Market Report / Protest-fueled Jitters Pull Down Indexes

Deutsche Bank cuts Israeli bank forecasts.

Major indexes of the Tel Aviv Stock Exchange closed down yesterday, for the seventh day in a row, on relatively low turnover of NIS 2.2 billion. Analysts attribute investor skittishness to the protest tent encampment just meters from the TASE and all it represents, compounded by global market contractions.

The blue-chip TA-25 index, which until about a week ago had been keeping its head above the 1,200-point line, fell 2% yesterday, to 1,155 points, for losses of 6.8% on the week and 14% since the start of the year. The broader TA-100 index is tracking similarly. It shed nearly 2% yesterday, closing at 1,048 points, and its stats for the week, month and year compare with its more exclusive kin. The Real Estate-15 index lost 2.3% yesterday, to 289 points, closing down 6.9% for the week and 20.7% since January.

The Banks-5 index fell by a steep 3.6%, to 1,183 points, after Deutsche Bank lowered its forecast for the sector in Israel. Analysts for the German bank said they expect Jerusalem to respond to the social protests by raising corporate taxes, a change that will ultimately be reflected in lower profits for Israeli banks.

Following the general downward trend yesterday were the Biomed index, which shrank 2.2%; the Communications index, which fell by 2.3%, and the Insurance index, which dropped by a precipitous 4.3%. The Finance-15 index also succumbed to gravity, closing down 3.9%.

The Tel Bond-20 index nudged up 0.1%, the Tel Bond-40 index nudged down 0.2% and the Tel Bond-6 index nudged down 0.1%.

"The tent protest put the system into a reevaluation, and we indeed saw that the losses over the past week indicate that the protest is affecting capital market investors," said Ron Eichel, chief economist and strategist at Meitav investment house. He recommended examining the effects of the protest on the future revenues of public companies. Will retail chains be able to keep raising their prices? What will happen to real estate development firms? And what about Israeli real estate prices?

"There's an uncertainly that does not reflect optimism in either the short or long term among investors, Eichel said. "The bottom line is that we see the protest having a negative effect on companies traded on the Israeli stock exchange," Eichler concluded.

Among the prominent losers yesterday from the TA-25 index were Israel Chemicals, which dropped 4%; Bank Leumi, which ended trading nearly 3.5% lighter and Bank Hapoalim, down almost 3.4%. Bezeq lost 2%, while Teva Pharmaceuticals clawed up 0.5% yesterday, after shedding 3.4% on Wednesday, presumably due to the fading future of its multiple sclerosis drug Laquinmod.