Analyst IMS Investment Management Services Ltd. (TASE:ANLT) analyst Noam Meirovich says that leading US stock indices rose by over 5% in July, and that European indices rose by 3%, but that the Tel Aviv Stock Exchange (TASE) rose by just 2%. The TASE was weighed down by the recent developments in the global potash market, when Russia's Uralkali JSC (LSE: URKA) decided to quit the Russian potash cartel and predicted a sharp drop in prices.
These events caused a double-digit drop in the share price of Israel Chemicals Ltd. (TASE: ICL) and in its parent company, Israel Corporation (TASE: ILCO).
Israel Chemicals was one of Meirovich's stock picks, but its share price has fallen 40% since his previous report on the company. "People holding the share should not be in a rush to sell," he says. "In retrospect, those who sold shares at these prices will probably discover that they made a mistake. Israel Chemicals is a quality company. I don’t know what will happen in a month, but, in a long-term perspective, it is not a company that will disappear.
"The potash market will continue to function, and Israel Chemicals has other growth engines: other chemicals, such as bromide. For those with patience and stamina, even if the share price falls a bit more, for the long term, the share is at a good price."
Meirovich adds, "Selling shares that are falling is not something that pays. It's unlikely that potash prices will return to the peak of 2007, but it should be remembered that there are other producers besides Uralkali, and not every customer will switch to buy from it tomorrow.
"Uralkali's announcement has political aspects as well as the economic ones. That is why it is hard to price the latest events at the moment, and things may change. Israel Chemicals' share price is also affected by the Sheshinski II Committee, which is examining the royalties structure in the industry, after dealing with the gas industry."
Meirovich also believes that, in addition to Israel Chemicals, it is worthwhile adding income-producing real estate companies to an investment portfolio. He says, "Analyst prefers exposure to the sector through a basket of shares of leading companies, which exposes us to offices, malls, and power centers. We include Azrieli Group Ltd. (TASE: AZRG), Melisron Ltd. (TASE: MLSR), Amot Investments Ltd. (TASE:AMOT), Bayside Land Corp. Ltd.(Gav Yam) (TASE: BYSD1), Big Shopping Centers (2004) Ltd. (TASE:BIG), and Industrial Buildings Corp. (TASE: IBLD) in this basket."
Published by Globes [online], Israel business news - www.globes-online.com - on August 6, 2013
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