Market Report / Israeli Shares Swing to Gains After String of Losses

The TA-25 blue-chip index finishes the first half with a meager 0.4% gain, though real estate and insurance did well.

The Tel Aviv Stock Exchange ended an eight-session losing streak Sunday with Teva Pharmaceutical Industries and The Israel Corporation leading the modest rise.

The benchmark TA-25 index ended 0.07% higher to finish at 1,190.50 points. The broader TA-100 inched up 0.18% to 1,071.45. But turnover was a paltry NIS 461.7 million, and the month was a rough one for the TASE, with the TA-25 down 3.4% and the TA-100 down 3.3%.

Teva led the most actives, although it only needed a modest turnover of around NIS 45 million to take the top spot. The stock rose 0.6%. The world's biggest maker of generic drugs will spend about $200 million to double its production capacity in Japan as the country looks to contain its health care costs with generics, the Japanese financial daily Nikkei reported last week.

Israel Corporation rose 2% as NIS 14.9 million in shares changed hands. Idan Ofer's holding company said last week it planned to split in two, with one company taking Israel Chemicals and Oil Refineries Ltd. and the other the rest of the group’s extensive holdings including TowerJazz and a Chinese auto-making venture.

In the United States, the S&P 500 ended Friday with its strongest first half of any year since 1998 after reaching record highs in May on a rally underpinned by the Fed’s massive monetary stimulus.

While the S&P 500 closed lower for June on concerns that the Fed might begin reducing its bond-buying program, the benchmark index ended the second quarter with a gain – its first positive second quarter in four years.The Dow and the S&P 500 fell in Friday's volatile session, ending three straight days of gains. The Dow Jones industrial average fell 0.8% to close at 14,909.60, while the S&P 500slipped 0.4% to finish at 1,606.28.

By contrast, European shares registered their first quarterly loss in a year and their first monthly loss since May last year as investors worried about when central banks would stop pumping money into the markets. The pan-European FTSEurofirst 300 index reversed early gains to close 0.5% lower at 1,152.17 points on Friday, a 5.3% drop for the month.

In Israel, the TA-25 ended the first half of the year Sunday with a mere 0.4% gain, but Ariel Mazuz, investment manager at Prico Risk Management, said the TASE's performance wasn’t as bad as the benchmark index suggested.

"While the TA-25 is way behind world stock markets, the other TASE indexes haven’t performed badly at all," he said. "The TA-MidCap 50, the TA-Biomed, the Real Estate15 and the TA-Insurance index have turned in relatively good performances since the start of the year."

Mazuz recommended a relatively low weighting for TA-25 stocks and higher ones for the TA-75 and TA-MidCap 50 indexes. He recommended avoiding bonds because of unattractive pricing, "to say the least."

The bond market was higher on Sunday, with the Tel-Bond indexes strengthening by about 0.3%. The government's 10-year unlinked bond gained 0.55% while its unlinked bonds for the same term edged 0.02% higher.

In foreign currency trading on Friday, the dollar slipped more than 0.8% to a Bank of Israel rate of NIS 3.6180. The euro fell 0.6% to NIS 4.7197.

Among the biggest gainers in the TA-100, Given Imaging, the maker of a camera in a capsule to diagnose digestive ailments, rose 3.7%. Biotech company Kamada climbed 3.1% and Clal Biotechnology 2.4%. On the losing side, biotech companies Evogene and Compugen fell 2.9% and 2.7%, respectively, and food maker Strauss dipped 1.9%.

Chipmaker TowerJazz rose 1.1% after it said it had taken in $22 million in a rights offering.CEO Russell Ellwanger said 90% of all available rights were exercised, with controlling shareholder Israel Corp. accounting for about $10 million of the total.

Fashion retailer Fox rose 2.3% after it said it had signed an agreement to sell apparel under The Children's Place label. The brand is among the biggest in the children's segment in North America.

With reporting by Reuters.

Bloomberg