"Don’t be afraid of the falls on the Tel Aviv Stock Exchange (TASE), and take the opportunities to buy more stocks," Excellence Investments Ltd. analyst Terence Kingman advises in review that focuses on Israeli bank shares.
Klingman asks, "Bank shares have suffered the sharpest falls, but does this trend constitute a change in investors' sentiment about bank shares that will lead to underperformance in the longer term?" His answer is no. "We still see the banks as attractive," he writes, adding, "In our opinion, the explanation for the sharp fall in bank shares is the lack of activity by foreign investors."
Excellence believes that, following pressure by investment committees, and thanks to good performances since the beginning of the year, institutional investors have slightly reduced the stock component in their portfolios, but they are still optimistic about the ability of small and mid-sized companies to achieve good yields. They are therefore in no hurry to sell these shares.
Usually, buy and sell margins in small and mid-cap shares are larger than in big-cap shares, so there is no point in foregoing small and mid-cap shares if there is no fear for the companies' future, Excellence adds.
Excellence draws attention to the fact that, among of the four biggest banks, Mizrahi Tefahot Bank (TASE:MZTF), which is perceived as a defensive stock, has suffered the steepest falls in the past month. Excellence believes that were investors truly pessimistic about Israeli banks, we'd expect less solid banks, such as Israel Discount Bank (TASE: DSCT) to be hit harder.
This fact strengthens Excellence's position that recent sales on the TASE were somewhat forced, and do not reflect the investors' mood. Excellence believes that the market will probably continue to be positive, but that bank shares will be more volatile than the average.
Published by Globes [online], Israel business news - www.globes-online.com - on November 9, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009