The Ticker: Dollar Extends Gains on the Shekel

Hopes for short conflict and quick economic recovery are dashed.

Bloomberg

The dollar on Wednesday continued to strengthen against the shekel, bringing its gains since its latest low on July 15 to 3.8%. On Wednesday alone, the U.S. currency appreciated 0.28% to a Bank of Israel rate of 3.533 while the euro added 0.19% to 4.693. “This is the kind of movement we haven’t see in months,” said Robert Carmeli, foreign-investments manager at Migdal Capital Markets. “That is being reflected in the expected interest-rate environment for long-term government shekel bonds.” In addition, market expectations for a short Gaza war and a quick recovery for the Israeli economy have been dashed and many are now predicting a longer war of attrition. “We can assume the dollar will reach a level of 3.675 shekels. The million-dollar question is where it will go from there,” Carmeli said. (Shelly Appelberg)

First Int’l Bank profit rises 7% in quarter

First International Bank of Israel, the country’s fifth-largest lender, on Wednesday reported second-quarter profit rose 7%, boosted by lower salary and other operating expenses. Net income was 160 million shekels ($45 million), compared with 149 million in the year-earlier period. Amid a low-interest-rate environment, net interest income, the difference between what a bank takes in on loans and pays out on deposits, edged down 0.7% to 547 million shekels from 551 million. And the bank recorded a credit-loss expense of 7 million shekels, versus 12 million in second-quarter 2013. Chief Executive Smadar Barber-Tsadik said that the bank was focusing on capital markets and investment advice to increase its earnings and that FIBI’s assets under management grew 40 billion shekels over the past year to 330 billion. Its core Tier 1 capital ratio slipped to 10% from 10.1% at the end of 2013. FIBI shares fell 0.2% to close at 54.41 shekels in Tel Aviv. (Reuters)

Lower coffee sales cut Strauss Group net by 9%

Strauss Group, the maker of Elite coffee and Sabra Salads, reported on Wednesday that second-quarter net income fell 9% from a year earlier, hurt by continuing declines in its global coffee sales. Profit fell to an adjusted 69 million shekels ($19.6 million) from 75 million shekels a year earlier. Sales declined 3% to 1.95 billion shekels, although they rose 1.7% excluding the effects of a strong Israeli shekel. “The group is contending with economic challenges in Eastern European markets, notably Russian and Ukraine, while posting continued growth in the international dips-and-spreads operation and in Strauss Water,” Chief Executive Gadi Lesin said. Coffee sales fell 8.5%, led by a 9.6% drop in international coffee sales. But sales at its Sabra international dips-and-spreads joint venture, which is half-owned by PepsiCo, grew 7%. Sales in Israel slipped 1.8%. Strauss shares fell 3% to close at 62.44 shekels in Tel Aviv. (TheMarker Staff)

Harel profit tumbles due to provisions

Harel Insurance & Finance on Wednesday posted a 26% drop in second-quarter profit, citing a 168-million-shekel ($47.6 million) provision for increased insurance liabilities and a continuing decline in risk-free interest. That left the insurer with a comprehensive profit of 66 million shekels for the three months, down from 89 million a year earlier. For the first half, profit climbed 20% to 347 million shekels, thanks to a recovery in the domestic capital market, higher management fees and low inflation. Premium income increased 9% in the first half to 8.3 billion shekels. Pension and other assets managed by the company grew 18% from the end of 2013 to a record 173.2 billion shekels at the end of June, Harel said. Its shares fell 0.9% to finish at 20.17 shekels in Tel Aviv. (Asa Sasson)

Renewed fighting depresses Tel Aviv shares

Renewed fighting between Israel and Hamas carried Tel Aviv shares lower on Wednesday, with oil-and-gas and biomed shares leading the market. The benchmark TA-25 index ended down 0.3% at 1,374.34 points while the TA-100 lost 0.2% to a 1.235.92 finish, with turnover reaching 975 million shekels ($276 million). The decline in biomed shares was paced by Brainsway, which dropped 8% in heavy trading to 37.17 shekels. Protalix lost 6.75% to 8.63 after the U.S. Food and Drug Administration on Tuesday approved Sanofi’s Gaucher-disease drug Cerdelga, an oral treatment that will compete with Protalix’s injectable treatment. Evogene declined 7.1% to 43.52 after reporting its second-quarter loss widened to 3.2 million shekels from 1.9 million a year earlier. (Shelly Appelberg)