The Tel Aviv Stock Exchange (TASE) fell sharply today, in response to the worsening demonstrations in Egypt, even as President Hosni Mubarak fired his cabinet and appointed a vice president. Geopolitical shocks, especially in the Middle East, tend to unsettle markets. Investors are afraid that the riots in Egypt will spread to other Arab countries, such as Saudi Arabia, one of the world's largest oil exporters. With the Arab world in turmoil, the Israeli capital market is hunkering down.
By close of trade, the Tel Aviv 25 Index was down 3.75% to 1282.56.
The Tel Aviv 25 Index fell 2.3% at the opening to 1,302.50 points, and the Tel Aviv 100 Index fell 2.5% to 1,210 points. On Friday, Wall Street posted the steepest falls since November, ending an eight-week rally that brought leading indices to a 29-month high. The price of crude oil jumped over 4%.
Clal Finance chief economist Amir Cohenovich says that the Egyptian demonstrations could benefit the partners in the Tamar gas field, weaken the shekel, and lower home prices. "The turmoil in Arab streets often tends to spread toward Israel. In the short term, it could have an adverse effect, given our location in the center of instability."
At the macroeconomic level, Clal Finance says that the demonstrations in Egypt are liable to drive foreign investors away from Israel, as it is in the heart of the Middle East. "The departure of foreign investors from Israel will weaken the shekel and could have an even greater effect than the efforts of the Bank of Israel and the Ministry of Finance," he says. As for the real estate market and the housing bubble, he believes that "most pressure will be in the direction of falling prices". He did not give any reasons for linking the situation in Egypt and the Israeli residential market.
The Israeli partners in Tamar are Delek Group Ltd. (TASE: DLEKG) subsidiaries Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling LP (TASE: DEDR.L), as well as Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) and Dor Alon Energy in Israel (1988) Ltd. (TASE:DRAL) unit Dor Alon Energy Exploration Ltd.
Published by Globes [online], Israel business news - www.globes-online.com - on January 30, 2011
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