Bank of Israel Research Finds Intervention Affected Shekel-dollar Exchange Rate

Business in Brief | Together forms medical-marijuana JV with European partner ■ Delek abandons plan to sell insurer Phoenix as deadline passes ■ Plus500 sees better business in 2018 thanks to Trump

Israel's new set of 20, 50, 100 and 200 shekel bills released in February 2018.
Olivier Fitoussi

Bank of Israel research finds intervention affected shekel-dollar exchange rate

A little behind the eight ball, the Bank of Israel released research on Monday which shows that its controversial policy of intervening in the forex market has, in fact, weakened the shekel, not only in the short term but over a period of 40-60 trading days. Researchers Itamar Caspi and Sigal Ribon found that intervention caused the shekel to lose value immediately 90% of the time the central bank intervened in 2009-11 and 2013-17, by as much as 6% during periods of intense intervention. The research only covered surprise interventions, not the routine forex buying the bank does to offset the impact of natural gas production on reducing Israel’s import bill. However, the bank is not known to have intervened in the market since one big action last January. Since mid-March, the dollar has strengthened 6.7% against the shekel. On Monday, the dollar strengthened 0.3%, leaving the representative rate at a 14-month high of 3.6610 shekels. (Avi Waksman)

Together forms medical-marijuana JV with European partner

The Israeli medical-marijuana company Together said on Sunday it had signed a joint venture agreement with an unnamed partner in the European Union to export medical marijuana from Europe. The new JV, which will be 51%-owned by Together and the rest by its EU partner, will construct 30,000 square meters of greenhouses and a processing facility. The partner will provide the land and Together will supply the know-how and skills. The JV “realizes the company’s business strategy of operating from several locations worldwide,” CEO Nissim Bracha said. “The legalization process in, among other places, North America . is generating a high rate of growth and demand for cannabis products.” Together has said it would seek to set up additional farms outside of Israel because the government has yet to approve export licenses for medical-cannabis companies. Together shares ended down 5.7% at 8.08 shekels ($2.20) on Monday. (TheMarker Staff)

Delek abandons plan to sell insurer Phoenix as deadline passes

Delek Group, the holding company controlled by Yitzhak Tshuva, said on Monday an agreement to sell its controlling stake in insurer Phoenix Holdings to Sirius International Insurance fell through after failing to win regulatory approval. Delek, in a statement to the Tel Aviv Stock Exchange, said the necessary approvals had not been received in time for the agreement's deadline. Bermuda-based Sirius said in November it would exercise an option to buy Delek’s 47% stake in Phoenix for 2.3 billion shekels ($628 million), but the deal never got required approval from the Commissioner of Insurance and other regulators. Regulators have blocked several deals Delek has reached to sell Phoenix over the last six years amid concerns about foreign groups gaining control of key financial assets, particularly pension funds. Delek said it would keep trying to sell its holding in Phoenix. Phoenix shares ended down 4% at 18.13 shekels. (Reuters)

Plus500 sees better business in 2018 thanks to Trump

Plus500, the Israel-based online trading platform, said on Monday it has materially increased its full-year financial performance expectations, after geopolitical events including the imposition of U.S. import tariffs resulted in higher levels of market volatility in the second quarter. “Despite more normal trading conditions, we continue to benefit from new customers acquired over recent periods trading a wide range of instruments,” CEO Asaf Elimelech said in a statement. The company had raised its 2018 expectations in June, saying it benefited from volatility in the markets and high levels of trading in its cryptocurrency offering. Meanwhile, Plus500 said a new European Union rule banning the sale of binary options to retail clients and restricting the sale of contracts for difference would not significantly affect its business, estimating that 12% of its clients could be eligible for an “elective professional client” status that would enable them to continue trading. Plus500 shares were up 10.15% at 1,179 pence ($23.42) in late trading local time in London. (Reuters)

Insurance, real estate stocks take Tel Aviv market lower

Tel Aviv shares ended lower on Monday, weighed down by insurance and real estate shares. The benchmark TA-35 index fell 0.3% to 1,515.91 points, while the TA-125 dropped nearly 0.4% to 1,361.19, on turnover of 1.08 billion shekels ($290 million). Declines for insurers were led by Phoenix with Harel close on its heels on a 2.8% drop to 26.44 shekels. In real estate, mall Melisron closed down 2.4% at 147.50 and Azrieli down 1.6% at 178.30. El Al Airlines plunged 4.5% to 76 agorot, marking a 476% drop so far this year, due to a pilots’ slowdown that has led to cancelled flights and higher fuel prices. Energy shares were mostly higher, with Ratio adding 2.7% to 2.40 after a Reuters interview with the head of Italy’s ENI offered some relief on the prospects of a big Egyptian gas find. Claudio Descalzi said there were prospects and new geological structures in Egypt “but we still haven’t discovered anything.” (The Marker Staff)