Business in Brief / Interest Rate Cut Powers Tel Aviv Shares to Record High

Dollar strengthens after rate decision, TowerJazz beats forecasts for fourth quarter by wide margin and Dan Hotels clears obstacle to expand Dan Acadia

Bloomberg

Interest rate cut powers Tel Aviv shares to record high

A surprise interest rate cut by the Bank of Israel yesterday breathed life into a lackluster trading session on the Tel Aviv Stock Exchange and lifted the TA-25 to a new record high. The benchmark index had been drifting sideways until the 4 P.M. rate announcement, which then caused the TA-25 to move above the 1,500 mark to a close of 1,503.34 points, a gain of 0.5% for the day. The TA-100 rose 0.55% to finish at 1,327.26 as 1.35 billion shekels ($340 million) in shares changed hands. The Tel-Bond 20, 40 and 60 indices rose as much as 0.49%, while the government’s shekel bond due in 2024 jumped 0.93%, slashing its yield to 1.72%. Volume leader Teva Pharmaceuticals gained 1.6%, to close at 221.50 shekels. Discount Investment Corporation jumped 8.4% to 9.21 shekels and its parent company, IDB Development Corporation, added 4% to close at 1.66 shekels. The only sector failing to join the rally was energy, where tense talks over the future of the natural gas cartel caused shares of Avner, Delek Drilling and Isramco all to fall about 2.2%. (Eran Azran)

Dollar strengthens after rate decision

The Bank of Israel’s decision to lower its base rate to a new record low caused an about-face in the shekel exchange rate yesterday. The dollar had weakened to close down 0.8% at 3.8580 shekels when the Bank of Israel set the day’s official exchange rate. Shortly afterward, though, the surprise rate cut reversed the greenback’s course, to leave it trading at 3.91 shekels late in the session, a gain of 1.4%. The euro, which had weakened to 4.361, also powered ahead on the news of the rate cut, to add 1.6% to 4.43 shekels late in the day. Yossi Fraiman, CEO of Prico Risk Management & Investments, said he doubted the rate cut would have a lasting effect on the shekel. “For the short term, depreciation factors remain valid and support depreciation to 3.95 to the dollar,” he said. “Longer term, however, the shekel may well strengthen to NIS 3.70 or less.” (TheMarker)

TowerJazz beats forecasts for fourth quarter by wide margin

TowerJazz beat forecasts yesterday with a fourth-quarter net profit, sending its shares up 15% by close to 61.38 shekels ($15.68). The chip maker said profit doubled on revenue from its joint venture in Japan with Panasonic, as well as growing market share from its largest customers, with earnings of 83 cents a share excluding one-time items, up from 40 cents a year earlier. Revenue grew 75% to a record $235.3 million. TowerJazz was forecast to earn 58 cents a share, excluding one-off items on revenue of $235 million, according to Thomson Reuters. CEO Russell Ellwanger said expectations for third-party revenue capability from the joint venture are $300 million a year on top of contractual Panasonic revenue. The company’s target is to achieve an annual revenue run rate of $1 billion in 2015. Ellwanger said he was targeting annualized adjusted gross profit of about $400 million in the fourth quarter of 2015. (Reuters)

Dan Hotels clears obstacle to expanding Dan Accadia

Dan Hotels won a major victory yesterday after a government planning committee overruled objections to its plan to expand its landmark Dan Accadia Hotel on the Herzliya Pituah beachfront by a factor of six. The panel approved the company’s $400-million plan to expand the hotel to 1,325 rooms from its current 219 over three stages, as well as building 70,000 square meters of shopping space and a parking garage for 750 vehicles. Dan faces further obstacles before final approval, with Herzliya mayor Moshe Fadlon challenging in court what he terms a disproportionately large project. The Dan Accadia accounts for less than 6% of all the chain’s hotel rooms but is a major profit center, earning 99 million shekels ($25.3 million) pre-tax for the company over the past five years. Dan shares closed unchanged at 18.40 shekels. (Yoram Gabison)