Tel Aviv Investors Applaud Netanyahu's Reelection

Banks lead large-caps in trek north: Market relieved at Bibi's reelection, he has fiscal cred, says Psagot's Zach Herzog.

Tel Aviv investors smiled on the election results Tuesday, judging by the 1.5% mid-day gain by the benchmark Israeli index on roughly normal volume of NIS 400 million.

Tuesday trading began with an opening gain of 1% the day after the election, which had Prime Minister Benjamin Netanyahu's Likud-Yisrael Beiteinu ticket on top – though with a much smaller margin than many expected a week or two ago.

"It's just the market that's happy about the elections, nothing sector-specific. It's broad market sentiment," Zach Herzog, head of the international trading desk at Psagot Investment House, told Haaretz.

"What we are seeing is a positive market reaction that Netanyahu will be next prime minister. He, almost more than anyone else than Stanley Fischer [the governor of the Bank of Israel], is identified with Israel's fiscal credibility over the past decade," Herzog said.

Among the large-caps, almost all were in the green at midday, with the banks leading the pack. Shares of Israel's biggest bank, Hapoalim, were jumping 2.5% on heavy turnover of almost NIS million, while the No. 2 bank by market cap – Leumi – was up 2%.

Not far behind were energy stocks, led by the Delek Group conglomerate, rising 2.8%, albeit on rather thin turnover of NIS 8 million.

Gilad Alper, head of research at Excellence-Nessuah, added that an election victory by Shelly Yacimovich would have been a nightmare scenario for Israeli energy shares – and for Israel Chemicals. Stock of Israel Chemicals were up 2.2% on heavy turnover at mid-day.

Other jumpers in Tel Aviv at Tuesday mid-session included the tech stock Nova Measuring Instruments, which was up 4.4%, and real estate shares Alrov, Airport City and Nitsba, all of which were powering ahead 3% and more.

Never mind that Tuesday was a day off for everybody and his dog so they could vote: the folks at Modiin Energy were evidently working, and announced negotiations to sell 20% of the Gabriella oil prospect to AGR of Norway and Israel Opportunity. Each would get a 10% stake. Modiin holds 70% of the rights to Gabriella; Canada-listed Adira Energy, which tried to sell stock in Tel Aviv and was treated like it was hawking dry wells, owns 10%. Modiin wants to bring in new partners that would help pay further exploration costs. Its participation units were up 6.5% at mid-day.

But among the day's losers were Liveperson, down 3%, and Mellanox, which was losing 2.3% as of writing. Tonight Mellanox, which makes chips for infiniband, will be filing its fourth-quarter 2012 financial statement. A month ago the company lowered its revenue guidance by 18% from its first estimate to $119-121 million for the quarter. Last night on Wall Street the stock, which is dual-listed, obviously, fell more than 4%.

The biggest mid-day volume among the large-cap pack was Israel Chemicals, which was gaining 1.7% on turnover of NIS 42 million.

Stocks on the TA-100 index were also largely in the green, with some noteworthy exceptions. Ormat Technologies, also dual-listed in Tel Aviv and New York, was losing nearly 5% after admitting that its fourth-quarter report would be painted red. Why will it be posting a loss for the quarter?  Because of the North Brawley geothermal plant in California, on which the group will be taking a heavy charge.

Ofer Vaknin