Tel Aviv stocks closed sharply lower Sunday, tracking a sell-off of global shares on Friday amid plunging crude oil prices and investor unease on expectations of the first U.S. interest rate hike in nearly a decade.
The Tel Aviv Stock Exchange’s benchmark TA-25 index ended down 2.5% at 1,494.50 points while the TA-100 lost 2.3% to 1,290.06. Turnover was somewhat heavier than usual for a Sunday, at 783 million shekels ($203.2 million). Shares were down virtually across the board, with biomed and technology shares taking the worst beating.
Blue chips weren’t spared, with Bank Leumi down 2.7% to 133.33 and Bank Hapoalim off 3% to 19.55. Africa Israel led TA-100 shares lower, dropping 9.7% to 2.69 shekels amid concerns it may seek another debt bailout. Perion Network was a rare stock moving higher, adding 6.3% to 11.42 shekels. The government’s 10-year shekel bond rose 0.51% to cut its yield to 2.12%.
(Shelly Appelberg and Reuters)
Excellence sees good year ahead for stocks
Excellence Investment House said Sunday it expect 2016 to be a good year for stock markets, despite the current downturn. Chief Economist Yaniv Hevron said markets, including the Tel Aviv Stock Exchange, would show returns of 8% to 10% next year.
“The sectors with the greatest weightings in the TA-100 index are trading at a discount, such as banking and insurance. A strong dollar and an improvement in global trade will certainly help the index’s export companies,” he said. Excellence also recommended exposure to domestic infrastructure and construction companies as well as residential real estate developers, at least as a short-term holding, due to strong demand for homes.
Excellence also recommended investing in the Tel-Div index of dividend-paying stocks as well as holdings in technology. It said housing prices would continue to rise in 2016 and possibly into 2017, but at a slower pace of 3-4% annually.
Canada’s Urbancorp becomes latest foreign bond issuer
Canadian developer Urbancorp, became the latest foreign property company to sell debt in Tel Aviv after is completed a 180-million-shekel ($46.7 million) bond issue over the weekend.
Urbancorp, which is controlled by Alan Saskin, had originally planned to raise 150 million shekels, but increased the issue amid strong demand in the institutional tranche of the sale. The three-year bonds, which were assigned a high-to-middling A3 rating by Midroog, are paying a relatively high interest rate of 8.15%. By comparison, the bonds of U.S. real estate giant Extell, with an A2 rating, are trading at 5.6%.
Unlike most foreign real estate companies issuing bonds in Tel Aviv, Urbancorp didn’t raise its debt through a Virgin Islands subsidiary because of Canadian law. Urbancorp develops residential properties in central Toronto and is currently developing 12 properties with 2,633 housing units. (Eran Azran)
Gazit makes tender offer to delist U. Dori
Gazit Globe said Sunday it wants to delist its financially trouble U. Dori real estate unit from the Tel Aviv Stock Exchange and offered to buy out minority shareholders for 50 agorot (13 cents) a share, which is close to the market price.
The offer, which is worth a combined 18 million shekels, expires December 28, Gazit Israel, the multinational real estate company’s Israeli subsidiary said. That would mark the final chapter in a disastrous investment for Gazit Globe after U. Dori’s construction unit ran up hundreds of millions of shekels in losses and forced its parent company to inject 750 million shekels into the business, an amount equal to 10% of Gazit Globe’s shareholders’ equity. The offering values U. Dori at about 126 million shekels while its equity is a negative 143 million. Shares of U. Dori rose 0.4% to end at 54 agorot.