Wall Street Sell-offs Push Tel Aviv Shares to Lowest in Two Months

Concerns about North Korea, higher U.S. interest rates leave TA-25 index down 1.7% for the day.

An official points to a map with seismic waves in North Korea following news of another nuclear test at the Korea Meteorological Administration in Seoul, September 9, 2016.
Yonhap, AFP

The Tel Aviv Stock Exchange dropped sharply Sunday, tracking sharp declines on Wall Street over the weekend and leaving the blue-chip TA-25 index as its lowest in two months.

The TA-25 ended at 1,433.03 points, down 1.7%, even though it closed off its lows for the day. The index is down 6.3% for the year. The broader TA-100 fell 1.9% to end at 1,254.67 as some 683.6 million shekels ($182 million) in shares changed hands.

Wall Street’s S&P 500 index had its worst day since June on Friday as investor nervousness increased following a nuclear test by North Korea and Federal Reserve officials’ comments lifted rate hike bets.

The CBOE Volatility index closed at its highest level since late June, while the S&P 500 index closed below its 50-day moving average for the first time also in about two months, a sign that further weakness may be ahead. In Tel Aviv, the VIX — popularly knowns as the “fear index” — jumped 35%, almost as much as the 40% rise for the U.S. index.

Traditionally, September tends to be a month of lower returns for stocks, and traders on Wall Street said this year could be no exception given the abundance of uncertainties including the rate outlook and November’s U.S. election.

The declines in Tel Aviv hit every sector of the market, but real-estate stocks were the hardest hit. Bayside dropped 4.6% to 1,480 shekels in unusually heavy trading for the company and shopping mall developer Melisron lost 3.8% to 156.70.

Dual-listed shares were weighed down by arbitrage trading, with SodaStream being the biggest loser among TA-100 stocks, dropping 5.7% to 97.59. Perrigo fell 2.4% to 331.90. But locally traded blue chips weren’t spared, with Bank Hapoalim down 1.5% to 20.88, Bank Leumi down 1.4% 14.43 and Delek Group down 2.5% at 768.

Elbit Systems fell 1.8% to 361.30 even though it reported Sunday that it won a contract valued at over $90 million from an Asia-Pacific country for advanced electro-optic systems to be delivered over the next four years. Ormat Technologies, which finished 3.3% lower at 182.60, said it raised $204 million from institutional investors in a private placement to recycle higher-interest debt coming due.

Among gainers, Compugen led TA-100 stocks with a 1.8% rise to 26.69. D-Pharm soared 42% to 1.73 after Clal Biotechnology said last week it was selling its stake, raising hopes that the failed drug developer will set a new course.