Israeli Shares Skid on Crisis Over Greece

Analysts believe Tel Aviv stocks will rebound quickly if Greeks exit the euro and declare bankruptcy.

AP

Tel Aviv joined falling stock markets around the world on Monday, the first bout of significant contagion from the Greek crisis after eleventh-hour talks between the near-bankrupt country and its creditors collapsed.

Talks between Greece and its creditors broke up after less than an hour on Sunday, raising the prospect of Athens being unable to repay $1.8 billion owed to the International Monetary Fund by the end of this month.

“The market has had a long time to prepare for [a Greek default] and has done what it can with what it sees on the horizon. But with situations like this, there is always an unknown factor,” Ashwin Bulchandani, head strategist at asset manager MatlinPatterson in New York, told Reuters. “Uncertainty freaks the market out. It makes it very, very nervous.”

But Top Alpha said the impact for the Tel Aviv Stock Exchange would likely be fleeting. “Volatility in the stock market is expected to remain high, but with an upward bias,” the investment house said.

“We believe the end of the crisis with Greece exiting the euro bloc and declaring bankruptcy will bring maybe a day or two of drops. But from then on, the stock market will climb in the absence of any alternatives and increased certainty.”

The benchmark TA-25 index ended down just over 1% on Monday at 1,674.05 points, while the TA-100 was down 0.9% on 1,440.23. Turnover was a moderate 1.45 billion shekels. Perrigo was the most active share of the day, rising 0.85% to 709 shekels.

Bank shares were mixed: First International was down 2.1% at 53.83 and Israel Discount off 2.4% at 6.97, but other lenders were up for the session. Bezeq lost 2.4% to 6.49 and Africa Israel Investments 3.95% to end at 3.21.

In the fixed income market, the government’s 10-year Shahar bond rose 0.44%, while its inflation-indexed Galil bond due in September 2023 strengthened 0.32%. The Tel-Bond 20, 40 and 60 indices were up as much as 0.64%. The government said on Monday that the May consumer price index rose 0.2% for a second month, in line with economists’ forecasts.

In foreign currency trading, the dollar gained 0.1% to 3.842 shekels, while the euro lost just 0.09% to 4.3077.

With reporting by Reuters