Tel Aviv Stocks Sag as World Markets Retreat

Part of the problem is feeble faith in the bank stress tests being conducted in Europe.

Market report

Israeli stocks wilted yesterday as world markets fell hard, with losses in Europe ranging from 1% to more than 2.5%. Not a screen glowed green in the Holy Land or the Old Continent. Nor was relief from the red to be found in Asia, at least not much - small gains in Japan and Jakarta were more than offset by minor losses elsewhere.

stock exhange - David Bachar - Aug 27 2008
David Bachar

Part of the problem is feeble faith in the bank stress tests being conducted in Europe: Do they faithfully portray the bigger picture or not? In any case, the relatively cheery findings failed to dispel investors' concerns that the debt crisis in Europe could spread, possibly even infecting the bigger nations.

The Tel Aviv indexes were red across the board, posting firm but not major losses - between half a percent and 1%. Only the indexes tracking biomed and telecom stocks lost more.

The benchmark TA-25 index dropped 0.9% to 1,240 points and the broader TA-100 index fell 0.9% to 1,126 points. Banks lost 0.6%. There were only two gainers on the TA-25 index yesterday: NICE Systems, which climbed 1.1%, and food company Osem, which rose 0.5%. Israel Corporation and its subsidiary Israel Chemicals were among the biggest losers on the TA-25, each dropping by 2.5% on heavy turnover. Total turnover on the exchange was normal for these times at NIS 1.6 billion.

Bonds were weak yesterday. "The pullback came after Delek Group announced expansions of debentures series," said Yair Drori, head analyst at Discount Tachlit Portfolio Management.

Another reason for Israeli investors to quake - Europe and worries about the American debt ceiling aside - is the state of the Israeli economy. More and more indicators show a weakening. In the IBI weekly macroeconomic review, chief economist Ayelet Nir wrote: "The state of Israeli foreign trade in two words: not good." Exports contracted in the second quarter and imports grew more slowly than in the first quarter.

Africa Israel Investments stock fell 1.6%; see Page 8 for more on that story. Smallcap shell company Oceana tumbled 12% following its 64% dive on Sunday after announcing a putative merger with a biomed company.

Biomed stock Brainsway gained 1.6% after reporting the final results of an initial clinical trial, finding that its Deep TMS device is useful in treating post-traumatic stress.