Market Report / Nasdaq Gains Unable to Overcome War at Home

Against the backdrop of violence and funerals, most shares on the Tel Aviv Stock Exchange slumped yesterday, while trading in dollar options reflected an additional 0.7 percent devaluation in the shekel against the U.S. currency.

This poor performance on the TASE came despite a resurgence of confidence on Wall Street at the end of last week, including a gain of over 4 percent on the Nasdaq index.

The leading indices on the local bourse traded down 1-2 percent during most of yesterday, with the Maof index of 25 blue-chip stocks closing down 1.3 percent, at 421 points.

The broader Tel Aviv 100 and Tel Aviv 75 indices each slipped 1.1 percent yesterday. Like on many Sundays, the trade volume was low, totaling NIS 158 million.

The Tel-Tech index was also unable to leverage the gains posted on Friday by technology stocks on Wall Street, with the local index of technology shares losing 0.9 percent yesterday.

Traders said yesterday that it appeared that a major player was purchasing short-term options in an effort to keep the Maof above the 420 point mark. These traders noted that Gmulot, a part of the Bank Hapoalim group, had acquired a large amount of shares last week.

Among the Maof shares, only two stocks finished higher yesterday: Partner and Teva Pharmaceuticals. Partner, the stock of which has performed weakly of late, gained 1.1 percent on a large volume of NIS 15 million. The cellular company's stock was boosted, in part, by a NIS 25 million transaction conducted outside the bourse last week. Teva climbed 1.8 percent on a volume of NIS 21 million, the largest turnover of the day.

The IDB group's stocks traded lower yesterday, following confirmation that talks with Kardan have resumed. IDB Holdings dropped 3.1 percent; Clal Industries recorded a loss of 2.5 percent; IDB Development slipped 1.8 percent; and Discount Investments closed down 1.6 percent.

The IDB group announced the sale of the Azorim real estate company yesterday, but the announcement had no noticeable impact on the firm's stock, which closed unchanged on a volume of NIS 390,000.

Leumi saw its share price slip 2.2 percent, on a large volume of NIS 18 million, following the Finance Ministry's decision to sell 16 percent of its stake in the bank. Bank Hapoalim's stock dropped 1.85 percent on a volume of NIS 6 million.

Dollar options: NIS 4.7

No representative rate is set for the U.S. currency on Sundays, but trading in dollar options pointed toward an additional devaluation of about 3 agorot (0.7 percent) in the exchange rate, with the greenback valued at NIS 4.7. There was lively trading in dollar options yesterday, with more than 49,000 options changing hands.

Kobi Elisof of Merhavim Capital Markets attributed the strengthening of the dollar to the escalation in violence and comments made at the end of last week by the governor of the Bank of Israel, David Klein.

While Klein's remarks were intended to reassure the market, his talk about a growing deficit and shrinking tax revenues rattled foreign and local investors, who moved toward dollar-based investments.

Elisof projects that the dollar will return to a level of NIS 4.65-4.68 if there are a few days of quiet, but anticipates the U.S. currency jumping to around NIS 4.75 in the event of another major flare-up in hostilities.