Tel Aviv Shares Take a Tumble After Paris Attacks

Investors act anticipating global sell-down Monday, but analysts say markets likely to rebound quickly.

Bloomberg

The Tel Aviv Stock Exchange was the first global stock market to trade in the wake of the Paris terror attacks over the weekend and, in a taste of things to come when the rest of the world’s market reopen Monday, shares dropped sharply and broadly.

The benchmark TA-25 index ended down 2.6% at 1,517.36 points, while the TA-100 lost 2.7% to end at 1,317.14. Turnover was unusually heavy for a Sunday, with just over 1 billion shekels ($257 million) in shares changing hands.

Israeli investors generally have a thick skin when it comes to terror attacks and wars, so long as they believe they won’t have a long-term impact. Analysts said Sunday's trade was less a direct response to the attacks, but to expectations that other stock markets will see a big sell-down Monday.

Thus, dual-listed shares – led by Teva Pharmaceuticals’ 2.5% drop to 223.80 shekels and Opko Health’s losing 7.9% to 40.98 – were among the hardest hit on the TASE. The Blue-Tech index of technology shares, the biggest of which are traded on Wall Street, tumbled 3.1% to end at 334.35.

“The impact of events in Paris on the market depends mainly on the extent they continue escalating,” said Ori Greenfeld, chief economist at Psagot Investment House. “If we’re talking about a one-time event, the expected impact will be short-term only. However, if it’s not just one time but the start of a wave of terror attacks, the European economic environment will be hurt, mainly in tourism and consumer cyclicals.”

Greenfeld said that Israel’s experience with its own wave of attacks shows how difficult it is to predict how things will develop. “So, history teaches us that the best decision during times like these is not to make any fundamental changes in your portfolio,” he said.

Meitav Dash’s chief economist, Alex Zabezhinsky, was more chary based on Israel’s experience. “The reaction [in Europe] isn’t expected to be very different from the reaction in Israel to attacks, but it could take longer to recover – a few days. In the end, people will return to normalcy,” he said.

The fact that the attacks occurred at the start of the weekend means investors had time to digest the news before they have to act, Zabezhinsky said. Still, added Einat Skornik, head of investment advisory services at Bank Leumi, the reaction in Europe Monday could be sharp.

“The level of shock in Europe is high right now and wide media coverage could well bring an impulsive reaction both by European and foreign investors,” she said. This will likely focus on French companies geared to the domestic market and the euro-dollar exchange rate, she added.

In Tel Aviv, biotech company MannKind tumbled 7% to 9.75 shekels after completing a $36.1-million share sale to institutions at $2.61 a share. EZchip fell 2% to 93.13 shekels after its prospective merger with Mellanox was delayed due to shareholder resistance.

The bond market, however, was firmer, with the government’s 10-year shekels bond rising 0.39% and the 30-year inflation-indexed bond up 0.82%. There is no foreign currency trading on a Sunday.