Market Report / Banks, bonds buffetted in light Sunday trading
The Banks-5 index had a volatile day and finished marginally lower while the Real Estate-15 index ended the day 0.14% higher.
Trading on Sunday on the Tel Aviv exchange was marked by share declines on extremely light trading of just NIS 486 million. The Tel Aviv-25 index lost 0.6% of its value, closing at 1,076.61. The broader Tel Aviv-100 declined by 0.6% as well, to 984.63.
The Banks-5 index had a volatile day and finished marginally lower while the Real Estate-15 index ended the day 0.14% higher. The Technology index declined by 1.85% and the Oil and Gas index by 1.1%. The Tel Bond-20, on the other hand, rose by 0.17%.
"The yields on Israeli government bonds are at all-time minimum levels, with shekel yields of 4.2%," said David Reznik, who heads the macroeconomic research department at Leumi Capital Markets.
He said the situation regarding local government bond trading on Sunday that arose on the backdrop of a decline in yields on Friday in the United States. He said the low level to which the yields have sunk here is surprising in light of the fact that investors are aware of the Finance Ministry's battle with the Bank of Israel to expand the state budget deficit.
Tel Aviv trading followed the lowering of interest rates in Europe and China, the announcement by the Bank of England of a new asset purchase program and dismal employment figures released Friday in the United States.
Social protest hitting profits
On the local front, there was talk of how the renewal of the social justice protests could hurt the bottom lines of companies in Israel. Economists at Bank Hapoalim addressed the issue in their weekly survey, discussing how companies geared toward the local consumer market have to contend with the implications of the protests. The firms are faced with the possibility of not being able to raise prices and in many cases are forced to even increase discounts, lowering their profitability substantially.
A large number of companies have also had to contend with increased government regulation, the bank noted in the survey, particularly in the communications sector, which has already experienced decreased profitability. The bank is counseling clients to give priority to stocks of companies involved in basic sectors in which demand is relatively inelastic and in business concerns that pay generous dividends, thereby offsetting volatility in the shares' price.
Baran Group shares rose nearly 17% in trading on Sunday after an amended share offer by Russian tycoon Alexander Nesis. Baran operates in the technology, construction and engineering sector.
After the close of trade on Thursday, the news of the completion of the sale of a controlling interest in Clal Industries and Investments by IDB Development Corp. to Len Blavatnik's Access Industries became public. IDB Development sold a 49.9% controlling interest in Clal Industries, which owns interests in such companies as retailer Golf & Co and Hadera Paper. Blavatnik is an American-Jewish business mogul. The price tag on the transaction, NIS 1.27 billion, reflects a market cap for Clal Industries of NIS 2.55 billion. Clal Industries' stock closed 3.9% higher in trading on Sunday at NIS 12.53.