Daily Roundup / Is Shelly Poison for Stocks?

Comverse cuts more staff, Ashdod oil refinery nets a major client and whence the quadruple turnover in ICL? Cherchez les foreigners.

The Shelly effect? If the Labor Party under Shelly Yacimovich joins the next governing coalition, Israeli stocks will take a hit, predict economists at the Excellence brokerage. That applies even if she joins a coalition headed by Benjamin Netanyahu, who is widely expected to win today's election. Why the down on Shelly? Historic data shows the Israeli market smiles on left-center victories. But this time things are different, they postulate at Excellence. In the absence of a clear diplomatic agenda, they elaborate, and based on Yacimovich's stated economic concepts, her joining the coalition would be "powerfully bad for the capital market." And if she wins the election outright? Unlikely that would happen but it would be a "horror scenario" for Israel Chemicals and for the oil & gas pack, they say at Excellence. Now you know.

Comverse cutting back more, fires 3% of workforce: Software group Comverse is firing 120 more employees in the next phase of its efficiency drive announced last September. Of the 120, a quarter work in Israel. It's just 3% of its 4,000-man workforce and the dismissals were confined to administration and finance: The R&D and products divisions weren't touched. During 2012 Comverse fired hundreds of people: The company is still working at overcoming the debacle caused by an options-backdating and fraud scandal and more immediately, is hurting from people moving from voicemail to texting. Leaving voice messages is so 2000s.

Paz's refinery gains big client: The Ashdod oil refinery has nabbed a major client - the gasoline retailer Dor-Alon. Dor-Alon, which has Israel's fourth-biggest chain of gas stations, will buy half its fuel needs from the Ashdod refinery this year, and the other half from its usual source – the Israel Corporation's Oil Refineries in Haifa. Industry insiders estimate that Oil Refineries will be losing about NIS 1.5 billion in revenues from the partial loss of Dor-Alon to the Ashdod refinery, which the Paz Oil group bought four years ago. It bears noting that from the time Paz bought the refinery in 2007, it mainly served the Paz group gas stations, leaving Oil Refineries as a monopoly in serving the other gas station chains. Now Oil Refineries has lost its monopoly.

Oil Refineries reaches accord on subsidiary's debt: In other news of Oil Refineries, institutional investors holding its bonds wanted to know how the company will cope with the worst-case scenarios that could ensue by assuming responsibility for a subsidiary's half-billion dollars in debt. Reps of the bondholders and company met on Sunday to discuss Oil Refineries' plan to guarantee Carmel Olefins' $500 million debt to its own bondholders and to banks. Apparently a meeting of minds was achieved and Oil Refineries will beef up collateral backing its own bonds.

Court appoints expert to help Kamor bondholders: After squabbling bondholders at Kamor wound up firing their trustee (Hermetic Trust), on Monday the court appointed accountant Shay Nissan as an expert to oversee negotiations between the company and the bondholders. Kamor owes bondholders NIS 100 million but only has NIS 18 million cash. Two weeks ago bondholder reps did reach an accord with the company about the debt, but as the bondholders failed to reach an agreement between themselves (about whether to reach an arrangement or liquidate the company), the court stepped in with the expert apt to guide the parties to shore.

Foreigners smiling on ICL? Israel Chemicals was responsible for a quarter of the total turnover on the Tel Aviv Stock Exchange on Monday, at the end of which the stock was 1.3% higher. The volume of trade in ICL reached NIS 241 million, which isn't that high by historic terms but certainly is in the terms of the last year. It's also quadruple ICL's usual volume of trade these days. Who dunnit? Foreign investors, suggest the local ones; a big foreign institution caught short on fertilizer stocks bought aggressively. The sellers were local institutions taking profit on recent gains. Turnovers on the Tel Aviv Stock Exchange were flattened by the country being added to indices tracking developed nations, as opposed to developing ones: Israel's weight on developed-nations indices is very small compared with its weight on the developing-nations indexes.

With reporting by Itai Trilnick, Oren Freund, Yoram Gabison, Dror Raich

Daniel Bar-On