Market Report/ Lapid-prompted Sell-off Accounts for Fifth of Day’s Trading

Following the finance minister’s announcement that he would oppose the sale of Israel Corporation’s Stake in Israel Chemicals, shares in both companies plummeted.

The trading day on the Tel Aviv Stock Exchange Wednesday started well following gains on Asian exchanges earlier in the day and positive news on Wall Street Tuesday. Share prices in Tel Aviv were 0.6% higher on the whole in early trading but were then dampened on news that Israel Finance Minister Yair Lapid would be convening a committee to take another look at the state's take in the exploitation of the country's natural resources.

Lapid said explicitly that he would oppose the sale of the Israel Corporation's stake in Israel Chemicals to the major Canadian fertilizer firm Potash Corporation. Shares in Israel Chemicals, which is itself a major international player in the fertilizer industry, plummeted along with those of its controlling shareholder, the Israel Corporation. 

The benchmark Tel Aviv-25 Index still finished 0.24% higher for the day at 1,232.23 points, while the broader Tel Aviv-100 Index finished the day up 0.34% at 1,098.47. The Banks-5 index rose by 1%, while the Real Estate-15 index added 0.7%. The Israel Corporation closed 5.9% lower, losing NIS 1.2 billion of its value. Israel Chemicals lost 3.8% on huge turnover of NIS 145 million, fully 16% of the market's entire day's trading volume of NIS 608 million, and the two companies together accounted for about a fifth of trade.

Israel Corporation's Idan Ofer has been in negotiations to sell the company's holdings in Israel Chemicals to Potash Corporation. Israel Chemicals operations include mining minerals from the Dead Sea. The Israel Corporation's shares were also affected by its plans to attempt to reschedule the debt of its Zim shipping lines subsidiary.

Among other shares, cellular service providers Cellcom and Partner, which does business as Orange, were standouts, rising by 4% and 1.6% respectively. The gains pushed the communications index up by 2.1% for the day. On Tuesday, the two firms' shares rose by as much as 9% on rumors, which later proved unfounded, that their competitor Golan Telecom was in serious financial trouble. A more enthusiastic outlook by the Excellence investment firm, which issued a buy recommendation for Cellcom, also helped.

Elbit Systems gained 5% Wednesday. The firm announced earlier in the week that it would release its first quarter financial results on May 8. On Tuesday, Union Bank increased its target price for the company's shares from $40.40 to $45.10, a premium of 8.9% on the stock's price before the recent gains.

Jerusalem Economy shares lost 2.5% Wednesday after the extent of its exposure to the Cypriot banking crisis was revealed. The company, which is controlled by Eliezer Fishman, disclosed that it and companies that it controls have between NIS 32 million and NIS 56.2 million deposited in Cypriot banks.

Teva Pharmaceutical Industries' shares were up somewhat Wednesday after losses in March that have been attributed to the U.S. Food and Drug Administration's approval of a competitor's drug for the treatment of multiple sclerosis, which could eat into the market for Teva's Copaxone. Teva shares gained 0.2% in Wednesday trading in Tel Aviv after declining in New York Tuesday. Shares of Shemen Oil and Gas Resources gained 10.4% Wednesday on trading volume that was three times its daily average. The company is in the midst of drilling operations at its Yam 3 drilling site, which are expected to be concluded at the end of May.

European shares extended gains in late afternoon trading Wednesday with encouraging Chinese import data and a record high set by a leading U.S. stock index prompting investors to snap up growth-linked stocks. The FTSEurofirst 300 index of top European shares was up 1.9% in the late afternoon at 1,187.36 points after hitting an intra-day high of 1,187.61. The index was on track to record its best one-day gain in more than a month. In the United States, the Standard & Poor's 500 index hit a fresh all-time high, helped by technology and financial stocks.

With reporting by Reuters.

Reuters