norwegian Krone
Polish Zloty
Romanian Leu
Russian Rouble
Swedish Krona
Swiss Franc
Ukrainian Hryvnia

BYR
GBP
BGN
CZK
DKK
EEK
EUR
GEL
HUF
LVL
LTL
MTL
MDL
NOK
PLN
RON
RUB
SEK
CHF
UAH

8620
1.5496
1.4926
19.591
5.6912
11.942
1.3101
1.646
228.45
0.53375
2.6352
0.3277
12.24
5.8137
3.1601
3.2947
31.0114
6.5492
0.9363
8.135

AUD
CAD
HKD
INR
JPY
KRW
NZD
SGD

1.0365
1.0112
7.7607
54.2025
97.72
1101
1.1673
1.2331

BHD
EGP
IRR
ILS
JOD
KWD
LBP
OMR
QAR
SAR
ZAR
AED

0.3770
6.9316
12073.90
3.5836
0.7057
0.2841
1501.00
0.3850
3.6402
3.7501
8.9883
3.6728

AZN
KZT
TRY

0.7835
151.18
1.7942

AMERICAS & PACIFIC

Australian Dollar *
Canadian Dollar
Hong Kong Dollar
Indian Rupee
Japanese Yen
Korean Won
New Zeland Dollar *
Singapore Dollar
MIDDLE EAST & AFRICA
Bahrain Dinar
Egyptian Pound
Iranian Rial
Israeli Shekel
Jordanian Dinar
Kuwait Dinar
Lebanese Pound
Omani Rial
Qatar Rial
Saudi Arabian Riyal
South African Rand
U.A.E. Dirham

Disclaimer: This information may not be construed as advice and in particular not as investment, legal or
tax advice. Depending on your particular circumstances you must obtain advice from your respective professional advisors. Investment involves risk. The value of investments may go down as well as up. Past performance is no guarantee for future performance. Investments in foreign currencies are subject to exchange
rate fluctuations. Marcuard Cyprus Ltd is regulated by the Cyprus Securities and Exchange Commission
(CySec) under License no. 131/11.

ASIA
Azerbaijanian Manat
Kazakhstan Tenge
Turkish Lira
Note:

* USD per National Currency

The Financial Markets

Weekly Economic Calendar

Date
Country
Detail
MAY 1
EUR Most EU markets closed for May Day
MAY 1
US
ADP Non-Farm Employment Change due 3.30pm
MAY 1
US
Final Manufacturing PMI due 4.00pm
MAY 1
US
Construction Spending M/M due 5.00pm
MAY 1
US
FOMC Statement - Fed Funds Rate due 9.00pm
MAY 2
EUR Final Manufacturing PMI due 11.00am
MAY 2
EUR ECB Rate Decision due 2.45pm - Mkts await Rate cut
MAY 2
EUR ECB President Mario Draghi press conf starts 3.30pm
MAY 2
US
Prelim Nonfarm Productivity Q/Q due 3.30pm
MAY 2
US
Prelim Unit Labour Costs Q/Q due 3.30pm
MAY 2
US
Weekly Unemployment Claims due 3.30pm
MAY 3
GBP Services PMI due 11.30am
MAY 3
EUR EU Economic Forecasts due 12.00noon
MAY 3
EUR PPI M/M due 12.00noon
MAY 3
US
Non-Farm Employment Change due 3.30pm
MAY 3
US
Unemployment Rate M/M due 3.30pm
MAY 3
US
Factory Orders due 5.00pm
Indicated times are Cyprus time

Vodafone investors
want bigger
bid or merger

Forecast

Previous

153k
52.1
0.70%
<0.25%
46.5
<0.5%

158k
52.0
1.20%
<0.25%
46.5
0.50%

1.80%
0.20%
345k
52.5

-1.90%
4.60%
339k
52.4

-0.10%
0.20%
155k
88k
7.60%
7.60%
-2.00%
3.00%
Source: Eurivex

Interest Rates
Base Rates

LIBOR rates

CCY
USD
GBP
EUR
JPY
CHF

0-0,25%
0.50%
0.75%
0-0,1%
0-0,25%

Swap Rates

CCY/Period

1mth

2mth

3mth

6mth

1yr

CCY/Period

2yr

3yr

4yr

5yr

7yr

10yr

USD
GBP
EUR
JPY
CHF

0.20
0.49
0.06
0.12
0.00

0.24
0.50
0.10
0.14
0.01

0.27
0.50
0.12
0.16
0.02

0.43
0.59
0.21
0.25
0.08

0.71
0.89
0.40
0.44
0.25

USD
GBP
EUR
JPY
CHF

0.35
0.56
0.38
0.26
0.07

0.45
0.63
0.45
0.25
0.13

0.62
0.74
0.58
0.35
0.24

0.83
0.89
0.73
0.39
0.35

1.29
1.25
1.04
0.53
0.64

1.83
1.78
1.46
0.75
0.99

Exchange Rates
Major Cross Rates
CCY1\CCY2
USD
EUR
GBP
CHF
JPY

Opening Rates

100
1 USD 1 EUR 1 GBP 1 CHF
JPY
1.3101
0.7633

1.5496

1.0680

1.0233

1.1828

0.8152

0.7811

0.6892

0.6604

0.6453

0.8454

0.9363

1.2266

1.4509

97.72

128.02

151.43

0.9581
104.37

Weekly movement of USD

CCY\Date

28.03

09.04

16.04

23.04

30.04

CCY

Today

USD
GBP
JPY
CHF

1.2740

1.2996

1.3024

1.2994

1.3043

0.8416

0.8509

0.8510

0.8512

0.8420

119.68

128.71

126.83

128.11

127.48

1.2116

1.2106

1.2079

1.2129

1.2201

GBP
EUR
JPY
CHF

1.5496
1.3101
97.72
0.9363

Last Week %Change

1.5219
1.2985
98.64
0.9395

-1.82
-0.89
-0.93
-0.34

May 1 - 7, 2013

22 | WORLD MARKETS | financialmirror.com

Private equity tests mining sector

With the worlds largest miners flocking to sell assets, cut
costs across the industry and a virtual drought in buyers, private equity funds may finally be tempted into a sector long
seen as potentially lucrative but risky.
Industry veterans say the coming months will be a test of
whether private equity funds can turn intentions into investments and become more than niche players in an industry
that has traditionally relied on public markets for cash.
Interest from private equity in the sector is the highest I
have ever seen, one veteran industry banker said.
Another senior industry adviser described a now or
never moment despite volatility in commodity prices, citing
what could be a drawn out period of low valuations in which
traditional buyers - largely, other miners - are kept out by
demands they refocus and cut back rather than grow.
Volumes certainly point to increased interest.
According to research and data group Preqin which studies private equity, eight natural resources funds focused solely on mining raised an aggregate $8.5 bln in 2012, more than
the years 2006-2010 combined, though data did not show
how much was spent on acquisitions.
Analysis by consultancy Ernst & Young suggests that private capital investors accounted for 21% of mining deal activity globally in the nine months to September 30 last year,
against just 12% for the same period in 2011.
Smaller miners and developers are also eager to tap alternative sources for funding. In a sign of how tough the markets now are, the Toronto stock exchange - the prime destination for emerging producers - has not had one mining IPO
in the first quarter, for the first time in a decade.
There are a lot of buying opportunities, and for those
who have the funds, you might find there is less competition,
and that is what private equity looks for - a good deal, said
Jason Burkitt, UK Mining Leader at PricewaterhouseCoopers.

GOLD RUSH?

Private equity firms have so far steered clear of mining

because of the scale and political risk involved in many operations. Volatile commodity prices and long time horizons are
also off-putting, not to mention that the investment firms
often lack the manpower or expertise to cover global projects.
Typically, funds have
stuck to niche assets,
like high-end aluminium products for the
aerospace and auto
industry, in the case of
Alcan Engineered Products, later Constellium,
bought from Rio Tinto
by funds led by Apollo in
2011.
Now, however, heavyweights like Apollo
but also KKR and
Carlyle are joining specialised energy-focused
First Reserve, Denham
Capital and Resource
Capital in betting more
heavily on the sector,
drawn in by the prospect of an extended
period of cheap prices
and an unprecedented funding drought.
Apollo, which aims to invest $100-500 mln per transaction, closed a $1.3 bln natural resources fund in 2012 which
will invest in areas including oil, gas and mining.
The fund was one of several to look at BHP Billitons
majority stake in Canadian diamond mine EKATI, which also
elicited interest from rival KKR before being sold to
miner Dominion Diamond Corp.
KKR has also been named as a
potential suitor for Rios majority
stake in the Northparkes coppergold mine.

SMALLER FIRMS
IN POLE POSITION

However industry bankers and

specialist funds both questioned
whether big name private equity
firms would be able to successfully
compete in the mining sector.
Size sometimes can be a disadvan-

F1 flotation by year end

The company behind Formula One
motor racing could be floated in Singapore
at the end of this year if markets remain
benign, the sports chief executive Bernie
Ecclestone said on Monday.
Plans to raise up to $3 bln were pulled
last June amid market turmoil following
the flotation of social network group
Facebook, which saw its shares plunge
after their debut.
Ecclestone confirmed a report in the
Daily Telegraph that the Formula One
Company structure had been reorganised in
preparation for a fresh attempt at a listing
in Singapore by the end of 2013.
Global equity fundraising rose 24% in
the first three months of 2013 on the back
of stronger markets and easing concerns
about the state of the global economy.
Private equity firm CVC Capital Partners
is the largest shareholder in Formula One,
with a stake of 35.5% and has been the
main owner of the business since 2006.
CVC last year raised $2.1 bln through
the sales of stakes in the business to U.S.
investment groups BlackRock and Waddell
& Reed and Norways Norges Bank
Investment Management. Those deals cut

its ownership from 63%.

Ecclestone said he believed CVC would
want to maintain a stake in the business.
The billionaire retains a 5% stake in the
business which has commercial rights to
Formula One for the next 97 years.
Now 82, Ecclestone has transformed the
sport from a
pastime for wealthy
enthusiasts into a
money-spinner that
stages around the
globe watched by
millions. He said he
had no plans to sell
any of his stake and
has always
dismissed talk of
retirement.
Flotation in Singapore, which stages a
race in September, would allow Formula
One to tap into Asias appetite for luxury
brands and its interest in sport.
Formula One had revenues of $1.5 bln
in 2011. It earns money from fees paid by
circuits to host races, the sale of television
rights, sponsorship and corporate
hospitality.

tage in our environment. You need to make decisions quickly - you need to have the coal face not too far removed from
decision making process, so you can react quickly, Sierra
Rutiles chief executive, John Sisay, said. The Sierra Leonefocused mineral sands producers largest shareholder is specialist fund Pala.

Smaller firms are able to do that better.

Traditional funds may also lack the extensive specialist
teams needed to evaluate projects across commodities and
across the world, and may be unable to invest for the longer
term.
One of the top shareholders in EMED Mining, a Londonlisted company redeveloping the former Rio Tinto copper
mine near Seville, is specialist Resource Capital.
If you are playing the development game you are playing
the development timeline, EMEDs chief executive, Harry
Anagnostaras-Adams, said.
Bert Koth, a Perth, Australia-based director at Denham
Capital, also questioned the idea that traditional firms would
step in. Although mining firms are shedding assets at a pace
not seen for decades, many are doing so at auctions which
can drive up prices - something private equity is likely to
want to avoid.
Generalist PE firms have a pretty poor track record as
they dont fully understand the risks involved. I query
whether they really appreciate what they are getting into,
Koth said.

F1 prize money for top 10 only

Bernie Ecclestone has made clear that
Formula One will pay prize money to only
the top ten teams from the end of this
season.
Since 2010, payments have been made
to the 11th and 12th-placed teams to help
three newcomers on reduced budgets who
came in after the
abrupt departure of
major
manufacturers
Honda, Toyota and
BMW.
There are now 11
teams remaining
after the demise last
year of Spanishbased HRT.
Ecclestone, the
sports commercial chief, said the plan was
to return to rewarding the top ten only,
injecting more drama into the battle to
avoid last place.
Its a bit more incentive to get going
and get into the top ten. Its a bit like the
football where you can go up and down,
he told Reuters in a telephone interview.
The confidential Concorde Agreement

that governs the sport expired at the end of

last year and a new one, to run to the end
of 2020, has yet to be signed by all parties.
In its absence, Ecclestone has agreed
individual commercial agreements with all
of the teams except Russian-licensed
Marussia, who have finished 11th in the
last three years and behind Caterham.
Marussia chief executive Graeme
Lowdon said that his team had not been
offered a bilateral agreement by rights
holders CVC but was reluctant to discuss
the matter.
Ecclestone said after HRT folded that he
would rather have ten teams, providing one
of them was Ferrari.
The new Concorde Agreement, which
must be signed by all teams as well as the
governing FIA, should replace the various
bilateral agreements once it comes into
operation.
Ecclestone told reporters at the Bahrain
Grand Prix last month that the detailed
document was in the hands of the
lawyers.
The FIA said on March 8 that
negotiations were proceeding positively in
order to be concluded in the near future.

May 1 - 7, 2013

financialmirror.com | WORLD MARKETS | 23

Iceland on lonely path to recovery

l Without EU and ECB backing, capital controls to stay; Economy could become increasingly uncompetitive

ANALYSIS
The victory in Icelands election of parties
who would spurn the European Union may
keep the country isolated by cementing damaging currency controls in place.
Once a symbol of globalisation with its
banking boom-turned-bubble, Iceland rejected
the one power that could have helped bring it
back onto the international stage five years
after its economy imploded.
At the heart of its malaise is a straightjacket
of capital controls. Put in place since the 2008
crisis - with IMF support - to save the local currency from collapse, they are now seen as hurting a nascent recovery.
The centre-right victors of the election won
over the austerity-weary public with a plan to
boost economic growth, cut taxes and write
down debt on foreign-owned debt crown
assets.
They hope to create conditions where a
gradual end to the controls would not lead to a
collapse of the crown through capital flight.
However, critics say a debt writedown could
further erode investor confidence in Iceland as
well as being a lengthy and legally difficult
process - any confiscation could lead to even
more capital flight.
Oh, capital controls? They wont be lifted.
Not in 5 years, not even 10. It could be 20 or
maybe even 30 years, said Gudmundur Ingi
Hauksson, who gave up running the biggest
branch of Landsbanki to manage a small car
wash chain in Reykjavik.
The election saw a backlash against a centre-left government widely seen as having failed
to deliver a fully-fledged recovery and been too
much in the thrall of the economic dictates of
donors like the IMF.
This came even though the parties which
won the vote were the ones widely blamed for
the crisis, when banks whose assets were ten
times the size of the economy collapsed after a
decade of debt-fuelled growth.

The winning Independence Party and the

Progressive Party see themselves as closer to
the go-it-alone spirit of the original Viking
settlers and have vowed to scrap the EU
accession process.

INVESTMENT PROBLEMS

Iceland lacks a powerful backer with financial firepower, as euro zone member Cyprus
had in the European Central Bank, so its
small central bank and the new government
will have to talk with investors on its own.
Some of those are hedge funds, which bought
up the dirt cheap assets of the collapsed banks
- Landsbanki, Kaupthing and Glitnir - hoping
to make a profit when bankruptcy claims are
settled.
The amount of the claims, and other foreign-owned assets locked in due to the controls, is about 1,200 bln crowns ($10.2 bln)
against $3.9 bln in central bank reserves.
Bjarni Benediktsson, the head of the
Independence Party and vying to become
prime minister after taking the biggest share of
the vote, hopes capital controls can end in 1218 months.
He wants to write off as much as 75% of the
debt in the estate of failed banks but, despite
election promises, talks with investors will be
tough. A substantial discount will be necessary but it has to be negotiated because you
dont want to create the perception of expropriation, said Hafsteinn Hauksson, an analyst at
Arion Bank. Even if Iceland wants a quick deal,
the funds themselves will be in no hurry and
could gain more by slowing the process.
Apart from sorting out the debt and banks,
capital controls have also kept out much needed foreign funds. Investment has fallen so low
it actually detracted from GDP growth last year,
which fell to 1.8% in 2012 from 2.6% a year earlier. Some forecast a further slowdown in 2013.
Aluminium giant Alcoa, one of the biggest
foreign investors in the country, cancelled
plans in 2011 to build a new smelter while a
long list of potential energy projects, relying on

Egypt says Qatar asking

5% interest on $3 bln bonds
Qatar wants 5% interest on $3 bln in bonds
it has offered to buy from Egypt, a price higher than expected yet one that Cairo may have
to accept.
Egypt has been asking Arab and Muslim
friends for cheap funds to help it stave off
financial collapse following the popular uprising that ousted Hosni Mubarak in early 2011.
It is negotiating a $4.8 bln dollar loan from
the IMF that would carry an interest rate of
just 1.1% but has balked at the economic policy terms.
Qatari Prime Minister Sheikh Hamad bin
Jassim al-Thani promised the money when
Egyptian Prime Minister Hisham Kandil visited Qatar on April 10. The Gulf state has already
lent Egypt $5 bln since President Mohamed
Mursi took office last July.
An Egyptian official said Qatar had asked for
an annual 5% interest on the bonds and a
maturity of no more than 18 months. No
agreement had yet been reached.
The Finance Ministry later issued a statement denying that Egypt had reached any deal
at that interest rate.
Analysts said say the interest rate puts the
bonds close to international levels but that the

parlous state of Egypts finances may nonetheless force it to accept the Qatari terms.
Since the uprising, Egypt has been drawing
down its foreign reserves, borrowing from
friends and delaying payments to oil companies to support the price of its currency and to
plug a budget deficit.
Reserves have tumbled to $13.4 bln in
March from $36 bln just before the uprising.
I still expect a deal to be done and the
funds to flow, said Simon Williams, an economist with HSBC. The market has already
priced the funds in ... if it were to fail, sentiment would turn bearish once again.
Earlier last month, Libya deposited $2 bln
at the Egyptian central bank and said it would
supply Egypt with $1.2 bln worth of crude on
interest free credit for a year.
Cairo has been counting on soft loans and
easy credit terms on fuel and food purchases to
help get through what threatens to be a tough
summer of power outages, fuel shortages and
possible unrest before parliamentary elections
expected later this year.
If Egypt cannot accept the Qatari terms, it
may face added heat to take an IMF loan and
apply tax rises and subsidy cuts.

the countrys vast renewable potential, lie dormant.

Prosthetics maker Ossur , made famous for
supplying South African Olympian Oscar
Pistorius with his artificial legs, is one of the
countrys big firms and is struggling under the
weight of restrictions.
Although it is mostly exempt from currency
controls, it has to list on two exchanges, borrow money through overseas subsidiaries and
cannot use a rights issue to raise funds as it
would be stuck with useless crowns.

This is a huge cost for a relatively small company, Chief

Executive Jon Sigurdsson says.
And the real problem is that I
just dont see the way out.
Closing an economy is very
simple, but opening is very difficult and there is just no credible
plan out there.
Holding Ossur shares is the
closest Icelandic investors get to
foreign currency and the stock
trades 19% higher in Reykjavik
than in Copenhagen.
Iceland has been cut off
from the international financial
system for 5 years and country is becoming
isolated, added Asgeir Jonsson, an advisor to
investment firm Gamma.
Others agreed that the government faced a
long haul. I have a hard time seeing a solution
other than changing our currency, Thorolfur
Matthiasson, a Professor of Economics at the
University of Iceland said. For now, Iceland
will be like Greece, Ireland, Italy or Spain, with
lots of political turmoil, populist politics, unstable governments.

May 1 - 7, 2013

24 | WORLD MARKETS | financialmirror.com

Kodak nears bankruptcy end

Photography pioneer Eastman Kodak has
cleared the last two hurdles to ending its
bankruptcy in one leap, with an agreement
to sell its remaining non-core businesses to
its British pension fund for $650 mln.

The pension plan also agreed to give up

a $2.8 bln claim against Kodak, resolving
the largest unsecured claim against the
company.
The agreement is subject to approval by

the U.S. Bankruptcy Court in Manhattan.

It is a huge step in Kodak exiting from
bankruptcy. In effect, it combines the final
two steps that were needed for the company
to emerge, said George Conboy, president
of Brighton Securities Corp., a Rochesterbased brokerage.
The deal allows Kodak to meet a requirement for securing financing for exiting its
bankruptcy. Lenders required the company
to sell its consumer and document imaging
businesses for at least $600 mln.
The two businesses being sold are personalised imaging, which includes most consumer products and retail printing kiosks,
and its document imaging unit that makes
scanners for enterprise customers.
Kodak said it will present a plan for its
post-bankruptcy business that will focus on
commercial imaging, which includes its
graphic communication, film and specialty
chemical products. The plan will also outline
how much creditors can expect to be repaid.

Meanwhile, Kodak reported a $283 mln

net profit for the January-March quarter,
compared to a $366 mln loss for the same
period a year ago.
The company said the profitable quarter
reflected improvements in its commercial
imaging businesses as well as a $535 mln
gain from the sale of its digital imaging
patents.
These results demonstrate that we are on
track with our strategy to focus on commercial imaging, said Antonio M. Perez,
Kodaks chairman and CEO.
The companys cash balance ticked up to
$1.17 bln from $1.14 bln at the end of 2012.
Kodak launched its first camera in 1888,
and grew to dominate the market for photographic film. Although Kodak invented the
digital camera, it put the project on the back
burner and spent years watching rivals stake
claim to the market while roll-up film sales
plummeted. The company filed for bankruptcy protection last year.

Lloyds near state break-even

l

Q1 profits jump to 1.48 bln;

No timetable for govt share sale

Lloyds Banking Groups first-quarter profit

jumped and the bank upped its cost savings
target, sending shares to a near two-year high
and close to the price at which the state could
break even if it sold its stake.
Shares in Lloyds, 39%-owned by the British
taxpayer, gained as much as 6.9% and hit a
high of 57.2 pence, after it said underlying
profit trebled to 1.48 bln pounds, on improved
margins, lower costs, and falling losses on bad
loans.
Chief Executive Antonio Horta-Osorio said
Lloyds had made substantial progress during
the quarter but he was focused on improving
its performance and had not held talks with
the government or UK Financial Investments
(UKFI), which manages Britains stake, about
a share sale.
Its managements job to operationally
prepare the bank as well as possible in order for
shareholders to decide about privatization. It is
ultimately up to UKFI and the Treasury to
decide on that and we have not been holding
discussions with them in that regard, he told
reporters.
A spokesman for the Treasury said that no
date had been set for the sale of shares.
The government considers a sale at 61
pence would enable it to break even after it
pumped 20.5 bln pounds into the bank to keep
it afloat during the 2008 financial crisis.
The government seems keen to start selling
off shares in the bank ahead of the 2015
general election, a move seen as more realistic
for the government than selling down its 81%
shareholding in
Royal Bank of
Scotland. An important step towards an eventual
share sale could
be a resumption
of dividend payments.
However, finance director
George Culmer
said Lloyds still
had hurdles to
overcome before
that would be
possible.

Lloyds capital strength has come under

scrutiny after the Bank of Englands Financial
Policy Committee said last month that UK
banks needed about 25 bln pounds of extra
capital. Analysts had said that meant Lloyds
might need to raise cash. Its core capital was
12.5% at the end of March and should be 9% at
the end of this year, based on the full impact of
new Basel III capital rules. That should rise
above 10% by the end of 2014, it said.
Britains biggest retail bank said its core loan
book had returned to growth earlier than
expected. Core loans increased by 600 mln
pounds in the quarter, ahead of guidance. That
included a 4% rise in lending to small
businesses.
Lloyds is pushing on with plans to float 630
branches making up the Verde business that
European authorities have ordered it to sell as
a price of the state bailout.
A planned sale of the network to the Cooperative collapsed last week and the bank is
now pursuing an IPO, which will probably take
place in 2014, Culmer said. Culmer said the
cost of selling the branches would increase by
between 200 mln and 300 mln pounds as a
result of switching to an IPO. The total cost will
rise to as much as 1.6 bln, he said.
Lloyds said complaints about the misselling of insurance on loans and mortgages
were falling in line with its expectations. It has
already set aside 6.8 bln pounds to compensate
customers mis-sold payment protection
insurance having sold more of the flawed
policies than its rivals.

May 1 - 7, 2013

financialmirror.com | GREECE | 25

Reform laws to unlock more rescue loans

Greek MPs approved a reform law on Sunday to unlock
about 8.8 bln euros of rescue loans from the EU and the IMF.
The law, which was a condition for further aid instalments, passed easily with the solid backing of the three parties comprising the ruling coalition, by 168 to 123 votes.
Following parliaments approval, senior euro zone officials
are expected to approve overdue payment of 2.8 bln euros in
rescue loans, finance minister Yannis Stournaras said.
Euro zone finance ministers will then meet on May 13 to

release a further 6 bln euro instalment, he added.

Greece needs that money to pay wages, pensions and
bonds held by the ECB that mature on May 20.
The law implements an agreement Athens struck with
EU/IMF inspectors earlier last month which allowed them to
state that the country was on track to meet its bailout targets.
The legislation makes it easier to fire government employees for disciplinary reasons, extends an unpopular property

tax and opens up professions such as accountants and bakers.

Measures to cut Greeces budget deficit and make its economy competitive are a condition of its 240 bln euro bailout.
Athens has already obtained about 200 bln euros of EU/IMF
rescue loans since mid-2010.
The economy is expected to have shrunk by almost a quarter in 2008-2013. Unemployment has soared to a record of
about 27%. Greeks disposable income has fallen by about a
third over the last four years.

OPAP suitor given more time

to raise offer
l Greek-Czech fund offered 622 mln for 33% stake;

Govt wants at least 650 mln

The Greek government gave the sole bidder for gambling
monopoly OPAP a week extra to raise its terms in a last-ditch
attempt to save its first big privatisation from an embarrassing failure that could derail its bailout.
Debt-laden Athens needs to conclude the sale to an
investment fund called Emma Delta to kickstart its longdelayed privatisation programme, imposed by its EU and IMF
creditors.
If Greece fails to sell OPAP, it will not meet its asset sale
target of 2.6 bln euros this year - a shortfall that would have
to meet with additional austerity
measures or by its international
creditors having to stump up
more money to bankroll the
country.
The OPAP sale drew no interest from big international gaming companies, with analysts citing Greeces economic problems
as well as OPAPs uncertain
growth prospects as the reason.
Emma Delta, controlled by
Czech investor Jiri Smejc and
Greek ship owner George
Melisanidis, submitted the only
valid bid for the 33% stake and
management rights in OPAP last week, offering 622 mln
euros.
Privatisation agency HRADF initially gave the fund 48
hours to raise its bid to at least 650 mln euros, but the
agency extended the deadline to May 1, on the funds
request.
HRADFs valuation is based on a minimum as estimated
by an external assessor and is a discount to its stock market
value, though Deutsche Bank and National Bank, Greeces
main sale advisors, have put the stakes value at just 610
mln.

VALUATION GAP

It wasnt possible to wrap up the ... evaluation and

response within a pressing 48-hour timeframe, an official
close to Emma Delta said. This is a multinational investor
group with the respective businessmen dispersed in different

parts of the world.

Some analysts saw the delay as a sign that a deal would
likely be reached. The extension shows that both parties
remain engaged in the process, said analyst Paris
Mantzavras at brokerage Pantelakis Securities.
Given the small valuation gap, it is very likely that they
will reach a deal this week, said Mantzavras.
Other investors in the group are Greek entrepreneur
Christos Copelouzos, Russian investment firm ICT Group,
Czech Republic-based investment fund KKCG and Slovak
investment fund J&T Finance.
Out of eight investors which
had expressed initial interest
for OPAP, only Emma Delta
and U.S. hedge fund Third
Point submitted binding bids.
Third Point was disqualified
because it insisted on the right
to resell OPAP shares at any
time.
Emma Delta had said in a
statement its bid was fair and
open. It added that OPAP had
internal structural problems,
with profitability hampered by
a cumbersome corporate structure and tight cashflow, which is forecast to continue for the
next two years.
OPAP was Greeces most profitable company last year,
with net income of 505.5 mln euros and a return on equity
of 49.2%, but this is set to change as the company faces a
number of issues.
Greece slapped a 30% tax on gross gaming revenue from
this year, OPAPs monopoly is subject to a legal challenge
from rivals such as William Hill, and OPAPs planned videolottery and online betting businesses are subject to regulatory uncertainty.
In addition, the company controversially decided earlier
last month to renew an IT deal with its long-standing technology provider Intralot just weeks before its privatisation.
Emma Delta and Gauselmann/Playtech, a German-Israeli
group which withdrew from the race, had loudly protested at
the Intralot contract renewal.

NBG chief:
will meet 10%
funding target
National Bank of Greece CEO Alexandros Tourkolias
said he was confident that the bank will cover the 10%
of private investors participation in a forthcoming
share capital increase plan.
The NBG board received EGM approval to proceed
with the EUR 9.76 bln share capital increase via the
contribution of EUR 1.17 bln in cash and contribution
in kind (HFSF), approval to proceed with a reverse
split, reduction in the share nominal value, while also
receiving approval for the issue of EUR 1.9 bln in
convertible contingency bonds, CoCos.
NBGs CEO stated that with the reassurances we
have so far we believe that we will achieve this goal,
adding that hundreds of thousands of traditional and
new shareholders were joining the effort. He also said
bank clients, individual depositors, large investors
along with the banks workers and pensioners were
also participating in this effort.
Tourkolias said that NBG shareholders will be asked
to decide over a National Bank we all want:
independent, in private hands, healthy, fortified against
any risk, dynamic, innovative and the main growth tool
for the economy and prosperity of the nation. He
added that there were encouraging signs of
stabilisation in the growth rate of bad loans in the first
months of 2013, compared with the corresponding
period last year.

Greece to push claim for German war reparations

Greece is planning to pursue a long-dormant claim for reparations from Germany over World War Two, a further strain on
relations with Berlin, which foots most of the bill for its 240-bln
euro rescue.
The Finance Ministry has compiled a report that takes stock
of all relating available documents spanning more than six
decades, Foreign Minister Dimitris Avramopoulos told parliament.
It will be submitted to Greeces legal advisers and then
Athens will decide how to officially press its claim, he said.

Avramopoulos did not not say how much would be

sought.
We will exhaust every means available to arrive to a
result, he told MPs. One cant compare the times, but also
not erase the memories.
Germany, whose forces occupied Greece in World War
Two, says it has already paid all reparations owed.
The issue has resurfaced since last year as Greece suffers
under austerity measures imposed on it by its creditors, mainly Germany, as a condition for its international EU/IMF bailout.

Avramopoulos said it was wrong to link the issue to the

debt crisis.
This has been an open issue for 60 years, it is too large
an issue to fit into the confines of the fiscal crisis, he said.
Greeces fragile coalition government has so far earned
praise from Chancellor Angela Merkel for starting to fix
Greeces finances.
But conservative Prime Minister Antonis Samaras was
pushed to raise the reparation issue by the main opposition,
anti-bailout Syriza party.

May 1 - 7, 2013

26 | CSE PRICES | financialmirror.com

CSE
CODE
OASIS
Index performance
CSE General Index
FTSE/CySE 20
FTSE/XA & XAK Banking
MAIN MARKET
MAIN MARKET INDEX
BANK OF CYPRUS
CYPRUS POPULAR BANK
HELLENIC BANK
LOGICOM
A. TSOKKOS HOTELS
LOUIS LTD
SECTOR TOTAL / OIKO
PARALLEL MARKET
PARALLEL MARKET INDEX
WOOLWORTH (CYPRUS) PROP
VASSILIKO CEMENT
A&P (ANDREOU&PARASKEV.)
ERMES DEPARTMENT STORES
LAIKI CAPITAL PUBLIC CO
K. ATHIENITIS CONTR. - DEV.
G.A.P VASSILOPOULOS
MITSIDES
PHIL. ANDREOU
LORDOS HOTELS HOLDINGS
LIBERTY LIFE INSURANCE
LORDOS UNITED PLASTIC
SECTOR TOTAL / OIKO
ALTERNATIVE MARKET
ALTERNATIVE INDEX
ALKIS HADJ. (FROU-FROU)
A.L. PROCHOICE FIN. SERV.
AMATHUS PUBLIC LTD
ATLANTIC INSURANCE
BLUE ISLAND FISH FARMING
CCC TOURIST ENT.
CHRIS JOANNOU LTD
CLARIDGE INVESTMENTS
CLR INVESTMENT FUND
CPI ENTER. DEVELOPMENT
C.T.O. PUBLIC CO
CYPRINT LTD.
CYPRUS CEMENT
CYPRUS FOREST IND.
CYPRUS TRADING CORP.
CYVENTURE CAPITAL
DIMCO PLC
DISPLAY ART LTD
ELLINAS FINANCE
ELMA HOLDINGS
EXELIXIS INVESTMENT
FILOKTIMATIKI
K & G COMPLEX
KARAOLIS GROUP
KARKOTIS MANUFACTURING
KEO LTD
KOSMOS INSURANCE
KRONOS PRESS DIST.
JUPITER PORTFOLIO INV.
LEPTOS CALYPSO HOTELS
MALLOUPAS & PAPACOSTAS
MINERVA INSURANCE
MODESTOU SOUND & VISION
PANDORA INVESTMENTS
PETROLINA HOLDINGS
PIERIDES HOLDINGS
PRIMETEL PLC
PROODOS AGROS
RENOS HADJIOANNOU FARMS
ROYAL HIGHGATE LTD
SALAMIS TOURS
SFS GROUP PUBLIC CO.
STADEMOS HOTELS
TOP KINISIS TRAVEL
TOXOTIS INVESTMENTS
UNIFAST FIN. & INV.
VISION INTL PEOPLE GROUP
SECTOR TOTAL / OIKO

K.

Number Nominal

Market

Book Value Price to

Shares
('000)
A

Cap.
('000)
K.
EUR

Per Share Book Value

2011
euro
Times
EUR ('000)
T

. . .

Value
euro
A
EUR

Profit/(Loss)

2011
BOCY
CPB
HB
LOG
TSH
LUI

1 795 141
4 065 482
619 689
74 080
246 214
460 547

1.00
0.10
0.43
0.35
0.35
0.17

70 645
18 224
10 341
5 066
104 275

1.24
0.25
0.78
0.75
0.49
0.27
0.63

0.15
0.33
0.09
0.04
0.10

FWW
VCW
APE
ERME
LI
ACD
GAP
MIT
PHIL
LHH
LIB
LPL

114 252
71 936
182 725
175 000
282 213
13 416
38 750
8 200
45 000
35 000
122 804
48 006

0.34
0.43
0.17
0.34
0.27
0.35
0.17
1.03
0.17
0.35
0.10
0.35

114 320
30 932
29 236
16 100
16 368
8 184
5 038
4 100
4 275
3 850
3 930
2 688
239 021

1.78
3.20
0.25
0.45
0.26
4.69
0.31
3.16
0.09
1.96
0.05
0.48
1.39

0.13
0.13
0.65
0.20
0.22
0.13
0.42
0.16
1.06
0.06
0.68
0.12
0.33

14 631
1 587
5 408
25 421
2 239
5 101
242
4 867
576
7 289
6 887
1 249
21 054
4 130
27 716
2 096
4 617
743
6 160
3 135
4 692
2 306
10 800
335
948
10 842
1 709
11 934
4 559
5 694
7 735
941
164
31 408
62 038
1 658
15 298
5 421
298
1 650
2 557
2 727
6 825
3 175
207
196
75 000
416 263

0.49
0.02
0.45
0.76
0.79
0.33
0.40
0.27
0.03
0.65
0.09
0.27
2.08
5.70
1.86
0.43
0.29
0.30
0.67
0.04
0.15
2.73
0.92
-0.10
0.09
3.40
0.38
0.59
0.36
0.75
0.63
0.09
-0.0075
0.18
1.31
0.38
0.004
3.40
0.04
0.12
0.43
1.33
2.44
0.34
0.04
0.11
0.19
0.77

0.30
0.56
0.11
0.85
0.18
0.11
0.06
0.16
0.08
0.46
0.38
0.90
0.07
0.24
0.16
0.33
0.20
0.19
0.57
0.23
0.89
0.18
0.12
-0.15
1.27
0.10
0.25
0.99
0.20
0.07
0.28
0.14
-1.47
0.40
0.54
0.20
10.26
0.44
0.03
0.43
0.16
0.03
0.09
0.76
0.25
0.18
5.38
0.60

FBI
PROP
ANC
ATL
BLUE
CCCT
CJ
CLA
CLL
CPIH
CTO
CYP
CCC
CFI
CTC
EXE
DES
DISP
ELF
ELMA
EXIN
PES
KG
KARA
KARK
KEO
COS
KRO
ARI
LCH
MPT
MINE
MSV
PND
PHL
PGE
PTL
AGRO
FRH
ROY
SAL
SFS
SHL
TOP
COV
UFI
VIP

98 861
158 660
110 358
39 109
15 438
141 692
10 070
108 163
288 141
24 379
208 700
5 140
137 611
3 059
92 079
14 973
80 999
13 506
16 000
348 333
34 000
4 805
100 000
22 343
7 967
30 978
17 985
20 400
62 446
101 683
43 211
78 415
14 900
424 435
87 500
22 100
382 440
3 590
297 915
33 000
36 529
66 520
32 500
12 212
20 700
9 788
75 000

0.26
0.09
0.35
0.35
0.17
0.43
0.35
0.35
0.08
0.17
0.87
0.43
0.43
1.73
0.85
0.43
0.09
0.35
0.62
0.09
0.29
0.87
0.17
0.34
0.35
0.43
0.31
0.43
0.20
0.35
0.35
0.17
0.14
0.17
0.35
0.34
0.17
1.73
0.03
0.17
0.43
1.00
0.69
0.34
0.03
0.05
$ 0.10

9M
2011
EUR ('000)
K
2011

9M
2012
EUR ('000)
K
2012

Profit/(Loss)

2012
EUR ('000)

.

9M '11
-792 593
-291 493
-73 081
3 024
-1 527
-4 830
-1 160 500

9M '12
-210 956
-1 671 495
219
3 026
109
-8 489
-1 887 586

2011

9M '11

9M '12

2012

6 700
-2 312
4 059
197
-1 734
3 250
-1 647
-1 046
-1 608
702
-3 657
-1 273
1 631

3 780
-2 992

2 372
-258

287
67

-505
-3 539

1 142

-1 930

6 005
-1 354
-1 880
-492
-34 500
3 181
-49
-1 753
-1 071
1 006
-5 616
-3 284
-39 807

2011

9M '11

9M '12

1 756

1 756

482

482

Earnings
Per

Dividend
Per

Dividend
Yield

Share
2011/12
Cents

Results

Share
2012
Cents

2012

-1 371 000
-3 650 380
-100 658
3 585
-6 894
-82 674
-5 208 021

1 932
-2 776
-2 123
2 311
571
-3 532
-375
-3 913
-7 733
-104
-2 998
-652
-4 639
-4 127
6 152
658
1 600
-529
-257
-6 807
-15 527
1 608
5 226
-2 268
-112
-3 948
-802
108
-1 263
-10 021
1 324
-3 328
-337
-20 039
10 783
-868
-6 356
75
151
480
973
-19 200
1 577
-891
13
-56
2 739
-87 300

P/E ratio
2012

0
0
-23 440
2 040
-13 281
-30 442
-65 123

2012
1 842
-637
-1 284
1 532
403
-7 040
-376
-16 998
-14 283
-52
-1 275
-366
-9 917
-2 868
4 381
-226
664
-666
-1 404
-8 999
-6 859
673
-3 246
-2 602
-203
-8 013
-670
-2 852
-2 408
-9 471
-1 006
-1 399
-318
-14 396
5 428
-719
-5 473
-148
-1 463
-1 593
-3 323
-21 450
2 218
-852
-192
-74
1 153
-136 827

n/a
n/a
n/a
8.93
n/a
n/a
1.56

4.57
n/a
n/a
n/a
n/a
2.57
n/a
n/a
n/a
3.83
n/a
n/a
5.16

Cents
-76.37
-89.79
-3.78
2.75
-5.39
-6.61

Cents

1.50

6.10

Cents
5.26
-1.88
-1.03
-0.28
-12.22
23.71
-0.13
-21.38
-2.38
2.87
-4.57
-6.84

Cents
2.31
1.50

%
9.63
3.49

2.10

22.83

Cents
1.86
-0.40
-1.16
3.92
2.61
-4.97
-3.73
-15.72
-4.96
-0.21
-0.61
-7.12
-7.21
-93.76
4.76
-1.51
0.82
-4.93
-8.78
-2.58
-20.17
14.01
-3.25
-11.65
-2.55
-25.87
-3.73
-13.98
-3.86
-9.31
-2.33
-1.78
-2.13
-3.39
6.20
-3.25
-1.43
-4.12
-0.49
-4.83
-9.10
-32.25
6.82
-6.98
-0.93
-0.76
1.54

Cents
0.93

%
6.28

7.00
1.20

10.77
8.28

3.20

10.63

0.45

4.17

1.70

2.40

2.00

9.52

2012
High
Low
EUR
EUR
A K

Last
Close
EUR
K

Price
31/12/2012
EUR
T
31/12/12

31/12/2012
. .
31/12/2012

124.29
47.75
188.86

92.66
37.08
81.63

97.55
38.24
105.79

114.86
44.40
168.87

-15.07
-13.87
-37.35

113.87
0.278
0.047
0.177
0.300
0.048
0.019

83.34
0.185
0.040
0.107
0.226
0.042
0.011

88.53

104.69
0.251
0.044
0.175
0.263
0.045
0.018

-15.44
-34.86
-6.46
-6.67
-38.89

637.17
0.260
0.460
0.195
0.124
0.061
1.050
0.130
0.500
0.095
0.110
0.032
0.059

563.93
0.220
0.410
0.160
0.092
0.054
0.610
0.130
0.500
0.095
0.100
0.032
0.056

563.93
0.240
0.430
0.160
0.092
0.058
0.610
0.130
0.500
0.095
0.110
0.032
0.056

627.38
0.250
0.439
0.183
0.115
0.058
1.050
0.130
0.500
0.095
0.100
0.032
0.058

-10.11
-4.00
-2.05
-12.57
-20.00
0.00
-41.90
0.00
0.00
0.00
10.00
0.00
-3.45

657.64

624.36

625.16
0.148
0.010
0.049
0.650
0.145
0.036
0.024
0.045
0.002
0.299
0.033
0.243
0.153
1.350
0.301
0.140
0.057
0.055
0.385
0.009
0.138
0.480
0.108
0.015
0.119
0.350
0.095
0.585
0.073
0.056
0.179
0.012
0.011
0.074
0.709
0.075
0.040
1.510
0.001
0.050
0.070
0.041
0.210
0.260
0.010
0.020
1.000

636.57
0.153
0.012
0.045
0.650
0.180
0.041
0.024
0.042
0.004
0.290
0.037
0.270
0.153
1.490
0.346
0.140
0.073
0.055
0.385
0.009
0.140
0.480
0.108
0.015
0.119
0.385
0.089
0.585
0.069
0.053
0.184
0.013
0.011
0.075
0.733
0.075
0.052
1.510
0.001
0.050
0.066
0.046
0.230
0.260
0.010
0.020
1.000

-1.79
-3.27
-16.67
8.89
0.00
-19.44
-12.20
0.00
7.14
-50.00
3.10
-10.81
-10.00
0.00
-9.40
-13.01
0.00
-21.92
0.00
0.00
0.00
-1.43
0.00
0.00
0.00
0.00
-9.09
6.74
0.00
5.80
5.66
-2.72
-7.69
0.00
-1.33
-3.27
0.00
-23.08
0.00
0.00
0.00
6.06
-10.87
-8.70
0.00
0.00
0.00
0.00

0.114
0.246
0.042
0.011

% Change

since

May 1 - 7, 2013

financialmirror.com | CSE PRICES | 27

CSE
CODE
OASIS

K.

APPROVED INVESTMENTS / EENYTIKOI OPAN.

INVESTMENT INDEX
ACTIBOND GROWTH FUND
ACT

APOL

APOLLO INVESTMENT FUND

CYTR

CYTRUSTEES INV. PUBLIC CO

DEMETRA INV. PUBLIC CO.
DEM

DODONI PORTFOLIO
DOD

HARVEST CAPITAL
HCM

INTERFUND INVESTMENTS
INF

ISCHIS INVESTMENT
ISXI

KARYES INVESTMENTS
KAR

REGALLIA HOLD. & INV.

REG

TRIENA INV. INCOME

TINC

TRIENA INV. CAPITAL

TCAP

TRIENA INTERNATIONAL
TINT

UNIGROWTH INVESTMENTS
UNI

SECTOR TOTAL / OIKO

SHIPPING COMPANIES SECTOR
SPECIAL CATEGORY /
AIANTAS INVESTMENTS
AD SHOPPING GALLERIES
A. PANAYIDES CONTRACTING
ASTARTI DEVELOPMENT
CEILFLOOR
CHARILAOS APOSTOLIDES
CONSTANTINOU BROS.
CYPRUS AIRWAYS
D.H. CYPROTELS
D&M TELEMARKETING
DOME INVESTMENTS
EFREMICO HOLDINGS
EMPIRE CAPITAL INV.
EUROPROFIT CAPITAL
FINIKAS AMMOCHOSTOU
FIRSTDELOS GROUP
KANIKA HOTELS
KNOSSOS INV.
K. KYTHREOTIS HOLDINGS
LASER INVESTMENT GROUP
LIBRA GROUP
L.P. TRANSBETON
NEMESIS CONSTRUCTIONS
O.C. OPTIONS CHOICE
ORPHANIDES
PIPIS FARM
ROLANDOS ENTERPRISES
SAFS HOLDINGS
SEA STAR CAPITAL
STARIO INVESTMENTS
SUPHIRE HOLDINGS
USB BANK
SECTOR TOTAL / OIKO

AIAS
AD
APC
AST
CFL
CHAP
CBH
CAIR
DHH
TLM
DOME
EFR
EMP
ERP
CONF
ACS
KAN
KNO
KYTH
LAS
LHG
TRB
NEM
OPT
ORF
PIPF
ROL
SAFS
SEAS
STAR
SUP
USB

Number

Nominal

Market

Book Value

Shares
('000)
A

Value
euro
A
EUR

Cap.
('000)
K.
EUR

Per Share
euro

Price to

Profit/(Loss)

Book Value
2011
Times
EUR ('000)
T
. .
.

NAV

Disc/Prem

0.0369
0.1914
0.2682
0.7174
0.0012
0.0660
0.1709
0.0589
0.2229
0.0265
1.0430
2.1427
0.6125
0.2000

-53.93
-51.41
-63.83
-69.19
66.67
36.36
-71.33
-26.99
0.94
-24.53
-23.30
-6.66
-15.10
37.50

2011
58 430
56 147
44 494
200 000
282 483
14 000
56 545
11 000
2 000
20 247
2 729
2 729
1 364
13 468

81 202
128 936
36 572
99 925
5 055
50 000
160 714
391 155
157 138
7 700
25 000
11 385
47 853
31 344
49 385
72 562
60 250
21 827
42 450
61 739
189 377
8 571
67 770
46 355
80 966
9 660
54 166
70 220
629 785
38 581
124 009
90 499

MARKET TOTAL / OIKO AOPA

0.17
0.27
0.30
0.87
0.02
0.17
0.51
0.51
0.43
0.09
0.85
0.85
0.85
0.17

993
5 222
4 316
44 200
565
1 260
2 771
473
418
405
2 183
5 458
709
3 704
72 677

0.21
0.17
0.35
0.35
0.03
0.35
0.35
0.086
0.17
0.12
0.43
0.43
0.87
0.09
0.10
0.34
0.35
0.17
0.17
0.06
0.01
0.35
0.17
0.17
0.35
0.35
0.17
0.17
0.04
0.17
0.09
0.57

162
13 023
3 657
5 296
207
1 600
12 375
9 388
157
23
15 000
285
35 890
752
148
7 256
7 833
218
1 910
8 582
189
1 971
10 843
510
1 619
773
2 925
140
1 889
77
1 240
58 824
204 764

0.1728
0.06
0.88
0.02
-1.21
0.12
0.57
-0.12
-0.20
-0.08
1.30
0.086
0.05
0.13
0.0100
0.29
0.67
0.11
0.38
0.06
-0.38
0.30
0.50
0.004
1.49
0.18
0.28
0.000
-0.08
0.05
-0.12
0.52

1 037 001

-98.84
1.68
0.11
2.41
-0.03
0.27
0.13
-0.19
-0.01
-0.04
0.46
0.29
15.00
0.19
-70.00
0.34
0.19
0.09
0.12
2.46
0.00
0.78
0.32
2.75
0.01
0.44
0.20
6.67
-0.04
-0.08
1.25

-737
-4 301
-10 771
-14 853
-6 892
-255
-9 493
-86
-180
-150
331
-136
-36
-403
-47 962

9M
2011
EUR ('000)
K
2011

9M
2012
EUR ('000)
K
2012

2012
EUR ('000)

.

9M '11

9M '12

2012

-8 799

-3 229

-8 799

-3 229

9M '11

9M '12

Profit/(Loss)

4
139
-2 774
-3 423
-2 559
-22
-443
-251
-57
-182
155
-1 921
12
-383
-11 705

2011

2012

-69
-12 265
399
-6 400
-2 974
-5 512
-3 755
-23 885
-9 100
-243
-701
35
-4 283
-219
-1 465
-24 581
-77
87
621
-10 339
-11 700
-545
2 145
-1 484
-8 648
-1 879
-328
-1 953
-15 879
-3 735
-60
-8 961
-157 753
-5 499 405

18

-17 728

18

-17 728

-1 011
-12 265
-350
-6 400
-217
-11 266
-10 859
-55 832
-9 100
-391
-70
35
6 553
-2 111
-1 465
-220
-77
87
-3 654
-713
-11 700
-605
35
494
-8 648
-959
-410
-450
-24 032
921
-60
-825
-155 565

-1 166 383

-1 909 991

-409 027

P/E ratio
2012

Earnings
Per

Dividend
Per

Dividend
Yield

Share
2011/12
Cents

Results

Share
2012
Cents

Cents
0.01
0.25
-6.23
-1.71
-0.91
-0.16
-0.78
-2.28
-2.85
-0.90
5.68
-70.39
0.88
-2.84

Cents

11.00

2012
High
Low
EUR
EUR
A K

572.39

450.90

13.75

Last
Close
EUR
K

Price
31/12/2012
EUR
T
31/12/12

481.98
0.017
0.093
0.097
0.221
0.002
0.090
0.049
0.043
0.209
0.020
0.800
2.000
0.520
0.275

546.03
0.017
0.115
0.119
0.250
0.004
0.078
0.048
0.043

0.002
0.101
0.100
0.053
0.041
0.032
0.077
0.024
0.001
0.003
0.600
0.025
0.750
0.024
0.003
0.100
0.130
0.010
0.045
0.139
0.001
0.230
0.160
0.011
0.020
0.080
0.054
0.002
0.003
0.002
0.010
0.650

0.002
0.101

0.210
0.020
0.800
2.000
0.520
0.250

% Change

since
31/12/2012
. .
31/12/2012

-11.73
0.00
-19.13
-18.49
-11.60
-50.00
15.38
2.30
0.00
-0.48
0.00
0.00
0.00
0.00
10.00

0.00

n/a

n/a

-1.25
-9.51
-0.96
-6.40
-4.29
-22.53
-6.76
-14.27
-5.79
-5.08
-0.28
0.31
13.69
-6.73
-2.97
-0.30
-0.13
0.40
-8.61
-1.15
-6.18
-7.06
0.05
1.07
-10.68
-9.93
-0.76
-0.64
-3.82
2.39
-0.05
-0.91

1.12

0.06

0.03

0.14

0.10

0.120

0.045

1.87

4.00

25.00

0.128

0.055
0.041
0.060
0.070
0.020
0.002
0.003
0.650
0.020
0.600
0.024
0.009
0.100
0.130
0.005
0.045
0.139
0.001
0.230
0.210
0.009
0.017
0.080
0.054
0.001
0.014
0.002
0.010
0.660

-21.88
-

source: Eurivex Ltd.

PAT:Profit After Tax

NAV: Net Asset Value

Bold: Final results

EPS: Earnings per Share based on existing number of shares.

P/E: Price to Earnings ratio. Weighted P/E ratio: Calculated based on market cap weighting of profit reporting companies,
Book Value: According to our estimates. N/A Indicates Not Applicable, Price 31/12/2009 is the closing price or in case of New Listings the opening price.

EMERGING MARKET (N.E.A.)

CONSTANTINOU BROS PROPERTIES
CYPRUS LIMNI RESORTS & GOLF
ITTL TRADE TOURIST & LEISURE
INT'L LIFE GENERAL INSURANCE SA
ORCA INVESTMENT PLC
P.C. SPLASH WATER PUBLIC CO.
WARGAMING PUBLIC CO.
ECHMI S.A. INVESTMENT CONSULTANTS
EPILEKTOS ENERGY S.A.
KERVERUS IT (CYPRUS) LTD
C.O. CYPRUS OPPORTUNITY ENERGY
BROZOS IVY PUBLIC
INTERLIFE GENERAL INSURANCE SA
GLOBAL DIGITAL SERVICES
TOTAL

CSE Code
/CBAM
/LIMNI
/ITTL
INLE
/ORCA
/PCSW
/WG
EXMI/
/EPIEN
/KERV
/GAS
/BRO
/INLI
STC/

No. of Shares
(000)
1 950
300 000
100 000
8 057
1 200
35 052
3 400
321
10 906
1 810
8 390
6 500
18 568
25 000

Market Cap
EUR (000)
36 855
297 000
75 000
21 834
14 280
42 062
3 400
1 541
43 624
2 552
13 844
10 010
7 799
250
570 051

Latest price Nominal

EUR
Value EUR
18.90
0.01
0.99
0.10
0.75
0.50
2.71
1.00
11.90
0.01
1.20
0.25
1.00
0.10
4.80
1.00
4.00
0.32
1.41
1.00
1.65
0.01
1.54
0.20
0.42
0.59
0.01
0.01

Listing
Date
29/3/10
29/3/10
06/8/10
21/7/11
10/9/10
10/10/11
2/11/11
10/04/12
28/06/12
29/06/12
17/07/12
11/09/12
17/10/12
30/04/13

WARRANTS
ALKIS HADJ. FROU-FROU (WAR. 2015)
AMATHUS NAVIGATION (WAR.07-2013)
TOTAL

EMERGING MARKET

Ignores weighted number of shares in circulation

Forecasted profits are liable to change without notice and responsibility

No. of warrants Mkt Cap

(000)
(00)
24831
25
17606
176
224

Exercise Period

Exercise Price
euro cents

Expiry Date

20-30 Jun 2001-2015

1-15 May & 1-15 Nov 07-13

173
20c or EUR 35c

30-06-2005
15-11-2013

CSE Code No. of Bonds

(N.E.A.)

Latest
Close
0.001
0.010

Market Cap

Latest price

Listing

Latest

EUR

EUR

Date

NAV

GreenTea SA

GRTEA

1 040

104 000 000

100 000

8 Nov 2011

N/A

Protean Global Futures (Perpetual Notes)

PGFL

650

65 000 000

100 000

1 Dec 2012

N/A

Disclaimer: The commentary appearing on this page is for indication purposes only and Eurivex does not take any responsibility for investment action taken. Nothing in this report should be considered to constitute investment advice. It is not
intended, and should not be considered, as an offer, invitation, solicitation or recommendation to buy or sell any of the financial instruments described herein. Trading on leverage is very risky and may lead to losses.

May 1 - 7, 2013

28 | BACK PAGE | financialmirror.com

Central banks, data to steer investors

With signs of a slower economy mounting, the near-term
outlook for U.S. stocks isnt rosy, but investors may find comfort this week from the worlds major central banks.
The Federal Reserve is meeting on Tuesday and Wednesday,
and the report of weaker-than-expected, first-quarter growth
could reinforce expectations the Fed will keep purchasing bonds
at a pace of $85 bln a month.
Low interest rates and ample liquidity provided by the Fed
and other central banks have buoyed global equity markets
because low borrowing costs for businesses and consumers lead
to richer corporate profits. Major U.S. stock indexes hit record
highs earlier this month.
As long as it looks like central banks are on your side and on
investors side as far as providing more liquidity, thats going to
help improve sentiment, said Brian Jacobsen, chief portfolio
strategist at Wells Fargo Funds Management in Menomonee
Falls, Wisconsin.
I dont think (Fed officials) have got enough data since the
last meeting to really justify changing policy. I really dont think
theyre going to look at slowing the pace of purchases until
probably September.
A strong commitment from the Fed to continue its stimulative policy, coupled with corporate earnings that have mostly
exceeded lowered forecasts, could help Wall Street extend a rally
despite signs that the U.S. economic recovery is losing momentum.
Even though the market ended flat on Friday, its performance last week was positive. The Standard & Poors 500 rose
1.7%, the Dow Jones Industrial Average was up 1.1% and Nasdaq
Composite Index gained 2.3%.
The economy expanded at a 2.5% annual rate in the first
quarter, the Commerce Department said on Friday, short of
expectations of 3.0% and setting a cautious tone.
A full slate of key economic indicators will be released this
week, including personal income and spending, the Institute for
Supply Managements manufacturing and services activity

indexes, pending home sales, the Chicago

purchasing managers index and consumer
confidence from the Conference Board.
The highlight of the week will come on
Friday when the Labor Department releases
its employment report for April.
Economists polled by Reuters are looking
for job growth of 150,000, up from 88,000 in
March. The unemployment rate is likely to
remain unchanged at 7.6%.
The GDP data suggests maybe the
momentum is much weaker that what was
priced in, said John Praveen, chief investment
strategist at Prudential International
Investments Advisers in Newark, New Jersey.
We have had a very strong rally, so people
are looking for any trigger for profit-taking, he
said. Praveen said the market could see a 5%
pullback in the months ahead should upcoming data prove to be weaker than expected.
Stocks had a wild run last week after hackers
attacked the website of stock broker Charles
Schwab Corp and a false report on the Associated Press Twitter
account about explosions at the White House sent the market
into a brief tailspin.
On Thursday, a software glitch shut down the Chicago Board
Options Exchange for half the day, preventing trading in options
on two of the stock markets most closely watched indexes and
delivering the latest blow to confidence in the way U.S. financial
markets operate.

EUROPE, EARNINGS

The European Central Bank will meet on Thursday and

investors will watch to see if it delivers an interest-rate cut as the
euro zone economy deteriorates further. Further monetary easing would encourage investors to buy riskier assets and boost
stocks. The market has been rallying on the fact the ECB might
actually start to do something; if the U.S. market reacts in the
same way, that might get the market rallying, said John
Canally, an investment strategist and economist for LPL
Financial in Boston.
With earnings reporting now half over, investors will look to
see if companies can continue to exceed profit estimates despite

lackluster revenue.
According to Thomson Reuters data, of the 271 companies
in the S&P 500 that have reported earnings for the first quarter,
69% have beaten analysts expectations, above the 63% average
since 1994.
However, only 43.9% have topped analysts revenue forecasts, well below the 62% average since 2002 and the 52% rate
for the last four quarters.
Analysts now see earnings growth of 3.8% this quarter, up
from expectations of 1.5% on April 1.
This week Dow components reporting results will be Pfizer
and Merck. Other companies scheduled to report include Loews
Corp, Aetna, Chesapeake Energy, Visa, Viacom and Kraft Foods.
David Joy, chief market strategist at Ameriprise Financial
based in Boston where he helps oversee about $700 bln in
assets, said the lackluster figures suggest the second quarter
may not be as robust as hoped.
Right now, markets are going through an adjustment
process, trying to figure out just how robust the economy is
here and overseas as well, Joy said. You have investors sort of
biding their time. They are invested, but not with complete conviction.