Cyprus will be able to face new challenges and risks – Petrides

The belief that Cyprus will be able to face the new risks and challenges in the aftermath of the war in Ukraine was expressed by Minister of Finance Constantinos Petridis, addressing the 8th International Funds Summit and Expo, which is being held in Nicosia.

And Andreas Yasemidis, President of the Investment Funds Organisation (Cifa), said in his speech that the world moves “from crisis to crisis”, to emphasise that the sector of investment funds in Cyprus proved to be resilient.
More than 500 delegates from all over the world are participating in the conference.

“We are heading into a rapidly changing and uncertain future, where we must be aware of the risks and challenges, as well as the opportunities,” Petridis said in his speech in a taped greeting, adding: “I believe we will once again rise to the heights of challenges”.

As he mentioned, in the wake of the war in Ukraine and the rise in prices, the Cypriot economy has proven to be resilient and flexible, significantly exceeding expectations. He noted that after growing by six per cent in the first half of the year, the Cypriot economy is forecast to register a growth rate of 5.7 per cent for the whole of 2022, with growth for 2023 estimated to reach three per cent.

The ministry of finance noted that in the wake of significant positive growth rates, public finances showed a surplus of 2.2 per cent of GDP during the period January – September 2022 compared to a deficit of 1.9 per cent in the corresponding period of 2021, adding that for the whole, public finances are expected to record a surplus of 1.2 per cent of GDP after two years of deficits.

Besides, Petridis praised the investment fund industry as a necessary tool for providing alternative financing for long-term projects, for businesses and start-ups, but also for the domestic economy in all EU member states.
“EU economies rely heavily on the banking sector to finance businesses. However, market financing is a useful alternative to bank financing and can facilitate risk sharing across the financial system and support activity,” he stressed.

In this context, Petridis recalled that the government established the Cyprus Equity Fund in collaboration with the European Investment Fund with the government’s contribution amounting to €30 million, a tool that will facilitate the access of Cypriot innovative SMEs in financing.

Welcoming the conference, Yasemidis said that the investment fund industry, like all sectors of the economy, is re-adjusting its business model to the new market conditions.

“Last year we were discussing the speed and robustness of the recovery after the pandemic, this year we are surrounded by uncertainty, inflation and instability. In other words, we move from crisis to crisis,” he said.

However, Yasemidis said that despite the difficulties, 2022 is shaping up to be another exciting year for the investment fund industry in Cyprus, which is now seen as an established sector of the economy, having proven its resilience both in the coronavirus pandemic and more recently with the consequences of the war in Ukraine, the energy crisis and inflationary pressures.

“Cyprus,” he added, “continually gains momentum as a centre of excellence for the international investment fund and asset management industry.”
Based on the data he provided, assets under management in the first half of 2022 amounted to €11 billion, while data from the European Association of Investment Funds showed that the net assets of Cypriot Alternative Investment Funds in 2021 recorded an increase of 61.5 per cent.

Pointing out that Cyprus is rapidly developing as a cross-border centre for investment funds, with the majority of assets held by international investors, Yasemidis added that “if we take into account that only Ireland, Luxembourg and Malta have higher percentages, we believe that this is a remarkable achievement for a jurisdiction which started developing the sector just four years ago.”

Besides, in his own greeting, the President of the Cyprus Capital Market Commission, George Theocharidis, emphasised that in the last nine years, after the modernisation of our institutional framework, “we have contributed to the development and establishment of the collective investment sector” which has tripled in size since 2016, with assets under management currently amounting to €10.6 billion.

“Of these, approximately €2.6 billion or 24 per cent are invested in Cyprus. 71.8 per cent of investments in Cyprus are invested in private equity, with 11.7 per cent in real estate”, he added.

The Chairman of the Board of Directors of Invest Cyprus, Evgenios Evgeniou, pointed out that “we are now able to record the tangible and diverse contribution of the investment fund sector to the economy, which is reflected in investments within Cyprus, in the creation of new jobs and new sources of revenue for the State.

“As Invest Cyprus we are charged with the responsibility of promoting the country abroad and therefore we emphasise the attraction of investment funds, managers and other relevant providers”, said Evgeniou.