Tel Aviv Stock Exchange Closes at a Record High

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Stock prices flash on an electronic screen displaying world clocks at the Tel Aviv Stock Exchange (TASE) in Tel Aviv, Israel, on Thursday, Dec. 11, 2014.Credit: Bloomberg

The TA-25 ended at 1,717.12 points, up 0.4% for the day and beating its old record set May 21 of 1,715.58. The index is up 17.5% so far this year. The TA-100 was also up 0.4% for the day at 1,483.30 points and 15.1% for the year so far. Some 1.23 billion shekels ($330 million) in shares changed hands.

Record or not, there was little cheering on the TASE, where trading volumes remains tepid, foreign investors scarce and the market for initial public offers has been weak.

“The market is rising mainly because of the absence of investment alternatives and monetary expansion at the central banks. So long as world economic leaders continue to inject money into the market and ensure there are no alternatives [to stocks], the positive trend will likely continue,” said Shmuel Ben-Aryeh, director of investments at the Pioneer Group.

The U.S. Federal Reserve and more recently the European Central Bank have kept interest rates at record lows and injected liquidity into their economies by policies of quantitative easing. That has driven most out of the fixed-income markets and into stocks. The Nasdaq Composite index closed at a record high last week.

The Fed was expected on Wednesday to point to a growing U.S. economy and stronger job market as it sets the stage for a possible interest rate hike in September.

The Bank of Israel has refrained from QE – and this week signaled it had no intention of implementing them any time soon – but its base interest rate is at a record low 0.1%. Bond yields are so low that Meitav Dash in a report last week said that only a 5% drop in the price of the government’s five-year bond, or a 15% increase in its 10-year bond, would make them competitive for investors.

Under the circumstances, Meitav Dash said the TASE’s leading share indices could post gains of another 10-15% over the next six to 12 months – that is if the Chinese stock market route doesn’t reverberate across the Chinese and world economies and Israel doesn’t suffer any major geopolitical risks.

Chinese shares bounced back more than 3% on Wednesday after a dramatic plunge of more than 8% on Monday, as Beijing’s latest efforts to prop up values restored a measure of stability to its unruly stock market. Chinese stocks suffered a precipitous sell-off in late June and early July that wiped as much as $4 trillion off share values.

“The local stock market is comfortably priced relative to economic parameters compared to other stock markets,” Meitav Dash said. “Not only that, the domestic market has proven that it is less volatile and more defensive than other world share markets, for instance Germany’s DAX.”

Teva, which is still basking in the glow of its quick pirouette from a troubled bid for Mylan to a successful offer for Allergan’s generics business, extended its gains for a third day running in heavy trading of 250 million shekels. The shares rose 1.2% to 271.10 shekels, bringing its gain to 13.3% since Monday.

Cellphone stock, which have also helped lift the TASE in recent weeks on a powerful rally, rose on Wednesday, too. Cellcom Israel added 1.4% to 23.53, bringing its gain since the start of the month to more than 55%. Partner Communications rose 2% to 16.71 shekels, a gain of close to 60% for the month. Compugen paced the TA-100 higher, climbing 4.1% to a close of 24.39. On the decliners’ side, LivePerson led TA-100 stock down

In the fixed-income market, the Tel-Bond 20, 40 and 60 indices were down 0.37-0.39%. The government’s 10-year shekel bond lost 0.6%, raising its yield to 2.38%

Reuters contributed to this report.

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