Market Report New York Drags TA Down

Ami Ginsburg
Ha'aretz Correspondent
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Ami Ginsburg
Ha'aretz Correspondent

Traders on the Tel Aviv Stock Exchange were not expecting a terrific Sunday following the dreadful weekend on the U.S. exchanges. Thursday's tumble on Wall Street sent the Dow Jones index down 4.6 percent to a level lower than its post-September 11 trough.

Tel Aviv indices followed suit Sunday, though not quite on the Dow's scale. At the end of the day, the Maof blue chip index had lost 1.2 percent to close 381 points, while the Tel Aviv 100 lost 1.4 percent and the Tel-tech slipped 2.3 percent. The last is technology-heavy and is considered linked more to the U.S. indices, and therefore its greater fall yesterday was not surprising. Turnover on the exchange yesterday was higher than average at NIS 268 million.

Much of Wall Street's woes stem from a collapsing faith in accounting standards, with a series of cases of misreporting. On Friday, it was revealed that the healthcare products company Johnson & Johnson was being investigated for accounting misreporting on its Puerto Rico plant. Its share plummeted 16 percent on the announcement.

Teva Pharmaceuticals, the generic drugs company, was dragged down in New York along with the flow, and opened yesterday with a 4 percent arbitrage gap. Its share obliged by dropping 4 percent in Tel Aviv yesterday, while the company, as usual, attracted the largest turnover on the exchange with NIS 38 million volume.

Bank Leumi took a similar drubbing. Its share lost 4 percent. As with the other Israeli banks, Leumi is trading significantly below its equity level, apparently as investors wait for the banks to report heavy losses. Leumi's losses are expected to stem mostly from provisions for doubtful debts, particularly in its telecoms portfolio.

The Koor industrial concern also lost 4 percent of its value yesterday. The share had soared 9 percent last Wednesday (the last trading day last week) on unfounded rumors that Bank Hapoalim had sold its 21 percent stake in Koor. The share continued to rise despite denials of the story even on the same day. Yesterday's share drop still leaves Koor trading 5 percent up on Wednesday morning.

Israel Discount Bank surprisingly beat the market trend with a rise of 4 percent on high turnover of NIS 13 million. The bank has been sweeping the business press of late with the heated competition among suitors for its New York subsidiary. Once news broke of Bank Hapoalim eyeing the lucrative New York business, others including Leumi, Leon Recanati and the Safra brothers have been flocking to the honeypot. The current price of the New York bank is hovering around $800 million, 21 percent higher than Discount's market value. If the deal does go through at such a price, the parent company will be notching up a welcome profit.

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