Shares on the Tel Aviv Stock Exchange were pounded on Thursday as worries about China’s economy sent world stock markets reeling.
The TASE’s benchmark TA-25 index dropped 1.9% to end at 1,493.97 points, capping a four-day decline of 3% and bringing it to its lowest level in two weeks. The TA-100 fell 2.1% to end at 1,284.39. Trading was unusually heavy, with 2.36 billion-shekels-worth of shares ($600 million) changing hands.
In the fixed-income market, the price of the government’s 10-year shekel bond rose a sharp 0.48%, lowering its yield to 2.01%. In foreign currency trading, the dollar weakened 0.1% against the shekel to a Bank of Israel rate of 3.937, while the euro strengthened more than 0.8% to 4.2728.
Shares on major global exchanges fell for a sixth consecutive day, while crude prices bounced back from multiyear lows as volatile markets digested another move lower in the yuan and Chinese efforts to stabilize a sinking stock market.
Stocks on Wall Street pared losses after China suspended the circuit breaker that stops trading for the day when stocks fall 7% – a halt that occurred twice this week. Analysts and investors said the mechanism, put in place to avoid market volatility, may have backfired.
In early afternoon New York time, the Dow Jones industrial average was down 1.2% at 16,699.76; the S&P 500 had fallen 1.3% to 1,964.77; and the Nasdaq Composite Index had lost 1.7% to 4,755.82.
In Europe, the pan-European FTSEurofirst 300 index closed down 2.3% and the euro zone’s blue-chip Euro STOXX 50 was down 1.7%, having fallen more than 3% during the session.
Brent crude fell as much as 6% to nearly $32 a barrel, its lowest level since at least April 2004, before later recovering.
“There is a wall of worry under full construction brought on by China, fall in oil prices and uncertainty regarding quarterly earnings,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.
In Tel Aviv, the declines were across the board, with tech and insurance stocks showing the biggest losses. China-related stocks on TASE declined, but not far in excess of the overall market.
Phoenix, the insurance company that is expected to be acquired by China’s Fosun Group, tumbled 3.5% to 8.24 shekels. Israel Chemicals, which this week announced a three-year framework accord to sell potash to China, was off 3.3% at 15.90 shekels.
But Kenon Holdings, which holds 50% of Qoros, a joint venture automaker in China, was down just 1.4% to 37.26. On Wednesday, Qoros said Phil Murtaugh, the former China head at General Motors who was named Qoros CEO in February, would step down this month, the second CEO to leave in a year for the troubled company.
On the other hand, Elco Holding soared 15.3%, leading gainers on the TA-100 to close at 32.10 shekels, after it reported that it had sold real estate in China for what one analyst termed an “amazing” price of 440 million shekels. The sale left Elco with a capital gain of 270 million shekels, an amount equal to a third of its market capitalization.
China is emerging as a major source of investment capital for Israel, especially in the high-tech sector, but China’s slowing economy and doubts about its regulatory environment have cast a shadow. Earlier this week, China’s Microlink backed out of a deal to buy control of Clal Insurance and Fosun’s acquisition of Phoenix is clouded by a Chinese police probe of Fosun’s chairman. Meanwhile, bilateral trade has failed to keep pace, with Israeli exports to China flat at about $3 billion annually since 2011.
Unrelated to China, the U.S. biotech company Mannkind led declines on the TA-100 with a 20% plunge to close at 2.58 shekels. Mannkind lost more than half its value this week after the drug multinational Sanofi said it was ending its licensing agreement to sell Mannkind’s oral insulin treatment, Afrezza.