Market Report / Israeli Stocks Set Two-and-a-half-year High

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The Tel Aviv Stock Exchange closed at a two-and-a-half-year high Sunday, making up losses incurred Thursday when index compositions were rebalanced. Shares were pulled up by optimism and arbitrage gaps that opened over the weekend.

The U.S. government shutdown, now entering its second week, had little effect, but a solid gain by Teva Pharmaceutical Industries did. All the leading indexes closed in the green. The blue-chip Tel Aviv-25 Index climbed 1.4% to close at 1,275 points, more than correcting for the 1.1% loss on Thursday, while the broader Tel Aviv-100 rose by the same percentage to close at 1,153 points. The Banks-5 gained 0.8%, the Real Estate-15 1.7% and the communications sector rose by 1%. Total turnover was NIS 813 million.

The upturn followed U.S. gains on Friday. Meanwhile the dollar is hovering near an eight-month low against the shekel on fears the budget standoff in Washington will drag on until politicians reach a deal to raise the U.S. debt ceiling.

A tailwind also came from European shares, which rose on Friday, led by Italian stocks and banks as investors welcomed a more stable political outlook in Italy and bet that the European Central Bank would continue to support the region’s financial sector. In Asia, Hong Kong shares slumped and Japan’s Nikkei average fell to a one-month low on Friday.

In Israel on Sunday, electronics and weapons manufacturer Elbit Systems announced that its wholly-owned subsidiary Elop had signed a $33 million follow-on contract to supply its Digital CoMPASS electro-optic payload systems. The equipment will go to helicopters of an Asia-Pacific-region air force. Elbit Systems shares gained 1.8%.

Teva Pharmaceutical Industries and Sweden’s Active Biotech said over the weekend that a Phase III clinical trial of laquinimod, an oral treatment for multiple sclerosis, demonstrated a beneficial impact on brain-tissue damage. Teva gained 1.6%.

Meanwhile, the Israel Securities Authority asked Electra Real Estate to explain how the value of an asset in Germany dropped 40 million euros over one year. The company valued the asset at 63.5 million euros in December 2010, while a financing bank put the figure at only 25.9 million euros in November 2011. Electra fell 1.2%.

Medical device company Brainsway finished raising NIS 24 million in a share issue at close to the market price on Thursday. It also received $1 million from the Japanese distributor with whom it signed a contract several weeks ago, in exchange for the right to be the sole distributor of Brainsway’s instrument for treating depression. Brainsway gained 3.4% Sunday.

With reporting by Reuters.

Inside Teva Pharmaceuticals. Credit: Ofer Vaknin

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