Market Report :Investors Applaud Report of Surging Fourth-quarter Growth

Economists across the country were slack-jawed when the Central Bureau of Statistics announced halfway through the trading session announced the growth; nobody had expected anything even close to that.

Tel Aviv stocks powered ahead yesterday as investors reacted to the astonishing news of Israel's economic growth in the second half of 2010, mainly in the last quarter.

Economists across the country were slack-jawed when the Central Bureau of Statistics announced halfway through the trading session that Israel's gross domestic product had expanded by 7.8% in the fourth quarter of 2010, in annualized terms, and that growth for the year had therefore run at 4.5%. Nobody had expected anything even close to that.

Before the growth announcement, stocks had been trading with gains yesterday, but fairly flatly. After the announcement, the TA-25 index leaped like a goosed gazelle. Heavyweights from real estate companies to banks surged: Real estate development company Gazit Globe and energy and property investment empire Delek Group each gained 4%, Bank Hapoalim jumped 3%, Bank Leumi increased by 2%, and Isramco rose 3.7%.

Most world markets up

Teva Pharmaceutical Industries was among the few losers, with a dip of 0.2%. And the mobile operators, often associated with defensive investment strategies, lost ground as well - with Partner Communications dropping 1.2% and Cellcom falling by 1%.

Total turnover on the Tel Aviv Stock Exchange was about average, however, at NIS 2 billion.

The state of world markets yesterday probably heartened investors as well. European markets were up across the board, though generally with modest gains, from 0.2% in Frankfurt to 1% in Paris. Spanish stocks outdid the lot with an increase of 2.1%. Asian exchanges were also in the green, but again to a modest degree.

U.S. stocks were mixed, however, which some market animals associated with concern about tensions between Israel and Iran, after Foreign Minister Avigdor Lieberman said Iranian warships planned to sail through the Suez canal en route to Syria and hinted at an Israeli response. That sent oil reeling to $85 per barrel.

Traders pointed out that, given the uptrend by equities since September, it doesn't take much to cause jittery investors to pull back.

The easily unnerved might also find reason to pull back based on data published by the Tel Aviv Stock Exchange yesterday. The combined market capitalization of Tel Aviv's listed companies rose to NIS 800 billion in 2010, from NIS 710 billion at year-end 2009 - an increase of 13%.

If Teva is excluded, the combined market cap of the companies rose 22%. Teva fell 11% in value last year, while Israel Chemicals (which rose 1.3% yesterday ) gained 31% in 2010. The Israel Corporation, shares of which rose 2% yesterday, jumped 56% in value last year.

While on specific stocks, Ampal lost 2.3% after announcing the day before that EMG, the Egyptian gas supplier in which it owns a 12.5% interest, won't be resuming its supply of gas to Israel this week. Apparently, the supply will only resume later this month as repairs of the pipeline blown up by saboteurs will take longer than expected. It is true that that particular pipeline supplies Jordan and Syria, not Israel, but the supply to the whole region got cut off.

With reporting by Reuters.