Shares Extend Declines but Losses Restrained

Tel Aviv joins another day of global China amid fresh worries about China’s economy, but TA-25 is still up for the year.

Bloomberg

The Tel Aviv Stock Exchange posted another day of big losses Tuesday as world markets were hit with more bad news from China. But Tel Aviv’s losses have so far been more restrained and some observer expressed bullishness about the market’s outlook.

The benchmark TA-25 index ended down about 1% to 1,563.06 points, bringing its loss over the past two weeks since global markets were roiled by China to 9.1%. Still, unlike major U.S. and European markets, the TA-25 is still ahead for the year, up 6.7%.

The TA-100 index fell 1.1% to 1,370.92 as turnover remained heavy, with 1.6 billion shekels ($4.1 billion) in shares changing hands.

European and Wall Street shares slumped on Tuesday, pushing all three major U.S. indices into negative territory for the year, after weak factory data from China heightened fears of a slowdown in the world’s second-largest economy and its effect on global growth.

The FTSEurofirst 300 index of top European shares was down 2.9% at 1,390.50 by mid-afternoon local time. In the U.S., the Dow Jones industrial average was down 2.2% at 16,170.22 in late morning trading. All the 30 Dow components were in the red.

Meitav Dash reported on Tuesday that mutual fund redemptions reached 4.7 billion shekels in August, but that was only 1.9% of the 246.6 billion in assets they manage and the industry had suffered bigger redemption waves in March and June this year.

Yaron Dayagi, head of mutual funds as Psagot Investment House, said the relatively restrained level of redemptions, even as the markets were hit hard by China in the final two weeks of last month, was evidence that investors aren’t fleeing the TASE.

“Despite the drama in the markets, the reaction of the mutual funds sector in August was relatively moderate,” he said. “It appears that as we go from crisis to crisis, investors, led by bank investment counselors, are succeeding in coping with the volatility.

“History, as we saw in January and July, teaches us that after months of sharp declines, most of the time they are followed by a correction with a relatively high return. Investors are alert to that so most aren’t making changes to their portfolios.”

Oil and gas shares extended their losses (see story on this page) on Tuesday amid worries about the impact of a key Egyptian gas find. Another big loser was Teva Pharmaceuticals, which was the most active share of the day and dropped 3.4% to 248.40 shekels. Perrigo ended 1.2% down 707.70 shekels and Frutarom lost 1.1% to 147.30, despite news that the giant U.S. fund manager Fidelity had accumulated a 5.2% stake.

Telecoms stocks bucked the trend, with Bezeq finishing 2.1% higher at 7.20 shekels and Partner Communications ahead 2.6% at 17.57.

In the fixed-income market, the Tel-Bond 20, 40 and 60 indices were down 0.14-0.16%. The government’s 10-year shekel bond declined 0.08%, raising its yield to 2.16%. Foreign currency trading was also relatively quietly, with the dollar losing about 0.2% against the shekel to a Bank of Israel rate of 3.923 shekels. The euro appreciated 0.4% to 4.4202.

With reporting by Asa Sasson and Reuters.