Market Report / Banks, Wall Street Pull TASE Higher as Cell Phone Stocks Stumble Again

Stocks rose strongly across the board yesterday on the Tel Aviv Stock Exchange as gains on European markets, together with a positive close on Wall Street Tuesday, combined to fuel the optimism on Ahad Ha'am, as bank shares led the TASE up.

All the major indexes were in the green throughout the day as the TASE opened strongly and stayed there. The blue chip TA-25 index gained 1.3% to close at 1,069 points, and the broader TA-100 index rose 1.4% to end the day at 984 points.

The TA-Banks index rose 2.2%, and the Real Estate-15 index gained 0.7%. The BlueTech-50 index climbed 1.5%, and the Biomed index rose 1.3%.

The Oil and Gas Exploration index rose "only" 0.4% for the day. The TA-Communications index rose 0.8%.

Turnover was average for recent times, at just over NIS 1 billion, but still far below the volume a year ago.

A number of traders were not so optimistic about yesterday's strong gains. Recent low turnover allows large institutional investors and others to affect trading, they say.

The traders blame much of the recent volatility on the low turnover, saying the variability is the result of low trading volume - and investors shouldn't read too much into recent moves by the market.

A trader from one of the major dealers said the recent recovery is nothing more than a correction after the pessimism of recent weeks based on the European debt crisis.

Mixed news locally

The TASE rose despite mixed local economic news, showing once again that investors have their eyes fixed on what is happening in global markets. On Tuesday, the Finance Ministry released data on may tax revenues, which show the 2012 budget deficit growing fast as tax collections continue to fall short.

Large-cap corporate bonds, as represented by the TelBond indexes, rose 0.3% to 0.4%. The TelBond-Shekel index rose 0.2%.

Bank shares were led upward by Bank Leumi, which climbed 2.9%. Israel Discount Bank gained 2.5% and Bank Hapoalim rose 1.2%.

After a few days of recovery, both Cellcom and Partner Communications fell again, losing 2.9% and 5.2% respectively. But communications shares rose overall, mostly due to a 9.2% jump by Internet Gold and B Communications, which gained 4.4%.

Not only did Partner shares drop heavily the day after the deal to sell control of the cellular operator back to Hutchison Whampoa, but shares of Scailex, the vehicle that controls Partner, dropped 2.1% - after climbing 28% Tuesday on the news.

Ilan Ben-Dov's Suny Electronic gained 3.6% after rocketing up 129% on Tuesday - on hopes that the Partner sale would rescue the company.

Kardan N.V. jumped 15.4% to help lead real estate shares up, and Elco Holdings, one of Israel's largest industrial groups, rose 4%. Africa Israel gained 3.7% and TowerJazz rose 4% after announcing a reorganization.

Clal Insurance gained 3.2% yesterday after a 7% rise on Tuesday. The IDB group company seems to be attempting to convince its 4,000 employees not to unionize, and workers are claiming the company is employing a range of tactics to combat the formation of a union.

The dollar lost ground against the shekel yesterday, down 0.2% to a representative rate of NIS 3.887. The euro moved in the opposite direction against the local currency, up 0.5% to a representative rate of NIS 4.863.

This basically reflected the trends in global forex markets yesterday as the euro recovered slightly. The European Central Bank dashed investors' hopes regarding the easing of monetary policy or another flood of cheap liquidity for banks - despite saying the euro zone money market has again become "dysfunctional."

At its monthly meeting, the ECB left interest rates on hold at 1%. The move raised pressure on EU political leaders to outline a solution to the bloc's festering debt crisis at a summit later this month.

Riskier banking and mining stocks led a technical rally among Europe's top shares yesterday. The FTSEurofirst rose 2.2%, while Britain's FTSE, which is heavily weighted toward mining and banking assets, jumped 2.4% and Germany's Dax added 2.1%.


Reuters contributed to this report.