Market Report / The Anthrax Effect

Despite the sharp rises on the New York markets on Thursday and despite Friday's steady trading, Tel Aviv's bourse started the week yesterday with falls. The Maof index lost 0.58 percent to 388.6 points, and the Tel Aviv 100 slipped 0.43 percent to 375.5 points. The Tel-Tech shed 0.94 percent, closing at 212.8 points.

Trading volumes were exceptionally low, and totaled NIS 157 million. During most hours of the day the key indexes were down more than 1 percent, and toward noon the Maof even lost 2 percent. But in the last two hours of trading the trend was reversed, and the indexes edged up, closing with more moderate losses.

Last week, as the Anglo-American attack in Afghanistan started and the European and U.S. markets displayed a positive mood with the hope that the war would not expand, stocks in Tel Aviv went up. Yesterday's falls were reactions to fears of bioterrorism in view of the spreading anthrax cases, and to assessments that the military campaign might escalate, market sources explained.

Investors in Israel did not have sufficient information as to the reaction in the U.S. and European markets, because most anthrax cases in the U.S. were discovered only after most markets had closed down for the weekend. Traders in Tel Aviv had to make do with only one indication, that of the New York stock markets after an anthrax case was discovered at the NBC headquarters in New York on Thursday. The American indexes fell 3 percent when the news first broke, but adjusted back up toward the end of trading.

Traders in Tel Aviv said that the market is still unsure how to behave in the face of the recent anthrax reports. Investors here are looking forward to trade opening in Europe tomorrow morning and to the futures on the Nasdaq. This is also the reason for the low trading volumes, they added.

Stocks in the IDB group pulled the Maof index downward, with Clal Industries falling 3.5 percent and IDB Development losing 2.6 percent.

Some of the stocks traded both in Tel Aviv and in New York started the day with negative arbitrage gaps, and as a result registered losses. Teva closed 1.4 percent down on volume of NIS 14 million, Matav slipped 1.8 percent and Nice shed 1.4 percent. Elbit Systems, which gained 12 percent since the beginning of the month and about 56 percent from the beginning of the year, tumbled 2.6 percent.

Koor, which in the last year plummeted by 70 percent, lost another 2.5 percent yesterday, after informing the Tel Aviv Stock Exchange that it was negotiating with the banks to improve its credit lines and after stories in the press of the company's decision to sell its subsidiary, Elisra.

Stocks of the large banks, which are considered defensive stocks and which last week suffered losses while the market at large was edging up, went against the market trend yesterday as well - this time with gains. Bank Hapoalim gained 1.5 percent on NIS 21 million volume, and Leumi went up 0.4 percent on NIS 12 million volume. The medium-sized banks, on the other hand, registered losses, with United Mizrahi Bank falling 1.2 percent and Discount Bank losing 1.5 percent.

The insurance companies on the Maof, Migdal and Clal Insurance, also gained yesterday, continuing their climb from last week. Clal Insurance closed 1.7 percent up yesterday, and Migdal gained 0.8 percent. Insurance companies have suffered serious losses since the September 11 terrorist attacks in the U.S., but these stocks have rebounded in the last few days and gained around 15 percent.

Elite Industries went up 2.9 percent after an announcement of dramatic restructuring - cutting 21 of its 32 officers.