Israeli Shares Enjoy Trump Bump While Other World Markets Slump

Threat to drugmakers like Teva lifted with Clinton loss, but other Tel Aviv stocks rallied, too, as initial panic fades

A large digital ticker shows financial information to pedestrians outside the entrance to the Tel Aviv Stock Exchange (TASE) in Tel Aviv, Israel, on Thursday, Aug. 4, 2016.
Rina Castelnuovo, Bloomberg

Global financial markets recovered on Wednesday from their initial shock at Donald Trump’s election victory, but on the Tel Aviv Stock Exchange shares not only turned higher but staged a powerful rally.

The heavy weighting of bid pharmaceutical stocks, led by the Israeli flagship drugmaker Teva Pharmaceuticals, helped lift the TASE’s main indices, but it didn’t take long for the rest of the market to join in the rally.

By closing time the blue chip TA-25 index was up 1.2% to 1,418.61 points and the broader TA-100 was ahead 0.8% to 1,233.32. Turnover was an unusually heavy 2.36 billion shekels ($620 million).

In foreign currency trading, the dollar weakened nearly 0.4% against the shekel to a Bank of Israel rate of 3.7990 but it clawed back all its early losses afterhours and was trading at 3.8176 shekels.

Pharma stocks were higher worldwide as investors breathed a sigh of relief that Hillary Clinton would not be able to make good her promise to crack down on price-gouging by drugmakers. Teva ended the day up 4.5% to 154.60 shekels and Perrigo, a U.S. company that trades on the TASE and has operations in Israel, advanced 1.3% to 311.50.

But the biggest winner in the pharma sector was Mylan, a U.S. company whose price increases for its EpiPen allergy treatment, had sparked the Clinton plan, jumped 7.2% to 149.60 shekels on the TASE where it trades. All three companies traded heavily.

“Israel maybe one of the only countries in the world that will be affected for the better by his [Trump’s] election. On a technical level, our share index in built on pharma stocks and the dramatic undertakings Hillary Clinton planned are not going to happen. Trump is good for the Israeli market,” said Jerry Cutiesteanu, head of investments at IBI Israel Brokerage & Investments.

Asian markets, the first to open as the news of the Trump upset became apparent, tanked and European shares initially fell, too. However, Europe rallied off its lows, with traders saying Trump’s acceptance speech later in the day was balanced and conciliatory, raising hopes that some of the more fiery rhetoric of his campaign might be behind him.

The STOXX Europe 600 fell 0.6%, having been down 2% in early trade. Growth-sensitive sectors such as autos, financials and oil were among the biggest fallers. On Wall Street, the Dow Jones industrial average was down 0.1% in early trading and the Nasdaq composite down 0.8%.

Investors fear a Trump victory could cause global economic and trade turmoil and years of policy unpredictability, which among other things will discourage the Federal Reserve from raising interest rates in December as long expected.

But Gilad Altshuler of the Israeli investment house Altshuler Shaham said he didn’t see any sign of panic in global markets but he said the declines so far represented nothing more than a technical correction on the global market’s recent price run-ups.

“At the end of the day the changes won’t be so dramatic in my opinion and the demon they call Trump won’t be so terrible,” he said.

Besides pharma stocks, banks were also big gainers in Wednesday’s market. Bank Hapoalim finished up 1.5% at 22.35 and Bank Leumi added 1.45% to 15.40. Real estate shares on the other hand, took a licking: Gazit Globes tumbled 3.9% to close at 31.30 and Azrieli lost 1.8% to 162.40

Reuters contributed to this report.