The Ticker: Tel Aviv Stock Market Still Shrinking

EZchip accused of undermining search for buyer; Kitov Pharma shines in clinical trial; Israeli stocks turn higher.

The entrance of the Tel Aviv Stock Exchange.
Bloomberg

The Tel Aviv Stock Exchange is continuing to shrink despite efforts to lure  investors to the trading floor. A study by the business research firm CofaceBDI released Tuesday found that at the end of October only 575 companies had shares or bonds registered for trading on the TASE, down from 600 at the end of 2014 and 801 in 2008. This year 22 companies listed but 43 dropped out. “The bourse is having trouble attracting big and stable companies to list because they prefer the liquidity and prestige of the New York Stock Exchange and the Nasdaq,” said Tehila Yanai, joint CEO of CofaceBDI. Another factor was that many bigger TASE-traded companies were struggling with debt and could no longer meet the TASE’s listing standards. CofaceBDI said 66 of 564 companies that reported third-quarter results were tagged with a “going concern” warning, meaning auditors could not vouch for the firm’s survivability. Still, that was down from 77 in the first quarter. (Eran Azran)

Raging Capital says EZchip CEO undermining search for buyer
Raging Capital, a U.S. hedge fund manager fighting to block Mellanox’s $811 million acquisition of EZchip, has accused EZchip CEO Eli Fruchter of undermining efforts to identify a better offer for the company. A vote on the acquisition by EZchip shareholders was postponed a month ago while management said it would solicit better offers in a so-called “go shop” process. But on Monday Raging Capital accused Fruchter of posting comments on an unidentified message board that “paint a negative picture of the business” and discourage other buyers from emerging. “Fruchter’s imprudent comments are intentionally sabotaging the go shop process in a manner completely inappropriate for a public-company CEO in the midst of what should be a competitive sale process,” Raging Capital said. “They reveal how his motives may be focused only on closing a transaction with his neighbors at Mellanox.” Shares of EZchip rose 1.2% to close at 93.63 shekels ($24.21). (TheMarker)

Kitov shares soar after successful clinical trial
Shares of Kitov Pharmaceuticals surged in Nasdaq trading Tuesday after the firm said its lead arthritis drug reduced pain without increasing the risk of heart disease. KIT-302, tested in 152 patients with osteoarthritis, significantly reduced blood pressure and pain compared to a placebo and was better than the two drugs given separately, the company said. Most widely used painkillers contain severe health warnings that link them to heart-related risks, but Kitov says its drug reduces the risk of cardiovascular events. Kitov will seek marketing approval in the second half of 2016 and expects to launch the drug in summer 2017, CEO Isaac Israel told Reuters. Shares of the company, which began trading last month, were up 25.7% to $4.45 at noon in New York (Reuters)

Tel Aviv shares turn higher, led by energy, communications
Tel Aviv rallied after three days of declines, paced by telecommunications and energy shares as world oil prices rose. The benchmark TA-25 index climbed 1.5% to finish at 1,509.86 points while the TA-100 advanced 1.4% to 1,301.27. Turnover was a decent 1.83 billion shekels ($470 million). World oil prices bounced off 11-year lows Monday, helping lift Israeli energy shares, too. Isramco gained 5.6% to 6.65 shekels and Avner 5% to 2.28. Frutarom extended gains after announcing a major acquisition Monday, rising 1.9% to 199.70, while Perion Network continued a powerful rally, adding 9.1% to 13.09. Mylan was among the day’s most active shares, gaining 1.8% to 211 shekels. TowerJazz rose 2.9% to 57.06 shekels after Oppenheimer initiated coverage of the company with a $20 target price, a 40% premium on its Monday closing. In the fixed-income market, the prices of the government’s 10-year shekel bond fell 0.25% to raise its yield to 2.25%. (Shelly Appelberg)