Market report / Africa Israel stock tumbles on Sell rating

Tel Aviv stocks ended flat, after losing fairly feeble morning gains. The TA-25 continued to hover above 1,000 points, a level of no significance whatsoever except, possibly, psychological. Yesterday the benchmark index closed 0.1% above the flatline at 1,043 points.

From the start of the year the TA-25 index has gained 72%.

The broader TA-100 index also gained 0.1% to end at 974 points, and the Real Estate-15 index advanced by 1.4%. In fact though, Israeli stocks were weak compared with other markets around the world: European shares hit a fresh 12-month closing high on Monday on increasing optimism for the third-quarter corporate earnings season. The FTSEurofirst 300 index of leading European shares rose 1.7% to 1,026 points, its highest close since October 3, 2008.

Total turnover was heavy at NIS 1.8 billion.

Yesterday the Central Bureau of Statistics published yet another indicator showing that the recession is over: Israel's trade deficit, meaning the gap between imports and exports, narrowed 58% in September to $500 million. That works out to $5.5 billion in annualized terms. In 2008, Israel's trade deficit was $13.2 billion.

Moving our gaze to Eilat, we find the tax commissioner, who addressed a conference of tax consultants who convened at the Red Sea resort city. The Tax Authority is starting to sense a recovery in economic activity, based on VAT payments, said Yehuda Nasradishi. From January to September inclusive, the taxman collected NIS 129 billion, which is NIS 2.5 billion more than it expected for that period.

Another upbeat item is that the Central Bureau of Statistics estimates that Israel's GDP will remain unchanged in 2009 compared with the year before. This is a good thing, considering that until now it had been predicting economic contraction this year. In 2008 Israel's GDP grew by 4%, and in 2007, by 5.2%. However, more important is GDP per capita, which is still expected to contract by 1.8% this year.

As last week closed, the world learned that the Israel's consumer price index had fallen by 0.3%, while economists had thought it would remain unchanged. Blame the pernicious tomato and other fresh fruit and vegetables for the discrepancy.

Onto some stocks: Psagot downgraded Bank Leumi from Buy to Sector Perform because its stock has risen so much. The investment bank's 12-month price target for the bank is NIS 16. Leumi closed yesterday at NIS 15.45 after losing 1%.

Africa Israel shares tumbled nearly 9%. Equities analyst Alon Glazer continues to recommend selling the stock: his 12-month price target is NIS 20, which is a cool 60% below Africa Israel's present price on the market.