Market Report / Delek Group Shares Rise Despite Jelmoli Turmoil

Tel Aviv stocks reversed to gains on the last day of the truncated trading week yesterday after a stable opening on Wall Street countered losses that had plagued much of the session.

By the way, the Tel Aviv Stock Exchange has launched an exhibition of 100 globes on Rothschild Blvd. in Tel Aviv, each prepared by an artist for one of the large-cap companies on the TASE. The New York Stock Exchange, London Stock Exchange and Nasdaq are represented too. (see picture)

The TA-25 index finished 0.9 percent higher at 1,130.4 points after spending most of the day below water. The broader TA-100 index gained 0.8 percent to 1,095.4 points, and tech stocks advanced 0.4 percent.

Trading for the week ended yesterday because of the Sukkot holiday, so the expiry of options on the TA-25 index was brought forward from Thursday to Tuesday. The expiry was lively and subsequent trading even livelier: Turnover at the expiry was NIS 1.3 billion, which climbed to NIS 3.2 billion for the day.

Investors had a chance on Tuesday to react to the Bank of Israel's announcement the day before that it was leaving interest rates unchanged at 4.0 percent. The interest rate gap between the shekel and dollar is therefore 0.75 percent after the U.S. Fed lowered its federal funds rate by half a percent to 4.75 percent.

Analysts note that Israel is still subject to inflationary pressures. From the start of 2007, the consumer price index has risen by 2.8 percent, while the Bank of Israel's government-set range of price stability is 1 percent to 3 percent.

Yet the central bank elected not to raise interest rates (and New York-based investment bank Merrill Lynch yesterday predicted that it won't raise Israeli interest rates at all this year). That's good news for investors because the lower interest rates are, the less attractive bank deposits are, which makes stocks look better.

Among stocks, usually the Banks-5 index is a good gauge of the market mood, but yesterday it retreated against the trend, closing 0.6 percent lower. Shares of Bank Hapoalim edged down by 0.1 percent and Bank Leumi stock lost 0.9 percent.

Discount Bank lost 0.6 percent even though Deutsche Bank upgraded it to Buy and set it a 12-month price target that's 18 percent above its opening share price yesterday.

The Real Estate-15 index added 1 percent; weighty Africa Israel climbed 2.8 percent and Gazit Globe gained 1.8 percent. Delek Real Estate lost 1.7 percent, however, on reports that its deal with Swiss company Jelmoli is falling apart. Yitzhak Tshuva's Delek Group reportedly demands a discount on the transaction price. Delek Group shares rose 1.4 percent.

While on real estate, Kardan NV shot up 5 percent on news that Discount Bank is investing in Kardan group company KFS.

Moving onto broad-market stocks, engineering company Baran jumped 7.4 percent on heavy turnover of NIS 12 million after revealing an agreement to allocate 12.5 percent of the company to a Russian investor for NIS 95 million.