Government bonds
Government bonds
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Israeli shares rose
Israeli shares rose
Shekel
The shekel altered course

Despite the predictions of economic gloom and doom, 2012 did not pan out too badly for investors.

Europe's debt crisis worsened and the European Union is not out of the woods yet. The U.S. economy continued to muddle through, as the national debt reached dizzying proportions. Growth slowed in the major emerging economies of China, India and Brazil.Most of the world's stock markets stumbled along or fell in the first half.

Until September Israel's capital market behaved as if in deep distress: Share prices tumbled, trading volumes thinned, there were debt restructurings and partial defaults, and bank shares sunk on fears of a spike in provisions for bad loans.

But then the market seemed to turn around. Turnover rose, stock and bond prices began to climbs and money began flowing into mutual bonds. At the same time foreign markets began gaining momentum, helping Israel's capital market to end the year on a positive note.

Stocks: Banks rallied

After a hesitant start the Tel Aviv Stock Exchange began to catch up with foreign exchanges. The broadl-based TA-100 index ended the year up 7.2%, compared with an average weighted gain of 13% for the MSCI World index. The benchmark TA-25 index climbed 9.2%, albeit 11% shy of its record high of April 2011.

Daily turnover stabilized at NIS 1.1 billion in 2012, 40% below 2011 levels. Only NIS 3 billion was raised in new issues, comparedwith NIS 5 billion in 2011 and NIS 13 billion in 2010. The year's biggest issues were from IDB Holding Corporation (NIS 320 million ) and TowerJazz Semiconductor (NIS 300 million ).

A total of 44 companies were delisted, reducing the number of companies trading on the TASE from 593 to 552.

Banks, which gained 23% on average, were the year's star performers. Leading the sector up was First International Bank of Israel, whose share price jumped 60%.

The MidCap-50 index, up 22% on the year, included three companies whose share prices more than doubled: XTL Biopharmaceuticals, which focuses on developing treatments for multiple myeloma, schizophrenia and hepatitis C; Perion Networks, whose flagship product is IncrediMail; and surgical guidance systems developer Mazor Robotics.

The technology index rose 18%, led by Babylon and Mellanox. The TA Real Estate-15 index gained 15%, with Alony Hetz jumping 46%. The worst performance was registered by the telecommunication index. It shed 34% of its value as a result of Cellcom's 45% drop. The TA Oil & Gas index slid 2%.

Bonds: Turnover jumped

The bond market made a comeback in 2012. Daily turnover rose 10% over 2011, to an average of NIS 4.1 billion. The annual return on the general bond index in 2012 reached 8%, compared to just 3% in 2011. The volume of corporate bond trading rose 13%, to a record daily average of NIS 1 billion. NIS 36 billion was raised in corporate bond issues, down 11% from 2011.