Wednesday was a dramatic day on the Tel Aviv Stock Exchange, with declines on the leading indexes. Trading came against the backdrop of news that the CEO of Teva Pharmaceutical Industries, Jeremy Levin, had resigned and that Google, a key customer of Babylon, the translation software firm, would not be extending its contract with the Israeli firm. Babylon shares lost over 62% of their value on Wednesday alone.
The benchmark Tel Aviv-25 index closed 0.5% lower at 1,283.08 points while the broader Tel Aviv-100 index slumped by 0.75% to 1,158.64 points. The Technology index lost 2.9% of its value. The Banks-5 index bucked the general trend and rose by 0.9% while the Real Estate-15 remained unchanged. Volume was heavy at NIS 1.33 billion.
Bablylon's Internet advertisement revenue-sharing deal with Google, set to end Nov. 30, was a major source of income for the company, accounting for 43% of its second-quarter revenue of $45 million. Babylon's stock price had already been suffering since the company announced last week that Yahoo, which provided 32% of revenue in the same period, had found faults in the way its own agreement was being handled. "We are still assessing the situation and examining the implications and the company's operation alternatives," CEO Alon Carmeli said in a statement to the Tel Aviv Stock Exchange. "It is too early to give one estimate or another on the full impact of the events and the course of action Babylon will choose to take," he said.
The collapse of Babylon's share price pulled down the shares of other high-tech firms as well. Perion Network declined by almost 10%. Somoto lost fully 24.2% of its value on the day's trade and Whitesmoke Software plummeted by 11.8%.
Trading in Teva halted in midday
Trading in Teva stock was halted followed the announcement of its CEO's departure, but when it resumed, shares of the company, the world's largest generic drug firm, ended the day 6.6% lower. Trading resumed at 2:45 P.M. Prior to the stop of trade it had been down 0.5%.
Shares in the country's largest supermarket chain, Super-Sol, which is part of Nochi Dankner's IDB group, ended the day 2.8% lower despite the company's announcement of improved third-quarter operating profits. The increased number of stores and sales space, the timing of the fall Jewish holidays and higher prices reportedly contributed to the operating profits, but it had lower net profits.
In contrast to the overall trend on the Tel Aviv exchange yesterday, the bond market showed gains. The Tel Bond indexes rose up to 0.1%. On the government bond front, index-linked 10-year bonds rose by 0.26% while unlinked bonds of the same duration were 0.02% higher.
A gauge of global shares rose to its highest level in almost six years Wednesday on expectations that the Federal Reserve would keep its current stimulus program intact, while the U.S. dollar edged lower internationally, giving support to gold and copper prices.
Europe's broad FTSEurofirst 300 index reached its highest point since mid-2008, buoyed by earnings, including those of Volkswagen and clothing retailer Next, before dipping less than 0.1% towards the close. The MSCI world equity index hit an intraday level not seen since early 2008.
With reporting by Reuters.
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