Market report / Real estate whimpers, chemicals roar

Tel Aviv stocks retreated Wednesday in a session marked by sharply falling real estate stocks. While the leading indexes were mixed with a negative bias, the Real Estate-15 index tumbled 4.3%, led south by large-cap stocks Africa Israel (down nearly 5%) and Elbit Medical Imaging, which lost 4.5%.

Total turnover was heavy at NIS 2.5 billion. Traders blamed the meltdown in real estate on fears that the companies will be releasing a wave of profit warnings for the second quarter.

The TA-25 index eased 0.3% to end at 1,115 points, and the TA-100 index fell 0.7% to close at 1,026 points. Wall Street began with moderate gains after U.S. Federal Reserve chairman Ben Bernanke broke a roughly two-month silence to indicate that he wouldn't be changing American interest rates for the moment.

In May, the government ran a surplus of a billion shekels. If it stays on the same track it seems likely to end the year balanced.

The fear of earnings warnings in the real estate sector didn't come out of the blue. Eliezer Fishman's company Industrial Buildings issued a warning, even though the second quarter isn't over yet. The company said it had borne financing costs of NIS 80 million because the jump in inflation had led to higher interest on its loans. That was enough to trigger a retreat from real estate, a sector highly dependent on borrowing.

Alony Hetz, another property stock, lost 2%. Formerly quite the market darling, Alony Hetz has lost half its value (see box).

Ocif, the local real estate vehicle of businessman Arcadi Gaydamak, dived 6.7%. The company's chairman, Shlomo Rothman, is stepping down after roughly a year, which had been widely expected in the capital market after Gaydamak brought businessman Uri Shani into his group as a sort of uber-manager. Rothman said he preferred to go into private business in energy and banking.

Israel Chemicals gained 0.4% on turnover that neared half a billion shekels, while its parent company Israel Corporation rose 2.1% on volume of NIS 177 million. While on chemicals, Makhteshim Agan gained 1.3% and its parent company advanced 5%.

Bee Contact wants to buy back all outstanding bonds, and ended unchanged after summoning its bondholders for a general assembly.