TASE Celebrates Its First Half-century

The Tel Aviv Stock Exchange is celebrating 50 years since its establishment with a one-day seminar at Tel Aviv's Dan Panorama hotel, for senior economists and managers in the business sector.

The Tel Aviv Stock Exchange is celebrating 50 years since its establishment with a one-day seminar at Tel Aviv's Dan Panorama hotel, for senior economists and managers in the business sector.

Today the securities of over 750 companies are traded on the Tel Aviv bourse, as well as some 200 bond issues, on turnovers of up to NIS 1 billion a day. There are sophisticated trade departments for derivatives, and trade is completely computerized.

That is a far departure from the exchange's humble beginnings. When the TASE was founded in 1953, only a few securities were traded, and this light trade was conducted in under three hours each day. The traders, most of them immigrants from Germany, knew one another and conducted business based on their facial expressions and body language.

The share price listings in December 1953 were printed on two sheets of A4 paper and included 28 companies, 18 shares and fewer than 20 bond issues, some of which were government bonds. Among other things, some interesting loans were traded, such as the "Popular Prize-bearing Loan" and the "War Loan."

Among the companies whose shares were traded on the bourse at that time were a few that have since ceased to exist, such as the Ata and Cardana textile companies, the Atid marine services company and Otzar Ha'ikarim Lemashkantaot (a farmers' mortgage company). Other shares that were traded back then were in companies that are no longer traded on the bourse but whose later incarnations are still around today - the Eretz-Yisrael Electric Company, the Assis agricultural produce plants, Lodzia textiles and the Nesher cement factory. Some of the shares that continue to be traded to this day are Teva, Africa Israel, Bank Leumi, Koor and Hachsharat Hayishuv (the Israel Land Development Company - ILDC).

Even 10 years after the establishment of the Tel Aviv bourse, the capital market was on the fringes of the Israeli economy, and only a few shares were traded. Newspapers in those days featured articles explaining the bourse and its importance as if they were delivering a lesson at school: "Becoming involved in the bourse is not easy, requiring much knowledge and necessitating the constant gathering of information, judgment and an understanding of financial matters," stated one article.

The trading hours were also quite limited - from 11:30 A.M. until 2 P.M. Here is a description of one day of trading in 1964: "On a raised dais sit the three official brokers. They manage the deals, record who sells and who buys, add and subtract and offer the goods out loud. In the middle sits Dr. Max Cook, with a big fat cigar stuck in his mouth; on his left is Avraham Pasha and on his right, Dr. Martin Roth. Two yekkes (German immigrants) and one Sephardi (from the Middle East or North Africa). Indeed, the Germans are in control here. In fact, it is they who brought the tradition of the bourse to Israel and founded the exchange bureau in 1953.

"In 1953 the bourse's business lasted about 20 minutes each day and was conducted in a room owned by Mr. Hasson, of the Anglo-Palestine Bank. Fewer than 10 persons would assemble in the morning, and Mr. Hasson would announce the shares of the Ashlag company and the electric company and the bond issues of the Apothekai Bank and the Rasco company. Mr. Hasson would set the share prices, and since he wanted to protect the Apothekai Bank, he would become very angry when someone would sell its shares and punish him by lowering the price by half a point."

Another newspaper account described how the traders on the bourse relied on facial expressions and gut feelings in their trading: "Opposite us sits Mr. Zelig Shenkovelski of Moritz & Tuchler [which was recently sold to Zur Shamir Holdings - R.S.]. A pointed gray beard covers his chin and his blue eyes dart hither and thither with a mischievous smile. He is already 60-something and has rich experience in bourse dealings from his days in Germany.

"Shenkovelski objected to a proposal to seat the members of the bourse in rows, one behind the other, because he wants to see the facial expressions of all those sitting around the U-shaped table. When he sees the Bank Hapoalim representative sticking his hand into his pants pocket, he [Shenkovelski] already knows that he [the representative] wants to sell. And when he sees the securities manager of the Export Bank, Oved Ben Ozer, sitting quietly for a while, he deduces that Wolfson-Clore [who had connections with the bank] are not doing well."

The first buds of the manipulation of shares can be seen in the following quote: "Ben Ozer, on the other hand, knows Shenkovelski's responses. Just now Shenkovelski bought Ampa shares, and Ben Ozer knows that Shenkovelski representatives Ampa. `When I see Shenkovelski buying Ampa, I realize that the company is interested in maintaining its image, even before no buyer is found and the share price drops. I calculate how much merchandise he absorbed and cautiously raise the price. Then I watch whether he relaxes, and it begins to become a game. Suddenly he reacts angrily and sells out of agitation."