'Tycoon Stocks' Hit Hard in Session Marked by Fear

The euro sagged against the U.S. dollar, falling below $1.36, as the lack of progress on the euro bloc's debt woes exacerbated concerns of a Greek default.

Tel Aviv stocks were hammered Monday, losing around 3% on paper-thin turnover, as markets the world wide took a swan dive on fresh worries about the future of the euro zone. But in Israel, among the hardest-hit companies on the Tel Aviv Stock Exchange were ones associated with the so-called tycoons - giant holding companies that may find their fortunes impaired by the conclusions of the Economic Concentration Committee that were announced on Monday.

In world markets, the euro sagged against the U.S. dollar, falling below $1.36, as the lack of progress on the euro bloc's debt woes exacerbated concerns of a Greek default. That in turn sharpened concern about a debt contagion that could affect larger countries, wreaking havoc on the European and global banking system. Suddenly, U.S. government debt seemed mighty attractive on Monday. European markets fell hard: The smallest loss was 1.6%, in Madrid; German shares lost 2.4%; U.K. stocks fell 2%; French shares lost 2.6%; and Stockholm stocks lost more than 3%.

Nochi Dankner - Olivier Pitoussi - 05092011
Olivier Pitoussi

Back in Israel, the session began with losses that deepened as the day wore on. Among the biggest losers were the oil and gas exploration partnerships: The index tracking them fell more than 6%. The problem there may be the saber-rattling by Turkey: Prime Minister Recep Tayyip Erdogan has said Turkey will be taking steps to prevent Israel from unilaterally exploiting natural resources in the Mediterranean Basin.

The benchmark TA-25 index lost 2.9%, to 1,033 points; the broader TA-100 index fell 2.7%, to 938 points; and the Banks-5 index fell 4.6%, following its peers in Europe.

Apropos of which, French bank shares have been squirming in the spotlight because of their heavy exposure to Grecian government debt and Monday brought their investors no joy, at least unless they shorted the stocks. Shares of BNP Paribas fell 5.3%, Credit Agricole lost a lesser 1.3% and Societe Generale lost 5.9%. In Tel Aviv, shares of Bank Hapoalim lost 4.7% and Leumi, the bigger bank by market capitalization, lost 5%.

Total turnover in Tel Aviv was paper-thin, at just over a billion shekels. "Total turnover today was below average," said Roy Laufer, head of the trading desk at DS Apex. "Daily turnover lately has been around a billion and a half shekels."

Tycoons take thrashing

The most likely reason for the retreat on Ahad Ha'Am Street, home of the stock exchange, is mushrooming fear, and uncertainty - not only about the American and European economies, but also about the structure of Israel's, following the conclusions of the economic concentration committee. (For more on that, see Page 4 and below ).

While the market was red practically across the board, some but not all of the stocks associated with Israel's "tycoons" took a special beating.

Delek Group, associated with energy and real estate baron Yitzhak Tshuva, lost 7%, as did Discount Investment, a central holding company in Nochi Dankner's vast holdings group, IDB. But the company at the top of Dankner's pyramid, IDB Holding, lost 3.9%, just a bit more than the benchmark indexes.

While on the IDB group, just one of its listed companies underperformed Monday: Hadera Paper lost 4.8%. But another three, Super-Sol, Clal Insurance and Cellcom, outperformed the index, a little, with losses of around 2%.

Another company likely to be affected by the concentration committee's recommendations is Housing & Construction, which belongs to Shari Arison, together with Bank Hapoalim. Housing & Construction shares lost 4%.

Zadik Bino's business group also had a bad day on the market. His flagship energy company, Paz Oil, lost 6.6% and shares of the bank in which he has an interest, First International Bank of Israel, fell 3%.

But there were winners Monday, too. Teva Pharmaceutical Industries was the only gainer on the TA-25 index, closing 0.3% higher on tiny turnover of NIS 49 million.

Another major gainer was Redhill, which shot up 18.7% after announcing the acquisition of rights to a kit that diagnoses a bacteria implicated in Crohn's Disease. For more on this story, see Page 8.