UN sees worsening of political climate

The political climate between the two sides in divided Cyprus has deteriorated, says UN Secretary General Antonio Guterres in his mission of good offices report for June to December.

“In the absence of constructive or harmonised messages from the two leaders that could resonate with both communities, the climate between the two sides and vis-à-vis the United Nations has deteriorated”, said Guterres.

According to the report, due to the lack of progress by the two sides towards finding common ground, public confidence in prospects for reaching a negotiated settlement in Cyprus remains low islandwide.

“The positions of the two sides remain far apart, and both sides maintain their opposing views about the way forward.”

He also notes that the political landscape has been further complicated by disputes and statements regarding areas in and adjacent to the UN-controlled buffer zone and Varosha.

Guterres said the situation on the island is compounded by ongoing tensions in the eastern Mediterranean, including maritime zone claims and a worsening of relations between the guarantor powers Greece and Turkey.

The report also points out that beginning in October, hardening demands related to the status of the north and political rhetoric in the south in the context of electoral campaigning increased perceived psychological barriers to cooperation.

“While the overall climate has become increasingly negative, with a further deepening of mistrust, the technical committees have nonetheless achieved some progress in reducing existing barriers to intercommunal contact and trade.

This included increased trade volume after the Republic of Cyprus eased certain restrictions on the trade of processed food items of non-animal origin under the EU Green Line Regulation.

On confidence-building measures proposed, discussions were held with the sides on possible steps forward.

“An understanding between the representatives of the two leaders to focus initially on a European Union-backed proposal for a photovoltaic park potentially to be located in the buffer zone and on irregular migration, a pressing issue for both sides, had not yet produced progress on a way forward.”

According to polls, “a majority of respondents from both communities reconfirmed their aspirations for a mutually agreed settlement and expressed the belief that it was imperative to reach one as soon as possible”.

“Despite the desire and urgency expressed, however, significantly fewer respondents of those polled had confidence that a settlement could be reached”.

Guterres said respondents who had contact with members of the other community, in general, wanted a settlement more urgently, had higher trust and less fear of the other community and foresaw fewer problems in case of a settlement, compared with the respondents without contacts.

He notes that difficult political and economic developments and regional tensions have impacted both communities over the past six months.

“The situation has both reflected and exacerbated the current lack of political space for finding common ground for formal negotiations, with the positions of the two sides growing further apart.”

Given the continuing absence of full-fledged negotiations, the leaders’ presence at the 7 December reception in Nicosia sent a positive signal to the broader public.

“The continued absence of substantive dialogue on the Cyprus issue between the two sides, and given the prevailing socioeconomic and political climate, prospects for reaching common ground on the Cyprus peace process remain uncertain.”

Source: The Financial Mirror

Storm alert after flash floods

As Cyprus counts the cost of the extreme weather over the weekend, the Met Office warned the storm has not passed with more heavy rain expected.

Following extreme rainfall mainly affecting the districts of Larnaca and Famagusta, the meteorological services issued a yellow warning for heavy rain and local thunderstorms, with intensity ranging between 55 and 85 mm per hour.

The warning came into effect on Monday morning until 5 pm.

Larnaca and Famagusta residents saw the streets in their towns and villages flood, with authorities responding to scores of distress calls.

On Sunday, the fire department responded to 43 distress calls, mainly from the Larnaca villages of Meneou and Dromolaxia.

The calls involved pumping water from flooded basements of private homes and businesses, opening storm water drains and flooded roads, moving trees, towing vehicles, and rescuing people from their cars on flooded roads.

In one case, help was provided to an elderly woman who could not leave her house due to the rushing waters that had trapped her.

Things were worse in the Famagusta district, where the fire department received 216 distress calls over the weekend. In addition, the district felt the brunt of the extreme weather on Saturday.

Other districts were not hit as badly, with the fire department only receiving one distress call in Nicosia.

In comments to state radio CyBC on Monday, Interior Minister Nicos Nouris said authorities were out in full force to record the storm damage.

He said the government would appraise damages and compensate people for loss or damage to their properties.

“The government will be swift in helping out in cases we find that people need state aid,” said Nouris.

“The latest storms should remind people that they should take out insurance policies on their property as the state cannot help out in all cases”.

Nouris said the ministry had instructed crews to focus on property damage in Menou and Dromolaxia.

“We will look into damages in Paralimni and Protaras at a second stage, again focusing on primary residences”.

“The government will be there for people in need.

“We have exhibited our solidarity in past natural disasters.

“We will assess damages and problems and respond to help people with serious problems,” said the minister.

Nouris said there are no people left homeless following the storms.

Roads

Police are also working to solve problems caused to the road network by the severe weather conditions.

Talking to CyBC, police spokesperson Christos Andreou said that the road from Artemis Avenue to the Hala Sultan Mosque in Larnaca is closed due to water accumulation.

In Famagusta, the Protaras – Cape Greco road has suffered severe damage, with land subsiding in two places and drivers are asked to be cautious.

All the roads to Troodos are open, although drivers should check for police announcements before heading off.

Over the weekend, major roads in Protaras and Paralimni were closed due to floods, including Protaras Avenue and Kappari avenue.

Roads in Dromolaxia and Meneou had also closed, with police cutting off the roundabout at the entrance of Larnaca Airport for a few hours on Sunday.

Monday’s weather is expected to be mostly cloudy, with isolated thunderstorms, sporadic localised showers, and snow in the higher mountains.

Snow depth at Troodos square is 7 cm.

Maximum inland temperatures will rise to 15C, coastal temperatures to around 17C, and mountain temperatures to 7C.

Weather conditions will improve on Tuesday, with top temperatures climbing to 17C, above the average 15C for the season.

Source: The Financial Mirror

Limassol’s public transport goes electric

Public transport in Limassol is going green, with 35 fully electric buses on the city’s roads in February, pushing the older diesel models into retirement.

The 35 six-metre-long electric busses will be the flagship of the new fleet of the Limassol Transport Company (EMEL), which will introduce 177 eco-friendly buses replacing the older models currently making the routes.

In comments to Phileleftheros daily, EMEL’s representative Petros Theocharides said 150 buses, including the electric ones, are currently being loaded onto ships heading for the island from China.

The other 27 will be coming from Europe.

“Except for the 35 electric ones, all other buses will be equipped with Euro 6 diesel engines, the most modern conventional anti-pollution technology,” said Theocharides.

Most buses were scheduled to arrive in early January, but delays in the supply chain caused by the war in Ukraine pushed their arrival to the end of the month or early February.

According to Theocharides, EMEL has injected some 26 mln into radically transforming Limassol’s public transport network while putting the city on the map as a leader in electric mobility.

The 35 six-metre electric buses will be able to carry up to 24 passengers and will run on routes in the city’s urban core.

It is estimated they will cover 2 million km per year, with zero pollution, while reducing noise reduction by 50%.

Actions are being taken so that after the first months, they will be powered with electricity produced by Renewable Energy Sources.

In addition to upgrading its fleet, EMEL will begin the reconstruction of three terminals for passengers with modern comforts, with provisions for improving service and rest conditions for bus drivers.

Meanwhile, the Transport Ministry is drawing up plans to set up three park-and-ride stations, encouraging people to park their car and hop on a bus when heading to the town centre.

Two park-and-ride stations will be close to the highway, in Polemidia and Ayios Tychonas, to cater to visitors from out of town.

The third station will be on Epaminontas street to cater to Limassol residents.

Source: The Financial Mirror

‘Bulls ready to run’ as Bitcoin hits $21,000

The Bitcoin price rally demonstrates that cryptocurrency investors are pricing in more favourable market conditions in 2023 as inflation looks set to peak, according to the CEO of a leading independent financial advisory and fintech.

Bitcoin reached above $21,095 on January 13 for the first time since November 8, 2022, before falling back slightly, according to the exchange deVere Crypto.

“We are technically still in a bear market, but the signs are the bulls are beginning to take back control, said Nigel Green of deVere Group.

“The Bitcoin price has jumped yet again – another 3.8% on Friday – on top of gains made through the week. It’s estimated that around $70 ln has been traded in crypto over the last day alone,” Green said.

He added that the relief rally began on the back of the latest U.S. inflation data which was released on Thursday. It revealed U.S. CPI slowed to 6.5% in December from 7.1% the previous month.

“As inflation in the world’s largest economy is, it seems, being brought under control thanks to the Federal Reserve’s aggressive interest rate hikes, it makes it more likely that the central bank will begin to take its foot off the brake of the economy by slowing the hikes,” Green said.

“The Fed will continue hiking rates for a while yet (albeit at a slower pace) as they can’t afford to slide backwards. Officials will continue to sound hawkish too in order to avoid over-excitement in the markets and wider complacency.”

Strongest performers

The asset classes that have fallen hardest due to central banks’ policy tightening in 2022 may be the strongest performers during the unwinding of the rate hike programmes, the deVere CEO predicted.

“These include cryptocurrencies, such as Bitcoin, which alongside tech stocks, were hit hard.

“As the central banks begin to stop tightening the screws, and the cyclical upturn gets underway, these asset classes could outperform others.

“Knowing they are likely to be rewarded for doing so, many crypto investors are positioning themselves now for the pivot.”

The developments will be welcomed by crypto enthusiasts after Bitcoin lost over 60% of its value in 2022, with many other tokens experiencing similar losses, due to the bleak macro outlook, the collapse of several crypto firms, and greater regulatory scrutiny.

Green concluded that the ‘crypto winter’ is thawing amid growing signs that inflation is beginning to cool.

“Of course, the crypto market will not go in a straight line – no market ever does – but we expect the bears to go into hibernation and bulls are ready to run.”

Source: The Financial Mirror

Tackling inflation government’s biggest task

The Cyprus Economy and Competitiveness Council (Ecompet) outlined medium-term and long-term proposals to tackle inflation via innovation investment.

The Council said that due to the seriousness of inflation, it established a committee to propose measures and policy directives to tackle inflation.

“Inflation is one of the most significant challenges facing all EU member-states, including Cyprus,” the Council said.

“Inflation has multiple adverse aspects, such as weakening purchasing power, increasing interest rates and slowing economic growth.”

The Council proposes improving productivity through digital transformation and innovation, recalling that the government’s Recovery Plan includes an array of measures to invest in innovation and boost productivity.

Digitisation, the Council added, will reduce the need for transportation to address services physically and the imposition of additional fees.

Improving broadband connection will enable a more innovative environment that would reduce operating costs and improve household costs via work-from-home solutions.

On improving supply chains and boosting Cyprus connectivity, Ecompet proposed that the Ministry of Commerce’s Trade Service should be strengthened to promote exports, the digitisation of services and utilise new technologies in agriculture.

It said upgrading ports and airports with new technologies and their promotion as regional hubs would improve supply chains and reduce transport costs.

Furthermore, the Council highlighted cheaper energy sources, a circular economy and energy efficiency.

It said that upgrading the electricity market, interconnections with other countries and using cheaper energy sources will gradually reduce electricity bills.

According to the Council, promoting a circular economy will reduce the excessive consumption trends and use of raw materials resulting in reduced production costs and an overall reduced final cost for consumers.

“The state should also upgrade energy efficiency for buildings, promote affordable housing and other measures to support vulnerable households.”

Ecompet recommended the promotion of cheap and efficient mass transportation, recalling that “Vision 2035” suggests a change in culture over public transportation.

To this end, the Council suggested increasing the frequency of bus routes for universities and schools and providing economic incentives to certain groups, such as university students and pupils, to use public transport.

The Council said using trams in Nicosia and Limassol and trains connecting cities could be viable in the future “when crucial parameters change”.

Source: The Financial Mirror

Real estate sales generated €6 bln in 2022

Despite the property market generating €6 billion in sales in 2022, real estate agents expect a challenging 2023.

Releasing its quarterly “Real Estate Market Bulletin”, the Cyprus Real Estate Registration Council said that the value of real estate sold last year was €5.85 bln.

The Council appeared satisfied, noting that “against the challenges, the real estate sector showed resilience and dynamism, which is reflected in the clearest way in the comparative sales”.

According to data from the Land Registry, 22,129 transactions were recorded in 2022 with a total value of €5.85 bln.

The fourth quarter of 2022 was the best of the year, as properties worth €1.7 bln were sold in 5,883 transactions.

In Q3 2022, the registry recorded transactions worth €1.65 bln, compared to €1.2 bln in Q2 and €1.3 bln in Q1.

The President of the Registration Council of Real Estate Agents, Marinos Kineyirou, said: “The real estate sector in an extremely difficult period managed to grow and develop.”

“However, a series of challenges related to inflation, rising interest rates, the cost of construction materials and the new realities concerning the reduced 5% rate of VAT for the main residence are expected to affect demand”.

Limassol recorded the largest sales volume with 6,945 real estate transactions worth €2.86 bln.

Nicosia followed with 6,237 transactions with a total value of €1.2 bln.

The real estate sector in Paphos grew significantly, both in the number of transactions (3,593) and in their total value, which reached €890.4 mln.

In Larnaca, 4,160 transactions had a value of €666.2 mln, while in Famagusta, 1,194 transactions were worth €238.4 mln.

In earlier comments to the Financial Mirror, Panos Danos FRICS, CEO of DANOS International Property Consultants & Valuers, said he expected 2023 to be a year of stability, as the inventory of real estate assets is expected to remain relatively high.

“This is not bad news, as the more the inventory, the more options for buyers and the more negotiable prices are.

“However, mortgage rates will remain high, and banks will still be difficult to agree on loans.

“It may mean that sellers might see fewer profits, but they will most likely profit, nevertheless.

“It is unlikely that 2023 will be a major turning point for the real estate market in Cyprus.

“Buyer demand is not expected to surge, and sellers are not going to change prices drastically”.

Danos said the real estate market and prices will leverage demand and supply, with buyers still viewing the property market as a solid investment for their money.

“But, still, buyers and sellers will take some time to digest the new norms, probably the first quarter of 2023, and to process the new adjusted prices.

“A risky but reasonable long-term prediction is that 2024 is unlikely to see a significant improvement in prices or interest rates.”

Source: The Financial Mirror

Anastasiades meets King Charles III

The Cyprus problem, bilateral ties and Commonwealth issues were discussed at a meeting between President Nicos Anastasiades with King Charles III in Scotland on Monday.

Following the British monarch’s invitation, the meeting was held in his private residence of Birkhall on the royal Balmoral estate.

The meeting was also attended by Queen Consort Camilla and Cyprus’ First Lady Andri Anastasiades.

A written statement by Government Spokesman Marios Pelekanos described the atmosphere of the meeting as “friendly”.

President Anastasiades took the opportunity to update His Majesty on the latest developments regarding the Cyprus issue.

“The talks also focused on the bilateral relations between Cyprus and the UK, which significantly strengthened during Anastasiades’ ten-year tenure as president.

“During this period, the two countries have signed important bilateral agreements, most notably the Memorandum for Strategic Partnership and the Memorandum for the non-military development of land within the British sovereign base areas, to benefit the local population,” Pelekanos said.

Talks also included matters concerning the Commonwealth’s future, climate change and its implications.

In this regard, the President and King Charles discussed Anastasiades’ initiative for climate change action in the Middle East and the Eastern Mediterranean.

Source: The Financial Mirror

Larnaca pier to be new hot attraction

Larnaca will soon have another destination to visit, as construction on a museum dedicated to the town’s history and floating hospitality venues get off the ground at the marina.

As announced, Kition Ocean Holdings – the Cypriot-Israeli consortium awarded the €1.2 bln redevelopment project of the marina and port – work on the pier is underway.

Although it has more than a two-month delay, contractors are optimistic they will keep to their initial delivery goal for June 2023.

Work on the pier was supposed to begin on 1 November last year.

Talking to Phileleftheros daily, Kition Ocean’s CEO, Panos Alexandrou, said: “Work on the pier has already started, with the main part of the redevelopment project to start next, once the Ministry of Transport has issued the necessary permit.

“We will try to speed up the work so that we can finish in June. Our wish is for the pier to open by the summer.”

According to the plans, the historic Larnaca marina pier will be revamped, with new railings, modern lighting, and new benches added.

The lighthouse at the end of the quay will be upgraded, and a photography museum dedicated to the history of the town and the marina will be set up at the entrance.

“The plan is to build four floating kiosks for hospitality venues on the right side of the pier with seating arrangements on the pier itself,” said Alexandrou.

The project will be carried out gradually, aiming to reduce the impact on diving schools and boat owners who organise excursions.

A major part of the first phase of the redevelopment of the port and marina will be launched in Autumn 2023.

Initially, work was set to start this April but was pushed back to September this year.

According to Alexandrou, the contractors will need four years to complete the work from the beginning of the project.

The project is estimated to generate around €12 bln for the government.

It will create about 4,000 new jobs, calculating those directly tied to the marina operations and businesses that will open outlets in the commercial areas.

The work will be carried out in four phases over 15 years.

The BOT project will see the government receiving fixed rent and a percentage of the revenue through a concession agreement with the port/marina operated on a 40-year lease and real estate acquired on a 125-year lease.

After 40 years, the port and marina can be returned to the government.

Reconstruction of the existing marina will accommodate 650 yachts and offer facilities such as boat repairs.

An upgraded Larnaca port will accommodate ships up to 450 metres in length, such as luxury cruise ships, energy exploration vessels, military, and other merchant ships.

Source: The Financial Mirror

Eyeing Davos and earnings

A relatively muted start to the week amid lighter expected trade due to the US bank holiday, with Europe and much of Asia posting small gains.

It’s been a frantic start to the year, so, investors may be capitalising on the opportunity to catch their breath. They won’t have long given the flurry of central bank speak as policymakers gather in Davos this week and as earnings season heats up in the US.

There’s an increasing sense of optimism about 2023 as we make our way through the opening month of the year. The economic data has been kind, to say the least, which is not something we were afforded for most of the past year.

The question now is whether earnings season will enhance that new sense of hope or spoil the party before it really gets going.

Companies have until now been reluctant to let staff go, which has kept the labour market tight, even as certain economic indicators weaken and inflation dampens the outlook for demand and costs. A bad earnings season could undermine hopes of a soft landing that looks more possible now than it has for many months.

Commentary from central bankers will also be closely monitored this week, during the famous gathering in Switzerland. But this time it comes amid much better data from the US and when policymakers have been reluctant to deviate from their hawkish position.

We saw signs of change last week, culminating in 25 basis points being heavily priced in for February. Could we finally see the full dovish pivot?

The end of YCC?

One standout event this week will be the BoJ meeting, amid plenty of speculation around the yield curve control tool and whether it’s time to abandon it.

Japan’s central bank has been very active in the market trying to protect the upper boundary around 0.5% on the 10-year JGB, but the market continues to push back.

Last month’s tweak, rather than buying the central bank time, appears to have massively intensified the pressure on the BoJ and we may learn on Wednesday whether the time has come to tweak it again or abandon it altogether.

Oil buoyed by optimism

Oil prices are marginally lower Monday, but have recovered the bulk of their earlier losses. They’ve been on a good run since getting the year off to a bad start in the opening couple of sessions.

No doubt the improved optimism over the economy is playing a big role in that, with the prospect of fewer rate hikes and maybe even cuts before the year is out making the headwinds less fierce.

China is also a big factor in all of this. Of course, it’s tough to get a true gauge of the disruption the current wave is having on the economy, but there’s no shortage of optimism for the rest of the year, particularly the second half.

It could even come as early as the second quarter, although that very much depends on how rapidly it spreads now. Brent may now be stabilising in the $85-90 range, with WTI just a little lower around $80-85.

Gold eyeing record highs?

Gold is marginally lower Monday after peaking earlier in the session.

It’s running into a little resistance just above the upper end of a key zone, between $1,880-1,920. This had the potential to cause it some difficulty, having done so repeatedly in the past, but that doesn’t appear to be the case. It’s rallied strongly again in recent days and momentum has been rising along with it.

A close above $1,920, backed by momentum, could see attention turn to $2,000, a level it hasn’t traded above since March last year, and even then it only lasted about a week before it fell back below.

Bitcoin making a comeback?

The biggest winner in all of this may be cryptos which have had a rough few months in the aftermath of the FTX collapse.

A boost in risk appetite has triggered a surge in bitcoin which spent the final weeks of last year languishing between $16,000 and $17,000. It is up more than 25% since the turn of the year, breaking back above $20,000 Monday in the process.

Whether this is a sign of it bottoming out and experiencing a resurgence or just a brief rebound isn’t clear, but there are clearly still some very bullish traders out there.

It should make for an interesting few weeks.

Craig Erlam is Senior Market Analyst, UK & EMEA at OANDA

Opinions are the author’s, not necessarily that of OANDA Global Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.

Source: The Financial Mirror