Market Report / Mellanox Tumbles on TASE Delisting

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The decision by semiconductor company Mellanox to quit the Tel Aviv Stock Exchange sent its stock into a tailspin Sunday, taking the rest of the market with it.

Mellanox finished down 12% at NIS 182.10 as NIS 47.3 million in shares changed hands – 9% of the day's NIS 525.9 million turnover.

Mellanox CEO Eyal Waldman said over the weekend he wanted to delist the company – the sixth largest on the TASE by market capitalization – though it would continue to be traded in the United States. The company cited the burden of reporting to the regulatory authorities, which has eaten into management time.

The TASE said Sunday that Mellanox's last day of trading would be August 29 and that it would be removed from the benchmark TA-25 index on September 1. The TA-25 ended down 0.8% at 1,222.60 points, while the TA-100 eased 0.5% to 1,102.09.

But investors had other reasons than Mellanox to sell. Wall Street ended sharply lower Friday, with the S&P 500 posting consecutive weekly losses for the first time since November. Investors are retreating after a seven-month run of gains.

Traders attributed some of the selling to global index rebalancing and a reallocation of investments to bonds from stocks, though a desire to protect profits contributed to the exodus late in the session.

The Dow Jones Industrial Average slid 1.4% to close at 15,115.57. The Standard & Poor's 500 Index lost 1.4% to finish at 1,630.74 and the Nasdaq Composite Index fell 1% to end at 3,455.91. For the week, the Dow fell 1.2%, the S&P 500 1.1% and the Nasdaq 0.1%.

European shares slid to a one-month closing low Friday, hit by profit taking at the end of 12th straight months of gains. The FTSEurofirst 300 index finished 0.9% down at 1,216.17 points, the lowest close since early May.

Assaf Shaul, deputy CEO for investments at Alfa Platinum Investment Management, said the global sell-off would be limited as long as interest rates and bond yields remained low.

"We'll continue to see money flowing to risk assets, which supports the stock market," he said. "In light of the underperformance on Israeli share indexes compared to the rest of the world this year, we prefer to give more weight to Israeli equities, with a certain exposure to the U.S. market."

In the currency market Friday, the dollar gained fractionally against the shekel to NIS 3.6830. The euro added 0.4% to NIS 4.7988.

The government's10-year shekel bonds rose gently to yields of 3.74%. Inflation-indexed 100-year bonds rose 0.2% to yield 1.43%.

IDB Holding Corporation's Series Dalet bonds soared 9.6% after Nochi Dankner's holding company over the weekend presented a debt-rescheduling plan that included some NIS 280 million in fresh capital from Argentine investor Eduardo Elsztain. The bonds are still trading at junk yields of about 57%. The stock rose 9.4%.

Alon Blue Square, whose holdings include filling stations and supermarkets, sank 8% after it reported a NIS 31.9 million first-quarter loss from continuing operations. That compared with a NIS 5.6 million profit a year earlier.

Meanwhile, Biopharmaceutical company Kamada sold some $52 million of shares in New York last Thursday at a discount to their TASE close that day. Kamada shares rose in their first day of Nasdaq trading Friday, but not enough to close the gap. The stock dropped 6.6% in Tel Aviv on Sunday.

Bank Leumi fell 1.2% to NIS 12.77. Three days after the bank reported disappointing first-quarter results, Leader analyst Alon Glazer cut his target price for the stock to NIS 14.80 from NIS 15.50 and lowered his rating to Market Outperform from Buy.

Babylon, the online translation company, ended 1.4% higher after it said it bought Israeli startup Woolik for NIS 8 million in cash and shares. Woolik has developed technology for personalizing search-engine pages.

With reporting by Reuters.

Mellanox CEO Eyal Waldman.Credit: Ofer Vaknin

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