Political Uncertainty to Shadow Israel’s Credit Rating, Moody’s Analyst Says

Bank of Israel to invest more of foreign reserves in equities; Keror turns down right to buy Clal shares in Jafora-Tabori; Tel Aviv shares eke out gains as dollar and euro weaken.

Netanyahu during the weekly cabinet meeting, February 5, 2016.
Emil Salman

Bank of Israel to invest more of foreign reserves in equities

The Bank of Israel will increase the weighting of equities in its foreign currency reserves to 12.5% this year from 10% in 2016. With reserves standing at $98.4 billion at the end of December and now probably exceeding $100 billion, the increase would amount to about $2.5 billion. The move is the latest in a series of annual increases in the weighing since the central bank decided four years ago to invest 3% of the reserves into stocks The Bank of Israel monetary committee, which made the decision January 23, reduced the ceiling on foreign government-bond holding to 79.5% up from 84.5% last year. Another 8% will go into foreign corporate bonds of investment-grade quality, up from 5.5% in 2016. Investing in shares is riskier than other holdings, but the policy has been successful until now and the bank is hedging its risk by holding stock only in blue chip companies. (Moti Bassok)

Political uncertainty to shadow Israel’s credit rating, Moody’s analyst says

Political uncertainty will probably keep Israel’s credit rating from improving anytime soon, even though its fiscal performance has been impressive, the lead Israel analyst at Moody’s Investors Service said on Monday. Moody’s last month affirmed Israel’s A1 rating with a Stable outlook, making it unlikely the ratings or outlook will change for at least 12 to 18 months, Kristin Lindow told Reuters on the sidelines of a conference of the credit agency’s Israeli affiliate, Midroog, in Tel Aviv. Benjamin Netanyahu is in his fourth term as prime minister, but police are pursuing two criminal investigations against him over alleged abuse of power. He has denied any wrongdoing. “If there would be a different prime minister or coalition where balance of power shifted a bit we would have questions as to what would be the main focus of any new government,” Lindow said. “It’s just a big question mark we hadn’t had in a while.” (Reuters)

Keror turns down right to buy Clal shares in Jafora-Tabori

Keror, the majority shareholder in the beverages maker Jafora-Tabori, said on Sunday it would not exercise its right of first refusal to buy shares from its partner, Clal Industries. Clal had last month agreed to sell a 14.3% in Jafora to an unnamed buyer at a company valuation of 1.56 billion shekels ($420 million), with an option to buy the rest of Clal’s 30.45% holding in the next nine months. But Keror said the figure Clal cited was too high and that it would not match the price. However, it insisted that its right of first refusal remains in force for the rest of Clal’s stake even though the unnamed buyer has an option built into the contract. Jafora is one of the largest makers of soft drinks in Israel, with a 25% market share and brands like Schweppes, Spring, Mei Eden and RC Cola. Keror shares ended down 0.3% to 104.60 shekels (Yoram Gabison)

Tel Aviv shares eke out gains as dollar and euro weaken

Tel Aviv shares edged higher on Monday, with most sectors trading in a narrow range. The blue chip TA-25 index ended just 0.07% up at 1,413.83 points, while the TA-100 added 0.1% to 1,248.85, as 1.58 billion shekels ($420 million) in shares changed hands. Among the biggest gainers was Israel Chemicals, which advanced 2.5% to 17.22 shekels and its parent company, The Israel Corporation, which rose 2.7% to 723. Evogene led TA-100 stocks higher on a 3.4% increase to 19.52 after a presentation to investors on Monday. Protalix rose sharply for a second day, adding 3.1% to 2.89 shekels, after Canada’s Knight Therapeutics bought a 5% stake in the biotech company for 57 cents a share. Kamada dropped 3.4% to 24.45 after posting a fourth-quarter loss of $1.8 million. In foreign currency trading, the dollar and the euro slipped against the shekel, with the greenback weakening 0.35% to a Bank of Israel rate of 3.747 shekels.  (Shelly Appleberg)