TA-25 breaks 1,000-point barrier

Stocks opened the shortened Yom Kippur trading week in a frenzy as the Tel Aviv Stock Exchange showed big gains across the board yesterday. The TA-25 rose 1.9% for the day to break the 1,000-point barrier, and remained there as the blue chip index ended the day at 1,016 points. The TA-100 jumped 2% to close at 947 points. The Banks-5 jumped 2.9% yesterday and the Real Estate-15 rose 1.7%. Turnover was a somewhat high NIS 2.1 billion.

The last time the TA-25 was over 1,000 it was on its way down, in September 2008.

The TA-25 opened 2003 at 335 points, which means it has risen 200% in the nearly seven years since then. At its peak in December 2007, the blue chip index hit 1,237.12 points - so despite breaking the psychological barrier yesterday, the index is still more than 200 points below its all-time high. In 2008 the TA-25 lost 46% of its value, bottoming out in December 2008 at 654 points.

The TA-25 was set at 100 points at the beginning of 1992, and has risen 916% since then. This translates into a 13% nominal annual return. Inflation was an average of 4.7% annually during that period, so the average net return on the index since 1992 was 7.9%.

Despite the optimism of recrossing the 1,000-point level, since the beginning of August when the TA-25 reached 986 points, the index has been pretty much treading water, with small ups and downs. In general, analysts are quite divided about where the markets are going and the 1,000-point barrier has little meaning in the large scale of things.

The real test facing the markets is the upcoming debt restructuring and rescheduling agreements. Not only giants such as Africa Israel and Zim are in the process of reworking their debts, but many smaller firms are also in trouble and weighing down both the bond and stock markets - even though the Bank of Israel wrote last week, as it announced that it was leaving October rates unchanged, that the economic atmosphere in Israel is one of a recovery from recession.

European shares closed higher yesterday, with banks gaining. The pan-European FTSEurofirst 300 index rose 0.2%. Asian markets were mixed as the Nikkei was up by almost 1% after two days of losses and Hong Kong rose 2.1% for the first time this week, but Shanghai shares were down slightly in advance of a week off, from October 1 through October 8 for the National Day holiday.

And now to individual shares: Teva rose 0.5% yesterday. The generic pharmaceutical manufacturer's senior management is optimistic about sales of its Azilect treatment for Parkinson's, which they expect to turn into a best-seller of at least $1 billion a year.

Africa Israel gained 3.4%. The company attracted quite a bit of investor interest in the wake of its debt restructuring negotiations with institutional investors. (See stories, Page 8.)

The Israel Corporation gained 1.2%.

Bezeq jumped 4.7%. Tomorrow the TASE will increase the phone company's weighting on the TA-25 - from 7.3% of the index to 9.2% - as part of its regular periodic rebalancing. (See story, Page 8.)

The dollar opened the foreign currency trading week yesterday with a small gain, as it rose 0.1% against the shekel to a representative rate of NIS 3.774. Since the governor of the Bank of Israel, Stanley Fischer, announced as expected last week that he was keeping October interest rates unchanged at 0.75%, the dollar has only gone up. However, it is still down 4% against the shekel since mid-August. Yesterday the U.S. currency also rose in world markets.

One of the large forex trading rooms said foreign banks were buying dollars yesterday morning, as was one large Israeli bank.

The euro fell 0.6% against the shekel yesterday to a representative rate of NIS 5.497.

The dollar also came under pressure in world markets after the president of the World Bank, Robert Zoellick, said the U.S. Treasury, not the Federal Reserve, should gain greater power to marshal financial regulation and warned that the dollar's future will "depend heavily on U.S. choices."

"We have yet to see whether central banks can handle the recovery without letting inflation get out of control," he said, adding that this will be crucial in determining whether the dollar retains its lead role as a global reserve currency.

"Of course, the U.S. dollar is and will remain a major currency. But the greenback's fortunes will depend heavily on U.S. choices. Will the United States resolve its debt problems without a resort to inflation?" Zoellick said.