Corporate Bonds Sink, Stocks Steady

The benchmark TA-25 index closed at 1,236.98 points, virtually unchanged from the day before, while the broader TA-100 index edged down 0.1% to 1,101.51 points.

Equities trading on the Tel Aviv Stock Exchange Monday lost the limelight to the bond market, whose Tel Bond indexes all posted drops of about 0.4% in what some analysts said marked the beginning of a correction to a six-month rally.

The Tel Bond-20 index fell 0.46%, to 297.10 points, while the Tel Bond-40 was off 0.42%, to 284.17 points and the Tel Bond-60 dropped 0.44%, to 291.74 points.

Citing the quiet trading in stocks Monday, David Resnick of Leumi Capital Markets said the drop was simply a correction rather than a change of direction for corporate bonds, which had risen 9% in the past six months bringing their spread with government bonds to nearly the levels that had prevailed before the 2008 financial crisis.

Government bonds also fell Monday, albeit more moderately, after yields overseas for government debt rose. Five-year shekel bonds fell 0.02% to a yield of 3.04% while inflation-indexed bonds for the same period dropped 0.18% to a yield of 0.81%.

The benchmark TA-25 index closed at 1,236.98 points, virtually unchanged from the day before, while the broader TA-100 index edged down 0.1% to 1,101.51 points. Just NIS 788 million in shares changed hands. Among the sector indexes only the Banks-5 index ended higher up 0.2% rise to 1,189.22 points.

Insurance stocks led the market lower. The TA-Insurance index fell 1.2%, to 1,274.21 points, while Phoenix ended down 3.5% and Menorah 2.2%.

European stock prices dipped Monday as weak economic data from China and worries about Italy following a credit downgrade undermined optimism generated by last week’s strong U.S. employment report. U.S. stocks were little changed.

Europe’s broad FTSEurofirst 300 index was 0.15% lower at 1,193.43 points. In late-morning trading, the Standard & Poor’s 500 Index was up 0.05% at 1,551.90 points and the Nasdaq Composite Index was down 0.08% at 3,241.93 points.

In currency trading, the euro was down a steep 0.9% against the shekel to a Bank of Israel rate of 4.7967. The dollar was lower 0.14% at NIS 3.69.

TowerJazz, the semiconductor foundry, led TA-100 shares higher, advancing 7.6%. The company said Monday that it has made significant market share gain in the fast-growing front-end module market, providing its silicon radio platform for smartphones and other mobile systems and is well placed to manufacture a major portion of the devices for the multibillion dollar market.

A market source who asked not to be identified told Reuters that TowerJazz’s revenue in FEM could reach hundreds of millions of dollars annually within three to four years.

Pharmaceuticals maker Kamada advanced 1.9% ahead of its Nasdaq stock offering. The company reported that fourth-quarter 2012 net profit soared 570% to $3.1 million as industrial sales climbed 18% to $15.9 million. Discount grocer Victory dropped 10.9% after it reported a 4.3% drop in same-store sales for the fourth quarter of 2012 compared with the same time a year earlier.

In the bond market Habas continued to decline, with its Series 12 bonds down 28.9% and its Series 4 down 12.6% on rumors that the company will not be able to meet its repayment deadline.

With reporting from Reuters.

Reuters