Market Report / TASE Jumps as Dow Jones Surges

The benchmark Tel Aviv-25 index closed the day 1.5% higher Sunday at 1,195.19 points. The broader Tel Aviv-100 rose by 1.6% to 1,063.09, while the Banks-5 climbed by nearly 1.5%.

Trading on the Tel Aviv Stock Exchange on Sunday was boosted by Friday’s trading on Wall Street, which brought the Dow Jones Industrial Average over 14,000 points for the first time since 2007. Increased investor appetite for risk, which has also depressed the value of the U.S. dollar, also helped push up stock prices in Tel Aviv.

The benchmark Tel Aviv-25 index closed the day 1.5% higher Sunday at 1,195.19 points. The broader Tel Aviv-100 rose by 1.6% to 1,063.09, while the Banks-5 climbed by nearly 1.5%. The Real Estate-15 gained 1.1% on the day. Trading volume was thin at NIS 650 million.

At the opening of trade, positive arbitrage gaps led to jumps of more than 5% in the share prices of Perrigo and Mellanox. Trading was delayed by five minutes due to the sharp increases. Perrigo and Mellanox ended the trading day 5.5% higher. Perrigo beat analysts’ forecasts.

At the center of investor attention, however, was El Al Israel Airlines, whose share price increased 20.5% following news that the Ishay Davidi’s FIMI fund had signed an agreement in principle to become part of a controlling shareholder group for the airline and ultimately invest as much as $60 million in the carrier.

Over the weekend, Bank Leumi warned of the existing risk in the local market. “Taking into consideration the price levels to which a significant number of the TA-25 shares have risen, at the current time, we prefer investment in second-tier stocks over first-tier stocks.” The bank said in the short term, stock prices would be influenced by developments overseas, but noted that the geopolitical situation in our region could negatively affect risk, as could the economic plans of the new government that will be formed.

Among other standouts in share trading here Sunday was Rosetta Green, whose stock price shot up by 22.3% after it announced it would be acquired by the multinational giant Monsanto. The Israeli firm develops improved plant traits for the agriculture and biofuel industries. Monsanto will be paying $35 million for the Israeli company, double its market cap. The deal will not include cash on hand or future obligations to laid-off staff. After the consummation of the deal, Rosetta Green will be a shell company with $35 million in cash.

The local corporate bond market also did well on Sunday. The Tel Bond indexes rose by as much as 0.1%. On the negative side, Series Gimmel bonds issued by The Leser Group fell by 2.9% following a report last week that a jury in the United States had returned a $48.5 million verdict in a civil case against the company’s owner, Abraham Leser. The suit was unrelated to The Leser Group’s operations.

In positive bond market trading, Series Dalet bonds of Knafaim Holdings, the Borovich family’s company that holds the controlling interest in El Al, jumped by 8.4% against the backdrop of the news of the deal with the FIMI fund. Government bonds traded at relatively stable levels on Sunday.

Bloomberg