Tel-Aviv Stock Exchange downturns in the past two weeks are attributed primarily to the behaviour of foreign investors: the economic press is full of reports of massive sell-offs by overseas investors, prompted by the upheavals on markets in Asia, South America and Russia to sell shares on the Israeli stock exchange too.
The TASE slides run counter to projections at the beginning of the month whereby Bank of Israel’s 1.5% lowering of the interest rate would divert at least some of the funds in the "shekel mountain" toward investment in shares.
Enquiries with major brokerage firms elicit the view that foreign investors have, in fact, recently been proceeding in accordance with a sell-off trend, although not in very great volume or force. "There were sell-offs, but this was not a panic", says Hannah Pri-Zan, manager of Bank Hapoalim’s securities department. "These disposals are natural, some foreign entities were in need of liquidity, and it should be borne in mind that we are the only market in the world that operates on Sundays". Pri-Zan adds that the sales volume in the past two weeks is still significantly lower than the purchasing volume in the preceding period.
Julian Assos, deputy general manager of the Sahar Securities brokerage firm, says, by contrast, that Sunday’s sell-offs actually came from domestic investors. He notes that this has nothing to do with the results of the universal Sabbath, since foreign investors have long since learned to post trading orders in the Israeli market on Sundays too. Most disposals by foreign investors took place last week, and the pace has slowed in the past two days.
"My assessment is that the parties selling securities were emerging market funds. This assessment is based on the type of orders we received", he said. The disposals, according to Assos, were due to the profit-taking wave that is overtaking those funds in the United States , and Israel is a convenient place to off-load, because, apart from Greece, it is the only market to have posted a positive yield since the beginning of the year.
As to the future, Assos says that if downslides on international markets continue, or if, alternatively, the atmosphere of uncertainty persists, then Tel Aviv will continue to see disposals and downturns. "In that state of affairs, customers will want to get out of the emerging markets and return to blue chip stocks in the United States or bonds over there.
Published by Israel's Business Arena August 25, 1998