Today’s TASE trading was characterised by sharp downslides, on relatively high turnovers. The Tel Aviv 100 index fell 3.61% to 296.72 points. The Maof index fell 3.96% to 303.53 points. Turnover amounted to NIS 341.5 million.
It’s just one month until Brazil inaugurates its Carnival; but as things look right now, it will be an especially glum Carnival. This is in view of the fact that Brazil’s stock exchange plunged yesterday, and the Brazilian government has reportedly decided to expand the fluctuation band of the real.
This was the backdrop against which the shekel was sharply devalued today against the dollar and other currencies. It happened when foreign investors pulled out of the Tel Aviv Stock Exchange and local business sector concerns closed positions.
The dollar representative rate of exchange rose 0.64% to NIS 4.084. Even after the representative rate of exchange was published, the dollar continued to gain strength, reaching NIS 4.11 in interbank trading. This was an increase of 0.64% on the representative rate of exchange. Against yesterday’s rate, the devaluation amounts to 1.28%.
The currency basket exchange rate rose 1.16% today, reaching NIS 4.4797. The basket exchange rate is now 12.3% above the fluctuation band floor, and 19.6% below its upper limit.
The weakening of the dollar on overseas money markets caused other currency rates to be sharply devalued. The euro exchange rate rose by 2.23% (to NIS 4.7813), the pound sterling was up 1.93% (to NIS 6.7427), while the Japanese yen rose 1% (NIS 3.6445 to 100 yen).
Foreign currency trading today was characterised by heavy demand, and total foreign currency trading was estimated at hundreds of millions of dollars. Most activity in the morning hours came from banks and foreign investors, who realised financial stock exchange investments totalling $100 million. This was further to their trend of reducing their overseas investments, due to the economic crisis in Brazil and the fall of the European stock exchanges. It is assessed that today’s activity consisted of investment portfolio adjustments that will not continue.
The dollar started the day at NIS 4.055, rising rapidly by NIS 0.03 to NIS 4.084. At this juncture, Israeli business sector concerns entered the market, seeking to purchase foreign currency. This was intended for closing foreign currency overlap and possibly also for closing foreign currency credits, in view of the high volatility of the exchange rates of the principal currencies on overseas markets.
The Brazilian shock wave also started to hit Wall Street yesterday, in another round of what might have been either profit taking or initial signs of concern as to the undermining of the aid plan to Brazil. Today, this wave spread to all corners of the globe.
With things like this going on in the world, the TASE stood no chance: a 1.5% drop in the Dow Jones index last night, and an even sharper decline on the European exchanges today. Frankfurt plunged 5.5%, Paris by a similar amount, and Amsterdam was down 6%. Only on the London Stock Exchange were the declines more moderate, amounting to a mere 2.5%.
The falls in Tel Aviv may have seemed moderate in comparison with what happened in Europe, but they worsened as the day wore on. The opening of trading was affected only by last night’s declines on Wall Street, and so trading began with a fall of only 1.5% in the leading indices. Later, the news broke that the Brazilian government was broadening the fluctuation band for the real - news that affected stock exchanges throughout the world, including, of course, the local exchange.
Turnover totaled NIS 342 million. Market players said that, though this was higher than on a normal day, it was low for a day of dramatic events. "I think many investors prefer to weigh their next moves, and are not rushing to act out of panic," a manager in one firm of brokers estimated today.
Published by Israel's Business Arena January 13, 1999
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Israel business stocks shares TASE quotes quotations
Israel business stocks shares TASE quotes quotations
Israel business stocks shares TASE quotes quotations
Israel business stocks shares TASE quotes quotations
Israel business stocks shares TASE quotes quotations
Israel business stocks shares TASE quotes quotations
Israel business stocks shares TASE quotes quotations
Israel business stocks shares TASE quotes quotations
Israel business stocks shares TASE quotes quotations
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