Market Report / Tel Aviv Ends Down in Heavy Trading

Lower global markets and a blow to the TASE hurt Israeli shares; starting next week, the exchange will stay open an hour later.

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Israeli shares ended down on Thursday, depressed by lower global stock markets and the failure of the Tel Aviv Stock Exchange to gain admittance to the MSCI Europe Index for developed countries, a change that TASE CEO Ester Levanon said would have brought some $21 billion in foreign capital to the market.

Turnover, however, ballooned to NIS 2.93 billion – nearly triple the level of a typical active trading day – with a whopping NIS 765.1 million in shares of Mellanox accounting for nearly a third of the total. The semiconductor company, whose shares rose 1.6%, is leaving the benchmark TA-25 index as of next week and the TASE altogether at the end of the summer.

The TA-25 closed 0.5% down at 1,222.13 points, while the broader TA-100 index lost 0.8% to a close to 1,093.11. The indices were both lower for the week. The TA-25 was down 0.3%, cutting its year-to-date advance to just 3.1%. The TA-100 was off 0.8%; its year-to-date return is now just 4.2%. The week's star performer was the TA-Communications index, which climbed 2.6% to bring its year-to-date gain to 10.2%.

As of next week, the TASE's trading day will close an hour later at 5:30 P.M. Mondays through Thursdays as the exchange tries to lure more foreign investors by extending its overlap with the American trading day. Also on Sunday, EZchip, which fell by 2.5% in heavy trading, will leave the TA-25. It will be replaced by Migdal Insurance, which gained 1.8% on Thursday, and First International Bank of Israel, which edged 0.2% higher.

Mellanox was not the only heavily traded stock on Thursday. Gazit Globe rose 0.8% to NIS 47.98 on turnover of NIS 183.5 million, after the property company raised what it said on Thursday would probably amount to NIS 580 million in one of the biggest share offerings in Israel in years. Demand reached NIS 670 million, forcing the company to extend the sale by a second day.

Among other volume leaders on Thursday, Israel Chemicals saw NIS 134.7 million in shares change hands, although its share price ended the day virtually unchanged. Yitzhak Tshuva's Delek Group rose 2.4% on turnover of NIS 127.1 million.

Most global stock markets fell for a third straight day on Thursday, and the U.S. dollar hit a 10-week low against the yen, as investors unwound bets linked to central bank stimulus measures that have buoyed many asset markets.

The slide has been triggered by comments from policymakers at the U.S. Federal Reserve, which meets next Tuesday and Wednesday, about when to start scaling back its huge bond-buying program.

The MSCI All-Country World Index fell 0.4% to 360.41. The FTSEurofirst 300 index of top European shares, down as much as 1.1% during the day, provisionally closed flat at 1,174.57 points, while the blue-chip Euro STOXX 50 index ended 0.1% lower at 2,664.94 points.In late-morning trading on Wall Street, however, the Standard & Poor's 500 Index was up 0.3% at 1,617.51, and the Nasdaq Composite Indexwas up 0.3% at 3,410.09.

In foreign-currency trading, the dollar weakened 0.3% to a Bank of Israel rate of NIS 3.6150, while the euro edged up to NIS 4.8146.

"Breaking [below] the NIS 3.60 level is likely to exacerbate its declines and put an end to the dollar's rising trend," said currency trader FXCM. "It will be interesting to see how the Bank of Israel behaves at current levels and if it will opt to intervene again. The daily threat of intervention acts as a deterrence, but the negative drift of the dollar in global trade may tip the scales."

Teva Pharmaceuticals fell 2.4%, extending a 1% drop from Wednesday. The world's biggest maker of generic pharmaceuticals had an unusually bad week, after it emerged that two more people in France had died after taking medication that was mislabeled, and the company agreed to pay$1.6 billion to settle a patent suit with Pfizer.

Online-translation company Babylon rose 1.6%, after it said it would pay shareholders of record on June 20 a dividend of NIS 1.61 per share, or an aggregate NIS 80 million.

Reuters contributed to this report.

At the entrance to the Tel Aviv Stock Exchange, 2011.Credit: Bloomberg