Market Report / Stocks Sag on Turbulent Trading

Delek Real Estate reports that its bondholders rejected its proposed debt arrangement and that it consequently won't be able to make interest payments to any of its creditors.

Israeli shares finished lower yesterday after a turbulent session featuring sharp swings about the flatline. The benchmark TA-25 index, for instance, began with a drop of half a percent, swung to a gain of 0.3% and finished 0.3% down at 1,106 points. The broader TA-100 index lost 0.4% to close at 990 points. The Banks-5 index gained 0.5% against the trend. But real estate stocks were in the doghouse, with the tracking index losing 0.9%. Total turnover was thin again at NIS 1.2 billion.

All eyes were on shares and bonds of Delek Real Estate after the company reported that its bondholders had rejected its proposed debt arrangement and that it consequently won't be able to make interest payments to any of its creditors. Despite that unhappy news from the troubled company, which borrowed enormously to buy property at pre-crisis prices, its stock ended 0.5% in the green after a late-afternoon rebound. Its bonds cut losses from a fall of roughly 7% to close about 3.5% under water.

In world markets, gold pulled back slightly, dropping for the first time in seven trading days after safe-harbor seekers pushed it above $1,910 an ounce. The price of gold rose 16% in August, Bloomberg reported, as investors quaked before the double troubles in Europe and United States.

World markets were mixed. European stocks extended their rally to a second session, led by demand for defensive stocks and investor hopes for a further easing of U.S. monetary policy. Copenhagen shares were an exception to a generally chirpy day in European markets, losing 1.8%, while Stockholm stocks gained 1.8%.

Back in Israel, shares of oil and gas exploration company Isramco fell 1.5% and Modiin Energy lost 2.9% after the companies announced the cancellation of their agreement to transfer 10% of the rights to the Daniel and Shimshon prospects. Givot Olam lost 1.7%; the day before the company said it had sold 32,000 barrels of oil during the second quarter for an average of $11 per barrel.

The session was marked by intense selectivity. For instance, among the day's gainers was Bank Hapoalim, which rose 0.5% on turnover of NIS 101 million. The second-liveliest stock on the floor was Israel Chemicals, which sank 0.3% on turnover of NIS 87 million. While most stocks on the TA-25 index lost ground, gainers included Oil Refineries at 1% and Discount Bank at 2.5%. Bank Mizrahi-Tefahot climbed 1.1%.


With reporting by Reuters