Market report / Gas, oil stocks soar on feeble market

Tel Aviv stocks ended mixed with a negative bias yesterday, clawing back some ground at the end of a session that had been marked by intense selectivity. Africa Israel stock gained about 10% on news that a debt arrangement had finally been ironed out with its bondholders.

Ofer Mariash, CEO of Mercantile Mutual Funds, heaped scorn yesterday morning on oil & gas exploration stocks, saying they are nothing more than casino gambles. Serious investment banks don't keep track of corporate announcements that spur speculation, Mariash said, adding they focus on "sectors worthy of long-term investment." Givot Olam, the exploration partnership that lost 1.4% in market value yesterday, has a considerable history of issuing announcements devoid of any real basis, he said, concluding: the euphoria will dissipate as quickly as it developed.

Regarding the banks, Mariash says investors should be highly selective this year, not look at them as a single sector. Apropos of banks, this week America's will be releasing their fourth-quarter financial statements, he added.

Mariash may be clammy on gas and oil stocks, but the rest of the investment community had their eyes glued on the sector. While the benchmark TA-25 index lost 0.2% to close at 1,156 points and the broader TA-100 index eased down by 0.1% to close at 1,091 points, participation units of exploration company Modiin surged up 7.7% after it announced it will be asking for permission to explore for fossil fuels in the Mediterranean Sea, off the Ashdod coast. It will be applying for a permit together with two other partnerships: Lapidoth-Heletz, units of which gained 68% yesterday, and a third entity in stages of incorporation. Modiin's part in the threeway partnership would be 45%, Lapidoth will have 30% and the third entity will have 25%.

Africa Israel stock jumped by more than 10% after the real estate company announced a new mechanism to bondholders. Holders of 16-year bonds will get NIS 3.59 billion instead of NIS 3.576 billion, as demanded by Roy Vermus' investment firm Psagot. The Sereis B9 bondholders who had been supposed to get NIS 560 million in November 2009 (but didn't) will get 45% of the adjusted value of their bonds in cash (NIS 250 million). The rest of their money due will be paid in shares of Africa Israel and its subsidiaries and in new bonds.

Can FITE stock gained 8.2% after the company said it had signed a memorandum of understanding for Morningside Asia Venture of Hong Kong to distribute its drug CF-102 in China.

By the way, for what it's worth, Psagot's Roy Vermus said last night that he doesn't feel the level of Israeli stocks has reached bubble proportions. Now you know.