All investment instruments have jumped since elections were declared on November 5.
The indexes on the Tel Aviv Stock Exchange gained about 10 percent, and bonds climbed 9 percent. The currency gained about NIS 0.1 against the dollar.
Prime Minister Ariel Sharon's statement about coming elections came after a long crisis in the financial markets. On November 5, the Tel-Aviv 25 was at 325 points and the Tel-Aviv 100 at 322, a three-and-a-half-year low. Shekel bonds were traded at yields of more than 12 percent, and indexed bonds at yields of 6 percent. But within one day of Sharon's announcement, the trend seemed to reverse.
Market sources explain that several factors were at play here. Before Sharon's announcement, concerns were mounting that after the Labor Party pulled out, the coalition would be unable to pass the budget bill and would have to cave in under parochial pressure. Concurrently, the sharp rises on Wall Street over the last month-and-a-half were a positive influence on trading in Tel Aviv. Signs that U.S. guarantees would be given also contributed to the positive trend.
Economists also explain that the market cap of many stocks on the TASE is far lower than their actual value. The fact that many major shareholders are now trying to increase their holdings proves this premise.
Also, in the last few days several quarterly reports indicate that companies are outperforming the predictions of analysts, including those of Teva Pharmaceutical Industries, Israel Chemicals, Osem, Agis Industries, Delta and Castro.
One of the main reasons for the stable currency trade and the strengthening of the shekel is the large difference between the interest rates in Israel and in the U.S., which leads investors to sell dollars and purchase shekel bonds.
Another factor is the nearing of the tax reform; in recent weeks funds that invest in tax-exempt instruments have been in high demand. These funds buy treasury bills (makam) and various bonds, which explains the jump in the price of these instruments over the last few weeks.
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